CHINA - COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL FROM THE UNITED STATES
Document: Report of the Panel
Date: 15 June 2012
Document codes: WT/DS414/R
Complainant: U.S.
Respondent: China
Third parties: Argentina, EU, Honduras, India, Japan, South Korea, Saudi Arabia, Vietnam, Russia
Dispute stage: Implementation & Compliance
Agreements cited: Art. VI  GATT 1994Art. 1  Anti-dumpingArt. 10, 11.2, 11.3, 12.7, 12.8, 22.3, 12.7, 12.8, 22.3, 22.5, 15.1, 15.2  Subsidies and Countervailing Measures (SCM)Art. 6.9, 12.2.2, 6.8, Annex II, 6.4, 6.5.1, 3.1, 3.2  Anti-dumping

CHINA - COUNTERVAILING AND ANTI-DUMPING DUTIES
ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL
STEEL FROM THE UNITED STATES

Report of the Panel

I. INTRODUCTION
1.1 On 15 September 2010, the United States requested consultations with China under Articles 4
of the Understanding on Rules and Procedures Gove rning the Settlement of Disputes (the DSU),
Article XXII:1 of the General Agreement on Tariffs and Trade of 1994 (the GATT 1994), Article 30
of the Agreement on Subsidies and Countervailing M easures (the SCM Agreement) (to the extent that
Article 30 incorporates Article XXIII of the GAT T 1994), and Article 17.3 of the Agreement on
Implementation of Article VI of the General Agreement on Ta riffs and Trade 1994 (the Anti-
Dumping Agreement) with respect to China' s measures imposing countervailing duties and anti-
dumping duties on grain oriented flat-rolled electri cal steel (GOES) from the United States, as set
forth in the Ministry of Commerce of the Peopl e's Republic of China (MOFCOM) Notice No. 21
[2010], including its annexes. 1 The consultations were held on 1 November 2010. The consultations
failed to resolve the dispute.
1.2 On 11 February 2011, the United States requested, pursuant to Article 6 of the DSU,
Article 17.4 of the Anti-Dumping Agreement, and Article 30 of the SCM Agreement, that the Dispute
Settlement Body (the DSB) establish a Panel to examine this matter.2
1.3 At its meeting on 25 March 2011, the DSB establis hed a panel pursuant to the request of the
United States in document , in accordance with Article 6 of the DSU.
1.4 The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by the United States in
document WT/DS414/2 and to make such findings as will assist the DSB in making
the recommendations or in giving the rulings provided for in those agreements.
1.5 Following the agreement of the parties, the Panel was composed on 10 May 2011 as follows:
 Chairman: Mr John Adank

 Members: Mr Anthony Abad
 Mr Jan Heukelman

1.6 Argentina; the European Union; Honduras; Indi a; Japan; Korea; Saudi Arabia and Viet Nam
reserved their rights to participate in the Panel proceedings as third parties.
1.7 The Panel met with the parties on 15-16 Septembe r and 6-7 December 2011. It met with the
third parties on 16 September 2011. The Panel issued its interim report to the parties on
24 February 2012. The Panel issued its final report to the parties on 1 May 2012.
II. FACTUAL ASPECTS
2.1 The United States challenges various aspects of the measures imposing countervailing duties
and anti-dumping duties on GOES from the United Stat es. The measures are set forth in MOFCOM's
Notice No. 21 [2010], including its annexes.
3 The United States claims that the measures are

1 WT/DS414/1.
2 WT/DS414/2.
3 Final Determination [2010] No. 21 (10 April 2010) ("Final Determination"), Exhibit CHN-16 and
Exhibit US-28.

inconsistent with China's commitments and ob ligations under the GATT 1994, the Anti-Dumping
Agreement and the SCM Agreement.
2.2 An application for initiation of an anti-dum ping and countervailing duty investigation was
filed on 29 April 2009 by two Chinese steel producers, namely Wuhan Iron and Steel (Group)
Corporation (WISCO) and Baosteel Group Corporation (Baosteel). The applicants alleged that 27
federal and state laws provided co untervailable subsidies to the United States producers of GOES.
The application also estimated a dumping margin for GOES imports from the United States of 25%.
Finally, the application alleged that the imports of GOES from the United States and Russia caused
and threatened injury to the Chinese domestic i ndustry. On 1 June 2009, MOFCOM initiated anti-
dumping, countervailing duty and injury investigati ons. In the countervailing duty initiation notice,
MOFCOM initiated on 22 of the 27 federal and state laws that the applicants had alleged provided
countervailable subsidies. On 20 July 2009, the a pplicants filed new subsid y allegations regarding a
further 10 federal and state laws. On 19 August 2009, MOFCOM initiated an investigation covering
six of these programmes.
2.3 On 10 December 2009, MOFCOM published its preliminary determination. MOFCOM
calculated ad valorem subsidy rates of 11.7% for AK Steel Corporation (AK Steel) and 12% for ATI
Allegheny Ludlum Corporation (ATI). The "all others" subsidy rate repor ted in the preliminary
determination was 12%. MOFCOM calculated pr eliminary dumping margins of 10.7% for AK Steel,
19.9% for ATI and 25% for "all others".
2.4 Prior to issuing its final determination, MOFC OM released a final disclosure document, in
which it revealed that the "all others" subsidy a nd dumping rates had increased to 44.6% and 64.8%
respectively.
2.5 On 10 April 2010, MOFCOM issued its final determination for the anti-dumping and
countervailing duty investigations. MOFCOM calculated ad valorem subsidy rates of 11.7% for AK
Steel, 12% for ATI and 44.6% for "all others". MO FCOM applied a dumping margin of 7.8% to AK
Steel, 19.9% to ATI and 64.8% to "all others". MOFCOM found that China's domestic GOES
industry sustained material injury and that there was a causal link between the injury and the dumped
imports of GOES from Russia and the dumped and subsidized imports of GOES from the
United States.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. T
HE UNITED STATES
3.1 In its written submissions, the United States requested the Panel to find:
(a) China acted inconsistently with Articles 11.2 and 11.3 of the SCM Agreement when
it initiated a countervailing duty investigation with respect to 11 of the programmes
included in the application;
(b) China acted inconsistently with Articles 12.4.1 of the SCM Agreement and 6.5.1 of
the Anti-Dumping Agreement because it faile d to require adequa te non-confidential
summaries of confidential information included in the application;
(c) China acted inconsistently with Article 12.7 of the SCM Agreement because its use
of facts available for known exporters was improper;

(d) China acted inconsistently with Articl e 12.2.2 of the Anti-Dumping Agreement
because it failed to make available to the respondent companies the calculations used
to determine these companies' final dumping margins;
(e) China acted inconsistently with Article 22.3 of the SCM Agreement because it failed
adequately to explain the findings and c onclusions supporting its determination that
the competitive bidding process under the United States Government procurement
statutes at issue did not result in prices that reflected market conditions;
(f) China acted inconsistently with Articles 6.8 and 6.9 of the Anti-Dumping Agreement
because it applied anti-dumping duties based on facts available to "unknown" United
States exporters and did not disclose the essential facts that led to that result;
(g) China acted inconsistently with Articles 12.2 and 12.2.2 of the Antidumping
Agreement because MOFCOM failed to provi de in sufficient detail the findings and
conclusions leading to application of f acts available to "unknown" United States
producers/exporters. MOFCOM also failed to provide "all relevant information" on
the facts underlying its determination that recourse to facts available was warranted in
the calculation of the "all others" antidumping rate;
(h) China acted inconsistently with Article VI:2 of the GATT 1994 because the "all
others" anti-dumping duty levied by China was greater in amount than the appropriate
margin of dumping;
(i) China acted inconsistently with Articl es 12.7, 12.8, 22.3 and 22.5 of the SCM
Agreement because it applied countervaili ng duties based on facts available to
"unknown" United States exporters and provi ded no detail in its final determination
or final disclosure documents regarding the findings that led to the application of
facts available;
(j) China acted inconsistently with Articles 3. 1, 3.2, 6.9 and 12.2.2 of the Anti-Dumping
Agreement and Articles 15.1, 15.2, 12.8 a nd 22.5 of the SCM Agreement because its
price effects analysis was not based on pos itive evidence and it did not engage in an
objective examination of the evidence. Furt her, China did not disclose the essential
facts supporting its price effects analysis a nd did not offer an adequate explanation
for its price effects findings;
(k) China acted inconsistently with Articles 3. 1, 3.5, 6.9 and 12.2.2 of the Anti-Dumping
Agreement and Articles 12.8, 15.1, 15.5 a nd 22.5 of the SCM Agreement because its
causation analysis was not supported by positive evidence or based on an objective
examination of the evidence. Further, China failed to disclose the essential facts
supporting its analysis and did not provide an adequate explanation for its causation
findings; and
(l) Consequently, China also acted inconsiste ntly with Article 1 of the Anti-Dumping
Agreement and Article 10 of the SCM Agreement.
3.2 Pursuant to Article 19.1 of the DSU, the Un ited States requests the Panel to recommend that
China bring its measures into conformity with the Anti-Dumping Agreement, the SCM Agreement
and the GATT 1994.

B.
CHINA
3.3 China requests the Panel to reject the United St ates' claims in their entirety, finding instead
that, with respect to each of them, China acted cons istently with all of its obligations under the WTO
Agreements.
IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are set out in their written submissions, oral statements to the
Panel and their answers to questions. Executive summaries of the parties' written submissions, and
their oral statements or executive summaries ther eof, are attached as addenda to this Report in
Annexes A, C, E and F (see List of Annexes, pages iv-vi).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 India and Viet Nam did not submit third party written submissions, while Viet Nam did not
submit a third party oral statement. The arguments of Argentina; the European Union; Japan and
Korea are set out in their written submissions, oral statements and answers to questions. The
arguments of Honduras and Saudi Arabia are set out in their written submissions and oral statements.
The arguments of India are set out in its oral stat ement. The third parties' written submissions and
oral statements, or executive summari es thereof, are attached as addenda to this Report in Annexes B
and D (see List of Annexes, pages iv-vi).
VI. INTERIM REVIEW
A. I
NTRODUCTION
6.1 On 24 February 2012, the Panel submitted its Interim Report to the parties. On
16 March 2012, both parties submitted written request s for review of precise aspects of the Interim
Report. On 30 March, the United States submitted comments on China's requests for review. Neither
party requested that the Panel hold an interim review meeting.
6.2 The Panel explains below its response to issues of a substantive nature raised by the parties in
their comments on the Interim Report. The Panel has also corrected a number of typographical errors
identified by the parties.
6.3 Due to changes as a result of our review, the numbering of the footnotes in the Final Report
has changed from the Interim Report. The text belo w refers to the footnote numbers in the Interim
Report, with the footnote number in the Final Report in parentheses for ease of reference.
B. PARTIES' REQUESTS FOR CHANGES TO THE INTERIM REPORT
1. Paragraph 7.28
6.4 China submits that the Panel's description of its argument regarding whether the United States
made a prima case under Article 11 is incomplete. China requests that the Panel supplement the
description to reflect the argument that the United States failed to engage in a serious evaluation of the
evidence that accompanied the application at issue.
6.5 The United States does not agree that the Inte rim Report incorrectly characterizes China's
argument. However, if the Panel agrees to amend the description of China's argument, the
United States requests that the Panel note the sec tions of the United States' first and second written
submissions where it addressed the contents of the application and each allegation.

6.6 The Panel has expanded upon its description of Chin a's argument in paragraph 7.28, so that it
is in the level of detail requested by China. The Panel has also accepted the United States' request, by
referencing the sections of its submissions th at the United States relies upon as addressing the
contents of the application (see footnote 19).
2. Paragraph 7.91
6.7 The United States requests some minor changes to the wording in the penultimate sentence of
paragraph 7.91, in order to add greater clarity to the sentence.
6.8 China does not comment on this request.
6.9 The Panel has decided to accommodate the United States' request and has made the
adjustments sought.
3. Paragraphs 7.105, 7.108 and 7.111
6.10 The United States submits that the Panel should ch ange references to the "Economic Stimulus
Package" to the "Economic Stimulus Plan" in its own descriptions of the alleged subsidy and when
describing the arguments made by the United States, as this is the correct terminology.
6.11 China does not comment on this request.
6.12 The Panel notes that Exhibits CHN-8 and US -29 refer to the programme at issue as the
"Economic Stimulus Plan" rather than the "Economic Stimulus Package". Therefore, the Panel has
accommodated the United States' request.
4. Paragraph 7.206
6.13 The United States suggests a minor change to the wording of the final sentence of paragraph
7.206.
6.14 China does not comment on this request.
6.15 In the Panel's view, the United States' suggest ed change does not alter the meaning of the
sentence, but perhaps makes the Panel's statement in the sentence more definitive. The Panel has
decided to accommodate the United States' request in order to add greater clarity and force to the
sentence at issue.
5. Paragraph 7.365
6.16 China submits that the first sen tence of paragraph 7.365 should be struck from the Report.
The sentence in question states: "[a]rguably, if the United States' claim were one of substance,
regarding for example the benefit determinati on under Articles 1.1(b) or 14(d) of the SCM
Agreement, we may find certain problems with the reasoning used by MOFCOM".
6.17 The United States does not comment upon China's request.
6.18 The Panel has removed the sentence from the Re port, on the basis that it is not strictly
necessary to its reasoning. The Panel has al so added a new footnote to paragraph 7.365
(footnote 357) to emphasise that the United States' claim was not one of substance and Article 22.3 of
the SCM Agreement does not discipline the substan tive adequacy of an investigating authority's
reasoning.

6. Paragraphs 7.527, 7.629, 7.635 and footnote 601 (footnote 604 in the Final Report)
6.19 China argues that the Panel's use of the term s "regrettably", "failed to", "failure" and
"impaired", as used variously in paragraphs 7.527, 7.629, 7.635 and footnote 601 (footnote 604 in the
Final Report), is inappropriate. According to Chin a, these terms convey value judgments that are not
appropriate in a panel's description of what ha ppened during the course of panel proceedings.
Further, China argues that the term "impaired" ma y inadvertently reflect some judgment by the Panel
of intent by China to frustrate the Panel's analysis . According to China, where there is no breach of
the relevant general and/or special panel working procedures, it is inappropriate for a panel to use
language that suggests a motive or intent outside the confines of these rules and obligations.
6.20 The United States disagrees with China's objecti ons and argues that other panels have used
the term "regret" to refer to the conduct of a party during a proceeding.
 4 Further, the term "impaired"
was used by the Panel as part of a factual statement about the impact on the Panel's work.
6.21 The Panel has reflected on the terminology used in the paragraphs at issue and, where it
considers appropriate, has made some of the changes requested by China.
7. Paragraph 7.530
6.22 China considers the Panel's statement in the fi fth sentence of paragraph 7.530, namely that
"such prices should be adjusted to ensure that they are properly comparable", suggests that the Panel
is articulating a mandatory methodology the authority must follow. China believes it would be more
appropriate to state that the authority should either adjust the prices to ensure comparability, or
otherwise explain why specific adjustments are not necessary in a particular situation. China suggests
that there may be cases in which adjustments woul d be immaterial. For example, China posits a
scenario in which there are two grades of a product, on e priced at $10/unit and one priced at $12/unit.
China suggests that, if there were a finding of price undercutting of $5/unit, any adjustment would be
immaterial, since the $2/unit difference between th e two products could ne ver change the overall
existence of undercutting.
6.23 The United States disagrees that the Panel' s statement is articulating a mandatory
methodology that authorities must follow. The United States understands the point in the final clause
of the sentence to be that when making a finding of price undercutting, the prices being compared
need to be comparable. The United States asserts that China's proposed revision of the second clause
would appear to provide an authority with the ability to use non-comparable prices. The United States
also asserts that China's hypothetical is confusing since it appears to be re ferring to two different
domestic prices, while the Panel is discussing the comparison between imported and domestic prices.
Should the Panel decide to rephrase the last clause of the sentence, the United States suggests that the
clause could be rephrased as: "and the authority s hould ensure that the prices it is using for its
comparison are properly comparable."
6.24 The Panel has decided to adjust the fifth sente nce of the paragraph to clarify that, for the
purpose of price comparisons, prices should always be comparable.
8. Footnote 525 (footnote 528 in the Final Report), paragraph 7.549
6.25 China suggests deleting the last sentence of footnote 525 (footnote 528 in the Final Report) at
paragraph 7.549. According to China, there is no basis before the Panel to express any opinion on

4 The United States refers in this regard to the Panel Report, Canada – Aircraft, para. 9.178, and Panel
Report, India – Autos, para. 6.54.

whether new capacity has higher costs than expandi ng existing capacity. China contends that the
Panel might properly note this as an issue the au thority should address, but the Panel should not use
any language that prejudges what the authority might find on this issue.
6.26 The United States contends that the last sente nce of footnote 525 (footnote 528 in the Final
Report) accurately describes the record before th e Panel and should not be deleted. The Panel
correctly observed that the United States explained that improvements in existing facilities were
unlikely to engender the same degree of start- up costs as opening an entirely new facility. The
United States contends that if this statement were not true, China (unlike the United States) had access
to the information from the confidential MOFCOM r ecord with which to rebut it. China did not do
so.
6.27 The Panel has decided not to accommodate China' s request. The United States' argument that
creating new capacity is likely to incur greater co sts than merely improving existing capacity is
relevant to the Panel's findings. In making its fi ndings, the Panel is entitled to rely on relevant
United States arguments that were not contested by China.
9. Footnote 602 (footnote 605 in the Final Report), paragraph 7.630
6.28 China disagrees with the first sentence of para graph 7.630, and the last two sentences of
footnote 602 (footnote 605 in the Final Report). China submits that the first sentence of
paragraph 7.630 and the entire footnote 602 (footnot e 605 in the Final Report) are unnecessary to the
Panel's analysis and should be deleted. China asser ts that the relevant issue is completely addressed
by paragraph 7.632. China submits that, although it may not have been able to provide the precise
number for the capacity utilization in 2008 because of confidentiality concerns, China did provide a
confidential range that provided upper and lower limits that more narrowly prescribed the actual
number. China contends that when a party provid es a range and states the actual number is within
that range, it is no longer reasonable for the other pa rty to make assumptions that generate a number
outside the range.
6.29 The United States disagrees with China's request that the Panel delete the first sentence of
paragraph 7.630 and footnote 602 (footnote 605 in the Final Report). According to the United States,
the first sentence of paragraph 7.630 is a factually accurate description of the United States' argument
and China has no basis to object to the inclusion of a United States argument in the Report. The
United States further asserts that the statement and accompanying footnote are directly related to the
remainder of paragraph 7.630 so th ey are not "unnecessary" and should be retained. Finally, with
respect to China's use of a range of numbers, the United States considers that the Panel properly noted
in the final sentence of footnote 602 (footnote 605 in the Final Report) that China's mere assertion of
error, without providing the actual underlying data, is insufficient to reject the basic point being made
by the United States.
6.30 The Panel has decided not to accommodate China's request. The first sentence of
paragraph 7.630 describes an argument made by the United States that is highly relevant to the Panel's
subsequent analysis. Furthermore, footnote 602 (footnote 605 in the Final Report) clarifies the
reasons the Panel was not able to reject the Unite d States' argument on the basis of China's simple
assertion of error.
10. Paragraph 7.637
6.31 China believes the statement "it is clear" in the second sentence of paragraph 7.637 is
inappropriate. Given the Panel's earlier discussion of the limitations on its analysis, China contends
that it is hard to see how the conclusion could be "c lear". In this situation, China believes the phrase
"it appears" more appropriately describes the situation.

6.32 The United States asserts that the fact that the information available to the Panel was limited
does not mean that there can be no clear conclusi ons drawn from it. Moreover, the Panel's statement
is qualified by stating the increase was "at least " partially responsible for the accumulation of
inventory. According to the United States, theref ore, the Panel's use of the phrase "it is clear" is
entirely appropriate.
6.33 The Panel has reconsidered the wording it used in the second sentence of paragraph 7.637 and
has decided to adjust it to accommodate China's request.
VII. FINDINGS
A.
GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION , THE APPLICABLE STANDARD OF
REVIEW AND BURDEN OF PROOF
1. Treaty Interpretation
7.1 Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of interpretation of
public international law". It is generally accepted th at the principles codified in Articles 31 and 32 of
the Vienna Convention on the Law of Treaties are such customary rules.5
2. Standard of Review
7.2 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 facts of the cas e and the applicability of and conformity
with the relevant covered agreements. 6 (emphasis added)
7.3 According to the Appellate Body, the "objective assessment" to be made by a panel reviewing
an investigating authority's determination is to be informed by an examination of whether the agency
provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its
factual findings; and (ii) how those factual findings supported the overall determination.7
7.4 The Appellate Body has also commented that a panel reviewing an investigating authority's
determination may not conduct a de novo review of the evidence or substitute its judgment for that of
the investigating authority. A panel must limit its examination to the evidence that was before the
agency during the course of the investigation and must take into account all such evidence submitted
by the parties to the dispute. 8 At the same time, a panel must not simply defer to the conclusions of
the investigating authority. A panel's examinatio n of those conclusions must be "in-depth" and
"critical and searching".9

5 Done at Vienna, 23 May 1969, 1155 United Nations Treaty Series 331 (1980); 8 International Legal
Materials 679 (1969).
6 Further to Article 11 of the DSU, Article 17.6 of the Anti-Dumping Agreem ent sets forth a specific
standard of review applicable to anti-dumping disputes.
7 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 186.
8 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 187.
9 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 - Canada), para. 93.

3. Burden of Proof
7.5 The general principles applicable to the allo cation 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.
10 Therefore, as the complaining party, the United States bears the burden of
demonstrating that certain aspects of the anti-dum ping and countervailing duty measures at issue are
inconsistent with the Anti-Dumping Agreemen t, the SCM Agreement and the GATT 1994. 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 eff ective refutation by the defending party, requires
a panel, as a matter of law, to rule in favour of the complaining party. 11 Finally, it is generally for
each party asserting a fact to provide proof thereof.12
B. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLES 11.2 AND 11.3 OF THE SCM
AGREEMENT IN INITIATING AN INVESTIGATION WITH RESPECT TO CERTAIN PROGRAMMES
1. Provisions at issue
7.6 The United States' claim relates to Articles 11. 2 and 11.3 of the SCM Agreement. These
provide, relevantly:
11.2 An application under paragraph 1 shall include sufficient evidence of the
existence of (a) a subsidy and, if possible, its amount, (b) injury within the meaning
of Article VI of GATT 1994 as interpreted by this Agreement, and (c) a causal link
between the subsidized imports and the alleged injury. Simple assertion,
unsubstantiated by relevant evidence, cannot be considered sufficient to meet the
requirements of this paragraph. The appli cation shall contain such information as is
reasonably available to the applicant on the following:

 (iii) evidence with regard to the exis tence, amount and nature of the subsidy
in question.
11.3 The authorities shall review the accu racy and adequacy of the evidence
provided in the application to determine wh ether the evidence is sufficient to justify
the initiation of an investigation.
2. Factual Background
7.7 On 27 April 2009, two Chinese steel producers, WISCO and Baosteel, filed an application
with MOFCOM, requesting relief under China's an ti-dumping and countervailing duty laws on behalf
of China's domestic GOES industry. The applicants alleged that United States producers of GOES, in
particular, AK Steel and ATI, had engaged in injurious dumping and had benefited from various
countervailable subsidies.
7.8 In relation to the subsidies, the applicants alleged that 27 federal and state laws, including
several federal procurement statutes, provided countervailable subsidies to the United States
companies. On 1 June 2009, MOFCOM initiated a countervailing duty investigation in relation to 22
of the 27 programmes included in the application.

10 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
11 Appellate Body Report, EC – Hormones, para. 104.
12 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.

7.9 On 20 July 2009, the applicants filed new subs idy allegations regarding 10 federal and state
laws. MOFCOM initiated a countervailing duty inves tigation in relation to six of the programmes
included in the additional application.
7.10 In its claim under Articles 11.2 and 11.3 of the SCM Agreement, the United States challenges
the initiation of an investigation in relation to six of the programmes included in the original
application and five of the programmes included in the additional application. Therefore, the
United States' challenge regarding the initiation of th e investigation relates to 11 programmes, namely
the Medicare Prescription Drug, Improvement a nd Modernization Act of 2003; the Economic
Recovery Tax Act of 1981, the Tax Reform Act of 1986; the Steel Import Stabilization Act of 1984;
the State of Indiana Steel Industry Advisory Serv ice; grace periods for meeting the Clean Air Act
emissions standards; the "supply of electricity to the steel industry at a low price"; the "supply of
natural gas to the steel industry at a low price"; a "subsidy to coal for the steel industry"; the 2003
Economic Stimulus Plan of Pennsylvania; and Pennsylvania's Alternative Energy Funding Program.
3. Arguments of the United States
7.11 According to the United States, the initiation by MOFCOM of the countervailing duty
investigation in relation to 11 United States fede ral and state programmes was inconsistent with
Articles 11.2 and 11.3 of the SCM Agreement.
(a) Article 11.2 of the SCM Agreement
7.12 The United States notes that Article 11.2 re quires that "an application…shall include
sufficient evidence of the existen ce of…a subsidy". Read in the context of Article 1 of the SCM
Agreement, Article 11.2 requires that an applica tion to initiate a counter vailing duty investigation
include sufficient evidence of the ex istence of a financial contribution, a benefit (requirements for the
existence of a subsidy) and specificity (since Part III of the SCM Agreement applies only if a subsidy
is specific).
13 According to the United States, Article 11. 2(iii), which refers to evidence "with regard
to the existence, amount and nature of the subsidy in question", supports its position.14
7.13 With respect to what evidence is "sufficient" in a petition, the United States refers to the
second sentence of Article 11.2, which provides that "simple assertion, unsubstantiated by relevant
evidence, cannot be c onsidered sufficient". 15 To meet the standard fo r "sufficient evidence", an
application must contain a degree of actual evidence. 16 The panel in US - Offset Act (Byrd
Amendment) noted that Article 11.2 ensures that "inves tigations are not initiated on the basis of
frivolous or unfounded suits". 17 The United States also argues that while it is not necessary for an
applicant definitively to establish the existence of ea ch element of a specific subsidy at the time of
lodging a petition, there must be at least some evidence of financial contribution, benefit and
specificity. The United States rejects China's attempt to rely on "the broader context provided by the
application" in place of evidence for one or more of the necessary elements.18
7.14 In relation to the GOES investigation, the United States argues that for 11 of the programmes
investigated by MOFCOM, the initial and additiona l applications included no evidence of basic

13 United States' first written submission, para. 74 and United States' response to Panel question 37.
14 United States' first written submission, para. 74.
15 United States' first written submission, para. 74.
16 United States' second written submission, para 4, citing Panel Reports, Mexico – Steel Pipes and
Tubes, para. 7.24 and Guatemala – Cement II , para. 8.53 (both discussing Article 5.2 of the Anti-Dumping
Agreement).
17 United States' first written submission, para. 74, quoting Panel Report, US – Offset Act (Byrd
Amendment), para. 7.61
18 United States' response to Panel question 1, para. 6.

subsidy elements and were based on simple assertion. Further, the applications did not state that
relevant information was not "reasonably available". 19 The United States alleges deficiencies in the
application in relation to the following programmes:
(i) Medicare Prescription Drug, Improvement and Modernization Act
7.15 The United States argues that the application in cluded no evidence indicating that the alleged
subsidy was specific. According to the United St ates, the statement in the AK Steel Annual Report
indicating that AK Steel sponsors the relevant type of healthcare plan to qualify for the subsidy does
not indicate that the company was the only such co mpany to do so, or that it was one of a limited
group of such companies. Further, there was no evidence to indicate that "sponsors of retiree
healthcare benefit plans that included a qualified prescription drug benefit" was a de jure or de facto
specific group.
(ii) Economic Recovery Tax Act of 1981
7.16 The United States notes that the Economic Recove ry Tax Act of 1981 was in effect for only
two years and ceased to operate 27 years prior to the period of investigation. The United States
argues that the application contained no evidence indi cating that a benefit existed during the period of
investigation. According to the United States, China' s speculation, after the fact, that it is possible the
subsidy could have been allocated over time, and th at the allocation period, which was never alleged
in the first place, could have exceeded 20 years, is inadequate to support a decision to initiate.
20
(iii) Tax Reform Act of 1986
7.17 The United States complains that the applicant failed to provide any evidence indicating that a
benefit could exist during the period of investigatio n in relation to subsidies allegedly provided 24
years prior to this period. 21
(iv) Steel Import Stabilization Act of 1984
7.18 According to the United States, the application was deficient due to lack of evidence of the
existence of a financial contribution. The applica tion alleged that the voluntary restraint agreements
(VRAs) established under the Steel Import Stabili zation Act constituted a price support mechanism
within the meaning of Article 1.1(a)(2) of the SCM Agreement. 22 However, the sole evidence relied
upon by the petitioner was that the VRAs "effectiv ely provided" steel producers with a price support
mechanism. According to the Un ited States, this is not evidence that the VRAs constituted "price
support" within the meaning of the SCM Agreement.23
(v) State of Indiana Steel Advisory Service
7.19 The United States argues that the application in cluded no evidence that the State of Indiana
Advisory Service constitutes a financial contribution. The applicant merely stated that the Advisory
Service constitutes the provision of a good or servi ce and that the programme was "indicative" of a

19 United States' first written submission, paras. 76-77. The United States responds to China's
argument that it did not engage in a serious evaluatio n of the evidence that acco mpanied the application and
therefore did not make a prima facie case under Article 11, by noting that it addressed the contents of the
application and each allegation at para. 78 of its firs t written submission, paras. 4-36 of its second written
submission and in Exhibits US-2, US-16, US-29, US-30 and US-31.
20 United States' opening statement at the first meeting of the Panel, para. 8.
21 United States' second written submission, para. 13.
22 United States' second written submission, para. 14.
23 United States' second written submission, para. 15.

financial contribution and could "quite plausi bly" have constituted a financial contribution.
24 T h e
United States contends that no evidence was provi ded indicating that a study would be performed
under the programme and, even if it were, whether it w ould be available to the steel industry. Finally,
the United States argues that the application did not indicate what the benefit under the programme
would be.25
(vi) Grace periods for compliance with the Clean Air Act
7.20 According to the United States, the application appears to allege that steel companies were
given a three year postponement for compliance with certain environmental standards in the Clean Air
Act and that this "special envi ronmental immunity is virtually an income support to the steel
industry". However, the United States argues that the application included insufficient evidence of
actual income or price support within the meaning of Article 1.1(a)(2) of the SCM Agreement.26 With
respect to benefit, the United States notes that the "special environmental immunity" ended on 31
December 1985. The applicant did not provide evidence indicating how a benefit could exist in
relation to a grace period that expired more than 20 years prior to the start of the period of
investigation.
27
(vii) 2003 Economic Stimulus Plan of Pennsylvania
7.21 According to the United States, the petition did not include sufficient evidence of specificity
in relation to the 2003 Economic Stimulus Plan of Pennsylvania. Noting that there are steel
production facilities in Pennsylvania does not constitute evidence that steel is a "favoured" industry.
Although a focal point of the programme was to provide "[r]esources that allow our traditional
industries, especially manufacturing, to access new technology", the United States argues that this was
only one of seven focal points. In fact, the Plan "sought to serve a wide variety of economic sectors,
industries and firms".
28
(viii) Pennsylvania's Alternative Energy Funding Programme
7.22 The United States argues that the applicati on was deficient in providing evidence of
specificity. The application asserted that "looking at the full range, the applicants could easily
discover the fact that…most…grantees were from en ergy or steel industries" and that the steel
industry "was absolutely one of the most important receivers". The United States argues that it is
unclear how these statements provide sufficient evidence of specificity. 29 The United States also
argues that the application did not provide evidence of the existence of a benefit. MOFCOM ignored
evidence provided by the United States demonstratin g that, for the most part, the programme was not
operational during the period of investigation. For the part of the programme that was operational, the
United States provided evidence that the respondent companies did not receive a benefit.
(ix) Natural Gas
7.23 The United States argues that the petition include d no evidence of a financial contribution,
benefit or specificity in relation to the alle gation that GOES producers received a countervailable

24 United States' second written submission, paras. 16-17.
25 United States' second written submission, paras. 16-17.
26 United States' second written submission, para. 18.
27 United States' second written subm ission, para. 20. In response to Panel question 39, the
United States confirms that it is not challenging MOFCOM 's initiation of an investigation with respect to the
1990 amendments to the Clean Air Act.
28 United States' second written submission, paras. 28 -30; United States' response to Panel question 5,
paras. 13-15 and United States' opening statement at the first meeting of the Panel, para. 7.
29 United States' second written submission, para. 32.

subsidy through the pricing of natural gas. The evidence provided by the applicants demonstrated that
the natural gas market was deregulated in 1985, at which time users negotiated directly with
producers to set prices. 30 China does not point to any evidence in the application to indicate that the
United States Government sets prices, let alone sets pr ices in a discriminatory manner. Further, price
differentiation is not, in and of itself, evidence of sp ecificity. Finally, to the extent the applicants
argued that subsidies were provided to natural g as producers, China cannot point to any evidence in
the application to indicate pass-through of such subsidies.31
(x) Electricity
7.24 According to the United States, the petitioners' allegation that GOES producers received a
subsidy through the pricing of electricity was not supported by evidence of a financial contribution,
benefit or specificity. The evidence in the petitio n was consistent with the fact that, while the
United States Government regulates the provision of el ectricity, it does not set retail electricity prices.
Further, the evidence did not sup port the applicant's assertion that the United States Government sets
preferential prices for certain industries and regions. Price differentiation is not, in and of itself,
evidence of specificity and China cannot point to any evidence indicating that the United States
Government sets prices in a discriminatory fashion. 32 In addition, the United States notes that, to the
extent the applicants argued that subsidies were provided to electricity producers, no evidence was
cited indicating pass-through of such subsidies to the steel industry.33
(xi) Coal
7.25 The United States notes that there was no evidence in the application that any subsidization to
the coal industry passes-through to the steel industry. This was merely asserted by the applicants.
Further, China cannot point to any evidence that th e United States Government sets the price for coal
or in any way sells coal to the steel industry on preferential terms.
(b) Article 11.3 of the SCM Agreement
7.26 The United States claims that China acted in consistently with its obligations under
Article 11.3 because MOFCOM failed to examine the accuracy and adequ acy of the evidence
provided to substantiate the exis tence of a subsidy. Regarding the correct interpretation of
Article 11.3, the United States cites the panel's interpretation of the analogous provision under the
Anti-Dumping Agreement in US – Softwood Lumber V , in particular that a panel should determine
"whether an unbiased and objective investigating au thority would have found that the application
contained sufficient information to justify initiation of the investigation".34
7.27 According to the United States, for many of the programmes included in the petition,
evidence of the basic subsidy elements was miss ing. The United States argues that no reasonable
investigating authority would have initiated an investigation of the 11 programmes at issue. 35 Prior to
the initiation, the United States highlighted to MOFCOM the problems with the application.
Notwithstanding the information provided to it by the United States, MOFCOM initiated the
countervailing duty investigation with respect to all of the programmes at issue.36

30 United States' second written submission, para. 23.
31 United States' second written submission, paras. 24-25.
32 United States' second written submission, para. 21.
33 United States' second written submission, para. 21.
34 United States' first written submission, para. 79.
35 United States' first written submission, para. 80.
36 United States' first written submission, para. 80 and second written submission, para. 36.

4. Arguments of China
7.28 China disputes the United States' claim that MOFCOM acted inconsistently with Articles 11.2
and 11.3 of the SCM Agreement. In fact, China contends that the United States has not made a prima
facie case with respect to its Article 11 claims. In particular, China argues in its first and second
written submissions that the United States failed to e ngage in a serious evaluation of the evidence that
accompanied the application at issue. Rather, the United States simply asserted that "the petition did
not contain any evidence" of one or more elements of an actionable subsidy, without referring to the
information accompanying the application.
37 China also argues that the allegation that the application
failed adequately to allege one or more elements of a subsidy with respect to each of the 11
programmes at issue is in fact incorrect.
(a) Article 11.2 of the SCM Agreement
7.29 According to China, Article 11.2 of the SCM Ag reement contains a low application threshold
that requires far less substantiation and an alysis than claimed by the United States. 38 The objective of
Article 11.2 is to limit the evidentiary burden on the applicant. Although China agrees with the
United States that Article 11.2 requires evidence of a financial contribution, benefit and specificity,
this is qualified by the chapeau to Article 11. 2, which requires only the information "reasonably
available to the applicant".39 China argues that, given the lack of any direct reference to "specificity"
in Article 11.2, and the difficulty applicants face in obtaining evidence of specificity, particularly de
facto specificity, a different and less stringent evidentiary standard exists for this element.40
7.30 China contends that the jurisprudence relating to the analogous provision under the Anti-
Dumping Agreement, namely Article 5.2, provid es important context for the interpretation of
Article 11.2 of the SCM Agreement.41 According to China, the panels that have examined Article 5.2
of the Anti-Dumping Agreement have held that applicants need only submit enough evidence to
justify an investigation and do not need to analyse the evidence or explain the ultimate conclusion.
China notes "the quantity and quality of the information provided by the applicant need not be such as
would be required in order to make a preliminary or final determination" and the inclusion of raw
information is sufficient to overcome the proscription on simple assertion.42
7.31 Although China's primary position is that the United States has not made a prima facie case
under Article 11.2 of the SCM Agreement, China also seeks to demonstrate that the application for
initiation included sufficient evidence for each of the 11 programmes at issue:
(i) Medicare Prescription Drug, Improvement and Modernization Act
7.32 In response to the United States' claim that th e application did "not include any evidence of
specificity", China argues that AK Steel's Annual Report, which was annexed to the application,
stated that the Medicare Act "provides a federal s ubsidy to sponsors of retiree healthcare benefit
plans" and that AK Steel is such a sponsor. Acco rding to China, this demonstrates contingent access
to the subsidy and could indicate the existence of de jure or de facto specificity.43

37 China's first written submission, paras. 25 and 28 and China's second written submission, paras. 12-
13.
38 China's first written submission, para. 14.
39 China's first written submission, paras. 16-17.
40 China's response to Panel question 37.
41 China's first written submission, para. 19.
42 China's first written submission, para. 22.
43 China's first written submission, paras. 34-36.

(ii) Economic Recovery Tax Act 1981
7.33 China disputes the significance of the United Stat es' argument that the application did not
include any evidence showing that the programme provided a benefit during the period of
investigation. According to China, implicit in the evidence of a large benefit to the steel industry is a
claim that a benefit was received during the period of investigation. There is no requirement to fix a
benefit allocation period at the time of filing an appli cation. China concludes that the lack of analysis
linking evidence of the subsidy in 1981 and 1982 to benefits during the POI does not invalidate the
allegation.
44
(iii) Tax Reform Act 1986
7.34 In response to the United States' allegation that the application did not contain evidence of a
benefit during the period of investigation, Chin a relies upon the explanation provided for in the
Economic Recovery Tax Act. Further, China cont ends that the applicant had no evidence before it
indicating that the programme had been repealed, l eaving open the possibility that it was still in effect
during the period of investigation.45
(iv) Steel Import Stabilization Act 1984
7.35 China disputes the United States' argument that the application included no evidence that the
VRAs concluded under the Act c onstituted a financial contribution. According to China, the
application included information that actions und er the Act led to "pecuniary benefits" to the
United States steel industry. China concludes that whether this could definitively be found to be a
financial contribution was not for the ap plication conclusively to determine. 46 In response to a Panel
question, China argues that the VRAs caused a tr ansfer of wealth from steel purchasers to the
United States steel industry, due to higher domestic steel prices. This could be construed generally as
a form of price or income support. Alternatively, China argues that it could be evidence of a financial
contribution under Article 1.1(a)(1)(iv) of the SCM Ag reement because the effect of the measure is to
cause a transfer of funds from private parties to the steel industry.47
(v) State of Indiana Steel Industry Advisory Service
7.36 China argues that the evidence in the application demonstrated that the programme provided
support to the steel industry, including a mandate to examine laws and problems affecting the
industry, and that this was "indicative of a financ ial contribution" in the form of the provision of
goods or services. 48 In response to the United States' argument that a study was never actually
conducted under the programme, China argues that the applicants were dealing with imperfect
information.49
(vi) Grace Periods for Compliance with the Clean Air Act
7.37 China argues that the application articulated a theory regarding the existence of a financial
contribution, namely the provision of income or price support to the industry through delaying an
obligation to invest in clear air technology. Regarding the United States' argument that the
application did not include evidence of benefit, China argues that the applicant provided specific
estimates of the cost savings associated with the grace periods. Although the grace periods ended

44 China's first written submission, paras. 37-39.
45 China's first written submission, para. 40
46 China's first written submission, paras. 41-42.
47 China's response to Panel question 38.
48 China's first written submission, paras. 43-44.
49 China's opening statement at the first meeting of the Panel, para. 15.

more than 20 years ago, China relies on its previo us argument that it is not necessary to allocate a
benefit across time in the context of an application for initiation.
50
(vii) 2003 Economic Stimulus Plan of Pennsylvania
7.38 China argues that there was "circumstantia l evidence of specificity" included in the
application, which is sufficient for the purposes of Ar ticle 11.2 of the SCM Agreement. In particular,
China argues that the evidence demonstrating the prominence of the GOES industry within
Pennsylvania was evidence of specificity. Further, the programme included a focus on "resources that
allow…traditional industries, especially manufactur ing, to access new technology". China argues that
a programme emphasizing traditional manufacturing industries suggests the prospect of de facto
specificity.51 Finally, China rejects the United States' argument that if more than one sector of an
economy is targeted for support, a finding of suffici ent evidence of specificity is not possible for the
purposes of initiation.52
(viii) Pennsylvania's Alternative Energy Funding Plan
7.39 China argues that the application included evidence that certain defined projects were eligible
for loans under the programme. Further, "based on actual utilization, these categories could in fact
define a very small range of industries that benefited, providing the basis for a de facto specificity
finding". On the question of benefit, China c ontends that evidence that individual respondents
actually received a benefit under the programme is not required. Rather, presenting evidence of the
"implication of a program focused on clean energy in relation to an industry known to be high
polluting" is plausible evidence of the existence of a benefit.
53
(ix) Natural Gas and (x) Electricity
7.40 China argues that, contrary to the United Stat es' allegation, the application did provide
evidence of a financial contribution, benefit and sp ecificity associated with the supply of electricity
and natural gas to the steel industry. In partic ular, the application included evidence that the
United States Government regulates the electricity and natural gas industries and that the average
price paid by the steel industry for electricity and na tural gas is lower than the total average price paid
in the United States and the price paid by other sectors.54
(xi) Coal
7.41 China argues that the application included evid ence of subsidies to the coal industry, which
"is evidence of benefit through an indirect financial contribution" and evidence of the steel industry's
substantial use of coal, "which goes to the issue of de facto specificity".55 Further, China argues that
the Coal Subsidy Act is "directly related to the steel industry's use of coal" and therefore provides
evidence of a direct financial contribution to the industry.56

50 China's first written submission, paras. 45-46.
51 China's first written submission, paras. 53-55.
52 China's response to Panel question 40.
53 China's first written submission, paras. 56-58.
54 China's first written submission, paras. 47-50 and China's response to Panel question 1, para. 11.
55 China's first written submission, paras. 51-52.
56 China's response to Panel question 1, para. 14.

(b) Article 11.3 of the SCM Agreement
7.42 According to China, Articles 11.2 and 11.3 of the SCM Agreement impose distinct
obligations.57 Article 11.3 obligates an investigating author ity to satisfy itself that the information in
an application is sufficient evidence of the existence of a financial contribution, benefit and specificity
for the purposes of initiating an investigation.58 China agrees with the United States that in examining
whether an initiation is justified, the standard of review to be applied by a panel is "whether an
unbiased and objective investigating authority woul d have found that the application contained
sufficient information to justify initiation of the investigation". 59 China argues that Article 11.3 does
not require a full investigation; rather the investiga ting authority's obligation is only to substantiate a
need for a more in-depth analysis. 60 As a result, the quantity and quality of the information provided
by an applicant need not be such as would be re quired in order to make a preliminary or final
determination.61
7.43 China questions whether the United States has made a prima facie case under Article 11.3. In
particular, the United States' Article 11.3 claim is dependent upon its flawed Article 11.2 claim. 62 In
any event, China argues that MOFCOM's initiation of the investigation with respect to the 11
programmes at issue before the Panel was consistent with Article 11.3 of the SCM Agreement. China
acknowledges that the United States raised certain objections regarding the evidence underlying some
of the programmes at issue. However, MOFCOM concluded that these were issues to be resolved
during the course of the investigation, rather than issues fatal to initiation of an investigation.63
5. Arguments of third parties
(i) Honduras
7.44 According to Honduras, the evidence required under Article 11.2 cannot consist of mere
conjecture, speculation or abstract inferences. 64 In relation to those programmes at issue that expired
prior to the period of investigation, Honduras argues that the lack of guidelines in the SCM
Agreement regarding the allocation of subsidies ov er time does not lead to an exception to the
requirement to provide sufficient evidence of the existence of a subsidy under Article 11.2.
65 I n
relation to the State of Indiana Steel Advisory Service, Honduras argues that the mere creation of an
entity whose apparent function is to conduct studi es or analyses should not be considered sufficient
evidence of the existence of a financial contribution.66
(ii) India
7.45 India notes that whether the application included the requirements found in Article 11.2 of the
SCM Agreement is a question of fact, which Indi a urges the Panel to "evaluate…cautiously and
keeping in view an objective interpretation of the requirements enunciated under Article 11.2".67

57 China's response to Panel question 1, para. 15.
58 China's first written submission, para. 59.
59 China's first written submission, para. 65.
60 China's first written submission, para. 66.
61 China's second written submission, para. 17.
62 China's first written submission, para. 67.
63 China's first written submission, para. 68.
64 Honduras's third party statement, para. 6.
65 Honduras's third party statement, paras. 7-8.
66 Honduras's third party statement, para. 9.
67 India's third party statement, paras. 2.2 and 2.10.

(iii) Korea
7.46 Korea submits that the initiation of a counterva iling duty investigation is supposed to be a
meaningful step, in which the investigating aut hority carefully examines the information in the
petition to determine whether an investigation is justified.
68 Article 11.3 of the SCM Agreement
requires the investigating authority to examine al l the relevant information and materials in the
application and to confirm its veracity before making a decision to initiate an investigation.
According to Korea, an investigating authorit y cannot "passively accept the allegations in the
petition…and initiate an investigation hoping to confirm the veracity down the road".69
(iv) Saudi Arabia
7.47 According to Saudi Arabia, Articles 11.2 and 11.3 of the SCM Agreem ent establish "strict
disciplines" to govern the initiation of investigati ons. The jurisprudence on initiation establishes that
authorities have an obligation to ensure that th e evidence in an application gives a "reasonable
indication" of the existence of subsidization. 70 Further, Saudi Arabia notes that the "reasonable
availability" of the evidence to the applicant under Article 11.2 is not determinative of the
"sufficiency" of the evidence under Article 11.3.71
6. Evaluation by the Panel
7.48 The United States claims that China acted inc onsistently with Articles 11.2 and 11.3 of the
SCM Agreement. According to the United States , with respect to 11 programmes, the initial and
additional applications did not meet the requirements of Article 11.2. Further, under Article 11.3, an
objective investigating authority would not ha ve found sufficient evidence to initiate the
investigations. The Panel notes that the United St ates' claim is the first under Articles 11.2 and 11.3
of the SCM Agreement in the context of WTO dispute settlement, although the initiation of a
countervailing duty investigation was considered in the context of the Tokyo Round Subsidies Code.72
(a) The relationship between Articles 11.2 and 11.3 of the SCM Agreement
7.49 Article 11 of the SCM Agreement sets out certain procedural rules relating to the initiation of
countervailing duty investigations. In particular, Article 11.2 of the SCM Agreement sets forth the
evidence that must be included in an application for initiation submitted to an investigating authority
by or on behalf of a domestic industry. Article 11.3 of the SCM Agreement requires an investigating
authority to review the accuracy and adequacy of the evidence in order to determine whether it is
"sufficient" to justify initiation of an investigation.
7.50 The Panel notes that the WTO covered agreemen ts are international agreements between the
WTO Members. Consequently, the obligations embodied in them are binding only upon Members
and not upon private actors. In the Panel's view, the obligation upon Members in relation to the
sufficiency of evidence in an application finds expression in Article 11.3 of the SCM Agreement,
which provides that an investigating authority must assess the accuracy and adequacy of the evidence
in an application to determine whether it is suffi cient to justify initiation. The obligation in
Article 11.3 must be read together with Article 11.2 of the SCM Agreement, which sets forth the
requirements for "sufficient evidence". If an investig ating authority were to initiate an investigation
without "sufficient evidence" before it, this would be inconsistent with Ar ticle 11.3. Given this

68 Korea's third party submission, paras. 13 and 16.
69 Korea's third party statement, para. 6.
70 Saudi Arabia's third party statement, para. 4.
71 Saudi Arabia's third party submission, paras. 3, 10 and 12.
72 GATT Panel Report, US – Softwood Lumber II.

interpretation, the Panel consider s it appropriate to make findings under Article 11.3 with respect to
the 11 programmes at issue. The Panel will reach its conclusions by reference to the requirements for
"sufficient evidence" set forth in Article 11.2, but does not consider it necessary to reach separate
conclusions under this provision.
(b) Article 11.3 of the SCM Agreement
7.51 Regarding the standard of review that the Pa nel should apply under Article 11.3 of the SCM
Agreement, both parties agree with the interp retation of the analogous provision under the Anti-
Dumping Agreement adopted by the panel in US – Softwood Lumber V. In particular, the parties
submit that a panel should determine "whether an unbiased and objective investigating authority
would have found that the applica tion contained sufficient informati on to justify initiation of the
investigation".73 The Panel agrees with the parties that its role is not to conduct a de novo review of
the accuracy and adequacy of the evidence to arrive at its own conclusion regarding whether the
evidence in the application was suffi cient to justify initiation. Rather, the Panel must consider the
reasonableness of MOFCOM's conclusions, by refere nce to the test articulated by the panel in US –
Softwood Lumber V.
7.52 Under Article 11.3 of the SCM Agreement an i nvestigating authority has an obligation to
determine whether there is "sufficien t evidence" to justify initiation of an investigation. Part of this
analysis must involve an assessment of the accuracy and adequacy of the evidence furnished. In the
Panel's view, when evidence not in the application bu t relevant to the decision to initiate is submitted
to an investigating authority, for example by an exporting Member, an unbiased and objective
investigating authority would weigh this evidence in its assessment. Indeed, this is what the language
in Article 11.3 implies, in providing that an in vestigating authority has a duty to determine the
accuracy and adequacy of the evidence in the application.74
(c) The "sufficient evidence" requirement under Articles 11.2 and 11.3 of the SCM Agreement
7.53 A major issue in contention between the parties is the meaning of "sufficient evidence" under
Articles 11.2 and 11.3 of the SCM Agreement. Ch ina argues that the standard for "sufficient
evidence" is much lower than that advocated by the United States.
7.54 The term "evidence" is defined, relevantly, as "the available facts, circumstances, etc.
supporting or otherwise a belief, proposition, etc., or indicating whether or not a thing is true or valid"
and "information given personally or drawn from a document etc. and tending to prove a fact or
proposition". The term "sufficient" is defined, relevantly, as "adequate". 75 The Panel notes that the
phrase "sufficient evidence" in Articles 11.2 and 11.3 of the SCM Agreement is used in the context of
determining whether the initiation of a countervailing duty investigation is justified. In making this
determination, the investigating aut hority is balancing two competing interests, namely the interest of
the domestic industry "in securing the initiation of an investigation" and the interest of respondents in
ensuring that "investigations are not initiate d on the basis of frivolous or unfounded suits". 76 I t i s
clear that at the stage of initiating an investigation, an investigating authorit y is not required to reach
definitive conclusions regarding the existence of a s ubsidy, injury or a causal link between the two.
Rather, as the panel noted in Guatemala – Cement II, an "investigation is a process where certainty on

73 Panel Report, US – Softwood Lumber V, para. 7.78.
74 Article 13.1 of the SCM Agreement also suggests that an investigating authority is required to weigh
the evidence submitted prior to initiation by an exporting Me mber, as a part of the process of "clarifying the
situation" as to the matters in Article 11.2 of the SCM Agreement.
75 The Concise Oxford English Dictionary, D. Thompson (ed.) (Clarendon Press, 1995), pp. 467 and
1392.
76 Panel Reports, US – Offset Act (Byrd Amendment), para. 7.61 and Guatemala – Cement I, para. 7.52.

the existence of all the elements necessary in order to adopt a me asure is reached gradually as the
investigation moves forward".
77 Indeed, both parties appear to agree with the reasoning of the panel
in US – Softwood Lumber V, in examining the analogous provisions under the Anti-Dumping
Agreement, that "the quantity and the quality of the evidence required to meet the threshold of
sufficiency of the evidence is of a different st andard for purposes of initiation of an investigation
compared to that required for a preliminary or final determination".78
7.55 Therefore, while the amount and quality of th e evidence required at the time of initiation is
less than that required to reach a final determinati on, at the same time the requirement of "sufficient
evidence" is also a means by whic h investigating authorities filter those applications that are frivolous
or unfounded. Although definitive proof of the existe nce and nature of a subsidy, injury and a causal
link is not necessary for the purposes of Article 11.3, adequate evidence, tending to prove or
indicating the existence of these elements, is requi red. Indeed, in considering the quality of the
evidence that should be provided in an application be fore an investigation is justified, we note that
Article 11.2 requires "sufficient evidence of the existence of a subsidy", meaning that the evidence
should provide an indication that a subsidy actually exists. It is also clear from the terms of
Article 11.2 that "simple assertion, unsubstantiated by relevant evidence" is not sufficient to justify
the initiation of an investigation.
7.56 According to China, the standard for "sufficient evidence" must be interpreted in the light of
the requirement in Article 11.2 that the applica tion contain such information as is "reasonably
available" to the applicant. In the Panel's view , the fact that an applicant must provide such
information as is "reasonably available" to it conf irms that the quantity and quality of the evidence
required at the stage of initiating an investigation is not of the same standard as that required for a
preliminary or final determination. However, an i nvestigation cannot be justified where, for example,
there is no evidence of the existence of a subsidy be fore an investigating authority, even if such
evidence is not "reasonably available" to the applicant. Indeed, to justify initiation under Article 11.3,
an investigating authority must have "sufficien t evidence" (whether from the applicant, exporting
Member or arising out its own enquiries) and not mere assertion before it.79
7.57 In the light of these considerations, the Panel c onsiders that the standard advocated by China
is at times overly permissive, as indicated in the Panel's consideration of the 11 programmes at issue.
(d) The required evidence
7.58 Although the parties disagree about the appropria te standard for "sufficient evidence" under
Articles 11.2 and 11.3 of the SCM Agreement, they concur about the categories of evidence referred
to under Article 11.2. In particular, the parties note that evidence of the "existence of a subsidy"
requires evidence of the existence of a financial contribution and a benefit. The parties also agree that
the reference in Article 11.2(iii) to evidence of the "n ature" of a subsidy refers to whether or not the
subsidy is specific under Article 2 of the SCM Agreem ent. However, in response to a Panel question,
China argues that the lack of any direct refere nce to "specificity" under Article 11.2 suggests a
different and lower evidentiary standard in relati on to it. According to China, this distinction

77 Panel Report, Guatemala – Cement II, para. 8.35.
78 Panel Report, US – Softwood Lumber V, para. 7.84.
79 In relation to whether evidence must be analysed by an applicant, we note that with respect to each of
the 11 programmes at issue in this case, the matter in contention between the parties is whether "sufficient
evidence" was included in the application, rather than whether included evidence was analysed or not. In any
event, we agree with the United States' statement that mere allegations cannot constitute sufficient evidence and
that an applicant need not engage "in an in-depth analysis of the available information" (United States' response
to Panel question 3, para. 11). However, we note that an investigating authority must review the accuracy and
adequacy of the evidence in accordance with Article 11.3 of the SCM Agreement.

recognises the difficulty applicants may face in ob taining evidence of specificity, particularly de facto
specificity.80
7.59 The Panel notes that Article 1.1 of the SCM Ag reement provides that a subsidy exists when
(a) there is a financial contribution or any form of income or price support; and (b) a benefit is thereby
conferred. Therefore, the Panel agrees with the pa rties that evidence of the existence of a subsidy
requires evidence of these two elements.
7.60 In relation to whether evidence of specificity is required in an application, the Panel concurs
with the parties that the reference to evidence of the "nature of the subsidy" includes evidence
regarding whether the subsidy is specific. Article 11 is found within Part V of the SCM Agreement.
Further, Article 1.2 provides that a subsidy will be subject to Part V only if it is specific within the
meaning of Article 2. Therefore, in our view, it is reasonable to conclude that evidence of the "nature
of the subsidy" includes evidence regarding whether th e subsidy is specific. The alternative would be
that the initiation of an investigation would be justified under Article 11.3, even though it may be
clear at the time of initiation that the alleged subsid y is not subject to the disciplines of Part V of the
SCM Agreement because it is broadly available in a given jurisdiction. This would not be effective in
filtering those applications that are "frivolous or unfounded".
7.61 The Panel acknowledges that the term "nature" is used in a number of sections of the SCM
Agreement, and that it may not necessarily refer to "specificity" in each instance. For example, the
reference to "nature" in Article 4.5 of the SCM Agreement appears to refer to whether or not a
subsidy is prohibited. However, in the Panel's vi ew, and as both parties agree, a consideration of the
context in which a term is used can result in different meanings across different provisions. 81 A s
outlined in the previous paragraph, the context in which Articles 11.2 and 11.3 are found supports the
parties' view that the "nature" of a subsidy under Article 11.2 (iii) includes evidence of whether or not
an alleged subsidy is specific.
7.62 Having concluded that the evidence referred to in Article 11.2 of the SCM Agreement
includes evidence of specificity, the Panel finds no basis for China's argument that a lower evidentiary
standard applies in relation to it. There is nothing within the terms of Articles 11.2 or 11.3 to suggest
that differing evidentiary standards apply depe nding upon the purpose for which the evidence is
furnished. Rather, the same standard of "suffi cient evidence" applies regardless of whether the
evidence relates to the existence of a financial contribution, benefit or specificity.
(e) The 11 programmes at issue
(i) Medicare Prescription Drug, Improvement and Modernization Act
7.63 The issue in contention between the parties is whether the application included any evidence
of specificity in relation to the Medicare Prescr iption Drug, Improvement a nd Modernization Act.
While the United States claims that the applica tion "did not…include any evidence of specificity"
82,
China argues that evidence that "coul d represent the existence of either a de jure or de facto specific
measure" was submitted with the application.83
7.64 The purported evidence of specificity relied up on by China is a statement from the AK Steel
Annual Report, annexed to the application, that the subsidy is available to "sponsors of retiree

80 China's response to Panel question 37, para. 1.
81 For support for this proposition, see Appellate Body Report, Japan – DRAMs (Korea), para. 272.
For the views of the parties on this matter, see the United States' and China's responses to Panel question 37.
82 United States' first written submission, para. 78.
83 China's first written submission, para. 35.

healthcare benefit plans that include a qualified pr escription drug benefit" and that AK Steel is a
sponsor of such a plan. The Panel notes that the application also includes a statement that "the
subsidy…is specific".
84
7.65 In the Panel's view, the fact that the subsidy pr ogramme is available to sponsors of particular
healthcare plans does not provide an indication of de jure specificity. To the contrary, the evidence
indicates that eligibility for the subsidy is governed by "objective criteria or conditions" in the sense
of Article 2.1(b) of the SCM Agreement, which prov ides that, subject to Article 2.1(c), "specificity
shall not exist" under such circumstances. Furthe r, the evidence that AK St eel sponsors the relevant
type of healthcare plan merely indicates that AK Steel is a user of the programme. In our view, this is
not sufficient for an unbiased and objective inves tigating authority to conclude there was any
evidence to indicate that the programme was de facto specific. For this purpose, at least some
evidence that, for example, AK Steel was the only user or one of a limited number of users of the
programme would be required.
7.66 Further, the Panel is not convinced by Ch ina's argument that the purported evidence of
specificity was sufficient in the light of the pe rvasive government support to the United States steel
industry, which was discernible from the applicati on. Article 11.2(iii) requires evidence of the
"nature", namely the specificity, "of the subsidy in question". In our view, this requires evidence of
the nature of each alleged subsidy programme. Ge neral information about government policy, with
no direct connection to the programme at issue, is not "sufficient evidence" of specificity.
7.67 China suggests that direct evidence of de facto specificity is typically not reasonably available
to applicants.
85 However, the fact that an applicant must provide such information as is reasonably
available to it does not suggest that an investigating authority is jus tified in initiating an investigation
under Article 11.3 of the SCM Agreement even though there is no evidence of specificity before it.
7.68 The Panel finds that an unbiased and objectiv e investigating authority could not have
concluded that there was sufficient evidence of specif icity to initiate the investigation in relation to
this programme. Therefore, the Panel finds that Ch ina acted inconsistently with Article 11.3 of the
SCM Agreement.
(ii) Economic Recovery Tax Act 1981
7.69 According to the evidence annexed to the a pplication, the Economic Recovery Tax Act 1981
allowed unprofitable corporations with certain unus able federal income tax credits and deductions
effectively to sell them to profitable corporations that could use them to reduce their tax liabilities. 86
The Act operated for a period of two years, expiring in 1983.87
7.70 The applicants alleged that the United States steel industry received a subsidy under the Act
to the value of USD 750 million. 88 The issue in contention betw een the parties is whether the
application included sufficient evidence of th e existence of a benefit during the period of
investigation, where the application proposed and was based upon a period of investigation from 2006

84 Petition for an Anti-Dumping and an Anti-Subsidy Investigation (29 April 2009) ("the Application"),
Exhibit CHN-2, pp. 63-64 and Exhibit US-2, p. 36. AK Steel Annual Report for 2008 (Annex 15-4 to the
Application) ("AK Steel Annual Report 2008"), Exhibit CHN-3, p. 63. We note that the United States'
interpretation of the statement on specificity is that "the subsidy…has the characteristic of special orientation".
85 See, for example, China's first written submi ssion, para. 36 and China's response to Panel
question 37, para. 10.
86 Paying the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, p. 133.
87 Paying the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, p. 133 and
United States' first written submission, para. 78.
88 Application, Exhibit CHN-2, p. 74.

through the first quarter of 2009 (i.e. the same as the period of investigation ultimately adopted by
MOFCOM).89 The purported evidence relied upon by China is a "large benefit" to the steel industry
when the subsidies were disbursed over a two year period concluding in 1983.
7.71 In the view of the Panel, in order to impose a countervailing duty, it is necessary that the
product against which it is imposed be presently subsid ized. We find support for this in Article 19.1
of the SCM Agreement, which provides that a countervailing duty may be imposed where the
"subsidized imports" are causing injury. Further, footnote 36 of the SCM Agreement states that a
countervailing duty is "levied for the purpose of offse tting any subsidy bestowed directly or indirectly
upon the manufacture, production or export of any me rchandise". If the product were not currently
subsidized, there would be no subsidy to offset and therefore, no basis for the imposition of
countervailing duties. The panel in Japan – DRAMs (Korea) agreed that "present subsidization" is
required before countervailing du ties may be imposed. In the case of non-recurring or expired
subsidies, "present subsidization" requires the benefi t of the subsidy to be a llocated to the period of
investigation and indeed, to the period of imposition of countervailing duties.90
7.72 Given that Articles 11.2 and 11.3 of the SCM Ag reement set out the evidence required before
an investigating authority is justified in initiating a countervailing duty investigation, in order to filter
those applications that are frivolous or unfounded, we consider that the reference in Article 11.2 to
evidence of the existence of a subsidy refers to evidence of the existence of a present subsidy,
including the existence of a benefit during the expected period of investigation. The alternative would
be that an investigation would be justified under Ar ticle 11.3, even though it may be clear that there
was no present subsidization and therefore that countervailing duties would ultimately not be
authorized.
7.73 In the Panel's view, an unbiased and objective i nvestigating authority would not have found
that the application included "su fficient evidence" to indicate the existence of a benefit during the
period of investigation proposed by the applicants . Although the programme ceased to operate more
than 20 years prior to the period of investigation, the application does not mention the allocation of
the benefit of the subsidy or allege that it would be appropriate to allocate the subsidy over time,
much less provide any concrete evidence to this effect. While we do not disagree with China's
argument that it may not be appropriate to finalize th e allocation period for the benefit of a subsidy at
the time of initiation of an investigation, this does not lead to the conclusion that no evidence or even
argument regarding "present subsidization" was requ ired in the application. Although China argues
that "implicit" in the evidence of a large benefit to the steel industry is a claim that the benefit was
allocated to the period of investigation, in our view, in the light of the long period between the
expiration of the programme and the period of inv estigation, an unbiased and objective investigating
authority would not conclude that such a claim was indeed implicit in the evidence regarding the
amount of the subsidy.
7.74 In conclusion, given the absence in the applica tion of even a reference to or an argument
about allocation of the benefit of the subsidy to the proposed period of investigation, much less the
inclusion of any evidence in this regard, the Pa nel finds that China acted inconsistently with
Article 11.3 of the SCM Agreement. In our view , an unbiased and objective investigating authority
would not have concluded that initiation was justified.

89 See, for example, Application, Exhibit CHN-2, pp. 9, 97 and 100.
90 Panel Report, Japan – DRAMs (Korea), paras. 7.349-7.361.

(iii) Tax Reform Act 1986
7.75 The Tax Reform Act 1986 granted the steel industry a special transition rule to mitigate the
impact of the repeal of a federal investment tax credit.
91 The application claimed that this resulted in
a benefit of USD 574 million to the United States stee l industry over the period 1986-1990. The issue
in contention between the parties is the same as th at in relation to the Ec onomic Recovery Tax Act,
namely whether the application included sufficient evidence of the existence of a benefit during the
period of investigation. The United States argues that the alleged subsidies referred to in the
application were provided over 15 years prior to the beginning of the period of investigation.92
7.76 Similarly to its argument in relation to the Economic Recovery Tax Act, China argues that
"given the outstanding issue of a potential alloca tion period and petitioners' claim that a benefit was
received", there was sufficient evidence of benefit in the application. Perhaps in an attempt to
highlight that the applicants were operating with imperfect information about the subsidy programme
and that they presented the information reasonably av ailable to them, China also argues that there was
no indication in the evidence collected and presented by the applicants that the programme had been
repealed, leaving open the possibility that the pr ogramme was still in operation during the period of
investigation.93
7.77 In relation to the latter point, the Panel does not find this line of argument convincing. The
evidence in the annex to the application, and cited by the applicants, states that the cost of the subsidy
to the government was incurred over the period 1986-1990. 94 Further, the evidence cited in the
application indicates that the Tax Reform Act provided "an exceptional transitional period" for the
steel industry to mitigate the repeal of a certain tax credit. In these circumstances, it is difficult to
conclude that the programme may still have been in operation at the time of filing the application,
particularly in the light of the fact that th e document from which the information was drawn was
written in 1999 and does not state that any benefit was received after 1990.95
7.78 For the same reasons as expressed in relation to the Economic Recovery Tax Act, the Panel
concludes that China acted inconsistently with Artic le 11.3 of the SCM Agreement. In particular, the
evidence in the application indicates that the bene fit of the subsidy was received during the period
1986-1990, over 15 years prior to the expected period of investigation. In these circumstances, we
consider that an unbiased and objective investigati ng authority would not view information about the
amount of the benefit to be sufficient evidence of the existence of a benefit during the period of
investigation.
(iv) Steel Import Stabilization Act 1984
7.79 The annex to the application indicates that under the Steel Import Stabilization Act, VRAs
restricting imports of steel into the United States were established. Total imports of steel were capped
at 18.5% of market share, with this later increasing to 20.26%.
7.80 The issue in contention between the parties app ears to be whether the application included
sufficient evidence of the existen ce of a financial contribution unde r Article 1.1(a)(i) of the SCM
Agreement, or of "any form of…price support" within the meaning of Article 1.1(a)(2).

91 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31, p. 2 and Paying
the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, pp. 133 and 136-137.
92 United States' first written submission, para. 78.
93 China's first written submission, para. 40.
94 Application, Exhibit CHN-2, pp. 75-76; Subsidies to the U.S. Steel Industry, (Annex 15-1 to the
Application), Exhibit US-31, p. 2.
95 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31 and
United States' first written submission, para. 78.

7.81 At the outset we note that it is not entirely clear whether the applicants were alleging that the
VRAs constituted a financial contribution or a form of price support or both. The application uses the
sub-heading "financial contribution", but the sub- section states that that the voluntary restraint
agreements constituted a "government compulsory pricing support mechanism". The sub-section also
includes a reference to a document prepared by th e American Institute for International Steel, which
provides that the Steel Import Stabilization Act "pro tected the domestic market share of U.S. steel
producers…effectively providing them with a government-enforced price support mechanism". 96
However, the application also states that the VRAs constituted a subsidy within the meaning of
Article 3 of the Chinese Regulations on Countervailing Measures. 97 Article 3 effectively replicates
Article 1.1(a) of the SCM Agreement, including a reference to financial contribution and "any form of
income or price support". In its first written submis sion, China contends that the application included
sufficient evidence of the existence of a financial contribution. In response to Panel questioning,
China argues the applicants alleged that the VRAs we re a subsidy within the meaning of Article 3 of
the Regulations on Countervailing Measures and, according to China, the evidence supported the
existence of a financial contribution within th e meaning of Article 1.1(a)(1)(iv) of the SCM
Agreement, although the application did not include the latter assertion. China notes that, in
suggesting the VRAs provided a price support mechanism, the applicants did not specifically
reference GATT Article XVI. Nevertheless, the VR As "might be construed generally as a price or
income support".
98
7.82 In the Panel's view, the commentary in the ap plication indicates that the applicants were
focused on the VRAs as a form of price support with in the meaning of Article 1.1(a)(2) of the SCM
Agreement. The application twi ce refers to the VRAs as a "government compulsory pricing support
mechanism" and includes a similar refere nce in the annex to the application. 99 Although there is a
reference to Article 3 of the Regulations on Counterva iling Measures, this Article refers to "any form
of income or price support", so does not necessaril y indicate that the applicants were alleging the
existence of a financial contribution, as suggested by China. In any event, despite the absence in the
application of a specific assertion regarding the exis tence of a financial contribution, the Panel will
assess whether the application included sufficient evid ence of either a financial contribution or price
support. This is consistent with the terms of Article 11.2 of the SCM Agreement, which focuses on
the evidence, rather than the assertions, included in an application.
7.83 Regarding whether the application included su fficient evidence that the VRAs constituted a
form of price support, we note that Article 1.1(a )(2) of the SCM Agreement provides that a subsidy
shall be deemed to exist if "there is any form of income or price support in the sense of Article XVI of
GATT 1994", where Article XVI deals with subsidies th at increase exports or decrease imports. In
order to assess whether the application included su fficient evidence of "price support", it is necessary
to consider the meaning of this te rm under Article 1.1(a)(2). There is no definition or other form of
guidance in the SCM Agreement regarding the mean ing of "price support". Although the Appellate
Body has commented that the con cept of "income or price support" under Article 1.1(a)(2) broadens
the range of measures capable of providing s ubsidies beyond those that constitute financial
contributions, it has not otherwise been required to co nsider the meaning of Article 1.1(a)(2), and nor
has any WTO dispute settlement panel.100
7.84 On the one hand, the phrase "any…price s upport" under Article 1.1(a)(2) of the SCM
Agreement is broad and, on its face, could be read to include any government measure that has the

96 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31, p. 2.
97 Application, Exhibit CHN-2, p. 80.
98 China's response to Panel question 38, para. 2.
99 Application, Exhibit CHN-2, p. 80 and Subsidie s to the U.S. Steel Industry (Annex 15-1 to the
Application), US-31, p. 2.
100 Appellate Body Report, US – Softwood Lumber IV, para. 52.

effect of raising prices within a market. According to Blacks Oxford Dictionary of Economics , price
support includes "government policies to keep th e producer prices…above some minimum level".
101
This does not necessarily contradict a broad reading of Article 1.1(a)(2), although it does suggest that
the government sets or targets a given price, and consequently does not capture every government
measure that has an incidental and random effect on price.102
7.85 However, despite the potential for a broad interpretation of the term "price support", reading it
in the context of Article 1.1(a) of the SCM Agre ement suggests that a more narrow interpretation is
appropriate. Under Article 1.1(a)(1)(i)-(iv), the ex istence of each of the four types of financial
contribution is determined by reference to the acti on of the government concerned, rather than by
reference to the effects of the measure on a market. This is consistent with the panel's interpretation
of "financial contribution" in US – Export Restraints, which the Appellate Body concurred with in US
– Countervailing Duty Investigation on DRAMS. 103 In US – Export Restraints , the panel noted that
the concept of "financial contribution" was included in the definition of subsidy in order to avoid an
effects-based approach to the concept of a subsidy. According to the panel:
[B]y introducing the notion of financial c ontribution, the drafters foreclosed the
possibility of the treatment of any government action that resulted in a benefit as a
subsidy. Indeed, this is arguably the prin cipal significance of the concept of financial
contribution, which can be characterised as one of the 'gateways' to the SCM
Agreement, along with the concepts of benefit and specificity. To hold that the
concept of financial contribution is about th e effects, rather than the nature, of a
government action would be effectively to wr ite it out of the Agreement, leaving the
concepts of benefit and specificity as th e sole determinants of the scope of the
Agreement.
Reading the term "price support" in this context, it is our view that it does not include all government
intervention that may have an effect on prices, such as tariffs and quantitative restrictions. In
particular, it is not clear that Article 1.1(a)(2) was intended to capture all manner of government
measures that do not otherwise constitute a financial contribution, but may have an indirect effect on a
market, including on prices. The concept of "pri ce support" also acts as a gateway to the SCM
Agreement, and it is our view that its focus is on the nature of government action, rather than upon the
effects of such action. Consequently, the concept of " price support" has a more narrow meaning than
suggested by the applicants, and includes direct government intervention in the market with the design
to fix the price of a good at a particular level, for example, through purchase of surplus production
when price is set above equilibrium.
7.86 Although neither the Appellate Body nor any WTO dispute settlement panels have been
required to resolve the meaning of the term "p rice support" under Article 1.1(a)(2) of the SCM
Agreement, we find some support for our appro ach in the reasoning of a GATT panel, which
speculated on the circumstances under which "a system which fixes domestic prices to producers at
above the world price level might be considered a su bsidy in the meaning of Article XVI". The panel
agreed that "a system under which a government, by direct or indirect methods, maintains such a price
by purchases and resale at a loss is a subsidy". However, the Panel speculated that "where a

101 Oxford Dictionary of Economics, 3rd ed., J. Black (ed.) (Oxford University Press, 2009), p. 355.
102 Indeed, the Macmillan Dictionary of Economics, 4th ed., D.W. Pearce (ed.), (Macmillian Press Ltd.,
1992) defines a "price support scheme" as " a method of artif icially raising the price of a good in the market.
This will give rise to a situation in which supply exceeds demand and would therefore normally result in the
government agency responsible for the support having to purchase the excess supplies itself". A similar
definition is provided in the Dictionary of Economics, G. Banncok, R.E. Baxter and E. Davis (eds.) (the
Economist Books, 1999). This supports a much more narrow concept of price support than suggested in the
application.
103 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 114.

government fixes by law a minimum price to producers which is main tained by quantitative
restrictions…there would be no loss to government" and consequently, no subsidy. 104 We note that
the conclusion regarding the latter example is less relevant in the context of the SCM Agreement,
under which the benefit of a subsidy is defined by reference to market benchmarks, rather than by the
cost to government. However, both examples used by the GATT panel at least illustrate that it
envisaged "price support" to involve the government se tting and maintaining a fixed price, rather than
a random change in price merely being a side-effect of any form of government measure.
7.87 Further, although the SCM Agreement does not include a definition of the term "price
support", we note that a concept of "market pr ice support" is included in the Agreement on
Agriculture. Annex 3 of that Agreement provides that "market price support" is calculated as the
difference between an external reference price and the "applied administered price".105 This indicates,
at least for the type of price support contemplated in Annex 3 of the Agreement on Agriculture, that a
direct form of government control over domestic prices is required, in the form of a fixed,
administered price, rather than a movement in prices being an indirect effect of another form of
government intervention.
7.88 In the light of these considerations, in the Pa nel's view, "any form of…price support" is not
broad enough to encompass VRAs, which may have an incidental side-effect, of random magnitude,
on prices. Therefore, we conclude that an unbi ased and objective investigating authority would not
have concluded that an investigation was justified under Article 11.3 on the basis of the existence of a
subsidy in the form of price support.
7.89 In relation to whether the application include d sufficient evidence of the existence of a
financial contribution under Article 1.1(a)(1), in its first written submission, China argues that the
evidence indicating that the VRAs resulted in "pecuni ary benefits" to the United States steel industry
constitutes evidence of a financial contribution. In response to a Panel questi on, China clarifies that
its argument relates to Article 1.1(a)(1)(iv) of the SCM Agreement. In particular, according to China,
the evidence that the VRAs led to a transfer of w ealth from steel purchasers to the United States steel
industry "might be seen as evidence of a financial contribution under Article 1.1(a)(1)(iv) of the SCM
Agreement given the effect of the measure on private parties, causing them to provide a transfer of
funds in the form of higher prices".
106
7.90 The Panel does not agree with the interpretation of Article 1.1(a)(1)(iv) of the SCM
Agreement that is advocated by China. In par ticular, the Panel does not consider that when a
government policy, such as a border measure, has the indirect effect of increasing prices in a market,
the government has entrusted or directed private cons umers to provide direct transfers of funds to the
industry selling the good in the affected market.
7.91 In US – Countervailing Duty Investigation on DRAMS, the Appellate Body found that under
Article 1.1(a)(1)(iv) the term "entrusts" connotes "t he action of giving responsibility to someone for a
task or an object" and the term "directs" involv es the exercise of author ity by a government over a
private body.107 In our view, when the action of a private party is a mere side-effect resulting from a
government measure, this does not come within the meaning of entrustment or direction under
Article 1.1(a)(1)(iv). The fact that the VRAs resulted in private bodies paying increased prices for

104 GATT Panel on Subsidies and State Trading, Report on Subsidies, L/1160, 23 March 1960. See
L. Rubini, The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective, (Oxford
University Press, 2009), pp. 123-125 for discussion of this GATT panel.
105 This is multiplied by the quantity of production eligib le to receive the applied administered price, to
calculate the "aggregate measures of support".
106 China's response to Panel question 38, para. 2.
107 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, paras. 110-111.

steel to the United States steel producers was in no way the result of United States Government action
giving responsibility to purchasers to transfer funds to the steel industry or because the Government
exercised its authority over the purch asers to ensure that a transfer of funds would occur. Therefore,
the increased revenue that the steel industry receive d after the VRAs came into existence cannot be
characterised as evidence of a financial contribution.
7.92 This conclusion accords with our reasoning in an alysing of the meaning of the term "price
support".
108 In that context, we noted that a financial contribution is defined by reference to the nature
of the government action, rather than by its effects. Indeed, in US – Countervailing Duty
Investigation on DRAMS, the Appellate Body agreed with the panel's analysis on this point in US –
Export Restraints. The Appellate Body stated:
Entrustment and direction do not cover 'the situation in which the government
intervenes in the market in so me way, which may or may not have a particular result
simply based on the given factual circum stances and the exercise of free choice by
the actors in that market'. Thus, governme nt 'entrustment' or 'direction' cannot be
inadvertent or a mere by-product of gove rnmental regulation…[N]ot all government
measures capable of conferring benefits would necessarily fall within Article 1.1(a);
otherwise paragraph (i) through (iv) of Artic le 1.1(a) would not be necessary because
all government measures conferring benefits, per se, would be subsidies.
7.93 In the light of the preceding reasons, the Panel concludes that China acted inconsistently with
Article 11.3 of the SCM Agreement. In the Pane l's view, an unbiased and objective investigating
authority would not have concluded that the applic ation included sufficient evidence of the existence
of price support or a financial contribution. 109 The fact that a side-effect of the VRAs was that the
United States steel industry received increased reve nue does not provide evidence of the existence of
a financial contribution under Article 1.1(a)(1)(iv). Further, China's refere nce to the evidence of
"pecuniary benefits" received by the steel industr y is not evidence of government action within the
meaning of Article 1.1(a)(1)(i)-(iv). Therefore, we find that an unbiased and objective investigating
authority would not have concluded that sufficient evidence existed to justify an investigation under
Article 11.3.
(v) State of Indiana Steel Industry Advisory Service
7.94 According to the information annexed to the app lication, in 1987 the State of Indiana formed
a "Steel Advisory Commission to examine state and federal laws affecting the steel industry and to
consider industry problems such as foreign competition and economic decline".110
7.95 The issues in contention between the parties ar e whether the application included sufficient
evidence of the existence of a financial contribu tion and a benefit. The purported evidence of a
financial contribution relied upon by China is the ex istence of "a program es tablished to perform a
function in support of the steel industry", includi ng a mandate to "examine state and federal laws
affecting the steel industry and to consider industry problems". 111 In relation to evidence of a benefit,

109 Indeed, we note that Article 11(1)(b) of the Sa feguards Agreement prohibits the use of voluntary
export restraints. This further reinforces our conclusion that voluntary export restraints were not intended to be
disciplined by the SCM Agreement.
110 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31, p. 3.
111 China's first written submission, para. 44 and Subsidies to the U.S. Steel Industry (Annex 15-1 to
the Application), Exhibit US-31, p. 3.

China argues that the fact the government assumed an obligation that might normally be undertaken
by the industry itself is evidence of the conferral of a benefit.112
7.96 In relation to whether the application include d sufficient evidence of the existence of a
financial contribution, the Panel notes that it is entirely possible that a programme under which a
government studies the laws and problems affecti ng an industry could give rise to a financial
contribution in the form of a provision of a good or ser vice. However, the Panel is not satisfied that
an unbiased and objective investigating authority coul d have concluded that the application included
"sufficient evidence" to indicate that this was the case in relation to the Steel Industry Advisory
Service. The application includes an assertion that the "government undertook a project which should
had been founded by companies with large expense, and therefore provided a large financial
contribution".
113 Yet the application does not include evidence to indicate that studies under the
programme were to be provided or ma de available to the steel industry, rather than being for internal
government use, for the purpose of formulating govern ment policy, for example. Given that "simple
assertion unsubstantiated by relevant evidence" is not sufficient under Article 11.2, in the Panel's
view, further evidence was required from the applic ants tending to indicate that the government was
providing a good or service under the programme. The fact that, according to China, the programme
"quite plausibly" constituted the provision of a good or service is not sufficient. Rather, some
evidence, although not definitive proof, to indi cate that the programme conferred a financial
contribution was required.
7.97 The United States argues that a further problem in relation to whether the application included
evidence of a financial contribution was that th ere was no evidence indicating that a study had
actually been performed under the programme. In res ponse, China contends that the applicants were
dealing with imperfect information and did not know with certainty whether the programme had ever
produced a study. Even if such information were not "reasonably available" to the applicants, without
evidence of the existence of a financial contributio n before it, an unbiased and objective investigating
authority could not have found initiation to be jus tified under Article 11.3 of the SCM Agreement. In
the Panel's view, as indicated in the preceding paragra ph, and also in the light of the fact that there
was no evidence in the application of a study having been conducted under the programme, the
evidence regarding the existence of a financial contribution was not such that an unbiased and
objective investigating authority could have found an i nvestigation justified. In any event, given that
the programme has been in existence since 1987, it woul d be reasonable to expect the applicants to be
able to point to some evidence of its use.
7.98 In the light of the Panel's finding that China acted inconsistently with Article 11.3 with
respect to the evidence of a financial contribution, the Panel does not consider it necessary to proceed
to consider the United States' arguments regarding the sufficiency of the evidence of the existence of a
benefit.
(vi) Grace Periods for Compliance with the Clean Air Act
7.99 The application explains that in 1981, legisl ation granting the steel industry a three-year
extension on the deadline for complying with the Cl ean Air Act came into force. The legislation
extended the deadline from 31 December 1982 until 31 December 1985 and the applicants alleged
that this reduced the steel i ndustry's costs by USD 3.7 billion. 114 The application also refers to a

112 China's response to Panel question 40, para. 4.
113 Application, Exhibit CHN-2, p. 81.
114 Application, Exhibit CHN-2, p. 84. See also, Paying the Price for Big Steel (Annex 15-to the
Application), Exhibit CHN-4, p. 147.

30 year exception for complying with certain sta ndards in the Clean Air Act Amendment of 1990,
which was granted to the steel industry in 1989.
115
7.100 The United States' challenge is limited to the decision to initiate an investigation into the
allegation that the three-year extension for complia nce with certain environmental standards in the
Clean Air Act constituted a subsidy. The United St ates does not challenge China's investigation into
the 30 year exception granted to the steel industr y in relation to compliance with the Clean Air
Amendment Act of 1990.116
7.101 The issue in contention between the parties is whether the application included sufficient
evidence of the existence of a financial contribution or "any form of income or price support" within
the meaning of Article 1.1(a)(2) of the SCM Agre ement, and whether it included sufficient evidence
of the existence of a benefit during the period of investigation.117
7.102 The Panel commences its analysis by consideration of the latter point, namely whether the
application included sufficient evidence of the exis tence of a benefit during the expected period of
investigation. We note that the grace period for complying with the Clean Air Act ended on
31 December 1985. 118 The United States argues that the applicants did not indicate how a benefit
could exist during the period of investigation in circumstances where the grace period ended more
than 20 years prior to the expected period of invest igation. This aspect of the United States' claim
raises the same issues as arose in relation to the alleged taxation subsidies.
7.103 As indicated in our analysis of the taxati on programmes, in circumstances where a long
period of time has elapsed between the expiry of the alleged subsidy and the period of investigation, a
lack of any evidence, or indeed any argument or assertion, regarding whether allocation of the benefit
to the period of investigation w ould be appropriate, leads us to the conclusion that an unbiased and
objective investigating authority would not have conc luded that there was sufficient evidence of the
existence of a benefit during the period of investigation to justify initiation.119
7.104 Consequently, the Panel concludes that China act ed inconsistently with Article 11.3 of the
SCM Agreement. In the light of this conclusion, the Panel does not consider it necessary to proceed
to consider the second issue in contention between th e parties, namely whether, in relation to the
grace periods for compliance, the application incl uded sufficient evidence of the existence of "any
form of income or price support" within the meaning of Article 1.1(a)(2) of the SCM Agreement.
(vii) 2003 Economic Stimulus Plan of Pennsylvania
7.105 The evidence annexed to the additional appli cation indicates that Pennsylvania introduced an
Economic Stimulus Plan aimed at "creating jobs, bolstering business growth, and
revitalizing…communities". 120
7.106 The issue in contention between the parties is whether the additional application included
sufficient evidence of de facto specificity. The purported evidence relied upon by China includes
documentation demonstrating that AK Steel and ATI are located and prominent in Pennsylvania.

115 Application, Exhibit CHN-2, p. 84.
116 United States' response to Panel question 39, para. 7.
117 United States' first written submission, para. 78; China's first written submission, paras. 45-46 and
United States' second written submission, paras. 18-20.
118 Paying the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, p. 147.
119 See paras. 7.71-7.74 and 7.78 of this Report.
120 2003 Economic Stimulus Plan (Annex 5-32 to the Additional Application) (20 June 2009), Exhibit
CHN-8.

Further, China contends the evidence in the additional application demonstrates that the programme is
focused on "traditional industries, especially manufacturing".121
7.107 The Panel does not consider the information regarding the presence and prominence of GOES
manufacturers in Pennsylvania to be evidence of de facto specificity. This information demonstrates
that AK Steel and ATI may be eligible to be users of the programme, but does not provide any
evidence that the steel industry is one of a limited number of users or that it receives a
disproportionately large amount of the subsidy, for example. The additional application also states
that "the purpose of the Stimulus Packages is to create jobs, bolster businesses and revitalize
communities. To achieve this, the Packages must particularly provide its contributions and preference
to those influential enterprises and industries in cr eating jobs and bolstering economies, such as steel
industry. Indeed, it's not difficult to discover the de facto specificity clearly existed".122 In our view,
the notion that the steel industry must be one of a limited number of enterprises to receive the subsidy,
on the basis that the purpose of the Economic Stimul us Plan is to create jobs, bolster business growth
and revitalize communities, is mere assertion and is not supported by relevant evidence.
7.108 The second element of China's argument regard ing the sufficiency of the evidence of
specificity is that the economic development plan included a focus on "resources that allow our
traditional industries, especially manufacturi ng, to access new technology to enhance their
productivity". The parties' arguments regarding whet her this provides evidence of specificity seem to
reflect different conceptual approaches to the i ssue. The United States argues that because the
Economic Stimulus Plan as a whole included si x other focal points, apart from traditional
manufacturing industries, the information regard ing traditional industries is not evidence of
specificity. However, China submits that individua l subsidies within a single piece of legislation or
measure should be analysed separately. China argues that otherwise there would be "a huge loophole
in the specificity requirement where authorities w ould simply lump different kinds of support for
different sectors of the economy into a single piece of legislation or measure in order to claim that, in
the aggregate, the measure is too diverse or generally available to justify a finding of specificity".
123
7.109 In order to assess whether the information regarding the focus on traditional industries
constitutes sufficient evidence of specificity, it is necessary for the Panel to determine the appropriate
conceptual approach to analysing this issue. If the legislation through which a subsidy is enacted
necessarily defines the breadth of the specificity analysis, loopholes in the SCM Agreement may
arise. In addition to allowing governments to gr oup specific subsidy programmes together in a single
piece of legislation to avoid a finding of specific ity, a broadly available s ubsidy programme could be
found to be specific if extended to each industry through separate pieces of legislation. Consequently,
in the specificity analysis, a s ubsidy programme should be considered as a whole. The programme
should define the breadth of the specificity analysis , rather than the legislation through which it is
enacted.
7.110 In the circumstances of this case, we note th at the evidence in the annex to the additional
application provides that the economic development package includes:124
 Over $2.8 billion dollars in loans, grants, and guarantees;

121 2003 Economic Stimulus Plan (Annex 5-32 to the Additional Application) (20 June 2009), Exhibit
CHN-8.
122 New Subsidy Allegations Application (20 July 2 009) ("Additional Application"), Exhibit CHN-5,
p. 27.
123 China's response to Panel question 41, para. 6.
124 2003 Economic Stimulus Plan (Annex 5-32 to the Additional Application) (20 June 2009), Exhibit
CHN-8.

 Programs to leverage funds generating at least USD 5 billion in private
investment in economic and community development projects;
 Investments in rural, urban, and suburban sites;
 New capital resources for small cities and communities;
 Tools to make Pennsylvania a leader in real estate and business development;
 Incentives and services to attract high-growth firms;
 Resources that allow our traditional industries, especially manufacturing, to
access new technology to enhance their productivity

7.111 In response to a Panel question, China appears to argue that the final "focal point" listed
above is an individual subsidy and that its specific ity should be analysed by reference to the universe
of industries and enterprises to which it applies.
125 However, an examination of the additional
application indicates that the app licants treated the Economic Stim ulus Plan as a single subsidy
programme. Although it was open to the applican ts to present their arguments on the basis of a
number of individual subsidy progr ammes all enacted under the Economic Stimulus Plan, there is no
indication in the additional application that the applicants did this or viewed the provision of access to
new technologies as a separate subsidy programme. Rather, the allegations regarding financial
contribution and benefit refer to the programme as a whole, with particular examples provided by
reference to certain aspects of the programme, including the loans and grants, the research and
development tax credits and the jo int venture investment guarantees. 126 The access to new
technologies is not referred to by the applicants until the section on specificity. Certainly, the
applicants did not provide any arguments regardi ng the existence of a financial contribution and
benefit in relation to the access to new technologies. As a result, we cannot find any basis for treating
this as a separate subsidy programme. Consequen tly, we consider it appropriate to analyse the
question of specificity by reference to the Economic Stimulus Plan as a single subsidy programme.
7.112 We note that the Economic Stimulus Plan include d a diverse range of "focal points", such as
economic and community development projects; rura l urban and suburban sites; resources for small
cities and communities; real estate and business development; and high-growth firms. The
information in the additional application indicates th at a number of enterprises or industries may have
been eligible to receive the alleged subsidies unde r the programme, including, for instance, the real
estate industry, venture capital partnerships , businesses making research and development
investments and high-growth enterprises.127 Further, in relation to some of aspects of the programme,
such as the provision of loans, grants and guarantees, it is not clear from the evidence in the additional
application whether or not these were broadly availa ble. In our view, the evidence suggests that the
programme had a much wider application than suggest ed by China. Consequently, the Panel is not
convinced that an unbiased and objective inves tigating authority would have found that the
information regarding a focus on "traditional indu stries, especially manufacturing" was sufficient
evidence of specificity to justify initiation under Article 11.3 of the SCM Agreement.
7.113 Finally, we note that China repeats the ar gument made in relation to the Medicare
Prescription Drug Improvement, and Modernization Act, namely that the purported evidence of
specificity was sufficient in the light of the pe rvasive government support to the United States steel
industry, which was discernible from the application. For the reasons expressed in relation to the
Medicare Act, we again do not consider this argument convincing.
128

125 China's response to Panel question 41, paras. 5-6.
126 Additional Application, Exhibit CHN-5, p. 27.
127 Additional Application, Exhibit CHN-5, p. 26; Research and Development Tax Credit (Annex 5 to
the Additional Application), Exhibit CHN-6, p. 189 (of the pdf version of the Exhibit) and New Pennsylvania
Venture Guarantee Programme, Exhibit CHN-6, p. 191 (of the pdf version of the Exhibit).
128 See 7.66 of this Report.

7.114 Therefore, we conclude that the additional a pplication did not include sufficient evidence of
specificity for an unbiased and objective investig ating authority to conc lude that initiation was
justified under Article 11.3 of the SCM Agreem ent. Although China argues that information
regarding de facto specificity is typically not reasonably available to appli cants, in the Panel's view,
an investigating authority must nevertheless have "s ufficient evidence" of specificity before it before
an investigation is justified under Article 11.3.
(viii) Pennsylvania's Alternative Energy Funding Plan
7.115 The evidence in the annex to the additiona l application indicates that the State of
Pennsylvania invested USD 650 million towards "expa nding the alternative fuel, clean energy and
efficiency sectors". Approximately half of the f unding is managed by the Department of Community
and Economic Development and this part of the programme focuses on "investing in infrastructure,
economic development projects, alternative ener gy companies and early-stage activities". The
remainder of the programme is administered thr ough the Commonwealth Financing Authority, which
focuses on business assistance through providing loans a nd grants to companies for certain categories
of projects.129
7.116 The issue in contention between the parties is whether the additional application included
sufficient evidence of the existence of a benefit during the expected period of investigation and
sufficient evidence of specificity. The purported evidence of benefit relied upon by China is the
"implication of a programme focused on clean energy in relation to an industry known to be high
polluting". According to China, evidence that individual respondents actually received a benefit
under the programme is not required. The purporte d evidence of specificity relied upon by China is
the documentation which it claims indicates that th e loan programme was directed at a narrow group
of beneficiaries.130
7.117 At the outset, we note that the alleged subs idy to the steel industry, as detailed in the
additional application, relates to that part of the Alternative Energy Funding Plan administered
through the Commonwealth Financing Authority. This is evident because the information in the
additional application regarding the existence of a financial contribution refe rs to the "provision of
loans and grants to the local enterp rises for their clean and alternativ e energy projects". Further, the
section of the additional application relating to benefit discusses the "provision of loans and grants to
qualified enterprises". 131 The allegations in the additional a pplication regarding the existence of a
financial contribution, benefit and specificity do not refer to the projects to be managed by the
Department of Community and Economic Developm ent, namely investment in "infrastructure,
economic development projects, alternative energy companies and early-stage activities".132
7.118 In relation to whether the additional applicati on included sufficient evidence of the existence
of a benefit, China argues that for the purposes of an application, it is not necessary to demonstrate
that the steel industry actually received a benefit und er the programme. However, in our view, on the
of basis the totality of the evid ence before the investigating aut hority, an unbiased and objective
investigating authority could not have considered an investigation justified under Article 11.3. This is
because the United States submitted evidence to MOFC OM demonstrating that the only aspect of the
programme administered by the Commonwealth Fina ncing Authority under which loans and grants
were distributed during the period of investigation was the Solar Energy project. The evidence
provided by the United States to MOFCOM included a document, prepared by the Commonwealth
Financing Authority, listing eight companies that had had projects approved for loans and grants as of

129 Annex 5 to the Additional Application, (Annex 5-38, Alternative Energy Funding), Exhibit CHN-6.
130 China's first written submission, paras. 56-58.
131 Additional Application, Exhibit CHN-5, p. 29.
132 Annex 5 to the Additional Application, (Annex 5-38, Alternative Energy Funding), Exhibit CHN-6.

14 July 2009.
133 None of the companies listed were producers of GOES, or indeed part of the steel
industry. As discussed previously in our reasons, when evidence not in the application but relevant to
the decision to initiate is submitted to an inv estigating authority, an unbiased and objective
investigating authority should weigh this eviden ce in its consideration of whether initiation is
justified.
134 Indeed, this is what the language in Articl e 11.3 implies, namely that an investigating
authority has a duty to determine the accuracy and adequacy of the evidence in the application.
Weighing the evidence submitted to MOFCOM by the United States, namely a document prepared by
a government body indicating that no financial contri bution or benefit was received by the respondent
companies during the period of investigation, agai nst the additional application which did not include
any evidence or even an assertion to the contrary, a reasonable investigating authority could not have
concluded that an investigation into the programme was justified. This is because it was clear at the
time of initiating that there would be no basis to impose countervailing duties against the products
exported by AK Steel and ATI. In reaching this conc lusion, we note that the additional application is
concerned with a benefit to be received directly by the steel industry, rather than a benefit "passed-
through" from other companies.
7.119 Therefore, the Panel concludes that China acted inconsistently with Article 11.3 of the SCM
Agreement on the basis that an unbiased and objec tive investigating authority could not have
concluded that there was sufficient evidence of the existence of a benefit to the steel industry during
the expected period of investigation to justify initiati on. In the light of this conclusion, the Panel does
not consider it necessary to proceed to examine wh ether the additional application included sufficient
evidence of specificity.
(ix) Natural Gas
7.120 The issue in dispute between the parties is whether the additional application included
"sufficient evidence" of the existence of a fina ncial contribution, benefit and specificity under
Articles 11.2 and 11.3 of the SCM Agreement. The additional application includes allegations of two
different types of subsidies. In particular, the a dditional application contends first, that the United
States Government regulates the price of natural ga s and provides it to the steel industry at below
market prices and second, that subsidies provide d to the natural gas industry "pass-through" to the
steel industry.135
7.121 The annex to the additional application includ es a significant amount of evidence related to
the natural gas industry. In its first written subm ission, China highlights a number of aspects of this
evidence that it relies upon as "sufficient" for th e purposes of Articles 11.2 and 11.3 of the SCM
Agreement. In particular, China notes the evidence of a long history of government regulation of the
natural gas sector; evidence of price differentiation between the prices paid by the steel industry and
the average price paid in the economy; and evidence of subsidies to the natural gas industry.136
7.122 In relation to the first type of subsidy alle ged in the additional application, namely the
government provision of goods or services at below market prices, the additional application

133 United States' Comment Regarding the Initiation Based on the New Allegations, (17 Aug. 2009)
Exhibit US-29, p. 6 and second attachment to the Comment, "Pennsylvania - State of Innovation:
Commonwealth Financing Authority" (see link to "Commonwealth Financing Authority Approved Projects -
Energy Programs", i.e. the last page of the second att achment to the Comment). We note that there appears to
be an error on p. 6 of the Comment (Exhibit US-29). In particular, the United States refers to the "Geothermal
and Wind Energy" project as the only project operational during the period of investigation. However, an
examination of the list prepared by the Commonwealth Financing Authority indicates that it was the Solar
Energy project under which loans and grants had been distributed as of 14 July 2009.
135 Additional Application, Exhibit CHN-5, pp. 12-13.
136 China's first written submission, para. 49.

discusses historical regulation by the United States G overnment of natural gas prices. The additional
application also states that despite the "l oosening of regulation…over the natural gas
industry…industrial enterprises still had no other choice but to buy natural gas from the network
companies at regulated prices". 137 However, an examination of the evidence regarding the
United States natural gas industry in the annex to the additional application does not support the
applicant's position that the government currently regulates natural gas prices. In particular, the
evidence suggests a history of government regulation of natural gas prices, with a gradual decrease in
the degree of regulation, to the current situation of market determined prices. The evidence provides
that in 1985, the Federal Energy Regulatory Co mmission published Decree 436, which opened up the
function of the delivery of natural gas "to allow the u ser to negotiate directly with the producer to set
the price".138 Further, in 1989 the Natural Gas Wellhea d Decontrol Act was passed, which abolished
all regulation over the wellhead price of gas. Th e Act required abolition of the price regulation by
1993, from which time the market determined the natural gas price. 139 Finally, in 1992, the Federal
Energy Regulatory Commission published Decree 636, which abolished "take-or-pay" contracts and
reorganized network companies to allow users to choose any producer of natural gas.140
7.123 Although China argues that the additional application includes evidence of "continued
vestiges of government price regulation through lower-reach development companies", we do not
agree with this reading of the evidence. 141 The evidence regarding the history of government
regulation of the natural gas industry, found in the an nex to the additional application, indicates that,
when the government began loosening its regulation over the industry "the lower-reaches distribution
companies (LDC) and industrial corporations still had no other choices but to purchase gas from
network companies at the regulated price". 142 However, the annex states that Decree 436, published
in 1985, required network companies to "open the fu nction of delivering natural gas to all natural gas
users including low-reaches selling companies…and to a llow the user to negotiate directly with the
producer to set the price".143 As indicated in the preceding paragr aph, the government continued with
further deregulation after Decree 436. Therefore, China's reference to government price regulation
through lower-reach development companies is a re ference to historical regulation and does not
provide support for the allegation that the govern ment currently provides na tural gas to the steel
industry at below market prices.
7.124 As well as the evidence in the additional a pplication indicating that the United States
Government does not regulate natural gas prices, this was drawn to MOFCOM's attention in the
United States' comments on the new subsidy allegati ons. In its comments, the United States noted
that "the natural gas market was deregulated in the 1980s. The market described by petitioners no
longer exists (if, indeed, it ever existed). GOES producers purchase natural gas on the open
market".144

137 Additional Application Exhibit CHN-5, p. 13.
138 Annex 5 to the Additional Application, (Annex 5-16, Overview and Comments on the U.S.
Government Regulation of the Natural Gas Market), pp. 4-5, Exhibit CHN-6.
139 Annex 5 Additional Application, (Annex 5-16, Overview and Comments on the U.S. Government
Regulation of the Natural Gas Market), p. 5, Exhibit CHN-6.
140 Annex 5 to Additional Application, (Annex 5-16, Overview and Comments on the U.S. Government
Regulation of the Natural Gas Market), p. 5, Exhibit CHN-6.
141 China's first written submission, para. 49.
142 Annex 5 to Additional Application, (Annex 5-16, Overview and Comments on the U.S. Government
Regulation of the Natural Gas Market), p. 4, Exhibit CHN-6.
143 Annex 5 to the Additional Application, (Annex 5-16, Overview and Comments on the U.S.
Government Regulation of the Natural Gas Market), p. 4, Exhibit CHN-6.
144 United States' Comment Regarding the Initiation Based on the New Allegations (17 August 2009),
Exhibit US-29, p. 3.

7.125 Therefore, in the light of the evidence provi ded by the applicants themselves, which was
supplemented by comments from the United States to MOFCOM prior to initiation, the Panel
concludes that China acted inconsistently with Ar ticle 11.3 of the SCM Agreement. In the Panel's
view, an unbiased and objective investigating author ity could not have concluded that there was
sufficient evidence of a financial contribution or a benefit, in the form of government provision of a
good or service at below market prices, to justify initiation under Article 11.3 of the SCM
Agreement.
145 The evidence indicates that natural gas is purchased by the steel industry at prices
determined by the market.
7.126 With respect to the second type of subsidy refe rred to in the additional application, namely
indirect subsidization of the steel industry via subs idies provided to the natural gas industry, the Panel
is not convinced that an unbiased and objective inv estigating authority coul d have found that the
additional application included sufficient evidence of specificity to justify initiation under Article 11.3
of the SCM Agreement.
7.127 The Panel is satisfied that the additional appli cation includes evidence of subsidies granted to
the natural gas industry. 146 Regarding the existence of a benef it to the steel industry, the additional
application includes an allegation, although no supporting evidence, of "pass-through" of the
subsidies to the steel industry. The position of Chin a appears to be that an allegation of pass-through
of a subsidy from an upstream to a downstream produ cer is sufficient for the purposes of initiating an
investigation. The Panel does not consider it n ecessary to resolve what ty pe of evidence of pass-
through is required at the stage of initiating an inv estigation. This is becau se, even assuming that the
additional application included sufficient evidence of pass-through of the benefit to the steel industry,
an unbiased and objective investigating authority coul d not have concluded that there was sufficient
evidence of specificity.
7.128 Although the subsidies could be specific to the natural gas industry, the applicants alleged that
the subsidies ultimately flow through to the steel industry, with steel being the product to be
countervailed. In these circumstances, some evidence that the steel industry falls within a category of
"certain enterprises" to which the subsidy is specifi c is required. However, there is no evidence that
any pass-through that occurs is specific to the steel industry. In particular, if an allegation of pass-
through is accepted for the purposes of the applicati on, there is no reason to assume that the benefit
did not pass-through to all purchasers of natural gas, ra ther than to the steel industry specifically. In
this regard, we note the panel's statement in US – Softwood Lumber IV that where a subsidy is
provided in the form of the provision of a good by the government, where the good is in the form of a
natural resource, there is no implication that such a subsidy is necessarily specific, precisely because
such goods may be used by an indefinite number of industries. 147 Similarly, in this case, the subsidy
to the natural gas industry may "pass-through" to an indefinite number of industries that purchase
natural gas.
7.129 Although China appears to rely upon evidence of price differentiation to indicate "the
possibility of…specificity", 148 in circumstances where we have found that natural gas prices are set by
the market, we have no basis to conclude that an y price differentiation indicates that pass-through is

145 Although it does not seem to be the case, if it was the intention of the applicants that countervailing
duties be imposed to counteract injury arising from the time when the government did regulate prices, the
application suffers from the same problem as it does in relation to the taxation programmes. In particular, it
does not include any evidence or arguments to support the existence of present subsidization.
146 See, for example, Annex 5 to the Additional Application, (Annex 5-2, Federal Financial
Interventions and Subsidies in Energy Markets 2007).
147 Panel Report, US – Softwood Lumber IV, para. 7.116.
148 China's first written submission, para. 49.

specific to the steel industry. There is nothing to indicate this is the case rather than the price
differentiation being due to market forces.
7.130 Finally, the Panel notes that China makes a gene ral argument that evidence of specificity may
not be "reasonably available" to applicants. 149 In the Panel's view, whether or not this is the case, an
investigating authority must nevert heless have "sufficient evidence" of specificity before it, whether
provided by the applicants or otherwise, before an investigation can be justified. The Panel is not
convinced that this was the case.
7.131 Therefore, with respect to the second type of subsidy alleged in the additional application,
namely indirect subsidization of the steel industry via subsidies provided to the natural gas industry,
the Panel finds that an unbiased and objective inve stigating authority could not have concluded that
the additional application included sufficient evid ence of specificity to justify initiation under
Article 11.3 of the SCM Agreement.
(x) Electricity
7.132 The issue in contention between the parties is whether the additional application included
sufficient evidence of the existence of a financial contribution, benefit and specificity in accordance
with Articles 11.2 and 11.3 of the SCM Agreement. The applicants alleged that the United States
electricity industry, including its pricing, is la rgely controlled by the United States Government and
that electricity is provided to th e steel industry at a low price. The applicants also argued that
subsidies provided to the electricity industry pass-through to the steel industry.
7.133 Before addressing the substance of the United States' claim, we note that the additional
application includes a number of exhi bits related to the electricity industry in the United States. For
the purposes of our analysis, we have found the follow ing information in the exhibits to be of most
relevance:
(i) The Federal Energy Regulatory Commission regulates interstate power transmission
and the wholesale electricity market. The regulation of the wholesale market includes
examining and approving the power price. In particular, every power company
submits a tariff table to the Federal En ergy Regulatory Commission, which has the
power to adjust and amend the table if it is not in line with the public interest
150;
(ii) There are also state-based electric power re gulatory institutions that regulate the price
for power distribution and in-state retail sales151;
(iii) The additional application also indicates that there are four categories of companies
that make up the United States electricity industry: (a) public power companies that
are "operated by privates"; (b) indepe ndent power generating companies; (c)
municipal power companies owned by local governments; and (d) the hydropower
regulatory bureaus belonging to the Federal Government
152; and

149 See, for example, China's response to Panel question 1, para. 10.
150 Annex 5 to the Additional Application, (Annex 5-16 Reform of the U.S. Electric Power System;
Annex 5-11, Report of the U.S Regulatory System on Electric Power).
151 Annex 5 to the Additional Application, (Annex 5 --16 Reform of the U.S. Electric Power System;
Annex 5-11, Report of the U.S Regulatory System on Electric Power).
152 Annex 5 to the Additional Application, (Annex 5-11, Report of the U.S Regulatory System on
Electric Power.)

(iv) There is differentiated pricing in the electricity market, with the steel industry
receiving a lower price than some other industries and a lower price than the national
average.
153
7.134 In its comments on the additional applica tion, the United States adds the following
information about the United States electricity industry:154
(i) There are no national policies directing the electricity industry to provide energy to
the steel industry at lower prices;
(ii) There is no agency that sets retail prices for electricity for the entire country;
(iii) Any difference in price paid by the steel industry for electricity is due to a "bulk
discount" negotiated directly between the steel industry and the electricity company;
(iv) Differences in prices are due to market forces;
(v) Steel producers pay less for electricity b ecause they purchase it from non-utilities at a
substantial discount; and
(vi) One of the GOES companies in the United States receives its electricity purely from
private entities.
7.135 With respect to the alleged direct subsidies to the steel industry, assuming arguendo that the
additional application included sufficient evidence of the existence of a financial contribution, namely
the provision of goods or services by the government, or by a private body entrusted or directed by the
government, the Panel is not convinced that the add itional application included sufficient evidence of
the existence of a benefit, such that an unbiased and objective investigating authority could have
considered initiation of an investigation to be jus tified. The additional application asserts that "the
amount of subsidy for this program shall be the di fference between the prefer ential electricity power
price actually paid by the companies concerned and the normal market electricity power price payable
to the companies concerned".
155 However, the additional application does not include evidence of the
appropriate market benchmark price, or evidence that the comparison between the benchmark and the
price charged to the steel industry was perform ed by the applicants. Although the additional
application compares the price paid by the steel in dustry with the national average electricity price
and with two selected industries, it is not clear why these constitute comparisons to an appropriate
market benchmark. Indeed, if the electricity indus try operates as the applicants asserted, namely that
the government intervenes to set prices, rather than market forces doing so, a benchmark chosen from
within this system would not appear to represent a market price.
7.136 Similarly, even assuming that the government intervenes in the electricity market to provide it
to the steel industry at below market prices, there is nothing to suggest that the steel industry alone
benefits from this intervention, or that access to this subsidy is otherwise limited to "certain
enterprises". The additional application includes broad assertions regarding specificity, including "the
[United States Government]… controls the electri city power price of electricity power companies
owned or controlled by the government to provide low-priced electricity to the steel industry…such
preferential treatment sp ecific to a certain industry is cl early characterised as specific". 156 However,

153 Annex 5 to the Additional Application, (Annex 5-13 Average Prices of Purchased Electricity,
Natural Gas and Steam, 2002).
154 United States' Comment Regarding the Initiation Based on the New Allegations (17 August 2009),
Exhibit US-29, pp. 2-3 and attachments.
155 Additional Application, Exhibit CHN-5, p. 10.
156 Additional Application, Exhibit CHN-5, p. 10.

the additional application does not include evidence to indicate that the alleged subsidy is indeed only
provided to the steel industry or to a limited group of beneficiaries. In our view, an unbiased and
objective investigating authority could not have concluded that the differentiated pricing in the market
provided sufficient evidence of specificity. In fact , the evidence of the wide range of prices charged
by the electricity industry in the United States te nds to suggest that deviation from the market
benchmark price, whatever that may be, is widespr ead. In general, the arguments in the additional
application that the Government intervenes in the pric ing of electricity specifically to benefit the steel
industry are somewhat speculative.
7.137 The additional application also includes an a llegation of pass-through of subsidies from the
electricity industry to the steel industry. 157 To the extent the allegation of pass-through relates to
private companies that are entrusted or directed to pr ovide electricity to the steel industry at particular
prices, including being directed to pass-through s ubsidies, the preceding pa ragraph of our reasoning
applies. In particular, apart from assertion, th ere was not sufficient evidence in the additional
application for an unbiased and objective investiga ting authority to conclude that the steel industry
specifically benefits from this intervention.
7.138 To the extent the allegation of pass-through refers to subsidies provided to private electricity
companies that are not directed by the government to provide electricity to the steel industry at
particular prices, we refer to our analysis of the allegations of pass-through in relation to the natural
gas industry.
158 Even assuming that the additional appli cation included sufficient evidence of pass-
through of the benefit to the steel industry, an unbiased and objective investigating authority could not
have found that the additional application included sufficient evidence of specificity. Although the
subsidies could be specific to the electricity indu stry, the applicants alleged that the subsidies
ultimately flowed through to the steel industry, with steel being the product to be countervailed. In
these circumstances, some evidence that the steel industry falls within a category of "certain
enterprises" to which the subsidy is specific is re quired. However, there is no evidence that any pass-
through that occurs is specific to the steel industry. In particular, if an allegation of pass-through is
accepted for the purposes of the application, there is no reason to assume that the benefit did not pass-
through to all purchasers of electricity, rather than to the steel industry specifically. Although China
appears to rely upon evidence of pr ice differentiation for this purpose, 159 in circumstances where a
private company is setting the price for electricity, without direction from the government, which is
the focus of our analysis in this paragraph as opposed to the preceding one, there is no basis to
conclude that any price differentiation indicates that pass-through is specific to the steel industry.
There is nothing to indicate this is the case rather than the price differentiation being due to market
forces.
7.139 Therefore, the Panel finds that the additional application included insufficient evidence for an
unbiased and objective investigating authority to conclude that initiation was justified under
Article 11.3 of the SCM Agreement.
(xi) Coal
7.140 The issue in contention between the parties is whether the additional application included
sufficient evidence of the existence of a financial c ontribution, benefit and specificity for the purposes
of Articles 11.2 and 11.3 of the SCM Agreement. The additional application alleges that the

157 Additional Application, Exhibit CHN-5, pp. 8-10.
158 See paras. 7.126-7.130 of this Report.
159 China's first written submission, para. 47.

United States Government provides subsidies to the coal industry and that the subsidies "pass-
through" to the steel industry, which is a major user of coal.
160
7.141 The Panel notes that the additional application in cluded some evidence of subsidization of the
coal industry, although not through the American Clean Energy Security Act 2009, which did not
exist during the proposed period of investigation.161
7.142 In relation to whether the additional applica tion included sufficient evidence of pass-through
of the benefit of the subsidies from the coal industry to the steel industry, we note that the additional
application included an allegation that the subsidies to the coal industry would "no doubt allow the
subsidized companies to…confer consider able benefits to the GOES producers".
162 The additional
application does not include any supporting evidence for this statement.
7.143 Again, in a similar manner to our reasoning in relation to the alleged pass-through of natural
gas subsidies, the Panel does not consider it necessary to determine what evidence would be
"sufficient" under Articles 11.2 and 11.3 for the purposes of tending to prove the "pass-through" of a
benefit from an upstream to a downstream entity. This is because, in any event, in the Panel's view an
unbiased and objective investigating authority c ould not have concluded that the additional
application included sufficient evidence tending to indicate that any subsidy to the steel industry was
specific. Although the subsidies may have been speci fic to the coal industry, the applicants alleged
that the subsidies ultimately flow through to the st eel industry, with steel being the product to be
countervailed. In these circumstances, some evidence that the steel industry falls within a category of
"certain enterprises" to which the subsidy is specific is required.
7.144 In the section on specificity, the additional application asserts that "coal is an important
energy input for the steel industry". 163 Further, China argues that "the steel industry's substantial use
of coal…goes to the issue of de facto specificity". 164 However, this is not evidence indicating or
tending to prove specificity. It does not demonstrat e that the coal subsidies pass-through to a limited
number of enterprises or in a disproportionately large amount to the steel industry, for example.
7.145 The application also relies upon a history of government support to the steel industry as
evidence of specificity. 165 However, as indicated in our anal ysis of the Medicare Prescription Drug,
Improvement and Modernization Act, Article 11. 2(iii), which sets out categories of evidence for
which sufficient evidence is necessary before an investigation is justified under Artic le 11.3, requires
evidence of the nature "of the subsidy in question" . In our view, this requires evidence of the
specificity of each alleged subsid y programme. General information about government policy, with
no direct connection to the programme at issue, is not "sufficient evidence" of specificity.

160 Additional Application, Exhibit CHN-5, pp. 15-16.
161 For evidence of subsidization see Annex 5 to the Additional Application, (Annex 5-2, Federal
Financial Interventions and Subsidies in Energy Markets 2007). Also, see Annex 5 to the Additional
Application, (Annex 5-19, US House of Representatives Passes the American Clean Energy Security Act) for
evidence that the American Clean Ener gy Security Act was only at the Ho use of Representatives stage in mid-
2009. See also, United States' Comment Regarding the Initiation Based on the New Allegations
(17 August 2009), Exhibit US-29, p. 3 and United States' first written submission, para. 78.
In its response to Panel question 1, para. 14, China suggests that the Clean Energy Security Act
provides a direct financial contribution to the steel industry. In response to this, we refer to the foregoing
evidence indicating that the Act did not exist during the period of investigation.
162 Additional Application, Exhibit CHN-5, p. 16.
163 Additional Application, Exhibit CHN-5, p. 16.
164 China's first written submission, para. 51.
165 Additional Application, Exhibit CHN-5, p. 16 and China's first written submission, para. 51.

7.146 Although China argues that evidence of de facto specificity is typically not reasonably
available to applicants, in the Panel's view, an investigating authority must nevertheless have
"sufficient evidence" of specificity before it to ju stify an investigation unde r Article 11.3 of the SCM
Agreement.
7.147 In the light of the preceding reasons, the Pa nel concludes that an unbiased and objective
investigating authority would not have found that the additional application contained sufficient
information of specificity to justify initiation of the investigation. Consequently, China acted
inconsistently with Article 11.3 of the SCM Agreement.
(f) Conclusion
7.148 The Panel concludes that China acted inconsiste ntly with Article 11.3 of the SCM Agreement
in relation to each of the 11 programmes at issue.
C.
WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 12.4.1 OF THE SCM AGREEMENT
AND 6.5.1 OF THE ANTI -DUMPING AGREEMENT BECAUSE MOFCOM FAILED TO REQUIRE
ADEQUATE NON-CONFIDENTIAL SUMMARIES
1. Provisions at issue
7.149 Article 12.4.1 of the SCM Agreement and Ar ticle 6.5.1 of the Anti-Dumping Agreement
provide:
The authorities shall require [interested Members or] interested parties providing
confidential information to furnish non-c onfidential summaries thereof. These
summaries shall be in sufficient detail to permit a reasonable understanding of the
substance of the information submitted in confidence. In exceptional circumstances,
such [Members or] parties may indicate that such information is not susceptible of
summary. In such exceptional circumst ances, a statement of the reasons why
summarization is not possible must be provided.166
2. Factual Background
7.150 The applicants sought and obtained from MOFCOM confidential treatment in relation to a
number of types of information, liste d in Part II-1 of the application. 167 Consequently, broad
categories of information about GOES were redact ed from the application, including the total
domestic output, the applicants' total output, the dom estic sales price, domestic consumption and the
applicants' sales revenue, costs and pre-tax profit. The United States argues that the applicants did not
provide adequate non-confidential summaries of the information.
3. Arguments of the United States
7.151 The United States submits that Article 12.4.1 of the SCM Agreement and Article 6.5.1 of the
Anti-Dumping Agreement require parties to furnis h adequate non-confidential summaries, allowing
for a reasonable understanding of the substance of the confidential information. 168 The United States
interprets China's position as claiming the existence of "exceptional circumstances", to excuse it from

166 Where only the SCM Agreement includes the references to Members.
167 Application, Exhibit US-2, p. 79. Part II-1 of the application lists 15 categories of information in
relation to which the applicants sought and obtained confidential treatment from MOFCOM.
168 United States' second written submission, para. 38.

the obligation of providing non-confidential summaries. The United States notes that this was never
asserted during the course of the investigation and is post hoc rationalization.
169
7.152 According to the United States, an examination of the petition demonstrates that the
applicants intended Part II of the petition to cons titute the non-confidential summary of the redacted
information. This is clear because page 2 of th e petition states that "a non-confidential summary of
the confidential information was provided along with this petition" and Part I of the petition directs
the reader to consult Part II of the petition fo r the purported non-confidential summaries. Further,
Part II is entitled "non-confidential summary". 170 The United States argues that the purported non-
confidential summaries in Part II are "utterly inadequate" and say almost nothing about the
"substance" of the confidential information submitted.171
7.153 The United States suggests that MOFCOM could have used any of a number of techniques to
summarize the information in a manner that woul d have preserved its conf identiality, while still
allowing interested parties to have a reasonable understanding of the substa nce of the information
submitted. The United States gives the example of presenting numerical data as a trend-line or in
indexed fashion, instead of in absolute terms.172
7.154 The United States characterizes China's response to its claim as suggesting that an "adequate"
non-confidential summary need only be provided if an interested party objects to the manner in which
confidential information is summarized. However, the United States argues that whether an interested
party objects during the proceeding to the adequacy of a summary is irrelevant to whether the
obligations in Articles 12.4.1 of the SCM Agreem ent and 6.5.1 of the Anti-Dumping Agreement are
met.
173 The United States also argues that China's s ubmissions reflect a mistaken view that an
investigating authority's obligation to ensure th at the interested parties furnish adequate non-
confidential summaries may be excused if there is some subsequent "non-confidential analysis"
contained in the investigating authority's own determinations.174
7.155 The United States' primary position is that Part II of the petition contains the purported non-
confidential summaries. However, the United States contends that even if the general statements
"scattered" throughout Part-I of the petition coul d be relied upon as summarizing the confidential
information, as argued by China, the supposed summa ries in the body of the petition are inadequate.
Unlabelled trend lines and year-over-year percenta ge changes without the necessary context of
absolute values (in the form of an average, for example) are inade quate. Further, the absence of a
label or other form of identification linki ng the purported non-confidential summaries, found
throughout the petition, with the redacted information, is a factor that undermines the adequacy of the
summaries. According to the United States, it was not practicable for interested parties to piece
together information from the record to create non-confidential summaries. 175 The United States
addresses the arguments of China in relation to each of the categories of confidential information that
it challenges as inadequately summarized:

169 United States' second written submission, para. 46.
170 United States' second written submission, para. 47; United States' response to Panel question 9,
para. 21; and United States' opening statement at the first meeting of the Panel, para. 17.
171 United States' first written submission, para. 83 and United States' second written submission,
para. 47.
172 United States' first written submission, para. 86.
173 United States' second written submission, paras. 39-40.
174 United States' second written submission, paras. 41-42 and United States' response to Panel
question 8, para. 19.
175 United States' second written submission, paras. 37 and 48; United States' response to Panel

(i) Output of the applicants, total output of GOES in China, proportion of the applicant's output
in relation to China's total output
7.156 According to the United States, at no point does China assert that the non-confidential
summary of the output of the applicants was sufficien t. Rather, China contends that the "details are
not needed" or that the "main point" was standing and that this was evident from the other information
provided. The United States argues that China requires the respondents to engage in guesswork to
surmise an understanding or "the poi nt" of the substance of the confidential information. Further,
China's reliance on "Appendix 13" as summarizing the ou tput of the applicants is inapposite. The
petition does not contain a single reference to Appe ndix 13 and it is impossible to determine whether
the applicants relied on Appendix 13 for their output figures. Therefore, it is not possible to
determine whether Appendix 13 provides an adequate non-confidential summary.176
(ii) The Chinese Industry
7.157 Regarding trends in domestic consumption, the United States argues that redacting the data on
the consumption of GOES in China and stating that it represents "a growth of about 50% over 2006",
does not provide a reasonable understanding of the red acted information. Without absolute values, it
is impossible to attribute any meaning to the statement that there was 50% growth.
7.158 With respect to the trends in domestic pr oduction, the United States argues that stating
domestic output grew less rapidly than imports does not shed light on the contents of the redacted
information, namely the numerical data on dom estic output over the period 2006-2008. Further,
China's reliance on percentage changes more than fi fty pages later in the petition is not credible and
would require respondents to engage in a fishing expedition for the missing information.
7.159 Regarding trends in domestic pr ices, the United States contends that stating "the price of
subject imports was always lower than that of the applicants" does not shed light on the contents of
the redacted information, namely the domestic pr ice per ton. China's reliance on unlabelled trend
lines in a section of the petition disconnected fro m the Chinese domestic industry discussion is an
inadequate summary of the information.
177
(iii) Similarity or likeness of production techniques
7.160 The United States notes that the application simply redacts certain information. Therefore,
the respondents could not comment meaningfully on the "like product" issue.178
(iv) Change of price
7.161 The United States' position is that the trend lines found in the petition are an inadequate
summary of the pricing data. The United States argues that trend lines need to be labelled to provide
necessary context.179
(v) Dumping margin of GOES imports from the United States
7.162 In response to China's position that the United States could have performed reverse
engineering to obtain the redacted data, the United States argues that this is an admission that the non-

176 United States' second written submission, paras. 49-51.
177 United States' second written submission, paras. 52-56.
178 United States' second written submission, para. 57.
179 United States' second written submission, para. 58.

confidential summary was inadequate. It is not acce ptable to require respondents to make educated
guesses regarding information for which a non-confidential summary was not provided.
 180
(vi) Apparent consumption of GOES in China
7.163 The United States contends that the purported summaries of the consumption of GOES in
China are inadequate. The reliance by China on Table 23 of the petition does not advance China's
case, because the information in it is entirely redact ed, with no cross-reference to a summary in any
other section of Part I of the petition. 181 Further, the "percentage change" discussed fifty pages earlier
in the petition is merely a statement that consump tion grew by 50% between 2006 and 2008. Finally,
in relation to China's reliance upon Table 32 of the petition, the United States notes that the table does
not provide a proper contextual framework to a llow the substance of the information to be
understood.182
(vii) Suppressing or depressing effects on domestic prices
7.164 The United States argues that year-on-year perc entage changes in domestic average prices are
not an adequate non-confidential summary because th e significance of the absolute changes is not
revealed. Unlabelled trend lines are also inadequate.183
(viii) Influence on the Chinese domestic industry
7.165 The United States contends that a significant portion of the injury indicia data is missing some
or all of the non-confidential summary information. In particular, aside from the fact that year-over-
year percentage changes are not an adequate non-confidential summary, they are not provided on a
consistent basis for all indicators.184
(ix) Statistics and information about dumping by the United States
7.166 According to the United States, China does not contest its claim that the petitioners provided
an inadequate summary of this category of confidential information.185
4. Arguments of China
7.167 China disputes the United Stat es' claims under Articles 12.4. 1 of the SCM Agreement and
6.5.1 of the Anti-Dumping Agreement. In par ticular, China argues that proper non-confidential
summaries were provided in Part I of the petition and that these summaries were later supplemented
by the non-confidential analysis by MOFCOM in its determination and by the parties in their
arguments to MOFCOM.
186 China does not invoke the "exceptional circumstances" exemption under
Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement. Rather, China
argues that the adequacy of the non-confidential su mmaries should be assessed in the context of the
circumstances of the investigation. In particular, China argues that in the GOES investigation the fact
that there were only two Chinese producers constitutes an "exceptional circumstance". 187 I n t h i s
context, if an authority were to aggregate the data provided by all domestic producers in order to
provide a non-confidential summary to interested pa rties, each domestic producer would be able to

180 United States' second written submission, para. 59.
181 United States' response to Panel question 46, paras. 12-13.
182 United States' second written submission, paras. 60-61.
183 United States' second written submission, para. 62.
184 United States' second written submission, para. 63.
185 United States' response to Panel question 12, para. 23.
186 China's first written submission, paras. 71 and 87.
187 China's response to Panel question 11, paras. 40-41.

disaggregate the data to reveal the confidential info rmation submitted by its competitor. This would
not adequately protect the confidential information.188
7.168 According to China, Article 12.4.1 of the SCM Agreement and Article 6.5.1 of the Anti-
Dumping Agreement do not require complete or perfect disclosure. Rather, the summary must be in
"sufficient detail" to allow a reasonable understanding of the information, in the light of the purpose
for which the information is submitted. 189 In determining whether a summary permits a "reasonable
understanding" of the confidential information, rele vant context, such as the importance of precise
numerical information to an argument and whethe r there is public information that can provide
context for the missing information, should be co nsidered. China argues that the United States'
approach, requiring a statement of reasons if a single number is missing, is too impractical and
mechanical.190
7.169 China contends that the United States mistakenly focuses on the statements in Part II of the
petition, assuming that they are the non-confidential su mmaries. Part II of the petition clearly states
that the "petitioners made explanations in the pub lic version of the petition about the part that were
applied for confidential treatment". 191 Part II was included "to identify each category of information
for which confidential treatment was requested, to justify confidential treatment on the basis of
competitive or adverse effects, and to ensure that other parties fully understood what information was
redacted".192
7.170 In addressing Part I of the petition, China understands the United States to be arguing that it
cannot comprehend the non-confidential summaries becau se they are in the substantive portion of the
text of the petition (Part I), rather than in the por tion of the text which describes the categories of
information for which confidential treatment was sought. 193 China responds to this argument by
noting that Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement do not
address the manner in which a non-confidential summary should be identified or the form it should
take. In particular, there is no requirement for the non-confidential information to be "linked" to the
information being summarized.
194
7.171 China addresses each of the topic areas that Un ited States claims was treated confidentially
but was not adequately summarized:
(i) Output of petitioners and standing
7.172 China acknowledges that a table regarding the production of the petitioners was redacted.
However, China reasons that the information was re levant to the standing of the petitioners. As the
public version of the petition makes a factual asserti on of standing, this is sufficient to allow a
reasonable understanding of the table. China also ar gues that there was evidence in the public version
of the petition indicating that the two petitioners make up the entire Chinese GOES industry, therefore
satisfying the standing criteria under WTO rules.195

188 China's first written submission, para. 136.
189 China's first written submission, para. 89.
190 China's response to Panel question 11, para. 44.
191 China's first written submission, para. 90.
192 China's response to Panel question 10, para. 39.
193 China's second written submission, para. 30.
194 China's second written submission, paras. 24 and 31.
195 China's first written submission, paras. 93-96.

(ii) Chinese domestic industry
7.173 China notes that a section of the petition detailin g trends in the Chin ese GOES industry had
specific numbers deleted. China argues that the de leted information was summarized either in the
same section or elsewhere in the public version of the petition. For example, trends in consumption
were summarized through the provision of percenta ge changes in domestic apparent consumption;
trends in domestic production were summarized by contrasting the rate of growth of imports with the
rate of growth of domestic shipments and by pr oviding the specific growth percentages in another
section of the petition; trends in domestic prices were summarized by asserting that import average
unit values were below the average unit values of the petitioners and by graphing trend lines.
196
(iii) Similarity or likeness of production techniques
7.174 China argues that information about specific production processes was confidential but that a
"general overview of the basic points" of this information was provided. 197
(iv) Change of price
7.175 China notes that information on specific aver age unit values of the petitioners' product was
removed from a table. However, the public versi on of the petition includes a non-confidential version
of the information in the form of trend lines, comparing relative domestic and import prices. 198
According to China, when read in conjunction with public import prices, the trend lines allow
interested parties to understand both the relative tr end in prices and the magnitude of the price
differential over time.199
(v) Dumping margins for GOES from the United States
7.176 China notes that the petitioners' estimates of freight costs and the numbers derived from that
information are deleted from the petition. Howeve r, China contends that disclosing the relevant
methodology and the majority of numbers is an ad equate summary. Further, based on the formula
and numbers disclosed, some of the missing in formation could have been derived by the
United States.200
(vi) Apparent consumption of GOES in China
7.177 China argues that deleted information about th e apparent level of dom estic consumption was
summarized in the form of year-to-year percentage changes. 201
(vii) Suppressing or depressing effects on domestic prices
7.178 China submits that data on average unit va lues for the domestic product was summarized
through the use of trend lines and percentage changes.202

196 China's first written submission, paras. 97-101.
197 China's first written submission, paras. 102-103.
198 China's first written submission, para. 104.
199 China's second written submission, para. 33.
200 China's first written submission, paras. 105-109.
201 China's first written submission, paras. 110-116.
202 China's first written submission, paras. 117-121.

(viii) Influence on the Chinese domestic industry
7.179 Actual numbers regarding the state of the domes tic industry were deleted. However, China
states that for each indicator a percentage change was provided as a non-confidential summary.203
(ix) Statistics and information about dumping by the United States
7.180 China relies upon the same summary as it doe s for the category "dumping margin of
GOES".204
5. Arguments of third parties
(i) Argentina
7.181 Argentina submits that the objective of Article 6.5.1 of the Anti-Dumping Agreement and
Article 12.4.1 of the SCM Agreement is to guarant ee a right of defence to interested parties.
MOFCOM should have required the interested parties to furnish non-confidential summaries.205
7.182 According to Argentina, providing year-on-y ear percentage changes and trend lines not
labelled to scale does not constitute an adequate non-confidential summary because information on
absolute values should be provided. However, Arge ntina submits that absolute values should not be
required for production costs, due to the sensitivity of this information.
(ii) European Union
7.183 The European Union argues that Articles 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of
the SCM Agreement not only impose an obligation on the interested party to provide a non-
confidential statement, but also impose an obligation on investigating authorities to require that such a
statement be provided.
206
7.184 The European Union is not convinced by Chin a's position that "exceptional circumstances"
within the meaning of Articles 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of the SCM
Agreement exist when there are only two producers. In the European Union's view, in cases where
there are only two producers, it is still possible to prepare non-confidential summaries (in the form of
indices, for example).207
(iii) India
7.185 India submits that Article 6.5.1 of the Anti-Dumping Agreement is of critical importance in
preserving the balance between the interests of confid entiality and the ability of interested parties to
defend their rights in an investigation.208
(iv) Korea
7.186 Korea notes that in its anti-dumping investig ations, the Korea Trade Commission utilizes
"percentage numbers" in lieu of actual numbers, as a form of non-confidential summary. However, if
indices or other alternative means of summariza tion would reveal confidential information (for

203 China's first written submission, paras. 122-128.
204 China's response to Panel question 12, para. 45.
205 Argentina's third party submission, paras. 8 and 11.
206 European Union's third party submission, para. 4.
207 European Union's third party statement, para. 16.
208 India's third party statement, para. 3.2.

example, when only two or three firms are invol ved), "such information may warrant confidential
treatment".
209
6. Evaluation by the Panel
(a) Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement
7.187 The issue in contention between the parti es is whether the applicants provided non-
confidential summaries of the confidential informati on redacted from the application, in accordance
with the requirements of Articles 12.4.1 of th e SCM Agreement and 6.5.1 of the Anti-Dumping
Agreement.
7.188 Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement oblige
investigating authorities to require interested partie s, and interested Members in the case of the SCM
Agreement, to furnish non-confidential summaries of any confidential information provided. The
summaries must permit a "reasonable understanding" of the substance of the confidential information
submitted. In the Panel's view, the broad nature of the requirement to furnish non-confidential
summaries applies to confidential information submitte d in an application, as well as to information
submitted in the course of an investigation. Ar ticles 12.4.1 and 6.5.1 permit an exemption to the
requirement to provide non-confidential summaries when "exceptional circumstances" exist, which
render the confidential information incapable of summarization. However, in such a case, a statement
of reasons why summarization is not possible must be provided.
7.189 The obligations in Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping
Agreement fall upon the investigating authorities. Th e Appellate Body agreed with this interpretation
in EC – Fasteners (China). The Appellate Body found that in respect of information treated as
confidential under Article 6.5, Artic le 6.5.1 imposes an obligation on the investigating authority to
require that a non-confidential summary of the information be furnished. 210 The Appellate Body
noted that this accommodates the concerns of confidentiality, transparency and due process.211 Where
"exceptional circumstances" exist, such that non-confidential information is not susceptible of
summary, Article 6.5.1 requires that the party id entify the exceptional circumstances and provide a
statement explaining why summarization is not possibl e. The investigating authority must scrutinize
such statements to determine whether they establish "exceptional circumstances".212
7.190 An issue in contention between the parties in the circumstances of this case is when the
obligation to furnish a non-confidential summary ari ses. In particular, China argues that the "non-
confidential summaries provided in the application its elf were later supplemented by non-confidential
analysis provided by MOFCOM in its determinati on, and by the parties in their arguments to
MOFCOM".213 In the Panel's view, China's reasoning in this regard is not convincing. Given the
Appellate Body's statement that Article 6.5.1 of the Anti-Dumping Agreement affords "due process"
to interested parties in an investigation, Chin a's argument that non-confidential information submitted
in the application can be summarized in the investigating authority's determination is problematic. In
order to allow an interested party the opportunity to defend its interests, the summary of the

209 Korea's third party response to Panel question 2.
210 Appellate Body Report, EC – Fasteners (China), para. 542.
211 Appellate Body Report, EC – Fasteners (China), para. 542.
212 Appellate Body Report, EC – Fasteners (China), para. 544. A number of panels have also taken
this approach, see in particular, Panel Reports, Guatemala – Cement II, para. 8.213; Mexico – Steel Pipes and
Tubes, para. 7.379; EC – Fasteners (China), para. 7.515, US – Oil Country Tubular Goods Sunset Reviews
(Article 21.5 – Argentina), para. 7.135; and Mexico – Olive Oil, para. 7.89. These panels held that meaningful
interpretation of the provisions must impose an obligation on the investigating authorities to require interested
parties to provide a statement of reasons regarding why summarization is not possible.
213 China's first written submission, para. 84.

confidential information needs to be provided befo re the investigating authority has reached its
determination. Further, Articles 12.4.1 of th e SCM Agreement and 6.5.1 of the Anti-Dumping
Agreement expressly provide that the authorities shall require " interested parties providing
confidential information to furnish non-confidential su mmaries thereof". It is difficult to read this
obligation as being fulfilled when an investigating authority produces a summary of information
submitted to it.
7.191 The parties also disagree regarding the releva nce of whether a respondent contests the issue
the subject of the summary. In its first written submission, in defending the adequacy of its non-
confidential statements with respect to certain cate gories of information, China variously notes that
"this issue was not seriously contested" by the respondents. However, whether or not a respondent
makes a substantive challenge rega rding the subject matter that has been treated confidentially does
not affect the standard for an adequate non-c onfidential summary under Articles 12.4.1 of the SCM
Agreement or 6.5.1 of the Anti-Dumping Agreement. Indeed, without an adequate non-confidential
summary, the ability of an interested party to contest the relevant issue is compromised.
7.192 Finally, with respect to whether the "exceptiona l circumstances" exemption is at issue, in
response to a Panel question, China clarifies that , in the event the Panel finds the non-confidential
summaries inadequate, it does not invoke the exceptional circumstances exemption. Indeed, the text
of the provisions at issue, and the Appellate Body an d panel reports, clearly state that if information is
not susceptible of summarization, the party must identify the exceptional circumstances and provide a
statement explaining why summarization is not possibl e. The investigating authority is required to
scrutinize such statements to determine whether they establish "exceptional circumstances". It is clear
that this did not occur in the context of this case. However, although it does not rely on the
exemption, China contends that the adequacy of the non-confidential summaries should be assessed in
the light of the "exceptional circumstance" that there were only two Chinese producers of GOES,
making it difficult for summaries of aggregate data adequately to protect the confidentiality of the
information.
7.193 In considering China's argument in this rega rd, we note that Articles 12.4.1 of the SCM
Agreement and 6.5.1 of the Anti-Dumping Agreemen t explicitly establish the standard by which the
sufficiency of non-confidential summaries is to be assessed, namely by reference to whether the
summaries "permit a reasonable understanding of th e substance of the information submitted in
confidence". If the information is not susceptible of summary, for example because it would not be
possible to summarize the information while still pr eserving its confidentiality, the provisions allow
for an exemption to the requirement to furnis h a non-confidential summary. However, if this
"exceptional circumstance" exemption is not invoked, as in this case, there is no basis to conclude that
purported "exceptional circumstances" alter the standa rd that applies under Articles 12.4.1 and 6.5.1.
Therefore, the Panel will assess the adequacy of the non-confidential summaries by reference to
whether they "permit a reasonable understanding of th e information submitted in confidence". If they
do not, the fact that there were only two Chinese producers of GOES will not alter the conclusion that
China acted inconsistently with Articles 12.4.1 and 6.5.1.
(b) Part II of the application
7.194 The major issue in contention between the pa rties is where in the application the non-
confidential summaries can be found. While the United States contends that the purported non-
confidential summaries are the genera l statements found in Part-II of the application, China contends
that non-confidential summaries can be found throughout Part-I of the application.
7.195
 We note that within Part-I of the application, there are several sections in which confidential
information, generally numerical, has been redact ed. The end of each section containing redacted
information includes the phrase "[p]lease see Part II- 2, Non-confidential summary [x] for confidential

information".
214 Part II-2 of the application is entitled "non-confidential summary" and its
introductory paragraph, in China's version of the English translation, provides:
For the convenience of interested parties to have a general idea about the confidential
information, the petitioner hereby summari ze the confidential information applied
including the narratives and annex marked **.
7.196 By contrast, the United States' translation of the opening paragraph of Part II-2 provides:
To help other interested parties to access to comprehensive information the
petitioners applied for confidential treatment, the petitioners made explanations in the
public version of the petition about the pa rt that were applied for confidential
treatment, and below are non-confidential summaries of the appendices that have
been applied for confidential treatment.215
7.197 A review of the application provides support for the United States' position that the applicants
intended Part II-2 of the application to provide the non-confidential summaries of the redacted
information. This is due to the consistent instru ctions in the body of the application, following
redacted sections, to consult Part II of the application for summaries of the non-confidential
information. Further, the title to Part II-2 is "non-confidential summ ary", which somewhat
undermines China's argument that Part II merely id entifies each category of information for which
confidential treatment was requested and justifi es the confidential treatment for each category.
Further, China's English translation of the introductory paragraph to Part II-2 states that "the petitioner
hereby summarize[s] the confidential information applied".
7.198 We note that Part II-2 of the application consists of short and general statements regarding the
nature of the information treated as confidential. Fo r example, the section in Part II-2 that refers to
the redacted information regarding "change in price" provides:
This part involves sales price of the subj ect merchandise by the petitioners from 2006
to February 2009. As they are business pr oprietary of the petitioners, disclosure of
which will seriously harm the interest of the petitioners; therefore, the petitioners
applied for confidential treatment of the information.
7.199 Therefore, in the Panel's view, the "summaries" in Part II-2 provide minimal descriptions of
the nature, rather than the substa nce, of the information treated as confidential. Indeed, China does
not even attempt to argue that the summaries in Part II-2 are sufficient under Articles 12.4.1 of the
SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.
7.200 Consequently, the Panel concludes that Part II of the application was intended to provide the
non-confidential summaries of the confidential info rmation, but the summaries are inadequate under
Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.
(c) Part I of the application
7.201 Although the Panel concludes that Part II of th e application was intended to provide the non-
confidential summaries, we note China's argument th at neither Article 12.4.1 of the SCM Agreement
nor Article 6.5.1 of the Anti-Dumping Agreem ent specify that the required non-confidential

214 Application, Exhibit US-2 (English translation), see for example pp. 4 and 5.
215 Application, Exhibit US-2 (English translation), p. 79. We note that the equivalent paragraph in the
English translation of the application submitted by Chin a does not include a statemen t that earlier parts of the
application included non-confidential summaries (see, Exhibit CHN-2, p. 126).

summaries must take a particular form or be labe lled in a particular manner. Consequently, China
argues that non-confidential summaries can be inters persed throughout the body of an application and
still provide a reasonable understanding of the substance of the confiden tial information. Even if we
were to accept China's argument that non-confid ential summaries can be found in Part I of the
application, as indicated in the reasons which fo llow the Panel is not convinced that the purported
summaries provide a reasonable understanding of the substance of the confidential information.
7.202 At the outset, we note certain problems with some of the summaries relied upon by China. In
particular, in some instances, China's position is that a non-confidential summary has been furnished
within the meaning of Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping
Agreement when it is possible to infer the "mai n point" of the confidential information from the
context surrounding the redaction. In our view, this is not what is envisaged as a non-confidential
summary under the SCM and Anti-Dumping Agreements . Articles 12.4.1 and 6.5.1 explicitly require
the interested party furnishing the confidential inform ation to provide a summary thereof, rather than
requiring other interested parties to infer, derive and piece together a possible summary of the
confidential information. The following analysis of a selection of the categories of confidential
information redacted from the application high lights the problems with the purported summaries
relied upon by China. Given our conclusion that cer tain categories of confid ential information were
not adequately summarized in Part I of the application, we have not considered it necessary to proceed
to analyse each of the nine categories set out in the United States' first written submission.
216
(i) Output of the petitioners, total output of GOES in China, proportion of the petitioners' output
in China's total output
7.203 Table 1 of the application includes information about the output of each applicant, the total
output of GOES in China and the proportion of total output of each of the two applicants over the
period 2006 through the first quarter of 2009. A ll of the numerical information in the table is
redacted. The information in the application that China claims summarizes the table includes:
(i) an assertion that the applicants met the standing requirements under the Chinese
regulations;
(ii) the discussion of the domestic industry in the application, which mentions only two
producers. China argues that this indicat es that the applicants account for 100% of
the domestic industry; and
(iii) Appendix 13 to the application, which pr ovides figures for the total domestic GOES
output and the output of each applicant over the period 2006-2007, and estimates for
2008 and beyond.
217
7.204 China argues that Table 1 was included in the application for the purpose of demonstrating
that the applicants met the standing requireme nts under the Anti-Dumping and SCM Agreements.
Although the United States argues that "standing" was not mentioned in the application, it is included
in China's version of the English translation of th e application. While the United States' translation
does not include the term "standing", the descripti on under Table 1 makes clear that whether the two
companies "qualify for petitioners" was at issue.218

216 United States' first written submission, para. 83.
217 GOES Supply: Domestic Output Growth Insignificant, while Import Pressure Mounts, CICC
(Appendix 13 of the Application), Exhibit CHN-13.
218 Application, Exhibit CHN-2, p. 9 and Exhibit US-2, pp. 3-4.

7.205 According to China, the assertion that the a pplicants met the standing requirements under
WTO rules is an adequate summary of the confid ential information redacted from Table 1 of the
application. However, we recall the Appellate Body's statement that Article 6.5.1 of the Anti-
Dumping Agreement accommodates the concerns of confidentiality, transparency and due process. In
the Panel's view, to accommodate the concern of due process, interested parties must have access to a
summary of the confidential information that is re lied upon to draw certain conclusions, so that those
conclusions may be challenged. Simply relyi ng on the conclusion as the non-confidential summary
does not provide interested parties with a means to challenge whether the confidential information in
fact provides a basis for the conclu sion drawn. China's position is that interested parties reading the
application should assume that the applicants correc tly interpreted the redacted data to reach the
conclusion relating to standing. In our view, this is not what is envisaged by Articles 12.4.1 of the
SCM Agreement and 6.5.1 of the Anti-Dumping Agreement. Rather, it is necessary to provide a
summary of the substance of the confidential information and not merely to assert the conclusions that
may be drawn from it.
7.206 With respect to the discussion of the domestic industry, China relies on Part I(1)(i)(d) of the
application, which discusses the technology investment s made by the two applicants and also states
that "in recent years, major steelmakers in China are making huge investments to expand GOES
production capacity to satisfy domestic demand. Up to now, most capacities built with newly added
investment are ready for production".
219 In our view, this does not make it as clear as China asserts
that the domestic industry consisted of only tw o producers. Although China argues that "it was
common knowledge" that there were only two producers in the Chinese GOES industry and "this was
widely known from the public press reports about the Chinese industry", this begs the question of why
the information was treated as confidential. 220 If information is treated as confidential in an
application or investigation, the obligation to provide a non-confidential summary of it cannot be
avoided by claiming that the information is public in any event.
7.207 Finally, China relies upon Appendix 13 as a summary of Table 1 of the application.
However, we find reliance on this appendix to be problematic. Appendix 13 is referenced twice in the
body of the application: first, in explaining the use of the export price to the European Union as the
normal value, and second, in claiming the existence of threat of material injury. In both instances, it
is relied upon for the information it includes regarding the state of the steel markets in the
United States and Russia.
221 In no place in the application, least of all in relation to Table 1, is the
information in Appendix 13 regardi ng domestic output of GOES in China referenced. It is uncertain
whether the data in Appendix 13 is the source for the confidential information in Table 1 or provides a
summary of it. Indeed, the information in Ap pendix 13 includes actual values only up to and
including 2007, with estimates of output provi ded for 2008 and beyond. Given this mismatch
between the data in Table 1 and Appendix 13, and the stated purpose in the body of the application for
the inclusion of Appendix 13, in our view it does not provide readers of the application with a
summary of the confidential information redacted from Table 1.
7.208 Consequently, even if we were to accept China's argument that the non-confidential
summaries are to be found in Part I rather than Pa rt II of the application, the information relied upon
by China as the summary of the confidential inform ation redacted from Table 1 is inadequate under
Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.

219 Application, Exhibit US-2, pp. 4-5.
220 China's first written submission, para. 95.
221 Application, Exhibit CHN-2, pp. 36, 116.

(ii) Apparent consumption of GOES in China
7.209 Tables 23 and 24 of the application redact data on the annual domestic apparent consumption
of GOES over the period 2006 through the first quarter of 2009. China relies upon the following
sections of the application as the non-confidential summaries of this information:
(i) Percentage changes in domestic apparent c onsumption on page 5 of the application.
In particular, page 5 states that sinc e 2006, domestic appare nt consumption has
maintained a year-on-year growth rate of 20%. By 2008, there had been a growth of
50% over 2006 levels.
(ii) Table 32 of the application provides year-on-year percentage changes from 2006 to
2007 and from 2007 to 2008. These figures are also discussed in the commentary on
causation following Tables 32 and 33.
(iii) Appendix 13 to the application, which pr ovides public data on apparent domestic
consumption over the period 2006-2007, with estimates for 2008 and beyond.
7.210 The United States and China disagree regarding whether year-on-year percentage changes can
provide an adequate non-confidential summary of the confidential information on the apparent
domestic consumption of GOES in China. According to the United States, it is impossible to gain a
reasonable understanding of the substance of the redacted information b ecause, in the absence of
information about the absolute values, "growth of about 50%" could mean growth from 100 to 150 or
100,000 to 150,000.
222 The United States argues that absolute values could have been reported as an
average without disclosing the confidential information. 223 However, a review of Tables 23 and 24 in
the application indicates that the tables report data in the form of annual averages, including redacting
the data on the annual average domestic apparent consumption. Therefore, it is the annual averages of
domestic apparent consumption of GOES that is treated as confidential in the application. Given that
the United States has not brought a claim regarding the classification of particular types of
information, including annual averages, as confidential under Articles 6.5 of the Anti-Dumping
Agreement or 12.4 of the SCM Agreement, its ar gument that the very information treated as
confidential should have been disclosed under Ar ticles 6.5.1 of the Anti-Dumping Agreement and
12.4.1 of the SCM Agreement is not convincing.
7.211 However, in the Panel's view, there remain significant problems with the purported
summaries of the confidential information relied upon by China. In particular, there is a mismatch
between the redacted information and the allege d summaries. Table 32 includes the percentage
change in domestic apparent consumption between 2006 to 2007 and between 2007 to 2008.
Although the information redacted from Tables 23 and 24 includes a figure for apparent domestic
consumption in the first quarter of 2009, no percenta ge change or other form of summary is provided
for this in Table 32 or elsewhere in the applicati on, including on page 5. Therefore, even accepting
China's arguments regarding the adequacy of y ear-on-year percentage changes as a means of
summarizing confidential information, the summary is de ficient in any event, w ith respect to the data
for the first quarter of 2009.
7.212 With respect to China's reliance upon Appendix 13 of the application as a form of non-
confidential summary, we recall our previous discussi on of this Appendix at paragraph 7.207 of this
Report.

222 United States' second written submission, para. 60.
223 United States' response to Panel question 45, para. 8.

7.213 Finally, we note the United States' argument that China would require respondents to "piece
together a puzzle of data and information scatte red throughout the petition". This is because
information 50 pages prior to, and 8 pages after, Tables 23 and 24 is supposed to summarize the
information redacted from Tables 23 and 24.
224 On the one hand, the Panel notes that Articles 12.4.1
of the SCM Agreement and 6.5.1 of the Anti-Dump ing Agreement do not include any requirements
regarding the form a non-confidential summary must take. However, on the other hand, given the
lack of cross-referencing and the mismatch betw een the redacted information and the purported non-
confidential summaries, a respondent may be confused regarding whether the summary information is
based on the same data source as the redacted information and thus represents the "non-confidential"
summary. In this sense, the due process objective of Articles 12.4.1 and 6.5.1 may be undermined, as
an interested party may not be aware that the red acted information has in fact been summarized and
can be contested.
7.214 In the light of this reasoning, even if we were to accept China's argument that year-on-year
percentage changes in domestic apparent consumption may cons titute non-confidential summaries,
there remain significant problems with the summa ries relied upon by China, such that they are
inadequate under Articles 12.4.1 and 6.5.1 of the SCM and Anti-Dumping Agreements.
(iii) Influence on the Chinese domestic industry
7.215 The section of the application describing the impact of the dumped imports on the domestic
industry includes 24 tables of data, from which eith er all or a significant portion of the data is
redacted.225 China relies upon year-on-year percentage changes as the relevant non-confidential
summaries, provided either within the relevant tabl es or in the accompanying commentary. China
again relies upon Appendix 13 as providing a non-confidential summary of some of the factors at
issue.
7.216 Again, even accepting that year-on-year percen tage changes may constitute a form of non-
confidential summary, there remain certain gaps in the summaries provided in the section of the
application examining the impact of the dumped imports on the domestic industry, as outlined in the
following paragraphs.
7.217 Figures for the injury indicators are provide d separately for each applicant, WISCO and
Baosteel. Generally, the percentage change in each indicator from 2006 to 2007 and from 2007 to
2008 is provided for WISCO. However, summary data is generally not provided for Baosteel. We
note that Baosteel commenced production in May 2008 and therefore, the redacted information
presumably included absolute values for Baosteel for 2008 and the first quarter of 2009. 226 Further,
China did not claim that such information was incapable of summarization due to "exceptional
circumstances" under Articles 12.4.1 of the SCM Agreement or 6.5.1 of the Anti-Dumping
Agreement. In Table 38, summary data is provi ded for Baosteel, by breaking the data down and
providing quarter-on-quarter changes, indicating th at some form of summarization was possible for
Baosteel. Therefore, for those tables where no summary data is provided for Baosteel, and the
subsequent commentary also fails to summarize the in formation, we cannot conclude that China acted
consistently with Articles 12.4.1 of the SCM Agreement or 6.5.1 of the Anti-Dumping Agreement.
227
7.218 For some of the tables in which no summary data is provided for Baosteel, year-on-year
changes for WISCO and for the total industry are pr ovided. Therefore, it is possible to derive

224 United States' second written submission, para. 61.
225 Application, Exhibit US-2, pp. 61-72.
226 Application, Exhibit US-2, p. 67.
227 Application, Exhibit US-2. For instances of this, see Tables 27, 34, 42 and 50, pp. 61, 65-66, 69 and
72.

Baosteel's contribution in 2008 and the first quarter of 2009. 228 However, where an interested party is
required to perform its own calculations in order to derive its own summary of the confidential
information, this is an indication that the party providing the confidential information did not furnish
an adequate summary to the investigating author ity in accordance with Articles 12.4.1 of the SCM
Agreement and 6.5.1 of the Anti-Dumping Agreement.
7.219 Although year-on-year percentage changes are generally provided for WISCO, in relation to a
number of tables a percentage change for only one y ear is provided, with the summary data for the
other annual change missing. 229 Finally, in a number of instances, no year-on-year summary is
provided for either WISCO or Baosteel. In these cases, there is some limited commentary following
the redacted tables.
230
7.220 In the light of these observations, even if we were to accept China's theory that the non-
confidential summaries can be found in Part I of th e application, the purported summaries relied upon
by China are deficient in a number of respects. Consequently, we cannot conclude that the summaries
provide a reasonable understanding of the substan ce of the confidential information in accordance
with Articles 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of the SCM Agreement.
(iv) Dumping Margin of GOES imports from the United States
7.221 China argues that the dumping margins for GO ES were adequately summarized because the
methodology for calculating the margins was outlined and the vast majority of numbers were
provided in Part I of the application. Given th e Panel's conclusions regarding the numerous problems
with the purported non-confidential summaries in relation to the three preceding categories of
confidential information, we do not consider it n ecessary to reach a defin itive conclusion regarding
whether, in this context, outlining the met hodology for calculating the dumping margins was
sufficient to permit a reasonable understanding of substance of the redacted information.
7.222 However, in relation to China's argument th at, based on the formulas and numbers disclosed,
interested parties could derive much of the missi ng data, the Panel feels it necessary to comment that
this kind of process is not what is envisaged by Articles 12.4.1 of the SCM Agreement and 6.5.1 of
the Anti-Dumping Agreement. The Articles explic itly require parties to furnish non-confidential
summaries of any information submitted in confidence. Where other interested parties are required to
derive their own summary and make educated guesses about the substance of the redacted
information, the requirements of Articles 6.5.1 and 12.4.1 are not met.
(d) Conclusion
7.223 The Panel concludes that Part II-2 of the app lication was furnished by the applicants as the
non-confidential summary required under Articles 12. 4.1 of the SCM Agreement and 6.5.1 of the
Anti-Dumping Agreement. However, the purported summaries in Part II are inadequate in permitting
a reasonable understanding of the substance of the information submitted in confidence.

228 Application, Exhibit US-2. For instances of this, see Tables 28, 29, 31 and 40, pp. 61-62, 63-64,
and 68.
229 Application, Exhibit US-2. For instances of this, see commentary following Tables 41 and 45 on
pp. 69 and 71.
230 For example, the commentary accompanying Table 30 indicates that the sales volume to output rate
was dropping for the applicants over the period 2006-2009. With respect to Table 33, the commentary indicates
that market share for the applicants rose between 2006 a nd 2007 and then fell in 2008. Finally, with respect to
Table 36, no summary information is provided for Baosteel, apart from a statement that its capacity utilization
rate was low (see Application, Exhibit US-2, pp. 63, 65 and 67.)

7.224 As highlighted in the preceding reasons, the Pa nel has analysed the information on the basis
of China's argument that the non-confidential summari es can be found in Part I of the application.
The Panel has concluded that, for at least some of the categories of confidential information, there are
deficiencies in the purported summaries relied upon by China, such that they do not provide a
reasonable understanding of the substance of the conf idential information. In addition, we are not
convinced by that aspect of China's defence whic h suggests that a non-confidential summary exists
where an interested party is able to derive, or infer from the context, the possible nature of the
confidential information. Rather, there is an explicit obligation under Articles 6.5.1 of the Anti-
Dumping Agreement and 12.4.1 of the SCM Agreement for an interested party submitting
confidential information to furnish a summary of it. It is not for other interested parties to derive their
own summary based on the context from which the information is redacted.
231
7.225 Accordingly, the Panel concludes that China act ed inconsistently with Articles 12.4.1 of the
SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.
D. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE 12.7 OF THE SCM AGREEMENT IN ITS
USE OF FACTS AVAILABLE IN CALCULATING THE SUBSIDY RATES (FOR THE TWO KNOWN
RESPONDENTS) UNDER CERTAIN PROCUREMENT PROGRAMMES
1. Introduction
7.226 MOFCOM applied facts available to calcula te the subsidy rates for the two known
respondents, AK Steel and ATI. MOFCOM found th at the respondents had not cooperated with its
investigation, since they had failed to provide certain sales data.
7.227 The United States contends that MOFCOM's reliance on facts available was improper, and
therefore contrary to China's obligations under Article 12.7 of the SCM Agreement.
7.228 China asks the Panel to reject the United States' claim.
2. Arguments of the United States
7.229 The United States denies that the two respondents failed to provide requested information, or
that they otherwise impeded MOFCOM's invest igation. The United States asserts that the
respondents cooperated, responded to MOFCOM's questionnaires, and to the extent they did not
provide information it was because MOFCOM's own questionnaires did not require it. The
United States asserts that the two respondents e ngaged with MOFCOM on its terms throughout the
investigation.
7.230 Regarding the information actually used by MOFC OM once it resorted to facts available, the
United States also contends that there were no facts available on the record supporting MOFCOM's
choice of a 100% utilization rate, i.e. a rate indi cating that all domestic sales of GOES and non-GOES
products by the respondents were subsidized.
(a) Failure to cooperate / provide data
7.231 The United States notes that, in its original August 2009 questionnaire, MOFCOM gave the
following general instructions for the respondents:

231 Although not expressly stipulated in Articles 12.4.1 of the SCM Agreement or 6.5.1 of the Anti-
Dumping Agreement, the Panel notes the important contri bution to transparency, and to assisting parties in
gaining a reasonable understanding of the substance of the confidential information, that labelling non-
confidential summaries as such provides.

Please read questions carefully before answering. When answering a question, please
write the question down first and put your answer directly below it and point out the
support evidence to it. If the questio n does not apply to you, please write down
explicitly, "this question does not apply to my company" and state the reasons.
232
7.232 The United States asserts that, in addition, MOFCOM posed the following questions under
the heading "government procurement programs" re lating to the applicants' government procurement
allegations:
(1) Please answer all the questions listed by Annex I.

(2) Does your company attend bidding when selling products to government? If yes,
please explain the specific bidding pro cedure and bidding rules as well as the
agencies and departments to which your company submit bid tender.

(3) Please provide all the relevant information (not limited to the subject merchandise), in
the form of tables, regarding government pr ocurement signed within the POI as well
as those not performed within the POI, wh ich includes: the specific names of the
purchaser, purchasing time, name of purchased products, the supply quantity, [value],
price, payment and the contract progress, etc. The contract, bid tender etc. related
evidence shall be provided. The selling price of the involved products that are sold to
other private purchaser shall be provided as well.

(4) Please provide the information regarding dom estic sales of all the products in POI, in
the form of tables. The quan tity and [value] of each product sold to each client shall
be provided.
233

7.233 The United States contends that, in response to questions 2 and 3, AK Steel answered that, as
demonstrated by the sale data for subject merchandise provided in the parallel anti-dumping
proceeding, the company did not sell any GOES to any government entity during the POI. AK Steel
continued: "[a]s a result, this alleged s ubsidy program is not relevant to AK Steel." 234 T h e
United States asserts that ATI provided a similar answer. 235 The United States asserts that, pursuant
to MOFCOM's instructions, AK Steel noted that no government procurement was signed during the
POI, and therefore the question was inapplicable.
7.234 The United States submits that, in response to Question 4, which only relates to the POI, and
which does not contain the proviso "not limited to the subject merchandise" found in Question 3, AK
Steel referred MOFCOM to the sale data for s ubject merchandise provided in the parallel anti-
dumping proceeding.236 ATI indicated that the qu estion was "[n]ot applicable." 237 The United States
contends that, in the light of the fact that AK St eel and ATI did not use the alleged program, and none
of the predicates for reporting data in response to Question 3 were met, the summary quantity and
value data requested in Question 4 were superfluous.
7.235 The United States acknowledges that MOFCOM issued a deficiency letter regarding the
respondents' replies to the above questions. The United States asserts that, in its deficiency letter

232AK Steel, Original Questionnaire Response, Aug. 10, 2009 (BCI), Exhibit US-11, p. 6; AK Steel,
Revised Questionnaire Response, Sept. 9, 2009 (BCI), Exhibit US-14, p. 6.
233 China's first written submission, para. 147.
234 AK Steel, Original Questionnaire Response, (BCI), Exhibit US-11, pp. 21-22.
235 Exhibit US-38, at 19 (“not applicable”).
236 AK Steel, Original Questionnaire Response, (BCI), Exhibit US-11, pp. 21-22.
237 Excerpt from ATI Questionnaire Response, Exhibit US-38, p. 19.

issued 10 August 2009, regarding government procur ement, MOFCOM appears to request transaction
data, but at the same time explains that if the f acts are such that the requ est is not applicable, the
respondents should demonstrate inapplicability:
The prima facie evidence owned by the Inv estigating Authority showed that your
company's products (not limited to the produc t concerned) could have been sold to
the USG or public bodies, or have been sold to contractors of relevant projects who
have been bound by the Buy America Act. There was a possibility that the prices of
these transactions was higher than then market prices and consequently brought
benefit to your company. Therefore, so long as your company's products were sold in
the domestic market, the transactions shall be reported. If your company was of the
view that, regarding the product concerned and your company's other products, there
was no purchase from the government or public body, or there was no transaction
bound by the Buy America Act, it was your company who shall bear the burden of
proof.
238
7.236 According to the United States, both of MOFCOM 's requests are predicated on the existence
of government procurement transactions. In the original questionnaire, MOFCOM asked for volumes
of information for "signed" procurement contracts and sales of "involved" products to private parties.
In the new subsidy questionnaire, MOFCOM asked for sales "under the influence" of any "Buy
American" law. The United States submits that, in the absence of any procurement sales, a company
would have no transactional data to report, and the quantity and value data requested by MOFCOM
for the POI in the original questionnaire would be irrelevant.
7.237 The United States explains that, in its revised questionnaire response dated 9 September 2009,
AK Steel attached a customer list showing that the government did not purchase any AK Steel
products (i.e. GOES or non-GOES) during the POI – including products unrelated to subject
merchandise, and revised its narrative response to address the question as clarified by the deficiency
letter.
239 In its separate deficiency letter response, also dated September 9, 2009, AK Steel explained
that it was impossible to know what its custom ers did with its products. According to the
United States, AK Steel's customer list and explan ation were responsive to the deficiency letter. 240
According to the United States, therefore, AK Stee l did not impede the investigations; it explained
why the question was not applicable. The United States notes, moreover, that MOFCOM did not
follow-up with any additional questions on this subject or otherwise suggest that AK Steel's
explanation was not adequate. The United States asserts that AK Steel only learned of MOFCOM's
dissatisfaction with its response when MOFCOM issued the preliminary determination.
7.238 Regarding ATI, the United States asserts that AT I attached a customer list to its revised
questionnaire response and pointed to the financ ial statements submitted with its original
questionnaire response to establish the fact that ATI made no sales of the subject merchandise (i.e.
GOES) to the United States Government. ATI also pointed out that MOFCOM could confirm the
inapplicability of the question to ATI when MOFCOM conducted the on-site verification.
7.239 The United States asserts that MOFCOM failed to react to the respondents' supplemental
questionnaire responses until issuance of its preliminary determination on 14 December 2009. The
United States asserts that this appears to be the first instance where MOFCOM highlighted any need
for transaction data without conditions. The United States contends that, in response to MOFCOM's

238AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 3; ATI Deficiency Letter
(26 August 2009), Exhibit CHN-20, p. 3.
239 AK Steel, Revised Questionnaire Response (BCI), Exhibit US-14, p. 25.
240 GOES Supply: Domestic Output Growth Insignificant, while Import Pressure Mounts, CICC
(Appendix 13 of the Application), Exhibit CHN-13, p. 3.

approach in the preliminary determination, AK Steel submitted the sales data for subject merchandise
as an exhibit to its comments on the preliminary de termination about a week before the verification
began.241 The United States asserts that ATI appeared to have decided that it no longer had an
opportunity to engage with MOFCOM, as it conclude d that MOFCOM had a pre-determined result in
mind. The United States suggests that, as demonstrated by MOFCOM's treatment of AK Steel's sales
data, ATI's decision was correct.
7.240 The United States submits that, in its January 2010 CVD verification memo, MOFCOM
acknowledges that the sales data submitted by AK Steel is at least partially responsive, but
nonetheless rejects the sales data because of past supposed "non-cooperation":
Since the investigation authority had already given explanations to relevant issues and
offered the respondent a chance of re-s ubmitting the responses, the investigation
regret to see that AK Steel Corporati on still didn't answer the questions for
Government Procurement Program as requi red by the questionnaire. Therefore,
though AK Steel Corporation provided some of its domestic sales data in the
Comments on Preliminary Determination, the investigation authority would not
verify those sales data in the anti-subsidy verification.
242
7.241 According to the United States, MOFCOM theref ore refused to verify the sales data, which
were already in its possession, and had been veri fied in the parallel anti-dumping proceeding.
Regarding the customer lists, AK Steel submitted a written request to verify the customer lists. The
United States asserts that MOFCOM, however, did not verify the lists.
243
7.242 The United States notes that China complained that the companies' failure to provide
transaction data prior to the verification denied MOFCOM "the ability to plan efficiently" for
verification.244 The United States suggests that, to the ex tent that MOFCOM may have suffered any
inconvenience, however, this was simply the resu lt of its own questionnaire and the apparent
differences between the instructions in the questi onnaire and what MOFCOM actually wanted. The
United States contends that if MOFCOM deemed transactional data necessary from the outset without
regard to whether a company participated in gove rnment procurement during the relevant period, its
questionnaire should have so stated from the outset.
(b) Factual basis for 100% utilization rate
7.243 The United States contends that, even if an inves tigating authority is entitled to resort to facts
available, the investigating authority does not ha ve carte blanche in choosing which facts, or
information, to rely on. The United States asserts that the investigating authority must take into
account the information actually provided by the exporter. The United States relies in this regard on
the following findings of the Appellate Body in Mexico – Anti-Dumping Measures on Rice:
We understand that recourse to facts ava ilable does not permit an investigating
authority to use any information in whatev er way it chooses....to the extent possible,
an investigating authority using "facts available" in a countervailing duty
investigation must take into account all the substantiated facts provided by an
interested party, even if those facts ma y not constitute the complete information

241 AK Steel, Comments on Preliminary Determination, Exhibit 1, Customer Lists (BCI), Exhibit US-
23.
242 MOFCOM, the Disclosure Letter for Fundamental Facts of the Verification on AK Steel
Corporation in the GOES Anti-Subsidy Investigation, 3 Mar. 2010 (BCI), Exhibit US-24, p. 3.
243 United States' first written submission, para. 105.
244 China's first written submission, para. 151.

requested by the party...the facts available to the agency are generally limited to those
that may reasonably replace the information that an interested party failed to
provide.
245
7.244 Regarding the context of Article 12.7 of the SCM Agreement, the United States submits that
the Appellate Body has compared the Anti-Dumpi ng Agreement to the SCM Agreement, and stated
that an investigating authority is obliged to consider information submitted by an interested party:
Like Article 6 of the Anti-Dumping Agreem ent, Article 12 of the SCM Agreement as
a whole sets out evidentiary rules th at apply throughout the course of
the...investigation, and provides also for due process rights that are enjoyed by
interested parties throughout...an investigation....[T]his due process
obligation...requires the investigating author ity...to take into account the information
submitted by an interested party.
246
Though the SCM Agreement does not have a facts available Annex, "it would be
anomalous if Article 12.7 of the SCM Agre ement were the permit the use of facts
available in countervailing duty investigati ons in a manner markedly different from
that in anti-dumping investigations."247
7.245 The United States argues that MOFCOM appears to have concluded that if a company does
not provide some information, or if the information provided does not perfectly fit the request to
which it responds, MOFCOM may reject all information provided by the company. The
United States recalls that the respondents provided sa les data showing that they did not sell subject
merchandise to the United States Government. AK Steel additionally provided customer lists
showing that it did not make any direct sales to the United States Government. The United States
contends that MOFCOM rejected these facts, which were verifiable, and assumed that the
United States companies sold all of their output to the United States Government, and that this output
garnered a 25% price premium. The United States submits that there are no facts available on the
record to support MOFCOM's conclusion that th e respondents sold all of their output to the
Government.
7.246 The United States contends that MOFCOM ignored information on the record demonstrating
that the respondents did not sell exclusively to the US Government or Government contractors. The
United States explains that, to calculate the amount of the alleged "subsidy" to producers resulting
from the procurement programs, MOFCOM assumed that AK Steel and ATI sold all of their output to
the government under programs requiring the paymen t of a 25% price premium. Had MOFCOM not
entirely disregarded the factual information actually supplied by the companies, it could not have
assumed that the companies sold all of their out put to the government. At most, AK Steel, for
example, could have sold 29% of its output to i ndustries with some relation to construction.
MOFCOM required AK Steel's 10-K annual report be transl ated in its entirety. Page 2 of that report
provides the percentage of AK Steel's sales attribut able to three market segments. In 2008, the
percentages were:
· Automotive: 32%;
· Infrastructure and Manufacturing: 29%; and
· Distributors and Converters: 39%.
248

245 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, at para. 294.
246 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, at para. 292.
247 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, at para. 295.
248 AK Steel Annual Report for 2008, (Annex 15-4 of the Application), Exhibit CHN-3, p. 2.

7.247 The United States asserts that MOFCOM improperl y ignored this information on the record.
The United States contends that, to the extent that any AK Steel products could have made their way
through commerce to government construction contractors, these sales would be included in the
infrastructure and manufacturing segment. Because neither automotive manufacturers nor distributors
and converters include construction contractors, sales to these market segments are necessarily
unaffected by the government procurement statutes under investigation. The United States asserts
that if MOFCOM was going to ignore all evidence indicating that AK Steel sold nothing to the
government, MOFCOM should have at least lim ited its subsidy calculation to AK Steel's
United States sales of products for the infrastructure and manufacturing segment, or 29% of the
company's United States sales.
3. Arguments of China
(a) Failure to cooperate / provide data
7.248 China submits that MOFCOM's requests for da ta, and the underlying theory of indirect
subsidization, were well articulated and plainly understood by the respondents. Regarding question 3
in MOFCOM's original questio nnaire, China asserts that Question 3 went to the issue of
acknowledged utilization under the program. The expor ters were to report all transactions during the
POI involving government purchases, not limited to the subject merchandise, as well as information
on the selling price for the same products in tr ansactions outside the program. Question 4 was
broader. It sought a simple tabulation of all domes tic sales by product in the POI, including quantity,
value, and customer. According to China, the questions were unambiguous in referring to both GOES
and non-GOES products.
7.249 China notes that AK Steel's response to Question 3 only concerned sales of GOES to
government entities during the POI. AK Steel did not provide any information regarding sales of non-
GOES products to government entities during the PO I. China notes that AK Steel's reply to
Question 4 referred only to sales data for GOES tr ansactions submitted for the purpose of the anti-
dumping proceeding. Regarding ATI, China notes that ATI merely stated that Questions 3 and 4 were
inapplicable to the company or its affiliates. China notes that, ultimately, AK Steel provided
transaction data for GOES products only, whereas ATI submitted no transaction data at all (not even
for GOES). According to China, therefore, neither respondent provided sales data for all (i.e. GOES
and other steel) products over the period of investigation, as requested by MOFCOM. China asserts
that both respondents had understood the questions to refer to both GOES and non-GOES products, as
AK Steel argued that data for non-GOES products w as irrelevant, and ATI stated that it did not
benefit from any subsidies for either GOES or non-GOES products.
249
7.250 China submits that MOFCOM's deficiency le tter was even clearer in requiring transaction
data for all products, since it stated that "so lo ng as your company's products were sold in the
domestic market, the transactions shall be reported". The deficiency letter al so stated that, before
making any arguments as to whether or not transac tions involved government entities, or were bound
by the Buy America Act, "it was of the first im portance that [respondents] respond completely and
accurately to the questions of the Investigati ng Authority". China submits that MOFCOM's
deficiency letter could not have been clearer.250
7.251 China contends that AK Steel's r esponse to the deficiency letter wa s similar to its reply to the
original questionnaire, although AK Steel did provide a table listing all customers of its products (i.e.
GOES and non-GOES). However, China notes th at AK Steel still did not provide non-GOES

249 China's response to Panel question 19, paras. 74 and 76.
250 China's response to Panel question 19, para. 78.

transaction data. In addition, China notes that AK Steel also made the following remarks in an
accompanying letter:
With regard to government procurement, AK Steel provides in Exhibit II.3 of the
Revised Subsidy Questionnaire Response a lis t of all its customers during the period
of investigation ("POI") grouped by product category. This list demonstrates that AK
Steel did not sell either the subject merchandise or any other product to any
government entity during the POI.
To the extent MOFCOM is requiring AK Steel to demonstrate that none of the steel it
sold to non-government entities was used in a project that was subject to the "Buy
America" or similar act, MOFCOM is impos ing an impossible burden. AK Steel has
no reason to know what its customers do with their purchases. Because such a
substantial proportion of AK Steel's products are sold to service centers, which resell
the products to end users, there is no wa y to find out. Moreover, as stated in AK
Steel's questionnaire response, even if the government ultimately overpaid for a
project incorporating steel that may have originated with AK Steel, the entity that
received the overpayment did not provide any of that overpayment to AK Steel,
which received only a market-determined price for its product.
251
7.252 According to China, "AK Steel had thrown down the gauntlet" by being argumentative. 252
China further contends that MOFCOM needed the tr ansaction data precisely in order to test AK
Steel's assertions that it "has no reason to know what its customers do with their purchases", and that
"even if the government ultimately overpaid for a proj ect incorporating steel that may have originated
with AK Steel, the entity that received the overpayme nt did not provide any of that overpayment to
AK Steel, which received only a market-determined price for its product". China submits that AK
Steel's continued refusal to respond again seriously impeded the investigation. China submits that
ATI's response to the deficiency letter was even le ss forthcoming, since it provided only a customer
list for GOES, and stated that it did not sell GOES to any government entities.
7.253 China acknowledges that AK Steel did ultimatel y submit transaction data for sales of GOES
during the POI (i.e. the same data that had alread y been submitted in the anti-dumping proceeding),
after issuance of MOFCOM's preliminary determinati on. According to China, though, the data came
150 days after the original deadline for submission, 142 days after the extended deadline for
submission, 126 days after the deadline for the second opportunity provided by MOFCOM to
respond, and just 3 business days before the commenc ement of verification. Moreover, the data was
limited to GOES transactions ev en though AK Steel clearly understood that Question 4 of the initial
questionnaire was seeking POI transaction data on all sales.
7.254 Furthermore, China notes that even the United States appears to concede that, at the very
latest, MOFCOM's requests for data were clear as of issuance of the 26 August 2009 deficiency letter.
China notes in this regard the US statement, in describing the deficiency letter, that "MOFCOM…
demanded that the respondents prove non-use of th e alleged programs by providing detailed sales
information for all products and all customers over the POI and the preceding 14 years".
253
(b) Factual basis for 100% utilization rate
7.255 China contends that MOFCOM reasonably dete rmined, based on the "facts available", the
degree of utilization of the Government Purchase of Goods Program. China notes the United States'

251 AK Steel, Response to Deficiency Letter (9 September 2009), Exhibit US-13, pp. 3-4.
252 China's response to Panel question 19, para. 79.
253 United States' response to Panel question 8, para. 30.

argument that, according to AK Steel's 10-K repor t, only sales within the infrastructure and
manufacturing segment, representing 29% of total sales, could be relevant to the program at issue. 254
China contends that the use of this 29% figure, however, does not represent the most reasonable "facts
available," given the circumstances of this par ticular case. China asserts that MOFCOM had four
alternatives before it: (1) find 0% utilization; (2) find 29% utilization; (3) find some other degree of
utilization; or (4) find 100% utilization, as it did in the preliminary determination. China submits that,
after considering these alternatives, and comparing each of them relative to the others based on the
facts before MOFCOM – including critically th e nature and degree of non-cooperation – MOFCOM
reasonably determined that 100% utilization was the most reasonable "facts available" in this
particular case.
7.256 China asserts that the first option, 0% utiliza tion, was inconsistent with the record, which
showed at least some degree of utilization of the program. China asserts that this fact has been
conceded by the United States. Ch ina also asserts that the variou s arguments by the United States
respondents had always focused on direct utilization, and consciously avoided (or admitted) indirect
utilization. China states that, given the MOFCOM focus on both direct and indirect utilization, the
available facts strongly suggested that the degree of utilization was not 0% and was some other figure.
7.257 China identifies "several serious problems" with the second option of 29% utilization. First,
although AK Steel asserted that only the releva nt segment was the "facility and manufacturing
industry segment" – which represented 29% of the AK Steel sales for calendar year 2008 –
MOFCOM had no factual support for this assertion. China contends that a customer in the
"automobile manufacturing" segment might well ha ve produced items that were sold to the
government or were used in some construction project. Similarly, a customer in the "distributor and
converters" segment might well have resold ite ms to the government or government related
construction projects.
7.258 Second, China asserts that the 29% figure came from a financial report prepared for the
calendar year 2008, which does not relate specifical ly to the period of investigation (March 2008
through February 2009). MOFCOM had no equivalent figure for the period of investigation.
7.259 Third, China asserts that the 29% alternative came very late in the process, in AK Steel's
comments on the preliminary determination, a submission not filed until 30 December 2010. Coming
on the very eve of the verification, MOFCOM was una ble fully to evaluate and test this alternative
during the verification.
7.260 Fourth, this alternative was filed on the same day – 30 December 2010 as the final AK Steel
effort belatedly to respond to the MOFCOM request fo r information. Yet even at this late date, AK
Steel still did not respond properly, and provided tr ansaction data only for a subset of the customers
that had been previously identified. Indeed, AK St eel did no more than submit data that it had readily
available for months. So instead of making a good faith effort finally to respond to the request, AK
Steel yet again decided it could pick and choose ho w and whether to respond. Thus, rather than
submitting data that would allow MOFCOM to ascerta in the actual rate of utilization, AK Steel
submitted proposed 29% without any factual basis.
7.261 Regarding the third option, of some other rate of utilization, China identifies two
"fundamental flaws". First, as a factual matter MOFCOM had no data fro m respondents that would
allow it to determine some other number in which it would have any degree of confidence. Second,
as a legal matter a utilization figure not grounded in the record evidence would not qualify as "facts
available", for it would not be a "fact" in any sense of that term, and would be pure speculation by
MOFCOM.

254 United States' first written submission, paras. 97-98.

7.262 Regarding the fourth option, of 100% utili zation, China contends that MOFCOM had
announced this figure in its preliminary determination, and thereby squarely put this alternative into
play and made that fact clear to all the parties. China notes that, with full knowledge that MOFCOM
was actively considering 100% utilization, AK Steel still refused to cooperate. Instead, it made a
calculated judgment that it was somehow better off proposing 29% rather than submitting the
information needed to determine the actual degree of utilization, and allowing that information to be
verified.
7.263 According to China, MOFCOM knew the correct utilization was more than 0%. MOFCOM
also had a reasonable basis to believe the correct utilization was more than 29%, since AK Steel had
proposed that alternative rather than providing the requested data. Furthermore, MOFCOM had no
information with which it could determine some a lternative more than 29% but less than 100%, in
large part due to the refusal of ATI to provide any information and AK Steel to provide complete
information. In these circumst ances, China asserts th at the "facts available" announced in the
preliminary determination proved still to be the most reasonable "facts available" for the final
determination.
4. Arguments of third parties
(a) Korea
7.264 Korea argues that Annex II of the Anti-Dumping Agreement sheds some light on the
application of facts applicable in the context of countervailing duty investigations. In particular,
according to Korea, an investigating authority is required to consider the information actually
provided by a respondent, even if the respondent does not submit all the requested information.
255
(b) Saudi Arabia
7.265 In Saudi Arabia's view, the standards that appl y to the use of facts available in anti-dumping
proceedings apply equally to countervailing duty proceedings. Saudi Arabia argues that if an
authority receives information from a respondent, it must use that information if the respondent acted
to the best of its ability. Facts available shoul d only be used to fill in gaps in the necessary
information. Further, facts available must not be used in a punitive manner.256
5. Evaluation by the Panel
7.266 There are two main issues raised by the United States' Article 12.7 claim. First, did
MOFCOM properly find that the respondents faile d to cooperate with MOFCOM's requests to
provide transaction data for domestic sales of GOES and non-GOES products during the POI?
Second, did MOFCOM properly apply a 100% utilizati on rate when determining the extent to which
respondents' domestic sales of GOES and non-GOES pr oducts during the POI were subsidized? We
address each of these issues in turn, after first cons idering the text and oblig ations inherent in the
relevant provision.
(a) Provision at issue
7.267 The United States' claim is brought under Ar ticle 12.7 of the SCM Agreement, which
provides:

255 Korea's third party submission, paras. 19 and 21.
256 Saudi Arabia's third party submission, paras. 14, 16 and 20-21.

In cases in which any interested Member or interested party refuses access to, or
otherwise does not provide, necessary info rmation within a reasonable period or
significantly impedes the investigation, preliminary and final determinations,
affirmative or negative, may be made on the basis of the facts available.
(b) Did MOFCOM properly find that the responde nts failed to cooperate with MOFCOM's
requests to provide transaction data for dom estic sales of GOES and non-GOES products
during the POI?
7.268 In order to resolve this first issue, we begin by examining the relevant requests for
information made by MOFCOM, and the respondents' responses to those requests. We then examine
MOFCOM's finding of non-cooperation, and consider wh ether that finding was justified by the facts.
Thereafter, we consider a United States argument that data requested by MOFCOM was not
"necessary" within the meaning of Article 12.7 of the SCM Agreement.
7.269 The relevant requests for information were set out in Questions 3 and 4 of MOFCOM's
original questionnaire, as clarified by deficien cy letters issued by MOFCOM on 26 August 2009.
Questions 3 and 4 of the original questionnaire were worded as follows:
(3) Please provide all the relevant info rmation (not limited to the subject
merchandise), in the form of tables, regarding government procurement signed within
the POI as well as those not performed with in the POI, which includes: the specific
names of the purchaser, purchasing time, name of purchased products, the supply
quantity, [value], price, payment and the contract progress, etc. The contract, bid
tender etc. related evidence shall be provi ded. The selling price of the involved
products that are sold to other private purchaser shall be provided as well.
(4) Please provide the information regardin g domestic sales of all the products in
POI, in the form of tables. The quantit y and [value] of each product sold to each
client shall be provided.
257
7.270 In its initial questionnaire response, AK Steel replied to Question 3 in the following terms:
As demonstrated in Table 4-2 of AK Steel's Antidumping questionnaire response, the
company did not sell any GOES to any government entity during the POI. As a
result, this alleged subsidy program is not relevant to AK Steel.
258
7.271 AK Steel provided a similar response to Question 4:
Please see Table 4-2 in AK Steel's Antidumping Questionnaire Response for a list of
companies that purchased GOES from AK Steel during the POI.259
7.272 In its initial questionnaire response, ATI made the following introductory remarks to its
replies to inter alia Questions 3 and 4.
This question does not apply to Allegheny Ludlum or the ALC Affiliates because no
subsidies provided pursuant to the [relevant procurement programmes] benefitted the Subject

257 China's first written submission, para. 147.
258 AK Steel, Original Questionnaire Response (BCI), Exhibit US-11, p. 22.
259 AK Steel, Original Questionnaire Response (BCI), Exhibit US-11, p. 22.

Merchandise or like or similar products during the POI and the 14-year period prior to
March 1, 2008.
260

7.273 Thereafter, ATI simply asserted that Questions 3 and 4 were "not applicable".
7.274 On 26 August 2009, MOFCOM issued letters identifying a number of deficiencies in the
respondents' replies to the original questionnair e. For present purposes, we first note that the
deficiency letter addressed to AK Steel explaine d that MOFCOM was maintaining separate records
for the parallel anti-dumping and countervail procee dings. Accordingly, MOFCOM stated that the
consequence of AK Steel referring to Table 4-2 of its anti-dumping questionnaire response (as it did
in response to Question 3) "was that essentially , the company failed to respond to relevant
questions…" 261
7.275 Second, we note that the deficiency letters a ddressed to AK Steel a nd ATI explained that
MOFCOM was investigating the possibility of both dir ect and indirect subsidization. In particular,
MOFCOM explained that "the subsidy that could be investigated in an anti-subsidy proceeding is not
limited to a subsidy that is directly related to the product concerned". The deficiency letter also
stated:
Regarding Government Purchase of Goods Program , the prima facie evidence
owned by the Investigating Authority s howed that your company's products (not
limited to the product concerned) could have been sold to the USG or public bodies,
or have been sold to contractors of relevant projects who have been bound by the Buy
America Act. There was a possibility that the pri ces of these transactions was higher
than the market prices and consequently br ought benefit to your company. Therefore,
so long as your company's products were sold in the domestic market, the
transactions shall be reported. If your comp any was of the view that, regarding the
product concerned and your company's ot her products, there was no purchase from
the government or public body, or there was no transaction bound by the Buy
America Act , it was your company who shall bear the burden of proof. If your
company was of the view that even if othe r products were benefited by subsidizations
but no effect would be conferred to the product concerned, it was your company who
shall prove the benefit generated through purchase of other products did not have any
effect to various aspects of the product con cerned such as the cost and the pricing.
Before making these arguments, it was of the first importance that your company
respond completely and accurately to the questions of the Investigating Authority.
262
7.276 AK Steel filed a revised questionnaire response on 9 September 2009. In its revised response,
AK Steel submitted a table listing all customers for all its products. AK Steel also stated:
With regard to government procurement, AK Steel provides in Exhibit II.3 of the
Revised Subsidy Questionnaire Response a lis t of all its customers during the period
of investigation ("POI") grouped by product category. This list demonstrates that AK
Steel did not sell either the subject merchandise or any other product to any
government entity during the POI.
To the extent MOFCOM is requiring AK Steel to demonstrate that none of the steel it
sold to non-government entities was used in a project that was subject to the "Buy
America" or similar act, MOFCOM is impos ing an impossible burden. AK Steel has

260 Excerpt from ATI Questionnaire Response, Exhibit US-38, p. 19.
261 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 1.
262 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 3 (emphasis in original).

no reason to know what its customers do with their purchases. Because such a
substantial proportion of AK Steel's products are sold to service centers, which resell
the products to end users, there is no wa y to find out. Moreover, as stated in AK
Steel's questionnaire response, even if the government ultimately overpaid for a
project incorporating steel that may have originated with AK Steel, the entity that
received the overpayment did not provide any of that overpayment to AK Steel,
which received only a market-determined price for its product.263
7.277 In its revised initial questionnaire response da ted 9 September 2009, ATI submitted a list of
its GOES customers, and stated that it did not sell GOES to any government agencies. ATI did not
submit any information relating to sales of non-GOES products.
7.278 In its preliminary determination, MOFCOM made the following findings regarding the nature
of MOFCOM's requests for information, and the quality of the respondents' replies:
[T]he Investigating Authority asked the responding companies to provide information
about the domestic sales for all of their products;
…
Because the responding companies did not provide transaction information, the
Investigating Authority could not determine whether their products were sold to the
government or public bodies or their project contractors, and whether the transaction
prices were abnormal, etc. Therefore, the transaction price between the responding
companies and the entity which might have received the payment of premium cannot
be proved to be market price;
…
The responding companies did not cooperate in the investigation as they did not
provide relevant information and data;
264
7.279 MOFCOM made the following findings in its final determination:
the original questionnaire issued to the responding companies on 26 June 2009 put
forward the requirement that the responding companies should report the status of all
domestic sales, which has never changed;
…
with regard to the government purchase of goods program, under the circumstances
that the responding companies failed to c ooperate and provide the status of their
domestic sales, the Investigating Authority c onsidered that their products (not limited
to the product concerned) may be sold to the USG or public bodies, or relevant
project contractors…;
…

263 AK Steel, Response to Deficiency Letter, (9 September 2009), Exhibit US-13, pp. 3-4.
264 Preliminary Determination [2009] No. 99 (10 December 2009) ("Preliminary Determination")
Exhibit CHN-17, pp. 34-37.

for examining if the subsidy confers any benefits to recipients, the responding
companies should cooperate with the investig ation and provide the domestic sales of
all the products;
…
Although AK Steel Corporation submitte d the domestic sales of the product
concerned as exhibit to its comment on preliminary determination this responding
company nonetheless failed to submit the re quired information i.e. the information
about domestic sales of all of its products in a reasonable time as requested by the
Investigating Authority and by doing so, impeded future investigation;
265
7.280 On 30 December 2009, in comments on MOFCOM's preliminary determination, AK Steel
submitted POI transaction data for GOES. This was the same sales data that AK Steel had submitted
in the parallel anti-dumping investigation. ATI provided no additional information to MOFCOM.
7.281 In considering whether or not MOFCOM's findi ng of non-cooperation was justified by the
facts, we first examine the issue of whether or not MOFCOM could properly be considered to have
requested transaction data for domestic sales (of both GOES and non-GOES products) by respondents
during the POI. We then examine the extent, if any, to which respondents complied with this request.
7.282 According to China, both Questions 3 and 4 of MOFCOM's initial questionnaire required
respondents to provide transaction data for sales of all products during the POI. 266 China asserts that
MOFCOM repeated its request for transaction data in its deficiency letters, with an accompanying
explanation as to the need for such data. The United States disagrees. According to the United States,
it only became clear that MOFCOM was making unqualified requests for transaction data when
MOFCOM issued its preliminary determination. Until then, the United States contends that
MOFCOM's requests for transaction data (in its orig inal questionnaire and deficiency letters) were
predicated on the existence of government procurem ent transactions. According to the United States,
in the original questionnaire MOFCOM only request ed transaction data for "government procurement
signed within the POI". In the deficiency letter, MOFCOM requested transaction data, but permitted
the respondents to prove that the government did not purchase their products, or that other
transactions were not subject to the alleged procurement programs.
7.283 We do not read Questions 3 and 4 of MO FCOM's initial questionnaire as requiring the
submission of transaction data for all domestic sales of all products during the POI, as alleged by
China. The request for transaction data in Question 3 is predicated on the existence of government
procurement contracts. While we accept China's ar gument that Question 3 relates to both GOES and
non-GOES products ("not limited to the subject merchandise"), the request for transaction data
contained in Question 3 is contingent on the existe nce of government procurement contracts. In the
absence of government procurement contracts, no transaction data need be provided.
7.284 Nor do we read Question 4 of the initial questionnaire as requiring the submission of
transaction data for all domestic sale s of all products during the POI. While the reference to "sales of
all the products" could be understood to mean both GOES and non-GOES (even though the "not

265 Final Determination [2010] No. 21 (10 April 2010) ("Final Determination"), Exhibit CHN-16,
pp. 41-43.
266 See, for example, China's response to Panel question 19, para. 73 ("Question 3 went to the issue of
acknowledged utilization under the program. The exporters were to report all transactions during the POI
involving government purchases, not limited to the subject merchandise, as well as information on the selling
price for the same products in transactions outside the program. Question 4 was broader. It sought a simple
tabulation of all domestic sales by product in the POI, including quantity, value, and customer") (emphasis in
the original).

limited to the subject merchandise" formulation of Question 3 is not used), we do not understand
Question 4 to require transaction data. Rather, the instruction to provide "the quantity and [value] of
each product sold to each client" could legitimatel y be understood by respondents as requiring only
the submission of aggregate, rather than transaction-specific, data.
7.285 That being said, we consider that the scope of Questions 3 and 4 was effectively revised by
the deficiency letters issued to respondents on 26 August 2009. While we regret MOFCOM's failure
to reformulate Questions 3 and 4 so as to remove all uncertainty, on balance we consider that
MOFCOM was entitled to consider that the overall e ffect of the deficiency letters was to put the
respondents on notice that MOFCOM was in fact see king transaction data for all domestic sales of all
products during the POI. In this regard, we not e MOFCOM's explanation of its concern that the
respondents' products ("not limited to the subject merchandise") could have been sold to the
United States Government, public bodies or government contractors, and that "the prices of these
transactions" could have been above market. Of gr eater significance is MOFCOM's instruction that
"so long as your company's products were sold in the domestic market, the transactions shall be
reported". In our view, MOFCOM was entitled to co nsider that it had informed respondents (through
the deficiency letters) that, notwithstanding the mo re limited scope of Questions 3 and 4 of the
original questionnaire, MOFCOM was actually seek ing transaction data for all domestic sales of all
products during the POI. To the extent responde nts still considered MOFCOM's request to be
unclear, they could have contacted MOFCOM to seek further clarification. There is no evidence that
they did so. Nor is there any evidence that r espondents sought additional time in which to comply
with MOFCOM's request.
7.286 As explained above, the United States accepts th at MOFCOM requested transaction data, but
claims that the requests for transaction data were conditional until issuance of MOFCOM's
preliminary determination. According to the Un ited States, the deficiency letter "permitted the
respondents to prove that the government did not pu rchase their products, or that other transactions
were not subject to the alleged procurement programs."
267 We disagree. While the deficiency letter
referred to the possibility of respondents demonstr ating that there were no government procurement
transactions, or transactions involving government c ontractors under the Buy America Act, or that
there was no pass through of subsidies on non-GOES pr oducts to GOES, the deficiency letter clearly
stated that "[b]efore making these arguments, it was of the first importance that your company
respond completely and accurately to the questions of the Investigating Authority".
268 MOFCOM was
therefore entitled to consider that it had properly informed respondents that transaction data should in
any event be provided, notwithstanding the possibility of respondents presenting additional arguments
regarding the question of indirect subsidization.269

267 United States' second written submission, para. 74.
268 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 3.
269 We also note that the United States' argument is inconsistent with its assertion that MOFCOM's
26 August 2009 deficiency letter "demanded that the respondents prove non-use of the alleged programs by
providing detailed sales information fo r all products and all customers ov er the POI and the preceding 14 years
in a revised submission" (United States' response to Panel question 23, para. 30, footnote omitted). It is also
inconsistent with the United States' statement that "[i]n the subsidy questionnaires issued to AK Steel and ATI,
MOFCOM demanded volumes of information unrelated to the subject merchandise. For example, MOFCOM
demanded that AK Steel provide detailed transaction data for billions of dollars in transactions involving carbon
steel, stainless steel, non-orie nted electrical steels, and tu bular products – products that are neither inputs for
GOES nor substitutable for GOES" (United States' first written submission, para. 19, footnotes omitted).
Furthermore, comments made by the United States during the underlying proceeding indicate that the
United States understood MOFCOM to have requested transaction-specific data. Thus, in comments made on
MOFCOM's preliminary determination, the United States asserted that MOFCOM had "unreasonably requested
that the two respondent companies report all individual domestic sales of all products produced by the
companies of whatever type" (Exhibit US -4, p. 3, emphasis in original). The context of this statement makes it

7.287 Having established that MOFCOM could properly be considered to have requested POI
transaction data for domestic sales of GOES and non -GOES products, we now consider the extent, if
any, to which respondents complied with this request . As explained above, ATI failed to provide any
transaction data for any domestic sales of any prod ucts for any period. In our view, MOFCOM was
consequently entitled to treat ATI as non-cooperativ e for the purpose of Article 12.7 of the SCM
Agreement.
7.288 AK Steel provided transaction data for domestic sales of GOES during the POI. However,
AK Steel only submitted that data on 30 December 2009, in its comments on MOFCOM's preliminary
determination. AK Steel did not submit this data in response to the requests set forth in MOFCOM's
deficiency letter.
270 Given AK Steel's failure to respond ade quately to MOFCOM's deficiency letter,
and given AK Steel's failure to include any non- GOES data when it did finally provide transaction
data in its comments on MOFCOM's preliminary determination, we consider that MOFCOM was also
entitled to treat AK Steel as non-cooperative for the purpose of Article 12.7 of the SCM Agreement.
7.289 The United States asserts that AK Steel had actually made a timely submission of its GOES
sales data, as it was submitted within the deadline provided for comments on MOFCOM's preliminary
determination. We understand the United States to be referring to Annex II, paragraph 3 of the Anti-
Dumping Agreement, which provides that "[a]ll info rmation which is … supplied in a timely fashion
… should be taken into account when determinations are made". In the light of the guidance provided
by the Appellate Body in Mexico – Anti-Dumping Measures on Rice ,271 and given "the need for the
consistent resolution of disputes arising fro m anti-dumping and countervailing duty measures", 272 we
agree that, as a matter of law, Annex II of the An ti-Dumping Agreement provides relevant context for
our evaluation of the United States' claim under Artic le 12.7 of the SCM Agreement. As a matter of
fact, though, the United States' argument is only valid if one accepts that the relevant deadline was
that concerning comments on the preliminary determin ation. As explained above, this was not the
case, as the request for transaction data had effectiv ely been made in MOFCOM's deficiency letters
(and AK Steel failed to submit its GOES transaction da ta within the deadline for responses to those
deficiency letters). Accordingly, AK Steel's submission was not "timely".
7.290 We note the additional United States argument that transaction data for sales of GOES was
not "necessary" within the meaning of Article 12. 7 of the SCM Agreement because MOFCOM was
only going to use this data as a tool to inform its verification strategy, and because this data had
already been provided in the parallel anti-dumping proceeding. 273 The issue of whether or not the
requested data is "necessary" is important, as Article 12.7 of the SCM Agreement only concerns the
provision of "necessary" information. If respondents had failed to provide information that was not
"necessary", the Article 12.7 facts available mechanism would not have been available to MOFCOM.

clear that the United States was referring to a request made before the preliminary determination was issued,
thereby further undermining the United States' argumen t that MOFCOM's unqualified request for transaction
data only became apparent in the preliminary determination.
270 We have already explained that MOFCOM effectiv ely requested this data in its deficiency letter
dated 26 August 2009, and that the deadline for responses to the deficiency letter was 9 September 2009 (see
para. 7.285).
271 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 295.
272 Declaration on Dispute Settlement Pursuant to th e Agreement on Implementation of Article VI of
the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing
Measures, adopted by the Trade Negotiations Committee on 15 December 1993.
273 United States' response to Panel question 52(iv). The United States also contends that the aggregate
quantity and value data requested in MOFCOM's Questi on 4 was not "necessary", si nce aggregate data would
not have helped MOFCOM to identify allegedly anomalous transactions (United States' response to Panel
question 52 (iii), para. 21). As explained above, we co nsider that, through its deficiency letters, MOFCOM had
effectively made it clear to respondents that it was no longer interested in merely aggregate sales data.
Accordingly, the United States' argument has no merit.

7.291 Regarding the use to which the requested data was to be put, we acknowledge that China has
asserted that the requested data was needed to allow planning for verification.274 However, China also
contends that "it is wrong to consider the requested data as only a tool for verification". 275 According
to China, MOFCOM might have used the data to identify anomalous transactions, to identify needs
for additional information, or to determine that a different approach should be used. We accept
China's argument. Given MOFCOM's investigation of alleged indirect subs idization, we are not
persuaded that MOFCOM would only have used the data to prepare for verification. Furthermore,
even if the requested data were onl y to be used to assist the author ity in planning for verification,
verification forms an important part of the investig ative process. Thus, even information that is only
needed to prepare for verification might still be tr eated as "necessary" for the purpose of Article 12.7
of the SCM Agreement.
7.292 Nor are we persuaded by the United Stat es' argument that transaction data was not
"necessary" for MOFCOM's countervail investiga tion because it was on MOFCOM's record in the
parallel anti-dumping proceeding. First, we reca ll that MOFCOM's deficiency letter to AK Steel
specifically addressed this issue, informing AK Stee l that the consequence of AK Steel referring to
Table 4-2 of its anti-dumping questionnaire respon se "was that essentially, the company failed to
respond to relevant questions…" 276 Second, the anti-dumping record only contained data for domestic
sales of GOES. It did not contain data for non-GOES transactions. In the light of these
considerations, we do not consider that MOFCOM was precluded from treating the requested data as
"necessary" within the meaning of Article 12.7 of the SCM Agreement for the purpose of its
countervailing duty investigation.
7.293 Finally, we note that the United States has made a number of references to the "burden" 277
imposed by MOFCOM's requests for information, particularly concerning MOFCOM's apparent
request for data covering a total of 15 years. Chin a submits that "this might constitute part of the
exercise in determining whether the respondents acted to the best of their ability within the meaning
of Annex II, paragraph 5 of the AD Agreement , and the implications thereof under Annex II,
paragraph 7. But this is left to speculation. The argument is not articulated anywhere". 278 We agree
that the United States has not explained how the alleged burden imposed on respondents might
influence our evaluation of the United States' claim under Article 12.7 of the SCM Agreement. 279 Nor
has the United States explained how an overly burden some request for transaction data, if any were
made, would have prevented responde nts from submitting any transaction data in a timely manner.
Although the United States asserts that "[b]ecause of the volumes of information requested, neither
AK Steel nor ATI could fulfil all of the requests made in the CVD proceeding", 280 there is no
evidence that either respondent st ated that they were unable to provide the relevant transaction data
within the deadline imposed by MOFCOM. Rather, respondents complained that the requested data,
concerning alleged indirect subsidization, was not relevant.281

274 China's response to Panel question 20, para. 86.
275 China's response to Panel question 56, para. 30.
276 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 1.
277 See, for example, United States' first written submission, para. 24.
278 China's second written submission, para. 44.
279 We recall that the United States has not filed any substantive claim concerning MOFCOM's reliance
on the theory of indirect subsidization.
280 United States' first written submission, para. 20.
281 See, for example, ATI's assertion that MOFCOM's request for non-GOES data "is
overly-burdensome, unreasonable, and w ill yield information that is completely irrelevant to the determination
of whether GOES benefited from countervailable subsidies during the POI" (Excerpt from ATI Supplementary
Response, Exhibit US-39, pp. 21-22).

7.294 For the above reasons, we conclude that MOFCOM properly found that the respondents failed
to cooperate with MOFCOM's requests to provide transaction data for domestic sales of GOES and
non-GOES products during the POI.
(c) Did MOFCOM properly apply a 100% utilization ra te when determining the extent to which
respondents' domestic sales of GOES and non-GOES products during the POI were
subsidized?
7.295 We recall that the United States' claim is based on Article 12.7 of the SCM Agreement, which
allows investigating authorities to use information or facts to fill gaps in the record resulting from
non-cooperation on the part of interested parties.
7.296 The facts available mechanism provided for in Article 12.7 of the SCM Agreement means
that the work of an investigating authority shoul d not be frustrated or hampered by non-cooperation
on the part of interested parties. As stated by the Appellate Body, though, "[w]ith respect to the facts
that an agency may use when faced with missi ng information, the agency's discretion is not
unlimited".
282 The Appellate Body has also stated that, in applying facts available, the investigating
authority is expected to employ the best information, or facts, available.283 Implicit in the requirement
that the best facts available be u sed is a more fundamental requirement that facts must be used. In
other words, even when applying facts available, an investigating authority's determination must have
a factual foundation. 284 We emphasise this point because of the United States' argument that there
was no factual support for MOFCOM's decision to apply a 100% utilization rate.
7.297 In response to the United States argument, Ch ina suggests that MOFCOM had to choose a
rate between 0 and 100%, but knew that a rate of 0% would be inaccurate, because of record evidence
allegedly showing certain sales to the United States Government. China also suggests that MOFCOM
considered the rate of 29% proposed by AK Steel to be inadequate, as AK Steel was presumed to be
proposing a rate that was less than actual utili zation. China suggests that the 100% rate was
appropriate because the facts available announced in MOFCOM's preliminary determination "proved
still to be the most reasonable 'facts available' for the final determination".285
7.298 We begin our evaluation with the observation that there is no justification for the application
of a 100% utilization rate, or any indication of the factual foundation for this rate, in MOFCOM's
final determination. Nor has China referred to extr acts from the final determination in support of its
arguments.
7.299 However, China has directed the Panel to f acts available allegedly announced in MOFCOM's
preliminary determination. In response to a question from the Panel asking China to identify
precisely which facts available were announced in th e preliminary determination, China referred the
Panel to 11 pages of the preliminary determination. China summarized the relevant facts available as:
(i) statutes and regulations denying effective acces s to foreign-produced steel, (ii) evidence from
applicants concerning the use of the respondents' products in construction, (iii) the refusal of
respondents to provide requested information, and the reasonable inference to be drawn from that
refusal to cooperate, and (iv) data indicating that the United States composite price for steel was seven
per cent higher than a World composite price. 286 In reviewing the 11 pages identified by China, we

282 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 289.
283 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 289.
284 This basic point is acknowledged by China. See China's first written submission, para. 187
("Legally, a utilization figure not grounded in the record evidence would not qualify as 'facts available' – it
would not be a 'fact' in any sense of that term, and would be pure speculation by MOFCOM").
285 China's second written submission, para. 75.
286 In its comments on China's response to Panel question 55, the United States contends that
MOFCOM improperly assumed that all sales concer ned carbon steel, and that all of the procurement

see no explanation by MOFCOM of how the factors identified by China were used by MOFCOM to
support MOFCOM's determination that all of the respondents' domestic sales of all products were
made to government entities or government contractors. Instead, MOFCOM simply stated:
The responding companies did not cooperate in the investigation as they did not
provide relevant information and data. Th erefore, pursuant to Article 21 of the
Regulations on Countervailing Measures , the Investigating Authority determined the
benefits under this program based on the facts available. Under the circumstance that
the Investigating Authority did not get an swers to the relevant questions of the
questionnaire from the responding companies, it was deduced that all the products of
the responding companies sold in domestic sales were sold to the government, public
bodies or project contractors thereof, at the highest premium, i.e., at a price 25%
higher than that of foreign products.
287
7.300 There is no additional explanation by MOFCOM of the basis on which "it was deduced" that
all sales were made to government entities or govern ment contractors. MOFCOM did observe that it
"cannot be ruled out that these products may have b een sold to the USG and public bodies, or to those
project contractors who are subject to the Buy American Act".288 However, a statement by MOFCOM
that products "may" have been sold to govern ment entities, or government contractors, does not
provide any factual basis for the conclusion that all domestic sales (of all products) were made to
government entities or government contractors.
7.301 The above extract from MOFCOM's preliminary de termination begins with a reference to the
respondents' failure to cooperate. MOFCOM's refe rence to the respondents' failure to cooperate
suggests that MOFCOM considered that the fact of non-cooperation by itself was sufficient to justify
the application of a 100% utiliza tion rate. Indeed, China has stated that MOFCOM drew "reasonable
inferences" from such non-cooperation. 289 China also contends that "authorities may draw certain
inferences – plainly adverse -- from [the] failure to cooperate, and the breadth of inferences available
grows commensurate with the level of non-co-operation".290
7.302 We disagree with China. In our view, the use of facts available should be distinguished from
the application of adverse inferences. While paragraph 7 of Annex II of the Anti-Dumping
Agreement states that non-cooperation by an interest ed party "could lead to a result which is less
favourable to the party than if the party did coopera te", we see no basis in Annex II for the drawing of

programmes applied a 25% price premium. We are pr esently considering the extent, if any, to which
MOFCOM was entitled to determine that all domestic sales were made to government entities or government
construction contractors. We do not consider that the United States' claim under Article 12.7 of the SCM
Agreement has been argued in a way that challenge s MOFCOM's finding of a 25% price premium, or
MOFCOM's finding that all sales concerned carbon steel. In its first written submission, the United States
asserts that "to calculate the amount of the alleged 'subsidy' to produ cers resulting from the procurement
programs, MOFCOM assumed that AK Steel and ATI sold all of their output to the government under programs
requiring the payment of a 25% price premium. Had MOFCOM not entirely disregarded the factual information
actually supplied by the companies, it could not have assumed that the companies sold all of their output to the
government" (United States' first written submission, para. 89, footnote omitted). Thus, the focus of the
United States is on MOFCOM's alleged disregard of factual information in finding that respondents sold all of
their output to the government, rather than on MOFCOM's finding that all such sales benefited from a 25% price
premium.
287 Preliminary Determination, Exhibit CHN-17, p. 37.
288 Preliminary Determination, Exhibit CHN-17, p. 36. A similar observation was made on p. 35: "the
Investigating Authority considered that their products (not limited to the product concerned) may be sold to the
USG or public bodies, or relevant project contractors constrained by the "Buy American Act".
289 China's response to Panel question 55, para. 28.
290 China's first written submission, para. 163.

adverse inferences. In our view, the purpose of th e facts available mechanism is not to punish non-
cooperation by interested parties. As explained by the Appellate Body, the purpose of Article 12.7 of
the SCM Agreement is rather to "ensure that the fa ilure of an interested party to provide necessary
information does not hinder an agency's investigation", in the sense that "the provision permits the use
of facts on record solely for the purpose of replacing information that may be missing".
291 While non-
cooperation triggers the use of facts available, non-cooperation does not justify the drawing of adverse
inferences. Nor does non-cooperation justify de terminations that are devoid of any factual
foundation. Accordingly, MOFCOM was still requ ired to establish a factual foundation for its
determination that the utilization rate of certain subsidy programmes by the respondents was 100%.
In the light of our review of both the preliminar y and final determination, we find that MOFCOM
failed to do so.
7.303 We further observe that, not only did MOFCOM fail to establish any factual basis for a 100%
utilization rate, but MOFCOM's application of this rate was actually at odds with information on the
record suggesting that a lesser rate of utilization should be applied. 292 In considering such record
information, we note that the 100% utilization rate effectively means that the two respondents made
all of their sales, for both GOES and non-GOES pr oducts, to government en tities or to government
contractors operating under the relevant government procurement programmes. Concerning sales of
GOES to government entities, we note that the reco rd included statements by the United States
Government to the effect that it had not purchased GOES from either of the respondents. In addition,
both respondents provided customer lists indicating that they had not sold any GOES to government
entities.
7.304 Pursuant to MOFCOM's theory of indirect subsidization, 293 the absence of sales to
government entities leaves open the possibility that respondents had sold all of their GOES to
government contractors. Given the nature of the government procurement programmes at issue,
though, this would have meant that all sales were made to government construction contractors.
294 In
this regard, the United States had explained to MO FCOM that "GOES, which is primarily used in
transformers, has no direct appli cation in construction projects". 295 ATI had similarly explained to
MOFCOM that GOES is used in power transformers, and that nearly all of its GOES was "sold
directly to end-use customers". 296 Indeed, MOFCOM itself found that " the main applications [of
GOES] include [a] variety of industries such as transformers, rectifiers, reactors, and large
electric motors etc. industries". 297 Given information in MOFCOM's record attesting to the limited
application of GOES, there would seem to be extrem ely little likelihood that of all of the respondents'

291 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 293.
292 To be clear, we do not find that MOFCOM was required by Annex II(5) of the Anti-Dumping
Agreement to use all of the informati on provided by the respondents. This is because Annex II(5) only applies
in respect of interested parties that have "acted to th e best of [their] ability". In failing to cooperate with
MOFCOM's requests for data, the respondents did not act to the best of their ability. However, MOFCOM was
still required to base its determination on "facts" available.
293 We recall that the United States has not filed any substantive claim concerning MOFCOM's reliance
on the theory of indirect subsidization.
294 The fact that MOFCOM's investigation concerned government construction contractors, rather than
contractors generally, is evident from MOFCOM's final determination (see, for example, Final Determination,
Exhibit CHN-16, p. 39: "even if the USG had not purchased the product concerned or other steel product
through supply contracts, it failed to prove that this prog ram had not been used because the government
purchase of goods included not only the supply contract but also the construction contract. The USG did not
prove that the contractor had not purchased American steel in the construction contract.").
295 United States Questionnaire Response, 17 August 2009, Exhibit US-3, p. 65.
296 Excerpt from ATI Supplementary Response, Exhibit US-39, pp. 21-22 (quoting from ATI's 2008
financial statements, which were submitted to MOFCOM as Exhibit I to ATI's response to the Enterprise
Questionnaire on GOES Anti-Subsidy Investigation, 10 August 2009).
297 Final Determination, Exhibit CHN-16, p. 2.

sales of GOES would have been made to government contractors operating in the construction sector.
Based on the information in the record, therefore, and in the absence of further explanation by
MOFCOM, we do not consider that an objective and impartial investigating authority could properly
have found that all of the respondents' sales of GOES were made to government entities or
government construction contractors.
7.305 We consider that MOFCOM's determination is particularly flawed in its treatment of AK
Steel. AK Steel had submitted lists identifying all of its GOES and non-GOES customers. These lists
indicated that AK Steel did not sell any GOES or non-GOES products to government entities.
Regarding the possibility of all of AK Steel's sales being made to government construction contractors
(pursuant to MOFCOM's uncontested theory of indi rect subsidization), MOFCOM's record contained
AK Steel's 2008 10-K report, which indicates that 32% of AK Steel's net sales in 2008 were attributed
to the Automotive segment, 29% to the Infrastructure and Manufacturing segment, and 39% to
Distributors and Converters. AK Steel asserted that, to the extent that any of its products could have
made their way through commerce to government construction contractors, these sales would be
included in the "Infrastructure and Manufacturing" segment. According to AK Steel, its 2008 10-K
report indicates that sales to government construction contractors could not have accounted for more
than 29% of its business.
7.306 According to China, MOFCOM declined to rely on AK Steel's 2008 10-K report for a number
of reasons.
298 First, China asserts that MOFCOM had no factual support for the assertion that all
relevant contractor sales would have been booked to the Infrastructure and Manufacturing sector. In
this regard, we note MOFCOM's statement that "it cannot be ascertained that the sales to distributors
and resellers were not related to government purchase and cons truction contractor's purchase". 299
Upon examining AK Steel's 2008 10-K report, we find that immediately below the list of the relevant
segments is a statement that "[t]he Company histor ically has referred to these markets by somewhat
different names…More specifically, the market previously described as ‘Appliance, Industrial
Machinery and Equipment, and Construction' now is referred to as Infrastructure and
Manufacturing".
300 In our view, this explanation would have prevented - at least without further
justification - an objective and impartial investig ating authority from rejecting AK Steel's assertion
that sales to government construction contractors w ould have been booked to the Infrastructure and
Manufacturing segment.301
7.307 Second, China asserts that AK Steel's 2008 10-K repo rt did not relate specifically to the POI.
In our view, though, the factual record before an investigating authority that has found that
respondents failed to provide necessary information w ill necessarily be compromised to some extent,
precisely because the necessary inform ation initially requested by the investigating authority has not
been provided. However, the fact that information in the record is not perfect does not mean that the
investigating authority is entitled to ignore it. AK Steel's 10-K report concerned the calendar year
2008, which coincided with three-quarters of the POI. In addition, the 10-K report also included data
concerning the attribution of AK Steel's net sales in 2006 and 2007. According to this data, 29% and

298 China's first written submission, paras 181-184.
299 Final Determination, Exhibit CHN-16, p. 45.
300 Exhibit I.II.ii to the AK Steel Revised Original Questionnaire Response (AK Steel's 10-K report,
2008), Exhibit US-9, p. 2, (emphasis added).
301 Furthermore, although MOFCOM refers to the possibility of the relevant sales being booked to the
"Distributors and Converters" segment, MOFCOM does not address the possibility of sales to government
construction contractors being booked to the "Automotive" segment. While China argues that "[a] customer in
the 'automobile manufacturing' segment might well have produced items that were sold the government or were
used in some construction project", (China's first wr itten submission, para. 181), China does not identify any
part of MOFCOM's Final Determination exploring this possibility, or the likelihood thereof. This would
suggest that MOFCOM accepted that AK Steel's sales to government construction co ntractors would not have
been booked to the "Automotive" segment.

26% of net sales were attributed to Infrastructure and Manufacturing in 2006 and 2007 respectively.
This data suggests stability in the proportion of AK Steel's net sales attributed to the Infrastructure and
Manufacturing segment. In these circumstances, we do not consider that an objective and impartial
investigating authority could properly have di smissed outright AK Steel's 2008 10-K report simply
because its reporting period did not coincide exactly with the POI.
7.308 Third, China suggests that, because AK Steel's 10K report came only "on the very eve of the
verification, MOFCOM was unable to fully eval uate and test this alternative during the
verification".
302 In fact, AK Steel's 10K report was attached to the application, and had therefore been
in MOFCOM's possession throughout the investigation.303
7.309 In the light of the above considerations, we consider that an objective and impartial
investigating authority would have attached releva nce to AK Steel's 10-K report when determining
the applicable utilization rate. While we do not conclude that the above considerations should
necessarily have led MOFCOM to apply a utilization rate of 29%, 304 at a minimum a proper
consideration of AK Steel's 10-K report should have caused MOFCOM to apply a utilization rate of
less than 100%.
7.310 For the above reasons, we find that there is no factual basis for MOFCOM's determination to
apply a 100% utilization rate. We also find that, in making this determination, MOFCOM ignored
record information and evidence indicating that a u tilization rate of less than 100% should have been
applied.
(d) Conclusion
7.311 We reject the United States' claim that MOFCOM 's decision to resort to facts available is
inconsistent with Article 12.7 of the SCM Agreem ent. However, we uphold the United States' claim
that MOFCOM's application of a 100% utilization ra te is inconsistent with Article 12.7 of the SCM
Agreement.
E. WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 12.2.2 OF THE ANTI -DUMPING
AGREEMENT BECAUSE IT DID NOT DISCLOSE THE DATA AND CALCULATIONS USED TO
ESTABLISH THE DUMPING MARGINS
1. Provision at issue
7.312 Article 12.2.2 of the Anti-Dumping Agreement provides:

A public notice of conclusion or suspension of an investigation in the case of an
affirmative determination providing for th e imposition of a definitive duty or the
acceptance of a price undertaking shall contai n, or otherwise make available through
a separate report, all relevant information on the matters of fact and law and reasons
which have led to the imposition of final measures or the acceptance of a price
undertaking, due regard being paid to the requirement for the protection of

302 China's first written submission, para. 183.
303 Furthermore, we query what sort of analysis would have been required for an authority to prepare
itself to verify the contents of the 10-K report. While the requisite review might take a considerable amount of
time during the verification visit, we fail to see what sort of time-consuming analysis would be needed before
verification.
304 The United States' claim is not limited to this sp ecific issue. The United States' claim concerns the
broader question of whether or not MOFCOM was entitled to apply a 100% utilization rate. It is not directly
concerned with whether or not MOFCOM should, instead, have applied a 29% utilization rate.

confidential information. In particular, the notice or report shall contain the
information described in subparagraph 2.1, as well as the reasons for the acceptance
or rejection of relevant arguments or claims made by the exporters and importers, and
the basis for any decision made under subparagraph 10.2 of Article 6.
7.313 Article 12.2.1 of the Anti-Dumping Agreement pr ovides, relevantly, that a public notice or
separate report "shall, due regard being paid to the requirement for the protection of confidential
information, contain…(iii) the margins of dumping established and a full explanation of the reasons
for the methodology used in the establishment and comparison of the export price and the normal
value under Article 2".
2. Factual Background
7.314 Following the issuance of the preliminary dete rmination and the final disclosure documents,
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing
duty investigations.
3. Arguments of the United States
7.315 The United States notes MOFCOM included only bare summaries of its methodologies,
adjustments and calculations in its preliminary de termination, final disclosure document and final
determination. The United States argues that this is inconsistent with Article 12.2.2 of the Anti-
Dumping Agreement.
305
7.316 According to the United States, the calculations employed by an investigating authority to
determine dumping margins, and the data underlying the calculations, constitute "relevant information
on matters of fact and law and reas ons which have led to the imposition of final measures" within the
meaning of Article 12.2.2. Given that Article 12.2. 2 requires that "all" such relevant information be
made available, it follows that Article 12.2.2 requi res an investigating authority to release to the
affected interested parties its final calculations, wh ich are the mathematical basis for arriving at the
dumping margins.306
7.317 In response to China's argument that Article 12.2 pertains only to "public notice", the
United States notes that Article 12.2.2 mentions the possibility of a "separate report" in addition to a
"public notice". The "separate report" is a vehicl e for making available all relevant information on
matters of fact and law and it need not be public. Further, Article 12.2.2 mandates that "due regard
be…paid to the requirement for the protection of confidential information". 307 Therefore, the
United States' position is that China cannot rely on th e fact that the calculations included confidential
data as an excuse for not making them available. The United States does not suggest that MOFCOM
was obliged to disclose confidential information to parties other than to those parties that the
information already belonged. Rather, a res pondent company is entitled to see the calculations
performed to arrive at the dumping margin applied to it. 308 In this regard, the United States argues
that footnote 23 of the Anti-Dumping Agreement shoul d be read in the context of the requirement in
Article 12.2.2 to pay "due regard…to the…protection of confidential information". The United States
argues that the requirement under footnote 23 to make the "separate report" available to the public
cannot outweigh this requirement.309

305 United States' first written submission, para. 113.
306 United States' first written submission, para. 112.
307 United States' second written submission, para. 106.
308 United States' first written submission, para. 115.
309 United States' response to Panel question 28, paras. 45-46.

7.318 In response to China's argument that if there is any obligation to disclose the final dumping
calculations it is found under Article 6.9 of the Anti-Dumping Agreement, the United States argues
that Article 6.9 pertains to the disclosure of essential facts before the final determination is made.
However, the final dumping calculations, to which the Unite d States' claim relates, cannot be
disclosed before the final determination.
310
7.319 Turning to the facts of this case, the United St ates argues that the preliminary determination,
final disclosure and final determination contain only MOFCOM's vague reas oning and description of
its methodologies for determining and adjusting th e export price and normal value. They do not
include the actual data used in the dumping ma rgin calculations or the calculations themselves.
MOFCOM should at least have made available (i) adjustments to the starting price to account for
differences in the circumstances of sale; (ii) revisions to the data reported by the respondent; and (iii)
the calculation of constructed normal value.311
7.320 In response to China's argument that the two e xporters were able to replicate the dumping
calculations on their own, the United States subm its that MOFCOM did not disclose sufficient
information to allow this. In any event, even if the exporters were able to replicate the calculations,
this would not relieve China of its obligation to disclose the calculations performed by MOFCOM.
Without access to the actual calculations, the exporte rs could not check MOFCOM's methodology or
mathematics for errors. The United States argues that the ability to check for errors is crucial, in the
event that an interested party c hooses to exercise its rights to judici al review under Article 13 of the
Anti-Dumping Agreement, or in the event a Member seeks WTO dispute settlement.312
4. Arguments of China
7.321 With respect to the United States' argument th at MOFCOM was obliged under Article 12.2.2
of the Anti-Dumping Agreement to release the act ual calculations performed in determining the
margins of dumping, China contends that the Un ited States has misinterpreted Article 12.2.2.
According to China, the United St ates' claim is based on bald assertion and is not supported by the
plain meaning of Article 12.2.2 or any WTO jurisprudence.313
7.322 Regarding the text of Article 12.2.2 of the Anti-Dumping Agreement, China notes that there
is no reference in the Article to the "calculation" of margins of dumping. The only reference to
margins is in Article 12.2.1(iii), which is incorporat ed into Article 12.2.2, a nd which requires that the
"margins of dumping established", rather than the calculations themselves, be disclosed in the relevant
notice.314 Further, the references in Article 12.2.2 to "relevant information on matters of fact and law
and reasons which have led to the imposition of final measures" and to "the reasons for the acceptance
or rejection of relevant arguments or claims" do not articulate any requirement that authorities
disclose the actual calculations of the margins of dumpi ng. Finally, there is nothing in the text of the
provision to suggest that, by virtue of the disclosures under Article 12.2.2, a respondent should be in a
position to replicate or check the calculations of the margins of dumping.315
7.323 According to China, reading Article 12.2.2 of the Anti-Dumping Agreement in its context
does not support the United States' position. The title of Article 12, "Public Notice and Explanation
of Determinations", indicates that the Article impos es a requirement upon investigating authorities to

310 United States' second written submission, para. 105 and United States' opening statement at the first
311 United States' first written submission, para. 113.
312 United States' second written submission, paras. 107-110; United States' response to Panel
question 27, paras. 40-44 and United States' opening statement at the first meeting of the Panel, paras. 45-47.
313 China's second written submission, para. 35.
314 China's first written submission, para. 203.
315 China's first written submission, paras. 204-206.

explain their determinations. China argues that an explanation does not require a repetition of all
facts, but rather a sufficient description of the fact s to permit an understanding of the causes, context
and consequences of those facts. 316 Further, China contends the requirement in Article 12.2 to
disclose those findings and conclusions considered "material" by the investigating authority indicates
that the methodology, the source of the data and the final margins should be disclosed, as these are the
"material" findings in the contex t of determining margins of dumping. According to China, this
interpretation is also supported by the requirement in Articles 12.2 and 12.2.1 to provide "sufficient"
rather than full detail in the explanations. Finall y, China notes that Article 12.2.1(iii) requires that
authorities provide a "full explanation of the reasons for the methodology used", which is quite
distinct from requiring the calculations of the margins of dumping.
317
7.324 With respect to the object and purpose of Article 12.2.2, China argues that this is to provide
interested parties with notice of determinations made by authorities and an explanation of the
determinations. The context suggests that this notice should consist of the reasons for the
determination, the methodology used in arriving at the determination and the results actually reached,
namely the margins of dumping. China contrasts this with the object and purpose of Article 6.9 of the
Anti-Dumping Agreement, which is to provide the " essential facts" to enable interested parties "to
defend their interests". China suggests that pe rhaps the United States' complaint regarding the
disclosure of the actual calculations may more properl y lie under Article 6.9. However, even if such
an Article 6.9 claim were properly before the Panel, China is not convinced that Article 6.9 requires
the level of disclosure sought by the United States.318
7.325 Although China's principal argument is that Article 12.2.2 of the Anti-Dumping Agreement
does not include a requirement to disclose the calcu lations for the margins of dumping used by an
investigating authority, China argues that, in any event, the information disclosed by MOFCOM was
sufficient to allow the respondents to replicate the authority's calculations.319
5. Arguments of third parties
(a) European Union
7.326 In the European Union's view, the calculations and data underlying the dumping margins are
"essential facts under consideration" that are require d to be disclosed under Article 6.9 of the Anti-
Dumping Agreement. However, if after the disclos ure under Article 6.9, which occurs prior to the
final determination, there is any revision to th e data or calculations, this constitutes relevant
information on matters of fact leading to the impos ition of final measures. Consequently, this should
be set out and explained in the public notice or separate report under Article 12.2.2 of the Anti-
Dumping Agreement. The European Union notes that Article 12.2.2 requires due regard to be paid to
the protection of confidential information. Conseque ntly, to the extent the calculations and data are
confidential information, their disclosure would be made through a "separate report".320

316 China's first written submission, paras. 207-209 a nd China's opening statement at the first meeting
of the Panel, para. 33.
317 China's first written submission, paras. 210-214.
318 China's first written submission, paras. 215-218.
319 China's first written submission, paras. 222-224 a nd China's opening statement at the first meeting
of the Panel, para. 34.
320 European Union's third party response to Panel questions 3 and 4.

(b) India
7.327 India submits that if authorities have provided a sufficiently detailed explanation on how they
established the margin of dumping, it may not be n ecessary to include the actual data in the public
notice under Article 12.2.2, keeping in mind the need for protection of confidential information.
321
(c) Japan
7.328 Japan contends that Article 12.2.2 of the An ti-Dumping Agreement requires an explanation
that includes the export price and normal value, th e comparison of these figures and the calculation of
dumping.322 In its third party statement, Japan submits that the disclosure under Article 12 of the
entire dumping margin calculation is critical for th e exporter to present an effective defence, because
even a tiny mistake could result in a gr ave distortion of the margin calculation. 323 However, in
response to a Panel question, Japan notes that anti- dumping investigations involve a large volume of
data and it would be impractical to require the aut horities to cite every individual piece of information
in the public notice or separate report. Neverthele ss, the public notice or separate report must include
all "relevant information", which at least includes the identity of the data and the margin calculation
methodology. The information disclosed must be su ch as to allow an exporter to replicate the entire
dumping margin calculation based on the raw data the exporter submitted.324
7.329 Japan notes that Article 12.2.2 requires an author ity to satisfy two requirements at the same
time, namely the statement of "all relevant information" and the protection of confidential
information. The provision does not provide guidance regarding how the authorities should satisfy
both obligations. However, it is clear that the requirement to protect confidential information does not
absolve the authority of the responsibility to provide all relevant information.
325
6. Evaluation by the Panel
7.330 The United States complains that MOFCOM did not disclose the data and calculations it used
to arrive at the dumping margins for AK Steel and ATI and that this is inconsistent with Article 12.2.2
of the Anti-Dumping Agreement. Therefore, the issue for the Panel to determine is whether an
investigating authority is required to include such calculations and data in the "public
notice…or…separate report" under Article 12.2.2 of the Anti-Dumping Agreement.
7.331 The information that MOFCOM did include in the final determination consists of a
description of the methodology used to establish and adjust the normal value and export prices for the
two respondent companies. It also includes th e dumping margins and a brief description of the
methodology used to calculate these margins.326
7.332 The text of Article 12.2.2 of the Anti-Dumping Agreement provides that a "public
notice…or…separate report" shall contain "all releva nt information on the matters of fact and law
which have led to the imposition of final measures… In particular, the notice or report shall contain
the information described in subparagraph 2.1, as well as the reasons for the acceptance or rejection of
relevant arguments or claims". Therefore, the list in Article 12.2.1 of the Anti-Dumping Agreement is
incorporated into the information on matters of fact and law that must be included in the public notice
or separate report under Article 12.2.2. We note that Article 12.2.1(iii) provides that "the margins of

321 India's third party statement, para. 5.3.
322 Japan's third party submission, para. 30.
323 Japan's third party statement, para. 3.
324 Japan's response to Panel question 6, para. 5.
325 Japan's response to Panel question 6, paras. 7-8.
326 Final Determination, Exhibit US-28, pp. 21-27.

dumping established and a full explanation of the reasons for the methodology used in the
establishment and comparison of the export price a nd the normal value" shall be included in the
public notice or separate report.
7.333 Although the requirement to give public notice of "all relevant information on matters of fact
and law" may appear wide enough to encompass th e data and calculations used to determine the
dumping margins, this requirement must be read in the light of the more particular obligation spelt out
in Article 12.2.1(iii), which is incorporated by referen ce into Article 12.2.2. In the Panel's view, it is
significant that the text in Article 12.2.1(iii) set s out in detail the information regarding dumping
margins that must be included in a public notice or separate report, but omits any reference to the
calculations or data. While Article 12.2.2 provides th at its disclosure obligations apply "in particular"
to the factors in Article 12.2.1(iii) and to the reas ons for acceptance or rejection of relevant arguments
or claims, we acknowledge that this is not an exha ustive description of the "relevant information" that
may be included in a public notice or separate re port under Article 12.2.2. Nevertheless, some
relevance must be attributed to the fact that the drafters of Article 12.2 specified with some
particularity a list of the information required in the public notice or separate report and chose not to
list the data and calculations used to arrive at a dumping margin, even though, on the United States'
argument, this is "relevant information" that s hould be included in every public notice or separate
report issued at the conclusion of an anti-dumping investigation. Therefore, on the text of
Article 12.2.2, which by cross-reference includes the text of Article 12.2.1, it is difficult to conclude
that there is an obligation to disclose the calculations and data underlying a dumping margin.
7.334 We find support for this position when read ing Article 12.2.2 of the Anti-Dumping
Agreement in its context. The title to Article 12, "Public Notice and Explanations of Determinations",
indicates that Article 12 requires public notification. Although Article 12.2.2 also provides for
disclosure through a "separate report", footnote 23 to the Anti-Dumping Agreement states that "where
authorities provide information and explanation under the provisions of this Article in a separate
report, they shall ensure that such report is readily available to the public". Article 12.2.3 of the Anti-
Dumping Agreement also provides relevant context. It indicates that only the "non-confidential part"
of an undertaking need be disclosed in the public notice or separate report following the acceptance of
an undertaking. This also provides an indication that Article 12 of the Anti-Dumping Agreement is
concerned with public disclosures and that the ob ligations it contains do not extend to confidential
information. The Panel notes that the data underlyi ng a dumping margin calculation is confidential to
the respondent providing it. Therefore, it is not su rprising that an obligation to disclose such data
cannot be found in the text of Article 12.2.2, which requires notification to the public.
7.335 In this regard, when confidential informati on does fall within the notification obligations
under Article 12.2.2, an investigating authority is under dual obligations. The investigating authority
must treat the information confidentially, in accordance with Article 6.5 of the Anti-Dumping
Agreement, but must also disclose the "relevan t information on matters of fact and law" under
Article 12.2.2, subject to its requirement to pa y due regard to the protection of confidential
information. In the Panel's view, the way in whic h an investigating authority should meet these dual
obligations is to include only a non-confidential su mmary of relevant confidential information in the
public notice or separate report (which must also be public). This would meet the requirements of
Article 6.5 and also disclose the relevant informati on under Article 12.2.2, while paying due regard to
the protection of confidential information. This method of protecting confidential information finds
expression elsewhere in the Anti-Dumping Agreement. For instance, under Article 6.5.1, when an
interested party submits confidential information to an investigating authority, a non-confidential
summary of such information must also be furnishe d to provide interested parties with a reasonable
understanding of the information.
7.336 In the case of confidential data and calculations underlying a dumping margin, we cannot find
within the text of Article 12.2.2 an obligation to include this information in the relevant public notice

or separate report. In our view, a non-confidential summary of such information is provided for in the
disclosure obligations under Article 12.2.1(iii). In particular, disclosure of the dumping margins and
an explanation of the methodology used to arrive at the margins seems to provide a non-confidential
summary of the relevant information regarding the margins and their calculation. There is no
additional obligation to disclose the actual data a nd calculations and to do so would be inconsistent
with Article 6.5 of the Anti-Dumping Agreement.
7.337 Although the United States argues that the "separ ate report" can be provided on a confidential
basis to each respondent, and in this way th e data and calculations can be disclosed under
Article 12.2.2 of the Anti-Dumping Agreement, it is di fficult to reconcile this with footnote 23, which
requires the separate reports to be "readily ava ilable to the public". Therefore, given the
confidentiality of the data and calculations at issu e, we cannot conclude that MOFCOM was required
to include this information in the public notice or the public separate report. We find support for this
conclusion in the reasoning of a number of other pa nels. These panels concl uded that a failure to
disclose confidential data could not be a violation of Article 12.2.2.
327
7.338 According to the United States, the data and cal culations used to arrive at dumping margins
must be included in the public notice or separate re port to allow respondents to check the calculations
used by an investigating authority. Although we do not disagree with the United States that the
disclosure of the data and calculations may be very useful for respondents in this regard, we cannot
find this obligation within the terms of Article 12.2.2. While Article 6.9 of the Anti-Dumping
Agreement expressly provides that the disclosure it re quires allows "parties to defend their interests",
a similar statement cannot be found within Article 12 . Rather, Article 12.2.2 provides the public with
notice of affirmative determinations and interested parties with a public explanation, in sufficient
detail, of the facts and reasons underlying such de terminations. In the light of the text of
Article 12.2.2, and the context in which it is found, there is no basis to conclude that it requires
inclusion of the data and calcul ations underlying the dumping margin in the public notice or separate
report.
7.339 Therefore, the Panel concludes that China did not act inconsistently with Article 12.2.2 of the
Anti-Dumping Agreement in failing to include in th e final determination the data and calculations
upon which its dumping margin calculations were based.
F.
WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 22.3 OF THE SCM AGREEMENT
BECAUSE IT FAILED TO PROVIDE SUFFICIENT INFORMATION ON THE FINDINGS AND
CONCLUSIONS OF LAW IT CONSIDERED MA TERIAL WITH RESPECT TO THE BENEFIT
DETERMINATION UNDER THE GOVERNMENT PROCUREMENT STATUTES

1. Provision at issue
7.340 Articles 22.3 of the SCM Agreement provides, relevantly:
Public notice shall be given of any prel iminary or final determination, whether
affirmative or negative…Each such notice sha ll set forth, or otherwise make available
through a separate report, in sufficient deta il the findings and conclusions reached on
all issues of fact and law considered material by the investigating authorities.

327 Panel Reports, EC – Tube or Pipe Fittings, paras. 7.427 and 7.443; Korea – Certain Paper ,
paras. 7.208, 7.210, 7.314 and 7.316.

2. Factual Background
7.341 Following the issuance of the preliminary dete rmination and the final disclosure documents,
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing
duty investigations.
3. Arguments of the United States
7.342 According to the United States, China acted in consistently with Article 22.3 of the SCM
Agreement because MOFCOM did not provide any rati onale for its conclusion in the preliminary and
final determinations that competitive bidding under United States pr ocurement laws does not result in
market prices.
7.343 The United States notes that Article 22.3 of th e SCM Agreement requires an investigating
authority to "set forth…in sufficient detail the fi ndings and conclusions reached on all issues of fact
and law considered material by the investigating au thorities". The United States interprets this as an
obligation to explain findings or conclusions that are "important", "essential" or "relevant" in the
public notice of a preliminary or fi nal countervailing dut y determination.328 In response to a Panel
question, the United States confirms that the focu s of Article 22.3 is on the findings and conclusions
actually reached by an investigating authority.329
7.344 According to the United States, in its prelimin ary and final determinations, MOFCOM stated
that "although there is a competitive bidding pr ocess" under the Buy American Act, the scope of
"participating products" is restricted and therefor e the competitive bidding process does not reflect
full market competition. Further, with some ex ception, the competition is only among United States
steel producers and therefore the price obtained does not reflect true market conditions. 330 However,
at various times throughout the investigation, the United States argued before MOFCOM that the
prices generated as a result of competitive bidding under the federal procurem ent laws reflect market
conditions. 331
7.345 The United States complains that MOFCOM did not provide a sufficient rationale for its
conclusion that the competitive bidding process under the procurement laws does not result in market
prices. Further, MOFCOM did not explain why it disregarded the arguments presented by the
United States. According to the United Stat es, MOFCOM's reasoning does not explain its benefit
determination. MOFCOM merely concluded that the United Stat es price was higher than foreign
prices and that some foreign producers were ex cluded from the competitive bidding process, leading
to a distorted market. However, under Article 14( d) of the SCM Agreement, authorities are to use
market prices in the country of purchase unless they establish that prices are so distorted that the
market price is unusable. According to the Unite d States, MOFCOM's flawed logic appears to be
based on the assumption that any government involv ement in a market leads to distortion and
unusable benchmark prices. 332 Without an adequate explanation, it is impossible to identify how
MOFCOM arrived at this conclusion. An adequa te explanation would have discussed how the level
of government involvement distorted the market to such an extent that a price derived from a
competitive bidding process was unusable. 333 The United States argues that merely stating vague and
conclusory assertions is insufficient.334

328 United States' first written submission, para. 117.
329 United States' response to Panel question 65, para. 45.
330 United States' first written submission, para. 119.
331 United States' first written submission, para. 120.
332 United States' second written submission, paras. 115-117.
333 United States' response to Panel question 68, para. 51.
334 United States' comments on China's response to Panel question 65, para. 48.

7.346 Therefore, the United States claims that China acted inconsistently with Article 22.3 of the
SCM Agreement because it did not explain how it found that market prices resulting from the
competitive bidding process were distorted.
335
4. Arguments of China
7.347 China rejects the United States' argument that it acted inconsistently w ith Article 22.3 of the
SCM Agreement. According to China, MOFCOM provided sufficient detail on why the government
procurement programmes at issue led to a benefit, in the form of above-market rate payments for the
provision of goods, to ATI and AK Steel. Furthe r, MOFCOM addressed the arguments advanced by
the respondents during the investigation.
7.348 With respect to the preliminary determination, China disputes the United States' argument that
MOFCOM failed to explain why, if a foreign producer is excluded from a competitive bidding
process, the resulting price is not a market price. The preliminary determination explains that
United States producers are afforded a 25% price cu shion over competing foreign prices and that in
certain states, foreign participation is prohibited. On the basis of these facts, MOFCOM reached the
conclusion in the preliminary determination that the resulting price would not reflect a competitive
market price.336
7.349 In relation to the final determination, China rejects the United States' contention that it merely
repeats the findings in the preliminary determina tion and did not address the arguments made by the
respondents. According to China, the final de termination includes a factual finding by MOFCOM
that the import volume excluded from the market was approximately 15% of United States total steel
consumption. MOFCOM also quantified the price difference between North American and non-North
American prices, based upon a submission from AK Steel. Finally, MOFCOM presented evidence
from verification noting the extremely limited use of foreign products within Buy American
projects.337 MOFCOM based its conclusion, namely th at the resulting bidding price could not be
competitive, on these facts. China argues that this was an expansion upon the detail in the preliminary
determination for the purpose of responding to the arguments advanced by AK Steel and ATI.338
7.350 China agrees with the United States that the obligation under Article 22.3 refers to the
findings actually reached by an investigating authority , rather than to an objective standard of what
the authorities should have found. 339 According to China, Article 22.3 of the SCM Agreement
contains obligations of a procedural nature and that it is not appropriate for the United States to
attempt to bootstrap a substantive claim relating to Article 14 of the SCM Ag reement to its challenge
under Article 22.3.340
5. Arguments of third parties
(a) India
7.351 India notes that MOFCOM was obliged to provi de sufficient details regarding how it found
that the competitive bidding price was not an acceptable market benchmark.341

335 United States' first written submission, paras. 118 and 121.
336 China's first written submission, paras. 229-231.
337 China's opening statement at the first meeting of the Panel, para. 41.
338 China's first written submission, paras. 223-234.
339 China's response to Panel question 65, para. 54.
340 China's opening statement at the second meeting of the Panel, paras. 39-40.
341 India's third party statement, para. 7.1.

(b) Japan
7.352 Japan contends that the public notice must explain how the evidence on the record supports
the findings of the market price or benchmark.342
(c) Korea
7.353 Korea argues that the sufficiency of the explanation provided by MOFCOM under
Article 22.3 of the SCM Agreement should be assess ed in the light of Article 14 of the SCM
Agreement, which is the substantive provision govern ing the benefit determination. Korea notes that
the benchmark in a benefit determination should be based on the prevailing conditions in the market
in question, unless the market is distorted. In Ko rea's view, it is not obvious that exclusion of certain
foreign producers automatically supports the propos ition that the market in question is distorted.
Korea submits that the Panel should consider whether MOFCOM conducted such an inquiry and
whether it adequately explained it in accordance with Article 22.3 of the SCM Agreement.343
6. Evaluation by the Panel
7.354 The United States complains that MOFCOM did not adequately explain, in either the
preliminary or final determinations, why the ex clusion of foreign producers from the competitive
bidding process under the United States Government procurement statutes led to the conclusion that
the resulting prices were not market prices for the purposes of the benefit determination. According
to the United States, this is inconsistent with Article 22.3 of the SCM Agreement.
7.355 Article 22 of the SCM Agreement sets out a series of requirements regarding the public
notices and separate reports that must be issued by investigating authorities. Article 22.3 of the SCM
Agreement requires a public notice of a preliminary or final determination, or a separate report, to set
forth "in sufficient detail the findings and conclusions reached on all issues of fact and law considered
material by the investigating authorities". By way of contrast, Article 22.3, unlike Article 22.5, does
not explicitly require public notice of "all relevant information on matters of fact and law and reasons
which have led to the imposition of final measures" or "the reasons for the acceptance or rejection of
relevant arguments or claims made by interested Members and by the exporters and importers".
7.356 In the Panel's view, and as the parties agree, the obligation in Article 22.3 of the SCM
Agreement is procedural in character, relating to the nature of the public notice an investigating
authority must provide with respect to its substantive determinations.
344 The text of Article 22.3
indicates that the disclosure required relates to the findings and conclusions actually reached by an
investigating authority, rather than the findings and conclusions that should reasonably have been
reached under an objective standard and by reference to the substantive obligations at issue. This is
evident because the text of Article 22.3 refers to the "findings and conclusions reached on all issues of
fact and law", rather than the findings and conclusi ons that should reasonably have been reached for a
given substantive claim. Further, the obligation relates to the "issues of fact and law considered
material by the investigating authorities". This indi cates that the disclosure obligation relates to those
issues that an investigating authority subjectivel y considers material. Therefore, in our view,
Article 22.3 is a procedural provision that does not discipline the substantive adequacy of an
investigating authority's reasoning. If this we re not the case, claims under Article 22.3 may be
difficult to distinguish from substantive claims relating to preliminary and final determinations.

342 Japan's third party submission, para. 33.
343 Korea's third party submission, paras. 40-41.
344 See United States' response to Panel question 64, para. 44 and China's response to Panel
question 64, paras. 52-53.

7.357 The United States' claim relates to MOFCOM's benefit determination under the United States
government procurement laws. The preliminary dete rmination indicates that MOFCOM applied facts
available in determining the price paid by the government in purchasing GOES. Seemingly based
upon the fact that the obligations regarding domestic steel procurement do not apply where the use of
domestic materials increases a project cost by 25 %, MOFCOM determined that the Government
purchased GOES from AK Steel and ATI at a price 25% higher than that of foreign steel prices. For
the purposes of the benefit determination, this purchase price was compared to a market benchmark
based on the price of carbon steel in the United States steel market.
345 The United States' claim relates
to the explanation provided by MOFCOM for its conclusion that the price paid by the Government, as
a result of a competitive bidding process, did not reflect "market competition in the usual sense",
leading to the conclusion that a benefit was conf erred through the purchase of GOES for more than
adequate remuneration (i.e. for a price above the market price).
7.358 In the preliminary determination, MOFCOM provided the following explanation for its
conclusion that the prices paid by the United States Government were not market prices:
The Investigating Authority found th at, according to provisions in the Buy American
Act and other regulations, although there is competitive bidding process, using steel
and finished products produced in the U.S. is required unless there is a waiver. The
Investigating Authority holds that this fact shows that the scope of products allowed
for bidding under Buy American Act has actually been limited to some extent, and
thus the bidding is not market competition in the usual sense. In addition to the
public interest exception, the conditions for using foreign products include that, the
quantity of U.S. iron and steel products is not enough, or the purchase of U.S. iron
and steel products would cost 25% higher than foreign products. In other words,
when purchases of U.S. iron and steel products do not cost 25% more than foreign
products, the foregoing so-called competitive bidding is only competition among U.S.
products. Of course, it may include a part of foreign products which can participate
in U.S. government procurement in accorda nce with international agreements (such
as Agreement on Government Procurement ). However, the Investigating Authority
noticed that at the state level of the U.S ., there were still more than a dozen states
which excluded members of the Agreement on Government Procurement when
purchasing construction steel and other goods (including requirements for the sub-
contract). That is, in these states (including Pennsylvania), only U.S. iron and steel
can be used. Therefore, the Investigati ng Authority considered that the competitive
bidding restricted the scope of participa ting products, and thus could not reflect the
full market competition. Even if there is competition, it is competition only among
the U.S. domestic steel products (may include part of the foreign products at the
federal level and in some regions). Hence the price obtained through competitive
bidding does not reflect the true market conditions.
346
7.359 In the final determination, MOFCOM did not alter its conclusion and offered the following
reasoning:

345 Preliminary Determination, Exhibit CHN-17, pp. 37-38. MOFCOM explained that it could not find
information on the prices of all steel products, so it us ed prices in the carbon steel market on the basis that
carbon steel accounts for the "vast majo rity of steel products". The price of foreign steel was also limited to
carbon steel, for the purpose of cons tructing the price paid for GOES by the United States Government. See
also, China's opening statement at the second meeting of the Panel, para. 41, in which China emphasizes that an
out-of-country benchmark was not used, despite the United States' apparent discussion of out-of-country
benchmarks in its second written submission, para. 115.
346 Preliminary Determination, Exhibit CHN-17, pp. 33-34.

The USG argued in the comment on the prelim inary determination that 'the Ministry
of Commerce did not make any actual analysis before drawing the conclusion that the
price obtained by competitive bidding could not reflect real market conditions. This
conclusion was not based on explicit evidence and it did not take into account that if
there were enough bidders, the price afforded by the government would be reduced to
the minimum production cost. Under such circumstances, the lowest bidding price
would become the market price.' AK Steel Corporation argued in the comment on the
preliminary determination that without any evidence that demonstrated the purchase
at premium, the Ministry of Commerce simply equalled the exclusion of some foreign
products with the absolute purchase at premium by the USG or government
contractor. The Investigating Authority f ound in further investigation that the import
volume of the excluded foreign products usually accounted for 15% of total steel
consumption in the U.S.; maybe this rate was not significant, but if this part of
foreign products had an even lower pri ce, then the competitive bidding excluded
these relatively cheaper steel, so the comp etitive bidding cannot demonstrate the real
market competition. AK Steel Corporation once mentioned such data in the comment
on the preliminary determination and claime d: 'when calculating the price difference
between the American steel or foreign st eel, comparisons should be made between
the North American price with the forei gn price or non-North American price (such
as Asian and European prices). Only such calculations could reflect the price gap
between the North American steel and steel from other markets. If the North
American price was excluded from the gl obal price, then the calculated price
difference between the U.S. and foreign st eel products was even more accurate, the
result would be 11.02%.' The Investigati ng Authority considered that according to
the claim, at least it could be confirmed at least that the American steel price (due to
the existence of North American Free Trad e Area, the North American price can be
regarded as the American price) was 10% higher than the non-North American steel
prices. The Investigating Authority consider ed that the bidding price obtained within
a bidding range that excluded potential low-pr iced bidders cannot reflect real market
prices. The competitive bidding had excluded these foreign products of relatively
lower price, therefore this competitive bidding cannot reflect the real market
competition. In addition, in the verification, the verification team was informed by
the Federal Expressway Administration that the use of foreign products in their
projects according to exclusion requirements was less than 1%, while in
Pennsylvania, the verification team got to know that the steel produced in America
must be used in the infrastructure construction in this state. In light of the above
facts, the Investigating Authority did no t accept in the definitive determination the
claim from the USG and relevant interested parties that government purchase through
bidding could obtain the market price so that there was no benefit in this program.
347
7.360 The United States variously claims that MOFCOM 's explanation in relation to the benefit
determination was deficient under Article 22.3 of the SCM Agreement in the following respects:
(i) MOFCOM does not explain why, if a foreign producer is excluded, a price derived
from the competitive bidding process does not reflect a market price. MOFCOM
does not explain how the evidence supports this conclusion or why it disregarded the
arguments made before it by the United States348;
(ii) MOFCOM did not explain how it arrived at the conclusion that the price resulting
from a competitive process did not reflect ma rket conditions. Vague and conclusory

347 Final Determination, Exhibit CHN-16, pp. 40-41.
348 United States' first written submission, para. 121.

assertions are insufficient.
349 Rather, an investigating authority should adequately
disclose its logic350;
(iii) MOFCOM did not explain its benefit determ ination. Rather, "all MOFCOM did was
conclude that the U.S. price was higher th an foreign prices, and that some foreign
producers are excluded from the competitive bidding process, leading to a distorted
market"351; and
(iv) MOFCOM's "flawed logic appears to be based on the assumption that any
government involvement in a market leads to a distorted market with prices that are
unusable as a benchmark price."
352
7.361 Therefore, the crux of the United States' comp laint is that, in the light of MOFCOM's
statement that "there is a competitive bidding pr ocess", MOFCOM did not adequately explain why a
price derived from such a process, namely the purc hase price paid by the government, would not be
equal to the market price (and consequently result in a finding of no benefit).
7.362 At the outset, we note that the United States' cl aim under Article 22.3 of the SCM Agreement
relates to the adequacy of the explanation in both the preliminary and final determinations. However,
given that it is the final determination that is currently in force and providing the basis for the
imposition of the countervailing duties, we consider it necessary to make a finding only in relation to
it. In our view, making a finding in relation to the preliminary determination would not assist in
securing a positive solution to this dispute. In res ponse to a Panel question, the United States agreed
that it "does not consider it necessary [for the Panel] to reach a conclusion in relation to both the
preliminary and final determination".353
7.363 In the Panel's view, the United States has not made out its claim under Article 22.3 of the
SCM Agreement. The United States argues that MO FCOM did not explain why a price derived from
a competitive bidding process would not be equal to the market price. However, in its explanation in
the final determination, MOFCOM set forth the fact ual findings that it consid ered supported its legal
conclusion that the United States Government purch ased domestically produced GOES for more than
adequate remuneration. In particular, MOFCOM found:
(i) the scope of foreign products competing in the bidding process is restricted. The
import volume of excluded foreign product s accounts for 15% of steel consumption
in the United States;
(ii) although, in accordance with the Government Procurement Agreement, there may be
some competition from foreign products, in certain states, including Pennsylvania,
foreign products are completely excluded; and
(iii) the North American price for steel is 10% higher than non-North American prices.
7.364 On the basis of the partial or complete exclus ion of lower priced foreign products from the
"competitive bidding"354 process, MOFCOM concluded that the bidding would not result in a market
price. The United States argues that there is a step missing in this logic, namely an explanation of
how this exclusion could result in a non-market pri ce, despite the existence of a "competitive bidding

349 United States' comments on China's responses to Panel questions 64 and 65.
350 United States' response to Panel question 68, para. 52.
351 United States' second written submission, para. 114.
352 United States' second written submission, para. 115.
353 United States' response to Panel question 67, para. 50.
354 Final Determination, Exhibit CHN-16, p. 39.

process". However, MOFCOM explained that, in its view, the lower prices of the excluded goods
would result in a non-market price even despite its conclusion that a "competitive bidding process" of
some sort existed. The United States does not agree with this conclusion. It refers to the "flawed
logic" and "flawed discussion" proffered by MOFCOM. 355 It also argues that "[t]he fact that one
foreign company may have been excluded from what China admitted was a competitive bidding
process does not mean that a given transaction was not conducted based on prevailing market
conditions".356
7.365 The Panel notes that Article 22.3 does not di scipline the substantive adequacy of an
investigating authority's reasoning. 357 MOFCOM included in its public notice the findings and
conclusions on matters of law that it considered material, and also referred to the material facts it was
relying upon to reach those conclusions. There is nothing to suggest that MOFCOM reached other
findings or conclusions that it considered material yet did not disclose. In this respect, we recall that
Article 22.3 requires only the findings and conclusions actually reached by an investigating authority
to be included in the public notice or separate report, rather than the findings and conclusions that
should reasonably have been reached, by reference to the substantive matter at issue.
7.366 The United States argues that MOFCOM did not explain why it "chose to disregard
arguments from the United States". Unlike Article 22.5 of the SCM Agreement, Article 22.3 does not
explicitly require the disclosure of the "reasons for the acceptance or rejection of relevant arguments
or claims made by interested Members and by the ex porters and importers". In any event, in the final
determination MOFCOM in fact outlined and resp onded to the arguments presented to it by the
United States and by AK Steel. For instance, in re sponse to the United States' contention that, with
enough bidders, the lowest bid becomes the market price, MOFCOM explained that, in its view, the
exclusion of foreign GOES, priced lower than United States GOES, and accounting for 15% of steel
consumption in the United States, would not lead to a market price, even if the bidding between the
non-excluded steel manufacturers was competitive. Although the United States may not agree with
the substance of this explanation, and may consider that there are certain flaws and gaps in this logic,
this does not lead to the conclusion that MOFCOM failed to give public notice of the "findings and
conclusions reached on all issues of facts and la w" it considered material, in accordance with
Article 22.3 of the SCM Agreement.
7.367 Consequently, the Panel concludes that China di d not act inconsistently with Article 22.3 of
the SCM Agreement in relation to the explanation of its benefit determina tion under the government
procurement statutes. We have no basis to find that MOFCOM reached other findings and
conclusions on issues of fact and law that it consider ed material to the issue but did not include in the
final determination.

355 United States, second written submission, paras. 112 and 115.
356 United States, second written submission, para. 117.
357 The United States' claim was not one of substance, for example under Articles 1.1(b) or 14(d) of the
SCM Agreement. In our view, the f act that the United States may disagr ee with the substance of MOFCOM's
reasoning is not relevant to an analysis under Article 22.3 of the SCM Agreement.

G.
WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLES 6.8, 6.9, 12.2, 12.2.2 AND ANNEX II
OF THE ANTI-DUMPING AGREEMENT IN RELATION TO THE "ALL OTHERS" RATE FOR UNKNOWN
EXPORTERS IN THE ANTI-DUMPING DUTY INVESTIGATION
1. Whether China acted inconsistently with Article 6.8 and paragraph 1 of Annex II of the
Anti-Dumping Agreement in using facts availa ble to calculate the dumping margins for
unknown exporters
(a) Provisions at issue
7.368 The United States' claim relates to Article 6. 8 and paragraph 1 of Annex II of the Anti-
Dumping Agreement. Article 6.8 provides:
In cases in which an interested party refu ses access to, or otherwise does not provide,
necessary information within a reasonable period or significantly impedes the
investigation, preliminary a nd final determinations, affirm ative or negative, may be
made on the basis of facts available. The provisions of Annex II shall be observed in
the application of this paragraph.
7.369 Annex II, paragraph 1 reads:
As soon as possible after the initiation of the investigation, the investigating
authorities should specify in detail the information required from any interested party,
and the manner in which that information shou ld be structured by the interested party
in its response. The authorities should also ensure that the party is aware that if
information is not supplied within a reasonable time, the authorities will be free to
make determinations on the basis of the f acts available, including those contained in
the application for the initiation of the investigation by the domestic industry.
(b) Factual Background
7.370 In calculating the anti-dumping rates, MOFCOM applied "facts available" to
exporters/producers that were "unknown" to it, but did not apply "facts available" to the two
investigated exporters, namely AK Steel and ATI. MOFCOM applied a "facts available" duty rate of
64.8% to unknown exporters.
7.371 In relation to the unknown exporters, in in itiating the GOES anti-dumping and countervailing
duty investigations, MOFCOM i ssued public notices of initiation. In these notices, MOFCOM
indicated that any interested party should register for investigation and that failure to register would
result in the application of best information av ailable. MOFCOM provided the initiation notices to
the two known exporters/producers of GOES in the United States and placed the notices on its
website and in its public reading room. MOFCOM also notified the United States Embassy in Beijing
of the initiations and requested that the Embass y notify the relevant exporters and producers.
However, apart from AK Steel and ATI, no United States producers/exporters of GOES registered for
investigation. As a result, in calculating the dumping rate for producers/exporters other than AK Steel
and ATI, namely for "unknown" exporters, MOFCOM applied "facts available".
(c) Arguments of the United States
7.372 The United States claims that China acted incons istently with Article 6.8 and paragraph 1 of
Annex II of the Anti-Dumping Agreement, due to th e improper use of "facts available" in calculating
the "all others" dumping rate for unknown exporters. The United States argues that Article 6.8 and
paragraph 1 of Annex II of the Anti-Dumping Agreemen t, read in the light of Article 6.1, clearly

establish that a dumping margin based on facts availa ble may only be applied to an entity when the
authority has specifically asked the party to provide certain information.358
7.373 The United States argues that China acted inconsis tently with Article 6.8 and paragraph 1 of
Annex II because MOFCOM applied facts available to firms it did not investigate and to which it did
not send copies of the questionnaire or give noti ce of the consequences of failing to provide the
required information. Apart from AK Steel and AT I, MOFCOM made no attempt to identify other
United States exporters/producers of GOES. Rather, MOFOM merely requested that the
United States Embassy in Beijing "notify the relevant exporters and producers".359
7.374 The United States rejects China's position that MOFCOM was within its rights to base the "all
others" rate on facts available because, while Artic le 6.10 of the Anti-Dumping Agreement limits the
anti-dumping rate that can be applied to known producers/exporters that are not individually
examined, there are no such limits placed on un known producers/exporters. The United States argues
that this overlooks the clear direction in Article 6.1 and paragraph 7 of Annex II to notify all
interested parties of the information required of th em. Further, China's argument overlooks the fact
that Article 6.8 and para graph 7 of Annex II address situations where a party does not cooperate and
withholds information from the investigating authority . A failure to cooperate cannot be found where
there is no evidence that any other producer/exporte r was aware of the investigation or the specific
information required of it.360
(d) Arguments of China
7.375 China's response to the United States' claim is tw ofold, namely that (i) it adequately notified
all exporters/producers of GOES of the investigation and its requirements; and (ii) in circumstances
where there is no explicit guidance in the Anti- Dumping Agreement regarding how to determine
margins of dumping for unknown exporters/producers, Article 6.8 is the most relevant provision to
apply.
7.376 China contends that MOFCOM issued a public notification of the initiation of the GOES
investigation and indicated in the notice that a ll exporters/producers of GOES should register for
investigation. The notification stated that failure to register within a specified time period would
result in the application of best information ava ilable. China submits that the initiation notice was
provided to the United States, ATI and AK Steel. It was also posted on MOFCOM's website and
placed in the MOFCOM reading room. According to China, this satisfied the notice requirements
under Article 6.1 of the Anti-Dumping Agreement.
361
7.377 China submits that it followed the general rule in Article 6.10 of the Anti-Dumping
Agreement by determining individual margins of dumping for each known exporter or producer and
therefore, Article 9.4 did not apply. China argues that neither Article 6.10 nor any other provision of
the Anti-Dumping Agreement addresses the issue of tr eatment of exporters or producers that are not
known to the authority and therefore cannot be individually examined. This means that an
investigating authority must exercise its own discret ion in determining how to calculate margins of
dumping for such exporters or producers.
362
7.378 China reasons that, in the circumstances of the case, where "unknown exporters/producers
[did] not cooperate by making themselves known and pa rticipating in the investigation", the provision

358 United States' first written submission, paras. 158-161.
359 United States' first written submission, para. 166.
360 United States' opening statement at the first meeting of the Panel, paras. 59-60.
361 China's first written submission, paras. 243-244.
362 China's first written submission, paras. 241-242.

most relevant for calculating the anti-dumping marg ins for "unknown and unresponsive" exporters is
Article 6.8 of the Anti-Dumping Agreement.
363 China's position is that the exporters or producers that
did not register for the investigation were "not co operating" and therefore the application of facts
available under Article 6.8 was warranted. Acco rding to China, this position is supported by
paragraph 7 of Annex II of the Anti-Dumping Agre ement, which provides that if a party does not
cooperate, this can lead to a less favourable result for the party. China argues that if it were to apply
to unknown exporters an "all others" rate based on the rates applied to cooperating respondents, "there
would be no incentive for unknown companies to make themselves known and participate in the
investigation".364
7.379 Although China is aware of the Appellate Body's decision in Mexico – Anti-Dumping
Measures on Rice, it argues that there is an important factual distinction between that case and the
case at hand. In particular, China contends that in Mexico – Anti-Dumping Measures on Rice, "the
authority was apparently dealing with many other kno wn exporters. Indeed a rice association entered
an appearance on behalf of those other exporte rs that were not individually investigated". 365
Therefore, China argues it is unclear to what extent the Appellate Body considered the significance of
the lack of any other exporters or producers, as was the case in the GOES investigation, when it
issued its findings. Further, it is not clear to China that the panel and the Appellate Body in Mexico –
Anti-Dumping Measures on Rice considered the policy implications of their decisions. China has not
been able to reconcile Mexico – Anti-Dumping Measures on Rice with the need to encourage co-
operation by unknown respondents and with the absence of any guidance in the Anti-Dumping
Agreement on how unknown respondents should be treated in the context of an investigation in which
the authority is seeking to implement the general rule of Article 6.10.
366
(e) Arguments of third parties
(i) India
7.380 According to India, based on Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping
Agreement, it appears that facts available may not be applied to an interested party that has not been
asked to submit any information.367
(ii) Japan
7.381 Japan argues that the Anti-Dumping Agreement clearly establishes that an investigating
authority may not use facts available to determine the margin of dumping for exporters/producers that
were not given notice of the information required of them. 368 According to Japan, a mere request in a
public notice of initiation posted on a website, that in terested parties make themselves known to the
authorities, cannot be the basis to apply facts available. 369 MOFCOM's notice of initiation did not
request exporters and producers to submit specific information, but me rely requested them to register
with MOFCOM. Therefore, there was no basis to apply facts available.370

363 China's first written submission, paras. 241 and 245.
364 China's first written submission, paras. 245-246.
365 China's response to Panel question 15, para. 49.
366 China's response to Panel question 15, paras. 49-50.
367 India's third party statement, para. 6.3.
368 Japan's third party submission, para.43.
369 Japan's third party submission, para. 47.
370 Japan's third party statement, para. 14.

(iii) Saudi Arabia
7.382 In Saudi Arabia's view, the use of facts availa ble is permissible only when the parties have
been given proper notice both of the information required by the investigating authority, and of the
possibility that facts available will be applied in the event of non-cooperation with the authority.
371
(f) Evaluation by the Panel
7.383 In relation to the United States' claim under Ar ticle 6.8 and paragraph 1 of Annex II of the
Anti-Dumping Agreement, the question before the Pa nel is whether the conditions for the application
of "facts available" were met.
7.384 Article 6.8 of the Anti-Dumping Agreement provid es that resort to facts available may occur
when an interested party (i) re fuses access to necessary information w ithin a reasonable period; (ii)
otherwise fails to provide necessary information w ithin a reasonable period; or (iii) significantly
impedes an investigation. The application of Article 6.8 is also subject to the provisions of Annex II
of the Anti-Dumping Agreement, paragraph 1 of which provides that an investigating authority should
"specify in detail the information required from any interested party" and "ensure that the party is
aware that if information is not supplied within a reasonable time, the authorities will be free to make
determinations on the basis of the facts available". Further, the United States argues that Article 6.8
should be read in the light of Article 6.1 of the An ti-Dumping Agreement, which states that interested
parties "shall be given notice of the information which the authorities require".
7.385 Therefore, Annex II imposes additional preconditions for the application of resort to facts
available, including that investigating authorities give interested parties notice of the precise
information required of them and of the consequences of failure to provide the information. This
requirement to notify interested parties of th e necessary information also finds expression in
Article 6.1 of the Anti-Dumping Agreement, which is relied on as context by the United States. In the
circumstances of this case, China argues that MOFCOM satisfied the notice requirement of
Article 6.1 by providing the notice of initiation to the United States, AK Steel and ATI, posting it on
its website and placing it in its reading room. The United States notes that MOFCOM also asked
United States embassy officials in Beijing to notify interested parties of the investigation.
7.386 The Anti-Dumping Agreement does not include explicit guidance regarding the form in
which the notice required by Annex II must be provide d to interested parties. However, paragraph 1
of Annex II provides that authorities should "ensure th at the party is aware" of the consequences of
not supplying necessary information. Arguably, posting a notice in a public place or on the internet
will not necessarily ensure this awaren ess in each interested party. In any event, in the circumstances
of this case, it is not necessary for the Panel to r esolve whether notice can ever be adequate if given
through a public reading room or an internet posting. This is because the notice of initiation, relied
upon by China as providing the requisite notification, did not specify in detail the information
required of the interested parties for the purposes of the anti-dumping investigation. While the notice
of initiation requested interested parties to provide so me general information at the time of registering
with MOFCOM, namely "the volume and valu e of exports to China from March 2008 to
February 2009", MOFCOM replaced more informati on than this with "facts available" for the
purposes of arriving at an "all others" anti-dumping ra te. Therefore, it is clear that MOFCOM should
have provided detailed notice of this further re quired information, although the Panel does not
comment on the form or manner in which this notice should have been conveyed. In the view of the
Panel, paragraph 1 of Annex II and Article 6.1 place the notifica tion obligation on investigating
authorities and it is difficult to find in the terms of the Anti-Dumping Agreement any obligation on
unknown exporters to come forward after a genera l public notice of initiation is published.

371 Saudi Arabia's third party statement, para. 13.

Consequently, in the Panel's view, China's argument that the notice of initiation met the notification
requirements embodied in paragraph 1 of Annex II and Article 6.1 cannot be sustained.
7.387 In relation to the other preconditions for the app lication of facts available found in Article 6.8
of the Anti-Dumping Agreement, given that the unknown exporters were not notified of the
"necessary information" required of them, the Panel cannot conclude that they refused access to or
failed to provide the information. Further, Chin a does not advance evidence to suggest that the
unknown exporters impeded the investigation. This conclusion is all the more compelling in the light
of China's acknowledgment that, apart from AK Steel and ATI, there were no other exporters of
GOES in existence during the period of investigation.
372 It is not clear how non-existent exporters
could possibly refuse to provide information or impede an investigation.
7.388 The Panel finds support for its reasoning in the report of the Appellate Body in Mexico – Anti-
Dumping Measures on Rice . In that case, the Mexican investigating authority, Economía, sent the
public notice of initiation and a questionnaire to two known exporters and to the United States
embassy in Mexico City. Further, the public notice of initiation gave 30 days for interested parties to
appear before Economía to submit an official investigation form. Two exporters as well as an
industry association appeared of their own initiative and received a questionnaire. 373 T h e
investigating authority ultimately used facts availa ble against all exporters apart from the four that
received a questionnaire. The Appellate Body he ld that the second sentence of paragraph 1 of
Annex II of the Anti-Dumping Agreement conditi ons the use of facts available on making the
interested party aware that if necessary information is not supplied by it within a reasonable time, the
investigating authority will be free to resort to fact s available. According to the Appellate Body, this
indicates that an exporter must be given the opportunity to provide the information required by the
investigating authority, before the latter resorts to the use of facts available. An exporter that is
unknown to the investigating authority, and therefore not notified of the information required of it, is
denied the opportunity to provide the information. Consequently, the Appellate Body concluded that
an investigating authority that applies facts ava ilable to such exporters acts inconsistently with
paragraph 1 of Annex II of the Anti-Dumping Agreement and therefore, with Article 6.8.374 A similar
conclusion was reached by the panel in Argentina – Ceramic Tiles. The panel held that paragraph 1
of Annex II "strongly implies that investigating authorities are not entitled to resort to best
information available in a situation where a pa rty does not provide certain information if the
authorities failed to specify in detail the information which was required".375
7.389 The conduct of the investigating authorities in this case and in Mexico – Anti-Dumping
Measures on Rice in attempting to give notice to interested parties is remarkably similar. In response
to a Panel question, China attempts to disti nguish the facts of the cases by arguing that in Mexico –
Anti-Dumping Measures on Rice there were many other known exporters, including the members of
the rice association that appeared in the inves tigation, and that this was not the case before
MOFCOM, where there were no other known exporters/producers.376 China argues that the Appellate
Body may not have considered the significance of the "lack of any other producers/exporters" when it
issued its findings. However, the Panel does not ag ree with China's interpretation of the Appellate
Body's findings. In particular, we are of the view that the Appellate Body found that only the four
exporters for which Economía calculated an individual margin of dumping were "known", while other
exporters, including those that may have been me mbers of the industry association that came forward
during the investigation, were "unknown". This is evident from the Appellate Body's finding that, in
calculating individual dumping margins for the two expor ters included in the application for initiation

372 China's response to Panel question 13, para. 47.
373 Panel Report, Mexico – Anti-Dumping Measures on Rice, para. 7.179.
374 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 259-260.
375 Panel Report, Argentina – Ceramic Tiles, para. 6.55.
376 China's response to Panel question 15, para. 49.

and the two that came forward of their own initiativ e, Economía determined an individual margin of
dumping for "each exporter of which it knew at the time " and therefore did not act inconsistently with
Article 6.10 of the Anti-Dumping Agreement. 377 Therefore, the Panel is not convinced by China's
attempt to distinguish the facts of Mexico – Anti-Dumping Measures on Rice . If China is attempting
to highlight that, in this case, apart from AK Steel and ATI, there were in fact no other
exporters/producers of GOES in existence during the period of investigation, this fact does not seem
to diminish the relevance of the Appellate Body 's findings. The Appellate Body suggests that a
consequence of an exporter being "unknown" is that it is not possible to give it notice of the required
information.378 The same reasoning extends to, and in fact applies more forcefully, to non-existent
exporters.
7.390 China also argues that in Mexico – Anti-Dumping Measures on Rice, the Appellate Body did
not consider the policy implications of its decision. In particular, China submits that preventing resort
to facts available for unknown exporters creates a lacuna in the Anti-Dumping Agreement, because
neither Article 6.10, Article 9.4 nor any other provision addresses how an investigating authority
should determine margins of dumping for unknown e xporters. While the Panel agrees that there is
indeed a gap in the Anti-Dumping Agreement rega rding how dumping margins should be calculated
for unknown exporters, Article 6.8 and Annex II are ve ry explicit regarding the conditions that must
exist before an investigating authority may resort to facts available. The exis tence of a lacuna in the
Anti-Dumping Agreement does not mean that the conditions should be ignored in order to fill the gap.
Although the lack of guidance in the Anti-Dumpi ng Agreement may leave investigating authorities
with some discretion regarding the calculation of margins of dumping for unknown exporters, in our
view, this discretion should not extend to acting in consistently with the express terms of Article 6.8
and paragraph 1 of Annex II.
7.391 China also submits that it is unable to r econcile the Appellate Body's decision in Mexico –
Anti-Dumping Measures on Rice with the need to encourage unknown respondents to cooperate so
that margins can be established on an individual company basis in accordance with the general rule
expressed in Article 6.10 of the Anti-Dumping Agreem ent. To support its position that adverse facts
available can be applied to the disadvantage of companies that do not make themselves known to
investigating authorities, China relies upon one part of paragraph 7 of Annex II, namely "if an
interested party does not cooperate…t he situation could lead to a result which is less favourable to the
party than if the party did cooperate". However, paragraph 7 also provides that authorities should use
"special circumspection" when basing their findings on information from a secondary source. This
suggests that the recourse to facts available is not intended to lead to excessive margins of dumping in
order to encourage cooperation by interested partie s. Rather, special care to attain as accurate a
margin as possible must be used, with an ac knowledgment that non-cooperation could nevertheless
lead to a less favourable result compared with coope ration. In this regard, we recall our previous
discussion in which we concluded that an investiga ting authority's discretion is not unlimited in the
use of facts available and nor is the use of facts available equivalent to the application of adverse
inferences. Rather, the best information availabl e must be used and facts available should not be
applied in a manner to punish non-cooperation. 379 We note that the general rule expressed in
Article 6.10 explicitly applies to each "known" exporter or producer.380 It is not clear that Article 6.10
establishes a general objective relating to unknown expor ters. In any event, even if an overriding

377 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 256.
378 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 259: "An exporter that is
unknown to the investigating authority - and, therefore, is not notified of the information required to be
submitted" (emphasis added).
379 See paras. 7.296 and 7.302 of this Report.
380 Indeed, the Appellate Body found in Mexico – Anti-Dumping Measures on Rice, para. 255, that "the
rule set out in the first sentence of Article 6.10…cov ers the exporters or foreign producers of which the
investigating authority knows at the time the calculation of margins of dumping is made".

objective exists to encourage unknown exporters to partic ipate in an investigation, so that individual
margins of dumping can be applied to them, the ac hievement of this objective would not justify a
violation of the express terms of Article 6.8 of the Anti-Dumping Agreement, which establishes clear
conditions regarding when it is permissible to resort to the use of facts available.
7.392 Therefore, while there is no system of preced ent under the DSU, Chin a has not advanced a
convincing reason for the Panel to depart fro m the reasoning of the Appellate Body in Mexico – Anti-
Dumping Measures on Rice.
7.393 In sum, in the view of the Panel, MOFCOM did not notify the "all other" exporters of the
necessary information required of them and so did not meet one of the preconditions for the
application of facts available, as found in paragra ph 1 of Annex II of the Anti-Dumping Agreement.
Further, exporters that were unknown to MOFCOM , and indeed that were non-existent, cannot
reasonably be held to have refused to provide necessary information or to have impeded an
investigation within the meaning of Article 6.8 of the Anti-Dumping Agreement.
7.394 Therefore, the Panel finds that China acted inc onsistently with Article 6.8 and paragraph 1 of
Annex II of the Anti-Dumping Agreement.
2. Whether China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by
failing to inform interested parties of the essential facts under consideration in
calculating the "all others" dumping margin
(a) Provision at issue
7.395 Article 6.9 of the Anti-Dumping Agreement provides:
The authorities shall, before a final determ ination is made, inform all interested
parties of the essential facts under considera tion which form the basis of the decision
whether to apply definitive measures. Such disclosure should take place in sufficient
time for the parties to defend their interests.
(b) Factual Background
7.396 Following the preliminary determination, and prior to issuing its final determination,
MOFCOM issued a final disclosure document, including certain disclosures regarding the dumping
margins and subsidy rates to be applied to th e investigated companies and to the "unknown"
exporters.
(c) Arguments of the United States
7.397 The United States notes that in its preliminary determination, MOFCOM established an "all
others" dumping rate of 25%, with the explanation that its calculation relied upon facts available for
"the other U.S. companies who failed to register responses or to submit responses". In its final
disclosure document, MOFCOM revealed that it w as increasing the "all others" rate to 64.8%, "based
on transaction information of the respondents" pursuant to the facts available method. In its final
determination, MOFCOM applied the "all others" dumping rate of 64.8%, based upon "facts available
and the information submitted by respondent companies".
381
7.398 The United States argues that MOFCOM did no t disclose the "essential facts" forming the
basis for applying an "all others" dumping rate of 64.8%. Although China argues that it could not

381 United States' first written submission, paras. 168-170.

disclose the essential facts because to do so would have compromised the confidentiality of the
information supplied by the two respondent compan ies, the United States submits that the facts
forming the basis to apply facts available in the first place would not have been confidential to the
respondent companies. Further, MOFCOM could ha ve publicly summarized th e information used or
at least disclosed the methodology it employed. According to the United States, disclosure of the
essential facts was particularly important, because it is difficult to understand how MOFCOM used
the information of the two respondent companies a nd arrived at an "all others" dumping margin more
than three times as high as the margin for one of th e respondent companies and more than eight times
as high as the margin for the other. 382 The United States argues that without the disclosure of this
information, it was unable to defend its interests.383
(d) Arguments of China
7.399 In relation to the application of facts availabl e to the calculation of the "all others" dumping
rate, China argues that it provided an adequate explana tion of the basis for the "all others" rate. In the
preliminary determination MOFCOM indicated that the "all others" dumping margins were based on
the information alleged and contained in the petition. In relation to the "all others" rate that was
revealed in the final determination, China ar gues that MOFCOM could provide only a general
explanation because the "all others" rate was base d upon confidential information of one of the
responding companies.
7.400 China argues that because the unknown companies did not c ooperate, the investigating
authority had an unlimited discretion to arrive at a result less favourable to the non-cooperating
parties. Therefore, failing to disclose the details of the calculation had no effect on the ability of the
parties to defend their interests.384
(e) Arguments of third parties
(i) European Union
7.401 The European Union agrees with the United Stat es on the "essential facts" that should have
been disclosed in relation to the "all others" dumpi ng rate. The European Union submits that if the
United States' allegations are conf irmed with respect to the lack of disclosure, China has acted
inconsistently with Article 6.9 of the Anti-Dumping Agreement.385
(ii) Japan
7.402 With respect to the disclosure required under Article 6.9 of the Anti-Dumping Agreement,
Japan submits that the disclosure of the "essential facts" must be distinguished from mere individual
items of evidence. 386 Japan argues that the normal value and export prices used to calculate margins
of dumping in the final determination, and the process to reach ex-factory prices, are "essential facts"
that should have been disclosed in relation to the calculation of the "all others" dumping rate.387

382 United States' second written submission, paras. 132-133 and United States' opening statement at
the first meeting of the Panel, para. 66.
383 United States' first written submission, para. 175.
384 China's first written submission, paras. 247-248 a nd China's opening statement at the first meeting
of the Panel, para. 47.
385 European Union's third party submission, paras. 21-24.
386 Japan's third party submission, para. 6.
387 Japan's third party submission, para. 19.

(iii) Saudi Arabia
7.403 Saudi Arabia notes that the disclosure of " essential facts" under Article 6.9 of the Anti-
Dumping Agreement must occur prior to the final determination, to allow sufficient time for parties to
defend their interests. Further, the "essential facts" must be explicitly identified as such, so that the
parties know whether a particular fact is important.
388
(f) Evaluation by the Panel
7.404 In its preliminary determination, MOFCOM es tablished an "all others " dumping rate of 25%
for unknown exporters. In the final disclosure documen t, released prior to the final determination,
MOFCOM indicated that the rate had increased to 64.8%.
7.405 In relation to the "all others" dumping rate , the following disclosures were made by
MOFCOM:
(i) The preliminary determination stated "[ r]egarding the other U.S. companies who
failed to register to respond or to submit responses, in accordance with Article 21 of
the Anti-Dumping Regulation, the Investigation Authority decided to adopt the
obtained and best information available to make the determination as for dumping
and dumping margin".
389
(ii) The final disclosure document provided that the "margin for all other American
companies was calculated based on tran saction information of the respondents
pursuant to Article 21 of the Antidumping Regulations".390
7.406 The United States argues that MOFCOM did no t disclose the "essential facts" forming the
basis for applying an "all others" dumping rate of 64.8%. In particular MOFCOM did not reveal:
(i) the facts relating to the United States companies refusing access to necessary
information or significantly impeding the investigation391;
(ii) the facts leading to the conclusion that 64.8% was the appropriate "all others" rate;
(iii) the "transaction information" from the two respondents that formed the basis for the
64.8% "all others rate"; or
(iv) the facts underpinning the calculation of the 64.8% rate and the details of the
calculation.392
7.407 In the Panel's view, the obligation under Artic le 6.9 of the Anti-Dumping Agreement requires
investigating authorities to discl ose those facts underlying the final findings and conclusions in
respect of the essential elements that must exis t for the application of definitive anti-dumping
duties.393 In an anti-dumping investigation, the essentia l elements include the existence of dumping,

388 Saudi Arabia's third party submission, para. 25.
389 Preliminary Determination, Exhibit US-5, p. 17.
390 Memorandum Regarding The Factual Disclosure On The Dumping Margin and Ad Valorem
Subsidy Rate for Grain Oriented Flat-Rolled Electrical Steel Antidumping and Countervailing Cases,
15 March 2010, ("Final Disclosure form"), Exhibit US-26, p. 41.
391 United States' opening statement at the first meeting of the Panel, para. 65.
392 United States' first written submission, para. 173.
393 In this regard, see Panel Report, Mexico - Olive Oil, para. 7.110, where the Panel examines the
analogous provision under the SCM Agreement.

injury and causation. We agree with those panels that have noted the disclosure obligation does not
apply to the reasoning of the investigating authorities, but rather to the "essential facts" underlying the
reasoning.394
7.408 In our view, China acted inconsistently with its disclosure obligations under Article 6.9 of the
Anti-Dumping Agreement in relation to the "all othe rs" dumping rate. In particular, in reaching its
conclusion on the existence of dumping by "all othe r" exporters, MOFCOM must have considered a
number of facts leading to the conclusion that the use of "facts available" was warranted. In the
circumstances of this case where, apart from AK Steel and ATI, there were in fact no other exporters
of GOES, it is not clear on what basis MOFCOM concluded that non-exis tent exporters refused
access to necessary information or otherwise impeded th e investigation. Therefore, in order to allow
the United States, as an interested party, to defe nd its interests, it was vital that MOFCOM disclose
the factual basis for its use of best information available.
7.409 Further, MOFCOM revealed that it relied upon certain facts submitted by the respondents in
finding the existence of dumping by "all other" expor ters at a margin of 64.8%. However, MOFCOM
did not disclose the particular information from the respondents upon which the dumping margin was
based. In the circumstances of this case, some indication of the information from the respondents
which formed the basis of the "all others" dumping ra te seems particularly important given the large
disparity between the "all others" rate and the rates for the respondents. It is certainly not self-evident
how such a large disparity could have arisen, in ci rcumstances where the rates were apparently based
upon the same set of facts. In our view, some disclosure in this rega rd to allow the United States to
defend its interests was required under Article 6.9 of the Anti-Dumping Agreement.
7.410 We note China's argument that the transaction information upon which MOFCOM relied in
calculating a dumping rate of 64.8% was confidential to the respondents. In this regard, we note that
where information which is by nature confidential, or is submitted to an investigating authority on a
confidential basis, is also part of the "essential facts under consideration", an investigating authority is
under dual obligations. On the one hand, Article 6.5 of the Anti-Dumping Agreement requires that
confidential information be treated as such and not be disclosed without the permission of the party
submitting it. On the other hand, Article 6.9 requires that the essential facts be disclosed so that
interested parties may defend their interests. Artic le 6.9 does not include a carve-out in relation to
confidential information. Therefore, in our view, when information is both confidential but also part
of the "essential facts under consideration", the oblig ation to disclose the information is nevertheless
binding. However, where the party submitting the c onfidential information does not give permission
for the information to be disclosed, the investig ating authority could m eet its obligations under
Article 6.9 through the use of non-confidential summaries of the "essential" but confidential facts.
Therefore, in our view, a non-confidential summary of the information from the respondents which
formed the factual basis of the "all others" dumping rate should have been prepared and disclosed for
the purposes of Article 6.9 of the Anti-Dumping Agreement.
7.411 In failing to disclose these facts underlying the "all others" dumping rate, the ability of the
United States to defend its interests was compromise d. We disagree with China's suggestion to the
contrary, which is based on the argument that MOFCOM had "unlimited discretion" to arrive at a
result less favourable to the unknown companies that did not cooperate. As indicated in our reasoning
in relation to the United States' claim under Article 6.8 of the Anti-Dumping Agreement, the premise
of China's argument fails, due to our conclusion that the unknown, non-existent companies did not fail
to cooperate. Further, as indicated in our analys is of Article 6.8 and Annex II of the Anti-Dumping

394 Panel Reports, Argentina – Poultry Anti-Dumping Duties, para. 7.228; US – Oil Country Tubular

Agreement, an investigating authority does not have unlimited discretion in applying facts
available.
395
7.412 Consequently, we find that China acted inconsis tently with Article 6.9 of the Anti-Dumping
Agreement in failing to disclose certain "essential fact s" forming the basis of the conclusion that "all
other" exporters were dumping at a rate of 64.8%.
3. Whether China acted inconsistently with Arti cles 12.2 and 12.2.2 of the Anti-Dumping
Agreement in relation to the public notice and explanation of its determination of the
"all others" dumping margin
(a) Provisions at issues
7.413 Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement provide, relevantly:
12.2 Public notice shall be given of any preliminary or final determination…Each
such notice shall set forth, or otherwise ma ke 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.
12.2.2 A public notice of conclusion or susp ension of an investigation in the case of
an affirmative determination providing for the imposition of a definitive duty or the
acceptance of a price undertaking shall contai n, or otherwise make available through
a separate report, all relevant information on the matters of fact and law and reasons
which have led to the imposition of final measures or the acceptance of a price
undertaking, due regard being paid to the requirement for the protection of
confidential information. In particular, the notice or report shall contain the
information described in subparagraph 2.1, as well as the reasons for the acceptance
or rejection of relevant arguments or claims made by the exporters and importers, and
the basis for any decision made under subparagraph 10.2 of Article 6.
(b) Factual Background
7.414 Following the issuance of the preliminary determination and the final disclosure document, on
10 April 2010, MOFCOM issued its final determin ation for the anti-dumping and countervailing duty
investigations.
(c) Arguments of the United States
7.415 The United States claims that China acted incons istently with Articles 12.2 and 12.2.2 of the
Anti-Dumping Agreement. In particular, in the preliminary determination, the final disclosure
document and the final determination, MOFCOM faile d to disclose the rationale for its decision to
apply facts available in calculating the "all others" dumping margin. The United States argues that the
single sentence in the preliminary and final determin ations, simply stating that the "all others" rate
was calculated on the basis of facts available, is insufficient to satisfy the requirements of
Articles 12.2 and 12.2.2.
396

395 See, for example, para. 7.391 of this Report.
396 United States' first written submission, paras. 179-182.

(d) Arguments of China
7.416 China argues that it provided an adequate explanation of the basis for the "all others" rate. In
this regard, China relies upon the same arguments as it did in relation to the United States' claim
under Article 6.9 of the Anti-Dumping Agreement. In particular, China argues that MOFCOM could
provide only a general explanation in the final determination because the "all others" rate was based
upon confidential information of one of the responding companies. 397
(e) Arguments of the third parties
(i) Japan
7.417 According to Japan, under Article 12.2.2 of th e Anti-Dumping Agreement the reasons for all
factual and legal issues related to an authority's final determination must be disclosed. Authorities
cannot pick and choose the issues on which they will provide an explanation.398
(ii) Saudi Arabia
7.418 According to Saudi Arabia, the public notices referred to in Article 12.2.2 of the Anti-
Dumping Agreement must contain sufficient detail to allow interested parties to discern either the
significance or lack thereof of the factors the inv estigating authority was obligated to address in its
analysis.
399
(f) Evaluation by the Panel
7.419 The United States argues that China acted in consistently with its obligations under
Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement on the basis that MOFCOM did not provide
the factual and legal basis underlying its resort to "facts available" for the purposes of calculating the
"all others" dumping rate for unknown exporters.
400
7.420 We note that a number of other panels have ex ercised judicial economy in relation to claims
under Articles 12.2 or 12.2.2 of the Anti-Dumping Ag reement in circumstances where a substantive
inconsistency with another provision of the Anti-Dumping Agreement has been found. 401 However,
in the circumstances of this case, the Panel is of the view that findings under the public notice
provisions may be relevant in the context of implem entation. Consequently, we consider that such
findings will be useful in reaching a positive solution to the dispute and therefore we will proceed to
examine the United States' claims in this regard.402
7.421 The information in the preliminary determinati on relating to the "all ot hers" dumping rate is
set forth in paragraph 7.405 of this Report. The fi nal determination states that for those United States
companies that neither responded to the inv estigation nor submitted questionnaire responses,

397 China's first written submission, paras. 247-248 a nd China's opening statement at the first meeting
of the Panel, para. 47. See also, summary of China's argument at para. 7.399 of this Report.
398 Japan's third party submission, para. 26.
399 Saudi Arabia's third party submission, para. 44.
400 In its first written submission, the United States quotes the text of Article 12.2 of the Anti-Dumping
Agreement. Although in paras. 180 and 182 of its first written submission the United States refers to
"Article 12" of the Anti-Dumping Agreement, the arguments in paras. 179-180 are based on the text of
Article 12.2. Therefore, we infer that the United States' reference to Article 12 in paras. 180 and 182 is intended
to be a reference to Article 12.2, and we have made a finding accordingly. This is consistent with the
United States' panel request (see WT/DS414/2, para. 11).
401 See, for example, Panel Report, EC – Bed Linen, para. 6.259.
402 See also, the United States' response to Panel question 29.

MOFCOM applied "the best information ava ilable and facts already known and [used] the
information submitted by the responding companie s to make determination on dumping and dumping
margin".
403
7.422 The United States' position is that the prelim inary and final determinations should have
disclosed the factual and legal basis for MOFCOM's resort to "facts available", including the facts
supporting a finding that the unknown exporters refused access to, or otherwise did not provide,
necessary information within a reasonable period, or significantly impeded the investigation.404
7.423 Although the United States' claim relates to bot h the preliminary and final determinations,
given that it is the final determination that is currently in force and providing the basis for the
imposition of anti-dumping duties, we consider it necessar y to make findings only in relation to it. In
our view, making a finding in relation to the pr eliminary determination would not assist in the
securing a positive solution to the dispute.
7.424 The decision to resort to facts available to determine the existence and the margin of dumping
in relation to "all other" exporte rs is one step in the process leading to the imposition of a final
measure, within the meaning of Article 12.2.2 of the Anti-Dumping Agreement. In the Panel's view,
the final determination did not set forth "all rele vant information on matters of fact" or the
"findings…reached on all issues of fact" s upporting the conclusion th at unknown, indeed non-
existent, exporters refused to provide necessary information or otherwise impeded the investigation.
7.425 Further, the final determination does not set fort h the relevant matters of fact, or the findings
and conclusions reached on all issues of fact, lead ing to the conclusion the 64.8% was the appropriate
anti-dumping margin for "all other" exporters. Al though the final determination states that best
information available was used, including informa tion submitted by the responding companies, it is
now clear that MOFCOM applied adverse facts available to calculate the dumping margin. However,
there is no indication of this in the final determination and it still re mains unclear exactly what factual
findings MOFCOM made to support a dumping of marg in of 64.8%, which differs markedly from the
rate calculated for the two respondent companies.
7.426 Consequently, the Panel concludes that MOFCOM did not disclose in "sufficient detail the
findings and conclusions reached on all issues of fact" or "all relevant information on matters of fact".
Therefore, we find that China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping
Agreement.
H. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE VI:2 OF THE GATT 1994
1. Provision at issue
7.427 Article VI:2 of the GATT 1994 provides, relevantly:
In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in amount than the margin of dumping in
respect of such product.

403 Final Determination, Exhibit CHN-16, p. 31.
404 United States' first written submission, para. 181.

2. Arguments of the United States
7.428 The United States claims that Ch ina acted inconsistently with Article VI:2 of the GATT 1994
because the duties China levied on the "all other" companies that were unknown to the investigating
authority were greater in amount than the appropriate margin of dumping.
7.429 The United States refers to its argument that China impermissibly assigned an adverse facts
available margin of 64.8% when calculating the "a ll others" margin for companies that were unknown
to the investigating authority. As a result of the adverse assumptions made in this calculation, the
anti-dumping duty levied on the unknown companies was greater in amount than the margin of
dumping that could have permissibly been calculated under the Anti-Dumping Agreement.
405
3. Arguments of China
7.430 In response to the United States' claim under Article VI:2 of the GATT 1994, China refers the
Panel to its substantive arguments regarding the "all others" anti-dumping duty rate.406
4. Evaluation by the Panel
7.431 The United States' claim under Article VI:2 of the GATT 1994 challenges the amount of the
anti-dumping duty levied by MOFCOM on the "all other" unknown exporters. The Panel has
previously concluded that the manner in which MOFCOM calculated the "all others" anti-dumping
duty rate, and the way in which it disclosed the facts underlying this calculation, are inconsistent with
both substantive and procedural provisions of the Anti-Dumping Agreement, namely Articles 6.8, 6.9
and 12.2.2.
7.432 Given that we have upheld the United States' claims under the Anti-Dumping Agreement with
respect to the "all others" anti-dumping duty rate, it is not necessary also to make a finding with
respect to this measure under Article VI:2 of the GATT 1994. The Appellate Body found in Canada
– Wheat Exports and Grain Imports that the practice of judicial economy "allows a panel to refrain
from making multiple findings that the same measure is inconsistent with various provisions when a
single, or a certain number of findings of inconsistency, would suffice to resolve the dispute". 407 In
our view, the findings made under Articles 6.8, 6.9, 12.2 and 12.2.2 of the Anti-Dumping Agreement
with respect to the "all others" anti-dumping duty rate are such as to allow the DSB to make
sufficiently precise recommendations and rulings in or der to ensure the effective resolution of this
dispute.408 Therefore, we exercise judicial economy in relation to the United States claim under
Article VI:2 of the GATT 1994.

405 United States' first written submission, para. 185.
406 China's first written submission, para. 251.
407 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 133.
408 See also, Appellate Body Reports, Brazil – Retreaded Tyres, para. 257 and Australia – Salmon,
para. 223.

I.
WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 12.7, 12.8, 22.3 AND 22.5 OF THE
SCM AGREEMENT IN RELATION TO THE "ALL OTHERS " RATE FOR UNKNOWN EXPORTERS IN
THE COUNTERVAILING DUTY INVESTIGATION
1. Whether China acted inconsistently with Article 12.7 of the SCM Agreement in using
facts available to calculate the subsidy rate for unknown exporters
(a) Provision at issue
7.433 The United States' claim relates to Article 12.7 of the SCM Agreement. Article 12.7
provides:
In cases in which any interested Member or interested party refuses access to, or
otherwise does not provide, necessary info rmation within a reasonable period or
significantly impedes the investigation, preliminary and final determinations,
affirmative or negative, may be made on the basis of facts available.
(b) Factual Background
7.434 In calculating the subsidy rates, MOFCOM applie d "facts available" to both the investigated
and the "unknown" exporters, although the rationale for doing so, and the "facts available" relied
upon, were different for the two categories of exporters. MOFCOM's method for notifying the
initiation of an investigation was the same as that outlined in relation to the anti-dumping
investigation, described at para graph 7.371 of this Report. We recall that, apart from AK Steel and
ATI, no United States producers/exporters of GOES re gistered for investigation. As a result, in
calculating the "all others" subsidy rate for prod ucers/exporters other than AK Steel and ATI,
MOFCOM applied "facts available".
(c) Arguments of the United States
7.435 The United States notes that in its final dete rmination MOFCOM publis hed an "all others"
subsidy rate of 44.6%, a rate more than two times higher than the hi ghest rate for an investigated
company. MOFCOM provided no explanation regard ing how it arrived at this figure, apart from a
reference indicating that it had made use of "facts available".409
7.436 The United States argues that the use of facts available in calculating the "all others" rate is
inconsistent with Article 12.7 of the SCM Agreement. MOFCOM appears to have determined that by
failing to register as respondents, "all other" prod ucers/exporters failed to provide MOFCOM with
necessary information and thereby triggered the use of facts available. However, the United States'
position is that, read in the context of Article 12. 1, the use of facts available under Article 12.7 is
conditioned on the investigating authority specifyi ng in sufficient detail the information required and
alerting the interested party that failure to supply such information will result in a determination based
on facts available. 410 According to the United States, apart from AK Steel and ATI, MOFCOM did
not identify the existence of any other United St ates exporters/producers of GOES. Indeed, the
United States notes China's response to a Panel ques tion, in which it acknowledges that "there are no
other U.S. producers" of GOES, apart from AK Steel and ATI. According to the United States, this

409 United States' first written submission, para. 124.
410 United States' first written submission, para. 129.

begs the question of what basis China had to appl y adverse facts available to non-existent entities for
failure to cooperate.411
7.437 Even if it were appropriate for MOFCOM to make use of facts available, the United States
maintains that the manner in which MOFCOM applie d facts available was incorrect. According to
the Appellate Body in Mexico – Anti-Dumping Measures on Rice , in applying facts available, all
substantiated facts on the record of the investigation must be taken into account and "facts available"
must only fill in information an interested part y refused access to or failed to provide. The
United States argues that to obtain a facts availa ble subsidy rate of 44. 6%, MOFCOM must have
included in its calculation the unsupported factual assertions contained in the petition, relating to
subsidy programmes that MOFCOM ultimat ely found to be non-countervailable. 412 I n s o d o i n g ,
MOFCOM ignored substantiated facts on the record , namely that certain programmes did not provide
specific subsidies.413
(d) Arguments of China
7.438 In response to the United States' argument that MOFCOM did not give notice to all interested
parties before applying facts available, Chin a responds that MOFCOM provided notice to the
United States Government, AK Steel and ATI. It also placed a copy of the petition in its public
reading room and published public notices of initiation. On this basis, China concludes that "notice
was thereby given to each known interested party".414
7.439 In relation to the United States' complaint th at the manner in which MOFCOM applied facts
available was inconsistent with Article 12.7 of the SCM Agreement because substantiated facts on the
record were ignored, China confirms that the facts are "as identified by the United States". Further, in
response to a Panel question, China explicitly acknow ledges that "the 'all others' subsidy rate for
unknown exporters contained programmes found by MOFCOM not to confer countervailable
subsidies on the two known respondents".415
(e) Arguments of the Third Parties
(i) European Union
7.440 The European Union argues that the inclusion of programmes found during the course of the
investigation not to be countervailable in the calcula tion of the all others subsidy rate constitutes an
abusive use of facts available, contrary to Article 12.7 of the SCM Agreement.416
(ii) India
7.441 According to India, the conclusion that can be drawn from Article 6.8 and paragraph 1 of
Annex II of the Anti-Dumping Agreement, namely th at facts available may not be applied to an

411 United States' second written submission, para. 120. In the United States' response to Panel
question 13, the United States submits that even though it knows of no other producers of GOES, apart from AK
Steel and ATI, the "all others" rates would apply to any new United States shipper of GOES to China.
412 United States' second written submission, para. 124.
413 United States' first written submission, paras. 136-137.
414 China's first written submission, para. 238 and Chin a's opening statement at the first meeting of the
Panel, para. 43.
415 China's response to Panel question 14, para. 48 . See also, China's first written submission,
para. 239, where China indicates that the "all others" rate was derived from the estimate of the subsidy margin
found in the petition and based on all programmes under investigation.
416 European Union's third party submission, para. 16.

interested party that has not b een asked to submit any informa tion, can also be drawn from
Article 12.7 of the SCM Agreement.
417
(iii) Japan
7.442 According to Japan, the "basic discipline" unde r the Anti-Dumping Agreement, namely that
an investigating authority may not use facts av ailable to determine the margin of dumping for
exporters/producers that were not given notice of th e information required of them, also applies under
the SCM Agreement, by virtue of Articles 12.1 and 12.7. This is supported by the Appellate Body's
comment in Mexico – Anti-Dumping Measures on Rice that "it would be anomalous if Article 12.7 of
the SCM Agreement were to permit the use of 'facts available' in countervailing duty investigations in
a manner markedly different from that in anti-dumping investigations".418
(iv) Korea
7.443 According to Korea, Article 12.7 is concer ned with due process, and the Panel should
carefully review whether the due process rights have been adequately respected in this case.419
(v) Saudi Arabia
7.444 In Saudi Arabia's view, the standards that appl y to the use of facts available in anti-dumping
proceedings apply equally to countervailing duty proceedings. Further, facts available should only be
used to fill in gaps in the necessary information and must not be used in a punitive manner.420
(f) Evaluation by the Panel
7.445 The United States' claim under Article 12.7 of the SCM Agreement raises two questions for
the Panel to determine. First, whether the conditi ons for the application of facts available to the
unknown exporters were met and second, whether the manner in which facts available were applied
was consistent with Article 12.7.
(i) Whether the conditions for the application of facts available were met
7.446 The Panel recalls that the investigating author ity took the same steps to attempt to notify
interested parties as it did in the context of the anti-dumping investigation. 421 The United States'
claim raises the question of whether, despite the ab sence in the SCM Agreement of an equivalent to
Annex II of the Anti-Dumping Agreement, an investig ating authority is required to notify interested
parties of the "necessary information" before th e investigating authority may resort to facts
available.422 In this regard, the Panel considers that Article 12.1 provides relevant context for the
interpretation of "necessary information" in Article 12.7. In particular, Article 12.1 provides that
interested parties "shall be given notice of the information which the authorities require". This
confirms that it is for the investigating author ities to define the parameters of the "necessary
information" and to give interested parties notice of this information. Ther efore, even in the absence
of an equivalent to Annex II, the Panel consider s that a similar conclusion to that reached under
Article 6.8 of the Anti-Dumping Agreement is appropr iate. In particular, in the absence of being
notified of the "necessary information" in the context of a particular investigation, it is difficult to
conclude that unknown exporters refused access to or failed to provide necessary information or

417 India's third party statement, paras. 6.3-6.4.
418 Japan's third party statement, para. 16.
419 Korea's third party statement, para. 10.
420 Saudi Arabia's third party submission, paras. 14, 16 and 20-21.
422 This issue is also considered at para. 7.289 of this Report.

otherwise impeded the investigation. Indeed, in th e circumstances of this case, where there were in
fact no other exporters/producers of GOES during th e period of investigation, apart from AK Steel
and ATI, a conclusion that non-existent exporters refused to provide information or impeded the
investigation seems illogical.423
7.447 We note that our conclusion finds support in the reasoning used by other panels to have
considered Article 12.7 of the SCM Agre ement. In particular, the panel in Mexico – Anti-Dumping
Measures on Rice noted that exporters not given notice of th e information required of them cannot be
considered to have failed to provide necessary information. 424 Further, in US – Anti-Dumping and
Countervailing Duties (China), the United States' investigating authority did not request specific
necessary information because it did not realize the need for such information until late in the
investigation. The panel held that this circumstance did not warrant the resort to facts available. The
panel noted that Article 12.7 of the SCM Agreement permits recourse to facts available only when an
interested party (i) refuses access to necessary information within a r easonable period; (ii) otherwise
fails to provide such information within a reaso nable period; or (iii) significantly impedes the
investigation.425 The panel held that the exporters in question did not refu se access to necessary
information. Rather, it was clear that the investig ating authority did not ever request the information
to be provided. 426 Consequently, the panel found that n one of the conditions permitting the recourse
to facts available were satisfied and the United States had acted inconsistently with Article 12.7.427
7.448 In sum, the Panel concludes that in applying "facts available" to exporters that were not
notified of the information required of them, and that did not refuse to provide necessary information
or otherwise impede the investigation, China act ed inconsistently with Article 12.7 of the SCM
Agreement.
(ii) The manner in which facts available were applied
7.449 In the Panel's view, the United States' has a strong claim that MOFCOM applied facts
available in a manner inconsistent with Article 12.7 of the SCM Agreement by including programmes
found by MOFCOM not to confer countervailable s ubsidies in the calculation of the "all others"
subsidy rate. Indeed, China does not seriously co ntest this aspect of the United States' case, but
merely confirms that the calculation of the "all others" subsidy rate occurred in this manner.
7.450 The Panel recalls the Appe llate Body's findings in Mexico – Anti-Dumping Measures on Rice
regarding the way in which facts available may be applied under Article 12.7 of the SCM Agreement.
The Appellate Body noted that although the SCM Agreement does not include an equivalent to
Annex II of the Anti-Dumping Agreement, this does not mean that there are no conditions under the
SCM Agreement to govern which "facts" might be "a vailable" for an investigating authority to use
when a respondent fails to provide necessary information. 428 According to the Appellate Body,
Article 12 of the SCM Agreement "set[s] out eviden tiary rules that apply throughout the course of
the…investigation". 429 The Appellate Body held that the due process obligation under Article 12.1,
namely that an interested party be permitted to present all the evidence it considers relevant,
concomitantly requires that the investigating au thority, where appropriate, take into account the
information submitted by an interested party. Furt her, the Appellate Body found that Article 12.7 is
intended to ensure that the failure of an inter ested party to provide necessary information does not

423 See China's response to Panel question 13, para. 47.
424 Panel Report, Mexico – Anti-Dumping Measures on Rice, footnote 211.
425 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 16.9.
426 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 16.15.
427 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 16.16.
428 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 291.
429 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 292.

hinder an agency's investigation. Therefore, the provision permits the use of facts available only for
the purpose of replacing information that may be missing, in order to arrive at an accurate
subsidization or injury determination.
430 The Appellate Body concluded that the recourse to facts
available does not permit an investigating author ity to use any information in whatever way it
chooses. The recourse to facts available is "not a licence to rely on only part of the evidence
provided".431 Rather, to the extent possible, an inves tigating authority making use of facts available
must take into account all of the substantiated facts on the record.
7.451 In the view of the Panel, the conclusion reach ed by the Appellate Body finds support within
the terms of Article 12.7 of the SCM Agreement. The fact that resort to facts available is conditioned
on refusal to supply necessary information suggests that it should be used to replace only that
information to which the refusal relates. Further, the Panel accords significance to the fact that China
does not address the Appellate Body's findings or s uggest any reasons for the Panel to depart from
them, despite a specific Panel ques tion to China asking it to commen t on this aspect of the reasoning
in Mexico – Anti-Dumping Measures on Rice.432
7.452 Therefore, the Panel concludes that by ignoring substantiated facts on the record, namely that
certain programmes included in the application did not confer countervailable subsidies, China acted
inconsistently with Article 12.7 of the SCM Agreement.
2. Whether China acted inconsistently with Article 12.8 of the SCM Agreement by failing
to inform interested parties of the essentia l facts under consideration in calculating the
"all others" subsidy rate
(a) Provision at issue
7.453 Article 12.8 of the SCM Agreement provides:
The authorities shall, before a final determ ination is made, inform all interested
Members and interested parties of the essen tial facts under consideration which form
the basis of the decision whether to appl y definitive measures. Such disclosure
should take place in sufficient time for the parties to defend their interests.
(b) Factual Background
7.454 Following the preliminary determination, and prior to issuing its final determination,
MOFCOM issued a final disclosure document, in cluding certain disclosures regarding the subsidy
rates to be applied to the investigated companies and to the "unknown" exporters.
(c) Arguments of the United States
7.455 The United States explains that in its prelim inary determination, MOFCOM established an
"all others" subsidy rate of 12%. Prior to the final determination, MOFCOM released its final
disclosure document, in which it revealed that the "all others" subsidy rate had increased to 44.6%.
The only explanation given for the increase was that MOFCOM had relied on "facts available" in its
calculation.433 Although the United States objected to the unexplained increase, MOFCOM imposed

430 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 292-293.
431 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 294.
432 China's response to Panel question 15.
433 United States' first written submission, para. 144.

an "all others" subsidy rate of 44.6% in its final determination. MOFCOM explained that the rate was
calculated according to information submitted by the petitioner.434
7.456 The United States argues that MOFCOM did no t disclose the "essential facts" forming the
basis for its imposition of a 44.6% all others subs idy rate. The United States argues that this is
particularly troublesome given that MOFCOM ch anged its calculation, and the basis for its
calculation, including to the use of facts available, between the preliminary and final determinations,
resulting in a nearly quadrupling of the subsidy ra te. The United States and interested companies
were unable adequately to defend their interests be cause they were unaware of the factual basis for
MOFCOM's determination.435
(d) Arguments of China
7.457 In response to the United States' claim that MO FCOM failed to inform the parties of the
"essential facts" under consideration forming the basi s of the application and calculation of the all
others subsidy rate, China argues that the final discl osure and the final determination revealed that the
all others rate was based upon information disclosed by the petitioners. China states that in its
submissions, the United States readily identified this as the source of the information underlying the
all others rate.436
(e) Arguments of third parties
(i) European Union
7.458 The European Union agrees with the United Stat es on the "essential facts" that should have
been disclosed in relation to the "all others" subsid y rate. The European Union submits that if the
United States' allegations are conf irmed with respect to the lack of disclosure, China has acted
inconsistently with Article 12.8 of the SCM Agreement.437
(ii) Japan
7.459 In relation to the "all others" subsidy rate, Japan argues that the government actions which the
investigating authority characterizes as a subsidy, and the calculation of the per-unit ad valorem
subsidy rates, are "essential facts" to be discl osed in accordance with Article 12.8 of the SCM
Agreement.438
(iii) Saudi Arabia
7.460 Saudi Arabia notes that the disclosure of "essential facts" under Article 12.8 of the SCM
Agreement must occur prior to the final determinat ion, to allow sufficient time for parties to defend
their interests. 439

434 United States' first written submission, para. 145.
435 United States' first written submission, paras. 149-152.
436 China's first written submission, para. 240; China's opening statement at the first meeting of the
437 European Union's third party submission, paras. 17-20.
438 Japan's third party submission, paras. 23-24.
439 Saudi Arabia's third party submission, para. 25.

(f) Evaluation by the Panel
7.461 In its preliminary determination, MOFCOM est ablished an "all others" subsidy rate of 12%
for unknown exporters. In the final disclosure documen t, released prior to the final determination,
MOFCOM indicated that the rate had increased to 44.6%. The final disclosure stated:
"The margin for all other American comp anies was calculated based on information
submitted by the petitioners pursuant to artic le 21 of the CVD regulations" [where
Article 21 of the Chinese regulations pertains to the use of facts available].
440
7.462 According to the United States, MOFCOM should also have disclosed:
(i) the facts leading to the conclusion that the use of "facts available" was appropriate;
(ii) the facts leading to the conclusion that 44.6% was the appropriate subsidy rate; and
(iii) the facts underpinning the calculation of the 44.6% rate and the details of the
calculation.441
7.463 Article 12.8 of the SCM Agreement requires the disclosure of the essential facts under
consideration "which form the basis of the decisi on whether to apply definitive measures". We agree
with the statement of the panel in Mexico – Olive Oil that "essential facts" are those that underlie an
investigating authority's final findings and conclusi ons in respect of the essential elements that must
be present for the application of definitive measures. In the case of a countervailing duty
investigation, these elements are s ubsidization, injury and causation. 442 Given that an investigation
must be terminated and countervailing duties cannot be imposed where the amount of subsidization is
de minimis, the rate of subsidization also forms the basi s of the decision whether to apply definitive
measures. Therefore, the essential facts underlying an investigating authority's conclusions regarding
the amount of subsidization should also be disclosed under Article 12.8.
7.464 In our view, China acted inconsistently with the disclosure obligations under Article 12.8 of
the SCM Agreement. In particular, MOFCOM's finding of subsidization was based upon a number of
underlying facts, including those leading to the conclusion that the application of "facts available" was
warranted. In the circumstances of this case, wh ere China acknowledges that there were in fact no
other exporters of GOES, apart from AK Steel and ATI, it is not clear how non-existent exporters
failed to provide necessary information or otherw ise impeded the investigation. MOFCOM should
have disclosed the facts leading to this conclusion in order to allow interested parties to defend their
interests.
7.465 Further, the "facts available" actually relied upon by MOFCOM, resulting in a subsidy rate of
44.6%, should have been disclosed in accordance w ith Article 12.8 of the SCM Agreement. Given
the significant increase in the "all others" subsidy ra te between the preliminary determination and the
final disclosure, and the large disparity between the all others "facts available" subsidy rate and the
rates calculated for the known exporters, a more detailed disclosure of the "essential facts" under
consideration leading to an "all others" rate of 44.6% was required to allow the United States to
defend its interests.

440 Final Disclosure document, Exhibit US-26, p. 41.
441 United States' first written submission, para. 148 and United States' opening statement at the first
442 Panel Report, Mexico – Olive Oil, para. 7.110.

7.466 Therefore, the Panel finds that China acted inconsistently with Article 12.8 of the SCM
Agreement in failing to disclose certain essential fact s underlying its decision to apply an "all others"
subsidy rate of 44.6%.
3. Whether China acted inconsistently with Ar ticles 22.3 and 22.5 of the SCM Agreement
in relation to the public notice and explanatio n of its determination of the "all others"
subsidy rate
(a) Provisions at issue
7.467 Articles 22.3 and 22.5 of the SCM Agreement provide:
22.3 Public notice shall be given of an y preliminary or final determination,
whether affirmative or negative…Each such notice shall set forth, or otherwise make
available through a separate report, in suffi cient detail the findings and conclusions
reached on all issues of fact and law considered material by the investigating
authorities.
22.5 A public notice of conclusion or suspen sion of an investigation in the case of
an affirmative determination providing for the imposition of a definitive duty…shall
contain…all relevant information on the ma tters of fact and law and reasons which
have led to the imposition of final m easures…due regard being paid to the
requirement for the protection of confiden tial information. In particular, the
notice…shall contain…the reasons for the acceptance or rejection of relevant
arguments or claims made by…the exporters and importers.
(b) Factual Background
7.468 Following the issuance of the preliminary dete rmination and the final disclosure documents,
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing
duty investigations.
(c) Arguments of the United States
7.469 The United States claims that China acted inconsistently with Articles 22.3 and 22.5
443 of the
SCM Agreement on the basis that MOFCOM did not provide, in the public notice of the final
determination, any rationale for its decision to apply adverse facts available to "all other"
United States producers/exporters of GOES. Furt her, the final determination did not include
information on the facts and reasons that led MOFCOM to conclude that a 44.6% subsidy rate was an
appropriate "all others" rate, an explanation of which was particularly necessary given that the subsidy
rates for the two respondent companies were substa ntially lower. The United States also complains
that MOFCOM did not reveal the facts underpinning the calculation of the 44.6% rate and the details
of the calculation itself. 444 The United States argues that MOFCOM's failure is particularly
troublesome given that MOFCOM changed its "all ot hers" rate calculation, and the basis for it,
between the preliminary and final determinations.445

443 United States' response to Panel question 30.
444 United States' response to Panel question 30, para. 50.
445 United States' response to Panel question 30, para. 52.

(d) Arguments of China
7.470 China does not provide arguments in response to the United States' claim.
446
(e) Arguments of third parties
(i) Japan
7.471 Japan notes that under Article 22.5 of the SCM Agreement, the reasons for all factual and
legal issues related to an authority's final determ ination must be disclosed. Authorities cannot pick
and choose the issues on which they will provide an explanation.447
(f) Evaluation by the Panel
7.472 The United States' claims under Articles 22.3 and 22.5 of the SCM Agreement relate to the
explanation in the final determination regarding th e "all others" subsidy rate for unknown exporters.
The final determination states "[f]or other U. S. companies who did not submit questionnaire
responses, the Investigating Authority made a determination on Ad Valorem subsidy rate according to
the information submitted by the Petitioners pursue to Article 21 of the Anti-Subsidy Regulations "
(where Article 21 relates to the use of facts available).448
7.473 Articles 22.3 and 22.5 of the SCM Agreement require that the public notice of a final
determination (or otherwise a separate report), set forth in sufficient detail the findings and
conclusions reached on all issues of fact and law cons idered material by the investigating authorities.
Article 22.5 also requires that the reasons leading to the imposition of final measures be disclosed.
7.474 The final determination does not set forth the relevant matters of fact leading to the
conclusion that 44.6% was the appropriate subsidy ra te for "all other" exporters. Although the final
determination states that the "all others" subsid y rate was based upon information submitted by the
applicants, it is now clear that this included information on programmes that MOFCOM had found
not to constitute countervailable subsidies. Howeve r, there was no indication of this in the final
determination and it was not clear from the determin ation what relevant facts led to an "all others"
rate that was substantially higher than the subs idy rate calculated for the two known exporters.
Consequently, the Panel concludes that MOFCOM di d not disclose in "sufficient detail the findings
and conclusions reached on all issues of fact" or "all relevant information on matters of fact".
Therefore, China acted inconsistently with Articles 22.3 and 22.5 of the SCM Agreement.
J. PRICE EFFECTS ANALYSIS
1. Whether China acted inconsistently with Ar ticles 15.1 and 15.2 of the SCM Agreement
and Articles 3.1 and 3.2 of the Anti-Dum ping Agreement in relation to MOFCOM's
analysis of the price effects of subject imports
(a) Introduction
7.475 MOFCOM conducted a single injury and causation analysis pertinent to both the anti-
dumping and countervailing duty inves tigations. Further, a cumulative assessment of injury was
performed, which collectively took into account GOES imports from both the United States and

446 See Part F of China's first written submission, where China responds on ly to the claims under
Articles 12.7 and 12.8 of the SCM Agreement in rela tion to MOFCOM's determination of the "all others"
countervailing duty rate for unknown exporters.
447 Japan's third party submission, para. 26.
448 Final Determination, Exhibit US-28, p. 49.

Russia. In its final determination, MOFCOM f ound that China's GOES industry sustained material
injury and that there was a causal link between th is injury and the dumped imports of GOES from
Russia, and the dumped and subsidized imports of GOES from the United States. In the course of its
injury analysis, MOFCOM found that the effect of subject imports was to "significantly depress[] and
suppress[] the price of domestic like products."449
7.476 The United States challenges MOFCOM's finding that the dumped and subsidized imports
had significant price effects. In particular, the United States challenges MOFCOM's findings on price
undercutting, price depression and price suppression. The United States contends that MOFCOM's
analysis of these price effects is conclusory, fails to reflect an objective examination of the evidence,
and is not based on positive evidence. The United States contends that MOFCOM's price effects
analysis is therefore contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement, and
Articles 15.1 and 15.2 of the SCM Agreement.
7.477 China submits that MOFCOM properly found adverse price effects from the increasing
volume of subject imports. In particular, China asserts that MOFCOM properly found price
suppression and price depression in 2008 and 2009. China submits that MOFCOM did not make
specific findings about price undercutting, and w as not required to do so. Furthermore, China
contends that even if the Panel were to find MOFCOM's analysis of price effects to be WTO-
inconsistent, the Panel should still affirm the ove rall finding of causation under Article 3 of the Anti-
Dumping Agreement and Article 15 of the SCM Agreement.
(b) Provisions at issue
7.478 Articles 3.1 and 3.2 of the Anti-Dumping Agreement provide:
3.1 A determination of injury for purposes of Article VI of GATT 1994 shall 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) th e consequent impact of these imports on
domestic producers of such products.
3.2 With regard to the volume of the dumped imports, the investigating
authorities shall consider whether there h as been a significant increase in dumped
imports, either in absolute terms or re lative to production or consumption in the
importing Member. With regard to the effect of the dumped imports on prices, the
investigating authorities shall consider wh ether there has been a significant price
undercutting by the dumped imports as compar ed with the price of a like product of
the importing 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. No one or several of these factors can necessarily
give decisive guidance.
7.479 Articles 15.1 and 15.2 of the SCM Agreement are identical, except that the phrase "dumped
imports" is replaced by the phrase "subsidized imports".
(c) Arguments of the United States
7.480 The United States submits that Article 3.1 of the Anti-Dumping Agreement and Article 15.1
of the SCM Agreement impose two important requirements regarding injury determinations. The first
is that the determination be based on "positive evid ence", which the Appellate Body has described as

449 Final Determination, Exhibit CHN-16, page 59.

evidence that is "relevant and pertinent with resp ect to the issue being decided, and that has the
characteristics of being inheren tly reliable and trustworthy".
450 The second requirement is that the
injury determination involve an "objective examinat ion" of the volume of the dumped or subsidized
imports, their price effects and the impact on th e domestic industry. The Appellate Body has found
that an "objective examination" must be conducted in good faith, must be based on data that provides
an accurate and unbiased account of what is being examined and must be conducted without
favouring the interests of any particular party.451
7.481 The United States also notes that Article 3.2 of the Anti-Dumping Agreement and
Article 15.2 of the SCM Agreement describe in furt her detail the nature of the examination that
authorities must conduct to determine the price e ffects of dumped or subsidized imports. In
particular, the investigating authority must cons ider whether the imports have resulted in price
undercutting, price depression or price suppression in the domestic market. The United States
challenges each of these three alleged aspects of MOFCOM's analysis. 452 In doing so, the
United States first establishes that MOFCOM's de termination was indeed based on both volume and
price effects, rather than volume effects only.
(i) Price Undercutting
7.482 The United States notes that MOFCOM does not expressly make a finding of significant price
undercutting. Nevertheless, the United States argues that several of its findings suggest that an
essential predicate of the price effects analysis is that the prices for the imports under investigation
were lower than the prices of domestically produced products. The United States notes that China has
acknowledged that MOFCOM made findings a bout the "low prices" of subject imports. 453 According
to the United States, MOFCOM purported to rely on in formation about the price levels of the imports,
and found that these price levels were "low" in comparison with the domestic like product.
7.483 Furthermore, although the United States accepts the proposition (as argued by China) that an
investigating authority can make a finding of si gnificant price effects without finding significant
underselling, the United States relies on the panel report in EC – Salmon (Norway) to argue that the
question of significant price underselling must in any event be considered (even if there is ultimately
no determination that significant price underselling ex ists). Furthermore, the United States contends
that examination of relative price levels of the domestically produced product and the imports under
investigation is an important element in ascerta ining whether price depression or suppression is
actually the effect of the imports, as opposed to some other factor.
7.484 With respect to the substance of MOFCOM 's alleged price undercutting findings, the
United States argues that MOFCOM never disclosed any underlying facts that would support the
finding that the exporters of GOES adopted a "low pr ice" strategy. There is no indication regarding
how MOFCOM conducted a price comparison and the only price comparison result reported is that
the imports under investigation were not priced lo wer than domestically produced products during the
first quarter of 2009. 454 Further, the United States contends that the undisclosed and unspecified
"records" of the petitioners in which the low price strategy of the exporters is allegedly reflected

450 United States' first written submission, para. 207.
451 United States' first written submission, para. 208.
452 United States' first written submission, para. 209.
453 China's first written submission, para. 296. See also, China's opening statement at the first meeting
of the Panel, para. 57.
454 United States' first written submission, paras. 210-211.

cannot constitute positive evidence of low "prices" absent some proof that the records reflect the
prices actually charged by the exporters.455
(ii) Price Depression
7.485 The United States makes arguments about both (i) the actual existence of significant price
depression during the period of investigation, and (ii) whether any such price depression can properly
be attributed to subject imports. According to the United States, it is not enough for the investigating
authority merely to demonstrate price depression. The authority must also establish that any price
depression was an effect of the dumped or subsidized imports.
7.486 Regarding the existence of significant price depression per se, the United States argues that
MOFCOM's price depression analysis is devoid of evid entiary support and is contradicted by the only
available evidence. The sole price depression finding made by MOFCOM was that "[b]ecause subject
merchandise was kept at a low price, and the import volumes of subject merchandise increased greatly
since 2008, domestic producers had to lower their pr ices to keep market shar e". The United States
notes MOFCOM's finding that domestic prices incre ased by 6.66% in 2007 and by 14.53% in 2008.
The United States contends that MOFCOM never ma de a finding that depression occurred in 2008.
The United States notes that, according to China, MOFCOM had quarterly domestic price data
showing that prices decreased by 15.3% in the last quarter of 2008.
456 However, the United States
contends that the only finding made by MOFCOM in respect of 2008 was that domestic prices
increased by 14.53% in that year. The United St ates asserts that, according to the information
disclosed by MOFCOM, the only period during which prices for domestically produced GOES
declined was the first quarter of 2009, when pri ces dropped by 30.25%. The United States further
asserts that MOFCOM failed to explain how any such price depression was "significant".
7.487 The United States asserts that MOFCOM purported to show that price depression was an
effect of subject imports by relying on comparis ons between "low" import prices and allegedly higher
prices for domestically produced products. The Un ited States contends that this finding was not
supported by positive evidence. The United States a sserts that MOFCOM did not collect information
in a manner designed to yield accurate or unbiased information about price levels. For instance,
nothing in MOFCOM's determinations indicates th at it relied upon actual pricing data. Rather,
MOFCOM references only average unit values for th e imports, without providing an explanation of
why average unit data was a reasonable proxy fo r pricing data. Further, MOFCOM relied upon
average unit values that were an aggregate of Russian and United States imports, even though
separate data would have been available.
457 Finally, MOFOCM collapsed all transactions for 2006,
2007 and 2008 into a single observation for each calenda r year. In the light of this, the United States
argues that MOFCOM manipulated the data to minimize its accuracy and comprehensiveness.458
7.488 Concerning the issue of whether any price depression in the last quarter of 2008 could
properly be attributed to subject imports, the Unite d States asserts that China does not contend, and
there is no indication in the portions of the MOFCOM record disclosed to the Panel, that MOFCOM
conducted any similar quarterly analysis concer ning other factors pertinent to whether price
depression was the effect of the imports. Withou t the comprehensive quarterly analysis that
MOFCOM failed to conduct, the record indicates no more than increasing imports were coincident
with increasing domestic prices for certain portions of 2008, but were coincident with declining prices
for other portions of 2008. In such circumstances, attributing the price declines for a portion of the
year to the imports under investigation is not a conc lusion that "is reasoned and adequate, in light of

455 United States' first written submission, para. 214.
456 See China's response to Panel question 33, para. 121.
457 United States' first written submission, paras. 216-217.
458 United States' first written submission, para. 221.

the evidence on the record and other plausible alternative explanations."
459 MOFCOM's use of
quarterly data for 2008 only for the purpose of exam ining domestic price leve ls "was selective and
provided only a part the picture" of what might have caused any pricing declines in the fourth
quarter.460 The United States contends that MOFCOM therefore failed to undertake an objective
examination of the data.
7.489 The United States notes MOFCOM's finding that price depression existed in the first quarter
of 2009. The United States contends, though, th at the import volume of GOES during this period,
relative to Chinese consumption, did not increase "greatly". The market share of imports increased by
1.17%, which was almost the same as the increase in the domestic industry's market share, namely
1.04%. Further, the price of the imports under i nvestigation during the first quarter of 2009 was in
fact higher than the prices for domestically produced products. 461 For these reasons, the United States
submits that price depression in the first quarter of 2009 could not properly be treated as an effect of
subject imports.
(iii) Price Suppression
7.490 As for price depression, the United States makes arguments about both (i) the actual existence
of significant price suppression during the period of investigation, and (ii) whether any such price
suppression can properly be attributed to subject im ports. According to the United States, it is not
enough for the investigating authority merely to de monstrate price suppression. The authority must
also establish that any price suppression was an effect of the dumped or subsidized imports.
7.491 The United States notes that MOFCOM's pr ice suppression conclusion concerning 2008,
namely that "the sales price for the domestic like product failed to cover rising costs", is not supported
by positive evidence. In particular, MOFCOM disclosed no information regarding the domestic
industry's cost levels during the period of investiga tion. In fact, the information that MOFCOM did
disclose indicates that pre-tax profits increased in 2008. The United States argues that this is not
consistent with the usual understanding of price s uppression, namely that prices and sales revenue do
not increase commensurately with cost. The United States argues that, contrary to the requirements of
Article 3.2 of the Anti-Dumping Agreement and Ar ticle 15.2 of the SCM Agreement, China did not
identify any evidence to demonstrate that the impor ts under investigation prevented price increases
that would otherwise have occurred.
462 The United States contends that, in the light of MOFCOM's
finding that domestic prices increased by 14.53% in 2008, MOFCOM would need to have established
that the imports under investigation precluded the domestic industry from achieving price hikes
significantly greater than 14.53%. This MOFCOM failed to do.
7.492 The United States contends that materials Chin a introduced to the Panel in connection with
the first written submission raise serious questions about whether MOFCOM's analysis of changes in
the "price-cost differential" was objective. MO FCOM's analysis assumes that the underlying cost
structure of the industry was static from 2007 to 2008, and that the only factors that changed were the
volume and pricing of the imports under investigation. According to the United States, though, there
were significant changes in the domestic industry's structure from 2007 to 2008. In particular, the
United States notes that, according to the appli cants, domestic producer Ba osteel began production
operations in May 2008.
463 When they begin production, steel production facilities frequently incur

459 The United States refers to the Appellate Body Report in US – Anti-Dumping and Countervailing
Duties (China), para. 516.
460 The United States refers in this regard to the Appellate Body Report in Mexico – Anti-Dumping
Measures on Rice, para. 176.
461 United States' first written submission, paras. 223-226.
462 United States' first written submission, paras. 229-230.
463 Application, Exhibit CHN-2, pp. 95, 102-03.

high start-up costs.464 The increased costs associated with a ne w facility can skew any analysis of the
industry's ability to recover costs. The United States asserts that MOFCOM apparently did not
examine, and certainly made no findings, whethe r the Chinese industry in 2007 and the Chinese
industry in 2008 were actually comparable for purpose of cost comparisons.
7.493 The United States contends that, even assuming arguendo that a comparison of 2007 and
2008 cost data is valid, China overlooks a central poi nt that is critical to the analysis required by
Article 3.2 of the Anti-Dumping Agreement and Ar ticle 15.2 of the SCM Agreement. In certain
circumstances, an industry may forego price increa ses for its own benefit, and not as a response to
import competition. If an industry can sell greater quantities exercising some price restraint – which
may be achieved either by cutting prices or by not fully passing through cost increases to purchasers –
its overall revenues and profits may increase despite the fact that the ratio of cost to sales revenues on
a per unit basis will also be rising. According to the United States, the experience of China's GOES
industry during 2008 illustrates this. During 2008, sales quantities of the Chinese GOES industry
increased by 5.04%. Because, as previously explai ned, the prices the domestic industry charged also
increased that year, sales revenues in creased by 20.3%. As a result, the industry's pre-tax profit
increased by 1.24% in 2008.
465 Thus, the information disclosed by MOFCOM indicates that, because
it was able to garner additional sales, the Chin ese industry's financial c ondition improved in 2008
notwithstanding the increase in the per unit ratio of co st to sales revenues. In the light of these
circumstances, to satisfy the requirements of Ar ticles 3.2 and 15.2, MOFCOM needed to provide
some reasoned explanation of why the change in the per-unit ratio was significant. It did not do so.
7.494 With respect to MOFCOM's price suppression finding for the first quarter of 2009, the
United States argues that the finding was not based upon an objective examination of the record.
MOFCOM found that the "great increase" in quantit y of imports during the first quarter of 2009 was
the cause of the adverse change in the domestic industry's price-cost differential during the first
quarter of 2009. However, in reaching this c onclusion, MOFCOM relied on data relating to only
three months of a 39 month period of investigation. 466 According to the United States, an analysis of
the entire data set for the period of investigation as a whole indicates that there was not a sufficient
nexus between increasing quantities of subject merchandise and significant price suppression. For
example during the period 2006-2008, although the quantity of imports increased, the domestic
industry's prices and profits also increased.
467 Therefore, the evidence indicates that the Chinese
GOES industry was able to increase revenues more ra pidly than its costs rose, notwithstanding a large
increase in the quantity of imports under investigation. The United States argues that by confining its
examination to data relating to th e first quarter of 2009, MOFCOM's analysis was skewed and failed
to reflect an objective ex amination of the evidence.468 The United States also contends that, although
China argues that the 2009 data indicate a conti nuation of the price suppression found in 2008, the
absence of any basis for MOFCOM's finding of price suppression in 2008 also undermines its finding
of price suppression in the first quarter of 2009.
7.495 Furthermore, the United States submits that MO FCOM's stated reason for finding that the
increasing ratio of costs to sales revenues in the firs t quarter of 2009 was the effect of the subject
imports was the purported "low price" strategy adopted by the importers under investigation.
469 The

464 See "Scheduling a Successful Start-Up", Iron Age, July 1992, Exhibit US-40, p. 2 (noting that new
steel production facilities can be characterized by various start-up problems which can seriously impact
earnings).
465 Essential Facts Under Consideration Which Form the Basis of the Determination on Industry Injury,
5 March 2010, ("Final Injury Disclosure document"), Exhibit CHN-29, sec. VI(3), (5), (6).
466 United States' first written submission, paras. 231-232.
467 United States' first written submission, paras. 232-234.
468 United States' first written submission, paras. 234 and 236.
469 Final Determination, Exhibit CHN-16, sec. VI (Industry Injury)(III)(3).

United States recalls its argument (in respect of pr ice depression) that there is no positive evidence
that the imports followed a "low price" policy and China does not even attempt to defend this finding.
(d) Arguments of China
7.496 China argues that MOFCOM correctly analysed price effects and that the United States'
arguments to the contrary are without merit.
(i) Price undercutting
7.497 China notes that the United States' arguments concerning price undercutting rest on the
mistaken premise that MOFCOM made price under cutting findings. However, China submits that
MOFCOM relied on the low prices of subject imports only as a supporting factor and did not make a
specific finding of price undercutting.
470 Furthermore, China contends that MOFCOM had positive
evidence supporting its statements regarding "low prices". While China asserts that MOFCOM did
not go into as much detail about this secondary i ssue because it not make any detailed and specific
findings of price undercutting, China contends that the record clearly supported MOFCOM's
statements about "low price". China refers in this regard to evidence in th e public version of the
application which, according to China, was conf irmed by confidential information collected by
MOFCOM.
7.498 Further, contrary to the United States' argu ments, China contends that it was under no
obligation to find price underc utting under Article 3.2 of the Anti-Dumping Agreement or
Article 15.2 of the SCM Agreement. 471 In this regard, China notes that the United States itself
concedes that an authority is not required to make a determination of price undercutting. As to the
issue of whether or not price undercutting must be "considered", China disagrees with the finding by
the panel in EC – Salmon (Norway) that the question of price undercutting must be considered. China
contends that the text of both Article 3.2 and Artic le 15.2 uses the key term "or." In other words, the
authority "shall consider" either price undercutting or price depression or price suppression. Nothing
in the text suggests that all three must each be considered. An authority may "consider" price
depression and price suppression, and by doing so fully comply with the obligations in Article 3.2 and
Article 15.2. In addition, the United States' view th at analysis of price underc utting is essential is at
odds with the absence of any requirement for the authorities to use any particular methodology. To
the extent that an obligation to "consider" pr ice undercutting does exist, China contends that
MOFCOM's determination properly discussed the issu e of relative prices. After considering all the
facts, though, MOFCOM chose to base its determination on price depression and price suppression.
7.499 Furthermore, China submits that any con cerns about price undercutting do not affect
MOFCOM's conclusions about price depression or pr ice suppression. China contends that both price
depression and price suppression can occur regardless of whether subject import prices are higher or
lower than domestic prices.
7.500 Regarding the United States' argument that MO FCOM failed to engage in an analysis of
"transaction prices,"
472 China contends that MOFCOM did not pursue specific findings on price
undercutting in this particular case because it did not believe such findings were the most appropriate
analytic tool given the data available in this case. Moreover, MOFCOM also had to take into account
the fact that it would be conducting analysis b ased on cumulated subject imports, so that any
transaction specific data would be blurred and ob scured when combined on a cumulated basis. For

470 China's first written submission, paras. 255-256.
471 China's first written submission, para. 301.
472 United States' response to Panel question 32, para. 63.

both of these reasons, MOFCOM focused the broade r measure of average prices as reflected in
average unit values.
(ii) Price depression
7.501 China submits that MOFCOM properly made findings of price depression for 2008 and 2009
on the basis of positive evidence. Although the Un ited States argues that a price depression finding
was made only for 2009, China states that MOFCOM found price depression in both 2008 and 2009
and cites statements on the record to support this. China argues that the po sitive evidence to support
this finding was the domestic pricing data before MOFCOM. 473 Although in the final determination
MOFCOM's findings were based on average domestic prices over an annual basis, which did not
demonstrate price depression over 2008, China subm its that MOFCOM had collected quarterly data
showing that domestic prices fell by 15.3% in the last quarter of 2008.
474
7.502 In relation to the price depression finding for the first quarter of 2009, China submits that the
United States' arguments are related to causation and do not acknowledge the "undisputed fact" that in
early 2009 domestic prices fell by more than 30%. China further contends that, even if the gain in
subject import volume in early 2009 was modest relative to the market, 475 the increase was still an
increase of more than 23% compared to the comp arable period in 2008. Moreover, domestic prices
still fell sharply in early 2009. China contends th at the United States argument looks at early 2009 in
isolation, and ignores the fact that the 1.17 percenta ge point gain in market share was in addition to
the 5.6 percentage point increase in market share that had just taken place the year before. Even more
telling, the United States overlooks the impact of th e further gain in United States market share.
China asserts that the gain of 1.17 percentage points of market share over one quarter would annualize
to a gain of 4.7 percentage points – almost as large as the gain in subject import market share in 2008.
Moreover, the United States argument does not acknow ledge the effect of subject import volume in
2008 on prices in 2009. China asserts that, in the light of the large increase of subject imports in
2008 and the 5.5 percentage point gain of market share, domestic producers began 2009 concerned
about their shipments and market share and decided to lower prices to stop the loss of market share.
According to China, the underlying facts and MOFC OM's discussion of those facts mean that the
pricing trends in late 2008 and early 2009 need to be considered together.
7.503 China notes the United States argument that MOFCOM found that price depression was an
effect of the low price of subject imports. Ch ina asserts that price depression can occur with or
without price undercutting, in the sense that price depression does not depend on any comparison with
subject import price levels. China further asserts that price depression can result from the volume of
subject imports. China contends that the United St ates implicitly admits as much, when it argues that
the price depression "was not solely because imports were increasing." 476 China contends that this is
what MOFCOM found, in the sense that the volume of subject imports increased significantly in 2008
and began to capture market share, and the domestic industry reacted by lowering their prices to try to
retain market share, which lead to the price de pression. According to China, MOFCOM found that
the "sharp increase" in the volume of subject imports depressed domestic industry prices.
Furthermore, China submits that Article 3.2 of th e Anti-Dumping Agreement and Article 15.2 of the
SCM Agreement require only the showing of the existence of the adverse price effects – the declining
prices (price depression), or the price-cost squeeze and declining profitability (price suppression) –
and do not require any explanation as to the causes of these adverse price effects.

473 China's first written submission, paras. 280-288.
474 China's response to Panel question 33, para. 121.
475 United States' first written submission, para. 226.
476 United States' first written submission, para. 72 (emphasis added).

(iii) Price suppression
7.504 China contends that MOFCOM had positive evid ence for the findings of price suppression in
2008 and 2009. According to China, in relati on to the price suppression findings in 2008, the
United States ignores some of the evidence re lied upon by MOFCOM, and misunderstands other
aspects of it. In particular, the United States ignores the statement in the final determination that in
2008 domestic GOES products failed to absorb rising costs, resu lting in a 7% drop in the cost-price
differential. According to China, this was the positive evidence to support MOFCOM's price
suppression finding for 2008.
477 Further, China rejects the Unite d States' claim that MOFCOM failed
to disclose cost data, since the price-cost squ eeze documented by MOFCOM for both 2008 and the
first quarter of 2009 was demonstrated by the drop in per unit profits. China asserts that the fall in per
unit profits in the first quarter of 2009 was even more pronounced than the fall in 2008. China
contends that MOFCOM was entitled to analyse price suppression on the basis of per unit profits, as
neither Article 3.2 of the Anti-Dumping Agreement nor Article 15.2 of the SCM Agreement impose
any specific requirements as to the methodology for analysing the price suppression. China contends
that the United States misunderstands the data in argui ng that the small gain in pre-tax profits in 2008
is inconsistent with price suppression.
478
7.505 China denies that MOFCOM "assume[d]" that increasing subject imports "caused" the decline
in per unit profits. 479 Rather, MOFCOM explained that the significant increasing volume of subject
imports captured significant market share, and this volume of subject imports forced the domestic
industry to react by lowering its prices so as to stop the continued loss of market share. China asserts
that the prices were lowered because of this comp etition with subject imports , and were thus lower
than they otherwise would have been.
7.506 In relation to MOFCOM's price suppression findings for 2009, China contends that the
United States "essentially concedes the existence of price suppression in the first quarter of 2009". 480
According to China, the United States' arguments about the 2009 price suppression findings are
essentially arguments about causation, rather than th e existence of price suppression. China repeats
its argument that there is no need to show that a dverse price effects were caused by subject imports.
According to China, Article 3.2 of the Anti- Dumping Agreement and Article 15.2 of the SCM
Agreement require only the showing of the existence of the adverse price effects – the declining prices
(price depression), or the price-cost squeeze and declining profitability (price suppression) – and do
not require any explanation as to the causes of these adverse price effects.
(e) Arguments of third parties
(i) European Union
7.507 With respect to MOFCOM's price undercutting an alysis, the European Un ion notes that it is
unclear what evidence supports the comparative an alysis of prices mentioned by MOFCOM or the
finding of the exporters' strategy of charging low pr ices. According to the European Union, it seems
that MOFCOM did not rely on any information about act ual pricing levels. It is also not evident that
MOFCOM objectively evaluated the exporters' arguments.
481
7.508 The European Union also submits that it is not clear on what positive evidence MOFCOM
based its price depression analysis. MOFCOM did not specify the period to which its finding of price

477 China's first written submission, paras. 256-264.
478 China's first written submission, paras. 270-271.
479 United States' first written submission, para. 79.
480 China's first written submission, para. 275.
481 European Union's third party submission, paras. 40-41.

depression refers. Further, the available evidence do es not support the conclusion that such a finding
would apply to 2008 or the first quarter of 2009.482
7.509 The European Union argues that MOFCOM's price suppression findings do not seem to be
supported by positive evidence. For example, MO FCOM did not disclose any data concerning the
domestic industry's cost levels or trends. Furt her, MOFCOM does not seem to have provided an
explanation for its finding that in 2008, while the price of domestic products and producers' profits
were increasing, imports prevented greater pri ce increases than those which occurred. Finally,
MOFCOM's price suppression analysis appears to be based upon data concerning only the last three
months of the investigated period of 39 months.483
7.510 Therefore, the European Union agrees with the United States that MOFCOM's price
undercutting, price depression and price suppression an alyses are inconsistent with Articles 3.1 and
3.2 of the Anti-Dumping Agreement and 15.1 and 15.2 of the SCM Agreement.484
(f) Evaluation by the Panel
7.511 The United States claims that MOFCOM's pric e effects analysis is not based on positive
evidence and that, in conducting its price effects analysis, MOFCOM did not engage in an objective
examination of the evidence.
7.512 We begin by considering the relevant issu es regarding MOFCOM's finding of significant
price depression. We then turn to MOFCOM's finding of significant price suppression. Before
concluding, we also address the United States' cl aim regarding MOFCOM's alleged finding of price
undercutting.
7.513 In addressing these issues, we recall that it is well established that the role of the Panel is not
to conduct a de novo review nor simply defer to the conclusions of the investigating authority.
Rather, we must determine whether the explanation for the conclusions reached by the investigating
authority is reasoned and adequate in the light of other plausible alternative explanations. 485
Furthermore, we must determine whether the qua lity of the evidence relied on by MOFCOM met the
"positive evidence" standard set forth in Article 3.1 of the Anti-Dumping Agreement and Article 15.1
of the SCM Agreement. In this regard, we recall that in US – Hot Rolled Steel, the Appellate Body
clarified that "positive evidence" relates to the qua lity of the evidence that authorities may rely upon
in making a determination, and that the evidence "mus t be of an affirmative, objective and verifiable
character, and it must be credible". 486 In addition, the Appellate Body has referenced with approval a
description of "positive evidence" as "e vidence that is relevant and pertinent with respect to the issue
being decided, and that has the characteristics of being inherently reliable and trustworthy." 487 We
must also determine whether MOFCOM undertook an objective examination of the evidence. We
note that the Appellate Body has found that an "o bjective examination" must be conducted in good
faith, must be based on data that provides an accurate and unbiased account of what is being
examined, and must be conducted without favouring the interests of any particular party.488

482 European Union's third party submission, para. 43.
483 European Union's third party submission, paras. 44-45.
484 European Union's third party submission, paras. 42, 43 and 46.
485 See, for example, Appellate Body Report, US – Tyres (China), para. 280.
486 Appellate Body Report, US – Hot Rolled Steel, para. 192.
487 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 163-164.
488 United States' first written submission, para. 208.

(i) Price depression
7.514 The United States challenges both MOFCOM's finding of the existence of significant price
depression per se , and MOFCOM's finding that such price depression was an effect of subject
imports. We address each issue in turn.
 The existence of price depression per se
7.515 MOFCOM found that domestic prices rose and then fell 489 during the period of investigation.
Specifically, MOFCOM found that:
[C]ompared with the same period of the previous year, the price of domestic like
products increased by 6.66% and 14.53% in 2007 and 2008 respectively, and it
dropped by 30.25% in Q1 2009.490
7.516 The United States' arguments regarding the existence of price depression per se are focused
on the year 2008. The United States asserts that a ny finding of price depression in 2008 would be
inconsistent with the above-mentioned evidence that prices rose by 14.53% from 2007 to 2008. In
response, China argues that MOFCOM found price depression in both 2008 and the first quarter of
2009. Regarding the existence of price depression in 2008, China refers to evidence on MOFCOM's
record allegedly indicating that prices fell in the last quarter of 2008.
7.517 We do not consider it necessary to address the dispute between the parties regarding the
existence of price depression in 2008. Even if prices did not fall in 2008, MOFCOM's final
determination contains a finding that domestic prices did fall by 30.25% in the first quarter of 2009.
The United States has not challenged this finding. 491 Nor has the United States contended that
MOFCOM was not entitled to treat price depression of this magnitude as "significant" within the
meaning of Article 3.2 of the Anti-Dumping Agreem ent and Article 15.2 of the SCM Agreement. In
these circumstances, there is no basis for us to conc lude that MOFCOM's determination of significant
price depression could not rest on its finding that prices fell by 30.25% in the first quarter of 2009.
 Whether price depression was an effect of subject imports
7.518 Having upheld MOFCOM's finding of the ex istence of significant price depression per se, we
now consider the United States' claim against MOFC OM's finding that such price depression was an
effect of subject imports. We begin by ex amining whether the provisions relied on by the
United States, i.e. Article 3.2 of the Anti-Du mping Agreement and Article 15.2 of the SCM
Agreement, require an investigating authority to de monstrate that the relevant price depression is an
effect of subject imports. We then evaluate the relevant findings made by MOFCOM in the light of
the principal arguments of the parties. While MOFCOM found that significant price depression was
an effect of both the increase in volume of subject imports, and the low price thereof, the
United States' arguments relate primarily to MOFC OM's finding that subject imports were priced
lower than domestic products. Accordingly, we limit our examination to MOFCOM's finding that
price depression was an effect of the low price of subject imports. We complete our evaluation by
considering whether, even if MOFCOM's analysis of the price effects of subject imports was flawed,
MOFCOM's finding that price depression was an effect of subject imports might nevertheless stand

489 Final Determination, Exhibit CHN-16, p. 58.
490 Final Determination, Exhibit CHN-16, p. 58.
491 The United States' challenge regarding the first qu arter of 2009 is direct ed at MOFCOM's finding
that price depression was an effect of subject imports (see, for example, United States' first written submission,
para. 226).

on the basis of MOFCOM's analysis of the effect of the increase in the volume of subject imports in
depressing domestic prices.
Whether Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement
require an investigating authority to demonstrate that the relevant price depression is an effect
of subject imports.
7.519 The United States challenges MOFCOM's determin ation that the significant price depression
found to exist was an effect of subject imports. The United States' arguments are premised on its
position that, as a matter of law, an investigating authority is required by Article 3.2 of the Anti-
Dumping Agreement or Article 15.2 of the SCM Ag reement to demonstrate that any price depression
found to exist is an effect of subject imports. Ch ina denies that any such obligation is contained in
these provisions. According to China, the need to establish a link between price effects and subject
imports is part of the broader obligations in Article 15.5 of the SCM Agreement and Article 3.5 of the
Anti-Dumping Agreement to establish a causal link between subject imports and material injury
suffered by the domestic industry.
7.520 Having regard to the text of the relevant provisions, we note that the analysis envisaged by the
second sentence of Article 3.2 of the Anti-Dump ing Agreement and Article 15.2 of the SCM
Agreement concerns "the effect of the [dumped/ subsidized] imports on prices." Furthermore, the
authority must consider whether "the effect of [dumped/subsidized] imports is … to depress prices to
a significant degree". Accordingly, merely showi ng the existence of significant price depression does
not suffice for the purposes of Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the
SCM Agreement. An authority must also show that such price depression is an effect of the subject
imports.
7.521 In support of its argument that Article 3.2 of the Anti-Dumping Agreement and Article 15.2
of the SCM Agreement do not require an authority to show that adverse price effects are an effect of
subject imports, China relies on the statement by the panel in EC – Countervailing Measures on
DRAM Chips that:
Article 15.2 of the SCM Agreement does not, as such, require an investigating
authority to establish a causal link between the subsidized imports and the domestic
prices which would require it to examine all other factors affecting domestic prices at
the same time…. As written, Article 15.2 focuses on the effect of the subsidized
imports on prices.
492
7.522 In our view, the panel in EC – Countervailing Measures on DRAM Chips was dealing with a
different issue than the one at hand. In particular , that panel had to consider Korea's claim that the
European Communities should have examined a vari ety of factors known to have been affecting
domestic prices, in addition to subject imports. Th e panel reasoned that such analysis of all known
factors was not required under Article 15.2 of the SC M Agreement, but noted that such analysis was
required under Article 15.5 of the SCM Agreement. The Panel in the present case is not confronted
with this issue. The United States is not suggesti ng that MOFCOM should have considered the effect
of other known factors on domestic prices. The United States is merely suggesting that MOFCOM
was required, by Article 15.2 of the SCM Agreement, to consider the effect of subject imports on
prices. Furthermore, the panel's statement that "Article 15.2 focuses on the effect of subsidized
imports on prices" seems to be premised on the noti on that subject imports should, in the context of
Article 15.2 of the SCM Agreement, be shown to have an effect on domestic prices. Indeed, the very
next sentence in the panel's report (which was omitted by China) states that "[t]he EC examined the
effect of the subsidized imports on domestic prices and thus, in our view, complied with Article 15.2".

492 Panel Report, EC – Countervailing Measures on DRAM Chips, para 7.338.

Accordingly, we do not accept that the report of the panel in EC – Countervailing Measures on
DRAM Chips stands for the proposition that an authority is not required by Article 15.2 of the SCM
Agreement to show that the relevant price depression is an effect of subject imports. As a result, we
consider that the United States is entitled to pur sue a claim under Article 3.2 of the Anti-Dumping
Agreement and Article 15.2 of the SCM Agreemen t against MOFCOM's finding that the relevant
price depression was an effect of subject imports. We now examine the merits of this claim.
Whether MOFCOM properly found that price depr ession was an effect of the low price of
subject imports.
7.523 The United States' primary arguments against MOFCOM's finding that price depression was
an effect of subject imports relate to MOFCOM's analysis of the effect of the price of subject imports
on domestic prices, and MOFCOM's determination that subject imports were priced lower than
domestic products. The United States contends th at MOFCOM's findings are not based on an
objective examination of positive evidence.
7.524 In this regard, we note MOFCOM's finding that subject import prices were "low" relative to
domestic prices, and that there was a "pricing po licy" of setting subject import prices lower than
domestic prices. 493 According to China, these findings were based on positive evidence in the
application, and positive evidence collected by MOFCOM during its investigation. 494 W e s h a l l
examine the probative value of both types of evidence.
7.525 Turning first to evidence of "low" prices alle gedly found in the application, we note that
China refers to two tables showing that the weighted average price of imports from the United States
and Russia together, and from the United States separ ately, was lower than the average price charged
by the applicants during the period of investigation.
495 We note that this evid ence in the application
was not expressly referenced, or incorporated into , MOFCOM's final determination. Furthermore,
regarding the reliability of the evidence, we note th at the evidence indicates that subject import prices
were lower than domestic prices in both 2008 and the fi rst quarter of 2009. The fact that this is at
odds with MOFCOM's own finding that subject impor t prices were not less than domestic prices
during the first quarter of 2009496 undermines the reliability of the evidence. For these reasons, we do
not consider that the applicants' evidence could properly be treated as "positive evidence" supporting
MOFCOM's finding that price depression was an effect of subject imports.
7.526 Turning next to the evidence collected by MOFC OM during its investigation, we shall first
examine MOFCOM's reliance on a comparison of the average unit values ("AUVs") of subject
imports and domestic sales. We shall then examine MOFCOM's reliance on certain contractual
documents regarding an alleged "pricing policy" of setting subject import prices lower than domestic
prices.
7.527 Regarding the AUV data collected by MOFCOM, Ch ina asserts that this data revealed a gap
of 8 to 12% between the AUVs of subject imports and domestic sales.
497 Given the absence of any
such evidence in MOFCOM's final determination, the Panel asked China to provide the confidential
AUV data. In response, China provided ranges of the relevant AUVs, in order "to protect the
sensitive [Business Confidential Information] of s howing the exact level of the domestic AUV" of

493 See, for example, Final Determination, Exhibit CHN-16, pp. 58 and 59.
494 China's second written submission, para. 102.
495 Application, Exhibit CHN-2, p. 98.
496 Final Determination, Exhibit CHN-16, p. 70: "the Investigating Authority did not conclude that
import price of the product concerned was lower than the price of the domestic like product in Q1 of 2009".
497 China's second written submission, footnote 95 . The AUVs relied on by MOFCOM represent the
volume weighted average unit values for all transactions during a given calendar year.

each of the two domestic producers at issue. 498 Although China failed to respond fully to the Panel's
request,499 ultimately the Panel was able to address th e issues raised by the United States using the
more limited data provided by China.
7.528 We have a number of misgivings regard ing the AUV data relied on by MOFCOM,
particularly concerning MOFCOM's failure to cons ider the need for adjust ments to ensure price
comparability. First, we note that China has faile d to rebut the United States' argument that the
subject import and domestic AUVs we re fixed at different levels of trade. According to the
United States, the domestic AUVs reflected transact ions between the domestic producer and the end
user, whereas subject import AUVs were fixed at a higher level of trade, between the exporter and the
first Chinese purchaser, which is typically an importer who resells to end users. Second, we note that
the relevant AUVs included products of different gr ades, without any attempt by MOFCOM to adjust
for differences in physical characteristics. 500 The inclusion of different grades is reflected in Exhibit
US-41, which shows that the relevant grades were classified under at least two different tariff
headings. China did not contest any of the data set forth in that Exhibit.
501 Third, the determination
of a single price point intended to represent prices throughout the course of an entire year does not
provide a sufficiently precise basis, in our view, fo r comparing prices. Given the possibility of prices
varying over time, an objective and impartial investigating authority would rather conduct
contemporaneous price comparisons, or at least comparisons during a relatively short period of time.
7.529 China does not deny that MOFCOM failed to make any form of adjustment to ensure price
comparability. Rather, China argues that becau se MOFCOM did not make findings of price
undercutting, "price comparability did not arise as an issue". 502 China contends that adjustments were
not necessary because MOFCOM was not relying on th e magnitude of price undercutting, but simply
noting the existence 503 of price undercutting as a supporting fact for its findings on price depression,
price suppression, and causation.504
7.530 We are not persuaded by China's argument. China concedes that MOFCOM relied on the
existence of price undercutting. MOFCOM did so to show that price depression was an effect of the
low price of subject imports relative to the price of domestic products. Thus, even though MOFCOM
did not make a finding of significant price undercutting (i.e. price undercutting of a certain
magnitude), MOFCOM did rely on a finding that subject import prices undercut domestic prices. In
our view, a proper finding of the existence of pr ice undercutting necessarily entails a comparison of
prices,
505 and the authority should ensure that the prices it is using for its comparison are properly

498 China's 25 November 2011 response to question (a) of the Panel questions dated
18 November 2011, p. 1.
499 The panel notes that China had previously indicated that it was prepared to submit this confidential
data (China's second written submission, footnote 95).
500 Even if domestic products and subject imports ar e "like", adjustments to reflect differences in
physical characteristics might still be necessary.
501 The United States has also criticised MOFCOM's failure to report separate AUVs for subject
imports from the United States and Russia respectively (U nited States' first written submission, para. 217). We
recall that MOFCOM undertook a cumulative assessment of injury, which the United States has not challenged.
Accordingly, there is no basis for us to find that MO FCOM should have reported separate AUVs for subject
imports from the two target countries.
502 China's response to Panel question 101, para. 142.
503 China's response to Panel question 105, para. 161.
504 China's response to Panel question 105, para. 161.
505 MOFCOM itself acknowledged that it had undertaken a comparison of prices: "the relevant content
of the determination makes a comparativ e analysis of price. There is an analysis on the low-price sales of the
product concerned" (Final Determination, Exhibit CHN-16, p. 70). While China denies that this refers to any
finding of price undercutting (China's first written submission, para. 299), we see no basis on which to conclude

comparable.
506 As soon as price comparisons are made, price comparability necessarily arises as an
issue. MOFCOM's reliance on AUVs, without any consideration of the need for adjustments to
ensure price comparability, is neither objective, nor based on positive evidence.
7.531 Regarding the evidence supporting MOFCOM's fi nding that there was a "pricing policy" of
setting subject import prices lower than domestic prices, MOFCOM stated:
During the on-the-spot verification, the pe titioner provided contracts and records of
price setting to show that a pricing policy aiming at setting the price down to a level
lower than the price of the domestic like product was adopted by producers of
product concerned.
507
7.532 China submitted the relevant "contracts and records of price" to the Panel in the form of four
BCI Exhibits, in response to a request from the Panel dated 18 November 2011. Exhibit CHN-37
contains a contract between a Russian trading company and a Chinese buyer of subject imports.
Exhibits CHN-38, 39, and 40 provide examples of price negotiations between a Chinese supplier and
its customers. China contends that in all thr ee examples, "the Chinese supplier quoted a price, the
customer responded by noting the specific amount by which the Chinese offe r was higher than the
alternatives available from Russian or U.S. supplie rs, and the Chinese supplier was then forced to
lower its price".508
7.533 Turning first to Exhibit CHN-37, we note that this contract establishes prices for certain
subject imports. The contract also contains a provi sion whereby, in the words of the applicants, "the
Russian companies … set their prices lower than [WISCO]". 509 While this contract may be of
relevance regarding the broader relationship between domestic and subject import prices, we note that
the contract is dated 9 January 2009. Accordingly, the contract was applicable during the first quarter
of 2009. Since MOFCOM found that subject impo rt prices were not lower than domestic prices in
this period,510 there was no valid basis for MOFCOM to de termine that the Exhibit CHN-37 contract
actually translated into price undercutting by subject imports. Rather, MOFCOM's finding that there
was no price undercutting in this period undermines th e probative value of Exhibit CHN-37. In the
absence of any explanation as to why the Exhibit CHN-37 contract should trump MOFCOM's finding
that subject imports were not priced lower than dom estic products in the first quarter of 2009, we do
not consider that an objective and impartial investig ating authority could prop erly have relied on this
contract to support a finding that subject imports we re priced "lower" than domestic products in that
period.
7.534 Regarding Exhibits CHN-38 and 40, we note that these price negotiations occurred in
February 2009, with delivery scheduled in March and April 2009. The price negotiations referred to
in Exhibit CHN-39 occurred in December 2008, with delivery scheduled for January 2009. Thus, the
deliveries for all three sets of price negotiations were scheduled for the first quarter of 2009. Again,
we note that MOFCOM found that subject import pri ces were not lower than domestic prices in that
period. MOFCOM's finding that there was no pr ice undercutting in this period undermines the

that MOFCOM is referring to anything other than a comp arative analysis of the price of subject imports relative
to domestic sales.
506 It may be, as alleged by China (China's response to Panel question 95(iii), para. 128), that certain
adjustments would actually inflate subject import price. In our view, this observation simply confirms the need
for appropriate adjustments to ensure that any price comparisons made are accurate and valid.
507 Final Determination, Exhibit CHN-16, p. 58.
508 China's 25 November 2011 response to question (b) of the Panel questions dated
18 November 2011, p. 2.
509 Final Determination, Exhibit CHN-16, p. 59.
510 Final Determination, Exhibit CHN-16, p. 70: "the Investigating Authority did not conclude that
import price of the product concerned was lower than the price of the domestic like product in Q1 of 2009".

probative value of Exhibits CHN-38 and 40. In the absence of any explanation as to why the evidence
contained in these Exhibits should trump MOFCOM's finding that subject imports were not priced
lower than domestic products in the first quarter of 2009, we do not consider that an objective and
impartial investigating authority could properly ha ve relied on these negotiations to support a finding
that subject imports were priced "lower" than domestic products in that period.
7.535 Finally, we note that MOFCOM also relied on "the drop of the import price of the product
concerned in Q1 2009" when finding that price depressi on was an effect of subject imports. In this
regard, we note MOFCOM's finding that subject impo rt prices fell by 1.25% from the first quarter of
2008 to the first quarter of 2009.
511 However, MOFCOM also found that subject import prices
increased by 2.97% and 17.57% in 2007 and 2008 respectively. 512 In addition, MOFCOM also found
that the subject import price was not lower than the dom estic price in the first quarter of 2009. In the
absence of any further clarification by MOFCOM, we are not persuaded that an objective and
impartial investigating authority could properl y have found that, following a 17.57% increase in
subject import price in 2008, a 1.25% decrease in subject import price in the first quarter of 2009
could have had the effect of depressing domestic pri ces, particularly as subject imports prices in any
event remained higher than domestic prices in that period.
7.536 For all of the above reasons, we do not consid er that the evidence available to MOFCOM
could have allowed an objective a nd impartial investigating authority to determine that subject
imports were priced lower than domestic products.
Whether MOFCOM's finding that price depression was an effect of subject imports might
nevertheless stand on the basis of MOFCOM's anal ysis of the effect of the increase in the
volume of subject imports in depressing domestic prices.
7.537 We note China's argument that MOFCOM's finding that price depression was an effect of
subject imports remains valid, despite any flaws in MOFCOM's analysis of the relative prices of
subject imports and domestic products, because MOFC OM's finding of causation was also based on
the effect of the increase in volume of subject im ports. According to China, since MOFCOM based
its analysis of causation on both volume effects and price effects, those price effects can support an
overall finding of causation, even if they might not have been sufficient to justify finding a causal link
on their own. 513 In considering this argument, we al so note China's statements that "MOFCOM
properly found adverse price effects from the increasing volume of subject imports," 514 that
MOFCOM drew a "key connection … between the domes tic industry lowering prices in an effort to
regain market share that had been lost to subject imports", 515 and that MOFCOM "relied heavily" 516
on volume effect. In addition, we note China's assertion that "[t]he low prices of subject imports were
discussed more generally as a supporting factor for the analysis, not as the primary basis of the overall
finding about price effects."517
7.538 Having regard to the various st atements made by China, we understand China to argue that
the increase in the volume of subject imports was the primary basis for MOFCOM's finding that price
depression was an effect of subject imports, and th at this primary basis for MOFCOM's finding is
sufficient in and of itself to uphold that finding, ev en if MOFCOM's analysis of the supporting basis,
i.e. the price effects of subject imports, is flawed. This argument raises the issue of whether the Panel

511 Final Determination, Exhibit CHN-16, p. 58.
512 Final Determination, Exhibit CHN-16, p. 58.
513 China's first written submission, para. 328.
514 China's first written submission, heading at para. 257.
516 China's second written submission, para. 121.
517 China's first written submission, para. 295.

could uphold MOFCOM's finding that price depression was an effect of subject imports purely on the
basis of MOFCOM's findings regarding the volume effects of subject imports. In addressing this
issue, we begin by considering whether or not MOFCOM's final determ ination supports China's
argument that volume effects were the primary basis for MOFCOM's finding that price depression
was an effect of subject imports. We then consider certain guidance offered by the Appellate Body.
7.539 We do not consider that MOFCOM's final de termination supports China's argument that
volume effects were the primary basis for MOFCOM's finding that price depression was an effect of
subject imports. In suggesting that MOFCOM relied more heavily on the volume of subject imports
than the low price thereof, China actually refers to extracts from MOFCOM's final determination that
appear to lend equal weight to considerations of both subject import volume and price. For example,
when arguing that MOFCOM drew a "key conn ection … between the domestic industry lowering
prices in an effort to regain market shar e that had been lost to subject imports",
518 China refers to
MOFCOM's determination that:
Under the impact of the large volume of imports of the product concerned at a low
price, in order to keep the market share, the price of the domestic like product was
lowered.519
7.540 Thus, MOFCOM refers both to the increased volume of subject imports, and the allegedly
low price thereof. In addition, we note that the re levant sub-section in th e final determination is
entitled "The impact of the import price of the product concerned on the price of domestic like
products".520 In these circumstances, it is difficult to accept that MOFCOM's finding that price
depression was an effect of subject imports was based primarily on the volume effect of subject
imports. In our view, there is nothing in MOFCOM 's determination to indicate that MOFCOM relied
more heavily on the increase in the volume of subject imports than it did on the low price thereof for
the purpose of establishing that price depression was an effect of subject imports.
7.541 Furthermore, we note the Appellate Body's finding in Japan – DRAMs (Korea) that:
[T]here may be cases in which certain interm ediate findings may be so central to the
ultimate conclusion of an investigating authority that an error at an intermediate stage
of reasoning may invalidate the final conclusion. Indeed, an evaluation of the
significance of the different factors considered by an investigating authority is at the
heart of the assessment a panel must make.
521
7.542 We agree with this finding by the Appellate Body , and we consider that a panel must exercise
great caution in determining whether or not to enga ge in analyses not undertaken by the investigating
authority itself.522 There is nothing in MOFCOM's determination to indicate that MOFCOM relied
more heavily on the volume effects of subject import s than it did on the price effects thereof for the
purpose of establishing that price depression was an effect of subject imports. Accordingly, we
consider that MOFCOM's finding that subject impor ts were priced lower than domestic products was
so central to MOFCOM's overall conclusion that pr ice depression was an effect of subject imports
that the above-mentioned flaws in this finding must invalidate MOFCOM's overall conclusion that
price depression was an effect of subject imports. In these circumstances, it is not possible to

519 Final Determination, Exhibit CHN-16, p. 65 (emphasis added).
520 Final Determination, Exhibit CHN-16, p. 58.
521 Appellate Body Report, Japan – DRAMs (Korea), paras. 131-135 (footnotes deleted).
522 There is nothing in MOFCOM's determination to suggest that MOFCOM itself found that the
volume effects of subject imports alone were sufficient to conclude that price depression was an effect of subject
imports.

conclude that MOFCOM's finding that price depress ion was an effect of subject imports might be
upheld purely on the basis of MOFCOM's findings rega rding the effect of the increase in the volume
of subject imports.
 Conclusion
7.543 In the light of the foregoing, we find that MO FCOM's determination that price depression
was an effect of subject imports was neither made pursuant to an objective examination, nor based on
positive evidence.
(ii) Price suppression
7.544 MOFCOM found that there was significant pri ce suppression in 2008 and the first quarter of
2009. MOFCOM's principal findings on price suppression were drafted in the following terms:
Starting from 2008, the selling price of the dom estic like products failed to absorb the
rising costs, the price-cost differential droppe d by 7% compared with 2007. In Q1 of
2009, while the unit cost of sales was rising co mpared to the same period of last year,
the selling price greatly dropped by 30.25%, which resulted that the cost-price
differential dropped continually and greatly by 75% compares to the same period of
last year.
523
…
To be more specific, the sharp increase of the import volume of the product
concerned since the beginning of 2008 and the drop of the import price of the product
concerned in Q1 2009 significantly depressed and suppressed the price of domestic
like products.
524
7.545 We begin by examining the United States' ch allenge against MOFCOM's finding of the
existence of price suppression per se . We then consider the United States' arguments against
MOFCOM's finding that price suppression was an effect of subject imports.
 The existence of price suppression per se
7.546 We are not persuaded by the United States ' argument that MOFCOM was precluded from
relying on changes in the price-cost ratio between 2007 and 2008, and between the first quarter of
2008 and the first quarter of 2009, to establish th e existence of price suppression. We note that
neither Article 3.2 of the Anti-Dumping Agr eement nor Article 15.2 of the SCM Agreement
prescribes the manner in which an investigating authority must establish the existence of price
suppression. Nor do these provisions exclude an inv estigating authority's reliance on changes in per
unit price-cost ratios. In the light of the text of these provisions, we consider that an authority is
entitled to find price suppression whenever prices have not been able to match increases in costs.
Accordingly, we find no flaws in MOFCOM's relian ce on changes in the price-cost ratio to find the
existence of price suppression in 2008 and the first quarter of 2009.
 Whether price suppression was an effect of subject imports
7.547 To challenge MOFCOM's finding that price suppression was an effect of subject imports, the
United States relies on the same arguments as it did to challenge MOFCOM's finding that price

523 Final Determination, Exhibit CHN-16, p. 58.
524 Final Determination, Exhibit CHN-16, p. 59.

depression was an effect of subject imports. The United States also makes the additional argument
that MOFCOM failed to consider whether, in the re levant factual circumstances, changes in the price-
cost ratio merely reflected changes in the underlying cost structure of the domestic industry. In
considering these arguments, we recall our finding that, pursuant to Article 3.2 of the Anti-Dumping
Agreement and Article 15.2 of the SCM Agreement, an investigating authority must demonstrate that
price depression is an effect of subject imports.
525 The same necessarily applies in respect of an
authority's finding of price suppression. Since MOFCOM relied on the same analysis of the price
effects of subject imports to show that both pri ce depression and price suppression was an effect of
subject imports, the same flaws that undermined MOFCOM's finding that price depression was an
effect of subject imports also undermine MOFCOM's finding that price suppression was an effect of
subject imports. In these circumstances, we are not required to consider the United States' additional
argument concerning alleged changes in the underl ying cost structure between 2007 and the later
stages of the period of investigation. We shall do so, though, for the sake of completeness.
7.548 In the factual circumstances of the underlying investigation, we consider that the
commencement of Baosteel's operations in Ma y 2008 should have caused MOFCOM to examine
whether the 2008 change in the price-cost ratio was merely a function of the inclusion of the
additional start-up costs incurred by Baosteel,
526 rather than an adverse effect of subject imports on
price. In particular, because of the risk of Baost eel's start-up costs distorting the results of a simple
analysis of changes in the price-cost ratio, MO FCOM should have considered whether the underlying
cost structure of the domestic industry in 2007 was co mparable to that in 2008 and the first quarter of
2009. While China argues that the cost structur es in 2007 and 2008 were comparable because
Baosteel would also have incurred start-up cost s in 2007, we note that MOFCOM's record only
includes costs booked by Baosteel as of 2008. 527 Accordingly, there is no basis in the record for the
argument that Baosteel's start-up costs were also incurred prior to 2008, in a period when no price
suppression occurred.
7.549 We do acknowledge that, prior to the arrival of Baosteel in 2008, the existing producer,
WISCO, had already been expanding capacity. Howe ver, while some new capacity was introduced in
2007, a significantly greater amount of new capacity was introduced in 2008. 528 In our view, the
introduction of such a significant amount of new capacity in 2008 should have caused MOFCOM to
consider the possibility that the change in the pri ce-cost ratio between 2007 and 2008 was, at least in
part, a reflection of the start-up costs associated with the commencement of Baosteel's operations in
May 2008, rather than an effect of subject imports . An objective and impartial investigating authority
would have recognized the need to check that the underlying cost structures of 2007 and 2008 were
comparable, and would have investigated accordingly.
529

525 See paras. 7.519 - 7.522 of this Report.
526 We note that China does not de ny the United States' argument that the introduction of new steel
production facilities incurs start-up costs.
527 Application, Exhibit CHN-2, p. 109, Table 40. We note that China failed to rebut the United States'
assertion (made in its reply to Panel question 75, para. 71 ) that "[t]he only pertinent information in the record
available to the Panel and the United States indicates th at, for purposes of the application, Baosteel did not
provide MOFCOM with financial performance data for any period prior to 2008".
528 According to the Final Injury Disclosure docume nt, Exhibit CHN-29, p. 12 , capacity increased by
35.33% in 2007, and by 53.67% in 2008. In addition, the capacity added by Baosteel was entirely new, whereas
the capacity added by WISCO in 2007 was not entirely the result of opening new production facilities, but
involved improving the efficiency of existing pro duction facilities (See United States' response to Panel
question 75, para. 71, referring to the Application, Exhibit CHN-2, pp. 100 and 107). We accept the
United States' view (not contested by China) that the introduction of entirel y new capacity is likely to engender
greater start-up costs than mere improvements to existing capacity.
529 The same applies to changes in the price-cost ratio between the first quarter of 2008 and the first
quarter of 2009, when capacity incr eased by 80.13%. As Baosteel commen ced operations only in May 2008,

7.550 China contends that even if there were start-up costs in 2008, such costs are a natural part of
business. China asserts that a domestic industry should be able to expand, incur start-up costs, and yet
still maintain its profitability. China asserts that the domestic industry could not do this because of
the surge in the volume of subject imports during 2008. We accept that, up to a certain point, the
market may allow companies to increase prices to recover increased costs, including costs associated
with starting-up new production facilities. This process of price matching increasing cost cannot
continue indefinitely, though. After a certain point , the market will consider that the increased costs
are not commercially reasonable, and that prices shoul d not be allowed to rise accordingly. The point
at which this occurs will depend on many factors, including the relationship between capacity, supply
(domestic and foreign) and demand. It is not for the Panel to determine de novo whether the start-up
costs incurred by the domestic industry were co mmercially reasonable, such that domestic prices
should have been able to rise to the full extent of su ch costs. This is a complex issue that should have
been considered by MOFCOM. Instead, MOFCOM simply assumed that (i) prices should have been
able to rise with costs, and (ii) the only reason pri ces were not able to rise with costs was because of
the effect of subject imports.
7.551 In the light of the foregoing, we find that MOFCOM's determination that price suppression
was an effect of subject imports was not made pursuant to an objective examination, based on positive
evidence.
(iii) Price undercutting
7.552 The basic issue raised by the parties is whether or not MOFCOM made a finding of
"significant price undercutting" within the meani ng of Article 3.2 of the Anti-Dumping Agreement
and Article 15.2 of the SCM Agreement. The United States acknowledges that MOFCOM did not
make an express finding of significant price undercutting, but contends that an essential predicate of
MOFCOM's price effects analysis is that prices for subject imports were lower than domestic
prices.
530 China denies that MOFCOM made any finding of significant price undercutting.
7.553 In examining MOFCOM's final determination, we are unable to find any express finding by
MOFCOM that there was significant price undercu tting by subject imports. Although, as discussed
above, MOFCOM purported to establish the exis tence of price undercutting for the purpose of
showing that price depression and price suppression were an effect of the relatively lower prices of
subject imports, MOFCOM did not rely on the magnit ude of such price undercutting. In particular,
MOFCOM did not conclude that such price underc utting was "significant" within the meaning of
Article 3.2 of the Anti-Dumping Agreement or Ar ticle 15.2 of the SCM Agreement. In these
circumstances, there is no finding of "significant price undercutting" for us to review.
(iv) Conclusion
7.554 For the above reasons, we conclude that MOFC OM's findings regarding the price effects of
subject imports are inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement, and
Articles 15.1 and 15.2 of the SCM Agreement.

data for the first quarter of 2008 would not have included Baosteel's start-up costs. Accordingly, MOFCOM
should also have considered whether the underlying cost struct ure of the first quarter of 2009 was comparable
with that of the first quarter of 2008.
530 United States' first written submission, paras. 210 and 211.

2. Whether China acted inconsistently with Articles 12.8 of the SCM Agreement and 6.9 of
the Anti-Dumping Agreement in failing to disclose the essential facts under
consideration in relation to its price effects analysis
(a) Provisions at issue
7.555 Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement provide:
The authorities shall, before a final determ ination is made, inform all [interested
Members and] interested parties of the e ssential facts under consideration which form
the basis of the decision whether to appl y definitive measures. Such disclosure
should take place in sufficient time for the parties to defend their interests.
531
(b) Factual Background
7.556 Following the preliminary determination, and prior to issuing its final determination,
MOFCOM issued a final injury disclosure document, with the stated purpose of disclosing the "basic
facts upon which the final injury determination is made".
(c) Arguments of the United States
7.557 The United States argues that the price effects anal ysis is inconsistent with Article 12.8 of the
SCM Agreement and Article 6.9 of the Anti- Dumping Agreement because MOFCOM did not
disclose the "essential facts" underlying the analysis and ultimately forming the basis for its decision
to apply definitive measures. The United States ex plains that MOFCOM's injury determination is
based upon a finding that the allegedly dumped and subsidized imports had significant price effects on
the like domestic product. However, in its final injury disclosure document and its final
determination, MOFCOM disclosed "strikingly fe w facts" regarding pricing. The United States
submits that the findings are cursory and lack any apparent evidentiary basis.
7.558 According to the United States, China does no t dispute MOFCOM's failure to disclose any
information about price levels for the domestica lly produced product or any comparisons between
prices for this product and the imports under inv estigation. The United States rejects China's
argument that such information was not "essen tial" because MOFCOM did not rely on an
underselling analysis. According to the United States, even if MOFCOM did not make a finding of
significant underselling, it repeatedly referred to the purportedly "low prices" of the imports under
investigation to justify its findings of price de pression and price suppression. Information about the
prices of domestically produced products, and wh ether these prices exceeded import prices, was an
essential element in MOFCOM's finding that import prices were "low". However, MOFCOM did not
disclose this information.
532
7.559 The United States argues that MOFCOM did not disclose the following information central to
its price effects analysis: 533
(i) information about price levels for the domestically produced product;
(ii) the source of the information provided concer ning pricing trends for the domestically
produced product;

531 Where the text in brackets is included only in Article 12.8 of the SCM Agreement and not in
Article 6.9 of the Anti-Dumping Agreement.
532 United States' second written submission, para. 162.
533 United States' first written submission, para. 191 and United States' second written submission,
para. 164.

(iii) any comparisons between prices of the dom estically produced product and prices of
the imports under investigation. The United States notes that this information would
not normally be confidential
534;
(iv) the purported "strategies" that the exporters of GOES from Russia and the
United States devised to undercut domestic prices;
(v) the levels or trends of the domestic industr y costs. The United States argues that this
information is no more confidential than the other trends concerning the domestic
industry that MOFCOM disclosed;
(vi) general information about what aspects of domestic producers' costs were increasing.
The United States argues that to the extent the domestic industry's costs increased in
2009, information about the type of costs that increased is critical to understanding
the basis of MOFCOM's findings on price suppression and depression; or
(vii) should the Panel agree that MOFCOM found declining prices for domestically
produced GOES during the fourth quarter of 2008, information about quarterly price
trends should have been disclosed. 535
7.560 The United States argues that these facts were cr itical to MOFCOM's price effects analysis,
which in turn was critical to its affirmative inju ry determination. The failure to disclose these
"essential facts" seriously impaired the ability of interested parties to defend their interests. 536
Further, China provides no explanation regarding why non-confidential summaries of the information
on pricing and costs could not be disclosed.
537
(d) Arguments of China
7.561 China asserts that, contrary to the United St ates' claim, MOFCOM disclosed all of the
"essential facts" under consideration, as required by Article 6.9 of the Anti-Dumping Agreement and
Article 12.8 of the SCM Agreement. The disclosur es can be found in the preliminary determination
and the final injury disclosure report, which are the two documents containing all of the "essential
facts" on which China relied in the final determination.538
7.562 According to China, the United States' clai m overlooks the obligations on investigating
authorities to protect confidential information, which can be found in Articles 6.5 and 12.2.2 of the
Anti-Dumping Agreement and Articles 12.4 and 22.5 of the SCM Agreement. In the light of the fact
that there were so few companies involved in the investigation, it was not possible to present
aggregated information without br eaching confidentiality obligations.
539 According to China, the
United States has not identified any specific piece of information that was both an "essential fact" and
could be disclosed while maintaining confidentiality.540

534 United States' second written submission, para. 163.
535 United States' second written submission, para. 165.
536 United States' first written submission, paras. 195-196.
537 United States' second written submission, para. 166.
538 China's first written submission, para. 306 and Chin a's opening statement at the first meeting of the
Panel, para. 51.
539 China's first written submission, paras. 307-308.
540 China's opening statement at the first meeting of the Panel, para. 52.

7.563 In relation to the five specific pieces of inform ation that the United States complains were not
disclosed, China responds as follows:
541
(i) Domestic prices - MOFCOM presented the trend in domestic prices, showing the
percentage change from year to year. The actual level of prices was confidential
information;
(ii) Source of information concerning domestic pric e trends - the source of information is
not an "essential fact". Moreover, it was " quite clear" to any "reasonable reader" that
the domestic industry pricing was drawn from the questionnaire responses submitted
by the Chinese producers;
(iii) Price comparisons between domestically pr oduced GOES and the subject imports -
MOFCOM did not make a price undercutting finding and therefore the price
comparisons were not "essential facts" forming the basis of its decision;
(iv) Evidence of description of the pricing stra tegies used by the exporters of GOES -
MOFCOM disclosed the basi c facts concerning the pricing strategies and was under
no obligation to disclose evidence supporting its factual statements or further details
that could compromise the confidentiality of the information; and
(v) Levels and trends of costs - MOFCOM did disclose the trends in costs. The level of
costs was confidential information and therefore could not be disclosed.
7.564 China concludes that the United States has not made a prima facie case in relation to its
claims under Article 6.9 of the Anti-Dumping Agreement and Article 12.8 of the SCM Agreement.
542
(e) Arguments of third parties
(i) European Union
7.565 If information about price levels for domesti cally produced products was never disclosed to
the interested parties, the Europ ean Union agrees with the United St ates that this should result in a
finding that China acted inconsistently with Artic les 12.8 of the SCM Agreement and 6.9 of the Anti-
Dumping Agreement.543
(ii) Japan
7.566 With respect to MOFCOM's price effects anal ysis, Japan notes that MOFCOM seems to have
made certain price comparisons. For example, in the final determination MOFCOM found that "the
sale of the product concerned was kept at a low price". 544 According to Japan, the results of such a
price comparison were "essential facts" which shoul d have been disclosed, subject to confidentiality
issues.545
(f) Evaluation by the Panel
7.567 According to the United States, five principal areas of MOFCOM's price effects analysis were
not accompanied by adequate disclosure of the "e ssential facts under consideration" in accordance

541 China's first written submission, paras. 310-314.
542 China's first written submission, para. 317.
543 European Union's third party submission, paras. 28-29.
544 Japan's third party statement, para. 8.
545 Japan's third party submission, paras. 11-13.

with Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement. In particular, the
United States claims that MOFCOM did not disclose (i) the price levels for the domestically produced
product; (ii) the source of the information on pricin g trends for the domestically produced product;
(iii) price comparisons between the domestically produced and imported products; (iv) information
regarding the purported low price "strategies" adopt ed by the United States and Russian exporters of
GOES; or (iv) the levels or trends of the domestic industry's costs.
7.568 The Panel will commence its analysis with a c onsideration of whether MOFCOM adequately
disclosed essential facts on the price comparis on between domestically produced and imported
products. China's primary response to the United St ates on this point is that MOFCOM did not make
a price undercutting finding. Rather, MOFCOM simp ly noted the low price of subject imports, and
the relative price levels of such imports in co mparison to the GOES produced in China, as supporting
evidence for its conclusions regarding price suppr ession and price depression. Consequently, China
argues that there were no "essential facts" relating to price comparisons that needed to be disclosed.
7.569 Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement require
investigating authorities to "inform all interested parties of the essential facts under consideration
which form the basis for the decision whether to apply definitive measures". In order to apply
definitive measures at the conclusion of count ervailing and anti-dumping investigations, an
investigating authority must find dumping or subsidi zation, injury and a causal link Therefore, the
"essential facts" underlying the findings and conclusi ons relating to these elements form the basis of
the decision to apply definitive measures and shoul d be disclosed. China characterizes its injury
analysis as based on its price suppression and price depression findings. Even accepting China's
argument that it did not make a price undercutting finding, nevertheless, its conclusion regarding the
"low price" of subject imports was repeated ly referenced throughout its determination.
546 In the
Panel's view, this conclusion formed an essential pa rt of the reasoning MOFCOM used to support its
price suppression and price depression findings. Therefore, MOFCOM was required to disclose not
only the conclusion regarding the existence of a "l ow price", but also the "essential facts" supporting
this conclusion, in order to allow interested parties to defend their interests.
7.570 In response to a Panel question regarding wher e in MOFCOM's determinations information
regarding "low" or "lower" subject import prices can be found, China responds that the determinations
included non-confidential summaries of the inform ation underlying its findings of "low" subject
import prices.
547 In this regard, China relies upon the following disclosures in the preliminary
determination and the final injury disclosure document:
(i) The preliminary determination announces significant margins of dumping,
demonstrating that United States exporters were charging lower prices in China than
in their home market;
(ii) The preliminary determination and the final injury disclosure document state that a
"pricing policy aiming at setting the price to a level lower than that of the domestic
like product was adopted when selling the product concerned in China"548;
(iii) The preliminary determination states that "there was no evidence supporting the
claim" that Russian prices were not causi ng price suppression. According to China,
this is a reference to the evidence that the parties had submitted;

546 See, for example, Final Determination, Exhibit CHN-16, pp. 58, 59, 60, 61, 62, 63, 65.
547 China's response to Panel question 90.
548 Final Injury Disclosure Document, Exhibit CHN-29, p.15.

(iv) The final injury disclosure document refers to "data obtained from investigation" to
highlight that Russian producers had a pricing policy of "setting the price to a lower
level than that of the domestic like product"
549; and
(v) The preliminary determination notes that the United States sales were below normal
value and were supported by subsidies. It also notes the declining trend in subject
import average unit values.
7.571 We acknowledge China's argument that the price co mparison data at issue is confidential. As
indicated in our reasons at paragraph 7.410 of th is Report, where confidential information is an
"essential fact under consideration", the disclos ure obligations under Articles 12.8 of the SCM
Agreement and 6.9 of the Anti-Dumping Agreem ent should be met through the use of non-
confidential summaries.
7.572 In the Panel's view, the non-confidential discl osures relied upon by China do not provide a
summary of the "essential facts" supporting the finding of "low" subject imports prices. In particular,
disclosures regarding the existence of dumping and subsidization are not on point as they do not relate
to the prices of subject imports, relative to GOE S produced by the domestic Chinese industry, which
is the matter at issue. In our view, the existen ce of dumping or subsidization cannot be used to infer
the relative prices of subject imports and the domestically produced product.
550 Similarly,
information on the trends in subject import averag e unit values does not indicate that the values are
"lower" than the values of domestically produced GOES. Further, a mere reference to the existence of
evidence to support a certain finding does not disclo se or summarize the "essential facts" underlying
the finding.
7.573 In the Panel's view, the references in the pr eliminary determination and the final injury
disclosure document to the low pricing strategies of the Russian and United States exporters are also
insufficient as a summary of the "essential facts" supporting the conclusion of "low" import prices. In
order to allow the respondents to defend their inte rests, a summary of the "essential facts" supporting
the finding of a "low price strategy" was required, ra ther than merely stating the conclusion that such
a strategy existed. In response to a Panel ques tion, China was able to provide additional non-
confidential information regarding the price setting behaviour it was relying upon to conclude that a
"low price strategy existed". For example, China stated that "the Chinese supplier quoted a price, the
customer responded by noting the specific amount by which the Chinese offe r was higher than the
alternatives available from Russian or U.S. supplie rs, and the Chinese supplier was then forced to
lower its price". 551 This is more specific than the information included in the preliminary
determination and the final injury disclosure document. 552 More importantly, in response to a Panel
question, China provided non-confidential informati on regarding the dates of the transactions in
which the "pricing strategies" were allegedly em ployed. Once provided with this information

549 Final Injury Disclosure Document, Exhibit CHN-29, p.13.
550 See also the United States' arguments on this po int in United States' comments on China's response
to Panel question 90, footnote 100.
551 China's 25 November 2011 response to question (b) of the Panel questions dated
18 November 2011.
552 The preliminary determination and the final injury disclosure included the following statements
regarding the "pricing strategies" of the United States and Russian producers of GOES: "the pricing policy
aiming at setting the price down to a level lower than the price of the domestic like product adopted by
producers of product concerned"; "the price of imported GOES was set accord ing to the variation of price of
like products"; "the materials provided by the petitioner…demonstrated a pricing policy adopted by the
producers of the product concerned who watched closely the price of the products of major producers in China
and sold the imported products in a lower price"; and "relevant evidence shows that a pricing policy aiming at
setting the price to a level lower than that of the domestic like product was adopted when selling the product
concerned to the Chinese market".

regarding the timing of the transactions, the United States was able to challenge before the Panel the
relevance of the transactions relied upon by Ch ina to support its price depression finding. 553 T h i s
information clearly formed a part of the "essential facts" underlying the finding of "low" import prices
and ultimately the price depression finding.
7.574 It is clear MOFCOM considered a number of facts leading to the conclusion of "lower"
subject import prices. For instance, in its second written submission, China disclosed that over the
period 2006-2008, the average unit values of subject imports was 8%-12% below the average unit
value of domestic shipments. In response to a requ est from the Panel, China provided, in the form of
a non-confidential range, the percentage difference between the average unit values of subject imports
and the average unit value of the domestic product fo r 2006, 2007 and 2008. In the Panel's view,
these facts were "essential" to MOFCOM's conclusion that subject import prices were "low". China's
disclosures during the Panel proceedings demonstrated that the facts could be summarized in non-
confidential format. In the Panel's view, su ch summaries should have been included in the
preliminary determination or the final injury disclos ure document to allow interested parties to defend
their interests.
7.575 The Panel concludes that the failure to discl ose the "essential facts" underlying MOFCOM's
finding of "low" subject import prices was inconsistent with Articles 12.8 of the SCM Agreement and
6.9 of the Anti-Dumping Agreement. Given this conclusion, the Panel does not consider it necessary
to proceed to consider whether MOFCOM's disclosures on other matters, such as costs, were also
inconsistent with Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement.
3. Whether China acted inconsistently with Articles 22.5 of the SCM Agreement and 12.2.2
of the Anti-Dumping Agreement in relation to the public notice and explanation of its
price effects determination
(a) Provisions at issue
7.576 Articles 22.5 of the SCM Agreement and 12.2. 2 of the Anti-Dumping Agreement provide,
relevantly:
A public notice of conclusion or suspension of an investigation in the case of an
affirmative determination providing for the imposition of a definitive duty…shall
contain, or otherwise make available through a separate report, all relevant
information on the matters of fact and law and reasons which have led to the
imposition of final measures…due regard be ing paid to the requirement for the
protection of confidential information. In particular, the notice shall contain…the
reasons for the acceptance or rejection of relevant arguments or claims made by…the
exporters and importers.
(b) Factual Background
7.577 Following the issuance of the preliminary dete rmination and the final disclosure documents,
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing
duty investigations.

553 China's 25 November 2011 response to question (b) of the Panel questions dated 18 November 2011
and United States' 14 December 2011 comments on China's 25 November 2011 response to question (b). Also,
see paras. 7.533-7.534 of this Report for the Panel's analysis of the relevance of the contracts, in the light of
their timing, to the price effects analysis.

(c) Arguments of the United States
7.578 The United States claims that China acted in consistently with Article 22.5 of the SCM
Agreement and Article 12.2.2 of the Anti-Dumping Ag reement because its final determination did not
contain sufficient information regarding its price effects analysis.
7.579 In the United States' view, it is indisputable th at MOFCOM's analysis of price effects was a
consideration leading to the imposition of definitiv e measures. Consequently, Article 12.2.2 of the
Anti-Dumping Agreement and Article 22.5 of the SCM Agreement require that MOFCOM provide
"all relevant information" on the facts underlying the price effects analysis.
554 However, the
United States argues that the price effects analysis is based upon the mere assertion that importers of
GOES had "policies" or "strategies" of charging low prices. 555 The United States contends that the
final determination does not contain any facts suppor ting this. Further, the final determination does
not provide any information concerning price leve ls for the domestically-p roduced product and so
does not contain any facts supporting a finding that prices of the merchandise under investigation
were at any time lower than the prices of the domestically produced product.
556
7.580 In response to China's argument that MOFC OM relied upon confidential information when
making its findings on adverse price effects, the United States contends that China has not identified
what, if any, document may contain the confidentia l findings MOFCOM failed to articulate in the
final determination. According to the United Stat es, the parties to an investigation, the exporting
Member and much less members of a dispute settl ement panel are not supposed to be placed in a
position of guessing the basis for an authority's findings.557
7.581 The United States also argues that China acted inconsistently w ith Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.5 of the SC M Agreement because MOFCOM did not provide
adequate reasons for the rejection of the ar guments of the parties opposing the imposition of
measures. For example, Russian and United Stat es exporters argued that Chinese producers were
actually the price leaders in the Chinese GOES ma rket. MOFCOM dismissed this in a single
sentence, which was utterly devoid of evidentiary b asis: "[t]he relevant evidence shows that the low
price policy was adopted when selling the subject merchandise in the Chinese market and forced
Petitioners to drop the price of like products and ca used the differential between price and cost to
continue decreasing".558
(d) Arguments of China
7.582 China asserts that MOFCOM provided the "relev ant information" and the "reasons" required
under Article 22.5 of the SCM Agreement and Artic le 12.2.2 of the Anti-Dumping Agreement in
relation to its price effects findings. The obligations under the provisions at issue must be considered
in the light of an investigating authority's discretion to decide what is material to its determination and
also the authority's obligations, as expressed in both provisions, to protect confidential information.559
7.583 In response to the United States' argument th at MOFCOM did not provide sufficient detail
regarding the "pricing strategy" employed by the exporters of GOES, China argues that MOFCOM
provided as much information as it could, in the light of the need to protect confidential information.
Further, MOFCOM was not obliged to disclose ever y detail about the pricing strategy. Rather, only

554 United States' first written submission, paras. 200-201.
555 United States' first written submission, para. 198.
556 United States' first written submission, para. 201.
557 United States' second written submission, para. 168.
558 United States' first written submission, paras. 202-203.
559 China's first written submission, paras. 319-321 and 327.

the information an investigating authority considers "material" need be provided. 560 Finally, China
argues that the United States is mistaken in thinking that the "pricing strategy" was the centrepiece of
MOFCOM's findings. The pricing strategy information was merely used as corroborating evidence to
support its price suppression and depression findings. 561 China also rejects the United States'
contention that MOFCOM did not provide sufficien t reasons for rejecting the arguments of the
exporters.562
(e) Arguments of third parties
(i) European Union
7.584 The European Union argues that if the Unite d States' allegations regarding MOFCOM's
failure to provide a meaningful description of numer ous facts critical to its price effects analysis are
correct, then China has acted inconsistently with Article 22.5 of the SCM Agreement and
Article 12.2.2 of the Anti-Dumping Agreement.563
(ii) Japan
7.585 Japan submits that because th e analysis of price effects was relevant to the injury
determination, the authorities were required to provide a sufficiently detailed explanation of it.564
(iii) Saudi Arabia
7.586 According to Saudi Arabia, the public notices referred to in Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.3 of the SCM Ag reement must contain sufficient detail to allow
interested parties to discern either the significance or lack thereof of the factors the investigating
authority was obligated to address in its analysis.565
(f) Evaluation by the Panel
7.587 The United States argues that China acted inc onsistently with Articles 22.5 of the SCM
Agreement and 12.2.2 of the Anti-Dumping Agreement on the basis that MOFCOM's final
determination did not include facts supporting a finding that the United States and Russia had a
strategy of charging low prices and supporting a finding that the prices of GOES from the
United States and Russia were at any time lower th an prices for the domestically produced product.
The United States also complains that MOFCOM did not provide reasons for the acceptance or
rejection of the relevant arguments of the exporters and importers.
7.588 The Panel will commence its analysis with a consideration of whether MOFCOM provided
adequate public notice and explanation regardi ng its finding that the prices of GOES from the
United States and Russia were "lower" than prices for the domestically produced product.
7.589 Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement require that
the public notice or separate report released at the co nclusion of an investigation contain "all relevant
information on matters of fact and law and reaso ns which have led to the imposition of final
measures…due regard being paid to the protection of confidential information". As indicated at
paragraph 7.335 of this Report, wh en confidential information also forms part of the "relevant

560 China's first written submission, para. 322.
561 China's first written submission, para. 323.
562 China's first written submission, paras. 324-326.
563 European Union's third party submission, para. 34.
564 Japan's third party submission, para. 37.
565 Saudi Arabia's third party submission, para. 44.

information on matters of fact and law", within the meaning of Articles 22.5 and 12.2.2, an
investigating authority can meet its dual obligations to disclose the relevant information while also
protecting its confidentiality, by providing only a non-confidential summary of the confidential
information in the public notice or separate report.
7.590 It is clear that the price effects analysis, in particular the findings of price suppression and
price depression, were essential elements in MO FCOM's reasoning leading to the imposition of final
measures. Even accepting China's argument th at MOFCOM did not make a price undercutting
finding, but rather relied upon the existence of "l ow" subject import prices to support its price
suppression and price depression findings, the final dete rmination repeatedly refers to the "low" price
of subject imports.
566 In the Panel's view, this indicates that the conclusion regarding the "low" price
of subject imports was an important aspect of MOFCOM's reasoning leading to the imposition of final
measures.
7.591 We recall the Appellate Body's observation in US - Countervailing Duty Investigation on
DRAMS that "Article 22.5 does not require the agen cy to cite or discuss every piece of supporting
record evidence for each fact in the final determination".567 We agree with the Appellate Body in this
regard. However, given the importance that the conclusion regarding the "lower" price of subject
imports played in MOFCOM's reasoning, the Panel is of the view that further information on the
matters of fact leading to this conclusion was required under Articles 22.5 of the SCM Agreement and
12.2.2 of the Anti-Dumping Agreement. It is cl ear that MOFCOM had before it information on the
prices of subject imports and the prices of the dom estic product and undertook a comparative analysis
of this information. For example, in its second written submission, China provided a non-confidential
summary of the factual information which MOFC OM had before it and relied upon to support its
conclusion regarding the "low price" of subject impor ts. In particular, China revealed that over the
period 2006-2008, the average unit values of subject imports was 8%-12% below the average unit
value of domestic shipments.
568 However, the final determination did not include any indication that
a comparative analysis of prices had been performed or provide the factual information arising from
the comparison.
7.592 Consequently, the Panel concludes that China act ed inconsistently with Articles 22.5 of the
SCM Agreement and 12.2.2 of the Anti-Dumping Ag reement by failing adequately to disclose "all
relevant information on matters of fact" underlying MOFCOM's conclusion regarding the existence of
"low" import prices. Given this conclusion, the Panel does not consider it necessary to proceed to
consider the remainder of the United States' argu ments regarding whether China met its obligations
under Articles 22.5 and 12.2.2.
K. CAUSATION ANALYSIS
1. Whether China acted inconsistently with Ar ticles 3.1 and 3.5 of the Anti-Dumping
Agreement and 15.1 and 15.5 of the SCM Agreement with respect to MOFCOM's
causation analysis
(a) Introduction
7.593 The United States argues that MOFCOM's causation analysis is inconsistent with Article 3.5
of the Anti-Dumping Agreement and Article 15.5 of the SCM Agreement. The United States also
claims that MOFCOM's analysis is inconsistent with Article 3.1 of the Anti-Dumping Agreement and

566 See, for example, Final Determination, Exhibit CHN-16, pp. 58, 59, 60, 61, 62, 63, 65.
567 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 164.
568 China's second written submission, footnote 95.

Article 15.1 of the SCM Agreement because it does not comply with the "objective examination" and
"positive evidence" requirements embodied in those provisions.
7.594 China asks the Panel to reject the United States' claim.
(b) Provisions at issue
7.595 Article 3.1 of the Anti-Dumping Agreement a nd Article 15.1 of the SCM Agreement are set
out above.
7.596 Article 3.5 of the Anti-Dumping Agreement provides:
It must be demonstrated that the dumped imports are, through the effects of
dumping…causing injury within the meaning of this Agreement. The demonstration
of a causal relationship between the dumped imports and the injury to the domestic
industry shall be based on an examination of all relevant evidence before the
authorities. The authorities shall also ex amine any known factors other than the
dumped imports which at the same time ar e injuring the domestic industry, and the
injuries caused by these other factors must not be attributed to the dumped imports.
Factors which may be relevant in this respect include, inter alia , the volume and
prices of imports not sold at dumping prices, contraction in demand or changes in the
patterns of consumption…the export perform ance and productivity of the domestic
industry.
7.597 Article 15.5 of the SCM Agreement is virtuall y identical, with references to "subsidized
imports" and "subsidies", rather than "dumped imports" and "dumping".
(c) Factual Background
7.598 MOFCOM conducted a single causation analysis pertinent to both the anti-dumping and
countervailing duty investigations. Ultimately, MOFCOM found that there was a causal link between
the dumped imports of GOES from Russia, the dumped and subsidized imports of GOES from the
United States and the material injury suffered by the domestic industry. In establishing causation,
MOFCOM rejected arguments that alleged ove rexpansion and overproduction by the domestic
industry was an alternative cause of injury.
(d) Arguments of the United States
7.599 The United States challenges two particular aspects of MOFCOM's causation analysis,
namely MOFCOM's use of price effects findings , and MOFCOM's examination of the domestic
industry's increase in capacity and production as a potential alternative cause of injury.
(i) Use of price effects findings
7.600 The United States relies upon its claim that MOFCOM's price effects analysis was
inconsistent with Articles 3.1 and 3.2 of the An ti-Dumping Agreement and Articles 15.1 and 15.2 of
the SCM Agreement, to argue that China has not established that the imports under investigation had
any significant price effects. The United States c ontends that because price effects findings were an
essential element of MOFCOM's causal link analysis, the flaws in MOFCOM's price effects analysis
render MOFCOM's causation determ ination inconsistent with Article 3.5 of the Anti-Dumping
Agreement and Article 15.5 of the SCM Agreement.

(ii) Other causes of injury: domestic capacity, production, demand and inventories
7.601 According to the United States, MOFCOM err oneously concluded that the rapid increase in
capacity of the domestic GOES industry during the period of investigation, and the consequent
overproduction and inventory build-up, could not have been a cause of injury to the domestic
industry. The United States argues that there is no positive evidence to support the conclusion that the
imports under investigation were the sole cause of the massive rise in inventory levels between 2008
and the first quarter of 2009. According to the Un ited States, the domestic industry was at least in
substantial share responsible for the increase because of its decision to expand capacity and
production far in excess of growth in domestic demand.
569 The United States concludes that because
there was a known factor other than dumped or subsidized imports causing injury, MOFCOM needed
to examine this factor as part of a non-attribution analysis. However, MOFCOM failed to do so. As a
result, the United States contends that China acted inconsistently with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement and 15.1 and 15.5 of the SCM Agreement.
7.602 The United States notes that MOFCOM provided three reasons for its determination that
overexpansion and overproduction was not a cause of injury to the domestic industry. First,
MOFCOM found that the domestic industry's capacity expansion was a response to an increase in
domestic demand. The United States argues that th ere is nothing in the record disclosed by
MOFCOM to support this view. According to the Un ited States, the data on the record indicates that
the capacity expansion far exceeded any historical or projected increases in domestic demand. 570
Furthermore, even if the domestic industry di d not expand capacity in excess of demand, the
United States asserts that the domestic industry was in any event not entitled to assume that it could
expand capacity in such a way that it must displace a ll imports (whether fairly or unfairly traded) in
order to be able to use that increased capacity to meet demand. The United States notes MOFCOM's
additional finding that the domestic producers "restrained their new production," 571 and did not
increase their production to the same extent that th ey increased their capacity , with the result that
capacity utilization decreased. The United Stat es contends, though, that far from having been
restrained, Chinese producers used their increased capacity to increase production far beyond what the
market demanded, resulting in sharply increasing inventor ies, particularly in the first quarter of 2009.
The United States notes in particular that between the first quarters of 2008 and 2009, the domestic
industry's output increased by 55.23%, although demand only increased by 12.46%.572
7.603 The United States notes that the second reason relied on by MOFCOM was a purported
absence of correlation between the domestic industry capacity increases and the inventory build-up.
The United States argues that this conclusion, relating to a period when capacity and production
increased far more rapidly than demand, is both counterintuitive and incorrect. According to the
United States, an objective examination of the da ta corroborates the common sense proposition that
the greater the disparity between increases in pr oduction capacity and increases in demand, the more
likely it is that inventories will rise.573
7.604 Third, the United States notes MOFCOM's findi ng that "the volume of [subject imports] did
not increase at a constant speed." According to th e United States, MOFCOM seems to reason that the
increase in imports of GOES was so rapid that the entire inventory overhang in the first quarter of
2009 can be attributed to the imports under investigation. 574 The United States argues that there is no
discernible basis in the record for this finding. Rather, the evidence indicates that the domestic

569 United States' first written submission, para. 253.
570 United States' first written submission, para. 247.
571 China's first written submission, para. 366.
572 Final Injury Disclosure document, Exhibit CHN-29, secs. VI(1), (2).
573 United States' first written submission, paras. 249-250.
574 United States' first written submission, para. 251.

industry and imports were growing at approximately the same rate during the period of investigation,
in response to growing domestic demand. It was not a case of the imports encroaching upon the
market share of the domestic industry.575
7.605 The United States notes that, in addition to the three above-mentioned factors, MOFCOM
also stated that the United States "did not submit any evidence to substantiate" its comments regarding
the effect of overexpansion and overproduction on the domestic industry. The United States denies
that the parties opposing imposition of duties had th e obligation of submitting evidence to prove that
the domestic industry's excessive production and con sequent inventory overha ng contributed to its
injury.576 According to the United States, the only obl igation that the Agreements place on the parties
is that of identifying "known" factors of injury other than the imports under investigation that the
authorities should examine. The United States asser ts in this regard that China has acknowledged 577
that United States exporter ATI brought to MO FCOM's attention that overproduction was
contributing to any difficulties that the domestic industry may have experienced since 2008. 578 The
United States submits that, because Articles 3.5 and 15.5 state that "[t]he authorities shall also
examine any known factor other than the [unfairly traded] imports which at the same time are injuring
the domestic industry" (emphasis added), the Ag reements placed on MOFCOM the responsibility to
conduct the requisite examination.
(e) Arguments of China
7.606 China denies the United States' claim. Furthe r, China argues that the United States' claim
must be analysed according to the standard of review set by the Appellate Body for injury
determinations, namely the Pane l should consider whether "the evidence and explanation relied upon
by the investigating authority reasonably supports its conclusions". China contends that merely
demonstrating that another conclusion might have been reached does not demonstrate inconsistency
with the Anti-Dumping and SCM Agreements.
579
(i) Use of price effects findings
7.607 In relation to the United States' argument that if its price effects arguments are successful,
then China's causation analysis n ecessarily disintegrates, China argu es that its causal link analysis
includes a finding of both price and volume effects. China argu es that even without its price effects
findings, the adverse volume effects support the finding of a causal link. 580 China notes that the
United States has not challenged MOFCOM's analysis of volume effects.
(ii) Other causes of injury: domestic capacity, production, demand and inventories
7.608 China disputes the United States' argument that MOFCOM erroneously concluded that the
rapid increase in the capacity of the Chinese GOES i ndustry was not a cause of injury. In particular,
China notes that MOFCOM fully addressed this factor after it was raised by one of the respondents,
ATI. China argues that, because MOFCOM rece ived no new evidence from ATI, MOFCOM's

575 United States' first written submission, para. 252.
576 China's first written submission, para. 357; see also China's opening statement at the first meeting of
the Panel, para. 57.
577 China's response to Panel question 36, para. 134.
578 ATI's Comments on the Preliminary Determination of the Antidumping Investigation on GOES
from the U.S. and Russia and the Anti-subsidy Investigation on GOES from the U.S. (Industry Injury and
Causal Link) (Public version) (30 December 2009) ("ATI's Comments on the Preliminary Determination"),
Exhibit CHN-31, p. 9.
579 China's first written submission, paras. 336-337.
580 China's first written submission, paras. 339-341.

analysis must be viewed in the light of the lack of evidence to support it.
581 Furthermore, China
contends that all reasons advanced by MOFCOM for dismissing the argument that the increase in
domestic capacity severed the causal link were fully supported by the record.
7.609 China contends that the United States relies on misleading percentages to demonstrate that the
increase in capacity exceeded the in crease in demand. China asserts that percentage comparisons are
misleading because of the different bases from which th e relevant percentages are calculated. China
argues that the evidence before MOFCOM confirms that domestic capacity did not increase more than
demand.
7.610 China also argues that, because of the restraint exercised by domestic producers, the increased
capacity was not actually fully utilized.
582 Although China concedes that the details were not included
in the specific response to the alternative cause, Ch ina asserts that MOFCOM had earlier in its final
determination explained that fro m 2007 to 2008, domestic capacity increased by 53.67% but that
domestic production increased by only 23.91%. 583 China submits that this significant gap confirms
the restraint by the domestic producers who did no t produce more than the market could bear and
instead allowed capacity utilization rates to fall.
7.611 According to China, MOFCOM's finding th at there was no correlation between the
production capacity change and the inventory change is supported by the data, which indicates that
the inventory increase corresponds with the increase in volume of imports rather than the increase in
production capacity. 584 MOFCOM found that the levels of inventory did not correspond with the
deteriorating condition of the domestic industry, but that changing levels of imports did. According to
China, this analysis thus confirmed what MO FCOM had already found – that increased domestic
capacity was not the problem, but rather subject imports were the problem. China contends that
MOFCOM's comparison of the relative trends to see whether there was any correlation in the trends
that would suggest some adverse effects being imprope rly attributed "ensured that it did not 'attribute'
any effects of the change in domestic industry capacity to subject imports".585
7.612 In addition, China submits that the United States has improperly re-characterized the nature of
the alternative cause at issue here. China asserts that, during the proceedings, the arguments focused
on excess production capacity, and did not discuss excess production. China contends that now the
United States has shifted its argument to "overproduction," 586 and "production growing far more
rapidly than demand," 587 even though these arguments about excess production had never been
presented to MOFCOM during the investigation. China contends that MOFCOM addressed the
alternative cause that respondents had raised – excess capacity – and it is improper for the
United States now to propose an alternative cause that had never been raised before the authorities.
7.613 Overall, China submits that the United States h as at most proposed an alternative explanation
for one aspect of domestic industry performance. China asserts that prior panels have found as
inadequate non-attribution arguments that do no more than posit an alternative explanation or a partial
explanation for the condition of the domestic industry. China relies in this regard on the reports of the
panels in EC – Fasteners and US – Countervailing Duty Investigation on DRAMS.588

581 China's first written submission, paras. 357-358.
582 China's first written submission, para. 363.
583 Final Determination, Exhibit CHN-16, page 60..
584 China's first written submission, paras. 364-365.
585 China's second written submission, para. 113.
586 United States' opening statement at the first meeting of the Panel, para 86.
587 United States' opening statement at the first meeting of the Panel, para 87.
588 China refers specifically to Panel Reports, EC – Fasteners (China) , para 7.429, and US –
Countervailing Duty Investigation on DRAMS, paras. 7.361-362.

(f) Arguments of third parties
(i) Argentina
7.614 Argentina submits that an investigating author ity is required to carry out a non-attribution
analysis as a part of its causation investigation. This may include examining whether, in the light of
their volume or prices, the effects of non-subject imports are such to break the causal link between the
subject imports and the injury. This may require an examination of the forms of competition in the
relevant markets.589
(ii) European Union
7.615 The European Union argues that, in the light of its flawed price effects analysis, MOFCOM
could not have conducted a correct causal link analys is. Unless imports have proven significant price
effects, the investigating authorities cannot find such imports to be causing injury within the meaning
of Article 3.1 of the Anti-Dumping Agreement and Ar ticle 15.1 of the SCM Agreement. Further, any
causation analysis must take into account the "volume and prices" of imports.590
(iii) Saudi Arabia
7.616 Saudi Arabia argues that investigating authoriti es must separate and distinguish the injurious
effects of dumped imports from the injurious effects of other factors. It is only through doing this that
the degree of injury caused by the dumped or subs idized imports can be assessed. This process
requires a satisfactory or meaningful explanation of the nature and extent of the injurious effects
caused by other factors.591
(g) Evaluation by the Panel
7.617 The United States' claim raises issues regarding MOFCOM's use of price effects findings, and
MOFCOM's examination of the domestic industr y's increase in capacity and production as an
alternative cause of injury. Be fore addressing the substance of these issues, we first make a number
of observations regarding the applicable lega l framework for the Panel's evaluation of the
United States' claim.
(i) Legal framework
7.618 In terms of the applicable legal standard, we note that the Appellate Body has provided some
guidance regarding the interpretation of Article 3.5 of the Anti-Dumping Agreement which we
consider equally applicable to Article 15.5 of the SCM Agreement. Thus, in US - Hot Rolled Steel the
Appellate Body noted that investigating authorities ar e required, as a part of their causation analysis,
to examine all "known factors" other than dumped imports which are causing injury to the domestic
industry. Where such other known factors are causing injury, the investigating authority must ensure
that the injurious effects of these factors are not "attributed" to the dumped imports. The non-
attribution analysis requires "separating and disti nguishing the injurious effects of the other factors
from the injurious effects of the dumped imports", rather than making "mere assumptions" about the
effects of the imports and the other factors.592

589 Argentina's third party submission, paras. 14-15.
590 European Union's third party submission, paras. 47-48.
591 Saudi Arabia's third party submission, paras. 38-39.
592 See, for example, Appellate Body Report, US – Hot-Rolled Steel, para. 226.

7.619 We recall that it is well established that th e role of the Panel is not to conduct a de novo
review nor simply defer to the conclusions of the i nvestigating authority. Rather, we must determine
whether the explanation for the conclusions reached by the investigating authority is reasoned and
adequate in the light of other plausible alternativ e explanations. Furthermore, we must determine
whether the quality of the evidence relied on by MOFCOM met the "positive evidence" standard set
forth in Article 3.1 of the Anti-Dumping Agreemen t and Article 15.1 of the SCM Agreement. We
must also determine whether MOFCOM undertook an objective examination of the evidence. More
details of our standard of review are set forth at paragraph 7.513 above.
(ii) Use of price effects findings
7.620 Our evaluation of MOFCOM's findings on price depression and price suppression has
revealed a number of shortcomings in MOFCOM's analysis of the price effects of subject imports.
Since MOFCOM relied on the price effects of subj ect imports in support of its finding that subject
imports caused material inju ry to the domestic industry,
593 the abovementioned shortcomings also
undermine MOFCOM's conclusion on the causal link betw een subject imports and the material injury
suffered by the domestic industry.
7.621 We note China's argument that MOFCOM did not rely exclusively on the price effects of
subject imports in the present case, such that MOFCOM's finding of causation might rest on
MOFCOM's analysis of the adverse volume effects of the subject imports. We recall our earlier
findings in this regard.
594 In particular, while MOFCOM did indeed rely on both the volume and
price effects of subject imports, we recall that ther e is nothing in the final determination to suggest
that volume effects were the primary basis for MOFCOM's findings, or that MOFCOM relied more
heavily on volume effects than price effects. Ra ther, MOFCOM's finding that subject imports were
priced lower than domestic products was centra l to MOFCOM's finding that price depression and
price suppression was an effect of subject imports , and MOFCOM's overall conclusion that subject
imports caused material injury to the domestic indus try. In these circumstances, it is not appropriate
for us to consider the possibility that MOFCOM's finding of causation might be upheld purely on the
basis of MOFCOM's analysis of the volume effects of subject imports.
7.622 We now turn to the United States' argument regarding MOFCOM's evaluation of the domestic
industry's increase in capacity and production.
(iii) Other causes of injury: domestic capacity, production, demand and inventories
7.623 For present purposes, we note that Article 3.5 of the Anti-Dumping Agreement and
Article 15.5 of the SCM Agreement require an inves tigating authority to "examine any known factors
other than" subject imports "which at the same time are injuring the dom estic industry". These
provisions also state that "the injuries caused by these other factors must not be attributed to" the
subject imports. Before considering the applicab ility of these provisions, we must first clarify the
precise nature of the "other factor" at issue. We must also clarify the precise nature of the finding
made by MOFCOM in respect of that "other factor".

593 Final Determination, Exhibit CHN-16, p. 65 ("The evidence available shows that during the
investigation period, since the product concerned imported from the U.S. and Russia had been sold in the
domestic market of China at a price below normal value and at the same time, the product concerned imported
from the U.S. received subsidy from the USG, the import of the product concerned in large quantity and at a low
price caused material injury to the domestic industry of China").
594 See paras. 7.537-7.542 of this Report.

 The nature of the "other factor"
7.624 China argues that the United States improperly re-c haracterized the "other factor" at issue,
shifting its argument to "overproduction," 595 and "production growing far more rapidly than
demand."596 According to China, during the proceedings, the arguments focused on excess production
capacity, and did not discuss excess production. China contends that it is improper for the
United States now to propose an alternative cause that had never been raised before the authorities.
7.625 We are not persuaded by China's argument. In comments made during the course of
MOFCOM's investigation, the United States stated:
In 2008, the Chinese industry increased both its capacity and production far in excess
of any increase in demand. There is certainly a colorable argument that the enormous
increase in Chinese producers' inventories due to the domestic industry's incorrect
assessment of demand…forced the Chinese indus try to engage in massive price cuts
during the first quarter of 2009, resulting in operating performance declines during
that period.
597
7.626 The United States' comment clearly refers to the domestic industry's increase in production, in
addition to the increase in capacity. Furthermore, ATI's comment included the statement that "[t]he
huge gap between the production capacity and dema nd would necessarily change the supply-demand
relation which further affected the domestic market price." 598 When addressing an unrelated matter in
its first written submission, China sought to make "a very important point: capacity does not affect
the supply-demand balance in the market until that capacity has been turned into production." 599 We
agree with China's observation. For this reason, we consider that ATI's remark about the gap between
capacity and demand affecting supply and demand w as necessarily premised on the notion that such
capacity had been turned into production. Furt hermore, we note that MOFCOM itself referred to
"production output" when responding to the interested parties' comments. 600 In these circumstances,
China's argument that the issue of the domestic industry's increase in production was not raised before
MOFCOM is not tenable.
 The nature of MOFCOM's finding
7.627 We now turn to the nature of the finding made by MOFCOM, in order to resolve the
disagreement between the parties regarding the prima facie case that needs to be established by the
United States. The United States alleges that the only finding made by MOFCOM was that the
domestic industry's increase in capacity and production did not cause injury to the domestic industry.
The United States contends that it need only establish a prima facie case that MOFCOM's finding that
the domestic industry's increase in capacity and pr oduction did not cause injury is flawed. The
United States asserts that MOFCOM did not conduct any non-attribution analysis in respect of this
factor. According to China, though, MOFCOM addressed both issues. First, MOFCOM found that
excess capacity and excess production was not a cause of injury. Second, MOFCOM discussed (1)
the correlation between inventory levels and subject imports, and (2) the lack of correlation between
inventory levels and changes in production capacity. According to China, this second discussion both
confirmed MOFCOM's finding that capacity chang es were not a cause of injury, and served as a non-

595 United States' opening statement at the first meeting of the Panel, para 86.
596 United States' opening statement at the first meeting of the Panel, para 87.
597 Anti-Subsidy Investigation on Imported Grain Orie nted Flat-Rolled Electrical Steel Originating in
the United States: United States' Comments on the Prelim inary Determination, (30 Dec. 2009), Exhibit US-4,
p. 9.
598 ATI's Comments on the Preliminary Determination, Exhibit CHN-31, p. 9.
599 China's first written submission, para. 363.
600 Final Determination, Exhibit CHN-16, p. 72.

attribution analysis.
601 According to China, therefore, the United States must establish a prima facie
case both that MOFCOM's finding that the domestic industry's increase in capacity and production did
not cause injury is flawed, and that MOFCOM's non-attribution analysis is flawed.
7.628
It is well established that a proper non-attri bution analysis requires the injury caused by
"other factors" to be separated and distinguished from th e injury caused by increased imports. 602 In
other words, injury caused by other factors must be cl early identified, to ensure that it is not attributed
to subject imports. In the present case, MOFCOM found that there was no injury caused by the
domestic industry's increase in capacity and production. Having made this finding, we do not see how
MOFCOM could then have identified the injury caused by that factor, and ensured that such injury -
of which there was allegedly none - was not attribut ed to subject imports. Accordingly, we reject
China's argument that MOFCOM undertook a non-attribution analysis in respect of the domestic
industry's increase in capacity and production. In our view, the only finding made by MOFCOM was
that this factor was not a cause of injury to the do mestic industry. This, then, is the finding in respect
of which the United States must establish a prima facie case. In particular, the United States has the
burden of establishing a prima facie case that MOFCOM's finding that the domestic industry's
increase in capacity and production did not cause injury is flawed. We shall now determine whether
or not the United States has discharged that burden in the light of the parties' arguments.
7.629 The principal arguments set forth in the Unite d States' first written submission concerned the
relationship between, and changes in, capacity, produc tion, inventories, demand, and the volume of
subject imports. 603 MOFCOM's final determination contai ns only relatively limited information
regarding these factors. After determining that a dditional information was necessary in order for the
Panel to undertake a more complete evaluation of the issues raised by the United States, the Panel
asked China to provide the confidential data supporting MOFCOM's finding, including data on
demand, domestic capacity, capacity utilization, domestic production and inventories.604 China failed,
however, to provide the bulk of the requisite confid ential data. Indeed, for the most part China failed
to provide any actual data at all, preferring to submit indexed summaries and numerical ranges.
Although the Panel was not provided with access to all of the relevant data , the Panel nevertheless
evaluates the United States' claim with the more limited information at hand.
7.630 The United States has asserted, on the basis of th e various estimates that it has prepared, that
the inventory overhang exceed ed the increase in the volume of subject imports. 605 We note that an

601 China's response to Panel question 107(ii), para. 185.
602 See, for example, Appellate Body Report, US – Hot-Rolled Steel, para. 226
603 United States' first written submission, paras 246 - 255.
604 The Panel addressed a fax to China dated 18 November 2011. In that fax, the Panel requested
"certain confidential data from Chin a". In particular, the Panel requeste d "[t]he data supporting MOFCOM's
finding that the domestic industry's increase in capacity and production did not cause any injury, including data
on demand, domestic capacity, capacity utilization, domestic production and inventories". China contends that
the Panel asked only for "data", and "did not specify any particular documents, numbers, or time periods"
(China's reply to Panel question 105(c), para. 167). We reject this argume nt. In our view, the relevant fax
clearly requested "confidential data", "including da ta on demand, domestic capacity, capacity utilization,
domestic production and inventories". By failing to provide this data, China failed to respond fully to the
Panel's request.
605 China has criticised some of those estimates on the basis that the United States made an error
regarding the amount of domestic capacity as a per cent of demand (China's response to Panel question 105(c),
para. 174). In our view, the number used by the United States was based on a not unreasonable reading of an
assertion made by China. (China asserted that "[d]omestic capacity as a per cent of total apparent consumption
was ranged between [x] and [y] during the period of investigation". The United States understood that the
figure "y" corresponded to the capacity as a proportion of demand in 2008. In our view, it is not unreasonable to
interpret China's assertion to mean that the figure "y" indi cated the relevant value in the latter part of the period
of investigation.) Furthermore, although China alleged an error by the United States, China failed to state what

important element in MOFCOM's reasoning was indeed that inventory overhangs were not explained
by increases in domestic capacity and domestic production, but rather by the increase in the volume of
subject imports from 2007 to 2008. This is clear from the various references made by MOFCOM to
the increase in the volume of subject imports in the following extract from the final determination:
Due to the increase of import volume of the product concerned in 2008, the increase
rate of the domestic like product's sales volume decreased greatly. The normal sales
of the domestic industry of China were seriously suppressed and consequently the
inventory increased largely. Thirdly, the import volume of the product concerned did
not increase at a constant speed. As the Inves tigating Authority had analysed in detail
in the determination, the imports of the product concerned increased greatly in 2008.
The increase rate of the import volume of the product concerned in 2008 and Q1 of
2009 were higher than the increase rate of the domestic demand of China by 42.55
percentage points and 11.11 percentage points respectively and higher than the
increase rate of sales volume of domestic like product by 55.60 percentage points
and by 8.74 percentage points. 606
7.631 This understanding is consistent with Chin a's own explanation of MOFCOM's finding. 607
Thus, China explains that, although production kept pace as capacity expanded in 2007, "that situation
changed when subject imports increased in 2008 and Q1 2009". 608 China also explains that "[b]oth
the large presence and growth of the unfairly traded imports … impeded domestic sales". 609
Furthermore, China asserts that "[e]ven with capac ity increasing in 2007, before the surge in subject
imports the domestic industry was able to increase its production and shipments, and draw down its
inventory".610 China asserts that this "situation changed dramatically in 2008", when "subject imports
surged", allowing subject imports to gain more than 5.56 percentage points of market share "directly
from the domestic industry". 611 According to China, the domestic industry "could not ship any
additional volume because the unfairly traded subject imports seized a large portion of the market".612
7.632 Thus, according to MOFCOM, the increase in inventories was caused by the increase in
subject imports, rather than by the increase in the domestic industry's capacity and production.
Information before the Panel, 613 though, indicates that inventor y overhangs would have occurred
notwithstanding the increase in subject imports, thereby undermining MOFCOM's assessment of this
issue. In this regard, we note that the upper end of the range of 2008 inventory data provided by
China exceeds the increase in the volume of subject imports in 2008. Thus, the range of data
provided by China indicates that inventories may have increased by more than subject imports.
China's assertion that "the domestic production in 2008 that could not be shipped was due almost

the correct number should be. In these circumstances, we do not consider that China's mere assertion of error,
without providing the actual underlying data, should necessarily cause us to reject the basic point being made by
the United States.
606 Final Determination, Exhibit CHN-16, pp. 72-73.
607 China's 25 November 2011 response to the Panel questions dated 18 November 2011, pp. 3-7.
608 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 4.
609 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 5. While
China refers to the both the "presence" and "growth" of subject imports, MOFCOM did not make any finding of
injury based on the "presence" of subject imports in 2007. (Indeed, according to China, "[t]he domestic industry
had been doing fine in 2006 and 2007" (China's first written submission, para. 254). Rather, MOFCOM's
determination, regarding the possible role of the domestic industry's increase in capacity and production, is
focused on the "growth" in subject imports between 2007 and 2008).
610 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 5.
611 China's 25 November 2011 response to the Panel questions dated 18 November 2011, pp. 5 and 6.
612 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 6.
613 See Annex H: Annex Containing Business Confidential Information.

entirely to the gain in subject imports" confirms that this was indeed the case.
614 In particular, the fact
that the increase in subject imports accounts for "almost" all of the inventory overhang indicates that
part of that overhang was caused by something ot her than the increase in the volume of subject
imports. In addition, China has provided a ra nge of data for domestic production in 2008.
615 W e
developed an equivalent range for 2007 production, on the basis of China's assertion that the domestic
industry increased its production by 24% between 2007 and 2008.616 The absolute difference between
both the lower and the upper numbers of the 2007 and 2008 ranges comfortably exceeds the absolute
increase in the volume of subject imports over the same period. In other words, the increase in
production by the domestic industry from 2007 to 2008 was greater than the increase in subject
imports, and would have accounted fo r (at least some of) the inventory build-up that could not be
attributed to the (lesser) increase in subject im ports. In these circumstances, an objective and
impartial investigating authority could not properly have found that the domestic industry's increase in
production was not a cause of injury.
7.633 A similar picture emerges from the limited inform ation available regarding the first quarter of
2009. The United States asserts that the domestic i ndustry produced a significant number of tons of
GOES more than it could ship during the first quart er of 2009. The United States contends that the
"quantity of excess production is staggering".
617 Our own calculations confirm that the increase in
subject imports could only account for a minor portion of the increase in inventories in the first
quarter of 2009. Thus, the amount of domestic producti on directed to inventory in the first quarter of
2009 was significantly greater than the increase in subject imports from the first quarter of 2008 to the
first quarter of 2009. Indeed, the increase in inventory in the first quarter of 2009 was even greater
than the total volume of subject imports in the first quarter of 2009. Thus, even if there had not been
any subject imports in the first quarter of 2009, th ere would still have been a substantial increase in
inventories in this period.
7.634 Accordingly, the limited information available to us supports the United States' argument that
domestic capacity
618 and domestic production increased by more than the increase in the volume of
subject imports in 2008 and the first quarter of 2009. This is at odds with MOFCOM's determination
that the increase in the domestic industry's capacity a nd production was not a cause of injury, and that
the real cause of the injurious inventories was the increase in the volume of subject imports.
7.635 Before concluding, we note China's relian ce on MOFCOM's finding that total domestic
capacity did not exceed total domestic demand. We are unable to verify this finding, because of
China's failure to provide the underlying data. Ho wever, even if this finding were accurate, it would
not change the fact that subject imports did not account for the totality of the injurious inventory
overhangs.
7.636 We also note China's argument that ATI had fa iled to support its assertions regarding this
"other factor" with "public information". Given th e difficulties we have experienced in obtaining all
of the information necessary to evaluate the United States' claim, we are not persuaded that ATI could
reasonably have been expected to provide "public in formation" regarding this matter. Furthermore,
we do not consider that a respondent is required to provide evidence regarding "other factors".
Article 3.5 of the Anti-Dumping Agreement and Ar ticle 15.5 of the SCM Agreement provide that

614 China's response to Panel question 105(c), para. 176.
615 China's response to Panel question 105(c), para. 175.
616 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 6.
617 United States' comments on China's response to Panel question 105, para. 119.
618 Since domestic producers were not utilizing 100% of their capacity in 2008 (China's
25 November 2011 response to the Panel questions dated 18 November 2011, p. 4. See also Final
Determination, Exhibit CHN-16, p. 64: "Capacity utilization had a substantial decline" from 2007 to 2008),
domestic capacity necessarily exceeded domestic production in 2008.

"[t]he authorities shall also examine any known fact ors other than the [subject] imports which at the
same time are injuring the domestic industry". Accordingly, once the "other factor" becomes
"known" to the investigating authority, it is for the investigating authority to investigate.
7.637 As explained above, the burden is on the United States to establish a prima facie case that
MOFCOM's finding that the domestic industry's increase in capacity and production did not cause
injury is flawed. Our evaluation of the United States' arguments in the light of the limited information
available to us, and our analysis of that information, indicate that the domestic industry's increase in
capacity and production were at least partly responsible for the accumulation of inventory in 2008 and
the first quarter of 2009. Accordingly, we find that the United States has established a prima facie
case that MOFCOM's determination that the domest ic industry's increase in capacity and production
was not a cause of injury is flawed. We fu rther find that China has failed to rebut that prima facie
case. As a result, we find that MOFCOM failed pr operly to examine whether a known factor other
than subject imports was at the same time injuring the domestic industry, contrary to the obligation set
forth in the third sentences of Article 3.5 of th e Anti-Dumping Agreement and Article 15.5 of the
SCM Agreement.
 Conclusion
7.638 For all of the above reasons, we conclude that MOFCOM's finding that subject imports
caused material injury to the domestic industry is in consistent with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement, and Articles 15.1 and 15.5 of the SCM Agreement.
2. Whether China acted inconsistently with Articles 12.8 of the SCM Agreement and 6.9 of
the Anti-Dumping Agreement in failing to disclose the essential facts under
consideration in relation to non-subject imports in its causation anaylsis
(a) Provisions at issue
7.639 Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement provide:
The authorities shall, before a final determ ination is made, inform all [interested
Members and] interested parties of the e ssential facts under consideration which form
the basis of the decision whether to appl y definitive measures. Such disclosure
should take place in sufficient time for the parties to defend their interests.619
(b) Factual Background
7.640 Following the preliminary determination, and prior to issuing its final determination,
MOFCOM issued a final injury disclosure document, with the stated purpose of disclosing the "basic
facts upon which the final injury determination is made".
(c) Arguments of the United States
7.641 The United States claims that MOFCOM's failu re to disclose information concerning non-
subject imports is inconsistent with Article 12.8 of the SCM Agr eement and Article 6.9 of the Anti-
Dumping Agreement. As MOFCOM purported to consider whether imports not subject to
investigation were a cause of material injury to th e domestic industry, facts pertaining to such imports
were essential to its causal link analysis. 620 However, MOFCOM disclosed no information regarding

619 Where the text in brackets is included only in Article 12.8 of the SCM Agreement and not in
Article 6.9 of the Anti-Dumping Agreement.
620 United States' first written submission, para. 259.

the volume and prices of imports from sources other than Russia and the United States.
Consequently, the United States was unable to prep are a meaningful argument regarding the role of
such imports in contributing to any material injury to the domestic GOES industry.
621 According to
the United States, China does not seriously dispute that MOFCOM failed to disclose any information
about the volume or prices of imports from source s other than Russia and the United States and nor
does China dispute that such information is essential to a causation analysis.622
7.642 In response to China's argument that MOFC OM was not required to disclose further
information about non-subject imports because the in terested parties did not continue to submit
arguments on the issue, the United States contends th at this turns the purpose of Articles 12.8 of the
SCM Agreement and 6.9 of the Anti-Dumping Agreem ent on its head. The provisions do not exist to
allow authorities to counter arguments parties have made. Rather, they require authorities to provide
information so that parties may defend their interests.623
7.643 According to the United States, in its firs t written submission China for the first time
discloses detailed information about the volume and value of non-subject imports. The United States
contends that if MOFCOM had di sclosed this information, whic h was information essential to any
reasoned analysis of the issue, the United Stat es may well have developed arguments to submit to
MOFCOM. 624
(d) Arguments of China
7.644 China argues that it did disclose the "essential f acts under consideration" with respect to the
role of non-subject imports in the causation analys is. In particular, China cites the preliminary
determination as identifying non-s ubject imports as an "other" f actor under consideration. The
preliminary determination also notes that the imports under investigation were capturing a larger share
of the market than non-subject imports. 625 This provided notice that China was addressing non-
subject imports and that subject imports were ga ining a share of total imports. Further, China
contends that by comparing the percentage loss in market share experienced by the domestic industry
with the percentage gain by the imports under invest igation, it was possible for interested parties to
calculate the gain in market share by non-subject imports (namely, 0.09%). 626 With respect to the
pricing of non-subject imports, China argues that MOFCOM considered this, but only indirectly.
MOFCOM observed that there was no evidence of the dumping of non-subject imports, but did not
otherwise investigate or consider the prices of such imports.
627
7.645 China also argues that having identified in th e preliminary determination that non-subject
imports were being considered by MOFCOM, the inte rested parties did not comment on this issue.
Therefore, China did not need to develop this is sue further. In addition, China argues that the
interested parties could have derived informati on about non-subject imports from publicly available
sources.628

621 United States' first written submission, para. 260.
622 United States' second written submission, para. 181.
623 United States' second written submission, para. 185.
624 United States' second written submission, paras. 186-187.
625 China's first written submission, para. 373.
626 China's first written submission, para. 374 and Chin a's opening statement at the first meeting of the
Panel, para. 58
627 China's response to Panel question 70, para. 63.
628 China's first written submission, para. 375 and Chin a's opening statement at the first meeting of the
Panel, para. 59.

(e) Arguments of third parties
(i) European Union
7.646 The European Union argues that any proper cau sation analysis must take into account the
"volume and prices" of non-subject imports. MO FCOM appears to have undertaken such an
assessment, but did not disclose any of the relevant data to the parties. Therefore, MOFCOM failed to
comply with Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement.629
(ii) Japan
7.647 With respect to the causation analysis, Japan gi ves a number of examples of "essential facts"
which may underlie an investigating authority's c onclusions, including the facts found relating to the
effect of non-subject imports and the analys is of the raw data supporting these findings. 630 In
response to China's argument that MOFCOM discl osed the relevant facts in the preliminary
determination, Japan notes that a preliminary de termination does not always result in sufficient
disclosure of the "essential facts" before the final determination. The "essential facts" may change
between a preliminary determination and an "on-the- spot investigation". If so, an exporter should be
informed of any changes in the "essential facts".631
(f) Evaluation by the Panel
7.648 The issue in contention between the parties is whether MOFCOM disclosed the essential facts
under consideration in relation to its causation analysis, in particular in relation to the effect of non-
subject imports on the domestic industry.
7.649 China argues that the following disclosures made in the preliminary determination met the
requirements of Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement:
(i) The preliminary determination states, in th e section analysing the other factors that
may cause injury to the domestic industry, that "[d]uring the POI, the proportion of
imports of the subject merchandise as a percentage of China's total imports increased,
while the proportion of the volume of GOES imported from Other Countries and
regions in total imports continued to drop. Meanwhile, there is no evidence that
imports from other countries (regions) ever dumped or received subsidies. Therefore,
there is no evidence suggesting that imported GOES from Other Countries and
regions caused material injury to China's domestic industry"
632; and
(ii) The preliminary determination also states, in the section analysing the economic
factors and indices having a bearing on the state of the domestic industry, that "the
market share of like product of China's domestic industry declined by 5.65%...at the
same period, the share of product concerne d in China market increased by 5.56%".
633
China argues that this indicates that non-subject imports were responsible for 0.09%
of market share loss.

629 European Union's third party submission, paras.48-49.
630 Japan's third party submission, para. 17.
631 Japan's third party statement, paras. 10-11.
632 Preliminary Determination, Exhibit US-5, p. 57.
633 Preliminary Determination, Exhibit CHN-17, p. 60.

7.650 The United States claims that more detailed in formation regarding non-subject imports, in
particular their volumes and prices, should have been disclosed in accordance with Articles 12.8 of
the SCM Agreement and 6.9 of the Anti-Dumping Agreement.
7.651 At the outset, we recall China's argument that it did not need to provide further disclosure
regarding non-subject imports following the prelim inary determination because the interested parties
made no further arguments on the issue. The Panel does not find this line of reasoning convincing.
Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement are not a means by
which authorities respond to arguments made by inte rested parties. Rather, the provisions allow
interested parties to "defend th eir interests" through review and response to the essential facts under
consideration disclosed by the investigating authoriti es. Indeed, the ability of an interested party to
submit arguments on the facts under consideration is dependent upon adequate disclosure of those
facts. Consequently, if the requirement for an in vestigating authority to disclose information under
Articles 12.8 and 6.9 were not trig gered until interested parties submitted arguments, the provisions
may become meaningless. Further, in relation to th e argument that the interested parties could have
consulted publicly available information regarding the non-subject im ports of GOES into the Chinese
market, the Panel notes that the obligations under Articles 12.8 and 6.9 fall upon investigating
authorities and do not make any distinction between confidential and publicly available facts. It is not
for a respondent to guess at and research the info rmation being considered by an investigating
authority.
7.652 Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement require
investigating authorities to "inform all interested parties of the essential facts under consideration
which form the basis for the decision whether to apply definitive measures". In order to apply
definitive measures at the conclusion of count ervailing and anti-dumping investigations, an
investigating authority must find dumping or subsidization, injury and a causal link. Therefore, the
"essential facts" underlying the findings and conclusi ons relating to these elements form the basis of
the decision to apply definitive measures and should be disclosed. Our interpretation in this regard
accords with that of the panel in Mexico – Olive Oil.
634
7.653 In considering the disclosure obligations unde r Articles 12.8 of the SCM Agreement and 6.9
of the Anti-Dumping Agreement, the question ari ses regarding whether the "essential facts" are the
facts that were actually under consideration by the investigating authority, or the facts that should
have been considered by a reasonable investig ating authority, depending upon the substantive
obligations at issue. In this respect, the Pa nel interprets Articles 12.8 and 6.9 as requiring an
investigating authority to disclose those facts that are actually under consideration by it (i.e. the body
of facts before it). We find support for this in the text of the provisions, which state that the
disclosure requirement applies to the "essential fact s under consideration", rather than the essential
facts that should reasonably be considered in reso lving a claim. If the standard were otherwise,
claims under Articles 12.8 and 6.9 may be difficult to distinguish from substantive claims relating to
the application of definitive measures. Finally, th e purpose of the disclosure in Articles 12.8 and 6.9
is to allow parties to "defend their interests". In order for this to be meaningful, the actual facts under
consideration are the relevant facts to be disclosed, so that omissions or the use of incorrect facts can
be challenged.
7.654 In the circumstances of this case, the United St ates claims that MOFCOM should have
disclosed the volume and prices of imports from sources other than Russia and the United States. In
examining this claim, it is necessary for the Panel to consider whether the volume and prices of non-
subject imports were "essential facts" under c onsideration by MOFCOM in reaching its final
determination and, if so, whether the disclosures relied upon by China were sufficient for the purposes
of Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement.

634 Panel Report, Mexico – Olive Oil, para. 7.110.

7.655 It is clear that in reaching its conclusion re lating to causation, MOFCOM considered whether
non-subject imports were an "other" factor that may have caused injury to the domestic industry.635 In
the preliminary determination, MOFCOM stated:
During the POI, the proportion of imports of the subject merchandise as a percentage
of China's total imports increased, while the proportion of the volume of GOES
imported from Other Countries and regions in total imports continued to drop.
Meanwhile, there is no evidence that impor ts from other countries (regions) ever
dumped or received subsidies. Therefore, there is no evidence suggesting that
imported GOES from Other Countries and regions caused material injury to China's
domestic industry.
636
7.656 Whether the volume and value of non-subject impor ts were facts actually under consideration
by MOFCOM, rather than MOFCOM merely reaching a conclusion about the effect of non-subject
imports based on the very general information a bout market share disclosed in the preliminary
determination, is less clear. While reaching a conclusion about the effects of non-subject imports
based purely on general information on market share tr ends could potentially be inconsistent with the
substantive obligations under the SCM and Anti- Dumping Agreements, whether an investigating
authority acts inconsistently with disclosure ob ligations under Articles 12.8 of the SCM Agreement
and 6.9 of the Anti-Dumping Agreement depends upon whether it failed to disclose essential facts that
were actually before it.
7.657 In the circumstances of this case, the Panel conc ludes that in reaching its finding on the effect
of non-subject imports, MOFCOM had before it and considered data on the volume of such imports,
rather than merely the market shares. In res ponse to a Panel question, China states that "MOFCOM
considered both the volume and prices of non-subject imports, but considered the volume directly and
considered the prices indirectly".
637 In relation to volume, China ar gues that the market share trends
for non-subject imports, disclosed in the prelimin ary determination, allowed MOFCOM to conclude
that non-subject imports were not a source of injury to the Chinese GOES industry. In this regard,
China states that "in the light of the analysis that MOFCOM conducted that showed non-subject
imports were not gaining market share, MOFCOM properly considered and addressed this issue". 638
This suggests that MOFCOM had mo re detailed data on volume before it, which it analysed and used
to derive the information on market share. Indeed, information about the volume and value of non-
subject imports, at least for 2008, was submitted to MOFCOM in an annex to the application.
639 In
the light of this, we conclude that data on the vol ume of non-subject imports was a part of the body of
facts being considered by MOFCOM as a part of its causation analysis.
7.658 The Panel considers that the data on volume wa s an "essential fact under consideration" with
respect to the causation analysis and finding. For the purposes of Articles 12.8 of the SCM
Agreement and 6.9 of the Anti-Dumping Agreement, it is insufficient merely to state a general finding
and conclusion regarding non-subject imports, namely that as a proportion of total imports into China,
non-subject imports "continued to drop" and therefor e were not a cause of injury to the domestic
industry. Rather, the facts underlying these findings and conclusions should have been disclosed, in
order to allow parties to "defend their interest s" by challenging the basis for the findings and
conclusions. In this case, disclosure of the data on the volume of imports was required.

635 MOFCOM expressly disclosed this in the Preliminary Determination, Exhibit CHN-17, p. 65.
636 Preliminary Determination, Exhibit US-5, p. 57.
637 China's response to Panel question 70, para. 61.
638 China's opening statement at the second meeting of the Panel, para. 82.
639 United States' second written submission, paras. 185-187. See, 2008 Customs Monthly Imports
Data (Annex 6 of Petition for an Anti-Dumping and an Anti-Subsidy Investigations), Exhibit CHN-33.

7.659 Clearly the data on the volume of non-subject imports was not disclosed. Rather, the
preliminary determination included (i) a general stat ement about the share of non-subject imports as a
proportion of total imports; and (ii) a statement from which information regarding the market share of
non-subject imports in 2008 could be derived, although was not expressly disclosed. This
undermined the ability of interested parties to ch allenge the basis for MOFCOM's conclusion that
non-subject imports were not a cause of injury to the domestic industry.
7.660 Consequently, the Panel concludes that China act ed inconsistently with Articles 12.8 of the
SCM Agreement and 6.9 of the Anti-Dumping Agreem ent in not disclosing the data on volume of
non-subject imports. In the light of this conclu sion, the Panel does not consider it necessary to
proceed to consider whether MOFCOM also failed to disclose "essential facts under consideration" by
not disclosing the prices of non-subject imports.
3. Whether China acted inconsistently with Articles 22.5 of the SCM Agreement and 12.2.2
of the Anti-Dumping Agreement in relation to the public notice and explanation of its
causation analysis with respect to non-subject imports
(a) Provisions at issue
7.661 Articles 22.5 of the SCM Agreement and 12.2. 2 of the Anti-Dumping Agreement provide,
relevantly:
A public notice of conclusion or suspension of an investigation in the case of an
affirmative determination providing for the imposition of a definitive duty…shall
contain, or otherwise make available through a separate report, all relevant
information on the matters of fact and law and reasons which have led to the
imposition of final measures…due regard be ing paid to the requirement for the
protection of confidential information. In particular, the notice…shall contain…the
reasons for the acceptance or rejection of relevant arguments or claims made by
[interested Members and by] the exporters and importers.
640
(b) Factual Background
7.662 Following the issuance of the preliminary dete rmination and the final disclosure documents,
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing
duty investigations.
(c) Arguments of the United States
7.663 The United States claims that Ch ina acted inconsistently with Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.5 of the SCM Agreement because of its cursory and fact free
analysis of the effect of non-subject imports.
7.664 The United States argues that information on th e volume and prices of imports from sources
other than Russia and the United States was direc tly relevant to MOFCOM's injury analysis.
However, MOFCOM's final determination disclosed no information to support its finding that the
non-subject imports were not a cause of injury, although such information would not have been

640 Where the text in brackets is included only in the SCM Agreement and not in the Anti-Dumping
Agreement.

confidential.641 According to the United States, Article 12.2.2 of the Anti-Dumping Agreement and
Article 22.5 of the SCM Agreement are intended to avoid such opacity in decision-making.642
7.665 In response to China's argument that non-su bject import market share increased only
modestly in 2008, the United States contends that MOFCOM made no such finding. Rather,
MOFCOM found that imports "continued to drop", wh ich is not consistent with China's response
regarding an increase in market share for non-subj ect imports. According to the United States, the
"divergence between China's proffered justification for the finding that non-subject imports were not a
cause of injury to the domestic GOES industry and MOFCOM's stated justification indicates that the
actual basis for the finding remains unclear". Con sequently, the final determination does not contain
"all relevant information on the matters of fact and law" which led MOFCOM to conclude that non-
subject imports were not a cause of injury to the domestic GOES industry.
643 Further, the
United States argues that China's acknowledgment th at non-subject imports gained market share in
2008 cannot possibly serve as a factual justification for a conclusion that non-subject imports were not
a cause of injury.644
(d) Arguments of China
7.666 China does not clearly distinguish between its arguments that relate to disclosing the
"essential facts under consideration" and those that relate to the notice requirements under
Article 12.2.2 of the Anti-Dumping Agreement and Article 22.5 of the SCM Agreement. In any
event, in addition to the arguments outlined at pa ragraphs 7.644-7.645 of this Report, China also
rejects the contention that MOFCOM did not provid e any "factual substantiation" for its conclusions
on non-subject imports. China submits that the de monstration that non-subject imports gained only
0.09% market share is factual substantiation. Further, in the light of the failure of the United States to
use publicly available information to develop ar guments on this issue, MOFOM provided adequate
discussion of it.645
(e) Arguments of third parties
(i) European Union
7.667 The European Union argues that not providi ng information on non-subject imports in the
context of the causation analysis falls short of the transparency requirements embodied in
Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement.646
(ii) Saudi Arabia
7.668 According to Saudi Arabia, the public notices referred to in Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.5 of the SCM Ag reement must contain sufficient detail to allow
interested parties to discern either the significance or lack thereof of the factors the investigating
authority was obligated to address in its analysis.647

641 United States' first written submission, paras. 263-264.
642 United States' first written submission, paras. 264-265.
643 United States' second written submission, para. 188.
644 United States' second written submission, para. 189.
645 China's first written submission, para. 376. It is evident from China's footnote reference to the
United States' submission that this part of China's submission relates to the claim under Article 12.2.2 of the
Anti-Dumping Agreement and Article 22.5 of the SCM Agreement, rather than Article 6.9 of the Anti-Dumping
Agreement and 12.8 of the SCM Agreement.
646 European Union's third party submission, para. 50.
647 Saudi Arabia's third party submission, para. 46.

(f) Evaluation by the Panel
7.669 The United States argues that the final determina tion did not include "all relevant information
on matters of fact and law" leading to the impos ition of definitive measures. In particular, the
United States argues that the final determination was "essentially devoid of in formation" relating to
imports from sources other than Russia and the United States. According to the United States, the
final determination contained no information concerning the vol ume and value of non-subject
imports. Further, the lack of factual substan tiation for MOFCOM's conclusion rendered it impossible
to review.
648 Consequently, the United States claims that China acted inconsistently with
Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement.
7.670 The final determination included the following statement about non-subject imports:
During the POI, the proportion of imports of subject merchandise in China's total
imports had been increasing, while the pr oportion of the volume of GOES imported
from other countries and regions in total imports continued to drop. Meanwhile, there
is no evidence that imports from other countries (regions) were ever dumped or
subsidized. Therefore, there is no ev idence suggesting that GOES imported from
other countries or regions caused material injury to China's domestic industry.
649
7.671 The final determination also stated, in the section analysing domestic industry indicators, that
"in 2008, the market share of like product of Ch ina's domestic industry declined by 5.65%...in the
same period, the share of the subject mercha ndise in the Chinese market increased by 5.56%". 650
China argues that this disclosed that non-subject im ports were responsible for 0.09% of market share
loss.
7.672 The text of Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement
can be read relatively broadly, in that "all relevant information on matters of fact and law and reasons
which have led to the imposition of final measures" must be included in the public notice or separate
report. However, in contrast to Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping
Agreement, Articles 22.5 and 12.2.2 do not provide that they allow interested parties to "defend their
interests". Rather, the title to Articles 22 of the SCM Agreement and 12 of the Anti-Dumping
Agreement, indicate that they are directed at provi ding the public with notice of the outcome of an
investigation and providing interested parties with an explanation for the outcome reached. Although
the explanations may form the basis of a party's re quest for review of a determination, either in
domestic judicial review proceedings or at the WTO, the Panel is not convinced that Articles 22.5 and
12.2.2 necessarily require a second disclosure, this time public, of the same detailed information, such
as datasets, that may have required disclosure unde r Articles 12.8 of the SCM Agreement and 6.9 of
the Anti-Dumping Agreement.
7.673 In any event, it is clear that the causation anal ysis is one of the essential elements leading to
the imposition of final measures. Therefore, the re levant information on matters of fact and law and
reasons underlying the causation analysis must be se t forth in the public notice or separate report in
accordance with Articles 22.5 of the SCM Agreemen t and 12.2.2 of the Anti-Dumping Agreement.
The causation analysis includes examination of othe r factors, apart from the dumped or subsidized
imports, that may be injuring the domestic industry. In this context, MOFCOM considered the effect
of non-subject imports on the domestic industry. However, MOFCOM's disclosure in the final
determination on this point was extremely limited. In the section of the determination relating to
other factors that may have been causing injury , MOFCOM stated that non-subject imports as a

648 United States' first written submission, paras. 262, 264-265.
649 Final Determination, Exhibit US-28, p. 61.
650 Final Determination, Exhibit US-28, p. 57.

proportion of total imports "continued to drop". Wh ile China argues that information on the market
share of non-subject imports during 2008 could be derived from disclosures in other sections of the
determination, namely that non-subject imports in creased by 0.09% in 2008, this disclosure was not
explicit and its relevance to the analysis of the non- subject imports as a factor that could be injuring
the domestic industry was not clear, particularly in the light of the fact that the information from
which it could be derived was in a different section of the determination.
7.674 Even if we were to accept that MOFCOM disclosed that non-subject imports increased by
0.09% in 2008, the Panel is not convinced that MOFCOM adequately disclosed all relevant
information on the matters of fact and law and reasons underlying the conclusion that non-subject
imports were not injuring the domestic industry. As indicated in para graph 7.657 of this Report, it is
clear that MOFCOM had information before it and undertook some analysis of that information in
addressing non-subject imports as an "other" cause of in jury. However, there is no indication of this
in the public notice. Indeed, China defends the merits of MOFCOM's conclusion by reference to
reasons and facts which it states "underscores the reasonableness of MOFCOM's judgment on this
issue". For instance, China argues that during the first and fourth quarters of 2008, "subject imports
gained 21.3 million kgs, while non-su bject imports gained only 8.9 million kgs. The overall market
was growing, so both increased. But unfairly trade subject imports were gaining volume faster, and
then gaining market share. Fairly traded non-s ubject imports increased more modestly and did not
gain market share". 651 Given our earlier conclusion that MO FCOM had detailed data on the volume
of non-subject imports before it 652, and that China argues that th is data supports MOFCOM's
conclusion, it is our view that the public notice fails to set forth "all relevant information on the
matters of fact and law and reas ons which have led to the impositi on of final measures". We do not
consider it necessary to proceed to decide whethe r MOFCOM should also have disclosed the full set
of data on the volume and prices of non-subject imports as a part of its final determination.
7.675 Consequently, in the light of this reasoni ng, the Panel concludes that China acted
inconsistently with Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement.
L. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE 1 OF THE ANTI -DUMPING
AGREEMENT AND ARTICLE 10 OF THE SCM AGREEMENT
1. Provisions at issue
7.676 Article 10 of the SCM Agreement provides, relevantly:
Members shall take all necessary steps to ensure that the imposition of a countervailing duty
on any product of the territory of any Member im ported into the territory of another Member
is in accordance with the provisions of Artic le VI of GATT 1994 and the terms of this
Agreement.
7.677 Similarly, Article 1 of the Anti-Dumping Agreement provides, relevantly:
An anti-dumping measure shall be applied only under the circumstances provided for
in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in
accordance with the provisions of this Agreement.

651 China's opening statement at the second meeting of the Panel, para. 88.

2. Arguments of the United States
7.678 The United States argues that because China's conduct of the GOES investigation breached
numerous other provisions of the SCM and Anti-Dumping Agreements, China also breached
Articles 10 and 1 of these Agreements respectively.
653
3. Arguments of China
7.679 China argues that to the extent it has addressed all the substantive claims raised by the
United States and has acted consistently with its obligations, the claims under Articles 10 and 1 of the
SCM and Anti-Dumping Agreements respectively, should be set aside.654
4. Evaluation by the Panel
7.680 The United States' claims under Article 1 of the Anti-Dumping Agreement and Article 10 of
the SCM Agreement are dependent on the other claims it has brought in this dispute.
7.681 Therefore, to the extent we have upheld th e United States' claims under the SCM and Anti-
Dumping Agreements, we find that China has also acted inconsistently with Article 10 of the SCM
Agreement and Article 1 of the Anti-Dumping Agreement.

653 United States' first written submission, paras. 183 and 267.
654 China's first written submission, paras. 249 and 377-378.

VIII. CONCLUSIONS AND RECOMMENDATION
A. CONCLUSIONS
8.1 In the light of the findings set forth in this Report, the Panel concludes that China acted
inconsistently with:
(a) Article 11.3 of the SCM Agreement, on the basis that MOFCOM initiated
countervailing duty investigations into each of the 11 programmes challenged before
the Panel by the United States, without sufficient evidence to justify this;
(b) Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement, on
the basis that MOFCOM did not require the applicants to furnish non-confidential
summaries in sufficient detail to permit a reasonable understanding of the substance
of the information submitted in confidence;
(c) Article 12.7 of the SCM Agreement in c onnection with MOFCOM's use of a 100%
utilization rate in calculating the subsid y rates for the two known respondents under
certain procurement programmes;
(d) Articles 6.8, 6.9, 12.2, 12.2.2 and para graph 1 of Annex II of the Anti-Dumping
Agreement, in connection with the resort to facts available to calculate the "all others"
dumping margin for unknown exporters and due to deficiencies in the related
essential facts disclosure and public notice and explanation;
(e) Articles 12.7, 12.8, 22.3 and 22.5 of the SCM Agreement, in connection with the
resort to facts available to calculate the "all others" subsidy rate for unknown
exporters and due to deficiencies in the re lated essential facts disclosure and public
notice and explanation;
(f) Articles 15.1, 15.2, 12.8 and 22.5 of the SC M Agreement and 3.1, 3.2, 6.9 and 12.2.2
of the Anti-Dumping Agreement, in connection with MOFCOM's findings regarding
the price effects of subject imports and due to deficiencies in the related essential
facts disclosure and public notice and explanation;
(g) Articles 15.1, 15.5, 12.8 and 22.5 of the SC M Agreement and 3.1, 3.5, 6.9 and 12.2.2
of the Anti-Dumping Agreement, in connection with MOFCOM's finding that subject
imports caused material injury to the domest ic industry and due to deficiencies in the
related essential facts disclosure and public notice and explanation; and
(h) Article 10 of the SCM Agreement and Article 1 of the Anti-Dumping Agreement, as
a consequence of the foregoing violations of these Agreements.
8.2 In the light of the findings set forth in this Re port, the Panel concludes that the United States
has not established that China acted inconsistently with:
(a) Article 12.2.2 of the Anti-Dumping Agreemen t by not including in a public notice or
separate report the data and calculations u sed to determine the respondent companies'
final dumping margins;
(b) Article 12.7 of the SCM Agreement due to MOFCOM's resort to facts available to
calculate the subsidy rates for the two known respondents under certain procurement
programmes; and

(c) Article 22.3 of the SCM Agreement in c onnection with MOFCOM's explanation of
the findings and conclusions supporting its determination that the bidding process
under the United States Government procurem ent statutes at issue did not result in
prices that reflected market conditions.
8.3 In the light of the findings set forth in paragr aphs 8.1 and 8.2 of this Report, the Panel does
not consider it necessary to make findings with respect to the United States' claims under:
(a) Article 11.2 of the SCM Agreement; and
(b) Article VI:2 of the GATT 1994.
B. R
ECOMMENDATION
8.4 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under th at agreement. Accordingly, to the extent China has acted
inconsistently with certain provisions of the SCM and Anti-Dumping Agreements, we conclude that it
has nullified or impaired benefits accruing to the United States under those Agreements.
8.5 Pursuant to Article 19.1 of the DSU, having fo und China acted inconsistently with certain
provisions of the SCM and Anti-Dumping Agreements, we recommend China bring its measures into
conformity with its obligations under those Agreements.