Document: WT/DS382/R Page E-1 BCI deleted, as indicated [[XX]] ANNEX E EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSIONS OF THE PARTIES Contents Page Annex E-1 Executive Summary of the Second Written Submission of Brazil E-2
Document codes: WT/DS382/R
Complainant: Brazil
Respondent: U.S.
Third parties: Argentina, EU, Japan, South Korea, Mexico, Taiwan, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 2.1, 2.4.2, 2.4, 2  Anti-dumpingArt. VI:1, VI:2, II:1  GATT 1994Art. XVI:4  Agreement Establishing the World Trade OrganizationArt. 9.3  Anti-dumping

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ANNEX E

EXECUTIVE SUMMARIES OF THE SECOND WRITTEN
SUBMISSIONS OF THE PARTIES

Contents Page
Annex E-1 Executive Summary of the Second Written Submission of Brazil E-2
Annex E-2 Executive Summary of the Second Written Submission of
the United States E-9

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ANNEX E-1

EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF BRAZIL

I. INTRODUCTION

1. The areas of disagreement between the two par ties in this dispute have already been well
canvassed in the respective submissions to this Pa nel. In its second written submission, therefore,
Brazil, does not repeat the details of what has been said before. Instead, Brazil presents a summary of
the key interpretive arguments, and select argument s on the three measures at issue: the First and
Second Administrative Reviews and the continued use measure.

2. Before doing so, Brazil recalls that, fo llowing the First and Second Administrative
Reviews, Cutrale and Fischer have so far in curred final anti-dumping duty liabilities of [[XX]]
million US dollars under the Orange Juice Order. The payment of these duties is a direct consequence
of the USDOC's use of zeroing, because, if zeroing had not been used, the United States would have
collected no anti-dumping duties under the Order.

II. SUMMARY OF KEY INTERPRETIVE ARGUMENTS

3. The crucial legal arguments in this dispute re late to the definition of "dumping" and "margin
of dumping". Brazil has explained that dumping and margin of dumping may only be defined in
relation to the product as a whole. As required by Article 17.6(ii) of the Anti-Dumping Agreement,
this reading is derived from the relevant text, context, and object and purpose, interpreted in
accordance with the Vienna Convention on the Law of Treaties . In particular, Brazil's reading, like
the Appellate Body's
1, is grounded in the text, context, object and purpose of the following provisions:
Articles II:1, VI:1 and VI:2 of the GATT 1994; and Articles 2.1, 2.2, 2.3, 3.1, 3.2, 5.2(ii), 5.8, 6.1.1,
6.7, 6.10, 6.10.2, 7.2, 7.4, 8.1, 9.1, 9.3, 9.5, 10.6 and 11.1 of the Anti-Dumping Agreement . The
Appellate Body has repeatedly confirmed that this is the sole permissible interpretation of the terms
"dumping" and "margin of dumping", overturning numerous panels that held otherwise.2

4. Conversely, the United States argues that "dumping" and "margin of dumping" may be
defined in diverse ways, at an importing Member's discretion, to encompass both transaction-specific
and product-wide definitions of "dumping". In its Opening Statement at the first Panel meeting,
Brazil responded to each of the arguments present ed by the United States in support of this
interpretation. Because the United States has not ela borated further on its position since that meeting,
in its Second Written Submission Brazil summarized the arguments presented earlier in this regard.3

5. The United States also argues that, assuming the use of zeroing gives rise to an inconsistency
with WTO disciplines, to prove such an inconsiste ncy Brazil must demonstrate that the use of zeroing
had an impact on the outcome of the authority' s determination. As Brazil discusses below, the
United States is wrong on the law and the facts.

1 See Appellate Body Report, US – Stainless Steel, paras. 83 – 99.
2 See, e.g., Brazil's FWS, paras. 49 – 61; and Br azil's Opening Statement, paras. 6 – 37. See also
Appellate Body Report, US – Continued Zeroing, concurring opinion, para. 312.
3 Brazil's SWS, pp. 3 – 4.

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III. THE FIRST AND SECOND ADMINISTRATIVE REVIEWS VIOLATE
ARTICLES 2.4 AND 9.3 OF THE ANTI-DUMPING AGREEMENT , AND
ARTICLE VI:2 OF THE GATT 1994

6. Brazil has shown that, for the two Brazilian exporters at issue, Cutrale and Fischer, the
USDOC used zeroing in the First Administrative Review under the Orange Juice Order to determine
the "weighted average margins of dumping", the cash deposit rates ("CDR") and the importer-specific
assessment rates ("ISAR"). 4 The United States has not contested this fact. Instead, it argues that
Brazil has not proven that the use of zeroing in this review had an impact on one of the two exporting
companies, Cutrale.

7. With respect to the Second Administrative Review, Brazil has also shown that the USDOC
used zeroing, for both Cutrale and Fischer, in determining the margins of dumping, CDRs and
ISARs.5 Again, the United States has not contested the use of zeroing for either Cutrale or Fischer.
Instead, it contends that zeroing did not have an impact on the determination for one of the
companies, Fischer.

A. A
S A MATTER OF LAW, THE USE OF ZEROING VIOLATES ARTICLES 2.4 AND 9.3 OF THE ANTI-
DUMPING AGREEMENT AND ARTICLE VI:2 OF THE GATT 1994, REGARDLESS OF THE IMPACT
OF ZEROING6

8. As set forth in the chapeau of Article 9.3 of the Anti-Dumping Agreement, a Member must
establish a margin of dumping consistently with Article 2 of the Anti-Dumping Agreement . The
obligation to comply with Article 2 in determining margins of dumping is not dependent on any other
aspect of the anti-dumping proceeding or on the outcome of that proceeding in terms of duty
collection. A failure to comply with Article 2 in determining the margin vitiates a determination
made under Article 9.3, irrespective of the amount of duties that is ultimately collected.7

9. In US – Zeroing (Japan)(21.5), the United States argued that Japan had not proven the impact
of zeroing in the challenged administrative reviews, a nd that therefore Japan's challenge had to fail.
The panel rejected the US argument. It noted that "the Appellate Body's findings in the original
proceedings were not based on evidence that partic ular importers had sales with negative margins or
that individual importer-specific assessment rates were affected by the application of zeroing
procedures". Therefore, the Panel did not consider "that Japan must show that given importers had
sales with negative margins" under the reviews at issue, "or the effect of zeroing on the importer-
specific assessment rates determined in those Reviews".
8

10. A showing of impact is also not necessary to prove a violation of Article 2.4 of the Anti-
Dumping Agreement. Article 2.4 provides that, in the determination of dumping:
 A fair comparison shall be made betwee n the export price and the normal value…

4 Brazil's FWS, paras. 77 – 85; and Brazil's Opening Statement, paras. 65 – 72. See also
Exhibits BRA-31 (Ferrier Affidavit); BRA-28 (Issues and Decision Memorandum); BRA-29 and BRA-30
(computer program logs); and BRA-34 and BRA-35 (computer program outputs).
5 Brazil's FWS, paras. 86 – 95; and Brazil's Opening Statement, paras. 73 – 79. See also
Exhibits BRA-31 (Ferrier Affidavit); BRA-43 (Issues and Decision Memorandum); BRA-36 and BRA-38
(computer program logs); and BRA-37 and BRA-39 (computer program outputs).
6 See also Brazil's Opening Statement, paras. 66 – 68 and 74; and Brazil's Answers, paras. 8 – 11
and 18 – 21.
7 See, in particular, Panel Report, US – Zeroing (Japan) (21.5), para. 7.162.
8 Panel Report, US – Zeroing (Japan) (21.5), para. 7.162. The United States did not appeal this aspect
of the panel's findings, and the Appellate Body upheld the panel’s finding that the application of zeroing in these
reviews was inconsistent with Article 9.3 of the Anti-Dumping Agreement, as well as Article 2.4 of the same
agreement and Article VI:2 of the GATT 1994. Appellate Body Report, US – Zeroing (Japan) (21.5) ,
paras. 195 and 197.

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11. The focus of Article 2.4 is firmly on the comparison between export price and normal value,
which must be "fair". In Egypt – Rebar , for example, the panel held that the "fair comparison"
requirement concerns "the nature of the comparison of export price and normal value".
9 In reaching
this interpretation, the panel observed that the fi rst sentence of Article 2.4 explicitly focuses on the
"the fairness of the comparison"; the second sentence elaborates on considerations pertaining to the
"comparison"; the third, fourth and fifth sen tence address issues relating to "price comparability";
and the final sentence concerns information necessary to make a "fair comparison".10 The panel also
considered that the surrounding context in Articles 2.4.1 and 2.4.2 confirmed that Article 2.4 imposes
obligations on the nature of the "comparison" itself.11

12. Accordingly, in assessing a claim under Article 2.4, a panel must assess "the nature of the
comparison" made between export price and normal value to determine whether it was "fair".
Because the obligation in Article 2.4 to provide a fair comparison concerns "the nature of the
comparison" that is made by an anti-dumping aut hority, it applies independently of the amount of
anti-dumping duties that are collected by an importing Member.

13. In terms of ordinary meaning, "[t]he term 'fair" [in Article 2.4] is generally understood to
connote impartiality, even-handedness, or lack of bias".
12 The Appellate Body has held that there "is
an inherent bias in a zeroing methodology". 13 Focusing on "the nature of the comparison", the
Appellate Body has also said that, as a " way of calculating " margins, the zeroing methodology
"cannot be described as impartial, even-handed, or unbiased", because the comparison necessarily
excludes any negative results. 14 A panel and the Appellate Body have, therefore, ruled that the
maintenance and application of zeroing procedures in administrative reviews is inconsistent with
Article 2.4 of the Anti-Dumping Agreement.15

14. In this dispute, by including zeroing in its methodology for determining margins of dumping
in the administrative reviews at issue, the United States failed to conduct a "fair comparison". The
United States has not contested Brazil's evidence th at the USDOC did not "take fully into account the
prices of all comparable export transactions" 16 for both companies in both the First and the
Second Administrative Reviews. To recall, by using zeroing in the comparison, the USDOC excluded
the vast majority of both companies' export transactions, in number, volume and value. 17 The nature
of the comparison was, therefore, distorted and unfair, b ecause it favored, very heavily, a positive
dumping determination.

9 Panel Report, Egypt – Rebar , paras. 7.333 – 7.335 (emphasis added). See also Panel Report,
10 Panel Report, Egypt – Rebar, para. 7.333 (original emphasis).
12 Appellate Body Report, US – Softwood Lumber V (21.5), para. 138.
13 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 135.
14 Appellate Body Report, US – Zeroing (Japan) , para. 146, quoting Appellate Body Report, US –
Softwood Lumber V (21.5), para. 142.
15 Panel Report, US – Zeroing (Japan)(21.5) , paras. 7.168 and 8.1(b); Appellate Body Report, US –
Zeroing (Japan)(21.5) , paras. 195, 197 and 213(c); and Appellate Body Report, US – Zeroing (Japan) ,
paras. 169, 176, 190(d) and 190(e).
16 Appellate Body Report, EC – Bed Linen, para. 55.
17 See Exhibits BRA-34, BRA-35, BRA-37 and BRA-39, respective last page, "Percentage of value
with AD margins" and "Percentage of quantity with AD margins".

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B. A S A MATTER OF FACT, THE USE OF ZEROING HAD AN IMPACT FOR BOTH COMPANIES IN BOTH
THE FIRST AND SECOND ADMINISTRATIVE REVIEWS

15. Even assuming, arguendo, that the United States were right in arguing that a showing of
impact is necessary to establish a violation of Articles 2.4 and 9.3 of the Anti-Dumping Agreement,
and Article VI:2 of the GATT 1994 ( quod non), the United States' use of zeroing had an impact for
both Cutrale and Fischer in the First and Second Administrative Reviews.

16. Brazil notes, first, that as regards Fischer in the First Administrative Review, and Cutrale in
the Second Administrative Review, the United States has contested neither the use nor the impact of
zeroing. Thus, the disagreement on the facts be tween Brazil and the United States concerns only
Cutrale in the First, and Fischer in the Second Administrative Review.

17. Contrary to the US arguments, zeroing had an impact for Cutrale, too, in the
First Administrative Review. First, through the use of zeroing, the United States established a
positive margin of dumping for Cutrale.
18 Had the United States complied with its WTO obligations,
this margin would have been zero. Second, through the use of zeroing, the United States established
an ISAR for Cutrale which was positive and above the de minimis threshold in US law. 19 T h e
United States, therefore, also collected anti-dumping duties on the relevant entries from Cutrale, on
the basis of an ISAR determined using zeroing.

18. Finally, also contrary to the US argume nt, zeroing had an impact for Fischer in the
Second Administrative Review. The dumping margin established for Fischer in this review, albeit
very small, was a positive one, whereas it would have been zero had the United States not disregarded
the overwhelming majority of export transactions.
20

IV. THE UNITED STATES' CONTINUED USE OF ZEROING VIOLATES
ARTICLES 2.4 AND 9.3 OF THE ANTI-DUMPING AGREEMENT , AND
ARTICLE VI:2 OF THE GATT 1994

19. In addition to challenging zeroing "as app lied" in the First and Second Administrative
Reviews, Brazil claims that the continued use of zeroing in a string of determinations under the
Orange Juice Order violates Articles 2.4, 2.4.2 and 9.3 of the Anti-Dumping Agreement , and
Article VI:2 of the GATT 1994. Brazil's earlier ar guments can be found in pr evious written and oral
submissions.
21 Also, with regard to Article 2.4 of the Anti-Dumping Agreement, Brazil has developed
interpretive arguments in this Submission and in its Opening Statement, and has explained why the
use of zeroing violates that provision. 22 Those arguments are made also in respect of the
United States' continued use of zeroing under the Orange Juice Order.

20. Here, Brazil focuses on U.S. arguments as serting that the evidence does not show the
continued use of zeroing under the Orange Juice Order. The United States argues, in particular, that
the series of determinations under the Orange Juic e Order is not sufficiently long to establish the
continued use of zeroing under this Order, and in support of this position, also repeats its arguments
that Brazil must show the impact, not the use, of zeroing.

18 Exhibit BRA-21, p. 46585, "Percent margin". Th is plainly contradicts the US Opening Statement,
para. 35.
19 Exhibit BRA-34, penultimate page, "Percent ad valorem assessment".
20 Exhibit BRA-39, right-most column, "Wt avg percent margin". This too contradicts the US Opening
Statement, para. 35.
21 See Brazil's FWS, paras. 98 – 117; Brazil's Opening Statement, paras. 80 – 96; and Brazil's
Answers, paras. 3 – 6 and 9 – 20.
22 See paras. 10 - 14 above; and Brazil's Opening Statement, paras. 67 – 72 and 74 – 79.

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21. Brazil disagrees. In US – Continued Zeroing, the Appellate Body held that the continued use
of zeroing is established if there is a sufficient " density" of evidence, that is not "fragmented" over
time, showing that zeroing has been used in a string of successive proceedings under the same order.23

22. Under the Orange Juice Order, the USDOC has used zeroing at every available opportunity
under the Orange Juice Order in proceedings extending over five years from the original investigation,
initiated in February 2005, throug h the First and Second Administrativ e Reviews, to the preliminary
determination in the Third Administrative Review in April 2010 and the final determination in this
review in August 2010. Therefore, the evidence of the continued use of zeroing under the Orange
Juice Order is perfectly consistent over an extended time, with no "fragmentation".

1. Zeroing was used in the original investigation

23. With respect to the original investigation
, the United States contends that zeroing was not
used, because there were no negative comparison results . It contends that the "lack of any negative
comparison results means that "zeroing" had no impact on the dumping margin calculation". 24 I n
reply, Brazil has noted that the United States mis understands the nature of the conduct, and hence
measure, at issue, which is the continued use, and not impact, of zeroing 25; in the Appellate Body's
words, the measure at issue is "the use of the zeroing methodology as an ongoing conduct".26

24. The United States unsuccessfully raised a similar objection in US – Continued Zeroing . In
that case, it argued that the continued use of ze roing under specific orders could not violate the Anti-
Dumping Agreement because, in a given determination, th ere may be no negative comparison results.
The Appellate Body disagreed. It said:

... even if zeroing may not manifest itsel f as a result of the particular factual
circumstances of a case in which all export prices are below the normal value, this
does not negate the fact that the repeated action by the USDOC in a string of
determinations relating to these four cases confirms the use of the zeroing
methodology as an ongoing conduct.
27

Thus, irrespective of the impact of zeroing in a give n determination, the continued use of zeroing is
WTO-inconsistent.

2. Zeroing was used in the First and Second Administrative Reviews

25. With respect to the First and Second Administrative Reviews
, the United States contends that
zeroing did not have an impact for Cutrale in the First Administrative Review, and for Fischer in the
Second Administrative Review. Again, for the reasons just elaborated, this argument misapprehends
the nature of the measure at issue, which is the continued use of zeroing. The US arguments do not,
therefore, show any "fragmentation" in the USDOC 's decision to use zeroing as part of its margin
calculation methodology. Indeed, in both reviews, the USDOC stated expressly in the respective
Issues & Decisions Memoranda that it had decided to continue using zeroing despite objections from
Brazil's exporters.28

23 Appellate Body Report, US – Continued Zeroing , paras. 191 and 194. See also, ibid., paras. 193
and 195.
24 US FWS, paras. 128 – 129.
25 Brazil's Opening Statement, paras. 91 – 93.
26 Appellate Body Report, US – Continued Zeroing , para. 193 (emphasis added). See also Brazil's
Answers, paras. 3 – 6 and 9 – 11.
27 Appellate Body Report, US – Continued Zeroing, para. 193.
28 Exhibits BRA-28, pp. 5 – 6; and BRA-43, pp. 4 – 6.

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26. Also, for the reasons already given 29, the United States is incorrect in asserting that zeroing
had no impact on the dumping determinations made for Cutrale in the First Administrative Review,
and for Fischer in the Second Administrative Review.

3. Zeroing was used in the Third Administrative Review

27. Since the Panel's first substantive meeting w ith the parties, the United States has seized yet
another opportunity to use zeroing under the Order, in the Third Administrative Review, with
predictable results. Although this determination is not itself challenged as a measure at issue in these
proceedings, it serves as further evidence to show the continued use of zeroing under the Orange Juice
Order.
30

28. In April of 2009, the USDOC initiated the Third Administrative Review under the Orange
Juice Order. On 13 April 2010, the USDOC published its preliminary results in this review, as set out
in Brazil's First Written Submission.
31 On 18 August 2010, the USDOC published its final results in
this review.32 In this review, the USDOC again used zer oing. As before, it di smissed the exporters'
pleas that it stop using zeroing, and stated, again, that WTO dispute settlement reports do not trump
the exercise of the USDOC's discretion under US law.33

29. The USDOC's computer logs and outputs, fo r both Cutrale and Fischer, confirm that the
USDOC used zeroing in the Third Administrative Review to determine the margins of dumping,
the CDRs, and the ISARs, excluding all negative comparison results, as explained in Mr. Ferrier's
second affidavit.
34

30. Furthermore, in the Issues and Decision Memorandum in the Third Administrative Review,
the United States stated expressly that its zeroing policy in reviews remains unchanged despite
WTO rulings.
35

31. Thus, in the midst of these Panel proceed ings, which are inquiring into the USDOC's
continued use of zeroing under the Orange Juice Order, the United States has expressly confirmed that
the use of zeroing continues to be part of the US DOC's calculation methodology for this Order. In
these circumstances, the United States' arguments th at the evidence before the Panel does not prove
the continued use of zeroing ring hollow. Its actions outside these proceedings contradict its words in
these proceedings.

32. Indeed, the United States' actions in using zeroing in the Third Administrative Review show
precisely why Brazil challenges the continued use of zer oing. Brazil wishes to tackle the root of the
problem under the Orange Juice Order, namely the Un ited States' continued use of zeroing. It wishes
to do so independent of the application of zeroing in individual determinations because, if Brazil's
challenge were confined to such determinations , the challenged measures would be outdated before
the Panel proceedings have even ended, with th e dispute being prolonged by new measures that are
not subject to the Panel's findings.

33. By challenging the conti nued use measure, Brazil seeks a ruling on a single measure
involving the specific ongoing conduct that is the source of the dispute, namely, the continued use of

29 See paras. 17 - 18 and 14 above.
30 See Brazil's Opening Statement, para. 95.
31 Brazil’s FWS, para. 48, 98, 103, footnote 53 and Exhibits BRA-23, BRA-24 and BRA-25. See also
Brazil's Opening Statement, paras. 88 and 95.
32 Exhibit BRA-49.
33 Exhibit BRA-50, pp. 4 – 6. .
34 Exhibit BRA-51. Brazil's SWS, pp. 13 – 15.
35 Exhibit BRA-50, pp. 4 – 6.

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zeroing under the Order. This measure is manifest ed by, and evidenced in, the string of individual
determinations; yet its existence transcends those measures, and must be subject to a specific
recommendation by the Dispute Settlement Body to ensure that the ongoing conduct ceases.

34. In sum, the United States has used zeroing with perfect consistency in every proceeding under
the Orange Juice Order. Moreover, in rejecting exporters' requests for it to cease using zeroing, it has
repeatedly affirmed its intent to persist in this c onduct. The record before the Panel, therefore, shows
that the continued use of zeroing as an ongoing con duct under the Orange Juice Order exists. For
reasons that Brazil has stated elsewhere
36, the continued use of zeroing is inconsistent with
Articles 2.4, 2.4.2 and 9.3 of the Anti-Dumping Agreement, and Article VI:2 of the GATT 1994, and
the Panel should find accordingly.

36 See Brazil's FWS, paras. 98 – 117; Brazil's Opening Statement, paras. 80 – 96; and Brazil's
Answers, paras. 7 – 20.

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ANNEX E-2

EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF THE UNITED STATES

I. ARTICLE 2.4 DOES NOT IMPOSE OBLI GATIONS WITH RESPECT TO ZEROING

1. The obligation to make a "fair comparison" u nder Article 2.4 does not create an obligation to
provide for offsets. Article 2.4 addresses only the required adjustments that must be made to export
price and normal value in order to account for "differences which affect price comparability".

2. First
, from the text of Article 2.4, it is clear that Article 2.4 establishes an obligation that a fair
comparison be made between normal value and export price and provides detailed guidance as to how
that fair comparison is to be made. The focus of Article 2.4 is on how the authorities are to select
transactions for comparison and make the appropria te adjustments for differences that affect price
comparability. As the panel in Egypt – Steel Rebar explained: "[A]rticle 2.4 in its entirety, including
its burden of proof requirement, has to do with ensuring a fair comparison, through various
adjustments as appropriate, of export price and normal value".

3. A number of other Appellate Body and panel reports that have considered the question of
price comparability have interpreted Article 2.4 to address pre-comparison price adjustments that
affect the comparability of prices between markets. For example, as the Appellate Body stated in
US – Hot-Rolled Steel, "an examination of whether USDOC acted consistently with Article 2.4 of the
Anti-Dumping Agreement must focus on ... whether there were 'differences', relevant under
Article 2.4, which affected the comparability of export price and normal value". Thus, Brazil's
proposed interpretation of Article 2.4 to encompass the results of comparisons between export price
and normal value is erroneous. In short, there is no obligation in Article 2.4 to offset any negative
differences between normal value and export price.

4. Second
, the United States urges the Panel to reject Brazil's invitation to convert "fair
comparison" into a broad-ranging mandate to dete rmine whether any and all dumping calculations are
"fair" or "unfair". As the panel report in EC – Cotton Yarn , which was adopted by the Tokyo Round
Antidumping Committee, stated regarding the co rresponding provision of the Tokyo Round Code:
"The Panel was of the view that although the object and purpose of Article 2.6 is to effect a fair
comparison, the wording of Article 2.6 '[i]n order to effect a fair comparison' made clear that if the
requirements of that Article were met, any comparison thus undertaken was deemed to be 'fair'". The
EC – Cotton Yarn panel rejected Brazil's argument that the term "fair comparison" in Article 2.6 of
the Tokyo Round Antidumping Code provided a basis to strike down the EC's zeroing practices. The
panel interpreted Article 2.6 as rela ting solely to the "actual comparison of prices at the same level of
trade and in respect of sales made as nearly as possible at the same time".

5. The term "fair comparison" originated in the 1967 Kennedy Round Antidumping Code.
Article 2(f) specified that: "In order to effect a fair comparison between the export price and the
domestic price in the exporting country ... the two pri ces shall be compared at the same level of trade,
normally at the ex factory level, and in respect of sales made as nearly as possible at the same time.
Due allowance shall be made in each case, on its mer its, for the differences in conditions and terms of
sale, for the differences in taxation, and for othe r differences affecting price comparability". This
language was incorporated practically verbatim into Article 2.6 of the Tokyo Round Antidumping

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Code. The Uruguay Round AD Agreement adopted the original Kennedy and Tokyo Round language
with minor modifications in Article 2.4.

6. Third
, Brazil's claim of inconsistency with Article 2. 4 does not rely on the text of Article 2.4.
Instead it relies upon isolated statements from the Appellate Body reports in US – Softwood Lumber
(Article 21.5), US – Corrosion-Resistant Steel Sunset Review, and US – Zeroing (Japan).

7. While the Appellate Body in US – Zeroing (Japan) found that the use of "zeroing" in
assessment proceedings was inconsistent with Article 2.4, those findings flowed from its finding that
the amount of the antidumping duty exceeded the margin of dumping under Article 9.3. Contrary to
Brazil's argument, the Appellate Body stated that "[ i]f antidumping duties are assessed on the basis of
a methodology involving comparisons between the export price and the normal value in a manner
which results in anti-dumping duties being collected from importers in excess of the amount of the
margin of dumping of the exporter or foreign producer, th en this methodology cannot be viewed as
involving a 'fair comparison' within the meaning of the first sentence of Article 2.4". But in the
second administrative review with respect to orange juice (aside from the fact that, as explained in our
first written submission, it is outside of the Pane l's terms of reference), for example, Commerce
determined that the weighted-average dumping margin for Fischer was zero and assessed no
antidumping duties on Fischer's entries of orange ju ice. Under these facts, even under the Appellate
Body's rationale relied upon by Brazil, there can be no inconsistency w ith either Article 9.3 or 2.4 of
the AD Agreement.

8. In US – Softwood Lumber (Article 21.5) , the Appellate Body stated that "the use of zeroing
under the transaction-to-transaction comparison met hodology artificially inflates the magnitude of
dumping, resulting in higher margins of dumping and making a positive determination more likely".
The Appellate Body limited this statement to margins in investigations that violated Article 2.4.2 of
the AD Agreement, while accepting the panel's conclu sion that higher margins are "fair" as long as
they are otherwise WTO consistent. Article 2.4. 2 does not apply in the context of the assessment
proceedings. Additionally, where, as here, th e United States determined either zero or de minimis
dumping margins for Cutrale and Fisher in the firs t and second administrative reviews, respectively,
these margins cannot be characterized as "artificially inflate[d]" or "inherently unfair" even under the
Appellate Body's rationale.

9. The Appellate Body's report in US – Corrosion Resistant Steel Sunset Review , concerned a
sunset review, which is not at issue in this di spute. The Appellate Body declined to find an
inconsistency with Article 2.4 of the AD Agreement, a salient fact that Brazil neglects to mention.

10. Moreover, any allegation of bias is based upon the assumption that a methodology
"artificially" inflates the magnitude of dumping. It may be that a methodology always produces
higher margins of dumping, and that exporters or fo reign producers may consider that to be biased
and "unfair". However, it is then equally true that prohibiting the methodology always produces
lower margins of dumping, and the domestic industry – an industry that must have been found to be
injured by dumping before the measure is imposed – may consider that to be biased and "unfair".
Higher or lower margins are not inherently fair or unfair.

11. As the panel in US – Zeroing (Japan) noted, the "precise meaning of" the fair comparison
requirement "must be understood in light of the nature of the activity at issue". The panel concluded
that "the 'fair comparison' requirement cannot ha ve been intended to allow a panel to review a
measure in light of a necessarily somewhat subjective judgment of what fairness means in the abstract
and in complete isolation from the substantive co ntext". Other panels have reached the same
conclusion. In
US – Softwood Lumber Dumping (Article 21.5) , the panel cautioned against the overly
liberal use of the "fair comparison" language of Article 2.4: "the fact that comparison methodology A
produces a higher margin of dumping than comparison methodology B would only make comparison

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methodology A unfair if comparison methodology B were the applicable standard. If however, the
AD Agreement were to permit either comparison methodology A or B, this would not be the case". In
US – Zeroing (EC) , the panel similarly stated: "[C]aution . .. is especially warranted where as in the
case of the first sentence of Article 2.4, a legal rule is expressed in terms of a standard that by its very
nature is more abstract and less determinate than most other rules in the AD Agreement".

12. Absent any principled basis fo r resolving such disputes, the Appellate Body and the panels
would be required to apply a vague , subjective, and ill-defined legal standard to factual situations
where "fairness" turns on the eye of the beholder. The Panel should reject an expansive interpretation
of a "fair comparison" requirement that leads to a flood of antidumping disputes that are virtually
impossible to resolve in any credible way.

II. THE TEXT OF ARTICLE VI:1 AND ARTICLE VI:2 OF THE GATT AND
ARTICLE 2 OF THE AD AGREEMENT DO NOT PRECLUDE UNDERSTANDING
OF THE TERMS "DUMPING" AND "MARGIN OF DUMPING" IN RELATION TO
INDIVIDUAL TRANSACTIONS

13. The term "product as a whole" is not f ound anywhere in the AD Agreement and the
GATT 1994, and Brazil's so-called "textual" argument is devoid of any textual analysis of the relevant
provisions.

14. First
, the precise meaning of the terms "dumping" and "margin of dumping" may be informed
by the context in which the term is used. These terms appear in many different provisions of the
covered agreements, and, in each case, must be interp reted in light of the text, context, and of the
object and purpose, of the provision at issue. The terms "dumping" and "margin of dumping" are
defined in relation to the term "product". The or dinary meaning of "product" may refer to a single
transaction or multiple transactions. The fundamental problem with Brazil's interpretation is that it
effectively denies the fact that the terms "dumping" and "margin of dumping" may apply in different
contexts and the context matters.

15. Dumping is defined as occurring in the cour se of ordinary commercial transactions, where
products are "introduced into the commerce" of th e importing country transaction by transaction, not
"as a whole". The drafters of the AD Agreement and the GATT 1994 wrote a definition of dumping
and put into the definition the essential meaning of this fundamental, foundational concept. It defies
logic to then redefine the terms "dumping" an d "margin of dumping" by finding new additional
components of its meaning hidden in other provisions of the AD Agreement that do not purport to
define those terms.

16. Article 2.1 defines "dumping" in relation to the terms "export price" and "normal value".
These fundamental concepts have flexible meani ng because "normal value" and "export price" could
relate to either an individual transaction or multiple transactions depending upon the context. Because
the term "dumping" is defined in relation to the te rms "normal value" and "export price," it would be
illogical to conclude that the derivative term "dumping" may not have a similarly flexible definition.

17. Second
, the United States agrees with Brazil th at the AD Agreement establishes multilateral
disciplines. However, contrary to what Brazil s uggests, it does not follow that the terms "dumping"
and "margin of dumping" must be construed only in terms of the "product as a whole". To the
contrary, the fact that the Agreement expressly allo ws Members to maintain different systems for the
assessment of antidumping duties and that Members assess duties differently demonstrates that the
multilateral character of the Agreement does not mandate the definition Brazil seeks to impose.

18. Brazil also appears to suggest that there mu st always be the same result in determining
"dumping" for the same set of export transactions, pr ices, products, and exporters regardless of the

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context. Brazil's interpretation is contrary to the text of the AD Agreement, which expressly
recognizes different assessment systems and different ways to make comparisons between the normal
value and export price. If the AD Agreement provides for different comparison methodologies that
could result in different amounts of dumping for the same set of transactions, there is no reason to
assume that calculations must always result in a singl e invariable number in different contexts – such
as assessment proceedings and investigations – particularly when a Member uses different
comparison methodologies in these two contexts.

19. Third
, Brazil conflates distinct proceedings – investigations and assessment proceedings –
which are subject to different requirements and serve different functions. Wh ile investigations are
conducted to determine the existence and degree of dumping pursuant to Article 5.1 and the existence
of material injury, assessment proceedings are conduc ted to determine the final liability for payment
of antidumping duties or whether a refund of excess antidumping duties is owed pursuant to
Article 9.3. Prior panels found that this contextual difference is significant. In US – Zeroing (EC) ,
for example, the panel explained: "In our view, the fact that in an assessment proceeding in
Article 9.3 the margin of dumping must be related to the liability incurred in respect of particular
import transactions is an important element that distinguishes Article 9.3 proceedings from
investigations within the meaning of Article 5".

III. BRAZIL'S CONTEXTUAL ARGUMENTS UNDER ARTICLES 3, 5.8, 6.10, 8.1, 9.1,
9.3 AND 9.5 ARE MISPLACED

20. Article 5.8 of the AD Agreement
: Brazil argues that in the cont ext of Article 5.8 the margin
of dumping must refer to an aggregation of multiple transactions. The fundamental flaw of Brazil's
contextual argument is that Brazil seeks to a pply that understanding entirely removed from the
context of Article 5. Article 9.3 assessment pr oceedings provide a very different context from
Article 5 investigations. Article 2.4.2 sets fort h the rules that govern the determination of the
"existence" of margins of dumping for purposes of Artic le 5 investigations. The text of Article 2.4.2
expressly limits itself to an Article 5 investigation in two different ways. First, it expressly provides
that it applies only in the "investigation phase." Sec ond, it provides that its purpose is to establish the
"existence" of dumping. There is only one inves tigation phase that requires a determination of the
"existence" of dumping: the Article 5 investiga tion that follows the initiation of an anti-dumping
investigation.

21. The Appellate Body and panels have found that the application of Article 2.4.2 is limited to
Article 5 investigations. The Appellate Body in EC – Bed Linen found that there is no connection
between Article 9.3 and Article 2.4.2. The panel in Argentina – Poultry found that "[i]f the drafters of
the AD Agreement had intended to refer exclusively to Article 2.4.2 in the context of Article 9.3, the
latter provision would have stated that 'the am ount of the anti-dumping duty shall not exceed the
margin of dumping as established under Article 2.4.2'. This is not what Article 9.3 says".

22. Article 6.10 of the AD Agreement
: Article 6.10 ensures that each exporter or producer is
assigned an antidumping duty based on its own pricing behavior, and not that of other exporters or
producers, unless it is impracticable. This provision does not address whether the "margin of
dumping" only has meaning in relation to the "product as a whole" (a term nowhere found in the text
of the AD Agreement) or individual transactions. This fact has been recognized by prior panels that
examined this issue. In US – Zeroing (Japan), for example, the panel explained that Article 6.10 does
not mandate any particular methodologies for calculating the margin of dumping.

23. Further, if Article 6.10 is read in the ma nner suggested by Brazil, then prospective normal
value systems cannot function in the manner that Me mbers currently administering such systems are
operating. The effect of the Appellate Body's and Brazil's reading of Article 6.10 would be to compel
a Member using a prospective normal value system to calculate a margin based on all of the

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transactions for some particular period of time, rath er than calculating a margin based on a particular
transaction.

24. Brazil Overstates the Significance of the U se of the Singular in the Term "Margin of
Dumping": With respect to Articles 6.10, 8.1, 9.1, 9.3, and 9.5, Brazil's interpretation relies on the
use of the term "margin of dumping" in the singular . However, by Brazil's own admission,"the use of
the singular is not decisive ...". A term that is used in the AD Agreement in the singular form may
have "both singular and plural meanings".

25. Brazil Misinterprets Article VII:3 of the GATT 1994
: Brazil argues that the United States is
wrong to assume that the same word, "product", must be given the same meaning in two proximate
treaty provisions, namely Article VI:1 and Article VIII:3 of the GATT 1994. Brazil misstates the
US argument. The United States argues that the te rm "product" may have either collective meaning
or an individual meaning, depending upon the context. This term, used in a wide variety of contexts
throughout the provisions of the GATT 1994 and th e AD Agreement, incorporates a flexibility of
meaning that derives from the fact that the term "p roduct" ordinarily has a meaning that is either
collective or transaction-specific.

26. Brazil attempts to draw contextual distin ctions between Article VII:3 of the GATT 1994 and
Article 9.3 of the AD Agreement. In describing th e context of Article VII:3, for example, Brazil
argues that "the customs authorities assess the value of particular goods that are listed in an import
entry of an individual import transaction and, based on that valuation, impose duties on that specific
entry". However, Article 9.3 of the AD Agreement also governs the assessment of the amount of the
antidumping duty, and the antidumping duties ar e assessed on individual entries resulting from
individual transactions. Therefore, the obligation set forth in Article 9.3 to assess no more in
antidumping duties than the margin of dumping is si milarly applicable at the level of individual
transactions. In US – Stainless Steel (Mexico) , the panel properly recognized the transaction-specific
character of Article 9.3 assessment proceedings: "We note that the obligation to pay anti-dumping
duties is not incurred on the basis of a comparison of an exporter's total sales, but on the basis of an
individual sale between the exporter and its importer. It is therefore a transaction-specific liability".

27. Brazil Misinterprets AD Article VI:1 of the GATT 1994
: Brazil asserts that Ad Article VI:1
does not provide a definition of "dumping" or "margin of dumping" and does not state that margins
may be transaction specific. However, contrary to Brazil's assertions, Ad Article VI:1 defines a
particular form of dumping – "hidden dumping" – in relation to individual transactions. The use of
the term "price invoiced" is particularly significant, because an invoice is normally issued with respect
to an individual transaction, and not with respect to all transactions covered by the period of review.
Thus, the text of Ad Article VI:1 provides that the "margin of dumping" may be calculated on the
basis of a specific sale by a particular importer rather than on the basis of the "product as a whole".

28. Brazil Misinterprets Article 2.2 of the AD Agreement
: Brazil disagrees that the term "margin
of dumping" as used in Article 2.2 of the AD Agr eement would require the us e of constructed value
for the "product as a whole", even if the c ondition precedent for using constructed value under
Article 2.2 relates only to a portion of the comparison s. Brazil argues that the Appellate Body stated
that an authority may subdivide the "product as a whole" in conducting "intermediate comparisons"
on a model-specific basis and, thus, may assess whet her the conditions in Article 2.2 are met on a
model-specific basis, and subsequently aggregat e all intermediate comparisons to determining
dumping for the product as a whole.

29. This interpretation is incorrect. Under Artic le 2.2, a Member may calculate normal value
based on constructed value. Many Members do so on a model- or transaction-specific basis. That is,
if the home market sales of a particular model were not in the ordinary course of trade, the importing
Member might resort to using a constructed nor mal value as a basis for normal value for that

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particular model; however, normal value for other models might still be based on home market sales.
If, however, the "margin of dumping" must refer, re gardless of context, to the "product as a whole",
then, when the conditions of Article 2.2 have been met, an investigating authority would be required
to use constructed value for the "product as a whole" , not just for specific models or transactions of
the product. This would be inconsistent with the pr inciple that constructed normal value is to be used
only in limited circumstances. The panel in US – Softwood Lumber Dumping (21.5) observed that
this "would run counter to the principle that construc ted normal value is an alternative to be used only
in the limited circumstances provided for in Article 2.2".

30. Brazil's Interpretation Cannot Be Reconciled with the Effective Functioning of Antidumping
Duties as a Remedy for Dumping: Brazil gives no answer to the fact that, if offsets must be provided,
importers of the merchandise for which the amount of dumping is greatest will actually have an
advantage over their competitors who import at fair value prices because they will enjoy the benefit of
offsets that result from their competitors' fairly priced imports.

IV. BRAZIL'S PROPOSED OBLIGATION IS CONTRARY TO THE CONCEPT OF A
PROSPECTIVE NORMAL VALUE SYSTEM PROVIDED FOR IN ARTICLE 9

31. Brazil's proposed obligation to provide offsets is contrary to the very concept of a prospective
normal value system provided for in Article 9. The administration of such an assessment system
cannot function as intended if the margin of dumping mu st relate exclusively to an aggregation of all
transactions constituting the "product as a whole".

32. Brazil argues that the amount of duties in the prospective normal value system is subject to
review under Article 9.3.2 to ensure that the to tal amount of duties does not exceed the margin of
dumping for "the product as a whole". However, nothi ng in the text of Article 9 suggests that the
refund proceeding described therein necessarily must relate to an aggregated examination of all
transactions. The United States is not aware of a single prospective normal value system that
conforms with Brazil's assertion that a refund mechanism must recalculate a margin of dumping based
on an aggregation of all export transactions. The character of the prospective normal value system
has led multiple panels that have examined this i ssue to conclude that final liability for antidumping
duties may be determined with respect to individual transactions rather than the "product as a whole".
It is implausible to think that the negotiators would agree to provisions in the AD Agreement
providing explicitly for a prospective normal value system while simultaneously, and without making
any textual provision whatsoever, requiring that such systems conduct retrospective assessment
proceedings that aggregate all the transactions occurring over some unspecified period of time.

33. Another characteristic of the AD Agreement th at supports the transaction-specific nature of
the term "margin of dumping" in certain contex ts, and not the aggregation of all transactions
constituting "product as a whole", is the use of the term "importer" in Article 9.3.2. When an exporter
or producer makes sales of the product subject to the antidumping duty, it is common for such sales to
be made to multiple importers. If Importer A deci des to request a refund of duty paid in excess of
margin of dumping under Article 9.3.2, it woul d be concerned with its purchases and not the
purchases of Importers B and C (or the "product as a w hole"). Further, Importer A would not likely
have access to the information relating to purchases by its competitors, Importers B and C. Therefore,
Importer A would not be able to provide the necessa ry evidence to duly support a request for a refund
if it was requesting a review for all Importers (i.e., for the "product as a whole").

V. BRAZIL'S ARGUMENTS REGARDING MATHEMATICAL EQUIVALENCY ARE
WRONG

34. The United States demonstrated in its firs t written submission that a general prohibition
against the use of zeroing would reduce the second sentence of Article 2.4.2 to inutility because the

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result of a comparison under the second sentence would yield the same result as a weighted average to
weighted average comparison under the first sentence of that article. Brazil argues that the Appellate
Body has noted that a comparison under the second sen tence may yield different mathematical results
from comparisons under other provisions if only a subset of data is analyzed, i.e., using only those
export transactions that make up the pricing patter n envisioned by Article 2.4.2. However, this
argument is not supported by the text of Article 2.4.2.

35. The second sentence of Article 2.4.2 describ es the situation in which an asymmetrical
methodology may be used. It does not establish a set of circumstances under which a Member may
select a subset of export transactions. If the drafters had intended for Members to limit its analysis to
a subset of export transactions, then presumably Artic le 2.4.2 would have said so. Instead, the text
provides for an asymmetrical comparison methodology, using the same universe of export
transactions as the other two methodologies.

36. Brazil's interpretation of the second sentence of Article 2.4.2 essentially requires that the
Panel read words into that sentence that do not appe ar there. Moreover, inferring those words in that
provision would allow that provision to be applie d in a manner that is similar to other provisions
explicitly provided in the AD Agreement, but with out any of the safeguards or limitations that the
drafters found appropriate when explicitly permitting the kind of analysis contemplated by Brazil.
Consequently, Brazil's interpretation would be incons istent with both the specific text of the second
sentence of Article 2.4.2 and with the broader context provided by the AD Agreement.

VI. THERE IS NO VIOLATION WHEN "ZEROING" HAS NO IMPACT

37. At the first substantive hearing, the United St ates explained that, even if Brazil were able to
prove that a denial of offsets for non-dumped transa ctions was part of a particular dumping margin
calculation, there could be no violation in the in stances where there was no impact on the calculated
dumping margin. Brazil argues that the "use" of zero ing is the violation, regardless of the impact.
However, Brazil is wrong because when no duties ar e assessed, there can be no violation of any
obligation not to assess duties in excess of the margin of dumping. Consequently, there can be no
violation with respect to Fischer in the second administrative review (in which the dumping margin
was zero).

38. It is worth noting in addition that, with resp ect to the perceived difference between the "use"
and the "impact" of "zeroing", Brazil appears to suggest that all that matters for purposes of finding an
inconsistency with the covered agre ements is that the "zeroing" line appear in the relevant calculation
program. However, the "zeroing" line does not ope rate where there are no non-dumped sales. In
those circumstances – as in the orange juice inves tigation – the calculations and comparisons made
are exactly those that would have been made even if the "zeroing" line were not there.

VII. BRAZIL'S CLAIMS WITH RESPECT TO "CONTINUED USE" FAIL

39. The United States explained in its first written s ubmission and in its oral statements at the first
meeting with the Panel why Brazil's "continued use" claim is not a measure that may be subject to
dispute settlement. Brazil's response to the US requ est for preliminary rulings, and its statements at
the first meeting with the Panel, demonstrate this poi nt further. They underline that Brazil seeks to
obtain adverse findings against specific measures that do not exist, based on evidence of past conduct
that does not demonstrate a violation of any obligation.

40. It is worth noting in light of Brazil's comp arison of its "continued use" measure to an "as
such" measure that a challenge to an "as such" me asure requires certain evidentiary showings that
Brazil has not offered here. Instead, the challenge to this alleged "measure" ignores the fact that any
"use" of "zeroing" can only occur in individual "as applied" measures and tries to include an indefinite

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number of future individual measures that do not and may never exist. The Panel cannot analyze such
measures, because there are no facts about them to an alyze. In addition, presumably, if Brazil is
challenging the "continued use" as a measure, such measure would cease to exist if at any point
"zeroing" is not used in a particular individua l determination – but Brazi l's argument requires the
Panel to assume that it will be used. Any recomm endation with respect to a future measure would
need to be conditioned on the use of zeroing, bu t there would be no mechanism to determine if
zeroing were in fact used in any individual proceedi ng. In addition, under Article 4.2 of the Dispute
Settlement Understanding ("DSU") a measure must be "affecting" the operation of a covered
agreement, and a measure that does not exist cannot be "affecting" the operation of an agreement.

41. Brazil relies heavily upon th e Appellate Body's findings in US – Continued Zeroing (EC)
(AB) in support of its arguments that the "continued use" of "zeroing" is a measure that is subject to
dispute settlement and WTO-inconsistent. Even asi de from the fact that "continued use" is not
properly within the Panel's terms of reference, th e reasoning in that report does not support a similar
finding in this case because this case is more si milar to the cases in which the Appellate Body
declined to find a "continued use" violation.

42. Contrary to Brazil's claim, the United States does not suggest that the Appellate Body created
a specific standard for finding a "cont inued use" violation. But in light of Brazil's insistence that the
findings in that dispute supported its claim, we noted that the Appellate Body found an inconsistency
only in circumstances that include d the use of the zeroing methodology in the initial less than fair
value investigation, the use of the zeroing methodology in four successive administrative reviews, and
reliance in a sunset review upon rates determined using the zeroing methodology. We further
explained that the Appellate Body declined to fi nd a violation in 14 other cases that had facts more
similar to this case. Brazil claims that the reason th e Appellate Body declined to find a violation in
most of the cases before it was that the evidence of zeroing was "fragmented" in those cases.
However, continuity was only one aspect of the A ppellate Body's analysis. In taking a cautious
approach, the Appellate Body found a violation only where "the zeroing methodology was repeatedly
used in a string of determinations made sequentia lly in periodic reviews and sunset reviews over an
extended period of time". That is not the case here.

43. Brazil argues that, regardless of whethe r the zeroing methodology had any impact, its
presence in the program is evidence of a violation. However, if the zeroing methodology has no
impact, there can be no lesser dumping margin that could have been calculated and there could be no
lesser duty assessed. It is not reasonable to find that a measure that is not itself WTO-inconsistent –
for example, the original investigation in the ora nge juice case, in which Brazil's own evidence shows
there were no non-dumped sales that could have been "zeroed" – can, nevertheless, be evidence of an
ongoing and continuing violation. Even if Brazil's factual allegations were true and the zeroing line
was present in each of the calculation programs at issue, Brazil has not shown the application of
"zeroing" in "a string of determinations, made seque ntially ... over an extended period of time". At
most it would have shown that "zeroing" applied to one company in one proceeding that is within this
Panel's terms of reference, covering a one year period, i.e., Fischer in the first administrative review.