CHINA – MEASURES IMPOSING ANTI-DUMPING DUTIES ON HIGH- PERFORMANCE STAINLESS STEEL SEAMLESS TUBES ("HP-SSST") FROM JAPAN
Document: CHINA – MEASURES IMPOSING ANTI-DUMPING DUTIES ON HIGH- PERFORMANCE STAINLESS STEEL SEAMLESS TUBES ("HP-SSST") FROM THE EUROPEAN UNION REPORTS OF THE PANELS Addendum
Date: 13 February 2015
Document codes: WT/DS454/R/Add.1; WT/DS460/R/Add.1; WT/DS454/R-WT/DS460/R.
Complainant: Japan
Respondent: China
Third parties: EU, India, South Korea, Russia, U.S., Turkey, Saudi Arabia
Dispute stage: Appellate Body
Agreements cited: Art. 3.1, 3.2, 3.4, 3.5, 6.5, 6.8, 6.9, 6.5.1, 7.4, 12.2, 12.2.2  Anti-dumpingArt. VI  GATT 1994

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
REPORTS OF THE PANELS
Addendum
This addendum contains Annexes A to D to the Reports of the Panels to be found in document

 •

LIST OF ANNEXES

ANNEX A
WORKING PROCEDURES OF THE PANELS
Contents Page
Annex A-1 Joint Working Procedures of the Panels A-2
Annex A-2 Additional Working Procedures on BCI A-7
ANNEX B
ARGUMENTS OF JAPAN AND THE EUROPEAN UNION
Contents Page
Annex B-1 Executive Summary of the First Written Submission of Japan B-2
Annex B-2 Executive Summary of the Second Written Submission of Japan B-10
Annex B-3 Executive Summary of the Statement of Japan at the First Panel Meeting B-18
Annex B-4 Executive Summary of the Statements of Japan at the Second Panel Meeting B-23
Annex B-5 Executive Summary of the First Written Submission of the European Union B-28
Annex B-6 Executive Summary of the Second Written Submission of the European Union B-34
Annex B-7 Executive Summary of the Statement of the European Union at the First Panel
Meeting
B-41
Annex B-8 Executive Summary of the Statements of the European Union at the
Second Panel Meeting
B-46
ANNEX C
ARGUMENTS OF CHINA
Contents Page
Annex C-1 Executive Summary of the First Written Submission of China C-2
Annex C-2 Executive Summary of the Statement of China at the First Panel Meeting C-7
Annex C-3 Executive Summary of the Second Written Submission of China C-9
Annex C-4 Executive Summary of the Statements of China at the Second Panel Meeting C-14
ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Third-Party Statement of the Republic of Korea D-2
Annex D-2 Third-Party Statement of the Kingdom of Saudi Arabia D-4
Annex D-3 Third-Party Statement of Turkey D-7
Annex D-4 Integrated Executive Summary of the Arguments of the United States D-12
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX A
WORKING PROCEDURES OF THE PANELS
Contents Page
Annex A-1 Joint Working Procedures of the Panels A-2
Annex A-2 Additional Working Procedures on BCI A-7
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX A-1
JOINT WORKING PROCEDURES OF THE PANELS
1. Pursuant to Article 9.3 of the DSU, the timetables in DS454 and DS460 are harmonized. The
Panels shall, to the greatest extent possible, cond uct a single panel process, with a single record,
resulting in separate reports contained in a single document, taking into account the rights of all
Members concerned, and in such a manner that th e rights that parties or third parties would
otherwise have enjoyed are in no way impaired. A complaining party's submissions in one dispute
shall be deemed to be an exercise of its third party rights in the other dispute. Third parties may
submit single submissions relating to both disputes.
2. In its proceedings, the Panels shall follow the relevant provisions of the Understanding on Rules
and Procedures Governing the Settlement of Disput es (DSU). In addition, the following Working
Procedures shall apply.
General

3. The deliberations of the Panels and the docume nts submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the disputes
(hereafter "party") from disclosing statements of its own positions to the public. Members shall
treat as confidential information submitted to th e Panels by another Member which the submitting
Member has designated as confidential. Where a pa rty submits a confidential version of its written
submissions to the Panels, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public.
4. The Panels shall meet in closed session. The parties, and Members having notified their interest
in either dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU
(hereafter "third parties"), shall be present at the meetings only when invited by the Panels to
appear before them.
5. The parties and third parties shall treat business confidential information in accordance with the
procedures set forth in the Additional Working Procedures of the Panels Concerning Business
Confidential Information, set out in Annex 1 to these Working Procedures.
6. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panels. Each party and third party shall have the responsibility for all
members of its own delegation and shall ensure th a t e a c h m e m b e r o f s u c h d e l e g a t i o n a c t s i n
accordance with the DSU and these Working Procedures, particularly with regard to the
confidentiality of the proceedings.
Submissions

7. Before the first substantive meeting of the Pa nels with the parties, each party shall submit a
written submission in which its presents the facts of its case and its arguments, in accordance with
the timetable adopted by the Panels. Each party shall also submit to the Panels, prior to the
second substantive meeting of the Panels, a written rebuttal, in accordance with the timetable
adopted by the Panels.
8. A party shall submit any request for a preliminary ruling at the earliest possible opportunity
and in any event no later than in its first writte n submission to the Panels. If the European Union
or Japan requests such a ruling, China shall submit its response to the request in its first written
submission. If China requests such a ruling, th e European Union and Japan shall submit their
responses to the request prior to the first substantive meeting of the Panels, at a time to be
determined by the Panels in light of the request. Exceptions to this procedure shall be granted
upon a showing of good cause.
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9. Each party shall submit all factual evidence to the Panels no later than during the
first substantive meeting, except with respect to evidence necessary for purposes of rebuttal,
answers to questions or comments on answers provid ed by the opposing party. Exceptions to this
procedure shall be granted upon a showing of good cause. Where such exception has been
granted, the Panels shall accord the opposing part y a period of time for comment, as appropriate,
on any new factual evidence submitted after the first substantive meeting.
10. Where the original language of exhibits is not a WTO working language, the submitting party
or third party shall submit a translation into the WTO working language of the submission at the
same time. The Panels may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any objection as to the accuracy of a translation, to the extent that
its significance is reasonably apparent, should be raised promptly in writing, no later than the next
filing or meeting (whichever occurs earlier) following the submission which contains the translation
in question. Any objection shall be accompanie d by a detailed explanation of the grounds of
objection and an alternative translation.
11. To facilitate the maintenance of the record of the disputes and maximize the clarity of
submissions, each party and third party shall sequentially number its exhibits throughout the
course of the disputes. For example, exhibits submitted by Japan could be numbered JPN-1, JPN-2,
etc. If the last exhibit in connection with the first submission was numbered JPN-5, the first exhibit
of the next submission thus would be numbered JPN-6. In order to avoid unnecessary duplication
of exhibits, parties may file joint exhibits. In particular, the exhibit of any party in DS454 or DS460
may consist of, and be effected by means of a cross-reference to, a document exhibited by any
other party in either dispute, including with respect to submissions with the same due date.
Questions

12. The Panels may at any time pose questions to the parties and third parties, orally or in
writing, including prior to each substantive meeting.
Substantive meetings

13. Each party shall provide to the Panels the list of members of its delegation in advance of each
meeting with the Panels and no later than 5.00 p.m. the previous working day.
14. The first substantive meeting of the Panels with the parties shall be conducted as follows:
a. The Panels shall invite the European Union and Japan to make opening statements to
present their cases first. Subsequently, the Panels shall invite China to present its point
of view. Before each party takes the floor, it shall provide the Panels and other
participants at the meeting with a provisional written version of its statement. In the
event that interpretation is needed, each party shall provide additional copies for the
interpreters, through the Panels' Secretary. Each party shall make available to the
Panels and the other party the final version of its statement, preferably at the end of the
meeting, and in any event no later than 5.00 p.m. on the first working day following the
meeting.
b. After the conclusion of the statements, the Panels shall give each party the opportunity
to ask each other questions or make comments, through the Panels. Each party shall
then have an opportunity to answer these questions orally. Each party shall send in
writing, within a timeframe to be determined by the Panels, any questions to the other
party to which it wishes to receive a response in writing. Each party shall be invited to
respond in writing to the other party's written questions within a deadline to be
determined by the Panels.
c. The Panels may subsequently pose questions to the parties. Each party shall then have
an opportunity to answer these questions orally. The Panels shall send in writing, within
a timeframe to be determined by them, any questions to the parties to which they wish
to receive a response in writing. Each party shall be invited to respond in writing to such
questions within a deadline to be determined by the Panels.
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d. Once the questioning has concluded, the Panels shall afford each party an opportunity to
present a brief closing statement, with the European Union and Japan presenting their
statements first.
15. The second substantive meeting of the Panels with the parties shall be conducted as follows:
a. The Panels shall ask China if it wishes to avail itself of the right to present its case first.
If so, the Panels shall invite China to pres ent its opening statement, followed by the
European Union and Japan. If China chooses not to avail itself of that right, the Panels
shall invite the European Union and Japan to present their opening statements first.
Before each party takes the floor, it shall provide the Panels and other participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies for the interpreters,
through the Panels' Secretary. Each party shall make available to the Panels and the
other parties the final version of its statement, preferably at the end of the meeting, and
in any event no later than 5.00 p.m. of the first working day following the meeting.
b. After the conclusion of the statements, the Panels shall give each party the opportunity
to ask each other questions or make comments, through the Panels. Each party shall
then have an opportunity to answer these questions orally. Each party shall send in
writing, within a timeframe to be determin ed by the Panels, any questions to another
party to which it wishes to receive a response in writing. Each party shall be invited to
respond in writing to such written questions within a deadline to be determined by the
Panels.
c. The Panels may subsequently pose questions to the parties. Each party shall then have
an opportunity to answer these questions orally. The Panels shall send in writing, within
a timeframe to be determined by them, any questions to the parties to which they wish
to receive a response in writing. Each party shall be invited to respond in writing to such
questions within a deadline to be determined by the Panels.
d. Once the questioning has concluded, the Panels shall afford each party an opportunity to
present a brief closing statement, with the party that presented its opening statement
first, presenting its closing statement first.
Third parties

16. The Panels shall invite third parties to make written submissions prior to the first substantive
meeting of the Panels with the parties, in accordance with the timetable adopted by the Panels.
17. Each third party shall also be invited to present its views orally during a session of this
first substantive meeting, set aside for that purpose. Each third party shall provide to the Panels
the list of members of its delegation in advance of this session and no later than 5.00 p.m. the
previous working day.
18. The third-party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panels shall first hear the arguments of the third parties in alphabetical order.
Third parties present at the third-party se ssion and intending to present their views
orally at that session, shall provide the Panels, the parties and other third-parties with
provisional written versions of their statements before they take the floor. Third parties
shall make available to the Panels, the parties and other third parties the final versions
of their statements, preferably at the end of the session, and in any event no later
than 5.00 p.m. of the first working day following the session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panels, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panels, any questions to a
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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third party to which it wishes to receive a response in writing. The deadline for receipt of
written answers to these questions shall be determined by the Panels.
d. The Panels may subsequently pose questions to the third parties. Each third party shall
then have an opportunity to answer these questions orally. The Panels shall send in
writing, within a timeframe to be determined by them, any questions to the third parties
to which they wish to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panels.
Descriptive part

19. The description of the arguments of the partie s and third parties in the descriptive part of the
Panels' reports shall consist of executive summaries provided by the parties and third parties,
which shall be annexed as addenda to the reports. These executive summaries shall not in any
way serve as a substitute for the submissions of the parties and third parties in the Panels'
examination of the cases.
20. Each party shall submit executive summaries of the facts and arguments as presented to the
Panels in its written submissions, other than responses to questions, and its oral statements, in
accordance with the timetable adopted by the Panels. Each executive summary of a written
submission shall be limited to no more than 10 pages, and each summary of statements presented
at a substantive meeting shall be limited to no more than 5 pages. The Panels will not summarize
in the descriptive part of its reports, or annex to its reports, the parties' responses to questions.
21. Each third party shall submit an executiv e summary of its arguments as presented in its
written submission and statement in accordance with the timetable adopted by the Panels. This
summary may also include a summary of responses to questions, where relevant. The executive
summary to be provided by each third party shall not exceed 6 pages.
22. The Panels reserve the right to request th e parties and third parties to provide executive
summaries of facts and arguments presented by a party or a third party in any other submissions
to the Panels for which a deadline may not be specified in the timetable.
Interim review

23. Following issuance of the interim reports, each party may submit a written request to review
precise aspects of the interim reports and request a further meeting with the Panels, in accordance
with the timetable adopted by the Panels. The righ t to request such a meeting shall be exercised
no later than at the time the written request for review is submitted.
24. In the event that no further meeting with the Panels is requested, each party may submit
written comments on another party's written request for review, in accordance with the timetable
adopted by the Panels. Such comments shall be limited to commenting on the other party's written
request for review.
25. The interim reports, as well as the final reports prior to their official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

26. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all documents to the Panels by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file 8 pape r copies of all documents it submits to the
Panels. However, when exhibits are provided on CD-ROMS/DVDs, 5 CD-ROMS/DVDs and
3 paper copies of those exhibits shall be filed. The DS Registrar shall stamp the
documents with the date and time of the filing. The paper version shall constitute the
official version for the purposes of the record of the disputes.
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c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panels at the same time as the paper versions, preferably in Microsoft
Word format, either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic
copy is provided by e-mail, it should be addressed to DSRegistry@wto.org, with a copy
to XXXX@wto.org, XXXX@wto.org and XXXX@wto.org. If a CD-ROM or DVD is provided,
it shall be filed with the DS Registry.
d. Each party shall serve any document submitted to the Panels directly on the other
parties in paper form and electronically, at the time it transmits such document to the
Panels. Each party shall, in addition, serve on all third parties its written submissions in
advance of the first substantive meeting with the Panels. A party may provide its
submissions only electronically to third parties. Each third party shall serve any
document submitted to the Panels directly on the parties and all other third parties. Each
party and third party shall confirm, in writing, that copies have been served as required
at the time it provides each document to the Panels.
e. Each party and third party shall file its do cuments with the DS Registry and serve copies
on the other parties (and third parties where appropriate) by 5.00 p.m. (Geneva time)
on the due dates established by the Panels. A party or third party may submit its
documents to another party or third party in electronic format only, subject to the
recipient party or third party's prior writte n approval and provided that the Panels'
Secretary is notified.
f. The Panels shall provide the parties with an electronic version of the descriptive part, the
interim reports and the final reports, as well as of other documents as appropriate. When
the Panels transmit to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the disputes.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX A-2
ADDITIONAL WORKING PROCEDURES OF THE PANELS CONCERNING
BUSINESS CONFIDENTIAL INFORMATION
1. These procedures apply to any business confidential information (BCI) that a party wishes
to submit to the Panels. For the purposes of these procedures, BCI is defined as any information
that has been designated as such by the Party submitting the information, that is not available in
the public domain, and the release of which could seriously prejudice an essential interest of the
person or entity that supplied the information to the Party. In this regard, BCI shall include
information that was previously treated by China’s Ministry of Commerce ("MOFCOM") as BCI in
the anti-dumping investigation at issue in these disputes. However, these procedures do not apply
to information that is available in the public domain. In addition, these procedures do not apply to
any BCI if the person who provided the inform ation in the course of the aforementioned
investigation agrees in writing to make the information publicly available.
2. No person shall have access to BCI except a member of the WTO Secretariat or the Panels,
an employee of a party or third party, and an outside advisor for the purposes of these disputes to
a party or third party. However, an outside advisor is not permitted access to BCI if that advisor is
an officer or employee of an enterprise engage d in the production, export, or import of the
products that were the subject of the investigation at issue in these disputes.
3. A party or third party having access to BCI submitted in these Panels proceedings shall
treat it as confidential and shall not disclose that information other than to those persons
authorized to receive it pursuant to these procedures. Any information submitted as BCI under
these procedures shall only be used for the purposes of these disputes and for no other purpose.
Each party and third party is responsible for ensuring that its employees and/or outside advisors
comply with these procedures to protect BCI.
4. A party or third party submitting or referring to BCI in any written submission (including in
any exhibits) shall mark the cover and the first page of the document containing any such
information with the words "Contains Business Confidential Information". The specific information
in question shall be enclosed in double brac kets, as follows: [[xx.xxx.xx]] and the notation
"Contains Business Confidential Information" shall be marked at the top of each page containing
the BCI. A non-confidential version, clearly marked as such, of any written submission (including
any exhibits) containing BCI shall be submitted pursuant to paragraph 26 of the Working
Procedures within three working days after the su bmission of the confidential version containing
the BCI.
5. In the case of an oral statement containing BCI, the party or third party making such a
statement shall inform the Panels before making it that the statement will contain BCI, and the
Panels will ensure that only persons authorized to have access to BCI pursuant to these
procedures are in the room to hear that statemen t. A written non-confidential version of an oral
statement containing BCI shall be submitted no later than the working day following the meeting
where the statement was made. Non-confidential ve rsions of both oral and written statements
shall be redacted in such a manner as to convey a reasonable understanding of the substance of
the BCI deleted therefrom.
6. Any BCI information that is submitted in binary-encoded form shall be clearly marked with
the statement "Business Confidential Information" on a label on the storage medium, and clearly
marked with the statement "Business Confidential Information" in the binary-encoded files.
7. The Panels shall not disclose in its reports or in any other way, any information designated
as BCI under these procedures. The Panels may, however, make statements of conclusion based
on such information. Before the Panels circulate th eir final reports to the Members, the Panels will
give each party an opportunity to review the reports to ensure that they do not contain any
information that the party has designated as BCI.
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8. Submissions containing information designated as BCI under these procedures will be
included in the record forwarded to the Appellate Body in the event of any appeal of the Panels'
reports.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX B
ARGUMENTS OF JAPAN AND THE EUROPEAN UNION
Contents Page
Annex B-1 Executive Summary of the First Written Submission of Japan B-2
Annex B-2 Executive Summary of the Second Written Submission of Japan B-10
Annex B-3 Executive Summary of the Statement of Japan at the First Panel Meeting B-18
Annex B-4 Executive Summary of the Statements of Japan at the Second Panel Meeting B-23
Annex B-5 Executive Summary of the First Written Submission of the European Union B-28
Annex B-6 Executive Summary of the Second Written Submission of the European Union B-34
Annex B-7 Executive Summary of the Statement of the European Union at the First Panel
Meeting
B-41
Annex B-8 Executive Summary of the Statements of the European Union at the Second
Panel Meeting
B-46
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX B-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF JAPAN
I. INTRODUCTION

1. This dispute concerns the measures taken by the Ministry of Commerce of the People's
Republic of China ("MOFCOM") imposing anti-dum ping duties on imports of high-performance
stainless steel seamless tubes ("HP-SSST") from Japan. 1 These measures are inconsistent with
China's obligations under the General Agreement on Tariffs and Trade 1994 ("GATT 1994") and the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
("Anti-Dumping Agreement" or "AD Agreement").

2. To begin, MOFCOM's injury and causation determinations are inconsistent with China's
obligations under the Anti-Dumping Agreement. Specifically, MOFCOM failed to conduct an
"objective examination" based on "positive eviden ce" in accordance with Article 3.1; follow the
specific requirements set forth in Articles 3.2, 3.4, and 3.5; and conduct a "logical progression of
inquiry"
2 in its volume, price effects, impact, and causation analyses.

3. Further, MOFCOM failed to follow several pr ocedural requirements of the Anti-Dumping
Agreement. First, MOFCOM failed to disclose information on import and domestic prices and
reasoning supporting its price effects finding, inconsistent with Articles 6.9, 12.2, and 12.2.2.
Second, MOFCOM treated certain information as confidential without satisfying the requirements of
Articles 6.5 and 6.5.1. Third, MOFCOM failed to disclose the pertinent data and calculation
methodologies used to determine the existence of dumping and the dumping margins for the
investigated Japanese companies, inconsistent with Article 6.9. Fourth, MOFCOM applied facts
available to determine the dumping margin for all other Japanese companies without satisfying the
requirements of Article 6.8 and Paragraph 1 of An nex II, and also failed to disclose information
and reasoning supporting its all others rate determination, inconsistent with Articles 6.9, 12.2,
and 12.2.2.

4. Finally, MOFCOM applied provisional measures for a period exceeding four months without
having any basis to do so under Article 7.4 of the Anti-Dumping Agreement.

II. L
EGAL ARGUMENT

A. MOFCOM's Determinations of Injury and Causation, and its Associated Disclosure
of Essential Facts and Final Determinatio n Notice, Are Inconsistent with China's
WTO Obligations in Several Respects

1. MOFCOM's Determinations of Injury and Causation Are Inconsistent with
Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement

a. Article 3 of the Anti-Dumping Agreement Requires an "Objective
Examination" Based on "Positive Evidence", and Calls for a "Logical
Progression" of Inquiry

5. Article 3.1 of the Anti-Dumping Agreement "is an overarching provision that sets forth a
Member's fundamental, substantive obligation" with respect to the injury determination, and
"informs the more detailed obligations in succeeding paragraphs".
3 It calls for an injury
determination based on "positive evidence" and involving an "objective examination" of

1 The subject products are available in three grades: TP347HFG, S30432, and TP310HNbN. For
simplicity, Japan refers to these grades as Products "A", "B", and "C", respectively. Product A is the least
expensive and lowest grade, Product B is in the middle, and Product C is the most expensive and highest
grade.
2 Appellate Body Report, China – GOES, para. 128.
3 Appellate Body Report, China – GOES, para. 126 (quoting Appellate Body Report, Thailand – H-Beams,
para. 106).
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"three essential components":4 (i) the volume of subject imports; (ii) the effect of such imports on
the prices of like domestic products; and (iii) the consequent impact of such imports on the
domestic producers of the like products. These components "are closely interrelated for purposes
of the injury determination".
5

6. Article 3.2 requires that an investigating au thority "consider" "whether there has been a
significant increase in dumped imports, either in absolute terms or relative to production or
consumption in the importing Member", and "whether there has been a significant price
undercutting by the dumped imports as compared wi th the price of a like product of the importing
Member, or whether the effect of such imports is otherwise to depress prices to a significant
degree or [to] prevent price increases, which ot herwise would have occurred, to a significant
degree". On the topic of price undercutting, Article 3.2 expressly establishes a link between the
price of subject imports and that of like domest ic products, by requiring that a comparison be
made between the two.
6

7. Article 3.4 details the obligation to examine the relationship between subject imports and
the state of the domestic industry, which is "analytically akin to the type of link contemplated by
the term 'the effect of' under Article 3.2", and "r equire[s] an examination of the explanatory force
of subject imports for the state of the domestic industry". 7 The investigating authority must
evaluate all fifteen factors listed in Article 3.4. Where there are "positive movements in a number
of factors", the investigating authority must provide "a compelling explanation of why and how, in
light of such apparent positive trends, the do mestic industry [is], or remain[s], injured". 8 Finally,
to ensure an "objective" analysis, an investigating authority finding that a segment of the domestic
industry is impacted by dumped imports cannot automatically extend that conclusion to the entire
industry without analyzing the impact of dumped imports on the other segments that constitute
part of that industry, as well as the industry as a whole , and providing a satisfactory explanation
as to why injury to one segment may be extended to the entire industry.9

8. Article 3.5 requires an investigating authority to demonstrate "that the dumped imports
are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury" to the
domestic industry. Further, an investigating authority must not attribute injury caused by other
known factors to dumped imports, which requires it to separate and distinguish the effects of
dumped imports from those of non-attribution factors.
10

9. The Appellate Body has made clear that Articles 3.1, 3.2, 3.4, and 3.5 "contemplate a
logical progression of inquiry leading to an investigating authority's ultimate injury and causation
determination".11 Thus, the analyses pursuant to each provision of Article 3 are "closely
interrelated"12, rather than independent of each other, and an investigating authority can reach a
proper injury and causation determination only if it follows the logical progression step by step.
This interrelationship finds further support in the word "consequent" in Article 3.1, which suggests
that the "impact" to be examined under Article 3.4 is something to follow as a result of, or be
logically consistent with, the volume and/or price effects analyses under Article 3.2.

b. China's Price Effects Analysis Is Inconsistent with Articles 3.1 and 3.2 of
the Anti-Dumping Agreement

10. After finding on the basis of comparison the imports and domestic prices of the HP-SSST
product as a whole that "the adjusted import prices of the subject products were higher than the
sales prices of the domestic like products"
13, MOFCOM proceeded to compare the prices of each
grade of subject imports with those of the corresponding domestic like products. This price effects
analysis, however, does not involve an objective examination and is not based on positive

4 Appellate Body Report, China – GOES, para. 127.
5 Appellate Body Report, EC – Tube or Pipe Fittings, para. 115.
6 Appellate Body Report, China – GOES, para. 136.
7 Appellate Body Report, China – GOES, para. 149.
8 Panel Report, China – X-Ray Equipment, para. 7.195 (quoting Panel Report, Thailand – H-Beams,
para. 7.249).
9 Appellate Body Report, US – Hot-Rolled Steel, para. 204. See also id., paras. 191 ff.
10 Appellate Body Report, US – Hot-Rolled Steel, para. 226.
11 Appellate Body Report, China – GOES, para. 128 (emphasis added).
12 Appellate Body Report, EC – Tube or Pipe Fittings, para. 115.
13 Final Determination, Exhibit JPN-2, p. 53 (emphasis added).
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evidence, and is therefore inconsistent with Arti cles 3.1 and 3.2 of the Anti-Dumping Agreement.
In particular: (i) MOFCOM's analysis of the price effects of imported Product C is analytically and
factually flawed; and (ii) MOFCOM improperly extended its conclusions concerning the alleged price
undercutting effects of Products B and C to the domestic HP-SSST industry as a whole.
14

i. MOFCOM's analysis of the price effects of imported Product C is
analytically and factually flawed

11. MOFCOM's finding that in 2010, "the large scale sales of [imports of Product C] at a low
price had relatively noticeable price undercutting impact on the domestic sales price of the
domestic like products"
15 is flawed, and falls short of an objective examination based on positive
evidence, in at least two respects.

12. First, MOFCOM purportedly "t[ook] into consideration the quantitative difference between
the import volume of the subject products and the sales volume of domestic like products", but
MOFCOM does not explain the criteria and economic methodology used to accommodate those
"quantitative differences".
16

13. Second, MOFCOM grounded its price undercutting conclusion for Product C on the fact that,
in 2009, the price of imported Product C was ov er 10% higher than the sales price of the
corresponding like domestic products, but, in 2010, the import price of the subject product "had a
big decrease to a level of over 50% of the domestic sales price of the domestic like products". 17
However, according to MOFCOM's own analysis, in 2010 the price of the domestic Product C
increased by 112.80% from 2009, while the pric e of the imports of the same grade decreased by
36.32%.
18 T h e f a c t t h a t t h e s a l e s p r i c e s o f d o m e s t i c P r o d u c t C m o r e t h a n d o u b l e d f r o m 2 0 0 9
to 2010 explains why, over the course of that year, the price of imported products became
relatively low by comparison. In other words, the dynamic relationship of the prices of both
imported and domestic products shows that imports of Product C did not have a significant
undercutting effect on the prices of the corresponding like domestic products. Moreover,
substantial record evidence suggests that the domestic sales of Product C were not in competition
with the imports of the same grade, and without any reasonable ground for concluding that these
products were in fact in competition with one another, it was erroneous for MOFCOM to conclude
that imports of Product C had any price undercutting effects on the corresponding like domestic
products.

ii. MOFCOM improperly extended its conclusions concerning the price
undercutting of Products B and C to the domestic HP-SSST industry
as a whole

14. Although MOFCOM determined that "the adjust ed import prices of the subject products
were higher than the sales prices of the domestic like products"
19 and that imports of Product A did
not have a significant price undercutting effect on domestic like products of the same grade,
MOFCOM concluded that "in general, the products under investigation … had a relatively noticeable
price undercutting effect on the price of domestic like products". 20 In effect, MOFCOM extended its
price undercutting findings with respect to Products B and C (the latter of which Japan has
demonstrated was itself flawed) to the whole domestic industry. MOFCOM's conclusions are
unwarranted and strikingly selective.

15. Guidance as to the prices to be compared in the price undercutting analysis under
Article 3.2 can be derived from WTO case law on Article 3.4 because the analyses under these
provisions are "analytically akin to" one another.
21 In this context, the Appellate Body has said that
"where investigating authorities undertake an examination of one part of a domestic industry, they
should, in principle, examine, in like manner, all of the other parts that make up the industry, as

14 Japan understands that MOFCOM did not find any price effects for Product A, and did not find price
depression or price suppression for any products. The ensuing discussion rests on this understanding.
15 Final Determination, Exhibit JPN-2, p. 54.
16 Final Determination, Exhibit JPN-2, pp. 53-54.
17 Final Determination, Exhibit JPN-2, p. 54.
18 See Japan's First Written Submission, Table 7 at para. 134.
19 Final Determination, Exhibit JPN-2, p. 53 (emphasis added).
20 Final Determination, Exhibit JPN-2, p. 54 (emphasis added).
21 Appellate Body Report, China – GOES, para. 149.
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well as examine the industry as a whole ", or they should "provide a satisfactory explanation as to
why it is not necessary to examine directly or specifically the other parts of the domestic
industry".
22

16. Accordingly, MOFCOM's ultimate price undercutti ng conclusion with respect to the product
as a whole required proper grounding in its grade-by -grade analysis to be consistent with
Articles 3.1 and 3.2. However, MOFCOM found an alleged price undercutting effect for only
Products B and C, which represented a minority sector of domestic production (i.e., 20.1% during
the POI), while it found no price undercutting effect for Product A, which represented the vast
majority of domestic production (i.e., almost 80% during the POI). 23 Further, MOFCOM did not
consider whether imports of each grade had a price effect on like domestic products of other
grades, and even if it had, the record eviden ce shows that the different grades of HP-SSST
products did not in fact compete with one another in the Chinese market, and therefore could not
have had cross-grade price effects. Thus, MOFCOM did not find "significant" (i.e., "important,
notable or consequential"
24) price undercutting within the meaning of Article 3.2, and did not
satisfy the good faith and objectivity requirements set out, as an overarching obligation, in
Article 3.1.

c. China's Impact Analysis Is Inconsistent with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement

17. MOFCOM's analysis of the impact of subject imports on the domestic industry is flawed,
and falls short of an objective examination, based on positive evidence. In particular:
(i) MOFCOM's analysis was at odds with and di d not follow from its volume and price effects
analyses; (ii) MOFCOM failed to evaluate the role of the magnitude of the margin of dumping;
(iii) MOFCOM improperly disregarded the relevant economic factors and indices showing that the
domestic industry was not injured; and (iv) MOFCOM failed to examine whether subject imports
provided explanatory force for the state of the domestic industry.

i. MOFCOM's impact analysis was at odds with and did not follow
from its volume and price effects analyses under Article 3.2

18. Prior to undertaking its impact analysis, MOFCOM found no significant increase in volume,
and allegedly found price undercutting effects with respect to only Products B and C. Yet, it
conducted an impact analysis by considering th e impact of subject imports as a whole on the
domestic industry as a whole, presumably on the basis of its flawed and partial price effects
analysis for the industry as a whole.
25 However, the Appellate Body has indicated that the volume,
price effects, and impact inquiries are " closely interrelated";26 the various paragraphs of Article 3
"contemplate a logical progression of inquiry ";27 and Article 3.4 requires "an examination of the
explanatory force of subject imports for the state of the domestic industry".28 Moreover, the text of
Article 3.1 indicates that the impact of subject im ports is contemplated to be the "consequen[ce]"
of the volume or price effects of the same imports. By conducting an impact analysis that was at
odds with and did not follow from its volume and price effects analyses and conclusions, MOFCOM
therefore failed to conduct an objective examination based on positive evidence in accordance with
Articles 3.1 and 3.4.

ii. MOFCOM failed to examine the magnitude of the margin of
dumping

19. At no point in its analysis did MOFCOM evaluate the significance of the margins of dumping
for the impact of subject imports on the Chinese HP-SSST industry. However, under Articles 3.1
and 3.4 the investigating authority "is required to evaluate the magnitude of the margin of

22 Appellate Body Report, US – Hot-Rolled Steel, para. 204 (emphasis added). See also id.,
paras. 191 ff.
23 See Japan's First Written Submission, Table 4 at para. 54.
24 Panel Report, US – Upland Cotton, para. 7.1325. The panel's interpretation was confirmed by the
Appellate Body. Appellate Body Report, US – Upland Cotton, para. 426.
25 See Final Determination, Exhibit JPN-2, pp. 63-64.
26 Appellate Body Report, EC – Tube or Pipe Fittings, para. 115 (emphasis added).
27 Appellate Body Report, China – GOES, para. 128 (emphasis added).
28 Appellate Body Report, China – GOES, para. 149.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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dumping and to assess its relevance and the weight to be attributed to it in the injury
assessment".29 MOFCOM therefore acted inconsistently with these provisions.

iii. MOFCOM improperly disregarded the relevant economic factors and
indices showing that the domestic industry was not injured

20. The outcomes of MOFCOM's analysis of the re levant economic factors and indices of the
domestic industry as listed in Article 3.4 were mixed
30, with many of the factors presenting general
trends favorable for the domestic industry. MOFCOM itself agreed that, at least, production
capacity, output, sales volume, market share, employment, labor productivity, and salary per head
exhibited positive trends.31 Yet, after reviewing all the relevant factors, MOFCOM simply concluded
that, "[b]ased on the above … the domestic industry is materially injured". 32 In so doing, MOFCOM
appears to have attached a high degree of importance to the other relevant factors highlighting
negative aspects of the Chinese HP-SSST industry, while disregarding the many factors suggesting
that the Chinese HP-SSST industry was not suffering injury. MOFCOM did not provide any
explanation whatsoever regarding the weight attributed to any given factor, nor of the inferences
it drew from those factors and indices that were positive for the domestic industry. MOFCOM
therefore failed to conduct an objective examin ation, based on positive evidence, within the
meaning of Articles 3.1 and 3.4 of the Anti-Dumping Agreement.
33

iv. MOFCOM failed to examine whether subject imports provided
explanatory force for the state of the domestic industry

21. Finally, in its analysis of all the relevant economic factors, MOFCOM did not engage in an
examination of whether the identified state of th e domestic industry or market phenomenon had
been the impact of subject imports; rather, it only identified the state of the domestic industry or
the market phenomenon at issue. Thus, it failed to conduct "an examination of the explanatory
force of subject imports for the state of the domestic industry", as the Appellate Body has said is
required under Article 3.4.
34

d. China's Causation Analysis Is Inconsistent with Articles 3.1 and 3.5 of the
Anti-Dumping Agreement

22. MOFCOM's causation determination is flawed and does not constitute an objective
examination of positive evidence as required by Articles 3.1 and 3.5 of the Anti-Dumping
Agreement. In particular: (i) the grounds of MOFCOM's causation determination, namely its
volume, price effects, and impact analyses, are analytically flawed and factually unsupported; and
(ii) MOFCOM failed to separate and distinguish the injurious effects of the decline in domestic
demand for HP-SSSTs and the expansion in capacity of domestic producers from the injurious
effects of subject imports.

i. MOFCOM's causation determination lacks any foundation in its
analysis of the volume, price effects, and impact of subject imports

23. The demonstration of a causal relationship between dumping and injury to the domestic
industry constitutes the last step in an investigating authority's "logical progression of inquiry"
35
leading to the final injury determination. As such, a finding of causation is dependent upon the
outcomes of the previous steps of analysis – namely, the volume and price effects of dumped
imports and their impact on the domestic industry.

24. However, in the present case: (i) MOFCOM found the volume and market share of
imported HP-SSST products did not significantly increase during the POI, and its focus on the
market share retained by imported products at the end of the POI was improper; (ii) MOFCOM's
analysis of the undercutting effect of imported HP-SSST products on prices of like domestic

29 Panel Report, China – X-Ray Equipment, para. 7.183.
30 See Japan's First Written Submission, Table 6 at para. 66.
31 Final Determination, Exhibit JPN-2, p. 63.
32 Final Determination, Exhibit JPN-2, p. 64.
33 See Panel Report, EC – Tube or Pipe Fittings, para. 7.314; Panel Report, Thailand – H-Beams,
paras. 7.225, 7.249; Panel Report, China – X-Ray Equipment, para. 7.216.
34 Appellate Body Report, China – GOES, para. 149.
35 Appellate Body Report, China – GOES, para. 128.
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products was fatally flawed; and (iii) MOFCOM's review of the relevant economic factors and
indices of the domestic industry was incomplete and skewed by its dismissal of the positive indices
and increased emphasis of the negative indices. Therefore, it follows, a fortiori, that by grounding
its causation determination on its volume, price effects, and impact analyses, which did not
support a finding of injury, MOFCOM failed to conduct an objective examination, based on positive
evidence, of the existence of a causal link be tween the subject imports and the injury itself,
inconsistently with Articles 3.1 and 3.5.

ii. MOFCOM failed to separate and distinguish the injurious effects of
other known factors from the injurious effects of subject imports

25. MOFCOM agreed that reduced apparent consumption and increased domestic production
capacity could have had negative effects on the domestic industry, but it made no attempt to
"separat[e] and distinguish[] the injurious effects" of these non-attribution factors "from the
injurious effects of the dumped imports", as th e Appellate Body has found is required under
Articles 3.1 and 3.5.
36 MOFCOM therefore erred.

26. First, despite recognizing that domestic demand for HP-SSST products declined
significantly, and acknowledging that this could ne gatively effect domestic sales prices and other
indicators,37 MOFCOM did not separate and distinguish the injurious effects of this other factor;
rather, it simply concluded that "the price undercutting effect of the imports of subject products
[was] the reason for the drop in price of domestic like products".38

27. Second, MOFCOM recognized that the POI saw a momentous expansion in the production
capacity of Chinese producers of HP-SSST prod ucts, and such capacity expansion intensified
competition and affected the domestic industry's operational metrics.
39 MOFCOM, however,
dismissed the relevance of this other factor by ob serving that "there was no case of oversupply"
based on a flawed supply-demand comparison, an d by asserting that a main reason for the
decrease in return on investment was "reduced pretax profits" rather than "greater average
investment as a result of capacity expansion".
40

2. MOFCOM's Disclosure of Essential Facts Was Insufficien t Under Article 6.9 of the
Anti-Dumping Agreement Because It Did Not Ad equately Disclose the Import Prices and
Domestic Prices Used in MOFCOM's Injury and Causation Analyses

28. Article 6.9 of the Anti-Dumping Agreement requires disclosure, "before a final
determination is made, [of] the essential facts under consideration which form the basis for the
decision whether or not to apply definitive measures". 41 Here, MOFCOM failed to disclose several
pieces of information on import and domestic prices critical to its price undercutting
determination
42, which served as the foundation for its causation determination. MOFCOM's
disclosure of certain price trend information was inadequate for this purpose.43

3. MOFCOM's Notice of Final Determination Failed to Satisfy the Requirements of
Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement With Respect to the Import
Prices and Domestic Prices Used in MOFCOM's Injury and Causation Analyses

29. Article 12.2 of the Anti-Dumping Agreement states that, in a preliminary or final
determination, an investigating authority must set out "all issues of fact and law considered
material"; and Article 12.2.2 further specifies this obligation as it applies to a final determination,
requiring that the investigating authority's final report detail "all relevant information on the
matters of fact and law and reasons which have led to the imposition of final measures". Here,
MOFCOM failed to discharge its obligations und er Articles 12.2 and 12.2.2 because it did not
provide a report stating all relevant information supporting its imposition of definitive anti-dumping

36 Appellate Body Report, US – Hot-Rolled Steel, para. 223. See also id., para. 226.
37 Final Determination, Exhibit JPN-2, pp. 68-70.
38 Final Determination, Exhibit JPN-2, p. 70.
39 Final Determination, Exhibit JPN-2, p. 74.
40 Final Determination, Exhibit JPN-2, p. 74.
41 Appellate Body Report, China – GOES, para. 240 (emphasis in original).
42 See Japan's First Written Submission, Table 5 at para. 57.
43 See Appellate Body Report, China – GOES, para. 247; Panel Report, China – X-Ray Equipment,
para. 7.409.
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duties as part of its Final Determination. Specifically, MOFCOM: (i) disclosed only price trend
information while omitting key factual information underlying its price undercutting analysis; 44 and
(ii) did not provide the reasoning behind how it purportedly accommodated important "quantitative
differences" between the products in its price undercutting analysis.
45 MOFCOM therefore breached
Articles 12.2 and 12.2.2.

B. MOFCOM's Treatment of Confidential Information Was Improper Under
Articles 6.5 and 6.5.1 of the Anti-Dumping Agreement Because MOFCOM Lacked Good
Cause and Did Not Require Sufficient Non-Confid ential Summaries or Explanations as to
Why Such Summaries Are Not Possible

30. With regard to confidential information, Article 6.5 of the Anti-Dumping Agreement
requires that "good cause" must be shown for treating information as confidential, and assuming
such good cause is shown, Article 6.5.1 requires an interested party to submit sufficient non-
confidential summaries or in "exceptional circumstances" indicate it is unable to do so with a
statement of the reasons. In the present case, MOFCOM permitted the full texts of the following
Appendices to remain confidential despite Petition ers' failure to show "good cause", and therefore
China violated Article 6.5: Appendices V and V III to the Petition; Appendix 59 to Petitioners'
Supplemental Evidence of 1 March 2012; and the Appe ndix to Petitioners' Supplemental Evidence
of 29 March 2012. Further, Petitioners did not furnish sufficient non-confidential summaries of the
following Appendices or any statements as to why such summaries were not possible, and
MOFCOM's failure to require such summaries or statements violated Article 6.5.1: Appendices V
and VIII to the Petition; Appendices 1, 7, 8, 24, 25, 26, 27, 28, 31, 32, 33, 35, 36, 37, 38, 39, 40,
41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 56, 57, 58, and 59 to Petitioners'
Supplemental Evidence of 1 March 2012; and the A ppendix to Petitioners' Supplemental Evidence
of 29 March 2012.
46

C. MOFCOM's Disclosures of E ssential Facts Were Insuffici ent Under Article 6.9 of
the Anti-Dumping Agreement Because They Di d Not Disclose the Data and Calculation
Methodologies Used to Determine the Exis tence of Dumping and the Dumping Margins
for SMI and Kobe

31. China violated Article 6.9 of the Anti-Dumping Agreement by failing to disclose the most
basic facts and analyses related to its anti-dumping determination and margin calculations for SMI
and Kobe. Specifically, MOFCOM's dumping disclosur es present only basic figures for export price
and normal value and a narrative summary of the actions purportedly taken to derive these
numbers; they present no cost data, no applicatio n of adjustments to price, and no evidence of
calculation methodology.
47 MOFCOM thus failed to present the "essential facts" in its anti-dumping
determination and margin calculations.

D. MOFCOM's Determination of the Dump ing Margin for All Other Japanese
Companies, and its Associated Disclosure of Essential Facts and Final Determination
Notice, Were Inconsistent with Article 6. 8 and Paragraph 1 of Annex II, as well as
Articles 6.9, 12.2, and 12.2.2, of the Anti-Dumping Agreement

32. MOFCOM's determination of the all others rate for Japanese HP-SSST exporters is
inconsistent with China's obligations under the Anti-Dumping Agreement. MOFCOM applied facts
available in setting the all others rate, but it failed to establish the required conditions before it
resorted to facts available. It also failed to make necessary disclosures related to its all others rate
determination.

33. First, MOFCOM violated Article 6.8 and Paragraph 1 of Annex II because it determined the
dumping margin for Japanese exporters other than SMI and Kobe (i.e., the all others rate) based

44 See Japan's First Written Submission, Table 5 at para. 57.
45 See Final Determination, Exhibit JPN-2, pp. 53-54.
46 See Petition, Exhibit JPN-3; Petitioners' Supplemental Evidence, 1 March 2012, Exhibit JPN-8;
Petitioners' Supplemental Evidence, 29 March 2012, Exhibit JPN-9.
47 See Preliminary Dumping Disclosure to SMI, Exhibit JPN-18 (containing BCI); Preliminary Dumping
Disclosure to Kobe, Exhibit JPN-19 (containing BCI); Final Dumping Disclosure to SMI, Exhibit JPN-20
(containing BCI); Final Dumping Disclosure to Kobe, Exhibit JPN-21 (containing BCI); Final Dumping Disclosure
to Japanese Embassy, Exhibit JPN-22.
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on "facts already known and best information available" 48 without notifying those other Japanese
exporters of all the information required of them and of the consequences of not submitting that
information.

34. Second, China violated Article 6.9 because MOFCOM failed to disclose the "essential facts"
related to its determination of the all others dumping rate.
49 In particular, China failed to disclose
both: (i) the facts leading to the conclusion that the use of "facts available" was warranted to
calculate the all others rate; and (ii) the particular facts that were used to determine the all others
rate itself.

35. Third, as with its Final Dumping Disclosure, MOFCOM's Final Determination also failed to
disclose both: (i) the facts leading to the conclusion that the use of "facts available" was warranted
to calculate the all others rate; and (ii) the particular facts that were used to determine the all
others rate itself. It repeated only the same statements from the Final Dumping Disclosure that it
decided "to use facts already known and best information available to establish the normal value
and export price"
50, and "base its determinations on dumping and dumping margin on facts
already known or best information available".51 Accordingly, MOFCOM failed to meet its obligations
under Articles 12.2 and 12.2.2.

E. China's Application of Provisional Measur es for a Period Exceeding Four Months
Violated Article 7.4 of the Anti-Dumping Agreement

36. China violated Article 7.4 of the Anti-D umping Agreement because MOFCOM applied
provisional anti-dumping measures from 9 May 2012 to 9 November 2012
52, a period of
six months, without any request by exporters repr esenting a significant percentage of the trade
involved to apply provisional measures for a period of six months or any examination by MOFCOM
as to whether a duty lower than the margin of dumping would be sufficient to remove injury. In
such circumstances, the maximum period allowed for provisional measures by Article 7.4 is
four months.

F. China's Anti-Dumping Measures on HP-S SST From Japan Are Inconsistent with
Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994

37. China's anti-dumping measures on HP-SSST from Japan are also inconsistent with Article 1
of the Anti-Dumping Agreement and Article VI of the GATT 1994 as a consequence of the breaches
of the Anti-Dumping Agreement described above.

III. C
ONCLUSION

38. For the foregoing reasons, Japan respectfully requests the Panel to find that China's
measures, as set out above, are inconsistent with China's obligations under the GATT 1994 and
Anti-Dumping Agreement. Japan further requests, pursuant to Article 19.1 of the DSU, that the
Panel recommend that China bring its measures into conformity with the GATT 1994 and Anti-
Dumping Agreement.

48 Final Determination, Exhibit JPN-2, p. 35.
49 See Final Dumping Disclosure to Japanese Embassy, Exhibit JPN-22.
50 Final Determination, Exhibit JPN-2, p. 35.
51 Final Determination, Exhibit JPN-2, p. 41.
52 See Preliminary Determination Notice, Exhibit JPN-6, Section II; Final Determination Notice,
Exhibit JPN-1, Sections II, III, IV.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX B-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF JAPAN
I. INTRODUCTION

1. The measures taken by the Government of the People's Republic of China ("China") –
particularly by China's investigating authority, the Ministry of Commerce of the People's Republic
of China ("MOFCOM") – in imposing anti-dumping duties on imports of high-performance stainless
steel seamless tubes ("HP-SSST") from Japan are in consistent with China's obligations under the
General Agreement on Tariffs and Trade 1994 ("GATT 1994") and the Agreement on
Implementation of Article VI of the General Ag reement on Tariffs and Trade 1994 ("Anti-Dumping
Agreement" or "AD Agreement").

II. MOFCOM'
S INJURY AND CAUSATION DETERMINATIONS ARE INCONSISTENT WITH ARTICLES 3.1,
3.2, 3.4, AND 3.5 OF THE ANTI-DUMPING AGREEMENT

A. Legal and Factual Overview Regarding Injury and Causation

2. On the legal side, Article 3.1 of the Anti-Dumping Agreement sets forth the
"three essential components" of the injury and causation analysis: "(i) the volume of subject
imports; (ii) the effect of such imports on the prices of like domestic products; and (iii) the
consequent impact of such imports on the domestic producers of the like products".
1 Subsequent
paragraphs of Article 3 set forth a detailed inquiry into the three essential components, with the
goal of each inquiry being to understand whethe r each component has been satisfied so as to
justify an ultimate finding that subject imports are causing injury to the domestic industry. These
inquiries must thus proceed in a "logical progression".
2

3. Article 3.2 provides that investigating authorities must consider "whether there has been a
significant increase in dumped imports, either in absolute terms or relative to production or
consumption in the importing Member", and "whether there has been a significant price
undercutting by the dumped imports as compared wi th the price of a like product of the importing
Member, or whether the effect of such imports is otherwise to depress prices to a significant
degree or prevent price increases, which otherwis e would have occurred, to a significant degree".
Thus, with regard to price effects, Article 3.2 sets forth three possible price effect factors that the
investigating authority must consider: price undercutting, price depression, and price suppression.
And because the final sentence of Article 3.2 provides that "[n]o one or several of these factors
can necessarily give decisive guidance", it should be evident that the consideration of one or more
of the three possible price effect factors does not necessarily lead to an affirmative price effects
determination. Finally, the price effects inquiry must be conducted with respect to the prices of the
domestic like product as a whole, given that Article 3.1 specifies that the inquiry relates to "the
effect of the dumped imports on prices in the domestic market for like products".

4. Article 3.4 provides that the investigating authority must examine "the impact of the
dumped imports on the domestic industry concerned" and must consider "all relevant economic
factors and indices having a bearing on the state of the industry". As Article 3.4 calls for an
examination of impact "on the domestic industry concerned", the impact inquiry must be
conducted with respect to the domestic industry as a whole. However, to proceed in a logical
progression, the impact analysis must proceed on the premise that the segments of the domestic
industry producing certain like products with respect to which no volume or price effects have been
found have not been impacted by the dumped imports. Article 3.4 also requires an examination of
"the explanatory force of subject imports for the state of the domestic industry"
3, for which the
magnitude of the margins of dumping and the degr ees of the volume and price effects found to
exist are highly relevant.

1 Appellate Body Report, China – GOES, para. 127.
2 Appellate Body Report, China – GOES, paras. 127-128.
3 Appellate Body Report, China – GOES, para. 149.
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5. Finally, Article 3.5 sets forth the ultimate question that the investigating authority must
answer: whether "dumped imports are, through the effects of dumping … causing injury within the
meaning of this Agreement". Under Article 3.5, pr oper volume, price effects, and impact analyses
may provisionally reveal causation. That provisional conclusion must then be confirmed through a
proper non-attribution analysis.

6. On the factual side, there are three critical sets of relevant facts. First, MOFCOM found no
increase in the volume of subject imports, bu t rather that subject import volumes declined
significantly during the period of investigation ("POI"). Second, MOFCOM did not find any effects
on the prices of domestic Product A (which accounted for 80%
4 of domestic HP-SSST production
during the POI) by imports of Product A or by im ports of Products B and C. Third, MOFCOM's 2010
price undercutting conclusion for Product C lacked factual support, because MOFCOM ignored the
facts that the price differential in 2010 arose because domestic Product C prices increased
by 112.80% while imported Product C prices decreased by 36.32% between 2009 and 2010, and
that domestic Product C gained market share. 5 More fundamentally, MOFCOM never established a
competitive relationship between imported and domestic Product C and the available facts
suggested that both products were not in competition.

B. MOFCOM's Price Effects Analysis Is Inconsistent with Articles 3.1 and 3.2

7. Under Articles 3.1 and 3.2, an investigating authority must find an actual decrease or
prevention of increase in prices in the domestic market for like products by virtue of competition
with dumped imports in order to justify imposing anti-dumping duties on subject imports. The
considerations of price undercutting, price depression, and price suppression explore all possible
ways in which dumped imports may produce a decrease or prevention of increase in domestic
prices. As for price undercutting, such a determination cannot be based solely on the existence of
a mathematical price difference, but requires the investigating authority to show that dumped
imports had the effect of placing some downward pressure on domestic prices by selling at lower
prices. But even if the undercutting inquiry reveals some downward pressure on domestic prices,
for a proper finding of "price effects", the invest igating authority must still find subject imports
gave rise to an actual decrease or prevention of increase in domestic prices, examining factors
such as the magnitude of the margins of dumping and the extent of the price differential between
the dumped imports and the domestic like products.

1. MOFCOM Erred in Its Price Unde rcutting Conclusion for Product C

8. MOFCOM's 2010 price undercutting conclusion for Product C was flawed because it was
based on comparing import prices with a trivial quantity of domestic prices, and because the 2010
price differential arose due to a 112.80% increase in domestic prices and a 36.32% decrease in
import prices relative to 2009, while domestic Product C gained market share.
6

9. The increase in domestic market share and th e increase in domestic prices between 2009
and 2010 demonstrate that imported Product C did not place any downward pressure on domestic
Product C prices in 2010 and did not cause an actual decrease or prevention of increase in
domestic Product C prices in 2010. Moreover, the triv ial quantity of domestic sales, vast difference
between import and domestic prices, and inverse price movements between the imported and
domestic products should have revealed to MOFCOM that price comparisons could not support a
price undercutting conclusion for Product C for 2010. Or, at a minimum, these facts should have
revealed that, to reach an objective price under cutting conclusion, MOFCOM had an obligation to
establish the competitive relationship between, and accordingly the price comparability of,
imported and domestic Product C in 2010 before reaching such a price undercutting conclusion.

10. China now argues that MOFCOM did find that imported and domestic Product C were in
competition with one another, and that imports of Product C at undercutting prices prevented
domestic producers from selling Product C.
7 However, MOFCOM's consideration of the competition
between imported and domestic Product C was done in the context of its "like product"

4 Japan's first written submission, para. 148.
5 Final Determination, Exhibit JPN-2, pp. 44, 52-54.
6 See Japan's first written submission, paras. 130-139; Japan's opening statement at the first meeting
of the Panel, paras. 63-73.
7 See China's response to Panel question No. 35.
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determination.8 MOFCOM did not, as the Anti-Dumping Agreement requires, separately ensure a
competitive relationship between products (and th erefore price comparability) before undertaking
price comparisons for purposes of a price undercutting determination.9

11. Further, even if it were sufficient to support its injury analysis, MOFCOM's like product
analysis contains several important shortcomings: (i) MOFCOM did not consider the unanimous
statements by the importers that subject imports and domestic like products were not
substitutable; (ii) MOFCOM's final determination contains only blanket references to the documents
China cites and does not provide any explanation as to how these documents support MOFCOM's
conclusion, and moreover, MOFCOM withheld as co nfidential the entirety of several of these
documents; and (iii) the sole piece of evidence th at China discusses in relation to the price effect
of Product C relates to competition between domestic and imported Product B
10, which is not
pertinent to the analysis of Product C.

12. Additionally, China appears to suggest that MOFCOM's conclusion from its causation
analysis that "the domestic industry was virtually unable to sell domestically as a 'result' of
dumped imports, sold at undercutting prices, holding a very high market share" supported its price
undercutting conclusion for Product C.
11 However, MOFCOM's conclusion from its causation
analysis cannot support its price effects finding, particularly in the absence of any reference in
MOFCOM's price effects analysis to that conclusion.
12 Moreover , MOFCOM's conclusion from its
causation analysis was a general conclusion about the domestic industry as a whole and not a
specific conclusion about Product C.

13. Finally, even if domestic and imported Product C were in a competitive relationship in 2010
that justified making price comparisons in that year, the facts still do not support proper price
undercutting and price effects findings in respect of Product C within the meaning of Articles 3.1
and 3.2. The increase in domestic market shar e and the vast increase in domestic prices
between 2009 and 2010 demonstrate that imported Product C did not place any downward
pressure on domestic Product C prices in 2010 and certainly did not cause any actual decrease or
prevention of increase in domestic Product C prices in 2010.

2. MOFCOM Erred in Extending Its Price Undercutting Conclusions for
Products B and C to the Domestic Like Product as a Whole

14. MOFCOM improperly extended its (flawed) price undercutting conclusions for Products B
and C to the domestic like product as a whole.
13 MOFCOM did not find any effects on the prices of
domestic Product A (which accounted for almost 80% of domestic HP-SSST production during
the POI), yet it reached a general price undercutting conclusion.

15. China now submits that MOFCOM found cross-grade price effects that justified extending
its price undercutting conclusions for Products B and C to the domestic like product as a whole
14,
because MOFCOM found that Products A, B, and C "belong to the same category of products" and
that "the price changes of the three are to a certain extent correlated with one another". 15
However, the discussion in MOFCOM's final determination that China cited, which addresses
product scope, does not contain the facts or logic that China now relies upon for its argument.
MOFCOM's consideration of price effects also does not cross-reference its earlier product scope
findings regarding price correlation.
16 Even if it did implicitly, correlation is not the same as
causation. To establish the latter, MOFCOM needed to ensure a competitive relationship between
the products, which it failed to do. Finally, even if such a competitive relationship existed,
MOFCOM never examined price differentials between any of the imported and domestic grades to
determine whether those differentials could have given rise to any price effects on domestic
Product A.

8 See China's response to Panel question No. 35, paras. 113-123.
9 See Panel Report, China – X-Ray Equipment, paras. 7.51, 7.65-7.66.
10 See China's response to Panel question Nos. 35 and 37, paras. 123 and 127.
11 See China's response to Panel question No. 35, paras. 111-112.
12 See Final Determination, Exhibit JPN-2, pp. 52-57.
13 See Japan's first written submission, paras. 140-153; Japan's opening statement at the first meeting
of the Panel, paras. 46-62.
14 See China's response to Panel question Nos. 44, 45, 46, 50.
15 Final Determination, Exhibit JPN-2, pp. 48-49.
16 See Final Determination, Exhibit JPN-2, pp. 52-57.
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C. MOFCOM's Impact Analysis Is Inconsistent with Articles 3.1 and 3.4

16. MOFCOM's impact analysis is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping
Agreement because: (i) it did not logically progress from MOFCOM's volume and price effects
analyses; (ii) MOFCOM failed to evaluate the ma gnitude of the margin of dumping; (iii) MOFCOM
did not provide a thorough and persuasive explan ation of why and how the domestic industry's
negative indicators outweighed the positive ones; and (iv) MOFCOM did not examine whether
subject imports had "explanatory force" for the state of the domestic industry.
17

17. Japan adds three points to further establish the flaws in MOFCOM's impact analysis. First,
MOFCOM found no increase in the volume of dumped imports and no proper price effects in
relation to Product A, so MOFCOM should have conducted its impact analysis on the premise that
the domestic industry segment producing Produc t A could not have been impacted by dumped
imports, which it failed to do. Second, MOFCOM di d not properly find price effects in relation to
Product C either, so it also had no basis to consider that dumped imports impacted the domestic
industry segment producing Product C. Third, MOFCOM never considered whether the extent of the
price undercutting it found to exist for Products B and C or the magnitudes of the dumping
margins for Products B and C could have had explanatory force for any of the domestic industry's
observed negative indicators.

D. MOFCOM's Causation Analysis Is Inconsistent with Articles 3.1 and 3.5

18. MOFCOM's causation analysis was flawed because it did not logically progress from its
volume, price effects, and impact analyses, and because it improperly attributed injury to subject
imports without separating and distinguishing other known factors.
18

19. Regarding causation, China submits that Article 3.5, rather than Article 3.2, requires
consideration of the relationship between the dumped imports and the domestic industry as a
whole. Japan does not agree, but notes that MOFCOM's causation analysis merely reiterated the
considerations it made pursuant to its Article 3.2 and Article 3.4 analyses
19, so China's argument
lacks factual support.

20. Regarding non-attribution, because MOFCOM's volume, price effects, and impact inquiries
did not progress logically, the outcome of MOFCOM's causation inquiry necessarily includes injury
to the domestic industry caused by other factors. Moreover, as for MOFCOM's actual non-
attribution analysis, MOFCOM conducted it with re spect to all grades of HP-SSST taken together,
without considering the possibility that other fact ors may have influenced different segments of
the market differently. In this regard, MOFCOM should have conducted distinct non-attribution
analyses with regard to Product A on the one hand, and Products B and C on the other.
Specifically, with regard to Product A, MOFCOM should have examined whether and how the
expansion of domestic production capacity caused injury to the domestic industry, given that the
subject imports had no impact on domestic producers of Product A. And with regard to Products B
and C, MOFCOM should have considered the effects of the decline in domestic demand.

E. Conclusion Regarding Injury and Causation

21. Thus, the Panel should find MOFCOM's injury and causation determinations are
inconsistent with Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement, and should make
findings with respect to each of Japan's claims without exercising judicial economy.

III. MOFCOM
 LACKED PROPER BASIS FOR ITS USE OF FACTS AVAILABLE TO DETERMINE THE ALL
OTHERS RATE, THEREBY VIOLATING ARTICLE 6.8 AND ANNEX II OF THE ANTI-DUMPING
AGREEMENT

22. Article 6.8 requires that before resorting to facts available, an investigating authority must
find that an interested party has refused access to or not provided necessary information, or has
significantly impeded the investigation. Article 6. 8 incorporates by reference Annex II, entitled

17 See Japan's first written submission, paras. 157-185; Japan's opening statement at the first meeting
of the Panel, paras. 74-83.
18 See Japan's first written submission, paras. 186-233; Japan's opening statement at the first meeting
of the Panel, paras. 84-104.
19 See Final Determination, Exhibit JPN-2, pp. 65-67.
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"Best Information Available in Terms of Paragraph 8 of Article 6". Paragraph 1 of Annex II requires
that before resorting to facts available, an investigating authority must "specify in detail the
information required from any interested party and the manner in which that information should
be structured", and "ensure that the party is aware that if information is not supplied within a
reasonable time, the authorities will be free to make determinations on the basis of the facts
available". Paragraph 7 of Annex II also provides that facts available must be used with "special
circumspection", and that a "less favourable" result may be obtained "if an interested party does
not cooperate and thus relevant information is being withheld". "[S]pecial circumspection" means
that the "the agency's discretion is not unlimited", and that "the facts to be employed are expected
to be the 'best information available'".
20 This means that, "there can be no better information
available to be used in the particular circumstances".21

23. Here, MOFCOM did not provide the notice requir ed by Paragraph 1 of Annex II through its
Initiation Notice or its anti-dumping questionnaire to justify its use of facts available to calculate
the all others rate for unknown Japanese exporters. MOFCOM's Initiation Notice requested far less
information than required to calculate a dumping margin. And Japan disagrees that MOFCOM's
alleged "publication" of the anti-dumping ques tionnaire on its website satisfied its notice
obligations
22, because China's own laws and regulations have no provision for "publish[ing]"
questionnaires in an anti-dumping investigation.23

24. Further, MOFCOM did not demonstrate the lack of cooperation by those unknown Japanese
exporters, as required by Article 6.8.

25. Finally, despite having two dumping margins comparable in quality and relevance,
MOFCOM chose to "apply the highest dumping margin found for the Japanese respondents" as the
all others rate.
24 MOFCOM's only stated that the reason for doing so was "[o]ut of consideration for
a unified approach to determine the rates for other companies". 25 MOFCOM, therefore, did not
exercise "special circumspection" in determining the all others rate.

IV. MOFCOM'
S DISCLOSURE OF ESSENTIAL FACTS AND NOTICE OF FINAL DETERMINATION DID NOT
SATISFY THE REQUIREMENTS OF ARTICLES 6.9, 12.2, AND 12.2.2 OF THE ANTI-DUMPING
AGREEMENT

A. Panels and the Appellate Body Have Provided Ample Guidance Regarding
the Requirements of Articles 6.9, 12.2, and 12.2.2

26. Article 6.9 of the Anti-Dumping Agreement re quires the disclosure of "essential facts",
meaning "those facts that are significant in the process of reaching a decision as to whether or not
to apply definitive measures".
26 Thus, China is simply wrong when it asserts that Article 6.9
requires disclosure of only "a summary of the 'essential facts'". 27 China is a lso wrong that the
"case law does not yet provide conclusive guidance" as to what Article 6.9 requires. 28 To the
contrary, the case law – including from China – GOES , China – X-Ray Equipment , China – Broiler
Products, and EC – Salmon (Norway) – clearly establishes the obligations under Article 6.9 (as well
as Articles 12.2 and 12.2.2).

27. Further, Article 12.2 states that, with respect to a final determination, an investigating
authority must provide a notice or separate report sufficiently setting out "all issues of fact and law
considered material by the investigating auth orities". And Article 12.2.2 specifies that the

20 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 289.
21 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 289 (quoting Panel Report,
Mexico – Anti-Dumping Measures on Rice, para. 7.166).
22 See China's first written submission, paras. 573, 584, 593.
23 See G/ADP/N/1/CHN/2/Suppl.3 (20 October 2004) and G/ADP/N/1/CHN/2/Suppl.1
(18 February 2003).
24 Final Dumping Disclosure to Japanese Embassy, Exhibit JPN-22, p. 19.
25 Final Dumping Disclosure to Japanese Embassy, Exhibit JPN-22, p. 19. See also Final Determination,
Exhibit JPN-2, p. 35.
26 Appellate Body Report, China – GOES, para. 240. See also Panel Report, EC – Salmon (Norway),
para. 7.796.
27 China's first written submission, para. 651 (emphasis in original) (quoting Appellate Body Report,
China – GOES, para. 249).
28 China's first written submission, para. 654.
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investigating authority's final report must detail "all relevant information on the matters of fact and
law and reasons which have led to the imposition of final measures".

28. Finally, where confidentiality is a concern, the disclosure obligations under Articles 6.9,
12.2, and 12.2.2 "should be met by disclosing non-confidential summaries".
29

B. MOFCOM Violated Article 6.9 with Respect to the Dumping Margins for SMI
and Kobe

29. MOFCOM violated Article 6.9 of the Anti-Dumping Agreement because it failed to disclose
the data and calculation methodologies used to determine the existence of dumping and the
dumping margins for Sumitomo Metal Industries, Ltd. ("SMI") and Kobe Special Tube Co., Ltd.
("Kobe"), which are properly "essential facts".
30 China submits that Japan's claims are only
"general allegations" and "not substantiated" 31, but Japan fails to see how it could further
substantiate a claim that certain "essential facts" are missing from MOFCOM's disclosure
documents.32 China also argues that MOFCOM's disclosure documents included all of the necessary
"essential facts"33, but China only reiterates the brief narrative descriptions that MOFCOM provided
in its disclosure documents, which were insufficient. Further, China asserts that the interested
parties should have been able to fully understand their own dumping margin determinations in
order to defend their interests from the brief narrative summaries that MOFCOM provided and,
presumably, each party's own data submissions to MOFCOM.
34 However, this information does not
permit each party to understand which data MOFCOM used to determine that party's dumping
margin and to comment on that determination so as to defend its interests.35

C. MOFCOM Violated Articles 6.9, 12. 2, and 12.2.2 with Respect to the
Dumping Margin for All Other Japanese Companies

30. MOFCOM violated Articles 6.9, 12.2, and 12.2.2 of the Anti-Dumping Agreement by failing
to disclose: (i) the facts leading to the conclusion that the use of "facts available" was warranted
to calculate the all others rate for unknown Japanese exporters; and (ii) the particular facts that
were used to determine the all others rate itself, including the facts underpinning the dumping
margin for Kobe that MOFCOM used as the all others rate and the facts that justified using Kobe's
dumping margin for the all others rate.
36

31. With regard to the facts leading to the use of "facts available", MOFCOM never made a
finding of non-cooperation with respect to the unknown Japanese exporters to which it applied the
all others rate, let alone disclosed the facts that may have supported such a finding, whether in its
disclosure documents or final determination.

32. With regard to the facts used to determine the all others rate, MOFCOM stated that it
equated the all others rate with the highest rate determined for an investigated respondent, which
was Kobe's rate.
37 However, MOFCOM failed to disclose all the "essential facts" used to determine
Kobe's rate, so MOFCOM also failed to disclose a ll the "essential facts" used to determine the all
others rate.

33. Additionally with regard to the facts used to determine the all others rate, an investigating
authority must use the "best information available" and "special circumspection", and may not
resort to "adverse inferences". The facts underpinning MOFCOM's determination that the highest
dumping margin for an investigated respondent was the "best information available" for
determining the all others rate are therefore "essential" or "material" facts that must be disclosed.
MOFCOM's analysis of those facts to reach the conclusion that the highest dumping margin was the
"best information available" also arguably constituted reasoning that required disclosure pursuant

29 Appellate Body Report, China – GOES, paras. 247, 259.
30 See Japan's first written submission, paras. 290-297. See also Japan's response to Panel question
No. 71.
31 China's first written submission, para. 666.
32 See Japan's first written submission, paras. 290-297.
33 China's first written submission, paras. 669-673.
34 China's first written submission, paras. 674-676.
35 See Panel Report, Guatemala – Cement II, para. 8.229.
36 See Japan's first written submission, paras. 307-319.
37 See Final Dumping Disclosure to Japanese Embassy, Exhibit JPN-22, Section III.2.
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to Article 12.2.2. 38 But MOFCOM never disclosed the facts or reasoning behind why the highest
calculated dumping margin was the "best information available" for determining the all others rate.

D. MOFCOM Violated Articles 6.9, 12.2, and 12.2.2 with Respect to the Import
Prices and Domestic Prices Used in the Injury and Causation Analyses

34. MOFCOM violated Articles 6.9, 12.2, and 12.2.2 of the Anti-Dumping Agreement by failing
to disclose several pieces of information critical to its price effects determination, which served as
the basis for MOFCOM's ultimate injury and causation determinations. China tries to justify those
failures, but those justifications are without merit. First, for those instances for which no price
comparisons were made or no price undercutting was found, China argues the missing price and
price differential information did not constitute "essential facts" that required disclosure.
39
However, the missing information was certainly "salient for a contrary outcome" 40 and "considered
[by MOFCOM in its] process of analysis and decision-making" 41, and therefore required disclosure.
Second, China argues that some of the missing price information was confidential 42, but MOFCOM
had an obligation to disclose sufficiently detailed non-confidential summaries in a coherent way to
permit interested parties to defend their interests.
43 Third, China argues that the -3% to -28%
range of underselling that MOFCOM disclosed for Product B for the entire 2008 to 2010 period was
sufficient,44 but MOFCOM should have been able to disclose a separate underselling margin for
Product B for each year. Finally, China argues that how MOFCOM accommodated important
"quantitative differences" was a methodological question that did not require disclosure
45, but
MOFCOM had an obligation to disclose the facts that constituted the "quantitative difference" and
the reasons why MOFCOM could take this into account.

V. MOFCOM
 LACKED GOOD CAUSE FOR WITHHOLDING CONFIDENTIAL INFORMATION, AND DID NOT
REQUIRE SUFFICIENT NON-CONFIDENTIAL SUMMARIES OR EXPLANATIONS AS TO WHY SUCH
SUMMARIES ARE NOT POSSIBLE, INCONSISTENT WITH ARTICLES 6.5 AND 6.5.1 OF THE ANTI-
DUMPING AGREEMENT

A. MOFCOM Violated Article 6.5 of the Anti-Dumping Agreement

35. China violated Article 6.5 of the Anti-Dum ping Agreement because Petitioners did not
demonstrate "good cause", and MOFCOM did not objectively examine Petitioners' attempted
demonstrations of "good cause", with respect to the confidential treatment of Appendices V and
VIII to the Petition, Appendix 59 to Petitioners' Supplemental Evidence of 1 March 2012, and the
Appendix to Petitioners' Supplemental Evidence of 29 March 2012.

36. China argues that an investigating authority "enjoys a considerable margin of discretion in
its examination of a request for confidential treatment and determining whether 'good cause' has
been shown, provided the outcome is not unreasonable".
46 However, notwithstanding an
investigating authority's discretion, it still "must objectively assess the 'good cause' alleged for
confidential treatment, and scrutinize the party's showing in order to determine whether the
submitting party has sufficiently substantiated its request". 47 Here, beyond the name of the third
party providing Appendix V to the Petition, MOFCOM failed to scrutinize Petitioners' confidentiality
requests to determine objectively whether Petitioners had established "good cause" for treating
the four reports at issue as entirely confidential.

37. China also asserts that "Petitioners did not only request confidential treatment out of
concern for the impact on the third parties' businesses", but "provided several other reasons" for

38 See Panel Report, China – X-Ray Equipment, para. 7.472. See also Panel Report, China – Broiler
Products, para. 7.528.
39 China's first written submission, para. 686. See also China's response to Panel question No. 75,
para. 191.
40 Appellate Body Report, China – GOES, para. 240.
41 Panel Report, EC – Salmon (Norway), para. 7.796.
42 China's fist written submission, para. 686.
43 Appellate Body Report, China – GOES, paras. 240, 247, 259.
44 China's first written submission, paras. 685-686. See also China's response to Panel question
Nos. 72, 75, 76, 77.
45 China's first written submission, para. 693.
46 China's first written submission, para. 725.
47 Appellate Body Report, EC – Fasteners (China), para. 539.
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doing so.48 However, China cited no underlying document s submitted by Petitioners to support its
assertions; none of China's points serve as evidence of efforts by MOFCOM during the investigation
to scrutinize Petitioners' confidentiality requests; some of the alleged other reasons simply
reiterate concerns regarding the third parties' businesses; and the facts that the reports were
obtained by Petitioners for remuneration or that confidentiality was requested by third parties
cannot automatically constitute "good cause" under Article 6.5.

38. Finally, China argues that the four reports at issue were also "by nature" confidential.
49 But
even if true, that would not absolve MOFCOM of its obligation to scrutinize Petitioners'
confidentiality requests and to objectively determin e that "good cause" exists for treating the full
texts of these four reports as confidential before doing so.

B. MOFCOM Violated Article 6.5.1 of the Anti-Dumping Agreement

39. China violated Article 6.5.1 of the Anti-Dumping Agreement because Petitioners did not
furnish sufficient non-confidential summaries or any statements as to why such summaries were
not possible, and MOFCOM failed to require such summaries or statements, with respect to several
documents submitted by Petitioners.
50 China argues that Petitioners' non-confidential summaries
of Appendices V and VIII to the Petition, Appendix 59 to Petitioners' Supplemental Evidence of
1 March 2012, and the Appendix to Petitioners' Supplemental Evidence of 29 March 2012 were
sufficient.51 China further argues that Petitioners provided statements as to why summarization is
not possible with respect to Appendices 1, 7, 8, 24, 25, 26, 27, 28, 31, 32, 33, 35, 36, 37, 38, 39,
40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 56, 57, and 58 to Petitioners' Supplemental
Evidence of 1 March 2012
52, or, alternatively, that Petitioners provided sufficient non-confidential
summaries of these Appendices.53

40. With respect to the first group of documents, China's contention that the non-confidential
summaries of these reports were sufficient is erroneous, as Japan has separately argued.
54 With
respect to the second group of documents, even if the short statements that Petitioners provided
justify confidential treatment, they are not statements as to why summarization is not possible,
and they are not sufficient non-confidential summaries because they do not summarize the
"substantive content" of those appendices.
55

VI. C
HINA APPLIED PROVISIONAL MEASURES FOR A PERIOD EXCEEDING FOUR MONTHS, THEREBY
VIOLATING ARTICLE 7.4 OF THE ANTI-DUMPING AGREEMENT

41. China has not attempted to rebut Japan's claim that China violated Article 7.4 of the Anti-
Dumping Agreement by applying provisional anti-dumping measures for a period of six months, so
Japan considers that there is no dispute in this regard.

VII. C
ONCLUSION

42. For the foregoing reasons and those set forth in Japan's previous written and oral
submissions in this dispute, Japan maintains its request that the Panel find China's measures at
issue to be inconsistent with China's obligations under the GATT 1994 and Anti-Dumping
Agreement, and recommend that China bring its measures into conformity with those obligations
pursuant to Article 19.1 of the Understanding on Rules and Procedures Governing the Settlement
of Disputes.

48 China's first written submission, para. 728.
49 China's first written submission, para. 732.
50 See Japan's first written submission, paras. 265-289.
51 China's first written submission, paras. 742-746, 757-763.
52 China's first written submission, paras. 747, 764-767.
53 See China's first written submission, note 791.
54 See Japan's responses to Panel question Nos. 68 and 69.
55 Panel Report, China – X-Ray Equipment, para. 7.342. (emphasis added)
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ANNEX B-3
EXECUTIVE SUMMARY OF THE STATEMENT OF JAPAN
AT THE FIRST PANEL MEETING
I. INTRODUCTION

1. This dispute concerns the measures taken by the Ministry of Commerce of the People's
Republic of China ("MOFCOM") imposing anti-dum ping duties on imports of high-performance
stainless steel seamless tubes ("HP-SSST") from Japan. These measures are inconsistent with
China's obligations under the General Agreement on Tariffs and Trade 1994 ("GATT 1994") and the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
("Anti-Dumping Agreement").

II. MOFCOM'
S INJURY AND CAUSATION DETERMINATIONS ARE INCONSISTENT WITH CHINA'S ANTI-
DUMPING AGREEMENT OBLIGATIONS

2. Despite MOFCOM's limited disclosures, it is evident that MOFCOM's injury and causation
determinations violate the Anti-Dumping Agreement and GATT 1994.

A. Description of the Subject Imports and Domestic Like Product

3. There are three grades of subject products in increasing order of price and quality:
Products A, B, and C. MOFCOM found the domest ic like product to consist of all three grades
1, but
that does not mean that differences in price and quality among the grades are not relevant in the
injury and causation analysis.
2 Importantly, during the period of investigation ("POI"), virtually
100% of subject imports were of Products B and C – the ultra-supercritical products – while only
about 20% of domestic HP-SSST products consiste d of Products B and C. Thus, the overwhelming
majority (about 80%) of the domestic like products consisted of Product A – the supercritical
product.3 In short, subject imports supplied a different segment of the market than the bulk of the
domestic like products, so did not compete with the bulk of those products.

B. Legal Requirements for an Affirmative Injury and Causation Determination

4. Pursuant to Article 3 of the Anti-Dumping Agreement and the Appellate Body's guidance,
an affirmative injury and causation determination requires: (i) a significant increase in the volume
of dumped imports and/or an effect of dumped imports on prices in the domestic market for like
products; (ii) a consequent impact of these dumped imports on domestic producers of such
products; and (iii) a finding that injury to th e domestic industry was caused by the dumped
imports, and not by other known factors. In order for the inquiry to progress logically and
ultimately lead to the imposition of antidumping duties on the entirety of dumped imports subject
to investigation, each subsequent step of the analysis must logically connect with the preceding
steps of the analysis.
4

C. Summary of MOFCOM's Injury and Causation Determinations

5. With regard to volume, MOFCOM found subject import volumes declined significantly
during the POI on all measures. With regard to price effects, MOFCOM found only price
undercutting with respect to Products B and C, and on that basis concluded that "in general, …
[t]he imports of the subject products had a relatively noticeable price undercutting effect on the
price of domestic like products". With regard to impact, MOFCOM conducted its analysis with
respect to the domestic industry as a whole, and although it found a mix of positive and negative
indicators, it concluded that the domestic industry was materially injured. Finally, MOFCOM
reached an affirmative causation determination on the basis of: (i) the high market share of
imports; (ii) the price undercutting conclusions with respect to Products B and C; and (iii) the

1 Final Determination, Exhibit JPN-2, pp. 23-28.
2 See Panel Report, China – X-Ray Equipment, paras. 7.50-7.51, 7.65.
4 See Appellate Body Report, China – GOES, para. 128.
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impact conclusion with respect to the domestic industry as a whole. MOFCOM also concluded that
other known factors did not break the causal link between dumped imports and injury to the
domestic industry.
5

D. Inconsistency of MOFCOM's Injury and Causation Determinations with the
Anti-Dumping Agreement

1. Summary of Japan's Arguments

6. Japan's particular arguments are set forth in its first written submission.
6

2. Response to China's Arguments

7. Next, Japan explains why China has failed to rebut Japan's prima facie case that
MOFCOM's injury and causation determinations are inconsistent with Articles 3.1, 3.2, 3.4, and 3.5
of the Anti-Dumping Agreement. At the outset, Ja pan notes that China misinterprets the "positive
evidence" obligation of Article 3.1 as being an obli gation that relates to only "the quality of the
evidence".
7 To the contrary, this obligation relates to not only the quality of the evidence, but also
the existence and pertinence of that evidence. Here, in several instances, MOFCOM failed to
support its determinations with any evidence or with pertinent evidence, let alone quality
evidence, for which reason the Panel should find MOFCOM's injury and causation determinations to
be inconsistent with Article 3.1.

a. MOFCOM's Price Effects Analysis Is Inconsistent with Articles 3.1
and 3.2 of the Anti-Dumping Agreement

8. Regarding Japan's argument that MOFCOM improperly reached the conclusion that subject
imports had a price undercutting effect on the domestic like product as a whole, first, in China's
view, the comparison must focus on the prices of the dumped imports, meaning the relevant
consideration is MOFCOM's apparent finding that 70% or even 100% of dumped imports were sold
at undercutting prices.
8 However, the Anti-Dumping Agreement and the Appellate Body make clear
that the focus of the Article 3.2 price effects inquir y is not only on the prices of subject imports,
but also on the prices of domestic like products, as well as the relationship between the two. 9
Thus, to determine whether price undercutting existed, and to justify the subsequent conclusions
that MOFCOM reached regarding injury and caus ation to the domestic industry as a whole,
MOFCOM had an obligation to consider the extent to which the subject imports it found to be sold
at lower prices may have had an effect on prices in the domestic market for like products. Since
MOFCOM found no price undercutting for Product A, which accounted for about 80% of domestic
production, and which did not compete with Products B and C, MOFCOM had no basis to find price
effects pursuant to Articles 3.1 and 3.2 with respect to the domestic market for like products.

9. Second, China justifies basing its price effects conclusion on finding price undercutting for
only about 20% of the domestic like product by invoking the fact that the second sentence of
Article 3.2 uses the term "a like product", instead of "the like product". 10 However, Article 3.1,
which specifies the "essential components" 11 of the analysis, specifies the requirement for an
investigating authority to determine "the effect of the dumped imports on prices in the domestic
market for like products"12, meaning the like product as a whole.

10. Third, China suggests that MOFCOM found imports of Products B and C caused effects on
domestic prices of Product A based on the fact that Products A, B and C "belong to the same
category of products" (i.e., are the domestic "like product"), as well as Petitioners' statement

5 See Final Determination, Exhibit JPN-2, pp. 43-77.
6 See Japan's first written submission, paras. 122-234. Japan clarifies that, notwithstanding the title of
Section V.A.1.b.ii of its first written submission, Japan's argument in that section is in fact that MOFCOM
improperly extended the price effects conclusion it made for only a portion of the domestic like product, as
defined by MOFCOM, to the domestic like product as a whole.
7 China's first written submission, paras. 234-235.
8 China's first written submission, paras. 338-341.
9 See Appellate Body Report, China – GOES, paras. 127-128, 138, 147, 154.
10 China's first written submission, paras. 347-351.
11 Appellate Body Report, China – GOES, para. 127.
12 Emphasis added.
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regarding "correlation" between the prices of Products A, B and C. 13 However, to find cross-grade
price effects merely based on a "like product" de termination and Petitioners' unverified statement
is not a finding based on "positive ev idence" and an "objective examination" 14, especially given
record evidence showing the lack of competition between Product A and Products B and C. And
even if a correlation were proved, that does no t establish that price movements of one product
caused price movements of the other products.

11. Regarding Japan's argument that MOFCOM's price undercutting conclusion for Product C
was analytically and factually flawed, first, China argues that a price undercutting finding may be
based solely on the factual difference between import and domestic prices, without considering the
"effect" of imports.
15 This is incorrect. Under a proper reading of Articles 3.1 and 3.2, consideration
of the "effect" of imports (i.e., the "explanatory force" of imports) 16 is relevant for not only price
suppression and depression, but also undercutting. Thus, an inquiry into "price undercutting by the
dumped imports" requires assessing whether dumped imports are having the effect of taking the
place of domestic like products by selling at lower prices or of rendering domestic prices less
firm
17, and not just of whether dumped imports are mathematically priced lower. Here, given the
facts, including the opposite trends in price and volume of imported and domestic Product C 18,
MOFCOM's price undercutting conclusion for Product C is clearly not objective or based on positive
evidence.

12. Second, China argues that the "similar quantitative difference" of greater than 99% import
market share for Product C in 2009 and 2010 justifies price comparisons, and ultimately a price
undercutting conclusion, for Product C for those two years. 19 Japan fails to see how, without a
meaningful quantity of both import and domestic sales, any objective price undercutting conclusion
could be reached with respect to a particular product.

b. MOFCOM's Impact Analysis Is Inconsistent with Articles 3.1 and 3.4
of the Anti-Dumping Agreement

13. Regarding Japan's argument that MOFCOM's impact analysis did not logically progress
from its volume and price effects analyses, China submits Article 3.4 requires an impact analysis
with respect to the domestic industry as a whole.
20 However, the successive provisions of Article 3
"contemplate a logical progression of inquiry" 21, and Article 3.4 is concerned with "the relationship
between subject imports and the state of the domestic industry".22 Here, MOFCOM was required to
ensure a logical progression from its volume and price effects findings to its impact and causation
analyses, which it failed to do.

14. Regarding Japan's argument that MOFCOM failed to evaluate the magnitude of the margin
of dumping, China argues that Article 3.4 does not require such an evaluation
23, but China is
wrong.24 Moreover, MOFCOM evaluated the magnitude of the margin of dumping only in deciding if
cumulation was appropriate, not in its injury assessment25, and so erred.

15. Regarding Japan's argument that MOFCOM did not provide a thorough and persuasive
explanation of why and how the domestic industry's negative indicators outweighed the positive

13 China's first written submission, paras. 365-367.
14 See Panel Report, China – X-Ray Equipment, para. 7.65.
15 China's first written submission, paras. 285-299.
16 See, e.g., Appellate Body Report, China – GOES, paras. 138, 149.
17 See The Oxford English Dictionary, OED Online, Oxford University Press, accessed 30 January 2014,
http://www.oed.com/view/Entry/211547 (defining "undercut" as "[t]o supplant … by selling at lower prices" or
"[t]o render unstable; to render less firm, to undermine").
18 Notably, in 2009, imported Product C prices were above domestic Product C prices by 10%, and
imported Product C prices ended up being below domestic Product C prices in 2010 by about 50% because
domestic prices increased by 112.80% while import prices decreased by 36.32%. See Japan's first written
submission, paras. 133-135.
19 China's first written submission, paras. 267-281.
20 China's first written submission, paras. 390-391, 393-400.
21 Appellate Body Report, China – GOES, para. 128.
22 Appellate Body Report, China – GOES, para. 149.
23 China's first written submission, para. 424.
24 See Panel Report, China – X-Ray Equipment, para. 7.183.
25 See China's first written submission, para. 426 (citing Final Determination, Exhibit JPN-2, pp. 41-42).
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ones, China wrongly asserts that it undertook the requisite evaluation. 26 Rather, MOFCOM simply
restated its factual conclusions regarding each factor, and juxtaposed those factual conclusions
using a variety of transitional terms.
27

16. Regarding Japan's argument that MOFCOM di d not examine whether subject imports had
explanatory force for the state of the domestic industry, very little 28 is needed to establish that
MOFCOM simply failed to undertake this requisite inquiry.29

c. MOFCOM's Causation Analysis Is Inconsistent with Articles 3.1 and
3.5 of the Anti-Dumping Agreement

17. Regarding Japan's argument that MOFCOM's causation analysis did not logically progress
from its volume, price effects, and impact analyses, China argues it was permitted to consider the
subject imports' high market share in its causation analysis.
30 However, Article 3.5 requires
causation to be based on the particular effects of dumping specified in Articles 3.2 and 3.4, which
with respect to volume require "a significant increase in dumped imports". Articles 3.5 also
requires "an examination of all relevant evidence", which must include the sharp decline in import
volumes found by MOFCOM. As for the link between MOFCOM's price effects and impact
conclusions and its causation determination, the flaws in those conclusions already discussed also
undermine MOFCOM's causation determination.
31

18. Regarding Japan's argument that MOFCOM improperly attributed injury to subject imports,
and not to other known factors, MOFCOM di d not properly "separate and distinguish": 32 (i) the
decline in domestic demand; and (ii) the expansio n of domestic production capacity. With respect
to Products B and C, there is no contradiction in Japan's argument, 33 because it is undeniable that
domestic demand for these products decreased significantly during the POI, which caused
significant decreases in import volume and domestic sales volume, as well as prices.
34 Thus,
whatever injury the approximately 20% of the do mestic industry producing Products B and C may
have been suffering was evidently the result of a significant decrease in domestic demand. As for
Product A, there were only trivial imports of Product A during the POI
35, and MOFCOM never found
volume or price effects on the domestic industry with respect to Product A. Thus, MOFCOM should
have presupposed that injury to the 80% of the domestic industry producing Product A should be
attributed to factors other than dumped imports. Here, that other factor was evidently the known
expansion of domestic production capacity. China has presented no arguments that dismiss the
role of capacity expansion as a non-attribution factor.
36

III. MOFCOM
 VIOLATED SEVERAL PROCEDURAL OBLIGATIONS OF THE ANTI-DUMPING AGREEMENT

19. China violated its procedural obligations with respect to: (i) the disclosure of essential
facts; (ii) the notice provided with MOFCOM's final determination; (iii) the determination of the all
others rate; (iv) the treatment of confidential in formation; and (v) the application of provisional
measures. China's arguments in its FWS cannot overturn this conclusion.

IV. T
RANSLATION ISSUES

20. With regard to translation issues, none of China's objections has any impact on Japan's
claims and arguments. Japan's views on China's alternative translations are expressed in
Exhibit JPN-29 submitted to the Panel on February 18.

26 China's first written submission, paras. 447-453.
27 See Final Determination, Exhibit JPN-2, p. 63.
28 See China's first written submission, para. 460.
29 See Appellate Body Report, China – GOES, para. 149.
30 China's first written submission, para. 516.
31 See Panel Report, China – X-Ray Equipment, para. 7.239.
32 Appellate Body Report, US – Hot-Rolled Steel, para. 226.
33 See China's first written submission, para. 550.
34 See Japan's first written submission, para. 54, Table 4, and para. 57, Table 5.
35 See Japan's first written submission, para. 54, Table 4.
36 See China's first written submission, paras. 557-561.
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V. CONCLUSION

21. Japan respectfully requests the Panel to find that China's measures are inconsistent with
the GATT 1994 and Anti-Dumping Agreement. Moreov er, Japan respectfully requests the Panel to
make findings with respect to each of Japan's claims under Articles 3.1, 3.2, 3.4, and 3.5 of the
Anti-Dumping Agreement, without exercising judicial economy.
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ANNEX B-4
EXECUTIVE SUMMARY OF THE STATEMENTS OF JAPAN
AT THE SECOND PANEL MEETING
I. INTRODUCTION

1. Japan has already established why the measures by the Ministry of Commerce of the
People's Republic of China ("MOFCOM") imposing anti-dumping duties on imports of high-
performance stainless steel seamless tubes ("HP-SSST") from Japan are inconsistent with China's
obligations under the General Agreement on Tariffs and Trade 1994 ("GATT 1994") and the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
("Anti-Dumping Agreement"). In the oral statement we review the principal issues at stake in this
dispute, and address the few new points by China that merit response.

II. MOFCOM'
S INJURY AND CAUSATION DETERMINATIONS ARE INCONSISTENT WITH CHINA'S ANTI-
DUMPING AGREEMENT OBLIGATIONS

A. Overview of Key Facts Related to Injury and Causation

2. There are three sets of critical facts pertaining to injury and causation. 1 First, MOFCOM
found no increase in the volume of subject imports, but rather a significant decreasing trend
during the period of investigation ("POI"). Seco nd, MOFCOM found no pric e effects on Product A,
which accounted for almost 80% of domestic HP- SSST production during the POI, yet reached a
general price effects conclusion for the domestic like product as a whole. Third, MOFCOM found
price undercutting for Product C in 2010, despite several facts indicating that there was no
competitive relationship between imported and domestic Product C that could justify making price
comparisons, and thus that imports of Product C could not actually be having an effect on prices of
domestic Product C.

B. MOFCOM's Price Effects Analysis Is In consistent with Articles 3.1 and 3.2
of the Anti-Dumping Agreement

1. Legal Requirements for a Price Effects Finding

3. As for the legal requirements for price effects
2, to begin, "price undercutting" cannot be
found based on a mathematical price difference alone; rather, it requires a showing that dumped
imports had an effect of placing downward pressure on domestic prices by selling at lower prices.
A competitive relationship between the dumped imports and domestic like products whose prices
are being compared is critical for finding "price undercutting".

4. That said, Articles 3.1 and 3.2 require an investigating authority to determine whether
price effects exist. Under Article 3.2, price undercutting, price depression, and price suppression
are three factors to be considered, but "[n]o one or several of these factors can necessarily give
decisive guidance". As such, a "price undercutti ng" finding may provide guidance for determining
whether price effects exist, but it is not sufficient. The United States concurs.
3 Thus, even if "price
undercutting" is found, price effects cannot be found unless dumped imports gave rise to an actual
decrease or prevention of increase in prices in th e domestic market for like products. This requires
an investigating authority to find both a price differential and degree of competition between the
dumped imports and domestic like products, and also consider other relevant factors.

5. Finally, Articles 3.1 and 3.2 require an investigating authority to determine "the effect of
the dumped imports on prices in the domestic market for like products".
4 This is plainly a reference
to the entire domestic market, meaning that the price effects to be found at this stage of the
inquiry must be with respect to the domestic like product as a whole.

1 See Japan's second written submission, paras. 12-16.
2 See Japan's second written submission, paras. 17-28.
3 United States' response to Panel question No. 7, paras. 19-20.
4 Emphasis added.
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2. MOFCOM Improperly Found Price Effects for Product C

6. On MOFCOM's price effects finding for Product C, the record evidence does not support a
price undercutting or price effects conclusion for Product C; rather, it indicates that there was no
competitive relationship between imported and domestic Product C.
5

7. China argues that because Japan has not challenged MOFCOM's "like" product finding
under Article 2.6 of the Anti-Dumping Agreement, it is precluded from raising a lack of competitive
relationship between imported and domestic Product C under Articles 3.1 and 3.2.
6 However,
China ignores China – X-Ray Equipment , where the panel distinguished between the
competitiveness considerations under Article 2.6 and Article 3.2. 7 Importantly, "like" products – or
even sub-groupings of "like" products – do not always compete with one another in the actual
market, so a complainant may raise competitive relationships and price comparability for a price
undercutting analysis under Article 3.2 without ch allenging likeness under Article 2.6. Here, for
Product C, the trivial quantity of domestic sales, vast difference between import and domestic
prices, inverse price movements between imported and domestic products, and unanimous
statements of domestic importers as to a lack of substitutability between imported and domestic
products should have revealed that domestic and imported Product C were not in fact in a
competitive relationship, and therefore their prices were not in fact comparable, for purposes of
finding price undercutting for Product C.

8. China also argues that it found a competitive relationship between imported and domestic
Product C sufficient to support its price undercutting determination for Product C.
8 As Japan has
explained: (i) MOFCOM's consideration of the comp etitive relationship was in the context of its
"like product" determination, and therefore inapposite; (ii) MOFCOM never considered the
unanimous statements by importers that subject imports and domestic like products were not
substitutable; (iii) MOFCOM never explained how any of the documents China references actually
support its conclusion, and withheld several of these documents as entirely confidential; and (iv)
the particular evidence and conclusions that China references are not specific to Product C.
9 China
now quotes one importer as stating that it did not buy domestic products in 2010 because "the
price of imports was more competitive"
10, but this importer clearly intended to state that imported
and domestic products were not commercially substitutable in the actual market. 11 Without some
evidence of the actual degree of competition be tween imported and domestic Product C, MOFCOM
could not have objectively found that the price differential it observed between imported and
domestic Product C in 2010 could have actually had effects on prices of domestic Product C.

3. MOFCOM Improperly Extended Its Price Effects Conclusions for
Products B and C to the Domestic Like Product as a Whole

9. MOFCOM improperly extended the price effects conclusions it reached for Products B and C
to the domestic like product as a whole.
12 China attempts to justify MOFCOM's conclusion by
reference to: (i) MOFCOM's apparent finding of a price correlation between the different HP-SSST
grades; and (ii) alleged evidence of the substi tutability of Product A by Products B and C. 13 Japan
finds it difficult to understand how higher priced imports of Products B and C could have price
undercutting effects on lower priced domestic Product A.

10. On China's first point, as explained
14, MOFCOM's brief analysis came in its scope
determination, and moreover, correlation itself does not establish that lower prices of imported
Products B and C pushed down prices of domestic Product A. As for Petitioners' assertion that a

5 See Japan's first written submission, paras. 130-139; Japan's opening statement at the first meeting
of the Panel, paras. 63-73; Japan's second written submission, paras. 30-37.
6 See China's second written submission, paras. 97-104.
7 See Panel Report, China – X-Ray Equipment, paras. 7.51, 7.65-7.67.
8 See China's second written submission, paras. 105-115.
9 See Japan's second written submission, paras. 33-37.
10 China's second written submission, para. 114 (quoting Babcock & Wilcox Questionnaire Response,
Exhibit JPN-15, p. 3).
11 Babcock & Wilcox Questionnaire Response, Exhibit JPN-15, questions 19, 22.
12 See Japan's first written submission, paras. 140-153; Japan's opening statement at the first meeting
of the Panel, paras. 46-62; Japan's second written submission, paras. 38-46.
13 See China's second written submission, paras. 138-156.
14 See Japan's second written submission, paras. 39-42.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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decrease in Product B and C prices "will certainly drive down" Product A prices 15, this assertion
makes little sense because Product A can perform reliably in supercritical boilers but not
ultrasupercritical boilers, while Products B and C are essential for ultrasupercritical boilers
16, so
there is a technical dichotomy between these products.

11. On China's second point of substitutability, MOFCOM never addressed this issue in its price
effects analysis, and even if it found substitutability, it never examined the degree of
substitutability and the extent of the price differential between Product A and Products B and C in
its determination. China's reference to evidence that Products B and C could substitute for
Product A
17 is misleading, because it plainly served to establish that lower-grade Product A could
not physically substitute for higher-grade Products B and C in ultrasupercritical boilers; it did not
establish actual commercial substitutability.

12. Japan emphasized that such an argument is rather an ex post rationalization.
18 China's
position on the requirements under Article 3.2 natu rally suggests that MOFCOM considers that it is
not obligated to find either a volume effect or a price effect of the dumped imports on domestically
produced Product A. Thus, it is doubtful that MOFCOM did engage in the inquiry of the effect of the
dumped imports on domestically produced Product A while MOFCOM considered it non-obligatory.
We are aware that China submits that MOFCOM can rely on its finding in the scope analysis later in
its price effect analysis.
19 Japan agrees an investigating authority can rely on its finding in a prior
part of its determination. It is obvious, however, that such a reliance on a prior finding should
have been explicitly mentioned in the relevant part of the Final Determination, in light of the
requirement for an objective examination based on positive evidence under the Anti-Dumping
Agreement. China's ex post rationalization cannot cure deficiencies in MOFCOM's original Final
Determination.

C. MOFCOM's Impact Analysis Is Inconsistent with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement

13. MOFCOM's impact analysis violated Articles 3.1 and 3.4 of the Anti-Dumping Agreement
because: (i) it did not logically progress from MOFCOM's volume and price effects analyses; (ii)
M O F C O M f a i l e d t o e v a l u a t e t h e m a g n i t u d e o f t h e m a r g i n o f d u m p i n g ; ( i i i ) M O F C O M d i d n o t
adequately explain why and how the domestic in dustry's negative indicators outweighed the
positive ones; and (iv) MOFCOM did not examine whether subject imports had "explanatory force"
for the state of the domestic industry.
20 Japan already rebutted much of what China argues on this
topic.21 China's view that Article 3.4 does not require a separate evaluation of "factors affecting
domestic prices" and "the magnitude of the margin of dumping" 22 is not consistent with a Vienna
Convention interpretation of Article 3.4, because it fails to address why Article 3.4 explicitly
references these factors. Rather, Article 3.4 requires examination of "the explanatory force of
subject imports for the state of the domestic industry"
23, and for this purpose, examination of the
"factors affecting domestic prices" and "the ma gnitude of the margin of dumping" is highly
pertinent.

D. MOFCOM's Causation Analysis Is Incons istent with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement

14. MOFCOM's causation analysis violated Articles 3.1 and 3.5 of the Anti-Dumping Agreement
because it did not logically progress from its volume, price effects, and impact analyses, and
because MOFCOM improperly attributed injury to subject imports without separating and
distinguishing other known factors.
24 Again, Japan already rebutted much of what China argues on

15 See China's second written submission, para. 140 (quoting Final Determination, Exhibit JPN-2, p. 48).
16 See Japan's opening statement at the first meeting of the Panel, para. 8.
17 See China's second written submission, paras. 143-150.
18 See Japan's closing statement at the first meeting of the Panel.
19 Ibid., para. 12.
20 See Japan's first written submission, paras. 157-185; Japan's opening statement at the first meeting
of the Panel, paras. 74-83; Japan's second written submission, paras. 50-53.
21 See China's second written submission, paras. 168-206.
22 See China's second written submission, paras. 182-188.
23 Appellate Body Report, China – GOES, para. 149.
24 See Japan's first written submission, paras. 186-233; Japan's opening statement at the first meeting
of the Panel, paras. 84-104; Japan's second written submission, paras. 56-61.
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this topic. 25 On non-attribution, China now argues that Article 3.5 requires an investigating
authority to provide only "reasonable explanations as to why the injurious effects of certain factors
are not sufficient to break the causal link".
26 However, in US – Hot-Rolled Steel , the Appellate
Body made clear that an investigating authorit y must identify the "nature and extent" of the
injurious effects of the non-attribution factor and the dumped imports, and distinguish the two. 27
Here, different factors were at work in different segments of the domestic HP-SSST market, yet
MOFCOM failed to consider any possibility that this was the case. For Product A, increasing
domestic demand combined with decreasing domestic prices indicated a typical oversupply
situation, where an expansion of domestic production capacity surely contributed to the domestic
industry's injury. For Products B and C, there is no dispute that domestic demand declined sharply,
which also contributed to the domestic industry's injury. Yet MOFCOM failed to separate and
distinguish the injurious effects of these non-attribution factors in the different segments of the
market.

III. MOFCOM
 VIOLATED SEVERAL PROCEDURAL OBLIGATIONS OF THE ANTI-DUMPING AGREEMENT

A. MOFCOM's Use of Facts Available to Determine the All Others Rate
Violated Article 6.8 and Annex II of the Anti-Dumping Agreement

15. MOFCOM's use of facts available to determine the all others rate for unknown Japanese
exporters violated Article 6.8 and Annex II of the Anti-Dumping Agreement for three reasons:
28 (i)
MOFCOM failed to provide the requisite notice before using facts available; (ii) MOFCOM did not
demonstrate the lack of cooperation by unknown Ja panese exporters before using facts available;
and (iii) MOFCOM failed to use the "best information available" and exercise "special
circumspection".

B. MOFCOM's Disclosure of Essential Facts and Notice of Final Determination
Violated Articles 6.9, 12.2, and 12.2.2 of the Anti-Dumping Agreement

16. MOFCOM's disclosure of essential facts and notice of final determination are inconsistent
with Articles 6.9, 12.2, and 12.2.2 of the Anti -Dumping Agreement in three respects. First,
MOFCOM violated Article 6.9 because it failed to disclose the data and calculation methodologies
used to determine the existence of dumpin g and the dumping margins for SMI and Kobe. 29
Second, MOFCOM violated Articles 6.9, 12.2, and 12.2.2 by failing to disclose, in connection with
its determination of the all others rate: (i) the facts justifying the use of "facts available"; (ii) the
data and calculation methodologies underpinning the dumping margin for Kobe, which MOFCOM
used as the all others rate; and (iii) the facts justifying the use of the highest dumping margin for
an investigated respondent as the all others rate.
30 Third, MOFCOM violated Articles 6.9, 12.2,
and 12.2.2 by failing to disclose several pieces of information regarding import prices and
domestic prices critical to its price effects determination.31

C. MOFCOM's Treatment of Confidential Information Violated Articles 6.5
and 6.5.1 of the Anti-Dumping Agreement

17. As for MOFCOM's treatment of confidential information: first, MOFCOM violated Article 6.5
of the Anti-Dumping Agreement because Petiti oners did not demonstrate "good cause", and
MOFCOM did not objectively examine Petitioners' attempted demonstrations of "good cause", with
respect to the confidential treatment of the full te xts of four appendices submitted by Petitioners;
and second, China violated Article 6.5.1 of the Anti-Dumping Agreement because Petitioners did
not furnish sufficient non-confidential summaries or any statements as to why such summaries
were not possible, and MOFCOM failed to require such summaries or statements, with respect to

25 See China's second written submission, paras. 207-242.
26 China's second written submission, para. 229.
27 Appellate Body Report, US – Hot-Rolled Steel, para. 226.
28 See Japan's first written submission, paras. 302-306; Japan's second written submission, paras. 63-
81.
29 See Japan's first written submission, paras. 290-297; Japan's second written submission, paras. 89-
95.
30 See Japan's first written submission, paras. 307-319; Japan's second written submission, paras. 96-
104.
31 See Japan's first written submission, paras. 235-264; Japan's second written submission, paras. 105-
113.
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several documents submitted by Petitioners. 32 Furthermore, China stated that in its first written
submission, it explained that the Petitioners prov ided "good cause" for the confidential treatment
of the four appendices, but such explanation cannot be found in any document on the record
including the Final Determination. Japan thus presented a prima facie case that China failed to
scrutinize whether the confidentiality request shows "good cause" at the time of the investigation.
It is incumbent on China to rebut this prima facie case by presenting evidence that MOFCOM did
scrutinize confidential requests by Petitioners in a manner argued by China, but China has not
done so.

D. China's Application of Provisional Me asures for a Period Exceeding Four
Months Violated Article 7.4 of the Anti-Dumping Agreement

18. Finally, China has not objected to Japan's claim that China violated Article 7.4 of the Anti-
Dumping Agreement by applying provisional measures for more than four months.

IV. C
ONCLUSION

19. Japan maintains that China's measures are inconsistent with its obligations under the
GATT 1994 and the Anti-Dumping Agreement. Japan respectfully requests that the Panel make
findings with respect to each of Japan's claims under the GATT 1994 and the Anti-Dumping
Agreement, including each claim under Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping
Agreement, without exercising judicial economy as to any of Japan's claims.

32 See Japan's first written submission, paras. 265-289; Japan's second written submission, paras. 114-
134.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-28 -

ANNEX B-5
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF THE EUROPEAN UNION
I. I NTRODUCTION AND GENERAL FACTUAL BACKGROUND

1. The present dispute concerns China's measures imposing anti-dumping duties on certain
high-performance stainless steel seamless tubes ("HP-SSST") from the European Union, as set
forth in Ministry of Commerce of the People's Re public of China ("MOFCOM") Notice No. 21 [2012]
(the "Preliminary Determination notice") and No tice No. 72 [2012] (the "Final Determination
notice"), including any and all annexes and any amendments thereof.

2. The product under investigation is high-performance stainless steel seamless tubes of
particular specification and having such features as high endurance strength, good structure
stability, anti-steam oxidation and excellent corro sion resistance at high temperature (HP-SSST).
The main applications of HP-SSST are in superh eaters and reheaters of supercritical and ultra-
supercritical boilers. The terms supercritical and ultra-supercritical describe the pressure of the
water inside the boiler. There are three types of HP-SSST, with various names according to
different national standards regimes and producers' designations:

Table 1: HP-SSST Product Identification
Product ASTM grade/ASTMUNS
steel number
China National
Standard GB5310-2008
Mannesmann
serial number
Sumitomo
serial number
A TP347HFG (S34710) 08Cr18Ni11NbFG DMV347HFG 347HFG
B S30432 10Cr18Ni9NbCu3BN DMV304HCu Super304H
C TP310HNbN (S31042) 07Cr25Ni21NbN DMV310N HR3C

3. In this submission, the European Union re fers to Products "A", "B", and "C". The
three types of HP-SSST are noticeably different.

II. T HRESHOLD ISSUE: REQUEST THAT THE PANELS AMEND TWO ASPECTS OF THE BCI PROCEDURES

4. The European Union objects to the Panels automatically classifying as BCI in these WTO
panel proceedings information that was submitted as BCI in the anti-dumping proceeding (unless
in the public domain).
1

5. First, the question of designation is ultimately a matter that must rest with the WTO
adjudicator and cannot be delegated to any other entity or person. Second, the additional
confidentiality obligation (which binds other Members but not the adjudicator) is triggered by a
designation by the submitting Member. It is not tr iggered by a designation by any other entity or
by a firm, because the DSU provides expressly that it does not regulate the capacity of a Member
to disclose statements of its own position to the public. The BCI Procedures in this case include a
statement that BCI shall include information that was previously submitted to China's Ministry of
Commerce ("MOFCOM") as BCI in the anti-dumping investigation at issue in these disputes. Thus,
in this case, the issue of designation for this particular category of information is delegated, in
absolute terms, not just to a particular party, but to a particular firm. It means that there is no
guarantee that a balanced and proportionate approach to designation will be adopted. The
European Union considers that this statement in the BCI Procedures is WTO inconsistent.

6. The European Union requests that the relevant sentence in paragraph 1 of the BCI
Procedures be modified to read: "In this regard, parties and third parties are encouraged to
designate as BCI information that was previous ly submitted to China's Ministry of Commerce

1 Joint Working Procedures of the Panels, Annex 1, Additional Working Procedures of the Panels
Concerning Business Confidential Information ("BCI Procedures"), paragraphs 1 and 2.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-29 -

("MOFCOM") as BCI in the anti-dumping investigation at issue in these disputes." Furthermore, the
European Union requests that a final sentence be added to paragraph 1 of the BCI Procedures as
follows: "In case of disagreement, the Panels shall decide on BCI designation".

7. The European Union objects to the requirement that a party must seek and provide
evidence of prior written authorisation from the entity that submitted such information in the anti-
dumping proceedings when submitting such information to the Panels. The European Union
considers that the additional confidentiality obligation (which binds other Members but not the
adjudicator) is triggered by a designation by th e submitting Member. It is not triggered by a
designation by any other entity or by a firm.

8. The European Union requests that paragraph 2 of the BCI Procedures be deleted or
amended to read as follows: "The first time that a party submits to the Panels BCI as defined
above from an entity that submitted that informat ion in the anti-dumping investigation at issue in
these disputes, the party may also provide, with a copy to the other parties, an authorizing letter
from the entity. That letter may authorize China, the European Union and Japan to submit in these
disputes, in accordance with these procedures, any confidential information submitted by that
entity in the course of the investigation at issue".

9. To the extent that the Panels, and even tually the Secretariat, are concerned about
protecting the WTO from any consequences of disclosure, a provision along the following lines
would be sufficient: "Each party and third party shall be solely responsible for ensuring its own
compliance with any applicable confidentiality rules and solely responsible for the confidentiality
designation it makes when submitting information to the Panel, and any consequences thereof".

III. P
ROCEDURAL CLAIMS

1. Claim under Articles 6.5 and 6.5.1 ADA

10. The European Union submits that China's treatment of confidential information submitted
by the Applicants was inconsistent with Articles 6.5 and 6.5.1 of the Anti-Dumping Agreement, in
particular with respect to: Appendices V and VIII to the Application; Append ices 1, 7, 8, 24, 25,
26, 27, 28, 31, 32, 33, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 56,
57, 58, and 59 to the Applicants' Supplemental Subm ission; and the Appendix to the Applicants'
Additional Submission.

11. With respect to Article 6.5 of the Anti-D umping Agreement, the European Union submits
that China acted inconsistently with this provision because China permitted the full texts of the
relevant documents to remain confidential without a showing of good cause. The European Union
submits that the concern regarding the potential di sruption of these third parties' businesses could
have been addressed by simply withholding the names of the third parties providing these reports,
as well as perhaps the names of any entities that provided information to the third parties that
prepared these reports, at least to the extent that the information in the reports would be referred
to or relied on by the Applicant or the investigating authority.

12. With respect to Article 6.5.1 of the Anti-D umping Agreement, the European Union submits
that China acted inconsistently with this provision because it did not require sufficient non-
confidential summaries or explanations as to why such summaries were not possible.

2. Claim under Article 6.7 and Annex I, paragraph 1 and Article 6.8 and Annex II,
paragraphs 3 and 6 of the Anti-Dumping Agreement

13. The European Union claims that the measure at issue is inconsistent with Article 6.7 and
Annex I, paragraph 1 of the Anti-Dumping Agreement because China refused to take into account
information relevant for the determination of the margin of dumping of SMST provided during the
on-the-spot investigation. The European Union further claims that the measure at issue is
inconsistent with Article 6.8 and Annex II, para graphs 3 and 6 of the Anti-Dumping Agreement
because China failed to take into account all information pertaining to the determination of the
margin of dumping for SMST which was verifiable, which was appropriately submitted so that it
could have been used in the investigation without undue difficulties, and which was supplied in a
timely fashion.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-30 -

14. At the verification, SMST submitted to the investigating authorities that certain financial
expenses had been inadvertently double-counted in the SMST Dumping Questionnaire Response,
and adduced corrected information that was duly verified. The only reason provided by China in
the SMST Final Disclosure and in the Final Determination for refusing to take the corrected
information into account was that SMST did not raise this point before the verification started.

3. Claim under Articles 6.4 and 6.9 of the Anti-Dumping Agreement

15. The European Union submits that China acted inconsistently with Articles 6.4 and 6.9 of
the Anti-Dumping Agreement by failing to disclose the essential facts that form the basis of its
dumping, injury and causation determinations. In particular, China failed to disclose information on
dumping calculations and import and domestic prices essential to its price effects finding.
Consequently, interested parties were unable properly to defend their interests.

16. Essential facts supporting an anti-dumping margin determination include the data
underlying the margin calculations and adjustments to the data. These facts also include
information on the calculation methodology, for example, the formulas used in calculations and the
data applied in those formulas. China's anti-dumping disclosures contain none of this information.
This lack of disclosure critically impaired the interested parties' defence to the dumping
determination and dumping margin calculations. Without the missing data and calculation
methodology information, they could not present the necessary rebutting arguments or address
the errors in China's analyses.

17. China failed to disclose several pieces of information critical to its price effects
determination. Specifically, China failed to disclose: (i) complete information about the import
prices it used in its price effects analysis (although an import price for Product C could be derived
from other information supplied by China); (ii) any domestic prices; (iii) the percentage change in
the domestic price of Product C in the first half of 2011 as compared with the first half of 2010
(this is particularly disconcerting because it would appear that in fact there were no sales of
Product C by the Applicants during the first half of 2011); (iv) the margins of overselling for
Product A and the HP-SSST product as a whole (to the extent that there were relevant domestic
sales); and (v) the margin of overselling or underselling for Product C in the first half of 2011.

4. Claim under Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement

18. Dumping determinations: The European Union claims that China acted inconsistently with
Articles 12.2 and 12.2.2 of the Anti-Dumping Ag reement because it did not provide a report
stating all relevant information supporting the imposi tion of definitive anti-dumping duties against
the investigated imports as part of its Final Determination.

19. The Final Determination did not provide "sufficient detail" on its justification for applying
facts available in its all others rate determinations because it provided no detail. At no point in the
proceeding did China disclose the factual basis or the legal reasoning supporting its definitive
assessment of the all others rates. In failing to provide this information, China failed to satisfy the
requirements of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement.

20. Injury determination: China did not provide all of the relevant information and reasoning
supporting its price undercutting conclusions. Specifically, its finding of price undercutting: (i)
omitted key factual information; and (ii) did not provide the reasoning behind one critical aspect of
its price comparisons by type. There appears to be no reason why China could not, at a minimum,
disclose non-confidential summaries, such as indexed data that would permit a comparison of
import prices and domestic prices by type and total product basis, while maintaining the
confidentiality requests of interested parties.

IV. S
UBSTANTIVE CLAIMS – DUMPING DETERMINATIONS

1. Claim under Articles 2.2, 2.2.1, 2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement

21. The European Union claims that, in the me asure at issue, China did not determine the
amounts for administrative, selling and general costs (SG&A) on the basis of records and actual
data kept by the exporter or producer under investigation (SMST) or in a manner that reasonably
reflects the costs associated with the production and sale of Product B (DMV 304HCu).
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-31 -

22. The European Union submits that China acted inconsistently with Article 2.2.2 of the Anti-
Dumping Agreement because the amounts for administrative, selling and general costs were not
based on actual data pertaining to production and sales in the ordinary course of trade of the like
product, and particularly Product B (DMV 304HCu), by SMST, as recorded in SMST QR Table 6-5
and duly verified.

23. China's error is compounded by the fact th at, as outlined above, the unrepresentative and
rejected data that China disclosed during consultations that it did use from SMST QR Table 6-3
(DMV 304HCu (EU)) did not pertain to production an d sales in the ordinary course of trade, as
required by Article 2.2.2 of the Anti-Dumping Agreement. The European Union finds further
support for its claim in the immediate context of Articles 2.2, 2.2.1 and 2.2.1.1 of the Anti-
Dumping Agreement.

2. Claim under Article 2.4 of the Anti-Dumping Agreement

24. The European Union claims that, in the me asure at issue, China did not establish the
existence of a margin of dumping for SMST on th e basis of a fair comparison between the export
price and the normal value, and in particular on the basis of a comparison between comparable
exports and domestic prices, for Product C (DMV 310N). China acted inconsistently with Article 2.4
of the Anti-Dumping Agreement because it relied for its findings of dumping on a comparison of
export prices and domestic prices that included different product mixes without taking any steps to
control for differences in physical characteristics affecting comparability or making necessary
adjustments.

3. Claim under Article 6.8 and Annex II, paragraph 1 of the Anti-Dumping Agreement

25. As a consequence of the preceding substantive dumping claims, and as a consequence of
any possible substantive consequences of the above procedural claims insofar as they relate to
dumping, and given that the "facts available" used by China to establish the EU all others rate
included the rate applied to SMST, China improperly relied on those "facts available" when
establishing the EU all others rate, also acting, in this respect, inconsistently with the above cited
provisions of the Anti-Dumping Agreement, and inconsistently with Article 6.8 and Paragraph 1 of
Annex II of the Anti-Dumping Agreement. Furthermor e, China acted inconsistently with Article 6.8
and Paragraph 1 of Annex II of the Anti-Dumping Agreement because it determined the dumping
margin for other EU and Japanese exporters based on facts available without notifying them of all
the information required and of the consequences of not submitting that information.

V. S
UBSTANTIVE CLAIMS – INJURY DETERMINATION

26. The European Union submits that China's determinations with respect to injury and
causation are inconsistent with China's obligations under Article 3 of the Anti-Dumping Agreement
– particularly Articles 3.1, 3.2, 3.4, and 3.5 – in that they do not stem from an objective
evaluation, based on positive evidence, of the facts on the record, and do not satisfy all of the
requirements of those provisions.

27. The European Union submits that China's price effects analysis is inconsistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreement because:

28. (i) China's analysis of the price effects of imported Product C is analytically and factually
flawed. The data indicates that domestic sales volume of Product C during the investigation period
was very small compared to import volume. Under such circumstances, and without any
reasonable ground for concluding that these products were in fact in competition with one another,
it was erroneous for China to conclude that imports of Product C had any price undercutting effects
on the corresponding like domestic products.

29. (ii) China improperly extended its conclusions concerning the price undercutting of
Products B and C to the domestic HP-SSST industry as a whole. China found some price
undercutting limited to a minority industry sector that does not actually compete with other
sectors which must be read in the context of the general finding that the vast majority of the
domestic production of HP-SSST was not subject to any price undercutting effect by the subject
imports.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-32 -

30. Second, the European Union submits that China's impact analysis is inconsistent with
Articles 3.1 and 3.4 of the Anti-Dumping Agreement because:

31. (i) China's impact analysis did not logically follow from its volume and price effects
analyses and conclusions; When, as in this particular case, an investigating authority has itself
elected to conduct an analysis of volume and price effects by type, and where the outcome of that
analysis already indicates lack of injury with re spect to two out of three product types, including
the product type predominantly produced by the domestic industry , that is a matter that must at
least be addressed in the impact analysis.

32. (ii) China failed to evaluate or properly evaluate the magnitudes of the margins of
dumping in its overall impact assessment. At no point of the investigation did China evaluate the
significance of the margins of dumping, properly calculated, for the impact of the imports on the
Chinese HP-SSST industry.

33. (iii) China improperly disregarded the relevant economic factors and indices showing that
the domestic industry was not injured. The Final Determination is silent as to why China
disregarded the relevance of the majority of the factors and indices having a positive bearing on
the state of the domestic industry.

34. Third, the European Union submits that China's causation analysis is inconsistent with
Articles 3.1 and 3.5 of the Anti-Dumping Agreement because:

35. (i) China's causation determination lacks any foundation in its volume, price effects, and
impact analyses. The European Union submits that China reached its conclusion concerning the
existence of a "causal link" between HP-SSST imports and the injury suffered by the domestic
industry despite the fact that: (a) the volume an d market share of imported HP-SSST products did
not significantly increase; (b) China's analysis of the undercutting effect of imported HP-SSST
products on prices of like domestic products was flawed; and (c) China's review of the relevant
economic factors and indices of the domestic indu stry was incomplete and skewed by its dismissal
of the positive indices and increased emphasis on the negative indices.

36. (ii) China failed to separate and distinguish the injurious effects of two other known factors
that were causing injury to the domestic industry, namely the decline in domestic demand for HP-
SSST and the expansion of the production capacity of the domestic HP-SSST industry.

VI. O
THER CLAIMS

1. Claim under Article 7.4 of the Anti-Dumping Agreement

37. By applying provisional measures for six months in the given circumstances, China acted
inconsistently with Article 7.4.

2. Consequential claims under Article 1 of the Anti-Dumping Agreement and Article VI of the
GATT 1994

38. As a consequence of the breaches described above, China's anti-dumping measures on HP-
SSST are also inconsistent with Article 1 of th e Anti-Dumping Agreement and Article VI of the
GATT 1994.

VII. R
EQUEST THAT PANEL EXERCISE RIGHT PURSUANT TO ARTICLE 13.1 OF THE DSU

39. The European Union respectfully requests that the Panel exercise its right to seek
information from China pursuant to Article 13.1 of the DSU. Article 13.1 of the DSU gives the Panel
the right to seek information from any body that it deems appropriate, and requires Members to
respond promptly and fully to any request by a pa nel for such information as the panel considers
necessary and appropriate.

40. In these proceedings, the only explanation gi ven by China for failing to comply with its
WTO obligations concerning disclosure and making information available is alleged confidentiality.
The European Union has explained why this is not a valid explanation, also given the possibility of
preparing non-confidential summaries. However, no w that this Panel has adopted procedures to
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-33 -

protect Business Confidential Information, there is clearly no longer any basis for China not to
provide the necessary information.

41. In these panel proceedings, the European Union does two things. First, the
European Union asks that the Panel draw the reasonable and logical conclusions from the
procedural inconsistencies that the European Union identified with respect to the substantive
aspects of the measure at issue. For example, the European Union explained that China has
breached its procedural obligations with regard to the disclosure of the essential facts relating to
the injury determination, and particularly the price-undercutting finding with respect to Product B.
Our submission is that, as a consequence, the price-undercutting analysis with respect to Product
B is unreliable, and the European Union asks the Panel to make a finding to that effect. Thus, what
the European Union seeks from China in terms of implementation is not merely disclosure. Rather,
the European Union seeks: disclosure; a full opportunity for all interested parties and Members to
comment and defend their interests; and a conseque nt re-assessment of this aspect of the injury
determination, and thus of the injury determination as a whole. The European Union asks the
Panel to make it clear that this is what China is expected to do.

42. Second, at the same time, already in these proceedings, the European Union seeks full and
proper disclosure from China (duly protected by the BCI rules now in place). The European Union
respectfully requests the Panel to exercise its right under Article 13.1 of the DSU to seek from
China information equivalent to the full disclosure that should have been made, that is, of all the
essential facts, having particular regard to the concerns raised by the European Union and Japan,
and given the BCI procedures in place. In this respect, the European Union insists particularly (but
not only) on the price-undercutting finding with respect to Product B. The European Union asks
that China provide complete, specific and precise information on the import and domestic products
that were compared, including full product descriptions, dates of transactions, volumes, prices and
terms of each transaction, and any adjustments.

VIII. R
EQUEST THAT PANEL MAKE A SUGGESTION PURSUANT TO ARTICLE 19.1 OF THE DSU

43. The European Union will be seeking steps to ensure that this measure is rectified and
eventually dis-applied "immediately" (to borrow the language of Article 21.3 of the DSU) and in
any event as soon as possible. Accordingly, the Eu ropean Union respectfully requests the Panel to
formulate suggestions to that effect, and reserves the right to request or re-iterate specific
suggestions as the proceedings go forward.

IX. C
ONCLUSION

44. For the reasons set forth in the submission, the European Union respectfully requests the
Panel to find that China's measures are inconsistent with China's obligations under the GATT 1994
and the Anti-Dumping Agreement. The European Union further requests, pursuant to Article 19.1
of the DSU, that the Panel recommend that China bring its measures into conformity with the
GATT 1994 and the Anti-Dumping Agreement, and make appropriate suggestions to that effect.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-34 -

ANNEX B-6
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF THE EUROPEAN UNION
I. I NTRODUCTION

1. In this second written submission, the European Union further explains why it requests the
Panel to find that China's measures imposing anti-dumping duties on imports of high-performance
stainless steel seamless tubes ("HP-SSST") are in consistent with China's obligations under the
GATT 1994 and the Anti-Dumping Agreement of the WTO.

II. S
TANDARD OF REVIEW

2. Both parties agree with regards to the standard of review. However, the European Union
rejects China's assertion according to which the European Union has not made a prima facie case
and refers to the reasons put forward in its submissions.

3. The European Union is willing to respond to any questions on the matter the Panel may
have.

III. T
HRESHOLD ISSUE: REQUESTS THAT THE PANEL AMEND TWO ASPECTS OF THE BCI PROCEDURES AND
ONE ASPECT OF THE WORKING PROCEDURES

A. Absolute delegation of the authority and ob ligation to determine BCI designation to a firm
submitting information to the investigating authority in a domestic anti-dumping
proceeding

4. The European Union contends that th e BCI procedures, by providing automatic
classification as BCI of information that was originally submitted as BCI in the context of municipal
anti-dumping proceedings in the current WT O proceedings, are WTO inconsistent. The
European Union considers that such a decision should be based on objective criteria. In other
words, in the view of the European Union, it is for a Member to seek designation of information
as BCI and it is for the adjudicator to make a designation after an assessment based on objective
criteria.

5. The European Union puts forward a harmonious interpretation of the relevant DSU rules
together with the provisions of the Anti-Dumping Agreement. Article 18 of the DSU sets out the
general principle of due process in the context of the WTO dispute settlement system. It prohibits
ex parte communication with a panel and states that written submissions to a panel are
confidential but shall be made available to th e parties to the dispute. In the view of the
European Union, this is also confirmed by the joint reading of Article 6.5 of the Anti-Dumping
Agreement and footnote 17, which confirm that even information designated as confidential by the
investigating authority may be disclosed, provided that it is adequately protected.

6. The European Union considers the issue to be a fundamental one and to touch upon one of
the cornerstones of rule-of-law based judicial systems. The European Union argues that, by
allowing an interpretation of the provisions above mentioned in a way contrary to the reading
advanced in its submissions, the system would allow a situation in which information submitted to
adjudicators is not available to the other litigant, and this would amount to a breach of the
fundamental principle of due process.

7. The European Union understands that it is always necessary to strike a balance between
various interests, namely: confidentiality, the interest of being in a position to make administrative
and judicial determinations, due process. Such balance, however, has to be conducted
independently and objectively by the panel.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-35 -

B. The imposition of an obligation on the submitting Member to obtain prior written
authorisation from another entity or firm

8. The European Union claims that BCI procedures are WTO inconsistent insofar as they
require a party to seek and provide evidence of prior written authorisation from the entity that
submitted such information in the anti-dumping proceedings when submitting such information to
a Panel. The European Union rejects China's reading of Articles 6.5 and 17.7 of the Anti-Dumping
Agreement, according to which these provisions im pose an obligation to automatically confer BCI
status in WTO dispute settlement proceedings to information classified as confidential before
national investigating authorities.

9. The European Union claims that this does not guarantee a balanced and proportionate
approach to BCI designation.

C. China's request relating to the timing of objections to translations

10. The European Union requests that paragrap h 10 of the Working Procedures be amended,
so to make it clear that it does not contain an absolute rule to raise objections to translations
promptly in writing no later than next meeting foll owing such filing, or in the absence of any such
meeting within two weeks, as opposed to at the next filing. China agrees.

IV. P
ROCEDURAL CLAIMS

A. Designation of information as confidential without good cause and failure to require
sufficient non-confidential summaries: Articles 6.5 and 6.5.1 of the Anti-Dumping
Agreement

1. Designation of information as confidenti al without good cause: Article 6.5 of the
Anti-Dumping Agreement

11. The European Union claims that China's trea tment of confidential information submitted by
the applicants was inconsistent with Articles 6. 5 and 6.5.1 of the Anti-D umping Agreement, in
particular with respect to: Appendices V and VIII to the Application; Append ices 1, 7, 8, 24, 25,
26, 27, 28, 31, 32, 33, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 56,
57, 58, and 59 to the Applicants' Supplemental Submission; and the Appendix to the Applicants'
Additional Submission. China claims that the European Union has not made a prima facie case and
has not specified the documents to which its claims relate. The European Union rejects these
arguments and points out that China, in its first written submissions, had shown to be aware of the
documents to which the claim relates and that the European Union and Japan shared the same
claim with respect to these reports.

12. The European Union has already pointed out that, other than disclosing the final data
summarised in paragraph 90 of the EU First Wri tten Submissions, the Applicants provided no
summary of any other contents of these report s, including the methodologies utilized by the
third party institutes to obtain these data or the underlying evidence they relied upon. This,
according to the European Union, contrasts with the Panel Report in China-X-Ray Equipment about
the necessity to summarise the substance of each type of confidential information in cases where
multiple type of information are designated as confidential. The European Union respectfully
requests the Panel to reject China's arguments an d affirm the claims made by the European Union
and Japan.

2. Failure to require sufficient non-confidential summaries: Art. 6.5.1 of the Anti-
Dumping Agreement

13. The European Union claims that China acted inconsistently with this provision because it
did not require sufficient non-confidential summaries or explanations as to why such summaries
were not possible.

14. In particular, China submits that two of the reports are themselves already summaries.
According to China, they contain no information regarding methodologies and no underlying
evidence and China describes them as being based on "non-existent information". The
European Union casts doubts that affirming that documents are based on "non-existent
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-36 -

information" could be helpful for China's arguments. In the view of the European Union, indeed,
such fact provides strong indication of substantial inconsistencies linked to procedural
irregularities.

15. The European Union considers that China has failed to provide a statement of reasons as
to why further summarisation is not possible that is consistent with Article 6.5.1 of the Anti-
Dumping Agreement.

B. SMST dumping determination, failure to take into account relevant information provided
during the verification: Art. 6.7 and Annex I, paragraph 7 and Art. 6.8 and Annex II,
paragraphs 3 and 6 of the Anti-Dumping Agreement

16. The European Union claims that the measure at issue is inconsistent with Article 6.7 and
Annex I, paragraph 7 of the Anti-Dumping Agreement because China refused to take into account
information which was relevant for the determination of the margin of dumping of SMST provided
during the on-the-spot investigation. The European Union further claims that the measure at issue
is inconsistent with Article 6.8 and Annex II, pa ragraphs 3 and 6 of the Anti-Dumping Agreement
because China failed to take into account all information pertaining to the determination of the
margin of dumping for SMST which was verifiable and was appropriately submitted. China claims
to have refused to take the corrected information into account because SMST did not raise this
point before the verification started.

17. The European Union bases its procedural claim on the fact that information was rejected
exclusively because it was submitted at verification. The European Union does not argue that
investigating authorities should not have discretion as to the information they should accept, but it
only claims that they should be open to do so if it does not impede the verification.

C. Inadequate disclosure and failure to inform interested parties of the essential facts under
consideration: Articles 6.4 and 6.9 of the Anti-Dumping Agreement

1. With respect to the dumping determinations

18. The European Union submits that China acted inconsistently with Articles 6.4 and 6.9 of
the Anti-Dumping Agreement by failing to disclose the essential facts that form the basis of its
dumping determinations. China claims that the European Union has not made a prima facie case of
violation of Article 6.4 of the Anti-Dumping Agreement because no request for information was
made. China also argues that the European Union failed to make a prima facie case with respect to
the violation of Article 6.9 of the Anti-Dumpi ng Agreement, because the arguments of the
European Union would amount to general allegations.

19. The European Union rejects China's argument according to which lack of understanding as
to how, for instance, the normal value in the case of SMST was calculated, is unreasonable and,
therefore, should allow non-disclosure. The European Union, in fact, argues that it was not possible
for multiple parties, all acting in good faith, to understand how the calculation was made, and to
know which numbers where used by MOFCOM to conduct its calculations. The European Union
considers that knowing the actual number used in the case of SMST would permit to SMST to
understand how the calculation was made, and allow it to defend its interests accordingly. Vice
versa, in the current situation, SMST and the European Union are unable to do so.

2. With respect to the injury determination

20. With respect to the injury determination, the European Union submits that China acted
inconsistently with Articles 6.4 and 6.9 of the Anti-Dumping Agreement by failing to disclose the
essential facts that form the basis of its injury and causation determinations. China claims that the
summaries it provided are sufficient and the European Union rejects this argument because such
information was partial and argues that there were other available means to address the
understandable concerns for disclosure and, at the same time, to allow exporters to understand
the facts and defend their interests accordingly. With respect to the claim by China whereby the
European Union has acknowledged, in particul ar, that Product A import price in 2008 was
confidential, the European Union argues that it has never considered MOFCOM to be entitled to
treat the data in its entirety as confidential and that the latter should have provided the exporters
with –at least- meaningful price range.
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- B-37 -

21. With respect to China's argument rega rding the underselling of Product B, the
European Union remains of the view that MOFCOM should have disclosed a number for each year
and claims that China has failed to do so in response to Panel Question 76.

D. Failure to set forth or otherwise make available in sufficient detail the findings and
conclusions: Articles 12.2 and 12.2 of the Antidumping Agreement

1. With respect to the dumping determination

22. The European Union claims that China acted inconsistently with Articles 12.2 and 12.2.2 of
the Anti-Dumping Agreement because it did not provide a report stating all relevant information
supporting the imposition of definitive antidumping duties against the investigated imports as part
of its Final Determination. According to the European Union, China has not provided valid
justification for its failure to reveal why it resorted to facts available and how it determined the
highest dumping margin found for the relevant exporters that received an individual margin to be
the appropriate one.

23. The European Union is not persuaded by the response provided by China according to
which it is sufficient to state that facts available were used with respect to firms that did not
submit a questionnaire. According to the European Union, this simply amounts to a restatement of
the facts and does not provide indication for the underlying reasoning.

24. The European Union requests the Panel to reject China's arguments and to affirm the
claims made by the European Union and Japan.

2. With respect to the injury determination

25. The European Union claims that China acted inconsistently with Articles 12.2 and 12.2.2 of
the Anti-Dumping Agreement because it did not provide a report stating all relevant information
supporting the imposition of definitive anti-dumping duties against the investigated imports as part
of its Final Determination, particularly with regards to injury and causation determination.
Specifically, China's finding of price undercutting omitted key factual information and did not
provide the reasoning behind one critical aspect of its price comparisons by type. The
European Union claims that the information provided by China was not sufficient.

26. The European Union recognizes that Art. 12.2.2 of the Anti-Dumping Agreement requires
an authority to pay due regard to confidentiality. H o w e v e r , i t c l a i m s t h a t t h e r e i s n o a p p a r e n t
reason why China did not –at least- disclose non-confidential summaries, so to permit a
comparison of import prices by type and total product basis.

V. S
UBSTANTIVE CLAIMS RELATING TO THE DUMPING DETERMINATIONS

A. SMST dumping determination, normal value for product B (DMV 304HCu), SG&A, failure to
use actual data reasonably reflecting costs, use of unrepresentative and rejected data
concerning samples: Articles 2.2, 2.2.1, 2.2.1.1, and 2.2.2 of the Anti-Dumping Agreement

27. The European Union comments, in its rebuttal, on China's Responses to the Panel's
Questions.

28. As regards Question 7, the European Union claims that China is incorrect to assert that the
Appellate Body Report in EC – Bed Linen supports its position in these proceedings. In its Second
Written Submissions, the European Union highlights many flaws in the understanding by China of
the Report above mentioned with regards to the interpretation of Article 2.2.2 of the Anti-Dumping
Agreement. Furthermore, the European Union rejects the view of China according to which the
Panel request by the European Union is inconsistent with Art. 6.2 DSU because, allegedly, it did
not provide a brief summary of the legal basis of the complaint. The European Union argues that
this was not the case, as it provided a sufficiently detailed summary and eventually points out to
the differences between a Panel request and first submissions, which China seems to neglect.

29. As regards Question 8, the European Union argues that China is incorrect to assert that
the Panel Report in US – Corrosion-Resistant Steel Sunset Review supports its position in these
proceedings. The European Union claims that the report, in fact, confirms that the Panel must take
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-38 -

into account whether the ability of the respondent to defend itself has been prejudiced, given the
actual course of the panel proceedings. The European Union considers that China has had ample
opportunity to respond but chose to remain silent on the substance of the matter.

30. With reference to Question 22, the European Union disagrees with China about its
argument according to which anything that is "used" by a firm automatically becomes "actual data
pertaining to production and sales in the ordinary course of trade". The European Union cannot
accept the consequences of such reasoning, which would lead to a situation in which the
determination of the amounts for administrative, selling and general costs and profits would
depend upon whether or not particular information or data would be "used" by the firm being
investigated.

31. With regards to Question 23, the European Union challenges China's assertion according to
which SMST did not request the investigating authority not to use the relevant Table 6-3 SG&A.
According to the European Union, the translations of the requests by SMST to which China refers
are redundant and lead to meaningless results, as that would mean that SMST had requested not
to use the data in the "constructed cost" calculation, and the expression "constructed cost" never
appears in the Anti-Dumping Agreement.

32. Regarding Question 24, the European Union reaffirms the concerns it had already made
explicit in its oral Statement and in its responses to the Panel Questions on the coefficients applied
to the calculation.

B. SMST dumping determination, product C (DMV 310N), failure to make a fair comparison,
failure to adjust for different product mixes: Article 2.4 of the Anti-Dumping Agreement

33. The European Union claims that China did not establish the existence of a margin of
dumping for SMST on the basis of a fair compar ison between the export price and the normal
value, and in particular on the basis of a comparison between comparable exports and domestic
prices. In its rebuttal, the European Union focuses on commenting China's responses to the Panel's
Questions.

34. With regards to Question 12, the European Union acknowledges that China agrees with the
summary of the former's claims and arguments.

35. Concerning Question 14, the European Union claims that China declined to answer with
respect to the remainder of the evidence referenced in footnote 195 of the First Written
Submission of the European Union. It adds that the Panel can and should proceed on the basis that
the information provided by the European Union was actually verified by MOFCOM. The
European Union considers MOFCOM to have not ensured a fair comparison and thus to have acted
inconsistently with Article 2.4 of the Anti-Dumping Agreement.

36. With reference to Question 15, the European Union challenges the view of China according
to which SMST did not provide evidence regarding the price differences. It also adds that SMST
was merely seeking that the authority take the necessary steps to ensure a fair comparison.

37. Concerning Question 16, the European Union claims that MOFCOM, according to Article 2.4
of the Anti-Dumping Agreement, should have made sure that the basket of transactions used to
calculate normal value included only those products that were comparable to the product sold in
China. The European Union argues that the Appellate Body Report in EC – Fasteners (China)
supports the same conclusion, and that MOFCOM did not act accordingly.

38. Finally, with regards to Question 17, the Eu ropean Union, contrary to what China argues,
claims that SMST did provide the necessary information.

C. Use of facts available to determine the all others rate: Article 6.8 and Annex II,
paragraph I of the Anti-Dumping Agreement

39. The European Union had claimed that China im properly relied on "facts available" when
establishing the EU all others rate. China responded that, in its view, even if it is true that the
dumping margin for SMST was calculated in a WTO inconsistent manner, no provision of the Anti-
Dumping Agreement would require China to make an adjustment. The European Union claims that
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-39 -

if China would nevertheless maintain an all others rate like the one it has applied, it would be in
violation of Article 6.8 of the Anti-Dumping Agreement.

VI. S
UBSTANTIVE CLAIMS RELATING TO THE INJURY DETERMINATION

A. Summary of the applicable legal framework: Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-
Dumping Agreement

40. As submitted before, the European Union considers that the Appellate Body Report China –
GOES, and in particular its paragraphs 126-128, are highly pertinent for the issues under
consideration.

B. Price effects: Articles 3.1 and 3.2 of the Anti-Dumping Agreement

41. The European Union claims that China's price effects analysis is inconsistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreemen t. The European Union argues that two aspects
deserve to be separately addressed: i) whether the definition of price undercutting involves not
just a price differential but also an element of price effect; ii) how an investigating authority is
required to establish through its price undercutting enquiry that the price effect on domestic like
products is the result or consequence of, or may be explained by, dumped imports.

42. As for the first issue, the European Union sees China's replies to be in contradiction with
each other as to whether a price effect is needed in order to have a "price undercutting". The
European Union is of the view that the definition of price undercutting is such that a price effect
needs to be present, like China seems to have asserted in its response to Panel Question 31(c).

43. As regards the second issue, China seems to be of the view that an investigating authority
is never obliged to investigate questions of effect if only a price differential can be established,
whereas the European Union is of the opposite view.

44. The European Union considers that possibly consensus could be reached on the first issue
and that parties could be left to argue about the second aspect.

1. China' analysis of price-undercutting with respect to product C is flawed

45. China argues that the European Union did not challenge "MOFCOM's findings about the like
product", so that such findings are, in the view of China, incontestable. The European Union rebuts
that. It is bringing a claim under Articles 3.1 an d 3.2 of the Anti-Dumping Agreement and as part
of this it is challenging MOFCOM's determination that imports of Product C were in competition
with domestically produced Product c in the Chinese market.

46. The European Union argues that, as regards the Chinese analysis undertaken as part of
the like product determination, it does not amount to an objective examination based on positive
evidence either. Even assuming that in 2010 imported Product C and domestic Product C were in
adjacent or slightly overlapping markets, the evidence on the record would still not have allowed
for a finding of price undercutting in the sense of Articles 3.1 and 3.2 of the Anti-Dumping
Agreement.

2. China improperly extended its conclusi ons concerning the price undercutting of
Products B and C to the domestic HP-SSST industry as a whole

47. China claims that it established correlation among the prices of the three grades of HP-
SSST on the basis of positive evidence. The Euro pean Union claims that China's price effects
analysis does not contain any examination of cross-grade price effects. The conclusions regarding
price correlation which China refers to were made in respect to the scope of the investigation, and
were not referred to in the price effects analysis.

48. The European Union points to the significant price differences between imported
Products B and C and domestic Product A. In neglecting such price differentials, China –in the view
of the European Union- has not conducted an objective examination.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-40 -

C. Impact on domestic industry: Articles 3.1 and 3.4 of the Anti-Dumping Agreement and D.
Causation: Articles 3.1 and 3.5 of the Anti-Dumping Agreement

49. The European Union refers back to its First Written Submission and to its First Opening
Oral Statement.

VII. O
THER CLAIMS

A. Application of provisional measures in ex cess of four months: Article 7.4 of the Anti-
Dumping Agreement

50. China acknowledges the claim by the European Union according to which it has violated
Article 7.4 of the Anti-Dumping Agreement by applying provisional measures for a period
exceeding four months, but it does not respond. The European Union respectfully requests the
Panel to find in favour of the European Union on this issue.

B. Consequential claims: Article 1 of the Anti-Dumping Agreement and Article VI of the
GATT 1994

51. China does not respond on the claims made by the European Union under Article 1 of the
Anti-Dumping Agreement and Article VI GATT 1994. The European Union respectfully requests the
Panel to find in favour of the European Union on this issue.

VIII. C
ONCLUSION

52. The European Union respectfully requests the Panel to find that China's measures, as set
out above, are inconsistent with China's ob ligations under GATT 1994 and the Anti-Dumping
Agreement. The European Union further requests, pursuant to Article 19.1 of the DSU, that the
Panel recommend that China bring its measures in to conformity with the GATT 1994 and the Anti-
Dumping Agreement, and make appropriate suggestions to that effect.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-41 -

ANNEX B-7
EXECUTIVE SUMMARY OF THE STATEMENT OF THE
EUROPEAN UNION AT THE FIRST PANEL MEETING
I. I NTRODUCTION

1. In this Oral Statement we first address the various threshold issues. We will then address
some dumping issues. Finally, we turn to some of the main injury issues.

II. T
HRESHOLD ISSUE: REQUEST THAT THE PANEL AMEND TWO ASPECTS OF THE BCI PROCEDURES AND
ONE ASPECT OF THE WORKING PROCEDURES

A. Request that the panel amend tw o aspects of the BCI Procedures

2. The European Union submits that two aspect s of the BCI Procedures are WTO inconsistent
and requested the BCI Procedures to be amended accordingly.

3. (i) The BCI Procedures are WTO inconsiste nt as they automatically classify as BCI
information that was submitted as BCI in the municipal anti-dumping proceeding. The question of
designation should be subject to objective criteria established and eventually applied by the WTO
adjudicator. The BCI Procedures take this matter ou t of the hands of the adjudicator. There is no
guarantee that a balanced and proportionate a pproach to designation will be adopted. It
contradicts the fact that it is for the Member to seek designation (or not).

4. (ii) The BCI Procedures are WTO inconsistent as they provide that a party must seek and
provide evidence of prior written authorisation from the entity that submitted such information in
the anti-dumping proceedings. This requirement ta kes out of the hands of the submitting Member
and eventually the adjudicator the question of what may be submitted in DSU proceedings. It
provides a proxy for unlawfully delegated designation, because whatever the correct designation, a
firm could simply withhold authorisation.

5. China submits that the EU request is "flawed". However, it provides no explanation of why
that is supposed to be the case. The same is true of China's assertion that this is demonstrated by
the case-law cited by the European Union.

6. China observes that the Panel in the cited case-law has decided that additional protection
for BCI is justified. That is correct. However, this is not the matter that has been placed before the
Panel by the European Union.

7. China submits that the Panel has ensured th e necessary balance because it has required
the submission of non-confidential summaries. Yet, it does not explain how the filing of non-
confidential summaries is supposed to bear on the issues.

8. China submits that panels have the authority to adopt BCI procedures pursuant to
Article 12.1 of the DSU. The European Union does not disagree. However, our point is that they
must do so in a manner that is consistent with the DSU.

9. China submits that the protection afforded by the BCI Procedures does not diminish the
protection afforded by the DSU. However, the Eu ropean Union is not arguing that the protection
afforded by the BCI Procedures diminishes the protection afforded by the DSU.

10. China submits that a Member's ability to designate information as confidential pursuant to
Article 18.2 of the DSU remains fully in force. However, we do not argue that a Member's ability to
designate information as confidential is impaired.

11. Finally, China asserts that the Panel's approach is consistent with Article 6.5 of the
AD Agreement. The AD Agreement recognises that the interest in confidentiality must be taken
into account. Nevertheless, designation of information as confidential is not something absolutely
in the hands of the submitting firm, but depends on the investigating authority being satisfied that
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- B-42 -

good cause has been shown and that such designation is warranted; even then designation
remains discretionary. Also, the rule is against disclosure to competitors, not adjudicators.

B. China's request relating to the timing of objections to translations

12. China requests the Panel to amend paragrap h 10 of the Working Procedures so that it
provides that objections to translations should be raised promptly in writing no later than the next
meeting following such filing, or in the absence of any such meeting within two weeks, as opposed
to at the next filing.

13. The WTO Agreement is authentic in Engl ish, French and Spanish and these are the
languages in which litigation is conducted and adjudications delivered. Nevertheless, evidence
placed on the record in some other language is still evidence placed on the record, i.e. evidence of
fact. However, translation is not a pure question of fact. Translation is about meaning, and the
meaning of municipal law is a mixed question of law and fact (i.e. a legal characterisation of the
facts). Article 17.6 of the DSU indicates that issues of law and legal interpretations, that is,
including translation issues, can be raised on appeal. Therefore, a panel's working procedures may
not provide that a party is absolutely precluded from raising a translation issue on appeal.

14. The European Union understands that translation is a particular type of issue, of a
preliminary nature, and that it may be reasonable to expect parties to raise any obvious
translation issues early. This is similar to so-called preliminary issues. Parties are expected to raise
them at a sufficiently early stage. Nevertheless, there is no absolute bar to them being raised
later, including in appeal proceedings.

15. The particular difficulty with translation issues is that their significance may not always be
apparent until such time as particular terms are set in the context of a particular adjudication. The
European Union would also observe that there are no circumstances in which it would make sense
to win a case based on an incorrect translation.

16. The European Union has understood that paragraph 10 of the Working Procedures is not
an absolute rule, since it uses the term "should". Therefore, the request is not necessary, because
the provision as drafted is not absolute. If th e Panel considers the requested amendment, then
(1) there should be no absolute rule and in an y event two weeks is too short and (2) a balanced
approach should be adopted.

III. S
UBSTANTIVE CLAIMS RELATING TO DUMPING DETERMINATIONS

A. SMST dumping determination, Product C, fa ilure to make a fair comparison, failure to
adjust for different product mixes: Article 2.4 AD Agreement

17. China did not establish the existence of a ma rgin of dumping for SMST on the basis of a
fair comparison between the export price and the normal value. In calculating normal value for
Product C, China compared two baskets with a very different product mix.

18. China's focus on what occurred during the investigation is not helpful, since what really
matters is whether or not, objectively, China ensured a fair comparison. In any event, China's
insistence on the content of SMST's Dumping Questionnaire Response is odd. China accepts that
SMST raised the point in a timely manner. In this respect, China does not allege any procedural
deficiency, nor could it, since the measure at issue itself expressly records the fact that SMST
raised the point.

19. China's submission that SMST's request was "tied-to the original low volume claim" is
inaccurate and irrelevant. The request was a stand-alone request. Even if it would have been "tied-
to" some other request, in failing to ensure a fair comparison, the measure is inconsistent with
Article 2.4 of the AD Agreement.

20. China's argument that SMST failed to provide "a modicum of an indication" of an impact on
price comparability should be rejected. The point raised by SMST is expressly dealt with in the
measure at issue. It is stated that SMST presented evidence proving that the relevant transactions
related to a product that was different from the products exported to China. SMST demonstrated
that, also because of the very thin dimensions of the products, they require more extensive
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-43 -

rolling/drawing resulting in higher cost. Obviousl y, the use of processing technology, including
rolling/drawing, involves costs and the greater the use of such technology, the greater the costs.
SMST also provided the specific documents relating to these transactions.

B. Use of facts available to determine the all others rate: Article 6.8 and Annex II,
paragraph 1 of the AD Agreement

21. As a consequence of the preceding substantive dumping claims and possible substantive
consequences of the procedural claims, and given that the "facts available" used by China to
establish the all others rate included the rate ap plied to SMST, China improperly relied on those
"facts available" when establishing the all others rate, acting inconsistently with Article 6.8 and
Paragraph 1 of Annex II of the AD Agreement. Furt hermore, China acted inconsistently with this
provision, because it determined the dumping ma rgin for other exporters based on facts without
notifying them of all the information required and of the consequences of not submitting that
information. China argues that, even if the dumping margin for SMST was calculated in a WTO
inconsistent manner, no provision of the AD Agreement would require China to make a consequent
adjustment to the all others rate. This is assertion is wrong. If the current dumping margin
calculated for SMST of 11.1% would be demons trated to be WTO inconsistent, and the re-
determination would fix it at a lower amount, then it would no longer be a determined "fact".
Accordingly, "11.1%" would no longer be a "fact" "available" within the meaning of Article 6.8 of
the AD Agreement.

IV. S
UBSTANTIVE CLAIMS RELATING TO THE INJURY DETERMINATION

22. China's determinations with respect to injury and causation are inconsistent with Article 3
of the AD Agreement, in particular Ar ticles 3.1, 3.2, 3.4, and 3.5. In China – GOES the Appellate
Body stated that the different paragraphs of Arti cle 3 "contemplate a logical progression of inquiry
leading to an investigating authority's ultimate injury and causation determination". Most of
China's inconsistencies are a breach of this required "logical progression of inquiry".

A. Price effects: Articles 3.1 and 3.2 of the AD Agreement

23. China's determination violates Articles 3.1 and 3.2 of the AD Agreement in two respects.
First, China's analysis of the price effects of imported Product C is flawed. Second, China
improperly extended its conclusions concerning the price undercutting of Products B and C to the
domestic HP-SSST industry as a whole.

1. China's analysis of price-undercutting with respect to Product C is flawed

(a) Article 3.2 requires "price undercutting", not just a "price differential per se"

24. MOFCOM erroneously concluded that imports of Product C had "price undercutting effects
on the corresponding like domestic products".

25. China argues that "any factual elements other than the price differential between the
import price and domestic price are irrelevant". Yet, a "price differential per se" is only a snapshot
that looks at import prices and domestic prices.

26. The key question is whether any "price differential per se" will suffice, or whether one has
to consider whether the "price differential per se" has the effect of price undercutting.

27. It follows clearly from the statements of the Appellate Body in China – GOES that
Article 3.2 of the AD Agreement contains three price effects: (1) price undercutting; (2) price
depression; (3) price suppression; and not just a "price differential per se" and two price effects.
When the Appellate Body refers to price depression and price suppression, it calls these "the last
two price effects" in Article 3.2, presuming that price undercutting is also a "price effect". Price
undercutting was not at issue in the China - GOES case, but the Appellate Body considers that the
focus of Article 3.1 of the AD Agreement on pric e effects colours the whole of Article 3.2 of the
AD Agreement. Given that "price effects" inform the whole of Article 3.2 of the AD Agreement, it is
equally appropriate that, in conducting an analysis of price undercutting, one is required to
consider whether a first variable – that is, a price differential per se – has explanatory force for the
occurrence of a second variable – that is, price undercutting.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-44 -

28. Interpreting Article 3.2 as requiring a consideration of the relationship between a price
differential per se and a potential price undercutting does not duplicate the causation analysis
under Article 3.5. Both provisions posit different inquiries. The analysis pursuant to Article 3.5
concerns the causal relationship between subject imports and injury to the domestic industry. The
analysis under Article 3.2 concerns the relationship between a price differential per se and an
alleged price undercutting, i.e. subject imports and domestic prices.

29. In this case, there are strong reasons to doubt that a price differential per se had
explanatory force for any alleged price undercutting. The inverse price movements, the vast
difference in import and domestic price levels and the trivial volume of domestically produced
Product C, all suggest that imports of Product C were not in competition with domestically
produced Product C.

(b) Allegations that "similar quantitative difference" justifies price comparison

30. China considers that in 2009 and 2010 the imports of Product C held a similar market
share, and that, on this basis, it was "meaningfu l" to compare the prices in spite of the tiny
amount of domestic sales. Yet, showing that the market share of Product C was tiny in both years,
does not show anything but the fact that these domestic sales were outlier transactions not just in
one year but in both years.

2. China improperly extended its conclusi ons concerning the price undercutting of
Products B and C to the domestic industry as a whole

31. China extended its conclusions concerning the price undercutting of Products B and C to
t h e d o m e s t i c i n d u s t r y a s a w h o l e , a l t h o u g h i t o n l y f o u n d s o m e p r i c e u n d e r c u t t i n g l i m i t e d t o a
minority industry sector that does not actually compete with other sectors, in the context of the
general finding that the vast majority of the domestic production was not subject to any price
undercutting effect. China could have examined "all of the other parts that make up the industry"
by conducting a cross-type analysis of price effects. Instead, it selected the minority sub-
categories of the like domestic products where it found price undercutting effect and unduly
extended its findings to the whole group of like domestic products.

32. The question is whether the focus of the pric e effects inquiry under Article 3.2 is only on
the prices of subject imports, or also on the pr ices of domestic like products. Both the Appellate
Body in China - GOES as well as the panel in China - X-Ray Equipment have clarified this issue.
The test required under a price undercutting analys is relates to the effect of such imports on
domestic prices. It is insufficient to study whether all of the subject imports are sold at
undercutting prices. The analysis needs to include the effect of such imports on domestic prices.

33. There was evidence in the record that the products were not in competition with each
other. Thus, an additional analysis was required in order to extend the price undercutting findings
for Products B and C to Product A.

B. Impact on domestic industry: Articles 3.1 and 3.4 of the Anti-Dumping Agreement

34. First, China's impact analysis did not logically follow from its volume and price effects
analyses and conclusions. When an investigating authority has itself elected to conduct an analysis
of volume and price effects by type, and where the outcome of that analysis already indicates lack
of injury with respect to two out of three product types, that matter must at least be addressed in
the impact analysis.

35. Second, China failed to evaluate or properly evaluate the magnitudes of the margins of
dumping in its overall impact assessment.

36. Third, China improperly disregarded the relevant economic factors and indices showing
that the domestic industry was not injured. Instead of a thorough and persuasive explanation as to
whether the negative factors outweighed the at least seven positive factors, China simply
enumerates the different factors.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-45 -

C. Causation: Articles 3.1 and 3.5 of the Anti-Dumping Agreement

37. China's causation determination lacks any foundation in its volume, price effects, and
impact analyses. China reached its conclusion despite the fact that: (a) the volume and market
share of imported products did not significantly increase; (b) China's analysis of the undercutting
effect of imported products on prices of like domestic products was flawed; and (c) China's review
of the relevant economic factors and indices of the domestic industry was incomplete.

38. Second, China failed to separate and distinguish the injurious effects of two other known
factors, namely the decline in domestic demand and the expansion of the production capacity of
the domestic industry.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- B-46 -

ANNEX B-8
EXECUTIVE SUMMARY OF THE STATEMENT OF THE EUROPEAN UNION
AT THE SECOND PANEL MEETING
I. T HRESHOLD ISSUE: REQUESTS THAT THE PANEL AMEND TWO ASPECTS OF THE BCI PROCEDURES

1. The European Union has submitted that the BCI Procedures are WTO inconsistent insofar
as they provide for the automatic classification as BCI of information that was submitted as
confidential in the municipal anti-dumping proceeding.

2. In the first place, we do not agree with Chin a that, if the firm is unwilling to designate the
information as non-confidential or provide a non-confidential summary, the only option for the
investigating authority is to disregard such information. Article 6.5.2 does not require the authority
to disregard such information; it merely provides for that discretion.

3. The DSU does provide for designation by Members (not firms or investigating authorities).
However, the concept of confidentiality is an objective one.

4. For similar reasons, the European Union has also submitted that the BCI Procedures are
WTO inconsistent insofar as they provide that a party must provide prior written authorisation
from the entity that submitted such information in the anti-dumping proceedings.

5. In its Second Written Submission China argues that such a letter is "necessary" to "allow"
an investigating authority to comply with its obligations under Article 6.5 of the Anti-Dumping
Agreement. However, seeking to include such a rule in the BCI procedures does not "allow"
anything. Rather, it seeks to impose an obligation on the European Union. Whatever obligations
may bear on an investigating authority pursuant to Article 6.5, it is not the purpose of these
proceedings to hand down a ruling on the interpretation of Article 6.5 and its application by the
European Union. No such matter is within the Panel's terms of reference.

6. What must govern the particular issue raised in these proceedings is Article 18.2 of the
DSU and Article 17.7 of the Anti-Dumping Agreement.

II. P ROCEDURAL CLAIMS

7. As set out in our First Written Submission, the European Union, like Japan, claims that
China's treatment of confidential information subm itted by the Applicants was inconsistent with
Articles 6.5 and 6.5.1 of the Anti-Dumping Agreement, with respect to certain specific documents.

8. As set out before, the European Union considers that China is not permitted to engage in
ex-post rationalisation at this stage of the process.

9. With respect to China's assertion that it disclosed "a large part of the original text", the
European Union has already pointed out that, other than disclosing the final data summarised in
paragraph 90 of the EU First Written Submission, the Applicants provided no summary of any
other contents of these reports.

10. We also recall that, with respect to this gr oup of Appendices, the Applicants did not explain
why a summary of other aspects of these reports, including the methodologies utilized therein or
underlying evidence, could not be provided.

11. As set out in our First Written Submission, with respect to Article 6.5.1 of the Anti-
Dumping Agreement, the European Union, like Japan, claims that China acted inconsistently with
this provision because it did not require sufficient non-confidential summaries or explanations as to
why such summaries were not possible, with respect to the documents specified therein.

12. We do not understand why China believes that affirming that the documents are based on
"non-existent information" might be helpful to China's case. The whole purpose of these
transparency provisions is to provide the interested parties with the opportunity to assess and
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challenge the factual assertions, evidence and arguments on which petitioners and the
investigating authority base themselves.

13. The European Union claims that the measure at issue is inconsistent with Article 6.7 and
Annex I, paragraph 7 of the Anti-Dumping Agreement and Article 6.8 and Annex II, paragraphs 3
and 6 of the Anti-Dumping Agreement because China failed to take into account certain
information corrected to eliminate double counting. China responded to this procedural claim by
focussing on the substance.

14. Focussing on the procedural claim, our claim is based on the terms of the measure at issue
itself, which simply records rejection of the information solely on the grounds that it was submitted
at verification.

15. We believe that China's submissions in these very proceedings demonstrate that to be the
case, because it is simply a matter of reconciling Tables 6-6 to 6-8 with Table 6-5, by ensuring
that, in compiling Table 6-5, no double counting takes place. We seek only that the Panel take
such steps as may be necessary in order to ensure that China understands that it should ensure
that no such double counting occurs in the re-determination.

16. As set out in our First Written Submission, the European Union submits that China acted
inconsistently with Articles 6.4 and 6.9 of the Anti-Dumping Agreement by failing to disclose the
essential facts that form the basis of its dumping determinations.

17. First, China states that: "It is difficult for China to rebut the arguments of Japan and the
European Union, since they fail to mention the fo rmulas that MOFCOM allegedly failed to disclose".
The heart of the problem is that it is impossible for the European Union and Japan to set out the
detail of matters that MOFCOM has not disclosed in the first place.

18. Second, the heart of the disagreement between the Parties is now crystal clear. China
considers that Article 6.9 only covers the factual basis for inference, not the inferences
themselves. We disagree for the reasons we have given before. Our conclusion is that China is
simply wrong to assert that something loses its quality as a fact simply because it is inferred.

19. With respect to the injury determinations,
 the European Union submits that China acted
inconsistently with Articles 6.4 and 6.9 of the Anti-Dumping Agreement by failing to disclose the
essential facts that form the basis of its injury and causation determinations.

20. With respect to China's argument that the complainants have acknowledged that the
Product A import price in 2008 was confidential, we refer to our Response to Panel Question 73.

21. With respect to China's argument that ther e were only two domestic producers and this
made disclosure of a range impossible, the European Union disagrees. Elsewhere in its submissions
China expressly recognises the possibility of pr oviding a range that does not consist of the
minimum and maximum prices actually charged. This method would therefore have permitted
China to provide a range.

22. Similarly, China's argument to the effect that each producer would have known the
average domestic price of the other is not convincing, because it would not be possible for one
producer to extract the average weighted domestic price of the other producer from the data.

23. Finally, the European Union does not agree wi th China that the question of whether or not
there were other ways of providing the data whilst respecting confidentiality is irrelevant.

24. The European Union claims that China acted inconsistently with Articles 12.2 and 12.2.2 of
the Anti-Dumping Agreement because it did not provide a report stating all relevant information
supporting the imposition of definitive anti-dumping duties against the investigated imports as part
of its Final Determination, particularly with respect to the all others rate and the use of facts
available.

25. The European Union claims that China acted inconsistently with Articles 12.2 and 12.2.2 of
the Anti-Dumping Agreement because it did not provide a report stating all relevant information
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supporting the imposition of definitive anti-dumping duties against the investigated imports as part
of its Final Determination, particularly with respect to the injury and causation determinations.
As the Appellate Body did in China – GOES , the Panel in the present case should not accept
China's use of price change data in place of the data that actually are relevant to its determination
that import prices "noticeabl[y]" undercut domestic prices.

26. Second, China also failed to satisfy its obligations under Articles 12.2 and 12.2.2 because
with regard to its price comparison of imported and domestically produced Product C, China failed
to provide any detail on how it purportedly accommodated important "quantitative differences"
between the products in its price undercutting analysis. The European Union recognizes that
Article 12.2.2 requires an authority to pay due rega rd to confidentiality. There appears to be no
reason why China could not, at a minimum, disclo se non-confidential summaries, such as indexed
data or price ranges that would permit a comparison of import prices and domestic prices by type
and total product basis, while maintaining the confidentiality requests of interested parties, in line
with what the Appellate Body stated in China – GOES.

III. S
UBSTANTIVE CLAIMS RELATING TO THE DUMPING DETERMINATIONS

27. The European Union claims that China did not determine the amounts for administrative,
selling and general costs (SG&A) on the basis of re cords and actual data kept by the exporter or
producer under investigation (SMST) in a manner that reasonably reflects the costs associated
with the production and sale in the ordinary course of trade of Product B (DMV 304HCu).

28. We cannot agree with China that the fact that we have demonstrated that the calculation
is based on aberrational sample transactions, without this being contested by China, is irrelevant.
We cannot agree with China that the fact that the coefficients are not actual data pertaining to
production and sales in the ordinary course of trade is irrelevant. We cannot agree with China that
the fact that Table 6-5 was verified whilst Table 6-3 was not with respect to SG&A is irrelevant. We
cannot agree with China that the fact that SMST repeatedly requested MOFCOM to disregard the
SG&A in Table 6-3 and directed it instead to Table 6-5 is irrelevant. We cannot agree with China
that the fact that China has sought to insert the term "this" into the translation of the disclosure
document when it is not there is irrelevant. We cannot agree with China that the fact that China
only now provides the information relevant to the calculation is irrelevant. We cannot agree with
China that the reasonableness of the SG&A amounts used by China is irrelevant. And most of all,
we cannot agree with China that the circumstances do not require it to re-visit the measure and
correct the error, in good faith.

29. The position with respect to the coefficients is also clear. According to China, anything
"used" by a firm is, by definition, actual data pe rtaining to production and sales in the ordinary
course of trade; and in any event it is sufficient for the purposes of Article 2.2.2 if the amounts are
based in part on actual data pertaining to production and sales in the ordinary course of trade. We
have explained why we disagree with both of these assertions, which we think are obviously
wrong.

30. No doubt if the European Union had written the entire provision out in its Panel Request
(as well as expressly referring to Article 2.2.2), instead of simply providing a brief summary, in
accordance with the terms of Article 6.2 of th e DSU, we would now be facing an (equally
unmeritorious) claim of failure to consult, pursuant to Article 4 of the DSU. China cannot profit
from its totally inadequate disclosure in the municipal anti-dumping proceedings in order to
engineer a situation where it can try to pressure Members back to square one (causing substantial
additional delay).

31. To recall, the European Union claims that, in the measure at issue, China did not establish
the existence of a margin of dumping for SMST on the basis of a fair comparison between the
export price and the normal value, and in part icular on the basis of a comparison between
comparable exports and domestic prices, for Product C (DMV 310N).

32. Specifically, as we have already indicated with respect to costs of production, we note that
Table 6-3 (DMV 310N (EU)) contains the cost of production of Product C per month. Table 4-2,
Domestic (regional) Sales, cells K5 and K6 state that the two sales were made on 15 October 2010
and 17 November 2010 and were the only sales of Product C made in those months. Cells E18
and F18 of Table 6-3 (DMV 310N (EU)) demonstrate that the cost of production for those months
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is about twice as high as the cost of produc tion in April and May 2011. In April and May 2011
Product C was sold in representative quantities. We also note that in December 2010 two samples
were delivered to customers. These samples were correctly excluded from the normal value by
China. They represented the only product C produced in December 2010 and the cost of
production is extremely high, as it is for the production of the samples of Product B.

IV. S
UBSTANTIVE CLAIMS RELATING TO THE INJURY DETERMINATION

33. The European Union claims that China's determinations with respect to injury and
causation are inconsistent with China's obligations under Article 3 of the Anti-Dumping Agreement,
in particular Articles 3.1, 3.2, 3.4, and 3.5.

34. In the view of the EU, the term "price und ercutting" poses two interpretative challenges:
The first question to be addressed relates to what constitutes "price undercutting". The EU
maintains that price undercutting, by definition, involves not just a "price differential" but also an
element of "price effect". The second question is: How is an investigating authority required to
establish through its price undercutting inquiry that the price effect on domestic like products is
the result or consequence of, or may be explained by, dumped imports?

35. The key difference seems to be that China considers that any mere "price differential"
amounts to a "price effect". The EU, on the other hand, considers that there may be situations
where a mere "price differential" does not contain a "price effect". Therefore, the key interpretative
question on this issue would be: Is it sufficient to simply establish a price differential? The
European Union has adduced a number of reasons for its position. The most pertinent usage of the
word "undercut" is: "To supplant […] by selling at lower prices". "To supplant" means "Chiefly of
things: to take the place of, succeed to the position of, supersede". The European Union has
already described in detail how the relevant sentence in Article 3.2 of the Anti-Dumping
Agreement refers to "effect". Suff ice it to say here that the sentence starts with the words "With
regard to the effect of the dumped imports on prices" and hence clearly refers to three price
effects, and not to two price effects (in the form of price depression/suppression) and a non-price
effect.

36. A finding of "price undercutting" thus requires a finding of a price differential plus a finding
of a price effect. There can be no price effect if there is no competitive relationship between the
dumped imports and the domestic like product. There are other factors that may impact the
finding of a price effect.

37. The European Union considers that in a case where an investigating authority has strong
reasons to doubt the presence of undercutting, the investigating authority needs at least to discuss
the evidence pointing to the absence of such effect.

38. As pointed out before, the European Union considers that China's analysis of the price
effects of imported Product C is erroneous, and fa lls short of an objective examination, based on
positive evidence. In the view of the European Union, China confuses two different types of
analysis. The consideration that is undertaken pursuant to Article 2.6 of the Anti-Dumping
Agreement is not identical with the requirem ent "under Article 3.2 of the Anti-Dumping
Agreement […] to consider whether the prices are actually comparable".

39. The European Union argues that China improperly extended its price undercutting findings
with respect to Products B and C to the whole industry to conclude that imports of HP-SSST
products had a price undercutting effect on like domestic products.

40. China's arguments fall into two categories: On the one side, China argues that its alleged
finding of "price correlation" justified such an extension. On the other side, China argued that
there was evidence of substitutability of Product A by Products B and C.

41. As regards the price correlation argument, the EU addressed the essence of these
arguments already in its Second Written Submission.

42. Turning to China's "substitutability" argument, given that we are in a trade context, what
matters is commercial substitutability in the real world, not theoretical substitutability in a world
where commercial aspects would not matter.
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43. As regards China's impact analysis, the European Union refers back to its previous
statements. Article 3.4 explicitly refers to a number of factors, and does not contain anything
capable of supporting China's "on the one hand […] on the other hand"- distinction.

44. As regards Articles 3.1 and 3.5 of the Anti -Dumping Agreement, the European Union refers
back to its previous statements.

WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX C
ARGUMENTS OF CHINA
Contents Page
Annex C-1 Executive Summary of the First Written Submission of China C-2
Annex C-2 Executive Summary of the Statement of China at the First Panel Meeting C-7
Annex C-3 Executive Summary of the Second Written Submission of China C-9
Annex C-4 Executive Summary of the Statements of China at the Second Panel Meeting C-14
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX C-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF CHINA
1. THE EUROPEAN UNION'S CLAIMS REGARDING MOFCOM'S DUMPING
DETERMINATION

1.1 MOFCOM’s determination of the SG&A and its consistency with Articles 2.2, 2.2.1,
2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement

1. The bulk of the claims made by the European Union under Articles 2.2, 2.2.1, 2.2.1.1
and 2.2.2 of the Anti-Dumping Agreement are outside the Panel's terms of reference. In
accordance with paragraph 8 of the Working Procedures of the Panels, China respectfully submits a
request for preliminary ruling in this respect. The European Union's claims that are within the
Panel's terms of reference are flawed by an inco rrect depiction of the facts, as available to
M O F C O M a t t h e t i m e i t m a d e i t s d e t e r m i n a t i o n . M O F C O M u s e d t h e S G & A a m o u n t t h a t w a s
reported by SMST in the only table of the questionnaire in which SMST was required to report the
actual unit SG&A amount for each specific grade of the product under consideration, distinguishing
between sales to the European Union and sales to China. SMST itself stated that these were the
actual data for SG&A. Importantly, during the procedure SMST never requested that the SG&A
data in Table 6-3 should not be used, nor did it submit an alternative per grade SG&A amount. The
European Union's erroneous claim that MOFCOM did not explain the source of the SG&A amount
may relate, inter alia, to a translation mistake in Exhibit EU–25 (BCI).

2. Moreover, MOFCOM simply could not use the SG&A data in Table 6-5, since this data was
not broken down per grade. Also, SMST itself had reported the specific SG&A amount in Table 6-3
for EU sales, and MOFCOM was not allowed to disregard it without any valid ground.

3. The SG&A data used by MOFCOM must be considered actual, since, far from being
"arbitrarily determined" by MOFCOM, the SG&A amount had been provided by SMST as actual
data. As such, MOFCOM used "actual data of the exporter or producer under investigation" that
related to the product at issue. Furthermore, th e data were based on the records of SMST. The
SG&A data in Table 6-3 had been reported by SMST, stating that "[t]he figures reported in
Table 6-3 were taken from cost calculations for the individual orders of subject merchandise
produced during the POI".

1.2 MOFCOM's dumping determination fo r SMST’s sales of Grade C and its
consistency with Article 2.4 of the Anti-Dumping Agreement

4. In order to ensure a fair comparison, MOFC OM opened the dialogue with SMST with the
questionnaire, in which MOFCOM asked multiple questions on the products, prices, adjustments,
costs, production processes and other relevant items and clearly informed SMST on how it should
make a request for adjustment. All of SMST's answers and supporting documents provided in its
questionnaire response, without any exception, de monstrated beyond any reasonable doubt that
there were no physical differences that had an impact on price comparability between Grade C
exported to China and Grade C sold domestically by SMST. During the investigation, SMST never
informed MOFCOM that these answers in its questionnaire response were wrong, nor why this
would have been the case. During the investigation, SMST never lodged any substantiated request
in relation to a fair comparison concerning sales of Grade C, and therefore, the claim presented by
the European Union must fail. SMST merely lodged several contradictory and incoherent
statements concerning first, low volume sales and, second, low volumes sales of tubes with
differences in diameter and, finally, just sales of tubes with differences in diameter.

5. Therefore, MOFCOM’s decision against taking into account SMST's unsubstantiated
statements presented subsequent to its questionnaire response, and to rather base its findings on
the clear and consistent information contained in the questionnaire response, is consistent with
China’s obligations under Article 2.4 of the Anti-Dumping Agreement.
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1.3 MOFCOM's determination of SMST's dumping margin, as consistent with
Article 6.7 and Annex I, paragraph 7 and Article 6.8 and Annex II, paragraphs 3
and 6 of the Anti-Dumping Agreement

6. The European Union's claims under Article 6.7 and Annex I, paragraph 7 and Article 6.8
and Annex II, paragraphs 3 and 6 of the Anti-Dum ping Agreement relate to an alleged double-
counting of administrative expenses. However, an examination of the facts makes it clear that
there was simply no double-counting in the dumping margin determination.

7. Moreover, Article 6.7 and Annex I, paragraph 7 of the Anti-Dumping Agreement cannot be
construed as containing a requirement to accept all information provided during a verification visit.
The fact that a verification visit's purpose may be "to verify information provided or to obtain
further details" does not imply that an investigating authority is compelled to verify information
provided or to obtain further details, let alone that it prescribes any approach that must be
followed to pursue that objective. As such, Article 6.7 and Annex I of the Anti-Dumping Agreement
leave a significant margin of discretion to investigating authorities. With respect to the alleged use
of facts available, it suffices to say that MOFCOM simply did not rely on any SG&A amount in which
there allegedly was a double-counting. Article 6.8 of the Anti-Dumping Agreement and Annex II
are thus irrelevant to the case at hand, since MOFCOM did not make any determinations on the
basis of "facts available".

2. CLAIMS REGARDING MOFCOM'S INJURY DETERMINATION

2.1 Consistency of MOFCOM's consideration of price effects with Articles 3.1 and 3.2
of the Anti-Dumping Agreement

8. With respect to MOFCOM's consideration of the price effects of Grade C, MOFCOM did
explain the methodology used to take into acco unt the quantitative difference for the Grade C
price effects consideration, contrary to the allegations made by Japan and the European Union. In
any event, the argument made by Japan and the European Union blurs the lines between the
substantive requirements laid down in Articles 3.1 and 3.2 and the procedural obligations set out
in other provisions.

9. In addition, Japan and the European Union's claim is based on an incorrect understanding
of the nature of the price undercutting consid eration under Article 3.2 of the Anti-Dumping
Agreement. The factual existence of price undercu tting by the dumped imports is considered in
itself to have an effect on domestic prices. A finding of price undercutting is a purely factual
consideration, which only requires a comparison of prices. Thus, any factual circumstances other
than the price difference that exists between the import price and domestic price of Grade C (for
instance, the increase in the prices of domestic Grade C) are irrelevant for the price undercutting
consideration. Moreover, Article 3.2 of the Anti-Dumping Agreement does not require an
investigating authority to establish what caused the price undercutting (for instance, an increase of
the domestic price or a decrease of the import price). Finally, the allegation that imports of
Grade C were not in competition with the domestically produced Grade C is legally irrelevant and
completely disregards MOFCOM's findings and in-depth analysis of this matter.

10. By claiming that MOFCOM improperly extended its conclusions concerning the price
undercutting by Grade B and Grade C to the "domestic industry" "as a whole", Japan and the
European Union misrepresent the nature of the price undercutting consideration in two main ways.
First, they erroneously presume that the price undercutting consideration under Article 3.2 of the
Anti-Dumping Agreement must be made with respect to the domestic industry, whereas it relates
to the prices of the dumped imports as compared with the price of a like product . As such, the
price effects consideration concerns the relationsh ip between subject imports and a variable other
than the domestic industry, that is, domestic prices. The assessment of the effects of the price
undercutting on the domestic industry as a whole is relevant as to whether there is a causal link
between the prices of the dumped imports and the impact on the domestic industry, in the
causation analysis, not in the price undercutting consideration.

11. Second, considering that price undercutting had to be found with respect to the like
product as a whole is at odds with the wording of Articl e 3.2 of the Anti-Dumping Agreement. A
textual analysis, in particular with respect to the use of the indefinite article (as opposed to the
abundant references to the concept of "like product" with use of the definite article in other
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provisions), reveals that for the price undercutting consideration, the prices of the dumped imports
must be compared with the prices of some like products. Moreover, the consideration under
Article 3.2 of the Anti-Dumping Agreement focuses on price undercutting by the prices of the
dumped imports. MOFCOM's consideration revealed that virtually all dumped imports were made
at undercutting prices. Japan and the European Union's position is also at odds with the purpose of
the price effects consideration, which will logically progress through the impact analysis towards
the causation analysis.

12. In addition, far from being selective, MO FCOM's methodology on the basis of which it
limited its price undercutting examination to "matching" models was objective and in line with
Article 3.2.

2.2 Consistency of MOFCOM's analysis of th e impact on the domestic industry with
Articles 3.1 and 3.4 of the Anti-Dumping Agreement

13. Any degree of "selectiveness" alleged to exis t by Japan logically follows from the explicit
requirements of the relevant provisions of the Anti-Dumping Agreement. Moreover, any differences
between the approach under Article 3.2 and the approach under Article 3.4 may have to be
assessed under Article 3.5 of the Anti-Dumping Agreement, which "links" both elements. In
addition, Japan erroneously postulates that ther e existed a "segment of the domestic industry
producing Products B and C" and a "segment of the domestic industry producing Product A" as well
as a "domestic industry sector" per grade.

14. The European Union also claims that MOFCOM's impact analysis was improperly based on
its flawed price effects analysis because the data relating to Grade A and Grade C are non-
attribution factors. This reveals clearly that the European Union's argument concerns the non-
attribution analysis under Article 3.5 of the Anti-Dumping Agreement, or, at best, the causation
analysis in general.

15. With respect to the evaluation of the margin of dumping, it is factually incorrect that
MOFCOM did not evaluate this in the part of the Final Determination relating to the injury
determination. In addition, similar to what was confirmed by case law for the evaluation of the
"factors affecting prices", Article 3.4 does not as a general rule require an evaluation of the
magnitude of the margin of dumping beyond the analysis of this factor as required by the
provisions of the Anti-Dumping Agreement dealing specifically with the dumping margin. With
respect to the conclusion reached by MOFCOM, the Final Determination provides a solid reflection
of MOFCOM's reasoned evaluation of the weight and relevance of all factors. MOFCOM concluded
that the weight and relevance of the positive factors fell short of those of the negative factors. This
is something very different from the allegation that MOFCOM "disregarded" positive factors.

16. Finally, MOFCOM did not fail to examine wh ether subject imports provided explanatory
force for the state of the domestic industry. The interpretation put forward by Japan creates an
obligation that simply cannot be found in Articl e 3.4 of the Anti-Dumping Agreement. Moreover, a
correct overview of the facts shows that MOFCOM properly examined the explanatory force, even
under Japan's misguided interpretation.

2.3 The consistency of MOFCOM’s causation determination with Articles 3.1 and 3.5
of the Anti-Dumping Agreement

17. In its causation analysis, MOFCOM duly established a link between its price effects
consideration and the impact analysis. The effects of price undercutting by the dumped imports on
the domestic industry must be assessed by an investigating authority, inter alia taking into
account how it defined the like product and the product concerned for the purposes of this
investigation. MOFCOM had found in this respect that the three grades constitute a "single
product" with correlation between their prices.

18. With respect to the importance attached to the market share, consistently with its finding
under Article 3.2, MOFCOM stated as a first point in its causation analysis that imports of the
subject products from the EU and Japan showed year-on-year declines. MOFCOM however
continued its analysis and found that in order to assess the impact of the price undercutting by
dumped imports on the domestic industry, it had to take into account the volume of imports made
at undercutting prices. In line with the findings of the panel in EC – Tube or Pipe Fittings, MOFCOM
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analyzed the key variables to derive an understanding about the impact of the price undercutting
on the domestic industry, i.e. the quantity of sales at undercutting prices and the margin of
undercutting. Contrary to allegations put forward by Japan and the European Union, Article 3.5 of
the Anti-Dumping Agreement certainly allows an investigating authority to attach importance to
the volume of imports. Indeed, an investigating authority is obliged to consider all relevant
evidence.

19. Moreover, an analysis of MOFCOM's findings reveals that it was reasonable in concluding
that the decline in apparent consumption and the capacity expansion did not break the causal link
established between the dumped imports and the material injury. The conclusions reached by
MOFCOM are reasonable conclusions as could be reached by an unbiased and objective
investigating authority in light of the facts and arguments before it and constitute meaningful
explanations of the nature and extent of the injurious effects of reduced apparent consumption.

3. CLAIMS REGARDING MOFCOM'S DETERMINATION OF THE ALL OTHERS RATE

20. By means of the Initiation Notice and the different forms by which this was communicated,
MOFCOM fulfilled its obligations under paragraph 1 of Annex II and was entitled to use facts
available with respect to those exporters/produc ers that did not come forward and/or did not
respond to the questionnaire. A very similar situation was addressed by the panel in China –
Broiler Products, which explicitly dismissed Japan's misplaced reliance on the notion that MOFCOM
could not substitute information with facts available, other than the information requested in the
Initiation Notice. This conclusion is reinforced by the publication of the questionnaire on MOFCOM's
website, which included a similar notice that if the information was not timely supplied, then facts
available could be used. In view of the above, th e claim must be rejected that MOFCOM failed to
comply with Article 6.8 and Paragraph 1 of Annex II to the Anti-Dumping Agreement.

21. As regards Article 6.4 of the Anti-Dumping Agreement, this alleged infringement must be
dismissed, as the European Union does not present a prima facie case. The European Union limits
its arguments under this provision to simply a bare reference to this provision.

22. The claim on the basis of Article 6.9 of the Anti-Dumping Agreement must equally fail
since MOFCOM adequately disclosed the facts leading to the conclusion that the use of facts
available was warranted (the failure of various interested parties to respond to the Initiation Notice
by means of the registration form and/or the failure to respond to the questionnaire) as well as the
facts used to determine the all others rate (the highest dumping margin of the Japanese
responding companies for the all others rate for Japan, and it used the highest dumping margin of
the EU responding companies for the all others rate for the European Union). Similar comments
apply to the alleged violation of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement.

4. CLAIMS REGARDING MOFCOM'S DISCLOSURE DOCUMENTS AND FINAL
DETERMINATION

23. The European Union fails to make a prima facie case for the alleged inconsistency with
Article 6.4 because it fails to show that MOFCOM denied an interested party's request to see
information used by the authorities.

24. Japan and the European Union's claims with respect to the dumping determinations under
Article 6.9 of the Anti-Dumping Agreement are on ly supported by general allegations, which are
not substantiated in any way by means of a specific reference to the disclosure documents. A
complaining party may not simply submit evidence in the form of exhibits, accompanied by some
general allegations and expect the panel to divine from it a claim of WTO-inconsistency. This
implies that no prima facie case has been made. In any event, the examples provided by China
demonstrate that the general allegations relied upon by Japan and the European Union are
factually incorrect and that MOFCOM satisfied its obligations under Article 6.9.

25. Japan and the European Union's claims in relation to the injury and causation
determinations must equally fail. With respect to Article 6.9, MOFCOM disclosed all "essential
facts", and as concerned "essential facts" for which it was bound by confidentiality obligations, it
provided sufficient non-confidential summaries, inter alia in the form of a range of the confidential
margins. With respect to the claims under Articles 12.2 and 12.2.2, similarly, MOFCOM included all
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"relevant information on the matters of fact" where appropriate, in the form of a proper non-
confidential summary.

5. CLAIMS REGARDING MOFCOM'S TREATMENT OF CONFIDENTIAL INFORMATION

26. With respect to the alleged violation of Ar ticle 6.5 of the Anti-Dumping Agreement, the
European Union fails to specify the documents for which it alleges that confidential treatment was
improperly granted and fails to refer to the statements considered by MOFCOM as providing "good
cause". Accordingly, it fails to make a prima facie case. In relation to Japan's claim, the facts of
this case show that the Petitioners did not only request confidential treatment out of concern for
the impact on the third parties' businesses. Rather, they provided several other reasons justifying
the confidential treatment of the four appendices at issue. As such, their concern could not have
been sufficiently addressed by withholding the names of the third parties. Moreover, in line with
the Petitioners' request and as revealed by the non-confidential versions of the four appendices at
issue, the confidential treatment did not concern the entirety of the four appendices at issue on a
blanket basis. Rather, the non-confidential versions lodged by the Petitioners included a large part
of the original text. MOFCOM acted consistently with Article 6.5 of the Anti-Dumping Agreement.

27. In relation to the claim under Article 6.5.1 of the Anti-Dumping Agreement, the Petitioners
provided a broad range of details in the concerne d non-confidential summaries and/or statements
as to why summarization was not possible. With respect to the appendices the confidential
treatment of which is challenged by Japan under Article 6.5, the non-confidential versions clearly
disclose more than merely the final data, as alleged by Japan and the European Union, but also
provide further summaries or even integral parts of the information contained in each original
(confidential) report. They are certainly sufficiently detailed to provide a "reasonable
understanding" of the substance of the information submitted in confidence. With respect to the
Appendices 1, 7, 8, 24, 25, 26, 27, 28, 31, 32, 33, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46,
47, 48, 49, 50, 51, 52, 56, 57, the translation provided by Japan and the European Union does not
correctly reflect the original Chinese version. As a matter of fact, the column "Note and non-
confidential summary" provides a statement of reasons as to why further summarization is not
possible.

6. OTHER ISSUES

28. The European Union brings a request for the amendment of the BCI Procedures adopted by
the Panels. China considers that the Panels have, after discussing the matter with the parties to
the disputes, determined that additional protection was justified in this case and specified the form
that this additional protection would take. Moreover, the BCI procedures are in line with Article 6.5
of the Anti-Dumping Agreement. As such, there is nothing WTO inconsistent about the content of
the BCI Working Procedures as adopted by the Pane ls in accordance with Article 12.1 of the DSU
and they do not need to be amended in this respect.

29. The European Union further requests that the Panel exercise its right to seek information,
as well as to make a suggestion for implementation, pursuant to Articles 13.1 and 19.1 of the DSU
respectively. While China does not call into question the Panel's discretion to decide whether or not
to exercise its rights under Articles 13.1 and 19.1 of the DSU, it does not consider it appropriate to
do so in this dispute.

30. China respectfully requests the Panels to amend paragraph 10 of the Working Procedures
of the Panels, to ensure a more even-handed treatment of both the complainants and the
defendant in this dispute with respect to the timeframe within which objections to translations
should be raised.

7. CONCLUSION

31. For the reasons set forth in its submission, China requests that the Panel in DS454 and the
Panel in DS460 reject the claims of respectively Japan and the European Union in their entirety
and find that MOFCOM’s determinations in the underlying investigation were fully consistent with
China’s obligations under the Anti-Dumping Agreement and the GATT 1994.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX C-2
EXECUTIVE SUMMARY OF THE STATEMENT OF
CHINA AT THE FIRST PANEL MEETING
Mr. Chairman, distinguished Members of the Panels,

1. The People's Republic of China ("China") would like to thank you for agreeing to serve on
these Panels. China also takes this occasion to thank the Secretariat for its valuable assistance. In
this oral statement, China will briefly touch upon some key factual and legal issues in this dispute,
leaving as much time as possible for answering any questions the Panels may have.

1. THE ANTI-DUMPING INVESTIGATION AT ISSUE

2. The single product under consideration includes three grades, with Grade A as the low-end
grade and Grade B and Grade C as the high-end gr ades. On the import side, Grade B represented
over 70% of the imports of the product under cons ideration, with Grade C making up the bulk or
all of the remaining imports. The domestic industry produced and sold all three grades. However,
sales of the low-end Grade A represented a large share of its sales since its ability to sell Grade B
and Grade C was hampered by unfair competition from imports.

3. The dumped imports from Japan and the European Union still held a market share of
around 50%, and their prices decreased year-on-year. The imports were found to be made at
undercutting prices. Imports of Grade B (representing over 70% of total imports) were made at
prices that were up to 28% lower than the domestic sales price. Imports of Grade C were found to
be made at undercutting prices as well. For Grade A, it was not possible to compare prices because
of the quantitative difference between imports and domestic sales in 2008 and the absence of
import sales in other years. As such, there was price undercutting by all grades that were actually
imported by Japan and the European Union in years other than 2008 (that is, Grade B and
Grade C).

4. Faced with these imports at undercutting prices, the domestic industry was suffering
injury. MOFCOM's analysis revealed the presence of a number of positive indicators, but its
assessment showed that the negative indicators outweighed the positive factors.

5. In its assessment of the causal link, MOFCOM took into account that the import volume
decreased, as revealed by the volume effects analysis. However, when assessing the impact of the
price undercutting on the domestic industry, MOFCOM did take into consideration that the dumped
imports made at undercutting prices still held significant market shares. The imports of Grade B
and Grade C made it practically impossible for the domestic industry to sell the high-end grades of
the product under consideration. The fall in the (u ndercutting) import price of the high-end grades
resulted in a significant fall in the domestic sales price that the domestic industry managed to
charge in these high-end grades. The fall in pric e of the imported high-end grades also impacted
the sales price at which the domestic industry could sell the low-end product grade (Grade A).

2. KEY LEGAL ISSUES AT STAKE

6. One of the key elements vitiating the clai ms by Japan and the European Union is the
failure to respect the inherently different nature of the inquiries under paragraphs 2, 3 and 5 of
Article 3 of the Anti-Dumping Agreement and the relationship between those inquiries. Assessment
of the WTO consistency of the different steps in an injury analysis, such as the price effects
consideration and the impact assessment, should be made according to the obligations in the
paragraph that governs such specific step. Japan and the European Union's claims, however,
conflate those obligations contained in the specific paragraphs with one another or simply
transpose the obligations contained in one paragraph to a different step in the injury analysis.

7. This is clearly revealed by the fact that Japan and the European Union allege that MOFCOM
has erroneously extended its conclusion concerning price undercutting of Grade B and Grade C to
the "domestic industry as a whole". A similar misunderstanding affects Japan's claim with respect
to the impact assessment under Article 3.4 of the Anti-Dumping Agreement. Japan fails to
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acknowledge that the focus of the price effects consideration and the impact assessment are
inherently different. Considerations that may resu lt from these differences, if any, need to be
addressed in the causation analysis under Article 3.5 of the Anti-Dumping Agreement, not in the
impact assessment under Article 3.4.

8. Another factor which undermines the position of Japan and the European Union is the
apparent lack of understanding of the inherently different nature of a price undercutting
consideration, on the one hand, and a price depression or suppression analysis, on the other hand.

9. China would like to stress once again the importance of assessing the European Union's
dumping claims on the basis of a correct, complete and contemporaneous overview of the factual
elements relating to these claims. This factual overview reveals that if any mistakes were made in
relation to the dumping matters at stake, these we re made by the EU exporter concerned, not by
the investigating authority. Whether or not a different determination would have or should have
been reached by MOFCOM in the absence of th e mistakes by the EU exporter, is not an
assessment to be made by the Panel. The Panel sh ould assess the European Union's claims on the
basis of an analysis of the record at the time of the determination.

3. THE EUROPEAN UNION'S RESPONSE TO CHINA'S REQUEST FOR PRELIMINARY
RULING

10. In response to China's request for a prelim inary ruling on the terms of reference, the
European Union, instead of focusing on the proced ural matter at stake, addresses a wide range of
substantive aspects which are of no relevance whatsoever to the procedural question posed to the
Panel. China notes that the response to China's request for a preliminary ruling is not the
appropriate medium to raise additional substantive arguments.

11. Each of the four provisions listed in the European Union's request for the establishment of
a panel contains multiple obligations. Where a provision contains only a single obligation, a simple
reference to the provision may be a sufficient summary of the legal basis of the complaint. Where
a provision, such as those at stake contains multiple obligations, a panel request may need to
specify which of the obligations is being challenged. If so, it goes without saying that the
obligations identified represent the totality of th e claims before the panel under the provisions in
question. This is the situation presently before the Panel in DS460. The summary of the legal basis
of the complaint of the European Union is expressly limited, by the use of the words "in particular",
to the obligations for the SG&A to (1) reflect th e records of the exporter and (2) be based on
actual data.

12. The arguments presented by the European Union in its response to the request for
preliminary ruling must fail. No summary of the legal basis of the claims at stake was included in
the panel request. Since the request for the establishment of a panel clearly limited the
European Union's claims regarding the SG&A to tw o specific obligations, China obviously limited
the preparation of its defence to these specific obligations. This precluded China from including
arguments about other obligations in its first written submission. The absence of a legal summary
of the basis of the complaint for the other claims raised by the European Union in its first written
submission did not only result in a prejudice to China. As a result of this absence, the request for
the establishment of the panel equally failed to fulfil its function of informing the third parties of
the basis for the complaint and precluded WTO Members from assessing whether they had a
substantial interest in the matter before the Panel.

13. In its response, the European Union includes a number of allegations which are irrelevant
to the subject matter of the requested preliminary ruling. China will clarify once again in writing
why the allegations of the European Union are factually incorrect. However, at this stage, China
considers that the decision on the preliminary ru ling should focus on the procedural matter at
stake and not on the surprisingly confused substantive inaccuracies put forward by the
European Union.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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ANNEX C-3
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF CHINA
1. MOFCOM'S DETERMINATION OF TH E SG&A AND ITS CONSISTENCY WITH
ARTICLES 2.2, 2.2.1, 2.2.1.1 AND 2.2.2 OF THE ANTI-DUMPING AGREEMENT

1. The European Union's submissions during the Panel process leave it unclear as to exactly
which claims the European Union is raising, how these claims relate to each other, and which
arguments relate to which claims. The lack of any clarity and precision in relation to how the
European Union is developing its claims in its first written submission, in any event, is of limited
importance to the present dispute, given the high level of precision and clarity of the claims
included in the European Union's request for the establishment of a panel. The latter expressly
limits its claims under Articles 2.2, 2.2.1, 2.2. 1.1 and 2.2.2 of the Anti-Dumping Agreement to the
claims that the SG&A amounts "do not reflect the records and the actual data". The use of the
word "in particular" makes this even clearer.

2. The request for the establishment of a panel by the European Union is thus, in the words
of the panel in US – Corrosion-Resistant Steel Sunset Review , "not unclear and does not lack
specificity: it is absolutely and clearly mute with respect to the issue of whether" the SG&A
amounts, for instance, are based on data that pertain to "production and sales in the ordinary
course of trade". As such, it is "insufficient on its face to provide the foundation sought by" the
European Union.
1

3. There are two claims within the Panel's terms of reference. First, the European Union
claims that the SG&A amounts used by MOFCOM for the determination of SMST's constructed
normal value for Grade B are not "based on actual data". China does not consider that it can be
reasonably disputed that the SG&A amounts used by MOFCOM "built upon" or "construct upon" the
costs of production. It also cannot be disputed that these costs of production are actual. As a
result, it is clear that the SG&A amounts used by MOFCOM for the determination of the
constructed normal value of Grade B of SMST were "based on" the cost of production and thus
based on "actual data".

4. Whether or not the coefficients used are also actual data is irrelevant, since in any event,
the SG&A amount were "based on" actual data. Article 2.2.2 does not require the SG&A amount to
be actual data in itself. Nevertheless, for the sake of good order, China points out that the
coefficients also constitute "actual data". The coefficients are "the internal rates used by SMST in
preparing price/cost calculations for orders" and were used by SMST in its daily operations and,
accordingly, are data that pertained to acts, existed in fact, are real, and were in existence at the
time. Therefore, the coefficients are actual data. If figures used for constructed value
determinations would no longer be considered to be based on actual data, as from the moment
that they would be allocated on the basis of coefficients, this would have unwarranted systemic
consequences.

5. Second, the European Union seems to claim that the SG&A amounts for Grade B in the EU
market provided by SMST in table 6-3 are not based on SMST's records. The New Shorter Oxford
English Dictionary defines "record" as "[…] knowledge or information preserved in writing, […] a
written or otherwise permanently recorded account of a fact or event […] Also, a document […] on
which such an account is recorded […]; in pl., a collection of such accounts, documents, etc.".
2 The
production costs and the coefficients are clearly part of SMST's records in this sense.

2. MOFCOM'S DUMPING DETERMINATION FOR SMST'S SALES OF GRADE C AND ITS
CONSISTENCY WITH ARTICLE 2.4 OF THE ANTI-DUMPING AGREEMENT

6. In line with its practice, MOFCOM used the product types (or "baskets of transactions")
proposed by the exporter to minimize the need for adjustments by using. In addition, MOFCOM

1 Panel Report, US – Corrosion-Resistant Steel Sunset Review, para.7.53.
2 The New Shorter Oxford English Dictionary, Exhibit CHN–15, Vol. II, p. 2506.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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requested the exporters to make substantiated requests for adjustments for any differences that
affect price comparability. The product types set by SMST and the absence of any need for
adjustments as stated by SMST were the two para meters that MOFCOM relied upon to ensure a
fair comparison. At no point during the investigation did SMST request to amend the product types
(or the "basket of transactions") used for the dete rmination of the normal value. SMST also never
requested any adjustment. Assuming that physical differences affected price comparability, SMST
failed to comply with its obligation "to make substantiated requests for "due allowance", whether
in the form of adjustments or otherwise, demonstr ating that there is a difference affecting price
comparability".
3 By contrast, MOFCOM fully complied with its obligation to ensure a fair
comparison. A very similar claim was addressed in EU – Footwear (China) and the findings in that
case show that no violation of Article 2.4 can be found in the present dispute.

7. This is true, even if assuming that SMST demonstrated that the physical differences
identified in the course of the investigation affected price comparability. Moreover, in any event,
SMST did not demonstrate that these physical differences affected price comparability. SMST
demonstrated the existence of physical differences (that is, a differences in outer diameter).
However, it did not even attempt to demonstrate that these differences affect price comparability.
The European Union cannot point to a single piec e of evidence submitted by SMST to demonstrate
an impact on price comparability (which is a consideration separate from different prices).

3. MOFCOM'S DETERMINATION OF SMST'S DUMPING MARGIN IS CONSISTENT WITH
ARTICLE 6.7 AND ANNEX I, PARAGRAPH 7 AND ARTICLE 6.8 AND ANNEX II,
PARAGRAPHS 3 AND 6 OF THE ANTI-DUMPING AGREEMENT

8. The alleged double-counting issue is non- existent and the claims presented by the
European Union thus lack any factual basis. In an y event, Article 6.7 and Annex I, paragraph 7 of
the Anti-Dumping Agreement do not contain any obligation for an investigating authority to accept
information, let alone any claim, presented to it during the verification visit. Article 6.8 and
Annex II, paragraphs 3 and 6 of the Anti-Dumping Agreement relate to the situation in which
determinations are made based on the facts availa ble. MOFCOM simply did not rely on any alleged
double-counting and, as such, did not make any determinations on the basis of the alleged facts
available.

9. Moreover, in the absence of any double-counting, the alleged procedural violation did not
and could not have had any adverse impact on the European Union, as there is no case of
nullification or impairment of the European Union's rights. The facts of this case rebut the
presumption of nullification or impairment laid down in Article 3.8 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU).

4. CLAIMS REGARDING MOFCOM'S PR ICE UNDERCUTTING CONSIDERATION

4.1 The consistency of MOFCOM's considerat ion of price undercutting by imports of
Grade C with Articles 3.1 and 3.2 of the Anti-Dumping Agreement

10. While MOFCOM's finding of likeness does not necessarily imply that each of the goods
included in the basket of domestic goods is "like" each of the goods included within the scope of
the product under consideration,
4 it does imply that there is "likeness" between the grade included
in the basket of domestic goods that was explicitly found to be "like" the corresponding grade
included within the scope of the product under co nsideration. In the present case, this is even
more evident, in view of MOFCOM's finding that the corresponding grades are "basically identical"
and "substitutable". The fact that the complainants did not challenge MOFCOM's findings relating
to the competitive relationship under Article 2. 6 of the Anti-Dumping Agreement results in the
irrelevance of this aspect under Article 3.2. Japan and the European Union must take, as a given,
the competitive relationship between the domestically produced Grade C and the imported
Grade C.

11. Moreover, MOFCOM analyzed at length the competitive relationship between the imported
grades and the corresponding domestically produced grades. This discussion was included in the
Final Determination when addressing the like product determination, in relation to which the

3 Panel Report, EU – Footwear (China), para. 7.278.
4 Panel Report, China – X-Ray Equipment, para. 7.65.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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interested parties logically raised this issue. Obviously, "in dispute settlement, a Member may
argue the consistency of an anti-dumping or countervailing duty determination based on the
entirety of that determination".
5 In view of the complete absence of any discussion of MOFCOM's
findings, it is clear that no prima facie case has been made by the complainants.

12. In view of the above, no finding can be m a d e i n t h i s d i s p u t e t h a t M O F C O M f a i l e d t o
properly establish the competitive relationship between imported Grade C and domestically
produced Grade C. This is irrespective of whether or not the Panels consider that there should be
"explanatory force" or that a price differential will always constitute an effect. In this respect, as
addressed in previous submissions, China considers that Article 3.2 allows an investigating
authority to find (or to presume conclusively) price undercutting in case the dumped import prices
are below the comparable domestic prices. No additional "effect" consideration is required since
price undercutting is in itself an effect. An important element reflecting the manifest
unreasonableness of the complainants' interpretation is the disregard of the inherently different
nature of a price undercutting consideration and a price depression/suppression consideration.

13. The complainants further rely on the allegation that the sales of Grade C were "outlier
transactions". However, Japan and the European Union fail to provide any evidence for the alleged
"outlier" nature of the sales of Grade C and, as such, do not substantiate their claims. Moreover,
the outlier nature of sales may be relevant from the supply-side perspective, but this is not the
case from the demand-side perspective (for the customer when making its purchasing decisions).
Also, Article 3.2 provides no methodological guidance on how to consider price effects.
6

4.2 The consistency with Articles 3.1 an d 3.2 of the Anti-Dumping Agreement of
MOFCOM's overall consideration of price undercutting by imports of the product
under consideration

14. MOFCOM found a price correlation between the different grades making up the product
under consideration and the domestic like produc t . O n t h i s b a s i s , M O F C O M f o u n d t h a t G r a d e A
should not be excluded from the scope of the product under consideration. The price correlation
and the effect of imports of Grade B and Grade C at undercutting prices on prices of Grade A is a
matter of elementary economics. In order for dumped imports to have an effect on prices of like
products, the dumped imports should be able to substitute the domestic like products. For
MOFCOM's overall price undercutting consideration in the case at hand, the relevant question is
thus whether or not the high-end grades (Grade B and Grade C) are capable of substituting the
low-end grade (Grade A). The possibility to substi tute the low-end grades by the high-end grades
of HP-SSST is evident and was referred to during the investigation by interested parties, including
the exporters.

15. Therefore, no violation can be found of Articles 3.1 and 3.2 of the Anti-Dumping
Agreement with respect to MOFCOM's overall price undercutting consideration. This is irrespective
of whether or not price effects need to be considered for the like product "as a whole" as alleged
by Japan and the European Union. In any event, Japan and the European Union's legal
interpretation and reliance on the price effects on the like product "as a whole" are erroneous, as
explained at length in China's previous submissions.

5. CONSISTENCY OF MOFCOM'S ANALYSIS OF THE IMPACT ON THE DOMESTIC
INDUSTRY WITH ARTICLES 3.1 AND 3.4 OF THE ANTI-DUMPING AGREEMENT

16. The price undercutting by imports of Grade B and Grade C had an effect on prices of the
domestically produced Grade A, given the substitu tability and resulting price correlation between
these three grades. As such, it is irrelevant as to whether an impact assessment should be carried
out on any basis other than focusing on the domestic industry as a whole and/or should be
accompanied by additional explanations in case price effects were considered on a per grade basis.
This is because the circumstances that would allegedly lead to such additional inquiries are simply
not present in the case at hand.

5 Panel Reports, US – Softwood Lumber VI, para. 7.136, US – Countervailing Duty Investigation on
DRAMS, footnote 264.
6 See for instance Panel Reports, EC – Tube or Pipe Fittings, para. 7.292; EC – Fasteners (China),
para. 7.328.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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17. In any event, any alleged degree of "selecti veness" of MOFCOM's approach logically arises
from the explicit requirements of the relevant pr ovisions of the Anti-Dumping Agreement, rather
than from any bias or attempt to inflate the chances of maximizing an affirmative finding of injury.
MOFCOM considered price undercutting on a grade-by-grade basis, in line with its obligation under
Article 3.2 of the Anti-Dumping Agreement to ensu re comparability of the prices being compared.
In its impact assessment, MOFCOM focused on the impact on the domestic industry as a whole,
consistent with its obligation under Article 3.4 of the Anti-Dumping Agreement. In no way did
MOFCOM determine its approach "depending on which approach would maximize the chance of
finding injury to the domestic industry". This approach was furthermore in line with the logical
progression of inquiry leading to an investigating authority's ultimate decision on whether or not
dumped imports are causing injury to the domestic industry.

18. For the reasons explained in China's first written submission, MOFCOM's evaluation of the
magnitude of the margin of dumping was sufficient for the purposes of Article 3.4 of the Anti-
Dumping Agreement and MOFCOM properly found that the domestic industry was injured. Finally,
MOFCOM did ensure the explanatory force, to the ex tent required. This is true even under Japan's
erroneous interpretation. China's explanation in th is respect is not an "post hoc attempt" but is
rather taken from the Final Determination itself.

6. THE CONSISTENCY OF MOFCOM'S CAUSATION DETERMINATION WITH
ARTICLES 3.1 AND 3.5 OF THE ANTI-DUMPING AGREEMENT

19. MOFCOM logically progressed its inquiry, starting from its product scope and like product
findings, via its price effects consideration and impact assessment, leading towards this final
conclusion under Article 3.5 of the Anti-Dumping Agreement.

20. When assessing the impact of price undercu tting on the domestic industry, MOFCOM relied
on the high market share of the dumped import s. This, however, does not imply that MOFCOM
relied on a significant increase of dumped im ports under Article 3.2 of the Anti-Dumping
Agreement to find causation under Article 3.5. Indeed, a distinction must be made between
MOFCOM's conclusion that there was no significant increase in the volume of the dumped imports
under Article 3.2 of the Anti-Dumping Agreement and MOFCOM's reliance on the fact that dumped
imports retained a high market share under Article 3.5. Article 3.5 of the Anti-Dumping Agreement
certainly allows an investigating authority to attach importance to the volume of imports in this
context. The appropriateness of MOFCOM's approach is also confirmed by the finding of the panel
in EC – Tube or Pipe Fittings.
7

21. A finding that imports decreased does not compel an investigation authority to conclude
that the domestic industry did not suffer any material injury or that any injury suffered by the
domestic industry could not be caused by the subject imports. Moreover, the present situation
appears to be a textbook example of a case in which a causal link can be found, despite the lack of
a significant increase in dumped imports.

22. MOFCOM's non-attribution analysis was consistent with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement. The explanations provided by MOFCOM constitute "meaningful explanations
of the nature and extent of the injurious effects"
8 of reduced apparent consumption. The
complainants' allegations fail in relation to the irrelevance of trends in domestic demand for Grade
A. Grade B and Grade C can substitute Grade A. Therefore, demand for Grade A is obviously a
relevant consideration.

23. MOFCOM further made a reasonable conclusion that the effects of the expansion of
capacity were not sufficient to break the causal link between dumped imports and material injury.

7. OTHER CLAIMS

24. With respect to claims raised by Japan and the European Union in relation to the all others
rate, China considers that it complied with all its obligations in this respect. In relation to the
consequential claims by the European Union, China points out that the alleged violations at the
basis of these claims are inexistent. In any event, the European Union takes issue with the

7 Panel Report, EC – Tube or Pipe Fittings, para. 7.277.
8 Appellate Body Report, US – Lamb, para. 186.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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particular "facts available" relied upon. This is a matter that should be assessed under paragraph 7
of Annex II, the only provision dealing with the substantive quality of the "facts available" that are
relied upon. No claim is made under this provision. To the extent the European Union is requesting
the Panel to make a finding of violation consequential to any alleged procedural violations, China
points out that exactly because "it is in the nature of a procedural claim that one does not know
what the substantive consequences may eventually be of remedying the procedural effect", a
procedural claim cannot lead to a consequential finding of a substantive violation.

25. China has demonstrated, in considerable detail, that its disclosure documents and Final
Determination are consistent with its obligations under Articles 6.4, 6.9, 12.2 and 12.2.2 of the
Anti-Dumping Agreement. With respect to the calculation methodology, China considers that the
wording of Article 6.9 of the Anti-Dumping Agreemen t is clear, in the sense that it only covers
"essential facts" and does not cover reasoning. In the context of Article 6.9, a "calculation
methodology" forms part of the investigating authority's reasoning, and does not amount to a fact
in any event. Japan appears to concede that the calculation methodology is "not entirely distinct
from legal interpretation". This implies that the calculation methodology does not fall within the
notion of "fact", since facts do not "have any overlap whatsoever with legal interpretation". The
European Union's the position that inferences drawn from relied upon facts can still constitute
"facts" for the purposes of Article 6.9 of the Anti-Dumping Agreement is contradicted by the
findings of the panel in EC – Salmon (Norway) , which described a "fact" as "[a] thing assumed or
alleged as a basis for inference".
9 Article 6.9 thus only covers the factual basis for inference, not
the inferences themselves.

26. MOFCOM's treatment of confidential in formation submitted by the Petitioners was
consistent with China's obligations under Articles 6.5 and 6.5.1 of the Anti-Dumping Agreement. In
this respect, the Anti-Dumping Agreement imposes no obligation on an investigating authority to
explain why it considers that confidential treatment is warranted. Moreover, Japan and the
European Union are both mistaken in claiming that the potential disruption of the third parties'
businesses could have been sufficiently addressed by withholding their names. Such approach
would not have addressed the concerns of the Petitioners or the third parties in question regarding
the full disclosure of the four concerned appendices , as is evident on the face of the Petitioners'
request for confidential treatment.

27. The Petitioners provided detailed and adequate non-confidential summaries of the four
appendices at issue, explaining the content of the reports, including information and data.
Regarding the other 32 additional Appendices to the Petitioners' Supplemental Evidence of
1 March 2012, a description of the information cont ained therein is provided. A statement is also
provided as to why summarization of the conten t of those appendices was not possible, due to
confidentiality considerations with regard to business secrets.

8. CONCLUSION

28. For the reasons set forth in its submissions, China requests that the Panel in DS454 and
the Panel in DS460 reject the claims of respectively Japan and the European Union in their entirety
and find that MOFCOM's determinations in the underlying investigation were fully consistent with
China's obligations under the Anti-Dumping Agreement and the GATT 1994.

9 Panel Report, EC – Salmon (Norway), para. 7.805.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- C-14 -

ANNEX C-4
EXECUTIVE SUMMARY OF THE STATEMENTS OF
CHINA AT THE SECOND PANEL MEETING
1. MOFCOM'S OVERALL PRICE UNDERCUTTING CONSIDERATION

1. The consistency of MOFCOM's grade-by-grade price undercutting consideration with WTO
law is confirmed by the use of the indefinite article in relation to the concept of "like product" in
Articles 3.1 and 3.2. Regarding the complainants' reliance on the definite article before "domestic
market", Article 3.1 does not speak about the effect of the dumped import on the domestic
market, but on the effect on prices in that domestic market. The reference to "the" domestic
market clarifies that these "prices" referred to by an indefinite article must relate to "the" domestic
market for like products. China's interpretation is also in line with the role that the price
undercutting consideration plays in the logical progression of inquiry leading towards a possible
affirmative finding of injury caused by dumped imports. The consideration under Article 3.2 must
allow an investigating authority to understand the undercutting that occurs and the frequency and
magnitude of that undercutting. This will enable it to logically progress its inquiry towards an
assessment of the extent of the impact of pric e undercutting on the domestic industry under
Article 3.5, taking into account the nature of the injury found to exist under Article 3.4.
1

2. Even if assuming that somehow, an investigating authority would be required under
Article 3.2 to find price undercutting for the like product as a whole ( quod non), no violation can
be found in the case at hand because of the subs titutability of Grade A by Grade B and/or Grade C
and the resulting price correlation. The potential to substitute as well as the actual occurrence of
substitution was referred to several times by the Japanese exporter SMI itself.

2. MOFCOM'S PRICE UNDERCUTTI NG CONSIDERATION OF GRADE C

3. Any price differential that is found between comparable products will constitute price
undercutting for the purposes of Article 3.2 and will constitute an effect as such. The wording of
Article 3.2 supports such position; that is, in order to find price undercutting, it suffices to find a
price differential between comparable products.

4. Japan and the European Union read the Appellate Body's findings in China – GOES in
isolation of the qualifications given by the Appellate Body. The Appellate Body explicitly found that
for price undercutting, the inquiry as to the "effect" consists of a price comparison - "a comparison
be made between the two" - without any need for an additional inquiry. Even if assuming that any
additional inquiry as to the "effect" was actually required ( quod non), the arguments relied upon
by the complainants cannot lead to a finding of violation because of MOFCOM's extensive
assessment of the competitive relationship in its like product assessment.

5. China is not claiming that a likeness finding implies that each of the goods included in the
basket of domestic goods is "like" each of the goods included within the scope of the product under
consideration. Rather, China is stating that an explicit finding of likeness between the imported
grades with their corresponding domestic grades implies that domestic Grade C is "like", and thus
in competition with, the imported Grade C. Products for which the prices are comparable for the
purposes of Article 3.2 are a subset of like pr oducts. Like products are in turn a subset of
competitive products, as found by the Appellate Body in Korea – Taxes on Alcoholic Beverages .
China is thus not arguing that a finding that products are "like" will always suffice to ensure price
comparability, as the complainants attempt to portray China's arguments. However, to the extent
that the complainants consider that there was a lack of price comparability under Article 3.2 in the
present dispute, this claim is actually based on an alleged lack of competitive relationship. Given
the specific likeness finding for domestic Grade C and imported Grade C, these cannot be
considered as not comparable for the purpose of Article 3.2 because of an alleged absence of a
competitive relationship.

1 Panel Report, EC – Tube or Pipe Fittings, para. 7.277.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- C-15 -

3. SG&A DATA FOR SMST'S NORMAL VALUE FOR GRADE B

6. In relation to the terms of reference matter, China is not taking issue with the
European Union for failing to cite the full wording of the relevant provisions. Rather, China takes
issue with the European Union's attempt to raise additional claims after it had explicitly limited its
panel request to an alleged inconsistency in relation to two specific obligations.

7. The irrelevance of the European Union's artificial distinction between the "actual data"
reference in Article 2.2.2 and the "actual amounts" reference in Article 2.2.2(ii) is clear from the
findings of the panel in that case (EC – Bed Linen).
2 The European Union further misrepresents the
panel's findings in US – Corrosion-Resistant Steel Sunset Review , while the parallels between
these two cases are striking:3 although the two claims - actual data and ordinary course of trade -
may have the same legal basis - Article 2.2.2 - the European Union expressly limited its panel
request to the actual data requirement. The pane l in that dispute also stated that "we do not
believe it is necessary to examine the issue of prejudice to the United States by any alleged "lack
of specificity" in the Panel request".
4 Furthermore, the European Union reprimands China for
allegedly disclosing the content of the consultations. In addition to being contrary to established
case law, it is the European Union's own first written submission that mentions several times that
China disclosed the exact number and the source during the consultations.

8. With respect to the claims within the Panel's terms of reference, Article 2.2.2 requires
SG&A to be "based on" actual data. It cannot se riously be disputed that the SG&A amounts used
by MOFCOM are in fact "founded" on, "built upon " or are "supported by" the costs of production.
5
It also cannot be disputed that these costs of production are "actual" in that these "existed in act
or in fact" and were "in existence at the time".

4. FAIR COMPARISON FOR SMST'S DUMPING DETERMINATION FOR GRADE C

9. The European Union is claiming that in th e circumstances of the present case, without any
evidence of impact on price comparability and in the absence of any request to do so, an
investigating authority must spontaneously amend the product types used. In particular, the
European Union claims that when "an exporter ha s presented evidence of differences in physical
characteristics and prices, an investigating auth ority" must amend the product types to ensure
that the products sold on the domestic market with differences are not used to calculate normal
value.
6

10. In extending findings under Article 3.2 to the fair comparison requirement under
Article 2.4, the European Union refers to the Appellate Body's findings in EC – Fasteners .
7
Interestingly, these findings confirm the discretion of an investigating authority as to the
methodology it follows to ensure fair comparison. Further confirmation can be found in the panel's
findings in EC – Footwear.
8 In that dispute, the panel dismissed the position that the product types
or "basket" definitions should reflect "all the characteristics of the product which may have
affected price comparability". China considers that the use of the product types submitted by
SMST is an important element in determining MOFCOM's compliance with Article 2.4. China does,
however, consider that it is not possible to exclude certain products from the scope of the
investigation on the basis of Article 2.4.

11. SMST never demonstrated any impact of the alleged physical differences on price
comparability. The European Union seems to argue that an investigating authority should
spontaneously analyze all data received and carry out several calculations to identify possible
differences in costs of production, even if it has not been directed to this data or the required
calculations by the exporter. This would in evitably impose an unreasonable burden on
investigating authorities.

2 Panel Report, EC – Bed Linen, para. 6.99.
3 Panel Report, US – Corrosion-Resistant Steel Sunset Review, para. 7.53.
4 Panel Report, US – Corrosion-Resistant Steel Sunset Review, para. 7.53.
5 Appellate Body Report, EC – Hormones, para. 163.
6 European Union’s second written submission, para. 127.
7 European Union's second written submission, footnote 148.
8 Panel Report, EC – Footwear, paras. 7.280 – 7.283.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- C-16 -

5. OTHER CLAIMS

12. With respect to the dumping disclosure, it is not sufficient for the complainants to "point to
the fact that they do not disclose the essential facts". A decision by the complainants to remain
silent about China's submissions cannot result in a finding of violation, especially as China rebutted
these general statements in specific terms. The methodology of MOFCOM's disclosure did permit
interested parties to understand how the calculation had been made (see for instance SMST's
comments on the Preliminary Dumping Disclosure (Exhibit EU-19 (BCI)), paragraphs 3 to 4).

13. In relation to the injury disclosure and fina l determination, with respect to those grades
and time periods for which no price comparisons were made in the absence of domestic sales or
imports, there was no price differential information. As such, the information on import prices
could not have led to a contrary outcome in the price undercutting consideration. Regarding
confidential information that may have required disclosure, an appropriate non-confidential
summary may take the form of "a non-confidenti al range [of] the percentage difference between
the average unit values", which is exactly what MOFCOM did in the present case.
9

14. Regarding MOFCOM's use of facts available for the "all others rate", compliance should be
assessed with respect to the exporters existing at the time, and not with respect to exporters that
did not exist at the time when the measures were adopted, and who may or may not have
subsequently come into existence. Japan further in vokes for the first time, in paragraphs 76 to 81
of its second written submission, a violation of Paragraph 7 of Annex II. China is concerned by this
claim, as it is clearly outside the Panel's terms of reference.

15. China recalls that the prospective nature of the WTO dispute settlement system precludes
a suggestion such as the one requested by the European Union, since Article 19.1 of the DSU
simply requires that a measure is brought into compliance, not that any preceding non-compliance
is restored.

16. With respect to a number of claims, the complainants have developed their arguments in
different ways and/or have engaged in a more detailed analysis than the other complainant. As a
result, for those claims, China considers it appropriate that the findings of each of the Panels are
set out separately, taking into account that it is for each complainant separately to make a prima
facie case.

WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-1 -

ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Third-Party Statement of the Republic of Korea D-2
Annex D-2 Third-Party Statement of the Kingdom of Saudi Arabia D-4
Annex D-3 Third-Party Statement of Turkey D-7
Annex D-4 Integrated Executive Summary of the Arguments of the United States D-12
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-2 -

ANNEX D-1
THIRD-PARTY STATEMENT OF THE REPUBLIC OF KOREA
1. On behalf of the Republic of Korea, I first would like to extend my sincere gratitude to the
members of the Panel for providing us a chance to present our view on the issues that we think
are important in this case. This anti-dumping case casts some serious questions with respect to
the anti-dumping investigations procedure which may affect the defending rights of the exporters
and ultimately the final determinations by the au thorities. We hope the Panel guides us through
this case with wisdom as to how the investigating authorities should conduct their anti-dumping
investigations.

2. Among various issues, Korea would like to raise two issues which are (1) When can the
investigating authorities determine the dumping margin on the basis of facts available for all other
companies and (2) When does the burden of proof with regard to the fair comparison obligation
under Article 2.4 of the AD Agreement shift to ex porters from the investigating authorities. Korea
will discuss the two issues in order.

When can investigating author ities determine the dumping margin on the basis of facts
available under Article 6.8 of the AD Agreement for all other companies

3. The European Union claimed that the use of facts available is permitted in the calculation
of an all others rate, provided that some efforts are made in terms of seeking to identify other
firms or specifying the consequences of not providing information. Korea agrees with the
European Union on that in order to apply facts available for calculating dumping margin, certain
conditions must be met under Article 6.8 and Annex II of the AD Agreement.

4. Furthermore, Korea would like to emphasize that the dumping margin for those firms
which were willing to be investigated but were excluded from the sample group according to
Article 6.10 of the AD Agreement should be calculated in accordance with Article 9.4 of the
AD Agreement.

5. We hope the Panel could shed light on the requirements for the authorities to calculate
dumping margin with facts available, and the firms to which such dumping margins could be
applied.

When does the burden of proof or fair co mparison obligation under Article 2.4 of the
AD Agreement shift to exporters from the investigating authorities

6. European Union claims that in calculating normal value for model Product C according to
Table 1 on page 4 of its First Written Submission , China reflected the value of goods that were
different from the goods sold for export to China. China responds that, although it is true that
under Article 2.4 of the AD Agreement the obligation to ensure a fair comparison lies on the
investigating authorities and not the exporters, exporters also have an important role to play in
the process and since the SMST did not raise any issue on prices between Product C and the goods
incorrectly compared, the investigating authorities cannot be deemed to have breached Article 2.4
of the AD Agreement.

7. According to the European Union, the comp ared goods are much thinner than Product C
and their usages are different. While Product C is used in a primary boiler system, incorrectly
compared goods cannot be used in a primary boiler system but rather are used in secondary
systems such as measuring temperatures or controlling valves.

8. We believe that the burden under Article 2.4 of the AD Agreement to ensure a fair
comparison does not shift to the exporters just be cause the exporters did not claim that there is a
price difference between the export product and the product under authority’s consideration for
calculating the normal value. Especially, the last sentence of Article 2.4 of the AD Agreement
states that 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.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-3 -

9. In this case, all the Parties agree that the SMST has claimed the difference in physical
characteristics between the export product and the product considered for calculating the normal
value. If such a factual claim was raised at the time of the investigation, through which an
investigating authority could have thrown suspicion on the issue of fair comparison, the
investigating authority should have evaluated further to determine whether the product it has
chosen for the comparison was appropriate, and if it did not, the investigating authority’s
obligation of fair comparison under Article 2.4 of the AD Agreement could not be deemed to have
been released.

10. We hope the Panel to provide us with a criterion that is applicable in determining the
moment when the fair comparison obligation of the investigating authorities under Article 2.4 of
the AD Agreement shifts to exporters.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-4 -

ANNEX D-2
THIRD-PARTY STATEMENT OF THE
KINGDOM OF SAUDI ARABIA

I. INTRODUCTION

1. Thank you, Mr. Chairman and Members of th e Panel. The Kingdom of Saudi Arabia would
like to take this opportunity to provide its views on the proper interpretation of the Anti-Dumping
Agreement. In particular, the Kingdom will addr ess: (i) the use of recorded costs in dumping
margin calculations; (ii) the "fair comparison" obligation; and (iii) the injury determination's
"logical progression".

II. AN INVESTIGATING AUTHORITY IS OB LIGATED TO ACCEPT AN EXPORTER'S
RECORDED COSTS EXCEPT IN LIMITED CIRCUMSTANCES

2. First, Article 2.2.1.1 of the Anti-Dumping Agreement imposes a "positive obligation"
1 on an
investigating authority to use an exporter's recorded costs subject only to the two conditions
stated in that provision. There is no other basis to reject exporters' costs, and WTO panels have
consistently held that an investigating authority is required to use recorded costs if these
two conditions are met.
2 This obligation rests solely on the investigating authority and applies to
all of Article 2.2.

3. The two conditions are provided in the first sentence of Article 2.2.1.1. The first condition
is that the exporter's records are "in accordance with the generally accepted accounting principles
of the exporting country".

4. The second condition is that these records "reasonably reflect the costs associated with the
production and sale of the product under consideration". The second condition is met where there
is a sufficiently close relationship between the recorded cost and the actual cost to the company
for the production and sale of the product at issue.
3 The phrase "reasonably reflect" does not
permit an investigating authority to substitute its subjective preference as to the recording of an
exporter's costs, nor does the phrase permit the authority to question whether the costs recorded
are "reasonable". Instead, "the test for determining whether a cost can be used in the calculation
of 'cost of production'" is simply "whether it is 'associated with the production and sale' of the like
product".
4 Thus, for example, the Panel in US – Softwood Lumber V stated that there is no textual
basis in Article 2.2.1.1 to conclude that for the "requirements of Article 2.2.1.1 to be met, it is
necessary that the [costs] reflect the market value of those [costs]"; to accept this premise "would
require [the Panel] to read into the text words which are simply not there".
5

III. A "FAIR COMPARISON" REQUIRES COMP ARABILITY OF THE EXPORT PRICE AND
ITS PARTICULAR NORMAL VALUE

5. Next, the "fair comparison" requirement of Article 2.4 of the Anti-Dumping Agreement
obligates an investigating authority to ensure comparability between an investigated product's
export price and normal value. The Kingdom wishes to highlight several aspects of the required
"comparison" for the Panel's consideration.

6. First, a proper definition of "like product" is necessary to ensure that a price comparison is
"fair". Article 2.1 of the Anti-Dumping Agreement requires that the determination of dumping be a
comparison of the export price to the domestic pr ice of a "like product". Article 2.6 defines "like

1 Panel Report, US – Softwood Lumber V, para. 7.237.
2 See, e.g., Panel Reports, EC – Salmon (Norway), para. 7.483 and US – Softwood Lumber V,
para. 7.23.
3 Panel Report, Egypt - Definitive Anti-Dumping Measures on Steel Rebar from Turkey, paras. 7.393,
7.423; see also Panel Report, EC – Salmon (Norway), para. 7.483.
4 Panel Report, EC – Salmon (Norway), para. 7.483.
5 Panel Report, US – Softwood Lumber V, para. 7.321 and fn. 446 (citing Appellate Body Report, India –
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-5 -

product" as "a product which is identical, i.e., alike in all respects to the product under
consideration, or in the absence of such a product, another product which, although not alike in all
respects, has characteristics closely resembling those of the product under consideration". The
phrases "alike in all respects" and "closely resemb ling" show that the adjusted values that form
the basis for a determination of dumping should depart as little as possible from actual prices in
the markets at issue.

7. Second, "normal value" must be specific to the exported product and its unique product
and pricing characteristics. In defining dumping of an exported product, Article 2.1 refers to "its"
normal value; Article 2.4 refers twice to "the" normal value. The consistent use of the possessive
or the definite article in referring to "normal value" is intentional: the Anti-Dumping Agreement
requires an investigating authority to determine the normal value, of a particular "like product",
that most closely reflects the unique characteristics and pricing structure of the particular exported
product.

8. Third, the comparison contemplated by Articl e 2.4 is a comparison of two values that are
defined in relation to each other. This follows from the text of Article 2: a determination of
dumping requires "price comparability". Although this term is a unitary concept like "fair
comparison", the consistent use of "comparability" or "comparable" in conjunction with "price" is
significant.

9. Article 2 repeatedly emphasizes the comparability of two interrelated values. Article 2.1
defines dumping as the situation in which a product's export price is "less than the comparable
price" of the like product consumed in the exporter's home market. Article 2.2 permits an
investigating authority to depart from the like product's home-market sales prices where "such
sales do not permit a proper comparison" and to use a "comparison with a comparable price of the
like product" exported to a third country. Footnote 2 refers to the need for a "proper comparison",
and Article 2.5, which addresses shipments thro ugh an intermediate country, underscores an
investigating authority's obligation to base the dumping determination on a "comparable price".
Finally, the language of Article 2.4, and th e emphasis on the "comparison" throughout,
underscores the importance of ensuring that a dumping calculation accounts for all differences that
affect price comparability. This exercise, which is required by the text of Article 2.4, does not
permit an investigating authority to ignore any similarity or difference that might affect
"comparability".

10. The jurisprudence therefore has established that artificially modifying the prices of certain
export transactions is not a "fair comparison"
6. This principle should be equally applicable to
normal value because both it and export price affect price comparability, which is the core
objective of the dumping calculation. As such, an impermissible price comparison may result, for
example, from using values other than the exporter's own prices to establish normal value, from
comparing products that are too different to be considered "like", or from adjusting only one value
for factors that affect both the normal value and the export price equally.

IV. AN INVESTIGATING AUTHORITY IS REQU IRED TO DETERMINE INJURY BASED ON
A "LOGICAL PROGRESSION" OF ANALYSIS

11. Finally, on the subject of injury, the Kin gdom is of the view that an investigating
authority's determination under Article 3 of the Anti-Dumping Agreement must establish a logical
progression of analysis among its "essential components" in order to constitute the requisite
"objective examination" of "positive evidence".

12. Article 3.1 lists the injury determination's three "essential components". The subsequent
paragraphs of Article 3 elaborate on these components, their relationship with each other, and how
they must fit into the "overall framework of an injury determination".
7 The sequential analysis
contemplated by Article 3 and its repeated emph asis on the "same imports" establish that the
injury components are "closely interrelated" 8 and work together to produce a "logical" conclusion
about whether subject imports caused material injury to the domestic industry. As the
Appellate Body has stated, the various provisions of Article 3 "contemplate a logical progression of

6 See Appellate Body Report, US – Zeroing (Japan), para. 146.
7 Appellate Body Report, China – GOES, paras. 127-128.
8 Appellate Body Report, EC – Tube or Pipe Fittings, para. 115.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-6 -

inquiry leading to an investigating authority's ultimate injury and causation determination". 9 This
inquiry entails sequential analyses of subject imports' volume effects and price effects under
Article 3.2 and then their impact on the domest ic industry under Article 3.4. Finally, under
Article 3.5, these elements are "linked through a causation analysis between subject imports and
the injury to the domestic industry, taking into account all factors that are being considered and
evaluated".
10

13. Although an investigating authority enjoys discretion as to the methodologies employed to
determine injury under Article 3, its examination of the impact of subject imports on the domestic
industry under Article 3.4 will constitute an "objective examination" only where it logically
progresses from the assessment of those imports' volume effects and price effects under
Article 3.2. This follows from three requirements of Article 3, which establish an analytical and
evidentiary linkage between Articles 3.2 and 3.4.

14. First, the text of Article 3 states that an investigating authority is required to examine the
same group of dumped imports under Articles 3.2 and 3.4. The Appellate Body has recognized and
confirmed this point.
11

15. Second, Article 3.4 requires an investigating authority to examine the same dumped
imports as were considered under Article 3.2 in order to properly assess whether those imports
have "explanatory force … for the state of the domestic industry".
12 Thus, an investigating
authority "must derive an understanding" 13 of the impact of the subject imports – the same
imports that have been found under Article 3.2 to have produced volume and price effects – on the
domestic industry in that market.

16. Third, the investigating authority's examination of the "explanatory force" of the dumped
imports for the state of the domestic industry will constitute an "objective examination" only where
it represents a "logical progression" from the examination of those same imports' volume effects
and price effects under Article 3.2.
14 The inquiry under Article 3.4 complements and conforms to
the analyses carried out under Article 3.2 in order to produce the ultimate conclusion on causation
under Article 3.5. This analysis necessarily invo lves a linkage between the identified volume and
price effects and the state of the domestic industry. Indeed, the Panel in China – Broiler Products
noted that the examination of the situation of the domestic industry under Article 3.4 is
"inextricably linked" to the "earlier examination of the price effects of subject imports" under
Article 3.2. The Panel therefore ruled that implemen tation of the Panel's findings with respect to
Article 3.2 would require the reexamination of the original determination concerning the impact of
subject imports on the domestic industry under Article 3.4.
15

V. CONCLUSION

17. Mr. Chairman, this concludes the Kingdom's statement. I thank you for your attention.

9 Appellate Body Report, China – GOES, para. 128.
10 Ibid.
11 Appellate Body Report, China – GOES, para. 127.
12 Ibid. para. 149. See also Panel Reports, China – X-Ray Equipment, para. 7.254; and China – Broiler
Products, fn. 822.
13 Appellate Body Report, China – GOES, para. 149.
14 Appellate Body Report, China – GOES, para. 149.
15 Panel Report, China – Broiler Products, para. 7.555.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-7 -

ANNEX D-3
THIRD-PARTY STATEMENT OF TURKEY
TABLE OF CASES

Short Name Full Citation
US – DRAMS (Panel) Panel Report, United States – Anti-Dumping Duty on Dynamic Random Access
Memory Semiconductors (DRAMS) of One Megabit or Above from Korea ,
WT/DS99/R, adopted 19 March 1999
Thailand – H Beams (AB) Appellate Body Report, Anti-Dumping Duties on Angles, Shapes and Sections of
Iron or Non-Alloy Steal and H-Beams from Poland , WT/DS122/AB/R, adopted
5 April 2001
Mexico – Rice (AB) Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and
Rice, WT/DS295/AB/R, adopted 29 November 2005
Mexico – Pipes and Tubes
AD Duties (Panel)
Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from
Guatemala, WT/DS184/AB/R, adopted 24 July 2007
EC – Fasteners (Panel) Panel Report, European Communities-Definitive Anti-Dumping Measures on
Certain Iron and Steel Fasteners, WT/DS397/R, adopted 29 September 2010
EC – Fasteners (AB) Appellate Body Report, Communities-Definitive Anti-Dumping Measures on
Certain Iron and Steel Fasteners, WT/DS397/R/AB, adopted 28 July 2011
China – GOES (Panel) Panel Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented
Flat-Rolled Electrical Steel From The United States , WT/DS414/R, adopted
16 November 2012
China – GOES (AB) Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain
Oriented Flat-Rolled Electrical Steel From The United States , WT/DS414/AB/R,
adopted 16 November 2012
China – Broiler Products (Panel) Panel Report, Anti-Dumping and Countervailing D u t y M e a s u r e s o n B r o i l e r
Products From The United States, WT/DS427/R, adopted 25 September 2013
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

- D-8 -

I. INTRODUCTION

Mr. Chairman, Distinguished Members of the Panel,

1. The Republic of Turkey (hereinafter referred to as "Turkey") would like to thank the Panel
for the opportunity to present her views in this proceeding on the dispute among the People's
Republic of China (hereinafter referred to as Ch ina), the European Union (hereinafter referred to
as the EU) and Japan.

2. Turkey would like submit its third party opinion due its interest on the correct and
coherent interpretation of the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 (hereinafter referred to as the "ADA").

3. In this statement Turkey will focus on two issues: Whether paragraph 1 of Article 3 of the
ADA envisages hierarchy among the paragraphs 2, 4 and 5 in course of an injury and causation
analysis; and the legal interpretation of the phrase " best endeavor" within the context of the use
of "facts available" based findings vis-à-vis "unknown exporters".

II. THE QUESTION CONCERNING "LOGICAL PROGRESSION" IN ANALYSIS ON INJURY
AND CAUSATION IN DUMPING INVESTIGATIONS

Mr. Chairman,

4. As underlined numerous times in Panel
1 and Appellate Body Reports 2, Article 3.1 of the
ADA acts like a chapeau of the remaining paragraphs of Article 3 putting the investigating
authority under the responsibility to undertake its injury/causation examination objectively by
relying on positive evidence. The investigating authority has to act in accordance with the
overarching principles of Article 3.1 every time it assesses the volume and trend of dumped
imports; evaluates the price effect of these impo rts on the domestic industry and analysis the
impact of dumped imports on the state of the domestic industry.

5. Article 3.1 reads as follows;

"A determination of injury for the purpose of Article VI of GATT 1994 shall be based on
positive evidence and involve an objective examination of both (a) the volume of the
dumped imports and the effect of the dumped imports on prices in the domestic
market for the like products, and (b) the consequent impact of these imports on
domestic producers of such products. (emphasis added)
6. The EU and Japan highlight in thei r written submission that the word " consequent" bridges
the evaluation on the volume and price effect of the dumped imports with the conclusions on
impact of such imports on the economic performance of the domestic producers.
3 It is understood
from this statement that the investigating authority is obliged to show initially the absolute or
relative increase of volume of dumped imports and the adverse price effect of these imports before
moving to establish the negative impact of these imports on the economic indicators of the
domestic industry.

7. Turkey acknowledges that this pattern of evaluation is frequently used by investigating
authorities in their analysis of injury and causation. Turkey's concern, however, does not relate to
whether such an approach is warranted under Article 3 but to the question whether this system,
named as " logical progression ", paves way to a legal obligation that confines the investigating
authority to stop its injury and causation analysis in the event that the authority concludes that
there is no absolute/relative increase in the volume of dumped imports and/or no price
undercutting, depression or suppression caused by dumped imports. Is the authority blocked to
proceed to the next stage of the assessment, name ly the analysis of the economic state of the
domestic industry, if it finds that paragraph 2 of Article 3 is not legally satisfied?

1 Panel Report, Mexico – Pipes and Tubes AD Duties, para. 7.247; Panel Report, EC – Fasteners,
para. 7.323.
2 AB Report, Thailand – H Beams, para. 106; AB Report, EC – Fasteners, para. 414;AB Report, China –
GOES, para. 126.
3 EU's first written submission, para. 218; Japan's first written submission, para. 121.
WT/DS454/R/Add.1 • WT/DS460/R/Add.1

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8. Turkey's position is not affirmative on th is issue. As underscored by the Appellate Body 4
the injury analysis should be an exercise of th e cross-consideration of the volume of the dumped
imports; the price effect of the dumped import s on the prices of the domestic producers and
evaluation of the economic state of the dome stic industry. In that framework, our legal
interpretation does not point out an obligation to follow a hierarchy or sequence among these
components of injury analysis.

9. Often, the investigating authorities begin their injury analysis by evaluating the volume
and price trend of the product under consideration originating in the country under investigation.
Assessment on the price effect of imports and th e state of the domestic industry comes at the
second phase. Such a pattern, however, should not lead to the conclusion that the investigating
authority is legally bound to pass first the stage concerning the volume and price effect of dumped
imports to proceed to the coming phases of the injury analysis.

10. As clearly identified in the first sentence of paragraph 5 of Article 3 the essence of
causality should be the negative effects of dumped imports on the domestic industry, through the
act of dumping, as set forth in paragraphs 2 and 4 of Article 3. The examination should include all
relevant evidence before the authorities incl uding those that weaken the causality between
dumped imports and injury incurred by the domestic industry. Furthermore the investigating
authority is also obliged to focus on known factor s other than the influence of dumped imports to
identify whether these factors erode the link between dumping and injury.

11. To concentrate on "other factors" the investigating authority has to finish first its
e v a l u a t i o n o n t h e " p r i m a r y f a c t o r s " w h i c h r e l a t e t o t h e i m p a c t o f d u m p e d i m p o r t s . W i t h o u t
finishing its work on the "main factors" causing injury, how can the authority evaluate "other
known factors" as formulated in paragraph 5 of Article 3? Turkey conceives that the legal
mechanics of paragraph 5 requires the authority to undertake a full-fledge examination of different
parts of the injury analysis without keeping any relevant information out of the scope.

12. Nevertheless, this legal interpretation should not be comprehended as that the authority is
obliged to continue the investigation even though it identifies that there is no significant increase
in imports; no adverse price affect or no erosion in the economic parameters of the domestic
industry. What Turkey underscores is that the authority should complete its examination
comprehensively, by including all aspects of the injury analysis, before reaching the conclusion
that it terminates the investigation due to the absence of legal requirements as stipulated in
paragraph 2 and 4 of Article 3.

13. In light of the principles stipulated in para graph 1 and 5 of Article 3, Turkey would like to
emphasize once more that injury-causality analysis should be undertaken with a comprehensive
approach without singling out any significant, veri fiable and objective factor that may weaken or
strengthen the injury determination and causation analysis between dumped imports and injury.

III. THE NOTION OF "BEST ENDEVOUR" CONC ERNING THE USE "FACT AVAILABLE" IN
"ALL OTHERS" RATE

14. The question whether the investigating authority has the discretion to use "facts available"
based calculations and findings vis-à-vis unknown exporters was one of the heavily addressed
issues in panels China – GOES
5 and China-Broiler Products.6

15. Considering the time-limits, Turkey will not reiterate her position on this issue but would
like to stress that She is in line with the latest ruling in the WTO case law pointing out that it will
be difficult for a member to determine an appropriate anti-dumping margin for certain unknown
producers/exporters and apply an anti-dumping me asure if "facts available" based calculations
cannot be used for "unknown" producers/exporters.
7

16. Turkey, however, would like to share briefly her position concerning the threshold of "best
endeavor" that the investigation authority has to pass to conclude that all effort was shown to
identify unknown producer/exporters, importers and other interested parties.

5 Panel Report, China – GOES, paras. 7.384-7.386.
6 Panel Report, China – Broiler Products, para. 7.305.
7 Panel Report, China – Broiler Products, para. 7.305.
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17. Pursuant to paragraph 1 of Article 6 of the ADA all interested parties in an anti-dumping
investigation shall be given notice of the information required and ample opportunity to present in
writing all evidence which they consider is relevant. Furthermore, as requested in paragraph 1 of
Annex II of the ADA the information required from any interested party should be in specific detail
and the interested party should be informed on possible consequences if the desired information is
not supplied in reasonable time.

18. Even though there are certain clear-cut rule s on the content of the communication, neither
paragraph 8 of Article 6 nor Annex II of the AD A shed light on the form of the requested
information or the medium of communication the investigation authority should use.
8 Such
components of the investigation are left to the discretion of the investigating authority which is
obliged to act in goodwill and respect due process rules as well as defense rights of the interested
parties in context of Article 6 of the ADA.

19. In practice, it is known that the starting point for the investigating authority to identify
foreign producer/exporters is the petition itself. In most cases the authority expects the petitioning
domestic industry to come up with the identities of the foreign producers/exporters because of the
assumption that these domestic producers would possess the most accurate information on the
market, their competitors and pricing trends. At this stage the investigating authority will be under
the legal obligation to check the adequacy and accuracy of the information in line with paragraph 6
of Article 6 of the ADA. As addressed by the WTO jurisprudence, however, such an obligation is not
absolute and the investigating authority has the leeway to satisfy as to the accuracy and adequacy
of the information in a number of ways without resorting to some type of formal verification. In
that manner, relying on the reputation of the source is considered as one of these ways. In line
with WTO case law there is no expectation of the verification of the accuracy of each piece of
information which would render the investigation unmanageable
9. Nevertheless, Turkey
understands that the investigating authority has to show the utmost caution on the accuracy and
adequacy of the submitted information as expected from an objective and even-handed authority.

20. Except the foreign companies shown in the petition, the question whether the authority
has to pin point each and every foreign producer/exporter that exported the subject merchandise
in the period of investigation is the essence of the discussion on "best endeavor". In light of the
latest rulings in WTO jurisprudence
10 Turkey maintains that even though the authority is under the
obligation to check the accuracy of the submitted information and extend its examination if it is
not fully satisfied with the submitted information; there is no legal obligation to further its works to
such extremes to identify each unknown producer/exporter.

21. As a matter of fact, in investigations where the industry is fragmented on both importer
and exporter side the investigating authority should not be held legally responsible for not directly
communicating
11 to each and every producer/exporter or not showing the highest enthusiasm to
get in touch with these exporters. Furthermore, co nsidering the textual reading of Article 5, 6 and
Annex II of the ADA as well as the recent holdings in WTO case law, in such cases, it would be
unreasonable to conclude that the authority has no discretion to use facts available based findings
vis-à-vis unknown exporters for the reason that it did not display the best endeavor to contact
them. As accurately pointed out, the investigating authority will not be in the position to draw a
line between two types of "unknown" producer s/exporters, namely those who exist and are
exporting but refuse to appear and those who are not exporting in period of investigation.
12

22. To summarize, Turkey would like to stress that the margins of the "best endeavor" to
identify unknown producer/exporters, importers an d other interested parties should be evaluated
within the merits of each case before reaching a conclusion that the investigating authority was
well warranted to rely on "fact available" based calculations and findings vis-à-vis these
producer/exporters.

8 Panel Report, China – Broiler Products, para. 7.301; Panel Report, China – GOES, para. 7.386.
10 Appellate Body Report, Mexico – Rice, para. 251; Panel Report, China – Broiler Products, para. 7.302.
11 Panel Report, China – Broiler Products, para. 7.304.
12 Panel Report, China – Broiler Products, footnote 498.
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IV. CONCLUSION

23. Mr. Chairman, distinguished Members of th e Panel, with these comments, Turkey would
like to contribute to the legal debate of the part ies in this case, and express again its appreciation
for this opportunity to share its points of view on this relevant debate, regarding the interpretation
of ADA Agreement. We thank you for your kind attention and remain at your disposal for any
question you may have.
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ANNEX D-4
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE UNITED STATES
I. PROCEDURAL AND TRANSPARENCY REQUIREMENTS OF GATT ARTICLE 6

a. Designation of Confidential Info rmation and Requirement for Public
Summaries under Articles 6.5 and 6.5.1 of the AD Agreement

1. A basic tenet of the AD Agreement, as reflec ted in various Article 6 provisions, is that the
parties to an investigation must be given a full and fair opportunity to see relevant information and
to defend their interests. At the same time, investigative authorities may need to protect
confidential information. Indeed, in AD investigations, the submission of confidential information is
a necessary and frequent occurrence. Article 6.5 thus requires that investigating authorities, upon
good cause shown, to ensure the confidential treatment of such information. Article 6.5.1 balances
the need to protect such information against the disclosure requirements of other Article 6
provisions. It provides that an investigating authority, if it accepts confidential information, must
provide or otherwise assure that confidential information is summarized in sufficient detail to
permit a reasonable understanding of the substance of the information. Where an investigating
authority accepts confidential information without providing or otherwise assuring timely adequate
non-confidential summaries of that information, significant prejudice to the ability of companies
and Members to defend their interests could occur.

b. Acceptance of Certain Informat ion Presented during Verification

2. The main purpose of "on-the-spot investigatio n" conducted pursuant to AD Article 6.7 is to
verify the information already submitted or obtain further detail. On-the-spot investigations are
not opportunities for interested parties to submit a significant amount of new information.

3. The United States notes that Paragraph 7 of Annex I provides that a firm is entitled to
prepare for the on-the-spot investigation and contemplates that an investigating authority may
request that a firm provide additional information, including potentially minor corrections or
clarifications to information already submitted.

4. With respect to what must be accepted by the investigating authority, Article 6.8 and
Annex II provide that an investigating authority may make determinations on the basis of facts
available when information is not submitted in a reasonable time. The investigating authority is not
required to use information in circumstances including when the information is submitted in an
untimely fashion and when its acceptance would cause difficulties in the conduct of the
investigation. Accordingly, whether any information proffered at verification should be accepted
will be a fact-specific inquiry.

c. Alleged Inadequate Disclosure an d Failure to Inform Parties of the
Essential Facts under Consideration in Violation of AD Articles 6.4 and 6.9

5. The United States recalls that the "relevancy " of the information covered by Article 6.4 is
to be determined from the perspective of the inte rested party, not the investigating authority. The
United States agrees with the EU that Article 6.4 generally requires that an investigating authority
give interested parties access to all non-confidential information that is submitted during an
investigation. The United States agrees that there is no "disclosure" of confidential information
within the meaning of Article 6.5 if the investigating authority is providing the confidential
information only to the party that submitted it. To the extent that there may be aspects of the
calculation that may not be able to be disclosed because they contain another interested party's
confidential information, the second clause of Ar ticle 6.4 explicitly excludes from the disclosure
requirements such information treated as confidential under Article 6.5.

6. With respect to Article 6.9, the United States notes that the calculations relied on by an
investigating authority to determine the normal value and export prices, as well as the data
underlying those calculations, constitute "essential facts" forming the basis of the investigating
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authority's imposition of final measures. Without such information, no affirmative determination
could be made and no definitive duties could be imposed. If the interested parties are not provided
access to these facts used by the investigating authority on a timely basis, they cannot defend
their interests.

7. Furthermore, with respect to the determinat ion of the existence and margin of dumping,
the investigating authority must disclose the data used in: (1) the determination of normal value
(including constructed value); (2) the determination of export price; (3) the sales that were used
in the comparison between normal value and export prices; (4) any adjustments for differences
which affect price comparability; and (5) the formulas that were applied to the data. All of these
would be "essential" facts within the meaning of Article 6.9.

8. Contrary to China's arguments, the fact that a party has provided information to the
investigating authority does not mean that the exporter knows with certainty which of that
information will be used and in what capacity. Moreover, China's claim that all that is required is a
summary of the essential facts is a misreading of Article 6.9, which require that an investigating
authority provide the essential facts underlying its determination and not merely a stated
conclusion based on these facts.

9. For injury determination, the United States notes that Article 6.9 considers information on
the price levels for domestically produced products and comparison between the prices for this
product and the imports under consideration to be essential facts for price effect findings.

d. Use of Facts Available to Determin e the Dumping Margins with respect to
All Other Companies in Alleged Breach of Article 6.8 and Paragraph 1 of
Annex II

10. The United States recalls that Article 6.8 establishes that an investigating authority may
only resort to facts available where an interested party "refuses access to" or otherwise "does not
provide" information that is "necessary" to the investigation, or otherwise "significantly impedes"
the investigation. An investigating authority may not assign a margin based on facts available
when the authority has not requested the information in the first place. Thus, an exporter must be
given the opportunity to provide information requ ired by an investigating authority before the
latter resorts to facts available. An exporter that is unknown to the investigating authority is not
notified of the information required, and thus is denied an opportunity to provide it. In other
words, exporters not given notice of the information required of them cannot be considered to
have failed to provide necessary information.

11. Article 6.8 should be read together with paragraph 1 of Annex II, which requires
investigating authorities to ensure that respondents receive proper notice of the rights of the
investigating authorities to use facts available. These provisions together ensure that an exporter
or producer has an opportunity to provide information required by an investigating authority
before the latter resorts to the use of facts available.

II. ALLEGED FAILURE TO SET FORTH OR OTHERWISE MAKE AVAILABLE IN
SUFFICIENT DETAIL CERTAIN FINDINGS AND CONCLUSIONS WITH RESPECT TO
THE ALL OTHERS RATE AND THE INJURY DETERMINATION IN VIOLATION OF
AD ARTICLES 12.2 AND 12.2.2

12. With respect to the dumping determination, Article 12.2 provides that, in a preliminary or
final determination, the investigating authority must provide notice or a separate report setting out
"in sufficient detail the findings and conclusions reached on all issues of fact and law considered
material by the investigating authorities". Article 12.2.2 further provides that for a final
determination, an investigating authority's final report must detail "all relevant information on the
matters of fact and law and reasons which have led to the imposition of final measures".

13. The factual and legal bases for the investigative authority to resort to facts available with
respect to all other exporters that it did not examine constitute material issues of fact and law
considered. These issues go to the very heart of the determination of what margin to apply to
unexamined exporters. Consequently, Article 12.2 requires that the investigative authority provide
in sufficient detail the findings and conclusions that lead to application of facts available. Similarly,
Article 12.2.2 requires, among other things, the that the investigative authority provide "all
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relevant information" on the relevant facts underlying its determination that recourse to facts
available was warranted in the calculations of the "all others" rate.

14. With respect to the injury determination, the United States notes the that, pursuant to
Article 12.2.2, any facts related to the price co mparisons of the subject imports and domestic
products are relevant information on the matters of fact that an investigating authority should
disclose in its final determination.

III. ALLEGED BREACH OF ARTICLE 2 OF THE AD AGREEMENT IN THE CALCULATION OF
DUMPING MARGINS

a. Determinations of SG&A Costs Shou ld be Based, Whenever Possible, on
Sales Made in the Ordinary Course of Trade Pursuant to AD Article 2.2.2

15. Article 2.2.2 provides that an investigatin g authority should, where possible, base SG&A
and profit on sale of the like product made in th e ordinary course of trade. If, and only if, such
sales in the ordinary course of trade are unava ilable, Article 2.2.2 then provides alternative
methodologies for determining SG&A and profit.

16. The EU argues that MOFCOM breached Article 2.2.2 because it based SG&A on certain
sample sales and these sales were outside the ordi nary course of trade. However, there are many
reasons to find a normal value sales transaction not in the ordinary course of trade. The
AD Agreement does not require an investigating authority to treat all sample sales as outside the
ordinary course of trade. Instead, the investigating authority must evaluate the record evidence to
determine whether it supports finding that the sample sale was concluded on terms and conditions
that are incompatible with normal commercial practice for sales of the like product, in the market
in question, at the relevant time.

b. Investigating Authorities Shall Norm ally Calculate Cost on the Basis of
Records Kept by the Exporters When the Costs are in Accordance with
Generally Accepted Accounting Princi ples (GAAP) and Reasonably Reflect
Cost Pursuant to AD Article 2.2.1.1

17. The United States considers Article 2.2.1.1 to require an investigating authority to
normally calculate costs on the basis of records kept by an exporter or producer's books and
provided that the books and records are in accordance with the GAAP of the exporting country and
reasonably reflect the costs associated with the production and sale of the product under
consideration. If the evidence in this dispute esta blishes that the records were in accordance with
GAAP and reasonably reflected the costs associated with the production and sale of the product
under consideration, MOFCOM would have been obligated to use those records pursuant to
Article 2.2.1.1 or obligated to provide a reason supported by the record evidence to depart from
the "normal" methodology provided for in Article 2.2.1.1.

c. An Investigating Authority Should Conduct Model Matching to Ensure a
Fair Comparison Pursuant to AD Article 2.4

18. Article 2.4 sets forth the overarching obligation of an investigating authority to make a
"fair comparison" between the export price and th e normal value when determining the existence
of dumping and calculating a dumping margin. A fair comparison requires the investigating
authority to strive to compare similar products as well as transactions. In finding the correct set of
products to compare, the investigating authorit y must conduct an exercise such as a model
matching exercise. When subject merchandise consists of two or more significantly diverse product
models, investigating authorities will match foreign-like products and home-market products using
model match criteria to assure accurate price comparisons within but not across relevant product
categories. Because model matching ensures that only sales of products with similar physical
characteristics are compared to each other or necessary adjustments for the differences are made,
some sort of model matching exercise is an essential component of establishing a fair comparison.

19. Generally, the investigating authority has the obligation to seek information regarding
differences in physical characteristics that may affect price comparability in order to make a fair
comparison. The investigating authority can fulfill this obligation by asking parties to: 1) identify
and explain the differences in physical characterist ics and 2) identify which of those differences in
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physical characteristics may affect price comparability. If an investigating authority sought such
information, but an exporter or producer merely identified differences in physical characteristics
between the products at issue without claiming that those differences affected price, then the
investigating authority need not independently undertake an analysis of the differences in physical
characteristics to determine whether they affected price comparability.

IV. INJURY DETERMINATION

a. Evaluation of the Margin of Dumping

20. The United States notes that Articles 3.1 an d 3.4 do not require an authority to evaluate
the significance of dumping margins. Neither article requires that the magnitude of the margins of
dumping be given any particular weight, or that they be evaluated in any particular way.

b. Import Volumes and Causation Determinations

21. With regard to Article 3.2, the United States disagrees with EU and Japan to the extent
they assert that an authority may not attach significance to the fact that imports "retain" a
significant share of the market over the period. Al though Article 3.2 does specify that an authority
"shall consider whether there has been a significant increase in dumped imports", either on an
absolute or relative basis, it does not expressly or implicitly prevent an authority from considering
in its analysis the fact that imports have a significant market share level. In a situation in which
significant volumes of subject imports are having a significant adverse impact on domestic prices,
the existence of significant import volumes or ma rket share is obviously one item of "relevant
evidence" that an authority may want to consider in its Article 3.5 analysis.

c. Application of Provisional Measures for a Period Exceeding Four Months

22. The text of Article 7.4 provides that without request from a sufficient percentage of
exporters or the imposition of a lesser duty, an investigating authority may not impose provisional
measures for a period exceeding four months. To the extent that MOFCOM applied provisional
measures for six months without a request by exporters representing a significant percentage of
the trade involved and without MOFCOM examinin g whether a duty lower than the margin of
dumping would be sufficient to remove injury, the United States agrees that China breached
Article 7.4.

d. The EU's Proposed Amendments to the BCI Procedures and the Request
that the Panel Seek Confidential Information Pursuant to DSU Article 13.1

23. Article 6.5 expressly provides that, once an investigating authority accepts information as
confidential, the investigating authority must not disclose such information without the specific
permission of the party submitting it. No provis ion of the AD Agreement or the DSU creates an
exception that would permit information that the investigating authority accepted as confidential in
the underlying investigation be disclosed within the context of a WTO proceeding without the
specific permission of the party submitting that information to the investigating authority.

24. Protecting confidential information, including by securing the specific permission of the
party submitting the information, is crucial to the proper functioning of trade remedy proceedings.
If the protections in Article 6.5 were treated as non-applicable in the context of a dispute, parties
could be deterred from disclosing confidential information to investigating authorities, potentially
impeding or frustrating the proceeding. It is also important to recognize that confidential
information often raises significant domestic sensitivities. For example, in order to ensure
confidential information stays properly protected, consistent with WTO obligations, Members may
have domestic legal provisions that impose penalties, including criminal penalties, on government
officials that disclose such information without authorization. The Panel should not request that a
party supply BCI information from the underlying pr oceeding absent the specific permission of the
party that submitted it.
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V. THE PANEL'S TERMS OF REFERENCE

a. Sufficiency of a Panel Request Assesse d in Light of the Disclosure Afforded
to the Interested Member and the Di scussion during the Administrative
Proceedings

25. The level of disclosure provided in the under lying proceeding can affect the sufficiency of a
complaining Member's panel request. Compliance with DSU Article 6.2 requires a case-by-case
analysis, considering the request "as a whole, and in light of the attendant circumstances". Such
circumstances would include the level of disclosure provided in the underlying proceeding.

26. In contrast, the United States disagrees th at the sufficiency of a panel request must be
assessed in the light of the discussion between the investigating Member and the interested party
during the administrative proceedings, as reflected in the measure at issue. The argumentation at
the administrative proceeding level is not relevant in evaluating the sufficiency of a panel request.
Using the issues raised before the investigating authorities during the administrative proceedings
would be contrary to DSU Article 6.2, which requires a Member to present the problem clearly to
the responding party and other Members (including those deciding whether to become third
parties). It is not enough that a Member is aware of the possible universe of issues which may be
raised as claims before a panel; the specific issue must be made clear in the panel request. A
responding party and other Members are entitled to a clear presentation of the problem. They are
not required to guess.