EUROPEAN UNION – MEASURES RELATED TO PRICE COMPARISON METHODOLOGIES REQUEST FOR THE ESTABLISHMENT OF A PANEL BY CHINA
Document: REQUEST FOR THE ESTABLISHMENT OF A PANEL
Date: 10 March 2017
Document codes: WT/DS516/9
Complainant: China
Respondent: EU
Third parties: Australia, Bahrain, Brazil, Canada, Colombia, Ecuador, India, Indonesia, Japan, Kazakhstan, South Korea, Mexico, Norway, Russia, Saudi Arabia, Taiwan, Tajikistan, Turkey, UAE, U.S.
Dispute stage: Panel
Agreements cited: Art. I:1  GATT 1994Art. 2.1, 2.2  Anti-dumpingArt. VI:1  GATT 1994

EUROPEAN UNION – MEASURES RELATED TO PRICE COMPARISON METHODOLOGIES
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY CHINA
The following communication, dated 9 March 2017, from the delegation of China to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

Procedures Governing the Settlement of Disputes ("DSU"), Article XXII of the General Agreement
on Tariffs and Trade 1994 ("GATT 1994"), and Article 17 of the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 ("Anti-Dumping Agreement"), with
respect to European Union – Measures Related to Price Comparison Methodologies (DS516).

2. Consultations were held on 23 January 2017 with a view to reaching a mutually satisfactory
solution. While these consultations assisted in clarifying some of the issues before the parties,
they failed to resolve the dispute.

3. Therefore, China requests, pursuant to Articles 4.7 and 6 of the DSU, Article XXIII of the
GATT 1994 and Articles 17.4 and 17.5 of the Anti-Dumping Agreement , that the Dispute
Settlement Body ("DSB") establish a panel to examine the matter referred to the DSB by China in
this document, with the standard terms of reference described in Article 7.1 of the DSU.

4. In the following sections, China identifies the specific measures at issue and pr ovides a brief
summary of the legal basis of the complaint sufficient to present the problem clearly.

A. Measures at issue
5. The measures at issue in this request include Articles 2(1) to 2(7) of Regulation
(EU) 2016/1036 ("the Basic Regulation"). 1 Articles 2(1) to 2(6) of the Basic Regulation set out
rules in EU law for determining normal value in anti-dumping proceedings. Article 2(7) of the Basic
Regulation sets out a different regime that applies to the calculation of normal value for imports
from so-called "non-market economy" countries. Article 2(7)(b), which expressly names China,
provides that the rules set forth in Articles 2(1) to 2(6) for calculating normal value for a specific
producer shall apply only if that producer is able to substantiate th at so-called "market economy"
conditions prevail in respect of the manufacture and sale by that producer of the like product
concerned. To do so, the producer must establish that it meets the criteria set out in
Article 2(7)(c). Article 2(7)(b) provides t hat, for all producers unable to make this showing, the
normal value calculation rules set forth in Article 2(7)(a) shall apply. Under Article 2(7)(a), normal
value shall be determined on the basis of prices or constructed value in a surrogate "market -
economy" third country.

1 The full title of the Basic Regulation is: Regulation (EU) 2016/1036 of the European Parliament and of
the Council of 8 June 2016 on protection against dumped imports from countries not members of the European
Union, published in the Official Journal of the European Union, L 176, 30.6.2016, p. 21. The Basic Regulation
was preceded by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped
imports from countries not members of the European Community, published in the Official Journal of the
European Union, L 343, 22.12.2009, p. 51.

B. Legal basis of the complaint
6. When China acceded to the WTO, China and other WTO Members agreed that, for a
transitional period of fifteen years, China -specific treaty provisions would apply to the
determination by other Members of c ertain elements of "price comparability" in anti -dumping
proceedings involving Chinese imports. Specifically, under paragraph 15(a)(ii) of the Protocol on
the Accession of the People's Republic of China ("Accession Protocol"), importing WTO Members
were, subject to certain conditions, exceptionally permitted to use a methodology not based on a
strict comparison with domestic prices or costs in China. Paragraph 15(d) provides that "[i] n any
event, the provisions of subparagraph (a)(ii) shall expire 15 year s after the date of accession ",
namely, on 11 December 2016. Accordingly, from that date, the WTO rules that govern the
determination by WTO Members of all elements of price comparability now apply to imports from
China. However, the European Union continues to determine normal value for Chinese imports on
the basis of a special calculation methodology unless the producer establishes that it meets certain
criteria, as set forth below. Thus, the European Union is in violation of its international obligations.
7. Specifically, following the expiry of paragraph 15(a)(ii), China i s concerned that: (i)
Articles 2(1) to 2(7) of the Basic Regulation are inconsistent with Article I:1 of the GATT 1994, and
(ii) Article 2(7) is inconsistent with Articles 2.1 and 2.2 of the Anti-Dumping Agreement ,
Article VI:1 of the GATT 1994, and the second paragraph of the Ad Note to Article VI:1 of the
GATT 1994 (the "Ad Note").
8. Articles 2(1) to 2(7) of the Basic Regulation provide for differential treatment of Chinese
imports, as com pared to imports from other WTO Members. Specifically, in contrast to the
treatment afforded imports from other WTO Members, Chinese imports are denied the advantage,
favour, privilege or immunity of the rules set forth in Articles 2(1) to 2(6) regarding t he
determination of normal value, and instead face the less favourable rules set forth in Article 2(7),
unless Chinese producers satisfy a requirement in Article 2(7)(b) to demonstrate that so -called
"market economy" conditions prevail. As a result, the Eu ropean Union fails to accord Chinese
imports immediately and unconditionally an advantage, favour, privilege or immunity that is
granted to like imports from other WTO Members, contrary to Article I:1 of the GATT 1994. This
differential treatment ceased to be justifiable when paragraph 15(a)(ii) of China's Accession
Protocol expired on 11 December 2016.
9. Article VI:1 of the GATT 1994 provides that normal value is normally to be determined
based on domestic prices of the like product or, in the absence of suc h prices, prices for export to
a third country or prices constructed from the costs of production in the country of origin.
Likewise, Article 2.1 of the Anti-Dumping Agreement provides that normal value is normally the
price for the like product when sold , in the ordinary course of trade, in the home market of the
producer/exporter; Article 2.2 of the Agreement provides for departure from home market prices
in certain circumstances. Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of
the GATT 1994 prohibit the determination of normal value on the basis of third country prices
and/or costs; doing so is inconsistent with the obligation under these provisions to, inter alia ,
determine normal value on the basis of domestic prices or on the b asis of a producer's costs of
production in the country of origin. Article 2(7) of the Basic Regulation is inconsistent with
Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 because,
when a producer does not satisfy the requirement in Article 2(7)(b) to demonstrate that so -called
"market economy" conditions prevail pursuant to the criteria in Article 2(7)(c), Article 2(7)
improperly requires the EU investigating authority to reject Chinese market prices and costs when
calculating normal value in favour of third country prices and costs.
10. The only exception to the rule in Articles 2.1 and 2.2 of the Anti-Dumping Agreement and
Article VI:1 of the GATT 1994 is found in the Ad Note, which permits a Member to depart from a
strict comparison with domestic prices only if the Member satisfies the two conditions set forth in
the Ad Note. Article 2(7) of the Basic Regulation, however, requires the European Union, in
defined circumstances, to depart from such a strict comparison with out satisfying the relevant
conditions in the Ad Note. In particular, Article 2(7) does so when a producer does not satisfy the
requirement in Article 2(7)(b) to demonstrate that so-called "market economy" conditions prevail.
11. The treatment afforded Chinese imports under Article 2(7) of the Basic Regulation ceased to
be justifiable when paragraph 15(a)(ii) of China's Accession Protocol expired on 11 December 2016
and is inconsistent with the WTO covered agreements, as described above in this request.

12. This r equest for panel establishment also concerns any modification, replacement or
amendment to the measures identified above, and any closely connected, subsequent measures.2
13. China asks that this request be placed on the agenda for the meeting of the DSB sched uled
to take place on 21 March 2017.
Commission's Proposal for a Regulation of the European Parliament and of the Council amending Council
Regulation (EC) No 1225/2009 on protection against dumped imports from countries not members of the
European Community and Council Regulation (EC) No 597/2009 on protection against subsidised imports from
countries not members of the European Community (COM(2013) 192 final). This request includes any changes
made to the Basic Regulation pursuant to the legislative processes initiated by these proposals.