Document: WT/DS344/R Page E-1 ANNEX E REQUEST FOR THE ESTABLISHMENT OF A PANEL Contents Page Annex E-1 Request for the Establishment of a Panel – Document WT/DS344/4 E-2
Document codes: WT/DS344/R; WT/DS344/4
Complainant: Mexico
Respondent: U.S.
Third parties: Brazil, Chile, China, EU, Japan, South Korea, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 1, 2.1, 2.4, 2.4.2, 9, 18.4  Anti-dumpingArt. VI:1, VI:2  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

ANNEX E

REQUEST FOR THE ESTABLISHMENT
OF A PANEL

Contents Page
Annex E-1 Request for the Establishment of a Panel – Document E-2

ANNEX E-1

REQUEST FOR THE ESTABLISHMENT
OF A PANEL BY MEXICO

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

Request for the Establishment of a Panel by Mexico

 The following communication, dated 12 October 2006, from the delegation of Mexico to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 Acting on instructions from the relevant Mexi can Government authorities, I hereby request
the establishment of a panel pursuant to Articl es 4 and 6 of the WTO Understanding on Rules and
Procedures Governing the Settlement of Disputes (D SU), Article XXIII of the General Agreement on
Tariffs and Trade of 1994 (GATT 1994) and Article 17 of the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade of 1994 (Anti-Dumping Agreement),
regarding the issues listed hereunder:

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

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

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

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

 In periodic reviews (i.e. when USDOC calculates the magnitude of dumping margins in order
to assess an importer's final liability for payment of anti-dumping duties and any future cash deposit
rate), USDOC first subdivides reported comparison market sales (also known as "normal value" sales)
by "control number" into a series of monthly "a veraging groups" on a model-specific basis. The
comparison is usually between each reported in dividual export transaction and the average normal
value of the identical or most similar contem poraneous monthly averaging group to which it
corresponds. USDOC then aggregates the results of these comparisons. In doing so, however, it adds
only the "positive" comparison results, disregarding (zeroing) the negative comparison results (i.e.
comparison results where the individual export price for the model exceeds the weighted-average
normal value). This practice is known as "simple zeroing".

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

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

 This means that the United States calculates a margin of dumping and collects anti-dumping
duties in excess of the actual dumping practiced by th e companies concerned. The United States uses
this methodology systematically in all periodic reviews.

 The calculation methodologies described above are measures of general and prospective
application, and the United States implements them pursuant to the following laws, regulations,
administrative procedures and measures:

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

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

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

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

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

3. Claims
 1. As such claims

 Mexico considers that the above-mentioned United States laws, regulations, administrative
procedures, measures and methodologies for determining the dumping margin in original
investigations and periodic reviews are inconsistent, as such, with th e obligations of the United States
under the Marrakesh Agreement Establishing the Wo rld Trade Organization (WTO Agreement), the
GATT 1994 and the Anti-Dumping Agreement, and that they have resulted in the nullification or
impairment of benefits accruing to Mexico under Article 3.8 of the DSU. In particular, Mexico
considers that the United States laws, regula tions, administrative procedures, measures and
methodologies for determining the margin of dumpi ng in original investigations and in periodic
reviews described above are, as such, inconsistent with at least the following provisions:

• With respect to original investigations a nd periodic reviews: Article 1 of the Anti-
Dumping Agreement and Article VI:1 a nd VI:2 of the GATT 1994 as regards the
zeroing methodology and the consequent im position and collection of anti-dumping
duties;

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

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

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

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

 2. As applied claims

 In the original investigation and periodic revi ews identified in the Annex attached hereto, the
United States applied the laws, regulations, admi nistrative procedures, measures and methodologies
described above. Accordingly, Mexico considers that the determinations made by USDOC and the
subsequent anti-dumping duty assessments and future cash deposit requirements are inconsistent with
the following provisions of the Anti-Dumping Agreement, the GATT 1994 and the WTO Agreement:

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

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

4. Request
 Accordingly, Mexico respectfully request s that a panel be established pursuant to
Article XXIII of the GATT 1994, Articles 4 and 6 of the DSU and Article 17 of the Anti-Dumping
Agreement. The terms of reference shall be the te rms provided in Article 7 of the DSU. Mexico asks
that this request be placed on the agenda of th e next meeting of the WTO Dispute Settlement Body
that will take place on 26 October 2006.

ANNEX

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

Specific Case No. 1

The measure

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

Use of the zeroing methodology

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

Dumping margin without zeroing

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

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

Specific Case No. 2

The measure

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

Use of the zeroing methodology

 In calculating the dumping marg in in the first periodic review of stainless steel from Mexico,
USDOC utilized the simple zeroing methodology, th ereby disregarding results where the difference
between the applicable normal value and the export price was negative, i.e. where normal value was
lower than export price.

Dumping margin without zeroing

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

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

Specific Case No. 3

The measure

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

Use of the zeroing methodology

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

Dumping margin without zeroing

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

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

Specific Case No. 4

The measure

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

Use of the zeroing methodology

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

Dumping margin without zeroing

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

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

Specific Case No. 5

The measure

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

Use of the zeroing methodology

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

Dumping margin without zeroing

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

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

Specific Case No. 6

The measure

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

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

Use of the zeroing methodology

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

Dumping margin without zeroing

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