UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA AB-2016-7
Document: Report of the Appellate Body
Date: 11 May 2017
Document codes: WT/DS471/AB/R
Complainant: China
Respondent: U.S.
Third parties: Brazil, Canada, EU, India, Japan, South Korea, Norway, Russia, Saudi Arabia, Ukraine, Vietnam, Turkey, Taiwan
Dispute stage: Implementation & Compliance
Agreements cited: Art. VI:2  GATT 1994Art. 6.10, 9.2, 9.4, 2.4.2, 6.8, Annex II, 6.1  Anti-dumping

UNITED STATES – CERTAIN METHODOLOGIES AND THEIR APPLICATION
TO ANTI-DUMPING PROCEEDINGS INVOLVING CHINA
AB-2016-7
Report of the Appellate Body

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
AFA Norm Adverse Facts Available Norm
alleged target price weighted-average price to the alleged target in a particular CONNUM
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994
BCI business confidential information
Additional Working
Procedures on BCI
Additional working procedures adopted by the Panel for the protection of BCI,
attached as Annex A-2 to the Panel Report
Coated Paper investigation USDOC [A570-958] Antidumping Duty Investigation of Certain Coated Paper
Suitable for High-Quality Print Graphics Using Sheet-Fed Presses from the
People's Republic of China
CONNUM control number
CONNUM-specific weighted-
average price
the weighted-average export price in a specific CONNUM
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
Nails test Methodology used by the USDOC in anti-dumping investigations to identify "a
pattern of export prices which differ significantly among different purchasers,
regions or time periods"
NME non-market economy
OCTG investigation USDOC [A570-943] Antidumping Duty Investigation of Oil Country Tubular
Goods from the People's Republic of China
Panel Panel in these proceedings
Panel Report Panel Report, United States – Certain Methodologies and Their Application to
Anti-Dumping Proceedings Involving China,
PRC People's Republic of China
SCM Agreement Agreement on Subsidies and Countervailing Measures
Steel Cylinders investigation USDOC [A570-977] Antidumping Duty Investigation of High Pressure Steel
Cylinders from the People's Republic of China
third administrative review
in PET Film
USDOC [A570-924] Antidumping Duty Administrative Review, 2010-2011, of
Polyethylene Terephthalate Film, Sheet, and Strip from the People's Republic of
China
three challenged
investigations
Coated Paper, OCTG, and Steel Cylinders investigations
T-T transaction-to-transaction
USCAFC United States Court of Appeals for the Federal Circuit
USCIT United States Court of International Trade
USDOC United States Department of Commerce
USDOC Antidumping Manual USDOC Enforcement and Compliance Antidumping Manual, Chapter 10:
Non-Market Economies
USDOC Policy Bulletin
No. 05.1
USDOC Import Administration Policy Bulletin, No. 05.1, Separate-Rates Practice
and Application of Combination Rates in Antidumping Investigations involving
Non-Market Economy Countries
Working Procedures Working Procedures for Appellate Review, WT/AB/WP/6, 16 August 2010
W-T weighted average-to-transaction
WTO World Trade Organization
W-W weighted average-to-weighted average

PANEL EXHIBITS CITED IN THIS REPORT
Exhibit
No.
Short title (if any) Description
CHN-1
revised
 First expert statement by Professor Dr Peter Egger
(26 February 2015)
CHN-2 First expert statement by Lisa Tenore (28 February 2015)
CHN-3 Coated Paper, targeted dumping
memorandum
USDOC [A570-958] Antidumping Duty Investigation of Certain
Coated Paper Suitable for High-Quality Print Graphics Using
Sheet‒Fed Presses from the People's Republic of China, Final
Targeted Dumping Memorandum (20 September 2010)
CHN-6 OCTG, post AD determination
analysis: Tianjin Pipe
USDOC [A570-943] Antidumping Duty Investigation of Oil
Country Tubular Goods from the People's Republic of China,
Post Preliminary Determination Analysis of Targeted Dumping:
Results for Tianjin Pipe (Group) Co. (2 March 2010)
CHN-23 USDOC Antidumping Manual USDOC Enforcement and Compliance Antidumping Manual,
Chapter 10 (2009): Non-Market Economies
CHN-64 Coated Paper, I&D memorandum USDOC [A570-958] Antidumping Duty Investigation of Certain
Coated Paper Suitable for High-Quality Print Graphics Using
Sheet‒Fed Presses from the People's Republic of China, Issues
and Decision Memorandum (20 September 2010)
CHN-66 Steel Cylinders, I&D
memorandum
USDOC [A570-977] Antidumping Duty Investigation of High
Pressure Steel Cylinders from the People's Republic of China,
Issues and Decision Memorandum (30 April 2012)
CHN-77 OCTG, I&D memorandum USDOC [A570-943] Antidumping Duty Investigation of Oil
Country Tubular Goods from the People's Republic of China,
Issues and Decision Memorandum (13 April 2010)
CHN-92 Oxford English Dictionary online, definition of "significant"
CHN-109 USDOC Policy Bulletin No. 05.1 Import Administration Policy Bulletin, No. 05.1, Separate-
Rates Practice and Application of Combination Rates in
Antidumping Investigations involving Non-Market Economy
Countries (5 April 2005)
CHN-114 Bicycles, final AD determination USDOC [A570-843] Antidumping Duty Investigation of
Bicycles from the People's Republic of China, Notice of Final
Determination (30 April 1996)
CHN-123 Jiangsu v. United States USCIT, Jiangsu Changbao Steel Tube Co., Ltd v.
United States, 884 F.Supp.2d 1295 (CIT 2012)
CHN-126 1996-1997 administrative review
in Sebacic Acid
USDOC [A570-825] Antidumping Duty Administrative Review
for Sebacic Acid from the People's Republic of China,
Preliminary Results (9 April 1998)
CHN-132 Huaiyin v. United States USCAFC, Huaiyin Foreign Trade Corp. v. United States,
322 F.3d 1369 (Fed. Cir. 2003)
CHN-134 East Sea Seafoods v. United
States
USCIT, East Sea Seafoods LLC v. United States,
703 F.Supp.2d 1336 (CIT 2010)
CHN-148 Hubbel Power Systems v. United
States
USCIT, Hubbel Power Systems, Inc. v. United States,
884 F.Supp.2d 1283 (CIT 2012)
CHN-163 Peer Bearing v. United States USCIT, Peer Bearing Co.-Changshan v. United States,
587 F.Supp.2d 1319 (CIT 2008)
CHN-167 2011-2012 administrative review
in Shrimp
USDOC [A570-893] Antidumping Duty Administrative Review
for Frozen Warmwater Shrimp from the People's Republic of
China, 2011-2012, Decision Memorandum (12 March 2013)
CHN-205 2012-2013 administrative review
in Aluminum
USDOC [A570-967] Antidumping Duty Administrative Review
for Aluminum Extrusions from the People's Republic of China,
2012-2013, Decision Memorandum (18 June 2014)

Exhibit
No.
Short title (if any) Description
CHN-272 2005-2006 administrative review
in Bags
USDOC [A570-886] Antidumping Duty Administrative Review
for Polyethylene Retail Carrier Bags from the People's Republic
of China, 2005-2006, Preliminary Results
(10 September 2007)
CHN-274 2006-2007 administrative review
in Bags
USDOC [A570-886] Antidumping Duty Administrative Review
for Polyethylene Retail Carrier Bags from the People's Republic
of China, 2006-2007, Preliminary Results (9 September 2008)
CHN-298 2011 administrative review in
Furniture
USDOC [A570-890] Antidumping Duty Administrative Review
for Wooden Bedroom Furniture from the People's Republic of
China, 2011, Decision Memorandum (1 February 2013)
CHN-313 2007-2008 administrative review
in Honey
USDOC [A570-863] Antidumping Duty Administrative Review
for Honey from the People's Republic of China, 2007-2008,
Preliminary Results (23 December 2009)
CHN-433 2011-2012 administrative review
in Glycine
USDOC [A570-836] Antidumping Duty Administrative Review
for Glycine from the People's Republic of China, 2011-2012,
Decision Memorandum (29 November 2012)
CHN-438 2005-2006 administrative review
in Tapered Roller Bearings
USDOC [A570-601] Antidumping Duty Administrative Review
for Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from the People's Republic of China, 2005-2006,
Preliminary Results (26 March 2007)
CHN-439 2004-2005 administrative review
in Freshwater Crawfish Tail Meat
USDOC [A570-848] Antidumping Duty Administrative Review
for Freshwater Crawfish Tail Meat from the People's Republic
of China, 2004-2005, Preliminary Results (10 October 2006)
CHN-441 2003-2004 administrative review
in Porcelain-on-Steel Cooking
Ware
USDOC [A570-506] Antidumping Duty Administrative Review
for Porcelain-on-Steel Cooking Ware from the People's
Republic of China, 2003-2004, Notice of Preliminary Results
(22 December 2005)
CHN-487 2012-2013 administrative review
in Solar
USDOC [A-570-979] Antidumping Duty Administrative Review
for Crystalline Silicon Photovoltaic Cells, whether or not
assembled into modules, from the People's Republic of China,
2012-2013, Decision Memorandum for Final Results
(7 July 2015)
USA-23 Steel Cylinders, final AD
Determination for Beijing Tianhai
USDOC [A570-977] Antidumping Duty Investigation of High
Pressure Steel Cylinders from the People's Republic of China,
Analysis of the Final Determination for Beijing Tianhai
Industry Co., Ltd (30 April 2012)

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of
Goods, WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted
26 January 2015
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon,
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p. 3327
Canada – Dairy
(Article 21.5 ‒ New Zealand
and US II)
Appellate Body Report, Canada – Measures Affecting the Importation of Milk
and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the
DSU by New Zealand and the United States, WT/DS103/AB/RW2,
WT/DS113/AB/RW2, adopted 17 January 2003, DSR 2003:I, p. 213
Canada – Renewable Energy
/ Canada – Feed-in Tariff
Program
Appellate Body Reports, Canada – Certain Measures Affecting the Renewable
Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff
Program, WT/DS412/AB/R / WT/DS426/AB/R, adopted 24 May 2013,
DSR 2013:I, p. 7
Chile – Price Band System
(Article 21.5 – Argentina)
Appellate Body Report, Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU
by Argentina, WT/DS207/AB/RW, adopted 22 May 2007, DSR 2007:II, p. 513
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 – HP-SSST (Japan) /
China – HP-SSST (EU)
Appellate Body Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes ("HP-SSST") from the European Union,
WT/DS454/AB/R and Add.1 / WT/DS460/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
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos
and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001,
DSR 2001:VII, p. 3243
EC – Bed Linen Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R, adopted
12 March 2001, DSR 2001:V, p. 2049
EC ‒ Bed Linen (Article 21.5
– India)
Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the
DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965
EC – 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)
(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 – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,
DSR 1998:I, p. 135
EC – IT Products Panel Reports, European Communities and its member States – Tariff
Treatment of Certain Information Technology Products, WT/DS375/R /
WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III,
p. 933
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23
July 1998, DSR 1998:V, p. 2031
EC – Poultry Panel Report, European Communities – Measures Affecting the Importation of
Certain Poultry Products, WT/DS69/R, adopted 23 July 1998, as modified by
Appellate Body Report WT/DS69/AB/R, DSR 1998:V, p. 2089

Short Title Full Case Title and Citation
EC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the
Importation and Marketing of Seal Products, WT/DS400/AB/R /
WT/DS401/AB/R, adopted 18 June 2014, DSR 2014:I, p. 7
EC – Selected Customs
Matters
Appellate Body Report, European Communities – Selected Customs Matters,
WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-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
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding
Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998,
DSR 1998:IX, p. 3767
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
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
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
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, DSR 2014:V, p. 1727
US – Continued Zeroing Appellate Body Report, United States – Continued Existence 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, DSR 2014:VIII, p. 3027
US – Large Civil Aircraft
(2nd complaint)
Appellate Body Report, United States – Measures Affecting Trade in Large Civil
Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012,
DSR 2012:I, p. 7
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 – 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 ‒ Softwood Lumber 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
US – Stainless Steel
(Mexico)
Appellate Body Report, United States – Final Anti-Dumping Measures on
Stainless Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008, DSR
2008:II, p. 513
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R,
WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R,
WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003,
DSR 2003:VII, p. 3117
US – Tuna II (Mexico)
(Article 21.5 – Mexico)
Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of
the DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted 3 December 2015

Short Title Full Case Title and Citation
US – Underwear Appellate Body Report, United States – Restrictions on Imports of Cotton and
Man-made Fibre Underwear, WT/DS24/AB/R, adopted 25 February 1997,
DSR 1997:I, p. 11
US – Underwear Panel Report, United States – Restrictions on Imports of Cotton and Man-made
Fibre Underwear, WT/DS24/R, adopted 25 February 1997, as modified by
Appellate Body Report WT/DS24/AB/R, DSR 1997:I, p. 31
US – Washing Machines Appellate Body Report, United States – Anti-Dumping and Countervailing
Measures on Large Residential Washers from Korea, WT/DS464/AB/R and
Add.1, adopted 26 September 2016
US – Washing Machines Panel Report, United States – Anti-Dumping and Countervailing Measures on
Large Residential Washers from Korea, WT/DS464/R and Add.1, adopted
26 September 2016, as modified by Appellate Body Report WT/DS464/AB/R
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 – 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 – Zeroing (Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset
Reviews, WT/DS322/R, adopted 23 January 2007, as modified by
Appellate Body Report WT/DS322/AB/R, DSR 2007:I, p. 97

APPELLATE BODY

United States – Certain Methodologies and
Their Application to Anti-Dumping
Proceedings Involving China

China, Appellant
United States, Appellee

Brazil, Third Participant
Canada, Third Participant
European Union, Third Participant
India, Third Participant
Japan, Third Participant
Korea, Third Participant
Norway, Third Participant
Russian Federation, Third Participant
Saudi Arabia, Third Participant
Separate Customs Territory of Taiwan, Penghu,
 Kinmen and Matsu, Third Participant
Turkey, Third Participant
Ukraine, Third Participant
Viet Nam, Third Participant

AB-2016-7

Appellate Body Division:

Bhatia, Presiding Member
Ramírez-Hernández, Member
Servansing, Member

1 INTRODUCTION
1.1. China appeals certain issues of law and legal interpretations developed in the Panel Report,
United States – Certain Methodologies and Their Application to Anti -Dumping Proceedings
Involving China 1 (Panel Report). The Panel was established on 26 March 2014 to co nsider a
complaint by China2 with respect to the consistency of certain United States measures with the
Agreement on Implementation of Article VI of the General Agreement on Tarif fs and Trade 1994
(Anti­Dumping Agreement) and the General Agreement on Tariffs and Trade 1994 (GATT 1994).
1.2. Before the Panel, China raised three sets of claims in relation to certain methodologies used
by the United States Department of Commerce (USDOC) in anti -dumping proceedings against
China. These claims concerned: (i) the USDOC's use of the weighted average-to-transaction (W-T)
methodology in three anti-dumping investigations and one administrative review; (ii) the USDOC's
treatment of multiple economic operators from a non -market econom y (NME) as a single
NME­wide entity; and (iii) the manner in which the USDOC determines anti-dumping duty rates for
NME-wide entities, as well as the level of such duty rates.3
1.3. In respect of the USDOC's use of the W-T methodology, China challenged: (i) several aspects
of the USDOC's application of the "Nails t est"4 in three anti -dumping investigations involving

1 WT/DS471/R.
2 Panel Report, para. 1.3. See also Request for the Establishment of a Panel by China, WT/DS471/5 and
Corr.1.
3 Panel Report, para. 2.1.
4 The Panel explained:
[T]he USDOC used what it called the Nails test to meet the requirements under the pattern
clause of Article 2.4.2 to find a pattern of export prices which differ significantly among different
purchasers or time periods. Under the Nails test, the USDOC sought to establish whether the
pattern of export prices to an allegedly targeted purchaser or time period (alleged target)
differed significantly from export prices to non-targeted purchasers or time periods
(non-targets). …
The Nails test consisted of two sequential stages. The first stage is referred to as the "standard
deviation test" and the second stage is what [the Panel referred] to as the "price gap test". …
[T]he objective of the standard deviation test was to find a pattern of export prices which

exports of oil country tubular goods (OCTG)5, certain coated paper suitable for high -quality print
graphics using sheet -fed presses (Coated Paper )6, and high pressure steel cylinders (Steel
Cylinders)7 from China (the three challenged investigations) on an "as applied" basis; and (ii) the
USDOC's use of "zeroing" in the third administrative review of exports of polyet hylene
terephthalate film (PET Film)8 from China on an "as applied" basis.9
1.4. With regard to the USDOC's treatment of multiple economic operators as one NME -wide
entity, China raised both "as such" and "as applied" claims. The "as such" claims concerned what
China termed the "Single Rate Presumption ". China alleged that the USDOC operates on the
presumption that all exporters from an NME country comprise a single entity under common
government control, and that the USDOC assign s a single margin of dumping and a single
anti-dumping duty rate to such entity. China further submitted t hat, in order to rebut the
Single Rate Presumption and obtain an individually determined margin of dumping, an exporter
has to prove, through the "Separate Rate Test", an absence of government control, both in law
and in fact, over that exporter's activiti es. China's "as applied" claims concerned the USDOC's
application of the Single Rate Presumption in 13 anti-dumping investigations and 25 administrative
reviews involving Chinese exporters.10
1.5. Regarding the manner in which the USDOC determines anti-dumping duty rates for NME-wide
entities, as well as the level of such duty rates , China raised both "as such" and "as applied"
claims. China's "as applied" claims concerned th e USDOC's determination of anti -dumping duty
rates for the People's Republic of China (PR C)-wide entity in 13 anti-dumping investigations and
17 administrative reviews involving Chinese exporters. 11 Specifically, in relation to each of these
determinations, China challenged: the USDOC's alleged failure to specify the information required
to calculate a margin of dumping and to notify exporters accordingly; the USDOC's recourse to,
and use of, facts available; and the level of the anti -dumping duty rates assigned to the PRC­wide
entity. China's "as such" claims concerned the manner in which the U SDOC uses facts available
when determining the anti -dumping duty rates for non -cooperating NME-wide entities under what
China referred to as the use of "Adverse Facts Available Norm" (AFA Norm12).13
1.6. In the Panel Report, circulated to Members of the World Tra de Organization (WTO) on
19 October 2016, the Panel found that:
a. with respect to the USDOC's use of the W -T methodology in the three challenged
investigations:
i. the United States acted inconsistently with Article 2.4.2 of the
Anti­Dumping Agreement in the OCTG and Coated Paper investigations because of

differed among different purchasers, regions or time periods within the meaning of the pattern
clause of Article 2.4.2, whereas the objective of the price gap test was to find whether the
differences identified under the standard deviation test were significant.
(Panel Report, paras. 7.3-7.4 (fns omitted))
5 USDOC [A570-943] Antidumping Duty Investigation of Oil Country Tubular Goods from the
People's Republic of China.
6 USDOC [A570-958] Antidumping Duty Investigation of Certain Coated Paper Suitable for High-Quality
Print Graphics Using Sheet-Fed Presses from the People's Republic of China.
7 USDOC [A570-977] Antidumping Duty Investigation of High Pressure Steel Cylinders from the
People's Republic of China.
8 USDOC [A570-924] Anti-Dumping Administrative Review, 2010-2011, of Polyethylene Terephthalate
Film, Sheet, and Strip from the People's Republic of China.
9 Panel Report, para. 2.2.
10 Panel Report, para. 2.3. The specific anti-dumping investigations and administrative reviews
challenged by China in this regard are listed in footnote 20 to paragraph 3.1.d of the Panel Report.
11 Panel Report, para. 2.4. The specific anti-dumping investigations and administrative reviews
challenged by China in this regard are listed in footnote 21 to paragraph 3.1.e of the Panel Report.
12 Before the Panel, China described the precise content of the AFA Norm as follows:
[W]henever [the] USDOC considers that an NME-wide entity has failed to cooperate to the best
of its ability, it systematically makes an adverse inference and selects, to determine the rate for
the NME-wide entity, facts that are adverse to the interests of that fictional entity and each of
the producers/exporters included within it.
(Panel Report, para. 7.422 (quoting China's opening statement at the second Panel meeting, para. 63
(emphasis original)))
13 Panel Report, para. 2.4.

the fourth quantitative flaw with the Nails test , which led the USDOC to disregard
non-target prices below the "alleged target price " under the price gap test 14, and
because of the first SAS programming error 15 that occurred in the application of the
price gap test16;
ii. the United States acted inconsistently with Article 2.4.2 of the
Anti­Dumping Agreement in the three challenged investigations because of the
USDOC's explanations under the second sentence of this pro vision, which were
premised on the use of the W -T methodology with zeroing , and because of the
USDOC's failure to provide an explanation as to why the transaction -to-transaction
(T-T) methodology could not take into account appropriately the significant
differences in the relevant export prices17;
iii. the United States acted inconsistently with Article 2.4.2 of the
Anti­Dumping Agreement in the three challenged investigations by applying the
W-T methodology to all export transactions18;
iv. the United States acted in consistently with Article 2.4.2 of the
Anti­Dumping Agreement in the three challenged investigations because the USDOC
used zeroing in the dumping margin cal culations when applying the
W­T methodology19;
v. China had not established that the United States acte d inconsistently with
Article 2.4.2 of the Anti -Dumping Agreement in the Steel Cylinders investigation
because of the fourth quantitative flaw with the Nails test , which allegedly led the
USDOC to disregard non -target prices below the alleged target price under the price
gap test20;
vi. China had not established that the United States acted inconsistently with
Article 2.4.2 of the Anti -Dumping Agreement in the three challenged investigations
by reason of the first 21, second 22, and third 23 alleged quanti tative flaws with the
Nails test24;
vii. China had not established that the United States acted inconsistently with
Article 2.4.2 of the Anti -Dumping Agreement because of the second alleged

14 The "price gap test" is explained in paragraphs 7.4 and 7.45-7.48 of the Panel Report, and in
paragraph 5.8 below of this Report.
15 The Panel noted that "[t]he first SAS programming error was that instead of comparing the alleged
target price gap with the weighted average non-target price gap, as required under the price gap test, the
USDOC compared the alleged target price gap with each of the individual non-target price gaps which made up
this weighted average non-target price gap." (Panel Report, para. 7.50)
21 With respect to the first alleged quantitative flaw, China contended before the Panel that the Nails
test depended on the assumption that the examined export price data were either, in terms of statistics,
normally distributed, or at least single-peaked and symmetric around the mean. (Panel Report, para. 7.56)
22 With respect to the second alleged quantitative flaw, China contended before the Panel that the
USDOC used a "one" standard deviation threshold under the standard deviation test. According to China, this
was contrary to established statistical conventions, which require the use of a higher threshold. (Panel Report,
para. 7.68)
23 With respect to the third alleged quantitative flaw, China contended before the Panel that it concerned
the USDOC's application of the price gap test. To China, this flaw related to the manner in which the USDOC
calculated the weighted-average non-target price gap and the alleged target price gap and then compared
them. (Panel Report, para. 7.75)

SAS programming error25 that occurred in the application of the price gap test in t he
OCTG and Coated Paper investigations26;
viii. China had not established that the United States acted inconsistently with
Article 2.4.2 of the Anti -Dumping Agreement in the three challenged investigations
because of the alleged qualitative issues27 with the Nails test28; and
ix. China had not established that the United States acted inconsistently with
Article 2.4.2 of the Anti -Dumping Agreement in the three challenged investigations
by finding the relevant "pattern" on the basis of purchaser or time period
weighted-average export prices as opposed to individual export transaction prices29;
b. with respect to the USDOC's use of zeroing in the third administrative review in
PET Film:
i. the United States acted inconsistently with Article 9.3 of the
Anti‒Dumping Agreement and Article VI:2 of the GATT 1994 because of the USDOC's
use of zeroing in the dumping margin calculations when applying the W -T
methodology30;
c. with respect to the Single Rate Presumption:
i. the six administrative review determinations 31 introduced by China at the
Panel's first substantive meeting with the parties fell within the Panel's term s of
reference32;
ii. the Single Rate Presumption constitutes a measure of general and prospective
application, which is "as such" inconsistent with Ar ticles 6.10 and 9.2 of the
Anti-Dumping Agreement33;
iii. the United States acted inconsistently with Ar ticles 6.10 and 9.2 of the
Anti­Dumping Agreement as a result of the USDOC's application of the Single Rate
Presumption in the 38 determinations challenged by China under these provisions34;
and
iv. in light of the above findings with respect to the Single Rate Presumption 35, the
Panel exercised judicial economy and made no findings with respect to China's
"as such" and "as applied " claims under the second sentence of Artic le 9.4 of the
Anti-Dumping Agreement concerning the Single Rate Presumption36; and

25 The Panel noted that, under the price gap test, the weighted-average non-target price gap was
calculated by multiplying each individual non-target gap with its associated weight and dividing the total by the
total weight associated with those gaps. The Panel explained that "[t]he second SAS programming error
occurred in the multiplication of each individual gap with its associated weight." (Panel Report, para. 7.51)
27 China contended before the Panel that the USDOC "did not consider the reasons for the identified
differences in export prices forming the relevant pattern, as part of its enquiry into whether such differences
31 The specific administrative reviews are listed in paragraph 7.241 of the Panel Report.
35 See Panel Report, paras. 8.1.c.ii and 8.1.c.iii.

d. with respect to the AFA Norm:
i. the relevant four administrative review determinations introduced by China at
the Panel's first substantive meeting with the parties37 fell within the Panel's terms of
reference38;
ii. China had not demonstrated that the AFA Norm constitutes a norm of general
and prospective application and, consequently, there was no need to examine
whether the AFA Norm fell within the Panel's terms of reference, or to address
China's "as such" claims under Article 6.8 of the Anti -Dumping Agreement and
paragraph 7 of Annex II thereto39; and
iii. in light of the above findings of inconsistency under Ar ticles 6.10 and 9.2 of the
Anti-Dumping Agreement in relation to the Single Rate Presumption 40, the Panel
exercised judicial economy and made no findings with respect to China's "as applied"
claims under Articles 6.1, 6.8, 9.4 , and paragraphs 1 and 7 of Annex II to the
Anti­Dumping Agreement concerning the 30 determinations challen ged by China
under these provisions.41
1.7. In accordance with Article 19.1 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU), and having found that the United States acted inconsistently with
certain provisions of the Anti -Dumping Agreement and the GATT 1994, the Panel recommended
that the United States bring its measures into conformity with its obligations under those
Agreements.42
1.8. On 18 November 2016 , China notified the Dispute Settlement Body (DSB) , pursuant to
Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the
Panel Report and certain legal interpretations developed by the Panel , and filed a Notice of
Appeal43 and an appellant's submission pursuant to Rule 20 and Rule 2 1, respe ctively, of the
Working Procedures for Appellate Review44 (Working Procedures).
1.9. On 19 November 2016, the United States requested the Appellate Body Division hearing this
appeal to extend the time period for filing a Notice of Other Appeal and other appellan t's
submission, and as a consequence the time periods for filing appellees' and third participants'
submissions, pursuant to Rule 16(2) of the Working Procedures . On 21 November 2016, the
Division invited China and the third participants to comment on the United States' request. On
22 November 2016, China and the European Union submitted comments. On 22 November 2016,
the Division issued a Procedural Ruling. 45 In its ruling, the Division came to the conclusion that
strict adherence to the time periods set ou t in the Working Procedures would result in manifest
unfairness in the particular circumstances of this case. Accordingly, the Division extended the time
periods for filing a Notice of Other Appeal and other appellant's submission, if any; the appellee's
submission(s); and the third participants' submissions.46
1.10. On 28 November 2016, the United States informed the Appellate Body, China, and the third
participants that, "[i]n light of the need to focus this appeal on those issues necessary to assist the
DSB in resolving th is dispute, and ongoing concerns over the Appellate Body's workload and
demands, [the United States had ] decided not to file an other appeal".47 On 16 December 2016,

37 The specific administrative reviews are listed in footnote 752 to paragraph 7.389 of the Panel Report.
39 Panel Report, para. 8.1.d.ii. The Division notes that the Panel found, in paragraph 7.454 of its Report,
that certain evidence put on the record by China demonstrated the precise content of the AFA Norm as
described by China. (See also supra, fn 12)
40 See Panel Report, para. 8.1.c.iii.
42 Panel Report, para. 8.2.
43 WT/DS471/8.
44 WT/AB/WP/6, 16 August 2010.
45 Contained in Annex D-1 of the Addendum to this Report (WT/DS471/AB/R/Add.1).
46 The revised submission dates are set out in the Procedural Ruling. (See Annex D-1 of the Addendum
to this Report (WT/DS471/AB/R/Add.1))
47 On appeal, China raises a conditional challenge to the Panel's exercise of judicial economy with
respect to China's "as applied" claims under Articles 6.1, 6.8, and paragraphs 1 and 7 of Annex II to the

the United States filed an appellee's submission. 48 On 9 January 2017, Brazil, C anada, the
European Union, Japan, and Viet Nam each filed a third participant's submission.49 On the same
day, Norway; Russia; the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu; and
Turkey each notified its intention to appear at the oral hearing as a third participant. 50 On
10 January 2017, Ukraine notified its intention to appear at the oral hearing as a
third participant.51 Subsequently, India and Korea each notified its intention to appear at the
oral hearing as a third participant.52
1.11. By letter of 16 January 2017, the Chair of the Appellate Body notified the Chair of the DSB
that the Appellate Body would not be able to circulate its Report i n this appeal within the
60-day period pursuant to Article 17.5 of the DSU, or within the 90 -day period pursuant to the
same provision. The Chair of the Appellate Body explained that this was due to a number of
factors, including the substantial workload of the Appellate Body in 2017, scheduling issues arising
from overlap in the composition of the Divisi ons hearing different appeals, the number and
complexity of the issues raised in this and concurrent appellate proceedings, together with the
demands that these appellate proceedings place on the WTO Secretariat's translation services, and
the shortage of staff in the Appellate Body Secretariat. 53 By letter of 22 March 2017, the Chair of
the Ap pellate Body informed the Chair of the DSB that the Appellate Body Report in these
proceedings would be circulated no later than 11 May 2017.54
1.12. The oral hearing in this appeal was held on 27 -28 February 201 7. The participants and
four of the third participants to this appeal (Brazil, Canada, the European Union, and Japan) made
oral statements and responded to questions posed by the Members of the Appellate Body Division
hearing the appeal.
1.13. On 16 February 2015, having been requested by the parties to do so, the Panel decided to
adopt additional working procedures for the protection of business confidential information (BCI)
(Additional Working Procedures on BCI).55 No such request was received by the Appellate Body. At
the beginning of the oral hearing in these appellate proceedings, the Presiding Member noted that,
while the Panel record contains BCI, under the circumstances, the Division would assume that all
information in this appeal shall be treated as confidential in accordance with Article 18.2 of the
DSU. The Appellate Body has in the past highlighted the need to distinguish between "the general
layer of confidentiality that applies in WTO dispute settlement proceedi ngs, as foreseen in
Articles 18.2 and 13.1 of the DSU" and "the additional layer of protection of sensitive business

Anti-Dumping Agreement. China's challenge is conditional upon the Appellate Body reversing the Panel's
findings that the USDOC acted inconsistently with Articles 6.2 and 9.2 of the Anti-Dumping Agreement by
applying the Single Rate Presumption in relation to any of the 30 challenged determinations in which the
USDOC determined a margin of dumping for the NME-wide entity. (China's appellant's submission,
paras. 510-511) Given that the United States did not appeal the Panel's finding concerning the Single Rate
Presumption, the condition to China's challenge is not met.
48 Pursuant to Rules 16 and 22 of the Working Procedures.
49 Pursuant to Rules 16 and 24(1) of the Working Procedures. The deadline for the filing of
third participant's submissions, including executive summaries of those submissions, was 9 January 2017,
5 p.m. All third participants filing a submission did so within this deadline. Brazil and Viet Nam, however,
omitted to file an executive summary along with their submissions. Brazil and Viet Nam subsequently filed their
executive summaries on 9 January 2017 at 7.30 p.m. and 10 January at 9.30 a.m. respectively, each noting
that the executive summary had mistakenly not been sent together with the submission. The Appellate Body
has held that considerations of due process and "fairness and orderly procedure", as referred to in Rule 16(1)
of the Working Procedures, require compliance with established time periods by all participants regarding the
filing of submissions. (See Appellate Body Report, US – Stainless Steel (Mexico), para. 164) These
considerations are also valid with respect to executive summaries of written submissions. In light of the
foregoing, Brazil and Viet Nam's executive summaries are included in the Addendum to this Appellate Body
Report.
50 Pursuant to Rule 24(2) of the Working Procedures.
51 Pursuant to Rule 24(4) of the Working Procedures.
52 On 22 and 23 January 2017, India and Korea, respectively, submitted its delegation list for the
hearing to the Appellate Body Secretariat and the participants and third participants in this dispute. For the
purposes of this appeal, the Division has interpreted these actions as notifications expressing the intention of
India and Korea to attend the hearing pursuant to Rule 24(4) of the Working Procedures.
53 WT/DS471/9.
54 WT/DS471/10.
55 Panel Report, para. 1.9 and Annex A-2.

information that a panel may choose to adopt".56 The Appellate Body has further emphasized that,
"absent any request from the participants, procedures for additional protection of BCI do not apply
in … appellate proceedings."57 In this dispute, no request for additional protection of BCI has been
made on appeal . The Additional Working Procedures on BCI adopted by the Panel do not cover
these ap pellate proceedings and therefore only the "general layer of confidentiality" under the
provisions of the DSU applies.
2 ARGUMENTS OF THE PARTICIPANTS
2.1. The claims and arguments of the participants are reflected in the executive summaries of
their written submissions provided to the Appellate Body.58 The Notice of Appeal and the executive
summaries of the participants' claims and arguments are contained, respectively, in Annexes A
and B of the Addendum to this Report, WT/DS471/AB/R/Add.1.
3 ARGUMENTS OF THE THIRD PARTICIPANTS
3.1. The arguments of the third participants that filed a written submission are reflected in the
executive summaries provided to the Appellate Body 59, and are contained in Annex C of the
Addendum to this Report, WT/DS471/AB/R/Add.1.
4 ISSUES RAISED IN THIS APPEAL
4.1. With regard to the USDOC's application of the Nails test in the OCTG, Coated Paper , and
Steel Cylinders investigations, the following issues are raised in this appeal:
a. in relation to the first and third alleged quantitative flaws with the Nails test:
i. whether the Panel erred in its interpretation and application of Article 2.4.2 of
the Anti -Dumping Agreement in finding that China ha s not established that the
United States acted inconsistently with this provision in the three challenged
investigations by reason of the first alleged quantitative flaw with the Nails test;
ii. whether the Panel erred in its interpretation and application of Article 2.4.2 of
the Anti -Dumping Agreement in finding that China ha s not established that the
United States a cted inconsistently with this provision in the three challenged
investigations by reason of the third alleged quantitative flaw with the Nails test; and
iii. whether the Panel acted inconsistently with Article 17.6(i) of the Anti -Dumping
Agreement in dismissin g China's claim in respect of the first and third alleged
quantitative flaws with the Nails test;
b. whether the Panel erred in its interpretation and application of Article 2.4.2 of the
Anti-Dumping Agreement in finding that China has not established that the United States
acted inconsistently with this provision in the three challenged investigations by not
considering the reasons for the differences in export prices when determining whether
those differences were qualitatively significant;
c. in relation to the USDOC's use of weighted-average export prices under the Nails test:
i. whether the Panel erred in its interpretation and application of Article 2.4.2 of
the Anti -Dumping Agreement in finding that China ha s not established that the
United States acted incon sistently with this provision in the three challenged

56 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.315; US – Tuna II
(Mexico) (Article 21.5 – Mexico), para. 5.3.
57 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico), para. 5.5.
58 Pursuant to the Appellate Body Communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in
Appellate Proceedings" (WT/AB/23, 11 March 2015).
59 Pursuant to the Appellate Body Communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in
Appellate Proceedings" (WT/AB/23, 11 March 2015).

investigations by determining the relevant "pattern" on the basis of
weighted-average export prices, as opposed to individual export transaction prices;
and
ii. whether the Panel acted inconsistently with Article 17.6(i) of the Anti -Dumping
Agreement by failing to find that the USDOC's use of weighted -average export prices
was inherently biased; and
d. whether the Panel erred in its interpretation of Article 2.4.2 of the Anti -Dumping
Agreement by suggesting th at comparison methodologies may be combined to establish
dumping margins.
4.2. With regard to the AFA Norm, the following issues are raised in this appeal:
a. whether the Panel erred in finding that China has not de monstrated that the
AFA Norm is a rule or norm of general and prospective application;
b. if the Appellate Body finds that the Panel erred, whether it can complete the analysis
and find that the AFA Norm is a rule or norm of general and prospective application that
can be the subject of an "as such" challenge in WTO dispute settlement; and
c. if the Appellate Body finds that the AFA Norm can be the subject of an "as such"
challenge in WTO dispute settlement, whether it can complete the analysis and find that
this measure is inconsistent "as such" with Article 6.8 and paragraph 7 of Annex II to the
Anti-Dumping Agreement.
5 ANALYSIS OF THE APPELLATE BODY
5.1. We first address China's claims raised on appeal under Article 2.4.2 of the Anti -Dumping
Agreement regarding the USDOC's application of the Nails test and its use of the W-T methodology
in the three challenged investigations. We then turn to China's claims on appeal regarding the
AFA Norm.
5.1 China's claims pertaining to the USDOC's application of the Nails test and its use of
the W-T methodology in the three challenged investigations
5.2. On appeal, China challenges certain findings of the Panel under Article 2.4.2 of the
Anti-Dumping Agreement regarding the USDOC's application of the Nails test in the
three challenged investigations. Specifically, China challenges the Panel's findings regarding:
(i) the first and third alleged quantitative flaws with the Nails test60; (ii) China's claim pertaining to
the consideration of certain qualitative factors when determining whether prices differ
"significantly"; and (iii) the USDOC's use of weighted-average export prices to establish the
existence of a "pattern". In addition, China claims that the Panel erred in suggesting tha t an
investigating authority may combine comparison methodologies to establish margins of dumping .
We first make a few observations regarding Article 2.4.2, as well as the Nails test that was applied
by the USDOC in the three challenged investigations. We then address, in turn, the claims raised
by China on appeal.

60 Before the Panel, China contended that, due to four quantitative flaws with the Nails test, the USDOC
failed to find, in the three challenged investigations, that "the differences in export prices forming the pattern
were significant, in a quantitative sense, as required under the pattern clause of Article 2.4.2". (Panel Report,
para. 7.11) China's appeal is limited to the Panel's findings regarding the first and third of these alleged
quantitative flaws.

5.1.1 Background
5.3. Article 2.4.2 of the Anti-Dumping Agreement reads:
Subject to the provisions governing fair comparison in paragraph 4, the existence of
margins of dumping during the investigation phase shall normally be established on
the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions or by a comparison of normal
value and export prices on a transaction -to-transaction basis. A normal value
established on a weighted average basis may be compared to prices of individual
export transactions if the authorities find a pattern of export prices which differ
significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by th e use of a weighted average -to-weighted average or
transaction-to-transaction comparison.
5.4. The first sentence of Article 2.4.2 provides for two symmetrical comparison methodologies
that "shall normally" be used by investig ating authorities to establish marg ins of dumping: (i) the
weighted average -to-weighted average ( W-W) methodology, whereby dumping margins are
established on the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions; and (ii) the T -T methodology, whereby
normal value and export prices are compared on a transaction -specific basis. 61 The
second sentence of Article 2.4.2, in turn, provides for a comparison methodology that is
asymmetrical: the W -T methodology, whereby a w eighted average normal value is compared to
prices of individual export transactions. 62 This methodology may be used if the following two
conditions are met: first, "the authorities find a pattern of export prices which differ significantly
among different purchasers, regions or time periods"; and, second, "an explanation is provided as
to why such differences cannot be taken into account appropriately by the use of a weighted
average-to-weighted average or transaction -to-transaction comparison."63 As the App ellate Body
has recognized, "[t]he function of the second sentence of Article 2.4.2 is … to enable investigating
authorities to identify so-called 'targeted dumping' and to address it appropriately."64
5.5. China's claims on appeal under Article 2.4.2 are "as ap plied" claims that pertain to the
three challenged investigations, namely, the OCTG, Coated Paper , and Steel Cylinders
investigations. In these investigations, the USDOC applied the Nails test to establish whether there
was "a pattern of export prices whic h differ significantly " among different purchasers or time
periods within the meaning of the second sentence of Article 2.4.2.65
5.6. The Nails test consisted of two sequential stages that the USDOC would apply after receiving
an allegation of "targeted dumping" by a domestic industry petitioner identifying an "alleged
target".66 First, the "standard deviation test" aimed at "find[ing] a pattern of export prices which
differed among different purchasers, regions or time periods".67 Second, the "price gap test" aimed
at establishing whether the differences identified under the standard deviation test were
significant.68 Under both stages , the USDOC would conduct its initial analysis on a model basis,

61 Appellate Body Report, US – Washing Machines, para. 5.15.
62 Appellate Body Report, US – Washing Machines, para. 5.16.
63 We refer to these two conditions as the "pattern clause" and the "explanation clause", respectively.
64 Appellate Body Report, US – Washing Machines, para. 5.17. (fn omitted) See also Appellate Body
Reports, EC ‒ Bed Linen, para. 62; US – Zeroing (Japan), para. 135; and US – Stainless Steel (Mexico),
paras. 122 and 127.
65 Panel Report, para. 7.3. While the pattern clause also refers to a pattern of export prices which differ
significantly among different regions, the USDOC did not find a pattern on that basis in the three challenged
investigations. (Ibid., fn 40 thereto)
66 Panel Report, para. 7.3 (referring to United States' first written submission to the Panel, para. 85)
and para. 7.40 (referring to United States' first written submission to the Panel, para. 86).
67 Panel Report, para. 7.4.
68 Panel Report, para. 7.4.

with each model being assigned a control number (CONNUM) .69 The USDOC would examine only
those CONNUMs that were sold to both the alleged target and the non-targets.70
5.7. The standard deviation test involved a two-step process.71 The USDOC would first consider
whether the weighted -average price to the alleged target in a parti cular CONNUM (the alleged
target price) was below a benchmark price equal to one standard deviation below the
weighted‒average export price in that CONNUM (the CONNUM-specific weighted-average price).72
Second, a fter repeating this exercise across all examined CONNUMs, if the volume of sales in
CONNUMs where the alleged target price was below the CONNUM -specific weighted -average
export price exceeded 33% of the total volume of the exporter's sales to the alleged target, the
USDOC would move on to the price gap test.73
5.8. The price gap test itself also involved a two-step process.74 First, the USDOC would calculate,
on a CONNUM -specific basis, the alleged target price gap by considering the difference between
the alleged target price and th e next highest weighted -average non-target price . It would also
calculate, for the same CONNUM, the weighted-average non-target price gap by considering the
weighted average of th e gaps between individual non -target weighted-average price s.75 The
USDOC would then consider whether the alleged target price gap exceeded the weighted-average
non-target price gap. Second, after repeating this exercise across all examined CONNUMs 76, if all
CONNUMs where the alleged target price gap was wider than the weighted -average non -target
price gap exceeded 5% of the total volume of the sales to the alleged target, the USDOC would
conclude that the exporter passed the price gap test.77
5.9. Applying the Nails test in the three challenged investigations, the USDOC established the
existence of "pattern[s] of export prices which differ [ed] significantly" among different purchasers
in the Coated Paper investigation and among different time periods in the Steel Cylinders and
OCTG investigations.78 The USDOC then evaluated the difference between the dumping margins
calculated using the W -W methodology (without zeroing) and those calculated using the
W-T methodology (with zeroing) .79 The USDOC considered that there were differences in the
dumping margins that showed that the W -W methodology "conceal[ed] differences in price
patterns between the targeted and non -targeted groups by averaging low -priced sales to the

70 Panel Report, para. 7.40 (referring to United States' response to Panel question No. 109(a), (b), and
(c), paras. 49-51; China's response to Panel question No. 109(c), para. 72; and First expert statement by Lisa
71 For a more detailed description of the standard deviation test, see Panel Report, paras. 7.41-7.44.
72 Panel Report, para. 7.41 (referring to United States' first written submission to the Panel, para. 97;
and China's first written submission to the Panel, para. 68). In the three challenged investigations, the USDOC
calculated a weighted standard deviation under the standard deviation test. Like the Panel, for ease of
reference, we refer to this as "standard deviation". (Ibid., fn 135 to para. 7.42)
73 Panel Report, para. 7.44 (referring to United States' first written submission to the Panel, para. 100;
and China's first written submission to the Panel, para. 72). In calculating the total volume of the exporter's
sales to the alleged target, the USDOC did not include sales volumes pertaining to CONNUMs that were not
sold to both the alleged target and a non-target. (Ibid. (referring to United States' response to Panel question
No. 109(a), para. 51))
74 For a more detailed description of the price gap test, see Panel Report, paras. 7.45-7.48.
75 Panel Report, para. 7.45 (referring to United States' first written submission to the Panel, para. 101;
and China's first written submission to the Panel, para. 76). In calculating this weighted-average non-target
price gap, the USDOC disregarded non-target prices that were lower than the alleged target price. (Ibid.)
76 CONNUMs that did not pass the standard deviation test were not examined under the price gap test.
(Panel Report, para. 7.48)
77 Panel Report, para. 7.48 (referring to Steel Cylinders, I&D memorandum (Panel Exhibit CHN-66),
p. 23; Coated Paper, I&D memorandum (Panel Exhibit CHN-64), p. 22; and OCTG, I&D memorandum
(Panel Exhibit CHN-77), Comment 2). The USDOC did not include, in the total volume of the exporter's sales to
the alleged target, sales volumes in those CONNUMs that were sold only to the alleged target but not to a
non‒target. (Ibid. (referring to United States' response to Panel question No. 109(b), para. 50))
78 Panel Report, para. 7.5 (referring to United States' first written submission to the Panel, para. 106,
in turn referring to Coated Paper, targeted dumping memorandum (Panel Exhibit CHN-3), p. 4; Steel Cylinders,
final AD Determination for Beijing Tianhai (Panel Exhibit USA-23), Attachment 4, pp. 138 and 158; and OCTG,
post AD determination analysis:Tianjin Pipe (Panel Exhibit CHN-6), p. 3).
79 Panel Report, para. 7.6 (referring to United States' first written submission to the Panel,
paras. 184-186).

targeted group with high-priced sales to the non-targeted group".80 As a result, the USDOC applied
the W -T methodology to all export transactions of the Chinese exporters involved in the
three challenged investigations.81
5.1.2 The first and third alleged quantitative flaws
5.10. On appe al, China claims that the Panel erred in its interpretation and application of the
second sentence of Article 2.4.2 of the Anti-Dumping Agreement in rejecting its claim in respect of
the first and third alleged quantitative flaws with the Nails test .82 Moreover, China claims that the
Panel failed to apply the proper standard of review under Article 17.6(i) of the Anti-Dumping
Agreement.83 Consequently, China requests us to reverse the Panel's finding s pertaining to the
first and third alleged quantitative fla ws. China further requests us to complete the legal analysis
and find that the USDOC acted inconsistently with the pattern clause in the three challenged
investigations, by failing to find, throug h an objective and unbiased evaluation of the facts,
"a pattern of export prices which differ significantly" within the meaning of the second sentence of
Article 2.4.2.84
5.11. Addressing China's claim under Article 2.4.2 of the Anti -Dumping Agreement, the
United States responds that China's appeal implicates the Panel's weighing and appreciation of
evidence, which China should have challenged under Article 11 of the DSU.85 It further argues that
the Panel made no legal findings that we could review and that there are insufficient undisputed
facts on the record for us to c omplete the legal analysis .86 The United States also submits that
China's arguments are baseless, and that China essentially requests that investigating authorities
be required to adopt a specific mode of numerical analysis to identify a pattern .87 Moreover, the
United States submits that China's arguments under Article 17.6(i) of the Anti-Dumping
Agreement lack merit .88 Consequently, the United States concludes that we should uphold the
Panel's findings concerning the first and third alleged quantitative flaws with the Nails test.89
5.12. We analyse China's claims under the second sentence of Article 2.4.2 and under
Article 17.6(i) of the Anti-Dumping Agreement in turn below.
5.1.2.1 Whether the Panel erred under the second sentence of Article 2.4.2 of the
Anti-Dumping Agr eement in rejecting China's claim in respect of the first alleged
quantitative flaw
5.13. The first alleged quantitative flaw with the Nails test relates to the standard deviation test
applied by the USDOC in the three challenged investigations, which aimed at i dentifying whether
there were export price differences among different purchasers or time periods. 90 Under that test,
the USDOC determined, for each CONNUM considered, whether the alleged target price was below
a benchmark price equal to one standard deviat ion below the CONNUM-specific weighted-average
price.91
5.14. Before the Panel, China claimed that the Nails test, and more particularly the use of the
one standard deviation threshold under that test, depended on the assumption that the examined

80 Panel Report, para. 7.6 (quoting United States' first written submission to the Panel, para. 187, in
turn quoting Steel Cylinders, I&D memorandum (Panel Exhibit CHN-66), p. 24); and referring to Coated Paper,
I&D memorandum (Panel Exhibit CHN-64), pp. 23-24; and OCTG, I&D memorandum (Panel Exhibit CHN-77),
Comment 2).
81 Panel Report, para. 7.7 (referring to China's first written submission to the Panel, paras. 98-104, in
turn quoting OCTG, I&D memorandum (Panel Exhibit CHN-77), Comment 2; Coated Paper, I&D memorandum
(Panel Exhibit CHN-64), pp. 24-25; and Steel Cylinders, I&D memorandum (Panel Exhibit CHN-66), p. 24).
82 China's Notice of Appeal, paras. 4-7; appellant's submission, paras. 70-72.
83 China's Notice of Appeal, para. 8; appellant's submission, paras. 118 and 123.
84 China's Notice of Appeal, paras. 9-10; appellant's submission, paras. 124-125.
85 United States' appellee's submission, para. 69.
86 United States' appellee's submission, para. 70.
88 United States' appellee's submission, para. 72.
89 United States' appellee's submission, para. 73.
90 The price gap test was then used to determine whether the differences in export prices identified
under the standard deviation test were significant. (See para. 5.8. above)
91 See para. 5.7. above.

export price da ta were either, "in terms of statistics ", normally d istributed, or at least
single-peaked and symmetric .92 China submitted that the United States acted inconsistently with
the pattern clause by applying the Nails test in the three challenged investigations without
assessing whether the data were normally distributed, or at least single-peaked and symmetric.93
5.15. The Panel considered that the issues were whether the Nails test was of such a nature that
it could only be used if the export price data were normally distributed, or single-peaked and
symmetric, and, if so, whether the USDOC verified that the data in the three challenged
investigations were so distributed.94 In addressing the first of these two issues, t he Panel
considered China's argument that a large number of prices may be below the one standard
deviation threshold when data are not normally distributed, or single-peaked and symmetric.95 The
Panel considered that this "would not necessarily preclude an investigating authority from finding
that such low prices differ significantly from other higher prices". 96 The Panel also disagreed with
China that such prices cannot form a pattern within the meaning of the second sentence of
Article 2.4.2 of the Anti -Dumping Agreement.97 Finally, the Panel saw no correla tion between the
"supposed statistical problem " alleged by China and what the USDOC was trying to achieve
through the standard deviation test.98
5.16. Based on the above, the Panel found that "China ha[d] not shown that the Nails test is of
such a nature that it could only be used if the export price data were normally distributed or
single-peaked and symmetric", and that it was therefore "irrelevant" that the USDOC did not verify
whether the export price data in the three challenged investigations were so distributed.99
Consequently, t he Panel found that China had not established that the United States acted
inconsistently with Article 2.4.2 in the three challenged investigations by reason of the first alleged
quantitative flaw.100
5.17. On appeal, China claims that the Panel erred in failing to develop and apply a proper legal
standard under the pattern clause.101 Specifically, China argues that a test involving the concept of
standard deviation, such as the Nails test, does not allow the authority to draw "valid conclusions"
unless the data form a normal or a single -peaked and symmetrical distribution.102
The United States responds that the Panel finding at issue is a factual finding 103, and that China's
appeal reveals that it is in fact challenging the Panel's weighing and ap preciation of facts, in
particular, evidence related to "the study of statistics" , as well as to "the Nails test and how it
operates".104 The United States thus submits that we should dismiss China's claim as China should
have but failed to raise a claim under Article 11 of the DSU.105 Accordingly, the first question
before us is whether China's claim pertaining to the first alleged quantitative flaw could be raised
on appeal as a claim regarding the Panel's interpretation or application of Article 2.4.2 of the
Anti-Dumping Agreement.
5.18. We recall that t he Appellate Body has stated that, in most cases, the issue raised by a
particular claim "will either be one of application of the law to the facts or an issue of the objective

92 Panel Report, para. 7.56 (referring to China's comments on the United States' response to Panel
question No. 93, para. 3) and para. 7.57 (referring to China's response to Panel question No. 6(c), para. 45;
and response to Panel question No. 6(a), para. 36).
93 Panel Report, para. 7.56.
94 Panel Report, para. 7.59.
95 Panel Report, para. 7.62.
96 Panel Report, para. 7.62.
97 Panel Report, para. 7.63.
98 Panel Report, para. 7.64.
99 Panel Report, para. 7.67.
101 China's appellant's submission, para. 69.
102 China's appellant's submission, para. 71.
103 The United States argues that the Panel rejected China's claim on the basis that it had not
established the factual premise of its claim, namely, that the Nails test depended on the assumption that the
data were normally distributed, or single-peaked and symmetric. (United States' appellee's submission,
paras. 80-81)
104 United States' appellee's submission, paras. 87-88. See also para. 82.
105 United States' appellee's submission, para. 96.

assessment of facts, and not both".106 At the same time, the Appellate Body has recognized that it
is often difficult to distinguish clearly between issues that are purely legal or purely factual, or are
mixed issues of law and fact.107 The Appellate Body has clarified, however, that "'[t]he consistency
or inconsistency of a given fact or set of facts with the requirements of a given treaty provision ' is
a question of legal characterization and, therefore, a legal question. "108 With these considerations
in mind, we assess whether, as the United Stat es contends, the Panel finding at issue is a factual
finding and whether China is challenging the Panel's weighing and appreciation of evidence.
5.19. In its analysis of China's claim, t he Panel considered that there was no textual basis in
Article 2.4.2 to limit a pattern to "outliers". 109 The Panel also disagreed with "China's contention
that where a large number of export transactions are made at prices that are one standard
deviation below the CONNUM -specific weighted -average price, such prices cannot form the
relevant pattern within the meaning of the pattern clause of Article 2.4.2."110 The Panel
considered, based on the text of the second sentence of Article 2.4.2, that a pattern, as properly
understood under that provision, may be composed of a large number o f transactions. On this
basis, the Panel found that China had not shown that the Nails test could only be used if the export
price data were normally distributed , or single -peaked and symmetric .111 What the Panel
ultimately found is that China had failed to show that the Nails test relied on an implicit
assumption regarding the distribution of the export prices for that test to identify properly a
pattern within the meaning of the second sentence of Article 2.4.2. This is a legal conclusion
reached by the Panel in light of its interpretation of the pattern clause as allowing a pattern to be
composed of a large number of transactions. In reaching this conclusion, the Panel addressed the
legal issue of whether the USDOC failed to identify a pattern of export pri ces which differ
significantly within the meaning of the second sentence of Article 2.4.2 because of the first alleged
quantitative flaw in the three challenged investigations . Therefore, while w e agree with the
United States that the manner in which the N ails test operates and whether the Nails test is
premised on an assumption tha t data are distributed in a certain manner involve factual
considerations112, the Panel's finding regarding the first alleged quantitative flaw involves a legal
characterization and addresses a legal issue under the second sentence of Article 2.4.2.
5.20. Turning to China's appeal, China submits that the USDOC would have had to examine the
underlying price distribution to confirm that the distribution is normal, or single -peaked and
symmetrical for the Nails test to be capable of establishing the existence of a pattern "in an
objective and unbiased manner" .113 This is because, according to China, if the export price data
distribution is neither normal nor single -peaked and symmetrical, the N ails test will lead to
arbitrary conclu sions as to the existence of a pattern .114 Contrary to the United States'
suggestion115, the essence of China's appeal is not to challenge the Panel's weighing and
appreciation of evidence pertaining to certain statistica l principles or the Nails test . What China
takes issue with is the Panel's assessment of whether the Nails test applied by the USDOC in the
three challenged investigations identified a pattern consistently with the second sentence of
Article 2.4.2. Based on the foregoing, we consider that China's claim pertaining to the first alleged
quantitative flaw should be treated as one concerning the Panel's interpretation and application of
the second sentence of Article 2.4.2. We therefore reject the United States' contention that we

106 Appellate Body Report, EC – Fasteners (Article 21.5 – China), para. 5.46 (quoting Appellate Body
Report, China – GOES, para. 183, in turn quoting Appellate Body Report, EC and certain member States –
Large Civil Aircraft, para. 872 (emphasis original)).
107 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 872.
108 Appellate Body Report, EC – Fasteners (Article 21.5 – China), para. 5.46 (quoting Appellate Body
Report, China – GOES, para. 183, in turn quoting Appellate Body Report, EC ‒ Hormones, para. 132).
109 Panel Report, para. 7.61.
110 Panel Report, para. 7.63.
111 Panel Report, para. 7.67. In its analysis, the Panel also considered that there was "no correlation
between the supposed statistical problem highlighted by China, namely, that a large number of export price
transactions will be one standard deviation below the CONNUM-specific weighted average export price when
data are not normally distributed or single-peaked and symmetric and what the USDOC was trying to achieve
through the use of the one standard deviation threshold, i.e. identify whether the weighted average export
price to the alleged target was lower than the CONNUM-specific weighted average export price". (Ibid.,
para. 7.64)
112 United States' appellee's submission, para. 94.
113 China's appellant's submission, para. 71.
114 China's appellant's submission, para. 93.
115 United States' appellee's submission, paras. 87-88.

should dismiss China's claim because China should have but failed to raise a claim under Article 11
of the DSU.116
5.21. Having reached this conclusion, we address the merit of China's claim under the
second sentence of Article 2.4.2 of the Ant i-Dumping Agreement. We recall that the first condition
set forth in the second sentence of Article 2.4.2 is that " the authorities find a pattern of export
prices which differ significantly among different purchasers, regions or time periods ".
In US ‒ Washing Machines , the Appellate Body considered that a pattern is "[a] regular and
intelligible form or sequence discernible in certain actions or situations".117 Accordingly, there must
be regularity to the sequence of "export prices which differ significantly" and this sequence must
be capable of being understood.118 In particular, the word "intelligible" excludes the possibility of a
pattern merely re flecting random price variation .119 This means that an investigating authority is
required to "identify a regular s eries of price variation s relating to one or more particular
purchasers, or one or more particular regions, or one or more particular time periods to find a
pattern".120 Although the Appellate Body recognized that a pattern may be identified in a variety of
factual circumstances, it considered that the relevant "pattern" for the purposes of the
second sentence of Article 2.4.2 comprises prices that are significantly lower than other export
prices121, as identified either among different purchasers, or among different regions, or among
different time periods.122 The Appellate Body concluded:
[A] "pattern" for the purposes of the second sentence of Article 2.4.2 comprises all the
export prices to one or more particular purchasers which differ significantly from the
export prices to the other purchasers because they are significantly lower than those
other prices, or all the export prices in one or more particular regions which differ
significantly from the export prices in the other regions because they are signific antly
lower than those other prices, or all the export prices during one or more particular
time periods which differ significantly from the export prices during the other time
periods because they are significantly lower than those other prices.123
5.22. Under the second sentence of Article 2.4.2 , it is the investigating authority that is tasked
with establishing the existence of such a pattern. This provision , however, does not prescribe a
particular method for identifying a pattern. We thus agree with the Panel that while the pattern
clause "specifies what an investigating authority should find … it does not prescribe how an
investigating authority should make such a finding. "124 Accordingly, investigating authorities enjoy
a margin of discretion regarding the meth ods or tools they wish to use in establishing the
existence of a pattern. However, irrespective of the method used, investigating authorities are
required to identify "a pattern of export prices which differ significantly among different
purchasers, regions or time periods" within the meaning of the second sentence of Article 2.4.2
and consistently with their obligations under the Anti-Dumping Agreement.
5.23. China acknowledges that the USDOC was free to use statistical tools to identify a pattern in
the three challenged investigations. 125 According to China , however, statistical tools cannot be
applied in a way that is disconnected from the analytical framework in which they were developed,
or in disregard of the assumptions on which they rest. 126 China argues that using a one standard
deviation threshold, "according to statistics, should generate output of 15.87% of sales beyond the
[one standard deviation] threshold ".127 By contrast, w hen the data distribution is not normal or
single-peaked and symmetrical , large qu antities of sales (sometimes more than 50%) may fall

116 United States' appellee's submission, para. 96.
117 Appellate Body Report, US – Washing Machines, para. 5.25 (quoting Panel Report, US ‒ Washing
Machines, para. 7.45). The participants agree with this definition. (China's appellant's submission, para. 82;
United States' appellee's submission, para. 32)
118 Appellate Body Report, US – Washing Machines, para. 5.25.
119 Appellate Body Report, US – Washing Machines, para. 5.25 (referring to Panel Report, US ‒ Washing
Machines, para. 7.45).
120 Appellate Body Report, US – Washing Machines, para. 5.32.
121 Appellate Body Report, US – Washing Machines, para. 5.36.
122 Appellate Body Report, US – Washing Machines, para. 5.34.
123 Appellate Body Report, US – Washing Machines, para. 5.36. (emphasis original)
125 China's appellant's submission, para. 88.
126 China's appellant's submission, paras. 69 and 89.
127 China's appellant's submission, para. 109.

below the one standard deviation threshold. 128 To China, the USDOC thus identified prices that
were "quite typical of the relevant market , thereby undermining the exceptional nature of the
W-T comparison m ethodology".129 While acknowledging that a properly identified pattern under
the second sentence of Article 2.4.2 may be composed of a large number of export transactions130,
China takes issue with the fact that the Nails test "routinely" discerned large quant ities of sales
below the one standard deviation threshold. 131 China concludes that, if the export price data are
not normally distributed, or single -peaked and symmetric, using a one standard deviation
threshold will lead to "arbitrary conclusions" as to the existence of a pattern. 132 China specifies
that its claim is rooted in the legal concepts of "pattern" and "significance" used in the pattern
clause.133
5.24. The United States responds that nothing in the second sentence of Article 2.4.2 compels an
investigating authority to undertake the particular kind of "statistical probability analysis"
discussed by China, even if that authority choose s to use the concept of standard deviation .134
Moreover, the United States argues that, under the Nails test, the USDOC was not engaging in a
statistical analysis, and that it did not make statistical inferences. 135 Rather, according to the
United States, the USDOC used the one standard deviation threshold as "a transparent,
predictable, and objective metric to characterize an exporter's pricing behavior".136
5.25. As recalled above, a pattern may not reflect random price variation, in the sense that the
sequence of "export prices which differ significantly" must be both regular and intelligible .137 As
the Appellate Body has noted, in agreemen t with the panel in US – Washing Machines ,
"[i]f particular prices are observed to differ in respect of a particular purchaser, region or time
period, those prices may be treated as a regular and intelligible form or sequence relating to that
purchaser, re gion or time period" , and "[t]he price differences are 'regular' and 'intelligible'
because they pertain only to that particular purchaser, region or time period."138
5.26. Regarding the term "significantly" in the pattern clause, China observes that , "with regard
to statistics", the adjective "significant" is defined as "unlikely to have occurred by chance
alone".139 As the Appellate Body in US ‒ Washing Machines noted, the adjective "significant" can
be defined as "important, notable or consequential" .140 It thus su ggests something that is more
than just a nominal or marginal difference in prices.141 As the Appellate Body also observed,
"[u]nder the second sentence of Article 2.4.2, the something that must be important, notable, or
consequential is the difference in ex port prices. "142 We consider, therefore, that t he term
"significantly" as used in the pattern clause should not be read as conveying the specialized
statistical meaning suggested by China.
5.27. With these considerations in mind, we observe that neither the text of the second sentence
of Article 2.4.2 of the Anti-Dumping Agreement nor the context suggests how many export prices
may fall within a pattern under the second sentence of Article 2.4.2 in proportion to the number of
export prices outside the pattern. The second sentence of Article 2.4.2 does not specify whether a
pattern can comprise only a small proportion of all transactions. Under that provision, t he
investigating authority is tasked with identifying prices that fall within the pattern because those

128 China's appellant's submission, para. 109. As China further argues, "when the authority relies on a
standard-deviation-based threshold without having tested for the shape of the underlying price distribution, an
unknown number of export prices will fall below … that threshold". (Ibid., para. 90)
129 China's appellant's submission, para. 110. (emphasis original)
130 China's response to questioning at the oral hearing.
131 China's appellant's submission, para. 109. To China, this is "symptomatic" of a serious flaw. (Ibid.)
132 China's appellant's submission, para. 93.
133 China's appellant's submission, para. 83; response to questioning at the oral hearing.
134 United States' appellee's submission, paras 117-122 and 129.
135 United States' appellee's submission, para. 130.
136 United States' appellee's submission, para. 133.
137 Appellate Body Report, US – Washing Machines, para. 5.32.
138 Appellate Body Report, US – Washing Machines, para. 5.34 (quoting Panel Report, US ‒ Washing
Machines, para. 7.46).
139 China's appellant's submission, para. 83 (quoting Oxford English Dictionary Online, definition of
"significant", <http://www.oed.com/view/Entry/179569?redirectedFrom=Significant#eid>, accessed
4 February 2015 (Panel Exhibit CHN-92). (emphasis added)
140 Appellate Body Report, US – Washing Machines, para. 5.62.
141 Appellate Body Report, US – Washing Machines, para. 5.62.
142 Appellate Body Report, US – Washing Machines, para. 5.62.

prices form a regular and intelligible sequence of "export prices which differ significantly" in that
they differ significantly from other prices and pertain to one or more purchasers (or regions or
time periods) as compared to the other purchasers (or regio ns or time periods). As set out above,
the price differences are regular and intelligible because they pertain only to the "targeted"
purchaser, region , or time period. 143 Moreover, a s the Appellate Body has found, "t he
distinguishing factor that allows that authority to discern which export prices form part of the
pattern would be that the prices in the pattern differ significantly from the prices not in the
pattern."144
5.28. We now turn to China's argument that the Nails test "routinely" discerned large quantities of
export prices below the one standard deviation threshold. 145 Neither the text of the
second sentence of Article 2.4.2 nor the context suggests the proportion of export prices that may
fall below a given price threshold when the investigating authority i s in the process of identifying a
pattern within the meaning of that provision. 146 Under the second sentence of Article 2.4.2, prices
in the pattern need to differ significantly from the prices not in the pattern.147 We also recall that a
"pattern" comprises all the export prices to one or more particular purchasers (or one or more
regions or one or more time periods) which differ significantly from the export prices to the other
purchasers (or regions or time periods) because they are significantly lower than those other
prices.148 In our view, that a large number of export prices may fall below the one standard
deviation threshold does not necessarily preclude an investigating authority from finding that the
export prices to the "target" (be it a purchaser, a re gion, or a time period) differ significantly from
the other export prices and form a pattern within the meaning of the second sentence of
Article 2.4.2.
5.29. Assuming the export prices to the "target" are found to differ from the other export prices in
a case where a large number of individual export prices fall below the one standard deviation
threshold, the pattern clause also requires the investigating authority to determine whether these
differences are significant. In addition, the second sentence of Artic le 2.4.2 requires that an
explanation be provided as to why these differences cannot be taken into account appropriately by
the use of a W -W or T -T comparison before an investigating authority may apply the
W-T methodology. As the Appellate Body has stated , the explanation clause "contemplates that
there may be circumstances in which targeted dumping could be adequately addressed through
the normal symmetrical comparison methodologies" .149 Consequently, our un derstanding of the
pattern clause does not undermine the exceptional nature of the W-T methodology.150
5.30. Finally, we note the Panel's statement that there is "no correlation" between the "supposed
statistical problem " China highlighted and what the USDOC was trying to achieve. 151 The Panel
distinguished between (i) the issue raised by China that a large number of individual export prices
may fall below the one standard deviation threshold where the data distribution is not normal or
single-peaked and symmetrical; and (ii) the objective of the standard deviation test as applied by
the USDOC in the three challenged investigations, which was to identify on the basis of weighted-
average prices whether the weighted-average export price to the alleged target was lower than
the CONNUM-specific weighted-average price. As the Panel observed, "[t] he USDOC did not apply
the Nails test to a data set which co nsisted of individual export transaction prices and did not seek
to identify how many export transactions fell one standard deviation below the CONNUM -specific
weighted average export price."152 On appeal, China argues that the act of averaging reduces the
number of data points, but "in no way affects how the underlying export prices are distributed ".153

143 Appellate Body Report, US – Washing Machines, para. 5.34.
144 Appellate Body Report, US – Washing Machines, para. 5.26.
145 China's appellant's submission, para. 109.
146 At the oral hearing, and in light of the Appellate Body report in US – Washing Machines, the
United States agreed with the European Union that the "pattern transactions" are all of the export transactions
to the alleged target, not all the export transactions that fall below the one standard deviation threshold.
147 Appellate Body Report, US – Washing Machines, para. 5.26.
148 Appellate Body Report, US – Washing Machines, para. 5.36. (emphasis original)
149 Appellate Body Report, US – Zeroing (Japan), para. 131. See also Appellate Body Report,
US ‒ Washing Machines, para. 5.18.
150 Appellate Body Report, US – Washing Machines, para. 5.18. See also Appellate Body Reports,
US ‒ Zeroing (Japan), para. 131; and US ‒ Softwood Lumber V (Article 21.5 – Canada), paras. 86 and 97.
151 Panel Report, para. 7.64.
152 Panel Report, para. 7.64.
153 China's appellant's submission, para. 112.

It further argues that using averages "increase[ed] the likelihood that [a lleged target] sales
[would] be found below the one -standard-deviation threshold." 154 We see merit in China's
allegation that , whether or not averages are used, the distribution of the underlying individual
export prices itself does not change. We are also n ot excluding the possibility that a given
distribution of individual export price s may make it more likely that the weighted -average price to
the "target" falls below the one standard deviation threshold. However, as we considered above,
the fact that a la rge number of export transactions are made at low prices and may fall below the
one standard deviation threshold does not necessarily preclude an investigating authority from
finding that the export prices to the "target" differ significantly from the other export prices and
form a pattern within the meaning of the second sentence of Article 2.4.2.
5.31. In sum, that a large number of export prices may fall below the one standard deviation
threshold where the distribution of the export price data is not normal or single-peaked and
symmetrical does not necessarily preclude an investigating authority from finding that the export
prices to the "target" differ significantly from the other export prices and form a pattern within the
meaning of the second sentence of Ar ticle 2.4.2. Accordingly, we consider that China has not
established that the standard deviation test as applied by the USDOC in the three challenged
investigations is only capable of identifying prices that differ from other export prices and form a
pattern within the meaning of the second sentence of Article 2.4.2 where the distribution of the
export price data is normal , or single-peaked and symmetrical. On this basis, we find that China
has not established that the Panel erred in its interpretation or a pplication of the second sentence
of Article 2.4.2 of the Anti -Dumping Agreement in rejecting China's claim in respect of the first
alleged quantitative flaw with the Nails test as applied in the three challenged investigations.
5.1.2.2 Whether the Panel erred un der the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement in rejecting China's claim in respect of the third alleged
quantitative flaw
5.32. The third alleged quantitative flaw with the Nails test relates to the price gap test applied by
the USDOC in the three challenged investigations in order to determine whether the differences
identified under the standard deviation test were significant.155 As set out above, under that test,
the USDOC would examine, on a CONNUM-specific basis, whether the alleged target price gap was
wider than the weighted-average non-target price gap.156
5.33. Before the Panel, China submitted that, "in terms of statistics" , in the case of any "peaked"
data distribution with "tails", the gap between any two given prices located at the tail is inherently
wider than the gaps at the peak.157 Therefore, China argued, when the USDOC found the alleged
target price gap, which was based on prices located at the tail, to be wider than the weighted -
average non-target price gap, which was based on pr ices located nearer to the peak, it merely
confirmed an "inherent feature of every peaked distribution with tails", rather than identify ing
export prices which differ significantly within the meaning of the second sentence of Article 2.4.2
of the Anti-Dumping Agreement.158
5.34. The Panel considered that the first issue was whether it is factually correct that, in the three
challenged investigations, the alleged target price gap was based on prices located at the tail of
the data distribution and the weighted -average non-target price gap was based on prices located
nearer to the peak of that distribution.159 The Panel stated that, "if [it found] this assumption to be
factually correct, [it would] have to examine whether the USDOC acted inconsistently with the
pattern clause of Article 2.4.2 because when it compared the alleged target price gap, based on
prices located at the tail of the distribution, with the weighted average non-target price gap, based
on prices nearer to the peak, it only confirmed an inherent featu re of every peaked distribution
with tails."160

154 China's appellant's submission, para. 113.
155 Panel Report, paras. 7.4 and 7.75.
157 Panel Report, para. 7.75.
158 Panel Report, para. 7.76 (quoting China's second written submission to the Panel, para. 43
(emphasis omitted by the Panel)).
159 Panel Report, para. 7.78.
160 Panel Report, para. 7.78.

5.35. After having explained the concepts of "peaks" and "tails" 161, the Panel addressed
China's argument that, if the export price data were "normally" distributed, the alleged target price
would "by definition" be located at the tail of th at distribution.162 The Panel observed that China
had presented evidence that, in the three challenged investigations, the export price data were not
normally distributed or even single-peaked and symmetric. The Panel could therefore not conclude
that the alleged target price was , as alleged by China, located at the tail of the distribution
"by definition".163 The Panel further considered that China did not show that, even though the
export price data were not normally distributed in the three challenged investigations, the
distribution still had a tail, and that the alleged target price was located at the tail .164 The Panel
concluded that "China ha[d] not shown that the assumption on which the third alleged quantitative
flaw rests, which is that the alleged target price gap was based on prices located at the tail of the
distribution of the export price data, is factually correct insofar as the three challenged
investigations are concerned. "165 On this basis, the Panel rejected China's claim i n respect of the
third alleged quantitative flaw with the Nails test.166
5.36. On appeal, China submits that "the Panel was … wrong to dismiss [its] argument that, even
assuming the existence of a 'normal' distribution, USDOC's attribution of 'significance' to wi der
price gaps in the 'tail' of the price distribution compared to price gaps closer to the 'mean' merely
confirmed an inherent feature of such distributions." 167 The United States responds that the Panel
finding at issue is a factual finding 168, and that Chin a's appeal reveals that it is in fact challenging
the Panel's weighing and appreciation of facts. 169 The United States thus submits that we should
decline to rule on China's arguments because China should have but failed to raise a claim under
Article 11 of the DSU.170 Accordingly, the first question before us is whether China's claim
pertaining to the third alleged quantitative flaw could be raised on appeal as a claim regarding the
Panel's interpretation or application of Article 2.4.2 of the Anti-Dumping Agreement. In addressing
this issue, we assess whether, as the United States contends, the Panel finding at issue is a factual
finding and whether China is challenging the Panel's weighing and appreciation of evidence.
5.37. As set out in paragraph 5.35. above, t he Panel rejected China's claim in respect of the
third alleged quantitative flaw on the sole basis that China had not shown that it was "factually
correct" that the alleged target price gap was based on prices located at the ta il of the distribution
of the export price data in the three challenged investigations. 171 In reaching this finding, t he
Panel did not examine the legal issue of whether the USDOC acted inconsistently with the pattern
clause because, when it applied the pric e gap test in cases of peaked distribution s with tails, the
USDOC only confirmed an inherent feature of that type of distribution . In our view, the Panel's
finding in respect of the third alleged quantitative flaw hinges on the Panel's assessment of China' s
factual allegations as to whether the alleged target price gap was based on prices located at a tail
of a distribution in each of the three challenged investigations. In rejecting China's claim in respect
of the third alleged quantitative flaw, the Panel nonetheless addressed the legal issue of whether

161 As the Panel explained, normally distributed data, when graphically represented, take the shape of a
bell. That bell has a single peak in the middle of the bell curve and two tails, one on the left and one on the
right. In that type of distribution, the weighted average of all prices is at the peak. Also, most of the prices are
concentrated at the peak, whereas fewer prices are located at the tail. The Panel further noted that "[b]oth
parties agree that the gaps between any two given prices located at the tail of the distribution are wider than
that at the peak of the distribution if there is normal or single-peaked and symmetric distribution."
(Panel Report, paras. 7.79-7.80)
162 Panel Report, para. 7.81.
163 Panel Report, para. 7.81.
164 Panel Report, para. 7.82.
166 Panel Report, para. 7.84.
167 China's appellant's submission, para. 72. (fns omitted)
168 The United States asserts that the Panel rejected China's claim "without having to interpret and
apply the pattern clause of Article 2.4.2 because China failed to establish the factual premise underlying its
claim." (United States' appellee's submission, para. 99)
169 The United States refers to China's arguments that: (i) the fact that the third quantitative flaw arises
only when the price distribution has a left tail does not mean that China did not demonstrate that the
assumption on which that flaw rests is factually correct; (ii) even if not normally distributed, the data for some
of the CONNUMs had left tails; and (iii) in every case, either the first or third quantitative flaw or both arose,
but there is no way to know which flaw arose in a given case, because the USDOC declined to examine the
data distribution in the three challenged investigations. (United States' appellee's submission, paras. 102-104
(referring to China's appellant submission, paras. 115-116))
170 United States' appellee's submission, para. 105.
171 Panel Report, para. 7.84.

the USDOC failed to identify a pattern of export prices which differ significantly within the meaning
of the second sentence of Article 2.4.2 because of this alleged flaw in the three challenged
investigations.
5.38. On appeal, China claims that the Panel erred in dismissing its argument that the USDOC's
attribution of "significance" to wider price gaps in the t ail of price distributions compar ed to price
gaps closer to the peak amounted to nothing more than a confirmation of an inherent
characteristic as to the shape of distributions whose existence is implici tly assumed by the test
itself.172 In support of that claim, China argues that, inter alia, the "USDOC's failure to test the
databases[,] to determine if the data were 'normally' distributed or had tails to the left of the
mean, means that the conclusions reached by USDO C in every case were random
(or arbitrary)."173 In other words, China argues that, irrespective of the actual distribution of the
data in the three challenged investigations and whether the relevant distributions had a left tail at
which the alleged target price gap was located, the USDOC failed to identify a pattern of export
prices which differ significantly because it failed to consider how the export prices were distributed.
We thus understand the focus of China's claim to be that the USDOC had an obligation to verify, in
the three challenged investigations, whether the data had a left tail and whether the alleged target
price gap was based on p rices located at that tail so as to avoid drawing random or arbitrary
conclusions as to the existence of a pattern.
5.39. Accordingly, we understand China to take issue with the fact that the Panel assessed its
claim by considering whether, as a matter of fact, in the three challenged investigations, the
alleged target price gap was based on prices located at the tail of the distribution 174, instead of
considering whether the USDOC had an obligation to verify how the data were distributed to
identify properly a p attern within the meaning of the second sentence of Article 2.4.2. To us,
whether the factual assessment conducted by the Panel was indeed relevant to make a finding
under the second sentence of Article 2.4.2 in respect of the third alleged quantitative fla w is a n
issue that should be assessed under that provision. Specifically, the issue on appeal is whether the
Panel erred under the second sentence of Article 2.4.2 in rejecting, on the basis of factual
considerations pertaining to the distribution of the e xport price data in the three challenged
investigations, China's claim that the USDOC failed to identify a pattern of export prices which
differ "significantly". This closely relate s to the legal issue that was before the Panel , namely,
whether, because of the third alleged quantitative flaw in the three challenged investigations , the
USDOC failed to identify a pattern of export prices which differ significantly within the meaning of
the second sentence of Article 2.4.2 . In light of the foregoing, we consid er that China's appeal
raises a legal issue under Article 2.4.2. W e therefore reject the United States' contention that we
should dismiss China's claim because China should have but failed to raise a claim under Article 11
of the DSU.175
5.40. Turning to the merit of China's claim, we recall China's argument that the "USDOC's failure
to test the databases[,] to determine if the data were 'normally' distributed or had tails to the left
of the mean, means that the conclusions reached by USDO C in every case were rando m
(or arbitrary)."176 The United States argues that China does not meet its burden of showing that
the Nails test, as applied in the three challenged investigations, is inconsi stent with
Article 2.4.2.177 Specifically, the United States takes issue with the fa ct that, to China, " the actual
evidence in the underlying investigations about which it has pursued 'as applied' claims, [that is],
the actual export sales data reported by respondent interested parties, does not matter. "178 It also
argues that China has failed to support its argument by using facts from the administrative records
of the three investigations that are the subject of its "as applied" challenges.
5.41. As set out earlier179, under the second sentence of Article 2.4.2 , it is the investigating
authority that is tasked with establishing the existence of a pattern. Whereas i nvestigating
authorities enjoy a margin of discretion as to how they wish to proceed in establishing the
existence of a pattern, they are required to identify a pattern within the meanin g of the

172 China's Notice of Appeal, para. 7.
174 See Panel Report, para. 7.78.
175 See United States' appellee's submission, para. 105.
177 United States' appellee's submission, paras. 140-142.
178 United States' appellee's submission, para. 140.
179 See para. 5.22. above.

second sentence of Article 2.4.2 and consistently with their obligations under the Anti -Dumping
Agreement.
5.42. However, we recall that, in WTO dispute settlement, the burden of proof rests on the party
that asserts the affirmative of a claim or defen ce. A complaining party will satisfy its burden when
it establishes a prima facie case by putting forward adequate legal arguments and evidence.
Therefore, a responding Member 's measure is considered WTO-consistent unless sufficient
evidence is presented t o establish the contrary. 180 In the instant case, China has brought
"as applied" claims pertaining to the three challenged investigations. It is thus for China to
demonstrate prima facie that, because of the third alleged quantitative flaw, the USDOC failed to
establish the existence of a "pattern of export prices which differ significantly" in the three
challenged investigations within the meaning of the second sentence of Article 2.4.2.
5.43. On appeal, China emphasizes that "any randomly chosen pair of prices i n the tail of a
peaked distribution will, by definition, tend to display a bigger gap than a randomly chosen pair of
prices near the peak." 181 This is because in "any peaked distribution of price data … a large mass
of prices occurs around the price at the p eak, whereas only a few occurrences are found in the
tails – because observations occur less frequently at those price levels ."182 China clarifies that the
third alleged quantitative flaw arises in situations in which there is a tail to the left of the mean ,
irrespective of whether the data d istribution is normal , or single-peaked and symmetrical.
Conversely, where the relevant data distribution does not have a left tail, that particular flaw does
not arise.183
5.44. As per China's submission, the third alleged quant itative flaw arises where the alleged
target price gap is based on prices located at the left tail of the data distribution. We consider that,
in light of China's "as applied" claim, China cannot successfully bring a claim of inconsistency with
the second sentence of Article 2.4.2 unless it shows that the relevant data distributions in each of
the three challenged investigations had a left tail and that the alleged target price gap was based
on prices located at th at tail. In our view, the Panel therefore c orrectly considered that
"the third alleged quantitative flaw rests on the assumption that in the three challenged
investigations, the alleged target price gap was based on prices located at the tail of the
distribution of the export price data and the wei ghted average non-target price gap was based on
prices located nearer to the peak of that distribution. "184 The Panel found that China ha d not
shown that this assumption is "factually correct insofar as the three challeng ed investigations are
concerned"185, and rejected China's claim on this basis. 186 In light of on our analysis above, we
consider that this was sufficient ground for the Panel to reject China's "as applied" claim in respect
of the third alleged quantitative flaw with the Nails test. Accordingly, the Panel did not err under
Article 2.4.2 in rejecting China's claim because "China ha[d] not shown that the assumption on
which the alleged third quantitative flaw rests, namely, that the alleged target price gap was based
on prices located at the tail of the distribution in the three challenged investigations, is factually
correct".187
5.45. In sum, the Panel considered that " the third alleged quantitative flaw rests on the
assumption that in the three challenged investigations, the alleged target price gap was ba sed on
prices located at the tail of the distribution of the export price data and the weighted average
non-target price gap was based on prices located nearer to the peak of that distribution. "188
The Panel was correct in rejecting China's claim on the basi s of its finding that China ha d not
shown that this assumption is "factually correct insofar as the three challeng ed investigations are
concerned".189 Therefore, we find that China has not established that the Panel erred in its
interpretation or application of the second sentence of Article 2.4.2 of the Anti -Dumping

180 See e.g. Appellate Body Reports, Canada – Dairy (Article 21.5 – New Zealand and US II), para. 66;
and Chile – Price Band System (Article 21.5 – Argentina), para. 134.
181 China's appellant's submission, para. 104 (referring to First expert statement by Professor Dr Peter
Egger (26 February 2015) (Panel Exhibit CHN-1 revised), para. 62).
182 China's appellant's submission, para. 104.
184 See Panel Report, para. 7.78.
185 Panel Report, para. 7.82.
186 Panel Report, para. 7.84.
187 Panel Report, para. 7.84.
188 Panel Report, para. 7.78.
189 Panel Report, para. 7.82.

Agreement in rejecting China's claim in respect of the third alleged q uantitative flaw with the
Nails test as applied in the three challenged investigations.
5.1.2.3 Whether the Panel failed to comply wi th Article 17.6(i) of the Anti -Dumping
Agreement
5.46. We now turn to China's claim that the Panel acted inconsistently with Article 17.6(i) of the
Anti-Dumping Agreement in dismissing China's claim regarding the first and third alleged
quantitative flaws.190 The United States responds that China makes no effort to substantiate its
claim under Article 17.6(i). 191 Specifically, the United States argues that " China does nothing to
support its claim beyond referring back to the elaboration of its arguments concerning th e
interpretation and application of Article 2.4.2 of the [Anti-Dumping] Agreement, which were
presented earlier in China's appellant submission."192
5.47. The first sentence of Article 17.6(i) provides that , "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." Thus, a claim alleging an
error of law or incorrect legal interpretation attributed to a panel is diffe rent from a claim that the
"assessment of the facts of the matter" by that panel is inconsistent with Article 17.6(i). A claim
under Article 17.6(i) must concern the panel's assessment of the facts of the matter and must
involve a showing that the assessme nt is inconsistent with this provision. For this reason, a claim
under Article 17.6(i) should not be made merely subsidiary to a claim that the panel erred in its
application of a WTO provision . Moreover, the Appellate Body has cautioned that it " will not
interfere lightly with [a] panel's exercise of its discretion" under Article 17.6(i). 193 Accordingly,
"[a]n appellant must persuade [the Appellate Body], with sufficiently compelling reasons, that [it]
should disturb a panel's assessment of the facts". 194
 For a claim to succeed under Article 17.6(i), it
is not sufficient for an appellant simply to disagree with the panel's weighing of the evidence,
without substantiating the claim of error by the panel.195
5.48. In support of its claim under Article 17.6(i), China arg ues that , "in dismissing [its]
arguments regarding the first and third quantitative flaws, the Panel failed to ensure that USDOC's
establishment of the facts was proper; and by approving the Nails [t]est applied in the
[three] challenged determinations, the Panel permitted USDOC to evaluate the relevant facts in a
manner that fell short of being objective and unbiased." 196 In bringing its claim, China does not
challenge the Panel's assessment of the facts pursuant to Article 17.6(i). China's claim is neither
about the Panel's determination of whether the USDOC's establishment of the facts was proper,
nor is it about the Panel's determination of whether the USDOC's evaluation of those facts was
unbiased and objective. China appears merely to take issue with the Panel's dismissal of its claim
in respect of the first and third alleged quantitative flaws with the Nails test . In particular, China
does not advance any argument that is separate and different from its arguments concerning the
alleged error in the Panel's interpretation and application of the second sentence of Article 2.4.2 of
the Anti-Dumping Agreement. This does not suffice for us to find that the Panel failed to comply
with Article 17.6(i).197 For this reason, we find that China has not established tha t the Panel failed
to comply with Article 17.6(i) of the Anti-Dumping Agreement.
5.49. In light of all the considerations above, we uphold the Panel's finding, in paragraph 8.1.a.vi
of its Report, that "China has not established that the United States acted inc onsistently with

191 United States' appellee's submission, para. 150. Moreover, the United States contends that China's
claim under Article 17.6(i) of the Anti-Dumping Agreement must fail because China should have raised a claim
also under Article 11 of the DSU. (Ibid., para. 149)
192 United States' appellee's submission, para. 153 (referring to China's appellant's submission,
para. 123).
193 Appellate Body Report, EC – Tube or Pipe Fittings, para. 125 (quoting Appellate Body Report,
EC ‒ Bed Linen (Article 21.5 – India), para. 169, in turn quoting Appellate Body Report, US – Wheat Gluten,
para. 151).
194 Appellate Body Report, EC – Tube or Pipe Fittings, para. 125 (quoting Appellate Body Report,
EC ‒ Bed Linen (Article 21.5 – India), para. 170).
195 Appellate Body Report, EC – Tube or Pipe Fittings, para. 128.
196 China's appellant's submission, para. 123.
197 In reaching this conclusion, we do not need to address whether, as the United States contends,
China's challenge should have proceeded also under Article 11 of the DSU.

Article 2.4.2 of the Anti -Dumping Agreement in the OCTG, Coated Paper and Steel Cylinders
investigations" insofar as this finding relates to the first and third alleged quantitative flaws with
the Nails test.198
5.1.3 Qualitative issues
5.50. China claims that the Panel erred in its interpretation and application of the second sentence
of Article 2.4.2 of the Anti -Dumping Agreement because it failed to recognize that investigating
authorities are required to consider objective market factors in determini ng whether relevant
pricing differences are "significant".199
5.51. The Panel found that , in determining whether export prices "differ significantly" within the
meaning of the second sentence of Article 2.4.2 of the Anti -Dumping Agreement, an investigating
authority is not required to consider the reasons for the identified differences in export prices. 200
The Panel further disagreed with China that an investigating authority is required to examine
whether the quantitatively significant differences in export prices e xamined under the pattern
clause are unconnected with "targeted dumping". 201 The Panel clarified, however, that "the word
'significant', as used in the pattern clause …, has a qualitative dimension in addition to a
quantitative one" and that, accordingly, "p urely larger quantitative or numerical differences
cannot, in all factual circumstances, lead to the conclusion that the identified differences in export
prices forming the relevant pattern are significant within the meaning of the pattern clause of
Article 2.4.2, without regard to whether such differences are also qualitatively significant."202
5.52. The Panel considered that , "when an investigating authority examines whether observed
quantitative differences in export prices forming the relevant pattern are quali tatively significant,
that authority is required to consider how such export prices differ and not why they differ." 203 In
this respect the Panel noted that , "[w]hen examining how export prices differ, the investigating
authority may find that a given margin of difference in export prices, which are in mathematical or
numerical terms, 'sufficiently great', are not 'worthy of attention' and hence not 'significant', in
light of the circumstances surrounding an investigation, including most importantly the natur e of
the product under investigation and the relevant industry."204
5.53. The Panel thus concluded that "the USDOC was not required to consider the reasons for the
differences in export prices forming the relevant pattern in order to determine whether those
differences were qualitatively significant within the meaning of the pattern clause of Article 2.4.2"
and, accordingly, "reject[ed] China's claim under the pattern clause of Article 2.4.2 in the
three challenged investigations insofar as it relates to the allege d qualitative issues with the
Nails test."205
5.54. China requests us to modify the Panel's interpretation of the second sentence of
Article 2.4.2 of the Anti -Dumping Agreement and find that investigating authorities must consider
qualitative factors when examinin g whether export prices "differ significantly" within the meaning
of that provision.206 According to China, although investigating authorities may not be required to
consider an exporter's subjective motivation or intent behind the observed price differences 207,
they are required to consider relevant "objective market factors", such as seasonality or
market‒driven fluctuations in the costs of production. 208 China thus takes issue with the Panel's
distinction between how and why prices differ and with the fact that the Panel focused on a narrow
reading of the word "reasons" that was used by China. According to China, a distinction between
how and why prices differ is meaningless, unless it is equated with a distinction between "objective
market factors" and "subjective intent".209 Moreover, the Panel should have recognized that China

198 Having upheld this finding, we need not examine China's request for completion of the legal analysis.
199 China's appellant's submission, para. 157. See also paras. 187-190.
200 Panel Report, paras. 7.107-7.108.
201 Panel Report, para. 7.109.
202 Panel Report, para. 7.110.
203 Panel Report, para. 7.111.
204 Panel Report, para. 7.111.
205 Panel Report, para. 7.114.
206 China's appellant's submission, para. 188.
207 China's appellant's submission, para. 163.
208 China's appellant's submission, para. 157.
209 China's appellant's submission, para. 179.

used the word "reasons" to refer to "objective reasons" – i.e. objective market factors – not the
subjective intent of exporters. 210 China also highlights that, in its analysis, the Panel r elied on the
panel's findings in US – Washing Machines, which have since been reversed on appeal. 211 Turning
to the Panel's finding that the United States did not act inconsistently with the second sentence of
Article 2.4.2 with respect to the alleged qualit ative issues with the Nails test, China requests us to
reverse this finding by the Panel.212
5.55. The United States responds that China's proposed interpretation of the second sentence of
Article 2.4.2 is at odds with the Appellate Body's findings in US – Washing Machines and is not
supported by the text of that provision. 213 The United States argues that the Panel did not find, as
China suggests, that investigating authorities are not required to consider "objective market
factors" in determining whether relevant p rice differences are significant 214 and that China's
alleged "objective market factors" are in fact "reasons" underlying the export price differences,
which need not be taken into account by investigating authorities. 215 According to the
United States, seasona lity and market –driven fluctuations in the costs of production, unlike the
"objective market factors" identified by the Appellate Body in US – Washing Machines , do not
relate to how the export prices are different and whether the observed differences are s ignificant
in a qualitative sense. Rather, the United States contends, seasonality and costs fluctuations aim
to assess whether there are reasons for export price differences other than "targeted dumping". 216
Finally, for the United States, China's criticism of the Panel Report for drawing support from the
panel report in US – Washing Machines is baseless given that the Panel did not agree with the
specific finding in that case that was subsequently reversed on appeal.217
5.56. The second sentence of Article 2.4.2 of the Anti-Dumping Agreement states:
A normal value established on a weighted average basis may be compared to prices of
individual export transactions if the authorities find a pattern of export prices which
differ significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weighted average -to-weighted average or
transaction-to-transaction comparison.
5.57. In US – Washing Machines, the A ppellate Body interpreted the term "significantly" in the
pattern clause as having both quantitative and qualitative dimensions , and thus considered that
assessing the extent of the differences in export prices in order to establish whether those export
prices differ significantly for the purposes of the second sentence of Article 2.4.2 entails both
quantitative and qualitative dimensions.218 The Appellate Body reversed the panel's finding s in
US ‒ Washing Machines219, to the extent that the panel had found that "a pattern of export prices
which differ significantly among purchasers, regions or time periods" can be established "on the
basis of purely quantitative criteria".220
5.58. In this dispute, the Panel found that "the word 'significant', as used in the pattern cl ause of
Article 2.4.2, has a qualitative dimension in addition to a quantitative one. "221 Accordingly, the
Panel stated that "purely larger quantitative or numerical differences cannot, in all factual
circumstances, lead to the conclusion that the identified differences in export prices forming the
relevant pattern are significant within the meaning of the pattern clause of Article 2.4.2, without
regard to whether such differences are also qualitatively significant." 222 We agree with these

210 China's appellant's submission, paras. 180 and 182.
211 China's appellant's submission, paras. 161 and 176.
212 China's appellant's submission, para. 190. See also paras. 156-158. The request for reversal itself is
in paragraph 158 of China's appellant's submission.
213 United States' appellee's submission, para. 217.
214 United States' appellee's submission, para. 208.
215 United States' appellee's submission, paras. 219–222.
216 United States' appellee's submission, paras. 219-222.
217 United States' appellee's submission, paras. 242-246.
218 Appellate Body Report, US – Washing Machines, para. 5.63.
219 See Panel Report, US – Washing Machines, paras. 7.52 and 8.1.a.ii. See also paras. 7.119.a and
8.1.a.v.
220 Appellate Body Report, US – Washing Machines, para. 5.66.
221 Panel Report, para. 7.110.
222 Panel Report, para. 7.110.

statements by the Pan el, to the extent that they are understood as suggesting that the term
"significantly" in Article 2.4.2 implies that, in all circumstances, a qualitative analysis is also
required. We do not read these statements by the Panel to suggest, as the panel in US – Washing
Machines did223, that there may be circumstances in which a pattern of export prices which differ
significantly within the meaning of Article 2.4.2 can be established on the basis of purely
quantitative criteria. We therefore disagree with China t hat this Panel drew support from findings
made by the panel in US ‒ Washing Machines, which were subsequently reversed by the
Appellate Body because that panel found that differences may be found to be significant based on
purely quantitative criteria.224
5.59. China also contends that the Panel erred in the interpretation of the pattern clause, because
it considered that an investigating authority is not required to take into consideration the
"objective reasons" for the price differences in its qualitative analysis of whether export prices
differ significantly. China equates these objective reasons underlying the differences in prices with
the "objective market factors", which the Appellate Body in US – Washing Machines said must be
considered in the qualitative assessment of significance. 225 China draws a distinction between
objective reasons, which it contends should be considered under the pattern clause, and subjective
intent or motivations, which need not be considered. 226 We disagree with China's characterization
of the terms "objective reasons", "motivations", and "objective market factors".
5.60. In US – Washing Machines , the Appellate Body noted that the significance of price
differences may be affected by "objective market factors", such as the nature of the product under
consideration, the industry at issue, the market structu re, or the intensity of competition in the
markets at issue, depending on the case at hand. 227 These objective market factors, however, are
relevant to the identification of a pattern within the meaning of Article 2.4.2 , insofar as they affect
the significan ce of the price differences and not because they provide reasons for the price
differences. The Appellate Body clarified that the words "significantly" and "pattern" in the
second sentence of Article 2.4.2 do not imply an examination into the cause of (or reasons for) the
differences in prices and that the text of this provision does not impose an additional requirement
to ascertain whether the significant differences found to exist are unconnected with "targeted
dumping".228 The Appellate Body noted, in this regard, that it used the phrase "cause of" the price
differences or "reasons for" the price differences to refer to the issue of whether the investigating
authority should consider if the price differences are the result of normal price fluctuations or
reflect "targeting" conduct to establish the existence of a pattern.229
5.61. In addition, the Appellate Body considered that the text of the second sentence of
Article 2.4.2 does not imply an examination of the motivation for, or intent behind, the differences
in prices.230 Therefore, while the pattern clause requires, in addition to a quantitative analysis, a
qualitative analysis of the significance of price differences, it neither requires that an investigating
authority ascertain the cause of (or objective reasons for) the price differences, nor does it require
that an authority ascertain the motivation for (or intent behind) the differences in prices.
5.62. In US – Washing Machines, the Appellate Body distinguished between the above -mentioned
"objective market factors" t hat affect the significance of price differences and the reasons for or
cause of such price differences, which need not be considered under the pattern clause. 231 The
scope and type of qualitative analysis under the pattern clause is informed by the text of the
second sentence of Article 2.4.2, which refers to a pattern of export prices which differ
"significantly". What is relevant to the pattern clause is the qualitative dimension of the
"significance" of price differences, not an overall qualitative analysis of the pattern. An inquiry into
the cause of , or reasons for , the price difference must thus be distinguished from a qualitative
assessment of the "significance" of the price differences.

223 See Panel Report, US – Washing Machines, paras. 7.52 and 8.1.a.ii. See also paras. 7.119.a and
8.1.a.v.
224 See China's appellant's submission, paras. 161 and 176.
225 China's appellant's submission, paras. 180-181.
226 China's appellant's submission, paras. 180-181.
227 Appellate Body Report, US – Washing Machines, para. 5.63.
228 Appellate Body Report, US – Washing Machines, para. 5.65.
229 Appellate Body Report, US – Washing Machines, fn 173 to para. 5.57. (emphasis omitted)
230 Appellate Body Report, US – Washing Machines, para. 5.65.
231 Appellate Body Report, US – Washing Machines, para. 5.66.

5.63. We therefore disagree with China's suggestion232 that the "objective reasons" for differences
in prices correspond to the "objective market factors" that the Appellate Body in US ‒ Washing
Machines considered may be relevant to the qualitative assessment of whether differences are
significant.233 In that dispute, the Appellate Body considered that neither the objective reasons nor
the motivations for differences in prices are relevant to the determination of whether export prices
differ significantly within the meaning of Article 2.4.2.234
5.64. We further note that the Panel state d that , in examining whether price differences are
qualitatively significant, an investigating authority "is required to consider how such export prices
differ".235 As the Panel further stated, in so doing, "the investigating authority may find that a
given margin of difference in export prices, which [is] in mathematical or numerical terms,
'sufficiently great', [is] not 'worthy of attention' and hence not 'significant', in light of the
circumstances surrounding an investigation, including most importantly t he nature of the product
under investigation and the relevant industry." 236 The P anel Report in this dispute , which was
circulated prior to the Appellate Body r eport in US ‒ Washing Machines, does not refer explicitly to
"objective market factors" and does not list all the indicative objective market factors that the
Appellate Body refers to in US – Washing Machines.237 Nevertheless, the Panel's reference to "the
circumstances surrounding an investigation" and to "the nature of the product under investigation
and the relevant industry" make it clear that the Panel considered that a qualitative assessment of
significance under the second sentence of Article 2.4.2 involves the consideration of factors such
as those that the Appellate Body mentioned as examples of "objective market factors".
5.65. China further contends that "[t]he Panel failed to recognize that the qualitative factors to be
considered are objective market factors, su ch as seasonal pricing cycles (seasonality) or
market-driven fluctuations in the costs of production." 238 In China's view , "the quantitative
difference between prices at the peak and the trough of a seasonal price cycle may not reveal
prices that 'differ significantly' in the sense of Article 2.4.2, if the numerical difference is consistent
with the regular seasonal fluctuations for the 'product under consideration' or 'the industry at
issue'."239 Moreover, China contends, "[a]nother relevant qualitative dimens ion that may have to
be examined is where the 'industry at issue' is subject to a secular decline in costs of production
over the course of the relevant time period, which may have a direct impact on the trend
(or pattern) in prices for the product at issu e."240 The United States responds that requiring an
investigating authority to consider seasonality or cost fluctuations to assess significance would
mean requiring that authority to examine "the cause of (or reasons for) the differences in
prices".241 To the United States, seasonality and cost fluctuations go to why export prices differ;
they do not provide information about how the export prices are different, and whether the
observed differences are significant.242
5.66. We have disagreed243 with China's contention th at the notion of "objective market factors",
which may be relevant to the qualitative analysis of the significance of price differences under
Article 2.4.2, includes, what China calls, "objective reasons" for the price differences.244
5.67. Factors such as the nature of the product under consideration, the industry at issue, the
market structure, or the intensity of competition in the markets are "objective market factors"
relevant to an investigating authority's qualitative evaluation under the pattern clause to t he
extent that they speak to the "significance" , or lack thereof, of the differences in export prices. In
this respect, "objective market factors" may assist an investigating authority in determining

232 China's appellant's submission, para. 181.
233 See Appellate Body Report, US – Washing Machines, para. 5.66.
234 Appellate Body Report, US – Washing Machines, para. 5.66.
235 Panel Report, para. 7.111.
236 Panel Report, para. 7.111.
237 See Appellate Body Report, US – Washing Machines, para. 5.66.
238 China's appellant's submission, para. 157.
239 China's appellant's submission, para. 169. (emphasis original)
240 China's appellant's submission, para. 169. (emphasis original)
241 United States' appellee's submission, para. 219 (quoting Appellate Body Report, US – Washing
Machines, para. 5.65).
242 United States' appellee's submission, para. 222.
243 See para. 5.63 above.
244 See China's appellant's submission, para. 180.

whether price differences are significant, understood as "important, notable or consequential". 245
In contrast, factors that provide reasons for price differences and explain whether such differences
are connected or not to "targeted dumping" are not relevant to the qualitative evaluation of
whether those price differences are significant within the meaning of the pattern clause.
5.68. Turning to China's arguments about market-driven fluctuations in the costs of production
and seasonality, we observe, first, that a decline in the costs of production is not concerned with
the significance of export price differences but rather with the very reasons for , or cause of, such
differences. Price differences may be due to a decline in the costs of production rather than to
"targeted dumping". We therefore do not agree with China that a decline in production costs
should form part of the investigating authority's qualitative analysis in assessing the significance of
price differences under the pattern clause . Regarding season ality, to the extent that seasonal
variations in the pr ices of goods explain why export prices vary over time periods, they relate to
the "reasons" for the price differences and thus need not be considered under the pattern clause .
Nevertheless, to the extent that seasonal price variations – which are inherent in the nature of a
product, the industry at issue, or the market structure – speak to the significance, or lack thereof,
of such price differences, they may be relevant to the qualitative assessment under the pattern
clause of whether identified differences in export prices differ "significantly".
5.69. In concluding that the reasons for price differences are not relevant to the determination of
whether export prices differ significantly, we a re aware that the qualitative analysis in the
second sentence of Arti cle 2.4.2 may not end with the assessment of the significance of price
differences under the pattern clause. The second sentence of Article 2.4.2 also requires
investigating authorities to provide an explanation " as to why such differences cannot be taken
into account appropriately by the use of a weighted average-to-weighted average or
transaction-to-transaction comparison". While the reasons behind differences in export prices are
not part of the qualitative analysis that is required under the pattern cla use in order to establish
whether such differences are significant, such reasons may be relevant to an investigating
authority's explanation of why the differences in export prices cannot be taken into account
appropriately by the use of either the W-W or the T-T methodology.246
5.70. In light of the above, we consider that the Panel did not err in its interpretation of the
second sentence of Article 2.4.2 of the Anti -Dumping Agreement in finding that investigating
authorities are not required to examine the reasons for the relevant differences in export prices247,
or whether those differences are unconnected to "targeted dumping"248, in order to assess whether
export prices differ "significantly". We also consider that, while it did not explicitly refer to
"objective market factors" , the Panel correctly concluded that an investigating authority should
undertake a qualitative analysis of the significance of export price differences. We thus disagree
with China's contention that the Panel erred in interpreting and applyi ng the second sentence of
Article 2.4.2 because it found that "investigating authorities [are not required] to consider
objective market factors in determining whether relevant pricing differences are 'significant'".249
5.71. We therefore uphold the Panel's findi ngs, in paragraphs 7.114 and 8.1.a.viii of its Report,
that "the USDOC was not required to consider the reasons for the differences in export prices
forming the relevant pattern in order to determine whether those differences were qualitatively
significant within the meaning of the pattern clause of Article 2.4.2 " and that, accordingly, "China
has not established that the United States acted inconsistently with Article 2.4.2 of the
Anti-Dumping Agreement in the OCTG, Coated Paper and Steel Cylinders investigations because of
the alleged qualitative issues with the Nails test".

245 Appellate Body Report, US – Washing Machines, para. 5.62.
246 We note that the panel in US – Washing Machines found that "the explanation clause is needed
because there may be factors other than targeted dumping that may cause export prices to differ" and that
"[p]rice differences caused by factors other than targeted dumping may 'normally' be taken into account
appropriately by one of the 'normal' comparison methodologies provided for in the first sentence of
Article 2.4.2." (Panel Report, US – Washing Machines, para. 7.73) These findings by the panel in
US ‒ Washing Machines were not appealed.
247 Panel Report, para. 7.108.
248 Panel Report, para. 7.109.
249 China's appellant's submission, heading IV.

5.1.4 Use of averages in determining a "pattern"
5.72. We now turn to the Panel's examination of the USDOC's use of weighted -average export
prices, under the Nails test applied in the three challe nged investigations, to determine a "pattern"
within the meaning of the second sentence of Article 2.4.2 of the Anti-Dumping Agreement.250
5.73. China appeals the Panel's finding that China ha d not established that the United States
acted inconsistently with Arti cle 2.4.2 in the three challenged investigations by determining the
relevant pattern on the basis of averages, as opposed to individual export transaction prices. 251
Specifically, China claims that the Panel erred in its interpretatio n and application of the
second sentence of Article 2.4.2 to the three challenged investigations because it found that this
provision allowed the USDOC to determine a pattern on the basis of averages. 252 For China, the
second sentence of Article 2.4.2 requires that a pattern be det ermined only on the basis of
individual export prices, not average prices.253 Furthermore, China contends that the USDOC's use
of averages in the three challenged investigations was inherently biased because it increased the
likelihood of finding a pattern under Article 2.4.2, and was thus inconsistent with this provision.254
In this respect, China also contends that the Panel's evaluation of the USDOC's determination was
contrary to the standard of review under Article 17.6(i) of the Anti -Dumping Agreement, because
the Panel failed to find that the USDOC's use of averages was inherently biased. 255 China requests
us to reverse the Panel's finding in paragraphs 7.128 and 8.1.a.ix of the Panel Report. 256 China
also requests us to complete the analysis and find that th e United States acted inconsistently with
the second sentence of Article 2.4.2, in the three challenged investigations, by determining a
pattern on the basis of averages, as opposed to individual export prices.257
5.74. The United States responds that the Panel di d not err in its interpretation of the
second sentence of Article 2.4.2 by finding that a pattern for purposes of this provision can be
determined on the basis of averages. 258 To the United States, this provision does not prohibit the
use of averages under t he pattern clause. 259 The United States also contends that China's claim
under Article 17.6(i) of the Anti -Dumping Agreement must fail because China's arguments are
merely consequential of, or made redundant by, its substantive arguments under Article 2.4.2.260
For these reasons, the United States requests us to reject China's claims.261 Should we reverse the
Panel's finding at issue, the United States submits that we would be unable to complete the
analysis, given the lack of sufficient undisputed facts on the record.262
5.75. The Panel found that China ha d not established that the United States acted inconsistently
with Article 2.4.2 in the three challenged investigations by finding a pattern on the basis of
averages.263 Examining the text of the second sentence of Articl e 2.4.2, the Panel concluded that
this provision does not preclude an investigating authority from finding a pattern on the basis of
averages. Rather, the Panel considered that Article 2.4.2 provides investigating authorities with

250 As noted by the Panel, in the three challenged investigations, the USDOC used CONNUM-specific
weighted-average export prices for each purchaser (in the Coated Paper investigation) and for each
time period (in the OCTG and Steel Cylinders investigations) in both stages of the Nails test – i.e. the standard
deviation test and the price gap test. (Panel Report, paras. 7.5 and 7.115) In this Report, we refer to the
weighted-average export prices relied on by the USDOC in the three challenged investigations as "averages" or
"average prices".
251 China's appellant's submission, para. 126 (referring to Panel Report, paras. 7.115-7.128).
252 China's appellant's submission, paras. 126-127, 133, 147, and 153.
253 China's appellant's submission, paras. 127, 134, and 147.
254 China's appellant's submission, paras. 128, 144-146, and 149-151.
255 China's appellant's submission, paras. 133, 148, and 153.
256 China's appellant's submission, paras. 154 and 630.
257 China's appellant's submission, paras. 155 and 631.
258 United States' appellee's submission, paras. 161-162, and 185.
259 United States' appellee's submission, paras. 9 and 167. The United States submits that the focus in
the second sentence of Article 2.4.2 is on the differences in export prices among different purchasers, regions,
or time periods, not on individual export transactions per se. (Ibid., para 167) In addition, the United States
contends that the average prices reflect the individual export prices, and that the examination of averages and
of individual export prices are thus not mutually exclusive. (Ibid., paras. 161 and 172-173)
260 United States' appellee's submission, paras. 188-191. Moreover, the United States contends that
China's claim under Article 17.6(i) of the Anti-Dumping Agreement must fail because China should have raised
a claim also under Article 11 of the DSU. (Ibid., para. 187)
261 United States' appellee's submission, para. 196.
262 United States' appellee's submission, paras. 198-202.
263 Panel Report, paras. 7.128 and 8.1.a.ix.

discretion to determine a pattern on the basis of averages or individual export prices. 264 With
respect to the question of whether the Nails test was biased towards finding a pattern under
Article 2.4.2, the Panel considered that China's argument was based on the view that, by relyi ng
on averages, the USDOC failed to consider variations in the prices for the same purchaser or time
period. Given that the Panel had found that the second sentence of Article 2.4.2 provided the
USDOC with discretion to use individual export transaction pr ices or average prices when
determining a pattern, the Panel did not believe that the USDOC's determination in the three
challenged investigations could be considered biased simply because the method that it chose led
to an outcome that was less favourable to exporters.265
5.76. Turning to our analysis, we first examine China's claim that the Panel erred in its
interpretation and application of the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement. Thereafter, we examine China's claim that the Panel fa iled to comply
with Article 17.6(i) of the Anti-Dumping Agreement.
5.77. The second sentence of Article 2.4.2 of the Anti -Dumping Agreement provides, in relevant
part, that "[a] normal value established on a weighted average basis may be compared to prices of
individual export transactions if the authorities find a pattern of export prices which differ
significantly among different purchasers, regions or time periods".266
5.78. On its face, the text of the pattern clause does not prescribe a specific method for
identifying a "pattern", in particular whether individual export transaction prices or average prices
must be used. Rather, it specifies what an investigating authority must find before resorting to the
W-T methodology, namely, "a pattern of export prices which di ffer significantly among different
purchasers, regions or time periods ". Thus, regardless of the particular method chosen, such
method must be capable of identifying a pattern that is consistent with the requirements stipulated
in the pattern clause. As explained earlier267, in the context of the second sentence of Article 2.4.2
of the Anti -Dumping Agreement, a "pattern" is a regular and intelligible form or sequence of
"export prices which differ significantly". This means that there must be regularity to th e sequence
of prices and that this sequence must be capable of being understood.268
5.79. In Article 2.4.2 of the Anti -Dumping Agreement, the term "pattern of export prices" is
followed by the phrase "which differ significantly". The Appellate Body has explained that the
wording "prices which differ" indicates that the focus of the pattern is on the prices that are found
to differ. Therefore, while an investigating authority would analyse the prices of all export
transactions made by the relevant exporter or produ cer to identify a pattern, "the distinguishing
factor that allows that authority to discern which export prices form part of the pattern would be
that the prices in the pattern differ significantly from the prices not in the pattern."269
5.80. The final part of th e pattern clause specifies that a pattern involves export prices which
differ significantly in relation to specified groups, namely , "among different purchasers, regions or
time periods". The term "among" emphasizes membership of a group. Something belongs to a
group when it shares certain common characteristics with the other members of that group or has
some form of relationship with them. 270 Specifically in the context of the pattern clause, the term
"among" serves to specify the parameters in relation to which "export prices which differ
significantly" may be discerned – i.e. purchasers, regions or time periods.271

264 Panel Report, para. 7.124.
265 Panel Report, para. 7.127.
266 The second sentence of Article 2.4.2 of the Anti-Dumping Agreement also contains a
second condition for the use of the W-T methodology, namely, that "an explanation [be] provided as to why
such differences cannot be taken into account appropriately by the use of a weighted average-to-weighted
average or transaction-to-transaction comparison."
267 See para. 5.21 above.
268 Appellate Body Report, US – Washing Machines, paras. 5.25 and 5.27. According to the
Appellate Body, this understanding of a pattern excludes the possibility of a pattern merely reflecting random
price variation. (Ibid., paras. 5.25 and 5.32)
269 Appellate Body Report, US – Washing Machines, para. 5.26. See also Appellate Body Report,
US ‒ Zeroing (Japan), para. 135.
270 Appellate Body Report, US – Washing Machines, para. 5.31.
271 Appellate Body Report, US – Washing Machines, paras. 5.30-5.31.

5.81. On the basis of the foregoing, the Appellate Body has explained that a "pattern" within the
meaning of the second sentence of Article 2.4.2 of t he Anti-Dumping Agreement comprises all of
the export prices for one or more purchasers, regions, or time periods which differ significantly
from, respectively, the export prices for the remaining purchasers, regions, or time periods
because they are significantly lower than the prices in the latter group.272
5.82. We now turn to the question of whether the pattern clause requires the use of individual
export transaction prices, as opposed to average prices, to determine the existence of a pattern.
The finding of a pattern is not centred on the price relationship among the different export
transactions falling within the pattern, i.e. the transactions to the "targeted" purchaser, region, or
time period. Rather, the existence of a pattern depends on the price relatio nship between the
prices for one group, i.e. the "targeted" transactions , and the prices for another group, i.e. the
"non-targeted" transactions. As explained above, the distinguishing factor that allows an
investigating authority to discern which export p rices form part of the pattern is that the prices in
the pattern differ significantly from the prices not in the pattern. In addition, the relevant
difference is one "among" different purchasers, regions or time periods. As explained above, the
term "among" in the pattern clause serves to specify the parameters in relation to which "export
prices which differ significantly" may be discerned, i.e. purchasers, regions or time periods. 273
Thus, we consider that the pattern clause focuses on the price differences among different
purchasers, regions or time periods; not the differences within the prices for the "targeted"
purchaser, region, or time period.
5.83. We consider that this view is consistent with the function of the second sentence of
Article 2.4.2, which is t o allow investigating authorities to identify and address
"targeted dumping".274 As a result , an investigating authority may rely on prices of individual
export transactions or average prices in order to find a pattern, provided that the pattern meets
the re quirements stipulated in the pattern clause. In this regard, we agree with the Panel's
conclusion that the pattern clause provides investigating authorities with discretion in relation to
whether a pattern determination is to be based on individual export transaction prices or average
prices.275
5.84. China contends that a focus on individual export prices is consistent with the meaning of the
term "pattern" in the second sentence of Article 2.4.2 of the Anti -Dumping Agreement. According
to China, the term "pattern" suggests "a sufficient number of observations from which an
intelligible form or arrangement amongst those events can be discerned". 276 China explains that,
when prices are averaged, a large number of observations are collapsed into a single average
price. According to China, this "reduces the investigating authority's ability to discern a pattern in
the array of prices actually charged by an exporter, due to the absence of a sufficient number of
observations from which an intelligible form or arrangement a mongst those data can be
discerned".277 China considers that, to examine whether the observed prices form a pattern among
different purchasers, regions or time periods, an investigating authority must properly account for
the differences within the prices for a given purchaser, region, or time period.278
5.85. China's proposed definition of a pattern implies that "a sufficient number of observations"
must exist within the prices for the "targeted" purchaser, region, or time period. As explained
above, we consider tha t the pattern clause focuses on the price differences among different
purchasers, regions, or time periods , not the differences within the prices for the "targeted"
purchaser, region, or time period. Moreover, in our view, where all the relevant individual export
transaction prices are averaged using weighted -average prices by purchasers, regions, or time
periods, the differences within the prices for a given purchaser, region, or time period are
accounted for in those averages. 279 In addition, a pattern dete rmined on the basis of averages is
still based on a collection of individual export prices that form a regular and intelligible form or
sequence of export prices which differ significantly, in the sense that those prices pertain to one or
more purchasers, regions, or time periods, and are significantly lower than the export prices for

272 Appellate Body Report, US – Washing Machines, para. 5.36.
273 Appellate Body Report, US – Washing Machines, paras. 5.30-5.31.
274 Appellate Body Report, US – Washing Machines, paras. 5.17 and 5.28.
275 Panel Report, paras. 7.123-7.124.
276 China's appellant's submission, para. 142.
277 China's appellant's submission, para. 142.
278 China's appellant's submission, para. 143.
279 See United States' appellee's submission, paras. 161, 172-173, and 182.

the remaining purchasers, regions, or time periods. We thus agree with the Panel that, when a
pattern is determined through the use of averages, the pattern itself will consis t of individual
export transactions.280 For these reasons, we disagree with China that the meaning of the term
"pattern" supports the view that the use of averages is a priori prohibited by the pattern clause.
5.86. China also argues that finding a pattern solely on the basis of individual export transaction
prices ensures parallelism between the pattern clause – one of the conditions to use the
W-T methodology – and the application of the W -T methodology itself, i.e. the comparison
between the weighted average nor mal value and "prices of individual export transactions". 281
For China, it would be incongruous to interpret the pattern clause as allowing an investigating
authority to "overlook" the individual export transaction prices for purposes of determining a
pattern, when "the very purpose of the second sentence is to authorize the investigating authority
to focus on individual export prices when making a comparison with normal value ."282 In addition,
China contends 283 that its interpretation of Article 2.4.2 is consist ent with the Appellate Body's
statements in US – Zeroing (Japan) that the term "individual export transactions" in the second
sentence of Article 2.4.2 refers to "transactions that fall within the relevant pricing pattern"284, and
in US – Washing Machines that the pattern in this provision "focuses on the 'targeted'
transactions".285
5.87. We recall that the first part of the second sentence of Article 2.4.2 , concerning the
application of the W -T methodology, provides that " [a] normal value established on a weighted
average basis may be compared to prices of individual export transactions ".286 The phrase
"individual export transactions" appears only in this part of the second sentence.
5.88. The structure of the second sentence of Article 2.4.2 makes clear that this provisio n has
two distinct parts serving different purposes. 287 The first part clarifies that a normal value may be
compared to prices of "individual export transactions" in order to establish the existence of
margins of dumping. This serves the purpose of distingui shing the W -T methodology from the
normally applicable methodologies in the first sentence of Article 2.4.2. The second part of the
second sentence deals with the conditions that have to be met for an investigating authority to
have recourse to the W -T methodology. We are not convinced that the reference to "prices of
individual export transactions" in the first part of the second sentence directly informs or limits
how a pattern is to be identified in the second part of the second sentence . China's argumen t
effectively imports the phrase "individual export transactions" into the pattern clause. Moreover, in
our view, a pattern determined on the basis of average prices is nonetheless composed of
individual export transactions to which the W -T methodology may be applied. In this respect, we
agree with the United States that individual prices are not "overlooked" by an investigating
authority when those prices are included in the calculation of averages.288
5.89. In addition, unlike China, we do not read the Appellate Body's statements in
US ‒ Zeroing (Japan) and US – Washing Machines as endorsing a parallelism between the
identification of the pattern and the application of the W -T methodology to the
"pattern transactions".289 In US – Washing Machines , t he Appellate Body explained that an

280 Panel Report, para. 7.120.
281 China's appellant's submission, para. 135 (referring to the first part of the second sentence of
Article 2.4.2 of the Anti-Dumping Agreement). (emphasis original)
282 China's appellant's submission, para. 135.
283 China's appellant's submission, paras. 138-141.
284 Appellate Body Report, US – Zeroing (Japan), para. 135.
285 Appellate Body Report, US – Washing Machines, para. 5.28.
286 Emphasis added. The Appellate Body has considered that the word "individual" in the
second sentence of Article 2.4.2 of the Anti-Dumping Agreement indicates that "the W-T comparison
methodology does not involve all export transactions, but only certain export transactions identified
individually". (Appellate Body Report, US – Washing Machines, para. 5.52 (referring to Panel Report,
US ‒ Washing Machines, para. 7.22)) The Appellate Body has read the phrase "individual export transactions"
as referring to the universe of export transactions that justify the use of the W-T methodology, namely, the
"pattern transactions". (Appellate Body Reports, US – Washing Machines, para. 5.52; US – Zeroing (Japan),
para. 135)
287 For a similar view, see European Union's third participant's submission, para. 65.
288 United States' appellee's submission, paras. 172-173.
289 For ease of reference, we use the term "pattern transactions" to refer to those transactions that fall
within the relevant pattern, and we use the term "non-pattern transactions" to refer to those transactions that
do not fall within that pattern.

investigating authority has to consider all of the transactions of a given exporter or producer in
order to identify a pattern of export prices that differ significantly among different purchase rs,
regions or time periods. 290 In US – Zeroing (Japan) , the Appellate Body explained that an
investigating authority may apply the W -T methodology only to the individual export transactions
that fall within the relevant pattern. 291 While the analysis under the pattern clause takes into
account all export transactions of a given exporter or producer, the W -T methodology applies only
to certain specific export transactions of that exporter or producer. We do not consider that any
such parallelism between these two parts of the second senten ce of Article 2.4.2 of the
Anti-Dumping Agreement – which serve different purposes – would require an investigating
authority to determine a pattern under the pattern clause on the basis of individual export
transaction prices, as opposed to average prices. Rather, as e xplained above, we consider that the
pattern clause allows an investigating authority to rely on individual export transaction prices or
average prices in order to find a pattern , provided that the pattern meets the requirements
stipulated in the pattern clause.292
5.90. Moreover, China argues that an investigating authority that relies on averages is unable to
discern a pattern focused on "targeted" transactions because the scope of a pattern differs
depending on whether it is determined on the basis of individual export transactions or average
prices.293 The United States notes that China does not explain how the scope of a pattern might
differ depending on whether individual prices or average prices are used in the analysis to
determine a pattern. 294 We recall that, in US – Washing Machines, the Appellate Body explained
that the "pattern" under the second senten ce of Article 2.4.2 of the Anti -Dumping Agreement
includes all of the export prices for the "targeted" purchaser, region, or time period. 295 Thus, we
disagree wi th China that, by relying on average prices, an investigating authority is unable to
discern a pattern for the purposes of the second sentence of Article 2.4.2. This is because,
regardless of whether an investigating authority relies on individual export t ransaction prices or
average prices when determining the existence of a "pattern", the scope of the pattern will remain
the same, namely, it will comprise all of the export prices for the "targeted" purchaser, region, or
time period.
5.91. We now turn to China's contention that the Panel failed to take into account that the use of
average prices in the Nails test reduced the variability of export prices across transactions and per
purchaser.296 We recall that, in relation to both stages of the Nails test, the USDO C used average
prices for each purcha ser in the Coated Paper investigation, and average prices for each time
period in the OCTG and Steel Cylinders investigations.297

290 In US – Washing Machines, the Appellate Body explained that, "[i]n the context of identifying a
pattern of export prices among, for example, different purchasers, an investigating authority would examine
the prices of export sales made to one or more purchasers as compared to the prices of export sales made to
the other purchasers." (Appellate Body Report, US – Washing Machines, fn 115 to para. 5.26) Thus, for
purposes of determining a pattern under the pattern clause, an investigating authority must consider all of the
transactions of a given exporter or producer to all purchasers, regions, or time periods. As noted above, while
the authority would analyse the prices of all export sales made by the relevant exporter or producer, the
distinguishing factor that allows that authority to discern which export prices form part of the pattern would be
that the prices in the pattern differ significantly from the prices not in the pattern. This determination, thus, is
not focused on the price relationship among the different export transactions falling within the pattern. The
Appellate Body then explained that the function of the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement is to allow investigating authorities to identify and address "targeted dumping". In
this context, the Appellate Body stated that, "by comprising only the transactions found to differ from other
transactions, the pattern focuses on the 'targeted' transactions." (Ibid., para. 5.28)
291 In US – Zeroing (Japan), the Appellate Body compared the universe of transactions to which the
T-T methodology and the W-T methodology apply. The Appellate Body explained that the phrase "individual
export transactions" in the first part of the second sentence of Article 2.4.2 of the Anti-Dumping Agreement
refers to the transactions that fall within the relevant pattern. In this respect, the Appellate Body observed that
the universe of export transactions subject to the W-T methodology would necessarily be more limited than the
universe of export transactions to which the symmetrical comparison methodologies in the first sentence of
Article 2.4.2 would apply. (Appellate Body Report, US – Zeroing (Japan), para. 135)
292 See para. 5.83. above.
293 China's appellant's submission, para. 141 (referring to Appellate Body Report, US – Washing
Machines, para. 5.28).
294 United States' appellee's submission, para. 180.
295 Appellate Body Report, US – Washing Machines, para. 5.36.
296 China's appellant's submission, para. 144.
297 Panel Report, paras. 7.5 and 7.115.

5.92. China considers that the USDOC's use of averages in the three challenged investigations
was inherently biased because it systematically drew the one standard deviation threshold closer
to the mean as compared to where the threshold would have been had the USDOC calculated it on
the basis of individual export transaction prices. 298 China contends that, as a consequence of this
bias, there was an increased likelihood that export sales to the "targeted" purchaser or within the
"targeted" time period fell below the one standard deviation threshold. In turn, this increased the
likelihood that the USDOC would find, in the three challenged investigations, the existence of a
pattern under the second sentence of Article 2.4.2.299 China contends that the Panel should have
found that, by using average prices instead of individual export transaction prices, the U SDOC
introduced a bias towards finding a pattern, and thus failed to identify a pattern consistently with
the second sentence of Article 2.4.2.300
5.93. The United States contends that China fails to demonstrate that the USDOC's application of
the Nails test in th e three challenged investigations was inconsistent with the second sentence of
Article 2.4.2.301 In addition, the United States contests the evidence provided by China to show
that, in the three challenged investigations, the outcome was biased as a result o f the USDOC's
use of average prices.302
5.94. The Panel noted that China's argument that the Nails test was biased towards finding a
pattern is based on China's view that, by relying on average prices, the USDOC failed to take into
consideration the variations within the prices for each purchaser or time period. The Panel recalled
its understanding that the pattern clause does not require the consideration of such variations;
rather, it provides discretion to investigating authorities to choose between individual e xport
transaction prices and average prices when determining a pattern. The Panel did not consider that
"the USDOC's determination in the three challenged investigations could be considered biased,
simply because the method that it chose led to an outcome which was less favourable to the
exporters".303
5.95. As noted by the Panel 304, China's arguments are directly related to China's view that the
USDOC should have calculated the standard deviation "on an examination of individual export
prices, as mandated by the tre aty".305 We have explained above that the second sentence in
Article 2.4.2 provides investigating authorities with discretion to rely on individual export
transaction prices or average prices in order to find a pattern, provided that this pattern meets the
requirements stipulated in the pattern clause. For this reason, we agree with the Panel's finding
that China has not established that the United States acted inconsistently with Article 2.4.2 in the
three challenged investigations by establishing the releva nt pattern on the basis of averages as
opposed to individual export transaction prices.306
5.96. We note the Panel's statement that, even if it were true that the numerical value of the
standard deviation would have been higher if the USDOC had relied on individua l export
transactions in the three challenged investigations, the Panel could not " find that the
USDOC's determination was biased on that basis". 307 As explained above, Article 2.4.2 provides
investigating authorities with discretion to rely on individual ex port transaction prices or average
prices in order to find a pattern. Whether or not the exercise of the discretion may be considered
biased will depend on the particular facts and specific circumstances of each case. Thus, to the
extent that the Panel con sidered that China ha s not demonstrated that the USDOC's use of
averages in the three challenged investigations was biased 308, we agree with the Panel statement.

298 China's appellant's submission, para. 149. For China, mathematically, the act of averaging collapses
multiple individual observations into a single observation. For this reason, China submits that averaging likely
leads to a reduction in variability of export prices and, consequently, a lower standard deviation. (Ibid.)
299 China's appellant's submission, paras. 150-151.
300 China's appellant's submission, para. 153.
301 United States' appellee's submission, para. 192.
302 United States' appellee's submission, para. 200.
303 Panel Report, para. 7.127.
304 Panel Report, paras. 7.123 and 7.127.
305 China's appellant's submission, para. 149.
307 Panel Report, para. 7.127.
308 In this respect, the Panel recalled that "China's argument that the Nails test suffered from a
'systematic bias' is based on its view that the USDOC failed to take into consideration price variations within
purchasers or time periods because it aggregated all individual export transaction prices to a purchaser or time
period to calculate a purchaser or time period average." (Panel Report, para. 7.127)

We note that our understanding of the Panel statement at issue is in line with the Panel's ultim ate
conclusion that "China has not established that the United States acted inconsistently with
Article 2.4.2 … [in the three challenged investigations] by finding the relevant pattern on the basis
of purchaser or time period averages as opposed to individual export transaction prices."309
5.97. Finally, we turn to China's claim under Article 17.6(i) of the Anti-Dumping Agreement. China
contends that the Panel's evaluation of the USDOC's determination was contrary to the standard of
review under Article 17.6(i), because the Panel failed to find that the USDOC's use of averages
was inherently biased.310
5.98. As explained earlier311, a claim under Article 17.6(i) of the Anti -Dumping Agreement must
concern the panel's assessment of the facts of the matter and involve a showing that the
assessment is inconsistent with this provision. Thus, a claim under this provision should not be
made merely as subsidiary to a claim that the panel erred in its application of a WTO provision.
5.99. China claims that the Panel failed to comply with Art icle 17.6(i) because the Panel endorsed
a WTO-inconsistent test that biased the outcome towards systematically increasing the likelihood
of finding a pattern under Article 2.4.2 of the Anti-Dumping Agreement.312 China contends that the
USDOC's use of average s was inherently biased because it drew the one standard deviation
threshold in the Nails test closer to the mean as compared to where the threshold would have
been had the USDOC calculated it based on individual export transaction prices, as required by
Article 2.4.2.313 Although China explains in some detail its claim under Article 17.6(i), China does
not identify, much less challenge, a specific instance of the Panel's assessment of the facts.
Rather, it seems to us that China has mostly recast the arguments that it made before the Panel
under Article 2.4.2. In addition, China does not advance any argument on appeal that is separate
and different from its arguments concerning the alleged error in the Panel's interpretation of
Article 2.4.2. Thus, we conside r that China has not demonstrated that the Panel failed to comply
with Article 17.6(i).
5.100. In sum, we consider that the existence of a pattern w ithin the meaning of the
second sentence of Article 2.4.2 of the Anti-Dumping Agreement depends on the price relati onship
between the "targeted" transactions, on the one hand, and the "non-targeted" transactions, on the
other hand. The distinguishing factor that allows for the determination of a pattern is that the
prices within the pattern differ significantly from th e prices outside it. We also note that the
relevant difference is one "among" different purchasers, regions, or time periods. For these
reasons, we consider that an investigating authority may rely on individual export transaction
prices or average prices in order to find a pattern, provided that this pattern meets the
requirements stipulated in the pattern clause. In this case, like the Panel 314, we consider that
China has not demonstrated that the United States acted inconsistently with Article 2.4.2 in the
three challenged investigations by determining the relevant pattern on the basis of average prices.
In addition, by not advancing any argument that is separate and different from its arguments
concerning the alleged error in the Panel's interpretation of Article 2.4.2, China has not
demonstrated that the Panel failed to comply with Article 17.6(i) of the Anti-Dumping Agreement.
5.101. We therefore find that the Panel did not err in its interpretation and application of the
second sentence of Article 2.4.2 of the Anti-Dumping Agreement to the three challenged
investigations when examining the USDOC's use of purchaser or time period averages under the
Nails test. Furthermore, we find that China has not established that the Panel failed to comply with
Article 17.6(i) of the Anti -Dumping Agreement. Consequently, we uphold the Panel's finding, in
paragraph 8.1.a.ix of its Report, that China has not established that the United States acted
inconsistently with the second sentence of Article 2.4.2 in the three challenged i nvestigations by
determining the existence of a "pattern" on the basis of average prices, instead of individual
export transaction prices.315

310 China's appellant's submission, paras. 133, 148, and 153.
311 See para. 5.47. above.
312 China's appellant's submission, paras. 148 and 153.
313 China's appellant's submission, para. 149.
315 Having upheld this finding, we need not examine China's request for completion of the legal analysis.

5.1.5 Whether the Panel erred under Article 2.4.2 of the Anti -Dumping Agreement in
suggesting that comparison methodologi es may be combined to establish dumping
margins
5.102. The Panel found that the United States ac ted inconsistently with Article 2.4.2 of the
Anti-Dumping Agreement by using zeroing under t he W -T methodology in the three challenged
investigations in calculating dumping margins for the concerned Chinese exporters. 316 In reaching
this finding, the Panel added , in footnote 385 of its Report , that it was not suggesting that "the
options under Article 2.4.2 for dumping determinations by investigating authorities are limited, as
that would render the second sentence of Article 2.4.2 inutile".317 The Panel added:
We are cognizant that where an investigating authority applies the [W-T] methodology
to the export transactions falling within the pattern and one of the two normal
methodologies to the export transactions falling outside the pattern, and the results of
the calculations for the export transactions falling outside the pattern show negative
dumping, it may be necessary, in order to give full meaning to the second sentence of
Article 2.4.2, not to let that negative dumping offset the dumping found within the
pattern. We make this observation bearing in mind the objective of the
[W-T] methodology which, as underlined by the Appellate Body, is to unmask targeted
dumping.318
5.103. China appeals the Panel's interpretation, set out in footnote 385 of its Report, that "it may
be necessary, in order to give full meaning to the second sentence of Article 2.4.2, not to let …
negative dumping [found outside of a pattern] offset the dumping found within the pattern" .319
According to China, this interpretation is erroneous because it is premised on the understanding
that an investigating authority may apply the W -T methodology to "pattern transactions" and the
W-W or T -T methodology to "non -pattern transaction s", and then combine the results of these
comparison methodologies to establish dumping margins .320 China argues that, in
US ‒ Washing Machines, the Appellate Body clarified that the second sentence of Article 2.4.2
permits the establishment of margins of dumping solely by applying the W-T methodology to a
limited universe of export transactions, namely , the "pattern transactions".321 China thus requests
us to declare the Panel's statement in footnote 385 of its Report moot and of no legal effect.322
5.104. The United States does not object to this request.323 In particular, the United States
acknowledges that, in US – Washing Machines, the Appellate Body found that Article 2.4.2 does
not permit the combining of comparison methodologies.324
5.105. In footnote 385 of its Report, the Panel considered that " it may be necessary, in order to
give full meaning to the second sentence of Article 2.4.2", not to let a negative comparison result
for "non-pattern transactions" offset a positive comparison result for "pattern transactions".325 In
US – Washing Machines 326, t he Appellate Body stated that, "[i]n keeping with its function of

317 Panel Report, fn 385 to para. 7.220. (emphasis original)
319 China's Notice of Appeal, para. 21 (quoting Panel Report, fn 385 to para. 7.220); appellant's
321 China's appellant's submission, para. 195 (referring to Appellate Body Report, US – Washing
Machines, para. 5.122).
323 United States' appellee's submission, para. 250.
324 United States' appellee's submission, para. 249 (referring to Appellate Body Report, US – Washing
Machines, paras. 5.124 and 5.130).
325 In this context, the Panel relied on the panel's finding in US – Washing Machines that Article 2.4.2
allows an investigating authority to disregard the negative result obtained for the "non-pattern transactions"
under the W-W or T-T methodology, when aggregating such result with those obtained in the calculations for
the "pattern transactions" under the W-T methodology. (Panel Report, fn 385 to para. 7.220 (referring to
Panel Report, US – Washing Machines, paras. 7.161-7.163 and 7.167))
326 In US – Washing Machines, the Appellate Body was faced with the USDOC's practice of applying the
W-T methodology to certain transactions and the W-W methodology to the remaining transactions and
disregarding or setting to zero the intermediate comparison result arising from the W-W methodology if it was
negative. This practice was referred to as "systemic disregarding". (Appellate Body Report, US ‒ Washing
Machines, paras. 5.78-5.79)

allowing an investigating a uthority to effectively address 'targeted dumping'" 327, the
second sentence of Article 2.4.2 allows an investigating authority to establish margins of dumping
by applying the W -T comparison methodology only to "pattern transactions", to the exclusion of
"non-pattern transactions". 328 The Appellate Body considered that the "targeted dumping"
identified from the consideration of "pattern transactions" would be "re -masked" if negative
comparison results arising from "non-pattern transactions" were considered.329
5.106. The Panel , however, referred to "an investigating authority appl[ying] the
[W-T] methodology to the export transactions falling within the pattern and one of the two normal
methodologies to the export transactions falling outside the pattern". 330 To the extent that the
Panel was suggesting that investigating authorities may combine the W -T methodology applied to
"pattern transactions" with the W-W or the T-T methodology applied to "non-pattern transactions"
in order to establish dumping margins , this does not a ccord with t he conclusions of the
Appellate Body in US ‒ Washing Machines . The re, the Appellate Body considered that the
second sentence of Article 2.4.2 " does not provide for a mechanism whereby an investigating
authority would conduct separate comparisons for 'pattern transactions' under the W-T comparison
methodology and for ' non-pattern transactions' under the W -W or T -T comparison methodology,
and exclude from its consideration the result of the latter if it yields an overall negative
comparison result, or aggregate it with the W-T comparison results for the 'pattern transactions' if
it yields an overall positive comparison result ".331 The Appellate Body thus concluded that , while
"the second sentence allows an investigating authority to establish the existence of mar gins of
dumping by comparing a ' normal va lue establis hed on a weighted average basis' with 'pattern
transactions' only", "Article 2.4.2 does not permit the combining of comparison methodologies for
the purposes of establishing dumping and margins of dumping in accordance with the second
sentence".332
5.107. As in US – Washing Machines, we consider that the second sentence of Article 2.4.2 allows
an investigating authority to establish margins of dump ing by applying the W -T methodology only
to "pattern transactions" and that Article 2.4.2 does not permit th e combining of comparison
methodologies.333 In circumstances where the requirements of the second sentence of Article 2.4.2
are fulfilled, an investigating authority may establish margins of dumping by comparing a weighted
average normal value with export pr ices of "pattern transactions ", while excluding
"non-pattern transactions" from the numerator, and dividing the resulting amount by all the export
sales of a given exporter or foreign producer.334
5.108. In light of the above , we declare m oot the Panel's statement s, in footnote 385 of its
Report, to the extent that these statements are premised on the erroneous understanding that
Article 2.4.2 of the Anti -Dumping Agreement permits the combining of comparison methodologies
to establish dumping margins.
5.2 The AFA Norm
5.109. In this section, we address China's claim of error on appeal in connection with the
AFA Norm. Before the Panel, China contended that the AFA Norm is an unwritten rule or norm of
general and prospective application that can be the subject o f an "as such" c hallenge in
WTO dispute settlement. China claimed that the AFA Norm is inconsistent with Article 6.8 and
paragraph 7 of Annex II to the Anti-Dumping Agreement.335 China described the precise content of
the AFA Norm in the following manner:
[W]henever [the] USDOC considers that an NME-wide entity has failed to cooperate to
the best of its ability, it systematically makes an adverse inference and selects, to

327 Appellate Body Report, US – Washing Machines, para. 5.109.
328 Appellate Body Report, US – Washing Machines, para. 5.129.
329 Appellate Body Report, US – Washing Machines, para. 5.109.
331 Appellate Body Report, US – Washing Machines, para. 5.123.
332 Appellate Body Report, US – Washing Machines, para. 5.124.
333 Appellate Body Report, US – Washing Machines, paras. 5.124 and 5.129.
334 Appellate Body Report, US – Washing Machines, para. 5.130.
335 Panel Report, paras. 7.397-7.399 and 7.416. AFA Norm stands for Adverse Facts Available Norm,
which China alleges is a rule or norm of general and prospective application. (China's appellant's submission,
para. 198)

determine the rate for the NME -wide entity, facts that are adverse to the interests of
that fictional entity and each of the producers/exporters included within it.336
5.110. Examining first whether the AFA Norm could be challenged "as such" in WTO dispute
settlement, the Panel found that the AFA Norm is attributable to the United States337, and that its
precise content corresponds to the description made by China. 338 The Panel found, however, that
China had not demonstrated that the AFA Norm has general and prospective application, so that it
could be challenged "as such" in WTO dispute settlement.339
5.111. China appeals the Pan el's finding that China had not demonstrated that the AFA Norm
constitutes a norm of general and prospective application. 340 China claims that the Panel erred in
its articulation and application of the legal standard for establishing that a rule or norm has
"prospective application ". This is because, according to China, the Panel erroneously required
"certainty" of future application for a rule or norm to be challenged "as such" in WTO dispute
settlement.341 China requests us to reverse the Panel's finding in p aragraphs 7.479 and 8.1.d.ii of
the Panel Report.342 In addition, China makes two requests for completion. First, China requests us
to complete the analysis and find that the AFA Norm constitutes a rule or norm of general and
prospective application that can be challenged "as such" in WTO dispute settlement. 343
Second, China requests us to complete the analysis and find that the AFA Norm is inconsistent
with Article 6.8 and paragraph 7 of Annex II to the Anti-Dumping Agreement.344
5.112. The United States responds that the Panel did not err in its articulation and application of
the legal standard for establishing that a rule or norm has prospective application .345 The
United States submits that the Panel did not require that the future application of the alleged
AFA Norm be demonstrated with "certainty" to establish whether it has prospective application. 346
To the United States, China's claim on appeal concerns the Panel's assessment of the facts and,
accordingly, should have been brought under Article 11 of the DSU. 347 Finally, the United States
requests us to reject both of China's requests for completion because: (i) China's claims under
Article 6.8 and Annex II to the Anti -Dumping Agreement are outside the Panel's terms of
reference; (ii) Appellate Body findings on the all eged AFA Norm would not contribute to a positive
resolution of this dispute; (iii) the Appellate Body is not in a position to complete the analysis; and
(iv) in any event, China's claims are without merit.348
5.113. We begin our analysis below by summarizing the re levant Panel findings concerning the
AFA Norm. We then address the legal standard for establishing whether a rule or norm has
"general and prospective application ". Thereafter, we examine whether the Panel erred in its
articulation and application of this standard. Finally, we address each of China's requests for
completion.
5.2.1 Panel's findings
5.114. The Panel examined whether the AFA Norm constitutes a rule or norm of general and
prospective application that can be challenged "as such" in WTO dispute settlement. 349 The Panel
recalled that, for an "as such" challenge against a rule or norm of general and prospective
application, the complaining Member must demonstrate: (i) that the alleged rule or norm is

336 Panel Report, para. 7.422 (quoting China's opening statement at the second Panel meeting, para. 63
(emphasis original)).
337 Panel Report, para. 7.456.
338 Panel Report, paras. 7.454-7.455.
339 Panel Report, paras. 7.477-7.479 and 8.1.d.ii.
340 China's appellant's submission, paras. 202, 263, 380, and 636 (referring to Panel Report,
paras. 7.457-7.479 and 8.1.d.ii).
341 China's appellant's submission, paras. 212, 227-231, 270, 387, 393, 395-396, 399, and 414.
342 China's appellant's submission, paras. 232, 395, 415, 437, and 636.
343 China's appellant's submission, paras. 420, 436-437, and 637.
344 China's appellant's submission, paras. 439, 509, and 637.
345 United States' appellee's submission, paras. 314, 338-339, 342, 354, and 360-361.
346 United States' appellee's submission, paras. 339-341.
347 United States' appellee's submission, paras. 316 and 369-370.
348 United States' appellee's submission, paras. 253, 255–257, 287, 371, 379, 387, 392, 399, 411-412,
416, 418, 431, and 438.
349 Panel Report, para. 7.415.

attributable to the responding Member; (ii) the precise content of the alleged rule or norm; and
(iii) that the alleged rule or norm has general and prospective application. 350 The Panel found that
the AFA Norm is attributable to the United States. 351 The Panel al so found that the 73 USDOC
anti-dumping determinations put o n the record by China demonstrate the precise content of the
AFA Norm, as described by China.352
5.115. The Panel then examined whether the AFA Norm has general and prospective application.
The Panel considered that a measure has "general application" to the extent that it affects an
unidentified number of economic operators, including domestic and foreign producers. 353 In
addition, the Panel explained that a measure has "prospective application" if it is intended to apply
in future situations after its issuance.354 In this regard, the Panel noted that, for a measure to have
prospective application, it must provide the same level of security and predictability of continuation
into the future typically associated with rules or norms.355
5.116. Turning to the evidence submitted by China, the Panel noted that the USDOC Enforcement
and Compliance Antidumping Manual356 (USDOC Antidumping Manual) provides that the NME-wide
rate "may" be based on adverse facts available in certain situations. 357 According to the Panel, the
permissive language used in the USDOC Antidumping Manual only recognizes the authority of the
USDOC to base an NME -wide rate on adverse facts available; it does not express what approach
the USDOC will or should adopt. The Panel thus considered that the USDOC Anti dumping Manual
does not support China's view that the AFA Norm has general and prospective application. 358 With
respect to the three decisions of the United States Court of International Trade 359 (USCIT) relied
upon by China , the Panel considered that they do not suppor t China's contention that the
AFA Norm has general and prospective application.360
5.117. In relation to the 73 USDOC anti -dumping determinations, the Panel noted that several of
them refer to the USDOC's "practice" of selecting a rate for a "non-cooperating NME-wide entity"
that is "sufficiently adverse" to ensure that the uncooperative party does not obtain a more
favourable result by failing to cooperate than if it had fully cooperated. 361 The Panel also observed

350 Panel Report, para. 7.419 (referring to Appellate Body Reports, US – Zeroing (EC), para. 198; and
Argentina – Import Measures, para. 5.104).
351 Panel Report, para. 7.456. The Panel recalled that, according to China, the AFA Norm arises from
acts or omissions of the USDOC. Given that the USDOC is an organ of the Government of the United States,
the Panel concluded that the acts that give rise to the AFA Norm are attributable to the United States. (Ibid.,
paras. 7.420 and 7.456)
352 Panel Report, paras. 7.454-7.455. For the Panel, the 73 anti-dumping determinations put on the
record by China show that, whenever the USDOC made a finding that an NME-wide entity failed to cooperate to
the best of its ability, it adopted adverse inferences and, in determining the duty rate for the NME-wide entity,
selected facts from the record that were adverse to the interests of such entity, and the exporters included
within it. (Ibid., para. 7.454) The Panel considered that the other two sets of evidence submitted by China –
the USDOC Antidumping Manual (Panel Exhibit CHN-23) and excerpts from three USCIT decisions (Panel
Exhibits CHN-134, CHN-148, and CHN-163) – did not support China's description of the precise content of the
353 Panel Report, para. 7.457 (referring to Appellate Body Reports, US – Underwear, p. 13, DSR 1997:I,
EC ‒ IT Products, para. 7.159).
354 Panel Report, para. 7.457 (quoting Appellate Body Report, US – Oil Country Tubular Goods Sunset
Reviews, para. 172).
355 Panel Report, para. 7.457 (quoting Appellate Body Reports, Argentina – Import Measures,
para. 5.182).
356 Panel Exhibit CHN-23.
357 Panel Report, para 7.460 (referring to the USDOC Antidumping Manual (Panel Exhibit CHN-23)
pp. 7-8)).
358 Panel Report, paras. 7.461-7.462.
359 USCIT decisions, East Sea Seafoods v. United States (Panel Exhibit CHN-134); Hubbel Power
Systems v. United States (Panel Exhibit CHN-148); Peer Bearing v. United States (Panel Exhibit CHN-163).
360 Panel Report, paras. 7.464-7.467. For the Panel, the USCIT's decisions in Peer Bearing v.
United States and Hubbel Power Systems v. United States relate to the magnitude or level of anti-dumping
duties, and not the process described in the AFA Norm. The Panel considered that the USCIT's decision in
East Sea Seafoods v. United States acknowledges that adverse inferences have been used to calculate
NME-wide margins up to present, but does not shed light on the prospective application of this method of
calculation. (Ibid., para. 7.464 (referring to Peer Bearing v. United States (Panel Exhibit CHN-163), p. 1327),
para. 7.465 (referring to Hubbel Power Systems v. United States (Panel Exhibit CHN-148), p. 1288), and
para. 7.466 (referring to East Sea Seafoods v. United States (Panel Exhibit CHN-134), p. 1354, fn 15))
361 Panel Report, paras. 7.469 and 7.472.

that the USDOC described the selection of the highes t margin in the petition or the highest rate
calculated in any segment of the proceedings as a "practice", "standard practice", or "normal
practice", which has consistently been upheld by the USCIT and the United States Court of Appeals
for the Federal Cir cuit ( USCAFC).362 In each of the 73 determinations, the USDOC followed the
same course of action: upon finding non -cooperation by the NME -wide entity, the USDOC drew
adverse inferences and selected facts that were adverse to the interest s of that entity and the
exporters within it. 363 The Panel considered that, by referring to its practice in every
determination, the USDOC's conduct reflected an invariable and standard approach whenever the
USDOC found that an NME -wide entity failed to cooperate to the best of its ability.364 The Panel
also found it significant that there was no evidence of determinations made during a period of over
12 years in which the USDOC did not follow this practice.365
5.118. The Panel considered that the Appellate Body's reasoning in Argentina – Import Measures
stands for the proposition that not every norm that may continue to be applied in the future can
be considered, for that reason alone, a norm that is prospective in nature. 366 Rather, according to
the Panel, the future application of a measure must achieve a "certain degree of security and
predictability typically associated with rules or norms." 367 Thus, in the Panel's view, the relevant
inquiry was whether the evidence on the record demonstrates, with the level of security and
predictability "t ypically associated with rules or norms", that the AFA Norm will be applied
generally and prospectively.368
5.119. The Panel agreed with China that the USDOC's treatment of non -cooperating NME -wide
entities in these determinations reflects more than mere repetition of conduct.369 In the Panel's
view, "[t]his practice constitutes evidence that the USDOC has invariably engaged in th at same
conduct" and "it may even constitute evidence that the USDOC is likely to engage in the same
conduct in the future". 370 Also, the Panel did not exclude that "the invariable application of the
alleged AFA Norm over several years might create the expectation that, in a case where an
NME-wide entity is found to be non -cooperating, the USDOC may, again, draw adverse inferences
and select fac ts that are adverse to the interests of the entity and the exporters within it." 371
In addition, the Panel did "not disagree that prior practice may provide the USDOC with
administrative guidance for future action."372
5.120. The Panel, however, was not persuaded th at the practice reflected in the 73 anti-dumping
determinations on the record was sufficient to demonstrate that the AFA Norm has prospective
application.373 This is because "it [did] not demonstrate that the USDOC will continue to follow the
same course of action in the future." 374 The Panel also considered that "the fact that economic
operators could reasonably expect the occurrence of certain conduct, or that the USDOC may find
guidance in previous determinations, is insufficient to ascertain with the necessary level of security
and predictability the prospective application of the alleged AFA Norm."375 Consequently, the Panel
considered that a finding that the USDOC's practice at issue has prospective application

362 Panel Report, para. 7.469.
363 Panel Report, paras. 7.471.
364 Panel Report, paras. 7.469 and 7.472.
365 Panel Report, para. 7.472.
366 Panel Report, para. 7.474 (referring to Appellate Body Reports, Argentina – Import Measures,
paras. 5.181-5.182).
367 Panel Report, para. 7.474. The Panel also referred to the Appellate Body's statement in Argentina –
Import Measures that "nothing in the [p]anel's reasoning indicates that it considered the TRRs measure to
have the same level of security and predictability of continuation into the future typically associated with rules
or norms". (Ibid. (quoting Appellate Body Reports, Argentina – Import Measures, para. 5.182))
368 Panel Report, para. 7.476 (quoting Appellate Body Reports, Argentina – Import Measures,
para. 5.182; and referring to Appellate Body Report, US – Zeroing (EC), para. 198). See also Panel Report,
paras. 7.470 and 7.472.
369 Panel Report, para. 7.472.
370 Panel Report, para. 7.475.
371 Panel Report, para. 7.476.
372 Panel Report, para. 7.476.
373 Panel Report, para. 7.475.
375 Panel Report, para. 7.476. The Panel also stated that the USDOC's practice emanating from these
73 determinations does not provide the level of security and predictability of continuation into the future
typically associated with rules or norms. (Ibid., para. 7.475 (referring to Appellate Body Reports, Argentina –
Import Measures, para. 5.182))

"would amount to speculation – albeit well -grounded – about the prospective application of the
alleged AFA Norm; certainty thereof, however, is not supported by record evidence." 376 The Panel
thus concluded that the evidence on the record does not support China's assertion that the
AFA Norm has prospecti ve application. In light of this finding, the Panel did not consider it
necessary to assess whether the AFA Norm has general application.377
5.121. Having found that China had not demonstrated that the AFA Norm constitutes a norm of
general and prospective applicat ion, the Panel did not examine whether this alleged norm is
"as such" inconsistent with Article 6.8 and paragraph 7 of Annex II to the Anti -Dumping
Agreement.378
5.2.2 Rules or norms of general and prospective application
5.122. China's appeal calls for us to examine the requirements for a measure to be considered a
rule or norm of general and prospective application that can be the subject of an "as such"
challenge in WTO dispute settlement. At the outset, we observe that Articles 3.3, 4.4, and 6.2 of
the DSU refer to "m easures" that are challenged in WTO dispute settlement. The Appellate Body
has explained that, in principle, any act or omission attributable to a WTO Member can be a
measure of that Member for the purposes of dispute settlement proceedings .379 Thus, it is c lear
that a broad range of measures can be challenged in WTO dispute settlement.380
5.123. The specific measure at issue, whether it is written or unwritten, and how it is described,
characterized, and challenged by a complainant, will inform the kind of evidence a complainant is
required to submit and the elements that it must prove in order to establish the existence of the
measure challenged.381 The manner in which a complainant challenges a measure affects the type
of analysis conducted in WTO dispute settlement and the possible recommendations and rulings of
the DSB.
5.124. The Appellate Body has noted that the distinction between "as such" and "as applied"
challenges neither governs the definition of a measure for purposes of WTO dispute settlement,
nor defines exhaustively the types of measures susceptible to challenge. 382 Rather, this distinction
serves as an analytical tool to facilitate the understanding of the nature of a measure at issue.
Measures need not fit s quarely within one of these two categories in order to be susceptible to
challenge in WTO dispute settlement. 383 For example, in US – Continued Zeroing , the
Appellate Body considered that the measure at issue was "ongoing conduct" that consisted of the
continued use of the zeroing methodology in successive administrative reviews by which duties in
each of the 18 cases identified were maintained.384 In EC and certain member States – Large Civil
Aircraft, the Appellate Body did not exclude the possibility that "concerted action or practice" could
be susceptible to ch allenge in WTO dispute settlement. 385 In Argentina – Import Measures , the
measure at issue comprised several individual trade -related requirements operating together as
part of a single measure in pursuit of a "managed trade" policy. That measure was conside red to
have systematic and continued application.386
5.125. Thus, in WTO dispute settlement, a challenge may be raised with respect to measures that
are neither individual instance s of application of a measure, nor rule s or norm s of general and
prospective application. A measure may share certain attributes with both. "Measures" need not be
compartmentalized into categories in order to be challengeable in WTO dispute settlement. T he

376 Panel Report, para. 7.476.
377 Panel Report, para. 7.476. See also paras. 7.477-7.479 and 8.1.d.ii.
378 Panel Report, paras. 7.479 and 8.1.d.ii.
379 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 81.
380 See Appellate Body Reports, Guatemala – Cement I, fn 47 to para. 69; EC and certain member
States – Large Civil Aircraft, para. 794; and Argentina – Import Measures, paras. 5.106 and 5.109.
381 Appellate Body Reports, Argentina – Import Measures, paras. 5.108 and 5.110.
382 Appellate Body Reports, US – Continued Zeroing, para. 179; Argentina – Import Measures,
para. 5.102.
383 Appellate Body Reports, US – Continued Zeroing, para. 179; Argentina – Import Measures,
para. 5.102.
384 Appellate Body Report, US – Continued Zeroing, paras. 181 and 183.
385 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 794.
386 Appellate Body Reports, Argentina – Import Measures, paras. 5.126, 5.141, 5.143, and 5.145-5.146.

term "measure" in Articles 3.3, 4.4, and 6.2 of the DSU is sufficiently broad to encompass various
types of acts or omissions attributable to a WTO Member.
5.126. This appeal concerns an "as such" challenge to an unwritten rule or norm of general and
prospective application. The Appellate Body has explained that the rationale for allowing
challenges against measures "as such" is that "the disciplines of the GATT and the WTO, as well as
the dispute settlement system, are intended to protect not only existing trade but also the security
and predictability needed to conduct future trade ."387 This obje ctive " would be frustrated if
instruments setting out rules or nor ms inconsistent with a Member's obligations could not be
brought before a panel … irrespective of any par ticular instance of application of such rules or
norms."388
5.127. When bringing an "as such" challenge against such a rule or norm, a complaining party
must clearly establish that the rule or norm is attributable to the responding Member; the precise
content of the rule or norm; and that the rule or norm has general and prospective application. 389
Ascertaining whether the rule or norm has general and prospective application is necessary
because "as such" challenges seek to prevent the responding Member from engaging in certain
conduct in general and in the future, as opposed to addressing particular instances of application
that are occurring or have occurred. The Appellate Body has clarified that both written and
unwritten measures can be the subject of a challenge in WTO dispute settlement.390 When written
rules or norms are challenged "as such", the precise content, attribution , as well as the general
and prospective nature of the rule or norm may be readily discernible from the document itself, its
official character, or the manner in which it was elaborated, adopted , or enacted. When an
unwritten ru le or norm is challenged "as such", a complainant will be required to adduce
arguments and supporting evidence to demonstrate the precise content, attribution , and general
and prospective nature of the rule or norm.
5.128. In the present dispute, the participants have not appealed the Panel findings concerning
the precise content of the unwritten AFA Norm and that it is attributable to the United States. 391
We therefore focus our analysis on the elements of "general application" and "prospective
application".
5.129. In US ‒ Zeroing (EC), the Appellate Body agreed with the panel that the measure at issue
in that dispute – the zeroing methodology – had general and prospective application. The
Appellate Body relied on, inter alia, the facts that the zeroing methodology was inv ariably applied
for an extended period of time ; that instances of non -application had not been identified ; that it
was part of a standard program ; and that it reflected a deliberate policy. 392 In US – Oil Country
Tubular Goods Sunset Reviews , the Appellate Body found that the United States' Sunset Policy
Bulletin had "normative value " because it provided "administrative guidance " and created
"expectations among the public and among private actors" ; had "general application" because it
was to apply to "all the sunset reviews conducted in the United States" ; and had " prospective
application" because it was "intended to apply to sunset reviews taking place after its issuance ".393
Therefore, while certain elements may contribute to demonstrating that a measure has b oth
general and prospective application, other elements may speak more specifically to the general or
prospective character of the measure.
5.130. We now turn to the meaning of "general application" of rules or norms that can be
challenged "as such" in WTO disput e settlement. In so doing, we draw guidance from the term
"general application" in Articles X:1 and X:2 of the GATT 1994.394 The Appellate Body's reading of
the term as it appears in those provisions is relevant to the notion of "general application" as it

387 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 82.
388 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 82. (fn omitted)
389 Appellate Body Reports, US – Zeroing (EC), para. 198; Argentina – Import Measures, para. 5.104.
390 Appellate Body Report, US – Zeroing (EC), para. 193.
391 See Panel Report, paras. 7.455-7.456.
392 Appellate Body Report, US – Zeroing (EC), paras. 201-204.
393 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 187. (fn omitted)
394 Article X:1 of the GATT 1994 refers to "[l]aws, regulations, judicial decisions and administrative
rulings of general application", and Article X:2 of the GATT 1994 refers to "measure[s] of general application".
In this respect, we observe that Article X of the GATT 1994 concerns the "[p]ublication and [a]dministration of
[t]rade [r]egulations", which fall into the broader category of measures of general and prospective application
that can be challenged in WTO dispute settlement.

characterizes rules or norms that can be the subject of an "as such" challenge in WTO dispute
settlement. In US – Underwear, the Appellate Body interpreted the term "measures of general
application"395 in Article X:2 of the GATT 1994. It considered that, while the safeguard measure at
issue "was addressed to particular, i.e. named, exporting Members …[,] the measure did not try to
become specific as to the individual persons or entities engaged in exporting the specified textile
or clothing items to the import ing Member and hence affected by the proposed restraint" .396
In EC ‒ Poultry, the Appellate Body interpreted the phrase "[l] aws, regulations, judicial decisions
and administrative rulings of general application"397 in Article X:1 of the GATT 1994. It considered
that, while a measure addressed to a specific company or appli ed to a specific shipment would not
qualify as a measure of general application, a measure would be of general application to the
extent that it "affects an unidentified number of economic operators". 398 We therefore consider
that a rule or norm has "general application" to the extent that it affects an unidentified number of
economic operators.
5.131. In relation to the meaning of "prospective application", we note that China and the
United States disagree on the requirements for demonstrating that a measure has p rospective
application. China argues that a rule or norm has prospective application where conduct is likely,
predictable, possible to anticipate, or can be reasonably expected to continue 399, and that a
complainant is not required to show with "certainty" t hat a measure will continue to apply in the
future.400 The United States contends that the prospective application of a measure is determined
by examining " whether the measure in question was intended to apply in the future , including
whether the measure reflects a deliberate policy that goes beyond mere repetition of conduct."401
5.132. The Appellate Body has explained that a rule or norm has "prospective application" to the
extent that it applies in the future. 402 In this respect, we do not consider that in order to
demonstrate prospective application, a complainant is required to show with "certainty" that a
given measure will apply in future situations. 403 A complainant would not be able to show
"certainty" of future application, because any measure, including rules or norms, written or
unwritten, may be modified or withdrawn in the future. The mere possibility that a rule or norm
may be modified or withdrawn, however, does not remove the prospective nature of that measure.
Rather, where prospective application is not sufficiently clear from the constitutive elements of the
rule or norm, it may be demonstrated through a number of factors. The existence of an underlying
policy, which is implemented by the rule or norm , is a relevant element in establishing the
prospective nature of that rule or norm. 404 In addition, the more frequent, consistent, and
extended the repetition of conduct is, the more probative such conduct will be in revealing,
together with other factors, such an underlying policy.405 In this regard, the Appella te Body has
explained that relevant evidence may include proof of the systematic application of the challenged
rule or norm. 406 Where ascertainable, the design, architecture, and structure of the rule or norm
may also be relevant in identifying the underlyin g policy and prospective nature of that rule or
norm. In addition, the extent to which a particular rule or norm provides administrative guidance
for future conduct and the expectations it creates among economic operators that it will be applied
in the future, are also relevant in establishing the prospective nature of that rule or norm.407
5.133. The examination of whether a rule or norm has general and prospective application may
vary from case to case. We do not exclude that additional factors may be relevant in this
assessment depending on the particular facts and specific circumstances of the case at hand.

395 Emphasis added.
396 Appellate Body Report, US – Underwear, p. 21, DSR 1997:I, p. 29.
397 Emphasis added.
398 Appellate Body Report, EC – Poultry, para. 113 (quoting Panel Report, US – Underwear, para. 7.65).
399 China's appellant's submission, paras. 318 and 359.
400 China's appellant's submission, paras. 318, 360, 364, and 367.
401 United States' appellee's submission, para. 351.
402 Appellate Body Reports, US – Oil Country Tubular Goods Sunset Reviews, paras. 172 and 187;
US ‒ Corrosion-Resistant Steel Sunset Review, para. 82.
403 See China's appellant's submission, paras. 294 and 364.
404 See Appellate Body Reports, US – Zeroing (EC), paras. 201 and 204-205; and US ‒ Zeroing (Japan),
paras. 85 and 88 (quoting Panel Report, US - Zeroing (Japan), para. 7.52).
405 See Appellate Body Reports, US – Zeroing (EC), para. 204; and US – Zeroing (Japan), para. 85
(quoting Panel Report, US – Zeroing (Japan), para. 7.52).
406 Appellate Body Report, US – Zeroing (EC), para. 198.
407 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 187.

5.2.3 Whether the Panel erred in finding that China ha s not demonstrated that the AFA
Norm is a norm of general and prospective application
5.134. China claims that the Panel erred in finding that it has not demonstrated that the
AFA Norm is a norm of general and prospective application . According to China, the Panel
erroneously required that a complaining party must demonstrate with "certainty" that a "rule or
norm" wil l be applied in the future for it to have "prospective application" and thus be
challengeable "as such" in WTO dispute settlement. 408 China contends that, across all types of
measures that have been challenged in past disputes, including rules or norms of ge neral and
prospective application, panels and the Appellate Body have not adopted a "legal standard of
'certainty'"409 in relation to either written or unwritten measures.410 China also contends that the
Panel's examination of the AFA Norm is at odds with the Panel's examination of the Single Rate
Presumption.411 This is because, in relation to the Single Rate Presumption, the Panel did not
require China to demonstrate with "certainty" that this rule or norm will be applied in the future for
it to have prospectiv e application.412 China observes that, in relation to the AFA Norm, the Panel
recalled the Appellate Body's statement that an unwritten rule or norm must display the "requisite"
or "necessary level of security and predictability of continuation into the futu re typically associated
with rules or norms" .413 China contends that the Panel considered this "necessary level" to be
"certainty".414 China submits that, in reaching this conclusion, the Panel erred in the interpretation
and application of Articles 3.3 and 6.2 of the DSU.415
5.135. The United States responds that the Panel did not rely on a "legal standard of 'certainty'"
when examining the prospective nature of the alleged AFA Norm. 416 The United States observes
that China's argument relies only on " one instance in whic h the Panel employed the word
'certainty' with respect to the alleged AFA Norm".417 The United States submits that, in past
disputes, establishing the prospective application of a rule or norm was done by examining
"whether the measure in question was intend ed to apply in the future, including whether the
measure reflects a deliberate policy that goes beyond mere repetition of conduct." 418 In the
United States' view, the Panel applied the correct legal standard to determine the prospective
application of the al leged AFA Norm. This is because the Panel considered that prospective
application can be established to the extent that the articulation or application of a rule or norm
demonstrates that it is intended to be applied in the future. 419 In addition, t he United States
contrasts the Panel's findings concerning the alleged AFA Norm with that of the Single Rate
Presumption. The United States suggests that, "[i]n comparison to the evidence on the Single Rate
Presumption, which the Panel found contained multiple sour ces articulating the prospective nature
of the challenged measure, the lack of similar articulation of the alleged AFA Norm in any of the
evidence advanced by China was key to the Panel's finding that the alleged norm does not possess
prospective application."420 The United States suggests that "China's grievance is essentially that
the Panel did not find China's evidence to be sufficient to support its allegation" .421 Given that
China has not brought a claim under Article 11 of the DSU, the United States reque sts us to
"decline to rule on China's arguments".422
5.136. Before turning to China's claims concerning the AFA Norm, the Panel made findings
concerning the Single Rate Presumption, which it determined to be a rule or norm of general and

408 China's appellant's submission, paras. 212, 227-231, 270, 387, 393, 395-396, 399, and 414.
409 China's appellant's submission, para. 360.
410 China's appellant's submission, paras. 212, 229, and 360.
411 The Single Rate Presumption is described in paragraph 1.4. of this Report.
412 China's appellant's submission, para. 229.
413 China's appellant's submission, para. 211.
414 China's appellant's submission, paras. 211-212.
415 China's appellant's submission, para. 202.
416 United States' appellee's submission, para. 339.
417 United States' appellee's submission, para. 339.
418 United States' appellee's submission, para. 351. The United States submits that, when examining
whether the measure in question was intended to apply in the future, panels and the Appellate Body have
often relied on the responding Member's own characterization of the measure in question. (Ibid.)
419 United States' appellee's submission, para. 340.
420 United States' appellee's submission, para. 362 (referring to Panel Report, paras. 7.337 and 7.447
(fns omitted)).
421 United States' appellee's submission, para. 314.
422 United States' appellee's submission, para. 370.

prospective application challengeable "as such" in WTO dispute settlement. 423 Furthermore, in
assessing whether the AFA Norm has prospective application, the Panel compared the evidence
pertaining to the future application of the AFA Norm with its earlier findings regarding the
Single Rate Presumption.424 For this reason, we find it appropriate to consider the Panel' s findings
regarding the Single Rate Presumption in order to elucidate the Panel's understanding of when a
rule or norm has prospective application.
5.137. The Panel considered that the USDOC Antidumping Manual and USDOC Policy Bulletin
No. 05.1425 support China's argument that the Single Rate Presumption has general and
prospective application "as a practice or policy ".426 In addition, for the Panel, the US CAFC and
USCIT decisions, and the anti-dumping determinations on the record show that the Single Rate
Presumption forms part of a "USDOC policy ".427 Finally, the Panel observed that "any legal
instrument, including laws and regulations, may be subject to repeal or amendment in the futur e",
but that this "does not necessarily remove the general and prospective nature of such legal
instruments at a given point in time".428
5.138. As noted earlier, a rule or norm has "prospective application" to the extent that it applies
in the future.429 A complainant, however, cannot be required to show with "certainty" that a rule or
norm will apply in the future because any measure, including rules or norms, may be modified or
withdrawn in the future, and this mere possibility does not remove the prospective natur e of a
measure. Rather, as explained above, where prospective application is not sufficiently clear from
the constitutive elements of a rule or norm, it may be demonstrated through a number of factors.
We consider that the Panel did not require China to demonstrate w ith "certainty" that the
Single Rate Presumption will be applied in the future . This aspect of the Panel's assessment of the
Single Rate Presumption is in line with our understanding of "prospective application", as explained
earlier.
5.139. In relation to the AFA Norm, the Panel noted that the USDOC described the selection of the
highest margin in the petition or the highest rate calculated as a "practice", "standard practice", or
"normal practice", which has consistently been upheld by the USCIT and t he USCAFC.430 For the
Panel, the fact that the USDOC referred to its practice in every determination indicates that the
conduct reflected an invariable and standard approach whenever the USDOC found that an
NME-wide entity failed to cooperate to the best of its ability. 431 The Panel considered that the
USDOC's actions in these determinations reflect more than mere repetition of conduct. 432 In the
Panel's view, this "may even constitute evidence that the USDOC is likely to engage in that same
conduct in the future ".433 The Panel also did not exclude that "the invariable application of the
alleged AFA Norm over several years might create the expectation" that the USDOC may again

423 Panel Report, para. 7.339.
424 Panel Report, para. 7.467.
425 USDOC Policy Bulletin No. 05.1 (Panel Exhibit CHN-109).
426 Panel Report, para. 7.324. For the Panel, the repeated use of the term "will" in the USDOC
Policy Bulletin No. 05.1 was indicative of conduct that will be applied in the future. (Ibid., para. 7.317) The
Panel also considered that "the purpose of [the USDOC Antidumping Manual] is to provide USDOC officials with
'internal training and guidance' on the practices or current policies set out therein, including the Single Rate
Presumption", and that these practices or policies are to be applied in all future anti-dumping proceedings
427 Panel Report, para. 7.326 (referring to USCIT decisions, Jiangsu v. United States (Panel
Exhibit CHN-123), pp. 1310-1312; East Sea Seafoods v. United States (Panel Exhibit CHN-134), p. 1354; and
Peer Bearing v. United States (Panel Exhibit CHN-163), p. 1325; and USCAFC decision, Huaiyin v. United
States (Panel Exhibit CHN-132), p. 1378), and para. 7.328 (referring to Bicycles, final AD determination
(Panel Exhibit CHN-114), p. 19036; 1996-1997 administrative review in Sebacic Acid (Panel Exhibit CHN-126),
p. 17368; 2005-2006 administrative review in Bags (Panel Exhibit CHN-272), p. 51590; and 2006-2007
administrative review in Bags (Panel Exhibit CHN-274), p. 52284).
428 Panel Report, para. 7.323.
429 Appellate Body Reports, US – Oil Country Tubular Goods Sunset Reviews, paras. 172 and 187;
US ‒ Corrosion-Resistant Steel Sunset Review, para. 82.
430 Panel Report, para. 7.469.
431 Panel Report, para. 7.472.
432 Panel Report, para. 7.472.
433 Panel Report, para. 7.475.

follow this course of action. 434 In addition, the Panel did "not disagree that prior practic e may
provide the USDOC with administrative guidance for future action."435
5.140. Relying on the Appellate Body's reasoning in Argentina – Import Measures , the Panel
considered that not every norm that may continue to be applied in the future will amount to a
prospective measure.436 Rather, according to the Panel, the future application of a measure must
meet a "certain degree of security and predictability typically associated with rules or norms" .437
Thus, in the Panel's view, it was required to assess whether the evidence on the record establishes
that the future application of the AFA Norm achieves such a level of security and predictability. 438
In this respect , the Panel was not convinced that the practice reflected in the 73 anti-dumping
determinations was sufficient to demonstrate prospective application of the AFA Norm439, because
"it [did] not demonstrate that the USDOC will continue to follow the same course of action in the
future."440 The Panel further considered that the fact that e conomic operators could reasonab ly
expect certain conduct, or that the USDOC may find guidance in previous determinations, is
insufficient to establish the AFA Norm's prospective application with the necessary level of security
and predictability.441 Consequently, the Panel considered that , in relation to the AFA Norm , the
evidence amounted to "speculation – albeit well-grounded – about the prospective application of
the alleged AFA Norm; certainty thereof, however, is not supported by record evidence."442
5.141. We consider that, when compared to t he Panel's analysis of the Single Rate Presumption,
the Panel applied a different standard to examine the prospective nature of the AFA Norm. In
relation to both measures challenged by China, the Panel concluded that there was evidence on
record of a consi stent and standard USDOC practice, over several years, in relation to
anti-dumping proceedings involving NME countries . For the Single Rate Presumption, the Panel
also noted that the USCAFC and USCIT decisions on the record considered the USDOC practice or
policy to be " settled", "established and judicially affirmed ", "not in conflict with the Statute ", and
"to some extent, sanctioned", "upheld", or "approv[ed by the USCAFC]".443 For the AFA Norm, the
Panel considered that the USDOC's actions reflect more tha n mere repetition of conduct 444, and
noted that the USDOC described the conduct at issue as having been consistently upheld by the
USCIT and the USCAFC. 445 We note that the Panel considered that the amount of evidence
revealing the USDOC's practice was higher in relation to the Single Rate Presumption when
compared to the evidence concerning the AFA Norm. Notwithstanding the difference in the amount
of evidence, the Panel required something more in relation to the legal standard applied to the
AFA Norm. In that respect, the Panel considered that "the future application of a measure must
achieve a certain degree of security and predictability typically associated with rules or norms ."446
The Panel, however, did not identify precisely what this level or degree is, or how a determination
is to be made as to whether a rule or norm achieves it. The Panel then found that "certainty" of
the prospective or future application of the AFA Norm was not supported by record evidence. 447 In

434 Panel Report, para. 7.476.
435 Panel Report, para. 7.476.
436 Panel Report, para. 7.474 (referring to Appellate Body Reports, Argentina – Import Measures,
paras. 5.181-5.182).
437 Panel Report, para. 7.474.
438 Panel Report, para. 7.476 (referring to Appellate Body Reports, Argentina – Import Measures,
para. 5.182; and US – Zeroing (EC), para. 198). See also Panel Report, paras. 7.470 and 7.472.
439 Panel Report, para. 7.475.
441 Panel Report, para. 7.476.
442 Panel Report, para. 7.476.
444 Panel Report, para. 7.472.
445 Panel Report, para. 7.469.
446 Panel Report, para. 7.474 (referring to Appellate Body Reports, Argentina – Import Measures,
para. 5.182). The Appellate Body in Argentina – Import Measures did not purport to articulate the legal
requirements for establishing the "prospective application" of a "rule or norm". Rather, the Appellate Body
statement referred to by the Panel was made in the context of a claim under Article 11 of the DSU by
Argentina pursuant to which the panel in that dispute would have "uncritically accepted the complainants'
characterization of the content of the alleged TRRs measure and failed to ensure that its findings were based
on the record evidence and supported by sufficient reasoning". (Appellate Body Reports, Argentina – Import
Measures, para. 5.162)
447 Panel Report, para. 7.476. In relation to the Single Rate presumption, the Panel did not require that
China demonstrate with "certainty" that the measure will be applied in the future for it to have "prospective
application". The Panel expressly noted that any legal instrument, including laws and regulations, may be

our view, the Panel's reasoning is circular because it suggests that the prospective application of a
rule or norm would be found to exist if it corresponds to the level or degree of continuation into
the future of a rule or norm.
5.142. In addition, as noted earlier, a complainant is not required to s how with "certainty" that a
given measure will apply in future situations for that measure to have prospective application.
Thus, by requiring "certainty" of future applic ation, the Panel's examination of the prospective
nature of the AFA Norm is at odd s with the legal standard for establishing the prospective
application of a rule or norm.448
5.143. For the reasons above, we conclude that the Panel erred in finding that China ha s not
demonstrated that the AFA Norm has "prospective application" and is therefore a norm of general
and prospective application. Consequently, we reverse the Panel's findings in paragraphs 7.479
and 8.1.d.ii of its Report.
5.2.4 China's request for completion – general and prospective application
5.144. Having reversed the Panel's finding that China has not demonstrated that the AFA Norm is
a norm of general and prospective application , we turn to China's request for us to complete the
analysis and find that the AFA Norm has general and prospective application. For China, the
AFA Norm has general application as it does not relate to "specific economic operators, but rather
to the general class of economic operators " that the USDOC could potentially include within an
NME-wide entity.449 China also contends that applying the correct legal standard to the rel evant
factual findings of the Panel demonstrates that the AFA Norm has prospective application.450
5.145. The United States responds that we should not complete the analysis and find that the
alleged AFA Norm has general application , given the lack of necessary fin dings by the Panel and
uncontested facts on the record.451 In particular, the United States contends that the Panel Report
lacks findings on the scope of application of the alleged AFA Norm, and that the evidence
submitted by China was contested before the Panel.452 In addition, the United States contends that
the evidence before the Panel was insufficient to demonstrate that the alleged AFA Norm has
prospective application.453
5.146. In previous disputes, the Appellate Body has completed the legal analysis with a view to
facilitating the prompt settlement and effective resolution of disputes. 454 The Appellate Body has
done so where the factual findings in the panel report, undisputed facts on the panel record, and
admitted facts provided it with a sufficient basis for con ducting its own analysis. 455 The
Appellate Body has declined to complete the legal analysis in light of the complexity of issues, the
absence of full exploration of issues before the panel, and considerations pertaining to parties' due
process rights.456 Moreover, the Appellate Body has declined to complete the legal analysis where
doing so was not required to resolve the dispute.457
5.147. In examining below whether the AFA Norm has general and prospective application, we
also assess whether the conditions for us to c omplete the analysis are present in this dispute . We

subject to repeal or amendment in the future, and this would not necessarily remove the prospective nature of
that instrument. (Ibid., para. 7.323)
448 Contrary to the United States' argument, we do not consider that China's claim concerns the Panel's
assessment of the evidence and thus should have been brought under Article 11 of the DSU.
(See United States' appellee's submission, paras. 367-370) Rather, as explained above, we find error with the
standard applied by the Panel to the AFA Norm.
449 China's appellant's submission, para. 432.
450 China's appellant's submission, paras. 416 and 419.
451 United States' appellee's submission, paras. 416 and 418.
452 United States' appellee's submission, paras. 425 and 431.
453 United States' appellee's submission, paras. 361-364.
454 See Appellate Body Reports, EC and certain member States – Large Civil Aircraft, para. 1178;
455 See Appellate Body Reports, Australia – Salmon, paras. 209, 241, and 255; Korea – Dairy, paras. 91
and 102; US – Large Civil Aircraft (2nd complaint), para. 653; US – Section 211 Appropriations Act, para. 343;
and EC – Asbestos, paras. 78-79.
456 See Appellate Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program,
para. 5.224; and EC ‒ Seal Products, paras. 5.63 and 5.69.
457 Appellate Body Report, US – Steel Safeguards, para. 431.

first examine whether the AFA Norm has "general application". As noted earlier, a rule or norm will
have "general application" to the extent that it affects an unidentified number of economic
operators, instead of economic operators specified in that rule or norm.458
5.148. China contends that the AFA Norm has general application by relying on certain statements
made by the Panel pertaining to the AFA Norm and the Single Rate Presumption. According to
China, the AFA Norm concerns the USDOC's determination of the rate for an NME -wide entity that
is identified by the USDOC through operation of the Single Rate Presumption. 459 China notes that
the Panel found that, under the Single Rate Presumption, "the USDOC presumpti vely includes
within the NME -wide entity all producers/exporters of a product under consideration in
anti-dumping proceedings from a country that the United States considers to be a non -market
economy."460 In addition, referring to the 73 anti -dumping determ inations it submitted to the
Panel, China contends that the AFA Norm applies in all investigations and reviews that involve
imports from an NME country. 461 China contends that the AFA Norm concerns the general class of
economic operators that the USDOC could potentially include within an NME-wide entity.462
5.149. The United States contends that the alleged AFA Norm does not have general application
because no evidence or findings demonstrate that it affects an unidentified number of economic
operators.463 The United States submits that the alleged AFA Norm merely "constitutes particular
treatment accorded to the China -government entity in an antidumping proceeding involving
uncooperative exporters or producers that are part of the China-government entity."464
5.150. Before the P anel, China described the precise content of the AFA Norm in the following
manner:
[W]henever [the] USDOC considers that an NME-wide entity has failed to cooperate to
the best of its ability, it systematically makes an adverse inference and selects, to
determine the rate for the NME -wide entity, facts that are adverse to the interests of
that fictional entity and each of the producers/exporters included within it.465
5.151. The Panel found that the 73 anti -dumping determinations on the record demonstrate the
precise content of the AFA Norm as described by China. According to the Panel, these
determinations show that, "whenever the USDOC made a finding that an NME -wide entity failed to
cooperate to the best of its ability, it adopted adverse inferences and, in determi ning the duty rate
for the NME-wide entity, selected facts from the record that were adverse to the interests of such
entity, and the exporters included within it."466
5.152. The unappealed Panel finding concerning the precise content of the AFA Norm suggests
that this norm is a measure of general application because it affects an unidentified number of
economic operators. The AFA Norm is not addressed to specified economic operators, in the sense
that the companies that will be subject to the AFA Norm can be identi fied independently of any
specific application of this norm. In addition, we note that the description of the precise content of
the AFA Norm does not impose any express limitation on the economic operators from an
NME country that may be included within an NME-wide entity that is subject to the AFA Norm. This
means, in our view, that any economic operator from an NME country may be included within such
an NME-wide entity.
5.153. We also note the connection between the AFA Norm and the Single Rate Presumption. For
the Panel, pursuant to the Single Rate Presumption, exporters in USDOC anti-dumping
proceedings involving NME countries are presumed to form part of an NME -wide entity and are
assigned a single anti-dumping duty rate, unless an exporter demonstrates, thro ugh the fulfilment

458 See para. 5.130. above.
459 China's appellant's submission, para. 429 (referring to Panel Report, para. 7.480).
460 China's appellant's submission, para. 430 (referring to Panel Report, para. 7.361).(emphasis original)
461 China's appellant's submission, para. 431 and fn 450 thereto.
462 China's appellant's submission, para. 432.
463 United States' appellee's submission, para. 377.
464 United States' appellee's submission, para. 377.
465 Panel Report, para. 7.422 (quoting China's opening statement at the second Panel meeting, para. 63
(emphasis original)).
466 Panel Report, para. 7.454.

of the criteria set out in the Separate Rate Test 467, an absence of de jure and de facto
governmental control over its export activities. 468 The Panel found that the Single Rate
Presumption has general application because it applies to all "NME exporters" involved in original
investigations and administrative reviews conducted by the United States.469
5.154. We note that the application of the Single Rate Presumption may result in the
establishment of NME -wide entities. In turn, these NME -wide entiti es will be subject to the
AFA Norm where the USDOC finds that they have failed to cooperate to the best of their ability.
Therefore, the AFA Norm would apply to the same group of economic operators subject to the
Single Rate Presumption – namely, economic operators from an NME country involved in
anti-dumping proceedings – whenever those economic operators do not demonstrate "an absence
of de jure and de facto governmental control over [their] export activities "470, and do not
cooperate in the anti -dumping investigation to the best of their ability. 471 Thus, we consider that
the Panel's finding that the Single Rate Presumption is a measure of general application supports
the conclusion that the AFA Norm is also a measure of general application.472
5.155. Finally, the 73 anti-dumping determinations put on the record by China also support the
conclusion that the AFA Norm has general application. As noted above, the Panel considered that
these determinations demonstrate the precise content of the AFA Norm as described by Chi na.473
We note that the 73 determinations covered a wide range of products, from saw blades to steel
cylinders, paper, shrimps, furniture, and photovoltaic cells474, and that the specific companies that
were deemed part of the NME -wide entity also varied great ly. In our view, the wide and varied
coverage of these determinations is a further indicator of the general scope of the AFA Norm. This
means that the AFA Norm is not limited to specifi ed economic operators, but rather covers any
economic operator that may be included within an NME-wide entity subject to the AFA Norm.
5.156. In light of the above, we conclude that, based on the findings in the Panel Report and
undisputed facts on the Panel record, the AFA Norm has "general application" because it affects an
unidentified number of economic operators.
5.157. We now turn to examine whether the AFA Norm has "prospective application". As noted
earlier, a rule or norm will have "prospective application" to the extent that it applies in the
future.475 We also recall our above find ing that a complainant is not required to show with
"certainty" that a given measure will continue to apply in the future. Rather, where prospective
application is not sufficiently clear from the constitutive elements of a rule or norm, it may be
demonstrated by a number of factors. These include: the existence of an underlying policy that is
implemented by the rule or norm; the systematic application of the challenged rule or norm; the
design, architecture, and structure of the rule or norm; the extent to which the rule or norm
provides administrative guidance for future conduct ; and the expectations it creates among
economic operators that the rule or norm will be applied in the future.476
5.158. China identifies a number of findings by the Panel that it views as being sufficient to show
that the AFA Norm has prospective application. 477 The United States responds that the evidence

467 The Separate Rate Test is described in paragraph 1.4. of this Report.
468 Panel Report, para. 7.311.
469 Panel Report, para. 7.337.
470 Panel Report, para. 7.311.
471 Panel Report, para. 7.454.
472 The group of economic operators subject to the Single Rate Presumption may not overlap entirely
with the group of economic operators subject to the AFA Norm where certain economic operators demonstrate
the absence of governmental control (and thus are excluded from the NME-wide entity), or where NME-wide
entities are considered to cooperate in the anti-dumping proceedings to the best of their ability. In our view,
even where the AFA Norm applies to a sub-group of the economic operators subject to the Single Rate
Presumption, the AFA Norm would still apply to an unidentified number of economic operators because it is not
possible to specify the economic operators affected by this norm outside the context of an application of the
AFA Norm to a particular NME-wide entity.
473 Panel Report, para. 7.454.
474 See Panel Report, fns 875 and 876 to para. 7.444.
475 Appellate Body Reports, US – Oil Country Tubular Goods Sunset Reviews, paras. 172 and 187;
US ‒ Corrosion-Resistant Steel Sunset Review, para. 82.
476 See para. 5.132. above.
477 China's appellant's submission, para. 419.

before the Panel was insufficient to demonstrate that the alleged AFA Norm has prospective
application.478
5.159. We observe that, in the context of examining whether China had demonstrated the precise
content of the AFA Norm, the Panel noted that, "[i]n the USDOC's view, selecting the highest
margin from any segment of the proceedings [in cases of non -cooperation] 'reflects a common
sense inference that the highest prior margin is the most probative evidence of current margins,
because, if it were not so, the importer, knowing of the rule , would have produced current
information showing the margin to be less' ."479 In the same context, the Panel also ob served that,
in several determinations, the USDOC referred to its "practice" of ensuring that the margin is
"sufficiently adverse as to effectuate the purpose of the facts available role to induce respondents
to provide the [USDOC] with complete and accura te information in a timely manner". 480 In our
view, these Panel statements mean that the AFA Norm implements, or is part of, an underlying
policy. The implementation of an underlying policy is an element that supports the conclusion that
the AFA Norm has prospective application.
5.160. The Panel also observed that, in several of the 73 USDOC anti-dumping determinations on
the record, the USDOC described the selection of the highest margin in the petition or the highest
rate calculated in any segment of the proceedin gs as a "practice", "standard practice", or "normal
practice", which has consistently been upheld by the USCIT and the USCAFC. 481 We agree with the
Panel that the USDOC's conduct amounted to more than mere repetition of conduct. 482 We also
agree with the Panel that the invariable application of the AFA Norm during a period of over
12 years might create expectations for economic operators that the norm will continue to apply in
the future, and that prior practice may provide the USDOC with administrative guidanc e for future
actions.483 As explained above, the systematic application of the challenged norm over an
extended period of time, as well as the extent to which it provides administrative guidance for
future conduct and creates expectations among economic oper ators, are all relevant factors that
indicate the prospective application of a rule or norm.
5.161. We observe that, at the end of its analysis, the Panel introduced the requirement of
"certainty" in relation to the prospective application of the AFA Norm. Purpo rting to apply this
understanding to the facts in this dispute, the Panel state d that it was not persuaded that the
practice reflected in the 73 anti-dumping determinations on the record is sufficient to demonstrate
that "the USDOC will continue to follow the same course of action in the future."484 The Panel then
concluded that the USDOC's practice emanating from these 73 determinations does not provide
the "level of security and predictability of continuation into the future typically associated with
rules or norms." 485 We consider that the legal proposition advanced by the Panel at
paragraphs 7.474-7.475 of its Report, as well as the tentative language and the conclusion in
paragraph 7.476 of its Report486, reflect the "certainty" requirement in respect of

478 United States' appellee's submission, paras. 361-364.
479 Panel Report, para. 7.446. (emphasis added) The Panel identified instances where the USDOC
referred to the fact that non-cooperating parties are "knowing of the rule." (See Panel Report, fn. 886 to
para. 7.446 (referring to 2011-2012 administrative review in Glycine (Panel Exhibit CHN-433), p. 7;
2007-2008 administrative review in Honey (Panel Exhibit CHN-313), p. 68252; 2003-2004 administrative
review in Porcelain-on-Steel Cooking Ware (Panel Exhibit CHN-441), p. 76029; 2005-2006 administrative
review in Tapered Roller Bearings (Panel Exhibit CHN-438), p. 14080; and 2004-2005 administrative review in
Freshwater Crawfish Tail Meat (Panel Exhibit CHN-439), p. 59436)) We note that, in addition to the exhibits
mentioned by the Panel, the USDOC referred to the same phrase in three more determinations, namely,
2011-2012 administrative review in Shrimp (Panel Exhibit CHN-167), p. 8; 2012-2013 administrative review in
Aluminum (Panel Exhibit CHN-205), p. 18; and 2011 administrative review in Furniture (Panel Exhibit
CHN-298), p. 14.
480 Panel Report, para. 7.445.
481 Panel Report, paras. 7.469 and 7.472.
482 Panel Report, para. 7.472. The Panel noted that "[t]he sample includes determinations covering a
period of over 12 years, with the most recent determination dating from 7 July 2015 (the first administrative
review in Solar)." (Ibid. (referring to 2012-2013 administrative review in Solar (Panel Exhibit CHN-487))
483 Panel Report, paras. 7.475-7.476.
485 Panel Report, para. 7.475.
486 At paragraph 7.476 of its Report, we note that the Panel employed somewhat tentative language in
its statements – namely, the terms "[w]e do not exclude", "[w]e … do not disagree", "might" and "may". In
particular, the Panel stated that it "[did] not exclude that the invariable application of the alleged AFA Norm
over several years might create the expectation that, in a case where an NME-wide entity is found to be
non-cooperating, the USDOC may, again, draw adverse inferences and select facts that are adverse to the

"prospective application" that the Panel applied to the AFA Norm. We have concluded above that
the Panel erred by requiring China to demonstrate with "certainty" that the AFA Norm will be
applied in the future. In our view, the final part of the Panel's analys is – where the erroneous
"certainty" requirement is introduced – does not detract from the Panel's earlier analysis
concerning the factors relevant to establishing "prospective application" as properly interpreted.
5.162. Thus, the Panel made certain findings and statements that lead to the conclusion that the
AFA Norm has prospective application, namely , that the AFA Norm was consistently and
systematically applied by the USDOC over an extended period of time, and that the AFA Norm
implements an underlying policy , provides administrative guidance, and creates expectations
among economic operators.
5.163. In light of the above, we conclude that, based on the findings in the Panel Report and
undisputed facts on the Panel record, the AFA Norm has "prospective application" in the sense that
it reflects a policy by the USDOC, it provides administrative guidance for future action, it generates
expectations among economic operators, and it therefore will continue to be applied in the future.
5.164. In light of the unappealed Panel find ings that the AFA Norm is attributable to the
United States487 and that its content corresponds to the description made by China488, and having
found that the AFA Norm has both general and prospective application, we find that the AFA Norm
is a rule or norm of general and prospective application that can be challenged "as such" in
WTO dispute settlement.
5.2.5 China's request for completion – Article 6.8 and paragraph 7 of Annex II to the
Anti-Dumping Agreement
5.165. Having found that the AFA Norm is a rule or norm of gen eral and prospective application,
we turn to China's request for us to complete the analysis and find that the AFA Norm is
inconsistent with Article 6.8 and paragraph 7 of Annex II to the Anti-Dumping Agreement.489 China
argues that the AFA Norm prompts the USDOC to draw adverse inferences and select adverse
facts as a response to a single factor – i.e. non -cooperation – without establishing that such
inferences can reasonably be drawn and that such facts are the "best" information available in the
particular circumstances.490 China submits that the inferences that can reasonably be drawn from
all of the facts and circumstances may be different from the inferences that might arise from
non-cooperation alone.491 For China, as a result of the AFA Norm, the USDOC ove rlooks relevant
procedural circumstances492, fails to exercise special circumspection, and fails to select the best
information available, as required by Article 6.8 and paragraph 7 of Annex II.493
5.166. The United States responds that the Appellate Body should dism iss China's request for
completion because China's claims under Article 6.8 and Annex II are outside the Panel's terms of
reference.494 The United States additionally submits that the Appellate Body is not in a position to
complete the analysis 495, and that China's claims are without merit. 496 The United States also
contends that Appellate Body findings on the AFA Norm would not contribute to a positive
resolution of this dispute.497
5.167. We first turn to the United States' argument concerning the Panel's terms of refer ence.
The United States submits that China's claims under Article 6.8 and Annex II are outside the
Panel's terms of reference because paragraph 26 of China's panel request does not identify the

interests of the entity and the exporters within it." The Panel also "[did] not disagree that prior practice may
provide the USDOC with administrative guidance for future action." (Panel Report, para. 7.476) (emphasis
added)
487 Panel Report, para. 7.456.
488 Panel Report, para. 7.454.
489 China's appellant's submission, paras. 439, 509, and 637.
490 China's appellant's submission, paras. 441 and 480.
491 China's appellant's submission, paras. 483-485.
492 China's appellant's submission, para. 442.
493 China's appellant's submission, paras. 441, 497, and 507-508.
494 United States' appellee's submission, paras. 255, 379, 387, and 392.
495 United States' appellee's submission, paras. 256–257, 416, and 418.
496 United States' appellee's submission, paras. 256, 399, 411-412, and 438.
497 United States' appellee's submission, paras. 253 and 287.

precise obligations alleged to have been breached by the Unite d States. Rather, it refers to an
entire portion of the Anti -Dumping Agreement – namely, Annex II – that contains multiple
obligations.498
5.168. The Appellate Body has explained that merely listing articles in the panel request may fall
short of the standard in Ar ticle 6.2 of the DSU where the listed articles establish multiple distinct
obligations.499 In this respect, the Appellate Body has examined the narrative of a panel request
when considering whether the panel request as a whole sufficiently identifies the par ticular
obligations that form the legal basis of the complaint.500
5.169. We note that China's panel request alleges that "the United States fails to use the best
information available and special circumspection when basing its finding s on information from
secondary sources."501 We observe that paragraph 7 of Annex II to the Anti-Dumping Agreement
contains similar wording providing that, "[i]f the authorities have to base their findings … on
information from a secondary source, … they should do so with special circums pection."
Paragraph 7 is the only paragraph in Annex II that concerns an investigating authority's obligation
to exercise special circumspection when basing findings on information from a secondary source.
Thus, we consider that the general reference by Ch ina to Annex II, together with the narrative
included in its panel request, provides "a brief summary of the legal basis of the complaint
sufficient to present the problem clearly" that comports with the standard set forth in Article 6.2 of
the DSU.
5.170. We now turn to China's claim under Article 6.8 and paragraph 7 of Annex II to the
Anti-Dumping Agreement. Article 6.8 provides:
In cases in which any interested party refuses access to, or otherwise does not
provide, necessary information within a reasonable per iod or significantly impedes the
investigation, preliminary and final determinations, affirmative or negative, may be
made on the basis of the facts available. The provisions of Annex II shall be observed
in the application of this paragraph.
5.171. Paragraph 7 of Annex II provides:
ANNEX II
BEST INFORMATION AVAILABLE IN TERMS OF
PARAGRAPH 8 OF ARTICLE 6
…
7. If the authorities have to base their findings, including those with respect to
normal value, on information from a secondary source, including the informat ion
supplied in the application for the initiation of the investigation, they should do so with
special circumspection. In such cases, the authorities should, where practicable, check
the information from other independent sources at their disposal, such a s published
price lists, official import statistics and customs returns, and from the information
obtained from other interested parties during the investigation. It is clear, however,
that if an interested party does not cooperate and thus relevant inform ation is being
withheld from the authorities, this situation could lead to a result which is less
favourable to the party than if the party did cooperate.

498 United States' appellee's submission, paras. 255, 379-380, 387, 390, and 392.
499 Appellate Body Reports, Korea – Dairy, para. 124; China – Raw Materials, para. 220. See also
Appellate Body Reports, EC ‒ Fasteners (China), para. 598; and US – Carbon Steel, para. 130.
500 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), paras. 4.25-4.30.
The Appellate Body has noted that compliance with the requirements of Article 6.2 of the DSU must be
determined on the merits of each case, having considered the panel request as a whole, and in light of
attendant circumstances. (Appellate Body Report, US – Carbon Steel, para. 127. See also Appellate Body
Reports, EC and certain member States – Large Civil Aircraft, para. 787; and EC – Selected Customs Matters,
para. 168)
501 Request for the Establishment of a Panel by China, dated 13 February 2014, WT/DS471/5, para. 26.

5.172. The Appellate Body has explained that, when relying on facts available, an investigating
authority must use those facts available that reasonably replace the necessary information that an
interested party failed to provide with a view to arriving at an accurate determination. 502
Ascertaining which "facts available" reasonably replace the missing "necessary information" calls
for a process of reasoning and evaluation of all substantiated facts on the record. 503 In such a
process, no substantiated facts on the record can be a priori excluded from consideration. 504 In
addition, an investigating authority may be cal led upon to draw inferences from the evidence
before it in order to reach a conclusion. The manner or procedural circumstances in which
information is missing can be relevant to an investigating authority's use of "facts available". 505
Determinations under A rticle 6.8, however, must be based on "facts" that reasonably replace the
missing "necessary information" in order to arrive at an accurate determination, and thus cannot
be made on the basis of procedural circumstances alone.506
5.173. Article 6.8 provides that t he provisions in Annex II shall be observed where an
investigating authority resorts to the use of "facts available". Paragraph 7 of Annex II sets forth
that, if the authorities have to base their findings on information from a secondary source,
including information supplied in the application for the initiation of an investigation, they should
do so with special circumspection and, where practicable, check the information from other
independent sources at their disposal. The Appellate Body has considered that this provision is
indicative that investigating authorities should undertake a process of reasoning and evaluation
when selecting the facts available that reasonably replace the missing "necessary information" to
arrive at an accurate determination.507
5.174. Given that the Panel neither explored nor made any finding s in relation to whether the
AFA Norm is inconsistent with Article 6.8 and paragraph 7 of Annex II, we examine whether there
are sufficient findings in the Panel Report and undisputed facts on the Panel record for us to
conduct our own analysis.
5.175. We recall that the Panel found that the 73 anti -dumping determinations put on the record
by China demonstrate the precise content of the AFA Norm as described by China. 508 Before the
Panel, China described the precise content of the AFA Norm in the following manner:
[W]henever [the] USDOC considers that an NME-wide entity has failed to cooperate to
the best of its ability, it systematically makes an adverse inference and selects, to
determine the rate for the N ME-wide entity, facts that are adverse to the interests of
that fictional entity and each of the producers/exporters included within it.509

502 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice, paras. 293-295; US ‒ Carbon
Steel (India), para. 4.416. Given the similarities between the text of Article 12.7 of the Agreement in Subsidies
and Countervailing Measures (SCM Agreement) and Article 6.8 of the Anti-Dumping Agreement and that both
provisions permit an investigating authority, under certain circumstances, to fill in gaps in the information
necessary to arrive at a conclusion as to dumping or subsidization and injury, we consider that the
interpretation of Article 12.7 of the SCM Agreement developed by the Appellate Body in Mexico – Anti-Dumping
Measures on Rice and US – Carbon Steel (India) is relevant to the understanding of the legal standard applied
under Article 6.8 and paragraph 7 of Annex II to the Anti-Dumping Agreement.
503 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice, para. 294; US ‒ Carbon Steel
(India), para. 4.419.
504 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice, para. 294; US – Carbon Steel
(India), para. 4.419.
505 Appellate Body Report, US – Carbon Steel (India), paras. 4.420 and 4.422. Article 6.13 of the
Anti-Dumping Agreement provides that investigating authorities "shall take due account of any difficulties
experienced by interested parties", which includes interested parties that have not provided the "necessary
information" referred to in Article 6.8 of the Anti-Dumping Agreement. The kinds of difficulties experienced by
interested parties to be taken into account by an investigating authority in having recourse to Article 6.8 could
relate to, inter alia, the nature and availability of the evidence being sought, the adequacy of protection
accorded by an investigating authority to the confidentiality of information, the time period provided to
respond, and the extent or number of opportunities to respond. (Ibid., para. 4.422)
506 Appellate Body Report, US – Carbon Steel (India), paras. 4.422 and 4.468.
507 Appellate Body Report, US – Carbon Steel (India), para. 4.425. See also Appellate Body Report,
Mexico – Anti-Dumping Measures on Rice, para. 289.
508 Panel Report, para. 7.454.
509 Panel Report, para. 7.422 (quoting China's opening statement at the second Panel meeting, para. 63
(emphasis original)).

5.176. As noted above, there are no findings by the Panel on whether the AFA Norm is
inconsistent with Article 6.8 and paragr aph 7 of Annex II. In particular, the Panel did not explore
much less make any findings concerning the process of reasoning and evaluation undertaken by
the USDOC prior to selecting "facts available" to replace missing information.
5.177. On appeal, China argues that the AFA Norm prompts the USDOC to draw adverse
inferences and select adverse facts as a response to non -cooperation alone.510 The United States
contends that nothing in the Panel Report suggests that the "USDOC is laboring under conditions
that prevent it from selecting facts that constitute reasonable and reliable replacements for the
missing information." 511 China's and the United States' arguments on appeal mostly concern
whether the USDOC relied on non -cooperation as the only relevant procedural circu mstance when
resorting to "facts available". China and the United States do not sufficiently engage with the
extent to which, under the AFA Norm, the USDOC selects facts that reasonably replace the missing
"necessary information" in order to arrive at an accurate determination.
5.178. For an evaluation of the conformity of the AFA Norm with Article 6.8 and paragraph 7 of
Annex II, we would need to examine the process of reasoning and evaluation of all substantiated
facts on the record adopted by the USDOC for its selection of which "facts available" reasonably
replace the missing "necessary information". In deciding whether we are able to complete the
analysis, we take into consideration the absence of Panel findings and sufficient undisputed facts
on the Panel rec ord, as well as the arguments made by the participants on appeal. Under these
circumstances, we are unable to evaluate the process that the USDOC undertakes for its selection
of which "facts available" reasonably replace the missing "necessary information" with a view to
arriving at an accurate determination.
5.179. For these reasons, we do not accede to China's request for us to complete the analysis in
relation to whether the AFA Norm is inconsistent with Article 6.8 and paragraph 7 of Annex II to
the Anti-Dumping Agreement. Therefore, we need not examine the United States' contentions that
Appellate Body findings on the AFA Norm would not contribute to a positive reso lution of this
dispute, and that China's claims are without merit.512
5.2.6 Conclusion
5.180. In sum, a rule or norm has "general application" to the extent that it affects an
unidentified number of economic operators. In addition, we consider that a rule or norm has
"prospective application" to the extent that it applies in the future. In this respect, in order to
demonstrate prospective application, a complainant is not required to show with "certainty" that a
given measure will apply in the future. Rather, where prospective application is not sufficiently
clear from the constitutive elements of the rule or norm, it may be demonstrated through a
number of other factors: the existence of an underlying policy that is implemented by the rule or
norm; the systematic application of the challenged rule or norm ; the design, architecture, and
structure of the rule or norm ; the extent to which the rule or norm provides administrative
guidance for future conduct; and the expectations it creates among economic operators that the
rule or norm will be applied in the future. We find that the Panel erred by requiring "certainty" of
future application when examining whether the AFA Norm has "prospective application".
Consequently, we reverse the Panel's findings, in paragraphs 7.479 and 8.1.d.ii of its Report, that
China has not demonstrated that the AFA Norm is a norm of general and prospective application.
5.181. In relation to China's request for us to complete the analysis and find that the AFA Norm is
a rule or norm of general and prospective application, we consider that the unappealed Panel
finding concerning the precise content of t he AFA Norm suggests that this norm is a measure of
general application because it affects an unidentified number of economic operators. The
AFA Norm does not impose any express limitations on economic operators from NME countries that
may be included with in NME-wide entities subject to the AFA Norm. The connection between the
AFA Norm and the Single Rate Presumption also supports the conclusion that the AFA Norm has
"general application". This is because the Panel found that the Single Rate Presumption is a
measure of general application, and the AFA Norm applies to the same group of economic
operators subject to the Single Rate Presumption whenever the economic operators fail to

510 China's appellant's submission, paras. 441, 480, and 487.
511 United States' appellee's submission, para. 403.
512 See United States' appellee's submission, paras. 253, 256, 257, 287, 399, 411-412, 416, and 418.

demonstrate an absence of governmental control over their export activities an d fail to cooperate
in the anti -dumping investigation to the best of their ability. Moreover, the fact that the
73 anti-dumping determinations put on the record by China covered a wide range of products and
companies is a further indicator that the AFA Norm has "general application". For these reasons,
based on the findings in the Panel Report and undisputed facts on the Panel record, we find that
the AFA Norm has "general application".
5.182. In addition, we consider that the Panel's findings concerning the AFA Norm mean that this
norm will continue to be applied in the future by the USDOC. The Panel made statements
demonstrating that the AFA Norm has "prospective application", namely , that the AFA Norm was
consistently and systematically applied by the USDOC over an extended period of time , and that
the AFA Norm implements an underlying policy, provides administrative guidance, and creates
expectations among economic operators. For these reasons, based on the findings and statements
in the Panel Report and our leg al analysis, we find that the AFA Norm has "prospective
application".
5.183. In light of the unappealed Panel findings that the AFA Norm is attributable to the
United States513, and that its content corresponds to the description thereof made by China 514, as
well as our conclusions above that the AFA Norm has general and prospective application, we find
that the AFA Norm is a rule or norm of general and prospective application that may be challenged
"as such" in WTO dispute settlement.
5.184. In relation to China's request for us to complete the analysis and find that the AFA Norm is
inconsistent with Article 6.8 and paragraph 7 of Annex II to the Anti -Dumping Agreement, we
consider that the general reference by China to Annex II, together with the narrative included in
its panel request, provides "a brief summary of the legal basis of the complaint sufficient to
present the problem clearly" consistently with the standard of Article 6.2 of the DSU. The Panel,
however, made no findings on whether the AFA Norm is inconsistent w ith Article 6.8 and
paragraph 7 of Annex II to the Anti-Dumping Agreement. In particular, the Panel did not explore
the process of reasoning and evaluation undertaken by the USDOC prior to selecting "facts
available" to replace missing "necessary information". For an evaluation of the conformity of the
AFA Norm with Article 6.8 and Annex II, we would need to examine the process of reasoning and
evaluation undertaken by the USDOC for its selection of which "facts available" reasonably replace
the missing "necessary information". In deciding whether we are able to complete the analysis, we
have taken into consideration the absence of Panel findings and sufficient undisputed facts on the
Panel record, as well as the arguments made by the participants on appeal. Under these
circumstances, we are unable to evaluate the process undertaken by the USDOC for its selection of
which "facts available" reasonably replace the missing "necessary information" with a view to
arriving at an accurate determination. Consequently , we do not accede to China's request for
completion of the analysis.
6 FINDINGS AND CONCLUSIONS
6.1. For the reasons set out in this Report, the Appellate Body makes the following findings and
conclusions.
6.1 The USDOC's application of the Nails test and its use of the W-T methodology in the
three challenged investigations
6.2. In relation to the first alleged quantitative flaw with the Nails test, we consider that the fact
that a large number of export prices may fall below the one standard deviation threshold where
the distribution of the export price data is not normal, or single-peaked and symmetrical does not
necessarily preclude an investigating authority from finding that the export prices to the "target"
differ significantly from the other export prices and form a pattern within the meaning of the
second sentence of Article 2.4.2 of the Anti -Dumping Agreement. Accordingly, we consider that
China has not established that the standard deviation test as applied by the USDOC in the
three challenged investigations is only capable of identifying prices that differ from other export
prices and form a pattern within the meaning of the second sentence of Article 2.4.2 where the
distribution of the export price data is normal, or single-peaked and symmetrical. On this basis, we

513 Panel Report, para. 7.456.
514 Panel Report, para. 7.454.

find that China has not established that the Panel erred in its interpretation or application of the
second sentence of Article 2.4.2 of the Anti -Dumping Agreement in rejecting China's claim in
respect of the first alleged quantitative flaw with the Nai ls test as applied in the three challenged
investigations.
6.3. In relation to third alleged quantitative flaw with the Nails test, the Panel considered that "the
third alleged quantitative flaw rests on the assumption that in the three challenged investigatio ns,
the alleged target price gap was based on prices located at the tail of the distribution of the export
price data and the weighted -average non-target price gap was based on prices located nearer to
the peak of that distribution."515 The Panel was correct in rejecting China's claim on the basis of its
finding that China ha d not shown that th is assumption is "factually correct insofar as the
three challenged investigations are concerned". 516 Therefore, we find that China has not
established that the Panel err ed in its interpretation or application of the second sentence of
Article 2.4.2 of the Anti -Dumping Agreement in rejecting China's claim in respect of the
third alleged quantitative flaw with the Nails test as applied in the three challenged investigations.
6.4. We also find that China has not established that the Panel failed to comply with Article 17.6(i)
of the Anti -Dumping Agreement in relation to both the first and third alleged quantitative flaws
with the Nails test.
a. Consequently, we uphold the Panel's finding, in paragraph 8.1.a.vi of its Report, that
"China has not established that the United States acted inconsistently with Article 2.4.2
of the Anti -Dumping Agreement in the OCTG, Coated Paper and Steel Cylinders
investigations" insofar as this finding r elates to the first and third alleged quantitative
flaws with the Nails test.
6.5. In relation to the qualitative issues with the Nails test, we consider that the Panel did not err
in its interpretation of the second sentence of Article 2.4.2 of the Anti -Dumping Agreement in
finding that investigating authorities are not required to examine the reasons for the relevant
differences in export prices, or whether those differences are unconnected to "targeted dumping",
in order to assess whether export prices differ "significantly". We also consider that, while it did
not explicitly refer to "objective market factors", the Panel correctly concluded that an
investigating authority should undertake a qualitative analysis of the significance of export price
differences. We thus disagree with China's contention t hat the Panel erred in interpreting and
applying the second sentence of Article 2.4.2 because it found that "investigating authorities
[are not required] to consider objective market factors in determining whether relevant prici ng
differences are 'significant'".517
a. Consequently, we uphold the Panel's findings, in paragraphs 7.114 and 8.1.a.viii of its
Report, that "the USDOC was not required to consider the reasons for the differences in
export prices forming the rel evant pattern in order to determine whether those
differences were qualitatively significant within the meaning of the pattern clause of
Article 2.4.2" and that, accordingly, "China has not established that the United States
acted inconsistently with Artic le 2.4.2 of the Anti -Dumping Agreement in the OCTG,
Coated Paper and Steel Cylinders investigations because of the alleged qualitative issues
with the Nails test".
6.6. In relation to the USDOC's use of averages to establish the existence of a pattern in the three
challenged investigations, we consider that the existence of a pattern within the meaning of the
second sentence of Article 2.4.2 of the Anti-Dumping Agreement depends on the price relationship
between the "targeted" transactions, on the one hand, and the "non-targeted" transactions, on the
other hand. The distinguishing factor that allows for the determination of a pattern is that the
prices within the pattern differ significantly from the prices outside it. We also note that the
relevant difference is one "among" different purchasers, regions, or time periods. For these
reasons, we consider that an investigating authority may rely on individual export transaction
prices or average prices in order to find a pattern, provided that this pattern meets the
requirements stipulated in the pattern clause. In this case, like the Panel 518, we consider that

515 Panel Report, para. 7.78.
516 Panel Report, para. 7.82.
517 China's appellant's submission, heading IV.

China has not demonstrated that the United States acted inconsistently with Article 2.4.2 in the
three challenged investigations by determining the relevant pattern on the basis of average prices.
In addition, by not advancing any argument that is separate and different from its arguments
concerning the alleged error in the Panel's interpretation of Article 2.4.2, China has not
demonstrated that the Panel failed t o comply with Article 17.6(i) of the Anti -Dumping Agreement.
We theref ore find that the Panel did not err in its interpretation and application of the
second sentence of Article 2.4.2 of the Anti -Dumping Agreement to the three challenged
investigations when examining the USDOC's use of purchaser or time period averages under the
Nails test. Furthermore, we find that China has not established that the Panel failed to comply with
Article 17.6(i) of the Anti-Dumping Agreement.
a. Consequently, we uphold the Panel's finding, in paragraph 8.1.a.ix of its Report, that
China has not established that the United States acted inconsistently with the
second sentence of Article 2.4.2 in the three challenged investigations by determining
the existence of a "pattern" on the basis of average prices, instead of individual export
transaction prices.
6.7. In relation to the Panel's statements in footnote 385 of the Panel Report, we consider that, as
in US – Washing Machines, the second sentence of Article 2.4.2 of the Anti -Dumping Agreement
allows an investigating authority to establish margins of dumping by applying the
W-T methodology only to "pattern transactions" and that Article 2.4.2 does not permit the
combining of comparison methodologies. 519 In circumstances where the requirem ents of the
second sentence of Article 2.4.2 are fulfilled, an investigating authority may establish margins of
dumping by comparing a weighted average normal value with export prices of "pattern
transactions", while excluding "non -pattern transactions" fr om the numerator, and dividing the
resulting amount by all the export sales of a given exporter or foreign producer.520
a. Consequently, we declare moot the Panel's statements, in footnote 385 of its Report ,
to the extent that these statements are premised on the erroneous understanding that
Article 2.4.2 of the Anti -Dumping Agreement permits the combining of comparison
methodologies to establish dumping margins.
6.2 The AFA Norm
6.8. We consider that a rule or norm has "general application" to the extent that it affect s an
unidentified number of economic operators. In addition, a rule or norm has "prospective
application" to the extent that it applies in the future. In this respect, in order to demonstrate
prospective application, a complainant is not required to show w ith "certainty" that a given
measure will apply in the future. Rather, where prospective application is not sufficiently clear
from the constitutive elements of the rule or norm, it may be demonstrated through a number of
other factors: the existence of an underlying policy that is implemented by the rule or norm; the
systematic application of the challenged rule or norm; the design, architecture, and structure of
the rule or norm; the extent to which the rule or norm provides administrative guidance for future
conduct; and the expectations it creates among economic operators that the rule or norm will be
applied in the future. We find that the Panel erred by requiring "certainty" of future application
when examining whether the AFA Norm has "prospective application".
a. Consequently, we reverse the Panel's findings, in paragraphs 7.479 and 8.1.d.ii of its
Report, that China has not demonstrated that the AFA Norm constitutes a norm of
general and prospective application.
6.9. In relation to China's request for us to complete the analysis and find that the AFA Norm is a
rule or norm of general and prospective application, we consider that the unappealed Panel finding
concerning the precise content of the AFA Norm suggests that this norm is a measure of general
application because it affects an unidentified number of economic operators. The AFA Norm does
not impose any express limitation s on economic operators from NME countries that may be
included within NME-wide entities subject to the AFA Norm. The connection between the AFA Norm
and the Single Rate Presumption also supports the conclusion that the AFA Norm has "general
application". This is because the Panel found that the Single Rate Presumption is a measure of

519 Appellate Body Report, US – Washing Machines, para. 5.129.
520 Appellate Body Report, US – Washing Machines, para. 5.130.

general application, and the AFA Norm applies to the same group of economic operators subject to
the Single Rate Presumption whenever the economic operators fail to demonstrate an absence of
governmental control over their export activities and fail to cooperate in the anti -dumping
investigation to the best of their ability. Moreover, the fact that the 73 anti-dumping
determinations put on the record by China covered a wide range of products and companies is a
further indicator that the AFA Norm has "general application". For these reasons, based on the
findings in the Panel Report and undisputed facts on the Panel record, we find that the AFA Norm
has "general application".
6.10. In addition, we consider that the Panel's findings concerning the AFA Norm mean that this
norm will continue to be applied in the future by the USDOC. The Panel made statements
demonstrating that the AFA Norm has "prospective application", namely , that the AFA Norm was
consistently and systematically applied by the USDOC over an extended period of time , and that
the AFA Norm implements an und erlying policy, provides administrative guidance, and creates
expectations among economic operators. For these reasons, based on the findings in the Panel
Report and our legal analysis, we find that the AFA Norm has "prospective application".
a. In light of the unappealed Panel findings that the AFA Norm is attributable to the
United States521, and that its content corresponds to the description thereof made by
China522, as well as our conclusion s above that the AFA Norm has general and
prospective application, w e find that the AFA Norm is a rule or norm of general and
prospective application that may be challenged "as such" in WTO dispute settlement.
6.11. In relation to China's request for us to complete the analysis and find that the AFA Norm is
inconsistent with Art icle 6.8 and paragraph 7 of Annex II to the Anti -Dumping Agreement, we
consider that the general reference by China to Annex II, together with the narrative included in
its panel request, provides "a brief summary of the legal basis of the complaint suffic ient to
present the problem clearly" consistently with the standard of Article 6.2 of the DSU. The Panel,
however, made no findings on whether the AFA Norm is inconsistent with Article 6.8 and
paragraph 7 of Annex II to the Anti-Dumping Agreement. In parti cular, the Panel did not explore
the process of reasoning and evaluation undertaken by the USDOC prior to selecting "facts
available" to replace missing "necessary information". For an evaluation of the conformity of the
AFA Norm with Article 6.8 and Annex II, we would need to examine the process of reasoning and
evaluation undertaken by the USDOC for its selection of which "facts available" reasonably replace
the missing "necessary information". In deciding whether we are able to complete the analysis, we
have taken into consideration the absence of Panel findings and sufficient undisputed facts on the
Panel record, as well as the arguments made by the participants on appeal.
a. Under these circumstances, we are unable to evaluate the process undertaken by th e
USDOC for its selection of which "facts available" reasonably replace the missing
"necessary information" with a view to arriving at an accurate determination.
Consequently, we do not accede to China's request for completion of the analysis.
6.3 Recommendation
6.12. The Appellate Body recommends that the DSB request the United States to bring its
measures found in this Report, and in the Panel Report as modified by this Report, to be
inconsistent with the Anti -Dumping Agreement and the GATT 1994, into conformity wi th those
Agreements.

521 Panel Report, para. 7.456.
522 Panel Report, para. 7.454.