CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL FROM THE UNITED STATES RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES REPORT OF THE PANEL
Document: REPORT OF THE PANEL BCI deleted, as indicated [***]
Date: 31 July 2015
Document codes: WT/DS414/RW
Complainant: U.S.
Respondent: China
Third parties: Argentina, EU, Honduras, India, Japan, South Korea, Saudi Arabia, Vietnam, Russia
Dispute stage: Implementation & Compliance
Agreements cited: Art. VI  GATT 1994Art. 1  Anti-dumpingArt. 10, 11.2, 11.3, 12.7, 12.8, 22.3, 12.7, 12.8, 22.3, 22.5, 15.1, 15.2  Subsidies and Countervailing Measures (SCM)Art. 6.9, 12.2.2, 6.8, Annex II, 6.4, 6.5.1, 3.1, 3.2  Anti-dumping

CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON
GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL
FROM THE UNITED STATES
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES
REPORT OF THE PANEL

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LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures on Business Confidential Information A-6
ANNEX B
ARGUMENTS OF THE UNITED STATES
Contents Page
Annex B-1 Executive summary of the first written submission of the United States B-2
Annex B-2 Executive summary of the second written submission of the United States B-9
Annex B-3 Executive summary of the oral statements of the United States at the
Substantive Meeting
B-17
Annex B-4 Executive summary of the oral statem ent of the United States at the
Interim Review Meeting
B-21
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 second written submission of China C-10
Annex C-3 Executive summary of the oral statements of China at the Substantive Meeting C-18
Annex C-4 Executive summary of the oral statement of China at the Interim Review
Meeting
C-22
ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of the European Union D-2
Annex D-2 Integrated executive summary of the arguments of Japan D-6

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CASES CITED IN THIS REPORT
Short title Full case title and citation
Argentina – Ceramic Tiles Panel Report, Argentina – Definitive Anti-Dumping Measures on Imports of
Ceramic Floor Tiles from Italy, , adopted 5 November 2001,
DSR 2001:XII, p. 6241
Argentina – Poultry
Anti-Dumping Duties
Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from
Brazil, WT/DS241/R, adopted 19 May 2003, DSR 2003:V, p. 1727
Canada – Aircraft
(Article 21.5 – Brazil)
Appellate Body Report, Canada – Measures Affecting the Export of Civilian
Aircraft – Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW,
adopted 4 August 2000, DSR 2000:IX, p. 4299
China – Autos (US) Panel Report, China – Anti-Dumping and Countervailing Duties on Certain
Automobiles from the United States, WT/DS440/R and Add.1, adopted
18 June 2014
China – Broiler Products Panel Report, China  Anti-Dumping and Countervailing Duty Measures on
Broiler Products from the United States, WT/DS427/R and Add.1, adopted
25 September 2013
China – GOES 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, DSR 2012:XII, p. 6251
China – GOES Panel Report, China – Countervailing and Anti-Dumping Duties on Grain
Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/R
and Add.1, adopted 16 November 2012, upheld by Appellate Body Report
WT/DS414/AB/R, DSR 2012:XII, p. 6369
China – HP-SSST (Japan)/
China – HP-SSST (EU)
Panel Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes ("HP-SSST") from the European Union,
WT/DS454/R and Add.1 / WT/DS460/R and Add.1, circulated to WTO
Members 13 February 2015 [adoption/appeal pending]
China – X-Ray Equipment Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security
Inspection Equipment from the European Union, WT/DS425/R and Add.1,
adopted 24 April 2013
EC – Approval and Marketing of
Biotech Products
Panel Reports, European Communities – Measures Affecting the Approval
and Marketing of Biotech Products, WT/DS291/R, Add.1 to Add.9 and Corr.1
/ WT/DS292/R, Add.1 to Add.9 and Corr.1 / WT/DS293/R, Add.1 to Add.9
and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847
EC – Bananas III (US) Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas, Complaint by the United States, WT/DS27/R/USA,
adopted 25 September 1997, as modified by Appellate Body Report
WT/DS27/AB/R, DSR 1997:II, p. 943
EC – Bananas III
(Article 21.5 – Ecuador)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Recourse to Article 21.5 of the DSU by Ecuador,
WT/DS27/RW/ECU, adopted 6 May 1999, DSR 1999:II, p. 803
EC – Bananas III
(Article 21.5 – Ecuador II)

EC – Bananas III
(Article 21.5 – US)
Appellate Body Reports, European Communities – Regime for the
Importation, Sale and Distribution of Bananas – Second Recourse to
Article 21.5 of the DSU by Ecuador, WT/DS27/AB/RW2/ECU, adopted
11 December 2008, and Corr.1 / European Communities – Regime for the
Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of
the DSU by the United States, WT/DS27/AB/RW/USA and Corr.1, adopted
22 December 2008, DSR 2008:XVIII, p. 7165
EC – Bananas III
(Article 21.5 – US)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Recourse to Article 21.5 of the DSU by the
United States, WT/DS27/RW/USA and Corr.1, adopted 22 December 2008,
upheld by Appellate Body Report WT/DS27/AB/RW/USA, DSR 2008:XIX,
p. 7761
EC – Bed Linen Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R, adopted
12 March 2001, DSR 2001:V, p. 2049
EC – Bed Linen Panel Report, European Communities – Anti-Dumping Duties on Imports of
Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12 March 2001, as
modified by Appellate Body Report WT/DS141/AB/R, DSR 2001:VI, p. 2077

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Short title Full case title and citation
EC – Bed Linen
(Article 21.5 – India)
Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of
the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III,
p. 965
EC – Bed Linen
(Article 21.5 – India)
Panel Report, European Communities – Anti-Dumping Duties on Imports of
Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by
India, WT/DS141/RW, adopted 24 April 2003, as modified by Appellate Body
Report WT/DS141/AB/RW, DSR 2003:IV, p. 1269
EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of
Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted
27 September 2005, and Corr.1, DSR 2005:XIX, p. 9157
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,
DSR 1998:I, p. 135
EC – IT Products Panel Reports, European Communities and its member States – Tariff
Treatment of Certain Information Technology Products, WT/DS375/R /
WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III,
p. 933
EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed
Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1,
DSR 2008:I, p. 3
EC – Sardines Appellate Body Report, European Communities – Trade Description of
Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII,
p. 3359
EC – Selected Customs Matters Appellate Body Report, European Communities – Selected Customs Matters,
WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear
from China, WT/DS405/R, adopted 22 February 2012, DSR 2012:IX, p. 4585
Korea – Certain Paper
(Article 21.5 – Indonesia)
Panel Report, Korea – Anti-Dumping Duties on Imports of Certain Paper from
Indonesia – Recourse to Article 21.5 of the DSU by Indonesia,
WT/DS312/RW, adopted 22 October 2007, DSR 2007:VIII, p. 3369
Mexico – Olive Oil Panel Report, Mexico – Definitive Countervailing Measures on Olive Oil from
the European Communities, WT/DS341/R, adopted 21 October 2008,
DSR 2008:IX, p. 3179
US – Countervailing Duty
Investigation on DRAMS
Appellate Body Report, United States – Countervailing Duty Investigation on
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea,
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Countervailing Measures
on Certain EC Products
(Article 21.5 – EC)
Panel Report, United States – Countervailing Measures Concerning Certain
Products from the European Communities – Recourse to Article 21.5 of the
DSU by the European Communities, WT/DS212/RW, adopted
27 September 2005, DSR 2005:XVIII, p. 8950
US – FSC
(Article 21.5 – EC)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Recourse to Article 21.5 of the DSU by the European
Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I,
p. 55
US – FSC
(Article 21.5 – EC II)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Second Recourse to Article 21.5 of the DSU by the
European Communities, WT/DS108/AB/RW2, adopted 14 March 2006,
DSR 2006:XI, p. 4721
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted
23 August 2001, DSR 2001:X, p. 4697
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX,
p. 4051
US – Oil Country Tubular
Goods Sunset Reviews
(Article 21.5 – Argentina)
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping
Measures on Oil Country Tubular Goods from Argentina – Recourse to
Article 21.5 of the DSU by Argentina, WT/DS268/AB/RW, adopted
11 May 2007, DSR 2007:IX, p. 3523

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Short title Full case title and citation
US – Oil Country Tubular
Goods Sunset Reviews
(Article 21.5 – Argentina)
Panel Report, United States – Sunset Reviews of Anti-Dumping Measures on
Oil Country Tubular Goods from Argentina – Recourse to Article 21.5 of the
DSU by Argentina, WT/DS268/RW, adopted 11 May 2007, as modified by
Appellate Body Report WT/DS268/AB/RW, DSR 2007:IX, p. 3609
US – Softwood Lumber VI
(Article 21.5 – Canada)
Appellate Body Report, United States – Investigation of the International
Trade Commission in Softwood Lumber from Canada – Recourse to
Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006,
and Corr.1, DSR 2006:XI, p. 4865
US – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain
Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R,
adopted 5 October 2011, DSR 2011:IX, p. 4811
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1, DSR 1997:I, p. 323
US – Zeroing (EC)
(Article 21.5 – EC)
Appellate Body Report, United States – Laws, Regulations and Methodology
for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of
the DSU by the European Communities, WT/DS294/AB/RW and Corr.1,
adopted 11 June 2009, DSR 2009:VII, p. 2911
US – Zeroing (EC)
(Article 21.5 – EC)
Panel Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the
DSU by the European Communities, WT/DS294/RW, adopted 11 June 2009,
as modified by Appellate Body Report WT/DS294/AB/RW, DSR 2009:VII,
p. 3117

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ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994
AK Steel AK Steel Corporation
AK Steel Supplementary
Questionnaire Response
AK Steel Corporation, Supplementary Industry Injury Investigation
Questionnaire Response (Exhibit US-18) (BCI)
Allegheny Ludlum ATI Allegheny Ludlum Corporation
AUV Average unit value
Baosteel Baosteel Group Corporation
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
GOES Grain oriented flat-rolled electrical steel
MOFCOM Ministry of Commerce of the People's Republic of China
Original Determination MOFCOM, Final Determination in Anti-Dumping and Anti-Subsidy
Investigations on GOES Imports from the US and Russia, No. 21,
10 April 2010 (Exhibit US-4)
Price negotiation letters Price negotiation letters exchanged be tween a Chinese producer and Chinese
purchasers (Exhibits US-7, US-8 and US-9) (BCI)
Redetermination MOFCOM, Determination on the Re-investigation of Anti-Dumping and
Countervailing Duties on Grain Oriented Flat-Rolled Electrical Steel Imports
from the United States, Public Notice [2013] No. 51, including its annexes
(Exhibit US-1)
Redetermination – China's
translation
MOFCOM, Determination of the Ministry of Commerce of the People's Republic
of China on the Anti-dumping and Coun tervailing Reinvestigation on Imports
of Grain Oriented Flat-rolled Electrical Steel Originating in the United States
(Exhibit CHN-1)
Redetermination Disclosure MOFCOM, Notice of informatio n disclosure before the industry injury verdict of
the anti-dumping on imported grain-oriented silicon electrical steel with the
country of origin in the United States and Russia and the anti-subsidy on the
imported grain-oriented silicon electrical steel with the country of origin in the
United States, Public Notice [2013] No. 327 (Exhibit US-3)
Redetermination Disclosure –
China's translation
MOFCOM, Notice of Disclosure Prior to Industry Injury Determination in the
Anti-dumping Reinvestigation on Imports of Grain Oriented Flat-rolled
Electrical Steel originating in the U.S. and Russia and the Anti-subsidy
Reinvestigation on Imports of Grain Oriented Flat-rolled Electrical Steel
originating in the U.S. SDCYCH [2013] No. 327 (Exhibit CHN-2)
Russian contract Contract between a Russian producer and a Chinese purchaser (Exhibit US-6)
(BCI)
SCM Agreement Agreement on Subsidies and Countervailing Measures
Wuhan Wuhan Iron and Steel Corporation
WTO Agreement Marrakesh Agreement Establishing the World Trade Organization

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1 INTRODUCTION
1.1 Complaint by the United States
1.1. This compliance dispute concerns the challenge by the United States to measures taken by
China to comply with the rulings and recommendat ions of the Dispute Settlement Body (DSB) in
China – Countervailing and Anti-Dumping duties on Grain Oriented Flat-rolled Electrical Steel from
the United States.
1.2. On 13 January 2014, the United States requested consultations with China pursuant to
paragraph 1 of the understanding reached on 19 August 2013 between China and the
United States in "Agreed Procedures under Articles 21 and 22 of the Dispute Settlement
Understanding" (Sequencing Agreement), which states that should the United States consider that
the situation described in Article 21.5 of the Understanding on Rules and Procedures Governing the
Settlement of Dispute ("DSU") exists, the United States will request that China enter into
consultations with the United States.
1.3. Consultations were held on 24 January 2014, but failed to resolve the dispute.
1.2 Panel establishment and composition
1.4. On 13 February 2014, the United States requested the establishment of a panel pursuant to
Articles 6 and 21.5 of the DSU with standard terms of reference.
1
1.5. At its meeting on 26 February 2014, th e Dispute Settlement Body (DSB) referred this
dispute, if possible to the original Panel, in accordance with Article 21.5 of the DSU.
1.6. The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by the United States in
document WT/DS414/16 and to make such findings as will assist the DSB in making
the recommendations or in giving the rulings provided for in those agreements.
2
1.7. In accordance with Article 21.5 of the DS U, the Panel was composed on 17 March 2014 as
follows:
Chairperson: Mr John Adank

Members: Mr Anthony Abad
 Mr Jan Heukelman

1.8. The European Union, India, Japan and the Russian Federation notified their interest in
participating in the Panel proceedings as third parties.
1.3 Panel proceedings
1.3.1 General
1.9. After consultation with the partie s, the Panel adopted its Working Procedures
3 and timetable
on 22 May 2014. After further consulting the parties, the Panel revised its timetable on
24 October 2014. The Panel further modified its timetable on 19 January 2015.
1.10. The Panel held its substantive meeting with the parties on 14 and 15 October 2014. A
session with the third parties took place on 15 Oc tober 2014. The Panel issued its Interim Report
to the parties on 17 March 2015. At the request of China, the Panel held a further meeting with

1 WT/DS414/16.
2 WT/DS414/17.
3 See the Panel's Working Procedures in Annex A-1.

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the parties to consider issues identified in the parties' requests for interim review on 23 April 2015.
The Panel issued its Final Report to the parties on 5 May 2015.
1.3.2 Working procedures on Business Confidential Information (BCI)
1.11. After consultation with both parties, the Panel adopted, on 22 May 2014, additional
procedures for the protection of BCI.
4
2 FACTUAL ASPECTS
2.1 The measures at issue
2.1. This dispute concerns measures taken by China to implement the DSB recommendations and
rulings in China – Countervailing and Anti-Dumping duties on Grain Oriented Flat-rolled Electrical
Steel from the United States , as set forth in MOFCOM's Redetermination issued on 31 July 2013,
pursuant to which China continues to impose anti-dumping and countervailing duties on imports of
GOES from the United States.
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. The United States requests that the Panel find that:
a. MOFCOM's injury determination is inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the
Anti-Dumping Agreement and Articles 15.1, 15. 2, 15.4 and 15.5 of the SCM Agreement.
Specifically:
i. MOFCOM's price effects analysis is inconsistent with Articles 3.1 and 3.2 of the
Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement;
ii. MOFCOM's impact analysis is inconsistent with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement and Articles 15.1 and 15.4 of the SCM Agreement; and
iii. MOFCOM's causation analysis is inconsistent with Articles 3.1 and 3.5 of the
Anti-Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement.
b. MOFCOM acted inconsistently with its obligations under Article 6.9 of the Anti-Dumping
Agreement and Article 12.8 of the SCM Agreement by failing to disclose certain essential
facts in connection with its Redetermination.
c. MOFCOM acted inconsistently with its obligations under Articles 12.2 and 12.2.2 of the
Anti-Dumping Agreement and Articles 22.3 and 22.5 of the SCM Agreement by failing to
set forth in sufficient detail in its Redetermination or a separate report, China's findings
and conclusions on certain material issues of fact and law in connection with its
Redetermination.
3.2. China requests that the Panel reject the United States' claims in this dispute in their entirety.
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflecte d in their executive summaries, provided to the
Panel in accordance with paragraph 18 of the Working Procedures adopted by the Panel (see
Annexes B and C).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of the European Union and Japan are reflected in their executive summaries,
provided in accordance with paragraph 19 of th e Working Procedures adopted by the Panel (see
Annex D). India and the Russian Federation did not submit written or oral arguments to the Panel.

4 See Additional Working Procedures on BCI in Annex A-2.

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6 INTERIM REVIEW
6.1. On 17 March 2015, the Panel submitted its Interim Report to the parties. On 31 March 2015,
the United States and China both submitted written requests for the review of precise aspects of
the Interim Report. In addition, China requested an interim review meeting, which was held on
23 April 2015.
6.2. In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's
response to the parties' requests made at the interim review stage. We modified certain aspects of
the Report in light of the parties' comments where we considered it appropriate, as explained
below. As a result of the changes that we have made, the numbering of footnotes in the Final
Report has changed from the Interim Report. References to footnotes in this section relate to the
Final Report. References to paragraph numbers are to the Interim Report.
6.1 Requests submitted by the United States
6.3. The United States requests that the Panel revise the last sentence of paragraph 7.20 of the
Interim Report to reflect the fact that it challe nged China's argument regarding the replacement of
the term "low" with the term "unfair" in MOFCOM's Redetermination, referring to its oral statement
at the Panel's meeting with the parties in this regard.
5 China did not comment on this request.
6.4. We have reviewed the United States' oral statement at the Panel's meeting with the parties,
and we have amended the last sentence of paragraph 7.20 to reflect more accurately the
arguments made by the United States.
6.5. The United States requests that the Panel revise the last sentence of paragraph 7.63 of the
Interim Report to align this sentence with the standard of review as enunciated by the Panel at
paragraph 7.4 and as applied by the Panel in paragraphs 7.58 and 7.120. 6 China did not comment
on this request.
6.6. We agree that, for consistency and clarity, the same terminology should be used in our report
where, as in this instance, the same standard is being applied and the same meaning is intended.
We have therefore amended the last sentence of paragraph 7.63 to align this sentence with other
references to the standard of review as set out in paragraphs 7.4, 7.58 and 7.120.
6.7. The United States requests that the Panel mo dify its findings in paragraph 8.2 of the Interim
Report. The United States recalls that it reques ted the establishment of the Panel pursuant to
Article 21.5 of the DSU because it considered that China's measures taken to comply were
inconsistent with the covered agreements, and as a result, China failed to comply with the DSB's
recommendations and rulings in this dispute, and suggests that the Panel modify paragraph 8.2 to
frame its findings of inconsistency in similar terms.
7 At the interim review meeting, China
commented that there was no need for the new language suggested by the United States,
contending that since the measures at issue no longer exist, there is no basis for a statement that
China has failed to bring its measures into compliance.8
6.8. Having considered the matter, and in light of our decision regarding the United States'
request concerning paragraph 8.6 of the Interim Report below, we have granted the United States'
request and modified paragraph 8.2, albeit using different language from that suggested by the
United States. Notwithstanding China's views concerning the termination of the measures, in this
proceeding we have found that the measures taken by China to comply with the recommendations
and rulings in the original dispute are inconsistent with relevant provisions of the Anti-Dumping
and SCM Agreements. In this context, we consider that the conclusion that China failed to comply
with the recommendations and rulings of the DSB is justified, regardless of subsequent events.
6.9. The United States requests that the Panel delete the recommendation set out in
paragraph 8.6 of the Interim Report. The United States notes that this is a compliance proceeding,
and suggests that there is consequently no need for the Panel to make a recommendation that

5 United States' request for interim review, paras. 3-4.
6 Ibid. paras. 5-7.
7 Ibid. paras. 8-10.
8 China's oral statement at the interim review meeting, para. 15.

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China bring its measures taken to comply into conformity. The United States contends that a panel
in a compliance proceeding is tasked with determining whether a measure taken to comply by the
Member concerned that is within the panel's terms of reference exists or is inconsistent with a
covered agreement, and asserts, relying on the report of the Appellate Body in US – FSC
(Article 21.5 – EC II)
9, that the Panel fulfils its mandate when it concludes that China has failed to
implement the recommendations and rulings of th e DSB, and that until a Member has brought its
measures found to be inconsistent by the DSB into full compliance with its WTO obligations, the
original recommendation by the DSB will remain operative, and no further recommendation
pertaining to the measure taken to comply is necessary. 10 At the interim review meeting, China
argued that the original recommendations were no longer operative, as there are no longer any
disputed measures in effect to which those recommendations could apply, and asserted that
termination of the measures at issue in this proceeding brings China into full compliance.
11
6.10. While US – FSC (Article 21.5 – EC II) concerned in particular a recommendation under
Article 4.7 of the SCM Agreement, the Appellate Body's reasoning suggests that a recommendation
to bring the measures taken to comply into conformity is not necessary in an Article 21.5
compliance proceeding in any case, as the original recommendations and rulings of the DSB under
Article 19.1 remain in effect until fully complied with. The Appellate Body and a number of panels
have in fact taken this view and not issued recommendations in Article 21.5 proceedings.
12 As
discussed below, at paragraphs 6.20-6.25, we have no evidence properly before us on the basis of
which we could conclude that there is no longer any disputed measure in effect to which the
original recommendations and rulings of the DSB could apply, and thus no basis on which we could
conclude that China is in compliance with those recommendations and rulings.
6.11. Having considered the matter, we agree with the United States that a recommendation is
not necessary in this proceeding, and have theref ore decided to grant the United States' request
and modified paragraph 8.6 to reflect our views.
6.2 Requests submitted by China
6.12. China requests that paragraph 7.21 of the Interim Report be modified to reflect its view that
the term "unfair imports" is not unclear and that the change from "low-priced imports" to "unfair
imports" was not cursory, and that the changes were necessary to refer more precisely to the
imports at issue and avoid confusion about whet her MOFCOM had engaged in price comparisons.
China makes no specific suggestions in this regard.
13 At the interim review meeting, the
United States recalled its arguments on this issue and argued that China provided no basis for its
request.14
6.13. We recall that we found China's explanation for the change in terminology, rather than the
term "unfair imports" itself, to be unclear. Nothing in China's request affects our conclusion that
the change in terminology appears to have been made primarily to avoid the reference to low
prices that both we and the Appellate Body found problematic in the original dispute. Moreover, we
considered the change in terminology specifically in evaluating whether it demonstrated a change
in the Redetermination sufficient to allow the United States to challenge MOFCOM's analysis of the
r e l e v a n t i n j u r y f a c t o r s , c o n c l u d i n g t h a t i t d i d n o t . A c c o r d i n g l y , w e s e e n o r e a s o n t o m a k e a n y
changes to paragraph 7.21, and deny China's request.

9 Appellate Body Report, US – FSC (Article 21.5 – EC II), paras. 85-87, 100.
10 United States' request for interim review, paras. 11-12.
11 China's oral statement at the interim review meeting, paras. 12-14.
12 E.g. Panel Report, Korea – Certain Paper (A rticle 21.5 – Indonesia) , para. 7.4 (the panel found that
the Korean investigating authority's redetermination finding violated the Anti-Dumping Agreement but stated
that since the original DSB recommendations and rulings remained operative, it would make no new
recommendation under Article 19.1 of the DSU); Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC) ,
para. 470; Panel Report, US – Zeroing (EC) (Article 21.5 – EC) , para. 9.2 (neither the panel nor the Appellate
Body made a new recommendation, but the Appellate Bo dy recommended that "the DSB request the United
States to implement fully the recommendations and rulings of the DSB [in the original proceeding]"); Appellate
Body Report, US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) , para. 186; Panel
Report, US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) , para. 8.2 (neither the panel
nor the Appellate Body made a ne w recommendation but the Appellate Body recommended that the DSB
request the United States to "implement fully the recommendations and rulings of the DSB"). See Panel
Report, EC – Bananas III (Article 21.5 – US), paras. 6.50, 8.13.
13 China's comments on the interim report, para. 3.
14 United States' oral statement at the interim review meeting, para. 23.

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6.14. China requests that the Panel delete pa ragraphs 7.55-7.57 and 7.66 of the Interim Report.
China notes that the Panel stated that it could "draw no conclusion" on the quarterly data under
the standard of review, and states that it is not clear why the Panel included this discussion. In
China's view, the Panel should discuss and rely upon only those facts that the Panel finds properly
within its purview under the standard of review. China suggests that the discussion at these
paragraphs, and "elsewhere" in the Interim Report, of facts the Panel believes are not properly
before it should be deleted. In addition, with respect to paragraph 7.56, China states that the
Panel appears to have transposed inadvertently the shift in market share by subject imports and
non-subject imports in Q1 2004. China makes no specific suggestions in this context, and cites no
support with respect to its assertion regarding paragraph 7.56.
15 At the interim review meeting,
the United States observed that the facts at issu e were evidence submitted by China to the Panel,
and that it was therefore appropriate for the Panel to examine and discuss that evidence, including
its role in light of the standard of review and of the fact that it provided further support for the
Panel's findings. The United States asserted that no changes to the report were therefore
necessary.
16
6.15. With respect to the alleged "inadvertent transposition" of data in paragraph 7.56, we have
double-checked the figures set out in that paragraph against those provided by China in its
response to Panel question 14, and they are the sa me. Therefore, there is no evidentiary basis for
any changes to paragraph 7.56 in this regard. Turning to the remainder of China's comments
regarding paragraphs 7.55 to 7.57 and 7.66, we note that while we made "observations" in
paragraphs 7.55 to 7.57 on the basis of the quar terly data submitted by China, our findings in
paragraph 7.66 were made on the basis of China Customs import data that was available to
MOFCOM and the data on subject import volume in Q1 2009 set out in MOFCOM's Redetermination
Disclosure. We do not consider that we are precluded from making the observations in
paragraphs 7.55 to 7.57, despite the fact that th e information in question was not relied on by
MOFCOM. We made it clear that we drew no conclu sions, adverse or otherwise, concerning shifts
in market share based on the quarterly data submi tted in this proceeding by China, relying in our
conclusions on evidence that was appropriately before us in light of the standard of review. In light
of the foregoing, we deny China's request to delete paragraphs 7.55-7.57 and 7.66, and have
made no changes to paragraph 7.56.
6.16. China requests the Panel to clarify that the only pricing data on the record were average
unit values ("AUVs") and to reflect China's explanation that MOFCOM addressed the price data, but
did not compare the relative prices of subject imports and the domestic like product because of the
deficiencies associated with AUV comparisons pointed out by the Appellate Body, referring
specifically to paragraphs 7.58 and 7.63-7.65 of the Interim Report in this regard.
17 At the interim
review meeting, the United States, noting that China offered no basis for the Panel to modify the
reasoning or findings in question, stated its view that no changes were necessary.
18
6.17. China's request essentially would require us to make a finding that the "only" price data
before MOFCOM was AUV data. It is not clear to us, and China has not explained, why such a
finding is necessary or appropriate. The issue before us was not whether the AUV data was the
"only" price data available to MOFCOM, but rather whether MOFCOM could have reached the
specific conclusions that it did, regarding the linkages between increases in volume of subject
imports and price effects suffered by the domest ic industry, without comparing the prices of
subject imports and the domestic like product. Whether AUV data was the only data before
MOFCOM on prices is not relevant to our consideration of that issue. Insofar as China requests us
to include its explanation that MOFCOM addresse d the price data regarding subject imports and
the domestic like product, China's request does not clearly identify which specific aspect of
MOFCOM's consideration of the price data remained unexplained in our report, what specific
explanations it seeks to have included, or any support for such explanations. We therefore deny
these aspects of China's request. However, having reviewed China's arguments in this regard, we
grant China's request that we reflect its explanation that MOFCOM did not make price comparisons
between subject imports and the domestic like pr oduct because of the deficiencies in the price
data that were highlighted by the Appellate Body , as this relates to an aspect of China's own
arguments. We have therefore added a new footnote 128 to paragraph 7.65 in this report.

15 China's comments on the interim report, paras. 4-5.
16 United States' oral statement at the interim review meeting, paras. 24-26.
17 China's comments on the interim report, para. 6.
18 United States' oral statement at the interim review meeting, para. 27.

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6.18. China asserts that the Panel dismissed as in sufficient MOFCOM's verification of the domestic
industry's production capability with respect to high grade GOES despite the fact that MOFCOM
properly addressed the issue of whether subject imports and the domestic like product were
substitutable, referring to paragraphs 7.72-7.81 of the Interim Report. China expresses concern
that the Panel's finding sets a precedent that "an authority must address every factual assertion
placed on record, even where it is adequately addressed by other means, and no matter the
context in which it is offered or the extent to which its significance is rendered moot by other facts
and findings of the authority."
19 China makes no specific requests for changes to the interim
report, and cites no evidence in support of it s concerns. At the interim review meeting, the
United States, noting that it had responded to China's arguments on this issue, and the Panel had
explained its findings, stated its view that no changes are necessary.
20
6.19. We explained the basis of our conclusion s in paragraphs 7.72-7.81, which include our
review of the evidence before MOFCOM, rele vant arguments provided by the parties and
MOFCOM's ultimate conclusions as provided in its Redetermination finding. In the absence of any
specific suggestions for change, we see no basis to modify our analysis and conclusions and have
made no changes in this section of the report.
6.20. Finally, China stated in its request for interim review that the measures at issue in this
proceeding would expire on 10 April 2015 because the domestic industry did not request a review
of those measures, which might have resulted in their continuation, and requested that the Panel
take this into consideration and issue no recommendations in the final report.
21 On 21 April 2015,
China submitted exhibit CHN-3, a copy of MOFCOM's public notice of termination of the measures
dated 10 April 2015. At the interim review meeting, the United States argued that the Panel
should reject China's attempt to introduce new evidence during the interim review stage of this
proceeding as contrary to the DSU, inconsistent with paragraph 8 of the Working Procedures of the
Panel and not based on the evidence before the Panel.
22 The United States noted that in its
request for interim review, China stated its expectations regarding the future termination of the
measures at issue. In the United States' view, since China's request was not based on any
evidence that had been developed by the parties an d considered by the Panel prior to issuance of
the report, there was no need or basis for the Panel to review its findings further.
23 Finally, the
United States asserted that China's new evidence, in addition to being untimely, was not relevant
to the matter being examined by the Panel, noting that the Appellate Body has stated that, as a
general rule, the measures subject to a panel's review "must be measures that are in existence at
the time of the establishment of a panel," and therefore the task of the panel is to determine
whether the measures at issue are consistent with the obligations at issue " at the time the Panel
was established."
24 According to the United States, China's exhibit has no relevance to the legal
situation that existed on the date of the Pane l's establishment when the DSB referred the matter
to the Panel, and thus is not relevant to the Panel's legal assessment and its findings and
conclusions in this proceeding.
6.21. Article 15.2 of the DSU entitles parties to submit a written request for the panel to review
"precise aspects of the interim report" prior to circulation of the final report. However, a number of
panels and the Appellate Body have held that Article 15.2 is available only for the panel to review
precise aspects of the interim report and does not permit parties to introduce new evidence. 25
Further, the panel in EC - IT Products concluded that evidence regarding the repeal of a measure
at issue in that dispute, submitted by the EC subsequent to the issuance of the interim report, was
such "new evidence" and could not be cons idered at the stage of interim review. 26 The panel in

19 China's comments on the interim report, para. 7.
20 United States' oral statement at the interim review meeting, para. 28.
21 China's comments on the interim report, para. 8.
22 United States' oral statement at the interim review meeting, paras. 6-14.
23 Ibid. paras. 15-16.
24 Ibid. paras. 17-18, citing Appellate Body Report, EC – Chicken Cuts, para. 156; Appellate Body
Report, EC – Selected Customs Matters, para. 264; Panel Report, EC – Approval and Marketing of Biotech
Products, para. 7.456.
25 Appellate Body Report, EC – Sardines, para. 301; Appellate Body Report, EC – Selected Customs
Matters, para. 259; Panel Report, EC – Bananas III (Article 21.5 – US), paras. 6.1-6.18; Panel Report, EC – IT
Products, para. 6.48.
26 Panel Report, EC - IT Products, para. 6.48. The panel observed:
Consistent with the Appellate Body's approach and in the interest of protecting the due process
rights of the complainants, who had no opportunity to make submissions for the record on the

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that case retained its recommendation under Arti cle 19.1, observing that there was no evidence
"properly before the Panel" confirming the repeal of some of the measures at issue.
6.22. The situation in the present case is analogous to that in EC - IT Products . As in that case,
China has submitted new evidence, i.e. Exhibit CHN- 3, subsequent to the issuance of the interim
report. In our view , MOFCOM's public notice of termination is new evidence that was not before
the Panel at the time it issued its interim report.
6.23. We note in this context the similarities between this case and the proceedings in EC -
Bananas III (Article 21.5 – US). In that case, as here, both parties requested during interim review
that the panel delete the recommendation made in the interim report, but for different reasons:
the United States because it considered such a recommendation to be unnecessary in a
compliance proceeding, and the then-European Communities because it had adopted an amending
regulation eliminating the measure challenged by the United States in that compliance dispute.
 The
European Communities informed the compliance panel of the repeal of the measure when it filed
its comments on the interim report, and submitte d a copy of the amending regulation at the
interim review meeting. The panel found the evid ence regarding the amending regulation to be
inadmissible as it had been submitted after the comments on interim review had been filed, at
which stage it could no longer consider new evid ence, but decided to delete the recommendation,
considering that the original DSB recommendations and rulings continued to be operative in the
compliance proceeding.
27
6.24. On appeal, the European Communities argued that the panel's statement that the original
DSB recommendations continued to be operative in the compliance proceeding constituted a
"concealed recommendation" and that the panel had erred in issuing such a recommendation in
relation to an expired measure. The Appellate Body disagreed, concluding that the panel had made
no recommendation in relation to a measure which was no longer in force. 28 The Appellate Body
itself made no recommendation on the ground that the measure at issue had ceased to exist.29
6.25. In light of the above, we deny China's request. Nonetheless, we note that, if the measures
have in fact expired, there would in our view be no further obligation on China to "bring the
[expired] measure[s] into conformity".
6.3 Editorial changes
6.26. Finally, we have made a number of changes of an editorial nature to improve the clarity and
accuracy of the Report or to correct typographical errors, including certain changes suggested by
the United States.
30
7 FINDINGS
7.1 General principles regarding treaty interpretation, the standard of review, and
burden of proof
7.1.1 Treaty interpretation
7.1. Article 3.2 of the DSU provides that the WT O dispute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of
interpretation of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly
requires panels to interpret that Agreement's provisions in accordance with the customary rules of

documents provided, we decline to consider further the documents attached by the
European Communities to its request for interim review. The Panel also declines to make
adjustments to the Interim Reports to exclude the measures in question from the Panel's
recommendation and to add text about the European Communities' confirmation that certain
measures have been repealed, as requested by the European Communities.
27 Panel Report, EC – Bananas III (Article 21.5 – US), paras. 6.50, 8.13.
28 Appellate Body Report, EC – Bananas III (Article 21.5 – US), para. 272.
29 Ibid. para. 479.
30 United States' request for interim review, paras. 13-37.

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interpretation of public international law. 31 It is generally accepted that the principles codified in
Articles 31 and 32 of the Vienna Convention on the Law of Treaties are such customary rules.
While we have not found it necessary to engage with any significant issues of treaty interpretation
in this proceeding, we have nonetheless been mindful of these principles in our analysis.
7.1.2 Standard of review
7.2. Article 11 of the DSU provides, in relevant part, that:
[a] panel should make an objective assessment of the matter before it, including an
objective assessment of the facts of the case and the applicability of and conformity
with the relevant covered agreements.
In addition, Article 17.6 of the Anti-Dumping Agreement sets forth the special standard of review
applicable to disputes under the Anti-Dumping Agreement:

(i) in its assessment of the facts of the matter, the panel shall determine whether
the authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the panel might have
reached a different conclusion, the evaluation shall not be overturned;
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance
with customary rules of interpretation of public international law. Where the panel
finds that a relevant provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the authorities' measure to be in conformity with
the Agreement if it rests upon one of those permissible interpretations.
Thus, Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement together establish the
standard of review we will apply with respect to both the factual and the legal aspects of the
present dispute.

7.3. The Appellate Body has explained that where a panel is reviewing an investigating authority's
determination, the "objective assessment" standard in Article 11 of the DSU requires a panel to
review whether the authorities have provided a reasoned and adequate explanation as to (i) how
the evidence on the record supported its factual findings; and (ii) how those factual findings
support the overall determination.
32 In the context of Article 17.6(i) of the
Anti-Dumping Agreement, the Appellate Body has clarified that a panel should not conduct a
de novo review of the evidence, nor substitute its ju dgment for that of the investigating authority.
A panel must limit its examination to the evidence that was before the investigating authority
during the course of the investigation and must ta ke into account all such evidence submitted by
the parties to the dispute.33 At the same time, a panel must not simply defer to the conclusions of
the investigating authority; a panel's examination of those conclusions must be "in-depth" and
"critical and searching".34
7.4. The Appellate Body has clarified a panel's st andard of review of the facts pursuant to the
above provisions in the following terms:
It is well established that a panel must neither conduct a de novo review nor simply
defer to the conclusions of the national authority. A panel's examination of those
conclusions must be critical and searching, and be based on the information contained
in the record and the explanations given by the authority in its published report. A
panel must examine whether, in the light of the evidence on the record, the
conclusions reached by the investigating authority are reasoned and adequate. What

31 Article 17.6(ii) of the Anti-Dumping Agreement also provides that if a panel finds that a provision of
the Anti-Dumping Agreement admits of more than one permissible interpretation, it shall uphold a measure
that rests upon one of those interpretations.
32 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS, para. 186; and US –
Lamb, para. 103.
33 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, paras. 187-188.
34 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.

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is 'adequate' will inevitably depend on the facts and circumstances of the case and the
particular claims made, but several general lines of inquiry are likely to be relevant.
The panel's scrutiny should test whether the reasoning of the authority is coherent
and internally consistent. The panel must undertake an in-depth examination of
whether the explanations given disclose how the investigating authority treated the
facts and evidence in the record and whether there was positive evidence before it to
support the inferences made and conclusion s reached by it. The panel must examine
whether the explanations provided demonstrate that the investigating authority took
proper account of the complexities of the da ta before it, and that it explained why it
rejected or discounted alternative explanations and interpretations of the record
evidence. A panel must be open to the possibility that the explanations given by the
authority are not reasoned or adequate in the light of other plausible alternative
explanations, and must take care not to assume itself the role of initial trier of facts,
nor to be passive by 'simply accept[ing] the conclusions of the competent
authorities.'
35 (Footnote omitted.)
7.1.3 Burden of proof
7.5. The general principles applicable to the al location of the burden of proof in WTO dispute
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert
and prove its claim.
36 Therefore, as the complaining party in this proceeding, the United States
bears the burden of demonstrating that certain aspects of the measures at issue are inconsistent
with the Anti-Dumping Agreement and the SCM Agr eement. The Appellate Body has stated that a
complaining party will satisfy its burden when it establishes a prima facie case, namely a case
which, in the absence of effective refutation by the defending party, requires a panel, as a matter
of law, to rule in favour of the complaining party.
37 Finally, it is generally for each party asserting a
fact to provide proof thereof.38
7.2 The United States' claim with respect to adverse impact
7.6. In this section of our report, we examine the United States' claim that MOFCOM's finding that
the subject imports had an adverse impact on the domestic industry was not based on an
objective examination of all relevant economic factors and indices having a bearing on the state of
that industry. More specifically, the United States claims that, in its Redetermination, MOFCOM
failed to examine the impact of subject imports on the domestic industry and to evaluate all
relevant economic factors and indices having a bearing on the state of the industry consistently
with China's obligations under Articles 3.1 and 3.4 of the Anti-Dumping Agreement and
Articles 15.1 and 15.4 of the SCM Agreement. Ch ina responds, in the first instance, that the
United States' claim is not properly before the Panel in a compliance proceeding under Article 21.5
of the DSU. China adds that, even if it were to be considered, the US claim would fail on the
merits. Given China's jurisdictional objection, we must first consider whether the US claim with
respect to adverse impact falls within our terms of reference before turning, if necessary, to its
merits.
7.2.1 Main arguments of the parties
7.7. The United States argues that its claim is properly before the Panel because it challenges
aspects of China's compliance measure that are inconsistent with the covered agreements. The
United States specifically alleges that MOFCOM modified its adverse impact analysis in the
Redetermination by (i) replacing all references to imports of product concerned "at a low price"
with references to "unfair" imports of the subject merchandise and (ii) relying significantly on
market conditions in 2008, in contrast to its original impact analysis.
39 The United States considers
that its claim relates directly to China's compliance measure, which it argues includes a revised

35 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.
36 Appellate Body Report, US – Wool Shirts and Blouses, para. 337.
37 Appellate Body Report, EC – Hormones, paras. 98, 104.
38 Appellate Body Report, US – Wool Shirts and Blouses, para. 337.
39 United States' second written submission, para. 67.

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injury analysis and newly disclosed facts. 40 It maintains that China's arguments regarding the
admissibility of claims under Article 21.5 of the DSU are misguided.
7.8. China asserts that the United States is not en titled to expand the scope of the dispute in this
Article 21.5 proceeding to include a wholly new claim not previously addressed by the panel, and
that it would be extremely unfair to allow this claim. 41 China notes there is no question that this is
a new claim by the United States, as there was no reference to either Article 3.4 of the
Anti-Dumping Agreement or Article 15.4 of th e SCM Agreement in the original request for
consultations.
42 China relies on several Appellate Body reports in arguing that a complaining
Member ordinarily would not be allowed to raise a claim in an Article 21.5 proceeding that it could
have pursued in the original proceedings, but did no t. According to China, the first mention of any
such claim was in the United States' first written submission in this proceeding. Moreover, China
maintains that MOFCOM's discussion of injury in the Redetermination is essentially unchanged
from the original.
43 China argues that the introduction of a new claim at this stage of the
proceedings would be contrary to basic principles of fairness and due process. 44 It would give the
United States a second chance to raise a claim it failed to raise in the original proceeding and
would expose China to possible suspension of concessions for a violation it was never given a fair
opportunity to address.
45
7.2.2 Evaluation by the Panel
7.9. In the original proceedings, the United States made no claim concerning MOFCOM's
evaluation of the various economic factors and indices having a bearing on the state of the
domestic industry for purposes of the injury determination under Articles 3.4 and 15.4 of the
Anti-Dumping and SCM Agreements, respectively. Accordingly, the Panel and Appellate Body did
not consider any claim under these Articles and made no findings in this respect. Therefore, the
question we must resolve is whether this aspect of the Redetermination is subject to review by the
Panel in this Article 21.5 proceeding.
7.10. Article 21.5 of the DSU provides, in relevant part:
Where there is disagreement as to the existence or consistency with a covered
agreement of measures taken to comply with the recommendations and rulings such
dispute shall be decided through recourse to these dispute settlement procedures,
including wherever possible resort to the original panel.
7.11. Inherent in proceedings under Article 21.5 of the DSU is the need to balance important
systemic interests. Expanding the scope of a compliance proceeding to measures not originally
challenged by the complaining Member may be necessary to ensure prompt and thorough
verification of compliance. However, it could also result in circumvention of the normal dispute
settlement process if it allows the complaining Member to obtain a finding of non-compliance and
potentially seek retaliation without the responding Member having had a reasonable period of time
in which to bring any inconsistent measures into compliance.
7.12. The scope of a panel's jurisdiction with respect to what measures and claims it may consider
in an Article 21.5 compliance proceeding has been addressed by a number of panels and the
Appellate Body. Several fundamental principles have emerged from these decisions. Thus, it is now
accepted that nothing in Article 21.5 limits a compliance panel to considering only certain issues,
or certain aspects of a measure taken to comply. Panels have found that to satisfy the objective of
prompt settlement of disputes, a complainant can challenge all aspects of a new measure taken to
comply, not only those related to issues covered by the original proceedings.
46
7.13. Similarly, the Appellate Body has found that a panel is not limited, in conducting its review
under Article 21.5, to examining the measures taken to comply from the perspective of the claims,

40 United States' second written submission, para. 69.
41 China's first written submission, para. 68.
42 Ibid. para. 71.
43 China's second written submission, paras. 60-61.
44 China's first written submission, paras. 71, 74.
45 Ibid. para. 71.
46 See, e.g. Panel Report, EC – Bananas III (Article 21.5 – Ecuador), paras. 6.3-6.12.

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arguments and factual circumstances that relate d to the measure that was the subject of the
original proceedings.47 The Appellate Body has observed that if a compliance panel were restricted
to examining the new measure from this limited pe rspective, it would be unable to examine fully,
in accordance with Article 21.5, the consistency with a covered agreement of the measures taken
to comply. 48 The Appellate Body has also upheld compliance panels' rulings that new claims
challenging a changed component of the measure taken to comply are admissible.49
7.14. However, the Appellate Body has also co ncluded that, in the context of a compliance
proceeding, a Member may be precluded from bringing the same claim with respect to an aspect of
another Member's redetermination that is unchanged from the determination at issue in the
original dispute.
50 An unchanged aspect of the original measure that a Member does not have to
change, and does not change, in complying with the recommendations and rulings of the DSB thus
should not be susceptible to challenge in a compliance proceeding. 51 One panel, in applying these
principles, distinguished between a new claim on an aspect of the measure taken to comply that
constituted a new or revised element of the original measure, and which thus could not have been
raised in the original proceedings, and another new claim that concerned aspects of the original
measure that were unchanged. 52 The panel found the former to be admissible, and the latter
inadmissible.53
7.15. We now proceed to consider the facts of this case, in light of the principles just described, to
determine whether the United States' claim with respect to adverse impact is properly before us in
this compliance proceeding.
7 . 1 6 . W e r e w e t o c o n c l u d e t h a t M O F C O M c h a n g ed the substance of its analysis or conclusions
regarding adverse impact in the Redetermination, such that the United States could not have
meaningfully raised the claim it now asserts in the original proceeding, we might conclude that
allowing the United States' claim in this compliance proceeding would not unduly deprive China of
its due process rights. However, should the changes in MOFCOM's Redetermination not be
sufficient to justify this conclusion, we may find that the United States is challenging aspects of the
original measure that are essentially unchanged, and which it could have challenged in the original
dispute, and therefore conclude that allowing the United States' new claim in this compliance
proceeding could jeopardize fundamental principles of fairness and due process and should
therefore not be allowed to proceed. We are of the view that the latter conclusion is warranted in
this case.
7.17. It is undisputed that the United States is introducing a new claim in this compliance
proceeding. The United States made no claims under Articles 3.4 and 15.4 of the Anti-Dumping
and SCM Agreements in the original proceeding. However, the United States asserts that
MOFCOM's Redetermination was changed from its original Determination, and that its claim is a
justified challenge to this changed Redetermination. In arguing that MOFCOM's Redetermination is
changed from its original Determination, the United States focuses on the deletion of references to
subject imports "at a low price" and an alleged ch ange in the temporal focus of MOFCOM's injury
analysis to 2008. China maintains that MOFCOM's Redetermination is essentially unchanged from
its original Determination.

47 See, e.g. Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), paras. 37-41.
48 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), paras. 37-41.
49 See, e.g. Appellate Body Report, US – FSC (Article 21.5 – EC), paras. 197-222.
50 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), paras. 88-89. In that case, the
Appellate Body found that India was seeking to challenge an unchanged aspect of the original measure that the
European Communities did not have to change, and did not change, in complying with the recommendations
and rulings of the DSB. The Appellate Body considered that: (i) the EC's redetermination could be separated
into distinct parts; (ii) India was merely reasserting a claim that it had raised, and as to which it had failed to
make a prima facie case before the original panel; and (iii) India was precluded from bringing the same claim
with respect to an aspect of the redetermination that was unchanged from the determination at issue in the
original dispute.
51 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), paras. 88-89.
52 Panel Report, US – Countervailing Measures on Certain EC Products (Article 21.5 – EC),
paras. 7.1-7.77.
53 Ibid.

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7.18. MOFCOM's injury analysis in the original Determination contained four references to imports
of the product concerned "at a low price". 54 In the Redetermination, these four references have
been reformulated, and now refer to "unfair" imports of subject merchandise in the otherwise
nearly identical text.
55 China contends that "none of these references are engaging in price
comparisons of any sort" and that "references to 'low price' imports in this discussion are just
synonyms for unfairly traded imports."56 China thus suggests that these different formulations are
simply interchangeable references to the subject imports in the context of MOFCOM's injury
analysis.
7.19. The Panel and Appellate Body in the origin al proceeding considered MOFCOM's discussion of
the "low price" of subject imports in the context of price effects and found that, "although
MOFCOM did not make a finding of significant price undercutting, MOFCOM's finding as to the 'low
price' of subject imports referred to the existe nce of price undercutting between 2006 and 2008,
and that MOFCOM relied on this factor to support its finding of significant price depression and
suppression."
57 The Appellate Body specifically was not persuaded by China's arguments that the
references to "low price" were simply references to the prices of subject imports in relation to their
historical prices or to the low price established by virtue of the sale of subject imports at dumped
and/or subsidized levels.
58 Thus, MOFCOM's references to "low price" were considered more
significant by the Panel and Appellate Body in the original proceedings than was argued by China.
7.20. Accordingly, we have considered whether the deletion of these references from MOFCOM's
injury analysis in the Redetermination and their replacement by a term that does not directly
implicate price reflects a change in the focus and substance of the Redetermination from the
original. We specifically asked China to clarify why MOFCOM replaced the original term in the
Redetermination. China responded that MOFCOM replaced the Chinese term meaning "low" with
one meaning "unfair" to avoid any confusio n with the concept of price undercutting.
59 China
further responded that MOFCOM thus inserted what it deemed to be the more precise term for
"unfair" in its injury analysis in the Redetermination to refer to subject merchandise in the sense of
"unfairly traded dumped or subsidized imports."
60 The United States argued that China provided no
support for this assertion, and that the Appellate Body had already rejected this argument.61
7.21. In our view, the term "unfair imports" appears to connote a broader concept than the term
"low-priced imports", as it implies that the impo rts in question are dumped or subsidized. But
dumping and subsidization are determinations th at can only be reached following thorough
investigation and analysis. Accordingly, we find China's explanation for this change in terminology
unclear. The change seems to be a cursory attempt to eliminate the reference to low prices that
both we and the Appellate Body found problematic in the original dispute. Nevertheless, in the
present proceeding, we consider this change in references specifically to assess whether it
demonstrates a change in the Redetermination sufficient to allow the United States to challenge
MOFCOM's analysis of the relevant injury factors.
7.22. On the basis of China's explanation, and in light of the text of the Redetermination and the
arguments in the original dispute, we are of the view that the injury analysis and determination
component of the measure taken to comply in this case, that is, the Redetermination, has not
been changed from the original determination in a manner that makes it susceptible to challenge
in this compliance proceeding. As was the case in EC – Bed Linen (Article 21.5 – India) , there was
no need for MOFCOM in this case to change its determination of injury in seeking to comply with

54 MOFCOM, Final Determination in Anti-Dumping and Anti-Subsidy Investigations on GOES Imports
from the US and Russia, No. 21, 10 April 2010 (Original Determination) (Exhibit US-4), pp. 60-63.
55 Compare Original Determination, (Exhibit US-4), pp. 60-63, with MOFCOM, Determination on the
Re-investigation of Anti-Dumping and Countervailing Duties on Grain Oriented Flat-Rolled Electrical Steel
Imports from the United States, Public Notice [2013] No. 51, including its annexes (Redetermination)
(Exhibit US-1), pp. 29-32; and MOFCOM, Determination of the Ministry of Commerce of the People's Republic
of China on the Anti-Dumping and Countervailing Reinvestigation on Imports of Grain Oriented Flat-rolled
Electrical Steel Originating in the United States (Redetermination – China's translation) (Exhibit CHN-1),
pp. 29-33.
56 China's second written submission, para. 64.
57 Appellate Body Report, China – GOES, para. 196.
58 Ibid. para. 194.
59 China's response to Panel question No. 48, para. 135.
60 Ibid. para. 136.
61 United States' opening statement at the meeting of the Panel, para. 48.

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the DSB's recommendation. 62 As that determination was unchallenged in the original proceeding,
the Redetermination simply incorporates elements of the original determination, unchanged in any
material respect. In our view, the changes in wo rding between the original determination and the
Redetermination are not substantively relevant to MOFCOM's analysis and determination of injury,
and do not constitute a change that gives rise to a new aspect of that analysis and determination
that can be challenged in this compliance proceeding.
7.23. The same reasoning applies to the United States' allegation that MOFCOM changed the
temporal focus of its injury analysis to 2008. The texts of the original Determination and
Redetermination with respect to MOFCOM's injury analysis are identical in almost all respects
63;
the minor changes between the original determination and the Redetermination do not reflect a
shift in the temporal focus of MOFCOM's analysis to 2008.
64
7.24. Finally, while the United States has focused on the changes in wording in the
Redetermination, the new claim it is raising in this compliance proceeding does not relate
specifically to those changes, but rather to aspects of MOFCOM's analysis and conclusions
regarding the injury factors that are unchanged from the original determination and unaffected by
the change in wording. We note that in a previo us dispute, the Appellate Body emphasized that
disallowing Brazil's claim in the compliance proceeding in Canada – Aircraft would have resulted in
Brazil being precluded from making claims that it could not have raised in the original dispute.
65 In
contrast, in this case, the substance of MOFCOM's injury analysis in the original determination and
in the Redetermination are identical to such a degree that it is clear to us that the United States
could have raised, in the original dispute, the same claim regarding the injury analysis in the
original determination it now seeks to bring before us with respect to the Redetermination. It
chose not to do so in the original proceeding, and we conclude that it may not do so in this
compliance proceeding.
7.2.3 Conclusion regarding adverse impact
7.25. Thus, we find that the few changes between MOFCOM's original determination and
Redetermination are inconsequential in the context of the latter, and the United States in this case
seeks to challenge aspects of the Redetermination that are essentially unchanged from the original
determination. In these circumstances, allowing the United States' new claim under Articles 3.1,
3.4 and 15.1, 15.4 of the Anti-Dumping and SCM Agreements respectively, with respect to adverse
impact in the present compliance proceeding would jeopardize fundamental principles of fairness
and due process, and we therefore conclude it is not properly before us.
7.3 Whether MOFCOM's Redetermination rega rding price effects is consistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the
SCM Agreement
7.3.1 Introduction
7.26. The United States contends that the foll owing three aspects of MOFCOM's Redetermination
on price effects were not based on an objective examination of positive evidence, in violation of
China's obligations under Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1
and 15.2 of the SCM Agreement:
a. Subject imports suppressed domestic prices in 2008 and Q1 2009;
b. Subject imports depressed domestic prices by 30.25% in Q1 2009; and
c. Pricing policies of subject country exporters caused price depression in Q1 2009.

62 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), paras. 86-87.
63 Original Determination, (Exhibit US-4), pp. 60-64; Redetermination, (Exhibit US-1), pp. 28-33; and
Redetermination – China's translation, (Exhibit CHN-1), p. 29-33.
64 Redetermination, (Exhibit US-1), p. 28 (The only textual change of a temporal nature in MOFCOM's
injury analysis in the Redetermination consists of the addition of the phrase "during the same period" at the
end of the last full paragraph on page 28 in reference to the period 2007, 2008 and Q1 2009). See also
Redetermination – China's translation, (Exhibit CHN-1), p. 29.
65 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 88, discussing Appellate Body
Report, Canada – Aircraft (Article 21.5 – Brazil). That is not the situation in this case.

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In particular, the United States makes a number of fact-specific arguments questioning MOFCOM's
finding that subject imports had the "effect" of suppressing and depressing domestic prices, and
also questions MOFCOM's decision to not make price comparisons between subject imports and the
domestic like product, as part of its price effects analysis.
66

7.27. China rejects the United States' contention s, asserting that MOFCOM's conclusions that the
increased volume of subject imports and the do mestic industry's loss in market share had a
suppressive and depressive effect on domestic like product prices were supported by factual
findings indicating a competitive relationship between subject imports and the domestic like
product.
67 China further argues that price negotiation letters exchanged between Chinese
producers and customers, as well as provisions of a contract between a Russian producer and a
Chinese customer (collectively referred to as "pricing policy documents") supported MOFCOM's
conclusions regarding the existence of price competition and also the influence of prices on
purchaser decisions as well as attempts by subject country exporters to set prices lower than
those of the domestic like product.
68 These three factors, in turn, supported MOFCOM's conclusion
that subject imports had had a suppressive and depressive effect on domestic prices.69
7.3.2 Provisions at issue
7.28. Article 3.1 of the Anti-Dumping Agreement provides:
A determination of injury for purposes 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 like products, and (b) the consequent impact of these imports on domestic
producers of such products.
Article 3.2 of the Anti-Dumping Agreement provides:

With regard to the volume of the dumped imports, the investigating authorities shall
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.
With regard to the effect of the dumped imports on prices, the investigating
authorities shall consider whether there has been a significant price undercutting by
the dumped imports as compared with 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 otherwise would have occurred, to
a significant degree. No one or several of these factors can necessarily give decisive
guidance.
Articles 15.1 and 15.2 of the SCM Agreement are iden tical to Articles 3.1 and 3.2, respectively, of
the Anti-Dumping Agreement, with the exception that all references to "dumped imports" are
replaced by references to "subsidized imports".

7.3.3 Main arguments of the parties
7.3.3.1 United States
7.29. The United States rejects MOFCOM's conc lusion that the increased volume of subject
imports and consequential loss of market share by the domestic industry, predominantly to subject

66 See, e.g. United States' first written submission, para. 46.
67 China's second written submission, para. 23. In this regard, China argues that MOFCOM's factual
findings regarding the following seven factors supported its finding of a directly competitive relationship
between subject imports and the domestic like product: (a) like product analysis; (b) cumulation analysis;
(c) statement by US producer Allegheny Ludlum that the subject merchandise that it produced or exported to
China was highly substitutable and competitive with the Chinese domestic like product and the like product
from other countries; (d) parallel price trends of subject imports and the domestic like product; (e) pricing
policy documents; (f) customer overlap; and (g) market share replacement. See also China's opening
statement at the meeting of the Panel, p. 5; China's response to Panel question No. 4, para. 18.
68 China's response to Panel question No. 1, paras. 13-17.
69 Ibid.

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imports, had the effect of suppressing or depressing the prices of the domestic like product. 70 The
United States argues that MOFCOM could not have concluded that subject imports had the effect of
suppressing or depressing domestic like product prices without comparing the actual prices of
subject imports and the domestic like product, which MOFCOM admittedly did not do.
71 Further,
the United States questions the linkage that MO FCOM drew between increases in the volume of
subject imports in 2008 and adverse effects on the domestic like product prices in Q1 2009,
c o n t e n d i n g t h a t t h e v o l u m e o f s u b j e c t i m p o r t s d e c l i n e d f r o m Q 3 2 0 0 8 t o Q 4 2 0 0 8 a n d f r o m
Q4 2008 to Q1 2009, making it less plausible that the decline in domestic industry prices in
Q1 2009 was related to subject imports.
72 The United States also requests the Panel to reject as
ex post facto rationalizations arguments made by China in this proceeding on the basis of
quarterly 2008 market share data concerning shif ts in market shares of subject imports,
non-subject imports and the domestic like product. The United States asserts that this information
was neither considered by MOFCOM in the Redetermination nor disclosed to the interested
parties.
73 The United States emphasizes, however, that the quarterly market share data casts
further doubt on MOFCOM's conclusions regarding the linkage between increases in the market
share of subject imports and price effects in Q1 2009. According to the United States, the fact that
non-subject imports gained market share in Q4 20 08 makes it more plausible that the decline in
domestic like product prices in Q1 2009 was in response to increases in non-subject imports'
market share rather than that of subject imports.
74
7.30. The United States submits that MOFCOM's factual findings purporting to demonstrate that
the subject imports and the domestic like product competed on price were flawed. First, the
United States contends that MOFCOM failed to co nsider submissions by the US exporter AK Steel
that [***].75 In particular, the United States emphasizes that MOFCOM failed to consider evidence
submitted by AK Steel that GOES produced by domestic producers was not certified for use in
large transformers, i.e. transformers of 500kW and above.76
7.31. Further, the United States questions MOFCOM's conclusions concerning price competition on
the ground that the factual findings relied upon by MOFCOM in support of this conclusion were
either general in nature, or were not representative of the market dynamic as a whole.77
7.3.3.2 China
7.32. China rejects the United States' contention that MOFCOM could not have reached its
conclusions regarding the suppressive and depressi ve effect of subject imports on the domestic
like product prices without considering evidence of actual prices of subject imports compared to
the prices of the domestic like product. China contends that Article 3.2 of the
Anti-Dumping Agreement and Article 15.2 of th e SCM Agreement do not require investigating
authorities to make comparisons between the pric es of subject imports and the prices of the
domestic like product.
78 Further, China argues that while MOFCOM did not compare the prices of
subject imports and the domestic like product, MOFCOM's Redetermination discussed and
demonstrated the competitive relationship be tween subject imports and the domestic like
product.79
7.33. China submits that increases in the volume of subject imports, and in particular, gains in
market share, may affect domestic prices regardless of whether the subject imports are priced
higher or lower than the domestic like product. 80 China notes that the domestic industry lost
5.65 percentage points of market share in 2008 while subject imports gained 5.56 percentage
points of market share in the same period. 81 China submits that this showed that it was the

70 See, e.g. United States' first written submission, paras. 49-53, 59-62; and second written submission,
paras. 23-27, 48-56.
71 United States' first written submission, para. 47.
72 Ibid. para. 78.
73 United States' comments on China's response to Panel question No. 14.
74 Ibid.
75 United States' opening statement at the meeting of the Panel, para. 30.
76 United States' comments on China's response to Panel question No. 40.
77 United States' opening statement at the meeting of the Panel, paras. 25-35.
78 China's first written submission, para. 15.
79 Ibid. para. 25.
80 Ibid. para. 19.
81 China's response to Panel question No.1, para. 9.

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subject imports, which were taking market share from the domestic industry, which forced the
domestic industry to respond to that loss by restraining or reducing prices. 82 In addition, China
also submits that MOFCOM had specific evidence that the domestic industry lowered its prices in
reaction to the loss of market share during 2008.
83
7.34. China argues that MOFCOM's factual findings regarding (a) likeness and cumulation,
(b) statements by US exporter Allegheny Ludlum that its exports were highly substitutable with
the domestic like product, (c) parallel price trends, (d) consumer overlap, (e) market share
replacement and (f) pricing policy documents, all supported its conclusion that subject imports and
the domestic like product competed on price.84
7.35. Regarding the United States' arguments concerning evidence furnished by US exporter
AK Steel, China argues that first, while AK Steel submitted a questionnaire response during the
original proceeding, it did not make any comments on the factual disclosure or the preliminary
determination in the original investigation regarding the non-substitutability of certain product
categories exported by it with the domestic like product or make any comments on this issue
during the Redetermination proceedings.
85 Second, AK Steel's exports of high-end GOES
accounted for only about ten per cent of total subject country exports to China. 86 Therefore,
according to China, the United States' argument regarding MOFCOM's failure to consider AK Steel's
submission would have no bearing on MOFCOM's review of the effect of subject imports as a
whole.87
7.36. Further, China asserts that while it may be true that test manufacturing of 500 kW
transformers employing domestically-produced mate rials was not expected until the end of 2009,
i.e. subsequent to the period of investigation, it did not necessarily follow that the domestic
industry did not produce GOES capable of being used in 500 Kw transformers earlier.88
7.3.4 Main arguments of the third parties
7.37. The European Union contends that an in crease in the volume of subject imports and a
decline in the domestic industry's market shar e, taken together with the existence of price
competition between subject imports and the domestic like product, will generally indicate that
subject imports suppress or depress domestic like product prices. 89 However, the European Union
adds that while in principle, it may be possibl e to establish price competition between subject
imports and the domestic like product without co mparing the prices of subject imports and the
domestic like product, it is unclear whether in practice, it is possible to do so. 90 Further, the
European Union submits that by disregarding evid ence that may call into question the explanatory
force of subject imports for price effects, an investigating authority acts contrary to its obligations
under Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the
SCM Agreement.
91
7.38. Japan submits that an increase in the volume of subject imports and a decline in the
domestic industry's market share, coupled with the existence of price competition, will not be
sufficient to demonstrate price depression or pric e suppression within the meaning of Articles 3.1
and 3.2 of the Anti-Dumping Agreement. 92 It contends that if increases in import volume and
decreases in domestic industry market share were sufficient to find price effects, the price effects
analysis would be rendered redundant. 93 In Japan's view, an increase in the volume of subject
imports or parallel pricing between subject imports and the domestic like product only establishes

82 China's response to Panel question No.1, para. 9.
83 Ibid.
84 China's opening statement at the meeting of the Panel, p. 5.
85 China's comments on the United States' response to Panel question No. 40.
86 Ibid.
87 Ibid.
88 Ibid.
89 European Union's third-party response to Panel question No. 3.
90 European Union's third-party response to Panel question No. 1.
91 Ibid.
92 Japan's third-party response to Panel question No. 3.
93 Ibid.

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the potential for subject imports to suppress or depress domestic like product prices, and not
actual price suppression or depression by subject imports.94
7.39. Japan finds MOFCOM's reliance on (a) the likeness analysis, (b) parallel pricing between
subject imports and the domestic like product, (c) overlap in consumers between subject country
exporters and domestic industry and (d) pricing policies of subject countries producers to establish
price competition between subject imports and the domestic like product to be flawed. 95 Japan
submits that while investigating authorities may assess a competitive relationship for the purpose
of a likeness enquiry, such inquiry is different from the scope, purpose and depth of consideration
of a competitive relationship necessary in the context of a price effects analysis. 96 With respect to
parallel pricing, Japan argues that parallel movement in prices of subject imports and the domestic
like product is not evidence of a competitive relationship between subject imports and the
domestic like product, and that the existence of parallel pricing between subject imports and the
domestic like product does not necessarily mean that subject import prices are having an effect on
domestic like product prices.
97 Further, Japan questions MOFCOM's reliance on consumer overlap,
arguing that when subject imports and the domestic like product are concentrated at different
ends of the like product spectrum, the fact that the same consumer may be procuring from subject
country exporters and the domestic industry does not mean that price competition exists between
subject imports and the domestic like product.
98 Finally, with respect to pricing policies of subject
country exporters, Japan states that the mere consideration of prices of other producers while
setting prices does not by itself establish the existence of a competitive relationship.
99
7.3.5 Evaluation by the Panel
7.40. The principal issue before us is whether MOFCOM's conclusions regarding the price
suppressing effect of subject imports in 2008 and the price suppressing and depressing effect of
subject imports in Q1 2009 were based on an ob jective examination of positive evidence, in
accordance with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of
the SCM Agreement. In other words, we must determine whether the conclusions reached by
MOFCOM, as explained in the Redetermination, are such as could be reached by an objective and
impartial decision-maker on the basis of the information and arguments that were before
MOFCOM.
7.41. Regarding price suppression and depression, Articles 3.2 and 15.2 require investigating
authorities to consider whether the effect of subject imports is to "depress prices to a significant
degree or prevent price increases, which otherwis e would have occurred, to a significant degree".
The Appellate Body has stated that this requires investigating authorities to consider whether
certain price effects are the "consequence" of subject imports.
100 We agree. But Articles 3.2
and 15.2 do not prescribe any particular meth odology for that consideration. Therefore,
investigating authorities retain some degree of discretion in adopting a methodology they deem fit
for this purpose. This discretion, however, is not without limit. It is qualified by the overarching
obligation set out in Articles 3.1 and 15.1 that investigating authorities shall base their
determinations on an objective examination of positive evidence of, inter alia, the effect of subject
imports on the market prices of domestic like products.
7.42. In China – GOES , the Appellate Body stated that the objective examination of positive
evidence, in the context of price suppression or depression, requires that when an investigating
authority "is faced with elements other than subj ect imports that may explain the significant price
depression or suppression of domestic prices, it must consider relevant evidence pertaining to such
elements for purposes of understanding whether subject imports indeed have a depressive or
suppressive effect on domestic prices".
101 The Appellate Body found support for this conclusion in
Articles 3.2 and 15.2, which obligate investigating authorities to consider whether subject imports
prevented price increases "which otherwise would have occurred". 102 We agree with the Appellate

94 Japan's third-party submission, para. 9.
95 Japan's third-party response to Panel question No. 1.
96 Ibid.
97 Ibid.
98 Ibid.
99 Ibid.
100 Appellate Body Report, China – GOES, para. 136.
101 Ibid. para. 152.
102 Ibid.

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Body that investigating authorities may not disregard evidence which raise questions as to
whether it is subject imports or some other element or elements that are suppressing or
depressing domestic like product prices.
7.43. In this case, the United States argues that MOFCOM failed to compare the prices of subject
imports and the domestic like product, despite evid ence in the record indicating that there was a
substantial divergence in the prices of subject imports and the domestic like product, and that in
Q1 2009, subject imports were priced higher than the domestic like product. The United States
argues that this evidence raised questions as to whether subject imports in fact had a suppressive
or depressive effect on the domestic like product prices which MOFCOM, by not comparing the
subject import and domestic like product prices, failed to consider. The United States contends
that MOFCOM failed to explain how subject import s had the effect of suppressing or depressing
domestic like product prices when subject import prices were higher in Q1 2009 than domestic like
product prices. China argues that Articles 3.2 and 15.2 do not require investigating authorities to
compare the prices of subject imports and the domestic like product, relying, in particular, on the
Appellate Body's statement that, in light of the te xt of Articles 3.2 and 15.2, price suppression or
depression may stem from "the price and/or volume of such imports".
103 China contends that
increases in the volume of subject imports may have the effect of suppressing or depressing
domestic prices independently of any effect of th e prices of those imports, and that therefore no
consideration of their prices in comparison to domestic like product prices is necessary in making
such a determination.
7.44. In our view, the issue in the present case is not whether price comparisons are mandated
under Articles 3.2 and 15.2, whether increased volumes of subject imports may have a price
suppressive or depressive effect independent of any consideration of their relative prices, or
whether higher priced imports may have a suppressive or depressive effect on domestic like
product prices. Instead, the issue is whether, with respect to the findings of price suppression and
depression, MOFCOM's Redetermination in this case, on its own merits, was based on an objective
examination of positive evidence and provides reasoned explanations for those findings, in light of
the evidence and arguments before it. Therefore, we do not consider it necessary to determine
whether price comparisons are or are not required by Articles 3.1 and 3.2 of the
Anti-Dumping Agreement or Articles 15.1 and 15. 2 of the SCM Agreement as a general matter of
law. Rather, we will consider, as part of our overall review of MOFCOM's conclusions on price
effects, whether MOFCOM's failure to make price comparisons in this particular case, in light of the
evidence and arguments before it, meant that it failed to make reasoned determinations regarding
price effects on the basis of an objective examination of positive evidence.
7.45. MOFCOM concluded that the increases in the volume of subject imports and consequential
gains in their market share, at the expense of the domestic like product sales, had the effect of
suppressing and depressing domestic like product prices. China asserts that its conclusions were
supported by factual findings demonstrating that the subject imports and the domestic like product
competed on the basis of price. Therefore, we will commence our analysis by considering
MOFCOM's conclusions on the effect of the increa sed volume of subject imports and consequential
increase in their market share in 2008 on the pr ices of the domestic like product in 2008 and
Q1 2009. Second, we will consider MOFCOM's findings concerning price competition between
subject imports and the domestic like product. In th at context, we will also consider whether, as
argued by the United States, MOFCOM failed to properly take into account specific assertions by
US exporter AK Steel that certain product categories it exported could not be commercially
supplied by the Chinese domestic industry. Finally, we will assess whether, as argued by China,
these findings, viewed as a whole, are sufficient to sustain MOFCOM's conclusions with respect to
the price suppressing and depressing effects of subject imports.
7.3.5.1 The effect of the increase in the vo lume and market share of subject imports on
domestic like product prices
7.46. MOFCOM found that the volume of subj ect imports increased in 2008 and the domestic
industry consequently lost 5.65 percentage poin ts of market share in 2008, predominantly to
subject imports, which gained 5.56 percentage points of market share in the same period.
MOFCOM concluded that the domestic industry had no option "but to compete with the subject

103 Appellate Body Report, China – GOES, para. 138.

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merchandise on pricing". 104 This precluded price increases in 2008, despite rising costs, resulting
in a 7% decline in the domestic industry's price-cost differential. 105 On this basis, MOFCOM
concluded that subject imports suppressed domestic like product prices in 2008.
7.47. Further, MOFCOM found that as a result of the increase in the volume of subject imports
in 2008, and a decline of 1.25% in subject import prices in Q1 2009 as compared to Q1 2008, the
domestic industry reduced its prices by 30.25% in Q1 2009 as compared to Q1 2008 so as to
avoid further loss of market share, resulting in price depression in Q1 2009.
106 MOFCOM also found
that, as a result of the decline in the domestic like product prices, the price-cost differential of the
domestic industry declined by 75% in Q1 2009, as compared to Q1 2008, and thus found that
subject imports also suppressed prices in Q1 2009.
107
7.48. In this regard, we note China's argument that although market share increases of subject
imports alone do not necessarily explain price effects in all cases, in this particular case they
did.108 China focuses on the close correspondence between the domestic industry's loss of market
share and gains in market share by subject import s. Further, China contends that the "extent and
nature of the other evidence in this case" was sufficient to support the inference that subject
import had adverse price effects and also that MOFCOM had "specific evidence" that the domestic
industry lowered its prices in reaction to the loss of market share during 2008.
109
7.49. China has not identified any "specific evidence" before MOFCOM that indicates that the
domestic industry lowered its prices in reaction to the loss of market share during 2008. Nor has
China identified the "other evidence in this case" whose "extent and nature" allegedly supports the
inference that subject imports suppressed and depressed domestic prices. To the extent that
China's reference to such evidence is actually a reference to the various factors relied on by
MOFCOM in its conclusions on price competition, we discuss these separately below.
7.50. Before examining MOFCOM's conclusions, we recall that Articles 3.2 and 15.2 require
investigating authorities to consider two lines of enquiry. With regard to the volume of dumped or
subsidized imports, investigating authorities are required to consider whether there has been a
significant increase in dumped or subsidized imports, in absolute terms, or relative to production
or consumption in the importing Member. With regard to the effect of the dumped imports on
prices, investigating authorities are required to consider "whether there has been a significant
price undercutting by the dumped imports as comp ared with 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 otherwise would have occurred, to a significant
degree". In our view, it is clear that these two lin es of enquiry are separate, and that increases in
subject import volume and/or market share may, or may not, have consequences for domestic
prices. In order to decide which the case in any given investigation is, the investigating authority
must specifically consider the question of price e ffects, guided by the requirements of Articles 3.2
and 15.2. It is clear to us that it cannot simply be assumed that an increase in subject import
volume and market share will have a price suppressing or depressing effect on domestic prices. If
investigating authorities could simply assume that an increase in subject imports' volume and
market share suppresses and/or depresses domestic like product prices, without specifically
explaining whether the effect of such dumped or subsidized imports was to suppress or depress
prices, the second prong of Articles 3.2 and 15.2 would be rendered redundant.
7.51. Therefore, in our view an investigating authority may conclude that increases in the volume
of subject imports and consequential market share gains have a price suppressing and depressing
effect on the domestic like product only if it establishes a linkage between the subject import's
increased volume and market share on the one hand and the price suppression or depression
observed on the other. Furthermore, where an authority is faced with elements other than subject
imports that may explain the price depression or suppression, it must consider the evidence

104 Redetermination, (Exhibit US-1), p. 26; and Redetermination – China's translation, (Exhibit CHN-1),
p. 27.
105 Ibid.
106 Redetermination, (Exhibit US-1), p. 24; and Redetermination – China's translation, (Exhibit CHN-1),
p. 25.
107 Redetermination, (Exhibit US-1), p. 26; and Redetermination – China's translation, (Exhibit CHN-1),
p. 27.
108 China's response to Panel question No. 1, para. 9.
109 Ibid.

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relevant to such elements for purposes of understanding whether subject imports indeed have a
depressive or suppressive effect on domestic prices. 110 By taking into account such elements, an
investigating authority ensures that its consideration of significant price depression and
suppression under Articles 3.2 and 15.2 is properly based on positive evidence and involves an
objective examination, as required by Articles 3.1 and 15.1.
111 With this understanding in mind,
we turn to the specific facts in this case.
7.3.5.1.1 Price Suppression in 2008
7.52. MOFCOM concluded that subject imports suppressed domestic like product prices in 2008
because the volume of subject imports increased in 2008 and the domestic industry lost market
share as a consequence, predominantly to subject imports, which precluded price increases by the
domestic industry despite rising costs. MOFCOM's analysis and determination raise a number of
concerns.
7.53. First, MOFCOM assumed that if the do mestic industry was losing market share,
predominantly to subject imports, any inability to raise domestic prices must be a consequence of
that loss in market share. We see no reference in MOFCOM's Redetermination to any evidence
which could have led MOFCOM to the conclusion that the domestic industry's inability to increase
prices and cover increased costs was actually the result of the loss in the domestic industry's
market share to subject imports. Nor is there an y explanation of how MOFCOM linked lost market
share, which may well translate into lost revenues, to the industry's inability to increase prices to
cover costs. MOFCOM's assumptions are particularly problematic in light of its failure to engage
with or consider relevant evidence on the record, which could have affected MOFCOM's conclusion
that the close correspondence between the domestic industry's loss of 5.65 percentage points of
market share and the subject imports' gain of 5. 56 percentage points of market share showed the
suppressive effect of increased imports on domestic industry prices.
7.54. For instance, while MOFCOM concluded that price suppression was an effect of the domestic
industry's loss of significant market share almost entirely to the subject imports, as we discuss
below in considering MOFCOM's causation analysis, it failed to consider the impact of non-subject
imports on domestic like product prices, even though the volume of such imports was greater than
that of subject imports. Moreover, as MOFCOM it self observed, the prices of non-subject import
prices were "close to" the price of subject imports in 2008.
112 Since subject imports, non-subject
imports and the domestic like product all competed in the Chinese market, it is unclear how
MOFCOM reached the conclusion that domestic industry prices were precluded from increasing as a
result of the increased volume of subject imports, but that the significant volume of non-subject
imports in the Chinese market, at prices similar to those of subject imports, had no such effect.
Similarly, it is not clear to us how MOFCOM concluded that relative changes in market share
between the domestic industry and subject import s had the effect of suppressing and depressing
domestic prices, but relative changes in the much greater volume of non-subject imports did not.
7.55. China argues that non-subject imports gained only 0.09 percentage points of the
5.65 percentage points of market share lost by th e domestic industry in 2008, given that subject
imports gained 5.56 percentage points. Therefore, China contends that it was the subject imports'
volume and market share increase that had the effect of suppressing and depressing domestic
prices.113 In response to questions from the Panel, China provided the following information
concerning quarterly shifts in market share in 2008 and Q1 2009 to the Panel, which was not set
out in MOFCOM's Redetermination.114

110 Appellate Body Report, China – GOES, para. 152.
111 Ibid.
112 See Redetermination, (Exhibit US-1), p. 37; and Redetermination – China's translation,
(Exhibit CHN-1), p. 37; GOES: Imports into China (China Customs import data), (Exhibit US-12) (this exhibit
contains no page numbers).
113 China's first written submission, para. 119.
114 China's response to Panel question No. 14, para. 52.

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Quarterly shifts in market share

 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q1 2009
compared to
Q1 2008
Domestic Industry … -1.85% -5.00% 0.39% 7.50% 1.04%
Subject imports … 10.28% 4.14% -4.69% -8.75% 1.17%
Non-subject imports … -8.44% 0.86% 4.30% 1.08% -2.21%
Source: China's response to Panel question No. 14.
7.56. While, in light of the standard of review , we draw no conclusions on the basis of this
quarterly data, we observe that it undermines to a degree MOFCOM's conclusion that the market
share lost by the domestic industry in 2008 was taken up almost exclusively by subject imports.
For instance, we note that China submits, relying on this quarterly data, that in Q4 2008, "subject
imports remained very high", "the domestic industry began to react" to increases in volumes of
subject imports, and that the domestic AUV fell in Q4 2008, in comparison to Q3 2008.
115 Further,
China explains that it is only in Q1 2009, with the cumulative effect of price decreases in Q4 2008
and Q1 2009, that the domestic industry began to regain market share that it had lost in 2008.116
7.57. Yet, the quarterly data show that in Q4 2008, non-subject imports gained 4.30% market
share, in comparison to Q3 2008, whereas subj ect imports lost 4.69% of market share, in
comparison to Q3 2008. We observe that MOFCOM's conclusion that in 2008 the domestic industry
lost market share predominantly to subject imports does not adequately reflect the market
dynamics prevalent in Q4 2008, and thereby understates the relevance or possible effect of
non-subject imports on the domestic like product pr ices in 2008. This is particularly difficult to
understand because China's submissions indicate that the price reactions from the domestic
industry started in Q4 2008 and continued in Q1 2009, both of which are quarterly periods when
non-subject imports gained and the subject imports lost market share.
117 Therefore, we observe
that far from offering relevant context for MOFCOM's conclusion regarding linkages between
increases in subject import volume and adverse price effects suffered by the domestic industry,
the quarterly data casts further doubt on MOFCOM's conclusions.
7.58. Second, in our view, a reasonable and unbiased investigating authority could not have
concluded that the domestic industry reacted to increased volumes of subject imports by
competing on price without considering the relative prices of subject imports and the domestic like
product. We recall that there was information before MOFCOM on the prices of the subject imports,
non-subject imports, and the domestic like product. While we draw no conclusions as to the
probative value of that information, we do question MOFCOM's failure to consider it at all in the
Redetermination. Such a consideration is, in our view, important to understand the relationship
between subject import and domestic like product prices. For example, if there is a significant
variation between the price levels of subject imports and the domestic like product, it may be
questioned whether domestic industry prices we re, in fact, precluded from increasing by the
increases in the volume of subject imports in the market, or whether other factors were
responsible for such price suppression. It is undisputed that MOFCOM did not make price
comparisons.
118 In our view, MOFCOM could not have reached a reasoned and adequate conclusion
that the domestic industry's prices were suppre ssed by the volume of subject imports, having
failed to consider the relative prices of subject imports and the domestic like product at all.
7.3.5.1.2 Price suppression and depression in Q1 2009
7.59. With respect to the price suppressing and de pressing effect of subject imports in Q1 2009,
MOFCOM concluded that (a) the "large increase " in the volume of subject imports since 2008 and

115 China's response to Panel question No. 14, paras. 55-56.
115 Ibid. para. 55.
116 Ibid. para. 56.
117 Ibid. paras. 55-56.
118 See, e.g. China's response to Panel question No. 7, para. 29.

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(b) the "sharp decrease" in the price of those imports in the first quarter of 2009, together
depressed and suppressed the price of the Chinese domestic like product in Q1 2009.119
7.60. In our view, when an investigating authority concludes that the increased volume and
decreased prices of subject imports, taken together, affects domestic prices, it is not for a panel to
independently seek to determine the price suppressi ve or depressive effect of either the volumes
or prices of subject imports alone. Absent some indication that the investigating authority itself
considered the effect on domestic prices of th e volumes and prices independent of each other,
such an inquiry would require us to undertake a de novo analysis of the facts, which we are not
permitted to do.
120 Therefore, we asked China to clarify whether MOFCOM found that the domestic
industry's loss of market share to subject imports in 2008 and the 1.25% decline in subject import
prices in Q1 2009, taken together, forced the domestic industry to lower prices by 30.25% in the
same period.
7.61. China clarified, referring to other parts of MOFCOM's Redetermination, that while MOFCOM
noted both the increased volume of subject imports and consequential gains in market share and
the decrease in import prices, it placed much more emphasis on the loss of domestic market share
and was more concerned with the decline in subject import prices in the face of rising domestic
costs than it was with the extent of the decline in subject import prices.
121 The following statement
reflects this:
In the first quarter of 2009, drawing upon the lesson of losing market share in 2008,
the domestic industry was forced to cut price to avoid further losing market share.
Given that sales price of the domestic like product fell by 30.25% compared to the
previous year, the domestic industry won back part of the market share that was lost
in 2008, but still failed to recover to the market share level of 2007 when the subject
merchandise had not yet been imported in large quantities.
122
7.62. This statement refers to the effect of the increased volume of subject imports and
consequential loss in domestic industry's market share alone on the domestic like product prices,
suggesting that MOFCOM did consider the effect of the volume of subject imports independent of
the effect of the price decline.
123 Therefore, we now turn to consider whether MOFCOM's conclusion
regarding the linkage between the increased volume of subject imports in 2008 and price effects in
Q1 2009 was based on an objective examination of positive evidence.
7.63. We have two specific concerns regarding the linkage that MOFCOM draws between increases
in subject import volume and price effects in Q1 2009. First, MOFCOM found that the domestic
industry was forced to lower prices to avoid further loss of market share. 124 However, MOFCOM
made no attempt to compare the prices of subj ect imports and the domestic like product. If
subject imports were priced higher than the domestic like product, it is not clear that further price
reductions by the domestic industry would enable it to limit further market share losses, which
occurred even though domestic prices were lower than subject import prices. We note in this
context that the US government specifically argued that subject imports were priced higher than
the domestic like product in Q1 2009 and MOFCOM did not find this assertion of fact to be
incorrect.
125 In our view, MOFCOM could not have reached a reasoned and adequate conclusion
regarding the linkage between increases in subject import volume and price effects suffered by the
domestic industry, without examining the price levels of subject imports and the domestic like
product.

119 Redetermination, (Exhibit US-1), pp. 28, 41; and Redetermination – China's translation,
(Exhibit CHN-1), pp. 28, 42.
120 See Appellate Body Report, China – GOES, paras. 216, 220.
121 China's response to Panel question No. 27, para. 93.
122 Redetermination, (Exhibit US-1), p. 49; and Redetermination – China's translation, (Exhibit CHN-1),
p. 49.
123 In this regard, we find no similar independent references to the depressive or suppressive effect of a
1.25% decline or sharp decrease on domestic like product prices, nor does China argue that MOFCOM's finding
could be sustained on the basis of a sharp decrease in subject import prices in Q1 2009. Therefore, we do not
consider this issue further.
124 Redetermination, (Exhibit US-1), p. 26; and Redetermination – China's translation, (Exhibit CHN-1),
p. 27.
125 Redetermination, (Exhibit US-1), p. 41; and Redetermination – China's translation, (Exhibit CHN-1),
p. 42.

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7.64. We recall that, in the original proceeding, the Appellate Body found that the "fact that there
was a substantial divergence in pricing levels over that period [Q1 2009] could suggest that the
two products [subject imports and the domestic like product] were not in competition with each
other or that there were other factors at work".
126 In the Redetermination, instead of considering
whether this substantial divergence in pricing levels (which China does not deny existed) brought
into question its determination, MOFCOM simply chose not to make price comparisons or take the
price levels into consideration at all.
127 In our view, in situations where a panel or the Appellate
Body highlights certain concerns, based on the underlying evidence, regarding the consistency of a
measure with the Anti-Dumping Agreement or SCM Agreement, it is on its face problematic for an
investigating authority to simply decline to engage with the evidence that was the basis of the
decision it is seeking to implement by making a new determination based on the same record
evidence.
7.65. In this case, given the nature and scope of the findings in the original proceeding, we would
have expected MOFCOM, in making a new determination based on the same record evidence, to
provide some analysis or explanation as to why the evidence regarding divergences in price levels
between subject imports and the domestic like product did not affect its conclusions, or why it
found it unnecessary to consider such evidence at all. However, MOFCOM chose not to address
that question, and ignored the evidence altogether, relying on the Appellate Body's statement that
price comparisons are not required as a matter of law.
128 Even if price comparisons are not
required in order to make a determination regarding the price effects of imports as a matter of
law, a failure to at least consider evidence of pr ice divergences where such evidence is before the
investigating authority is difficult to understand. An analytical approach based on disregarding
evidence which might lead to a different conclusion casts doubt on the reasonableness and
objectivity of the investigating authority's examination of the evidence and its conclusions. This is
particularly so in a case like the present one, when there were specific arguments advanced by the
United States government that subject imports we re priced higher than the domestic like product
in Q1 2009, both the panel and the Appellate Body questioned the adequacy of MOFCOM's analysis
of the pricing evidence in the original determination, the record evidence underlying the
Redetermination is unchanged from the original proceeding, and the same ultimate conclusions
were reached by MOFCOM.
7.66. Second, MOFCOM's conclusions seem even more questionable given that, as argued by the
United States, subject imports declined from Q3 2008 to Q4 2008 and from Q4 2008 to Q1 2009,
undermining the plausibility of a conclusion that the price suppression and depression in Q1 2009
were the effect of increases in subject import volumes.
129
7.67. China questions the United States' reliance on quarterly import statistics from China
Customs, on the ground that quarterly data may have anomalies. 130 China argues that such
anomalies may arise because it takes time for subject imports to arrive in China and be counted,
while decisions about how much to import and how much to charge for those shipments are based
on information from an earlier time.131 However, China clarified that its arguments "relate more to

126 Appellate Body Report, China – GOES, para. 226.
127 See, e.g. Redetermination, (Exhibit US-1), p. 41; and Redetermination – China's translation,
(Exhibit CHN-1), p. 42.
128 In this regard, China argues that it did not co nsider the price differences between subject imports
and the domestic like product because, in the original pr oceeding, the Appellate Body found deficiencies in the
price data that was used for price comparisons. In the absence of new price data in the redetermination
proceeding, MOFCOM could not have made price comparisons without using the same deficient price data.
China's comments on the interim report, para. 6. In it s Redetermination, MOFCOM decided not to collect new
evidence and based its redetermination on the evidence from the original investigation and determination.
While China may, in the first instance, seek to bring it s measures into conformity with its WTO obligations in
whatever manner China deems appropriate, any measure taken to comply with its WTO obligations, in this
case, MOFCOM's Redetermination, must itself be consistent with China's WTO obligations. In this case, for the
reasons set out in this Report, we have found that MOFC OM's failure to make price comparisons, as well as
other errors, resulted in findings and explanations which were not "reasoned and adequate" to support
MOFCOM's determination, and therefore concluded, inter alia , that the Redetermination is inconsistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreement an d Articles 15.1 and 15.2 of the SCM Agreement. We do
not consider that China's explanation as to why MO FCOM did not make price co mparisons between subject
imports and the domestic like product justifies the errors that we found in MOFCOM's price effects analysis.
129 United States' first written submission, para. 78.
130 China's first written submission, para. 62; and response to Panel question No. 35, paras. 108-110.
131 China's response to Panel question No. 35, para. 108.

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the price than the volume" and that given the clos er proximity to the market, domestic producers
could react with a new price while the subject imports would react on a delayed basis. 132 Since the
United States' argument concerns the effect of the declining volume of subject imports rather than
their price, we do not consider that China's argument undermines the argument raised by the
United States, that is, whether MOFCOM's redetermination could be considered reasonable since
MOFCOM focused on shifts in market share in 2008 as a whole, while ignoring evidence that the
volume of subject imports declined from Q3 2008 onwards.133
7.68. MOFCOM's Redetermination does not suggest that this issue was considered by MOFCOM,
nor has China argued to the contrary. In our view, a reasonable and unbiased investigating
authority could not conclude that an increase in the volume of subject imports and a consequential
market share gain of 5.56 percentage points in 2008 resulted in domestic price declines in
Q1 2009 to avoid further loss of market share, wi thout taking into account the fact that subject
imports actually declined from Q3 2008 to Q4 2008 and again from Q4 2008 to Q1 2009. In our
view, this evidence is clearly relevant to asse ssing the linkages, if any, between market share
shifts in 2008 and price declines in Q1 2009.
7.69. To be clear, we do not mean to suggest that it is impossible that the Chinese domestic
industry experienced price depression in Q1 2009 in the face of a declining volume of subject
imports from Q3 2008 to Q1 2009. However, we do co nsider that, faced with evidence of declining
import volumes toward the end of the period, which could potentially affect any findings regarding
the price suppressing and depressing effect of subject imports, MOFCOM should have, at a
minimum, considered and addressed this evidence. MOFCOM failed to do so.
7.70. Our review of MOFCOM's determination with respect to price suppression and price
depression in 2008 and Q1 2009 based on subject im port volumes and market share has revealed
serious errors in MOFCOM's analysis of the underlying evidence, which in our view call into
question whether MOFCOM's conclusions regarding price effects could have been reached by an
investigating authority considering the evidence objectively, and are supported by reasoned
explanations. Nonetheless, we now turn to an exam ination of whether this evidence, considered in
conjunction with evidence of price competition be tween the subject imports and the domestic like
product is an adequate basis for MOFCOM's conclusions regarding the price suppressing and
depressing effect of subject imports on domestic like product prices.
7.3.5.2 MOFCOM's finding regarding price competition between subject imports and the
domestic like product
7.71. Turning to MOFCOM's findings on price competition, we will first examine MOFCOM's
consideration of evidence furnished by the US ex porter AK Steel that certain product categories
manufactured by it could not be commercially suppl ied by the domestic industry. In our view, the
inability of the domestic industry to meet the needs of certain specific end-uses may well affect a
finding of price competition between subject imports and the domestic like product. Second, we
will examine whether, as argued by China, MOFCOM's seven factual findings concerning price
competition, taken as a whole, supported MOFCOM's conclusions regarding price competition
between subject imports and the domestic like product. Finally, we will consider whether, and if so
how, MOFCOM's finding of price competition, taken together with its findings regarding the volume
and market share of subject imports, reasonably explain and support its conclusions regarding the
price effects of those imports.
7.3.5.2.1 AK Steel's evidence of non-substitutability of certain product categories
7.72. The United States argues that MOFCOM failed to adequately consider evidence submitted by
AK Steel that [***].
134 Further, AK Steel also contended that lower grade Chinese-produced GOES
was not readily substitutable for imported GO ES and that any substitution would require
downstream users to make significant manufacturing changes, with consequent adverse effects on
the final product and on manufacturing costs. 135 In particular, the United States emphasizes that

132 China's response to Panel question No. 35, paras. 108-109.
133 See Redetermination, (Exhibit US-1), p. 50; and Redetermination – China's translation,
(Exhibit CHN-1), p. 50.
134 United States' opening statement at the meeting of the Panel, para. 30.
135 Ibid.

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MOFCOM failed to consider evidence submitted b y A K S t e e l t h a t G O E S p r o d u c e d b y d o m e s t i c
producers was not certified for use in large transformers, i.e. transformers of 500kW and above.136
The United States asserts that AK Steel was a much more significant participant in the Chinese
market than the other participating US export er, Allegheny Ludlum, and that by ignoring
AK Steel's submissions, MOFCOM disregarded eviden ce relating to a significant proportion of the
imports under investigation.
137
7.73. China responds first that, while AK Steel submitted a questionnaire response during the
original proceeding containing the assertions relied on by the United States, it did not make any
comments on MOFCOM's factual disclosure or preliminary determination in the original
investigation with respect to the issue of non-substitutability of certain product categories or any
comments on this issue during the Redetermination proceedings.
138 Second, China contends that
AK Steel's exports of high-end GOES accounted for only about ten per cent of total subject country
exports to China and for that reason, would not have had any material impact on MOFCOM's
analysis of the cumulated effect of subject imports as a whole.
139 Further, China asserts that while
it may have been true that the Government of China did not expect test manufacturing of 500 kW
transformers employing domestically-produced GOES until the end of 2009, i.e. subsequent to the
period of investigation, it did not necessarily follow that the domestic industry did not produce
GOES capable of being used in such transformers.140 Finally, China submits that since AK Steel did
not distinguish the product categories exported by it from those exported by Allegheny Ludlum,
MOFCOM was well within its rights to forego any further consideration of AK Steel's contentions.141
7.74. China referred to the following excerpt from MOFCOM's Redetermination, which China
contends responded to the submissions of AK Steel regarding the inability of the domestic industry
to manufacture certain product types in commercia l quantities, without explicitly referring to
AK Steel by name:
The interested parties that submitted responses to the questionnaire for overseas
producers and domestic importers at one po int argued that laser scribing, low iron
loss and other high-end products can only be produced in the U.S., Japan and other
countries. During the verification of the domestic producers, the Investigating
Authority verified their production lines of laser scribing, collected evidence such as
their product catalogues, product testing reports and sales invoices, which prove that
the domestic industry indeed did produce and sell laser-scribing and low-iron-loss
grain GOES product. The domestic industry also provided use evaluation reports from
the downstream users, proving that domestic like product is of similar quality to the
subject merchandise and that the two are competitive and substitutable.
142
7.75. There is a considerable degree of factual dispute between the parties as to whether
AK Steel's submissions were considered by MOFCOM and whether AK Steel's submissions were
accurate in light of MOFCOM's conclusions concer ning the substitutability of different product
types. While we will not undertake a de novo review of the information provided by AK Steel, we
will examine carefully whether the "explanations given disclose how the investigating authority
treated the facts and evidence in the record" and whether the "explanations provided demonstrate
that the investigating authority took proper account of the complexities of the data before it, and
that it explained why it rejected or discounted al ternative explanations and interpretations of the
record evidence".
143
7.76. First, we do not accept that merely because AK Steel did not advance specific arguments on
an issue beyond providing information in its questionnaire, MOFCOM was entitled to disregard the

136 United States' response to Panel question No. 40, para. 22.
137 United States' opening statement at the meeting of the Panel, paras. 30, 32.
138 China's comments on the United States' response to Panel question No. 40.
139 Ibid.
140 Ibid.
141 Ibid.
142 Redetermination, (Exhibit US-1), p. 51; and Redetermination – China's translation, (Exhibit CHN-1),
p. 51.
143 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.

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relevant facts submitted by AK Steel. [***]144 We understand China to be arguing that in order for
MOFCOM to consider whether this was in fact true, AK Steel was required to make some additional
submission specifically raising an argument base d upon the facts presented in its questionnaire
response. We disagree. If interested parties make available relevant evidence to the investigating
authority, within prescribed timelines, there is no obligation on those parties to, in addition, make
further arguments based on that evidence in the form of separate written or oral submissions. On
the other hand, investigating authorities are required, in order to ensure an objective examination
of the evidence, to consider all the evidence presented, and not merely that which is the subject of
elaborated arguments.
7.77. Further, MOFCOM based the Redetermination on "record evidence submitted by interested
parties as well as record evidence collected by the investigating authority in the original
investigation".
145 It is clear that AK Steel was not required to resubmit its questionnaire response
again in the Redetermination proceeding, and th e same consideration we discussed above means
it was not required to make additional arguments on the basis of the facts it submitted originally in
the Redetermination proceeding. Therefore, as the questionnaire response continued to be part of
the evidence on record before MOFCOM in th e Redetermination proceeding, MOFCOM remained
obligated to consider the information in its analysis and conclusions or explain why it was not
relevant or probative.
7.78. Second, we reject China's argument that, ab sent an attempt by AK Steel to distinguish its
steel from that shipped by Allegheny Ludlum, or any arguments on the issue, MOFCOM was
entitled to forego any further consideration of AK St eel's contentions. Indeed, we find it difficult to
understand this argument, given that it is entirely possible that one exporter simply has no
knowledge of the product mix of another expo rter, and therefore could not make such an
argument. Moreover, even if the exporter did have this information, we cannot accept the view
that the failure of an interested party to make certain arguments justifies an investigating
authority's failure to consider relevant evidence submitted to it. China has pointed to no provision
in the Anti-Dumping Agreement or the SCM Agreement, which would allow this. To the contrary, it
is clear to us that the obligation of an investigating authority is to consider all the evidence
presented to it, evaluate and weigh it, and draw conclusions supported by reasoned explanations.
We fail to see how an investigating authority can satisfy this standard if it refuses to consider
seemingly relevant information without a sufficient explanation.
7.79. Third, looking at MOFCOM's statement concerning arguments regarding [***], we observe
that while MOFCOM took note of the assertions by interested parties that laser scribing, low iron
loss and other high-end products could only be produced in the US, Japan and other countries, it is
unclear to us how this responds to the specific assertions of AK Steel.
146 For instance, AK Steel
stated that "HiB grades" manufactured by Wuhan were not certified for use in large transformers
of 500 kW and above, and that based on AK St eel's feedback from its customers, Chinese
transformer manufacturers were refusing to use domestically-produced GOES for these
applications.
147 It is not discernible from MOFCOM's analysis or explanations how or if it considered
this specific assertion. In our view, the fact that the domestic industry was allegedly unable to
satisfy a specific end-use need in the Chinese market, i.e. supply GOES for use in large
transformers of 500 Kw or above, was a relevant fact which should have been considered and
resolved by MOFCOM in concluding that the domestic product and subject imports competed on
price.
7.80. Finally, China contends that AK Steel did not quantify its shipments of GOES destined for
use in transformers of capacity 500 Kw and ab ove and therefore questions the United States'

144 United States' response to Panel question No. 40, paras. 10-13 (quoting AK Steel Corporation,
Supplementary Industry Injury Investigation Questionnaire Response, (AK Steel Supplementary Questionnaire
Response), (Exhibit US-18) (BCI)).
145 Redetermination, (Exhibit US-1) (this part of the Redetermination contains no page numbering); and
Redetermination – China's translation, (Exhibit CHN-1), p. 1.
146 Redetermination, (Exhibit US-1), p. 51; and Redetermination – China's translation, (Exhibit CHN-1),
p. 51.
147 United States' response to Panel question No. 40, paras. 13, 22 (quoting AK Steel Supplementary
Questionnaire Response, (Exhibit US-18) (BCI), p. 4). See also News article, China encourages domestic
production of grain-oriented electrical steel for large transformers, (Exhibit US-19). This Exhibit was presented
as evidence in the original investigation before MOFCOM and cited in AK Steel's supplementary questionnaire
response. See AK Steel Supplementary Questionnaire Response, (Exhibit US-18) (BCI), p. 4.

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reliance on AK Steel's information.148 Further, China argues that high-end GOES accounted for only
about 10% of total subject imports and for that re ason, United States' argument was not material
t o M O F C O M ' s a n a l y s i s o f t h e e f f e c t o f s u b j e c t i m p o r t s a s a w h o l e .149 W e r e j e c t b o t h o f t h e s e
arguments. The fact that the volume of imports of a grade not produced by the domestic industry
may be relatively small as a percentage of total imports may well be relevant in assessing the
question of price competitiveness, but it does not justify an investigating authority's refusal to
undertake an analysis on the issue. Further, it is not for the Panel to make de novo findings as to
whether MOFCOM's failure to consider such evidence was inconsequential in light of the limited
volume of exports of such product categories into China.
150 There is nothing in the
Redetermination that suggests that MOFCOM itself took this view.
7.81. In sum, MOFCOM's Redetermination does not explain how MOFCOM actually considered the
information submitted by AK Steel in the context of its conclusion that the subject imports
competed with the domestic like product on the basis of price.
7.3.5.2.2 Seven factors supporting MOFCOM's finding of price competition
7.82. China argues that, in making its determination of price effects, MOFCOM considered the
domestic industry's loss of market share to incr eased volumes of subject imports in conjunction
with other evidence demonstrating a competitive relationship based on price between subject
imports and the domestic like product. 151 We agree that price competition may be a relevant
element in determining whether subject imports had an effect on domestic like product prices. In
that context, an investigating authority must be able to explain the connection between a factual
finding of price competition between the domestic like product and subject imports and its ultimate
conclusions concerning the price effects of those imports.
7.83. We now turn to consider each of the seven factors which China argues supported MOFCOM's
finding of price competition. We note that China acknowledges that each of these factors, viewed
in isolation, may be insufficient to support a finding regarding price competition or price effects.
152
Thus, while we review each of the factors individually, our conclusions will take into account all of
them as a whole.
Like product and cumulation

7.84. In the Redetermination, MOFCOM summarized its analysis of likeness as follows:
In summary, the GOES produced by China's domestic industry and the subject
merchandise are not different in terms of physical character, and aspects such as
production techniques and processes, product use, product substitutability,
evaluations by consumers and producers, and sales channel are fundamentally similar
and the price trends are overall consistent. Being similar and comparable, they are
substitutable. Therefore, the GOES produc ed by China's domestic industry and the
subject merchandise are like products.
153 (emphasis added)
With respect to cumulation, MOFCOM stated:

Based on investigation, comparing the subject merchandise and the subject
merchandise and the Chinese domestic like products, the physical characteristics,
production techniques and processes and end uses are fundamentally the same , the
sales channel and sale price trends are fundamentally the same, they all arose in the

148 China's comments on the United States' response to Panel question No. 40.
149 See, e.g. China's comments on the United States' response to Panel question No. 40.
150 In this regard, we do not share China's view that because AK Steel's exports [***] constituted only
ten per cent of total subject imports, it would not materially affect MOFCOM's analysis of price competition
between subject imports and the domestic like product. In our view, the non-substitutability of even
ten per cent of subject imports with the domestic like product may well be relevant in assessing the extent of
price competition. In any event, investigating authorities may not summarily reject arguments regarding
non-substitutability solely because they affect a relatively small segment of the domestic market.
151 China's response to Panel question No. 5, para. 21.
152 China's response to Panel question No. 4, para. 19.
153 Redetermination, (Exhibit US-1), p. 12; and Redetermination – China's translation, (Exhibit CHN-1),
p. 13.

BCI deleted, as indicated [***]

Chinese market at fundamentally the same time , product quality is similar, they
satisfy customer requirements, they are substitutable, a competitive relationship
exists between them, and the competition conditions are fundamentally the same .
154
(emphasis added)
7.85. The United States argues that MOFCOM's determinations of likeness and cumulation did not
go beyond very general similarities or include any meaningful consideration of the nature of price
competition or lack thereof.
155 China contends that it is difficult to conceive that subject imports
and the domestic like product which were (a) "fundamentally the same", in terms of physical
characteristics and terms of use, (b) travelled through the same channels, (c) were directly
competitive with each other, (d) and were subs titutes of each other, were not competing on
price.
156 China argues that the finding of substitutability, in particular, strongly supported the
notion of price competition.157
7.86. We agree that products which have similar physical characteristics and uses and are directly
competitive and substitutable with each other are likely to compete on price. However, MOFCOM's
findings are qualified, as indicated by the text italicized in the quotations above. Thus, in our view,
the extent of similarities between subject imports and the domestic like product is less than clear,
and thus the conclusion of price competition is somewhat attenuated. For instance, MOFCOM finds
that the end uses of the domestic like product and the subject imports were "fundamentally the
same". However, the extent and nature of the differences might well give insight as to whether the
domestic product and subject imports are only broadly similar or close substitutes which could be
used interchangeably for many, most, or all commercial purposes. In particular, we recall the
assertions of AK Steel that certain GOES manufactured by the domestic industry was not certified
for use in large transformers, and thus did not compete with the imported product.
158 MOFCOM's
qualified conclusions give no indication as to whether or how it considered these assertions, which
in our view would be relevant to a conclusion that the domestic like product competed with subject
imports on the basis of price.
Statement by US producer Allegheny Ludlum

7.87. MOFCOM also relied on US producer A llegheny Ludlum's statement that the subject
merchandise it produced and exported to China wa s highly substitutable and competitive with the
domestic like product and the like product from other countries in its finding of price competition
between subject imports and the domestic like product.159 The United States asserts that MOFCOM
could not have properly drawn conclusions regarding price competition based on Allegheny
Ludlum's statement, particularly because MOFCOM failed to consider the submission of AK Steel, a
bigger participant in the Chinese market, which argued that [***].
160
7.88. While MOFCOM was entitled to take into account Allegheny Ludlum's statement that its
exports were highly substitutable and competitive with the domestic like product, we note that
there is nothing in MOFCOM's determination su ggesting that the product types exported by
Allegheny Ludlum were representative of subjec t imports from the United States, or subject
countries, as a whole. We recall our concerns with MOFCOM's failure to fully consider the
information submitted by AK Steel, and the fact that AK Steel's exports accounted for a larger
share of US exports than did those of Allegheny Ludlum. Since MOFCOM was making a finding with
respect to subject imports as a whole, it is not clear to us why MOFCOM would rely on Allegheny
Ludlum's statement without thoroughly considering the submissions of AK Steel, whose exports to
China were greater than those of Allegheny Ludlum, and would thus seem to have been more
likely to be representative of US imports, even if not of subject imports as a whole. In these
circumstances, we consider that Allegheny Ludlum's statements give little support to MOFCOM's
conclusion of price competition.

154 Redetermination, (Exhibit US-1), p. 21; and Redetermination – China's translation, (Exhibit CHN-1),
p. 22.
155 United States' second written submission, para. 31.
156 China's second written submission, para. 34.
157 Ibid.
158 United States' response to Panel question No. 40, para. 9.
159 China's opening statement at the meeting of the Panel, p. 5 (quoting Redetermination,
(Exhibit US-1), p. 51; and Redetermination – China's translation, (Exhibit CHN-1), p. 51).
160 United States' opening statement at the meeting of the Panel, paras. 29-30.

BCI deleted, as indicated [***]

Parallel price trends from 2006 to 2008

7.89. MOFCOM also relied on parallel trends in the prices of imports and the domestic like product
in finding price competition. China argues that the divergence in the price trends of subject
imports and the domestic like product in Q1 2009 did not undermine MOFCOM's conclusions
because MOFCOM adequately explained the reasons for that divergence. 161 According to MOFCOM,
the domestic industry reduced prices in Q1 2009 in order to regain market share lost to subject
imports in 2008.162 The United States contends that MOFCOM's reliance on parallel price trends to
show price competition was misplaced, especially in light of the substantial divergence in the price
trends of subject imports and the domestic like product in Q1 2009.
163
7.90. MOFCOM relied on the following data concerning the average unit values (AUV) 164 of subject
imports and domestic like product over the period of investigation165:
Percentage changes in AUV of subject imports and domestic like product
 2007 2008 Interim 2009
Subject imports +2.9% +17.57% -1.25%
Domestic like product +6.66% +14.53% -30.25%
Source: United States' second written submission166
On the basis of this data, MOFCOM concluded:

The Investigating Authority based on the investigation determines that the conclusion
that the pricing trends are fundamentally consistent was arrived at from the analysis
of the import price of the subject merchandise during the period of the investigation
and domestic price of the Chinese domestic like product. From 2006 through the
first quarter of 2009, the two prices first increased and then decreased. The trends
are fundamentally consistent.
167
7.91. In response to arguments by the US government and AK Steel that the 1.25% drop in
subject import price in Q1 2009, compared to the drop of 30.25% in domestic like product prices,
indicated a lack of correlation between the prices of subject imports and the domestic like product,
MOFCOM noted as follows:
The Investigating Authority finds that the analysis in the price effects section of the
redetermination comprehensively analysed the situation in 2008 and the first quarter
of 2009. After taking into full consideration the import volume of the subject
merchandise, corresponding changes in the market share of the subject merchandise
and domestic like product and the corresponding changes in average price, the
Investigating Authority finds that the continual substantial increase in the import
volume of the subject merchandise caused the domestic [industry] to face a dilemma:
if the domestic industry maintained the proper price level, the domestic industry
would lose its market share; if the domestic industry wanted to avoid losing market

161 China's first written submission, para. 43.
162 Redetermination, (Exhibit US-1), p. 49; and Redetermination – China's translation, (Exhibit CHN-1),
p. 49.
163 United States' second written submission, paras. 34-35.
164 Average unit values or AUVs, as noted in the original proceeding, represented the volume weighted
average unit values for all transactions during a given calendar year. See Panel Report, China – GOES,
footnote 497. China clarified that the AUV data on domestic prices was the same data on domestic prices
available and discussed in the original determination. See China's response to Panel question No. 7, para. 25.
We understand that MOFCOM used AUVs as proxies for actual prices of the domestic like product.
165 See United States' first written submission, p. 19. The United States provided, in table form, the
percentage changes in prices of subject imports and the domestic like product, as considered by MOFCOM, in
the Redetermination.
166 United States' second written submission, para. 33. The figures are based on percentage changes in
price trends that were disclosed by MOFCOM in the Redetermination.
167 Redetermination, (Exhibit US-1), pp. 39-40; and Redetermination – China's translation,
(Exhibit CHN-1), p. 40.

BCI deleted, as indicated [***]

share, then it had to lower the price. Th e evidence that the Investigating Authority
obtained fully support[s] this determination.168
7.92. We recall that in the original proceeding the panel and the Appellate Body had questioned
MOFCOM's failure to explain why the different rate s of decrease in the prices of subject imports
and domestic like product did not affect its parallel price trends analysis or its overall price effects
analysis.169 China argues that MOFCOM did explain this in the Redetermination and that MOFCOM's
analysis addressed trends both over the 2006 to 2008 period, as well as the divergence in
Q1 2009, referring to the following:
The domestic industry had no choice in the first quarter of 2009 but to substantially
lower the price to avoid further losing its market share. Based on a comprehensive
rather than isolated analysis of the situation in 2008 and the first quarter in 2009, the
abovementioned evidence fully support the decision of the Investigating Authority,
namely that in light of the impact of the large volume of the subject merchandise
starting in 2008, the domestic industry was facing a the [sic] loss of market share and
the decline in profitability; if the domestic industry hoped to maintain its market
share, it had to reduce price and bear a further decrease in profitability.
170
7.93. We have already explained our concerns with MOFCOM's conclusions regarding the price
suppressing and depressing effects of the increa sed volume of subject imports and consequential
gains in market share. For the same reasons, we find MOFCOM's explanation of the divergence in
the prices of subject imports and the domestic like product in Q1 2009 to be unpersuasive, and
thus the finding of parallel price trends lends little if any support to the finding of price
competition.171
Customer overlap

7.94. In the Redetermination, MOFCOM found a degree of overlap between the users of subject
imports and the domestic like product:
Based on the comparison of the top ten clients by purchase volume provided by the
domestic importers and domestic producer s, the overlap ratio of the downstream
users of the subject merchandise and domestic like product is around 50%. The sales
contracts for the subject merchandise and the price negotiation documents between
the domestic industry and the downstream clients that were provided by the domestic
producers also prove that the subject merchandise and domestic like product are
directly competitive and price is an important factor in the purchasing decisions of the
downstream clients.
172
7.95. The United States argues that MOFCOM's finding on consumer overlap does not support
MOFCOM's conclusions on price competition, because the same customers may be buying different
types of GOES for different applications from different sources.
173 China emphasizes that
MOFCOM's finding was part of its overall evaluation and that MOFCOM reasonably established that

168 Redetermination, (Exhibit US-1), pp. 48-49; and Redetermination – China's translation,
(Exhibit CHN-1), pp. 48-49.
169 Appellate Body Report, China – GOES, footnote 350.
170 Redetermination, (Exhibit US-1), pp. 49-50; and Redetermination – China's translation,
(Exhibit CHN-1), p. 49.
171 In this regard, we also note China's assertion that from Q4 2008 to Q1 2009, domestic AUVs fell by
31.11% while subject import AUVs fell by only 18.32%. On the other hand, subject import AUVs were 1.25%
lower in Q1 2009 than in Q1 2008, while domestic AUVs were 30.25% lower. China emphasizes that the
difference in the decline in AUVs of subject imports and the domestic like product was less from Q4 2008 to
Q1 2009 than it was from Q1 2008 to Q1 2009. China argues that this quarterly data regarding changes in
AUVs of subject imports and the domestic like product from Q4 2008 to Q1 2009 was before MOFCOM but not
discussed in the Redetermination, and strongly supports the finding of parallel pricing. Since we can find no
reference in MOFCOM's Redetermination to such quarterly data, or any consideration thereof, we decline to rely
on China's arguments in this regard, as there is no indication that MOFCOM itself took this into account in the
Redetermination. See China's response to Panel question No. 10, para. 42.
172 Redetermination, (Exhibit US-1), p. 51; and Redetermination – China's translation, (Exhibit CHN-1),
p. 51.
173 United States' first written submission, para. 72; and second written submission, para. 43.

BCI deleted, as indicated [***]

subject imports and the domestic like product had (a) common customers, (b) sold the same
products and (c) there was no attenuated competition due to specialty products.174
7.96. In our view, MOFCOM's analysis on customer overlap is at a level of generality which is
insufficient to shed light on the issue as to whether there was price competition between subject
imports and the domestic like product. In particular, it is not clear to us from MOFCOM's analysis
how it reached a conclusion that the subject imports and domestic like product competed on the
basis of price, simply because half of the customers in a sample provided to MOFCOM purchased
both the subject imports and the domestic like product. MOFCOM's analysis offers no insight as to
whether individual customers were sourcing the same GOES from both subject imports and the
domestic industry for the same uses. It may very well be, as suggested by the United States, that
customers purchased subject imports and domestic product for use in different applications. Thus,
we conclude that MOFCOM's finding of consumer overlap lends little support to its finding of price
competition.
Market share recapture

7.97. In the Redetermination, MOFCOM stated that the domestic industry was able to regain some
market share in Q1 2009 by reducing its prices.
175 China argues that the domestic industry was
able, in Q1 2009, to regain 5.15 of the 5.65 percen tage points of market share that it had lost
over 2008.176 China acknowledges that there is no specific reference to the extent of market share
recapture in Q1 2009 in MOFCOM's Redetermination but contends that recapture of market share,
pursuant to a significant decline in domestic like product prices, was indicative of price competition
between subject imports and the domestic like product.
177 The United States argues that
MOFCOM's Redetermination does not refer to a 5.15 percentage point gain in market share in
Q1 2009, and therefore, this line of argument is entirely ex post facto rationalizations.
178
7.98. As noted, China itself admits that there is no reference in MOFCOM's Redetermination to the
extent of market share regained in Q1 2009. 179 Indeed, there is nothing in the Redetermination
that would suggest that the extent or quantum of market share recaptured by the domestic
industry in Q1 2009 was even considered by MO FCOM in finding price competitiveness between
subject imports and the domestic like product. 180 We agree with the United States that this focus
on the amount of market share re-captured in Q1 2009 is an ex post facto argument, and we will
not consider it, but will rather focus on MOFCOM's actual findings as set out in the
Redetermination.
7.99. MOFCOM did find that the domestic industry was able to regain "some" of the market share
that it lost in 2008, as a result of a reduction in its prices.181 The question therefore is whether this
finding supports MOFCOM's conclusions on pric e competition between subject imports and the
domestic like product.
7.100. We recall that the domestic industry's prices declined significantly in Q1 2009. In our view,
the fact that the domestic industry is able to regain market share from subject imports when its
prices decline, suggests that consumers were reacting to the price decline. This could indicate that
customers were sensitive to price changes and were basing their purchasing decisions on price
considerations. Therefore, in our view, it was plausible for MOFCOM to consider that the gain in
market share in Q1 2009 supported the conclusi on of price competition between subject imports
and the domestic like product.

174 China's second written submission, paras. 50-51.
175 China's opening statement at the meeting of the Panel, p. 5 (citing Redetermination, (Exhibit US-1),
p. 28; and Redetermination – China's translation, (Exhibit CHN-1), p. 27).
176 China's opening statement at the meeting of the Panel, para. 20.
177 China's response to Panel question No. 18, para. 66.
178 United States' comments on China's response to Panel question No. 18 (citing Panel Report,
Argentina – Ceramic Tiles, para. 6.27).
179 China's response to Panel question No. 18, para. 66.
180 See, e.g. China's response to Panel question No. 18, paras. 66-68 (citing Redetermination,
(Exhibit US-1), pp. 26, 34, 43; and Redetermination – China's translation, (Exhibit CHN-1), pp. 25-27, 32, 43).
181 See Redetermination, (Exhibit US-1), p. 26; and Redetermination – China's translation,
(Exhibit CHN-1), p. 27.

BCI deleted, as indicated [***]

Pricing policy documents

7.101. MOFCOM relied on a contract between a Russian supplier and a Chinese customer and
price negotiation letters exchanged between dome stic producers and Chinese suppliers ("pricing
policy documents") in support of its findings of price competition.
182 China clarified that MOFCOM
also considered that these pricing policy documents demonstrated that prices were influencing
purchaser decisions and that subject country exporters were attempting to set lower prices than
those set by the domestic industry.
183 As we find MOFCOM's conclusions and the parties'
arguments based on these documents to be interlinked, we examine them together below.
7.102. In the Redetermination, MOFCOM made the following findings on the basis of the pricing
policy documents:
During the verification period, domestic producers submitted to the Investigating
Authority a contract concerning the foreign producers' sales of subject merchandise in
the Chinese market, in which relevant provisions of the contract demonstrate that in
the first quarter in 2009 Russian producers adopted a pricing strategy that set lower
prices than those of the domestic like products. The domestic producers also
submitted documents on price negotiations with downstream users, which
demonstrated that the prices of subject merchandise imported from the United States
in the first quarter of 2009 were lower than that of the domestic like products, forcing
the domestic industry to lower its prices. The Investigating Authority finds that the
aforementioned evidence reveals that the subject merchandise has a direct
competitive relationship with the domestic like products in terms of sales and pricing,
that prices have a marked influence on the purchasing decisions of downstream users,
and that in the first quarter of 2009 the subject merchandise attempted to set the
price in the Chinese domestic market lower than the domestic like product.
184
7.103. We turn first to the contract between a Russian producer and a Chinese purchaser
("Russian contract"). MOFCOM considered that the Russian contract indicated that "in the first
quarter in 2009 Russian producers adopted a pricing strategy that set lower prices than those of
the domestic like products". 185 The United States argues that [***]. 186 We agree with the
United States, as in our view, the contract is clear that [***]. We do not consider that a
reasonable investigating authority could have inferred from the cited provisions of the contract
that the Russian exporter adopted a "price strategy that set lower prices". Moreover, the contract
certainly cannot be understood as providing any information as to the pricing policies of exporters
in other subject countries, or even other Russian exporters. We do not consider that this contract
demonstrates that subject country exporters atte mpted to set lower prices than those of the
domestic industry.
7.104. In relation to MOFCOM's conclusions regarding price competition and the relevance of
prices in consumers' purchasing decisions, the fact that [***]. Therefore, we consider that
MOFCOM could have relied upon the contract as part of its overall evaluation of price competition
between subject imports and the domestic like pr oduct. Nevertheless, since the Russian contract
set out the terms and conditions applicable only between one specific Chinese purchaser and the
Russian supplier, the contract offered only very limited insight into the competition between
subject imports and the domestic like product as a whole.
7.105. Second, [***]
7.106. The United States argues that the price negotiation letters, involving limited tonnage,
provided nothing more than limited, anecdotal ev idence and that since these letters all pertained

182 China's opening statement at the meeting of the Panel, p. 5. See Contract between a Russian
producer and a Chinese purchaser, (Russian contract), (Exhibit US-6) (BCI), p. 3 and Price negotiation letters
exchanged between a Chinese producer and Chinese purchasers, (Price negotiation letters), (Exhibits US-7,
US-8 and US-9) (BCI).
183 China's response to Panel question No. 3, para. 13.
184 Redetermination, (Exhibit US-1), p. 24; and Redetermination – China's translation, (Exhibit CHN-1),
p. 25.
185 Ibid.
186 United States' first written submission, para. 69.

BCI deleted, as indicated [***]

to negotiations in Q1 2009, they offered no insight on price competition prior to that. 187 China
argues that the price negotiation letters indicate that the domestic consumers were using subject
import prices to drive down domestic prices an d the pricing policy documents as a whole were
further evidence of a competitive relationship between subject imports and the domestic like
product.
188
7.107. MOFCOM stated that the "domestic producers also submitted documents on price
negotiations with downstream users, which demons trated that the prices of subject merchandise
imported from the United States in the first quarter of 2009 were lower than that of the domestic
like product, forcing the domestic industry to lower its prices". 189 In the absence of any
comparison of the prices of subject imports and the domestic like product, we have serious
concerns regarding a conclusion that the price negotiation letters "demonstrated" that the prices of
subject merchandise imported from the United States in Q1 2009 were lower than those of the
domestic like product. However, we can accept that, as suggested by China, MOFCOM's reference
to the "lower" prices was only a description of the prices mentioned in the documents themselves,
and not a finding as to the overall relationship between the price levels of subject imports and the
domestic like product.
190 However, in this context, the reference to "lower" prices gives little
support to MOFCOM's conclusions regarding price competition overall.
7.108. With respect to the conclusions reached by MOFCOM in light of these letters we consider
that, like the Russian contract, they have some relevance to understanding the competitive
relationship between prices of subject import and th e domestic like product. However, it is unclear
from MOFCOM's Redetermination why it considered the price negotiation letters, which concern
specific transactions of limited tonnage, to be representative of direct price competition between
subject imports and the domestic like product as a whole. There is nothing in MOFCOM's
Redetermination that would even suggest that these three groups of letters were somehow
representative of the entire spectrum of comp etition between subject imports and the domestic
like product. Given their limited scope, while they do show that, in the transactions concerned,
customers used the prices of subject imports in ne gotiating prices with Chinese suppliers, we have
no basis on which to conclude that the facts represented in those letters, i.e., that subject import
prices were lower than the originally quoted domestic like product prices, were true. Thus, these
three groups of letters at most demonstrate the existence of price negotiations driven by
customers, which suggests some degree of price competition in the transactions at issue.
However, they lend at best little support to MOFCOM's overall conclusions.
7.3.5.2.3 Conclusions on price competition
7.109. While as set out above, we do have some concerns regarding the factual findings relied
upon by MOFCOM in support of its conclusions on price competition between subject imports and
the domestic like product, as well as MOFCOM's failure to adequately consider submissions made
by AK Steel, the question before us is whether MOFCOM's conclusion regarding price competition
between subject imports and the domestic like product, on the basis of the factual findings taken
as a whole, is one an objective investigating authority could have reached based on the facts and
explanations given.
7.110. We consider that the concerns highlighted above with respect to MOFCOM's price
competition finding weaken MOFCOM's conclusion concerning price competition. In particular,
MOFCOM's failure to engage with evidence furnished by AK Steel regarding [***], raises doubts as
to whether subject imports and the domestic like product were in competition with each other
across at least some part of the spectrum of the GO ES like product. Nonetheless, we find that the
facts overall, including the fact that the domestic industry was able to regain market share from
subject imports (as well as from non-subject imports), provided a reasonable basis for MOFCOM to

187 United States' comments on China's response to Panel question No. 3; and second written
submission, para. 39.
188 China's first written submission, para. 47; and second written submission, para. 56.
189 See Redetermination, (Exhibit US-1), p. 24; and Redetermination – China's translation,
(Exhibit CHN-1), p. 25.
190 China's response to Panel question No. 3, para. 13. In this regard, we also have concerns with
MOFCOM's statement that prices of subject merchandise imported from the United States in the first quarter of
2009 "were lower" than those of the domestic like product, forcing the domestic industry to lower its prices, in
light of the specific argument by the US government that subject imports were priced higher than the domestic
like product in Q1 2009, which was not examined by MOFCOM.

BCI deleted, as indicated [***]

conclude that subject imports and the domestic like product competed on the basis of price.
However, we recall that the core issue we are called upon to resolve is whether MOFCOM's
conclusion that the volume and market share of subject imports had a suppressive and depressive
effect on domestic like product prices is one that could be reached by a reasonable decision maker
on the basis of the evidence and arguments be fore MOFCOM, and not simply whether subject
imports and the domestic like product competed on price.
7.111. The concern that remains, having considered MOFCOM's Redetermination in light of the
evidence and arguments presented to it and to us, is that it does not explain how MOFCOM's
findings on price competition support its conclusions regarding the suppressive and depressive
effect on domestic like product prices of the volume and market share of subject imports. We
consider price competition to be an important analyt ical tool that goes to the question of whether
subject imports have the potential to affect domestic prices – if subject imports and the domestic
like product do not compete on price, it is unlik ely that subject imports will affect domestic like
product prices. However, it does not necessarily follow, in our view, that just because subject
imports and the domestic like product compete on price, increases in subject import volumes and
market share will necessarily have a suppressive or depressive effect on the domestic like product
prices.
191 Therefore, we consider that it is incumbent on an investigating authority to demonstrate
how its factual findings concerning price competition support its conclusions regarding the price
effects of subject imports on the domestic like product. 192 MOFCOM failed to draw any such
analytical linkage in this case.
7.3.6 Conclusion
7.112. Based on the foregoing, we conclude that MOFCOM's conclusions regarding the price
effects of subject imports are not consistent with Articles 3.1 and 3.2 of the
Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement.
7.4 The United States' claim with respect to causation
7.113. In this section of our report, we consider the United States' claim that MOFCOM's finding of
causation in the Redetermination is inconsistent with China's obligations under Articles 3.1 and 3.5
of the Anti-Dumping Agreement and Articles 15. 1 and 15.5 of the SCM Agreement because it is
not based on an "objective examination" and "positive evidence" as required by those provisions.
The United States argues both that MOFCOM's determination of causation under Articles 3.5

191 See, e.g. Japan's third-party submission, para. 9. Japan argues that factors such as increases in
volume of subject imports or parallel price trends between subject imports and the domestic like product at
best only establish the potential for subject imports to suppress or depress domestic prices. As explained, in
our view, even the fact of price competition between subject imports and the domestic like product at best only
establishes the potential for subject imports to suppress or depress domestic prices. See also, Appellate Body
Report, US – Tires (China), para. 192. The Appellate Body in US – Tires commented on the relevance of an
analysis of the conditions of competition between subject imports and the domestic like product in the context
of the causation analysis under paragraph 16.4 of China's Accession of Protocol to the WTO. We are mindful
that the discipline under paragraph 16.4 which stipulates that market disruption shall exist when imports of an
article, which is like or directly competitive with an Article produced by the domestic industry, is increasing
rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material
injury to the domestic industry, is different from the considerations set out in Articles 3.2 and 15.2 of the
Anti-Dumping Agreement and SCM Agreement respectively. The Appellate Body also commented that unless
there is actual or potential competition between imports and the domestic like product, imports cannot be a
significant cause of material injury to the domestic industry, but noted that the examination of the conditions
of competition is an analytical tool which is not dispositive on the question of causation. In other words, while
competition may be a necessary element for causation of material injury, it is not necessarily sufficient.
Similarly, in our view, while price competition may be a necessary element of price suppression or depression,
it is not necessarily sufficient.
192 See, e.g. Panel Report, China – Autos, para. 7.265. In this regard, we find it relevant that the panel
considered that although parallel pricing may provide some basis for a determination that subject imports
depressed domestic like product prices, such a determination must explain the role of parallel pricing in the
price depression found. In the case before us, MOFCOM relied on parallel pricing analysis in support of its
intermediate finding of price competition. However, we consider that as explained by the panel in China –
Autos ultimately, the investigating authority must show how its findings on factors such as parallel pricing
supports its ultimate conclusions regarding the suppressive or depressive effect of subject imports on domestic
like product prices. In that sense, we find no analysis in MOFCOM's Redetermination as to how its conclusions
on parallel pricing or the other factors, on the basis of which it reached its intermediate finding of price
competition, supported its conclusions regarding the suppressive or depressive effect of subject imports.

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and 15.5 of the Anti-Dumping and SCM Agreements is undermined by its defective conclusions
with respect to price effects under Articles 3.2 and 15.2 of the Anti-Dumping and
SCM Agreements, and that MOFCOM's analysis of the effect of subject imports on the domestic
industry under Articles 3.5 and 15.5 of the Anti-D umping and SCM Agreements is itself invalid.
With respect to the latter aspect, the United States focusses on MOFCOM's conclusions regarding
the industry's inability to benefit from economies of scale, and its failure to consider properly the
effects of other causes of injury, i.e., domestic industry expansion and increased production, as
well as non-subject imports. China counters that none of the United States' arguments undermine
MOFCOM's basic finding that the increasing volume and market share of the directly competitive
subject imports caused material injury to the domestic industry.
7.4.1 Provisions at issue
7.114. Articles 3.1 and 15.1 of the Anti-Dumpi ng and SCM Agreements are set out above at
paragraph 7.28.
7.115. Article 3.5 of the Anti-Dumping Agreement provides:
It must be demonstrated that the dump ed imports are, through the effects of
dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the dumped imports
and the injury to the domestic industry shall be based on an examination of all
relevant evidence before the authorities. The authorities shall also examine any known
factors other than the dumped imports which at the same time are injuring the
domestic industry, and the injuries caused by these other factors must not be
attributed to the dumped imports. Factors which may be relevant in this respect
include, inter alia, the volume and prices of imports not sold at dumping prices,
contraction in demand or changes in the patterns of consumption, trade restrictive
practices of and competition between the foreign and domestic producers,
developments in technology and the expo rt performance and productivity of the
domestic industry.
7.116. Article 15.5 of the SCM Agreement is virtually identical to Article 3.5 of
Anti-Dumping Agreement but for references to "subsidized imports" and "subsidies" in place of
"dumped imports" and "dumping".
7.4.2 Factual background
7.117. In the original dispute, the United States claimed that MOFCOM's analysis and conclusion
regarding causation were inconsistent with Articles 3.5 and 15.5 of the Anti-Dumping and
SCM Agreements, respectively, because MOFCOM's finding of a causal link was inadequate, and
because MOFCOM failed to adequately consider the effects of other known factors causing injury to
the domestic industry. We agreed, finding:
a. With respect to price effects, MOFCOM's findings on price depression and price
suppression suffered from a number of analytical shortcomings. As MOFCOM relied
primarily on the price effects of subject imports in its finding that subject imports caused
material injury to the domestic industry, these shortcomings undermined its conclusion.
While MOFCOM had also considered the adverse effects of the volume of subject imports,
the Panel concluded that it would be inappropriate to consider the possibility that
MOFCOM's finding of causation might be upheld purely on the basis of MOFCOM's
analysis of the effects of the volume of subject imports.
b. With respect to other causes of injury, MOFCOM had concluded that the increase in the
domestic industry's inventories was caused by the increase in subject imports rather
than the increase in the domestic industry's capacity and production. However, the Panel
noted that the increase in the domestic industry's production was greater than the
increase in subject imports. As a result, the increased domestic production would have
accounted for at least some of the increase in inventories. As MOFCOM had failed to
address the fact that domestic production in creased more than subject imports in this

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context, the Panel concluded that MOFCOM had failed to adequately consider other
factors possibly causing injury.
7.118. China did not appeal our finding that MOFCOM's causation determination was inconsistent
with Articles 3.1 and 3.5 of the Anti-Dumping Agreement and Articles 15.1 and 15.5 of the
SCM Agreement. The Appellate Body observed that, as a result, the Panel's finding regarding
MOFCOM's causation finding stands.193
7.4.3 Legal framework
7.119. The interpretation of Articles 3.5 and 15.5 of the Anti-Dumping and SCM Agreements has
been considered by a number of panels and th e Appellate Body. In addition, given the near
identity of the texts of Article 3.5 of the Anti-Dumping Agreement and Article 15.5 of the
SCM Agreement, we consider that the principles derived from these decisions are equally
applicable in cases involving either. 194 It is by now well understood that investigating authorities
are required, as a part of their causation analysis, to examine all "known factors" other than
dumped imports that are causing injury to the domestic industry. Where such other known factors
are causing injury, the investigating authority must ensure that the injurious effects of these
factors are not attributed to the dumped imports. The non-attribution analysis requires "separating
and distinguishing the injurious effects of the other factors from the injurious effects of the
dumped imports", rather than making "mere assumptions" about the effects of the imports and
the other factors.
195
7.120. It is also well established that the role of a panel considering an investigating authority's
causation findings is not to conduct a de novo review of the facts considered by the investigating
authority in making its determination. 196 However, neither may a panel simply defer to the
conclusions of the investigating authority.197 Rather, we must determine whether the explanations
given by the investigating authority for the conclusions reached are reasoned and adequate to
support those conclusions, in the light of other plausible alternative explanations.
7.4.4 Price effects
7.4.4.1 Main arguments of the parties
7.121. The United States argues that MOFCOM's conclusion that a causal link exists between
subject imports and the material injury suffered by the domestic industry rests on a price effects
analysis that is contrary to the evidence, lacks a discernible factual basis, and fails to reflect an
objective examination of the record.
198 The United States claims the present case is analogous to
China – Autos , in which the Panel concluded that MOFCOM's defective price effects analysis
undermined its causation analysis.199 The United States argues that, far from being collateral to its
injury determination, MOFCOM's price effects analysis was an important element of that
determination in this case, as in China – Autos .200 The United States further argues that, as in
China – Autos, it would be difficult for MOFCOM to have made its determination of causation in this
case without relying on price effects. 201 Absent a demonstration that subject imports had any
significant price effects on the domestic like product, MOFCOM's causation analysis must therefore
fail.202
7.122. China does not accept that MOFCOM relied on an allegedly defective analysis of price
effects to establish causation. China first maintains MOFCOM was not required to, and did not in

193 Panel Report, China – GOES, paras. 7.620-7.638; Appellate Body Report, China – GOES, para. 114.
194 See also Declaration on Dispute Settlement Pursuant to the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and
Countervailing Measures.
195 See, e.g. Appellate Body Report, US – Hot-Rolled Steel, para. 226.
196 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.
197 Ibid.
198 United States' first written submission, para. 109.
199 United States' second written submission, para. 81 (citing Panel Report, China – Autos, para. 7.327).
200 Ibid. para. 82.
201 Ibid.
202 United States' first written submission, para. 110.

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fact, make price comparisons in considering price effects. 203 Rather, MOFCOM considered the
increased volume of imports, along with a number of other elements (i.e., product comparability
and substitutability, price trends consistent with a competitive relationship, overlap in customers,
and evidence of purchasers' attempts to use subject import prices to reduce the prices of the
domestic like product) in its analysis, and made well-reasoned findings that properly establish the
explanatory force of increasing subject import volumes and market share on domestic prices and
thus establish the necessary causal link.
204
7.4.4.2 Main arguments of the third parties
7.123. Japan agrees with the United States that a flawed price effects determination necessarily
results in a flawed causation analysis, citing seve ral panels that have reached this conclusion, and
argues that the Panel should follow the same approach in evaluating MOFCOM's determination in
this proceeding.205
7.4.4.3 Evaluation by the Panel
7.124. As discussed above, MOFCOM found that the subject imports caused price suppression and
depression based primarily on the volume and ma rket share of the subject imports, considered
together with its findings regarding price competition between the subject imports and the
domestic like product. Given the shortcomings we have identified in MOFCOM's findings regarding
price effects, as set out above, we consider that those findings cannot adequately support a finding
that the subject imports caused material injury to the domestic industry. We recall that several
panels have similarly found determinations of causation to be inadequate where underlying
determinations of price effects were found to be inadequate.
206 It is clear to us that MOFCOM's
causation determination rests, at least in part, on its conclusions regarding the price effects of
subject imports. Accordingly, we find that, to the extent that it is based on the price effects of
subject imports, MOFCOM's causation determination is inconsistent with Articles 3.5 of the
Anti-Dumping Agreement and 15.5 of the SCM Agreement.
7.125. While this finding resolves the United States' claim with respect to its arguments regarding
the element of price effects, the United States made further arguments regarding economies of
scale, domestic industry expansion and incr eased production, and non-subject imports.
Accordingly, we now proceed to consider specifically these additional elements below.
7.4.5 Economies of scale
7.4.5.1 Main arguments of the parties
7.126. The United States argues that MOFCOM's conclusion that the domestic industry was
prevented by subject imports from reaping the benefi ts of economies of scale does not rest on an
objective examination of positive evidence. The United States maintains that MOFCOM's findings in
this context are merely conclusory assertions unsupported by any factual analysis.
207 The
United States asserts that Baosteel commenced production of GOES in May 2008 and Wuhan's
largest capacity expansion occurred in the first quarter of 2009.
208 Given that steel production
facilities have high start-up costs, the United States asserts that it was unrealistic for MOFCOM to
expect the domestic industry to realize economies of scale and attendant profits immediately upon
bringing significant new capacity online.
209 The United States further argues that neither of the two
separate and competing companies in the domestic industry could be expected to realize
economies of scale as a result of an increase in the production capacity of the other.210

203 China's first written submission, para. 97.
205 Japan's third-party written submission, para. 16 (citing Panel Reports, China – GOES, para. 7.620;
China – X-Ray Equipment, paras. 7.239-7.240; and China – Autos, paras. 7.327-7.328).
206 Panel Reports, China – X-Ray Equipment, para. 7.239; China – Autos, paras. 7.327-7.328; and China
– HP-SSST (Japan)/China – HP-SSST (EU), para. 7.191.
207 United States' first written submission, para. 112; and second written submission, para. 89.
208 United States' first written submission, para. 113.
209 Ibid.; and second written submission, para. 84.
210 United States' first written submission, para. 115; and second written submission, para. 87.

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7.127. China counters that MOFCOM determined that the domestic industry reasonably invested
in new or additional GOES production ca pacity in an expanding domestic market. 211 China argues
that investment in greater production capacity in an expanding domestic market should have
allowed domestic producers to realize economies of scale and reduce per-unit costs.212 However, in
the present case, unfairly traded subject imports captured a significant part of the expanding
domestic market.213 Domestic producers' resulting inability to benefit from the expected economies
of scale thus constitutes an adverse effect that reasonably supports a finding of causation.214
7.4.5.2 Main arguments of the third parties
7.128. Japan argues that "even if MOFCOM's fi nding that the domestic industry was prevented
from realizing the benefits of economies of scale had certain evidentiary support and was not a
mere conclusory assertion, that finding cannot be sufficient to establish a causal link."
215 It argues
that it would be untenable to allow investigating authorities to impose anti-dumping duties simply
on the basis that the domestic industry was preven ted from realizing the benefits of economies of
scale.216 Japan maintains that investigating authorities must base their causation determinations
on examinations of the volume of dumped imports and their price effects.217
7.4.5.3 Evaluation by the Panel
7.129. Economies of scale may be defined generally as the cost advantages realized by an
enterprise as a result of the size, output or scale of its operations. Assuming fixed costs that can
be spread over additional units of output, economies of scale would generally cause the cost per
unit of output to decrease as the size, output or scale of an enterprise's operations increases, and
thus result in increased profits at the same price level. However, there are a number of underlying
considerations as to the nature of the industry, product, market, etc. that must be taken into
account in an analysis of economies of scale. MOFCOM's Redetermination does not address, much
less establish, even basic premises and assumption s, such as the extent to which economies of
scale may be realizable in this particular segment of the steel industry.
7.130. In the Redetermination, MOFCOM refers to the domestic industry's inability to realize
economies of scale as evidence of the causal re lationship between the subject imports and injury
to the domestic industry. However, the Redetermination contains only passing references to
economies of scale.
218 MOFCOM does not analyze economies of scale in the same manner in which
it analyzes the other principal indicators of injury in the Redetermination.
7.131. In its answers to our questions, China asserted that fixed costs for this industry "in the
range of 30-40 percent of total costs" constitute "a significant percentage of the total costs" and,
based on "accounting truisms", concluded that a lower production volume necessarily results in
higher fixed costs per unit.
219 However, China itself characterizes MOFCOM's consideration of
economies of scale simply as a qualitative assessment and as establishing a qualitative
connection.220 China concludes by confirming that MOFCOM did not perform any specific
calculations in this regard.221
7.132. We also note that the impact of the timing of the domestic industry's capacity expansions
is important. Wuhan was the only domestic producer of GOES for much of the POI, until Baosteel's
later entry into the market, with its capacity co ming online at the end of 2008 and in the first
quarter of 2009. It is unclear what, if any, data MOFCOM had before it on the basis of which it
could conclude that either Wuhan (which expanded its capacity steadily from 2006 through 2008,

211 China's second written submission, para. 96.
212 China's first written submission, para. 100.
213 Ibid.
214 China's second written submission, para. 95.
215 Japan's third-party written submission, para. 17.
216 Ibid.
217 Ibid.
218 Redetermination, (Exhibit US-1), pp. 28, 29, 42, 43; and Redetermination – China's translation,
(Exhibit CHN-1), pp. 29, 43, 44.
219 China's response to Panel question No. 58, paras. 158-160.
220 China's second written submission, paras. 94, 98.
221 China's response to Panel question No. 57, para. 156.

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with the greatest increase of 51.65% in 2008 222) or Baosteel (which entered the market in 2008)
individually were unable to benefit from economies of scale, or that the domestic industry as a
whole was unable to benefit from economies of scale towards the end of the POI. Similarly, it is
entirely unclear how MOFCOM linked this alleged inability to benefit from economies of scale to the
subject imports. China argues that "when subject imports gained volume and market share at the
expense of the domestic industry, subject imports by definition imposed higher per unit costs on
the domestic industry."
223 However, while increased volume and market share of subject imports
may well have affected the domestic industry's sales and profitability, this does not necessarily
mean that unit costs increased as a result, particularly in view of continued increases in the
domestic industry's output, which would tend to lead to lower unit costs. Nothing in the
Redetermination explains how, or to what degree, unit costs for the industry increased as a result
of the subject imports' increased market share, and thus we fail to see how MOFCOM linked the
increased imports to the domestic industry's failure to achieve economies of scale.
7.133. Given the lack of underlying information an d the minimal nature of MOFCOM's analysis of
economies of scale, we find MOFCOM's conclusions in this context insufficient to support its
determination of causation.
7.4.6 Domestic industry expansion and increased production
7.4.6.1 Main arguments of the parties
7.134. The United States argues that the domest ic industry's overexpansion and overproduction
caused injury that MOFCOM failed to attribute properly. It maintains that MOFCOM assumed that
the domestic industry could have reasonably expected the domestic market to absorb all of its
increased production from increased capacity
224, but that Baosteel and Wuhan in fact were forced
to compete aggressively with each other for cust omers in the domestic market, as their expanded
capacity and production far outstripped the growth in demand in the domestic market. 225 The
United States further argues that MOFCOM av oided acknowledging the role of the domestic
industry's overexpansion and overproduction in the large increase in domestic inventories by
attributing this increase instead to unspecified "sales obstacles".
226
7.135. The United States also challenges MOFC OM's use of 2007 as the baseline for its analysis,
as it is the year in which the domestic industry had the highest market share, thus understating
the domestic industry's contribution to inventory overhangs.
227 The United States further
challenges MOFCOM's failure to consider the first quarter of 2009 separately from 2008. 228 It
argues that the domestic industry's contribution to inventory overhangs through overproduction
was particularly significant in the first quarter of 2009, which was the only part of the period of
investigation when the domestic industry's prices declined and the domestic industry was not
profitable.229
7.136. China argues that the volume of GOES resu lting from Baosteel's entry into the market and
Wuhan's production capacity expansion did not exceed the growth in overall demand on the
domestic market, and that MOFCOM properly separa ted and distinguished the effect of this excess
volume by identifying subject imports as the "sales obstacles" hindering the domestic industry. 230
It also contends that MOFCOM explained its choice of 2007 as the base year as being a reasonable
basis for the industry's market forecasts, a comparable and representative year for evaluating
changes in 2008, and a year in which imports were stable and the industry was not showing
declines.
231 China also contends that MOFCOM explained its consideration of inventory build-up

222 United States' first written submission, para. 123; China's response to Panel question No. 59,
para. 162.
223 China's second written submission, para. 95.
224 United States' first written submission, para. 133.
225 Ibid. paras. 122-123.
226 Ibid. para. 124.
227 United States' first written submission, para. 130; and second written submission, paras. 91-92.
228 United States' second written submission, para. 93.
229 United States' first written submission, para. 132.
230 China's first written submission, paras. 105-106.
231 China's second written submission, para. 105.

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over the period 2008-Q1 2009 on the principle th at inventory accumulates over time, and thus
requires a different approach to understand the reasons for increases.232
7.4.6.2 Main arguments of the third parties
7.137. Japan maintains that MOFCOM does not appear to have distinguished properly the
injurious effects of the domestic industry's overexpansion and overproduction from those of the
subject imports.
233
7.4.6.3 Evaluation by the Panel
7.138. In the original proceeding, we found that the increase in production by the domestic
industry from 2007 to 2008 was greater than the increase in subject imports, and would have
accounted, at least in part, for the inventory accumulation, which thus could not be attributed
entirely to the lesser increase in subject imports.
234 We were unable to verify MOFCOM's finding
that total domestic capacity did not exceed total domestic demand because China failed to provide
the underlying data. 235 Nevertheless, we concluded that "even if this finding were accurate, it
would not change the fact that subject imports did not account for the totality of the injurious
inventory overhangs."236 We concluded that MOFCOM had failed to examine properly whether a
known factor other than subject imports was simultaneously injuring the domestic industry, as "an
objective and impartial investigating authority could not properly have found that the domestic
industry's increase in production was not a cause of injury."
237
7.139. In the present compliance proceeding, the United States makes essentially the same
argument it had made in the original dispute. The United States contends that "[t]he domestic
industry's expansion of capacity and production outstripped the growth in demand for GOES in the
Chinese market by wide margins."
238 In support of its argument, the United States relies on
information on growth in demand, capacity and output in MOFCOM's original Determination and
the Redetermination
239 to calculate and compare the percentage changes in these growth rates
from 2006 to 2008. We have compiled this information, including the United States' calculation, in
the chart below:
Changes in demand, capacity, output and inventories

 Demand Capacity Output Inventories
2007 22.80% 35.33% 36.76% -49.01%
2008 18.09% 53.67% 23.91% 839.02%
2006-08240 45.01% 107.96% 69.46% --
Q1 2009241 12.46% 80.13% 55.23% 978.81%
Source: MOFCOM's Determination and Redetermination, United States' first written submission242
7.140. China faults the United States for making comparisons on the basis of percentage changes
in demand, capacity and output, each with po tentially different base levels. However, the
Redetermination does not contain the underlying data from which these changes were calculated,
as MOFCOM treated the information as confidential. China has not pointed us to any additional
information in the record before MOFCOM on these factors. Thus, the United States' argument is

232 China's second written submission, para. 111.
233 Japan's third-party submission, paras. 18-20.
235 Ibid. para. 7.635.
236 Ibid. para. 7.635.
237 Ibid. para. 7.632.
238 United States' first written submission, para. 122.
239 Original Determination, (Exhibit US-4), p. 60; Redetermination, (Exhibit US-1), p. 28; and
Redetermination – China's translation, (Exhibit CHN-1), p. 29.
240 United States' first written submission, para. 122.
241 Compared with Q1 2008.
242 Original Determination, (Exhibit US-4), pp. 60-61; Redetermination, (Exhibit US-1), pp. 28, 30; and
Redetermination – China's translation, (Exhibit CHN-1), pp. 29, 31; United States' first written submission,
para. 122.

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based on the only information available to it, the percentage changes reported in the
Redetermination. While it may well be that the underlying base values are different, which could
affect the validity of the comparisons made, there is no better basis of information for either the
United States' argument or our review. At a minimum, the United States' argument highlights
seemingly relevant comparisons in the changes in the growth of demand, capacity, output and
inventory that would have merited more detailed examination and explanation by MOFCOM.
Indeed, even if the base levels from which the ch anges began were different, it is clear that the
rate of increase in the domestic industry's capacity and output was notably greater than the
growth in demand during the entire period examined. Unless demand was fairly high at the
beginning of the period, and capacity and output we re very low, at these rates of increase it is
difficult to envision a situation in which domestic industry capacity and output did not surpass
domestic demand.
7.141. MOFCOM also compared percentage changes in demand and output in the
Redetermination.
243 It found that domestic demand was "almost twice" the output of the domestic
like product in 2007, and that the growth in do mestic demand of 18.09% in 2008 must therefore
be "roughly equivalent" to a 36% increase in outp ut over the level of 2007. It then concluded that
this 36% figure was greater than the increa se in output in 2008 over 2007 of 23.91%. 244 This is
simply an approximation of output relative to demand which we cannot verify from the limited
information before us. Nothing in China's arguments in this proceeding persuades us that our
original conclusion, that, relative to the increase in domestic demand, the increases in the
domestic industry's capacity and production were at least partly responsible for the accumulation
of inventory in 2008 and the first quarter of 2009, was wrong.
7.142. As to MOFCOM's choice of 2007 as the baseline year for its analysis of domestic demand
and output, as well as the consideration of 2008 and the first quarter of 2009 as a whole for its
analysis of inventories, China asserts that the WTO agreements do not specify any particular
methodology. China also contends that MOFCOM sufficiently and reasonably explained its
choices.
245 We agree with China that the Anti-Dumping and SCM Agreements do not specify a
particular methodology in this context, especially not at the level of detail of how an investigating
authority establishes a baseline year for its analysis. However, an investigating authority's choice
of methodology or baseline year should not a ffect the objectivity of its analysis, as the
United States argues happened in this case.
246
7.143. In this situation, an explanation is necessa ry to enable us to ensure that the choice of
baseline year was appropriate. To justify MOFCOM's choice of baseline year, China argues that
using 2006 as the baseline year would not have allowed MOFCOM to focus on the impact of subject
imports at the end of the period of investigation an d specifically the effect of the surge in subject
imports in 2008.
247 However, we fail to see how the use of 2006 as the baseline year could have
prevented MOFCOM from focusing on these specif ic developments in 2008. China also reiterates
MOFCOM's explanation that inventory accumulation is a continual process, warranting its analysis
across time periods. 248 However, production and sales could also be argued to be continual
processes, yet MOFCOM did not analyse them across time periods as it did inventories. Moreover,
companies are likely to assess these elements at specific times to gauge performance and
establish accounts. In our view, inventories are not significantly different from production, sales,
or indeed, other economic factors, and we find nothing further in the Redetermination that

243 Redetermination, (Exhibit US-1), p. 52; and Redetermination – China's translation, (Exhibit CHN-1),
p. 52.
244 Ibid.
245 China's first written submission, para. 116. China cites to pages 53 and 54 of the Redetermination,
which provides the following main reasons for the choice of 2007 as the baseline year for MOFCOM's analysis:
(i) 2007 is the closest, most comparable and representative year to 2008, when the volume of subject imports
and domestic inventories started to increase substantially; and (ii) 2007 can be regarded as a year of normal
market conditions during which the volume of subject imports did not increase substantially and the domestic
industry did not yet show signs of being adversely affected.
246 United States' second written submission, paras. 90-95. The United States argues that MOFCOM's
choice of 2007 as the baseline year for its analysis minimizes the responsibility of the domestic industry's
overproduction for inventory overhangs in 2008 and the first quarter of 2009, because the domestic industry's
market share increased significantly in 2007. Had MOFCOM used 2006 as the baseline year, its analysis would
not have been distorted by the domestic industry's significant market share gain in 2007. The United States
argues that MOFCOM modified its analysis in this context to obtain the result it wanted.
247 China's first written submission, para. 116.
248 Ibid. para. 117 (citing Redetermination, (Exhibit US-1), pp. 54-55).

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explains why inventories, whether in this particular industry or more generally, should be treated
differently.
7.144. While MOFCOM considered the fifteen months of 2008 and the first quarter of 2009
together, it accorded particular weight to inventory data for 2008. 249 However, in the first quarter
of 2009, the volume of subject imports decreased while inventories skyrocketed. In our view, an
objective and impartial investigating authority examining this evidence would not have considered
the first quarter of 2009 together with the rest of 2008, and virtually disregarded the changes
happening in the first quarter of 2009 for purposes of its analysis. MOFCOM's approach fails to
consider the changes in inventories in a manner that would ensure that any injurious effects of
those inventories are not attributed to subject imports.
7.145. In the continued absence of underlying data regarding growth in domestic demand,
capacity and output, even if only in summary form to preserve its confidentiality, and given the
inconsistencies in MOFCOM's analytical approach to inventories and time periods, we conclude that
MOFCOM's determination that the domestic indust ry's expansion and increased production did not
cause injury to the domestic industry is not one that could have been reached on the basis of the
information and arguments in this case. Accordingly, we find that MOFCOM failed to ensure that
injuries caused by increased inventories were not attributed to the subject imports consistently
with the requirements of Articles 3.5 and 15.5 of the Anti-Dumping and SCM Agreements.
7.4.7 Non-subject imports
7.4.7.1 Main arguments of the parties
7.146. The United States argues that, given the rising and substantial volumes and competitive
prices of non-subject imports, MOFCOM should have considered more carefully whether it was
attributing to subject imports injury actually caused by non-subject imports.
250 The
Redetermination includes additional evidence in this context that was not in the original
Determination, but the United States contends MOFCOM did not examine this evidence
objectively.251 The United States questions how the increase in non-subject imports throughout the
period of investigation could have had no injurious effects on the domestic industry. 252 The
United States also focuses specifically on the first quarter of 2009, during which the volume of
subject imports decreased while that of non-subject imports increased. 253 In addition, the
United States argues that MOFCOM's analysis of market share conflates shifts in market share with
absolute market share data.
254 The United States alleges that MOFCOM limited its analysis to the
former and ignored the latter.255
7.147. China argues that the United States errs in focusing entirely on the absolute volume of
non-subject imports and average sales values, whil e completely ignoring the market share shifts
that MOFCOM emphasized in its analysis. 256 China further argues that MOFCOM's emphasis on
market shares was important because market share figures adjust for the changing size of the
overall market when it is expanding and market share figures allow for a direct comparison of all
the analytically relevant actors in the market (i.e., the domestic industry, subject imports and
non-subject imports).
257 MOFCOM established that subject imports accounted for the vast majority
of the increase in imports in 2008 and the first quarter of 2009, and that the condition of the
domestic industry began to deteriorate when subject imports surged in 2008. 258 By comparison,
non-subject imports never gained market share and were fairly traded. 259 China thus maintains
that MOFCOM properly accounted for the effect of non-subject imports.

249 China's second written submission, para. 113.
250 United States' first written submission, para. 139.
251 Ibid. para. 138.
252 Ibid. para. 141.
254 United States' second written submission, para. 100.
255 Ibid.
256 China's first written submission, para. 121.
258 China's first written submission, para. 122; and second written submission, para. 121.
259 China's first written submission, para. 124.

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7.4.7.2 Main arguments of the third parties
7.148. Japan maintains that MOFCOM does not appear to have distinguished properly the
injurious effects of the non-subject imports from those of the subject imports.260
7.4.7.3 Evaluation by the Panel
7.149. It is apparent from the Redetermination that the volume of non-subject imports was
greater than that of subject imports throughout the period of investigation. In fact, the volume of
non-subject imports was twice that of subject im ports in 2007, more than twice that of subject
imports in 2008, and almost three times that of su bject imports in the first quarter of 2009. Even
in 2008, when the difference was the smallest, the volume of non-subject imports was one and
one-half times that of subject imports. The pric e of non-subject imports was also below that of
subject imports in 2006 and 2008. The volume of subject imports increased significantly in 2008,
when they were priced higher than non-subjec t imports, and declined significantly in the
first quarter of 2009 as compared to the first quar ter of 2008, when they were priced well below
non-subject imports.
261
7.150. The data relied on by MOFCOM in the Redetermination, including those relating to
non-subject imports which were not provided by MOFCOM in the original Determination 262, are
compiled in the chart below:
Volumes and prices of subject and non-subject imports

 Subject Imports
Volume (tons)
Subject Imports
Price (RMB/ton)
Non-Subject Imports
Volume (tons)
Non-Subject Imports
Price (RMB/ton)
2006 83,837 25,913 169,846 25,468
2007 84,600 26,684 183,349 28,701
2008 135,900 31,372 213,517 30,999
Q1 2009 19,400 26,673 54,206 32,359
Source: MOFCOM's Determination and Redetermination263
7.151. MOFCOM's reliance primarily on shifts in market share for purposes of assessing the causal
link between subject imports and injury to the domestic industry causation in this context is
perplexing. The data considered in the Redetermination suggest that the price of the larger volume
of non-subject imports fluctuated as much as th at of the smaller volume of subject imports.
Subject imports recorded the most striking increase in terms of volume during the period of
investigation (approximately 60% from 2007 and 2008), at a time when their price increased
faster and to a higher level than that of non-su bject imports. In addition, the volume of subject
imports dropped in the first quarter of 2009, at the same time as their prices declined from 2008
levels to approximately 18% below that of non-subject imports, which by contrast had increased
from 2008 levels.
7.152. In our view, this relationship between volumes and prices, with volumes of subject imports
increasing when their prices are higher than those of non-subject imports and vice versa, would
seem to warrant a more careful examination and more detailed explanation than MOFCOM
provided in the present case. For example, the vo lume of non-subject imports and the changes in
their prices are such that it is conceivable respondents and members of the domestic industry
occasionally may have established their volumes and prices in response to non-subject import
trends. A simple comparison of percentage changes in the market share of the various sets of
actors, rather than a comparison of actual or even indexed volume and price data established on
clear bases, cannot serve to explain satisfactorily the trends in this market.

260 Japan's third-party submission, paras. 18-20.
261 Redetermination, (Exhibit US-1), pp. 23, 24, 36, 37; and Redetermination – China's translation,
(Exhibit CHN-1), pp. 24, 37.
262 Original Determination, (Exhibit US-4), pp. 57-58 (data on subject imports only); Redetermination,
(Exhibit US-1), pp. 23, 24, 36, 37 (data on subject and non-subject imports, respectively); and
Redetermination – China's translation, (Exhibit CHN-1), pp. 24, 37.
263 Original Determination, (Exhibit US-4), pp. 57-58; Redetermination, (Exhibit US-1), pp. 23, 24, 36,
37; and Redetermination – China's translation, (Exhibit CHN-1), pp. 24, 37.

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7.153. Given the shortcomings in MOFCOM's analytical approach to non-subject imports, we
conclude that its determination that non-subject imports were not a cause of injury is flawed.
Accordingly, we find that MOFCOM failed to examine properly whether non-subject imports injured
the domestic industry at the same time as subject imports consistently with the requirements of
Articles 3.5 and 15.5 of the Anti-Dumping and SCM Agreements.
7.4.8 Conclusion regarding causation
7.154. For all the above reasons, we conclude that MOFCOM's revised finding that subject imports
caused material injury to the domestic industry is inconsistent with Articles 3.1 and 3.5 of the
Anti-Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement.
7.5 The United States' claim with respect to disclosure
7.5.1 Introduction
7.155. In this section of our report, we consider the United States' claim that MOFCOM failed to
disclose facts under consideration that formed the basis for the Redetermination, inconsistent with
China's obligations under Articles 6.9 of the Anti-Dumping Agreement and 12.8 of the
SCM Agreement. The United States contends that the facts allegedly not disclosed were significant
in MOFCOM's determination and formed part of the basis for its determination and decision to
apply definitive measures. China contends that the United States has failed to demonstrate that
these facts were "essential", and in any event argues that MOFCOM did disclose all the facts
identified in the US claim, while striking a ba lance between necessary disclosure and the need to
protect confidential information.
7.5.2 Provisions at issue
7.156. Article 6.9 of the Anti-Dumping Agreement provides as follows:
The authorities shall, before a final determination is made, inform all interested
parties of the essential facts under consideration which form the basis for the decision
whether to apply definitive measures. Such disclosure should take place in sufficient
time for the parties to defend their interests.
Article 12.8 of the SCM Agreement is identical to Article 6.9 of the Anti-Dumping Agreement but
for the addition of a reference to "all interested Members" as well as all interested parties in the
first sentence, which is not relevant in this dispute.

7.5.3 Legal framework
7.157. The scope of the disclosure obligation under Articles 6.9 of the Anti-Dumping Agreement
and 12.8 of the SCM Agreement has been discusse d in a number of previous panel and Appellate
Body reports. Recently, the Appellate Body in China – GOES observed that "essential facts" are
those that (a) form the basis for the decision to apply definitive measures and (b) ensure the
ability of interested parties to defend their interests.
264 Further, Articles 6.9 and 12.8 do not
require the disclosure of all facts before an investigating authority. 265 Facts that do not form the
basis of the decision to impose definitive measures do not constitute essential facts. 266 Also, as we
observed in the original proceeding, essential facts refer to facts that were actually under
consideration by the investigating authority rather than facts that should have been considered by
the authority.
267
7.158. The Appellate Body has indicated that what constitutes an "essential" fact must be
determined in light of the findings an investigating authority must make to satisfy the substantive
obligations of the Anti-Dumping and SCM Agreements in order to apply definitive measures under
the Anti-Dumping and SCM Agreements.
268 Put differently, the relevant facts are those that are

264 Appellate Body Report, China – GOES, para. 240.
265 Ibid.
266 Panel Report, Argentina – Poultry Anti-Dumping Duties, para. 7.223.
268 Appellate Body Report, China – GOES, para. 241.

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essential to reach conclusions on the issues of dumping and/or subsidization, material injury and
causation, as well as other issues the investigating authority must resolve in a particular case in
concluding that whether to impose definitive measures.
269 However, essential facts are not limited
to those facts that support a determination, but rather are the body of facts essential to any
determinations that are being considered in the process of analysis and decision-making by the
investigating authority.270 The obligation to disclose under these provisions applies only to facts, as
opposed to reasoning. In addition, the obligation to disclose applies even where the essential facts
in question are confidential, in which case investigating authorities may discharge their obligation
through disclosure of non-confidential summaries of those facts. Investigating authorities may not,
however, rely on confidentiality to justify a failure to disclose essential facts.
271
7.159. With this understanding of the relevant obli gations in mind, we turn to the specific facts at
issue in the dispute before us. In our evaluation, we will address separately the allegedly
undisclosed essential facts with respect to MOFCOM's determination regarding price effects and the
allegedly undisclosed essential facts regarding its determination of causation. As noted above,
disclosure must come before the determination is final, so as to allow parties to defend their
interests. Therefore, the relevant document for our consideration of whether MOFCOM disclosed
the essential facts in this case is the Redetermination Disclosure provided to interested parties on
4 July 2013.
272
7.5.4 Failure to disclose essential facts regarding MOFCOM's price effects determination
7.160. The United States' claim of failure to disclose essential facts relating to MOFCOM's price
effects determination focuses on the following three elements:
a. Information underlying MOFCOM's assertion that the trends of the prices of the subject
imports and the domestic like product were the same;
b. Information regarding the evidence that MOFCOM allegedly considered, and the analysis
that it allegedly conducted, in concluding that the domestic industry's loss of market
share in 2008 led it to slash prices by over 30% in the first quarter of 2009; and
c. Information regarding MOFCOM's assertion that the price-cost differential for Wuhan
decreased in 2008.
7.5.4.1 Main arguments of the parties
7.5.4.1.1 United States
7.161. First, with respect to MOFCOM's statement that the price trends of subject imports and the
domestic like product in 2007, 2008 and Q1 2009 were the same, the United States argues that
MOFCOM failed to disclose the basis of MOFCOM's conclusions and in particular, takes issue with
China's argument that some of the data could not be disclosed because it was confidential.
273 The
United States argues that while there may be some complications where essential facts are
confidential information, this does not excuse the investigating authority from its obligation to
disclose the essential facts which formed the basis of the decision to apply definitive measures.
274
7.162. Second, the United States asserts that MOFCOM failed to disclose the essential facts under
consideration with respect to its conclusion that the domestic industry's loss in market share in

269 Panel Report, Mexico – Olive Oil, para. 7.110.
270 Panel Report, EC – Salmon (Norway), para. 7.796.
271 Appellate Body Report, China – GOES, para. 247.
272 MOFCOM, Notice of information disclosure before the industry injury verdict of the anti-dumping on
imported grain-oriented silicon electrical steel with the country of origin in the United States and Russia and
the anti-subsidy on the imported grain-oriented silicon electrical steel with the country of origin in the
United States, Public Notice [2013] No. 327 (Redetermination Disclosure) (Exhibit US-3); and MOFCOM, Notice
of Disclosure Prior to Industry Injury Determination in the Anti-Dumping Reinvestigation on Imports of Grain
Oriented Flat-rolled Electrical Steel originating in the U.S. and Russia and the Anti-subsidy Reinvestigation on
Imports of Grain Oriented Flat-rolled Electrical Steel originating in the U.S. SDCYCH [2013] No. 327
(Redetermination Disclosure – China's translation) (Exhibit CHN-2).
273 United States' second written submission, para. 107.
274 Ibid. para. 109.

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2008 led it to slash prices by over 30% in Q1 2009. 275 The United States emphasizes that the
information disclosed by China could not be considered to be essential facts but was, in fact, the
reasoning provided by MOFCOM for its conclusions.
276
7.163. Third, the United States contends that China failed to disclose any essential facts in the
Redetermination Disclosure relevant to MOFCOM's conclusions regarding a decline in Wuhan Iron
and Steel's price-cost differential over 2008. 277 It reiterates the view that claims of confidentiality
do not justify failure to disclose essential facts.278
7.5.4.1.2 China
7.164. China argues that the United States has failed to make a prima facie case with respect to
the specific claims made by the United States with regard to MOFCOM's alleged failure to disclose
all essential facts that formed the basis of the Redetermination.
279 China contends that the
United States' non-disclosure claim is factually, as well as legally, incorrect.
7.165. First, China contends that MOFCOM did disclose the essential facts relevant to MOFCOM's
finding that the price trends of subject imports and the domestic like product were the same. The
price trends or percentage changes in subject import prices were based on China Customs data
and both the trends and the underlying data ar e set out in the Redetermination Disclosure. 280 The
price trends of the domestic industry were based on verified data of the domestic industry and are
set out in the Redetermination Disclosure. The un derlying data was treated as confidential and
thus not disclosed. 281 China asserts that the percentage changes in domestic like product prices,
disclosed in the Redetermination Disclosure, constitute an adequate public summary of that
confidential information.
282
7.166. Second, China argues that MOFCOM's conclusion that the domestic industry's loss in
market share in 2008 led it to slash prices by over 30% in Q1 2009 was based on the following
information, which was disclosed in the Redetermination Disclosure:
a. subject imports surged in 2008 resulting in loss of market share for the domestic
industry
283;
b. one-to-one correlation between the market sh are lost by the domestic industry and the
market share gained by subject imports284; and
c. faced with a continued surge in the volume of subject imports in Q1 2009, the domestic
industry was forced to lower prices by 30.25% to compete with the subject imports to
regain market share.
285
China submits that these statements and the specific facts, upon which they were based, were the
essential facts that were under consideration before MOFCOM.286

7.167. Third, China rejects the United States' assertion that MOFCOM failed to disclose essential
facts regarding the extent of the decline in Wuhan's price-cost differential. In this regard, China
asserts that MOFCOM did disclose the extent of decline in Wuhan's gross profit, and that gross
profit is a common way of expressing the price-cost differential.
287 China contends that the

275 United States' second written submission, para. 115.
276 Ibid.; and comments on China's response to Panel question No. 62.
277 China's second written submission, para. 116.
278 Ibid.
279 United States' first written submission, paras. 130-135.
280 China's first written submission, para. 138; and second written submission, para. 128.
281 China's second written submission, para. 128.
282 China's comments on the United States' response to Panel question No. 64.
283 China's first written submission, para. 141 (quoting Redetermination Disclosure, (Exhibit US-3),
p. 10); and response to Panel question No. 62, para. 175.
284 Ibid.
285 Ibid.
286 China's response to Panel question No. 62, para. 175.
287 China's first written submission, paras. 142-143; and second written submission, para. 132.

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percentage figures showing the extent of decline in Wuhan's gross profit constituted an adequate
non-confidential summary of the confidential information.288
7.5.4.2 Main arguments of the third parties
7.168. Japan supports the United States' claims regarding MOFCOM's failure to fulfill its disclosure
obligations under Articles 6.9 and 12.8 of the Anti-Dumping and SCM Agreements. It contends that
the facts identified by the United States were taken into consideration by MOFCOM in its injury and
causation determination, and therefore should have been disclosed.
289
7.5.4.3 Evaluation by the Panel
7.5.4.3.1 Alleged non-disclosure of inform ation underlying MOFCOM's conclusion that
the trend of the prices of the subject imports and the domestic like product were the
same
7.169. With respect to the question of whether parallel price trends of subject imports and the
domestic like product constituted "essential facts" for the purpose of Articles 6.9 and 12.8 which
MOFCOM allegedly failed to disclose, we recall that "essential facts" include all facts necessary to
the process of analysis and decision-making by an investigating authority.
7.170. In the Redetermination Disclosure, MOFCOM found that the prices of subject imports and
the domestic like product first went up and then went down.
290 On this basis, MOFCOM concluded
that the prices of subject imports and the domestic like product kept "in line", i.e., were parallel.291
MOFCOM relied on this finding of parallel pricing in support of its finding of price competition,
which MOFCOM relied on in turn in its final conclusions regarding the price effects of imports and
causation. Indeed, this is precisely what China has argued before us. Thus, it is clear that the facts
on which the finding of parallel pricing was based were part of the facts under consideration in
MOFCOM's analysis and conclusions regarding the effect of subject imports on domestic like
product prices. Put differently, they were essent ial facts under consideration which formed the
basis of MOFCOM's decision to impose definitive measures.
7.171. The question raised by the United States' claim is whether MOFCOM failed to disclose these
essential facts. In the Redetermination Disclosure , MOFCOM stated that the price of the subject
imports was based on Chinese Customs data and that the price of the like products was based on
the verified data of the domestic industry.
292 The price trends on which MOFCOM based its
conclusion of parallel prices were based on the weighted average unit values of imports from the
Russian Federation and the United States combin ed with respect to subject imports, and the
weighted average unit values of the domestic like product. MOFCOM disclosed the weighted
average prices of subject imports from the United States and the Russian Federation. Therefore, it
is clear that information concerning subject import prices was disclosed to interested parties.
However, we do not consider that this was sufficient to constitute disclosure of the essential facts
underlying MOFCOM's conclusions on parallel pricing.
7.172. China maintains that price trends of the domestic like product over the period of
investigation were based on confidential AUV data of the domestic producers and therefore could
not be disclosed to the interested parties.
293 We note that China provided, in the course of this
proceeding, information on domestic price ranges on a confidential basis. While this information
provides a better understanding of MOFCOM's findin g of parallel pricing, and apparently was part
of the record before MOFCOM, it was not included in the Redetermination Disclosure. As a

288 China's second written submission, para. 132.
289 Japan's third-party submission, para. 24.
290 Redetermination Disclosure, (Exhibit US-3), p. 10; and Redetermination Disclosure – China's
translation, (Exhibit CHN-2), p. 11.
291 Ibid.
292 Redetermination Disclosure, (Exhibit US-3), pp. 9-10; and Redetermination Disclosure – China's
translation, (Exhibit CHN-2), p. 11.
293 China's first written submission, para. 138. In this regard, we note that MOFCOM's parallel pricing
analysis concerned price trends in 2007, 2008 and Q1 2009. The AUV data for 2007 was based on Wuhan's
prices alone while the AUV data for 2008 and Q1 2009 reflected the weighted average of Baosteel's and
Wuhan's prices. See China's response to Panel question No. 7, para. 27.

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consequence, it cannot be considered in our evaluation of whether China complied with the
disclosure obligations at issue.
7.173. Further, while we are sympathetic to the fact that in situations where there are only
two domestic producers, disclosure of even average domestic sales prices may allow the
competing producers in that two producer industry to calculate each other's information, this does
not obviate the obligation to disclose essential facts, at least in some non-confidential summary
form. There is no indication in the Redetermination that MOFCOM even attempted to do so, and no
explanation of why it was impossible to do so, if that was MOFCOM's view. We emphasize that we
do not understand Article 6.9 or Article 12.8 to require an investigating authority to disclose
confidential information which it is obliged to protect pursuant to Article 6.5 of the
Anti-Dumping Agreement or Article 12.4 of the SC M Agreement. We note that the United States
has not challenged MOFCOM's decision to treat the domestic price information as confidential.
Nonetheless, we find that having failed to even attempt to provide a non-confidential disclosure of
essential facts regarding domestic prices which formed the basis of its consideration of parallel
pricing, MOFCOM acted inconsistently with Articles 6.9 and 12.8 of the Anti-Dumping and
SCM Agreements.
7.5.4.3.2 Alleged non-disclosure of essentia l facts regarding MOFCOM's finding that the
domestic industry's loss in market share in 2008 led it to slash prices by over 30% in
Q1 2009
7.174. In the Redetermination, MOFCOM found that the domestic industry's loss of market share
in 2008 led it to slash prices by over 30% in Q1 2009. MOFCOM relied on this finding in support of
its conclusions regarding the price effects of imports and causation. Thus, again, it is clear that the
facts on which the finding was based were part of the facts under consideration in MOFCOM's
analysis and conclusions regarding the effect of subject imports on domestic like product prices.
Put differently, they were essential facts under co nsideration which formed the basis of MOFCOM's
decision to impose definitive measures.
7.175. China asserts that the following statements , along with the specific facts upon which they
were based, are the "essential facts" which were under consideration and that formed the basis of
MOFCOM's decision:
a. subject imports surged in 2008 resulting in loss of market share for the domestic
industry;
b. there was a one-to-one correlation between the market share lost by the domestic
industry and the market share gained by subject imports; and
c. faced with a continued surge in the volume of subject imports in Q1 2009, the domestic
industry was forced to lower prices by 30.25% to compete with subject imports and to
regain market share.
7.176. We note that the United States contends that "MOFCOM fail[ed] to support its assertion
that the domestic industry's loss of market share led it slash prices by over 30% in the
first quarter of 2009".
294 Further, the United States submits that "obligations contained in the
covered agreements apply to the disclosure of facts, and not reasoning". 295 We understand the
United States to argue that the three factors relied upon by China, set out in paragraph 7.175
above, were in fact "reasons" provided by MOFCOM for its conclusions rather than essential facts.
As noted above, Article 6.9 of the Anti-D umping Agreement and Article 12.8 of the
SCM Agreements require the disclosure of "essentia l facts", not the reasoning of the investigating
authority.296 In this instance, it seems to us that the United States is arguing that MOFCOM
disclosed reasoning, but not facts, and that the reasoning was unsupported by facts disclosed to
the parties.

294 United States' second written submission, para. 115.
295 Ibid.; and comments on China's response to Panel question No. 62.
296 See, e.g. Panel Report, Argentina – Poultry Anti-Dumping Duties, para. 7.225. The panel in that case
concluded that the "essential facts" within the meaning of Article 6.9 of the Anti-Dumping Agreement did not
include motives, causes or justifications for the investigating authority's findings. We agree.

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7.177. As explained above, we do have serious concerns regarding MOFCOM's conclusions
regarding the linkage between the domestic industry's market share loss in 2008 and the 30.25%
decline in the domestic industry's price in Q1 2009. However, MOFCOM did disclose the essential
facts under consideration on the basis of which it made these findings, i.e. percentage figures
relating to market share shifts and price fluctuations. Moreover, we understand that subject import
statistics from China Customs were available to the interested parties. It is not clear to us from the
United States' submissions what additional facts it contends MOFCOM should have disclosed, but
did not. For these reasons, we reject the United States' claim in this respect.
7.5.4.3.3 Essential facts regarding MOFCOM's finding that the price-cost differential for
Wuhan decreased in 2008
7.178. Before considering the United States' claim, we wish to clarify our understanding of why a
decline in the price-cost differential for Wuhan in 2008 was relevant to MOFCOM's
Redetermination. In the original proceeding, we expressed specific concerns regarding MOFCOM's
failure to consider the possible effect of Baosteel's start-up costs in suppressing domestic like
product prices in 2008.
297 We understand from China's argument that MOFCOM, in the
Redetermination, examined this question, and concluded that Wuhan did not experience such
start-up costs, and faced an even more significan t decline in its price-cost differential. On this
basis, MOFCOM found that the effect of Baosteel's start-up costs on the domestic industry was
relatively small.298
7.179. In light of China's argument, it seems to us that facts concerning the decline in Wuhan's
price-cost differential were considered by MOFCOM in determining whether subject imports had a
price suppressive effect in 2008, and in this cont ext, therefore, constituted essential facts under
consideration by MOFCOM.
7.180. The United States argues that MOFCOM failed to disclose facts underlying MOFCOM's
finding that Wuhan's price-cost differential decreased in 2008. China asserts that the gross profit
margin is the difference between price and costs and thus serves as a sufficient proxy for the
price-cost differential. 299 It further asserts that figures concerning the decline in Wuhan's gross
profits were disclosed. 300 The United States does not dispute that MOFCOM disclosed facts
regarding the gross profit margins, but asserts that this is not a sufficient disclosure of the
essential facts. However, the United States does not specifically explain why the disclosure of
gross profit margins cannot be considered a sufficient non-confidential summary of a decline in
Wuhan's price-cost differential. In light of United States' failure to rebut China's argument, we
reject the United States' claim in this respect.
7.5.5 Failure to disclose essential facts regarding MOFCOM's causation determination
7.5.5.1 Main arguments of the parties
7.5.5.1.1 United States
7.181. The United States' claim of failure to disclose essential facts relating to MOFCOM's
causation determination focuses on the following four elements:
a. Information regarding the "sales obstacles" that allegedly prevented the domestic
industry from making more sales in 2008 and the first quarter of 2009;
b. Information underlying MOFCOM's assertion that the domestic industry was prevented
by subject imports from realizing economies of scale;
c. Information underlying MOFCOM's finding that the capacity and output of the domestic
GOES industry did not exceed market demand; and

297 Panel Report, China – GOES, para. 7.548; and Appellate Body Report, China – GOES, para. 168.
298 China's first written submission, para. 30 (quoting Redetermination, (Exhibit US-1), p. 25).
299 Ibid. para. 30.
300 Ibid.

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d. Information supporting MOFCOM's division of responsibility for the inventory overhang.
7.182. The United States argues the following with respect to these four elements:
a. the Redetermination Disclosure does not make clear what were the sales obstacles to
which MOFCOM referred301;
b. MOFCOM failed to disclose any facts underlying its conclusion that the domestic industry
was prevented by subject imports from realizing economies of scale302;
c. MOFCOM failed to disclose any information underlying its finding that the capacity and
output of the domestic industry did not exceed market demand303; and
d. MOFCOM failed to disclose any information supporting its allocation of responsibility for
the domestic industry's inventory overhang.304
7.5.5.1.2 China
7.183. China maintains the following with respect to these four elements:
a. MOFCOM's Redetermination Disclosure makes clear that the increase in subject imports
that were the sales obstacle in issue 305, and the United States does not clearly identify
the facts regarding subject imports which MOFCOM purportedly failed to disclose306;
b. MOFCOM explained the reasoning for its finding regarding economies of scale307;
c. MOFCOM disclosed not only information on the percentage changes in capacity and
output, adjusted for differences in the base amounts of each 308, but also facts showing
that domestic capacity from 2006 through 2008 remained significantly below the total
market demand despite the growth in capacity during that period
309; and
d. MOFCOM extensively discussed the cause of the domestic industry's inventory overhang,
relying on the percentage changes in the relevant factors, which were disclosed in the
Redetermination Disclosure, to establish that inventories first declined while subject
imports were steady in 2007 and then increase d when subject imports also increased in
2008.
310
7.5.5.2 Main arguments of the third parties
7.184. Japan supports the United States' claims regarding MOFCOM's failure to fulfill its disclosure
obligations under Articles 6.9 of the Anti-Dumping Agreement and Article 12.8 of the
SCM Agreement. It contends that the facts identified by the United States were taken into
consideration by MOFCOM in its injury and causation determinations, and therefore should have
been disclosed.
311

301 United States' second written submission, para. 114.
302 United States' first written submission, para. 146; and second written submission, para. 111.
303 United States' first written submission, para. 146; and second written submission, para. 117.
304 United States' first written submission, para. 146; and second written submission, paras. 118-119.
305 China's first written submission, para. 140; and second written submission, para. 130.
306 China's second written submission, para. 130.
307 China's first written submission, para. 139; and second written submission, para. 129.
308 China's second written submission, para. 144, footnote 186.
309 China's second written submission, para. 133.
310 China's first written submission, para. 145; and second written submission, para. 134.
311 Japan's third-party submission, para. 24.

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7.5.5.3 Evaluation by the Panel
7.5.5.3.1 Essential facts regarding "sales obstacles"
7.185. China asserts in this proceeding that the "sales obstacles" to which MOFCOM made
reference in the Redetermination were specifically subject imports.
312 While the Redetermination
Disclosure does contain information on the volumes of subject imports, we see nothing that would
connect that information to the notion of subject imports specifically constituting the "sales
obstacles" referred to in the Redetermination. Thus, to the extent MOFCOM considered "sales
obstacles" in making its determination of causation, we see nothing in the Redetermination
Disclosure that could be understood to constitute the essential facts concerning those sales
obstacles. In this respect, MOFCOM failed to comply with the obligations set out in Articles 6.9
and 12.8 of the Anti-Dumping and SCM Agreements.
7.5.5.3.2 Essential facts regarding economies of scale
7.186. MOFCOM referred to economies of scale in the context of its injury and causation analyses
in the Redetermination.
313 These references consist of the repeated statement that the increase in
the domestic industry's output and capacity did not result in "corresponding economies of scale"
for the domestic industry. However, the references in the Redetermination appear unsupported by
any specific underlying facts. China refers to the Redetermination Disclosure at pages 22-23 to
argue that MOFCOM disclosed the essential facts regarding economies of scale and at page 13 to
argue that the percentage changes in demand, ca pacity and output are the facts that were the
basis for MOFCOM's findings regarding economies of scale. However, pages 22-23 appear to relate
to US comments on the disclosure of information in the original investigation and the percentage
changes at page 13 do not relate specifically to economies of scale. Thus, we fail to see the
relevance of China's references to these pages of the Redetermination Disclosure in the context of
this claim.
7.187. As discussed above, MOFCOM's findings with respect to economies of scale rely on several
premises that are not explained in the Redetermination, and for which there are no facts set out in
either the Redetermination itself, or in the Redetermination Disclosure. Indeed, China
acknowledges that there are no facts other than the information concerning percentage changes in
demand, capacity and output relevant to the issue of economies of scale set out in the
Redetermination Disclosure.
314 Thus, it appears that MOFCOM did not actually have any other facts
before it that could be under consideration with respect to this issue.
7.188. While we have concluded that MOFCOM's findings regarding economies of scale are not
sufficiently explained, and therefore are not substantively adequate, it does appear that MOFCOM
disclosed the essential facts under consideration with respect to that substantively inadequate
determination. In this situation, we see no basis for a finding that MOFCOM failed to comply with
the obligation to disclose essential facts set out in Articles 6.9 and 12.8 of the Anti-Dumping and
SCM Agreements.
7.5.5.3.3 Essential facts regarding capacity, output and demand
7.189. In support of its conclusion that domestic capacity and output did not exceed demand from
2006 through 2008, MOFCOM referred only to the percentage changes in these factors and a
statement that domestic demand in 2007 was "almost twice" domestic output.
315 China has not
asserted that there was any other information in the record that formed the basis for MOFCOM's
findings regarding capacity, output and demand.
7.190. While we find it difficult to understand how MOFCOM based its findings regarding these
factors on the facts to which China refers, these facts are undisputedly set out in the
Redetermination Disclosure. Accordingly, MO FCOM did disclose the essential facts under
consideration with respect to its determination. In this situation, we see no basis for a finding that

312 China's first written submission, para. 140; and second written submission, para. 130.
313 Redetermination, (Exhibit US-1), pp. 28, 29, 42, 43; and Redetermination – China's translation,
(CHN-1), pp. 29, 43, 44.
314 China's second written submission, paras. 94, 98; and response to Panel question No. 57, para. 156.
315 Redetermination, (Exhibit US-1), p. 52; and Redetermination – China's translation, (CHN-1), p. 52.

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MOFCOM failed to comply with the obligation to disclose essential facts set out in Articles 6.9
and 12.8 of the Anti-Dumping and SCM Agreements.
7.5.5.3.4 Essential facts regarding inventory overhang
7.191. In support of its conclusion that subject imports caused the increase in the domestic
industry's inventory in 2008, MOFCOM relied on the fact that the domestic industry's inventory and
subject imports increased at commensurate rates during that period. China has not asserted that
there was any other information in the record that formed the basis for MOFCOM's findings
regarding inventory overhang.
7.192. While we consider that MOFCOM's findings regarding inventory overhang are not
sufficiently explained, and therefore are not substantively adequate, it does appear that MOFCOM
disclosed the facts under consideration with respect to that substantively inadequate
determination. In this situation, we see no basis for a finding that MOFCOM failed to comply with
the obligation to disclose essential facts set out in Articles 6.9 and 12.8 of the Anti-Dumping and
SCM Agreements.
7.6 The United States' claim with respect to public notice
7.6.1 Introduction
7.193. In this section of our report, we consider the United States' assertions that MOFCOM
explained neither the matters of fact and law nor the reasons that led it to maintain anti-dumping
and countervailing duties in the public notice of the Redetermination, and thus claims that its
public notice is inconsistent with China's obligations under Articles 12.2 and 12.2.2 of the
Anti-Dumping Agreement and Articles 22.3 and 22.5 of the SCM Agreement. Specifically, the
United States contends that MOFCOM's Redetermination does not explain:
a. MOFCOM's finding that the trends of the pric es of the subject imports and the domestic
like product were the same;
b. the evidence that MOFCOM allegedly consid ered, and the analysis that it allegedly
conducted, in concluding that the domestic industry's loss of market share in 2008 led it
to slash prices by over 30% in the first quarter of 2009;
c. its assertion regarding the "sales obstacles" that allegedly prevented the domestic
industry from making more sales in 2008 and the first quarter of 2009;
d. its assertion that the domestic industry was prevented by subject imports from realizing
economies of scale; and
e. MOFCOM's finding that the capacity and output of the domestic GOES industry did not
exceed market demand.
The United States contends that these findings and conclusions were material and thus subject to
public notice requirements because they had to be resolved before MOFCOM could make an
affirmative determination.
316

7.194. China counters that the Redetermination is sufficiently clear as to the facts and reasoning
that led MOFCOM to its conclusions, while also respecting the need to protect confidential
information. China maintains that (i) MOFCOM fully respected the requirement to provide a
reasoned account of the factual basis for its decision to impose definitive measures
317, (ii) the
United States failed to establish a prima facie case318, and (iii) some of the United States' claims

316 United States' first written submission, para. 154.
317 China's first written submission, para. 153.
318 Ibid.

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are factually inaccurate. 319 In addition, in its second written submission, China contends that the
United States abandoned some of its original claims concerning public notice.320
7.6.2 Provisions at issue
7.195. Article 12.2 of the Anti-Dumping Agreement provides:
Public notice shall be given of any preliminary or final determination, whether
affirmative or negative, of any decision to accept an undertaking pursuant to Article 8,
of the termination of such an undertaking, and of the termination of a definitive
anti-dumping duty. Each such notice shall set forth, or otherwise make available
through a separate report, in sufficient detail the findings and conclusions reached on
all issues of fact and law considered material by the investigating authorities. All such
notices and reports shall be forwarded to the Member or Members the products of
which are subject to such determination or undertaking and to other interested parties
known to have an interest therein.
Article 22.3 of the SCM Agreement is virt ually identical to Article 12.2 of the
Anti-Dumping Agreement but for references to "Article 18" and "a definitive countervailing duty" in
place of "Article 8" and "a definitive anti-dumping duty" in the first sentence.

7.196. Article 12.2.2 of the Anti-Dumping Agreement further provides:
A public notice of conclusion or suspension of an investigation in the case of an
affirmative determination providing for the imposition of a definitive duty or the
acceptance of a price undertaking shall contain, or otherwise make available through a
separate report, all relevant information on the matters of fact and law and reasons
which have led to the imposition of final measures or the acceptance of a price
undertaking, due regard being paid to the requirement for the protection of
confidential information. In particular, the notice or report shall contain the
information described in subparagraph 2.1, as well as the reasons for the acceptance
or rejection of relevant arguments or claims made by the exporters and importers,
and the basis for any decision made under subparagraph 10.2 of Article 6.
Again, Article 22.5 of the SCM Agreement is virtually identical to Article 12.2.2 of the
Anti-Dumping Agreement. None of the differences are relevant in this dispute.
321
7.6.3 Legal framework
7.197. We begin by recalling the difference in the obligations imposed by Articles 6.9 and 12.2.2
of the Anti-Dumping Agreement and the analogous provisions, Ar ticles 12.8 and 22.5, of the
SCM Agreement. As explained by the Appellate Body in the original proceedings, Article 6.9
concerns the disclosure of essential facts prior to a definitive determination. Article 12.2.2 requires
"public notice of conclusion" of an investigation, and thus applies once a final determination is
made.
322 Therefore, in this case, the document to be considered in resolving the United States'
claims is the Redetermination document issued by MOFCOM.
7.198. Further, the chapeau of Article 12.2.2 (i.e., Article 12.2) and the corresponding provision
of the SCM Agreement, Article 22.3, require investigating authorities to make available, in
sufficient detail, the findings and conclusions reached on all issues of fact and law "considered
material by the investigating authorities." Therefore, if an issue of fact or law was not considered
material to its determinations, MOFCOM would not be obliged to give public notice of findings and
conclusions on that issue, regardless of its relevance or importance to the parties, or a reviewing
panel. However, we also agree with the view taken by some panels that material issues of fact and

319 United States' second written submission, para. 122.
320 China's second written submission, para. 137.
321 Article 22.5 refers to "an undertaking" rather than "a price undertaking" in the first sentence, and
refers to "paragraph 4" rather than "subparagraph 2.1" and "interested Members" in addition to " exporters
and importers" in the second sentence. Article 22.5 of the SCM Agreement also omits the reference at the end
of Article 12.2.2 of the Anti-Dumping Agreement to sampling under Article 6.10 of the latter Agreement. There
is no corollary provision to Article 6.10 in the SCM Agreement.
322 Appellate Body Report, China – GOES, para. 240.

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law include issues that arisen in the course of an investigation and which must necessarily be
resolved in order for the investigating authorities to make the necessary determinations. 323 In
other words, an investigating authority cannot simply conclude that an issue that arises in an
investigation is not material and make no findings regarding it if, viewed objectively, that issue
requires resolution in the context of the findings made by the investigating authority.
7.199. In addition, as we stated in the original proceedings, the public notice requirement under
Article 12 of the Anti-Dumping Agreement and Ar ticle 22 of the SCM Agreement does not extend
to confidential information.
324 Indeed, both provisions make clear that "due regard" must be paid
to the requirement to protect confidential info rmation. Where the public notice requirement
implicates information treated as confidential in an investigation, investigating authorities may
reconcile their obligation to protect confidential information from disclosure with their obligations
with respect to public notice by basing the public notice on non-confidential summaries of the
relevant information.
325 As the public notice obligations only require investigating authorities to
make available "findings" and "conclusions" on issues of fact, and "matters of fact" which have led
to arguments being rejected, it is also not necessary to include all relevant underlying, or even
supporting facts, in the public notice.326
7.200. Before we turn to the specific assertions of the United States regarding allegedly
inadequate public notice, we have considered the application of judicial economy with respect to
those assertions which relate to aspects of MOFCOM's Redetermination which we have, in this
report, found to be inconsistent with China's substantive obligations under the Anti-Dumping and
SCM Agreements. We note that where we have fo und such inconsistency, we have based that
decision principally on the basis of the explanations of MOFCOM's analysis and conclusions in the
Redetermination, consistently with the applicable standard of review. In this situation, we consider
immaterial the question of whether the public notice of such an inconsistent determination is
"sufficient". We find the question of whether it is necessary or appropriate for us to make findings
on the adequacy of the public notice to be particularly relevant in this case as, where we have
found substantive inconsistencies in MOFCOM's price effects and causation analysis, the primary
basis for those findings is our conclusion MOFCOM failed, in the Redetermination, to engage
adequately with relevant evidence before it, and/or failed to explain the basis of its finding.
Therefore, where we have found that aspects of MOFCOM's Redetermination are inconsistent with
China's substantive obligations we exercise judicial economy and make no finding on the
corresponding claims under Articles 12 and 22 of the Anti-Dumping and SCM Agreements
respectively.
7.201. Our decision is in keeping with that of several previous panels, which have concluded that,
where there is a substantive inconsistency with th e provisions of the Anti-Dumping Agreement, it
is neither necessary nor appropriate to make find ings on claims of violation of Articles 12
and/or 22 of the Anti-Dum ping and SCM Agreements.
327 In this regard, we note in particular the
findings of the panel in EC – Bed Linen:
A notice may adequately explain the determination that was made, but if the
determination was substantively inconsistent with the relevant legal obligations, the
adequacy of the notice is meaningless. Further, in our view, it is meaningless to
consider whether the notice of a decision that is substantive [sic] inconsistent with the
requirements of the AD Agreement is, as a separate matter, insufficient under
Article 12.2. A finding that the notice of an inconsistent action is inadequate does not
add anything to the finding of violation, the resolution of the dispute before us, or to
the understanding of the obligations imposed by the AD Agreement.
328
We agree with the findings of the panel in EC – Bed Linen to this effect, in particular with respect
to the lack of any additional value to be had from findings as to whether a notice of a substantively
inadequate determination is consistent with the public notice requirements of the Anti-Dumping

323 See Panel Reports, China – Broiler Products, para. 7.527; and EU – Footwear (China), para. 7.844.
326 See, e.g. Appellate Body Report, China – GOES, para. 256.
327 Panel Reports, EC – Bed Linen, para. 6.259; and EC – Salmon (Norway), para. 7.831.
328 Panel Report, EC – Bed Linen, para. 6.259.

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and SCM Agreements. We therefore adopt them as our own, and will follow the same approach in
evaluating the United States' public notice claims in this proceeding.
7.6.4 Main arguments of the parties
7.6.4.1 United States
7.202. The United States contends that, inter alia, MOFCOM's Redetermination did not contain all
relevant information on matters of fact and law which led MOFCOM to conclude that price trends of
subject imports and the domestic like product were the same.
329
7.203. The United States further contends that MOFCOM's Redetermination explains neither its
conclusions that the domestic industry was prevented by subject imports from realizing economies
of scale330 nor its finding that the capacity and output of the domestic industry did not exceed
market demand.331 In its second written submission, the United States further argues that China's
representations that increased imports are the "sales obstacles" referred to in the Redetermination
are not supported by the Redetermination itself.332
7.6.4.2 China
7.204. China argues that by failing to establish that the facts referred to by the United States in
its public notice claims were critical to an understanding of the factual basis that led to the
imposition of final measures, the United States has failed to make a prima facie case that MOFCOM
violated Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement and Articles 22.3 and 22.5 of the
SCM Agreement.
333 With regard to MOFCOM's conclusions regarding trends in prices of subject
imports and the domestic like product, China argues that MOFCOM provided, in the
Redetermination, the public version of the data supporting these conclusions.
334 In relation to
MOFCOM's conclusion that the domestic industry's market share loss in 2008 led it to reduce prices
significantly in Q1 2009, China submits that MOFCOM disclosed all matters of fact and law that led
to this conclusion.335
7.205. In addition, China contends that MOFCOM fully explained not only its analysis and findings
regarding the domestic industry's failure to realize economies of scale due to subject imports,
referring to pages 23 and 24 of the Redetermination
336, but also the basis for its finding that
domestic capacity and output did not exceed market demand, referring to the Redetermination at
page 52.337 China further contends that it was clear from MOFCOM's Redetermination that subject
imports were the sales obstacles in issue, and how MOFCOM considered them, referring to the
Redetermination at pages 24-26.
338
7.6.5 Main arguments of the third parties
7.206. Japan argues that the facts identified by the United States in its public notice claims were
material because they were taken into consideration by MOFCOM in its injury and causation
determinations. Japan requests us to examine carefully whether MOFCOM complied with its
obligations in this regard.339
7.6.6 Evaluation by the Panel
7.207. Turning to the specific assertions of the United States regarding allegedly inadequate
public notice, we note that each of these relates to aspects of MOFCOM's Redetermination which

329 United States' second written submission, para. 122.
330 United States' first written submission, para. 153.
331 Ibid.
332 United States' second written submission, para. 124.
333 China's first written submission, para. 150.
334 Ibid. para. 156.
335 Ibid. para. 159.
337 China's first written submission, para. 161.
338 Ibid. para. 158.
339 Japan's third-party submission, para. 24.

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we have found, in this report, to be substantively inconsistent with China's obligations. More
specifically, the United States' claims regarding the adequacy of the public notice of MOFCOM's
price effects and causation determinations relate to our substantive findings as follows:
a. In relation to MOFCOM's conclusions regarding similar trends in the prices of subject
imports and the domestic like product, we note that MOFCOM's conclusions were
relevant to its factual findings on parallel trends in prices of subject imports and the
domestic like product. The findings on parallel trends formed part of MOFCOM's
intermediate findings concerning price competition and were part of MOFCOM's price
effects analysis. We found MOFCOM's parallel pricing analysis to be erroneous, for the
reasons described above.
340 It is also relevant to note that we found MOFCOM's overall
price effects analysis to be inconsistent with China's obligations under Articles 3.1
and 3.2 of the Anti-Dumping Agreemen t and Articles 15.1 and 15.2 of the
SCM Agreement.
b. With regard to the United States' claim concerning MOFCOM's alleged failure to provide
in the Redetermination, relevant information on facts and law, which led MOFCOM to the
conclusion that the domestic industry's loss of market share in 2008 led it to slash prices
by over 30% in the first quarter of Q1 2009 we highlighted specific errors in MOFCOM's
analysis, in particular, in light of MOFCOM's failure to engage with probative evidence
before it, which could have brought its conc lusions into question, and also because of
MOFCOM's failure to adequately explain the basis for its finding.
341 We found MOFCOM's
volume based price suppression analysis, in this case, to be flawed and inconsistent with
China's obligations under Articles 3.1 and 3.2 of the Anti-Dumping Agreement and
Articles 15.1 and 15.2 of the SCM Agreement.
c. With respect to economies of scale, the US claim is based upon MOFCOM's failure to
explain its conclusions that the domestic industry was prevented by subject imports from
realizing economies of scale. Similarly, our finding that MOFCOM's conclusions regarding
economies of scale do not support its determination of causation is based on the fact
that MOFCOM's findings in this context rely on several premises that are not explained in
the Redetermination, and for which there are no facts set out in either the
Redetermination itself, or in the Redetermination Disclosure.
342
d. With respect to capacity, output and demand, the US claim is based upon MOFCOM's
failure to explain its finding that the capacity and output of the domestic industry did not
exceed market demand. Similarly, our finding that MOFCOM's conclusions regarding
these three economic factors do not support its determination of causation is based on
the continued absence of underlying data regarding growth in domestic demand,
capacity and output.
343
e. With respect to sales obstacles, the US claim is based upon the fact that China's
representations that increased imports are the "sales obstacles" referred to in the
Redetermination are not supported by the Redetermination itself. Similarly, we have
found nothing that would connect the information presented by MOFCOM on the volumes
of subject imports to the notion of subject imports specifically constituting the "sales
obstacles" encountered by the domestic industry.
344
7.208. As the United States' claims of inadequate public notice relate specifically to the aspects of
MOFCOM's price effects and causation determinations that constitute the basis of our findings of
inconsistency of those determinations with various provisions of the Anti-Dumping and
SCM Agreements, we apply judicial economy based on the considerations set out above and make
no findings on these public notice claims under Articles 12 and 22 of the Anti-Dumping and
SCM Agreements respectively.

340 See, above, paras. 7.89-7.93.
341 See, above, paras. 7.40-7.112.
342 See, above, paras. 7.129-7.133.
343 See, above, paras. 7.138-7.145.
344 See, above, para. 7.185.

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8 CONCLUSIONS
8.1. For the reasons set forth in this Report, we conclude that the United States' claim regarding
adverse effects under Articles 3.1 and 3.4 of the Anti-Dumping Agreement and Articles 15.1
and 15.4 of the SCM Agreement is not properly before us.
8.2. Further, and for the reasons set forth in this Report, we conclude that:
a. MOFCOM's conclusions regarding the price effects of subject imports are not consistent
with Articles 3.1 and 3.2 of the Anti-Dumpi ng Agreement and Articles 15.1 and 15.2 of
the SCM Agreement;
b. MOFCOM's revised finding that subject imports caused material injury to the domestic
industry is not consistent with Articles 3. 1 and 3.5 of the Anti-Dumping Agreement and
Articles 15.1 and 15.5 of the SCM Agreement; and
c. MOFCOM acted inconsistently with Articl e 6.9 of the Anti-Dumping Agreement and
Article 12.8 of the SCM Agreement with respect to the disclosure of essential facts
regarding parallel pricing and sales obstacles.
Accordingly, China's measures taken to comply with the DSB's recommendations and rulings, at
issue in this proceeding, are inconsistent with the relevant covered agreements, and therefore
China failed to comply with the recommendations and rulings of the DSB.

8.3. In addition, and for the reasons set forth in this Report, we conclude that the United States
has failed to demonstrate that MOFCOM acted inconsistently with Article 6.9 of the
Anti-Dumping Agreement and Article 12.8 of the SC M Agreement with respect to the disclosure of
essential facts regarding the domestic industry's loss of market share in 2008 and price reduction
in the first quarter of 2009, the decrease in Wuhan's price-cost differential in 2008, economies of
scale, domestic capacity, output and demand, and inventory overhang.
8.4. Finally, in light of our findings of substa ntive violations, we exercised judicial economy and
made no findings with regard to the United States' public notice claims under Article 12 of the
Anti-Dumping Agreement and Article 22 of the SCM Agreement.
8.5. Under Article 3.8 of the DSU, in cases wh ere there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent that we have found the measures at
issue inconsistent with the provisions of the An ti-Dumping and SCM Agreements cited above, they
have nullified or impaired benefits accruing to the United States under these agreements.
8.6. We therefore conclude that China failed to implement the recommendations and rulings of
the DSB to bring its measures into conformity with its obligations under the Anti-Dumping and
SCM Agreements.
345 To the extent that China failed to comply with the recommendations and
rulings of the DSB in the original dispute, those recommendations and rulings remain operative.
Interim Report. However, there is no evidence properly before us in this regard.