EUROPEAN COMMUNITIES – DEFINITIVE ANTI-DUMPING MEASURES ON CERTAIN IRON OR STEEL FASTENERS FROM CHINA RECOURSE TO ARTICLE 21.5 OF THE DSU BY CHINA REPORT OF THE PANEL
Document: Addendum
Date: 7 August 2015
Document codes: WT/DS397/RW/Add.1; WT/DS397/RW.
Complainant: China
Respondent: EU
Third parties: Brazil, Canada, Chile, Colombia, India, Japan, Norway, Taiwan, Thailand, Turkey, U.S.
Dispute stage: Implementation & Compliance
Agreements cited: Art. 6, 9, 5, 2, 3, 4  Anti-dumpingArt. I, X:3(a), VI:1  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

EUROPEAN COMMUNITIES – DEFINITIVE ANTI-DUMPING MEASURES
ON CERTAIN IRON OR STEEL FASTENERS FROM CHINA
RECOURSE TO ARTICLE 21.5 OF THE DSU BY CHINA
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to D to the Report of the Panel to be found in document

LIST OF ANNEXES

ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
ANNEX B
ARGUMENTS OF CHINA
Contents Page
Annex B-1 Executive summary of the first written submission of China B-2
Annex B-2 Executive summary of the second written submission of China B-8
Annex B-3 Executive summary of the oral statements of China B-14
ANNEX C
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex C-1 Executive summary of the first written submission of the European Union C-2
Annex C-2 Executive summary of the second written submission of the European Union C-10
Annex C-3 Executive summary of the opening oral statement by the European Union C-19
ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Integrated Executive summary of the arguments of Japan D-2
Annex D-2 Integrated Executive summary of the arguments of the United States D-4

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ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2

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ANNEX A-1
WORKING PROCEDURES OF THE PANEL
1.1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on
Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following
Working Procedures shall apply.
General

1.2. The deliberations of the Panel and the docume nts submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter
"party") from disclosing statements of its own positions to the public. Members shall treat as
confidential information submitted by another Member to the Panel which the submitting Member
has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public. A
Party submitting confidential information in any written submission (including in any exhibits) shall
mark the cover and/or first page of the document containing any such information with the words
"Contains Confidential Information". The specific information in question shall be enclosed in
double brackets, as follows: [[xx.xxx.xx]] and th e notation "Contains Confidential Information"
shall be marked at the top of each page containi ng the confidential information. Before the Panel
circulates its final report to the Members, the Panel shall give each party an opportunity to ensure
that the report does not contain any information that it has designated as confidential. The
removal of any designated confidential information by the Panel will be indicated in the final report
through the use of double brackets.
1.3. The Panel shall meet in closed session. The parties, and Members having notified their interest
in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU (hereafter
"third parties"), shall be present at the meetings only when invited by the Panel to appear before
it.
1.4. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and thir d party shall have responsibility for all members
of its own delegation and shall ensure that each member of such delegation acts in accordance
with the DSU and these Working Procedures, particularly with regard to the confidentiality of the
proceedings.
Submissions

1.5. Before the substantive meeting of the Panel wi th the parties, each party shall transmit to the
Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts
of the case and its arguments, and counter-arguments, respectively, in accordance with the
timetable adopted by the Panel.
1.6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity
and in any event no later than in its first written submission to the Panel. If China requests such a
ruling, the European Union shall submit its response to the request in its first written submission.
If the European Union requests such a ruling, Chin a shall submit its response to the request prior
to the substantive meeting of the Panel, at a time to be determined by the Panel in light of the
request. Exceptions to this procedure shall be granted upon a showing of good cause.
1.7. Each party shall submit all factual evidence to the Panel no later than during the substantive
meeting, except with respect to evidence necessar y for purposes of rebuttal, answers to questions
or comments on answers provided by the other party. Exceptions to this procedure shall be
granted upon a showing of good cause. Where su ch exception has been granted, the Panel shall
accord the other party a period of time for comme nt, as appropriate, on any new factual evidence
submitted after the substantive meeting.

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1.8. Where the original language of exhibits is not a WTO working language, the submitting party
or third party shall submit a translation into the WTO working language of the submission at the
same time. The Panel may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any objection as to the accuracy of a translation should be raised
promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following
the submission which contains the translation in question. Any objection shall be accompanied by a
detailed explanation of the grounds of objection and an alternative translation.
1.9. To facilitate the maintenance of the record of the dispute, and maximize the clarity of
submissions, each party and third party shall sequentially number its exhibits throughout the
course of the dispute. For example, exhibits submitted by China could be numbered CHN-1,
CHN-2, etc. If the last exhibit in connection with the first submission was numbered CHN-5, the
first exhibit of the next submission thus would be numbered CHN-6.
Questions

1.10. The Panel may at any time pose questions to the parties and third parties, orally in the
course of the substantive meeting or in writing.
Substantive meeting

1.11. Each party shall provide to the Panel the list of members of its delegation in advance of the
meeting with the Panel and no later than 5.00 p.m. the previous working day.
1.12. The substantive meeting of the Panel shall be conducted as follows:
a. The Panel shall invite China to make an opening statement to present its case first.
Subsequently, the Panel shall invite the European Union to present its point of view.
Before each party takes the floor, it shall provide the Panel and other participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies to the interpreters.
Each party shall make available to the Panel and the other party the final version of its
opening statement as well as its closing statem ent, if any, preferably at the end of the
meeting, and in any event no later than 5.00 p.m. on the first working day following the
meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask questions or make comments, through the Panel. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's questions within a deadline to be determined by the Panel.
c. The Panel may subsequently pose questions to the parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the parties to which
it wishes to receive a response in writing. Each party shall be invited to respond in
writing to such questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with China presenting its statement first.

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Third parties

1.13. The Panel shall invite each third party to tr ansmit to the Panel a written submission prior to
the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by
the Panel.
1.14. Each third party shall also be invited to present its views orally during a session of the
substantive meeting, set aside for that purpose. Ea ch third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 5.00 p.m. the previous
working day.
1.15. The third party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third
parties present at the third-party session and intending to present their views orally at
that session, shall provide the Panel, the parties and other third parties with provisional
written versions of their statements before they take the floor. Third parties shall make
available to the Panel, the parties and other third parties the final versions of their
statements, preferably at the end of the session, and in any event no later than
5.00 p.m. of the first working day following the session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the third parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.
Descriptive part

1.16. The description of the arguments of the part ies and third parties in the descriptive part of
the Panel report shall consist of executive summari es provided by the parties and third parties,
which shall be annexed as addenda to the report . These executive summaries shall not in any way
serve as a substitute for the submissions of the parties and third parties in the Panel's examination
of the case.
1.17. Each party shall submit executive summaries of the facts and arguments as presented to the
Panel in its written submissions, other than responses to questions, and in its oral statements, in
accordance with the timetable adopted by the Panel. Each executive summary of a written
submission shall be limited to no more than 10 pages, and each summary submitted by each party
of both opening and closing statements presented at a substantive meeting shall be limited to no
more than 5 pages. The Panel will not summarize in the descriptive part of its report, or annex to
its report, the parties' responses to questions.
1.18. Each third party shall submit an executive summary of its arguments as presented in its
written submission and statement in accordance with the timetable adopted by the Panel. This
summary may also include a summary of response s to questions, where relevant. The executive
summary to be provided by each third party shall not exceed 6 pages.
1.19. The Panel reserves the right to request th e parties and third parties to provide executive
summaries of facts and arguments presented by a party or a third party in any other submissions
to the Panel for which a deadline may not be specified in the timetable.

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Interim review
1.20. Following issuance of the interim report, each party may submit a written request to review
precise aspects of the interim report and request a further meeting with the Panel in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.
1.21. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review in accordance with the timetable
adopted by the Panel. Such comments shall be limited to commenting on the other party's written
request for review.
1.22. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

1.23. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all do cuments to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file three paper copies of all documents it submits to the
Panel. However, when exhibits are provided on CD-ROMS/DVDs, six CD-ROMS/DVDs and
three paper copies of those exhibits shall be filed. The DS Registrar shall stamp the
documents with the date and time of the filing. The paper version shall constitute the
official version for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, in Microsoft Word format,
either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is
provided by e-mail, it should be addressed to DSRegistry@wto.org, and cc'd to
xxxxxxxxxx@wto.org and xxxxxxxxxx@wto.org. If a CD-ROM or DVD is provided, it shall
be filed with the DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance
of the substantive meeting with the Panel. Each third party shall serve any document
submitted to the Panel directly on the parties and all other third parties. Each party and
third party shall confirm, in writing, that copies have been served as required at the time
it provides each document to the Panel.
e. Each party and third party shall file its docu ments with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on
the due dates established by the Panel.
f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the dispute.

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ANNEX B
ARGUMENTS OF CHINA
Contents Page
Annex B-1 Executive summary of the first written submission of China B-2
Annex B-2 Executive summary of the second written submission of China B-8
Annex B-3 Executive summary of the oral statements of China B-14

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ANNEX B-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF CHINA
1 INTRODUCTION
1. China has initiated the present proceedings to seek resolution of a disagreement with the
European Union ("EU") as to the conformity with the covered agreements of the measures taken
by the European Union to comply with the recommendations and rulings of the WTO Dispute
Settlement Body ("DSB") in this dispute. China considers that the measures taken by the
European Union have failed to bring the European Union into compliance with its obligations under
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994 ("the AD Agreement") and the Ge neral Agreement on Tariffs and Trade 1994
("GATT 1994"). More specifically, China considers that the measures taken by the European Union
to implement the recommendations and rulings of th e DSB in relation to the anti-dumping duties
on imports of certain iron or steel fasteners originating in China through Council Regulation (EU)
No 924/2012 of 4 October 2012 do not fully and correctly implement the recommendations and
rulings of the DSB and that they are inconsistent with various provisions of the AD Agreement and
of the GATT 1994.

2 LEGAL CLAIMS
2.1 The European Union violated Articles 6.5, 6.5.1, 6.4, 6. 2 and 6.1.2 of the
AD Agreement in relation to information concerning the products of the Indian producer
2. China claims that the European Union violated Article 6.5 of the AD Agreement because it
granted confidential treatment to the information concerning the products of the Indian producer
while such information was not confidential and while no "good cause" had been shown.

3. Pursuant to Article 6.5 of the AD Agreemen t two conditions must be fulfilled before any
information submitted by parties to an investigation is to be treated by the investigating
authorities as confidential: first, the information must be either confidential by nature or submitted
on a confidential basis and, second, good cause mu st be shown. These conditions are essential to
secure the balance between, on the one hand, the interests of the party submitting the information
in confidentiality and, on the other hand, the need of the other parties for a level of transparency
that is essential to defend their rights throughout the investigation. Neither of these conditions has
been met in the present case in relation to the list of products and the information concerning the
characteristics of the products of the Indian producer.

4. First, the list of products actually sold by the Indian producer on its domestic market and the
information concerning the characteristics of these products, such as information on the strength
class, type of coating, chrome, diameter, length, etc., cannot be considered as confidential "by
nature" as they are both the type of information that is routinely provided to potential customers
interested in purchasing fasteners. Second, nothin g in the file suggests that the Indian producer
officially requested confidential treatment for all types of information concerning its products
thereby providing them "on a confidential basis".

5. In any case, even if the information concer ned is to be treated as being submitted on a
confidential basis, it is clear that the Indian producer has never provided any reason or
justification for the confidential treatment of it s information and therefore failed to show "good
cause" as required by Article 6.5 of the AD Agr eement. As clarified by the Appellate Body in the
original dispute, the party submitting the confidential information not only has to provide the
reason why the information should be treated as confidential but such reason must be sufficient to
justify the withholding of information. The Indian producer, however, did not provide any reason
whatsoever why the information concerning the characteristics of its products and the lists of the
products should be treated as confidential. The European Union therefore failed to comply with
Article 6.5 of the AD Agreement.

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6. Furthermore, if the Panel were to find that the European Union did not violate Article 6.5 of
the AD Agreement – quod non -, China submits that the European Union violated Article 6.5.1 to
the extent that it failed to ensure that the Indi an producer provide a non-confidential summary of
its information in sufficient detail as to permit a reasonable understanding of the substance of the
information submitted in confidence. In addition , China notes that the Indian producer did not
establish that there were "exceptional circumstances" and did not provide a statement of the
reasons why, in such exceptional circumstances, summarization was not possible.

7. Furthermore, by failing to provide timely o pportunities to the Chinese exporters to see the
lists of products sold by the Indian producer as well as the information concerning the
characteristics of these products, the European Un ion violated Article 6.4 of the AD Agreement.
First, the information was relevant to the presenta tion of the interested parties' cases, as shown
by the numerous requests by the Chinese exporters to see this information during the review
investigation. Second, the information was not confidential, in particular in the absence of any
"good cause" shown by the Indian producer. And third, the information was used by the authorities
for the determination of the normal value and th e comparison between the normal value and the
export price. Therefore, by failing to provide ti mely opportunities for the Chinese exporters to see
such information, the European Union violated Article 6.4 of the AD Agreement.

8. Moreover, to the extent that the European Unio n violated Article 6.4 of the AD Agreement, it
s h o u l d a l s o b e f o u n d t o h a v e v i o l a t e d A r t i c l e 6.2 of the AD Agreement. In China's view, the
obligation laid down in Article 6.2 is broad and therefore a finding of violation of Article 6.4
necessarily entails a violation of Article 6.2. Since Chinese exporters have been denied the
opportunity to see all information that was relevant to the presentation of their cases, they have
been denied the opportunity to fully defend their interests, as required by Article 6.2 of the
AD Agreement. Furthermore, even if the Panel we re to find no violation of Article 6.4 of the
AD Agreement, it should conclude that the European Union nonetheless violated Article 6.2 of
the AD Agreement. Indeed, in the framework of the review investigation, the European Union
failed to provide to the Chinese exporters access to the list of products as well as to the
information on the characteristics of the products sold by the Indian producer which were used by
the European Union in the normal value and dumping determination. As a consequence, the
Chinese exporters were not in a position to make relevant requests for adjustment necessary to
ensure that a fair comparison could be made an d were therefore deprived of the opportunity to
defend their interests, in violation of Article 6.2 of the AD Agreement.

9. With respect to Article 6.1.2 of the AD Agr eement, China considers that the European Union
failed to ensure that the evidence provided by the Indian producer concerning the characteristics
of its products was made available promptly to the Chinese exporters and thereby violated that
provision. The Indian producer should be regarded as an "interested party" within the meaning of
Article 6.1.2 since it participated in the investigation by providing a substantial amount of
information to the European Union. Furthermore, as examined above, the evidence provided by
the Indian producer cannot be treated as "confidential information". For the foregoing reasons, the
European Union was under the obligation to make the evidence concerning the characteristics of
the products of Indian producer promptly availa ble to the Chinese exporters participating in the
investigation and by failing to do so, the Eu ropean Union violated Article 6.1.2 of the
AD Agreement.

2.2 The European Union violated Article 2.4 of the AD Agreement by failing to provide
relevant information regarding the dumping margin determination
10. China claims that by failing to provide relevant information on the characteristics of the
products of the Indian producer which was used for the determination of the normal value, the
European Union violated Article 2.4 of the AD Agreement.

11. In the original dispute, the Appellate Body stated that in order to ensure a fair comparison
as required by Article 2.4 of the AD Agreement, the investigating authority must, at a minimum,
inform the parties of the products or product groups with regard to which it will conduct the price
comparison. According to the Appellate Body, this obligation is particularly important in case of
anti-dumping investigations of imports from non-market economy countries since without this
information, the foreign producers under investigation are not in a position to request the
necessary adjustments.

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12. Pursuant to the Appellate Body's finding in th e original dispute, the European Union, in the
review investigation, initially clarified that, for the purposes of the dumping margin determination,
it had grouped products according to the distinction between standard and special fasteners and
the strength class. The European Union did not, however, provide any further information
regarding the products of the Indian producer. Since the comparison had been made on the basis
of products groups defined initially by only two criteria, there were potentially many other physical
differences affecting price comparability which would justify adjustment necessary to ensure a fair
comparison required by Article 2.4 of the AD Agreement. It was therefore essential for the Chinese
exporters to know the characteristics of the produc ts of the Indian producer used in the normal
value determination.

13. Despite numerous requests by Chinese export ers, the European Union failed to provide any
information concerning characteristics that the European Union itself acknowledged as affecting
price comparability and which were identified in the original PCNs such as diameter and length,
types of fasteners or coating and chrome. By failing to provide this information, the
European Union made it impossible for the Chinese exporters to identify the possible differences
between the fasteners of the Indian producer an d their own products and, if any, to request
adjustments related to these differences.

14. Similarly, the European Union failed to provide any information with respect to
characteristics affecting price comparability other than those identified in the original PCNs namely
traceability, industry standards, unit of defective rate, hardness, bending, strength impact
toughness and friction coefficient, as identified by the Chinese exporters. The European Union
failed to provide information on whether any of the abovementioned characteristics were present,
and if so, to what extent, in the products sold by the Indian producer. Furthermore, the
European Union rejected the request for adjustments presented by the Chinese exporters in
relation to these characteristics on the basis that they were not sufficiently substantiated.
However, China submits that once the Chinese exporters had shown that certain technical
characteristics are known in fasteners industry to affect prices, under the last sentence of the
Article 2.4 of the AD Agreement, it was the duty of the European Union to indicate to the Chinese
exporters what information their requests should contain so that they could further substantiate
their requests for adjustments.

15. Therefore, by failing to provide the necessa ry information on the characteristics of the
products sold by the Indian producer affecting price comparability, which were essential for the
Chinese exporters in order to make or substantiate their requests for adjustments and thereby
ensure a fair comparison, the European Union acted inconsistently with Article 2.4 of the
AD Agreement.

2.3 The European Union acted inconsistently with Article 2.4 of the AD Agreement in
failing to ensure that the export price of standard fasteners was not compared to the
normal value of special fasteners
16. Pursuant to Article 2.4 of the AD Agreement, in conducting a fair comparison between the
export price and the normal value, the investigating authorities should make due allowances for
differences affecting price comparability. In the present case, the European Union, after having
noted that there were differences between standard and special fasteners, decided to make due
allowances for these differences by grouping similar fasteners models, namely "standard"
fasteners on the one hand and "special" fasteners on the other hand.

17. China takes no issue with the methodology of "grouping" followed by the European Union. It
claims, however, that the European Union failed to ensure that a fair comparison was being made
for the following reasons.

18. First, the European Union, failed to ensure that fasteners destined for high-end applications
but not made according to a customer drawing were considered as "special" fasteners and not as
"standard" fasteners. China submits that such hi gh-end fasteners are much more expensive than
the standard low-end fasteners produced by the Chinese exporters and therefore should not be
included in the same group. However, during the review investigation, the European Union failed
to provide clarifications concerning the criteria on the basis of which it made the distinction
between standard and special fasteners and when more precise information was provided, such
information was contradictory. Furthermore, the limited information finally provided by the

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European Union shows that fasteners used in high -end applications but not made according to a
customer's drawing would have been considered as standard fasteners.

19. Second, the European Union could not reasonably and objectively conclude that the lists of
standard and special fasteners provided by the Indian producer were accurate. As shown by the
Review Regulation, the European Union was unable to conduct an on-the-spot verification of the
split between standard and special fasteners ma de by the Indian producer and accepted the
accuracy of the split uniquely on the basis of the so-called "walk-through" tests (i.e. in-depth
verification of a sample of sales transactions included in the sales listing in order to verify its
accuracy) and after checking the split of the sales listing against an average price level of the split.
However, in China's view, neither of these method s can be considered as objective as they check
the accuracy of the data by reference to the very same data instead of to an external source.

20. In failing to ensure that the export price of standard fasteners produced by the Chinese
exporters was not compared to the normal value of special fasteners manufactured by the Indian
producer, and in failing to examine objectively and reasonably the lists of standard and special
fasteners provided by the Indian producer, the European Union failed to make a fair comparison
between export price and normal value. Therefore, the European Union acted inconsistently with
Article 2.4 of the AD Agreement.

2.4 The European Union acted inconsistently with Articles 2.4 of the AD Agreement and
VI:1 of the GATT 1994 in failing to make a fair comparison between normal value and
export price in particular in failing to ma ke allowances for differences affecting price
comparability
21. China claims that the European Union violated Articles 2.4 of the AD Agreement and VI:1 of
the GATT 1994 since it failed to make a fair comp arison between the normal value and the export
price and, in particular, since it failed to make allowances for several differences affecting prices
comparability, namely differences in taxation, differences in certain physical characteristics and
other differences affecting price comparability.

22. First, in relation to differences in taxation, in the review investigation, the Chinese exporters
requested an adjustment for the difference in ta xation on the ground that the Indian producer
used imported raw materials subject to high indirect taxes, while the Chinese exporters used
locally sourced wire rode. The European Union, howe ver, rejected this request for the reason that
the Chinese producers could not demonstrate that first, they used imported raw materials and
second, that they benefited from a duty drawback scheme.

23. The difference in taxation was due to the fact that the analogue producer used imported raw
materials subject to high indirect taxes, while the Chinese exporters used locally produced wire
rod. China submits that it was the European Union, by choosing an analogue country producer that
used as raw materials imported wire rod subject to high import duties and other indirect taxes,
that created the imbalance between normal value and export price. The European Union should
therefore have corrected this imbalance by making an adjustment for the difference in taxation.

24. China further submits that by requiring th e Chinese exporters to demonstrate that their
exports to the European Union benefited from the non-collection or refund of import charges on
the raw materials incorporated in the finished product, the European Union not only applied the
wrong legal test but also imposed an unreasonable burden of proof on the Chinese producers.

25. Second, during the review investigation the Chinese exporters also indicated that several
differences in physical characteristics affected price comparability and therefore had to be taken
into account when making the price comparison be tween normal value and export price. Although
the European Union acknowledged that the differences originally identified in the PCNs were all
d i f f e r e n c e s t h a t h a d a n e f f e c t o n p r i c e s , i t f a i l e d t o t a k e t h e m p r o p e r l y i n t o a c c o u n t . M o r e
specifically, the European Union failed to make necessary adjustments related to the differences in
the types of fasteners, coating and chrome as well as the diameter and length of fasteners.

26. The European Union also rejected the requests for adjustments related to the physical
characteristics other than those identified in th e PCNs arguing that the requests had not been
substantiated. The Chinese exporters noted that the characteristics such as traceability, industry
standards, unit of defective rate, hardness, bending strength, impact toughness and friction

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coefficient affect price comparability, even though in the absence of any information as to the
products of the Indian producer, it was impossible for them to further substantiate their requests
for adjustment. China submits that in requiring that the Chinese exporters provide further
evidence on the existence of differences in price, without providing precise indications on how the
interested parties were to substantiate their requests and without providing any information
whatsoever on the characteristics of the product types used for normal value determination, the
European Union imposed an unreasonable burden of proof on the interested parties.

27. Finally, the European Union acted inconsiste ntly with Article VI:1 of the GATT 1994 and
Article 2.4 of the AD Agreement in failing to make necessary adjustments for other differences
affecting price comparability, namely differences resulting from the easier access to raw material,
differences resulting from an additional production process, i.e. the fact that the analogue
producer used self-generated electricity, and di fferences in efficiency and productivity, more
specifically efficiency of consumption of raw material, electricity consumption and productivity per
employee. The European Union rejected these requests for adjustments claiming that the Chinese
producers failed to provide evidence that those differences affected price comparability.
Additionally, the European Union rejected the re quests based on the assertion that this was
necessary to prevent the prices and costs in a non-market economy from being taken into account
when establishing normal value. China strongly disagrees with both of these assertions. As to the
first assertion, the Chinese producers provided ex tensive information on the differences in costs,
along with evidence that these differences translated into differences in prices. As to the second
assertion, China notes that the requests for adjustment were not based on the Chinese exporters'
prices or costs.

28. For all the abovementioned reasons, by failing to make allowances for differences affecting
price comparability, the European Union failed to make a fair comparison between the normal
value and the export price and therefore, violated Article VI:1 of the GATT 1994 and Article 2.4 of
the AD Agreement.

2.5 The European Union violated Articles 2.4 and 2.4.2 of the AD Agreement in failing to
take into account all comparable export transactions
29. China claims that the European Union acted in consistently with Articles 2.4.2 and 2.4 of the
AD Agreement since it did not take into account all export transactions in determining the dumping
margin of each of the Chinese exporters concerned.

30. In determining the margin of dumping, the European Union did not take into account "all"
export transactions of the Chinese exporters since the comparison between export price and
normal value was made on a weighted average basis only for those fasteners types exported by
each Chinese producer for which a matching type was produced and sold by the Indian producer.

31. The European Union's failure to take into account "all" export transactions is based on the
fact that where there is no fastener type produced by the Indian producer "matching" the fastener
types produced by the Chinese exporter, there is a lack of comparability and the export
transactions must be left out.

32. This approach, however, is inconsistent with the requirements of Article 2.4.2 of the
AD Agreement. As stated by the European Union itself, all export types of the Chinese producers
are "like" the normal value product types of the Indian producer. They are therefore "comparable"
within the meaning of Article 2.4.2 of the AD Agreement. As a consequence, all of these
comparable types should have been taken into account in the dumping margin calculation. This is
further required by the fact that dumping and margins of dumping must be established for the
product under investigation as a whole.

33. In failing to base its dumping margin determination on a comparison of all comparable
export transactions, the European Union has thus acted inconsistently with Article 2.4.2 of the
AD Agreement.

34. Furthermore, by failing to take into account the prices of "all" comparable export
transactions, the European Union also failed to make a fair comparison between export price and
normal value thereby violating Article 2.4 of the AD Agreement.

- B-7 -

2.6 The European Union violated Article 4.1 and Article 3.1 of the AD Agreement
35. In the original proceedings, the Appellate Body found that the European Union acted
inconsistently with Article 4.1 of the AD Agreement by linking the eligibility to be included in the
domestic industry definition to the producer's willingness to be part of the sample.

36. To remedy this situation, in the review investigation, the European Union re-defined its
domestic industry on the basis of the producers which had come forward within the deadline
imposed by the Notice of Initiation of the original investigation regardless of whether they
indicated that they were prepared to be part of the sample.

37. This approach, however, disregards the fact that the Notice itself had mixed the issue of the
domestic industry definition and the sampling determination. Therefore, it is clear that producers
may have decided not to come forward and provid e the requested information because they knew
that their unwillingness to be included in the sample would automatically exclude them from the
definition of the domestic industry.

38. For these reasons, in order to properly implem ent the findings of the Appellate Body and, in
order to act in compliance with Article 4.1 of th e AD Agreement, the European Union was required
to start the selection process of the domestic industry anew, instead of limiting itself to use the
data received from the EU producers that came within the deadline imposed in the original
investigation.

39. Therefore, the European Union's re-determination of its domestic industry is inconsistent
with Article 4.1 of the AD Agreement since it remains based on a self-selection process among the
domestic producers that introduces a material risk of distortion.

40. As a consequence, the European Union also violated Article 3.1 of the AD Agreement since
the analysis of injury is based on information relating to a wrongly defined industry. Such analysis
is therefore necessarily distorted and does not involve an objective examination as required by
Article 3.1 of the AD Agreement.

3 CONCLUSIONS
41. China respectfully requests the Panel to find that the measures adopted by the
European Union to implement the recommendations an d rulings of the DSB in relation to the anti-
dumping duties on imports of certain iron or steel fasteners originating in China through Council
Regulation (EU) No 924/2012 of 4 October 2012 are inconsistent with Articles 6.5, 6.5.1, 6.4, 6.2,
6.1.2, 2.4, 2.4.2, 4.1 and 3.1 of the AD Agreem ent and with Article VI:1 of the GATT 1994. For
this reason, China further requests the Panel to find that the European Union has failed to comply
with the recommendations and rulings of the DSB.

42. China also respectfully requests the Panel to recommend that the DSB requests the
European Union to bring its measures into conformity with the AD Agreement and the GATT 1994.

- B-8 -

ANNEX B-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF CHINA
1. INTRODUCTION

1. In the second written submission, China addresses and rebuts the EU's defence and the
arguments it advances in its first written submission. In so doing, China addresses the arguments
of the EU in the same order as they have been presented.

2. LEGAL CLAIMS

2.1 The EU violated Articles 6.5, 6.5.1, 6.4, 6.2 and 6.1.2 of the AD Agreement in
relation to information concerning the products of the Indian producer

2. China claims that the EU violated Article 6.5 of the AD Agreement because it has granted
confidential treatment to the information concerning the products of the Indian producer while
such information was not confidential and no "good cause" has been shown.

3. First, China submits that, contrary to the EU's assertion, it is not prevented from raising this
claim in the context of the compliance proceedings. China notes that while in the original dispute
the claim under Article 6.5 concerned the confiden tial treatment of information on the "product
types", it is now challenging the confidential treatment afforded to the list of products and the
information concerning the characteristics of the products sold by the Indian producer. Thus, the
claim relates to a different, or at least changed, component. Second, China could not have
challenged these aspects during the original proceedings since the Chinese exporters only became
aware of them during the Review Investigation. Finally, unlike in EC – Bed Linen , the confidential
treatment of the information concerned is an inseparable aspect of the measure taken to comply in
the present dispute.

4. Second, contrary to what the EU is arguing, the information concerned is neither confidential
"by nature" nor has it been submitted on a confidential basis and, in any case, no good cause has
been shown by Pooja Forge. China submits that the information concerning the list of products and
the information concerning the products characteristics is routinely provided to potential customers
willing to purchase fasteners on unrestricted ba sis and the EU failed to prove otherwise. The
argument that it is proprietary information that, allegedly, companies do not like sharing with their
competitors cannot stand, and even if it is the case, it does not render such information
confidential by nature.

5. Furthermore, the EU fails to precisely show that each piece of information concerned has
been provided on a confidential basis. Finally, Ch ina reiterates that no good cause has been ever
shown by Pooja Forge and that the a posteriori justification provided by the EU cannot be
considered as "good cause" within the meaning of Article 6.5 of the AD Agreement. The EU has
also failed to objectively assess the alleged good cause and instead considered that the
confidential treatment was justified merely because Pooja Forge cooperated on a voluntary basis.

6. China further submits that if the Panel were to conclude that the EU did not violate
Article 6.5 of the AD Agreement – quod non – i t s h o u l d c o n c l u d e t h a t t h a t t h e E U v i o l a t e d
Article 6.5.1 of the AD Agreement to the extent th at it failed to ensure that the Indian producer
provide a non-confidential summary. China notes that the file does not contain any indication that
the Indian producer was not able to furnish a non-confidential summary nor a statement of
reasons why summarization was not possible. Moreover, the excerpt from Pooja Forge's
Questionnaire Response does not constitute an ad equate summary. Finally, China notes that the
arguments put forward by the EU only deal with the list of products but not with the information
concerning the characteristics of those products.

7. China maintains that by failing to provide th e opportunities to the Chinese exporters to see
the list of products sold by Pooja Forge as well as the information concerning the characteristics of

- B-9 -

those products which were used for the normal value determination, the EU violated Article 6.4 of
the AD Agreement. First, China notes that contrary to the EU objection it does not expand the
scope of its claim since the Panel Request clearly refers to the information concerning the products
sold by the Indian producer, thus including information on the list of such products as well as
information on their characteristics. China further submits that the information concerned is
relevant to the presentation of the Chinese export ers' case and in particular for identifying the
differences affecting price comparability. Moreover, the information is not confidential within the
meaning of Article 6.5 and was used by the investigating authorities since the Commission
examined such information in order to make the normal value and dumping determinations.
Finally, China notes that the EU did not respond to its claim under Article 6.2 and refers to its
arguments developed in China's first written submission.

8. China claims that since the evidence provided by Pooja Forge concerning its products has
not been made available promptly to the Chinese exporters, the EU violated Article 6.1.2 of the
A D A g r e e m e n t . I n t h a t r e s p e c t , P o o j a F o r g e i s t o b e r e g a r d e d a s a n i n t e r e s t e d p a r t y s i n c e i t
participated in the investigation at the request of the EU and provided substantial amount of
information that was used as the basis for determining normal value. Furthermore, the information
concerned was not confidential and it has never been provided to the Chinese exporters. For these
reasons the Panel should conclude that the EU violated Article 6.1.2 of the AD Agreement.

2.2 The EU violated Article 2.4 of the AD Agreement by failing to provide relevant
information regarding the dumping margin determination

9. China claims that by failing to provide relevant information regarding the products of Pooja
Forge which was used for the determination of the normal value, the EU violated Article 2.4 of the
AD Agreement and failed to implement the DSB recommendations and rulings. The EU's
arguments presented in its first written submission are based on an erroneous interpretation of the
findings of the Appellate Body and fail to take into account the purpose of the role to be played by
the authorities and the interested parties in the co ntext of the "dialogue" under Article 2.4 of the
AD Agreement.

10. At the outset China clarifies that its claim under Article 2.4 relates to the role an
investigating authority must play in the context of the fair comparison obligation, in particular,
taking into account the requirement that the authorities shall indicate what information is
necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on
the interested parties. In any event, however, Ch ina submits that contrary to what the EU argues,
there has been no "active and engaged" dialogue.

11. Pursuant to the Appellate Body's finding in the original dispute, in anti-dumping
investigations involving imports from NMEs, producers must be informed of the specific products
with regard to which the normal value is determ ined and not only of the product types, since
without such information the interested parties are not in a position to request necessary
adjustments and to substantiate their requests.

12. The EU, however, failed to provide relevant information regarding characteristics affecting
price comparability identified in the original PCNs, namely diameter and length, types of fasteners
and coating and chrome. China submits that this information was crucial for the Chinese exporters
and that the alleged confidential character of the information is not an excuse for not providing
this information to the extent that the provision of such information is necessary under Article 2.4
of the AD Agreement.

13. Similarly, the EU failed to provide relevant information regarding characteristics affecting
price comparability not identified in the original PCNs. China notes that the EU did not address
China's claim and instead argued that the Chines e exporters failed to show how these product
characteristics affect price comparability. China submits that the exporters provided evidence that
characteristics such as traceability, hardness or unit of defective rate had an impact on price and
therefore should be taken into account. However, because the Commission did not provide any
information concerning these characteristics in Pooja Forge's products, it was impossible for the
Chinese exporters to substantiate further their request for adjustments.

- B-10 -

14. Therefore, by failing to indicate to the Ch inese exporters the information that their request
should contain, the EU violated Article 2.4 of the AD Agreement and failed to comply with the
recommendations and rulings of the DSB.

2.3 The EU acted inconsistently with Articl e 2.4 of the AD Agreement in failing to
ensure that the export price of standard fasteners was not compared to the normal
value of special fasteners

15. China submits that it is allowed to raise this claim before the Panel. The EU's argument that
China is raising the same issues as those it raised before the Panel in the original proceedings and
the argument that it could have, but did not raise this claim in the course of the original
proceeding, are contradictory. Indeed, China could not be raising issues "again" which it did not
raise during the original proceedings.

16. The claims raised in the present proceedin gs concern the dumping determination and the
comparison between the export price of Chinese fasteners and the normal value of Pooja Forge's
fasteners. This claim is very different from those raised in the original proceedings, which
concerned the analysis of the price effects in the framework of the injury determination and
involved a comparison between the prices of fast eners exported to the EU and those produced by
the EU industry.

17. The argument that China could have raised this claim during the original Panel proceedings
is unconvincing, as the EU did not inform interested parties how it made the distinction between
Pooja Forge's special and standard fasteners during the Original Investigation. It is also incorrect
to characterize the distinction between special and standard fasteners as an unchanged aspect of
the original measures. The claim China is raising is a result of the further information on how the
distinction had been made, information that the EU was obliged to provide following the
recommendations and rulings of the DSB.

18. The EU's arguments that it entered into a substantive dialogue as required by Article 2.4 of
the AD Agreement are equally unconvincing. Through different phases of the dialogue the EU first
refused to engage with the interested parties, thereafter provided conflicting information and
ultimately showed that it failed to ensure that fasteners not made to a customer drawing but used
in high-end applications were not grouped with standard fasteners.

19. Finally, a reasonable and objective investigating authority could not conclude that the lists of
standard and special fasteners provided by Pooja Forge were accurate and would allow for a fair
comparison within the meaning of Article 2. 4 of the AD Agreement. Indeed, during the in situ
verification, the EU had not even considered the po ssibility of distinguishing special from standard
fasteners. The distinction was introduced at a later stage, based only on the criterion of a
customer drawing. The lists did not contain customer names nor did the product codes allow to
identify fasteners that were special on the account of their use in high end-applications.

20. Against this background, walk-through tests could not show that the information provided
was accurate as they were conducted to verify the split against information that was obtained prior
to the distinction between standard and special fasteners. The average price check is equally
unsatisfactory, as the establishment of the average itself likely included special fasteners.

2.4 The EU acted inconsistently with Articl e 2.4 of the AD Agreement and Article VI:1
of the GATT 1994 in failing to make a fair co mparison between normal value and export
price in particular in failing to make due allowances for differences affecting price
comparability

21. China claims that the EU violated Articl es 2.4 of the AD Agreement and VI:1 of the
GATT 1994 since it failed to make a fair comparison between the normal value and the export
price and, in particular, since it failed to make due allowances for several differences affecting
price comparability, namely differences in taxation, differences in certain physical characteristics
and other differences affecting price comparability.

22. China further claims that the EU's argument that China re-litigates the issue and disregards
the standard of review under Article 17.6 of the AD Agreement must be rejected. China clarifies
that it does not ask the Panel to make a de novo review, but instead, in line with the standard

- B-11 -

established under Article 17.6 of the AD Agreement, requests the Panel to find that the conclusion
reached by the EU was not one that an objective and unbiased investigating authority could have
reached and therefore the EU violated Article 2.4 of the AD Agreement.

23. First, with respect to differences in taxati on, China submits that by ignoring the evidence
presented by the Chinese exporters and requiring them to demonstrate that their exports to the
EU actually benefited from the non-collection or refund of import charges on wire rod, the EU
applied the wrong legal test and imposed an unreasonable burden of proof on the Chinese
exporters thereby acting inconsistently with the last sentence of Article 2.4 of the AD Agreement.

24. Furthermore, contrary to what the EU argues, the difference in taxation has nothing to do
with the alleged "distorted raw material situation of the Chinese fasteners producers." Moreover,
any alleged distortions in the raw material prices of the Chinese producers are irrelevant for the
export price determination. In that respect China notes that paragraph 15 of China's Accession
Protocol allows to treat China differently only with respect to the domestic aspect of the price
comparability (namely normal value), but not with respect to the export price determination or the
comparison between export price and normal value once these have been established.

25. By determining normal value on the basis of the domestic sales of an analogue country
producer that used as raw material imported wire rod subject to high import duties, the EU created
imbalance between the normal value and the export price. Therefore, the obligation to ensure a
"fair comparison" rested squarely on the EU that should have corrected this imbalance by making
appropriate adjustment, in accordance with Article 2.4 of the AD Agreement.

26. Second, China submits that the EU based its allowances for certain differences in physical
characteristics as identified in the original PCNs on an improper factual basis. More specifically
China submits that an objective investigating authority could not reasonably conclude, on the basis
of the elements on the record, that all fastener s of the Indian producer were electroplated and
contained only chrome Cr3. Moreover, the EU failed to take fully into account the differences in
diameter and length while acknowledging that su ch differences affected price comparability.
Finally, the methodology followed by the EU to distinguish between different types of fasteners and
to make allowances accordingly was not satisfactory. The EU, in its first written submission, failed
to address the arguments presented by China and therefore failed to rebut that it acted
inconsistently with Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994.

27. Third, with respect to differences in physical characteristics other than those identified in the
PCNs, China submits since the EU did not clearly indicate the basis on which the price comparison
was going to be made until very late in the proc eedings, the Chinese producers were not able to
request the necessary adjustments in the course of the original anti-dumping investigation, and,
as a result, during the original dispute. Furthermore, China submits that the EU could not, as it
did, merely claim that the requests for adjustments concerning these other characteristics had not
been properly substantiated. The Chinese expo rters explained that characteristics such as
traceability, standards or unit of defective rate have a significant impact on price, even though in
the absence of any information as to the products of Pooja Forge, the evidence they were able to
submit was necessarily limited.

28. Fourth, in its first written submission, the EU did not address the detailed arguments
presented by China in support of its claims that the EU failed to make due allowances for
differences resulting from the easier access to raw materials, differences in efficiency and
productivity and differences arising from the self-generated electricity of the Indian producer.
China notes that in particular the EU did not respond at all to the claim relating to the adjustments
for differences in the efficiency of the consumption of wire rod and productivity per employee.

29. China further submits that the EU's argu ments for rejecting those requests cannot be
accepted by the Panel. First, China notes that the two Chinese producers submitted comprehensive
evidence on the differences in costs as well as demonstrated that such differences in costs
translated into differences in prices and that thei r requests were in line with the well-established
practice of the EU. Second, China notes that the NME status of China is irrelevant to the fact that a
fair comparison must be made between the normal value and the export price in accordance with
Article 2.4 of the AD Agreement and that in any ev ent Chinese exporters relied only on data of the
Indian producer's prices and prices applicable in India. China further submits that the fact that the
production processes were similar and that the Indian market was competitive, even if deemed

- B-12 -

right, do not refute the fact that there were several differences in costs which affected price
comparability. As explained by the Chinese exporters, differences related to the easier access to
raw materials, self-generated electricity and differe nces in efficiency and productivity all translate
into differences in prices and therefore should be treated equally to the differences in quality
control, for which adjustment was made in the original proceedings.

2.5 The EU violated Articles 2.4 and 2.4.2 of the AD Agreement in failing to take into
account all comparable export transactions

30. China claims that the EU acted inconsiste ntly with Article 2.4.2 of the AD Agreement
because it did not take into account all comparable export transactions in determining the
dumping margin of the Chinese exporters.

31. China submits that the appropriate legal standard for identifying "comparable export
transactions" is the one elaborated by the Appellate Body in EC – Bed Linen . Given that all export
types of fasteners of the Chinese producers are "like" normal value fasteners types of Pooja Forge,
as acknowledged by the EU itself, they are all "com parable" for the purpose of Article 2.4.2 of the
AD Agreement. It logically follows that the rela ted export transactions should be treated as
"comparable" and thus, should be included in the comparison under Article 2.4.2. This approach is
further required by the fact that the dumping an d margins of dumping must be established for the
product under investigation as a whole.

32. China submits that, when using the multiple averaging methodology, the investigating
authority cannot simply ignore some of the product types or models, and contrary to what the EU
argues, this is inherently "unfair". Therefore, the fact that the EU decided to group fasteners into
different product types for the calculation of the dumping margin does not imply that the export
transactions related to those products that did not have a corresponding Indian type could be
simply left out.

33. In response to the EU's arguments under Arti cle 6.10 of the AD Agreement, China notes that
this provision allows for sampling only as an exception to the obligation to determine individual
margins of dumping, however, it does not provide an exception to Article 2.4.2 and the obligation
to take into account all comparable export transactions. China also notes that the EU used only
certain types of products not because their overall number was too large, as required by
Article 6.10, but rather because Pooja Forge did no t produce all of the product types produced by
the Chinese exporters. Finally, China wishes to stress that the EU has never indicated that it was
wishing to use sampling techniques in the present investigation.

34. China disagrees with the EU that the partial comparison of export prices was the most
reliable basis for establishing the level of dumping. In that respect China observes that Article 2 of
the AD Agreement provides for alternative method ologies to establish margin of dumping when
there is no matching normal value. These methodologies, however, were ignored by the EU.

35. With regard to the "matching problem" referre d to by the EU, China submits that it was the
EU's responsibility to ensure that the products of Pooja Forge, selected as a market economy third
country producer, were comparable to those of the Chinese exporters and to conduct a fair
comparison of all comparable export transactions.

36. China further notes that, in its first written submission, the EU did not provide any facts or
reasoning supporting its conclusion that the dumping margin calculated on the basis of the
matching products was representative for the export sales as a whole. To the contrary, China
submits that there are both qualitative and quantitative reasons why the export sales that were
compared with normal value are not representative.

37. Finally, China considers that by failing to take into account all comparable export
transactions, the EU acted inconsistently with the fair comparison obligation under Article 2.4 of
the AD Agreement. In particular, since the compar ison made by the EU resulted in a presumption
of dumping for those export transactions that were not used in the dumping determination, it must
necessarily be qualified as "unfair".

- B-13 -

2.6 The EU violated Articles 4.1 and 3.1 of the AD Agreement

38. China considers that the EU's re-determination of its domestic industry is inconsistent with
Articles 4.1 and 3.1 of the AD Agreement since it remains based on a self-selection process that
introduces a material risk of distortion. This is because, contrary to the EU's assertions, the
material risk of distortion does not stem exclusiv ely from the actual exclusion of the producers not
willing to participate in the sample from the defini tion of the domestic industry but rather from the
approach linking the eligibility to be included in the domestic industry to the willingness to be part
of the sample.

39. China submits that the approach of the EU disr egards the fact that the Notice of Initiation
and the sampling forms sent to the domestic producers in the Original Investigation had confused
the issue of sampling and the definition of the domestic industry and therefore, some of the
producers who could be included in the domestic industry did not even come forward within the
15-day deadline. Contrary to the EU's assertion, the possibility that producers did not come
forward because of the linkage between the unwillingness to be part of the sample and the
definition of the domestic industry is not merely speculative.

40. China also submits that contrary to the EU's assertion the participation rate of 36% remains
very low and that the fragmented nature of the fasteners industry cannot serve as a justification
for not ensuring that the process of defining the domestic industry does not give rise to a material
risk of distortion.

41. In light of the above, China considers that in order to fully implement the Appellate Body's
findings in the original dispute and in order to comply with its obligations under Article 4.1 of the
AD Agreement, the EU was required to start the selection process of the domestic industry anew
instead of limiting itself to using the data received in the Original Investigation.

42. Furthermore, the argument advanced by the EU that the violation of Article 4.1 of the
AD Agreement would not result in the automatic violation of Article 3.1, because the sample of
domestic producers would still be representative only shows the continuing confusion by the EU
between the definition of the domestic industry, on the one hand, and the selection of the sample,
on the other hand. In fact, the domestic industry must be defined first and it is only on the basis of
the domestic industry thus defined that a sample can be selected that is representative of the
domestic industry initially defined. Therefore, since the analysis of injury is based on information
relating to a wrongly defined industry, the EU viol ated Article 3.1 of the AD Agreement. Such an
analysis is necessarily distorted and does not involve an objective examination.

3. CONCLUSIONS

43. For the reasons set forth in its second written submission, China respectfully requests the
Panel to find that the measures adopted by the European Union to implement the
recommendations and rulings of the DSB in relation to the anti-dumping duties on imports of
certain iron or steel fasteners originating in China through Council Regulation (EU) No 924/2012 of
4 October 2012 are inconsistent with Articles 6.5, 6.5.1, 6.4, 6.2, 6.1.2, 2.4, 2.4.2, 4.1 and 3.1 of
the AD Agreement and with Article VI:1 of the GATT 1994. For this reason, China further requests
the Panel to find that the EU has failed to comply with the recommendations and rulings of the
DSB.

44. China also respectfully requests the Panel to recommend that the DSB requests the EU to
bring its measures into conformity with the AD Agreement and the GATT 1994.

- B-14 -

ANNEX B-3
EXECUTIVE SUMMARY OF THE ORAL
STATEMENTS OF CHINA
Opening Statement of the People's Republic of China

1. Introduction

1. The present proceedings concern the European Union's failure to comply with the
recommendations and rulings of the DSB in relation to the anti-dumping duties imposed by the
European Union on imports of fasteners originating in China. Despite the clear and straightforward
ruling of the Appellate Body in July 2011, the implementing measures taken by the
European Union have failed to bring it into compliance with its obligations under the AD Agreement
and the GATT 1994.

2. The European Union violated Articles 6.5, 6.5.1, 6.4, 6. 2 and 6.1.2 of the
AD Agreement in relation to the information concerning the products of the Indian
producer

2. China claims that the European Union violated Article 6.5 of the AD Agreement because it
has granted confidential treatment to the informat ion provided by the Indian producer concerning
its products, while such information was not confidential by nature, had not been submitted on a
confidential basis. Neither has "good cause" been shown. China is not prevented from raising this
claim and has demonstrated that the conditions laid down in Article 6.5 were not met and
therefore, the European Union erred in provid ing confidential treatment to the information
concerning Pooja Forge's products.

3. If the Panel where to conclude that there is no violation of Article 6.5, it should be found
that the European Union violated Article 6.5.1 sinc e it failed to ensure that Pooja Forge provide a
non-confidential summary of the information concerned or, alternatively, establish that there were
"exceptional circumstances" and provide a statemen t of the reasons why, in such circumstances,
summarization was not possible.

4. Furthermore, the European Union violated Article 6.4 because it failed to provide
opportunities to the Chinese exporters to see the list of products and the information concerning
the characteristics of Pooja Forge's products, despite the fact that such information was not
confidential, was relevant and used by the Comm ission. As a consequence, the Chinese exporters
have also been denied the opportunity to fully defend their interest as required by Article 6.2.

5. Finally, the European Union violated Article 6. 1.2 of the AD Agreement because it failed to
ensure that the evidence presented by the Indi an producer concerning its products was made
available promptly to the Chinese exporters participating in the investigation.

3. The European Union violated article 2.4 of the AD Agreement by failing to provide
relevant information regarding the dumping margin determination

6. China now turns to the claim that the European Union acted inconsistently with Article 2.4 of
the AD Agreement by failing to provide information on the product characteristics of Pooja Forge's
domestic sales that were used in the normal value determination.

7. In the original dispute, the Appellate Body unambiguously stated that informing which
particular method the authority will use to categorize the products for purposes of the price
comparison was a minimum under Article 2.4 of the AD Agreement. In addition to this minimum,
the Appellate Body referred to the specific situation of anti-dumping investigations of imports from
non-market economies. The Appellate Body stated that foreign producers are unlikely to have
knowledge of the specific products and pricing practices of the producer in an analogue country, as
is indeed the case in this investigation. Based on this consideration, the Appellate Body found that

- B-15 -

exporters will not be able to request adjustments, unless they are informed of the specific products
with regard to which normal value is determined.

8. However, during the review investigation, in stead of informing the exporters of the specific
products used for the normal value determination, the European Union limited itself to explaining
on which basis it "grouped" transactions for the basis of the dumping determination. In so
proceeding, the European Union both failed to bring its measures into conformity with the covered
agreements and prevented the Chinese exporter s from substantiating their requests for
adjustments.

4. The European Union violated Article 2. 4 of the AD Agreement since it failed to
ensure that the export price of standard fasteners was not compared to the normal
value of special fasteners

9. China claims that the European Union acted inconsistently with Article 2.4 in making a
distinction between standard and special fasteners th at failed to ensure that the export price of
standard fasteners was not compared to the normal value of special fasteners. The failure to
ensure that a fair comparison be made results from the fact that a distinction between the
standard and the special fasteners sold by Pooja Forge was drawn on the sole basis of a customer
drawing, which is an inadequate criterion that does not capture all special fasteners. As a result,
the European Union failed to ensure that the price of Pooja Forge's domestic sales of special
fasteners was not compared with the export price of standard fasteners of the Chinese producers.

10. China suggests that the Panel exercise its fact-seeking powers under Article 13 of the DSU
by requesting the European Union to provide it wi th a copy of the DMSAL listing, as well as the
brochure and other information that has been relied upon to first make the distinction between
standard and special fasteners and second, to verify the accuracy of the split made by
Pooja Forge.

5. The European Union violated Article 2.4 of the AD Agreement and Article VI:1 of
the GATT 1994 since it failed to make a fa ir comparison between export price and
normal value in particular si nce it failed to make allowances for differences affecting
price comparability

11. The European Union failed to make a fair comparison as required by Article 2.4 of the
AD Agreement and Article VI:1 of the GATT 1994 for the three following reasons.

12. First, the European Union acted inconsistent ly with Article 2.4 of the AD Agreement and
Article VI:1 of the GATT 1994 because it based its allowances for certain differences in physical
characteristics identified in the original PCNs on an improper factual basis. The European Union has
acknowledged that differences in characteristics such as coating, chrome, diameter, length and
type of fasteners are all differences affecting price comparability. Nevertheless, it failed to ensure
that these price differences were eliminated, by making appropriate adjustments.

13. Second, with respect to the adjustments for differences in physical characteristics not
reflected in the original PCNs, the European Union failed to communicate what kind of information
or evidence was required to substantiate the requests for adjustments and imposed unreasonable
burden of proof on the interested parties. The Chinese exporters explained that these
characteristics have a significant impact on price, however, in the absence of any information as to
the products of Pooja Forge, it was simply im possible for them to differentiate between their
products and the products of the Indian producer so as to provide additional information to further
substantiate their request for adjustments.

14. Third, the European Union failed to make adjustments for differences that had been shown
to affect price comparability. In particular, the European Union failed, despite the requests made
by the Chinese exporters, to make due allowances for differences in taxation related to the fact
that the normal value of the Indian analogue pr oducer included a significant amount of import
duties on wire rod, while the export price of fa steners produced by the Chinese manufacturers did
not. The European Union also failed to make due allowances for differences related to the easier
access to raw materials, efficiency of energy consumption, productivity per employee and self-
generated electricity of Pooja Forge. The European Union ignored evidence and arguments
presented by the Chinese exporters and failed to make the necessary adjustments.

- B-16 -

6. The European Union violated articles 2. 4 and 2.4.2 of the AD Agreement since it
failed to calculate the dumping margin on the basis of all comparable export
transactions

15. The European Union also acted inconsiste ntly with Articles 2.4 and 2.4.2 of the
AD Agreement because it did not take into account all comparable export transactions in
determining the dumping margins of the Chinese exporters.

16. The fact that the European Union decided to conduct a comparison by grouping product
types does not imply that the export transactions related to those products that did not have a
corresponding type on the Indian domestic market could simply be left out. As clarified by the
Appellate Body in EC – Bed Linen "all types or models falling within the scope of a "like" product"
must necessarily be "comparable"" and therefore taken into account in the dumping
determination. This approach is further required by the fact that dumping and margins of dumping
must be established for the product under investigation as a whole.

17. The European Union attempts to raise secondary arguments with a view to show that it is
not so that all domestic and export sales of the "like product" are necessarily always "comparable".
These arguments, related to sampling under Article 6.10 or the timing of sales, are manifestly
inapposite.

18. The European Union fails to rebut China's arguments that the export sales that were
compared with the normal value are not represen tative for both qualitative and quantitative
reasons and seeks to mislead the Panel by providing extremely unclear chart and incorrect data. In
any event, it should be stressed that Article 2.4.2 of the AD Agreement requires the comparison of
"all comparable export transactions" and does not allow for a calculation of the dumping margin
only on the basis of "representative" transactions.

19. By failing to take into account the prices of all comparable export transactions the
European Union failed to make a fair comparison between export price and normal value and
thereby violated Article 2.4 of the AD Agreement.

7. The European Union violated articles 4.1 and 3.1 of the AD Agreement since the
re-determination of the domestic industry remains based on a self-selection process that
introduces a material risk of distortion

20. The European Union violated Article 4.1 of the AD Agreement because it defined the
domestic industry on the basis of the data received in the original investigation pursuant to the
notice of initiation and sampling forms which confused the issue of sampling and the definition of
the domestic industry.

21. China considers that the European Union's re-d etermination of its domestic industry remains
based on a self-selection process that introduces a material risk of distortion. It is the link between
the producer's willingness to be included in the sa mple and the definition of the domestic industry
which creates the self-selection process and introduces the material risk of distortion. This is
confirmed by the Appellate Body's finding that the selection of the sample and the determination
of the domestic industry constitute two different steps.

22. The European Union also violated Article 3.1 of the AD Agreement since the analysis of
injury is based on information relating to a wrongly-defined domestic industry.

Closing Statement of the People's Republic of China

23. As has become clear, and as the European Union itself confirmed today, the
European Commission tried to do "its best" on the basis of the information provided to it by Pooja
Forge. However, the issue before this Panel is not whether the European Commission "did its
best", but whether it substantively complied with the obligations incumbent on it pursuant to the
Anti-Dumping Agreement and Article VI of the GATT.

- B-17 -

24. As demonstrated by China in its writte n submissions and during this meeting, the
European Union failed to comply with its obligations, in stark contradiction with the DSB rulings
and recommendations in the original dispute.

- C-1 -

ANNEX C
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex C-1 Executive summary of the first written submission of the European Union C-2
Annex C-2 Executive summary of the second written submission of the European Union C-10
Annex C-3 Executive summary of the opening oral statement by the European Union C-19

- C-2 -

ANNEX C-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF THE EUROPEAN UNION
1 INTRODUCTION
1. The European Union considers that it has fully complied in good faith with the DSB
recommendations and rulings in the original dispute. The present submission addressed China's
claims in the order followed by China in its first written submission.

1.1 Claims under Articles 6.5 and 6.5.1 of th e AD Agreement: information relating to the
Indian producer (Pooja Forge)
2. Article 6.5.1 of the AD Agreement imposes an obligation on the investigating authorities to
ensure that sufficiently detailed non-confidential summaries are submitted to permit a reasonable
understanding of the substance of the confidential information; and, in exceptional circumstances,
to ensure that parties provide a statement appr opriately explaining the reasons why particular
pieces of confidential information are not susceptible of summary.

3. The European Union has complied with this legal standard in the current investigation.
Information about internal company codes for its transactions and products (including the product
description text string used by the company in question) is proprietary information. It is the typical
sensitive information that companies do not like sharing with their competitors. The
European Union considers that the information concerning the list of products sold as well as
information provided by Pooja Forge concerning th e characteristics of the products sold in the
Indian market was "by nature" confidential and, in any event, the information in question was
provided "on a confidential basis". The European Union considers that in examining the good cause
alleged by Pooja Forge objectively in this case , there were reasons to grant such information
confidential treatment. Thus, China's claim under Article 6.5 of the AD Agreement should be
rejected. The same should be concluded with resp ect to China's claim under Article 6.5.1 of the
AD Agreement.

1.2 Claims under Articles 6.4 and 6.2 of the AD Agreement: the alleged lack of
opportunities to see all relevant non-confidential information
4. China claims that the European Union violated Articles 6.2 and 6.4 of the AD Agreement by
failing to provide to the Chinese interested parties a full opportunity for the defence of their
interests and by failing to provide timely opportunities for them to see all information that was not
confidential.

5. Article 6.2 of the AD Agreement provides that throughout the anti-dumping investigation all
interested parties shall have a full opportunity for the defence of their interests. To this end, this
provision foresees the possibility to have hearings by interested parties where opposing views may
be presented and rebuttal arguments offered. Provision of such opportunities must take account of
the need to preserve confidentiality and of the convenience to the parties.

6. Article 6.4 of the AD Agreement imposes the obligation upon investigating authorities to
provide timely opportunities for all interested parties to see all information (i) that is relevant to
their presentation of their cases, (ii) that is not confidential as defined in Article 6.5 of the
AD Agreement, and (iii) that is used by the authorities in an anti-dumping investigation.

7. The European Union notes that China appears to have expanded the scope of its dispute in
its first written submission when compared with its Panel Request. Indeed, China's Panel Request
defined the scope of the claims under Articles 6. 2 and 6.4 of the AD Agreement "with regard to,
inter alia, the products sold by the Indian producer". In contrast, in its first written submission,
China takes issue with internal company's item codes and product description text strings which,
unless the internal reference to match the codes is obtained from Pooja Forge, do not say much

- C-3 -

about the products sold by Pooja Forge. The Panel should thus refrain from examining this aspect
of China's claim.

8. Regardless, the European Union considers that the conditions set out in Article 6.4 of the
AD Agreement are not met in this particular case. The Chinese exporters could see the information
relating to the characteristics of the products sold by Pooja Forge and which was used in
determining the normal value. As a result, the European Union considers that China's claim under
Article 6.4 of the AD Agreement should be reje cted. On the same basis, the European Union
requests the Panel to reject China's claim under Article 6.2 of the AD Agreement.

1.3 Claim under Article 6.1.2 of the AD Agreem ent: prompt availability of the evidence
presented by the Indian producer concerning its products to interested parties
9. China argues that, because the evidence conc erning the characteristics of the products of
Pooja Forge was not confidential and was not made available during the investigation – and thus a
fortiori not been made available "promptly" – to the Chinese exporters, the European Union
violated Article 6.1.2 of the AD Agreement.

10. Article 6.1.2 of the AD Agreement provides that, subject to the requirement to protect
confidential information, evidence presented in writing by one interested party shall be made
available promptly to other interested parties participating in the investigation. The
European Union considers that China's claim under Article 6.1.2 of the AD Agreement is without
merit. The European Union disagrees with China th at Pooja Forge falls under the definition of an
"interested party" within the scope of Article 6.1.2 of the AD Agreement. The
European Commission did not designate Pooja Forge as an interested party in the implementation
proceeding.

11. In any event, China's claim under Article 6.1.2 of the AD Agreement is baseless on
substance. First, the information provided by Pooja Forge about its products sold in the Indian
market during the relevant investigation period was confidential under Article 6.5 of the
AD Agreement. Second, the information about the ch aracteristics of Pooja Forge's products sold in
India and which was used for the normal value determination was provided promptly to the
Chinese exporters. Consequently, the European Union requests the Panel to reject China's claim
under Article 6.1.2 of the AD Agreement.

1.4 Claim under Article 2.4 of the AD Agreement: failure to indicate information that was
necessary to ensure a fair comparison
12. China argues that the European Union violated Article 2.4 of the AD Agreement by failing to
provide relevant information on the product characteristics of the Indian producer which was used
for the determination of the normal value. The European Union considers that the
European Commission disclosed all of the necessa ry information on the product groupings that
were used in the normal value determination to the Chinese exporters and engaged in an active
dialogue with the Chinese interested parties, as required by Article 2.4 of the AD Agreement. In so
doing, the European Commission fully implemente d the recommendations and rulings of the DSB
and complied with its obligations under Article 2.4 of the AD Agreement. China's arguments must
therefore be rejected.

13. Article 2.4 of the AD Agreement places an obligation on the investigating authority to make
a fair comparison between normal value and export price. In particular, it requires the authority to
make due allowances, in each case, on its merits, for differences which "are demonstrated to
affect" price comparability. Article 2.4 of the AD Agreement does not impose specific obligations in
terms of providing information submitted by in terested parties to other interested parties
requesting adjustments.

14. The Appellate Body explained that it was of the view that the last sentence of Article 2.4
adds "a procedural requirement" and requires a "dialogue" between the investigating authority and
the interested parties. In the implementing investigation the European Commission more than
complied with the Appellate Body's holding by engaging in an extensive dialogue with the
interested parties that led to the development of detailed product categories that took into
consideration many of the suggestions made by Chinese interested parties to ensure a fair
comparison. Furthermore, information on the characteristics of the product categories used in the

- C-4 -

dumping margin determination as well as information on the sales of these product categories by
the Indian producer that were used in the normal value determination was made available to the
Chinese interested parties. The European Union therefore complied with its obligations under
Article 2.4 of the AD Agreement.

15. The Commission fully engaged in the required "dialogue" by constructively addressing the
comments received and providing at every step of the proceeding reasoned and reasonable
explanations of the decisions that led to the ad option of product categories. The European Union
therefore fully implemented the rulings and reco mmendations of the DSB and complied with the
obligation to enter into "dialogue" under Article 2.4 of the AD Agreement. The
European Commission also complied with the substa ntive obligation that the Appellate Body read
into Article 2.4 of the AD Agreement requiring the investigating authority to provide information on
the product groups that would be used for purposes of the normal value determination. China's
argument that the European Union violated Articl e 2.4 of the AD Agreement by failing to provide
relevant information regarding the dumping margin determination is therefore without merit.

1.5 Claim under Article 2.4 of the AD Agreement: fair comparison - failure to ensure that
an export price of standard fasteners was no t compared to the normal value of special
fasteners
16. In the context of the original investigation, the Chinese exporters raised the need to
distinguish between "special" and "standard" fasten ers. Even though this distinction was raised
relatively late in the proceeding and had not been part of the original PCN, the
European Commission considered that it was useful to include it in the product types as this
distinction was considered to affect price comparability. The original final determination reflects
the fact that "customer drawing" is the basic difference between special and standard fasteners.
Special fasteners are fasteners "on demand" while standard fasteners are simply fasteners that
meet certain general industry standards.

17. China argues that in the implementation pr oceeding the European Union failed to ensure
that a fair comparison was made between export pric e and normal value as it failed to ensure that
the export price of the Chinese standard fasteners was not compared to the normal value of
special fasteners produced by the Indian analogue producer. China's claim is without merit. The
distinction between standard and special fastener s on the basis of customer drawings was clear
from the definitive determination. China's claims of violation of Article 2.4 of the AD Agreement
relating to the distinction between standard and special fasteners must therefore be rejected.
Investigating authorities are given discretion to determine the comparison methodology. If the
selected methodology makes a "fair comparison", in which "due allowance" is made for differences
demonstrated to affect price comparability, then the methodology is consistent with Article 2.4 of
the AD Agreement.

18. The question before the Panel is whether in the light of the circumstances of the case, the
European Commission's treatment of the distinct ion between standard and special fasteners was
reasoned and adequate and whether the European Commission acted as an objective and unbiased
investigating authority when using the information provided by the Indian producer. In this
respect, it is recalled that the Indian producer provided information enabling the
European Commission to distinguish special and standard fasteners and the European Commission
verified and cross-checked the information that wa s provided to ensure accuracy. The main risk
was to avoid including special fasteners within the standard list as this would have affected the
ultimate dumping calculation, i.e. it would have increased the normal value and thus the possible
margin of dumping. By taking all reasonable steps to ensure that this did not happen, the
European Commission did what was reasonable and adequate.

19. The European Commission acted as an active, objective and reasonable investigating
authority in obtaining confirmation of the accuracy and reliability of the distinction between
standard and special fasteners as made by the Indian producer thus complying with its obligations
under Article 2.4 of the AD Agreement. Therefore, even though it may have been done differently,
such as through an on-spot verification, under the Panel's standard of review, and in light of the
obligations imposed under the Agreement, China's claims under Article 2.4 of the AD Agreement
relating to the split between special and standard fasteners are to be rejected.

- C-5 -

1.6 Claim under Article 2.4 of the AD Agreem ent and Article VI:1 of the GATT 1994: fair
comparison - failure to make adjustments for differences affecting price comparability
20. China argues that the European Union failed to fulfil its obligations pursuant to Article 2.4 of
the AD Agreement and Article VI:1 of the GATT 1994 by "refusing to make adjustments for
differences in taxation, differences in physical characteristics and certain other differences
affecting price comparability". According to China, all of the adjustments that were requested by
the Chinese exporters were fully supported by the evidence before the European Commission.
China also argues that alleged "imbalances" th at are created by choosing an analogue country
producer should be corrected by making an adjustment.

21. The European Union considers that Article 2.4 of the AD Agreement requires only that
adjustments be made when it concerns differences that have been demonstrated to affect price
comparability. The Chinese exporters did not provide the information necessary to substantiate
their request for adjustments. China disagrees with the decisions taken by the
European Commission in the proceeding but fails to demonstrate that the European Commission's
detailed and substantiated explanation of why it did not consider that adjustments were required
to address these alleged differences was not reasoned and reasonable. The European Commission
acted as an objective and unbiased investigating authority in addressing the claimed adjustments
and requesting additional information to be provid ed in order to substantiate the request. China's
claim under Article 2.4 and Article VI of the GATT 1994 must therefore be rejected.

22. Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994 concern the comparison
by the investigating authority of the export price and the normal value. Pursuant to these
provisions, an investigating authority is under an obligation to ensure "a fair comparison" between
the export price and the normal value and to make "due allowance" for certain factors affecting
price comparability including differences in conditions and terms of sale, and in taxation. Neither
Article 2.4 of the AD Agreement nor Article VI:1 of the GATT 1994 mandates a methodology that
the investigating authority must use in ensuring "a fair comparison". Under the fair comparison
obligation, the authority "must take steps to achieve clarity as to the adjustment claimed and then
determine whether and to what extent that adjustment is merited". Thus, if an adjustment is
requested but to a difference which is not shown to affect price comparability, or if the
investigating authority determines that an adjustment is not merited, no adjustment to the export
price and/or normal value needs to be made. It is through examining the requests for adjustment
and by communicating with the interested parties the kind of information and evidence that may
be required to substantiate their requests that the investigating authority complies with the fair
comparison obligation under Article 2.4 of the AD Agreement.

23. In light of this obligation and given the applicable standard of review under Article 17.6 of
the AD Agreement, it is to be examined whether the investigation authority acted in an objective,
reasonable and reasoned manner such that its approach to the request for adjustments can be
said to have been that of an unbiased and objective investigating authority. A decision with
respect to adjustments does not lead to an unfair comparison simply because a different approach
could have been adopted.

24. China essentially disagrees with the manner in which the European Commission addressed
the request for adjustments and re-litigates the issue that was before the European Commission,
disregarding the standard of review under Articl e 17.6 of the AD Agreement. The European Union
therefore requests the Panel to reject China's claim of violation of Article 2.4 of the AD Agreement,
similar to what the Panel did in the original dispute when it rejected China's unfounded challenge
of the European Commission's decision not to make adjustments for alleged quality differences
other than quality control.

1.6.1.1 China's claims relating to allo wances for differences in taxation are
unfounded
25. China argues that an adjustment should have been made for the import duties paid by the
analogue producer to acquire wire rod –an important raw material for the production of fasteners–
because the Chinese exporters do not import wire rod. The European Commission examined the
arguments of the Chinese interested parties that adjustments had to be made under
Article 2(10)(b) of the EU's Basic Regulation for th e indirect taxes incurred on the import of wire
rod into India. It explained that such an adjustment is claimable if the import charges borne by the

- C-6 -

like product when intended for consumption on the domestic market would not be collected or
would be refunded when the like product is exported to the European Union. The European Union
complied with Article 2.4 of the AD Agreement and acted in a reasonable and reasoned manner
when rejecting the request for adjustment for alleged differences in taxation.

26. It appears as if China is complaining that the use of an analogue country is "unfair" or
"unreasonable". That debate, however, is not related to Article 2.4 of the AD Agreement but has
been settled at the time of China's accession to the WTO and was never in doubt during the
original dispute. Absent evidence relating to a difference in taxation affecting price comparability
between the Indian producer's domestic sales and Chinese export sales, the European Commission
acted as a reasonable and objective investigating authority when taking the decision to reject the
requested adjustment.

1.6.1.2 China's claims relating to adjust ments for alleged differences in physical
characteristics are unfounded
27. China argues that the European Commission failed to take the differences in physical
characteristics into account, both physical characteristics included in the product categories and
those that were not included. It alleges that the European Commission thus failed to make a fair
comparison as required by Article 2.4 of the AD Agreement. However, China fails to demonstrate
that the decision by the European Commission not to make the requested adjustment for physical
characteristics was unreasonable or biased or that the European Commission did not engage in an
active and substantive dialogue with the interested parties on these matters.

28. China's main arguments actually relate to the alleged "limited evidence" and the fact that
certain evidence was "not verified", on the one hand, and the additional detailed PCNs that could
have been developed by the European Commission, on the other hand. However, as explained
above, Article 2.4 of the AD Agreement does not impose any particular evidentiary burden on the
investigating authority. An investigating authority must be entitled to rely on information provided
by the relevant interested parties and draw conclusions on the basis of this information. The
European Commission satisfied itself of the accuracy of the information provided and was thus
permitted to rely on such evidence. In any case, China did not include any claims of violation of,
for example, Article 6.6 or 6.7 of the AD Agreemen t that concerns verification of the accuracy of
the information provided. The European Commission may thus be assumed to have acted in
accordance with the requirements to have satisfied itself of the accuracy of the information
provided. The Implementing Regulati on explains how that was done for each of the issues raised
by China and China fails to demonstrate that this method of proceeding was not objective or was
biased.

29. Turning to the specific arguments of China on the need for additional adjustments for
physical characteristics reflected in the product categories, the European Union considers that
China's arguments are self-defeating and fail to demonstrate that the European Commission did
not act as a reasonable and objective investigating authority when examining and ultimately
rejecting these requests.

1.6.1.2.1 Coating and Chrome
30. China takes issue with the European Commission's conclusion that no adjustment for coating
was required because all domestic sales were electroplated. China asserts that the Commission's
conclusion was based on "confidential evidence" and on "declarations of representatives and
production brochures which have not been verified". China argues that the evidence should have
"been verified" and that the evidence relied on was limited. However, there is no verification in the
sense of "on-spot" verification required and China did not challenge the European Commission's
verification under Article 6.6 of the AD Agreement.

31. With respect to the European Commission's conclusion that all fasteners of the Indian
producer used only Chrome CR3 and not the more expensive Chrome VI, China argues that the
European Commission "should have gathered and verify [sic] detailed and precise information
regarding the type of chrome used on the fasteners in relation to which normal value was
established". China argues that "by failing to do so, the European Union acted inconsistently with
Article 2.4 of the AD Agreement". This is clearly incorrect. The European Commission examined
the information available. The fact that the information was confidential does not make it less

- C-7 -

reliable of course. The European Commission acted as a reasonable and objective investigating
authority in addressing chrome and coating in accordance with Article 2.4 of the AD Agreement.

1.6.1.2.2 Diameter and length
32. China argues that actual figures for diameter and length should have been used rather than
ranges as there are still price differences within the ranges used. However, the fact that prices
may still differ within a range of diameter and leng th does not mean that it is "unreasonable" of
the investigating authority to use ranges to distinguish between product categories for purposes of
making a fair comparison. In fact, the interested parties themselves indicated some ranges that
could be used.

1.6.1.2.3 Types of fastener
33. China takes issue with the way in which the types of fasteners were identified and included
in the product categories, but fails to demonstrate that the methodology followed for distinguishing
between different types of fasteners (hexagon screws, wood screws, bolts, etc.) as per the request
of Chinese interested parties was unreasonable. The European Commission developed an
alternative methodology looking at the main types of fasteners sold on the EU market. The
information provided by the Indian producer enabled the European Commission to make these
distinctions.

34. China does not appear to disagree with th e fact that the different types of fasteners
identified in the product categories reflect main types of fasteners; it simply suggests that the
European Commission did not develop "evidence" to confirm that this was the case. China again
seems to place an undue burden on the authorit y, which, in the absence of evidence to the
contrary, was entitled to rely on the informatio n provided. China therefore failed to demonstrate
that there was anything improper or "unreasonable" in the way the Commission made its fair
comparison.

1.6.1.2.4 Other features not part of the PCN
35. Finally, with respect to certain other possible fe atures of fasteners that were not included in
the revised product categories, China asserts that it was not sufficient for the
European Commission to request that the Chinese interested parties substantiate their arguments
about the need for adjustments. According to China, the European Commission "failed to provide
information concerning the characteristics of the fasteners sold by the Indian producer" thereby
allegedly making it impossible for the Chinese interested parties to provide the requested
substantiation.

The European Union notes that these non-PCN features were either not substantively raised in the
context of the original investigation or to the extent that some were raised, they were adequately
dealt with by the European Commission in the original proceeding. In any case, China is in respect
of these characteristics again complaining about an alleged lack of information relating to the
products sold by the Indian producer. It is not enough for an interested party to simply raise a
feature of a product that may have some effect on price to suggest that the burden is then on the
investigating authority to develop the evidence to substantiate the need for an adjustment. What
needs to be demonstrated is that there are reasons to believe that the presence or absence of
these features in the models sold by the Chinese interested parties may have affected price
comparability. The Chinese interested parties never did so. The European Commission's rejection
of the requested adjustments for lack of substantiation was therefore entirely reasonable and
China failed to demonstrate that the European Commission did not act as an objective and
unbiased investigating authority.

1.6.1.3 China's claims relating to adjustments for other differences with the Indian
analogue country producer are unfounded
36. China argues that the European Union acted inconsistently with Article 2.4 of the GATT 1994
and Article 2.4 of the AD Agreement in failing to make adjustments for alleged differences between
the analogue country producer and Chinese exporters resulting from easier access to raw
materials, differences in energy consumption affe cting productivity, and differences arising from
self-generated electricity.

- C-8 -

37. The European Union resorted to the use of an analogue country producer to determine
normal value because of the cost related market distortions in China for fasteners. The Indian
producer's electricity self-generation is a minor difference.

38. None of China's arguments demonstrate that the European Commission's determination was
unfair or incorrect. China has failed to demonstrate that the European Union acted inconstantly
with Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994. The
European Commission examined the requests as a reasonable and objective investigating authority
and enquired about the information available to substantiate the requests before rejecting the
request based on the record of the investigation.

1.7 Claim under Articles 2.4 and 2.4.2 of the AD Agreement: failure to calculate the
dumping margin on the basis of all comparable export transactions and the imposition of
anti-dumping duties on this basis
39. China argues that the European Union acted inconsistently with Article 2.4.2 of the
AD Agreement by failing to take into account all export transactions in its dumping calculations.

40. The European Union observes that the approa ch of "multiple averaging" based on examining
product types and determining margins of dumping for different models that are then consolidated
in a weighted average to weighted average comparison is clearly WTO consistent. In addition,
Article 6.10 of the AD Agreement allows for sampling. It provides that, when the number of "types
of products involved is so large to make such a determination impracticable", the authorities may
limit their examination to only a certain number of products or the largest volume of exports that
can reasonably be investigated. Article 6.10.1 of the AD Agreement expressly refers to a limitation
based on the "types of products". Given that such sampling techniques are permissible and as long
as all comparable export transactions are taken into consideration, it is not inconsistent with
Article 2.4.2 of the AD Agreement not to includ e in the dumping margin determination export
transactions for which no comparable domestic sales transaction exists. The obligation is to
compare only comparable transactions but to make sure to compare and use all of such
comparable transactions. That is exactly what the European Commission did.

41. The European Commission included only the comparable export transactions in its dumping
calculation in order to ensure the accuracy of the calculations. Given that China failed to
demonstrate that any comparable export transact ions were excluded from the dumping margin
determination, China's claim under Article 2.4 and 2.4.2 of the AD Agreement must be rejected.

1.8 Claim under Articles 4.1 and 3.1 of th e AD Agreement: definition of domestic
industry
42. With respect to the original determination, the Appellate Body found that the exclusion from
the definition of the domestic industry of domestic producers that indicated that they would not be
willing to be part of the sample and be verified constituted a violation of the EU's obligations under
Article 4.1 and 3.1 of the AD Agreement. In the Implementing Regulation, the
European Commission therefore re-examined the file and included all previously excluded domestic
producers into the definition of the domestic industry. Following a re-examination, it found that in
the context of a fragmented industry these domestic producers represented a major proportion of
the domestic industry and that the sample originally examined remained sufficiently representative
of the domestic industry, also under the new definition of the domestic industry.

43. China, however, considers that despite allowing the previously excluded producers to be part
of the domestic industry in the implementation pr oceeding, as required by the Appellate Body, the
European Union still failed to comply with its obligations under Article 4.1 and 3.1 of the
AD Agreement. According to China, as a result of the European Commission's approach, certain
producers "may have" decided not to come forward and this approach "may have" discouraged
producers from coming forward because they alle gedly knew they would be rejected from the
definition of domestic industry if they were not willing to be part of the sample. China's speculative
argument is unfounded and over-states the obligations that result from the limited findings of the
Appellate Body. China's argument that the Europe an Union violated Articles 4.1 and 3.1 of the
AD Agreement must therefore be rejected.

- C-9 -

44. The task of the European Union was to bring its measure into conformity with the
recommendations and rulings of the Appellate Body, also in respect of the definition of the
domestic industry. The European Commission did not simply reject the request to start the process
anew because this was clearly not required by the Appellate Body, as it could have done. The
European Commission included the information from all responsive domestic producers in the
fragmented fastener industry. The inclusion of this additional information increased the percentage
of total production included in the injury anal ysis. Given that all producers that came forward
within the deadline and that provided the relevant information were included in the definition of
the domestic industry, the previously highlig hted material risk of distortion in the
European Commission's injury analysis as a result of the deliberate exclusion of domestic
producers for the sole reason that they were not willing to be part of the sample was adequately
addressed.

45. The European Commission's revised domestic industry definition and consequent injury
determination is based on all producers that came forward within the deadline and provided the
relevant information, in line with the EU's obligation under Article 4.1 and 3.1 of the
AD Agreement. In view of the fragmented natu re of the fasteners industry, these producers
represented a major proportion of the domestic in dustry's production. The previously identified
material risk of distortion that resulted from the exclusion of domestic producers that had come
forward within the deadline and that had provided the relevant information was thus taken care of.
China's claims of violation of Articles 4.1 and 3.1 of the AD Agreement must therefore be rejected.

- C-10 -

ANNEX C-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF THE EUROPEAN UNION
1. Claims under Articles 6.5 and 6.5.1 of the AD Agreement: information relating to the
Indian producer (Pooja Forge)

1. The European Union considers that China's claims under Articles 6.5 and 6.5.1 of the
AD Agreement must be rejected. Pooja Forge agreed to cooperate in the investigation provided
that all its company details remained confidential and, thus, not disclosed to any interested
parties. It also provided specific reasons as to why such a disclosure should not take place, i.e.,
since otherwise that would provide an advantage to its competitors. The European Commission
objectively assessed those reasons and concluded that there was "good cause" to treat such
information as "confidential". The European Commission also provided information regarding the
characteristics of the products sold by Pooja Forge to interested parties to its best ability within the
margins of not disclosing such confidential information, and yet striking a balance with the right of
those other parties to know the necessary information to protect their interests accordingly.

1.1.1. China is prevented from raising the same claim in these compliance proceedings

2. The European Union recalls that Article 21.5 reports by the Appellate Body and panels have
consistently found that a compliance panel must not re-examine the WTO-consistency of an
unchanged aspect that was not found to be WTO-in consistent in that dispute. Similarly, when a
WTO Member has failed to make a prima facie case against the measure at issue, the same
WTO Member cannot have a "second chance" and re-litigate the same issue. The Appellate Body
and panels have stressed the importance of th e principles of fundamental fairness and due
process, as well as the purpose of Article 21.5 which is to provide an "expeditious" resolution of
the dispute.

3. China argues that in the original proceeding, it only challenged "the confidential treatment of
the information on 'product types' provided by Pooja Forge". China considers that in these
compliance proceedings it "disputes the confidential treatment afforded to the list of products as
well as of the information concerning the characteristics of the products sold by the Indian
producer". China thus tries to draw a distinctio n, based on the fundamental premise that in the
original panel proceedings, it did not take issue with the treatment of all the information submitted
by Pooja Forge regarding its products, and in particular the information provided in the context of
Pooja Forge's Questionnaire Response. If this premise falls, then China's argument falls.

4. China's fundamental premise is contradicted by the Original Panel's record. The Original
Panel explicitly found that "China takes issue with the treatment of all the information in Pooja
Forge's questionnaire response". The Panel stated explicitly that China's claim was not limited to
"product types". The Panel quotes, for example, China's second written submission, para. 1110,
where China claimed that the non-confidential ve rsion of Pooja Forge's questionnaire response
"does not contain any information, and in particular information on the 'product types' on the basis
of which the information has been provided by this producer which is obviously not confidential".
In the original panel proceeding China raised a broad claim with regard to the treatment of all the
relevant information provided by Pooja Forge, not limited to "one" category of information, such as
"product types".

5. After having taken "issue with the treatment of all the information in Pooja Forge's
questionnaire response" already in the original panel proceedings, China wants to adduce
additional evidence and arguments in the 21.5 proceedings, after having failed to do so in the
original panel proceedings. This is precisely that sort of attempt at getting a "second chance"
which neglects the importance of the principles of fundamental fairness and due process, as well
as the purpose of Article 21.5 which is to provide an "expeditious" resolution of the dispute.

- C-11 -

1.1.2. China's claim under Article 6.5 of the AD Agreement also fails on substance

1.1.2.1. The information provided by Pooja Forge is confidential by nature

1.1.2.1.1. "List of products"

6. With respect to the "list of products", th e European Union had argued that "information
about internal company codes for its transactions and products (including the product description
text string used by the company in question) is the typical sensitive information that companies do
not like sharing with their competitors. Knowing how a company arranges its internal
administration could provide an advantage to a competitor (e.g. by learning a more efficient
manner to organise its internal records) and may have an adverse effect upon a person supplying
the information (e.g. if such information is provided to a competitor, such as the Chinese exporters
in this case)".

7. China argues that these explanations are "ex post reasons" and selectively quotes one single
instance in the Review Regulation. China forgets to cite any of the other passages where reasons
were given to maintain the information as confidential. China also forgets to refer to the specific
request by the Indian producer that it "would not like to disclose our company details to interested
parties" and thus to maintain all "details" (and thus any particulars or information) concerning its
company confidential. Thus, there were clear references on record that Pooja Forge requested the
European Commission to maintain all information regarding its company confidential as the basis
for its cooperation.

8. China further alleges that the information in question (i.e. the item codes and product
description text strings per transaction) "is routinely provided to potential customers willing to
purchase fasteners on an unrestricted basis". However, the European Union submits that Pooja
Forge did not routinely provide the information in question (i.e. the item codes and product
description text strings per transaction) on an unrestricted basis. In its business dealings at the
time Pooja Forge would not disclose this information on an unrestricted basis. This is the reason
why it insisted upon confidential treatment. This is the type of information that is of no concern to
customers. Also Chinese exporters did not want this kind of information to be disclosed. China
remains silent in this respect.

9. The European Union has not argued that "proprietary information" always amounts to
"inherently confidential" information. In the current case this proprietary information in question is
such that it is at the same time inherently confidential information.

10. China pretends that it is difficult to un derstand why the European Union requested Pooja
Forge whether its list of products and the co mpany brochure provided during the Original
Investigation could be disclosed to interested parties. To the European Union, it seems good
administrative practice to ask first and only then to make assessments. Just as in panel
proceedings, parties are not supposed to draw conclusions from the fact that a panel may ask
question.

1.1.2.1.2 Information regarding the characterist ics of the products sold by Pooja
Forge

11. China claims that the European Union di d not provide "any argument as to why the
information in question, that is the evidence provided by Pooja Forge with respect to the
characteristics such as the type of coating, chrome, and other characteristics of the products, was
confidential by nature".

12. The European Union respectfully disagrees. In this respect, the European Union refers China
inter alia to para. 46 of the EU's first written submission. What China is asking for is disclosure of
commercially valuable market information which is proprietary to Pooja Forge. Knowing in detail
the whole set of products sold by Pooja Forge on the market provides competitors with valuable
market information. This kind of detailed information may indicate to competitors which kind of
products a competitor could offer in that market. At the same time, it may allow a competitor to
identify which products are not sold so that th e competitor can identify potential weaknesses of
Pooja Forge and an unsatisfied demand on the market. The disclosure of this detailed information
would therefore be of significant competitive advantage to a competitor and could have a

- C-12 -

significantly adverse effect upon a person supplying the information, pursuant to Article 6.5 of the
AD Agreement.

13. China's claim concerning the information provided by Pooja Forge is very broad. China
mostly fails to identify the specific documents where the information provided by Pooja Forge was
kept as confidential. China's claim amounts to arguing that an investigating authority has to
ensure that any information regarding the characteristics of the product sold by all producers in an
investigation must be disclosed to all parties. This seems unreasonable and also inconsistent with
the position adopted by the Chinese exporters in this investigation.

14. China's second written submission refers to the fact that one domestic producer enclosed a
product catalogue as an annex to its questionnaire response. The European Union fails to see the
relevance. The information that is in question here is Pooja Forge's company brochure, and it is
uncontested that at the time of the investigation Pooja Forge did not typically disclose it in an
unrestricted way in the normal course of business. The fact that one producer decides to disclose
all its prices to its competitors does not mean that Pooja Forge's price information cannot be
considered as "confidential" by nature.

15. Finally, China's reference to recent European Union guidelines is inapposite. These are (1)
very recent "guidelines" (and thus subject to change in view of the specific circumstances of each
party) which were not used in respect of Pooja Forge; (2) at the time of the Fasteners
investigation the European Commission made no su ch statement; (3) administrative guidelines by
one WTO Member do not constitute an authoritative interpretation of the WTO Antidumping
Agreement and are thus not dispositive of the question which China has raised before this Panel.

1.1.2.2. Pooja Forge provided the information at issue on a confidential basis

16. The European Union observes that the information in question was provided "on a
confidential basis". China takes issue with this and argues that the European Union "fails to
demonstrate that confidential treatment has been requested precisely with respect to sub-section
B.2 'Specifications of the product concerned'".

17. Pooja Forge agreed to cooperate in the or iginal investigation as an analogue country
producer, provided that no company details would be disclosed to interested parties. This request
was reiterated a number of times both orally and in writing, see for example Exhibit CHN-25, a
communication from Pooja Forge to the European Commission dated 2 July 2012. As is apparent
from this communication, the case handlers had asked which information could be treated as non-
confidential, and Pooja Forge had replied that "it would not like to disclose our company details to
interested parties as requested by you". Thus, it is clear that all the information provided by Pooja
Forge in this case was provided on a confidential basis.

18. With respect to sub-section B.2 referred to by China, China ignores the fact that Pooja Forge
did not fill in this part of its Questionnaire Resp onse. The non-confidential version of the "blanked"
response showed precisely the same result.

1.1.2.3 The "good cause" requirement is met in this case

19. Regarding the list of products, the Europe an Union has explained that "disclosing such
information could provide an advantage to Pooja Forge's competitors and may cause an adverse
effect on Pooja Forge".

20. China further considers that the "good cause" test is not met because, in China's view,
"good cause" must be shown by the party seeking confidential treatment for information, not by
the European Union. However, as the Appellate Body found, it is up to the investigating authority
to determine objectively "good cause". A party can never itself determine the existence of "good
cause" in the sense of Article 6.5 AD Agreement. The purpose of the "good cause" requirement is,
in the words of the Appellate Body, that the "inv estigating authority must seek to balance the
submitting party's interest in protecting its confidential information with the prejudicial effect that
the non-disclosure of the information may have on the transparency and due process interests of
other parties involved in the investigation to present their cases and defend their interests". If this
balance is done properly, then it seems mere formalism whether it is the investigating authority –
in the exercise of its balancing duty under Arti cle 6.5 of the AD Agreement – that has correctly

- C-13 -

interpreted the interests of the submitting party in order to establish a clearer balancing of the
interests, in the interest of the strength and accuracy of the balancing exercise.

21. The point by China must therefore be rejected, even if one were not to share Japan's
consideration that "the authorities may not be prevented from treating relevant information as
confidential on its own initiative, provided that 'good cause [is] shown' by themselves".

22. China argues that the Panel must disregar d Pooja Forge's e-mail dated 3 July 2012 because
it was not in the administrative file. However, the question of how to deal with such a situation has
already been clarified by the panel in EC – Salmon.

23. The arguments that China raises in its second written submission with regard to information
about the characteristics of the products sold by Pooja Forge are to be rejected for the same
reasons as those arguments relating to the list of products.

1.1.3. China's claim under Article 6.5.1 of the AD Agreement also fails

24. At the time of the verification visit in Apri l 2008, Pooja Forge insisted on the confidentiality
of its information in order to continue its cooperation and expressed its views about the
impossibility of summarising the information about its list of products and product characteristics
without revealing too much to its competitors. The facts and events to which the European Union
needs to refer in this case refer to back 2008. At that time, the European Commission did not have
the means to archive all the documents and comm unications provided by interested parties.
Furthermore, many of the observations made by Pooja Forge regarding the information about its
products and the impossibility to provide any meaningful summary (other than "fasteners") were
made orally to the European Commission's case-handlers that visited the facilities of the Indian
producer, so no written record was left other than the case-handlers' verification notes.

25. Pooja Forge provided the summary "fasteners" as a general statement contained in its
response to the questionnaire about its product range. Upon request of the European Commission,
Pooja Forge expressed its views about the impossibility of summarising the information about its
list of products and product characteristics in a way other than by means of this general
statement. The European Union considered that, other than the general statement "fasteners",
Pooja Forge could not provide another, more meanin gful confidential summary of a list of 80,000
item codes relating to specific transactions as well as their product description text strings without
either revealing internal company details or other sensitive market information to competitors. Yet
throughout the whole investigation, the European Commission provided information regarding the
characteristics of the products sold by Pooja Forge to interested parties to its best ability within the
margins of not disclosing such confidential information.

2. Claims under Articles 6.4 and 6.2 of the AD Agreement: the alleged lack of
opportunities to see all relevant non-confidential information

26. China continues to ignore the fact that the information about the characteristics of the
products sold by Pooja Forge and that was used for the normal value determination (i.e. the
specific claim made by China) was provided to the interested parties through the company specific
disclosures.

2.1.1. China's claim with respect to the "list of products" is not within the Panels' terms
of reference

27. The scope of China's claims under Articles 6. 2 and 6.4 of China's Panel Request is limited to
"information … with regard to, inter alia , the products sold by the Indian producer", that is,
information specifically with respect to the products sold by Pooja Forge. It does not cover the
item codes and product description text strings. The item codes are a combination of letters and
numbers (e.g. Z1234), whereas the product description text string is also a combination of letters
and numbers indicating some product characterist ics, such as diameter and length. These codes
and text strings are therefore part of the internal administrative set-up; in themselves they do not
say much about the products sold by Pooja Forg e. While sometimes the product description text
string could indicate some of the features of the products sold, further information is required to
understand the characteristics Pooja Forge considered as relevant to be included in such a product

- C-14 -

description. The Panel should limit its examination to China's claim regarding the information
submitted by Pooja Forge on the characteristics of the products sold in the Indian market.

2.1.2. China's claim under Article 6.4 of the AD is unwarranted

28. China argues that the item code, product description text strings as well as the
characteristics of the products sold by the Indian producer were all "used" by the investigating
authorities. First the European Union would like to remind China of the scope of its claim. China
stated its claim as follows: "it is clear that the list of products as well as the information
concerning the characteristics of the products sold by the Indian producer used for the
determination of normal value constitutes information that was relevant to the presentation of the
exporters' cases, that was not confidential and th at was used by the investigating authorities in
the anti-dumping investigation. By failing to provide timely opportunities for the Chinese exporters
to see such information despite the numerous requ ests made by the Chinese exporters during the
review investigation, the European Union violated Article 6.4 of the AD Agreement". Pursuant to its
claim under Articles 6.4 and 6.2, China does not take issue with the "raw data" concerning the
products sold by Pooja Forge, but rather it takes issue with information relating to the products
sold by the India producer which was used by the European Commission when making the normal
value determinations. Such information was actually disclosed to the Chinese exporters in their
specific disclosures.

29. China creates confusion between the standards under Articles 6.4 and 6.9 of the
AD Agreement. However, while through those specific disclosures the European Commission
informed interested parties of the essential facts underlying its determination, it also provided
information about the characteristics of the products sold by Pooja Forge and that were used in the
normal value determinations. Any other information that was provided by the Indian producer was,
thus, not "used" by the European Commission.

2.1.3. China's consequential claim under Article 6.2 of the AD Agreement must also fail

30. The European Union has requested the Panel to reject China's claim under Article 6.2 of the
AD Agreement on the same basis as argued with re gard to Article 6.4 of the AD Agreement, since
China's claim is entirely consequential.

3. Claim under Article 6.1.2 of the AD Agreem ent: prompt availability of the evidence
presented by the Indian producer concerning its products to interested parties

31. The text of Article 6.1.2 only refers to ev idence presented by an "interested party" which
Pooja Forge clearly is not. Further, the information provided by Pooja Forge was confidential under
Article 6.5 of the AD Agreement. Finally, the type of information against which China takes issue
was provided promptly to the Chinese exporters through the specific disclosures.

4. Claim under Article 2.4 of the AD Agreem ent: failure to indicate information that
was necessary to ensure a fair comparison

32. The European Commission disclosed all of the necessary information on the product
groupings (including the detailed product characteristics) that were used in the normal value
determination to each of the Chinese exporters and engaged in an active dialogue with the
Chinese interested parties, as required by Article 2.4 of the AD Agreement. In so doing, the
European Commission fully implemented the re commendations and rulings of the DSB and
complied with its obligations under Article 2.4 of the AD Agreement.

33. China acknowledges that the European Commission provided information about the "product
groups" in the Implementation Review as requir ed by the Appellate Body. However, China now
asserts that the next step required by the Appellate Body in the context of investigations involving
NME countries was to provide information "also of the 'specific products' with regard to which the
normal value was determined". This is not correct. China's presentation of the "procedural
requirement" of the last sentence of Article 2.4 of the AD Agreement as requiring a full disclosure
of the "full information" or "raw data" of the analogue country producer, even if this information is
provided on a confidential basis is in error. There is no basis in the Appellate Body report in the
original dispute or in any other dispute that would support such a requirement, and China cannot
point to one. In the second written submission, China concedes that the European Commission

- C-15 -

disclosed the basis for the price comparison by pr oviding the calculation sheets. Therefore, China
acknowledges that the European Commission complied with the obligation identified by the
Appellate Body and provided the required informat ion on the product types that were used from
the Indian analogue country producer.

34. China fails to provide any relevant evidence in respect of the alleged differences relating to
the characteristics that were part of the PCNs . China therefore does not provide evidence to
support its allegation that the use of the PCNs led to an "unfair" comparison. And the same is true
for the additional characteristics not originally included in the PCNs. China makes a lot of noise
about additional aspects of fastener products that may affect prices but fails to show how those
alleged differences affected price comparability for example because Chinese interested parties
would have sold only one specific type. That is the evidence and information the Commission was
asking for and never received. That is not an "undue burden" on interested parties. Finally, in light
of the fact that the sales information was provid ed on a confidential basis, the product type
information that was provided to China shows the kind of products sold by the Indian analogue
country producer and that were used for the no rmal value determination without disclosing any
confidential information.

35. China's argument that the European Union violated Article 2.4 of the AD Agreement by
failing to provide relevant information regarding the dumping margin determination is therefore
without merit and must be rejected.

5. Claim under Article 2.4 of the AD Agreem ent: fair comparison - failure to ensure
that an export price of standard fastener s was not compared to the normal value of
special fasteners

36. The original final determination reflects the fact that "customer drawing" is the basic
difference between special and standard fasteners. Special fasteners are fasteners "on demand"
while standard fasteners are simply fasteners that meet certain general industry standards. In its
second written submission, China continues to argue that the European Commission failed to
ensure that the export price of the Chinese standard fasteners was not compared to the normal
value of special fasteners produced by the Indian analogue producer. China fails to explain why
this matter is different from the one already decide d upon by the Original Panel in the context of
the injury examination and cannot explain why it did not raise this same matter also with respect
to the dumping determination in the original disput e. It thus fails to rebut any of the procedural
and substantive arguments developed in the EU's first written submission.

37. In fact, China's arguments in the second written submission have confirmed that the
distinction between special and standard fasteners was actually "clear": orders made on the basis
of customer's drawings is what makes a fastener a "special" fastener. China's allegation in the
second written submission that the criteria used for distinguishing special and standard fasteners
failed to ensure that the export price of standa rd fasteners was not compared to the normal value
of special fasteners is based on an erroneous interpretation of what is a "special" fastener and is
contradicted by the facts on the record. The use th at is ultimately made of a fastener that is
ordinary and not otherwise made "on demand" ("special") has no effect on its price, and is thus
irrelevant.

38. The European Commission undertook to test the sales information from the analogue
producer and conducted additional reasonable anal ysis to confirm that special fasteners were not
included in the sales listing for standard fasteners used for the normal value determination. It thus
acted as a reasonable and objective investigating authority in response to demands of the Chinese
interested parties that a distinction be made between special and standard fasteners in addition to
the use of PCNs. The European Union therefore co mplied with its obligations under Article 2.4 of
the AD Agreement when making the distinction between special and standard fasteners.

6. Claim under Article 2.4 of the AD Agreem ent and Article VI:1 of the GATT 1994: fair
comparison - failure to make adjustments for differences affecting price comparability

39. In its second written submission, China continues to disagree with the decisions taken by
the European Commission in the review proceeding but fails to demonstrate that the
European Commission's detailed and substantiated explanation of why it did not consider that

- C-16 -

adjustments were required to address these alleged differences was not reasoned and reasonable.
China's claim under Article 2.4 and Article VI of the GATT 1994 must therefore be rejected.

40. The European Commission examined the reques ts for adjustments and took steps to achieve
clarity by requesting that evidence be provided of the effect of these alleged differences on price
comparability. It found that China failed to meet the evidentiary requirements to support the
claimed adjustment or failed to demonstrate how these alleged differences affected price
comparability and therefore rejected the requests for adjustments. In so doing, and as explained
in our first written submission, the European Commission acted as an objective and unbiased
investigating authority and provided a reasoned an d adequate explanation of its decision not to
accept the requested adjustments.

41. On the alleged need for adjustments re lating to alleged taxation differences,
Article 2(10) (b) of the EU Basic Regulation does not allow, as a matter of EU law, taking into
account hypothetical import duties that were not actually incurred by Chinese exporters.
Furthermore, the European Union maintains its position that China is actually challenging the use
of an analogue country producer as the basis for making a dumping determination, in disregard of
China's Accession Protocol. The Indian producer operates in a competitive market environment and
prices its products accordingly. The price used as the basis of the dumping comparison is thus the
price of the fasteners sold by th e Indian producer on its competitive home market, irrespective of
whether it had to import part of the wire rod used in the production of the fasteners or not. Absent
evidence relating to a difference in taxation affecting price comparability between the Indian
producer's domestic sales and Chinese export sales, China failed to rebut the EU's argument that
the European Commission acted as a reasonable and objective investigating authority when taking
the decision to reject the requested adjustment.

42. China also fails to demonstrate that the decision by the European Commission not to make
the requested adjustment for alleged differences in physical characteristics was unreasonable or
biased. China essentially doubts the accuracy of the information provided and considered that the
European Union should have done more to veri fy the information on the record. However, an
investigating authority must be entitled to rely on information provided by the relevant interested
parties and to draw conclusions on the basis of this information. China does not provide any
evidence that would be able to suggest that the European Commission's conclusions are not
correct or are contradicted by other evidence on the record.

43. China also repeats its arguments relating to the lack of adjustments for alleged differences
affecting price comparability that were not part of the PCNs, but fails to rebut the
European Union's procedural and substantive arguments. First, throughout the original
proceedings, interested parties could have raised non-PCN features and could have requested non-
PCN adjustments, as they did for the distinct ion between special and standard fasteners for
example or for quality control. They did not do so for these other non-PCN features and neither did
China in the original dispute. On substance, Article 2.4 of the AD Agreement concerns price
comparability and not just difference in prices for products based on certain features. What needs
to be demonstrated is that there are reasons to believe that the presence or absence of these
features in the models sold by the Chinese interested parties may have affected price
comparability because these features were or were not present in the products used for purposes
of the normal value determination. The Chinese interested parties never did so. They could have
pointed to unique features of the products exported by the Chinese interested parties that required
a further distinction or an adjustment. No such evidence was provided.

44. Furthermore, all three aspects of China's claim relating to access to raw materials and costs
of energy (electricity) have been rebutted by the European Union in its first written submission on
the same basis: raw materials and energy distortions are among the typical features of a non-
market economy and, if no evidence is adduced th at the alleged differences in costs affect price
comparability, no adjustments will be made. The fact that in the European Union's practice
involving NME countries cost-related differences between analogue country producers and NME
exporters have sometimes and under specific circumstances led to adjustments being made is not
relevant from a WTO perspective and that is why the European Union did not engage with China
on its arguments relating to this EU practice. In any case, in all of the cases where such
adjustments were made, it concerned differences in costs that were reflected in the prices of the
analogue country producer. The situation is entire ly different here. China tries to use adjustments
to partly undo the recourse to the analogue country method which is to replace the entire data set

- C-17 -

of the exporter in the non-market economy country by the data set of a producer in an analogue
market economy country, and not to merely replace the costs of the production factors, as used by
the non-market economy producer, by market costs. China has therefore failed to demonstrate
that the European Union acted in a manner that is inconsistent with its obligations under
Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994.

7. Claim under Articles 2.4 and 2.4.2 of th e AD Agreement: failure to calculate the
dumping margin on the basis of all comparable export transactions and the imposition of
anti-dumping duties on this basis

45. The European Union recalls that the European Commission included all export transactions
of product types for which it could identify a comparable product type sold domestically by the
Indian analogue country producer. For the export sales of product types for which no match was
found on the normal value side, no comparison was made for lack of a comparable domestic
transaction. No export transactions for which a comparable domestic sale existed were excluded.
China acknowledges the important difference between the zeroing situation and the issue at stake
in the current dispute but fails to otherwise respond to the European Union's arguments in this
respect. China also fails to respond to the European Union's reference in paragraph 211 of its first
written submission to the clear finding by the Appellate Body in US – Softwood Lumber V that only
"comparable" export transactions need to be taken into consideration. The European Commission
did not exclude any comparable transactions or otherwise sought to skew the averaging that
followed the model-to-model comparison as had b een the issue in the zeroing disputes. There is
therefore nothing "inherently unfair" about this approach. The panel in US – Stainless Steel
(Korea) also emphasised the need to compare only those transactions that are comparable and
found that the timing of sales could lead to problems of comparability. Thus, it is not so, as China
seems to argue that all domestic and export sales of the "like product" are necessarily always
"comparable". Finally, the European Union demonstrates that both qualitatively and quantitatively,
the amount of matching sales was such as to ensure a fair comparison between comparable sales.
The non-matching is made up of a variety of product types that were sold in very small quantities,
whereas the matching is made up of a number of ma in product types that were sold in very large
quantities. Thus, the matched and included export transactions are both qualitatively and
quantitatively representative of the product as a whole. China's claims under Articles 2.4 and 2.4.2
of the AD Agreement must be rejected.

8. Claim under Articles 4.1 and 3.1 of th e AD Agreement: defi nition of domestic
industry

46. In the Implementation Review, the European Union complied with the Appellate Body's
findings relating to the definition of the domestic industry by including all producers that presented
themselves within the deadline to be part of the domestic industry. Contrary to what China argues,
the material risk of distortion to which the Appellate Body referred in the original dispute does not
stem from the mere presence of a question on participation in the sample in the sampling form.
China does not present any evidence of such risk of distortion either to support its speculative
argument that certain producers may have decided not to come forward because of a question in
the sampling form. The 25 producers that came forward within the deadline but indicated that they
would not be willing to be part of the sample clearly had a sufficient incentive to provide
information. Contrary to China's speculative assertion, these producers were willing to provide the
information, notwithstanding the question on sampling. In this respect, the European Union
considers relevant the Appellate Body's findings in its report on US – Offset Act (Byrd Amendment)
warning against an attempt to examine the motives of domestic producers. All that matters is that
the domestic producers that come forward and that are included in the domestic industry
represent a significant proportion of total domestic production.

47. China fails to rebut the European Union's argument that the European Commission's revised
domestic industry definition and consequent injury determination is based on all producers that
came forward within the deadline and that provided the relevant information, in line with the
European Union's obligation under Article 4.1 an d 3.1 of the AD Agreement. In view of the
fragmented nature of the fasteners industry, th ese producers represented a major proportion of
the domestic industry's production. The previously identified material risk of distortion that
resulted from the exclusion of domestic producer s that had come forward within the deadline and
that had provided the relevant information was thus taken care of. China's claims of violation of
Articles 4.1 and 3.1 of the AD Agreement must therefore be rejected.

- C-18 -

9. Conclusions

48. For the reasons stated in this submission, the European Union respectfully requests the
compliance Panel to reject China's claims and therefore declares that the European Union has fully
implemented the original DSB recommendations and rulings.

- C-19 -

ANNEX C-3
EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT
BY THE EUROPEAN UNION
Mr. Chairman, distinguished Members of the Panel,
1. Introduction

1. Following the structure of China's submissions, today we will recall first our position with
respect to China's claims regarding the lack of transparency in this case, in particular with respect
to China's claims under some of the obligations under Article 6 of the AD Agreement. Then, we will
address China's concerns with respect to the fair comparison requirement under Article 2.4 as well
as the definition of domestic industry in Article 4.1 of the AD Agreement.

2. Claims under Articles 6.5 and 6.5.1 of the AD Agreement: Information relating to
the Indian producer (Pooja Forge)

2. First, China claims that the European Union should not have granted confidential treatment
to the information concerning the products of the Indian producer.

3. The European Union considers that China is prevented from raising this Article 6.5 claim as
the Panel found explicitly that China raised a broad claim with regard to all relevant information
but only managed to substantiate, with evidence an d arguments, part of the claim, i.e. those bits
that relate to the "product types".

4. In any event, the European Union is of the vi ew that such an Article 6.5 claim also fails on
substance since (i) the information provided by Pooja Forge China takes issue with indeed is
confidential "by nature"; (ii) the record of the investigation clearly shows that Pooja Forge
provided the information at issue on a confidential basis; and (iii) it is up to the investigating
authority and not China to determine the existence of "good cause" in the sense of Article 6.5.

5. To sum up: the European Union considers that China is barred from re-litigating its
Article 6.5 claim in these compliance proceedings, and even if it were not barred from raising it
again, its claim should not be upheld on substance.

6. China further argues that the European Union also violated Article 6.5.1 by failing to ensure
that the Indian producer provided a non-confidential summary. However, throughout the whole
investigation, the European Union provided information regarding the characteristics of the
products sold by Pooja Forge to interested parties within the limits of this balancing exercise.
China's claim under Article 6.5.1 should thus equally be rejected.

3. Claims under Articles 6.4 and 6.2 of the AD Agreement: The alleged Lack of
Opportunities to see all relevant non-confidential information

7. China alleges that the European Union fail ed to provide opportunities to the Chinese
exporters to see the "list of products" sold by P ooja Forge as well as the information concerning
the characteristics of the products of Pooja Fo rge, and which were used for the normal value
determination. In that regard, the European Union recalls that China's Panel Request is limited to
"information … with regard to, inter alia, the products sold by the Indian producer", and does not
stretch to encompass Pooja Forge's internal administrative set-up.

8. Moreover, China's claim fails also on substance as (i) the so-called "list of products" is not
relevant to the presentation of the cases of the interested parties; (ii) both the list of products as
well as the characteristics of the products sold by Pooja Forge are confidential under Article 6.5 of
the AD Agreement; and (iii) what the European Un ion actually did use in its determination of the
Chinese exporters' normal values was disclosed to the Chinese exporters.

9. Consequently, China's claim under Article 6.4 of the AD Agreement must be rejected.

- C-20 -

10. On similar grounds as argued with respect to Article 6.4 of the AD Agreement, the
European Union requests the Panel to reject China's claim under Article 6.2 of the AD Agreement.

4. Claim under Articles 6.1.2 of the AD Agreement: Prompt availability of the
evidence presented by the Indian producer concerning its products to interested parties

11. China argues that the European Union violated this provision by not making available
"promptly" to the Chinese exporters the evidence provided by Pooja Forge.

12. The European Union reminds that it has never designated Pooja Forge as an "interested
party" in the implementing procedure. Pooja Forge is therefore not an "interested party" within the
meaning of Article 6.1.2.

13. China's claim under Article 6.1.2 is also baseless on substance since (i) the information
provided by Pooja Forge about its products sold in the Indian market was confidential under
Article 6.5 of the AD Agreement; and (ii) the information about the characteristics of Pooja Forge's
products sold in India was provided promptly to the Chinese exporters, i.e. at the time of the
company specific disclosure.

14. Consequently, the European Union requests the Panel to reject China's claim under
Article 6.1.2 of the AD Agreement.

5. Claim under Article 2.4 of the AD Agreem ent: failure to indicate information that
was necessary to ensure a fair comparison

15. Concerning Article 2.4 of the AD Agreement, Ch ina firstly argues that the lack of information
provided by the European Commission to Chinese interested parties amounts to a violation of
Article 2.4 of the AD Agreement. However, prov iding such information in a case where the one
cooperating analogue country producer undisputedly provided the data on a confidential basis
would not be consistent with Article 6.5 of the AD Agreement.

16. Moreover, the European Commission fulfilled its obligation under Article 2.4 of the
AD Agreement to engage in an active dialogue to ensure a fair comparison between normal value
and export price. Furthermore, the European Commission also entered into a dialogue with
Chinese interested parties on the alleged differences other than those included in the revised PCNs
and provided the required information on the pr oduct types that were used from the Indian
analogue country producer.

17. Consequently, the European Union respected its obligation under Article 2.4 of the
AD Agreement.

6. Claim under Article 2.4 of the AD Agreem ent: fair comparison - failure to ensure
that an export price of standard fastener s was not compared to the normal value of
special fasteners

18. A second claim of China under Article 2.4 of the AD Agreement re-starts the "old" debate
about the distinction between special and standard fasteners.

19. It is submitted that China fails in its argument that the European Commission did not ensure
that special fasteners sold by the Indian producer were not compared with standard fasteners
exported by China. The European Commission acted as a reasonable and objective investigating
authority in response to demands of the Chinese interested parties that a distinction be made
between special and standard fasteners in addition to the use of PCNs. Consequently, the
European Union acted in accordance with its obligations under Article 2.4 of the AD Agreement.

7. Claim under Article 2.4 of the AD Agreem ent and Article VI:1 of the GATT 1994: fair
comparison - failure to make adjustments for differences affecting price comparability

20. In its third claim China also fails to demonstrate that the European Commission's detailed
and substantiated explanation of why it did not consider that adjustments were required to
address the alleged differences that China pointed to was not reasoned and reasonable. This
follows from the following reasons.

- C-21 -

21. First, China refers to allege d differences in taxation on input products between the analogue
country producer and Chinese producers. But that is not the relevant issue in the context of a
non-market economy where the authority will take the price of the product in the analogue
country as the ordinary, "normal" market price, and is not required to adjust for differences that
are related to the market economy environment of the analogue country.

22. Second, China's claim that adjustments were required to take into account alleged
differences in physical characteristics is focused on an alleged lack of verification of the record by
the authority. However, China does not provide any evidence that would suggest that the
European Commission's conclusions are not correct or are contradicted by other evidence on the
record.

23. Third, China fails to demonstrate that ther e are reasons to believe that the presence or
absence of PCNs in the models sold by the Chinese interested parties may have affected price
comparability.

24. Fourth, China makes a cluster of claims relati ng to differences in access to raw materials and
costs of energy (electricity) between the Indian producer and Chinese producers. China tries to
use adjustments partly to undo the recourse to the analogue country method, which is a method
that replaces the entire data set of the exporter in the non-market economy country with the data
set of a producer in an analogue market econom y country. Accordingly, China's attempt should be
rejected.

25. Consequently, also with respect to its third claim under Article 2.4 of the AD Agreement,
China failed to demonstrate that the European Union acted in a manner that is inconsistent with its
obligations under Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994.

8. Claim under Articles 2.4 and 2.4.2 of th e AD Agreement: failure to calculate the
dumping margin on the basis of all comparable export transactions and the imposition of
anti-dumping duties on this basis

26. A fourth and final claim of China under Article 2.4 concerns the European Commission's
decision to compare all export transactions of product types for which it could identify a
comparable product type sold domestically by the Indian analogue producer.

27. In that regard, The Appellate Body has in th e past made it clear that only "comparable"
export transactions need to be taken into consideration. Since the European Union ensured that
the matched and included export transactions are both qualitatively and quantitatively
representative of the product as a whole, China's fourth and final claim under Article 2.4 must also
be rejected.

9. Claim under Articles 4.1 and 3.1 of th e AD Agreement: defi nition of domestic
industry

28. The Appellate Body considered that the European Commission should not have excluded
those domestic producers that provided information within the deadline simply because they had
indicated that they did not want to be part of th e sample. As a result of this, in the implementing
review, the European Commission went back to the file, included all producers that presented
themselves within the deadline and examined their information as part of the information provided
by the domestic industry.

29. China argues now that the real problem was that the questionnaires sent to the domestic
producers included a question about whether they would be willing to be part of a sample and
cooperate with the investigators if selected. That question caused a "material risk of distortion",
a c c o r d i n g t o C h i n a . H o w e v e r , ( i ) t h i s a r g u m e n t i s c o n t r a d i c t e d b y t h e f a c t s o n t h e r e c o r d a s a
major proportion of producers did provide informatio n despite this question; (ii) this argument is
not supported by the text of Article 4.1 of the AD Agreement, which imposes a requirement that
the definition of the domestic industry includes a major proportion of domestic production; and
(iii) this argument is not supported by the Appellate Body's findings in this or other relevant
disputes.

- C-22 -

30. China's claims of violation of Articles 4.1 and 3.1 of the AD Agreement must therefore be
rejected.

10. Conclusions

31. For the reasons stated in our submissions, as summarised and further clarified here today,
the European Union respectfully requests the compliance Panel to reject China's claims. We look
forward to answering any questions that you may have.

- D-1 -

ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Integrated Executive summary of the arguments of Japan D-2
Annex D-2 Integrated Executive summary of the arguments of the United States D-4

- D-2 -

ANNEX D-1
INTEGRATED EXECUTIVE SUMMARY OF
THE ARGUMENTS OF JAPAN
1. Since we have already provided our views in our written Third Party Submission, we will not
repeat all of those comments today. Rather, Japan would like to use this oral statement to provide
some reactions to the parties' arguments addressi ng Japan's Third Party Submission regarding the
issues of (1) how to treat confidential information, and (2) the scope of the domestic industry.

2. We begin with the treatment of confidential information. In Japan's view, the relevant
Appellate Body precedent makes clear that the investigating authorities have the burden of
ensuring that "good cause" for confidential treatment has been shown.
1 The party submitting the
information may provide relevant information that helps to establish the factual basis for the
authority to find "good cause". But the legal conclusion finding "good cause" must be made by the
authorities themselves, based on any facts submitte d by the party claiming confidential treatment
and any other facts properly before the authorities. This is clear from the text of Article 6.5 that
provides "Any information ... shall ... be treated as such by the authorities." Thus, in Japan's view,
China's argument that only the party seeking confidential treatment can make the "good cause"
showing, confuses the distinction between the factual basis for the authority to find "good cause"
and the legal conclusion of the existence of "good cause" itself. In order for the requirement of
Article 6.5 with regards to "good cause" to be satisfied, the authorities must conclude that a
sufficient factual basis on the record demonstrates the existence of "good cause." The text of
Article 6.5 itself refers only to "upon good cause shown", without specifying who must show what.
Moreover, Article 6.5.2 states "if the authorities find that a request for confidentiality is not
warranted" and footnote 18 provides "Members agree that requests for confidentiality should not
be arbitrarily rejected". These contexts for Article 6.5 make clear that request for confidential
treatment may be rejected; even if confidential treatment is requested by the party submitting the
information, the request is up to the authorities to "find" whether such treatment is "warranted".
This language suggests that "good cause" must be found or determined by the authority. Nothing
in the text of Article 6.5 would require an authority to ignore facts otherwise properly on the
record when making its determination of "good cause", even if those facts came from someone
other than the party claiming confidential treatment for information.

3. At the same time, this discretion to consider the factual information only extends to those
facts properly before the authority.
2 Japan is of the view that "before" should mean not merely
that the factual information is in the hand of the authority at the time of determination, but also
that the authority took into consideration the information at that time. The factual information not
included in the record should be presumed not to have been "before" the authority, or otherwise
the interested party would have no opportunity to object to the treatment of confidential
information. Thus, the factual basis for the authority to find "good cause" should be included in the
investigation record.

4. Let us now turn to the issue of the proper scope of the domestic industry. Japan would like
to stress the Appellate Body's explanation that the phrase "major proportion" in Article 4.1
"… should be understood as a proportion defined by reference to the total production of domestic
producers as a whole." The benchmark is "the total production of domestic producers as a whole",
and not some subset thereof. The Appellate Body we nt on to note that "the lower the proportion,
the more sensitive an investigating authority will have to be to ensure that the proportion used
substantially reflects the total production of the producers as a whole."
3 Again the focus remains
on "the total production of the domestic producers as a whole." Japan believes an investigating
authority must ensure that the proportion used in the definition of a domestic industry
substantially reflects the total production of the producers as a whole so as to remove any material
risk of distortion.

1 EC – Fasteners, Appellate Body Report, para. 537.
2 EC – Salmon, Panel Report, paras.7.837-7.839
3 EC – Fasteners, Appellate Body Report, para. 412.

- D-3 -

5. In Japan's view, the EU authorities were not sufficiently concerned with crafting a
methodology that substantially reflects "the total production of the producers as a whole". In
particular, a methodology that allows self-selection – with companies deciding themselves to
provide information or not – poses a serious risk of distortion. If the resulting proportion of the
total domestic production is high enough, the materiality of any distortion fades. If the proportion
remains low, however, then the risk of material di stortion becomes very real. When an industry is
fragmented, that fact just underscores the importance of using neutral methods to gather the
necessary information, not methods that emphasiz e administrative convenience over the need to
avoid self-selection bias.

6. Moreover, the Appellate Body's discussion of the role of motive in another context
4 does not
change this analysis, because the motive of domestic firms deciding to come forward or not cannot
objectively determine the scope of the domestic industry. Rather, the issue under Article 4.1 is
whether the method adopted by the authority is neut ral on its face, or has a material risk of bias.
One source of bias is self-selection. The potential problems from self-selection are made even
worse if the request to participate is phrased in such a way as to make companies with a certain
perspective more willing or less willing to participate in order to be included in the scope of the
domestic industry. The method that allows self-selection to skew the information being gathered
can create a material risk of distortion, and can be inconsistent with Article 4.1, particularly when
the resulting percentage of the industry as a whole remains small.

4 US – Offset Act, Appellate Body Report, para. 291.

- D-4 -

ANNEX D-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES
I. China's Claims Under Article 6 of the AD Agreement

A. Article 6.5

1. The United States disagrees with China's assertion that that "information routinely provided
to potential customers… cannot be by nature confidential," as a categorical matter, for purposes of
Article 6.5 (emphasis added). China's position is not supported by the text of Article 6.5. The
article is clear in stating that information is "by nature confidential" where, inter alia, "disclosure
would be of significant competitive advantage to a competitor or because its disclosure would have
a significantly adverse effect upon a person supplying the information…" The text of the provision
contains no carve out, as China proposes, for confidential information provided to potential
customers. Indeed, the United States can envision commercial scenarios where proprietary
information is routinely provided to potential customers, perhaps with the proviso that the
information not be further disclosed by the recipient.

B. Article 6.5.1

2. The first sentence of Article 6.5.1 makes clear that the requirement to "furnish non-
confidential summaries" applies only to information submitted by "interested parties." China,
however, has not established that Pooja Forge is an "interested party" for purposes of the
AD Agreement.

3. The phrase "interested parties" is expressly de fined in Article 6.11 of the AD Agreement. The
definition set forth in Article 6.11 applies to the AD Agreement as a whole, including therefore to
Article 6.5.1. Pooja Forge does not fall under any of the "interested party" categories listed in
Article 6.11. That is, Pooja Forge is (i) not an ex porter or foreign producer of the product subject
to investigation, (ii) not the government of the exporting Member ( i.e., China), and (iii) does not
reside in the territory of the importing Member ( i.e., in the EU). Moreover, in its submission China
made no attempt to establish that Pooja Forge met the definition of "interested party" as defined
in Article 6.11.

4. Therefore, because Pooja Forge does not appear to be an "interested party" for purposes of
the AD Agreement, the United States disagrees with China's assertion that the European Union
was obligated, by virtue of Article 6.5.1, to require that Pooja Forge furnish non-confidential
summaries of information submitted to the EU Commission.

C. Articles 6.2 and 6.4

5. In an antidumping investigation, the ability of an interested party to defend its interests is
especially critical with respect to information related to the calculation of normal value and the
price comparisons that are conducted. The United States thus agrees with the Appellate Body's
decision in EC – Pipe Fittings , where the Appellate Body recognized that the relevancy of
information covered by Article 6.4 is to be determined from the perspective of the interested
parties, not the investigating authority.

6. Accordingly, Article 6.4 generally requires that an investigating authority give interested
parties access to all non-confidential information submitted during an investigation that an
interested party could view as relevant to the presentation of their positions or the outcome of the
investigation. Failure to provide such access is not only inconsistent with Article 6.4, but also
Article 6.2, because without access to information described in Article 6.4, interested parties are
necessarily denied "a full opportunity for the defense of their interests."

7. The United States takes no position on whether the information at issue was properly
accorded confidential treatment under Article 6.5. To the extent that confidential treatment was
not properly accorded, the United States is of the view that the EU Commission was obligated,

- D-5 -

under Article 6.4, to make such information available to Chinese exporters during the review
investigation, and in a timely fashion. On the other hand, if the information from the Indian
producer was properly accorded confidential tr eatment under Article 6.5, Article 6.4 would not
require disclosure of such information.

8. Nonetheless, even if the information provided by the Indian producer could not be disclosed
in full, this does not mean that the EU Commission could conduct an investigation in a manner that
completely denied the respondents any opportunity to participate meaningfully in the investigation
or to defend their interests as contemplated in Article 6.2 of the AD Agreement. The United States
recalls that it was the choice of the EU Commission to rely on confidential information from a party
that was not an "interested party" under Article 6.11. If the EU decided to rely on such
information, and if access to such information was necessary for the respondents to participate
meaningfully or defend their interests in the investigation, the United States understands
Article 6.2 to require that an authority adopt some sort of mechanism that would allow the
respondents an opportunity to do so.
 For example, perhaps the Commission could have provided
its own summary of the information obtained from the Indian producer, or could have disclosed
the information under a narrowly-drawn protective order (see AD Agreement, note 17).

D. Article 6.1.2

9. The United States believes that transparency is a key principle reflected in the provisions of
the AD Agreement, including Article 6.1.2. Accord ingly, the United States is of the view that
transparency is best ensured by requiring all non-confidential information presented to, or
obtained by an investigating authority to be on the record of antidumping proceedings, and should
be made available to all interested parties.

10. The United States, however, disagrees with China's further suggestion that where a party
presents evidence to an investigating authority that party is, ipso facto, an "interested party" for
purposes of Article 6.1.2. Specifically, China argues that Pooja Forge "should be regarded as an
'interested party' for purposes of Article 6.1.2" because Pooja Forge submitted evidence used by
the EU Commission during the antidumping investigation.

11. As discussed above, however, the phrase "i nterested parties", is expressly defined in
Article 6.11 of the AD Agreement. Simply put, a "party that provides information to investigating
authorities" is not among the list of "interested parties" listed in Article 6.11. Thus, the fact that a
party provides information to an investigating authority does not ipso facto render said party an
"interested party" for purposes of the AD Agreement.

II. China's Claims under Article 2 of the AD Agreement

A. Claim that European Union failed to pr ovide relevant information regarding the
products of the Indian analogue producer

12. The United States understands Article 2.4 as generally obligating an investigating authority
to solicit information regarding what differences in physical characteristics affect price
comparability. The investigating authority can fulfill th is obligation by asking interested parties to:
(1) identify and explain the differences in physical characteristics; and (2) identify which of those
differences in physical characteristics may affect price comparability. Taking into consideration the
responses the parties provide and the investigating authority's own analysis of the record
evidence, the investigating authority may then develop appropriate product comparison criteria for
the dumping margin calculation.

13. An investigating authority must exercise tran sparency with respect to the products used in
the determination of normal value, the considered physical differences between those products,
and how those differences informed the investigating authority's determination of price
comparability and ultimately normal value. This transparency obligation is found in the provisions
of Article 6 of the AD Agreement, and is reinfo rced by the last sentence of Article 2.4. The
United States understands that transparency within the confines of Article 2.4 requires an
investigating authority to provide the necessary information regarding the products and
transactions at issue so that the parties can provide relevant information and argument in
response. Failure to ensure transparency in this context could prevent an interested party from
being able to meaningfully defend its interest.

- D-6 -

14. The United States therefore agrees with th e statement of the Panel and Appellate Body in
this dispute that "without knowing what constitu ted product types, it would be difficult if not
impossible, for foreign producers to request adjustments that they consider necessary in order to
ensure a fair comparison."

15. To the extent that the EU Commission, as a lleged, has not provided Chinese exporters with
information on the full range of product characteristics considered in the Commission's assessment
of price comparability, the United States finds it difficult to see how the Commission could have
met its obligation to conduct a fair comparison with respect to physical differences.

B. Claim that the European Union improper ly grouped standard and special fasteners
in its determination of normal value

16. The United States understands that a mere statement by an investigating authority that a
certain product grouping is defined the same in both markets, without providing further
information, is likely to be inconsistent with th e requirements of Article 2.4. In addition, without
knowing the details of the comparison product, the party may have no way of knowing whether a
standard product (or special product) in the export market is defined under the same parameters
as a standard product (or special product) in the comparison market.

C. Claim that the European Union faile d to make warranted adjustments for
differences that affected price comparability

17. The Appellate Body has stated that, "under Article 2.4, the obligation to ensure a 'fair
comparison' lies on the investigating authorities, and not the exporters. It is those authorities
which, as part of their investigation, are char ged with comparing normal value and export price
and determining whether there is dumping of imports." It is important to understand, however,
that although the investigating authority has a burden to ensure a fair comparison, the interested
parties also have the burden to support any requested adjustments for differences that affect price
comparability.

18. Thus, when requesting adjustments to reflec t the "due allowance" within the meaning of
Article 2.4, an interested party is responsible for explaining to the investigating authority why such
adjustment is warranted. Moreover, while the investigating authority is required to make "due
allowance" for differences that affect price, Article 2.4 does not require the authority to accept,
without evaluation, an interested party's argu ment that a certain difference affects price
comparability and that adjustment is thereby warranted.

EXECUTIVE SUMMARY OF U.S. THIRD-PARTY STATEMENT
I. Exclusion of one or more export transactions

19. The United States does not agree with Ch ina that an administering authority breaches
Article 2.4.2 unless each and every export transaction is included in a weighted average to
weighted average comparison methodology. This view is too extreme, and does not reflect the text
of the agreement or the realities of the administ ration of anti-dumping measures. On the other
hand, the other extreme – such as basing a dumpin g margin on just one export transaction out of
a thousand total export transactions – would also not be appropriate. As the United States will
describe, the text of the agreement does provid e guidance on instances where certain export
transactions might be excluded from a margin calculation.

20. Turning first to Article 2.4.2, the text provid es that "margins of dumping…shall normally be
established on the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions…." Notably, the text limits the comparison
to "comparable" export transactions, which clearly indicates that this requirement does not extend
to "all" export transactions. Indeed, if WTO Members had intended for the requirement to extend
to "all transactions", they would have not limited Article 2.4.2 by including the modifier
"comparable" before the term "export transactions."

21. The Appellate Body has also interpreted the text of Article 2.4.2 in this manner. In
particular, the Appellate Body has recognized that this provision allows investigating authorities to
use "multiple averaging" under the weighted average-to-weighted average comparison

- D-7 -

methodology. Under this approach, an investigating authority can divide transactions into groups
according to model or product type.

22. The basic definition of dumping is set out in Article 2.1 of the AD Agreement, and Article 2.2
sets out the basic rules covering the situation where a "proper comparison" cannot be made
between export price and the price of the like product in the domestic market. Further, Article 6.10
provides important context, and indicates a number of factors which may be relevant when certain
export transactions are excluded. To recall, Articl e 6.10 provides "where the number of exporters,
producers, importers or types of products involved is so large as to make such a determination
impracticable" the investigating authority "may limit [its] examination … to a reasonable number
of … products by using samples which are statistically valid on the basis of information available to
the authorities at the time of the selection, or to the largest percentage of the volume of the
exports from the country which can reasonably be investigated." From this language, at least the
following factors may be relevant in examining a situation where certain export transactions are
excluded.

23. First, the number of different types of produc ts is relevant; a large number of different types
may support a limitation of the examination. Second, the difficulties involved in conducting an
investigation of each and every product type are a relevant factor. The text notes that one
consideration is whether an examination of each export sale is "impracticable." And at the end of
this second sentence of Article 6.10, the language repeats this theme, noting that the limitation of
an examination may be tied to what "can reasonably be investigated." Third, where the
examination is so limited, the authority must still examine a "reasonable" number. Fourth, the text
indicates that what is a "reasonable" number may depend on whether the examined transactions
represent a statistically valid sample. Fifth, the text also indicates that the percentage of the total
volume of exports investigated is relevant, and is tied to what can "reasonably" be investigated.
Sixth, Article 6.10.1 states that it is "preferable" for any selection of product types to be made "in
consultation with, and the consent of," the exporters, producers or importers concerned.

24. The United States suggests that the Panel a pply these types of factors in examining China's
claim with respect to the EU's exclusion of certain export sales. Because this involves a close
examination of the facts and circumstances of the dispute, the United States takes no position on
the ultimate question of whether China has made out its claim with respect to the exclusion of
certain sales. Nonetheless, the United States does note its agreement with the EU that in the
circumstances of this case, one particularly important factual circumstance is that China is a
nonmarket economy. As a result, the EU was not able to rely on prices charged in China's
domestic market, and was required to employ information from an analogue country. The use of
this type of methodology appears to have made it more difficult for the EU to examine all product
types.

II. Alleged differences in production costs

25. China claims that the EU acted inconsistently with Article 2.4 of the AD Agreement in failing
to make adjustments for alleged differences relating to the production of fasteners in China and
the production of fasteners in India, which was the analogue country used by the EU.

26. As an initial matter, the United States notes that the issue raised by China is not governed
by Article 2.4. By its plain terms, Article 2.4 sets forth the obligation of an investigating authority
to make a "fair comparison" between the export price and the normal value. In the investigation at
issue, the export price of course is the price to the EU, and the basis of normal value – under the
EU's analogue country methodology – were domestic sales in India by an Indian producer. Here,
China's complaint is not with respect to physical differences, or differences in terms of sale,
between the sales to the EU and the domestic sales in India. Rather, China raises a completely
different issue, regarding – in essence – whether the domestic sales in the analogue country were
an appropriate basis of normal value.

27. Furthermore, Article 2.4 provides that "[d]ue allowance shall be made in each case, on its
merits, for differences which affect price comparability, including differences in conditions and
terms of sale, taxation, levels of trade, quan tities, physical characteristics, and any other
differences which are also demonstrated to affect price comparability." But here, China is alleging
difference in production costs between China and the analogue country (India); such alleged cost
differences do not themselves affect "price compar ability" between sales of two sets of products.

- D-8 -

Rather, these alleged differences go to the issue of whether or not the Indian domestic sales are
an appropriate surrogate for normal value.

28. Turning to the merits of China's factual assertions, we agree with the EU that an
investigating authority may determine that normal value cannot be based on sales in a nonmarket
economy because of, inter alia, a distorted market for raw materials, and that making adjustments
to the dumping calculation based on such distorti ons would be inappropriate. Accordingly, China's
argument is fundamentally circular.

29. China argues that India is not an appropriate analogue country because of alleged
differences – as compared to China – in costs of raw materials and electricity. However, China fails
to acknowledge that the very reason the EU has resorted to India as an analogue country is that
the costs in China are distorted because China is a nonmarket economy. Accordingly, any
calculation of the "true" costs in China – that is, the costs that would have been incurred if China
were a market economy – are not knowable. Thus, in the facts of this dispute, it appears that
China cannot establish that costs in China would be lower – or for that matter higher – than the
costs incurred by the Indian producer.

30. In short, China's argument, if accepted, would defeat the underlying purpose of not relying
on cost and sales data from a nonmarket economy.