UNITED STATES – FINAL ANTI-DUMPING MEASURES ON STAINLESS STEEL FROM MEXICO
Document: Request for the Establishment of a Panel by Mexico
Date: 3 October 2006
Document codes: WT/DS344/3
Complainant: Mexico
Respondent: U.S.
Third parties: Brazil, Chile, China, EU, Japan, South Korea, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 1, 2.1, 2.4, 2.4.2, 9, 18.4  Anti-dumpingArt. VI:1, VI:2  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

UNITED STATES – FINAL ANTI-DUMPING MEASURES
ON STAINLESS STEEL FROM MEXICO

Request for the Establishment of a Panel by Mexico

 The following communication, dated 2 October 2006, from the delegation of Mexico to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 Acting on instructions from the relevant Mexi can Government authorities, I hereby request
the establishment of a panel pursuant to Articl es 4 and 6 of the WTO Understanding on Rules and
Procedures Governing the Settlement of Disputes (D SU), Article XXIII of the General Agreement on
Tariffs and Trade of 1994 (GATT 1994) and Article 17 of the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade of 1994 (Anti-Dumping Agreement),
regarding the issues listed hereunder. To that en d, we have requested a meeting of the Dispute
Settlement Body on 13 October 2006:

A. Consultations
 On 26 May 2006, the Government of Mexico re quested consultations with the Government of
the United States of America (United States) under Ar ticles 4 and 6 of the DSU, Article XXII:1 of the
GATT 1994 and Article 17 of the Anti-Dumping Ag reement, regarding the laws, regulations,
administrative practices, measures and methodologies for calculating dumping margins, including
zeroing practices.
1 The consultations were held on 15 June 2006. They allowed a better
understanding of the parties' positions but failed to resolve the dispute.

B. Measures
 In the anti-dumping proceedings carried out by the United States Department of Commerce
(USDOC) the United States uses the following methodologies to calculate dumping margins:

 In original investigations, USDOC first s ubdivides reported domestic market and export sales
(also known as "normal value" sales), using a "control number", into a series of "averaging groups" on
a model-specific basis. For each averaging group, it compares normal value and export price, and
takes as the "dumping margin" the amount by which normal value exceeds export price. It then
aggregates the results of the various model-based comparisons. In doing so, however, it adds up only
"positive" results, disregarding (treating as zero, or "zeroing") the negative results (i.e. comparison
results where the weighted-average export price fo r the model exceeds the weighted-average normal
value). This practice is known as "model zeroing". Lastly, USDOC calculates the overall margin of
dumping for the period of investigation by dividing the sum of the positive results (numerator) by the

1 WT/DS344/1; G/L/778; G/ADP/D67/1 (1 June 2006).

total value of all the export sales used in the comp arisons (including those with negative differences)
(denominator).

 In administrative reviews (i.e. when USDOC ca lculates the magnitude of dumping margins in
order to assess an importer's final liability for payment of anti-dumping duties and the future
percentage of the cash deposit), USDOC first subdi vides the comparisons of domestic market sales
(also known as "normal value" sales), using a "contro l number", into a series of monthly "averaging
groups" on a model-specific basis. The comparis on is usually between e ach reported individual
export transaction and the average normal value of the identical or most similar contemporaneous
monthly averaging group to which it corresponds. USDOC then adds together the results of these
comparisons. In doing so, however, it adds only th e "positive" results, disregarding (zeroing) the
negative results (i.e. the results of a comparison where the individual export transaction price for the
model exceeds the weighted-average normal value). This practice is known as "simple zeroing".

• In order to determine the amount of cash deposits, USDOC calculates an overall
margin of dumping for the period of the admi nistrative review for the "class or kind
of merchandise" by dividing the sum of the positive results (numerator) by the total
value of all the export sales used in the comparisons (including those with negative
results) (denominator).

• In order to determine the amount of th e anti-dumping duties to be assessed, USDOC
usually calculates the importer-specific amount by dividing the sum of the positive
differences (numerator) of each importer by the total customs-entered value of each
importer's export sales.

 This means that the United States calculates a margin of dumping and collects anti-dumping
duties in excess of the dumping actually done by the companies concerned. The United States uses
this methodology systematically in all administrative reviews.

 The calculation methodologies described above ar e general measures applied on a prospective
basis, and the United States implements them unde r the following laws, regulations, administrative
procedures and measures:

• Section 736, 751, 771 (35)(A) and (B), a nd section 777(A)(c) and (d) of the Tariff
Act of 1930, as amended;

• The Statement of Administrative Action that accompanied the Uruguay Round
Agreements Act, H.R. Doc. No. 103-316, vol. I;

• USDOC regulations codified at Title 19 of the United States Code of Federal
Regulations, sections 351.212(b), 351.414(c), (d) and (e);

• The Import Administration Anti-Dumping Manual (1997 edition), including the
computer programme(s) to which it refers.

 The calculation methodologies described above were applied by the United States
respectively for determining the dumping margin in the original anti-dumping investigation and for
the final results of the administrative reviews listed in the annex attached hereto.

C. Claims
 1. As such claims

 Mexico considers that the above-mentioned United States laws, regulations, administrative
procedures, measures and methodologies for determining the dumping margin in original
investigations and administrative reviews are incons istent as such with the obligations of the United
States under the Marrakesh Agreement Establishing the World Trade Organization
(WTO Agreement), the GATT 1994 and the Anti-Dumpi ng Agreement, and that they have resulted in
the nullification or impairment of benefits accrui ng to Mexico under Article 3.8 of the DSU. In
particular, Mexico considers that the United Stat es' laws, regulations, administrative procedures,
measures and methodologies for determining the margin of dumping in original investigations and in
administrative reviews described above are, as su ch, inconsistent with at least the following
provisions:

• With respect to original investigations a nd administrative reviews: Article 1 of the
Anti-Dumping Agreement and Article VI:1 and VI:2 of the GATT 1994 as regards
the zeroing methodologies and the conse quent imposition and collection of anti-
dumping duties;

• With respect to original investigations: Articles 2.1, 2.4, and 2.4.2 of the Anti-
Dumping Agreement insofar as the comparison of normal value and export price is
inconsistent with these provisions;

• With respect to administrative reviews: Articles 2.1 and 2.4 of the Anti-Dumping
Agreement insofar as the comparison of norma l value and export price is inconsistent
with these provisions;

• With respect to administrative reviews: Article 9 (including but not limited to
Article 9.3) of the Anti-Dumping Agreem ent insofar as the measures result in the
imposition and collection of an anti-dumpi ng duty in an amount in excess of the
margin of dumping pursuant to Article 2 of the Anti-Dumping Agreement;

• With respect to original investigations a nd administrative reviews: Article XVI:4 of
the WTO Agreement and Article 18 of th e Anti-Dumping Agreement insofar as the
United States has failed to take all necessary steps, of a general or particular
character, to ensure the conformity of its laws, regulations, administrative procedures
and measures with the provisions of the GATT 1994 and the Anti-Dumping
Agreement.

 2. As applied claims

 In the original investigation and administra tive reviews identified in the Annex attached
hereto, the United States applied the laws, regul ations, administrative procedures, measures and
methodologies described above. Accordingly, Mexi co considers that the determinations made by
USDOC and the subsequent determination of an ti-dumping duties and the fu ture cash deposits are
inconsistent with the following provisions of the Anti-Dumping Agreement, the GATT 1994 and the
WTO Agreement:

• With respect to the original investigation: Article VI:1 and VI:2 of the GATT 1994,
Articles 1, 2.1, 2.4, 2.4.2 and 18.4 of the Anti-Dumping Agreement, and
Article XVI:4 of the WTO Agreement, for the reasons set forth above;

• With respect to the administrative reviews: Article VI:1 and VI:2 of the GATT 1994,
Articles 1, 2.1, 2.4, 9 (including, but not limited to Article 9.3) and 18.4 of the Anti-
Dumping Agreement, and Article XVI:4 of the WTO Agreement, for the reasons set
forth above.

D. Request
 Accordingly, Mexico respectfully request s that a panel be established pursuant to
Article XXIII of the GATT 1994, Articles 4 and 6 of the DSU and Article 17 of the Anti-Dumping
Agreement. The terms of reference shall be the te rms provided in Article 7 of the DSU. Mexico asks
that this request be placed on the agenda of the next meeting of the WTO Dispute Settlement Body.

ANNEX

United States –Final Anti-Dumping Measures on Stainless Steel
from Mexico
(Investigation and Order)

Specific Case No. 1

The measure

 This case concerns the imposition of anti-dum ping duties on certain stainless steel products
from Mexico (USDOC case number A-201-822; 64 Fe deral Register (FR) 30790 of 8 June 1999 and
64 FR 40560 of 27 July 1999). The ad valorem rate of the anti-dumping duty was 30.85 per cent for
ThyssenKrupp Mexinox S.A. de C.V. and all other companies.

Use of the zeroing methodology

 In calculating the dumping margin in the original investigation of stainless steel from Mexico,
USDOC utilized the zeroing methodology. It thus disregarded results wher e the difference between
the applicable normal value and the export price was negative, i.e. where normal value was lower than
export price.

Dumping margin without zeroing

 By using the above methodology, USDOC calculated a dumping margin of 30.85 per cent.
Had it not used the zeroing methodology (i.e. had the comparison of the negative results been
included), the dumping margin would have been lowe r. The use of zeroing increased the exposure of
ThyssenKrupp Mexinox S.A. de C.V. and led to the imposition of excessive anti-dumping duties
through the collection of excessive estimated duty deposits.

United States –Final Anti-Dumping Measures on Stainless Steel
from Mexico

(First Administrative Review)

Specific Case No. 2

The measure

 This case concerns the imposition of anti-dumping duties on stainless steel from Mexico
(USDOC case number A-201-822; 67 FR 6490 of 12 February 2002 and 67 FR 15542 of
2 April 2002). The review period was from January 1999 to June 2000 and the ad valorem rate of the
anti-dumping duties was 2.28 per cent for ThyssenKrupp Mexinox S.A. de C.V.

Use of the zeroing methodology

 In calculating the dumping margin in the firs t administrative review of stainless steel from
Mexico, USDOC utilized the simple zeroing methodology, thereby disregarding results where the
difference between the applicable normal value and the export price was negative, i.e. where normal
value was lower than export price.

Dumping margin without zeroing

 By using the above methodology, USDOC calculated a dumping margin of 2.28 per cent.
Had it not used the simple zeroing methodology (i.e. had the comparison of the negative results been
included), the dumping margin would have been 6.02 per cent, and no anti-dumping duties would
have been collected.

United States –Final Anti-Dumping Measures on Stainless Steel
from Mexico
(Second Administrative Review)

Specific Case No. 3

The measure

 This case concerns the imposition of anti-dum ping duties on certain stainless steel products
from Mexico (USDOC case number A-201-822; 68 FR 6889 of 11 February 2003 and 68 FR 13686
of 20 March 2003). The review period was from July 2000 to June 2001, and the ad valorem rate of
the anti-dumping duties was 6.15 per cent for ThyssenKrupp Mexinox S.A. de C.V.

Use of the zeroing methodology

 In calculating the dumping margin in the sec ond administrative review of stainless steel from
Mexico, USDOC utilized the simple zeroing methodology, thereby disregarding results where the
difference between the applicable normal value and the export price was negative, i.e. where normal
value was lower than export price.

Dumping margin without zeroing

 By using the above methodology, USDOC calculated a dumping margin of 6.15 per cent.
Had it not used the simple zeroing methodology (i.e. had the comparison of the negative results been
included), the dumping margin would have been 1.83 per cent, and lower anti-dumping duties would
have been collected.

United States –Final Anti-Dumping Measures on Stainless Steel
from Mexico
(Third Administrative Review)

Specific Case No. 4

The measure

 This case concerns the imposition of anti-dumping duties on stainless steel from Mexico
(USDOC case number A-201-822; 69 FR 6259 of 10 February 2004). The review period was from
July 2001 to June 2002, and the ad valorem rate of the anti-dumping duties was 7.43 per cent for
ThyssenKrupp Mexinox S.A. de C.V.

Use of the zeroing methodology

 In calculating the dumping margin in the th ird administrative review of the anti-dumping
investigation concerning certain stainless steel products from Mexico, USDOC utilized the simple
zeroing methodology, thereby disregarding results where the difference be tween the applicable
normal value and the export price was negative, i.e. where normal value was lower than export price.

Dumping margin without zeroing

 By using the above methodology, USDOC calculated a dumping margin of 7.43 per cent.
Had it not used the simple zeroing methodology (i.e. had the comparison of the negative results been
included), the dumping margin would have been 4.96 per cent, and lower anti-dumping duties would
have been collected.

United States –Final Anti-Dumping Measures on Stainless Steel
from Mexico
(Fourth Administrative Review)

Specific Case No. 5

The measure

 This case concerns the imposition of anti-dumping duties on stainless steel from Mexico
(USDOC case number A-201-822; 70 FR 3677 of 26 January 2005). The review period was from
July 2002 to June 2003, and the ad valorem rate of the anti-dumping duties was 5.42 per cent for
ThyssenKrupp Mexinox S.A. de C.V.

Use of the zeroing methodology

 In calculating the dumping margin in the fourth administrative review of stainless steel from
Mexico, USDOC utilized the simple zeroing methodology, thereby disregarding results where the
difference between the applicable normal value and the export price was negative, i.e. where normal
value was lower than export price.

Dumping margin without zeroing

 By using the above methodology, USDOC calculated a dumping margin of 5.42 per cent.
Had it not used the zeroing methodology (i.e. had the comparison of the negative results been
included), the dumping margin would have been 1.54 per cent, and lower anti-dumping duties would
have been collected.

United States –Final Anti-Dumping Measures on Stainless Steel
from Mexico
(Fifth Administrative Review)

Specific Case No. 6

The measure

 This case concerns the imposition of anti-dumping duties on stainless steel from Mexico
(USDOC case number A-201-822; 70 FR 73444 of 12 December 2005). The review period was from

July 2003 to June 2004, and the ad valorem rate of the anti-dumping duties was 2.96 per cent for
ThyssenKrupp Mexinox S.A. de C.V.

Use of the zeroing methodology

 In calculating the dumping margin in the fifth administrative review of stainless steel from
Mexico, USDOC utilized the simple zeroing methodology, thereby disregarding results where the
difference between the applicable normal value and the export price was negative, i.e. where normal
value was lower than export price.

Dumping margin without zeroing

 By using the above methodology, USDOC calculated a dumping margin of 2.96 per cent.
Had it not used the zeroing methodology (i.e. had the comparison of the negative results been
included), the dumping margin would have been 4.57 per cent, and no anti-dumping duties would
have been collected.