EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA
Document: REPORT OF THE PANEL
Date: 29 March 2016
Document codes: WT/DS473/R
Complainant: Argentina
Respondent: EU
Third parties: Australia, China, Malaysia, Norway, Russia, Saudi Arabia, Turkey, U.S., Colombia, Indonesia, Mexico
Dispute stage: Appellate Body
Agreements cited: Art. 2.2  Anti-dumpingArt. VI:1  GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4  Anti-dumpingArt. XVI:4  Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4  Anti-dumpingArt. VI:2  GATT 1994Art. 3.1, 3.4, 3.5, 1  Anti-dumpingArt. VI  GATT 1994

EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA

REPORT OF THE PANEL

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 of the Panel Concerning Business Confidential
Information
A-7
ANNEX B
ARGUMENTS OF ARGENTINA
Contents Page
Annex B-1 Executive Summary of the Firs t Written Submission of Argentina B-2
Annex B-2 Executive Summary of the Second Written Submission of Argentina B-12
Annex B-3 Executive Summary of the Statement of Argentina at the First Meeting of the
Panel
B-23
Annex B-4 Executive Summary of the Statement of Argentina at the Second Meeting of
the Panel
B-29
Annex B-5 Executive Summary of the Response of Argentina to the European Union's
Request for a Preliminary Ruling
B-34
ANNEX C
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex C-1 Executive Summary of the First Written Submission of the European Union C-2
Annex C-2 Executive Summary of the Second Written Submission of the European Union C-11
Annex C-3 Executive Summary of the Stat ement of the European Union at the
First Meeting of the Panel
C-21
Annex C-4 Executive Summary of the Statement of the European Union at the
Second Meeting of the Panel
C-26
Annex C-5 Executive Summary of the European Un ion's Request for a Preliminary Ruling C-33
ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Executive Summary of Third-Party Arguments of Australia D-2
Annex D-2 Executive Summary of Third-Party Arguments of China D-5
Annex D-3 Executive Summary of Third-Party Arguments of Colombia D-10
Annex D-4 Executive Summary of Third-Party Arguments of Indonesia D-13
Annex D-5 Executive Summary of Thir d-Party Arguments of Mexico D-17
Annex D-6 Executive Summary of Third-Party Arguments of Norway D-21
Annex D-7 Executive Summary of Third-Party Arguments of the Russian Federation D-23
Annex D-8 Executive Summary of Third-Party Arguments of the Kingdom of Saudi Arabia D-26
Annex D-9 Executive Summary of Thir d-Party Arguments of Turkey D-30
Annex D-10 Executive Summary of Third-Party Arguments of the United States D-32

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Import
Measures
Appellate Body Reports, Argentina – Measures Affe cting the Importation of
Goods, WT/DS438/AB/R / WT/DS444/AB /R / WT/DS445/AB/R, adopted
26 January 2015
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft ,
WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1161
Brazil – Desiccated Coconut Appellate Body Report, Brazil – Measures Affect ing Desiccated Coconut ,
WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, p. 167
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive
Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000,
DSR 2000:VI, p. 2985
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, DSR 2013:IV, p. 1041
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)
Appellate Body Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seam less Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dum ping Duties on High-Performance
Stainless Steel Seamless Tubes (" HP-SSST") from the European Union ,
WT/DS454/AB/R and Add.1 / WT/D S460/AB/R and Add.1, adopted
28 October 2015
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of Various
Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted
22 February 2012, DSR 2012:VII, p. 3295
China – Raw Materials Panel Reports, China – Measures Related to th e Exportation of Various Raw
Materials, WT/DS394/R, Add.1 and Corr.1 / WT/DS395/R, Add.1 and Corr.1 /
WT/DS398/R, Add.1 and Corr.1, adopted 22 February 2012, as modified by
Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R,
DSR 2012:VII, p. 3501
Dominican Republic –
Import and Sale of
Cigarettes
Appellate Body Report, Dominican Republic – Measures Affecting the
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R, adopted
19 May 2005, DSR 2005:XV, p. 7367
EC – Bananas III Appellate Body Report, European Communities – Regi me for the Importation,
Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997,
DSR 1997:II, p. 591
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
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R,
adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on
Certain Iron or Steel Fasteners from China , WT/DS397/R and Corr.1, adopted
28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R,
DSR 2011:VIII, p. 4289
EC – Fasteners (China)
(Article 21.5 – China)
Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China – Recourse to
Article 21.5 of the DSU by China , WT/DS397/AB/RW and Add.1, adopted
12 February 2016
EC – Fasteners (China)
(Article 21.5 – China)
Panel Report, European Communities – Definitive Anti-Dumping Measures on
Certain Iron or Steel Fasteners from China – Recourse to Article 21.5 of the DSU
by China, WT/DS397/RW and Add.1, adopted 12 February 2016, as modified by
the Appellate Body Report WT/DS397/AB/RW
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

Short Title Full Case Title and Citation
EC – IT Products Panel Reports, European Communities and it s 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 – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast
Iron Tube or Pipe Fittings from Brazil , WT/DS219/R, adopted 18 August 2003,
as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, p. 2701
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – An ti-Dumping Duties on
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R, adopted
18 August 2003, DSR 2003:VI, p. 2613
EC and certain member
States – Large Civil Aircraft
Appellate Body Report, European Communities and Certain Member States
– Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R, adopted
1 June 2011, DSR 2011:I, p. 7
Egypt – Steel Rebar Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from
Turkey, WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, p. 2667
EU – 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
India – Agricultural products Panel Report, India – Measures Concerning the Importation of Certain
Agricultural Products , WT/DS430/R and Add.1, adopted 19 June 2015, as
modified by Appellate Body Report WT/DS430/AB/R
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products , WT/DS50/AB/R, adopted 16 January 1998,
DSR 1998:I, p. 9
Japan – Alcoholic Beverages
II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97
Korea – Certain Paper Panel Report, Korea – Anti-Dumping Duties on Imports of Certain Paper from
Indonesia, WT/DS312/R, adopted 28 November 2005, DSR 2005:XXII,
p. 10637
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I,
p. 3
Mexico – Anti-Dumping
Measures on Rice
Panel Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice,
Complaint with Respect to Rice , WT/DS295/R, adopted 20 December 2005, as
modified by Appellate Body Report WT/DS295/AB/R, DSR 2005:XXIII, p. 11007
Mexico – Anti-Dumping
Measures on Rice
Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and
Rice, Complaint with Respect to Rice , WT/DS295/AB/R, adopted
20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Corn Syrup
(Article 21.5 – US)
Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose
Corn Syrup (HFCS) from the United Stat es – Recourse to Article 21.5 of the
DSU by the United States , WT/DS132/AB/RW, adopted 21 November 2001,
DSR 2001:XIII, p. 6675
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
Mexico – Steel Pipes and
Tubes
Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from
Guatemala, WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, p. 1207
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R,
adopted 5 April 2001, DSR 2001:VII, p. 2701
Thailand – H-Beams Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections
of Iron or Non-Alloy Steel and H-Beams from Poland , WT/DS122/R, adopted
5 April 2001, as modified by Appellate Body Report WT/DS122/AB/R,
DSR 2001:VII, p. 2741
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916 ,
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X,
p. 4793
US – Anti-Dumping and
Countervailing Duties
(China)
Appellate Body Report, United States – Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted
25 March 2011, DSR 2011:V, p. 2869
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain Hot-
Rolled Carbon Steel Flat Products from India , WT/DS436/AB/R, adopted
19 December 2014
US – Certain EC Products Appellate Body Report, United States – Import Measures on Certain Products
from the European Communities , WT/DS165/AB/R, adopted 10 January 2001,
DSR 2001:I, p. 373

Short Title Full Case Title and Citation
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and
Sale of Clove Cigarettes , WT/DS406/AB/R, adopted 24 April 2012, DSR 2012:
XI, p. 5751
US – Continued Zeroing Appellate Body Report, United States – Continued Ex istence and Application of
Zeroing Methodology , WT/DS350/AB/R, adopted 19 February 2009,
DSR 2009:III, p. 1291
US – Corrosion-Resistant
Steel Sunset Review
Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties
on Corrosion-Resistant Carbon Steel Flat Products from Japan ,
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3
US – Countervailing and
Anti-Dumping Measures
(China)
Appellate Body Report, United States – Countervailing and Anti-Dumping
Measures on Certain Products from China, WT/DS449/AB/R and Corr.1, adopted
22 July 2014
US – Countervailing Duty
Investigation on DRAMS
Appellate Body Report, United States – Countervailing Duty Investigation on
Dynamic Random Access Memory Se miconductors (DRAMS) from Korea ,
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
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 – Section 211
Appropriations Act
Appellate Body Report, United States – Section 211 Omnibus Appropriations Act
of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589
US – Section 301 Trade Act Panel Report, United States – Sections 301-310 of the Trade Act of 1974 ,
WT/DS152/R, adopted 27 January 2000, DSR 2000:II, p. 815
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998,
DSR 1998:VII, p. 2755
US – Shrimp (Thailand)

US – Customs Bond
Directive
Appellate Body Report, U n i t e d S t a t e s – M e a s u r e s R e l a t i n g t o S h r i m p f r o m
Thailand / United States – Customs Bond Directive for Merchandise Subject to
Anti-Dumping/Countervailing Duties , WT/DS343/AB/R / WT/DS345/AB/R,
adopted 1 August 2008, DSR 2008:VII, p. 2385 / DSR 2008:VIII, p. 2773
US – Shrimp II (Viet Nam) Appellate Body Report, United States – Anti-Dumping Measures on Certain
Shrimp from Viet Nam, WT/DS429/AB/R, adopted 22 April 2015, and Corr.1
US – Softwood Lumber V Panel Report, United States – Final Dumping Determination on Softwood
Lumber from Canada , WT/DS264/R, adopted 31 August 2004, as modified by
Appellate Body Report WT/DS264/AB/R, DSR 2004:V, p. 1937
US – Softwood Lumber V Appellate Body Report, United States – Final Dumping Determination on
Softwood Lumber from Canada , WT/DS264/AB/R, adopted 31 August 2004,
DSR 2004:V, p. 1875
U S – S o f t w o o d L u m b e r V
(Article 21.5 – Canada)
Appellate Body Report, United States – Final Dumping Determination on
Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by
Canada, WT/DS264/AB/RW, adopted 1 September 2006, DSR 2006:XII,
p. 5087
U S – S o f t w o o d L u m b e r V I
(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 – Stainless Steel (Korea) Panel Report, United States – Anti-Dumping Measures on Stainless Steel Plate
in Coils and Stainless Steel Sheet and Strip from Korea , WT/DS179/R, adopted
1 February 2001, DSR 2001:IV, p. 1295
US – Stainless Steel
(Mexico)
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 – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R,
adopted 19 January 2001, DSR 2001:II, p. 717
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) Appellate Body Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R, adopted
9 May 2006, and Corr.1, DSR 2006:II, p. 417
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing and
Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p. 3
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R
and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779

Short Title Full Case Title and Citation
US – Oil Country Tubular
Goods Sunset Reviews
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R,
adopted 17 December 2004, DSR 2004:VII, p. 3257
US – Zeroing (Japan)
(Article 21.5 – Japan)
Appellate Body Report, United States – Measures Relating to Zeroing and
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan ,
WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441
EXHIBITS REFERRED TO IN THIS REPORT
Panel Exhibit Title (Short Title)
Exhibit ARG-1 Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection
against dumped imports from countries not members of the European
Community (codified version), OJ L 343, 22.12.2009, p. 51 and corrigendum to
Council Regulation (EC) No 1225/2009, OJ L 7, 12.1.2010, p. 22 (Basic
Regulation)
Exhibit ARG-5 Council Regulation (EC) No 1972/2002 of 5 November 2002, amending
Regulation (EC) No 384/96 on the protection against dumped imports from
countries not members of the European Community, OJ L 305, 7.11.2002, p. 1,
(Council Regulation 1972/2002)
Exhibit ARG-6 Edward Borovikov and Bogdan Evtimov, "EC's Treatment of Non-Market
Economies in Anti-Dumping Law: Its History: An Evolving Disregard of
International Trade Rules; Its State of Play: Inconsistent with the GATT/WTO?",
Exhibit ARG-7 Olesia Engelbutzeder, EU Anti-Dumping Measures Against Russian Exporters –
In View of Russian Accession to the WTO and the EU Enlargement , 2004,
pp. 159-160
Exhibit ARG-8 Council Regulation (EC) No. 1891/2005 of 14 November 2005, amending
Regulation (EEC) No 3068/92 imposing a definitive anti-dumping duty on
imports of potassium chloride originating in Belarus, Russia or Ukraine, OJ 2005
L 302, 19.11.2005, p. 14, (Council Regulation 1891/2005)
Exhibit ARG-9 Council Regulation (EC) No. 1050/2006 of 11 July 2006, imposing a definitive
anti-dumping duty on imports of potass ium chloride originating in Belarus and
Russia, OJ 2006 L 191, 12.7.2006, p. 1, (Council Regulation 1050/2006)
Exhibit ARG-10 Council Regulation (EC) No. 954/2006 of 27 June 2006, imposing definitive anti-
dumping duty on imports of certain seam less pipes and tubes, or iron or steel
originating in Croatia, Romania, Russia and Ukraine, repealing Council
Regulations (EC) No 2320/97 and (EC) No 348/2000, terminating the interim
and expiry reviews of the anti-dumping duties on imports of certain seamless
pipes and tubes of iron or non-alloy steel originating, inter alia, in Russia and
Romania and terminating the interim reviews of the anti-dumping duties on
imports of certain seamless pipes and tubes of iron or non-alloy steel
originating, inter alia , in Russia and Romania and in Croatia and Ukraine,
OJ 2006 L 175, 29.6.2006, p. 4, (Council Regulation 954/2006)
Exhibit ARG-11

Council Regulation (EC) No 812/2008 of 11 August 2008 amending Regulation
(EC) No 954/2006 imposing a definitive anti-dumping duty on imports of certain
seamless pipes and tubes of iron or steel originating, inter alia, in Russia, OJ
2008 L 220, 15.8.2008, p. 1, (Council Regulation 812/2008)
Exhibit ARG-12 Council Implementing Regulation (EU) No 1269/2012 of 21 December 2012
amending Implementing Regulation (EU) No 585/2012 imposing a definitive
anti-dumping duty on imports of certain seamless pipes, of iron or steel,
originating, inter alia, in Russia, following a partial interim review pursuant to
Article 11(3) of Regulation (EC) No 1225/2009, OJ 2012 L 357, 28.12.2012,
p. 1, (Council Implementing Regulation 1269/2012)
Exhibit ARG-13 Council Regulation (EC) No. 1911/2006 of 19 December 2006, imposing a
definitive anti-dumping duty on import s of solutions of urea and ammonium
nitrate originating in Algeria, Belarus, Russia and Ukraine following an expiry
review pursuant to Article 11(2) of Regulation (EC) No 384/96, OJ 2006 L 365,
21.12.2006, p. 26, (Council Regulation 1911/2006)
Exhibit ARG-14 Council Regulation (EC) No. 238/2008 of 10 March 2008, terminating the partial
interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the
anti-dumping duty on imports of solutions of urea and ammonium nitrate
originating in Russia, OJ 2008 L 75, 18.3.2008, p. 14, (Council
Regulation 238/2008)
Exhibit ARG-15 Council Implementing Regulation (EU) No. 1251/2009 of 18 December 2009,
amending Regulation (EC) No 1911/2006 imposing a definitive anti-dumping
duty on imports of solutions of urea and ammonium nitrate originating,
inter alia, in Russia, OJ 2009 L 338, 19.12.2009, p. 5, (Council Implementing

Panel Exhibit Title (Short Title)
Regulation 1251/2009)
Exhibit ARG-16 Council Regulation (EC) No. 236/2008 of 10 March 2008, terminating the partial
interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the
anti-dumping duty on imports of ammonium nitrate originating in Russia,
OJ 2008 L 75, 18.3.2008, p. 1, (Council Regulation 236/2008)
Exhibit ARG-17 Council Regulation (EC) No 661/2008 of 8 July 2008 imposing a definitive anti-
dumping duty on imports of ammonium nitrate originating in Russia following
an expiry review pursuant to Article 11 (2) and a partial interim review pursuant
to Article 11(3) of Regulation (EC) No 384/96, OJ 2008 L 185, 12.7.2008, p. 1,
(Council Regulation 661/2008)
Exhibit ARG-18 Council Regulation (EC) No. 237/2008 of 10 March 2008, terminating the partial
interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the
anti-dumping duty on imports of ammonium nitrate originating, inter alia , in
Ukraine, OJ 2008 L 75, 18.3.2008, p. 8, (Council Regulation 237/2008)
Exhibit ARG-19 Council Regulation (EC) No. 907/2007 of 23 July 2007, repealing the anti-
dumping duty on imports of urea originating in Russia, following an expiry
review pursuant to Article 11(2) of Regulation (EC) No 384/96, and terminating
the partial interim reviews pu rsuant to Article 11(3) of such imports originating
in Russia, OJ 2007 L 198, 31.7.2007, p. 4, (Council Regulation 907/2007)
Exhibit ARG-20 Council Regulation (EC) No. 240/2008 of 17 March 2008, repealing the anti-
dumping duty on imports of urea originating in Belarus, Croatia, Libya and
Ukraine, following an expiry review pursua nt to Article 11(2) of Regulation (EC)
No 384/96, OJ 2008 L 75, 18.3.2008, p. 33, (Council Regulation 240/2008)
Exhibit ARG-21 Council Regulation (EC) No. 1256/2008 of 16 December 2008, imposing a
definitive anti-dumping duty on import s of certain welded tubes and pipes of
iron or non-alloy steel – originating in Belarus, the People's Republic of China
and Russia following a proceeding pursua nt to Article 5 of Regulation (EC)
No 384/96 – originating in Thailand following an expiry review pursuant to
Article 11(2) of the same Regulation – originating in Ukraine following an expiry
review pursuant to Article 11(2) and an interim review pursuant to Article 11(3)
of the same Regulation – and terminatin g the proceedings in respect of imports
of the same product originating Bosnia and Herzegovina and Turkey,
OJ 2008 L 343, 19.12.2008, p. 1, (Council Regulation 1256/2008)
Exhibit ARG-22 Council Implementing Regulation (EU) No. 1194/2013 of 19 November 2013,
imposing a definitive anti-dumping du ty and collecting definitively the
provisional duty imposed on imports of biodiesel originating in Argentina and
Indonesia, OJ 2013 L 315, 26.11.2013, p. 2, (Definitive Regulation)
Exhibit ARG-23 Judgment of the General Court of the European Union (Eighth Chamber) of
7 February 2013, Acron OAO and Dorogobuzh OAO v Council of the
European Union, Case T-235/08, (General Court of the European Union,
Acron I)
Exhibit ARG-30 Commission Regulation (EU) No. 490/2013 of 27 May 2013, imposing a
provisional anti-dumping duty on imports of biodiesel originating in Argentina
and Indonesia, OJ 2013 L 141, 28.5.2013, p. 6, (Provisional Regulation)
Exhibit ARG-31 Consolidated version of the new anti-dum ping complaint concerning imports of
biodiesel originating in Argentina and Indonesia, (Consolidated version of the
complaint)
Exhibit ARG-32 Notice of initiation of an anti-dumping proceeding concerning imports of
biodiesel originating in Argentina and Indonesia, OJ 2012 C 260, 29.8.2012,
p. 8, (Notice of initiation of the anti-dumping investigation)
Exhibit ARG-33 Notice of initiation of an anti-subsidy proceeding concerning imports of biodiesel
originating in Argentina and Indonesia, OJ 2012 C 342, 10.11.2012, p. 12,
(Notice of initiation of the countervailing duty investigation)
Exhibit ARG-35 General Disclosure Document (Annex 1), AD593 Anti-Dumping Proceeding
Concerning imports of biodiesel originating in Argentina and Indonesia, Proposal
to impose definitive measures, (Definitive Disclosure)
Exhibit ARG-36 Commission Regulation (EU) No. 1198/2013 of 25 November 2013, terminating
the anti-subsidy proceeding concerning imports of biodiesel originating in
Argentina and Indonesia and repealing Regulation (EU) No 330/2013 making
such imports subject to registration, OJ 2013 L 315, 26.11.2013, p. 67, (Notice
of termination of the countervailing duty investigation)
Exhibit ARG-37 CARBIO's written submission of 5 November 2012
Exhibit ARG-38 Definitive Disclosure, Annex II, (BCI)
Exhibit ARG-39 CARBIO's comments on the Definitive Disclosure of 17 October 2013, (CARBIO's
comments on the Definitive Disclosure)
Exhibit ARG-43 Powerpoint presentation projected du ring the hearing of 14 December 2012
(CARBIO's Powerpoint presentation of 14 December 2012)
Exhibit ARG-44 Information concerning producti on capacity and capaci ty utilization of EBB
Members and non-EBB Members submitted by EBB on 12 March 2013, (EBB's

Panel Exhibit Title (Short Title)
submission of 12 March 2013)
Exhibit ARG-46 Powerpoint presentation projected during the hearing of 8 July 2013 (CARBIO's
Powerpoint presentation of 8 July 2013)
Exhibit ARG-47 Submission by EBB of 17 September 2013 (EBB's submission of
17 September 2013)
Exhibit ARG-51 CARBIO's comments on the Provisional Disclosure of 1 July 2013, (CARBIO's
comments on the Provisional Disclosure)
Exhibit ARG-52 Judgment of the General Court (Eighth Chamber) of 7 February 2013, Acron
OAO v Council of the European Union, Case T-118/10 (General Court of the
European Union, Acron II)
Exhibit ARG-53 Judgment of the General Court (Eighth Chamber) of 7 February 2013,
EuroChem Mineral and Chemical Company OAO (EuroChem MCC) v Council of
the European Union, Case T-459/08 (General Court of the European Union, case
T-459/08)
Exhibit ARG-54 Judgment of the General Court (Eighth Chamber) of 7 February 2013,
EuroChem Mineral and Chemical Company OAO (EuroChem MMC) v Council of
the European Union, Case T-84/07 (General Court of the European Union, case
T-84/07)
Exhibit ARG-57 European Commission, Proposal for a Council Regulation further amending
Council Regulation (EC) No. 384/96 on the protection against dumped imports
from countries not members of the European Communities, COM(2002)467
final, 31 December 2002
Exhibit EU-1 Council Regulation (EC) No. 950/2001 of 14 May 2001 imposing a definitive
anti-dumping duty on imports of certain aluminium foil originating in the
People's Republic of China and Russia, OJ L 134, p.1, (Council
Regulation 950/2001)
Exhibit EU-8 Tietje et al., "Cost of Production Ad justments in Anti-Dumping Proceedings",
Journal of World Trade, 45, No. 5 (2011), pp. 1071-1102
Exhibit EU-9 Shorter Oxford English Dictionary, 6th edn, (version 3.0.2.1)
Exhibit EU-10 Media reports on plant closures in the European Union
Exhibit EU-12 Appendix II, contai ning all regulations, resolutions and administrative provisions
required in the questionnaire sent by the Commission to the Government of
Argentina, related to the product under investigation, (Appendix II to the
Government of Argentina's questionnaire response in the countervailing duty
investigation)
Exhibit EU-13 Commission Regulation (EC) No. 193/2009 of 11 March 2009, imposing a
provisional anti-dumping duty on imports of biodiesel originating in the United
States of America; OJ L 67, 12.3.2009, p. 22, (Provisional Regulation, anti-
dumping investigation on biodiesel from the United States)
Exhibit EU-14 Council Regulation (EC) No. 599/2009 of 7 July 2009, imposing a definitive anti-
dumping duty and collecting definitive ly the provisional duty imposed on
imports of biodiesel originating in the United States of America, OJ L 179,
10.7.2009, p. 26, (Definitive Regulation, anti-dumping investigation on biodiesel
from the United States)

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Basic Regulation Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection
against dumped imports from countries not members of the European
Community
BCI Business Confidential Information
CARBIO Cámara Argentina de Biocombustib les (association of Argentine biodiesel
producers)
DET Differential export tax
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EBB European Biodiesel Board (complainant, association of EU biodiesel producers)
FOB Free on Board
GAAP Generally accepted accounting principles
GATT 1994 General Agreement on Tariffs and Trade 1994
IP Investigation period
SG&A Selling, general and administrative costs
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155
UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization

1 INTRODUCTION
1.1 Complaint by Argentina
1.1. On 19 December 2013, Argentina requested consultations with the European Union pursuant
to Articles 1 and 4 of the Understanding on Ru les and Procedures Governing the Settlement of
Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and
Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 (Anti-Dumping Agreement) with respect to Article 2(5) of Council Regulation (EC)
No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not
members of the European Community (the Basic Regulation
1) and with respect to the anti-
dumping measures imposed by the European Un ion on imports of biodiesel originating in,
inter alia, Argentina.2
1.2. Consultations were held on 31 January 2014 but failed to resolve the dispute.
1.2 Panel establishment and composition
1.3. On 13 March 2014, Argentina requested the establishment of a panel pursuant to Articles 4.7
and 6 of the DSU, Article XXIII of the GATT 1994 and Article 17.4 of the Anti-Dumping Agreement
with standard terms of reference.
3 At its meeting on 25 April 2014, the Dispute Settlement Body
(DSB) established a panel pursuant to the request of Argentina in document WT/DS473/5, in
accordance with Article 6 of the DSU.4
1.4. 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 Argentina in document
WT/DS473/5 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.5
1.5. On 13 June 2014, Argentina requested the Director-General to determine the composition of
the Panel, pursuant to Article 8.7 of the DSU. On 23 June 2014, the Director-General accordingly
composed the Panel as follows:
Chairperson: Mr Arumugamangalam V. Ganesan

 Mr Scott Gallacher
6

1.6. Mr Scott Gallacher resigned from the Panel on 15 February 2015. On 18 February 2015, the
Director-General appointed a new member of the Panel, Mr Mathias Francke. Accordingly, the
Panel is composed as follows:
 Chairperson: Mr Arumugamangalam V. Ganesan

 Mr Mathias Francke
7

1.7. Australia, China, Colombia, Indonesia, Malaysia, Mexico, Norway, the Russian Federation, the
Kingdom of Saudi Arabia, Turkey and the United States notified their interest in participating in the
Panel proceedings as third parties.

1 Exhibit ARG-1.
2 WT/DS473/1.
3 WT/DS473/5.
4 WT/DSB/M/344.
5 WT/DS473/6.
6 WT/DS473/6.
7 WT/DS473/8.

1.3 Panel proceedings
1.3.1 General
1.8. After consultation with the partie s, the Panel adopted its Working Procedures
8 and timetable
on 21 August 2014. 9 On 25 November 2014, the Panel adopted Additional Working Procedures
Concerning Business Confidential Information (BCI).10
1.9. The Panel held a first substantive meeting with the parties on 18 and 19 March 2015. A
session with the third parties took place on 19 March 2015. The Panel held a second substantive
meeting with the parties on 9 and 10 June 2015. On 16 July 2015, the Panel issued the descriptive
part of its Report to the parties. The Panel issued its Interim Report to the parties on
8 December 2015. The Panel issued its Final Report to the parties on 23 February 2016.
1.3.2 Request for preliminary ruling
1.10. On 24 November 2014, the European Union submitted to the Panel a request for a
preliminary ruling, arguing that certain of Argentina's claims were outside the Panel's terms of
reference.
11 On 18 December 2014, Argentina submitted a response to the European Union's
request.12 The parties further addressed each other's arguments in their subsequent submissions
to the Panel. Some third parties also commented on the European Union's request in their
third-party submission.
1.11. The Panel addresses the European Union's re quest for a preliminary ruling in its findings
below.
2 FACTUAL ASPECTS AND MEASURES AT ISSUE
2.1. This dispute concerns two sets of measures of the European Union.
2.2. First, Argentina makes "as such" claims against Article 2(5), second subparagraph, of Council
Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from
countries not members of the European Community (the Basic Regulation).
2.3. Second, Argentina challenges certain aspect s of the anti-dumping measures imposed by the
European Union on imports of biodiesel from Argentina. These measures were adopted at the
conclusion of an investigation on imports of biodiesel originating in Argentina and Indonesia that
was initiated by the European Commission on 29 August 2012
13 following a complaint submitted
by the European Biodiesel Board (EBB). 14 Provisional anti-dumping duties were imposed on
29 May 201315, and definitive anti-dumping duties on 27 November 2013. 16 With regard to
Argentine producers/exporters, in the De finitive Regulation, the EU authorities 17 calculated
dumping margins ranging from 41.9% to 49.2% and applied anti-dumping duties corresponding to

8 Working Procedures of the Panel (last revised on 27 January 2015), Annex A-1.
9 Last revised on 23 September 2015.
10 Additional Working Procedures of the Panel Concerning Business Confidential Information, Annex A-2.
11 See Executive summary of the European Union's request for a preliminary ruling, Annex C-5.
12 See Executive summary of the response of Argentina to the European Union's request for a
preliminary ruling, Annex B-5.
13 Notice of initiation of the anti-dumping investigation, (Exhibit ARG-32).
14 Consolidated version of the complaint, (Exhibit ARG-31).
15 Provisional Regulation, (Exhibit ARG-30). In addition, on 10 November 2012, the EU authorities
initiated an anti-subsidy proceeding with regard to imports of biodiesel from Argentina and Indonesia and
commenced a separate investigation. (Notice of initiation of the countervailing duty investigation, (Exhibit
ARG-33)). On 7 October 2013, the domestic industry withdrew its complaint. The EU authorities terminated the
anti-subsidy investigation on 27 November 2013. (Notice of termination of the countervailing duty
investigation, (Exhibit ARG-36))
16 Definitive Regulation, (Exhibit ARG-22).
17 The European Commission conducts investigations and adopts preliminary determinations; the
European Council is a decision-making body that adopts final determinations on the basis of proposals from the
European Commission.

the injury margins they calculated, which ranged from 22.0% to 25.7%. 18 The duties were applied
in the form of specific duties expressed as a fixed amount in euro/tonne.
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. Argentina requests that the Panel find that:19
a. Article 2(5), second subparagraph, of the Basic Regulation is "as such" inconsistent with:
i. Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of
the GATT 1994 by providing that the author ities shall reject or adjust the cost
data of the exporters as included in their records when those costs reflect prices
which are "abnormally or artificially low", because the costs do not reflect market
prices or because they are allegedly affected by a distortion;
ii. Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 by providing that the costs shall be adjusted or established in certain
cases "on any other reasonable basis, including information from other
representative markets", even though neither provision allows for an
establishment of the costs on this basis; and
iii. As a result, with Article XVI:4 of the Marrakesh Agreement Establishing the WTO
and Article 18.4 of the Anti-Dumping Agreement.
b. The anti-dumping measures imposed by the European Union on imports of biodiesel
from Argentina are inconsistent with:
i. Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of
the GATT 1994 because the European Union failed to calculate the cost of
production on the basis of the records kept by the producers under investigation;
ii. Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 because the European Union failed to construct the normal value of
the exports of biodiesel on the basis of th e cost of production in the country of
origin;
iii. Article 2.2.1.1 of the Anti-Dumping Agreement because the European Union
included costs not associated with the production and sale of biodiesel in the
calculation of the cost of production;
iv. Article 2.1 of the Anti-Dumping Agreemen t and Article VI:1 of the GATT 1994 as
a result of the inconsistencies in points (i) – (iii) above affecting the dumping
margin determinations;
v. Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement because the
European Union failed to base the profit margin as a component of the
constructed normal value on a reasonable method within the meaning of
Article 2.2.2(iii) of the Anti-Dumping Agreement;
vi. Article 2.4 of the Anti-Dumping Agreement because the European Union failed to
make due allowance for differences affecting price comparability, including
differences in taxation, thereby precluding a fair comparison between the export
price and the normal value;
vii. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994
because the European Union imposed and levied anti-dumping duties in excess of

18 Provisional and definitive anti-dumping duties were imposed on imports from both Argentina and
Indonesia.
19 Argentina's first written submission, paras. 468-470; second written submission, paras. 252-254.

the margin of dumping that should have been established in accordance with
Article 2 of the Anti-Dumping Agreement;
viii. Articles 3.1 and 3.4 of the Anti-Dumping Agreement because the
European Union's injury determination is not based on positive evidence and does
not involve an objective examination of the consequent impact of the allegedly
dumped imports on domestic producers of the like product in relation to capacity,
utilization of production capacity and return on investment of the European Union
industry; and
ix. Articles 3.1 and 3.5 of the Anti-Dumping Agreement since the European Union
failed to conduct an objective examination, based on positive evidence, of known
factors other than the allegedly dumped imports in its non-attribution analysis;
hence, the European Union failed to ensure that the injury suffered by the
domestic industry of the European Union resulting from other factors was not
attributed to the allegedly dumped imports.
3.2. Argentina requests the Panel to make use of its discretion under the second sentence of
Article 19.1 of the DSU by suggesting ways in which the European Union should implement the
recommendations and rulings of the DSB to bring its measures into conformity with the
Anti-Dumping Agreement and the GATT 1994.
20
3.3. The European Union requests that the Panel reject Argentina's claims in their entirety.21
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries provided to the
Panel in accordance with paragraphs 19 and 21 of the Working Procedures adopted by the Panel
(see Annexes B-1 to B-5 and C-1 to C-5).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Australia, China, Colombia, Indonesia, Mexico, Norway, the
Russian Federation, the Kingdom of Saudi Arabia, Turkey, and the United States are reflected in
their executive summaries provided to the Panel in accordance with paragraph 20 of the Working
Procedures adopted by the Panel (see Annexes D-1 to D-10). Malaysia did not submit any written
or oral arguments to the Panel.
6 INTERIM REVIEW
6.1 Introduction
6.1. On 8 December 2015, the Panel issued its Interim Report to the parties. On
22 December 2015, Argentina and the European Union each submitted written requests for the
Panel to review aspects of the Interim Report. On 15 January 2016, both parties submitted
comments on the other party's requests for revi ew. Neither party requested an interim review
meeting. In addition, on 5 February 2016, the Pa nel provided an opportunity for the parties to
comment on the relevance for the present dispute of the Appellate Body Report in EC – Fasteners
(China) (Article 21.5 – China) , which was circulated after the issuance of the Interim Report. In
this context, the Panel invited the parties to co mment on a proposed revision to paragraph 7.302
of the Interim Report (paragraph 7.303 of the Final Report).
6.2. In accordance with Article 15.3 of the DSU, this section of the Report sets out the
parties' requests for modifications made at the interim review stage as well as the Panel's
response to these requests. In addition, the Pane l has made a number of changes of an editorial

21 European Union's first written submission, para . 348; second written submission, para. 170. In
addition, as noted above in paragrap h 1.10, the European Union considers that certain claims pursued by
Argentina are not properly before the Panel.

nature to improve the clarity and accuracy of the Report or to correct typographical and other non-
substantive errors, certain of which were suggested by the parties.
6.3. The numbering of some of the paragraphs and footnotes in the Final Report has changed
from the numbering in the Interim Report. The di scussion below refers to the numbering in the
Final Report and, where appropriate, includes the corresponding numbering in the Interim Report.
6.2 Specific requests for review submitted by the parties
Paragraph 7.13

6.4. Argentina requests that the Panel modify paragraph 7.13 to properly reflect its position,
namely, that for most of the claims identified in this paragraph, Argentina did not raise claims that
it decided not to pursue, but rather, the European Union raised procedural objections with regard
to non-existent issues. The European Union objects to Argentina's request and notes that the text
suggested by Argentina is already included in a footnote.
6.5. In addition, the European Union requests the Panel to reformulate the penultimate sentence
of paragraph 7.13 to indicate that the absence of claims being made or pursued pertains to points
arising from Argentina's panel request. Argentina does not comment on this request.
6.6. We have amended the text of paragraph 7.13 to better reflect Argentina's arguments and the
Panel's reasoning. We note however that footnote 45 to paragraph 7.13 already quotes the text
suggested by Argentina; we therefore did not repeat this text in the body of paragraph 7.13. The
changes suggested by the European Union are, in our view, unwarranted, and we decline to make
them. We have, however, amended the penultimate sentence of paragraph 7.13 to express with
more clarity the point made in this sentence.
Paragraphs 7.56-7.57

6.7. The European Union requests the Panel to reformulate paragraphs 7.56 and 7.57 and to
amend footnote 105 to paragraph 7.59. According to the European Union, paragraph 2(A)(2) of
Argentina's panel request introduced two new elements, both of which the European Union
challenged: (a) a reference to Article 2.2 of the Anti-Dumping Agreement; and (b) a reference to a
"second reason", namely, "that the costs used be associated with the production and sale of the
product". In the European Union's view, this second element was properly covered in
paragraphs 7.12 and 7.13, and has no place in the section beginning with paragraph 7.56.
Argentina requests the Panel to reject the reformulations proposed by the European Union.
Argentina considers it appropriate in paragraph 7.56 to refer to the entire objection raised by the
European Union pertaining to "new claims" against Article 2(5) of the Basic Regulation.
6.8. We are not persuaded that the specific changes requested by the European Union would add
any clarity to the paragraphs and footnote concerned or are necessary. We note, in this regard,
that footnote 99 to paragraph 7.56 refers back to paragraph 7.12, which relates to the first
element of paragraph 2(A)(2) of Argentina's panel request challenged by the European Union. We
further note that, in paragraph 7.57, we clarify that we will consider the European Union's
objection pertaining to Article 2.2 of the Anti-Dum ping Agreement. However, in order to avoid any
risk of confusion, we have made certain amendments to the text of paragraphs 7.56 and 7.57 with
a view to clarifying those aspects of the European Union's objection to paragraph 2(A)(2) of
Argentina's panel request that the European Union no longer appears to pursue, in contrast to
those aspects that the European Union continues to "invite" the Panel to consider.
Paragraph 7.67

6.9. The European Union suggests adding language ("due to an alleged distortion in the operation
of the markets of the exporting country result ing from a measure of the government of the
exporting country; and") to qualify the term "dis tortion" at the end of the last sentence of
subparagraph (a) to paragraph 7.67 to avoid confusion and to render it consistent with
paragraph 7.113. Moreover, the European Union suggests adding language – "and when
information on the costs of other producers or expo rters in the same country is not available, or
cannot be used" – at the end of subparagraph (b) of the same paragraph to make it clear that a

determination that a producer/exporter's records do not reasonably reflect the costs is not the only
condition for the recourse to "prices prevailing on other markets than the market of the country of
origin". Argentina opposes these requests. Argentina considers that subparagraph (a) of
paragraph 7.67 accurately reflects its claim, as consistently referred to in its submissions, and that
the description is consistent with the wording included in paragraphs 7.69 and 7.74 of the
Interim Report. Argentina also considers that the wording of subparagraph (b) correctly reflects
the issue raised by Argentina's claim.
6.10. We decline to add the language suggeste d by the European Union. In our view, the two
sub-paragraphs of paragraph 7.67 accurately reflect the questions of interpretation that arise from
Argentina's claims.
Paragraph 7.112

6.11. Argentina requests that the Panel add a third subparagraph to paragraph 7.112 to clarify
that with respect to both of its "as such" claims, Argentina also claimed that even if it granted the
EU authorities the discretion alleged by the Europe an Union, Article 2(5), second subparagraph, of
the Basic Regulation would nonetheless be inconsistent with Articles 2.2.1.1 and 2.2. The
European Union objects to Argentina's request. The European Union notes that paragraph 7.112
reflects the Panel's understanding of the "essence of Argentina's claims" and that Argentina seems
to accept the Panel's summary of its arguments in relation to this claim as it does not request any
changes to paragraphs 7.74 to 7.86. The European Union submits that the Panel's understanding
is accurate, while the new text suggested by Argentina is inaccurate. Moreover, the
European Union submits that the purpose of the interim review is not to allow the complaining
party to dictate to the Panel the understanding that the Panel should have, or the reasoning the
Panel should follow.
6.12. We note that the Interim Report already included several references to the alternative line
of argumentation that Argentina would have us reflect in paragraph 7.112, notably in footnote 189
of the Interim Report. Nonetheless, we have added the language requested by Argentina, albeit
with some minor changes, but have included it in a new paragraph after paragraph 7.117 rather
than as a new subparagraph of paragraph 7.112. Consequently, we have deleted footnote 189 of
the Interim Report. We have also included a brie f summary of the European Union's response to
this argument in the new paragraph, and amended paragraph 7.81 to reflect the alternative
argument as it pertains to Argentina's Article 2.2.1.1 claim in the summary of its arguments.
Paragraphs 7.116, 7.142 and 7.143

6.13. The European Union suggests adding the qualifier "government induced" to the term
"distortion" in paragraphs 7.116 and 7.142 and to the term "market distortion" in
paragraph 7.143. Argentina objects to the modificati on proposed by the European Union, which, it
submits, is a new terminology that the European Union seeks to introduce at a late stage of the
proceedings. Argentina submits that the current wording is clear and is in line with Argentina's
claims as formulated in its submissions to the Panel.
6.14. We decline to make the change requeste d by the European Union, particularly as the
European Union did not itself refer to a "government induced" distortion in these contexts. Nor do
Recital 4, Article 2(3), second subparagraph, or Argentina's submissions use such a qualifier.
Paragraph 7.132

6.15. The European Union suggests replacing the terms "after a determination is made" with
"after a determination has been made". Argentina objects to this request.
6.16. We have made the amendment suggested by the European Union.
Paragraph 7.133

6.17. Argentina requests the addition of footnote references to its second written submission at
the end of the second sentence of paragraph 7.13 3. The European Union does not object to the

Panel adding the footnote suggested by Argentina pr ovided that the text of the main body of the
paragraph is not modified.
6.18. We have added the footnote references suggested by Argentina.
Paragraph 7.140

6.19. Argentina requests that paragraph 7.140 be amended to more accurately reflect its
arguments to the Panel regarding the relevance of Recital 4 for purposes of interpreting
Article 2(5), second subparagraph. The European Union objects to the proposed amendments on
the ground that the paragraph already accurately describes Argentina's argument and contains the
references to Argentina's submissions which Argentina suggests adding.
6.20. We have modified paragraph 7.140 to more accurately reflect Argentina's arguments albeit
in somewhat different terms than suggested by Argentina.
Paragraph 7.142

6.21. The European Union suggests reformulating the last sentence of paragraph 7.142 to ensure
consistency with paragraphs 7.138 and 7.141, which indicate that Recital 4 relates to Article 2(5)
of the Basic Regulation. Argentina does not comment on this request.
6.22. We have amended the last sentence of paragraph 7.142 in accordance with the
European Union's request.
Paragraph 7.146

6.23. Argentina requests the addition of language at the end of paragraph 7.146 to clarify its
arguments before the Panel. The European Union objects to Argentina's request as it considers the
proposed changes unnecessary and considers the paragraph in its current form to be satisfactory.
The European Union submits that if the Panel were to accept the redundant new text requested by
Argentina, it should also move the content of f ootnote 224 into the main body of the Report and
explain in detail the reason for which Argentina's as sertions are erroneous, as already reflected in
footnote 224.
6.24. We have, in the light of Argentina's request, modified footnote 224 to better reflect
Argentina's arguments.
Paragraph 7.149

6.25. Argentina requests that we add language to paragraph 7.149 in order to more completely
reflect the arguments it presented with respect to the judgments of the General Court. The
European Union objects to Argentina's request. The European Union submits that it is unnecessary
to reproduce in this paragraph all of the arguments presented by Argentina on the judgments of
the General Court given that the following paragraphs directly address all of these arguments.
6.26. We decline to add the language suggested by Argentina, which we do not consider to be
necessary particularly as, in this section, the Panel addresses the relevant arguments submitted by
Argentina with respect to the judgments of the General Court.
Paragraphs 7.149-7.152

6.27. The European Union suggests adding language to paragraphs 7.149-7.152 to reflect the
Panel's conclusion that the judgments confirm that the EU authorities are not "required" or
"mandated" to act in any particular way, which is already reflected in paragraphs 7.167-7.168.
Argentina opposes this request, noting that in this section of its Report, the Panel only examines
the judgments in relation to the issue of the re lationship between the first two subparagraphs of
Article 2(5) of the Basic Regulation. Argentina takes the view that paragraphs 7.167-7.168 relate
to a different issue; the conclusion in these paragraphs therefore cannot merely be transposed in
paragraphs 7.149-7.152 and the latter cannot include any conclusion regarding the issue whether

the authorities are "required" or "mandated" to act in a particular way without examining this issue
in detail.
6.28. We agree with Argentina, and therefore decline the European Union's request.
Paragraph 7.150

6.29. Argentina requests that the Panel add a footnote in the second sentence of paragraph 7.150
to refer to the relevant paragraphs of the ju dgments. The European Union does not comment on
this request.
6.30. We have included footnote references to the relevant paragraphs of the judgments at issue.
Footnote 227 to paragraph 7.150

6.31. Argentina requests that, in footnote 227 to paragraph 7.150, the Panel include a reference
to its response to Panel question No. 98. The European Union does not object to Argentina's
request in this regard, provided that the rest of the footnote and of the paragraph are not
modified.
6.32. We have included the additional reference requested by Argentina.
Paragraph 7.155

6.33. Argentina requests that the Panel modify paragraph 7.155 in order to clarify that it also
submits that Article 2(5) of the Basic Regulation is inconsistent with Article 2.2 of the
Anti-Dumping Agreement regardless of whether it is mandatory. The European Union opposes this
request because, it submits, this point is already addressed in paragraphs 7.173 and 7.174,
whereas paragraph 7.155 presents the Panel's understanding of Argentina's main claim, which is
that Article 2(5) mandates the investigating authorities to act in a certain way.
6.34. As indicated above, in our response to Argentina's request concerning paragraph 7.112, the
Interim Report already included several references to the alternative line of argumentation that
Argentina would have us reflect in paragraph 7.155, and we have added such a reference in a new
paragraph, paragraph 7.118. Moreover, footnote 229 to paragraph 7.155 already referred to
Argentina's alternative line of argumentation. In light of the foregoing, we do not consider it
necessary to modify paragraph 7.155 as requested by Argentina. We have, instead, amended
footnote 229 to clarify it and to refer back to paragraph 7.118.
Paragraph 7.165

6.35. Argentina requests the Panel to identify in a footnote the examples of EU determinations
supporting the statement contained in paragraph 7.165. The European Union does not comment
on this request.
6.36. We have amended paragraph 7.165 and adde d a footnote to add greater precision to the
discussion of the examples of EU determination cited by Argentina.
Paragraph 7.166

6.37. The European Union suggests reformulat ing the final sentence of paragraph 7.166.
Argentina does not comment on this request.
6.38. We have revised the final sentence of paragraph 7.166 in the light of the European Union's
comment.
Paragraph 7.172

6.39. The European Union suggests reformulating paragraph 7.172 to clarify the conclusion that,
under Article 2(5) of the Basic Regulation, the authorities may use the listed sources of
information to establish an investigated producer/exporter's costs in constructing its normal value,

but are not required to do so. Argentina objects to this request as it considers that the paragraph
as currently worded is clear and does not need to be modified.
6.40. We note that the European Union did not explain the reason for its suggested revision. In
our view, paragraph 7.172 is sufficiently clear. Accordingly, we see no reason to modify it.
Paragraphs 7.173 and 7.174

6.41. The European Union suggests merging paragraphs 7.173 and 7.174 and treating the
arguments of Argentina addressed in these paragrap hs as different formulations of the same legal
interpretation. Argentina takes the view that the two paragraphs deal with different arguments and
requests that the Panel reject this request.
6.42. We reject the request of the European Union. Paragraphs 7.173 and 7.174 address
different, alternative arguments submitted by Argentina with respect to what it must establish for
its "as such" claims to succeed.
Paragraph 7.174

6.43. The European Union suggests breaking up the second sentence of paragraph 7.174 into
separate sentences because the present formulation may create some confusion as to what "as
discussed above" refers to. Argentina considers that paragraph 7.174 is clear and does not need to
be modified.
6.44. We have amended paragraph 7.174 to eliminate the risk of confusion identified by the
European Union.
Paragraph 7.240

6.45. Argentina requests that paragraph 7.240 be modified to include the word "alleged" before
the words "distortion arising out of government actions or circumstances". The European Union
objects to this request, noting that Argentina acknowledged in its reply to Panel question No. 43
that its export tax system has a significant "impact on soybean prices as an input material for
biodiesel".
6.46. We decline to make the change requested by Argentina. Paragraph 7.240 discusses
distortions in the abstract as they might relate to the second Ad Note to Articles VI:2 and VI:3 of
GATT 1994, rather than articulating any conclusion s with respect to Argentina's export tax system
in particular.
Footnote 421 to paragraph 7.249

6.47. The European Union suggests that it would be more accurate in footnote 421 to
paragraph 7.249 to preface the word "regulated" with the word "directly". Argentina requests the
Panel to reject this modification because, in its view, the parties did not dispute that the domestic
prices of soybean are not regulated.
6.48. In light of the considerations raised by the parties, we have reformulated the last sentence
of footnote 421 to paragraph 7.249.
Paragraph 7.257

6.49. The European Union suggests that the Pane l add a sentence at the end of paragraph 7.257
to reflect Argentina's acknowledgement that the prices used by the EU authorities "would have
been the prices paid by the Argentine producers of biodiesel in the absence of the export tax
system, possibly with small variations depending on the particular terms of each transaction." In
the European Union's view, this addition would make the description of the facts in that paragraph
more accurate. Argentina objects, asserting that it did not agree that the price to be paid by
exporters would be the reference price minus fobbing costs.

6.50. We see no basis for making the change suggested by the European Union. The paragraph at
issue contains a brief restatement of pertinent as pects of the findings of the EU authorities,
whereas the addition suggested by the European Union concerns Argentina's arguments before the
Panel, which are addressed elsewhere in the Report.
Paragraphs 7.261-7.269

6.51. Argentina requests the Panel to complete its reasoning with respect to its second "as
applied" claim concerning Article 2.2.1.1 of the Anti-Dumping Agreement. In Argentina's view, its
second claim is of a different nature to its first cl aim. In Argentina's view, a finding on this second
claim would be necessary to preserve its rights at subsequent stages of the proceeding. The
European Union does not consider that Argentina's request is justified. In the European Union's
view, in light of its finding in paragraph 7.249, the Panel is justified in concluding in
paragraph 7.269 that a finding on a logically identical claim under Article 2.2.1.1 of the
Anti-Dumping Agreement is not necessary for the effective resolution of the dispute.
6.52. We reject Argentina's request. For the reasons explained in paragraph 7.269, we maintain
our view that a finding on Argentina's second claim under Article 2.2.1.1 of the Anti-Dumping
Agreement is not necessary for the effective resolution of this dispute.
Paragraph 7.293

6.53. The European Union requests that we delete the words "pursuant to Article 2.1" from the
first sentence of paragraph 7.293 given that these words are not mentioned in the text of
Article 2.4 of the Anti-Dumping Agreement. Argent ina requests that we reject the request of the
European Union. Argentina considers that the Euro pean Union misreads the sentence at issue and
that the sentence is accurate.
6.54. Although the sentence at issue did not, as the European Union suggests, state that the
opening sentence of Article 2.4 refers to Article 2. 1, in order to avoid any risk of confusion, we
have omitted the words "pursuant to Article 2.1" from the first sentence of paragraph 7.293.
Footnote 511 to paragraph 7.296

6.55. The European Union suggests that the Panel delete the text in footnote 511 starting with
"[w]e note, however …". The European Union does not see the connection between this text and
the reference to the panel report in EU – Footwear (China), nor between this text and the sentence
in paragraph 7.296 to which footnote 511 is appended. Argentina requests the Panel to reject the
request of the European Union. According to Argent ina, the text that the European Union seeks to
delete is related to the content of paragraph 7.296.
6.56. The text that the European Union seeks to delete in footnote 511 to paragraph 7.296
reflects a nuance that is not otherwise reflected in the attendant quotations and considerations in
paragraph 7.296. As we explain in that paragr aph, the subject matter of Article 2.4 can be
contrasted with that of Articles 2.1, 2.2, and 2.3, which pertain to the methodology of determining
the normal value and the export price. However, as we explain in footnote 511 to that paragraph,
the fourth and fifth sentences of Article 2.4 pertai n to the construction of the export price under
Article 2.3. Omitting this nuance would dilute th e accuracy of the Panel's discussion. Nonetheless,
in order to avoid any risk of confusion, and since the text referred to by the European Union is not
directly connected to the reference to EC – Footwear (China) in the same footnote, we have
moved this text to a new footnote at the end of the following sentence (footnote 512).
Paragraphs 7.303 and 7.304

6.57. In the evaluation of Argentina's claim under Article 2.4 of the Anti-Dumping Agreement, the
Interim Report made reference to certain findings of the panel in EC – Fasteners (China) (Article
21.5 – China) . On 18 January 2016, the Appellate Body issued its Report in the same dispute. In
this Report, the Appellate Body addressed, inter alia, the findings of the EC – Fasteners (China)
(Article 21.5 – China) panel referred to in this Panel's Interim Report. This being the case, on 5
February 2016, the Panel amended paragraph 7.303 and included a new paragraph (now
paragraph 7.304) in order to reflect the reasoning of the Appellate Body, and invited the parties to

provide their comments, if any, on these revi sions. Argentina provided comments, and the
European Union provided comments on Argentina's comments.
6.58. Argentina does not request any changes to the revised paragraph 7.303, but makes three
sets of requests for revisions to paragraph 7.304. First, Argentina takes issue with the statement
in that paragraph that, in EC – Fasteners (China) (Article 21.5 – China) , the "Appellate Body
agreed with the panel that, in the context of an investigation in which the analogue country
methodology is applied, the investigating authority is not required under Article 2.4 to adjust for
differences in costs where this would lead it to adjust back to the costs in the NME industry that it
had found to be distorted". 22 Argentina considers that rather than agreeing with the panel, the
Appellate Body faulted the panel for the lack of ca re and detailed evaluation in assessing whether
the investigating authority had complied with its duty to determine whether the adjustments
requested were warranted pursuant to Article 2.4. As a consequence, Argentina requests that we
replace the term "agreed" in the first sentence with the term "found". Second, Argentina considers
that the Appellate Body's findings in EC – Fasteners (China) (Article 21.5 – China) do not stand for
the "broad, unqualified and far-reaching" prop osition that methodological approaches for
establishing the normal value cannot be challenged under Article 2.4 as "differences affecting price
comparability" without more, as – in Argentina's view – the Panel's language seems to suggest.
Rather, Argentina considers that the Appellate Body (like the panel) found that recourse to the
analogue country methodology did not relieve the investigating authority from the obligation to
make a fair comparison under Article 2.4, and th e Appellate Body clarified the conditions under
which a determination as to whether adjustme nts are warranted should be made. Argentina
therefore suggests that we make certain change s to the last sentence of paragraph 7.304,
specifically that we qualify the term "proposition " in that sentence with the term "general", and
that we add "provided that the fair comparison requirement is not affected" at the end of that
sentence. Finally, Argentina requests that we qualify the term "distortion" in footnote 527 to
paragraph 7.304 with the term "alleged", that we replace the term "mitigated" in that footnote
with the term "found", and that we qualify the te rm "replace" with the term "improperly" in the
same footnote.
6.59. The European Union only comments on Argentina's requests for revisions concerning the
footnote to paragraph 7.304. In this respect, th e European Union notes that the Panel had already
used the word "mitigated" elsewhere in the Report and that Argentina had not expressed any
comment in this respect in its initial requests for review. Further, the European Union considers
that the term "found", suggested by Argentina, does not accurately reflect the meaning expressed
by the relevant sentence, and suggests that any change should use the terms "eliminated" or
"addressed". The European Union also asks us to reject Argentina's request to qualify the term
"distortion" with the term "alleged" on grounds that the relevant sentence describes the actions
taken by the investigating authorities as opposed the parties', or the Panel's, assessment of
whether the distortion was "alleged" or real. Finally, the European Union asks us to reject
Argentina's request to qualify the term "replace" with the term "improperly" on grounds that the
relevant sentence is simply describing facts and does not assess whether the actions of the
investigating authority were "proper".
6.60. We made certain changes to the language of paragraph 7.304 and the corresponding
footnote in light of Argentina's comments an d the European Union's comments thereon. In
particular, we have modified the first sentence of paragraph 7.304. In this respect, we note
however that both the panel and the Appellate Body in EC – Fasteners (China) (Article 21.5 –
China) considered that, in the context of an investigation in which the analogue country
methodology is applied, the investigating authority is not required under Article 2.4 to adjust for
differences in a manner that would lead it to adjust back to the costs in the NME industry that it
had found to be distorted, thereby undermining the use of the analogue country methodology. The
footnote to paragraph 7.304 already highlighted the differences in the approaches adopted by the
panel and Appellate Body; we modified our text to provide even greater clarity in this respect. We
decline to qualify certain language in the footnote by adding "alleged" and "improperly" before
"distortion" and "replace", as requested by Argentina, because the language at issue reflects
certain factual aspects of the EU authorities' determination rather than findings of the Panel.
However, we replaced the term "mitigated" by "a ddressed" to better reflect the EU authorities'
determination. Finally, we modified the last sentence of paragraph 7.304 to better reflect our
understanding of the essence of the Appellate Body's findings in EC – Fasteners (China) (Article

22 Emphasis added.

21.5 – China) and of its relevance to the present disput e. As a result, we also amended the first
sentence of paragraph 7.305.
Footnote 581 to paragraph 7.337

6.61. The European Union notes that in footnote 581 to paragraph 7.337, the reference to the
panel report in Thailand – H-Beams relates to subparagraphs (i) and (ii) of Article 2.2.2 of the
Anti-Dumping Agreement, whereas the present dispute involves subparagraph (iii) of Article 2.2.2.
Argentina considers the European Union's observation inapposite because the paragraph of the
panel report in Thailand – H-Beams points out the connection between Article 2.2.2(iii) and the
preceding subparagraphs of Article 2.2.2.
6.62. Paragraph 7.112 of the panel report in Thailand – H-Beams discusses the "chapeau and
overall structure" of Article 2.2. 2 of the Anti-Dumping Agreement. We therefore decline to amend
that reference. However, we have omitted an inaccurate reference to EU – Footwear (China) in the
same footnote, identified by the European Union.
Paragraph 7.347

6.63. The European Union suggests that the Panel include the word "particularly" before the
clause beginning "when reliable data concerni ng …" in paragraph 7.347. According to the
European Union, this would be more consistent with footnote 579. Argentina objects on the ground
that the modification suggested by the European Union is unnecessary.
6.64. In order to avoid any risk of misunderstanding, we substituted the word "might" for the
word "may" in the sentence referred to by the European Union.
Paragraph 7.361

6.65. The European Union submits that paragraph 7.361 inaccurately attributes to the Appellate
Body in US – Zeroing (EC) a quotation ("that is, a margin established consistently with Article 2").
In response, Argentina notes that the language identified by the European Union is not part of the
quotation in paragraph 7.361.
6.66. We see no reason to modify paragraph 7.361. The text referred to by the European Union
does not appear in quotation marks, nor does it misrepresent the quotation from US – Zeroing
(EC) extracted in paragraph 7.361.
Paragraph 7.370

6.67. Argentina requests that the Panel modify paragraph 7.370 to reflect the fact that its claims
under Articles 3.1 and 3.4 should be read jointly with the claims under Articles 3.1 and 3.5. The
European Union disagrees with Argentina's request, arguing that footnote 618 already makes the
same point.
6.68. We reject Argentina's request. Paragraph 7.370 and footnote 618 to the same paragraph
already make clear the link between Argentina's claims under Articles 3.1 and 3.4, on the one
hand, and its claims under Articles 3.1 and 3.5, on the other.
Paragraphs 7.416-7.422

6.69. Argentina submits that the Panel's finding that the EU authorities failed to base their
evaluation of production capacity and capacity utilization on positive evidence and failed to conduct
an objective examination of the impact of dumped imports on the domestic industry insofar as it
relates to these two factors only provides a partial resolution of the matter at issue. Argentina
considers that to ensure a complete resolution of the dispute, it is also necessary for the Panel to
make a finding regarding the issue whether the EU authorities acted inconsistently with Article 3.4
in their definition of capacity and capacity ut ilization. The European Union does not comment on
this request.

6.70. Argentina has not demonstrated that findings with respect to its allegation concerning the
EU authorities' definition of capacity utilization are necessary to the resolution of the dispute
between the parties in light of the Panel's conclusions in paragraphs 7.413 and 7.415. We
therefore maintain our view that we need not make such findings.
Paragraph 7.429

6.71. The European Union suggests adding a reference to the panel reports in China – Raw
Materials (second phase of the preliminary ruling, paragraphs 74 to 76) to this paragraph.
Argentina objects to this suggestion. Argentina argues that it is too late at the interim review
stage to advance new arguments or to refer to prior reports that were not brought to the Panel's
attention earlier.
6.72. We do not consider it necessary to include a reference to the panel reports in China – Raw
Materials and have therefore not made the addition suggested by the European Union.
Paragraph 7.462

6.73. Argentina requests that we clarify that its argument with regard to overcapacity discussed
in paragraph 7.462 focuses on the violation of both Articles 3.1 and 3.5. The European Union does
not provide comments on this request.
6.74. The relevant clarification has been inserted into the text.
Paragraphs 7.463 and 7.465

6.75. The European Union suggests that, in its descr iption of the findings of the EU investigating
authorities, the Panel add footnote references to the relevant documents containing these findings.
Argentina does not comment on this request.
6.76. In the light of the European Union's request, we have inserted relevant footnote references
where appropriate (footnotes 783-785 and 788-790).
Paragraph 7.471

6.77. The European Union suggests adding footnote s indicating the source of certain statements
in paragraph 7.471. Argentina does not comment on this request.
6.78. The relevant footnotes have been inserted in the Final Report (footnotes 798, 800,
and 802).
Paragraph 7.509

6.79. The European Union suggests adding footnote s indicating the source of certain statements
in paragraph 7.509. Argentina does not comment on this request.
6.80. The Panel has made certain changes to paragraphs 7.503, 7.505, 7.508, and 7.509 to
clarify its findings and, in doing so, has added footnotes to identify the source of the statements or
arguments it refers to, where appropriate (footnotes 867, 872-873, and 875-878).
7 FINDINGS
7.1. This dispute concerns European Union meas ures imposing anti-dumping duties on biodiesel
from Argentina, which Argentina challenges on an "as applied" basis, as well as Article 2(5),
second subparagraph, of the Basic Regulation, which Argentina challenges on an "as such" basis.
Argentina's claims proceed under various provisions of the Anti-Dumping Agreement; Articles VI:1,
including subparagraph (b)(ii) thereof, and VI:2 of the GATT 1994; and Article XVI:4 of the World
Trade Organization (WTO) Agreement. The European Union requests that the Panel reject each of
the claims presented by Argentina, and in additi on, requests the Panel to find that certain of
Argentina's claims are not within the Panel's terms of reference.

7.2. We begin by examining the request for a preliminary ruling submitted by the European Union
prior to the filing by Argentina of its first written submission. Thereafter, we consider Argentina's
"as such" claims against Article 2(5), second subparagraph, of the Basic Regulation, before
considering Argentina's "as applied" claims, which pertain to the EU authorities' Provisional
Regulation and Definitive Regulation in the biodiesel investigation. However, before proceeding to
do so, we briefly recall the relevant general principles regarding treaty interpretation, the standard
of review and the burden of proof in WTO disput e settlement proceedings, as laid down by the
Appellate Body.
7.1 General principles regarding treaty interpretation, the applicable standard of review
and burden of proof
7.1.1 Treaty interpretation
7.3. Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of
interpretation of public international law". It is generally accepted that the principles codified in
Articles 31 and 32 of the Vienna Convention are such customary rules.
23
7.1.2 Standard of review
7.4. Panels generally are bound by the standard of review set forth in Article 11 of the DSU, which
provides, in relevant part:
[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. (emphasis added)
7.5. Further to Article 11 of the DSU, Article 17.6 of the Anti-Dumping Agreement sets forth a
specific standard of review applicable to anti-dumping disputes, namely:
(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; and
(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.
7.6. The Appellate Body has stated that the "objective assessment" to be made by a panel
reviewing an investigating authority's determination is to be informed by an examination of
whether the agency provided a reasoned and adequa te explanation as to: (i) how the evidence on
the record supported its factual findings; and (ii) how those factual findings supported the overall
determination.
24
7.7. The Appellate Body has also stated that a panel reviewing an investigating authority's
determination may not undertake a de novo review of the evidence or substitute its judgment for
that of the investigating authority. A panel must limit its examination to the evidence that was
before the agency during the course of the investigation and must take into account all such
evidence submitted by the parties to the dispute. 25 At the same time, a panel must not simply

23 Appellate Body Report, Japan – Alcoholic Beverages II, p. 10.
24 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 186.
25 Ibid. para. 187.

defer to the conclusions of the investigating authority. A panel's examination of those conclusions
must be "in-depth" and "critical and searching".26
7.1.3 Burden of proof
7.8. 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.
27 Therefore, as the complaining party, Argentina bears the burden of
demonstrating that the EU measures it challenges are inconsistent with the provisions of
the covered agreements that it invokes. 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.
28 It is generally for each party asserting a fact to provide proof
thereof.29
7.2 Terms of reference – European Union's request for a preliminary ruling
7.2.1 Introduction
7.9. On 24 November 2014, the European Union submitted a request for a preliminary ruling in
which it objected to the inclusion of certain claims and measures in Argentina's panel request. In
its request, the European Union argued that Argentina's panel request failed to identify the specific
measure(s) at issue, failed to provide a brief summary of the legal basis of the complaint sufficient
to present the problem clearly, and/or added claims that had not been included in Argentina's
request for consultations.
7.10. Specifically, the European Union requested the Panel to find that:
a. the references to "implementing measures and related instruments or practices" in
paragraph 1(A) and footnote 7 of Argentina's panel request, and the reference to
"related measures and implementing measures" in paragraph 1(B) of Argentina's panel
request, fail to "identify the specific measures at issue" as required by Article 6.2 of the
DSU and, as a consequence, any claims with respect to these measures fall outside the
scope of the Panel's terms of reference
30;
b. the use of the term " inter alia " in section 2(A) of Argentina's panel request, in the
description of the provisions of the covered agreements allegedly violated by Article 2(5)
of the Basic Regulation, fails to properly identify the legal basis of the complaint and to
present the problem clearly and, as a consequence, the relevant claims are outside the
Panel's terms of reference
31;
c. paragraph 2(B)(6) of Argentina's panel request, to the effect that the Provisional and
Definitive Regulations are inconsistent with Article 9.3 of the Anti-Dumping Agreement
and Article VI:2 of the GATT 1994, fails to properly identify the legal basis of the
complaint and to present the problem clearly and, as a consequence, falls outside the
Panel's terms of reference
32;
d. the claim in respect of "related … practices" in paragraph 1(A) of Argentina's panel
request (the paragraph that identifies Article 2(5) of the Basic Regulation as a measure
at issue), refers to a measure that was not included in Argentina's consultations request,

26 Appellate Body Reports, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93; US – Lamb,
paras. 106 and 107.
27 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
28 Appellate Body Report, EC – Hormones, para. 104.
29 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
30 European Union's request for a preliminary ruling, paras. 3-9.
31 European Union's request for a preliminary ruling, paras. 11-13.
32 European Union's request for a preliminary ruling, paras. 14-22.

thereby expanding the scope of the dispute and changing the essence of Argentina's
complaint and, as a consequence, falls outside the Panel's terms of reference33;
e. an unnumbered paragraph inserted between paragraphs 2(B)(3) and 2(B)(4) of
Argentina's panel request appears to set forth a new "as applied" claim in respect of
Article 2(5) of the Basic Regulation that was not included in Argentina's consultations
request and expands the scope of the dispute, and which, as a consequence, falls
outside the Panel's terms of reference
34;
f. the claim under Article 9.3 of the Anti-Dumpi ng Agreement against Article 2(5) of the
Basic Regulation in paragraph 2(A)(3) of Argentina's panel request is a new claim that
was not included in Argentina's request for consultations, expands the scope of the
dispute and changes the essence of the compla int, and, as a consequence, falls outside
the Panel's terms of reference
35;
g. the claims under Article VI:1 of the GATT 1994 in paragraphs 2(A)(1) and 2(A)(2) of
Argentina's panel request are new claims that were not included in Argentina's request
for consultations, expand the original scope of the dispute and, as a consequence, fall
outside the scope of the panel's terms of reference36;
h. the claims in paragraph 2(A)(2) of Argentina's panel request that Article 2(5) of the
Basic Regulation is inconsistent with the re quirement in Articles 2.2 and 2.2.1.1 of the
Anti-Dumping Agreement that "the costs used be associated with the production and
sale of the product under consideration" are new claims that were not included in
Argentina's request for consultations, expand the original scope of the dispute and, as a
consequence, fall outside the scope of the Panel's terms of reference
37; and
i. the claim under Article 2.1 of the Anti-Dumping Agreement in paragraph 2(B)(4) of
Argentina's panel request concerning the amount for profits is a new claim that was not
included in Argentina's request for consultations and, as a consequence, falls outside the
scope of the Panel's terms of reference.38
7.11. Argentina responded to the European Union's request on 18 December 2014. 39 The
European Union submitted comments on Argentina's response on 19 January 2015 as part of its
first written submission 40 and both parties further commented on the matter as part of their
subsequent submissions and statements before the Panel. In addition, China and Mexico submitted
comments on the European Union's request as third parties.41
7.12. The European Union's request for a preliminar y ruling pre-dated Argentina's filing of its first
written submission. Argentina submitted that the European Union's objections concerning
"implementing measures and related instruments or practices", "related measures and
implementing measures", the terms " inter alia" and "related practices", and the "as such" claim
against Article 2(5) of the Basic Regulation based on Article 9.3 of the Anti-Dumping Agreement,
were unnecessary because, at the time these obje ctions were made, Argentina had not yet made
any submissions indicating that it was challenging measures on those bases.
42 The European Union
subsequently contended in its first written submission that:
Argentina has abandoned: (1) any claim against " related practices ", mentioned in
Paragraph 1(A) and in Footnote 7 of Argentina's Panel Request; (2) any claim under
an " inter alia " legal basis, mentioned in Paragraph 2(A) of Argentina's Panel

33 European Union's request for a preliminary ruling, paras. 27-30.
34 European Union's request for a preliminary ruling, paras. 31-35.
35 European Union's request for a preliminary ruling, paras. 36-40.
36 European Union's request for a preliminary ruling, paras. 41-44.
37 European Union's request for a preliminary ruling, paras. 45-49.
38 European Union's request for a preliminary ruling, paras. 50-54.
39 Argentina's response to the European Union's request for a preliminary ruling.
40 European Union's first written submission, paras. 11-44.
41 Mexico's third-party submission on the European Union's request for a preliminary ruling; China's
third-party submission, paras. 4-14.
42 Argentina's response to the European Union's requ est for a preliminary ruling, paras. 33, 42, 72, 78,
and 80.

Request; (3) the claim against Article 2(5) of the Basic Regulation based on Article 9.3
of the Anti-dumping Agreement, mentioned in Paragraph 2(A)3 of Argentina's Panel
Request; (4) any distinct " as applied " claim against Article 2(5) of the Basic
Regulation, mentioned in the not-numbered paragraph between paragraphs 2(B)3
and 2(B)4 of Argentina's Panel Request; (5) the claim against Article 2(5) of the Basic
Regulation for the "second reason" mentioned in Paragraph 2(A)2 of Argentina's Panel
Request, namely that the costs used are allegedly not "associated with the production
and sale of the product under consideration"; and (6) the claim against the "profit
determination" based on Article 2.1 of the Anti-Dumping Agreement, mentioned in
Paragraph 2(B)4 of Argentina's Panel Request.
43 (emphasis original; fns omitted)
7.13. On the basis of that understanding, the European Union submitted that the Panel cannot
examine or make any findings on those particular claims, and stated that it would "not address
these claims further, because they are outside the scope of the present dispute".44 Argentina noted
these statements of the European Union, and stated that "these issues appear to be moot and, in
Argentina's view, the Panel therefore does not need to examine them any further".45 Therefore, we
understand the parties to agree that there is no need for us to rule on these aspects of the
European Union's request for a preliminary ruling. In light of Argentina's submissions and in the
absence of claims being made or pursued in rela tion to these aspects of the European Union's
request for a preliminary ruling, we consider them moot. Accordingly, we make no findings on
these aspects of the European Union's request.
7.14. We also note that, in response to the Eu ropean Union's objection concerning "implementing
measures and related instruments or practices" and "related measures and implementing
measures" in paragraph 1(A), paragraph 1(B) and footnote 7 of Argentina's panel request,
Argentina indicated that a ruling by the Panel woul d have no "practical implications for the dispute
at issue".
46 The European Union responded that this "confirms that Argentina has abandoned these
claims" and that its arguments pertaining to the other allegedly abandoned claims applied. 47 In
that context, and in view of our understanding that Argentina has not, in fact, pursued claims
concerning "implementing measures and related instruments or practices", we consider these
aspects of the European Union's request for a preliminary ruling to be moot, and will therefore
make no findings on these aspects.
7.15. Below, we consider and resolve the remaining objections raised by the European Union in its
request for a preliminary ruling.
48
7.2.2 Objection concerning the claim of inconsistency with Article 9.3 of the
Anti-Dumping Agreement in paragraph 2(B)(6) of Argentina's panel request
7.16. The European Union requests that we find paragraph 2(B)(6) of Argentina's panel request to
be inconsistent with Article 6.2 of the DSU, and thus outside the scope of the Panel's terms of
reference.
49

43 European Union's first written submission, para. 12.
44 European Union's first written submission, paras. 13 and 14.
45 Argentina's opening statement at the first meeting of the Panel, paras. 29-31. Argentina stated that
"[f]or most of the claims concerned by this allegation, th e fact is not that Argentina has raised claims that it
decided not to pursue, but that the European Union has raised procedural objections with regard to
non-existent issues". (Argentina's second written submission, para. 6)
46 Argentina's second written submission, para. 7.
47 European Union's second written submission, para . 7 (referring to European Union's first written
submission, para. 13).
48 We note that, in its subsequent submissions to the Panel, the European Union raises a jurisdictional
objection with respect to Argentina's claims under Articles 3.1 and 3.5 of the Anti-Dumping Agreement as they
pertain to the EU authorities' evaluation of return on investments. See below, para. 7.389.
49 European Union's request for a preliminary ruling, paras. 15-22. We note that the European Union
stated in its first written submission that Argentina has clarified that this claim is conditioned upon the success
of Argentina's claims under Article 2 and, therefore, that Argentina's Article 9.3 claim "is of very limited value
for the present dispute". The European Union nonetheless "invites the panel to cons ider whether the claim is
properly within its terms of reference". (European Un ion's first written submission, paras. 41 and 42). We
understand from this that the European Union persists with its jurisdictional objection with respect to this
claim.

7.2.2.1 Main arguments of the parties
7.2.2.1.1 European Union
7.17. The European Union submits four arguments in support of its assertion that
paragraph 2(B)(6) of Argentina's panel request is inconsistent with the requirement in Article 6.2
of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the
problem clearly".
50
7.18. First, the European Union argues that panel requests must specify which specific
subparagraph of a provision is alleged to be in fringed where the provision contains different
subparagraphs containing different sets of obligations. 51 Accordingly, the failure of Argentina to
specify in paragraph 2(B)(6) which of the chapea u or three subparagraph of Article 9.3 of the
Anti-Dumping Agreement is alleged to be infringed is inconsistent with Article 6.2 of the DSU.
7.19. Second, the European Union argues that the allegation in paragraph 2(B)(6) that it
"imposed and levied anti-dumping duties in exce ss of the margin of dumping that should have
been established" does not articulate clearly the exact claim that Argentina advances. 52 For the
European Union, this allegation could refer either to a challenge to the comparison between the
anti-dumping duty and the margin of dumping (e.g . as a result of a numerical mistake in setting
the anti-dumping duty), or to a challenge to the method of calculation of the margin of dumping
itself.
7.20. Third, assuming arguendo that the claim in paragraph 2(B)(6) pertains to the method of
calculation of the margin of dumping itself, the European Union argues that it is unclear which
aspect of this calculation is challenged by Argentina's claim.
53 In particular, the European Union
points out that the determination of the dumping margin by the EU authorities was based on four
separate components or aspects (the determination of the normal value, the determination of the
export price, the comparison between the two, an d the analysis of certain requests by Argentine
exporters), and that these are dealt with by the challenged measures in four different sections
with four different titles. For the European Union, the failure to specify which component or aspect
of the measures is challenged means that it cannot understand the scope of the challenge it faces.
7.21. Finally, assuming arguendo that the claim in paragraph 2(B)(6) pertains to the fourth
section of the challenged measures entitled "Dumping Margins", the European Union submits that
this section discusses two different and distinct issues pertaining to requests submitted by
Argentine exporters.
54 The failure of Argentina to specify which of those two issues are under
challenge in paragraph 2(B)(6) falls short of the applicable standard under Article 6.2.
7.2.2.1.2 Argentina
7.22. Argentina contends that there is no gene ral requirement under Article 6.2 to refer to the
specific paragraphs of a provision of the covere d agreements that is alleged to be infringed.
55
Rather, according to Argentina, WTO jurisprude nce suggests that the question of whether a
general reference to a treaty provision is adequate to meet the "sufficiency" requirement of
Article 6.2 calls for a case-by-case assessment, taking into account the extent to which such
reference sheds light on the nature of the obligation at issue.56
7.23. In the particular circumstances of this case, Argentina points to an alignment between the
language used in paragraph 2(B)(6) of its panel request and the chapeau of Article 9.3 of the
Anti-Dumping Agreement.57 In particular, the chapeau of Article 9.3 states that "the amount of the
anti-dumping duty shall not exceed the margin of dumping as established under Article 2", and

50 European Union's request for a preliminary ruling, paras. 15 -22; first written submission,
paras. 39-42.
51 European Union's request for a preliminary ruling, para. 16.
52 European Union's request for a preliminary ruling, para. 17.
53 European Union's request for a preliminary ruling, para. 19.
54 European Union's request for a preliminary ruling, paras. 20 and 21.
55 Argentina's response to the European Union's request for a preliminary ruling, para. 47.
56 Argentina's response to the European Union's request for a preliminary ruling, para. 48.
57 Argentina's response to the European Union's request for a preliminary ruling, para. 49.

paragraph 2(B)(6) of Argentina's panel request states that there is a violation of Article 9.3
"because the European Union imposed and levied an ti-dumping duties in excess of the margin of
dumping that should have been established in ac cordance with Article 2". In the light of this
textual alignment, Argentina submits that it is clear that the claim set out in paragraph 2(B)(6) of
its panel request is directed at the chapeau of Ar ticle 9.3 of the Anti-Dumping Agreement. In this
regard, Argentina cites the Appellate Body Report in Thailand – H-Beams , in which an explicit
reference to the specific language of Article 3 of the Anti-Dumping Agreement was found to be
sufficient to meet the requirements of Article 6.2, without identifying the specific paragraphs of
Article 3 alleged to have been infringed. 58 Moreover, Argentina argues that the conclusion that the
claim is directed at the chapeau is further supported by the fact that the claim relates at the same
time to Article VI:2 of the GATT 1994.
7.24. In Argentina's view, the nature of the obligation in the chapeau of Article 9.3 of the
Anti-Dumping Agreement clarifies that the claim in paragraph 2(B)(6) of its panel request could
not be construed as pertaining to the method of calculating dumping margins, contrary to the
argument of the European Union.
59 This is because the chapeau of Article 9.3, and Article 9
generally, do not deal with the determination of dumping. Rather, they deal with the imposition
and collection of anti-dumping duties.
7.25. In the light of its other claims concerning the determination of the dumping margin under
Article 2 of the Anti-Dumping Agreement, Argentin a submits that its claim under Article 9.3 of the
Anti-Dumping Agreement logically refers to the le vying of anti-dumping duties that exceed the
margins of dumping that the European Union should have calculated without violating its
obligations under Article 2. 60 In any case, Argentina claims that the European Union has failed to
demonstrate that any ambiguity in its panel request prejudiced the European Union's ability to
defend itself.
61
7.2.2.2 Arguments of the third parties
7.26. China submits that there is no general and mandatory requirement to refer to a specific
subparagraph of a WTO treaty provision, but ra ther, a panel should examine whether a general
reference to a treaty provision meets the requirem ent under Article 6.2 on a case-by-case basis,
taking into account the extent to which such refe rence sheds light on the nature of the obligation
at issue. 62 In China's view, the language of paragraph 2(B)(6) of Argentina's panel request
indicates that the factual basis of the alleged inconsistency with Article 9.3 is that the anti-
dumping duties were levied in excess of the margins of dumping, which connected the challenged
measure with the chapeau of Article 9.3.
7.2.2.3 Evaluation by the Panel
7.27. Pursuant to Article 6.2 of the DSU, the request for the establishment of a panel must,
inter alia, "provide a brief summary of the legal basis of the complaint sufficient to present the
problem clearly". A panel must determine whether a panel request is sufficiently clear on the basis
of an objective examination of the panel request as a whole, as it existed at the time of filing, and
on the basis of the language used therein 63, that is, "'on the face' of the panel request". 64 Parties'

58 Argentina's response to the Europe an Union's request for a preliminary ruling, para. 50 (referring to
Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para 4.24, in turn referring to
Appellate Body Report, Thailand – H-Beams, para. 90).
59 Argentina's response to the European Union's request for a preliminary ruling, para. 53.
60 Argentina's response to the European Union's re quest for a preliminary ru ling, para. 54. Argentina
reiterated its position in para. 9 of its second written submission.
61 Argentina's response to the European Union's request for a preliminary ruling, para. 57.
62 China's third-party submission, para. 8.
63 Appellate Body Report, EC and certain member States – Large Civil Aircraft , paras. 641 (referring to
Appellate Body Reports, US – Carbon Steel , para. 127; US – Oil Country Tubular Goods Sunset Reviews ,
paras. 164 and 169; US – Continued Zeroing , para. 161; and US – Zeroing (Japan) (Article 21.5 – Japan) ,
para. 108), and 642).
64 Appellate Body Report, US – Continued Zeroing , para. 161 (quoting Appellate Body Report, US –
Carbon Steel, para. 127).

submissions and statements during the panel proceedings cannot "cure" defects in the panel
request.65
7.28. As a minimum requirement, the panel re quest must list the provision(s) of the covered
agreement(s) claimed to have been violated. 66 There may be situations, however, where such
listing is not "sufficient to present the problem clearly", for instance, where the provisions contain
multiple and/or distinct obligations.67 On the other hand, there may be situations where a general
reference to a treaty provision is sufficient under Article 6.2. 68 Thus, the determination of
conformity with Article 6.2 must be undertaken on a case-by-case basis, taking account of the
nature of the measure(s) at issue, and the manner in which it is (or they are) described in the
panel request, as well as the nature and scope of the provision(s) of the covered agreements
alleged to have been violated.
69
7.29. Finally, in order to "present the problem clearly", a panel request must "plainly connect" the
challenged measure(s) with the provision(s) claimed to have been infringed such that a
respondent can "know what case it has to answer, and … begin preparing its defence".
70
7.30. With this understanding of the relevant principles, we now address the objection raised by
the European Union with respect to the claim under Article 9.3 of the Anti-Dumping Agreement set
forth in paragraph 2(B)(6) of Argentina's panel request.
7.31. Paragraph 2(B)(6) of Argentina's panel request states that Argentina considers that the
anti-dumping measures imposed by the Europe an Union on imports of biodiesel, and the
underlying investigation in that regard, are inconsistent with:
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 because
the European Union imposed and levied anti -dumping duties in excess of the margin
of dumping that should have been established in accordance with Article 2 of the
Anti-Dumping Agreement.
The question before us is whether this text suffices to "provide a brief summary of the legal basis
of the complaint sufficient to present the problem clearly".
7.32. The text of paragraph 2(B)(6) refers to Article 9.3 of the Anti-Dumping Agreement. That
Article consists of a chapeau and three subparagraphs, each of which sets out different obligations.
Taken in isolation, the reference to Article 9.3 in paragraph 2(B)(6) of Argentina's panel request
may cause some confusion over which particular obligation contained therein is the object of the
claim. However, paragraph 2(B)(6) contains an additional narrative referring to "anti-dumping
duties in excess of the margin of dumping that should have been established in accordance with
Article 2 of the Anti-Dumping Agreement". This narrative is clear enough to align it with the text of
the chapeau of Article 9.3, which states that "[ t]he amount of the anti-dumping duty shall not
exceed the margin of dumping as established under Article 2". Thus, in our view, this additional
narrative clarifies that the obligation in Article 9.3 at issue is that contained in the chapeau of the
provision. Our understanding is further confirmed by the reference in paragraph 2(B)(6) of
Argentina's panel request to Article VI:2 of the GATT 1994. That provision provides, in relevant
part, that "a contracting party may levy on any dumped product an anti-dumping duty not greater
in amount than the margin of dumping in respec t of such product". The similarity between that
provision and the chapeau of Article 9.3 of the Anti-Dumping Agreement provide a further
indication that the reference to Article 9.3 in paragraph 2(B)(6) of Argentina's panel request
concerns the obligation contained in the chapeau.

65 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 787 (referring to
Appellate Body Reports, EC – Bananas III, para. 143; and US – Carbon Steel, para. 127).
66 Appellate Body Reports, Korea – Dairy , paras. 123 and 124 (referring to Appellate Body Reports,
Brazil – Desiccated Coconut , fn 21, p. 22, DSR 1997:I, p. 186; EC – Bananas III , fn 13, paras. 145 and 147;
and India – Patents (US), fn 21, paras. 89, 92, and 93); and US – Carbon Steel, para. 130.
67 Appellate Body Report, China – Raw Materials , para. 220 (referring to Appellate Body Reports, Korea
68 Appellate Body Reports, US – Countervailing and Anti-Dumping Measures (China) , para. 4.17; US –
Carbon Steel, para. 130 (referring to Appellate Body Report, Korea – Dairy, para. 124).
69 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.17.
70 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 162 (quoting
Appellate Body Report, Thailand – H-Beams, para. 88).

7.33. Turning to the structure of Argentina's panel request, we note that paragraph 2(B)(6) of
that request is part of a series of claims concerning the anti-dumping measures imposed by the
European Union on imports of biodiesel from Argentina. In particular, it is preceded by claims
under Article 2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 pertaining to
alleged failures in the calculation of the cost of production and in the construction of the normal
value for the producers under investigation, as well as those pertaining to the fairness of the
comparison between the export price and the normal value. It is in this context that Argentina
subsequently claims in paragraph 2(B)(6) that "the European Union imposed and levied anti-
dumping duties in excess of the margin of dumping that should have been established in
accordance with Article 2 of the Anti-Dumping Ag reement." When read in this context, it is
apparent that the claim in paragraph 2(B)(6) of Argentina's panel request is premised on a
number of other claims pertaining to Article 2 of the Anti-Dumping Agreement. In our view, it is
sufficiently clear from this context that Argentina makes a claim in paragraph 2(B)(6) of its panel
request that the alleged inconsistencies with Article 2 in the calculation of the margin of dumping
led, in turn, to the levying of an amount of anti-dumping duty that exceeds the level at which the
margin of dumping would have been established if the disciplines of Article 2 had been properly
observed.
7.34. For the foregoing reasons, we reject the European Union's request and conclude that the
claim under Article 9.3 of the Anti-Dumping Agreement set forth in paragraph 2(B)(6) of
Argentina's panel request falls within our terms of reference.
7.2.3 Objection concerning the claims of inconsistency with Article VI:1 of the
GATT 1994 in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request
7.35. The European Union submits that Argentina's claims under Article VI:1 of the GATT 1994
against Article 2(5) of the Basic Regulation in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel
request fall outside the scope of the Panel's terms of reference as they are new claims which were
not included in Argentina's request for consultations, and which expand the scope of the dispute.
71
7.2.3.1 Main arguments of the parties
7.2.3.1.1 European Union
7.36. The European Union contends that Argentina's request for consultations did not contain any
claims based on Article VI:1 of the GATT or any claims regarding Article 2(5) of the Basic
Regulation based on the GATT 1994 more generally.
72 For the European Union, the claims under
Article VI:1 set out in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request expand the
original scope of the dispute, and there are no facts that suggest that these new claims might
reasonably be said to have evolved from the consultations. 73 In particular, the European Union
submits that nothing prevented Argentina from presenting the same claims in the request for
consultations, as is evidenced by the fact that the request for consultations contains other claims
regarding the same provision. Further, the Europe an Union asserts that the addition of these new
claims is indicative of Argentina's view that this provision has a different scope to the provisions of
the Anti-Dumping Agreement listed in its request for consultations, and thus, the "essence" of
these respective provisions and claims is different.
74

71 European Union's request for a preliminary ruling, paras. 41-44. We note that the European Union
stated in its first written submission that Argentina has not developed its Article VI:1 of the GATT 1994 claims
against Article 2(5) of the Basic Regulation in the course of the proceedings, and that Argentina's claims in this
regard are reliant on its other claims pertaining to Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement.
The European Union adds that this being the case, the claims are of very limite d relevance for the present
dispute. The European Union nonetheless invites the Panel to consider whether this claim is properly within its
terms of reference. (European Union's first written su bmission, paras. 43 and 44). We understand from this
that the European Union persists with its jurisdictional objection with respect to these claims.
72 European Union's request for a preliminary ruling, para. 41.
73 European Union's request for a preliminary ruling, para. 42.
74 European Union's request for a preliminary ruling, para. 43.

7.2.3.1.2 Argentina
7.37. Argentina first notes that it has limited the claims set out in paragraphs 2(A)(1) and 2(A)(2)
of its panel request to Article VI:1(b)(ii) of the GATT 1994. 75 In addition, Argentina submits that
nothing prevents it from adding provisions that are identical in scope to an existing claim on which
consultations were held. 76 Argentina considers that the claim does not expand the scope of the
dispute, and, in its view, a comparison of the text and context of that provision, and the provisions
of the Anti-Dumping Agreement cited in its request for consultations, demonstrates that those sets
of provisions do not differ in essence or scope.
77 Argentina draws on criteria mentioned by the
panel in China – Broiler Products to argue that there is a strong connection between the panel
request and the request for consultations due to the obligations at issue (obligation to construct
normal value on the basis of the cost of producti on of the producers, and cost in the country of
origin) being the same, and the factual circumstances leading to the alleged violation (failure to
allow, in the costs calculation, for the use of costs in the country of production, and failure to
require that the costs be calculated on the basis of producers' records) being identical.
78 Argentina
also submits that Article VI:1 of the GATT 1994 is cited in its request for consultations in respect of
"as applied" claims that are similar to the "as such" claims at issue. On the basis of the foregoing,
Argentina submits that "consultations were held" with the European Union on Article VI:1(b)(ii) of
the GATT 1994 regarding Argentina's claims under paragraphs 2(A)(1) and 2(A)(2) of its panel
request.
79
7.2.3.2 Arguments of the third parties
7.38. Mexico submits that the Appellate Body has established that Articles 4 and 6 of the DSU do
not require a precise and exact identity between the request for consultations and the panel
request with respect to the "legal basis" of the complaint.
80 According to Mexico, the Panel should
look at whether the allegedly "new claims" actually derive from claims previously identified by
Argentina in the request for consultations, and should consider whether "some connection" exists
between the respective claims.81
7.2.3.3 Evaluation by the Panel
7.39. The European Union's objection concerns th e relationship between the claims set forth in
Argentina's consultations request, on the one hand, and those set forth in its panel request, on the
other.
7.40. Pursuant to Article 7.1 of the DSU, a panel's terms of reference are normally defined on the
basis of the panel request made pursuant to Article 6.2 of the DSU. However, the request for
consultations made under Article 4 of the DSU co nstitutes a prerequisite for the panel request.
82
Articles 4 and 6 of the DSU "set forth a process by which a complaining party must request
consultations, and consultations must be held, before a matter may be referred to the DSB for the
establishment of a panel". 83 Moreover, "consultations provide the parties an opportunity to define
and delimit the scope of the dispute between them". 84 As a result, the request for consultations
circumscribes the scope of the panel request and, therefore, the panel's terms of reference.85
7.41. However, Articles 4 and 6 do not "require a precise and exact identity" between the specific
provisions of the covered agreements identified in the request for consultations, and those

75 Argentina's response to the European Union's request for a preliminary ruling, para. 81.
76 Argentina's response to the European Union's request for a preliminary ruling, para. 83.
77 Argentina's response to the European Union's request for a preliminary ruling, para. 85.
78 Argentina's response to the Europe an Union's request for a preliminary ruling, para. 85 (referring to
Panel Report, China – Broiler Products, para. 7.224).
79 Argentina's response to the European Union's request for a preliminary ruling, para. 86.
80 Mexico's submission on the Eu ropean Union's request for a prel iminary ruling, para. 9 (citing
Appellate Body Report, Brazil – Aircraft, para. 131).
81 Mexico's submission on the European Union's request for a preliminary ruling, para. 11 (citing Panel
82 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 58.
83 Appellate Body Report, Brazil – Aircraft, para. 131.
84 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 54.
85 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 137.

identified in the panel request. 86 This is because a complaining party may come to know of
additional information during consultations – fo r example, it may develop a better understanding
of the operation of a challenged measure – that could warrant revising the list of treaty provisions
with which the measure is alleged to be inconsistent.
87 Thus, it is not necessary that the provisions
referred to in the request for consultations be identical to those set out in the panel request,
provided that the "legal basis" in the panel request may reasonably be said to have evolved from
the "legal basis" that formed the subject of consultations.
88 In other words, the addition of
provisions must not have the effect of changing the essence of the complaint.89
7.42. Paragraphs 2(A)(1) and (2) of Argentina's panel request provide, in relevant part:
Argentina considers that Article 2(5) of the Basic Regulation is inconsistent as such
with, inter alia , the following provisions of the Anti-Dumping Agreement, the
GATT 1994 and the Marrakesh Agreement Esta blishing the World Trade Organization
("Marrakesh Agreement"):
1. Article 2.2 of the Anti-Dumping Agreement and Article VI:1 of the
GATT 1994, because these provisions do not permit to adjust or establish the
cost of production on the basis of data or information other than that in the
country of origin.
2. Articles 2.2, 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the
GATT 1994 for two reasons: first, since these provisions require that the costs
be calculated on the basis of the records kept by the producers under
investigation when such records are in accordance with the generally accepted
accounting principles of the exporting co untry and reasonably reflect the costs
associated with the production and sale of the product under consideration and
do not permit to adjust or replace the costs actually incurred by the producers
under investigation by other costs simply because they are considered to be
artificially low or distorted; secondly, since these provisions require that the
costs used be associated with the production and sale of the product under
consideration.
7.43. The corresponding paragraphs of Argentina's request for consultations appear to be
paragraphs b(1) and (2), which set forth claims under Articles 2.2 and 2.2.1.1 of the
Anti-Dumping Agreement. These two paragraphs in dicate that Argentina is seeking consultations
with respect to:
Article 2(5) of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on
protection against dumped imports from countries not members of the
European Community in that it establishes that if costs associated with the production
and sale of the product under investigation are not reasonably reflected in the records
of the party concerned, they shall be adjust ed or established on the basis of the costs
of other producers or exporters in the same country or, where such information is not
available or cannot be used, on any other reasonable basis, including information from
other representative markets. This measure appears to be inconsistent as such with
the following obligations of the European Union:
1. Article 2.2 of the Anti-Dumping Agreement, which requires that the cost
of production in the country of origin be used to determine the margin of
dumping on the basis of a comparison between the export price and the
production cost plus a reasonable amount for administrative, selling and general
costs and for profits;

86 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 138.
87 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 138.
88 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 138.
89 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice , para. 137; US – Shrimp
(Thailand) / US – Customs Bond Directive, para. 293.

2. Article 2.2.1.1 of the Anti-Dumping Agreement, which requires that costs
normally be calculated on the basis of records kept by the exporter or producer
under investigation … . (emphasis original; fn omitted)
7.44. Neither Article VI:1 nor any other provision of the GATT 1994 is mentioned in these
paragraphs of Argentina's request for consultations.
90
7.45. As Article VI:1 of the GATT 1994 was added as a legal basis for the claims set out in
paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request, we now consider whether the
addition of this provision as a legal basis for those claims changes the essence of the complaint or
whether the legal basis for these claims may reasonably be said to have evolved from the legal
basis that formed the subject of consultations.
7.46. We first consider the texts of the provis ions at issue. Article VI:1 of the GATT 1994
provides, in relevant part
91:
[A] product is to be considered as being introduced into the commerce of an importing
country at less than its normal value, if the price of the product exported from one country
to another:
(b) in the absence of such domestic price, is less than …
(ii) the cost of production of the product in the country of origin plus a
reasonable addition for selling cost and profit. (emphasis added)
7.47. Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement provide, in relevant part, that:
2.2 When there are no sales of the like prod uct in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting
country, such sales do not permit a proper comparison, the margin of dumping shall
be determined by comparison with a comparable price of the like product when
exported to an appropriate third country, provided that this price is representative, or
with the cost of production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits.
…
2.2.1.1 For the purpose of paragraph 2 , costs shall normally be calculated on
the basis of records kept by the exporter or producer under investigation,

90 However, paragraph b(3) of Argentina's consultati ons request alleges that Article 2(5) of the Basic
Regulation violates:
Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization and
Article 18.4 of the Anti-Dumping Agreement, since the European Union did not take all of the
necessary measures to ensure conformity of its laws, regulations and administrative procedures
with the provisions of the GATT 1994 and the Anti-Dumping Agreement. (emphasis added)
We also note that paragraphs (a) 1 and 2 of Argent ina's request for consultations include "as applied"
claims under Article VI:1 of the GATT 1994 with respect to the anti-dumping measures imposed by the
European Union on biodiesel from Argentina and the underlying investigation. These paragraphs indicate that
Argentina is seeking consultations with respect to these measures and allege that they are inconsistent with:
1. Article 2.1, 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of
the GATT 1994, because the European Union did not calculate the costs on the basis of the
records kept by the exporters or producers under investigation and because the European Union
did not properly determine the costs of production;
2. Article 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 ,
because in constructing the normal value, the European Union did not use the production cost in
the country of origin … . (emphasis added)
91 Before the Panel, Argentina clarified that the clai ms in paragraphs 2(A)(1) and 2(A)(2) of its panel
request pertain not to Article VI:1 in its entirety, but rather, are limited to Article VI:1(b)(ii) of the GATT 1994.
(Argentina's response to the European Union's request for a preliminary ruling, para. 81). We must rule on the
European Union's objection on the basis of the text of Argentina's panel request rather than on the basis of
Argentina's representations before the Panel. Nonetheless, the narrative of paragraphs 2(A)(1) and (2) of its
panel request makes it clear that Argentina's claims therein are limited to Article VI:1(b)(ii).

provided that such records are in a ccordance with the generally accepted
accounting principles of the export ing country and reasonably reflect the costs
associated with the production and sale of the product under consideration .
(emphasis added; fn omitted)
7.48. Based on our understanding of the foregoing extracts, we consider that there is a close
correlation between the content – in terms of the obligations imposed – of Articles 2.2 and 2.2.1.1
of the Anti-Dumping Agreement, on the one hand, and Article VI:1(b)(ii) of the GATT 1994, on the
other. In particular, these provisions concern, inter alia, whether a product is to be considered as
being introduced into the commerce of an importing country at less than its normal value by
reference to the cost of production in the country of origin in instances where domestic prices are
unavailable or unsuitable.
7.49. We next consider the texts of the claims in Argentina's request for consultations, on the one
hand, and the corresponding claims in Argentina's panel request, on the other. As noted above,
paragraph 2(A)(1) of Argentina's panel request specifically claims that Article 2(5) of the Basic
Regulation is inconsistent with Article 2.2 of the Anti-Dumping Agreement and with Article VI:1 of
the GATT 1994 on the basis that these provisions "do not permit to adjust or establish the cost of
production on the basis of data or information other than that in the country of origin".
92
7.50. This can be juxtaposed against Argentin a's request for consultations. The consultations
request alleges that whereas Article 2.2 of the An ti-Dumping Agreement "requires that the cost of
production in the country of origin be used to determine the margin of dumping" 93, Article 2(5) of
the Basic Regulation:
[E]stablishes that if costs associated with the production and sale of the product under
investigation are not reasonably reflected in the records of the party concerned, they
shall be adjusted or established on the basis of the costs of other producers or
exporters in the same country or, where such information is not available or cannot be
used, on any other reasonable basis, including information from other representative
markets.
94
7.51. Paragraph 2(A)(2) of Argentina's panel request claims that Article 2(5) of the Basic
Regulation is inconsistent with Articles 2.2 an d 2.2.1.1 of the Anti-Dumping Agreement and with
Article VI:1 of the GATT 1994, on the basis that these provisions:
[R]equire that the costs be calculated on the basis of the records kept by the
producers under investigation when such records are in accordance with the generally
accepted accounting principles of the exporting country and reasonably reflect the
costs associated with the production and sale of the product under consideration and
do not permit to adjust or replace the costs actually incurred by the producers under
investigation by other costs simply because they are considered to be artificially low or
distorted; … [and] that the costs used be associated with the production and sale of
the product under consideration.
95
7.52. This can be juxtaposed against the language of paragraph b(2) of Argentina's consultations
request, which alleges, for the same reasons as under paragraph b(1), that Article 2(5) of the
Basic Regulation is inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement, which
"requires that costs normally be calculated on the basis of records kept by the exporter or
producer under investigation".
7.53. When these claims are compared, it is appare nt to us that they are sufficiently similar in
terms of the alleged circumstances leading to the alleged violation and that the "essence" of these
claims is the same. In particular, the claims under paragraph 2(A)(1) of the panel request
and b(1) of the consultations request both concern the fact that Article 2(5) is inconsistent with an
alleged prohibition against determining the cost of production on a basis other than data or
information in the country of origin. The claims under paragraph 2(A)(2) of the panel request and

92 WT/DS473/5, para. 2(A)(1).
95 WT/DS473/5, para. 2(A)(2).

under paragraph b(2) of the consultations request both take issue with the fact that Article 2(5) of
the Basic Regulation allegedly makes it permissible to determine the cost of production on a basis
other than the records kept by the producers, despite those records conforming to the specified
requirements.
7.54. In view of the foregoing, we consider th at there is a close and clear relationship between
the claims set forth in the request for consultations, on the one hand, and those included in the
panel request, on the other, in terms of the obligations at issue, the provisions cited, the measure
being challenged, and the alleged violation resulting from this measure. Therefore, in our view, the
claims in the panel request may reasonably be said to have evolved from those in the request for
consultations such that the essence of the disp ute has not been changed by the addition of
Article VI:1 as a legal basis for the claims included in the panel request.
96
7.55. For these reasons, we conclude that these claims under Article VI:1 of the GATT 1994 do
fall within our terms of reference.
7.2.4 Objection concerning the claim of inconsistency with Article 2.2 of the
Anti-Dumping Agreement in paragraph 2(A)(2) of Argentina's panel request
7.56. The European Union initially requested that the Panel find that the "as such" claims of
inconsistency against Article 2(5) of the Basic Re gulation with the requirement in Articles 2.2
and 2.2.1.1 of the Anti-Dumping Agreement that "the costs used be associated with the production
and sale of the product under consideration" contained in paragraph 2(A)(2) of Argentina's panel
request are new claims not included in Argentina's request for consultations and, as a result, fall
outside the Panel's terms of reference.
97 Specifically, the European Union contended that these
claims in Argentina's panel request introduce a new legal basis not found in Argentina's
consultations request, namely, Article 2.2 of the Anti-Dumping Agreement, and further, that they
introduce a new type of complaint, namely, the alleged use of costs not "associated with the
production and sale of the product under consideration". 98 As mentioned above, in its first written
submission, the European Union appeared to take the view that Argentina had abandoned the
claim against Article 2(5) of the Basic Regulation for the "second reason" mentioned in
paragraph 2(A)(2) of Argentina's panel request, namely, that the costs used are allegedly not
"associated with the production and sale of the product under consideration".
99 As we discuss
above, the parties appear to concur that this aspect of the European Union's request for a
preliminary ruling is moot.
100 However, we also note that, in its discussion of one of the objections
that were not moot, the European Union stated the following101:
In these circumstances, the question of whether the claims against Article 2(5) of the
Basic Regulation based on Article VI:1 of the GATT are within the Panel's terms of
reference is of very limited value for the present dispute. For this reason, the
European Union invites the Panel to consider whether this claim is properly within its
terms of reference, but will not discuss the issue any further.[*]
[*fn original] 43 The same is true for Argentina' s reference to Article 2.2 of the
Anti-Dumping Agreement, mentioned in Paragraph 2(A)2 of its Panel Request and in
paragraph 133 of its First Written Submission.

7.57. Thus, the European Union appears to call upon the Panel to consider whether Argentina's
reference to Article 2.2 of the Anti-Dumping Agr eement in paragraph 2(A)(2) of its panel request
insofar as it relates to the first basis specified in paragraph 2(A)(2) – namely, the EU authorities'

96 The fact that Argentina could already have included a claim against Article 2(5) of the Basic
Regulation under Article VI:1 of the GATT 1994 in light of , notably, the inclusion of an "as applied" claim under
this provision challenging the anti-dumping measures imposed by the European Union on biodiesel from
Argentina does not, in our view, mean that the Article VI:1 claim against Article 2(5) of the Basic Regulation
could not reasonably be said to have evolved from the co rresponding claims included in Argentina's request for
consultations.
97 European Union's request for a preliminary ruling, paras. 45-49.
98 European Union's request for a preliminary ruling, para. 46.
99 See above, para. 7.12.
100 See above, para. 7.13.
101 European Union's first written submission, para. 44 and fn 43 thereto.

alleged failure to calculate the costs on the basis of the records kept by the producers/exporters
under investigation – is within the Panel's terms of reference. 102 Accordingly, we now consider the
European Union's objection in this respect.
7.2.4.1 Main arguments of the parties
7.2.4.2 European Union
7.58. With respect to its objection pertaining to Article 2.2 of the Anti-Dumping Agreement, the
European Union argues that the allegedly new claims in paragraph 2(A)(2) of Argentina's panel
request expand the scope of the dispute and change the essence of the complaint by introducing a
new legal basis. In particular, the European Union argues that the corresponding portion of
Argentina's request for consultations only included a claim based on Article 2.2.1.1 of the
Anti-Dumping Agreement, rather than on Article 2.2.
103 The European Union submits that the
addition of Article 2.2 could not "'reasonably be said to have evolved' from the consultations" given
that Argentina was fully aware of the European Union's interpretation and application of
Article 2(5) of the Basic Regulation at the time of its consultations request, and was aware of all
the facts that would have allowed it to articulate this claim in its consultations request, particularly
as Argentina's consultations request already included "as applied" claims alleging a violation of
Article 2.2.
104
7.2.4.2.1 Argentina
7.59. Argentina disagrees with the European Union's contention that it added a provision in the
panel request. Argentina argues that paragraph 2(A)(2) of its panel request should not be read by
reference to paragraph b(2) of its request for consultations only. Rather, Argentina submits that
the issue of the calculation of costs for the purpose of the construction of normal value is also
addressed in paragraph b(1) of its request for co nsultations, which refers to Article 2.2 of the
Anti-Dumping Agreement. On this basis, Argentina argues that consultations were held on
Article 2.2 and with respect to the same substantive obligations at issue. Moreover, Argentina
argues, there is a clear and logical connection betw een Article 2.2.1.1 and Article 2.2, the former
being a specific provision governing the calculation of costs for the construction of normal value
while the latter concerns, among other matters, the construction of normal value and its
components, including the cost of production. Argentina submits that consultations on the
calculation of costs for the construction of normal value pursuant to Article 2.2.1.1 logically also
cover the construction of normal value pursuant to Article 2.2, when such costs are being included
in the construction of normal value. Therefore, even assuming that Argentina had only referred to
Article 2.2.1.1 in its consultations request, the inclusion of Article 2.2 in the panel request can
"reasonably be said to have evolved" from the consultations.
105
7.2.4.2.2 Arguments of the third parties
7.60. China submits that Article 2.2 of the Anti-Dum ping Agreement was invoked to challenge
Article 2(5) of the Basic Regulation in both the request for consultations and the panel request. 106
Thus, it appears to China that Argentina has not added a new legal basis in the panel request, but
has merely clarified or reformulated the connection between the challenged measure and the legal
basis. Further, China submits that Articles 4.4 and 6.2 of the DSU set different requirements for
the request for consultations and the panel request; in particular, it is sufficient for a consultations
request to include an indication of the legal basis for the complaint. Therefore, the terms "which
requires" in the consultations request, in contrast with the terms "because" or "for two reasons"

102 Moreover, we recall that the Appellate Body has stated that "the vesting of jurisdiction in a panel is a
fundamental prerequisite for lawful panel proceedings … pa nels must deal with such issues – if necessary on
their own motion – in order to satisfy themselves that they have authority to proceed". (Appellate Body Report,
Mexico – Corn Syrup (Article 21.5 – US), para. 36)
103 European Union's request for a preliminary ruling, para. 46.
104 European Union's request for a preliminary ruling, paras. 45 and 46.
105 Argentina's response to the European Union's request for a preliminary ruling, paras. 87-94.
106 China's third-party submission, para. 12.

used in the panel request, suggest that Argentina's intention in the consultations request was not
to "present the problem clearly" but just to indicate the legal basis of the claim.107
7.2.4.2.3 Evaluation by the Panel
7.61. As we have noted in the previous subsection, the claim set forth in paragraph 2(A)(2) of
Argentina's panel request corresponds to the claim set forth in paragraph b(2) of Argentina's
request for consultations. Hence, Argentina's panel request added a reference to Article 2.2 in a
claim which already cited Article 2.2.1.1.
7.62. In light of the close relationship and – to some extent – even identity between the measure
that is being challenged, the grounds for the alleged violation, and the obligations and provisions
involved, we are of the view that the Article 2.2 claim can reasonably be said to have evolved from
the Article 2.2.1.1 claim set forth in the request for consultations.
108 In particular, with respect to
the obligations at issue, we note that Article 2.2.1.1 is a subparagraph of Article 2.2 and serves to
further refine the obligation set forth under that provision as it provides how the "cost of
production in the country of origin" is to be determined. Moreover, the corresponding paragraphs
of the request for consultations and of the panel request make it clear that Argentina takes issue
in both documents with the fact that Article 2(5) of the Basic Regulation allegedly permits not
constructing the cost of production on the basis of producers' records. The language of Argentina's
panel request clearly implies that the alleged violation of Article 2.2 is closely related to the alleged
violation of Article 2.2.1.1.
7.63. Moreover, we note that Argentina's consultations request already included an "as applied"
claim under Article 2.2 challenging the EU authorities' failure to calculate the costs on the basis of
the records kept by the producers/exporters under investigation similar to the "as such" claim to
which the European Union objects. Argentina's consultations request also included an "as such"
claim under Article 2.2 based on the requirement to construct the normal value using the cost of
production in the country of origin. The fact that Argentina's consultations request already included
these claims under Article 2.2, does not, in our view, mean that the scope of the dispute was
broadened by the addition in its panel request of an "as such" claim under Article 2.2 challenging
the failure to calculate the costs on the basis of the records kept by the producers/exporters under
investigation. In particular, in our view, the addition of a reference to Article 2.2 in a claim already
listing Article 2.2.1.1 is indicative of a further refinement of the legal basis for the claim that was
in the request for consultations. Thus, it does not follow that the addition of Article 2.2 in
paragraph 2(A)(2) of Argentina's panel request could not reasonably have evolved from the
corresponding claim in Argentina's request for consultations on the basis that this provision had
already been cited in the request for consultations in another sense.
7.64. In light of the foregoing, we find that the claim of inconsistency with Article 2.2 of the
Anti-Dumping Agreement set forth in paragraph 2(A)(2) of Argentina's panel request falls within
our terms of reference.
7.65. Having considered the request of the European Union for a preliminary ruling on the terms
of reference of the Panel, we now turn to address the "as such" and "as applied" claims of
Argentina.
7.3 Argentina's claims concerning whether Article 2(5), second subparagraph, of the
Basic Regulation is inconsistent "as such" with Articles 2.2, 2. 2.1.1 and 18.4 of the
Anti-Dumping Agreement, Article VI:1(b)(ii) of the GATT 1994, and Article XVI:4 of the
WTO Agreement
7.3.1 Introduction
7.66. Argentina makes a number of claims pertaining to Article 2(5), second subparagraph, of the
Basic Regulation, both "as such" and with respect to the application of this provision in the EU
anti-dumping measures on biodiesel from Argentina.

107 China's third-party submission, para. 13.
108 We also refer, in this respect, to our considerations in section 7.2.3.3.

7.67. Argentina's claims raise complex questions pertaining to the interpretation of Articles 2.2
and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 that have not
been addressed previously by panels or the Appellate Body concerning the following issues:
a. whether, under Article 2.2.1.1 of the An ti-Dumping Agreement, an investigating
authority may find that a producer/exporter's records do not "reasonably reflect the
costs associated with the production and sale of the product under consideration" on the
ground that the records reflect costs (notably for inputs) that the authority considers to
be abnormally or artificially low due to an alleged distortion; and
b. whether an investigating authority may, under Article 2.2 of the Anti-Dumping
Agreement and Article VI:1(b)(ii) of the GATT 1994, adjust or calculate the
producer/exporter's costs of production by using information pertaining to prices
prevailing on other markets than the market of the country of origin when it has been
determined that a producer/exporter's records do not "reasonably reflect" the costs of
production and sale.
7.68. In this section, we consider Argentina's claims that Article 2(5), second subparagraph, of
the Basic Regulation is "as such" (i.e. independently of its application in specific instances),
inconsistent with the covered agreements.
 We address Argentina's "as applied" claims in the
following section of this Report.
7.69. With respect to its claims concerning Article 2(5), second subparagraph, of the Basic
Regulation "as such", specifically, Argentina claims that:
a. by providing that the authorities shall reject or adjust the cost data of the
producers/exporters as included in their records when those costs reflect prices which
are "abnormally or artificially low" because they are affected by an alleged distortion,
Article 2(5), second subparagraph, of the Basic Regulation is inconsistent with
Article 2.2.1.1 of the Anti-Dumping Agreement; and this violation in turn leads to a
violation of Article 2.2 of the Anti-Dumping Agreement and of Article VI:1(b)(ii) of the
GATT 1994;
b. by providing that the costs shall be adjusted or established in certain cases "on any
other reasonable basis, including information from other representative markets",
Article 2(5), second subparagraph, of the Basic Regulation is inconsistent with Article 2.2
of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994; and
c. as a consequence of these violations, Article 2(5) of the Basic Regulation is inconsistent
with Article XVI:4 of the WTO Agreement and Article 18.4 of the Anti-Dumping
Agreement.
109
7.3.2 Relevant provisions of the covered agreements
7.70. Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement provide as follows:
2.2 When there are no sales of the like prod uct in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting
country, such sales do not permit a proper comparison, the margin of dumping shall
be determined by comparison with a comparable price of the like product when
exported to an appropriate third country, provided that this price is representative, or
with the cost of production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits. (fn omitted)
…

109 Argentina's first written submission, paras. 87, 133-134, 142, and 468-469; second written
submission, para. 252.

2.2.1.1 For the purpose of paragraph 2, costs shall normally be calculated
on the basis of records kept by the exporter or producer under investigation,
provided that such records are in a ccordance with the generally accepted
accounting principles of the exporting co untry and reasonably reflect the costs
associated with the production and sale of the product under consideration.
Authorities shall consider all available evidence on the proper allocation of costs,
including that which is made available by the exporter or producer in the course
of the investigation provided that such allocations have been historically utilized
by the exporter or producer, in particular in relation to establishing appropriate
amortization and depreciation periods and allowances for capital expenditures
and other development costs. Unless already reflected in the cost allocations
under this sub-paragraph, costs shall be adjusted appropriately for those
non-recurring items of cost which benefit future and/or current production, or
for circumstances in which costs during the period of investigation are affected
by start-up operations.[*]

[*fn original]6 The adjustment made for start-up operations shall reflect the costs at the end of
the start-up period or, if that period extends beyond the period of investigation, the most recent
costs which can reasonably be taken into account by the authorities during the investigation.
7.71. Article VI:1 of the GATT 1994 reads, in relevant part:
The contracting parties recognize that dumpin g, by which products of one country are
introduced into the commerce of another country at less than the normal value of the
products, is to be condemned if it causes or threatens material injury to an
established industry in the territory of a contracting party or materially retards the
establishment of a domestic industry. For the purposes of this Article, a product is to
be considered as being introduced into the commerce of an importing country at less
than its normal value, if the price of the product exported from one country to another
…
 ( b) … is less than …
…
(ii) the cost of production of the product in the country of origin plus a reasonable
addition for selling cost and profit.
7.3.3 Factual background
7.72. Article 2 of the Basic Regulation provides, in relevant part:
Article 2
Determination of dumping
A. NORMAL VALUE
1. The normal value shall normally be based on the prices paid or payable, in the
ordinary course of trade, by independent customers in the exporting country.
However, where the exporter in the exporting country does not produce or does not
sell the like product, the normal value may be established on the basis of prices of
other sellers or producers.
…
2. Sales of the like product intended for domestic consumption shall normally be used
to determine normal value if such sales volume constitutes 5% or more of the sales

volume of the product under consideration to the Community. However, a lower
volume of sales may be used when, for example, the prices charged are considered
representative for the market concerned.
3. When there are no or insufficient sales of the like product in the ordinary course of
trade, or where because of the particular market situation such sales do not permit a
proper comparison, the normal value of the like product shall be calculated on the
basis of the cost of production in the country of origin plus a reasonable amount for
selling, general and administrative costs and for profits, or on the basis of the export
prices, in the ordinary course of trade, to an appropriate third country, provided that
those prices are representative.
A particular market situation for the product concerned within the meaning of the first
subparagraph may be deemed to exist, inter alia , when prices are artificially low,
when there is significant barter trade, or when there are non-commercial processing
arrangements.
…
5. Costs shall normally be calculated on the basis of records kept by the party under
investigation, provided that such records are in accordance with the generally
accepted accounting principles of the country concerned and that it is shown that the
records reasonably reflect the costs associated with the production and sale of the
product under consideration.
If costs associated with the production and sale of the product under investigation are
not reasonably reflected in the records of the party concerned, they shall be adjusted
or established on the basis of the costs of other producers or exporters in the same
country or, where such information is not available or cannot be used, on any other
reasonable basis, including information from other representative markets.
7.73. Argentina challenges only the second subparagraph of Article 2(5) above and not any other
part or provision of the Basic Regulation.
110
7.3.4 Main arguments of the parties
7.3.4.1 Argentina
7.74. Argentina argues that the second subparagraph of Article 2(5) contains a rule that:
[W]hen the costs associated with the production and sale of the product concerned
are not reasonably reflected in the records of the producer concerned, that is,
according to the European Union, when the prices of the raw materials included in the
records of the exporters are considered as being abnormally or artificially low because
the market is regulated or because of some alleged distortion, then they must be
adjusted or established on the basis of the costs of other producers in the same
country, or on any other reasonable basis, including information from other
representative markets.
111

110 We use the terminology used by the European Union, which has referred to this provision as the
"second subparagraph of Article 2(5)". Before the Panel, Argentina initially referred to the second
subparagraph of Article 2(5) of the Basic Regulation as the "second paragraph" of this provision, but later
adopted the European Union's terminology. In addition, the European Union notes that the General Court of
the European Union has referred to the same subparagraph as the "second sentence of the first subparagraph"
of Article 2(5) of the Basic Regulation (the General Court refers to the first subparagraph of Article 2(5) as the
"first sentence of the first subparagraph" of this provision).
111 Argentina's first written submission, para. 2. See also Argentina's first written submission, para. 86.

7.75. Argentina adds that this rule is "reflected in the continued and consistent practice of the
European Union"112, but indicates that it is not challenging this alleged consistent practice as a
separate measure at issue.
7.76. In support of its interpretation of the second subparagraph of Article 2(5), Argentina
submits evidence pertaining to the text of this provision, its legislative history, its consistent
application by the EU authorities, and judgments of the General Court of the European Union.
7.77. With respect to the text of the provision at issue, Argentina argues that Article 2(5), first
subparagraph, only repeats the general rule under Article 2.2.1.1 that when the records
reasonably reflect the costs associated with the production and sale of the product under
consideration and are in accordance with generally accepted accounting principles (GAAP), those
records must be used. However, the first subparagraph does not lay down the criteria that must
lead to the determination that the records do no t reasonably reflect the costs. Argentina submits
that it is the second subparagraph of Article 2(5) that gives meaning and content to the situations
in which the records are to be found not to reasonably reflect the costs of production and sale of
the product under investigation. According to Argentina, it is the second subparagraph that leads
to the determination that records do not reasonably reflect costs if the prices for inputs are
artificially or abnormally low due to an alleged distortion. This is clarified by the fact that the
second subparagraph requires the authorities to adjust or establish the costs on any other
reasonable basis, including information from other representative markets, where information from
the domestic market cannot be used. Thus, Argentina argues, the second subparagraph of
Article 2(5) provides the legal basis for disregarding the records of the producers in those
situations.
113 Argentina also argues that Article 2(5), second subparagraph, establishes a
mandatory rule in this respect: where this condition is met, then the second part of the sentence
automatically applies, i.e. the recorded costs must be adjusted or established on another basis,
including potentially, "from other representative markets".
114
7.78. With respect to the legislative history 115 of the second subparagraph of Article 2(5),
Argentina submits that this subparagraph was introduced by Council Regulation 1972/2002 at the
same time as the Russian Federation was granted full market economy status, with the purpose of
allowing the EU authorities to continue to apply non-market economy techniques in investigations
involving products from the Russian Federation. Argentina draws attention to Recital 4 of Council
Regulation 1972/2002, which it submits sheds light on the meaning of Article 2(5), second
subparagraph, by making it clear that it was added in order to provide a legal basis for the
authorities to reject the cost data included in the records when those costs are found to be
"artificially low" or "abnormally low" because they are affected by a "distortion" and to adjust or
replace these costs by data which are not affected by such "distortion".
116 Argentina also refers to
Article 2(3), second subparagraph, of Council Regulation 1972/2002, which was added to clarify
what circumstances could be considered as constituting a "particular market situation". Argentina
argues that, taken together, Recital 4 and the second subparagraph of Article 2(3) clarify that the
opening phrase of the second subparagraph of Arti cle 2(5), viz. "[i]f costs associated with the
production and sale of the product … are not reasonably reflected in the records", refers to
situations where prices are abnormally or artificially low or affected by a distortion.
7.79. With respect to the consistent practice of the EU authorities in applying the second
subparagraph of Article 2(5), Argentina argues that the EU authorities have followed the practice
that if the prices of certain raw materials are, in their view, "abnormally or artificially low" in
comparison with the prices in other markets, that means that the costs associated with the
production and sale of the product under investigation are not reasonably reflected in the
producer's records, notwithstanding the fact that the records may have accurately reported the
actual prices paid by the producers/exporters.
7.80. Argentina refers the Panel to four judgments of the General Court of Justice of the
European Union in which the General Court considered issues pertaining to the application of

112 Argentina's first written submission, para. 2.
113 Argentina's second written submission, paras. 16-20.
114 Argentina's first written submission, para. 55.
115 Argentina refers to this evidence as the "historical perspective". (Argentina's first written submission,
section 4.1.2)
116 Argentina's second written submission, paras. 27-28 and 33.

Article 2(5).117 Argentina argues that these judgments, and particularly the judgment of the Court
in Acron, confirm that the second subparagraph to Article 2(5) covers situations where prices are
regulated or distorted.118
7.81. Argentina claims that Article 2(5), second subparagraph, is inconsistent with Article 2.2.1.1
of the Anti-Dumping Agreement (and, as a consequence, with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994) because it requires the
EU authorities to determine that a producer's records do not reasonably reflect the costs of
production in situations in which the records reflect prices which are artificially or abnormally low,
by reference to prices prevailing in other markets, whereas Article 2.2.1.1 requires that that
determination be solely made by reference to the costs actually incurred by the producer and
reflected in its records.
119 In addition, Argentina submits that even if the authorities had the
discretion alleged by the European Union, the mere fact that Article 2(5), second subparagraph,
provides for the possibility to find that the records do not reasonably reflect the costs on the
ground that costs are artificially or abnormally low would render it inconsistent with
Article 2.2.1.1.
120
7.82. In addition, Argentina claims that Article 2(5), second subparagraph, is inconsistent with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 as it provides
that, where the costs of other producers or exporters in the same country are not available or
cannot be used, the costs shall be adjusted or established on "any other reasonable basis,
including information from other representative markets", i.e. it provides for the use of costs not in
the country of origin in establishing a producer's costs of production.
7.83. By contrast, Argentina argues, Article 2. 2 of the Anti-Dumping Agreement requires that,
when the margin of dumping is established by comparison with a constructed normal value, the
c o m p a r i s o n s h a l l b e m a d e w i t h " t h e c o s t o f p r o d u c t i o n i n t h e country of origin ".
121 Argentina
submits that the term "shall" denotes an obligation, and the term "country of origin" refers to the
exporting country. Article V1:1(b)(ii) of the GATT 1994 similarly refers to "the cost of production of
the product in the country of origin". 122 For Argentina, the "cost of production in the country of
origin" refers to the "price to be paid for the act of producing" in the country of origin, which
necessarily implies that the evidence or data used are those in the country of origin. 123 Assuming
for the sake of argument that evidence outside the country of origin could be used, Argentina
considers that adjustments would need to be made in order to ensure that it correctly reflects the
situation in the country of origin
124, and it would need to be demonstrated how such evidence
reflects the "cost of production" in the exporter's country of origin. 125 On this basis, Argentina
rejects what it considers to be an artificial distinction drawn by the European Union between the
"cost" and the "evidence", whereby evidence from outside the country of origin could be used to
determine the cost of production in the country of origin.
7.84. In this respect, Argentina argues that in Article 2(5), second subparagraph, the "information
from other representative markets" constitutes the evidence which is used to determine the cost of
production. However, the mere fact that evidence is used "for the purposes" of determining the
"cost of production in the country of origin" does not demonstrate that such evidence reflects the
situation in the country of origin. Moreover, Argentina submits that the consistent practice of the
EU authorities actually confirms the absence of a "connection" or "nexus" between the evidence

117 Argentina's first written submission, paras. 80-85; response to Panel question Nos. 23 (para. 59), 26
(para. 81), and 35 (para. 99).
118 Argentina's first written submission, para. 85.
119 See below, paras. 7.186-7.191 for a more detailed summary of Argentina's arguments on the
interpretation of Article 2.2.1.1.
120 Argentina's opening statement at the first meeting of the Panel, para. 74; response to Panel question
No. 24, para. 69; second written submission, paras. 147-149.
121 Argentina's first written submission, para. 138. (emphasis original)
122 Argentina's first written submission, para. 139.
123 Argentina's second written submission, para. 154 (referring to Panel Report, EC – Salmon (Norway) ,
para. 7.481).
124 Argentina's second written submission, para. 156; response to Panel question No. 20, paras. 55-58.
125 Argentina's second written submission, para. 158.

used, namely the information from other representative markets, and the cost of production in the
"country of origin".126
7.85. Argentina argues that, to establish that a measure is "as such" inconsistent with the
covered agreements, it is not necessary to demonstrate that it leads to WTO-inconsistent results in
each and every case. Rather, it is sufficient to demonstrate that the rule will necessarily lead to
WTO-inconsistent results. Thus, Argentina considers that, whether Article 2(5), second
subparagraph, grants discretion to the authorities or not is irrelevant; insofar as Article 2.2
prohibits the construction of normal value on a basis other than the cost of production in the
country of origin, the fact that Article 2(5), second subparagraph, provides for the use of a basis
other than the cost of production in the country of origin renders that measure inconsistent with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
127
7.86. In any event, Argentina argues, Article 2(5), second subparagraph, does not give the
authorities "broad discretion" as is claimed by the European Union. Argentina submits that, under
Article 2(5), second subparagraph, in every case where domestic information is not available or
cannot be used, the authorities have to adjust or replace the costs on any other reasonable basis,
including information from other representative markets.
128 Argentina argues that "any other
reasonable basis" necessarily refers to information outside the country of origin 129, and that "other
representative markets" necessarily is not "the cost of production in the country of origin".
Argentina asserts that the consistent practice of the EU authorities confirms the absence of
discretion since, in the cases referred to by Argentina, where the authorities have found that prices
were "artificially low" or "abnormally low" because of a distortion, they have used information
other than information from the country of origin.
130
7.3.4.2 European Union
7.87. The European Union argues that, to succeed in its "as such" claims, Argentina must
establish that Article 2(5) requires the EU authorities to act inconsistently with the relevant
provisions of the covered agreements in all cases.
131 According to the European Union, neither the
first nor the second subparagraph of Article 2(5) of the Basic Regulation mandates the
EU authorities to act in any particular manner but, quite to the contrary, both provisions allow the
EU authorities discretion.132
7.88. The European Union submits that th e scope, meaning and content of the second
subparagraph of Article 2(5) are clear "on its face ", and that therefore, the consistency of this
measure with the covered agreements must be assessed on the basis of the text of the legal
instrument alone. 133 The European Union considers that Argentina attributes to the second
subparagraph of Article 2(5) a meaning not found in its text. 134 The European Union argues that it
is clear from the text of Article 2(5) that the determination whether a producer's records
"reasonably reflect" the costs of production and sales is made under the first subparagraph of
Article 2(5), and not under the second subparagraph of that provision.
135 The European Union
asserts that the second subparagraph only describes what the authorities can do when one of the
provisos of the first subparagraph is not met, and in such situations, gives them alternative
options for establishing or adjusting the costs of production. The European Union also submits that
the text of Article 2(5) does not include the terms – "abnormally low", "artificially distorted",
"reflect market values", "regulated market" – used by Argentina in describing the alleged
measure; that the second subparagraph does not define the notion of records that "reasonably

126 Argentina's second written submission, paras. 156-158.
127 Argentina's second written submission, paras. 161-166.
128 Argentina's second written submission, para. 149.
129 Argentina's response to Panel question No. 99, para. 66; comments on the European Union's
response to Panel question No. 101, para. 33.
130 Argentina's second written submission, paras. 161-166.
131 European Union's first written submission, paras. 184-187 (quoting from, inter alia, Appellate Body
Report, US – Carbon Steel (India), para. 4.483); second written submission, paras. 38 and 82.
132 European Union's opening statement at the first meeting of the Panel, para. 61.
133 European Union's first written submission, paras. 74 and 78 (quoting from Appellate Body Report, US
– Corrosion-Resistant Steel Sunset Review, para. 168, referring in turn to Appellate Body Report, US – Carbon
Steel, para. 157).
134 European Union's first written submission, para. 71.
135 European Union's first written submission, para. 78.

reflect costs"; and that it does not impose on the authorities the obligation to treat as
"unreasonable" cost data that are "abnormally or artificially low" or "distorted".136
7.89. The European Union argues that even if the scope, meaning and content of the second
subparagraph of Article 2(5) were not clear "on its face", quod non, none of the other evidence
invoked by Argentina supports Argentina's reading of the measure at issue.
7.90. With respect to the legislative history, the European Union argues that the introduction of
the second subparagraph in 2002 had no impact on the scope, meaning or content of the terms
"reasonably reflects costs" in Article 2(5) since those terms already existed in that Article and the
EU authorities had determined that records did not reasonably reflect costs based on similar
grounds in many cases even prior to that date.
137 The European Union also argues that Recital 4 of
Council Regulation 1972/2002 and the second subparagraph of Article 2(3) are not relevant to the
interpretation of the second subparagraph of Arti cle 2(5) as they pertain to only one of the two
situations under the Basic Regulation where the authorities may construct the normal value, i.e.
where there is a "particular market situation".
138
7.91. With respect to the evidence submitted by Argentina on the "consistent practice" of the
EU authorities applying the measure, the European Union argues that Argentina needs to establish
that: (i) the practice forms an integral part of (i.e. is not distinct from) the measure itself and that
it is necessarily applied in all instances; and (ii) that the practice is required by the measure and
constitutes a binding requirement to apply the measure in the same way in all cases.
139 The
European Union considers that Argentina fails to establish any of these requirements. Moreover,
the European Union argues that the examples of al leged consistent practice of the EU authorities
cited by Argentina do not support its interpretation because: (i) in the precedents cited by
Argentina, the EU authorities invoke the first, rather than the second, subparagraph of Article 2(5)
in the analysis of whether company records "reasona bly reflect" costs; (ii) Argentina cites too few
examples and its examples mostly pertain to the i ssue of dual pricing of gas in Russia; and (iii)
Argentina excludes cases where the EU authoritie s found that company records did not reasonably
reflect costs on grounds other than the artificially low value of inputs.
140
7.92. The European Union argues that the judgmen ts of the General Court of the European Union
cited by Argentina do not support Argentina's assertions because: (i) they make clear that the
determination of whether company records "reasonably reflect" costs is made pursuant to the first
rather than the second subparagraph of Article 2(5); and (ii) they confirm that Article 2(5) entitles
– but does not require – the EU authorities to find that the records do not "reasonably reflect
costs" if the prices are "abnormally or artificially low".
141
7.93. In sum, the European Union argues th at Article 2(5), second subparagraph, is not
inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement because it does not govern the
determination whether producers' costs are reasonably reflected in their records or provide criteria
for the authorities to make such a determination, let alone require them to reach a determination
that the costs are not reasonably reflected in a producer's records in the situations identified by
Argentina. Moreover, the European Union considers that Article 2.2.1.1 does not require an
authority to determine whether a producer's records "reasonably reflect" the costs of production
and sale solely with reference to the costs actually incurred by that producer, but allows it to
examine whether the costs themselves are "reasonable".
142
7.94. With respect to Argentina's claim under Article 2.2 of the Anti-Dumping Agreement, the
European Union argues that Argentina misinterprets Article 2(5), second subparagraph, when it
asserts that this provision establishes a mandatory rule. According to the European Union, this
provision affords the EU authorities broad discretion in choosing between different options to
establish or adjust the costs, imposes no limitation or direction as to what constitutes an "other

136 European Union's first written submission, paras. 79-87.
137 European Union's first written submission, paras. 89-92.
138 European Union's first written submission, paras. 93-98.
139 European Union's first written submission, paras. 118 (quoting from Appellate Body Report, US –
Carbon Steel (India), paras. 4.460, 4.474, 4.476, 4.477, and 4.480), and 119-126.
140 European Union's first written submission, paras. 100 and 102-105.
141 European Union's first written submission, paras. 106-115.
142 See below, paras. 7.194-7.201 for a more detailed summary of the European Union's arguments on
the interpretation of Article 2.2.1.1 of the Anti-Dumping Agreement.

representative market", and does not prescribe that the latter should be a market outside the
country of origin.143 Thus, the European Union submits, the text of Article 2(5), the judgments of
EU courts, and the EU authorities' determinations in prior investigations all show that Article 2(5),
second subparagraph, does not require the authorities to use information from other countries in
all cases, as it does not require them to engage in any particular conduct and, much less, in any
conduct necessarily inconsistent with the covered agreements.
144
7.95. In addition, the European Union argues that, although Article 2.2 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994 require that an investigating authority
determine the costs of production in the country of origin, the evidence t h a t m a y b e u s e d i n
constructing these costs is not subject to this limitation.
7.96. In particular, in respect of Article 2.2 of the Anti-Dumping Agreement, the European Union
submits that the determination of a firm's costs of production in a particular country will typically
require evidence pertaining to that country, but it cannot be excluded that evidence relating to
that determination might originate in other countries. For example, evidence of the cost of imports
might be verified by means of invoices issued by exporters in other countries.
145 Thus, the
European Union contends that there is a conceptual distinction between the "costs", on the one
hand, and the "evidence" pertaining to the determination of those costs, on the other.
146 The
European Union argues that support for the distinction between costs and the evidence pertaining
to the determination of costs can be found in the context of Article 2.2. The European Union refers
in particular to the second sentence of Article 2.2.1.1 in this regard. The European Union notes
that whereas "costs" in Article 2.2 refers to "the country of origin", the requirement to consider "all
available evidence" in Article 2.2.1.1 in the proper al location of such costs is not restricted in that
way
147, and that Article 6.12 of the Anti-Dumping Agreement expressly provides that various
groups outside the country of origin can provide information relevant to the investigation regarding
dumping.148 The European Union argues that the conditional permission in Article 2.2.2 of the
Anti-Dumping Agreement to calculate amounts for administrative, selling, and general costs using
"any reasonable method" supports its understanding, because it implies that Article 2.2, as a
whole, does not impose an absolute prohibition on the use of data on the cost of production from
countries other than the country of origin.
149
7.97. In respect of Article VI:1(b)(ii) of the GATT 1994, the European Union submits that,
pursuant to Article 17.6(i) of the Anti-Dumping Agreement, a criterion of reasonableness applies to
the evidence used by investigating authorities in establishing the exporter's costs in the country of
origin.150
7.3.5 Arguments of the third parties151
7.98. Australia considers that the mandatory/discretionary distinction is relevant to the Panel's
analysis of Argentina's "as such" claims in the present dispute. Australia refers to the
Appellate Body Report in US – 1916 Act , which endorsed the approach developed by GATT panels
that only legislation which mandates WTO-inconsistent conduct can be challenged "as such".
152
Australia submits that this approach was re cently confirmed by the Appellate Body in US – Carbon

143 European Union's first written submission, paras. 174-183; opening statement at the second meeting
of the Panel, paras. 114-118; comments on Argentina's response to Panel question No. 99, paras. 87-91.
144 European Union's first written submission, paras. 184-187.
145 European Union's first written submission, para. 193.
146 European Union's first written submission, paras. 193 and 194.
147 European Union's first written submission, para. 194.
148 European Union's response to Panel question No. 20, para. 28.
149 European Union's first written submission, paras. 197 and 198; second written submission,
paras. 136 and 137.
150 European Union's first written submission, paras. 203 and 204.
151 The third parties' arguments on the interpretation of Article 2.2.1.1 are summarized below, in the
section addressing Argentina's "as applied" claims. In addition, we note that some third parties made
observations on Article 2.2 of th e Anti-Dumping Agreement insofar as it may serve as context to the
interpretation and application of Article 2.2.1.1 of the Anti-Dumping Agreement. (China's third-party response
to Panel question No. 13, paras. 28-31; Colombia's th ird-party submission, para. 20; Russian Federation's
third-party statement, paras. 9-11; Turkey's third-party statement, paras. 10-12). Since those observations
were not connected directly to the present claim, they are not reflected in this section.
152 Australia's third-party response to Panel question No. 19 (referring to Appellate Body Report, US –
1916 Act, paras. 88-89).

Steel (India) , in which the Appellate Body rejected "as such" claims on the basis that the
challenged measure did not require inconsistent conduct but instead was of a "discretionary
nature".153 Australia further notes that Argentina does not challenge the European Union's practice
of application of Article 2(5), but only the provision itself. In this regard, Australia considers that
the Appellate Body's findings in US – Carbon Steel (India) suggest that the practice must not be
distinct and separate from Article 2(5) and that it must require the European Union to engage in
inconsistent conduct.154
7.99. Australia submits that the "country of orig in" requirement in Article 2.2 does not preclude
evidence from being obtained from outside the country concerned. 155 However, the authorities
should explain why the evidence is useful for providing a basis for comparison to determine
dumping margins.
7.100. China submits that, in view of the special link between the first and second subparagraphs
of Article 2(5), these two paragraphs simultaneo usly require the authority to make the same
determination as to whether the company records "reasonably reflect" costs. China considers that,
read together with Recital 4 of Council Regu lation 1972/2002, the second subparagraph of
Article 2(3) and Recital 3 of the same Council Re gulation, the second subparagraph of Article 2(5)
appears to require the investigating authority to re ject the records of the parties concerned on the
ground that "prices are artificially low" or for reasons relating to the situation of the entire market
caused by governmental policy interventions.
156 China argues that this reading is confirmed by the
EU authorities' practice in applying Article 2(5), which shows that they apply the two
subparagraphs simultaneously, and that in determining whether the records reasonably reflect the
costs, they compare the producer's costs with hypothetical costs that would be borne by a
producer in a theoretical market where the prices of relevant inputs were not affected by
governmental policy interventions.
157
7.101. China argues that in order for a rule or norm of general and prospective application to be
found to be inconsistent, "as such", with the Anti -Dumping Agreement, it is not necessary that it
"mandate" a WTO-inconsistent outcome in every case; rather the complainant must provide
evidence demonstrating that, in defined circumstances , the application of the impugned rule will
necessarily lead to a violation of that Member's WTO obligations. China argues that Article 2(5),
second subparagraph, appears necessarily to require the EU authorities to reject records of a
producer/exporter that accurately account for the costs incurred by that producer/exporter for the
sole reason that the recorded costs are "artificially low" compared to the hypothetical costs that
would be incurred in a market unaffected by governmental policy interventions. This being the
case, China argues, the impugned provision is in consistent with Article 2.2.1.1. China also
considers that Article 2(5), second subparagraph, appears to require, in the same situations, the
adjustment of the costs recorded in the producer/exporter's records on the basis of information
outside the country of origin when the costs of other producers/exporters in the same country are
also "artificially low" and other "reasonable" bases are not available. China submits that Article 2.2
of the Anti-Dumping Agreement requires that the cost of production that may be used to construct
normal value must be the cost "in the country of origin".
158 For China, evidence in the form of
prices from outside the country of origin will not itself reflect costs in the country of origin. 159
China considers that by explicitly authorizing the EU authorities to act in violation of Article 2.2 by
using information outside the country of origin, Article 2(5), second subparagraph, is "as such"
inconsistent with Article 2.2 of the Anti-Dumping Agreement.
160

153 Australia's third-party response to Panel question No. 19 (referring to Appellate Body Report, US –
Carbon Steel (India), para. 4.483). Australia submits that the relevance of the mandatory/discretionary
distinction is also supported by Appellate Body Reports, US – Corrosion-Resistant Steel Sunset Review,
para. 89 and US – Section 211 Appropriations Act, para. 259; and Panel Report, US – Section 301 Trade Act,
para. 7.53.
154 Australia's third-party response to Panel question No. 20.
155 Australia's third-party response to Panel question No. 12.
156 China's third-party submission, paras. 85-90.
157 China's third-party submission, paras. 92-99.
158 China's third-party submission, para. 121.
159 China's third-party response to Panel question No. 12, para. 25.
160 China's third-party submission, paras. 79-80 (quoting from Appellate Body Report, US – Oil Country
Tubular Goods Sunset Reviews, para. 172), and 100-108; third-party response to Panel question No. 19,
para. 37.

7.102. Colombia argues that a complainant bringing an "as such" claim must demonstrate that
the challenged law has general and prospective application. 161 Colombia refers to previous panel
and Appellate Body reports that indicate that evidence in support of an "as such" claim is not
limited to the text of the measure, but can include, as appropriate, decisions and jurisprudence of
domestic courts on the meaning of such laws, doctrine issued by legal experts and examples of
application of the challenged law.
162 Thus, Colombia argues, the Panel should take into
consideration all the evidence submitted by the parties in examining Argentina's "as such"
claims.163
7.103. Indonesia submits that previous Appellate Body reports suggest that evidence submitted
by Argentina in support of its "as such" claim beyond the text of the measure, including the
legislative background, administrative practice and domestic court rulings, must be reviewed by
the Panel.
164 Indonesia further submits that Recital 4 of Council Regulation 1972/2002 and the
application of Article 2(5) in previous anti-dumping investigations support the above understanding
of the scope and content of the challenged provision.
165
7.104. Indonesia considers that the second subparagraph of Article 2(5) of the Basic Regulation
establishes a rule which mandates WTO-inconsistent conduct by the European Union and that it
constitutes a WTO-inconsistent condition or requirement in the form of a "non-distortion" test not
provided for in the Anti-Dumping Agreement or in any of the other WTO covered agreements.
166
Indonesia submits that this requirement has been "woven" into the requirement that the costs be
"reasonably reflected" in the records of the investigated producer/exporter. 167 Indonesia also
submits that in case the producer/exporter's costs are found to be distorted, the EU authorities are
required to replace or adjust them with prices from outside the country of origin.168
7.105. With respect to Argentina's claims unde r Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, Indonesia submits that, once an investigating authority
decides to construct the normal value under Article 2.2, it does not have the discretion to use third
country prices or cost data. 169 By unequivocally referring to the cost of production in the "country
of origin", Article 2.2 expressly limits the cost of production to be assessed on the basis of, and to
be based on, costs that exist in the country where the investigated producer/exporter produces
the product under consideration. 170 The text and context of Article 2.2 do not permit any
exceptions to this rule. For Indonesia, once out-of -country evidence is used, the actual cost of the
producer/exporter in the country of origin is disregarded and replaced by the out-of-country
evidence or cost.171
7.106. The Russian Federation notes that amendments to Articles 2(3) and 2(5) of the Basic
Regulation were introduced simultaneously with the granting of full market economy status to the
Russian Federation in 2002. The Russian Federation considers that these amendments were
introduced to allow the EU authorities to use data from markets other than the country of origin
for constructing the normal value. In particular, the amendment to Article 2(5) gave the
EU authorities the right to reject or adjust costs reflected in the producers/exporters' records and
to establish such costs based on "information from other representative markets". The
Russian Federation argues that this practice is similar to the EU authorities' treatment of
non-market economies applied to the Russian Fede ration before it was granted market economy

161 Colombia's third-party submission, paras. 8-10.
162 Colombia's third-party submission, paras. 9-10 (referring to the Appellate Body Report, US – Carbon
Steel, para. 157; and Panel Reports, Mexico – Anti-Dumping Measures on Rice, para. 6.26; and EC – IT
Products, para. 7.108).
163 Colombia's third-party submission, para. 12; third-party statement, para. 4; third-party response to
Panel question No. 20, para. 10.
164 Indonesia's third-party submission, para. 8 (referring to Appellate Body Report, US – Carbon Steel
(India), paras. 4.446 and 4.451).
165 Indonesia's third-party submission paras. 9, 12, 14-15, and 23-32; third-party statement, para. 4;
third-party response to Panel question No. 19, paras. 46-49.
169 Indonesia's third-party submissi on, para. 50; third-party respon se to Panel question No. 12,
paras. 33-36.
170 Indonesia's third-party submission, para. 52.
171 Indonesia's third-party submission, para. 51.

status.172 The Russian Federation argues that the relevance of the mandatory/discretionary
distinction is "highly questionable", because the distinction is not based on any provision of the
covered agreements.
173
7.107. Saudi Arabia submits that the ordinary meaning of Article 2.2 is unequivocal in that it
only permits investigating authorities to construct the normal value on the basis of the "cost of
production in the country of origin" and not on the basis of costs of production in a third country
market or the world market.
174 For Saudi Arabia, this is reflective of the country-specific nature of
an anti-dumping investigation, and is confirme d by the context afforded by Articles 2.2.1.1
and 2.2.2, which suggest that the constructed cost of production and the constructed amounts for
administrative, selling and general costs and for profits must be based on data from the country
under investigation and cannot be established by re ference to out-of-country benchmarks such as
international reference prices.
175
7.108. The United States considers that to succeed in an "as such" claim, a complainant has to
demonstrate that the measure at issue requires an investigating authority to act in a
WTO-inconsistent manner, and that if the measure can be applied in a WTO-consistent manner,
there is no basis for finding a violation. 176 The United States notes that in US – Carbon Steel
(India) the Appellate Body found that the evidence submitted (which included, beyond the text of
the measures, also judicial decisions, legislative history, and evidence of the application of the
measure) did not "establish conclusively that the measure requires an investigating authority to
consistently" act contrary to the WTO obligations.
177 Therefore, the Unites States submits, the
Panel should consider whether Argentina has demonstrated that Article 2(5) of the Basic
Regulation requires that the EU authorities act in a WTO-inconsistent manner.178 The United States
submits that if the text of the challenged law provides discretion to act in a WTO-inconsistent
manner, the complainant must submit additional evidence in order to identify "elements requiring
an investigating authority to engage" in WTO-inconsistent conduct.
179 In this regard, the
United States notes the European Union's arguments that Article 2(5) expressly provides for
discretion for the EU authorities to adjust costs an d that it does not require the EU authorities to
depart from the producers' cost data. The United States considers that the practice of the
application of a challenged measure can be reviewed in considering an "as such" claim, but the
practice must demonstrate that the measure itself mandates WTO-inconsistent action.
180 The
United States takes the view that the additional evidence submitted by Argentina does not show
that the EU authorities are mandated to act in a particular manner.181
7.109. The United States submits that Article 2.2 does not limit the evaluation of record evidence
to evidence obtained in the country of origin, and further, that revising particular elements of the
cost calculation based on record evidence from outside the country of origin would not undermine
the constructed normal value as a proxy for home market value. 182 However, the United States
notes that it is for the investigating authority to demonstrate, based on the record evidence, that
such costs serve as an appropriate comparator or alternative source of data, and that such costs
are only appropriate to the extent that they ai d in determining the cost of production in the
domestic market.183

172 Russian Federation's third-party statement, paras. 4-7.
173 Russian Federation's third-party response to Panel question No. 19, paras. 9 and 10 (referring to
Appellate Body Reports, US – Hot-Rolled Steel, para. 200; and US – Countervailing and Anti-Dumping
Measures (China), para. 4.101).
174 Saudi Arabia's third-party submission, para. 25.
175 Saudi Arabia's third-party submission, para. 29.
176 United States' third-party submission, para. 5; third-party response to Panel question No. 19,
para. 34.
177 United States' third-party submission, para. 7 (referring to Appellate Body Report, US – Carbon Steel
(India), para. 4.483).
178 United States' third-party submission, para. 8.
179 United States' third-party response to Panel question No. 19, para. 35 (referring to Appellate Body
Report, US – Carbon Steel (India), para. 4.483).
180 United States' third-party response to Panel question No. 20, para. 37.
181 United States' third-party submission, para. 6.
182 United States' third-party response to Panel question No. 12, para. 25.
183 United States' third-party response to Panel question No. 12, para. 26.

7.3.6 Evaluation by the Panel
7.3.6.1 Introduction
7.110. Argentina challenges "as such", that is, independently of its application in specific
instances, Article 2(5), second subparagraph, of the Basic Regulation as being inconsistent with
several provisions of the Anti-Dumping Agreem ent and the GATT 1994. Argentina's challenge is
limited to this second subparagraph of Article 2(5) of the Basic Regulation and does not extend to
the first subparagraph of the same provision.
184 In addition, while Argentina has referred to the
EU authorities' consistent practice in applying the second subparagraph of Article 2(5), it has
repeatedly made it clear that it only refers to this practice in support of its interpretation of the
text of Article 2(5), second subparagraph, but does not challenge this alleged practice in and of
itself.
185
7.111. Argentina has used different formulations in describing the scope, meaning and content of
the challenged measure during these proceedings. While we would have preferred greater
consistency in this regard, we do not consider that these variations amount to a failure on its part
to articulate properly, with the requisite eviden ce, the precise content of the measure challenged,
as the European Union alleges.
186
7.112. We understand the essence of Argentina's claims to be as follows:
a. When the EU authorities take the view that the costs reported in an investigated
producer's records reflect prices that are "abnormally low" or "artificially low" because of
what they consider to be a "distortion", Ar ticle 2(5), second subparagraph, of the Basic
Regulation requires the EU authorities to determine that the costs of production and sale
of the product under investigation are not "reasonably reflected" in the producer's
records and, consequently, to reject or adjust those costs in establishing the
investigated producer's costs of production and sale.
187 Argentina submits that this
renders Article 2(5), second subparagraph, inconsistent with Article 2.2.1.1 of the
Anti-Dumping Agreement, and as a consequence, with Articles 2.2 of the same
Agreement and Article VI:1(b)(ii) of the GATT 1994.
b. When the aforesaid determination is made, Article 2(5), second subparagraph, further
requires the EU authorities to adjust or establish the costs on the basis of other
information, including costs other than those prevailing in the country of origin.
Argentina submits that this renders Article 2(5), second subparagraph, inconsistent with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
7.113. Argentina explains that it uses the terms "abnormally" and "artificially" to indicate that the
prices are "lower" as a result of an alleged "distortion" in the form of price regulation, an export
tax, or other government intervention. In addition, Argentina points out that these terms, and the
terms "distorted or affected by a distortion" and "do not reflect market values or prices", which it
uses in describing the measure at issue, are not included in the text of Article 2(5), second
subparagraph, of the Basic Regulation, but have been used in the other evidence it submits to the
Panel to support its understanding of the scope, meaning and content of this provision.
188

184 Argentina's first written submission, para. 34; opening statement at the first meeting of the Panel,
paras. 47 and 69; and response to Panel question No. 23, para. 59.
185 Argentina's response to Panel question No. 23(c), para. 61.
186 European Union's opening statement at the first meeting of the Panel, paras. 53-60; second written
submission, paras. 40-41 (referring to Appellate Body Report, Argentina – Import Measures,
paras. 5.102-5.104).
187 Argentina indicates that, under its interpretation of Article 2(5), second subparagraph, this provision
imposes the following test: "the authorities must determine whether the costs reflect prices that are 'artificially
low' or 'abnormally low' as a result of an alleged 'distortion'". (Argentina's response to Panel question
No. 26(b), para. 83)
188 Argentina explains that the terms "affected by a distortion" are found in Recital 4
of Council Regulation 1972/2002; that the terms "abnormally low" and "artificially low" have been used by the
EU authorities in their "practice", and that the words "artificially low" are also used in Article 2(3) of the Basic
Regulation to describe one type of circumstances in which a "particular market situation" may be deemed to
exist; and that it uses the terms "reflect market values and prices" in its submissions by reference to the

7.114. The European Union takes the view that Argentina challenges two separate measures. 189
However, it is clear to us that Argentina challenges two related aspects of the same measure,
namely Article 2(5), second subparagraph, of the Basic Regulation under two separate but related
claims or groups of claims. For ease of refere nce, we hereafter refer to these claims as two
separate "claims" advanced by Argentina.
7.115. Before we proceed with our analysis, we consider it useful to recapitulate the main points
of disagreement between the parties with respect to the meaning and operation of the measure at
issue as it relates to each of Argentina's two claims.
7.116. First, with respect to Argentina's first claim, which principally involves Article 2.2.1.1 of the
Anti-Dumping Agreement, the European Union disput es that Article 2(5), second subparagraph, is
the provision governing the determination whether the costs of production are "reasonably
reflected" in the producer's records. The European Union argues that the relevant provision for this
determination is the first, and not the second, subp aragraph of Article 2(5). Even with respect to
such a determination under the first subparagraph of Article 2(5), the European Union contends
that the EU authorities are not required to find that the costs are not "reasonably reflected" in the
records in the situations identified by Argentin a (i.e. where the records reflect prices that are
artificially or abnormally low due to a distortion). According to the European Union, the authorities
are merely afforded discretion based on their view of the facts and circumstances of each case.
7.117. With respect to Argentina's second claim, which involves Article 2.2 of the Anti-
Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the disagreement between the
parties centres on "the discretion" afforded to the EU authorities to resort to information prevailing
in "other representative markets", particularly in the situations identified by Argentina. According
to Argentina, the reference to "information from other representative markets" in Article 2(5),
second subparagraph, mandates the use of costs not prevailing in the country of origin. On the
contrary, the European Union contends that th e provision grants wide discretion to the EU
authorities to resort to various options when they have determined under the first subparagraph of
Article 2(5) that the costs are not reasonably reflected in the records.
7.118. Although it considers that Article 2(5), second subparagraph, of the Basic Regulation,
contains a rule or requirement, Argentina argues, in the alternative, that even if the authorities
had the discretion alleged by the European Union, this provision would nonetheless be inconsistent
with Articles 2.2.1.1 and 2.2 of the Anti-Dum ping Agreement and Article VI:1(b)(ii) of the
GATT 1994. With respect to Article 2.2.1.1 of the Anti-Dumping Agreement, Argentina submits
that even if Article 2(5), second subparagraph, only provided for the possibility – and did not
require – that the authorities reject the records in situations where prices are artificially low or
abnormally low, the mere possibility would render it inconsistent with Article 2.2.1.1. With respect
to Article 2.2 of the Anti-Dumping Agreement an d Article VI:1(b)(ii) of the GATT 1994, the fact
that Article 2(5), second subparagraph, provides for the use of a basis other than the cost of
production in the country of origin renders that measure inconsistent with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
190 The European Union
considers that Argentina needs to establish that the measure mandates WTO-inconsistent action
for its claims to succeed.
191
7.3.6.2 General principles relevant to a pa nel's examination of "as such" claims and of
municipal legislation
7.119. We begin our analysis by recalling the relevant principles established under WTO
jurisprudence on the examination of the scope, content and meaning of provisions of the municipal
(i.e. domestic) legislation of a Member, under "as such" claims.

criterion used by the EU authorities when Russian exporters were subject to the hybrid market economy
treatment system before the Russian Federation was granted market economy status in 2002 and by reference
to several cases in which the costs were described by the EU authorities as reflecting "regulated prices which
are far below market prices in unregulated markets". (Argentina's response to Panel question No. 26,
paras. 78-82) (emphasis original)
189 European Union's first written submission, paras. 63-66.
190 See, e.g. Argentina's opening statement at the first meeting of the Panel, para. 74; response to
Panel question No. 24, para. 69; second written submission, paras. 147-149 and 162.
191 See, e.g. European Union's first written submission, paras. 184-187; second written submission,
paras. 38 and 82.

7.120. First, we note that the Appellate Body has emphasized that "as such" challenges to a
Member's legislation are "serious challenges", particularly as Members are presumed to have
enacted their laws in good faith.
192 We also note that, consistent with the generally applicable
principles regarding the burden of proof applicable in WTO disputes, it is for the complainant to
establish the WTO-inconsistency of provisions of domestic law.
7.121. In the recent US – Carbon Steel (India) dispute, the Appellate Body explained that:
With regard to the construction of municipal law, the Appellate Body explained in US –
Hot-Rolled Steel that, "[a]lthough it is not the role of panels or the Appellate Body to
interpret a Member's domestic legislation as such, it is permissible, indeed essential,
to conduct a detailed examination of that legislation in assessing its consistency with
WTO law".[*] As part of their duties under Article 11 of the DSU, panels have the
obligation to examine the meaning and content of the municipal law at issue in order
to make an objective assessment of the matter before it, including an objective
assessment of the facts of the case and th e applicability and conformity with the
covered agreements. This obligation under Article 11 means that panels must conduct
their own objective and independent assessm ent of the meaning of municipal law,
instead of deferring to a party's characterization of such law.[*]
193
[*fn original]1115 Appellate Body Report, US – Hot-Rolled Steel, para. 200.
[*fn original]1116 Appellate Body Report, India – Patents (US), para. 66.
7.122. The Appellate Body has also emphasized that when a panel is called upon to interpret
domestic legislation to decide on its WTO-consistency, the panel should undertake a "holistic
assessment" of all relevant elements, including, for instance, the consistent application of the
relevant domestic laws, pronouncements of domestic courts on the meaning of such laws, the
opinion of legal experts, and the writings of recognized scholars.
194
7.123. In the recent US – Shrimp II (Viet Nam) case, the Appellate Body explained that:
In respect of the types of elements that are required to be considered in order to
establish the content and meaning of municipal law, the Appellate Body has clarified
that, in some cases, the text of the relevant legislation may suffice. In other cases,
the complainant will also need to suppo rt its understanding of the content and
meaning of the measure at issue with eviden ce beyond the text, such as evidence of
consistent application of the measure, pronouncements of domestic courts, and the
writings of recognized scholars.[*] Furthermore, the Appellate Body has held that, "in
ascertaining the meaning of municipal law, a panel should undertake a holistic
assessment of all relevant elements, starting with the text of the law and including,
but not limited to, relevant practices of administering agencies."[*] An examination of
such elements, including legal interpretations given by domestic courts or domestic
administering authorities, may inform the question of whether a measure is consistent
with a WTO Member's obligations under the covered agreements. In respect of the
burden of proof, the Appellate Body has clarified that "[t]he party asserting that
another party's municipal law, as such, is inconsistent with relevant treaty obligations
bears the burden of introducing evidence as to the scope and meaning of such law to
substantiate that assertion."[*]
195

192 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, paras. 172-173:
In our view, "as such" challenges against a Member's measures in WTO dispute settlement
proceedings are serious challenges. … The presumption that WTO Members act in good faith in
the implementation of their WTO commitments is particularly apt in the context of measures
challenged "as such".
193 Appellate Body Report, US – Carbon Steel (India), para. 4.445.
194 Appellate Body Report, US – Carbon Steel (India), para. 4.472 and fn 1157 (referring to Appellate
Body Reports, US – Countervailing and Anti-Dumping Measures (China), para. 4.101; and US – Carbon Steel,
para. 157).
195 Appellate Body Report, US – Shrimp II (Viet Nam), para. 4.32.

[*fn original] 184 Appellate Body Reports, US – Countervailing and Anti-Dumping Measures
[*fn original]185 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China) ,
para. 4.101.
[*fn original]
186 Appellate Body Report, US – Carbon Steel (India), para. 4.446 (quoting Appellate
Body Report, US – Carbon Steel , para. 157, in turn referring to Appellate Body Report, US –
Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335).
7.124. While the Appellate Body has stated that where the meaning of a provision is clear on the
face of its text, the text of the relevant legislation may suffice to establish the content and
meaning of municipal law, in recent disputes the Appellate Body has clarified that:
[I]n order to conduct a "detailed examination" of the measure at issue, and to engage
in an "objective assessment of the matter", it is incumbent on a panel to engage in a
thorough analysis of the measure on its face and to address evidence submitted by a
party that the alleged inconsistency with the covered agreements arises from a
particular manner in which a measure is applied. While a review of such evidence may
ultimately reveal that it is not particularly relevant, that it lacks probative value, or
that it is not of a nature or significance to establish a prima facie case, this can only
be determined after its probative value has been reviewed and assessed.
196 (emphasis
added)
7.125. Our reading of these statements of the Ap pellate Body suggests to us that, depending on
the probative value of the facts and the evidence before it, a panel may well be required to go
beyond the text of the impugned measure regardless of how clear the text might be on its face
and that a panel may be required to make a "holistic assessment" of all the relevant elements.
197
In the present dispute, we understand Argentina to take the position that confining the analysis to
the text of Article 2(5), second subparagraph, itself will not suffice to arrive at a proper
interpretation of this provision. Argentina's interp retation of Article 2(5), second subparagraph, of
the Basic Regulation relies on its reading of the text of this provision, on the legislative history that
led to its introduction, on an alleged consistent practice of the EU authorities in applying it, and on
judgments of the General Court of the European Union.
7.126. With these principles in mind, and mindful of the need to conduct a "holistic assessment"
of the evidence put forward by the parties, we proceed to determine the scope, meaning and
content of the measure at issue, as they pertain to each of Argentina's two claims.
7.3.6.3 Argentina's first "as such" claim under Article 2.2.1.1 of the Anti-Dumping
Agreement and, as a consequence, Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994
7.127. We first consider the text of Article 2(5), second subparagraph, and the other evidence
submitted by Argentina in order to determine whether they support Argentina's allegations
concerning the scope, meaning, and content of this provision.
7.3.6.3.1 Text of Article 2(5), second subparagraph, of the Basic Regulation
7.128. With respect to its first claim, Argent ina's case is premised on its view that the
EU authorities make the determination that the records do not "reasonably reflect" the costs
pursuant to the opening phrase of the second su bparagraph of Article 2(5) ("If costs …"). The
European Union disagrees and argues that th e determination whether a producer's records
reasonably reflect the costs of production and sale of the product is made pursuant to the first
subparagraph of Article 2(5) of the Basic Regulation. In addition, the European Union contends
that neither the first nor the second subparagraph set forth the criteria for the EU authorities to
make that determination.

196 Appellate Body Report, US – Carbon Steel (India), para. 4.454.
197 Moreover, the Appellate Body has indicated that it sees "no merit in the proposition … that a panel
must limit itself, in considering a claim against legislation as such, exclusively to the wording of legislation
itself." (Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes, para. 112) (emphasis
original)

7.129. Although Argentina initially contended that the determination is governed by the opening
phrase of Article 2(5), second subparagraph, Argentina later clarified that its position is that while
Article 2(5), first subparagraph, is – or may be – the provision generally authorising authorities to
reject data when that data does not reasonably reflect the costs of production, the second
subparagraph of the Article is the real provision that identifies the situations where costs are
artificially or abnormally low as a result of a distortion as constituting the basis for the
determination that records do not reasonably reflect the costs. In other words, according to
Argentina, the second subparagraph is the provision requiring the EU authorities to determine that
the records do not "reasonably reflect" the costs when the costs included in the records are
"artificially" or "abnormally low" as a result of a distortion.
198
7.130. The European Union has objected to this subsequent clarification of Argentina, alleging
that it amounts to a "change [in] the factual basis" of Argentina's claims introduced for the first
time in Argentina's responses to the Panel's questions after the second meeting. 199 We decline to
reject this clarification of its arguments by Argentina, as the European Union would have us do.
Contrary to what the European Union suggests, the Working Procedures adopted by the Panel do
not impose a time limit on the submission of arguments to the Panel, but only on the factual
evidence submitted to the Panel. 200 In our view, the clarification is more properly regarded as a
clarification or refinement of Argentina's argumentation, rather than as the introduction of a new
"factual basis". In any event, the European Union has had the opportunity to respond to
Argentina's "clarification", and has done so, such that due process has been preserved.
7.131. We now consider whether the text of Article 2(5) of the Basic Regulation supports
Argentina's reading of that provision. 201 In our view, it does not. Article 2(5) applies to the
calculation of costs of production for purposes of: (i) applying the below-cost ("ordinary course of
trade") test; or (ii) constructing the normal value on the basis of the costs of production. With
respect to the latter, Article 2(3) provides for two separate grounds on which the investigating
authority may be permitted to resort to a constructed normal value: (i) where there are no or
insufficient sales in the ordinary course of trade; or (ii) where sales in the ordinary course of trade
do not permit a proper comparison because of a particular market situation. Article 2(5) applies in
both situations. The first subparagraph of Article 2(5) reproduces almost word for word the first
sentence of Article 2.2.1.1. It sets out the sour ce of the data which is to be preferred in the
construction of a producer's costs of production, i.e. the producer's records, and subjects this
preference to two conditions: that the records be consistent with the generally accepted
accounting principles of the exporting Member, an d that they reasonably reflect the costs of
production.
7.132. The second subparagraph of Article 2(5) begins with a condition: "If costs associated with
the production and sale of the product under investigation are not reasonably reflected in the
records of the party concerned", followed by "they shall be adjusted or established on the basis of
the costs of other producers or exporters in the same country or, where such information is not
available or cannot be used, on any other reasonable basis, including information from other
representative markets." Thus, the text of the second subparagraph of Article 2(5) strongly
suggests that this provision takes effect following a determination under the first subparagraph
that a producer's records do not reasonably refl ect the costs associated with the production and
sale of the product under investigation. This is clear from the use of the word "[i]f", which clearly
refers to the second condition under the first subparagraph. Thus, the plain text of Article 2(5),
second subparagraph, does not support Argentina's contention that it governs the issue as to when
the EU authorities are to reach the conclusion that the producer's records do not reasonably reflect
the costs of production and sale of the product under investigation. On the contrary, on the face of

198 Argentina's response to Panel question Nos. 84, para. 10, and 88(b), para. 30. In its response to
Panel question No. 84, Argentina uses the conditional form ("even if the first subparagraph were to be
regarded as including the authorization for the authorities to conclude that the records do not reasonably
reflect the costs, it is the second subparagraph which provides that such determination has to be made where
costs are distorted") whereas in its response to Panel question No. 88(b), para. 30, Argentina affirmatively
states that the first subparagraph "contains the general principle that the costs must be calculated on the basis
of the records provided that it is shown that such records reasonably reflect the costs associated with the
production and sale of the product under consideration".
199 European Union's comments on Argentina's response to Panel question No. 84, para. 22.
200 Panel's Working Procedures, Annex A-1, para. 8.
201 Although Argentina challenges only the second subparagraph, in light of their close relationship, we
consider it pertinent to consider the meaning and content of both subparagraphs.

the language used therein, this is an issue that is governed by the first subparagraph of
Article 2(5) of the Basic Regulation. We therefore agree with the European Union that the relevant
determination is made under the first subparagraph of Article 2(5) and that the second
subparagraph of the Article comes into play only after a determination has been made under the
first subparagraph that the records do not reasonably reflect the costs associated with the
production and sale of the product under investigation.
7.133. Moreover, we note that the text of the first and the second subparagraphs do not provide
any criteria for the determination of whether the costs are reasonably reflected in a producer's
records. Argentina argues that the options that are given to the investigating authorities under the
second part of the second subparagraph constitute or inform the reasons why information from the
domestic market cannot be used to determine the costs of production.
202 By this, we understand
Argentina to argue that the phrase " shall be adjusted or established on the basis of the costs of
other producers or exporters in the same country or, where such information is not available or
cannot be used, on any other reasonable basis, including information from other representative
markets" in the second subparagraph requires the EU authorities to find that the producer's
records do not reasonably reflect costs where they differ from costs in other representative
markets. Argentina's argument disregards the fact that the phrase quoted above refers not only to
"information from other representative markets", but also to the costs of producers or exporters in
the exporting country, and to "any other reasonable basis".
7.134. In sum, Argentina would have us read the second subparagraph in a manner that is
contrary to its text. We agree with the Euro pean Union that the second subparagraph of
Article 2(5) only lays down what the authorities can do – and allows them to exercise any one of
the listed options for determining the costs of production – after they have made a determination
under the first subparagraph that the records do no t reasonably reflect the costs. We also find, as
a matter of considerable significance to the mean ing and content of both of the subparagraphs of
Article 2(5) that neither subparagraph contains any of the terms or concepts used by Argentina to
describe the measure at issue, i.e. "artificially low", "abnormally low", "distortion", "reflects market
values"; "regulated market", "artificially distorted", etc. None of these terms are found in the text
of the Article to be used by the EU authoritie s as criteria for determining whether the records
reasonably reflect the costs of production and sale of the product under consideration.
7.135. We are therefore of the view that the text of Article 2(5), second subparagraph, does not
support Argentina's allegations with respect to th e scope, meaning, and content of that provision.
Having reached these preliminary conclusions on the basis of the text we now consider the other
evidence submitted by Argentina. We start with the legislative history pertaining to the
introduction of the second subparagraph of Article 2(5).
7.3.6.3.2 Legislative history pertaining to the inclusion of the second subparagraph of
Article 2(5) in the Basic Regulation
7.136. Argentina relies on the legislative history that led to the introduction of the second
subparagraph of Article 2(5) in support of its interpretation of this provision. Argentina refers in
particular to: (i) Recital 4 of Council Regulation 1972/2002, which is the Regulation that added the
second subparagraph to Article 2(5); (ii) the second subparagraph of Article 2(3), which was
added at the same time as the second subparagraph of Article 2(5); and (iii) academic writings
drawing a link between the introduction of th e second subparagraph and the granting, by the
European Union, of market economy status to the Russian Federation.
7.137. Argentina submits that the introduction of the second subparagraph in Article 2(5) by
Council Regulation 1972/2002 gave a specific meaning and content to the condition that the "costs
associated with the production and sale of th e product under investigation are not reasonably
reflected in the records of the party concerned", such that the EU authorities are required to
conclude that the records do not reasonably reflect costs associated with the production and sale
of the product under consideration where they find that the costs of the inputs reflect prices that
are "abnormally or artificially low" in comparison to prices in other markets.
203

202 Argentina's second written submission, paras. 19-22 and 63.
203 Argentina's opening statement at the first meeting of the Panel, paras. 53-58.

7.138. Recital 4 of Council Regulation 1972/2002, which explains the addition of the second
subparagraph of Article 2(5) of the Basic Regulation, states as follows:
I t i s c o n s i d e r e d a p p r o p r i a t e t o g i v e s o m e g u i d a n c e a s t o w h a t h a s t o b e d o n e i f ,
pursuant to Article 2(5) of Regulation (EC) No 384/96 , the records do not reasonably
reflect the costs associated with the production and sale of the product under
consideration, in particular in situations where because of a particular market situation
sales of the like product do not permit a proper comparison. In such circumstances,
the relevant data should be obtained from sources which are unaffected by such
distortions. Such sources can be the costs of other producers or exporters in the same
country or, where such information is not available or cannot be used, any other
reasonable basis, including information from other representative markets. The
relevant data can be used either for adjusting certain items of the records of the party
under consideration or, where this is not possible, for establishing the costs of the
party under consideration.
204 (emphasis added)
7.139. In addition, Argentina refers to the seco nd subparagraph of Article 2(3), which was also
introduced by Council Regulation 1972/2002 and which provides that:
A particular market situation for the product concerned within the meaning of the
preceding sentence may be deemed to exist, inter alia, when prices are artificially low,
when there is significant barter trade, or when there are non-commercial processing
arrangements.
205
7.140. Argentina submits that Recital 4, read together with the new Article 2(3), makes clear
that, pursuant to Article 2(5), second subparagraph, when the costs are "artificially low" or
"affected by a distortion", the costs must be adjusted or established on another basis. Argentina
further submits that Recital 4 does more than merely identify the options available in case the
records do not reasonably reflect the costs, as it also identifies the situations in which recourse to
such options will be made, namely when costs are affected by a distortion.
206 Argentina submits
that even though Recital 4 refers to situations in which normal value is constructed because of the
existence of a "particular market situation", it is relevant for the purposes of interpreting
Article 2(5), second subparagraph, as this provision applies not only in cases in which the
authorities proceed to construct the normal value due to the existence of a "particular market
situation", but also in cases in which the authorities construct normal value following a finding that
there are no or insufficient sales in the ordinary course of trade.
207
7.141. It is clear from Recital 4 that the second subparagraph was added to Article 2(5) to give
some guidance as to what has to be done if "pursuant to Article 2(5)" – which clearly refers to
what is now the first subparagraph208 – "the records do not reasonably reflect the costs associated

204 Council Regulation 1972/2002, (Exhibit ARG-5), Recital 4 (quoted in Argentina's first written
submission, para. 37).
205 Recital 3 of Council Regulation 1972/2002, (Exhibit ARG-5), explains the rationale for the
introduction of the new subparagraph to Article 2(3):
It is prudent to provide for a clarification as to what circumstances could be considered as
constituting a particular market situation in which sales of the like product do not permit a proper
comparison. Such circumstances can, for example, occur because of the existence of barter-trade
and other non-commercial processing arrangements or other market impediments. As a result
market signals may not properly reflect supply and demand which in turn may have an impact on
the relevant costs and prices and may also result in domestic prices being out of line with
world-market prices or prices in other representative markets. Obviously, any clarification given
in this context cannot be of an exhaustive nature in view of the wide variety of possible particular
market situations not permitting a proper comparison.
206 Argentina's response to Panel question No. 84, para. 10.
207 Argentina's response to Panel question No. 29(a), paras. 93-94.
208 We are not convinced by Argentina's argument that these terms refer to Article 2(5) "without any
further precision", as opposed to only to its first subparagraph. (Argentina's response to Panel question No. 84,
para. 9). At the time, Article 2(5) of the previous Regulation had only one sentence, namely, the current first
subparagraph of Article 2(5). Thus, we see merit in the European Union's argument that:
The text of Recital 4 shows that Article 2(5) had already been the legal basis for the
authorities' determination of whether the records reasonably reflected costs, already before the
introduction of the second subparagraph of Article 2(5). This is made clear by the fact that
Recital 4 does not state that the purpose of the introduction of the second subparagraph was to

with the production and sale of the product under consideration", before proceeding to list what
sources may be used in so doing, essentially repeating the language contained in the second
subparagraph. This is consistent with our read ing of the second subparagraph of Article 2(5)
above, namely, that it applies only after the EU authorities have determined that the producer's
records do not reasonably reflect the costs of prod uction and sale of the investigated product, and
that it governs how the EU authorities are to establish the cost of production in such a situation.
7.142. We consider next the second subparagraph of Article 2(3). This new subparagraph
provides guidance as to the meaning of the terms "particular market situation" in the first
subparagraph of the same Article. It provides that such a "particular market situation" may exist
"when prices are artificially low, when there is significant barter trade, or when there are
non-commercial processing arrangements". Reading the second subparagraph of Article 2(3) in
conjunction with Recital 4 suggests that, when they determine that a particular market situation
exists on the basis of the existence, inter alia, of "artificially low" prices due to a distortion, the
authorities should establish or adjust the costs of a producer on a basis that is not affected by that
distortion. However, it is not at all apparent from the text of Article 2(3), even read in conjunction
with that of Recital 4, firstly, that it applies to Article 2(5) and secondly, that these considerations
govern the determination that the costs of production are not "reasonably reflected" in the
producer's records.
7.143. Hence, neither Recital 4 nor the second subparagraph of Article 2(3) support the notion
that the determination that records do not reasonably reflect the costs of production if prices are
artificially low due to a market distortion is made pursuant to the second subparagraph of
Article 2(5) in certain situations, while in other situations, the determination is made pursuant to
the first subparagraph of Article 2(5).
209, 210
7.144. Argentina also argues that the modifications made to Articles 2(3) and 2(5) of the Basic
Regulation by Council Regulation 1972/2002 sought to enable the EU authorities to continue using
non-market economy techniques vis-à-vis the Russian Federation at the same time as the
European Union granted the Russian Federation full market economy status. Argentina refers us to
an article published in a law journal and to excerpts from a book. Argentina also comments on an
article submitted to the Panel by the European Union. 211 The authors of these articles express a

provide, for the first time, to the investigating authorities the power to determine whether the
records reasonably reflect costs. Recital 4 treats this legal authority as a given on the basis of
the pre-existing form of Article 2(5) and states that the addition of the second subparagraph to
Article 2(5) simply gives guidance on the sources to be used in order to identify the relevant
data, when the company records cannot be used. This confirms that the legal basis for the
determination of whether the records reasonably reflect costs is the first subparagraph of
Article 2(5), which is the only provision that existed prior to the addition of the second
subparagraph and the adoption of Recital 4. (European Union's opening statement at the second
meeting of the Panel, para. 28) (emphasis original)
209 In addition, Argentina submits as evidence what appears to be the initial European Commission
proposal for the amendments to the Basic Regulation that would become Council Regulation 1972/2002, and
which contains an "Explanatory Memorandum" by the European Commission to explain the proposal.
(European Commission, Proposal for a Council Regulation further amending Council Regulation (EC)
No. 384/96 on the protection against dumped imports from countries not members of the European
Communities, COM(2002)467 final, 31 December 2002, (Exhibit ARG-57), discussed in Argentina's response to
Panel question No. 84, para. 11 and fn 13). The European Union objects to Argentina's submission of this
exhibit. (European Union's comments on Argentina's response to Panel question No. 84, para. 16). We do not
find it necessary to decide on the European Union's objection given that the Explanatory Memorandum merely
states – in different terms – the same explanations as are provided in Council Regulation 1972/2002.
210 In light of this conclusion, we do not find it necessary to consider in any more detail Argentina's
argument that Recital 4 and/or the second subparagraph of Article 2(3) of the Basic Regulation are relevant to
the interpretation of Article 2(5) as this provision applies not only in cases when the authorities proceed to
construct the normal value on the basis of the existence of a "particular market situation", but also when the
authorities determine to do so on the basis that there are no, or that are insufficient, sales of the investigated
product in the ordinary course of trade on the domestic market.
211 Argentina's first written submission, para. 43 (quoting from Edward Borovikov and Bogdan Evtimov,
"EC's Treatment of Non-Market Economies in Anti-Dumping Law: Its History: An Evolving Disregard of
International Trade Rules; Its State of Play: Inconsistent with the GATT/WTO?" Revue des Affaires
Européennes, 2002, pp. 875 – 896, (Exhibit ARG-6), p. 888; and Olesia Engelbutzeder, EU Anti-Dumping
Measures Against Russian Exporters – In View of Russian Accession to the WTO and the EU Enlargement 2004,
pp. 159 – 160, (Exhibit ARG-7)); second written submission, paras. 29-30 (referring to Tietje et al., "Cost of

personal view that by virtue of Article 2(3), se cond subparagraph, the EU authorities might extend
the non-market economy techniques to market economies as well. However, we consider it
particularly relevant that the authors of these articles do not suggest that the 2002 amendments
to the Basic Regulation require that the EU authorities conclude that the records do not
"reasonably reflect" costs where prices are artificially low, but merely suggest that it enables them
to do so. More importantly, they do not suggest th at it is the second subparagraph of Article 2(5)
that governs the determination whether costs are reasonably reflected in a producer's records.
7.3.6.3.3 Alleged consistent practice of the EU authorities
7.145. We now turn to Argentina's allegations concerning the alleged consistent "practice" of the
EU authorities in applying Article 2(5), second subparagraph. We recall that Argentina does not
challenge the alleged consistent practice in and of itself as a measure at issue but only relies on
this alleged consistent practice as evidence in support of its interpretation of Article 2(5), second
subparagraph. Therefore, we consider whether this alleged practice sheds light on the meaning of
the impugned provision.
7.146. Argentina refers us to decisions of the EU authorities in a series of anti-dumping
proceedings, Potassium Chloride from Belarus, Russia or Ukraine
212, Seamless Pipes and Tubes of
Iron or Steel from Croatia, Romania, Russia and Ukraine 213, Solutions of Urea and Ammonium
Nitrate from inter alia Russia and Algeria214, Ammonium Nitrate from Russia215, Ammonium Nitrate
from Ukraine216, Urea from Russia217, Urea from, inter alia, Croatia and Ukraine218, Certain Welded
Tubes and Pipes of Iron or Non-Alloy Steel from inter alia Russia 219, and the investigation
concerning imports of biodiesel from Argentina and Indonesia220 which is the subject of Argentina's
"as applied" claims in the present dispute.
7.147. Having reviewed the decisions of the EU au thorities cited by Argentina, we find that they
do evidence a certain pattern of the EU authoritie s concluding that the costs of production of the
product under investigation were not reasonably re flected in the records of a producer/exporter in
situations in which the prices of inputs (particularly energy) were lower than world prices, prices in
third country markets, the cost of production of the input, or the price of the same input when
exported from the country of origin (e.g. the Russian Federation). However, we also note that in
almost all these cases, the input or energy pr ices were set and regulated by the government,
which raises in our view doubts as to whether they can be regarded as establishing a "consistent
practice" or as convincing evidence that Article 2(5), second subparagraph, mandates the
authorities to disregard the producer's actual cost s in every case in which the authorities find the
input prices to be artificially low.
221, 222

Production Adjustments in Anti-Dumping Proceedings", Journal of World Trade, 45, No. 5 (2011),
pp. 1071-1102, (Exhibit EU-8)).
212 Council Regulation 1891/2005, (Exhibit ARG-8); Council Regulation 1050/2006, (Exhibit ARG-9).
213 Council Regulation 954/2006, (Exhibit ARG-10); Council Regulation 812/2008, (Exhibit ARG-11);
Council Implementing Regulation 1269/2012, (Exhibit ARG-12).
214 Council Regulation 1911/2006, (Exhibit ARG-13); Council Regulation 238/2008, (Exhibit ARG-14);
Council Implementing Regulation 1251/2009, (Exhibit ARG-15).
215 Council Regulation 236/2008, (Exhibit ARG-16); Council Regulation 661/2008, (Exhibit ARG-17).
216 Council Regulation 237/2008, (Exhibit ARG-18).
217 Council Regulation 907/2007, (Exhibit ARG-19).
218 Council Regulation 240/2008, (Exhibit ARG-20).
219 Council Regulation 1256/2008, (Exhibit ARG-21).
220 Definitive Regulation, (Exhibit ARG-22), p. 2.
221 In some of the cases cited by Argentina, the EU authorities reach the conclusion that the prices for
the input did not reasonably reflect the cost of production for that input rather than the cost of production of
the product under investigation. (Council Regulation 1891/2005, (Exhibit ARG-8), Recital 31; Council
Regulation 1050/2006, (Exhibit ARG-9), Recital 54)
222 We do not find it relevant to our consideration of Argentina's claims that the EU authorities may in
some instances have found that company records did not reasonably reflect the costs on grounds other than
those that are alleged by Argentina, i.e. the artificially low value of the raw materials or inputs. We recall that
"[w]hat Argentina is claiming is that the second subparagraph of Article 2(5) requires the authorities to
conclude that the records do not reasonably reflect the costs if they find that the costs of the inputs reflect
prices that are 'abnormally low' or 'artificially low' because of an alleged distortion on the domestic market",
and that Argentina is not claiming that these constitute the only reason that lead the EU authorities to reach
such a conclusion. (Argentina's opening statement at the first meeting of the Panel, para. 61; see also idem
at 73)

7.148. In any event, we do not consider it ne cessary to examine at any greater length whether
the examples of application cited by Argentina can properly be characterised as reflecting, or be
constitutive of, a consistent "practice" of the EU authorities. This is because the decisions cited by
Argentina do not establish, or even suggest, that the second subparagraph of Article 2(5) is the
provision pursuant to which these determinations of whether the costs were reasonably reflected
in the records were made. The decisions in general refer to Article 2(5) without distinguishing
between its two subparagraphs; contrary to Arge ntina's assertions, the wording used by the
EU authorities in the regulations does not suggest that their determinations that its records did not
"reasonably reflect" a producer's costs were made pursuant to Article 2(5), second
subparagraph.
223 In sum, the determinations submitted to our attention by Argentina do not
undermine our preliminary conclusion, reached abov e on the basis of the text of the impugned
provision and of its legislative history, that the relevant determination is made pursuant to the first
subparagraph of Article 2(5).224
7.3.6.3.4 Judgments of the General Court of the European Union interpreting the
measure at issue
7.149. In support of its interpretation of the second subparagraph to Article 2(5), Argentina
submits evidence pertaining to four judgments of the General Court of the European Union that
were issued on the same date by a bench composed of the same three judges, address similar
claims, and largely share the same reasoning.225
7.150. Of significance for the purposes of our consideration of Argentina's claims, these
judgments do not suggest that the determination whether the costs are reasonably reflected in the
records of a producer is one which is governed by the second subparagraph of Article 2(5). On the
contrary, it is obvious to us that the General Court considered in each case that this determination
is one which is governed by Article 2(5), first subparagraph.
226 We note that Argentina directs our
attention to a statement of the General Court in one of the judgments, which Argentina reads as
supporting its view that the second subparagraph of Article 2(5) is the provision governing the
determination of whether the records reasonably reflect the costs of production and sales in
certain situations.
227 In our view, Argentina reads out of context a statement that the Court
intended to be a mere restatement of its earlier findings, which as we have stated above, do not
support Argentina's position.

223 Argentina's response to Panel question 35(a), para. 99.
224 Moreover, although Argentina submits that there had been no cases in which the EU authorities
concluded that the records do not reasonably reflect costs on the basis of Article 2(5) because the costs were
found to be abnormally or artificially low as a result of an alleged distortion before the inclusion of the second
subparagraph of Article 2(5) in 2002 (Argentina's response to Panel question No. 126, para. 113), the
European Union refers to what it considers is an example of the EU authorities reaching a determination that
the costs were not reasonably reflected in the producer's records by virtue of a distortion of the type alleged by
Argentina prior to the inclusion of the second paragraph of Article 2(5) in the Basic Regulation.
(European Union's first written submission, para. 91 (quoting Aluminum Foil originating in China and Russia
investigation, Council Regulation 950/2001, (Exhibit EU-1), Recital 45)). We agree with the European Union
that this example lends support to the view that Article 2(5), first subparagraph, is the provision pursuant to
which this determination is made. While, as Argentina notes, in Aluminum Foil originating in China and Russia,
the normal value was established on the basis of "facts available" pursuant to Article 18 of the Basic
Regulation, the determination also indicates that the EU authorities sought to rely on the producer's data to the
extent possible.
225 Judgments of the General Court of the European Union of 7 February 2013 in Cases T-235/08
(Acron I), (Exhibit ARG-23); T-118/10 (Acron II), (Exhibit ARG-52); T-459/08, (Exhibit ARG-53); T-84/07,
(Exhibit ARG-54).
226 See General Court of the European Union, Acron I, (Exhibit ARG-23), in particular paras. 39-41;
General Court of the European Union, case T-118/10 (Acron II), (Exhibit ARG-52), in particular paras. 46-48;
General Court of the European Union, case T-459/08, (Exhibit ARG-53), in particular paras. 60-62; General
Court of the European Union, case T-84/07, (Exhibit ARG-54), in particular paras. 53-55.
227 General Court of the European Union, Acron II, (Exhibit ARG-52), para. 72 (cited in Argentina's
second written submission, paras. 41-42; and response to Panel question No. 98, paras. 60- 63):
[T]he WTO rules do not define the expression 'a particular market situation', as defined in the
second sentence of the Article 2(3) of the basic regulation and which may be used as a basis by
the institutions for assessing whether the records reasonably reflect the costs, pursuant to the
second sentence of the first subparagraph of Article 2(5) of the basic regulation, as noted in
paragraphs 44 to 51 above.
The decision in case T-84/07, (Exhibit ARG-54), contains an identical statement at para. 83.

7.151. Similarly, we are unconvinced by Argent ina's suggestion that the judgments confirm, on
the basis of Recital 4 of Council Regulation 1972/2002 that the second subparagraph of
Article 2(5) was introduced to provide a legal basis to reject the cost data contained in the records
where such costs reflect prices that are found to be "abnormally" or "artificially low" because of a
distortion. On the contrary, in the judgments, the General Court reads Recital 4 of Council
Regulation 1972/2002 as we do, i.e. as indicating that the second subparagraph of Article 2(5)
was inserted to provide guidance as to "what has to be done" following a determination that the
records do not reasonably reflect the costs pursuant to the first subparagraph.
7.152. In sum, nothing in the judgments cited by Argentina supports Argentina's reading of the
relationship between the first two subparagraphs of Article 2(5), i.e. that the determination of
whether the producer's records reasonably reflect the costs of production is made pursuant to the
first subparagraph in certain situations and pursuant to the second subparagraph in other
situations. Rather, the four judgments of the General Court cited by Argentina point in the
direction of this determination being made pursuant to the first subparagraph of Article 2(5).
7.3.6.3.5 Conclusion with respect to Arge ntina's first claim that Article 2(5), second
subparagraph, of the Basic Regulation is inco nsistent with Article 2.2.1.1 of the Anti-
Dumping Agreement and, as a consequence, Article 2.2 of the Anti-Dumping Agreement
and Article VI:1(b)(ii) of the GATT 1994
7.153. On the basis of the foregoing, and base d on our "holistic assessment" of the evidence
submitted by Argentina in support of its interpretation of the provision at issue, we conclude that
Article 2(5), second subparagraph, of the Basic Re gulation does not require the European Union to
determine that a producer's records do not reasonably reflect the costs associated with the
production and sale of the product under consideration when these records reflect prices that are
considered to be artificially or abnormally low as a result of a distortion. In fact, the evidence
indicates that Article 2(5), second subparagraph, ap plies to an entirely different issue, i.e. what
has to be done after the EU authorities have determined that a producer's records do not
reasonably reflect the costs of production pursuant to the first subparagraph.
7.154. This aspect of Argentina's claims is associated with its claims of inconsistency under
Article 2.2.1.1 of the Anti-Dumping Agreement and, as a consequence, Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. As we conclude that Argentina
has not established its case regarding the scope, meaning, and content of the challenged measure
on which these claims are based, we find that Argentina has not established that Article 2(5),
second subparagraph, of the Basic Regulation, is in consistent "as such" with Article 2.2.1.1 of the
Anti-Dumping Agreement and, as a consequenc e, Article 2.2 of the same Agreement and
Article VI:1(b)(ii) of the GATT 1994.
7.3.6.4 Argentina's second claim under Ar ticle 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994
7.155. With respect to Argentina's second claim, which involves Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the disagreement between the
parties centres on the "discretion" afforded (or not) to the EU authorities to resort to information
prevailing in "other representative markets" in establishing or adjusting the normal value where
they have concluded that a producer's records do not reasonably reflect the costs of production of
the investigated product, particularly in the situations identified by Argentina. Argentina's claims
are premised on its reading of Article 2(5), seco nd subparagraph, as requiring the EU authorities
to adjust or establish a producer's costs on the basis of information from countries other than the
country of origin if the EU authorities have determined that the records reflect prices which are
artificially or abnormally low as a result of a distortion and if information from other
producers/exporters from the same country is not available or cannot be used.
228 According to
Argentina, the references to "any other reasonable basis" and to "information from other
representative markets" in Article 2(5), second subparagraph, mandate the use of costs not
prevailing in the country of origin.
229 On the contrary, the European Union contends that the

228 See, inter alia, Argentina's first written submission, paras. 134-140.
229 As noted above, however, Argentina also argues, in the alternative, that to the extent that Article 2.2
prohibits the construction of normal value on a basis other than the cost of production in the country of origin,
the fact that Article 2(5), second subparagraph, provides for the use of a basis other than the cost of

provision grants wide discretion to the EU authorities to resort to various options in constructing
the normal value when they have determined under the first subparagraph of Article 2(5) that the
costs are not reasonably reflected in the records.
7.156. We proceed to analyse the text of Article 2(5), second subparagraph, and the other
evidence submitted by Argentina in order to determine whether they support Argentina's
allegations concerning the scope, meaning and content of this provision with respect to this second
claim.
7.3.6.4.1 Text of Article 2(5), second subparagraph, of the Basic Regulation
7.157. We note that the text of Article 2(5), second subparagraph, provides a number of
alternative bases on which the EU authorities may establish or adjust the costs where they have
determined pursuant to the first subparagraph of Article 2(5) that the costs reported in a
producer's records do not "reasonably reflect" the costs of production of the investigated product.
On its face, the phrase of the second subparagraph at issue is formulated in permissive terms. The
first – and it seems, preferred – option is for the EU authorities to use the costs of other producers
or exporters in the country of origin. Where "such information is not available or cannot be used",
they can resort to "any other reasonable basis", including "information from other representative
markets". Hence, the text of Article 2(5), second subparagraph, suggests that the EU authorities
would first seek to establish or adjust a producer's costs of production on the basis of information
originating from producers in the same country. It only permits the authorities to adjust or
establish the costs on the basis of information from other representative markets as one of several
options that they can consider if such information is not available or cannot be used.
7.158. In support of its reading of the text of Article 2(5), second subparagraph, as requiring the
EU authorities to use information outside the country of origin, Argentina argues that as the term
"on any other reasonable basis" necessarily relates to information other than information from
other domestic producers, it can refer only to information from outside the country of origin.
7.159. Certainly, as Argentina argues, the plain text of the second subparagraph makes it clear
that the phrase "any other reasonable basis" refers to something other than "the costs of other
producers or exporters in the same country". Ho wever, in our view, there may be "bases" or
sources of information in the country of origin other than the costs of other producers or exporters
of the investigated products. This is particularly so as Argentina's reading would render the phrase
"including information from other representative markets" inutile. Hence, we are not convinced by
Argentina's argument that the reference to "any ot her reasonable basis" necessarily is a reference
to costs outside the country of origin.
7.160. In addition, we note that Argentina considers that Article 2(5) necessarily implies that the
authorities will use not only "information", but will actually construct the normal value on the basis
of "costs" in countries other than the country of origin when they decide to resort to "information"
from "other representative markets". We note, howe ver, that the text of the second subparagraph
refers to "adjust[ing] or establish[ing]" the costs "on the basis" of "information". As Article 2(5),
second subparagraph, refers to the sources of information (as opposed to the costs themselves)
that may be used to establish an investigated producer or exporter's costs, it does not, in our
view, require the EU authorities to construct the normal value so as to reflect costs prevailing in
other countries. Hence, the text of Article 2(5), second subparagraph, does not, in our view,
support Argentina's argument that this provision requires the EU authorities, where they take the
view that the costs of other domestic producers or exporters are not available or cannot be used,
to construct the normal value on the basis of costs prevailing in other countries than the country of
origin.
7.161. On the basis of the foregoing, we are of the view that the text of Article 2(5), second
subparagraph, does not support Argentina's allegations with respect to the scope, meaning, and
content of that provision as regards Argentina's second claim. Rather, in our view, the text of
Article 2(5), second subparagraph, suggests that it provides the EU authorities with a wide range
of options concerning the information they may use in constructing the normal value where they

production in the country of origin renders that measure inconsistent with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. (See above, paras. 7.85 and 7.118)

have determined that producers/exporters' records do not reasonably reflect the costs of
production.
7.162. Having reached these preliminary conclusions on the basis of the text, we now consider
the other evidence submitted by Argentina.
7.3.6.4.2 Legislative history pertaining to the inclusion of the second subparagraph of
Article 2(5) in the Basic Regulation
7.163. As we have stated above, in the context of addressing Argentina's first claim, our reading
of the second subparagraph of Article 2(3) in conjunction with Recital 4 of Council
Regulation 1972/2002 suggests that when the auth orities determine that a particular market
situation exists on the basis of the existence, inter alia , of "artificially low" prices due to a
distortion, they should establish or adjust the costs of a producer on a basis that is not affected by
that distortion. However, neither the second subparagraph of Article 2(3) nor Recital 4 of Council
Regulation 1972/2002 suggests that the options available to the EU authorities are constrained in
such a way that they must systematically resort to information or prices not in the country of
origin.
230
7.3.6.4.3 Alleged consistent practice of the EU authorities
7.164. We now focus on the application of Article 2(5), second subparagraph, by the
EU authorities as it pertains to Argentina's claim under Article 2.2 of the Anti-Dumping Agreement
and Article VI:1(b)(ii) of the GATT 1994.
7.165. As we have noted above, in our evaluation of Argentina's first claim under Article 2.2.1.1,
Argentina has brought to our attention a number of instances in which the EU authorities, having
determined (primarily in situations in which the prices for certain energy inputs were regulated by
the government) that the producer's records did not reasonably reflect its costs, adjusted the costs
on the basis of information from sources that they did not consider to be affected by the
distortion.
231 The decisions of the EU authorities cited by Argentina contain explicit statements by
the EU authorities to the effect that Article 2(5) allows recourse to data from other representative
markets including third countries.
232 Indeed, in the majority of th e examples cited by Argentina,
the EU authorities adjusted the actual costs in curred by the producer on the basis of prices
prevailing in other countries or on the basis of the price for export of the input concerned. 233 As
discussed below, in the Biodiesel case, the EU authorities adjusted the actual input costs on the
basis of reference prices which, in their view, reflected what the domestic prices for the inputs
would have been in the absence of the distortion s created by the export tax systems maintained
by Argentina and Indonesia.
234
7.166. In our view, while the examples of a pplication cited by Argentina reveal that the
EU authorities may resort to prices prevailing in countries other than the country of origin, any
consistent practice emanating from these examples does not demonstrate that Article 2(5), second

230 We do not find it necessary to form a view as to whether Recital 4 and the second subparagraph of
Article 2(3) are relevant to interpreting Article 2(5), second subparagraph, in a situation where the authorities
decide to construct the normal value on the basis that there are no, or insufficient, domestic sales in the
ordinary course of trade; see above, fn 210.
231 In some of the determinations, the EU authorities explain that one of the primary criteria for the
choice of the basis on which to adjust or establish the input price is that "it reasonably reflects a price normally
payable in undistorted markets". See, e.g. Council Regulation 238/2008, (Exhibit ARG-14), Recitals 28-29;
Council Regulation 236/2008, (Exhibit ARG-16), Recitals 29 and 31.
232 Council Implementing Regulation 1251/2009, (Exhibit ARG-15), paras. 20 et seq.
233 Council Regulation 1891/2005, (Exhibit ARG-8), Recital 31; Council Regulation 1050/2006, (Exhibit
ARG-9), Recital 54; Council Regulation 954/2006, (Exhibit ARG-10), Recitals 97 and 127; Council
Regulation 812/2008, (Exhibit ARG-11), Recital 17; Council Implementing Regulation 1269/2012, (Exhibit
ARG-12), Recital 21; Council Regulation 1911/2006, (Exhibit ARG-13), Recitals 28 and 58; Council
Regulation 238/2008, (Exhibit ARG-14), Recital 22; Council Regulation 1251/2009, (Exhibit ARG-15),
Recital 18; Council Regulation 236/2008, (Exhibit ARG-16), Recital 19; Council Regulation 661/2008, (Exhibit
ARG-17), Recital 59; Council Regulation 237/2008, (Exhibit ARG-18), Recital 26; Council Regulation 907/2007,
(Exhibit ARG-19), Recital 34; Council Regulation 240/2008, (Exhibit ARG-20), Recitals 26 and 46; Council
Regulation 1256/2008, (Exhibit ARG-21), Recital 111.
234 See below, paras. 7.179-7.184.

subparagraph, requires t h e m t o d o s o .235 Merely the fact that the authorities opted to act in a
certain manner in the past does not mean that the provision at issue requires them to do so in all
cases; as we have already noted, Argentina relies on the EU authorities' practice in support of its
interpretation of Article 2(5), second subparagr aph, but does not challenge the WTO-consistency
of the practice itself.
236
7.3.6.4.4 Judgments of the General Court of the European Union interpreting the
measure at issue
7.167. Argentina does not refer specifically to the judgments of the General Court of the
European Union with respect to the issue of how the EU authorities are to establish a producer's
costs in situations in which they conclude that the records do not reasonably reflect the costs
associated with the production and sale of the product under consideration. We note, however,
that in the judgments cited by Argentina in su pport of its arguments on the scope, meaning and
content of Article 2(5) relating to its first claim, the General Court cites Recital 4 of Council
Regulation 1972/2002 as stating that "the data should be obtained from sources which are
unaffected by such distortions".
237 Moreover, the General Court holds that the EU authorities are
entitled to conclude that where an item in a producer's records could not be regarded as
reasonable, it had to be adjusted by having re course to other sources from markets which the
authorities regarded as more representative, for instance by adjusting the costs to bring them into
line with costs prevailing in other countries.
7.168. In sum, the judgments show that, in a situation in which the EU authorities determine that
a producer's records do not reasonably reflect the costs of production because they are affected by
a distortion, the EU authorities are entitled to establish the producer's costs on the basis of
sources that are unaffected by that distortion, and may have recourse to sources of information
outside the country of origin. This is consistent with our reading of the text of Article 2(5), second
subparagraph, above.
7.3.6.4.5 Conclusion with respect to Argent ina's second claim that Article 2(5), second
subparagraph, is inconsistent with Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994
7.169. With respect to the scope, meaning and content of Article 2(5), second subparagraph, as it
pertains to Argentina's second claim, our review of the text of Article 2(5), second subparagraph,
shows that this provision lays out a series of options for the EU authorities in establishing the costs
of production once it has been determined that the producer's records do not reasonably reflect
the costs associated with the production and sale of the product being investigated. On its face,
the phrase at issue is formulated in permissive terms, and does not require that the costs reported
in the producer's records be replaced by costs in another country. It only permits the authorities to
establish or adjust the costs reported in the producers' records on the basis of information from
other representative markets; moreover, this option is subject to the costs of other producers or
exporters in the same country not being available or not being suitable and is only one of "other
reasonable bas[es]" which the EU authorities may resort to.
7.170. The other evidence submitted by Argentina does not convince us that the second
subparagraph of Article 2(5) requires the EU authorities to construct a producer's costs of
production on the basis of information pertaining to countries other than the country of origin.
7.171. Even where the EU authorities do resort to information from other countries to construct
the normal value, it does not necessarily follow that they act contrary to Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. In this respect, we note that it
is not in dispute between the parties that Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 require the cons truction of normal value on the basis of the
"cost of production" "in the country of origin". The parties however disagree as to whether

235 Moreover, as already noted, the examples cited by Argentina mostly pertained (with the notable
exception of the investigation on biodiesel from Argentina and Indonesia) to situations in which prices were
regulated. For this reason, we are not convinced that they suffice to establish a "consistent practice".
236 We find guidance in the Appellate Body Report in US – Carbon Steel (India); see in particular
para. 4.480 of the Report.
237 General Court of the European Union, Acron I, (Exhibit ARG-23), paras. 41 et seq.

Article 2.2 and Article VI:1(b)(ii) permit the use of information not from the country of origin in the
construction of the cost of production. Argentina takes the view that these Articles do not permit
the use of information other than information from the country of origin and therefore that there
would never be any instance in which the use of information from other representative markets
can be consistent with Article 2.2 of the Anti-Dumping Agreement and Article VI:1 of the
GATT 1994.
238 We note, however, that Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 do not limit the sources of information that may be used in
establishing the costs of production; what they do require, however, is that the authority construct
the normal value on the basis of the "cost of pr oduction" "in the country of origin". While this
would, in our view, require that the costs of production established by the authority reflect
conditions prevailing in the country of origin, we do not consider that the two provisions prohibit
an authority resorting to sources of information other than producers' costs in the country of
origin.
7.172. By contrast, our consideration of the evidence submitted by Argentina leads us to conclude
that the language of Article 2(5), second subparagraph, pertains to the sources of information (as
opposed to the costs themselves), that may be used to establish an investigated
producer/exporter's costs in constructing its normal value. As a result, even when information
from "other representative markets" is used, Article 2(5), second subparagraph, does not, in our
view, require the EU authorities to establish the costs of production so as to reflect costs prevailing
in other countries.
239
7.173. Argentina contends that for its claims to prevail, it would be "sufficient for Argentina to
demonstrate that this rule will necessarily lead to violations of WTO rules in certain specified
circumstances".240 However, we have concluded that Argentina has not made such a
demonstration.
7.174. In addition, we understand Argentina to take the position, in the alternative, that the fact
that Article 2(5), second subparagraph, provides for the use of a basis other than the cost of
production in the country of origin in the construction of the normal value renders Article 2(5),
second subparagraph, inconsistent with the same provisions. However, while Argentina has
established that Article 2(5), second subparagraph, is capable of being applied in a manner that is
inconsistent with the European Union's obligations under Article 2.2 of the
Anti-Dumping Agreement and with Article VI:1 (b)(ii) of the GATT 1994, as discussed above
Argentina has not demonstrated that this provision cannot be applied in a WTO-consistent manner.
This being the case, we find that Argentina has not established that Article 2(5), second
subparagraph, of the Basic Regulation, is inco nsistent "as such" with Article 2.2 of the
Anti-Dumping Agreement and with Article VI:1(b)(ii) of the GATT 1994.
241
7.3.6.5 Whether Argentina has established th at Article 2(5), second subparagraph, is
inconsistent with Article XVI:4 of th e WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement
7.175. Argentina claims that, as a consequence of the inconsistency of Article 2(5),
second subparagraph, of the Basic Regulation with Articles 2.2.1.1 and 2.2 of the Anti-Dumping
Agreement and Article VI:1(b)(ii) of the GATT 1994, the European Union also violates Article XVI:4
of the WTO Agreement and Article 18. 4 of the Anti-Dumping Agreement. 242 As these claims are
purely consequential and as we have rejected Argentina's principal claims on which they depend,
we also find that Article 2(5), second subparagraph, of the Basic Regulation is not inconsistent
with Article XVI:4 of the WTO Agreement and Article 18.4 of the Anti-Dumping Agreement.

238 See, e.g. Argentina's opening statement at the second meeting of the Panel, para. 24.
239 The European Union argues that the terms "other representative markets" could be markets in the
country of origin. We do not find it necessary to resolve this question to decide Argentina's claims.
240 Argentina's opening statement at the first meeting of the Panel, para. 84
241 We find guidance in the Appellate Body Report in US – Carbon Steel (India); see in particular
para. 4.483 of the Report.
242 Argentina's first written submission, paras. 142-146 and 469.

7.4 Argentina's claims concerning whether the EU anti-dumping measures on imports of
biodiesel from Argentina are inco nsistent with Articles 2.1, 2. 2, 2.2.1.1, 2.2.2(iii), 2.4,
3.1, 3.4, 3.5, and 9.3 of th e Anti-Dumping Agreement and Articles VI:1, VI:1(b)(ii) and
VI:2 of the GATT 1994, "as applied"
7.4.1 Whether the EU anti-dumping measures on imports of biod iesel from Argentina
are inconsistent with Articles 2.1, 2.2, an d 2.2.1.1 of the Anti-Dumping Agreement and
with Articles VI:1 and VI:1(b)(ii) of the GATT 1994
7.4.1.1 Legal claims
7.176. Argentina claims that the anti-dumping measures applied by the European Union on
imports of biodiesel from Argentina are inconsistent with a number of provisions of the
Anti-Dumping Agreement and of the GATT 1994. Spec ifically, Argentina requests us to find that
the European Union acted inconsistently with:
a. Article 2.2.1.1 and, as a consequence, Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, by failing to calculate the cost of production of the
product under investigation on the basis of the records kept by the producers;
b. Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by
failing to construct the normal value on the basis of the cost of production in the country
of origin, namely, Argentina;
c. Article 2.2.1.1 of the Anti-Dumping Agreement by including costs not associated with the
production and sale of biodiesel in the calculation of the cost of production; and
d. Article 2.1 of the Anti-Dumping Agreemen t and Article VI:1 of the GATT 1994 as a
consequence of the above-mentioned violatio ns under the Anti-Dumping Agreement and
the GATT 1994.
243
7.177. We begin by addressing the first of these claims, which hinges, in large part, on the proper
interpretation of Article 2.2.1.1 of the Anti-Dumping Agreement.
7.4.1.2 Relevant provisions of the covered agreements
7.178. The texts of Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and of Article VI:1 of
the GATT 1994 are reproduced above, paragraphs 7.70-7.71. Article 2.1 of the
Anti-Dumping Agreement reads:
2.1 For the purpose of this Agreement, a product is to be considered as being
dumped, i.e. introduced into the commerce of another country at less than its normal
value, if the export price of the product exported from one country to another is less
than the comparable price, in the ordinary course of trade, for the like product when
destined for consumption in the exporting country.
7.4.1.3 Factual background
7.179. On 16 July 2012, the European Biodiesel Board (EBB) submitted a complaint to the
EU authorities, requesting the initiation of an anti-dumping investigation concerning imports of
biodiesel originating in Argentina and Indonesia. 244 The EU authorities subsequently initiated an
anti-dumping investigation on imports of biod iesel from these countries on 29 August 2012. 245 On
28 May 2013, the European Union published a Provisional Regulation imposing provisional
anti-dumping duties on imports of biodiesel from Argentina at margins of between 6.8% and
10.6% in the form of specific duties expressed as a fixed amount per tonne.
246 On 1 October 2013,

243 Argentina's first written submission, para. 470(a)-(d); second written submission, para. 254(a)-(d).
244 Consolidated version of the complaint, (Exhibit ARG-31). We will not address the aspects of the
investigation pertaining to Indonesia, as these are not material to the claims at hand.
245 Notice of initiation of the anti-dumping investigation, (Exhibit ARG-32).
246 Provisional Regulation, (Exhibit ARG-30), Recital 179.

the European Union issued a Definitive Disclosure and proposal for definitive measures to
interested parties. 247 Interested parties were allowed to submit comments on this Definitive
Disclosure. On 26 November 2013, the Definitive Regulation was published in the Official Journal
of the European Union. It confirmed the provisional findings of dumping and injury. It calculated
dumping margins ranging from 41.9% to 49.2%. Given that the dumping margins exceeded the
injury margins calculated by the EU authorities, which ranged from 22.0 to 25.7%, the European
Union applied duties corresponding to the latter, in the form of specific duties on imports of
biodiesel from Argentina.
248
7.180. In the Provisional Regulation, the EU auth orities found that, since the Argentine biodiesel
market was heavily regulated, domestic sales were not made in the ordinary course of trade,
which meant that the normal value would have to be constructed.
249 As part of constructing the
normal value, the EU authorities calculated the cost s of production of biodiesel on the basis of the
costs recorded in the producers' records during the investigation period (IP). While the EBB had
claimed that the "Differentia l Export Tax" (DET) system
250 in Argentina depressed the price of
soybeans and soybean oil (the main raw material inputs used in the production of biodiesel) and,
therefore, distorted the costs of biodiesel producer s, the EU authorities indicated that they did not
have enough information at that stage of the investigation to make a decision as to the most
appropriate way to address that claim.251 Hence, they stated, the question as to whether the costs
of soybeans in the producers' records reasonably reflect the costs associated with the production
of biodiesel would be examined further at the definitive stage, as well as in the parallel
countervailing duty investigation.
252
7.181. In the Definitive Disclosure, the EU author ities confirmed their finding that domestic sales
were not made in the ordinary course of trade given that the Argentine market was heavily
regulated, such that the normal value had to be constructed.
253 In addition, the EU authorities
found that the DET depressed the domestic price of soybeans and soybean oil to an artificially-low
level which, as a consequence, affected the costs of the biodiesel producers. 254 The EU authorities
further considered that this cost distortion should be taken into account in establishing the normal
value.255 In particular, the EU authorities considered that the investigation demonstrated that the
DET in Argentina distorted the costs of production of Argentine biodiesel producers because:
[E]xport taxes on raw material (35% on soya beans and 32% on soybean oil) were
significantly higher than the export taxes on the finished product (nominal rate of
20% on biodiesel, with an effective rate of 14.58% taking into account a tax rebate) …
…
On the other hand, domestic prices of soya beans and soya bean oil are determined
on the relevant markets under the prevailing conditions. However, the domestic prices
follow the trends of the international prices. The investigation established that the
difference between the international and the domestic price of soya beans and soya
bean oil is the export tax on the product and other expenses incurred for exporting it.

247 Definitive Disclosure, (Exhibit ARG-35).
248 Definitive Regulation, (Exhibit ARG-22).
249 Provisional Regulation, (Exhibit ARG-30), Recitals 44 and 45.
250 See below, para. 7.181, for the EU authorities' description of the DET.
251 Provisional Regulation, (Exhibit ARG-30), Recital 45.
252 Provisional Regulation, (Exhibit ARG-30), Recital 45. The EU authorities conducted a parallel
countervailing duty investigation on imports of biodiesel from Argentina and Indonesia. The investigation was
initiated on 10 November 2012, following the submission of a complaint by the EBB on 27 September 2012.
(Notice of initiation of the counterva iling duty investigation, (Exhibit ARG-33)). The alleged subsidies at issue
consisted of the provision of inputs (soybean or soybean oil in the case of Argentina and palm oil in the case of
Indonesia) at below market prices by means of government policies impl emented and enforced by a policy of
export tax (export tax on the inputs at higher rates than on the finished product, biodiesel), and which obliged
input producers to sell on the domestic market, creati ng an excess of supply, depressing prices to a
below-market level and artificially reducing the costs of the biodiesel producers.
The countervailing duty investigation was terminated on 25 November 2013, following the EBB's
withdrawal of its complaint on 7 October 2013. (Notice of termination of the countervailing duty investigation,
(Exhibit ARG-36))

The domestic reference prices of soya beans and soya bean oil are also published by
the Argentine Ministry of Agriculture as the 'FAS theoretical price'. The producers of
soya beans and soya bean oil therefore obtain the same net price no matter whether
they sell for export or domestically.
In conclusion, the domestic prices of the main raw material used by biodiesel
producers in Argentina were found to be lower than the international prices due to the
distortion created by the Argentine export tax system and, consequently, the costs of
the main raw material were not reasonably reflected in the records kept by the
Argentinean producers under investigation in the meaning of Article 2(5) of the basic
Regulation as interpreted by the General Court as explained above.
256 (fns omitted)
7.182. In light of the above, the EU authorities decided to disregard the price actually paid by
Argentine producers for soybeans – which the EU authorities referred to as "the main raw material
purchased and used in the production of biodiesel" – and to replace it with "the price at which
those companies would have purchased the soya beans in the absence of such a distortion".257 The
EU authorities thus replaced the actual purchase price of soybeans during the IP, as reflected in
the producers' records used in the calculation at the provisional stage, with the average reference
price of soybeans published by the Argentine Mini stry of Agriculture for export, FOB Argentina,
minus fobbing costs, during the IP. 258 This resulted in the EU authorities replacing the costs
incurred by the producers as reported in thei r records by a uniform price of 2,144.60 ARS
(Argentine pesos) for soybeans for all producers in establishing their costs of production. This
significantly increased the costs of production for each of the Argentine producers.
259 The
EU authorities considered that this reference price reflected the level of international prices.260
7.183. In its comments on the Definitive Disc losure, the association of Argentine exporting
producers (Cámara Argentina de Biocombustibles, CARBIO) argued, inter alia, that export taxes on
soybeans or soybean oil are not a cost associated with the production of biodiesel in Argentina,
and therefore cannot be included in the cost of production and sale of biodiesel.261
7.184. In the Definitive Regulation, the EU auth orities confirmed their conclusion that domestic
prices of soybeans were artificially lower than in ternational prices due to the distortion created by
the Argentine export tax system, and also confirmed their use of reference prices published by the
Argentine Ministry of Agriculture to establish the cost at which companies would have purchased
soybeans in the absence of the distortion.
262 In response to CARBIO's claim that export taxes on
soybeans or soybean oil could not be included in the cost of production and sales of biodiesel, the
EU authorities stated:
In the present case it was established that the costs associated with the production of
the product concerned are not reasonably reflected in the records of the companies
concerned as they are artificially low due to the distortion caused by the Argentine
DET system. This holds true regardless of whether or not DET systems in general may
be as such contrary to the WTO Agreement … [W]hen making such a determination to
derogate from [the general rule set forth in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement], the investigating authority must set forth its reasons for
doing so. Consistent with this interpretation , in view of the distortion created by the
DET system, which creates a particular market situation, the Commission replaced the
costs recorded by the companies concerned for the purchase of the main raw material
in Argentina with the price that would have been paid in the absence of the
established distortion.
263

256 Definitive Disclosure, (Exhibit ARG-35), paras. 31-34.
258 Definitive Disclosure, Annex II, (Exhibit ARG-38) (BCI).
259 Definitive Disclosure, Annex II, (Exhibit ARG-38) (BCI), pp. 2, 5, 8, 11, and 14; Argentina's first
written submission, para. 182.
261 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), pp. 5 and 6 (discussed in
Definitive Disclosure, Annex II, (Exhibit ARG-38) (BCI)).
262 Definitive Regulation, (Exhibit ARG-22), Recitals 38-40.
263 Definitive Regulation, (Exhibit ARG-22), Recital 42.

7.4.1.4 Whether the European Union acted in consistently with Article 2.2.1.1 of the
Anti-Dumping Agreement, and as a conseq uence, Article 2.2 of the Anti-Dumping
Agreement and Article VI:1(b)(ii) of the GA TT 1994 by failing to calculate the cost of
production of biodiesel on the basis of the records kept by the producers
7.4.1.4.1 Arguments of the parties
7.4.1.4.1.1 Argentina
7.185. Argentina submits that the European Union acted inconsistently with Article 2.2.1.1 and, as
a consequence of this inconsistency, with Article 2.2 of the Anti-Dumping Agreement and with
Article VI:1(b)(ii) of the GATT 1994 by failing to calculate the cost of production of the product
under investigation on the basis of the records kept by the producers.
264 In particular, Argentina
claims that the European Union erred by determining that the costs of the main raw material in the
production of biodiesel, soybean oil and soybeans 265, were not reasonably reflected in the records
kept by the Argentine producers under investigation because those costs were artificially lower
than international prices due to the distortion created by the Argentine export tax system.
266
7.186. Argentina submits that Article 2.2.1.1 of the Anti-Dumping Agreement requires an
investigating authority to calculate a producer/exporter's costs of production on the basis of the
records kept by the producer/exporter under investigation, provided that such records are in
accordance with the generally accepted accounting principles (GAAP) of the exporting country, and
reasonably reflect the costs associated with the production and sale of the product under
consideration.
267 According to Argentina, the second basis for disregarding the costs reflected in
the records kept by the producer/exporter under Article 2.2.1.1 is needed because those records
pre-exist and are not necessarily organized in a manner which coincides with what is requested in
an anti-dumping investigation, which focuses on a specific product and a specific period of
investigation.
268 For instance, this ground might be relied upon where the costs reflected in these
records do not correlate to the specific time period or product under investigation, or in instances
where the exporter forms part of a group of comp anies and sources certain inputs from a related
company.269 However, this ground only permits examination of whether the records – rather than
the costs contained therein – are "reasonable". 270 Thus, the reliance on this condition by the
EU authorities to remedy what they considered to be "artificially low" prices stemming from the
Argentine export tax system was erroneous.
271 Argentina bases its understanding of Article 2.2.1.1

264 Argentina's first written submission, paras. 171(1), 244, and 470(a). Argentina also argues, as a first
line of argumentation, that Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of
the Anti-Dumping Agreement, and, therefore, the Panel sh ould likewise find the application of Article 2(5) of
the Basic Regulation in the anti-dumping measures at issue to be inconsistent with the same provision.
(Argentina's first written submission, para. 196). We have found in the previous section of our report that
Argentina has not established that Article 2(5), second subparagraph, of the Basic Re gulation, is inconsistent
"as such" with the provisions of the Anti-Dumping Agreement and of the GATT 1994 which it invokes.
Accordingly, in the present section, we only address th e second line of argumentat ion presented by Argentina
in support of its "as applied" claim under Article 2.2.1.1, i.e. that Article 2(5) was applied in a manner
inconsistent with Article 2.2.1.1 in the circumstances of the investigation at issue.
265 We note that Argentina claims that the European Union erred in referring indistinctly in the Definitive
Regulation to soybeans and soybean oil as "the main ra w material", because soybeans are not a direct input in
the production of biodiesel. In particular, Argentina co ntends that producers must "crush" soybeans to obtain
soybean oil (in addition to soybean me al and pellets) before biodiesel can be obtained from the oil by way of
transesterification. (Argentina's first written submission, paras. 211 and 212 (referring to Definitive Regulation,
(Exhibit ARG-22), Recitals 30, 34, 38, and 39)). We adopt the same terminology as the Definitive Regulation
without prejudice to the merits of Argentina's contention in that regard.
266 Argentina's first written submission, paras. 204-207 (referring to Definitive Regulation, (Exhibit ARG-
22), Recital 38).
267 Argentina's first written submission, paras 92 and 200. Argentina contends that the term "normally"
in the first sentence of Article 2.2.1.1 does not render the rule contained therein optional, but rather, indicates
that there are exceptions to the rule as expressed by the two conditions referred to in the same sentence (see
ibid. paras. 93 and 201).
268 Argentina's response to Panel question Nos. 90, para. 32 (referring to Panel Report, Egypt – Steel
Rebar, para. 7.393), and 7, paras. 17-23.
269 Argentina's response to Panel question No. 7, paras. 18-23.
270 Argentina's second written submission, para. 179.
271 Argentina's first written submission, paras. 99 and 209-211.

in this regard on the ordinary meaning of that provision, in its context and in light of the object
and purpose of the Anti-Dumping Agreement.272
7.187. In particular, Argentina contends that the ordinary meaning of the term "costs" concerns
costs actually incurred by the producer/exporte r, regardless of whether the amount actually
incurred by the producer/exporter corresponds to pr ices that they could have hypothetically paid
on other markets.273 Further, Argentina notes that, if the producer/exporter were to include costs
in its records that represent the costs that it could have hypothetically incurred instead of the
costs that were actually incurred, those records would be inconsistent with the GAAP. 274 Thus, for
Argentina, the term "costs" in Article 2.2.1.1 refers to costs actually incurred by the
producer/exporter. On that basis, the term "associ ated" in the phrase "costs associated with the
production and sale" cannot be construed in a broad sense to cover hypothetical costs that were
not actually incurred by the producer/exporter. Rather, it refers to costs pertaining specifically to
the production and sale of the product under investigation.
275
7.188. Argentina further argues that, in the ph rase "provided that such records … reasonably
reflect the costs …", the term "records" is the su bject, the term "costs" is the object, the term
"reflect" is the verb, and the term "reasonably" is an adverb. 276 Thus, it follows from the structure
of this phrase that the correct inquiry into whether the records reasonably reflect the cost of
production involves an assessment of the reasonableness of the records, as opposed to the
reasonableness of the costs themselves. 277 Thus, while governmental intervention might distort
costs, such intervention is not relevant if those costs are reasonably reflected in the records.278
7.189. Turning to the context of the phrase "pro vided that such records … reasonably reflect the
costs …" in the first sentence of Article 2.2.1. 1, Argentina asserts that the second and third
sentences in Article 2.2.1.1 are directly concerned with the manner in which costs are apportioned
and registered in the records, rather than with the costs themselves.
279 For Argentina, this
confirms that the first sentence of Article 2.2.1.1 is not concerned with the reasonableness of the
costs, but rather, with whether the costs are reas onably reflected in the records. Argentina also
argues that the presence of Article 2.2.2 in the Anti-Dumping Agreement suggests that the
drafters of the Agreement would have explicitly provided for using data other than those of the
producers in determining the cost of production if they had intended such a meaning. 280 This is
because Article 2.2.2 provides an express basis for using data other than those of the
producers' records for determining particular costs and profits, in contrast to Article 2.2.1.1.
7.190. Argentina also argues that the textual references to the domestic market of the "country of
origin" in Articles 2.2 and 2.2.2 of the Anti-D umping Agreement and Article VI:1(b)(ii) of the
GATT 1994 suggest that costs reflected in the records kept by the producer/exporter should not be
considered "unreasonable" on the basis that they do not reflect international prices.
281 Argentina
further argues that the very concept of dumping, as articulated through multiple provisions of the
Anti-Dumping Agreement, is clearly exporter-specific.
282 It concerns the costs actually incurred by
an exporter, rather than abstract or hypothetical costs pertaining to other exporters in different
contexts. This militates against an interpretation that would permit an investigating authority to
disregard the actual costs incurred by an exporter on the basis that they were unreasonable or

272 Argentina's first written submission, para. 207.
273 Argentina's first written submission, paras. 101 an d 216. In this connection, Argentina refers to a
number of panel reports which, it claims, support the view that Article 2.2.1.1 pertains to actual costs incurred
by the producer/exporter. See ibid. paras 128-131 (referring to Panel Reports, US – Softwood Lumber V ,
the absence of any reference to terms su ch as "prices" or "international pr ices" in Article 2.2.1.1 that connote
what the costs could be by reference to undistorted markets (see ibid. para. 217).
274 Argentina's first written submission, para. 228.
275 Argentina's second written submission, paras. 114-115 and 180; comments on the European Union's
response to Panel question No. 90, para. 18.
276 Argentina's first written submission, para. 225.
277 Argentina's response to Panel question No. 4, para. 3; first written submission, para. 225.
278 Argentina's response to Panel question No. 4, para. 3.
279 Argentina's first written submission, para. 111; response to Panel question No. 11, para. 24.
280 Argentina's first written submission, para. 113; second written submission, paras. 123-125.
281 Argentina's first written submission, paras. 114, 117, and 232-235; second written submission,
paras. 184 and 185.
282 Argentina's second written submission, paras. 127-131 and 136; opening statement at the first

artificially low. 283 Thus, to permit the replacement of costs actually incurred by the
producer/exporter in the domestic market with international prices would subvert the object and
purpose of the Anti-Dumping Agreement, which is to regulate dumping based on a comparison
between the normal value and the export price.
284 Further, addressing the existence of a
"distortion" on the domestic market is totally unrelated to the issue of "dumping".285
7.191. In Argentina's view, the foregoing considerations make clear that Article 2.2.1.1 does not
permit the costs in producers/exporters' records to be disregarded on the basis that those costs
are artificially low due to distortions flowing from governmental intervention. Given that the
interpretation of the term in light of its ordina ry meaning and read in context is not ambiguous,
the negotiating history of Article 2.2.1.1 would only be useful insofar as it confirms the meaning of
that provision as set out above.
286 In this regard, Argentina argues, inter alia, that the negotiating
history demonstrates that the costs of production relate to costs in the country of origin, that
Article 2.2.1.1 concerns the allocation of costs in the records kept by the producer/exporter rather
than the reasonableness of the costs themselves, and that the negotiating parties decided not to
regulate "input dumping" in the Anti-Dumping Agreement. 287 Further, Argentina argues that the
second Ad Note to Articles VI:2 and VI:3 of the GATT 1994 does not establish, contrary to the
arguments of the European Union, that dumpin g is capable of stemming from governmental
practices such as Argentina's export tax system. 288 Rather, the second Ad Note to Articles VI:2
and VI:3 is limited to the specific case of multiple currency practices.289
7.192. Finally, Argentina submits that the European Union's finding that the records do not
reasonably reflect the cost of "the main raw material" is based on an improper establishment of
the facts. In particular, the finding that domestic prices of soybeans and soybean oil in Argentina
are "distorted" is factually incorrect since those prices are freely set. 290 Further, soybeans are not
a direct input in the production of biodiesel. Inst ead, they are used to produce soybean oil, from
which biodiesel can in turn be obtained through transesterification. 291 Argentina argues that given
that soybeans are not a direct input in the production of biodiesel, it does not flow from the finding
that the domestic price of soybeans is "distorted" that the price of the "main raw material"
(i.e. soybean oil) is "distorted", or that the records of the Argentinean producers do not reasonably
reflect the cost of soybean oil.
292
7.193. As a result of failing to calculate the costs of production in accordance with Article 2.2.1.1
of the Anti-Dumping Agreement, Argentina claims that the European Union failed to properly
construct the normal value, and therefore acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement and with Article VI:1(b)(ii) of the GATT 1994.293
7.4.1.4.1.2 European Union
7.194. The European Union requests the Panel to find that Argentina has failed to make a
prima facie case that it acted inconsistently with Articles 2.2.1.1 and 2.2 of the
Anti-Dumping Agreement by disregarding the cost s of soybeans and soybean oil in the records
kept by the producers because they were "artificially low" as a consequence of Argentina's export
tax system. 294 For the European Union, investigating authorities are only required to use the
"costs" reflected in such records under Article 2.2.1.1 where they are "reasonable" for the
production of the goods in question.
295 Thus, where such costs are not "reasonable", Article

283 Argentina's first written submission, paras. 125-127 and 240.
284 Argentina's opening statement at the first meeting of the Panel, paras. 77 and 78.
285 Argentina's response to Panel question No. 91, para. 40.
286 Argentina's response to Panel question No. 18, para. 38.
287 Argentina's response to Panel question No. 18, paras. 37-47; second written submission,
paras. 141-145.
288 Argentina's comments on the European Union's response to Panel question No. 94, paras. 23-26.
289 Argentina's opening statement at the second meeting of the Panel, paras. 38-40.
290 Argentina's first written submission, paras. 209 and 210. In addition, Argentina argues that export
taxes are legal under WTO law, and the particular export tax in question is not a form of government
intervention in the domestic price of soybeans. (Argentina's response to Panel question No. 103, paras. 77-79)
291 Argentina's first written submission, para. 211.
292 Argentina's first written submission, para. 212.
293 Argentina's first written submission, para. 244.
294 European Union's second written submission, paras. 132 and 143.
295 European Union's first written submission, paras. 130-133 (referring to Panel Report, Egypt – Steel
Rebar, para. 7.393).

2.2.1.1 does not preclude investigating authoritie s from determining that the producer's records
do not reasonably reflect those costs, regardless of the fact that they may record the costs that
were actually incurred by the producer under investigation.
296
7.195. In respect of the ordinary meaning of Ar ticle 2.2.1.1 of the Anti-Dumping Agreement, the
European Union argues that the term "costs" does not necessarily refer only to the costs actually
incurred by a producer, but rather, it connotes the prices "to be paid" by the producer for the
production of the product under consideration.
297 In this connection, the European Union contends
that the term "associated" in the phrase "costs associated with the production and sale" in
Article 2.2.1.1 captures a broader range of relati ons between the "costs" and the "production" of
the goods than the costs actually incurred by the producer/exporter. 298 For instance, it captures
the costs that would "normally" be associated with the production and sale of the goods. 299 The
European Union notes, in this regard, the absence of a textual link in the first sentence of
Article 2.2.1.1 between the "costs associated …" and the specific "producer" under investigation.
The European Union also contends that the term "reflect" suggests that there is no need for "a
precise calculation or determination"; therefore, the use of that term in the first sentence of
Article 2.2.1.1 does not support Argentina's thesis that the records should be considered as
"reasonable" where they simply include the precis e costs "actually incurred by the producer". The
European Union refers to a number of panel and Appellate Body reports which it considers provide
authority for its understanding of Article 2.2.1.1.
300
7.196. In respect of the context of the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement, the European Union argues that the specific references to the "actual
amounts" incurred by the producer/exporter in Arti cle 2 of the Anti-Dumping Agreement, such as
those in Articles 2.2.2(i) and 2.2.2(ii), suggest that the choice of the words "costs associated with
the production and sale" in Article 2.2.1.1 aims to cover something different from the "actual
amounts incurred" or "expenses actually incurred" by a specific producer. 301 Further, the inclusion
of the condition in the first sentence of Article 2.2.1.1 for the records to be consistent with GAAP –
which, the European Union submits, suffices to en sure that the records include the costs actually
incurred by the producer under investigation – suggests that the subsequent condition pertaining
to the records reasonably reflecting costs must mean something more than simply "the expenses
actually incurred".
302 The European Union also argues that the second and third sentences of
Article 2.2.1.1 suggest that adjustments may be made to the costs reported by a company in
certain circumstances, and that authorities can take into consideration cost information that does
not appear in such records. 303 This, in turn, suggests that Article 2.2.1.1 stands for the principle
that authorities may disregard, or adjust, the information in the records of producers under
investigation, provided certain conditions are met.304
7.197. The European Union submits that the chapeau of Article 2.2.2 also provides context for the
interpretation of Article 2.2.1.1, insofar as it states that the amounts for administrative, selling and
general costs and for profits shall be based on actual data pertaining to production and sales in the
ordinary course of trade. In particular, it can be inferred from this that, where sales are not in the
ordinary course of trade, actual data may potentially be disregarded. Since it is not disputed in the
present case that sales of biodiesel were not in the ordinary course of trade in Argentina, the

296 European Union's response to Panel question No. 5, para. 10.
297 European Union's first written submission, para. 136 (referring to Panel Report, EC – Salmon
(Norway), para. 7.481); second written submission, paras. 125-128.
298 European Union's first written submission, para. 137 (referring to Panel Report, Egypt – Steel Rebar,
para. 7.393).
299 European Union's first written submission, para. 139.
300 European Union's first written submission, paras. 140-141, 166-169 (referring to Panel Reports, EC –
Salmon (Norway), para. 7.481; Egypt – Steel Rebar, para. 7.383; US – Softwood Lumber V paras. 7.327-7.329
and 7.347; and Appellate Body Report, US – Softwood Lumber V , para. 171); response to Panel question
No. 10, para. 18; opening statement at the second meet ing of the Panel, paras. 136-138 (referring to Panel
Report, Egypt – Steel Rebar , para. 7.393), and 151-152 (referring to Panel Report, EC – Salmon (Norway) ,
para. 7.483); comments on Argentina's response to Panel question No. 90, para. 49.
301 European Union's first written submission, para. 147.
302 European Union's first written submission, para s. 148 and 149; opening statement at the second
303 European Union's first written submission, paras. 151-153 (referring to Panel Report, EC – Salmon
(Norway), para. 7.484).
304 European Union's first written submission, para. 154.

context provided by Article 2.2.2 suggests that Ar ticle 2.2.1.1 should not be read to require the
investigating authority to use the costs actually incurred by the producers.305
7.198. The European Union rejects Argentina's argument that various textual references to the
"country of origin" support Argentina's interpretati on of Article 2.2.1.1 that costs reflected in the
records kept by the producer/exporter may not be considered "unreasonable" where they do not
accord with international prices. First, the European Union argues that the reference to the country
of origin in Article 2.2 does not mean that evidence from other countries cannot be used in
determining the costs of production. The European Union argues in this respect that Article 2.2.1.1
directs an investigating authority to consider "all available evidence", which may include, for
instance, invoices issued by exporters in other countries.
306 Second, the European Union argues
that the leeway provided for in Article 2.2.2(iii) to use "any other reasonable method" implies that
there is no absolute prohibition on the use of data on the cost of production from countries other
than the country of origin where the conditions of production and sale are not in the "ordinary
course of trade".
307
7.199. In respect of the object and purpose of the Anti-Dumping Agreement, the European Union
contends that it is directed at preventing damage to the industries of an importing country by the
producers of an exporting country through the use of prices that are artificially low due to some
abnormal condition. For the European Union, therefore, goods that are produced with costs that
are not "normal" fall within the type of conditions that the Anti-Dumping Agreement is intended to
address.
308 In this connection, the European Union cont ends that exogenous factors, such as the
actions of the government of the exporting country , are capable of being the source of dumping.
For instance, the Appellate Body has considered that there can be circumstances where dumping
and subsidization arise from the "same situation" 309, and further, the second Ad Note to
Articles VI:2 and VI:3 of the GATT 1994 states that "multiple currency practices" meant as
"practices by governments" can "constitute a form of dumping". 310 Given its similarities to
"multiple currency practices" (both involve a government-induced manipulation of the ordinary
operation of the market, which substantially affects and distorts pricing), Argentina's export tax
falls within the types of government measures that may lead to dumping.
311 More generally, this
Ad Note demonstrates that the definition of dump ing cannot be construed to exclude government
practices, but rather, that whether a particular governmental price intervention results in dumping
must be considered on a case-by-case basis.
312
7.200. The European Union argues that the negotiating history of Article 2.2.1.1 contradicts
Argentina's interpretation of this provision, given that the terms "the allocation of costs" included
in a previous version of the provision were replaced with "costs shall be normally calculated",
which suggests that this provision is not limited to cost allocation issues, and given that the
requirement for "reasonableness" was severed from the GAAP, which suggests a broader scope for
the "reasonableness" obligation in Article 2.2.1.1.
313
7.201. Finally, the European Union submits that Argentina's contentions that the EU authorities
improperly established the facts in determining that a distortion existed and that soybeans are a
direct input in the production of biodiesel are unfounded.
314

305 European Union's first written submission, paras. 247 and 248; opening statement at the first
meeting of the Panel, paras. 73-75.
306 European Union's first written submission, pa ras. 193 and 194; second written submission,
paras. 134 and 135.
307 European Union's first written submission, para. 198; opening statement at the second meeting of
the Panel, para. 159.
308 European Union's first written submission, paras. 157 and 158.
309 European Union's opening statement at the first me eting of the Panel, paras. 25-36 (referring to
Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 568).
310 European Union's second written submission, paras. 114-124.
311 European Union's second written submission, para s. 119-124; response to Panel question No. 94,
paras. 38-41.
312 European Union's response to Panel question No. 94, paras. 39-41.
313 European Union's second written submission, paras. 96-98.
314 European Union's first written submission, paras. 222-232.

7.4.1.4.2 Arguments of the third parties
7.202. Australia submits that an investigating authority should be permitted to consider whether
the costs reflected in the records of the produc er/exporter are reasonable, and, where they are
not, to adjust or replace them in an appropriate manner. 315 Thus, Article 2.2.1.1 permits
investigating authorities to look beyond a producer/exporter's actual records and consider whether
the costs reflected therein are reasonably related to the costs of producing and selling the product.
For Australia, the reasonableness of costs of inputs or raw materials would be relevant to this
analysis.
316
7.203. In Australia's view, to disallow an authority from considering elements that were beyond
the direct control of a producer/exporter would render inutile the provision in Article 2.2 of the
Anti-Dumping Agreement for cost construction in circumstances of a particular market situation.
317
Further, to limit an investigating authority's scope of analysis to factors that are endogenous to the
foreign producers/exporters implies limitations in Article 2.2 that do not exist, and, moreover,
contradicts the ordinary meaning of the term "particular market situation".
318
7.204. China submits that the authority to apply anti-dumping measures is limited to
circumstances in which the pricing behaviour of an individual producer/exporter under
investigation is found to result in price discrimination between the normal value and export price
for a product and that price discrimination causes injury to the importing Member's domestic
industry.
319 For China, this producer/exporter-specific focus is embodied in the definition of
dumping in Article VI:1 of the GATT 1994 and Articl e 2.1 of the Anti-Dumping Agreement, and is
also reflected throughout various provisions of the Anti-Dumping Agreement. 320 Accordingly, an
investigating authority cannot reject the costs recorded in the producer/exporter's accounts on
grounds exogenous to that producer/exporter, su ch as governmental interventions beyond its
control.321 While China does not consider that governmental interventions "are outside the
remedial scope of the covered agreements", China argues that to ignore this foundational element
of the Anti-Dumping Agreement would be to subvert the carefully negotiated balance of rights,
disciplines and remedies provided for Members in the WTO Agreement as a whole.
322
7.205. China thus submits that the European Un ion's understanding of Article 2.2.1.1 of the
Anti-Dumping Agreement goes impermissibly far in suggesting that recorded costs may be
benchmarked against hypothetical costs that might be borne by a producer in a theoretical market
where the price of relevant inputs is not affected by governmental interventions.
323 For China, a
cost in a hypothetical market, incurred by a hypothetical producer, does not pertain to the
production of the product by the investigated producer.324
7.206. China acknowledges that, in certain cases, there could be evidence suggesting that the
actual costs ascribed to a producer/exporter and reflected in its records may not properly reflect
the costs associated with production and sale in the country of origin. 325 A comparison with the
costs incurred by other producers/exporters of th e product in the country of origin could be
indicative in that regard.326 Importantly, however, the context afforded by Articles 2.2 and 2.2.2 of
the Anti-Dumping Agreement demonstrates that re corded costs "can only be rejected as not
'reasonably reflect[ing]' costs of production if they fail to reasonably reflect the cost of production

315 Australia's third-party submission, para. 12.
316 Australia's third-party submission, para. 5 (referring to Panel Report, China – Broiler Products ,
para. 7.164).
317 Australia's third-party response to Panel question No. 5.
318 Australia's third-party response to Panel question No. 8.
319 China's third-party submission, paras. 26 (referring to Appellate Body Reports, US – Zeroing (Japan),
320 China's third-party statement, para. 4; third-party submission, paras. 47-50.
321 China's third-party submission, para. 27.
322 China's third-party submission, paras. 29 and 30; third-party statement, para. 5: "Otherwise,
anti-dumping proceedings cease to be a remedy for the pricing behavior of producers or exporters, and instead
become a tool for investigating authorities to penalize imports for cost advantages that foreign producers may
enjoy."
323 China's third-party submission, para. 36.
324 China's third-party submission, paras. 37 and 42-45; third-party statement, paras. 9-13.
325 China's third-party submission, para. 39.
326 China's third-party submission, para. 51.

of the product in the country of origin ".327 Thus, for China, it is never appropriate to substitute
out-of-country costs for costs in the country of origin.328 China does not exclude the possibility that
an investigating authority may encounter exceptional circumstances in which there is simply no
evidence as to the relevant costs available from within the country of origin.
329 However, any
evidence that does not directly pertain to costs of production in the country of origin would need to
be dealt with in a manner that reflects the specific market conditions in the country of origin,
including any differences in respect of relevant governmental interventions between the two
markets, such as taxes and duties.
330
7.207. Colombia submits that the phrase "reasonably reflect the costs" in Article 2.2.1.1 refers to
"the actual cost of production a producer has to reflect in its records", in the light of the syntax of
the phrase
331, as well as the fact that Article 2.2.1.1 is directed at situations where a Member that
imposes an anti-dumping measure "is actually investigating the costs of production of producers of
the exporting Member".332 Colombia notes the absence of any terms in Article 2.2.1.1 suggesting
that the "costs" have to be the ones " normally associated with the production and sale of
goods"333, as well as the context of the term "allocation", which refers to an amount of a resource
assigned for a particular purpose, and the context provided by Articles 2.2 and 2.2.2 of the Anti-
Dumping Agreement, which establish that the benchmark for calculating the normal value is the
cost of production in the country of origin.
334 Therefore, in Colombia's view, the European Union
acted against Article 2.2.1.1 by using internationa l prices of soybeans to calculate the costs of
production.
7.208. Colombia submits that it may have been more appropriate for the European Union to have
pursued a countervailing duty investigation. 335 For Colombia, the Anti-Dumping Agreement
governs actions against exporters that injuriously sell at an abnormally low value, and distorted
input prices due to an export tax do not fall within its scope.
336
7.209. Indonesia concurs with Argentina's interpretation of Article 2.2.1.1 of the Anti-Dumping
Agreement.337 In Indonesia's view, the European Union added an additional dimension to the test
governing the reasonable reflection of costs by including an element on the non-distortion and
reasonableness of input costs per se.338 For Indonesia, this is not supported by the text or context
of Article 2.2.1.1.339 In this regard, Indonesia notes that a reasonability condition explicitly applies
to the "administrative, selling and general costs" under Article 2.2 of the Anti-Dumping
Agreement, whereas the two criteria in the first sentence of Article 2.2.1.1 are concerned with cost
allocation issues unrelated to the reasonability of those costs.
340 Indonesia also argues that these
two criteria call for an assessment of the records of the producer/exporter under investigation,
which, in turn, limits an investigating authority from expanding its consideration to any other set
of prices outside the costs contained in those records.
341
7.210. Indonesia submits that the European Union's rejection of the argument that Article 2.2.1.1
refers to costs "actually incurred by the producer" is untenable because the first sentence of that
provision clearly refers to the "records kept by the producer/exporter under investigation", and
further, because it would be contrary to the requirement to calculate individual dumping
margins.
342 Indonesia draws on certain historical materials to support its position. In particular,

327 China's third-party submission, para. 52 (emphasis original); third-party statement, paras. 14-16.
328 China's third-party response to Panel question No. 13, para. 28.
329 China's third-party response to Panel question No. 13, para. 30.
330 China's third-party response to Panel question Nos. 13, para. 31; 4, para. 12; and 12, paras. 25-27.
331 Colombia's third-party statement, para. 7.
332 Colombia's third-party submission, para. 18.
333 Colombia's third-party submission, para. 18. (emphasis original)
334 Colombia's third-party submission, para. 20.
335 Colombia's third-party submission, para. 24; third-party response to Panel question Nos. 6,
paras. 3-6, and 16, para. 7.
336 Colombia's third-party submission, paras. 23 and 24.
337 Indonesia's third-party submission, para. 33.
338 Indonesia's third-party submission, paras. 35 and 36.
339 Indonesia's third-party submission, para. 35.
340 Indonesia's third-party submission, para s. 37 and 38 (referring to Panel Report, EC – Salmon
(Norway), para. 7.484).
341 Indonesia's third-party submission, para. 39.
342 Indonesia's third-party submission, para. 40; third-party statement, paras. 10-12 (referring to Panel
Report, Thailand – H-Beams, para. 7.112); third-party response to Panel question No. 2, para. 12.

Indonesia suggests that the European Union's own view in the Ad hoc group on the
implementation of the Anti-Dumping Code was th at the actual costs of a producer had to be
used.343 Further, Indonesia suggests that the negotiating history on Article 2.2.1.1 demonstrates
that the term "reasonably" is not intended to qualify the term "costs".344
7.211. In response to questions from the Panel, Mexico submits that it did not consider there to
be fixed parameters in the text or context of Article 2.2.1.1 of the Anti-Dumping Agreement
governing the manner in which an investigating authority is to determine whether the records
reasonably reflect the costs associated with the production and sale of the product concerned.
345
Accordingly, Mexico considers that investigating authorities have a margin of discretion to make
such a determination on a case-by-case basis.
7.212. Norway submits that both of the cumulative conditions in Article 2.2.1.1 seem to relate to
the quality of the records as such, and the stru cture and ordinary meaning of Article 2.2.1.1
suggest that the second condition only concerns whether the records reflect the costs associated
with the production and sale of the product under investigation in a reasonable manner.
346
7.213. The Russian Federation considers that the practice of input cost adjustment is
inconsistent both with the provisions of the WTO Agreement and the spirit of the WTO. 347
Concerning Article 2.2.1.1 of the Anti-Dumping Agreement, the Russian Federation submits that
the records must depict the costs that have been incurred in association with the production and
sale of the product under consideration. 348 The plain meaning of the term "costs" focuses on what
is paid, rather than on the value or the reasonableness of what is paid, and the core issue under
Article 2.2.1.1 is whether the costs are reasonably reflected in the records, as opposed to whether
the costs themselves were reasonable in the light of extraneous economic considerations.
349
Indeed, an analysis of the structure of the first sentence of Article 2.2.1.1 reveals that the word
"reasonably" immediately precedes the word "reflect", and therefore the inquiry under
Article 2.2.1.1 is whether the records reflect the costs associated with the production and sale of
the product under consideration "reasonably".
350
7.214. Further, the Russian Federation contends that the European Union's understanding of the
object and purpose of the Anti-Dumping Agreement, which is a holistic, integrative notion, is
"manifestly wrong" because it was derived from a si ngle provision of the treaty while ignoring the
others, and because the term "normal" in the Anti-Dumping Agreement does not correspond to
concepts of "artificially low" and "abnormal condition" as suggested by the European Union.
351
Further, the Russian Federation submits that WTO jurisprudence demonstrates that the concept of
"dumping" in the Anti-Dumping Agreement does not deal with the price of the product's inputs.352
7.215. Saudi Arabia contends that the first sentence of Article 2.2.1.1 imposes a general and
mandatory obligation to use, for the purpose of calculating costs of production, the costs in the
country of origin as reflected in the records of each individual producer/exporter concerned.353 For
Saudi Arabia, the term "normally" in that sentence confirms that the general rule must be followed
unless one of the two exceptional circumstances listed therein applies. 354 In Saudi Arabia's view,
these two limited conditions concern the reliability and accuracy of the costs in relation to the
product under consideration, and underline the exceptional nature of the circumstances that would
allow an investigating authority to reject those costs.
355 For Saudi Arabia, the "reasonableness"
referred to in the first sentence of Article 2.2. 1.1 does not allow an investigating authority to
question the general "reasonableness" of the costs recorded, such as by comparison with

343 Indonesia's third-party submission, paras. 42 and 47.
344 Indonesia's third-party statement, para. 7; th ird-party response to Panel question No. 11,
paras. 24-32.
345 Mexico's third-party response to Panel question No. 2.
346 Norway's third-party statement, paras. 7 and 8.
347 Russian Federation's third-party statement, para. 2.
348 Russian Federation's third-party submission, para. 3.
349 Russian Federation's third-party submission, para. 5.
350 Russian Federation's third-party submission, para. 3.
351 Russian Federation's third-party submission, paras. 17-22.
352 Russian Federation's third-party submission, paras. 23-31.
353 Saudi Arabia's third-party submission, para. 12.
354 Saudi Arabia's third-party submission, para. 13.
355 Saudi Arabia's third-party submission, paras. 14-16.

international reference prices. Rather, it merely concerns the association of the recorded costs with
the product under consideration as compared with other products of the producer/exporter to
which certain costs may also be associated.
356 Saudi Arabia also invokes the object and purpose of
the Anti-Dumping Agreement in contending that it is not aimed at preventing Members from
adopting WTO-consistent measures or undoing Members' comparative advantages by correcting
reported costs of production in light of international reference prices. 357 In Saudi Arabia's view,
there are other multilateral or unilateral instruments available to address measures alleged to
distort the market environment and trade.358
7.216. Turkey submits that Article 2.2.1.1 of the Anti-Dumping Agreement requires that, for the
purpose of establishing normal value, the investigating authority is normally obliged to use the
records kept by the producer/exporter if the two conditions in the first sentence of that provision
are met.
359 If those conditions are met, the term "nor mally" in Article 2.2.1.1 indicates that the
investigating authority has discretion, and the investigating authority would be required to provide
a reasoned and adequate explanation to deviate from the rule.
360 For Turkey, whether a "particular
market situation" would justify disregarding the records of producers/exporters requires a
case-by-case examination.361 Turkey submits that the term "reasonably" in Article 2.2.1.1 not only
defines the method for how the prices (paid or due to be paid) are recorded in the books of the
producer/exporter, but also implies an examinatio n that focuses on whether the recorded prices
correspond to a price level that is determined by market forces free from any intervention. 362 For
Turkey, therefore, the "reasonabl eness" assessment displays a two-sided structure. Based on the
outcome of this assessment, the investigating auth ority has discretion to modify the elements of
costs in line with in-country or out-of-country benchmarks, so long as the out-of-country data
used is associated with the cost of production and sales of the product under consideration.363
7.217. The United States submits that, in situations where records are kept in accordance with
GAAP and reasonably reflect the costs associated with the product under consideration, the
investigating authority is normally obligated to use those records pursuant to Article 2.2.1.1 of the
Anti-Dumping Agreement.
364 The term "normally" in Article 2.2.1.1 indicates that the use of a
producer/exporter's records is not necessary in every case, but if the investigating authority finds
that the records meet the conditions and nonetheless departs from them, it is bound to provide an
explanation.365
7.218. The United States contends that the ordinary meaning of the term "costs" in Article 2.2.1.1
does not necessarily imply costs "actually incurred by the producer". 366 The United States finds
support for this understanding by comparing it to the express references to "the actual amounts
incurred" elsewhere in Article 2.
367 The United States also notes that Article 2.2.1.1 references
costs "associated with" the production and sale of the product under consideration. In that regard,
the United States contends that the term "associated with" suggests a more general connection
between the relevant costs and the production or sale of the product than just those costs borne
by the specific producer.
368
7.219. The United States rejects Argentina's contention that Article 2.2.1.1 solely concerns cost
allocation issues, but rather, contends that Article 2.2.1.1 leaves open what costs may be
"unreasonable" such that the records do not reasonably reflect the costs associated with the

356 Saudi Arabia's third-party submission, para. 17.
357 Saudi Arabia's third-party submission, para. 20.
358 Saudi Arabia's third-party submission, para. 21.
359 Turkey's third-party su bmission, para. 7 (referring to Panel Reports, EC – Salmon (Norway) ,
361 Turkey's third-party submission, paras. 10-12.
362 Turkey's third-party response to Panel question No. 7, paras. 7 and 8.
363 Turkey's third-party response to Panel question Nos. 4, para. 6, and 17, para. 8.
364 United States' third-party submission, para. 11.
365 United States' third-party submission, para. 12.
366 United States' third-part y submission, para. 14 (referring to Panel Report, EC – Salmon (Norway) ,
para. 7.481).
368 United States' third-party submission, paras. 26 and 27 (referring to Panel Report, Egypt – Steel
Rebar, para. 7.393).

production and sale of the product. 369 In that connection, the United States argues that the
context provided by Article 2.2, such as the reference to a "low volume of the sales in the
domestic market of the exporting country" or "a particular market situation", supports the
understanding that market conditions, including some "peculiarity, structure, [or] distortion", may
lead to records reflecting "unreasonable" costs.
370 In the United States' view, an investigating
authority may, on a case-by-case basis, use a wide range of record evidence, potentially including
international prices, to evaluate whether the producer/exporter's records reasonably reflect their
costs.371 However, international prices, if used, must be a proxy for the costs in the country of
origin.372
7.4.1.4.3 Evaluation by the Panel
7.220. Argentina requests us to find that the European Union acted inconsistently with
Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and with Article VI:1(b)(ii) of the
GATT 1994 by failing to calculate the cost of prod uction of the product under investigation on the
basis of the records kept by the producers.
373
7.221. We note, at the outset, that the EU authorities disregarded the records kept by the
Argentine producers insofar as they pertained to the costs for soybeans and soybean oil because:
[T]he domestic prices of the main raw material used by biodiesel producers in
Argentina were found to be artificially lower than the international prices due to the
distortion created by the Argentine export tax system and, consequently, the costs of
the main raw material were not reasonably reflected in the records kept by the
Argentinean producers under investigation in the meaning of Article 2(5) of the basic
Regulation as interpreted by the General Court as explained above.
374
7.222. Beyond this statement from the Definitive Regulation, it has not been alleged that the
costs pertaining to the main raw material in the records kept by producers do not represent the
actual price paid by those producers, nor has it been alleged that the records themselves are
improper, flawed, or otherwise inconsistent with the GAAP.
7.223. Argentina's principal allegation is that the European Union acted inconsistently with
Article 2.2.1.1 (and, as a consequence, with Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994) because the reasons given by the EU authorities for
disregarding the records – i.e. because the prices for an input were artificially lower than
international prices due to an alleged distortion – are not legally permissible under
Article 2.2.1.1.
375
7.224. Thus, we consider the question before us to be whether, on the basis of the reasoning set
out in the Definitive Regulation, the European Unio n acted consistently with Article 2.2.1.1 of the
Anti-Dumping Agreement, and, consequently, with Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994.
7.225. We begin our analysis by setting out our understanding of Article 2.2.1.1. Before doing so,
however, we note that Article 2.2 of the Anti-Dumping Agreement prescribes that the normal value
may be constructed on the basis of the "cost of production in the country of origin plus a
reasonable amount for administrative, selling and general costs and for profits" in one of two
situations, namely when there are no sales of the like product in the ordinary course of trade, or

369 United States' third-party submission, para s. 20 and 22 (referring to Panel Reports, China – Broiler
370 United States' third-party submission, para. 24; third-party response to Panel question No. 3,
paras. 10 and 11.
371 United States' third-party response to Panel question No. 1, para. 2.
372 United States' third-party response to Panel question No. 12, para. 26.
373 Argentina's first written submission, paras. 195, 244, and 470(a); second written submission,
para. 254(a).
374 Definitive Regulation, (Exhibit ARG-22), Recital 38.
375 Argentina's first written submission, paras. 195, 244, and 470(a). Argentina also contests that its
export tax system creates a distortion.

where there is a particular market situation or a low volume of sales in the domestic market, such
that those sales do not permit a proper comparison.376
7.226. Article 2.2.1.1 provides, in relevant part:
For the purpose of paragraph 2, costs shall normally be calculated on the basis of
records kept by the exporter or producer under investigation, provided that such
records are in accordance with the generally accepted accounting principles of the
exporting country and reasonably reflect the costs associated with the production and
sale of the product under consideration.
7.227. The opening phrase "[f]or the purpose of paragraph 2" makes clear that Article 2.2.1.1
elaborates on how the "cost of production in the country of origin" in Article 2.2 is to be
determined in constructing the normal value in the circumstances mentioned above. The first
sentence of Article 2.2.1.1 also establishes the records of the investigated producer as the
preferred source of information for the establishm ent of the costs of production. The term "shall"
in this first sentence of Article 2.2.1.1 indicates that it establishes a mandatory rule in this
respect
377, whereas the term "normally" suggests that this rule may be derogated from under
certain conditions.378 In that regard, the first sentence of Article 2.2.1.1 expressly provides for two
circumstances in which an investigating authority need not follow the general rule to calculate
costs on the basis of the records kept by the producer/exporter under investigation. 379 In the case
before us, the investigating authority explicitly relied on the second of these conditions, namely
that the records do not reasonably reflect the costs associated with the production and sale of the
product under consideration.
380 We have therefore to address the proper scope and meaning of
only that condition, before turning to whether it was correctly invoked by the investigating
authority in the present case.
7.228. We begin our interpretation with the ordinary meaning of the phrase "provided such
records … reasonably reflect the costs associated with the production and sale of the product under
consideration". First, we note that for both this condition and the GAAP-related condition in
Article 2.2.1.1, the subject is the producer/exporter's "records". It is the "records" of the
producer/exporter under investigation that must be in accordance with the generally accepted
accounting principles and that must reasonably reflect the costs associated with production and
sale of the product under consideration for the conditional obligation set forth under the first
sentence to apply. Thus, the focus of the condition is on the specific producer/exporter under
investigation, and what is contained in its records.
381

376 Article 2.2 of the Anti-Dumping Agreement provides:
When there are no sales of the like product in the ordinary course of trade in the domestic
market of the exporting country or when, because of the particular market situation or the low
volume of the sales in the domestic market of the exporting country, such sales do not permit a
proper comparison, the margin of dumping sh all be determined by comparison with a
comparable price of the like product when export ed to an appropriate third country, provided
that this price is representative, or with the cost of production in the country of origin plus a
reasonable amount for administrative, selling and general costs and for profits. (fn omitted)
Article 2.2.1.1 is also applicable to determining whether, pursuant to Article 2.2.1, sales in the domestic
market of the exporting country are at prices below per-unit costs and ther efore not in the ordinary course of
trade by reason of price.
377 Appellate Body Report, EC – Fasteners (China), paras. 316 and 317.
378 Appellate Body Report, US – Clove Cigarettes , para. 273; Panel Report, China – Broiler Products ,
379 See Panel Reports, China – Broiler Products , para. 7.164; and US – Softwood Lumber V,
paras. 7.236 and 7.237.
380 Definitive Regulation, (Exhibit ARG-22, Recital 38); European Union's response to Panel question
No. 82, paras. 10-14. We note, in this regard, that it has not been argued in the proceedings before us that the
investigating authority derogated from the rule set out in the first sentence of Article 2.2.1.1 on any other
basis, and we therefore consider it unnecessary to expr ess any views in that regard. For the same reason, we
consider it unnecessary to the resolution of the present claim to express any views on the arguments
presented by the parties and third parties as to whether, in general terms, Article 2.2.1.1 permits derogations
on grounds other than those expressly listed in Article 2.2.1.1. (Argentina's first written submission, para. 98;
Saudi Arabia's third-party submission, para. 13; United States' third-party submission, para. 12)
381 This focus is consistent with the general rule in Article 6.10 of the Anti-Dumping Agreement that an
individual dumping margin should be calculated for each particular producer/exporter under investigation.

7.229. We turn next to the verb in the phrase "provided such records … reasonably reflect the
costs associated with the production and sale of the product under consideration". The verb is
"reflect": the records must reflect the costs. The Oxford English Dictionary defines "reflect" as,
inter alia, "to reproduce, esp. faithfully or accurately; to depict."
382 Therefore, we understand this
verb to refer, in the context of the construction of the cost of production under Article 2.2.1.1, to
records that capture, or depict, the costs associated with the production and sale of the product
under investigation in a faithful or accurate manner.
7.230. We consider next the term "reasonably" in this phrase. It is clear to us that "reasonably" is
an adverb that modifies the verb "reflect", and not, as the European Union seems to suggest, the
term "costs". Generally speaking, an adverb modi fies the meaning of a verb, adjective or another
adverb in terms of ideas such as time, place, degree or manner. In the context of the provision of
Article 2.2.1.1, where the verb is to "reflect" the costs associated with production and sale of the
product under consideration, it seems to us that th e modification introduced by the adverb is with
respect to the degree or manner of reflection of such costs in the records of the producer or
exporter. In other words, the question before us concerns the manner or degree by which the
records depict or capture the costs associated with production and sale of the product so to satisfy
the condition that they "reasonably reflect" such costs.
7.231. This brings us to the meaning of "reasonably" in the phrase " reasonably reflect the costs
associated with the production and sale of the product". The adjective underlying the adverb
"reasonably" is "reasonable". The word "reasonable" is given several definitions in dictionaries
depending on the context in which it is used. In the context of Article 2.2.1.1, where the records
must "reasonably reflect" the costs, together with the requirement that the same records must
also be in accordance with generally accepted accounting principles, it seems to us that an
appropriate ordinary meaning of the word "reasona ble" is conveyed here by concepts such as
"rational or sensible", "in accordance with reason", and "fair and acceptable in amount".
383 Since it
is the "records" that must "reflect reasonably" th e costs of production and sale of the product for
the purpose of the construction of the "normal value", and in th e light of our understanding that
"reflect" connotes the faithful and accurate depiction of information, we understand the term
"reasonably reflect" in Article 2.2.1.1 to mean th at the records of a producer/exporter must depict
all the costs it has incurred in a manner that is – within acceptable limits – accurate and reliable.
7.232. Turning to the immediate context of this ph rase in Article 2.2.1.1, we note that it sits
alongside the condition that records be "in accordance with the generally accepted accounting
principles of the exporting country". It is undisputed between the parties that the GAAP generally
encompass a requirement that all the costs that ha ve actually been incurred in the production of
the items be truly reported in a company's records. 384 This means that records containing costs
that differ from the costs actually incurred by producers would likely not be in accordance with
GAAP, and would thus form a basis for derogating from the general rule to use producers' records
under Article 2.2.1.1. This suggests to us that the first sentence of Article 2.2.1.1 is concerned
with the "reasonable reflect[ion]" of the costs that producers actually incur in the production of the
product in question. In this regard, we disagree with the European Union that the inclusion of the
condition in the first sentence of Article 2.2.1.1 for the records kept to be consistent with GAAP
suggests that the subsequent condition pertaining to the records reasonably reflecting costs must
mean something more than simply "the expenses actually incurred".
385 Rather, in our view the
inclusion of the second condition reflects the fact that, while records might be consistent with
GAAP, they may still not adequately report the actual costs incurred by the producer/exporter
under investigation. Moreover, while the costs in the records might be consistent with GAAP, they
may still not accord with how they would need to be considered in the context of an anti-dumping
investigation, such as in respect of the proper allocation of costs for depreciation or amortization
or the relevant time periods. As another example, the specific producer/exporter under
investigation might be part of a vertically-integrated group of companies in which the actual cost
of production of particular inputs is spread across different companies' records, or in which

382 Oxford English Dictionary, http://www.oed.com/view/Entry/160912?rskey=Ly5uAc&result=3#eid,
accessed 23 November 2015.
383 Oxford English Dictionary, http://www.oed.com/view/Entry/159072?redirectedFrom=reasonable#eid,
accessed 23 November 2015.
384 Argentina's first written submission, para. 228; European Union's first written submission, paras. 148
and 149.
385 European Union's first written submission, paras. 148 and 149.

transactions between such companies are not at arms-length or indicative of the actual costs
involved in the production of the product under consideration.
7.233. We find further support for our understanding that the "costs associated with the
production and sale of the product under consideration" refers to the actual costs incurred by the
producer/exporter under investigation in other elements of the context of Article 2.2.1.1. First, the
basic purpose of calculating the cost of production and constructing the normal value on the basis
of that cost under Article 2.2 is to identify an appropriate proxy for the price "of the like product in
the ordinary course of trade in the domestic ma rket of the exporting country" when that price
cannot be used.
386 To us, it clearly flows from this purpose that the "costs associated with the
production and sale of the product under consideration" are those that a producer actually
incurred, since these would yield such a proxy more accurately. Conversely, if the actual costs
incurred by a producer are not properly taken into account, this would lead to an unreliable proxy
for what the price of the like product in the ordinary course of trade in the domestic market of the
exporting country would have been. Second, we note that, pursuant to Article 6.10 of the
Anti-Dumping Agreement, investigating authorities are required as a general rule to determine an
individual margin of dumping for each known pr oducer/exporter concerned of the product under
investigation. This, in turn, suggests to us that costs of production will vary from producer to
producer and each producer's costs of production should be evaluated separately. In that context,
it would seem anomalous to us if the "costs associated with the production and sale" did not refer
to the actual costs incurred by individual producers, as reflected in their records.
7.234. Our view in this regard is also supported by footnote 6 to Article 2.2.1.1 of the
Anti-Dumping Agreement, which provides:
The adjustment made for start-up operations shall reflect the costs at the end of the
start-up period or, if that period extends beyond the period of investigation, the most
recent costs which can reasonably be taken into account by the authorities during the
investigation.
7.235. In particular, it is implicit in this footnote that costs are to be assessed on the basis of the
specific circumstances of each producer/exporter and the costs that they incur, such as those
pertaining to start-up operations. Thus, contrary to the arguments of the European Union, we do
not understand the term "associated" in the phrase "costs associated with the production and sale"
in Article 2.2.1.1 to be capable of denoting costs "normally" associated with the production and
sale of the goods in general.
387 Such an approach could lead to a determination that the costs
contained in the investigated producer/exporter's records do not "reasonably reflect" the costs of
production because of the mere fact that they differ from costs incurred by other
producers/exporters. The European Union's interpretation would, in our view, frustrate the purpose
of Article 2.2.1.1 to enable investigating authorit ies to identify an appropriate proxy for the price
of the like product in the ordinary course of trad e in the domestic market of the exporting country
for each individual producer.
388
7.236. We are also not persuaded by the European Union's reliance on Article 2.2.2 as context,
namely, that the express reference to the "actual data" of the producer/exporter in that provision
relates only to production and sales in the ordinary course of trade, and a contrario, their actual
data need not be used where the like product is not sold in the ordinary course of trade. 389 As we
discuss elsewhere390, the structure of Article 2.2.2 indicates a preference for the actual data of the
exporter and like product in question, with an in cremental progression away from these principles
before reaching "any other reasonable method" in Article 2.2.2(iii), for approximating, as closely
as possible, the profit margin and administrative, selling and general costs for the product under
consideration. Hence, the reference to "actual costs" in the specific context of Article 2.2.2 does

386 Panel Reports, Thailand – H-Beams, para. 7.112; and US – Softwood Lumber V, para. 7.278.
387 European Union's first written submission, paras. 137-143 (referring to Panel Report, Egypt – Steel
388 We emphasize, however, that ou r observations in this regard pe rtain to the invocation of the
particular condition in Article 2.2.1.1 of the Anti-Dumpi ng Agreement relied upon by the European Union in the
present claim. As we mention above in footnote 380, we consider it unnecessary to express any views on any
potential derogations other than that specifically invoked and relied upon by the European Union.
389 European Union's first written submission, paras. 247 and 248.

not in our view support the European Union's re ading of the first sentence of Article 2.2.1.1. 391 If
anything, the context provided by Article 2.2.2 su ggests to us that, as a general principle, the
actual data of producers/exporters is to be pr eferred in constructing the normal value. This
accords with our understanding of Article 2.2.1.1 set out above.
7.237. The European Union argues that the omission of the words "of the product" in Article 2.2 of
the Anti-Dumping Agreement, in contrast to the corresponding provision in Article VI:1(b)(ii) of
the GATT 1994, suggests an intentio n that in the calculation of the constructed price the focus
does not need to be exclusively on the specific company under investigation and the production of
its goods.
392 We disagree. In our view, the term "cost of production" in Article 2.2 could not be
read as referring to anything other than the cost of production "of the product", particularly as
Article 2.2 already refers to the "like product" twice. Thus the inference suggested by the
European Union cannot validly be drawn.
7.238. We further note that the parties made a number of arguments pertaining to the object and
purpose of the Anti-Dumping Agreement. We recall, in this regard, that Argentina argues that the
object and purpose of the Anti-Dumping Agreement is to "counteract dumping, which occurs when
the export price is less than the comparable pric e, in the ordinary course of trade, in the domestic
market and not on any other markets".
393 The European Union responds that the object and
purpose of the Anti-Dumping Agreement is directed at preventing damage incurred by the use of
prices that are artificially low "due to some ab normal condition", and, therefore, goods produced
with costs that are not "normal" fall within the type of conditions that the
Anti-Dumping Agreement is intended to address.
394 The Anti-Dumping Agreement does not contain
a preamble or an explicit indication of its object and purpose.395 Moreover, we do not consider that
an interpretation of the text of Article 2.2. 1.1 in context leaves its meaning equivocal or
ambiguous.396 We therefore do not consider that arguments pertaining to the object and purpose
of the Anti-Dumping Agreement shed light on the meaning of the particular question of
interpretation before us, and we therefore do not examine those arguments in detail.
7.239. The European Union draws on the second Ad Note to Articles VI:2 and VI:3 of the
GATT 1994 to argue that the notion of dumping is not limited to situations that arise out of
producers/exporters' "voluntary" pricing behaviour, but rather, it also covers situations that are
created by the action of governments.
397 The European Union also argues that the situation
addressed in the Ad Note, i.e. multiple currency practices, involve a government-induced
manipulation of the ordinary operation of the market, which substantially affects and distorts
pricing, and that these are precisely the characteristics of Argentina's export tax on soybeans. 398
7.240. We are not convinced by these arguments. The second Ad Note to Articles VI:2 and VI:3
is, on its own terms, limited to "multiple currency practices", and its very existence indicates that
it should be treated as an exceptional and specialized provision. We therefore see no reason to
extrapolate from this provision that the concept of "dumping" is generally intended to cover any

391 Along broadly similar lines, Aust ralia and the United States subm it that the "particular market
situation[s]" referred to in Article 2.2 encompass distor tions that could render a producer/exporter's recorded
costs unreasonable as to the cost of production and sale, and thereby justify departing from those recorded
costs. However, in our view, Article 2.2 of the Anti-Dumping Agreement only states that a "particular market
situation" may necessitate the construction of normal va lue. It does not address how that construction should
be undertaken, which is instead set out in detail in th e subparagraphs of Article 2. 2. (Australia's third-party
response to Panel question No. 5; United States' third-party response to Panel question No. 3, para. 11)
392 European Union's first written submission, para. 196.
393 Argentina's first written submission, para 240. (emphasis original)
394 European Union's first written submission, paras. 157 and 158.
395 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 118.
396 Appellate Body Report, US – Shrimp, para. 114.
397 The text of the second Ad Note provides that:
Multiple currency practices can in certain circumstances constitute a subsidy to exports which
may be met by countervailing duties under paragraph 3 or can constitute a form of dumping by
means of a partial depreciation of a country's currency which may be met by action under
paragraph 2. By "multiple currency practices" is meant practices by governments or sanctioned
by governments.
398 European Union's second written submission, paras. 113-115.

distortion arising out of government action or circumstances such as those surrounding Argentina's
export tax system and its impact on soybean prices as an input material for biodiesel.399
7.241. Finally, we note the explicit provisions allowing investigating authorities to disregard
domestic prices and costs when determining the normal value that are provided for under the
second Ad Note to Article VI:1 of the GATT 1994 (which is incorporated by reference into the
Anti-Dumping Agreement through Article 2.7 thereof) , and in the protocols of accession of certain
Members. These provisions lend further support to our understanding of Article 2.2.1.1. At the
very least, these provisions suggest to us that th eir drafters considered explicit derogations to be
needed in order to allow investigating authorities to use prices or costs other than those prevailing
in the country of origin.
7.242. On the basis of the foregoing consideratio ns, we understand the ordinary meaning of the
phrase "provided such records … reasonably reflect the costs associated with the production and
sale of the product under consideration", in its context, to concern whether the costs set out in a
producer/exporter's records reflect all the actual costs incurred by the producer/exporter under
investigation in –within acceptable limits – an accurate and reliable manner. This, in our view, calls
for a comparison between, on the one hand, the costs as they are reported in the
producer/exporter's records and, on the other, the costs actually incurred by that producer.
400 We
emphasize, however, that the object of the comparison is to establish whether the records
reasonably reflect the costs actually incurred, and not whether they reasonably reflect some
hypothetical costs that might have been incurred under a different set of conditions or
circumstances and which the investigating authority considers more "reasonable" than the costs
actually incurred.
401
7.243. We find support for our understanding of Article 2.2.1.1 in the reports of other panels and
the Appellate Body considering claims under this provision. For instance, the panel in US –
Softwood Lumber V was confronted with a claim that the investigating authority erred under
Article 2.2.1.1 by using the records of certain producers to calculate their cost of production of
softwood lumber.
402 In particular, the claim concerned whether those records "reasonably

399 As we do not see the relevance of the second Ad Note to Article VI:2 and VI:3 on its face, we do not
consider it necessary to address further the material submitted on its negotiating history.
400 However, we do not understand the phrase "reasonably reflect" to mean that whatever is recorded in
the records of the producer or exporter must be automatically accepted. Nor does it mean, as argued by
Argentina, that the words "reasonably reflect" are limited only to the "allocation" of costs. The investigating
authorities are certainly free to examine the reliability and accuracy of the costs recorded in the records of the
producers/exporters, and thus, whether those records "reasonably reflect" such costs. In particular, the
investigating authorities are free to examine whether all costs incurred are captured and none has been left
out; they can examine whether the actual costs incurred have been over or understated; and they can
examine if the allocations made, for example for depreciation or amortization, are appropriate and in
accordance with proper accounting standards. They are also free to examine non-arms-length transactions or
other practices which may affect the reliability of the reported costs. But, in our view, the examination of the
records that flows from the term "reasonably reflect" in Article 2.2.1.1 does not involve an examination of the
"reasonableness" of the reported costs themselves, when the actual costs recorded in the records of the
producer or exporter are otherwise found, within acceptable limits, to be accurate and faithful.
401 We note that the parties and third parties made a number of submissions concerning the negotiating
history of relevant provisions of the Anti-Dumping Agreement and the GATT 1994 pertaining to the
interpretation of Article 2.2.1.1. In this connection, we note that Article 32 of the Vienna Convention provides
that:
Recourse may be had to supplementary means of interpretation, including the preparatory work
of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting
from the application of article 31, or to determine the meaning when the interpretation according
to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable.
Our analysis of the interpretation of Article 2.2.1.1 does not, in ou r view, leave its meaning ambiguous
or obscure, nor lead to a result which is manifestly absurd. Thus, our analysis does not, in our view, call for a
recourse to the negotiating history referred to by the part ies and third parties. In any event, our review of that
negotiating history suggests that it is not conclusive on the issues at hand.
402 We recall that the claim under review in the present section is that the investigating authority erred
by not using the costs reflected in the producers' records. The panel in US – Softwood Lumber V was
confronted with a different claim, namely , whether the investigating authority erred by using the costs
reflected in the producers' records. We note, in this regard, that the nature of the claim faced by the panel in
US – Softwood Lumber V formed a key part of its evaluation of that claim. This was because, in that panel's
view, Article 2.2.1.1 gives rise to a discretion – not a requirement – to decline to use the costs reflected in

reflect[ed]" the level of profit derived from se lling woodchips – a by-product generated in the
production of softwood lumber – which, in turn, of fset the cost of production of softwood lumber.
The panel approached this claim by assessing whether the "records do not reasonably reflect the
extent to which the existence of the by-product reduces the costs to the producer".403 By assessing
the extent to which the profits derived from woodchip sales reduced the cost of production of
softwood lumber, we understand the panel to have sought to ascertain the actual cost of
production to the producer in question. In this regard, we note that the panel rejected an
argument concerning one of the producers that, be cause that producer's sales were made through
interdivisional transactions within the same company at a discounted rate, the profits reflected in
its records should be replaced with a market benchmark price.
404 Instead, the panel found that the
investigating authority did not err in using the actual profits derived from woodchip sales reflected
in that producer's records to offset the cost of production of softwood lumber, notwithstanding that
those transactions may have been at prices lower than market prices for woodchips.405
7.244. We note that, in respect of another producer, the panel in US – Softwood Lumber V took a
different approach. For that particular producer, the investigating authority had rejected the profits
reported in its records for sales of woodchips to affiliated parties, and instead replaced those
profits with other values from that producer's transactions with unaffiliated parties.
406 The panel
did not find error with the investigating author ity's replacement of profits from affiliated
transactions with those from unaffiliated transactions. 407 However, contrary to the arguments of
the European Union, we do not understand this find ing to represent an acceptance of disregarding
recorded costs where they do not reflect market values. 408 Instead, we understand the panel to
have been concerned with whether, in the case of this particular producer, the profits from sales to
affiliated parties were "reliable", that is, whether they provided an accurate indication of the actual
extent to which the sales of woodchips reduce d the costs of production to the producer. 409 The
panel took note, in this connection, of the concerns of the investigating authority about the probity
of the evidence on affiliated sales, as well as the late submission by the relevant producer of

producers' records where the reflection of these is not reasonable. Thus, its observations on whether the
investigating authority erred by using the costs re flected in the producers' records were on an arguendo basis,
assuming that Article 2.2.1.1 imposes a positive obligation on an investigating authority. (Panel Report, US –
Softwood Lumber V , paras. 7.236-7.237, 7.241, 7.310, 7.316, and 7.317; see also European Union's second
written submission, para. 102)
403 Panel Report, US – Softwood Lumber V, para. 7.312. (emphasis added)
404 Panel Report, US – Softwood Lumber V, para. 7.321 and fn 447 thereto.
405 Panel Report, US – Softwood Lumber V , paras. 7.322-7.324. In this regard, we disagree with the
European Union that the investigating authority in that case "used market value as a benchmark for
determining the reasonableness of prices paid by a co mpany to purchase a by-product from an affiliated
c o m p a n y " i n o r d e r t o " c o n f i r m w h e t h e r t h e f i n a l v a l u a t i o n w o u l d b e a s c l o s e a s p o s s i b l e t o m a r k e t v a l u e " .
(European Union's second written submission, para. 106). Ra ther, in our reading, the investigating authority in
that case sought to ascertain whether the reflection of the recorded costs was reasonable. In other words, the
investigating authority tested the recorded costs/prices against a market benchmark in order to determine
whether those costs/prices were reliable and accurate because the transactions at issue were transactions
between divisions of the same company, thus raising questions as to whether the value of the transactions in
the producer's records accurately reflected the costs/prices to the producer. In any event, we note that the
panel's ultimate finding on this aspect was that "an unbiased and objective investigating authority could have
used the actual cost of the input as recorded in Tembec's books as a benchmark for valuing internal transfers
of wood chips". (Panel Report, US – Softwood Lumber V , para. 7.324). The panel did not, in our view, reach a
finding that "confirm[ed] that investigating authorities can use market prices as 'benchmarks' in order to
confirm the 'reasonableness' of the recorded costs and values". (European Union's second written submission,
para. 109). See also Argentina's opening statement at the first meeting of the Panel, para. 95.
406 Panel Report, US – Softwood Lumber V, para. 7.327.
407 Panel Report, US – Softwood Lumber V, para. 7.332.
408 European Union's first written submission, paras. 167-169; second written submission, para. 105.
409 Panel Report, U S – S o f t w o o d L u m b e r V, para. 7.329. In this regard, we do not agree with the
European Union that, by assuming that investigating authorities are not precluded from carrying out an arm's
length test in order to ensure prices charged to affiliated parties are "reliable", the panel in US – Softwood
Lumber V accepted that investigating authorities may reject the data in the companies' records where they do
not reflect market prices, and that they may adjust cost s on the basis of market prices. (European Union's first
written submission, para 167). Rather, we understand the panel to have assumed that such a test is
permissible in order to establish the veracity of the re flection of the recorded costs, and thus to establish
whether those costs are "reliable", or able to be trusted and relied upon. Moreover, in US – Softwood
Lumber V, the investigating authority had used the producer's own transactions in comparing costs and prices
between unaffiliated and affiliated parties, as opposed to a market be nchmark that was external to the
producer.

otherwise pertinent data. 410 Based on the foregoing, our understanding of the panel's analysis in
US – Softwood Lumber V accords with that of Argentina, insofar as it stands for the proposition
that there is no requirement under Article 2.2.1.1 for costs in producers' records to reflect market
values.
411
7.245. We also find support for our understanding of Article 2.2.1.1 in the panel's findings in
Egypt – Steel Rebar . The European Union argues that the panel in that case interpreted
Article 2.2.1.1 to mean that "the costs reflected in the records must be 'reasonable' for the
production of the good in question", and to "refle ct the broader notion of 'associated', instead of
the narrow notion of 'actually incurred'". 412 Our reading of the panel's findings, however, does not
accord with this understanding. In particular, the panel in that case was faced with the question
whether certain short-term interest income was related to the production and sale of rebar, such
that it could be used to offset the cost of production of rebar.
413 In undertaking this inquiry, the
panel focused on evidence as to whether each company under investigation had demonstrated that
the interest income at issue was sufficiently closely related to their costs of production of rebar.
414
Since none of these companies had provided sufficient factual evidence during the investigation
that the interest income was related to their cost of production of rebar, the panel found that
Turkey had not established a prima facie case that the investigating authority violated
Article 2.2.1.1 in deciding not to factor this income as an offset in its calculation of the cost of
production of rebar. 415 In our reading, this approach reveals that the panel understood that
Article 2.2.1.1 calls for a factual assessment of each producer/exporter's actual costs of
production, and whether the evidence on record demonstrates that those costs were offset by
certain income.
7.246. The European Union argues that the panel's findings in EC – Salmon (Norway) "confirms
that Article 2.2.1.1 creates an association with th e costs that would normally be required for the
act of producing" and that the "notion of 'reasonable costs' is not limited to the expenses that the
specific company under investigation has incurred". 416 We do not share the European Union's view
of the panel's analysis in that case. Rather, a close reading of that case suggests to us that the
panel was concerned to ensure the accuracy of the calculation of the actual cost of production to
the producers concerned. In particular, the panel faulted the investigating authority for calculating
certain non-recurring costs on the basis of a th ree year average, despite three years being the
average amount of time to farm a salmon, because those non-recurring costs did not relate
exclusively to the farming-related activities for a given salmon generation.
417 Instead, the panel
stated that "in order to comply with Article 2.2.1.1, the allocation methodology that is applied by
an investigating authority to determine cost of production must reflect the relationship that exists
between the costs being allocated and the production activities to which they are 'associated'" .
418
This statement does not suggest to us that Article 2.2.1.1 is concerned with what might "normally"
be the cost of production. Rather, it suggests to us that the panel was focused on the actual costs
of production incurred by the producers in assessing alleged violations of Article 2.2.1.1. This is
because the panel tested whether there existed, in actuality, a rational relationship between the
costs allocated and the production activities, in order to yield an accurate outcome. Our
understanding in this regard is strengthened by the panel's subsequent finding that the
investigating authority erred in adding costs of purchasing salmon from domestic sources to a
producer's cost of production, without taking account of the revenue received from the same
domestic sources for slaughtering services by that producer in respect of the same purchased
salmon.
419 Again, this reveals an approach focused on the actual costs of production incurred by
producers in assessing alleged violations of Article 2.2.1.1, including any appropriate offset
revenue, rather than the costs that might be "normally" incurred.
7.247. In sum, we consider that the proper inte rpretation of "provided such records … reasonably
reflect the costs associated with the production and sale of the product under consideration" under

410 Panel Report, US – Softwood Lumber V, paras. 7.331-7.333.
411 Argentina's response to Panel question No. 19, para. 54.
412 European Union's first written submission, paras. 133 and 138.
413 Panel Report, Egypt – Steel Rebar, para. 7.422.
414 Panel Report, Egypt – Steel Rebar, paras. 7.423-7.426.
415 Panel Report, Egypt – Steel Rebar, para. 7.426.
416 European Union's first written submission, paras. 141 and 163. (emphasis original)
417 Panel Report, EC – Salmon (Norway), paras. 7.506-7.507.
418 Panel Report, EC – Salmon (Norway), para. 7.514.
419 Panel Report, EC – Salmon (Norway), paras. 7.606 and 7.609.

Article 2.2.1.1 calls for an assessment of whether the costs set out in a producer's records
correspond – within acceptable limits – in an accurate and reliable manner, to all the actual costs
incurred by the particular producer or exporter for the product under consideration.
7.248. With the foregoing considerations in mind, we now turn to whether, in the case before us,
the investigating authority derogated from using the costs reflected in the records kept by
producers in a manner consistent with Article 2.2.1.1. The investigating authority determined not
to use the costs of the main raw material, soybeans, in the production of biodiesel because "the
domestic prices of the main raw material used by biodiesel producers in Argentina were found to
be artificially lower than the international prices due to the distortion created by the Argentine
export tax system".
420 In our view, this does not constitute a legally sufficient basis under
Article 2.2.1.1 for concluding that the producers' records do not reasonably reflect the costs
associated with the production and sale of biodiesel.
7.249. Therefore, we find that the European Union acted inconsistently with Article 2.2.1.1 of the
Anti-Dumping Agreement by failing to calculate the cost of production of the product under
investigation on the basis of the records kept by the producers.421
7.250. Argentina also requests that we find that, as a consequence of failing to calculate the costs
of production consistently with Article 2.2.1.1 of the Anti-Dumping Agreement, the European Union
failed to properly construct the normal value and thus acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. 422 Argentina's claims under
these provisions are purely consequential to its claim under Article 2.2.1.1, and we do not consider
findings under those provisions to be necessary for the effective resolution of this dispute.
7.4.1.5 Whether the European Union acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by failing to construct
the normal value on the basis of the cost of production in the country of origin
7.4.1.5.1 Arguments of the parties
7.4.1.5.1.1 Argentina
7.251. Argentina requests that we find that the European Union acted inconsistently with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by failing to
construct the normal value on the basis of the cost of production in the country of origin.
423
7.252. In addition to its arguments concerni ng the interpretation of Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 424, Argentina submits that the

420 Definitive Regulation, (Exhibit ARG-22), Recital 38.
421 In the light of this finding, we do not consider it necessary to address the arguments set out in
paragraphs 208-213 of Argentina's first written submission concerning the alleged improper establishment of
certain facts. We no te, however, that the Argentine government does not set the price of soybeans in
Argentina.
We also note the argument of the European Union that Argentina's prima facie case rests on the Panel
upholding Argentina's interpretation of Article 2.2.1.1 of the Anti-Dumping Agreement, and consequently, if the
Panel "replac[es] Argentina's legal interpretation of Article 2.2.1.1 with a different legal interpretation that
Argentina has not proffered", this "would be tantamount to the Panel's making the case for the complaining
party". (European Union's second written submission, paras. 90-91, 118, 132, and 139). We disagree with the
suggestion that panels are not entitled to develop their own legal reasoning in a context in which it is clear that
the complaining party has made a claim on a matt er before the panel. (Appellate Body Reports , EC –
Hormones, para. 156; US – Certain EC Products, para. 123). In any event, our understanding of Article 2.2.1.1
of the Anti-Dumping Agreement bears close similarity to the interpretation advocated by Argentina.
422 Argentina's first written submission, para. 244.
423 Argentina's first written submission, paras. 254 and 470(b). Argentina also argues, as a first line of
argumentation, that Article 2(5), second subparagraph, of the Basic Regulation being inconsistent "as such"
with Articles 2.2 of the Anti-Dumping Agreement an d VI:1(b)(ii) of the GATT 1994, its application in the
anti-dumping measures at issue is necessarily inconsiste nt with the same provisions. (Argentina's first written
submission, paras. 248-249). As we have rejected Argentin a's "as such" claims under Articles 2.2 and VI:1, in
the present section we only consider Argentina's second line of argumentat ion, i.e. that Article 2(5), second
subparagraph, of the Basic Regulation was applied in a manner inconsistent with those provisions in the
circumstances of the present investigation.
424 See above, paras. 7.82, 7.86.

EU authorities used prices of soybeans that are not the prices of soybeans in Argentina, i.e. the
country of origin. Rather, they used the referenc e FOB price of soybeans, net of fobbing costs,
which "reflect the level of international prices". 425 For Argentina, the fact that this price is
published by the Ministry of Agriculture in Argentina does not render it a "domestic price" because
it is not a price at which soybeans are or can be acquired domestically, but rather, it provides an
indication of the taxable base that will be used in the calculation of the export tax on a given
day.
426 Therefore, Argentina submits, in construc ting the normal value on the basis of the
reference FOB price minus fobbing costs, the EU authorities calculated a cost of production that is
not the cost of production in the country of origin.427
7.4.1.5.1.2 European Union
7.253. The European Union responds that Ar ticle 2.2 of the Anti-Dumping Agreement and
Article VI:1 of the GATT 1994 entitled it to use th e impugned data in order to calculate the normal
value of Argentine biodiesel.
428
7.254. In addition to its arguments concerni ng the interpretation of Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 429, the European Union submits
that the EU authorities were faced with the problem that certain costs had been distorted as a
result of government action, and were required to find appropriate evidence in order to determine
what the cost would have been in the absence of the distortion.
430 They sought this evidence in the
FOB prices published daily by the Government of Argentina, which technically constitute prices "in
the country of origin"
431, and they properly set forth their reasons for doing so. 432 Thus, the
European Union submits, Argentina failed to make a prima facie case.433
7.4.1.5.2 Evaluation by the Panel
7.255. Argentina requests that we find that the European Union acted inconsistently with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by failing to
construct the normal value on the basis of the cost of production in the country of origin.434
7.256. The text of both Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 refer to the "cost of production" in "the country of origin". 435 Thus, the question before
us is whether the cost used by the EU authorities for soybeans can be understood to be a cost in
"the country of origin", that is, in Argentina.
7.257. We recall, in this regard, that the EU authorities found the domestic prices of the main raw
material used by biodiesel producers in Argentina to be "artificially lower" than international prices
due to the distortion created by the Argentine export tax system. 436 On that basis, the
EU authorities disregarded the price actually paid by Argentine producers for soybeans and
replaced it with "the price at which those companies would have purchased the soya beans in the
absence of such a distortion".
437 Accordingly, the EU authorities replaced the average actual
purchase price of soybeans during the IP, as reflected in the producers' records, with the average
reference price of soybeans published by the Ar gentine Ministry of Agriculture for export, FOB

425 Argentina's first written submission, paras. 251-253; second written submission, para. 191 (referring
to Definitive Regulation, (Exhibit ARG-22), Recital 34).
426 Argentina's second written submission, paras. 193 and 194.
427 Argentina's second written submission, para. 195.
428 European Union's first written submission, para. 257.
429 See above, paras.7.94 - 7.97.
430 European Union's first written submission, para. 205.
431 European Union's opening statement at the first meeting of the Panel, paras. 80 and 81.
432 European Union's first written submission, para. 206; response to Panel question No. 45,
paras. 57-60.
433 European Union's first written submission, para. 207.
434 Argentina's first written submission, paras. 254 and 470(b).
435 The parties agree that both provisions require the use of the "cost of production" in the country of
origin. (European Union's first written submission, paras. 200 and 205-207; Argentina's first written
submission, para. 117).

Argentina, minus fobbing costs, during the IP. 438 The EU authorities considered that this reference
price reflected the level of international prices and that this would have been the price paid by the
Argentine producers in the absence of the export tax system.
439
7.258. In our view, it is plain from this that the cost used by the European Union is not a cost "in
the country of origin". It was specifically selected to remove the perceived distortion in the
domestic price of soybeans caused by the Argentine export tax system. 440 This is because the
prices prevailing in Argentina were considered to be artificially lower than international prices. In
other words, the EU authorities selected this cost precisely because it was not the cost of soybeans
in Argentina.
7.259. The fact that this price was published by the Argentine Ministry of Agriculture, and
therefore, was a price published "in" Argentina, is irrelevant. This price did not represent the cost
of soybeans in Argentina for domestic purchasers of soybeans, including the Argentine
producers/exporters of biodiesel. 441 The European Union itself stated that "the prices used were
indeed reflecting the soya bean costs that the Argentine producers of biodiesel would have to bear
in Argentina, in the absence of the distortion ".442 Thus, the European Union itself recognized that
the prices used were not those actually prevailing in Argentina, but rather, were those that would
have prevailed in the absence of the alleged distortion.
7.260. For the foregoing reasons, we find that the European Union acted inconsistently with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by using a
"cost" that was not the cost prevailing "in the country of origin", namely, Argentina, in the
construction of the normal value.
7.4.1.6 Whether the European Union acted in consistently with Article 2.2.1.1 of the
Anti-Dumping Agreement by including costs no t associated with the production and sale
of biodiesel in the calculation of the cost of production
7.4.1.6.1 Main arguments of the parties
7.4.1.6.1.1 Argentina
7.261. Argentina submits that the European Union acted inconsistently with Article 2.2.1.1 of the
Anti-Dumping Agreement because it included costs not associated with the production and sale of
biodiesel in the calculation of the cost of production.
443
7.262. In Argentina's view, the test under Article 2.2.1.1 of the Anti-Dumping Agreement focuses
on the records kept by the producer/exporter, and therefore the "costs associated with the
production and sale" are necessarily the costs of that specific producer/exporter. 444 This further
flows from the fact that the test refers to the "costs associated with the production and sale of the
product under consideration ".445 According to Argentina, instead of calculating the cost of
production on the basis of the records of the ex porting producers, the European Union decided to
base the cost of soybeans on an average of the FOB reference price published by the Ministry of
Agriculture of soybeans net of fobbing costs. 446 Since the producers under investigation did not
pay the reference FOB price minus fobbing costs for soybeans but instead paid the actual amounts
reflected in their records, Argentina submit s that the price of soybeans used by the

438 Definitive Disclosure, Annex II, (Exhibit ARG-38) (BCI), p. 1.
440 Definitive Regulation, (Exhibit ARG-22), Recitals 38-40.
441 To recall, the price used by the EU authorities was the reference price used by the Argentine
government for the calculation of the export tax on soybeans. See above, para. 7.184.
442 European Union's response to Panel question No. 45, para. 60. (emphasis added)
443 Argentina's first written submission, para. 470(c).
444 Argentina's second written submission, para. 115.
445 Argentina's second written submission, para. 115 (emphasis original); response to Panel question
No. 91, para. 38.
446 Argentina's first written submission, para. 260.

European Union to calculate the cost of production is not a price that is associated with the
production and sale of the like product.447
7.4.1.6.1.2 European Union
7.263. The European Union submits that Argentin a's claim is based on the assumption that the
terms "associated with the production and sale" in Article 2.2.1.1 should be given the meaning
"prices actually paid by the companies under investigation".
448 In the European Union's view,
however, the term "associated" has a broader meaning than the words "actually incurred" or
"actually paid".449 The European Union submits, in this regard, that the panel report in Egypt –
Steel Rebar used the term "pertain to the production".450 In the European Union's view, the panel's
use of the term "pertain", akin to the use of the term "associated", demonstrates that
Article 2.2.1.1 does not require that the "costs" used for the calculation be the "expenses actually
incurred" by the producer.
451
7.264. The European Union submits that its understan ding in this regard is reinforced by the fact
that Article 2.2.1.1 mentions the costs associated "with the production", as opposed to the costs
incurred by the "producer".452 The European Union notes the EC – Salmon (Norway) panel's finding
that the "costs of production" should be understood as the prices to be paid "for the act of
producing".
453 For the European Union, the use of the te rms "production" and "act of producing",
instead of the term "producer", shows that Article 2.2.1.1 does not require the costs to have been
actually paid by the specific producers that are subject to the investigation. The European Union
also argues that the context afforded by Article 2.2.2 of the Anti-Dumping Agreement, which uses
the phrase "shall be based on actual data pertaining to production and sales in the ordinary course
of trade", can be contrasted with Article 2.2.1.1, which uses the phrase "reasonably reflect the
costs associated with the production and sale".
454
7.4.1.6.2 Arguments of the third parties
7.265. China submits that, self-evidently, the price of soybeans exported from Argentina is not a
cost associated with the production and sale of biodiesel in Argentina, since exported soybeans are
necessarily not available to producers of biodiesel in Argentina. 455 By including in its calculation of
the cost of production of biodiesel a cost which was not associated with the cost of production and
sale of biodiesel, China argues, the European Union acted inconsistently with Article 2.2.1.1 of the
Anti-Dumping Agreement.
456
7.266. Indonesia submits that the European Union misint erprets the statement of the panel in
Egypt – Steel Rebar in asserting that, by using the word "pertain", "the Panel was seeking a term
that would reflect the broader notion of 'associated' instead of the narrow notion of actually
incurred".
457 Indonesia submits that this is because, in the chapeau of Article 2.2.2, the present
participle of the verb "pertain" is used to refer to the "actual data" of the producer/exporter under
investigation.458 Indonesia also considers that previous panel reports have adequately established
that the phrase "costs associated with the production and sale of the product under consideration"

447 Argentina's first written submission, para. 261; second written submission, paras. 185-189 (referring
to Panel Report, EC – Salmon (Norway), para. 7.483).
448 European Union's first written submission, para. 259.
449 European Union's first written submission, para. 260.
450 European Union's first written submission, para. 260 (referring to Panel Report, Egypt – Steel Rebar,
para. 7.393). (emphasis added)
451 European Union's first written submission, para. 260; opening statement at the first meeting of the
Panel, para. 72.
452 European Union's first written submission, para. 261.
453 European Union's first written submission, para. 261 (referring to Panel Report, EC – Salmon
(Norway), para. 7.481).
454 European Union's opening statement at the first meeting of the Panel, para. 73.
455 China's third-party submission, para. 125.
456 China's third-party submission, para. 127.
457 Indonesia's third-party submissi on, para. 40(iii) (referring to European Union's first written
submission, paras. 137 and 138, in turn referring to Panel Report, Egypt – Steel Rebar, para. 7.383).
458 Indonesia's third-party submission, para. 40(iii); third-party statement, para. 11.

necessarily refers to the costs which are connected in some manner to the actual production and
sales of the product under consideration by the investigated producer/exporter.459
7.267. The United States submits that it is revealing that, rather than modify "reasonably reflect
costs" with the phrases "actually incurred" or "by the exporter or producer in question,"
Article 2.2.1.1 references costs " associated with the production and sale of the product under
consideration".460 For the United States, the text of Article 2.2.1.1 is not directly tied to the
producers or their books and records. Rather, the term "associated with" suggests a more general
connection between the relevant costs and the production or sale of the product. 461 The
United States contends that the use of the term "associated with" also conveys a conception of
costs more general than just those borne by the specific producer.
7.4.1.6.3 Evaluation by the Panel
7.268. Argentina requests that we find that the European Union acted inconsistently with
Article 2.2.1.1 of the Anti-Dumping Agreement because it included costs not associated with the
production and sale of biodiesel in the calculation of the cost of production.
462
7.269. We recall, in this connection, that Arge ntina has also requested us to find that the
European Union acted inconsistently with Article 2.2.1.1 of the Anti-Dumping Agreement by failing
to calculate the cost of production on the basis of the records kept by the producers. 463 In our
understanding, the present claim also follows from the reliance of the European Union on the
condition in Article 2.2.1.1 set out in the phrase "provided that such records … reasonably reflect
the costs associated with the production and sale of the product under consideration". The
EU authorities relied on this condition in their determination not to calculate costs on the basis of
the records kept by the producers under investigation. We have already examined whether the
EU authorities had a legally sufficient basis under Article 2.2.1.1 for concluding that the producers'
records do not reasonably reflect the actual costs incurred in the production of biodiesel. We found
that they did not and consequently, found that the European Union acted inconsistently with
Article 2.2.1.1 of the Anti-Dumping Agreement.
464 Thus, in the light of that finding, we consider it
unnecessary to reach a finding on the present claim for the effective resolution of this dispute.
7.4.1.7 Whether the European Union acted inconsistently with Article 2.1 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994
7.4.1.7.1 Main arguments of the parties
7.4.1.7.1.1 Argentina
7.270. Argentina submits that, as a consequence of the European Union acting inconsistently with
Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 in
calculating the cost of production and constructing the normal value, the dumping margin
determinations made by the investigating authority are also inconsistent with Article 2.1 of the
Anti-Dumping Agreement and with Article VI:1 of the GATT 1994.
465
7.271. Argentina indicates that its claim is "not a stand-alone claim", but rather, is a
consequential claim premised on other violations. 466 Argentina submits that, while Article VI:1 of
the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement are definitional provisions that do
not impose independent obligations and on which no stand-alone claim can be based, the
character of such provisions as definitional does not mean that a Member cannot act inconsistently

459 Indonesia's third-party submission, pa ra. 40 (referring to Panel Reports, Egypt – Steel Rebar ,
460 United States' third-party submission, para. 26. (emphasis original)
461 United States' third-party submission, para. 26.
462 Argentina's first written submission, para. 470(c).
463 Argentina's first written submission, paras. 195, 244, and 470(a).
464 See above, para. 7.249.
465 Argentina's first written submission, paras. 264 and 470(d); second written submission, paras. 196
and 254(d).
466 Argentina's response to Panel question No. 55, para. 134; opening statement at the first meeting of
the Panel, para. 39.

with such definitions in and of themselv es, and when applied to other provisions. 467 Argentina
notes, in this respect, that the Appellate Body has not declined to find violations of these
provisions in its past reports because such provisions cannot be violated, but rather, the
Appellate Body deemed that additional findings under those provisions were not necessary to
resolve the particular disputes concerned.
468
7.272. Argentina further submits that Article 2.1 of the Anti-Dumping Agreement is not limited to
cases in which there are no sales in the ordinary course of trade, but rather, it is concerned with
defining dumping generally, as evidenced by the phrase "for the purpose of this Agreement". 469 In
Argentina's view, a finding that the European Union acted inconsistently with Article 2.1 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994 will provide "more solid legal
predictability", and would ensure that, when implementing the Panel's recommendations and
rulings, the European Union adopts a measure which is not only consistent with Articles 2.2
and 2.2.1.1, but also with Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the
GATT 1994.
470
7.4.1.7.1.2 European Union
7.273. The European Union submits that, according to the jurisprudence of the Appellate Body,
Article 2.1 of the Anti-Dumping Agreement and Ar ticle VI:1 of the GATT 1994 do not impose any
independent obligation on Members, and they cannot serve as a legal basis for a distinct claim in
WTO dispute settlement proceedings. 471 Consequently, Argentina cannot base any claim on
Article 2.1 of the Anti-Dumping Agreement. For the European Union, Argentina's assertion that its
claims are "consequential" and dependent on other claims under different legal provisions
essentially constitutes a request to the Panel to exercise judicial economy on these claims.
472 Since
the provisions at issue are not aimed at protecting some specific and distinct legal right or interest,
the European Union doubts whether raising claims under those provisions is compatible with the
Members' obligations under Article 3.10 of the DSU.
473
7.274. Further, the European Union submits that, in defining the concept of a "dumped product",
the text of Article 2.1 expressly refers to a comparison between the export price and the
comparable domestic price of the product "in the ordinary course of trade". 474 For the
European Union, Article 2.1 does not cover situations, as in the present case, where there are no
domestic sales "in the ordinary course of trade".
7.4.1.7.2 Evaluation by the Panel
7.275. We commence our analysis by noting th at the Appellate Body has approached similar
claims in the following manner
475:
Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 are
definitional provisions. They set out a definition of "dumping" for the purposes of the
Anti-Dumping Agreement and the GATT 1994. The definitions in Article 2.1 and
Article VI:1 are no doubt central to the interpretation of other provisions of the
Anti-Dumping Agreement, such as the obligations relating to, inter alia, the calculation
of margins of dumping, volume of dumped imports, and levy of anti-dumping duties to
counteract injurious dumping. But, Article 2.1 and Article VI:1, read in isolation, do
not impose independent obligations. As we have found that the United States acts
inconsistently with Article 2.4.2 of the Anti-Dumping Agreement by maintaining
zeroing procedures in original investigations on the basis of T-T comparisons, we do

467 Argentina's response to Panel question No. 55, paras. 133 and 135.
468 Argentina's response to Panel question No. 55, para. 135 (referring to Appellate Body Reports, US –
Zeroing (Japan), para. 140; US – Stainless Steel (Mexico) , para. 140); opening statem ent at the first meeting
of the Panel, para. 40 (referring to Appellate Body Report, US – Zeroing (Japan), para. 140).
469 Argentina's opening statement at the first meeting of the Panel, para. 41.
470 Argentina's response to Panel question No. 107, paras. 82-84.
471 European Union's first written submission, paras. 48 and 53 (refe rring to Appellate Body Report, US
– Zeroing (Japan), para. 140).
472 European Union's second written submission, para. 14.
473 European Union's second written submission, para. 14.
474 European Union's first written submission, para. 49.
475 Appellate Body Report, US – Zeroing (Japan), para. 140.

not consider it necessary to make additional findings on Japan's claims under these
provisions. Japan has not explained why such additional findings under Article 2.1 of
the Anti-Dumping Agreement and Articles VI:1 and VI:2 of the GATT 1994 would be
necessary to resolve this dispute. (fn omitted)
7.276. We see no reason to depart from this approach in the present case. In particular,
Argentina has not explained how, the Panel having found the European Union to have acted
inconsistently with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii)
of the GATT 1994, additional findings under Ar ticle 2.1 of the Anti-Dumping Agreement and
Article VI:1 of the GATT 1994 would contribute to the effective resolution of the present dispute.
Argentina asserts that such findings would provide "more solid legal predictability", and ensure
that, as part of its implementation, the European Union would adopt a measure which is not only
consistent with Articles 2.2 and 2.2.1.1, but also with Article 2.1 of the Anti-Dumping Agreement
and Article VI:1 of the GATT 1994.
476 However, Argentina does not ground these assertions on any
further explanation or argumentation. In the ab sence of cogent reasons for departing from the
approach of the Appellate Body in prior cases, we adopt the same approach. 477 We therefore
conclude that is it unnecessary to make findings on Argentina's claims under Article 2.1 of the
Anti-Dumping Agreement and Article VI:1 of th e GATT 1994 for the effective resolution of the
present dispute.
7.4.2 Whether the European Union acted inconsistently with Article 2.4 of the
Anti-Dumping Agreement by failing to make a fair comparison between the normal value
and the export price
7.4.2.1 Legal claim
7.277. Argentina requests that we find that the European Union acted inconsistently with
Article 2.4 of the Anti-Dumping Agreement by failing to make due allowance for differences
affecting price comparability, including differences in taxation, thereby precluding a fair
comparison between the export price and the normal value.
478 In particular, Argentina claims that
the comparison between a constructed normal valu e that reflected an average of the reference
price of soybeans published by the Argentine Ministry of Agriculture (minus fobbing costs), on the
one hand, and an export price that reflected the ac tual domestic price of soybeans, on the other,
was not a "fair comparison" under Article 2.4.479
7.4.2.2 Relevant provisions of the covered agreements
7.278. Article 2.4 of the Anti-Dumping Agreement provides, in relevant part:
A fair comparison shall be made between th e export price and the normal value. This
comparison shall be made at the same level of trade, normally at the ex-factory level,
and in respect of sales made at as nearly as possible the same time. Due allowance
shall be made in each case, on its merits, for differences which affect price
comparability, including differences in conditions and terms of sale, taxation, levels of
trade, quantities, physical characteristics, and any other differences which are also
demonstrated to affect price comparability.[*] In the cases referred to in paragraph 3,
allowances for costs, including duties and taxes, incurred between importation and
resale, and for profits accruing, should also be made. If in these cases price
comparability has been affected, the authorities shall establish the normal value at a
level of trade equivalent to the level of trade of the constructed export price, or shall
make due allowance as warranted under this paragraph.
[*fn original]7 It is understood that some of the above factors may overlap, and authorities shall
ensure that they do not duplicate adjustments that have been already made under this provision.

476 Argentina's response to Panel question No. 107, paras. 82-84.
477 Appellate Body Report, US – Stainless Steel (Mexico), para. 160.
478 Argentina's first written submission, para. 470(f).
479 Argentina's first written submission, para. 296.

7.4.2.3 Factual background
7.279. As noted above 480, the EU authorities considered that the normal value had to be
constructed, and replaced the actual prices paid by the producers for the main raw material,
soybeans, with prices that reflected the level of international prices. The reason for this
replacement, according to the EU authorities, was that the domestic Argentine prices for soybeans
were distorted by the Argentine export tax system.
481
7.280. In its comments on the Definitive Discl osure, CARBIO argued that, by comparing the
exporting producers' actual export prices to a normal value based on international prices of
soybean and soybean oil, the EU authorities effect ively compared a normal value that reflects the
inclusion of the export taxes on soybeans and soybea n oil with an export price that is net of such
taxes. It contended that, given that soybean oil is the main component of the production costs, the
inclusion of the export taxes in the normal value substantially impacted price comparability.
CARBIO argued that the EU authorities' decision to construct the normal value on the basis of
international prices of soybeans and soybean oil and to compare this value with an export price net
of export taxes (that would otherwise have brought such export price also to the level of
"international prices") could not be considered a "fair comparison".
482
7.281. In response to CARBIO's argument that the EU authorities did not make a fair comparison,
the EU authorities stated that:
The fact that from a pure numerical point of view the result is similar does not mean
that the methodology applied by the Commission consisted in simply adding the
export taxes to the costs of the raw material. International prices of commodities are
set based on supply and demand and there is no evidence that the DET system in
Argentina affects the CBOT prices. Therefore, all claims and allegations that by using
an international price the Commission did not make a fair comparison between normal
value and export price are unfounded.
483
7.4.2.4 Main arguments of the parties
7.4.2.4.1 Argentina
7.282. Argentina argues that the failure to construct the normal value on the basis of the cost of
production reported in producers' records, which it claims is inconsistent with, inter alia ,
Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement, introduced a difference between the
normal value and export price that affected price comparability. For Argentina, the difference
stems from the EU authorities' reflection of the ex port tax on soybeans in the cost of soybeans for
the purposes of calculating the cost of producti on when constructing the normal value, while
omitting that same tax from the export price.
484 In Argentina's view, this approach ignores the fact
that both exported biodiesel and domestically sold biodiesel are manufactured using domestic
soybean oil and this has led to an "artificial imbalance" between the export price and the normal
value.
485
7.283. According to Argentina, the European Union should have made "due allowance" for this
difference between the export price and the normal value, for instance by deducting the export tax
on domestic soybeans from the constructed normal value. 486 Although Argentina acknowledges
that the export tax on soybeans was not directly added to the cost of production, Argentina

480 See above, paras. 7.182, 7.184.
481 Definitive Disclosure, (Exhibit ARG-35), paras. 35-37.
482 CARBIO's comments on the Definitive Disclosure (Exhibit ARG-39), p. 12.
483 Definitive Regulation, (Exhibit ARG-22), Recital 42.
484 Argentina's first written submission, para. 303.
485 Argentina's second written submission, para. 202.
486 Argentina's response to Panel question Nos. 56, para. 138, and 113, paras. 98-100. Argentina
submits that this difference acco unts for approximately 75% of the dumping margin found by the
European Union at the definitive stage. (Argentina's first written submission, para. 300; opening statement at
the first meeting of the Panel, para. 105; response to Panel question No. 56, para. 137)

submits that the methodology of the European Un ion yielded a result which, from a numerical
viewpoint, was similar to simply adding the export tax.487
7.284. Argentina submits that its claim under Article 2.4 does not concern the manner in which
the normal value was constructed. Rather, for Argentina, the WTO-inconsistent construction of the
normal value introduced differences between the no rmal value and the export price that affected
price comparability and for which due allowance should have been made pursuant to Article 2.4. 488
In this regard, Argentina refers to the panel report in EU – Footwear (China) , which stated that
"the provisions of Article 2.4 are intended precisely to deal with problems that arise in the
comparison as a result of, inter alia, how normal value was established".489
7.4.2.4.2 European Union
7.285. The European Union argues that Argentina has failed to substantiate its claim of
inconsistency with Article 2.4 of the Anti-Dumping Agreement.
7.286. The European Union contends that, properly characterized, Argentina's claim under
Article 2.4 pertains to the calculation of the normal value, as opposed to the comparison between
the normal value and the export price.
490 The European Union draws on the panel reports in
Egypt – Steel Rebar and EC – Tube or Pipe Fittings to argue that Article 2.4 does not deal with "the
basis for and basic establishment of the export price and normal value (which are addressed in
other provisions)", but rather, has to do "with the nature of the comparison of export price and
normal value". 491 Thus, Argentina's claim that the EU authorities should have calculated the
normal value in a different way falls outside the scope of Article 2.4, because Article 2.4 does not
apply to the establishment of the normal value.
492
7.287. The European Union submits that the EU authorities did not adjust the normal value by
reference to the level of the export tax on soybeans. 493 Rather, the European Union contends that
the EU authorities considered the export tax to have introduced a distortion into the market for
soybeans and soybean oil, thus prompting them to measure the extent of that distortion and,
accordingly, adjust the cost of production. 494 While the extent of the distortion corresponded, in
practice, to the level of the export tax, the European Union submits that the extent of the
distortion could have been less had the balance of market power between the soybean growers
and the biodiesel producers been such that the growers could have obtained a higher price. 495
Thus, the European Union should not be understood to have adjusted the normal value by an
amount corresponding to the level of export ta x, but rather, to have made adjustments for a
market distortion created by the export tax.
7.288. Further, the European Union argues that Argentina's reliance on the panel report in EU –
 Footwear (China) is misplaced because that case addressed a different situation and a different
claim, and, conversely, that panel report actu ally supports the European Union's position by
concluding that Article 2.4 does not "establish specific obligations with regard to the methodologies
that investigating authorities may use in order to ensure a fair comparison".
496 For the
European Union, this suggests that investigating authorities enjoy discretion under Article 2.4 on
how adjustments are made and which methodology they chose to ensure a fair comparison. 497 The

487 Argentina's first written submission, paras. 302-304 (referring to Panel Report, Egypt – Steel Rebar ,
para. 7.388).
488 Argentina's first written submission, paras. 285 and 286; second written submission, para. 206;
response to Panel question No. 56, paras. 136-138.
489 Argentina's response to Panel question No. 56, para. 137; opening statement at the second meeting
of the Panel, para. 7 (both quoting Panel Report, EU – Footwear (China), para. 7.264).
490 European Union's response to Panel question No. 57, para. 84.
491 European Union's second written subm ission, para. 21 (quoting Panel Report, Egypt – Steel Rebar ,
para. 7.333 (emphasis added by the European Union)); see also ibid. para. 26 (quoting Panel Report, EC –
492 European Union's second written submission, paras. 21-22 and 24.
493 European Union's first written submission, para. 284.
494 European Union's first written submission, para. 284.
495 European Union's first written submission, para. 284.
496 European Union's second written submissi on, paras. 31-35 (quoting Panel Report, EU – Footwear
(China), para. 7.281).
497 European Union's second written submission, para. 36. The European Union also refers to the Panel
Report in EC – Tube or Pipe Fittings, para. 7.178.

European Union argues that in the present case, Argentina has failed to show that the
EU authorities have exercised their discretion in an arbitrary manner when comparing the normal
value and the export price.
7.4.2.5 Arguments of the third parties
7.289. China submits that Article 2.4 of the Anti-Dumping Agreement applies generally to the
calculation of the dumping margin, regardless of how the normal value and export price are
determined.
498 In China's view, the European Union acte d inconsistently with Articles 2.2.1.1
and 2.2 by making adjustments to the costs of soybeans. However, even if the EU authorities were
entitled to make such adjustments, China argues that those adjustments nonetheless resulted in a
difference affecting price comparability under Article 2.4. This is because the adjustments led to a
difference in the costs of inputs reflected respectively in the normal value and in the export price,
and this difference affected price comparability.
499 In China's view, the European Union was
obliged under Article 2.4 to make "due allowance" for this difference in order to ensure a fair
comparison between the normal value and the export price.
7.290. Indonesia submits that there is an obvious difference between the constructed normal
value and the export price affectin g the comparability between the two. 500 Indonesia submits that
the use of international prices for soybeans or the inclusion of an amount numerically equal to the
export tax on soybeans only in the normal value is a difference that needed to be taken into
account in the comparison to the export price, be cause it affected the "comparable price" that was
constructed.501
7.291. The United States submits that the text of Article 2.4 of the Anti-Dumping Agreement
presupposes that the appropriate normal value has already been identified. 502 The United States
agrees in principle with both complainant and re spondent that the use of a constructed normal
value does not preclude the need for due allowances or adjustments where necessary. 503 In the
context of the comparison required by Article 2.4, the United States submits that the Panel should
consider, first, whether there is a relevant difference between the constructed value and the
export price, and second, whether that difference has an effect on "price comparability".
7.4.2.6 Evaluation by the Panel
7.292. We begin our analysis by interpreting Article 2.4 of the Anti-Dumping Agreement based on
its text and context, taking into account relevant reports of prior panels and the Appellate Body.
7.293. Beginning with the text of Article 2.4, we note that its opening sentence mandates that a
"fair comparison" be made between the export price and the normal value when determining
whether dumping exists.
504 The second sentence of Article 2.4 sets up certain parameters for this
comparison, requiring it to be "at the same level of trade, normally at the ex-factory level, and in
respect of sales made at as nearly as possible the same time". These parameters, in our view,
provide an indication of matters to be considered in ensuring that the comparison is "fair".
7.294. The third sentence of Article 2.4 elaborates on the means of ensuring, in practical terms,
that the "comparison" between the normal value and the export price is "fair". It requires "[d]ue
allowance" to be made "for differences which affect price comparability". In our understanding, the
ordinary meaning of making an "allowance" connotes "mak[ing] [an] addition or deduction

498 China's third-party submission, para . 143 (referring to Panel Report, Egypt – Steel Rebar ,
para. 7.388).
499 China's third-party submission, para. 145.
500 Indonesia's third-party statement, para. 21.
501 Indonesia's third-party statement, para. 21 (referring to Appellate Body Report, US – Zeroing (EC) ,
502 United States' third-party submission, para. 33.
503 United States' third-party submission, para. 34.
504 We note that the parties and third partie s do not dispute that Article 2.4 of the
Anti-Dumping Agreement applies in cases involving normal values constructed under Article 2.2 of the
Anti-Dumping Agreement. (Argentina's first written submission, para. 286; European Union's first written
submission, para. 286; China's third-party submission, pa ra 145; Indonesia's third-party statement, para. 21;
Saudi Arabia's third-party submission, para. 31; United States' third-party submission, para. 34)

corresponding to; … tak[ing] into account mitigating or extenuating circumstances" 505, and "due"
connotes what is "just, proper, regular, and reasonable". 506 That is, additions or deductions in
appropriate amounts to the export price or normal value may be required to account for
"differences" between the two if they affect price comparability, thereby ensuring the "fairness" of
the comparison under Article 2.4. The Appellate Bo dy, interpreting the text of Article 2.4, has
indicated that this provision is specific in describing the circumstances in which such allowances
are to be made, namely, as just noted, where there are "differences in characteristics of the
compared transactions that have an impact, or are likely to have an impact, on the price of the
transaction".
507 This, in turn, calls for the identification of "differences" that affect the
appropriateness of the respective "price[s]" for the purposes of comparison, which would
compromise the "fair[ness]" of the comparison if an allowance were not made.
7.295. Article 2.4 lists examples of "differences " between the normal value and the export price
which presumptively may affect price comparability: "conditions and terms of sale, taxation, levels
of trade, quantities, [and] physical characterist ics". The elements of listed differences are all
features, or characteristics, of the transactions that are compared to determine whether there is
dumping.
508 This list is non-exhaustive, and due allowance must also be made for "any other"
difference which is demonstrated to affect price comparability. Thus, the reference in Article 2.4 to
"price comparability" can be understood to refer to differences in characteristics of the compared
transactions that have an impact, or are likely to have an impact, on the prices involved in the
transaction.
509
7.296. Viewed in this context, it is evident th at Article 2.4 concerns the comparison between the
normal value and the export price and is not directed at what the panel in Egypt – Steel Rebar
described as "the basis for and basic establishment of the export price and normal value", which it
considered to be "addressed in detail in other provisions".510 Or, in the words of the EU – Footwear
(China) panel: "[n]othing in Article 2.4 suggests that the fair comparison requirement provides
guidance with respect to the determination of the component elements of the comparison to be
made, that is, normal value and export price."
511 Thus, the subject-matter of Article 2.4, i.e.
differences affecting the comparability of the normal value and the export price, can be contrasted
with that of Articles 2.1, 2.2 – including its subparagraphs – and 2.3 which pertain to the
methodology for determining the normal value and the export price.
512
7.297. This is not to say that the manner in which the normal value or export price is determined
is not pertinent to the question whether the authority is conducting a "fair comparison" within the
meaning of Article 2.4. Indeed, as noted above 513, the parties and third parties all agree that
Article 2.4 of the Anti-Dumping Agreement applie s in cases involving normal values constructed
under Article 2.2 of the Anti-Dumping Agreement. We agree with the Egypt – Steel Rebar panel's
indication that "[a] constructed normal value is, in effect, a notional price, 'built up' by adding
costs of production, administrative, selling and other costs, and a profit". Thus, it may be
necessary to make "due allowance" in a particular investigation in order to comply with the
obligation to ensure a fair comparison under Arti cle 2.4, even though the normal value is one
arrived at by way of a construction under Article 2.2.
514 Thus, there may be cases where the

505 Oxford English Dictionary, http://www.oed.com/view/Entry/5464?rskey=sBvRt6&result=1#eid,
accessed 23 November 2015.
506 Panel Report, Mexico – Olive Oil, para 7.67 (citing Black's Law Dictionary, 7th edn, abridged. (2000),
p. 405).
507 Appellate Body Report, US – Zeroing (EC), para. 157.
508 Appellate Body Report , US – Zeroing (EC) , para. 157; Panel Report, US – Stainless Steel (Korea) ,
para. 6.77.
509 Appellate Body Report , US – Zeroing (EC) , para. 157; Panel Report, US – Stainless Steel (Korea) ,
para. 6.77. The Appellate Body has indicated that, conver sely, the third sentence of Article 2.4 can also be
read a contrario, such that allowances may not be made for diffe rences that do not affect price comparability.
(Appellate Body Report, US – Zeroing (EC), para. 156)
511 Panel Report, EU – Footwear (China), para 7.263.
512 We note, however, that the fourth and fifth senten ces of Article 2.4, which are not at issue here and
which apply in specific cases involving a constructed export price under Article 2.3, can be conceived as
supplementing the construction of the export price pursuant to that provision. These two sentences incorporate
disciplines to ensure that the constructed export prices are comparable to the normal value, notwithstanding
that they have been constructed by the investigating authority on the bases specified in Article 2.3.
513 See above fn 504.
514 Panel Report, Egypt – Steel Rebar, para. 7.388.

methodology by which the normal value is calculated has a bearing on the kinds of allowances that
may need to be made to ensure a "fair comparis on" under Article 2.4. As one example, we note
that, in United States – Hot-Rolled Steel , the Appellate Body found that the use of downstream
sales prices in the calculation of the normal value under Article 2.1 could, in principle, necessitate
the provision of appropriate allowances under Article 2.4 to account for any differences that affect
price comparability.515
7.298. We turn now to Argentina's claim that the European Union acted inconsistently with
Article 2.4 of the Anti-Dumping Agreement by failing to make a fair comparison between the
export price and the normal value in the underlying investigation. 516 Argentina's claim concerns
what it describes as the "artificial imbalance" between a normal value that reflects an average of
the reference FOB price of soybeans (minus fobbing costs), on the one hand, and an export price
that reflects the actual domestic price of soybeans, on the other.
517 Thus, the question before us is
whether this difference between the normal value and the export price is a "difference which
affects price comparability" for which "due allowance" should have been made in order to ensure a
"fair comparison" under Article 2.4 of the Anti-Dumping Agreement.518
7.299. At the outset, we consider it useful to recall how this difference between the normal value
and the export price arose. In particular, we reca ll that the EU authorities reached the conclusion
that the export tax applicable to soybeans and soybean oil depressed the domestic prices of the
main raw material input in biodiesel to an artificially low level. 519 This was found to distort the
costs of production for biodiesel in Argentina. 520 Thus, the EU authorities considered that the costs
of the main raw material were not reasonably reflected in the records kept by the Argentine
producers under investigation. 521 They replaced those costs with costs reflecting the price which
they considered would have been the price at which those producers would have purchased the
soybeans in the absence of the distortion caused by the export tax.
522 The replacement used by
the authorities was the average of the reference prices of soybeans published by the Argentine
Ministry of Agriculture during the investigating period, which the Argentine government used to
calculate the amount of the export tax on soybeans.
523 Thus, the level of distortion mitigated by
the authorities more or less amounted to the leve l of the export tax, given that the difference
between the reference price and actual prices roughly equalled the export tax.524
7.300. Thus, the "difference" that Argentina claims "affects price comparability" between the
normal value and the export price, such that "due allowance" should have been made in order to
ensure a "fair comparison" under Article 2.4, arose from the methodology used by the
investigating authority to determine the normal value. In particular, it arose from the decision of
the investigating authority – challenged by Argentina under claims that we have upheld above – to
construct a normal value by, inter alia, using what it considered to be undistorted prices for the
main raw material input.
525

515 Appellate Body Report, US – Hot-Rolled Steel, para. 169.
516 Argentina's first written submission, para. 296.
517 Argentina's second written submission, para. 202.
518 The European Union asserts that Argentina's claim falls outside the "scope" of Article 2.4 and must
therefore be rejected as a preliminary matter. (Europ ean Union's second written submission, paras. 20-28).
The European Union's argument in that regard is premised on its own interpretation of Article 2.4. We do not
see how we can reject Argentina's cl aim, as a preliminary matter, on the basis of the European Union's
interpretation of Article 2.4 without first reviewing both the merits of Argentina's claim and the
European Union's preferred interpretation. We therefore decline to reject Argentina's claim, as a preliminary
matter, on the basis that it is outside the "scope" of Article 2.4.
519 Definitive Disclosure, (Exhibit ARG-35), paras. 26 and 31; Definitive Regulation, (Exhibit ARG-22),
paras. 30 and 35.
521 Definitive Disclosure, (Exhibit ARG-35), para. 34; Definitive Regulation, (Exhibit ARG-22), paras. 38
and 39.
523 Definitive Disclosure, (Exhibit ARG-35), paras. 32 and 36; Definitive Regulation, (Exhibit ARG-22),
paras. 36 and 40.
524 European Union's first written submission, pa ra. 284; Argentina's first written submission,
paras. 302-304.
525 We note, in this regard, that Argentina indicated that its claim "results from the failure to construct
normal value on the basis of the cost of production reported in the accounts of the exporting producers".
(Argentina's first written submission, para. 285)

7.301. In our view, this difference is not a "difference[] which affect[s] price comparability" within
the meaning of Article 2.4 of the Anti-Dumping Agreement for which "[d]ue allowance" should
have been made under that Article. It does not relate to a difference in the characteristics of the
(actual or notional) domestic vs. export transactions being compared. In particular, we do not
consider that this difference represents a tax – or some other identifiable characteristic – that was
incorporated into the constructed normal value by the EU authorities. Rather, the alleged
"difference" is one that arose exclusively from the methodology used to construct the normal
value; it resulted from a methodological approach directed at remedying what the authority
considered to be a distorted input cost, a matter th at is primarily governed by Article 2.2 of the
Anti-Dumping Agreement.
7.302. Certainly, the perceived distortion itself was caused by the export tax, and the undistorted
price ultimately used by the EU authorities clos ely resembled the domestic price plus the export
tax. But this does not transform the export tax on soybeans into an identifiable component of the
constructed normal value itself. Unlike the examples in the illustrative list in Article 2.4, it is not a
characteristic of the transactions being compared. It was a methodological approach that affected
the price of biodiesel, but it did not affect the price comparability of the normal value and the
export price.
7.303. Our conclusion in this respect is consis tent with the views of the Appellate Body in EC –
Fasteners (China) (Article 21.5 – China) . In that dispute, China alleged that there existed a
number of differences between the export price and the normal value, which had been determined
on the basis of prices prevailing in an analogue "market economy" country, in application of the
analogue country methodology. Specifically, Chin a referred to certain differences in taxation,
arguing that the producer in the analogue co untry imported most of its raw materials and
therefore paid import duties and other indirect taxes on its purchases of these raw materials,
whereas the Chinese producers sourced their raw materials on the domestic market and
consequently did not have to pay import duties and other associated taxes on the raw materials.
China also alleged a number of other differences between the Chinese producers and the surrogate
country producer, in terms of access to raw materials, the use of self-generated electricity, and
"efficiency and productivity".
526
7.304. Like the panel, the Appellate Body consider ed that, in the context of an investigation in
which the analogue country methodology is applied, the investigating authority is not required
under Article 2.4 to adjust for differences in costs where this would lead it to adjust back to the
costs in the NME industry that it had found to be distorted. 527 W e r e a d t h e f i n d i n g s o f t h e
Appellate Body in EC – Fasteners (China) (Article 21.5 – China) as consistent with the general
proposition that differences arising from the methodology applied for establishing the normal value
cannot, in principle, be challenged under Article 2.4 as "differences affecting price comparability".
We note that unlike the factual scenario in EC – Fasteners (Article 21.5 – China) , the methodology
at issue in the present dispute was challenged by Argentina, and found by us to be inconsistent

526 Panel Report, EC – Fasteners (China) (Article 21.5 – China), paras. 7.196-7.223 and 7.237-7.251.
527 Appellate Body Report, EC – Fasteners (China) (Article 21.5 – China) , para. 5.207. See also ibid.,
paras. 5.214 and 5.231, and Panel Report, EC – Fasteners (China) (Article 21.5 – China) , paras. 7.218-219
and 7.245. However, the Appellate Body took issue with the panel's approach, which – in the Appellate Body's
words – was to find, "in general term s and without more", that adjustin g for differences in taxation or
differences in costs would undermine the investigating authority's recourse to the analogue country
methodology. The Appellate Body found that the panel had failed to review whether the authority had
established that the differences were "related to the issue of the price of domestic raw materials that was
found to be distorted or whether an adjustment was merited because price comparability was affected under
Article 2.4". The Appellate Body considered in this respec t that it is incumbent on an investigating authority to
take "steps to achieve clarity as to the adjustment claimed" and then to determine whether and to what extent
the adjustment is warranted because it reflects a difference affecting pric e comparability and – in a situation
such as the one that arose in EC – Fasteners (China) (Article 21.5 – China) , "whether it would have had the
effect of reintroducing distorted cost s or prices in the normal value component of the comparison". (Appellate
Body Report, EC – Fasteners (China) (Article 21.5 – China) , paras. 5.216-5.218 and 5.231-5.236). We recall,
in this regard, that in the present dispute, the EU authorities explicitly clarified in their determination that the
level of distortion addressed by the authorities more or less amounted to the level of the export tax, given that
the difference between the reference price and actual prices roughly equalled the export tax (see Definitive
Disclosure, (Exhibit ARG-35), paras. 32-35; see also Eu ropean Union's first written submission, para. 284; and
Argentina's first written submission, paras. 302-304). There is in our view no question that the entirety of the
alleged difference resulted from the EU authorities' decision to replace the price actually paid by the
investigated Argentine producers for soybeans by the adjusted reference price.

with certain provisions of the Anti-Dumping Agreement. However, in our view, the aforementioned
general proposition applies as well to instances in which the methodology may reveal itself to be
WTO-inconsistent as in the case before us.
7.305. We find support for our reasoning in the Appellate Body's resolution of a claim that zeroing
constitutes an impermissible allowance under Article 2.4 in US – Zeroing (EC). The Appellate Body
in that case found that the zeroing methodology used by the USDOC in the administrative reviews
at issue – which it had already found to result in an inconsistency with Article 9.3 of the Anti-
Dumping Agreement because it meant that th e authority did not treat the product under
consideration "as a whole" – could not be characterized as an allowance or adjustment
"undertaken to adjust to a difference relating to a characteristic of the export transaction in
comparison with a domestic transaction".
528 Similarly, in the present case, the action of the
investigating authorities that is at the heart of Argentina's Article 2.4 claim – the use of reference
prices in the construction of normal value, rather than the prices actually paid by the investigated
producers – is not one which was undertaken with a view to adjusting for a difference relating to
some characteristic of the domestic transactions in comparison with the export transactions.
7.306. For the foregoing reasons, we find that Argentina has not established that the
European Union failed to make a "fair comparison" between the normal value and the export price,
inconsistently with Article 2.4 of the Anti-Dumping Agreement.
7.4.3 Whether the European Union acted incons istently with Articles 2.2 and 2.2.2(iii)
of the Anti-Dumping Agreement by failing to base the determination of the amount for
profits on a "reasonable method"
7.4.3.1 Legal claim
7.307. Argentina claims that the anti-dumping measures at issue are inconsistent with Articles 2.2
and 2.2.2(iii) of the Anti-Dumping Agreement be cause the European Union failed to base the
amount for profits component of the constructed normal value on a reasonable method within the
meaning of Article 2.2.2(iii). 529 In response, the European Union submits that the method on the
basis of which the EU authorities determined the level of profits was reasonable and that the
resulting margin was itself reasonable.530
7.308. Before addressing Argentina's claim of inconsistency, we set out the relevant facts
concerning the establishment of the profit margin used in constructing the Argentine producers'
normal value in the investigation. We will then examine whether Argentina has demonstrated that
the European Union acted inconsistently with the provisions it cites.
7.4.3.2 Relevant provisions of the covered agreements
7.309. Article 2.2 of the Anti-Dumping Agreement provides, in relevant part:
When there are no sales of the like product in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting
country, such sales do not permit a proper comparison, the margin of dumping shall
be determined by comparison with a comparable price of the like product when
exported to an appropriate third country, prov ided that this price is representative, or
with the cost of production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits. (fn omitted)
7.310. Article 2.2.2(iii) of the Anti-Dumping Agreement provides, in relevant part:
For the purpose of paragraph 2, the amounts for administrative, selling and general
costs and for profits shall be based on actual data pertaining to production and sales

528 Appellate Body Report, US – Zeroing (EC), para. 158.
529 Argentina's first written submission, paras. 265 and 470(e); second written submission,
para. 254(e).
530 European Union's first written submission, para. 267.

in the ordinary course of trade of the like product by the exporter or producer under
investigation. When such amounts cannot be determined on this basis, the amounts
may be determined on the basis of:
…
(iii) any other reasonable method, provided that the amount for profit so established
shall not exceed the profit normally realized by other exporters or producers on sales
of products of the same general category in the domestic market of the country of
origin.
7.4.3.3 Factual background
7.311. In the complaint to initiate an investigation, for the construction of the normal value, the
EBB used a profit margin which was not reported in the public version of the complaint but which
was described as being comprised between 0 and 5% . The EBB claimed to base this figure on the
Argentine regulations establishing the price formula of biodiesel, while noting that this level of
profit "appear[ed] artificially low", and recallin g that, in the 2009 anti-dumping and countervailing
duty investigations on imports of biodiesel from the United States, the EU authorities had
considered a profit margin of 15% to be a le vel reasonably achieved by the European Union
biodiesel industry.
531
7.312. In the Provisional Regulation, the EU authorities found that the Argentine market
conditions for biodiesel were such that "domestic sales were not considered as being made in the
ordinary course of trade and the normal value of the like product had to be provisionally
constructed".
532 Considering the prevailing market conditions in Argentina, the EU authorities
concluded that the amount for profits could not be based on the actual data of the Argentine
producers and proceeded to determine the amount for profits "on the basis of the reasonable
amount of profit that a young and innovative capital intensive industry of this type under normal
conditions of competition in a free and open market could achieve, that is 15% based on
turnover".533
7.313. In its Comments on the Provisional Disclos ure, CARBIO argued that the 15% profit rate
was "ridiculously high", and was not based on a reasonable parameter. 534 In addition, CARBIO
argued that the rate was not in line with the profit rates used by the EU authorities in all similar
proceedings in the past. CARBIO cited the examples of recent investigations on biodiesel from the
United States, in which a profit rate of 6.27% (corresponding to the weighted average of the profit
margins of investigated producers with representative domestic sales) was used, and on
bioethanol from the United States, in which the we ighted average profit rate of the company that
accounted for the majority of domestic sales was even lower. CARBIO added that these two
industries were also "young and innovative capital intensive" industries. CARBIO also argued that
in recent investigations in the commodities sector, the EU authorities had used profit margins in
the region of 5% in constructing normal value.
535
7.314. In the Definitive Disclosure, the EU authorities noted these arguments by CARBIO, stating
that some Argentine producers claimed that the 15% amount for profits used by the EU authorities
in constructing normal value was unrealistically high and represented a radical change in its
established practice in similar proceedings. The EU authorities rejected these arguments,
explaining that they do not systematically use a 5% profit margin when constructing normal value,
and that every situation is assessed on its own merits taking into account the specific

531 Consolidated version of the complaint, (Exhibit ARG-31), para. 64.
532 Provisional Regulation, (Exhibit ARG-30), Recital 45. As part of their finding that the Argentine
market was heavily regulated by the State, the EU auth orities noted that, during the IP, Argentina imposed a
mandatory blending requirement of 7% and that the biod iesel needed to meet this blending requirement was
apportioned via the attribution of qu otas among a selected number of Argentine biodiesel producers. The
EU authorities further noted that the biodiesel sold under this quota system was sold at a price that was fixed
by the State under a complex formula which took into account the cost of production and ensured the
achievement of a certain amount of profit, and which resulted in significant profitability for the Argentine
producers. (Idem, para. 44)
533 Provisional Regulation, (Exhibit ARG-30), Recitals 44 and 46.
534 CARBIO's comments on the Provisional Disclosure, (Exhibit ARG-51), pp. 4-5.
535 CARBIO's comments on the Provisional Disclosure, (Exhibit ARG-51), pp. 5-6.

circumstances of the case. 536 They noted, for example, that in the 2009 investigation on biodiesel
from the United States, different profit levels were used, with a weighted average profit rate well
above 15%.
537 In addition, the EU authorities indicated that they had looked at the short and
medium-term borrowing rate in Argentina, around 14% according to World Bank data, and
considered that it was reasonable to expect a higher profit margin to be obtained when doing
business in the domestic biodiesel markets than the borrowing cost of capital. 538 They added that
the 15% profit figure was "even lower than the profit realised during the IP by the producers of the
product concerned, albeit that level results from distortions in costs brought about by the DET and
domestic biodiesel prices regulated by the State". 539 For these reasons, the EU authorities
maintained their determination that "15% profit is a reasonable amount that can be achieved by a
relatively new, capital-intensive industry in Argentina".
540
7.315. In its comments on the Definitive Disclosure, CARBIO raised a number of objections
against the EU authorities' determination of the amount for profits. First, CARBIO argued that the
EU authorities' reference to the prior investigation on biodiesel from the United States was
ill-founded given that the market had matured dram atically since then and that high profits were
no longer possible. CARBIO added that, on this very consideration, the EU authorities had reduced
from 15% to 11% the target profit margin for the EU industry that it used in calculating the injury
margin.
541 CARBIO requested that the EU authorities use a profit margin not exceeding the same
figure of 11% when constructing the Argentine producers' normal value. 542 CARBIO also objected
to the EU authorities' reference to borrowing rates in Argentina, which it argued departed from the
EU authorities' usual practice in constructing the normal value. CARBIO further argued that the
Argentine producers make investments in USD terms, not just because of inflation in Argentina but
also because, in virtually all cases, they make the investments together with foreign-owned
entities related to EU producers. CARBIO added that none of the accounts of the sampled
companies would show short and medium financing costs in the region of 14%.
543 Finally, CARBIO
argued that because of the regulated prices of biodiesel on the domestic market, profit margins on
the – albeit limited – domestic sales were not "in the ordinary course of trade" and should
therefore be disregarded.544
7.316. The Definitive Regulation, however, confirmed the 15% profit margin established in the
Provisional Regulation and set out in the Definitive Disclosure on the following grounds:
The Commission considered that a 15% profit margin was reasonable for the biodiesel
industry in Argentina, since in that country during the IP it was still a young and
capital intensive industry. The reference to the profit margin in the US case was made
to rebut the claim that the Commission uses systematically a 5% profit margin when
constructing normal value. The reference to the medium-term borrowing rate also was
not meant to set a benchmark but to test the reasonableness of the margin used. The
same applies to the profit actually earned by the sampled companies. On the other
hand, since the purpose of constructing normal value is different from the calculation
of the target profit for the Union industry in the absence of dumped imports, any
comparison between the two is irrelevant.
545
7.4.3.4 Main arguments of the parties
7.4.3.4.1 Argentina
7.317. Argentina submits that the amount for prof its established by the EU authorities, namely
15% on turnover is not based on a reasonable method within the meaning of Article 2.2.2(iii) of

536 Definitive Disclosure, (Exhibit ARG-35), paras. 37-38; Definitive Disclosure, Annex II, (Exhibit
ARG-38) (BCI), pp. 2, 6, 8, 11, and 15.
540 Definitive Disclosure, (Exhibit ARG-35), paras. 37-38.
541 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 13.
542 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), pp. 13-14.
543 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 14.
544 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 14.
545 Definitive Regulation, (Exhibit ARG-22), Recital 46.

the Anti-Dumping Agreement and, consequently, cannot be considered to be "reasonable" within
the meaning of Article 2.2 of the Anti-Dumping Agreement.546
7.318. First, Argentina contends that the EU authorities failed to provide any explanation of how
they determined a profit margin of 15%, but rath er, merely stated that they "considered" that
amount to be reasonable. 547 For Argentina, therefore, the 15% figure does not result from any
"method" within the meaning of Article 2.2.2(ii i) of the Anti-Dumping Agreement, let alone a
reasonable one. In Argentina's view, the refe rence to "any other reasonable method" in
Article 2.2.2(iii) implies that the profit margin must be arrived at by way of a method.548 The profit
margin cannot just be "established" first and then tested for its reasonableness. Otherwise,
Article 2.2.2(iii) would have used the term "any reasonable amount". Argentina finds support for
its interpretation in the first two subparagraphs of Article 2.2.2, which lay down precise procedures
that must be followed in order to arrive at a reasonable amount for profits. Argentina further
considers that its interpretation is supported by the findings of the panels in Thailand – H-Beams
and EC – Bed Linen, which it argues show that the ceiling under subparagraph (iii) operates after a
methodology has been applied rather than an amount merely being "established".
549
7.319. Second, Argentina contends that the EU authorities' reference to World Bank data
concerning the short to medium-term borrowing rate cannot be a relevant justification for the 15%
profit margin determination because "profit" indicates a "result", and a profit margin is a figure
that is arrived at after financing costs and other liabilities are taken into account, at least in the
case of a net profit.
550 Consequently, there is no reason to expect the level of profits to exceed the
borrowing cost of capital. Further, since this data was only used to confirm the reasonableness of
the profit margin, it does not indicate the method by which that margin was determined.551
7.320. Third, Argentina contends that the EU authorities' reference to the 15% profit margin
determination for the European Union's biodiesel industry in a prior investigation concerning
imports from the United States relates to "entirely different" market conditions 552, and further, it
was unreasonable to consider the Argentine industry as "young and innovative" compared to the
European Union's industry because, at the time of the investigation, Argentine production had
peaked and the market had matured significantly.
553 In this connection, Argentina submits that the
European Union's explanation concerning the profit margin used in the investigation on US
biodiesel and its explanation concerning the relative levels of development of the Argentine and
European Union biodiesel industries amounts to nothing more than a post hoc rationalization.
554
Argentina additionally submits that, while this might constitute a justification of the profit margin
determined by the investigating authority, it does not reveal the method by which the margin was
determined.555 In contrast, Argentina submits that the 11% profit figure used by the investigating
authority in the present investigation to calculate the injury elimination level would have been an
acceptable figure in the present investigation because it reflects similar levels of development
between the Argentine and European Union indust ries, and further, because this figure was
determined in a reasoned manner on the basis of a carefully-described methodology.
556
7.4.3.4.2 European Union
7.321. The European Union submits that the method on which the determination for the profit
margin was based consisted of a number of elements: (i) the figure was appropriate on the basis
of the reasonable amount of profit that a young and innovative capital intensive industry of this
type under normal conditions of competition in a free and open market could achieve; (ii) each

546 Argentina's first written submission, para. 275.
547 Argentina's first written submission, para. 276.
548 Argentina's response to Panel question No. 54, para. 129; response to Panel question No. 108,
paras. 85-88.
549 Argentina's response to Panel question No. 54, paras 130-132 (referring to Panel Reports, Thailand –
H-Beams, paras. 7.122 – 7.128; EC – Bed Linen, paras. 6.98-6.99; and EU – Footwear (China), para. 7.299).
550 Argentina's first written submission, paras. 279 and 280.
551 Argentina's second written submission, para. 197(c).
552 Argentina's first written submission, para. 281.
553 Argentina's first written submission, paras. 282 and 283; response to Panel question No. 109,
paras. 92 and 93.
554 Argentina's second written submission, para. 198; response to Panel question No. 109, para. 92.
555 Argentina's second written submission, para. 197(a).
556 Argentina's response to Panel question No. 109, paras. 91-95.

assessment is case-by-case and on its own merits; (iii) the figure was not out of line with that
adopted in other investigations; (iv) the short and medium-term borrowing rate in Argentina was
approximately 14%, and it was reasonable to expect biodiesel producing companies to obtain a
profit margin exceeding that level; (v) Argentine biodiesel companies enjoyed a level of profit
higher than 15% during the investigation period, albeit because they benefited from distorted
costs; and (vi) a comparison with the target profit for the domestic industry in the absence of
dumped imports is not relevant because the target profit rate for the domestic industry has a
different purpose.
557
7.322. The European Union submits that this represents a "method" for the calculation of the
profits that is "reasonable". The EU authorities first established a profit figure on the basis of their
experience with the relevant industry from other investigations and then tested the
reasonableness of that profit figu re against a number of benchmarks.
558 In this regard, the
European Union asserts that, logically, if the amount determined by an investigating authority is
"reasonable", then whatever "method" it had used in order to determine that amount should also
be "reasonable".
559 On that basis, the European Union argues that the Panel should first examine
whether the profit margin determined by the EU authorities was "reasonable" for purposes of the
chapeau of Article 2.2 of the Anti-Dumping Agreement.
7.323. The European Union submits that the Wo rld Bank data on the short and medium-term
borrowing rate in Argentina was only used in order to confirm the reasonableness of the 15%
profit margin, rather than to determine that margin in the first instance. In that regard, the
European Union submits that the fact that the EU authorities considered that investors decided to
invest in the Argentine biodiesel industry with the knowledge that the cost of the invested capital
would be around 14% was an additional element that supported the reasonableness of the 15%
profit margin.
560 With regard to the EU authorities' finding that the Argentine producers actually
achieved profit margins higher than 15% during th e investigation, the European Union argues that
although this level was evidently achieved because of the distortions in costs caused by the export
tax regime and State regulation of domestic biodiesel prices, "that was the context in which the
companies were operating and the EU investigating authority could not ignore it".561
7.324. The European Union also notes that its prior anti-dumping investigation of biodiesel from
the United States showed that during its early stages, the profit levels achieved by the EU industry
were around 18%. 562 That investigation concluded that a profit margin of 15% on turnover could
be regarded as an appropriate level that its domestic industry could have expected to obtain. The
European Union submits that its authorities followed a similar analysis in the present case and
reached the conclusion that a 15% margin was reasonable for the Argentine industry at a period of
time when it was at the same stage of development as its domestic industry in the prior
investigation.
563 However, the European Union clarified that it does not suggest that the 15%
profit margin was adopted in the present investigation simply because that was the level used for
the European Union industry in the United States' investigation. 564 Rather, it was used to rebut
Argentina's argument that the 15% profit margin for the European Union industry in the prior
investigation had been reduced to an 11% profit margin in the present investigation due to its
biodiesel market maturing.
7.325. With respect to the 11% profit figure used in calculating the injury margin, the
European Union argues that its domestic biodiesel industry was found to have matured by the time

557 European Union's first written submission, para s. 269-275; response to Panel question No. 51,
para. 70.
558 European Union's second written submission, para. 148.
559 European Union's response to Panel question No. 108, para. 84.
560 European Union's response to Panel question No. 52, para. 76.
561 European Union's first written submission, para. 280. In its response to Panel question No. 51, the
European Union refers to Appendix II to the Govern ment of Argentina's questionnaire response in the
countervailing duty investigation, (Exhibit EU-12), p. 36, which indicates that the Argentine biodiesel industry
was achieving profit margins in excess of 25% at th e time. (European Union's response to Panel question
No. 51, para. 74)
562 European Union's response to Panel question No. 51, para. 72.
563 European Union's response to Panel question No. 51, paras. 72-73.
564 European Union's response to Panel question No. 110, para. 89.

of the investigation on biodiesel from Argentina, and the different levels of development of the EU
and Argentine biodiesel industries explain the difference in the two profit rates.565
7.326. Finally, the European Union submits that the anti-dumping duties were imposed on a
"lesser duty rule" basis and that in the case of all Argentine exports the injury margin was well
below the dumping margin. Accordingly, even if th e profits had been set at the level proposed by
Argentina, viz. 11%, the amount of the anti -dumping duty imposed would have been no
different.566
7.4.3.5 Arguments of the third parties
7.327. China submits that it is questionable whether the European Union adopted a "method", let
alone a reasonable one, which meets the test under Article 2.2.2(iii) of the Anti-Dumping
Agreement to determine the amounts for profits. 567 In China's view, the EU authorities did not
indicate the method that they used in order to determine the 15% profit margin, and, at most,
they only provided a general rationale for the figure.568
7.328. Indonesia submits that the justification provided by the European Union does not meet
the requirements of Article 2.2.2 and Article 2.2 because it does not qualify as a "methodology"
and it overlooks the main purpose of the construction of the normal value, namely, to ensure that
the constructed normal value approximates as closely as possible the price of the like product in
the ordinary course of trade in the domestic market of the exporting country.
569
7.4.3.6 Evaluation by the Panel
7.329. The question before us is whether the anti-dumping measures imposed by the
European Union on imports of biodiesel from Argentina are inconsistent with Articles 2.2
and 2.2.2(iii) of the Anti-Dumping Agreement beca use the European Union failed to determine the
profit margin as a component of the constructed normal value on the basis of a "reasonable
method" within the meaning of Article 2.2.2(iii).
570
7.330. Article 2.2 provides that where the normal value is constructed, it shall include, inter alia,
a "reasonable amount" for selling, general and administrative (SG&A) expenses and for profits.
The chapeau and paragraphs (i) and (ii) of Articl e 2.2.2 outline specific methods available to the
authorities to determine these amounts "[f]or the purpose of paragraph 2", i.e. Article 2.2. The
chapeau requires the use of the SG&A expenses and profit margins from the producer/exporter's
domestic sales of the like product in the ordina ry course of trade. When the amounts cannot be
determined on that basis, the authorities may resort to the various approaches, or "methods", set
out under paragraphs (i)-(iii).
571 The panel in EC – Bed Linen summarized the three subparagraphs
of Article 2.2.2 as they apply to the determination of the amount for profits as follows:
Paragraphs (i)-(iii) provide three alternative methods for calculating the profit
amount, which, in our view, are intended to constitute close approximations of the
general rule set out in the chapeau of Article 2.2.2. These approximations differ from
the chapeau rule in that they relax, respectively, the reference to the like product, the
reference to the exporter concerned, or both references, spelled out in that rule. Thus,
Article 2.2.2(i) allows the calculation of the profit amount on the basis of data for the
exporter concerned, corresponding to a general category of products , including the
like product. In turn, Article 2.2.2(ii) permit s the calculation of the profit rate on the
basis of the weighted average profit rate for other investigated exporters ,
corresponding to the like product itself. Finally, Article 2.2.2(iii) allows the use of any
other method, as long as the resulting rate is not higher than the weighted average

565 European Union's response to Panel question No. 53, paras. 79 and 80.
566 European Union's first written submission, para. 283.
567 China's third-party submission, paras. 135 and 137.
568 China's third-party submission, para. 136.
569 Indonesia's third-party statement, para. 18.
570 Argentina's first written submission, para. 470(e).
571 Panel Report, EC – Bed Linen, para. 6.58.

profit rate realised by other investigated exporters in respect of sales in the same
general category of products.572 (emphasis original; fn omitted)
7.331. As the panel in EC – Bed Linen noted, Article 2.2.2(iii) prescribes two conditions for
determining the amount for profits, when that prov iso is resorted to. First, the amount for profits
must be determined on the basis of "any othe r reasonable method", and second, it must not
exceed the ceiling defined under this subparagraph, i.e. "the profit normally realized by other
exporters or producers on sales of products of th e same general category in the domestic market
of the country of origin". The report of the panel in EU – Footwear (China) suggests that each of
the two conditions must be met in order for the amount for profit to be consistent with
Article 2.2.2(iii).
573 In the present dispute, Argentina's claims are limited to the first condition
concerning the use of a "reasonable method" in determining the amount for profits.
7.332. We note, however, that in addition to its claim under Article 2.2.2(iii), Argentina also
makes a claim of inconsistency under Article 2.2. This provision requires the use of a "reasonable
amount for administrative, selling and general costs and for profits" in constructing normal value.
We understand Argentina to contend that a violation of the specific conditions of Article 2.2.2(iii)
leads, ipso facto, to a violation of this requirement under Article 2.2 as well.
574
7.333. We now set out our understanding of what constitutes "any other reasonable method"
under Article 2.2.2(iii), before assessing whether reliance on such a method can be discerned from
the explanations provided by the EU authorities in the investigation at issue.
7.334. We turn first to the ordinary meaning of the term "method" in the context of
Article 2.2.2(iii). Dictionary definitions of the term include "[p]rocedure for attaining an object",
"[a] mode of procedure; a (defined or systematic) way of doing a thing", and "[a] written
systematically-ordered collection of rules, observations, etc. on a particular subject". 575 Based on
these definitions, we understand the term "method" to refer, in general terms, to a process or
procedure, as opposed to an outcome.
7.335. The context of the term in Article 2.2.2(iii) sheds further light on its scope. First, the term
is qualified by the words "any other". The us e of "any" suggests a particularly broad scope 576, and
the use of "other" suggests that the other subpar agraphs of Article 2.2.2 illustrate what may be
captured by the term "method" under Article 2.2.2(iii). In that regard, we note that the chapeau
and paragraphs preceding Article 2.2.2(iii) provide, in relevant part, that the amounts for
administrative, selling and general costs and for profits may be "based on" or "determined on the
basis of": (i) actual data pertaining to production and sales in the ordinary course of trade of the
like product by the exporter or producer under investigation; (ii) the actual amounts incurred and
realized by the exporter or producer in question in respect of the same general category of
products; or (iii) the weighted average of the actual amounts incurred and realized by other
exporters or producers subject to investigation in respect of production and sales of the like
product.
577 It is significant, in our view, that these three alternatives refer to the kind of specific
data on which the amount of profit can be determined, rather than a specific procedure or
methodology for the calculation of the amount for profits. This suggests to us that the term
"method" in subparagraph (iii) refers to a reasoned consideration of the evidence before the
investigating authority for the determination of the amount for profits, rather than to a
pre-established procedure or methodology.
578 In addition, these "other" methods indicate a

572 Panel Report, EC – Bed Linen, para. 6.60.
573 Panel Report, EU – Footwear (China), paras. 6.52, 6.55, and 7.288 et seq.
574 Argentina's first written submission, para. 284, and second written submission, para. 199. Moreover,
we note that Argentina refers us to the reports of two panels that concluded that the "reasonable amount"
language in Article 2.2 does not impose an additional re asonableness test on the am ount for profit determined
pursuant to Article 2.2.2. (Argentina's response to Pa nel question No. 54, paras. 129-132 (referring to Panel
Reports, EC – Bed Linen, paras. 6.98-6.99 and Thailand – H-Beams, paras. 7.122-7.128))
575 Shorter Oxford English Dictionary , 6 th edn, A. Stevenson (ed.) (Oxford University Press, 2007),
Vol. 1, p. 1767.
576 Appellate Body Reports, US – Anti-Dumping and Countervailing Duties (China), fn 197; Canada –
Autos para. 79.
577 See above, para. 7.310, for the text of Article 2.2.2(iii) of the Anti-Dumping Agreement.
578 Argentina acknowledges that "neither of the two procedures set forth in (i) and (ii) represents a
complex or elaborated method. They are rather simple " (adding, however, that "they go beyond the mere

preference for the actual data regarding the ex porter and like product in question, with an
incremental progression away from these principles before reaching "any other reasonable
method" in Article 2.2.2(iii). It flows from that context that the phrase "any other reasonable
method" may be used in the absence of reliable data concerning the actual exporter or other
exporters and the like product.
579 This, in turn, suggests that an investigating authority would
usually have recourse to Article 2.2.2(iii) in circumstances where its options for basing the
determination of an exporter's profit margin are constrained. This context, together with absence
of any additional guidance in Article 2.2.2(iii) on what the "method" chosen should entail in terms
of either the source or scope of the data or procedure, suggests to us a broad and non-prescriptive
understanding of the term.
7.336. Second, as we have noted above, in addition to the requirement that it be determined on
the basis of "any reasonable method", Article 2.2.2(iii) imposes a ceiling on the amount for profits
determined
580, requiring that that the amount for profits "not exceed the profit normally realized
by other exporters or producers on sales of products of the same general category in the domestic
market of the country of origin". The presence of this constraint, in the absence of any other
guidance on the kind of "method" to be adopted, confirms our broad and non-prescriptive
understanding of the term "method".
7.337. We now turn to assess what constitutes a "reasonable" method in the context of
Article 2.2.2(iii). In the context of Article 2.2.2(iii), it is clear from the use of "any other" before
"reasonable" that what is "reasonable" is conne cted to the preceding paragraphs and the chapeau
and that the "methods" set in the preceding paragraphs and the chapeau are presumptively
reasonable. As we have discussed, these indicate a preference for the actual data of the exporter
and like product in question, with an incremental progression away from these principles before
reaching "any other reasonable method" in Article 2.2.2(iii). In our view, this context suggests that
the general function of Article 2.2.2 is to approximate what the profit margin (as well as
administrative, selling and general costs) would have been for the like product in the ordinary
course of trade in the domestic market of the exporting country.
581 Thus, in our view, the
reasonableness of the method used under Article 2. 2.2(iii) for determining the profit margin turns
o n w h e t h e r i t i s r a t i o n a l l y d i r e c t e d a t a p p r o x i m a t i n g w h a t t h a t m a r g i n w o u l d h a v e b e e n i f t h e
product under consideration were sold in the ordinary course of trade in the domestic market of
the exporting country.
7.338. Based on the foregoing considerations, we understand the term "any other reasonable
method" in Article 2.2.2(iii) to involve an enquiry into whether the investigating authority's
determination of the amount for profits is the result of a reasoned consideration of the evidence
before it, rationally directed at approximating the profit margin to what would have been realized if
the product under consideration had been sold in the ordinary course of trade in the exporting
country.
7.339. With this understanding in mind, we now examine whether the EU authorities' explanations
for the 15% profit margin applied in the investigation at issue meet this requirement.
7.340. We recall that the EU authorities first iden tified a profit margin of 15% in the Provisional
Regulation. This amount was reached "on the basis of the reasonable amount of profit that a
young and innovative capital intensive industry of this type under normal conditions of competition
in a free and open market could achieve".
582 We consider it relevant to this explanation that the
application of the EBB to initiate the investigation had drawn attention to the finding reached by
the EU authorities in a prior investigation that a profit margin of 15% represented a level

unsubstantiated assertion with respect to what profits are"). (Argentina's response to Panel question No. 108,
para. 86)
579 We note that the panel in EC – Bed Linen found that there is no hierarchy among the methods for
determining the amount for profits in Articles 2.2.2(i)-(iii). (Panel Report, EC – Bed Linen, para. 6.59). The
question of the interaction between these methods, or a potential hierarchy among them, has not been raised
in this dispute and accordingly we express no views in that regard.
580 We note that the ceiling does not apply to the determination of the amounts for administrative,
selling and general costs.
581 Panel Report, Thailand – H-Beams, para. 7.112.
582 Provisional Regulation, (Exhibit ARG-30), Recitals 44 and 46.

reasonably achieved by the European Union biodiesel industry. 583 The figure of 15% in that
investigation was "deemed reasonable for guaranteeing the productive investment on a long-term
basis for this newly established [biodiesel] indust ry", and was reached in the light of profits of
18.3%, 18%, and 5.7% achieved by the EU domestic industry over the period of investigation.
584
7.341. Thus, it appears that the EU authorities initially arrived at the figure of 15% based on their
experience with the relevant industry in other investigations, taking into account the
characteristics of the industry in question.
585 The profit margin selected and the rationale for that
margin in the Provisional and Definitive Regulations are analogous to the profit margin and
rationale in the prior investigation referred to by the domestic industry in its application. Moreover,
the 15% profit margin calculated in the investigation concerning biodiesel from the United States
is expressly relied upon by the EU authorities in the Provisional and Definitive Regulations at issue;
the EU authorities used the same profit margin in calculating the injury elimination margin in the
Provisional Regulation, before adjusting it to 11% in the Definitive Regulation in the light of market
developments in the intervening period.
586
7.342. Thus, from the relevant attendant circumstances, we understand that the EU authorities
arrived at the 15% figure by taking into account the characteristics of a biodiesel industry that is
"young", "innovative", and "capital intensive" and by drawing on their earlier experience in a
recent, similar investigation.
7.343. We note that, subsequent to determining the profit margin of 15% in the Provisional
Regulation, and in response to CARBIO's arguments opposing this profit rate, the EU authorities
explained that they tested it.
587 They compared it to the short and medium-term borrowing rate in
Argentina of around 14% because, in their view, it seemed reasonable to expect a higher profit
margin to be obtained when doing business in the domestic biodiesel markets than the borrowing
cost of capital. They also compared it to the profit realized during the period of investigation by the
Argentine producers and found it to be lower than that profit, while recognizing that the higher
profit level achieved in the Argentine domestic market resulted from certain distortions. Following
these tests, the EU authorities confirmed the 15% profit margin.
7.344. At this juncture, we note that our unders tanding of the approach of the EU authorities is
consistent with the explanation of the European Un ion, namely, that they first established a profit
figure on the basis of their experience with the relevant industry from other investigations, and
then tested the reasonableness of that profit figure on the basis of a number of benchmarks.
588
This being the case, we are of the view that the EU authorities' determination of the amount for
profits proceeded from a reasoned consideration of the evidence before them. Further, we recall
that such data was not selected arbitrarily in the present case, but rather, on the basis of what
appear to be plausible similarities between th e respective stages of development of the EU
biodiesel industry at the time of the investigation on biodiesel from the United States and of the
Argentine biodiesel industry during the IP in the investigation at issue here. We therefore disagree
with Argentina that the approach of the EU authorities does not qualify, in the first instance, as a
"method" within the meaning of Article 2.2.2(iii).
7.345. We turn now to the reasonableness of the method used by the EU authorities. CARBIO
argued in response to the EU authorities' test ing of the 15% profit margin that the short and
medium-term borrowing rate had never previously been used to set a reasonable level of profit,
and that the sampled biodiesel producers make investments in USD and do not have financing
costs of 14%.
589 CARBIO also argued that testing against the actual profit margins of biodiesel

583 Consolidated version of the complaint, (Exhibit ARG-31), para. 64; Provisional Regulation,
anti-dumping investigation on biodiesel from the United States, (Exhibit EU-13), Recital 164.
584 Provisional Regulation, anti-dumping investigation on biodiesel from the United States, (Exhibit
EU-13), Recitals 95 and 164. Moreover, the EU authorities indicated that "[t]he imposition of anti-dumping
measures would likely put the Commun ity industry in the position to maintain its profitability at levels
considered necessary for this capital intensive industry ." (Provisional regulation in the AD investigation on
biodiesel from the United States, (Exhibit EU-13), Recital 146) (emphasis added)
585 European Union's second written submission, para. 148.
586 Provisional Regulation, (Exhibit ARG-30), Recita ls 174 and 175; Definitive Regulation, (Exhibit
ARG-22), Recitals 204-210.
588 European Union's second written submission, para. 148.
589 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 14.

producers was not appropriate, as these are based on sales that are not in the ordinary course of
trade. CARBIO further submitted, in contrast to its earlier submission, that "the market has
matured dramatically since the early days in this industry", and therefore, that "high profits are no
longer possible" and that "the reference to the US proceeding is ill-founded".
590
7.346. The EU authorities responded by stating that the profit margin of the domestic industry for
the injury elimination level in the current proceeding is not a relevant benchmark for comparison
because the purpose of constructing normal value is different from the purpose of calculating the
target profit for the EU biodiesel industry in the absence of dumped imports.
591 The EU authorities
also replied that their reference to the profit margin in the prior investigation had been made to
rebut CARBIO's claim that they systematically use a 5% profit margin when constructing normal
value.
592 Further, the EU authorities stated that the short and medium-term borrowing rates, and
the actual profits of producers, were not meant to set a benchmark but to test the reasonableness
of the margin used.593
7.347. In our view, these arguments and explanat ions inform whether the "method" used by the
EU authorities was "reasonable", that is, rationally directed at approximating the profit margin for
the like product to what would have been achieved were the like product sold in the ordinary
course of trade in the domestic market of the exporting country.
594 We recall that investigating
authorities might have recourse to Article 2.2.2(iii) when reliable data concerning the actual
exporter or other exporters and their products is unavailable, making the more specific approaches
in the chapeau and subparagraphs (i) and (ii) of Article 2.2.2 unusable. In that context, we
consider that an unbiased and objective investigating authority could reasonably consider, as an
initial step, that profit margins determined in prior investigations of other producers in the same
industry at similar stages of development provide an indication of the profit margins of producers
in a subsequent investigation. Further, since that figure was determined at a different point in time
for different producers, it would be appropriate, in our view, that an unbiased and objective
investigating authority would seek to test that figure against relevant benchmarks that might be
available. In our understanding, four such benchmarks were considered by the EU authorities in
this investigation and they seem to us to be plausible.
7.348. The EU authorities used the World Bank indicator for short and medium-term borrowing
rates in Argentina, which was 14%, to test the reasonableness of the 15% profit margin they had
determined. In addition, the EU authorities noted the rate of the actual profits of Argentine
biodiesel producers, which was in excess of 25%.
595 CARBIO proposed a 5% benchmark since that
figure is regularly used in similar commodity-related markets, as well as an 11% benchmark since
that figure was used for the domestic industry. The EU authorities rejected the first of CARBIO's
benchmarks on the basis that a 5% profit margin is not systematically used and instead there
should be a case-by-case analysis, and it rejected the second because the figure used for the
purpose of constructing normal value is different from the calculation of the target profit for the
domestic industry in the absence of dumped imports. Moreover, while the EU authorities did not
explicitly find that the EU and Argentine industries were at different stages of development during
the IP, a comparison of their discussion of the profit rate applied to the Argentine producers (in
which they refer to that industry as a young and innovative one) with their discussion of the profit
rate applied to the EU industry in the context of determining the injury margin (which they found

590 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 13. In our view, CARBIO's
position in this regard seems to have evolved from its earlier contention that the profits of US producers in
prior biodiesel investigations – which represented a "young and innovative capital intensive industry" – could
be used as the profit margin for Argentine producers in the current investigation. (See CARBIO's comments on
the Provisional Disclosure, (Exhibit ARG-51), p. 6). In particular, in its later submission, CARBIO seemed to
reject the characterization as a "young and innovative capital intensive industry", and further, CARBIO also
now seemed to reject the relevance of considering prior investigations. In contrast to its earlier submission,
CARBIO now seemed to suggest that the profit margin of the domestic industry for the injury elimination level
in the current proceeding represented a reasonable benchmark for comparison. (See CARBIO's comments on
the Definitive Disclosure, (Exhibit ARG-39), p. 13)
591 Definitive Regulation, (Exhibit ARG-22), Recital 46.
592 Definitive Regulation, (Exhibit ARG-22), Recital 46.
593 Definitive Regulation, (Exhibit ARG-22), Recital 46.
594 Panel Report, Thailand – H-Beams, para. 7.112.
595 See above, fn 561.

had "matured significantly" since the investigation on biodiesel from the United States 596), makes
it clear that the EU authorities considered this to be the case.
7.349. Thus, the selection and testing of the 15% profit margin resulted from a reasoned analysis
that, in our view, was rationally directed at ap proximating what the Argentine producers' profit
margin for the like product would have been if the like product had been sold in the ordinary
course of trade in the domestic market of the exporting country. 597 Both the initial selection of a
figure of 15% and its subsequent confirmation through testing against benchmarks were grounded
on coherent reasoning in a context where data on the actual producers and their products was not
useable. We do note some apparent internal inconsistencies in the EU authorities' explanations. In
particular, in response to CARBIO's argument that the EU authorities' reference to the prior
investigation into biodiesel from the United States was ill-founded, the EU authorities stated that
the reference to the profit margin in that investigation was made to rebut the claim that the
European Union systematically uses a 5% profit margin when constructing normal value. That
could be read to suggest that the EU authorities did not rely on that investigation as part of its
method for deriving the figure of 15%.
598 Regardless of this statement, we do not understand the
EU authorities to have used the findings in its prior investigation exclusively to rebut CARBIO's
argument concerning the 5% profit margin when constructing normal value. Rather, in our
understanding, the EU authorities used those prior findings as part of its corpus of knowledge in
identifying the initial figure of 15%, because that investigation involved an industry with similar
characteristics and products to the case at hand.
7.350. We also note that the EU authorities rejected CARBIO's suggestion to use the 11% figure
determined for the domestic industry as a benchmark in the present investigation on the grounds
that the purpose of constructing the normal value is different from the calculation of the target
profit for the European Union industry in the absence of dumped imports, in the context of
determining the injury margin. There seems to be a degree of inconsistency between this
reasoning, on the one hand, and the use by th e EU authorities of the 15% profit margin
determined on the basis of its earlier experience from the United States investigation, on the
other. This is because the 15% margin used by the EU authorities in the present investigation in
constructing the Argentine producers' normal value i t s e l f w a s , a s w e n o t e a b o v e , b a s e d o n t h e
15% target profit margin used by the EU authorities in their calculation of the injury margin in the
prior investigation on biodiesel from the United States. That notwithstanding, we consider that an
objective and unbiased investigating authority, in the present case, could have plausibly
differentiated between the determination of the profit margin of Argentine producers for the
purpose of constructing normal value on the one hand, and the determination of the profit margin
of the European Union industry for the purpose of determining the level of injury, on the other.
This is particularly the case given that the EU authorities found that the EU domestic industry had
matured such that a reduction in its target profit in the absence of dumped imports was
warranted, but considered the Argentine industry to be "young and innovative", or, in other words,
at a different stage of development. On that basis, we consider that it was not unreasonable for
the EU authorities to distinguish between the profit rates used in the construction of normal value
and the profit rate used in the calculation of the target profit for the European Union industry in
the absence of dumped imports.
599
7.351. For the foregoing reasons, we find that Argentina has not established that the
European Union acted inconsistently with Article 2.2.2(iii) of the Anti-Dumping Agreement in its
determination of the amount for profits in construc ting the Argentine producers' normal value. In
light of our understanding that Argentina's claim under Article 2.2 is dependent on its claim under

596 Definitive Regulation, (Exhibit ARG-22), Recital 205.
597 Panel Report, Thailand – H-Beams, para. 7.112.
598 In addition, while, in its response to Panel question No. 51, the European Union discussed the 15%
profit margin used to calculate the injury elimination margin in the investigation on biodiesel from the
United States, the European Union later clarified in response to a question from the Panel, that it "did not state
[in its response to Panel question No. 51] that the '15% profit margin comes from the US investigation'", and
that it "did not suggest that the 15% profit margin had been adopted in the Argentine investigation simply
because that was the level used for the European Union industry in the United States' investigation".
(European Union's response to Panel question No. 110, para. 89)
599 We also find it significant that, in response to a question from the Panel, Argentina indicated that a
profit rate of 11%, the rate used by the EU authoritie s in calculating the injury elimination margin, would have
been an acceptable profit rate for the Argentine producers, based inter alia on the fact that the 11% rate had
been determined in a reasoned manner. (Argentina's response to Panel question No. 109, paras. 91-95)

Article 2.2.2(iii), we also find that the European Union did not act inconsistently with Article 2.2 in
its determination of the amount for profits.
7.4.4 Whether the European Union acted inco nsistently with Article 9.3 of the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994 by imposing and levying
anti-dumping duties in excess of the margins of dumping
7.4.4.1 Legal claim
7.352. Argentina requests that we find that the European Union acted inconsistently with
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 by imposing and
levying anti-dumping duties in excess of the margin of dumping that should have been established
in accordance with Article 2 of the Anti-Dumping Agreement.
600
7.4.4.1.1 Relevant provisions of the covered agreements
7.353. The chapeau of Article 9.3 of the Anti-Dumping Agreement provides that:
The amount of the anti-dumping duty shal l not exceed the margin of dumping as
established under Article 2.
7.354. Article VI:2 of the GATT 1994 provides that:
In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in amount than the margin of dumping in
respect of such product. For the purposes of this Article, the margin of dumping is the
price difference determined in accordance with the provisions of paragraph 1.
7.4.4.2 Main arguments of the parties
7.4.4.2.1 Argentina
7.355. Argentina argues that the European Union imposed and levied anti-dumping duties in
excess of the margin of dumping that it should have calculated in conformity with Article 2 of the
Anti-Dumping Agreement. Argentina submits that this results from the European Union acting
inconsistently with Articles 2. 2, 2.2.1.1, 2.2. 2(iii) and 2.4 of the Anti-Dumping Agreement and
Article VI:2 of the GATT 1994 in the construction of the normal value and the comparison of the
normal value to the export price.
601 Argentina submits that a dumping margin calculation in
conformity with Article 2 would have established that imports of biodiesel originating in Argentina
were not dumped, or would have resulted in margins well below the duties imposed by the
European Union.
602
7.4.4.2.2 European Union
7.356. The European Union submits that Articl e 9.3 of the Anti-Dumping Agreement addresses
the comparison between the anti-dumping duties and the dumping margins, as opposed to
addressing the calculation of the normal value. 603 Thus, in the European Union's view, the text of
Article 9.3 requires a comparison between the anti-dumping duties actually imposed and the
dumping margin actually calculated by the investig ating authority. Article 9.3 does not call for a
comparison with what should have been calculated under Article 2 of the
Anti-Dumping Agreement. The European Union subm its that this understanding is supported by
the context of the Anti-Dumping Agreement insofar as it contains two separate sets of rules in
Article 2 and Article 9, the former of which conc erns the construction of normal values and the

600 Argentina's first written submission, paras. 309 and 470(g); second written submission,
para. 254(g). We recall that we have rejected the European Union's contention that this claim is not within our
terms of reference. See above, para. 7.34.
601 Argentina's first written submission, paras. 307-309; response to Panel question No. 114, para. 101.
602 Argentina's second written submission, para. 209; response to Panel question No. 114, para. 101.
603 European Union's first written submission, para. 57. We note that the arguments of the
European Union in this regard also pertain to its requ est for a preliminary ruling concerning Article 9.3 of the
Anti-Dumping Agreement.

calculation of dumping margins, and the latter of which regulates the imposition and collection of
anti-dumping duties. 604 Since Article 9.3 is situated in the latter, it would run counter to the
context of Article 9.3 for it to encompass alleged errors in the construction of normal value. In this
connection, the European Union draws on the panel's findings in EC – Salmon (Norway) to
demonstrate that a violation of Article 2 does not automatically lead to a violation of Article 9.3.605
7.4.4.3 Evaluation by the Panel
7.357. Argentina requests that we find that the European Union acted inconsistently with
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 by imposing and
levying anti-dumping duties in excess of the margin of dumping that should have been established
in accordance with Article 2 of the Anti-Dumping Agreement.
606
7.358. We first address Argentina's claim under Article 9.3 of the Anti-Dumping Agreement. As we
understand it, the key point of contention between the parties with respect to this claim concerns
the proper interpretation of the term "margin of dumping as established under Article 2" in
Article 9.3 of the Anti-Dumping Agreement. Thus, we consider the question before us to be
whether this term refers to the margin of dumping that was actually determined by the
investigating authority regardless of any errors or inconsistencies with Article 2 of the
Anti-Dumping Agreement, or whether it refers to the margin of dumping that an investigating
authority would have established in the absence of any errors or inconsistencies with this Article.
7.359. We begin our analysis by setting out our interpretation of Article 9.3 of the Anti-Dumping
Agreement. We note that Article 9 addresses the imposition and collection of duties. Article 9.3
provides that "[t]he amount of the anti-dumping duty shall not exceed the margin of dumping as
established under Article 2". It is therefore clear from the plain language of Article 9.3 that it
concerns the margin of dumping "as established under Article 2". Relevant dictionary definitions of
the preposition "under" include "subject to", "subject to the authority, control, direction, or
guidance of", "in the form of", and "in the guise of".
607 "Under" may be used to introduce "the
guise of" or "the manner how" a certain action is to be conducted. 608 When read in the context of
the phrase "as established under Article 2", we understand "under" to refer to the disciplines set
out in Article 2 of the Anti-Dumping Agreement, which contain detailed rules on the determination
of dumping.609 Thus, in our view, "margin of dumping" referred to in Article 9.3 relates to a margin
that is established in a manner subject to the disciplines of Article 2 and which is therefore
consistent with those disciplines. It would run counter to the inclusion of the phrase "as
established under Article 2" if the margin of dumping referred to in Article 9.3 of the
Anti-Dumping Agreement could encompass a margin that is established in a manner that is not
consistent with the disciplines of Article 2.
7.360. We also consider it clear from the plain language of Article 9.3 that it sets the maximum
level at which anti-dumping duties may be levied, namely, at the level of "the margin of dumping
as established under Article 2". In the light of this, we do not take the view that an error or
inconsistency in calculating the margin of dumping under Article 2 necessarily leads to a violation
of Article 9.3 insofar as the upper limit of the margin is concerned. For instance, as we note below,
the anti-dumping duty could be imposed or levied at a rate that is lower than the dumping margin
that ought to have been determined had the authorities acted in accordance with Article 2.
7.361. Our reading of Article 9.3 of the Anti-Dumpi ng Agreement is supported by findings in prior
disputes. For instance, in US – Zeroing (EC) , the Appellate Body noted that Article 9.3 refers to

604 European Union's first written submission, para. 60.
605 European Union's first written submission, para. 61 (referring to Panel Report, EC – Salmon
(Norway), paras, 7.749 and 8.2).
606 In respect of both Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994, the
European Union stated that "Argentina's claims under Article 9.3 of the Anti-Dumping Agreement and
Article VI:2 of the GATT 1994 are entirely consequential on the [Article 2] claims that the European Union has
answered in the preceding paragraphs", and that "[s]ince Argentina has failed to establish the earlier claims
these consequential claims must also fail." (European Union's first wri tten submission, para. 288). We recall
that we have upheld some of Argentina's claims under Article 2 of the Anti-Dumping Agreement.
607 Shorter Oxford English Dictionary , 6 th edn, A. Stevenson (ed.) (Oxford University Press, 2007),
Vol. 2, p. 3421; Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.75.
608 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.75.
609 Appellate Body Report, EC – Tube or Pipe Fittings, para. 80.

Article 2, and considered that "[i]t follows that, under Article 9.3 of the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994, the amount of the assessed anti-
dumping duties shall not exceed the margin of dumping as established 'for the product as a
whole'", that is, a margin established consistently with Article 2. 610 Similarly, in US – Zeroing
(Japan), the Appellate Body found violations in resp ect of the determination of the margin of
dumping under Article 2. In its consideration of claims under Article 9.3 of the Anti-Dumping
Agreement, the Appellate Body did not refer to the margin of dumping actually determined by the
investigating authority, which it had found to be inconsistent with Article 2. Rather, it stated that
the calculation under Article 9.3 must be made "according to the margin of dumping established
for that exporter or foreign producer without zeroing", that is, without the error it had found in the
determination under Article 2.
611
7.362. In sum, it is clear that the term "the margin of dumping as established under Article 2"
means a margin established in a manner that is consistent with Article 2, as opposed to whatever
erroneous margin was actually established by the investigating authority.
7.363. We note that the European Union relies on the panel report in EC – Salmon (Norway) to
support its argument that a violation of Article 2 does not automatically lead to a violation of
Article 9.3.
612 This accords with our understanding that Article 9.3 sets the maximum level at
which anti-dumping duties may be levied . As the Appellate Body explained in US – Stainless Steel
(Mexico), "under Article VI:2 and Article 9.3, the margin of dumping established for an exporter in
accordance with Article 2 operates as a ceiling for the total amount of anti-dumping duties that can
be levied on the entries of the subject merchandise from that exporter." 613 An error or
inconsistency under Article 2 does not necessarily or automatically mean that the anti-dumping
duty actually applied will exceed the correct margin of dumping. 614 This is because it is possible
that an anti-dumping duty could be applied at a rate that is lower than the WTO-inconsistent
dumping margin. This might be the case where the lesser duty rule is applied, in which case the
anti-dumping duty actually applied may not only be lower than the WTO-inconsistent dumping
margin, but also lower than the dumping margin that would have been established in accordance
with Article 2.
7.364. In the case at hand, we recall that we found above that the EU authorities acted
inconsistently with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and with
Article VI:1(b)(ii) of the GATT 1994 in their establishment of the dumping margins in the Definitive
Regulation due to their use of surrogate input pr ices in the construction of each investigated
Argentine producer's normal value. By contrast, at the provisional stage, the EU authorities had
used each Argentine producer's actual input prices when constructing the normal value used in
calculating that producer's dumping margin.
7.365. Argentina contrasts the margins calculated in the Provisional Regulation, ranging from
6.8% to 10.6%
615, with the duties imposed by the EU authorities in the Definitive Regulation,
which ranged from 22.0% to 25.7% 616, i.e. two to three times higher. We cannot infer the exact
dumping margins that would have been established had the determinations been done in
accordance with Article 2. Yet, in our view the dumping margins established in the Provisional
Regulation provide a reasonable approximation of what margins calculated in accordance with
Article 2 of the Anti-Dumping Agreement might have been. The substantial difference between the
margins calculated at the provisional stage and the duties imposed in the Definitive Regulation
suggests that the anti-dumping duties imposed by the European Union in the Definitive Regulation

610 Appellate Body Report, US – Zeroing (EC), para. 127. (fn omitted)
611 Appellate Body Report, US – Zeroing (Japan), para. 156. (emphasis added)
612 European Union's first written submission, para. 61 (referring to Panel Report, EC – Salmon
(Norway), paras, 7.749 and 8.2).
613 Appellate Body Report, US – Stainless Steel (Mexico), para. 102. (emphasis original)
614 For instance, in the Provisional Regulation, the lesser duty rule was not applied because the
provisional injury margins were found to be higher than the provisional dumping margins, whereas the
opposite finding resulted in the application of the lesser duty rule in the Definitive Regulation. (Provisional
Regulation, (Exhibit ARG-30), Recital 179; Definitive Regulation, (Exhibit ARG-22), Recital 215)
615 Provisional Regulation, (Exhibit ARG-30), Recitals 59 and 179.
616 Definitive Regulation, (Exhibit ARG-22), Recital 215. In application of the "lesser duty rule", these
duty rates corresponded to the injury margins calculated by the EU authorities; the dumping margins
calculated by the EU authorities in the Definitive Regulation were significantly higher, ranging from 41.9% to
49.2%.

exceeded what the dumping margins could have been had they been established in accordance
with Article 2. On this basis, and in light of our finding referred to above, we consider that
Argentina has made a prima facie case that the European Union acted inconsistently with
Article 9.3 of the Anti-Dumping Agreement, which the European Union has failed to rebut.
7.366. We now turn to Argentina's claim under Article VI:2 of the GATT 1994. This Article
provides that a WTO Member "may levy … an anti-dumping duty not greater in amount than the
margin of dumping in respect of such product", addi ng that "[f]or the purposes of this Article, the
margin of dumping is the price difference determined in accordance with [Article VI:1]". The terms
"in accordance with" in the latter phrase makes it clear, in our view, that Article VI:2 prohibits the
levying of anti-dumping duties in excess of the dumping margin determined consistently with
Article VI:1 of the GATT 1994 in the same way as the phrase "as established under Article 2" does
in Article 9.3. The same considerations that guided our assessment of Argentina's Article 9.3 claim
therefore apply mutatis mutandis to our assessment of its Article VI:2 claim. With respect to this
claim, we therefore also conclude that Argentina has made a prima facie case that the
European Union has not rebutted.
7.367. On the basis of the foregoing, we find th at the European Union acted inconsistently with
Article 9.3 of the Anti-Dumping Agreement an d Article VI:2 of the GATT 1994 by imposing
anti-dumping duties in excess of the margin of dumping that should have been established under
Article 2 of the Anti-Dumping Agreement.
7.4.5 Whether the EU authorities' evaluation of production capacity, capacity utilization
and return on investments is inconsistent wi th Articles 3.1 and 3.4 of the Anti-Dumping
Agreement
7.4.5.1 Legal claim
7.368. Argentina claims that the anti-dumping me asures on imports of biodiesel from Argentina
are inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement. Argentina takes issue,
in particular, with the EU authorities' exclusion of so-called "idle capacity" in their calculation and
evaluation of production capacity and of utilization of capacity in their injury analysis. Specifically,
Argentina asserts that:
a. The EU authorities' definition of production capacity and of utilization of capacity was
inconsistent with Article 3.4;
b. The EU authorities' evaluation of production capacity and of utilization of capacity was
inconsistent with Articles 3.1 and 3.4 because it was not based on positive evidence;
c. The EU authorities' evaluation of production capacity and of utilization of capacity was
inconsistent with Articles 3.1 and 3.4 because it did not proceed from an objective
examination; and
d. The EU authorities acted inconsistently with Article 3.4 by failing to adequately evaluate
production capacity and utilization of capacity.
7.369. In addition, Argentina claims that the EU authorities acted inconsistently with Article 3.4 by
failing to evaluate return on investments and utilization of capacity in a consistent manner.
617
7.370. Argentina argues that the exclusion of "idle capacity" led the EU authorities, in their
findings, to understate production capacity and overstate utilization of capacity and that,
moreover, their WTO-inconsistent evaluation of production capacity and utilization of capacity
affected their non-attribution analysis under Article 3.5.618

617 Argentina's first written submission, paras. 310, 353, and 470 (h); second written submission,
para. 254 (h).
618 Argentina asks that we read its Articles 3.1 and 3.4 claims together with its claims under Article 3.5
of the Anti-Dumping Agreement regarding overcapacity of the domestic industry as an alleged other factor
causing injury to that industry. (Argentina's first wr itten submission, para. 311; second written submission,

7.371. The European Union considers that Argentina has not made a prima facie case and
therefore asks the Panel to reject these claims.619
7.4.5.2 Relevant provisions of the covered agreements
7.372. Article 3.1 of the Anti-Dumping Agreement reads as follows:
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.
7.373. Article 3.4 of the Anti-Dumping Agreement provides that:
The examination of the impact of the du mped imports on the domestic industry
concerned shall include an evaluation of all relevant economic factors and indices
having a bearing on the state of the industry, including actual and potential decline in
sales, profits, output, market share, producti vity, return on investments, or utilization
of capacity; factors affecting domestic prices; the magnitude of the margin of
dumping; actual and potential negative effects on cash flow, inventories, employment,
wages, growth, ability to raise capital or investments. This list is not exhaustive, nor
can one or several of these factors necessarily give decisive guidance.
7.4.5.3 Factual background
7.374. The EBB initially submitted certain data regarding production capacity and capacity
utilization of the EU biodiesel industry in its complaint.
620 Subsequently, on 12 March 2013, prior
to the issuance of the Provisional Regulation, the EBB revised some of the data – including the
data on production and production capacity – that it had submitted in the complaint.621
7.375. In the Provisional Regulation, issued on 27 May 2013, the EU authorities found that during
the period considered for purposes of the injury determination (2009 to the IP, i.e. 1 July 2011 to
30 June 2012), the production capacity and capacity utilization of the EU domestic industry were
as reported in the following table 622:
 2009 2010 2011 IP
Production capacity
(tonnes)
20 359 000 21 304 000 21 517 000 22 227 500
Index 2009 = 100 100 105 106 109
Production volume
(tonnes)
8 745 693 9 367 183 8 536 884 9 052 871
Index 2009 = 100 100 107 98 104
Capacity utilisation 43% 44% 40% 41%
Index 2009 = 100 100 102 92 95

Body Report, China – GOES , para. 128)). We address Argentina's claims under Article 3.5 in the next
sub-section of this Report.
619 European Union's first written submission, pa ras. 329 and 348; second written submission,
para. 170.
620 Consolidated version of the complaint, (Exhibit ARG-31), paras. 122-126 and Annex 49.
621 EBB's submission of 12 March 2013, (Exhibit ARG-44).
622 Provisional Regulation, (Exhibit ARG-30), table 4.

On the basis of this data, the EU authorities stat ed that the production capacity of the domestic
industry had "remained relatively stable in particular between 2010 and the IP" 623 and that
capacity utilization had "remained low throughout the period". 624 The Provisional Regulation
indicates that the source of these figures was the data provided by the EU industry.
7.376. Following the Provisional Regulation, CARBIO disputed the finding that "capacity remained
relatively stable".625 Subsequently, on 17 September 2013, the EBB filed a submission requesting
an adjustment of the data it had previously submitted. 626 The EBB stated that the estimate of the
total production capacity of the EU industry that it had provided to the EU authorities (and which
was also reported on its website) included "idle capacity" and, therefore, that it had to be adjusted
to exclude such "idle capacity". The EBB explained that while the data it had previously submitted
regarding EBB members already excluded the "idle capacity" of these EBB members, the figures
for non-EBB members and for the total EU production capacity (i.e. EBB members and non-EBB
members) still included "idle capacity".
627 Hence, to provide an accurate calculation of the EU
industry's production capacity, the total EU pr oduction capacity and the capacity of non-EBB
members had to be adjusted. The EBB explained that the previous estimated total EU industry
production capacity should be adjusted by subt racting the "idle capacity" of both EBB members
and of non-EBB members, and the previous esti mated production capacity of non-EBB members
should be adjusted by subtracting EBB members' production capacity from the revised total EU
production capacity.628
7.377. In the Definitive Disclosure issued to interested parties on 1 October 2013, the
EU authorities stated that, "after close scrutiny", they had accepted the revised data regarding
production capacity submitted by the EBB. 629 As a result, the EU authorities modified their
provisional findings regarding production capacity and capacity utilization.
7.378. CARBIO commented on this issue in its comments on the Definitive Disclosure, arguing
that it was inappropriate to exclude "idle capacity", questioning the revised production capacity
data and suggesting that the change appeared to have been made with the only purpose of
diminishing the importance of the EU industry's overcapacity as a source of injury.
630
7.379. In the Definitive Regulation, the EU auth orities confirmed their decision to accept the
revised production capacity data submitted by the EBB. The Definitive Regulation states the
following with regard to production capacity and capacity utilization:
Following provisional disclosure the Union industry noted that the capacity data that
had been used in Table 4 of the provisional Regulation included capacity that had not
been dismantled, but was not in such a state that it would have been available for use
during the IP, or previous years, to manufacture biodiesel. They separately identified
this capacity as 'idle capacity' which should not be counted as capacity available for
use. The capacity utilisation figures in Ta ble 4 were therefore understated. After close

623 Provisional Regulation, (Exhibit ARG-30), Recital 103.
624 Provisional Regulation, (Exhibit ARG-30), Recital 103.
625 CARBIO's Powerpoint presentation of 8 July 2013, (Exhibit ARG-46), slides 19-21.
626 EBB's submission of 17 September 2013, (Exhibit ARG-47). The Panel was only provided with the
non-confidential version of this submission.
627 The EBB also explained that it estimated the total EU biodiesel production capacity on the basis of
the total production capacity of EBB members and then estimated the production capacity of non-EBB
members by subtracting the production capacity of EBB members from the EU-wide production capacity. Given
that the capacity of non-EBB members had been calculated as the total EU capacity (including "idle capacity")
minus the capacity of EBB members (excluding "idle capa city"), the production capacity previously calculated
for non-EBB members included not on ly these non-EBB members' own "idl e capacity", but also the "idle
capacity" of EBB members. (EBB's submission of 17 September 2013, (Exhibit ARG-47), pp. 2 and 3)
628 The EBB submission included annexes providing the following information: (a) non-EBB members
aggregate data on production, production capacity, sales and employment; (b) EBB members aggregate macro
data, including the total production capacity of EBB memb ers, their capacity utilization, the total production
capacity of sampled companies, the total EU production capacity excluding "idle capacity" (i .e. excluding "idle
capacity" for EBB members and non-EBB members) and the total EU production capacity including "idle
capacity" (i.e. including "idle capaci ty" of both EBB members and non-EBB members); (c) former and current
EBB members that stopped production in the period 2009-2012; (d) information regarding "idle capacity" of
non-EBB members per country. (EBB's submission of 17 September 2013, (Exhibit ARG-47), pp. 12-19)
630 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 16 et seq.

scrutiny of this resubmitted data, it was accepted and Table 4 is restated below. The
capacity utilisation rate, which had been from 43% to 41% in the provisional
Regulation, was now 46% to 55%. The Union industry also corrected the production
data for 2009 to produce the table below:
 2009 2010 2011 IP
Production capacity
(tonnes) 18 856 000 18 583 000 16 017 000 16 329 500
Index 2009 = 100 100 99 85 87
Production volume
(tonnes) 8 729 493 9 367 183 8 536 884 9 052 871
Index 2009 = 100 100 107 98 104
Capacity utilisation 46% 50% 53% 55%
Index 2009 = 100 100 109 115 120

Recital 103 of the provisional Regulation an alysed the previous capacity utilisation
data, noting that production increased while capacity remained stable. With the
revised data production still increases, but useable capacity decreased during the
same period. This shows that the Union industry was reducing available capacity in
face of increased imports from Argentina and Indonesia and thereby reacting to
market signals. This revised data is now more in line with the public statements of the
Union industry and Union producers, stating that during the period under
consideration production was stopped in several plants and that the capacity that had
been installed was not immediately available for use, or only available for use with
significant reinvestment.
Several interested parties questioned the revised capacity and capacity utilisation
data. However, no alternatives were provided by any interested party. The revision is
based on the revised capacity data provided by the complainant, covering the entire
Union industry. The revised data was cross-referenced to publicly available data
concerning in particular idle capacity as well as capacity of producers that ceased
operations due to financial difficulties. As explained above in Section 6,
'Macroeconomic indicators', the revised data provide a more accurate dataset of
capacity available to produce biodiesel during the period under consideration than the
dataset originally provided and published in the provisional Regulation.
631
7.4.5.4 Main arguments of the parties
7.4.5.4.1 Argentina
7.380. Argentina submits that the EU authorities' de finition of capacity and capacity utilization is
inconsistent with Article 3.4 as there is no concept of "idleness" or any legal basis in the text of
Article 3.4 or the rest of the Anti-Dumping Agr eement that allows excluding "idle capacity" or
capacity not "available for use". Therefore, Argentina submits, in the framework of Article 3, the
entirety of production capacity must be taken into account regardless of whether it is "available for
use" or not.
632 Argentina adds that this interpretation is supported by the object of Article 3.4,
which is to provide for an "evaluation [of] … all relevant economic factors and indices having a
bearing on the state of the industry". Argentina notes in this respect that the entirety of an
industry's production capacity generates costs, re gardless of the assets' immediate availability for
use. Therefore, the exclusion of "idle capacity" resu lts in an inaccurate picture of the state of the
domestic industry. 633 Argentina submits that excluding "idle capacity" from the assessment of
capacity utilization would diminish the meaning of the terms "utilization of" in Article 3.4 as it blurs
the distinction between full production capacity and the portion of this full production capacity that

631 Definitive Regulation, (Exhibit ARG-22), Recitals 131-133.
633 Argentina's first written submission, para. 355.

is actually being used.634 Finally, Argentina asserts that the definition of "idle capacity" provided in
the Definitive Regulation is vague and does not support the EU authorities' decision that the
circumstances of the present investigation warranted the exclusion of the "idle capacity".635
7.381. Argentina claims that the European Union acted inconsistently with Articles 3.1 and 3.4
because its evaluation of production capacity and capacity utilization was not based on positive
evidence. Argentina builds its claim upon the foll owing three principal lines of argument. First,
Argentina argues that the evidence on which the EU authorities based their evaluation of capacity
utilization is implausible. Argentina notes in this respect that the EU authorities' reduction of the
production capacity figures in the Definitive Regulation amounted to 5,898,000 tonnes, or 26.53%
of total production capacity, during the IP (i.e. 1 July 2011 to 30 June 2012). Argentina argues
that the EBB could not have overlooked a "mistake " of this magnitude, given the frequency with
which the EBB collected production capacity data and given the fact that the EBB's
September 2013 submission shows that the entire ty of "idle capacity" had previously been
attributed to non-EBB producers, a minority sector of the EU industry.
636 Second, Argentina
asserts that the revised capacity figures are contradicted by multiple reliable and publicly available
sources reporting production capacity figures simila r to those initially provided by the EBB in the
complaint.637 Furthermore, Argentina argues that while, in the Definitive Regulation, the
EU authorities mentioned that they had cross-referenced the revised data to publicly available
data, they failed to identify the public data used , to place this data on the public file of the
investigation and to clarify the "cross-referencing" exercise which they allegedly undertook. 638
Third, Argentina argues that because the exclusion of "idle capacity" is not supported by the text
of Article 3.4, evidence concerning such "idle capacity" is not evidence that is relevant or pertinent
with respect to the issue of capacity.639
7.382. Argentina submits that the European Union did not conduct an objective examination of
production capacity and capacity utilization, as requ ired by Article 3.1, as the EU authorities failed
to act in an even-handed manner and favoured th e interests of the EU domestic industry in
weighing and balancing the evidence before them. Argentina argues in this respect that the
unusual exclusion, on the basis of unreliable data, of "idle capacity" of a huge magnitude favoured
the interests of the domestic industry by understating capacity, overstating capacity utilization and
consequently denying the significance of overcapacity as a source of injury. 640 Argentina adds that
this occurred in a context in which CARBIO argu ed that overcapacity, and not dumped imports,
caused injury to the EU industry. 641 In addition, Argentina argues that the facts that the
EU authorities favoured evidence produced by one party even though that evidence is contradicted
by public sources, that the EU authorities did no t disclose the publicly available data with which
they cross-referenced the EBB's submission of 17 September 2013, and that the adjustment was
made after the on-site verifications had been completed constitute a failure to conduct an
objective examination.
642 Argentina adds that all sampled producers were EBB members, and
therefore their production capacity figures excluded "idle capacity" from the beginning; therefore
the EU authorities' verification of these producers' data does not establish the accuracy of the
revised data.
643
7.383. Argentina claims that, contrary to Article 3.4, the EU authorities failed to adequately
evaluate production capacity and capacity utilization. Argentina first submits in this respect that
the obligation to evaluate all relevant economic factors under Article 3.4 is to be read in
conjunction with the obligations imposed under Arti cle 3.1, such that the authorities' failure to

634 Argentina's second written submission, para. 216; response to Panel question No. 59, para. 145.
635 Argentina's second written submission, para. 218.
636 Argentina's first written submission, paras. 363-364; opening statement at the first meeting of the
637 Argentina's first written submission, para. 370. The sources are EBB press releases, the EBB's
we bsi te , th e US D e partme n t of Agri c u lt u re's G l obal Agricultural Information Networ k, and data quoted by a
Bloomberg New Energy Finance analyst in The Telegraph.
638 Argentina's first written submission, paras. 371-372.
639 Argentina's first written submission, para. 373; second written submission, para. 222 (referring to
Panel Report, Mexico – Steel Pipes and Tubes, para. 7.213).
640 Argentina's first written submission, paras. 376-377 and 380.
641 Argentina's first written submission, para. 376.
642 Argentina's first written submission, para. 378; opening statement at the first meeting of the Panel,
para. 117.
643 Argentina's second written submission, para. 224.

base their evaluation of production capacity and capacity utilization on an objective examination of
positive evidence also constitutes a violation of Article 3.4. 644 Second, Argentina submits that the
finding in the Provisional Regulation, confirmed in the Definitive Regulation, that "production
capacity remained relatively stable" is factually incorrect in view of the fact that production
capacity increased by 1,868,500 tonnes, or 9%, during the reference period.
645
7.384. Finally, Argentina argues that the EU authorities acted inconsistently with Article 3.4
because they failed to evaluate return on investments and capacity utilization in a consistent
manner. Argentina submits that "idle capacity" was excluded from the capacity utilization figures
considered by the EU authorities but was included in the return on investment figures given that
the EU authorities' evaluation of the latter procee ded on the basis of all assets employed in the
production of biodiesel.
646 Argentina submits that while the European Union asserts that "idle
capacity" was not included in the calculation of return on investments because there were no
sampled companies with "idle capacity", there was at least one sampled company, namely Diester,
with "idle capacity" that would have been excluded from the production capacity figure but was
included in the return on investments figures used by the EU authorities. 647 Argentina rejects the
European Union's contention that its claim concerning return on investments does not properly fall
within the Panel's terms of reference.
7.4.5.4.2 European Union
7.385. Concerning Argentina's challenge of the EU authorities' definition of production capacity,
the European Union argues that there is no definition of production capacity in the
Anti-Dumping Agreement. It submits that the exclusion of "idle capacity" accords with the most
relevant dictionary definitions of the term "capacity", such as the one in the Shorter Oxford English
Dictionary, which defines it as "the maximum amount or number that can be contained, produced,
etc."
648, given that "idle" plants make no contribution to the "maximum amount or number that
can be … produced". 649 According to the European Union, this conclusion is supported by the
context of the term, as a plant that is not available for production cannot be utilized. 650 The
European Union argues that Article 3.4 requires a substantive assessment of the state of the
domestic industry (i.e. a substantive evaluation rather than a formalistic one based on rigid
definitions and a checklist of positive and negative factors) and that capacity utilization is only one
of the factors listed in Article 3.4. 651 The implications for the injury determination are the same
regardless of the inclusion or exclusion of "idle capacity" as both low capacity utilization and
closing or "mothballing" of plants are indicative of injury. 652 However, the European Union submits
that capacity utilization provides a measure of the level of efficiency at which an industry is
operating, and that to include industrial plants th at have been mothballed in the same category as
plants that are kept in operational condition would give a false impression about the state of the
domestic industry.
653
7.386. The European Union rejects Argentina's allegations that the revised figures are implausible
and therefore do not constitute positive eviden ce. The European Union submits that the change
consisted in reclassifying part of the non-producing plants as "idle" because "[they were] not in a
state that it would have been available for use during the IP" and that "having given the EBB's
information 'close scrutiny', the EU authorities were prepared to accept it as accurate".
654 The
European Union argues that the issue of whether and at what precise point a plant becomes "idle"
is one of technical interest; what is significant in the context of Article 3.4 is the conclusion, as

644 Argentina's first written submission, paras. 382-383 (quoting from Panel Report, Korea – Certain
Paper, para. 7.272).
645 Argentina's first written submission, paras. 384-385 (quoting from Panel Report, EC – Tube or Pipe
Fittings, para. 7.314).
646 Argentina's first written submission, para. 390.
647 Argentina's opening statement at the first meeting of the Panel, para. 120; response to Panel
question No. 63(b), para. 156.
648 Shorter Oxford English Dictionary, 6th edn, (version 3.0.2.1), (Exhibit EU-9).
649 European Union's first written submission, para. 300.
650 European Union's first written submission, para. 301.
651 European Union's response to Panel question No. 59, para. 87; second written submission,
para. 151.
652 European Union's first written submission, para. 308.
653 European Union's second written submission, para. 154.
654 European Union's first written submission, para. 305.

stated in recital 132 of the Definitive Regulation, that "during the period under consideration
production was stopped in several plants and that the capacity that had been installed was not
immediately available for use, or only available for use with significant reinvestment". The
European Union submits that the evidence was secured from the best source, namely the domestic
industry
655, and the EU authorities have made no attempt to conceal the analytical process in
which they were engaged, and the effect of the new data received from the EBB. 656 The
European Union argues that the production capa city data contained in the publicly available
material cited by Argentina were in fact based on the data that the EBB provides to the public,
which include "idle capacity". The European Union further submits, with respect to Argentina's
criticism that the EU authorities have not made available the publicly available material relating to
"idle capacity", that there is no such obligation in the legal provisions invoked by Argentina, i.e.
Articles 3.1 and 3.4.
657 In any event, the European Union considers that it has submitted to the
Panel several examples of the types of publicly available material relied upon by the
EU authorities.
658
7.387. The European Union argues that Argentina confuses the "objective examination" aspect of
its claim by embarking on a discussion of the caus es of injury, a matter governed by Article 3.5,
rather than the existence or extent of that injury, which is the subject of Article 3.4.659 In addition,
the European Union argues that even though the EBB's revised submission was filed after in situ
verifications, the EU authorities gave it "close scrutiny". 660 The European Union explains that the
authorities analysed the data concerning capacity in two ways: first, by desk analysis and cross-
referencing against publicly available sources (published press releases, news from biodiesel
producers and the EBB that plants had been clos ed or mothballed); and second, by selecting a
sample of EU producers and subjecting their data to detailed examination and verification.661
7.388. With regard to Argentina's assertion that the EU authorities failed to properly evaluate data
in respect of production capacity and capacity utilization, the European Union notes that this
aspect of Argentina's claim is in part merely consequential to its claims concerning objective
examination and positive evidence. The European Union responds to the other aspect of that
claim, concerning the EU authorities' statement that production capacity was "relatively stable"
even though it had increased by 9%, that the "r elatively stable" finding pertained to the period
from 2010 to the IP, in which capacity increased by 4.3%, not by 9%.
662
7.389. The European Union argues that the inconsistency alleged by Argentina concerning the
EU authorities' findings with regard to return on investments falls outside the Panel's terms of
reference given that Argentina did not mention return on investments in either its panel request or
its request for consultations.
663 On the merits, the European Union initially submitted that the
EU authorities' assessment of production capacity was based on data for the industry as a whole,
whereas their examination of return on investments was based on data from the sampled EU
producers. The European Union indicated that had any of the sampled producers had "idle
capacity", that capacity would have been ignored in calculating return on investments. However,
none of these sampled producers had "idle capacity"; therefore the exclusion of "idle capacity" had
no impact on the EU authorities' assessment of return on investments.
664 In its second written
submission, the European Union acknowledged that one of the sampled producers in fact had "idle
capacity", which was reported by that company and verified. 665 However, the European Union
argued, excluding "idle capacity" from the consider ation of capacity utilization, on the one hand,

655 European Union's second written submission, para. 155.
656 European Union's first written submission, para. 308.
657 European Union's first written submission, para. 310. However, the European Union recognizes that
such an obligation is contained in Article 6 of the Anti-Dumping Agreement.
658 European Union's first written submission, para. 310 and fn 254 (referring to Media reports on plant
closures in the European Union, (Exhibit EU-10)).
659 European Union's first written submission, para. 313.
660 European Union's first written submission, para. 315.
661 European Union's first written submission, para. 295; response to Panel question No. 62, para. 91.
662 European Union's first written submission, para. 317.
663 European Union's first written submission, para. 318; second written submission, para. 165.
664 European Union's first written submission, para. 318.
665 European Union's second written submission, para. 157.

but including it in the evaluation of return on investments, on the other, is entirely logical given
that this capacity, although not in use, was nevertheless an asset of the company.666
7.4.5.5 Arguments of the third parties
7.390. China considers that certain facts and arguments submitted by Argentina raise issues as
to whether the European Union based its injury de termination on positive evidence and conducted
an objective examination, as required by Article 3.1 of the Anti-Dumping Agreement.
667 China
agrees with Argentina that Article 3.4 contains no reference to a concept such as "availability for
use" or "idleness" and thus the entirety of the production capacity should be considered during the
injury investigation. 668 China considers that the term "idle" does not mean that such capacity
ceased to exist, and that the exclusion of such capacity is not an "objective examination" of
utilization of capacity.669
7.391. Colombia invites the Panel to take into account the architecture of Article 3 and the key
importance of "positive evidence" and "objective examination" in the legal obligation under
Article 3.4.
670 Colombia submits that the Panel should consider the last sentence of Article 3.4,
which provides that "this list is not exhaustive, nor can one or several of these factors necessarily
give decisive guidance." 671 This provision suggests that the Panel should refrain from limiting its
analysis of the Article 3.4 claim to the evaluation of production capacity and utilization of capacity.
Rather, all injury factors must be taken into account when evaluating the state of the domestic
industry.672
7.392. Indonesia argues that the full installed capacity of the domestic industry should be
considered for evaluation of the injury factor "utilization of capacity". 673 Indonesia refers to the
definition of the term "capacity" provided in the Shorter Oxford English Dictionary – "ability to
receive, contain, hold, produce or carry".674 Indonesia believes that this was the meaning intended
by the drafters of the Anti-Dumping Agreement, as a contrary interpretation would make an
assessment of capacity utilization non-objective and discriminatory, because investigating
authorities could adopt different interpretations of the term "idle capacity" in different contexts.675
7.393. Saudi Arabia notes the importance of the injury analysis in preventing abuse of the
anti-dumping instrument and recalls that the injury determination shall be based on positive
evidence. Saudi Arabia submits that the injury analysis is not a "tick-the-box exercise"; rather it
requires a critical analysis of the facts on the record and an unbiased and proper evaluation of
facts.
676
7.4.5.6 Evaluation by the Panel
7.394. Argentina's challenge with respect to the EU authorities' analysis of the impact of dumped
imports on the domestic industry raises two principal issues. The first is the EU authorities'
exclusion of "idle capacity" in their determination and evaluation of production capacity and
capacity utilization. Argentina argues that ex cluding "idle capacity" is not permissible under
Article 3.4, that "idleness" of capacity is an irrele vant fact in the evaluation of production capacity
and capacity utilization, and that reliance on an irrelevant fact violates the "positive evidence"
requirement under Article 3.1. The second issue pertains to the data that was used by the
EU authorities in their evaluation of production capacity and capacity utilization. This issue
primarily arises under Article 3.1 of the An ti-Dumping Agreement – Argentina alleges the
EU authorities acted inconsistently with the "positive evidence" and "objective examination"
requirements under Article 3.1 in accepting the re vised data submitted by the EBB. Argentina also
submits that a violation of these requirements in Article 3.1 gives rise to a violation of Article 3.4.

666 European Union's second written submission, para. 158.
667 China's third-party submission, para. 150.
668 China's third-party submission, para. 151.
669 China's third-party response to Panel question No. 21.
670 Colombia's third-party submission, paras. 27-29.
671 Colombia's third-party submission, para. 39.
672 Colombia's third-party submission, paras. 38-49.
673 Indonesia's third-party response to Panel question No. 21, para. 61.
674 Indonesia's third-party response to Panel question No. 21, para. 53.
675 Indonesia's third-party response to Panel question No. 21, para 61.
676 Saudi Arabia's third-party statement, para. 17.

7.395. We do not find it necessary, in the circumstances of the present dispute, to definitively
resolve the first issue, i.e. whether the EU authorities acted inconsistently with Articles 3.1 and 3.4
by excluding "idle capacity" in their determination and evaluation of production capacity and
capacity utilization. This is because, as we expl ain below, we find that the EU authorities acted
inconsistently with Articles 3.1 and 3.4 in accepting the revised data submitted by the EBB without
assuring themselves of the accuracy and reliability of this revised data. Before turning to that
conclusion, we recall the obligations imposed by Articles 3.1 and 3.4 of the Anti-Dumping
Agreement.
7.396. Article 3.4 requires an investigating authority to evaluate "all relevant economic factors
and indices having a bearing on the state of the in dustry". Article 3.4 sets forth a non-exhaustive
list of such economic factors and indices which mu st be evaluated in order to examine the impact
of the dumped imports on the domestic industry.
677 One of these is utilization of capacity.
Consideration of capacity utilization as an economic factor or index having a bearing on the state
of the industry necessarily involves, as a preliminary step, determining the production capacity of
the domestic industry in order to be able to determine the level or percentage of such capacity
that is being utilized.
678 In the investigation at issue, the EU authorities addressed both production
capacity and capacity utilization in their analys is of the impact of the dumped imports on the
domestic industry.679
7.397. Article 3.1 of the Anti-Dumping Agreement is "an overarching provision that sets forth a
Member's fundamental, substantive obligation" 680 that its injury determination be based on an
"objective examination" of "positive evidence" co ncerning the impact of dumped imports on the
domestic industry.
7.398. The obligation to base findings on positive evidence pertains to "the quality of the evidence
that authorities may rely upon in making a determination". 681 Thus, it is concerned with "the facts
underpinning and justifying the injury determination". 682 Prior panels and the Appellate Body have
observed that the term "positive" suggests that "the evidence must be of an affirmative, objective
and verifiable character, and that it must be credible". 683 Further, "positive evidence" refers to
"evidence that is relevant and pertinent with respect to the issue to be decided, and that has the
characteristics of being inherently reliable and creditworthy". 684 Appellate Body findings in prior
disputes suggest that the obligation to conduct an objective examination deals with the procedural
aspects of the proceeding, i.e. the investigative process itself. 685 It requires that the effects of
dumped imports be investigated in an unbiased manner, without favouring the interests of any
interested party in the investigation. 686 Our analysis of Argentina's claim proceeds on the basis of
this understanding of the relevant obligations under Article 3.1 invoked by Argentina.
7.399. We first consider Argentina's argument that the EU authorities based their evaluation of
production capacity and capacity utilization on evid ence that was unreliable. We recall that in the
Definitive Regulation, the EU authorities revised the production capacity figures that they had set
out in the Provisional Regulation, on the basi s of revised data submitted by the EBB in

677 Appellate Body Report, Thailand – H-Beams, paras. 121-128.
678 "Capacity utilization" is defined in the Oxford Di ctionary of Economics as the "[a]ctual output as a
percentage of capacity." ( Oxford Dictionary of Economics, 3rd edn, J. Black, N. Hashimzade and G. Myles
(Oxford University Press 2009), p. 50)
679 Although Article 3.4 does not require evaluation of production capacity per se, it allows it, given that
it includes a non-exhaustive list of relevant factors or indices. Produc tion capacity and capacity utilization were
two of the "macroeconomic indicators" which the EU authorities evaluated on the basis of data provided
relating to all EU producers. (Provisional Regulation, (Exhibit ARG-30), Recitals 100-101; and Definitive
Regulation, (Exhibit ARG-22), para. 130)
680 Appellate Body Report, Thailand – H-Beams, para. 106.
681 Appellate Body Report, US – Hot-Rolled Steel, para. 192.
682 Appellate Body Report, US – Hot-Rolled Steel, para. 193.
683 Appellate Body Report, US – Hot-Rolled Steel, para. 192.
684 Panel Reports, Mexico – Steel Pi pes and Tubes, para. 7.213; and Mexico – Anti-Dumping Measures
on Rice, para. 7.55, upheld by the Appellate Body Report, Mexico – Anti-Dumping Measures on Rice,
paras. 164-165.
685 Appellate Body Report, US – Hot-Rolled Steel, para. 193.
686 Appellate Body Report, US – Hot-Rolled Steel, para. 193.

September 2013, which excluded "idle capacity" from overall production capacity. They also
revised the capacity utilization figures accordingly.687
7.400. In our view, the circumstances surrounding what was a substantial revision of the data
underlying the EU authorities' evaluation of produc tion capacity and capacity utilization were such
that an unbiased and objective authority should have exercised particular care in ascertaining the
accuracy and reliability of the revised data.
7.401. First, the change in the total production capacity figures that resulted from the EBB's
revision of the data was of such a magnitude that it was likely to fundamentally affect the
EU authorities' evaluation of this factor and, as consequence, their evaluation of capacity
utilization. The EBB's revised data resulted in a reduction in total EU production capacity of up to
5,898,000 tonnes, or 26.53% of the figure reported in the Provisional Regulation.
688 It also led to
very different trends in the evolution of prod uction capacity. The figures relied upon by the
EU authorities in the Provisional Regulation showed production capacity increasing from
20,359,000 tonnes to 22,227,500 tonnes between 2009 and the IP, while in the Definitive
Regulation, production capacity decreases from 18,856,000 to 16,329,500 tonnes. The data
r e v i s i o n a l s o l e d t o v e r y d i f f e r e n t t r e n d s i n c apacity utilization; according to the revised data,
capacity utilization showed an upward trend, increasing from 46% to 55% over the period
considered, in stark contrast to the downward trend from 43% to 41% over the same period in the
Provisional Regulation.689 Moreover, the change in the data also led to different conclusions in the
Definitive Regulation concerning the impact of the dumped imports on the domestic industry. The
Definitive Regulation states that: "[w]ith the revised data production still increases, but useable
capacity decreased during the same period. This shows that the Union industry was reducing
available capacity in face of increased imports from Argentina and Indonesia and thereby reacting
to market signals." 690 Such significant changes as a result of accepting the revised data warrant
careful consideration of the accuracy and reliability of the revised data, especially where, as in this
case, the changes benefit the position of the submitter of the revised data.
7.402. Second, the reliability of the EBB data appears to have been an issue from the outset of
the investigation. According to the European Union, the EU authorities entertained doubts
concerning the reliability of the data initially provided by the EBB, which they relied upon in the
Provisional Regulation.
691 In addition, it appears that the EBB corrected its production capacity and

687 Definitive Regulation, (Exhibit ARG-22), Recital 131.
688 The EU authorities revised the production capacity for each of the years considered in their injury
determination: for 2009, production capacity was revised from 20,359,000 to 18,856,000 tonnes (a decrease
of 1,503,000 or 7.38%); for 2010, it was revised from 21,304,000 to 18,583,000 tonnes (a decrease of
2,721,000 or 12.77%); for 2011, it was revised from 21,517,000 to 16,017,000 tonnes (a decrease of
5,500,000 or 25.56%); for the IP, from 22,227,500 to 16,329,500 tonnes (a decrease of 5,898,000 or
26.53%).
689 Definitive Regulation, (Exhibit ARG-22), Recital 131.
690 Definitive Regulation, (Exhibit ARG-22), Recital 132.
691 In particular, during the second meeting of the Panel with the parties, in answer to a question from
the Panel, the representative of the European Union stated that from the beginning the officials of the
EU authorities had considerable doubts about the production capacity figures that they had received from the
EBB and that throughout the investigation, they pursued the EBB with the view to identify the "actual
capacity". In its second written submission, the Europe an Union argues that "[t]he true situation regarding
[idle] capacity was discovered by the investigating authority only after the adoption of the Provisional
Regulation." (European Union's second written submission, para. 157). See also the European Union's response
to Panel question No. 119(c), para. 111: "… it was only due to the persistent efforts of the Commission that
the EBB provided figures for capacity that could be relied upon", and response to Panel question No. 115,
para. 96:
In the Biodiesel investigation the Commission sought to identify a reliable and meaningful figure
for the production capacity of the industry. As a first step in this direction the Provisional
Regulation reproduced data that had been suppli ed by the EBB. Following the adoption of the
Provisional Regulation, the Commission focussed particular attention on the reliability of the
capacity figures. In the course of this examinat ion it became apparent, in particular, that the
figures in the Provisional Regulation included 'idle' plant, i.e. plant that was not available for use.
The Commission set about identifying a figure that excluded any such capacity. The result of this
effort is the figures which are given in the Definitive Regulation. These figures were closely
examined by the Commission.
The Definitive Regulation does not explicitly address the question of who, of the EU authorities or the
EBB, initiated the revision of the production capacity figures, although it contains language that suggests the
the EBB took the initiative to revise its data. It states, notably, that:

capacity utilization data at least twice during the investigation process, in March 2013, after the
initiation of the investigation and before the issuance of the Provisional Regulation, and again in
September 2013, when the EBB presented the revise d data that is at the centre of the present
claim.
7.403. Third, the September 2013 data was prep ared specifically for the purposes of the
investigation, and differed from the production capa city data made available to the public by the
EBB, notably on its website. We do not mean that the fact that the EBB presented different
production data to different audiences for different purposes, in and of itself, says anything about
the reliability of any of the data so presented. However, in our view, the difference between the
data publicly reported by the EBB, which included "idle capacity", and the data submitted by the
EBB in its September 2013 submission, which excluded "idle capacity", and the fact that the latter
was specifically prepared for the purposes of the investigation made it all the more necessary for
the EU authorities to satisfy themselves of the accuracy and reliability of the revised data.
7.404. Fourth, the revision of the data took place in a context in which the issue of capacity and,
in particular, of overcapacity, was one of particular importance. From the outset of the
investigation, Argentine interested parties repeatedly argued that the overcapacity of the domestic
industry was an important cause of injury. Again, this context supports the conclusion that careful
consideration of the accuracy of the revised data was warranted.
7.405. In these circumstances, we would expect an investigating authority to exercise particular
care and circumspection in assuring itself of the reliability of the production capacity data that it
ultimately relies upon. However, nothing on the record allows us to conclude that the
EU authorities did so in this case.
7.406. We recall in this respect that the Defini tive Regulation states that the EU authorities
accepted the revised data "after close scrutiny".
692 However, the only elaboration on this "close
scrutiny" is the statement that they cross-referenced this data against "publicly available data
concerning in particular idle capacity as well as capacity of producers that ceased operations due
to financial difficulties".
693 The Definitive Regulation also mentions that:
[The] revised data is now more in line with the public statements of the Union
industry and Union producers, stating that during the period under consideration
production was stopped in several plants and that the capacity that had been installed
was not immediately available for use, or only available for use with significant
reinvestment.
694
7.407. These statements do not persuade us that the EU authorities were sufficiently careful in
assessing the accuracy and reliability of the data.
7.408. Before the Panel, the European Union asse rted that the EU authorities had cross-checked
the revised data against public sources. However, the European Union was unable to satisfactorily
explain how this exercise was conducted. The Euro pean Union submitted to the Panel, as Exhibit
EU-10, "examples of the kinds of sources that were used"
695 during the investigation to
cross-check the data.696 The European Union admitted that this Exhibit does not contain the actual
public sources used by the EU authorities in cross-referencing the revised data, and that the data
that was actually used to verify the EBB's submission was not placed on the record of the
investigation.
697 In our analysis, we are obliged to limit ourselves to evidence that was on the
record of the investigating authority at the time of investigation. As Exhibit EU-10 was prepared

Following provisional disclosure the Union industry noted that the capacity data that had been
used in Table 4 of the provisional Regulation incl uded capacity that had not been dismantled, but
was not in such a state that it would have been available for use during the IP, or previous years,
to manufacture biodiesel. They separately identified this capacity as 'idle capacity' which should
not be counted as capacity available for use. (Definitive Regulation, (Exhibit ARG-22),
Recital 131)
692 Definitive Regulation, (Exhibit ARG-22), Recital 131.
693 Definitive Regulation, (Exhibit ARG-22), Recital 133.
694 Definitive Regulation, (Exhibit ARG-22), Recital 132.
695 European Union's response to Panel question No. 118 (c), para. 106.
696 See Media reports on plant closures in the European Union, (Exhibit EU-10).
697 European Union's response to Panel question No. 118 (c), para. 106.

for the purposes of this dispute and did not form part of the record of the EU authorities in the
anti-dumping investigation at hand, even assuming we found it to be persuasive, which we do
not698, it would not be pertinent to our analysis.699
7.409. The European Union further asserted before the Panel that the capacity data was
"checked" through "desk analysis", which we underst and to mean that it was reviewed so as to
spot problems in terms of clarity, consistency and completeness, etc. 700 That said, even when
asked directly, the European Union could not clarify whether only the initial data was "checked"
through desk analysis or whether the revised data also was. 701 Similarly, although the
European Union's explanations on this matter are not particularly clear, we understand that the
EU authorities verified the production capacity of sampled producers, who were all EBB members,
prior to the submission by the EBB of the revised data. As noted above, the EBB indicated that the
initial data, as it pertained to EBB members, already excluded "idle capacity", whereas the revised
data concerned non-EBB members that were not part of the sample.
702 As the revised data was
submitted after the on-site verifications of sample d EU producers conducted by the EU authorities,
it is clear to us from the European Union's explanations that the EU authorities did not actually
verify the revised data, at least as it pertai ned to non-EBB members, through these on-site
verifications.
7.410. Finally, the European Union's answers to precise questions regarding the verification or
checks on the revised data do not allow us to conclude that the EU authorities performed any other
type of verification.
703 We add that the revised data was submitted less than 10 working days
before the Definitive Disclosure containing revised findings based on the revised data was issued.
The brevity of this period also raises question wh ether the EU authorities would have been able to
assure themselves of the accuracy and reliability of the revised data.
7.411. In light of the foregoing, the explanations provided by the European Union do not satisfy
us that the EU authorities undertook sufficient steps to satisfy themselves that the revised figures
were accurate. While it may be that the EU authorities exercised the necessary degree of
circumspection in considering the revised data and assuring themselves of its accuracy, nothing on
the record or in the explanations provided by the European Union allows us to satisfy ourselves
that this was the case. Having considered the record before us and the explanations by the
European Union, it is not clear that the EU author ities satisfied themselves of the accuracy of the
information provided in the EBB submission of September 2013, consistent with the requirement
under Article 3.1 to base their determination on positive evidence
704 We stress that we make no
conclusion as to the accuracy in fact of the revised data; we merely find that the European Union
has not persuaded us that the EU authorities exercised sufficient care in assessing the accuracy
and reliability of the revised data in the circumstances of this investigation.
7.412. Moreover, in the context of an investigation in which the issue of capacity and overcapacity
was fiercely contested between the domestic indu stry and the Argentine producers/exporters, the

698 Media reports on plant cl osures in the European Union, (Exhibit EU-10), contains only a few news
excerpts pertaining, inter alia, to the closing of certain plants. While this may have allowed the European Union
to satisfy itself of the veracity of some of the plant closures reported in the EBB's revised submission, the type
of information referred to in this exhibit would in our view have been insufficient to allow the EU authorities to
verify the accuracy of the revised figures provided by the EBB in its September 2013 submission.
699 Pursuant to Article 17.5 (ii) of the Anti-Dumping Agreement, a panel shall examine the matter based
upon "the facts made available in co nformity with appropriate domestic procedures to the authorities of the
importing Member". See also Appellate Body Report, US – Countervailing Duty Investigation on DRAMS ,
para. 161: "a Member may not seek to defend its agency's decision on the basis of evidence not contained in
the record of the investigation".
700 European Union's response to Panel question No. 118, para. 104.
701 European Union's response to Panel question Nos. 62, para. 91, and 118, paras. 104-108.
702 The revised data also affected the total EU production capacity, which was comprised of EBB and
non-EBB members' capacity. See above, paras. 7.374 - 7.379.
703 See, e.g. European Union's response to Panel question No. 118, paras. 104-108.
704 In its first written submission, the European Union submits that "[i]t is not the practice of the
European Union in drafting measures such as the Provisional and Definitive Regulations to enter into the level
of detail about its methodology that Argentina seems to expect", concerning how the revised data was verified
or scrutinized. (European Union's first written submi ssion, para. 296). We note that we have not limited
ourselves to the explanation provided in the Regulation s, but have given the European Union the opportunity
to refer to other evidence on the re cord, whether or not that evidence or information was made public or
communicated to interested parties.

EU authorities' acceptance of revised data presen ted by one of these parties without sufficiently
assuring itself of the accuracy of this data do es not, in our view, constitute the "objective
examination" required by Article 3.1.
7.413. Based on the above considerations, we conclude that Argentina has made a prima facie
case, which the European Union has failed to rebu t, that the EU authorities failed to base their
evaluation of production capacity and capacity utilization on positive evidence, and failed to
conduct an objective examination of the impact of dumped imports on the domestic industry
insofar as it relates to these two factors, thereby acting inconsistently with Article 3.1.
7.414. Argentina further asks us to find that the EU authorities' failure to act consistently with
the "positive evidence" and "objective examinat ion" obligations under Article 3.1 renders its
evaluation inconsistent not only with these provisions, but also with Article 3.4 of the
Anti-Dumping Agreement.
7.415. We recall that Article 3.4 requires that an investigating authority's examination of the
impact of the dumped imports on the domestic industry include "an evaluation of all relevant
economic factors and indices having a bearin g on the state of the industry", including inter alia,
utilization of capacity. We also recall that the fundamental obligations imposed under Article 3.1
"inform[] the more detailed obligations in succeeding paragraphs" of Article 3
705, including
Article 3.4. It is difficult to imagine that an unbiased and objective investigating authority could
conduct its evaluation of any injury factor or index consistently with Article 3.4 where that
evaluation is not based on "positive evidence" within the meaning of Article 3.1, and does not
result from an "objective examination", also within the meaning of Article 3.1. In the
circumstances of the present dispute, we consider that Argentina has made a prima facie case that
the EU authorities acted inconsistently with Article 3.4, which the European Union has not
rebutted, and therefore also uphold Argentina's Article 3.4 claim.
7.416. We now turn to Argentina's allegation that the EU authorities acted inconsistently with
Article 3.4 in their definition of the term "capacity utilization". According to Argentina, the term
"capacity" in that Article means the full production capacity of the domestic industry and no part of
it can be excluded. On the contrary, the European Un ion is of the view that the term "capacity" as
used in Article 3.4 permits the exclusion of production capacity which is not available for use
during the IP.
7.417. Prior panels – in particular the panels in the recent EU – Footwear (China) and EC –
Fasteners (China) disputes – have stressed that Article 3.4 does not provide any guidance or
methodology for the evaluation of individual factors and indices listed in Article 3.4.
706 In other
words, investigating authorities enjoy a certain degree of latitude in the evaluation of the
Article 3.4 injury factors and indices. Nonetheless, in our view, the terms used in listing the
various relevant factors under Article 3.4 delineate what the authorities must examine, and what
data they may rely upon in their examination of the relevant factors.
7.418. In this dispute, the parties have debated whether "capacity", as a concept, or as used in
the phrase "utilization of capacity" in Article 3.4, requires inclusion or not of certain type(s) of
capacity which is not used or not available for use, e.g. "idle capacity". Hence, the question before
us is whether some part of the installed capacity, which is not available for use, may be excluded
from the calculation of a firm's total production capacity.
7.419. The ordinary meaning of the term "capacity" (in the sense of production capacity) refers to
the maximum output that a firm is capable of producing; in other words, it refers to its total
installed production capacity.
707 As it refers to the notion of being capable to produce, this ordinary

705 Appellate Body Report, Thailand – H-Beams, para. 106.
706 Panel Reports, EU – Footwear (China) , paras. 7.445, 7.448, and 7.456; EC – Fasteners (China) ,
para. 7.401.
707 The Shorter Oxford English Dictionary defines "capacity" as, inter alia , the "[a]bility to receive,
contain, hold, produce, or carry", and "[t]he maximum amount or number that can be contained, produced,
etc." (Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1,
p. 338). The Oxford English Dictionary defines the same term, as it is used in industry as "the ability to
produce; equivalent to 'full capacity'." (OxfordDic tionaries.com, Oxford Univ ersity Press, accessed
28 October 2015, http://www.oed.com/view/Entry/27368?redirectedFrom=capacity#eid). The Oxford
Dictionary of Economics provides an even more pertinent definition of "capacity". It defines this term as "[t]he

meaning does not conclusively resolve the question whether some installed capacity which is in
practical terms not available for productive use may be excluded from the calculation of a firm's
production capacity. It seems to accommodate defining production capacity as only that part of
installed capacity which can actually be mobilized for production within the reasonably short term.
Turning to the context of the term "capacity" as it is used in the phrase "utilization of capacity" in
Article 3.4, the requirement to evaluate this fa ctor or index to determine whether the domestic
industry has been injured makes it implicit that what is called for is an evaluation of the domestic
industry's ability (or inability) to make use of it s installed capacity during the period considered.
This evaluation calls for a determination as to the extent to which the assets were being put to use
and the extent to which the assets could not be put to use as a result of the impact of dumped
imports on the domestic industry during the period considered for purposes of the injury
determination. Insofar as productive assets are genuinely not available for use, as noted above, an
investigating authority could, in our view, properly consider that they do not form part of the
domestic industry's production capacity. However, capacity utilization as a factor or index bearing
on the state of the domestic industry would be less than meaningful or would be undermined if
production capacity that is not being used as a result of the impact of dumped imports is excluded
from the determination of rates of capacity utilization.
708
7.420. In this investigation, the record before us strongly suggests that the EU authorities relied
on the re-classification of production capacity be tween "useable" capacity and capacity that is not
available for use done by the EBB without themselves assessing the EBB's reclassification 709, and
without adequately assessing whether the data actually corresponded to the explanation or
definition of "idle capacity" that they themselves provided in the Regulations 710 and, more
importantly, without assuring themselves that th e production capacity that was excluded could
properly be excluded from the domestic indu stry's production capacity. In addition, the
Regulations refer to "idle capacity" as capacity which would require significant reinvestment in
order to be put to use again but there is no explanation as to why reinvestment was required.
7.421. It is not clear whether "idle capacity", as that term was used by the EBB and the
EU authorities, corresponds to plants that entirely stopped producing on a permanent basis or
plants that were temporarily shut down but could be put back into use once the necessity arose, or
both of them, or any other types of plants. Of particular concern is the reference by the EU
authorities in the Definitive Regulation to capacity which was "not immediately available for
use".
711 In principle, one would expect that the fact that certain capacity is momentarily
unavailable is not sufficient to exclude it from the production capacity of a producer or of the
overall industry. Where an investigating authorit y decides to exclude such production capacity
from its evaluation, we would expect a plausible explanation of its reasons for doing so. In this
context, we note that the capacity that was excluded in the Definitive Regulation amounts to as
much as 5,898,000 tonnes according to the data set out in the Regulations.

maximum output of goods and services a firm or an economy is capable of producing". ( Oxford Dictionary of
Economics, 3rd edn, J. Black, N. Hashimzade and G. Myles (Oxford University Press 2009), p. 50).
708 Argentina submits that the negotiating history of the Anti-Dumping Agreement supports its
interpretation. In our view, the ordinary meaning of the term "capacity" in Article 3.4 read in its context, does
not entirely preclude determining the amount of capacity with reference to capacity available for use in the
reasonably short term and there is therefore no need to have recourse to the preparatory work of the treaty as
a supplementary means of interpretati on pursuant to Article 32 of the Vienna Convention. In any event, the
negotiating history on this matter is inconclusive.
709 W e r e c a l l t h a t w e h a v e f o u n d a b o v e t h a t A r g e n t i n a h a s m a d e a prima facie case that the
EU authorities failed to properly satisfy themselves of the accuracy of the relevant figures provided by the EBB.
710 We recall that the Definitive Disclosure and the Definitive Regulation define the excluded capacity (or
"idle capacity") as "capacity that had not been dismantled, but was not in such a state that it would have been
available for use during the IP, or previous years, to manufacture biodiesel" (Definitive Disclosure, (Exhibit
ARG-35), Recital 105; Definitive Regulation, (Exhibit ARG-22), Recital 131) and – implicitly – as "capacity that
had been installed [but] was not imme diately available for use, or only available for use with significant
reinvestment" (Definitive Regulation, (Exhibit ARG-22), Recital 132) and contrasted such "idle capacity" with
"capacity available for use" or "useable capacity" (Definitive Regulation, (Exhibit ARG-22), Recitals 131 and
132). (See also European Union's response to Panel question No. 116, para. 99)
711 The Definitive Regulation implies that the EU authorities excluded "capacity that had been installed
[but] was not immediately available for use, or only available for use with significant reinvestment". (Definitive
Regulation, (Exhibit ARG-22), Recital 132, cited in European Union's response to Panel question No. 116,
para. 99)

7.422. In our view, these concerns raise doubts as to the consistency with Article 3.4 of the
treatment of the total production capacity of the EU industry. It also raises questions as to the
objectivity of the EU authorities' evaluation of production capacity and capacity utilization as
factors bearing on the state of the domestic indust ry in their injury analysis under Article 3.4.
However, given our findings above that the European Union acted inconsistently with Articles 3.1
and 3.4, we do not see the need to reach a definitive view on this matter.
7.423. Lastly, we turn to Argentina's contention that the EU authorities acted inconsistently with
Article 3.4 due to their "inconsistent" evaluati on of capacity utilization and of return on
investments.
712 To recall, Argentina argues that "idle capacity" was excluded from the production
capacity and capacity utilization figures, but was included in the "return on investments" figures.713
Before addressing the merits of Argentina's claim in this respect, we address the European Union's
objection that it is outside the Panel's term of reference.
7.424. The European Union argues that the inconsistency alleged by Argentina falls outside the
panel's terms of reference because neither Ar gentina's panel request nor its request for
consultations mentions return on investments. 714 The European Union submits in this respect that
each of the factors listed under Article 3.4 of the Anti-Dumping Agreement is the object of a
separate obligation. Consequently, the European Union argues, pursuant to Article 6.2 of the DSU,
Argentina's panel request should have referred to each factor for which it challenges the
EU authorities' evaluation and its failure to mention this factor deprives Argentina of the possibility
of challenging the EU authorities' evaluation of it. In addition, the European Union argues that
Argentina's panel request does not satisfy the Article 6.2 requirement to present the problem
clearly with respect to return on investments as it does not even mention this injury factor.
715
7.425. Argentina responds that it does not challe nge the EU authorities' evaluation of return on
investments in isolation, but rather that it challenges the inconsistent evaluation of capacity
utilization and return on investments. 716 Argentina disagrees with the proposition that each of the
injury factor listed in Article 3.4 amounts to a specific and independent obligation, and considers
that its panel request mentioned the relevant obligation, which is to evaluate all relevant economic
factors and indices having a bearing on the state of the industry. Argentina adds that the alleged
inconsistency arises from a change of figures on production capacity and capacity utilization, thus
the evaluation of capacity utilization is a basis for this claim and it was included in the panel
request.
717 In addition, Argentina argues that the express use of " inter alia" in the paragraph of its
panel request setting out its Articles 3.1 and 3.4 claims means that the claim is not necessarily
limited to the injury factor "utilization of capacity".718
7.426. We recall that Article 6.2 of the DSU provides that a panel request "shall indicate whether
consultations were held, identify the specific measures at issue and provide a brief summary of the
legal basis of the complaint sufficient to present the problem clearly". According to the
Appellate Body, Article 6.2 requires claims, but not arguments, to be set forth in the panel
request.
719
7.427. Argentina's panel request alleges that the anti-dumping measures imposed by the
European Union on imports of biodiesel are inconsistent with:

712 Argentina's response to Panel question No. 63, para. 151.
713 Return on investments was one of the "microeconom ic" factors that the EU authorities considered on
the basis of data provided by the sampled producers. The EU authorities indicated that their assessment of
return on investments was made on the basis of the sampled domestic producers' "pre-tax result as a
percentage of the average opening and closing net book value of the assets employed in the production of
biodiesel." (Provisional Regulation, (Exhibit ARG-30), Recital 116, confirmed in Definitive Regulation,
(Exhibit ARG-22), Recitals 140-141)
714 European Union's first written submission, para. 318; second written submission, para. 165.
715 European Union's second written submission, paras. 166-168 (quoting from Appellate Body Report,
China – Raw Materials, para. 231).
716 Argentina's response to Panel question No. 63, para. 151.
717 Argentina argues that it is making allegations concerning return on investments not as an
independent factor, but as part of its claim regarding capacity utilization.
718 Argentina's opening statement at the first meeting of the Panel, para. 119; response to Panel
question 63, paras. 150-153.
719 Appellate Body Report, EC – Bananas III, para. 143.

Articles 3.1 and 3.4 of the Anti-Dumping Agreement because the European Union's
injury determination is not based on positive evidence and does not involve an
objective examination of the consequent impact of the allegedly dumped imports on
domestic producers of the like product, inter alia, in relation to capacity and capacity
utilization of the domestic industry.
720
7.428. In it submissions to the Panel, Argentina requests that the Panel find that:
[T]he anti-dumping measures imposed by the European Union on imports of biodiesel
originating in Argentina are inconsistent with the following provisions of the
Anti-Dumping Agreement and the GATT 1994:
…
Articles 3.1 and 3.4 of the Anti-Dumping Agreement because the European Union's
injury determination is not based on positive evidence and does not involve an
objective examination of the consequent impact of the allegedly dumped imports on
domestic producers of the like product in relation to capacity, utilization of production
capacity and return on investment of the European Union industry … .
721
7.429. Although Argentina responds to the European Union's objection that it does not challenge
the evaluation of return on investments "in isolation", i.e. per se, this assertion is contradicted by
the requests for findings that it presents to the Panel, in which it seeks a finding that the
EU authorities' evaluation of this specific factor was inconsistent with Articles 3.1 and 3.4.
Argentina's claim in this regard falls outside the Panel's terms of reference as Argentina's panel
request does not mention "return on investments", while it expressly mentions "capacity and
capacity utilization". Argentina had all the information in its possession to include a claim
concerning this factor/index in its panel request. Thus, had Argentina wanted to also challenge the
EU authorities' evaluation with respect to the factor return on investments in the same manner as
it did with respect to production capacity and capa city utilization, there is no plausible reason why
it could not have also mentioned this factor/index in its panel request – and, before then, in its
consultations request – alongside the other two factors. To us, the use of the catch-all phrase
"inter alia" does not cure this omission, particularly as, by explicitly listing capacity and capacity
utilization as specific factors with respect to which the EU authorities' evaluation infringed
Articles 3.1 and 3.4, Argentina's panel request implicitly limited the issues or problems it could
raise in respect of the EU authorities' determination under Article 3.4. In light of the formulation of
Argentina's claims under Articles 3.1 and 3.4 in its panel request, and considering the
requirements of Article 6.2 of the DSU, the absence of any reference to the factor "return on
investments" in Argentina's panel request could only lead to the conclusion that the
EU authorities' evaluation of this factor falls outside the terms of reference of the Panel.
7.430. As noted above, Argentina argues that it is not challenging the EU authorities' evaluation
of "return on investments" per se, but rather that it only refers to their evaluation of this factor as
an argument in support of its claims concerning the EU authorities' evaluation of capacity
utilization. Even if we agreed, and on this basis considered that Argentina's challenge concerning
this factor falls within the Panel's terms of reference as a part of the production capacity and
capacity utilization claims, we would still not need to make a finding with respect to the
EU authorities' evaluation of this factor in order to resolve this dispute. This is because we have
already found that the EU authorities acted inconsistently with Articles 3.1 and 3.4 in their
evaluation of production capacity and capacity utilization.
722
7.431. In sum, for the reasons explained above, we find that Argentina has made a prima facie
case that the EU authorities did not base their eval uation of production capacity and "utilization of
capacity" on an "objective examination" of "positive evidence". This being the case we find that the
European Union acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement in

720 WT/DS473/5, p. 4, para. 7.
721 Argentina's requests for findings in first written submission, para. 470(h); second written
submission, para. 254(h).
722 See above, paras. 7.413 and 7.415.

its examination of the impact of the dumped imports on the domestic industry, insofar as it relates
to these two factors.723
7.4.6 Whether the EU authorities' non-a ttribution findings are inconsistent with
Articles 3.1 and 3.5 of the Anti-Dumping Agreement
7.4.6.1 Introduction
7.432. Argentina claims that the European Union ac ted inconsistently with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement because the EU author ities failed to appropriately assess the injury
caused by "other factors" at the same time and to separate and distinguish that injury from the
injury caused by the dumped imports. 724 Argentina challenges the EU authorities' consideration of
the following "other factors", which were brought to their attention by CARBIO, the association of
Argentine biodiesel producers: (i) the overcapaci ty of the EU domestic industry; (ii) the EU
domestic industry's imports of the product under consideration; (iii) the EU domestic industry's
lack of vertical integration and of access to raw materials; and (iv) the alleged double-counting
regimes of certain EU member States.
725
7.433. In the determinations at issue, the EU authorities concluded that significantly increased
volumes of dumped imports from Argentina and In donesia undercut the prices of the EU industry
and caused material injury to it. 726 They further concluded that whereas it was possible that other
factors had affected the performance of the EU industry to a certain extent, the effect of those
factors, considered individually or collectively, was not such as to break the causal link between
the dumped imports and the material in jury suffered by the EU industry. 727 Specifically, with
respect to the other factors addressed by Argentina's claims, the EU authorities found that the
domestic industry's overcapacity was a factor of injury, but not such a decisive one as to break the
causal link between the dumped imports and the deterioration of the situation of the domestic
industry.728 With regard to the imports by the EU industry, the EU authorities rejected allegations
that the domestic industry had a long-term strategy of importing the investigated product and
concluded that the causal link was not broken by these imports. 729 Finally, the EU authorities
rejected arguments that other factors such as the double-counting regimes put in place by certain
EU member States, the domestic industry's lack of access to raw materials at reasonable prices,
and absence of vertical integration, were causing injury to the domestic industry.730
7.434. We examine Argentina's claims as they pertain to each of these "other factors" in turn,
after reviewing the relevant obligations under the two provisions invoked by Argentina.
7.4.6.2 Relevant provisions of the covered agreements
7.435. The text of Article 3.1 of the Anti-Dum ping Agreement has been reproduced above in
paragraph 7.372.
7.436. Article 3.5 of the Anti-Dumping Agreement reads as follows:

723 We do not understand Argentina to be seeking a finding with respect to the overall conclusion of
material injury reached by the EU authorities (see, in particular, Argentina's response to Panel question No. 61,
para. 148). Given that Argentina's claims are confined to the EU authorities' evaluation of production capacity
and utilization of capacity, our findings of inconsistency are limited to the EU authorities' evaluation of these
two factors.
724 We note that while Argentina submits claims of violation under both Articles 3.1 and 3.5, with the
exception of its allegations with respect to the issue of overcapacity, most of the arguments submitted by
Argentina relate to the requirements under Article 3.5.
725 Argentina's first written submission, paras. 420, 436, 453, 467, and 470(i); second written
submission, para. 254(i).
726 Provisional Regulation, (Exhibit ARG-30), Recital 128; confirmed in Definitive Regulation, (Exhibit
ARG-22), Recital 147.
727 Definitive Regulation, (Exhibit ARG-22), Recital 189.
728 Definitive Regulation, (Exhibit ARG-22), Recital 164.
729 Provisional Regulation, (Exhibit ARG-30), Recital 136; Definitive Regulation, (Exhibit ARG-22),
Recitals 151-160.
730 Provisional Regulation, (Exhibit ARG-30), Recitals 141-146; Definitive Regulation, (Exhibit ARG-22),
Recitals 172-179.

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. (emphasis added)
7.4.6.3 General considerations relevant to Argentina's Articles 3.1 and 3.5 claims
7.437. We have already discussed in the previous section of this Report
731 the fundamental
requirement imposed on investigating authorities by Article 3.1 of the Anti-Dumping Agreement
that they should base their determination of injury on an "objective examination" of "positive
evidence".
7.438. Article 3.5 of the Anti-Dumping Agreement requires the demonstration of a causal link
between the dumped imports and the material injury as a prerequisite to the imposition of anti-
dumping measures. It also requires the authorities to examine any other known factors that may
be simultaneously causing injury to the domestic industry and to ensure that the injuries caused
by those other factors are not attributed to the dumped imports. The Appellate Body in EC – Tube
or Pipe Fittings set out three elements for determining when such a "non-attribution" analysis is
required. The Appellate Body indicated that the factor at issue must: (i) be "known" to the
investigating authority; (ii) be a factor "other than dumped imports"; and (iii) be injuring the
domestic industry at the same time as the dumped imports.
732 The Appellate Body has taken the
view that if an "other factor" is causing injury to the domestic industry simultaneously with the
dumped imports, the investigating authority "must appropriately assess the injurious effects of
those other factors" and "such an assessment must involve separating and distinguishing the
injurious effects of the other factors from the injurious effects of the dumped imports."
733
7.439. Article 3.5 does not contain any guidance or specify any methodology as to how an
investigating authority may satisfy the obligation not to attribute to the dumped imports the
injurious effect of the other known factor. Prior panels have taken the view that it is appropriate
"to undertake a careful and in depth scrutiny" of the determinations made by the investigating
authorities in order to evaluate whether the investigating authority's explanations and conclusions
regarding the other factor are "such reasonable conclusions as could be reached by an unbiased
and objective investigating authority in light of the facts and arguments before it and explanations
given."
734
7.440. We are guided by these principles in our review of the EU authorities' consideration of each
of the other factors cited by Argentina, to which we now turn.

731 See above, paras. 7.397, 7.398.
732 Appellate Body Report, EC – Tube or Pipe Fittings, para. 175.
733 Appellate Body Report, US – Hot-Rolled Steel, para. 223; reiterated in Appellate Body Reports, EC –
Tube or Pipe Fittings, para. 188; China – GOES, para. 151; and China – HP-SSST (Japan) / China – HP-SSST
(EU), para. 5.283.
734 See, e.g. Panel Reports, EU – Footwear (China), para. 7.483; and EC – Salmon (Norway),
para. 7.655. Moreover, we recall that, as noted in section 7.1.2 above, pursuant to the standard of review
applicable in disputes involving anti-dumping measures, set forth under Article 17.6 (i) of the
Anti-Dumping Agreement, the panel must not conduct a de novo review of the evidence before an investigating
authority, but must instead "determine whether the authorities' establishment of the facts was proper and
whether their evaluation of those facts was unbiased and objective".

7.4.6.4 Overcapacity of the EU domestic industry
7.4.6.4.1 Introduction and factual background
7.441. Argentina argues that excessive overcapacity was the main factor that was injuring the EU
domestic industry, rather than dumped imports from Argentina and Indonesia, and that by
attributing the injury suffered by the domestic industry to the dumped imports rather than to
overcapacity, the EU authorities failed to appr opriately separate and distinguish the injurious
effects of this factor from those of the dumped imports.
735
7.442. During the course of the investigation, CARBIO identified overcapacity as a major factor
causing injury to the EU industry, stressing the fact that despite the low capacity utilization rate
during the period considered (less than 50%), th e EU producers had continuously expanded their
production capacity on over-optimistic assumptions.
736
7.443. In the Provisional Regulation, the EU author ities rejected this argument on the basis that
there was no temporal correlation between the domestic industry's capacity utilization, which
remained low and stable during the period considered, and its profitability, which declined during
the same period:
It is the case that during the period considered capacity utilisation across the Union
remained low, at a low point of 40% during the IP. Therefore some companies have
not been using the capacity they have installed.
However capacity utilisation was already low at the start of the period considered and
has remained low throughout the whole period, and was also stable in the sampled
companies.
The sampled companies were profitable at the start of the period considered and loss
making at the end, with stable capacity utilisation. It is reasonable to deduce that the
whole industry has also become less profitable while its capacity utilisation has
remained stable. This cannot therefore be considered a major cause of injury, as there
appears to be no causal link. This argument is therefore provisionally rejected.
737
7.444. CARBIO disagreed with these preliminary findings and argued that even the total
elimination of imports would not have had a noticeable effect on capacity utilization. CARBIO
pointed out that even in the total absence of impo rts, capacity utilization would have been only
53% during the IP. 738 CARBIO argued that such a low capacity utilization rate was problematic
and, in the light of all the fixed costs that such a young industry must bear, would not allow the EU
industry to be profitable.739
7.445. In the Definitive Regulation, the EU auth orities recalled their finding in the Provisional
Regulation that the domestic industry's low capacity utilization rate, which was a stable feature,
was not responsible for the injury caused to it, given that the situation of the sampled companies
had deteriorated during the period considered whil e their capacity utilization did not decrease to
the same extent.740 The EU authorities noted the arguments that, even in the absence of dumped
imports, capacity utilization would have been low, and that the domestic industry had increased
production capacity during the period chosen fo r injury analysis. The EU authorities considered
that no evidence had been provided to show that the domestic industry's low capacity utilization
was causing injury to such an extent as to break the causal link between the dumped imports and
the deterioration in the situation of the domestic industry.
741 They added that fixed costs
represented only a small proportion (roughly 5%) of total production costs, which showed that the

735 Argentina's first written submission, paras. 398-420; second written submission, paras. 227-235.
736 See, e.g. CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), pp. 26-28; CARBIO's
Powerpoint presentation of 14 December 2012, (Exhibit ARG-43), slides 17-18.
737 Provisional Regulation, (Exhibit ARG-30), Recitals 138-140.
738 CARBIO's Powerpoint presentation of 8 July 2013, (Exhibit ARG-46), slide 20; CARBIO's comments
on the provisional disclosure, (Exhibit ARG-51), p. 16.
739 CARBIO's comments on the provisional disclosure, (Exhibit ARG-51), p. 16.
740 Definitive Regulation, (Exhibit ARG-22), Recitals 161-162 and 171.
741 Definitive Regulation, (Exhibit ARG-22), Recitals 163 and 164.

low capacity utilization was "only one factor of injury, but not a decisive one." 742 They also
considered that one of the reasons for the low capacity utilization rate was the fact that the
domestic industry, "due to the particular market situation", imported the finished product itself.
743
They stated, in addition, that according to the revised data on capacity and capacity utilization, the
domestic industry had decreased its capacity during the period considered, and capacity utilization
had increased from 46% to 55%, which "show[ed] that the capacity utilisation of the Union
industry would be significantly higher in the absence of dumped imports than the 53% [figure
mentioned by interested parties]".
744 The EU authorities also rejected the argument that the
domestic industry's overcapacity was so high that even in the absence of imports it would not be
adequately profitable, reasoning that the fact that the domestic industry was profitable in 2009
with a low capacity utilization suggested that in the absence of dumped imports, profitability would
have been even higher.
745
7.446. They also rejected as unsupported by evidence the argument that any company increasing
production capacity during the period under consideration was making an irresponsible business
decision. In this regard, they noted the fact that some companies were able to increase capacity in
the face of increasing imports of dumped biodie sel from Argentina and Indonesia, which to the
EU authorities showed that there was demand in the market for their particular products. 746 The
EU authorities further noted that, according to the revised data before them, "companies were
during the period taking capacity out of possible us e, and closer to the end of the IP were starting
a process of closing plants that are no longer viable". Increases in capacity on a
company-by-company level were mainly due to the expansion of "second generation" biodiesel
plants. Therefore, the EU authorities reasoned, th e domestic industry had been, and was, in the
process of rationalising capacity to meet the demands of the EU market.
747
7.447. Finally, the EU authorities rejected as uns upported by evidence the arguments contesting
their finding that fixed costs represented only ab out 5% of the domestic industry's total costs.
They added that verification had shown a fixed-cost to total-cost of production ratio between 3%
and 10% during the IP for sampled producers and that in any case, fixed costs did not bear any
relation to the capacity utilization rates.748
7.448. On the basis of these considerations, the EU authorities confirmed their provisional findings
on the issue.749
7.4.6.4.2 Main arguments of the parties
7.4.6.4.2.1 Argentina
7.449. In support of its claims, Argentina first refers to its claims under Articles 3.1 and 3.4 750,
and argues that the EU authorities acted inconsistently with Articles 3.1 and 3.5 by relying in their
examination of overcapacity on the revised figures on production capacity and capacity
utilization.751 Argentina submits that the correct figures would have shown a much higher
production capacity and a much lower capacity utilization rate than the ones relied upon by the
EU authorities in the Definitive Determination. 752 In addition, Argentina argues that the correct
figures would show different trends in capacity utilization: whereas the EU authorities found an
increase in capacity utilization, the correct figures would have shown an increase in unused
capacity of 1,561,322 tonnes from 2009 to the IP, and a decrease in capacity utilization during the
same period.
753

742 Definitive Regulation, (Exhibit ARG-22), Recital 164.
743 Definitive Regulation, (Exhibit ARG-22), Recital 164.
744 Definitive Regulation, (Exhibit ARG-22), Recital 165.
745 Definitive Regulation, (Exhibit ARG-22), Recitals 165 and 167.
746 Definitive Regulation, (Exhibit ARG-22), Recital 169.
747 Definitive Regulation, (Exhibit ARG-22), Recital 170.
748 Definitive Regulation, (Exhibit ARG-22), Recital 166.
749 Definitive Regulation, (Exhibit ARG-22), Recital 171.
750 See above section 7.4.5.
751 Argentina's first written submission, paras. 400-401 (referring to Definitive Regulation, (Exhibit
ARG-22), Recital 165).
752 Argentina's first written submission, para. 400.
753 Argentina's opening statement at the first meeting of the Panel, para. 124.

7.450. Second, Argentina takes issue with the EU authorities' reliance on the fact that capacity
utilization was stable during the period considered. In this regard, Argentina submits that the
EU authorities confused overcapacity as a factor causing injury and capacity utilization as an injury
indicator
754, and that their assessment of overcapacity as an "other factor" improperly focused on
the capacity utilization rate. Argentina argues that the authorities should instead have focused on
the important increase in overcapacity in absolute terms, i.e. the fact that, according to Argentina,
the EU industry's unused production capacity increased by 1,561,322 tonnes from 2009 to the
IP.755 Argentina argues that this was the focus of CARBIO's arguments during the investigation.756
7.451. Third, Argentina submits that the increase in unused capacity correlates with the decrease
in profitability of the EU industry, which in its view shows that overcapacity was responsible for the
deterioration of the situation of the industry. 757 Argentina notes that, according to the figures
initially provided by CARBIO, overcapacity increased from 11,613,307 to 13,174, 629 tonnes
from 2009 to the end of IP, while prof itability decreased from 3.5% to -2.5% during the same
period.758 Argentina also argues that the profit of 3. 5% of the domestic industry in 2009 was low,
considering the fact that in the investigation on biodiesel from the United States, the
EU authorities used a profit margin of 15% in determining the injury elimination margin during the
period from April 2007 to March 2008.
759
7.452. In addition, Argentina notes that imports from Argentina and Indonesia increased by
1,247,389 tonnes between 2009 and the IP. Argentina argues that if imports had not increased,
the EU industry would still have had significant overcapacity, of 11,927,240 tonnes, and that even
the total elimination of imports from Argentina and Indonesia would have hardly improved the EU
industry's capacity utilization rates. Argentina notes that the EU industry experienced a similar
level of overcapacity in 2010, when it was no longer profitable with a loss of -0.3%.760
7.453. Fourth, Argentina takes issue with the EU authorities' finding concerning fixed costs,
pointing in particular to the EU authorities' statement that "fixed costs do not bear any relation to
capacity utilisation rates". Argentina argues that the fact that fixed costs remain constant at
different capacity utilization rates is precisely the reason why low capacity utilization rates result in
fixed costs being disproportionally high on a per-unit basis.
761 Argentina argues that an increase in
capacity utilization to a reasonable rate (at least 70%), would have led to a decrease in the ratio
of fixed costs to total costs.
762 Argentina also disputes the EU authorities' statement that fixed cost
represented only a "small proportion" of total produc tion costs in light of their finding that fixed
costs amounted to 3-10% of the sampled companies' total costs during the IP. 763 In addition,
Argentina argues that the authorities' finding with regard to overcapacity of the EU industry is at
odds with their recognition of the capital-intensive nature of the biodiesel industry. Argentina

754 Argentina's first written submission, paras. 403-406; second written submission, para. 229.
755 Argentina's first written submission, para. 405 (referring to the provisional findings on production
capacity and production in table 4 of the Provisional Regulation, (Exhibit ARG-30)); second written submission,
para. 232.
756 Argentina's first written submission, paras. 404-406 (referring to CARBIO's written submission of
5 November 2012, (Exhibit ARG-37), section 5.1 (pp. 26 et seq.); CARBIO's Powerpoint presentation of
14 December 2012, (Exhibit ARG-43), slides 17 and 18; CARBIO's Powerpoint presentation of 8 July 2013,
(Exhibit ARG-46), slides 19 to 21).
757 Argentina's second written submission, paras. 229-231.
758 Argentina's second written submission, paras. 229-231, and table 1 thereto.
759 Argentina's second written submission, para. 232 (referring to the findings of the EU authorities in
the Definitive Regulation, anti-dumping investigation on biodiesel from the United States, (Exhibit EU-14),
Recitals 181 and 182). Argentina also notes the profit margin of 18% achieved by the domestic industry in
2005 and 2006, when the capacity utilization levels amounted to around 90%. (Argentina's second written
submission, para. 233 (referring to European Union's response to Panel question No. 65, referring in turn to
the Provisional Regulation in the anti-dumping investigation on imports of biodiesel originating in the
United States, (Exhibit EU-13), paras. 87 and 95, tables 4 and 7))
760 Argentina's second written submission, para. 234 (referring to Definitive Regulation, (Exhibit
ARG-22), table 2).
761 Argentina's first written submission, para. 409.
762 Argentina's first written submission, para. 411.
763 Argentina's first written submission, para. 410.

submits that overcapacity was "a controlling cause of injury", considering the relevance of fixed
costs to the capital-intensive biodiesel industry.764
7.454. Fifth, Argentina points to other findings of the EU authorities pertaining to the issue of
overcapacity which, in its view, are based on incorrect or irrelevant considerations. In particular,
Argentina notes the EU authorities' statement that one of the reasons for the low capacity
utilization rate was the importation of the product by the EU industry itself. Argentina argues that
this consideration does not mean that overcapacity was not a significant source of injury.
765
Argentina also takes issue with the EU authorities' statement that "the fact that some companies
were able to increase their capacity in the face of increasing imports of dumped biodiesel … shows
the demand on the market for their particular products". 766 Argentina submits that an increase in
capacity does not mean that there is sufficient demand to utilize installed production capacity.767
7.4.6.4.2.2 European Union
7.455. The European Union argues that the EU authorities made a reasoned assessment of the
effects of overcapacity and properly concluded that whatever the effects of overcapacity, the
evidence established that the dumped imports had caused injury to the domestic industry.768
7.456. The European Union argues that Argentina cannot shortcut the requirements of Article 3.5
by simply relying, in its Article 3.5 claim, on the allegations of incorrect assessment of capacity
utilization it made in the context of its Article 3.4 claim. The European Union submits that
Argentina's approach fails to recognize the different natures of Articles 3.4 and 3.5.769
7.457. Responding to the argument of Argentina that the EU authorities focused on low capacity
utilization, rather than on overcapacity, the European Union argues that in the case at hand, the
production capacity of the EU industry had expanded more than there was a demand in the EU and
export markets, and in this context these two term s, "low capacity utilization" and "overcapacity",
are interchangeable. 770 In addition, the European Union questions the figure on the increased
unused capacity (1,561,322 tonnes from 2009 to the IP) cited by Argentina and submits that
Argentina failed to provide a formula or principle as to how a particular level of overcapacity
correlates with the consequent level of harm to the industry.
771 The European Union considers that
the argument of Argentina that even a total elimination of imports would have hardly improved the
EU domestic industry's capacity utilization rates is of no significance; such a hypothesis, if it were
to have any significance, would have to consider all the consequences of the removal from the EU
market of dumped imports that were markedly undercutting the prices of EU producers.
772
7.458. With regard to Argentina's argument concerning fixed costs, the European Union refers to
the EU authorities' finding that sampled companies were profitable at the beginning of the IP but
loss-making at the end of the IP, while capacity utilization remained low during the IP. The
European Union argues that this means that there was no correlation between the two.
773
Similarly, the European Union argues that the capital intensive nature of the biodiesel industry is a
constant feature, whereas injury to the domestic industry developed over the course of the period
considered.
774 Referring to the EU authorities' findings in the Definitive Regulation, the
European Union notes that the capacity utilization rate actually improved, which indicates that

764 Argentina's first written submission, paras. 413-414 (referring to Provisional Regulation, (Exhibit
ARG-30), Recitals 46, 65, 106, and 160; and Definitive Regulation, (Exhibit ARG-22), Recitals 44, 46, 84,
and 138); opening statement at the first meeting of the Panel, para. 126.
765 Argentina's first written submission, para. 417.
766 Argentina's first written submission, para. 418 (referring to Definitive Regulation, (Exhibit ARG-22),
Recital 169).
767 Argentina's first written submission, para. 418.
768 European Union's first written submission, para. 328.
769 European Union's first written submission, para. 321.
770 European Union's first written submission, para. 322.
771 European Union's first written submission, para. 323.
772 European Union's second written submission, para. 159.
773 European Union's first written submission, para. 324.
774 European Union's first written submission, para. 325.

capacity utilization was not responsible for the deterioration in the situation of the domestic
industry.775
7.459. Regarding the EU industry's imports of biodiesel, the European Union submits that the
dumped imports forced the EU industry to shift in part from producing biodiesel to importing it,
thus aggravating its existing problem of overcapacity, which was in turn both an indicator of injury
and a cause of harm reflected in other indicators, such as profits.776
7.460. Finally, the European Union argues that EU authorities' statement that "the fact that some
companies were able to increase their capacity in the face of increasing imports of dumped
biodiesel … shows the demand on the ma rket for their particular products" 777 refers to "some
companies" and to a demand for "their particular products", and not to the EU domestic industry
as a whole.
778
7.4.6.4.3 Arguments of the third parties
7.461. Colombia notes the argument of Argentina that even in case of total elimination of
imports, the capacity utilization of the EU industry would only have reached around 50%.
Colombia submits that it is necessary to question what prompted the EU industry to expand its
production capacity, despite the presence of the allegedly dumped imports during the IP. 779 It
argues that the decision to increase production capacity is not logical or responsible when an
industry had already experienced difficulties and faced competition from dumped imports. 780
Colombia further notes that the European Union itself recognized that one of the reasons for the
low capacity utilization rate was the imports of the product under consideration made by the EU
industry. Colombia argues that the EU authorities failed to meet their obligation of separating and
distinguishing causes of injury and suggests that the Panel should apply an "order of magnitude
test" with regard to the effect of the low capacity utilization rate, on the one hand, and the injury
caused by the dumped imports, on the other hand.
781
7.4.6.4.4 Evaluation by the Panel
7.462. We first consider Argentina's argument that the EU authorities' findings on overcapacity
are inconsistent with Articles 3.1 and 3.5 because they are premised on an improper determination
of the amount of capacity and of the capacity utilization rate. 782 We recall our finding in the
previous section of this Report that the EU authorities acted inconsistently with Articles 3.1 and 3.4
in their evaluation of the domestic industry's production capacity and capacity utilization, because
they failed to base this evaluation on an "o bjective examination" of "positive evidence".
Argentina's present argument raises the question whether these findings under Articles 3.1
and 3.4 of the Anti-Dumping Agreement mean that we should also find that the EU authorit ies'
non-attribution analysis with regard to overcapacity was inconsistent with Articles 3.1 and 3.5 for
the same reasons. In resolving this question, we consider whether the non-attribution analysis of
the EU authorities was tainted by, i.e. based on or affected by, the downward revision of the
figures of the domestic industry's production capacity.
7.463. In this regard, we note that in both th e Provisional and the Definitive Regulation, i.e.
irrespective of which set of figures they consid ered, the EU authorities found that the level of
capacity utilization was low and stable during the period considered, whereas the profitability of
the sampled producers had deteriorated during the same period.
783 The EU authorities considered
that low capacity utilization was a constant or permanent feature of the EU biodiesel industry

775 European Union's first written submission, paras. 322-323 (referring to Definitive Regulation, (Exhibit
ARG-22), Recital 131 and table thereto); second written submission, para. 161.
776 European Union's first written submission, para. 326.
777 Definitive Regulation, (Exhibit ARG-22), Recital 169.
778 European Union's first written submission, para. 327.
779 Colombia's third-party submission, para. 60.
780 Colombia's third-party submission, para. 61.
781 Colombia's third-party submission, paras. 64-68 (referring to Panel Report, Egypt – Steel Rebar,
paras. 7.119-7.121).
782 See the summary of the EU authorities' findings on production capacity and capacity utilization rates,
above, paras. 7.375, 7.379.
783 Provisional Regulation, (Exhibit ARG-30), Recitals 138-140; Definitive Regulation, (Exhibit ARG-22),
Recitals 161-162.

during the period considered, and therefore, that it could not explain the deteriorating state of the
domestic industry, and that it was the dumped imports with their price undercutting that caused
the state of the domestic industry to deteriorate. It is clear from the EU authorities' findings that
their conclusions were not dependent on, or even affected by, the use of the revised vs. the initial
data and/or the trends associated with these data, as in either case, the data showed a low rate of
capacity utilization. This, in fact, was the basis of the EU authorities' conclusion, which did not rely
on the levels of capacity utilization or any changes in those levels. Again, the conclusion of the
EU authorities on the issue of overcapacity is unchanged from the Provisional to the Definitive
Regulation. In the Provisional Regulation – which according to Argentina, was based on "correct"
capacity and capacity utilization data – the EU authorities found that overcapacity was not a major
cause of injury.
784 The Definitive Regulation merely confirmed these findings, after addressing
comments of interested parties on the findings in the Provisional Regulation and the Definitive
Disclosure.785 This leads us to conclude that the revision of the production capacity and capacity
utilization figures in the Definitive Determination did not taint the EU authority's determination on
overcapacity as an "other factor" causing injury to the domestic industry, as this determination
was not based on or affected by the revised data.786
7.464. Argentina refers to a statement of the EU authorities in the Definitive Regulation in which
they mention the revised figures:
In addition, following the inclusion of the re vised data on capacity and utilisation, the
Union industry decreased capacity during the period considered, and increased
capacity utilisation, from 46% to 55%. This shows that the capacity utilisation of the
Union industry would be significantly higher in the absence of dumped imports than
the 53% mentioned above.
787
7.465. However, the statement cited by Argentina was, in our view, a subsidiary point made by
the EU authorities in response to a specific argument that even in the absence of any imports from
Argentina and Indonesia, capacity utilization would have been low at 53% during the IP. 788 The
EU authorities rejected this argument on the ground that no evidence was provided to support the
view that the low capacity utilization rate was causing injury to such an extent as to break the
causal link between dumped imports and the injury, before adding that fixed costs represented
only a small proportion of the total production costs.
789 This, in their view, showed that low
capacity utilization was a factor of injury, but not a decisive one. It is only after making these
points that the EU authorities posited that, in view of the revised capacity utilization rates, in the
absence of any dumped imports, capacity utilization would have been significantly higher than the
53% figure cited by the interested parties.
790 Read in context, this statement does not convince us
that the EU authorities' conclusion with respect to the issue of overcapacity was based on, or
affected by, the revised data.
7.466. We therefore conclude that the revised data did not have a significant role in the
EU authorities' conclusion in the Definitive Regulation on overcapacity as an "other factor" causing
injury. Consequently, the fact that their evaluation of capacity and capacity utilization was, as we
have found, inconsistent with Articles 3.1 and 3.4, does not, in and of itself, render their
non-attribution analysis with respect to overcapacity inconsistent with Articles 3.1 and 3.5. In
other words, notwithstanding our findings above that the EU authorities acted inconsistently with
Article 3.1 and Article 3.4 in their evaluation of production capacity and capacity utilization,
Argentina has not established that the authorities' consideration of the issue of overcapacity is, as
a result, inconsistent with Articles 3.1 and 3.5.
7.467. This brings us to the next argument of Argentina, i.e. that in their non-attribution analysis,
the EU authorities improperly focused on capacity utilization as opposed to the increase in
overcapacity in absolute terms during the period considered. Argentina posits a difference between
the capacity utilization rate (an injury indicator under Article 3.4 representing the percentage of

784 Provisional Regulation, (Exhibit ARG-30), Recital 140.
785 Definitive Regulation, (Exhibit ARG-22), Recital 171.
786 The panel in China – GOES took a similar approach (Panel Report, China – GOES, paras. 7.541,
7.542, and 7.621). See also Appellate Body Report, China – GOES, paras. 219-221.
787 Definitive Regulation, (Exhibit ARG-22), Recital 165.
788 Definitive Regulation, (Exhibit ARG-22), Recital 163.
789 Definitive Regulation, (Exhibit ARG-22), Recital 164.
790 Definitive Regulation, (Exhibit ARG-22), Recital 165.

available production capacity being utilized) and overcapacity (the industry's unused capacity in
absolute terms as an "other" source of injury). Referring to the figures in the Provisional
Regulation, Argentina argues that while capacity utilization did not vary significantly, ranging
between 43% and 41% between 2009 and the IP acco rding to the initial figures provided by the
EBB, overcapacity increased dramatically from 11,613,307 to 13,174,629 tonnes, i.e. by
1,561,322 tonnes, during the same period.
791 Argentina argues that, for this reason, the statement
of the EU authorities that "production capacity remained relatively stable" is factually incorrect. 792
Argentina submits that the increase in unused capaci ty correlates with the decrease in profitability
from 3.5% to –2.5 % during the same period, and concludes that overcapacity led to the declining
profitability and the injury suffered by the domestic industry.
7.468. In our view, capacity utilization is logicall y related to overcapacity, in the sense that the
rate of capacity utilization reflects the amount of excess capacity of the domestic industry in
relative terms. We fail to see how focusing on the increase in overcapacity in absolute terms,
rather than on trends in capacity utilization rates, would have altered the conclusion reached by
the EU authorities in this matter. More fundamentally, we see no basis in Article 3 of the
Anti-Dumping Agreement – and Argentina has identifi ed none – to support the proposition that an
investigating authority would have to consider or give priority to the evolution of the domestic
industry's overcapacity in absolute terms as opposed to its evolution in relative terms. In our view,
an objective and unbiased investigating authority may well have proceeded to examine the issue
of overcapacity on the basis of capacity utilizat ion rather than in terms of the evolution of the
domestic industry's overcapacity. In fact, an authority may well consider that the former is a more
pertinent and informative basis on which to assess the issue of overcapacity. We therefore reject
Argentina's argument that in their non-attribution analysis, the EU authorities improperly focused
on capacity utilization as opposed to the increase in overcapacity in absolute terms during the
period considered.
793
7.469. Argentina also takes issue with the EU authorities' conclusion that the sampled companies
were profitable at the start of the IP, arguing th at a profit rate of 3.5% is extremely low in
comparison to the profit rates realised by the EU domestic industry in earlier periods, in particular
in view of the 15% profit rate used by the EU authorities in calculating the injury elimination
margin in the anti-dumping investigation on biodiesel from the United States.
794 Argentina also
refers to the European Union's indication, in response to a question from the Panel, that
in 2005-2006 the EU biodiesel industry had a profitability rate of 18%, while its capacity utilization
rate was 88–93%.795 The fact that the EU industry may have achieved higher levels of profitability
at a time when its capacity utilization rates we re higher does not, in our view, undermine the
EU authorities' conclusion that, during the period considered, dumped imports caused a
deterioration in the situation of the domestic industry and that overcapacity was not such a cause
of injury as to break this causal link. In our view, whether an industry is in good or poor condition
at the outset of the period examined is not determinative of whether dumped imports caused
material injury. We add, in this respect, that the concept of injury under Article 3 of the
Anti-Dumping Agreement is not limited to the situation in which a healthy industry is injured by
dumped imports.
796 Rather, the notion of "injury", in our view, calls for an inquiry into whether the
situation of the industry deteriorated during the period considered. Our view is supported by the
fact that Article 3.5 itself envisages the possibility of more than one factor causing injury. We note
in this regard that the EU authorities found that while capacity utilization was stable (although
low), profits decreased. Merely because the EU domestic industry might have been "less injured" if

791 Argentina's first written submission, para. 405 (referring to the provisional findings on production
capacity and production, which do not exclude "idle capacity" (Provisional Regulation, (Exhibit ARG-30),
table 4)); second written submission, paras. 229-232.
792 Argentina's first written submission, paras. 384 and 405 (referring to Provisional Regulation, (Exhibit
ARG-30), Recital 103, confirmed in Definitive Regulation, (Exhibit ARG-22), Recital 139).
793 Argentina's first written submission, para. 406.
794 Argentina's second written submission, para. 232 (referring to Definitive Regulation, anti-dumping
investigation on biodiesel from the United States, (Exhibit EU-14), Recitals 181 and 182).
795 Argentina's second written submission, para. 233 (referring to European Union's response to Panel
question No. 65, para. 95, referring in turn to Provisional Regulation, anti-dumping investigation on biodiesel
from the United States, (Exhibit EU-13)).
796 In this respect, we note that in response to a question from the Panel, the European Union noted
that the profit rate of 3.5% achieved by the EU sampled producers in 2009 could not be deemed as the profit
that would have been achieved in the absence of dumped imports, because in the period between 2005
and 2009 the EU biodiesel producers faced the dumped imports from the United States and their profitability
had considerably decreased. (European Union's response to Panel question No. 75, para. 107)

the rate of capacity utilization were higher does not undermine the EU authorities' finding that,
with a constant state of capacity utilization, the decline in profits can be attributed to dumped
imports. The same considerations lead us to reject Argentina's argument that even in the absence
of any imports from Argentina and Indonesia, the EU industry would still be operating at a
significant level of overcapacity.
7.470. We now turn to Argentina's argument concerning the EU authorities' finding that fixed
costs represent only a small proportion of the total production costs. Argentina argues that the
biodiesel industry is a capital-intensive industry that normally has high fixed costs, that the
decrease in capacity utilization leads to cost increases on a per-unit basis and that it is important
for a capital-intensive industry to have a high level of capacity utilization in order to stay
profitable. However, the EU authorities verified that the sampled companies had ratios of fixed
costs to total costs of production between 3% and 10% during the IP.
797 While Argentina's
assertions may be valid in the abstract, they are belied by the facts on the record in this case.
Given that Argentina has produced no evidence that brings into question these facts, we consider
that the conclusion reached by the EU authorities on this issue is one which an unbiased and
objective authority could have reached.
7.471. Finally, we turn to the other statements challenged by Argentina. First, Argentina takes
issue with the statement that one of the reasons for the low capacity utilization rate was the
importation of the product by the EU industry itself.
798 Argentina argues that this explanation does
not support the conclusion that overcapacity was not a significant source of injury. However, in our
view, this particular statement does not suggest that the EU authorities considered that
overcapacity was not a cause of injury. Rather, it points to the fact that overcapacity was caused,
at least in part, by competition from the dumped imports.
799 Likewise, in our view, Argentina
misreads the EU authorities' statement that "the fact that some companies were able to increase
their capacity in the face of increasing import s of dumped biodiesel … shows the demand on the
market for their particular products". 800 Argentina submits that an increase in capacity does not
mean that there is sufficient demand to utilize installed production capacity. 801 As the
European Union points out, this statement pertained to some companies and the demand for their
particular products and not, as Argentina suggests, to the entirety of the EU industry.802
7.472. Based on the above considerations, we reject Argentina's arguments with respect to the
EU authorities' non-attribution analysis as it concerns the issue of overcapacity. Instead, we
consider that the EU authorities' conclusion with respect to this "other factor" is one that an
unbiased and objective investigating authority could have reached in light of the facts before it.
Consequently, we reject Argentina's allegations th at the European Union acted inconsistently with
Articles 3.1 and 3.5 with respect to the treatment of overcapacity as an "other factor" of injury to
the EU domestic industry.
7.4.6.5 Imports by the EU domestic industry
7.4.6.5.1 Introduction and factual background
7.473. During the investigation, CARBIO argued that the imports from Argentina were a result of
a long-term commercial strategy of the EU producers to benefit from the considerable natural
advantages of soybean production in Argentina.
803 CARBIO argued, in particular, that the volume
of imports by the EU industry was significant an d that the imported biodiesel was produced in
facilities directly related to EU producers. 804 In the Provisional Regulation, the EU authorities

797 Definitive Regulation, (Exhibit ARG-22), Recitals 164 and 166.
798 Argentina's first written submission, para. 417 (referring to Definitive Regulation, (Exhibit ARG-22),
Recital 164).
799 We note that the EU authorities found that the domestic industry made these imports in self-defence
in order to remain in business. Moreover, we note that we reject, below, Argentina's allegations concerning the
issue of the EU industry's own imports.
800 Definitive Regulation, (Exhibit ARG-22), Recital 169.
801 Argentina's first written submission, para. 418.
802 European Union's first written submission, para. 327.
803 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), section 5.2, para. 81;
CARBIO's Powerpoint presentation of 14 December 2012, (Exhibit ARG-43), slides 9-11.
804 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), section 5.2, para.79; CARBIO's
Powerpoint presentation of 14 December 2012, (Exhibit ARG-43), slides 9 to 16.

rejected CARBIO's arguments and accepted the EU industry's arguments that imports were made,
temporarily and in self-defence, in order to benefit from dumped prices and to stay in business. 805
The EU authorities concluded that the EU industry's imports did not break the causal link between
the dumped imports and the injury, and explained th at even if the EU domestic industry had not
imported these volumes of biodiesel, trading companies would have imported them anyway and
would have undercut the EU domestic industry's prices to sell the product on the EU market.
806
The Provisional Regulation addresses this issue as follows:
It is clear from data provided by the Union industry that they have imported quantities
of biodiesel from Argentina and Indonesia during the period considered, up to 60% of
all imports in the IP from these countries. However they have stated these imports
have been made in self-defence. Being able to benefit from the dumped prices of
these imports, in the short term, has assisted Union producers in being able to stay in
business for the medium term.
The imports of biodiesel at dumped prices by the Union industry increased
substantially in 2011 and the IP, which was wh en the effect of the differential export
tax on biodiesel and its raw materials could be most felt, as it was at that time that
imports of the raw materials (soybean oil and palm oil) became uneconomic as
compared to imports of the finished product. The differential export tax system in
both countries puts a higher tax on the export of raw materials than the tax on the
finished product … .
For example during some months of the IP the import price of soybean oil from
Argentina was higher than the import price of SME, making purchase of soybean oil
economically disadvantageous. In this position purchase of SME was the only
economically justifiable option.
807
7.474. CARBIO objected to these findings in the Provisional Regulation. 808 In the Definitive
Disclosure the EU authorities found that no evidence of the "long term strategy" alleged was
provided and concluded that, in any case, if such a strategy existed, it would be "nonsensical and
illogical [for the EU industry] to then launch a complaint against such imports".
809 In addition, the
EU authorities stated that the EU industry's imports were the result of the Differential Export Tax
(DET) systems, which made imports of the finish ed product (biodiesel) more competitive than
imports of raw materials (soybean or palm oil).
810
7.475. CARBIO objected to these findings, relying, in particular, on what it asserted was the
EU authorities' standard practice in similar situations. CARBIO argued that the massive volume of
imports made by the EU industry (60% of total imports) represented far more in percentage terms
than what the EU authorities usually regard as imports made in "self-defence''.
811 Consequently,
CARBIO argued, it would have expected the EU au thorities to provide a substantiated and detailed
explanation as to why, in this particular case, they had departed from their consistent practice. 812
Furthermore, CARBIO argued that the EU authorit ies had ignored certain of the arguments it had
presented, in particular its arguments concerning the extent to which the increase in the market
share of the imports from the countries concerne d resulting from the imports made by the EU
industry had compensated for the decrease in the EU industry's own market share.
813
7.476. In the Definitive Regulation the EU authorities rejected these arguments and confirmed
their provisional findings. 814 They reiterated that no evidence of a "long-term strategy" had been
provided and that such a "long-term strategy" ha d been denied by the EU industry, adding that
"[c]learly if the strategy of the Union industry was to supplement their biodiesel production by

805 Provisional Regulation, (Exhibit ARG-30), Recital 133.
806 Provisional Regulation, (Exhibit ARG-30), Recital 136.
807 Provisional Regulation, (Exhibit ARG-30), Recitals 133-135; confirmed in Definitive Regulation,
(Exhibit ARG-22), Recital 160.
808 CARBIO's Powerpoint presentation of 8 July 2013, (Exhibit ARG-46), slide 22.
809 Definitive Disclosure, (Exhibit ARG-35), Recital 127.
810 Definitive Disclosure, (Exhibit ARG-35), Recital 128.
811 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 19.
812 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 19.
813 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 19.
814 Definitive Regulation, (Exhibit ARG-22), Recitals 151-160.

producing in Argentina and importing the finished product, it would be nonsensical and illogical to
then launch a complaint against such imports." 815 They also reiterated their conclusions with
respect to the effects of the differential export tax:
The Union industry has also shown that in previous years the importation of soya bean
oil — and palm oil — for processing into biodiesel was economically viable. No
evidence of the contrary was provided by the interested party. Only with the distortive
effect of the differential export tax which makes the export of biodiesel cheaper than
the raw materials does import of the finished product become economically
sensible.816
7.4.6.5.2 Main arguments of the parties
7.4.6.5.2.1 Argentina
7.477. Argentina submits that the EU authorities failed to properly assess the injury caused by the
EU industry's imports of the product concerned and to separate and distinguish those injurious
effects from that of the allegedly dumped imports.
7.478. Argentina argues that, based on the av ailable evidence, the EU authorities could not
reasonably have arrived at the conclusion that the imports of the EU industry were merely made in
self-defence and that they did not break the ca usal link between the dumped imports and the
injury suffered by the industry.
817 In particular, Argentina argues, first, that the EU authorities
themselves recognised that the imports by the EU industry had led to a decrease in the level of
capacity utilization, and thus were a cause of injury. 818 Second, Argentina submits that the
significant volume of imports by the EU industry and the fact that the imported biodiesel was
produced in facilities that were related to the EU producers and set up with investments made by
them as from 2007, constitute ample evidence of a long-term commercial strategy pursued by the
EU industry.819 Third, Argentina argues that the EU authorities' "allegations" that the DET system
forced the EU industry to import biodiesel and that traders would have imported biodiesel if the EU
industry had not, are irrelevant to the causation analysis. 820 Argentina asserts that the
EU authorities failed to provide any evidence that traders would have imported the same
significant amount of biodiesel from Argentina. 821 Finally, Argentina contends that the argument
that the importation of biodiesel was a way to maintain a customer base is contradicted by the fact
that imports made by the EU producers were counted in the market share of the allegedly dumped
imports, rather than in the market share of the domestic industry.
822
7.4.6.5.2.2 European Union
7.479. The European Union asserts that the EU au thorities rejected the allegation of a long-term
commercial strategy because, in their view, such a strategy could not be reconciled with the EU
industry's plan to have anti-dumping duties imposed on biodiesel from Argentina and Indonesia.823
The European Union argues that evidence provided by Argentine interested parties during the
investigation did not support the existence of a "long term commercial strategy" of importing the
product under consideration.
824 W i t h r e g a r d t o t h e i m p a c t o f t h e E U i n d u s t r y ' s i m p o r t s o n i t s
capacity utilization rate, the European Union argu es that the dumped prices compelled the EU

815 Definitive Regulation, (Exhibit ARG-22), Recital 154. See also idem, Recital 155: "Also, it would seem
illogical for the concerned Union producers to support the complaint and, in some cases, to have increased its
capacity in the Union while at the same time have a strategy to fulfil production needs by imports."
816 Definitive Regulation, (Exhibit ARG-22), Recital 157.
817 Argentina's first written submission, paras. 429-434; second written submission, paras. 236-242.
818 Argentina's first written submission, paras. 432-433 (referring to Definitive Regulation, (Exhibit
ARG-22), Recital 164).
819 Argentina's first written submission, para. 434; second written submission, paras. 238-239; opening
statement at the first meeting of the Panel, paras. 129-132.
820 Argentina's first written submission, para. 435; opening statement at the first meeting of the Panel,
paras. 129-132.
821 Argentina's second written submission, para. 240.
822 Argentina's second written submission, para. 241; comments on the European Union's response to
Panel question No. 123, para. 68.
823 European Union's first written submission, para. 333.
824 European Union's first written submission, paras. 330-331.

industry to import biodiesel, thereby causing injury in the form of low capacity utilization. The
European Union submits that this was not injury caused by an "other factor" but merely injury
caused by dumped imports through an indirect chain of causation.
825 Finally, the European Union
notes that the EU authorities found that by importing biodiesel itself, the EU industry improved its
financial situation and that independent traders would have secured the same deals if the EU
industry had not made the imports. 826 The European Union submits that biodiesel imported from
Argentina was cheaper than the soybean oil used to produce biodiesel and that imports of the
finished product – biodiesel – were a temporary effo rt on the part of the EU producers to maintain
their customer base, while seeking protection against the unfair imports.827
7.4.6.5.3 Arguments of the third parties
7.480. Colombia argues that the EU authorities failed to meet their obligation of separating and
distinguishing causes of injury and suggests that the Panel should apply an "order of magnitude
test" with regard to, on the one hand, the imports by the EU industry, and on the other, the injury
caused by the dumped imports.
828
7.4.6.5.4 Evaluation by the Panel
7.481. We recall that the EU authorities rejected allegations about the existence of a long-term
strategy of importing biodiesel by the domestic industry and found that the industry's own imports
of Argentine and Indonesian biodiesel did not br eak the causal link between the dumped imports
and the injury to the industry.829
7.482. Argentina argues that based on the evid ence before them, the EU authorities could not
have arrived at the conclusion that imports of Ar gentine biodiesel by the EU industry were not a
result of a long-term commercial strategy of the EU producers to benefit from the natural
advantages of soybean production in Argentina.
7.483. We recall that the EU authorities conclude d that no evidence of the alleged "long term
strategy" had been provided to them. They adde d that it would have been "nonsensical and
illogical" for the domestic industry to launch or support an investigation against such imports or to
have increased its capacity in the European Union while at the same time pursuing a strategy of
supplementing its production with imports.
7.484. We read these statements in the light of th e EU authorities' findings, in the section of the
Definitive Regulation regarding the definition of the domestic industry, in which the EU authorities
rejected comments of interested parties regardin g the relationship between the EU producers and
Argentine and Indonesian producers:
[T]hose companies were found to be openly competing with each other for the same
customers on the Union market, thereby showing that their relationship did not have
any impact on the business practices of either the Argentinian exporting producer or
the Union producer.
830
7.485. More importantly, the EU authorities found that the EU industry's imports were the result
of the DET system, which made imports of the fini shed product, biodiesel, more competitive than
imports of the raw materials needed for biodiesel production and thus caused the EU producers to
temporarily import the finished product from Argentina in order to stay in business. We consider

825 European Union's first written submission, para. 332.
826 European Union's first written submission, para. 334; opening statement at the second meeting of
the Panel, para. 221.
827 European Union's response to Panel question No. 70, para. 100; opening statement at the second
828 Colombia's third-party submission, paras. 65-68 (referring to Panel Report, Egypt – Steel Rebar,
paras. 7.119-7.121).
829 Provisional Regulation, (Exhibit ARG-30), Recital 136; Definitive Regulation, (Exhibit ARG-22),
Recital 160.
830 Definitive Regulation, (Exhibit ARG-22), Recital 109 (referred to in European Union's second written
submission, para. 164).

that the EU authorities provided a plausible expl anation for the actions of the EU industry to
support their conclusion that the imports were made temporarily and in self-defence.831
7.486. Argentina also takes issue with the EU authorities' explanation that even if the EU industry
had not imported these volumes of biodiesel, trading companies would have imported them
anyway and would have undercut the EU industry's prices to sell the product on the EU market. 832
Argentina submits that the conclusion that traders would import the same volume of biodiesel,
amounting to 60% of the total imports, is not supported by any evidence.
833 The EU authorities
stated in the Provisional Regulation, and confirmed in the Definitive Regulation that:
In any case had the Union industry not imported these volumes of biodiesel, trading
companies in the Union would have imported them, undercut the Union industry and
sold them on the Union market, as they already import from these countries for sale
to the diesel refiners in competition with the Union industry.
834
In our view, this reflects a reasonable inference from the fact that the imported volumes of
biodiesel were absorbed by the EU market, indicating demand that needed to be met.
7.487. Argentina argues that the European Union's position that the importation of biodiesel was a
way to maintain a customer base is contradicted by the fact that imports made by the EU
producers were counted as part of the market shar e of the allegedly dumped imports, rather than
as part of the market share of the domestic industry.
835 During the investigation, CARBIO argued
that the decrease in the EU domestic industry's own market share was compensated by the
increase in the domestic industry's sales of its imports of biodiesel from Argentina and
Indonesia.
836 The EU authorities rejected this argument in the Definitive Regulation, explaining
that the domestic industry's market share has to re flect the sales of the EU industry of goods they
produced themselves and not their trading activities.837
7.488. We have no issue with this conclusion . Nothing in the Anti-Dumping Agreement supports
the proposition that imports by the domestic producers must be included in the domestic industry's
market share.838
7.489. Finally, we note that the parties disagree whether, in the EU authorities' finding that the
"Union industry" imported almost 60% of all impo rts from Argentina and Indonesia during the IP,
the term "Union industry" was a reference to all EU biodiesel producers, or whether it excluded the
three producers who had been excluded from the de finition of the EU industry because of their
large volume of imports. 839 In light of our conclusions above, we do not consider it necessary to

831 Definitive Regulation, (Exhibit ARG-22), Recitals 154-155 and 157.
832 Provisional Regulation, (Exhibit ARG-30), Recital 136; Definitive Regulation, (Exhibit ARG-22),
Recital 160.
833 Argentina's second written submission, para. 240.
834 Provisional Regulation, (Exhibit ARG-30), Recital 136, confirmed in Definitive Regulation, (Exhibit
ARG-22), Recital 160.
835 Argentina's second written submission, para. 241 (referring to Definitive Regulation, (Exhibit
ARG-22), Recital 156); comments on the European Union's response to Panel question No. 123, paras. 68-70.
The decrease in the market share of the domestic industry was one of the elements relied upon by the
EU authorities in their causation analysis. (Provisional Regulation, (Exhibit ARG-30), Recital 125; confirmed in
Definitive Regulation, (Exhibit ARG-22), Recital 147)
836 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 19.
837 Definitive Regulation, (Exhibit ARG-22), Recital 156.
838 We agree with the findings of the panel in Korea – Certain Paper that:
[W]e are unaware of any provision in the Agreement which could support the proposition that
dumped imports made by the domestic industry have to be excluded from the scope of dumped
imports for purposes of the IA's injury determination. Imports from sources subject to an anti-
dumping investigation may properly be treated as dumped imports irrespective of the identity of
the importers making these imports. (Korea – Certain Paper, Panel Report, para. 7.287)
839 In their determinations, the EU authorities defined the term "Union industry", as including 254 EU
producers of biodiesel and excluding five companies: three who were excluded due to their reliance on imports
from Argentina and Indonesia and two who had not produced biodiesel during the IP. This would suggest that
the EU authorities found that 60% of all imports were made by all the EU producers that were found to be part
of the domestic industry, i.e. excluding those producers who imported the most of the product under
consideration. However, in response to a question from the Panel, the European Union clarified that the 60%
figure referred to all EU producers, including the three companies excluded from the definition of the EU

reach a definitive view on the issue of the prec ise percentage of the imports from Argentina and
Indonesia that were made by the EU industry in order to resolve Argentina's claims.
7.490. On the basis of the foregoing, we find that the EU authorities' conclusion that the EU
industry's imports of the product concerned did not break the causal link between the dumped
imports and the material injury to the domestic industry is one which an unbiased and objective
investigating authority could have reached in light of the facts before it. We therefore reject
Argentina's allegation that the European Union acted inconsistently with Articles 3.1 and 3.5 in
finding that the EU industry's imports of Arge ntine and Indonesian biodiesel did not break the
causal link between the dumped imports and the injury to the EU industry.
7.4.6.6 Double-counting regimes of certain EU member States
7.4.6.6.1 Introduction and factual background
7.491. Argentina submits that the EU authorit ies failed to appropriately assess the injurious
effects of the "double-counting regimes" in place in certain EU member States and to distinguish
and separate the injurious effects of such regimes from those of the allegedly dumped imports.
7.492. So-called "double-counting" refers to the fact that certain EU member States availed
themselves of the possibility, under the EU Re newable Energy Directive, to allow minimum
blending requirements (established pursuant to the same Directive) to be halved when the
biodiesel used in blending is second generation biodiesel made from certain types of raw materials,
particularly waste oils or used animal fats, rather than from virgin vegetable oil such as soybean,
palm, or rapeseed oil. Thus, in these member States, second generation biodiesel meeting certain
criteria "counts double" for purposes of satisfying the minimum incorporation requirements.
840
7.493. In the investigation, CARBIO argued, inter alia, that the double-counting regimes of certain
EU member States caused a decrease in the sales of first generation biodiesel during the IP,
thereby injuring the EU domestic industry.
841 CARBIO submitted specific evidence concerning the
French double-counting regime. In particular, it cited a public statement by Diester, a French
biodiesel producer, in which this producer stated that it had experienced a significant decrease in
its sales as a result of double-counting and that double-counting had diminished the French
market by around 600,000 tonnes.
842 CARBIO also referred the EU authorities to a report of the
French Cour des Comptes , which found that the introduction on the French market of 350,000
tonnes of double-counted biodiesel in 2011 caused Diester's sales to decrease by 700,000 tonnes
– representing a third of its French production – and causing it to close down a non-depreciated
production line.
843 CARBIO argued that in the light of this information, which showed that the
double-counting policy in France alone caused 350,000 tonnes of biodiesel (representing 3.14% of
total EU consumption) to disappear from the market altogether, the effect of double-counting on
the domestic industry could not be considered limited or temporary.
844
7.494. The EU authorities rejected CARBIO's allegations concerning the impact of EU member
States' double-counting regimes on the domestic industry. In the Provisional Regulation, the
EU authorities noted that their sample of domestic producers included both companies producing
first generation biodiesel and companies producing double-counted biodiesel, that the latter's
prices had also been affected by the low price of the dumped imports and that their financial
situation was not significantly different to that of sampled companies making biodiesel from virgin
vegetable oils.
845 The EU authorities also rejected an argument that the domestic industry was

industry, such that the if imports from these three producers were excluded, the EU industry imported 35%,
not 60%, of all subject imports during the IP.
840 Provisional Regulation, (Exhibit ARG-30), Recital 144.
841 CARBIO's comments on the Definitive Disclosure, (Exhibit ARG-39), p. 27. CARBIO also argued that
lack of clarity and uniformity in the national legislations of EU member States and the lack of traceability of
double-counting biodiesels had resulted in fraudulent practices. Argentina has not emphasized these
arguments in its submissions to the Panel. (CARBIO's written submission of 5 November 2012,
(Exhibit ARG-37), para. 95)
842 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), paras. 96 and 97.
843 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), pp. 106 and 107 to Annex 16.
844 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), paras. 93-98; CARBIO's
comments on the Definitive Disclosure, (Exhibit ARG-39), p. 27.
845 Provisional Regulation, (Exhibit ARG-30), Recital 145.

suffering injury by not investing more in second-generation biofuel production; the EU authorities
indicated that there was not enough waste oil available in the European Union to significantly
increase the amount of processing.
846
7.495. In the Definitive Regulation, the EU authorities rejected CARBIO's arguments concerning
Diester and the French double-counting regime as follows:
The negative impact on this one producer was however limited, temporary and only
relevant for a part of the investigation period, as the double counting scheme was
adopted in the Member State in which the company is located only in
September 2011. Given that the financial performance of the sampled companies
declined after September 2011, and this company was included in the sample, double
counting cannot be considered a source of injury.
847
They then confirmed the conclusions they had reached in the Provisional Regulation, stating:
As the Union industry is composed of both companies producing biodiesel from waste
oils and benefiting from double-counting in some Member States, and also of
companies producing biodiesel from virgin oils, the movement in demand remains
within the Union industry. Due to a finite supply of used oils which are needed for
manufacturing double counting biodiesel, a large increase in production of
double-counting biodiesel is difficult. Therefore, there is still a strong demand for first
generation biodiesel. No significant imports of biodiesel eligible for double-counting
was found during the investigation period, thereby confirming that double-counting is
shifting the demand within the Union industry and not generating demand for imports.
The Commission received no data from the interested party to show that double
counting biodiesel had caused the price of virgin oil biodiesel to fall during the period
under consideration. In fact data shows that double counting biodiesel has a small
price premium over virgin biodiesel, the price of which is linked to mineral diesel.
The decline in performance of the Union industry, which is composed of both types of
producers, cannot be attributed to the double-counting regime in force in some
Member States. In particular, the fact that companies in the sample producing
double-counted biodiesel are also showing a decline in performance, as mentioned in
recital 145 to the provisional Regulation, shows that injury caused by dumped imports
is being suffered across the industry.
848
7.496. Finally, the EU authorities addressed the argument made by several interested parties
after the Definitive Disclosure that the amounts of double-counted biodiesel were underestimated.
The authorities indicated that the amounts of doub le-counted biodiesel available on the EU market
were limited in relation to the total sales of biodiesel during the IP, and repeated, in this context,
that double-counted biodiesel was produced in the European Union "and therefore demand
remain[ed] within the Union industry".
849
7.4.6.6.2 Main arguments of the parties
7.4.6.6.2.1 Argentina
7.497. Argentina submits that the EU authorities failed to adequately a ssess the injurious effects
of the double-counting regimes, which not only shifted demand from first-to second-generation

846 Provisional Regulation, (Exhibit ARG-30), Recital 146.
847 Definitive Regulation, (Exhibit ARG-22), Recital 175. In its first written submission, the
European Union submitted that the statement in the Definitive Regulation that "the double counting scheme
was adopted in the Member State in which the company is located only in September 2011" (emphasis added)
was a clerical error and that "adopted" should be replaced by "repealed", (European Union's first written
submission, para. 337). In response to a question from the Panel, the European Union further clarified that the
double-counting regime in France was introduced in April 2010 without fixing a ceiling to the incorporation
rate, and was amended in 2011 to fix a ceiling of 0.35%. (European Union's response to Panel question
No. 113, para. 103)
848 Definitive Regulation, (Exhibit ARG-22), Recitals 176-177.
849 Definitive Regulation, (Exhibit ARG-22), Recital 178.

biodiesel, but actually reduced overall EU demand , citing evidence that the French regime alone
caused an EU-wide drop in consumption of 3.14% in 2011. 850 Argentina also notes that in one of
its submissions to the EU authorities, the EBB admitted that the French double-counting regime
"may have caused, to a certain extent in 2011, injury to first-generation biodiesel producers, such
as Diester".851
7.498. Argentina disagrees with the European Union's assertion that the negative performance of
companies producing double-counted biodiesel showed that the double-counting regimes were not
a source of injury. 852 Argentina submits that this conclusion is based on the mistaken assumption
that the double-counting regimes could only have been found to be a cause of injury if the
performance of producers of second-generation biodiesel were positive. Argentina submits that the
negative effect of the double-counting regimes is evidenced by the reduced demand for
biodiesel.
853
7.499. Argentina also disputes the relevance of the EU authorities' conclusion that the French
regime was in effect only during a part of the IP, given that the evidence shows that it had an
impact during the IP. 854 Argentina argues that since the effects of the double-counting regime in
France materialized during the IP, these effects should have been distinguished and separated as
required by Article 3.5, regardless of the fact that it had been repealed.855
7.500. Finally, Argentina argues that the EU au thorities examined the injurious effect of the
double-counting regime in France, but failed to examine the impact of the double-counting
regimes of other EU member States.856
7.4.6.6.2.2 European Union
7.501. The European Union argues that Argentine interested parties submitted evidence regarding
the alleged detrimental effect of double-counting regimes only with respect to France and only
with regard to one producer (Diester).
857 The European Union submits that since the information
about implementation of the double-counting regimes at the national level was difficult to obtain,
the EU authorities based their analysis of the effe ct of double-counting regimes on the data of the
sampled EU producers (eight producers from seven member States). 858 Following this analysis,
apart from a minor effect on one producer (Diester), the EU authorities did not identify any
significant consequences of the regimes and found that the performance of both double-counting
and non-double-counting biodiesel producers was in decline, and therefore the deterioration of
their situation resulted from a different so urce of injury, i.e. the dumped imports.
859 The
EU authorities also relied on the fact that the sampled producers' performances declined only after
the scheme was ended.860
7.502. The European Union submits that the French scheme ended three months into the IP in
September 2011 and that the evidence presented by Argentina itself indicated that the 2011
decline in production resulting from the double-counting regime would be more than cancelled
during the following year.
861 In response to a question from the Panel, the European Union clarifies
that the double-counting regime in France was introduced in April 2010 without fixing a ceiling to
the incorporation rate, and was amended in 2011 to establish a ceiling of 0.35%. The European

850 Argentina's first written submission, paras. 449-450.
851 Argentina first written submission, para. 440 (referring to EBB's submission of 17 September 2013,
(Exhibit ARG-47), p. 5).
852 Argentina's second written submission, para. 245.
853 Argentina's second written submission, para. 245.
854 Argentina's first written submission, para. 452.
855 Argentina's second written submission, para. 244.
857 European Union's first written submission, paras. 338-339.
858 European Union's opening statement at the second meeting of the Panel, para. 222; response to
Panel question No. 124, para. 121.
859 European Union's response to Panel question No. 71, para. 101 (referring to Definitive Regulation,
(Exhibit ARG-22), Recitals 176-178).
860 European Union's first written submission, paras. 337-339.
861 European Union's first written submission, para. 338.

Union argues that the injury this regime caused to first generation producers was limited and only
relevant for a short period of the IP.862
7.4.6.6.3 Evaluation by the Panel
7.503. The EU authorities' analysis of "double-count ing" as an alleged "other factor" consists of a
general discussion of the effects of double-counting, in the context of rebutting interested parties'
arguments that double-counting regimes injured the domestic industry. As part of this analysis,
the EU authorities also consider specific evidence placed before them by CARBIO concerning the
French double-counting regime and its effect on Diester. In both respects, the EU authorities reject
the argument that double-counting is a cause of injury to the EU industry.
7.504. We understand the EU authorities' reasonin g with respect to the evidence relevant to the
French regime and Diester to be that the effect of the French double-counting regime had been
limited in time given that in September 2011 France imposed a ceiling on the proportion of
double-counted biodiesel.
863 The evidence before the EU authorities showed that the French
regime had been put in place in April 2010, an d the IP ran from 1 July 2011 to 30 June 2012,
meaning that the French double-counting regime was in place without a ceiling for only
approximately 3 months of the IP. Moreover, the same documents, which CARBIO cites, that
reported the impact on Diester of the French double-counting regime in 2011 made the point that
the negative impact of the double-counting regime would have essentially disappeared by 2012.
864
In our view, an unbiased and objective investigating authority could have concluded from the
evidence before the EU authorities that the negati ve impact of the French double-counting regime
resulting from the introduction of 700,000 tonnes of double-counted biodiesel on the French
market was limited in scope and in time. This is particularly the case as this negative impact
resulted from a specific situation having regard to the fact that France had initially not imposed a
ceiling on the use of double-counted biodiesel. The fact that the impact on Diester corresponded –
according to CARBIO – to 3% of the EU biodiesel market in 2011
865, or the fact that Diester may
have had to close a production line, does not mean that it was unreasonable for the EU authorities
to treat the impact of the French regime as limited in time and scope.
866
7.505. We also note the EU authorities' explanation that the situation of sampled companies,
including Diester, deteriorated after the introd uction of the ceiling in the French regime. 867 In our
view, these explanations reasonably support the EU authorities' conclusion that double-counting
was not a cause of injury to the domestic industry.
7.506. Argentina also argues that the EU authorit ies failed to examine the impact of the double-
counting regimes of EU member States other than France.
868 Argentina submits in this respect that
CARBIO drew the attention of the EU authorities to the fact that double-counting regimes had been
implemented in several EU member States, including France, Germany, Denmark and the

862 European Union's response to Panel question No. 73, para. 103.
863 Although the Definitive Regulation states that the French "double-counting" regime was adopted in
September 2011, the European Union indicated that this was a clerical mistake and the paragraph should be
read as stating that the French double-counting was repealed in September 2011, given that a ceiling was then
imposed on the use of double-counted biodiesel. (See above, fn 847). We accept the European Union's
explanation, particularly as it is the only one that makes the EU statement comprehensible, since the point that
the EU authorities sought to make was that the performance of the companies declined only after the scheme
had ceased to exist, thereby indicating that it was not responsible for that decline.
864 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), pp. 104 and 113.
865 While Argentina argues that the ceiling of 0.35% placed on double-counted biodiesel in France in
September 2011 did not prevent European Union-wide consumption from being reduced by 3.14% as
explained by the French Cour des Comptes (Argentina's first written submission, para. 452), in our view
Argentina's argument is inapposite. We understand that 350,000 tonnes of double-counted biodiesel were sold
on the French market during the year 2011, so we fail to see how it can be stated that the imposition of a
ceiling by France in September 2011 did not prevent something which happened prior to the imposition of that
ceiling.
866 Moreover, we read the EU authorities' statement that the impact of double-counting on Diester was
"limited" in the light of the statement of the EU authorities, in response to another aspect of the argument of
interested parties on the issue of double-counting, that "the amounts of double-counted biodiesel available on
the Union market were limited in relation to the total sales of biodiesel during the period under investigation".
(Definitive Regulation, (Exhibit ARG-22), Recital 178)
867 Definitive Regulation, (Exhibit ARG-22), Recital 175.

Netherlands.869 A r g e n t i n a r e f e r s i n p a r t i c u l a r t o a s u b m i s s i o n m a d e b y C A R B I O t o t h e
EU authorities, in which CARBIO addressed the double-counting regimes in other EU member
States as follows:
Several Member States of the EU have implemented [the Renewable Energy Directive]
at the national level. For instance, in France, the eligible raw materials are waste
vegetable oils, animal fats or oils and cellulose matter. Germany, for instance, does
not include animal fats or oils in its double-counting provisions due to traceability
concerns. Denmark, on the other hand, includes animal fats but not waste vegetable
oils in its double-counting provisions. Under Dutch legislation, the raw materials that
qualify are waste oils, residues and lignocellulosic materials.
870
7.507. Article 3.5 only requires investigating auth orities to consider – and distinguish – the injury
caused by "other factors" that are "known" to the investigating authority. As concerns the effects
that double-counting regimes could have on demand, CARBIO only submitted specific evidence
with respect to the effects of the French regime, which we have discussed above.
871 CARBIO's
submission with respect to other double-counting regimes only describes certain aspects of those
regimes; CARBIO did not submit to the EU authorities specific evidence concerning the effects of
those other double-counting regimes. In the absence of specific evidence that the double-counting
regimes of other member States were such as to injure the EU domestic industry, we do not
consider that the EU authorities were required, under the terms of Article 3.5, to examine at
greater length the impact of those regimes on the domestic industry. This is particularly the case
as the EU authorities did not find that the one double-counting regime which they considered in
more detail – that established by France – had injured the domestic industry during the IP.
7.508. Concerning the EU authorities' general discussion of the effects of double-counting
regimes, Argentina takes issue with what it regard s as the EU authorities' "misplaced insistence"
on the fact that double-counting only "shifts demand" within the European Union
872, citing in
particular the findings in the report of the French Cour des Comptes that double-counting in France
alone reduced European Union-wide consumption of biodiesel, whether first generation or not, by
more than 3% in 2011.
7.509. It cannot be contested that double-counting regimes reduce overall demand for biodiesel
in the European Union; as Argentina explains, the very concept of double-counting means that one
tonne of "double-counted" biodiesel replaces tw o tonne of vegetable oil biodiesel, which in
principle reduces overall demand of biodiesel of any type by one tonne. Read in isolation, the
EU authorities' reference to demand shifting within the European Union
873 c o u l d b e r e a d a s
suggesting that the EU authorities misunderstood this argument made by CARBIO. However, we
read this statement as making the point that although double-counting may affect one segment of
the EU domestic industry, it benefits another segment of the EU industry (and not foreign
producers) by creating demand for "double-counted " second generation biodiesel of EU origin; in
this context, the EU authorities noted that there had been no significant imports of double-counted
biodiesel.874 In addition, we read the EU authorities' reference to the amounts of double-counted
biodiesel being limited as an indication that double-counting only affected a fraction of the EU
demand for biodiesel
875, and their reference to the limited supply of raw materials for the

869 Argentina's response to Panel question No.72, para. 173 (referring to CARBIO's written submission of
5 November 2012, (Exhibit ARG-37), paras. 93-98).
870 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), para. 94.
871 In its submission, CARBIO further cited a press release from the EBB regarding the negative effects
of double-counting regimes. However, the press release at issue focused on problems generated by what the
EBB saw as the lack of guidance concerning the implementation of the double-counting mechanism across EU
member States and issues with compliance or verification, adding that "[i]f not consistently implemented in
member States' legislations, the double-counting mechanism will inevitably lead to important disruptions of the
EU biofuels market". (CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), para. 95). Hence,
this press release concerns a secondary type of issues possibly arising out of the double-counting regimes (i.e.
the potential for varying implementation across the European Union and risks of circumvention), and differs
from the issues that are at the heart of Argentina's claims, pertaining to the effects of double-counting on
demand for first generation biodiesel and on overall EU demand for biodiesel.
872 Argentina's first written submission, para. 449 (referring to Definitive Regulation, (Exhibit ARG-22),
Recital 176).
873 Definitive Regulation, (Exhibit ARG-22), Recital 176.
874 Definitive Regulation, (Exhibit ARG-22), Recital 176. See also ibid., Recital 178.
875 Definitive Regulation, (Exhibit ARG-22), Recital 178.

production of double-counted biodiesel as an indication that double-counted biodiesel would not
significantly replace biodiesel made from virgin oils.876
7.510. Argentina also takes issue with the EU authorities' statement that both producers of
non-double-counted biodiesel and producers of double-counted biodiesel saw their situation
deteriorate. Argentina reads this statement as be ing premised on the unfounded assumption that
double-counting could only have harmed the domestic industry if producers of double-counted
biodiesel had done well, whereas in Argentina's view, double-counting harms the domestic
industry by virtue of reducing overall demand fo r biodiesel, whether first generation or "double-
counted".
877 However, in our view, the EU authorities' discussion of this issue878 indicates that they
considered that, if double-counting had been an important cause of injury, producers of "double-
counted" biodiesel would have been expected to fa re better than producers of first generation
biodiesel. Argentina has not convinced us that this inference is unreasonable and that an unbiased
and objective investigating authority could not have inferred from the fact that producers of
double-counted biodiesel were also injured, that both types of producers were injured by dumped
imports. Moreover, we note that the EU authorities examined the impact of double-counted
biodiesel on the price of first generation biodiesel, and found that double-counted biodiesel sells
for a small premium over biodiesel made from virgin oil.
879
7.511. In light of the foregoing, and despite that the EU authorities' treatment of this "other
factor" of injury could have been better explaine d, we do not consider that the EU authorities'
conclusions could not have been reached by an unbiased and objective investigating authority in
the light of the evidence and arguments before it. Consequently, we reject Argentina's allegations
that the European Union acted inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping
Agreement in the EU authorities' evaluation of "double-counting" as an "other factor" allegedly
causing injury to the domestic industry.
7.4.6.7 Alleged lack of vertical integratio n of and access to raw materials of the EU
industry
7.4.6.7.1 Introduction and factual background
7.512. During the investigation, CARBIO argued th at the lack of vertical integration of the EU
industry and its lack of access to raw materials placed it at a disadvantage compared to the
Argentine producers and constituted "other factors" causing injury to the EU biodiesel industry.
880
In particular, CARBIO argued that production of biodiesel in Argentina was more efficient than in
the European Union because the Argentine industry was vertically integrated, with the growing of
soybeans, crushing plants, and biodiesel production units all located in proximity to one another
and close to port facilities.
881 By contrast, CARBIO argued, the EU industry was not integrated with
crushing facilities and relied primarily on imported vegetable oil produced outside of the
European Union or far from its biodiesel production units. 882 CARBIO further argued, regarding the
raw material used in the production of biodiesel, that the EU industry mainly used rapeseed oil,
whereas the Argentine industry used soybean oil, which on average was 10% cheaper.883
7.513. In the Provisional Determination, the EU authorities rejected these arguments on the
ground that some of the sampled EU producers were located at ports with seamless access to
imported raw materials brought in by ship, others had their biodiesel producing plants on the same
site as their vegetable oil producing plants, and many – in the south of Europe – were located at
port sites deliberately to access raw materials imported from Argentina and Indonesia or were on
the same site as their customers (fossil oil refineries).
884 The EU authorities also considered that

876 Definitive Regulation, (Exhibit ARG-22), Recital 176.
877 Argentina's second written submission, para. 245.
878 Provisional Regulation, (Exhibit ARG-30), Recital 145; Definitive Regulation, (Exhibit ARG-22),
Recital 177.
879 By contrast, the EU authorities found that dumped imports undercut the prices of the domestic
industry. (Provisional Regulation, para. 126)
880 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), para. 84.
881 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), para. 85; CARBIO's Powerpoint
presentation of 14 December 2012, (Exhibit ARG-43), slides 19-20.
882 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), paras. 85-88.
883 CARBIO's written submission of 5 November 2012, (Exhibit ARG-37), para. 91.
884 Provisional Regulation, (Exhibit ARG-30), Recital 142.

the effect of the DET systems of Argentina and Indonesia had been to make the raw materials
more expensive than the finished product, which injured the EU industry by making it economically
impossible for it to manufacture biodiesel from soybean oil and palm oil in the European Union.885
7.514. CARBIO contested these provisional fi ndings, arguing that the EU producers were either
located close to ports or close to raw materials. By contrast, Argentine producers were located
close to both ports and raw materials. 886 I n a d d i t i o n , C A R B I O a r g u e d t h a t i n t h e P r o v i s i o n a l
Regulation, the EU authorities had recognized a dire ct causal link between the domestic industry's
difficulties in obtaining imported feedstock at viable prices and the injury it suffered. 887 CARBIO
referred to the EU authorities' findings that:
[D]ue to a poor rapeseed harvest in 2011 the cost of production rose to an extent that
it could not be covered by an increase in sales price. It was uneconomical for the
Union industry to import alternative raw materials from Argentina and Indonesia due
to the tax regimes in place in those countries and therefore was forced to resort to
importing the finished biodiesel in order to keep down its costs and therefore reducing
overall losses.
…
The Union producers … could not pass on the further increase in cost from 2011 to the
IP, due to an increase in the feedstock price, which represents close to 80% of the full
cost of production of biodiesel. These cost increases could not be fully passed on to
customers on the Union market, causing the losses in the IP.
888
7.515. CARBIO requested that the EU authorit ies isolate these factors – the poor rapeseed
harvest of 2011, the domestic industry's lack of feedstock and increased feedstock prices – in its
injury analysis.889 In addition, CARBIO argued that rapeseed is more expensive than soybeans and
that the poor harvest of 2011 exacerbated the problem.890
7.516. In the Definitive Disclosure, the EU auth orities indicated that they would confirm their
provisional findings based on the fact that no new evidence had been submitted on this issue.891 In
its comments on the Definitive Disclosure, CARBIO contested this statement and referred to its
comments on the Provisional Disclosure of 1 July 2013 and to statements it made at the hearing
held in July 2013.892
7.517. In the Definitive Regulation, "in the absence of any new comments", the EU authorities
confirmed their findings in the Provisional Regulation.893
7.4.6.7.2 Main arguments of the parties
7.4.6.7.2.1 Argentina
7.518. Argentina argues that EU biodiesel produc ers are at a competitive disadvantage compared
to Argentine producers (including the Argentine producers to which they are related) because of
their lack of vertical integration and of access to raw materials.
894 A s p a r t o f t h i s a r g u m e n t ,
Argentina submits, first, that EU producers are at a disadvantage because they must import
soybeans, which contain only 20% oil, as opposed to soybean oil, which results in increases in the

885 Provisional Regulation, (Exhibit ARG-30), Recital 142.
886 CARBIO's Powerpoint presentation of 8 July 2013, (Exhibit ARG-46), slide 17.
887 CARBIO's comments on the provisional disclosure, (Exhibit ARG-51), pp. 14 and 15.
888 Provisional Regulation, (Exhibit ARG-30), Recitals 111 and 120 (quoted in CARBIO's comments on
the Provisional Disclosure, (Exhibit ARG-51), p. 12).
889 CARBIO's comments on the provisional disclosure, (Exhibit ARG-51), p. 12.
890 CARBIO's comments on the provisional disclosure, (Exhibit ARG-51), p. 14.
892 CARBIO's comments on the provisional disclosure, (Exhibit ARG-51), pp. 12 and 13; CARBIO's
Powerpoint presentation of 8 July 2013, (Exhibit ARG-46), slides 15 and 16.
893 Definitive Regulation, (Exhibit ARG-22), para. 172 (confirming Provisional Regulation, (Exhibit
ARG-30), Recitals 141 and 142).
894 Argentina's first written submission, para. 461.

volume of cargo that must be transported and imported. 895 Second, feedstock production in the
European Union is not enough to cover the dema nd of the biodiesel industry and EU producers
therefore have to rely on imported feedstock. 896 Third, vertically integrated companies benefit
from cost efficiencies due to on-site production of vegetable oil; in this respect, Argentina argues
that the EU producers' location close to ports does not cure the relative disadvantage caused by
the fact that they are not vertically integrated, as an additional phase, viz. transport of the raw
materials, is added to their production chain.
897 Argentina further argues that, as acknowledged by
the EU authorities, two factors related to the issu e of access to raw materials – the poor rapeseed
harvest in the European Union in 2011 and rapeseeds being on average 10% more expensive than
soybeans – injured the domestic industry. However, the EU authorities have failed to examine
these factors to ensure that the resulting injury was not attributed to dumped imports.
898
7.519. Finally, Argentina takes issue with the EU authorities' statement in the Definitive
Regulation that no new comments were submi tted on the issue following the provisional
determination, contending that CARBIO extensively commented on this issue during the
investigation. 899
7.4.6.7.2.2 European Union
7.520. The European Union submits, first, that most of the factors pertaining to the alleged lack of
vertical integration and access to raw materials are constant and existed also at the time when the
EU industry was profitable, and they cannot be held responsible for the deterioration in the
condition of the EU industry during the IP.
900 Second, the European Union contests Argentina's
assumption that vertical integration is necessarily a more efficient way of operating in the biodiesel
industry, particularly when processors and grow ers in different countries are located close to
ports.901 Third, the European Union counters Argent ina's argument that the EU industry is
disadvantaged by having to import soybeans, which contain only 20% oil, noting that oilseeds also
have value as animal feed, which is in itself a sufficient reason to import them. 902 Finally,
regarding the poor rapeseed harvest in 2011, the European Union submits that normally in such a
situation, biodiesel producers would switch to al ternative sources of supply, but because of the
differential export tax systems in Argentina and Indonesia, they had to purchase the finished
product from these countries.
903 Regarding the fact that rapeseeds are on average 10% more
expensive than soybeans, the European Union responds that this is a constant factor and could not
have explained the deterioration in the situation of the domestic industry.
904
7.4.6.7.3 Arguments of the third parties
7.521. Colombia notes that the arguments submitted by Argentina with regard to the EU
industry's lack of vertical integration and of a ccess to raw materials raise the issue of the possible
absence of a causal link between the dumped imports and the injured suffered by the EU
industry.905
7.4.6.7.4 Evaluation by the Panel
7.522. Argentina primarily takes issue with the EU authorities' conclusion that the structure of the
EU industry was not a cause of injury. The two factors, namely lack of vertical integration and lack
of access to raw materials, identified by Argentina, essentially are inherent features of the EU
domestic industry that, according to Argentina, render it less competitive than the Argentine
producers. In our view, however, this line of argume nt is premised on a misreading of Article 3 of
the Anti-Dumping Agreement and its various para graphs, including Article 3.5. The concept of

895 Argentina's first written submission, para. 464(a).
896 Argentina's first written submission, para. 464(b).
897 Argentina's first written submission, para. 464(c); second written submission, para. 249.
898 Argentina's first written submission, para. 466.
899 Argentina first written submission, paras. 463 and 465 (referring to Definitive Regulation, (Exhibit
ARG-22), Recital 172).
900 European Union's first written submission, para. 342.
901 European Union's first written submission, para. 343.
902 European Union's first written submission, para. 343.
903 European Union's first written submission, para. 345.
904 European Union's first written submission, para. 346.
905 Colombia's third-party submission, paras. 69-72.

injury envisaged by Article 3 relates to negative developments in the state of the domestic
industry.906 Article 3 is not intended to address differences in the structure of the domestic
industry as compared to that of the exporting Member. Rather, it is clear from the text of
Article 3.5 and from its indicative list of such "other factors" – which all pertain to developments in
the situation of the domestic industry – that the authority is not required to conduct a
non-attribution analysis with respect to features that are inherent to the domestic industry and
have remained unchanged during the period considered by the investigating authority for purposes
of its injury analysis.
7.523. Argentina argues, citing to the Appellate Body Report in US – Wheat Gluten , that the
relevant issue is not when a factor occurred, took place, or varied, but when its effects were
felt
907, and that although the lack of vertical integration or access to raw materials were constant
features of the EU industry, they existed during the period of investigation and their effects were
felt during that period.908 We agree with the European Union that the Appellate Body Report in US
– Wheat Gluten does not address the issue of whether a feature or characteristic of a domestic
industry which is inherent to that domestic industry and does not vary over the course of the
period considered may properly be regarded as an "other factor". Rather, that Report concerns the
timing of the injury caused by an "other factor".
909 Argentina has not argued that the effect of the
lack of raw materials or vertical integration changed during the period considered so as to cause
injury to the domestic industry. Therefore, the Appellate Body Report in US – Wheat Gluten, where
the factual circumstances were different, is inapposite to the present case, and Argentina has not
convinced us that the EU authorities were requir ed by Article 3.5 to conduct a non-attribution
analysis with respect to the inherent features or characteristics of the EU biodiesel industry
vis-à-vis the Argentine industry. For the same reason, i.e. because this alleged fact does not, in
our view, constitute an "other factor" within the meaning of Article 3.5, we do not consider
Argentina's argument that the EU authorities failed to address the fact that rapeseed is on average
10% more expensive than soybeans as an "other" factor causing injury to the EU industry.
7.524. Nonetheless, we will consider the EU authorities' determination with respect to the alleged
lack of vertical integration and of access to raw materials of the EU domestic industry. We have
carefully reviewed the EU authorities' discussion of this issue and the explanations for rejecting the
arguments that the EU industry's alleged lack of access to raw materials and lack of vertical
integration were "other factors" injuring that industry. We are not convinced that the conclusions
reached by the EU authorities concerning these two alleged other factors are unreasonable. In
particular, we read the Provisional Regulation as tacitly making the point that whereas the
Argentine industry may have benefited from certai n advantages (e.g. location close to the source
of raw materials), the EU industry may itself ha ve benefited from certain other advantages (e.g.
location close to ports or to the final customer). We consider the EU authorities' explanation on
this issue reasonable. In any event, we consider the EU authorities' conclusion that these factors
were not the cause of the deterioration in the condition of the domestic industry in the IP was
reasonable in the light of the evidence before them.
7.525. Argentina also raises concerns regardin g the EU authorities' treatment of the poor
rapeseed harvest of 2011 and the increase in feedstock prices during the IP. Argentina argues that
the EU authorities failed to address the effects of this poor harvest and the increase in feedstock
prices in its consideration of this injury factor even though in the Provisional Regulation, the
EU authorities themselves suggested that the p oor rapeseed harvest of 2011 had injured the EU
industry, and Argentine interested parties subsequently asked the EU authorities to isolate the
effects of the poor rapeseed harvest and the increase in feedstock prices. Argentina refers to the
following language in the Provisional Regulation as an acknowledgment by the EU authorities of
the impact of the 2011 rapeseed harvest:
Although over the period considered the Union industry was able to increase its sales
price, due to a poor rapeseed harvest in 2011 the cost of production rose to an extent
that it could not be covered by an increase in sales price. It was uneconomical for the

906 This is particularly clear from the text of Article 3.4, which requires consideration of the evolution of
the state of the domestic industry and calls upon the authority to consider, inter alia, "declines" in various
factors or indices.
907 Argentina's response to Panel question No. 69, para. 169 (referring to Appellate Body Report, US –
Wheat Gluten, paras. 87 and 88).
908 Argentina's second written submission, para. 250.
909 European Union's second written submission, para. 169.

Union industry to import alternative raw materials from Argentina and Indonesia due
to the tax regimes in place in those countries and therefore was forced to resort to
importing the finished biodiesel in order to keep down its costs and therefore reducing
overall losses.
910
7.526. The EU authorities addressed the effect of the poor rapeseed harvest in both the
Provisional Regulation and the Definitive Regulation, in the context of their evaluation of the
impact of dumped imports on domestic industry. In our view, the statement quoted above reflects
the EU authorities' conclusion that but for the export tax regime, the poor rapeseed harvest would
not have had the adverse effects it did. Thus, it seems to us to be more in line with a notion of
indirect causation in injury by imports rather than an "other" factor causing injury. While it would
have been helpful if the EU authorities had provid ed a more thorough discussion of the effects of
the poor 2011 rapeseed harvest, in our view, the EU authorities' conclusion, that the negative
impact of the poor harvest were compounded by th e effect of the differential export tax regimes,
satisfies the requirements of Article 3.5.
7.527. On the basis of the foregoing, we reject Argentina's allegations that the European Union
acted inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement in their evaluation of
the alleged lack of vertical integration and of access to raw materials as "other factors" causing
injury to the domestic industry.
7.4.6.7.5 Overall conclusion with respec t to Argentina's clai ms concerning the
EU authorities' non-attribution findings
7.528. We recall that we have considered and rejected the arguments raised by Argentina with
respect to the EU authorities' non-attribution analysis as it concerns each of the four "other
factors" at issue, finding in each case that th e EU authorities' conclusions with respect to the
specific "other factor" were conclusions which an unbiased and objective investigating authority
could have reached in the light of the facts before it.
7.529. Consequently, we find that Argentina has not established that the European Union's
non-attribution analysis was inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, we conclude as follows:
a. With respect to the objections raised by the European Union in its request for a
preliminary ruling:
i. The claim under Article 9.3 of the Anti-Dumping Agreement set forth in
paragraph 2(B)(6) of Argentina's panel request falls within our terms of reference;
ii. The claims under Article VI:1 of the GATT 1994 set out in paragraphs 2(A)(1)
and 2(A)(2) of Argentina's panel request fall within our terms of reference;

910 Provisional Regulation, (Exhibit ARG-30), Recital 111. In addition, CARBIO had made a similar point
with respect to the following paragraph of the Provisional Regulation:
The Union producers were able to pass on most of the increase in cost of production from 2010
to 2011 (+33 percentage points) but only by lowering profitability to the break-even point.
However they could not pass on the further increase in cost from 2011 to the IP, due to an
increase in the feedstock price, which represents close to 80% of the full cost of production of
biodiesel. These cost increases could not be fully passed on to customers on the Union market,
causing the losses in the IP. (Provisional Regulation, (Exhibit ARG-30), Recital 120, confirmed in
Definitive Regulation, (Exhibit ARG-22), Recital 143)
(See CARBIO's comments on the provisional disclosure, (Exhibit ARG-51), pp. 12-14). The issue of poor
rapeseed harvest and increase in feedstock prices during the IP was raised by Argentine interested
parties in the context of their argument that the lack of vertical integration and access of raw materials
were other factors causing injury to the domestic industry. In particular, CARBIO noted that that poor
rapeseed harvest of 2011 is a part of the wider pr oblem of the EU biodiesel industry, namely their
access to the raw materials. (CARBIO's comments on the provisional disclosure, (Exhibit ARG-51),
p. 12)

iii. The claim under Article 2.2 of the Anti-Dumping Agreement set forth in
paragraph 2(A)(2) of Argentina's panel request falls within our terms of reference;
and
iv. We do not rule on the other objections in the European Union's request for a
preliminary ruling.
b. With respect to Argentina's "as such" claims:
i. Argentina has not established that Article 2(5), second subparagraph, of the Basic
Regulation is inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement and,
as a consequence, Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii)
of the GATT 1994;
ii. Argentina has not established that Article 2(5), second subparagraph, of the Basic
Regulation is inconsistent with Article 2. 2 of the Anti-Dumping Agreement and with
Article VI:1(b)(ii) of the GATT 1994; and
iii. Argentina has not established that Article 2(5), second subparagraph, of the Basic
Regulation is inconsistent with Article XVI:4 of the WTO Agreement and Article 18.4
of the Anti-Dumping Agreement as a result of inconsistencies with Articles 2.2
and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
c. With respect to Argentina's claims concerning the anti-dumping measures imposed by
the European Union on imports of biodiesel from Argentina:
i. The European Union acted inconsistently with Article 2.2.1.1 of the Anti-Dumping
Agreement by failing to calculate the cost of production of the product under
investigation on the basis of the records kept by the producers; we do not reach
findings as to whether, as a consequence, the European Union acted inconsistently
with Article 2.2 of the Anti-Dumping Ag reement and Article VI:1(b)(ii) of the
GATT 1994;
ii. The European Union acted inconsistently with Article 2.2 of the Anti-Dumping
Agreement and Article VI:1(b)(ii) of the GATT 1994 by using a "cost" for inputs that
was not the cost prevailing "in the country of origin", namely, Argentina;
iii. We do not reach a finding as to whether the European Union acted inconsistently
with Article 2.2.1.1 of the Anti-Dumping Agreement because it included costs not
associated with the production and sale of biodiesel in the calculation of the cost of
production;
iv. We do not reach findings as to whether the European Union acted inconsistently with
Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 as a
result of inconsistencies with Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement
and Article VI:1(b)(ii) of the GATT 1994;
v. Argentina has not established that the European Union acted inconsistently with the
requirement under Article 2.4 of the Anti-Dumping Agreement to make a "fair
comparison";
vi. Argentina has not established that the European Union acted inconsistently with
Articles 2.2.2(iii) and 2.2 of the Anti-Dumping Agreement in its determination of the
amount for profits applied in the construc tion of the Argentine producers' normal
value;
vii. The European Union acted inconsistently with Article 9.3 of the Anti-Dumping
Agreement and Article VI:2 of the GATT 19 94 by imposing anti-dumping duties in
excess of the margins of dumping that should have been established under Article 2
of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, respectively;

viii. The European Union acted inconsistently with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement in its examination of the impact of the dumped imports on
the domestic industry, insofar as it relates to production capacity and capacity
utilization.
ix. Argentina's claims under Articles 3.1 and 3.4 of the Anti-Dumping Agreement
concerning the EU authorities' evaluation of return on investments fall outside our
terms of reference; and
x. Argentina has not established that the European Union's non-attribution analysis was
inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.
8.2. 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 the measures at issue have been
found to be inconsistent with the Anti-Dumping Agreement and the GATT 1994, they have nullified
or impaired benefits accruing to Argentina under these agreements.
8.3. Pursuant to Article 19.1 of the DSU, we recommend that the European Union bring its
measures into conformity with its obligations under the Anti-Dumping Agreement and the
GATT 1994. Argentina requests that we use our discretion under the second sentence of the same
article to suggest ways in which the European Union should bring its measures into conformity
with the Anti-dumping Agreement and the GATT 1994. Argentina considers that the measures at
issue in this dispute should be withdrawn. We de cline to exercise our discretion under the second
sentence of Article 19.1 of the DSU in the manner requested by Argentina.