UNITED STATES – COUNTERVAILING DUTY MEASURES ON CERTAIN PRODUCTS FROM CHINA DECISION BY THE ARBITRATOR
Document: Addendum BCI omitted, as indicated [[***]]
Date: 26 January 2022
Document codes: WT/DS437/ARB/Add.1; WT/DS437/ARB.
Complainant: China
Respondent: U.S.
Third parties: Australia, Brazil, Canada, EU, India, Japan, South Korea, Norway, Russia, Turkey, Vietnam, Saudi Arabia
Dispute stage: Implementation & Compliance
Agreements cited: Art. 11.1, 11.2, 11.3, 1.1(a)(1), 2, 1.1(b), 14(d), 12.7, 1.1, 10, 32.1  Subsidies and Countervailing Measures (SCM)Art. VI, XXIII  GATT 1994Art. 30  Subsidies and Countervailing Measures (SCM)Art. 15  Protocol of Accession

UNITED STATES – COUNTERVAILING DUTY MEASURES ON CERTAIN PRODUCTS
FROM CHINA
DECISION BY THE ARBITRATOR
Addendum
BCI omitted, as indicated [[***]]

This addendum contains Annexes A to C to the Decision of the Arbitrator to be found in document

BCI omitted, as indicated [[***]]

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE ARBITRATOR
Contents Page
Annex A-1 Working Procedures of the Arbitrator 4
Annex A-2 Additional Working Procedures of the Arbitrator Concerning Business
Confidential Information
9
Annex A-3 Additional Working Procedures of the Arbitrator Concerning Meetings with
Remote Participation
10
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Executive summary of the arguments of the United States 13
Annex B-2 Executive summary of the arguments of China 21
ANNEX C
DATA INPUTS AND CALCULATIONS OF THE ARBITRATOR
Contents Page
Annex C-1 Data inputs for US market values in the years-prior 32
Annex C-2 Data inputs for elasticities 34
Annex C-3 Data inputs for the WTO-inconsistent and the WTO-consistent CVD rates 36
Annex C-4 Data inputs for US market values in 2017 40
Annex C-5 Primary NAICS codes for Pressure Pipe, Kitchen Shelving, Seamless Pipe, and
Print Graphics
43
Annex C-6 Scaling index for domestic varieties of Pressure Pipe, Kitchen Shelving,
Seamless Pipe, and Print Graphics
49
Annex C-7 Scope adjustments for selected varieties of Kitchen Shelving and Print
Graphics
51
Annex C-8 Remedy year figures for selected varieties of Pressure Pipe, Kitchen Shelving,
Seamless Pipe, and Print Graphics
54
Annex C-9 GAMS code of the two-step Armington model 57
Annex C-10 Data inputs used to implement the Armington model under the two steps 61
Annex C-11 Results of implementing the first step of the two-step Armington model 63

BCI omitted, as indicated [[***]]

ANNEX A
WORKING PROCEDURES OF THE ARBITRATOR
Contents Page
Annex A-1 Working Procedures of the Arbitrator 4
Annex A-2 Additional Working Procedures of the Arbitrator Concerning Business
Confidential Information
9
Annex A-3 Additional Working Procedures of the Arbitrator Concerning Meetings with
Remote Participation
10

BCI omitted, as indicated [[***]]

ANNEX A-1
WORKING PROCEDURES OF THE ARBITRATOR
Adopted on 8 January 2020
General

1. (1) In this proceeding, the Arbitrator shall follow the relevant provisions of the
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").
In addition, the following Working Procedures apply.
(2) The Arbitrator reserves the right to modify these procedures as necessary, after
consultation with the parties.
Confidentiality
2. (1) The deliberations of the Arbitrator and the documents submitted to it shall be kept
confidential. Members shall treat as confidential information that is submitted to the Arbitrator
by another Member which the submitting Member has designated as confidential.
(2) In accordance with the DSU, nothing in these Working Procedures shall preclude a party
from disclosing statements of its own positions to the public.
(3) If a party submits a confidential version of its written submissions to the Arbitrator,
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 should endeavour
to promptly provide a non-confidential summary to any Member requesting it, and if possible
within 10 days of receiving the request.
(4) Upon request, the Arbitrator may adopt appropriate additional procedures for the
treatment and handling of confidential information after consultation with the parties.
Submissions

3. (1) Before the substantive meeting of the Arbitrator with the parties, China shall transmit
to the Arbitrator and to the United States a communication explaining the basis for its request,
including the methodology and data supporting it, in accordance with the timetable adopted
by the Arbitrator.
(2) Each party to the dispute shall also transmit to the Arbitrator a written submission in
which it presents the facts of the case and its arguments, in accordance with the timetable
adopted by the Arbitrator.
(3) The Arbitrator may invite the parties to make additional submissions during the
proceeding, including with respect to requests for preliminary rulings in accor dance with
paragraph 4 below.
Preliminary rulings
4. (1) If the United States considers that the Arbitrator should make a ruling before the
issuance of the Decision that certain measures, claims or issues are not properly before the
Arbitrator, the following procedure applies. Exceptions to this procedure shall be granted upon
a showing of good cause.

BCI omitted, as indicated [[***]]

a. The United States shall submit any such request for a preliminary ruling at the earliest
possible opportunity. China shall submit its response to the reque st at a time to be
determined by the Arbitrator in light of the request.
b. The Arbitrator may issue a preliminary ruling on the issues raised in such a preliminary
ruling request before, during or after the substantive meeting, or the Arbitrator may defer
a ruling on the issues raised by a preliminary ruling until it issues its Decision to the parties.
c. If the Arbitrator finds it appropriate to issue a preliminary ruling before the issuance of its
Decision, the Arbitrator may provide reasons for the ruli ng at the time that the ruling is
made, or subsequently in its Decision.
(2) This procedure is without prejudice to the parties' right to request other types of
preliminary or procedural rulings during the proceeding, and to the procedures that the
Arbitrator may follow with respect to such requests.
Evidence
5. (1) Each party shall submit all evidence to the Arbitrator no later than its written submission
under paragraph 3(2) above, except evidence necessary for purposes of rebuttal, or evidence
necessary for answers to questions or comments on answers provided by the other party.
Additional exceptions may be granted upon a showing of good cause.
(2) If any new evidence has been admitted upon a showing of good cause, the Arbitrator
shall accord the other party an appropriate period of time to comment on the new evidence
submitted.
6. (1) If the original language of an exhibit or portion thereof is not a WTO working language,
the submitting party shall simultaneously submit a translation of the exhibit or relevant portion
into the WTO working language of the submission. The Arbitrator may grant reasonable
extensions of time for the translation of exhibits upon a showing of good cause.
(2) Any objection as to the accuracy of a translation should be raise d promptly in writing,
preferably no later than the next filing or the meeting (whichever occurs earlier) following the
submission which contains the translation in question. Any objection shall be accompanied by
an explanation of the grounds for the objection and an alternative translation.
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of
submissions, each party shall sequentially number its exhibits throughout the course of the
dispute, indicating the submitting Member and the number of each exhibit on its cover page.
Exhibits submitted by China should be numbered CHN -1, CHN-2, etc. Exhibits submitted by
the United States should be numbered USA -1, USA-2, etc. If the last exhibit in connection
with a submission w as numbered CHN -5, the first exhibit in connection with the next
submission thus would be numbered CHN-6. If a party withdraws an exhibit or leaves one or
more exhibits intentionally blank, it should indicate this on the cover page that provides the
number of the blank exhibit.
(2) Each party shall provide an updated list of exhibits (in Word or Excel format) together
with each of its submissions, oral statements, and responses to questions.
(3) If a party submits a document that has already been submitted as an exhibit by the
other party, it should explain why it is submitting that document again.
(4) Insofar as a party considers that the Arbitrator should take into account a document
already submitted as an exhibit in the prior panel proceedings, it should resubmit that
document as an exhibit for the purpose of this proceeding. In its list of exhibits, it should refer
to the number of the original exhibit in the original panel proceeding (OP) and Article 21.5
panel proceedings (CP), if applicable (example: CHN-1 (CHN-21-OP), USA-2 (USA-11-CP)).

BCI omitted, as indicated [[***]]

(5) If a party includes a hyperlink to the content of a website in a submission, and intends
that the cited content form part of the official record, the cited content of the website shall be
provided in the form of an exhibit along with an indication of the date that it was accessed.
Editorial Guide
8. In order to facilitate the work of the Arbitrator, each party is invited to make its submissions
in accordance with the WTO Editorial Guide for Submissions (electronic copy provided).
Questions

9. The Arbitrator may pose questions to the parties at any time, including:
a. Before the meeting, the Arbitrator may send written questions, or a list of topics it
intends to pursue in questioning orally during the meeting. The Arbitrator may ask different
or additional questions at the meeting.
b. The Arbitrator may put questions to the parties orally during the meeting, and in writing
following the meeting, as provided for in paragraph 16 below.
Substantive meeting

10. The Arbitrator shall meet in closed session.
11. The parties shall be present at the meetings only when invited by the Arbitrator to appear
before it.
12. (1) Each party has the right to determine the composition of its own delegation when
meeting with the Arbitrator.
(2) Each party shall have the responsibility for all members of its delegation and shall
ensure that each member of its delegation acts in accordance with the DSU and these Working
Procedures, particularly with regard to the confidentiality of the proceeding and the
submissions of the parties.
13. Each party shall provide to the Arbitrator the list of members of its delegation no later than
5.00 p.m. (Geneva time) three working days before the first day of the meeting with the Arbitrator.
14. A request for interpretation by any party should be made to the Arbitrator as early as possible,
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.
15. There shall be one substantive meeting with the parties.
16. The substantive meeting of the Arbitrator with the parties shall be conducted as follows:
a. The Arbitrator shall invite the United States to make an opening statement to present
its case first. Subsequently, the Arbitrator shall invite China to present its point of view.
Before each party takes the floor, it shall provide the Arbitrator with a provisional written
version of its statement. If interpretation is needed, each party shall provide additional copies
for the interpreters.
b. Each party s hould avoid lengthy repetition of the arguments in its submissions.
Each party is invited to limit the duration of its opening statement to not more than
60 minutes. If either party considers that it requires more time for its opening statement,
it should inform the Arbitrator and the other party at least 10 days prior to the meeting,
together with an estimate of the expected duration of its statement. The Arbitrator will accord
equal time to the other party.
c. After the conclusion of the opening statements, the Arbitrator shall give each party the
opportunity to make comments or ask the other party questions.

BCI omitted, as indicated [[***]]

d. The Arbitrator may subsequently pose questions to the parties.
e. Once the questioning has concluded, the Arbitrator shall afford each party an
opportunity to present a brief closing statement, with the United States presenting its
statement first. Before each party takes the floor, it shall provide the Arbitrator and other
participants at the meeting with a provisional written version of its closin g statement, if
available.
f. Following the meeting:
i. Each party shall submit a final written version of its opening statement no later than
5.00 p.m. (Geneva time) on the first working day following the meeting. At the same
time, each party should also submit a final written version of any prepared closing
statement that it delivered at the meeting.
ii. Each party shall send in writing, within the timeframe established by the Arbitrator
before the end of the meeting, any questions to the other party to w hich it wishes to
receive a response in writing.
iii. The Arbitrator shall send in writing, within the timeframe established by the Arbitrator,
any questions to the parties to which it wishes to receive a response in writing.
iv. Each party shall respond i n writing to the questions from the Arbitrator, and to any
questions posed by the other party, within the time -frame established by the
Arbitrator.
Descriptive part and executive summaries

17. The description of the arguments of the parties in the Decision of the Arbitrator shall consist
of executive summaries provided by the parties, which shall be annexed as addenda to the Decision.
These executive summaries shall not in any way serve as a substitute for the submissions of the
parties in the Arbitrator's examination of the case.
18. Each party shall submit one integrated executive summary, which shall summarize the facts
and arguments as presented to the Arbitrator in the party's submissions and statements, and may
also include a summary of its responses to questions and comments thereon following the
substantive meeting.
19. Each integrated executive summary shall be limited to 15 pages.
20. The Arbitrator may request the parties to provide executive summaries of facts and arguments
presented in any other submissions to the Arbitrator for which a deadline may not be specified in
the timetable.
Service of documents

21. The following procedures regarding service of documents apply to all documents submitted by
parties during the proceeding:
a. Each party shall submit all documents to the Arbitrator by submitting them with the
DS Registry (office No. 2047).
b. Each party shall submit 2 paper copies of its submissions and 2 paper copies of its Exhibits
to the Arbitrator by 5.00 p.m. (Geneva time) on the due dates established by the
Arbitrator. The DS Registrar shall stamp the documents with the date and time of
submission. The paper version submitted to the DS Registry shall constitute the official
version for the purposes of submission deadlines and the record of the dispute. If an
exhibit is in a format that is impractical to submit as a paper copy, then the party may
submit such exhibit in electronic format (by email or on a CD -ROM, DVD or USB key). In
this case, the cover page of the exhibit should indicate that the exhibit is only available in
electronic format.

BCI omitted, as indicated [[***]]

c. Each party shall also send an email to the DS Registry, at the same time that it submits
the paper versions, attaching an electronic copy of all documents that it submits to the
Arbitrator, preferably in both Microsoft Word and PDF format. All such emails to the
Arbitrator shall be addressed to DSRegistry@wto.org, and copied to other WTO Secretariat
staff whose email addresses have been provided to the parties during the proceeding. If it
is not possible to attach all the Exhibits to one email, the submitting party shall provide
the DS Registry with four copies of the Exhibits in electronic form on USB keys, CD-ROMs
or DVDs.
d. In addition, each party is invited to submit all documents through the WTO e-filing system
within 24 hours following the deadline for the submission of the paper versions. If the
parties have any questions or technical difficulties relating to the WTO e -filing system,
they are invited to contact the DS Registry at DSRegistry@wto.org.
e. Each party shall serve any document submitted to the Arbitrator directly on the other
party. A party may submit its documents to another party by email or other electronic
format acceptable to the recipient without having to serve a pa per copy, unless the
recipient party has requested a paper copy at least five working days before the filing.
Each party shall confirm, in writing, that copies have been served on the parties,
as appropriate, at the time it provides each document to the Arbitrator.
f. Each party shall submit its documents with the DS Registry and serve copies on the other
party by 5.00 p.m. (Geneva time) on the due dates established by the Arbitrator.
g. All communications from the Arbitrator to the parties will be via email.
Correction of clerical errors in submissions
22. The Arbitrator may grant leave to a party to correct clerical errors in any of its submissions
(including paragraph numbering and typographical mistakes). Any such request should identify the
nature of t he errors to be corrected, and should be made promptly following the filing of the
submission in question.

BCI omitted, as indicated [[***]]

ANNEX A-2
ADDITIONAL WORKING PROCEDURES OF THE ARBITRATOR CONCERNING
BUSINESS CONFIDENTIAL INFORMATION

Adopted on 8 January 2020

1. These procedures apply to any business confidential information (BCI) that a party wishes to
submit to the Arbitrator, including BCI that was previously treated by the U.S. Department of
Commerce as confidential or proprietary information protected by Administrative Protective Order in
the course of the countervailing duty proceedings relevant to this dispute. However, these
procedures do not apply to information that is available in the public domain. In addition, these
procedures do not apply to any BCI if the person who provided the information in the course of the
relevant proceedings agrees in writing to make the information publicly available.
2. The first time that a party submits to the Arbitrator BCI, as defined above, from an entity that
submitted that information in one of the relevant proceedings, the party shall also provide, with a
copy to the other party, an authorizing letter from the entity. That letter shall authorize both China
and the United States to submit in this dispute, in accordance with these procedures, any confidential
information submitted by that entity in the course of those proceedings.
3. If an entity refu ses to grant the authorization letter, a party may bring the situation to the
attention of the Arbitrator. The Arbitrator shall consider what steps to take, which may include
requesting information pursuant to Article 13 of the DSU.
4. No person may have access to BCI except a member of the Secretariat or the Arbitrator, an
employee of a party, and an outside advisor for the purposes of this dispute to a party. An outside
advisor may include a person providing to a party advice on any matter related to the dispute.
However, an outside advisor is not permitted access to BCI if that advisor is an officer or employee
of an enterprise engaged in the production, export, or import of the products that were the subject
of the proceedings relevant to this dispute.
5. A party having access to BCI shall treat it as confidential, i.e., shall not disclose that
information other than to those persons authorized to receive it pursuant to these procedures. Each
party shall have responsibility in this regard for its employee s as well as any outside advisors used
for the purposes of this dispute. BCI obtained under these procedures may be used only for the
purpose of providing information and argumentation in this arbitration and for no other purpose.
6. The party submitting BCI shall mark the cover and/or first page of the document containing
BCI, and each page of the document, to indicate the presence of such information. The specific
information in question shall be placed between double brackets, as follows: [[xx,xxx.xx]]. The first
page or cover of the document shall state "Contains business confidential information on pages
xxxxxx", and each page of the document shall contain the notice "Contains Business Confidential
Information" at the top of the page.
7. Where a party submits a document containing BCI to the Arbitrator, the other party referring
to that BCI in its documents, including written submissions and oral statements, shall clearly identify
all such information in those documents. All such documents shall be marke d as described in
paragraph 6. In the case of an oral statement containing BCI, the party making such a statement
shall inform the Arbitrator before making it that the statement will contain BCI, and the Arbitrator
will ensure that only persons authorized to have access to BCI pursuant to these procedures are in
the room to hear that statement.
8. The Arbitrator will not disclose BCI, in its decision or in any other way, to persons not
authorized under these procedures to have access to BCI. The Arbitrator may, however, make
statements of conclusion drawn from such information. Before the Arbitrator circulates its final
decision to the Members, the Arbitrator will give each party an opportunity to review the decision to
ensure that it does not contain any information that the party has designated as BCI.

BCI omitted, as indicated [[***]]

ANNEX A-3
ADDITIONAL WORKING PROCEDURES OF THE ARBITRATOR
CONCERNING MEETINGS WITH REMOTE PARTICIPATION
Adopted on 20 October 2020
General
1. These Additional Working Procedures set out terms for holding meetings with the Arbitrator
which some participants may attend by remote means.
Definitions
2. For the purposes of these Additional Working Procedures:
"Remote participant" means any registered person attending the meeting with the Arbitrator
by remote means.
"Platform" means the software or system through which remote participants attend the
meeting with the Arbitrator.
"Host" means the designated person within the WTO Secretariat responsible for the
management of the platform.
Equipment and technical requirements
3. Each party shall ensure that all remote participants of its delegation join the meeting using the
designated platform, and meet the minimum equipment and technical requirements set out by
the platform provider for the effective conduct of the meeting.
Technical support
4. (1) Each party is responsible for providing technical support to the remote participants of its
delegation.
(2) The host will assist remote participants in accessing and using the platform in prepa ration
of, and during, the meeting with the Arbitrator.
Pre-meeting
Registration
5. Each party shall provide to the Arbitrator the list of the members of its delegation, on a dedicated
form to be provided by the WTO Secretariat, no later than 5:00 p.m. (Geneva time) two weeks
before the first day of the meeting with the Arbitrator. Such list shall include all members of the
party's delegation, regardless of whether they participate in person or by remote means.
Advance testing
6. Before the meeting with the Arbitrator, the WTO Secretariat will hold two testing sessions with
all remote participants of each party: (i) a separate one for each party's remote participants,
and (ii) a joint session with all participants in the meeting, i ncluding all remote participants of
the parties and the arbitrators joining remotely. Such sessions will seek to reflect, as far as
possible, the conditions of the meeting.

BCI omitted, as indicated [[***]]

Confidentiality and security
7. All remote participants shall follow the Additiona l Working Procedures of the Arbitrator
concerning Business Confidential Information and the security rules contained in these Additional
Working Procedures as well as any additional security guidance that may be provided by the
host.
Conduct of the meeting
Access to the virtual meeting room
8. (1) The host will invite remote participants via email to join the virtual meeting room on the
platform.
(2) For security reasons, access to the virtual meeting room will be password -protected and
limited to registered participants. Remote participants shall not forward or share the meeting
link or password.
(3) Each party shall ensure that only registered participants from its delegation join the virtual
meeting room.
Advance log-on
9. (1) The virtual meeti ng room will be accessible 60 minutes in advance of the scheduled start
time of each session of the meeting with the Arbitrator.
(2) All remote participants shall log on to the platform at least 30 minutes in advance of the
scheduled start time of each session of the meeting with the Arbitrator.
Document sharing
10. (1) Each party shall provide the Arbitrator and other participants with a provisional written
version of its opening statement and, if available, of its closing statement, before delivery at the
meeting.
(2) Any participant wishing to share a document with the Arbitrator and other participants during
the meeting shall do so before first referring to such document at the meeting.
Communication breakdown
11. (1) Each party shall designate a conta ct person who can liaise with the host during the course
of the meeting to report any technical issues that arise with respect to the platform. The host
can be contacted via the platform, by sending an email to remotemeeting03@wto.org, or by
calling +41 (0)22 739 6148.
(2) After consulting the parties, the Arbitrator may pause the session until the technical issue is
resolved or may continue the proceedings with those participants that continue to be connected
or are physically present in the meeting room at the WTO.
Relation with the Working Procedures of the Arbitrator
12. These Additional Working Procedures complement the Working Procedures of the Arbitrator
and prevail over the latter to the extent of any conflict.

BCI omitted, as indicated [[***]]

ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Executive summary of the arguments of the United States 13
Annex B-2 Executive summary of the arguments of China 21

BCI omitted, as indicated [[***]]

ANNEX B-1
EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES
I. INTRODUCTION
1. Contrary to the requirements of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU"), the level of suspension of concessions that China has requested is
not equivalent to the level of nullification or impairment.
2. Pursuant to Article 22.7 of the DSU, the task of an arbitrator is to determine whether the
requested level of suspension of concessions or other obligations is equivalent to the level of
nullification or impairment of benefits accruing to the complaining party under the relevant covered
agreement(s), as required under Article 22.4. China, in its DSU Article 22.2 r equest, has proposed
to suspend concessions at a level of $2.4 billion annually; the United States has objected to that
level, referring the matter to arbitration; and the United States has made a prima facie case
(including through China's concession that $2.4 billion exceeds the level of nullification or impairment
and by demonstrating fundamental defects in China's methodology and data) that China's requested
level of suspension is inconsistent with Article 22.4 of the DSU.
3. Thus, it is appropriate fo r the Arbitrator to reject China 's requested level of nullification or
impairment and continue the analysis, pursuant to Article 22.7, to determine the level of suspension
that it considers to be equivalent to the level of nullification or impairment, as other arbitrators have
done in prior Article 22.6 proceedings. The United States has provided the Arbitrator ample evidence
to sustain its factual assertions in order to assist the Arbitrator in determining the correct
methodology (including correct underly ing assumptions) and the correct data that can be used to
accurately estimate a level of suspension that is equivalent to the level of nullification or impairment.
4. The level of nullification or impairment should be determined by estimating the trade eff ects
of removing the WTO -inconsistent aspects of the U.S. countervailing duty ( "CVD") measures
following the expiration of the reasonable period of time ( "RPT"), through a counterfactual of
reducing the CVD rate by the relevant WTO -inconsistent Less -Than-Adequate-Remuneration
("LTAR") rate. China agrees with this approach, but has incorrectly identified the WTO -inconsistent
CVD rates to use to calculate the counterfactual WTO -consistent CVD rates. The United States has
shown that the rates from the final de terminations of the section 129 proceedings ( "section 129
rates"), which were the compliance measures reviewed in the Article 21.5 proceedings in this
dispute, are the correct WTO -inconsistent CVD rates, and the counterfactual WTO -consistent CVD
rate for e ach product should be calculated by reducing the section 129 CVD rate by the relevant
WTO-inconsistent LTAR rate.
5. With respect to the methodology to simulate the counterfactual, a two-step Armington-based
imperfect substitutes partial equilibrium model is appropriate for the purpose of this proceeding, but
only with certain necessary adjustments to be able to accurately estimate the level of nullification
or impairment caused by the WTO-inconsistent CVD measures at issue –and not caused by any other
factors. While China's methodology uses a two -step Armington-based model, it fails to apply the
necessary adjustments, consequently generating distorted counterfactual market shares and grossly
overestimating the trade effects of the CVD measures at issue.
6. The two necessary adjustments identified by the United States are: (1) controlling for the
trade effects of the antidumping ( "AD") duties that also were imposed on the same products; and
(2) controlling for the trade effects of the positive supply shocks f or imports of the same products
from third countries, making them more competitive in the U.S. market. These adjustments are
necessary to generate a counterfactual market representation which accurately estimates how the
U.S. market would be different if the CVD rates were made WTO-consistent at the expiration of the
RPT (i.e., in 2017), and thus properly isolate the trade effects of the CVD measures at issue.

BCI omitted, as indicated [[***]]

7. Finally, contrary to the incorrect data used by China, the United States has proposed to use
the same data and data estimation methods chosen by the arbitrator in DS471 – save for certain
instances where data-based adjustments were necessary. In estimating the counterfactual value of
imports from China, the United States has provided the Arbitrator data that accurately reflect imports
from China that are subject to the CVD measures at issue in this proceeding. This contrasts with
China's reliance on basket tariff categories and blanket use of an economy -wide GDP deflator to
estimate the market size for each discrete product.
8. As the United States has demonstrated, when proper analysis is employed and correct data
are used, the actual level of nullification or impairment is no more than $105.77 million annually.
II. APPROPRIATE CALCULATION OF THE LEVEL OF NULLIFICATION OR
 IMPAIRMENT FOR THE COUNTERVAILING DUTY MEASURES AT ISSUE
A. Article 22 of the DSU Requires that the Proposed Level of Suspension Be
Equivalent to the Level of Nullification or Impairment
9. Pursuant to Article 22.4 of the DSU, the DSB is not to authorize the suspension of concessions
or other obligations unless "the level" of suspension is "equivalent" to the level of nullification or
impairment. Article 22.7 of the DSU further provides that where a matter is referred to arbitration,
the arbitrator "shall determine whether the level of . . . suspension is equivalent to the level of
nullification or impairment." The starting point in the analysis of a suspension request is to determine
the extent to which any WTO -inconsistent measure maintained following the expiration of the RPT
nullifies or impairs benefits accruing to the complaining Member under the relevant covered
agreement(s).
10. Thus, an analysis of the level of nullification or impairment must focus on the "benefit"
accruing to the complaining party under a covered agreement that is allegedly nullified or impaired
as a result of the breach found by the DSB. Arbitrators in past proceedings have unifor mly based
their determinations on hard evidence and have refused to "accept claims that are 'too remote', 'too
speculative', or 'not meaningfully quantified.'" As the arbitrators in EC – Hormones (US) (Article 22.6
– EC) and EC – Hormones (Canada) (Article 22.6 – EC) found, "we need to guard against claims of
lost opportunities where the causal link with the [WTO -] inconsistent [measure] is less than
apparent, i.e., where exports are allegedly foregone not because of the [WTO-inconsistent measure]
but due to other circumstances."
11. In previous Article 22.6 proceedings, the arbitrators compared the level of trade for the
complaining party under the WTO -inconsistent measure to what the complaining party 's level of
trade would be expected to be had the Member concerned brought the WTO-inconsistent measure
into conformity following the expiration of the RPT. The situation in which the Member concerned
has removed the WTO inconsistency is referred to as the "counterfactual." The difference in the level
of trade under these two situations typically represents the level of nullification or impairment. Other
Article 22.6 arbitrators have recognized that a counterfactual was an appropriate method in those
proceedings to calculate a level of nullification or impairment.
12. Similarly, in this proceeding, both the United States and China have proposed a counterfactual
in which the WTO -inconsistent aspect of each of the CVD measures at issue ( i.e., the WTO -
inconsistent LTAR rate) is removed following the expiration of the RPT. China, however, has proposed
to use incorrect rates as the WTO -inconsistent CVD rates, which also results in incorrect
counterfactual WTO-consistent CVD rates. The appropriate analysis requires a comparison between
the baseline value of impor ts of each product from China to the United States and the value of
imports from China to the United States that would have been expected had the CVD rates been
WTO-consistent following the expiration of the RPT (the counterfactual). As described below, China's
incorrect WTO -inconsistent rates and incorrect counterfactual WTO -consistent rates result in an
incorrect outcome of the counterfactual analysis.
B. The Correct Counterfactual is Reduction of the Section 129 CVD Rate by the
Relevant WTO-Inconsistent LTAR Rate
13. In this proceeding, the correct counterfactual is the estimated value of imports of relevant
products from China to the United States if the WTO -inconsistent CVD measures were modified,

BCI omitted, as indicated [[***]]

following the expiration of the RPT, to comply with the DSB recommendations, holding all other
factors constant. China, in its methodology paper, acknowledges that the Article 21.5 compliance
panel in this dispute reviewed and found to be WTO -inconsistent the section 129 determinations,
which are the basis of t he WTO-inconsistent CVD rates used by the United States. Yet, China has
disregarded this fact and has used the rates from the CVD orders, rather than the section 129 rates,
as the baseline rates for the counterfactual analysis.
14. The relevant rates to be used as the WTO -inconsistent CVD rates are the section 129 rates
because the section 129 determinations were the measures that were actually "found to be WTO -
inconsistent" in this dispute.
C. The Correct Methodology for Determining the Level of Nullifi cation or
Impairment Must Incorporate Other Relevant Factors and Rely on a Correct
Assumption Regarding Elasticities of Substitution
15. As explained above, the key issue in this proceeding is the impact on trade flows of the
maintenance of the WTO-inconsistent CVD measures following the expiration of the RPT. The United
States and China generally agree that a version of the two -step Armington approach used by the
arbitrators in DS464 and DS471 is appropriate. However, the United States disagrees with China's
proposed version of the two -step Armington approach because it not only fails to address the
fundamental deficiencies of the unadjusted two -step Armington approach but also further distorts
the model by relying on a flawed assumption about elasticities of substitution.
16. In contrast, the U.S. methodology corrects the fundamental deficiencies of the two -step
Armington approach used in DS464 and DS471 by implementing two necessary adjustments. These
adjustments are necessary to capture China 's true relative competitiveness and correctly estimate
the level of nullification or impairment attributable to the CVD measures at issue. Moreover, the U.S.
methodology is based on a correct assumption about elasticities of substitution.
The Correct Methodology Properly Isolates the Trade Effects of the
WTO-Inconsistent CVD Measures by Adjusting for Other Factors that
Demonstrably Affected the Evolution of Market Shares Between the
Time of Imposition of the Relevant CVD Measure and Remedy Year
17. The two-step Armington approach, as applied by the arbitrators in DS464 and DS471, begins
by calibrating a standard partial equilibrium Armington model using market share data from the year
prior to the imposition of the CVD measure ( "the year -prior") for three entities: U.S. domestic
producers, China, and the rest of the world ("ROW"). In this type of model, market shares observed
in the year-prior data are assumed to capture relative competitiveness in the U.S. market in that
year. The year-prior data in this proceeding, however, do not reflect an accurate picture of China 's
underlying competitiveness because the U.S. market was distorted by subsidies and dumping, prior
to the imposition of the relevant CVD and AD measures.
18. Using the year -prior data and cal ibrated parameters, step one of the two -step Armington
approach, as applied by the arbitrators in DS464 and DS471, simulates the application of WTO -
inconsistent CVD measures on imports from China. The counterfactual market shares resulting from
step one ar e ostensibly assumed to represent the relative competitiveness of each entity ( i.e.,
domestic shipments, imports from China, and imports from ROW) after the expiration of the RPT,
that is, in 2017.
19. In step two of the two-step Armington approach, the counterfactual market shares generated
in step one are used to calibrate a new benchmark model. The market shares are used to divide up
the total value of the U.S. market in 2017, as observed in the data, constructing an alternative 2017
market in which no f actors other than the CVD measures on imports from China have affected
relative competitiveness among the entities between the date of imposition of the CVD measure and
the remedy year (2017). This constructed market is assumed to be representative of the market in
2017. This new benchmark model is then used to simulate the trade effects of modifying the WTO -
inconsistent CVD rates to be WTO -consistent in 2017, including estimating each entity 's market
share under the counterfactual WTO-consistent CVD rates. The level of nullification or impairment is
the difference between the simulated value of 2017 U.S. imports from China under the WTO -

BCI omitted, as indicated [[***]]

inconsistent rates and the simulated value of 2017 U.S. imports from China under the modified,
counterfactual WTO-consistent rates.
20. As recognized by the authors of a recent paper discussing the DS471 arbitration, the two-step
Armington approach used in that arbitration had a fundamental deficiency: it incorrectly attributed
trade damage solely to the AD duties at issue in that proceeding by failing to account for other
factors that affected the evolution of relative competitiveness in the U.S. market ( i.e., market
shares) between the date of imposition of the duties and the remedy year. The CVD duties at issue
in this proceeding were among those factors. China, in DS471, appears to have anticipated this
problem when it proposed to "tak[e] into account the impact of CVD measures " in its alternative
methodology for estimating the level of nullification or impairment caused by the AD measures that
were at issue in that proceeding.
21. The U.S. methodology in this proceeding offers a solution that corrects this deficiency by
incorporating two adjustments. These adjustments ensure that the model controls for economic
forces other than the CVD measures at issue and properly isolates the trade effects of the CVD
measures. In contrast, the unadjusted two -step Armington model that fails to account for other
relevant factors would essentially estimate trade damage based on an incorrect counterfactual
market, in which factors observed to have affected the actual 2017 market shares are absent, thus
overestimating the level of nullification or impairment.
a. First, the Two-Step Armington Approach Must Account for the
Effect of Dumping and the Corresponding Antidumping Duties
on China's U.S. Market Share
22. An unadjusted two-step Armington approach fails to account for the parallel AD measures that
applied to the products at issue in this proceeding – meaning the model essentiall y asks how the
market would be different if CVD rates were WTO -consistent at the expiration of the RPT and if AD
duties were never imposed in the first place. But there is no question that the AD measures were
imposed simultaneously or almost simultaneously with the CVD measures at issue, and that China's
actual relative competitiveness in 2017 was directly affected by these AD measures. Thus, it would
not be proper under the correct counterfactual to assume that AD duties never existed or affected
relative competitiveness in the U.S. market.
23. Accordingly, the model in step one of the two-step Armington approach must account for the
parallel AD duties to be able to estimate China 's actual relative competitiveness and generate an
adequate representation of the counterfactual 2017 market. Otherwise, the step two model
calibrated with incorrect counterfactual 2017 market shares would, in turn, overestimate China 's
relative competitiveness in 2017 because it would not account for the correction for dumping – the
AD duties – that was in effect at the end of the RPT. Therefore, only a two -step approach that
properly accounts for the parallel AD measures can accurately simulate the 2017 market shares and
thus accurately estimate the level of nullification or impairment.
24. The U.S. methodology takes the AD duty rates as they are and incorporates them with the
WTO-inconsistent CVD rates in step one and the counterfactual WTO -consistent CVD rates in step
two. This prevents the two-step Armington model from simulating an incorrect counterfactual 2017
market in which the parallel AD duties were never imposed, thereby properly controlling for the
effects of the AD duties.
b. Second, the Two-Step Armington Approach Must Account for
Third-Country Supply Shock, i.e., Factors Other than Trade
Remedy Measures that Influenced the Evolution of Market
Shares in the Interim Period Between Imposition of the
Relevant CVD Measure and Remedy Year
25. As explained above, the unadjusted two-step model used by the DS471 arbitrator ignores the
trade effects of other factors on the evolution of relative competitiveness during the interim period
between the imposition of the CVD measures and 2017. In reality, however, entry of new m arket
participants and increased capacity of countries other than China to supply the U.S. market
influenced China's (and other suppliers') relative competitiveness. In several of the product markets
at issue in this proceeding, investments of private firm s or changes in government policy allowed

BCI omitted, as indicated [[***]]

certain third country suppliers to improve their relative competitiveness in the U.S. market during
the interim period.
26. A model that fails to account for such third-country supply shocks fails to answer the relevant
question; rather, it assesses how the market would be different if CVD rates were WTO -consistent
and if third -country market shares were held proportionally constant. Such a model cannot
accurately estimate the nullification or impairment caused by the WTO-inconsistent CVD measures
at issue in this proceeding. The resulting estimate of nullification or impairment would either
understate or overstate the actual level of nullification or impairment, depending on the underlying
circumstances.
27. The United States has provided evidence for five of the products (Aluminum Extrusions, OCTG,
Solar Panels, Line Pipe, Pressure Pipe) that investments of private firms or changes in government
policy boosted the supply potential of certain third countries and r esulted in imports from those
countries gaining U.S. market share at China's expense. In other words, these positive supply shocks
improved the relative competitiveness of those third countries and led to the relative deterioration
of China's competitive position in the U.S. market during the interim period. Such changes during
the interim period should be reflected in the step one counterfactual market that is used to calibrate
the step two model. Otherwise, the step one counterfactual market would not rep resent China's
actual relative competitiveness in 2017, and in turn, cannot be used to correctly estimate the level
of nullification or impairment. Accordingly, the United States has quantified and incorporated those
supply shocks into its model using a hi storical simulation approach based on the economics
literature.
28. In principle, the two-step Armington approach should incorporate a supply shock adjustment
for every product for which the relative competitiveness of third -country suppliers has changed
between the date of imposition of the CVD measures and 2017. However, it is not possible to directly
observe supply shocks and their magnitude by country. As the best alternative, the United States
has relied on two types of information to make the best effort to identify the relevant supply shocks:
(1) trade data showing trends of disproportionate increases in certain third countries' market shares
relative to other exporting countries between the year in which the CVD measure was imposed and
2017, and (2) analyses documented in relevant U.S. International Trade Commission ( "USITC")
investigations of any industry investment or government policy changes in those third countries
during the same period.
29. Using this evidence -based method, the United States h as identified the "Rising Supplier "
countries for Aluminum Extrusions, OCTG, Solar Panels, Line Pipe, and Pressure Pipe, and has
detailed the government policies or industry investments that are linked to the expansion of their
supply potential. Based on e vidence, the adjustment also includes a net decline in relative
competitiveness of India, Malaysia, Thailand, and Vietnam in the U.S. Pressure Pipe market due to
U.S. trade remedies against Pressure Pipe from those countries in 2014 and 2016, which ultimately
boosted China's relative competitiveness. The United States has not found sufficient evidence to
recommend implementing the supply shock adjustment for the remaining five products.
30. Both the AD adjustment and the third -country supply shock adjustmen t stem from the fact
that the correct methodology for this proceeding should control for any other factors that affected
the evolution of relative competitiveness in the U.S. market for the products at issue between the
imposition of the measure at issue a nd the remedy year, as long as there is evidence to support
those effects and sufficient quantitative information to incorporate them into the model. The United
States has controlled for these two factors because there is sufficient evidence to demonstrate their
effects on the evolution of relative competitiveness between the imposition of the relevant CVD
measures and 2017. On the other hand, the United States has not adjusted for any other factors
due to lack of sufficient evidence that any other factors (including any other duties or non -tariff
actions) meaningfully affected the evolution of relative competitiveness during the interim period.
31. China falsely argues that incorporating the necessary adjustments proposed in the U.S.
methodology would be equivalent to adopting a one-step Armington model. However, the step one
counterfactual market shares generated by the U.S. methodology are consistently and significantly
greater than China's actual 2017 market shares that would be used in a one-step Armington model.
The U.S. methodology corrects the critical deficiency in the unadjusted two -step Armington model
so that the model can generate accurate counterfactual 2017 market shares and thus estimate the

BCI omitted, as indicated [[***]]

level of nullification and impairment that is properly attributable to the CVD measures at issue – the
very purpose of adopting a two-step Armington model.
The Correct Methodology Relies on the Correct Assumption that the
Elasticity of Substitution across Imported Varieties is Same as the
Elasticity of Substitution Between Imported Goods and Domestic
Goods
32. Contrary to China's argument, the so -called "Rule of Two" is not the correct assumption for
the methodology in this proceeding. The Rule of Two is an ad hoc assumption that the elasticity of
substitution across imported varieties ( "micro-elasticity") is two times the elasticity of substitution
between imported goods and domestic goods ( "macro-elasticity"). This proposition has serious
implications, as it would result in a significantly higher estimate of the level of nullification or
impairment. However, China has not sufficiently demonstrated why the Arbitrator should deviate
from the more reasonable assumption that the micro-elasticity and the macro-elasticity are constant
(i.e., the Rule of One), which is the standard in Armington partial equilibrium modeling in the
academic literature and which has been used in previous WTO arbitrations, including DS471.
33. While China has frequently referenced Feenstra et al., there simply is no evidence in the paper
to conclude that the micro -elasticity is double the macro -elasticity for the products at issue in this
proceeding. Rather, China has misinterpreted the statistical data presented in the paper. The
corrected outcome provided by the United States is, in fact, evidence in favor of the null hypothesis
that the macro-elasticity and micro-elasticity are equal.
34. Moreover, the results of Feenstra et al. do not support China's position because they do not
apply to the products at issue here and cannot be generalized. The sample examined in Feenstra et
al. only covers 0.5 percent of all Harmonized Tariff Schedule of the United States ( "HTSUS")
categories at the 10-digit level. In addition, it appears that the only overlap between the sample in
Feenstra et al. and the products at issue in this proceeding is a limited subset of the products subject
to the OCTG CVD measure. From a statistical perspective, it is unreasonable to generalize the weak
results of Feenstra et al . The small sample in Feenstra et a l. is not randomly sampled from the
population of all products, and there is no evidence that it is a representative sample. In fact, the
authors of Feenstra et al. themselves do not assert that the paper's results are generalizable outside
of the specific sample, contrary to China's argument. The weak evidence in Feenstra et al. that the
micro-elasticities may be higher than the macro -elasticities for the products sampled in the paper
does not support the application of the Rule of Two for the specific pro ducts at issue in this
proceeding that are largely from different industries.
35. Further, a nested approach – which encompasses the Rule of Two and other model
arrangements in which the elasticity of substitution is not assumed to be constant across all sources
of supply – is not appropriate in this proceeding because trade diversion is not expected for the
products at issue. A nested approach could be used where there is evidence that buyers are more
likely to substitute one source of supply over another in response to a change in the price of the
subject variety. However, product-specific evidence reported by the USITC shows that the domestic
variety, imports from China, and imports from ROW are not systematically differentiated, but rather
are comparable and interchangeable in terms of product quality, terms of sale, and use. That is,
there is no basis to assume that an increase in the price of imports from China would lead U.S.
buyers to systematically and disproportionately substitute toward imports fro m ROW, over U.S.
domestic products. And there is certainly no evidence that buyers are likely to substitute toward
imports from ROW at double the rate of substitution toward U.S. domestic products.
36. Accordingly, the correct methodology should rely on t he standard Rule of One and thus use
the substitution elasticity estimates reported by the USITC for both micro - and macro-elasticities.
These USITC elasticities (which were developed under the implicit assumption that the micro -
elasticity and macro-elasticity are equal) are tailored to the specific products subject to the duties
and are based on analysis of responses from purchasers, producers, and importers to questionnaires
concerning the pertinent market, as well as arguments made by interested parties.

BCI omitted, as indicated [[***]]

D. The Correct Data Inputs that Would Be Used in Applying the Two -Step
Armington-Based Partial Equilibrium Model
37. In an effort to identify the best data available for this proceeding, the United States has
maintained a reasoned and consistent approach of using the same year-prior and 2017 U.S. market
data that the arbitrator in DS471 chose to use for the seven products for which AD measures were
at issue in the DS471 arbitration proceeding (Aluminum Extrusions, Line Pipe, OCTG, Print Graphics,
Seamless Pipe, Solar Panels, and Steel Cylinders). For the other three products that were not at
issue in DS471 (Kitchen Shelving, Pressure Pipe, and Wire Strand), the United States has estimated
the U.S. market data by applying estimation methods that are similar to those applied by the DS471
arbitrator. In contrast, China has unnecessarily deviated from the data and data estimation methods
used by the DS471 arbitrator and has proposed data that are not suitable for accurately estimating
the level of nullification or impairment.
Year-Prior U.S. Market Data
38. China has chosen the wrong year -prior for three of the products (OCTG, Line Pipe, and
Pressure Pipe). Since step one of the two -step Armington approach uses the year -prior data to
generate market shares that reflect relative competitiveness in the U.S. market in 2017, it is
necessary to ensure that the two-step approach uses the correct year-prior – that is, the year prior
to the imposition of the final CVD measure. However, China has attempted to deviate from the
approach taken by the arbitrators in DS471 and DS464 by arguing that the year -prior should be
based on the date of imposition of the preliminary CVD measure.
39. However, the imposition of a CVD measure is not made final until both the U. S. Department
of Commerce and the USITC make affirmative final determinations. Any cash deposits collected
following an affirmative preliminary CVD determination are merely provisional and subject to refund
depending on the outcome of the final determination. Moreover, for all of the products at issue, no
provisional CVD duties were collected for a "gap period" of several months between the expiration
of the preliminary CVD measure and the publication of the final CVD measure. China has not
explained how, or why, any changes in trade flows during the gap period should be attributed to
CVD duties when there were no CVD duties in place. Therefore, the United States has maintained
the use of the year prior to the imposition of the final CVD meas ure, rather than a temporary
preliminary CVD measure.
40. In addition to misidentifying the relevant year-prior and thus using incorrect year-prior data,
China has also misidentified the relevant domestic shipments or imports values for three other
products (Print Graphics, Steel Cylinders, and Solar Panels). For Kitchen Shelving, China's estimated
imports values improperly rely on "basket" HTSUS categories that broadly include a number of
products that fall outside the scope of the Kitchen Shelving CVD measure.
41. In contrast, the United States has correctly identified the year -prior for each product in a
manner that is consistent with the year-prior identified by the arbitrator in DS471, and has used the
domestic shipments and imports values that were either used by the DS471 arbitrator, or calculated
those values using sources and methods similar to those relied on by the DS471 arbitrator. There
are only two exceptions. First, for the domestic shipments value for Steel Cylinders, whereas the
DS471 arbitrator relied on an estimate based on industry data, the United States has replaced the
estimate with actual data, which became available after the release of the DS471 decision. Second,
for Kitchen Shelving, the United States has corrected for the overinclus ion problem of relying on
basket tariff categories by incorporating industry data -based adjustments to data collected in the
relevant USITC investigations.
2017 U.S. Market Data
42. With respect to the 2017 data, the United States has generally used the data already reported
by the DS471 arbitrator for the seven products that were also at issue in that arbitration. Where the
United States has adjusted data used by the DS471 arbitrator due to an overinclusion issue (Print
Graphics and Seamless Pipe imp orts from ROW) or due to the availability of more recent or better
data (OCTG and Steel Cylinders domestic shipments), ample evidence and explanations have been
submitted for the application of those adjustments.

BCI omitted, as indicated [[***]]

43. As for the three products that were not at issue in DS471, the United States has calculated an
estimate using industry -specific data to estimate each component of the U.S. market for each
product (i.e., domestic shipments, imports from China, and imports from ROW). This is the method
that the DS471 arbitrator used and also the method that the USITC uses in its investigations.
44. While the United States has used HTSUS -based data for the year -prior data due to lack of a
better alternative, the United States has used, for 2017 imports from China, USCBP data reporting
company-specific imports of subject merchandise that are subject to the CVD measures at issue.
USCBP data, which are collected by the U.S. federal agency that enforces CVD measures at the time
of importation, provide the most accurate estimates of the imports from China that were subject to
the CVD measures at issue in this proceeding.
45. In contrast, China has abandoned the reasoned approach of estimating each component of
the U.S. market using industry -specific data, and has instead resorted to a novel approach of
applying a GDP deflator to the reported value of the U.S. market for a specific product in an earlier
year and extrapolating the value of the 2017 U.S. market for that product. This is not supported by
economic theory. A GDP deflator is based on the entire U.S. economy and is not tailored to specific
products. A GDP deflator, which is nominal GDP divided by real GDP, is a measurement of inflation.
Accordingly, the outcome of China 's GDP deflator approach merely states the value of the earlier
U.S. market in terms of 2017 dollars – it does not estimate the size of the 2017 U.S. market. By
attempting to project a future market size using a GDP deflator, China improperly assumes that the
U.S. market for each individual product grew in line with the prices of all final goods and services
produced in the United States between the earlier data year and the remedy year. Furthermore,
regardless of the number of years over which a GDP deflator is applied, the deflator 's estimate for
the 2017 market size would vary depending on the year that the deflator happens to extrapolate
from – which demonstrates that the GDP deflator method is not a reliable proxy for projecting a
future market size.
46. While China has suggested the Producer Price Index (PPI) as an alternative, applying the PPIs
would also merely state the value of an earlier U.S. market in terms of 2017 dollars, similar to the
GDP deflator approach. Moreover, the PPIs, while narrower in product coverage than the economy-
wide G DP deflator, are not tailored to the specific products at issue in this proceeding and are
unsuitable for estimating the market size for these products. Generally, applying the PPIs would
include the price effects of many other, non -subject products that a re often produced by different
manufacturers or distributed through different channels.
E. The Level of Nullification or Impairment that Would Result from the
Application of an Appropriate Armington-Based Partial Equilibrium Model
47. As a result of apply ing the two -step Armington-based approach that incorporates the two
necessary adjustments proposed by the United States, the level of nullification or impairment from
the maintenance following the expiration of the RPT of the U.S. WTO-inconsistent CVD measures on
Aluminum Extrusions, Print Graphics, OCTG, Solar Panels, Steel Cylinders, Line Pipe, Seamless Pipe,
Kitchen Shelving, Pressure Pipe, and Wire Strand from China is no more than $105.77 million per
year.
II. CONCLUSION
48. For the reasons given throughout this proceeding, the United States respectfully requests that
the Arbitrator find that the level of suspension of concessions or other obligations requested by China
is not "equivalent" to the level of nullification or impairment. The United States requests that the
Arbitrator find that the level of nullification or impairment is no more than $105.77 million annually.

BCI omitted, as indicated [[***]]

ANNEX B-2
EXECUTIVE SUMMARY OF THE ARGUMENTS OF CHINA
I. INTRODUCTION
1. This proceeding under Article 22.6 of the Dispute Settlement Understanding ("DSU")
commenced because of the United States' continued refusal to comply with the recommendations
and rulings of the Dispute Settlement Body ("DSB") in United States – Countervailing Measures
(China) ("DS437").
2. On 15 August 2019, the DSB adopted the compliance panel's report in DS437, as modified by
the Appellate Body Report. In that report, the Appellate Body upheld the compliance panel's findings
that the United States had acted inconsistently with Articles 1.1(b) and 14(d) of the Agreement on
Subsidies and Countervailing Measures ("SCM Agreement") in four countervailing duty ("CVD")
investigations. The Appellate Body also upheld the compliance panel's findings that the United States
had acted inconsistently with Article 2.1(c) of the SCM Agreement in those same four investigations
and in an additional seven countervailing duty investigations.
3. The DSB ruled that t he U.S. measures at issue are inconsistent with the relevant provisions
of the SCM Agreement and recommended that the United States bring its measures into conformity
with its obligations under that agreement. Despite these findings, the United States has refused to
bring its measures into compliance with the recommendations and rulings of the DSB.
4. Because the United States has refused to bring its unlawful measures into compliance with its
WTO obligations, China is seeking authorization to suspend conce ssions or other obligations under
the covered agreements in the amount of USD 788.75 million. For the reasons set out in China's
methodology paper, written submission, oral statements, responses to questions from the Arbitrator,
and comments on the United States' responses to questions from the Arbitrator, China submits that
the United States has failed to demonstrate that China's proposed level of suspension is not
equivalent to the level of nullification and impairment suffered by China as a result of the U.S. failure
to bring its measures into conformity with the recommendations and rulings of the DSB.
II. CHINA'S PROPOSED COUNTERFACTUAL SCENARIO IS PLAUSIBLE AND
REASONABLE
5. Pursuant to Article 22.4 of the DSU, "[t]he level of the suspension of concessi ons or other
obligations authorized by the DSB shall be equivalent to the level of the nullification or impairment."
Pursuant to Article 22.7 of the DSU, it is the Arbitrator's task to "determine whether the level of
such suspension is equivalent to the level of nullification or impairment." Specifically, it is the
Arbitrator's task to determine whether the level of suspension proposed by China is equivalent to
the level of nullification and impairment caused by the United States' continued non-compliance with
the recommendations and rulings of the DSB concerning the measures at issue.
6. WTO arbitrators have consistently adopted the approach of examining the relevant
"counterfactual" scenario, i.e. a hypothetical scenario that describes what would have ha ppened in
terms of trade flows had the responding party implemented the DSB recommendations and rulings.1
7. The compliance panel's findings as affirmed by the Appellate Body concern the USDOC's
incorrect interpretation and application of Articles 14(d) a nd 2.1(c) of the SCM Agreement and its
resulting incorrect determination that China provides inputs for less than adequate remuneration
("LTAR"). The only reasonable inference that can be drawn in light of these findings is that had the
USDOC sought to bring its measures into conformity with its obligations under the SCM Agreement
by properly interpreting and applying Articles 14(d) and 2.1(c), it would not have identified a
countervailable subsidy in respect of the alleged provision of inputs for LTAR. Consequently, the
benefit that China could have legitimately expected to receive as a result of the recommendations
and rulings of the DSB was that any countervailing duties applied to the products at issue would be

1 See China's methodology paper, para. 15.

BCI omitted, as indicated [[***]]

calculated so as to exclude the portion of the total CVD margin attributed to the alleged input subsidy
programmes.
8. Accordingly, in this proceeding China proposed a plausible and reasonable counterfactual
scenario of modifying the relevant CVD orders to exclude the portion of the total CVD margi n
attributable to the alleged input subsidy programmes. The United States has agreed that the
appropriate counterfactual analysis would entail modifying the relevant CVD rates by deducting the
portion of the total CVD rate attributable to the input subsidy programs.2
III. CHINA'S PROPOSAL TO CALCULATE NULLIFICATION OR IMPAIRMENT USING THE
TWO-STEP ARMINGTON MODEL IS REASONABLE AND CONSISTENT WITH THE
APPROACH ADOPTED BY PRIOR ARBITRATORS
A. Overview of China's Application of the Two-Step Armington Model
9. China has proposed that the Arbitrator utilize a two -step Armington elasticities model
consistent with the approach implemented in two recent Article 22.6 proceedings: US – Washing
Machines (Korea) ("DS464") and US – Anti-Dumping Methodo logies (China) ("DS471"). The
Armington elasticities model estimates the impact of the WTO-inconsistent countervailing duties on
China's 2017 exports of the subject products to the United States.
10. At step one, China applied the Armington model to the U. S. market as it existed prior to the
imposition of the WTO-inconsistent CVD orders in order to simulate, for each CVD order, the impact
of imposing the WTO-inconsistent countervailing duties on the sales of Chinese exporters, exporters
from the rest of the world ("ROW"), and U.S. producers. These counterfactual sales were then used
to compute counterfactual market shares for each supplier.
11. At step two, China multiplied the counterfactual market shares simulated under the first step
by the actual 2017 to tal value of the U.S. market, i.e. the total value of the U.S. market in the
remedy year, in order to obtain a counterfactual 2017 value of U.S. imports from Chinese exporters,
ROW exporters, and sales by U.S. producers. China then applied the Armington mo del to these
counterfactual 2017 sales in order to estimate, for each CVD order, the impact of changing the
countervailing duties from WTO-inconsistent rates to WTO-consistent rates. This second step yielded
new counterfactual estimates of the value of U.S. imports from China, ROW exporters, and sales by
U.S. producers.
12. For each CVD order, China then computed the amount of nullification and impairment suffered
by China by subtracting China's counterfactual export value with WTO-inconsistent duties (step one)
from China's simulated export value with WTO -consistent duties (step two). Adding the amount of
nullification and impairment for each of the underlying cases yielded China's estimate of the total
amount of nullification and impairment suffered by China.3
13. In its submissions, China explained in detail why a two-step approach to the Armington model
is appropriate for the purposes of calculating nullification and impairment caused by the United
States' WTO -inconsistent CVD duties in this proceeding. A simpler one -step approach is not
appropriate because implicit in that approach is the assumption that the change from the WTO -
inconsistent countervailing duty to the WTO -consistent countervailing duty occurs quickly, i.e. it is
essentially a short -run a nalysis. That assumption does not hold if the WTO -inconsistent
countervailing duties are in place for many years.4
14. In each of the underlying cases at issue, the WTO -inconsistent countervailing duties were
imposed between 2008 and 2012. The remedy year is 2017. Thus, for each of the underlying cases,
a considerable period of time has passed since the countervailing duty was originally imposed. It
would therefore be inappropriate to assume either that the market share of the three types of
suppliers in the remedy year is a reasonable benchmark from which to evaluate the trade impact of
the long-ago imposed countervailing duties or that the size of the overall U.S. market in the year
prior to the imposition of WTO -inconsistent duties is a reason able proxy for the size of the market

2 See China's written submission, Section II.
3 See China's methodology paper, Section III.B.
4 See, e.g. China's methodology paper, Section III.

BCI omitted, as indicated [[***]]

in the remedy year. Accordingly, step one of the two-step approach is necessary to account for the
small market shares resulting from the trade-depressing effect of the WTO-inconsistent duties.
15. China incorporated t wo advancements to the two -step Armington methodology applied by
prior arbitrators. First, China allowed the elasticity of substitution to vary by source. China provided
strong factual and academic support for the proposition that the Arbitrator use a nest ed approach,
rather than the single elasticity approach used in DS464 and DS471, including the use of the
standard "Rule of Two", i.e. setting the elasticity across different import sources at twice the
elasticity between domestic and import varieties.5
16. China pointed out that this "nested" approach to Armington modelling has been used by the
WTO in its Global Trade model and the U.S. International Trade Commission ("USITC"). The practice
of using the nested approach should carry over to partial -equilibrium analyses of disaggregated
products where significant trade diversion to other importers can be expected. Failing to account for
the higher rates of substitution across import varieties would lead to an understatement of
nullification or impairment because the model would understate the diversion of trade to non-subject
sources induced by the WTO-inconsistent duties.6
17. Second, China discovered a critical programming error in the DS471 computer code. China
explained the nature of this error and prov ided corrected computer code to the Arbitrator.
Specifically, the computer code includes a new variable named "NI_fixed", which calculates the
amount of nullification or impairment net of duty payments, which is the correct approach and
consistent with tha t reported in DS464. 7 The parties agree that the Arbitrator should calculate
nullification and impairment net of duties because duties do not accrue to the producers of the
subject imports.8
18. China has also proposed that the Arbitrator implement the t wo-step approach using public,
verifiable data. Step one of the two-step Armington model requires three sets of data: (i) actual U.S.
market data (the sales of the domestic producers, Chinese exporters, and ROW exporters); (ii)
Armington elasticity model p arameters; and (iii) the WTO -inconsistent CVD rate imposed in each
case.
19. For eight of the underlying cases, the public version of the relevant USITC investigation report
contained all necessary market sales information. For three other cases, some of t he necessary
market information was not provided in the relevant final USITC report. Accordingly, for these three
cases, China used the HS10 tariff codes listed in the relevant USITC reports to obtain the value of
trade for Chinese exporters and ROW export ers from USITC Dataweb. For domestic sales value,
China relied on public data, including 10K reports and North American Industry Classification System
("NAICS") industry data.9
20. With respect to Armington elasticity parameters, three elasticities are reported in the relevant
final USITC reports: demand elasticity, domestic supply elasticity, and the elasticity of substitution
between domestic and imported products. Import supply elasticities, however, are not provided in
those reports. China therefore fo llowed the approach adopted by the arbitrator in DS471 and
assumed a value of 10 for each of these elasticities. For the elasticity of substitution between the
imported varieties, China proposed a separate elasticity: the standard "Rule of Two".10
21. China submitted to the Arbitrator the relevant WTO -inconsistent countervailing duty rates at
the time of the expiry of the reasonable period of time ("RPT").11
22. Step two of the two -step Armington model requires two additional sets of data: (i) the total
value of the U.S. market in 2017 and (ii) the WTO-consistent CVD rate for each case. For five cases,
China used information from either a USITC sunset review, a USITC report from a subsequent trade
dispute involving the same product scope, or a publicly available 10K report. For cases where those

5 See China's methodology paper, Section III.C.5.
6 See China's written submission, Section V.A.
7 See China's methodology paper, para. 78.
8 See China's oral statement, para. 9.
9 See China's methodology paper, Section IV.B.
10 See China's methodology paper, para. 96.
11 See China's methodology paper, Section IV.B.3.

BCI omitted, as indicated [[***]]

subsequent reports were published prior to 2017, China scaled data from the latest year with
reported market data to 2017 values using the GDP deflator. For the other cases, all relevant market
information was redacted in all subsequent USITC reports. China therefore estimated 2017 market
size by scaling the size of the market prior to the WTO-inconsistent duties being imposed using the
GDP deflator.12
23. China submitted to the Arbitrator the WTO-consistent countervailing duty rates calculated by
deducting the inputs for LTAR subsidy rate from the total CVD rate for each of the CVD orders at
issue.13 China has acknowledged that the USDOC's methodology for calculating the All -Others rate
varies depending on the rates calculated for the individually-investigated respondents and accepted
the U.S. proposal that the All-Others WTO-consistent rate for Solar Panels and Aluminum Extrusions
be calculated using the same methodology applied by the USDOC in the underlying proceeding, i.e.
using a weighted average of the rates assigned to the two mandatory respondents in each case,
rather than a simple average. China's estimates also reflect certain other revisions proposed by the
United States to the relevant CVD rates.14
24. Thus, China has reasonably proposed that the Arbitrator implement the two -step Armington
methodology developed and applied by prior arbitrators incorporating the "Rule of Two", correcting
the error in the DS471 computer code, and using public, verifiable data.
B. The Arbitrator Should Reject the U.S. Proposed "Adjustments" to the Two -
Step Armington model
25. The United States has purportedly agreed with China that the appropriate methodology for
estimating the level of nullification or i mpairment in this dispute is a two -step approach to the
Armington model. In reality, however, the United States seeks to revert to a one-step approach.
26. The U.S. objective to revert to a one -step approach is apparent from its two proposed
"adjustments" to the two-step model, both of which are designed to depress China's market shares
in the remedy year and reduce the level of nullification and impairment. The first proposed
adjustment is to incorporate other trade remedy measures into the two-step approach, in this case,
the effects of parallel antidumping ("AD") duties on the relevant Chinese products. The United States
refers to this approach as the "CVD+AD model".15
27. Parallel duties were also present in DS464 and DS471. In both of those disputes, the arbitrator
correctly computed nullification and impairment by isolating the impact of the specific WTO -
inconsistent measures at issue in each dispute. In fact, a major reason for the two-step Armington
method implemented in DS464 and DS471 was that it allowed the arbitrator in those cases to
separately identify and evaluate the effect of the specific measures under scrutiny. Within the two-
step Armington framework, there is no basis for the U.S. proposal to incorporate parallel AD duties
into the analysis.16
28. The second proposed adjustment is to account for "other factors" that allegedly influenced the
evolution of market shares. The United States proposes, in particular, to implement a so -called
"supply shock", based on supposed changes that contributed to China's decline in imports separately
from the WTO -inconsistent CVD duties. The supply shock is a transparent attempt by the United
States to ignore the objective of the two -step approach and use the duty -distorted trade levels of
the remedy year as the basis for the nullification and impairment calculation. The issue of distortion
of trade levels in the remedy year is the primary reason why the arbitrator in DS464 developed the
two-step approach. Thus, there is again no basis for the U.S. proposal to incorporate "supply shocks"
within the two-step Armington framework.17
1. The Arbitrator Should Reject the U.S. Proposal to "Adjust" the Two -Step
Armington Model to Account for Parallel Anti-Dumping Duties

12 See China's methodology paper, Section IV.C.1.
13 See China's methodology paper, Section IV.C.2.
14 See, e.g. China's written submission, para. 25.
16 See China's written submission, para. 4.
17 See China's written submission, paras. 4 and 5.

BCI omitted, as indicated [[***]]

29. Adjusting the two-step Armington model to incorporate the parallel AD duties would prevent
the model from accurately estimating the effect of the WTO -inconsistent CVD duties and fail to
capture the full amount of nullification and impairment caused by those duties.
30. The U.S. approach of adjusting for parallel AD duties necessarily distorts the base upon which
nullification and impairment is calculated and therefore cannot be used to calculate the level of
suspension "equivalent" to the amount of nullification and impairment caused by th e measures at
issue as required by Article 22.4 of the DSU. The U.S. approach ignores the non -linear nature of
contemporaneous duties. China demonstrated that this non -linearity means that imposing other
duties inevitably reduces the impact of the incremen tal measure at issue. Consequently, the U.S.
approach of first adjusting for any contemporaneous duties necessarily underestimates the amount
of nullification and impairment attributable to the measures at issue.18
31. This is true regardless of when the AD duties were imposed or their duration. Alleged dumping
in the year -prior, the remedy year, or the period in between is not relevant to the analysis of
nullification and impairment caused by the WTO-inconsistent CVD measures. In all cases, the effect
of the WTO-inconsistent CVD duties would be distorted by adjusting for the AD duties. The relatively
contemporaneous nature of the specific AD duties that the United States proposes to incorporate in
the context of this proceeding does not make it appropriate to consider those duties as part of the
counterfactual analysis. Trade actions other than the measures at issue, regardless of their nature,
timing, duration, or WTO -consistency or inconsistency, do not form part of the counterfactual
analysis under Article 22.6 of the DSU.19
32. The United States argues that because the sum of the AD and CVD nullification and impairment
calculated separately does not equal the level of nullification and impairment when the effects of the
two duties are modelled together, the "unadjusted" model must be attributing more than the full
amount of nullification and impairment to the WTO -inconsistent CVD duties.20 The United States is
mistaken. China has shown that the U.S. assertion fails to take into account the non -linear effects
of duties (or other measures) that affect trade.21
33. The United States would have the Arbitrator arbitrarily first reduce China's market size through
the effects of the duty not at issue in the arbitration and then calculate the level of nullification and
impairment on the basis of that already -reduced market size. The level of nullification and
impairment resulting from this approach will inevitably understate the true level of nullification and
impairment associated with the measure that is the subject of the Article 22.6 inquiry. The proposed
U.S. approach therefore cannot determine the "equivalent" level of nullification and impairment in a
manner consistent with Article 22.6 of the DSU.22
2. The Arbitrator Should Reject the U.S. Proposal to "Adjust" the Two -Step
Armington Model for "Supply Shocks"
34. Consistent with the arguments it made in DS464 and DS471, the United States in this dispute
argues that information on remedy-year shares is preferred to year-prior shares. The U.S. argument
and proposed procedure in this dispute is considerably less transparent, but upon close review, it is
unmistakeable that the U.S. proposed "supply shift" procedure is designed to reduce the
complainant's market share incorporated into the nullification and impairment calculation.
35. First, the United States proposes a decomposition of ROW suppliers into a group of rising -
supplier ("RS") countries and other suppliers. Second, the United States uses the model to find a
set of "phantom subsidies" on U.S. imports from these RS countries such that a remedy-year target
is met. According to some unexplained theory of how market competition works, the phantom
subsidies are set to match the ratio of RS to other third-country shares in the remedy year. Crucially,
no evidence is given that the fast growth in market share was not a result of the trade -diverting
effect of the WTO-inconsistent duties imposed on China.

18 See China's response to Arbitrator question No. 104.
19 See, e.g. China's response to Arbitrator question No. 72.
20 See China's oral statement, para. 28.
21 See China's response to Arbitrator question No. 104.
22 See China's response to Arbitrator question No. 104.

BCI omitted, as indicated [[***]]

36. With these phantom subsidies in place, the market shares used to calibrate the model at the
remedy-year benchmark are substantially consistent with the observed shares in the remedy year.
The only reason the U.S. procedure does not fully match the remedy year observation is because
the set of phantom subsidies is limited to the RS countries. The United States then purports to run
a two -step model similar to that proposed by China. Because the United States assumes large
phantom subsidies (whose size is dependent on trade values in the remedy year) the U.S.
implementation effectively ties China's market share to the trade-distorted value in the remedy year.
By using these "adjusted" step one counterfactual market shares to calibrate the model at step two,
the United States effectively eliminates the first step of the two-step approach.23
37. China recognizes that adopting the U.S. approach of "adjusting" for other factors would spell
the end of the two-step Armington model. With each "adjustment", the model would edge closer to
the observed remedy-year market shares that the two -step model explicitly rejects. In contrast to
the United States, China has therefore refrained from proposing any such adjustments. Rather,
China has requested that the Arbitrator apply the two -step approach in a manner that permits the
isolation of the effect of the WTO-inconsistent CVD duties and is consistent with the approach
adopted by prior arbitrators, i.e. without any adjustments for the parallel AD duties or so -called
"supply shocks".24
IV. THE UNITED STATES HAS FAILED TO REBUT CHINA'S PROPOSED APPLICATION OF
THE "RULE OF TWO"
38. The U.S. criticism of China's proposed application of the "Rule of Two" is without merit. The
United States ignores the fact that applying the "Rule of Two" is, in fact, the norm for general
equilibrium analyses of trade restrictions.25
39. The primary basis for the U.S. criticism of the "Rule of Two" is based on its misinterpretation
of the results in the Feenstra et al. paper. This paper was submitted by China with its methodology
paper. Feenstra et al. estimate macro-elasticities for broad product categories (e.g. Metal Products).
Their analysis focuses on the relationship between the product -specific micro-elasticities and the
broader product macro-elasticities.
40. Feenstra et al. provide considerable evidence that the micro -elasticities exceed the macro -
elasticity and that this should be accommodated through the application of the standard "Rule of
Two". Exemplifying the evidence in favour of higher micro-elasticities, Feenstra et al. "find evidence
that the former elasticity, w hich we call the micro -Armington elasticity, is larger than the latter
elasticity, the macro-Armington elasticity".26 Feenstra et al.'s finding is inconsistent with the extreme
assumption adopted by the United States; that is, its assumption that the micr o- and macro -
elasticities are the same.
41. Contrary to the U.S. assertion that the Feenstra et al. study does not cover any of the products
at issue in this proceeding, Feenstra et al. do estimate a micro-elasticity of substitution for carbon-
steel OCTG (NAICS code 3312100130). This directly corresponds to the carbon-steel OCTG product
at issue in this case. Adopting Feenstra et al.'s point estimates of the micro -elasticity would result
in a significant increase in nullification and impairment under the two-step Armington model. China
has reasonably proposed only that the Arbitrator take into account this evidence in support of the
application of the conservative "Rule of Two".27
42. The United States argues that the cited USITC reports for the specific products at issue support
the restriction of equivalent micro - and macro-elasticities. In fact, they do not. The elasticities of
substitution reported in these reports specifically apply to the import -domestic response—not the
"micro" import-import response. The United States further appeals to the USITC's discussions of
"comparability" and "interchangeability". In the context of economic analysis, comparability and
interchangeability among sources does not directly indicate high substitution elasticities.

23 See China's written submission, Section IV.B.
24 See China's oral statement, para. 36; China's response to Arbitrator question No. 105.
25 See China's written submission, Section V.A.
26 China's response to Arbitrator question No. 70, para. 3.
27 See China's response to Arbitrator question No. 70, para. 2.

BCI omitted, as indicated [[***]]

Furthermore, comparability and interchangeability in no way indicate similar micro -elasticities and
macro-elasticities.28
43. The United States itself has provided direct evidence that the macro - and micro-elasticities
must be different. For Aluminum Extrusions, OCTG, and Solar Panels, the United States has provided
evidence that a set of other countries were able to significantly increase import penetration into the
U.S. market – the so-called "rising suppliers". This pattern of third-country responses is explained
by the fact that the elasticity among import varieties is greater than the elasticity between imports
and domestic varieties.29
44. To provide further direct evidence that the elasticity among imports is higher than the
elasticity between imports and domestic varieties, such that a nested structure is appropriate, China
reported the percentage point changes in China's market shares and the changes in China's share
of U.S. imports across each product. China demonstrated that the data submitted by the United
States shows a substantial diversion away from Chinese imports and toward other import sources.
China further demonstrated that the United States' own data shows a systematic bias in the increase
in ROW shares over U.S. shares at the same time that China's market shares plummeted.30
V. THE ARBITRATOR SHOULD REJECT THE U.S. PROPOSAL TO USE INCORRECT AND
UNRELIABLE DATA INPUTS
A. The Arbitrator Should Reject the U.S. Proposal to Use CVD Rates
Implemented After the Expiry of the Reasonable Period of Time
45. The United States has proposed incorrectly that in five cases, the Arbitrator should use the
CVD rates promulgated pursuant to Section 129 of the Uruguay Round Agreements Act ("Section
129 rates"), despite the fact that these rates were implemented after expiry of the RPT.
46. It is well established that compliance measures implemented after the expiry of the RPT do
not form part of the counterfactual analysis under Article 22.6 of the DSU. In US – Tuna II (Mexico)
(Article 22.6 – US), the arbitrator rejected the U.S. argument that it should consider the relevant
measure to be the latest version of the measure rather than the version that was in force at the
time the RPT expired. Contrary to the U.S. contention, the decisions of other arbitrators are
consistent with the conclusion reached by the arbitrator in US – Tuna II (Mexico) (Article 22.6 –
US).31
47. At the time of the expiry of the RPT in this dispute, the applicable CVD rates for Pressure Pipe,
Line Pipe , OCTG, Solar Panels, and Seamless Pipe were not the revised Section 129 rates. The
Section 129 rates for these five cases came into effect after the expiry of the RPT on 1 April 2016.
The USDOC did not publish the Section 129 determinations in these cases until 9 June 20 16 and
when it did, it explicitly stated that the effective date of the determinations was 26 May 2016, almost
two months after the expiry of the RPT. The USDOC revised the total CVD rates in only three of
these five cases: Line Pipe, OCTG, and Seamless Pipe.32
48. For this reason, China has submitted that the Arbitrator should not use the revised net subsidy
rates from the Section 129 determinations in Line Pipe, OCTG, and Seamless Pipe. Similarly, the
Arbitrator should not use the unrevised ne t subsidy rates from the Section 129 determinations in
Pressure Pipe and Solar Panels. China recognizes that in the context of this proceeding, whether the
Arbitrator uses the Section 129 net subsidy rates or the final determination rates will have only a
marginal effect on the amount of concessions that China is permitted to suspend. But there is more
at stake here than the ultimate retaliation amount. The requirement to bring measures into
compliance by the expiry of the RPT is a legal obligation. The Arbitrator should not permit the United
States as the respondent in this case to benefit from its failure to comply with that obligation.33

28 See China's response to Arbitrator question No. 70; China's comment on the U.S. response to
Arbitrator question No. 70.
29 See China's response to Arbitrator question No. 1.
30 China's comment on the U.S. response to Arbitrator question No. 101.
31 See China's comment on the U.S. response to Arbitrator question No. 113.
32 See China's written submission, Section III.A.
33 See China's oral statement, para. 42.

BCI omitted, as indicated [[***]]

B. The Arbitrator Should Reject the U.S. Proposal to Rely on the Incorrect
Year-Prior
49. In addition to proposing incorrect rates for purposes of determining the counterfactual WTO-
consistent CVD rates, the United States has relied on the incorrect year -prior for evaluating
nullification and impairment in six cases. By definition, any year prior to the year in which duti es
were imposed cannot include months where duties were already in place.
50. The preliminary determinations in these particular investigations were not at issue in earlier
stages of this dispute in respect of China's claims concerning alleged inputs for L TAR subsidies.
However, it does not follow that the year -prior may include WTO -inconsistent preliminary duties
imposed pursuant to those determinations. The preliminary duties in each of these cases were
imposed as part of the same investigation that resul ted in the imposition of final duties and both
sets of duties suffer from the same legal flaws that the DSB identified in respect of the final
determinations, i.e. the USDOC's findings in respect of the alleged "inputs for LTAR" subsidies.
51. In order to accurately estimate nullification and impairment, the effects of the WTO -
inconsistent duties in the reference year must be compared to a prior year in which trade flows were
not distorted by those duties. Using a year-prior when the preliminary duties were in place for any
period of time cannot satisfy that basic requirement. It is irrelevant that the duty liability is not final.
From the time that an importer pays a preliminary duty, it is at risk of losing the full amount of that
duty. This fact necessarily affects the economic behaviour of exporters.34
52. China has shown that distortive effects occur as a result of the preliminary liability imposed
on importers. Specifically, China has demonstrated that imports dropped significantly following the
imposition of the preliminary duties and submitted economic papers confirming the distortive effects
of preliminary duties. In order to ensure that these effects do not compromise the accuracy of the
two-step approach, the year-prior must be a year in which neither preliminary nor final duties were
in place.35
C. The Arbitrator Should Reject the Incorrect and Unreliable U.S. Proposed
Year-Prior and Remedy-Year Data
53. Furthermore, the United States has adopted an inconsistent, non -transparent, and
unreasonable approach to selecting the data for use in the two -step Armington model. Most of the
U.S. proposed changes to the data submitted by China are transparent attempts to distort the
market share held by Chinese exporters. A number of the U.S. proposals directl y contradict the
factual record developed by the USITC and ignore the timing of when the WTO -inconsistent duties
were levied on China. Critically, the United States mistakenly insists that its confidential exporter -
specific data is the only basis to compute nullification and impairment.
54. As China has stressed, the first place the Arbitrator should look for data in this case is the
public reports of the USITC. Only if such data does not exist would the Arbitrator need to turn to
verifiable outside sources.36
55. The U.S. data is not the best data available to the Arbitrator. The United States has submitted
USCBP exporter-specific data for imports from China for the year -prior in four cases. In three of
these cases, the parties disagree on the year-prior.37 For these three cases, the U.S. estimates are
inevitably under-inclusive because they do not account for exporters that exited the market following
the imposition of the preliminary duties, as the USCBP does not track subject imports until the
preliminary duties are imposed.
56. The United States has emphasized that the arbitrator in DS471 relied on exporter -specific
USCBP data. This fact does not support use of that data in the present arbitration. The WTO violations

34 See China's response to Arbitrator question No. 31.
35 See China's response to Arbitrator question No. 107.
36 See, e.g. China's response to Arbitrator question No. 57.
37 See China's response to Arbitrator question No. 73, para. 21 (referring to OCTG, Steel Cylinders, and
Line Pipe).

BCI omitted, as indicated [[***]]

at issue in DS471 related to an exporter-specific duty adjustment. In contrast to DS471, the WTO
violation at issue in this proceeding does not vary depending on the exporter.38
57. In addition to the year-prior issue, there are other serious problems with the exporter-specific
USCBP data. In the case of Solar Panels, for example, the data submitted by the United States is
demonstrably inaccurate. China has shown that the USCBP and U.S. Census figures submitted by
the United States contain a significant amount of out-of-scope merchandise. In the case of OCTG,
the United States proposes measuring imports by customs value. In the case of Line Pipe, the U.S.
data again is measured using customs value, despite the fact that the USITC deemed landed duty
value paid the correct metric to measure imports.39
58. The confidential USCBP data that the United States prefers to use for subject imports does
not exist for imports from nonsubject suppliers. The public HTS trade data therefore must be the
basis for calculating the size of imports from non-subject suppliers in the remedy year.40
59. China's approach to scaling the data in the remedy -year is reasonable. The GDP deflator
approach used by China assumes that, on average, a particular product sector grows at the same
rate as the overall economy. This assumption does not imply that only prices grow or that only
quantities grow. Rather, it assumes that the value of the market (p times q) grows at the same rate
as the overall economy. If prices grow faster than average, quantities will adjust. This is consistent
with the law of demand.41
60. China would also reiterate that, in most cases, the number of years for which China applies
the GDP deflator is small, which means that China's approach is unlikely to significantly distort the
estimate of the total size of the market in the remedy year.42
VI. THE UNITED STATES HAS FAILED TO SATISFY ITS BURDEN OF PROOF
61. As China has explained, in proceedings under Article 22.6 of the DSU, the burden of proof is
initially allocated to the respondent. As the respondent, the United States bears the burden of
establishing a prima facie case that the level of suspension proposed by China is not "equivalent" to
the level of nullification and impairment caused by the WTO-inconsistent CVD measures at issue.43
62. The United States is not relieved of this initial burden by the fact that China submitted a
different nullification and impairment estimate in its methodology paper than in its request for
authorization to suspend concessions submitted to the DSB. China's decision to revise its nullification
and impairment estimate reflects its reasonable choice to adopt the same methodology as the
arbitrators in DS464 and DS471.44
63. China submits that the United States has not met its initial burden of proof to establish the
WTO-inconsistency of the level of suspension proposed by China. The United States has not
established a prima facie case that the two-step Armington methodology adopted by prior arbitrators
should be adjusted to account for AD dutie s, so-called "supply shocks", or any other tariff or non -
tariff trade action. Nor has the United States established a prima facie case that the extreme
assumption of the "Rule of One" should be applied to any of the cases at issue rather than the
standard "Rule of Two", or that any of the verifiable public data submitted by China is inaccurate.45
64. China has submitted evidence and argument rebutting the U.S. assertions that its proposed
adjustments to the two-step Armington methodology are necessary to correctly calibrate the model
and revealing the critical flaws in the United States' year -prior and remedy -year data. Therefore,
even assuming, arguendo, that the United States had met its initial burden, China has satisfied its
burden of rebutting the U.S. prima facie case.

38 See China's response to Arbitrator question No. 73, para. 23.
39 See China's response to Arbitrator question No. 73, para. 22.
40 See, e.g. China's response to Arbitrator question No. 24.
41 See China's response to Arbitrator question No. 80.
42 See, e.g. China's response to Arbitrator question No. 26.
43 See China's oral statement, para. 11.
44 See China's response to Arbitrator question No. 98.
45 See, e.g. China's response to Arbitrator question No. 99.

BCI omitted, as indicated [[***]]

VII. CONCLUSION
65. China has utilized a two -step approach to the Armington elasticities model similar to that
implemented in DS464 and DS471 in order to estimate the amount of nullification or impairment
caused by the U.S. failure to comply with its WTO obligations. China selected the two-step approach
to the Armington model in order to accurately estimate the impact of the WTO -inconsistent
countervailing duties at issue in this dispute on China's 2017 exports of the subject products to the
United States. The U.S. proposed approach to calculating nullification and impairment in this dispute
is not reasonable or verifiable. For the reasons set forth in its submissions, China respectfully
requests that the Arbitrator grant China's request to suspend the application of concessions or other
obligations under the covered agreements in the amount of 788.75 million.

BCI omitted, as indicated [[***]]

ANNEX C
DATA INPUTS AND CALCULATIONS OF THE ARBITRATOR
Contents Page
Annex C-1 Data inputs for US market values in the years-prior 32
Annex C-2 Data inputs for elasticities 34
Annex C-3 Data inputs for the WTO-inconsistent and the WTO-consistent CVD rates 36
Annex C-4 Data inputs for US market values in 2017 40
Annex C-5 Primary NAICS codes for Pressure Pipe, Kitchen Shelving, Seamless Pipe, and
Print Graphics
43
Annex C-6 Scaling index for domestic varieties of Pressure Pipe, Kitchen Shelving,
Seamless Pipe, and Print Graphics
49
Annex C-7 Scope adjustments for selected varieties of Kitchen Shelving and Print
Graphics
51
Annex C-8 Remedy year figures for selected varieties of Pressure Pipe, Kitchen Shelving,
Seamless Pipe, and Print Graphics
54
Annex C-9 GAMS code of the two-step Armington model 57
Annex C-10 Data inputs used to implement the Armington model under the two steps 61
Annex C-11 Results of implementing the first step of the two-step Armington model 63

BCI omitted, as indicated [[***]]

ANNEX C-1
DATA INPUTS FOR US MARKET VALUES IN THE YEARS-PRIOR1
Product Year-prior
US
shipments
(1,000 USD)*
US imports
from China
(1,000 USD)*
US imports
from the rest
of the world
(1,000 USD)*
Data sources
Pressure Pipe 2007 201,460 154,833 158,535 Annualized value of US shipments based on data from
USITC Publication 4064 (Exhibit CHN-4). Value of import
varieties from USITC Publication 4064 (Exhibit CHN-4).
Line Pipe 2007 757,701 153,881 315,411 Data for all three varieties from USITC Publication 4055
(Exhibit CHN-11).
Kitchen Shelving 2008 84,256 150,477 276,171 Data on value of US shipments provided by China based on
US Census estimates for the primary 6-digit NAICS code
adjusted to correct for out-of-scope products (Exhibit CHN-
53). Values of import varieties based on midpoint estimates
between the figures submitted by China (Exhibit CHN-53)
and the figures submitted by the United States (Exhibit
USA-61).
OCTG 2008 6,148,818 2,805,206 2,572,888 Data for all three varieties from USITC Publication 4124
(Exhibit CHN-23).
Wire Strand 2008 333,721 194,276 21,771 Data for all three varieties from USITC Publication 4162
(Exhibit CHN-28).
Seamless Pipe 2009 199,357 135,240 348,609 Data for all three varieties from USITC Publications 4190
(Exhibit CHN-32) and 4595 (Exhibit USA-16).
Print Graphics 2009 1,023,688 297,527 420,989 Data for all three varieties from USITC Publication 4192
(Exhibit CHN-50).
Aluminum Extrusions 2009 2,888,945 547,968 359,382 Data for all three varieties from USITC Publications 4229
(Exhibit CHN-36) and 4677 (Exhibit CHN-37).
Steel Cylinders 2010 [[***]] 23,009 2,821 Value of US shipments based on data from Norris Cylinders
(Exhibit USA-116 (BCI)) provided by the United States.

1 For the determination of the year-prior for each product and the relevant data, see section 3.4.1 of the Decision of the Arbitrator.
* The values in this table have been rounded to 1,000 USD for display purposes only. The actual values were used when implementing the Armington model under the two
steps to estimate the level of nullification or impairment.

BCI omitted, as indicated [[***]]

Product Year-prior
US
shipments
(1,000 USD)*
US imports
from China
(1,000 USD)*
US imports
from the rest
of the world
(1,000 USD)*
Data sources
Value of import varieties based on USITC's online DataWeb
system provided by China (Exhibit CHN-74).
Solar Panels 2011 804,853 1,905,220 824,588 Value of US shipments from USITC Publication 4519 (Exhibit
USA-21). Value of import varieties from USITC Publication
4360 (Exhibit CHN-45).

BCI omitted, as indicated [[***]]

ANNEX C-2
DATA INPUTS FOR ELASTICITIES1
Product Total demand
elasticity
Domestic
supply
elasticity
Import supply
elasticity
China
Import supply
elasticity
RoW
Elasticity of
substitution2 Data sources
Pressure Pipe -0.500 7.500 10 10 4.500 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4064
(Exhibit CHN-4). Import supply elasticities
provided by the parties.
Line Pipe -0.375 4.000 10 10 3.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4055
(Exhibit CHN-11). Import supply elasticities
provided by the parties.
Kitchen Shelving -0.300 7.500 10 10 5.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4098
(Exhibit CHN-19). Import supply elasticities
provided by the parties.
OCTG -0.875 5.000 10 10 4.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 5090
(Exhibit USA-148). Import supply elasticities
provided by the parties.
Wire Strand -0.750 4.000 10 10 3.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4162
(Exhibit CHN-28). Import supply elasticities
provided by the parties.
Seamless Pipe -0.750 7.500 10 10 3.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4190
(Exhibit CHN-32). Import supply elasticities
provided by the parties.
Print Graphics -1.000 4.000 10 10 3.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4656

1 Exhibits CHN-120 and USA-154. See section 3.4.3 of the Decision of the Arbitrator.
2 The Elasticity if Substitution in this column refers to the macroelasticity (i.e. the elasticity between the domestic and imported varieties). For the Elasticity of Substitution
among imported varieties, we use a value of the square root of two. See section 3.3.1 of the Decision.

BCI omitted, as indicated [[***]]

Product Total demand
elasticity
Domestic
supply
elasticity
Import supply
elasticity
China
Import supply
elasticity
RoW
Elasticity of
substitution2 Data sources
(Exhibit CHN-51). Import supply elasticities
provided by the parties.
Aluminum
Extrusions
-0.375 4.000 10 10 5.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4677
(Exhibit CHN-37). Import supply elasticities
provided by the parties.
Steel Cylinders -0.500 7.500 10 10 4.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4328
(Exhibit CHN-41). Import supply elasticities
provided by the parties.
Solar Panels -0.875 5.500 10 10 4.000 Midpoint values for the demand elasticity,
domestic supply elasticity and elasticity of
substitution from USITC Publication 4874
(Exhibit CHN-46). Import supply elasticities
provided by the parties.

BCI omitted, as indicated [[***]]

ANNEX C-3
DATA INPUTS FOR THE WTO-INCONSISTENT CVD RATES AND THE WTO-CONSISTENT
CVD RATES1
Product Respondents in the relevant CVD investigations WTO-inconsistent
CVD rates
WTO-consistent
CVD rates Data sources
Pressure
Pipe
Froch Enterprise Co. Ltd. 299.16 298.8 WTO-inconsistent CVD rates based on records of
CVD investigation on Circular Welded Austenitic
Stainless Pressure Pipe from the People’s Republic
of China (Exhibits CHN-1 to 3) and on
Implementation of Determinations Pursuant to
Section 129 of the Uruguay Round Agreements Act,
81 Fed. Reg. 37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
Winner Companies: Winner Stainless Tube Co., Ltd.,
Winner Steel Products (Guangzhou), and Winner
Machinery Enterprise Company Ltd.
1.10 0.74
All Others 1.10 0.74
Line Pipe Huludao Companies: Huludao Seven Star Group,
Huludao Steel Pipe Industrial Co. Ltd., and Huludao
Bohai Oil Pipe Industrial Co. Ltd.
32.65 1.37 WTO-inconsistent CVD rates based on
Implementation of Determinations Pursuant to
Section 129 of the Uruguay Round Agreements Act,
81 Fed. Reg. 37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided by the United
States (Exhibit USA-138).
Liaoning Northern Steel Pipe Co., Ltd. 40.05 6.35
All Others 36.35 3.86
Kitchen
Shelving
Asber Enterprises 170.82 159.06 WTO-inconsistent CVD rates based on records of
CVD Investigation on Certain Kitchen Appliance
Shelving and Rack from the People’s Republic of
China (Exhibits CHN-16 to 18) and on
Implementation of Determinations Pursuant to
Section 129 of the Uruguay Round Agreements Act,
81 Fed. Reg. 37180, June 9, 2016 (Exhibit USA-1).
Guandong Wire King 13.30 1.54
Non-cooperative companies: Changzhou Yixiong
Metal Products; Foshan Winleader Metal Products;
149.91 138.15

1 As explained in para. 3.25 of the Decision of the Arbitrator, these CVD rates correspond to the ones provided by the United States in Exhibit USA-138. For an explanation
of the calculation of the WTO-consistent CVD rates see para. 3.11 of the Decision of the Arbitrator.

BCI omitted, as indicated [[***]]

Product Respondents in the relevant CVD investigations WTO-inconsistent
CVD rates
WTO-consistent
CVD rates Data sources
Kingsun Enterprises Group; Yuyao Hanjun Metal;
Zhongshan Iwatani Co.
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
All Others 13.30 1.54
OCTG Jiangsu Changbao Steel Tube (Changbao) 12.46 0.78 WTO-inconsistent CVD rates based on
Implementation of Determinations Pursuant to
Section 129 of the Uruguay Round Agreements Act,
81 Fed. Reg. 37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided by the United
States (Exhibit USA-138).
Tianjin Pipe (TPCO) 7.71 3.23
Wuxi Seamless Oil Pipe (Wuxi) 14.95 3.98
Zhejiang Jianli (Jianli) 15.78 0.30
All Others 12.26 2.07
Wire
Strand
Fasten Group 9.42 2.83 WTO-inconsistent CVD rates based on records of
CVD Investigation on Pre-Stressed Concrete Steel
Wire Strand from the People’s Republic of China
(Exhibits CHN-25 to 27) and on Implementation of
Determinations Pursuant to Section 129 of the
Uruguay Round Agreements Act, 81 Fed. Reg.
37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
Xinhua Metal Products 45.85 30.54
All Others 27.64 16.69
Seamless
Pipe
Hengyang Steel, Hengyang Valin Steel, Hengyang
Valin MPM, Xigang Seamless Steel (Hengyang)
49.56 47.05 WTO-inconsistent CVD rates based on
Implementation of Determinations Pursuant to
Section 129 of the Uruguay Round Agreements Act,
81 Fed. Reg. 37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided by the United
States (Exhibit USA-138).
Tianjin Pipe (TPCO) 8.24 3.47
All Others 28.90 25.26

BCI omitted, as indicated [[***]]

Product Respondents in the relevant CVD investigations WTO-inconsistent
CVD rates
WTO-consistent
CVD rates Data sources
Print
Graphics
Gold Companies: Gold East Paper (Jiangsu) Co., Ltd,
Gold Huasheng Paper Co., Ltd., Gold East Trading
(Hong Kong) Company Ltd., Ningbo Zhonghua Paper
Co., Ltd., and Ningbo Asia Pulp & Paper Co., Ltd.
19.46 18.66 WTO-inconsistent CVD rates based on records of
CVD Investigation on Certain Coated Paper
Suitable for High-Quality Print Graphics from the
People’s Republic of China (Exhibits CHN-47 to 49)
and on Implementation of Determinations Pursuant
to Section 129 of the Uruguay Round Agreements
Act, 81 Fed. Reg. 37180, June 9, 2016 (Exhibit
USA-1).
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
Sun Paper Companies: Shandong Sun Paper Industry
Joint Stock Co., Ltd. and Yanzhou Tianzhang Paper
Industry Co., Ltd.
202.84 202.04
All Others 19.46 18.66
Aluminum
Extrusions
Dragonluxe Limited 374.15 371.6 WTO-inconsistent CVD rates based on records of
CVD Investigation on Aluminum Extrusions from
the People’s Republic of China (Exhibits CHN-33 to
35 and USA-3 and 4) and on Implementation of
Determinations Pursuant to Section 129 of the
Uruguay Round Agreements Act, 81 Fed. Reg.
37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
Miland Luck Limited 374.15 371.6
Liaoyang Zhongwang Group 374.15 371.6
Zhongya Companies 4.89 3.27
Guang Ya Companies 9.94 3.88
All Others 7.37 3.57
Steel
Cylinders
Tianhai Industry (BTIC) 15.81 1.47 WTO-inconsistent CVD rates based on records of
CVD Investigation on High Pressure Steel Cylinders
from the People’s Republic of China (Exhibits CHN-
38 to 40) and on Implementation of
Determinations Pursuant to Section 129 of the
Uruguay Round Agreements Act, 81 Fed. Reg.
37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
All Others 15.81 1.47

BCI omitted, as indicated [[***]]

Product Respondents in the relevant CVD investigations WTO-inconsistent
CVD rates
WTO-consistent
CVD rates Data sources
Solar
Panels
Trina Solar 15.97 14.83 WTO-inconsistent CVD rates based on records of
CVD Investigation on Crystalline Silicon
Photovoltaic Cells from the People’s Republic of
China (Exhibits CHN-42 to 44) and on
Implementation of Determinations Pursuant to
Section 129 of the Uruguay Round Agreements Act,
81 Fed. Reg. 37180, June 9, 2016 (Exhibit USA-1).
WTO-consistent CVD rates provided jointly by the
parties (Exhibits CHN-100 and USA-138).
Wuxi Suntech 14.78 14.49
All Others 15.24 14.62

BCI omitted, as indicated [[***]]

ANNEX C-4
DATA INPUTS FOR US MARKET VALUES IN 2017
Product
Total US
market
(1,000 USD)
US
shipments
(1,000 USD)
US imports
from China
(1,000 USD)
US imports
from the rest
of the world
(1,000 USD)
Data sources
Pressure Pipe [[***]] 89,091 [[***]] 156,207 Value of US shipments estimated by applying the growth
rate of the primary 6-digit NAICS industry associated with
Pressure Pipe (Annex C-5) between 2015 and 2017 (Annex
C-6) to the 2015 value of US shipments reported in USITC
publication 4644 (Exhibit CHN-5 and Annex C-8). Data on
the value of US imports from China provided by the United
States from USCBP data (Exhibit USA-66(BCI)). Data on the
value of US imports from the rest of the world provided by
the United States based on HTS aggregated data from the
US Census Bureau (Exhibit USA-65) scaled using average
ratio of subject to total HTSUS imports over years 2007-
2009 based on USITC Publication 4064 (Exhibit CHN-4).
Line Pipe [[***]] 542,483 [[***]] 605,500 Data on value of US shipments provided by the United
States estimated by multiplying the average US price by the
2017 total production quantity of welded line pipe multiplied
by the share of all line pipe less than 16 inches sales in total
line pipe sales, based on data from Preston Pipe (Exhibits
USA-60 and USA-136 (BCI)). Data on value of US imports
from China provided by the United States from USCBP data
(Exhibit USA-64 (BCI)). Data on value of US imports from
the rest of the world provided by the United States based on
HTSUS aggregated data from US Census (Exhibit USA-59).
Kitchen Shelving [[***]] 278,363 [[***]] 412,630 Value of US shipments estimated by applying the growth
rate of the primary 5-digit NAICS industry associated with
Kitchen Shelving (Annex C-5) between 2016 and 2017
(Annex C-6) to 2016 sales estimates for the primary 6-digit
NAICS industry associated with Kitchen Shelving (Annex C-
5) from the US Census' Annual Survey of Manufactures
2016 and correcting for out-of-scope products on the basis
of data from USITC Dataweb (see Exhibit CHN-43 and
Annexes C-7 and C-8). Data on the value of US imports
from China provided by the United States from USCBP data
(Exhibit USA-66(BCI)). Value of US imports from the rest of
the world estimated by applying an estimate of the share of

BCI omitted, as indicated [[***]]

Product
Total US
market
(1,000 USD)
US
shipments
(1,000 USD)
US imports
from China
(1,000 USD)
US imports
from the rest
of the world
(1,000 USD)
Data sources
subject products within HTSUS basket categories to
aggregate HTSUS imports under these categories. The
subject product share is estimated using the year-prior
midpoint estimate divided by total imports from the rest of
the world under the basket categories in the year-prior
(Annex C-7, Exhibits CHN-120 and USA-155(BCI)).
OCTG 6,356,019,000 3,248,604 3,107,415 Value of US shipments estimated by adjusting the figure on
Table I-11/III-11 in USITC Publication 5090 (Exhibit USA-
148) to include the incremental value of heat-treating
imported unfinished OCTG. Value of total US imports from
USITC Publication 5090 (Exhibit USA-148).
Wire Strand [[***]] 201,603 [[***]] 91,619 Data on value of US shipments provided by the United
States estimated by using data from the World Steel
Association on wire rod production, scaled by the average
2007-2009 wire rod to wire strand production ratio based on
data from the World Steel Association for wire rod and
USITC Publication 4569 (Exhibit USA-25) for wire strand,
and the trend in the unit price of imported wire strand
varieties taken from USITC DataWeb (Exhibit USA-61). Data
on the value of US imports from China provided by the
United States from USCBP data (Exhibit USA-66(BCI)). Data
on the value of US imports from the rest of the world
provided by the United States based on HTS aggregated
data from the US Census Bureau (Exhibit USA-65).
Seamless Pipe [[***]] 294,963 [[***]] 390,161 Value of US shipments estimated by applying the growth
rate of the primary 6-digit NAICS industry associated with
Seamless Pipe (Annex C-5) between 2009 and 2017 (see
Annex C-6) to the 2009 value of US shipments reported in
USITC publication 4190 (Exhibit CHN-32) and USITC
Publication 4595 (Exhibit USA-16 and Annex C-8). Data on
the value of US imports from China provided by the United
States from USCBP data (Exhibit USA-64 (BCI)). Data on
the value of US imports from the rest of the world provided
by the United States based on adjusted HTSUS aggregated
data from US Census Bureau (Exhibit USA-59) and USITC
Publication 4595 (Exhibit USA-16).

BCI omitted, as indicated [[***]]

Product
Total US
market
(1,000 USD)
US
shipments
(1,000 USD)
US imports
from China
(1,000 USD)
US imports
from the rest
of the world
(1,000 USD)
Data sources
Print Graphics [[***]] 1,100,263 [[***]] 961,770 Value of US shipments estimated by applying the growth
rate of the primary 6-digit NAICS industry associated with
Print Graphics (Annex C-5 ) between 2015 and 2017 (Annex
C-6) to the the 2015 value of US shipments reported in
USITC Publication 4656 (Exhibit CHN-51 and Annex C-8).
Data on the value of US imports from China provided by the
United States from USCBP data (Exhibit USA-64 (BCI)).
Value of US imports from the rest of the world estimated by
using adjusted HTSUS aggregated data from US Census
(Exhibit USA-59), scaled using the average ratio over the
years 2011-2015 of subject to total HTSUS imports based
on USITC Publication 4656 (Exhibit CHN-51 and Annexes C-
7 and C-8).
Aluminum Extrusions [[***]] 5,514,091 [[***]] 1,077,900 Value of US shipments estimated by applying annual real
growth rates provided by the United States (Exhibit USA-
149 (BCI)) and a PPI-based inflation index provided by
China (Exhibit CHN-103) to the 2015 value of US shipments
reported in USITC Publication 4677 (Exhibit CHN-37). Data
on the value of US imports from China provided by the
United States from USCBP data (Exhibit USA-62 (BCI)).
Data on the value of US imports from the rest of the world
provided by the United States based on HTSUS aggregated
data from US Census (Exhibit USA-63).
Steel Cylinders [[***]] [[***]] [[***]] 5,200 Value of US shipments based on data from Norris Cylinders
(Exhibit USA-116(BCI)) provided by the United States. Data
on the value of US imports from China provided by the
United States from USCBP data (Exhibit USA-64(BCI)). Data
on the value of US imports from the rest of the world
provided by the United States based on HTS aggregated
data from the US Census Bureau (Exhibit USA-59).
Solar Panels 4,055,230,000 259,535 441,381 3,354,314 Value of US shipments estimated by calculating a 6.4%
share of the total market relying on 2017 import varieties
figures from USITC Publication 4874 (Exhibit CHN-46).
Value of US imports from China from USITC Publication
4874 (Exhibit CHN-46). Value of US imports from the rest of
the world from USITC Publication 4874 (Exhibit CHN-46).

BCI omitted, as indicated [[***]]

ANNEX C-5
PRIMARY NAICS CODES FOR PRESSURE PIPE, KITCHEN SHELVING, SEAMLESS PIPE, AND PRINT GRAPHICS
Product HTSUS codes Corresponding
NAICS code
Primary NAICS
code Data sources
Pressure
Pipe
7306405005 331110
331110
HTSUS codes as reported in section "Tariff
treatment" (p. I-8) of U.S. International Trade
Commission, Welded Stainless Steel Pressure Pipe
from India, USITC Publication No. 4644, November
2016 (Exhibit CHN-5).
HTSUS-NAICS concordance by Justin R. Pierce and
Peter K. Schott (2012), A Concordance Between
Ten-Digit U.S. Harmonized System Codes and
SIC/NAICS Product Classes and Industries, Journal
of Economic and Social Measurement 37(1-2):61-
96 available at
https://sompks4.github.io/sub_data.html.
7306405040 331110
7306405062 331110
7306405064 331110
7306405085 331110
7306401010 331110
7306401015 331110
7306405042 331110
7306405044 331110
7306405080 331110
7306405090 331110
Kitchen
Shelving
N/A N/A 335221 Primary NAICS code as reported by China in Exhibit
CHN-53.

BCI omitted, as indicated [[***]]

Product HTSUS codes Corresponding
NAICS code
Primary NAICS
code Data sources
Seamless
Pipe
7304191020 331110
331110
HTSUS codes as reported in section "Tariff
treatment" (p. I-9 and I-10) of U.S. International
Trade Commission, Certain Seamless Carbon and
Alloy Steel Standard, Line, and Pressure Pipe from
China, USITC Publication No. 4190, November
2010 (Exhibit CHN-32).
HTSUS-NAICS concordance by Justin R. Pierce and
Peter K. Schott (2012), A Concordance Between
Ten-Digit U.S. Harmonized System Codes and
SIC/NAICS Product Classes and Industries, Journal
of Economic and Social Measurement 37(1-2):61-
96 available at
https://sompks4.github.io/sub_data.html.
7304191030 331110
7304191045 331110
7304191060 331110
7304195020 331110
7304195050 331110
7304313000 331110
7304316050 331110
7304390016 331110
7304390020 331110
7304390024 331110
7304390028 331110
7304390032 331110
7304390036 331110

BCI omitted, as indicated [[***]]

Product HTSUS codes Corresponding
NAICS code
Primary NAICS
code Data sources
7304390040 331110
7304390044 331110
7304390048 331110
7304390052 331110
7304390056 331110
7304390062 331110
7304390068 331110
7304390072 331110
7304515005 331110
7304515060 331110
7304596000 331110
7304598010 331110
7304598015 331110
7304598020 331110

BCI omitted, as indicated [[***]]

Product HTSUS codes Corresponding
NAICS code
Primary NAICS
code Data sources
7304598025 331110
7304598030 331110
7304598035 331110
7304598040 331110
7304598045 331110
7304598050 331110
7304598055 331110
7304598060 331110
7304598065 331110
7304598070 331110
Print
Graphics
4810141900 322121
322121
HTSUS codes as reported in section "Tariff
treatment" (p. I-20) of U.S. International Trade
Commission, Certain Coated Paper Suitable for
High-Quality Print Graphics Using Sheet-Fed
Presses from China and Indonesia, USITC
Publication No. 4656, December 2016 (Exhibit
CHN-51).
HTSUS-NAICS concordance by Justin R. Pierce and
Peter K. Schott (2012), A Concordance Between
Ten-Digit U.S. Harmonized System Codes and
SIC/NAICS Product Classes and Industries, Journal
4810142010 322130
4810142010 322121
4810142090 322130

BCI omitted, as indicated [[***]]

Product HTSUS codes Corresponding
NAICS code
Primary NAICS
code Data sources
4810142090 322121
of Economic and Social Measurement 37(1-2):61-
96 available at
https://sompks4.github.io/sub_data.html. No
concordance available for five HTSUS codes.
Primary NAICS codes identified based on most
common concordance.
4810145000 322299
4810146000 322121
4810191100 322121
4810191900 322121
4810192010 322121
4810192010 322130
4810192090 322121
4810192090 322130
4810221000 322121
4810226000 322121
4810291000 322121
4810295000 322299
4810296000 322121

BCI omitted, as indicated [[***]]

Product HTSUS codes Corresponding
NAICS code
Primary NAICS
code Data sources
4810921200 322121
4810921200 322130
4810921400 322121
4810921400 322130

BCI omitted, as indicated [[***]]

ANNEX C-6
SCALING INDEX FOR DOMESTIC VARIETIES OF PRESSURE PIPE, KITCHEN SHELVING, SEAMLESS PIPE, AND PRINT GRAPHICS

1 Figures rounded to the second decimal for representation only.
2 Data for Kitchen Shelving only available at 5-digit NAICS level in Economic Census 2017.
3 5-digit NAICS level sales generated by summing across 6-digit NAICS level codes pertaining to 5-digit NAICS code 33522 (335221, 335222, 335224, 335228).
Product
Primary
NAICS
code
Latest year
with
product-
level data
availability
Sales in
latest year
(in '000
USD)
(A)
Exports in
latest year
(in '000
USD)
(B)
Domestic
shipments
in latest
year (in
'000 USD)
(C=A-B)
Sales 2017
(in '000
USD)
(D)
Exports
2017 (in
'000 USD)
(E)
Domestic
shipments
2017 (in
'000 USD)
(F=D-E)
Scaling Index1
(G=F/C)
Data sources
Pressure
Pipe 331110 2015 84,342,031 12,806,457 71,535,573 87,557,262 13,052,125 74,505,137 1.04
Primary NAICS code based on Annex
C-5.
NAICS-level sales estimates from US
Census' Annual Survey of
Manufactures 2016 and Economic
Census 2017 available at
https://www.census.gov/data/tables/
time-series/econ/asm/2013-2016-
asm.html ("2016 Value of Product
Shipments") and
https://www.census.gov/data/tables/
2017/econ/economic-census/naics-
sector-31-33.html ("EC1700BASIC").
Export data from USITC Dataweb for
Domestic exports, FAS Value
available at
https://dataweb.usitc.gov/.
Kitchen
Shelving 335222 2016 18,014,7053 2,817,671 15,197,034 18,936,670 2,826,241 16,110,429 1.06
Primary NAICS code based on Annex
C-5.
NAICS-level sales estimates from US
Census' Annual Survey of
Manufactures 2016 and Economic
Census 2017 available at
https://www.census.gov/data/tables/
time-series/econ/asm/2013-2016-
asm.html ("2016 Value of Product
Shipments") and
https://www.census.gov/data/tables/
2017/econ/economic-census/naics-
sector-31-33.html ("EC1700BASIC").

BCI omitted, as indicated [[***]]

4 Under the 2007 version of NAICS which was effective in 2009, code 331110 corresponds to code 331111 (see 2007 NAICS to 2012 NAICS concordance available at
https://www.census.gov/naics/?68967). In the US Census' Annual Survey of Manufactures 2010 the relevant data is thus listed under the code 331111.
Export data from USITC Dataweb for
Domestic exports, FAS Value
available at
https://dataweb.usitc.gov/.
Seamless
Pipe 3311104 2009 60,984,598 10,628,749 50,355,849 87,557,262 13,052,125 74,505,137 1.48
Primary NAICS code based on Annex
C-5.
NAICS-level sales estimates from US
Census' Annual Survey of
Manufactures 2010 and Economic
Census 2017 available at
https://www.census.gov/data/tables/
time-series/econ/asm/2008-2011-
asm.html ("2010 Value of Product
Shipments") and
https://www.census.gov/data/tables/
2017/econ/economic-census/naics-
sector-31-33.html ("EC1700BASIC").
Export data from USITC Dataweb for
Domestic exports, FAS Value
available at
https://dataweb.usitc.gov/.
Print
Graphics 322121 2015 40,359,975 2,456,397 37,903,578 36,968,156 2,326,820 34,641,336 0.91
Primary NAICS code based on Annex
C-5.
NAICS-level sales estimates from US
Census' Annual Survey of
Manufactures 2016 and Economic
Census 2017 available at
https://www.census.gov/data/tables/
time-series/econ/asm/2013-2016-
asm.html ("2016 Value of Product
Shipments") and
https://www.census.gov/data/tables/
2017/econ/economic-census/naics-
sector-31-33.html ("EC1700BASIC").
Export data from USITC Dataweb for
Domestic exports, FAS Value
available at
https://dataweb.usitc.gov/.

BCI omitted, as indicated [[***]]

ANNEX C-7
SCOPE ADJUSTMENTS FOR SELECTED VARIETIES OF KITCHEN SHELVING AND PRINT GRAPHICS
Product Variety Primary
NAICS
code
HTSUS codes linked to
primary NAICS code1
Imports under
all HTSUS codes
linked to
primary NAICS
code in 2017
(A)
Subject
Imports linked
to primary
NAICS code in
2017
(B)
Scope
adjustment2
(C=B/A)
Data sources
Kitchen
Shelving Domestic 335221
7321111030, 7321111060,
7321113010, 7321113020,
7321113050, 7321116000,
7321120000, 7321190020,
7321190040, 7321190060,
7321190080, 7321901000,
7321902000, 7321904000,
7321905000, 7321906040,
7321906060, 7418100021
7418100051, 8516500030,
8516500060, 8516500090,
8516604060, 8516604070,
8516604074, 8516604078,
8516604082, 8516604086,
8516903500, 8516905000,
8516905500, 8516906500,
8516907500, 8516908010,
8516908050
USD
5,216,804,617 USD 328,243,066 0.06
Primary NAICS code based on Annex C-5.
Subject codes based on Exhibits CHN-53 and
USA-61 defining the statistical reporting
numbers under which Kitchen Shelving is
classifiable.
HTS codes linked to primary codes based on
HTSUS-NAICS concordance by Justin R.
Pierce and Peter K. Schott (2012), A
Concordance Between Ten-Digit U.S.
Harmonized System Codes and SIC/NAICS
Product Classes and Industries, Journal of
Economic and Social Measurement 37(1-
2):61-96 available at
https://sompks4.github.io/sub_data.html.
Import data from USITC Dataweb for
General Imports available at
https://dataweb.usitc.gov/.

1 Subject imports, i.e. codes referenced in Exhibit CHN-53, in bold. Codes with zero trade flows removed.
2 Figures rounded to the second decimal for representation only.

BCI omitted, as indicated [[***]]

Product Variety Mid-point between
parties' estimates for
imports from the RoW
in the year-prior
(A)
Imports under HTSUS
codes under which the
product is classifiable in
the year-prior
(B)
Scope
adjustment
(Share of subject
imports in HTSUS
codes)3
(C=A/B)
Data sources
Kitchen
Shelving
Imports from
the RoW USD 276,170,928 USD 547,341,857 0.50
HTSUS codes under which Kitchen Shelving is
classifiable based on Exhibits CHN-53 and USA-61.
Import data from USITC Dataweb for General Imports
available at https://dataweb.usitc.gov/.

Product Variety Imports under HTSUS codes under which the product is
classifiable (in USD '000)4
(A)
Subject imports (in USD '000)5
(B)
Scope
adjustment6
(C)7
Data sources
 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
Print
Graphics
Imports
from the
RoW
1,690,265 1,154,087 1,139,722 1,100,101 1,180,584 1,196,763 1,136,151 1,139,356 1,094,453 1,066,559 0.92
HTSUS codes under which
Print Graphics is classifiable
as reported in section "Tariff
treatment" (p. I-20) of U.S.
International Trade
Commission, Certain Coated
Paper Suitable for High-
Quality Print Graphics Using
Sheet-Fed Presses from
China and Indonesia, USITC
Publication No. 4656,
December 2016 (Exhibit
CHN-51).
Subject imports as reported
in Table I-9

3 Figures rounded to the second decimal for representation only.
4 Figures rounded for representation only.
5 Figures rounded for representation only.
6 Figures rounded to the second decimal for representation only.
7 The scope adjustment is obtained by taking the 2011-2015 average across the share of subject imports in total imports under the HTSUS codes under which Print Graphics
is classifiable (C=(B2011/A2011+B2012/A2012+B2013/A2013+B2014/A2014+B2015/A2015)/5).

BCI omitted, as indicated [[***]]

Product Variety Imports under HTSUS codes under which the product is
classifiable (in USD '000)4
(A)
Subject imports (in USD '000)5
(B)
Scope
adjustment6
(C)7
Data sources
 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
(p. I-36) of U.S.
International Trade
Commission, Certain Coated
Paper Suitable for High-
Quality Print Graphics Using
Sheet-Fed Presses from
China and Indonesia, USITC
Publication No. 4656,
December 2016 (Exhibit
CHN-51).
HTSUS Import data from
USITC Dataweb for General
Imports available at
https://dataweb.usitc.gov/.

BCI omitted, as indicated [[***]]

ANNEX C-8
REMEDY YEAR FIGURES FOR SELECTED VARIETIES OF PRESSURE PIPE, KITCHEN SHELVING, SEAMLESS PIPE, AND PRINT GRAPHICS
Product Variety Latest year with
product-level
data availability1
Latest available
estimate
(A)
Scaling index2
(B)
Scope
adjustment3
(C)
Remedy year
figure4
(D=A*B*C)
Data sources
Pressure
Pipe Domestic 2015 USD 85,540,000 1.04 N/A USD 89,090,911
Latest available estimate from Table IV-3
(p. IV-8) in U.S. International Trade
Commission, Welded Stainless Steel
Pressure Pipe from India, USITC
Publication No. 4644, November 2016
(Exhibit CHN-5).
Scaling index based on Annex C-6.
Kitchen
Shelving Domestic 2016 USD 4,173,231,241 1.06 0.06 USD 278,363,000
Latest available estimate from US Census'
Annual Survey of Manufactures 2016
available at
https://www.census.gov/data/tables/time-
series/econ/asm/2013-2016-asm.html
("2016 Value of Product Shipments") for
Primary NAICS code 335221 (see Annex
C-5).
Scaling index based on Annex C-6.
Scope Adjustment based on Annex C-7.

1 In the case of the domestic variety of Kitchen Shelving, we rely on industry-level data since no product-level data is available.
2 Figures rounded to the second decimal for representation only.
3 Figures rounded to the second decimal for representation only.
4 Figures rounded to closest USD '000 for reasons of consistency across products.

BCI omitted, as indicated [[***]]

Product Variety Latest year with
product-level
data availability1
Latest available
estimate
(A)
Scaling index2
(B)
Scope
adjustment3
(C)
Remedy year
figure4
(D=A*B*C)
Data sources
Kitchen
Shelving
Imports
from RoW 2017 USD 817,790,284 N/A 0.50 USD 412,630,000
Latest available estimate based on HTSUS
import data from USITC Dataweb for
General Imports available at
https://dataweb.usitc.gov/ for HTSUS
codes under which Kitchen Shelving is
classifiable based on Exhibits CHN-53 and
USA-61.
Scope Adjustment based on Annex C-7.
Seamless
Pipe Domestic 2009 USD 199,357,000 1.48 N/A USD 294,963,000
Latest available estimate from Table C-4
(p. C-6) in U.S. International Trade
Commission, Certain Seamless Carbon and
Alloy Steel Standard, Line, and Pressure
Pipe from China, USITC Publication No.
4190, November 2010 (Exhibit CHN-32).
Scaling index based on Annex C-6.
Print
Graphics Domestic 2015 USD 1,203,877,000 0.91 N/A USD 1,100,263,085
Latest available estimate from Table I-9
(p. I-36) in U.S. International Trade
Commission, Certain Coated Paper
Suitable for High-Quality Print Graphics
Using Sheet-Fed Presses from China and
Indonesia, USITC Publication No. 4656,
December 2016 (Exhibit CHN-51).
Scaling index based on Annex C-6.

BCI omitted, as indicated [[***]]

Product Variety Latest year with
product-level
data availability1
Latest available
estimate
(A)
Scaling index2
(B)
Scope
adjustment3
(C)
Remedy year
figure4
(D=A*B*C)
Data sources
Print
Graphics
Imports
from RoW 2017 USD 1,047,576,114 N/A 0.92 USD 961,770,000
Latest available estimate based on HTSUS
import data from USITC Dataweb for
General Imports available at
https://dataweb.usitc.gov/ for HTSUS
codes under which Print Graphics is
classifiable as reported in section "Tariff
treatment" (p. I-20) of U.S. International
Trade Commission, Certain Coated Paper
Suitable for High-Quality Print Graphics
Using Sheet-Fed Presses from China and
Indonesia, USITC Publication No. 4656,
December 2016 (Exhibit CHN-51).
Scope Adjustment based on Annex C-7.

BCI omitted, as indicated [[***]]

ANNEX C-9
GAMS CODE OF THE TWO-STEP ARMINGTON MODEL1
$Title partial equilibrium Armington trade model for DS437

*Specify the default case (i.e. product subject to CVD order)
$if not set case $set case 931

Set case cases /
931 "C-570-931 Pressure Pipe",
936 "C-570-936 Line Pipe",
942 "C-570-942 Kitchen Shelving",
944 "C-570-944 OCTG",
946 "C-570-946 Wire Strand",
957 "C-570-957 Seamless Pipe",
959 "C-570-959 Print Graphics",
968 "C-570-968 Aluminum Extrusions",
978 "C-570-978 Steel Cylinders",
980 "C-570-980 Solar Panels"

item data items /
USA "USA shipments year prior",
CHN "CHN shipments year prior",
ROW "ROW shipments year prior",
IMP "Total imports year prior",
MKT "Total market year prior",
theta_lo "Demand elasticity lower bound",
theta_up "Demand elasticity upper bound",
eps_usa_lo "Supply elasticity USA lower bound",
eps_usa_up "Supply elasticity USA upper bound",
sig_lo "Substitution elasticity lower bound",
sig_up "Substitution elasticity upper bound",
eps_sub "Supply elasticity subject imports",
eps_chn "Supply elasticity Chinese imports",
eps_row "Supply elasticity Other imports",
MKT2017 "Total market size remedy year",
tau_ocvd "Original CVD rate",
tau_LTAR "LTAR rate",
tau_cons "WTO Consistent CVD rate"

Parameter raw(case,item);
$gdxin data2
$loaddc raw

Scalar scale "Rescale the value data from $ to $M" /1e-6/;

Set r(*) supply regions /USA,CHN,ROW/
usa(r) usa region /usa/;

Parameter
psi(r) supply quantity for calibration
phi total quantity demanded for calibration
theta demand elasticity
epsilon(r) supply elasticity for region r
sigma_1 elasticity of substitution dm
sigma_2 elasticity of substitution mm (import nest)

* Initial calibration is to the year-prior data. Quantity units
* are chosen such that year-prior prices are one.
psi("USA")= raw("%case%","USA") *scale;
psi("CHN")= raw("%case%","CHN") *scale;
psi("ROW")= raw("%case%","ROW") *scale;

1 The code is based on Exhibit CHN-54
2 See Annex C-10 for the data inputs to the model.

BCI omitted, as indicated [[***]]

phi = raw("%case%","MKT") *scale;

display psi,phi;

* Elasticities: Ranges converted to averages by default
theta = -(raw("%case%","theta_lo")+raw("%case%","theta_up"))/2;
*theta = -1;
* [NB] minus sign in front of theta added since theta is positive in data file
sigma_1 =(raw("%case%","sig_lo")+raw("%case%","sig_up"))/2;
* Elasticity of substitution among imports (sigma_2) set to sqrt(2)*sigma_1 (see section 3.3.1)
sigma_2 = sqrt(2) * sigma_1;
epsilon("USA") =(raw("%case%","eps_usa_lo")+raw("%case%","eps_usa_up"))/2;
epsilon("CHN") =raw("%case%","eps_chn");
epsilon("ROW") =raw("%case%","eps_row");

*NB: The data include a supply elasticity for subject imports, "eps_sub", but
* these are Chinese imports for our purposes. Regardless, the values of
* these elasticities are all the same -- 10.

* These are data used to setup the counterfactuals
Parameter
a1 total quantity demanded in 2017
t_ocvd Original CVD rate,
t_LTAR LTAR rate (WTO inconsistent duty),
t_cons WTO Consistent CVD rate;

a1 = raw("%case%","MKT2017" )*scale;
t_ocvd = raw("%case%","tau_ocvd")/100;
t_LTAR = raw("%case%","tau_LTAR")/100;
t_cons = raw("%case%","tau_cons")/100;

Parameter
tau(r) duty rate on goods from region r
alpha(*) calibrated share of region r variety
beta(r) share of region r variety in imports;

tau(r) = 0;
alpha(r)=psi(r)/phi;
alpha("M")=(1-alpha("USA"));
beta(r)$(not usa(r)) = (alpha(r)/sum(r.local$(not usa(r)),alpha(r)));

*Perform some data checks
Abort$(round(sum(r,alpha(r)),7) ne 1) "Market shares do not sum to one";
Abort$(round(sum(r,beta(r)),7) ne 1) "Import market shares do not sum to one";
Abort$(round(sum(r,psi(r))-phi,7) ne 0) "Total value of supply not equal to demand";
Abort$(round(sum(r,psi(r))-psi("USA")-raw("%case%","IMP")*scale,7) ne 0) "Component supplies inconsistent
with imports";

* Setup the model (see China's Methodology Paper, Section III.C.1, for the model in text form)

Positive Variables

A Armington activity index
P Price index
PX(r) Net-of-tariff price of variety from region r
X(r) Index on supply quantity;

Equations
Eq_1 Aggregate demand
Eq_2 Armington technology (dual representation)
Eq_3(r) Market clearance for regional varieties
Eq_4(r) Supply functions;

*Clean up the equations by using a macro for the import price index.
$macro PMM ((sum(r.local$(not usa(r)),beta(r)*((1+tau(r))*PX(r))**(1-sigma_2)))**(1/(1-sigma_2)))

BCI omitted, as indicated [[***]]

* Equation (1)
Eq_1.. A - phi*P**theta =g= 0 ;

* Equation (2) (oriented properly for MCP: MargCost-MargBenefit ge 0)
Eq_2.. (alpha("usa")*PX("usa")**(1-sigma_1) + alpha("M")*PMM**(1 -sigma_1))**(1/(1-sigma_1)) - P =g=
0;

* Equations (3), (4), and (5)
Eq_3(r).. X(r)
- (alpha("M")*beta(r) * A * (P/PMM)**sigma_1 *(PMM/((1+tau(r))*PX(r)))**sigma_2)$(not usa(r))
- (alpha(r)* A * ( P/((1+tau(r))*PX(r)))**sigma_1 )$(usa(r))
=g= 0;

* Equations (6), (7), and (8) (oriented properly for MCP: Supply-Demand ge 0)
Eq_4(r).. psi(r)*PX(r)**epsilon(r) - X(r) =g= 0;

Model PEARM /Eq_1.P,Eq_2.A,Eq_3.PX,Eq_4.X/;

* Set the initial level values and check the benchmark:
A.l =phi;
X.l(r) =psi(r);
P.l =1;
PX.l(r) =1;

PEARM.iterlim=0;
Solve PEARM using mcp;
Abort$(PEARM.objval gt 1e-6) "Initial year-prior calibration failed";

* Generate intermediate reports
* Domain sets for report indexing
Set equ equilibrium /
pybmk "year prior benchmark",
pyscn "year prior scenario (duties imposed)",
rybmk "remedy year benchmark",
ryscn "remedy year scenario (duties removed)"/
acct Account /
revenue "revenue by market",
duty_pmt "duty payments",
share "gross of duty share",
totalmkt "total market size (value gross of duties)"
"NI_$M" "Nullification or Impairment"/

Parameter report(case,*,equ,acct,*) summary report
vchk value check;

* Write the actual reporting assignments out to a file that can be
* recalled for different solutions
$onechov > rpt.gms
report("%case%","no","%1","revenue" ,r) = X.l(r)*PX.l(r);
report("%case%","no","%1","duty_pmt",r) = tau(r)*X.l(r)*PX.l(r);
report("%case%","no","%1","revenue","Total_gross_of_duty") = sum(r,(1+tau(r))*X.l(r)*PX.l(r));
report("%case%","no","%1","share",r) = (1+tau(r))*X.l(r)*PX.l(r)/(P.l*A.l);
vchk = P.l*A.l - report("%case%","no","%1","revenue","Total_gross_of_duty");
Abort$(round(vchk,5)) "Value check failed: equilibrium=%1";
Abort$(round(sum(r,report("%case%","no","%1","share",r)),5) ne 1) "Report shares do not sum to one";
$offecho

* Report the year-prior benchmark (in parameter report)
$batinclude rpt pybmk

BCI omitted, as indicated [[***]]

*--------------------
* Equilibrium = pyscn
* Impose the duties to generate the year-prior counterfactual

tau("chn") = t_ocvd;

PEARM.iterlim=1000;
Solve PEARM using mcp;

* Report the year-prior counterfactual (in parameter report)
$batinclude rpt pyscn

*--------------------
*--------------------

* Equilibrium = rybmk (remedy year hypothetical benchmark)
* Now recalibrate the model to this solution applied to the 2017 market size

alpha(r)=(1+tau(r))*PX.l(r)*X.l(r)/(P.l*A.l);
alpha("M")=1-alpha("usa");
beta(r)$(not usa(r)) = (1+tau(r))**(sigma_2 - 1) * alpha(r)/sum(r.local$(not usa(r)),alpha(r));
psi(r)=alpha(r)*a1/(1+tau(r));
phi = a1;

Abort$(round(sum(r,alpha(r)),7) ne 1) "Hypothetical 2017 market shares do not sum to one";

* Set the level values and check the Hypothetical 2017 benchmark 222
A.l =phi;
X.l(r) =psi(r);
P.l =1;
PX.l(r) =1;

PEARM.iterlim=0;
Solve PEARM using mcp;
Abort$(PEARM.objval gt 1e-6) "Hypothetical 2017 benchmark replication fails";

* Report the remedy year benchmark
$batinclude rpt rybmk
*--------------------
*--------------------
* Equilibrium = ryscn
* Remove the WTO inconsistent duties

tau("chn") = t_cons;

PEARM.iterlim=1000;
Solve PEARM using mcp;

* Report the remedy year counterfactual
$batinclude rpt ryscn

* Calculation of NI:
report("%case%","no","ryscn","NI_$M","CHN")=
report("%case%","no","ryscn","revenue","CHN")
-report("%case%","no","rybmk","revenue","CHN");

*--------------------
display report;

BCI omitted, as indicated [[***]]

ANNEX C-10
DATA INPUTS USED TO IMPLEMENT THE ARMINGTON MODEL UNDER THE TWO STEPS1,2

1 The code of the software GAMS in Annex C-9 refers to this input table.
2 The names used in the table refer to the following; 931: Pressure Pipe; 936: Line Pipe; 942: Kitchen
Shelving; 944: OCTG; 946: Wire Strand; 957: Seamless Pipe, 959: Print Graphics; 968: Aluminum Extrusions;
978: Steel Cylinders; 980: Solar Panels; USA: year-prior sales US domestic variety; CHN: year-prior sales of
imports from China; ROW: year_prior sales of imports from the RoW; theta: demand elasticity; up: maximum
value of range; lo: minimum value of range; eps_usa: domestic supply elasticity; eps_sub: import supply
elasticity; eps_chn: supply elasticity of imports from China; eps_row: supply elasticity of imports from RoW;
sig: elasticity of substitution; MKT2017: total US market value in USD in 2017; tau_ocvd: WTO-inconsistent
CVD rate; tau_LTAR: LTAR rate; tau_cons: WTO-consistent CVD rate.
Product
USA
CHN
ROW
IMP
MKT
theta_lo
theta_up
eps_usa_
lo
eps_usa_
up
sig_lo
sig_up
eps_sub
eps_chn
eps_row
MKT2017
tau_ocvd
tau_LTAR
tau_cons
931
201,460,000
154,833,000
158,535,000
313,368,000
514,828,000
0.3
0.7
5
10
3
6
10
10
10

1.1
0.36
0.74
936
757,701,000
153,881,000
315,411,000
469,292,000
1,226,993,000
0.25
0.5
3
5
2
4
10
10
10

36.35
32.49
3.86
942
84,256,000
150,477,000
276,171,000
426,648,000
510,904,000
0.1
0.5
5
10
4
6
10
10
10

13.3
11.76
1.54
944
6,184,818,000
2,805,206,000
2,572,888,000
5,378,094,000
11,562,912,000
0.75
1
4
6
3
5
10
10
10
6,356,019,000
12.26
10.19
2.07
946
333,721,000
194,276,000
21,771,000
216,047,000
549,768,000
0.5
1
3
5
2
4
10
10
10

27.64
10.95
16.69
957
199,357,000
135,240,000
348,609,000
483,849,000
683,206,000
0.5
1
5
10
2
4
10
10
10

28.9
3.64
25.26

BCI omitted, as indicated [[***]]

Product
USA
CHN
ROW
IMP
MKT
theta_lo
theta_up
eps_usa_lo
eps_usa_up
sig_lo
sig_up
eps_sub
eps_chn
eps_row
MKT2017
tau_ocvd
tau_LTAR
tau_cons
959
1,023,688,000
297,527,000
420,989,000
718,516,000
1,742,204,000
0.75
1.25
3
5
2
4
10
10
10

19.46
0.8
18.66
968
2,888,945,000
547,968,000
359,382,000
907,350,000
3,796,295,000
0.25
0.5
3
5
4
6
10
10
10

7.37
3.8
3.57
978

23,009,000
2,821,000
25,830,000
41,967,000
0.25
0.75
5
10
3
5
10
10
10

15.81
14.34
1.47
980
804,853,000
1,905,220,000
824,588,000
2,729,808,000
3,534,661,000
0.75
1
4
7
3
5
10
10
10
4,055,230,000
15.24
0.715
14.62

BCI omitted, as indicated [[***]]

ANNEX C-11
RESULTS OF IMPLEMENTING THE FIRST STEP OF THE TWO-STEP ARMINGTON MODEL1

Product Simulated market share of
US domestic producers
Simulated market share of
Chinese exporters
Simulated market share of
exporters from the rest of
the world

WTO-
inconsistent
CVD rate
WTO-
consistent
CVD rate
WTO-
inconsistent
CVD rate
WTO-
consistent
CVD rate
WTO-
inconsistent
CVD rate
WTO-
consistent
CVD rate
Pressure
Pipe 0.394 0.393 0.294 0.296 0.312 0.311
Line Pipe 0.643 0.621 0.069 0.117 0.287 0.261
Kitchen
Shelving 0.178 0.167 0.213 0.284 0.609 0.550
OCTG 0.562 0.540 0.191 0.233 0.247 0.227
Wire
Strand 0.677 0.652 0.271 0.300 0.053 0.048
Seamless
Pipe 0.310 0.308 0.123 0.130 0.567 0.561
Print
Graphics 0.610 0.609 0.125 0.126 0.265 0.264
Aluminum
Extrusions 0.779 0.770 0.120 0.132 0.101 0.098
Steel
Cylinders [[***]] [[***]] [[***]] [[***]] [[***]] [[***]]
Solar
Panels 0.260 0.259 0.446 0.449 0.294 0.292