CHINA – ANTI-DUMPING MEASURES ON IMPORTS OF CELLULOSE PULP FROM CANADA REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 25 April 2017
Document codes: WT/DS483/R
Complainant: Canada
Respondent: China
Third parties: EU, Chile, Japan, South Korea, Norway, U.S., Brazil, Singapore, Uruguay
Dispute stage: Panel
Agreements cited: Art. 2.2, 2.2.1.1, 2.2.2, 2.4, 3.1, 3.2, 3.4, 3.5, 4.1, 6.2, 6.1, 6.8, Annex II, 6.9, 6.10, 6.10.2, 12.2.2, 9.4, 1  Anti-dumpingArt. VI  GATT 1994

CHINA – ANTI-DUMPING MEASURES ON IMPORTS OF
CELLULOSE PULP FROM CANADA
REPORT OF THE PANEL
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LIST OF ANNEXES
ANNEX A
INTERIM REVIEW AND WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Interim Review A-2
Annex A-2 Working Procedures of the Panel A-7
Annex A-3 Additional Working Procedures of the Panel concerning Business Confidential
Information
A-12
ANNEX B
ARGUMENTS OF CANADA
Contents Page
Annex B-1 First integrated executive summary of the arguments of Canada B-2
Annex B-2 Second integrated executive summary of the arguments of Canada B-15
ANNEX C
ARGUMENTS OF CHINA
Contents Page
Annex C-1 First integrated executive summary of the arguments of China C-2
Annex C-2 Second integrated executive summary of the arguments of China C-14
ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of Brazil D-2
Annex D-2 Integrated executive summary of the arguments of the European Union D-5
Annex D-3 Integrated executive summary of the arguments of Japan D-8
Annex D-4 Integrated executive summary of the arguments of Norway D-11
Annex D-5 Integrated executive summary of the arguments of the United States D-13

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CASES CITED IN THIS REPORT
Short title Full case title and citation
China – Autos (US) Panel Report, China – Anti-Dumping and Countervailing Duties on Certain
Automobiles from the United States, and Add.1, adopted
18 June 2014, DSR 2014:VII, p. 2655
China – Broiler Products Panel Report, China  Anti-Dumping and Countervailing Duty Measures on
Broiler Products from the United States, and Add.1, adopted
25 September 2013, DSR 2013:IV, p. 1041
China – GOES Appellate Body Report, China – Countervailing and Anti-Dumping Duties on
Grain Oriented Flat-Rolled Electrical Steel from the United States,
WT/DS414/AB/R, adopted 16 November 2012, DSR 2012:XII, p. 6251
China – 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 – HP-SSST (Japan) /
China – HP-SSST (EU)
Panel Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes ("HP-SSST") from the European Union,
WT/DS454/R and Add.1 / WT/DS460/R, Add.1 and Corr.1, adopted
28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R/

China – X-Ray Equipment Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security
Inspection Equipment from the European Union, WT/DS425/R and Add.1,
adopted 24 April 2013, DSR 2013:III, p. 659
EC – Bed Linen Panel Report, European Communities – Anti-Dumping Duties on Imports of
Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12 March 2001, as
modified by Appellate Body Report WT/DS141/AB/R, DSR 2001:VI, p. 2077
EC – Bed Linen
(Article 21.5 – India)
Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of
the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III,
p. 965
EC – Bed Linen
(Article 21.5 – India)
Panel Report, European Communities – Anti-Dumping Duties on Imports of
Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by
India, WT/DS141/RW, adopted 24 April 2003, as modified by Appellate Body
Report WT/DS141/AB/RW, DSR 2003:IV, p. 1269
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on
Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1,
adopted 28 July 2011, as modified by Appellate Body Report
WT/DS397/AB/R, DSR 2011:VIII, p. 4289
EC – 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 – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed
Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1,
DSR 2008:I, p. 3
EC – Tube or Pipe Fittings 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 – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable
Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted
18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R,
DSR 2003:VII, p. 2701

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Short title Full case title and citation
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
EU – Biodiesel (Argentina) Appellate Body Report, European Union – Anti-Dumping Measures on
Biodiesel from Argentina, WT/DS473/AB/R and Add.1, adopted
26 October 2016
EU – Biodiesel (Argentina) Panel Report, European Union – Anti-Dumping Measures on Biodiesel from
Argentina, WT/DS473/R and Add.1, adopted 26 October 2016, as modified
by Appellate Body Report WT/DS473/AB/R
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear
from China, WT/DS405/R, adopted 22 February 2012, DSR 2012:IX, p. 4585
Japan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996,
DSR 1996:I, p. 97
Korea – Certain Paper Panel Report, Korea – Anti-Dumping Duties on Imports of Certain Paper from
Indonesia, WT/DS312/R, adopted 28 November 2005, DSR 2005:XXII,
p. 10637
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000,
DSR 2000:I, p. 3
Mexico – Anti-Dumping
Measures on Rice
Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef
and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted
20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Olive Oil Panel Report, Mexico – Definitive Countervailing Measures on Olive Oil from
the European Communities, WT/DS341/R, adopted 21 October 2008,
DSR 2008:IX, p. 3179
Mexico – Steel Pipes and Tubes Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from
Guatemala, WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, p. 1207
Thailand – H-Beams Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R,
adopted 5 April 2001, as modified by Appellate Body Report
WT/DS122/AB/R, DSR 2001:VII, p. 2741
US – 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 – Countervailing Duty
Investigation on DRAMS
Appellate Body Report, United States – Countervailing Duty Investigation on
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea,
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Countervailing Duty
Investigation on DRAMS
Panel Report, United States – Countervailing Duty Investigation on Dynamic
Random Access Memory Semiconductors (DRAMS) from Korea,
WT/DS296/R, adopted 20 July 2005, as modified by Appellate Body Report
WT/DS296/AB/R, DSR 2005:XVII, p. 8243
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted
23 August 2001, DSR 2001:X, p. 4697
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX,
p. 4051
US – 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 – Softwood Lumber IV
(Article 21.5 – Canada)
Appellate Body Report, United States – Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada –
Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted
20 December 2005, DSR 2005:XXIII, p. 11357
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton,
WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3

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Short title Full case title and citation
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R,
Add.1 to Add.3 and Corr.1, adopted 21 March 2005, as modified by Appellate
Body Report WT/DS267/AB/R, DSR 2005:II, p. 299
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 – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R,
adopted 19 January 2001, DSR 2001:II, p. 717
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1, DSR 1997:I, p. 323

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ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994
BCI Business Confidential Information
Cosmo Cosmo Specialty Fibers, Inc.
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
Fortress Fortress Specialty Cellulose Inc.
GATT 1994 General Agreement on Tariffs and Trade 1994
MOFCOM Ministry of Commerce of the People's Republic of China
POI Period of investigation
Rayonier Rayonier Performance Fibers, LLC.
Vienna Convention Vienna Convention on t he Law of Treaties, Do ne at Vienna, 23 May 1969,
1155 UNTS 331; 8 International Legal Materials 679
VSF Viscose Staple Fibre
WTO World Trade Organization

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1 INTRODUCTION
1.1 Complaint by Canada
1.1. On 15 October 2014, Canada requested consultations with China pursuant to Articles 1 and 4
of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) ,
Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), and Articles 17.2
and 17.3 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 (Anti -Dumping Agreement) with respect to the anti-dumping measure applied by
China on imports of cellulose pulp originating from, inter alia, Canada.1
1.2. Consultations were held on 2 November 2 014, but failed to resolve the dispute . On
12 February 2015, Canada requested the establishment of a panel.2
1.2 Panel establishment and composition
1.3. At its meeting on 10 March 2015 , the Dispute Settlement Body (DSB) established a panel
pursuant to the request of Canada in document WT/DS 483/2, in accordance with Article 6 of the
DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter refe rred to the DSB by Canada in document
WT/DS483/2 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
1.5. On 15 April 2015 , Canada requested the Director -General to determine the composition of
the panel, pursuant to Article 8.7 of the DSU. On 27 April 2015, the Director-General accordingly
composed the Panel as follows:
Chairperson: Mr. Thomas Cottier
Members: Mr. Greg Weppner
 Mr. Shahid Bashir
1.6. Brazil, Chile, the European U nion, Japan, Korea, Norway, Si ngapore, Uruguay, and the
United States notified their interest in participating in the Panel proceedings as third parties.5
1.3 Panel proceedings
1.3.1 General
1.7. The Panel began its work on this case later than it would have wished d ue to staff constraints
in the WTO Secretariat.6 After consultation with the parties, on 8 January 2016 the Panel adopted
its timetable7 and Working Procedures.8

1 China – Cellulose Pulp, request for consultations by Canada, (dated 15 October 2014, circulated
20 October 2014), WT/DS483/1.
2 China – Cellulose Pulp, request for the establishment of a panel by Canada, (dated 12 February 2015,
circulated 13 February 2015), WT/DS483/2 (Canada's panel request).
3 Dispute Settlement Body, minutes of meeting held on 10 March 2015, (circulated 20 April 2015),
WT/DSB/M/358.
4 China – Cellulose Pulp, constitution note of the panel, (dated 10 March 2015, circulated
28 April 2015), WT/DS483/3.
5 China – Cellulose Pulp, constitution note of the panel, (dated 10 March 2015, circulated
28 April 2015), WT/DS483/3.
6 China – Cellulose Pulp, communication from the panel, (issued and circulated on 27 October 2015),

7 The Panel revised its timetable on 1 March 2016, 19 May 2016, 8 August 2016, and
12 December 2016.
8 Working Procedures of the Panel, Annex A-2.

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1.8. The Panel held a first substantive meeting with the parties on 11-12 May 2016 . A session
with the third parties took place on 12 May 2016 . The Panel held a second substantive meeting
with the parties on 3 August 2016.9 On 22 September 2016, the Panel issued the descriptive part
of its Report to the parties. The Panel issued its Interim Report to the p arties on
23 November 2016. The Panel issued its Final Report to the parties on 16 December 2016.
1.3.2 Additional working procedures concerning business confidential information (BCI)
1.9. After consultation with the parties, on 8 January 2016 the Panel adopted Additional Working
Procedures concerning Business Confidential Information (BCI).10
2 FACTUAL ASPECTS
2.1. This dispute concerns the anti-dumping measure imposed by China on imports of cellulose
pulp originating from Canada, as set forth in Ministry of Commerce of the People's Republic of
China (MOFCOM) Notices No. 75 of 6 November 2013 (Preliminary Determination)11 and No. 18 of
4 April 2014 (Final Determination)12 and accompanying annexes. Specifically, Canada challenges
MOFCOM's determination of injury in the anti-dumping investigation at issue.13
2.2. MOFCOM initiated anti -dumping investigation s on imports of cellulose pulp from Brazil,
Canada, and the United States on 6 February 201314, following the submission of an application by
Chinese cellulose pulp producers on 13 December 2012.15 The period of investigation (POI) for the
examination of dumping was from 1 January 2012 to 31 December 2012 , and the POI for the
examination of injury was from 1 January 2010 to 31 December 2012.16
2.3. In its Preliminary Determination, published on 6 November 2013, MOFCOM found that the
imports of cellulose pulp from the investigated countries were dumped and caused material injury
to the domestic industry in China. 17 MOFCOM confirmed th ese conclusions in its Final
Determination, published on 4 Apr il 2014. 18 MOFCOM calculated final dumping margin s for
Canadian producers rang ing from 0 .7% to 23.7%. 19 MOFCOM also concluded that the dumped
imports, including those from Canada, caused material injury to the Chinese domestic industry
producing the like product.20
2.4. MOFCOM applied an anti-dumping measure in the form of ad valorem duties on imports from
producers in the investigated countries. 21 Anti-dumping dut ies of 13% were imposed on
cooperating Canadian producers , and of 23.7% on all other Canadian producers. O ne Canadian

9 On 15 September 2016, Canada submitted a letter to the Panel commenting on a recently issued
Appellate Body report in connection with its arguments in this dispute. Following an invitation from the Panel to
respond, China on 23 September 2016 replied asking the Panel not to admit the Canadian letter, and going on
to respond to the substance of Canada's comments. Despite the unsolicited nature of Canada's submission, in
light of the fact that China had the opportunity to, and did, comment on the substance of the submission, the
Panel decided to deny China's request that Canada's letter be rejected.
10 Additional Working Procedures of the Panel Concerning Business Confidential Information, Annex A-3.
11 Ministry of Commerce of the People's Republic of China, Announcement of Anti-Dumping Preliminary
Determination on Imported Dissolving Pulp from the United States, Canada, and Brazil, Notice No. 75,
6 November 2013 (Preliminary Determination), (Exhibit CAN-2).
12 Ministry of Commerce of the People's Republic of China, Final Determination on the Anti-Dumping
Investigation on the Imported Cellulose Pulp Originated in the United States of America, Canada, and Brazil,
Notice No. 18, 4 April 2014 (Final Determination), (Exhibits CHN-1 and CAN-3). Canada and China submitted
differing English versions of the Final Determination. The Panel refers principally to the version submitted by
China throughout this Report. In the few instances where the parties disagreed on the translation from the
original Chinese, the Panel refers to both versions.
13 In footnote 2 of its first written submission, Canada specifically abandoned claims regarding the
determination of dumping and procedural aspects of the investigation set out in paragraphs 1-3 and 7-13 of its
panel request. (Canada's first written submission, fn 2).
14 China's first written submission, para. 15; Canada's first written submission, para. 28.
15 China's first written submission, para. 14; Canada's first written submission, para. 25.
16 Final Determination, (Exhibit CHN-1), p. 2.
17 Preliminary Determination, (Exhibit CAN-2), p. 68.
18 Final Determination, (Exhibit CHN-1), p. 86.
19 Final Determination, (Exhibit CHN-1), pp. 57 and 86.
20 Final Determination, (Exhibit CHN-1), pp. 77 and 78.
21 Notice on the Final Determination No. 18, 4 April 2014, included in Exhibit CAN-3, pp. 2 and 3.

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producer was excluded from the investigation because its dumping margin was determined to be
de minimis.22
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. Canada requests that the Panel find that the measure at issue is inconsistent with China's
obligations under Articles 3.1, 3.2, 3.4 , and 3.5 of the Anti -Dumping Agreement , and as a
consequence also inconsistent with Article 1 of the Anti -Dumping Agreement and Article VI of the
GATT 1994.23 Canada further requests, pursuant to Article 19.1 of the DSU, that the Panel
recommend that China bring its measure into conformity with the GATT 1994 and the
Anti-Dumping Agreement.24
3.2. China requests that the Panel find that the measure at issue is fully consistent with China's
WTO rights and obligations.25
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the
Panel in accordance with paragraph 19 of the Working Procedures adopted by the Pan el (see
Annexes B-1, B-2, C-1, and C-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Brazil, the European Union, Japan, Norway, and the United States are
reflected in their executive summaries, provided in accordance with paragraph 20 of the Working
Procedures adopted by the Panel (see Annexes D-1-D-5). Chile, Korea, Singapore, and Uruguay
did not submit written or oral arguments to the Panel.
6 INTERIM REVIEW
6.1. On 23 November 2016, the Panel issued its Interim Report to the parties. On
30 November 2016, Canada and China each submitted written requests for the Panel to review
aspects of the Interim Report. Neither party requested an interim review meeting. On
7 December 2016, both parties submitted comments on the other party's requests for review.
6.2. The parties' requests made at the interim review stage as well as the Panel's discussion and
disposition of those requests are set out in Annex A-1.
7 FINDINGS
7.1 Introduction
7.1. This dispute concerns the imposition of anti -dumping duties by China on imports of cellulose
pulp from Canada. Cellulose pulp is described as "a kin d of cellulosic material made from plant
fibers and used for production of chemical fibers, such as viscose fiber and cellulosic acetate" .26
Following an investigation initiated based on an application by Chinese cellulose pulp producers,
MOFCOM concluded t hat cellulose pulp imported from Brazil, Canada, and the United States was
dumped and causing material injury to the domestic industry producing the like product in China.
MOFCOM applied an ad valorem anti-dumping duty on imports of cellulose pulp from producers in
the investigated countries. In the case of Canada, those duties were in the amount of 13% for
cooperating Canadian producers, and 23.7% for all other Canadian producers.27
7.2. Canada requested consultations with China with respect to the anti-dumping measure applied
by China on imports of cellulose pulp from Canada. In its request for panel establishment, Canada

22 Notice on the Final Determination, No. 18, 4 April 2014, included in Exhibit CAN-3, p. 2.
26 Final Determination, (Exhibit CHN-1), p. 26.
27 One Canadian producer was excluded from the investigation because its dumping margin was
determined to be de minimis.

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challenged MOFCOM's determinations of injury and dumping, and various procedural aspects of the
investigation.28 In its first written submissi on, Canada specifically abandoned claims regarding the
determination of dumping and procedural aspects of the investigation .29 Canada has pursued its
claims challenging the consistency of MOFCOM's determination of injury with Articles 3.1, 3.2, 3.4,
and 3.5 of the Anti-Dumping Agreement. It is those claims which are before us in this dispute.
7.3. In addressing the complaint in this dispute, we will first set out the relevant principles guiding
our review, including the relevant principles of treaty interpretati on. Second, we will set out our
understanding of the fr amework of Article 3 of the A nti-Dumping Agreement governing the
determination of injur y, and the interrelationship of its several provisions . Finally, we will set out
our detailed analysis of the application of Article 3 to the facts of the underlying determination and
investigation.
7.2 General principles regarding treaty interpretation, the applicable standard of
review, and burden of proof
7.2.1 Treaty interpretation
7.4. Article 3.2 of the DSU provides that the d ispute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of
interpretation of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly
requires panels to interpret that Agreement's provisions in accordance with the customary rules of
interpretation of public internation al law.30 It is generally accepted that the principles codified in
Articles 31 and 32 of the Vienna Convention are such customary rules.31
7.2.2 Standard of review
7.5. Panels generally are bound by the standard of review set forth in Article 11 of the DSU, which
provides, in relevant part, that:
A panel should make an objective assessment of the matter before it, including an
objective assessment of the fac ts of the case and the applicability of and conformity
with the relevant covered agreements.
7.6. In addition, Article 17.6 of the Anti -Dumping Agreement sets forth the special standard of
review applicable to disputes under the Anti-Dumping Agreement:
(i) in its assessment of the facts of the matter, the panel shall determine whether
the authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the panel might have
reached a different conclusion, the evaluation shall not be overturned;
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance
with customary rules of in terpretation of public international law. Where the panel
finds that a relevant provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the authorities' measure to be in conformity with
the Agreement if it rests upon one of those permissible interpretations.
Thus, Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement together establish the
standard of review we are to apply with respect to both the factual and the legal aspects of the
present dispute.

28 Canada's panel request.
29 Canada's first written submission, fn 2. As a consequence, there is no dispute concerning China's
determination that subject imports are dumped.
30 Article 17.6(ii) of the Anti-Dumping Agreement also provides that if a panel finds that a provision of
the Anti-Dumping Agreement admits of more than one permissible interpretation, it shall uphold a measure
that rests upon one of those interpretations.
31 Appellate Body Report, Japan – Alcoholic Beverages II, p. 10.

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7.7. When a panel is reviewing an investigating authority's determination of facts, the "objective
assessment" standard in Article 11 of the DSU requires a panel to review whether the authorities
have provided a reasoned and adequate explanation as to : (a) how the evidence on the record
supported its factual findings; and ( b) how those factual findings support the overall
determination.32 Moreover, with respect to a "reasoned and adequate explanation" , the
Appellate Body observed:
What is "adequate" will inevitably depend on the facts and circumstances of the case
and the particular claims made, but several general lines of inquiry are likely to be
relevant. The panel's scrutiny should test whether the reasoning of the authority is
coherent and internally consistent. The panel must undertake an in-depth examination
of whether the explanations given disclose how the investigating authority treated the
facts and evidence in the record and whether there was positive evidence before it to
support the inferences ma de and conclusions reached by it. The panel must examine
whether the explanations provided demonstrate that the investigating authority took
proper account of the complexities of the data before it, and that it explained why it
rejected or discounted alter native explanations and interpretations of the record
evidence. A panel must be open to the possibility that the explanations given by the
authority are not reasoned or adequate in the light of other plausible alternative
explanations, and must take care n ot to assume itself the role of initial trier of facts,
nor to be passive by "simply accept[ing] the conclusions of the competent
authorities".33
Finally, it is clear that a panel should not conduct a de novo review of the evidence, nor substitute
its judg ment for that of the investigating authority . A panel must limit its examination to the
evidence that was before the investigating authority during the course of the investigation and
must take into account all such evidence submitted by the parties to the dispute.34 At the same
time, a panel must not simply defer to the conclusions of the investigating authority; a panel's
examination of those conclusions must be "in-depth" and "critical and searching".35
7.2.3 Burden of proof
7.8. The general principles applicable to the allocation of the burden of proof in WTO dispute
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert
and prove its claim. 36 Therefore, as the complaining party, Canada bears the bur den of
demonstrating that the measure at issue is inconsistent with the provisions of the covered
agreements that it invokes. The Appellate Body has stated that a complaining party will satisfy its
burden when it establishes a prima facie case, namely, a case which, in the absence of effective
refutation by the defending party, requires a panel, as a ma tter of law, to rule in favour of the
complaining party.37 It is generally for each party asserting a fact to provide proof thereof.38
7.3 The legal framework for injury determination
7.9. As noted above, Canada challenges MOFCOM's injury determination under various provisions
of Article 3 of the Anti -Dumping Agreement. Previous decisions of panels and the Appellate Body
have elaborated on the meaning of the provisions of Article 3. In our view , it is useful to explain
our understanding of the legal framework for injury determination , in order to set out the context
for our review of the challenged determination of injury and our conclusions in this dispute.
7.10. Article 3 is entitled "Determination of Injury" and its provisions require an investigating
authority to consider, examine, and evaluate a broad range of factors, and to demonstrate that
dumped imports are causing injury to the domestic industry. As explained below, in our view,

32 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS, para. 186; and US –
Lamb, para. 103.
33 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93 (referring to
Appellate Body Report, US – Lamb, para. 106). (emphasis original)
34 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, paras. 187 and 188.
35 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.
36 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
37 Appellate Body Report, EC – Hormones, para. 104.
38 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.

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there are not eworthy differences in what an investigating authority must do in order to satisfy
these various requirements so as to make a determination of injury consistent with Article 3 of the
Anti-Dumping Agreement. Moreover, the provisions of Article 3 are inter-related in the sense that
the consideration, examination, and evaluation of the required elements all contribute to the
explanation of the ultimate determination whether dumped imports are causing material injury to
the domestic industry.
7.11. The application of anti-dumping measures is subject to the requirements of Article VI of the
GATT 1994 and the Anti -Dumping Agreement. The GATT 1994 establishes basic principles for the
imposition of anti -dumping (and countervailing) measures, and the Anti -Dumping Agreemen t
provides considerable elaboration of those principles, setting out a series of detailed substantive
and procedural obligations which must be complied with before an anti -dumping measure may be
applied. A WTO Member is entitled to apply an anti-dumping measure only if the requirements of
the Anti-Dumping Agreement have been met. Recently, the Appellate Body observed that:
Taken as a whole, the object and purpose of the Anti -Dumping Agreement is to
recognize the right of Members to take anti-dumping measures to counteract injurious
dumping while, at the same time, imposing substantive conditions and detailed
procedural rules on anti-dumping investigations and on the imposition of anti-dumping
measures.39
Article 3 of the Anti-Dumping Agreement sets out the r ules and conditions that apply with respect
to the determination of injury, which is one of the fundamental prerequisites for the imposition of
an anti-dumping measure.
7.12. Article 3.1 establishes the basic principle s that a determination of injury for purpos es of
Article VI of GATT 1994:
[S]hall be based on positive evidence and involve an objective examination of both
(a) the volume of the dumped imports and the effect of the dumped imports on prices
in the domestic market for like products, and (b) the cons equent impact of these
imports on domestic producers of such products.
It is well established that "positive evidence" refers to "the facts underpinning and justifying the
injury determination"40, and "the quality of the evidence that an investigating auth ority may rely
upon in making a determination ".41 "Positive" suggests that the evidence should be "affirmative,
objective, verifiable, and credible ".42 The "objective examination" relates to the investigative
process itself, and requires that it "conform to the dictates of the basic principles of good faith and
fundamental fairness", and be conducted "in an unbiased manner, without favouring the interests
of any interested party, or group of interested parties, in the investigation".43
7.13. These basic principles i nform the more detailed provisions set out in the remainder of
Article 3. They do not, in our view, establish independent obligations which can be judged in the
abstract, or in isolation and separately from the substantive requirements set out in the remai nder
of Article 3. Instead, they inform the application of all the provisions of Article 3.
7.14. The provisions of Article 3 requiring consideration, examination, and evaluation of various
factors contemplate "a logical progression of inquiry leading to an investigating authority's ultimate
injury and causation determination". 44 The inquiries under Articles 3.2 and 3.4 , together with the
inquiries under Articles 3.7 and 3.8 where relevant 45, "contribute[] to, rather than duplicate[]" 46,
the overall determination required under Article 3.5. Furthermore, in the event of a dispute, they

39 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.25.
40 Appellate Body Report, US – Hot-Rolled Steel, para. 193.
41 Appellate Body Report, China – GOES, para. 126 (citing US – Hot-Rolled Steel, para. 192).
42 Appellate Body Report, China – GOES, para. 126 (citing US – Hot-Rolled Steel, para. 192).
43 Appellate Body Report, China – GOES, para. 126 (citing US – Hot-Rolled Steel, para. 193).
44 Appellate Body Report, China – GOES, para. 128.
45 Article 3.7 establishes additional criteria to be considered in making a determination of threat of
material injury, and clarifies that such a determination must be based on facts, and not merely on allegations,
conjecture, or remote possibility, while Article 3.8 requires that the application of anti-dumping measures shall
be considered and decided with special care in cases of threat of material injury.
46 Appellate Body Report, China – GOES, para. 149.

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inform a panel's conclusion regarding the investigating authority's compliance with Article 3.1 with
respect to a determination of injury.
7.15. An investigating authority's determination o f injury comprises a broad range of facts which
must be considered in accordance with those substantive requirements, and upon the basis of
which the authority must ultimately make a determination as to whether dumped imports are
causing material injury to the domestic industry. That determination may become the subject of a
dispute, in which case a panel will be required to review it, and decide whether the investigating
authority complied with the relevant substantive and procedural obligations, consisten tly with the
fundamental principles set out in Article 3.1. This does not, however, in our view mean that a
claim of inconsistency with Article 3.1 can normally be made independently of other provisions of
Article 3.
7.16. To us, this seems logical, as the "pos itive evidence" to be examined by the investigating
authority must pertain to the particular substantive elements relevant to the determination made,
and the "objective examination" must relate to the consideration and evaluation of that evidence
in the in vestigation at issue. Thus, we do not believe a panel can, on review of a determination,
decide whether a particular element of evidence relied upon by an investigating authority is
"positive" in some absolute or abstract sense, but only in the context of the role and weight given
to it by the investigating authority . A panel must decide whether that evidence is " affirmative,
objective, verifiable, and credible " with respect to the substance of the matter in connection with
which it is considered and relied upon by the investigating authority.
7.17. Similarly, we do not believe a panel can, on review of a determination, decide whether the
examination of the evidence by the investigating authority was objective in the abstract, but only
in the context of the subst ance of the matter with respect to which the authority was considering
and relying on that evidence.47 Whether the decision-making process of the investigating authority
"conform[ed] to the dictates of the basic principles of good faith and fundamental fair ness", and
was undertaken "in an unbiased manner, without favouring the interests of any interested party,
or group of interested parties, in the investigation " can, in our view, only be determined on the
basis of a careful scrutiny of the decisions made b y the investigating authority in reaching a
conclusion on the question of whether dumped imports caused injury, as set out in the relevant
determination and other documents.
7.18. Looking at the substantive obligations of Article 3, we see that Article 3.2 provides more
specific guidance regarding the objective examination of the volume of dumped imports and the
objective examination of the effect of those imports on prices in the domestic market , as required
by Article 3.1. Article 3.2 first sentence provides that:
With regard to the volume of the dumped imports, the investigating authorities shall
consider whether there has been a significant increase in dumped imports, either in
absolute terms or relative to production or consumption in the importing Member.
In our view, this does not require an investigating authority to make a determination regarding the
significance of any increase in the volume of dumped imports.48 Rather, it requires the authorities
to consider whether there was any increase in dumped imp orts, and the significance of any such
increase, and provides for three different parameters for that consideration.
7.19. Article 3.2 second sentence provides that:
With regard to the effect of the dumped imports on prices, the investigating
authorities shall consider whether there has been a significant price undercutting by
the dumped imports as compared with the price of a like product of the importing

47 Of course, a general claim of bias on the part of the investigating authority would fall squarely under
Article 3.1. But even in such a situation, it is questionable whether the objective nature of the authority's
investigation could be determined without going into the substance of the determination which is challenged.
48 See Appellate Body Report, China – GOES, para. 130. The Appellate Body concluded that
consideration of the price effects of dumped imports under Article 3.2 does not require a definitive
determination such as that required by Article 3.5 with respect to causation. In our view, the same conclusion
applies with respect to the consideration of the volume of dumped imports and the significance of any increase
in that volume under the first sentence of Article 3.2.

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Member, or whether the effect of such imports is otherwise to depress prices to a
significant degree or prevent price increases, which otherwise would have occurred, to
a significant degree.
Thus, like the first sentence, the second sentence of Article 3.2 does not require an investigating
authority to make a determination regarding the effects of dumped imports on prices, but rather to
consider whether there has been a significant price undercutting by the dumped imports, or
whether the effect of dumped imports is otherwise significant price depression or price
suppression.49
7.20. Article 3.4 sets out a series of "relevant economic factors and indices having a bearing on
the state of the industry", which must be evaluated by the investigating authority in all cases when
examining the consequential impact of dumped imports on that industry , as required by
Article 3.1. Like Article 3.2, Article 3.4 does not require an investigating authority to make a
determination regarding the impact of dumped imports, but rather to undertake an examination of
that impact, including an evaluation of all relevant economic factors and indices having a bearing
on the state of the industry, including those specifically mandated by Article 3.4 itself.
7.21. The fact that Articles 3.2 and 3.4 do not require an investigating authority to make
determinations regarding the matters considered, exam ined, or evaluated, does not diminish the
scope of the necessary inquiries under those provisions. 50 With respect to volume, the necessary
inquiries call for consideration of the volume of dumped imports and the significance of any
increase in that volume. With respect to the effects of dumped imports on prices and their impact
on the domestic industry, the necessary inquiries call for consideration of the relationship between
the dumped imports and prices of the domestic like product and the factors relevan t to the
condition of the industry .51 However, while these inquiries "are necessary in order to answer the
ultimate question … as to whether subject imports are causing injury to the domestic industry" 52,
the fact that no determinations are made under these provisions makes it clear that no particular
outcome is a necessary prerequisite for reaching and resolving that "ultimate question".53
7.22. An investigating authority's objective examination may reveal no increase in dumped
imports, or no significant increase in those imports, or no price undercutting, depression, or
suppression, or no impact on one or more of the relevant economic factors and indices evaluated.
But this does not mean that the investigating authority need not, or may not, go on to an
examination of all relevant evidence before it to consider whether or not dumped imports are
causing material injury to the domestic industry. Of course, in the absence of any increase in the
volume of dumped imports, any price effects, or any impact on the domestic industry, the answer
would be expected to be no. But in the more likely situation where the results of the inquiries
under Articles 3.2 and 3.4 are diverse, a thorough consideration of whether there is a causal
relationship between the dumped imports and injury will be necessary before a determination of
injury within the meaning of the Anti-Dumping Agreement and Article VI of the GATT can be made.
7.23. The analysis under Article 3.5 covers a broader scope and concerns the ultimate question of
whether dumped i mports are causing material injury to the domestic industry. 54 The elements of
that ultimate determination are set out in Article 3.5, which requires a demonstration that the
dumped imports are, through their volume, price effects, and impact on the domesti c industry,
causing material injury to that industry. The results of the inquiries under Articles 3.2 and 3.4 are
"linked through a causation analysis" to the demonstration that there is a causal relationship
between the dumped imports and the injury to th e domestic industry. 55 Article 3.5 specifically
refers back to the "effects of dumping, as set forth in [ Articles 3.2 and 3.4]" in the context of the

49 Appellate Body Report, China – GOES, para. 130.
50 Appellate Body Report, China – GOES, para. 131. While the Appellate Body was referring specifically
to Article 3.2 in this context, we are of the view that the observation holds for Article 3.4 as well.
51 Appellate Body Reports, China – GOES, paras. 136 and 138; and China – HP-SSST (Japan) / China –
HP-SSST (EU), paras. 5.158-5.160.
52 Appellate Body Report, China – GOES, para. 128.
53 We note in this regard that both Article 3.2 and Article 3.4 provide that no one or several of the
factors listed therein can necessarily give decisive guidance. We understand this as indicating that no one or
several of the factors listed can give decisive guidance as to the ultimate question whether dumped imports are
causing material injury to the domestic industry.
54 Appellate Body Report, China – GOES, paras. 147 and 150.
55 Appellate Body Report, China – GOES, paras. 128 and 130 and fn 217.

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demonstration that dumped imports are causing injury within the meaning of the Agreement, and
requires a de monstration of a causal relationship between the dumped imports and the injury to
the domestic industry based on an examination of all relevant evidence.
7.24. It seems clear that a "causal relationship" is a relationship in which dumped imports
contribute to " bringing about", "producing" or "inducing" the material injury.56 We note that
Article 3 does not provide any specific guidance on how an investigating authority should
undertake the examination of the relevant evidence in determining whether dumped imports are
causing material injury. 57 Thus, "it is for the investigating authorities in the first instance to
determine the analytical methodologies that will be applied in the course of an investigation []"58
and will enable it to make the required determination consistently with Article 3.59
7.25. Article 3.5 also requires that an investigating authority examine known factors other than
dumped imports which are causing injury to the domestic industry simultaneously with the
dumped imports, and ensure that the injuries ca used by such other factors not be attributed to
dumped imports. In order to comply with this requirement, an investigating authority must:
[M]ake an appropriate assessment of the injury caused to the domestic industry by
the other known factors, and … must separate and distinguish the injurious effects of
the dumped imports from the injurious effects of those other factors. This requires a
satisfactory explanation of the nature and extent of the injurious effects of the other
factors, as distinguished from the injurious effects of the dumped imports.60
7.26. While the investigating authority must find a sufficiently clear contribution by dumped
imports to demonstrate that they are causing material injury, and explain its determination in that
regard, nothing in th e first two sentences of Article 3.5 suggests that those imports must be the
sole cause of that injury. The language of Article 3.5 as a whole seems clear – the "causal
relationship" between dumped imports and material injury may exist even though other factors are
also contributing, "at the same time", to the situation of the domestic industry.
7.27. Similarly, the obligation to distinguish between the effects caused by dumped imports and
the effects caused by other factors does not necessarily imply that dumpe d imports on their own
must be capable of causing material injury.61 Finally, there is no requirement that dumped imports
alone, or in and of themselves, must be capable of causing material injury.62 Article 3 does not
provide any specific guidance on how an investigating authority should undertake the examination

56 See Appellate Body Report, US – Wheat Gluten, para. 67. While the Appellate Body was referring to
the meaning of the "causal link" between increased imports and serious injury required under Article 4.2(b) of
the Safeguards Agreement in this case, we are of the view that prior decisions relating to the causation
requirement in the Agreement on Safeguards can provide guidance in interpreting the very similar phrase
"causal relationship" in Article 3.5 of the Anti-Dumping Agreement. (See Appellate Body Report, US –
Hot-Rolled Steel, para. 230).
57 Appellate Body Report, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.141 (citing
Appellate Body Report, EC – Bed Linen (Article 21.5 – India), paras. 113 and 118).
58 Panel Report, Thailand – H-Beams, para. 7.159.
59 In this context, we are of the view that the use of the word "all" in the phrases "all relevant economic
factors" in Article 3.4 and "all relevant evidence" in Article 3.5 indicates that the effects of any factor may be
relevant to the ultimate determination of causation, irrespective of whether the particular factor relates to
dumped imports specifically or to the domestic industry more generally. In our view, all the factors and
evidence having a bearing on the question are to be included in the investigating authority's assessment, and
the contribution of each relevant factor is to be counted in the determination of injury caused by dumped
imports according to its impact on the situation of the domestic industry. In this context, we do not consider
that factors specifically related to dumped imports should be counted towards a determination of material
injury caused by dumped imports, while others – those not related to dumped imports – should be excluded
from that determination. (See Appellate Body Report, US – Wheat Gluten, para. 67 (referring to Article 4.2(b)
of the Safeguards Agreement)).
60 Appellate Body Report, US – Hot-Rolled Steel, para. 226
61 Cf. Appellate Body Report, US – Wheat Gluten, para. 67. The Appellate Body was referring to the
non-attribution language in the Agreement on Safeguards, which can provide guidance in interpreting the
non-attribution language in Article 3.5 of the Anti-Dumping Agreement. (Appellate Body Report, US –
Hot-Rolled Steel, para. 230).
62 See, Appellate Body Report, US – Wheat Gluten, para. 79. While the Appellate Body was referring to
the causation requirement in Article 4.2(b) of the Agreement on Safeguards, we are of the view that its
reasoning in that context is highly relevant to understanding the causation requirement in Article 3.5.
(Appellate Body Report, US – Hot-Rolled Steel, para. 230).

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of known factors other than the dumped imports which are injuring the domestic industry, nor how
it should ensure that i njuries caused by these other factors are not attributed to the dumped
imports. Thus an investigating authority may rely on any methodology or methodologies it believes
will enable it to make the required determination consistently with Article 3.
7.28. In addition to the provisions establishing substantive criteria for the determination of
material injury caused by dumped imports, Article 3 contains two additional provisions which might
be viewed as more procedural in nature. Article 3.3 establishes criteria for the cumulative
assessment of the effects of dumped imports. A decision to us e such a cumulative assessment
necessarily will precede the consideration of the volume, price effects and impact of dumped
imports, as well as the demonstration of a causal relationship , as it is a necessary element to
delimit the corpus of dumped imports to be taken into account under the relevant provisions,
Articles 3.2, 3.4, 3.5 , and 3.7. Article 3.6 provides for an alternative to the consideration of the
effects of dumped imports on domestic production of the like product in certain circumstances.
Again, this provision would necessarily come into play before the examination of the impact of the
dumped imports in the context of Article 3.4, as the relevant information on the state of the
domestic industry will be different if the alternative allowed for is applied.
7.29. Thus, it seems clear to us that while there is a "logical progression" from consideration of
the various substantive elements set out in Articles 3.2, 3.4, and whe n the issue of threat of
material injury is raised, Article 3.7, to the ultimat e determination whether the dumped imports
are causing material injury to the domestic in dustry under Article 3.5 , there is no obligatory
sequence for the analysis by an investigating author ity to be undertaken , and "n o prescribed
template or format" for an investigating authority's determination of injury exists under Article 3 of
the AD Agreement.63 As a consequence, we consider it clear that there is no necessary sequence
to be followed by an investigating authority in setting out its consideration, exami nation,
evaluation and determination in relevant documentation.64
7.30. Finally, an investigating authority's consideration, examination, evaluation, determinations,
and importantly, its reasoning and explanations in connection with the foregoing, must be
reflected in relevant documentation, such as a public notice or other separate report of its final
determination whether or not to impose an anti -dumping measure.65 It is this documentation that
will be considered, in the first instance, by a panel reviewing a Mem ber's imposition of
anti-dumping measures, if challenged. Against the background set out above, it is that task to
which we now turn in this dispute.
7.4 Whether MOFCOM's consideration of the volume of dumped imports was consistent
with Articles 3.1 and 3.2 of the Anti-Dumping Agreement
7.4.1 Introduction
7.31. Canada challenges MOFCOM's consideration of the volume of the dumped imports under
Articles 3.1 and 3.2 of the Anti -Dumping Agreement. MOFCOM found that the volume of dumped
imports increased by 43.82% in absolute terms over the POI.66 Canada does not disagree with this
factual finding, but argues that MOFCOM failed to assess the significance of this increase in light of

63 Appellate Body Report, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.141.
64 We note that the parties are in agreement with us on this point. (Canada's response to Panel
question No. 8(i); China's response to Panel question No. 8(i)). Third parties also expressed this view. (Brazil's
response to Panel question No. 6(i); Japan's response to Panel question No. 6(i); and United States' response
to Panel question No. 6(i)).
65 Article 12.2 provides that:
Public notice shall be given of any preliminary or final determination, whether
affirmative or negative, of any decision to accept an undertaking pursuant to
Article 8, of the termination of such an undertaking, and of the termination of a
definitive anti-dumping duty. Each such notice shall set forth, or otherwise make
available through a separate report, in sufficient detail the findings and conclusions
reached on all issues of fact and law considered material by the investigating
authorities.
See, Appellate Body Report, China – GOES, para. 131 (referring to Panel Reports, Thailand – H-Beams,
66 Final Determination, (Exhibit CHN-1), p. 59.

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evidence which Canada alleges indicated that this increase was not significant. 67 Canada bases its
claim largely on its interpretation of the term "significant" in the first sentence of Article 3.2.68
Specifically, Canada argues that in order to consider whether an increase in the absolute volume of
the dumped imports is significant, an investigating au thority has to examine the factual
circumstances surrounding that increase.69 Canada submits that the relevant factual circumstances
will vary from case to case, but may include trends in domestic demand, and trends in the volume
of the domestic like product and non-dumped imports.70
7.32. China submits that Article 3.2 requires the investigating authority to consider the volume of
the dumped imports either in absolute or in relative terms, noting that the text of the provision
uses the disjunctive "or" and the wor ds "either" and "absolute". 71 China contends that the
interpretation suggested by Canada would require the investigating authorities always to consider
an increase in volume in both absolute and relative terms. 72 China points out th at MOFCOM
considered that there had been a significant increase in dumped imports in absolute terms.73
According to China, there is no textual basis in Article 3.2 to support Canada's argument that
relevant factual circumstances must be taken into account in considering whether there has been a
significant increase in the absolute volume of dumped imports. China submits that Article 3.2
clearly specifies how the investigating authorities are required to consider the volume of the
dumped imports, and provides a choice between differen t approaches. 74 China asserts that the
term "absolute" suggests that the increase in imports is to be examined on its own, without the
need to look at surrounding factual circumstances, and that the magnitude of the increase can be
in itself significant.75
7.33. We will first address the legal standard under the first sentence of Article 3.2 and then
examine each of Canada's allegations in turn.
7.4.2 Legal standard under Articles 3.1 and 3.2, first sentence
7.34. We start our analysis by considering the relevant provisions o f the
Anti-Dumping Agreement. Article 3.1 of the Anti -Dumping Agreement provides, in relevant part,
that a determination of injury:
[S]hall be based on positive evidence and involve an objective examination of both
(a) the volume of the dumped imports and the effect of the dumped imports on prices
in the domestic market for like products, and (b) the consequent impact of these
imports on domestic producers of such products.
7.35. The first sentence of Article 3.2 elaborates on the objective examination of the vo lume of
imports required by Article 3.1, providing as follows:
With regard to the volume of the dumped imports, the investigating authorities shall
consider whether there has been a significant increase in dumped imports, either in
absolute terms or relative to production or consumption in the importing Member.
7.36. As discussed above , consideration of the data and trends with respect to the volume of
dumped imports is a step in the logical progression toward a determination whether injury is
caused by dumped i mports.76 However, even a significant increase in the volume of dumped
imports may not, standing alone, suffice to demonstrate that dumped imports are causing material

67 Canada's first written submission, paras. 66-76.
69 Canada's first written submission, para. 70.
71 China's second written submission, para. 25.
72 China's second written submission, paras. 18 and 37.
73 China's first written submission, paras. 47 and 48. China notes that, even though not required to do
so, MOFCOM also looked at the volume of dumped imports relative to consumption. (China's first written
submission, para. 48).
74 China's second written submission, para. 24.
75 China's second written submission, para. 25.
76 It seems clear that the greater the volume of, or any increase in the volume of, dumped imports, the
greater the likely impact of those dumped imports with respect to factors such as lost sales and consequent
financial effects, inventories, production capacity, and so on.

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injury to the domestic industry. The impact of those imports and of any increase in those imports
over the period of investigation (POI) on the condition of the domestic industry will have to be
considered before that ultimate question can be answered. Nonetheless, even if the consideration
of the volume of dumped imports shows no increase, or an insignificant increase, this does not
mean a determination that dumped imports are causing material injury is precluded.77
7.37. Canada acknowledges that the first sentence of Article 3.2 gives the investigating
authorities discretion to consider the increas e in dumped imports in absolute terms or relative to
production or consumption in the importing Member. 78 However, Canada asserts that when
considering any of these perspectives, the authorities must conduct an objective examination
based on positive eviden ce, and provide reasoned and adequate explanations of its conclusions. 79
For Canada, this means that the significance of an absolute increase in the volume of dumped
imports must be considered in the context of the factual circumstances in the market.
7.38. However, we cannot distinguish what Canada describes as a contextual consideration of the
significance of an absolute increase in the volume of dumped imports , taking into account trends
in domestic production of the like product and trends in domestic demand, from a consideration of
the significance of any increase in dumped imports relative to domestic production or
consumption, or indeed from the consideration of the significance of any increase in dumped
imports in the analysis of causation. Thus, Canada's argument fails to recognize the separate
nature of the three inquiries regarding the volume of dumped imports set out in Article 3.2, which
are clearly distinguished in the text . In our view, Canada's argument fails to recognize the
difference between the consideration of the volume of dumped imports required under Article 3.2
first sentence and the demonstration of the effects of the volume of dumped imports in the context
of the demonstration of a causal relationship between dumped imports and material in jury to the
domestic industry under Article 3.5.
7.39. While it is clear that Article 3.1 requires that an injury determination must be based on an
objective examination of positive evidence, and that this principle applies in general to an
investigating authority's consideration of increased imports under Article 3.2, this does not inform
the substance of that consideration. Nor does it provide guidance, or establish any limitation, as to
which of the alternatives set out in Article 3.2 for consideration of the volume of dumped imports
should be undertaken by an investigating authority in any given investigation. The three methods
for considering the volume of imports set out in Article 3.2 are not mutually exclusive, and the
investigating authority may rely on one, two or all of them in the course of its consideration of the
significance of any increase in the volume of dumped imports, as well as in its analysis and
determination with regard to injury and causation at later stages. However, in our view, there is
no basis in the text of Article 3.2, in light of the disjunctive "either … or", for Canada's view that
investigating authorities can, on the facts of a particular case, be required to consider the
significance of any increase in the volume of dumped import s in relative terms, in addition to
considering the significance of any absolute increase.80
7.40. Turning to the interpretation of "significant", we note that the parties agree that the
dictionary meaning of the word "significant" is " important, notable, consequ ential".81 In the first
sentence of Article 3.2, the term "significant" modifies the word "increase" in the phrase "whether

77 To us, this distinction is appropriate and indeed, may be significant in a particular case. An absolute
increase in the volume of imports in a growing market is likely to have a very different impact on the situation
of the domestic industry than if the market were stable or contracting. In such a situation, there may be no
increase in the volume of dumped imports relative to domestic production or consumption. But these are
considerations to be addressed in the context of the ultimate demonstration whether dumped imports are
causing injury under Article 3.5.
78 Canada's response to Panel question No. 4, para. 1.
79 Canada's response to Panel question No. 4, para. 2; second written submission, paras. 30-33.
80 Our conclusion in this regard is consistent with the views of previous panels. See Panel Reports,
Thailand – H-Beams, para. 7.171 ("it is sufficient for the purposes of this provision for the investigating
authorities to consider whether there has been a significant absolute increase"); and US – Countervailing Duty
Investigation on DRAMs, paras. 7.233 and 7.234 (discussing the corresponding, almost identical provision in
the SCM Agreement, the panel stated that there are three ways to comply with the obligation to consider
whether there has been a significant increase in dumped imports. The investigating authority may consider
whether there has been a significant increase in the volume of the dumped imports: (a) in absolute terms;
(b) relative to domestic production; or (c) relative to domestic consumption).
81 Shorter Oxford English Dictionary, 6th ed., A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 2,
p. 2833; and Canada's first written submission, para. 70.

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there has been a significant increase in dumped imports, either in absolute terms or relative to
production or consumption in the imp orting Members". The inquiry as to the significance of any
increase in dumped imports implies a consideration of developments, that is, changes or trends, in
the volume of dumped imports over the period of the injury investigation. Article 3.2 further
specifies how the invest igating authorities shall consider whether there has been a significant
increase in imports: in either absolute terms, or relative to domestic production or consumption.
7.41. The term "absolute" is defined as "not relative", or "not depende nt for meaning or
significance on a relationship with another term or concept". 82 Thus, the consideration of whether
there has been a significant increase in dumped imports in absolute terms calls for an assessment
of whether the increase in dumped imports, if any, is "important, notable or consequential". In this
context, we consider that a "significant" absolute increase may be assessed on the basis of the
magnitude of that increase . Of course, this does not diminish the rigour of what has to be
considered, namely "whether th ere has been a significant increase in dumped imports, either in
absolute terms or relative to production or consumption in the importing Member". 83 Moreover,
such consideration has to be reflected in the final determination in order to demonstrate that the
investigating authorities have considered the relevant factors.84
7.42. The investigating authority will also have to decide w hether any given increase in imports,
whether considered significant or not, ultimately supports a determination of injury caused by
dumped imports . However, in our view, this is a further evaluation of the significance of any
increase in dumped imports as an element of determining causation under Article 3.5.85 In
analysing causation, the investigating authority must demonstrate that the dumped imports are
causing injury to the domestic industry, based on "all relevant evidence before the authorities",
which, in light of the structure and logic of Article 3, includes evidence of increases in dumped
imports. In that anal ysis, the investigating authority will have to take into account any such
increases in the context of all the other evidence before it, including evidence concerning, for
instance, changes in demand, volume of sales of the domestic industry, and non -dumped imports.
However, given that Article 3.2 does not require a determination that any increase in imports,
whether absolute or relative to domestic production or consumption, is significant 86, we do not see
how these latter elements can be considered necessar y aspects of the consideration of the
significance of an absolute increase in dumped imports required under Article 3.2.
7.43. A different understanding may be appropriate with respect to the consideration of whether
an increase in imports is significant relative to domestic production or consumption. In such a
case, the significance of any increase is considered in relation to another variable, requiring some
comparison. This suggests a degree of contextual analysis, rather than a n assessment of the
magnitude of an increase. However, even in this context, consideration of the magnitude of any
increase in dumped imports relative to domestic production or consumption may be sufficient for
purposes of Article 3.2, keeping in mind that, whether any increase in import s relative to domestic
production or consumption, significant or not, is ultimately enough to support a determination of
injury caused by dumped imports will still have to be addressed by the investigating authority in

82 Oxford English Dictionary online, definition of "absolute", available at:
<http://www.oed.com/view/Entry/679?redirectedFrom=absolute#eid>, accessed 13 July 2016.
83 Appellate Body Report, China – GOES, para. 131.
84 Appellate Body Report, China – GOES, para. 131.
85 We note in this regard that an investigating authority may make an affirmative determination of
injury caused by dumped imports even where there has been no significant increase, or indeed any increase at
all, in the volume of dumped imports. This is in contrast to the situation under the Safeguards Agreement,
where increased imports are a necessary prerequisite for the imposition of a safeguard measure.
86 Appellate Body Report, China – GOES, para. 130.
In Thailand – H-Beams the panel observed that:
While it would certainly be preferable for a Member explicitly to characterize
whether any increase in import s as "significant", and to give a reasoned
explanation of that characterization, we believe that the word "significant" does not
necessarily need to appear in the text of the relevant document in order for the
requirements of this provision to be fulfilled. Nevertheless, we consider that it must
be apparent in the relevant documents in the record that the investigating
authorities have given attention to and taken into account whether there has been
a significant increase in dumped imports, in absolute or relative terms.
(Panel Report, Thailand – H-Beams, para. 7.161)
We do not disagree. However, as discussed above, in our view this assessment is an element of the
ultimate determination of causation.

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demonstrating causation. In our view, the consideration of whether there has been a significant
increase in the volume of dumped imports under Article 3.2 does not require a duplicative analysis
of causal linkages and other factors.
7.44. Furthermore, Article 3.2 does not provide any guidance as t o what circumstances might be
relevant to consideration of the "significance" of any increase in imports. Recalling that there is no
requirement under Article 3.2 for an investigating authority to determine that an observed
increase in imports, whether absolute or relative, is significant, and an investigating authority may
ultimately find injury caused by dumped imports even in the absence of a significant increase in
such imports, it would be inappropriate, in our view, to impose requirements for the analysis of the
significance of any increase in imports that are duplicative of elements of the analysis of causation
relevant to determining whether the dumped imports, whatever their volume, and whether or not
it increased significantly in absolute or relative terms, are causing injury to the domestic industry.
7.45. Canada argues in this respect that the interpretation of the term "significant" in the context
of Article 3.2 with respect to the effect of the dumped imports on prices is equally applicable with
respect to the consideration of increases in volume. 87 We fail to see how this could be the case.
The need for a contextual consideration of the significance of any price undercutting, price
depression, or price suppression derives from the word "effect" in the second sentence of
Article 3.2.88 However, unlike the second sentence of Article 3.2, which refers to the effect of
dumped imports on prices, and Article 3.4, which refers to the impact of dumped imports on the
domestic industry, the first sentence of Article 3.2 does not refer to any impact or effect of the
dumped imports, but simply to consideration of whether there has been a significant increase in
dumped imports. For us, the notion that an increase in the volume of dumped imports, whether
absolute or r elative to production or consumption, could be considered as an effect or impact of
those same imports is illogical. We are of the view that no such contextual analysis in respect of
the effect of the dumped imports is required by the first sentence of Article 3.2. In our view, the
significance of any particular volume of or increase in dumped imports is, in the first instance, a
question of the magnitude of that increase. Whether any given volume of or increase in dumped
imports may be significant in the u ltimate determination of whether dumped imports cause
material injury to the domestic industry will, of course, depend on the evaluation of all the relevant
facts in each case. But that is an inquiry under Article 3.5 of the Anti-Dumping Agreement.
7.4.3 MOFCOM's consideration of the volume of dumped imports
7.46. Turning to the facts of the present case, we note that MOFCOM considered the volume of
the dumped imports in both absolute terms and relative to consumption in the Chinese market.
Specifically, MOFCOM found an increase in the volume of dumped imports, in absolute terms,
of 43.82% over the POI, i.e. 2010 -2012.89 MOFCOM further determined that the market share of
the dumped imports also showed an overall upward trend, increasing by 1.31 percentage points
over the POI.90
7.47. Thus, MOFCOM found that both the absolute quantity and the quantity of the dumped
imports relative to consumption showed an increasing trend during the POI. Noting the
submissions made by interested parties Rayonier Performance Fibers, LLC. (Rayonier) and Fortress
Specialty Cellulose Inc. (Fortress) asserting that there had been no significant increase in volume
of the dumped imports, especially relative to production and consumption in China, MOFCOM
further observed that volume of the dumped impor ts relative to production of the domestic like

87 Canada's second written submission, paras. 20-26 (referring to Appellate Body Reports, China –
HP-SSST (Japan) / China – HP-SSST (EU), para. 5.161; US – Large Civil Aircraft (2nd complaint), para. 1272;
EC and certain member States – Large Civil Aircraft, para. 1218; and US – Upland Cotton, para. 427; and
Panel Report, US – Upland Cotton, paras. 7.1328 and 7.1329). Similarly, we consider that the interpretation of
the term "significant" in the context of Article 2.4.2 of the Anti-Dumping Agreement is not applicable to the
analysis of the volume of the dumped imports, because it concerns a pattern of export prices which differ
significantly, which involves an assessment of price difference. (Canada's letter dated 15 September 2016
(referring to Appellate Body Report, US – Washing Machines, paras. 5.63, 5.64, and 5.66, and fns 199
and 202)).
88 Appellate Body Reports, China – GOES, paras. 134-142; and China – HP-SSST (Japan) / China –
HP-SSST (EU), paras. 5.155-5.163.
89 Imports first decreased from 421,000 tonnes in 2010 to 419,000 tonnes in 2011 and then increased
to 605,500 tonnes in 2012. (Final Determination, (Exhibit CHN-1), p. 59).
90 After a decline in the dumped imports' market share from 20.70% in 2010 to 18.96% in 2011,
dumped imports' market share increased to 22.01% in 2012. (Final Determination, (Exhibit CHN-1), p. 59).

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product showed an increasing trend. 91 As noted above92, while it might have been preferable had
MOFCOM explicitly characterize d the 43.82% increase as "significant" and give n a reasoned
explanation of that chara cterization, we consider that it would have been apparent to the
interested parties from the Final Determination.
7.48. In light of our interpretation of the first sentence of Article 3.2 set out above, we consider
that the Final Determination on its face shows that MOFCOM considered, that is, took into account,
whether there was a significant increase in the volume of dumped imports in both absolute and
relative terms.
7.49. Canada argues that MOFCOM failed to consider the magnitude and factual circumstances
surrounding the increase in dumped imports, which it asserts would suggest that the increase in
fact was not significant.93 Canada argues that while the volume of the dumped imports increased
by almost 44%, the volume of sales of the domestic like product and non -subject imports
increased by 80% and 78% respectively, and domestic demand increased by 35%. 94 Canada also
contends that MOFCOM failed to address arguments of the interested parties in this regard 95, for
instance, the Rayonier submission, which asserted96:
[D]emand for dissolving pulp in China increased as a result of market factors that
were unrelated to subject imports, including the supply shortage and high prices for
cotton during the first half of the POI. The domestic industry could not satisfy this
increasing demand, despite rapid attempts to expand capacity. Therefore,
downstream producers naturally required increased volumes of subject imports … .
7.50. In light of our views as set out above, we see no basis to conclude that MOFCOM was
required to specificall y address arguments regarding the context in which the acknowledged
43.82% increase in dumped imports occurred in its consideration of whether that increase was
significant in absolute terms under Article 3.2. In any event, we note that MOFCOM also
considered the increase in imports relative to domestic consumption, which of course reflects
changes in domestic demand. Moreover, MOFCOM did briefly discuss the volume of dumped
imports relative to production of the domestic like product in response to the argu ments made by
Fortress during the investigation.
7.51. Insofar as Canada argues that MOFCOM was required to consider the interaction between
sales of the like domestic product and the volume of dumped imports in its consideration of
whether there was a significant increase in dumped imports in absolute terms, as discussed above,
we do not view such an inquiry to be necessary in the context of Article 3.2. An evaluation of
domestic sales volume is required under Article 3.4 in the context of examining the impact of
dumped imports on the state of the domestic industry. The relationship between trends in the
volume of dumped imports and trends in domestic sales volume may be relevant in that context,
as well as in the demonstration of a causal link between dumped im ports and injury under
Article 3.5. However, we fail to see how they would be relevant in considering whether there was
an increase in the volume of dumped imports in absolute terms . Similarly, the volume or trends in
sales of non-dumped imports are not a necessary aspect of consideration of the significance of any
increase in dumped imports, although they may well be relevant to a demonstration of causation,
and in particular in the context of a non-attribution analysis under Article 3.5.
7.52. Finally, Canada argues that MOFCOM failed to provide a reasoned and adequate explana tion
for its conclusion that there was a significant increase in dumped imports in absolute terms. 97

91 Final Determination, (Exhibit CHN-1), pp. 60 and 61.
92 See fn 86 above.
93 Canada's first written submission, paras. 72-74; second written submission, para. 34.
94 Canada's first written submission, para. 74 (referring to Final Determination, (Exhibit CAN-3), p. 73;
and Apparent Market and Domestic Production Tables, (Exhibit CAN-28), p. 2).
95 Canada's second written submission, paras. 34 and 35 (referring to Rayonier Performance Fibers,
LLC., Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments Regarding Material Injury and
Causality, 29 July 2013, (Exhibit CAN-12), pp. 23-37; Cosmo Specialty Fibers, Inc., Anti-Dumping
Investigation on Imports of Cellulose Pulp, Argument of no Injury, 4 July 2013, (Exhibit CAN-11), pp. 12-17;
and Fortress Specialty Cellulose Inc., Response to MOFCOM's Preliminary Determination on the Anti-Dumping
Investigation against Imported Dissolving Pulp, (Exhibit CAN-17), p. 7).
96 Rayonier Performance Fibers, LLC., Anti-Dumping Investigation on Imports of Cellulose Pulp,
Comments Regarding Material Injury and Causality, 29 July 2013, (Exhibit CAN-12), p. 24.
97 Canada's opening statement at the first meeting of the Panel, para. 21; second written submission,
para. 16.

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China responds that this allegation should be rejected because Canada did not mention it in the
panel request or in the first written submission. 98 China submits that, in any case, the Final
Determination makes it clear that MOFCOM considered whether there was a significant increase in
the volume of dumped imports in accordance with the first sentence of Article 3.2.99
7.53. Article 6.2 of the DSU provides that a panel request "shall indicate whether consultations
were held, identify the specific measures at issue and provide a brief summary of the legal basis of
the complaint sufficient to present the problem clearly". Compliance with Article 6.2 must be
determined on the basis of the language of the panel request and in light of the circumstances of
each case.100 Canada's claim under Article 3.2 in its panel request is as follows:
4. Articles 3.1 and 3. 2 of the Anti -Dumping Agreement because China's
determination of injury was not based on positive evidence and did not involve an
objective examination of the volume of the dumped imports and the effect of those
imports on prices in the domestic market for like products. China failed to properly
consider whether there had been:
a. significant increase in dumped imports; … .101
7.54. Although the text of the panel request clearly identifies Canada's claim under Articles 3.1
and 3.2, it does not specifically refer to the lack of a "reasoned and adequate explanation" of
China's conclusion of a significant increase in dumped imports, but rather to an alleged failure to
properly consider whether there had been such an increase. Canada notes that the alleged failure
to explain a conclusion regarding the significant increase in dumped imports is part of its claim
under the first sentence of Article 3.2.102 We are not persuaded that by arguing that MOFCOM
failed to provide an explanation of its conclusion regarding the increas ed volume of the dumped
imports, Canada is pursuing a claim distinct from the one identified in its panel request. Canada's
claim regarding MOFCOM's analysis of the volume of the dumped imports is based on both
Articles 3.1 and 3.2. An investigating author ity's compliance with the requirements of Article 3.1
must be assessed based on the record of the investigation, and in particular the information and
explanations provided in the Final Determination. 103 Therefore, we consider Canada's allegation
that MOFCOM failed to provide a reasoned and adequate explanation of its conclusion regarding a
significant increase in imports falls within our terms of reference.
7.55. Canada's specific argument in this regard is that MOFCOM failed to provide a reasoned and
adequate exp lanation of how MOFCOM's reference to the share of the dumped imports in total
imports supported its conclusion that the volume of the dumped imports increased in absolute
terms.104 In addition, Canada argues that MOFCOM did not take into account the expansi on of the
market and the increased sales of the domestic like product and non -dumped imports.105 Based on
our views above, consideration of how any increase in the dumped imports correlates with other
factors, including sales of the domestic like product and non-dumped imports, is not a required
element of the consideration of whether there was a significant increase in the volume of dumped
imports in absolute terms under Article 3.2. Moreover, we recall that the obligation is to consider –
and not to determi ne – whether there was a significant increase in dumped imports in absolute

98 China's second written submission, para. 38.
99 China's second written submission, para. 38.
100 Appellate Body Reports, EC and certain member States – Large Civil Aircraft, para. 641; US – Carbon
Steel, para. 127; and Korea – Dairy, paras. 123 and 124.
101 Canada's panel request, pp. 1 and 2.
102 Canada's response to Panel question No. 46, para. 26.
103 E.g. in US – Hot-Rolled Steel, the Appellate Body stated that absent "satisfactory explanation" as to
why it was not necessary to examine directly or specifically the other parts of the domestic industry, an
examination of only certain parts of the domestic industry did not ensure a proper evaluation of the state of
the domestic industry as a whole, and did not satisfy the requirement of "objectivity" under Article 3.1.
(Appellate Body Report, US – Hot-Rolled Steel, paras. 204-206). See also Panel Report, Mexico – Steel Pipes
and Tubes, para. 7.252.
104 Canada's second written submission, para. 40 (referring to the Final Determination, (Exhibit CHN-1),
p. 77); response to Panel question No. 46, para. 28. In particular, in the section relating to causal link,
MOFCOM stated that:
In addition to the continuous growth of the quantity of import, the proportion of
the quantity of the dumped imported product to the tota l quantity of the imported
cellulose pulp in China always remained high: 49.32% in 2010, 42.77% in 2011
and 43.96% in 2012.
105 Canada's response to Panel question No. 46, para. 28.

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terms. In the absence of a requirement to make any determination in this regard, we cannot
conclude that there is an obligation to provide a reasoned and adequate explanation under
Article 3.2. Whether any increase in dumped imports supports a demonstration that dumped
imports cause material injury under Article 3.5 will require explanation in order to be consistent
with the requirements of that Article and Article 3.1.
7.56. We therefore conclude that Canada has not demonstrated that MOFCOM's consideration of
the volume of the dumped imports was inconsistent with Articles 3.1 and 3.2 of the
Anti-Dumping Agreement.
7.5 Whether MOFCOM's consideration of price effects was consistent with Articles 3.1
and 3.2 of the Anti-Dumping Agreement
7.5.1 Introduction
7.57. Canada asserts that MOFCOM's injury determination was based on a flawed consideration of
the effect of dumped imports on the prices of the domestic like product, and thus is inconsistent
with Articles 3.1 and 3.2 of the Anti -Dumping Agreement. Canada argues that MOFCOM's finding
of price depression from the second half of 2011 to the end of 2012 failed to establish that the
effect of the dumped imports could explain the significant depression in the prices of the domestic
like product. In particular, Canada argues that MOFCOM failed to:
a. objectively examine the existence of parallel price trends and explain the relevance of
allegedly parallel trends to its finding of significant price depression;
b. address the evidence that the prices of the dumped imports were higher than the prices
of the domestic like product;
c. conduct an objective examination of positive evidence that the market share of the
dumped imports remained essentially stable; and
d. assess wheth er the pricing documents and meeting minutes constituted "positive
evidence" or, alternatively, conduct an objective examination of this evidence. Canada
argues that even if the Panel finds that the pricing documents and meeting minutes
constituted positive evidence and were objectively examined, MOFCOM failed to reconcile
these documents with other evidence showing a lack of price depression.106
7.58. China responds that MOFCOM's price effects analysis complies with Articles 3.1 and 3.2 of
the Anti -Dumping Agreeme nt. China submits, first, that MOFCOM had undisputed evidence of
parallel price trends on the record and explained their relevance. 107 Second, MOFCOM was not
required to find price undercutting to support its finding of price depression. 108 Third, MOFCOM
based the price effects analysis on the increased volume of the dumped imports in absolute terms,
and it also considered the movements in market share, even though it was not required to do
so.109 Fourth, MOFCOM based its finding of significant price depression o n positive evidence ,
including pricing documents and meeting minutes showing that the domestic industry was forced
to lower prices in order to compete with the rapidly increasing volume of dumped imports at
declining prices110, and an objective examination.111 Finally, China emphasizes that MOFCOM did
not rely on any single factor in its consideration of price effect s, but instead relied on a collective
evaluation of various factors, including the competitive relationship between the dumped imports
and the domestic like product, the significant increase in the volume of dumped imports, the
significant decline in the price of the dumped imports, the parallel trends in the prices of the
dumped imports and the domestic like product, and the information provided in pricing documents
and meeting minutes, which interacted with each other and collectively informed MOFCOM 's price
depression analysis.112

106 Canada's first written submission, paras. 10, 46, and 83-103; and second written submission,
paras. 43, 46, 55, 56, 81, and 91.
107 China's first written submission, paras. 65-73; second written submission, paras. 48-58.
108 China's first written submission, paras. 74-82; second written submission, paras. 71-76.
109 China's first written submission, paras. 83-91; second written submission, paras. 77-82.
110 China's first written submission, paras. 92-98; second written submission, paras. 59-70.
111 China's first written submission, paras. 9, 10, 61, 65-71, and 82.
112 China's response to Panel question No. 13, para. 31; second written submission, paras. 41-47; and
opening statement at the second meeting of the Panel, para. 20.

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7.59. We will first address the legal standard under the second sentence of Article 3.2 and then
examine each of Canada's allegations in turn.
7.5.2 Legal standard under Article 3.2, second sentence
7.60. The second sentence of Article 3.2 provides, in pertinent part, that the investigating
authorities shall "[w]ith regard to the effect of the dumped imports on prices … consider whether
there has been [significant price undercutting], or whether the effect of such imports is otherwise
to depress prices to a significant degree …".113
7.61. In China – GOES, the Appellate Body noted that price depression means "a situation in
which prices are pushed down, or reduced, by something".114 The Appellate Body clarified that the
consideration of price depression req uires investigating authorities to examine the relationship
between dumped imports and domestic prices. 115 The Appellate Body stated that that the mere
observation of a price decline is not sufficient to demonstrate that the investigating authority has
considered whether the effect of dumped imports is significant for price depression. 116 The
investigating authorities must consider whether the dumped import s have "explanatory force" for
the domestic price depression which is observed to have occurred. However, the Appel late Body
made it clear that the consideration under Article 3.2 does not require a conclusion that dumped
imports caused price depression. 117 The Appellate Body also noted that the effect of the dumped
imports "stems from the relevant aspects of such imports, including the price and/or the volume of
such imports".118
7.62. Prior panel and Appellate Body reports have recognized that Article 3.2 does not establish a
specific methodology for investigating authorities' examination of the effects of dumped imports on
prices. However, although an investigating authority enjoys a certain latitude in choosing a
methodology for its consideration of the effect of the dumped imports on prices of the domestic
like product, this discretion is not unlimited, and is subject to the overarching principle of
Article 3.1 that a determination of injury be based on positive evidence and involve an objective
examination.119
7.63. Moreover, it is clear that the consideration of price undercutting, price depression, and price
suppression may be independent of one another .120 Thus, the absence of price undercutting, or
even the absence of any consideration of price undercutting, is not in i tself inconsistent with
Article 3.2, and does not preclude consideration of price depression or price suppression, and
potentially reliance on one of those factors in demonstrating that dumped imports are causing
material injury to the domestic industry.121 Of course, reliance on only one of these price effects in
the context of a determination that dumped imports are causing injury will only be consistent with
Article 3.1 to the extent that the investigating authority does not ignore evidence and arguments

113 The provision goes on to require consideration of whether the effect of dumped imports is significant
price suppression, which is not at issue in this case and is not further discussed.
114 Appellate Body Report, China – GOES, para. 141. (emphasis original)
115 Appellate Body Report, China – GOES, para. 136.
116 Appellate Body Report, China – GOES, paras. 138 and 141.
117 Appellate Body Report, China – GOES, paras. 144 and 145.
118 Appellate Body Report, China – GOES, para. 138.
119 Panel Reports, China – Autos (US), para. 7.255; China – Broiler Products, para. 7.474; and China –
X-Ray Equipment, para. 7.41; and Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 113
(discussing the related issue of the investigating authority's examination of the volume of imports).
120 Appellate Body Report, China – GOES, para. 137 (The inquiries regarding price undercutting and
price depression and suppression set out in the second sentence of Article 3.2 "are separated by the words "or"
and "otherwise". This indicates that the elements relevant to the consideration of significant price undercutting
may differ from those relevant to the consideration of significant price depression and suppression".)
121 Appellate Body Report, China – GOES, para. 137, ("even if prices of subject imports do not
significantly undercut those of like domestic products, subject imports could still have a price-depressing or
price-suppressing effect on domestic prices").
Similarly, in China – HP-SSST, the panel noted:
The fact that Article 3.2 identifies three distinct price effects, and distinguishes
between price undercutting on the one hand, and price depr ession and price
suppression on the other, suggests that there is no need to establish price
depression or suppression when considerin g the existence of price undercutting, or
indeed, vice versa.
(Panel Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 7.129)

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on the record before it suggesting that one or both of the other price effects suggests a different
result.
7.64. As discussed above, consideration of the effects of dumped imports on prices is a step in the
logical progression toward a determination whether inj ury is caused by dumped imports. 122
However, even significant price undercutting, depression, or suppression may not, standing alone,
suffice to demonstrate that dumped imports are causing material injury to the domestic industry.
The impact of those price effects over the POI on the condition of the domestic industry will have
to be considered before that ultimate question can be answered. However, even if the
consideration of the effects of dumped imports on prices shows no, or insignificant, price
undercutting, depression , or suppression, this does not mean a determination that dumped
imports are causing material injury is precluded.
7.65. The need for a contextual analysis in respect of prices derives from the requirement to
consider the effects of dumped imports on prices in the second sentence of Article 3.2. Simply to
observe the trends in prices does not suffice, as those trends may be the effect of different factors
other than dumped imports, as well as of the dumped imports. However, it is difficult to undertake
a consideration of the effects of dumped imports on prices from the effects of other factors which
may be affecting those prices in isolation from the ultimate question whether the dumped imports
are causing injury to the domestic industry. This is because Article 3.5 specifically provides that
the demonstration that dumped imports are causing injury is, in part, dependent on the effects of
dumped import s on prices. In our view, i t would be entirely appropriate for an investigating
authority to obser ve the levels and trends of dumped import and domestic prices in the first
instance without addressing the effect of dumped imports on those levels and trends. 123 But, of
course, the investigating authority cannot stop there. The investigating authority must examine
these levels and trends in the context of the domestic market and connect them to the effects of
the dumped imports – that is, assess the explanatory force of dumped imports for the observed
levels and trends in domestic prices – in reaching its u ltimate determination regarding whether
dumped imports are causing material injury through their effects on prices.124
7.5.3 MOFCOM's consideration of parallel price trends
7.66. Canada contends that MOFCOM failed to conduct an objective examination of positive
evidence of allegedly parallel price trends between the dumped imports and the domestic like
product, and failed to explain the relevance of the allegedly parallel price trends to its finding of
price depression.125 Canada submits that prices did not move in paralle l during part of the POI,
specifically in 2010, and that even when prices moved in the same direction the rates of change
were different.126 Canada further submits that price trends were different, because the prices of
the dumped imports were lower than those of the domestic like product in the first part of the POI,
while the dumped imports were priced higher in the second part of the POI, when the price
depression was found to be occurring. 127 Canada argues that when prices were increasing in the
first part of the POI, dumped import prices were increasing at faster rate; however when prices
started to fall in the second part of the POI, domestic like product prices declined faster than the
prices of the dumped imports.128

122 It seems clear that the greater the effect of dumped imports in terms of price undercutting, price
depression, or price suppression, the greater the likely impact of those dumped imports with respect to factors
such as lost sales and market share and consequent financial effects such as deteriorating company profits and
profitability, as well as on factors such as inventories, production capacity, and so on.
123 Indeed, this may well be important, if not actually necessary to comply with the requirements of
Article 12.2.
124 As the Appellate Body has observed, this is different from the ultimate analysis of causation under
Article 3.5, as it focuses on the effect of the dumped imports on individual factors that may, or may not, be
vectors or pathways by which the dumped imports are causing injury to the domestic industry. The Article 3.5
analysis focuses on the evaluation of all relevant evidence, including these individual vectors, in making the
ultimate determination whether dumped imports cause material injury to the domestic industry.
125 Canada's first written submission, paras. 83-87; second written submission; paras. 46-58.
126 Canada's second written submission, paras. 47 and 48; opening statement at the first meeting of the
Panel, paras. 30 and 31; and opening statement at the second meeting of the Panel, para. 21.
127 Canada's second written submission, para. 47; opening statement at the first meeting of the Panel,
paras. 29-32.
128 Canada's second written submission, paras. 48 and 49; opening statement at the first meeting of the
Panel, paras. 31 and 32.

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7.67. China submits that MOFCOM based its fin ding of parallel price trends on substantial record
evidence. China argues that Canada inappropriately focuses on a single point of the POI, when the
price trends crossed, whereas MOFCOM examined price trends throughout th e POI. 129 China
objects to Canada's argument that the prices of the domestic like product declined much faster,
arguing that during the second half of the POI the prices of both the dumped imports and the
domestic like product declined at almost the same rate.130 For China, the existence of parallel price
trends can indicate the link between prices for imported and domestic products, and can support
the conclusion that decreases in the prices of dumped imports lead to decreases in the prices of
domestic like product.131 China submits that MOFCOM explained the relevance of the parallel price
trends, referring to pricing documents and meeting minutes , which China contends demonstrated
that it was the dumped subject imports that forced down the prices of the domestic like product,
as domestic producers had difficulty selling the domestic like product and were repeatedly forced
to lower prices to meet subject import competition.132
7.68. The relevance of parallel prices for a price depression analysis was addressed by the
Appellate Body in China – GOES. In that appeal, China argued that the panel had failed to consider
a key element of MOFCOM' s price effects analysis, namely that dumped import prices and
domestic prices followed the same trends. The Appellate Body stated that parallel price trends
might support a price depression analysis, e.g. such trends "might indicate the nature of
competition between the products" and "may explain the extent to which factors relating to the
pricing behaviour of importers have an effect on domestic prices". 133 However, in that case, the
Appellate Body noted that there was no basis on which to draw such conclus ions, as MOFCOM did
not provide a meaningful description of the price trends or any explanation or reasoning regarding
the role such trends played in MOFCOM's price effects analysis and findings.134
7.69. In the case before us, MOFCOM considered that the effect of the dumped imports was to
depress prices to a significant degree. MOFCOM found that the continued decline of prices and
increasing volume of the dumped imports in the sec ond part of the POI forced the prices of the
domestic like product to fall. The Final Determination states:
From the second half of 2011 to the second half of 2012, the continued decline of the
Price of the Dumped Imported Product and the quick increase of the quantity of the
dumped imported product forced the Domestic Industry to compete with them in
terms of prices, leading to a fast and continuous decline of the Price of the Like
Product of the Domestic Industry. Based on these facts, the Investigating a uthority
determined that the dumped imported product had a depressing effect on the Price of
the Like Product of the Domestic Industry.135
7.70. Canada's claim raises the question whether MOFCOM's finding of parallel price trends is
supported by the evidence, and whether MOFCOM provided a reasoned explanation of the
relevance of the parallel prices for its finding of price depression.
7.71. MOFCOM relied on the information shown in Table 1 and depicted graphically in Chart 1
below with regard to the prices of the dumped imports and the domestic like product:

129 China's second written submission. para. 51.
130 In particular, China argues that over the second part of the POI the prices of the dumped imports
and the domestic like product declined by the same amount, 46% and 47% respectively. (China's
second written submission, para. 52).
131 China's first written submission, paras. 67 and 68; second written submission, paras. 55 and 56
(referring to Appellate Body Report, China – GOES, para. 210).
132 China's first written submission, paras. 69-71; second written submission, paras. 57 and 58
(referring to Final Determination, (Exhibit CHN-1), p. 65; and Pricing documents and meeting minutes,
(Exhibit CHN-2) (BCI)).
133 Appellate Body Report, China – GOES, para. 210.
134 Appellate Body Report, China – GOES, para. 210.
135 Final Determination, (Exhibit CHN-1), pp. 65 and 66.

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Table 1: Trends in average prices of the dumped imports and the domestic like product
POI 2010 2011 2012
 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012
Prices of dumped imports
(RMB/tonne)
8,819.96

10,050.44

13,040.55

12,313.21

7,877.85

7,024.13

Rate of change +13.95% +29.75% -5.58% -36.02% -10.84%
Prices of the like domestic product
(RMB/tonne)
10,037.87

10,926.06

11,767.68

9,534.11

7,202.34

6,192.68

Rate of change +8.85% +7.70% -18.98% -24.46% -14.02%
 Source: Final Determination, (Exhibit CHN-1), pp. 63 and 64.
Chart 1: Price Trends of Domestic Like Product and Dumped Imports
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
H1/2010 H2/2010 H1/2011 H2/2011 H1/2012 H2/2012
RMB/Tonne
Domestic Like Product Subject Imports

Source: Canada's opening statement at the first meeting of the Panel, figure 1
7.72. Based on the above, MOFCOM concluded that prices of both the dumped imports and of the
domestic like product "first increased and then decreased, showing a decreasing trend in
general".136 Further MOFCOM observed that prices of the dumped imports and of the domestic like
product showed the "same trend of changes", namely from the first half of 2010 to the first half of
2011 both had "the same increasing trend" and from the second half of 2011 to the second half of
2012 – "continuous decreasing trend".137
7.73. The product subject to the underlying anti -dumping investigation, cellulose pulp, is a
commodity and there is no dispute between the parties that the imported and domestic products
were competitive with and substitutable fo r each other. Hence, their prices might be expected to
follow similar trends. On this point MOFCOM observed:
[T]he dumped imported product and the like product of the Domestic Industry were
basically identical in terms of the product performance, the qual ity, the sales areas
and the groups of clients, the two were competitive and substitutable to each other
and there was a certain relevance between the Price of the Dumped Imported Product
and the Price of the Like Product of the Domestic Industry.138
7.74. Canada alleges that MOFCOM's finding of parallel price trends is without support in the
evidence on the record, contending that the price trends were not parallel because they crossed at
the end of 2010 (see Chart 1 above ).139 However, even though the trend lines d id cross in the
second half of 2010, overall, the trend lines moved genera lly in the same direction. We do not

136 Final Determination, (Exhibit CHN-1), p. 63.
137 Final Determination, (Exhibit CHN-1), p. 64.
138 Final Determination, (Exhibit CHN-1), p. 65.
139 Canada's opening statement at the first meeting of the Panel, para. 32 and figure 1 (referring to
Apparent Market and Domestic Production Tables, (Exhibit CAN-28), p. 1).

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consider it unreasonable to view these price trends as being generally parallel. Furthermore, even
at the time they crossed, they were moving in the same direction – both domestic and import
prices were increasing.
7.75. This is unlike the facts in China – Autos (US), where the domestic and import price trends
moved in opposing directions during part of the POI.140 It is noteworthy that, even in that case ,
the panel did not find that parallel price trends could not be found in the factual circumstance, but
stated that "a situation of diverging trends during a part of the period examined requires
explanation before those trends can be characterized as 'para llel'".141 Therefore, we do not
consider that the fact that price trends crossed at one point during the POI undermines MOFCOM's
conclusion that the prices of dumped imports and the domestic like product followed the same or
parallel trends.
7.76. Canada also asserts that the different rates of change in prices of the dumped imports and
the domestic industry, particularly in 2011 were not considered by MOFCOM, and undermine its
finding of parallel price trends. In the first half of 2011, the prices of the dumped im ports
increased by almost 30%, whereas the prices of the domestic like product increased by about 8%.
In the second part of 2011, when prices began to decline, the dumped imports' prices declined by
about 6%, while the domestic like product's prices declin ed by 19%. We are not persuaded that
these different rates of change undermine the finding of the parallel trends in prices per se, given
that the prices still moved in the same direction and quickly adjusted to the price decline in the
market, showing the close competition between the domestic and imported dumped products.
7.77. At the same time, however, we recognize that the fact of simultaneous declines in the prices
of both dumped imports and the domestic like product does not necessarily mean that the
domestic prices were pushed down by the declining prices of the dumped imports. As discussed
below, the prices of the dumped imports, although declining, were higher than the prices of the
domestic like product over the second part of the POI, when MOFCOM cons idered domestic prices
were depressed by the dumped imports. In addition, during the investigation interested parties
argued that in fact it was the domestic like product prices that led prices of the dumped imports to
decline.142 The absence of any explanat ion in the Final Determination of how , in MOFCOM's view ,
parallel price trends showed the existence of price depression leads us to conclude that the fact of
parallel price trends provides little if any support for MOFCOM's conclusion that dumped imports
had the effect of depressing the prices of the domestic like product.143
7.78. MOFCOM also referred to the coincidence of a "continuous increasing trend" in the volume of
dumped imports and a "continuous decreasing trend" in the prices of both dumped imports and
the domestic like product from the second half of 2011 to the second half of 2012, the period
during which MOFCOM found significant price depression. The Final Determination states:
The quantity of the dumped imported product was 220,000 tons in the second half of
2011, 295,100 tons in the first half of 2012 and 310,400 tons in the second half of
2012, showing a continuous increasing trend. In the same periods, both the Price of

140 Panel Report, China – Autos (US), para. 7.262. In that case, the record showed that from 2006 to
2007, the average unit values (AUVs were used as a proxy for prices) of imports and of the domestic like
product moved in different directions: import AUVs decreased by 8.47%, while the AUV of the domestic like
product rose by 11.08%. The panel concluded that this information undermined the factual conclusion of
parallel prices reached by the investigating authority, and should have been addressed in the investigating
authority's determination. In the absence of any explanation the panel stated that it could not conclude that
MOFCOM even considered this divergence of price trends, much less how it was resolved, and any finding of
parallel prices in these factual circumstances would require some indication of the investigating authority's
reasoning in support of a conclusion of parallel prices.
141 Panel Report, China – Autos (US), para. 7.264.
142 Canada's second written submission, para. 49 (referring to Fortress Specialty Cellulose Inc.,
Response to MOFCOM's Preliminary Determination on the Anti-Dumping Investigation against Imported
Dissolving Pulp, (Exhibit CAN-17), p. 9; and Rayonier Performance Fibers, LLC., Anti-Dumping Investigation on
Imports of Cellulose Pulp, Comments Regarding Material Injury and Causality, 29 July 2013, (Exhibit CAN-12),
pp. 38-45).
143 We also note China's argument that the pricing documents and meeting minutes collected by
MOFCOM during the verification showed that the decline of import prices for pulp had led to the domestic
industry having difficulty selling the domestic like product and had forced the domestic producers to reduce
prices. We address MOFCOM's consideration of the pricing documents and meeting minutes in
paras. 7.101-7.108 below.

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the Dumped Imported Product and the Price of the Like Product of the Domestic
Industry showed a continuous decreasing trend. The Price of the Dumped Imported
Product was 12,313.21 RMB/ton in the second half of 2011, decreased to
7,877.85 RMB/ton in the first half of 2012 and further decreased to 7,024.13 RMB/ton
in the second half of 2012. From the second half of 2011 to the second half of 2012,
under the situations that the quantity of the dumped imported product continuously
increased and the market share of the dumped imported products continuously
increased compared with the first half of 2011, the Price of the Dumped Imported
Product continuously decreased and the Price of the Like Product of the Domestic
Industry also decreased, from 9,534.11 RMB/ton in the second half of 2011 to
7202.34 RMB/ton in the first half of 2012 and furth er decreased to 6,192.68 RMB/ton
in the second half of 2012, at the lowest during the Period of investigation.144
7.79. We consider that this assessment is insufficient to allow us to conclude that MOFCOM
adequately explained how parallel declining price trends were taken into account in conjunction
with the increased volume of dumped imports in its consideration of price depression. While
MOFCOM referred to the trends in volume and prices of the dumped imports and prices of the
domestic like product, MOFCOM did no t provide any explanation of how the prices and volume of
the dumped imports interacted to have a depressing effect on domestic prices.
7.80. Without such explanation , the identification of parallel price trends does no more than
recognize that two variables, domestic and dumped import prices, move together. Given that the
product in question in this dispute is a commodity, and both dumped imports and the domestic like
product are sold in similar quantities, at the same level of trade, with few if any discernible
differences in quality or other relevant competitive factors 145, and are in the same market and
therefore influenced by the same market pressures and factors, this is hardly surprising. It may be
that one of the factors affecting domestic prices is competition with dumped imports, but the mere
identification of such a parallel trend cannot alone suffice to show that the decline in the price of
the domestic like product is an effect of the dumped imports.
7.81. We therefore conclude that while MOFCOM reasonably fou nd that there were parallel trends
between dumped import and domestic like product prices, it failed to explain the role of those
parallel price trends in the decline of domestic like product prices and how changes in the prices
and volume of the dumped imports affected the domestic like product prices.
7.5.4 MOFCOM's consideration of the fact that dumped imports were sold at higher
prices than the domestic like product
7.82. Canada argues that MOFCOM failed to conduct an objective examination of positive
evidence that the dumped imports were sold at higher prices than the domestic like product during
the period in which MOFCOM identified price depression. 146 Canada contends that MOFCOM did not
provide any explanation how dumped imports priced between 9% and 29% higher t han the
domestic like product could have explanatory force for price depression .147 China responds that
MOFCOM is not required to m ake a finding of price undercutting to conclude that price depression
has occurred. 148 Article 3.2 allows an investigating author ity to base its finding on one of three
possible price effects: price undercutting, price depression, or price suppression.149 China considers
that prices of domestic like products can be depressed by competition with dumped imports, even
if the prices of the dumped imports are higher than those of the domestic like product.150

144 Final Determination, (Exhibit CHN-1), pp. 64 and 65.
145 MOFCOM found the dumped imports and the domestic like product to be "competitive and
substitutable to each other". (Final Determination, (Exhibit CHN-1), p. 65).
146 Canada's first written submission, paras. 88-94; second written submission, paras. 59-66.
147 Canada's second written submission, paras. 59 and 60; first written submission, para. 93 (referring
to Panel Report, China – Autos (US), para. 7.272).
148 China's first written submission, paras. 75 and 77 (referring to Panel Reports, EC – Salmon
(Norway), para. 7. 638; and China – HP-SSST (Japan) / China – HP-SSST (EU), para. 7.129; and Appellate
Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), paras. 5.149 and 5.156); second written
submission, paras. 71 and 72.
149 China's first written submission, paras. 75 and 76 (referring to Panel Report, Korea – Certain Paper,
para. 7.242).
150 China's first written submission, para. 78.

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7.83. In the Final Determination, MOFCOM relied on the following information concerning the
prices of the dumped imports and the domestic like product:
Table 2: Average prices of the dumped imports and like domestic product
POI 2010 2011 2012
 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012
Prices of dumped imports
(RMB/tonne)
8,819.96 10,050.44 13,040.55 12,313.21 7,877.85 7,024.13
Prices of the like domestic
product (RMB/tonne)
10,037.87

10,926.06

11,767.68

9,534.11

7,202.34

6,192.68

Margin of difference -12.13% -8.01% +10.82% +29.15% +9.38% +13.43%
 Source: Final Determination, (Exhibit CHN-1), pp. 64 and 65.151

7.84. At the beginning of the POI, in the first hal f of 2010, the dumped imports undersold the
domestic like product by 12%. In the second half of 2010, the prices of both the dumped imports
and the domestic like product increased, but the prices of the dumped imports increased faster,
and the underselling difference fell to 8%. Prices further increased in the first half of 2011, with
dumped import prices again increasing faster to levels above those of the domestic like product.
Thus, during the rest of the POI, the prices of the dumped imports were higher than those of the
domestic like product. In the first half of 2011, the dumped imports were priced nearly 11% higher
than the domestic like product, while in the second half of 2011 the prices of the dumped imports
were almost 30% higher. In 2012, the dum ped imports were priced higher than the domestic like
products by 9% and 13% in the first and second half respectively.
7.85. Several interested parties, including Cosmo Specialty Fibers, Inc. (Cosmo) and Fortress,
raised the issue of higher priced dumped import s during the investigation.152 They argued that
because dumped import prices were consistently higher than the prices of the dome stic like
product, the dumped imports did not have any effect on domestic prices. In the Final
Determination, MOFCOM addressed th e interested parties' arguments by noting that it had
assessed the effect of dumped imports from all exporting countries subjec t to the investigation
cumulatively, and would not conduct a separate price analysis for each exporting country.153
7.86. The question wh ether a consideration of price depression may be warranted where the
prices of dumped imports are higher than the prices of the domestic like product was discussed by
the panel in China – Autos (US). In that case, the panel confirmed that price depression is not
contingent on the existence of price undercutting, and may be found in a situation where the
prices of dumped imports is higher than the price of the domestic like product .154 However, such a
finding requires an explanation of how the investigating au thorities reached a conclusion of price
depression in a situation where the prices of dumped imports are higher during most of the POI. 155
The panel in China – Autos (US) stated:

151 See Japan's third-party submission, annex II. China confirmed the accuracy of the figures reported
by Japan. China's response to Panel question No. 3, para. 3.
152 Cosmo Specialty Fibers, Inc., Anti-Dumping Investigation on Imports of Cellulose Pulp, Argument of
no Injury, 4 July 2013, (Exhibit CAN-11), p. 17. Canada's first written submission, para. 92 (referring to
Fortress Specialty Cellulose Inc., Injury Brief, Industry Injury Investigation for the Anti-Dumping Investigations
Against Cellulose Pulp, 5 September 2013, (Exhibit CAN-13), p. 7; Cosmo Specialty Fibers, Inc., Anti-Dumping
Investigation on Imports of Cellulose Pulp, Argument of no Injury, 4 July 2013, (Exhibit CAN-11), pp. 8 and 9,
and 17-21; Rayonier Performance Fibers, LLC., Anti-Dumping Investigation on Imports of Cellulose Pulp,
Comments Regarding Material Injury and Causality, 29 July 2013, (Exhibit CAN-12), pp. 39-45; and American
Forest and Paper Association, Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments on Industry
Injury Investigation, 24 September 2013, (Exhibit CAN-10), p. 7); second written submission, para. 61.
153 Final Determination, (Exhibit CHN-1), p. 71. China's second written submission, para. 74.
154 See also Appellate Body Report, China – GOES, para. 137:
[E]ven if prices of subject imports do not significantly undercut those of like
domestic p roducts, subject imports could still have a price -depressing or
price-suppressing effect on domestic prices.
155 Panel Report, China – Autos (US), paras. 7.272 and 7.274.

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We do not preclude the possibility that price depression may be found to exist in a
case where there is overselling by subject imports. However, absent analysis and
explanation by the investigating authority , it is difficult to understand how a
conclusion of price depression was reached in a situation where prices of imports
were, for the most part, significantly higher than those of the domestic like product
whose prices were purportedly being depressed during the POI.156
We agree. This is particularly true where, as here , the issue has been raised by interested parties,
the respective products are competitive and substitutable, and the domestic demand is increasing.
The mere fact that domestic prices were below dumped import prices and did not remain stable or
increase is insufficient to warrant considering that the dumped imports had "explanatory force" for
the decline in domestic prices.
7.87. In our view, MOFCOM's reference to the cumulative assessment of the effects of dumped
imports does not address the interested parties' arguments concerning the absence of price
undercutting, which referred to the average prices of the dumped imports as well as the prices of
imports from the individual investigated countries.157 MOFCOM did not adequately explain its
conclusion that, despite the higher prices of dumped imports , particularly in the latter p art of the
POI when prices were declining for both dumped imports and the domestic like product, the
dumped imports had the effect of significant price depression.
7.88. We therefore conclude that MOFCOM failed to provide a n adequate explanation of its
consideration of price depression in light of the undisputed fact that the prices of the dumped
imports were higher than those of the domestic like product during the latter part of the POI.
7.5.5 MOFCOM's consideration of changes in the dumped imports' market share
7.89. Canada argues that MOFCOM failed to explain how price depression could be an effect of the
dumped imports in light of evidence that the market share of the dumped imports remained
essentially stable .158 Canada argues that MOFCOM failed to explain how the essent ially stable
market share of dumped imports, which increased only 2.66 percentage points from 19.91% to
22.57% from the second half of 2011 to the second half of 2012, could have had any downward
pressure on the prices of the domestic like product, which a ctually gained 7.09 percentage points
of market share during this period, from 18.64% of the domestic market in the second half of
2011 to 25.73% in the second half of 2012.159
7.90. China responds that MOFCOM focused on the absolute increase in dumped imports in the
volume aspect of its price effects analysis, and was not required to consider the changes in market
share. China argues that the possibility provided for in the first sentence of Article 3.2 to consider
an increase in dumped imports in either absolute or relative terms extends to the consideration of
the price effects of those same imports under the second sentence of the same provision. In
China's view, this means that since consideration of market share is not obligatory with regard to
consideration of the volume of imports, it cannot be compulsory when considering the price effects
of those same imports.160 Nevertheless, China submits that MOFCOM considered changes in
market share and found that the dumped imports' market share did not in fact remain s table, but
rather increased.161
7.91. We begin by addressing China's argument that MOFCOM properly based the volume aspect
of its price effects analysis on the increased volume of the dumped imports in absolute terms and
was not required, as a matter of law, to a lso examine the changes in the dumped imports' market
share. Article 3.2 requires the investigating authorities to consider the vol ume of the dumped
imports and the effect of these imports on the prices of the domestic like product. As discussed
above, the first sentence of Article 3.2 sets out three options for the consideration of the dumped

156 Panel Report, China – Autos (US), para. 7.272.
157 Cosmo Specialty Fibers, Inc., Anti-Dumping Investigation on Imports of Cellulose Pulp, Argument of
no Injury, 4 July 2013, (Exhibit CAN-11), p. 17.
158 Canada's first written submission, para. 95; second written submission, paras. 67 and 74.
159 Canada's first written submission, paras. 97 and 98; second written submission, paras. 67 and 68.
160 China's first written submission, para. 84.
161 China's first written submission, paras. 83 and 87 (referring to Final Determination, (Exhibit CHN-1),
pp. 59, 61, and 64); second written submission, paras. 78 and 79.

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import volume: in absolute terms, or relative to production, or consumption in the importing
Member. Under the second sentence of Article 3.2, the investigating autho rities shall consider the
effect of the dumped imports on the prices of the domestic like product. The effect of dumped
imports on domestic prices may be considered "through the vector of subject import prices,
subject import volumes, or both". 162 We recall that the provisions of Article 3 "contemplate a
logical progression of inquiry leading to an investigating authority's ultimate injury and causation
determination".163 We consider that the investigating authorities' volume analysis under the first
sentence of Article 3.2 also informs the price effects analysis under the second sentence of the
same provision. If an investigating authorit y finds that the dumped imports have increased either
in absolute or relative terms, it is likely to consider the effect of s uch increased volume in its price
effects analysis. Nevertheless, we do not consider that by relying on one of the options for volu me
analysis provided in the first sentence of Article 3.2, the investigating authorities limit the evidence
they can rely upon in their further inquiries under Article 3.
7.92. In the investigation at hand, MOFCOM based the price effects analysis on development s in
both the prices and the volume of the dumped imports. MOFCOM concluded that the dumped
imports had a "depressing effect" on prices of the domestic like product, based on the continued
decline of dumped imports' prices and the rapid increase in volume of the dumped imports. 164 In
its overall analysis MOFCOM considered the changes in volume of the dumped imports together
with p rice movements of the imported and domestic products over the POI in assessing price
depression in the context of injury and causation. This suggests to us that MOFCOM's main focus
with respect to the volume aspect of the price effects analysis was the eff ect of the change in
volume of the dumped imports in absolute terms, which it had found increased by 43.82% over
the POI.
7.93. At the sa me time, MOFCOM also took into account the change in market share, observing
that the market share of the dumped imports "sho wed an increasing trend in general". Further,
when looking at the price trends of the imported and domestic products together with the
increased absolute volume of dumped imports, MOFCOM noted that the dumped imports
"accounted for a certain market share in China" from the first half of 2010 to the first half of 2011.
In the context of discussing the changes in volume and prices of the dumped imports and the
prices of the domestic like product in the second part of the POI, i.e. from the second half of 2011
to the secon d half of 2012 , MOFCOM observed that the market share of the dumped imports
"continuously increased compared with the first half of 2011" . MOFCOM also considered
developments in the domestic industry's market share, which it found had increased.
7.94. The Final Determination contains the following data with regard to market shares of the
dumped imports and the domestic like product:
Table 3: Market shares of the dumped imports and the domestic like product
POI 2010 2011 2012
 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012
Market share of dumped imports 20.53% 20.88% 18.02% 19.91% 21.45% 22.57%
change from previous +0.35 -2.86 +1.89 +1.54 +1.12
Market share of the like domestic product 18.00% 21.36% 17.54% 18.64% 26.71% 25.73%
change from previous +3.36 -3.82 +1.1 +8.07 -0.98
 Source: Final Determination, (Exhibit CHN-1), pp. 63 and 64.

162 Appellate Body Report, China – GOES, para. 216.
163 Appellate Body Report, China – GOES, para. 128.
164 Final Determination, (Exhibit CHN-1), pp. 65 and 66. We note that this is unlike the facts in China –
Autos (US), where MOFCOM emphasized that market share gains of the dumped imports caused the downward
pressure on domestic prices. In that case, the domestic industry lost 4.04 percentage points and the dumped
imports gained 3.52 percentage points of the market share over the POI. The panel found that MOFCOM acted
inconsistently with Articles 3.1 and 3.2 by failing to explain the linkage between the dumped import market
share gains and its finding of price depression, in light of changes in market share of other market participants
and the timing of the changes in market share and prices. (Panel Report, China – Autos (US), paras. 7.287 and
7.288). In the present case, MOFCOM found that downward pressure was caused by the volume and decline in
prices of the dumped imports.

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7.95. Looking at this data , it is apparent that d uring the POI both the dumped imports and the
domestic like product gained market share. The market share of the domestic like product
increased from 18% to 25.73%, a gain of almost 8 percentage points, over the POI. The market
share of the dumped imports also increased, but by a lesser degree, from 20.53% to 22.57%, a
gain of 2 percentage points over the same period. Canada argues that the market share of the
dumped imports remained "essentially stable" and thus could not have depressed the prices of the
domestic like product. The question whether an increase in market share of 2 percentage point s
over the POI is described as an increase or as market share remaining essentially stable is a
question of judgment and interpretation, not a question of fact. It is a fact that the dumped import
market share did increase, albeit less overall than the dom estic industry market share. We
consider that MOFCOM did not err in referring to an increase in dumped import market share in its
consideration of price effects.
7.96. The existence of price depression does not necessarily require that there be a concurrent
decrease in the domestic industry's market share. Price depression can exist "in a situation where
there is no increase, or even in some circumstances a decrease, in the volume or market share of
dumped imports". 165 Canada does not disagree that price depressio n can be found without an
increase in volume or market share; however Canada argues that MOFCOM clearly based the
volume part of the price depression analysis on the increase of both volume and market share and
contends that MOFCOM was under obligation to objectively examine the market share but failed to
do so.166 We do not agree. In the Final Determination, MOFCOM explained that in the second half
of 2011, due to the increased demand, the domestic industry increased its output and sales. As a
result, the ma rket share of the domestic lik e product increased by 1.10 percentage points
compared to the first half of 2011. MOFCOM considered that in the same period, the prices of the
dumped import s decreased "in order to increase its market share". The prices of the dumped
imports decreased by 5.58% in the second half of 2011 compared to the first half of 2011, and
market share increased by 1.89 percentage points. In addition, MOFCOM observed that in the
second part of 2012 the domestic like product lost 0.98 percent age points of market share to the
dumped imports, and the domestic industry reduced its prices in order to prevent further declines
in market share. We also obs erve that the domestic industry' market share increased by
8 percentage points in the first half of 2012, but this development was not addressed in MOFCOM's
analysis. Although the Final Determination would have benefitted from an explanation regarding
the effect of the increase of the domestic industry' market share by 8 percentage points in the first
half of 2012, we consider that overall MOFCOM's description and examination of the change in
dumped imports' market share was both reasonable and objective, p articularly in view of the fact
that it relied primarily on the increase in the absolute volume of imports in its consideration of
price effects.
7.97. Finally, Canada submits that MOFCOM did not consider market dynamics and changes in the
market share of the dumped imports in relation to market shares of the domestic industry and the
non-dumped imports.167 In particular, Canada refers to similar movements in market shares of the
domestic industry, increases from 18% to 26%, and the market share of the non-dumped imports,
increased from 21% to 28%, during the POI.168
7.98. The market shares were as follows:
Table 4: Market Shares169
 2010 2011 2012
Domestic industry 19.68% 18.09% 26.22%
Other Chinese producers 38.35% 37.57% 23.71%
Dumped imports 20.70% 18.96% 22.01%
Non-dumped imports 21.27% 25.38% 28.06%
 Source: Apparent Market and Domestic Production Tables, (Exhibit CAN-28), p. 2.

165 Panel Report, EC – Bed Linen (Article 21.5 – India), para. 6.230.
166 Canada's second written submission, para. 75.
167 Canada's opening statement at the first meeting of the Panel, paras. 35-37. See also Canada's first
written submission, para. 99 (referring to Panel Report, China – Autos (US), para. 7.289).
168 Canada's opening statement at the first meeting of the Panel, paras. 35 and 36.
169 Apparent Market and Domestic Production Tables, (Exhibit CAN-28), p. 2; Canada's opening
statement at the first meeting of the Panel, para. 36; and China's response to Panel question No. 37, table B.

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7.99. Looking at this data, we observe that both the domestic like product and the non -dumped
imports gained market share, 6.5 and 6.7 percentage points respectively, the dumped imports
gained 1.3 percentage points o f market share, and other Chinese producers lost 14.6 percentage
points of market share. Canada refers to the China – Autos (US) dispute in its argument regarding
the need to consider changes in market share of various participants in the market. However,
while it is true that the panel in that case faulted MOFCOM for relying on a decline in domestic
industry market share without considering and addressing the role and impact of other participants
in the market before reaching its conclusions, the facts in China – Autos (US) are different from
those in this case. 170 In China – Autos (US), the domestic industry had lost market share, and
most of that lost market share was gained by non -industry producers and non -dumped imports.
MOFCOM had relied on that decline in its analysis of price effects. In the case before us, both the
domestic industry and the dumped imports gained market share. Thus, MOFCOM in this case did
not rely on lost domestic market share in its consideration of price effects, and a need to expla in
the relevance of such a loss in the light of the gains of other participants in the market does not
arise.
7.100. We therefore conclude that Canada has failed to demonstrate that MOFCOM acted
inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement in considering changes in
the market share of dumped imports in its consideration of price effects.
7.5.6 MOFCOM's consideration of certain business information
7.101. Canada argues that MOFCOM failed to base its findings of price depression on an objective
examination of positive evidence by relying on the minutes of business analysis meetings and
pricing reports obtained during on-site verifications.171
7.102. MOFCOM referred to certain information obtained during on -site verifications in its
consideration of price depression, as follows:
Investigating authority had collected evidences from many domestic producers during
its on-site verifications, including the minutes of the business analysis meetings and
the pricing reports, which showed that since the second half of 201 1, the decline of
the import prices of foreign dissolving pulp had led to the difficulty in the sale of the
like produ ct of the Domestic Industry, forcing the Domestic Industry to reduce the
price. This showed that the domestic producers were affected by t he decrease of the
Price of the Dumped Imported Product when they set the price of the like product of
the Domestic Industry.172
7.103. The minutes of the business analysis meetings and the pricing reports referred by
MOFCOM in the Final Determination include:
a. meeting minutes for reporting sales of cellulose pulp by [***];
b. meeting minutes regarding sales of cellulose pulp by [***];
c. the proposal for price adjustment of [***].173
In response to a question from the Panel, China clarifi ed that these documents represen t
approximately one -third of the total domestic production and were dated throughout the price
depression period.174
7.104. Canada asserts that the meeting minutes and pricing documents of [***] are not positive
evidence because they refer to imported cellulose pul p in general, without specifying exporting
countries, and do not provide reliable data with regard to prices of the dumped imports and their
relationship with the domestic like product. Five of the meeting minutes from [***], and one

170 Canada's first written submission, para. 99 (referring to Panel Report, China – Autos (US),
para. 7.289).
171 Canada's first written submission, paras. 101-103.
173 Pricing documents and meeting minutes, (Exhibit CHN-2) (BCI).
174 China's response to Panel question No. 14, para. 40.

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proposal for price adj ustment of [***], do not specifically refer to imports from investigated
countries, i.e. Brazil, Canada, and the United States, but to the prices of imported dissolving pulp
without specification of origin. Having examined these documents, we consider that although they
support MOFCOM's conclusion that the domestic producers had to lower their prices due to the
intense competition with imported cellulose pulp, the probative value of these documents is
limited, because they refer to imported cellulose pulp in general. This means that these documents
might refer to price competition with the dumped imports as well as non -dumped imports.
Nonetheless, in our view, it was not improper for MOFCOM to have taken this information into
account, given the obligation un der Article 3.2 is to consider the effect of the dumped imports on
prices, rather than to conclude that the price depression was caused by the dumped imports. As
well, there is no obligation to conduct a non -attribution analysis under Article 3.2. However, the
absence of any indication of the specific source of the imported cellulose pulp referred to in those
documents calls into question the weight they should be given in considering the explanatory force
of the dumped imports for the existence of price de pression, as opposed to the effect of non -
dumped imports.
7.105. Further, the meeting minutes and pricing documents of [***] do name investigated
exporting countries in referring to competition with imported cellulose pulp from Brazil, Canada
and the United Stat es.175 In this regard, Canada maintains that the remaining documents from
[***] are not representative of the domestic industry, because they originate from only one
petitioner, which accounted for less than [***] of total domestic output.176 China responds th at
that there is no requirement that the specific examples of price depression must account for a
certain percentage of overall sales during the investigation. 177 China asserts these pricing
documents and meeting minutes illustrate specific instances over th e POI in which domestic
producers were forced to reduce prices due to price pressure from the dumped imports. 178 In our
view, MOFCOM's consideration of price effects was primarily driven by the data on the volume and
prices of the dumped imports and the prices of the domestic like product. While not determinative,
the documents in question do corroborate MOFCOM's view that the domestic prices were
depressed by the declining prices and increased volume of the dumped imports. Therefore, we
consider that a reasonable and objective investigating authority could have taken this information
into account in its consideration of price effects.
7.106. Canada also submits that MOFCOM neither verified the pricing documents against relevant
sales contracts, purchase orders, and VAT invoices, nor did it verify this information with
purchasers or data collected from the interested parties, e.g. downstream viscose staple fibre
(VSF) producers.179 The Final Determi nation explicitly states that these documents were obtained
during on-site verifications, the very purpose of which is to verify information obtained during the
investigation. We note in this regard that while an investigating authority is required to sati sfy
itself as to the accuracy of the information supplied by interested parties pursuant to Article 6.6 of
the Anti -Dumping Agr eement, there is no particular means by which it is required to do so.
Verification, as provided for in Article 6.7 of the Anti-Dumping Agreement, which may include such
steps as suggested by Canada i s not a requirement in any case. Moreover, Canada does not even
allege any errors or lack of accuracy in the pricing documents or meeting minutes. In these

175 The parties disagree whether the list of exporting countries in these documents is exhaustive.
Canada submits that the translation into English omits the word "deng", which it asserts means "et cetera" and
suggests that the list includes other countries. China responds that the word "deng" has two meanings in
English: one is "et cetera", and the other is "namely" or "as such". China submits that in the context of these
documents the second meaning is more accurate, because the list of countries is followed by the specific
percentage of imports, i.e. "more than half of China's total imports of cellulose pulp". China further submits
that this is confirmed by import data, because imports from Brazil, Canada, and the United States represent
approximately half of total imports. The dumped imports accounted for 49% in 2010, 43% in 2011, and 44%
in 2012 of the total imports of cellulose pulp to China, or approximately half of total imports. While some of the
imports discussed in the documents may have been from other sources, in our view, the specific references to
Brazil, Canada, and the United States are sufficient for MOFCOM to have used the word "deng" as meaning
"namely" or "as such". (Canada's opening statement at the first meeting of the Panel, para. 41; response to
Panel question No. 12, para. 41; second written submission, para. 85 and fn 105; China's response to
Panel question No. 14, paras. 35-38; second written submission, paras. 61-63; and opening statement at the
second meeting of the Panel, paras. 37 and 38).
176 Canada's second written submission, paras. 83 and 84.
177 China's response to Panel question No. 14, para. 41.
178 China's response to Panel question No. 14, para. 33.
179 Canada's second written submission, paras. 85 and 90.

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circumstances, and given that Canada has made no claim in this regard, we do not consider that
the failure of MOFCOM to undertake "verification" as suggested by Canada was erroneous.
7.107. Canada also contends that MOFCOM failed to explain how the domestic industry could have
had difficulty in making sales of the like product, given that the volume of domestic sales
increased, as did the domestic market share. 180 In this regard, we note that MOFCOM found that
domestic prices declined while market share increased, which is consistent with th e domestic
industry having achieved increased sales only by lowering price s, which in our view suggest that
the industry had difficulty making sales of the like product – until it lowered its prices. The pricing
documents and meeting minutes also lend supp ort to this view. In the price effects analysis,
MOFCOM specifically found that due to increased demand, in the second half of 2011 the domestic
industry increased its output and sales of the like product leading to an increase in market share,
but decreased its prices, which again is consistent with a conclusion that the domestic industry had
to lower prices to make sales .181 We note that China has relied heavily on the meeting reports in
arguing that MOFCOM did not err in its consideration of price effects. In the circumstances of this
case, we are of the view that these document s, on their own, cannot suffice to show that dumped
imports had the effect of depressing domestic prices. However, this is a different question from
whether taking these documents into account in the consideration of the price effects of dumped
imports is, in itself, inconsistent with Articles 3.1 and 3.2.
7.108. We therefore find that Canada has failed to demonstrate that MOFCOM acted inconsistently
with Articles 3.1 and 3.2 by taking into account pricing documents and meeting minutes in its
consideration of the price effects.
7.5.7 MOFCOM's consideration of evidence and factors collectively
7.109. China argues that MOFCOM based its conclusion that the dumped imports had an effect to
depress prices of the domestic like product on a "variety of evidence" , specifically : (a) in tense
price competition between dumped imports and domestic like product; (b) a dramatic 43%
increase in the dumped import volume; (c) a drastic decline in domestic like product price s;
(d) parallel price trends; (e) pricing documents and meeting minutes; and (f) significant dumping
margins.182 China asserts that MOFCOM examined these factors "collectively" and did not rely
"solely on any single factor".
7.110. We have found that MOFCOM failed to adequately explain the role of parallel price trends
in its consideration of price depression and how parallel declining price trends in conjunction with
the increased volume of dumped imports explained its consideration of price depression, and how
it found price depression in a situation where dumped import prices were hi gher than those of the
domestic like product during the second part of the POI. The fact of price competition between the
dumped imports and the domestic like product, even if that competition was intense, may explain
the observation of parallel price tren ds, but goes no further to explain how dumped import prices
had the effect of depressing the domestic industry's prices.
7.111. An increase in the volume of dumped imports might lead the domestic industry to lower
prices to maintain market share. This would be a rational response if the dumped imports were
entering at lower prices than those of the domestic industry, which was not the case during the
second half of the POI. Moreover, the increased volume of dumped imports entered a growing and
highly price competitive market which further calls into question the explanatory force of dumped
imports for the decline in domestic like product prices. Thus, as with the observed parallel price
trends, the mere fact th at prices declined dramatically in the second half of the POI does not
suffice, on its own, to explain how dumped import prices had the effect of depressing the domestic
industry's prices.
7.112. We conclude that MOFCOM's consideration of price effects was not consistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreement.

180 Canada's first written submission, para. 102.
182 China's first written submission, para. 93; second written submission, paras. 41-47; response to
Panel question No. 13, paras. 24-31. We note that China refers to the significant dumping margins as one of
the factors considered in MOFCOM's consideration of price effects, but we find no mention of the margin of
dumping in connection with price effects in the Final Determination.

BCI deleted, as indicated [***]

7.6 Whether MOFCOM's examination of the impact of dumped imports was consistent
with Articles 3.1 and 3.4 of the Anti-Dumping Agreement
7.6.1 Introduction
7.113. Canada claims that MOFCOM's examination of the impact of the dumped imports on the
domestic indust ry is inconsistent with Articles 3.1 and 3.4 of the Anti -Dumping Agreement,
because:
a. MOFCOM failed to objectively examine the domestic industry's market share; and
b. MOFCOM failed to properly analyse and interpret data relating to factors that showed an
improvement in the state of the domestic industry.183
7.114. We will first address the legal standard under Article 3.4 and then examine each of
Canada's allegations in turn.
7.6.2 Legal standard under Articles 3.1 and 3.4
7.115. The text of Article 3.1 of the Anti-Dumping Agreement is set out in paragraph 7.12 above.
Article 3.4 reads as follows:
The examination of the impact of the dumped imports on the domestic industry
concerned shall include an evaluation of all relevant economic factors and indice s
having a bearing on the state of the industry, including actual and potential decline in
sales, profits, output, market share, productivity, return on investments, or utilization
of capacity; factors affecting domestic prices; the magnitude of the margin of
dumping; actual and potential negative effects on cash flow, inventories, employment,
wages, growth, ability to raise capital or investments. This list is not exhaustive, nor
can one or several of these factors necessarily give decisive guidance.
7.116. Article 3.4 requires an investigating authority to examine the impact of the dumped
imports on the domestic industry on the basis of an evaluation of all relevant economic factors and
indices having a bearing on the state of the industry. T he evaluation of the relevant factors must
respect the overarching principle set out in Article 3.1 concerning the objective examination of
positive evidence.184 Neither Article 3.4 nor any other provision of the Anti -Dumping Agreement
provides any guidance regarding a specific methodology on how these factors and indices shall be
evaluated.
7.117. The "evaluation" required under Article 3.4 suggests that an investigating authority must
undertake an analysis and assessment of all relevant economic factors and indices. 185 At the same
time, there is no requirement that all relevant factors, or even most or a majority of them, reflect
negative developments in order to point to an overall assessment of negative impact on the
relevant domestic industry. 186 The last sentence of Article 3.4 specifies that no one or several of
the relevant factors can necessarily "give decisive guidance". Article 3.4 requires an overall

183 Canada's second written submission, paras. 95-117. In its first written submission, Canada refers to
the Appellate Body's interpretation of Article 3.4 in China – GOES to claim that MOFCOM failed to evaluate the
relationship between the dumped imports and the state of the domestic industry, and to examine whether
subject imports explained the state of the domestic industry. (Canada's first written submission, paras. 108,
110, and 111). From Canada's response to Panel question number 18, we understand that Canada refers to the
interpretation of Article 3.4 developed in China – GOES to support its claims under Articles 3.1 and 3.4 that
MOFCOM failed both to objectively evaluate the domestic industry's market share, and to properly analyse and
interpret data relating to factors that showed an improvement in the state of the domestic industry.
184 Appellate Body Reports, US – Hot-Rolled Steel, paras. 196 and 197; and China – HP-SSST (Japan) /
185 Panel Report, China – X-Ray Equipment, para. 7.180 (referring to Panel Report, EC – Bed Linen
(Article 21.5 – India), para. 6.162).
186 Panel Report, EU – Footwear (China), para. 7.413 (referring to Panel Reports, EC – Tube or Pipe

BCI deleted, as indicated [***]

evaluation of the information, in context, as well as an explanation of how the facts considered by
an investigating authority support its assessment.187
7.118. Article 3.4 does not require merely an examination of the state of the domestic industry in
the abstract. Rather, it contemplates that an investigating authority must also "derive an
understanding of the impact of subject imports on the basis of such an examination".188 Article 3.4
"[is] concerned with the relationship between subject imports and the state of the domestic
industry".189 In other words, Article 3.4 requires an examination of "the explanatory force" of the
subject imports for the state of the domestic industry.190
7.119. The examination under Article 3.4 is necessary to provide a "meaningful basis" for the
authority's determination under Article 3.5 as to whether dumped imports are causing injury to the
domestic industry.191 The examination under Article 3.4 "contributes to, rather than duplicates",
the determination required under Article 3.5.192 For this reason, "an investigating authority is
required to examine the impact of subject imports on the domestic industry", but it "is not
required to demonstrate that subject imports are causing injury to the domestic industry", which is
an analysis specifically mandated by Article 3.5.193 The demonstration of the causal relationship
under Article 3.5 requires the examination of "all relevant evide nce" as well as other factors
causing injury to the domestic industry, and thus covers a broader scope than the examination
under Article 3.4.194
7.6.3 MOFCOM's evaluation of market share
7.120. Canada contends that MOFCOM's evaluation of actual and potential decline in market share
was inconsistent with Articles 3.1 and 3.4. Therefore, the question before us is whether MOFCOM's
evaluation of the domestic industry's market share, in the context of its overall examination of the
state of the industry, was reasonable and objective.
7.121. In the Final Determination, in its evaluation of relevant economic factors and indices,
MOFCOM examined the domestic industry's market share and found that:
During the Period of investigation, the market share of the Like Product of the
Domestic Industry was 19.68% in 2010; 18.09% in 2011, 1.59 percentage points less
than 2010; and 26.22% in 2012, 8.13 percentage points more than 2011.195
Further, in its examination of the state of the domestic industry, MOFCOM described the domestic
industry's market share as having "remained low".196, 197
7.122. There is no disagreement between the parties on the level of the market share held by the
domestic industry. Canada however takes issue with MOFCOM's characterization of that level of

187 Panel Report, EU – Footwear (China), para. 7.413 (referring to Panel Reports, Mexico – Olive Oil,
para. 7.372; EC – Bed Linen, paras. 6.163 and 6.213; and EC – Tube or Pipe Fittings, para. 7.329).
188 Appellate Body Reports, China – GOES, para. 149; and China – HP-SSST (Japan) / China –
HP-SSST (EU), para. 5.205. (emphasis original)
189 Appellate Body Reports, China – GOES, para. 149; and China – HP-SSST (Japan) / China –
HP-SSST (EU), para. 5.205.
190 Appellate Body Reports, China – GOES, para. 149; and China – HP-SSST (Japan) / China –
HP-SSST (EU), para. 5.205.
191 Appellate Body Reports, China – GOES, para. 154; and China – HP-SSST (Japan) / China –
HP-SSST (EU), para. 5.205.
192 Appellate Body Reports, China – GOES, para. 149; and China – HP-SSST (Japan) / China –
HP-SSST (EU), para. 5.205. (emphasis original)
193 Appellate Body Reports, China – GOES, para. 150; and China – HP-SSST (Japan) / China –
HP-SSST (EU), para. 5.205. (emphasis original)
194 Appellate Body Report, China – GOES, para. 150.
195 Final Determination, (Exhibit CHN-1), p. 72.
196 Final Determination, (Exhibit CHN-1), p. 76.
197 We note that the parties disagree whether the correct translation of the description of market share
in the original Chinese, "shizhong … dimi", is "remained low" (China's version) or "consistently depressed"
(Canada's version). The Panel considers that it does not have to decide on which of the two translations is
correct, given that Canada disagrees with MOFCOM's characterization of the market share regardless of the
translation. (China's first written submission, paras. 108 and 109; and Canada's second written submission,
paras. 100 and 101).

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market share as having "remained low". Canada refers to MOFCOM's own findings that the
domestic industry's market share increased by 6.54 percentage points during the POI. 198 Canada
also argues that MOFCOM assessed the amount or level of market sh are, but failed to consider
trends in the m arket share and to evaluate whether there was actual and potential decline in
market share, as required by Article 3.4.199 China responds that MOFCOM did examine trends in
market share, referring to MOFCOM's finding that during the POI the market share of th e like
domestic product was "19.68% in 2010; 18.09% in 2011, 1.59 percentage points less than 2010;
and 26.22% in 2012, 8.13 percentage points more than 2011". 200 China further submits that it
was not unreasonable f or MOFCOM to characterize the market share as having "remained low",
given that the domestic industry held approximately one quarter or less of the market during the
POI.201
7.123. Having considered MOFCOM's finding regarding the market share as mentioned above, we
make the following observations. MOFCOM e xamined trends and developments in market share
over the POI on a year-on-year basis, stating that in 2011 market share slightly decreased, and in
2012 increased by 8 percentage points compared with 2010. In its discussion of price effects,
MOFCOM looked at developments in market share on a half -yearly basis, acknowledged that the
domestic industry's market share was generally increasing, and provided the following assessment
of the changes in market share over the POI:
The domestic market share of the like product of the Domestic Industry was generally
in an increasing trend: 18.00% in the first half of 2010; 21.36% in the second half of
2010, 3.36 percentage points more than the first half of 2010; 17.54% in the first half
of 2011, 3.82 percentage points l ess than the second half of 2010; 18.64% in the
second half of 2011, 1.1 percentage points more than the first half of 2011; 26.71%
in the first half of 2012, 8.07 percentage points more than the second half of 2011;
and 25.73% in the second half of 2012, 0.98 percentage points less than the first half
of 2012 and 7.73 percentage points more than the first half of 2010 at the beginning
of the Period of investigation.202
In the same context, MOFCOM noted that in the second part of 2011 the domestic industry
increased its output in order to meet the growing demand for cellulose pulp in China, leading to an
increase in domestic industry's sales, and consequently to an increase in market share. Further,
MOFCOM stated that at the end of the POI, in the second part of 2012, the dumped imports
"squeezed" the market share of the domestic like product, which declined from 26.71% to
25.73%.203 Given these findings and explanations by MOFCOM, we consider that MOFCOM did
evaluate the trends and developments of the market share over the POI.
7.124. Canada argues however that MOFCOM's characterization of the market share as having
"remained low"204 is not an objective evaluation of the facts. MOFCOM states:
During the Period of investigation, the market share of the Like Product of the
Domestic Industry remained low and its operation rate stayed at a low level.205
7.125. Moreover, MOFCOM also observed that the market for cellulose pulp in China had
expanded.206 Demand had been growing over the POI, and this had induced the domestic industry
to increase its production capacity, output and sales. We consider that the characterization of the
domestic market share as "remained low" is not unreasonabl e in light of the fact that the demand
for cellulose pulp had grown considerably, by 35.26% over the POI. In addition, although domestic

198 Canada's first written submission, paras. 112-114; second written submission, para. 105; and
opening statement at the first meeting of the Panel, paras. 50 and 51.
199 Canada's second written submission, paras. 103 and 104 (referring to Panel Report in China – X-Ray
Equipment, paras. 7.201 and 7.216); opening statement at the first meeting of the Panel, para. 49; and
opening statement at the second meeting of the Panel, para. 31.
200 China's second written submission, para. 86 (referring to Final Determination, (Exhibit CHN-1),
p. 72); opening statement at the second meeting of the Panel, paras. 40 and 41.
201 China's second written submission, para. 87.
202 Final Determination, (Exhibit CHN-1), p. 63.
203 Final Determination, (Exhibit CHN-1), p. 65.
204 Final Determination, (Exhibit CHN-1), p. 76.
205 Final Determination, (Exhibit CHN-1), p. 76.
206 Final Determination, (Exhibit CHN-1), pp. 65, 72, and 76.

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production capacity had been increased to meet the increased demand, the domestic industry's
market share had not increased commensurate with the available production capacity. In this
respect, by the end of the POI, the do mestic industry was using only half of its production
capacity, its capacity utilization rate decreased from 66.01% in 2010 to 53.77% in 2011 and to
52.35% in 2012. 207 In these circumstances, we consider that MOFCOM's characterization of
domestic industry ma rket share as having "remained low" is one a reasonable and objective
investigating authority could reach in light of the evidence before it.
7.126. We t herefore we conclude that Canada has failed to demonstrate that MOFCOM acted
inconsistently with Articles 3.1 and 3.4 of the Anti -Dumping Agreement in its evaluation of the
domestic industry's market share.
7.6.4 MOFCOM's evaluation of injury factors showing positive trends
7.127. Canada contends that MOFCOM failed to evaluate factors that showed an improvement in
the state of the domestic industry.208 Canada argues that, while MOFCOM mentioned these factors,
it failed to assess them and explain the role, relevance and weight each factor had in the
investigation.209 Canada asserts that apart from the discussion on the relationship between
domestic demand and the construction and renovation of production facilities, MOFCOM did not
explain the trends of the positive factors and how they related to each other and to the negative
factors.210 In addition, Canada submits that MOFCOM failed to properly assess the role of "market
share" and "investing and financing ability" in its overall evaluation of the state of the domestic
industry.211
7.128. China responds that MOFCOM recognized that trends in several factors were positive, but
concluded that dum ped imports forced prices to fall, leading to declines in profits, return on
investments, and net cash flow. 212 China submits that Article 3.4 calls for overall examination of
the impact of the dumped imports on the domestic industry .213 However, while this ex amination
includes an evaluation of all relevant factors and indices, it does not require examination of the
role, relevance, and weight of each individual factor. 214 China refers to the last sentence of
Article 3.4 to argue that the existence of positive fa ctors of injury did not preclude MOFCOM from
concluding imports had an overall negative impact on the domestic industry.
7.129. We recall that Article 3.4 requires an investigating authority to derive an understanding of
the impact of the dumped imports on the s tate of the domestic industry based on examination of
all relevant factors and indices having a bearing on the state of the domestic industry. There is no
requirement in Article 3.4 that all relevant factors, or even most or a majority of them, have to
show negative developments in order to arrive at an understanding that dumped imports are
having a negative impact on the domestic industry.215 At the same time, positive developments in
other factors would require an investigating authority to provide a compel ling explanation of why
and how, despite such positive trends, it ultimately concludes under Article 3.5 that the domestic
industry is injured.216 The question before us is whether MOFCOM's evaluation of the positive and
negative trends in examining the stat e of the domestic industry under Article 3.4 was reasonable
and sufficiently explained in the Final Determination.

207 Final Determination, (Exhibit CHN-1), p. 73.
208 Canada's first written submission, para. 118.
209 Canada's first written submission, para. 119 (referring to Panel Report, China – X-Ray Equipment,
para. 7.216).
210 Canada's second written submission, para. 111.
211 Canada's argument, which refers to MOFCOM's failure to properly assess the role of factors "such as"
those mentioned, suggests that MOFCOM's analysis was deficient in other respects. However, Canada only
specifically addressed the two factors mentioned, and therefore we will only make findings with respect to
them.
212 China's first written submission, para. 114; second written submission, paras. 90-92 (referring to
Final Determination, (Exhibit CHN-1), p. 76).
213 China's second written submission, para. 96.
214 China's second written submission, para. 96.
215 Panel Report, EU – Footwear (China), para. 7.413 (referring to Panel Reports, EC – Tube or Pipe
216 Panel Report, Thailand – H-Beams, para. 7.249.

BCI deleted, as indicated [***]

7.130. In its examination of impact MOFCOM specifically examined the following factors: domestic
demand, production capacity, output, sales volume, market share, sales revenue, employment,
labour productivity, and salary per capita showed an increasing trend; selling price, pre-tax profit,
return on investment, operation rate, net cash flow from operating activities were decreasing;
ending inventor ies grew, and investing and financing abiliti es were weakened. 217 MOFCOM then
provided an overall assessment of the state of the domestic industry 218, in which it acknowledged
that several injury factors showed positive developments, stating:
[D]uring the Period of investigation, the demand of the domestic cellulose pulp market
was strong: the demand in 2011 was 8.67% more than 2010 and the demand in 2012
was 24.47% more than 2011; the demand at the end of the Period of investigation
was 35.26% more than that at t he beginning of the Period of investigatio n. With the
increase of the demand of the domestic cellulose pulp market, the Domestic Industry
constructed and renovated a number of production facilities; the production capacity,
output, sales volume and sales r evenue of the Domestic Industry all showed an
increasing trend and the employment, labor productivity and salary per capita all
showed a small increase.219
7.131. We cannot agree with Canada's view that MOFCOM failed to provide any explanation
regarding positive trends in some factors.220 MOFCOM's Final Determination states that, due to the
increase in demand, the domestic industry constructed and renovated a number of production
facilities, which l ed to increases in production capacity, output, sales volume, sales r evenue,
employment, labour productivity, and salary per capita. Thus, MOFCOM provided a plausible and
reasonable explanation of the positive trends in several factors in that they were driven by the
expansion of the market for cellulose pulp in China and the domestic industry's expansion.
7.132. Next, MOFCOM observed that prices of the domestic like product continued to decrease
and the unit sales cost was in a decreasing trend generally. However, the degree of decline in
prices was greater than the decline in th e unit sales costs, leading to a significant decline in the
gross profits of the domestic industry. 221 As a consequence, the domestic industry showed
significant declines in pre -tax profits, and in fact suffered significant losses, declines in return on
investments and net cash flow, and also significant increases in ending inventor ies.222 MOFCOM
stated that domestic producers that submitted questionnaire responses reported reductions of
output or shutdowns to some degree. Some of the companies had to sell thei r assets in order to
maintain the operations, and some of them had closed down. 223 MOFCOM noted that the domestic
industry's market share remained low, and capacity utilization rate also remained at a low level.224
Thus, MOFCOM explained its overall assessment of dumped imports' negative impact on the
domestic industry notwithstanding positive trends in some factors.
7.133. Canada submits that MOFCOM failed to properly assess the role of two "critical" injury
factors, namely market share and ability to raise capital a nd investments in its overall evaluation
of the state of the domestic industry .225 Canada argues that MOFCOM improperly considered that
these two factors supported a finding of injury. We have addressed Canada's arguments regarding
the market share above and found that MOFCOM's evaluation of mar ket share complies with the
requirements of Articles 3.1 and 3.4. Regarding the ability to raise capital and investment, Canada
argues that this factor should have been assessed through the prism of the increased produ ction
capacity of the domestic industry and the investments that increase implies. 226 According to
Canada, had this been done, MOFCOM could not have found this factor to be indicative of injury.

217 Final Determination, (Exhibit CHN-1), pp. 71-74.
218 Final Determination, (Exhibit CHN-1), pp. 74-76.
219 Final Determination, (Exhibit CHN-1), p. 76.
220 Canada's second written submission, para. 111.
221 Final Determination, (Exhibit CHN-1), p. 76. The gross profit of the domestic industry was
1,775.31 RMB/tonne in the first half of 2011; -23.16 RMB/tonne (loss) in the second half of 2011;
770.94 RMB/tonne in the first half of 2012; and -327.49 RMB/tonne (loss) in the second half of 2012.
222 Final Determination, (Exhibit CHN-1), p. 76.
223 Final Determination, (Exhibit CHN-1), p. 76.
224 Final Determination, (Exhibit CHN-1), p. 76.
225 Canada's second written submission, para. 114.
226 Canada's second written submission, para. 114.

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7.134. MOFCOM noted in examining the impact of the dumped imports the information received
from the domestic industry during on -site verifications, and in the responses to questionnaires
which indicated that some companies had to sell their assets in order to stay in operation, and
some of them had to close down. MOFCOM als o noted that the investing and financi ng abilities of
some companies were weakened and plans for capacity expansion were put aside, because banks
terminated credits for investment plans due to declining profitability and increasingly worsened
business situ ations.227 In our view, it was not unreasonable for MOFCOM to consider that the
shutdown of companies and selling of assets were negative developments in the state of the
domestic industry, even in a situation of the domestic industry's increased capacity. T hus, in our
view, MOFCOM's examination in this respect was that of a reasonable and objective investigating
authority.228
7.135. We recall that under Article 3.4 the investigating authorities are not required to
demonstrate that the dumped imports are causing inju ry to the domestic industry, which is an
analysis specifically mandated by Article 3.5. The evaluation of all relevant economic factors and
indices under Article 3.4, including market share and the ability to raise capital and investments,
must provide a m eaningful basis for the final determination whether injury is caused by dumped
imports under Article 3.5.
7.136. Finally, we note China's argument that certain parts of the examination of the impact of
the dumped imports on the state of the domestic industry can be found in the causation
analysis.229 We recall that Article 3 "does not prescribe a specific methodology to be relied on by
an investigating authority in its determination of injury ".230 Article 3 also does not provide a
"prescribed template or format that an investigating authority must adhere to in making its
determination of injury, provided that its determination comports with the disciplines that apply
under the discrete paragraphs of Article 3".231 Thus, "it is for the investigating authorities in the
first instance to determine the analytical methodologies that will be applied in the course of an
investigation."232
7.137. We have found above that MOFCOM evaluated the mandatory economic factors and indices
set forth in Article 3.4. In doing so, it noted that some of the factors were negative and some were
positive. MOFCOM further considered these factors and indices in its demonstration of the
causation relationship between dumped imports and material injury. 233 We recall that Article 3
contemplates "a logical progression of inquiry leading to an investigating authority's ultimate injury
and causation determination" .234 Thus, it is unsurprising that the outcome of the investigating
authorities' examination under Article 3.4 is further discussed in the causation section of a final
determination.
7.138. We therefore conclude that Canada has not established that MOFCOM acted inconsistently
with Articles 3.1 and 3.4 of the Anti -Dumping Agreement in its examination of the impact of the
dumped imports on the state of the domestic industry.
7.7 Whether MOFCOM's demonstration of causation and examination of other factors
causing injury were consistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement
7.7.1 Introduction
7.139. Canada claims that MOFCOM's demonstration of a causal relationship betw een the dumped
imports and the injury to the domestic industry is inconsistent with Articles 3.1 and 3.5 of the
Anti-Dumping Agreement. Canada also claims that MOFCOM failed to objectively examine several

227 Final Determination, (Exhibit CHN-1), pp. 73 and 74.
228 We also note that increased production capacity and overexpansion of the domestic industry is raised
by Canada as an alleged "other factor" causing injury to the domestic industry under Article 3.5 of the
Anti-Dumping Agreement. We address this issue further in paragraphs 7.173-7.185 of the Report.
229 China's first written submission, paras. 102-107; China's response to Panel question No. 17,
paras. 54-62.
230 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.141; see also EC
– Bed Linen (Article 21.5 – India), paras. 113 and 118.
231 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.141.
232 Panel Report, Thailand – H-Beams, para. 7.159.
233 Part VI.1 "Causal Relationship" (Final Determination, (Exhibit CHN-1), pp. 77 and 78).
234 Appellate Body Report, China – GOES, para. 128.

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other factors allegedly causing injury to the domes tic industry simultaneously with the dumped
imports, namely: (a) changes in cotton and VSF prices; (b) domestic industry overexpansion,
overproduction and inventory build-up; (c) non-dumped imports; and (d) shortage of cotton linter.
7.140. We will first address the legal standard under Article 3.5 and then examine each of
Canada's allegations in turn.
7.7.2 Legal standard under Articles 3.1 and 3.5
7.141. As discussed above, Article 3.5 of the Anti-Dumping Agreement requires the demonstration
of a causal relationship between the dumped imports and the material injury. 235 It provides
specifically that it must be "demonstrated that the dumped imports are, through the effects of
dumping, as set forth in paragraphs 2 and 4, causing injury with the meaning of this Agreement".
Article 3.5 further requires that the demonstration of the causal relationship "shall be based on an
examination of all relevant evidence before the authorities". Article 3.5 also requires the
investigating authority to examine any other known factors that may b e simultaneously causing
injury to the domestic industry and to ensure that the injuries caused by those other factors are
not attributed to the dumped imports. 236 It is well established that there are three relevant
elements for determining when such a "non -attribution" analysis is required : the "other factor"
allegedly causing injury must be: (a) known to the investigating authority; ( b) a factor other than
dumped imports; and ( c) injuring the domestic industry at the same time as the dumped
imports.237 If these elements are satisfied, the investigating authority "must appropriately assess
the injurious effects of those other factors", which "must involve separating and distinguishing the
injurious effects of the other factors from the injurious effects of the dumped imports".238
7.142. Article 3.5 does not provide any guidance on methodology for either of these
requirements. Thus, there is no specific guidance as to how an investigatin g authority can or
should demonstrate that there is a causal link between dumped impo rts and injury, or how it can
or should ensure that it does not attribute to the dumped imports injuries caused by a known
"other factor". 239 Various methods are used by investigating authorities for the required
demonstration of a causal link and examinatio n of other factors and assurance of non -attribution.
While a number of panel and Appellate Body reports have reviewed the decisions of investigating
authorities in these respects, they have focused on the specific facts, analysis and conclusions,
rather th an on the methods of analysis relied upon, in the abstract. Thus, in the context of
non-attribution, prior decisions have generally focused on "a careful and in depth scrutiny" of the
determinations made by the investigating authority in order to evaluate whether the investigating
authority's explanations and conclusions are "such reasonable conclusions as could be reached by
an unbiased and objective investigating authorit y in light of the facts and arguments before it and
explanations given".240
7.7.3 MOFCOM's demonstration of causation
7.143. In its Final Determination, MOFCOM found that significantly increased volumes of the
dumped imports at decreasing prices depressed the prices of the domestic like product. In turn,
the depressed price of the domestic like product l ed to a continuous decline in the domestic
industry's pre-tax profit, return on investments and net cash flow from operating activities. Since
the degree of decline in the domestic like product's prices was greater than the degree of decline
in unit sales costs, profitability declined, and at the end of the POI the domestic industry was
showing serious losses. In addition, the domestic industry's market share and capacity utilization
rate were low, and inventories increased over the POI. Based on all of the se factors, MOFCOM

235 See above paras. 7.23-7.27.
236 Panel Report, EU – Biodiesel (Argentina), para. 7.438; Appellate Body Report, EU – Biodiesel
(Argentina), para. 6.125 (referring to Appellate Body Reports in China – HP-SSST (Japan) / China –
237 Panel Report, EU – Biodiesel (Argentina), para. 7.438 (referring to Appellate Body Report, EC – Tube
or Pipe Fittings, para. 175).
238 Panel Report, EU – Biodiesel (Argentina), para. 7.438 (referring to Appellate Body Reports, US –
HP-SSST (Japan) / China – HP-SSST (EU), para. 5.283).
239 Panel Report, EU – Biodiesel (Argentina), para. 7.439.
240 Panel Report, EU – Biodiesel (Argentina), para. 7.439 (referring to Panel Reports, EU –

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determined that during the POI the dumped imports of cellulose pulp caused material injury to the
domestic industry producing the like product.241
7.144. Canada argues that MOFCOM's causation analysis is based on flawed volume and price
effects analyses and therefore is necessarily inconsistent with Articles 3.1 and 3.5. 242 In the
alternative, Canada submits that MOFCOM failed to demonstrate how dumped imports actually
caused injury to the domestic industry, given that the dumped imports' market sh are did not
change considerably, the prices of dumped imports were significantly higher than those of the
domestic like product and the volume of sales of the domestic like product increased more than
those of the dumped imports.243
7.145. China responds that MOFC OM's causation analysis was based on an objective examination
of positive evidence demonstrating a dramatic increase in the volume of dumped imports in
absolute terms, increased market share of the dumped imports and declining prices of the
domestic like product, in parallel with the declining prices of the dumped imports.244 China submits
that documents examined by MOFCOM during the verification showed that domestic producers
were forced to lower their prices to maintain sales in the Chinese market. 245 China argues that
MOFCOM also careful ly considered the economic factors and indices concerning the state of the
domestic industry that showed the domestic industry suffered material injury. It found that, due to
the dumped imports, the domestic industry had to re duce significantly the prices of the like
product, resulting in a significant decline in the profitability and a sharp decline in the pre -tax
profit and return on investments of the domestic industry.246
7.146. Canada's claim under Article 3.5 regarding MOFCOM's c ausation analysis is dependent in
part on its claims under Articles 3.2 and 3.4. We have found above that China acted inconsistently
with Articles 3.1 and 3.2 of the Anti -Dumping Agreement in its consideration of the effect of the
dumped imports on prices. 247 In particular, we found that MOFCOM failed to adequately explain
both the role of parallel price trends in its consideration of price depression and how the effect of
dumped imports was to depress domestic prices in a situation where dumped import prices were
higher than those of the domestic like product during the second part of the POI. Thus, to the
extent that MOFCOM merely relied on its con sideration of price effects under Article 3.2 in
demonstrating causation, we conclude that its demonstration of causation was inconsistent with
Articles 3.5 and 3.1.248
7.147. In its demonstration of causation, MOFCOM specifically acknowledged that the price of the
dumped imports was higher than the price of the domestic like product.249 MOFCOM found that
starting from the se cond half of 2011 until the end of the POI, the prices of the dumped imports
decreased continuously and the volume of the dumped imports increased quickly, which forced the
domestic industry to decrease its prices, and concluded that the dumped imports dep ressed the
price of the like domestic product. 250 Even though MOFCOM acknowledged that the dumped
imports were priced higher in the first half of 2011, it did not explain how, the dumped imports
depressed domestic like product prices, thereby contributed to causing material injury to the
domestic industry, when the decreasing prices of the dumped imports remained higher than the
price of the domestic like product during the remainder of the POI . Therefore, in light its flawed
price effects analysis and conclu sions, MOFCOM has failed to demonstrate that the dumped
imports caused injury to the domestic industry through their price effects.

241 Final Determination, (Exhibit CHN-1), p. 77.
242 Canada's first written submission, paras. 10 and 48; second written submission, paras. 119-121.
243 Canada's first written submission, paras. 125-138; second written submission, para. 122.
244 China's first written submission, paras. 123, 127,128, and 129 (referring to Final Determination,
(Exhibit CHN-1), pp. 59, 63-66, 77, and 78); second written submission, paras. 9, 79, and 80.
245 China's first written submission, para. 129 (referring to Final Determination, (Exhibit CHN-1), p. 65).
246 China's first written submission, paras. 127-134; second written submission, para. 82.
247 See section 7.5 above.
248 In this regard, we recall the panel's statement in China – Autos (US) that "it would be difficult, if not
impossible, to make a determination of causation consistent with the requirements of the Articles 3 … in a
situation where an important element of that determination, the underlying price effects analysis, is itself
inconsistent with the provisions of [the Anti-Dumping Agreement]." (Panel Report, China – Autos (US),
para. 7.327).
249 Final Determination, (Exhibit CHN-1), p. 77.
250 Final Determination, (Exhibit CHN-1), pp. 77 and 78.

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7.148. Turning to the role of the volume of dumped imports in MOFCOM's demonstration of
causation, we recall our conclusion above t hat MOFCOM did not act inconsistently with Article 3.2
of the Anti-Dumping Agreement in its consideration of whether there was a significant increase in
the volume of dumped imports.251 In our view, MOFCOM did not rely on the increased volume of
imports as a n independent causal factor. Rather, we understand MOFCOM to have relied on a
significant increase in the volume of dumped imports in absolute terms in its consideration of the
effects of dumped imports on prices, and its conclusion that the dumped imports caused material
injury.252 However, MOFCOM failed to explain how parallel declining price trends, even considered
in conjunction with the increased volume of dumped imports, played a role in price depression and
thus contributed to causing material injury.
7.149. In its demonstration of causation, MOFCOM noted the "significant growth" in the volume of
the dumped imports, and that the proportion of the dumped imports in the total imports was
high.253 MOFCOM relied on the "impact brought by the significant growth of t he quantity" of the
dumped imports to explain the continuous price decline of the domestic like product since the
second half of 2011, which in turn led to negative developments in the state of the domestic
industry, including decline in profitability, ret urn on investment and net cash flow from operating
activities.254 Thus, MOFCOM's causation determination relies on both the volume and price effects
of dumped imports. Nothing in MOFCOM's Final Determination suggests that it took the view that
the significantly increased volume of dumped imports alone was a sufficient basis to conclude that
those imports caused material injury . We fail to see, and MOFCOM failed to explain, the relevance
of the "high proportion" of total imports accounted for by the dumped imp orts, to its causation
demonstration.255 In this context, we note that while the volume of dumped imports increased by
43.82% over the POI, demand for cellulose pulp in the Chinese market also increased, by 35.26%
in the same period.256 Had MOFCOM considered the increased volume of dumped imports alone to
be sufficient to demonstrate a causal relationship to material injury, we would have expected some
discussion of the significance of that increase in the context of increasing market demand.
7.150. MOFCOM also referred to the increase in the market share of the dumped imports over the
POI in its assessment of causal link, an increase of 1.3 percentage points. 257 In this regard, we
note that the domestic industry's market share also increased, by 6.5 percentage points 258, while
the market share of non -dumped imports increased by 6.7 percentage points during the same
period.259 The increase in the market share of non -dumped imports, which were sold at prices
close to those of the dumped imports, was not addressed by MOFCOM in the context of its
demonstration of a causal relationship between dumped imports and material injury .260 However,
we would have expected a reasonable and objective investigating authority to at least consider in
these circumstances the possible role of non -dumped imports in the price depression MOFCOM
found to have been contributing to causing material injury to the domestic industry.

251 See section 7.4 above.
252 Final Determination, (Exhibit CHN-1), pp. 63-66.
253 Specifically, MOFCOM stated:
The statistical data of China Customs showed that during the Period of
investigation, the quantity of the dumped imported product showed the significant
growth in general, 43.82% more at the end of the Period of investigation than at
the beginning of the Period of investigation. In addition to the continuous growth of
the quantity of import, the proportion of the quantity of the dumped imported
product to the total quantity of the imported cellulose pulp in China always
remained high: 49.32% in 2010, 42.77% in 2011 and 43.96% in 2012.
(Final Determination, (Exhibit CHN-1), p. 77)
254 Final Determination, (Exhibit CHN-1), p. 78.
255 In this regard, we note that dumped imports accounted for just under half of total imports
throughout the POI, and the volume of non-dumped imports was argued to be, and considered by MOFCOM, as
an "other factor" causing injury to the domestic industry simultaneously with the dumped imports.
256 Final Determination, (Exhibit CHN-1), pp. 76 and 77.
257 Final Determination, (Exhibit CHN-1), p. 77.
258 Final Determination, (Exhibit CHN-1), p. 72.
259 Apparent Market and Domestic Production Tables, (Exhibit CAN-28), p. 2; Canada's opening
statement at the first meeting of the Panel, para. 36; and China's response to Panel question No. 37, table B.
260 MOFCOM did address the allegedly injurious impact of the non-dumped imports on the domestic
industry as an "other factor" in its non-attribution analysis. Canada's claim in this regard is discussed below.

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7.151. We therefore conclude that MOFCOM failed to demonstrate a causal relationship between
the dumped imports and the injury to t he domestic industry consistently with Articles 3.1 and 3.5
of the Anti-Dumping Agreement.
7.152. We consider that the above findings are a sufficient basis for us to conclude that China has
failed to act consistently with its obligations under the Anti-Dumping Agreement in connection with
the anti -dumping measure at issue in this dispute. However, as it may provide some useful
guidance in the context of implementation of any DSB recommendation in this dispute, we go on
to consider Canada's claims regarding non-attribution.
7.7.4 MOFCOM's examination of other known factors allegedly causing injury and
non-attribution
7.7.4.1 Cotton and VSF prices
7.7.4.1.1 Introduction
7.153. Canada contends that MOFCOM failed to properly examine positive evidence submitted by
the interested parties concerning the effects of changes in cotton and VSF prices and failed to
separate and distinguish their injurious effect on the domestic industry from the impact of the
dumped imports.261
7.154. The imported product at issue in the underlying investigation, cellulose pulp, is made from
wood, cotton, or bamboo as a principal input, and is in turn the primary raw material in the
production of VSF, which is used by the textile industry. The interested parties argued that since
VSF is a close substitute for cotton fibre, the pri ce of VSF is highly correlated with the price of
cotton.262 In 2010-2011, due to a global supply shortage of cotton caused by cotton crop failures,
global cotton price increased significantly, to historically high levels, leading to high demand for
VSF and a similar increase in VSF prices. 263 The increased demand for VSF stimulated demand for
cellulose pulp and an increase in prices of cellulose pulp during the first part of the POI. 264 The
Chinese government introduced a policy, based on environmental concerns, limiting cotton
production in China and favouring VSF production, which also contributed to increased demand for
VSF in China. 265 However, in the second part of the POI, starting from the second half of 2011,
additional supplies of cotton became available an d global cotton prices started to decline. 266
Consequently, the price of VSF also began to fall, leading to a decline in the price of cellulose

261 Canada's first written submission, para. 159.
262 Fortress Specialty Cellulose Inc., Response to MOFCOM's Preliminary Determination on the
Anti-Dumping Investigation against Imported Dissolving Pulp, (Exhibit CAN-17), p. 12; Fortress Specialty
Cellulose Inc., Injury Brief, Industry Injury Investigation for the Anti-Dumping Investigations Against Cellulose
Pulp, 5 September 2013, (Exhibit CAN-13), p. 2; and American Forest and Paper Association, Anti-Dumping
Investigation on Imports of Cellulose Pulp, Comments on Industry Injury Investigation, 24 September 2013,
(Exhibit CAN-10), p. 8.
263 Fortress Specialty Cellulose Inc., Response to MOFCOM's Preliminary Determination on the
Anti-Dumping Investigation against Imported Dissolving Pulp, (Exhibit CAN-17), p. 12; Fortress Specialty
Cellulose Inc., Injury Brief, Industry Injury Investigation for the Anti-Dumping Investigations Against Cellulose
Pulp, 5 September 2013, (Exhibit CAN-13), p. 2; American Forest and Paper Association, Anti-Dumping
Investigation on Imports of Cellulose Pulp, Comments on Industry Injury Investigation, 24 September 2013,
(Exhibit CAN-10), pp. 9 and 10; and Rayonier Performance Fibers, LLC., Anti-Dumping Investigation on
Imports of Cellulose Pulp, Comments Regarding Material Injury and Causality, 29 July 2013, (Exhibit CAN-12),
p. 16.
264 Fortress Specialty Cellulose Inc., Response to MOFCOM's Preliminary Determination on the
Anti-Dumping Investigation against Imported Dissolving Pulp, (Exhibit CAN-17), p. 12; and Rayonier
Performance Fibers, LLC., Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments Regarding
Material Injury and Causality, 29 July 2013, (Exhibit CAN-12), p. 17.
265 Rayonier Performance Fibers, LLC., Anti-Dumping Investigation on Imports of Cellulose Pulp,
Comments Regarding Material Injury and Causality, 29 July 2013, (Exhibit CAN-12), p. 16; and American
Forest and Paper Association, Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments on Industry
Injury Investigation, 24 September 2013, (Exhibit CAN-10), p. 10.
266 American Forest and Paper Association, Anti-Dumping Investigation on Imports of Cellulose Pulp,
Comments on Industry Injury Investigation, 24 September 2013, (Exhibit CAN-10), pp. 11 and 12; and
Multi-Client Study: Outlook for Global Dissolving Pulp Market 2011, (Exhibit CAN-6) (BCI), p. 3.

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pulp.267 Interested parties argued that the dramatic decline in prices of cotton and VSF from 2011
to the second half of 2012 pulled down the price of the cellulose pulp in the domestic market.268
7.155. MOFCOM discussed the effect of both cotton and VSF prices in the section of the Final
Determination concerning its consideration of the effect of dumped imports on domestic pric es,
and did not specifically address these prices in the section of the Final Determination concerning
non-attribution of injury to "other factors" allegedly causing injury to the domestic industry. The
Anti-Dumping Agreement does not provide any guidance as to the structure of an investigating
authority's final determination. Nor does compliance with the requirements of the Anti -Dumping
Agreement require any particular order of analysis, or that aspects of an investigating authority's
analysis and determination be specifically linked to the specific requirements of that Agreement. In
our view, while it is clear that an investigating authority must comply with the legal requirements
set out in the Anti -Dumping Agreement, and that if challenged in dispute set tlement, such
compliance must be demonstrable based on the relevant determinatio ns and underlying
information in the record, a Member may rely on the entirety of the challenged determination, and
refer to supporting information in the record, in doing so, regardless of where the relevant
discussion, analysis, or conclusion appears in the determination.269 Of course, this does not mean
that a reviewing panel can be expected to comb through the determination to find the relevant
aspects o f the investigating aut hority's discussion, analysis, or conclusion, or that a defending
Member can cobble together an analysis from disparate elements in the determination. But it does
mean that simply because an explanation for a particular analytical approach or conclusion is set
out in one part of a determination in the context of one aspect of the analysis does not mean that
it cannot be considered, if relevant, with respect to a different aspect of the analysis addressed
principally in another part of the determination. The refore, the question before us is whether
MOFCOM complied with the non -attribution requirements of the Anti -Dumping Agreement,
regardless of where the discussion China relies on in defending MOFCOM's determination explicitly
appears in the Final Determination.
7.7.4.1.2 Cotton prices
7.156. MOFCOM found that "the cotton price was not the main factor that determined the price of
viscose fiber".270 MOFCOM based its conclusion on several considerations. First, MOFCOM found
that, due to differences in the properties of the produ cts, there is no necessary connection
between VSF and cotton prices. Second, MOFCOM found that due to government intervention in
the Chinese market for cotton, specifically quotas and policies to protect cotton prices, changes in
the price of cotton were not the main factor affecting the price of VSF or cotton cellulose pulp. As a
result of these interventions, while cotton prices fluctuated on the international market, cotton
prices in China were higher and more stable than the international prices. 271 Finally, MOFCOM
determined that because the cellulose pulp under investigation included all cellulose pulp products,
including wood- and bamboo-based cellulose pulp, and not only cotton -based cellulose pulp, the
price of cotton was not the primary factor affect ing the prices of the domestic like product. In this
regard, MOFCOM noted that during the POI sales of wood and bamboo cellulose pulp reached
nearly 70% of the total sales volume of the like product.272
7.157. Canada argues that MOFCOM failed to objectively examin e the relationship between the
prices of cotton, VSF, and cellulose pulp. 273 Canada contends that MOFCOM failed to consider
evidence submitted by several interested parties regarding the effect of global cotton prices;
instead MOFCOM focused on government -supported domestic cotton prices in China. 274 Canada

267 Cosmo Specialty Fibers, Inc., Anti-Dumping Investigation on Imports of Cellulose Pulp, Argument of
no Injury, 4 July 2013, (Exhibit CAN-11), p. 29; and Rayonier Performance Fibers, LLC., Anti-Dumping
Investigation on Imports of Cellulose Pulp, Comments Regarding Material Injury and Causality, 29 July 2013,
(Exhibit CAN-12), p. 18.
268 Fortress Specialty Cellulose Inc., Response to MOFCOM's Preliminary Determination on the
Anti-Dumping Investigation against Imported Dissolving Pulp, (Exhibit CAN-17), p. 13; and American Forest
and Paper Association, Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments on Industry Injury
Investigation, 24 September 2013, (Exhibit CAN-10), p. 9.
269 E.g. Panel Report, EU – Biodiesel (Argentina), para. 7.526.
270 Final Determination, (Exhibit CHN-1), p. 67.
271 Final Determination, (Exhibit CHN-1), p. 67.
272 Final Determination, (Exhibit CHN-1), p. 67.
273 Canada's second written submission, paras. 131-133.
274 Canada's first written submission, para. 150.

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submits that MOFCOM failed to explain how any distinction between products is relevant to the
question of whether viscose fibre is a substitute for cotton, referring to the submissions of
interested parties suggesting that viscose fibre is a close substitute for cotton fibre. 275 Canada
argues that cotton prices affected VSF prices, and in turn, prices of all cellulose pulp, regardless of
whether it was produced using wood, bamboo, or cott on linter. Therefore Ca nada contends that
the fact that sales of bamboo- and wood- based cellulose pulp, at their peak, accounted for 70% of
the total sales volume of cellulose pulp does not support MOFCOM's finding with respect to the
effect of cotton prices.276
7.158. China submits that MOFCOM examined the impact of cotton prices, even though it did not
have to since the relevant question before it was whether VSF prices impacted the prices of
cellulose pulp, and therefore MOFCOM did not have to consider further upstream factors that m ay
have affected the prices of VSF. 277 China asserts that MOFCOM properly relied on domestic cotton
prices, rather than on international cotton prices, because the Chinese cotton market was affected
by government intervention leading to domestic cotton price s that were higher and more stable
than the international prices.278 China argues that MOFCOM reasonably concluded that there is no
necessary relationship between VSF and cotton prices due to the different properties of the
products and "non-substitutability", noting that VSF has superior dyeing and moisture absorption
properties as compared to cotton fibre.279 China submits that cotton prices could not constitute the
main factor affecting the domestic like product overall, because the do mestic cellulose pulp
industry includes not only cotton-based pulp, but also wood- and bamboo-based pulp.280
7.159. As noted above, there is no prescribed methodology as to how a non-attribution analysis is
to be conducted. Thus, the question before us with respect to Canada's claim rega rding the
allegedly injurious effect of cotton prices is whether a reasonable and objective investigating
authority could have concluded that changes in international cotton prices were not the main
factor that determined the price of VSF, and therefore were not the main factor affecting the prices
of cellulose pulp.
7.160. We begin by addressing Canada's argument that MOFCOM wrongly confined its analysis to
the trends in cotton prices in China, while the interested parties argued that VSF prices in China
were affected by fluctuations of international cotton prices. MOFCOM found that cotton prices in
China were more stable, and higher, than international cotton prices.
7.161. In this regard, MOFCOM reported the prices of cotton, VSF and cotton -based cellulose pulp
in China during POI to be as follows:
Table 5: Average annual prices of cotton, VSF, and cotton-based cellulose pulp in China
POI 2010 2011 2012

Cotton price (RMB/tonne)

19,563 24,269 19,327

VSF price (RMB/tonne)

20,726 21,524 15,442

Price of cotton cellulose pulp produced by
domestic industry (RMB/tonne)
14,610 14,639 8,010
 Source: Final Determination, (Exhibit CHN-1), p. 67.
MOFCOM stated that the prices of cotton in China "first increased and then decreased and basically
remained unchanged", while prices of both VSF and cotton pulp were "in decreasing trend in

275 Canada's first written submission, paras. 148 and 149; second written submission,
paras. 134 and 135.
276 Canada's second written submission, para. 140.
277 China's second written submission, para. 114.
278 China's first written submission, para. 148; second written submission, paras. 117 and 118 (referring
to Final Determination, (Exhibit CHN-1), p. 67).
279 China's first written submission, para. 146; second written submission, para. 115 (referring to Final
Determination, (Exhibit CHN-1), p. 67).
280 China's first written submission, para. 150 (referring to Final Determination, (Exhibit CHN-1), p. 67).

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general". MOFCOM concluded that during the POI "the cotton price was not the main factor that
determined the price of viscose fiber, and it was not the main f actor that affect the price of cotton
pulp of the Domestic Industry in Chinese market".281
7.162. China contends that these findings suggest that domestic VSF and cot ton pulp prices did
not follow the trends in domestic cotton prices. 282 We do not consider it inappropriate for MOFCOM
to have focussed on domestic prices in its analysis . However, we do not agree that a reasonable
and objective investigating authority could reach the conclusion reached by MOFCOM on the basis
of the domestic price information before it. It is clear from the data shown in Table 5 and depicted
graphically in Chart 2 that the Chinese prices of cotton, VSF and cotton cellulose pulp were closely
correlated, especially in t he second part of the POI, declining in 2012, at the same time as the
prices of domestic like product were allegedly depressed by the dumped imports:
Chart 2: Average annual prices of cotton, VSF, and cotton-based cellulose pulp in China

Source: Final Determination, (Exhibit CHN-1), p. 67.
Cotton pric es in China, like international cotton prices, increased significantly in 2011 and then
dropped in 2012 to about the level they had been at the beginning of the POI. This could be
viewed as suggesting that cotton prices in China were affected by the global cotton shortage and
consequent price increase, at least to some extent. Yet MOFCOM simply did not address this
possible impact of international cotton prices. Furthermore, even accepting that there are some
differences in the physical properties of the pr oducts, the data suggests that prices of VSF and
cotton followed similar trends, especially in the second half of the POI . In our view, this suggests
that there is at least some relationship between the prices of these products, which casts doubt on
MOFCOM's conclusion, which rests on the finding that there is no ne cessary relationship between
prices of cotton and VSF. China's assertion that there was no general correlation between domestic
cotton prices, VSF prices, and cotton cellulose pulp prices is beli ed by the data. The domestic data
that China relied on, in our view, shows the same general trend as international prices – cotton,
VSF and cellulose pulp prices rose in the first half of the POI and declined in the second half. The
correlation between the domestic prices is less pronounced than that between the international
market prices relied on by Canada in its arguments, but is by no means insignificant.
7.163. In addition , we note that although the Chinese cotton market was regulated by the
government, international cotton prices would nonetheless appear relevant to MOFCOM's analysis,
because Chinese producers of the downstream product, VSF, competed globally and thus would
seem likely to be affected by the international market prices for cotton, as it affe cted other VSF

281 Final Determination, (Exhibit CHN-1), p. 67.
282 China's first written submission, para. 149; second written submission, para. 118 (referring to Final
Determination, (Exhibit CHN-1), p. 67).

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producers and thus the world market in which Chinese VSF producers competed . Even though
export sales were only [***] of VSF production in China283, given the size of the Chinese
market284 this is not insignificant. Moreover, export sales of VSF increased rapidly over the POI, by
[***].285 To the extent that Chinese VSF producers purchasing domestic cellulose pulp for VSF
production sought lower prices to enable them to compete better in export markets with producers
whose input costs directly benefitted from the decline in international cotton prices, Chinese prices
for cellulose pulp may have been affected by those declines as well. MOFCOM's analysis fails to
consider these interconnections at all.
7.164. In addition, MOFCOM considered that since cotton is the raw material for cotton -based
cellulose pulp only, prices for cotton had no effect on the prices of wood - and bamboo-based pulp.
However, as MOFCOM recognized, all cellulose pulp, regardless of whether it is cotton -, wood- or
bamboo-based, is used in the production of VSF. 286 It seems to us likely that there is some
correlation, or at least a connection between the prices of cellulose pulp made from the different
inputs, as the cellulose pulp, regardless of input, all competes for sales to VSF produce rs. Thus,
while prices for cotton may not have a direct effect on the prices of wood - and bamboo-based pulp
as a raw material, the possible indirect effect through the competition for sales to downstream
users, would seem to merit consideration, which MOFCOM did not undertake.
7.165. To conclude, we consider that whi le MOFCOM may have been justified in concluding that
the international price of cotton was not the main factor affecting the prices of the downstream
product VSF, MOFCOM's explanations are insufficient to demonstrate, in light of the arguments and
evidence concerning international cotton prices, that they were not a factor affecting VSF prices,
and consequently cellulose pulp prices. Thus, MOFCOM failed to properly examine whether cotton
prices were another factor causing injury to the domestic industry.
7.7.4.1.3 VSF prices
7.166. MOFCOM found that "the change of the price of viscose fiber as a downstream product was
not the direct cause of the decline of the Price of the Like Product of the Domestic Industry."287
7.167. Canada argues that cellulose pulp is primarily used to produce VSF, which creates a
prima facie presumption that the price of VSF has a causal impact on the price of cellulose pulp. 288
Canada submits that MOFCOM failed to explain how its discussion regarding gro wth in VSF output
and subsequent growth in demand for cellulose pulp related to correlations between prices of
viscose fibre and cellulose pulp. 289 Canada contends that interested parties submitted evidence
showing that there is a close link between cellulos e pulp and VSF prices; therefore MOFCOM's
conclusion that interested parties failed to provide evidence of a direct link between decline in
prices of VSF and cellulose pulp cannot stand.290
7.168. China responds that MOFCOM properly considered evidence submitted b y interested
parties, but after objectively examining both this evidence and the supply and demand relationship
between VSF and cellulose pulp, determined that VSF prices were not the direct cause of the
changes in cellulose pulp prices. 291 China submits tha t parallel trends in VSF and cellulose pulp
prices on their own do not demonstrate that the downward trend in VSF prices led to the

283 CCFGroup, China Viscose Industry Chain Report 2012, (February 2013), (Exhibit CAN-4) (BCI),
p. 35, table 20.
284 China is "the predominant global producer and user of VSF". (Canada's response to Panel
question No. 56, paras. 61-66).
285 Source: CCFGroup, China Viscose Industry Chain Report 2012, (February 2013),
(Exhibit CAN-4) (BCI), p. 35, table 20.
286 "The comments and opinions submitted by the downstream companies showed that wood pulp,
cotton pulp and bamboo pulp were substitutable to each other when used as raw materials for the production
of viscose fibers and the quality of viscose fibers made from any of the three types of pulp was the same."
(Final Determination, (Exhibit CHN-1), p. 62).
287 Final Determination, (Exhibit CHN-1), p. 69.
288 Canada's second written submission, para. 145.
289 Canada's first written submission, para. 154; second written submission, paras. 147 and 148.
290 Canada's first written submission; para. 152; second written submission, paras. 143 and 144;
response to Panel question No. 28, paras. 55-63.

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downward trend in cellulose pulp prices. 292 For China, MOFCOM reasonably considered that the
relationship between VSF output and domestic demand for cellulose pulp is relevant to the analysis
of the impact of VSF prices on cellulose pulp prices, and in this context, considering that domestic
demand for cellulose pulp was strong as VSF output increased, and cellulose pulp supply c ould not
meet the demand, the price of cellulose pulp should have remained stable or increased, but
instead the price had declined.293
7.169. MOFCOM observed that VSF prices declined while VSF output increased rapidly, leading to
increased demand for cellulose pulp . It noted that while total domestic production capacity for
cellulose pulp was equal to the total demand, total output could not meet th at demand.294
MOFCOM relied on the following data:
Table 6: Chinese VSF output, demand for cellulose pulp, and total output of cellulose
pulp
POI 2010 2011 2012

VSF output (tonnes)

1,955,500 2,125,000 2,645,000

Total domestic demand for cellulose pulp
(tonnes)
2,033,700 2,210,000 2,750,800

Total output of all domestic producers of
cellulose pulp (tonnes)
1,329,800 1,397,600 1,641,500
 Source: Final Determination, (Exhibit CHN-1), pp. 68 and 69.
7.170. MOFCOM concluded that since there was strong demand for cellulose pulp in China and
domestic supply could not meet the demand, the price for cellulose pulp should have been stable,
but instead it had declined.295 Therefore, the decline in VSF prices was not the direct cause of the
decline in cellulose pulp prices. However, MOFCOM's analysis is based on the assumption that
because domestic supply could not satisfy demand for cellulose pulp, prices should have remained
stable, which ignores the presence of a significant supply of imported cellulose pulp in the Chinese
market, which might itself be expected to affect domestic prices. Moreover, MOFCO M failed to
explain how its conclusion diminishes the relevance of declines in VSF prices at the same time as
cellulose pulp prices declined as a possible factor contributing to the decline in Chinese cellulose
pulp prices.
7.171. Overall, we are of the view that MOFCOM's explanations fail to engage satisfactorily the
arguments of the interested parties concerning the allegedly injurious impact of international
cotton prices and VSF prices . Given the fact that MOFCOM's determination of causation was to a
large ext ent driven by the declining price of cellulose pulp , MOFCOM's explanations are thus
insufficient to allow us to find that MOFCOM's conclusions in this regard were those of a reasonable
and objective investigating authority in light of the evidence and arguments before it.
7.172. We therefore conclude that MOFCOM failed to properly examine the effects of cotton and
VSF prices and failed to ensure that any injuries caused by cotton and VSF prices w ere not
attributed to the dumped imports and therefore acted in consistently with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement.
7.7.4.2 Domestic industry overexpansion, overproduction, and inventory build-up
7.173. MOFCOM considered the impact of the expansion of domestic production capacity as an
"other factor" causing injury to the domestic industry. It concluded that the possible impact of the
increased production capacity on the domestic cellulose pulp industry "cannot be excluded", but
that the effect of this factor was not sufficient to break the causal link between the dumped

292 China's first written submission, para. 153 (referring to Canada's first written submission,
293 China's first written submission, paras. 155 and 156; second written submission, paras. 121-124.
294 Final Determination, (Exhibit CHN-1), pp. 68 and 69.
295 Final Determination, (Exhibit CHN-1), pp. 68 and 69.

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imports and material injury to the domestic industry. 296 In making this conclusion, MOFCOM
observed that total production capacity of all domestic cellulose pulp producers increased during
the POI, but "there was no serious excessive production capacity", sin ce the increased production
capacity was almost equal to the demand for cellulose pulp in China. 297 MOFCOM also examined
the domestic industry's unit production costs and inventories, finding that unit production costs of
the like domestic product decreased due mainly to declines in raw material costs, and that while
the domestic industry's inventories increased, this was not directly caused by the increased output
and expanded production capacity.298
7.174. Canada submits that MOFCOM acted inconsistently with Articles 3.1 and 3.5 by relying on
data pertaining to all domestic cellulose pulp producers, which included data for domestic
producers that were not part of the domestic industry as defined by MOFCOM, in addressing the
issue of dome stic production capacity. 299 Canada argues that this is not permissible under
Article 3.5 and distorted the true magnitude of the capacity expansion of the domestic industry. 300
Canada submits that regardless of the data used, production capacity increased far in excess of
growth in demand. Canada submits that the examination of manufacturing costs reflects expenses
incurred due to increased capacity, and that other costs are irrelevant for this analysis. Finally ,
Canada argues that the increased inventories and low capacity utilization rate shows that domestic
industry's overexpansion resulted in surplus capacity.301
7.175. China notes that MOFCOM acknowledged the significa nt growth of the domestic industry's
production capacity and examined the effect of this growth by assessing the domestic indu stry's
costs. MOFCOM found that the unit production costs declined over the POI 302, showing that
expenditures for increased production capacity did not injure the financial performance of the
domestic industry.303 China acknowledges that MOFCOM looked at both the production capacity of
the domestic industry as defined by MOFCOM, and that of all Chinese producers of cellulose
pulp.304 China submits that it was reasonable for MOFCOM to examine the relationship between the
production capacity of all Chinese producer s of cellulose pulp and total domestic demand: since
prices for cellulose pulp would be driven by total output and total demand , an overall expansion of
production capacity could impact the domestic industry, if it caused the prices of the domestic
industry to decline.305
7.176. We begin by considering whether it was permissible for MOFCOM to rely on data pertaining
to all Chinese cellulose p ulp producers in the context of examining production capacity as an
alleged other factor causing injury to the domestic indust ry. We recall that Article 3.5 of the
Anti-Dumping Agreement requires the investigating authorities to examine any known factors
other than the dumped imports which are injuring the domestic industry at the same time as
dumped imports, and not attribute th e injuries caused by these other factors to the dumped
imports. It is clear to us that the domestic industry referred to in this aspect of Article 3.5 is the
same domestic industry as to which material injury must be demonstrated to be caused by the
dumped imports, that is, the domestic industry producing the like product, as defined by the
investigating authority in the investigatio n at issue. It is also clear to us that both the
demonstration of causation of material injury to the domestic industry and the ensuring that injury
caused by other causal factors is not attributed to dumped imports should be based on information

296 Final Determination, (Exhibit CHN-1), p. 82.
297 Final Determination, (Exhibit CHN-1), p. 81.
298 Final Determination, (Exhibit CHN-1), p. 82.
300 Canada's second written submission, para. 164. Canada notes that, according to MOFCOM figures,
total domestic demand increased by 35.26% during the POI, while the production capacity of the domestic
industry increased by 122.49% and production capacity of all Chinese producers increased by 72.41%. Canada
emphasizes that in 2011 the production capacity of the domestic industry increased by 62.98%, whereas the
production capacity of other domestic producers declined by 6.71%. Canada also notes that the domestic
industry's production capacity increased by 62.98% during 2011-2012, when the prices of the domestic
industry were falling and being allegedly depressed and causing injury to the domestic industry. (Canada's
first written submission, paras. 163-165; second written submission, paras. 165 and 166 (referring to Final
Determination, (Exhibit CAN-3), p. 74)).
301 Canada's second written submission, para. 169.
302 There was a small increase in manufacturing expenses in 2012, but this represented only 4% of total
per unit sales costs. (China's response to Panel question No. 31, para. 96).
303 China's first written submission, para. 164; second written submission, paras. 137-139.
304 China's second written submission, paras. 135 and 136.
305 China's second written submission, paras. 141-143; response to Panel question No. 59.

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related to that same domestic industry, as defined. 306 However, this basic principle does not
preclude investigating authorities from con sidering and, in appropriate circumstances, relying on
information pertaining to a larger group of domestic producers than the domestic industry as
defined, so long as that reliance is properly justified.307
7.177. Considering the above, we have examined the partic ular arguments raised by the
interested parties concerning the expanded production capacity of the domestic industry as an
"other factor" of injury to see whether there was a justification for MOFCOM to consider data for
the larger group of domestic produc ers. It is apparent that interested parties raised two sets of
arguments. First, that the expansion of production capacity caused the cellulose pulp market to
slow down, and second, that overcapacity affected domestic producers' costs. It is not clear,
however, that these arguments are necessarily limited to only the situation of the domestic
industry as defined by MOFCOM. 308 In our view, it was not unreasonable for MOFCOM to consider
the data pertaining to changes in the production capacity of all domestic c ellulose pulp producers
in addressing the first argument of the interested parties' regarding the slowdown in the Chinese
cellulose pulp market. Indeed, to focus only on the capacity of the domestic industry as defined in
considering the impact of capacity expansion of the Chinese market for cellulose pulp would be to
ignore capacity that would necessarily be affecting that market overall. Thus, we do not consider
that MOFCOM erred in considering overall domestic capacity in this context.
7.178. However, turning to the conclusion MOFCOM drew on the basis of that information, it is not
clear to us how the fact that, despite having increased, production capacity of all domestic
producers was generally in balance with domestic demand, explains how any injury caused by that
increase was not attributed to dumped imports. In this regard, we recall that MOFCOM recognized
the increased capacity may have had "a certain impact" on the domestic industry, but discounted
this impact because " during the Period of investigation, t he total output of the domestic cellulose
pulp industry was always far less than the total domestic demand" and the situation tha t total
supply of the domestic cellulose pulp industry exceeded the total demand did not occur. 309 Again,

306 In EC –Bed Linen, the panel observed that in the context of Article 3.4:
[I]nformation concerning companies that are not within the domestic industry is
irrelevant to the evaluation of the "relevant economic factors and indices having a
bearing on the state of the indust ry" required under Article 3.4. This is true even
though those companies may presently produce, or may have in the past
produced, the like product, bed linen.
(Panel Report, EC – Bed Linen, para. 6.182)
Similarly, in EC – Fasteners (China), in the context of a non-attribution analysis under Article 3.5, the
panel noted the "fundamental principle" expressed in the above-quoted statement in EC – Bed Linen and
concluded:
We see no reason why the same fundamental principle should not be adhered to in
the contex t of analysis of causation, including the examination of other factors
which may be causing injury to the domestic industry at the same time as imports.
(Panel Report, EC – Fasteners (China), para. 7.437)
307 Like the panel in EC-Fasteners (China):
We do not preclude the possibility that information for all producers might, in some
circumstances, be an appropriate proxy for information specific to the domestic
industry at issue, for instance where information for the industry is not available or
not provided. However, in such a situation, we woul d consider it imperative that
the investigating authority explain why, in the particular case, it considers reliance
on information to be appropriate, and how any weaknesses in the information have
been taken into account.
(Panel Report, EC – Fasteners (China), fn 912)
308 For instance, Fortress argued before MOFCOM that "over-expansion of production capacity of
domestic producers further increased their marginal cost and resulted in the market slump". (Fortress Specialty
Cellulose Inc., Response to MOFCOM's Preliminary Determination on the Anti-Dumping Investigation against
Imported Dissolving Pulp, (Exhibit CAN-17), p. 11). Cosmo submitted that "the increase in actual DC Pulp
production capacity and potential production capacity added new supply or potential new supply to the global
DC Pulp market which placed downward pressure on global prices for DC Pulp." (American Forest and Paper
Association, Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments on Industry Injury
Investigation, 24 September 2013, (Exhibit CAN-10), p. 12). Weyerhaeuser argued that by the second quarter
of 2011 "capacity increases resulted in an almost immediate softening of the market". (Weyerhaeuser,
MOFCOM Presentation, 4 June 2013, (Exhibit CAN-21), p. 6). Weyerhaeuser added that "as additional capacity
came on, the market became heavily oversupplied and pricing continued to decrease down to the point where
higher cost producers were losing money." (Weyerhaeuser, MOFCOM Presentation, 4 June 2013,
(Exhibit CAN-21), p. 7).
309 Final Determination, (Exhibit CHN-1), p. 81.

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MOFCOM appears to have ignored the presence of substantial volumes of imports on the Chinese
market, which supply could be expected to affect prices, and thus exacerbate the effect of
increased capacity, resulting in a general situation of over -supply, with a consequent potentia l
negative effect on prices.
7.179. Second, interested parties argued that overcapacity affected the domestic
producers' costs. With regard to this argument, MOFCOM relied on information concerning the unit
production costs of the domestic industry as defined. MOFCOM found that that the unit production
costs for the domestic like product declined over the POI , mainly as a result of declines in raw
material costs:
[D]uring the Period of investigation, the unit production cost of the Like Product of the
Domestic In dustry increased first and then dropped, showing a decline in general.
Through the analysis of the questionnaire responses for Domestic Producers , the
Investigating authority found that compared to 2010, the unit production cost of the
Like Product of the Domestic Industry reduced by 2,462.72 RMB/ton in 2012; among
it, the direct material cost reduced by 2,597.03 RMB/ton, the direct labor cost reduced
by 37.12 RMB/ton, the fuel and power cost reduced by 87.99 RMB/ton, and the
manufacturing cost increased by 259.42 RMB/ton. It showed that the reduction of the
raw material cost was the main cause of the decline of the unit production cost of the
Like Product of the Domestic Industry.310
7.180. Canada argues that evidence before MOFCOM shows that manufacturing costs (w hich
include capital expenses) increased, and asserts that other costs are irrelevant to the question of
whether the increased production capacity of the domestic industry had an injurious impact on
manufacturing costs. 311 China responds that MOFCOM consider ed total per unit costs of the
domestic industry and found that the total costs declined. China submits that MOFCOM also
considered the cost structure of the domestic industry, including manufacturing costs , finding that
the increase in manufacturing costs in 2012 represented only 4% of total per unit sales costs.
According to China, it reasonably concluded that an increase in costs accounting for such a small
proportion of the total costs could not have broken the causal link between the dumped imports
and material injury.312
7.181. China submitted data from the record of the investigation regarding the components of
unit production costs, including manufacturing costs:
Table 7: Components of production cost of cellulose pulp in China
POI 2010 2011 2012
A. Direct Materials (RMB/ton) [***] [***] [***]

B. Direct Labour (RMB/ton) [***] [***] [***]

C. Fuel and Power (RMB/ton) [***] [***] [***]

D. Manufacturing Costs (RMB/ton) [***] [***] [***]

A+B+C+D =Total Production Cost
(RMB/ton)

Source: China's response to Panel question No. 60, para. 38.
7.182. In our view, it was not unreasonable of MOFCOM to have focused on the decline in total
production costs, rather than increase in manufacturing costs in 2012, which represented only a
small proportion of total production costs, and did not affect the fact that total production costs
declined by almost one third over the POI. Canada may be correct that manufacturing costs are
most directly relevant to the question of the effect of increased production capacity on the
domestic industry . On the facts of this case, Canada's argument does not persuade us that

310 Final Determination, (Exhibit CHN-1), pp. 81 and 82. (italics original, underlining added)
311 Canada's second written submission, para. 168.
312 China's second written submission, paras. 138 and 139; response to Panel question Nos. 31,
paras. 95 and 96 and 60, para. 39.

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MOFCOM erred in focusing on the overall decline in production costs, and we therefore consider
that MOFCOM's conclusions in this regard are such as could have been reached by a reasonable
and objective investigating authority in light of the evidence and arguments before it.
7.183. MOFCOM also examined the increase in the domestic industry's inventories based on the
data provided by the domestic producers:
[T]he ending inventory of the Like Product of the Domestic Industry in 2012 was
118,000 tons higher than 2011. Although the production capacity of the Like Product
of the Domestic Industry in 2012 increased by 687,800 tons compared to 2011, the
output of the Like Product of the Domestic Industry in 2012 increased by merely
344,600 tons compared to 2011, while the domestic sales volume of the Like Product
of the Domestic Industry in 2012 increased by 321,500 tons compared to 2011. It
showed that, encouraged by the increase of 540,800 tons of the domestic demand in
2012 compared to 2011, the Domestic Industry increased the output, but the
increased part of the output due to the expansion of the production capacity was not
the d irect cause of the increase of the ending inventory of the Like Product of the
Domestic Industry.313
MOFCOM set out the following information regarding domestic demand, production capacity,
capacity utilization, output, sales, and inventories:
Table 8: Domestic demand, capacity, output, sales volume, operating rate, and ending
inventories
POI 2010 2011 2012
Total domestic demand for cellulose pulp (tonnes) 2,033,700 2,210,000
+8.67%
2,750,800
+24.47%
Production capacity (tonnes) 800,000 1,092,100
+36.51%
1,779,900
+62.98%
Output (tonnes) 528,100 587,200
+11.19%
931,800
+58.69%
Domestic sales volume (tonnes) 400,200 399,800
-0.1%
721,300
+80.42%
Operating rate 66.01% 53.77%
-12.24
52.35%
-1.42
Ending Inventories (tonnes) 66,400 102,300
+54.07%
220,300
+115.35%
 Source: Final Determination, (Exhibit CHN-1), pp. 72 and 73.
7.184. In the overall evaluation of the state of the domestic industry, MOFCOM noted the
significant increase in inventories, by 231.78% over the POI, as one of the "ne gative factors"
showing material injury to the domestic industry. In the causation analysis, MOFCOM also stated
that "the ending inventory increased continuously" .314 In this respect, Canada submits that
MOFCOM's data shows that the domestic industry's output was exceeding the volume of sales, and
that this caused an increase in inventories.315 Indeed, the data shows that throughout the POI, the
domestic industry's output increased roughly in line with increases in capacity, and exceeded its
sales, resulting in continued and significant increases in inventor ies. Thus, the data indicate s that
the domestic industry increased production capacity in excess of the increase in total domestic
demand, which suggests that to the extent injury was manifested in increased inventories,
capacity expansion played a role in that injury. MOFCOM failed to address this possibility, and
indeed dismissed it altogether.
7.185. We therefore conclude that MOFCOM failed to adequately examine the domestic industry's
overcapacity, overexpansion, and inventory build -up as other factors causing injury and failed to
ensure that the injuries caused by these other factors were not attributed to the dumped imports,
and therefore acted inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.

313 Final Determination, (Exhibit CHN-1), p. 82.
314 Final Determination, (Exhibit CHN-1), pp. 76-78.
315 Canada's second written submission, para. 169.

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7.7.4.3 Impact of non-dumped imports
7.186. With respect to the allegedly injurious impact of non-dumped imports316, MOFCOM looked
at prices of dumped and non -dumped imports, and found that there were no large differences
between imported dumped and non -dumped produc ts in terms of price and quantity, but
acknowledged that the dumped import s were generally better quality. MOFCOM noted that
non-dumped imports constituted a significant proportion of total imports, and specifically discussed
non-dumped imports from the largest sources, i.e. South Africa, Indonesia, and Sweden. MOFCOM
concluded that non -dumped imports did not break the causal link between the dumped imports
and the material injury to the Chinese domestic industry.317
7.187. Canada argues that MOFCOM's analysis is ba sed on a consideration of non -dumped
imports in relation to the dumped imports. 318 Canada submits that Article 3.5 requires an
investigating authority to examine the effect of the non-dumped imports on the domestic industry,
not in relation to dumped imports.319 Canada contends that MOFCOM's analysis was subjective and
biased, and asserts that MOFCOM should have considered data on sales volumes, market share
and prices of non-dumped imports and compared this data with those for the dumped imports and
the domest ic industry. In addition, Canada submits that MOFCOM's examination of the
non-dumped imports is flawed because MOFCOM failed to present any quantity or price data with
regard to non -dumped imports, failed to support its statement regarding a quality differ ence
between dumped and non -dumped imports with "positive evidence", and failed to present any
explicit data to support its assertions with regard to imports from South Africa, Sweden, and
Indonesia.320
7.188. China responds that MOFCOM conducted an objective exam ination of positive evidence
with regard to the impact of non -dumped imports on the state of the domestic industry. In
particular, MOFCOM observed that non-dumped imports constituted a significant proportion of total
imports.321 It further examined the relat ionship between the p rices of dumped imports and
non-dumped imports and concluded that th ere were no significant differences, albeit the dumped
imports were generally of better quality. 322 MOFCOM specifically addressed the relative prices and
volume of non -dumped imports from South Africa, Sweden , and Indonesia, major producers of
cellulose pulp.323
7.189. We recall that Article 3.5 does not provide any guidance regarding how a non -attribution
analysis is to be conducted. Therefore, we see no basis in the text to supp ort Canada's view that
the methodology used by MOFCOM was impermissible. Nor do we see any basis in the text that
would require an investigating authority to examine the effect of non -dumped imports on the
domestic industry, and not in relation to dumped i mports. As discussed above, in the absence of
any particular methodological requirements, t he question before us is whether MOFCOM
sufficiently explained its conclusion that the effect of non-dumped imports did not break the causal
link between the dumped imports and the material injury to the domestic industry, and thus
whether this was a conclusion that could be reached by a reasonable and objective investigating
authority on the basis of the evidence before it, and in light of the arguments made by the
interested parties.
7.190. MOFCOM found that the share of the non -dumped imports in total imports was 50.68% in
2010, 57.23% in 2011 and 56.04% in 2012. 324 MOFCOM observed that there were no large
differences in the quantity and prices of non -dumped imports and dump ed imports. While the
actual data regarding the volume and prices of non -dumped and dumped imports are not set out
in the Final Determination, China provided the following information on the record in this regard:

316 Imports of cellulose pulp not found to be dumped pursuant to the investigation.
317 Final Determination, (Exhibit CHN-1), pp. 84 and 85.
318 Canada's second written submission, para. 178.
319 Canada's second written submission, para. 178.
320 Canada's first written submission, paras. 172-174; second written submission, para. 179.
321 China's first written submission, para. 169; second written submission, paras. 153 and 154.
322 China's first written submission, para. 169; second written submission, paras. 153-156.
323 China's first written submission, para. 171.
324 Final Determination, (Exhibit CHN-1), p. 84.

BCI deleted, as indicated [***]

Table 9: Volume and prices of dumped and non-dumped imports
POI 2010 2011 2012
Dumped imports (tonnes) 421,009.93 419,050.31 605,470.23
Non-dumped imports (tonnes) 432,584.92 560,720.54 771,971.03
Prices of dumped imports (US dollars) 1384.05 1946.96 1165.33
Prices of non-dumped imports (US dollars) 1378.17 1721.21 1051.75
 Source: China's response to Panel question No. 35, paras. 103 and 105.
We observe that in 2010 the quantity of dumped and non -dumped imports was almost identical .
During the rest of the POI , the volume of non -dumped imports was greater than that of dumped
imports, while t he prices of the non -dumped imports were lower. MOFCOM also stated that the
dumped imports were generally of better quality than the non -dumped imports, which , China
contends, suggests that the dumped imports were in a stronger competitive position relative to the
domestic like product than the non -dumped imports and the differences in prices would be
mitigated by quality differences.325 While this explanation is not unreasonable, it doe s not appear
in MOFCOM's Final Determination, which does not discuss this alleged relationship between
competition, price, and quality. Thus, it is an ex post explanation which we cannot take it into
account in our evaluation of MOFCOM's determination.
7.191. MOFCOM specifically discussed the quantity and prices of non -dumped imports only from
South Africa, Indonesia, and Sweden. 326 China explains that these were the three largest sources
of non-dumped imports.327 China provided data from the record of the investigation on the volume
of non -dumped imports from all sources in support of MOFCOM's conclusions on the impact of
non-dumped imports. 328 In our view, given that the non -dumped imports MOFCOM did not
specifically discuss accounted for between 18% and 25% of total i mports over the POI, a
reasonable and objective investigating authority would have to take these imports into account in
its non-attribution analysis, which MOFCOM appears to have done in considering the total volume
and prices of non-dumped imports. While it might have been preferable had MOFCOM set out and
discussed the data on the volumes and prices of non -dumped imports in its Final Determination in
greater detail, the failure to do so is not in itself erroneous, as the data were in the record.
Table 10: Volume of Dumped and Non-Dumped imports and share of total imports
accounted for by countries other than South Africa, Sweden, and Indonesia
POI 2010 2011 2012
Volume of dumped imports 421,009.93 419,050.31 605,470.23
Volume of non-dumped imports329 432,584.92 560,720.54 771,971.03
Volume of non -dumped imports from South Africa,
Sweden, and Indonesia*
273,363.38 321,713.66 419,322.73
Volume of non-dumped imports from countries other
than South Africa, Sweden, and Indonesia
159,221.54 239,006.88 352,648.30
Total imports* 853,594.85 979,770.85 1,377,441.26

Share of total imports accounted of by countries
other than South Africa, Sweden, and Indonesia*
18.65% 24.40% 25.60%
 Source: China's response to Panel question No. 37, table A.
 * calculated by the Secretariat

325 China's response to Panel question No. 65, para. 56.
326 Final Determination, (Exhibit CHN-1), p. 85.
327 China's response to Panel question No. 67, para. 60.
328 China's response to Panel question No. 37, table A.
329 China's response to Panel question No. 35, para. 103.

BCI deleted, as indicated [***]

7.192. The data before MOFCOM suggests that the effect of the non -dumped imports on prices
and consequently on the domestic industry was similar to that of the dumped imports – the
volumes and prices were similar, and mo ved similarly over the POI. MOFCOM found that the
dumped imports were causing injury to the domestic industry . It would seem that non -dumped
imports might therefore be having a similarly injurious effect on the domestic industry. Indeed,
MOFCOM did not fin d that non-dumped imports did not have such an effect, but rather concluded
that they did not break the causal link between the dumped imports and the injury to the domestic
industry. However, there is little explanation of how MOFCOM reached this conclusion. Simply to
state that MOFCOM did indeed separate and distinguish the injury or that non-dumped imports did
not break the causal link , without further explanation, does not suffice to persuade us that the
investigating authority did in fact undertake the necessary examination and reach an objective
conclusion warranted by the evidence and arguments before it that injuries caused by non-dumped
imports were not attributed to the dumped imports. Taken together, the failure to specifically
discuss non-dumped imports accounting for between 18% and 25% of total imports over the POI,
and the failure to explain how MOFCOM reached the conclusion that non -dumped imports, whose
volume was greater than that of dumped imports throughout the POI and whose prices were below
those of the dumped imports in 2011 and 2012 when MOFCOM found that dumped imports were
depressing domestic prices and causing injury, did not break the causal link between dumped
imports and material injury, leads us to the view that MOFCOM's conclusi ons were not such as
could have been reached by a reasonable and objective investigating authority in light of the
evidence and arguments before it.
Table 11: Market shares of domestic industry, dumped and non-dumped imports
POI H1/2010 H2/2010 H1/2011 H2/2011 H1/2012 H2/2012
Market share of like product of
the domestic industry
18% 21.36% 17.54% 18.64% 26.71% 25.73%
Market share of dumped
imports
20.53% 20.88% 18.02% 19.91% 21.45% 22.57%
Market share of other Chinese
producers
38.35% 37.58% 23.71%
Market share of non-dumped
imports*
21.27% 25.36% 28.06%
Total 100% 100% 100% 100% 100% 100%
 Source: China's response to Panel question No. 37, table B.
 * calculated by the Secretariat
Table 12: Prices of dumped and non-dumped imports
 2010 2011 2012
Prices of dumped imports
(USD Annual)
1384.05 1946.96 1165.33
Prices of imports from
South Africa (USD Annual)
1049 1397 948
Prices of imports from
Indonesia (USD Annual)
1487 1717 1039
Prices of imports from Sweden
(USD Annual)
1404 1883 1104
Prices of non-dumped imports
from other countries
(USD Annual)
1436.75 1810.02 1084.35
 Source: China's response to Panel question No. 37, table C.
7.193. We therefore conclude that MOFCOM failed to adequately examine th e non -dumped
imports as a factor other than dumped imports causing injury and failed to ensure that the injuries
caused by these imports were not attributed to the dumped imports, and therefore acted
inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.

BCI deleted, as indicated [***]

7.7.4.4 Shortage of cotton linter
7.194. During the investigation, interested parties argued that the domestic industry had a low
rate of capacity utilization due to an insufficient supply of cotton linter, the main raw material for
production of cotton -based cellulose pulp. 330 MOFCOM addressed these arguments in its
examination of the impact of the dumped imports on the domestic industry and concluded that the
low capacity utilization rate, which MOFCOM considered an aspect of injury, was not caused by an
insufficient supply of cotton linter.331
7.195. Canada argues that MOFCOM's concl usion that a shortage of cotton linter was not a cause
of the domestic industry's low capacity utilization rate was erroneous because MOFCOM failed to
objectively examine positive evidence indicating that there were producers of other products using
cotton linter as a input, and that total cotton linter demand surpassed total cotton linter supply. 332
China asserts that MOFCOM conducted an objective examination of positive evidence regarding the
supply of cotton linter and found that the supply was sufficient and that the changes in supply of
cotton linter were not the cause of the domestic industry's low capacity utilization rate and thus
there was no need to separate and distinguish the effect of this factor from the injurious effect of
dumped imports.333
7.196. MOFCOM noted that the domestic industry produced three types of cellulose pulp: wood -,
bamboo-, and cotton -based cellulose pulp. Cotton linter is a raw material for the production of
cotton-based cellulose pulp only. 334 MOFCOM found that in 2012, the volume of wood - and
bamboo-based cellulose pulp accounted for 70% to total sales of cellulose pulp. MOFCOM
acknowledged that the output and price of cotton linter had a direct effect on producti on of
cotton-based cellulose pulp, and that cotton linter was mainly use d by producers of cotton -based
cellulose pulp. MOFCOM examined the total production capacity, output, and capacity utilization of
cotton cellulose pulp producers and the domestic suppl y of cotton linter over the POI. 335 Having
considered the supply of cotton linter available on the market MOFCOM found that the capacity
utilization rate of the producers of cotton-based cellulose pulp could have been higher had the full
production of cotton linter available been used by those pulp producers, however, it stayed at a

330 Canada's first written submission, para. 178 (referring to Final Determination, (Exhibit CAN-3),
pp. 75 and 76; Cosmo Specialty Fibers, Inc., Anti-Dumping Investigation on Imports of Cellulose Pulp,
Argument of no Injury, 4 July 2013, (Exhibit CAN-11), pp. 37 and 38; Rayonier Performance Fibers, LLC.,
Anti-Dumping Investigation on Imports of Cellulose Pulp, Comments Regarding Material Injury and Causality,
29 July 2013, (Exhibit CAN-12), p. 18; American Forest and Paper Association, Anti-Dumping Investigation on
Imports of Cellulose Pulp, Comments on Industry Injury Investigation, 24 September 2013, (Exhibit CAN-10),
p. 11; Weyerhaeuser, MOFCOM Presentation, 4 June 2013, (Exhibit CAN-21), p. 8; Tangshan Sanyou Group
Company Limited, Impact of "Anti-Dumping [Measures]" Against Imported Dissolving Pulp on the Viscose
Industry, (Exhibit CAN-18), p. 3; and Xingda Chemical Fiber Co., Ltd. of the Tangshan Sanyou Group, Report
on the Impact of Anti-Dumping Measures Applied to Imported Dissolving Pulp, (5 December 2013),
(Exhibit CAN-15), pp. 3 and 4).
331 Final Determination, (Exhibit CHN-1), pp. 74-76.
332 Canada's first written submission, paras. 181, 182, and 185 (referring to CCFGroup, China Viscose
Industry Chain Report 2011, (March 2012), (Exhibit CAN-5) (BCI), p. 6; Multi-Client Study: Outlook for Global
Dissolving Pulp Market 2011, (Exhibit CAN-6) (BCI), pp. 4 and 8; and CCFGroup, China Viscose Industry Chain
Report 2012, (February 2013), (Exhibit CAN-4) (BCI), p. 6); second written submission, paras. 189 and 190.
333 China's first written submission, paras. 175-180; second written submission, paras. 160-167.
334 In this regard, we note that MOFCOM relied in its analysis on a unit consumption ratio of 1 tonne of
cotton-based cellulose pulp from approximately 1.3 tonnes of cotton linter. Canada disagrees with this ratio,
and argues that the ratio should have been 1 tonne of cotton-based cellulose pulp from approximately
[***] tonnes of cotton linter. (Canada's first written submission, para. 186). We consider that the difference
between the two ratios is so small that the use of Canada's proposed ratio would not have an impact on
MOFCOM's analysis, and Canada has not demonstrated otherwise.
335 MOFCOM found that total production capacity of the domestic cotton cellulose pulp industry was
1.4 million tonnes in 2010, 1.4 million tonnes in 2011, and 1.8 million tonnes in 2012; total output of the
domestic cotton cellulose pulp industry was 720,000 tonnes in 2010, 810,000 tonnes in 2011, and
830,000 tonnes in 2012; capacity utilization rate of cotton cellulose pulp industry was 51.43% in 2010,
57.86% in 2011, and 46.11% in 2012. The total domestic supply of cotton linter was 1.44 million tonnes
in 2010, 1.35 million tonnes in 2011, and 1.64 million tonnes in 2012. (Final Determination, (Exhibit CHN-1),
p. 75).

BCI deleted, as indicated [***]

lower rate.336 MOFCOM concluded that the low capacity utilization rate of the domestic industry
was therefore not caused by an insufficient supply of cotton linter.337
7.197. Canada argues t hat MOFCOM failed to consider a report that had been submitted during
the investigation indicating that there were producers of products other than cotton -based
cellulose pulp using cotton linter as an input, and that overall, cotton linter demand was high er
than available supply.338 China asserts that MOFCOM considered this evidence and found that the
supply of cotton linter was sufficient. China notes that the report referred to by Canada supports
this conclusion, stating that the shortage of cotton linters was covered by linters made of waste
cotton and that "the supply in 2012 was relatively sufficient".339
7.198. According to the data referred by Canada, the proportion of total demand for cotton linter
from other producers, namely producers of specialty pulp and refined cotton, was approximately
[***] in 2010, [***] in 2011, and [***] in 2012.340 In our view, although it might have been
preferable had MOFCOM specifically recognized that there was demand for cotton linter from other
producers in its discussion, this omission does not undermine MOFCOM's overall conclusion that a
shortage of cotton linter was not a cause of the domestic cellulose pulp industry's low capacity
utilization rate. We recall in this regard that that the domestic industry produced cellulose pu lp
from three different raw materials, and cotton linters are used only in the production of
cotton-based cellulose pulp. China provided data regarding the shares of cotton -, wood -, and
bamboo-based cellulose pulp in total sales of cellulose pulp during the POI:
Table 13: Share of cotton- based and wood- and bamboo-based cellulose pulp in total
sales of cellulose pulp
Year Share of Cotton Pulp Sales Share of Wood and Bamboo Pulp Sales

2010 [***]% [***]%

2011 [***]% [***]%

2012 [***]% [***]%
 Source: China's response to Panel question No. 69, para. 70.341
7.199. In our view, this data could suggest that the shortage of cotton linter led to increased sales
of cellulose pulp made from wood and bamboo. We recall that the sales of the domestic like
product increased in general during the POI by 80% and specifically in 2012 342, when the sales of
wood- and bamboo-based cellulose pulp, which had accounted for less than 30% of total sales at
the beginning of the POI, accounted for 70% of total sales of the domes tic industry. Therefore, it
would appear that the domestic industry reacted to any shortage of cotton linter by increasing
sales of the other two types of cellulose pulp.
7.200. Canada also argues that MOFCOM failed to examine the proportion of sales of differen t
types of cellulose pulp over the entire POI, but rather focused on the proportion of sales of wood
and bamboo cellulose pulp in 2012 .343 The 70% proportion of sales of wood - and bamboo-based
cellulose pulp was the highest level during the POI, and occurred during the period in which
MOFCOM found material injury caused by dumped imports. Furthermore, MOFCOM found the
prices of the domestic like product were depressed by the dumped imports in the second part of
the POI, starting from the second part of 2011 until the end of 2012. Therefore, in our view, it was

336 Final Determination, (Exhibit CHN-1), p. 75.
337 Final Determination, (Exhibit CHN-1), p. 76.
338 Canada's first written submission paras. 181 and 185, and table 4 (referring to CCFGroup, China
Viscose Industry Chain Report 2012, (February 2013), (Exhibit CAN-4) (BCI), p. 6); second written submission,
para. 193.
339 China's first written submission, para. 176 (referring to CCFGroup, China Viscose Industry Chain
Report 2012, (February 2013), (Exhibit CAN-4) (BCI), p. 5); second written submission, para. 161.
340 Canada's first written submission, table 4 (referring to CCFGroup, China Viscose Industry Chain
Report 2012, (February 2013), (Exhibit CAN-4) (BCI), p. 6).
341 China clarified that this data was derived by MOFCOM from the responses to questionnaires provided
by the domestic industry. (China's response to Panel question No. 69, para. 70).
342 Sales of the domestic like product were 400,200 tonnes in 2010; 399,800 tonnes in 2011;
721,300 tonnes in 2012. (Final Determination, (Exhibit CHN-1), p. 72).
343 Canada's second written submission, paras. 191 and 192.

BCI deleted, as indicated [***]

not unreasonable for MOFCOM to focus on the fact that in 2012 the main proportion of domestic
sales included cellulose pulp made of wood and bamboo.
7.201. In addition, Canada submits that the low capacity uti lization rate of cotton pulp producers
was driving down the overall capacity util ization rate of the domestic industry. 344 Although the
capacity utilization rate of cotton -based cellulose pulp producers was lower than that of the
domestic industry during certain parts of the POI , it did not differ considerably .345 Even granting
that the lower rates for the cotton-based cellulose pulp producers accounted for part of the decline
in the domestic industry's capacity utilization rate, we note that cotton -based cellu lose pulp
producers' capacity utilization rate was higher than the domestic industry's rate in 2011, when
cotton-based cellulose pulp producers accounted for more than half of production of cellulose pulp,
and declined more in 2012 than the capacity utiliz ation rate of the domestic industry, when their
share in total domestic production also declined significantly. This does not suggest to us that the
decline in cotton -based cellulose pulp producers' capacity utilization drove down the overall
capacity utilization rate of the domestic industry.
7.202. We therefore conclude that MOFCOM did not fail to adequately examine the injury
allegedly caused by the shortage of cotton linter and did not fail to ensure that such injury was not
attributed to the dumped imports, and therefore did not act inconsistently with Articles 3.1 and 3.5
of the Anti-Dumping Agreement.
7.8 Consequential claims
7.203. Canada claims that the MOFCOM acted inconsistently with Article 1 of the
Anti-Dumping Agreement and Article VI of the GATT 1994, as a con sequence of the alleged
violations of the Anti-Dumping Agreement.346
7.204. Canada's claims under Article 1 of the Anti -Dumping Agreement and Article VI of the
GATT 1994 are purely consequential, in the sense that they depend on the outcome of other
claims brought by Canada under other provisions of the Anti -Dumping Agreement. As a
consequence of the inconsistencies with the Anti -Dumping Agreement above, we find that China
acted inconsistently with Article 1 of the Anti -Dumping Agreement and Article VI of the
GATT 1994.
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, we conclude that Canada has failed to establish that
China acted inconsistently with:
a. Articles 3.1 and 3.2 of the Anti -Dumping Agreement with respect to MOFCOM's
consideration of the volume of the dumped imports;
b. Articles 3.1 and 3.2 of the Anti -Dumping Agreement with respect to MOFCOM's
consideration of price effects in light of changes in dumped imports' market share, and
by taking into account pricing documents and meeting minutes in that consideration;
c. Articles 3.1 and 3.4 of the Anti -Dumping Agreement with respect to MOFCOM's
examination of the impact of the dumped imports on the domestic industry; and
d. Articles 3.1 and 3.5 of the Anti -Dumping Agreement with respect to MOFCOM's
examination of the shortage of cotton linter as an allegedly known factor other than the
dumped imports allegedly causing injury to the domestic industry.
8.2. For the reasons set forth in this Report, we further conclude that Canada has established that
China acted inconsistently with:

344 Canada's first written submission, para. 182.
345 The capacity utilization rate for cotton-based cellulose pulp producers was 51.43% in 2010, 57.86%
in 2011, and 46.11% in 2012, while the capacity utilization rate for the domestic industry was 66.01% in 2010,
53.77% in 2011, and 52.35% in 2012. (Final Determination, (Exhibit CHN-1), pp. 73 and 75).

BCI deleted, as indicated [***]

a. Articles 3.1 and 3.2 of the Anti -Dumping Agreement with respect to MOFCOM's
consideration of price effects by failing to adequately explain both the role of parallel
price trends and the fact that dumped import prices were highe r than those of the
domestic like product;
b. Articles 3.1 and 3.5 of the Anti -Dumping Agreement with respect to MOFCOM's
demonstration of a causal relationship between the dumped imports and injury; and
c. Articles 3.1 and 3.5 in connection with MOFCOM's examin ation of the effects of changes
in cotton and VSF prices; domestic industry overexpansion, overproduction and
inventory build-up; and the impact of non -dumped imports as allegedly known factors
other than the dumped imports causing injury to the domestic i ndustry, and MOFCOM's
failure to ensure that injuries caused by these factors were not attributed to the dumped
imports.
8.3. As a consequence of the inconsistencies we have found, we further conclude that Canada has
established that China acted inconsistently with Article 1 of the Anti -Dumping Agreement and
Article VI of the GATT 1994.
8.4. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent that the measure at issue has been
found to be inconsistent with the Anti -Dumping Agreement and GATT 1994, it has nullified or
impaired benefits accruing to Canada under these agreements.
8.5. Pursuant to Article 19.1 of the DSU, we recommend that China bring its measure into
conformity with its obligations under the Anti-Dumping Agreement and GATT 1994.