Document: WT/DS405/R Page E-1 ANNEX E EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSIONS OF THE PARTIES Contents Page Annex E-1 Executive Summary of the Second Written Submission of China E-2
Document codes: WT/DS405/R
Complainant: China
Respondent: EU
Third parties: Australia, Brazil, Colombia, Japan, Turkey, U.S., Vietnam
Dispute stage: Panel
Agreements cited: Art. 9  Anti-dumping  Protocol of AccessionArt. 6.10, 9.2, 9.3, 9.4  Anti-dumpingArt. I, XVI:4, X:3(a)  GATT 1994Art. 2.1, 2.4  Anti-dumpingArt. VI:1  GATT 1994Art. 3.1, 17.6, 3.4, 3.5, 6.1.2, 6.5, 6.5.1, 6.5.2, 6.8, 11.3, 12.2.2, 1, 18.1, 2.2.2, 2.6, 9.1, 3.3, 6.2, 6.4, 6.5.1, 6.5.2, 6.1.1, 6.9, 6.10.2  Anti-dumping

ANNEX E

EXECUTIVE SUMMARIES OF THE SECOND WRITTEN
SUBMISSIONS OF THE PARTIES

Contents Page
Annex E-1 Executive Summary of the Second Written Submission of China E-2
Annex E-2 Executive Summary of the Second Written Submission of the
European Union E-12

ANNEX E-1

EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF CHINA

I. INTRODUCTION

1. The extent to which this summary treats certa in facts and legal issues should not be taken as
any indication of the relative importance that China attaches to them.

II. PRELIMINARY RULING REQUEST ISSUES

2. First, China notes that it is its view that the drafters did intend to have Article 17.6(i) set
limits on authorities' discretion to act in an unfair manner. After the inclusion in the Anti-Dumping
Agreement of Article 17.6(i), it seems as though it would have gone without saying that if Members
did not conduct investigations in accordance with the broad standard s set by the Article, then they
would be liable to have the determinations not made in conformity therewith overturned.

3. China also notes, as it did in its response to qu estion 29 by the Panel, that even if the Panel
were to consider that Article 17.6(i) were not capable of forming the basis of a claim, the Panel should
still consider China to have made its prima facie case in respect of its procedural fairness claims
through the Article 2.4 fair comparison obligation. The facts which China has said violate the 17.6(i)
standards are the same facts which would violate the fair comparison obligation, and for the same
reasons (it is noteworthy that the EU responded to these allegations on their merits).

4. With respect to the EU's DSU Article 6.2 arguments in connection with China's
Article 17.6(i) claims, China refers to Paragraphs 116 to 135 of its First Written Submission ("FWS")
for a general overview of how WTO panels and the AB have interpre ted Article 6.2 of the DSU, as
well as Paragraphs 149 to 155 of its FWS for its ar gument as to why China's Article 17.6(i) claims,
specifically, satisfied the requirements of that Article.

5. China does not have much substance to add to those arguments in connection with the rest of
the EU's DSU Article 6.2 arguments pertaining to the Definitive and Review regulation claims. The
claims, as China has explained, were properly made in the panel request as they identified the
measures at issue and provided a brief summary of the legal basis of the complaint, as those terms
have been defined by consistent case law. An elaboration of the arguments was provided in China's
FWS.

III. CHINA'S "AS SUCH" CLAIM AGAINST ARTICLE 9(5) OF THE BASIC AD
REGULATION

6. As an initial matter, China would note th at up to this point, it has not relied upon the
conclusions of the panel in the EC - Steel Fasteners dispute as they relate directly to each of China's
as such claims. As of four days before the due-d ate of this submission, however, the final report of
the panel in that dispute has been made public, and China considers that the holdings of the panel in
that dispute should henceforth be duly taken into account by the panel in this one.

7. Notably, with respect to China's as such claims, the panel in that dispute ruled in favour of
China with respect to every claim on which it made an affirmative finding. Specifically, the panel
held that Article 9(5) of the Basic AD Regulation violates Articles 6.10 and 9.2 of the Anti-Dumping
Agreement, along with the MFN principle contained in Article I:1 of the GATT 1994, Article XVI:4
of the WTO Agreement and Article 18.4 of the AD Agreement. 1 In addition, it is noteworthy that the
panel considered, in the context of a virtually id entical panel request in both cases, that each of
China's as such claims fell within the scope of Article 9(5) such that they could be considered on their
merits, and none failed to meet the requirements of DSU Article 6.2.

8. China additionally notes that in light of the iden tical nature of the as such claims at issue in
the two disputes and the close temporal relationshi p between them (i.e. no AB report has made any
statement which would cast doubt upon the validity of the panel's reasoning in the EC - Steel
Fasteners), as well as the common parties, China consider s the issue of whether or not Article 9(5) is
inconsistent with Article 6.10, 9.2 and I:1 of the GATT to have been resolv ed such that any major
contradiction with respect to th e result in the two disputes would be difficult to accord with
Article 3.2 of the DSU the AB's holding that, while not binding, panel reports create legitimate
expectations among Members.

9. As to the substance, China considers that the EU clearly has no legal basis on which to
consider that the actual status of China's economy is relevant for the purposes of this dispute, and the
Panel report in EC - Steel Fasteners has effectively rejected any form of the proposition that either the
Working Party report, the Protocol, or any of the EU 's "evidence" as to the current state of China's
economy can form the basis of a justification to institute a rebuttable presumption which applies to
China on a discriminatory basis and has nothing to do with the calculation of normal value.

10. It is on this basis that the Panel held for China with respect to the GATT I:1 claim. It is also
noteworthy, as a foundational issue that equally undermines the EU's defenses with respect to each of
the provisions at issue, that the Panel in EC - Steel Fasteners held that in determining whether a
company is related to the state as a factual matter, be it in the context of whether the state is a single
producer for Article 6.10 purposes or a supplier for Ar ticle 9.2 purposes, the burden of proof shall not
be shifted to the exporters, irrespective of the ec onomy from which that producer comes. In China's
view, the panel held the same burden of proof issue to, in itself, constitute a violations of Articles 6.10
and 9.2 of the Anti-Dumping Agreement, as well as GATT I:1.

IV. CHINA'S CLAIMS CONCERNING THE REVIEW REGULATION

11. China recalls that the analogue country selec tion process falls within the scope of the fair
comparison obligation of Article 2.4, first sentence. In paragraphs 154-193 of China's replies to the
questions of the Panel in connection with the firs t meeting with the Panel, China provided a detailed
response to the Panel's request that China respond to the EU's argument in its FWS, paragraph 171,
that the obligation in Article 2.4 of the AD Agreem ent to make a fair comparison comes into play
after such a normal value has been identified, but not before.

12. China's principal argument in that respect is that the fair comparison obligation contained in
Article 2.4, first sentence, is an independent, overarching obligation which stands alone from the more
specific obligations relating to the examples of due allowances which follow it. China considers that
the analogue country selection and selection proces s effectively precluded a fair comparison, and
therefore the EU is in violation of that obligatio n. China finds support for this argument in various
AB reports' interpretation of the fair comparison obligation, as well as the drafting history of the
Article and the wording of China's Protocol of Accession, which considers the "comparison" to be
essentially synonymous with the establishment of normal value.

1 See generally EC - Steel Fasteners, paras. 7.11-7.50 for holdings on preliminary issues and 7.51 to
7.137 for holdings on substantive issues relating to the as such claims.

13. Along with the substantive criteria in making the selection and the result, the Fair Comparison
obligation informs the procedural fairness aspects of analogue country selection. It would be difficult
to imagine that the "comparison" could be truly "fair" in a situation where the substantive criteria used
to derive the normal value on which the comparison was based were fair (which is not the case here
either), but the actual procedure were effectively rigged so as to favour the interests of the domestic
producers such that the final normal value were sure to be unrealistically high.

14. Article 2.1 of the Anti-Dumping Agreement may form the basis of a claim. In response to the
EU's reliance on the AB in US - Zeroing (Japan), China notes that it is not reading Article 2.1, and
particularly what it considers to be the necessity to establish a comparable price, in isolation. Rather,
the obligation to establish a comparable price is in fact found throughout various provisions of the
Anti-Dumping Agreement such that it cannot be said that Article 2.1 independently imposes it, and the
independent imposition of an obligation by a provis ion is not a necessary prerequisite to its being
capable of citation as the basis of a claim.

15. Certain procedural fairness issues must be c onsidered to fall within the scope of Article 2.1.
even though there is no embedded due-process language contained within Article 2.1, as is the case
with Article 2.4. Nevertheless, China considers that if there is an obligation to secure a comparable
price, a process by which that price is secured whic h is effectively rigged in such a way that the
resulting price will not be, or will be far less likel y to be "comparable," then that obligation is
violated. At the least, China would consider that certain of the facts of this case, which evidence
blatant bias in favour of the domestic producers throughout the selection of the analogue country,
should violate the general principle of good faith.

16. As to the actual way in which Article 2.1 a nd 2.4 place limits on authorities' discretion with
respect to the analogue country selection process, Chin a considers that the EU's interpretation of the
significance of the silence of the contracting parti es as to the specific criteria to be used in the
analogue country selection is misplaced, and the AB report in US-Hot Rolled Steel lends clear support
to this view. A reasonable analogue country selecti on process undertaken in the event of a finding of
distortion of domestic prices must at least aim in the direction of finding a proxy normal value for
that which would have prevailed if not for the dist ortion. The EU's argument that the only "inferred
requirement" is that the country operate under market conditions is not tenable in light of the object
and purpose of the Anti-Dumping Agreement.

17. In that respect, China considers th at the actual criteria which the EU used in this case to select
the analogue country were, taken as a whole, ina ppropriate as a means to find a comparable price
which could permit a fair comparison because they did not include any factor which could evidence
an intention to find a proxy normal value for the actual country under investigation.

18. That conclusion notwithstanding the criteria in this case were analysed in an unreasonable
manner because the EU placed a manifestly unr easonable amount of importance on sales volume as
an analogue country selection criterion, and this was primarily responsible for the inappropriate
selection of Brazil. Furthermore, the sales volumes analysed were derived as the result of a violation
of the interested parties' due process rights, and thus the procedural fairness issues tainted those
analyses.

19. Those arguments notwithstanding, China also considers that the EU's analysis of the
"competition" criterion was unreasonable because the effects of the protection of a market must be
considered as a counterweight to the fact that th ere are a significant number of producers in that
market. Furthermore, the analysis of the "lik e product" criterion was unreasonable because Brazilian
producers did not even produce one of the major subsets of the product concerned.

20. With regard to the claim concerning the PCN classification system, China has explained that
the existence of an overly broad PCN system with broad PCN categories precluded a fair comparison
in the review investigation. The differences on acc ount of the physical characteristics and technical
differences which affected the production costs and sales prices were not captured by the PCN system
used in the review investigation. Chinese produ cers could not possibly quantify these differences for
the hundreds of extremely different footwear types cl assified under the same PCN in order to be able
to request specific adjustments within the PCN. China has also estab lished that there was a change in
the methodology of classification of sports, sports -like and trekking footwear from one category to
another, contrary to the EU's claim in the FWS that there was merely a rectification of the
classification errors. The changed classification fu rther prevented a fair comparison between the
PCN-based Chinese export prices and Brazilian normal value within the meaning of Article 2.4 and
consequently the EU's evaluation of 'dumping ' was inconsistent with Article 2.1 of the Anti-Dumping
Agreement and Article VI:1 of the GATT 1994.

21. Having mentioned the foregoing, China notes that the legal basis of its claims II.1 and II.13
are Articles 2.1, 2.4, and 17.6(i), and Article VI:1 GATT and Article 11.3. Ch ina first established the
legal basis for the applicability of Article 2 provi sions in the expiry review with reference to
Article 11.3; then it provided detailed factual a nd legal arguments establishing the violation of the
provisions of Articles 2.1, 2.4, 17.6(i) and GATT Article VI:1. Thereafter, China argued the breach
of Article 11.3 based on the establishment of th e violation of the provisions of Article 2 and
Article VI:1 GATT 1994.

22. With regard to claims II.2-II.5, China submits that the EU's assertion of a legal error by China
is incorrect and must be rejected. China claims th at an investigating authority is not required to or
mandated to make an injury determination again in the context of a likelihood of injury determination
under Article 11.3. However, as was the case in the re view investigation, if an investigating authority
makes an injury determination and relies upon it for th e likelihood of injury determination, then the
provisions of Article 3 would be rele vant in the context of that inju ry determination and the violation
of the provisions of Article 3 can be alleged in the context of that injury determination.

23. Article 11.3 being termed as a consequential claim in China's FWS does not indicate that it is
not the legal basis of China's claim.
2

24. In China's view, if a panel finds that an investigating authority conducted an injury
determination which is in consistent with the Article 3 prov isions, and relied upon that injury
determination for its likelihood-o f-injury determination, then th e latter determination of the
investigating authority is also defective and inconsistent with Article 11.3. Such a likelihood of injury
determination cannot form a prope r foundation for the continuation of the anti-dumping duties under
Article 11.3.3

25. China has established that the EU made an injury determination in this case based on the
provisions of Article 3. The scheme of the injury determination in the review investigation mirrored
that of the original investigati on. This injury determination th en became the essential basis of the
EU's finding of a likelihood of continuation of injury. The EU's assertion that " [t]he determination of
likelihood of injury that is made in the Review Regulation is based… also on an examination of the
individual factors pertaining to both injury and causation that are relevant to such a determination.
In fact, by far the greatest emphasis is placed on this examination "
4 is factually incorrect. The
likelihood determination of the EU was simply b ased on a finding of continued dumping and injury to

2 Panel Report, US - OCTG Sunset Reviews, paras. 7.273-7.274.
3 AB in US - OCTG Sunset Reviews also held that the requirement of Article 3.1 that an injury
determination be based on "positive evidence" and an "objective examination" is equally relevant to likelihood
determinations under Article 11.3.
4 Para. 93, EU's response question 43 from the Panel.

the exclusion of any additional analysis. The alleged likelihood-of-injury causation analysis was not a
part of the likelihood-of-injury analysis of the EU but merely its response to the arguments raised by
interested parties. Thus, to the extent the EU made an injury determination in the review
investigation, it was required to comply with the Article 3 provisions.

26. As regards the sampling of the EU producers, China considers that since some information for
the complainant producers was available to the EU-w hich was (a) not the relevant information nor the
kind of evidence which is necessary for sampling and can be considered "positive evidence"; and (b)
not at the same level and to the extent as that so licited for the purpose of sampling through a sampling
form and was solicited from the other interested parties including non-complainant producers – the
EU did not comply with the objective examination and positive evidence requirement of Articles 3.1
and 17.6(i) in selecting the eight complainant producers in the sample. By not sending the sampling
forms to the complainant producers only, the EU di d not gather the requisite "positive evidence" and
did not 'identify' the facts for the purpose of sample selection and consequently the injury
determination, on the basis of an objective exam ination. China notes that by soliciting sampling
information through sampling forms an investigating authority in addition to gathering the relevant
data ensures to a certain extent that the data qualifies as "positive evidence".

27. If the Panel were to accept the EU's new de finition of the domestic industry, it would only
lend further support to China's assertions in the c ontext of the present clai m because while the EU
claims to have investigated th e existence of injury both with respect to the complaining and non-
complaining producers, it solicited the informati on relevant for sampling, i.e. positive evidence,
exclusively from the non-complainant producers.

28. The EU's entire defence is based on an assu mption unsupported by any evidence, that the
"positive evidence", i.e. the information relevant fo r sampling, that would have been obtained through
completion of sampling forms by each individual complainant, was available to it for all the
complainant producers individually at the time of sa mple selection, i.e. before 10 October 2008. This
assumption has been refuted by China. With re gard to the complaint, the EU's response to
question 45 from the Panel makes clear that the data for the full RIP was not available in the
complaint; information regarding the sales data for the years 2006, 2007 and the RIP, and information
about the product types produced were not provided by each complainant. The declarations of
support provided only the production data for 2007 and January 2008 and no information was
solicited for sales or sector/product segments. Additionally, the standing forms requested the
production and sales volume for the years 2006, 2007 and first half of 2008 and were allegedly
completed by 'some' complainants. Even if two, five or ten complainants completed the standing
form, clearly the EU did not have the data from each complainant. The EU's assertion that the
aggregate data for majority of the complainants that did not complete the standing forms was obtained
from the national associations is irrelevant as deseg regation of the data of individual producers from
the aggregate data of all companies that were members of the national associations is impossible.
Aggregate data of the national associations is ne ither the same as the individual data that the
complainants would have provided if they would have completed the sampling forms, nor can that
aggregate data be considered "positive evidence" . Simply considering the full year 2007 data
provided by some complainants in the standing form responses, equal to or representative of the data
for the last six months which were part of the RIP amount to extrapolation and not "positive
evidence". Product/sector segment information was not sought in the standing form. Last, the EU's
use of estimates provided by CEC in the letter of 29 October 2008, to further confirm estimates
provided in the complaint, cannot be considered re levant "positive evidence" for sampling. In any
event, the reference to the CEC letter of 29 Octobe r 2008 which post-dated the sample selection, i.e.
10 October 2008, does not establish that the selection of the eight producers sampled on
10 October 2008 was based on positive, credible and affirmative data relevant for sample selection.

29. China has explained the basis on which it posits the applicability of Article 6.10 for sampling
in the context of injury in this case. Based on th at reasoning and the interpretation of the panel ruling

in EC - Salmon , China considers that if an investigating authority claims to have based the sample
principally on the volume of production of the dom estic producers, it is obliged to follow the criteria
prescribed in Article 6.10 and there is no other methodology which would en sure that the domestic
industry as a whole is represented by the sample. The contrary would lead to anarchic situations like
the present case where the EU industry's sample co mprises of only eight companies of which one
completely outsourced production in the RIP to a non-EU country, and in total the sampled companies
account for only 8.2 per cent of the domestic industr y production if the domestic industry were to be
accepted as comprising of the complainants and 3.1 per cent of the total production of the EU industry
should the Panel consider that the domestic industry comprises of complainants and non-
complainants.

30. Additionally, if the Panel were to accept the new definition of the domestic industry, China
considers that the sample of the EU producers sel ected from a pool of complainant producers only is
biased and unrepresentative of the domestic industry as whole which includes non-complainant
producers representing 65 per cent of the total dom estic industry production. In violation of
Articles 3.1 and 17.6(i) of the Anti-Dumping Agreement, the EU ensured that only one segment of the
domestic industry, notably the complainants that clai med the existence of injury to begin with, were
represented in the sample.

31. China submits that the inclusion of a company in the domestic industry sample that
definitively ceased EU production and outsourced its entire production at some point during the RIP
to a third country and was no longer representativ e of the entire domestic industry as a whole after
that point in time, cannot be justified on the groun d that it represented an important business model
because such business model pertained to an importer and representativity of business models was not
one of the criteria for sample selection as admitted by the EU in the FWS. Even if the data of this
company pertaining only to its activity as a producer was taken into account for the injury
determination, China considers that the effect of outsourcing on this company would be attributed to
the allegedly dumped imports and transposed to the situation of the other EU producers.
Consequently an injury analysis based on a sample including such a producer cannot be considered
objective and based on positive evidence.

32. China requests the Panel not to accept the EU's ex-post definition of the 'domestic industry' as
consisting of complainants and non-complainants. The contrary would make the provisions of
Articles 3.1 and 3.4 practically ineffective. Ampl e evidence on the record as noted by China in the
SWS disproves the EU's new definition. The Review Regulation and the Notes for the File show that
the EU represented since the beginning of the re view investigation that the domestic industry
consisted of the complainant producers only, as is indeed standard EU practice. Thus, the EU violated
Article 3.4 because it analyzed the macroeconomic injury indicators on the basis of data that included
the data of non-complainant producers accounting for around 65 per cent of the EU production.

33. If however, the domestic industry were to be considered by the Panel as consisting of
complainants and non-complainants then also Chin a's claim stands as the Prodcom data as well as the
data of the national associations for the various macroeconomic indicators used by the EU included
the data pertaining to the domestic producers th at had delocalized production to the countries
concerned; or were related to Chinese exporters or imported significant quantities of the product
concerned from China and/or Viet Nam. An unsubs tantiated assumption forms the basis of the EU's
evaluation of the macroeconomic indicators that only three EU companies out of 18,000 producers
outsourced production outside the EU and/or were related to Chinese producers. Additionally,
irrespective of the domestic industry definition, Ch ina has established in the SWS that the EU's
assessment of the injury indicators was not ba sed on "positive evidence" and an "objective
examination" of evidence. Notably, Prodcom data is an un-objective source of data, it is available
only for calendar years (not the RIP) and at th e CN code level; and th e data of the national
associations contained significant estimates and represented only 80 per cent of the EU production.

34. With regard to causation, China consider s that the EU did not objectively separate and
distinguish the injurious effects of certain duly dem onstrated factors and made boilerplate statements
without analyzing the nature and extent of the injury caused by those factors. This is evident from the
explanations provided by the EU in the Review Regul ation. The EU simply attributed the injurious
effect of those other known factors to the dumped im ports in violation of Article 3.5. Additionally,
with respect to certain other known factors, the EU admittedly refused to analyze the injurious effects
of those factors. Consequently, the EU did not co mply with its overarching obligation to demonstrate
causation and the non-attribution analysis was not done in compliance with Article 3.5.

35. With regard to the procedural issues, in the context of the violation of Article 6.1.2 by the EU,
China considers that in the absence of any proof that would establish that the five sampled EU
producers did not submit Community interest questionnaire responses, China's claim stands.
Concerning the delay in making available the inju ry questionnaire responses of four sampled EU
producers, China notes that the condition in Article 6. 1.2, i.e. "subject to the requirement to protect
confidential information", which is the basis of a ll the arguments of the EU, does not come into play
as the subject questionnaires were the properly f iled non-confidential versions. Investigating
authorities have no obligation to ascertain whether the submitted evidence labe lled 'non-confidential'
is indeed non-confidential. It is the party s ubmitting evidence/a documen t that has to request
confidentiality and demonstrate good cause for confiden tiality and in the absence thereof, it is the
investigating authority's obligation to promptly make available the evidence submitted by one
interested party to another. If the EU's inte rpretation of Article 6.1.2 were to be accepted,
investigating authorities will virtually never have to bother to make promptly available any evidence
to interested parties.

36. In the context of claim II.7, China's notes that its claims under Article 6.2 are not merely
consequential to its claims under Article 6.4. Chin a has also established an independent violation of
Article 6.2. Based on the panel ruling in Guatemala–Cement II China considers that there may be
cases in which a panel will nevertheless need to ma ke additional findings under Article 6.2, although
the more specific provision has not been violated. In the specific context of Article 6.4, China has
refuted the misconceived interpretation of the terms 'information', information 'used' by investigating
authorities, and timeliness, forwarded by the EU. If the EU's interpretation of Article 6.4 were to be
accepted, procedural issues among others concer ning the sample selection and analogue country
selection cannot be challenged under this Article.

37. With regard to the violation of Articles 6.5 and 6.5.1, China has refuted at length the
erroneous interpretations and factually incorrect ar guments of the EU in the FWS and in response to
the Panel questions. The EU violated Article 6.5 (a) by granting confidential treatment to the names
of the EU producers including complainants, supporters, sampled producers and producers sampled in
the original investigation; by granting confidential tr eatment to some information in the expiry review
request, standing forms, CEC submissions, injury questionnaires of sampled EU producers; and
analogue country questionnaires, which were not co nfidential; and (b) by granting confidentiality to
certain information in the above-mentioned docum ents on its own accord in the absence of "good
cause" showing by the parties concerned. The EU al so violated Article 6.5.1 (a) by failing to require
the parties concerned to provide non-confidential summaries of the confidential information submitted
and/or to give a statement of reasons as to why summarization was not possible; and (b) by failing to
ensure that the non-confidential summaries pr ovided permitted a reasona ble understanding of the
confidential information submitted.

38. China reiterates its claims II.9-II.12 and refers to its detailed rebuttal in the SWS of the EU's
arguments in the context of these claims.

V. CHINA'S CLAIMS CONCERNING THE DEFINITIVE REGULATION

39. China considers that sampling does not apply to the MET determination because Article 6.10
and 6.10.2 do not concern the methodology and da ta to be used for calculating the margin of
dumping. The EU was under an obligation to base th e margin of dumping on prices or costs in China
even to non-sampled exporting producers whic h can show to operate under market economy
conditions.

40. Alternatively, the criterion "largest volume of export sales" does not guarantee that the sample
is representative for a determination whether pr oducers operate under market economy conditions, as
it excludes small and medium-sized exporters. Also, by requesting non-sampled companies to
respond to MET questionnaires in a very short de adline and then not looking at them, creating a
reasonable expectation that they could be gran ted MET and granting no additional opportunity to
apply for individual examination once it was decided to disregard the information supplied by them,
the EU did not act in respect of the general prin ciple of good faith and fundamental fairness and the
"proper establishment" requirement of Article 17.6(i).

41. China considers that the EU was not excused from individually examining any subsequent
submission of non-sampled companies because the size of the sample was extended at the request of
the Chinese authorities. It is for the EU to provid e evidence that its administrative capacities did not
allow for the examination of four additional co mpanies. In any event, in case of sampling,
investigating authorities should always allocate some resources in case any company requests an
individual examination as otherwise, Article 6.10.2 would be rendered meaningless.

42. China considers that the EU was not allowed to disregard the sales of companies not granted
MET for the calculation of the cap for the establishm ent of the amounts for SG&A and profits for the
Chinese company granted MET. In addition, the EU could have used the profit realized by exporting
producers in the textile sector – which together with footwear belong to the broader category "Fashion
and design industries" – to calculate the cap. In any event, that the method used was unreasonable,
because the EU used criteria not provided in Article 2. 2.2(iii) to arbitrarily restrict the amount of data
that could be used.

43. With regard to the analogue country selection process, China refers to its arguments made in
the context of the review regulation that (i) th e EU places an unreasonable amount of weight on
domestic sales volume as a means to select an analogue country, (ii) the criteria taken as a whole are
manifestly unreasonable and necessarily cannot not acco rd with the obligations to secure and make a
fair comparison as the EU does not seriously take into account any criterion which aims at finding a
proxy normal value for that which would have exis ted but for the distortion in the Chinese market.
With regard to instances of procedural bias Chin a considers among others that (i) exporting producers
did in fact request the EU to undertake more ex tensive and diligent efforts to secure producer
cooperation and better assess the appropriateness of India and Indonesia as analogue countries, (ii) the
burden of proving that there were fewer (known) prod ucers in Indonesia lies with the EU and (iii) the
EU has been unable to rebut the prima facie ev idence that the several Brazilian companies were
granted more time, (iv) and the failure to even consider the numerous and repeated arguments made
by an interested party constitutes an improper establishment of the facts.

44. China considers that the PCN methodology was t oo broad to allow for a fair comparison, thus
violating Article 2.4 because the EU only made one adjustment even though many differences
affecting cost of production were not reflected in the PCN. The method used to exclude STAF was
unreasonable because the EU "deemed to be STAF" a ll PCNs reported with a weighted average CIF
price above a price threshold. China notes also that the EU is stating something else in the context of
this dispute than what is contained in the pub lished Regulation, namely that the leather cost
adjustment was based only on world market prices, and that the EU refused as a matter of principle to
make adjustments in previous investigations becau se the companies were not granted MET, while in

the footwear case, the EU was prepared to make an exception for the calculation of a significant
adjustment upwards.

45. China considers that the EU effectively de termined that STAF and non-STAF were not 'like
products' because the test it applied effectively cons titutes a 'like product' test or indeed an even
stricter test than the 'like product' test. Give n the absence of any production of STAF in Brazil and –
or hardly any – in the EU, the EU violated Article 2.6 read together with Articles 3.1 and 4.1 by
determining that the product concerned and all co rresponding types of footwear produced and sold in
Brazil, as well as those produced and sold by th e Community industry on the Community market are
alike.

46. With regard to the use of different sa mpling procedures for Chinese exporters and EU
producers, China refers to its claim II.2. Also, the EU's conclusion that, in the case of relatively small
and medium sized companies, losses cannot be sustai ned for a significant period without being forced
to close down, was based on data from associations wh ich included companies that were not parts of
the industry. China cons iders that the requirement to conduct an objective determination of injury
based on positive evidence in this case required a veri fication of the informatio n provided, given that
the information was collected at the complaint stage.

47. China considers that its description of the lesser duty calculation methodology is in line with
the wording of Article 9.1, which is relevant to the dispute because it creates the possibility to have a
lesser duty and sets the context within which such a rule would operate. While the lesser duty rule
provision is voluntary, China submits that, once it is used, an authority is bound to interpret the term
"injury" in terms of Article 3. China consid ers that the lesser duty calculation is covered by
Article 17.6(i), as export prices are the facts to be evaluated.

48. China stands by the arguments and conclusions that (i) by mixing data from 2003, the IP and
2005, the EU did not conduct an unbiased and objectiv e examination and this violated Articles 3.1
and 17.6(i), (ii) an unbiased and objective authority would not apply a different standard either (a) in
terms of ensuring a fair comparison by not including all export sales when using the lesser duty rule
or (b) by using different datasets for dumping and injury margin calculations, (iii) by basing the
profitability on one part of the Community industry, especially in light of the fact that profit had never
exceeded 2 per cent even in the 2003 non-injurious s ituation, the EU violated Article 3.1 by not
conducting an objective examination, and (iv) by collecting a higher duty for China than Viet Nam
when all objective measures indicated that the opposite was true, the EU violated Article 9.2.

49. China considers that the EU failed to consider an important asymmetry between the
development of the import volumes from China and from Viet Nam, as the 2001 import volumes from
China were much lower than for Viet Nam a nd the increase in imports from China occurred only
towards the end of the IP, and thus the volume of imports did not develop "in parallel". The
Definitive and Provisional Regulation do not contai n any compelling explanation as to why, in light
of the suppression of the quota in 2005 and the acceler ation of imports during the first quarter of 2005
due particularly to the development of the Chinese imports, the EU still considered that a cumulative
assessment of the imports was appropriate.

50. China did not purport to propose a definition of production capacity that would fit in all
circumstances and in any event the EU cited an exam ple which does not apply to the facts of this case
or referred to figures which are not on record. In addition, by taking employment as a proxy for
production capacity, the EU analysed this factor only for part of the Complainants. With regard to the
analysis of "other factors" China considers that EU's arguments should be rejected.

51. Concerning causation, the one common theme is that the explanations given by the EU
evidence the erroneous understanding of the non-a ttribution requirement as being an obligation

completely distinct from the obligation to dem onstrate that the dumped imports are, through the
effects of dumping causing injury as set forth by Article 3.5, first sentence.

52. As to the 15 days to reply to the MET questi onnaire, a recent panel report has ruled that there
may be a set of initial questionnaires. China reit erates that there is absolutely no bar to the
consideration of an uncited provision (para. 151 of the WPR and Article 6.1) in support of a claim
relating to a provision which was cited in a panel request.

53. China does not consider that specific and subjective valuations made by one party from
Viet Nam, concerning the additional disclosure, could simply be extended to all parties. Furthermore,
the EC – Salmon (Norway) applied to a reassessment of facts, while in the present case the disclosure
used facts occurring after the period of investigation, namely in the calendar year 2005.

54. By including exports of STAF in the la rgest volume of exports of non-STAF from China,
such as exports from the company PWC, the EU failed to base the sample on the largest percentage of
the exports from the country in question which can reasonably be investigated. In addition, the
consideration of domestic sales by the EU is ba sed on a wrong interpretation of the notion of
reasonableness as it appears in Article 6.10.

55. As regards the claims arising as a consequence of the fact that Article 9(5) of the Basic AD
Regulation is inconsistent with the provisions as such, unless the panel disagrees with the clear
holdings of the EC – Steel Fasteners panel with respect to China's Article 9.2 and 6.10 claims, then it
must find that the EU violated those articles in the context of the as applied claims as well.

56. China reiterates its claims III.10 to III.12 and III.19 and refers to its detailed rebuttal in the
SWS of the EU's arguments in the context of these claims.

ANNEX E-2

EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF THE EUROPEAN UNION

INTRODUCTION

1. Pending the Panel's response to the EU Request for a Preliminary Ruling, the EU notes that
this Request has affected the way in which the European Union has b een arguing its claims before the
Panel. The fact that the European Union addressed in good faith (fully or at least partially) some
other China's claims which were the subject of th e Request does not mean that the European Union
accepted that those claims had been brought properly within the Panel's terms of reference.

2. Instead of repeating the EU arguments, the European Union focuses on addressing those
assertions and arguments brought by China at the First substantive meeting as well as in China's
Responses to Questions from the Panel and the Europ ean Union. The fact th at the European Union
does not specifically comment on a certain statement or a response made by China does not mean that
the European Union agrees with it. Rather, it means that the European Union considers those
statements irrelevant to the claims at issue or re butted by the arguments made by the European Union
in previous submissions.

ARTICLE 17.6(I) OF THE ADA

3. There is no question that WTO Members should establish facts properly and evaluate them in
an unbiased and non-objective way when discharging their WTO obligations in the conduct of
domestic anti-dumping proceedings. The standard of review established in Article 17.6(i) achieves –
from the practical perspective – just that objective. In essence, this standard reflects a corresponding
obligation (obligations) which is (are) imposed on WTO Members by "other provisions" (Appellate
Body Report, US – Hot-Rolled Steel , para. 56) of the ADA. It follows that to achieve China's
objective to make WTO Members establish facts properly and evaluate them in an unbiased and non-
objective way, it is not necessary to construe Article 17.6(i) as a separate legal basis. Conversely,
doing so would be counterproductive and of concern for the WTO system.

CHINA'S "AS SUCH" CLAIM AGAINST ARTICLE 9(5) OF THE BASIC AD
REGULATION

4. The European Union observes that China has not yet addressed the arguments made by the
European Union in its request for preliminary ruli ngs and First Written Submission that China's Panel
Request failed to meet the requirements of Article 6. 2 of the DSU. Essentially , China seems to try to
identify the specific measur e in the description of the legal claims. This in itself implies that the
identification of the specific measure, as required by Article 6.2 of the DSU, was insufficient. The
European Union has also explained that Article 9(5) addresses a threshold question and provides for
the imposition of anti-dumping duties on an individual basis (in the case of IT suppliers) or on a
country-wide basis (in the case of non-IT suppliers). Other provisions of the Basic AD Regulation
address the individual calculation of dumping margins, how those margins are calculated and how the
level of anti-dumping duties is established. Likewi se, the European Union recalls that the dumping
margin does not serve in all cases as the basis for establishing the level of anti-dumping duties since
the European Union has adopted the lesser duty rule (i.e., the anti-dumping duty may be based on an

injury margin). Thus, the explanations as to why Article 9(5) violates the covered agreements do not
relate to the specific measure identified by China in its Panel Request; rather, those explanations seek
to expand the measure at issue to other aspects of the Basic AD Regulation which were not identified
by China in accordance with Article 6.2 of the DS U. The European Union further observes that
compliance with the requirements under Article 6.2 of the DSU is not only a due process issue, but
also a jurisdictional matter. What China cannot do is to specify Article 9(5) in its Panel Request, state
that it "effectively" provides for one specific i ssue (in relation to the imposition of anti-dumping
duties) and then allege violations of other provisi ons which relate to other aspects which may or may
not derive from the Article 9(5) determination, al one or in combination with other provisions (not
identified by China) of the Basic AD Regulation. This is therefore both a jurisdictional and a due
process issue into which the Panel should look carefu lly. Consequently, for all the reasons mentioned
in its previous submission, the European Union main tains that China's Panel Request failed to meet
the requirements of Article 6.2 of the DSU with resp ect to its claims relating to Articles 6.10, 9.3 and
9.4 of the ADA and Article X:3(a) of the GATT 1994.

5. The European Union observes that China has not made any new arguments concerning its
claims under Articles 9.4 and 18.4 of the ADA, Article X:3(a) of the GATT 1994 and Article XVI:4 of
the WTO Agreement. Accordingly, the Eur opean Union will only address China's arguments
concerning Articles 6.10, 9.2 and 9.3 of the ADA and Article I:1 of the GATT 1994. In particular, the
European Union will divide its anal ysis into China's claims under the ADA and China's claims under
Article I:1 of the GATT 1994.

6. With respect to Ch ina's claims under the ADA, the European Union has explained in detail in
its submissions why China's claims are without mer it. To recall, China's main argument is that
Article 6.10 mirrors Articles 9.2 and 9.4 of the ADA. According to China, since sampling is the only
exception to the individual determination of dum ping margins contained in Article 6.10, first
sentence, the imposition of anti-dumping duties in ac cordance with Article 9.2 must also be done on
an individual basis. The European Union has s hown that sampling is not the only exception to the
general preference of individual determination of dumping margins. The European Union has
provided examples taken from its own practice to sh ow this. The European Union can also provide
other hypothetical examples, such as the one already explained during the First Hearing. Indeed, in a
case where sampling is not used (e.g. there are three known cooperating exporters representing almost
the totality of exports), it may occur that the inves tigating authority has to construe the normal value
for the three of them on the basis of the same in formation (facts available – e.g. because relevant
information is not provided in the questionnaire responses), and may have to use the same export
prices for all of them (e.g. if it finds double invoi cing or the accounts/records of the company are not
complete). In those circumstances, the inves tigating authority would calculate one single dumping
margin for all three suppliers and would impose a single anti-dumping duty on all three. This is
permitted by Articles 6.10 and 9.2. Needless to say, the three suppliers would be entitled to request a
refund pursuant to Article 9.3.1 if they can show later on that the anti-dumping duty imposed does not
reflect their specific level of dumping. This is the mechanism envisaged in the ADA to prevent abuses
by Members while ensuring an adequate protection pursuant to an anti-dumping investigation.

7. Moreover, if other provisions of the ADA (such as Articles 6.8 or 9.5, as China recognises)
directly and expressly permit to depart from the "mandatory rule" (as Ch ina posits) contained in
Article 6.10, first sentence, the only conclusion that th e treaty interpreter can reach is that Article 6.10
cannot be interpreted in such a rigid manner.

8. If anything, China's reaction to the exam ples posed by the European Union shows the
weakness of its case. First, China recognises that , pursuant to Article 6.8, investigating authorities do
not need to calculate an individual dumping marg in (in the sense of specifying a duty rate for an
exporter by name) when the exporter fails to cooperate in the middle of the investigation. In other
words, even if the exporter or producer is "known" , such an exporter or producer would fall under the
category or group of non-cooperating suppliers/residual duty/all others rate. Its own data would not

be used to calculate an individual dumping margin and its name would not be specified in the anti-
dumping measures (just as part of the residual duty or "all others" rate). Second, in the case of the
trader, China ignores that the panel in EC – Salmon (Norway) already concluded that, according to
Article 2.5 of the ADA, "investigating authorities may be entitled to focus their determination of the
existence of dumping on a producer's pricing beha viour, notwithstanding the existence of a known
exporter that is responsible for the export sales under inv estigation". In other words, even if there is a
"known" exporter (i.e., trader), there is no need to calculate an individual dumping margin for that
trader. Third, in cases where it is not possibl e to identify the actual producer of the product
concerned, China argues that the producer is not known. While the identity of the producer may be
known, the true problem is to relate specific transact ions to the known producer . In any event, China
fails to see that in those cases the "exporter" w ill be "known" and, despite of that, no individual
dumping margin is calculated for that "known exporter" (yet again another exception to the strict rule
posited by China in Article 6.10, first sentence). Fourth, with respect to the example where the
information gathered does not allow to calculate individual dumping margins per supplier, China only
asserts that just because the drafters did not envision and list other hypothetical scenarios which
would necessarily call for a derogation of the general rule contained in Article 6.10, first sentence, this
does not imply that the exception in Article 6.10 is one of many. The European Union disagrees. The
recognition of other situations where investiga ting authorities can depart from the general rule
contained in Article 6.10, first sentence, implies that such a rule is a general preference or principle
that may not be followed in some cases. This furt her implies that Article 6.10, second sentence (i.e.,
sampling) is not the only exception to that general preference.

9. Moreover, the panel in Korea – Certain Paper identified situations wh ere, even if there were
several legal entities involved, all together could be considered as a single exporter or producer "for
the purposes of the dumping determinations in anti-dum ping investigations". In this respect, as the
Appellate Body has acknowledged, it is well recognised in international economic and trade literature
that "dumping" is "international price discrimin ation". As Article VI:2 of the GATT 1994 and
Article 9.1 of the ADA further state, the purpose of imposing and collecting anti-dumping duties is to
"offset or prevent dumping", that is, to address the source of price discrimination. Consequently, a
proper identification of the single exporter or pr oducer in a case where there are several related
companies allows the imposition of anti-dumping duties on the "actual source of price discrimination"
(or, in other words, on the supplier found to be the source of dumping). This also permits avoiding
potential circumvention at a later stage. Article 9( 5) follows the same logic and seeks to identify the
relevant supplier (i.e., an IT supplier which acts i ndependently from China, or China and its related
export branches (non-IT suppliers) which are not acting independently from the State). The
application of a single duty rate then also beco mes necessary to avoid circumvention of the duties
(i.e., the channelling of exports through the supplier with the lowest duty rate).

10. The differences in the elements examined in Korea – Certain Paper and the Article 9(5)
criteria lie in the different context where the panel made its findings. The reversal of the burden of
proof in cases on non-market economy countries, or put in different terms, the fact that NME
exporters have to show that they comply with the Article 9(5) criteria, is further justified in the case of
imports from China. Indeed, China has not contest ed the evidence provided by the European Union
(which relies not only on two reports, but also on extensive findings made in the context of anti-
dumping investigations and on China's constitution and institutional framework) showing how China
interferes in the export activities of private compani es in China. Moreover, under Section 15(d) of
China's Protocol of Accession, the European Un ion is entitled to consider China as a non-market
economy country until 2016, although it has the possibility to acknowledge that market economy
conditions prevail in certain industries or sectors. The European Union has not made use of this
possibility and, despite recognising the efforts made by China in this respect, still considers that China
is not a full market economy for the purpose of anti-dumping proceedings.

11. There is specific wording in Section 15(a) of China's Protocol of Accession already providing
for the reversal of the burden of proof when dete rmining price comparability under Article VI of the

GATT 1994 and the ADA. "Price comparability" in the sense of Article VI of the GATT 1994 and
Article 2.1 of the ADA refers to the dumping determination. As per Section 15(a)(ii), in determining
the existence of dumping, the importing WTO Member may use a methodology that is not based on a
strict comparison with domestic prices or costs in China "if the producers under investigation cannot
clearly show that market economy conditions prevail in the industry producing the like product with
regard to manufacture, production and sale of that product". The term market economy "conditions"
does not encompass the situation when State intervention in the economy including international trade
is so substantial that operators cannot act indepe ndently from the State in their export activities.
Likewise, the term "sale" also includes "export" sales. Thus, Section 15(ii) of China's Protocol of
Accession allows investigating authorities to have recourse to "a methodology that is not based on a
strict comparison with domestic prices or costs in China" when determining the existence of dumping
if the producers under investigation fail to show the existence of market economy conditions.

12. With respect to China's claim under Article I:1 of the GATT 1994, the European Union notes
that China's argument is based on the presumption that the ADA does not allow for treating suppliers
from non-market economy countries differently. In other words, China assumes what it pleads for
(i.e., that Article 9(5) violates certain provisions of the ADA) in order to conclude that there is no
conflict with Article I:1 of the GATT 1994. Such a circular argument should be rejected. More so
where there are other references in the ADA which allow WTO Members to treat non-market
economy countries differently. What China seems to argue is that even in cases where there are
recognised exceptions to the non-discrimination principle in the ADA (or elsewhere, such as
Section 15 of China's Protocol of Accession), tho se exceptions are contrary to Article I:1 of the
GATT 1994. That approach ignores the fundamental principle of lex specialis and the General
Interpretative Note to Annex 1A of the WTO and reduces all exceptions to nullity.

13. Consequently, the European Union requests the Pa nel to reject China's claim that Article 9(5)
is "as such" inconsistent with Articles 6.10, 9.2, 9.3, 9.4 and 18.4 of the ADA, Articles I and X:3(a) of
the GATT 1994 and Article XVI:4 of the WTO Agreement.

REVIEW REGULATION

14. Claims II.1 and II.13. Members are free to use a PCN system when comparing export prices
and normal values unless it prevents a fair comparison. Differences that are not reflected in the
system can be taken account of when making comp arisons. China has gone outside the terms of
reference in complaining about the way particular comparisons were made. It can find no authority
illustrating its argument that Article 2.4 applies to the choice of the normal value, and the case law
points in the opposite direction. The terms of th e Accession Protocol clearly establish that the only
obligations arising from the Working Party Report ar e those binding China. China's new criterion for
choosing the normal value – what the value would have been if sales had been made in the ordinary
course of trade at the same level of trade in the domestic market – has no support outside one specific,
limited context. Its attempts to justify this crite rion by examining the relevant texts are unsuccessful.
The term 'appropriate' is not explicitly attached to any rule governing how the choice of analogue
country should be made, but that fact is not si gnificant since there is no doubt that the choice is
subject to implicit rules and principles, even if these cannot be stated with great certainty. The
European Union took into account competitiveness and representativeness in choosing Brazil as the
analogue country, and such rules may require consideration of this kind.

15. Issues common to Claims II.2 to II.5 and II.11. It seems that China, the European Union
and the United States agree that errors or inconsiste ncies with Article 3 made in the finding of injury
made in the context of an expiry review do not automatically or necessarily lead to a finding of a
violation of Article 11.3 ADA. Rather, inconsistencies in the injury finding with Article 3 can lead to
a violation of Article 11.3 of the ADA only "if the investigating authority bases its likelihood of injury
determination entirely on the injury determinati on" (as phrased by China), or if "IA based its
likelihood determination to a decisive degree on a defective finding of injury" (the European Union)

or if "defects in this new present injury finding are critical to the expiry review and undercut the
factual basis underlying the determination of continuation or recurrence of injury" (the United States).
The applicable legal test, described above, has prof ound implications for the ways in which the Panel
should dispose of China's claims. First, these clai ms are, factually, based upon China's unsupported
assertion that the European Union relied entirely in it s determination of the likelihood-of-injury on its
finding of injury. This is incorrect and the Panel can dismiss China's claim on this basis alone. Such
a ruling would be fully consistent with the legal te st that China itself considers applicable and with
respect to which the evidentiary onus thus lies on Chin a. Second, China asked the Panel to rule on its
claim of a violation of Article 11.3 ADA as a mere consequential claim. This construction of claims
contradicts China's own legal test concerning the ap plicability of Article 3 in the expiry reviews and
invites (and mandates) the Panel to adopt the theory that some defects (regardless of their extent) in
the finding of injury made in the context of an expiry review automatically and necessarily render the
determination of the likelihood of injury inconsistent with Article 11.3 ADA. This is legally erroneous
and, hence, the Panel should dismiss China's claims . As a final remark, the European Union stresses
that what is at issue is whether the EU's dete rmination of the likelihood-of-injury satisfied the
obligations of Article 11.3 ADA. This is what China should be ask ed to prove in a claim against an
expiry review. So far, however, all the debate before the Panel concerned the compliance with
Article 3 of the ADA. China's way of framing its claims suggests that the Panel should review China's
claims with respect to the injury finding in is olation from the disciplines of Article 11.3 of the ADA.
Yet, the correct focus of the in jury should be whether China has established that the EU IA's
determination of likelihood of injury contradi cted the requirements of Article 11.3 of the ADA. This
is not the case.

16. Claim II.2.Instead of clarifying the issues, Chin a's response to Question 39 obfuscates them
by departing from the original claim set out in the Panel request and developed in China's First
Written Submission. China's res ponse includes contradictory statements which make it difficult for
the European Union to understand what actually China's argument is.

17. Claim II.3 With respect to applicability of Article 6.10 of the ADA to injury sampling, for
careful readers of the EC – Salmon (Norway) case China's argumentation comes as a déjà vu. China
does not bring any new element or idea into the discu ssion. When considered carefully in light of the
facts of the present case, in effect, China is saying that in the circumstances at hand an investigation
of injury cannot take place. Eventually, the Panel does not need to inquire into the representativeness
of the sample. What China claims under its Claim II.3 is that the EU producers' sample was neither
statistically valid nor represented the largest perc entage of production as required by Article 6.10
ADA. Since there are no legal requirements to sample companies in an injury analysis in accordance
with Article 6.10, China's claim can simply be reject ed on law. The issue of whether the EU IA acted
inconsistently with Article 3.1 ADA under Claim II.3 depends on whether there was sufficient
information on the record for a selection of the sample in accordance with the requirements of
Article 3.1 ADA. As the European Union explained also in its First Written Submission,
 in the context
of a discussion under Article 3 of the ADA, there may indeed be very good reasons for keeping a
company which discontinued production in the RIP in a sample. China did not make a claim under
Article 4.1 of the ADA.

18. Claim II.4 Regarding Prodcom, if China is really of the view that the possible presence of
related companies invalidates a legal analysis under Article 3.4 of the ADA, China is effectively
saying that in situations where the domestic industry is very large, an analysis of the relevant factors
cannot be made consistently with Article 3.4 ADA, since there is always the risk that some such
companies would be included. Regarding China' s assertion concerning the reliance on information
from the national associations in the analysis of the injury factors assessed at the macroeconomic
level, China misunderstands the analysis which was unde rtaken. The European Union also does not
see a reason for which reasonable estimates should not constitute positive evidence.

19. Claim II.5 A determination of likelih ood of injury under Article 11.3 should not be equated
with a determination of likelihood of dumping in so far as reliance is placed on a finding of existing
injury or dumping.

20. Claim II.6 The failure of one interested party to appreciate that some EU producers had not
replied to the Community Interest questionnaires was not the European Union's fault. The burden lies
on China to prove the factual assertions (disputed by th e European Union) that form part of its claim.
China's reiterations of its criticis ms of the grant of identity confidentiality to EU producers remain
unconvincing. The EU producers' had limited legal assistance. The Commission assisted all
interested parties, without discrimination, in pr oviding the information that had been requested of
them.

21. Claim II.7 The obligation in Article 6.4 to 'provi de timely opportunities for all interested
parties to see all information' available does not ex tend to the investigating authority's intentions or
reasoning. China's contentions regarding the notifi cation obligations of the investigating authority
during the course of the investigation have no basi s in law. The European Union's decision on the
analogue country did not become irrevocable at the stage that is alleged by China.

22. Claim II.9 China has not produced further effective criticisms of the decision to accord EU
producers confidentiality for their identities.

23. Claim II.10 The European Union prefers to use actual data rather than 'facts available', even
if that means accepting corrections to evidence that h as been submitted. Such efforts are just what is
required by Article 3.1. China has provided no ev idence that could establish a case of discrimination
by the European Union in exercising this power.

DEFINITIVE REGULATION

24. Claim III.1 and III.20 The European Union considers th at the examination of the MET
applications was not required with respect to exporting producers which, as was the case in the
Footwear investigation, did not fall within the samp le and did not qualify for individual examination.
On this basis, the Panel should reject China's claims in their entirety. Moreover, China fundamentally
ignores that, according to paragraph 342 of China's Working Party Report, the commitments listed
therein "are incorporated in paragraph 1.2 of [China's Protocol of Accession]". Thus, only the
commitments listed in paragraph 342 of the Working Party Report are integral part of the covered
agreements. Since paragraphs 150 and 151 of China's Working Party Report are not listed in
paragraph 342, it should be concluded that they ar e not part of the covered agreements. China also
takes issue with the meaning of Section 15(a)(ii) of its Protocol of Accession and argues that the term
"industry" does not imply that the use of NME methodologies is precluded only if it can be
established that the "industry", rather than the si ngle operators within such industry, operate on
market economy conditions. The European Union di sagrees. In general terms producers requesting
MET must show that market economy conditions pr evail in the industry (as opposed to individual
companies) producing the like product with regard to manufacture, production and sale of that
product. However, as a unilateral concession vis-à-vi s China, the European Union examines whether
an individual producer can be considered as a market economy producer (and thus grant MET) even if
market economy conditions cannot be shown to preva il in the industry or sector producing the like
product. Finally, China considers that sampling cannot apply to a determination whether market
economy conditions prevail in the industry concerned. In this respect, the Eu ropean Union notes that
China again disregards the consequences of usin g sampling. Even in cases concerning market
economy countries, prices or costs of non-sampled cooperating exporting producers are not examined
and there is no obligation to do so, other than Article 6.10.2 of the ADA. Similarly, there was no
obligation to examine MET applications of non- sampled cooperating exporting producers in the
Footwear investigation. In view of the above, the Panel should reject China's claim in their entirety.

25. Claim III.2 China's proposal of an alternative basi s for determining administrative, etc.,
expenses and profits is irrelevant in the light of the standard of review set by Article 17.6(i) in regard
to evaluations of the facts. China could succeed only by showing bias or non-objectivity on the part
of the European Union.

26. Claim III.5 The European Union decided to opt for the bifurcated approach and based its
analysis on multiple sources of information, subject to multiple cross-checking. This method is
entirely reasonable and yields possibly the most reliable results under the circumstances. China
satisfies itself with criticizing this method without o ffering a credible and feasible alternative. The
EU IA could, instead of relying on its bifurcated approach, simply extrapolate information from the
sample composed of complainants to the entire domestic industry. Intuitively, it would seem that
China would not really prefer such an approach, given the context of a discussion provided by China's
claim II.4.

27. Claim III.9 The issue of the collective effect of 'oth er factors' as a cause of injury was not
raised by any interested party in the investigation, nor in this dispute by China until the Panel itself
poses a question. China's notion that the Europe an Union's 'break the causal link' methodology
precludes a collective assessment is mere assertion. China has given no basis for its contention that
the European Union should have carried out a quan titative analysis. It has adduced no evidence to
support a claim that failure to make a collective assessment in the initial in vestigation 'attributed
improperly to dumped imports the injuries caused by other factors.' Since the European market
operates in euros it is in that currency rather than dollars that undercutting must be assessed. The
causation issue to be determined under the ADA is the effect of the 'dumped imports' and not that of
the margin of dumping. The concentration of dumped imports at a particular time is not an 'other
cause' of injury but may constitute an exacerbated form of injury caused by the dumped imports.

CONCLUSION

28. For the reasons set out in this and previous submissions by the European Union, China's
claims should be rejected in their entirety.