Document: Oral Statement
Date: 15 May 2000
Document codes: WT/DS141/R
Complainant: India
Respondent: EU
Third parties: Egypt, Japan, South Korea, U.S.
Dispute stage: Consultation
Agreements cited: Art. VI, I  GATT 1994Art. 2, 3, 4, 5, 15, 12  Anti-dumping

ANNEX 1-5
QUESTIONS FROM INDIA TO THE EUROPEAN COMMUNITIES AND THE UNITED STATES
(15 May 2000)
To the EC
1. The EC states at paragraph 38 of its First Oral Statement that "even if, during the course of
the investigation, information became available which caused the authorities to conclude that they
had been mistaken regarding the sufficiency of the evidence for the purposes of the initiation decision,
that would not in itself be a basis for halting the investigation." In light of this statement, could the
EC please clarify whether it agrees with the past panels (Swedish steel; Mexican cement) that have
held that the failure to effect a proper standing determination is a fatal error which cannot be cured
retro-actively?
2. In its paragraph 34 of its First Oral Statement the EC acknowledges that in fact it has
considered "information gained during a previous investigation on bedlinen." Can the EC please
provide details of this information that it considered?
3. Similarly, Can the EC provide details of the "number of exchanges" that took place in the
process of verification of standing, as referred to in the Footnote 1 of EC Exhibit-4. Can the EC
provide details of other similar "exchanges", if any, between itself and producers [or Eurocoton and/or
national associations] in the period between the termination of Bed Linen-I and the initiation of Bed
Linen-II?
4. In paragraph 41 of its First Oral Statement the EC implies to have relied on the 25 per cent
test as the minimum required to determine standing. In view of the absence of any comments on the
separate 50 per cent test, and India’s Exhibit-79, is it factually correct that the EC did not in fact
before 13 September 1996 consider the six Spanish companies not opposed to the initiation?
5. In paragraph 43 of its oral statement the EC explains that the arguments concerning the
initiation were "not relevant at the point at which they were posed." Would the EC not agree that in
the EC anti-dumping system it is not known when a complaint is filed and hence when a dumping
case would be initiated? Could the EC indicate when the arguments should have been posed in order
to have been considered relevant? Is it the EC’s position that exporters should "guess" that a
complaint has been filed and that a proceeding "could" start and that the only moment at which a
comment is relevant is when such a "guess" is indeed made at the right moment?
6. As agreed during the first meeting with the Panel, the EC will submit the original faxed
copies of the producers’ and national associations’ declarations of support so that the dates of receipt
by the EC of the declarations of producers’ support can be verified. In reply to the question by the
Chairman of the Panel why the fax headers were removed, the EC stated that the fax headers had been
removed to protect the – apparently confidential – fax numbers of the EC producers. However, this
information (that is the telephone and fax numbers) was as it is to be supplied by the company
expressing support. Could the EC therefore explain why the fax headers were removed?
7. Moreover, under the EC system of confidentiality of information, it is incumbent upon the
party supplying confidential information, to simultaneously provide a non-confidential version thereof
(Article 19.2 EC Basic Regulation) that is to be placed in the non-confidential file. Failure to do so
by an interested party will lead the EC to use best information available (Article 19.3). Why then did

the EC, in violation of its own Basic Regulation a nd its standard practice, not follow this standard
practice, and instead, of its own volition remove the fax headers?
8. Would the EC agree that in other EC anti-dumping proceedings it does not normally remove
fax headers? Would the EC also not agree that in other EC anti-dumping proceedings the declarations
of support are normally contained in an Annex to the complaint rather than being separately obtained
and filed in a non-confidential standing file?
9. The European Commission maintains a ‘chron-in’ log in which all incoming correspondence
is recorded. Could the EC indicate on the basis of this chron-in log when the faxed declarations of
producers’ support were received by the EC?
10. Exhibit EC-4, appended to the first submission of the EC, now indicates that the declarations
of support from the eight French producers were submitted. However, these eight declarations of
support were never in the non-confidential file on 8 January 1997. When did the EC receive the
declarations of support from these eight French producers? Why were these eight declarations of
support not included in the non-confidential file? Did the EC rely on these declarations of support
during any part of the standing determination? Could the EC provide the original faxed copies of
these eight declarations of support?
11. Paragraph 3 of the working procedures indicates documents submitted to the Panel shall be
kept confidential by all. In light of this conf identiality requirement, why did the EC not disclose
producer-specific production-output details of EC Exhibit-4? Can the EC provide the individual
producer-wise production-output details, not contained in EC Exhibit-4, but forming the basis for the
country-wide figures?
12. Can the EC confirm that the information on production output contained in Exhibit EC-4 was
available at the time initiation and at the time of sample selection?
13. It has been argued that the German companies Irisette and Frankische Bettwarenfabrik are,
respectively, a trader and a producer with production outside the EC. Can the EC provide an
explanation on these assertions?
14. Why did it take four months from the date of initiation, for the EC to grant access to the non-
confidential file?
15. The EC takes the position that the filing of an anti-dumping complaint by a trade association
on behalf of domestic producers is in accordance with Article 5.4 ADA. Does the EC agree that the
objective of Article 5.4 is the prevention of the filing of frivolous complaints? Would the EC agree
that its position in this case may undermine that objective to the extent that it could occur that a trade
association files a complaint which later turns out not to be backed by members of the association?
Would the EC agree that this has in fact occurred in several EC anti-dumping proceedings?
16. Supposing, for the sake of argument, that the EC did ‘examine’ as per Article 5.3 the
adequacy and accuracy of the complaint. Can the EC confirm whether it shares the view that such
examination should take place before initiation? Can the EC confirm that in this Bed Linen
proceeding such examination indeed took place before initiation?
17. In paragraph 97 of its first written submission the EC acknowledges that support for (or
opposition to) an application must be expressed by domestic producers . The EC then takes the
position that the expressions of support from the domestic producers need not necessarily be
expressed directly to the investigating authorities, but could be expressed to a trade association. India
agrees with this argument. However, in examining standing, the authorities under Article 5.4 must
examine the declarations of support of the domestic producers and it does not suffice to rely solely on

declarations made by trade associations. Would the EC agree that, while declarations of support may
indeed be addressed/expressed to or channelled through a trade association, Article 5.4 obliges the
investigating authorities to examine the declarations of the domestic producers before the initiation?
18. In paragraph 99 of its first written submission the EC states that "on the basis of information
they had received from various sources, the authorit ies estimated the total EC production in 1995 to
be between 123,917 and 130,128 tonnes." Could the EC divulge to the panel which sources are
referred to here? Assuming that this informa tion came from the complainants, would the EC agree
that such information might be self-serving? If so, could the EC explain which steps it took to verify
the accuracy of the data provided on total EC production?
19. Does the EC agree that the exclusion of sales below cost for Article 2.2.2(ii) purposes will by
definition when not all sales are profitable lead to the calculation of a higher dumping margin than
would otherwise exist?
20. At paragraph 57 of its First Oral Statement the EC states that "ordinary course of trade is part
of the basic definition of dumping contained in Article 2.1". At its paragraph 69 the EC states that
"Article 2.2 enounces that . . . profit included in the constructed normal value must be ‘reasonable’."
Could the EC please explain why under Article 2.2.2(ii), which contains neither the words ‘ordinary
course of trade’ nor the word ‘reasonable’ only the concept of ‘ordinary course of trade’ applies, and
not the concept of ‘reasonable’ [other than that such approach invariably leads to a higher dumping
margin].
21. At its paragraph 73 the EC in the context of…asserts that "India has presented no relevant
evidence to that effect." At countless times during the disclosure comments India has explained that
18+ per cent profit for Bed Linen is not reasonable, together with a variety of prima facie proof.
Could the EC indicate what it means by ‘relevant’? Were the arguments not relevant because they
were posed at a wrong moment [such as suggested in paragraph 43 of its First Oral Statement]? Or
was the evidence not relevant because it was not "significant independent factor" [such as in 253 of its
First Written Submission]?
22. In paragraph 76 of its first oral statement the EC suggests that the profit margin of Bombay
Dyeing calculated in the ordinary course of trade was representative beyond question because all of its
sales nearly reached 80 per cent of the domestic market. Would the EC not agree that nearly half of
the sales of Bombay Dyeing were loss making and that the profit margin so established was based on
the profitable sales only?
23. At paragraph 78 of its first oral statement the EC states that "the ‘zeroing’ practice . . . is not
covered by Article 2.4.2." This view is repeated in paragraph 79 of its oral statement where the EC
states that "’zeroing’ took place only at the subsequent stage of combining the dumping margins
determined for each type in accordance with Article 2.4.2 into a single dumping margin. That stage
of calculation, however, is not subject to Article 2.4.2." In light of these assertions could the EC
please indicate, in the alleged absence of the applicability of Article 2.4.2, what Article of the ADA
covers the zeroing practice and what Article covers of the ADA covers the ‘subsequent stage’ of
determining a ‘single dumping margin’?
24. The EC in paras. 144-148 of its first written submission tries to show with theoretical
examples that the method advocated by India leads to "absurd" and "perverse" results. Would the
EC not agree that in the real life situation presented by the case at issue the only reason why the EC
was able to find significant dumping for all Indian exporters other than Bombay Dyeing and Anglo-
French was through its use of an 18.64 per cent profit margin, which itself was largely the result of the
inflation of the real profit margin of Bombay Dyeing through exclusion of all below cost sales?

25. The EC in paragraph 156 of its first written statement tries to create the impression that one of
the reasons why it prefers to use Article 2.2.2(ii) over Article 2.2.2(i) is to accommodate difficulties
experienced by interested parties, in particular small companies. It is India’s experience that
exporters prefer use of their own data (method 2.2.2(i)) over use of other producers’ data, particularly
in EC anti-dumping proceedings, because under the EC system of confidentiality of information,
method 2.2.2(ii) completely precludes companies from checking the dumping margin calculations of
the EC (because the SGA and profit data of the other producer(s) used are considered as business
proprietary). India appreciates the EC’s apparent concern for small exporters, but has never seen any
concrete evidence of this concern, either in the present anti-dumping case or in other EC anti-dumping
cases. Could the EC produce such evidence?
26. The Article 2.2.2(ii) option, especially after exclusion of sales below cost (as advocated by
the EC), can lead to establishment of huge profit margins. Yet, the EC position is that any profit thus
found is by its very nature reasonable. Suppose that a profit margin thus established would be
1,000 per cent; would this then be reasonable?
27. In paragraph 190 of its first written submission the EC states that where "…one producer can
have 80 per cent of its domestic market and make a profit of over 18 per cent while the numerous
other producers ignore this market and devote themselves to exporting, may be an uncommon
situation." Does the EC agree that Bombay Dyeing did not in fact make 18.64 per cent profit on its
domestic sales of bed linen, but that the 18.64 per cent profit quoted by the EC is the profit
established by the EC after systematic exclusion of all domestic sales at a loss? Does the EC agree
that the actual overall profit made by Bombay Dyeing on domestic sales of bed linen is only 12.09 per
cent and its overall profit only 4.66 per cent?
28. Does the EC agree that Article 2.4.2 provides for a two step analysis under which a mixing of
methodologies for establishing normal value and export price comes into play only in the second step,
i.e. where there is a pattern of differing export prices? Does the EC agree that the first step of
Article 2.4.2 does not allow such mixing?
29. Suppose that a producer has been found not to have dumped, would the EC include such
producer’s exports for the purposes of the injury determination? If so, does this not mean that the
causal link between dumping and injury is broken because injury cannot logically be caused by a non-
dumping producer?
30. If the EC persists in the argument that countries are dumping, then why has the EC on
occasion initiated anti-dumping proceedings against specific producers (Orion and Funai) in a country
(Japan)? Similarly why has the EC on occasion excluded specific dumping producers in a country
from the injury determination (BASF: 23.1 per cent; Eastman Chemical: 9.9 per cent and Celanese
Fibres: 9.2 per cent in Synthetic fibres of polyesters from the United States)?
31. If the EC persists in the argument that countries are dumping, then why has it on several
occasions initiated company-specific reviews?
32. Similar to its First Written Statement [paragraph 309] the EC again presents its arguments
concerning the permissibility of a double domestic industry definition within a single investigation
[paragraph 135 First Oral]. In light of paragraph 308 of its First Written Submission and the
statements during the First Meeting with the Panel can the EC confirm that it only used one of the
permissible definition during the Bed Linen proceeding?
33. In paragraph 221 of its first written submission, the EC posits that the ordinary meaning
proposed by the EC is straightforward. But would th e EC not agree that the EC’s reading of the term
‘dumped imports’ renders the word ‘dumped’ obsolete, and this throughout the entire Article 3?

34. Could the EC confirm that the theory of the "found not to be a significant independent factor"
has been advanced for the first time in the first su bmission of the EC to this Panel? In other words,
could the EC confirm that this theory has never before been communicated to the Indian exporters,
either in the published Regulations or in any other communications to the Indian exporters?
35. Could the EC explain the interconnection (paragraph 253 EC’s first written submission)
between on the one hand the 7 factors it did evaluate, albeit at varying levels, i.e. actual and potential
decline in sales, profits, output, market share, factors affecting domestic prices, employment and, on
the other hand, the 11 factors it did not address anywhere, i.e. productivity, return on investments,
utilization of capacity, magnitude of margin of dumping, actual and potential negative effects on cash
flow, inventories, wages, growth and ability to raise capital or investments?
36. Does the EC interpret the word relevant in Article 3.4 as providing unlimited discretion to the
administering authority to unilaterally determine which factors it considers relevant and to then base
its injury determination on those factors only?
37. Does the EC agree that in an ASCM case (Brazil-milk) the EC itself argued that the
comparable ASCM provision should be interpreted as requiring an evaluation of all injury factors
listed in the comparable provision?
38. Does the EC agree that its position taken in paras. 271 to 277 of its first written statement,
would encourage domestic producers to provide information only on the factors that are beneficial to
their case, as apparently happened in the bed linen case?
39. Would the EC agree that the company Luxorette was part of the sample? Would the EC also
agree that Luxorette was not one of the 35 companies which were determined to make up the
domestic industry? Would it be therefore correct to conclude that in any event EC relied on at least
one company not part of the domestic industry for its injury finding?
40. Can the EC explain whether the sample was established before, after, or simultaneous with
the date on which the Community Industry [the 35 producers] were established? More specifically:
can the EC provide the dates on which it established the Community Industry and the EC sample (of
17 producers)?
41. Could the EC provide any support for its contention in paragraphs 309 and 332 that "a
member may use both definitions of the domestic industry in the course of a single investigation"?
42. Would the EC agree that it only referred to trends of all EC producers or the complaining
producers (as opposed to the sampled producers) where this benefited its conclusion that there was
injury? Would the EC agree that this approach can be described as ‘picking and choosing’?
43. In paragraph 325 of its first written statement the EC states that "India does not explain in
what way the EC could have, but did not, take account of data concerning exporters not part of the
sample nor what difference this would have made ." Would the EC agree that India explained this in
great detail in Section III.A.1, paras 3.2 to 3.13, of its first submission to the Panel and that this
statement is therefore factually incorrect?
44. The EC acknowledges in paragraph 349 of its first written submission that the Regulation
imposing definitive duties repeatedly referred to companies that ceased production/disappeared in the
years preceding the investigation period. As such statements were used to substantiate the finding of
injury, does the EC then not agree that as a matter of pure logic, the EC is assuming that pre-
investigation imports were also dumped because any other interpretation would break the causal link
between dumping and resulting injury and the repeated statements would therefore be non-sensical?

45. Article 15 of the Agreement specifically indicates that ‘special regard must be given by
developed country Members to the special situation of developing country member when considering
the application of anti-dumping measures’. It is therefore clear that the onus of exploring constructive
remedies is on the developed country Members. Can the EC explain how it fulfilled this obligation?
46. The EC states in paragraph 80 of its first submission that the (Article 12.2.2 ADA) obligation
on the Member concerned is to deal with relevant arguments and claims. Is it the position of the EC
that a Member can then ignore arguments and claims made by interested parties on the simple ground
that the Member unilaterally judges such arguments and claims not relevant?
To the US
1. In paragraph 19 of its Oral Statement made on 11 May, the US has stated that Article 15 of
the Anti-Dumping Agreement "provides important pro cedural safeguards to developing countries".
Could the US please explain and elaborate, on the basis of its own experience of implementing
Article 15, what these important procedural safeguards are?
2. In paragraph 25 of its Oral Statement, the US has referred to the draft recommendations of the
WTO Committee on Anti-Dumping Practices on the period of data collection for anti-dumping
investigations. Would the US agree that these guidelines are only in the form of recommendations?

ANNEX 1-6
RESPONSES OF INDIA TO QUESTIONS
FOLLOWING THE FIRST MEETING OF THE PANEL
(18 May 2000)
Questions from the Panel for India
1.A At paragraphs 41-46 of its first oral statement, India seems to agree that the
"reasonable" criterion, which it has suggested ap plies to the result of the calculations under
Article 2.2.2 (i) and (ii), and which India asserts derives from Article 2.2, applies to the chapeau.
Could India confirm whether the Panel’s understanding of India’s position is correct, that the
test of "reasonableness" India is proposing applie s to the chapeau of Article 2.2.2 as well as to
the subparagraphs?
India confirms that this understanding is correct. The criterion of reasonableness, as laid
down in Article 2.2 instructs the chapeau of Article 2.2.2 and its subparagraphs.
1.B Does India acknowledge that, as the propon ent of the claim that the EC has violated
Article 2.2.2 (ii) in its interpretation and appl ication, India bears the burden of presenting a
prima facie case on these questions.
India acknowledges this. In this connection India wishes to recall that in its view it has made
a prima facie case at many instances during the proceeding, especially at the time of provisional
disclosure comments, the hearings, as well as at the time of definitive disclosure comments.
For example, India has shown the profit in other countries to be three times lower, and the
profit in the same general category on the domestic market to be much lower as well. In this
connection India recalls the following paragraphs of its first written submission: paragraph 3.23,
especially sub-paragraphs 3, 4, and 5; paragraph 3.24, sub-paragraphs 2 [B] and 3; paragraph 3.26,
sub-paragraphs 2.3 and 2.4; paragraph 3.27, s ub-paragraph 2.1; paragraph 3.28; paragraph 3.29;
paragraph 3.30; paragraph 3.31; paragraph 3.32; and, as far as comments on the definitive disclosure
are concerned, India Exhibits-34, 35, 36, 37, and 38.
2.A The Panel understood India to state, in responding orally to the Panel’s questions
during the first meeting, that the reasonableness test applies to the chapeau of Article 2.2.2, and
that in the case of the chapeau, the reasonableness test is satisfied by the limitation to sales in
the ordinary course of trade. Is the Panel’s understanding correct?
The Panel is correct in its understanding that in India’s view the test of reasonableness applies
to the chapeau of Article 2.2.2 [see also paragraph 3.128 of India’s First Written Submission]. India
accepts that for the calculation of profit under the chapeau of Article 2.2.2 the authorities are indeed
explicitly allowed to restrict themselves to sales in the ordinary course of trade. However, for the
profit calculation under Article 2.2.2 (ii) no such restriction to the ordinary course of trade is
envisaged.
This does not imply that any profit established under the method of Article 2.2.2 chapeau and
Article 2.2.2 (ii) is automatically reasonable; fo r example, if a profit of 1,000 per cent would be
established is this then reasonable? In the view of India not. However, what India would like to
stress is that it is concerned that the profit of 18+ per cent calculated on the basis of Article 2.2.2(ii)
for Bombay Dyeing was applied to all other producers.

2.B If so, could India explain why the limitation to sales in the ordinary course of trade
under Article 2.2.2 (i) and (ii), which the EC applied in its calculation under Article 2.2.2 (ii) in
this case, does not similarly satisfy any reas onableness requirement applicable to the sub-
paragraphs of Article 2.2.2?
Sub-paragraphs (i) and (ii) explicitly do not contain the words "in the ordinary course of
trade." The chapeau of Article 2.2.2 does contain such words. There is therefore a difference
between the methods although both must lead to a reasonable result.
It appears therefore not correct that the same standard of reasonableness would apply to the
chapeau and to the sub-paragraphs. In the situation under consideration, it is striking that a company
such as Bombay Dyeing is achieving 18+ per cent on its sales in the ordinary course of trade as per
Article 2.2.2 chapeau while it only incurs and realizes a 12 per cent overall profit on domestic sales of
this product. But it becomes "unreasonable" when this 18+ per cent profit is subsequently
extrapolated under Article 2.2.2 (ii) to all other sample companies [and none of which sold
domestically], which are in a totally different league from the well-established premium company
Bombay Dyeing.
Both the sub-paragraphs and the chapeau of Article 2.2.2 must produce reasonable results.
However, to achieve this, the chapeau explicitly allows for an ordinary course of trade restriction, but
the sub-paragraphs explicitly do not.
Accordingly the standards for reasonableness, as far as the different paragraphs are
concerned, can also vary depending on the facts under consideration. More specifically a State-
owned company such as Anglo-French with high lab our costs would never be able to realize a profit
of 18+ per cent. Bombay Dyeing’s profit incurred and realised on Bed linen itself was 12 per cent;
Anglo-French by contrast was, overall, loss-making, while the same category on the domestic market
had a profit of 5+ per cent ( vide paragraph 3.134 First Written Submission of India). Nevertheless,
India reiterates that the 18+ per cent profit calculated for Bombay Dyeing was after exclusion of sales
below cost.
3.A What, in India’s view, is the difference between "actual data" and "actual amounts
incurred and realized" -- don’t both require co nsideration of real information to derive the
amounts to be used for profit and SGA in constructing a normal value?
Firstly, it is correct that the first sentence of Article 2.2.2 chapeau stipulates that the amounts
for SGA and profits shall be based on actual data, i.e. indeed consideration of real information to
derive the amounts to be used for profit and SGA.
Secondly, it is also correct that the second sentence of Article 2.2.2 chapeau stipulates that, as
an alternative method, the amounts may be determined on the basis of the weighted average of the
actual amounts, i.e. consideration of real information to derive the amounts to be used.
Both possibilities therefore require consideration of real information to derive the amounts to
be used. However, the "real information" from which the amounts are to be derived has been
qualified in the first sentence of Article 2.2.2 chapeau: the real information on which such SGA and
profits amounts are to be based is "actual data pertaining to . . . sales in the ordinary course of trade."
[emphasis added] By contrast, the "real information" from which the amounts in the second sentence
of Article 2.2.2 are to be derived are not subject to qualification: the real information from which the
amounts for SGA and profits are to be derived are the "actual amounts incurred and realized."
In both instances [first and second sentence of Article 2.2.2 chapeau] the ‘actual data
pertaining to ordinary course of trade’ as well as the ‘actual amounts incurred and realized’ form the
basis for the determination of the SGA and profit. Both are ‘ real information’ which form the basis

for SGA and profit determination. The difference in the view of India is that this "real information"
has in the case of ‘actual data’ explicitly been qualified by the ADA to pertain to ordinary course of
trade. In the case of ‘actual amounts incurred and realized’ this is specifically not the case.
3.B Is the Panel correct in understanding that India does not dispute that the profit rate for
Bombay was properly calculated on the basis of actual data in accordance with the chapeau of
Article 2.2.2?
This understanding is correct. Profit for Bombay Dyeing was based on actual data pertaining
to the ordinary course of trade.
3.C Is the Panel correct in understanding that India does not dispute that the resulting
profit level was "reasonable" because it was ca lculated on the basis of sales in the ordinary
course of trade, in accordance with the chapeau of Article 2.2.2?
A profit that is calculated on the basis of sales on the ordinary course of trade as per the
chapeau of Article 2.2.2 is not ipso facto reasonable. It is our view that the test of ‘reasonableness’
would still apply even for a profit calculated as per the method of Article 2.2.2 chapeau. However,
contrary to sub-paragraph (ii) of Article 2.2.2, the chapeau itself contains the ‘ordinary course of
trade’ restriction. With this in mind, while the test of reasonableness for profit under the chapeau of
Article 2.2.2 still applies, it is perhaps somewhat easier to satisfy than in the case of Article 2.2.2 (ii).
India also refers to its answer to question 5.A, infra.
The profit used for Article 2.2.2 (ii) was in the view of India definitely not reasonable. As
pointed out earlier, this enormous profit calculated for a product such as Bed Linen was not normal
(let alone reasonable) for any other company in or outside India.
Whether or not this same profit was reasonable for Bombay Dyeing itself is a different
question. India takes the view that in this case it was at least permissible because it was calculated as
per the explicit rules of the chapeau of Article 2.2.2. This does not take away the possibility that even
a profit calculated under the method of the chapeau can under certain circumstances be unreasonable.
4. India seemed to suggest, at paragraph 44 of its first oral statement, that the profit cap
under Article 2.2.2 (iii) must always be calculat ed, in order to assess the reasonableness of
results obtained under Article 2.2.2 (i) and (ii). How is this suggestion consistent with India’s
view that the sub-paragraphs of Article 2.2.2 are hierarchical?
Article 2.2.2 has three main components. Firstly, the Chapeau is provides a general direction
on how the SGA expenses and the profits can be calculated in a reasonable manner by basing these on
actual data pertaining to production and sales in the ordinary course of trade. However, if this is not
possible, paragraphs 2.2.2 (i) & (ii) provide specific alternative methodologies for calculating SGA
and profits. These two sub-paragraphs constitute the second component of Article 2.2.2. In drafting
the final component of Article 2.2.2, as contained in 2.2.2 (iii), the drafters evidently wanted to take
care of a possible alternative methodology other than those specifically alluded to in sub-paragraphs
(i) & (ii). It is important to note that this open-ended reference to the alternative methodology is
subjected to the important proviso of reasonableness expressed as a cap on the profit. This was done
so as to ensure that any alternative methodology should satisfy these conditions, just as the
methodologies indicated in 2.2.2 (i) & (ii) were expected to fulfil. It is therefore India’s firm
conviction that even though the chapeau and sub-paragraphs of 2.2.2 are hierarchical, any
methodology that is chosen to calculate SGA and the profits should satisfy the test of reasonableness
expressed as cap on profit, as elaborated in 2.2.2(iii).
5.A The Panel understands India’s argument on including Standard’s data in the
calculation of profit under Article 2.2.2(ii) as not relating to sampling per se, since India does

not challenge the establishment of the sample, but as suggesting that, for the profit amount
calculation, the sample should have been "expa nded" to include Standard, in light of the fact
that Bombay’s profit on sales in the ordinary course of trade was markedly higher than the
available information concerning Standards profit rate. Is the Panel’s understanding of India’s
argument correct?
The Panel’s understanding is partially correct: the sample that was unilaterally imposed by the
EC upon the Indian textiles industry has not been challenged. In fact it should be pointed out that the
so-called ‘reserve sample’ [consisting of two reserve companies] did include Standard, and that the
questionnaire response of Standard was duly available with the EC. The sample is therefore not
challenged since the [reserve] sample did in fact include Standard.
Standard should have been included in the profit margin calculation. Clearly, this company
was more representative than Bombay Dyeing and clearly it also had a significant amount of domestic
sales. Whether or not the profit rate of Bombay Dyeing was ‘markedly higher’ could only have been
determined if the questionnaire response of the reserve company, Standard, had been verified and
further analyzed by EC. We have never suggested that Standard should have been included solely
because it was likely to have a lower profit. Rather, we genuinely believe that Standard was more
representative of the Indian industry, and that a sample containing both Bombay Dyeing and Standard
would have been more representative. It is likely that the inclusion of Standard would have resulted
in a lower margin of profit. However, the basic reason for the inclusion of Standard was that it would
have made the profit more representative and w ould have resulted in a truly valid -- and indeed
hopefully lower -- weighted average profit.
We feel that the inclusion of one more – less anomalous and less peculiar – company in the
calculation of the profit would have resulted in a more representative and less ‘peculiar’ profit rate.
Moreover such an inclusion would have done justice to the text of Article 2.2.2(ii) which provides for
a weighted average, presumably to avoid exactly such results, as have been obtained in the current
case, where a single peculiar company is allowed to contribute in its entirety to all dumping margins
of the country.
The EC’s current position to exclude Standard ab initio , because it could not have been
relevant since it ‘only’ has 14 per cent domestic sales [as pointed out during the EC’s First Oral
Statement] is beside the point. Such approach resembles the EC’s defence in other parts of this
dispute: ‘it is not relevant and therefore it will not be investigated.’ How could Standard be judged
not relevant without first analyzing its data?
5.B Does the information concerning Standard’s profit rate which India considers should
have been taken into account relate to all of Standard’s sales of the like product, or only to sales
in the ordinary course of trade?
Similar to its second argument with respect to its first claim [paragraph 3.78 et seq. of its First
Written Submission] India considers that this should ha ve been the profit pertaining to all sales. The
reason is that according to India the profit should have been calculated in accordance with
Article 2.2.2(ii) that is based on profit incurred and realized and not restricted to ordinary course of
trade. India is not arguing that Standard should have been attributed its own dumping margin and that
Standard should have been used to determine th e weighted average dumping margin. India merely
argues for compliance with Article 2.2.2 (ii) in that a genuine weighted average of actual amounts
incurred and realized be used.
Nevertheless, even if the profit would have been restricted to sales in the ordinary course of
trade only, it would still have addressed the separate basic concern that India has had all along with
the EC’s use of a profit margin of one peculiar producing exporter. In the view of India the use of one

or two companies’ data and the use of all their sales or only their sales pertaining to the ordinary
course of trade are separate arguments.
6. India’s argument against zeroing relies on the language of Article 2.4.2 concerning
weighted average prices. Assume, for the sake of argument, that a transaction-to-transaction
comparison were used. There is no weighted average of prices in that case. Would zeroing still
be prohibited? If so, why? If not, how would the overall dumping margin be calculated from
the individual transaction margins? How is th is different from the calculation of an overall
margin from individual model margins?
As India has stated during the meeting with the Panel, to the best of India’s knowledge and
experience, the EC has never used a transaction-to-transaction comparison. During the third party
meeting, the United States stated that it might use a transaction-to-transaction method, for example, in
cases involving sales of capital equipment. Presumably, the United States would then compare
domestic and export sales transactions made at, as nearly as possible, the same dates. In such a case,
the dumping margin would therefore presumably initially be calculated transaction to transaction
(unless there were several transactions effected on the same date).
However, to calculate the weighted average dumping margin for an exporter, weighted
averaging would still need to take place in all cases where at least two export transactions at different
dates were concerned. It is India’s view that in such a case the text of Article 2.4.2 is distinct for a T-
to-T comparison as compared with the text for a WA-to-WA comparis on. The WA-to-WA method
clearly admonishes a weighted average
 of all comparable export transactions, whereas the T-to-T
method does not contain similar strong language. In light of this different language India considers it
an open question whether zeroing would be permitted in the T-to-T method.
As regards some concerns expressed by the United States during its third party meeting with
the Panel, India notes that the first sentence of Article 2.4.2 explicitly contains the words "during the
investigation phase." Article 2.4.2 therefore does not necessarily address dumping margin calculation
methods in connection with collection of anti-dumping duties in retrospective systems, such as the
United States.
7.A Regarding India’s Article 5.3 claim that the EC "failed to examine the allegations in the
complaint", the Panel notes that India has not argued that the application did not contain
information required under Article 5.2.
The Panel’s understanding is correct and India confirms that it has not argued that the
application did not contain information required under Article 5.2.
7.B Regarding India’s Article 5.3 claim that the EC "failed to examine the allegations in the
complaint", the Panel notes that India has not specifically argued that the EC erred in its
determination that there was sufficient evidence to justify initiation.
India has argued that the EC erred in its determination that there was sufficient evidence to
justify initiation. In paragraph 5.20 of its first submission India argued that the evidence provided in
the application can in itself never be the only element to justify the initiation of an investigation. In
this connection India cited from the relevant part of the Panel report of 19 June 1998
1 , where it was
stated that "Article 5.3 established an obligation that extends beyond a determination that the
requirements of Article 5.2 are satisfied." In this connection India in paragraphs 5.28 through 5.31
argued that the counter-evidence existing before the initiation was not duly taken into account and
should have warranted a further examination due to these circumstances. India has repeatedly put

1 Guatemala--Anti-dumping investigation regarding Portland cement from Mexico, Report of the Panel
of 19 June 1998; WT/DS60/R.

forth the point that the EC failed to examine the veracity of the allegations in the complaint and
thereby erred in its determination that there was sufficient evidence to justify initiation, when none
existed.
7.C Regarding India’s Article 5.3 claim that the EC "failed to examine the allegations in the
complaint", the Panel notes that India has not argued that the EC’s notice of initiation was
insufficient.
In the view of India it did make the argument that it had serious concerns as regards the
transparency of the EC’s behaviour. In paragraphs 5.26 and 5.27 of its First Written Submission India
expressed such concerns. While the notice of initiation perhaps 2 contained standard phraseology on
items (i) through (vi) as required per Article 12.1.1, India has until today not been able to ascertain
that the EC examined the complaint, neither from the notice of initiation nor from any other record.
Even during its First oral Statement the EC did not clarify how it examined the ‘accuracy and
adequacy’ of the evidence, as provided for in Article 5.3.
7.D Can India clarify the scope of the violation it alleges in arguing that the EC failed to
"examine" the allegations in the application, and how, in India’s view, the Panel is to assess
whether such a violation occurred?
Article 5.3 ADA provides that the authorities shall examine the accuracy and adequacy of the
evidence provided in the application to determine wh ether there is sufficient evidence to justify the
initiation of an investigation. This is a positive obl igation imposed on the authorities. In view of the
existing counter-evidence it is hard to understan d how the EC could have examined the evidence in
the complaint without looking at other information [which was available and at the disposal of the
investigating authorities at the time of initiation].
7.E Does India agree that it has the burden of presenting a prima facie case of violation of
Article 5.3 in this regard?
India agrees and, in its view, it has made a prima facie case that there was no examination
whatsoever. This was also pointed out during India’s First Oral Statement in paragraphs 10 and 11.
In fact the EC’s Notice of Initiation is totally silent on the aspect of due examination of the complaint
and merely states that "the volume and prices of the imported products have, among other
consequences, had a negative impact on the quantities sold and the prices charged by the Community
producers, resulting in substantial adverse effects on employment and the financial situation of the
Community industry". As the notice of initiation is the only public document on record in which the
EC "discusses" its ‘examination’, it follows that India and the Panel must rely on this document and
conclude that no examination took place.
India, in its view, has made a prima facie case that the allegations in the complaint were taken
at face value by the EC ["allegations"] and were not examined at all before initiation [see the striking
Exhibit from the non-confidential file attached as India-82]. Moreover, the EC has not adduced any
evidence to the contrary. India acknowledges that Article 5.3 itself unfortunately does not impose any
form requirements for the examination, but notes that the Panel in Guatemala-Cement [Panel Report
of 19 June 1998] did impose the obligation to go beyond Article 5.2. In any event, it is clear from the
notice of initiation and from EC’ s First Oral Statement and responses to some of the preliminary

2 Although India has not made this argument, it is for example unclear whether the date of initiation
was mentioned in the notice of initiation. The EC has argued in other proceedings in the past that the date of
initiation is not necessarily the same as the date of the Official Journal. Since these two potentially different
dates therefore not necessarily coincide it could be argued that the date of initiation was not mentioned. In order
to avoid facetious arguments, India has not made this claim.

questions raised by the Panel that the complaint was not examined at all. It is therefore clear that EC
violated the provisions of Article 5.3.
8.A On what legal principle does India base th e suggestion, made at paragraph 8 of India’s
oral statement at the Panel’s first meeting, that circumstances and/or information outside the
application somehow increase the obligation to "examine accuracy and adequacy" of
information?
India in paragraph 8 of its oral statement has reasoned that the obligation imposed by the
provisions of Article 5.3 that the investigating authority shall examine the accuracy and adequacy of
information provided in the compla int, was in this particular case rendered even more acute by the
fact that the same investigating authority had carried out back to back investigations on practically the
same product being imported from India. In fact, the previous investigation had been terminated only
twenty days before the filing of the present case. Thus while in principle India seeks to highlight the
non-fulfilment of the obligation imposed by Article 5 .3 by the EC authorities, it also seeks to stress
this lapse in the context of the previous investigations initiated by EC.
India’s views are supported by those expressed by the Panel in Guatemala Cement in
paragraphs 7.47 through 7.60. First of all, in that Report at paragraph 7.49 the Panel stated that
"Article 5.3 established an obligation that extends beyond a determination that the requirements of
Article 5.2 are satisfied." [emphasis added]. Secondly, in paragraph 7.51 of the same Report the
Panel stated that "compliance with the requirements of Article 5.2 does not ipso facto mean that there
was sufficient evidence to justify initiating an investigation under Article 5.3". The Panel in that
paragraph then provides an example that while the requirements of Article 5.2 could be satisfied, there
could nonetheless not be sufficient evidence to initiate as per Article 5.3.
The Panel in paragraph 7.52 of Guatemala-Cement expressed the view that Article 5 as a
whole and Article 5.3 in particular is meant to strike a balance between competing interests, as far as
the initiation of an investigation is concerned. If the authorities were to disregard certain other
evidence readily available, then this balance between competing interests cannot be achieved.
8.B Does India mean the investigating authority must go beyond the application in
determining whether there is sufficient evidence to justify initiation, for instance by considering
the facts concerning a previously terminated inve stigation involving at least in part the same
parties and products.
India does not imply that the investigating authority ‘must’ go beyond the application in every
case in determining whether or not there is sufficie nt evidence to justify initiation. However, India
strongly feels that in particular cases, for instance the present case which had a history of repeated
initiations, the investigating authority ‘should’ have gone beyond the facts presented in the complaint,
specially since this evidence was readily available. This information should not have been ignored.
India’s view is supported by the clear wording of the Guatemala-Cement Panel which held in
its paragraph 7.49 that: "Article 5.3 established an obligation that extends beyond a determination
that the requirements of Article 5.2 are satisfied."
8.C India’s argument suggests that the "examination" under Article 5.3 of the adequacy and
accuracy of the evidence in the application must be carried out as some sort of "mini" or "pre-"
investigation. Is this India’s view?
It is not India’s view that the examination of the complaint should involve a mini or pre-
investigation. In this context, India agrees with relevant statements in prior Panel reports, such as
HFCS and Softwood lumber . On the other hand, India recalls and stresses that the authorities’
establishment of the facts must be proper and its evaluation of the facts unbiased and objective.

In the pre-initiation phase of a case, the authorities normally have at their disposal the
allegations in the application and possibly other information in the public domain. India would
suggest that, if, for example, the information readily available in the public domain directly
contradicted some of the allegations in the comp laint, then an examination of the facts would be
necessary to resolve the contradictions. Similarly, where, as was the case here, a previous
investigation involving largely the same parties and products was terminated days before the initiation
of the new proceeding, it would indeed be necessary that the facts pertaining to the previously
terminated investigation are taken into consideration.
An authority that does not accept that it has the onus to examine and therefore does not
conduct an unbiased and objective evaluation of the facts acts contrary to the obligation contained in
the ADA and paragraph 7.49 of the Panel Report in Guatemala Cement.
9. Does India consider that the standing determination must take account of "opposing"
views? In this regard, the Panel notes that the standing determination must take place prior to
initiation, during which time Article 5.5 admonishes investigating authorities to avoid
publicizing the application. Is India of the view that an investigating authority must, in all
cases, canvass all domestic producers of the li ke product to determine their opinions, whether
supporting or opposing the application, before a determination of standing can be made? How
could such an obligation be carried out consistently with the Article 5.5 obligation?
First, India agrees fully with the Panel that the standing determination (both the 25 per cent
and the 50 per cent test) must take place prior to initiation. Failure to do so constitutes a fatal error
on the part of the authorities, which cannot be cured retro-actively in the further course of the
proceeding [Swedish Steel; Mexican Cement]. Thus, as regards the 25 per cent test, in India’s view it
is clear that the producers supporting the complaint must do so expressly, i.e. individually , and
together must account for at least 25 per cent of total domestic production, this being an absolute
figure. In order to make this determination in accordance with Article 5.4, the authorities should
satisfy themselves as to the accuracy of the numerator and the denominator. [In the case of an
exceptionally large number of producers (as perhaps in Bed Linen), authorities may determine support
and opposition by using statistically valid sampling techniques as per the footnote to Article 5.4, but
the EC chose not to invoke this option].
As regards the 50 per cent test, on the other hand, India suggests that a more nuanced
approach is necessary, in light of Article 5.5 as well as the plain meaning of Article 5.4. Article 5.4
provides in relevant part that the application must be supported by those domestic producers whose
collective output constitutes more than 50 per cent of the total production of the like product produced
by that portion of the domestic industry expressing either support for or opposition to the application.
In India’s view, it follows from the wording of this provision that the denominator for the 50 per cent
test is different from the denominator to be used for purposes of the 25 per cent test.
Whereas for the latter, the denominator is the total domestic production of the like product
[arguably after the exclusion of related parties ex Article 4.1(i)] and therefore a fixed figure
independent of the specifics of the case, the denominator for the 50 per cent test depends on the
totality of producers expressing either support or opposition to the application and it may therefore
vary, depending on the producers expressing opposition to the application. If, for example, there are
domestic producers which do not take a position in a certain case (neither oppose nor support) or
which remain quiet, the production figure of such producers must be taken into account for the 25 per
cent test, but not for the 50 per cent test.
In other words, India does not, in such cases read into Article 5.4 an obligation on the part of
the authorities to actively canvass all domestic producers in order to determine whether they support
or oppose the application. The 50 per cent test can be satisfied on the basis of an examination of the

degree of support for, or opposition to, the application expressed by domestic producers of the like
product.
In India’s view, the important point in response to the Panel’s question is that it is absolutely
necessary for the investigating authority to verify the support for a complaint, specially if the support
has been expressed by an association of producers [which, in India’s view, is in any event not
permissible]. If during the verification some of the domestic producers express opposing views then
the investigating authority must take these into a ccount. This, in India’s view, does not in any way
dilute the obligation of Article 5.5.
10. On what basis does India argue that Article 6.10 applies to the selection of a sample for
purposes of assessing material injury to the domestic industry, given that that Article only
refers to samples of foreign producers and exporters?
India agrees with the Panel that Article 6.10 only refers to sampling of foreign producers and
exporters. The ADA does not explicitly contain any provisions on sampling of domestic producers
for purposes of the injury determination, and it is therefore not completely clear about such sampling.
However, the ADA does specify that sampling is appropriate in other contexts such as the use
of "statistically valid sampling techniques" to determine support and opposition for an application in
the case of fragmented industries [footnote to Article 5.4]. In Article 6.10 itself sampling is explicitly
allowed for the determination of dumping margins. The critical criterion is that sampling should be
statistically valid.
From these general principles India therefore derives that once sampling is applied, it should
be statistically valid. If such obligation exists for the sampling of foreign exporters and producers, the
same should equally apply for the sampling of the domestic industry.
11. Does India take the view that every element of the investigative process and every
decision taken during that process must be explained in the notice of final determination? If
not, on what criteria would India suggest that an investigating authority base its judgment as to
what must be addressed in the notice? In what does India base the table on page 28 of its first
oral statement, in light of the fact that the "claims" there addressed are those being pursued in
this dispute? Is India of the view that every element set forth in that table was required to be
addressed by the EC authorities in the notice of definitive Regulation?
In the view of India, Articles 12.1.1, 12.2.1 and 12.2.2 set forth – progressively detailed –
explanation requirements for, respectively, notices of initiation, notices of imposition of provisional
measures and notices of imposition of definitive duties. A comparison of the relevant texts of Articles
12.2.1 and 12.2.2 is instructive:
"[12.2.1] shall set forth sufficiently detailed explanations for the preliminary
determinations on dumping and injury and shal l refer to the matters of fact and law
which have led to arguments being accepted or rejected.
[12.2.2] shall contain all relevant information on the matters of fact and law and
reasons which have led to the imposition of final measures…in particular, the notice
shall contain the information described in subparagraph 2.1, as well as the reasons
for the acceptance or rejection of relevant arguments or claims made by the exporters
and importers". [emphasis added]
Thus, according to the text of Article 12.2.2, the notice of imposition of definitive duties
(where Article 12 imposes the most detailed obligations) must contain all matters of fact and law
which have led to arguments being accepted or rejected as well as the reasons for the acceptance or

rejection of relevant arguments or claims made by the exporters. The only important qualification in
this sentence is the word relevant which implies that all relevant information must be included. In the
view of India, there are only so many arguments or claims that are typically raised in the course of an
anti-dumping proceeding. Of these, some might be more important to the outcome of the proceeding
and some might be prima facie non-sensical, which could in turn imply that they are not relevant
within the meaning of Article 12.2.2.
However, the objective of Article 12 as a whole is clearly to require transparency and India
therefore suggests that authorities should err on the side of caution when deciding not to include
certain arguments or claims in the notice of final de termination. Clearly, when an authority expressly
chooses not to address an argument it should at least as a bare minimum indicate as to why it has
chosen not to address an argument. Clearly this is what the drafters had in mind as a permissible
interpretation of Article 12.
India notes in this context paragraph 97 of the third party submission of the United States that
the United States supports India’s views and states that it "shares some of India’s concerns about the
adequacy of the EC’s findings because the EC’s specific findings on the factors it addressed do not
elucidate why it did not give weight to factors it did not discuss".
In the table on page 28 of India’s first oral statement, India has provided a summary of nine
substantive claims which were not addressed in the notice imposing definitive AD duties. Of these
nine substantive claims, eight were made in the course of the proceeding. 3 All eight claims are not
only relevant, but also important, either because they are outcome-decisive (claims 11, 15, 20, 23, 26),
have a significant impact on the level of the dumping margin (claims 1 and 4) or are important as a
matter of principle to India and other developing countries (claim 29).
Accordingly, India is indeed of the view that these arguments and claims should have been
addressed in the notice imposing definitive AD duties, and by not doing so the EC violated the
provisions of Article 12.
12. Could India explain the statement, at para graph 87 of its first oral statement, that
Article 15 "tries to take care and addresses the diff erent market mechanis ms applicable between
the various countries in the world", and that for this purpose, special regard must be given to the
special situation of developing countries?
India, in paragraph 87 of its oral statement has tried to indicate the reasoning and objective
behind the introduction of the provisions of Article 15, when the ADA was being negotiated. At that
stage, it was pointed out by a large number of developing countries, and accepted by a large number
of developed countries, that the operation of the markets and the market mechanism existing in
developing countries was very different from that in developed countries. It was accordingly argued
that it was extremely important to provide a special dispensation to developing countries as far as the
anti-dumping provisions were concerned. Accordingly, Article 15 of the ADA begins by the
recognition that ‘special regard must be given by developed country members to the special situation
of developing country Members’. It was this ‘special situation’ prevailing in developing countries,
for which there was a need to give a special regard that India had attempted to highlight and explain in
paragraph 87 of its oral submission.
13. In the view of India, given that no specific offer of price undertakings was made by
Indian producers within the time-limit specified by the EC, what should the EC have
reasonably been expected to do in fulfilment of its obligations under Article 15?

3 The exception is claim 8. It is standard practice in the EC to treat all imports as dumped as long as
there is an overall dumping margin and it was therefore no t considered fruitful to ra ise this claim in the course
of an administrative proceeding in the EC.

India has repeatedly stated that the obligation to explore constructive remedies, as provided
for in Article 15 of the ADA, rested on the EC authorities. Thus, the EC should have proposed either a
price undertaking, or any other alternate constructive remedy to the Indian exporters, irrespective of
whether these exporters/producers had made any overtures in this regard. However, the EC
authorities did not do so. In fact they did not offer any alternate constructive remedies even after
Texprocil had sent a written proposal to explore a price undertaking as an alternative to the levying of
anti-dumping duties. Thus, at the very least th e EC authorities should have responded positively to
the offer made by Texprocil by making a concrete offer, vis-à-vis the possibility of a price
undertaking. However, India would like to make it clear that by simply making an offer of a price
undertaking, EC would still not have been in full compliance of its obligations under Article 15. This
obligation would have been fulfilled had EC with an open mind and constructive attitude tried to
explore all possible alternative remedies, including that of price undertaking, before levying anti-
dumping duties.
Questions from the Panel for both parties
32. The Panel understands, from the statements of the Parties at the first meeting, that the
EC authorities calculated SGA expenses on the basis of all sales in the ordinary course of trade,
and that India has posed no claim with respect to this methodology. Could the parties confirm
whether the Panel’s understanding is correct, and that the parties agree that Article 2.2.2(ii)
allows the calculation of SGA expenses on the basis of all transactions?
India has posed no claim with regard to the calculation of SGA expenses since according to
the understanding of India, the SGA expenses expressed as a percentage [10.39 per cent] were in this
case for the sales in the ordinary course of trade the same as for all sales. In the EC’s system these
amounts are normally the same.
In this connection India also refers to its summary table under paragraph 3.78 of its First
Written Submission where it is shown that the SGA percentage pertaining to the ordinary course of
trade is the same as the percentage pertaining to all sales.
In fact, according to India’s understanding, the SGA expenses were derived from the P/L
table in the questionnaire response and were derived from all sales.
33. Where an investigation involves multiple pr oduct types, investigating authorities will
have different SGA expenses for each of them, no t all of which product types may be sold for
profit. As a result, if the investigating authority excludes from consideration sales of one or
more product types as not sold in the ordinary course of trade, it will have different data sets for
calculation of SGA expenses as compared to those for calculation of profit. In the view of the
parties, would such a methodology fulfil the "fair comparison" requirement of Article 2.4?
Assuming for example that there are three sets of main product groups A, B, and C. Each
group has its own level of SGA expenses and each Group comprises a variety of, for example, 10
models. Suppose that the SGA percentages are 8, 10, and 12 per cent respectively. Suppose that
Group C is entirely loss-making. The EC would then probably calculate constructed normal value on
the basis of the cost of manufacture for Group C and the SGA of Group C, together with the weighted
average profit of Groups A and B. Since this method therefore does not apply different SGA
expenses to Group C than those that were actually incurred and realized, India made no claim on SGA
calculation. In the view of India it is hard to generalize that, once the comparison is made under
Article 2.4 in the situation above, this EC met hod of basing SGA on all sales of Group C would be
inconsistent with the ADA.
34. Would the parties indicate whether, in their view, in a case in which there is information
from more than one exporter or producer available for use in the calculation of profit amounts

under Article 2.2.2(ii) (including the case in which a proper sample includes more than one
exporter or producer), the investigating author ities may nonetheless choose to rely on the
information concerning only one of those exporters or producers?
The text of 2.2.2(ii) clearly refers to a triple plural. Therefore, once the criteria to rely on
option (ii) are fulfilled by the existence of more than one exporting producer there can be no reason
and for that matter no discretion, for the investigating authorities to rely on the information of only
one of those exporters or producers.
For example, in the current case information from both Bombay Dyeing and Standard
Industries was readily available [Standard did file a questionnaire response and was included in the
reserve sample]. The EC authorities should have relied on the information of both, without the a
priori decision to exclude Standard because it was not considered relevant in view of its ‘mere’ 14 per
cent share of the domestic market [EC’s First Oral Statement].
35A. As the Panel understands it, India takes the position that in the case of multiple
comparisons of weighted average normal value to weighted average export price, Article 2.4.2
specifically precludes "zeroing", but that Article 2.4.2 does not address the question of
"zeroing" in the process of "summing up" the results of multiple transaction to transaction
comparisons of normal value and export price.
This understanding appears correct [see also answer to question 6, supra]. The first
possibility under 2.4.2 [w.a. to w.a.] specifically deals with weighted average normal value to be
compared with weighted average prices of all comparable export transactions. The T-by-T method
does not include the words ‘all’ or ‘weighted average’ and specifically addresses the situation of one
transaction compared with one transaction.
35B. The Panel notes that if a Member makes separate comparisons of weighted average
normal value and weighted average export pr ice for each quarter during the investigation
period, the same question of summing up arises. Could the parties explain, with specific
reference to the text of the provision, whether, and if so how, Article 2.4.2 governs this process
of "summing up" in these situations?
Article 2.4.2, second sentence, specifically foresees the possibility of use of a weighted
average normal value to be compared with individual export transactions in case of a pattern which
differs among time periods. This is, however, the second step [the exceptions].
Before further answering the question, it appears best to provide an example. Suppose there
is one model A with four transactions as follows:
Transaction #1 on day 1: normal value: 100; export price 100
Transaction #2 on day 2: normal value: 105; export price 105
Transaction #3 on day 3: normal value: 115; export price 115
Transaction #4 on day 4: normal value: 120; export price 120
Dumping margin if weighted average normal value to weighted average export price: 0 [110 -
110 = 0]. Presumably, the authorities could not use a weighted average normal value to individual
export price method since there is no pattern of export prices which differs.
Suppose now that there are four quarters with a similar fact pattern for one and the same
model:
Transactions in Q1: w.a. normal value: 100; w.a. export price 100
Transactions in Q2: w.a. normal value: 105; w.a. export price 105

Transactions in Q3: w.a. normal value: 115; w.a. export price 115
Transactions in Q4: w.a. normal value: 120; w.a. export price 120
In this situation the question of zeroing does not arise either.
Suppose now that the situation is somewhat more extreme with some quarters revealing some
positive dumping and others revealing negative dumping:
Transactions in Q1: w.a. normal value: 100; w.a. export price 90
Transactions in Q2: w.a. normal value: 105; w.a. export price 115
Transactions in Q3: w.a. normal value: 115; w.a. export price 105
Transactions in Q4: w.a. normal value: 120; w.a. export price 130
Clearly, there is positive dumping in Q1 and Q3 and negative dumping in Q2 and Q4. In the
view of India there is then a significant difference between time periods and the exception can be
applied. However, turning back to a situation where these are not four quarters but simply four
transactions within one model WA-to-WA must be applied and the issue of zeroing consequently does
not arise [unless one of the other exceptions applies]:
Transaction #1 on day 1: normal value: 100; export price 90
Transaction #2 on day 2: normal value: 105; export price 115
Transaction #3 on day 3: normal value: 115; export price 105
Transaction #4 on day 4: normal value: 120; export price 130
WA-to-WA = 0 [110-110]. This is now consistent EC practice.
This then brings us to the last question: suppose that there is a variation between models, as
follows:
Model #1 on day 1: normal value: 100; export price 90
Model #2 on day 1: normal value: 105; export price 115
Model #3 on day 1: normal value: 115; export price 105
Model #4 on day 1: normal value: 120; export price 130
The text of Article 2.4.2 does not contain an exception of applying weighted average price
with individual export prices in case of differ ences between models. On the contrary, 2.4.2 only
permits use of the exception when there is a pattern of differences between purchasers, regions, or
time periods. Moreover, the main rule of 2.4.2 talks about the weighted average of all comparable
export transactions, and not of only those that are positively dumped.
In summary, according to India, Article 2.4.2 is clear. The first sentence sets out the principle
[WA-to-WA or T-to-T]. The second sentence provides for three limited exceptions [purchasers,
regions, time-periods], usage of which must be explicitly motivated. The failure of the EC to offset
inter-model negative dumping, however, introduces a third method which is neither fish nor fowl. As
the plain meaning of Article 2.4.2 is clear, such third method is, however, not a permissible
interpretation.
36.A The Panel understands India to take the vi ew that an investigating authority, having
established a sample for consideration of injury to the domestic industry, is limited to
considering only information for that sample set, and must ignore other information concerning
the information concerning the condition of the domestic industry if it relates to producers
outside the sample?

The very purpose of establishing a sample would be defeated if, during the process of
collecting information from the sample and examin ing such information, the investigating authority
can go back to the original source which the sample is supposed to represent in the first place. There
could perhaps in rare cases be overbearing circumstances to go back to the original source but it
makes no sense to go back only if and when this suits the purpose of authorities. The sample was
drawn from the domestic industry to facilitate the analysis of injury; therefore, to allow the data of the
sample to count only when it shows negative factors is meaningless.
Moreover, the EC did not only look beyond the sample to the Community Industry [the
original source from which the sample was drawn], but even relied on data from EU-15 as well [ i.e.
outside the original source for the sample; see paragraph 4.151 of First written submission of India].
India emphasizes that the EC relied on different levels when such reliance favoured a finding of injury
[see also India’s table at paragraph 4.151 of its First Written Submission].
36.B Does this not conflict with India’s suggesti on that the EC was obliged to take account of
Standard’ s information in calculating normal value despite the fact that it was not part of the
sample established by the EC for the dumping calculation?
Standard Industries was part of the sample and hence India’s views are not in conflict with its
response to question 36.A. Standard Industries has from the very outset been included in the reserve
sample as unilaterally imposed by the EC [see India Exhibits page 327 obliging the "reserve
companies" Jindal and Standard to respond to the qu estionnaire]. Standard duly answered to this
obligation and the questionnaire response of Standard was available with the EC from the outset. One
of the very purposes of a reserve sample is to provide extra information, in case this is or becomes
necessary. If it is considered not necessary to rely on the reserve when it becomes apparent that the
criteria of Article 2.2.2(ii) are not met and one still wants to rely on Article 2.2.2(ii), then when would
it become necessary to have to rely on a company from the reserve?
India has not suggested and is not suggesting that the EC should go beyond the companies in
the (reserve) sample. On the contrary, the EC should have relied on the sample and the reserve
sample.
In the view of India, therefore, no conflict whatsoever exists between India’s answer to
question 36A and this answer to question 36B. On the contrary, India cannot escape the impression
that the EC has measured the situation of the foreign exporting producers and the Community industry
with a double standard, incompatible with the provisions of the ADA.
Indeed, instead of a contradiction, India could see a similarity between the use of samples by
the EC, if the inclusion of Standard would be considered as going outside the sample in the first place-
-quod non. The EC seems to take the position that where data of the sample are ‘beneficial’ for the
EC, it is relied on. Where data of the sample ar e somehow not beneficial, these are ignored. Where
data outside the sample are beneficial, they are relied on. Where data outside the sample are not
beneficial, they are not relied on. One only needs to look at the table in India’s paragraph 4.151 of its
First Written Submission as to how this principl e worked for the determination of injury. For
dumping the same applies. Even if the inclusion of Standard for the profit determination would be
considered by the EC as ‘going outside the sample’ -- which was not the case because Standard was
in the reserve -- there could perhaps be other reasons for not doing so. Perhaps Standard was
disregarded because its inclusion for the profit determination for the purposes of Article 2.2.2(ii)
could have been less ‘beneficial’ for EC. Perhaps Standard was prima facie ‘estimated’ not to be
relevant in the first place because of a risk of reducing the profit and therefore not further analyzed
altogether.
36.C Can the EC explain how its action in going beyond the sample in considering
information on the question of injury to the domestic industry is consistent with its apparent

view that it was precluded from, or at a minimum was not required to, go beyond the sample to
take into account Standard’s data for the calculation of the profit rate under Article 2.2.2 (ii).
Not for India to answer.
36.D Why did the EC go beyond the sample data for the Community industry, and further to
data for all EC bed-linen producers in considering some elements of their analysis under
Article 3.4, and where are these reasons explained in the final determination?
India really does not know or understand why the EC [partially] relied on information beyond
the sample data for the Community industry [such as for example with the company Luxorette].
Similarly India does not know why the EC refused to explain its actions, despite repeated
observations and arguments on this issue.
37.A In the view of the parties, does the term "anti-dumping duties" in the second sentence of
Article 15 include provisional measures, or refer only to definitive duties?
According to India it is clear from the wording of Article 15 that the term ‘anti-dumping
duties’ in the second sentence of the Article includes provisional measures. This is because the first
sentence in the Article specifically states that the special situation of developing countries must be
kept in mind when considering the application of ‘anti-dumping measures’. It is, therefore, evident
that the reference in the Article is to any kind of anti-dumping measures, whether in the form of
provisional or definitive duties. This view is also supported by the fact that duties whether
provisional or definitive tend to have a negative effect on trade. It was with a view to limit this
negative trade effects in developing countries, by minimising the application of anti-dumping
measures, whether in the form of provisional or definitive duties, that the drafters of the ADA
specially included Article 15.
37.B Could the parties, in their answers, refer specif ically to the text of other provisions of the
AD Agreement which relate to provisional and/or final duties and/or measures.
India’s view is strengthened by a reference in Article 1 where again the phrase ‘anti-dumping
measure’ has been used. Since Article 1 provides a preface to the entire ADA, and since the ADA
refers to both the application of provisional and definitive duties, it is clear that the term ‘anti-
dumping measure’ refers to both provisional and definitive duties. Article 7.2 provides that
"provisional measures may take the form of a provisional duty." Clearly, therefore "anti-dumping
duties" include provisional duties as well.
38.A In the view of the parties, does the fulfilment of obligations imposed by Article 15 go
beyond the fulfilment of obligations under Article 8.3?
It is India’s view that indeed Article 15 goes beyond the fulfilment of obligations imposed
under Article 8.3. A price undertaking is only one of the possible constructive remedies that have
been referred to in Article 15. There could obvious ly be other constructive remedies as well, in the
form of other modalities. Article 8.3 only deals with the specific situation of an undertaking.
Moreover, Article 8.3 is applicable to all Members of the WTO. It is therefore, clear that the
possibility of a price undertaking under Article 8.3 can be explored irrespective whether the imports
under investigation are from a developed or a develo ping country. If the drafters of the ADA wanted
to limit the use of alternate constructive remedies to only price undertakings, then they may perhaps
have not felt the need for a separate Article 15. By including a specific and separate Article dealing
with the special situation of developing countries and referring to ‘constructive remedies’ (in plural)
in the Article, it is more than clear that the fulfilment of the obligations imposed by Article 15 go very
much beyond the fulfilment of the obligations under Article 3.

38.B In particular, is it necessary for the inve stigating Member, for instance, to take the
initiative to seek an understanding, and if so, how, and when, is that to be done?
Article 15 of the ADA specifically states that constructive remedies ‘shall be explored’. It is
therefore, clear that the onus and obligation is on the investigating Member to take an initiative to
seek such an understanding. In fact, the second sentence read in conjunction with the first sentence of
the ADA further strengthens this, since it has been specified that special regard must be given by
developed country Members. Furthermore, it is also mandated that the possibility of alternative
remedies shall be explored ‘before applying anti-dumping duties’. It is, therefore, clear that the
investigating Member needs to take the initiative of exploring alternate constructive remedies before
the application of anti-dumping duties.
38.C And again if the fulfilment of obligations imposed by Article 15 does go beyond the
fulfilment of obligations under Article 8.3, how did the EC authorities’ actions in the context of
the Bed Linen investigation go beyond the fulfilment of their obligations under Article 8.3?
As detailed in India’s response to question 13 above, the EC investigating authorities did not
take any initiative whatsoever in fulfilment of their obligations under Article 15. In fact, the EC
authorities did not even respond to the proposal made to them by Texprocil regarding a price
undertaking, except for stating that it had been received on the last day. It is, therefore, clear that the
EC authorities did not even fulfil the obligations imposed under Article 8.3, let alone the obligations
imposed under Article 15.
Questions from the EC
As a general preliminary matter, India notes that many of the questions raised by the EC
either refer to, or request information about India’s anti-dumping law and practice. EC does not
appear to be focusing on the legal or factual arguments relating to the present case, but instead wants
to focus on India’s anti-dumping law and practic e. India’s anti-dumping law and practice are in
conformity with the ADA and have so far never been subject matter of a dispute. Furthermore, India
considers that its anti-dumping law and practice is not relevant to the matter before the Panel. Indeed,
India’s anti-dumping law and practice is outside the terms of reference of the Panel.
Initiation Questions
1. INITIATION QUESTIONS
1. According to India, what type of evidence has to be evaluated in order to determine
whether or not to initiate an anti-dumping investigation under Article 5.3 of the Anti-dumping
Agreement?
India welcomes this opportunity to reiterate and further explain arguments that are already
contained in its First Written Submission with respect to its claim 23.
More specifically, India refers to the Report of the Panel of 19 June 1998, Guatemala—Anti-
dumping investigation regarding Portland cement from Mexico. According to the Panel, the
obligation to examine the accuracy and adequacy of the evidence provided extends beyond a mere
determination that the requirements of Article 5.2 are satisfied:
"7.47 Guatemala's position on this issue is cl ear: if the information supplied in the
application is all that is reasonably available to the applicant as required by
Article 5.2, the investigating authority is justified in initiating the investigation . . .
7.49 We cannot accept Guatemala's arguments in this regard. In our view, the
fact that the applicant has provided, in the application, all the information that is

‘reasonably available’ to it on the factors set forth in Article 5.2(i) - (iv) is not
determinative of whether there is sufficie nt evidence to justify initiation. Rather,
Article 5.3 establishes an obligation that extends beyond a determination that the
requirements of Article 5.2 are satisfied." [Footnotes omitted, emphasis added].
The Appellate Body did not overrule the Panel report on this issue.
Clearly, in abstracto, the evidence to be evaluated extends beyond that what is contained in
the complaint as per Article 5.2. In concreto, the evidence to be provided will obviously depend on
the facts of the case. However, as also pointed out in paragraph 5.28 of India’s First Written
Submission, immediately before the initiation the investigating authorities did have more information
at their disposal than merely the allegations in the complaint. This is in fact apparently also the
position of the EC in paragraph 38 of its first written submission, although it is unclear as of yet what
information was considered.
Could India illustrate its answer with examples taken from its own anti-dumping
practice?
See general comment above.
2. Could India provide an example of how public notice of examination of evidence prior
to initiation of an investigation has to be given?
The EC has ample opportunity to explain how it had examined the evidence in the various
phases of the case: at the moment of initiation, at the time of provisional measures, and at the time of
the definitive measures. The manner in which such explanation is given is obviously form-free, but it
has to be given. One cannot simply state that "it has been alleged that" and thereby consider to have
fulfilled the obligation. In the view of India, it has provided prima facie evidence that the EC did not
conduct an examination of the pre-initiation evidence, let alone provide public notice of such
examination.
Does India consider that issues relating to evidence provided in the industry’s complaint
and examined for purposes of initiation should be dealt with in the public notice of conclusion?
As stated, explanations can be given at three points in time: in the public notice of initiation,
in the public notice of the imposition of provisional measures, and in the public notice of definitive
measures. Article 12 provides the respective legal obligations in this regard and in the view of India
is self-explanatory. Under the mechanics of EC anti-dumping law and practice (where applications
received are confidential and are provided – in non-confidential form – to interested parties only after
the initiation of the proceeding), interested parties logically can comment on the evidence provided in
the domestic industry’s application only once they have received a copy of the non-confidential
application, i.e. after the initiation of the proceeding. Thus, it is only after the initiation of the
proceeding that interested parties can analyze and review the evidence in the application and can
make comments thereon. If interested parties make relevant arguments and claims with respect to the
evidence provided in the domestic industry’s co mplaint, the authorities have obligations under
Articles 12.2.1 and 12.2.2 to address such arguments and claims. A member cannot simply fail to
explain and therewith consider its obligations under Article 12 fulfilled.
Could India illustrate its answer with examples taken from its own anti-dumping
practice?
See general comment above.

3. According to India, how should the domestic industry’s standing requirement be
assessed for purposes of initiation?
India refers to its answer to question 9 of the Panel. India recalls that the objective of the pre-
initiation standing determination requirement in Article 5.4 is the prevention of frivolous complaints.
As regards both the 25 per cent and the 50 per cent tests, India is of the opinion that the text and plain
meaning of Article 5.4 are unambiguous: declarations of support/opposition must emanate from
individual producers and the authorities must examine such individual producers’ declarations of
support/opposition in order to determine prior to initiation whether the tests have been met. While the
application itself obviously may be filed by a trade association on behalf of its members, the
underlying declarations of support/opposition must emanate from individual producers and it is such
individual producers’ declarations that must form the basis for the standing determination. To adopt
the interpretation that trade associations may issue the declarations of support/opposition on behalf of
their members not only defeats the very objective of Article 5.4, but in addition makes footnote 13
meaningless.
As regards the denominator of the 25 per cent test, India considers that this is by definition a
fixed figure which must be determined by the authorities prior to initiation. In this respect, India
would suggest that while in the majority of cases the denominator may not be decisive because the
producers expressly supporting the application represent much more than 25 per cent, in critical cases,
such as the present case, it is incumbent upon the authorities to take appropriate steps to ensure that
the 25 per cent test is met and the correct numerator and denominator are used.
As far as the 50 per cent test is concerned, India does not wish to go as far as to suggest that
the authorities must actively canvass all domestic producers in order to examine the degree of
support/opposition [but only canvass those who ha ve made themselves known], although both
footnote 13 and practice of other traditional AD users would appear to contemplate such an approach.
If, however, the Panel were to decide that Article 5.4 does in fact require such canvassing, India
would welcome such a ruling while noting that it is clear that the EC has not canvassed all domestic
producers in order to determine degree of support/opposition, as seems not contested by the EC.
What is the standard of proof that the India considers necessary under Article 5.4 of the
Anti-dumping Agreement?
India first notes that the notion of a ‘standard of proof’ and the threshold for meeting a
particular standard cannot inherently be defined with absolutely precision in most legal situations, nor
is the appropriate standard of proof necessarily completely static throughout the ADA.
In India’s view, the standard of proof requir ed under Article 5.4 is a function of several
factors. These factors include:
• the text of Article 5.4, including the nature of the threshold test set out therein;
• the object and purpose behind the standing requirement in Article 5.4, interpreted according
to the ordinary meaning of the text and in the light of the other provisions of the ADA; and
• the facts of each case.
With regard to the text of Article 5.4 and the nature of the test set out in that provision, we
note that Article 5.4 provides for a very specific test for determining standing. This test is based on
objective, mathematical parameters. Article 5.4 clearly states that this test shall be satisfied as a prior
condition for initiation. Also, it is clear that it is the authority that shall determine whether the

standing threshold has been met, on the basis of an examination by the authority of the degree of
support for or opposition to the application by domestic producers.
When these factors are considered together, it would seem incongruous to take the position
that, while the drafters apparently went to some length to create an objective and mathematically
measurable test which is required to be fulfilled (as opposed to favouring a more subjective or vague
test), those same drafters then intended a very low standard of proof with respect to examining
whether the standing requirement is in fact met in any given case. On the contrary, the nature of the
standing requirement laid down in Article 5.4 would seem to suggest that a high degree of precision
and diligence is required when carrying out the obligation of determining standing under this
provision.
This conclusion is further supported by consideration of the object and purpose of the
standing requirement, and its relevance to the overall objectives of the ADA. The primary purpose of
the standing requirement clearly seems to be to avoid frivolous complaints, bearing in mind the severe
and immediate negative effect on exporters’ trade that often results from the ‘mere’ initiation of a
proceeding. Such trade distortions are clearly wholly inconsistent with the objectives of the WTO
Agreement. Also, with regard to the ‘standard’ that must be satisfied in a complaint generally,
Article 5.2 makes it clear that "simple assertion, unsubstantiated by relevant evidence, cannot be
considered sufficient…" In our view, the principle expressed in Article 5.2 is instructive in
examining the ‘standard’ required under Article 5.4, in that it again implies that a high degree of
diligence is required on the part of the authority, and that not all information or assertions can simply
be taken at face value.
It is clear from previous panels that unless an investigating authority can back up its
determination that the standing requirement has been met by reference to reliable evidence or data, the
authority cannot have properly be considered to have fulfilled its obligation to verify this issue prior
to initiation. For example, in the Swedish steel case, the United States argued that its initiation of the
anti-dumping investigation in that case was fully consistent with the standing requirements in
Article 5.1 of the previous Agreement on the Implem entation of Article VI of the GATT 1947. The
petition in that case had been filed by a trade association. The United States agreed that investigating
authorities must verify the standing requirement prior to initiation, noting that "[t]here has to be a
careful examination of inter alia a petitioner’s representation that it filed on behalf of a domestic
industry."4 Nonetheless, although the US argued that it had indeed conducted such a careful
examination, the Panel rejected the US argument, noting that the US had failed to back up its assertion
with solid data showing that the standing requirement had been met. The Panel noted that:
"…there was, therefore, no statistical evidence provided to the Panel in support of the
claim that the request ‘on its face’ supported the initiation of an investigation on
behalf of the domestic industry."
With regard to the facts of each case, we would first note that, while a trade association can
undoubtedly act on behalf of its members, Article 5.4 clearly requires that the authority must always
satisfy itself that the required level of support exists and examine the declarations of support of the
individual producers. In addition, however, as we noted above, in cases where the denominator of the
25 per cent test may be decisive, it is equally important that the investigating authority take the
appropriate steps to ensure that the 25 per cent test is met and that the correct numerator and
denominator are used.
Finally, as we noted above, the standard of proof which is required is not entirely static
throughout the ADA. For example, previous panels have held that the requisite level of proof of
dumping, injury and causation for the purposes of initiation is somewhat less than that required for the

4 Paragraph 5.11.

imposition of provisional or definitive duties. In the context of determining dumping, injury and
causation, this is obviously a sensible principle because of the complexity and volume of information
which must be analyzed and weighed in order to reach provisional or definitive determinations.
However, we believe it is important to distinguish between the required level of proof of
dumping, injury and causation at the initiation stage on the one hand, and the required level of proof
for standing at the initiation phase on the other.
First, conclusive findings on the former are by their nature impossible to reach at the outset of
an investigation because of the complexity of the evid ence. This is not at all true with respect to the
determination of standing. In fact, given the much simpler factual assessment that must be made for
the standing determination, and the clear, simple test provided for by Article 5.4, there is no logical
reason why an assessment of the standing requirement cannot be achieved with a relatively high
degree of certainty. The authority is simply being asked to verify that sufficient support is truly being
expressed by individual producers, and that these producers represent a sufficient portion of domestic
production to meet the threshold. In fact, even if there were an exceptionally large number of
domestic companies involved, footnote 13 in Article 5.4 guarantees that this will still be a very
achievable requirement by allowing the degree of support or opposition among the domestic industry
to be assessed using statistically valid sampling techniques.
Also, it should be recalled that no anti-dumping duties can be applied until/unless a
provisional or final determination has been made. Since duties are obviously not imposed at the
initiation phase it is logical that a somewhat lower standard of proof of dumping, injury and causation
is required at that stage, because the harm resulting from the im position of duties does not come into
play at the initiation phase . However, one must distinguish between the harm resulting from the
imposition of duties on the one hand, and the immediate and different harm to exporters which results
from the initiation itself (e.g. lost sales, legal expenses and lost man hours). With respect to the type
of harm resulting from initiation, the prior examination by the authority of the standing requirement is
the ‘last chance’ the exporter has to avoid this harm, and in this respect, in terms of consequences, the
authority’s determination of standing is somewhat more closely analogous to a provisional or
definitive finding of injurious dumping than to a mere preliminary assessment.
For all the reasons set out above, it is our view that the drafters of Article 5.4 considered the
standing requirement to be a crucial prior condition to initiating an anti-dumping investigation and a
specific test was designed to ensure that the level of support required for standing could be measured
with considerable accuracy. India therefore consid ers that Article 5.4 requires that reasonable steps
must be taken by the authority to ensure that the proper thresholds have been met, particularly where
it appears that the standing issue could be decisive. Again, the nature of the standing requirement laid
down in Article 5.4 would therefore seem to suggest that a high degree of precision and diligence is
required.
In its anti-dumping practice, does India only accept complaints for which support is
expressed explicitly by individual domestic producers? In case of affirmative answer, could
India provide actual examples of this expression of support? In case of negative answer, could
India explain in which cases it considers that complaints filed on behalf of the domestic industry
are acceptable?
See general comment above.
4. Could India explain how public notices of initiation should be formulated with regard to
the initial standing determination, if possible also by way of actual examples? Does India
consider issues relating to the initial standing determination in the public notice of conclusion of
an investigation?

India notes that Article 12.1.1 does not contai n provisions with respect to the standing
determination. On the other hand, it is crystal clear from Article 5.4 and from GATT Panel reports
[Swedish Steel; Mexican Cement] that the standing determination must be made correctly prior to
initiation and that a defective standing determination cannot be cured retro-actively in the further
course of the proceeding. Obviously, howev er, these two observations are not necessarily
contradictory. Thus, under the ADA, no formal obligation for an explanation is cast upon the
authorities to explain the standing determination in the notice of initiation. On the other hand,
Article 5.4 imposes the unequivocal substantive obligation that a correct standing determination must
be made prior to initiation. India would agree that issues relating to the standing determination may
be explained in the provisional or definitive determinations. However, the standing determination as
such must be made correctly prior to the initiation on the basis of the facts, available at the time of
such determination. Thus, for example, failure to request or receive individual declarations of support
prior to the initiation cannot be cured by ex post facto receipt of individual declarations of support
after initiation of the proceeding. In any event, if concerns are expressed concerning this
determination these concerns cannot be simply left un-addressed.
2. INJURY QUESTIONS
5. Does India, in its own anti-dumping practice, attempt to determine that material injury
is being caused only by those transactions that are dumped?
The EC would refer India to the following examples of its practice:
Hydrodesulpherisation Catalyst (HDS), Zinc Oxide Desulpherisation Catalyst
(ZnODS), High Temperature Shift Catalyst (HTS), Low Temperature Shift
Catalyst (LTS), Secondary Reforming Catalyst (SR), Methanation Catalyst
(Meth) from Denmark – Preliminary findings. ADD/IW/39/95-96, Ministry of
Commerce, 7 May 1997 (esp. paras. 18, 23) (Confirmed in Final Findings);
Sodium Cyanide from United States of America, Federal Republic of Germany
(FRG), Czech Republic, Korea RP and the Territory of European Union –
Preliminary Findings, No. 8/1/99-DGAD, Ministry of Commerce, 20 Oct. 1999.
(pp. 19, 21) (Confirmed in Final Findings).
See general comment above.
6. Does India, in its own anti-dumping practice, evaluate all the factors listed in
Article 3(4) Anti-dumping Agreement or only those that appear relevant?
See general comment above.
At the meeting with the Panel, the EC referred India to paragraph 19 of its recent Final
Findings dated 6 March 2000 in the Anti-dumping investigation concerning imports of Sodium
Cyanide from the USA, European Union, Czech Republic and Korea Republic. 8/1/99-DGAD.
7. Does India, in its own anti-dumping practice, attempt to determine whether dumping
was occurring during the whole of the injury investigation period or does it assume that there
was either dumping or no dumping in the period immediately prior to the investigation period
(for dumping)?
See general comment above.
The EC would refer India to the following examples of its practice:

Oxo Alcohols from Poland, South Korea, Indonesia, Saudi Arabia, Russia, Iran,
US and the European Union – Preliminary findings No. 15/1/99-DGAD,
Ministry of Commerce, Directorate General of Anti-Dumping & Allied Duties,
Notification, 3 Dec. 1999. (see pp 41, 66, 70);
Hydrodesulpherisation Catalyst (HDS), Zinc Oxide Desulpherisation Catalyst
(ZnODS), High Temperature Shift Catalyst (HTS), Low Temperature Shift
Catalyst (LTS), Secondary Reforming Catalyst (SR), Methanation Catalyst
(Meth) from Denmark – Preliminary findings. ADD/IW/39/95-96, Ministry of
Commerce, 7 May 1997 (esp. paras. 1-o, 18, 21-a, 23). (Confirmed in Final
Findings)
Sodium Cyanide from United States of America, Federal Republic of Germany
(FRG), Czech Republic, Korea RP and the Territory of European Union –
Preliminary Findings, No. 8/1/99-DGAD, Ministry of Commerce, 20 Oct. 1999.
(pp. 5, 21) (Confirmed in Final Findings)
3. PROCEDURAL QUESTIONS
8. On page 79 (para 3.135) of its First Written Submission, India reveals the profit margins
of companies in other countries. Where did India obtain this highly confidential information?
The direct source for this paragraph is India Exhibit-27, page 438, which consists of the
disclosure comments of Texprocil of 6 July 1997 in response to the provisional disclosure. India
understands that the underlying sources of this information are from the market. India also notes that
these profit rates during the past three years have never been disputed by EC. The profit considered
for the EC [5 per cent] is based on recital (130) of the provisional Regulation.
9. In Exhibit 16 a letter from the Indian government agency responsible for export
licensing of the products under consideration reveals that there are 287 Indian exporters.
During the investigation, the EC was told that only of 84. The export volumes indicated are also
inconsistent with those given to the EC. Can India please explain these discrepancies?
It appears that the EC confuses producing exporters and traders. The document in question
clearly refers to ‘shippers.’ Since it is the EC’s policy that only producing exporters are eligible for
their own dumping margin [vide (1994) O.J. L48/10
5], traders are in fact immaterial for a sampling
exercise which seeks to establish a weighted average dumping margin. It is further noted that a
number of traders in the list exported as much as 1 [one] kilogram and it therefore appears that the EC
is perhaps being a bit facetious. As regards the alleged discrepancies India does not know to which
discrepancies the EC is in fact referring.

5 In this proceeding the EC announced that, as a general rule, it will not calculate separate dumping
margins for trading houses: “[c]onsidering that a trading company is normally free to purchase from any
source, and may change its source of supply whenever con venient, a trading company cannot be treated in the
same way as a producer. Therefore, as a rule, individual dumping margins are not established, nor are duties
imposed on exporters who do not manufacture the product.”

3. As a second preliminary observation India regrets that the EC initially did not answer a
number of important questions from the Panel [e.g., Panel questions 14, 15, 16, 17] and only provided
answers three days after the deadline. India does not comment on these EC’s answers to the Panel
because these answers were not provided within the deadline.1 India requests that the Panel draws
inferences from the EC’s refusal to answer the Panel’s questions 14 through 17 within the deadline.
The situation is similar to the determination that Article 6 ADA is outside the terms of reference
because India did not mention that Article on time, even though the EC in fact had three weeks to
respond to it. India now only has two days to respond to EC’s answers 14 through 17.
4. India also regrets that the EC has answered othe r questions from the Panel only in part [e.g.
Panel question 18] and that the EC has not substantially answered a number of questions from India,
even though most of India’s questions were very straightforward [e.g. India’s questions 2, 3, 9, 10, 11,
23]. India would like to particularly draw the Panel’s attention to the manner in which EC has
deliberately avoided answering India's questions 6 to 10, and has refused to clarify the issue. The EC's
response to a number of questions that “given the advanced stage … only if the Panel believes it is
necessary…” [e.g. answers to questions 2, 9, 10], is extremely regrettable.
5. In the view of India this attitude on the part of the EC is symptomatic of the manner in which
the EC has been treating India and its exporters throughout the course of the administrative and
dispute settlement proceeding. This contrasts with the very serious efforts on the part of India to fully
co-operate with the EC throughout the entire administrative Bed Linen I and II proceedings and to
fully co-operate with the Panel and the EC during this dispute settlement proceeding. Until today, it
remains unclear what happened before and in the beginning of the administrative proceeding as
regards the examination of the complaint and the sta nding determination. Since this evidence, in the
sole possession of the EC, has been withheld for nearly four years by the EC and continues to be
withheld vis-à-vis the Panel, India notes that the Panel is allowed to draw inferences if it deems that
there is sufficient basis to do so.
2 This will be discussed in more detail below.
6. This rebuttal is divided into 6 parts:
• Introduction (I);
• Initiation claims (II);
• Dumping claims (III);
• Injury and causation claims (IV);
• Developing country status claims (V); and
• Explanation claims (VI);
II. INITIATION
1. Article 5.3: No 5.3 examination (Claim 23)
7. As a preliminary matter, India rejects the arguments contained in paragraphs 47 through 74 of
the EC’s First Written Submission. Particularly I ndia rejects the arguments by the EC that India is
arguing for an ‘eccentric’ interpretation of the word ‘examine’ [point 54] or that its interpretation of
the word ‘examine’ is ‘so vague as to be useles s’ [point 49]. India also rejects the arguments
contained in paragraphs 30 through 35 of the EC’s First Oral Statement. India regrets the EC’s
refusal to answer India’s legitimate questions on the EC’s assertions contained in the above-referred
paragraphs [e.g. India’s questions 2 and 16].

1 Contrary to India’s offer for undertakings which was submitted on the last day, i.e. on time, and for
that reason rejected by EC, the EC’s answers are now simply three days too late.
2 Canada -- Measures affecting the export of Civilian Aircraft, WT/DS70/R, of 14 April 1999;
Argentina -- Textiles and Apparel, WT/DS56R, of 22 April 1998.

8. It is clear from the very text of the EC’s notice of initiation, that there was no examination
whatsoever. Before initiation the complaint was taken at face value as regards the companies
allegedly supporting it and no examination took place.
9. In this connection India also strongly rejects the statement contained in paragraph 55 of the
first submission of the EC where the EC claims that “The Community authorities . . . have no interest
in initiating investigations that are likely to fail for lack of evidence.” It is ironic to read such bold
statements when India had recently been subjected to Synthetic Fabrics, Cotton Fabrics, Bed Linen I ,
all of which failed exactly for lack of evidence.
10. It appears that evidence has only been examined--if this indeed happened--to the extent that it
may have pointed towards injury, an evaluation of the facts which can hardly be said to be ‘unbiased
and objective.’ This is also witnessed for example by the EC taking into account the declaration of
the Spanish Association only as far as it concerned active support [India Exhibits page 1071] while
failing to examine before the initiation whether any producer of that Association would perhaps be
opposed to the complaint [see EC answer to India’s question 4].
11. As regards the assertion in paragraph 68 of the EC ’s First Written Submission that possible
evidence that injury may not have occurred is not relevant, India recalls the Report of the Panel of
19 June 1998, Guatemala—Anti-dumping investigation re garding Portland Cement from Mexico. 3
The EC’s argument on the precedent in HFCS is misplaced because that case involved a different fact
pattern: In that case the question was whether the complaint should contain information on all injury
factors. India is not arguing this [while it is clear that the Eurocoton complaint of course did not
contain evidence on all injury factors]. In the current dispute the question is whether investigating
authorities can ignore information patently at their disposal. And, as also pointed out in
paragraph 5.28 of India’s First Written Submission, immediately before the initiation the investigating
authorities did have more information at their disp osal than merely the allegations in the complaint.
This is apparently also the position of the EC in paragraph 38 of its first written submission, although
despite India ’s legitimate question on this issue the EC unfortunately refuses to provide factual
evidence for its assertions [EC answers to India’s questions 2 and 3].
12. For these reasons, India requests the panel to rule that there was no or insufficient
examination by the EC in violation of Article 5.3.
2. Article 5.4: Defective standing determination (Claim 26)
13. As a preliminary matter India rejects the EC’s arguments in paragraphs 82 through 100 of the
EC’s First Written Submission. India also rejects paragraphs 39 through 44 of the EC’s First Oral
Statement.
14. India recalls that there have been two GATT Panel reports on the issue of standing: United
States-Imposition of Anti-Dumping Duties on imports of Seamless Stainless Steel Hollow Products
from Sweden4 , [Swedish Steel] and United States-Anti-dumping duties on Gray Portland Cement and
Cement Clinker from Mexico5 [Mexican Cement]. Both Panel reports establish beyond doubt that (1)
the authorities have the obligation to actively check whether an application has indeed been filed on
behalf of6 the domestic industry and (2) that the failure to correctly determine standing is a fatal error

3 See also India’s written answers to questions of the Panel.
4 ADP/47 (20 August 1990).
5 ADP/82 (7 September 1992).
6 For the record, India notes that paragraph 89 of the EC’s First Written Submission misreads India’s
argument. A complaint may be submitted “by or on behalf of” the industry (Article 5.2). An association such as
Eurocoton can submit a complaint “on behalf of” the EC industry. However, Article 5.4 requires that the EC
determine whether the complaint is made “on behalf of” the EC industry. This must be done on the basis of “an
examination” of “the degree of support (etc.)”. The EC seems to argue that a listing of the associations in

which cannot be cured retro-actively in the course of the proceeding. The pertinent language in the
two Panel reports is remarkably similar. Thus, the Swedish Steel Panel noted that:
“ … in its ordinary meaning this term [‘on behalf of’] was used to refer to a situation
where a person or entity acted on the part of another involving the notion of agency
or representation. Nothing in the text of Article 5:1 suggested that the drafters of the
Agreement had wished to attach a different meaning to this term; on the contrary, the
fact that the term “on behalf of” appears in Article 5:1 as an alternative to “by”
underlines that this term must be interpreted in accordance with its ordinary
meaning. In the view of the Panel, the alternative for the requirement that a petition
be filed “by” the domestic industry affect ed cannot be a requirement so loose as to
allow a request to be filed by some members of an industry simply claiming to be
acting ”on behalf of” the rest of the industry. The Panel concluded that “ a written
request … on behalf of the industry affected” implies that such a request must have
the authorization or approval of the industry affected before the initiation.
The Panel then turned to the question of whether Article 5.1 must be interpreted to
require investigating authorities to satisfy themselves before initiating an
investigation, in a case where a written request for the initiation of an investigation
has been made allegedly on behalf of a domestic industry, that the request in question
has indeed been made on behalf of that industry. The Panel considered in this
respect that the reference in the first sentence of Article 5.1 to the definition of the
domestic industry in Article 4 meant that, in evaluating a written request allegedly
made on behalf of a domestic industry, investigating authorities must take into
account this definition. This requirement to observe the definition of industry in
Article 4 in decisions to initiate an investigation could only be met if investigating
authorities examined whether the person or entity who made a request for the
opening of an investigation acted on behalf of the industry affected, as defined in
Article 4. The Panel therefore concluded that Article 5:1 must be interpreted to
require investigating authorities, before opening an investigation, to satisfy
themselves that a written request is made on behalf of a domestic industry, defined in
accordance with Article 4.” [Paras. 5.9-5.10; emphasis added].
15. The Panel found that the United States had not checked that the application had indeed been
filed ‘on behalf of’ the domestic industry prior to initiation and considered that “…in light of the
nature of Article 5.1 as an essential procedural requirement…there was no basis to consider that an
infringement of this provision could be cured retro-actively."
7
16. In Mexican Cement, the Panel similarly found that in Article 5.1, the term “on behalf of”
involved a notion of agency or representation, and that a petition had to have the authorization or

Eurocoton’ s complaint was sufficient for the purposes of Article 5.4. In its submission, the EC does not specify
whether it checked whether the membership of these national associations represented at least 25% of EC
production, but in any event this is irrelevant. The whole point of Article 5.4 is that the claim of the
complainant that it represents the industry must be checked. If the number of producers is not overly large, this
can be done by contacting them or by some statement from them to this effect. If the industry is fragmented, the
first footnote to Article 5.4 allows statistically valid sampling (which the EC did not do in this case). It is
evident from the structure of Article 5 that the EC’s interpretation is unacceptable. For example, if a mere
declaration by the complainant (whether or not accompanie d by declarations from associations that themselves
are not producers) would suffice for Article 5.4, the first footnote to that provision becomes meaningless. This
footnote clearly requires positive action from the investigating authorities: “authorities may determine support
and opposition by using statistically valid sampling techniques.”
7 Para. 5.20.

approval of the industry affected, the term industry being defined in Article 4.8 The Panel went on to
determine on the basis of the word “shall” in Article 5:1 that this was a mandatory requirement and
that the investigating authorities had to satisfy them selves, prior to initiation, that the application was
by or on behalf of the producers of all or almost all of the production (the latter because of the
regional industry involved). 9 Thus, the investigating authorities had to satisfy themselves, prior to
initiating the investigation, that the application was made with the authorization or approval of
producers of all or almost all of the production within the regional market.
10 The Panel then found,
as a factual matter, that the Department of Commerce had made no effort to ascertain the extent of
approval for the application prior to initiation and had therefore violated Article 5:1.11
17. India notes that in both cases the Panels recommended that, in light of the nature of the
infringement, the anti-dumping duties collected be reimbursed.
18. India recalls that in the Bed Linen proceeding it has made several arguments related to the
defective EC standing determination:
- the standing determination must be made prior to the initiation;
- declarations of support must emanate from domestic producers; and
- the substantive test of 25 per cent must be met, [while the 50 per cent test should be
checked as well].
19. In the view of India, and in accordance with ample precedent ( Mexican cement; Swedish
steel), the failure of the authorities to abide by any of these requirements vitiates the standing
determination and constitutes a fatal error which cannot be repaired in the further course of the
proceeding.
20. In light of EC’s illuminating answer to India’s question 40, India is surprised at the statements
contained in paragraph 41 of the EC’s First Or al Submission and Paragraphs 98 and 99 of the EC’s
First Written Submission. According to the EC’s answer to question 40 the timeline of events was as
follows:
A. Before 13 September 1996 46 companies apparently ‘supported’ the complaint before
Initiation. According to the same answer, 35 companies out of these 46 producers
supporting the complaint represented 34 per cent of total EC production [It has
always been the position of the EC that this determination of 35 companies
representing 34 per cent of EC production constituted the standing determination (see
e.g. also EC Exhibit-4 (disregarding the fact that this Exhibit concerns in fact 38
companies))];
B. The 35 companies constituting the Community Industry on which basis the 34 per
cent can be calculated were fixed much later than 13 September 1996, in the course
of the investigation, when 11 producers were gradually excluded. [The figure of ‘35’
is arrived at only after exclusions of 11 producers after initiation].

8 Para. 5.20. Contrary to what the EC seems to imply in para 93 and 95 of its First Written Submission,
India does not dispute that companies may request their association to file a complaint for them (as actually
often happens in EC practice), or that an association files a complaint on its own initiative. Associations can
also draft standard letters of support for producers, which can then be signed by them and filed with the
investigating authorities before the initiation. If this is unworkable because of the number of producers, there is
still the option in footnote 1 to Article 5.4. What India cannot accept is that Article 5.4 allows that an
association supports on behalf of producers a complaint which is submitted on behalf of them [French, Spanish,
Austrian Association]. This is the same as a lawyer issuing a power of attorney to itself.
9 Para. 5.29.
10 Para. 5.31.
11 Para. 5.32.

21. How could the EC know before initiation that these 35 companies, later determined to
constitute the Community industry, represented 34 per cent at the time of initiation, while these 35
companies [the Community industry] were only identified after initiation? In other words, on the
basis of the EC’s reply to question 40, it is logically impossible that the EC determined, prior to
initiation, that these 35 companies represented around 34 per cent of EC production. At that stage--
according to the explicit written answer of the EC to India’s question 40--none of the 46 producers
which supported the complaint had yet been excluded.12
22. Similarly, how could the EC on 12 September 1996 already know that it was going to restrict,
after 13 September 1996, the initial 46 companies supporting the complaint to those companies which
allegedly represented 34 per cent of the total production. I.e., on 12 September 1996 the EC states
that “The sum of the 1995 production figures contained in the following documents, which
corresponds to the companies actively supporting the complaint, is 45952 tonnes.” But this is the
production figure of 38 companies! [copy of page 1035 of India’s Exhibits, re-attached]].13
23. India also notes that the EC has proffered Ex hibit EC-4 annexed to the EC’s First Written
Submission as evidence of the examination it conducted prior to initiation. Exhibit EC-4, however,
lists only 38 companies. As the EC states in its answer to question 40 that exclusions of EC producers
took place only after the initiation of the proceeding, it is logically impossible that Exhibit EC-4
reflected the situation before the initiation; rather, it reflects the situation at some stage later in the
proceeding. As eight companies [46-38=8] were excluded in Exhibit EC-4, and based on the EC’s
reply to India’s question 40, it becomes clear that Exhibit EC-4 [and the Commission letter referred to
in the previous paragraph] can at the earliest reflect the situation after the questionnaires were sent.
This is because, according to the EC’s reply to question 40, only 7 companies were eliminated after
initiation while 3 more companies were eliminated after questionnaires were sent [apparently in
October/November 1996, i.e. months after initiation].
24. Furthermore, since the EC considered that 46 companies supported the complaint at the time
of initiation, why were there at that stage only 24 declarations of support from individual companies
[according to EC]. [There were 32 such declarations if one counts the eight French declarations
(which apparently were available but which the EC decided not to put on file) and 38 if the
declarations of the Spanish and Austrian Associations are counted as company support].
Nevertheless, and at least, eight [i.e. 46-38] declarations of support were never received, even though
the EC concluded that 46 companies at initiation supported the complaint.14 Interestingly, these eight
missing declarations happen to coincide with the names of the companies which, according to EC
reply to India’s question 40, were excluded at various stages after initiation [seven after initiation,
three after the questionnaires were sent (10-11/1996) and one even after verification!].
25. Moreover, how could the EC already know on 12 September 1996 that companies actively
supporting the complaint represented 45952 tonnes [copy of Exhibit India page 1035 attached], while
it only received on 13 September 1996 the production figures from Eurocoton? [ Vide India
Exhibit-82]. How could the EC calculate the 34 per cent of total production on 12 September 1996
while it did not even have the total production figures on 8 November 1996, the date on which the EC

12 Apparently, the EC, before initiation, considered the unchecked list of complainants, including
companies such as Uco and Finnpile, to be the evidence that these companies actually did support the complaint.
It also implies that before initiation the EC did not work on the basis of any stated support or communications
from the companies.
13 This figure of 45,952 tonnes of 12 September 1996 more or less coincides with the tonnage
mentioned in Exhibit-4, footnote 3, of 44,187 MT.
14 The 8 companies on which the EC relied but which never gave a declaration of support are: the 4
Portuguese companies (Jocaritas, Helena, Ribeiro, Texteis), the Belgian company Uco, the French companies
Valrupt and Gisele, and the Finnish company Finnpile.

asked Eurocoton for further information [For example the production of the French company Gisele
was missing until then, vide India Exhibit-82]?
26. It follows from the foregoing that the EC cannot possibly have made the standing
determination before initiation. This constitutes a violation of Article 5.4 ADA [it also follows that
the EC did not examine before initiation].
27. Further, as a factual matter, India objects to the EC’s insinuation 15 that India has suggested
that EC officials falsified records and deceived the exporters in a fraudulent attempt to demonstrate
that they complied with WTO rules. However, apar t from the above noted inconsistencies, two facts
stand out:
• The non-confidential file, supposedly containing the producers’ declarations of support, was
only made available nearly four months after the initiation of the proceeding. [Contrary to
the EC’s answer to question 14, India had already inspected the regular non-confidential file
in December 1996, at which stage the non-confidential standing file was still not available. In
this regard, India attaches Exhibit-83 showing India’s inspection of the regular non-
confidential file. Indeed, the EC letter informing the Indian exporters that the non-
confidential standing file was ready [India Ex hibit-58 (re-attached)] only arrived 7 January
1997. India then inspected the non-confidential standing file one day later. India therefore
rejects the factually incorrect suggestion by the EC in its answer to question 14 that access to
the non-confidential file was never requested].
• The file contained a limited number of copies of faxed declarations of support, partially from
producers and partially from trade associations, from which the fax headers had been
removed, preventing interested parties in the proceeding from objectively establishing the
proper chronology of events.
28. India notes that, to this day, the EC has not contested these facts and has at no stage attempted
to give any explanation [In this regard the Panel may wish to refer to the manner in which EC has
sidestepped clarification of this issue by its refusal to respond to India's questions 6-10].
29. To the contrary, in the first meeting with the Panel, the EC, during the course of discussion
explained that the fax headers were removed from the producers’ declarations of support because the
fax numbers of the producers were considered to constitute business confidential information. At the
meeting, India expressed its surprise at this explanation because the producers’ declarations of
support, in the text of the declarations of support themselves, provide such fax numbers in the
identification details typed on the very same declaration.
30. At that time, India recalls that the Panel specif ically confirmed, in answer to such suggestion
by EC, that it would indeed be useful if the EC would produce the original faxed copies (with fax
headers intact) to establish the proper chronology of events. Thus far, the EC has refused to do so,
thereby preventing the establishment of the proper chronology.
31. As a supplementary means to establish the proper chronology of events, India has also
requested the EC (question 9) to provide a copy of the relevant pages of the so-called ‘chron-in’ log
that the EC maintains. To this request, the EC has responded that “[g]iven the advanced stage of the
proceedings, the EC will give additional factual information on this point only if the Panel believes it
necessary.” India considers that these documents are extremely relevant to the Panel’s assessment of
whether the individual declarations of support were in fact received by the EC before initiation. India
observes, on the other hand, that neither the “copies of faxed declarations of support by producers in
non-confidential file, [nor] Exhibit EC-4 [nor] EC oral answers to Panel’s questions during first

15 EC first submission, at paragraph 83.

substantive meeting of the Panel” [EC’s answer to question 9] can be considered as establishing such
date of receipt. India recalls that Exhibit EC-4, contrary to EC’s assertions, cannot possibly
summarize the situation before initiation because it provides details of 38 producers 16 only while the
EC has now admitted in its reply to India’s quest ion that it excluded producers only after initiation
and after questionnaires were sent [10-11/96].
32. India recalls that Article 13.1 of the DSU provides that “[a] Member should respond promptly
and fully to any request by a panel for such information as the panel considers necessary and
appropriate." The Appellate Body17 has stated in Canada – Measures affecting the export of civilian
aircraft, paragraphs 187 – 189, that:
“We note that Article 13.1 of the DSU provides that “A Member should respond
promptly and fully to any request by a panel for such information as the panel
considers necessary and appropriate.” (Emphasis added) Although the word
“should” is often used colloquially to imply an exhortation, or to state a preference,
it is not always used in those ways. It can also be used “to express a duty [or]
obligation.” The word “should” has, for instance, previously been interpreted by us
as expressing a “duty” of panels in the context of Article 11 of the DSU. Similarly,
we are of the view that the word “should” in the third sentence of Article 13.1 is, in
the context of the whole of Article 13, used in a normative, rather than a merely
exhortative, sense. Members are, in other words, under a duty and an obligation to
“respond promptly and fully” to requests made by panels for information under
Article 13.1 of the DSU.
If Members that were requested by a panel to provide information had no legal duty
to “respond” by providing such information, that panel's undoubted legal “right to
seek” information under the first sentence of Article 13.1 would be rendered
meaningless. A Member party to a dispute could, at will, thwart the panel's fact-
finding powers and take control itself of the information-gathering process that
Articles 12 and 13 of the DSU place in the hands of the panel. A Member could, in
other words, prevent a panel from carrying out its task of finding the facts
constituting the dispute before it and, inevitably, from going forward with the legal
characterization of those facts. Article 12.7 of the DSU provides, in relevant part,
that “…the report of a panel shall set out the findings of fact, the applicability of
relevant provisions and the basic rationale behind any findings and recommendations
that it makes.” If a panel is prevented from ascertaining the real or relevant facts of
a dispute, it will not be in a position to determine the applicability of the pertinent
treaty provisions to those facts, and, therefore, it will be unable to make any
principled findings and recommendations to the DSB.
The chain of potential consequences does not stop there. To hold that a Member
party to a dispute is not legally bound to comply with a panel's request for
information relating to that dispute, is, in effect, to declare that Member legally free
to preclude a panel from carrying out its mandate and responsibility under the DSU.
So to rule would be to reduce to an i llusion and a vanity the fundamental right of
Members to have disputes arising between them resolved through the system and

16 Only after initiation producers were excluded and there should have been 46 producers. And, for
example, on 8 November 1996, there were still 39 producers. [On 8 November the French producer Ets Gisele
was still part of the 39 companies (Exhibit India-82) although it was not included in the list of 38 producers of
EC Exhibit-4, a document which supposedly summarizes the situation before initiation (of 12 September 1996).]
17 Canada – Measures affecting the export of civilian aircraft, WT/DS70/AB/R, 2 August 1999.

proceedings for which they bargained in concluding the DSU. We are bound to
reject an interpretation that promises such consequences.”
33. Similarly, the Panel in Argentina - Measures Affecting Imports of Footwear, Textiles,
Apparel and Other Items ("Argentina – Textiles and Apparel") emphasized the “rule of collaboration”
incumbent upon parties to WTO dispute settlement. 18 According to that panel, the rule of
collaboration provides that once “the claimant has done its best to secure evidence and has actually
produced some prima facie evidence in support of its case”, the respondent has the obligation “to
provide the tribunal with relevant documents which are in its sole possession”.
34. India requests the Panel to draw inferences from the EC’s refusal to provide relevant
information solely in its possession and to conclude that the EC has failed to establish that it received
the producers’ declarations of support before the initiation of the proceeding.
19 India notes once more
that, even if one accepts the declarations of support by the National Trade Associations, the maximum
number of producers represented is 38. As the eight producers were excluded only after initiation and
after the questionnaires were sent [10-11/96], it is unclear why their declarations of support, according
to the EC received before initiation, are missing from the non-confidential standing file.
Consequently, the EC could not possibly have determ ined standing within the meaning of Article 5.4
ADA.
III. DUMPING
35. India recalls that there are three Articles that are at the core of the dumping claims:
Article 2.2, Article 2.2.2 (ii), and Article 2.4.2.
1. Article 2.2: The profit must be ‘reasonable’ (Claim 4)
36. In connection with this claim, India rejects the observations contained in paragraphs 175
through 193 of the EC’s First Written Submission. In this regard India also rejects the EC’s
arguments contained in paragraphs 68 through 77 of the EC’s First Oral Statement.
37. India recalls that at the heart of its claim as regards Article 2.2 is the question whether the
principle of ‘reasonable’ is an over-arching requirement, instructing the whole of Article 2.2, or
whether any profit determined in accordance with the further specifics of Article 2.2.2 is in se
reasonable?.
38. India is convinced that a profit arrived at under the methods foreseen under Article 2.2.2 is
not automatically reasonable. The word ‘reasonable ’ in the chapeau of Article 2.2 instructs the
whole Article as an independent requirement, both as regards the method and its result. India
categorically and strongly denies the EC’s suggestion that the methods in Article 2.2.2 (i) and 2.2.2(ii)
are ‘evidently formulae that produce reasonable solutions’ [paragraphs 181].

18 Panel report, WT/DS56/R, adopted 22 April 1998, as modified by the Appellate Body Report,
WT/DS56/AB/R, para. 6.40.
19 As the Appellate Body stated in Canada – Measures affecting the export of civilian aircraft,
para 203:
“Clearly, in our view, the Panel had the legal authority and the discretion to draw inferences from the
facts before it – including the fact that Canada had refused to provide information sought by the Panel.”
Also, in para. 205 the Appellate Body continued:
”If we had been deciding the issue that confronted the Panel, we might well have concluded that the
facts of record did warrant the inference that the info rmation Canada withheld on the ASA transaction included
information prejudicial to Canada's denial that the EDC had conferred a "benefit" and granted a prohibited
export subsidy.” [Footnotes omitted].

39. India rejects the contention that no evidence was ever presented showing that the profit of
Bombay Dyeing was anomalous and not representative. Bombay Dyeing is a peculiar company in
India possessing an established position in the market for over one-hundred years. This fact was
brought to the attention of the EC countless times during the proceeding.
40. India also rejects the EC’s brushing off of I ndia’s argument that a profit is unreasonable
simply because it is higher than that obtained in other countries [EC First Written Submission
paragraph 188]. The point has never been that the profit so determined for India was a bit higher than
in other countries [implied by EC First Written Submission paragraph 188]. The point was that the
profit determined for and used in the calculations for India was three times higher than that of any
other profit found to exist in the proceeding. In this connection India also rejects the EC’s answer to
India’s question 29.
2. Article 2.2.2: Incorrect application (Claim 1)
41. In relation to Article 2.2.2 India recalls that it has advanced three arguments:
• The text of Article 2.2.2 (ii) itself evidently mandates the use of a weighted average of
amounts from exporters or producers;
• The text of Article 2.2.2 (ii) itself mandates the use of amounts “incurred and realized” and
not amounts “determined”;
• Option (ii) follows option (i);
42. As a preliminary matter, India rejects the EC’s arguments contained in its paragraphs 108
through 166 of the EC’s First Written Submission. Similarly, India rejects the EC’s arguments
contained in paragraphs 47 through 66 of the EC’s First Oral Statement and the EC’s answers to
questions 24 and 25.
43. As regards the first argument India considers the suggestion that the inclusion of data of
another producer would have had little effect [again paragraph 190] is not borne out by the facts. As
the EC knows, Bombay Dyeing and Standard Industries were the largest sellers on the domestic
market [see India’s first submission paragraph 3.3]. Since the EC failed to investigate Standard
Industries, its potential impact is unknown. From the very beginning India’s suggestions in this
regard were not taken into account. The EC’s position to exclude Standard ab initio, because it could
not have been relevant since it ‘only’ has 14 per cent domestic sales [as pointed out during the EC’s
First Oral Statement] is beside the point. Such approach resembles the EC’s defense in other parts of
this dispute: ‘it is not relevant and therefore it will not be investigated.’ How could Standard be
judged as not being relevant without first analyzing its data? This refusal to analyze therefore
constitutes a violation of Article 2.2.2(ii): the possibilities to properly apply the option were available,
yet despite this the EC refused to take Standard into account and instead chose to interpret the option
in a restrictive manner that it deemed more useful for its purpose. Such refusal is all the more bizarre
in view of the inappropriateness to rely on Bombay Dyeing as being representative for Indian
exporters.
44. Indeed, now that the EC argues that this 18.65 per cent profit of Bombay Dyeing was so
perfectly representative [EC FWS paragraph 190], it may be recalled that the quantity of its profitable
sales was only half of its total domestic sales [page 374 of India Exhibit-24]. In this regard India does
not agree with the EC’s answer to question 22 where the EC states that the profitable sales of Bombay
Dyeing were “sufficiently representative.” As pointed out earlier, Bombay Dyeing was never
representative as a general concept; moreover, as already pointed out on 6 July 1997, the profitable
domestic sales quantities of Bombay Dyeing were le ss than 5 per cent of India’s export quantities to

the EC [page 435 India’s Exhibits], and therefore not representative within the meaning of footnote 2
of the ADA.
45. As far as the second argument concerning amounts “incurred and realized” is concerned,
India first of all objects to the suggestion that it ha s not considered the context, object and purpose of
the provision [EC paragraph 135]. However, it is clear from the Vienna Convention that the terms of
a treaty in its ordinary meaning are the first source of interpretation. India has therefore rightfully
considered the text of the provision.
46. The EC confuses a normal profit “incurred and realized” and the profit “calculated and
determined” for dumping purposes. In this connection India recalls that the three respective profit
margins of Bombay Dyeing were overall 4.66 per cent, 12.09 per cent “incurred and realized on Bed
Linen”, and 18.65 per cent “determined on profitable sales only of Bed Linen”.
47. Indeed, to improperly graft the concept of “ordinary course of trade ” onto Article 2.2.2 (ii)
has several flaws as a matter of treaty interpretation:
• First, the initial sentence of Article 2.2.2 chapeau explicitly includes the concept “ordinary
course of trade.” This first sentence of this chapeau however is grammatically distinct from
the second sentence that serves as the chapeau for the remainder of this provision. The
concept “ordinary course of trade” is therefore not properly considered to be part of the
remaining text of this provision. This is different from the concept of ‘reasonable’ which
does not form part of the chapeau of 2.2.2, but is an overarching concept embedded in
Article 2.2 and thereby instructing the whole of Article 2.2.
• Second, the drafters of Article 2 were quite careful to insert the concept “ordinary course of
trade” in precisely those places where they intended the concept to apply. The decision not
to include the concept in Article 2.2.2(ii) must therefore be given meaning when interpreting
this language.
• Third, the EC’s interpretation gives no significance to the important distinction between the
language and the option set forth in Article 2.2.2 chapeau based on “actual data” and the
language of the option set forth in Article 2.2.2(ii) based on “actual amounts incurred and
realized”.
48. In other words, in both instances [first and second sentence of Article 2.2.2 chapeau] the
‘actual data pertaining to ordinary course of trade’ as well as the ‘actual amounts incurred and
realized’ form the basis for the determination of the SGA and profit. Both are ‘real information’
which form the basis for SGA and profit determina tion. The difference in the view of India is that
this “real information” has in the case of ‘actual data’ explicitly been qualified by the ADA to
pertain to ordinary course of trade. In the case of ‘actual amounts incurred and realized’ this is
specifically not the case.
49.
In sum, it would appear that the EC has acted contrary to Article 2.2.2 on the above counts.
3. Article 2.4.2: Incorrect interpretation of a ll weighted average export transactions; main
rule and exceptions cannot be mixed (Claim 7)
50. As a preliminary observation, India rejects the arguments put forward by the EC in
paragraphs 201 through 214 of the EC’s First Written Submission. In this connection India also
rejects paragraphs 77 through 80 of the EC’s First Oral Statement. India regrets that the EC has
refused to answer the first part of its question 23. India further rejects EC’s argument in the second
part of its answer to question 23. India will now address this issue in further detail.

51. India reiterates its concern that allowing the offset within models but not between models
[inter-model zeroing] contradicts the plain meaning of Article 2.4.2. The EC’s interpretation
disregards the word ‘all’ in the context of ‘all comparable export transactions.’ ‘All’ is apparently
taken to mean by EC only the transactions that are dumped, not those transactions involving models
that are not dumped.
52. Moreover, India respectfully submits that the alternative option contained in Article 2.4.2
allows the authorities to compare a weighted average normal value with individual export prices, in
case of a ‘pattern of export prices.’ Such pattern could exist, for example, in a case where three
models would appear very much dumped while two would appear very much non-dumped. However,
in the view of India, the ADA does not allow the mixing of the main rule and the exceptions. Either
the main rule is applied or the exceptions are invo ked on the basis of an explicitly motivated finding
of existence of a pattern of export prices.
53. India considers the arguments of the EC unconvincing. The fact remains that no genuine
‘weighted average’ on the export side is being effectuated: while normal value is always considered at
the ‘weighted average’ level, the ‘export prices’ are sometimes ‘zeroed’ and therefore not considered
at their ‘weighted average’ level.
54. The interpretation of the EC which for certain models imputes ‘zero’ instead of ‘weighted
average’ is tantamount to skewing the proper weighted average by essentially adjusting some prices,
but not others.
55. The offsetting of dumped with non-dumped transactions within models [ intra-model
offsetting], but not between models [ inter-model zeroing], is also illogic al as shown in the following
example:
Situation 1: One Model A
Date Normal value Export price Difference
1 May 50 50 0
 10 May 100 100 0
20 May 150 150 0
30 May 200 200 0
Agreed between all Members:
Weighted average-to-weighted average:
125 (50+100+150+200/4) – 125 (50+100+150+200) = 0
Situation 2: Four different models A, B, C, D:
Date Normal value Export price Difference
1 May-Model A 50 50 0
10 May-Model B 100 100 0
20 May-Model C 150 150 0
30 May-Model D 200 200 0

Inter-model zeroing:
[India’s method: Weighted average-to-weighted average: 125-125=0]
Transaction by transaction-to-transaction by transaction:
[Model A: 50-50=0
Model B: 100-100=0
Model C: 150-150=0
Model D: 200-200=0]
EC method, as applied in Bed Linen: Weighted average normal value to transaction by transaction
export price
Model A: 125-50=75
Model B: 125-100=25
Model C: 125-150=-25=0
Model D: 125-200=-75=0
(100/500)*100=20 per cent
The EC has managed to find a dumping margin of 20 per cent.
56. India takes this opportunity to make an observation as regards the example put forward by the
United States in its First Written Third Party Subm ission at paragraphs 43 and 46. The United States
suggests that “India’s methodology necessarily distorts the product-specific comparisons and is
equivalent to simply aggregating normal values and export prices regardless of comparability.” In
light of the strong wording of this statement, India wishes to draw the Panel’s attention that it
respectfully disagrees with its content. The reasons are twofold: in the example of the United States,
the models have all been set to an equal volume thereby suggesting that India’s method necessarily
compares one weighted average normal value with one weighted average export price. Suppose
however that the dumped models are all specialty products and the non-dumped models are all mass
merchandise sold at non-dumping prices:
WA
Normal
Value
WA
Export
Price
Dumping
Amount per
model
 Quantity
Exported
Total
Dumping
Amount
Total
Export
Price
Dumping
per model
Model 1 5,500 5,000 500 10 5,000 50,000 10%
Model 2 1,800 2,000 -200 50 -10,000 100,000 -10%
Model 3 3,300 3,000 300 10 3,000 30,000 10%
Model 4 4,500 5,000 -500 50 -25,000 250,000 -10%
Model 5 2,200 2,000 200 10 2,000 20,000 10%
450,000
The US is now suggesting that only the positive dumping should count towards the overall margin:
(10000 ./.. 450000 )* 100 = 2.22 per cent. The company is therefore attributed a dumping margin.
However, it is clear that on the whole the comp any was not dumping at all: its overall dumping
amount was - 25000, i.e., its dumping margin was - 5.55 per cent. (-25000 ./.. 450000)*100=-5.55 per
cent.
57. In the view of India the situation is therefore not as suggested by the United States. India’s
position takes due care of the overall situation of a company’s behaviour, exactly in accordance with a

genuine weighted average of all export transactions. India believes that, in this respect,
paragraphs 3.158 and 3.159 of its First Written Submission containing the ‘real-life’ example of the
company Prakash is also instructive. Companies are found to be dumping while they are in fact not
practising dumping behaviour if their export transa ctions would be properly weighted. India regrets
to note that its straightforward observations are drawn into a complex dispute as to whether
Article 2.4.2 covers ‘zeroing’ of non comparable models which, in fact, all are one ‘like product.’
India further regrets that the inconsistent EC practice has been brushed aside with unprovoked attacks
on the integrity of India’s lawyers [ ‘breach of confidentiality’], rather than by the EC explaining in
straightforward terms that in some proceedings inter-model offsets are allowed and in other cases not
[and notably not in the Bed Linen case].
58. In India’s view, not only the letter but also the spirit of the provision should be kept in mind.
Article 2.4.2 was introduced in the ADA during the Uruguay Round to address specific concerns of
victims of anti-dumping actions, so that exporters should not be put in an unfair situation due to
skewed calculation techniques, and to effectuate a genuinely fair comparison as per Article 2.4.
59. The EC has also argued that Article 2.4.2 does not address the issue of zeroing. Asked by
India which provision does, according to the EC, address zeroing, the EC provided the non-sequitur
answer that “it is not for the EC’s [sic] to formulate India’s claims in this case.” India would recall
that Article 2.4.2 was inserted in the ADA exactly to overrule the GATT Audio Tapes in Cassettes
report on zeroing and therefore considers the EC’s invocation of the ATC report
20 on this point
unconvincing.
60. Finally, India further rejects the introduction by the EC of Article 9.4, which deals with the
duty for the non-sampled co-operating exporters. It is clear that it is not the sampling duty
calculation, but the operation of Article 2.4.2 whic h is the Article towards which India’s claim is
directed. The fact that a sampling duty could under certain specific circumstances be higher by the
exclusion of zero or de minimis dumping margins is not at issue. No claims have been raised with
respect to Article 9.4.
IV. INJURY
61. As a preliminary matter concerning injury, India wishes to address the concerns that it has
regarding the manner in which the EC’s sample and Community Industry have been established. The
process of establishing the sample has been ‘explained’ in the Provisional Regulation, recitals 52
through 61, recital 8 of the Provisional Regulation, in EC’s non-confidential letter to Eurocoton [India
Exhibit-82] and in EC’s answer 40 to India’s written questions. For the purposes of summarizing the
information made available by EC concerning the various stages in this process, India attaches a
summary worksheet of the facts as India Exhibit-84.
62. India has earlier expressed concern about the fact that the company Luxorette was part of the
sample, while it was not part of the Community industry. Having been asked this question, the EC
answers in its written replies to the Panel and to India that Luxorette is not part of the sample. In light
of the published explanations provided in the Official Journal, and the other information read in
context, India is perplexed to learn that according to EC Luxorette is allegedly not in the sample. This
assertion by the EC is inconsistent with the facts:
A. Recital 61 of the Provisional Regulation mentions that there is an initial list of 19
sample companies: 8 from France, six from Germany, four from Italy, and one from
Portugal. These 19 companies are also mentioned in EC’s non-confidential letter to
Eurocoton attached as India Exhibit-82;

20 EC’s First Oral Statement at paragraph 81.

B. From these 19 companies, two companies are subsequently excluded, as per recital 61
of the Provisional Regulation. These two companies were respectively excluded for
‘failing to co-operate’ and ‘for the reason as per recital 54’. From Exhibit-82 read in
conjunction with the other information it follows that these two companies excluded
by recital 61 were Erbelle [Germany] and Claude [France];
C. This then leaves 17 producers including Luxorette which the Commission considered
“to be representative of the Community industry” [Recital 61]. These 17 producers
are also specifically mentioned in recital 8 of the provisional Regulation, including
Luxorette, where they are also indicated as sampled companies;
D. Up to this stage, Luxorette is still part of these 17 companies;
E. Now, in its answers to the Panel, the EC states that Luxorette has been excluded as
per recital 54 of the provisional Regulation. This answer is incomprehensible in view
of the fact that as per recital 61 the EC already used the reason of recital 54 to come
down from 19 sampled producers to 17 sampled producers [17 in which Luxorette
was still included]. Exclusion of one company as per the reason in recital 61 jº
recital 54 cannot be used twice!;
21
F. Indeed, in light of the EC’s answer to question 40 of India, one more question arises.
In its answer the EC states that th e Community industry and the sample were
established “in parallel in various steps.” If this is the case, one may also wonder
what happened with the French company “Claude”. This company formed part of the
original sample of 19 producers and of the original Community industry of 39
companies [recital 61 PR and India Exhibit-82]. In recital 61 of the provisional
regulation two companies are excluded from this sample of 19, one for non-co-
operation and one for the reasons as per recital 54. One of these companies is the
French company “Claude” since it does not appear any longer on the list of 17
sampled companies as per recital 8 of the provisional regulation [while it did appear
in the original sample of 19 producers mentioned in Exhibit-82]. This company was
therefore excluded from the sample-19. However, this company does show up in the
final Community industry of 35 producers. This begs the question whether the
sample and the Community industry were indeed established in parallel and why
Claude was removed from the original 19 sampled companies but not from the
Community industry.22
1. Article 3.1: Failure to examine only dumped transactions (Claim 8)
63. India rejects the EC’s arguments contained in paragraphs 215 through 241 of EC’s First
Written Submission and paragraphs 82 through 94 of EC’s First Oral Statement. India further does
not understand the EC’s answer to India’s question 33 where the EC appears to suggest that Article 3
refers only to ‘dumped’ imports. To the extent th at this answer by EC indeed supports India’s view
that dumped imports cannot mean dumped and non-dumped imports alike, India does not reject this
answer. In case this answer has another unknown m eaning, India reserves its position on this point.
India further regrets that the EC has only answered the Panel’s question 18 in part.

21 I.e. for coming from sample-19 to sample-17, and then again to argue that from the sample-17
another removal has to take place.
22 India re-attaches the relevant pages of the Provisional Regulation [pages 143, 144, 150, and 151 of
India’s original Exhibits].

64. India recalls that it considers that the failure of the EC to examine dumped transactions only
for the purpose of the injury determination in the Bed Linen II proceeding is inconsistent with
Articles 3.1, 3.2, 3.4, 3.5 of the ADA.
65. India also draws the Panel’s attention to the EC’s reply to question 18, posed by the Panel.
On the basis of the unique theory advanced by the EC that “countries dump” , the EC will even
include exports by producers determined not to have dumped in its injury analysis. In the view of
India, this practice completely breaks the causal link between dumping and injury, required by the
ADA. During the first meeting with the Panel, the EC tried to explain away the consequences of its
incomprehensible practice on this point by arguing that the level of undercutting/underselling might
be less than it otherwise would have been. However, this explanation comes into play only if the non-
dumping producer charged higher export prices than the dumping producer[s]. The EC, in fact, also
argued that if ‘today’ some companies are not dumping, they could well be dumping ‘tomorrow’ and
that since dumping by a few companies is beneficial to all exporters, all imports must be included.
This logic is hard to accept. Indeed, the example put forth to the EC during the course of first meeting
with the Panel in which one producer engaged in co st dumping [because of high investments] while
the other producer did not, is in the view of India es pecially pertinent to India’s argument. In India’s
view such example rebuts the EC’s logic that “countries dump.” India does not deny that there are
various forms of dumping, but the argument that ‘countries dump’ is simplistic in India’s view.
[There are many other situations envisagable where certain companies dump while others do not and,
upon request of the Panel, India would be pleased to provide further details].
66. In short, allowing some “dumped” imports to taint all imports from a company and, indeed, a
country skews the fundamental injury analysis of Article 3 apart from being a gross violation of the
basic principles of ‘natural justice.’ The core analysis of Article 3.1 and 3.2 requires the assessment
of the volume and price impact of “dumped” imports only.
2. Article 3.4: Failure to evaluate all factors (Claim 11)
67. India first of all rejects the EC’s arguments provided in paragraphs 246 through 293 EC’s
First Written Submission and the arguments contained in paragraphs 95 through 118 of EC’s First
Oral Statement. As far as the answers to the questions from the Panel and from India are concerned,
India is sure that the Panel would have noted that the EC now states that in fact there was no injury to
the EC industry except for two factors and that fo r that reason all other factors were apparently not
considered relevant by EC, without admittedly having even examined these other factors.
68. Indeed, India wishes to take this opportunity to highlight some of the EC’s answers which,
rather explicitly, admit that in fact there was no injury in the first place:
A. “The point is illustrated by the circumstances on the bed linen industry. In that
investigation an analysis of the industry showed, firstly, that the negative data on
certain factors (profits and prices) justified an overall conclusion of injury, and
secondly that (because of closures and consolidation) data obtained on other factors
could give a false impression of good health. In circumstances such as these it would
not be unreasonable to conclude that the latter factors were not relevant, without
examining them all. (Some examination would probably be necessary in order to
confirm the overall analysis).” [emphasis added; source: last paragraph of EC
answer to Panel question 27];
B. “ . . . factors which might otherwise have been expected to reveal injury were
indicating an apparently healthy industry (PM rec. 92; DR rec. 41). It could be said
that they had lost their relevance, or at least their direct relevance, to the conclusion
on injury.” [EC answer to Panel question 20, third paragraph];

C. “As explained in the answer to the previ ous question, in the peculiar circumstances
of the case, indications of injury were apparent in only two of the factors listed in
Article 3.4, in other respects the industry was in an apparently healthy condition.”
[emphasis added; source: EC answer to Panel question 27, second sentence];
D. “ . . . the principal significance of the disappearance of companies is to explain how
an affirmative determination of injury could properly be made when on all but two
factors, the domestic industry was in an apparently healthy state (PM recs. 81, 90;
DR rec. 41).

Without information regarding the exit of the companies the Regulations would have
given a misleading picture of developments in the state of the industry during the
‘injury investigation period’. In particular, this information supported the finding
that some of the Article 3.4 factors were not relevant (i.e. meaningful) in this case
(e.g. employment and production), or that th e relevant information risked giving a
distorted image of the industry’s condition (e.g., sales volume and value, capacity,
capacity utilisation, and inventories).” [emphasis added; EC answer to India’s
question 44].
69. From the above quotes it would appear that the main reason why the EC has in fact restricted
itself to merely two factors, sales prices and profits, is that all other factors did not indicate or prove
injury. For this reason these other factors were disregarded. But, how can factors prima facie be
considered to show no material injury when these factors have to form part of the analysis which
eventually has to determine whether the health wa s good or not. In other words, the EC’s logic
enabled it to establish injury on the basis of two factors, thereby ab initio disregarding all other factors
of Article 3.4, because according to EC such other factors provided a ‘false impression of good
health.’ This in India's view is both a subversion of the objectives of the ADA and of natural justice,
which demand that injury to the domestic industry must be gauged on the basis of all relevant
economic factors, and not on the basis of one or two factors alone.
70. India now briefly recapitulates its comments on the three EC’s [contradictory] defences as
regards Article 3.4 [that it did evaluate all factors, that only negative factors should be examined, that
not all factors require examination].
71. First of all, contrary to the assertions in its First Written Submission, the EC failed to carry
out the obligatory evaluation of all injury factors mentioned in Article 3.4 of the ADA for its
determination on the state of the domestic industry. As the EC itself points out in its written answers
to the Panel and in its description of the facts in its First Oral Statement: “The EC recalls that two
principal negative factors (profits and prices) were identified by the EC authorities in this case, and
were thoroughly examined and evaluated. No other plausible negative factors were suggested to them
or otherwise came to their attention.” [Emphasis added; EC First Oral Statement, paragraph 105,
footnote omitted]. Apart from the factual incorrectness of this statement, apparently, the EC admits
that it did not take into account the factors ‘suggested’ by Article 3.4, since these were neither
suggested nor came to their attention. It becomes no longer necessary for India to further rebut the
factually incorrect arguments put forth by the EC that all factors were evaluated [paragraphs 250
through 255 of EC’s First Written Submission], because the EC itself admits that “no other factors
[than profits and prices] came to their attention.” If such other factors did not even come to the
attention of the EC it is incomprehensible how thes e factors could have been evaluated in the first
place. In any event they were not evaluated, as India also pointed out in its First Written Submission
in paragraphs 4.72 through 4.76.
72. According to the EC’s admissions in its answ ers, it did not examine the following factors
[because it did not consider these factors to be relevant]:

• Output;
• Market share;
• Productivity;
• Return on investments;
• Utilization of capacity;
• Factors affecting domestic prices;
• The magnitude of the margin of dumping;
• Actual effects on cash flow;
• Potential negative effects on cash flow;
• Inventories;
• Employment;
• Wages;
• Growth;
• Ability to raise capital;
• Ability to raise investments.
73. India also registers its surprise at the statement contained in EC First Written Submission at
paragraph 262, where the EC suggests that, in spite of the specific provisions of Article 3.4, it was up
to the exporters to suggest factors to the EC whic h it otherwise might forget to evaluate and examine.
Apparently the EC believes that the Indian exporters should have guessed, before imposition of
measures, that the EC was only going to rely on two injury factors in its examination. For that reason
the exporters should, on the basis of such speculative guesswork, have pointed out to the EC that there
are 16 other factors which are relevant under the ADA and should be examined. In any event it
should be noted for the record that India’s exporters did make such arguments which they considered
relevant on a number of occasions. Unfortunately, these arguments were never addressed by the EC.
74. India recalls that the purposes of Article 3.4 is to ensure an unbiased and objective injury
analysis, which is mandatory as per the Article. Evaluation of all the factors is required in every case,
although such consideration may lead the investigating authority to conclude that a particular factor is
not probative in the circumstances of a particular industry and therefore is not relevant to the
particular determination.23
75. India further rejects the argument that only negative factors [and negative aspects of factors]
should be examined. As the EC now suggests in its answer to the question 20 of the Panel: “ . . .
factors which might otherwise have been expected to reveal injury were indicating an apparently
healthy industry (PM rec. 92; DR rec. 41). It could be said that they had lost their relevance, or at
least their direct relevance, to the conclusion on injury.” [EC answer to Panel question 20, third
paragraph] Apparently, the EC decided that when factors, which it expects to point towards injury, do
in fact not point towards injury, they are no longer relevant for the determination of injury!? India
rejects this unprecedented logic.
76. In this connection India recalls that the EC argued in Brazil--CVD on Milk:
24
“ 111. . . . that a review of whether the investigating authorities had made a
determination of injury based on an objective examination of the volume of
subsidized imports had to include an examination of whether they had considered all
relevant facts before them, including facts which might detract from an affirmative
determination, and whether a reasonable explanation had been offered of how the

23 Mexico--HFCS, WT/DS132/R, 28 January 2000.
24 Brazil—imposition of provisional and definitive countervailing duties on milk powder and certain
types of milk from the EEC (SCM/179).

facts as a whole supported the determination made by the investigating authorities."25
[emphasis added]
The current reasoning of the EC in the Bed Linen case, that relevant information should be
disregarded because it can create a ‘false impression of good health’ is therefore contradictory with
what it argued in Brazil--CVD on Milk.26
77. To the extent that the EC argues that it is not necessary to evaluate all Article 3.4 factors,
India rejects such suggestion. In this connection India recalls the EC’s own words in Brazil--CVD on
Milk.27
“123. The EEC argued that Brazil had not considered the impact of the allegedly
subsidized imports on the domestic producers as required under Articles 6:1(b) and
6:3 of the Agreement. The EEC said that Article 6:3 elaborated on the criteria for the
examination of the impact on the domestic i ndustry of the subsidized imports. The
EEC argued that this subject was not addressed in the Administrative Order No. 569,
where except for a vague reference in Article 1(e) to production having stagnated,
there was no mention of any of the indicators which Brazil was required to evaluate
in Article 6:3 of the Agreement ... Moreover, the EEC said that Brazil had never
provided definitive data on production, consumption, profitability, capacity
utilization, market share or any of the other factors indicated in Article 6:3, nor were
these issues dealt with in any way in the final determination. . . .
The EEC argued that in carrying out an objective examination required under
Article 6:1 of the Agreement, the investigating authorities were obliged to consider
the criteria and indicators laid down in Articles 6:2 and 6:3. Therefore, an essential
element of a review of whether a determinat ion of material injury was in conformity
with the standard of Article 6 was an examination of whether the factors set forth in
Articles 6:2 and 6:3 had been properly considered, though Article 6 did not prejudge
the weight to be assigned to each factor. 28 However, in this case, the data on the
elements contained in Article 6:3, such as on consumption, market shares, production
or prices, had not been provided by Brazil at the time of its definitive determination. ..
132. The EEC disagreed with Brazil's contention that Brazil had provided the
relevant evidence on elements enumerated in Article 6:3 to the EEC prior to the
panel proceedings. Brazil had never provided any evidence on consumption, market
shares, capacity utilization or profitability relevant to an examination of injury to the
domestic industry under Article 6, either during the investigation or in consultations

25 In this context, the EEC cited the Report of the panel on "United States - Salmon", paragraph 258.
26 India notes that the text of Article 6:3 of the Subsidies Code was at the relevant point identical to 3.4
of the ADA:
“The examination of the impact on the domestic industry concerned shall include an evaluation of all
relevant economic factors and indices having a bearing on the state of the industry such as actual and potential
decline in output, sales, market share, profits, productivity, return on investments, or utilization of capacity;
factors affecting domestic prices; actual and potential negative effects on cash flow, inventories, employment,
wages, growth, ability to raise capital or investment and, in the case of agriculture, whether there has been an
increased burden on Government support programmes. This list is not exhaustive, nor can one or several of
these factors necessarily give decisive guidance.”
27 Brazil—imposition of provisional and definitive countervailing duties on milk powder and certain
types of milk from the EEC (SCM/179).
28 To support its point that the question of whether the determination of injury was based on positive
evidence was distinct from the question of the weight to be accorded to the fact s before the investigating
authorities, the EEC cited the report of the panel on "United States - Salmon", paragraph 260.

or conciliation meetings. These data were definitely not provided in Administrative
Order No. 569 which imposed the definitive duty.” [emphasis added]
78. The Panel in that case also concluded that:
“333. . . . the list of factors mentioned in Article 6:3 in this provision was
illustrative in nature, and the last sentence made it clear that the provision did not
prejudge the weight to be given to any particular factor mentioned in the provision.
At the same time, Article 6:3 clearly required investigating authorities to conduct in
each case a comprehensive analysis of "all relevant economic factors and indices
having a bearing on the state of the industry". The Panel was of the view that to
consider only the stagnation of domestic production in the analysis of the impact of
imports on the domestic industry was inconsistent with this comprehensive character
of the examination required under Article 6:3.”
79. Similarly, the Panel report in Korea Resins concluded that the investigating authority could
not focus solely on factors supporting a conclusion that the domestic industry would likely encounter
difficulties while disregarding other factors.
29 Article 3.4 and, indeed the Article 17.6(i) ADA require
an unbiased and objective evaluation of the facts.
80. The HFCS Panel report, and other case law quoted in India’s First Written Submission, is
equally relevant. Contrary to what the EC seems to suggest in its paragraph 289, India does not
consider that the Panel in HFCS made its decision based on simplistic reliance on an inappropriate
precedent. As the third party submission of the United States emphasizes, the parties to that dispute
fully argued the issue to the panel, citing GATT anti-dumping determinations such as Korea Resins .
81. Article 3.4 specifies the 18 relevant factors and indices which at a minimum must be
evaluated to examine the impact of the dumped imports on the domestic industry.
30 Moreover, this
list is not exhaustive. The EC observes in paragraph 265 of its First Written Submission that “to
insist that the listed factors must be evaluated in all circumstances, would be to require the evaluation
of a factor that has already been found to be irrelevant, which is nonsense”. However, this reasoning
is illogical: how can investigating authorities determine that a factor is not relevant if it is not
examined/evaluated? And how can interested parties know whether the authority has evaluated such
factor, if nothing is published. In the EC’s logic, investigating authorities should first determine on
which relevant factors/indices they will rely, and only then examine their importance. Such an
approach makes a mockery of Article 3.4.
82. As far as the EC’s new argument in Table-4 of its First Written Submission is concerned
[“Found not be a significant independent factor” ], India recalls the Panel’s views in Brazil-Milk on
the introduction of such new arguments during Panel proceedings:

29 Korea-Resins, ADP/92 and of 2 April 1993.
30 At this stage India also wishes to register for th e record that it does not agree with the EC that the
word 'impact' has a negative connotation. Webster's New World Dictionary, 3rd College Edition 1994 defines
the noun ‘impact’ as: “1 a striking together; violent contact; collision; 2 the force of a collision; shock; 3 the
power of an event, idea, etc. to produce changes, move the feelings, etc.” Clearly, in the context of the ADA the
first definition is not relevant. The other two are not necessarily negative. India does agree with the EC that the
interpretation of Article 3.4 must be based on the ordinary meaning of its terms in their context and in the light
of the object and purpose of the ADA. However, in this context India notes the opening words which are not (as
implied by the EC at para 257) “impact” but “the examination of the impact”. The word “examination” conveys
an investigation whether or not there is an impact. [Webster's New World Dictionary, 3rd College Edition 1994
defines “examination” as 1 an examining or being examined; investigation; inspection; checkup; scrutiny;
inquiry; testing; 2 means or method of examining; 3 a set of questions asked in testing or interrogating; test.]
The examination of the impact must include “an evaluation of all relevant factors and indices (etc.)”. The word
“evaluation” again conveys an analysis of “all” (i.e. each of) these relevant factors and indices.

“312. For the reasons explained elsewhere in this Report in connection with the
Panel's analysis of the preliminary affi rmative finding made in April 1992 by the
Brazilian authorities, the Panel was of th e view that in its review of the final
determination in Administrative Order No. 569 it could not properly take account of
reasons presented by Brazil before the Panel but not discernible either from the text
of Administrative Order No. 569 or from a st atement of reasons issued in a different
form by the Brazilian authorities at the time of their final finding. For the Panel to
take into account such considerations would be tantamount to allowing a Party to
modify and rationalize its determination ex post facto.” [emphasis added]
The newly advanced logic, not discernible from the public record, should therefore be disregarded.
3. Article 3.4: Picking and choosing of the domestic industry for injury determination
(Claim 15)
83. The first submission of India contained three arguments showing the inconsistency in the
injury determination:
• The EC explicitly determined that the domestic industry consisted of 35 companies [the
complainants according to the EC], but relie d in its injury determination on companies
outside this group of 35.
• The EC chose a sample from the domestic industry, but it did not consistently rely on it;
• The EC chose to rely on different ‘levels’ of industry for different injury indices without any
apparent reason other than goal-oriented ‘picking and choosing of injury’.
84. India maintains that the arguments put forward by the EC in its First Written Submission and
its First Oral Statement do not refute the claims made by India in India’s First Written Submission at
all. Moreover, India objects to the newly introduced concept by the EC [as far as we understand it]
that within one and the same investigation a Member may use either of the alternative definitions of
the domestic industry contained in Article 4.1 of the ADA, suited to its needs. Such innovative ‘right’
of picking and choosing the most desirable definition whenever a choice is available runs contrary to
the concepts of consistency and predictability. One may also wonder how such innovative approach
fits with Article 17 (6) (i) which provides that establishment of the facts must be proper and the
evaluation must be unbiased and objective.
85. In paragraph (57) of the provisional Regulation, subsequently endorsed, the EC noted that:
“The remaining 35 companies, which cooperated with the enquiry and are located in
France, Germany, Italy, Spain, Portugal, Austria and Finland, represented a major
proportion of total Community production in the investigation period. These
companies were therefore deemed to make up the Community industry under the
terms of Article 4 (1) of the basic Regulation.” (Emphasis added).31
86. In paragraph 317 of its first submission the EC reiterates that its finding of injury is not based
on the EC producers as a whole but on the Community industry. For this purpose the EC quotes
recital (40) of the Definitive Regulation. The Definitive Regulation refers back to the sample
companies. The sample of 17 producers however contained at least one company [Luxorette] that
does not belong to the Community industry. The EC is therefore contradicting itself: how can one

31 This finding was confirmed in paragraph 34 of the definitive Regulation. If--notwithstanding this
explicit determination--other companies were also part of the domestic industry, the provisional and definitive
Regulations suffer at least from an Article 12 problem.

allegedly not be looking outside the Community industry when, for the purpose of analyzing the
situation of the Community industry, one is partly relying on a sample which consists of companies
not part of the Community industry.32
87. Further, the EC argued in its First Oral Statement at paragraphs 134 and 138 that it is allowed
to and in fact did look at the whole of the EC producers to make an injury determination for the
domestic industry, defined as the 35 producers: “It is true that in the case of some injury factors the
EC looked to the whole industry to make this [injury] determination [for the Community industry]” .
The EC clarified in its answer to India’s question 32 that it did not rely on a double definition of the
domestic industry and only considered the 35 producer s as the Community industry. India therefore
has a problem with the EC finding injury for the domestic industry, while partly relying in this
determination on companies outside this domestic industry. In the view of India this is inconsistent
with Article 3.4 ADA.
88. In paragraph 318 of its first submission the EC suggests that “India ’s arguments appear to
rest on the notion that all factors . . . must indicate injury.” This mistaken ‘interpretation’ by the EC
is reiterated by the EC in paragraph 128 of its First Oral Statement. For the record, India denies
having ever relied on such notion. The EC is misrepresenting India’s arguments and the statements of
the EC are inconsistent with the facts. As per India’s First Submission it is clear that what the EC
states is not what India has been arguing. See, e.g., India’s First Written Submission at
paragraph 4.126: “. . . in the final analysis not all factors will have to point towards injury, as long as,
objectively seen, the investigating authorities could reasonably conclude that on the whole material
injury existed and was caused by the ‘dumped imports’.”.
89. Therefore, as India has argued all along, an objective weighing process needs to take place.
However, in this weighing process of positive and negative factors, the EC cannot simply disregard
the positive injury factors during the IP with a justification that company closures occurred before the
I.P. How can company closures from before the IP be caused by dumped imports which occurred
only after their closure? By doing so, the EC has without justification disregarded positive factors
that existed in the IP and has incorrectly cons idered the exit of companies from the Community
industry before the IP as evidence of injury during the IP. Moreover, why does the EC automatically
assume that the closures were caused by the dumped imports? When EC company A disappears to
the benefit of EC company B, then why is the exporting company C then automatically assumed to be
the guilty one? It could well be that A has disappeared because of B’s competition. In India’s view,
the EC’ s approach amounts not to ‘injury investigation’ but what to could appropriately be called
‘injury speculation.’ It lacks even a shred of scientific or objective validity.
90. [Moreover, while assuming automatically that the companies disappeared prior to I.P. on
account of dumped imports, the EC has also assumed incorrectly that imports prior to the IP were also
dumped (see claim 19 infra)].
91. As regards sampling of the domestic industry, India maintains that once the EC selected a
sample from the domestic industry, it was not entitled to subsequently deviate from that sample in
order to find injury. India rejects the assertion contained in paragraph 136 of the EC’ s First Oral
Statement that this claim from India is “mysterious.” India’s claim is not mysterious at all but very
straightforward. India notes that the EC in its First Written Submission does not deny having looked
at information outside the sample. Indeed, the EC again in its First Oral Statement confirms that it is
entitled to deviate from the sample if it wants to find injury. India rejects the suggestions put forward
by the EC [paragraphs 326-327 First Written Submission; paragraph 136 First Oral Statement] that

32 And, conversely, one may wonder what this Community industry represents if it includes a producer
which was excluded from the original sample-19 because it was not representative. [This is the French producer
Claude which was excluded from the sample-19 (see India Exhibit-82) for the reasons set forth in recital 61 and
54 of the PR, but which still continued to form part of the Community industry].

once it had selected a sample it could still use information outside the sample if available. [ But,
according to EC, only if such information points towards injury, because the EC considers that
information that does not point towards injury loses it relevance (EC answer to Panel question 20,
second last sentence)]. Such approach distorts the very purpose of a sample and cannot, contrary to
what the EC suggests in its paragraph 327, be considered ‘unbiased and objective’.
92. As regards the ‘picking and choosing’ of the preferred level in order to establish injury India
notes that the EC does not deny the facts as summarized by India. Indeed, the EC even seems to
acknowledge that it has used various injury factors from the preferred level so long as this would
support an injury determination. This understanding by India of the EC’s ‘pick and choose’ injury
determination is again confirmed by paragraph 134, 136, and 137 of the EC’s First Oral Statement.
India underlines that such a ‘pick and choose’ approach cannot be considered unbiased and objective
by any stretch of imagination.33 The ADA does not contemplate that an authority will at its
discretion use one industry definition for one factor and another definition for another factor.
93. India at this stage recapitulates some of the ‘unusual’ aspects of the EC’s injury determination
for the Community Industry. Acco rding to EC the Community industry may be defined at any stage
during the proceeding and it is possible, but not necessary, that two definitions of this industry apply
simultaneously [para 309 EC FWS]. For the purpo ses of determining injury for this Community
Industry, producers outside this group may also be taken into account [para 134 EC FOS]. For the
purposes of determining injury of the Community Industry a sample may also be established which
however is non-binding and can be abandoned at an y time [para 136 EC FOS]. The sample is not
relevant in case it would not point towards injury [para 136 EC FOS, jº price development of the
sample (increase of 3.2 per cent) jº market share of the sample (increase by volume and value), etc.].
Indeed, and in any event, injury factors are only rele vant if they point towards injury; positive factors
lose their relevance and need therefore not to be discussed [EC answer to Panel question 20]. The
EC’s position appears to be that where only two factors out of 18 point towards injury at one of the
three levels to be decided only after seeing the result for each level, then injury for the Community
Industry under Article 3.4 ADA is determined.
94. In the view of India these views of the EC on the determination of injury are absurd and
inconsistent with Article 3.4 of the ADA. Again, one of the most fundamental principles of any
scientific or fact-finding determinations is that cause and effect should be determined according to
consistent parameters and, as also pointed out in India’s First Written Submission: the grocer should
not be allowed to “tip the scale ” during the weighing process.
4. Articles 6.10 and 6.11: No statistically valid sampling (Claim 16)
95. As pointed out by the preliminary ruling of Panel, India is still permitted to present arguments
concerning Article 6.10 and 6.11.
96. India underlines that for a sample to be statistically valid it must fairly represent the entire
underlying population from which the sample was taken. India contends that to take a sample only
from the pool of the complaining domestic producers does not meet the requirements of a ‘statistically
valid’ sample. Alternatively, however, in case the sample is supposedly taken to represent only the
Community industry, i.e. the complaining producers as the EC seems to argue, then it should not be
allowed to contain companies from outside that industry.
34 Further, if companies are removed from
the sample because they are no longer representative they can no longer form part of the main group.35

33 A pick and choose approach will also lead to an ‘injury finding’ which no longer reflects the
domestic industry because the findings are inferred from various levels, de facto at random.
34 The company Luxorette was part of the sample but did not belong to the Community industry.
35 The company Claude was removed from the original sample, de facto because it was not
representative; however, it continued to form part of the Community industry.

Indeed, if the sample would have been statistically valid then why has it been necessary to deviate
from the sample at certain points: a perfectly statistically valid sample should have produced the same
results as the source from which the sample was drawn. This makes it even more suspect that the EC
jumps back and forth between the sample, the Co mmunity industry and EU-15. The EC’s behaviour
is in fact exactly tantamount to admitting that the sample was not statistically valid.
5. Dumped imports before I.P. (Claim 19)
97. India considers the assertion of the EC contained in paragraph 343 where it now denies
having ever considered as “dumped” all imports of bed linen from India in the years preceding the
investigation period as factually incorrect. In this connection India recalls, to give just one example,
paragraph 67 of the provisional Regulation, endorsed by the definitive Regulation, which states:
“dumped imports from the three countries concerned increased from 33,825 tonnes
in 1992 to 46 656 tonnes during the investigation period i.e. an increase of 12,831
tonnes or 38 per cent. During the same period their market share increased from
16.9 per cent to 25.1 per cent” [emphasis added].
This view of the EC is repeated at other places. For example, in recital (81) of its Provisional
Regulation the EC states that “ . . . the Community industry represented those companies which were
strong enough to survive the competition of dumped imports. . .”.
36
98. In the light of this India is surprised to read paragraphs 344 and 345 of the EC’s First Written
Submission, which contradict its statements in the Official Journal on this point. Clearly, India is not
‘in confusion’ at all [EC paragraph 345] but is merely relying on the text of the Regulation published
in the Official Journal .
99. Accordingly, India reiterates that the EC practice to automatically consider as ‘dumped” all
imports of bed linen from India in the years preceding the investigation period is inconsistent with
Article 3.4. In particular, EC could not attribute the alleged closures of the 29 companies in the
period from 1992 up to the I.P. to the “dumped imports” during the I.P., since these imports occurred
only after the alleged company closures.
100. Second, the statements contained in paragraphs 346 through 350 of the EC’s First Written
Submission contradict and try to explain away the EC ’s very own injury analysis as published in the
Official Journal. In this connection India refers for example to recitals (91) and (92) of the
Provisional Regulation, maintained in recitals (40) and (41) of the Definitive Regulation. The
statements now made by the EC in its first subm ission, alleging for example that India’s arguments
are “misplaced” [paragraph 348], are completely contradicted by the published statements in the
Official Journal.
6. Article 3.5: No consideration of other factors (Claim 20)
101. India believes that the EC acted inconsistently with Article 3.5 by automatically considering
all imports of bed linen from India in the period 1992-30 June 1995 as “dumped” and thereby
causing injury “through the effects of dumping”.
102. For the same reasons as explained by India above under claim 19, the statements of the EC
contained in paragraph 352 of its First Written Submission are not borne out by the facts. The

36 Or, also explicitly in its answer 19 to the Panel: “I f it appears that the domestic industry was already
suffering injury before the IP, this may help to confirm that dumping is causing injury. This may involve a
presumption that the dumping found in the IP was also present before the IP.”

Regulations imposing provisional and definitive duties are clear and form the basis on which this
dispute is to be adjudicated. Indeed, as the Panel held in Brazil-Milk:
“it could not properly take account of reasons presented by Brazil before the Panel
but not discernible either from the text of Administrative Order No. 569 or from a
statement of reasons issued in a different form by the Brazilian authorities at the time
of their final finding. For the Panel to take into account such considerations would
be tantamount to allowing a Party to modify and rationalize its determination ex post
facto."
37
103. The clear language of the EC Regulations cannot be waived away by suggestive statements
that India’s claim is based on a “misunderstanding of the EC’s practice” [EC paragraph 354].
V. ARTICLE 15: NO DEVELOPING COUNTRY STATUS (Claim 29)
104. India first of all rejects the inaccurate suggestion by the EC in its First Written Submission
that no undertaking was offered within the time limits set. This suggestion from the EC is factually
incorrect. Exhibit-72 shows that India did make such an offer on time. Furthermore, India rejects the
EC’s averment in its First Oral Statement that the EC was “willing to explore” an undertaking
because, as India has clearly shown
38, the EC authorities did not express this willingness at any stage,
and did not take any initiative but rejected the offer made by Texprocil. In fact India would also like
to bring to the Panel's notice that on the cont rary, in answer to its repeated suggestions on
undertakings in October 1997 the standard answer from the EC was always that Bed Linen was “too
complicated a product for undertakings”.
105. India also rejects the suggestions of the EC in its answers to the Panel that undertakings
cannot be offered and accepted at the provisional stage. These suggestions from the EC are factually
incorrect. Undertakings can be offered and can be accepted at the provisional stage in EC anti-
dumping proceedings.39
106. India recalls that the objective of Article 15 ADA is to provide special and differential
treatment under the ADA to developing countries. To achieve this purpose “special regard” must be
given by developed country Members to the “special situation” of developing country Members and
possibilities of constructive remedies shall be explored.
107. Unfortunately however the EC chose to ignore this Article altogether. The EC did not
explore any possibility of any constructive remedy at all and did not even take the trouble to address
the requests made by Indian exporters throughout the proceeding. During the consultations, and now
again in reply to question 30 of the Panel, the EC has replied that the EC had in fact accorded special
treatment to Indian exporters in three manners:
• Simplified questionnaires;
• Acceptance of responses beyond stated deadlines;
• Individual treatment of newcomers.

37 At 312.
38 And the EC has also admitted in its answer to question 29 of the Panel: “The EC made no specific
communication of this fact to India.”
39 For example, Polypropylene Binder Or Baler Twine from Poland, Czech Republic, Hungary, and
Saudi Arabia, where undertakings were accepted at the provisional stage for the Hungarian exporters: [1998]
O.J. L267/7. Or, even more recently, Urea and Ammonium Nitrate from Algeria, Belarus, Lithuania, Russia,
and Ukraine, where an undertaking was accepted at the provisional stage for the Algerian exporter: [2000] O.J.
L75/3.

108. In its first submission, India has already proven this alleged “special treatment” to be
factually incorrect. Exhibits India-63, India- 64, India-65 and India-66 prove that the bed linen
questionnaires were similar to questionnaires used in a case against OECD members Hungary, Poland
and Mexico and in two cases against Taiwan. India is not aware of any special flexibility as regards
deadlines (India’s first submission paragraphs 6.34-6.38) and furthermore recalls the EC’s reply to a
question by the Panel during the First Meeting with the Panel that India was given the bare statutory
ten days’ minimum period to offer a price undertaking. Last, the ‘special’ newcomers provision is
not special at all (India’s first submission, paragraphs 6.39-6.41), unless of course one considers
Norway or Poland a developing country to whom su ch a provision was also applied. India therefore
rejects that “these measures go beyond the requirements of Article 15” [EC’s answer to panel
question 30]. India also notes the ‘logic’ put fort h by the EC in response to the Panel's question
No. 38 in the context of the obligations imposed by Article 15 that ‘where developing countries are
experienced in such proceedings, or where their exporters are professionally represented, there is no
need for such action.’ It is for the first time that India is hearing such an argument that the obligations
under a GATT/WTO Agreement are dependent on the experience that a Member may have in respect
of that Agreement, and that a special provision for the protection of developing countries in the ADA
could, by any stretch of imagination, contain such a restriction; nor does any valid manner of treaty
interpretation justify the kind of logic the EC is putting forth.
109. Finally, as the Panel in Cotton Yarns already pointed out: measures during the process of
establishing dumping and injury [such as the alleged special questionnaires or special deadlines] do
not constitute constructive remedies within the meaning of Article 15 since the Article only comes
into play once the authorities determine that dumping and injury exist. Article 15 applies to the
examination of constructive remedies before imposing provisional or definitive duties, which the EC
did not do.
110. Furthermore, Article 15 clearly puts the initiative for exploring constructive remedies with the
importing country authority, as has been elaborated upon by India in its response to the Panel's
question 13, and the in third party submission made by Egypt.
111. India is aware of the Panel report in EC-Imposition of anti-dum ping duties on imports of
cotton yarn from Brazil.
40 However, as the following excerpt s hows, the situation in that case was
quite different:
“The Panel notes that in Section M enti tled “UNDERTAKINGS” of the Definitive
Determination the EC had stated
“Both the Turkish and Brazilian authorities, having been informed on the essential
facts and considerations on the basis of which it was intended to recommend the
imposition of definitive duties, offered, on behalf of the exporters concerned, a form
of undertaking.

As regards the Brazilian offer which provides for voluntary quantitative export
restrictions, the Commission was not satisfied that its acceptance would eliminate the
injurious effects of the dumping.
The Council noted that for these reasons both these offers of undertaking have, after
consultation, been rejected.”

40 ADP/137 (4 July 1995).

In the view of the Panel at the stage of considering the application of anti-dumping
duties, the EC had considered whether it could enter a quantitative undertaking and
had considered that such an undertaking would not eliminate the injury caused by the
dumped imports. The Panel recalled that it had concluded in paragraph 584 that
there was no obligation to enter into the constructive remedies, merely to consider
the possibility of entering into constructive remedies.
Based on its conclusions in paragraphs 585, 587 and 589, the Panel dismissed the
claim by Brazil that the EC had breached Article 13 of the Agreement by not giving
"special regard" to the "special situation" of Brazil and not exploring the possibility
of constructive remedies proposed by Brazilian exporters.”
112. Thus, in the Cotton Yarns case, the EC had in fact considered the acceptance of
undertakings, as is clear from the published record in that case. However, in the present case the
exporters were discouraged from seeking such remedy and the EC did not even take the trouble to
address the repeated concerns of India.
113. India therefore regrets that the EC has not only blatantly ignored its responsibilities under
Article 15 but has the audacity to make inaccurate statements and to advance legally untenable and
ludicrous arguments. The issue of special and deferential treatment does not only affect India, but all
developing country members alike, all of whom ar e looking with anticipation to the Panel ruling on
this important issue.
VI. ARTICLE 12.2.2: NO/INSUFFICIENT EXPLANATIONS (Claims 3, 6, 13, 18, 22, 25,
28, AND 31)
114. India rejects the ‘logic’ put forward by the EC at various parts in its First Written Submission
that it is in fact only obliged to react to relevant arguments and that for the rest it does not have to
explain its actions or decisions. This reasoning of the EC becomes especially doubtful when it
automatically decides that when an argument or a fact point against, for example, injury such
argument becomes not relevant. Thus, the EC stated in its answer to the question 20 of the Panel:
“ . . . factors which might otherwise have been expected to reveal injury were
indicating an apparently healthy industry (PM rec. 92; DR rec. 41). It could be said
that they had lost their relevance, or at least their direct relevance, to the conclusion
on injury.” [EC answer to Panel question 20, third paragraph]
115. Apparently, since these factors were no longer relevant they did not warrant any discussion by
the EC. As noted before, India rejects this unique logic for a number of reasons: it means that any
valid argument or valid fact, which seriously points against an argument or fact on which the
administrator wants to base its determination would automatically be judged irrelevant. It therefore
renders any serious discussion or analysis completely meaningless. It further provides the authorities
carte blanche discretion not to discuss anything, under the pretext that it is not relevant. India is of
the view that it is up to the authorities to explain why a factor or argument is irrelevant, rather than by
showing its irrelevance by absence of discussing it. The EC’s approach makes a mockery of
Article 12 and Article 17.6(i).
116. The inappropriate results to which the EC’s interpretation could lead can for example be
illustrated with its reactions to India’s concerns with EC’s explanation regarding standing. The EC
apparently takes the following--incomprehensible--views on Articles 12.1 and 12.2 in connection with
standing:
As regards Article 12.1:

A. India should have brought a claim under Ar ticle 12.1.1 [answer to India question 5,
second sentence] if it had any problems with the standing;
B. Article 12.1.1 in any event does not require the EC to address the standing
determination [answer to Panel question 23, second paragraph].
As regards Article 12.2
A. India should have invoked 12.2 at the relevant time, i.e. not after initiation nor after
provisional measures [EC paragraph 43 First Oral Statement]. Or, in other words,
India’s claims under Article 12.2 are in any event considered irrelevant [paragraph 43
EC’s First Oral Statement] because they are made after initiation. The EC implicitly
suggests therefore that India should guess when the proceeding will be initiated and
should therefore make a claim before such initiation;
B. In any event, even if Article 12.2 is invoked the EC does not need to react [answer to
Panel question 23 last sentence].
117. These answers from the EC therefore imply that regardless of when and regardless of under
which Article India would have, has, or had, made any claims regarding standing, the EC is not under
an obligation to react or explain whatsoever. This attitude is exacerbated by the latest answers of the
EC to India’s question regarding standing: “given the advanced stage of the proceeding” the EC does
not have to answer [EC answer 2 to India’s question]. Again therefore according to the EC: now it is
too late, regardless of the fact that this is a WTO dispute settlement proceeding. In other words and in
short: the EC’s position is that it never has to explain anything to anyone. “India [and the Panel] will
just have to take the EC’s word for it”. In the view of India this attitude, interpretation, and
application of Article 12 is inconsistent with the ADA.
118. Those familiar with anti-dumping and injury determinations in other jurisdictions, notably the
United States and Canada, are often surprised at the scarcity of information provided in public
determinations issued by the EC authorities. Contrary to, for example, the practice of the Commerce
Department in the United States of addressing specific comments raised by parties in a section
following the findings of the authorities, and the detailed ITC injury determinations, determinations in
the EC are full of standard phraseology and summaries of selective EC findings, as the Bed Linen case
witnesses.
119. The EC tries to brush aside the concerns raised by India on the ground that the importing
country authorities have discretion to decide which matters of fact and law, arguments and claims are
relevant within the meaning of Article 12.2.2 and that the arguments made by the Indian exporters in
the course of the proceeding were not relevant. Such interpretation is illegal and unwarranted and
constitutes a violation of Article 17.6 (i).
120. Furthermore, the structure of India’s first submission, which was designed on purpose to
show the close linkage between key arguments and insufficient explanation by the EC, negates the
EC’s apparent conclusions that India’s claims and arguments were irrelevant for purposes of
application of Article 12.2.2. The following table shows once more that on eight of India’s
substantive claims, the EC provided either no or extremely cursory information on public record:

Substantive claims Explanation
claims
1-Article 2.2.2 3 Recital 18 addresses only 1 of 3
arguments, and very summary
4-Article 2.2 reasonable 6 Recital 18 does not address claim
11-3.4 factors 13 Not addressed
15-3.4 picking and choosing
domestic industry
18 Four arguments raised not addressed
20-Pre-IP imports 22 Not addressed
23-5.3 examination 25 Not addressed
26-5.4 standing determination 28 Not addressed
29-15-developing country 31 Not addressed
121. India acknowledges that this table has been slightly modified from the comparable table
provided in its First Oral Statement to take into account the Panel’s valid observation that one claim
(all imports dumped) was not made during the administrative proceeding. As explained in its oral
reply to the question by the Panel, India did not raise this claim during the administrative proceeding
because it knew from experience that the EC would routinely reject such claim.
122. To sum up, the explanation in the definitive Regulation, which incorporates parts of the
provisional Regulation suffering from the same defects, was self-serving and the EC failed to address
virtually any of the claims and arguments made by Indian exporters in the proceeding. In view of this
systematic and repeated pattern of ignoring claims and arguments made by Indian exporters in the
proceeding, India requests the Panel to send a strong message to the EC: that selective self-serving
explanations which do not address the claims and arguments made by exporters in the course of the
proceeding do not meet the standards of Article 12.

ANNEX 1-8
ORAL STATEMENT AND CONCLUDING REMARKS OF INDIA
SECOND MEETING OF THE PANEL
(6 June 2000)
CONTENTS
Page
I. ARTICLE 5.4: STANDING.................................................................................................358
II. DUMPING..................................................................................................................... ........359
III. INJURY ..................................................................................................................... ............360
IV. DEVELOPING COUNTRY STATUS OF INDIA.............................................................362
V. EXPLANAT IONS................................................................................................................. 363
VI. CONCL USIONS ...................................................................................................................364
1. India thanks the Panel and the Secretariat for its continued attention to this case.
Mr Chairman, we intend to be brief since we have already highlighted our concerns in our first
submission, first oral statement, and subseque nt rebuttal submission. However, we would make
certain observations and react to some arguments that have been stressed in the EC’s Second Written
Submission. This does not in any way imply that India accepts EC’s arguments on the issues which
India does not address today. Obviously India adheres to its earlier arguments and does not want to
repeat them today;
I. ARTICLE 5.4: STANDING
2. The Panel is well aware of India’s concern about the removal of fax headers from the
declarations of support on standing. After initially remaining silent on the issue and in fact expressing
indignation on what it referred to as “India’s barely concealed accusations”, EC has finally admitted
that the fax headers were indeed removed by its own officials;
3. India thanks the EC for finally providing declarations of support, including the fax headers as
Exhibit EC-5 that were until very recently not provided by the EC in what it termed “the advanced
stage of the proceedings".
1 In any event, India has the following comments and observations to make
on these documents;
4. Firstly, India regrets that it has taken the EC three and a half years, and the initiation of a
WTO Panel proceeding, to finally provide something as simple as fax headers which could have
helped to clarify the chronology of events much earlier. However, it is surprising that in none of the
documents, copies of which have now been submitted by the EC, the exact date on which these were
faxed by Eurocoton is clearly visible. Moreover, in some of the documents, there appears to be a
discrepancy between the stated date of dispatch and the recorded date of receipt of the fax, which
makes India concerned that these Exhibits, if anyt hing, do not show that the EC did check standing
before the initiation. For instance in the expression of support conveyed by the Portuguese company
Foncar [page 6 of EC-5] the fax appears to have been sent by Eurocoton on some unknown date in

1 One wonders why the very documents that had been requested time and again could not be provided a
mere five days before they were finally made available.

September 1996, while the same fax transmission appears to have been received in EC on Monday
29 July 1996. It is not clear to us how this can happen;
5. Secondly, India continues to have reservations on the reasons adduced by the EC for the
removal of headers. As the Panel is aware, the EC delegation initially stated that these had been
removed on the ground of confidentiality. However, when it was pointed out to the EC delegation
that the telephone and fax numbers of the companies that they were seeking to protect by removing
the fax headers was in fact the very information th at the producers had been asked to submit in the
non-confidential questionnaire responses and was in fact printed elsewhere on the declaration itself,
the EC retracted its statement and tried to project that India was unnecessarily making an issue out of
a non-issue. Mr Chairman, if the telephone and fax numbers of the concerned companies were
already a part of the non-confidential portion of the documents, then India wonders what information
other than the date on which the faxes were sent, the EC sought to protect;
6. Thirdly, even though EC has provided what it states to be the original fax headers, India
would like to point out to the Panel that the regula r administrative stamp for the chron-in log is still
missing on the all faxed declarations themselves. By contrast, India refers, for example, to page 906
of India Exhibits, or recent Exhibit EC-6 and EC-7. We leave it to the Panel to conclude as to why
Exhibit EC-5 does not contain the chron-in log which is otherwise customarily present on all
documents received in the EC;
7. Finally, India still does not understand as to how the EC had on 12 September 1996 [Exhibit
India-59, page 1035] the uncanny ability to pre-determine support for the complaint on the basis of an
amount of production from 38 companies [Exhibit EC-4 and Exhibit India-59]. Exclusion of
companies from the 46 complainants took place only after initiation [EC Answer to India question 40]
and the questionnaires were sent out and total production quantity was not known until at least on or
after 13 September 1996 [Exhibit India-82]. This contradiction in the chronology of events continues
to be unexplained by the EC;
II. DUMPING
8. Mr Chairman, India considers that the EC’s example regarding the ‘Indian cricket team’ in
the context of dumping is instructive in that it is misleading. To continue the metaphor, first of all,
the EC’s ‘team’ of 35 producers, was established in full co-ordination with the complainants and even
before the match started.
2 The ‘Indian team’ including its reserve players, by contrast, was not
selected by India but was unilaterally imposed by the EC with the refusal - despite repeated requests -
to include Standard in the field. Even when it ‘appeared’ that one of the field members did not have
sufficient domestic sales, i.e. Anglo-French, the EC still refused to replace it with Standard which was
already a part of the Indian team. 3 Mr Chairman, cricket or no cricket, the basic point that India is
making is that Standard was part of the overall sample and that if EC had taken it into account, which
for reasons best known to them it did not, the re sults would have been more representative and
consistent with the requirements of Article 2.2.2(ii);
9. Furthermore, the EC’s most recent explanation that Standard’s response “would have had no
effect on the profit margin” is another ex-post facto explanation [EC’s Second Written Submission
§26]. Indeed, since this current explanation differs with the earlier ex-post facto explanation [that ‘a

2 Apparently it was already known on 12 September 1996 that a number of companies of the complaint
were to be excluded from the investigation since they did not count towards standing.
3 The EC implied in the Regulation imposing definitive duties [recital (18)] that the investigation
‘revealed’ that only one company [Bombay Dyeing] had sufficient domestic sales. From India’s First written
submission, paragraphs 3.73 through 3.76, it is clear that the EC had known this fact from the start [Anglo-
French never had enough domestic sales to meet the 5 per cent rule]. Nevertheless, even once this fact was
‘revealed’ the EC refused to replace the field player.

mere share of 14 per cent of India’s domestic sales would not have influenced the domestic profit
margin’], India wonders what the real reason for the exclusion was. It cannot be both reasons since
they are mutually exclusive: if it had been known from the start that Standard had no profitable sales
then its alleged ‘small’ 14 per cent size of the domestic market is irrelevant. Clearly therefore the
determination of the absence of profitable sales is ex-post facto. In any event, no reason is apparent
from the published determinations or otherwise, and it is the view of India that ex-post facto
explanations should not be permitted to repair irrational past behaviour. Mr Chairman, we therefore
strongly feel that EC acted inconsistently with the requirements of Article 2.2.2.(ii).4
III. INJURY
10. Mr Chairman, as far as, the determination of injury is concerned, India disagrees with the
EC’s interpretation of Article 3.4 as presented in section IV.2 of its Second Written Submission, that
it was not required to evaluate all the factors, for the following reasons;
11. Firstly, an “objective examination” as required by Article 3.1 encompasses those factors
tending to support an injury investigation as well as those tilting against it. The EC has argued that
Article 3.4 only requires consideration of factors that show injury. As pointed out on earlier
occasions, India disagrees with this view. For example, as the Panel held in Korea Resins , the
investigating authority could not focus solely on factors supporting a conclusion that the domestic
industry was likely to encounter difficulties, while disregarding other factors. 5 Mr Chairman, allow
me to further elaborate;
12. India has never advocated a mere ‘checklist’ approach to Article 3.4, as the EC seems to be
suggesting. The overall balance of the factors listed in Article 3.4, after having been evaluated, may
tilt towards injury or no injury--but it will be necessary to evaluate all factors to ensure that the overall
balance of factors is correctly established. This is however a minimum position: the list of factors in
Article 3.4 is “not exhaustive, nor can one or several of the factors give guidance.” Furthermore, the
evaluation of the factors must be coherent. In any event, the list is not ‘simplistic’, as asserted by the
EC. Article 3.4 has been carefully drafted taking into account the structure of the ADA itself. In this
connection India disagrees with the ‘interpretation'
6 of the EC that the role of Article 3.4 is limited to
an examination of the price and volume effects of dumping as described in Article 3.17, and which the
EC now labels as the ‘true’ injury factors.8 Article 3.4 elaborates part (b) of Article 3.1 and as such, it
is part of the obligations which must be upheld by the investigating authorities. The analogy with the
Safeguards9, Anti-Dumping 10, and SCM Agreements, and Article 6(3) of the 1979 Anti-Subsidies

4 Contrary to the EC’s assertions [paragraph 105 Second Written Submission] that India did not make a
related Article 12 claim in connection with the inconsistency with Article 2.2.2(ii), it is clear from India’s First
Written Submission at paragraph 3.117 that this claim was made: “The first argument is that contrary to
Article 12.2.2, the EC has not provided a sufficient explanation as to why it decided to apply an option for
which the requirements were not fulfilled.” The EC’s assertion regarding the absence of an explanation claim
on this issue is therefore inconsistent with the facts.
5 Korea— Anti-dumping duties on imports of Polyacetal resins from the United States, Report of the
Panel, ADP/92 and Corr.1 of 2 April 1993.
6 EC’s paragraph 58 SWS.
7 The interpretation of the EC misreads [the structure of] Article 3. Article 3.1, it may be recalled,
mandates an objective examination of (a) volume of dumped imports and effect of dumped imports on prices
and (b) the consequent impact of those imports. Article 3.2 provides further details as to how point (a) volume
and prices need to be investigated. Article 3.4 sets forth in detail how the impact of the dumped imports is to be
examined. To attribute the role of Article 3.2 to Article 3.4, which the EC appears to be doing, is a misreading
and misinterpretation of Article 3.
8 Does this imply that the EC considers the other Article 3.4 as ‘not true’?
9 Argentina —Safeguards Measures on Imports of Footwear, Report of the Panel adopted on 25 June
1999, WT/DS121/R.

Code11, cannot be denied as the EC appears to be doing. This is especially pertinent since the other
factors, to the extent that they were evaluated, did not point towards injury [as admitted in recital (62)
of EC’s second written submission];
13. India disagrees with the repeated assertions of the EC that it “did examine” all factors [recital
64 EC Second Written Submission], although it “found” nearly all of them “not to be a significant
independent factor” [recital 255 EC First Written Submission]. Thus far, the EC has never explained
when and how this examination took place, especially since these factors were considered not relevant
in the first place. Apparently, the EC is now so convinced by its continued assertions that it “did
examine” all factors, that it now assumes they are true. India believes that, under a proper
construction of the ADA, it must be possible for a Panel to determine whether the investigating
authorities have done the evaluation under Article 3.4. The EC seems to take the position that other
countries (and indeed, the Panel) have to take its word that it has fulfilled its obligations under the
ADA, and that its failure to publicize its examination should not be construed as a presumption that it
acted inconsistently with the ADA. India believes such an interpretation would make Article 3.4 [and
Article 12] practically redundant;
14. Indeed, as regards the continued conundrum posed by the EC as to how authorities can decide
whether a factor is relevant before evaluating it, India fails to understand the EC’s repeated
‘justification’: ‘‘Relevance is a matter of degree rather than of ‘yes or no’. In some cases it will be
immediately apparent, even before the initiation of an investigation, that certain factors are not
relevant and in others this may not be apparent until much later, so that the process of determining
the relevance of a factor may be little different from that of evaluating it".
12 Apart from the question
to which ‘degree’ the EC is referring to and the overall incomprehensibility of the EC’s statement,
India fails to understand how, “even before the initiation of an investigation” , it could be apparent
that certain factors are not relevant. Perhaps it was this same prophetic power of the EC which
enabled it to establish, even before initiation, that it was going to calculate standing on the basis of a
restricted number of producers, while exclusion of a number of companies still had to take place;
15. India reiterates for the record that the EC’s “explanation” clarifying that the company
Luxorette was not part of the Community sample is simply incompatible with the published
determinations and the non-confidential file [ e.g. Exhibit India-82]. India also refers to its Second
Written Submission. It is regrettable that almost four years after the selection of the sample and the
Community industry, the EC still seems unable to indicate with certainty in a manner corresponding
to the public record which companies were part of it and why;
16. India disagrees with the EC’s statement in paragraph 71 of its Second Written Submission
where it appears to argue that companies which disappeared [for whatever commercial reason] as
separate entities, years before the investigation period, should automatically be counted as ‘victims of
alleged dumping’ during the investigation period. Since these dumped imports occurred only after the
alleged company closures, the EC cannot attribute the closures to the dumped imports;
17. India fails to understand the EC’s statement (paragraph 85 EC’s Second Written Submission)
that “it is open to Indian exporters to argue that they were actually dumping greater volumes in
earlier years.” India similarly fails to understand the EC’s assertion in paragraph 86 that, “[a]s far as

10 Korea—Anti-dumping duties on imports of Polyacetal resins from the United States, Report of the
Panel, ADP/92 and Corr.1 of 2 April 1993 at § 254; Mexico—Anti-dumping investigation of high fructose corn
syrup (HFCS) from the United States, WT/DS132/R of 28 January 2000.
11 Brazil—imposition of provisional and definitive countervailing duties on milk powder and certain
types of milk from the EC (SCM/179).
12 This ‘explanation’ is an answer to a question from the Panel and is now repeated in the EC’s second
written submission.

import volume is concerned, the only assumption that the EC could be accused of making is not that
imports were being dumped, but that they were not being dumped”;
18. In conclusion, Mr Chairman, it is quite clear that the EC has acted inconsistently with
Article 3 on a number of counts, and more specifically has acted inconsistently with Article 3.4. The
EC has admitted in writing that “indications of injury were almost entirely concentrated in two areas:
profits and prices.” [EC Second Written Submission at §61]. Indeed, the EC stated that the
“industry is continuing to operate normally except for these two vital factors. This normality was
notably apparent in the volume of sales, and of production, factors that were investigated by the EC.”
Clearly, the EC did not examine numerous other factors, as required by Article 3.4 and suggested to it
in the course of the proceeding, and has therefore incorrectly established injury based on merely two
factors. This type of approach has been consistently and prudently rejected by earlier Panels since in
an injury investigation the authorities cannot sole ly focus on factors supporting a conclusion that the
domestic industry is encountering difficulties, thereby disregarding other factors.
13
IV. DEVELOPING COUNTRY STATUS OF INDIA
19. Mr Chairman, for India, issues related to Article 15 are extremely sensitive and important. As
repeatedly highlighted by us, this Article provided the balance and equity, as well as the safeguard
that developing countries had sought during the Uruguay Round. It was specifically recognized and
therefore mandated in Article 15 that developed country members shall give special regard to the
situation in developing countries and that they should explore alternative constructive remedies before
applying anti-dumping duties against developing countries. It is extremely unfortunate that the EC
authorities did neither;
20. The EC has throughout these proceedings tried to evade this issue and has presented illogical
arguments about their perception of the obligations imposed by Article 15. Mr Chairman, there can
be no doubt that the onus of exploring constructive remedies was on the EC. Firstly, the EC did not at
any stage of the proceedings either indicate their willingness to explore such alternative remedies
(rather the contrary), or as they should have done, presented the Indian exporters with any concrete
alternative possibilities which could be explore d. Secondly, when the Indian exporters through
Texprocil made such an overture, the EC officials flatly refused to consider it on the ground that it had
been received on the last day. India does not agree with the factually incorrect suggestion made by
the EC that Indian exporters were not willing to accept an undertaking. If this was true the Indian
exporters would have never put forward the offer that they did to the EC authorities, through its letter
dated 13 October 1997;
21. The alleged difficulties with undertakings in the Textile Sector as asserted by the EC are not
borne out of the facts. The EC suggests (in its second written submission) that its last undertaking in
the Textile Sector was in 1991. India attaches as Exhibit India-85 an example of an undertaking given
by exporters in the textile sector in other countries to the EC in October 1998. This recent undertaking
was in fact accepted at the provisional stage itself.
14 Mr Chairman, this very clearly establishes two
facts. Firstly, contrary to what the EC has continuously stated, constructive remedies can, and have
been adopted at the stage of provisional duties. Secondly, it is also abundantly clear that for reasons
again best known only to EC, it did not even remote ly try to explore similar alternative possibilities
before levying anti-dumping duties on Indian exports. In fact, it did not even constructively consider
the alternative of a price undertaking that the Indian exporters requested the EC to consider;

13 See, for example , Korea— Anti-dumping duties on imports of Polyacetal resins from the United
States, Report of the Panel, ADP/92 and Corr.1 of 2 April 1993 at § 254; Mexico—Anti-dumping investigation
of high fructose corn syrup (HFCS) from the United States, WT/DS132/R of 28 January 2000.
14 In fact, in EC anti-dumping practice, many undertakings take effect from the provisional stage as
also pointed out in India’s Second Written Submission. See by way of further illustration Steel Stranded Ropes
and Cables from Hungary, Poland, [1999] OJ L 45/1; Flat Wooden Pallets from Poland, [1999] OJ L 150/4.

22. India also refers to the EC’s efforts to seek an undertaking in the second Unbleached Cotton
Fabrics from India proceeding which involved many more exporters than the Bed Linen proceeding
and many more types of product. Clearly in that case the number of exporters or the vast variety of
product types did not form an obstacle to the EC exploring an undertaking [see page 1361 of India’s
Exhibits]. We are therefore surprised by the EC’s assertion that it was not possible to seek a similar
undertaking in this case, an assertion that is evidently inconsistent with the facts and EC’s past
practice;
23. As regards the handloom sector, India had in deed at some point suggested its exclusion.
However, as India also pointed out in its First Written Submission, the exclusion of handloom
products was sought because the handloom products could not be classified as a ‘like product’ and
since these handloom products were also exclud ed from the coverage of the EC-India Textile
Agreement. Hence the exclusion of handloom products by the EC was not made in the context of
Article 15 [see India’s paragraphs 6.42-6.45 of First Written Submission], a fact specifically
acknowledged by the EC in paragraph 96 of its Second Written Submission. It is therefore rather
surprising and contradictory for the EC to now suggest that the handloom exclusion was in fact based
on India’s developing country status while simultaneously it declares that the exclusion was not made
on this basis. In any event, ex post facto explanations cannot mitigate the fact that the EC did not
make any endeavour to fulfil its obligations under Article 15. The EC’s assertions are inconsistent
with the facts and it is more than clear that no special regard was given to the special situation of India
as a developing country;
V. EXPLANATIONS
24. Mr Chairman it is illuminating to note the EC’s remarks in paragraph 112 of its Second
Written Submission that the request of the exporters for an explanation “was a waste of their money
and of the [EC] authorities’ time.” This shows that the EC’s attitude towards requests for an
explanation of decisions is that these are to be treated as wastage of time and money. Given the
context that in the EC anti-dumping practice the investigating authority is the only party with access
to all information, there is an additional obligation cast upon such authority to provide for
explanations as requested by the exporters as they are in a weak position vis-à-vis such authority;
25. Mr Chairman, the suggestion by the EC that it does not have to react to arguments pertaining
to WTO rules is preposterous [EC Second Written Submission §108]. If this suggestion were to be
seriously considered, importing country authorities would be exempted from reacting to any
arguments pertaining to WTO law, which is simply unacceptable. Article 18.4 of the ADA requires
that the AD legislation and procedures of the EC comply with WTO rules;
26. Mr Chairman, limiting explanations to arguments pertaining to domestic rules deprives
Article 12 of its meaning and leaves an enormous black hole in the ADA. For example, the EC’s
domestic legislation does not contain a mirror provision to Article 15 ADA. The EC’s approach
would imply that any arguments pertaining to Article 15 ADA can simply be ignored, as in fact has
happened in the Bed Linen case. In any event, throughout the administrative proceeding the EC did
not react to repeated arguments pertaining to its domestic legislation either, such as the arguments
made by exporters in connection with Article 2 [dumping], 3 [injury], and 5 [initiation]. Thus, even if
Article 12 is limited to arguments pertaining to domestic legislation-- quod non --the EC acted
inconsistently with Article 12 ADA on many counts;
27. The EC’s qualification of India’s claims as relating to WTO rules is also factually incorrect
[EC SWS §107]. The EC anti-dumping legislation provides a framework with the Administering
authorities vested with enormous amounts of discretion to apply the law, as they deem fit. That the
Indian exporters made these claims in the course of the administrative proceeding bears testimony to
the fact that the EC anti-dumping law and practice is not as clear as the EC would like the Panel to

believe. The exporters sought explanations during the course of the proceedings on issues of vital
concern to them. However, the EC not only rejected these claims but felt that the exporters were
wasting their money and the EC’s time, thereby apparently liberating itself from any obligation to
even explain the rationale behind the rejections;
28. Finally, as a matter of record, India registers its disagreement with the table contained in EC
paragraph 105 as the table is inconsistent with the facts. For example, as regards line D India did
raise its claim [as pointed out earlier in this Statement]. As regards line K and L it is clear that
Article 12 did form part of the terms of reference. Thus, the assertions of the EC are inconsistent with
the facts and the EC acted inconsistently with Article 12;
VI. CONCLUSIONS
29. Mr Chairman, we now wish to conclude this brief Second Oral Statement by reiterating by
from the time of initiation, through the provisional and definitive findings and even during the
consultation process, India expected fairness, transparency and accountability which has been totally
denied, by the EC authorities. India has during the course of the proceedings clearly demonstrated
that the EC authorities initiated investigations in the present case without sufficient support among the
EC to justify the initiation of the case. Till date no company-specific production output has been
provided to sustain this. Moreover, the whole issue of removal of fax headers continues to remain
unclear;
30. Mr Chairman, India has also demonstrated that the EC did not calculate the dumping margin
as provided for by the ADA. In order to find dumping it relied on only one unique producer instead
of including a more representative second producer of the like product. Moreover, even for this single
and non-representative producer, the EC excluded its below cost sales and came up with an
extraordinary profit margin. Finally, the EC determined the dumping margin by not properly
accounting for the non-dumped sales;
31. Mr Chairman, we have also conclusively shown that injury was determined by focusing the
examination solely on two factors, clearly disregarding the mandatory language of Article 3.4.
Indeed, even while examining only these two factors, the EC repeatedly juggled between the sample,
the Community industry, and the total EU produc ers in order to find injury. Disappearance of
companies before the investigation period was wrongly attributed to dumping during the investigation
period. At the same time EC also wrongly assumed that all imports were dumped;
32. Finally, before applying anti-dumping measures the EC chose to completely ignore the
developing country status of India and did not explore any alternative constructive remedies as
mandated by the ADA. In fact, as India has de monstrated, the EC even did not constructively
consider the offer of price undertaking that was made by the Indian exporters;
33. Mr Chairman, India believes it has presented the facts as accurately as possible in order to
enable the Panel to reach a fair decision. India remains at the full disposal of the Panel should it
require any further explanations or assistance. Further, in the context of EC’s Second Written
Submission and the answers it has provided to the questions raised by the Panel and India, India
would like to seek certain clarifications from the EC. India believes that the Panel will get
considerable assistance in its work by obtaining responses from the EC on the clarifications sought by
India;
34. Mr Chairman, these points seeking clarifications have been listed as an Annex to this Second
Oral Statement. In order to save time, and wi th the Panel’s indulgence, these questions may be
treated as read, unless the Panel desires otherwise. India hopes that the EC would co-operate in the
matter and provide the requisite answers and clarifications to the Panel by a suitable date to be
determined by the Panel.

Annex with Questions for EC
1. Could the EC explain what it means with its statement in its answer to India’s question 15: " .
. . it is not worse that [sic] not giving credit to a complaint which later turns out as having been
supported by a major proportion of the industry."
2. Could the EC explain, with detailed production figures, its statement in paragraph 21 of its
second written submission that India’s calculation of the 25 per cent threshold figure is erroneous
because it involves "double-counting"?
3. It is the practice of the EC, and especially Directorates I.C and I.E, to register incoming and
outgoing written communications by date and with a number. This was also the case with documents
in the Bed Linen proceeding, with the sole exception of the declarations of support. Why were the
declarations of support never registered?
4. Why were the fax headers and fax footers from Eurocoton removed while its fax number is
even printed on the front page of the complaint?
5. The EC has stated in its reply to question 40 of India, that at the time of initiation, 46
producers supported the complaint, that seven were excluded after initiation, that three more were
excluded after the questionnaires were sent (10-11/96) and that one more was excluded after
verification. However, Exhibit EC-4 which, accord ing to the EC, ‘froze’ the situation at the moment
of initiation, as well as the declarations of support of individual producers, c.q. trade associations,
refer only to 38 producers. Could the EC provide the declarations of support of the eight--later
supposedly excluded--companies which, at the moment of initiation, must have filed such declarations
in order for a legal standing determination to have been effected?
6. How could the EC, at the time of initiation, alr eady know that it was later going to exclude
the eight companies?
7. Could the EC explain the situation of th e German company Luxorette and the French
company Claude? More specifically, once the EC went from 19 producers to 17, in recital (61) of the
provisional Regulation, Luxorette was still in the sample of 17. To come from 19 to 17 the EC used
as one reason the stated reason as per recital (54). The situation of Luxorette remains therefore
unclarified. Similarly, why was Claude excluded from the sample of 19, but not from the Community
industry?
8. In paragraph 22 of its second written submission, the EC states that it "… has in any case
established that producers responsible for over 34 percent of EC production expressly supported the
complaint". But this 34 per cent can be reached only if one accepts the declarations of support of the
French, Spanish, and Austrian textiles Federations because the EC, thus far, has not submitted
individual declarations of support from French, Spanish, and Austrian textiles producers. Is this
correct?
9. Does the EC agree that its logic in paragraph 76 and 77 of its Second Written Submission
conveniently fails to mention, first, that – through the inclusion of non-dumped exports - the overall
volume of ‘dumped’ imports will in all cases be higher than it otherwise would have been. Does the
EC agree, second, that the mitigating effect on the price undercutting will occur only if the prices of
the non-dumped exports are in fact higher than the prices of the dumped exports? In other words, that
where dumping or non-dumping are caused by different patterns on the normal value side, the
mitigating effect will not occur?
10. In paragraph 84 the EC posits that "[a]t any rate, the investigating authorities would have
been entitled to assume, in the absence of evid ence to the contrary, that dumping existed for some

time before this. In fact, such an assumption was relevant to the bed linen case." Could the EC
provide any legal basis in the ADA for such an assumption? Could the EC also confirm for the record
that it follows from the last sentence that the EC did in fact assume that pre-investigation imports
were dumped, as is in fact also clear from the published Regulations (but as has been denied by the
EC in the course of the Panel proceedings).
11. Why would Indian exporters wish to argue that "…they were actually dumping greater
volumes in earlier years", especially where they would not have an inkling that they were dumping in
the first place because they could not conceivably know that the EC would apply an 18+ per cent
profit to their non-existent domestic sales?
12. In paragraphs 104-115 the EC attempts to rebut the explanation claims made by India by
differentiating between a member’s obligations under the ADA and that same member’s obligations
under its domestic law and practice and arguing that an interested party’s claims under the ADA
would not be relevant claims (and therefore need not be addressed by an investigating authority)
under such authority’s law and practice where the latter were different. Would the EC not agree that
this logic, ceteris paribus , would mostly benefit members which strayed furthest from the ADA,
because such members then would have the least explaining to do, a bizarre and unwarranted result?

INDIA’s CLOSING STATEMENT OF 6 JUNE 2000
1. Mr Chairman, India thanks the Panel for providing India the opportunity to make its closing
statement. India believes that all that needed to be said has been said in written and oral submissions
and that there is perhaps no need to further reiterate those issues in this closing statement;
2. Mr Chairman, the case that India has presented rests on the following facts:
• That EC failed to take into account informa tion available to it at the time of initiation,
pointing to lack of material injury caused by imports from India in a proceeding terminated a
mere twenty days earlier;
• That the EC did not determine standing before initiating the investigation. Indeed, in
response to a question today, the EC admitted that certain companies were already excluded
at the time of standing, while EC had previously explained that standing had been determined
on the basis of 46 companies;
• That the EC unilaterally imposed the sample for India and did not accept India’s request to
include companies which would have made the sample more representative, as should have
been done in accordance with Article 2;
• That in the determination of dumping an unreasonable profit margin of over 18 per cent was
applied, leading to artificially inflated dumping margins, especially since in the EC system
exclusion of below cost sales tends to increase the profit margin, but not the margin of SGA;
• That the dumping margins were further inflated through the use of a skewed weighted-
average to weighted-average comparison instead of taking into account non-dumped sales;
• That the EC, during the course of injury determination, did not evaluate all the relevant
economic factors as provided for in Article 3, and whose evaluation had already been held to
be mandatory by previous Panels;
• That by selectively picking two of these economic factors and ignoring the others, the EC
made a wrong determination of injury;
• That, the EC initially determined that the dom estic industry consisted of 35 companies, but
thereafter relied on companies outside this group, in order to determine injury. Thus, the EC
chose a sample from the domestic industry, but did not base its injury determination on this
sample;
• That the EC wrongly considered all imports as dumped and even attributed the closure of
companies before the investigation period, to subsequent exports;
• That, finally before the application of anti-dumping measures, the EC neither took special
regard of India as a developing country, nor did it explore constructive remedies as was
mandated on EC as a developed country member by Article 15 of the ADA;
3. Mr. Chairman, all these issues were raised during the investigation, but were simply ignored
by the investigating authority. If these genuine concerns had been addressed by the EC, Indian
exporters and Indian exports would not have been subjected to anti-dumping action and duties, the
way they were;

4. Mr Chairman, before I conclude my closing statement I think it is my duty to draw the
Panels’ attention to some broader aspects of this case. As all of us are aware, during the Uruguay
Round negotiations the ADA was negotiated as a su pplement to Article VI of GATT, primarily with
the objective of tightening the procedural requirements for taking anti-dumping action so as to
introduce a certain amount of discipline into the unfettered use of anti-dumping measures, and to
thereby prevent major trading partners from misusing the anti-dumping provisions. Hence, EC
assertion that the ADA provides choices to investigating authorities, whether in the determination of
injury by picking and choosing which factors it would evaluate, or in the calculation of dumping, by
again picking and choosing that method which results in the greatest margin of dumping, goes entirely
against both the letter and spirit of the ADA;
5. Mr Chairman, it is more than obvious that the EC has no t complied with the procedural
requirements laid down in the ADA, in the present case. What is even more unfortunate is that EC
seems to feel that these procedural requirements are either a waste of time or can be complied with ex-
post facto. Obviously, EC’s approach undermines th e very basic foundation of the ADA. I would
also like to add that EC in the present case took anti-dumping action with respect to products, which
were already subjected to quantitative restrictions. It would be extremely unfortunate if major trading
players such as the EC were allowed to so blatantly violate the provisions of the ADA, as they have
done in this case, since then the very benefits which should have otherwise accrued to developing
countries from the Uruguay Round would get impaired through these non-tariff barriers.

ANNEX 1-9
INDIA'S QUESTIONS TO THE EUROPEAN COMMUNITIES
(7 June 2000)
1. The EC in its closing statement on 6 June mentioned that it had "never" stated that it relied on
46 companies to determine support for the complaint. However, in its written answer to India’s
question No.40, EC had stated that "there were 46 companies, which supported the complaint before
initiation". Could the EC explain this contradiction?
2. The EC in its closing statement on 6 June, also stated that their domestic regulation provided
wide ‘discretionary powers’ to the investigating authority:
(a) Could the EC explain how the use of such ‘discretionary powers' is consistent with
the ADA, which in fact attempts to limit this very discretion.
(b) In this context, could the EC also explain how it uses these ‘discretionary powers’ in
choosing the methodology for calculating the dumping margin, specially in case
where two methodologies lead to different findings.
3. The EC, again in its closing statement, stated that they could during a panel proceeding,
provide ‘ex-post facto justification’ for actions taken during the investigation. Could the EC clarify as
to how this ‘ex-post facto justification’ of actions taken earlier is compatible with Articles 2, 3 and 5
of the ADA, which specifically prescribe the cond itions to be satisfied and the procedure to be
followed before initiation of an investigation and for the determination of injury and the dumping
margin.
4. Can the EC indicate how many EC companies were contained in the sample drawn from its
Community industry and could the EC provide details of their individual production of the like
product.

ANNEX 1-10
RESPONSES OF INDIA TO QUESTIONS FROM THE PANEL
FOLLOWING THE SECOND MEETING OF THE PANEL
(8 June 2000)
Questions for India
1. What factual conclusion does India wish the Panel to draw based on its arguments
concerning the fax headers? Does India believe that the letters of support were in fact not received
before the initiation?
— India would respectfully request the Panel to conclude that
(1) the documents contained in Exhibit India-59, as well as any later variations or
versions of those documents (with or without, or with varying fax headers) do not
show that the EC has examined standing before initiating the anti-dumping
proceeding. As a result, India would respectfully request the Panel to conclude that
the EC acted inconsistently with Article 5.4, a fatal error that cannot be cured
retroactively later in the proceeding;
(2) the EC’s actions, including the admitted removal of the fax headers and its
presentation of different ‘versions’ of the Foncar declaration, would suggest that the
EC has been trying to conceal its mistake of not examining standing before initiating
the proceeding;
— India indeed believes that at least some of the letters of support were not, received by the EC
before initiation of the proceeding.
India would like to explain in detail how it arrived at these conclusions:
(a) The fax header dispute might at first sight seem to be trivial . However, it is an
important issue, since it goes to the core of the standing in this dispute. In order to
put the matter in perspective and explain its importance with reference to Article 5.4,
India would like to recall (b) the basic sequence of events (c) explain in detail the
facts of the matter and (d) recall the legal relevance of the issue.
(b) Basic sequence of events : During the administrative proceeding that followed the
initiation on 13 September 1996, the Indian exporters, bearing in mind the events of
the first Bed linen anti-dumping proceeding
1, questioned whether in fact the EC
authorities had made a proper standing determination in accordance with Article 5.4
of the ADA. On 8 January 1997 the EC responded by making available the "non-
confidential standing file" , which consisted of the documents attached as Exhibit
India-59. The fax headers on the declarations contained in Exhibit India-59 had been
removed. This made it impossible for Indian exporters to verify whether the EC had
examined standing before initiating the proceeding.

1 See para 5.54 of India’s first submission to the Panel.

When the Indian exporters during their injury hearing queried2 as to why the fax headers were
removed, the EC reacted with indignation and refused to answer the question (a reaction still reflected
in para. 83 of the EC’s first submission to the Panel). In its answer of 19 May 2000 to India’s
question 9, the EC noted that it considered:
"to have indicated the dates at which it received declarations of support by producers
a sufficient number of times (copies of faxed declarations of support in the non-
confidential file, . . . )".
It follows therefore, that the EC relies on the dates typed or written on the faxed declarations
as proof that it examined support for the complaint before initiation.
In its Second written submission (para. 19), however, the EC changed its defence and
admitted that the fax headers had indeed been removed "at the request of producers to protect
information they regarded as confidential" . The EC did not provide any evidence showing that
producers had indeed asked this. The fax headers contained fax number of the sender, and the date of
sending and receipt of the faxes. The fax numbers of the senders (the companies or Eurocoton) is
hardly confidential since it was on the body of the faxes anyway, and in the non-confidential
questionnaire responses of the Community producers. The headers would have been the best
evidence to prove that the faxes had arrived on time. But they were removed with no convincing
reason. India doubts that confidentiality of a fax number was the real reason for the removal of fax
headers. Rather, there is reason to believe that the EC authorities removed the fax headers in order to
make it impossible for any party to verify the exact date of receipt of the declarations of support.
The removal of the fax headers greatly impaired the usefulness of these declarations as
evidence. Thus it is doubtful whether the proceed ing had indeed been initiated in accordance with
Article 5.4
3, especially since the EC relied on those declarations. For this reason, India requested the
EC to submit the original fax copies, which—it expected—would, in accordance with European
Commission practice, be marked with a ‘chron-in’ stamp but, inexplicably until now (15 June 2000),
the EC has declined to do so.4
(c) Facts of the matter : During the second meeting with the Panel the EC handed over
what it alleged to be the correct copy of Foncar’s declaration of support, although it
did so only after India had pointed out that there existed inconsistencies of which it
gave the example of Foncar. However, as India then showed to the Panel, at least
part (the footer) of the ‘correct copy’ was inconsistent with the document that was
previously presented. Thus the authenticity and the veracity of the documentation
remains questionable. Obviously, the document footer could well have been prepared
after the initiation of the administrative proceeding, for the purpose of the Panel
proceeding.
India therefore summarises several instances where the evidence presented by the EC simply
cannot be correct:
• Foncar: The Foncar declaration which was sent by Eurocoton in September 1996 was according
to its fax footer received in the same fax transmission by the EC in July 1996 . When it was
pointed out during the second meeting with the pa nel that this is logically impossible, the EC

2 The Indian exporters later put their concerns on record (see e.g. Exhibit India-54 at 955). As far as
India is aware, the EC did not during the administrative proceeding respond to the arguments concerning this
issue in writing.
3 Moreover, India believes the Panel could draw inferences from the fact that the EC went through
great trouble to cover the dates on the faxes.
4 Examples of such stamps can be seen in Exhibit India-53 at 906, Exhibits EC-6, and EC-7.

reacted by providing a new version of the same document, this time with the allegedly ‘correct’
footer (all three declarations are now re-attached for convenience of the Panel as Exhibit India-
86). Clearly, in the view of India this casts serious doubts on the veracity of the document. The
only conclusion which India can draw is that at the very least , the fax footer on Foncar’s
declaration was added post facto, and incorrectly at that.5
• the other Portuguese producers’ declarations : When Eurocoton sent a fax to the European
Commission, the print-out of the fax would contain a fax header, showing the date when
Eurocoton sent the fax, the text "from Eurocoton 02 2303622" and a page number of that
particular fax transmission in the top-right corner (please refer to Exhibit EC-5). Simultaneously,
the European Commission’s fax machine would a dd a footer showing the date of receipt (which
should logically correspond with the header’s date of sending), and the batch number of that
particular fax transmission. It is thus logically impossible for any two pages to have identical
footers and headers; even if two pages were sent in the same batch, the Eurocoton fax header
would show a different page number;
Nevertheless, the reception date/time, batch and page numbers of several Portuguese declarations
[as supplied in Exhibit EC-5] are identical to those of German producers. This concerns at least
the following instances (indicated in italics):
Company: Header
date:
Time: Header
page nr
Footer
date:
Time: Footer
batch nr:
Foncar ?-Sep-96 10:31 2 29-Jul-96 17:19 6936
Bierbaum ?-Jul-96 15:40 3 29-Jul-96 17:19 6936
Lameirinho ??-Jul-96 12: 07 3 29-Jul-96 17:19 6936
Meckelholt 29-Jul-96 15:48 4 29-Jul-96 17:19 6936
Incotex ??-Jul-96 12:08 4 29-Jul-96 17:1? 6936
Kettelhack 29-Jul-96 15:49 5 29-Jul-96 17:19 6936
Erbelle ??-Jul-96 15:49 6 29-Jul-96 17:19 6936
The EC’s batch number identifies pages that were part of the same fax transmission. These
pages should have different (subsequent) page numbers added by Eurocoton’s fax machine.
Instead, in two instances (Bierbaum/Lameirin ho and Meckelholt/Incotex) the same batch and
page numbers feature. This, however, is logically impossible unless the fax machines had been
re-programmed and re-dated; or the fax headers and footers were cut and pasted from one fax
onto another declaration);
• The copy of the declaration of the Syndicat Général de l’Industrie Cotonnière Française which
was made available on 8 January 1997 in the non-confidential file contained on the top right
corner the words "Annexe 2" (India Exhibit-59 at 1061). On the copy with the fax header
presented by the EC as Exhibit EC-5, the fax header runs through the words "Annexe 2". This is
not possible, unless the fax header was applied after the copy provided in the non-confidential file
was made.6 For the convenience of the Panel, India attaches a copy of the original declaration

5 India notes that, also pointed out during the discussions in the second Round of consultations,
throughout this proceeding, the EC has had the tendency to produce new ex-post facto explanations, tailored to
meet India ’s legal points [even if the explanations provided by the EC contradicts earlier evidence and
explanations (such as in the case of the Foncar declaration)].
6 The EC has never during the administrative or Panel proceedings challenged the copies that India
submitted as Annex India-59.

and of the one with the fax headers, as well as magnified copies of the same [Exhibit India-87]. 7
This clearly shows that the fax header was applied afterwards.
It follows that at least those of the fax headers/footers of the declarations mentioned above
cannot have been authentic. In view of the above-noted discrepancies, it is not impossible that all fax
headers presented during the second meeting with the Panel could have been applied post facto (but
India has no means of checking this). It is for this reason that India had requested further information
by means of the EC’s chron-in log.
In any event, the EC’s reply of 19 May 2000 to India’s question 9 that it correctly informed
the Panel of the date of submission is factually incorrect; in the case of Foncar this is very explicitly
clear. For the other companies (at least Lameirinho and Incotex, as well as the Syndicat Général de
l’Industrie Cotonnière Française)8 the EC admitted that the fax headers were removed, and India
concludes that later new fax headers were added. While EC admitted the removal, the second act is a
logical conclusion which any reasonable person would arrive at, given the facts of the case.
Considering the effort the EC went through to amend the evidence in its files, India believes that none
of the declarations presented by the EC from any company or association can be unquestionably relied
on as having been submitted before initiation.
(d) Legal relevance of the issue : Why is this issue material? The EC has admitted in its
First Written Submission that it relied on the declarations for standing purposes:
"[t]he evidence on which the EC authorities relied at the time when the decision to
initiate the investigation was made is set out in details in Exhibit EC-4. It consisted
of the following: . . . Forms issued by Eurocoton (the European producers
association) and completed by individual producers, indicating support for the
complaint and giving production in 1995 . . ."9
India accepts that the soliciting and obtaining of declarations of support from producers
would indeed be one possible form of "examination of the degree of support" under Article 5.4. Since
such examination must take place before initiation, the standing file that has been presented to Indian
exporters should then contain sufficient evidence showing that the declarations of support were
received (at the latest) on the day of initiation.
Since at least part of these declarations seems contradictory, India believes there is no genuine
positive evidence that the EC checked standing before initiation. If anything, the supply of conflicting
documents by the EC would suggest the opposite, i.e., that the EC did not have information from at
least the Portuguese companies Foncar, Lameirinho and Incotex when it initiated the proceeding. The
same could be true with respect to the declarations from other companies in Exhibit India-59 when it
initiated the proceeding.

7 For the sake of clarity, the very original (as it was copied from the non-confidential file on
8 January 1997) is attached as the transparent on top of the version with fax header. As a result of the
photocopying process of India ’s Exhibits, the copies submitted as Exhibit India-59 were cut off at the very top,
although only with respect to the letter ’A’, and not for the distinctive ‘2’. Indeed, even if Exhibit India-59 itself
is compared with the version submitted as EC-5, the pr oblem clearly remains since the new header runs through
the distinctive digit ‘2’. It is also evident from a comparison of these enlarged copies that India did not ‘redraw’
the letter A in “Annexe 2”. (India can provide the very original, as copied on 8 January 1997, to the Panel, if
required). India notes that the document ‘Annexe 2’ also formed part of Exhibit India-51 [page 686 of Exhibits]
as page 35 of those disclosure comments.
8 India notes that in any event, it does not believe that a declaration by an association of producers can
be evidence of support by individual producers. India mentions the specific case of this Syndicat Général de
l’Industrie Cotonnière Française because it raises concerns as the reliability of the remainder of Exhibit India-59.
9 The EC repeated this in para. 40 of its first Oral Statement.

2. The EC has stated that based on information from various sources, prior to initiation the
investigating authorities estimated total EC produ ction of cotton type bed-linen in 1995 to be
between 123,917 and 130,218 tonnes. Based on the information in Exhibit 4 of the EC's first
submission, producers who directly submitted a document of support to the EC (producers in
Finland, Germany, Portugal, and Italy, as listed in Exhibit EC-4) prior to 13 September 1996,
accounted for, collectively, 34,756 tonnes in 1995, or 26.7 per cent of total EC production of
130,218 tonnes in that year. Does India agree that if these data are accepted as facts, the
requirement of support by domestic producers accounting for at least 25 per cent of total
production of the like product was met in this case?
If indeed these data were accepted as facts, the 25 per cent threshold would have been met in
retrospect. However, India submits that the data cannot be accepted. Additionally, even if the data
would be accepted as facts, failure to make the standing examination before initiation cannot be
repaired retroactively. The arguments underlying India’s conclusions are the following:
The EC’s data referred to in the question as "facts" are anything but facts (point (a) below)
and can therefore not be accepted. Moreover, India believes that the question does not address one
fundamental problem, i.e. the timing (point (b) below).
(a) The EC seems to argue that in any event on 13 September 1996 it possessed evidence
from individual companies amounting to more than 25 per cent of Community
production. But this is not factually correct: as explained in India’s reply to the
Panel’s question number 1, above, the ‘fax header issue’ affects at least three, but
possibly more Portuguese companies.
10 Since, using the figures of the Panel’s
question, support by domestic producers would stand at 26.7 per cent on the basis of
the Portuguese, Italian, German and Finnish producers listed in Exhibit EC-4,
discounting the three Portuguese companies would already bring the total level of
support well below the Article 5.4 threshold. In addition, as explained above, India is
not convinced that the other Portuguese producers’ declarations were indeed provided
before initiation. Since (according to Exhibit EC-4) the Portuguese producers
represented by far the largest national production volume, discounting them would
mean the EC on 13 September 1996 had at best received the support of the Italian,
German and Finnish producers listed in Exhibit EC-4. This means that the standing
test revealed that at most at 14 per cent of Community production supported the
complaint.
11
(b) Quite apart from how many companies did in fact support the complaint, there is the
question of timing. As a legal matter, India considers the logic of the Panel in
United States—imposition of anti-dumping duties on imports of seamless stainless
steel hollow products from Sweden compelling: " an anti-dumping investigation shall
normally be initiated upon a written request ‘by or on behalf of the industry affect.’
The plain language in which this provision (Article 5.1) is worded, and in particular
the use of the word ‘shall’, indicates that this is an essential procedural requirement
for the initiation of an investigation to be consistent with the Agreement. This is
underlined by Article 1 of the Agreement. … The panel considered, in the light of the
nature of Article 5.1 as an essential procedural requirement, that there was no basis
to consider that an infringement of this provision could be cured retroactively."
12

10Foncar (whose declaration of support was clearly altered); and Lameirinho and Incotex, whose
declaration’s headers are identical to those of two German companies (please refer to the Annex to these
replies).
11 (5,905 [Italy] + 11,280 [Germany] + 1,010 [Finland]) ÷ 130,128 [total EC production] = 14.0 per
cent.
12 ADP/47 at 5.20.

On 13 September 1996 the EC initiated the proceeding on the basis of the assertions in the
complaint. As analysed above, the EC never made "an examination of the degree of support for, or
opposition to, the application expressed by domestic producers of the like product" before initiating
the proceeding. Even if in retrospect it turned out that more than 25 per cent supported the complaint
(as the EC tried to show with its Exhibit EC-4) this is too late. According to India, the EC was indeed
too late: Exhibit EC-4 has already been stated to have been drawn up recently; the EC’s Note for the
file of 12 September 1996 could not possibly have been drawn up before initiation, as will be shown
in India’s answer to question 3.
3. Could India clarify its argument about exclusion of producers from the domestic industry
after initiation and the relationship of such exclusion (if any) to the standing determination?
India will hereby try to clarify its argument.
The replies to question 2 above, as well as in its earlier submissions, India already noted that
Article 5.4 requires the standing determination to be made prior to initiation. This is, in the words of
the Swedish steel panel, an "essential procedural requirement" which cannot be "cured retroactively".
The EC has explained in its reply of 19 May 2000 to Panel question 40 that "there were 46
companies which supported the complaint before initiation". At the time, however, the only list of 46
companies was contained in the complaint. It is furthermore evident from EC’s own admissions that
exclusions from those 46 took place only after initiation: "[c]ertain companies were eliminated from
the list of 46 companies in the course of the investigation, namely after initiation" (EC’ s reply to
question 40), after the EC had contacted the companies listed in the complaint and a number of them
made it clear that they did not support the proceeding: "After elimination from the list of companies
included in the complaint of seven of them found not to be complainants . . ." (Recital 52 of the
provisional Regulation). One other company was in fact relying on imports and was also excluded
(recital 54).
This brought the number of companies, after initiation, to (46 –7 –1 =) 38 (the companies
listed in Exhibit EC-4). Even later the EC elimin ated three more companies because they either no
longer produced bed linen
13 or did not respond to requests for information (Recital 56). Thus the
final number of companies belonging to the Community industry was established at (38 –3 =) 35. It
is clear from the EC’s own statements to the Panel that the determination of the 38 companies, and
later the 35 companies, only took place well after initiation.
As is evident from Exhibit India-58, the non-confidential standing file on 8 January 1997 also
contained a "Note for the non-confidential file" drawn up by the European Commission services,
dated 12 September 1996 (one day before initiation), stating that:
"[t]he sum of the 1995 production figures contained in the following documents,
which corresponds to the companies actively supporting the complaint, is 45952
tonnes."
This amount of 45,952 tonnes corresponds with the production data of the Exhibit EC-4 14
companies from Italy, Portugal, France, Germany, Finland, Spain, and Austria. 15 It follows that the

13 This admission in Recital 56 in itself suggests that the EC checked standing only after initiating the
proceeding. How could the EC have determined that a company was entitled to support the complaint when it
did not even produce the product concerned?
14 India notes that the EC has admitted that Exhibit EC-4 was prepared for the purposes of the panel
proceeding.

note dated 12 September 1996 refers to the 38 compan ies listed in Exhibit EC-4, and that the EC in
January 1997 tried to justify its standing determination as having been made on the basis of those
companies. This information is inconsistent with reply 40 of the EC replies to India of 19 May 2000.
Even more seriously, since it is evident from the foregoing that the EC only arrived at the list
of 38 companies well after the initiation, it could not possibly have known on 12 September 1996 that
after the initiation (after 13 September) it would eliminate those 7+1 companies. It logically follows
that the drafter of the note in the non-confidential standing file may not have been entirely accurate in
dating it on "12 September 1996"; the note can logically only have been produced after initiation. In
summary, that note cannot be relied on as evidence that the EC determined standing before
initiation—on the contrary, it seems to support India’s conclusions as noted in its reply to question 1.
Therefore, the standing determination, which purportedly hinged on that Note for the file, was in fact
absent.
4. On what basis does India conclude that, as st ated at the second meeting with the Panel, the
requirement in Article 15 to "explore constructive remedies under this Agreement" obligated the
EC to "present Indian exporters with any concrete alternative proposals which could be explored"
or "indicate their willingness such alternative remedies"?
As India understands, there are two elements to the question: first, whether there are
constructive remedies other than undertakings (a), and second who is under an obligation to take the
initiative (b).
(a) India believes that there seems to be common ground among the parties to this
dispute that proposals other than price undertakings could also constitute
"constructive remedies" . Indeed, in the consultations and in its Second Written
Submission the EC itself gave a number of examples which it considered remedies
other than an undertaking [which, however, India proved not to be correct as
constituting a constructive remedy]. Since EC refused to "explore" the price
undertaking desired by the Indian exporters, EC was under an obligation to explore
other constructive remedies.
(b) In the view of India the obligation to indicate the willingness stems from the words
"shall explore." India believes that "explore " evokes a positive action. According to
Webster’s New Collegiate Dictionary
16 "explore" means: "to seek for or after; to
examine minutely; to make or conduct a systematic search" . The common element
here is that the person exploring is the one taking initiative. This brings the matter to
the question as to who should explore possibilities of constructive remedies. It would
logically follow that this can only be "developed country Members" ; a reading
supported by the wording of the first sentence of Article 15.
It follows from the foregoing that the investigating authorities in developed country Members
should take action; they should examine the possibilities for constructive remedies. The initiative thus
lies with the EC.

15 Taking the data from Exhibit EC-4: according to footnote 3 on that document, the “[s]upport declared
on the basis of a document directly emanating from individual companies amounts to 44187 MT, or 34 per cent
of the total. ” This 44,187 is the total of the production figures for Italy (5,905) + Portugal (16,550), France
(9,442), Germany (11,280), and Finland (1,010). If to this 44,187 the amounts alleged for Austria (215) and
Spain (1,550) are added, it adds up to (44,187 + 215 + 1,550 = ) 45,952 MT featuring in the note for file dated
12 September 1996.
16 Webster’s new Collegiate Dictionary, 1975 Edition.

5. Could India explain what relevance it attribut es to the acceptance of undertakings in other
cases to the question of whether the "constru ctive remedies under this Agreement" were
"explored" in this case? Is India of the view that "explore" requires the EC to accept a remedy
that may be explored?
India believes that the obligation to "explore" is a positive one, which does not alter per
country, per case. However, a comparison of the Bed linen proceeding with current EC practice may
be useful to determine whether the EC discharged its obligations under the second sentence of
Article 15 in good faith. India does not believe that "explore" includes the obligation to accept an
undertaking at any price.
India would like to set out the arguments underpinning its replies:
(a) According to experienced EC anti-dumping experts,
"[a]n undertaking can be proposed by the exporter concerned. In accordance with
Article 8(2), the Commission may suggest to an exporter that it proposes an
undertaking. Article 4(3) explicitly provides that in regional anti-dumping cases,
exporters shall be given an opportunity to offer an undertaking; the same applies with
regard to anti-dumping proceedings concerning CEECs [Central and Eastern
European countries] and Turkey."
17
In practice, when the Commission considers undertakings feasible and desirable for policy
reasons, it will work out the text of the undertaking. In most cases the undertaking is sent to the
companies concerned ‘ready for signature’; in politically more complicated cases occasionally the
final text is the result of negotiations between the exporters and the Commission staff.
In the past, if the European Commission needed an undertaking, it was prepared to offer one,
even though it concerned textile products and the product variety and number of exporters concerned
was far larger than in Bed linen. For example, when the vote in the EC Council of Ministers on the
proposed anti-dumping duties on Unbleached cotton fabrics from inter alia India was debated,
European Commission pleaded strongly with the I ndian exporters to sign an undertaking (Exhibit
India-77, page 1361). The Commission was so eager that it pre-empted the actual existence of an
undertaking by suggesting to the EC Member States in the disclosure document that undertakings had
already been concluded before even one had b een signed (Exhibit India-77 page 1360). The EC’s
enthusiasm for undertakings in Cotton fabrics is all the more remarkable since that proceeding
covered more countries than Bed linen, involving vast numbers of exporters in the targeted countries,
and a vast array of different product types. Under these circumstances the EC’s explanations to the
Panel in the Bed Linen case
18 look implausible.
India notes that, when the European Commission for domestic policy reasons desperately
needed an undertaking in Cotton fabrics, it had no qualms to offer one. This clearly shows that the
EC has the practical ability to accept an undertaking concerning textile products from developing
countries when it genuinely seeks to explore this.
(b) As to the second question, India does not believe that "explore" includes the
obligation to accept an undertaking at any price. There may indeed be technical
reasons why it is impossible for the investigating authorities to accept an
undertaking.19 But the second sentence of Article 15 does in India’s view obligate

17 Müller, Khan, Neumann, EC Anti-Dumping Law — A Commentary on Regulation 384/96 , Wiley,
Chichester 1998 at 298-299 (Exhibit India-88).
18 EC’s second written submission at paras. 91-93.
19 In this case, however, India sees no such technical difficulties that could not have been overcome.

the investigating authorities to at least ex amine in some form or way the possibilities
of an undertaking. 20 Rejecting an undertaking for bed linen outright, without any
exploration whatsoever, on the basis that it is "too complicated a product for
undertakings" is, in India’s view compatible with neither the letter nor the spirit of
Article 15.
According to Webster’s New Collegiate Dictionary21 "explore" means: "to seek for or after;
to examine minutely; to make or conduct a systematic search". The common element is that the
person exploring is the one taking initiative. "Explore" implies positive action. In the Bed linen case,
the EC officials made it clear up-front that the EC would not be in a position to accept an undertaking.
The EC never examined in good faith whether an undertaking would be feasible. No exploration ever
took place.
6. Does India take the view that the EC is re quired to explain in each instance that it has
applied its domestic law and regulations, when a party argues during the course of the investigation
that the EC should act in a different manner or on a different basis? Or is India arguing that
having applied its domestic law and regulations in this case, the EC acted inconsistently with its
WTO obligations?
Regarding the first question, India is of the view that relevant claims and arguments made by
exporters and importers must be addressed in the Regulation imposing definitive duties ex
Article 12.2.2 of ADA.
India recalls the text of Article 12.2.2 which provides in relevant part that the public notice
imposing definitive duties must contain the reasons for the acceptance or rejection of relevant
arguments or claims made by the exporters or importers. Particularly the fact that this Article refers
only to exporters and importers (and not to domestic producers) clarifies that this Article was included
for the protection of exporters and importers.
There are only a limited number of claims that in a given anti-dumping proceeding are likely
to be made by exports and importers. Typical claims will pertain to procedural issues, the costs and
profit calculations where constructed normal values are used, the refusal to grant adjustments, and the
injury analysis. Claims falling in these categories are made in virtually every case that India is aware
of. An authority could reply to each raised claim that it has applied its domestic law and regulations
22
(indeed, which authority would volunteer that it did not apply its domestic law and regulations?).
However, in India’s view this would amount to a non-sequitur answer. Article 12.2.2, read with
Article 17.6(i), purports to lay down a minimum standa rd of fair play. India disagrees with the EC’s
attempt to circumvent the Article 12.2.2 obligation by arguing that it is sufficient for an authority to
respond that it has applied its domestic law. In this context India emphasizes the choice of words
throughout Article 12.2.1 and 12.2.2 in clarifying the obligations of the investigating authorities:
"…sufficiently detailed explanations…"; "…all relevant information on the matters of fact and
law…"; "…the reasons for the acceptance or rejection of relevant arguments or claims made by the
exporters or importers…" Article 12 obliges the authorities to provide specific and adequately
detailed responses to arguments and claims made. To simply respond that domestic law was applied
fails to meet this requirement. Indeed, one litmus test that demonstrates the inadequacy of such a
response is that the very same reply could be given to any and all arguments and claims, on any issue,
in any case, without variation: "The EC applies its domestic legislation."

20 Or, if they exist, other solutions conforming to the WTO Agreement.
21 Webster’s new Collegiate Dictionary, 1975 Edition.
22 India notes that, contrary to some other jurisdictions such as the United States, EC does not in fact
have public regulations.

In the light of EC’s position in other cases, it is surprising that the EC is following this line of
reasoning in the present case. Thus, as two authors have argued:
"Equally important, authorities will have to document their investigation. Two GATT
panels in the countervailing duty area [Brazil-milk powder; US-Bismuth steel] have
already expressed their doubts about the sufficiency of the evidence in the record,
concerning determinations…
No authority seems safe from the rather sweeping use of the requirement of an "
adequate explanation" in the written determination (i.e. notwithstanding whether
adequate support can be found in the record), as evidenced by the US use of this
weapon against Korea in the panel on Polyacetal Resin, followed by the successful
use of the doctrine by the EU against the US in Bismuth Steel and against Brazil in
Milk Powder."23 [Emphasis added; footnotes deleted]
Indeed in the Bismuth steel case, the EC itself argued that "…the obligation to explain the
rationale for a decision was case-specific, no matter how long-standing a practice may be, the
guidelines required an administering authority to deal with the merits of each challenge to it. "24
In its second submission to the Panel, India has explained in detail, first, that, contrary to the
allegations of EC, virtually all of its claims made before the Panel were also made before the EC
during the administrative proceeding and, second, that the claims were also valid under EC law. In
this respect, India recalls, for example, that it has proffered undisputed evidence that inter-model
zeroing is applied by the EC in some cases, but not in others, including bed linen. The effort by EC to
make it seem as if EC in the bed linen case simply applied its law is therefore factually incorrect. The
EC did not apply its domestic legislation.
In reply to the second question, India considers that the EC acted inconsistently with its WTO
obligations on the numerous counts, set out in detail in India’s first submission to the Panel, and, in
most of these cases, also in violation of its own legislation, as applied in practice, as detailed in
India’s second submission.
7. Did Indian producers or exporters offer undertakings or discuss the possibility of
undertakings with the EC prior to the imposition of provisional measures? If so, please provide
details, including copies of any documents, regarding relevant communications.
The provisional anti-dumping duties were imposed per 14 June 1997.
25 At that time, no
formal request for an undertaking or offer was made because the Indian exporters still hoped to be
able to convince the EC authorities to revise their extreme dumping determination and to seriously re-
consider the incorrect injury determination.
8. Could India indicate the legal basis for the as serted obligation on a Member to explain to a
party during the course of an anti-dumping in vestigation "how" it carried out the examination of
the "accuracy and adequacy of the evidence provided in the application" under Article 5.3? Could
India further indicate the legal basis for the obligation it asserts a Member has to explain to a
Panel in dispute settlement "how" it carried out this task, in the absence of evidence or argument

23 Horlick, Clarke, Standards for Panels Reviewing Anti-Dumping Determinations under the GATT
and WTO, 315, at 316 in International Trade Law and the GATT/WTO Dispute Settlement System (Kluwer
1997).
24 United States, Imposition of countervailing duties on certain hot-rolled lead and bismuth steel
products originating in France, Germany and the UK, Report of the Panel, 15 November 1994 (SCM/185), at
para. 298.
25 Article 3 of the provisional Regulation.

to suggest that the result of that examination, a determination that "there is sufficient evidence to
justify the initiation of an investigation", was not proper in light of the facts?
With regard to the first part of the question, Article 5.3 imposes a pre-initiation examination
obligation on the authorities. In the EC anti-dumpi ng system (contrary to, for example, the United
States system), complaints are confidential and a non-confidential version of the complaint will be
provided to interested parties only after the case is initiated. As a consequence, exporters can criticize
aspects of the (pre-) initiation, including perceived deficiencies in the Article 5.3 examination and the
Article 5.4 standing determination, at the earliest after initiation. This in fact also happened in the bed
linen case where comments by the Indian and other countries’ exporters were submitted in the injury
submissions. India considers that any such clai ms and arguments made by exporters must then be
addressed in the notices imposing provisional or definitive duties ex Articles 12.2.1 and 12.2.2. In
this regard, these Articles oblige the investigating authority to refer to, or explain, the reasons of fact
and law for accepting or rejecting arguments advanced by the exporters or importers. In the view of
India, since the procedural requirements related to initiation are critical components of an
investigation leading to a provisional or final determination, if arguments are advanced that pre-
initiation requirements have not been met, such arguments fall within the ambit of Article 12 and the
investigating authority must refer to or explain the reasons for such arguments being accepted or
rejected.
The EC position would seem to be that a simple statement by the authorities that they did
"examine", be it to exporters or to a WTO Panel, is sufficient to satisfy the Article 5.3 obligation. In
the view of India such interpretation renders the Article 5.3 obligation meaningless.
As regards the second question, India notes that any evidence related to the pre-initiation
examination is exclusively in the hands of the EC authorities. As has been noted in India’s second
submission to the Panel
26, WTO Panels have emphasized the "rule of collaboration" incumbent upon
parties to WTO dispute settlement proceedings. Thus, once the claimant has done its best to secure
evidence and has actually produced some evidence in establishing a prima facie case, the respondent
has the obligation "to provide the tribunal with relevant documents which are in its sole possession."
Until today, India believes that the EC did not conduct the pre-initiation examination and took
the complaint at face value. However, India cannot conclusively prove this because the evidence is in
the hands of the EC authorities. EC has argued that it could only prove that it did conduct the
examination if it were to have videotaped the examination. With all due respect this argument
appears silly. As in any developed bureaucracy, the European Commission has a chain of command.
India understands that, as part of the chain of command, both the Cabinet of the Commissioner in
charge of the Trade Directorate as well as the Commission’s Legal Service must normally give an
opinion on the initiation of an anti-dumping proceeding. In addition, India would expect that there are
internal written documents which would evidence that a pre-initiation examination, if any, did in fact
take place. EC, however, has not submitted such documents, if they exist, and thereby has acted
inconsistently with the rule of collaboration.
Questions for both parties
15. In several instances, the AD Agreement gives Members a free choice of methodology on a
particular issue. One such issue is the choice of whether to determine normal value on the basis of
a constructed value, or the export price to a third country, under Article 2.2, another is the choice
of comparing a weighted average normal value to the weighted average of all comparable export
transactions, or comparing normal value and export prices on a transaction-to-transaction basis.
It appears evident that in some cases, dependin g on the particular facts, the choice of one
methodology would result in a determination of dumping, while the choice of another methodology

26 Second submission of India to the Panel, paras. 32-34.

would result in a determination of no dumping. Could the parties please explain whether, in their
view, this is a reasonable understanding of the AD Agreement in this regard? Further, could the
parties please comment on how the choice of methodology is or may be determined in these
instances, given that the results of application of either possible methodology will not be known
until after it is applied. Are there any consideratio ns that must be brought to bear on the choice of
methodology? May the choice of methodology be re solved by policy? Is a Member free to choose
the methodology to be used in a particular case without any reasons at all?
India agrees with the Panel that the ADA sometimes gives the authorities a choice of
methodology. However, this choice is often qualified. Thus, in the case of the examples given by the
Panel, third country export prices may be used, provided that the prices are representative.
Constructed normal value may be used, provided that the amounts of SGA and profits are reasonable.
The Article 2.4.2 comparison is subject to the provisions governing fair comparison . These
qualifications are overarching requirements that the authorities must comply with to avoid patently
unreasonable results.
Article 17.6(i) of the ADA in turn instructs Panels to determine whether the authorities ’
establishment of the facts was proper and whether their evaluation of those facts was unbiased and
objective. While drafted in the form of instructions to WTO Panels, the provision obviously
simultaneously requires the authorities to properly establish facts and to evaluate such facts in an
unbiased and objective manner.
Applying these initial observations to the questions raised by the Panel, India considers that
where choices are provided in the ADA, such choices are not unqualified. Furthermore, facts must be
evaluated objectively and in an unbiased manner. While India agrees with the Panel’s observation
that a certain choice may in some cases lead to higher dumping margins than other choices, the
overarching requirements noted above may then militate against using such choice, depending on the
facts (for example, whether the difference between various methodologies is minor or major).
Furthermore, in India’s view, where a certain choice would systematically lead to higher dumping
margins than another choice, adoption of that choice, whether on an incidental basis or as a matter of
policy, this would violate Article 17(6)(i) because the result would become biased. In India’s view,
under the ADA the "job description" of authorities applying anti-dumping laws is not "to find
dumping", but rather to determine "whether dumping exists". Systematic choices favouring dumping
findings are in violation of the ADA.
16. India indicated, in its rebuttal submission at paragraph 104, that it made "repeated
suggestions on undertakings in October 1997" but that the answer from the EC was "always that
Bed Linen was "too complicated a product for undertaking". Could the par ties please provide
specific details concerning any communications pertaining to undertakings between India and the
EC in October 1997, or prior to that date. Copies of any relevant correspondence should be
provided in this regard as exhibits. If in fact such discussions took place, could India indicate what
additional facts would be required, in order for the Panel to conclude that "constructive remedies "
were "explored"?
Relevant correspondence is submitted as Exhibits, with accompanying explanations below.
As regards the last question, India believes that the Commission was under an obligation to
discuss in good faith with Indian exporters the possibilities and difficulties of an undertaking. India
only had ten days to work out an undertaking. The EC had an obligation to assist India in working out
an undertaking, and an obligation to take initiatives in this regard.

When the Indian exporters received the definitive disclosure on Friday, 3 October 27, it
became clear that the EC was going to impose definitive anti-dumping duties on the basis of (in
India’s view) exaggerated dumping and distorted injury determinations. The Indian exporters then
asked their lawyers to work out the possibility of an undertaking. The Indian exporters had 10 days
[which included two weekends] to work out an offer encompassing the whole Indian bed linen
industry.28 After telephonic contacts between the lawyers and the Cotton Textiles Export Promotion
Council (Texprocil), and representatives of the Indian Mission, the former on Tuesday 7 October sent
fax 27642 [Exhibit India-89] to Texprocil.
Texprocil checked with its members and came back to the lawyers on Thursday, 9 October
(fax 27702 [Exhibit India-90]). This led to telephone discussions between the lawyers and Texprocil
on the possible organisation of an undertaking. The lawyers followed this up with a more detailed
written advice of the same date, suggesting the ba sic outlines of an undertaking (Fax 27722 [Exhibit
India-91]). Notably, the lawyers suggested an undertaking roughly based on the model adopted by the
EC in the anti-dumping concerning Flat wooden pallets from Poland , which had also been a sample
case with a large variety of product types and where the same lawyers had also helped to negotiate
and conclude the undertakings.
Therefore, on Monday, 13 October 1997 the lawyers, on the instructions of Texprocil, sent a
fax to the Commission:
"communicat[ing] the desire of our Client Texprocil and its Members to offer price
undertakings . . .
Our Client is working on a detailed formula concerning the practical aspects of this
offer. Such detailed formula might be necessary since the product concerned can be
divided in a number of items/models. We will be relaying the proposed formula
implementing the practical details of the offe r as soon as this has been worked out in
detail.
In the meantime, we look forward to your favorable reaction concerning the offer of
our Clients. We hope that the offer can be given due consideration especially in light
of Article 15 of the WTO Agreement [sic] . . ." (fax 27817 and 27818 [Exhibit India-
92])
This fax offering the undertaking was therefore made on time and comprised the very explicit
invitation to seriously negotiate.
Despite this fax, whether before or after it , the EC at no point showed any interest in
negotiating an undertaking. The EC never contacted the representatives of the Indian exporters to
discuss the possibility of undertakings nor were any positive signals received whatsoever.
Indeed, when Texprocil’s lawyers contacted the Commission by phone, the up-front (oral)
reaction from the Commission case handler was that bed linen was "too complicated a product for
undertakings" (Fax 27870 [Exhibit India-93]). The EC did nothing to explore anything.
On the contrary, once the deadline for offering an undertaking had expired, the EC simply
sent a formalistic one-page fax to the effect that:

27 3 October 1997 (Exhibit India-56 at 1009).
28 Article 8(2) of the EC basic anti-dumping Regulation provides in relevant part that “[s]ave in
exceptional circumstances, undertakings may not be offered later than the end of the period during which
representations may be made pursuant to Article 20(5). ” (Exhibit India-1 at 14). Since that period was set at 10
days (Exhibit India-56 at 1009), the deadline for the undertaking offer was ten days.

"[y]our fax reached the Commission services the last day of the above mentioned
period but no detailed offer of price undertakings has been made yet.
Given that the investigation shall be concluded within 15 months of investigation, the
Commission services will not be in a position to consider any offer of undertakings
which your client may be considering at this stage." (Fax 28213 [Exhibit India-94]).
This concluded the discussions and prevented India from further pursuing to seek an
undertaking. It takes two to tango, but when the party who should invite is the one who repeatedly
declines there can be no dance.
As regards the last question of the Panel, India believes that the Commission was under an
obligation to discuss in good faith with Indian exporters the possibilities and difficulties of an
undertaking. India could only start working out a meaningful price undertaking offer when it knew
the dumping calculations (normal value data). It was only apprised of those on Friday, 3 October
1997.
Taking those difficult circumstances into account, the European Commission—which had all
calculations computerized and was the party best equipped to suggest a production categorisation and
method for minimum price calculation—was under an obligation to at least be forthcoming with
information. As India has argued in its reply to Panel questions 4 and 5, it believes the EC had an
obligation to take the initiative. In any event, the formalistic conclusion that India did not come forth
within ten days with a full proposal, falls short of the obligation to actively examine the possibilities
for concrete remedies.
17. Assume that a Member has a policy that it will not accept undertakings in an anti-dumping
investigation involving a particular product. Could the parties comment on whether the application
of that policy in the case of an investigation of imports of that product from a developing country
would be sufficient to satisfy the requirements of Article 15, or whether there must be a
consideration of the specific circumstances in question? Could the EC indicate whether its view
regarding the difficulties of concluding undertakings in non-commodity textile products is a matter
of general policy. If so, was this general policy applied in this case? Whether or not a general
policy was ultimately applied in this case, was consideration given to the possibilities of
undertakings in the particular circumstances of this case regardless of general policy?
India believes that the obligations flowin g from the Anti-Dumping Agreement cannot be
different between WTO Members on the basis that some of them have certain policies. The second
sentence of Article 15 applies to all developed WTO Members equally, whatever their policies. If a
WTO Member generally does not wish to use undertakings for a particular product, it is entitled to do
so, but within the constraints of the Anti-Dumping Agreement (including Article 15).
Although India does not wish to exclude the possibility of "constructive remedies" other than
undertakings, in practice the undertaking will be one of the best-suited vehicles for a "constructive
remedy". If a WTO Member does not allow other possible constructive remedies
29, and it excludes
the possibility of an undertaking a priori, then it is difficult to see how it can comply with the letter
and spirit of the second sentence of Article 15.
18. Dumping investigations generally cover a period of investigation of six to 12 months. One
effect of this is to smooth out, to some degree, minor or erratic price changes over that time-period
in the determination of dumping. Zeroing detracts from this "smoothing out" effect. Could the

29 India would not be aware of other WTO-conform instruments currently in use by WTO parties to
implement Article 15.

parties comment on this proposition and its relevanc e, if any, to the understanding of Article 2.4.2
of the Agreement?
India agrees with this proposition.
India recalls, as EC has also admitted, that Article 2.4.2 was inserted in the ADA at the behest
of victims of anti-dumping actions who wanted to put a halt to biased dumping margin calculation
methods.30 As part and parcel of the package deal, the EC and other users of anti-dumping action
accepted the Article 2.4.2 restraint. However, the inter-model zeroing practiced by the EC in the Bed
linen case, emasculates the first sentence of Article 2.4.2 significantly, as the facts of the bed linen
case show.

30 Koulen, The New Anti-Dumping Code Through Its Negotiating History, 151, at 171, in The
Uruguay Round Results (European Interuniversity Press 1995), at 171:
“More contentious, however, was the question of th e application of averaging techniques in the c
omparison between export prices and normal values. Many delegations regarded the practice followed by
major users of anti-dumping of comparing average domestic prices to individual export transactions at prices
below the average domestic price as one of the most obv ious methodological <<tilts>> in favour of affirmative
findings of dumping and as fundamentally inconsistent with the <<fair comparison>> requirement in
Article 2.6…
In the course of the negotiations, an understanding emerged that a new agreement would include a
general rule requiring that export prices and domestic prices normally be compared on an identical basis, i.e.
either on a weighted-average-to-weighted average basis or on a transaction-to-transaction basis, but that in
specific circumstances an average normal value could be compared with individual export prices. What
remained unresolved was the precise definition of those circumstances.”
And at 212:
“There has been some criticism in the literature of the definition in the second sentence of this clause of
the conditions under which margins of dumping can be established on the basis of a comparison of a weighted
average normal value to individual export prices. It would appear that some of this criticism overlooks that
these conditions need to be interpreted in the context of Article 2.4.2 as a whole, the first sentence of which
clearly states that the normal rule is that in an investigation margins of dumping must be established on a
weighted average-to-weighted average basis or on a transaction-to-transaction basis. ”

Exhibit India-86: Three versions of the Foncar declaration as made available
Exhibit India-87: ‘Annex 2’
Exhibit India-88: Relevant copy of Dr Muller’s Book regarding undertaking
Exhibit India-89: Fax 27642
Exhibit India-90: Fax from Texprocil
Exhibit India-91: Fax 27722
Exhibit India-92: Fax 27818 and 27817
Exhibit India-93: Fax 27870
Exhibit India-94: Fax from EC

ANNEX 1-11
COMMUNICATION FROM INDIA IN RESPONSE TO THE
EUROPEAN COMMUNITIES' COMMUNICATION OF 22 JUNE 2000
(27 June 2000)
I refer to EC's letter of 22 June 2000 offering "to show to the Panel, in the presence of India,
the original …documents" i.e., faxes containing declarations of support by the EC producers, "in
order to resolve" the issue of standing "once and for all."
India welcomes this positive gesture of EC and requests the Panel to direct EC to submit all
the original documents at a meeting specially convened to consider these documents.
It may be noted that India and its exporters have been seeking clarifications on this issue for a
long time now. India is g lad that EC is forthcoming with the offer of showing the originals to the
Panel and India. In the spirit of Article 3.10 of DSU, India hopes that EC would note/clarify the
following points relating to these documents on standing issue while submitting the originals to the
Panel:
(a) It would be helpful if the EC could provide the original declarations of support of the
eight producers, who were excluded after initiation, but (India believes) were relied
upon in making the standing determination prior to initiation;
(b) It would also be useful if the EC coul d clarify the following discrepancies noted by
India in the declarations of support submitted thus far:
• how there could be two different versions of the Foncar declaration, each with different fax
footers;
• why there are no EC fax footers on the declarations of the Fédération Française de l’Industrie
Cotonnière;
• how it is possible that the Portuguese and the German declarations have the same footers;
• how it is possible that the fax header on Annexe 2 of the Fédération Française de l’Industrie
Cotonnière declaration runs through the triangle on the upper left corner, although this triangle
was completely visible on the copy given to India and its producers on 8 January 1996;
• concerning the same page, how it is possible that the fax header runs through the words
"Annexe 2" although these words were complete on the copy given to India and its producers on 8
January 1996;
(c) In order to allay India’s concerns, the EC could also show the chrono-in entries, as
well as the cover pages of the faxes with the declarations.
India believes that Eurocoton’s fax number could not have been confidential (it is for example
contained in the complaint (Exhibit India-6 at 75)). India would therefore be grateful if the EC could
indicate:

(i) why the producers would have wanted this fax number to be removed (as implied by
the EC’s answer of 16 June 2000 to India’s question 4);
(ii) why the EC removed the footers with the date of receipt as well; and
(iii) EC could provide evidence for its statement that " the removals (of the fax headers
and footers) were made in response to the requests of producers";
India notes that these covers, according to the EC’s reply of 16 June 2000 to Indian question
3, "were registered on receipt, with the exception of one producer which had an output of only 5 mt ";
It would be useful if the EC could explain why one fax was not registered, and identify that company
(with the output of 5 mt);
(d) The EC’s reply of 16 June 2000 to Panel question 13 unfortunately has caused some
confusion. It would be useful if th e EC could explain how it could exclude Luxorette
(together with 7 other companies) from the 46 companies to arrive at 38 companies,
even though Luxorette features as one of those 38 companies (Exhibit EC-4);
(e) For helping India’s understanding of the matter, it would be useful if the EC could
explain why the recital 8 of the provisional Regulation lists different EC sample
companies than the EC’s reply of 16 June 2000 to Indian question 4.

"The names of these 35 companies constituting the Community industry were made available during
the second round of consultations on 15 April 1999."
Paragraph 2.8: After the first sentence India would suggest to add: "after consultation and
agreement with the complainant Eurocoton" . (Please refer to recital 61 of the provisional
Regulation). In the second sentence India would suggest to change the beginning into: "This sample
comprised 16 of the 35 companies from within the Community industry and one company outside the
Community industry." (Please refer to Exhibit India-84 and India’s second written submission at
pages 23-25.)
Paragraph 2.10: After last sentence India would suggest to add: "Indian producers made final
disclosure comments and offered a price undertaking within the deadline imposed by EC. The EC did
not explore such offer for an undertaking and stated that the Indian exporters had missed the deadline
for offering undertakings."
Paragraph 2.11: India would suggest to add before the second last sentence: "Because of its
different physical characteristics, handloom products were . . . " (see recital (7) definitive
Regulation).
Paragraph 2.11: India would suggest to change the last sentence: "Provisional duties were
not definitively collected because the EC had not imposed such duties within the deadlines prescribed
by its domestic law."
III. PARTIES’ REQUESTS FOR FINDINGS AND RECOMMENDATIONS
Paragraph 3.1: India would suggest to reformulate Claim 20 as follows: "Claim 20:
Inconsistency with Article 3.5, by taking account of injury allegedly caused by imports before the
investigation period, which imports were not determined to be dumped;" (please refer to India’s first
submission at 180-181).
Paragraph 3.7 at 4: India would suggest adding a footnote stating that: "India has presented a
letter from the company involved expressly allowing it to use Exhibit India-49 in the panel
proceeding."
Finally, without prejudice to India's well-known position on amicus curiae briefs, the
Panel may have to explain in its final report as to how it has dealt with the brief submitted by
the Foreign Trade Association.

I. INTRODUCTION
1. The European Communities (hereafter "the EC") welcomes this opportunity to present its
views in the case brought by India against the initiation of an anti-dumping a-proceeding, the
imposition of provisional duties and the imposition of definitive anti-dumping duties by the EC on
imports of bedlinen originating in India.
2. At the outset of this proceeding, the EC wishes to thank the members of the Panel for
agreeing to serve in this dispute, and for the diligence with which it is sure they will discharge their
functions. The EC wishes also to acknowledge the considerable work that will be required of the
Secretariat in assisting the Panellists to perform their task.
3. The case at issue is rather complex and has resulted in a number of claims by India. In order
to assist the Panel in resolving this dispute, the EC will highlight in this submission the main reasons
why India’s approach is wrong. In order to do so, the EC will first address some preliminary concerns
caused by India’s course of action (Section II), to th en focus on the issues raised by India in relation
to the initiation of the anti-dumping proceeding (Section III), the determination of dumping
(Section IV) and injury (Section V). Finally, the EC will deal with the issue of the status of India as a
developing country (Section VI). The EC reserves its right to articulate more detailed arguments in its
Rebuttals Submission.
4. Before entering into the core of the case, the EC would like to turn its attention to some initial
points that deserve a clarification.
5. First of all, the EC notes that a number of claims that were mentioned in India’s request for
the establishment of a panel have not been included in India’s First Written Submission. In particular,
India does not claim in the Submission that:
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC did not adequately
respond to queries from India’s exporters on the issues of standing (Panel request,
point 1);
- inconsistently with Article 12.1 Anti-dumping Agreement, did not make available any
record of its examination of the allegations contained in the complaint and of its
consideration at the time of initiation of information pointing to lack of injury (Panel
request, point 2);
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC failed to state in a
public notice the reasons why provisional measures were judged necessary (Panel
request, point 3);
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC refused to grant a
level-of-trade adjustment (Panel request, point 8);
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC was "comparing
similar sales channels for the determination as to whether ASG expenses are similar,
while comparing different sales channels for the determination as to whether the
profits on branded goods were higher" (Panel request, point 9);
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC discriminated
between exporting countries with respect to the treatment of state-owned companies
(Panel request, point 10).

6. In the light of the Panel’s working procedures, the EC assumes that these matters are not
being pursued.
7. Second, India’s Submission contains many a ssertions of fact and law which are not
specifically associated with its ‘Claims’. Because they appear to be irrelevant to the subject matter of
this dispute the EC has ignored them. The EC reserves its position on these assertions, and its silence
should not be taken as acceptance.
8. Third, the EC notes the documents presented as exhibits by India. Some of these emanate
from India or the exporters. The fact that the EC does not comment on one or other of these
documents in this Submission should not be taken as an acceptance by the EC of the accuracy of any
of the statements that it contains.
9. Finally, with regard to the company-specific information included in India’s Submission, the
EC assumes that India has received the authorisation to disclose by the exporting companies
concerned and that this authorisation also allows use of that information by the EC.
II. PRELIMINARY ISSUES
10. In light of paragraph 13 of the Panel’s Working Procedure, in this Section the EC will address
the issues on which it requests a preliminary ruling by the Panel.
A. CLAIMS NOT MENTIONED IN THE PANEL REQUEST
11. The EC objects to the inclusion in India’s First Written Submission of claims that were not
mentioned in its Panel request (Exhibit EC-1). These include claims that the EC has acted
inconsistently with the following provisions of the Anti-dumping Agreement:
- Article 1 (Section VII.B - Requests, para. 7.3);
- Article 3.4, as regards the allegation that the EC assumed that imports before the
Investigation Period were dumped (Claim 19, paras. 4.198 et seq.);
- Article 6.2, 6.4 and 6.9 (Claim 14, paras. 4.87 to 4.92); and
- Article 6.10 and 6.11 (Claim 16, paras. 4.158 et seq.).
The same stricture applies to India’s apparent contention (paras. 3.106 to 3.107) that the EC Basic
Regulation (Exhibit India-1) is inconsistent with Article 2.2.2 of the Anti-dumping Agreement.
12. It is well-established in WTO law that a complainant Member may not introduce a claim
during the course of panel proceedings that is not mentioned or referred to in the terms of reference
set by the DSB.
13. The rules applicable to the present dispute are set out in Article 17.4 of the Anti-dumping
Agreement:
If the Member that requested consultations considers that the consultations pursuant
to paragraph 3 have failed to achieve a mutually agreed solution, and if final action
has been taken by the administering authorities of the importing Member to levy
definitive anti-dumping duties or to accept price undertakings, it may refer the matter
to the Dispute Settlement Body ("DSB"). When a provisional measure has a
significant impact and the Member that re quested consultations considers that the
measure was taken contrary to the provisions of paragraph 1 of Article 7, that
Member may also refer such matter to the DSB.

14. As a "special or additional rule or procedure" (defined in DSU Article 1.2), this takes priority
over the normal rule in DSU Article 6.2. However, on this point the two provisions are in harmony.
Thus, the Appellate Body has said:1
the word "matter" has the same meaning in Article 17 of the Anti-Dumping
Agreement as it has in Article 7 of the DSU. It consists of two element: The specific
"measure" and the "claims" relating to it, both of which must be properly identified in
a panel request as required by Article 6.2 of the DSU
15. The panel in Mexico – HFCS observed that:
2
In considering the arguments relating to Article 17.4 of the AD Agreement, we note
first that Article 17.4 does not, in our view, set out any further or additional
requirements with respect to the degree of specificity with which claims must be set
forth in a request for establishment challenging a final anti-dumping measure. 3
Therefore, a request for establishment that satisfies the requirements of Article 6.2 of
the DSU in this regard also satisfies the requirements of Article 17.4 of the AD
Agreement.
16. Article 6.2 of the DSU states that:
The request for the establishment of a panel shall be made in writing. It shall indicate
whether consultations were held, identify the specific measures at issue and provide a
brief summary of the legal basis of the complaint sufficient to present the problem
clearly. In case the applicant requests the establishment of a panel with other than
standard terms of reference, the written request shall include the proposed text of
special terms of reference.
17. In the European Communities – Bananas case the Appellate Body said:
4
142. We recognize that a panel request will usually be approved automatically at the
DSB meeting following the meeting at which the request first appears on the DSB's
agenda.1 As a panel request is normally not subjected to detailed scrutiny by the DSB,
it is incumbent upon a panel to examine the request for the establishment of the panel
very carefully to ensure its compliance with both the letter and the spirit of Article 6.2
of the DSU. It is important that a panel request be sufficiently precise for two
reasons: first, it often forms the basis for the terms of reference of the panel pursuant
to Article 7 of the DSU; and, second, it informs the defending party and the third
parties of the legal basis of the complaint.
Cement from Mexico, AB-1998-6, WT/DS60/AB/R, 2 November 1998, at paragraph 76 (footnote omitted).
2 Report by the Panel on Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, 28 January 2000, at paragraph 7.14.
3 We note that Article 17.4 does not refer to "claims".
4 Report by the Appellate Body on European Communities - Regime for the Importation, Sale and
Distribution of Bananas, AB-1997-3, WT/DS27/AB/R, 9 September 1997.

A panel's terms of reference are important for two reasons. First, terms of reference
fulfil an important due process objective -- they give the parties and third parties
sufficient information concerning the claims at issue in the dispute in order to allow
them an opportunity to respond to the complainant's case. Second, they establish the
jurisdiction of the panel by defining the precise claims at issue in the dispute.
19. Regarding the degree of precision with which the complainant must specify the WTO
provisions that it invokes, the Appellate Body in Korea – Dairy Safeguard explained the
interpretation that it had given in earlier cases:6
123 Thus, we did not purport in European Communities – Bananas to establish the
mere listing of the articles of an agreement alleged to have been breached as a
standard of precision, observance of which would always constitute sufficient
compliance with the requirements of Article 6.2, in each and every case , without
regard to the particular circumstances of such cases. If we were in fact attempting to
construct such a rule in that case, there would have been little point to our enjoining
panels to examine a request for a panel " very carefully to ensure its compliance with
both the letter and the spirit of Article 6.2 of the DSU ". Close scrutiny of what we in
fact said in European Communities – Bananas shows that we, firstly, restated the
reasons why precision is necessary in a request for a panel; secondly, we stressed
that claims, not detailed arguments, are what need to be set out with sufficient clarity;
and thirdly, we agreed with the conclusion of the panel that, in that case, the listing of
the articles of the agreements claimed to have been violated satisfied the minimum
requirements of Article 6.2 of the DSU. In view of all the circumstances surrounding
that case, we concurred with the panel that the European Communities had not been
misled as to what claims were in fact being asserted against it as respondent.
124 Identification of the treaty provisions claimed to have been violated by the
respondent is always necessary both for purposes of defining the terms of reference of
a panel and for informing the respondent and the third parties of the claims made by
the complainant; such identification is a minimum prerequisite if the legal basis of
the complaint is to be presented at all. But it may not always be enough. There may
be situations where the simple listing of the articles of the agreement or agreements
involved may, in the light of attendant circumstances, suffice to meet the standard of
 clarity in the statement of the legal basis of the complaint. However, there may also
be situations in which the circumstances are such that the mere listing of treaty
articles would not satisfy the standard of Article 6.2. This may be the case, for
instance, where the articles listed establish not one single, distinct obligation, but
rather multiple obligations. In such a situation, the listing of articles of an agreement,
in and of itself, may fall short of the standard of Article 6.2.
20. The terms of reference
7 of the Panel established by the DSB do not contain, either explicitly
or by reference,8 any mention of the claims listed in paragraph 11 above. In most instances (regarding

5 Report by the Appellate Body on Brazil - Measures Affecting Desiccated Coconut , AB-1996-4,
WT/DS22/AB/R, 21 February 1997, at sec. VI.
6 Report by the Appellate Body on Korea – Definitive Safeguard Measure on Imports of Certain Dairy
Products, WT/DS98/AB/R, 14 December 1999, (footnote omitted).
7 The terms, as reported in document WT/DS141/4 (Exhibit EC-3), are as follows:
To examine, in the light of the relevant provisions of the covered agreements cited by India in
document WT/DS141/3, the matter referred to the DSB by India in document WT/DS141/3,
and to make such findings as will assist the DSB in making the recommendations or in giving
the rulings provided for in those agreements.

Article 1, Article 3.6, and Article 6) there is no mention of the relevant provision in the terms of
reference. In one (regarding Article 3.4) the provision is mentioned in relation to a quite different
claim. The fact that India has not clearly stated to which of the multiple obligations in the above-
mentioned articles its claims refer has prevented the EC from properly preparing its defence, and has
denied third parties their right to be alerted to the issues that are the subject of this panel.
21. Consequently, in line with the clear jurisprudence established on this point, the EC requests
the Panel refuse to entertain
- the claims regarding Article 1, Article 3.6 and Article 6 because undoubtedly outside
the terms of reference of the Panel ; and
- the claim regarding Article 3.4 because India has failed to clearly identify this issue in
the request for the establishment of the Panel and thus has violated Article 6.2 DSU,
preventing the EC from properly preparing its defence and denying third parties their
right to be alerted to the issues that are the subject of this panel.
B. C
LAIMS IN RELATION TO THE PROVISIONAL REGULATION
22. Many of India’s claims concern alleged defects in the Provisional Regulation. Such claims are
beyond the Panel’s jurisdiction for two reasons.
23. Firstly, Article 17.4 (quoted at paragraph 3 above) defines the circumstances in which a
provisional measure may be referred to the DSB. These are when it "has a significant impact and the
Member that requested consultations considers that the measure was taken contrary to the provisions
of paragraph 1 of Article 7".
24. In this instance India has not contended that the Provisional Regulation had a "significant
impact", and has presented no evidence in support of such a contention.
25. Consequently, no claims in respect of the Provisional Regulation may be considered by the
Panel.
26. Secondly, India’s claims regarding the Provisional Regulation are also beyond the Panel’s
jurisdiction because they are moot.
27. This Regulation expired in November 1997. 9 No anti-dumping duties were collected under it
because the Definitive Regulation contained no provision for the retroactive collection of duties (such
as is permitted by Article 10.2 of the Anti-dumping Agreement) and authorised the release of any
duties secured by way of the provisional anti-dumping duty imposed by the Provisional Regulation.
28. Furthermore, the status of the Definitive Regulation under the Anti-dumping Agreement is in
no way affected by any possible defects in the Provisional Regulation.
29. Consequently there is no meaningful remedy that India can obtain in respect of the
Provisional Regulation.
30. Article 19.1 of the DSU states that (footnotes omitted):

8 Through the Request for the establishment of a Panel of the Government of India (Exhibit EC-1),
which is referred to in the DSB’s decision.
9 In accordance with EC law and practice, aspects of the text of the Provisional Regulation are adopted
by references in the Definitive Regulation. In so far as there are any differences between the texts of the two
Regulations, that of the Definitive Regulation prevails.

Where a panel or the Appellate Body concludes that a measure is inconsistent with a
covered agreement, it shall recommend that the Member concerned bring the measure
into conformity with that agreement. …
31. As India tacitly admits when listing the recommendations that it requests from the Panel
(para. 7.4), the Provisional Regulation, since it is no longer in force, is not a measure that can be
brought into conformity with the Anti-dumping Agreement.
32. Likewise, Article 3.7 of the DSU states that
… In the absence of a mutually agreed solution, the first objective of the dispute
settlement mechanism is usually to secure the withdrawal of the measures concerned
if these are found to be inconsistent with the provisions of any of the covered
agreements. …
33. In the case of the Provisional Regulation there is no measure to withdraw.
34. The principle that panels should decline to make a ruling in such situations is supported by a
number of rulings.
35. The panel in United States – Gasoline was faced with a rule that had ceased to have effect
before its terms of reference were established. It observed that:10
it had not been the usual practice of a panel established under the General Agreement
to rule on measures that, at the time the panel’s terms of reference were fixed, were
not and would not become effective.
36. The panel noted that the measure in question had not been specifically mentioned in the terms
of reference and was not likely to be renewed.
11 This contrasted with the 1980 Chile Apples case in
which a measure was considered despite the fact that it had terminated before establishment of the
terms of reference, but when those terms specifically included the measure, which was seasonal in
nature.
12
37. In the passage quoted in paragraph 17 above, the Appellate Body in the Bananas case noted
that it was the normal practice of the DSB to automatically approve requests for panels, and not to
subject them to detailed scrutiny. It concluded th at it was therefore incumbent on a panel to examine
the request very carefully to ensure compliance with both the letter and the spirit of DSU Article 6.2
(see paragraph 16 above).
38. This passage was cited by the panel in Argentina – Footwear, 13 which adopted the same
approach as the Gasoline panel (paragraph 35 above). The panel also noted that the Appellate Body
has warned against dispute bodies making law outside the context of resolving a particular dispute,
and has enjoined panels to address only those claims that must be addressed in order to resolve the
matter in dispute.
14

10 Report by the Panel on United States – Standards for Reformulated and Conventional Gasoline ,
WT/DS2/R, 29 January 1996, at paragraph 6.19.
11 Ibid.
12 Report by the panel on EEC - restrictions on imports of apples from Chile , BISD 27S/98, adopted on
10 November 1980. The respondent seems not to have challenged the panel’s jurisdiction over the issue.
13 Report by the Panel on Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and
Other Items, WT/DS56/R, 25 November 1997, at paragraphs 6.6 et seq.
14 Report by the Appellate Body on United States – Measure Affecting Imports of Woven Wool Shirts
and Blouses from India, AB-1997-1, WT/DS33/AB/R, 25 April 1997, at sec. vi.

39. In Guatemala – Cement the Appellate Body interpreted Article 17.4 of the Anti-dumping
Agreement to mean that a Complainant invoking this Agreement may attack three kinds of "measure"
only: the final imposition of anti-dumping duties or acceptance of a price undertaking, and
provisional measures (in certain circumstances). 15 Since the Provisional Regulation is outside the
jurisdiction of the Panel, and there was no price undertaking in this case, the only measure that may
be challenged by India is the Definitive Regulation.
40. The EC is therefore not responding to India’s claims regarding the Provisional Regulation,
and it asks the Panel not to address them. It requests a preliminary ruling to exclude these claims from
the scope of these proceedings.
41. Those claims in India’s Submission are as follows: Claims 2, 5, 8 (in part), 9, 11 (in part), 12,
15 (in part), 17, 19 (in part), 21, 24, 27, 29 (in part), and 30.
C. VERBATIM REPORTS OF CONSULTATIONS PRODUCED AS EVIDENCE BEFORE THE PANEL
42. Verbatim reports of WTO consultations, drafted by one party and lacking the endorsement of
the other, are intrinsically unreliable, and as such are not evidence that should properly be submitted
to a panel. Were they to be admitted they would encourage a dispute with the other party’s version of
the same consultations, which would be incapable of resolution and therefore pointless.
43. For the record, the EC states that it does dispute the accuracy of important elements of the
reports presented by India.
44. The EC therefore requests the panel to declare such reports inadmissible.
D. OTHER MATTERS
45. Regarding Annexe 49 of the Indian Submission, the EC notes the use of what is apparently a
dumping calculation made by the EC authorities in the course of a separate investigation. If this is
indeed what it is, the EC condemns the breach of confidentiality, and is not prepared to comment on
the substance of the document. The Panel is requested to rule that the document is not part of the
proceedings.
E. P
RELIMINARY RULINGS REQUESTED
46. On the basis of paragraph 13 of the Panel’s Working Procedures, and in view of the
arguments substantiated above, the EC request the <Panel to issue the following preliminary rulings:
- that India’s claims regarding Article 1, Article 3.6 and Article 6 are dismissed
because outside the terms of reference of the Panel;
- that India’s claim regarding Article 3.4 is dismissed because India has failed to
clearly identify this issue in the request for the establishment of the Panel in violation
of Article 6.2 DSU;
- that India’s Claims 2, 5, 8 (in part), 9, 11 (in part), 12, 15 (in part), 17, 19 (in part),
21, 24, 27, 29 (in part), and 30 are excluded from the scope of the proceedings;
- that the verbatim reports of the consultations submitted as evidence by India are
inadmissible and will be disregarded;

15 Report by the Appellate Body on Guatemala - Anti-Dumping Investigation Regarding Portland
Cement from Mexico, AB-1998-6, WT/DS60/AB/R, 2 November 1998, at paragraphs 77 et seq.

that the document submitted by India as Annex 49 is not part of these proceedings.
III. CLAIMS REGARDING INITIATION
A. CLAIM 23: ALLEGED INCONSISTENCY WITH ARTICLE 5.3
47. India alleges (in paras. 5.17 to 5.31) that the EC has infringed Article 5.3: "the investigating
authorities, according to their own published statements, did not ‘examine’ the allegations in the
complaint on the state of the domestic industry before initiating the anti-dumping investigation."
16
48. Article 5.3 states that:
The authorities shall examine the accuracy and adequacy of the evidence provided in
the application to determine whether there is sufficient evidence to justify the
initiation of an investigation.
49. India contends (para. 5.20) that the evidence provided in a complaint can in itself never be the
only element to justify the initiation of an investig ation. It also suggests that the word "examine" in
Article 5.3 implies "action on behalf of the investigating authorities", a definition that is so vague as
to be useless. India evidently wishes to argue th at the investigating authorities must acquire some
evidence in addition to that constituted by the complaint.
50. None of India’s proposed interpretations is justified by the text of Article 5.
51. To arrive at the proper interpretation of the Article 5.3 it is necessary to look at the ordinary
meaning of its terms in their context. Article 5.2 is an important part of this context since it appears to
suggest that evidence will be adequate if it covers th e topics listed there, and will be accurate if it is
sufficiently credible. Regarding the standard of pr oof required in this decision it has been observed
that it is less than that appropriate to a preliminary or final determination of dumping, but more than
mere allegation or conjecture.17 Furthermore, in regard to injury, there is no need for the investigating
authority "to have or consider information on all the Article 3.4 factors".18
52. India’s assertion that evidence in addition to the complaint is always required is not supported
by the text, or by the extract from the Guatemala – Cement panel report that is cited in its favour. That
panel was denying that evidence that satisfied the criterion of "such information as is reasonably
available" in Article 5.2 would necessarily satisfy that of "sufficient evidence" in Article 5.3. It did
not deny that, in a particular case, it might satisfy this test.
53. India’s view assumes that the evidence presented in the complaint is inherently unreliable, but
this view has no basis in the text. Furthermore, it implicitly undermines the crucial role of the
Complaint, which is evident both in practice and in the text of Article 5. In any case, India’s
suggestion is unworkable, because it does not say how much additional evidence should be obtained,
and from where it should come. The concept is artificial, and would be meaningless in practice.
54. Once it is accepted that there is no specific duty on the investigating authorities to collect
evidence additional to that in the complaint, the specific allegations of India in paragraphs 5.23 and
5.24 collapse, since all are dependent on its eccentric interpretation of the term "examine" in
Article 5.3.

16 Although this is described as the "first" argument in the claim, this appears to its clearest expression.
17 Report by the Panel on Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, 28 January 2000, at paragraph 7.94.
18 Ibid., para. 7.97.

55. In accordance with their ordinary practice, the EC authorities examined the Complaint in the
light of the requirements of Article 5.2 and 5.3, and with the benefit of their considerable experience
in dealing with such documents. As is usually th e case, some of the information in the complaint
derived from publicly-available sources, and could therefore be checked, whereas some was known
only to the complainants. The Community authorities, who have no interest in initiating investigations
that are likely to fail later for lack of evidence, reached a positive conclusion. This was recorded in the
Notice of Initiation (Exhibit India-7): "having de termined that … there is sufficient evidence to
justify initiation of the proceedings …". This demonstrates that the authorities examined the
information contained in the Complaint and found it sufficient.
56. In paragraph 5.26 India alleges that the EC investigating authorities have not published or
maintained on file a record suggesting that they have examined the evidence contained in the
complaint. It seems to be implied that the Anti-dumping Agreement requires the EC to have done one
or both of these things.
57. In paragraph 5.27 India asserts that the EC was obliged to publish the results of its
examination or make a separate report available to the Indian exporters.
58. In neither of these paragraphs is it clear whether India is employing the peculiar interpretation
it has given to the word "examine" (para. 49 above), or whether it is using the word in its proper
sense. In so far as it is the former, the EC rejects any suggestion of WTO inconsistency in its actions,
since there can be no obligation to publish, etc., a determination based on fallacious notion.
59. On the assumption that India might be using th e word "examine" in its correct sense it is
necessary to look more closely at the allegations in the two paragraphs.
60. India implies that the legal authority for the supposed obligations is Article 5.3, and quotes
from the report of the panel in Korea – Polyacetal Resins . This case concerned the 1979 Anti-
Dumping Code, and the panel was addressing an aspect of the injury determination in the definitive
measures. The rules on publication in the Anti-dumping Agreement are much more detailed than
those of the Code, and the position of the initiation decision is very different from that of the measure
imposing duties.
61. A more apposite precedent is provided by the recent decision on Mexico – HFCS where the
issue was the same as that in the present dispute – the degree of explanation to be provided in regard
to an initiation decision. The panel summed up its analysis by saying:
19
In our view, Article 5.3 cannot be interpreted to require the investigating authority to
issue an explanation of how it has resolved all underlying questions of fact at
initiation. That is a requirement that arises at later stages of the proceeding, and is
explicitly set forth in Article 12.2.
62. In any event, in that case the complainant alle ged that the Mexican authorities had failed to
respect Article 12.1 of the Anti-dumping Agreement, which deals explicitly with the issue of giving
public notice of the initiation decision. It states that (footnote omitted):
12.1 When the authorities are satisfied that th ere is sufficient evidence to justify the
initiation of an anti-dumping investigation pursuant to Article 5, the Member or Members the
products of which are subject to such investigation and other interested parties known to the
investigating authorities to have an interest therein shall be notified and a public notice shall
be given.

19 Report by the Panel on Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, 28 January 2000, at paragraph 7.110.

12.1.1 A public notice of the initiation of an investigation shall contain, or otherwise make
available through a separate report, adequate information on the following:
(i) the name of the exporting country or countries and the product involved;
(ii) the date of initiation of the investigation;
(iii) the basis on which dumping is alleged in the application;
(iv) a summary of the factors on which the allegation of injury is based;
(v) the address to which representations by interested parties should be directed;
(vi) the time-limits allowed to interested parties for making their views known.
63. In the present dispute India has chosen not to invoke this provision. It cannot now circumvent
that decision by seeking to find a parallel obligation to publish within Article 5.3.
64. In so far as India implies that, irrespective of publication, the EC authorities should have
supplied a report on the initiation decision directly to the Indian exporters, the EC cannot see any such
obligation in Article 5.3. In any case, it is not until sometime after the initiation decision that those
authorities are able to identify these exporters with confidence.
65. Finally, as regards maintaining a file, the EC of course maintains records, but it cannot see
how this fact relates to the obligations of Article 5.3, nor has India provided any explanation.
66. In paragraphs 5.28 to 5.31 India alleges that when the EC authorities initiated the
investigation they had information in their possession concerning the previous bedlinen investigation
which strongly indicated that the industry might not be suffering injury, and this required the
authorities to carry out a further investigation, which they failed to do.
67. A number of points can be made in response to this allegation.
68. Firstly, the information that was obtained by the EC authorities in the first investigation into
bedlinen related to the relevant investigation period, i.e., the year 1993, whereas that for the present
investigation was 1995/96. Thus, even had the previous investigation indicated that injury had not
occurred, it would not be relevant.
69. Secondly, the earlier investigation did not lead the authorities to conclude that the domestic
industry was not suffering injury. Had it done so the investigation would have been terminated in
accordance with Article 5.8. Furthermore, the fact that the previous complaint was withdrawn could
hardly be said to indicate a conviction on the part of exporters that they were not suffering injury,
when, at the very same time, they were giving their support to a new complaint which contained just
such a claim.
70. Nevertheless, information gained during the previous investigation was available to the
investigating authorities when they considered the issue of "sufficient evidence" in the second
complaint, and thereby facilitated a better-informed decision on initiation.
71. In conclusion, the EC observes that the standard of review that the Panel must exercise in
considering the actions of the EC authorities is set out in Article 17.6(i) of the Anti-dumping
Agreement:

in its assessment of the facts of the matter, the panel shall determine whether the
authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the panel might have
reached a different conclusion, the evaluation shall not be overturned;
72. The panel in Mexico – HFCS endorsed the Guatemala – Cement panel, which said that "the
approach taken by the Panel in the Softwood Lumber dispute is a sensible one and is consistent with
the standard of review under Article 17.6(i)." 20 This approach consisted in not conducting a de novo
review, by evaluating anew the evidence and in formation before the national authority, but in
considering "whether an unbiased and objective investigating authority evaluating that evidence could
properly have determined" the issue in question.21
73. Even the non-confidential version of the Complaint (Exhibit India-6) is a substantial
document, with a wide-range of information. The EC submits that the initiation of an investigation on
the basis of evidence identified in this version would satisfy the standard of Article 17.6(i), in that
"the authorities' establishment of the facts was proper" and "their evaluation of those facts was
unbiased and objective".
74. The remarks made by the EC (at paragraph 86 below) regarding the appropriate standard of
proof to be applied by the authorities are also relevant in this context.
B. C
LAIM 24: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1
75. India alleges (paras. 5.32 to 5.44) that inconsistency with Article 12.2.1 in regard to the
Provisional Regulation.
76. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
C. CLAIM 25: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
77. India states (paras. 5.46 to 5.47) that the EC was "obliged to provide in the definitive
Regulation ‘the reasons for the acceptance or rejection of relevant arguments or claims made by the
exporters and importers".
78. Before responding specifically to this claim, the EC notes that India’s approach to Article 12,
as manifested in this and, for example, Claim 28 (at paragraph 103 below), fails to take proper
account of its structure. This is quite straightforward. Initiation issues are dealt with by paragraph 1,
while paragraph 2 is covers the measures adopted during and after the investigation (that is
provisional measures, definitive measures and undertakings).
79. Regarding Claim 25, the "arguments or claims" to which India is referring are apparently
those made in the context of Article 5.3. Although the Submission is not at all clear what these consist
of, it is assumed that they concern the alleged inadequacy of the initiation decision.

20 Report by the Panel on Mexico — Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, adopted 24 Feb. 2000, para. 7.94, quoting Report by the Panel on
Guatemala — Anti-Dumping Investigation Regarding Portland Cement from Mexico , WT/DS60/R, adopted 25
November 1998, para. 7.57, which in turn was referring to Report by the Panel on United States — Measures
Affecting Softwood Lumber from Canada, SCM/162, adopted 27 October 1993, BISD 40S/358, para. 332.
21 This quotation is taken from Guatemala – Cement, para. 757. In this and in Mexico – HFCS the issue
concerned the sufficiency of evidence to commence an in vestigation, which is examined specifically in this
Submission at para. 82.

80. The Definitive Regulation was issued in accordance with Article 9 of the Anti-dumping
Agreement. Consequently, the issues with which it deals are the substantive ones of dumping and
injury causation. This is reflected in the requirements of Article 12.2.2. As the quoted extract makes
clear, the obligation on the Member concerned is to deal with " relevant arguments or claims". India’s
allegations regarding the initiation of the investigation are not relevant to the definitive measure.
81. In any event, India appears to be under a misunderstanding regarding the nature of the
investigating authorities’ responsibilities during the course of the investigation. It was not the task of
those authorities (any more than it is the task of the Panel now) to review the initiation decision with
benefit of hindsight . For example, if, during the course of the investigation, information became
available which caused the authorities to conclude that they had been mistaken regarding the
sufficiency of the evidence for the purposes of the initiation decision, that would not in itself be a
basis for halting the investigation. Such a termination would be appropriate only if they concluded
that, on the information available at the time of initiation, the initiation was unjustified. Consequently,
arguments directed to issues of the first type could never be relevant.
D. CLAIM 26: ALLEGED INCONSISTENCY WITH ARTICLE 5.4
82. India alleges (paras. 5.48 to 5.108) that the EC investigating authorities failed to make the
standing determination required by Article 5.4 of the Anti-dumping Agreement.
83. The claim follows a ‘Facts’ Section which is distinguished by its barely concealed accusations
that EC officials have falsified records and deceived the exporters in a fraudulent attempt to
demonstrate that they have complied with WTO rules.
84. Article 5.4 states as follows:
"An investigation shall not be initiated pursuant to paragraph 1 unless the authorities
have determined, on the basis of an examination of the degree of support for, or
opposition to, the application expressed
13 by domestic producers of the like product,
that the application has been made by or on behalf of the domestic industry. 14 The
application shall be considered to have been made "by or on
behalf of the domestic industry" if it is supported by those domestic producers whose
collective output constitutes more than 50 per cent of the total production of the like
product produced by that portion of the domestic industry expressing either support
for or opposition to the application. However, no investigation shall be initiated when
domestic producers expressly supporting the application account for less than 25 per
cent of total production of the like product produced by the domestic industry.
13 In the case of fragmented industries involving an exceptionally large number of
producers, authorities may determine support and opposition by using statistically
valid sampling techniques.
14 Members are aware that in the territory of certain Members employees of domestic
producers of the like product or representatives of those employees may make or
support an application for an investigation under paragraph 1."
85. Various questions can be raised about the interpretation of this provision, but for the purposes
of this dispute, the contentious issues are relatively few. Before considering them a general comment
on standard of proof is appropriate.
86. The tone adopted in India’s Submission gives the impression that, when applying Article 5.4,
the investigating authorities should adopt an approach to factual determinations equivalent to that of a

court of law when it is trying a defendant on a criminal charge. Some jurisdictions describe this as
"proof beyond reasonable doubt". In any event, it implies a particularly high degree of certainty.
87. There is no basis in the Agreement for demanding such a high standard of proof regarding the
matters that the investigating authorities have to establish under Article 5.4. The relevant phrase in
Article 5.4 is "the authorities have determined". The ordinary meaning of these words does not
indicate what standard of proof should be applied, so account must be taken of their context, and of
the object and purpose of the Anti-dumping Agreement.
88. One WTO panel has made the following observations:
The object and purpose of the initiation requirements of Article 5 as a whole, and of
Article 5.3 in particular, is in our view to establish a balance between the competing
interests of "the import competing domestic industry in the importing country in
securing the initiation of [an] investigation and the interest of the exporting country in
avoiding the potentially burdensome consequences of [an] investigation initiated on
an unmeritorious basis".
22
89. The notion of a balance struck between competing interests is common to much of the Anti-
dumping Agreement. In the present context it suggests that anti-dumping proceedings are more akin
to civil than to criminal proceedings in the domesti c sphere, since the interests of both exporters and
domestic producers will be affected by the outcome. As such, the appropriate standard of proof is not
the high one that is usually required when the result may be the conviction of the defendant as a
criminal. Furthermore, Article 5.4 relates merely to the commencement of an investigation, not the
imposition of measures. A misjudgement by the investigating authorities regarding the degree of
support would normally be automatically corrected, because an inadequate level would usually be
reflected in a no-injury finding. This is not to deny that, as part of the initiation decision, the
determination of the level of support is critical to the status of the ensuing investigation, and of any
anti-dumping measures that are imposed.
23 The point being made here concerns solely the standard of
proof applied in determining that level of support.
90. India suggests (para. 5.89) that the support referred to in Article 5.4 is expressed "by a
deliberate act on behalf of the entity whose support is examined", which merely begs the question
what it means by "a deliberate act". More significantly it argues (para. 5.90) that support must be
"expressed by domestic producers" and not "on behalf of" them (as is permitted in the making of the
application). It interprets this as meaning that the support must be expressed by the producer itself,
and, in particular, not by an association of producers.
91. Article 5.2 of the Anti-dumping Agreement provides some of the context for interpreting
Article 5.4 according to the international law rules. It lists the matters that are to be included in an
application for an investigation. The following pass age, since it deals with the identification of the
applicant and the domestic industry, is particularly relevant:
…The application shall contain such information as is reasonably available to the
applicant on the following:

22 Report by the Panel on Guatemala — anti-dumping investigation regarding Portland cement from
Mexico, WT/DS60/R, adopted 25 November 1998, para. 7.52, quoting from Report by the Panel on United
States — measures affecting softwood lumber from Canada, SCM/162, adopted 27 October 1993, BISD
40S/358, para 331.
23 See, e.g., Report of the Panel on Guatemala - Anti-Dumping Investigation Regarding Portland
Cement from Mexico, AB-1998-6, WT/DS60/AB/R, 2 November 1998, at paragraph 8.5 (This report was found
to be largely irrelevant by the Appellate Body); Report by the Panel on United States -Imposition of
Countervailing Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway , SCM/153, adopted on 28
April 1994, at paragraph 225.

(i) the identity of the applicant and a description of the volume and value of the
domestic production of the like product by the applicant. Where a written application
is made on behalf of the domestic industry, the application shall identify the industry
on behalf of which the application is made by a list of all known domestic producers
of the like product (or associations of domestic producers of the like product) and, to
the extent possible, a description of the volume and value of domestic production of
the like product accounted for by such producers
92. When applications are made "on behalf of" the domestic industry, the application may list
merely the associations of domestic producers rather than the producers themselves. This supports the
view that the expressions of support might come from the associations of producers rather than from
their member-producers.
93. Furthermore, it is hardly the object and purpose of the Anti-dumping Agreement to create
unnecessary uncertainties for firms wishing to lodge complaints. By presenting the argument in a
negative form India avoids some awkward questions in this respect. Business enterprises can take
many different forms, in both legal and practical contexts. Does a company express its views only by
its board of directors or its principal officers? Suppose it is a subsidiary of another company. Can it
not express its views via its parent? Can two companies not a establish a special body to handle
various common interests? Furthermore, the notion of agency is inextricably embedded in business
practice. Is the Anti-dumping Agreement to be ta ken to cut across the voluntary arrangements that
businesses make and insist on a particular form of expression? When these considerations are taken
into account, the distinction suggested by India is seen to be unworkable.
94. Again, India’s proposed interpretation discriminates against small firms, who have particular
difficulty addressing issues such as these, and join trade associations for that very reason. The values
reflected in Article 6.13 of the Anti-dumping Agreement indicate that the special concerns of such
firms are respected by the Anti-dumping Agreement.
95. Therefore, when the phrase "expressed by domestic producers" is considered in its context,
and in the light of the object and purpose of the Agreement, there is no doubt that it is capable of
including expression by a trade association.
24 Whether that is true in a particular case will depend on
the circumstances. But in reviewing a Member’s assessment of the circumstances, the Panel should
have in mind the standard laid down in Article 17.6(i) of the Anti-dumping Agreement (explained at
paragraph 71 above).
96. It should be noted that there have been several GATT/WTO dispute proceedings in which the
anti-dumping measures at issue were initiated at the instance of trade associations. In none of them
was this fact challenged.
25
97. Article 5.4 speaks in various places of support for (or opposition to) an application being
expressed by domestic producers (or by a portion of the domestic industry). It does not define to
whom that support should have been directly expressed, and in particular it does not say that the
support must be expressed directly to the investigating authorities (although it obviously has to be
brought to their attention). Furthermore, the provision explicitly envisages that the application may be
made on behalf of the domestic industry. Thus the ordinary meaning of paragraph 4 allows for the

24 Footnote 14 to Article 5.4, which allows trade unions to express support on behalf of their members,
also undermines India's arguments.
25 For example, Report by the Panel on United States - Imposition of Anti-Dumping Duties on Imports
of Fresh and Chilled Atlantic Salmon from Norway , ADP/87, 27 April 1994; Report by the Panel on Mexico –
Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States , WT/DS132/R,
28 January 2000.

possibility that the support might have been expressed to a trade association, for example, which then
presents a complaint to the authorities, accompanied by the expressions of support.
98. The evidence on which the EC authorities relied at the time when the decision to initiate the
investigation was made is set out in details in Exhibit EC – 4.26 It consisted of the following.
- Forms issued by Eurocoton (the European producers association) and completed by
individual producers, indicating support for the complaint and giving production in
1995.
- Faxes sent by national producers to a national association giving production data for
1995, in response to a request from the association for information to support the
complaint.
- Various other communications from producers associations indicating the nature and
degree of support for the complaint.
99. Producers in the first two categories alone accounted for the production of more than 44,000
tonnes in 1995. On the basis of the information they had received from various sources, the authorities
estimated the total EC production in 1995 to be between 123,917 and 130,128 tonnes. The support
provided by these two categories of producers alone represented therefore at least 34 per cent of the
highest figure of total EC production.
100. Consequently, even without entering the disputed area of the validity of support expressed by
a trade association, it is clear that the EC authorities satisfied the 25 per cent threshold set in
Article 5.4.
E. C
LAIM 27: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1
101. This claim is made in paragraphs 5.109 to 5.116 of India’s Submission.
102. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
F. CLAIM 28: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
103. In this claim (paras. 5.118 to 5.120) India contends that the EC is in breach of Article 12.2.2
for failing to give "reasons for the acceptance or rejection of relevant arguments" made by the
exporters regarding the degree of support for the original complaint in the bed linen investigation.
104. The obligation in Article 12.2.2 is to respond to relevant arguments. The arguments presented
by the exporters were not relevant in the present case at the point at which they were posed because
the determinations imposing provisional and definitive measures do not constitute appeals from the
initiation decision. The focus of these determinations is on the issues of dumping and injury causation.
The grounds for terminating an investigation are set out in Article 5.8:
An application under paragraph 1 shall be rejected and an investigation shall be
terminated promptly as soon as the authorities concerned are satisfied that there is not
sufficient evidence of either dumping or of injury to justify proceeding with the case.
…

26 The EC authorities had at their disposal further expressions of support which they decided not to
utilise because they were either received too late or expressing only passive support or coming from companies
which had in the meantime closed down.

105. Thus, India could have pursued the very similar issue of whether the domestic producers
examined by the EC did not satisfy the definition of "domestic industry" in Article 4 of the Anti-
dumping Agreement.
106. It is in Article 12.1 that the Anti-dumping Agreement deals with the obligation to publicise
details of the initiation decision, and the justification for it. If that does not require details of the level
of support it can hardly be the intention of the Agreement that they should have be to supplied under
Article 12.2.2.
107. The points made by the EC in response to Claim 25 are also relevant to this Claim.
IV. CLAIMS REGARDING DUMPING
A. C
LAIM 1: ALLEGED INCONSISTENCY WITH ARTICLE 2.2.2
1. Argument that the requirements for the application of Article 2.2.2(ii) were not met.
108. This argument is presented in paragraphs 3.54 to 3.77 of India’s Submission.
109. Irrespective of its results, the EC takes issue with the method of treaty interpretation reflected
in paragraphs 3.56 and 3.57 of India’s Submission.
110. Article 17.6(ii) of the Anti-dumping Agreement explicitly requires the Panel to "interpret the
relevant provisions of the Agreement in accordance with customary rules of interpretation of public
international law". Articles 31 and 32 of the Vienna Convention on the Law of Treaties are now
invariably acknowledged to state rules of customary international law on treaty interpretation.
111. The method adopted by India presents the method ology of Article 31 of the Convention as a
process of ‘pick and mix’. The logic behind its approach is that any interpretation which is compatible
with one or more dictionary definitions is acceptable.
112. As evidenced by the reports of the Appellate Body, the approach required by Article 31 is
much more rigorous. In particular, it relies on the ordinary meaning of the words of the treaty in their
context and in the light of the treaty’s object and purpose. India’s Submission ignores both the context
of the words it is purporting to interpret and the object and purpose of the Anti-dumping Agreement.
113. India alleges (para. 3.59) that "the word ‘ave rage’ relates to the fact that more than one
parameter needs to be summarised". In this respect it appears that India is arguing that provisions
containing this word (or the words "weighted aver age") become in some way inapplicable if the
circumstances are such that the class of data that is to be averaged contains only one item. (For the
purpose of the point being made by India, whether the average is weighted or simple is irrelevant).
114. Of course, the use of this concept (whether simple or weighted average) suggests that the
class of items that is being considered usually contains more than one item. However, India seems to
be suggesting that, unless the text contains a clause such as "or the amount of the single item, if there
is only one", it becomes inapplicable in such a si tuation. One does not have to look far in the Anti-
dumping Agreement to see the improbability, even impossibility, of such an interpretation.
Article 2.4.2 of the Anti-dumping Agreement uses the notion of "a weighted average normal value
with a weighted average of prices of all comparable export transactions". There is no reason to think
that the formula could not be applied if either the side of the comparison contained only one sale.
115. India seeks (para. 3.61) to apply its unrealistic interpretation to Article 2.2.2 of the Anti-
dumping Agreement by focusing on the use of the word "amounts" rather than amount. In fact, the use

of this word is more complex than India allows. The first sentence of the chapeau of Article 2.2.2
states that
For the purpose of paragraph 2, the amounts for administrative, selling and general
costs and for profits shall be based on actual data pertaining to production and sales in
the ordinary course of trade of the like product by the exporter or producer under
investigation.
116. Since this sentence refers to an individual "exporter or producer" (i.e., in the singular), it
would be surprising if there were more than one amount for "administrative, selling and general costs"
and one amount for "profits". Therefore, the word "amounts" most plausibly reflects the fact that there
would be two amounts (one of each type) for each exporter or producer.
117. In the remaining words of the chapeau ("When such amounts cannot be determined on this
basis, the amounts may be determined on the basis of:") it is evidently this pair of amounts that is
referred to.
118. Turning to Article 2.2.2(ii), this provides that
the weighted average of the actual amounts incurred and realized by other exporters
or producers subject to investigation in respect of production and sales of the like
product in the domestic market of the country of origin;
119. In this provision the word "amounts" is plural in two senses. Firstly, in the sense of the pair of
amounts for each exporter or producer. Secondly, because in many cases there will be more than one
other exporter or producer, as is also envisaged by the reference to "other exporters or producers".
120. It is clear that both in ordinary speech, and in carefully drafted legal texts, a phrase of the
form "other _____s" (i.e. the word "other" followed by a plural noun) is often used with the intention
of including the case where there is only one such person or thing.
121. For example, in Article 2.2.1.1 of the Anti-dumping Agreement, the clause preceding
Article 2.2.2, one finds the phrase "in relation to establishing appropriate amortization and
depreciation periods and allowances for capital expenditures and other development costs ." It is not
plausible to suggest that the phrase would not apply if there were only one other development cost.
122. Again, Article 4.1 of the Anti-dumping Agreement states that
"For the purposes of this Agreement, the term "domestic industry" shall be interpreted
as referring to the domestic producers as a whole of the like products or to those of
them whose collective output of the products constitutes a major proportion of the
total domestic production of those products, except that:
 (i) when producers are related to the exporters or importers or are themselves
importers of the allegedly dumped product, the term "domestic industry" may be
interpreted as referring to the rest of the producers;"
123. It would be absurd to prevent the operation of this provision merely because there was only
one other producer.
124. Similarly in Article 7.4 of the Anti-dumping Agreement
"The application of provisional measures shall be limited to as short a period as
possible, not exceeding four months or, on decision of the authorities concerned,

upon request by exporters representing a significant percentage of the trade involved,
to a period not exceeding six months. …"
125. It would likewise be absurd to prevent a si ngle exporter making such a request if it
represented a significant percentage of the trade.
126. Consequently the ordinary meaning of "other exporters or producers" is capable of including
the situation where there is only one other such exporter or producer.
127. One can go further and say that, absent a special factor, this would be the meaning usually
ascribed to such a phrase. If that were not so, legal drafts would be littered with ungainly phrases such
as "by other exporter(s) or producer(s)", or "by other exporters or producers, or by another exporter or
producer if only one such existed", or "by other exporter/exporters or producer/producers", or "by one
or more other exporters or producers", in order to avoid the possibility that they might be interpreted
so as to include the plural only.
128. It is the phrase "other exporters or producers" in Article 2.2.2(ii) that is the central element of
all this discussion. Obviously, in many cases where this provision is applied there will be more than
one exporter or producer. However, even if the possibility of there being more than one such entity
were slight, there would nevertheless be a need to produce an average (of some kind) of the data. By
starting its discussion with the topic of averages India has put the cart before the horse, and not
surprisingly created confusion. The same effect is manifested in paragraph 3.66 of its Submission. In
terms of what India seeks to prove, the mention of "average" adds nothing to the use of the plural in
phrase "exporters or producers".
129. Further confusion is created by India’s aspers ions (in paragraph 3.63) against the drafting of
recital 18 of the Definitive Regulation:
"(18) . . . Moreover, the reference in Article 2(6)(a) of the basic Regulation to a
weighted average amount for profits determined for other exporters or producers,
does not exclude that such amount can be determined by reference to a weighted
average of transactions and/or product types of a single exporter or producer . . . "
130. The dark purpose that is alleged is nowhere ap parent. The "amount" in the phrase "weighted
average amount" is obviously not the same concept as the "amounts" in the phrase "amounts incurred
and realized by other exporters or producers".
131. In paragraphs 3.67 et seq. of its Submission, India protests against the consequences of
allowing the phrase "other exporters or producers" to include the case where there is but one such
entity, but adds little to explain why the normal usage of the phrase should not apply in this case.
132. Thus, it is alleged that reliance on data from a single exporter or producer is peculiarly likely
to distort the outcome, or is incompatible with the standard of reasonableness contained in the
chapeau of Article 2.2. These allegations imply that the use of data from "other exporters and
producers" is controlled by an implicit or explicit criterion. All such arguments can best be discussed
in the context of Claim 4, where India raises them explicitly. However, the EC wishes to emphasise
that the use of data relating to a single exporting producer in the context of Article 2.2.2(ii) does not in
itself create a distorted result.
133. It is also alleged (paras. 3.72 et seq.) that the choice of companies to form the sample that was
investigated was in some way rigged by the EC authorities to produce an untypical outcome. The
Anti-dumping Agreement rules on the choice of the sample are contained in Article 6.10, which (see
paragraph 11) is not at issue in this dispute.

134. When the words "other exporters or producers" ar e considered in the light of the object and
purpose of the Anti-dumping Agreement it will be seen that the evident purpose of this part of the
agreement is to secure data that are independent of the company in question, but are nevertheless
limited to the sales of like products. There is no intrinsic reason why the use of data from a single firm
could not achieve this goal.
2. Argument that the EC did not observe the requirements of Article 2.2.2(ii)
135. In this argument (paras. 3.78 to 3.96) India continues its blinkered and legally-unfounded
approach by insisting on a literal interpretation of the individual words of Article 2.2.2(ii) without that
consideration of their context, and of the treaty’s object and purpose, which is required by the rule
enshrined in Article 31 of the Vienna Convention.
136. The specific words that are being interpreted are those in Article 2.2.2(ii): "the actual
amounts incurred and realized by other exporters or producers subject to investigation".
137. The issue is whether the EC authorities were correct to put certain limits on what data they
would consider for the purposes of constructing the normal value. The excluded classes of data are, in
the case of SG&A, data from sales that were unrepresentative, and in the case of profits, those derived
from sales that were unrepresentative and/or unprofitable. These classes correspond to the concepts
mentioned in the opening clauses of the paragraph in which they are contained – Article 2.2:
When there are no sales of the like product in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting
country, such sales do not permit a proper comparison, [footnote omitted]
138. Thus, the first class consists of sales which, because they are in low volumes, "do not permit a
proper comparison". They are described here as unrepresentative.
139. The second class consists of those seals which, because they are made at a loss, are "not in the
ordinary course of trade". They are referred to here as unprofitable.
140. Article 2.2 makes clear that one object and purpose of this part of the Anti-dumping
Agreement is to avoid reliance on sales that fall into either of these categories.
141. (India does not deny that the Community has accurately applied these criteria, the only
dispute is about whether it should have applied them in the context of Article 2.2.2(ii).)
142. In this respect, Article 2.2 is itself a development of Article 2.1 which introduces the notions
of sales "in the ordinary course of trade" and of prices that are "comparable".
143. This object and purpose is reflected in the interpretation adopted and the actions taken by the
EC authorities.
144. In contrast, India proposes an interpretation that conflicts with the ordinary meaning of this
provision, and would produce results that verge on the bizarre.
145. Suppose there were a group of exporters, all selling at below cost on the domestic market. In
accordance with Article 2.2, a constructed normal value would be calculated. According to the
interpretation proposed by India, in applying Article 2.2.2(ii) the normal value calculated for each
company would be based on profit data for the other companies. But the profit level derived from
such prices would be zero, or less than zero, so that the resulting constructed price would as distorted

(or almost as distorted) as that resulting from using the below-cost sale prices to determine the normal
value, the very outcome that Article 2.2 seeks to avoid.
146. Another, quite plausible, scenario reinforces the point. Suppose exporter A has significant
loss-making sales, but not enough to justify basing normal value on sales prices, so that only
profitable sales are used to establish normal value. At the same time, two or more other exporters have
sales that are all loss-making. If we follow the approach suggested by India, exporter A (whose sales
could still be used in order to determine normal value) would clearly be at a disadvantage as
compared to the rest. It could not ‘benefit’ from its loss-making sales for the purposes of determining
the normal value, while the other companies, to whom A's overall profit margin would be applied,
could do so.
147. Similarly perverse results would arise from the use of SG&A data from unrepresentative
sales.
148. India is evidently suggesting that the drafters of this Article did not object to normal value
being based on unprofitable or unrepresentative sales as long as that data came from other producers
or exporters.
149. Such an interpretation is not the one that emerges from a consideration of "the ordinary
meaning to be given to the terms of the treaty in their context and in the light of its object and
purpose". Even if it were, it would merit resort to the interpretative principles listed in Article 32 of
the Vienna Convention on the ground that it was "manifestly absurd or unreasonable".
150. Consequently the elaborate exercise undertaken by India in paragraphs 3.84 et seq. of its
submission is a pointless endeavour.
151. In paragraph 3.86 India again indulges in ‘pick and mix’ among the dictionaries in order to
conclude that the "basis" of something must always be something that it does not consist of. Would it
therefore insist that an expression such as "the basis of bread is flour, water and yeast" is
ungrammatical or illogical? In paragraph 3.87 from the premise that the formula in the chapeau of
Article 2.2.2 cannot be used, India draws the improbable conclusion that the authorities should
therefore abandon the principles reflected in that provision, and in Article 2.2, when applying
Article 2.2.2(ii).
152. India assumes (in paragraph 3.88 et seq.) that the EC authorities, when requiring that the data
used in applying Article 2.2.2(ii) should be subjec t to the "ordinary course of trade" principle, is
relying on the chapeau to Article 2.2.2. It is true that the chapeau reflects this principle, but the basic
principle is expressed in Article 2.2. In fact, it is a two-part principle: data associated with sales that
are unprofitable, or are unrepresentative, are not reliable. For reasons of consistency, this principle
applies to all the provisions coming within Article 2.2, including Article 2.2.2(ii).
3. Argument that the EC has wrongly inverted the order required by Article 2.2.2
153. This argument, contained in paragraphs 3.97 to 3.107 of India’s Submission, suggests that
options (i), (ii), and (iii) in Article 2.2.2 must be attempted in that order.
154. In paragraph 3.98 India seeks to establish the priority of option (i) over option (ii) by
emphasising the importance of the particular export er or producer. No doubt that is an important
element, but so is that of the particular product. In fact, from an economic point of view the
commonality of products is more important than that of persons because market forces, that is to say
competition, operate most strongly between products of the same kind. In other words, the prices that
one producer charges for his products have an effect on the prices charged by other producers for that
product, but have no particular effect on the prices that the same producer charges for his other

products. Furthermore, the direct costs of producers within the same country are unlikely to vary
greatly. Thus, option (ii) is at least as economically realistic as option (i).
155. There is also the fact that option (i) could lead to discrimination because the SG&A and profit
level of a company would depend on whether or not it also had sales of the same general category of
products.
156. India draws attention (in paragraph 3.99) to certain disadvantages for the exporter/producer of
adopting option (ii) or (iii). The implication of this argument is that the drafters would have sought to
avoid such disadvantages. This is a reference, presumably, to the supposed objects and purposes of
the treaty, which can influence the interpretation of its terms. Protecting these interests of the
exporter/producer is arguably one of the purposes implicit in the Anti-dumping Agreement , but there
are others that are equally plausible. For example, compared to option (ii), the use of option (i) would
involve much greater investigative effort, with consequent inconvenience and delays for all
concerned, because it requires entirely new data to be collected. In contrast, the data relevant to option
(ii) will already be in the hands of the investigating authorities. Article 6.13 of the Anti-dumping
Agreement requires investigating authorities to "take due account of any difficulties experienced by
interested parties, in particular small companie s, in supplying information requested". Given this
variety of considerations, rather than draw India’s conclusion, it is more in accordance with the object
and purpose of the Anti-dumping Agreement to conclude that the text leaves Members free to decide
whether to give priority to option (i) or option (ii).
157. In any event, one should not examine the object and purpose of the Anti-dumping Agreement
without also looking at the ordinary meaning of its terms, in their context.
158. The ordinary meaning of Article 2.2.2 indicates no priority between the three options. The
three subparagraphs contain no features (such as the words "if that is not possible") indicating that one
is to be applied in preference to another. Nor is any preference inherent in the nature of the three
options, or at least of the first two. Both of these involve an enlargement of the pool of data that may
be taken into account. The first broadens the data to include not merely like products, but sales of the
"same general category". The second retains the like products limit, but extends the data to include
that of other exporters or producers.
159. The context favours the interpretation proposed by the EC. Where the Agreement intends a
priority it makes that fact clear. For example: Article 2.3
27 (alternatives to export price), Article 2.4.2
(calculation of margin, below), and Article 2.2.2 itself (the chapeau states the first priority).
160. Consequently, according to the correct interpretation of Article 2.2.2, WTO Members have a
complete discretion to choose between the options.
161. The EC chooses to exercise this discretion in favour of option (ii).
162. This situation is not unprecedented. A similar discretion is conferred on Members regarding
the choice between a constructed value and a third-country price that is allowed in Article 2.2 for
determining normal value when the exporter’s sale prices are unavailable or unusable. Here again the
EC, as a matter of practice, uses one of the options.

27 Article 2.3:
In cases where there is no export price or where it appears to the authorities concerned that the
export price is unreliable because of association or a compensatory arrangement between the
exporter and the importer or a third party, the export price may be constructed on the basis of
the price at which the imported products are first resold to an independent buyer, or if the
products are not resold to an independent buyer, or not resold in the condition as imported, on
such reasonable basis as the authorities may determine.

163. In paragraphs 3.101 et seq. India addresses the drafting of Article 2(6) of the EC’s basic
Regulation, in particular the fact that options (i) and (ii) are set out in the opposite order. The EC
assumes that India is not requesting the Panel to condemn this Regulation, because if that were the
case the EC would strongly object to the introduction at this stage of the dispute of a claim that is
outside the Panel’s terms of reference, and is therefore not a "matter" that has been referred to the
Panel for consideration (see paragraph 11).
164. In paragraph 3.104 India accuses the EC authorities of failing to consider which option would
be most reasonable. No obligation of the Anti-dumping Agreement is mentioned in this context, and it
is not clear that India asserts that any such obligation exists.
165. India gives a mistaken analysis of EC law (para. 3.105) in order to assert that this requires
consideration of the options in the order specified in the basic Regulation. 28 India does not explain
how past EC practice in this area is relevant to its complaint in this dispute.
166. To conclude, India has presented a series of irrelevant or mistaken arguments to support its
contention regarding the existence of a mandatory order among the options listed in Article 2.2.2(ii).
It has made no attempt to apply the accepted rules of treaty interpretation. Were it to do so, the
threadbare nature of its logic would be more easily revealed. Consequently, no inconsistency with
Article 2.2.2 has been established.
B. CLAIM 2: A LLEGED INCONSISTENCY WITH ARTICLE 12.2.1 REGARDING APPLICATION OF
ARTICLE 2.2.2
167. This claim is covered by paragraphs 3.108 to 3.112 of India’s Submission. It asserts that "the
EC acted inconsistently with Article 12.2.1 by fail ing to sufficiently explain why and how it applied
Article 2.2.2 in the Provisional Regulation" (para. 3.109).
168. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s terms of reference.
C. CLAIM 3: A LLEGED INCONSISTENCY WITH ARTICLE 12.2.2 REGARDING APPLICATION OF
ARTICLE 2.2.2
169. This claim is covered by paragraphs 3.113 to 3.121 of India’s Submission. In similar fashion
to the previous claim, it asserts "the EC has acted inconsistently with Article 12.2.2 by failing to
sufficiently explain why and how it applied Article 2.2.2 in the definitive determination".

28 The judgements to which it refers (Case C-105/90, Goldstar Co. Ltd v. Council , [1992] ECR I-677
(paragraph 35); Case C-69/89, Nakajima All Precision Co. Ltd v. Council , [1991] ECR I-2069 (paragraph 61))
were concerned with the then basic Regulation (Reg. 2423/88 of 11 July 1988, OJ L 209, 1988, p. 1) under
which a priority was explicitly established:
Art. 2(3)(b)(ii) … The amount for selling, general and administrative expenses and
profit shall be calculated by reference to the expenses incurred and the profit realized by the
producer or exporter on the profitable sales of like products on the domestic market. If such
data is unavailable or unreliable or is not suitable for use they shall be calculated by reference
to the expenses incurred and profit realized by other producers or exporters in the country of
origin or export on profitable sales of the like product. If neither of these two methods can be
applied the expenses incurred and the profit realized shall be calculated by reference to sales
made by the exporter or other producers or exporters in the same business sector in the
country of origin or export or on any other reasonable basis.

170. As the EC has already explained, there is no obligation on a Member to explain its choice
between the options listed in Article 2.2.2. Consequently there can be no obligation to publish such an
explanation under the provisions of Article 12.2.
171. None of the three arguments presented by India addresses this issue.
172. The first and second arguments seem to accuse the EC of failing to explain why it has
infringed the rules. This seems to be the WTO equivalent of a defendant being asked ‘When did you
stop beating your wife?’ The EC denies infringing any rules. On this basis no explanation is
necessary.
173. In paragraph 3.119 it is asserted that the EC authorities did not explain why the profit so
established was reasonable. This claim appears to be identical with that in Claim 6, and is dealt with
in that context.
174. The third argument assumes that controversy about the choice of option creates an obligation
to explain it. There is no basis in the Anti-dumping Agreement to support such a thesis. The EC does
not need to explain why it exercised in a particular way the complete discretion that is conferred upon
it by the Anti-dumping Agreement. Any such obligation would deny that discretion.
D. C
LAIM 4: ALLEGED INCONSISTENCY WITH ARTICLE 2.2
175. India’s fourth claim (contained in paras. 3.122 to 3.139) is that "the EC has acted
inconsistently with Article 2.2 of the Anti-dumping Agreement by not adding a ‘reasonable’ amount
of SG&A and for profits".
176. It is evident that the methods for calculating SG&A and profits that are set out in the options
in Article 2.2.2 fall under the aegis of the standard of "a reasonable amount for administrative, selling
and general costs and for profits" that is enunciated in Article 2.2. But in describing these options as
"procedural" (paras. 3.125 to 3.127) India is merely being tendentious. They represent particular and
detailed formulations of what constitute reasonable amounts.
177. India is also completely mistaken in suggestin g that the proviso set out in the third option –
"provided that the amount for profit so established shall not exceed …" – applies to the other two.
178. Such an interpretation is completely at odds with the ordinary meaning of Article 2.2.2. Had
the draftsmen wished to apply this proviso to all the options they would no doubt have attached it to
the chapeau of Article 2.2.2 (or they could have inserted it in each option). The natural reading of the
text is that the proviso applies to option (iii) only. Furthermore, it is not even a proviso that defines
what is reasonable, since the text assumes that there might be a "reasonable method" that did not
satisfy the proviso.
179. Stepping back from the text and examining it in its context, and in the light of the object and
purpose of the Anti-dumping Agreement, reveals nothing that changes this conclusion. The object of
this part of the Agreement is evidently to provide different methods of arriving at the "reasonable
amount" set out in Article 2.2. The rules contained in these options are not cumulative.
180. The EC therefore rejects the conclusions of paragraphs 3.130 to 3.132 of India’s Submission.
181. The EC also rejects the observation (para. 3.133) that the text gives no indication (other than
the false one suggested by India) of the substance of what is reasonable. Options (i) and (ii) are
evidently formulae that produce reasonable solutions.

182. It was obviously the intention of the draftsmen that the application of the formulae in options
(i) and (ii) will always produce figures for profits and for SG&A that meet the standard of
reasonableness specified in the last sentence of the chapeau of Article 2.2.
183. This is evident from the ordinary meaning of the wording of option (iii), which commences
with the words "any other reasonable method", i.e., other than the methods described in the preceding
options (i) and (ii) which are in themselves reasonable, and do not need to be qualified as such.
184. It is also evident from the context, that is provided by the structure of this part of Article 2.
Article 2.2, which provides a chapeau for the following sub-paragraphs, introduces the notion of "a
reasonable amount for administrative, selling and general costs and for profits". This is elaborated in
Article 2.2.2 by means of formulae by which these amounts may be derived. Only for the last of these
formulae, that in option (iii), is it necessary to repeat the criterion of reasonableness, and that is
because, unlike the others, it does not specify a formula.
185. Even supposing, for the sake of argument, that it were not accepted that these options
definitively produce reasonable results, their wording at least implies that those results are presumed
to satisfy this standard. The question that then arises is: What kind and weight of evidence would be
required to overturn the presumption?
186. This is not a question that need be pursued very far in this dispute because India had
presented no relevant evidence to rebut the presumption.
187. Although strongly wedded to its mistaken notion that the principle of reasonableness is
expressed in the proviso to option (iii), India also implies (para. 3.138) that a less precise notion of
reasonableness applies. It seems to say that the profit figure determined for Bombay Dyeing (and
applied to all Indian exporters) was unreasonable because its size was anomalous. It was, for example,
three times greater than the figure determined for other exporting countries.
188. Profit margins of different companies in different countries are not normally identical. In
particular, profit margins will vary with the levels of competitiveness in the various markets.
Therefore a margin is not unreasonable merely because it is higher than the margins of other
companies.
189. If a notion of reasonableness is to be developed in this context it would be one derived from
the object and purpose of the Anti-dumping Agreement. On this basis it could be argued that the three
options in Article 2.2.2 are intended to produce approximations of the amounts that would emerge
from applying the formula in the chapeau, that is to say the profits and SG&A of a producer selling in
its own market. This, in its turn, is intended to arrive at a constructed value that is as close as possible
to the normal value that would have been established on the basis of domestic prices, had there been
comparable sales in the ordinary course of trade.
190. Apart from the arguments about relying on a single exporter or producer (made in its first
Claim) India does not attack the methodology adopted by the EC authorities. It does not deny that the
investigating authorities have correctly determined the level of profit being obtained by Bombay
Dyeing. By definition, this company has representative sales on the Indian market. Since Bombay
Dyeing has almost 80 per cent of the domestic market for bedlinen there was not very much doubt on
that score. That one producer can have 80 per cent of its domestic market and make a profit of over 18
per cent, while the numerous other producers ignore this market and devote themselves to exporting,
may be an uncommon situation. But that does not make the use of data from this company
unreasonable. Rather, it would have been unreasonable to ignore this company and choose another
source, which would inevitably be less typical of sellers in that market. (Because of Bombay Dyeing’s
dominance of the domestic market the inclusion of data from another producer that did sell in the
domestic market would have had little effect on the resulting figures). In any event, there is nothing to

suggest that other companies selling on the Indian market could not have earned profits similar to
those of Bombay Dyeing.
191. Consequently not only did the Indian exporters fail to provide evidence of a sufficient weight
to overturn the presumption of reasonableness, they provided no evidence whatsoever that was
relevant to this purpose.
192. As a result, even if the presumption of reasonableness that is attached to option (ii) is viewed
as rebuttable, India has failed to show any grounds for thinking that the EC authorities failed to
properly apply this rule.
193. In any event, even if it were accepted that the exporters had presented relevant evidence on
this issue, which the EC authorities had found unconvincing, in examining this question the Panel has
to bear in mind the appropriate standard of review that it should exercise over the decisions of the EC
authorities (explained at paragraph 71 above).
E. CLAIM 5: A LLEGED INCONSISTENCY WITH ARTICLE 12.2.1 REGARDING APPLICATION OF
ARTICLE 2.2
194. Under this heading (paras. 3.140 to 3.142) it is claimed that "the EC has acted inconsistently
with Article 12.2.1 by failing to sufficiently explai n in the provisional Regulation or the disclosure
document why and how it applied Article 2.2, and especially, why it considered the uniquely
established and exceptionally high profit margin ‘reasonable’."
195. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s terms of reference.
F. CLAIM 6: A LLEGED INCONSISTENCY WITH ARTICLE 12.2.2 REGARDING APPLICATION OF
ARTICLE 2.2
196. It is claimed (paras. 3.143 to 3.145) that "the EC has acted inconsistently with Article 12.2.2
by failing to explain why and how it applied Article 2.2".
197. Recitals 18 and 19 of the Definitive Regulation address various matters that were raised by
the exporters.
198. The amounts derived from the application of Article 2.2.2(ii) are reasonable per se, and so do
not require justification. Furthermore, since the pr ofit margin established in accordance with the
system was not "uniquely established and exceptionally high", and no evidence (as opposed to
assertion) was presented to the investigating authorities to this effect, the EC had no need to make the
explanation suggested by India.
199. In any event, the obligations in Article 12.2.2 concern publication of decisions that are taken
by the investigating authorities. As India has acknowledged in its Submission (para. 3.106), the use of
option (ii) in Article 2.2.2 is a matter of EC practice, and is not decided on a case-by-case basis by the
investigating authority.
200. In so far as India contends that the EC’s Basic Regulation is inconsistent with Article 2.2.2,
the EC requests the Panel to reject the claim since this issue is not within its terms of reference (see
paragraph 11 above).

G. CLAIM 7: ALLEGED INCONSISTENCY WITH ARTICLE 2.4.2 – ZEROING
201. In this claim India (in paras. 3.146 to 3.172 of the Submission) contends that "the EC acted
inconsistent with Article 2.4.2 by zeroing negative dumping amounts on a per-type basis".
202. Article 2.4.2 of the Anti-dumping Agreement states that:
Subject to the provisions governing fair comparison in paragraph 4, the existence of
margins of dumping during the investigation phase shall normally be established on
the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions or by a comparison of normal
value and export prices on a transaction-to-transaction basis. A normal value
established on a weighted average basis may be compared to prices of individual
export transactions if the authorities find a pattern of export prices which differ
significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weighted average-to-weighted average or
transaction-to-transaction comparison.
203. EC practice in this matter is straightforward.
204. In comparing export prices with the normal value in accordance with the first option
presented by Article 2.4.2 the EC carries out a weighted average comparison of products of the same
type (that is to say, of the same model or product line). It usually happens that an investigation covers
several such types, the boundaries of which are set by the definition of the product concerned in the
notice of initiation.
205. In order to determine a single dumping duty that is appropriate for all types of product within
these boundaries it is necessary to draw the individual product-type dumping margins into a single
figure. This is also done by weighting the individual margins. Since the process is directed at
dumping, it focuses on those product types where dumping has been found. However, in the case of
any product types for which there is no dumping (i.e. the dumping margin is zero or less than zero),
for the purposes of this calculation the dumping margin is treated as zero.
206. The types of products that are found in the first stage to have margins less than zero (and
which therefore are not being dumped), are nevertheless kept in the calculation (albeit at notional zero
margins), and thereby reduce the overall dumping margin determined for that product.
207. The EC’s methodology is in accordance with the ordinary meaning of Article 2.4.2. Under the
first option presented by this provision, "the existence of margins of dumping during the investigation
phase shall normally be established on the basis of a comparison of a weighted average normal value
with a weighted average of prices of all comparab le export transactions". A central element of this
formula is expressed in the word "comparable". This exactly characterises the process carried out by
the EC, since it observes the principle of comparing weighted averages for those products that are
comparable.
208. The phrase "the existence of margins of dumping" reinforces this conclusion by making clear
that the process of comparing weighted averages will normally conclude with more than one dumping
margin.
209. The process of determining a single dumping duty from these margins is a separate one,
which does not fall within the express terms of Article 2.4.2, but is left to the discretion of Members.
This is confirmed by the fact that Article 2.4.2 applies only in order to "establish the existence of the
margins of dumping during the investigation phase". Yet, under a "retrospective" system, the amount

of the anti-dumping duty is not determined on the basis of "the dumping margins during the
investigation phase". Instead, it is determined at a later stage on the basis of the dumping margin
calculated for each particular consignment by comparing its export price to the normal value
calculated in the initial investigation. Thus, India’s interpretation would have the anomalous result
that one and the same provision would have a different scope depending on whether a Member
assesses anti-dumping duties on a prospective or on a retrospective basis. A Member applying anti-
dumping duties prospectively would be required to calculate the amount of the duties in accordance
with the rules prescribed in Article 2.4.2. In contrast, a Member applying duties retrospectively would
have discretion to use a different method.
210. In paragraph 3.171 India asserts that the method applied by the EC will always lead to a
higher dumping margin than would have been the case if the so-called ‘zeroing’ had not taken place.
This is not necessarily so. Apart from the exception noted by India, the complexities of anti-dumping
law can result in zeroing having the opposite effect. This is illustrated by the facts of the present case
(see Table 2). If no zeroing had taken place in the calculation of the duty, the dumping margin
calculated for the exporter with the lowest margin would have qualified as de minimis and would
therefore have been disregarded in calculating the average margin for the exporters that were
sampled.
29 It is on this average margin that the duty applicable to the non-sampled exporters is
calculated, which would as a consequence increase (by several percentage points in the present case).
211. The EC’s methodology, and the contrasting methodologies that might theoretically be used,
are demonstrated by the following tables, which illustrate the second stage of the calculation. In each
table the crucial element is the ‘Dumping margin’ calculated for each exporter
212. The total/average dumping margin is applied in setting the dumping duty for co-operating
companies that were not included in the sample, i.e. 60% of Indian exports. Table 1 shows the results
of applying the EC’s methodology.
Table 1 – Summary of EC’s dumping calculation for definitive duty
30
Dumping amount Dumping margin c.i.f. value
Anglo French 31266339 24.72% 126464037
Bombay Dyeing 7842226 7.77% 100924637
Madhu 31169522 17.03% 183063049
Omkar 30328190 14.25% 212877521
Prakash 8412131 2.67% 314529134
Total/average 109018408 11.62% 937858378
213. The effects of applying the methodology proposed by India are shown in Table 2. The reason
for the increase in overall margin is that the co mpany with the lowest margin has disappeared from
the calculation, its dumping margin being de minimis. The EC does not wish to imply that this would
happen on every occasion that the methodology was used. It would of course depend on the relevant
figures.

29 In accordance with Article 9.4 of the Anti-dumping Agreement
30 The ‘total/average’ dumping margin is applied to co-operating companies not included in the sample,
i.e. 60% of Indian exports.

Table 2 – Summary of dumping calculation according to India’s proposed methodology
Dumping amount Dumping margin c.i.f. value
Anglo French 30799409 24.35% 126464037
Bombay Dyeing 5612587 5.56% 100924637
Madhu 30898430 16.88% 183063049
Omkar 28025198 13.16% 212877521
Total/average 95335624 15.29% 623329244
214. It is also worth noticing the effect (shown in Table 3) of entirely excluding non-dumped types
from the calculation.
Table 3 – Summary of dumping calculation excluding non-dumped types
Dumping amount Dumping margin c.i.f. value
Anglo French 31266340 25.18% 124188642
Bombay Dyeing 7842226 11.11% 70600090
Madhu 31169522 17.20% 181231246
Omkar 30328190 16.51% 183679947
Prakash 8412131 4.80% 175146076
Total/average 109018409 14.84% 734846001
V. CLAIMS REGARDING FINDING OF INJURY CAUSED
A. CLAIM 8 A LLEGED INCONSISTENCY WITH ANTI-DUMPING AGREEMENT ARTICLES 3.1, 3.2,
3.4, 3.5 AND 3.6
215. In this claim (paras. 4.13 to 4.35) India contends that "the failure of the EC to examine
dumped transactions only for the purpose of the injury determination in the Bed linen II proceeding is
inconsistent with Articles 3.1, 3.2, 3.4, 3.5, and 3.6 Anti-dumping Agreement" (para 4.35).
216. Since claims in respect of the Provisional Regulation are not properly before the Panel (See
paragraph 22 above), the EC regards this claim as a challenge to the consistency of the Definitive
Regulation.
217. For the reasons stated at paragraph 11 above, the EC objects to the inclusion of a claim under
Article 3.6.
218. India has also expressed its claim by saying that it "considers the EC determination to
automatically assume that all imports of bed linen from India during the investigation period were
dumped to lead to a finding inconsistent with Article 3.1" (para. 4.13).
219. It appears that, whichever way it is expressed, the claim is based on the notion that, in the
various paragraphs of Article 3 where it occurs, the term "dumped imports" should be taken as

referring to only those transactions that are dumped. The EC will show that, on its correct
interpretation, this term includes all the imports of the product in question, from the country that is
found to be dumping. (The EC, and it would seem India, assumes that the terms has the same meaning
throughout Article 3).
220. According to the principle expressed in Article 31 of the Vienna Convention, a treaty is to be
interpreted in good faith in accordance with the or dinary meaning to be given to the terms of the
treaty in their context and in the lights of its object and purpose.
221. As regards the term "dumped imports", the ordinary meaning proposed by the EC is
straightforward. In contrast, that proposed by India raises immediate doubts because of its uncertainty.
If each transaction is be allocated to a dumped or non-dumped classification there is no provision to
cope with the situation where an exporter conceals the volume of dumping by varying the prices from
one consignment to another, perhaps in collusion wi th the importer. Thus, there would need to be a
sub-categorisation by exporter, or perhaps by particular exporter-importer links. Furthermore, it is not
unknown for exporters to work together to evade the consequences of anti-dumping measures. Of
course, an ordinary meaning does not cease to be such merely because it is complex. But there is a
real question whether India’s interpretation has not moved beyond complexity into confusion. (The
issue of needless complexity is considered in the context of the Anti-dumping Agreement’s object and
purpose, below).
222. A consideration of context is particularly important in regard to the term "dumped imports".
There are several features of the Anti-dumping Agreement which indicate that dumping and injury-
causation issues are to be analysed on a product and country basis, rather than on a transaction basis.
223. The EC agrees with India
31 that Article 2.1 Antidumping Agreement is relevant context. It
disagrees however with India’s conclusion. Article 2.1 (following Article VI GATT) states that:
For the purpose of this Agreement, a product is to be considered as being dumped, i.e.
introduced into the commerce of another countr y at less than its normal value, if the
export price of the product exported from one country to another is less than the
comparable price, in the ordinary course of trade, for the like product when destined
for consumption in the exporting country.
224. This makes perfectly clear that the existence of dumping is to be determined for a country at
the level of the product under investigation, referred to as the "like product".
225. Article 2 goes on to set out detailed rules on how dumping is to be determined and measured
for the product under investigation from a country. If these rules, correctly applied, give rise to a
finding of dumping for a certain product from a particular country that is the "dumped product" for
the purposes of Article 3.
226. It is true that Article 2 allows (or may even require) the product under investigation from a
country to be divided up by exporter and type in calculating the margin of dumping. But the
determination of dumping is still made for the product under investigation and the country (and if a
duty is ultimately imposed, at least the general – or residual – duty will be on that same product from
that country).
227. A determination of injury caused by dumped imports has to be made, according to Article 3.1,
for the domestic market for, and the domestic producers of, the like product. This can only result
from an overall assessment. It is not possible to isolate the effects of individual transactions in a
single product market. The market situation is determined by the overall impact of imports.

31 See paragraphs 4.18-4.19 of India’s First Written Submission.

228. The fact that it is all the imports of the "like product" from a particular exporting country that
are referred to under the notion of "dumped imports" is also apparent in the drafting of Article 3.3,
which deals with the cumulation of imports from several countries. There are no corresponding rules
to cover the problem of cumulation of imports from several exporters, or of imports of a particular
model of product, although this would be just as necessary if the term "dumped imports" were taken
to require separate consideration of the products of different exporters or of different models.
229. The EC’s position is also supported by Article 5.7 of the Anti-dumping Agreement which
requires that:
The evidence of both dumping and injury shall be considered simultaneously (a) in
the decision whether or not to initiate an investigation, and (b) thereafter, during the
course of the investigation, starting on a date not later than the earliest date on which
in accordance with the provisions of this Agreement provisional measures may be
applied.
230. Since injury has to be investigated before it is established which transactions are dumped, it is
clear that the term "dumped products" used in connection with the injury provisions of Article 3 must
be referring to all imports of the product under investigation (although the finding of injury is, of
course, conditional upon dumping being found).
231. As a further aspect of the context of Article 3, one should consider the rules on countervailing
duties in Article 15 of the Agreement on Subsidies and Countervailing Measures. These run parallel
with Article 3 of the Anti-dumping Agreement except, of course, that the SCM Agreement uses the
expression "subsidised imports" instead of "dumped imports". However, it is not possible to
distinguish between consignments in relation to subsidies. If there is a subsidy it benefits all exports
of the product in question, so the investigators always take into account all imports of the product.
The reports of the Salmon panels (below) reflect an assumption that the parallelism extended into the
meaning of these terms.
232. Further context supporting this parallelism is provided by the Ministerial Declaration on
Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing
Measures, where Ministers
Recognize, with respect to dispute settlement pursuant to the Agreement on
Implementation of Article VI of GATT 1994 or Part V of the Agreement on
Subsidies and Countervailing Measures, the need for the consistent resolution of
disputes arising from anti-dumping and countervailing duty measures.
233. The EC’s interpretation of "dumped imports" is also supported by a consideration of the
object and purpose of Article 3 of the Anti-dumping Agreement.
234. The term is used in most of the paragraphs of Article 3, but it is only in regard to those that
concern causation that the question of interpretation discussed here is important. Thus, in Article 3.4
and 3.6, where the focus is on the condition of the domestic industry rather than causation, the precise
interpretation of "dumped imports" is not significant.
235. Thus, India would have to argue that Articl e 3 pursued its object and purpose with a
needlessly complex notion of "dumped imports". The unlikelihood of such an interpretation is
reinforced when one considers the first sentence of Article 3.2. Here the Anti-dumping Agreement
evidently intends the national authorities to gather information covering a lengthy period, since the
investigation period used to assess dumping (typically one year) would hardly be enough to detect
volume changes. Article 3.2 is manifestly for the benefit of exporters because it sets conditions that

must be satisfied before causation is established. Nevertheless, on India’s interpretation, in order to
apply this provision the exporters would have to provide not just one, but several years’ price data.
Far from benefiting exporters, such an interpretation would in many cases make this provision
unworkable. It would impinge directly on the obligation in Article 6.13 for the authorities to "take due
account of any difficulties experienced by interested parties, in particular small companies, in
supplying information requested, and shall provide any assistance practicable", and would
substantially obstruct the objective of expeditious procedures set out in Article 6.14.
236. India seems to acknowledge this objection in paragraph 4.28 where is says: "It is granted that
the EC cannot review the overview of ‘dumped imports’ from the period preceding the investigation
period up to the investigation period, simply because the EC has no information on the level of any
‘dumped imports’ in the years preceding the investigation period."
237. India argues (para. 4.34) that according to the EC’s methodology, one dumped model out of a
hundred would lead to all one hundred being classifi ed as dumped imports. It is not clear what Anti-
dumping Agreement’s provision India has in mind in this case, but it seems most likely to concern the
issue of causation, probably Article 3.5. However, in such a case the effect of including all the imports
would be to reduce the undercutting margin, and thereby work against a finding of causation. Also,
the unusual circumstances hypothesised by I ndia would only arise where the product under
investigation has been defined in an inappropriate manner or where there are other factors causing
injury. In any event, such circumstances are not present in this case.
238. The interpretation of the term "dumped imports" in Article 3 has received relatively little
attention from dispute bodies. In the Salmon cases (decided under the Anti-Dumping and Subsidies
Codes, which used the same term) the Panels used the phrase "imports under investigation" as a
synonym for "dumped imports". Thus, in discussing the requirement (that is now in Article 3.5 of the
Anti-dumping Agreement) to examine causes other than the "dumped imports", such as "the volume
and prices of imports not sold at dumping prices", it contrasted these with "the imports under
investigation".
32 Thus, "dumped imports" were regarded as all imports of the product under
investigation coming from the country found to have been dumping. Furthermore, the Panels assumed
that this interpretation applied to the earlier paragraphs of Article 3.33
239. According to Article 31(3) of the Vienna C onvention, there shall be taken into account
together with the context of a treaty "(b) any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation". As far as the EC is aware, no
party to the Codes,34 and no Member of the WTO has ever applied the term "dumped imports" in the
manner suggested by India. Nor, until now, does it seem to have ever been seriously proposed. This
practice can reasonably be said to amount to the kind of practice referred to in the Convention.
35

32 Report by the Panel on United States - Imposition of Anti-Dumping Duties on Imports of Fresh and
Chilled Atlantic Salmon from Norway , ADP/87, 27 April 1994, at paragraph 552; Report by the Panel on
United States -Imposition of Counte rvailing Duties on Imports of Fresh and Chilled Atlantic Salmon from
Norway, SCM/153, adopted on 28 April 1994, at paragraph 316.
33 Ibid., paragraphs 555, and 321.
34 While practice under the Codes is not directly pertinent to an interpretation of the ANTI-DUMPING
AGREEMENT, it is nevertheless relevant because in establishing the meaning of the Codes it influences the
interpretation of terms, such as "dumped imports", that were carried into the ANTI-DUMPING AGREEMENT.
35 It is significant that the argument was not raised by the exporters during the investigation. On the
contrary, they demonstrated that they implicitly accepte d the EC’s approach by submitting evidence regarding
import volumes over a period of several years. E.g., The Post-hearing brief submitted on behalf of Texprocil by
Vermulst & Waer, 6 February 1997, pages 9-10 (Exhibit India-54) contains data on EC quota restrictions on
certain textile categories for the years 1995 thro ugh 1997 as evidence that the import volume had not increased
significantly.

240. Furthermore, if the meaning is still regarded as ambiguous, one is entitled, under Article 32 of
the Convention to look at supplementary means of interpretation, including the circumstances of the
treaty’s conclusion. The circumstances of the Anti-dumping Agreement’s conclusion, and of the Anti-
Dumping Code that preceded it, seem to have been that no country applying anti-dumping measures
used the interpretation proposed by India. Furthermore, the panel reports in the Salmon cases (above),
which established that "dumped imports" had the meaning proposed by the EC, were decided and
adopted during the course of the WTO negotiations. The drafters of the Anti-dumping Agreement
nevertheless chose to use the same term, without alteration or qualification.
241. This analysis shows that the term "dumped imports" in Article 3.1, 3.2, 3.4, 3.5 and 3.6 Anti-
dumping Agreement refers to all imports of the product in question from the country found to be
dumping. Consequently, the EC is not in breach of th e provisions of Article 3 for failing "to examine
dumped transactions only for the purpose of the injury determination", as alleged by India.
B. C
LAIM 9: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1.
242. In this claim (paras. 4.36 to 4.39) India contends that in respect of the Provisional Regulation
the EC has failed to publish the fact that in applying Article 3 it took into account of only those
imports that were dumped.
243. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
C. CLAIM 10: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
244. This claim (contained in paras. 4.40 and 4.41) is vague, and does not indicate which
obligation in Article 12.2.2 the EC is alleged to have infringed.
245. In the Bedlinen investigation the EC’s methodology was that described in paragraph 217 et
seq. This methodology is the EC’s standard practice and, in the absence of any argument on the point
by one of the interested parties to the investigation, the EC sees no need to publish details of it in
every decision that it makes.
D. C
LAIM 11: ALLEGED INCONSISTENCY WITH ARTICLE 3.4
246. This claim is contained in paragraphs 4.56 to 4.76 of India’s Submission, and alleges that "the
EC has acted inconsistently with Article 3.4 by not evaluating all relevant economic factors and
indices mentioned in Article 3.4 of the Anti-dumping Agreement" (para. 4.76). It is evident that India
is relying on the supposedly compulsory nature of the evaluation of these factors. India is not arguing
that it is because of the circumstances of this particular case that the factors should be evaluated.
247. In so far as claims in respect of the Provisional Regulation are outside the panel’s jurisdiction
(see paragraph 22 above), the EC regards this claim as a challenge to the consistency of the Definitive
Regulation.
248. Article 3.4 of the Anti-dumping Agreement states that:
The examination of the impact of the dumped imports on the domestic industry
concerned shall include an evaluation of all relevant economic factors and indices
having a bearing on the state of the industry, including actual and potential decline in
sales, profits, output, market share, productivity, return on investments, or utilization
of capacity; factors affecting domestic prices; the magnitude of the margin of
dumping; actual and potential negative effects on cash flow, inventories,

employment, wages, growth, ability to raise capital or investments. This list is not
exhaustive, nor can one or several of these factors necessarily give decisive guidance.
249. In the following paragraphs the EC presents three defences to India’s claim. Firstly, it points
out that the factors listed in Article 3.4 were evaluated during the investigation. Secondly, it shows
how the factors listed in Article 3.4 are ones that are solely negative in character, and as such were
properly evaluated during the investigation. Thirdly, and subsidiarily, it puts forward various reasons
for concluding that Article 3.4 does not require that every one of the listed factors need be evaluated
in every investigation.
1. The examination of injury factors in the bedlinen investigation
250. The EC’s evaluation of the "factors and indices" mentioned in Article 3.4 is reflected in the
Table 4. (For convenience, "factors and indices" are usually referred to as "factors" in this account).
251. The individual factors are set out in the first column. The second shows from where the EC
obtained the relevant information, for example from the Questionnaire (Exhibit EC-2) sent to the
domestic producers. In the case of some factors, where the necessary information could be derived
from other data, it was not necessary to include a specific request. Thus, for several of the factors, the
data could be derived from the exporters’ accounts, which were obtained along with the answers to
the Questionnaires. For example, ‘return on investments’ is apparent from a company’s balance sheets
and profit and loss accounts; ‘cash flow’ and ‘growth’ are evident from the balance sheets; and
‘wages’ are an element in cost of production.
252. The third column indicates the evaluation accorded to each of the factors. Specific details are
given regarding those directly addressed in the Provisional and Definitive Regulations, and at which
‘level’ the EC producers’ data are presented (this is relevant to India’s Claim 15, below).
36
253. In a number of instances it is recorded that the factor is ‘Found not to be a significant
independent factor’. The word ‘independent’ reflects the interconnection between the factors. Where a
decline in one factor is an automatic consequence of that in one or more of the others, it would
encourage double-counting to claim that as an additional support for a finding of injury. (This is not to
argue that certain factors in the list are redundant. Whereas a finding on factor A may flow
automatically from one on factors B and C, the contrary is not necessarily true).
254. The fourth column indicates those factors which India alleges were not evaluated.
255. The information set out in the table demonstrates that the Definitive Regulation (which
incorporates the explanations in the Provisional Regulation) satisfies the requirements of Article 3.4
by containing an evaluation of all the factors listed there.
Table 4 – Consideration of injury factors
Anti-dumping
Agreement Art. 3.4
Source of
Information
Evaluation Indian list
actual and potential
decline in sales
Information explicitly
requested in
questionnaire
Eurocoton/CITH
Volume (PR82)
EU-15
Sample
Value (PR83)
EC industry

36 EU-15 means all producers in the EU; EC-industry means the all producers in the ‘domestic
industry’; Sample means all producers in the sample.

Anti-dumping
Agreement Art. 3.4
Source of
Information
Evaluation Indian list
Sample
Profits Information explicitly
requested in
questionnaire
Eurocoton/CITH
Sample (PR89)
Output Information explicitly
requested in
questionnaire
Eurocoton/CITH
EU-15 (PR81)
EC industry (PR81)
market share Derived from other
requested information
Volume (PR84)
EU-15
Sample
Value (PR85)
EU-15
EC industry
Sample
Productivity Derived from other
requested information
Found not to be a
significant
independent factor

return on investments Derived from other
requested information
Found not to be a
significant
independent factor

Utilization of capacity Information explicitly
requested in
questionnaire
Found not to be a
significant
independent factor

factors affecting
domestic prices
Information explicitly
requested in
questionnaire
Eurocoton/CITH
Sample (PR86-87) /
Magnitude of the
margin of dumping
Derived from other
requested information
Found not to be a
significant
independent factor
actual and potential
negative effects on
cash flow
Derived from other
requested information
Found not to be a
significant
independent factor

Inventories Information explicitly
requested in
questionnaire
Found not to be a
significant
independent factor

Employment Data and information
requested in
questionnaire.
Eurocoton/CITH
EC industry (PR91)
Wages Derived from other
requested information
Found not to be a
significant
independent factor

Growth Derived from other
requested information
Found not to be a
significant
independent factor

ability to raise capital
or investments
Derived from other
requested information
Found not to be a
significant
independent factor

2. The examination required by Article 3.4 – negative character of factors
256. The interpretation of Article 3.4 must be based on the ordinary meaning of its terms in their
context and in the light of the object and purpose of the Anti-dumping Agreement.
257. The first stage in this process is a close examination of the terms of Article 3.4, in particular
the factors and indices listed there. One feature that stands out in such an examination is that these
factors are explicitly concerned with indications of injury, not the absence of injury. Thus the first
seven are prefixed by the phrase "actual and potential decline in", and most of the remainder by the
phrase "actual and potential negative effects on". Of fifteen factors and indices, only two are not
qualified by the words "decline", or "negative effects". Furthermore, one of these two (magnitude of
the margin of dumping) might be said to be inherently negative. 37 Whether the remaining item
("factors affecting prices") is to be taken to be subject to the same qualification, or to have been
deliberately accorded different treatment, is not an issue that need be addressed here since India has
not accused the EC authorities of failing to evaluate it.
258. This interpretation of the factors listed in Article 3.4 is reinforced by a consideration of the
opening phrase, which speaks of the " impact of the dumped imports". The word "impact" carries a
negative aspect, which is not present, for example, in the phrase "the effect of the imports" in the
corresponding provision of Article 6 of the Agreement on Textiles and Clothing (ATC).
259. There is nothing in the context of Article 3.4 to contradict this "ordinary meaning" of its
terms, and the object and purpose of this part of the Anti-dumping Agreement – which is evidently to
provide a regime for the determination of injury – reinforces it. The purpose of the examination under
Article 3.4 is to determine what is wrong with the domestic industry, not what is right with it.
260. Although parallels can be drawn between Arti cle 3.4 and provisions in the Safeguards
Agreement and in the ATC, in neither of these Ag reements are the listed factors qualified in this
negative fashion.
261. The EC does not wish to defy common sense by implying that non-negative factors can have
no relevance. In fact, in the bed linen investigation considerable attention was given to certain positive
factors. However, in this Claim India seeks to establish that Article 3.4 requires investigating
authorities to evaluate in an explicit fashion all the fifteen factors and indices that are listed there.
Since this argument (which the EC rejects) is based on the wording of Article 3.4, it must respect that
wording. The wording quite explicitly refers almost exclusively to negative factors. Consequently,
what might be called the ‘comprehensive evaluation’ requirement (if it exists) applies only to such
factors.
262. In the bedlinen investigation, two principal negative factors (profits and prices)
38 were
identified by the EC authorities, and were thoroughly examined and evaluated. No other plausible
negative factors were suggested to them or otherwise came to their attention. None has been
suggested by India.
3. The examination required by Article 3.4 – must all listed factors be evaluated?
263. Irrespective of its arguments regarding the negative nature of the factors in Article 3.4, the EC
also rejects the notion that all those factors must be explicitly evaluated in every investigation.

37 India has not included this factor on the list of allegedly disregarded factors.
38 See recital 40 of the Definitive Regulation. As mentioned above, "prices" might be the one factor on
the list that is not negatively qualified.

264. This interpretation is also based on the ordinary meaning of the terms of this paragraph, in
their context, in the light of the Anti-dumping Agreement’s object and purpose.
265. Firstly, according to Article 3.4, economic factors and indices need be evaluated only if they
are "relevant", and "have a bearing on the state of the industry", which implies that those factors that
are relevant may differ from one investigation to another. This, hardly controversial, conclusion is
reinforced by the last sentence of the paragraph which states that the "list is not exhaustive, nor can
one or several of these factors necessarily give decisive guidance". Consequently, among the factors
listed in Article 3.4 there may be some that, in a particular case, are not relevant, and so do not need to
be evaluated.
266. To insist that the listed factors must be evaluated in all circumstances, would be to require the
evaluation of a factor that has already been found to be irrelevant, which is nonsense.
267. Secondly, the notion that the word "including" should be read as meaning "at the very least"
is undermined by the nature of the list that follows. This is broken into parts by semi-colons, and the
word "or" is used to indicate that not all of the factors need be considered. If all the factors and indices
listed in Article 3.4 had to be evaluated, the Members would have used the conjunction "and", as they
had not hesitated doing in many other contexts. (For example in the lists in the Safeguards Agreement
and ATC).
268. The fact that it is not necessary to consider all the factors listed in the first sentence of
Article 3.4 is made perfectly clear by the second sentence which states that:
This list is not exhaustive, nor can one or several of these factors necessarily give
decisive guidance.
269. The use of the words "nor … necessarily" (meaning "need not but may") in the second part of
this sentence means that sometimes one or several, and thus not all, of the listed factors can give
"decisive guidance". Since a single factor can thus gi ve "decisive guidance", it is clear that in these
cases the investigating authorities are not required to look further.
270. Thirdly, in the EC’s view not only do the factors listed in Article 3.4 differ in importance
from case to case, but it is possible to deduce that certain of them are inherently likely to be more
significant than others and that findings on some may make findings on others superfluous. For
example, how can a calculation of return on investments possibly be relevant or even meaningful in
the case of an industry that is making losses? This is another reason why evaluation of all the factors
cannot be regarded as compulsory.
271. A fourth consideration in this context is that the obligation in Article 3.4 to consider relevant
injury factors does not exist in isolation. In particular, account must be taken of Article 6.13 and 6.14:
6.13 The authorities shall take due account of any difficulties experienced by
interested parties, in particular small co mpanies, in supplying information requested,
and shall provide any assistance practicable.
6.14 The procedures set out above are not intended to prevent the authorities of a
Member from proceeding expeditiously with regard to initiating an investigation,
reaching preliminary or final determinations, whether affirmative or negative, or from
applying provisional or final measures, in accordance with relevant provisions of this
Agreement.
272. As regards Article 6.13, the European producers in the bedlinen investigation were
undeniably small companies.

273. The obligation in Article 6.13 places limits on the information, etc., that may be demanded of
companies according to the level of difficulty that such demands create for those companies. It is a
balance to be decided in each case by the investigating authorities. As the phrase "take due account"
indicates, exercising that decision is a matter of judgement.
274. The domestic producers are the best, and sometimes the only source of information on the
factors relevant to injury. Consequently, Article 6.13 implicitly sets limits on the duty in Article 3.4 to
evaluate the various injury factors that it lists, because that evaluation is necessarily constrained by
any limitation on the information available to the authorities. In other words, aspects of the evaluation
that is required by Article 3.4 may have to be limited in the interest of the values expressed in
Article 6.13. Once again, the decision on such limits is a matter of judgement that must be exercised
by the investigating authorities.
275. In theory this judgement could be made by reducing by an equal proportion the attention paid
to gathering information relevant to each of the fa ctors listed in Article 3.4. Such an approach has
only to be stated for its illogicality to become a pparent. The illogicality has two bases. In the first
place, in any particular investigation some factors will almost certainly be more important than others.
276. In the second place, the difficulties for companies will vary between the factors depending on
whether they keep appropriate records. It might seem, to those inexperienced in these matters, that
one has but to direct a question at a company in order to obtain any business information that is
needed. In fact, companies have very clear ideas of what factors are important to them. These vary
from industry to industry, although an overall pattern is apparent. As regards the other factors, small
companies, in particular, may keep no records other than raw data that would require extensive
processing in order to be usable.
277. Thus, these two explanations are connected. Some factors are more important than others in
investigations, and companies keep better records of the information that is most critical to their well-
being. The initial Complaint presented by domestic producers is a prime indicator of those factors that
are most important.
278. In addition to those arising from Article 6.13, potential limits are set to the extent of the
examination carried out under Article 3.4 by the goal of an expeditious procedure that is laid down in
Article 6.14.
279. The conclusion that flows from this consideration of Article 6.13 and 6.14 is that the
obligation in Article 3.4 to consider injury factors cannot in principle be absolute in character. This
adds further support to the view that the evaluation of all of those factors is not compulsory.
280. Against the four considerations set out above, India relies for support on some simple
readings of the text of Article 3.4, and on a series of supposed precedents.
281. Regarding the precedents, as India’s Submission relates, there have been a number of disputes
in which GATT (or Code) and WTO bodies have applied themselves to the interpretation of
provisions of this kind. They have emphasised the requirement to examine all the listed factors.
282. The EC disagrees that the ATC and Safeguards Agreement precedents support India’s
position. First, the wording and context of the corresponding provisions of the ATC and Safeguards
Agreement are entirely different. In particular, the "injury factors" listed in those agreements are not
so extensive and they are not joined with the word "or".

283. Second the standard of adverse effects required in those agreements is higher than the
"material injury" required under the Antidumping Ag reement. As the Appellate Body stated most
recently in Argentina – Footwear,39
"The application of a safeguard measure does not depend upon "unfair" trade actions,
as is the case with anti-dumping or countervailing measures. Thus, the import
restrictions that are imposed on products of exporting Members when a safeguard
action is taken must be seen, as we have said, as extraordinary. And, when
construing the prerequisites for taking such actions, their extraordinary nature must
be taken into account."
284. The Appellate Body went on to emphasise the high standard of injury required under that
agreement, saying:
40
We note, in this respect, that there is a de finition of "serious injury" in Article 4.1(a)
of the Agreement on Safeguards, which reads as follows:
"serious injury" shall be understood to mean a significant overall
impairment in the position of a domestic industry. (emphasis added)
And we note that, in its legal analysis of "serious injury" under
Article 4.2(a), the Panel made no use whatsoever of this definition.
285. In addition, the EC would point out that injury caused by dumping is distinguishable from the
injury targeted by the ATC and the Safeguards Agreement in that dumping is an essentially price-
based practice and the analysis of injury under Article 3.4 of the Antidumping Agreement is made in
circumstances where the investigating authority will have already determined, pursuant to Article 3.1
and 3.2, that dumping has had an effect either on the volume of the dumped imports or on prices in
the domestic market.
286. According to Article 3.1:
A determination of injury for purposes of Article VI of GATT 1994 shall be based on
positive evidence and involve an objective examination of both (a) the volume of the
dumped imports and the effect of the dumped imports on prices in the domestic
market for like products, and (b) the consequent impact of these imports on domestic
producers of such products.
287. The analysis which is required by Article 3.4, and which India is complaining has not been
correctly conducted, is the additional analysis referred to in point (b) of Article 3.1 of the
consequential impact on the domestic industry of the primary effect of dumping which is the effect on
import volumes or prices in the domestic market.
288. The only precedent relating to the WTO Antidumping Agreement is the panel in Mexico –
HFCS that said, "the text of Article 3.4 is mandatory".41

39 Report by the Appellate Body on Argentina – Safeguard Measures on Imports of Footwear ,
WT/DS121/AB/R, 14 December 1999, at paragraph 94.
40 Id. paragraph 138.
41 Report by the Panel on Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, 28 January 2000, at paragraph 7.128:
In our view, this language makes it clear that the listed factors in Article 3.4 must be
considered in all cases. There may be other relevant economic factors in the circumstances of
a particular case, consideration of which would also be required. In a threat of injury case, for

289. However, the panel in Mexico – HFCS did not address several of the arguments developed
here. In particular, there was no discussion of the negative character of the factors in Article 3.4, the
use of the word "or", the differences between the factors listed in the various WTO agreements, and
the significance of Article 6.13 and 6.14 but rather a simplistic reliance on the inappropriate precedent
of the safeguard cases.
4. Conclusion
290. It will be recalled that India’s claim is that "the EC has acted inconsistently with Article 3.4
by not evaluating all relevant economic factors a nd indices mentioned in Article 3.4 of the Anti-
dumping Agreement". Thus, it is not a general claim that the EC has failed to apply Article 3.4
properly.
291. In response to India’s claim the EC has put fo rward three defences, set out in the preceding
paragraphs, which are to some extent alternatives. In summary, they are as follows. Firstly, in part (a)
the EC has argued that the factors listed in Article 3.4 were evaluated during the investigation.
Secondly, in part (b) it has shown how the factors listed in Article 3.4 are ones that are solely negative
in character, and as such were properly evaluated during the investigation. Finally, in part (c) it has
put forward various reasons for concluding that Article 3.4 does not require that every one of the
listed factors need be evaluated in every investigation.
292. If any of these defences is successful, India’s claim will fail. It is not necessary for the EC to
establish that its injury finding was in general satisfactory (although that is the case).
293. On this basis, the EC concludes that its authorities did not fail to satisfy the requirements of
Article 3.4 of the Anti-dumping Agreement in the way alleged by India.
E. C
LAIM 12: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1
294. This claim is covered by paragraphs 4.77 to 4.83 of India’s Submission. It is alleged that, in
respect of various factors listed in Article 3.4, the EC has not referred to "the matters of fact and law
which have led to arguments being … rejected" in the "public notice" imposing provisional measures.
295. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
F. CLAIM 13: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
296. India alleges (paras. 4.84 to 4.86) that the EC failed to provide the explanations and reasons
required by Article 12.2.2.
297. Article 12.2.2 requires the public notice of a measure imposing definitive duties to contain
"all relevant information on the matters of fact and law and reasons which have led to the imposition
of final measures" and in particular "the information described in subparagraph 2.1". The relevant
item in subparagraph 2.1 refers to "considerations relevant to the injury determination as set out in
Article 3".

instance, the AD Agreement itself establishes that consideration of the Article 3.7 factors is
also required. But consideration of the Article 3.4 factors is required in every case, even
though such consideration may lead the investigating authority to conclude that a particular
factor is not probative in the circumstances of a particular industry or a particular case, and
therefore is not relevant to the actual determination. Moreover, the consideration of each of
the Article 3.4 factors must be apparent in the final determination of the investigating
authority.

298. In recitals 40 to 41 of the Definitive Regulation the EC gave a detailed account of the factors
considered in its examination, including those listed in Article 3.4 that were relevant to its
determination. The identity of the relevant factors is explained in the EC’s response to Claim 11,
above.
299. As regards "relevant arguments or claims made by the exporters" Article 12.2.2 requires the
public notice to contain "reasons for [their] acceptance or rejection".
300. India quotes (para. 4.45) the Post-hearing Brief (Exhibit India-54) submitted on behalf of the
exporters to the EC authorities in February 1997, which contained criticisms of the domestic
industry’s Complaint for failing to include information on all the factors listed in Article 3.4.
However, this was the last occasion when the exporters raised this issue. Following the publication of
the Provisional Regulation (2 June 1997), they confined their comments to the particular factors that
were explicitly considered in that Regulation, and did not advert to the other factors listed in
Article 3.4.42 Nor was this matter raised in later communications from the exporters. 43 Thus, the
exporters’ concerns were directed at the original Complaint, and as such were not arguments relevant
to the decisions made by the EC authorities. Consequently, there was no requirement under
Article 12.2.2 for reasons to be given for their acceptance or rejection.
G. CLAIM 14: ALLEGED INCONSISTENCY WITH ARTICLE 6
301. This claim by India (in paras. 4.87 to 4.92) alleges that the EC has infringed Article 6.2, 6.4
and 6.9 of the Anti-dumping Agreement.
302. As explained in Section II.A of this Submission, this claim lies outside the jurisdiction of the
Panel.
H. CLAIM 15: ALLEGED INCONSISTENCY WITH ARTICLE 3.4
303. India alleges (in paras. 4.93 to 4.157) that the EC has infringed Article 3.4 in various ways
connected with the selection of data to establish injury.
304. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction. The explanations of the Provisional Regulation are adopted by the
Definitive Regulation in so far as that is necessary for the determination, but the text of the latter takes
priority.
1. Reliance on companies outside "domestic industry"
305. The first allegation of India is that the EC relied "on companies outside the domestic industry
in order to find injury".
306. In the Anti-dumping Agreement, the basic definition of domestic industry is found in the
chapeau of Article 4.1:
For the purposes of this Agreement, the term "domestic industry" shall be interpreted
as referring to the domestic producers as a whole of the like products or to those of
them whose collective output of the products constitutes a major proportion of the
total domestic production of those products …

42 Thus the Second Post-hearing Brief , dated 17 July 1997 (Exhibit India-55) referred to the
‘Production of the Community industry’, ‘Sales (value) of the Community industry’, ‘Employment situation of
the Community ‘industry’, ‘Market share of the Community industry’, and ‘Prices’.
43 See Disclosure comments submitted on behalf of Texprocil, 13 October 1997 (Exhibit India-60).

307. India’s introduction (paras. 4.115 to 4.120) to this part of its claim concentrates on the
definition of domestic industry for the purposes of the Anti-dumping Agreement. However, it focuses
on the terms "producers" and "like products", neither of which is relevant to India’s Claim. Rather, it
seems that India is concerned about references in the Provisional Regulation to production of producers
who were not among those defined for the purposes of the investigation as the domestic industry.
308. Throughout this investigation the EC applied the option in Article 4.1 of defining the
domestic industry as a group of producers whose collective output constituted a "major proportion of
the total domestic production" of the products in question.44
309. This approach provides the basis for the following arguments. However, although it is
permitted by the Anti-dumping Agreement, it is not required, and the actions taken by the EC
authorities in the bedlinen investigation are also justifiable on the basis that a Member may use both
definitions of the domestic industry in the course of a single investigation.
310. In this and other aspects of India’s arguments there appears to be confusion between, on the
one hand, evidence, and, on the other, the conclusi ons drawn from evidence. As regards injury, the
conclusions drawn from evidence must ultimately concern the domestic industry as defined in the
investigation. However, there is no intrinsic limit to the types of evidence that may be used to arrive at
such conclusions.
311. In particular, it surely cannot be excluded ab initio that the condition of EC producers as a
whole may provide evidence of the condition of those producers who comprise the domestic industry.
312. In its comments on production data, India attacks (paras. 4.123 to 4.130) the analysis
presented in recital 81 of the Provisional Regulation. However, the point that is made here is simply
that the increase in production of the "domestic industry" producers between 1992 and 1995/96 was
not a symptom of good health, but is explained by the disappearance of a great number of Community
producers during that period. It is explained in recital 41 of the Definitive Regulation.
313. India remarks (para. 4.130) that the evidence set out in the EC Regulations indicated "the
Community industry companies thrived". If companies with a profit level of 1.6 per cent can be
described as thriving, one wonders what word India uses to describe the profit levels achieved by
companies selling in its own market.
314. India similarly confuses evidence and conclusions in its comments on sales figures (paras.
4.131 to 4.133). In the textile industry sales and production figures are closely related. Producers do
not allow stocks to build up. Consequently what is true for production is usually true for sales.
315. In its discussion on market share (paras. 4.134 to 4.136) India in essence merely repeats the
points made in the preceding paragraphs about production and sales.
316. India returns to the same point in its discussion of employment data (in paras. 4.137 et seq.)
and again in discussing "Allegedly disappeared companies"
45.
317. All these allegations that the EC authorities based the finding of injury on the condition of EC
producers as a whole are explicitly denied in recital 40 of the Definitive Regulation where it is stated
that

44 See recitals 52 to 57 of the Provisional Regulation.
45 Despite its use of this phrase, it seems that India does not deny the fact that companies did disappear
from the business.

the principal basis for the finding of material injury was the reduced profitability and
price suppression of the Community industry as observed among the sampled
companies.
318. India’s arguments appear to rest on the notion that all the factors listed in Article 3.4 must
indicate injury. In reality, the nature of the injury suffered by the domestic industry will to some
extent depend on the way in which that industry responds to unfairly-priced imports. If it maintains
existing prices it is likely to suffer a decline in sales. If it lowers prices to match those of the imports it
may maintain sales volume and market share, but its profitability will suffer. Although what usually
occurs is something between these two scenarios, th e facts of the present case fell markedly towards
the lost-profit end of the spectrum.
2. Sampling
319. In paragraphs 4.145 to 4.150 India raises various points about the sampling method applied to
domestic producers in this investigation. Although various provisions of the Anti-dumping Agreement
are cited, it seems that what India is alleging is that the EC has failed to make an "unbiased and
objective"
46 evaluation of the factors and indices listed in Article 3.4. It contends that as a
consequence the EC is in breach of Article 3.4.
320. India expressly states in paragraph 4.145 of its First Written Submission that it
… takes no issue with the EC’s right to resort to sampling of the domestic industry
for the injury determination.
321. The EC, for its part, accepts that in assessing the impact of dumped imports on the domestic
industry in accordance with Article 3.4, a Member’s authorities are obliged to evaluate the established
facts in an unbiased and objective manner.
322. However, the allegations made by India create no suspicion of a failure by the EC authorities
to respect this standard.
323. In the first place India implies (para. 4.146) that there is some fault in the fact that a sample of
the producers constituting the "domestic industry" (in this investigation this was based on the "major
proportion" principle in Article 4.1) is likely to be "tilted" in comparison with the domestic producers
as a whole. India does not explain the nature of th is tilt, or explain how it constitutes an infringement
of Article 3.4.
324. Secondly, it suggests (paras. 4.147 to 4.148) that the sampling of the domestic industry was in
some way more favourable than that of the Indian exporters. The lack of agreement with the latter is
mentioned, as is (again) the issue of consideration of information on all domestic producers rather
than merely those in the "domestic industry". The implementation of sampling in regard to dumping is
of no relevance to the method used to determine the impact of dumped imports under Article 3.4. The
relevance of this provision to the range of companies whose data were taken into account has already
been considered (paras. 310 et seq.).
325. India also suggests that the application of sampling was "rigorous and mechanical" in the case
of the exporters but not with respect to the domestic industry. India does not substantiate this
allegation and in particular does not explain in what way the EC could have, but did not, take account
of data concerning exporters not part of the sample nor what difference this would have made. In any
event, it is clear that the calculation of the dumping margin, as a precise calculation, has to be

46 See paragraph 4.150 where India refers to Article 17.6(i) Antidumping Agreement.

"rigorously and mechanically" limited to the sampled companies. An assessment of injury requires a
broader range of information to be assessed; it is not a mechanical calculation.
326. It is said (paras. 4.149 and 4.150) that the EC should have confined its enquiry to the
companies in the sample. A sample was undertaken to give an indication of the condition of the
"domestic industry". When the authorities have information relating directly to the condition of that
industry it could be said that a possible infringement of Article 3.4 would arise not from using it but
rather from refusing to use it.
327. In any event, for reasons that have already been explained, notably in Section (a) above, the
EC was entitled under Article 3.4 to refer to the different levels of industry. It cannot therefore be
accused of failing to carry out an unbiased and objective evaluation. India puts forward no other basis
on which the EC might be found to have conducted a biased and unobjective evaluation.
3. Explanation of relevant level
328. India’s third basis for alleging that the EC infringed Anti-dumping Agreement Article 3.4 is
that it "at no point has indicated or made clear why exactly it relied on which industry level for each
injury factor" (paras. 4.151 to 4.157).
329. In this accusation India rehearses the complaints that have already been examined under this
claim. The EC’s response is likewise a repetition. In recitals 40 and 41 of the Definitive Regulation
the EC summed up the peculiar features of this investigation. In particular, the fact that, on some
criteria, the condition of the domestic industry, rather than suffering injury, appeared to be improving
slightly. In order to demonstrate the reality – that this improvement concealed price suppression and a
serious deterioration in profitability – it was necessary to look at the broader picture, in particular the
significant contraction in the overall number of domestic producers between 1992 and 1996. Thus it
could be said that the injury to the producers comprising the "domestic industry", which was
demonstrated by price suppression and declining profitability, was not offset by increasing sales,
market share, etc., because those increases were a consequence of the contraction in the total number
of EC producers.
330. The significant feature of the table summarising the data provided in the Provisional
Regulation, which is presented by India in paragraph 4.151, is that in respect of each injury factor
there is a figure for the "sample" and/or the "domestic industry". Recital 58 of the Provisional
Regulation explained that the sample was used "[B]ecause of the number of companies in the
Community industry". However, what a sample pr oduces is always an approximation to the true
figure for the domestic industry, so there can be no objection to presenting data for that industry when
it is available.
4. Conclusion
331. In conclusion it can be observed that none of the three bases put forward by India in this
Claim establishes any inconsistency with Article 3.4 in respect of the EC authorities’ use of data from
different levels of the bedlinen industry.
332. Finally, the EC repeats the point it made at the outset, that the Anti-dumping Agreement does
not prevent a Member using the alternative definiti ons of domestic industry envisaged in the chapeau
to Article 4.1 in the course of a single investigation, should it choose to do so.
I. C
LAIM 16: ALLEGED INCONSISTENCY WITH ARTICLES 6.10 AND 6.11
333. In this claim (paras. 4.158 to 4.161) India invokes provisions of Article 6 of the Anti-dumping
Agreement.

334. As explained in Section II.A of this Submission, this claim lies outside the jurisdiction of this
Panel.
J. CLAIM 17: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1
335. India alleges (paras. 4.163 to 4.170) that the Provisional Regulation did not satisfy the
publication requirements contained in Article 12.2.1.
336. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
K. CLAIM 18: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
337. In this claim India alleges (paras. 4.171 to 4.177) that the Definitive Regulation did not satisfy
the publication requirements of Article 12.2.2.
338. Since the explanations that the EC has provided to satisfy the requirements of Article 3
regarding injury were set out in the Definitive Regulation either directly, or by reference to parts of
the Provisional Regulation, those explanations also satisfy the requirements of Article 12.2.2.
339. Regarding the response in the Regulation to the comments made by the exporters, the claim in
paragraph 4.177 of the Submission is too vague to enable the EC to respond.
L. CLAIM 19: ALLEGED INCONSISTENCY WITH ARTICLE 3.4
340. India asserts (para. 4.194) that "the EC practice to automatically consider as "dumped" all
imports of bed linen from India in the years preceding the investigation period, is inconsistent with
Article 3.4." India is evidently referring to the period from 1992 to 1996.
341. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction. The explanations of the Provisional Regulation are adopted by the
Definitive Regulation in so far as that is necessary for the determination, but the text of the latter takes
priority.
342. Furthermore, as explained in Section II.A of this Submission, the whole of this claim lies
outside the jurisdiction of the Panel.
343. In any event, the EC rejects India’s assertion. There is no statement indicating such a practice
in either Regulation, nor have the authorities made any other statement that expressly or implicitly
supports such a view.
344. In addition, the statements attributed to the EC in paragraphs 4.189 and 4.190, even assuming
they are accurately recorded, do not support the contention that the EC authorities, having determined
dumping during the Investigation Period (usually one year), assumed that all imports during the
preceding period (usually 3 or 4 years) that were examined for certain injury data were also dumped.
Imports in previous years were examined in order to put the situation during the Investigation Period
into relief. The longer period is referred to by the EC as the ‘injury investigation period’. But this term
of art does not, contrary to India’s assertion (para. 4.192), imply dumping during that period.
345. India appears to be in confusion over the notion of "dumped imports", which is considered in
paragraphs 215 et seq. In the contested measure, as in the Anti-dumping Agreement, this term is
shorthand for "imports of products found to be dumped (in the Investigation Period)".

346. Most of the points made by India under this Claim refer to the use made by the EC authorities
of data concerning disappeared companies.
347. Thus, India asserts (para. 4.207) that the EC "at several instances puts great emphasis on
companies allegedly disappeared from the EC market in the period 1992-IP". However, India chooses
not to mention the single most explicit statement in the Regulations concerning the existence of
injury:
the principal basis for the finding of material injury was the reduced profitability and
price suppression of the Community industry as observed among the sampled
companies.47
348. Consequently, all India’s arguments that the EC authorities relied on the fact that many EC
companies ceased production in the years immediately preceding the Investigation Period are
misplaced. As the EC has repeatedly emphasised in this Submission, the EC authorities faced a
situation where, on some indicators, the health of the domestic industry was apparently improving.
The exporters would have looked askance if these facts had been ignored, and the conclusion had
been reached solely on the basis of profitability and price considerations. The information on the
contraction in the number of producers showed that what might otherwise have seemed a
contradiction was in fact a realistic scenario.
349. In paragraphs 4.208 to 4.212 India quotes from a number of recitals in the Provisional and
Definitive Regulations which contain statements to the effect that that the disappeared companies
should be taken into account in the injury analysis. None of these contradicts the fact that the EC
authorities found injury principally because of the domestic industry’s reduced profitability and price
suppression, and that the data of the disappeared companies was relevant to explaining the improved
position of the industry in regard to sales and market share.
350. It must therefore be concluded that India has provided no basis for its claim that the EC has
infringed Article 3.4.
M. C
LAIM 20: ALLEGED INCONSISTENCY WITH ARTICLE 3.5
351. India alleges (paras. 4.217 to 4.220) that "the EC acted inconsistently with Article 3.5 by
automatically considering all imports of bed linen from India in the period 1992-30 June 1995 as
"dumped"."
352. Since the EC authorities (as explained under the preceding claim) did not automatically
consider all such imports to be dumped, this claim must also fail.
353. In any event, the EC authorities addressed the issue of causation by the dumped imports in
recitals 95 to 99 of the Provisional Regulation. These reveal no inadequacy in the use of the concept
of dumped imports, which in all cases is used to apply to imports during the Investigation Period. The
issue of the inclusion within this term of imports at non-dumped prices is addressed in paragraphs 215
et seq., above. The relationship of volume and price described there is directly applicable to the issue
of causation covered in Article 3.5 through the reference to Article 3.2, which concerns both of these
factors.
354. It is remarkable that, for all its individual complaints about the measures taken by the EC
authorities, the only claim that India can make is one based on a misunderstanding of the EC’s
practice.

47 Definitive Regulation, recital 40.

N. CLAIM 21: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1
355. It is contended (paras. 4.221 to 4.229) that the EC failed to comply with Article 12.2.1.
356. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
O. CLAIM 22: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
357. This claim is addressed in paragraphs 4.230 to 4.234 of India’s Submission.
358. It seems to be claimed (para. 4.232) that th e EC failed to respond to the allegation that a
takeover of one company by another was not a sign of injury if production overall expanded. Recitals
40 and 41 of the Definitive Regulation identified the principal bases of the injury finding (loss of
profitability and price suppression), and explained how the increase of production and sales of the
"domestic industry" did not vitiate this conclusion. They therefore implicitly indicate that the issue of
takeovers was irrelevant to the EC authorities’ conclusion, and that the fact of increased production
was not determinative of the question of injury in this investigation. The requirements of
Article 12.2.2 regarding "relevant information" and "reasons for the … rejection of relevant
arguments" are therefore satisfied.
359. The point raised in paragraph 4.233 regarding restructuring is revealed, in the footnote, to be
essentially one about employment. In the recitals cited above, the Definitive Regulation makes clear
that employment was not a factor on which the EC relied in concluding that the domestic industry was
suffering injury. Consequently, the exporters’ "argument" on this point was not "relevant", and
therefore not one that need be addressed by the EC.
360. As regards the assertion in paragraph 4.234, since the EC did not regard imports prior to the
Investigation Period as constituting "dumped imports", it had no duty under Article 12.2.2 to explain
such a point in the Definitive Regulation.
361. Consequently, the EC denies any inconsistency with Article 12.2.2 in respect of this claim.
VI. CLAIMS REGARDING STATUS OF INDIA AS A DEVELOPING COUNTRY
A. C
LAIM 29: ALLEGED INCONSISTENCY WITH ARTICLE 15
362. India contends (paras. 6.1 to 6.53) that "the EC acted inconsistently with Article 15 of the
Anti-dumping Agreement by not exploring possibilities of a constructive remedy and by not even
reacting to arguments from Indian exporters pertaining to Article 15" (para. 6.1).
363. Article 15 reads as follows:
It is recognized that special regard must be given by developed country Members to
the special situation of developing country Members when considering the
application of anti-dumping measures under this Agreement. Possibilities of
constructive remedies provided for by this Agreement shall be explored before
applying anti-dumping duties where they would affect the essential interests of
developing country Members.
364. In so far as India alleges (para. 6.51) that the Provisional Regulation was in breach of the
requirements of Article 15, the EC recalls that, as explained at paragraph 22 above, claims regarding
the Provisional Regulation are not within the Panel’s jurisdiction.

365. India acknowledges (para. 6.22) that the first sentence of Article 15 "does not seem to create a
rock-solid legal obligation", and founds its claim on the second sentence.
366. The EC agrees that the second sentence does impose a legal obligation on Members.
367. It is not disputed that bedlinen producers are part of the textile industry, that this is an
"essential interest" of India, and that anti-dumping duties would "affect" this interest.
368. The practice of the EC when developing countries are involved in an anti-dumping
investigation is to give special consideration to the possibility of accepting undertakings from their
exporters. Unfortunately, the difficulty that frequently arises in relation to undertakings, that of
effective supervision, can also apply in the case of developing countries.
369. However, in this investigation, contrary to India’s assertion in paragraph 6.52, the immediate
reason why no undertaking was accepted was that none had been offered by the exporters within the
time limits set by the EC Basic Regulation. 48 These time limits are a reflection of those imposed by
Article 5.10 of the Anti-dumping Agreement, and the general obligation to manage investigations
expeditiously (Article 6.14 of the Anti-dumping Agreement).
B. C
LAIM 30: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.1
370. This claim is made in paragraphs 6.54 to 6.58 of India’s Submission.
371. As explained at paragraph 22 above, claims regarding the Provisional Regulation are not
within the Panel’s jurisdiction.
C. CLAIM 31: ALLEGED INCONSISTENCY WITH ARTICLE 12.2.2
372. India claims (paras. 6.59 and 6.60) that the EC failed to properly explain its reasoning, and to
react to the exporters’ arguments.
373. The practice of the EC in regard to Article 15, described in paragraph 368, is well-known to
exporters and their legal advisors. As India acknowledges (para. 6.52), the matter was discussed with
the exporters. The EC denies that every detail of the anti-dumping investigation need be included in
the public notice of determinations. The authorities have to strike a balance, and there is less need to
include details that have been explained to the interested parties during the course of the investigation.
On this basis the EC contends that, in regard to this claim, it has satisfied the requirements of
Article 12.2.2.
VII. CONCLUSIONS AND REQUESTS
374. The EC recalls its requests for preliminary rulings set out in Section II above.
375. For the rest, the EC requests the Panel to reject the requests for recommendations made by
India for the reasons set out above.

48 See the fax sent by the EC authorities to the exporters’ legal representatives on 22 October 1997,
reproduced in Exhibit India-52.

ANNEX 2-2
RESPONSE OF THE EUROPEAN COMMUNITIES TO PRELIMINARY
RULINGS REQUESTED BY INDIA
(5 May 2000)
Following India’s request for preliminary ruling, the European Communities welcome the
opportunity to present their comments to the Panel.
It is the belief of the European Communities that India’s request for preliminary ruling is
inadmissible. In its letter of 11 April 2000, in fact, India fails to explain what decision is actually
seeking from the Panel and limits itself to express its lack of understanding of the origin of the
document marked as Exhibit EC-4.
The document in question, as expressed in its heading, is a "summary", a recapitulative table
of the declarations of support that the European Communities’ industry had communicated to the
European Communities before its initiation of the anti-dumping investigation on imports of bedlinen
from India. As such, Exhibit EC-4 does not constitute new evidence. On the contrary, it simply
systematises the evidence on which the European Communities based its standing determination and
which, as indicated in the document’s last column, has always been available to India in a form or
another as part of the non-confidential file (to the point that India has been able to produce such
evidence as Exhibit India-59). The aim of this document in this proceeding is purely to help the Panel
understanding the lack of foundation of India’s claims on standing.
This said, the European Communities wish to further point out that nothing in the WTO
Agreements prevents the European Communities from presenting to the Panel in the course of the
current procedure evidence not made available during an anti-dumping proceeding.
In light of the nature of the preliminary rulings requested both by India and by the European
Communities, we expect that the Panel will rule on them no later than at the First Substantive Meeting
with the Parties.

I. INTRODUCTION
1. The case at issue is rather complex and has resulted in a number of claims by India.
However, the European Communities (to which we will from now on refer to as "the EC") believes to
have clearly highlighted in its First Written Submission the reasons why India’s claims are unfounded
and should be rejected.
2. Today, therefore, the EC will limit its inte rvention to a recapitulation of the main aspects of
the present case. In particular,
- I will deal with the preliminary issues and with the initiation phase of the EC anti-dumping
investigation;
- Mr Vidal Puig will address the determination of dumping effectuated by the EC;
- and Mr White will deal with the finding by the EC of injury caused.
3. In addressing these topics, the EC will take into account the valuable contribution offered by
the Third Parties’ interventions.
4. Before moving on to the procedural issues, th e EC would like to briefly recall one initial
point.
5. The EC notes that India has persisted in not addressing a number of claims originally
mentioned in its request for the establishment of a panel. In light of the Panel’s working procedures,
the EC considers that these matters are now outside the scope of the present Panel. Incidentally, the
EC wishes to apologise for the typing errors contained in paragraph 5 of its First Written Submission
and provides the correct references to the articles of the WTO agreements in a footnote to the written
text of this presentation.
1
II. PRELIMINARY RULINGS
6. On the preliminary rulings requested, the EC welcomes the invitation of the Panel to present
its comments on India’s response to its request for preliminary rulings.

1 Paragraph 5 of the First Written Submission of the European Communities should read:
“First of all, the EC notes that a number of claims that were mentioned in India’s request for the
establishment of a panel have not been included in India’s First Written Submission. In particular, India does
not claim in the Submission that:
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC did not adequately respond
to queries from India’s exporters on the issues of standing (Panel request, point 1);
- inconsistently with Article 12.1 Anti-dumping Agreement, the EC did not make available any
record of its examination of the allegations contained in the complaint and of its consideration
at the time of initiation of information pointing to lack of injury (Panel request, point 2);
- inconsistently with Article 12.2 Anti-dumping Agreement, the EC failed to state in a public
notice the reasons why provisional measures were judged necessary (Panel request, point 3);
- inconsistently with Article 2.4 Anti-dumping Agreement, the EC refused to grant a level-of-
trade adjustment (Panel request, point 8);
- inconsistently with Article 2.4.2 Anti-dumping Agreement, the EC was “comparing similar
sales channels for the determination as to whether ASG expenses are similar, while comparing
different sales channels for the determination as to whether the profits on branded goods were
higher” (Panel request, point 9);
- inconsistently with Article I of GATT 1994, the EC discriminated between exporting
countries with respect to the treatment of state-owned companies (Panel request, point 10).”

1. Claims not mentioned in the panel’s request
7. With regard to its first request of preliminary ruling, i.e. that the Panel should dismiss India’s
claims not mentioned in the Panel’s request, th e EC would like to make the following general
observation.
8. The norm that sets the standards for the reques t for the establishment of a panel is Article 6.2
of the Dispute Settlement Understanding. This norm provides, in the relevant part, that:
"The request for the establishment of a panel shall be made in writing. It shall
indicate whether consultations were held, identify the specific measures at issue and
provide a brief summary of the legal basis of the complaint sufficient to present the
problem clearly."
9. In Korea - Dairy Products 2, the Appellate Body has recently refined its previous findings on
the exact requirements of Article 6.2 DSU. In EC - Bananas, in fact, it had held that it was sufficient
for the complainants "to list the provisions of the specific agreements alleged to have been violated
without setting out detailed arguments as to which specific aspects of the measures at issue relate to
which specific provisions of those agreements". 3 In that occasion the Appellate Body had also
specified that the panel request needs be "sufficiently precise" for two reasons: first, because it forms
the basis for the terms of reference of the panel, and, second, because "it informs the defending party
and the third parties of the legal basis of the complaint". 4 Now, returning on the same issue, the
Appellate Body has clarified that the identification of the treaty provisions alleged to be violated is
"always necessary" and constitute a "minimum prerequisite" to present the legal basis of the
complaint. The Appellate Body has also specified that, if this might, in some cases, be enough to
meet the standard of Article 6.2 DSU, in other cases, for instance when an Article contains more than
one distinct obligation, the mere listing of articles of an agreement is likely to be not sufficient to
inform the defending party and any third parties of the legal basis of the complaint.
5
10. In the present case, the EC has requested the Panel to dismiss India’s claims not mentioned in
the request for the establishment of the Panel. India has agreed not to seek a ruling on Article 3.6 of
the Anti-Dumping Agreement.

2 Report by the Appellate Body on Korea – Definitive Safeguard Measure on Imports of Certain Dairy
Products, WT/DS98/AB/R, 14 December 1999.
3 Report by the Appellate Body on European Communities - Regime for the Importation, Sale and
Distribution of Bananas, AB-1997-3, WT/DS27/AB/R, 9 September 1997, at paragraph 141.
4 Ibid., at paragraph 142.
5 Report by the Appellate Body on Korea Dairy Products, cited above, at paragraphs 114 ff.

(i) Claim 16 – Articles 6.10 and 6.11 of the Anti-Dumping Agreement
11. With regard to Articles 6.10 and 6.11 of the Anti-Dumping Agreement, India argues 6 that it
had demonstrated its concern with these provisions during the consultation phases, and that its claim
is linked with claims regarding selection in the context of Article 3.
12. But, as we have just seen, for the purposes of bringing a matter within the jurisdiction of the
Panel, it is not sufficient merely to raise the topic during the consultation phase. The "always
necessary" "prerequisite" is a "sufficiently precise" identification of the treaty provisions alleged to be
violated.
13. It is quite common, in fact, for complainant Members to raise matters in the course of
consultations, and not pursue them before the Panel. Thus, in the present case, as well as Article 6 of
the Anti-Dumping Agreement, India had raised GATT Article VI in its consultation document
(WT/DS141/1), but did not invoke it either in its Panel request or anywhere else.
14. Furthermore, the EC does not accept that the use of selection in the context of Article 3 can be
used to bring any aspect of that notion within the jurisdiction of the Panel. Article 6 deals explicitly
with the concept of selection in the context of exporters and producers.
15. The only sense in which the two points are ‘linked’, as alleged by India, is that they relate to
the same general concept. The Agreement elaborates this concept in detail in the case of the dumping
enquiry. It might be argued that some aspects of that elaboration should be read into the provisions on
injury. However, this possibility is not now at issue. What is at issue is the objection raised by the
EC that India has not included the question of selection in the injury investigation as one of its claims.
(ii) Claim 14 – Article 6 of the Anti-Dumping Agreement
16. With regard to the EC’s request that the Panel does not consider India’s claims relating to
Article 6 of the Anti-Dumping Agreement, the EC understands that India
7 regards Claim 14 as merely
part of the context of Claim 13, as merely supporting that Claim. These assertions are not explained,
and their meaning is not evident in any of India’s submissions, except that now it appears that India
no longer regards ‘Claim 14’ as a separate head of claim.
17. It follows from this that India would not be prejudiced by and would not object to this claim
being dismissed.
(iii) Claim 19 – Article 3.4 of the Anti-Dumping Agreement
18. Finally, on Article 3.4 of the Anti-Dumping Agreement, India regards a reference to Article 3,
which explicitly directs attention only to paragraph 5, as sufficient to bring claims regarding any part
of that Article within the Panel’s jurisdiction. In citing the AB in Bananas III, India chooses to ignore
the later observations of the AB in Korea Dairy, referred to before.
19. Article 3 of the Anti-Dumping Agreement incl udes a diverse range of obligations covering
most of the issues that come under the rubric of injury. It would place an unreasonable burden on a
defendant Member to require it to prepare responses to all those obligations so as to be able to deal
with any aspect that the complainant may chose to pursue in its Submission. Furthermore, in the
present case, in point 13 of its panel request India explicitly directed attention away from paragraph 4
towards another part of Article 3.

6 See point 1.3.1 of Response of India to preliminary rulings requested by the European Communities.
7 See point 1.3.2 of Response of India to preliminary rulings requested by the European Communities.

20. As a consequence, the EC’s rights of defence have been prejudiced, and third parties have
been denied due notice of the subject matter of the proceedings.8
21. Finally, the mere fact that a defendant Member attempts to provide an answer to a claim that
is raised for the first time in a complainant’s submission does not justify the conclusion that its rights
of defence have been respected.
2. Claims in relation to the provisional regulation
22. The second EC’s request for preliminary ruling regards India’s claims in relation to the
Provisional Regulation. India confirms in point 3 of its Response to preliminary rulings requested by
the EC that its complaint is directed only against the Definitive Regulation. This is, as India states in
paragraph 2 of its First Written Submission, the ‘measure at issue’.
23. The EC agrees, for its part, that India can base arguments in support of its claims that the
Definitive Regulation is inconsistent with the EC’s WTO obligations on statements in the Provisional
Regulation that are incorporated unchanged into the Definitive Regulation.
24. India has therefore agreed to drop claims 2, 5, 9, 12, 17, 21, 24, 27, and 30. For the remaining
claims mentioned by the EC in this regard it is su fficient for the Panel to note that they are directed
exclusively at the Definitive Regulation.
3. Verbatim reports of consultations
25. Thirdly, the EC requests the Panel to find that the verbatim reports of consultations, submitted
as evidence by India, are inadmissible and will be disregarded.
26. On this point, and in response to India's assertions regarding the "absolute accuracy" of the
so-called "verbatim reports", the EC can only reiterate that they do not reflect accurately the views
expressed by the members of the EC delegation during the consultations. The reports were not
provided to the EC delegation and have never been approved by any EC official. The disagreement
between the two parties regarding the accuracy of the reports furnishes the best proof that they cannot
be considered as reliable evidence. In substance, India's position amounts to saying that one party
should be allowed to create its own evidence, a notion which is at odds with the most basic
considerations of procedural fairness.
27. Furthermore, the EC denies India's unsupported allegations of lack of respect for the basic
objectives of the consultation process. In any event, since India has made no claim in respect of such
alleged lack of respect, the EC does not understand the relevance of the topic to the present
proceedings.
4. Use of confidential documents
28. Finally, the EC is not in a position to comme nt on India’s answer to its preliminary request
that confidential documents be not considered part of this proceeding. In fact, the EC has not yet had
a chance to see Exhibit India-81, which is supposed to contain the written approval of the producer
concerned, and therefore to verify its authenticity.

8 Report by the Appellate Body on Brazil - Measures Affecting Desiccated Coconut , AB-1996-4,
WT/DS22/AB/R, 21 February 1997, at sec. VI.

III. CLAIMS REGARDING THE INITIATION OF THE INVESTIGATION
29. Moving on to the issues related to the initiation by the EC of the anti-dumping investigation,
India has alleged infringements, on the part of the EC, of both Article 5.3 and Article 5.4 of the Anti-
Dumping Agreement.
1. Examination of evidence in the complaint
30. With regard to Article 5.3, India claims that the EC has violated this norm because it has not
‘examined’ the allegations in the Complaint on the state of the domestic industry before initiating the
investigation.
31. The EC has explained at length in its First Written Submission why India ’s claims are
unfounded with regard to both the facts of the case and the interpretation of the requirements of
Article 5.3. Therefore, today the EC will only summarise some of its arguments.
32. In particular, the EC wishes to recall that the text of Article 5.3 states that:
"The authorities shall examine the accuracy and adequacy of the evidence provided in
the application to determine whether there is sufficient evidence to justify the
initiation of an investigation."
33. From the ordinary meaning of the text of Ar ticle 5.3, read in conjunction with Article5.2,
which constitutes its immediate context, it is clear that the evidence contained in a complaint has to be
regarded as accurate and adequate for the purpose of initiating an anti-dumping investigation if it
covers the topics listed in Article 5.2 and it is sufficiently credible. No duty exists on the
investigating authorities to collect evidence additional to that in the complaint. In other words, the
standard of proof required to initiate an anti-dumping investigation is more than a mere allegation or
conjecture but it is less than that appropriate to a preliminary or final determination of dumping and
injury.9
34. In the case at issue, the EC authorities examined the information contained in the complaint in
light of the requirements contained in Articles 5.3 and 5.2. As is usually the case, some of the
information in the complaint derived from publicly-available sources, and could therefore be checked,
whereas some was known only to the complainants. The Community authorities determined that the
evidence provided was sufficient to justify initiation of the proceedings. (It has to be noticed that, in
the case at issue, information gained during a prev ious investigation on bedlinen was available to the
investigating authorities when they considered the issue of "sufficient evidence", and this facilitated a
better-informed decision.) In accordance with Article 12.1 of the Anti-Dumping Agreement, the
decision taken was recorded in the Notice of Initiation.
10 The relevant language can be found under
heading 5 of the Notice of Initiation, regarding "Procedure for determination of dumping and injury":
"Having determined, after consulting the Advisory Committee, that the complaint has
been lodged by or behalf of the Community industry and that there is sufficient
evidence to justify the initiation of proceedings, the Commission has commenced an
investigation pursuant to Article 5 of Regulation (EC) No 384/96."
35. No other action was required at this stage of the procedure from the EC authorities. In
particular, contrary to India’s assertion, no obligation exists in Article 5.3 of the Anti-Dumping

9 Report by the Panel on Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, adopted 28 January 2000, at paragraphs 7.94 and 7.97.
10 Notice of initiation of anti-dumping proceedings concerning imports of cotton-type bed linen
originating in Egypt, India and Pakistan, in OJ No C 266, 13.9.96, p.2 (Exhibit India-7).

Agreement to maintain on file a record of the ex amination of the evidence or to make a separate
report available to the Indian exporters (exporters which are identified only sometime after the
initiation decision).
2. Public notice and explanation of determinations
36. On this regard, the EC feels it necessary to point out once again, for the benefit of India, that
the issue of public notice and explanation of determinations are specifically dealt with by another
norm of the Anti-Dumping Agreement, i.e. Article 12. The structure of this norm is quite
straightforward. Initiation issues are dealt with by paragraph 1, while paragraph 2 covers the
measures adopted during and after the investigation, that is provisional measures, definitive measures
and undertakings.
37. In the present dispute India has chosen not to invoke Article 12.1. Now, it cannot circumvent
that decision by seeking to find a parallel obligation to publish within Article 5.3. And, if there had
ever been a doubt about this, this is now solved. The Panel in Mexico – HFCS clearly stated that11:
"Article 5.3 cannot be interpreted to requi re the investigating authority to issue an
explanation of how it has resolved all underlying questions of fact at initiation. That
is a requirement that arises at later stage of the proceeding, and is explicitly set forth
in Article 12.2".
38. Similarly, India’s cannot find parallel obligations in Article 12.2.2 of the Anti-Dumping
Agreement. This norm, in fact, only requires the Member concerned to deal, in the public notice of
conclusion, with all relevant arguments or claims. And, India’s allegations regarding the initiation of
the investigation are not relevant to the definitive m easure. This is clear from the fact that, even if,
during the course of the investigation, information became available which caused the authorities to
conclude that they had been mistaken regarding the sufficiency of the evidence for the purposes of the
initiation decision, that would not in itself be a basis for halting the investigation. This is confirmed
by Article 5.8 of the Anti-Dumping Agreement which specifies the instances in which an
investigation is to be terminated.
3. Determination of standing
39. Moving on to analyse the issue arising under Article 5.4 of the Anti-Dumping Agreement,
India claims a violation of this norm on part of the EC for failing to determine the standing of the
domestic industry.
40. Contrary to India’s claim, and as evidenced both by the Notice of Initiation and by the non-
confidential file of the investigation, the EC authorities did check the standing of the domestic
industry. In particular, the evidence on which the EC authorities relied at the time when the decision
to initiate the investigation was made consisted of the following:
- Forms issued by Eurocoton (the European pro ducers association) and completed by individual
producers, indicating support for the complaint and giving production in 1995;
- Faxes sent by national producers to a national association giving production data for 1995, in
response to a request from the association for information to support the complaint;
- Various other communications from producers associations indicating the nature and degree
of support for the complaint.

11 Ibidem, at para. 7.110.

41. On the basis of the production levels, the EC authorities estimated that the support provided
by the first two categories of producers alone represented at least 34 per cent of the highest figure of
total EC production. Consequently, it is clear that the complainant did satisfy the 25 per cent
threshold set in Article 5.4.
42. This said, the EC considers unnecessary to debate here, today, the issue of the validity of the
support expressed by a trade association. However, the EC wishes to reaffirm that there is no doubt
that when the phrase "expressed by domestic producers" in Article 5.4 is considered in its context, and
in the light of the object and purpose of the Agreement, this is capable of including expression of
support by a trade association. In this regard, the EC believes to have clearly highlighted in its First
Written Submission the reasons why India’s interpre tation of Article 5.4 not only is wrong, but also
discriminates against small firms who join trade associations with the precise aim to be able to
address issues as complex as anti-dumping.
43. India tries to find obligations related to the decision on standing also in Article 12.2.2. As
explained before, the obligation in Article 12.2.2 is to respond to relevant arguments. The arguments
presented by the exporters regarding the degree of support for the original complaint in the bed linen
investigation were not relevant in the present case at the point at which they were posed because the
determinations to impose provisional and definitive measures do not constitute appeals from the
initiation decision.
44. It is in Article 12.1 that the Anti-Dumping Agreement deals with the obligation to publicise
details of the initiation decision. That provision does not require details of the level of support. And
if this level of details is not required by Article 12.1, it can hardly be the intention of the Agreement
that they should have be to be supplied under Article 12.2.2.
IV. CLAIMS REGARDING THE DETERMINATION OF DUMPING
45. India has submitted three main claims regarding the determination of dumping made by the
EC authorities :
- the first claim is that the EC authorities determined the amount for SGA and profit included in
the constructed normal values inconsistently with Article 2.2.2;
- the second claim is that the EC authorities acted inconsistently with Article 2.2 by including
an "unreasonable" amount for SGA and profit in the constructed normal values;
- the third claim is that the EC authorities acted inconsistently with Article 2.4.2 by "zeroing"
the dumping margin for those product types for which the dumping margin was zero or less
when calculating the overall dumping margin.
46. In addition, India has raised a number of ancillary claims under Article 12.2 of the Anti-
Dumping Agreement. We do not purport to address those claims in our statement. As shown in our
written submission, those claims are unfounded. In addition, those based on Article 12.2.1 are outside
the terms of reference of the Panel.
1. Alleged inconsistency with Article 2.2.2
47. India has put forward three different arguments in support of its claim under Article 2.2.2
48. India’s first argument is that the method set out in Article 2.2.2(ii) does not allow the use of
SGA and profit data from a single company.

49. India’s argument relies on a purely literal interpretation of individual words of
Article 2.2.2(ii) such as «average» and «other producers and exporters» (in the plural). That approach
is at odds with the basic principles of treaty interpretation enshrined in Article 31 of the Vienna
Convention. When the terms invoked by India are read in their context and in light of the object and
purpose of the Anti-Dumping Agreement, it becomes evident that Article 2.2.2(ii) does not require a
minimum number of companies to be used.
50. An «average » is normally based on more than one figure. This does not mean, however, that
Article 2.2.2 (ii) becomes inapplicable whenever the circumstances of a case are such that the pool of
data to be averaged happens to contain just one item.
51. Similarly, the examples provided by the EC and by the US evidence that the term «exporters
or producers» cannot be read as excluding a single exporter or producer without creating absurd
results throughout the Anti-Dumping Agreement. Indeed, India has admitted as much this morning,
and now argues, rather unconvincingly, that it is the presence of a "triple plural" which requires a
different reading in this case.
52. India is aware that its literalistic approach is unconvincing. Thus, it makes a failed attempt to
provide some logical rationale for its contrived interpretation of Article 2.2.2 (ii) by asserting that the
use of data from two companies is intrinsically more «reasonable» than the use of data from one
single company. That proposition is clearly unsustainable. More important than the absolute number
of exporters is whether the exporters are representative of the conditions prevailing in the domestic
market for the product concerned. For example, a weighted average of the profit margins obtained by
two exporters with less than 1 per cent each of the domestic market would be, if anything, less
representative, and therefore less «reasonable», than the profit margin of a single company which, like
Bombay Dyeing, accounts for almost 80 per cent of the domestic market. (In comparison, Standard
accounted for 14 per cent of that market. Standard was excluded from the sample, because its exports
to the EC were minor)
53. India’s second argument is that the method set forth in Article 2.2.2(ii) does not allow the
exclusion of sales not made in the ordinary course of trade in calculating the amount for SGA and
profits.
54. India’s argument relies largely on a mere a contrario inference. Unlike the method set out in
the chapeau, Article 2.2.2 (ii) contains no express requirement to the effect that sales not made in the
ordinary course of trade must be excluded from th e calculation. From this, according to India, it
would follow that those sales should be included. India also makes much of the fact that Article 2.2.2
(ii) uses the terms «actual amounts incurred or realized» instead of «actual data».
55. Neither argument, however, is persuasive. The simple truth is that the ordinary meaning of
Article 2.2.2 (ii) does not require either the inclusion or the exclusion of sales not made in the
ordinary course of trade.
56. In addition to not being required by the ordinary meaning of Article 2.2.2 (ii), India’s
interpretation is at odds with the overall operation of Article 2 and would produce absurd results.
57. The exclusion of the sales not in the ordinary course of trade is part of the basic definition of
dumping contained in Article 2.1 of the Anti-Dumping Agreement.
58. Consistent with that definition, Article 2.2 provides for the construction of normal values
where there are no domestic sales in the ordinary course of trade. Article 2.2.2 then lays down
specific rules for calculating the amount for SGA and profits to be included in the constructed value.
Those rules purport to arrive at a result which is as close as possible to the normal value that would
have been determined on the basis of domestic prices, had there been sufficient sales in the ordinary

course of trade. Therefore, it is only logical if those rules exclude sales not made in the ordinary
course of trade from the calculation of the amount for SGA and profits.
59. India’s interpretation would have the perverse consequence that, although the absence of sales
in the ordinary course of trade is one of the reasons for constructing the normal value, the constructed
normal value could be based on sales not made in the ordinary course of trade. In other words, India’s
interpretation would lead to the very outcome which Article 2.2 seeks to avoid.
60. Furthermore, India’s interpretation would produce the bizarre result that the profit margin
included in the normal value of an exporter with sales in the ordinary course would be higher than the
amount for profit contained in the constructed value of those exporters without sales in the ordinary
course of trade.
61. The example provided by India at paragraph 49 of its Oral statement does not refute this.
India’s example only goes on to demonstrate the obvious proposition that, had the EC used a lower
profit margin, the dumping margins would have been also lower.
62. India’s interpretation implies that the use of sales not in the ordinary course of trade is not
objectionable as long as the data come for other producers or exporters. That distinction, however,
has no rational basis whatsoever: sales not in the ordinary course of trade are just as unreliable when
they are made by the exporter concerned as when they are made by another producer or exporter.
Indeed, it is significant that India has not even attempted to provide a rationale for its interpretation of
Article 2.2.2 (ii), beyond the purely textual arguments mentioned before.
63. India’s third argument is that the options set out in subparagraphs (i), (ii) and (iii) of
Article 2.2.2 must be attempted in that order.
64. This argument finds no support whatsoever in the wording of Article 2.2.2. The three sub-
paragraphs of Article 2.2.2 contain no feature suggesting that one is to be applied in preference to
another. In contrast, Article 2.2.2 lays down an ex plicit hierarchy between the chapeau and the three
alternatives that follow.
65. The absence of any textual support for this argument is implicitly acknowledged in India’s
nebulous claims to the effect that the EC «violates the spirit and structure of Articles 2.2.2 and 2.2 »
or that the existence of a preference is clear « from the context of the Article and the very concept of
dumping».
66. More specifically, India seeks to establish the priority of subparagraph (i) by arguing that
dumping is a «highly producer-specific » concept. Dumping determinations, however, are not only
producer-specific but also product-specific. Dumping margins are determined, and anti-dumping
duties are imposed, with respect to imports of a like product, and not with respect to the complete
range of products manufactured by a given producer. This is reflected in the chapeau of Article 2.2.2,
which expresses a preference for the use of actual data of the producer or exporter under investigation
concerning sales of the like product.
67. If anything, for the reasons explained in our written submission, the option in
subparagraph (ii) would be more realistic from an economic point of view, since the level of profits
for a certain product is determined to a large extent by market factors affecting equally all the
producers, rather than by producer-specific factors.

2. Alleged inconsistency with Article 2.2
68. Let me turn now to India’s second substantiv e claim, i.e. that the EC authorities acted
inconsistently with Article 2.2 by including an «unreasonable» amount for SGA and profits in the
constructed normal values.
69. Contrary to what is argued by India, Article 2.2 does not establish a supplementary
«reasonability» test, different from that embodied in Article 2.2.2.
70. Article 2.2 enounces the general requirement th at the amount of SGA and profit included in
the constructed normal value must be «reasonable». That requirement is elaborated in Article 2.2.2,
which sets out a series of specific formulae for arriving at that reasonable amount.
71. The amounts for SGA and profit established pursuant to the method set out in the chapeau
and in subparagraphs (i) and (ii) of Article 2.2.2 ar e always "reasonable". This is not a refutable
presumption, but rather a presumption iuris et de iure . This is confirmed by the wording of
subparagraph (iii) which commences with the word s "any other reasonable method". Those words
imply necessarily that the preceding methods are "reasonable" per se.
72. India contends that Article 2.2.2 only purports to regulate the "procedural" aspects (how SGA
and profits are to be established) and not the "substantive" aspects (whether those amounts are
reasonable). That interpretation, however, is refuted by the structure of Article 2. Article 2.2.2 is
subordinated to Article 2.2 (Article 2.2.2 commences with the words « For the purpose of paragraph 2
(of Article 2.2)»). Therefore, it is clear that the obligations imposed by Article 2.2.2 are not
cumulative to the general reasonability requirement set out in Article 2.2. Rather, they are a
development of that requirement. Furthermore, what could be the purpose of defining purely
«procedural » rules for calculating the amount for SGA and profits?
73. India is also completely mistaken in sugge sting that the proviso set out in the third
subparagraph applies also to the other two subparagr aphs. Such an interpretation is completely at
odds with the ordinary meaning of Article 2.2.2. That proviso has been inserted in the third
subparagraph because, unlike the chapeau and the first two subparagraphs, the third subparagraph
does not specify a formula for calculating the reasonable amount. That the drafters considered it
necessary to attach the proviso only to the third subparagraph provides further confirmation of the
intrinsic reasonability of the preceding methods.
74. Even assuming for the sake of argument that the presumption that the method set out in
subparagraph (ii) is reasonable per se could be overturned, India has presented no relevant evidence to
that effect.
75. Profit margins may vary considerably from one country to another, as well as among different
product markets, depending on the prevailing competitive conditions. Therefore, a profit margin is
not "unreasonable" simply because it is higher than the margins obtained in other markets.
76. The «reasonability» of the amount for profit should not be considered in the abstract, but
rather in the light of the object and purpose of Article 2.2.2, which, to repeat, is to arrive at a
constructed value as close as possible to the normal value that would have been determined on the
basis of domestic prices, had there been comparable sales in the ordinary course of trade.
77. What matters, therefore, is whether the amount for profit is representative of the conditions
prevailing in the market concerned. The representativity of the margin used by the EC authorities is
beyond question, since Bombay Dyeing accounted for almost 80 per cent of the sales in the domestic
market.

3. Alleged inconsistency with Article 2.4.2
78. We will conclude this section of our statement by addressing India’s claim under
Article 2.4.2, i.e. that the EC authorities acted inconsistently with Article 2.4.2 by "zeroing" the
dumping margin for those product types for which the dumping margin was zero or less when
calculating the overall dumping margin.
79. This claim rests on a basic misunderstanding of the scope of the obligations imposed by
Article 2.4.2. The simple answer to India ’s claim is that the «zeroing » practice to which India
objects is not covered by Article 2.4.2.
80. The first option presented by Article 2.4.2 does not require a comparison of the weighted
average normal value with the weighted average of all export sales of the product under investigation.
Instead, Article 2.4.2 requires a comparison « with a weighted average of prices of all comparable
export transactions ». This is precisely what the EC authorities did in this case: they compared the
weighted average normal value for each product type with the weighted average price of all exports
sales of the same product type. The « zeroing » took place only at the subsequent stage of combining
the dumping margins determined for each type in accordance with Article 2.4.2 into a single dumping
margin. That stage of the calculation, however, is not subject to Article 2.4.2.
81. India’s interpretation would read out of Article 2.4.2 the term «comparable». Moreover,
India’s interpretation of Article 2.4.2 would upset the finely balanced compromise achieved by the
negotiators of the Anti-Dumping Agreement. As confirmed by the Audio Cassettes report
12, there is
nothing inherently "unfair" about "zeroing". In spite of that, Article 2.4.2 purports to give partial
satisfaction to those Members which, like Japan, had objected to the average-to-transaction
methodology used by some other Members, such as the EC or the US. It would be a mistake,
however, to assume that simply because Article 2.4.2 now provides for the use of an average-to-
average methodology at the first stage of the dumping margin calculation, the same methodology
should be extrapolated to the entire process.
82. As a final comment, the EC would like to note that the example provided by India this
morning as Annex to its Oral Statement totally mi srepresents the method applied by the EC in this
case. Contrary to what is misleadingly stated in India’s example, the EC did not compare the
weighted average normal value to the "transaction by transaction export price". The EC compared the
weighted average normal value to the weighted average export price of all sales of the same type.
India’s example seeks to obfuscate the difference between those two methods by presenting the Panel
with an example in which there is just one transaction of each model.
V. CLAIMS REGARDING INJURY
83. We now come to the claims concerning injury (Claims 8 – 22). These have been discussed in
some detail by the EC in its First Written Submissi on. For the purposes of this meeting, the EC will
concentrate on three sets of issues :
- First whether the use of the term "dumped imports" in Article 3 means that an investigating
authority must try to ascertain whether material injury is being caused exclusively by
transactions which are dumped or whether it requires an examination of overall imports of
the product under consideration which is found to be the subject of dumping;
- Second, whether it is necessary in assessing the impact of dumping on the domestic industry
to evaluate all the possibly relevant factors listed in Article 3.4 of the Agreement;

12 Panel report on EC – Anti-dumping Duties on Audio Tapes in Cassettes originating in Japan ,
ADP/136, distributed on 28 April 1995, unadopted, at paras. 347-366.

- Finally, for what part of the domestic industry must material injury be established.
1. The meaning of the term "dumped imports"
84. The first difference between the EC and India arises from the fact that India understands the
term "dumped imports" in Article 3 Antidumping Agreement as referring to dumped imports of
particular items of merchandise. Accordingly, it claims that an investigating authority must somehow
determine that material injury is being caused by certain transactions. The EC however, understands
this term as referring to dumped imports of a product of a certain description and that it is therefore
only necessary to show that a product of a certain description is dumped and is causing material
injury.
85. The EC has provided in its First Written Submission many arguments why its interpretation is
correct. I will not repeat them, but just try to illustrate them with some further remarks.
86. The first point to make is rather systemic in nature. It is that an antidumping investigation as
envisaged in the Antidumping Agreement and carried out by the EC is opened into imports of a
product of a certain description from a certain country or countries in respect of which there is reason
to believe that they are occurring under conditions of dumping. This imported product is termed the
"product under consideration" in Article 2.6 Antidumping Agreement but is sometimes, rather
inaccurately, termed the "like product," – a term wh ich is more properly reserved for the equivalent
products sold on the domestic market of the exporter or produced by the importing country’s domestic
industry. In any event, the investigation is not into a single item of merchandise or even a series of
articles of merchandise (transactions), but into this "product under consideration," that is a product of
a certain description. It is only this that can cause injury and for which a dumping determination is
necessary, not the individual items of merchandise or transactions.
87. Individual transactions are of course investigated for the purpose of establishing and
measuring this dumping. The purpose of the investigation is to establish whether dumping of the
product under consideration is taking place that is causing material injury to the domestic industry
producing the " like product" and the level of offsetting antidumping duty that is appropriate.
88. As the EC has explained in its First Written Submission, this is clear from the terms used in
Article 3 but also from the context. Article 2.1 Antidumping Agreement makes perfectly clear that the
existence of dumping is to be determined for a country at the level of the product under consideration.
This product is to be compared with the like product destined for consumption in the exporting
country. A like product can only be a product of a certain description, not an individual item of
merchandise.
89. Against this, it has been objected that a product under consideration or "like product" cannot
have an export price and that therefore Article 2 mu st be referring to dumping of individual items of
merchandise so that dumping has to be established at least for each transaction. Such reasoning
ignores however the context of the rest of Article 2 which explains in some detail how to make this
comparison for the entire category of product under consideration.
90. Article 2 allows (or may even require) the product under consideration (i.e. investigation)
from a country to be divided up by exporter and type in calculating the margin of dumping. But the
determination of dumping is still made for the product under investigation and the country.
91. The second point that the EC would make here is that the approach advocated by India is in
any event quite impossible to follow.

92. Most obviously, a determination of material injury caused by dumped imports has to be made,
according to Article 3.1, for the domestic market for, and the domestic producers of, the like product.
This can only result from an overall assessment. The market situation is determined by the overall
impact imports.
93. Also Article 5.7 of the Anti-Dumping Agreement requires that:
The evidence of both dumping and injury shall be considered simultaneously
The fact that injury has to be investigated before it is established which transactions are
dumped, further confirms that the term "dumped products" used in connection with the injury
provisions of Article 3 must be referring to all imports of the product under consideration.
94. Finally on this point, the EC would point out that the interpretation advanced by India now
has never, as far as the EC is aware, ever been applied by any Member of the WTO or any party to the
Codes. Nor, until now, does it seem to have ever been seriously proposed.
95. Indeed, in the Salmon cases (decided under the Anti-Dumping and Subsidies Codes, which
used the same term) the Panels used the phrase "imports under investigation" as a synonym for
"dumped imports". Thus, in discussing the requirement (that is now in Article 3.5 of the Anti-
Dumping Agreement) to examine causes other than the "dumped imports", such as "the volume and
prices of imports not sold at dumping prices", it contrasted these with "the imports under
investigation".
13 Thus, "dumped imports" were regarded as all imports of the product under
investigation coming from the country found to have been dumping. Furthermore, the Panels
assumed that this interpretation applied to the earlier paragraphs of Article 3.14
96. This analysis shows that the term "dumped imports" in Article 3 Anti-Dumping Agreement
refers to all imports of the product in question from the country found to be dumping. Consequently,
the EC is not in breach of the provisions of Article 3 for failing "to examine dumped transactions only
for the purpose of the determination", as alleged by India.
2. Is it necessary in assessing the impact of dumped imports on the domestic industry to
evaluate all the possibly relevant factors listed in Article 3.4 of the Agreement.
97. India claims
15 that "the EC has acted inconsistently with Article 3.4 Antidumping Agreement
by not evaluating all the economic factors and indices mentioned in that provision. It considers that
there exists a general obligation in all cases to evaluate all of these factors. It is not arguing that it is
because of the circumstances of this particular case that the factors should be evaluated.
98. The EC has explained in its First Written Submission:
- Firstly, that the factors listed in Article 3.4 were evaluated during the investigation.
- Secondly, how the factors listed in Article 3.4 are negative in character, and as such were
properly evaluated during the investigation.

13 Report by the Panel on United States - Imposition of Anti-Dumping Duties on Imports of Fresh and
Chilled Atlantic Salmon from Norway, ADP/87, 27 April 1994, at paragraph 552; Report by the Panel on
United States -Imposition of Countervailing Duties on Imports of Fresh and Chilled Atlantic Salmon from
Norway, SCM/153, adopted on 28 April 1994, at paragraph 316.
14 Ibid., paragraphs 555, and 321.
15 Paragraphs 4.56 to 4.76 of India’s First Written Submission.

- Thirdly, and subsidiarily, that Article 3.4 does not require that every one of the listed factors
need be evaluated in every investigation.
99. The EC will not dwell orally on the first point – that all the factors were evaluated. This is
most conveniently illustrated in Table 4 and the accompanying text to the EC’s First Written
Submission.16
100. This first point already disposes of India’s claim. But the EC also attaches importance to the
second and third points because they are relevant to a proper understanding of other claims and
because the EC would like to ensure that the incorrect interpretation of Article 3.4 which have been
advanced be decisively rejected. Article 3.4 must be properly interpreted according to the ordinary
meaning of its terms in their context and in the light of the object and purpose of the Anti-Dumping
Agreement.
101. The first point to make is that Article 3.4 does not contain a list of injury factors in the same
way as Article 4.2 of the Safeguards Agreement and Article 6 of the Agreement on Textiles and
Clothing (ATC).with which it is often compared . The injury factors to be examined in an
antidumping investigation are listed in Article 3.1 of the Agreement. Article 3.4 is merely providing
guidance for conducting one element of the in jury analysis. This analysis is the additional analysis
referred to in point (b) of Article 3.1 of the consequential impact on the domestic industry of the
primary effect of dumping which is the effect on import volumes or prices in the domestic market.
102. This is why, the factors mentioned in Article 3.4 are, as the EC explained in its First Written
Submission, all negative in character. An examination of the factors listed in Article 3.4 is not
intended to serve the purpose of ensuring that injury caused by other factors is not attributed to
dumping (as is the case of the above mentioned safeguard provisions).
103. In the Antidumping Agreement this is a separate and subsequent exercise set out in Article 3.5.
This provides that :
The authorities shall also examine any k nown factors other than the dumped imports
which at the same time are injuring the domestic industry, and the injuries caused by
these other factors must not be attributed to the dumped imports. Factors which may
be relevant in this respect include, inter alia, the volume and prices of imports not
sold at dumping prices, contraction in demand or changes in the patterns of
consumption, trade restrictive practices of and competition between the foreign and
domestic producers, developments in technology and the export performance and
productivity of the domestic industry.
104. The "other factors" examination is subsequent because Article 3.5 says that it must be
examined if they are not also causing injury and it is separate because Article 3.5 contains its own list
of potential factors separate from that in Article 3.4. The EC notes that India has nowhere claimed
that the EC failed to conduct an "other factors" analysis as required by Article 3.5 Antidumping
Agreement.
105. As the EC explained in its First Written Submission, the purpose of the examination under
Article 3.4 is to determine what is wrong with the domestic industry, not what is right with it.
106. Indeed, since the purpose of Article 3.4 is to determine the extent to which dumped imports
are having a negative impact on the domestic industry, even if India were correct in its complaint that
the EC did not evaluate all the relevant Article 3.4 factors, this could only mean that the EC had failed

16 Paragraphs 250 – 255 of the EC ’s First Written Submission.

to examine evidence that would have further confirmed its finding of adverse impact. The EC fails to
see how this helps India.
107. The EC recalls that two principal negative factors (profits and prices) 17 were identified by the
EC authorities in this case, and were thoroughly examined and evaluated. No other plausible negative
factors were suggested to them or otherwise came to their attention. None has been suggested by
India.
108. The fact that Article 3.4 does not require that all the factors must be explicitly evaluated in
every investigation is clear from its wording.
109. Firstly, according to Article 3.4, economic factors and indices need be evaluated only if they
are "relevant", and "have a bearing on the state of the industry", which implies that those factors that
are relevant may differ from one investigation to another. This, hardly controversial, conclusion is
reinforced by the last sentence of the paragraph which states that the " list is not exhaustive, nor can
one or several of these factors necessarily give decisive guidance". Consequently, among the factors
listed in Article 3.4 there may be some that, in a particular case, are not relevant, and so do not need to
be evaluated.
110. To insist that the listed factors must be evaluated in all circumstances, would be to require the
evaluation of a factor that has already been found to be irrelevant, which makes no sense.
111. Secondly, the notion that the word "including" should be read as meaning "at the very least"
is undermined by the nature of the list that follows. This is broken into parts by semi-colons, and the
word "or" is used to indicate that not all of the factors need be considered. If all the factors and
indices listed in Article 3.4 had to be evaluated, the Members would have used the conjunction "and",
as they had not hesitated doing in many other contexts. (For example in the lists in the Safeguards
Agreement and ATC).
112. The fact that it is not necessary to consider all the factors listed in the first sentence of
Article 3.4 is made perfectly clear by the second sentence which states that:
This list is not exhaustive, nor can one or several of these factors necessarily give
decisive guidance.
113. The use of the words "nor … necessarily" (meaning "need not but may") in the second part of
this sentence means that sometimes one or several, and thus not all, of the listed factors can give
"decisive guidance". Since a single factor can thus give "decisive guidance", it is clear that in these
cases the investigating authorities are not required to look further.
114. Thirdly, not only do the factors listed in Article 3.4 differ in importance from case to case, but
it is also possible to deduce that certain of them are inherently likely to be more significant than others
and that findings on some may make findings on others superfluous. For example, how can a
calculation of return on investments possibly be relevant or even meaningful in the case of an industry
that is making losses? This is another reason why evaluation of all the factors cannot be regarded as
compulsory.
115. Perhaps the most superficially attractive of India’s arguments is the existence of the supposed
"precedents " which it invokes. The argument is illusory and the precedents unpersuasive.

17 See recital 40 of the Definitive Regulation.

116. First, as we have seen, the wording and context of the corresponding provisions of the ATC
and Safeguards Agreement are entirely different. They have different contexts, serve different
purposes and the "injury factors" listed in those agreements are not so extensive and they are not
joined with the word "or".
117. Second the standard of adverse effects required in those agreements is higher than the
"material injury" required under the Antidumping Agreement. The Appellate Body has always
emphasised in its decisions on safeguards the importance of the fact that the application of a safeguard
measure does not depend upon "unfair" trade actions as is the case with anti-dumping measures. 18 In
Argentina – Footwear the Appellate Body criticised a panel for not taking account of the high
standard required by the definition of "serious injury" (a significant overall impairment in the position
of a domestic industry).19
118. The only precedent relating to the WTO Antidumping Agreement is the panel in Mexico –
High Fructose Corn Syrup that said, "the text of Article 3.4 is mandatory".20
119. However, that panel did not address many of the arguments developed by the EC here today
(or the other arguments contained in the EC’s First Written Submission) and is, on this point, with all
due respect to those involved, wrong. The EC firmly rejects the notion that it should be bound by an
insufficiently considered or reasoned position taken in a previous panel in which in addition it was not
involved.
(i) Conclusion
120 For these and the other reasons set out in the EC’s First Written Submission, India’s claim is
that the EC has acted inconsistently with Article 3.4 by not evaluating all relevant economic factors
and indices mentioned in Article 3.4 of the An ti-Dumping Agreement is unfounded and must be
rejected.
3. For what part of the domestic industry must material injury be established (Claim 15)
121. The next important issue concerning injury which the EC will address today relates to the
question of what "domestic industry" must be found to be injured under the Antidumping Agreement
and was found to be injured in this case.
122. The EC finds itself in the comfortable positio n of being in the middle of two conflicting and
contradictory positions presented by India and the US. India complains that the EC was wrong in
considering some of the factors to look beyond the circle of complaining and co-operating producers
and the US considers that the EC erred in confining any part of its investigation to those complaining
and co-operating producers.
123. Before explaining why they are both wrong and the EC was right, let me first dispose of the
issue of the EC’s Basic Antidumping Regulation. Both India and the US base arguments on what
they believe is mandated or required by that Regulation.
124. India seems to preface its whole reasoning on the contention
21 that:

18 Most recently in Argentina – Footwear. Report by the Appellate Body on Argentina – Safeguard
Measures on Imports of Footwear, WT/DS121/AB/R, 14 December 1999, at paragraph 94.
19 Id. paragraph 138.
20 Report by the Panel on Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS)
from the United States, WT/DS132/R, 28 January 2000, at paragraph 7.128:
21 Paragraph 4.94 of India’s First Written Submission.

under EC law, the ‘domestic industry’ is defined by reference to the standing
determination
125. The US also alleges 22 that
The EC’s action in this case appears to have been mandated by its Anti-dumping
Regulation, which defines the domestic industry as those producers who filed the
"complaint."
126. However Article 4.1 of the EC’s Antidumping Regulation is virtually identical to Article 4.1
Antidumping Agreement. Apart from the quite immaterial one that "domestic industry" in the
Agreement becomes "Community industry" in the Regulation, the only difference is that Article 4.1
of the Regulation refers to the initiation requirements of Article 5.4 for the purpose of explaining what
is meant by "a major proportion".
23
127. The EC’s Basic Antidumping Regulation neither mandates nor allows with respect to
"domestic industry" anything that the Antidumping Agreement does not. There is no question of any
inconsistency between the EC’s Basic Antidumping Regulation and the Antidumping Agreement .
Even if one were to consider that the term "a major proportion" in the Antidumping Agreement means
something different than the meaning given to it in the EC Regulation (and the EC does not), the EC
notes that India is not contesting that 35 per cent of all producers constituted "a major proportion".
128. The EC will turn in a moment to India’s substantive complaints concerning the definition of
domestic industry. But it is first useful to put them into perspective. This perspective is provided
recital 40 of the Definitive Regulation where it is stated that
the principal basis for the finding of material injury was the reduced profitability and
price suppression of the Community industry as observed among the sampled
companies.
129. This reduced profitability and price suppression was established exclusively on the basis of
the Community industry as defined by the EC and from the data provided by the sample. None of
India’s complaints on domestic industry which we will examine and dismiss below affect these
essential findings of reduced profitability and price suppression. They are, the EC submits, sufficient
in themselves to justify a finding of material injury.
130. Indeed India’s arguments appear to rest on the notion that all the factors listed in Article 3.4
must indicate injury and thus to depend on the success of its other complaint based on the need to
evaluate all of the factors in Article 3.4, which we examined a moment ago.
131. The EC will now discuss India’s substant ive complaints. These are two. They are
conveniently expressed by India
24 as follows:
- First, the EC relied on companies outside the domestic industry in order to find injury.
- Second, the EC, once it selected a sample from among the domestic industry, was not entitled
to subsequently deviate from that sample in order to find injury.

22 Paragraph 80 of US’ third party submission.
23 The US refers in a footnote to paragraph 34 of the Definitive Regulation in this case in support of its
view of what EC legislation “mandates”. However, this paragraph is merely recalling that the domestic industry
may be considered to be constituted by the co-opera ting and complaining producers since these constitute a
major proportion of the whole industry.
24 In paragraph 4.121 of India’s First Written Submission.

132. We will also deal with the conflicting US allegation 25 that
The EC acted inconsistently with the Agreement by not including all Community
producers in the domestic industry
133. The basic provision of the Anti-Dumping Agreement on which these allegations are based is
Article 4.1 which states that:
For the purposes of this Agreement, the term "domestic industry" shall be interpreted
as referring to the domestic producers as a whole of the like products or to those of
them whose collective output of the products constitutes a major proportion of the
total domestic production of those products …
134. For the EC the meaning of this provision is perfectly clear. The "domestic industry" for
which material injury need be found is either the domestic producers as a whole or those of them
whose collective output of the products constitutes a major proportion of the total domestic
production of those products. Either one or the other suffices. The fundamental reasons for this is
also clear for the EC. It is twofold. First, different parts of a domestic industry may be injured in
different ways and to different extents. Second it may not always be possible to obtain the necessary
data from all the producers as an investigating authority may not have the means of ensuring that
disinterested producers provide the necessary accurate information. However it is considered that
protective measures against dumping are justified if what is called "a major proportion" of the
producers are materially injured.
135. The EC finds no basis in the Antidumping Agreement for India’s contention that an
investigating authority must make an irrevocable choice at the beginning of an investigation (or at any
other point in the investigation for that matter) for basing its findings on the whole or a major
proportion of the producers. If the investigating authority established that either the whole or a major
proportion are injured, protection against dumped imports is justified.
136. In this case, the EC found material injury to "a major proportion." It is true that in the case of
some injury factors the EC looked to the whole i ndustry in order to make this determination and gave
reasons why it thought this was more appropriate. However, if there is material injury for the
producers as a whole then this is surely persuasive evidence that there is also material for a major
proportion?
137. Even if this were shown not to be true, the EC still fails to see how India’s arguments can be
considered to undermine the EC’s measures. A finding of material injury for only a major proportion
of the producers is permitted but not required by the Anti-Dumping Agreement. The actions taken by
the EC authorities in the bedlinen investigation are also justifiable on the basis that a Member may use
both definitions of the domestic industry in the course of a single investigation.
138. India’s second claim (relating to sampling) is even more mysterious. It is that, once the EC
selected a sample from among the domestic industry, it was not entitled to subsequently deviate from
that sample in order to find material inju ry. The EC finds no basis for this in the Antidumping
Agreement. The purpose of taking a sample is that it is not possible or impracticable to investigate all
producers. The sample represents the whole of the major proportion of the producers which
constituted the Community Industry. Where data is available for that whole why cannot it be used? It
is surely better to use the more complete data when this is available than the sample?

25 Paragraph 89 of US’ third party submission.

139. As the EC observed in its First Written Submission, in this and other aspects of India’s
arguments there appears to be confusion between, on the one hand, evidence, and, on the other, the
conclusions drawn from evidence. As regards injury, the conclusions drawn from evidence must
ultimately concern the domestic industry as defined in the investigation. However, there is no
intrinsic limit to the types of evidence that may be used to arrive at such conclusions.
140. In particular, it surely cannot be excluded ab initio that the condition of EC producers as a
whole may provide evidence of the condition of those producers who comprise the domestic industry.
(i) Conclusion
141. For these and the other reasons set out in its First Written Submission, the EC considers
India’s claims concerning the EC evaluation of the factors listed to in Article 3.4 Antidumping
Agreement to be unfounded.
VI. CONSTRUCTIVE REMEDIES FOR DEVELOPING COUNTRIES
142. Last but by no means least, the EC wishes to remind the Panel of its position on India’s
treatment as a developing country.
143. The EC takes seriously the obligation to explore constructive remedies in the case of
developing countries. It is quite untrue to su ggest that the EC rejected India’s overtures about
undertakings. It was willing to explore this. However, in this investigation, contrary to India’s
assertion in paragraph 6.52, the reason why no undertaking was accepted was that none had been
offered by the exporters within the time limits set by the EC Basic Regulation.26 These time limits are
a reflection of those imposed by Article 5.10 of the Anti-Dumping Agreement, and the general
obligation to manage investigations expeditiously (Article 6.14 of the Anti-Dumping Agreement).
VII. CONCLUSIONS
144. If needed, the European Communities will articulate more detailed arguments in the
remaining course of the procedure and will be happy to address any remaining doubt the Panel might
have.

26 See the fax sent by the EC authorities to the exporters’ legal representatives on 22 October 1997,
reproduced in Exhibit India-52.

ANNEX 2-4
QUESTIONS FROM THE EUROPEAN COMMUNITIES TO INDIA,
EGYPT AND THE UNITED STATES
(15 May 2000)
To India
1. INITIATION QUESTIONS
(1) According to India, what type of evidence has to be evaluated in order to determine whether
or not to initiate an anti-dumping investigation under Article 5.3 of the Anti-dumping Agreement?
Could India illustrate its answer with examples taken from its own anti-dumping practice?
(2) Could India provide an example of how public notice of examination of evidence prior to
initiation of an investigation has to be given? Do es India consider that issues relating to evidence
provided in the industry’s complaint and examined for purposes of initiation should be dealt with in
the public notice of conclusion? Could India illust rate its answer with examples taken from its own
anti-dumping practice?
(3) According to India, how should the domestic industry’s standing requirement be assessed for
purposes of initiation? What is the standard of proof that the India considers necessary under
Article 5.4 of the Anti-dumping Agreement? In its anti-dumping practice, does India only accept
complaints for which support is expressed explicitly by individual domestic producers? In case of
affirmative answer, could India provide actual examples of this expression of support? In case of
negative answer, could India explain in which cases it considers that complaints filed on behalf of the
domestic industry are acceptable?
(4) Could India explain how public notices of initia tion should be formulated with regard to the
initial standing determination, if possible also by way of actual examples? Does India consider issues
relating to the initial standing determination in the public notice of conclusion of an investigation?
2. INJURY QUESTIONS
(5) Does India, in its own anti-dumping practice, attempt to determine that material injury is
being caused only by those transactions that are dumped? The EC would refer India to the following
examples of its practice:
Hydrodesulpherisation Catalyst (HDS), Zinc Oxide Desulpherisation Catalyst
(ZnODS), High Temperature Shift Catalyst (HTS), Low Temperature Shift Catalyst
(LTS), Secondary Reforming Catalyst (SR), Methanation Catalyst (Meth) from
Denmark – Preliminary findings. ADD/IW/39/95-96, Ministry of Commerce, 7 May
1997 (esp. paras. 18, 23) (Confirmed in Final Findings);
Sodium Cyanide from United States of America, Federal Republic of Germany
(FRG), Czech Republic, Korea RP and the Territory of European Union –
Preliminary Findings, No. 8/1/99-DGAD, Mi nistry of Commerce, 20 Oct. 1999. (pp.
19, 21) (Confirmed in Final Findings).
(6) Does India, in its own anti-dumping practice, evaluate all the factors listed in Article 3(4)
Anti-dumping Agreement or only those that appear relevant? At the meeting with the Panel, the EC

referred India to paragraph 19 of its recent Final Findings dated 6 March 2000 in the Anti-dumping
investigation concerning imports of Sodium Cyanide from the USA, European Union, Czech Republic
and Korea Republic. 8/1/99-DGAD.
(7) Does India, in its own anti-dumping practice, attempt to determine whether dumping was
occurring during the whole of the injury investigat ion period or does it assume that there was either
dumping or no dumping in the period immediately prior to the investigation period (for dumping)?
The EC would refer India to the following examples of its practice:
Oxo Alcohols from Poland, South Korea, Indonesia, Saudi Arabia, Russia, Iran, US
and the European Union – Preliminary findings No. 15/1/99-DGAD, Ministry of
Commerce, Directorate General of Anti-Dumping & Allied Duties, Notification, 3
Dec. 1999. (see pp 41, 66, 70);
Hydrodesulpherisation Catalyst (HDS), Zinc Oxide Desulpherisation Catalyst
(ZnODS), High Temperature Shift Catalyst (HTS), Low Temperature Shift Catalyst
(LTS), Secondary Reforming Catalyst (SR), Methanation Catalyst (Meth) from
Denmark – Preliminary findings. ADD/IW/39/95-96, Ministry of Commerce, 7 May
1997 (esp. paras. 1-o, 18, 21-a, 23). (Confirmed in Final Findings)
Sodium Cyanide from United States of America, Federal Republic of Germany
(FRG), Czech Republic, Korea RP and the Territory of European Union –
Preliminary Findings, No. 8/1/99-DGAD, Mi nistry of Commerce, 20 Oct. 1999. (pp.
5, 21) (Confirmed in Final Findings)
3. PROCEDURAL QUESTIONS
(8) On page 79 (para 3.135) of its First Written Submission, India reveals the profit margins of
companies in other countries. Where did India obtain this highly confidential information?
(9) In Exhibit 16 a letter from the Indian government agency responsible for export licensing of
the products under consideration reveals that there are 287 Indian exporters. During the investigation,
the EC was told that only of 84. The export volumes indicated are also inconsistent with those given
to the EC. Can India please explain these discrepancies?
To the US
1. INITIATION QUESTIONS
(1) According to the United States, what type of evidence has to be evaluated in order to
determine whether or not to initiate an anti-dumping investigation under Article 5.3 of the Anti-
dumping Agreement?
(2) What is the standard of proof that the United States considers necessary for purposes of
initiation of an anti-dumping investigation under Article 5.3 of the Anti-dumping Agreement?
(3) The US has maintained that Article 5.4 of the Anti-dumping Agreement allows associations
of producers to bring a complaint on behalf of the domestic industry. Could the United States
illustrate what type of enquiry they consider necessary on the part of the investigative authorities to
satisfy themselves that the complaint is in fact brought "on behalf of" the domestic industry?
(4) Does the US consider that an investigating authority should close an anti-dumping proceeding
that it has initiated if it should determine, during the course of an investigation and on the basis of

information that was not available to the authority before the investigation was initiated, that the
domestic producers expressly supporting the application do not account for at least 25 per cent of total
domestic production?
2. INJURY QUESTIONS
(5) Article 4.1 Anti-dumping Agreement provides that the term "domestic industry" shall be
interpreted as referring to the domestic producers as a whole of the like products or to those of them
whose collective output of the products constitutes a major proportion of the total domestic
production of those products.
Why does the US consider that
"The EC acted inconsistently with the Agreement by not including all Community
producers in the domestic industry for the purposes of evaluating other factors such as
price and impact under Articles 3.1, 3.2, 3.4 and 3.5."1
(6) The US states that India has not made a claim that the EC should have defined the
Community Industry as all the producers. Need the Panel therefore consider these comments of the
US?
(7) How does the US interpret the term "a major proportion" of the industry?
(8) Does the US consider that the only cases where less than all producers may be considered to
be the domestic industry are those set out in sub-paragraphs (i) and (ii) of Article 4.1? If so, why does
not Article 4.1 say this? If not, what are the criteria which, according to the US, allow less than all
producers to be considered to constitute the domestic industry?
(9) Does the US consider that an investigating au thority must irrevocably choose at the beginning
of an investigation its definition of "domestic industry"?
(10) The US argues in paragraph 93 that the sample of domestic producers must be "statistically
valid". In this context, does "statistically va lid" mean the same as "representative"? The US
criticisms of the EC sample of domestic producers seem to derive exclusively from its view that it was
wrong to define the complaining and co-operating producers as the "Community industry". Is this
correct?
(11) The US invokes Article 6 in support of its view that the EC should have looked at all the
Community Industry. The EC does not deny that an excluded domestic producer is an ‘interested
party’ within the meaning of Article 6 and is entitled to defend its interests, i.e., present information to
the investigating authority. But is the US really arguing that this means that all interested parties must
be investigated ?
(12) In paragraph 96 of its submission, the United States states that it considers that "all
enumerated factors [in Article 3.4] must be eval uated". On what basis does the US construe an
obligation to evaluate all relevant factors (the terms of Article 3.4) as an obligation to evaluate all
factors, even if it is apparent at the outset that some factors are not relevant? The US seeks to defend
the HFCS panel discussion of this issue. Where in its report did the panel in that case consider the
EC’s arguments presented in its First Written S ubmission and its Oral Statement (which the US now
has)? The US also refers to the Korea – resins report.
2 Where in that report is there any statement

1 Paragraph 89 of US’ third party submission.
2 Korea – Anti-Dumping Duties on Imports of Polyacetal Resins from the United States (Korea-
Resins), BISD 40S/205, adopted 27 April 1993.

that all factors must be evaluated, whether relevant or not, or any consideration of the arguments that
the EC has made in this case?
To Egypt
(1) The EC notices that, both in the Written Subm ission and in the Oral Statement, Egypt refers
to a figure of 15 per cent as the share of total EU production passively supporting Eurocoton
complaint. Could Egypt identify the source of this data?

ANNEX 2-5
RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS
FOLLOWING THE FIRST MEETING OF THE PANEL
(19 May 2000)
Questions from the Panel for the EC
14. Under what circumstances would the EC go from the option of a calculation based on
Article 2(6)(a) of its Basic Regulation to a calculation based on Article 2(6)(b)? Has the EC ever
done so?
The EC will use the option in Article 2(6)(b) rather than that in Article 2(6)(a) if the latter
cannot be used. Such occasions are so uncommon that no general practice can be described. An
example is Commission Decision of 20 March 1998 terminating the anti-dumping proceeding
concerning imports of tungstic oxide and tungstic acid originating in the People's Republic of China
(OJ L 87, 21.3.98, p. 24):
(19) The cost of manufacture was obtained by adding all costs, both fixed and
variable, for materials and manufacturing in the country of origin. In the absence of
data specific to oxide/acid for other producers/exporters in the country of origin, as
far as SG&A are concerned they were calculated by reference to SG&A on sales of
tungsten metal powder, that is, the same general category of product, by Metek on its
domestic market during the investigation period, in accordance with Article 2(6)(b) of
the Basic Regulation.
15. Would the EC take the position that the ordi nary course of trade would not include sales
between related parties? In other words, is the d ecision that sales are in the ordinary course of
trade based on the question of profitability al one, or, for instance, does it also include
consideration of whether sales are made between related parties?
The issue of related parties usually arises when export prices are being determined (ADA
Article 2.3), whereas that of sales ‘in the ordinary course of trade’ concerns the determination of
domestic sales that can properly be used in making a comparison with the export prices. However, it
can also happen that domestic sales are made between related parties. The EC’s treatment of such
sales (in arriving at the normal value) is regulated by Article 2(1) of the Basic Regulation:
Prices between parties which appear to be associated or to have a compensatory
arrangement with each other may not be considered to be in the ordinary course of
trade and may not be used to establish normal value unless it is determined that they
are unaffected by the relationship.
Thus the EC does include consideration of whether sales are made between related parties in deciding
whether domestic sales are made ‘in the ordinary course of trade’.
16. Would the EC apply the ‘ordinar y course of trade’ principle if it applied Article 2(6)(b)
of the Basic Regulation.
Yes. It is contained in the text of this clause.

17. Is the EC of the view that sales not in the ordinary course of trade may, at an
investigating authority’s discretion, either be included in or excluded from the category of sales
from which data concerning profit are derived for purposes of the subparagraphs of
Article 2.2.2?
The ‘ordinary course of trade’ criterion is part of Article 2.2.2(i) and (ii), but, as illustrated in
the answer to question 15, when it is not satisfied Members are permitted rather than obliged to
exclude data.
18. Does the EC not exclude from volume, for th e purposes of its injury analysis, imports
from companies, that is, investigated foreign producers or exporters, found not to be dumping
or having de minimis dumping margins?
No. The EC has addressed this issue in its first written Submission (paragraphs 215 et seq),
and will make additional arguments in its Rebuttal Submission on the meaning of the term ‘dumped
imports’.
19. Could the EC explain how it takes into acco unt, in the context of analyzing injury and
causation during the ‘period of investigation’, (which the Panel understands to be the period
over which the dumping determination is made), the analysis and conclusions concerning the
domestic industry over the ‘injury investigation period’.
The state of the domestic industry and the existence of injury is assessed over a longer period
("the injury investigation period") than that for which dumping is investigated (the investigation
period" or "IP"). This is done so as to put the situation of the domestic industry into perspective and
to reveal the trends to be
The data collected during the ‘injury investigation period’ relate to changes during that period
in both the condition of the domestic industry (as measured in factors such as profits and prices), and
in the volumes and prices of imports, which provide evidence of causation. However, the conclusions
regarding injury and causation relate principally to the IP – normally the last year of the injury
investigation period.
Thus, a finding that the condition of the domestic industry was significantly worse during the
IP than in previous years will incline the authoritie s to conclude that it was suffering injury. If the
volumes of dumped imports and/or price undercutting (or suppression, etc.) were significantly greater
during the IP than in previous years, the authorit ies will be more inclined to find that the dumped
imports were causing the injury.
If it appears that the domestic industry was already suffering injury before the IP, this may
help to confirm that dumping is causing injury. This may involve a presumption that the dumping
found in the IP was also present before the IP.
Of course, other potential causes of the injury would have to be considered before a final
conclusion could be reached on causation.
20. What is meant by the phrase ‘not a signific ant independent factor’ as used by the EC in
Table 4 of its first written submission with respect to certain of the Article 3.4 factors? Does it
mean that the particular factor was considered and was found to not be significant, or that the
particular factor was considered relevant, was evaluated, and was found not to indicate injury?
The interpretation to be given to the phrase ‘an evaluation of all relevant economic factors
and indices’ must be flexible enough to cope with the enormous variety of circumstances that arise in
investigations into injury and injury causation. Relevance is a matter of degree rather than of ‘yes or

no’. In some cases it will be immediately apparent, even before the initiation of an investigation, that
certain factors are not relevant and in others this may not be apparent until much later, so that the
process of determining the relevance of a factor may be little different from that of evaluating it.
By using the terms ‘significant’ and ‘independent’ the EC sought to explain the application of
these notions to the situation that was revealed by the investigation in the bed linen case.
In this case the investigators were faced with a situation where the disappearance of many
businesses in the period leading up to the IP had removed competition from the market and had thus
benefited the remaining producers (PM rec. 90). The result of this was that factors which might
otherwise have been expected to reveal injury were indicating an apparently healthy industry (PM rec.
92; DR rec. 41). It could be said that they had lost their relevance, or at least their direct relevance, to
the conclusion on injury. On the other hand, regarding two factors – profits and price – there were
strongly indications of injury (PM rec. 93; DR, rec 40).
21. Did the EC authorities consider the exit of companies from the industry as evidence of
injury by dumped imports or as evidence of the state of the industry?
Although there is mention in the Regulations of the notion that the exit of companies was an
indicator of injury caused by dumped imports (DR rec. 41), the principal significance of the
disappearance of companies is to explain how an affirmative determination of injury could properly
be made when on all but two factors, the domestic industry was in an apparently healthy state (PM
recs. 81, 90; DR rec. 41).
Without information regarding the exit of the companies the Regulations would have given a
misleading picture of developments in the state of the industry during the ‘injury investigation
period’. In particular, this information supported the finding that some of the Article 3.4 factors were
not relevant (i.e. meaningful) in this case (e.g. employment and production), or that the relevant
information risked giving a distorted image of the industry’s condition (e.g., sales volume and value,
capacity, capacity utilisation, and inventories).
22. India suggests there were multiple ‘definitions’ of industry. Could the EC confirm that
the Community industry was defined exclusively as the 35 cooperating complainants? Could
the EC clarify the basis on which certain companies were apparently excluded from the
Community industry as ‘ non-complainants’. Does the EC agree that one company (Luxorette)
was in the sample but not in the Community industry? If not, could the EC explain the situation
of this company?
Yes. The Community industry was defined exclusively as the 35 cooperating complainants?
This is indicated in PR 57 and confirmed in DR 34.
AFTER initiation 11 companies were excluded from the list of complaining companies (see:
recitals 52 (7 companies), 54 (1 company) and 56 (3 companies) of the Provisional Regulation.
The reasons for excluding them was that some were importing high volumes of Bed Linen,
some were not producing the product concerned any longer, some were not focussed on the
production of Bed Linen in the EC (this was the case of Luxorette) and some for lack of cooperation.
Luxorette was not in the Community industry and was not
 in the final sample. The situation
is that Luxorette was intended to be included in the sample and, as indicated in Recital 8 of the
Provisional Regulation, an on-the-spot verification visit took place at the premises of the company.
However, as indicated in 54 of the Provisional Regulation, it was excluded from the Community
industry and thus from the sample.

23. Is the EC of the view that, given the langua ge of Article 12.1, an Authority, consistently
with that provision, is not required to disclose or explain its conclusions regarding the standing
determination under Article 5.4?
As the EC observed in its first written Submission (para. 5, as corrected in the oral
Statement), although India invoked Article 12.1 in its panel request (points 1 and 2), it has not
elaborated any claims under this provision in it s Submission (other than asserting that the ‘The
initiation of the proceeding against Bed Linen from India by the EC is inconsistent with Article 12.1
of the ADA’, paragraph 7.1.1). Furthermore, as regards the standing issue (point 1 of the panel
request) India’s complaint was that ‘the EC has never during the investigation or in the published
Regulations adequately responded to detailed queries from Indian exporters on this issue’. Thus no
claim has been made regarding the disclosure, at th e time of initiation, of the details of the standing
determination.
Article 12.1 requires public notice of the authorities determination that they ‘are satisfied that
there is sufficient evidence to justify the initiation of an anti-dumping investigation’. The contents of
this notice are listed in Article 12.1.1, but the list does not refer to the standing determination under
Article 5.4.
Nevertheless, exporters are entitled to substantial disclosure on this matter. Under
Article 6.1.3 they receive the text of the complaint. That text must (according to Article 5.2) include
substantial information regarding the producers on whose behalf the complaint has been made. The
right of confidentiality results in certain data being excluded, among which are the production
volumes of the producers. Of course, such information is basic to calculating whether the application
satisfies the support levels required by Article 5.4, so the extent to which the authorities can elaborate
on the question of standing is limited.
In the bed linen case the EC complied with all its obligations regarding disclosure. It rejects
the apparent view of India that the investigat ing authorities are under an obligation to respond
throughout the investigation to repeated claims that they had not complied with those obligations.
24. At, inter alia, paragraphs 84, 86, 87, and 94 of its first oral statement, the EC refers to a
determination of dumping for exports from a country. Could the EC clarify its position that,
under the AD Agreement, the determination of dumping is country-specific, not specific to
individual producers and/or exporters?
The country-based nature of anti-dumping determinations is apparent from several aspects of
Article VI GATT and the Antidumping Agreement . In particular it is evident from Article 12.1.1 that
investigations can only be opened as regards countries (the notice of initiation must contain a
‘statement of the exporting country or countries and the product involved’). All exports of the
product from the named country or countries are investigated in order to determine dumping and
injury. Although dumping duties are as far as possible calculated for individual exporters (inter alia
for reasons of effectiveness), there is normally always a general duty applicable to all unnamed
exporters on a country-by-country basis.
25. Could the EC please explain its view that ‘factors’ under Article 3.4 are negative in
character – what is ‘negative’ about production, output, sales, etc.? Does the EC mean that in
evaluating the factors in Article 3.4, an investigating authority need only take into account those
which show downturns, that is are ‘negative’ for the domestic industry, and that if the
information concerning a particular factor is positive for the domestic industry, it need not be
evaluated and taken into account at all? Ca n the EC reconcile the apparent contradiction
between the views expressed at paragraphs 257 and 261 of its first written submission?

The point that the EC would like to make is not that the factors themselves are negative. As
the Panel implies, these are intrinsically neither pos itive nor negative. However, Article 3.4 refers to
particular aspects of these factors, and it is these that are negative. Thus, Article 3.4 does not refer
simply to ‘sales’, but to ‘actual or potential decline in sales’ (and likewise for profits, etc.). Similarly,
it does not refer simply to ‘cash flow’, or even to ‘effects on cash flow’, but to ‘actual and potential
negative effects on cash flow’ (and likewise for inventories, etc.).
The view expressed by India, and unfortunately by the panel in Mexico – High Fructose Corn
Syrup, is that the factors listed in Antidumping Agreement Article 3.4 constitute a compulsory
checklist. Thus, to satisfy the requirements of the Antidumping Agreement , national measures
imposing anti-dumping duties would have to work through this list, explicitly addressing each of the
items on it. As the EC explained in its first written Submission (paragraphs 263 to 289), it believes
that this apparently literal interpretation of Article 3.4 is incorrect, and when the words are read in
their context in light of their object and purpose, they do not impose a compulsory list. However, if
this interpretation is not accepted, then the EC ar gues that the literal approach must be applied
consistently, and that, as explained above, the text refers, in almost all instances, exclusively to the
negative aspects of the factors that are subject to the requirement. In paragraph 262 of its Submission
the EC shows how its determinations in the bed linen case have explicitly examined all the negative
aspects of the factors listed in Article 3.4, and have therefore satisfied such a requirement.
Finally, the EC emphasises that, as shown in the two Regulations, in the bed linen case
consideration was not confined to these negative aspects, but included a wide range of factors both
positive and negative.
26. Can the EC please explain on what basis any fact can have ‘already been found to be
irrelevant’? How is this possible without considering or evaluating that factor in some measure?
Could the EC further explain how a Panel can as sess whether an investigating authority has
acted consistently with its obligations if the co nclusion that a factor is not relevant must be
assumed from the absence of any discussion of it?
The EC does not mean to suggest that a factor can be found to be irrelevant without any
consideration whatsoever. However, in some circumstances the fact that particular categories of data
will be irrelevant to the issue of injury may become apparent at an early stage in the enquiry, or,
because of the experience of investigators, may be known even before it is opened.
For example, in the sector of the textile indu stry examined in this investigation, capacity
utilisation is a factor of little if any significance to a finding of injury because capacity is so easy to
adjust as assets are regularly bought sold and closed down. Indeed because of the large variety of
products produced and the ease with which production can be switched from one to the other, there is
no meaningful way to measure capacity. To burden producers with questions on this issue would
therefore serve no purpose and conflict with the obligations expressed in Antidumping Agreement
Articles 6.13 and 6.14 (as explained at paragraph 271 of the EC’s first written Submission).
Likewise, arguments for or against the existence of injury on the basis of data relating to capacity
utilisation would almost certainly be fallacious.
Regarding the question concerning assumptions and relevance, the EC has sought to show
(particularly in paragraphs 246 et seq. of its Submission, as elucidated in the answer to the previous
question) that the obligation in Article 3.4 to evaluate all relevant economic factors and indices having
a bearing on the state of the industry will not always require the completion of a checklist of
investigations.
The point is illustrated by the circumstances on the bed linen industry. In that investigation
an analysis of the industry showed, firstly, that the negative data on certain factors (profits and prices)
justified an overall conclusion of injury, and secondly that (because of closures and consolidation)

data obtained on other factors could give a false impression of good health. In circumstances such as
these it would not be unreasonable to conclude that the latter factors were not relevant, without
examining them all. (Some examination would proba bly be necessary in order to confirm the overall
analysis).
27. Assuming that the EC is correct that one of the Article 3 factors can give decisive
guidance in the examination under that Article, how can a Panel evaluate such a determination
without understanding how, that is in what manner, based on what reasoning or analysis, the
investigating authority concluded that the single factor was decisive.
A panel must carry out this task by examining th e situation of the industry as revealed in the
determination and the arguments and explanations advanced by the parties to the dispute. The
circumstances of the bed linen case are pertinent to the point that the EC wishes to make (that there
were two decisive factors rather than one is not significant). As explained in the answer to the
previous question, in the peculiar circumstances of the case, indications of injury were apparent in
only two of the factors listed in Article 3.4, in other respects the industry was in an apparently healthy
condition.
In the two Regulations the EC gave a full explanation of the circumstances giving rise to this
unusual situation. This explanation consisted not of an examination of the other economic factors
(although such factors were examined), but of an account of how recent developments in the industry
(the exit of firms) had made those factors into unreliable indicators of injury. Of course, the
Regulations also explained how data regarding the two decisive factors established the existence of
injury.
In this way the Regulations provide a satisfactory basis for a Panel to exercise its power of
review.
28. In paragraph 132 [112] of its first oral st atement, the EC seems to suggest that the
possibility that data will not be available from all producers somehow justifies declining to
consider such producers as part of the domestic industry, without even asking for the relevant
data first, and despite that they are producers of the domestic like product. If the Panel’s
understanding is correct, can the EC explain the legal justification for this position.
The second arm of the definition of ‘domestic industry’ in Article 4.1 permits Members to
adopt a definition in terms of producers whose output constitutes a ‘major proportion’, etc. The
Agreement contains no explicit rule regarding the choice between the two options presented in
Article 4.1.
The EC notes that India has not called into question the EC’s exercise of this choice.
Furthermore, although India challenged the EC’s sa mpling of the industry in its Submission (Claim
16, ruled by the Panel to be outside its terms of reference), and in its original panel request (point 14,
not pursued other than in the context of Claim 16), it has never challenged the EC’s application of the
notion of ‘major proportion’.
In the part of its oral statement to which the Panel refers, the EC was merely suggesting what
motivations the drafters of the Agreement may have had in conferring upon Members a choice as to
the definition of domestic industry. It was not suggesting that Members have to justify the way in
which they exercise this choice.
29. Can the EC explain whether, and if so, how, the fact that the EC was ‘willing’ to explore
constructive remedies under the AD Agreement was communicated to India?

The EC made no specific communication of this fact to India. From an early stage of the
proceedings the EC was aware that the investigated exporters fully appreciated their rights under
Article 15. For example, their legal representatives raised this issue in their brief of 25 October 1996
(Exhibit India-50, section 7).
30. Without prejudice to the EC’s preliminar y objection to consideration of evidence
relating to the substance of the consultations, wi th regard to India’s assertions as to what the
EC represented to India during the consultations as actions taken in pursuance of the Article 15
obligation, (i) Are these among the aspects of the reports of the consultations that the EC
challenges as inaccurate?; and (ii) Does the EC , in fact, assert that any of these actions was
taken in fulfilment of its obligations under Article 15? If not, why did the EC take these actions
(assuming it did)?
The EC believes it can most clearly respond by explaining in its own words what happened.
In answer to India’s questions during the consultations it said):
It was pointed out that while specific concessions made to Indian firms in view of
their location in a developing country were not spelled out in the published
Regulations, the firms concerned were granted special treatment in a number of ways.
The preparation of simplified questionnaires for exporters, the acceptance of
responses beyond the stated deadline and consequent granting of co-operator status,
and the individual treatment of newcomers despite the case having been based on
sampling, are all examples of special consideration. (Follow-up to second round of
consultations, 29 June 1999, Exhibit India-14, question 115.)
These measures go beyond the requirements of Article 15 because they concern procedures rather
than ‘constructive remedies’.
The EC endeavours to take account of the special situation of developing countries generally,
not only to the extent that this is required by the Antidumping Agreement. This is why it also made
the procedural concessions described in the above quoted text.
Having shown interest at an early stage of the proceedings in receiving special treatment as a
developing country (briefs of 25 Oct. 1996, Exhi bit India-50, and 6 Feb. 1997, Exhibit India-54), the
exporters did not raise this issue again until after disclosure. Thus, the immediate reason why no
undertaking was accepted by the EC was that none was ever offered by the exporters (Exchange of
correspondence, Exhibit India-72).
31. Could the EC please provide the Panel with the dates on which the following occurred in
the bed-linen investigation in dispute: (a) final disclosure to parties, (b) offer from Texprocil
regarding price undertakings, (c) letter from the EC indicating that offers of undertakings
would no longer be considered, (d) the date on which the Commission staff completed work and
forwarded a recommendation or other relevant document to the decision-making authority, and
(e) the date of the final determination by the Council. To the extent possible, could the EC
provide the Panel with a ‘standard’ timetable for the above-listed events.
(a) Final disclosure to parties (dumping margin calculation): 3.10.1997
(b) Offer from Texprocil 13.10.1997
(c) Letter from EC regarding offers: 22.10.1997
(d)(i) Formal proposal presented to Commission 4.11.1997
(d)(ii) Recommendation forwarded to Council: 14.11.1997
(e) Final determination: 28.11.1997
Standard timetable:

Completion of investigation 0
Preparation of formal document +10 days
Decision by Commission +4 weeks
Adoption by Council +1 month
Questions from the Panel for both parties
32. The Panel understands, from the statements of the Parties at the first meeting, that the
EC authorities calculated SGA expenses on the basi s of all sales, as opposed to only sales in the
ordinary course of trade, and that India has posed no claim of violation with respect to this
methodology. Could the parties confirm whether the Panel’s understanding is correct, and that
the parties agree that Article 2.2.2(ii) allows the calculation of SGA expenses on the basis of all
transactions?
Since in the bed linen investigation the SGA expenses were the same for all sales, the
question whether the calculation of SGA should be limited to sales in the ordinary course of trade did
not arise.
33. Where an investigation involves multiple pr oduct types, investigating authorities will
have different SGA expenses for each of them, no t all of which product types may be sold for
profit. As a result, if the investigating authority excludes from consideration sales of one or
more product types as being not sold in the ordinary course of trade, it will have different data
set for calculation of SGA expenses as compared to those for calculation of profit. In the view of
the parties, would such a methodology fulfil the ‘fair comparison’ requirement of Article 2.4.
The EC notes that, as the Panel observed regarding the previous question, India has posed no
claim of violation with respect to the EC’s methodology regarding the calculation of SGA.
Furthermore, as the EC said in its response to that question, since the SGA expenses were the same
for all sales the use of different data sets had no consequence on the level of SGA that was
determined.
34. Would the parties indicate whether, in their view, in a case in which there is information
from more than one exporter or producer available for use in the calculation of profit amounts
under Article 2.2.2(ii) (including the case in which a proper sample includes more than one
exporter or producer), the investigating author ities may nonetheless choose to rely on the
information concerning only one of those exporters or producers?
The EC has proceeded on the assumption that Ar ticle 2.2.2(ii), by referring to ‘weighted
average’, requires Members to use data from all the eligible exporters or producers. The ‘ordinary
course of trade’ criterion will apply in identifying those that are eligible. In addition, the selection
would be subject to the limits imposed by sampling.
35. As the Panel understands it, India takes the position that in the case of multiple
comparisons of weighted average normal value to weighted average export price, Article 2.4.2
specifically precluded ‘zeroing’, but that Article 2.4.2 does not address the question of ‘zeroing’
in the process of ‘summing up’ the results of multiple transaction to transaction comparisons of
normal value and export price. The Panel notes that if a Member makes separate comparisons
of weighted average normal value and weighted average export price for each quarter during
the dumping investigation period, the same question of ‘summing up’ arises.
The EC agrees that Article 2.4.2 does not address the process of summing up the results of
multiple transaction to transaction comparisons. This underlines the point made by the EC (in

paragraph 209 of its first written Submission) that Article 2.4.2 does not provide a guide for the
second phase of the process of arriving at a single dumping margin for an individual exporter or
producer.
The Panel is correct in pointing out that comparable sales are not defined solely by physical
similarities. In fact, in addition to differences noted by the Panel regarding in the time of sale, there is
at least one other category of differences that can prevent comparison: that of level of trade. Thus in
some investigations it is necessary to distinguish the dumping margin on wholesale sales from that on
retail sales. Of course, all three types of difference can occur in a single investigation, so that it might
be necessary to calculate (by weighted averaging) dumping margins for ‘Model A, 1st quarter, retail
sale’, and so on. However, in most investigations there are no differences of time or level of trade to
be taken into account.
36. The Panel understands India to take the view that an investigating authority, having
established a sample for the consideration of injury to the domestic industry, is limited to
considering only information for that sample set, and must ignore other information concerning
the condition of the domestic industry if it relates to producers outside the sample? Does this not
conflict with India’s suggestion that the EC was obliged to take account of Standard’s
information in calculating normal value despite the fact that it was not part of the sample
established by the EC for the dumping calculation? Can the EC explain how its action in going
beyond the sample in considering information on the question of injury to the domestic industry
is consistent with its apparent view that it was precluded from, or at the minimum was not
required to, go beyond the sample to take into account Standard’s data for the calculation of the
profit rate under Article 2.2.2(ii). Why did the EC authorities go beyond the sample data to
data for the Community industry, and further to data for all EC bed-linen producers in
considering some elements of their analysis under Article 3.4, and where are these reasons
explained in the final determination?
The EC observes that in its Panel request, which sets the boundaries of the Panel’s
jurisdiction, India made no claim regarding the selection of samples, either in relation to exporters or
producers when calculating the dumping margin, or in relation to domestic producers when
investigating injury. The sole claim made by India in the context of sampling was that the EC was not
consistent in its use of the sample chosen in the context of Article 3.4 (point 14).
Furthermore, India did not raise the question of inconsistencies in the selection of samples as
between the dumping and the injury investigations.
In its first written Submission India launched an attack on the EC’s selection of exporters and
producers for the injury sample that was entirely based on ADA Article 6. That attack has been found
by the Panel to be outside its terms of reference.
These introductory comments are relevant to the Panel’s question because the arguments of
India regarding Standard Industries have in all instances concerned its demand that the company be
included in the sample of exporters and producers se lected by the EC authorities for determining the
dumping margin.
The EC regards that issue as quite different fro m the question whether, in considering injury,
it is permissible to look at data for the whole of the domestic industry as well as that for the sample
companies alone. The EC cannot see any way in which an interpretation of the rules defining how a
sample should be constructed for a dumping investigation could have a bearing on the application of a
sample used for the determination of injury. In fact, it is not obvious that there would be any
connection even if both issues concerned the injury margin. Thus the rules governing the selection of
companies for the purposes of determining an inju ry margin have no logical relationship with the
application of that sample.

There is another distinction that can be drawn between the two concepts that are juxtaposed in
the Panel’s question. In the case of Standard Industries and the dumping margin the issue was
whether one particular company should be added to the sample. The issue in the injury case might be
represented as being whether the sample should be expanded, for certain purposes, from a selection of
companies, to the entire class. A sample consisting of the entire class is, for statistical purposes, a
perfect sample. To that extent its use has an inherent logic. The expansion of the dumping sample to
include one more company has no such logic. It has to be justified on the particular facts of the case.
Therefore the answer to the Panel’s penultimate question is that the situations presented by
the Panel are not comparable, so the question of inconsistency cannot arise.
Regarding the Panel’s final question, the EC notes that the ADA contains no explicit rules for
sampling the domestic industry. Article 3.1 requires the EC authorities to make a determination of
injury that is ‘based on positive evidence and involve[s] an objective examination’.
In its Initiation decision (Exhibit India-7) the EC said that:
The Commission intends to investigate injury to the Community industry by, on the
one hand, examining the reliability of the sources of the information submitted in the
complaint, and, on the other hand, by means [sic] questionnaires to be addressed to a
sample of Community producers supporting the complaint.
The sample was to be based on the ‘largest representative volume of production of
Community industry which can reasonably be investigated in the time available’.
Thus at the outset the Community indicated that it did not intend to confine itself to
information obtained in the sample.
In any event, the justification for using data for the whole Community industry, where they
are available, is self-evident. As the EC noted in paragraph 330 of its first written Submission, a
sample can at best give an approximation to the true figure. If the true figure is available it should be
used. This mixing of data sources in no way subverts the validity of the investigation.
The use of data for all producers is justifiable in so far as it casts light on the condition of the
domestic industry. The Regulations contain no indication that such data were used for any other
purpose.
37. In the view of the parties, does the term ‘anti-dumping duties’ in the second sentence of
Article 15 include provisional measures, or refer only to definitive duties? Could the parties, in
their answers, refer specifically to the text of other provisions of the AD Agreement which relate
to provisional and/or final duties and/or measures?
The applicable rule of interpretation is that of the ordinary meaning to be given to the terms of
the Agreement, in their context, in the light of its object and purpose. The Panel’s question implies
that an examination of the terms used by the Agreement will be especially significant.
In the Anti-Dumping Agreement there are relatively few occurrences of the term ‘anti-
dumping duty’ (or ‘duties’) where it is not also made clear which of these types of duty is intended.
The Agreement often uses the explicit terms ‘defin itive anti-dumping duty (or duties)’, ‘definitive
duties ’), and ‘provisional duty’. In other places different, but equally clear grammatical constructions
are used to class the duty in question as either provisional or definitive.

It could be argued that in those few cases where the type of duty is not made obvious the
intention of the Agreement is to cover both types of duty, because where the intention is to refer to
one only, that is made clear in the text.
This is probably the case in Article 4.2 (duties applied to a geographical area only). In
Article 9, many of the rules for the imposition and collection of anti-dumping duties appear
appropriate for both kinds of duty. However, some are unlikely to be applicable to provisional duties,
for example, the rules on refunds in Article 9.3.2, and on new-exporter reviews in Article 9.5.
Article 8.1 contains the phrase ‘provisional measures or anti-dumping duties’, so that it is
clear that the anti-dumping duties in question are not provisional duties. However, because of the
juxtaposition of the two terms it is evident that the second refers to definitive measures only, and to
have included the word definitive would have been superfluous.
Thus, a purely textual analysis of the Agreement suggests that where the term ‘anti-dumping
duties’ is unqualified, it refers to both kinds of duties, except perhaps in so far as there are practical
reasons why it could not be so applied.
Bearing in mind the basic rule of interpretation, this construction of the term should not be
applied to the second sentence of Article 15 without taking into account ‘context’, and ‘object and
purpose’.
The panel in EC – Cotton yarn from Brazil observed that whether the measure would affect
essential interests ‘could only be ascertained subsequent to the determination of the amount of anti-
dumping duty to be applied’ (ADP/137, adopted 30 Oct. 1995, para. 585).
The level of duties that is to be applied is not certain until the definitive measures stage of the
investigation. Furthermore, in the EC, provisional duties are always implemented in the form of the
giving of securities rather than the payment of duties. Such securities may be, and often are, released
at the definitive stage. (This was the case in the bed linen investigation). In contrast, a price
undertaking accepted at the provisional stage cannot be retroactively cancelled in any meaningful
sense, since the exporter will have already respected its terms.
For these reasons, the EC does not consider that there was an obligation to explore the
possibilities of "constructive remedies" at the provisional stage of the investigation.
38. In the view of the parties, does the fulfilment of obligations imposed by Article 15 go
beyond the fulfilment of obligations under Article 8.3? If so, what would that involve? In
particular, is it necessary for the investigating Member, for instance, to take the initiative to
seek an understanding, and if so, how, and when, is that to be done? And again, if the fulfilment
of obligations imposed by Article 15 does go beyond the fulfilment of obligations under
Article 8.3, how did the EC authorities’ actions in the context of the Bed Linen investigation go
beyond the fulfilment of their obligations under Article 8.3.
It is generally accepted that the second sentence of Article 15 imposes an obligation on
Members. Although the scope of that obligation remains uncertain, the EC accepts that, in principle,
it goes beyond that in Article 8.3. For example, in the case of developing countries that are unfamiliar
with anti-dumping proceedings, the EC recognises an obligation to ensure they are aware of the
possibility of offering undertakings. However, where developing countries are experienced in such
proceedings, or where their exporters are professionally represented, there is no need for such action.
Thus, in answer to the Panel’s second question, the EC believes the scope of the obligation will
depend on the extent to which exporters in the developing country could be prevented by lack of
experience, etc., from effectively defending their interests.

In the present case the record of the discussion regarding undertakings was described in the
EC’s first written Submission (paragraph 369), from which it will be seen that the exporters’
representatives (who are obviously very familiar with EC anti-dumping proceedings) did not raise the
possibility of giving undertakings in time for it to be dealt with.
In these circumstances the EC contends that it has fulfilled its obligations under Article 15.
In any event, India’s claim (point 18 of th e panel request, and paragraph 6.32 of the first
written Submission) is that ‘Inconsistently with Article 15 ADA, the EC failed to consider India’s
special situation of developing country Member before imposing provisional anti-dumping duties’.
In the EC’s view, there can be very little opportunity for exploring possibilities of
constructive remedies before the imposition of provisional measures. Despite the fact that Article 8
envisages the acceptance of undertakings at the stage of provisional measures, the EC has found such
an option to be ‘impractical’ (as envisaged in Arti cle 8.3), and no longer provides it. One of the
principal characteristics of such measures is that they are made on the basis of partially-formed
judgements on the issues of dumping and injury. Were the EC to accept undertakings from exporters
at this stage, they would have to be limited to the period before the imposition of definitive measures
because of the likelihood that further enquiries (permitted by Article 8.4) would lead to a revision of
the authorities’ conclusions. It is the EC’s judgement that these arguments apply equally to exporters
in developing countries. Furthermore, as already mentioned, undertakings cannot be retrospectively
repealed.
In addition, in the present case, the EC has argued (paragraphs 22 et seq. of the first written
Submission) that the Indian claims that challenge the EC’s Provisional Regulation are not within the
Panel’s jurisdiction. Although India’s claim regard ing Article 15 does not attack the Provisional
Regulation as such, it relates to a phase of the proceedings that leads to the adoption of provisional
measures. Furthermore, the obligation that the EC is accused of infringing – that of exploring
possibilities of constructive remedies – is explicitly linked to the application of provisional anti-
dumping duties (see answer to Question 37). Cons equently, it is this measure that is called into
question if the obligation in Article 15 is not observed. Since the WTO-compatibility of this measure
is not within the Panel’s jurisdiction, the issue of an infringement of Article 15 also becomes moot.
Questions from India
Question 1
The EC states at paragraph 38 of its First Oral Statement that "even if, during the
course of the investigation, information b ecame available which caused the authorities to
conclude that they had been mistaken regarding the sufficiency of the evidence for the purposes
of the initiation decision, that would not in itse lf be a basis for halting the investigation." In
light of this statement, could the EC please clarify whether it agrees with the past panels
(Swedish steel; Mexican cement) that have held that the failure to effect a proper standing
determination is a fatal error which cannot be cured retro-actively?
As this is not what happened in the present dispute, the EC considers the question theoretical.
Question 2
In its paragraph 34 of its First Oral Statem ent the EC acknowledges that in fact it has
considered "information gained during a previo us investigation on bedlinen." Can the EC
please provide details of this information that it considered?

As the reference in paragraph 34 of the EC Oral Statement is only incidental, the EC does not
consider this information as material for the current dispute. Given the advanced stage of the
proceedings, the EC will give factual information of this kind only if the Panel believes it is necessary
for the solution of the dispute.
Question 3
Similarly, Can the EC provide details of th e "number of exchanges" that took place in
the process of verification of standing, as referred to in the Footnote 1 of EC Exhibit-4. Can the
EC provide details of other similar "exchanges", if any, between itself and producers [or
Eurocoton and/or national associations] in the period between the termination of Bed Linen-I
and the initiation of Bed Linen-II?
In the framework of the analysis of standing, the Commission Services were in contact both
in writing and orally with associations and companies.
Question 4
In paragraph 41 of its First Oral Statement the EC implies to have relied on the 25 per
cent test as the minimum required to determine standing. In view of the absence of any
comments on the separate 50 per cent test, and India’s Exhibit-79, is it factually correct that the
EC did not in fact before 13 September 1996 consider the six Spanish companies not opposed to
the initiation?
Yes.
Question 5
In paragraph 43 of its oral statement the EC explains that the arguments concerning the
initiation were "not relevant at the point at wh ich they were posed." Would the EC not agree
that in the EC anti-dumping system it is not known when a complaint is filed and hence when a
dumping case would be initiated? Could the EC indicate when the arguments should have been
posed in order to have been considered relevant? Is it the EC’s position that exporters should
"guess" that a complaint has been filed and th at a proceeding "could" start and that the only
moment at which a comment is relevant is when such a " guess" is indeed made at the right
moment?
Paragraph 43 of the EC Oral Statement answers the fact that India tries to find obligations
related to standing also in Article 12.2.2 of the Anti-dumping Agreement, thus considering
determinations to impose provisional and definitive measures as appeals from the initiation decision.
The EC rejects this interpretation of Article 12.2.2 and sustains that, if India considered that the
Notice of Initiation did not contain sufficient inform ation on standing, it should have brought a claim
under Article 12.1, which it failed to do. Further details on EC’s views on disclosure and explanation
regarding the adequacy of support for initiation are given in its answer to question 23 of the Panel.
Question 6
As agreed during the first meeting with the Pa nel, the EC will submit the original faxed
copies of the producers’ and national associations’ declarations of support so that the dates of
receipt by the EC of the declarations of producer s’ support can be verified. In reply to the
question by the Chairman of the Panel why the fax headers were removed, the EC stated that
the fax headers had been removed to protect the – apparently confidential – fax numbers of the
EC producers. However, this information (that is the telephone and fax numbers) was as it is to

be supplied by the company expressing support. Could the EC therefore explain why the fax
headers were removed?
See answer below.
Question 7
Moreover, under the EC system of confidential ity of information, it is incumbent upon
the party supplying confidential information, to simultaneously provide a non-confidential
version thereof (Article 19.2 EC Basic Regulation) th at is to be placed in the non-confidential
file. Failure to do so by an interested party wi ll lead the EC to use best information available
(Article 19.3). Why then did the EC, in violat ion of its own Basic Regulation and its standard
practice, not follow this standard practice, and instead, of its own volition remove the fax
headers?
The only standard practice of the EC in this context is that the specific form of non-
confidential versions of documents are indicated by applicants.
Question 8
Would the EC agree that in other EC anti-dumping proceedings it does not normally
remove fax headers? Would the EC also not agre e that in other EC anti-dumping proceedings
the declarations of support are normally cont ained in an Annex to the complaint rather than
being separately obtained and filed in a non-confidential standing file?
No. The standard EC practice is to prepare a separate non-confidential standing file.
Question 9
The European Commission maintains a ‘chron-in’ log in which all incoming
correspondence is recorded. Could the EC indicate on the basis of this chron-in log when the
faxed declarations of producers’ support were received by the EC?
The EC considers to have indicated the dates at which it received declarations of support by
producers a sufficient number of times (copies of faxed declarations of support by producers in non-
confidential file; Exhibit EC-4; EC oral answers to Panel’s questions during First Substantive Meeting
of the Panel). Given the advanced stage of the proceedings, the EC will give additional factual
information on this point only if the Panel believes it necessary.
Question 10
Exhibit EC-4, appended to the first submission of the EC, now indicates that the
declarations of support from the eight French producers were submitted. However, these eight
declarations of support were never in the non-confidential file on 8 January 1997. When did the
EC receive the declarations of support from these eight French producers?
See answer under question 9.
Why were these eight declarations of support not included in the non-confidential file?
See answer under question 7.
Did the EC rely on these declarations of support during any part of the standing
determination?

Yes. The support of the individual French producers was reflected in the support expressed by
the French producers association, details of which were always contained in the non-confidential file.
Could the EC provide the original faxed copies of these eight declarations of support?
No. Given the advanced stage of the proceedings, the EC will give additional factual
information of this kind only if the Panel believes it necessary.
Question 11
Paragraph 3 of the working procedures in dicates documents submitted to the Panel
shall be kept confidential by all. In light of this confidentiality requirement, why did the EC not
disclose producer-specific production-output details of EC Exhibit-4? Can the EC provide the
individual producer-wise production-output details, not contained in EC Exhibit-4, but forming
the basis for the country-wide figures?
Business confidential information can only be disclosed with the agreement of the industry
concerned. Given the aggregated figures provided on a country basis, the EC does not consider that
this additional "producer-specific" information would add anything to the present dispute.
Question 12
Can the EC confirm that the information on production output contained in Exhibit
EC-4 was available at the time initiation and at the time of sample selection?
Yes.
Question 13
It has been argued that the German companies Irisette and Frankische Bettwarenfabrik
are, respectively, a trader and a producer with production outside the EC. Can the EC provide
an explanation on these assertions?
The EC does not understand where and by whom this has been argued.
Frankische Bettwarenfabrik (FB) and IRISETTE were included in the complaint and were
supporting the complaint before and after initiation. They were also included in the list of 35
companies (making up the Community industry) which was provided to India during the previous
consultations.
As far as IRISETTE is concerned, the company was taken over in 1994 by BIERBAUM-
group (BIERBAUM was included in the definition of the Community industry and is a major player
in the Community market with a production of Bed linen of around 5.000 Tons, i.e. around 4 per cent
of total Community production). IRISETTE had a production activity notably via subcontracting
activities with French producers.
The investigation showed that the main ac tivity of IRISETTE in the BIERBAUM-group
consisted in packing, handling and shipping, but continued with production notably via subcontractors
during the IP.
The figures for the BIRBAUM-group were centralized by BIERBAUM. This explains why no
figures were declared by IRISETTE while remaining included in the list of the Community industry.

FB is a very small company (production during the IP = 468 tonnes, or 0.3 per cent of total
Community production), contrary to the 11 companies (including Luxorette) (see question 40 below)
which were excluded from Community industry -non-cooperation, non production, imports of high
volumes of BL from the countries concerned, its activity was not focussed on the product concerned -
the evidence available during the investigation did not allow the investigation team to exclude FB
from the definition of the Community industry.
Question 14
Why did it take four months from the date of initiation, for the EC to grant access to the
non-confidential file?
Because access to the non-confidential file on standing had never been asked.
Question 15
The EC takes the position that the filing of an anti-dumping complaint by a trade
association on behalf of domestic producers is in accordance with Article 5.4 ADA. Does the EC
agree that the objective of Article 5.4 is the prev ention of the filing of frivolous complaints?
Would the EC agree that its position in this case may undermine that objective to the extent that
it could occur that a trade association files a complaint which later turns out not to be backed
by members of the association?
This is not what happened in the present dispute. However, the EC believes that on the
contrary, particularly in case of a fragmented industry with a high number of small and medium
enterprises, the fact that trade associations file a complaint on behalf of its members helps to prevent
"frivolous complaints".
Would the EC agree that this has in fa ct occurred in several EC anti-dumping
proceedings?
Other anti-dumping proceedings are outside the scope of this Panel and, if India has a
problem with any of them, it should take appropriate action. In any event, the EC considers that the
termination of an investigation is a fact inherent in the scope of an the investigation itself and it is not
worse that not giving credit to a complaint which later turns out as having been supported by a major
proportion of the industry. Complainants may also go to court for failure to open an investigation.
Question 16
Supposing, for the sake of argument, that the EC did ‘examine’ as per Article 5.3 the
adequacy and accuracy of the complaint. Can the EC confirm whether it shares the view that
such examination should take place before initiation? Can the EC confirm that in this Bed
Linen proceeding such examination indeed took place before initiation?
The EC confirms that the examination of the adequacy and accuracy of the evidence provided
in the application to determine whether there is su fficient evidence to justify the initiation of the
investigation has to be done before initiating the investigation.
The EC also confirms what written in its Notice of Initiation that in the case at issue this
examination took place before initiation.

Question 17
In paragraph 97 of its first written submission the EC acknowledges that support for (or
opposition to) an application must be expressed by domestic producers. The EC then takes the
position that the expressions of support from the domestic producers need not necessarily be
expressed directly to the investigating authorities, but could be expressed to a trade association.
India agrees with this argument. However, in examining standing, the authorities under
Article 5.4 must examine the declarations of support of the domestic producers and it does not
suffice to rely solely on declarations made by trade associations. Would the EC agree that,
while declarations of support may indeed be addressed/expressed to or channelled through a
trade association, Article 5.4 obliges the investig ating authorities to examine the declarations of
the domestic producers before the initiation?
No. The EC’s view is that associations are capable of expressing support within the meaning
of Article 5.4.
Question 18
In paragraph 99 of its first written submis sion the EC states that "on the basis of
information they had received from various sources, the authorities estimated the total EC
production in 1995 to be between 123,917 and 130,128 tonnes." Could the EC divulge to the
panel which sources are referred to here? Assuming that this information came from the
complainants, would the EC agree that such information might be self-serving? If so, could the
EC explain which steps it took to verify th e accuracy of the data provided on total EC
production?
As usual, the Commission verified the figure s originally provided in the complaint with
information deriving from trade associations, national ministries, national statistical offices and
Eurostat, previous cases on the same product, and the individual declarations by companies and
associations provided in the framework of the standing analysis.
Question 19
Does the EC agree that the exclusion of sales below cost for Article 2.2.2(ii) purposes will
by definition when not all sales are profitable lead to the calculation of a higher dumping
margin than would otherwise exist?
The exclusion of sales not in the ordinary course of trade is part of the basic definition of
dumping contained in Article 2.1. Accordingly, a calculation that would include those sales would not
be an accurate measurement of the margin of dumping as defined in that provision.
Question 20
At paragraph 57 of its First Oral Statement the EC states that "ordinary course of trade
is part of the basic definition of dumping contained in Article 2.1". At its paragraph 69 the EC
states that "Article 2.2 enounces that . . . profit included in the constructed normal value must
be ‘reasonable’." Could the EC please explain why under Article 2.2.2(ii), which contains
neither the words ‘ordinary course of trade’ nor the word ‘reasonable’ only the concept of
‘ordinary course of trade’ applies, and not the concept of ‘reasonable’ [other than that such
approach invariably leads to a higher dumping margin].
The EC does not argue that the "concept of reasonable" does not "apply" to Article 2.2.2(ii).
Rather, the EC’s position is that the formulae contained in Article 2.2.2 specify that concept, with the
consequence that the amounts determined in accordance with that Article are "reasonable" per se.

Question 21
At its paragraph 73 the EC in the context of…asserts that "India has presented no
relevant evidence to that effect. " At countless times during the disclosure comments India has
explained that 18+ per cent profit for Bed Line n is not reasonable, together with a variety of
prima facie proof. Could the EC indicate what it means by ‘relevant’? Were the arguments not
relevant because they were posed at a wrong moment [such as suggested in paragraph 43 of its
First Oral Statement]? Or was the evidence not relevant because it was not "significant
independent factor" [such as in 253 of its First Written Submission]?
The evidence presented by India is not "relevant" because it is not apt to demonstrate that the
profit amount used by the EC is "unreasonable". As already explained by the EC, profit margins may
vary considerably from one country to another, as well as among different product markets,
depending on the prevailing competitive conditions in each market. Therefore, a profit margin is not
"unreasonable" simply because it is higher than the margins obtained in other markets.
Question 22
In paragraph 76 of its first oral statement the EC suggests that the profit margin of
Bombay Dyeing calculated in the ordinary course of trade was representative beyond question
because all of its sales nearly reached 80 per cent of the domestic market. Would the EC not
agree that nearly half of the sales of Bombay Dyeing were loss making and that the profit
margin so established was based on the profitable sales only?
Bombay Dyeing’s non-profitable sales were disregarded in application of the rules contained
in Article 2.2.1. The remaining sales are sufficiently representative of the conditions prevailing in the
Indian market.
Question 23
At paragraph 78 of its first oral statement the EC states that "the ‘zeroing’ practice . . .
is not covered by Article 2.4.2." This view is repeated in paragraph 79 of its oral statement
where the EC states that "’zeroing’ took place only at the subsequent stage of combining the
dumping margins determined for each type in accordance with Article 2.4.2 into a single
dumping margin. That stage of calculation, however, is not subject to Article 2.4.2." In light of
these assertions could the EC please indicate, in the alleged absence of the applicability of
Article 2.4.2, what Article of the ADA covers the zeroing practice and what Article covers of the
ADA covers the ‘subsequent stage’ of determining a ‘single dumping margin’?
It is not for the EC’s to formulate India’s claims in this case. The EC would recall,
nevertheless, that the issue raised by India was addressed by the Panel in the Audio Cassettes case,
which held that even, assuming arguendo that Articles 2.1 and 2.6 (now 2.4) applied to the practice of
"zeroing", that practice would not be inconsistent with those provisions (Panel report on EC – Anti-
dumping duties on Audio Tapes in Cassettes originating in Japan , ADP/136, 28 April 1995,
unadopted, at paras. 347-366).
Question 24
The EC in paras. 144-148 of its first written submission tries to show with theoretical
examples that the method advocated by India leads to "absurd" and "perverse" results.
Would the EC not agree that in the real life situ ation presented by the case at issue the only
reason why the EC was able to find significan t dumping for all Indian exporters other than
Bombay Dyeing and Anglo-French was through its use of an 18.64 per cent profit margin,

which itself was largely the result of the inflation of the real profit margin of Bombay Dyeing
through exclusion of all below cost sales?
Bombay Dying’s non-profitable sales were disregarded in accordance with the rules contained
in Article 2.2.1. The EC, therefore, rejects any suggestion that the profit amount was "inflated".
A method is not "absurd" or "perverse" simply because it yields a less favourable result for
the exporters than the methods proposed by the exporters.
On the other hand, the examples presented by the EC show that India’s method is "absurd"
and perverse" because it leads to a result that is at odds with the definition of dumping and the internal
logic of Article 2 and moreover introduces an arbitrary and unjustifiable discrimination against those
exporters which have sufficient sales in the ordinary course of trade.
Question 25
The EC in paragraph 156 of its first written statement tries to create the impression that
one of the reasons why it prefers to use Article 2.2.2(ii) over Article 2.2.2(i) is to accommodate
difficulties experienced by intere sted parties, in particular small companies. It is India’s
experience that exporters prefer use of their own data (method 2.2.2(i)) over use of other
producers’ data, particularly in EC anti-dumping proceedings, because under the EC system of
confidentiality of information, method 2.2.2(ii) completely precludes companies from checking
the dumping margin calculations of the EC (b ecause the SGA and profit data of the other
producer(s) used are considered as business proprietary). India appreciates the EC’s apparent
concern for small exporters, but has never seen an y concrete evidence of this concern, either in
the present anti-dumping case or in other EC anti-dumping cases. Could the EC produce such
evidence?
It is the EC’s experience that exporters always prefer the method which yields the lowest
dumping margin in each case. Since that preference cannot be accommodated, the EC authorities
attempt to make their choices on the basis of objective criteria which are equally valid in all cases.
One of the reasons why the EC gives preference to the method set out in Article 2.2.2(ii) is
that it limits the amount of data to be provided by the exporters. The EC believes that this is in
accordance with the principle enunciated in Article 6.13.
India has not submitted any claim under Article 6.13. Therefore, the EC fails to see the
relevance of the evidence requested by India. The EC, nonetheless, is willing to provide that evidence
if deemed necessary by the Panel.
Question 26
The Article 2.2.2(ii) option, especially after exclusion of sales below cost (as advocated
by the EC), can lead to establishment of huge profit margins. Yet, the EC position is that any
profit thus found is by its very nature reasonable. Suppose that a profit margin thus established
would be 1,000 per cent; would this then be reasonable?
A profit margin is not unreasonable simply because it is high.
The EC doubts that "in the real world" to which India refers in other questions the profit
margin realised by an exporter in respect of sales made in the ordinary course of trade and in
sufficiently representative quantities will ever reach that level in any market.

In any event, why would it be "reasonable" to use a 1,000 per cent profit margin when that
margin is based on the exporter’s own sales, but "unreasonable" to use the same amount when
calculating the constructed normal value for other exporters or producers? Or is India suggesting that
the reference to the "ordinary course of trade" in the chapeau of Article 2.2.2 becomes inapplicable if
it leads to a result which is "unreasonably high"?
Question 27
In paragraph 190 of its first written submission the EC states that where "…one
producer can have 80 per cent of its domestic market and make a profit of over 18 per cent
while the numerous other producers ignore this market and devote themselves to exporting,
may be an uncommon situation." Does the EC agree that Bombay Dyeing did not in fact make
18.64 per cent profit on its domestic sales of bed linen, but that the 18.64 per cent profit quoted
by the EC is the profit established by the EC after systematic exclusion of all domestic sales at a
loss? Does the EC agree that the actual overa ll profit made by Bombay Dyeing on domestic
sales of bed linen is only 12.09 per cent and its overall profit only 4.66 per cent?
Bombay Dyeing's non-profitable sales of the products under investigation were disregarded in
accordance with the rules contained in Article 2.2.1.
Bombay Dyeing’s "overall profit" for all its ales of all products is irrelevant for the purposes
of Article 2.2.2 (ii).
Question 28
Does the EC agree that Article 2.4.2 provides for a two step analysis under which a
mixing of methodologies for establishing normal value and export price comes into play only in
the second step, i.e. where there is a pattern of differing export prices? Does the EC agree that
the first step of Article 2.4.2 does not allow such mixing?
Article 2.4.2 does not provide for a two-step analysis. The two sentences of Article 2.4.2
apply alternatively and not sequentially.
The first sentence of Article 2.4.2 neither allows nor prohibits the "mixing" of methodologies
when combining the dumping margins established in accordance with that provision into an overall
dumping margin for the product under investigation. That stage of the calculation is simply not
covered by Article 2.4.2.
Question 29
Suppose that a producer has been found not to have dumped, would the EC include
such producer’s exports for the purposes of the injury determination? If so, does this not mean
that the causal link between dumping and injury is broken because injury cannot logically be
caused by a non-dumping producer?
See the EC’s answer to the Panel’s question 18.
Question 30
If the EC persists in the argument that countries are dumping, then why has the EC on
occasion initiated anti-dumping proceedings against specific producers (Orion and Funai) in a
country (Japan)? Similarly why has the EC on occasion excluded specific dumping producers in
a country from the injury determination (BASF: 23.1 per cent; Eastman Chemical: 9.9 per cent
and Celanese Fibres: 9.2 per cent in Synthetic fibres of polyesters from the United States)?

The video recorder case which India refers to was an exception pre-WTO case.
The EC sees no contradiction between its position and the fact that specific companies may be
excluded from the application of duties where this is warranted by the facts of the case.
Individual treatment of exporters is given in particular in order to improve the effectiveness of
antidumping duties.
Question 31
If the EC persists in the argument that countries are dumping, then why has it on
several occasions initiated company-specific reviews?
See the answer to the previous question.
Question 32
Similar to its First Written Statement [paragraph 309] the EC again presents its
arguments concerning the permissibility of a double domestic industry definition within a single
investigation [paragraph 135 First Oral]. In light of paragraph 308 of its First Written
Submission and the statements during the First Meeting with the Panel can the EC confirm that
it only used one of the permissible definition during the Bed Linen proceeding?
The EC did not rely on a double definition of the domestic industry.
Reference to the whole industry was made in order to clarify the actual situation in the
Community market and thus not ignore the non-complain ant. In this context, it should also be noted
that reference is also made to a number of companies which disappeared during the "injury
examination period" and also during the Investigation Period (PR 81 - DR 41).
As clearly indicated in the PR and DR the conclusion of the investigation was that the
"Community industry" (as defined in PR 57 and confirmed in DR 34) suffered material injury.
Question 33
In paragraph 221 of its first written subm ission, the EC posits that the ordinary
meaning proposed by the EC is straightforward. But would the EC not agree that the EC’s
reading of the term ‘dumped imports’ renders the word ‘dumped’ obsolete, and this throughout
the entire Article 3?
No. The word "dumped" is necessary to indicate that it is imports of the product under
consideration and that has been found to be dumped that are relevant rather than all imports of all
products from the country or countries in question.
Question 34
Could the EC confirm that the theory of the "found not to be a significant independent
factor" has been advanced for the first time in the first submission of the EC to this Panel? In
other words, could the EC confirm that this th eory has never before been communicated to the
Indian exporters, either in the published Regu lations or in any other communications to the
Indian exporters?

The word "relevant" is in Article 3.4 for all to see. Clearly absence of significance or
independence of factors are matters that can lead to the conclusion that certain factors are not relevant.
Also it should be noted that as indicated below (question 35) there are factors known not to be
relevant by the industry as well as by all the operators working in the business. This include
exporting producers and importers. All interested parties have the right to present evidence (on
factors listed in 3.4 of ADA for instance) if they believe they are relevant to defend their rights.
Question 35
Could the EC explain the interconnection (paragraph 253 EC’s first written submission)
between on the one hand the 7 factors it did evaluate, albeit at varying levels, i.e. actual and
potential decline in sales, profits, output, market share, factors affecting domestic prices,
employment and, on the other hand, the 11 factors it did not address anywhere, i.e.
productivity, return on investments, utilization of capacity, magnitude of margin of dumping,
actual and potential negative effects on cash flow, inventories, wages, growth and ability to raise
capital or investments?
The EC has already made clear that the examination of the impact of dumped imports on the
"domestic industry" under Article 3.4 involved a consideration in one way or another of all the
factors.
Some factors were of course found to either not be relevant for the purpose of the present
investigation or "interconnected" to other factors which were fully examined and evaluated.
As already said, factors may be not relevant because of reasons known even by all the
industry as well as by all the operators working in the business, e. g.:
(2)-inventories: because detailed records are not kept in many SME's because there are
thousand of different types of the like product plus many other products they are manufacturing. In
addition, when data is available its format is not compatible from SME to SME. No aggregation is
possible for the domestic industry.
(3)-Capacity and (4) capacity utilization: because it is well known that a high flexibility of the
available capacity render it impossible to make an assessment in particular when SME's are involved.
Experience also showed that if the information is available, it is not homogenous and not consistent
from company to company (product mix problem, method of calculation,…). No aggregation is
possible.
(5)-wages (6)-growth (7) ability to raise capital: same problem with these factors in particular
when SME's are involved.
As regard the "interconnection" of certain factors: the following examples can be given:
- profits are interconnected with (8) cash flow (and thus also ability to raise capital)
(cash flow equates to profits plus depreciation);
- production and employment with (9) productivity (= production / number of
personnel employed);
- production with capacity and capacity utilization.

Question 36
Does the EC interpret the word relevant in Article 3.4 as providing unlimited discretion
to the administering authority to unilaterally de termine which factors it considers relevant and
to then base its injury determination on those factors only?
The Antidumping Agreement gives investigating authorities a certain discretion in assessing
the state of the domestic industry but this is clearly not unlimited. The exercise of the discretion must
be justifiable in the light of all the circumstances.
Question 37
Does the EC agree that in an ASCM case (Brazil-milk) the EC itself argued that the
comparable ASCM provision should be interpret ed as requiring an evaluation of all injury
factors listed in the comparable provision?
The EC does not read the Brazil milk powder case in that way. In that case it appears that
consumption figures were necessary in order to be able to calculate market share.
Question 38
Does the EC agree that its position taken in paras. 271 to 277 of its first written
statement, would encourage domestic producers to provide information only on the factors that
are beneficial to their case, as apparently happened in the bed linen case?
No. Pursuant to Article 5.3 of the Antidumping Agreement, the investigating authority will
examine as the accuracy and adequacy of the information provided in the complaint.
Question 39
Would the EC agree that the company Luxorette was part of the sample? Would the EC
also agree that Luxorette was not one of the 35 companies which were determined to make up
the domestic industry? Would it be therefore correct to conclude that in any event EC relied on
at least one company not part of the domestic industry for its injury finding?
Luxorette was not in the Community industry and was not
 in the final sample.
The situation is that Luxorette was intended to be included in the sample and as indicated in
PR 8 an on-the-spot verification visit took place at the premises of the company. However, as
indicated in PR 54, it was excluded from the Community industry and thus from the sample.
Question 40
Can the EC explain whether the sample was established before, after, or simultaneous
with the date on which the Community Industry [the 35 producers] were established? More
specifically: can the EC provide the dates on which it established the Community Industry and
the EC sample (of 17 producers)?
It should be noted that there were 46 companies which supported the complaint before
initiation. Given that the 35 companies making up the Community industry (CI) represented around
34 per cent of total Community production, the conditions set forth in Article 5.4 of the ADA were
fulfilled before and after initiation.

As for the selection both the sample of Community industry and exporting producers, the
method for the selection is clearly indicated in the notice of initiation (NOI) point 5. Consequently
both samples were defined after initiation.
For establishing the CI sample, as indicated in the NOI, the EC requested information directly
from the complainant (point 5.b. 2nd &), if necessary the individual companies and/or associations.
Certain companies were eliminated from the li st of 46 companies in the course of the
investigation, namely after initiation (see reply to question 13 above). Consequently, the reply to the
question is that both the definition of the Community industry (35 companies) and the sample were
thus established in parallel in various steps.
Indeed, exclusions of companies occurred in the course of the investigation when evidence
indicating that they should be excluded was examined and a decision was reached by the investigating
team. Evidence triggering the exclusion of a company was obtained during an on-the-spot
verification (this is the case of Luxorette).
Both the final sample and the Community industry were established according to the
following steps:
- Before initiation (before 13/09/96) 46 companies were supporting the complaint
- after initiation (after 13/09/96) -7 companies were eliminated from "CI"
- 18 were likely to be included in the sample
- after questionnaires were sent (10 -11/96), 3 companies were eliminated (failure to
cooperate, no production anymore),
- during the on-the spot verifications, 1 company (Luxorette) activity was found not to
be not focussed on the product concerned in the Community.
- after evaluation of on-the-spot findings (from 10/96 to 011/97).
Question 41
Could the EC provide any support for its contention in paragraphs 309 and 332 that "a
member may use both definitions of the domestic industry in the course of a single
investigation"?
The contention is supported by the text of the provision.
Question 42
Would the EC agree that it only referred to trends of all EC producers or the
complaining producers (as opposed to the sampled producers) where this benefited its
conclusion that there was inju ry? Would the EC agree that this approach can be described as
‘picking and choosing’?
No. The conclusions on material injury are clearly based on the findings made for the
Community industry (PR 92 to 94 - DR 40)

Question 43
In paragraph 325 of its first written statement the EC states that "India does not explain
in what way the EC could have, but did not, take account of data concerning exporters not part
of the sample nor what difference this would have made." Would the EC agree that India
explained this in great detail in Section III.A.1, paras 3.2 to 3.13, of its first submission to the
Panel and that this statement is therefore factually incorrect?
The EC does not understand this question. Se ction III.A.1 explains the factual background
and does not explain in what way the EC could have taken account of the information or what
difference it would have made.
Question 44
The EC acknowledges in paragraph 349 of its first written submission that the
Regulation imposing definitive duties repe atedly referred to companies that ceased
production/disappeared in the years preceding the investigation period. As such statements
were used to substantiate the finding of injury, does the EC then not agree that as a matter of
pure logic, the EC is assuming that pre-inve stigation imports were also dumped because any
other interpretation would break the causal link between dumping and resulting injury and the
repeated statements would therefore be non-sensical?
The EC did not use the company closures to "substantiate the finding of dumping".
Although there is mention in the Regulations of the notion that the exit of companies was an indicator
of injury caused by dumped imports (DR rec. 41), the principal significance of the disappearance of
companies is to explain how an affirmative determ ination of injury could properly be made when on
all but two factors, the domestic industry was in an apparently healthy state (PM recs. 81, 90; DR rec.
41).
Without information regarding the exit of the companies the Regulations would have given a
misleading picture of developments in the state of the industry during the ‘injury investigation
period’. In particular, this information supported the finding that some of the Article 3.4 factors were
not relevant (i.e. meaningful) in this case (e.g. employment and production), or that the relevant
information risked giving a distorted image of the industry’s condition (e.g., sales volume and value,
capacity, capacity utilisation, and inventories).
Question 45
Article 15 of the Agreement specifically indicates that ‘special regard must be given by
developed country Members to the special situation of developing country member when
considering the application of anti-dumping meas ures’. It is therefore clear that the onus of
exploring constructive remedies is on the developed country Members. Can the EC explain how
it fulfilled this obligation?
See the EC’s answer to questions 30, 37 and 38 from the Panel.

Question 46
The EC states in paragraph 80 of its first submission that the (Article 12.2.2 ADA)
obligation on the Member concerned is to deal with relevant arguments and claims. Is it the
position of the EC that a Member can then ig nore arguments and claims made by interested
parties on the simple ground that the Member unilaterally judges such arguments and claims
not relevant?
No. The investigating authorities conclusion that the argument is not relevant must be
capable of justification in particular in the event of a dispute settlement proceeding.

II. INITIATION
1. Adequacy of evidence – Article 5.3
3. India accuses the EC of failing to adequately examine the allegations in the complaint. It
seeks to further its case by stretching the notion of examination, in particular by saying that
examination of the complaint can never be the only element in such an examination. India’s criticisms
focus exclusively on one aspect of the matter to be examined by the authorities – the injury to the
domestic industry.
4. Two points should be made at the outset. Firstly, the EC has never accepted that its
examination was limited to the complaint, and, as explained in its Oral Statement to the First Meeting
of the Panel
1, did in fact cross-check the data in the comp laint with other information available to it.
Secondly, India, despite various suppositions and hypotheses, has never presented evidence that it was
so limited.
5. There is little direct guidance in Article 5.3 as to the nature of the examination that is
required. However, Article 12.1.1, which states the information to be contained in the public notice of
initiation, and is as such part of the context of Article 5.3, gives assistance. Regarding the issue of
injury, what must be published is ‘a summary of the factors on which the allegation of injury is
based’. The provision on dumping is similar. What must be published is ‘the basis on which
dumping is alleged in the application’ .
6. Consequently on all substantive issues relevant to the eventual establishment (or not, as the
case may be) of injurious dumping, the notice of initiation has to address only the allegations in the
complaint. If the Agreement intended the kind of investigation suggested by India one would have
expected that this provision on injury to say something like ‘a summary of the factors on which it was
decided that injury might be occurring’.
7. India has repeatedly called in aid the comments of the Panel in the Guatemala – Cement
case.
2 The EC countered that argument in its first written Submission 3, saying ‘That panel was
denying that evidence that satisfied the criterion of “such information as is reasonably available” in
Article 5.2 would necessarily satisfy that of “sufficient evidence” in Article 5.3. It did not deny that,
in a particular case, it might satisfy this test.’ India has never attempted a refutation.
8. India explicitly accepts 4 that it bears the burden of proving that the EC failed in its
obligations, but implicitly denies this by arguin g that the EC has failed to provide evidence of
compliance in its Notice of Initiation (In fact, the notice says: “Having decided … that there is
evidence to justify the initiation of a proceeding …”). In other words, India accuses the EC, not of
failing to comply with Article 5.3, but of failing to prove that it has complied with Article 5.3, while
simultaneously accepting that the burden lies on itself to prove that the EC has not done so. And its
supposed proofs consist of nothing but assertions.
9. India also appears to accept that the complainant party bears the burden of proving that, in a
particular case, the investigators were under an obligation to look beyond the complaint.5
10. Even if the burden of proof did not lie on India, in the absence of a video showing its officials
examining the various documents, the EC is unclear what proof India expects to find. The document

1 Paragraph 20.
2 E.g. India’s answers to Panel questions, Questions 7.E, 8.A.
3 Paragraph 52.
4 India’s answers to Panel questions, Question 7
5 This is assumed in India’s answers to Panel questions, Question 8.B.

that India presents as Exhibit India-82 reflects the early stages of the investigation itself. The fact that
certain matters were examined further during the investigation does not mean that they were not
examined as required by Article 5.3 at initiation. The EC authorities clearly had the means of
complying with the obligations; and they recorded the fact of their compliance. 6 Against that India
merely asserts the contrary. It provides no relevant answer 7 when the Panel asks how it is to assess
whether a violation occurred, although it late 8 asserts that the Panel is confined to looking at public
documents.
11. In fact, despite the various comments on the subject that India has made in its Oral Statement
to the First Meeting of the Panel, and in its answ ers to questions from the Panel and the EC, nothing
of substance has been added to its case. In particular, it has done nothing to answer the defence
presented by the EC, rather it has chosen to ignore or misinterpret it, and to rely on mere assertion.
12. In its answer to the Panel’s Question 7, India asserts that the EC failed to examine the
accuracy of the evidence in the complaint, and had insufficient evidence to initiate an investigation. It
presents no proof in support of this assertion. In its Oral Statement to the First Meeting of the Panel 9
it claims support from the fact that the Initiation Notice referred to the allegations in the domestic
industry’s complaint. However, according to Article 12.1 of the Agreement, it is precisely ‘a
summary of the factors on which the allegation of injury is based’ that should be included in the
Notice.
13. India has also taken the opportunity
10 to make what is in effect a criticism of the contents of
the EC’s Notice of Initiation, a matter regulated by Article 12.1 of the Agreement. If what India
contests is the language or level of details with which the EC gave account of this examination of
evidence in the Notice of Initiation, India should have claimed a violation of Article 12.1. India chose
not to do so, and must abide by its decision.
11 In any event, the EC’s Notice satisfied the requirements
of Article 12.1.
14. In its Oral Statement to the First Meeting of the Panel 12 India says that the EC has made
contradictory assertions as to whether the previous investigation found injury to exist. It apparently
fails to see the difference between making a finding of injury and not making a finding of non-injury.
15. In its answers to the Panel’s Question 8, India resorts to meaningless language to explain its
arguments regarding the EC ’s obligations under Article 5.13 Thus, the obligation was ‘rendered even
more acute’ – does this mean the obligation was modified? And India sought to ‘stress [the EC’s]
lapse in the context of the previous investigations’ – was this merely for dramatic effect?
16. India admits 14 that the question whether the authorities should look at the evidence of
previous investigations depends on the circumstances of the case. The EC recalls that, under
Article 17.6(i) of the Agreement, the role of the Panel is to review the assessments made by national
authorities, not to substitute their own views. Th e EC notes that India has now been so convinced by
its assertions that the EC authorities did not take into account data from its previous investigations
that it now assumes they are true.

6 In the Initiation Notice, and in the Provisional Regulation, recital 2.
7 Answer 7.D.
8 Answer 7.E.
9 Paragraph 10.
10 India’s answers to Panel questions, Question 7.E.
11 See EC Oral Statement to the First Meeting of the Panel, paragraph 14; EC answer to Panel
question 23.
12 Paragraph 15.
13 India’s answers to Panel questions, Question 8.A.
14 India’s answers to Panel questions, Question 8.B.

2. Sufficient support for initiation – Article 5.4
17. India continues to throw doubts on the propriety of the EC’s conduct at the time of
initiation.15 In light of these comments, the EC makes the following observations.
18. Firstly, as far as it is aware, no interested party that specifically requested access to the non-
confidential file on initiation was denied access, nor was any delay imposed in allowing access, in the
period following initiation. In October 1996 the exporters’ representatives submitted a brief stating
that ‘Texprocil would expect that the Commission will make evidence available in the non-
confidential file attesting …’ 16 The EC is confident that, had this expectation been converted into a
specific request, access would have been swiftly granted.
19. Secondly, the removal of headers from faxes was done at the request of producers to protect
information they regarded as confidential. The versions of the faxes that include the headers are now
being submitted (Exhibit EC-5).17
20. To facilitate the Panel’s examination, the EC is providing, in an annex to this Submission, a
list of the companies and associations that expressed support, along with the dates on which these
declarations were received by the EC.
21. India’s calculation
18 of the threshold figure on the supposition that the French producers’
support should be disregarded is erroneous since it involves double counting.
22. Regarding the status of support expressed by producer associations the EC refers to its
previous remarks.19 The EC has in any case established that producers responsible for over 34 per
cent of EC production expressly supported the complaint.
III. DUMPING
1. Exporters: choice of sample
23. Although India has no claim that addresses the issue, and as a consequence it is not in the
panel’s terms of reference, the choice of the sample of exporters continues to attract attention.
24. India has given a perverse response to the Panel’s question 20 on the exclusion of Standard
Industries. Apparently, no objection was taken to Standard’s exclusion from the sample because it
was a reserve for inclusion in the sample. Nevertheless it should have been included in the
calculations (in other words included in the sample) for purposes of the profit calculation.
25. India also argues that Standard was more representative of domestic sellers than Bombay
Dyeing, because it was ‘less anomalous and less peculiar’. The EC cannot see how a company with
80 per cent of the market can be more anomalous and peculiar than one with only 14 per cent. The
only basis given for this conclusion is that the Indian authorities ‘genuinely believe’ it.

15 Oral Statement to the First Meeting of the Panel, paragraph 18.
16 Brief of 25 October 1996, point 1.2, Exhibit India-50.
17 The non-confidential versions are contained in Exhibit India-59.
18 Oral Statement to the First Meeting of the Panel, paragraph 21.
19 First written Submission, at paragraph 82; Oral Statement to the First Meeting of the Panel, at
paragraph 39.
20 Number 5.

26. As it happens, the evidence from Standard’s response to the EC authorities’ questionnaire
indicated that it had no domestic sales in the ordinary course of trade during the investigation period.
Assuming that this fact would have been confirmed on verification, Standard’s data would have had
no effect on the profit margin.
27. Finally, India thinks that the companies should not be excluded from the sample before their
data are examined. If that were the case there would be no point having a sample, because the
authorities would have already examined all the data.
28. India also grasped other opportunities 21 to return to the issue of the exclusion of Standard
Industries from the sample, but added nothing of substance. In order to distinguish its arguments on
the exclusion of Standard from the use of different layers of producers in the analysis of injury it was
forced to adopt the perverse position that being in the reserve for the sample meant that it actually was
in the sample. 22 Perhaps it would also argue that being a reserve for the Indian cricket team is the
same as being a playing member.
29. A sample is by definition less than the whole class from which it is taken. India has not
criticized resort to a sample by the EC, but merely because one particular company was not included.
2. Article 2.2.2
(i) Reasonableness
30. The EC has explained at length 23 why there is no implicit requirement of reasonableness in
Article 2.2.2(ii). In this section it examines in more detail India’s arguments regarding how such a
requirement would apply, were its existence accepted.
31. India accepts 24 that, even were Article 2.2.2(ii) subject to a standard of reasonableness, it
would bear the burden of establishing a prima facie case of establishing that the standard was
infringed.
32. India uses extravagant language to describe the application to other exporting companies of
the 18.65 per cent profit margin calculated for Bombay Dyeing (e.g., ‘contrary to any perception of
reasonableness that can and may exist in and outside the textile industry’)25, but on closer examination
its arguments as to what is meant by reasonableness are unimpressive.
33. Firstly, it quotes the claims made by the companies and their rejection by the EC, without
indicating which of the claims it endorses. 26 Only two of these claims appear to be of significance.
One concerned alleged differences between sales of branded and non-branded goods. The EC dealt
with this in its Definitive Regulation:
It should be noted that the profit margin used in constructing normal value
corresponds to the weighted average profit realized on domestic sales of profitable
types of branded and non-branded products by the Indian company concerned and
that, had this claim been accepted, this would have been to the disadvantage of the

21 India’s answers to Panel questions, Question 34, 36.
22 India’s answers to Panel questions, Question 36.
23 First written Submission at paragraph 175.
24 India’s answers to Panel questions, Question 1.B.
25 India’s first written Submission, paragraph 3.139.
26 Ibid., at paragraph 3.5.

producers, the profit margin used being lower than the profit margin realized by the
same company solely on its domestic sales of non-branded products.27
34. The other is the allegation that the application of the 18.65 per cent profit margin to Anglo
French was inappropriate because of its allegedly high labour costs. Even were such costs high, it
does not make for an unreasonable result. Higher labour costs as a percentage of total cost of
production (as alleged in the case of this company) do not mean necessarily that labour costs per unit
are higher, nor that the manufacturing costs are higher (for example, depreciation and financial costs
are likely to be lower). It is inevitable that ther e will be differences between the various companies
operating in a market. If account were to be taken of each of them the methodology established in
Article 2.2.2(ii) would break down, and be replaced by the investigators’ view of what was
reasonable. That is evidently not what the Agreement intends.
35. Secondly, India argues
28 that the ‘same general category’ criterion of Article 2.2.2(iii) applies,
although the language of that provision clearly indicates that this criterion is used to set a limit to
‘reasonable methods’ in that provision, not as a general definition of what is reasonable.
36. Thirdly, it regards the 18.65 per cent figure as inherently unreasonable when compared to
three other profit figures:
37. (a) that of sales of the ‘same general category’ of products among Indian producers criterion:
the simple average of three producers profits is about 7 per cent. However, in the textile sector in
particular an average of this kind is virtually irrelevant, since profit levels differ greatly between
product lines, and between the various markets in which the products are sold.
38. (b) average profits for the like product in the other exporting countries, which (it is said by
India) are 5.8 per cent and 7.4 per cent. Even supposing that these figures are correct, the same
comment is relevant. Profit margins may vary considerably from one geographical market to another,
depending on the prevailing competitive conditions. The EC would also like to draw attention to a
feature of the investigation concerning the interrelationship of profits and SGA. The point was made
in the course of correspondence between the EC and the Indian Embassy in Brussels in 1997 (Exhibit
EC-6), where the EC said
… it should be noted that the amount of SG&A expenses incurred by a company
influence its profit and that the combined average amount of SG&A expenses and
profits established for each of the exporting countries happened to be at a similar
level.
39. (c) the reasonable profit (5 per cent) imputed by the EC to the EC industry for the purposes of
calculating the injury margin.
29 However, this figure is not an estimate of the profit level in the EC
market, but the ‘minimum amount of profit required to ensure the viability of the Community
industry’.30
40. In any event, in making the comparisons proposed by India it should be remembered that the
18.65 per cent figure is based on profitable sales only, in accordance with the rules (disputed by India)
of Article 2.2.
31 Thus India is not comparing like with like.

27 Recital 18.
28 First Indian written Submission, at paragraph 3.131.
29 Ibid., paragraphs 3.134 et seq.
30 Provisional Regulation, recital 130.
31 EC first written Submission, at paragraph 137.

41. Nor does India say anything useful about the ma rket for bed linen in India, which if anything
would help explain the significance of the figure s. It merely asserts that Bombay Dyeing, ‘is a
peculiar company in India possessing an established position in the market for over one-hundred
years’.32
42. Fourthly, India observes (possibly regarding reasonableness) that the profitable sales on
which the 18.65 per cent figure was based were only half its total domestic sales.
33 However, this
basis for calculating profit is explicitly envisaged in Article 2.2.1 and footnote 5 of the Agreement.
43. India 34 cites the panel report in the Audiocassettes case in support of its argument. However,
the passage in question refers to Article 2.4 of the 1979 Anti-Dumping Code, which contained a much
simpler set of rules for constructing prices. The formula was
‘the cost of production in the country of origin plus a reasonable amount for
administrative, selling and any other costs and for profits. As a general rule, the
addition for profit shall not exceed the profit normally realized on sales of products of
the same general category in the domestic market of the country of origin.’
44. The panel’s observation quoted by India is therefore irrelevant to the current dispute. The
panel no doubt appreciated that if it had not adopted this interpretation it would have rendered the
word ‘reasonable’ redundant.
45. The reference to the Code draws attention to the effect of the 1994 Anti-Dumping Agreement
in introducing much greater precision in the rules, bo th in general, and in particular regarding what is
now Article 2.2. This can be seen as one of the ‘objects and purposes’ of the Agreement. It would be
undermined by adopting India’s criterion of reasonableness, which would confer on investigating
authorities a discretion that is at odds with the precisely drawn terms of the text.
46. The question whether a test of reasonableness is to be imposed on top of the text of
Article 2.2.2(ii), is quite distinct from the question whether it incorporates the criterion of the
‘ordinary course of trade’. It is notable that India does not regard this criterion as incompatible with
reasonableness in the chapeau of Article 2.2.35
47. Finally, it may be noted that India is unable to explain 36 how the reasonableness criterion in
Article 2.2.2(iii) extends to sub-paragraphs (i) and (ii).
(ii) More than one exporter or producer
48. India has argued that, as used in Article 2.2.2(ii), the use of words in their plural form means
that data from a single company may not be taken into account. It has not attempted to answer the
EC’s refutation37, but has sought to shore up its arguments by describing this provision as a ‘triple
plural’.38 Each word of the phrase has to be capable of covering the plural, in case there are more than
one exporters and/or producers. However, this does not detract from the fact that it is equally
applicable to a single exporter or producer.

32 India Oral Statement to the First Meeting of the Panel, paragraph 33.
33 Ibid., paragraph 37.
34 Ibid., paragraph 40.
35 India’s answers to Panel questions, Question 2.A.
36 India’s answers to Panel questions, Question 4.
37 EC first written Submission, at paragraph 108.
38 Oral Statement to the First Meeting of the Panel, paragraph 43.

49. The notion that the methodologies provided by Article 2.2.2 impose cumulative restrictions 39
is at odds with the fact that they present alternative options, a point that has not been questioned by
either party to this dispute.
(iii) Application of ‘ordinary course of trade’ criterion
50. India has not succeeded in denying the perverse consequences of interpretation of
Article 2.2.2(ii) so as to permit to inclusion of data relating to sales not in the ordinary course of
trade.40 In the first of the EC’s examples 41, rather than, as India proposes, accepting a zero margin,
the authorities would have abandoned Article 2.2.2(ii), and used another methodology.42
51. The second example India does not try to answer, but reinvokes its principle of
reasonableness.
52. It might seem at first glance that the EC’s argument that Article 2.2.2(ii) contains an implicit
‘ordinary course of trade’ rule is no different to the one for which it is criticising India in regard to a
criterion of reasonableness However, the EC’s arguments differ crucially from those of India. The
EC’s view, founded on the rules of general international law, is that Article 2.2.2(ii) should not be
interpreted in a way that would give rise to perverse results (they would be perverse if they
contradicted the principle enshrined in Article 2.2 that normal values should not be based on data
from unprofitable sales). On the other hand, India wishes to qualify the rule in Article 2.2.2(ii) with
its vague criterion of reasonableness (see above). In the EC’s view, Article 2.2.2(ii) crystallises the
principle of reasonableness contained in the chapeau. In contrast, India cannot explain how the ‘not in
the ordinary course of trade’ criterion is compatible with reasonableness in the chapeau, but not in
Article 2.2.2(ii).
43
3. Zeroing
53. Regarding zeroing, in its answer to the Panel India acknowledges that the correct
methodology for the second phase of a dumping cal culation is an ‘open question’ in the case of
transaction-to-transaction comparisons.44
54. It denies this in the case of the weighted-average to weighted-average option, but its
justification – that the Agreement requires a weighted average of ‘all comparable export sales’ – is
patently flawed. This part of Article 2.4.2 is addressing the comparison of export sales and normal
values. Here, as in the case of transaction-to-transaction comparisons, the Agreement has no explicit
rule for the second phase of the process – bringing the individual dumping margins together into a
single company-based margin.
55. India seeks support for its view from the word ‘all’ in the phrase ‘all comparable export
transactions’.
45 However, this argument does nothing to alter the fact that the phrase is concerned
with comparable transactions. The distinctive characteristic of the second phase of calculating a
dumping margin is that the individual margins that are taken into account are not comparable.

39 India Oral Statement to the First Meeting of the Panel, paragraph 44.
40 Ibid., para 47.
41 EC first written Submission, paragraph 145.
42 EC responses to Panel questions, Question 14.
43 India’s answers to Panel questions, Question 2.A.
44 Question 6.
45 Oral Statement to the First Meeting of the Panel, paragraph 52.

IV. INJURY
1. Sampling of producers
56. In its answer to the Panel’s question 46, India finally acknowledges that Article 6.10 does not
apply to sampling of domestic producers in injury investigations. It asserts that sampling should be
statistically valid on the basis of a general principle that is somehow derived from the individual
provisions on sampling. Even if there were such a principle, India fails to notice that, as an alternative
to sampling, Article 6.10 authorizes the use of ‘the largest percentage of the volume of the exports
from the country in question which can reasonably be investigated’. It is by analogy with this
criterion that Article 17(1) of the Basic Regulation allows the investigation to be limited to ‘the
largest representative volume of production … which can reasonably be investigated within the time
available’. In the Initiation Notice the EC announced its intention to proceed on this basis when
examining the Community industry.
47
2. Article 3.4 impact factors
57. Article 3.4 regulates ‘The examination of the impact of the dumped imports on the domestic
industry’. It therefore does not envisage a general examination of the health of the domestic industry,
but one directed to the consequences of dumping.
58. As the EC explained in its Oral Statement to the First Meeting of the Panel 48, Article 3.4 must
be read in the context of the rest of Article 3. The structure of Article 3 makes clear that the role of
the Article 3.4 is an examination of the impact on the domestic industry of the price and volume
effects of dumping described in Article 3.1 (the true “injury factors”). It is not comparable to the
injury and causality analysis conducted in a safeguard investigation, with which it has been wrongly
compared.
59. As the EC has explained in its first written Submission
49, the examination of the EC bed linen
industry that is contained in the Provisional and Definitive Regulations provides a coherent
explanation of the condition of that industry which justified the conclusion that it was suffering injury
from dumped imports of bed linen.
60. The circumstances of particular cases vary enormously. That obvious fact must be reflected in
the practice of national authorities, and should be respected by the Panel when reviewing their actions.
61. In some cases an affirmative finding of injury will be based on an accumulation of indications
in a broad variety of factors. The circumstances of the bed linen case were not like that. Rather, the
indications of injury were almost entirely concentrated in two areas: profits and prices.
62. The Regulations reveal an industry that is continuing to operate normally except for these two
vital factors. This normality was most notably apparent in the volume of sales, and of production,
factors that were investigated by the EC authorities and reported in the Regulations.
63. In its Oral Statement to the First Meeting of the Panel India has made several criticisms of the
EC’s arguments, which can be briefly answered.

46 Question 10.
47 Initiation notice, paragraph 5(b).
48 Oral Statement to the First Meeting of the Panel, paragraphs 101 to 104.
49 At paragraph 256 in particular.

64. India suggests 50, that the EC is presenting contradictory arguments. Apart from the fact that a
party to a WTO dispute is entitled to present alternative arguments 51, the EC would remind the Panel
that it did examine all the factors mentioned in Article 3.4, even if only to dismiss some of them as
irrelevant. It goes on to refute the contention that all the factors in Article 3.4 must mandatorily be
evaluated because it believes that it is a fundamental mistake for investigating authorities and panels
to adopt a simplistic ‘checklist’ approach to the application of the Agreement. The EC has further
argued that if Article 3.4 did provide for a ‘checklist’, it would concern only the negative aspects of
the factors mentioned.
65. Contrary to India’s suggestions 52, the EC has not said that its authorities did not investigate
factors, but rather that they explained why injury could be concluded on the basis of some factors
despite positive indications on other factors and made clear that they were open to hearing of other
such factors that interested parties might suggest.53
66. Although India would wish to assume that the HFCS panel had taken various arguments into
account because they were argued before it54, that panel, like other legal bodies, can only be judged by
what it said, not what it heard.55
67. India draws attention to the conundrum, posed by the words of Article 3.4, of how the
authorities can decide whether an issue is relevant, before it has been evaluated, is set.
56 The EC has
attempted to answer it, most recently in its answer the Panel’s question where it said ‘Relevance is a
matter of degree rather than of ‘yes or no’. In some cases it will be immediately apparent, even before
the initiation of an investigation, that certain factors are not relevant and in others this may not be
apparent until much later, so that the process of determining the relevance of a factor may be little
different from that of evaluating it’.
57
68. Whatever India’s doubts on the matter 58, it is undoubtedly true ‘domestic producers, are the
best and sometimes the only source of information on the factors relevant to injury’. 59 The point is
very pertinent to the decision in the Bed Linen investigation, in which profit and price data, known
only to the producers, were crucial.
3. Sources of data on injury
69. In its Oral Statement to the First Meeting of the Panel 60, India largely repeats the arguments in
its first Submission on the subject of the various levels of domestic producers mentioned in the EC
Regulations.
70. The position of Luxorette is explained in the EC’s answer to the Panel’s question.61

50 India Oral Statement to the First Meeting of the Panel, paragraph 65.
51 EC first written Submission, paragraphs 246 et seq. The point was explicitly acknowledged in Report
of the panel on United States — restrictions on imports of tuna, BISD 39S/155 (1993), (unadopted),
paragraph 5.22.
52 India Oral Statement to the First Meeting of the Panel, paragraphs 66 and 67.
53 EC first written Submission, paragraphs 246 to 262.
54 India Oral Statement to the First Meeting of the Panel, paragraph 69.
55 EC first written Submission, paragraph 289.
56 India Oral Statement to the First Meeting of the Panel, paragraph 70.
57 Question number 20.
58 India Oral Statement to the First Meeting of the Panel, paragraph 70.
59 EC first written Submission, paragraph 274.
60 Paragraphs 73 et seq.
61 Number 22.

71. The EC used information from the various leve ls in order to describe the situation in the
domestic market, not to favour a particular finding. 62 In those Regulations the EC explained the
peculiar feature of the case, that is to say the fact that several indicators showed the domestic industry
to be in an apparently healthy condition. Data for the domestic industry were presented where
possible, otherwise data for the sample were used. In several cases both types were given. Data for
the EU-15 supported the EC’s explanation of the consequences of the disappearance of firms.
4. Meaning of ‘dumped imports’ and assumption of dumping before investigation period
72. India has taken objection to the inclusion of transactions that are non-dumped wherever the
phrase ‘dumped imports’ is used in Article 3, and accuses the EC of infringing Article 3.4 and 3.5 in
particular. However, it does not clearly explain the nature of this infringement, and in fact there has
been none.
73. There is an unspoken assumption in the Indian claim that findings of injury are made on a
country-by-country basis. Indeed it is reflected in India’s own practice. 63 This is in line with WTO
law, and reflects a broader perception that the Agreement addresses dumping between countries,
albeit that individual companies are the actors. The principle is reflected i Article VI GATT itself and
at several points in the Agreement, notably in Article 12.1.1 on the initiation notice, and in the rules
on cumulation in Article 3.3. In any event, there seems no doubt, as far as this dispute is concerned,
that what matters is whether non-dumped transactions should be included in a country’s exports of a
product under consideration.
74. The issue is relevant solely to the causation of injury. It has no relevance to defining whether
the domestic industry is in an injured state. Although the sales volume of domestic producers is
relevant, and an increase in imports may be at the cost of a decrease in sales of the domestic product,
it is the latter and not the former that is relevant for assessing the state of the domestic industry. The
expansion of imports may be responsible for this, but that of course is an issue of causation.
75. One can go further and say that, as a question of causation, the issue arises solely in relation
to the price and the volume of the imports in question.
76. As regards price, the inclusion of non-dumped transactions in the total of ‘dumped imports’
only serves to reduce the chance of causation being established, and therefore of a duty being imposed
on the exporters. The reason for this is that it can hardly be supposed that the prices of transactions
that are not dumped are lower than the prices of those that were dumped. In fact, the opposite is
almost certainly the case, so that, as the EC has pointed out
64 the effect of including non-dumped
transactions is generally to reduce the margin of undercutting. At any rate, the notion that the
inclusion of such transactions could exaggerate the undercutting margin can be dismissed as
academic.
77. Consequently, it can be safely concluded that in the bed linen investigation the effect of
including non-dumped transactions in the notion of ‘dumped imports’ was to reduce the margin of
undercutting, and therefore the indications of injury causation. Consequently, there can have been no
unjustified finding of injury causation on this basis.

62 Cf. India Oral Statement to the First Meeting of the Panel, paragraph 79; and reply to Panel
Question 36.
63 See, e.g., Anti-dumping investigation concerning imports of Sodium Cyanide from the USA,
European Union, Czech Republic and Korea Republic. 8/1/99-DGAD.
64 First written Submission, paragraph 237.

78. In the bed linen investigation, undercutting was considered solely during the dumping
investigation period. 65 The EC’s conclusions on the point were essentially a snapshot of the
prevailing situation, rather than an examination of changes in undercutting over time. Consequently,
in this context the issue of assumed dumping in earlier years is not relevant.
79. Turning to the question of volume, what is notable about Article 3 is that all the contexts
where the volume of dumped imports is an issue concern changes in volume. This is not surprising.
A snapshot of the volume of imports (whether or not individual dumped transactions are included)
says nothing about injury to the domestic industry. There could be a successful domestic industry
where imports from the country concerned have 95 per cent of the market, and an unsuccessful one
where they have only 5 per cent. Thus, what matters is the change in volume: in particular, whether
there has been an increase.
80. It is in order to identify such changes that the injury investigation period covers a number of
years, typically three or four, concluding with th e dumping investigation period. Of course, as the
India has noted, the EC authorities have no dumping data for the years proceeding the dumping
investigation period. Consequently, no comparison can be made of volumes of dumped transactions
over this period. The only comparison that can be made is that of total volumes of the product in
question from the country in question.
81. Thus Members appear to be in a dilemma. The Agreement requires information on changes
in the volume of dumped imports, but no Member’s authorities (not even those of India) collect data
on dumping for the whole of the period in which import volumes are studied. No one (not even India)
has suggested that there is an obligation to carry out such an investigation. (India has asserted that its
law and practice – which the EC has illustrated in its questions to India – are in conformity with the
Anti-Dumping Agreement.
66
82. Thus the Agreement envisages that the only basis on which volume change can be determined
is one that includes all imports of the product from the relevant country. Consequently, the EC cannot
be at fault for having made its determinations on that basis.
83. This argument would be sufficient to dispose of India’s complaint, but the legality of the EC’s
behaviour is also supported by a closer consideration of the issues.
84. The bed linen investigation revealed that imports of the product in question had risen
significantly in both absolute and relative (market share) terms between 1992 and mid-1996.
67 The
evidence from the dumping investigation period revealed dumping between mid-1995 and mid-
1996.68 Although it is conceivable that the dumping practice changed dramatically in mid-1995, that
seems unlikely. At any rate, the investigating author ities would have been entitled to assume, in the
absence of evidence to the contrary, that dumping existed for some time before this. In fact, such an
assumption was relevant to the bed linen case.
85. The only assumption which it could be said that the investigating authorities did make was
that the volume of dumped transactions increased at the same time as the total volume of imports. In
other words, that the exporters were not dumping, or were dumping smaller volumes in earlier years.
This hardly seems an exceptional step to take. In any event, it is open to Indian exporters to argue that
they were actually dumping greater volumes in earlier years. Bearing in mind the arguments regarding
the cost of investigations into dumping margin s it would not be acceptable for the authorities to

65 Provisional Regulation, recital 68.
66 India’s answers to the EC’s question, Introduction and Questions 5 and 7.
67 Provisional Regulation, recital 67.
68 Definitive Regulation, recital 28.

compel exporters to undergo such an investigation. This judgement is endorsed by the practice of
Members of not imposing such burdens.
86. In regard to the current proceedings are concerned, the conclusion of this analysis must be
that India’s claims fail. As far as India accuses the EC of taking non-dumped transactions into
account for assessing price effects, the only consequence is to reduce the likelihood of dumping
measures being imposed, so the question is moot. As far as import volume is concerned, the only
assumption that the EC could be accused of making is not that imports were being dumped, but that
they were not being dumped.
V. TREATMENT OF DEVELOPING COUNTRIES – ARTICLE 15
87. EC has explained that it did explore the possibility of constructive remedies as required by
Article 15. It was prepared to contemplate an undertaking in this case, even from a trade associations
such as Texprocil. However no proposal was forthcoming 9 days after the deadline.
69 E v e n i f
Article 15 reduces, in the case of antidumping actions against developing countries, the discretion that
investigating authorities have under Article 8 to reject undertakings, it is still not possible for
investigating authorities to impose price undertakings on exporters that do not want to offer them.
88. India is dismissive of the EC’s attempts to put the letter and the spirit of Article 15 into
practice. However, the EC is not alone in having difficulty in this area. When questioned by the
Panel, India was unable to suggest any alternat ives to price undertakings under Article 83 70, and
during the first oral session of the Panel it revealed that its exporters were not interested in offering
undertakings during the bed linen investigation. (It seems therefore rather cynical for India to tell the
Panel that the EC ‘should have proposed either a price undertaking, or any other alternate constructive
remedy to the Indian exporters’ .)
71
89. Anti-dumping procedures have a judicial char acter, which makes indulgence to any particular
party or parties a very delicate matter. There are at least two sides to every investigation. An
advantage for one is almost inevitably a disadvantage for the other. It is particularly difficult to give
procedural benefits to one party in the course of an investigation without interfering with the rights of
the other to present its case.
90. Whereas there is a general principle of favouring developing countries in trade matters (as
reflected in GATT Part IV, and in the Generalized System of Preferences) this has proved very
difficult to implement in the textiles sector (witness the criticisms regarding the implementation of the
Agreement on Textiles and Clothing).
91. Furthermore, the EC, which has considerable experience in operating undertakings, has found
that they are almost impossible to achieve in the textile sector. The practical problems are evidenced
in a document accompanying India’s first written Submission (Exhibit India-16) where the number of
traders involved in shipping runs to nearly 300.
92. Furthermore, that document also illustrates the problems that arise even when dealing with
producers’ associations. Although it is included in the exhibit, Statement C of that document was
never submitted to the Commission. It contains trade data for exporters that contradict those in
Statement A, which was submitted. India has sought to explain away the discrepancies
72, but many
remain. (For example, the list in Statement A contains companies that were traders, both sides having
agreed that a sharp distinction was not possible).

69 EC’s answers to Panel questions, Question 31.
70 India’s answers to Panel questions, Question 38.
71 India’s answers to Panel questions, Question 13.
72 See India’s answer to EC questions, Question 9.

93. It is also significant that bed linen is a non-commodity product, made to the purchaser’s order.
Setting minimum price levels in such circumstances is very difficult, except on terms (such as
minimum price by weight) which are unlikely to be acceptable to exporters. It is significant that
during the first oral session of the Panel India admitted that its exporters had little interest in offering
undertakings.
94. The last occasion on which it proved possible to accept an undertaking in this area was Pure
silk typewriter ribbon fabric originating in China, in 1991 73, hardly a mainstream textile product.
Nevertheless, the EC continues to try.
95. One is also entitled to ask how it was that the exporters, who were represented by counsel
thoroughly experienced in EC anti-dumping proceedings, raised the possibility of undertakings at only
the last minute, and made no further efforts in this direction.
96. However, the reality of the EC’s actions is not as bleak as the picture painted by India. Thus,
its account
74 of the removal of handloom products from the scope of the definitive measure does not
present the whole story. It was the exporters who invoked Article 15 in order to request special
treatment of such products.
75 The EC could not take action on the basis of Article 15 because of the
implications for its relations with other countries, but was able to redefine the scope of the measure in
order to accommodate the exporters’ interests. The special treatment of handloom products is a
feature of the EC’s trade policy that is exclusive to its relations with developing countries.76
97. Finally, while it is committed to observing both the letter and the spirit of Article 15, in
defence of its interests in this case, EC is obliged to point out that India’s claim
77 is that
‘Inconsistently with Article 15 ADA, the EC failed to consider India’s special situation of developing
country Member before imposing provisional anti-dumping duties’. This is the topic that should be
addressed by the Panel. The EC’s alleged failures following the Provisional stage are not within the
terms of reference of the Panel.
98. In any case, in view of the difficulties of trying to explore constructive remedies before a final
assessment of dumping and injury is made, the EC does not believe that there is any obligation under
Article 15 to do so at the provisional measures stage.78
VI. PUBLIC NOTICE – ARTICLE 12.2.2
99. In its first Oral Statement to the First Meeting of the Panel to the Panel 79, India has brought
together its various claims under Article 12.2.2. The EC believes this is a useful approach. In its first
Submission the EC has raised specific points about the interpretation of Article 12 in regard to each of
India’s individual claims, but in the present documen t it wishes to address some issues of overall
importance.
100. However, before taking these up, there are some recent arguments of India that must be
answered.

73 Official Journal L174/27, 1990, p. 27.
74 First written Submission, paragraph 6.42.
75 Second post hearing brief, Exhibit India-55, point 8.
76 Definitive Regulation, recital 7 and Article 2; Letter from Vermulst & Waer of 11 August 1997,
Exhibit EC-7.
77 Point 18 of the panel request, and paragraph 6.32 of the first written Submission.
78 See EC responses to Panel questions, Question 37.
79 At paragraph 92.

101. According to India, the only arguments or claims that need not be included in the notice under
Article 12.2.2 as not ‘relevant’ are ones that are nonsensical, and even here it holds that an
explanation should be given for exclusion.80 The result is that not even nonsensical arguments may be
excluded since it will be necessary to mention them, and explain that they are nonsensical, in order to
dismiss them.
102. Thus India’s argument deprives the word ‘relevant’ of its meaning, since all claims and
arguments are in effect relevant.
103. Having emasculated that criterion, India introduces another, characterized by the word
‘important’. Claims are important either because they could affect the outcome of the case, or
because they are regarded as matters of principle to developing countries. The significance of this
criterion is not explained. However, it is apparent that India believes that claims or arguments which
are acknowledged to be unimportant, and which could not affect the outcome of the investigation, are
nevertheless relevant and therefore required to be mentioned in the public notice of the final
determination.
104. In its various statements, including the list presented by India in its Oral Statement to the First
Meeting of the Panel
81 India confuses the ‘claims’ said by it to have been made by the exporters
during the proceedings (which are mentioned in Arti cle 12.2), with the ‘claims’ presented in this
dispute. (A further confusion arises because India introduced ‘claims’ in its first written Submission
which, since they were not included in its panel Request, are not within the terms of reference of this
Panel. Similarly certain claims in its Request have not been pursued before the Panel.). The
confusion is compounded by India’s answer to the Panel’s Question 11.
105. The EC believes the most straightforward appr oach is to examine the complaints regarding
publication of claims under Article 12.2 in so far as they were included in the panel Request and have
been pursued before this Panel. These are as follows:
Action that is said to have been inadequately
notified/explained, despite exporters’ arguments, etc.
Claim in Panel
Request
Claim in first
Submission
A Inadequate decision on standing 1 28
B Not examining evidence other than complaint 2 25
C Applying Article 2.2.2(ii) of the Agreement before
Article 2.2.2(i)
4 3 (3.120)
D Using an option – Article 2.2.2(ii) – for which the
requirements were not fulfilled because it was based on only
one company,
5
E Using an option – Article 2.2.2(ii) – for which the
requirements were not fulfilled because the profit level used
was unreasonable
6 3 (3.119)
6 (3.144)
F Using an option – Article 2.2.2(ii) – for which the
requirements were not fulfilled because actual data were not
used
7 3 (3.118)
G Use of zeroing – Article 2.4.2 11
H Assuming that all imports in investigation period were
dumped
12,13 10 (4.41)
I Inconsistent use of sample 14 18
J Disregarded factors under Article 3.4 15 13

80 India’s answers Panel’s questions, Question 11.
81 Paragraph 94.

K Failure to consider factors other than dumped imports:
restructuring
22 (4.233)
L Failure to consider factors other than dumped imports:
assuming that imports in years before investigation period
were dumped
22 (4.234)
M Examination of market share 16
N Consideration of developing country status 18 31
106. It will be noted that two claims (K, and L) made in the first Submission were not included in
the Panel Request. Since that forms the Panel’s terms of reference they fall outside the jurisdiction of
the Panel.
107. Many of the remaining claims are misconceived. The EC has explained the point at several
places in its first written Submission. In these cases India is objecting to actions taken in the
application of a Member’s law and practice on the basis that it is contrary to WTO rules. Whether it
is or not will be determined by the Panel in the context of the appropriate claims. However, as
regards Article 12.2, the only explanation that is required is for the EC Regulations to make clear that
the action taken is an application of that law or practice.
108. It cannot be expected that investigating auth orities, which will almost certainly have very
limited if any judicial authority, will be empowered to disregard national law and practice on the basis
that it is contrary to WTO rules. Nor will they be authorized to justify that law and practice against
those rules. Therefore, arguments to the effect that the law and practice are contrary to WTO rules are
irrelevant in so far as they are addressed to the investigating authorities.
109. This is not to say that the exporters are without a remedy. They could challenge the
authorities’ interpretations of EC law before the Eu ropean courts (which have sought to interpret EC
law in line with WTO obligations), or the exporting Member could, as in this case, take the matter to
the WTO.
110. (It is possible that, if any elements of the EC’s law and practice were to be held by the Panel
not to be consistent with the requirements of the Anti-Dumping Agreement, infringements of
Article 12.2 would follow, because the EC would not have provided an explanation appropriate to the
proper application of WTO law.)
111. Nearly all the complaints in th e Table fall into this category, either completely (those in lines
B, C, D, E, F, G, H, I, J and M), or in part (those in lines A, K, and L). In other words, in each of
these cases, the EC was following its usual law and practice, and it was to this that India took
exception. In each case, by merely stating that law or practice, the EC authorities were complying
with the obligations of Article 12.2.
112. Line C of the Table will serve as an example of the point that is being made. India complains
that the EC has applied the options in Article 2.2.2 contrary to the proper order.
82 The Article 12.2.2
claim is essentially that the EC did not justify this or respond to the exporters complaints on the
WTO-compatibility of its action. In fact, as they made clear in the Regulations, the EC authorities
were simply applying EC law and practice . That is all the explanation that was required by
Article 12.2 in such a case. For the exporters to continue to demand explanations of the point in the
course of investigations was a waste of their money and of the authorities’ time. Their arguments
were irrelevant in the context of the investigation.

82 Claim 1 in the first written Submission.

113. The table in India’s Oral Statement to the First Meeting of the Panel seems to assume that an
obligation under Article 12 arises only where the issue of which notice has to be given is one that
concerns behaviour by the authorities that infrin ges the Agreement. This is not the case. The
authorities could be complying with the requirements of the Agreement in the aspect of the rules that
they are applying (e.g. making appropriate allowances when comparing sales), and yet fail to give
adequate notice of that action and thereby infringe Article 12.
114. Because of India’s assumption, it is very difficult to identify those instances where its claims
contain elements of the second kind. It is possible that they exist in claim A. However, for A (and B)
the governing provision is Article 12.1 of the Agreement, which India has not invoked. The EC has
made additional arguments in its first Submission 83 and its Oral Statement to the First Meeting of the
Panel.84
115. The one claim under Article 12.2 which seems to be independent of a disagreement about the
substantive law (Article 15) is that in Line N. The matter is addressed in the EC’s first written
Submission.
85
VII. CONCLUSION
116. The EC asks the Panel to look at the facts of this case, in particular the explanations given in
the Regulations adopted by the EC, and conclude that they fall within the boundaries that the
Agreement sets for the actions of Members. In this respect the EC recalls that the in the light of the
provisions of Article 17.6(i) and the discretion that the terms of the Agreement leave to Members, the
Panel is not called upon to approve every step that the EC has taken in the investigation but only to
determine whether there is any inconsistency with the mandatory requirements of the Agreement
which has affected the outcome of the investigation.

83 At paragraphs 77 and 103.
84 At paragraph 36.
85 At paragraph 372.

EXHIBITS
EC-5 Expressions of support for initiation of investigation.
 EC-6 Correspondence between Commission and Indian Embassy, 1997
EC-7 Letter from Vermulst & Waer regarding handloom products, 11
August 1997

Annex
Chronology of receipt of declarations of support for initiation of the investigation
French Association. Companies: 29-Jul-96
 -Fremaux 29-Jul-96
 -Hacot Colomb 29-Jul-96
 -Hacot 29-Jul-96
 -Vanderschooten 29-Jul-96
 -Claude 29-Jul-96
 -Mulliez 29-Jul-96
 -Jalla 29-Jul-96
 -Bera 29-Jul-96
Spanish Association: Companies: 29-Jul-96
 -Estebanell 29-Jul-96
 -Puignero 29-Jul-96
 -Cano 29-Jul-96
Austrian Association. Companies: 29-Jul-96
 -Fussenegger 29-Jul-96
 -Getzner 29-Jul-96
 -Hämmerle 29-Jul-96
Bierbaum 30-Jul-96
Meckelholt 30-Jul-96
Kettelhack 30-Jul-96
Erbelle 30-Jul-96
Luxorette 30-Jul-96
Wülfing 30-Jul-96
Bauer 30-Jul-96
Estella 30-Jul-96
Irisette 30-Jul-96
Damino 30-Jul-96
Dyckhoff 30-Jul-96
Bossi 30-Jul-96
Bassetti 30-Jul-96
1Zucchi 30-Jul-96
Gabel 30-Jul-96

Valman 30-Jul-96
Lameirinho 30-Jul-96
Incotex 30-Jul-96
Coelima 30-Jul-96
Almeida 30-Jul-96
Reikalevy 27-Aug-96
Finlayson 28-Aug-96
Marimekko 2-Sep-96
Fremaux 4-Sep-96
Hacot Colomb 4-Sep-96
Hacot 4-Sep-96
Vanderschooten 4-Sep-96
Claude 4-Sep-96
Mulliez 4-Sep-96
Jalla 4-Sep-96
Bera 4-Sep-96
Foncar 5-Sep-96
Date of publication of the notice of initiation: 13 September 96

I. INTRODUCTION
1. The EC would like to thank the Panel for its dedication to resolving this case. There is a
considerable volume of material to be dealt with, some of it relevant to the issues that the Panel is
called on to decide.
2 In this Statement, the EC would like to take up various points in India’s Rebuttal Submission 1
3. As at last meeting,
- I will deal with the initiation phase of the EC anti-dumping investigation;
- Mr Vidal Puig will address the determination of dumping effectuated by the EC;
- and Mr White will deal with the finding by the EC of injury caused, and the issue of
special regard for developing countries.
II. INITIATION
1. Article 5.3 – Evidence
4. India complains that the EC authorities failed to ‘examine the accuracy and adequacy of the
evidence provided in the application’ as required by Article 5.3. However, its repeated statements to
this effect have never amounted to more than assertions.
5. This style of argument is continued in the Rebuttal Submission. The following statement is
typical. ‘It is clear from the very text of the EC ’s notice of initiation, that there was no examination
whatsoever.'2 The contents of the initiation notice follow the requirements of Article 12.1 of the
Agreement. Consequently, according to India, by respecting the Agreement a Member provides
evidence that it is breaking it.
6. Having said that there was no examination whatsoever, India then asserts that there was an
examination, but only of factors pointing towards injury.
3 The only support for this assertion appears
to be the fact that the EC authorities did not enquire of one Association whether any of its members
might be opposed to the complaint. India does not explain how the authorities were to achieve this
without infringing the non-publication obligation in Article 5.5, nor how the mere fact of opposition,
were it detected, would be indicative of insufficient evidence of injury.
7. India then misquotes the EC’s first Submission in order to make it appear that the EC had
argued that ‘possible evidence that injury may not have occurred is not relevant’.
4 What the EC said
was that evidence of no injury in the year 1993 (had it existed) would not have been relevant to the

1 The EC would like to take this opportunity to make some corrigenda to its Rebuttal Submission.
(a) Paragraph 47, last phrase: should read ‘extends to sub-paragraphs (i) and (ii)’.
(b) Paragraph 84, last sentence: should read: ‘In fact, such an assumption was not relevant to the bed
linen case’.
(c) Paragraph 107, second sentence: should read ‘action’, not ‘actions’.
2 India Rebuttal Submission, paragraph 8.
3 India Rebuttal Submission, paragraph 10.
4 India Rebuttal Submission, paragraph 11.

existence of injury in 1995/96. 5 (One can imagine India’s reaction had the EC authorities used
evidence of the existence of injury in 1993 to support a similar finding in regard to 1995/96).
8. India’s argument in this regard seems to be that (a) the previous investigation concluded that
there was no injury to the industry (in 1993), therefor e (b) had the EC authorities considered that fact
they could not have concluded that there was injury to the industry in 1995/96, regardless of the
evidence in the complaint. The proposition only ha s to be stated for its illogicality to become
apparent. On top of this, the premise is false. The previous investigation reached no such conclusion.
9. India suggests that the question in the dispute regarding Article 5.3 is ‘whether investigating
authorities can ignore information patently at their disposal’.
6 However, the real question is whether
India has discharged its burden of proving that the EC authorities did not ‘examine the accuracy and
adequacy of the evidence provided in the application’. The EC submits that, since the strongest
‘proof’ provided by India is mere speculation, its failure in this regard is obvious.
10. The EC has noted from the outset
7 the particular problems of examining the accuracy of the
evidence provided in this (or any other) complaint. Considered in the abstract one can speak of
possible standards of proof that move in a smooth progression from ‘mere allegation or conjecture’ at
base to something such as ‘beyond any conceivable doubt’ at the top, passing ‘more likely than not’
and ‘beyond reasonable doubt’ on the way.
8 In this world of abstraction one merely has to choose an
appropriate point to select the standard that is ap propriate for the initiation of the investigation (and,
later on, for the definitive finding).
11. The problems arise when one moves to the real world and attempts to apply the chosen
standard to the facts of the case. In particular, a dumping enquiry does not provide a similarly smooth
progression in the available evidence. As regards both dumping and injury, access to company records
constitutes a quantum leap in both the quality and the quantity of evidence.
12. At the initiation stage the authorities do not have access to such records. They can look at the
internal coherence of the complaint, they can consid er it in the light of their own experience (such as
in this case the information, albeit several years old, of the previous investigation), and they can
compare it with publicly available information. All these things the EC authorities did before they
initiated the investigation in the bed linen case. In the light of this action, it is apparent that there is no
merit in India’s attempt to show that the EC authorities failed in their obligations under Article 5.3.
2. Article 5.4 - Standing
13. In the light of the repeated attacks made by India regarding the adequacy of support for the
EC’s decision to initiate an investigation on bed linen it is appropriate to recall that it is India that
bears the burden of proving that the EC has failed to meet the requirements of Article 5.4 of the
Agreement. In fact, India has sought to discharge this burden by means of little more than assertion,
innuendo and misrepresentation.
14. In its Rebuttal Submission India repeats some of its previous accusations, and misinterprets
statements by the EC in order to present one entirely new argument. The EC will deal with these
points in the following paragraphs.

5 EC first written Submission, paragraph 68.
6 India Rebuttal Submission, paragraph 11.
7 EC first written Submission, paragraph 55.
8 The point is discussed in EC first written Submission, paragraph 51.

15. Firstly, India cites the Swedish Steel and Mexican Cement panel reports 9, to argue that
Article 5.4 requires Members’ to ‘actively check’ whether an application has been filed on behalf of
the domestic industry. In fact, although they concern the rather different wording of the 1979 Codes,
these reports merely confirm the ordinary doctrine that the investigators must ensure that sufficient
support (as defined in Article 5.4) for the investigation has been expressed before it is commenced.
Not only has India failed to provide evidence to establish a prima facie case in this respect. The EC
has supplied documents that demonstrate that it has complied with the requirements of the Agreement.
16. India says that ‘the whole point of Article 5.4 is that the claim of the complainant that it
represents the industry must be checked. If the number of producers is not overly large, this can be
done by contacting them or by some statement from them to this effect. ’ India bases this proposition
on the provision for sampling contained in the footnote to Article 5.4. It implies that the EC thinks
that merely listing an association in the complaint is sufficient expression of support.10
17. In view of the degree of support expressed individually by EC producers for the initiation of
this investigation these comments are largely academic. Nevertheless, the EC would like to reaffirm
its view that an association can express support on behalf of its members.
11
18. In its Rebuttal Statement, much of India’s discussion of standing consists of an elaborate
argument that entirely depends on a misreading of the EC’s answer to one of its questions.
12 The first
point to make is that this was a question directed to the composition of the sample of the domestic
industry. Thus it concerned the injury determination that justified the imposition of anti-dumping
measures, and not the issue of standing as regard s initiation. In fact, the question made no mention of
the latter topic. In its answer the EC gave the number of companies listed in the complaint –46.13
This was not the number for which expressions of support for the complaint were obtained (for the
purposes of Article 5.4), which was 38. 14 The EC’s answer also gave the number of companies that
were included in the final definition of ‘domestic industry’ (referred to as the ‘Community industry’),
which was 35, and said that their production represented ‘around 34 per cent of total Community
production’. It also observed that this satisfies the conditions set forth in Article 5.4, and that the
conditions were satisfied both before and after initiation.
19. India now seeks to use this information to mount an attack on the initiation decision.
However, although India purports to read it so
15, the EC’s answer did not assert that there were only
35 companies that expressed support for initiation in the sense of Article 5.4, or that their production
represented around 34 per cent of total production. Regarding initiation, and the requirements of
Article 5.4, what the EC has demonstrated is that 38 companies expressed support for the complaint16,
and that they represented ‘at least 34 per cent of the highest figure of total EC production ’. 17

9 India Rebuttal Submission, paragraph 14.
10 India Rebuttal Submission, paragraph 14, footnote.
11 EC first written Submission, paragraphs 92 et seq. It is significant that the Statutes of Eurocoton
provide that it is entitled “d’assurer la représentation de l’industrie cotonnière de la CEE auprès des autorités et
des institutions publique en particulier des Communautés Européennes”. Article 4, lett. b) (Exhibit India-59).
12 EC answers to India questions , Question 40.
13 Annex 3 of the non-confidential version of the Complaint, Exhibit India-6. Note that the entry for
Austria on page 10 refers to three companies. What the EC’s answer actually said was that ‘there were 46
companies which supported the complaint before initiation’.
14 See, e.g., the names listed in the Annex to EC second written Submission. Note that, because of a
clerical error, the French companies appear twice on that list.
15 That India understood the real significance of the reference to 46 companies is evident from the fact
that it knew which were the eight extra companies, information which is only available in the Complaint.
16 Annex to EC second written Submission; Exhibit EC-4; Exhibit EC-5.
17 EC first written Submission, paragraph 99; EC first oral Statement, paragraph 41; Exhibit EC-4.

Furthermore, the figure of 45952 tonnes is, as India accepts, the total production of the
38 companies.18
20. As a separate point, India asks how the EC could have made estimates of total EC production
at the time of initiation if it was still asking for information on production figures two months later. 19
The answer is that at the time of initiation th e EC already had data on total EC production from a
number of sources.20 Taking even the highest production figure, it calculated that degree of support
was well in excess of the threshold requirement set by Article 5.4. The enquiries referred to by India21
concern companies with fractions of a per cent of total production. They represent a commendable
attempt by the EC authorities to pursue the investigation it had initiated some months before.
21. Despite India’s attempt to complicate the issue, the reality is straightforward. Before initiating
the investigation the EC authorities determined that the levels of support required by Article 5.4 were
satisfied. The list of producers who expressed that support has been provided to the Panel, along with
the evidence as to when that support was expressed.
22
22. Also in its Rebuttal Submission, India returns to the question of access to the non-confidential
file, although it refuses to explain the relevance of this question to the issue before the Panel, other
than to say it is a fact that ‘stands out’.
23
23. India maintains 24 that the EC was ‘factually incorrect’ to say that ‘access to the non-
confidential file was never requested’ 25, but it does not state when a request was made, still less
provide any evidence for it. As far as the EC is aware, the Indian exporters’ representatives, having in
October 1996 indicated their interest in seeing the file26, did not pursue the matter. The EC maintains
separate non-confidential files on initiation, dumping and injury. The records show that the
representatives saw the non-confidential file on injury on 13 December 1996.27 We have no record of
what prompted the invitation of 7 January 199728 to inspect the initiation file.
24. As for the removal of the fax headers, the EC has already explained its practice of complying
with producers’ wishes in regard to the information held in the non-confidential file. Copies of the
complete originals have now been supplied as Exhibit EC-5.
25. The EC has provided considerable information on this issue, and has more than satisfied the
obligations of the DSU in this respect. It remains ready (in the words of Article 13.1 quoted by
India)29 to ‘respond promptly and fully to any request by a panel for such information as the panel
considers necessary and appropriate’. India’s observation30 that the Appellate Body has encouraged
panels to draw inferences from the refusal of a party to provide information that is within its
possession is of no relevance to this case since the Panel has made no such request, despite India’s
plea.31 India’s invitation 32 to the Panel to draw such inferences in the present case is therefore
misplaced.

18 It represents the total of the production figures listed in Exhibit EC-4.
19 India Rebuttal Submission, paragraph 25.
20 EC first written Submission, paragraph 99.
21 Exhibit India-82.
22 Exhibits EC-4, and EC-5; Annexe to EC second written Submission.
23 India Rebuttal Submission, paragraph 27.
24 Paragraph 27.
25 EC answers to India questions, Question 14.
26 Brief of 25 October 1996, point 1.2 (Exhibit India-50).
27 Register: Inspection non-C files (Exhibit India-83).
28 Exhibit India-58.
29 India Rebuttal Submission, paragraph 32.
30 Ibid.
31 India first oral Statement, paragraph 27.

III. DUMPING
26. In this section of our statement I will address in turn each of the three substantive claims
raised by India with respect to the dumping determination, i.e.
(1) the claim under Article 2.2 that the profit amount used in the constructed normal
values is "unreasonable";
(2) the claim that the method set out in Article 2.2.2 (ii) was incorrectly applied; and
(3) the claim under Article 2.4.2 relating to inter-type "zeroing ".
1. Article 2.2: Reasonableness of the profit margin
27. By now the EC’s position with respect to India’s claim under Article 2.2 is well-known to the
Panel. Article 2.2. does not establish a supplementary «reasonableness» test, different from that
embodied in Article 2.2.2. Article 2.2 enunciates the general requirement that the amount of profit
included in the constructed normal value must be «reasonable». That requirement, however, has been
elaborated in Article 2.2.2, which sets out a series of specific formulae for arriving at that reasonable
amount. The amount of profit established pursuant to those formulae is presumed to be "reasonable"
and, therefore, consistent with the requirement in Article 2.2. This is not a refutable presumption.
28. India’s position may appear attractive at fi rst sight. Upon a closer examination, however, it
becomes evident that the uncertainty introduced by India’s interpretation could lead to results that are
more "unreasonable" than the strict application of a set of well-defined set of rules agreed by all
Members.
29. The rules contained in Article 2.2.2 purport to limit the discretion of the investigative
authorities, and at the same time to create a « safe haven » for those authorities. India’s interpretation
would defeat both objectives. Investigative authorities would have to check the results obtained by
applying the formulae in Article 2.2.2 against a broad « reasonableness » requirement, which is
nowhere defined. India’s interpretation could be detrimental also to the exporters, by devolving to the
investigative authorities a large amount of discretion. It would allow those authorities, for example, to
disregard the preferred method in the chapeau if they consider that the result is « unreasonably » low
and move directly to «any other reasonable method ».
30. Even assuming for the sake of argument that the presumption that the method set out in
subparagraph (ii) is reasonable per se could be overturned, India has presented no relevant evidence to
that effect.
31. India appears to consider that it is enough to assert that Bombay Dyeing is "in a different
league"
33, or that it possesses "an established position in the market for over one-hundred years" 34 in
order to prove its sweeping claim that Bombay Dyeing ’s profit margin is unreasonable "for any other
company in or outside India".35 The EC obviously disagrees.
32. The Panel has invited India to provide evidence in support of its claim. India has produced
none. Instead, India has made a wholesale reference to the unsupported arguments raised by the

32 India Rebuttal Submission, paragraph 34.
33 India's answer to Question 2.A from the Panel.
34 India's Second Submission, para. 38 and India's First Oral Statement, para. 33.
35 India's answer to Question 3.A from the Panel

exporters during the administrative procedure. 36 Those arguments, which concerned essentially
alleged differences between branded and non-branded sales, were addressed and rejected in the
Definitive Regulation. In fact, the EC authorities found that, had those claims been accepted, it
would have been to the disadvantage of the Indian exporters concerned, since Bombay Dyeing’s
profits on unbranded sales were higher than on branded sales. 37 India has not challenged that factual
finding in this dispute.
33. India also reiterates the argument that the amount for profit was « unreasonable » because it
was higher than those used for the Pakistani and the Egyptian exporters.38 The EC recalls once again,
however, that profit margins may vary considerably from one country market to another, depending
on the prevailing competitive conditions in each market. Indeed, it is significant that none of the
methods set out in Article 2.2.2 envisages the use of data pertaining to a different country of export.
Moreover, the EC recalls that the amount of profit is related to the amount of SGA expenses. In this
case, the combined amounts for profit and SGA expenses used for the Pakistani and the Egyptian
exporters were similar to that used for the Indian exporters. India cannot pick and choose the most
favourable figure for each amount from different data sets.
34. Finally, the comparisons made by India with the profit levels obtained by the exporters
concerned in their domestic sales of products of the same category
39 (defined by India as « textiles »)
are false because they do not compare like with like. Data from non-profitable sales are excluded from
one side, but not from the other. (Incidentally, it is worth noting that the table at paragraph 3.134 of
India’s First Submission evidences that the « overall » profit margin for both domestic and export
sales is lower than the profit margin for domestic sales of the same category, which suggests that the
exporters concerned are dumping even by India’s standard).
2. Article 2.2.2 (ii)
(i) Hierarchy of the options
35. The EC notes that India has nowhere addressed, either in its First Oral Statement or in its
Second Submission, the EC’s rebuttal of India’s argument that the options set out in subparagraphs (i)
and (ii) must be attempted in that order.
(ii) Use of data from a single company
36. As regards India’s argument that Article 2.2.2(ii) does not allow the use of profit data from a
single company, India now concedes the obvious point that « in general terms »40, words in the plural
can contain references to the singular as well. In its First Oral Statement, India attempts to shore up its
argument by describing Article 2.2.2 (ii) as containing a ‘triple plural' 41, which supposedly would
justify to make an exception to the general rule. Ra ther sensibly, India omits altogether this argument
in its Second Submission.
37. Instead, India presses its newly discovered claim that the EC authorities should have included
Standard Industries in the calculation of the profit amount. 42 India’s arguments misrepresent the
EC’s position. Standard Industries was not excluded from the profit margin calculation because it was

36 India’s answer to Question 1.B from the Panel.
37 Recital 18.
40 India’s First Oral Statement, para. 43.
41 Ibid.

not deemed « relevant ».43 Standard Industries was excluded from the calculation because it had not
been previously included in the sample. In turn, the reason why Standard Industries was not included
in the sample was because its exports to the EC were minor.44 India has not challenged the choice of
the sample under the relevant provision of the Anti-dumping Agreement. In view of that, India is
precluded from claiming now that the sample is not sufficiently representative for the purposes of
Article 2.2.2 (ii).
38. India’s complaint that Standard Industries should not have been excluded from the profit
margin calculation without first examining Standard Industries’ data makes no sense. 45 If India were
correct, there would be no point in having a sample, because the investigative authorities would in any
event have to examine all the data.
39. India contends that Standard Industries was more representative of domestic sellers than
Bombay Dyeing, because it was «less anomalous and less peculiar ».46 The EC, however, cannot see
how a company with 80 per cent of the market can be more « anomalous and peculiar » than one with
only 14 per cent. The only reason advanced by India is that it «genuinely believes » 47 that Standard
Industries is more representative.
40. In its Second Submission, India has suggested that Bombay Dyeing’s sales do not meet the
5 per cent rule in footnote 2 of the Agreement. 48 That rule, however, refers to all domestic sales of
the like product. Moreover, it is applied on a company basis, rather than on a country basis. Domestic
sales of the like product by Bombay Dyeing represented 70 per cent of its exports to the EC and
8.5 per cent of the total exports to the EC of the 5 sampled companies.
41. India’s insistence that Standard Industries should have been included in the calculation of the
profit amount is in any event misplaced. Standard Industries’ response to the EC authorities’
questionnaire shows that Standard Industries had no domestic sales in the ordinary course of trade
during the investigation period. All 104 different bed linen types were sold at a loss. Thus, Standard
Industries’ data would have had no effect on the profit margin. To be clear, an d in response to India’s
remarks of this morning, the EC did not exclude Standard Industries because it had no profitable
domestic sales, but because, as I have just mentioned, its export sales were small. Indeed, at the time
were the sample was chosen, the EC authorities could not have been aware that Standard’s sales were
not profitable, since its questionnaire response had not been received yet. The EC’s point is simply
that India’s claim, even if upheld, would be inconsequential, since it would not affect the level of the
dumping margin.
(iii) Ordinary course of trade
42. The EC has shown that India’s view that Article 2.2.2 (ii) does not allow the exclusion of the
sales not in the ordinary course of trade would lead to results that are manifestly absurd.
49
43. India has attempted to explain away 50 the illustrations of the perverse consequences of its
theory. These attempts were in themselves unconvincing. 51 But more importantly they fail to deal

43 Ibid.
44 See India’s Exhibit 22.
45 Ibid.
46 India’s answer to Question 5.A from the Panel.
47 Ibid.
49 EC’s First Submission, paras. 145 et seq.
50 India’s First Oral Statement, paras. 47 et seq.
51 The point of the illustration in paragraph 145 is that, under India’s interpretation the data from
companies with nil or negative profit levels would be taken into account to calculate each other’s normal value.

with the fundamental argument from which they derive: under the Indian interpretation, normal values
could be based on data from unprofitable or unrepresentative sales, but only as long as those data
came from other producers or exporters.
44. Instead of addressing the EC’s argument, India repeats once again the same unpersuasive
textual arguments already made in its First Submission. 52 The truth, however, is that the ordinary
meaning of Article 2.2.2 (ii) neither requires nor prohibits the inclusion of sales not in the ordinary
course of trade.
45. India’s responses to the Panel’s questions evidence that India cannot explain why the
exclusion of the sales in the ordinary course of trade is "reasonable" in the chapeau, but not in
Article 2.2.2 (ii).53
46. India is led to argue that the "reasonableness" standard in the chapeau is different from that in
the sub-paragraphs.54 Specifically, according to India, "while the test of reasonableness under the
chapeau of Article 2.2.2 still applies, it is perhaps somewhat easier to satisfy than in the case of
Article 2.2.2 (ii)".55
47. The EC cannot understand why an exporter without domestic sales in the ordinary course of
trade should be afforded more "reasonable" treatment than an exporter with domestic sales in the
ordinary course of trade. 56 India has not provided, and indeed cannot provide, any rational
justification for that difference in treatment.
3. Article 2.4.2: Zeroing
48. In response to a question from the Panel, India has acknowledged that Article 2.4.2 does not
address the question of how the results of the transaction-to-transaction comparisons should be
« summed up » in order to arrive at a single dumping margin. 57 Furthermore, India acknowledges
that "it is an open question whether zeroing would be permitted in the T-to-T method".58
49. India’s answers beg the question : why then should Article 2.4.2 address the « summing up »
in the case of the average-to-average method? And why should « zeroing » be permitted in the
transaction-to-transaction method but not in the average-to-average method? Indeed, even Japan
concedes that the two methods should be interpreted consistently with respect to « zeroing ».59
50. India does not even attempt to provide a rational explanation for those differences. Instead, it
relies on a purely textual analysis of the wording of Article 2.4.2. Specifically, according to India,
"The WA-to-WA method clearly admonishes a weighted average of all comparable export
transactions, whereas the T-to-T method does not contain similar strong language".
60
51. Once again, however, India disregards that Article 2.4.2 does not refer to a weighted average
of all transactions, but rather to a weighted average of all comparable transactions. India still has to

52 India ’s Second Submission, paras. 45-48.
53 India’s answers to Questions 1, 2, 3.C and 4 from the Panel.
54 India’s answer to Question 2.B from the Panel.
55 India ’s answer to Question 3.C from the Panel.
56 India’s answer to Question 2.A from the Panel.
57 India’s answer to Question 35.A from the Panel.
58 India’s answer to Question 6 from the Panel.
59 Japan’s answer to Question 1 from the Panel, at point III.
60 India ’s answer to Question 6 from the Panel.

account for the presence of the term « comparable » in Article 2.4.2. The truth is that even Japan
admits that the language of Article 2.4.2 does not demonstrate that « zeroing » is prohibited.61
52. Given that its sole textual argument is flaw ed, India may be excused for resorting to invoke
what it calls the "spirit" 62 of Article 2.4.2. According to India, Article 2.4.2 "was introduced in the
ADA during the Uruguay Round to address specific concerns of victims (sic) of anti-dumping actions,
so that exporters should not be put in an unfair situation due to skewed calculation techniques and to
effectuate a genuinely fair comparison as per Article 2.4".
63 Yet India cites no evidence or authority
to support that assertion.
53. Like India, Japan also makes much of the drafting history of Article 2.4.2. 64 L i k e I n d i a ,
however, Japan provides no evidence for its account of that drafting history. Instead, Japan relies
upon an incidental remark contained in the Audio-Cassettes report noting that the issue of zeroing
"would not arise" when average-to-average comparisons are used.65 That remark, however, concerns
the issue of zeroing within each average. It does not address the situation where there are multiple
averages. In any event, that remark can have no bearing on the interpretation to be given to
Article 2.4.2. Contrary to what is implied by Japan 66, the negotiators could not have taken it into
account because the Uruguay Round was concluded one year before the report was issued.
54. India’s and Japan’s account of the drafting hi story of Article 2.4.2 is incomplete and one-
sided. It is well known that Article 2.4.2 was introduced in response to the concerns expressed by
some Members, such as Japan, which had objected to the average-to-transaction methodology. This
does not mean, however, that the negotiators agreed to all the demands made by those Members. The
wording of Article 2.4.2 reflects a finely balanced compromise. The term « comparable » was a
crucial element of that compromise. Indeed, the EC recalls that, significantly, the only difference
between the language of Article 2.4.2 contained in the Dunkel Draft, and the final version of
Article 2.4.2 is the addition of the word « comparable ».
55. Aware that neither the letter nor the "spirit" of Article 2.4.2 support its interpretation, India
also attempts a mathematical demonstration. At paragraph 55 of its Second Submission, India
reproduces the same numerical example that was an nexed to its First Oral Statement. The example
purports to show that the EC’s method is "illogical".
67 In fact, it shows only that different methods
may lead to different results. A method is not "illogical" simply because it yields a result that is less
favourable for the exporters than another method proposed by the exporters.
56. Furthermore, as already pointed out by th e EC, India’s example misrepresents the method
applied by the EC in this case. Contrary to what is misleadingly stated in India’s example, the EC did
not compare the weighted average normal value to the "transaction by transaction export price". The
EC compared the weighted average normal value to the weighted average export price of all sales of
the same type. India’s example seeks to obfuscate the difference between those two methods by
presenting the Panel with an example in which there is just one transaction of each model.
57. The arguments derived by India from that example, like its arguments based on the "real life"
example of Prakash
68, rest on purely circular reasoning. Thus, for example, India complains that the

61 Japan’s answer to Question 1 from the Panel, at point I.
63 Ibid.
64 Japan’s answer to Question 1 from the Panel.
65 Panel report on EC – Anti-dumping duties on Audio Tapes in Cassettes Originating in Japan,
ADP/136, unadopted, at para. 349.
66 Japan’s answer to Question 1 from the Panel, at point II.

EC’s method has the consequence that "companies are found to be dumping while they are in fact not
practising dumping behaviour if their export transactions would be properly weighted". 69 T h a t
argument assumes precisely what it purports to prove, i.e. that India’s method is the proper method to
calculate the amount of dumping. By the same logic, the EC could complain that India’s method leads
to the "illogical" and "unfair" result that no dumping can be found although Parakash is in fact
dumping if the correct method is used.
58. The truth is that there is nothing inherently « illogical » or « unfair » about zeroing, as
confirmed by the panel report in the Audio-cassettes case.70 . Although India cited that report in its
First Submission71, it now seeks to deny its authority. To that end India « recalls » that Article 2.4.2
« was inserted in the ADA exactly to overrule the GATT Audio Tapes in Cassettes report on zeroing
and therefore considers the EC’s invocation of the ATC report on this point unconvincing ». 72 Yet
the Audio-cassettes report was issued one year after the conclusion of the Uruguay Round. Therefore,
it is hardly conceivable how it could have been "overruled" by the negotiators of the Anti-dumping
Agreement.
59. In its Second Submission, India makes reference to the second sentence of Article 2.4.2 in
order to cast light on the meaning of the first. Such an approach is valid in principle since the two
sentences provide context for each other. However, there is no obvious lesson to be learnt from the
exercise. In the second sentence, the patterns of export prices that differ significantly may occur
among three categories: purchasers, regions and time periods. At first sight there might seem to be an
overlap with the three categories of differences that prevent comparison: physical characteristics, time
of sale, level of sale. 73 However, even as regards time, the concepts are not the same. Thus, the EC
would regard time differences between sales as preventing comparison if the external circumstances
affecting sales had changed significantly during the course of the investigation period. In the second
sentence, on the other hand, the differences based on time are introduced by the seller rather than any
external factor. Likewise, the differences in level of trade (such as sales direct to retailers and sales to
wholesalers) that render sales non-comparable are capable of being objectively recognised. The topic
of the second sentence, offering different prices to different purchasers, is dependent on the exporter
only.
60. India accuses
74 the EC of confusing the rules in the first and second sentences of
Article 2.4.2. However, as already explained, the distinctions drawn under the two provisions are not
the same. Nor are the effects of applying the EC ’s methodology. Under the first sentence, zeroing
never occurs among transactions that can be compared (taking account of physical, time or level of
trade differences). On the other hand, when use of the second sentence is justified, all sales with
negative margins may be treated as having a zero margin. The dumping margin that results will
almost inevitably be greater.
61. To conclude, I would like to refer to an argument raised by Japan in response to a question
from the Panel. Japan has alerted the Panel to the alleged risk that Article 2.4.2 may be abused in
order to create artificial sub-divisions.
75 Japan overlooks, however, that the discretion of the
investigative authorities to calculate multiple averages is limited by the term « comparable ». If two
export transactions are « comparable », they must be included in the same average. India has at no

69 Ibid.
70 Panel report on EC – Anti-dumping duties on Audio Tapes in Cassettes Originating in Japan,
ADP/136, unadopted, at paras. 347-359.
71 India’s First Submission, paras. 170-171.
73 EC answers to Panel’s questions, Question 35.
75 Japan’s answer to Question 1 from the Panel.

point argued that the different types of products for which the investigative authorities calculated
separate averages were «comparable» and should have been included in the same average.
IV. INJURY
1. Companies included in sample
62. In its Rebuttal Submission 76 India addresses ‘the concerns that it has regarding the manner in
which the EC’s sample and Community industry have been established’ . No mention is made of any
provision of the Agreement that the EC is alleged to have breached in this respect, nor of how these
concerns relate to any claim that is being exam ined by this Panel. The EC therefore formally
challenges their relevance to these proceedings.
63. It would seem that, at the Rebuttal stage of th e Panel proceedings, India is still looking for
evidence that might enable it to formulate a claim against the EC. Subject to the Panel’s wishes
regarding the provision of further evidence, the EC sees no point in devoting further attention to this
issue. The EC is reinforced in this view by the fact that, during the investigation period, the
production of the two companies mentioned by India as giving rise to its concerns amounted to 354
tonnes, which is to say less than two per cent of the total production of sampled companies.
2. Consideration of dumped imports
64. In its Rebuttal Submission
77 India takes up again its claim that, by including non-dumped
transactions when applying the term ‘dumped imports’, the EC decision in the bed linen case
infringed Article 3.1, 3.2, 3.4 and 3.5 of the ADA.
65. The EC would like first to note the cynicism of this claim in face of the evidence, which India
has failed to deny, still less refute 78, that it adopts exactly the same practice in its own anti-dumping
decisions.
66. Regarding the substance of the claim, the EC has shown that India’s arguments do not
withstand close examination. In the first place, they fail to recognise the country-based nature of
dumping enquiries that is envisaged by the WTO rules. 79 Secondly, they fail to take account of the
precise ways in which the term ‘dumped imports’ is employed in Article 3 of the Anti-Dumping
Agreement.
67. The EC would like to underline that whether the issue in question is the price or the volume
of the ‘dumped imports’, the inclusion of non-dumped transactions in the calculation does not
prejudice the exporters. As regards price, the almost inevitable consequence will be to reduce the
apparent undercutting, and thereby make a finding of injurious dumping less likely. As regards
volume, the exporters’ position could be adversely affected only if they had been dumping in greater
volumes in previous years, and they remain free to present evidence to this effect, and thereby argue
that injury was due to some other cause.
3. Examination of all factors
68. The EC has made a number of responses to the accusation that the authorities in the bed linen
investigation failed to consider all the factors th at are listed in Article 3.4. The following comments
concentrate on some of the points that arise, in the light of India’s Rebuttal Submission.

76 India Rebuttal Submission, paragraphs 61 et seq.
77 India Rebuttal Submission, paragraphs 64 et seq.
78 India’s answers to the EC’s questions, introduction.
79 EC first written Submission, paragraphs 215 et seq.

69. One of the main features of the bed linen case was the peculiar nature of the injury that the
EC investigators found was being experienced by the domestic industry. To state it briefly, injury was
focussed on two factors, profits and prices, notably because of the concentration that had taken place
among producers.
70. In its Rebuttal Submission India quotes 80 various of the EC’s arguments in this context in an
attempt to show that the EC authorities considered only those two factors, and disregarded all the
others listed in Article 3.4. This is quite false.
71. In particular, India quotes 81 the EC’s statement to the effect that no plausible negative factors,
other than the two mentioned, were suggested to the investigating authorities or otherwise came to
their attention. It then distorts this statement, even changing its wording 82, in order to conclude that
the EC was at fault because Article 3.4 itself sugge sts other factors. The EC ’s meaning was obvious,
and reflects the conclusions in the Provisional and Definitive Regulations. 83 It was that the evidence
of injury submitted to its authorities, or otherwise coming to their attention, was concentrated on the
two factors.
72. The misrepresentations of the EC’s case that are contained in India’s Rebuttal Submission are
such that it is easier to deal with them by simply reviewing what the EC argued.
73. Firstly, the EC authorities sought to carry out a comprehensive investigation of injury in this
case. So much is obvious from the questionnaires that they sent to the domestic producers. 84 I n
addition to the specific questions on topics such as sales, prices, production, costs, turnover, and
employment, the authorities included a general reques t to companies to ‘describe the effects of the
imports under consideration on your own business of producing the types of bed linen covered by the
investigation, eg on market share, sales, prices , production, capacity utilisation, stocks, employment,
profitability, ability to invest etc.’.
74. As another sign of this activity, the letter presented by India (as Exhibit India-82) shows the
EC authorities engaged (in the first months of the investigation) in gathering information on a wide
range of factors. The letter was sent to Eurocoton. The topics covered were production, sales (by
volume and value), employment, production capacity, and stocks. Significantly, the response of
Eurocoton to this letter (the non-confidential ve rsion of which the EC presents as Exhibit EC-8)
already indicates the particular problems of identifying injury to this industry (Eurocoton describes
the closure of firms, and restructuring).
75. Also as the EC pointed out in its first written Submission
85, information on several of the
factors listed in Article 3.4 did not need to be explicitly requested since it was implicit in other data
obtained by the EC authorities. For example profitability can be calculated from prices and costs.
76. India purports 86 to read the EC’s Submission as putting the onus on exporters to suggest
relevant injury factors. Of course, the EC had no such intention. On the other hand, its authorities

80 India Rebuttal Submission, paragraph 68.
81 India Rebuttal Submission, paragraph 71.
82 Thus it is wrongly implied that the EC made the following statement: “no other factors [than profits
and prices] came to their attention.” (ibid.). The word ‘negative’ has been omitted.
83 In mentioning the Provisional and Definitive Regulations in this way, the EC intends to refer to only
those parts of the Provisional Regulation that were adopted by reference in the Definitive Regulation. See EC
first written Submission, note 9.
84 Exhibit EC-2. The non-confidential replies are to be found in Exhibit India-53.
85 EC first written Submission, paragraph 251.
86 India Rebuttal Submission, paragraph 73.

were prepared receive evidence on all aspects of injury. The injury analysis contained in the
Provisional Regulation gave exporters a concrete basis on which to submit such evidence, as did the
two disclosure statements made by the EC in the course of the investigation.
77. For example, in the Provisional Regulation the EC completed its examination of the condition
of the domestic industry by concluding, inter alia , that "The production, sales, employment and
profits of companies which have since disappeared are not included in the aggregated data for the
Community industry, thus improving the apparent trends for the survivors." 87 The picture of the
domestic industry which formed the heart of the EC’s conclusions in the Definitive Regulation was
already clearly manifested in the Provisional measure.
78. The EC has argued that for a number of reasons the factors mentioned in Article 3.4 are not
intended to be a compulsory checklist.
79. This consideration is reinforced by the opening words of the paragraph, which state its
concern: the ‘impact’ of the dumped imports. India’s comments focus on the listed factors as though
they had an independent existence. In fact the significance of the whole paragraph, including the list,
hangs on its opening clause.
80. The second clause of the paragraph speaks of ‘an evaluation of all relevant economic factors
and indices having a bearing on the state of the industry’. From this it follows that there may be
factors ‘that have a bearing on the state of the industry’ which are nevertheless not ‘relevant’. The
principal criterion of relevance which is apparent in the paragraph is that indicated in the first clause –
the impact of the dumped imports.
81. This interpretation of Article 3.4 is reinforced by a particular feature of the factors listed in
the remainder of the paragraph. As the EC has already noted
88, this list consists not of ‘factors and
indices having a bearing on the state of the industry ’, but of negative aspects of such factors.
82. In addition to these arguments, the EC notes that, on India’s interpretation, WTO-
compatibility of national anti-dumping investiga tions, perhaps involving investigation of tens of
companies and thousands of man-hours work, would be thrown into question by failure to give
explicit consideration to even the most minor of the factors listed in Article 3.4.
83. In this context, India has quoted 89 the EC’s explanation to the Panel of the notion of
relevance in a way that distorts the EC’s actual views. As described above, the EC regards the word
‘relevant’ in the phrase ‘all relevant factors and indices bearing in the state of the industry’ as limiting
the class of such factors and indices in line with the notion of ‘impact’ that is stated in the first clause.
84. However, the EC believes that a proper examination of the impact of the dumped imports will
usually require some kind of overall assessment of the nature and condition of the domestic industry,
which provides a framework for the particular study of the impact of the dumped imports. The form
of the overall assessment will depend on the circumstances of the case. What is considered in this
assessment could be called ‘factors’ that are ‘relevant’ to that industry, if it were not that those terms
are used in Article 3.4 in a specific way. In the bed linen investigation the EC Regulations provide
just such an overall assessment, that draws attention, in particular, to the special state of the domestic
industry following the contraction that has occurred in the number of producers.

87 Provisional Regulation, recital 92.
88 EC first written Submission, paragraphs 256 et seq.; EC responses to Panel questions, Question 25.
89 India Rebuttal Submission, paragraph 75.

85. India once again cites a passage from the panel report in Brazil – CVD on Milk in support of
its case.90 However, far from supporting India’s interpretation, the panel described in that case the
list of factors (now in Article 3.4) as ‘illustrative in nature’.91
86. India also cites again 92 the panel report in Korea Resins. However, the passage in question
refers to parties’ obligations in Article 3:1 of the 1979 Anti-Dumping Code, and now in Article 3.1 of
the Anti-Dumping Agreement, to carry out an ‘obj ective examination’ of volume, etc., which India
has not invoked in the present case.
93 Whether, as India contends, Article 3.4 requires ‘an unbiased
and objective evaluation of the facts’ alongside the examination imposed by Article 3.1 is, for the
purposes of the present dispute, an academic question. India does not point to any way in which the
EC’s injury examination is biased or unobjective, other than its supposed failure to examine properly
the factors listed in Article 3.4.94
87. India accuses 95 the EC of using the table presented in its first Submission96 to provide ex post
facto rationalisations of its authorities’ conclusions in the bed linen investigation. This is to confuse
the introduction of new evidence to justify decisions imposing anti-dumping measures, which the EC
has not attempted, with explanations of the WTO-compatibility of those decisions, as they are found
in the Provisional and Definitive Regulations. The EC has already 97 had occasion to draw this
distinction.
88. Thus, in the arguments presented in its various statements to this Panel the EC has, it believes,
shown how the analysis of the impact of the dumped imports that is contained in the Regulations
satisfies the requirements of Article 3.4. This has involved the EC demonstrating, for example, how
the term ‘relevant’ applies to the various factors listed in this provision. Thus, in categorising certain
factors as ‘Found not to be a significant independent factor’ in its table the EC seeks merely to put in
words the conclusion that is implicit in its Regulations.
4. Article 3.4 – evidence from different levels of producers
89. The EC would first like to dispose of the issue of whether Luxorette formed part of the
‘domestic industry’ (referred to as the ‘Community industry’ in the EC Regulations). India raises in

90 India Rebuttal Submission, paragraph 78; India first written Submission, paragraph 4.63.
33The Panel noted that the list of factors mentioned in Article 6:3 in this provision was illustrative in
nature, and the last sentence made it clear that the provision did not prejudge the weight to be given to any
particular factor mentioned in the provision. At the same time, Article 6:3 clearly required investigating
authorities to conduct in each case a comprehensive analysis of "all relevant economic factors and indices
having a bearing on the state of the industry". The Pane l was of the view that to consider only the stagnation of
domestic production in the analysis of the impact of imports on the domestic industry was inconsistent with this
comprehensive character of the examination required under Article 6:3.
91 India also quotes (paragraph 7) from the EC’s arguments before this panel in order to detect
inconsistency in its views. Whether such inconsistency exists is of course irrelevant to the outcome of a dispute,
which the Panel will decide on the basis of the cogency of the arguments, rather than their pedigree. Parties are
in any case free to present alternative, and therefore inconsistent, arguments even with the confines of a single
dispute.
92 India Rebuttal Submission, paragraph 79; India first written Submission, paragraph 4.64.
93 Other than in regard to the meaning of ‘dumped imports’, discussed at paragraph above.
94 The EC dealt with this issue in its first written Submission, paragraphs 319 et seq. India also (para.
80) cites, again, the HFCS panel report. The EC has observed that, whatever was said by parties, the report
provided little basis for its conclusion, other than precedents concerning safeguard measures.
95 India Rebuttal Submission, paragraph 82.
96 EC first written Submission, paragraph 255.
97 EC second written Submission, paragraphs 107 et seq.

its Rebuttal exactly the same point that it made in its oral Statement to the Panel. 98 For convenience,
the EC quotes here part of the answer it gave to the Panel’s question99 on this point.
Luxorette was not in the Community industry and was not in the final sample. The
situation is that Luxorette was intended to be included in the sample and, as indicated
in Recital 8 of the Provisional Regulation, an on-the-spot verification visit took place
at the premises of the company. However, as indicated in 54 of the Provisional
Regulation, it was excluded from the Community industry and thus from the sample.
90. India repeats in its Rebuttal Submission
100 its claim that the EC relied on the contraction that
took place among EC producers prior to the investigation period as evidence of injury. The EC’s
refutation of this claim was made in its first written Submission.101
91. As regards use of data from different levels of producers, India attempts to advance its case
by misrepresenting that of the EC. Contrary to India’s assertions 102, the EC does not argue that
information from outside the sample is relevant only if it points to injury. The EC has just explained
its view of the notion of relevance.103
92. India seems to confuse 104 the identification of the domestic industry (for which Article 4.1
allows Members a discretion, and regarding which India has made no claim against the EC), with the
use of evidence from different levels of producers in order to determine whether that industry is being
injured.
93. In its oral Statement to the first meeting of the Panel 105 the EC elaborated on its alternative
argument ‘that actions taken by the EC authorities in the bedlinen investigation are also justifiable on
the basis that a Member may use both definitions of the domestic industry in the course of a single
investigation’. Rather than attempt to refute this argument India chooses to introduce further
confusion by not recognising it as an alternative argument. Consequently the merits of the argument
remain unanswered.
94. To boost its case, India misrepresents the EC’s contentions in order to give a misleading
account of the injury finding presented in the EC Regulations. Those Regulations (notably recitals 81
and following of the Provisional Regulation) gave a comprehensive account of the state of domestic
industry (referred to as the ‘Community industry’). In addition to data for the sampled producers in
the ‘domestic industry’, that account also drew on information for the whole ‘domestic industry’, as
well as from all EC producers. It was, however, directed (as the title of the relevant section indicated)
to the ‘Situation of the Community Industry’.
106
95. India alleges 107 that the Regulations ‘pick and choose’ between levels in order to find
evidence to support the conclusion of injury. However that conclusion rested on findings of injury in
regard to two specific factors: prices and profits which were assessed at the level of the domestic
industry as defined in the proceeding.

98 India first oral Statement, paragraph 75; India Rebuttal Statement, paragraph 86.
99 EC responses to Panel questions, Question 22.
100 India Rebuttal Submission, paragraph 89.
101 EC first written Submission, paragraphs 348 et seq.
102 India Rebuttal Submission, paragraphs 91 and 92.
103 See above at paragraph 80.
104 India Rebuttal Submission, paragraph 92.
105 Paragraphs 134 et seq.
106 The point has been made in EC first written Submission, paragraph 329; First oral Statement,
paragraph 138; Rebuttal Statement, paragraph 71.
107 India Rebuttal Submission, paragraph 93.

96. India implies that the Regulations ignored the price increase among the sampled producers of
3.2 per cent between 1992 and 1995/96. A reading of the relevant section of the Provisional
Regulation108 shows this to be quite unfounded. Thus, it is explained that, taking inflation into
account, prices actually decreased.
97. Regarding the second factor, profits, India does not suggest that the EC quoted data
selectively. The only other example it suggests is in regard to market share, where the industry was
apparently healthy. However, the Regulations explain how the finding of injury could be reconciled
with such data.
98. In conclusion it may be said that although India accuses the EC of not discuss ing positive
factors, quite the opposite is true. It is the Indian account of the EC decisions that is misleading
because it presents a set of bald figures without explanation of the context that is provided in the
Regulations.
5. Article 6: Sampling
99. India has again invoked Article 6 of the Anti-Dumping Agreement
109, despite the Panel’s
ruling on the matter. The EC reaffirms its objections to the inclusion of claims under this Article.110
100. The EC has commented on the subject in its Rebuttal Submission. 111 Article 6.10 and 6.11
govern the determination of dumping margins for exporters and producers. They do not apply to the
selection of the domestic producers in regard to the domestic industry.
101. Contrary to India’s assumption 112, the selection of domestic producers in the bed linen
investigation was never intended to be a statistical sample. It was ‘the largest representative volume of
production … which can reasonably be investigated within the time available’. Thus, even if the
principles in Article 6 were applicable, the notion of statistical validity would be inapplicable.
6. Imports before investigation period
102. In its Rebuttal Submission India makes various accusations regarding the EC’s attitude to
alleged dumping before the dumping investigation period.
103. In this context, the issue to be decided by the Panel is whether India has established that the
EC, in its Provisional and Definitive Regulations has failed to determine properly the issues of injury
and causation. In particular, India claims that the EC infringed Article 3.4 because its determination
was dependent on assumptions that the imports prior to the dumping investigation period were also
dumped.
104. As the EC has already pointed out, the analysis contained in the Regulations reveals a
domestic industry that had undergone considerable contraction in the years prior to the dumping
investigation period. It also explains how the industry was currently suffering injury, despite the fact
that, as a result of that contraction, it appeared to be healthy according to a number of indicators.
There is therefore a clear distinction between the reasons for that contraction, and the reasons for the
current injury to the industry. It is the latter that is relevant to the finding of injury and causation that
are at issue in the present dispute. In this context the cause of the contraction is irrelevant. What
matters is that it did take place, a fact that India does not challenge. Therefore, that the EC presumed

108 Recitals 86 to 88.
109 India Rebuttal Submission, paragraph 95.
110 First written Submission, paragraph 11.
111 Paragraph 56.
112 India Rebuttal Submission, paragraph 96.

that the contraction was due to dumped imports was not relevant to the finding of injury during the
dumping investigation period. Let me repeat that the EC did not base its measures on a finding of
injury in the form of a contraction of the industry.
105. The EC has already addressed 113 the meaning of the phrase ‘dumped imports’ as it is found in
Article 3 and shown that it is the accepted interpretation of this term, reflected in Members’ practice
(including that of India), in the context of volume, to make comparisons on the basis of all imports of
the product in question.
7. Article 3.5 - Injury caused other than by dumping
106. India’s claim
114 in regard to Article 3.5 is entirely dependent on its arguments concerning the
meaning of ‘dumped imports’. The EC has shown (a bove) that India is wrong in denying that the
phrase covers all imports of the product in question from the country found to be dumping.
V. TREATMENT OF DEVELOPING COUNTRIES – ARTICLE 15
107. The EC has dealt with India’s claims regarding Article 15 of the Agreement at several points
in its statements.115
108. The EC regrets that it incorrectly informed the Panel that undertakings are not accepted at the
stage of provisional measures.
116 As India points out 117, this has happened on a small number of
occasions.118
109. The EC has suggested various ways in which it gave advantages as regards aspects of the
anti-dumping proceedings. However, as the EC has acknowledged, three of these do not involve
‘remedies’ and consequently do not fit precisely with the obligation in the second sentence of
Article 15.
110. India refers to these steps in its Rebuttal Submission
119, but it overlooks the fourth that the EC
put forward, the exclusion of handloom products from the scope of the anti-dumping measure.
111. Although discussion of Article 15 usually concentrates on undertakings, it can hardly be
denied that anti-dumping measures are ‘remedies provided for by this Agreement’. Furthermore, in
this context the word ‘constructive’ is best interpreted as meaning ‘helpful’ 120, and to narrow the
scope of an anti-dumping duty is undoubtedly a ‘constructive’ action as regards the exporting
country.121

113 Supra paragraph EC second written Submission, paragraphs 72 et seq.
114 Repeated in India Rebuttal Statement, paragraphs 101, et seq.
115 EC first written Submission, paragraphs 362 et seq.; first oral Statement, paragraph 153; Panel
questions to EC, Questions 29 and 30; EC second written Submission, paragraphs 87 et seq.
116 EC responses to Panel questions, Question 38.
117 India Rebuttal Submission, paragraph 105.
118 It is unfortunate that India’s representatives di d not take advantage of their detailed knowledge of
EC law and practice to express interest in offering an undertaking at a point somewhat before the last possible
minute.
119 India Rebuttal Submission, paragraph 108.
120 The New Shorter Oxford Dictionary (1996) contains the following definition of ‘constructive’: ‘3.
Tending to construct or build up something non-material; contributing helpfully, not destructive.’
121 That ‘constructive remedies’ should be broadly interpreted is also encouraged by the fact that the
term was almost certainly taken (by the 1979 Codes) from Article XXXVII:3(c) of GATT, where it was not
confined to contexts were undertakings could be used:
3. The developed contracting parties shall:

112. India has objected that the exclusion of handloom products was done under the notion of ‘like
product’ rather than Article 15.122 However, this is to misunderstand the obligation in the provision,
which is to ‘explore’ the possibilities of constructive remedies 123, not to implement those remedies.
Implementation is achieved using the provisions governing the ‘remedies provided for by this
Agreement’. In this case Article 9. Likewise, when an undertaking is accepted, even with exporters in
a developing country, the governing provision is not Article 15 but Article8.
124
113. The only question that remains is whether the EC ‘explored’ such the possibilities of such
remedies within the meaning of Article 15.
114. That the EC authorities carried out such an exploration, and did so under Article 15 is evident
from the fact that the exporters explicitly invoked Article 15 when requesting the exclusion of
handloom products.
125 It hardly lies in India’s mouth to deny that in responding to this request, by
exploring the possibility of making such an exclusion, the EC authorities were acting under that
provision.
115. India has made two responses on this issue. Firstly, it says 126 that Article 15 ‘puts the
initiative for exploring constructive remedies with the importing country authority’. 127 T h e
suggestion does not hold water.128
116. Most fundamentally, Article 15 only requires an investigating authority to explore the
possibilities of constructive remedies "where they would affect the essential interests of developing
countries." This demonstrates that an effect on the essential interests of a developing country first has
to be invoked by that country before there is a requirement to explore constructive remedies.
117. In any event, if, as here, the exporters make a proposal and the authorities pursue it with them,
then both are ‘exploring’ the issue, within the ordinary meaning of the word.
129
118. Secondly, India’s claim 130 refers to action prior to the imposition of provisional measures
(13 June 1997), and the exploration of position of handloom products began no earlier, it would seem,
than the receipt of the brief from the exporters (about a month later).
119. The EC has already shown that there is no obligation to explore constructive remedies before
the imposition of provisional measures. 131 Furthermore, in so far as alleged failures to respect

(c) have special regard to the trade interests of less-developed contracting parties when
considering the application of other measures permitted under this Agreement to meet particular problems and
explore all possibilities of constructive remedies before applying such measures where they would affect
essential interests of those contracting parties.
122 India first written Submission, paragraph 6.43.
123 The distinction is apparent in paragraph 589 of the report of the Brazil – Cotton-Yarn panel, quoted
by India in its Rebuttal Submission (paragraph 111).
124 In this context the EC wishes to withdraw any implication in paragraph 96 of its Rebuttal Statement
that the constructive remedies would have to be implemented under Article 15.
125 EC second written Submission, paragraph 96. S ee Exporters’ Second post hearing brief (Exhibit
India-55), point 8.
126 India Rebuttal Submission, paragraph 110.
127 See also Egypt written Submission, paragraph 38.
128 There is no indication in the Brazil – Cotton Yarn case to indicate that the initiative for an
undertaking came from the EC.
129 It is evident that there were a number of communications between the parties on the implementation
of the proposal. See the communication from the exporters’ representatives of 11 August 1997 (Exhibit EC-7).
130 Request for the Establishment of a Panel by India, WT/DS141/3, (Exhibit EC-1) paragraph 18.
131 EC second written Submission, paragraph 98; EC responses to Panel questions, Question 37.

Article 15 relate to those measures, they are not properly before the Panel.132 In so far as such alleged
failures relate to the imposition of definitive duties (in December 1997), the EC has complied with its
obligations, for example, by the exploration that took place between July and December 1997
resulting in the exclusion of handloom products.
120. The EC’s arguments in regard to Article 15 are not confined to its treatment of handloom
products. It has explained its position in regard to the possibility of accepting exporters’
undertakings.133 India accuses the EC of rejecting the offer of an undertaking made by the
exporters.134 The exporters made no such offer. At the last minute their representatives indicated their
‘desire … to offer price undertakings’. 135 The difference is important. Had the EC authorities had a
text available to them they could have made a response to it.
121. During the consultations with India prior to the establishment of the Panel, in answer to a
question from India on Article 15, the EC said that ‘discussions on undertaking took place and this
has to be considered as complying with obligations even if these did not result in measure in the form
of undertakings’.136 The response was quoted by India in its first Submission 137, and has not been
contradicted. In its Rebuttal Submission India said that ‘in answer to its repeated suggestions on
undertakings in October 1997 the standard answer from the EC was always that Bed Linen was " too
complicated a product for undertakings" .138 The explanation of this response – the difficulties of
concluding undertakings in non-commodity textile products – has already been given by the EC. 139
What it incidentally confirms is that also in this context the EC did explore the possibilities of
constructive remedies during the bed linen investigation.
122. Finally, the EC would recall that it also gave special and differential treatment to India by
being prepared to consider an undertaking from a trade association (Texprocil) rather than insisting
that undertakings be offered by exporters.
123. In this claim India has sought to convert the burden of proof on itself to show that the EC
failed comply with its Article 15 obligations into one in which the EC has to justify its behaviour. In
fact, not only has India failed to establish a prima facie case, but the EC has demonstrated that
through its actions regarding both special treatment for handloom products, and undertakings it has
fully satisfied its obligations.
VI. PUBLIC NOTICE – ARTICLE 12.2.2
124. The EC has stated at length why most of India’s claims under Article 12.2.2 are unfounded
because they in effect demand that the EC authorities should explain to parties involved in anti-
dumping investigations why its law and practice are in accordance with WTO requirements.
140
125. In its Rebuttal Submission India presents the EC as claiming that challenges to the
investigating authorities’ views are automatically irrelevant.141 Of course, this is not the EC’s view.

132 EC second written Submission, paragraph 97; EC first written Submission, paragraphs 22 et seq.
133 EC second written Submission, paragraphs 87 et seq.
134 India Rebuttal Submission, paragraph 104.
135 Fax of 13 October 1997. Exhibit India-72.
136 Follow-up to second round of consultations held between India and the EC (Exhibit India-14),
question 115
137 India first written Submission, paragraph 6.11.
138 India Rebuttal Submission, paragraph 104.
139 EC second written Submission, paragraph 93.
140 EC second written Submission, paragraphs 104 et seq.
141 India Rebuttal Submission, paragraph 115.

126. India also suggests that the EC’s positions regarding Article 12.1 and 12.2 are
incomprehensible.142 Since the first of these has not been invoked in this dispute the EC will
concentrate on the latter. On this matter the EC expressed its views in answer to a question from the
Panel.143 The fact that the Agreement leaves the exporters in a weak position regarding information
about standing may be considered unfortunate but that is not a reason for changing the plain text of
the ADA. The contracting parties made the choice that antidumping complaints should not receive
any publicity before initiation of a procedure (Article 5.5 ADA).
127. Regarding the provision of information in the course of these dispute proceedings, the EC
reaffirms its determination to comply with whatever requests the Panel may make. Any suggestion by
India to the contrary is misconceived.
144 Furthermore, the EC does not suggest that investigating
authorities have discretion to define what is ‘relevant’ in terms of Article 12.145 Of course, it is they
who will decide what appears in notices of in itiation, and in instruments adopting provisional
measures and definitive measures. But if they leave out matters that should have been included
according to Article 12, then they are liable to have that error determined by a Panel in dispute
proceedings.
128. India has chosen once more to emphasise the link that it sees between claims of alleged
defects in the EC’s anti-dumping measures (particularly as regards findings of dumping and injury),
and the public notice requirements associated with those measures. 146 As the EC has already
explained147, such a linkage serves to confuse rather than enlighten. In most of the cases where India
invokes Article 12.2 there is a dispute between India and the EC as to whether the EC law or practice
breaks the linked substantive rule in the Agreement. The only explanation that might be given by the
EC is why that law or practice does not infringe the Agreement. This is not an explanation that
Article 12.2 requires Members to provide.
129. Once an investigation has been initiated, such authorities are charged with investigating
questions of dumping or injury and making appropriate determinations thereon. They are not charged
with reviewing the propriety of th eir own conduct. Consequently, arguments relating to that conduct
are irrelevant.
EXHIBITS
EC-8 Reply by Eurocoton to EC Commission, 10 Jan. 1997.

142 India Rebuttal Submission, paragraph 116.
143 EC responses to Panel questions, Question 23.
144 India Rebuttal Submission, paragraph 117.
145 India Rebuttal Submission, paragraph 119.
146 India Rebuttal Submission, paragraph 120.
147 EC second written Submission, paragraphs 104 et seq.

CLOSING REMARKS OF THE EUROPEAN COMMUNITIES
TO THE SECOND MEETING OF THE PANEL
(6 June 2000)
Mr Chairman, Members of the Panel, I have just a few closing remarks to round of and complete
some of the issues we have been discussing today.
VII. INITIATION
130. The obligation to examine the accuracy and adequacy of the evidence in the complaint arises
at a stage of the procedure where exporters and importers are not involved since the investigating
authority is required by Article 5.5 ADA to keep the complaint confidential. The only body that can
be informed is the government of the exporting country. This government may have the opportunity
to make representations about the complaint under Article 17.2 but the exporters and importers do not.
131. The ADA specifically regulates in Article 12.1 the information about the initiation that has to
be made available in a public notice. India has not alleged a violation of this provision since it is fully
aware that requirements of Article 12.1 have been satisfied. It attempts instead to argue that the EC
somehow had an obligation under Article 5.3 or 12.2 to justify its determination that the evidence in
the complaint was accurate and adequate.
132. There is no such obligation of explanation and if the determination is challenged in dispute
settlement, the general rule applies that the complaining country must establish at least a prima facie
case of violation. This, as we have seen, India has signally failed to do.
133. One of the reasons why the ADA does not provide for an obligation to justify initiation to the
exporters is that the same evidence has to be exam ined in the investigation and the interested parties
should concentrate their efforts on this rather than turning over issues that have already been decided
on a preliminary basis and for the purpose of initiation.
VIII. ARTICLE 3.4 ADA
134. Earlier today we urged the Panel not to take a formalistic approach to Article 3.4. It serves no
useful purpose to insist that an investigating authority investigate and evaluate factors that appear
irrelevant to the issue of impact of dumped products in the circumstance of the case, in particular
because they are not significant in the industry conc erned or are implicit in other factors. Nor does it
make any sense to require that the authority include a standard paragraph on each of the factors in its
determination.
IX. EX POST FACTO EXPLANATIONS
135. India is regularly accusing the EC of making ex post facto explanations and justification of
the measures. The EC has explained that it is not seeking to introduce new evidence which was not
available during the proceeding as India seems to suggest but is simply explaining what it did and
why. If this is not possible in dispute settlement concerning antidumping measures, then a Member
would be able to do nothing more to defend a meas ure than produce the text of the determination!
Clearly it must do more. There are a great many choices made in the course of an antidumping
proceeding and every one of them cannot be set out in the public notice of the determination –
otherwise this would be thousands of pages long. These choices can be challenged in dispute
settlement but then it must be possible to elaborate on the reasons for the way in which the
investigation was conducted.

X. QUANTITATIVE RESTRICTIONS
136. India has just mentioned for the first time in its closing remarks the fact that the products in
question are subject to quantitative restrictions in support of its complaints.
137. Let me just say that this issue is not within the Panel’s terms of reference and that this
incident illustrates why the EC prefers to speak second when it is defendant before a Panel. It is only
then that it can be sure to be in a position to respond to the allegations made against it.
XI. INACCURACIES IN INDIA’S PRESENTATION
138. India has again misrepresented the EC’s case for example in stating just now that the EC had
earlier declared that it determined standing on the basis of 46 companies. The EC refrains from
repeating statements that it has already made and simply asks the Panel to check the EC’s position as
actually expressed by it rather than relying on India’s statements.
139. Mr Chairman, Members of the Panel it only remains for me to thank you for the patience you
have shown during this proceeding and to wish you well in your further deliberations.

ANNEX 2-8
RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS
FROM THE PANEL FOLLOWING THE SECOND MEETING OF THE PANEL
(16 June 2000)
Questions for the European Communities
9. Even assuming that injury can be found based on the impact of dumped imports on only
two of the factors set out in Article 3.4, could the EC explain why, in its view, it would be merely
‘formalistic’ and not useful to evaluate, and explain the evaluation of, other ‘relevant economic
factors and indices having a bearing on the state of the industry’.
In its necessarily brief closing remarks to th e Panel the EC could not hope to summarise the
complex arguments that it has presented regarding Article 3.4, nor did it attempt to do so. Rather, it
picked out certain aspects of those arguments for the Panel’s attention. In light of the Panel’s
question, the EC wishes to make clear that it does not base its defence on the argument that an
examination of two factors alone justified a finding of injury (whether or not such a conclusion could
be legally justified). Nor does it claim that a consideration of other factors would have been irrelevant.
What the EC denies is that Article 3.4 in every case requires the item-by-item evaluation of a
specific checklist of factors – which could be described as a formalistic approach. Such an approach
has been advocated on the basis of a cursory reading of Article 3.4 (notably the latter part of the
provision, beginning with the words ‘including actual and potential decline …’), coupled with
references to the provisions of the Safeguards Agreement and ATC which have a superficial
similarity.
The EC will not repeat here the arguments it has presented to demonstrate that this is not what
the text of Article 3.4 says should be done (see First written Submission, paragraphs 249 et seq.).
Although this dispute has focussed on the factors listed in Article 3.4 it should not be
forgotten that this provision does not purport to provide a complete framework for determining ‘the
impact of the dumped imports on the domestic industry’ (it speaks of what the examination ‘shall
include’). The fundamental obligation of the Agreement is determine whether injury has been caused
to the domestic industry. It is this obligation which the EC sought to discharge in its Regulations. The
case presented there consists essentially of three elements:
(1) an assessment of the condition of the domestic industry, concentrating on those factors
(volume and value of sales, profits, output, mark et share, prices and employment) which are most
significant;
(2) the identification of two such factors (prices and profits) where the evidence indicated that the
‘impact of the dumped imports’ was injurious; and
(3) an explanation of how an overall finding of injury was justified in these circumstances despite
the fact that in other respects the industry appeared to be healthy.
The first of these elements comes closest to the ‘checklist’ or ‘formalistic’ approach.
However, the purpose of the assessment was to provide evidence for the second and third elements.
Indeed, for the third element it was necessary to go further, and examine the recent history of the
industry.

Viewed as a whole, the EC believes the methodology was sound, and provided a coherent and
comprehensive explanation of how the industry was suffering injury that cannot be faulted
(particularly in light of the standard of review enunciated in Article 17.6).
More than this, it satisfied the precise requirements of Article 3.4. It provided an examination
of the ‘impact of the dumped imports’, and involved an ‘evaluation of all relevant economic factors
and indices having a bearing on the state of the industry’. Finally, it undoubtedly evaluated the ‘actual
… decline in sales, [and] profits’, the only factors where such negative aspects were present.
10. The EC has asserted that it may be clear at the beginning of an investigation that some
factors are not relevant to an evaluation of the impact of dumped imports on the domestic
industry, that this lack of relevance might become apparent later. Assuming this is case, could
the EC explain how a Panel, in reviewing a final determination, may assess whether the
investigating authority found that a particular factor was not relevant in a particular case,
whether at the outset or later, if there is no mention of that factor, or of the conclusion of lack of
relevance, in the determination itself? Is a Panel to assume that the absence of discussion of a
factor indicates that it was found not to be relevant? In response to the Panel’s question
number 27 after the first meeting, which posed a similar issue, the EC responded ‘A panel must
carry out this task by examining the situation of the industry as revealed in the determination
and the arguments and explanations advanced by the parties to the dispute.’ However, this
sounds very much like an invitation to de novo review, which the parties recognised is not
allowed under Article 17.6 of the AD Agreement. Could the EC please elaborate on how the
panel can ‘examine the situation’ of the industry with respect to the relevance of any particular
factor without making a judgement of its own as to the relevance of that factor?
In these questions the Panel seems to be assuming that factors are ‘relevant’ if they bear on
the state of the industry. However, such a reading would render the word superfluous. It must refer to
the finding of injury, which is made by examining the impact of the dumped imports. The evaluation
of factors is required in so far as they are relevant to that finding. (EC Second Oral Statement,
paragraph 80).
In its Regulations the EC has presented an explanation of how the dumped imports have
injured the domestic industry, and it has done this, inter alia, by evaluating factors bearing on the
state of that industry (see the answer to Question 9). Those factors are ‘relevant’ in that they support
the case that the EC is presenting.
It is evident that what is relevant will depend on the particular justification that the Member
gives for its injury determination. There will be some cases where the justification consists of a simple
weighing of pluses against minuses among the various factors, with the decision depending on which
way the balance points at the end. In such cases one would probably expect a wide range of factors to
be considered.
As the EC Regulations make clear, the present case is not like that. On the basis of the
analysis contained in those Regulations, the EC is implicitly saying that factors other than those it has
evaluated are not relevant. This is not because they do not bear on the condition of the industry, but
because they do not need to be evaluated in order to establish the EC’s findings.
Such an approach does not leave the Panel unable to exercise its power of review. On the
contrary it can examine the determination in the light of the review standard in Article 17.6. But it can
only do so if the complaining party has challenged that determination.
In the present case India has not challenged the coherence of the EC’s injury finding. All that
it has done is complain that certain factors listed in the last part of Article 3.4 were not explicitly

evaluated. The EC has explained elsewhere how it has satisfied this part of Article 3.4. (EC First
written Submission, paragraphs 246 et seq.)
In the light of these comments, the EC’s answer to the Panel’s second question is Yes. The
Panel can assume from the absence of an explicit evaluation of a factor that the EC found it not to be
relevant, in the sense described above, to its finding of injury.
Furthermore, the EC does not believe that a Member is obliged to say explicitly of each
unevaluated factor that it is not relevant to the finding of injury. For one thing, the list in the latter part
of Article 3.4 is clearly not comprehensive, so th ere is no knowing how many such statements should
be included.
However, the EC Regulations, while not addressing such unevaluated factors individually, do
provide an overall explanation of why they were not ‘relevant ’, albeit that the word itself was not
used. This is contained in the discussion of the peculiar condition of the bed linen industry, resulting
from the contraction in the number of producers. The Regulations explain how, because of the
contraction in the number of producers, the industry appeared to be in many respects healthy. In fact,
it was only as regards the factors of sales and profits that indications of injury were to be found. With
the exception of these two, it was assumed that the economic indices would show an apparently
healthy industry.
As to the last part of the Panel’s question, the EC is far from suggesting that the Panel should
engage in a de novo examination of the issue of injury. The EC rests its case on the determination
contained in the two Regulations. By the ‘arguments and explanations advanced by the parties to the
dispute’ it means no more than the kind of reasoning it is presenting here. It has not attempted to
present additional evidence to retrospectively justify the finding of injury.
To answer the Panel’s final question, the EC would first say that the task of the Panel is to
examine the Regulations’ assessment of the situation of the industry. (The Panel would itself attempt
to examine the situation of the industry only to the extent that India was challenging the factual
accuracy of the individual findings in the Regulations, which is not the case). As explained in the
answer to Question 9, the Regulations provide a coherent and comprehensive explanation of how the
EC bed linen industry was being injured, and one that satisfies the requirement in Article 3.4 to
evaluate relevant factors and indices, etc. The question of which factors in a particular investigation
are ‘relevant’ is a factual one, and therefore the task of the Panel is not to make its own determination
on this issue, but to review the conclusions contained in the Regulations.
11. Could the EC explain the basis for its apparent view that events concerning companies
that are not part of the Community industry at issue, that is the closure of some EC bed linen
producers, can be relevant to the analysis and finding of injury to the Community industry.
It should be recalled that ‘Community industry’ has the same meaning as ‘domestic industry’
in the Anti-Dumping Agreement.
The investigations of the EC authorities revealed an industry where evidence of material
injury was to be found in only two areas – prices and profits. In other respects the industry appeared
to be healthy. The authorities concluded that this apparent contradiction was explained by the fact that
the apparently healthy aspects of the condition of the producers making up the industry were the
consequences of benefits flowing from the contraction that had taken place in the industry in the years
preceding and during the ‘investigation period’. In other words, the disappearance of a number of
producers had made economic life easier in some respects for those that remained. This is illustrated
by the fact that some of the companies that disappeared either merged or were bought by survivors.

Thus, ‘events concerning companies that are not part of the Community industry at issue’
helped explain the nature of the injury caused to the Community industry during the investigation
period.
12. Could the EC elaborate on the statement that a Member may use ‘both’ definitions of
the domestic industry in its analysis of injury to the domestic industry in a single anti-dumping
investigation. This suggests that there are two domestic industries at issue in a single case, while
the EC confirmed, in its answer to the Panel’s question 22 after the first meeting, that the single
domestic industry at issue in the disputed investigation was the ‘Community industry’, which
comprised the 35 co-operating producers of bed-linen?
The EC’s argument is that nothing in the Anti-Dumping Agreement requires that the decision
on which industry definition to adopt should be made before the end of the investigation, that is,
before the final determination. If, having carried out its investigation, an investigating authority finds
that one part of the "domestic producers as a whole" has been injured, but another part has not,
Article 4.1 allows the finding of injury for the part of the "domestic producers as a whole" to be used
as a basis for imposing antidumping measures where this part constitutes "a major proportion" of the
total domestic production of the products. Similarly, an investigating authority is entitled to rely on
injury to "domestic producers as a whole" even where producers of "a major proportion" of the total
domestic production of the products may not be injured.
In the present case, the EC relied only on injury to producers of "a major proportion" of the
total domestic production of the products – that is the 35 co-operating complainants, since this was the
part of industry on which it had the most information.
The EC made the argument referred to by the Panel in order to explain that even if India were
right and the EC found injury to the "domestic prod ucers as a whole", this would not justify a finding
that the Regulation was inconsistent with the Anti-Dumping Agreement.
13. Could the EC please confirm that the company alleged to be importing bed-linen
referred to in recital 54 of the provisional regul ation as the ‘one case’ that was excluded from
the domestic industry was Luxorette? In its answer to the Panel’s question 22 after the first
meeting, the EC stated ‘The reasons for excl uding them was that some were importing high
volumes of Bed Linen, some were not producing the product concerned any longer, some were
not focussed on the production of Bed Linen in the EC (this was the case of Luxorette) and some
for lack of cooperation.’
The answer to the question is Yes.
The Panel’s quotation from the EC’s reply to question 22 of the Panel should be read in
context. Rather than excluding Luxorette from the domestic industry, following the logic of the text of
the Provisional Regulation, it would be more appropriate to say that Luxorette was not included in the
domestic industry.
The relationship between the various numbers can be explained as follows.
• 46 companies gave their backing to the complaint – this is ‘the list of companies included in
the complaint’ mentioned in PR recital 52 (Complaint annex 3, Exhibit India-6).
• exclusion of 7 companies (PR recital 52)
• exclusion of one company (which had also originally been included in the sample –
Luxorette) (PR recital 54)

• exclusion of 3 companies (PR recital 56).
This process left 35 companies that constituted the domestic industry (PR recital 57).
Companies were excluded for any of four reasons:
• importing high volumes of bed linen;
• not producing the product concerned any longer;
• not being focussed on the production of bed linen in the EC; and
• lack of cooperation.
Luxorette fell into the third category, namely importing bed linen from Pakistan and not being
focussed on producing bed linen
14. Referring to recital 29 of the final regulat ion, the Panel notes that four Pakistani
exporters of bed-linen were found to have de minimis margins of dumping. Referring to
Article 1 of the Regulation adopted by the EC Council, the Panel notes that exports from these
four companies were assigned a rate of duty of "0.0 per cent". The EC conducted its injury
analysis on the basis of cumulated volumes of imports, and appears to have included in that
analysis all imports from Pakistan, including those attributable to these four companies. Is it the
EC’s contention that these exports from Paki stan were dumped, despite the findings of de
minimis margins of dumping? If so, could the EC elaborate on the legal basis for that position?
The EC is not clear in what context the Panel is raising this question. It assumes that, since
the issue is not before the Panel, the EC is not being asked to comment on the justification for
cumulating imports from the three exporting countries for the purposes of determining injury.
That being so, the Panel’s question appears to address the interpretation of the notion of
‘dumped imports’ as it has been raised by India in these proceedings. The EC has shown that this term
is properly interpreted to include all imports of the product in question from the country whose
exporters have been found to have been dumping (the four companies’ exports comprised 20 per cent
of Pakistani exports of bed linen to the EC). That conclusion applies both where the non-dumped
transactions are scattered among the sales of various companies, and where they are concentrated on
the sales of particular producers, thereby reducing the overall margins of such producers to zero or to
de minimis levels.
Questions for both parties
15. In several instances, the AD Agreement gi ves members a free choice of methodology on
a particular issue. One such issue is the choice of whether to determine normal value on the
basis of a constructed value, or the export price to a third country, under Article 2.2, another is
the choice of comparing a weighted average no rmal value to the weighted average of all
comparable export transactions, or comparing no rmal value and export price on a transaction-
to-transaction basis. It appears evident that in some cases, depending on the particular facts, the
choice of one methodology would result in a det ermination of dumping, while the choice of the
other methodology would result in a determination of no dumping. Could the parties please
explain whether, in their view, this is a reas onable understanding of the AD Agreement in this
regard? Further, could the parties please comment on how the choice of methodology is or may
be determined in these instances, given that the results of application of either possible

methodology will not be known until after it is applied. Are there any considerations that must
be brought to bear on the choice of methodology? May the choice of methodology be resolved by
policy? Is a Member free to choose the methodology to be used in a particular case without any
reasons at all?
The EC agrees with the Panel that the AD Agr eement permits different methodologies for the
calculation of the dumping margins of individual exporters, and that in some circumstances one
methodology would result in a finding of dumping whereas another would not. In particular, apart
from the explicit choice between the ‘comparable weighted averages’ and ‘transaction-to-transaction’
methodologies, there is an implicit choice regarding the methodology to be used in the second phase
of the ‘comparable weighted averages’ option. (The first phase is the calculation of dumping margins
of the exporter's comparable sales; the second phase is the bringing together of these margins into a
single margin for the exporter).
The EC is reluctant to suggest solutions to prob lems that do not arise in the present case. The
EC has, as a matter of policy, adopted a particular methodology, which (subject to the use of the
option in the second sentence of Article 2.4.2) is applied as a matter of course in each investigation.
(This practice is reflected in the fact that the expo rters in the present case, although they raised many
questions in the course of the investigation, did not dispute the use of this methodology).
Consequently, in answer to the Panel’s second question, the fact that alternative methodologies might
produce different results is not a relevant consideration for the EC authorities in applying their
standard methodology.
As regards the Panel’s third question, the only consideration that the EC authorities take into
account is whether the circumstances merit the application of the formula contained in the second
sentence of Article 2.4.2.
As already stated, the EC’s choice of basic methodology is one of policy, the essence of
which is that it is applied without having to be justified in particular situations. The EC does not argue
that no circumstances could ever exist in which the policy would not be applied, but it does not have a
list of such circumstances. Furthermore, it is evid ent that no such circumstances were apparent to the
investigators in the bed linen case, nor were any proposed by interested parties.
16. India indicated, in its rebuttal submission at paragraph 104, that it made ‘repeated
suggestions on undertakings in October 1997’ but that the answer from the EC was ‘always that
Bed Linen was " too complicated a product for undertaking" ’. Could the parties please provide
specific details concerning any communications pertaining to undertakings between India and
the EC in October 1997, or prior to that date. Co pies of any relevant correspondence should be
provided in this regard as exhibits. If in fact such discussions took place, could India indicate
what additional facts would be required, in order for the Panel to conclude that ‘constructive
remedies’ were ‘explored’?
In contrast to the position regarding handloom products, the EC has no written record of its
contacts with the exporters regarding a possible undertaking, other than those already made available
to the Panel (Exhibit India-72).
The recollection of the responsible officials is that there were a number of telephone
discussions on the subject, beginning in early October 1997. During these the EC emphasised the
difficulty of drafting satisfactory undertakings because the product was supplied in consignments
according to individual specifications of purchasers, involving hundreds of suppliers. They were
advised to discuss the possibilities with Texprocil, the exporters’ association. This willingness to
contemplate undertakings by a trade association is not an automatic feature of the EC’s practice in this
respect.

17. Assume that a Member has a policy that it will not accept undertakings in an anti-
dumping investigation involving a particular product. Could the parties comment on whether
the application of that policy in the case of an investigation of imports of that product from a
developing country would be sufficient to satisfy the requirements of Article 15, or whether
there must be consideration of the specific circumstances of the investigation in question? Could
the EC indicate whether its view regarding the difficulties of concluding undertakings in non-
commodity textile products is a matter of general policy. if so, was this general policy applied in
this case? Whether or not a general policy was ultimately applied in this case, was consideration
given to the possibilities of undertakings in the particular circumstances of this case regardless
of general policy?
The EC is reluctant to offer more than tentative interpretations of the Agreement in respect of
hypothetical situations. If a Member were to adopt the policy described in the question, the
application of that policy in the context of Article 15 would no doubt depend on the reasons for the
adoption of the policy.
The EC’s attitude to the difficulties of concluding undertakings in non-commodity textile
products is not a matter of policy, whether general or otherwise. The sole policy maintained by the EC
in this context is that of accepting undertakings only when their implementation can be adequately
supervised. The EC’s experience, which accords with common sense, is that undertakings are most
easily supervised where the product in question is of a fungible character, such as natural or semi-
processed materials, and appears in only a small numbe r of forms. Another factor that plays a role is
the number and nature of the traders who deal in the product.
The more variety there is in the product, the greater will be the difficulty of devising an
appropriate scheme of minimum prices. Schemes could be devised on the basis of weight which
would be enforceable but which, by not adequately reflecting differences in quality, would not be
acceptable to exporters. The larger the number of traders, and the greater the informality of their
methods of trading, the more difficult will it be to check that the undertakings are being respected.
The issue for the EC authorities was not that of deciding whether in the circumstances a
policy should not be applied. The only policy in question was that of ensuring that undertakings could
be supervised, and the EC could not abandon that policy.
As indicated in answer to Question 16, during October 1997 the EC authorities pointed out to
the Indian exporters the difficulties of agreeing on acceptable undertakings in respect of bed linen.
Nothing in the particular circumstances of this case appeared to the authorities to enable these
difficulties to be overcome, nor did the exporters or their legal representatives suggest anything. The
authorities remained open to offers of undertaki ngs, but none was forthcoming within the relevant
time limit, merely an expression of interest in giving an undertaking. In particular, the exporters did
not mention possible undertakings in the individual submissions that they made to the EC at this time
(Exhibits India-34 to 38). The EC authorities were of the opinion that the exporters had no serious
interest in offering undertakings. For example, they made no request for an extension of the deadline
for submitting offers, although extensions of other deadlines had previously been granted to them.
That this was the case was confirmed by the comments of India in the first oral session.
18. Dumping investigations generally cover a period of investigation of six to 12 months.
One effect of this is to smooth out, to some degree, minor or erratic price changes over that
time-period in the determination of dumping. Zeroing detracts from this ‘smoothing out’ effect.
Could the parties comment on this proposition and its relevance, if any to the understanding of
Article 2.4.2 of the Agreement?
This answer is based on the two-phase process of calculating dumping margins that is used by
the EC.

In the first phase (weighted average comparison of comparable sales), the longer the period
over which sales are treated as comparable, the less chance there is that atypical prices will affect the
resulting margins. A longer period is also more li kely to reduce adventitious results when prices are
erratic. (‘Minor’ price changes are likely to produce the same margin, whatever period is used).
Consequently, where there are atypical or erratic prices, if margins are calculated for each
month of a twelve-month investigation period, those margins are likely to cover a greater range than
had they been calculated for the whole year. (Of course, there will be twelve times as many margins.)
There is therefore more likelihood of instances arising where the export price exceeds the
normal value.
Consequently when (in the second phase of calc ulating an exporter’s margin) these margins
are brought together to produce a single margin, more of them are likely to be zeroed. (Whether this
actually happens will depend on the data in the particular investigation).
Thus, in the EC system, looked at in isolation the effect of sub-dividing the investigation
period is, if anything, to increase the margin. It is not clear how it could be said that this effect
involves either more or less ‘smoothing out’ of minor or erratic price changes.
However, this discussion takes no account of the reality of EC practice. Although the EC has
emphasised that comparability of sales can take account of three types of difference – in model/type,
channel of sale, and time of sale – in most investigations (including the bed linen case) only the first
of these plays a role. The EC subdivides the investigation period only if prices at different points in
the period are not comparable. For example, if there is serious inflation, or if raw material costs
change markedly over the period, so that an export price at the end of the period is not comparable
with a normal value calculated at the beginning. In such cases the consequences of limiting
comparisons to sales that are truly comparable will outweigh any possible increase in the margin of
the kind described above. The effect is to reduce rather than increase dumping margins.
This is why monthly or quarterly comparisons are almost always requested by the exporters
themselves.

ANNEX 2-9
RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS FROM
INDIA FOLLOWING THE SECOND MEETING OF THE PANEL
(16 June 2000)
Questions Annexed to Closing Statement
1. Could the EC explain what it means with its statement in its answer to India’s
question 15: " . . . it is not worse that [sic] not giving credit to a complaint which later turns out as
having been supported by a major proportion of the industry."
It is the EC’s view that Article 5.4 permits trade associations to ‘express support’ for anti-
dumping investigations on behalf of their members. That being the case, India’s question appears
irrelevant.
2. Could the EC explain, with detailed produc tion figures, its statement in paragraph 21 of
its second written submission that India’s calculation of the 25 per cent threshold figure is
erroneous because it involves "double-counting"?
The EC has provided adequate evidence to establish that the thresholds set by Article 5.4
were easily surpassed (even though the burden of proof lay on India to show that this had not
happened). The double counting arose because in pa ragraph 21 of its First oral Statement India made
use of a base figure of 34 per cent, from which it deducted the production of three companies, when
that production had already been removed by the EC in arriving at the 34 per cent figure.
3. It is the practice of the EC, and especially Directorates I.C and I.E, to register incoming
and outgoing written communications by date and with a number. This was also the case with
documents in the Bed Linen proceeding, with the sole exception of the declarations of support.
Why were the declarations of support never registered?
The declarations of support were registered on receipt, with the exception of one producer
which had an output of only 5 mt.
4. Why were the fax headers and fax footers from Eurocoton removed while its fax number
is even printed on the front page of the complaint?
As the EC has explained, the removals were made in response to the requests of producers.
5. The EC has stated in its reply to question 40 of India, that at the time of initiation, 46
producers supported the complaint, that seven were excluded after initiation, that three more
were excluded after the questionnaires were sent (10-11/96) and that one more was excluded
after verification. However, Exhibit EC-4 which, according to the EC, ‘froze’ the situation at
the moment of initiation, as well as the declarations of support of individual producers, c.q.
trade associations, refer only to 38 producers. Could the EC provide the declarations of support
of the eight--later supposedly excluded--companies which, at the moment of initiation, must
have filed such declarations in order for a legal standing determination to have been effected?
The EC has explained the relevant figures in its Second oral Statement to the Panel
(paragraphs 18 et seq.).

6. How could the EC, at the time of initiati on, already know that it was later going to
exclude the eight companies?
See the answer to the previous question.
7. Could the EC explain the situation of th e German company Luxorette and the French
company Claude? More specifically, once the EC went from 19 producers to 17, in recital (61)
of the provisional Regulation, Luxorette was still in the sample of 17. To come from 19 to 17 the
EC used as one reason the stated reason as per recital (54). The situation of Luxorette remains
therefore unclarified. Similarly, why was Claude excluded from the sample of 19, but not from
the Community industry?
See the EC’s answer to the Panel’s question 13.
8. In paragraph 22 of its second written submission, the EC states that it "…has in any
case established that producers responsible for over 34 per cent of EC production expressly
supported the complaint" . But this 34 per cent can be reached only if one accepts the
declarations of support of the French, Spanish, and Austrian textiles Federations because the
EC, thus far, has not submitted individual declarations of support from French, Spanish, and
Austrian textiles producers. Is this correct?
Individual declarations of support of the French producers have not been supplied, having
been classified as confidential by the producers. They were received by the EC authorities prior to
initiation. Spanish and Austrian producers expressed their support through their associations.
9. Does the EC agree that its logic in paragraph 76 and 77 of its Second Written
Submission conveniently fails to mention, first, that – through the inclusion of non-dumped
exports - the overall volume of ‘dumped’ imports will in all cases be higher than it otherwise
would have been. Does the EC agree, second, that the mitigating effect on the price
undercutting will occur only if the prices of the no n-dumped exports are in fact higher than the
prices of the dumped exports? In other words, that where dumping or non-dumping are caused
by different patterns on the normal value side, the mitigating effect will not occur?
Since any particular level of imports, rather than changes in the level, is not relevant to injury
causation, the first point is of no significance. As regards price, the only concern would arise if the
inclusion of non-dumped transactions increased the undercutting margin. That it does not reduce the
margin is irrelevant.
10. In paragraph 84 the EC posits that "[a]t any rate, the investigating authorities would have
been entitled to assume, in the absence of evidence to the contrary, that dumping existed for some
time before this. In fact, such an assumption was relevant to the bed linen case." Could the EC
provide any legal basis in the ADA for such an assumption? Could the EC also confirm for the
record that it follows from the last sentence that the EC did in fact assume that pre-
investigation imports were dumped, as is in fact also clear from the published Regulations (but
as has been denied by the EC in the course of the Panel proceedings).
As the EC noted in its Second Oral Submissi on, the sentence in question contained a typing
error. It should have read ‘In fact, such an assumption was not relevant to the bed linen case.’ The EC
emphasizes that the observation was made in relation to the causation of injury.
11. Why would Indian exporters wish to argue that "…they were actually dumping greater
volumes in earlier years", especially where they would not have an inkling that they were
dumping in the first place because they could not conceivably know that the EC would apply an
18+per cent profit to their non-existent domestic sales?

Only if the exporters were dumping in greater volumes in previous years might the effect of
including non-dumped transactions in ‘dumped imports’ be to wrongly attribute responsibility to
those exporters.
12. In paragraphs 104-115 the EC attempts to rebut the explanation claims made by India
by differentiating between a member’s obligations under the ADA and that same member’s
obligations under its domestic law and practice and arguing that an interested party’s claims
under the ADA would not be relevant claims (and therefore need not be addressed by an
investigating authority) under such authority’s law and practice where the latter were different.
Would the EC not agree that this logic, ceteris paribus, would mostly benefit members which
strayed furthest from the ADA, because such members then would have the least explaining to
do, a bizarre and unwarranted result?
The EC would not agree because, by definition, by straying from the ADA the Member would
be incurring international responsibility for infringing substantive provisions of the Agreement.
Questions Submitted on 7 June 2000
1. The EC in its closing statement on 6 June mentioned that it had "never" stated that it
relied on 46 companies to determine support for th e complaint. However, in its written answer
to India’s question No.40, EC had stated that " there were 46 companies, which supported the
complaint before initiation". Could the EC explain this contradiction?
See the explanation provided at paragraph 18 of the EC Second oral Statement.
2. The EC in its closing statement on 6 June, also stated that their domestic regulation
provided wide ‘discretionary powers’ to the investigating authority:
(a) Could the EC explain how the use of such ‘discretionary powers' is consistent
with the ADA, which in fact attempts to limit this very discretion.
In certain respects the ADA grants Members a wide discretion, in others it sets precise limits
to what they may do.
(b) In this context, could the EC also explain how it uses these ‘discretionary
powers’ in choosing the methodology for calculating the dumping margin,
specially in case where two methodologies lead to different findings.
In accordance with the first sentence of Article 2.4.2, the EC has a methodology, fully
explained in its submissions to the Panel, for determining the dumping margins of exporters. It departs
from that methodology only when justified under the second sentence of Article 2.4.2.
3. The EC, again in its closing statement, stated that they could during a panel proceeding,
provide ‘ex-post facto justification’ for actions taken during the investigation. Could the EC
clarify as to how this ‘ex-post facto justification’ of actions taken earlier is compatible with
Articles 2, 3 and 5 of the ADA, which specifically prescribe the conditions to be satisfied and the
procedure to be followed before initiation of an investigation and for the determination of
injury and the dumping margin.
The EC believe it has been misquoted in this question. The phrase it used in its closing
remarks was ‘ex post facto explanation’ that The basic statements justifying the action taken by the
EC in regard to bed linen are those contained in the Notice of Initiation, and in the Provisional and

Definitive Regulations. In the course of these dispute settlement proceedings information the EC has
responded to arguments from India by providing further explanations of its Regulations. This has
concerned points of detail. The EC has not attempted ex post facto justification of its actions. It has
simply sought to explain for the benefit of the Pane l, and of India, the justifications for the measures
that are provided in the Regulations.
4. Can the EC indicate how many EC companies were contained in the sample drawn from
its Community industry and could the EC provide details of their individual production of the
like product.
Because the specific company production levels are confidential, the EC is prepared to
provide them only if requested to do so by the Panel. The following table gives data at a country
level.
Companies Included in the Sample
PORTUGAL AND GERMANY – 5 companies
BIERBAUM TEXTILWERKE
IRISETTE (belonging to Bierbaum)
GÜNTER MECKELHOLT WEBEREI
WILH WÜLFING
LAMEIRINHO Industria textil
Portugal and Germany production = 13.260 tonnes
FRANCE – 8 companies
Ets. FREMAUX
Ets. HACOT
HACOT Joseph et Cie
JALLA S.A. NIEPPE
MULLIEZ FRERES au LONGERON
VANDERSCHOOTEN
Ets. CLAUDE
Ets. BERA
France production = 8.533 tonnes
ITALY – 4 companies
BASSETTI
BOSSI
GABEL INDUSTRIA TESSILE
ZUCCHI
Italy production = 4.210 tonnes
SAMPLE total production = 26.003 tonnes

ANNEX 2-10
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
TO THE CHAIRMAN OF THE PANEL
(22 June 2000)
The European Communities notes that, in its responses to the questions from the Panel
following the second meeting, India reiterates its allegation that the European Communities could
have in some way falsified the faxes containing the declarations of support of the domestic producers.
The European Communities considers these allegations serious and outrageous. Contrary to
India's allegations, the European Communities has no need to forge documents and nothing to hide.
On the contrary, the European Communities has repeatedly stated its readiness to respond
promptly and fully to any request by the Panel for such information as the Panel considered necessary
and appropriate, and, the only time the Panel has made such request, it has responded promptly.
In view of the difficulty of accurately copying and transmitting by fax these documents, the
European Communities, if the Panel considers it useful, would be happy to show to the Panel, in the
presence of India, the original of these documents in order to resolve this issue once and for all.
A copy of this letter has also been sent to the Mission of India.

ANNEX – 2-11
COMMENTS OF THE EUROPEAN COMMUNITIES ON THE
DESCRIPTIVE PART OF THE PANEL REPORT
(3 July 2000)
The European Communities has the following comments to the descriptive part of the Panel’s
report.
Paragraphs 2.2 – 2.11 in general
The description of the EC measure concentrates on the provisional regulation (and therefore
refers to "the Commission") which is not the subject of the dispute rather than on the definitive
measure which is the subject of the proceeding but is not a measure adopted by the Commission. In
order to avoid a complex and unnecessary explanation, the EC suggests that references to the
Commission be replaced throughout by references to the EC. All the measures are measures of the
EC.
The description of the measures seems rather unbalanced in that great detail is provided on
some point and little on others. The EC will be suggesting certain simplifications below.
Paragraph 2.5
The summary of the sampling criteria is inaccurate. In particular, the document in Exhibit
India-22, speaks of "the need to cover ... companies of different types (i.e. integrated, semi-integrated,
merchant exporters)". The EC considers this to be disproportionate detail and suggests that the first
sentence end after "sample of Indian exporters" and the second sentence be deleted entirely. The last
sentence can also be deleted for the same reason.
In any case, the EC believes that the language described in paragraph 2.5 and referred in
note 7 as coming from Exhibit India-22 appears in fact as taken from Exhibit India-19.
Paragraph 2.6
The second sentence of paragraph 2.6 might create some confusion regarding the method
followed by the Commission when calculating the normal value for Bombay Dyeing (described in
recitals 23, 24, 25 and 26 of the Provisional Regulation).
The EC would suggest that the second and third sentences be deleted completely as
unnecessary detail. If the Panel does not follow this suggestion, it is suggested to redraft the second
sentence as follows:
"One company, Bombay Dyeing, was found to have global representative domestic
sales of cotton-type bed-linen. However, only five types comparable to those
exported to the EC were sold in representative quantities on the domestic market.
Nevertheless, those five types were found not to be sold in the ordinary course of
trade. Therefore, constructed values had to be calculated for all the types sold by
Bombay Dyeing."

Paragraph 2.7
This paragraph refers twice to the concept of a "major proportion of Community industry"
and does not distinguish between the two phases of standing and determination of Community
industry. The EC does not think that it is necessar y to discuss this matter in detail in the descriptive
part. However, the text would be clearer for the reader if the words " represented a major proportion
of the Community production of bed linen" in the first sentence of paragraph 2.7 were replaced by
"satisfied the standing requirements of Article 5.4" (which phrase is also found in Recital 52 of the
Provisional Regulation).
Paragraph 2.8
The third sentence does not mention prices. Both profits and prices were mentioned in the
'Conclusion on injury' in the Provisional Regulation, recital 93, last sentence. This is important as
regards the overall conclusions on injury (see paragraph 40 of the Definitive Regulation). The EC
asks that the words "and price depression" be added after "inadequate profitability" in the fourth line.
Paragraph 3.1, Claim 4
The EC recalls that India has confirmed that this claim does not extend to the amount for
SGA expenses included in the constructed values. In particular, in response to Question 32 from the
Panel following the First Meeting with the Parties, India stated that
"India has posed no claim with regard to the calculation of SGA expenses since
according to the understanding of India the SGA expenses expressed as a percentage
[10.39 per cent] were in this case for the sales in the ordinary course of trade the same
as for all sales […]."
It is suggested, therefore, to redraft this claim as follows:
"Claim 4: Inconsistency with Article 2.2, by applying the profit amount determined
for Bombay Dyeing in calculating the constructed value for other producers, even
though that amount was clearly not "reasonable".
Before Paragraph 3.7
Only the EC’s requests for preliminary rulings have been described. For the sake of accuracy,
the EC asks that
(1) the following paragraph be inserted before paragraph 3.7:
"The EC requests the Panel to reject the requests for recommendations made by
India".
(2) the following paragraph be inse rted after paragraph 3.7 (new 3.8):
"In addition to its request for a preliminary ruling regarding the Panel's terms of
reference, the EC also argued that claim 29 is largely outside the Panel's terms of
reference because the Panel request referred to EC behaviour before the provisional
measures Regulation."
(See EC Rebuttal Submission, paragraph 97.)

ANNEX 2-12
COMMENTS OF THE EUROPEAN COMMUNITIES ON THE
INTERIM REVIEW OF THE PANEL REPORT
(3 July 2000)
The European Communities thanks the Panel for its well-written Report and thanks both the
Panel and the Secretariat for the work they have put into it. The EC is of course disappointed that the
Panel has found that certain elements of the Regulation are not entirely consistent with the Anti-
Dumping Agreement and reserves its rights in this respect.
The European Communities does not consider that an interim review meeting will be
necessary unless India makes requests for substantive modifications to the Panel’s findings which the
Panel would be minded to accept.
The only request that the European Communities would make on the drafting of the final
Report is that it be described by its correct WTO designation, "the European Communities", rather
than the abbreviation, "the EC".
A copy of the present letter is being sent directly to the delegation of India.

3. Egypt is of the considered view that the initiation of anti-dumping proceedings, the
imposition of provisional duties, and the imposition of definitive duties on Egyptian cotton-type
bedlinen by the EC is unjustified and contrary to relevant rules of the World Trade Organization
(WTO). As such, Egypt requests the panel to find that its benefits have been nullified and impaired
under the WTO Agreement.
4. As Egypt is a third party in this present case, it has decided not to make a detailed submission
on all the relevant issues before the panel. It has only addressed those factual and legal aspects of this
case which, it believes, are germane to the outcome of this proceeding. In that context, it wishes to
endorse all the arguments put forward by India to prove that the imposition of anti-dumping duties by
the EC is illegal and cannot be justified under the WTO Agreement on Anti-Dumping (ADA).
II. FACTUAL ASPECTS
5. The present dispute arose out of a complaint lodged with the European Commission by
Eurocoton in July 1996. It alleged, inter alia , that Egypt and other developing countries, namely
India and Pakistan were dumping cotton-type bedlinen in the EC. Acting on the basis of this
complaint, the EC initiated anti-dumping proceedings against imports of cotton-type bedlinen
originating in or exported from Egypt, India a nd Pakistan by publishing a notice of initiation in
September 1996 (in the Official Journal of the European Communities C266/2 of 13 September
1996). Following preliminary investigations, th e EC imposed provisional anti-dumping duties on
exports from the three-named countries in EC Commission Regulation No.1069/97 dated 12 June
1997. This was followed by the imposition of definitive anti-dumping duties by EC Council
Regulation No. 2398/97 of 28 November 1997.
6. Pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement
of Disputes (DSU), Article XXIII of General Agreement on Tariffs and Trade, 1994 and Article 17 of
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994,
the Government of India requested consultations with the EC. Following the failure of the
consultations to resolve the issue, India requested the establishment of a panel in a communication to
the Chairman of the Dispute Settlement Body dated 7 September 1999. Egypt notified the DSB at its
meeting of 27 of October 1999 about its intention to participate in the case as a third party in
accordance with Article 10 of the Dispute Settlement Understanding.
III. LE
GAL ASPECTS
7. In the case of Egypt, three state-owned companies and one private company were selected as
representatives of Egyptian bed-linen exporters/p roducers by the European Commission for purposes
of the investigation. The EC received the assura nce of cooperation in the investigations by the non-
sampled companies, but did not send questionnaires to them nor requested any information from them
during the proceedings. Egypt's complaint in this matter relates to the manner in which the
investigations were conducted and the application of the substantive rules of the WTO Antidumping
Agreement which it believes were contrary to the established multilateral disciplines.
1. Violations of procedural requirements of the Agreement on Anti-Dumping
8. Prior to lodging its complaint with the European Commission in July 1996, Eurocoton had
been involved in a number of anti-dumping cases that were terminated principally because of the lack
of co-operation or opposition by a significant proportion of domestic producers of like products in the
EC.1 A previous investigation into alleged dumping of bedlinen by India, Pakistan, Thailand and

1 See (Cotton terry-towelling articles form Turkey, OJ-1996-L17/22 - non-cooperation on the part of
the Community industry / Cotton fabric from China, India, Pakistan, Indonesia and Turkey, OJ-1996-L42/16 -

Turkey was terminated after Eurocoton withdrew its complaint. Although no reasons were given for
the withdrawal, it is common knowledge that it did not receive the support of other significant
producers of bedlinen in the EC. With only a minority of producers supporting it, Eurocoton had no
choice but to request the withdrawal of its complaint.
9. While the EC was at all material times aware of the withdrawal of the initial complaint ( OJ-
1996-L17/27), by Eurocoton on the ground that it was not supported by a significant proportion of
Community producers, it chose to launch an investigation upon receiving another complaint against
dumped exports of bedlinen from Eurocoton. Prudence would have required the EC to satisfy itself if
the new complaint had been lodged by or on behalf of the domestic industry producing a like product
as required by Article 5.4 of the ADA before taking any further steps. Had it scrupulously followed
the provisions of the ADA, it would have realised that the Eurocoton did not have the standing
required under Article 5.4 of the ADA to lodge a complaint.
10. The EC's assertion that the complaint was filed on behalf of the Community industry is not
supported by the facts in this case. The investigation revealed that those Community producers who
supported the complaint were in the minority. Even among them, several complainants had to be
excluded for various reasons. As many as 7 complainants had to be excluded because they were
"found not to be complainants" by the Commission. Furthermore, out of the remaining producers,
three failed to co-operate with the Commission in the course of the investigation and one was found to
be no longer producing bed linen. Finally it was found that one company in the sample had to be
excluded because it imported a significant proportion of the product under investigation from
Pakistan. These exclusions brought down the number of complainants initially listed in the complaint
from 46 to 34. The level of co-operation from the remaining Community producers was, on the whole,
extremely low. Many producers failed to provide - at least in non-confidential form - information,
which is usually required during investigations of this kind.
11. In the instant case, the proportion of the complaining industry is extremely low (34%) but the
Commission and Council claim that the thresholds set out in the EC basic regulation had been met
throughout the proceeding (Recitals 32 to 34 of the Regulation imposing definitive measures). The
figure of 34 per cent is sufficient under the ADA provided the remaining 66 per cent did not object to
the initiation of the investigation. This argument by the EC does not appear to be supported by the
evidence so far adduced in this case. Neither the non-confidential files made available to the
interested parties, nor the disclosure documents or the Regulation imposing definitive duties offers
conclusive proof that the complainants indeed represented 34 per cent of total EU production.
Furthermore, in order to ascertain whether the above-mentioned thresholds were met, the Commission
was supposed to have made a preliminary determination as to which producers were to be excluded
from the Community industry on the basis that they themselves were importers of the allegedly
dumped products. There is no mention of this determination in any of the available files open for
inspection.
12. It is not sufficient for the complaining industry to represent 25 per cent of total Community
production to pass the "representative" test provided for in ADA. Given the above-mentioned facts,
the Commission was supposed to have closely scrutinized whether the remaining Community
producers who co-operated with the investigation accounted for more than 50 per cent of the total
production of bed linen in the EC. Since the co-operating producers were found by the Commission
to represent only 34 per cent and the other Community producers claimed by Eurocoton to be

withdrawal of complaint on unspecified grounds / Synthetic staple fibre fabric from India, Pakistan, Indonesia
and Thailand, OJ 1996-L42/18 - withdrawal of complaint on unspecified grounds / Denim fabric from Turkey,
Indonesia, Hong Kong and Macao, OJ-1990-l222/50 - no injury and/ Polyester/cotton sheets and pillowcases
from the United States, OJ-1982-48/30 - no dumping).

supporting the complaint represented only 15 per cent of total EU production, it can be concluded that
all the producers in favour of the complaint accounted for 49 per cent of total Community production.
13. Given the difficulties that had been experienced by Eurocoton in getting the support of other
Community producers, it could be inferred that the producers accounting for 51 per cent of
Community production were opposed to the complaint. The true position could have been
established, if the Commission had launched a thorough enquiry to ascertain the position of the
various producers of bed linen in the EC and verified the claims of Eurocoton that it represented a
"major proportion of the Community industry" within the meaning of the ADA. By failing to launch
this enquiry, the Commission was obliged to terminate the proceeding immediately.
14. The interpretation given to what the EC claims to be the relevant phrase in Article 5.4 i.e.,
"the authorities have determined" is not supported by the context, object and purpose of the Article.
The purpose of Article 5.4 of the ADA is to safeguard the interests of exporters by requiring
investigative authorities not to initiate frivolous actions which could disrupt trade. It is because of
that the Article requires them to be sure about the support a complaint enjoys before initiating
investigations. The word "determine" does not mean that investigative authorities can arrive at any
decision that they like. Any decision taken to launch an investigation must be supported by the
relevant facts and evidence. If the interpretation of the EC were to be accepted, it would make the
Article redundant, as there would be no cases where you can question the determination of
investigative authorities. Had the Agreement wanted to give this huge discretionary power to
investigators, it would have stated so explicitly.
15. Contrary to the express wording of Article 5.3 of the ADA, the EC failed to examine
thoroughly the allegations in the complaint. It failed to take into account information available to it at
time of initiation pointing to lack of material injury caused by dumped imports. Even if the EC
carried out the examination, it failed to disclose this fact to the interested parties. As such, it acted in
breach of Articles 12.1 and 12.2 of the ADA. The EC's argument that in paragraph 81 of its First
Written Submissions seems to stretch the relevant language of the Article. A breach of any provision
of the WTO Anti-dumping Agreement could invalidate the decision made by a Member country.
Thus, it is not open to the EC to minimize or disregard its breaches of explicit provisions in the WTO
Agreement.
2. Substantive breaches of the Anti-Dumping Agreement
16. Before proceeding to outline the substantive breaches of provisions of the Anti-Dumping
Agreement, it is in order to comment on the argument of the EC that claims by India in respect of
"alleged defects in the Provisional Regulation…[were] beyond the Panel's jurisdiction". The EC
gives two reasons in support of this claim. That a provisional measure can only be referred to the
DSB when it "has [had] a significant impact and the Member that requested consultations considers
that the measure was taken contrary to the provisions of paragraph 1 of Article 7." It is clear that had
India and the other countries affected by the measure not think that the measure was imposed in
breach of the provisions of Article 7.1 of the ADA, they would not have found it necessary to
participate in this panel proceeding. Regarding the first condition, it also follows that if the measure
had not had any significant impact, India and the other affected countries would not have complained.
The very fact that they cooperated in the investig ation and provided evidence to refute the allegations
means that they were concerned about the significant impact the imposition of anti-dumping duties
would have on their bed-linen industries. In summary, the EC's argument that the Panel cannot
entertain claims relating to the provisional Regulation is unfounded and should be rejected by the
Panel.

(i) Dumping
17. In determining the normal value of the alleged dumped product, the EC disregarded the
provisions of Articles 2.2.1.1 and 2.2.2 of the ADA, which provide in relevant parts, as follows:
"…costs shall normally be calculated on the basis of records kept by the exporter or
producer under investigation" (Article 2.2.1.1); and
"…amounts from administrative, selling and general costs and for profits shall be
based on actual data." (Article 2.2.2).
Costs calculated by the Commission were not based on the records kept by the exporters or producers
under investigation in the case of Egypt, nor were amounts for SGA costs based on actual data
submitted by the relevant parties. Instead, higher amounts for administrative, selling and general
costs than were ever incurred and properly reported in the records kept by the producer, were used in
the calculation of the constructed normal value. The Commission, in adding more SGA costs than
were ever incurred, violated the above provisions. Accordingly, the normal values have been
overstated resulting in artificially inflated dumping margins. This over-addition of SGA expenses
stems from calculation techniques that are mathematically flawed and contrary to an elementary
understanding of accounting.
18. The argument of the EC in paragraph 137 of it s first written submission that they "were
correct to put certain limits on what data they would consider for the purposes of constructing the
normal value" is overstated. While in certain cases, adjustments could be made, the overriding goal is
that the use of any method should not result in excess profit margins. By inflating the figures, the EC
grossly exaggerated the profits of the 4 sampled Egyptian exporters permitting it to arrive at a higher
normal value and consequently an unrealistic dumping margin.
19. In establishing the margin of dumping in this case, the EC violated the provisions of
Article 2.4.2:
"the existence of margins of dumping during the investigation phase shall normally
be established on the basis of a comparison of a weighted average normal value with
a weighted average of prices of all comparable export transactions or by a comparison
of normal value and export prices on a transaction-to-transaction basis. However (as
an exception to this rule), a normal value established on a weighted average basis
may compared to prices of individual export transactions if the authorities find a
pattern of exports prices which differ significantly among different purchases, regions
or time periods, and if an explanation is provided as to why such differences cannot
be taken into account appropriately by the use of a weighted average-to-weighted
average of transaction comparison."
Paragraph 46 of the EC Regulation imposing provisional duties notes that weighted average
constructed normal value "by type" was compared with weighted average export price "by type" with
regard to Egyptian exporters. In effect, the EC chose to apply the first option stipulated in
Article 2.4.2 of the ADA. However, its manipulation of the calculation by zeroing negative dumping
amounts on a per-type basis goes beyond what could legitimately be done within the bounds of
Article 2.4.2 of the ADA. Had the Commission followed strictly its own established practice, the
outcome would have been different. In failing to do that, it is clear that the EC was determined to
have bigger dumping margins.
20. In imposing provisional anti-dumping duties, the EC violated the provisions of Article 9.4 of
the ADA. As pointed out in paragraph 7 of this submission, the EC Regulations imposing provisional

and definitive duties distinguished between state-owned and private enterprises and that the
investigation covered three state-owned enterprises and one private enterprise. However, paragraph
48 of the Regulation imposing provisional duties affirmed that one weighted average dumping margin
was calculated for the three state-owned companies which was then applied to all state companies,
regardless of whether or not they offered to co-operate with the EC authorities during the
investigation. The resulting margin was 13.5 per cent. An individual dumping margin of 9.1 per cent
was calculated for the private investigated company. However, the 9.1 per cent margin was not
applied across the board to all private companies including the non-sampled private companies which
offered to co-operate with the EC authorities duri ng the investigation. Rather, the EC authorities
attributed the weighted average dumping of the four companies in the sample, weighted on the basis
of their export turnover to the EC, and came up with a dumping margin of 13 per cent applicable to
the entire private sector. Clearly, the approach adopted by the EC is unjustified under the ADA. The
EC should have been consistent, rather than manipulate the relevant figures to enable it to achieve its
objective.
(ii) Injury
1. The volume of dumped imports
21. The relevant question which needs to be addressed is whether in determining injury, the EC
was justified in treating all imports from the targeted countries as dumped during the period of
investigation? It would appear that the standard practice of the EC in injury determinations is to
consider all imports of the products under consideration as dumped, once the weighted average
dumping margin has been established. In other wo rds, all the relevant products originating in the
investigated country would be deemed to have b een dumped. Following this standard practice, the
Commission noted in the Regulation imposing provisional duties that:
"(67) Dumped imports from the three countries concerned increased from 33825
tones in 1992 to 46656 tones during the investigating period i.e. an increase of 12831
tones or 38 per cent during the same period their market share increased from
16.9 per cent to 25.1 per cent."
An examination of the evidence revealed that there was no segregation between dumped exports and
those that were not dumped. There is no textual support for the approach adopted by the EC in the
ADA. In fact, its approach is contrary to Articles 3.1, 3.2, 3.4, 3.5 and 3.6 of the ADA.
22. The EC's interpretation of Article 3.1 of the ADA is not supported by the cardinal rules of
interpretation laid down in Article 31 of the Vienna Convention on the Law of Treaties as clarified
and applied in a number of cases by the Appellate B ody starting with United States - Standards for
Reformulated and Conventional Gasoline (WT/ DS2/AB/R, adopted by the DSB on 20 May 1996).
The relevant words in Article 3.1 of the ADA are "dumped imports". Thus, if ceratin products are
not dumped, then they cannot be taken into account for the purposes of determining injury. The EC
has read too much into the provisions of Articl e 3.1 of the ADA a nd that should not be permitted by
the Panel.
2. Data collection
23. The relevant issue to be addressed is whether it is a breach of the ADA to use data from
producers other than those determined to be part of the Community industry in injury determinations?
In paragraph 57 of the EC Regulation imposing provisional anti-dumping duties, it is explicitly stated
that:

"The remaining 35 companies, which cooperated with the inquiry and are located in
France, Germany, Italy, Spain, Portugal, Austria and Finland represented a major
proportion of total Community production in the investigation period. These
companies were therefore deemed to make up the Community industry under the
terms of Article 4.1 of the basic Regulation."
Notwithstanding this statement, the Commissi on relied heavily on the data of companies not
supporting the complaint to establish injury. There is no textual support in the ADA for the approach
adopted by the EC, which is incompatible with Article 3.1 (as well as Articles 3.3, 3.4, 3.5 and 3.6)
which requires the Commission to determine whether the domestic industry has suffered injury, and
which does not mandate an injury determination which is based on data relating to companies not
belonging to the domestic industry.
24. An ancillary question which needs to be answered is the extent to which the EC is bound by
data of sampled companies in an injury analysis. Put in another way, is the Commission entitled to
ignore data collected on sampled companies and base its decision on companies which were not
sampled? The Commission, by ignoring the results of its own sample of the domestic industry, failed
to make an unbiased and objective assessment of the facts and thus acted inconsistently with
Article 6.10 in conjunction with Article 3.4, 3.5 and 3.6. By failing to provide relevant data for the
domestic industry on a factor-by-factor basis, the Commission acted inconsistently with Article 3.5 of
the ADA.
3. The injury suffered by the EC industry
25. In assessing whether the Community industry had suffered material injury, the Commission
appeared to have treated indifferently the EC indus try and the total EC production. It also drew a
number of conclusions relating to the situation of the EC industry on the basis of statistical
information concerning the total EC production. These indices are completely different and should be
treated as such, otherwise a distorted picture would be given. The evidence available in this case
shows that the EC industry is in a healthy state and could not have been injured by the imports of bed-
linen from the targeted countries. The following facts are indicative:
4. Production
26. The total production of bed linen by the EC industry increased by 8.7 per cent between 1992
and the period of the investigation. The fact that production by some producers in the EC fell is
irrelevant, since pursuant to Article 3 of the basic EC Regulation, the Commission must only examine
whether material injury had been caused to the relevant EC industry. It is quite disturbing that the
Commission now wants to ascribe a different meaning to the phrase "relevant industry." According to
it, the term encompasses those Community producers that were able to survive notwithstanding the
dumping by the targeted countries. The allegation by the EC that the closure of certain companies was
due to the alleged dumped imports, and not attributable to other independent causes, is
unsubstantiated by any evidence. Carried to its logical conclusion, the EC argument would mean that
the dumped products were able to selectively injure only those industries that did not support the
complaint lodged by Eurocoton. Clearly, this reasoning of the EC is absurd. Again, there is no textual
support for EC's interpretation of Article 3 of the ADA. The more logical explanation of the
reduction in production on the part of the non-EC relevant industry is due to reasons other than
dumping, as there is sufficient evidence to indicate that global production in the EC had increased
during the period of investigation.

5. Sales volume
27. The Commission alleges that sales of total Community producers fell by 17 per cent and that
sales for the sampled producers fell by 1.5 per cent. However, for reasons best known to it, the
Commission fails to provide the figures that are really important, i.e. the sales trends in volume terms
of the EC industry, even though it does provide this information in value terms. The Disclosure
document indicates, however, that sales by the EC industry have actually increased during the
relevant period. Indeed, if the relationship between sales trends in volume and in value terms of the
sampled producers is contrasted to the trend in sales values of the EC industry, it becomes apparent
that the sales volume of the EC industry increased by around 2.5 per cent between 1992 and the
period of the investigation. Given this result, the figures given by the Commission are quite dubious.
6. Sales value
28. The evidence discloses that between 1992 and the period of the investigation, there was an
increase of 4.2 per cent in sales value terms for the EC industry and an increase of 1.7 per cent for the
sampled producers. Thus, the assertion by the EC that the alleged dumped products had an effect on
domestic sales values is unsubstantiated.
7. Market share
29. In value terms, the market share of the EC industry increased by a respectable 11.8 per cent
between 1992 and the investigation period. The market share of the sampled producers increased by
9 per cent between 1992 and the investigation period and by as much as 17.2 per cent between 1991
and the investigation period. In volume terms, the market share of the sampled producers increased
by 5.6 per cent between 1992 and investigation period. No data was provided with respect to the EC
industry. However, even if one considers that sales volume remained stable as indicated by the
Commission in the Disclosure letter, the market share of the EC industry must have, at least, increased
by a similar ratio.
8. Employment
30. The evidence discloses that there was an insignificant decrease in the level of employment as
far as the EC industry is concerned. Out of the 7,000 persons engaged in this sector, only 375 persons
lost their jobs. It should be borne in mind, however, that production increased during the same period,
which points to the fact that increased efficiency rather than alleged dumped imports was responsible
for the decrease in the level of employment.
9. Price development and profitability
31. Considering the decline in Community cons umption, the Community producers have been
able to maintain remarkably stable prices and actually managed to increase them by over 3 per cent
during the relevant period and remain profitable.
32. It follows from the forgoing that virtually all the indicators that the Commission relied on to
demonstrate injury to the domestic industry actually proves the contrary. In other words, they confirm
that the EC industry is in a good state of health and has not been injured by any dumped exports.
They suggest that other reasons are to blame for the difficulties being experienced by some individual
EC producers. From the available evidence, the EC cannot controvert the fact that between 1992 and
the period of investigation, the EC industry increased its production, increased its sales, increased its
market share, increased its prices and remained profitable in spite of a significant decrease in
consumption.

33. The Commission's observation that in analyzing data on the EC industry, account should be
taken of the 29 companies, other than the EC industry, which ceased or reduced bed linen production
in the Community between 1992 and the investigation period (page 18 of the disclosure) is irrelevant,
since injury must be assessed in respect of the basic Regulation and not in respect of the Community
production.
(iii) Causality
34. Among the requirements (dumping, injury, causality) necessary for anti-dumping duties to be
lawfully imposed, causality is the only purely legal requirement. The causality requirement will be
satisfied under the ADA when two conditions are proved: that dumping through its effects caused
injury to the domestic industry producing a like product; and that the injury to the domestic industry
is not to be attributed to any other factor.
35. The Commission's assertion that it satisfied both conditions is not supported by the evidence.
In paragraphs 95-99 of the Regulation imposing provisional duties, the Commission noted that "it can
be concluded that there was a direct causal link between these imports and the material injury found".
What is intriguing is that it was only after making this finding that the EC examines whether other
factors could have caused the injury. The approach adopted is inconsistent with Article 3.5 of the
ADA.
36. There is no evidence that the EC took into account in its analysis the fact that consumption of
the like product in the EC decreased over the relevant period. Had it taken this into account, it could
not have arrived at the conclusion that the alleged dumped products were the source of injury to the
EC industry. By ignoring this important fact, the EC failed to make a fair and objective determination
under Article 3.4 of the ADA.
37. While the Commission acknowledges that the dumped imports have not had an effect on the
market share of Community industry, it asserts that they have had an impact on the profitability of the
sampled producers "whose profitability had fallen from 3.6 per cent to 1.6 per cent". It should be
pointed out that the alleged reduction in profitability was based on one sampled producer. Since the
market share in value of the Community industry increased proportionately at a higher rate in
comparison to the variation of its market share in vo lume terms than that of the sampled producers, it
may reasonably be assumed that the trend in profitability of the Community industry would have
certainly shown a different pattern. Assuming that the variation in its production costs is the same as
that of the sampled producers, its profitability would have actually increased during the relevant
period.
(iv) Breach of Article 15 of the ADA
38. By virtue of the provisions of Article 15 of the ADA, the EC was obliged to explore "the
possibilities of constructive remedies…before applying anti-dumping duties where they would affect
the essential interests of developing country Members." It is clear that the EC acted in contravention
of this provision, as it did not suggest to the Egyptian exporters the possibility of giving, for example,
price undertakings. It appears that the EC is of the view that the offer has to come from the exporters.
Its interpretation of the provisions of Article 15 is erroneous for the simple reason that since it is a
legal obligation which has to be fulfilled by developed countries anytime they contemplate on
imposing antidumping duties, it is up to them to suggest to the developing countries involved whether
or not they would be interested in offering price undertakings. By failing to offer Egyptian exporters
the possibility of giving price undertakings, the EC acted inconsistently with the provisions of
Article 15 of the ADA.

ANNEX 3-2
THIRD-PARTY SUBMISSION OF JAPAN
(3 April 2000)
CONTENTS
Page
I. INTRODUCT ION ................................................................................................................559
II. ARTICLE 2.2.2 – "P ROFITS"............................................................................................559
III. ARTICLE 2.4.2 – "WEIGHTED AVERAGE" .................................................................560
IV. ARTICLE 3 – "DUM PED IMPORTS"..............................................................................561
V. ARTICLE 3.4 – "ALL RELEVANT EC ONOMIC FACTORS AND INDICES" .........562
I. INTRODUCTION
1. The WTO Agreement, in particular the Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994 (hereinafter referred to as AD Agreement) permits the
use of anti-dumping measures only under strict conditions stipulated therein because such measures
are exceptions to the non-discriminatory principle and the rule prohibiting duties that exceed the
bound rate of the WTO. By virtue of being such exceptions, the authorities must adhere strictly to the
rules of the AD Agreement when initiating anti-dumping investigations. We have witnessed a
substantial increase in the number of instances in which anti-dumping measures are invoked, and have
increasingly become concerned about the abuse of anti-dumping measures in some cases.
II. ARTICLE 2.2.2 – "PROFITS"
2. Japan believes that Article 2.2.2(ii) does not allow the exclusion of below cost sales before
determining the profit amount. Article 2.2.2(ii) refers to "the actual amounts incurred and realized,"
and does not include any qualifications. If they choose this option, the authorities must therefore
determine the weighted average of the actual profit margins reported by the exporters or producers in
their accounting records or reflected in the price and cost of the transactions at issue. Article 2.2.2(ii)
does not allow the authorities to modify these actual profit margins.
3. This interpretation reflects both the plain text and the overall context of Article 2.2.2. One
should not improperly graft the concept of "ordinary course of trade" onto Article 2.2.2(ii). Such an
interpretation has several flaws as a matter of treaty interpretation.
4. First, the initial sentence of Article 2.2.2 sets forth one of four distinct options for determining
profit. The language of this option explicitly in cludes the concept "ordinary course of trade". This
first sentence, however, is grammatically distinct from the second sentence that serves as the chapeau
for the remainder of this provision. The concept "ordinary course of trade" is therefore not properly
considered to be part of the remaining text of this provision.
5. Second, the drafters of Article 2 were quite careful to insert the concept "ordinary course of
trade" in precisely those places where they intended the concept to apply. The decision not to include

the concept in Article 2.2.2(ii) must therefore be given meaning when interpreting this language. If
the drafters had intended the concept to apply, they would have so drafted the legal text.
6. Third, such an interpretation would give no significance to the important distinction between
the language of the option set forth in Article 2.2.2 based on "actual data" and the language of the
option set forth in Article 2.2.2(ii) based on "actual amounts incurred and realized." The former
option contemplates manipulation of a database specific to the exporter in question, and thus
excluding those sales not in the "ordinary course of trade". The latter option in Article 2.2.2(ii) does
not focus on a narrowly defined database, but instead uses the broader concept of "actual amounts
incurred and realized". No company in the worl d records the profits "realized" in its accounting
records in accordance with the rather unique anti-dumping law concept of "ordinary course of trade".
7. In its First Submission, the EC tries to bolster its own flawed interpre tation by attacking the
Indian interpretation as leading to unreasonable results (See EC submission para 145,146). Japan
finds this EC argument unpersuasive for several reasons.
8. First, the EC interpretation is equally capable of unreasonable results. Suppose a company
had nine sales at a loss of 1 per cent each, but a tenth sale at a profit of 20 per cent. If the sales had
equal weight, the overall profit would be 1.1 per cent. Yet under the EC interpretation, the company
would have a profit margin of 20 per cent. The company with an average profit margin of about 1
 per cent would undoubtedly be perplexed by the legal conclusion that its profits were actually 20 per
cent.
9. Second, unreasonable results should not occur. Presumably if the outcome under
Article 2.2.2(ii) were unreasonable, and thus inconsistent with Article 2.2, the EC could choose some
other option such as Article 2.2.2(i) or Article 2.2.2(iii). Neither of these alternatives would permit
the arbitrary exclusion of sales deemed "outside the ordinary course of trade". But switching from the
narrow "like product" specified under Article 2.2.2 and Article 2.2.2(ii) to the broader "same general
category" specified under Article 2.2.2(i) and Article 2.2.2(iii) might avoid the outcome the EC
believed to be unreasonable.
10. Third, the requirement of Article 2.2 that any profit amount be added must be "reasonable"
serves as a final safeguard against unreasonable results. If the EC truly believed that the profit
calculated from all sales, not just those sales in the "ordinary course of trade", to be unreasonable,
after calculating the amounts of profits in accordance with Article 2.2.2(ii), it could so find and decide
not to take that option.
III. ARTICLE 2.4.2 – "WEIGHTED AVERAGE"
11. Japan believes that the EC practice of "zeroing" dumping margins is not consistent with the
requirements of Article 2.4.2. This provision explicitly calls for dumping margins to be based on a
comparison of a weighted average normal value with "a weighted average of prices of all comparable
export transactions". A proper weighted average does not arbitrarily raise some of the numbers in the
average in an effort to increase the final result of the weighted average.
12. The EC erroneously believes its practice can be justified by the term "comparable" in
Article 2.4.2. This term speaks only to the need to make the "comparison" on an apples-to-apples
basis. In other words, the authorities may properly define whatever reasonable categories are
necessary to make sure the comparison is between "comparable" home market products and export
market products. It would make no sense at all to calculate an overall average price of all home
market products and another overall average price of all export market products - differences in prices
between those products mix could render such an analysis unreasonable. The term "comparable"

seeks to avoid such unreasonable results, but in no way authorizes setting any non-dumped categories
to zero before calculating an overall weighted average dumping margin.
13. The EC seems to believe that if they properly weight-averages once within the product
category, they need not then properly weight-average in the next stage of its aggregation across the
various product categories. This interpretation, however, ignores the plain meaning of Article 2.4.2
which requires the comparison of a weighted average in establishing the existence of dumping
margins.
14. The text of Article 2.4.2 calls for a weighted average based on "all" comparable export
transactions, not just those transactions found to be dumped. The EC apparently believes that
including the volume of the non-dumped product categories in the overall average satisfies this
requirement of including "all" export transactions. The EC approach, however, arbitrary considers
only part of the export transactions - the volume element, not the price element. The first sentence of
Article 2.4.2 explicitly calls for a weight average of the "prices" of export transactions. Yet setting
the value of the non-dumped product category to zero essentially amounts to resetting the "prices" of
the underlying export transactions. Nothing in Article 2.4.2 contemplates such rigging of the export
prices before conducting a proper overall weighted average.
15. Finally, the EC cannot hide behind the argument that Article 2.4.2 does not prohibit
"zeroing", and thus the practice must be permitted. The text of Article 2.4.2 explicitly calls for a
weighted average of the "prices", not of some actual prices and some arbitrarily adjusted prices.
Japan believes that the treaty text and plain meaning of Article 2.4.2 are quite clear.
16. Moreover, Article 2.4 creates an overall obligation of "fair comparison" for the calculation of
dumping margins. Indeed, the first phrase of Article 2.4.2 explicitly refers back to the obligation of
"fair comparison" in Article 2.4. Japan believes that it is not "fair" to skew a proper weight average
by essentially adjusting some prices.
17. Indeed, the unfairness of such an approach can be seen in this case. A company that was not
dumping under a proper weighted average comparison suddenly was deemed to have been dumping
because of the EC methodology. The EC tries to sh ift the focus away from this company by pointing
to the calculation of the "all other rate" under different scenarios (See EC submission, para 212, 213).
The distinction between 12 per cent and 15 per cent dumping margins for companies not investigated
at all does not matter to the company fully investigated and yet subjected to dumping duties when
none should properly apply at all.
IV. ARTICLE 3 – "DUMPED IMPORTS"
18. In various places, Article 3 refers to the concept of "dumped imports". Japan believes that
this language means that the injury determination set forth in Article 3 must reflect the authorities'
assessment of only "dumped imports", and not imports that were not found to have been "dumped".
19. This language has a readily discernable plain meaning. If the authorities find that some
imports are "dumped" and others are not "dumped", then the authorities must distinguish between the
two types of imports in making injury determinations. The fact that some imports from a company
may be "dumped" does not give the authorities a license to assume that all imports from that company
should be deemed as having been "dumped".
20. The EC misinterprets various provisions of the Anti-dumping Agreement in an effort to
defend its practice. The EC misreads Article 2.1. First the EC seems to assume that "product" means
"like product", even though the two terms are quite different and used quite carefully in the Anti-
dumping Agreement. Second, the EC ignores the fact that Article 2.1 refers to "the export price of the

product . . . ". Since there is no "price" associated with product categories, but only individual
transactions, this definition must refer to transact ions. If the EC believes that "product" means the
same thing as "like product" in this context (See EC submission, para 223-226), Japan wonders how
the EC would even attempt to define "the price" (as opposed to the aggregate value) associated with
such a broad category of multiple products.
21. The EC also misreads Article 3.3. The discretion to cumulate applies to all "imports", since
Article 3.3 does not refer to "dumped imports". Even if imports are cumulated, however, the
authorities still have an obligation to make the in jury determination only for the "dumped" portion of
the cumulated imports.
22. Allowing some "dumped" imports to taint all imports from that company seriously skews the
fundamental injury analysis of Article 3. The core analysis of Article 3.1 and 3.2 require the
assessment of the volume and price impact of "dumped imports". Considering non-dumped imports
to be "dumped" unavoidably skews the analysis of the "volume of the dumped imports". It is simply
not possible for imports to be both "dumped" and not dumped at the same time.
V. ARTICLE 3.4 – "ALL RELEVANT ECONOMIC FACTORS AND INDICES"
23. Japan believes that the language of Article 3.4 requires all listed factors to be considered. The
list of factors in Article 3.4 is the minimum that must be evaluated by the authorities. The degree of
importance of each factor may vary from case to case, but all of the listed factors must be fully
considered and evaluated in each case. Authorities may not exclude certain factors because they
deem these to be irrelevant.
24. Japan believes that this interpretation of Article 3.4 finds additional support in the change in
the language of this provision over time. The change from the phrase "such as" in the comparable
provision of the Tokyo Round Antidumping Code to the word "including" in the Anti-dumping
Agreement underscores the interpretative significance of the word "including". Because "including"
means "part of a whole", the factors after the word "including" must be viewed as a subset of a
potentially larger group of factors that must be evaluated by the authorities. Had the drafters intended
this list of factors be a discretionary check list, from which authorities may pick and choose, they
would not have changed "such as" to "including". The drafters also would have used language to
more clearly provide that authorities could consider as many or as few of these factors as they wished.

C. CLAIMS REGARDING EC'S EXAMINATION OF INJURY FACTORS UNDER
ARTICLE 3.4 ...............................................................................................................584
D. CLAIMS REGARDING TREATMENT OF ALL SUBJECT IMPORTS AS DUMPED
IMPORTS......................................................................................................................586
I. INTRODUCTION
1. The United States makes this third party submission to comment on certain legal
interpretations of the Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994 (the "Agreement"). Many of the issues in this dispute appear to involve
questions of fact, and, in several instances, the facts are either unclear or are in dispute. In addition, in
several instances, the precise claims of India are sufficiently vague to make comment difficult. For
this reason, the United States has emphasized what it believes to be the proper legal interpretation of
several provisions of the Agreement, without expressing a definitive view as to whether, over all, the
facts of this case spell out a violation of the Agreement.
2. Section II below addresses one of the issues raised by the European Communities ("EC") in
its request for preliminary rulings.
3. Section III below addresses a number of the dumping issues raised by the parties, including
(1) the calculation of constructed value profit; (2) the interpretation of the "reasonableness" language
in Articles 2.2. and 2.2.2; (3) the manner in which non-dumped sales are included in the calculation of
dumping margins; (4) the relevance of a prior, incomp lete investigation to the decision to initiate this
investigation; (5) the nature of evidence that must be considered to determine industry support for
initiation purposes; and (6) the appropriate timing and nature of accommodations to be made pursuant
Article 15. With respect to issue (2), in particular, the United States urges the panel to reject India’s
interpretation of the Agreement’s constructed value profit provisions – contained in Articles 2.2 and
2.2.2 – because it imposes a comparative "reasonableness" standard and creates a cap on constructed
value profit amounts where no such provision exists in the Agreement. In addition, with respect to
issue (3), the United States urges the panel to reject India’s interpretation of Article 2.4.2, because it
would require an investigating authority to distor t the calculation of an overall dumping margin by
offsetting dumped sales with non-comparable non-dumped sales.
4. Finally, Section IV addresses issues relating to the injury determination in this case. The
United States notes that the EC appears to have defined the domestic industry in this case in a manner
inconsistent with its obligations under Articles 3 and 4 of the Agreement. Also, the sample taken for
purposes of determining injury was fundamentally flawed, and there is no basis to conclude that the
sample was statistically valid. The United States also presents views concerning India's claims
regarding the EC's evaluation of the criteria in Articles 3.2 and 3.4, and the EC's treatment of all
subject imports as dumped imports.
A. T
HE STANDARD OF REVIEW
5. The United States respectfully notes that, pursuant to Article 17.6(i), the task of the reviewing
panel when examining the assessment of the facts is to examine whether the evidence before the
investigating authority is such that an unbiased and objective investigating authority evaluating that
evidence could properly have made the same determination.1 With regard to the examination of legal
issues, Article 17.6(ii) requires a panel to uphold an interpretation of the Agreement by an
investigating authority when the language in the Agreement is susceptible to more than one

1 See: Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the
United States, WT/DS132/R, Report of the Panel (28 January 2000) ("HFCS"), paras. 7.94 - 7.95.

permissible interpretation and the challenged interpretation is a permissible construction. On this
basis, the United States submits that it would be inappropriate for a reviewing panel to re-weigh the
evidence that was before the investigating authority, or to substitute its own judgment for that of the
investigating authority. The United States further submits that it would be inappropriate for a
reviewing panel to overturn a permissible interpre tation of the Agreement simply because the panel
viewed another interpretation as permissible or even preferable. We respectfully request that the
panel bear in mind the dictates of Article 17.6 in the course of its deliberations.
II. PRELIMINARY ISSUES RAISED BY THE EUROPEAN COMMUNITIES
6. The EC argues that the panel should not consider Annex 49 of India’s first submission,
because the document in question appears to be confidential and related to a separate investigation,
and because India may have wrongfully released such information. Annex 49 appears to be an
excerpt from a disclosure document from the European Commission to Messrs. Vermulst and Wang
regarding an anti-dumping proceeding concerning stainless steel fasteners from the People’s Republic
of China. The letter indicates that it constitutes di sclosure to them on behalf of their clients of the
essential facts and considerations in the investigation; attached thereto is a list of what appear to be
product-specific export prices and normal values. The normal values appear to be based on
information from Taiwanese companies, while the export prices appear to be from sales by the
Chinese clients of Messrs. Vermulst and Wang. This information may have been the business
proprietary information of the clients of Messrs. Vermulst and Wang and there is no indication in the
First Submission of India that these clients granted permission for that information to be disclosed to
the Government of India or this panel. If, in fact, Messrs. Vermulst and Wang have breached a duty
of confidentiality to their clients in releasing this information to the Government of India, such action
is deplorable and should not be encouraged by this pane
2
III. INDIA'S CLAIMS UNDER ARTICLE 2.2.23
A. INVESTIGATING AUTHORITIES ARE ENTITLED TO USE THE PROFITS AND THE SELLING ,
GENERAL, AND ADMINISTRATIVE COSTS (SG&A) OF A SINGLE EXPORTER OR PRODUCER IN
CONSTRUCTING A NORMAL VALUE PURSUANT TO ARTICLE 2.2.2.(II) ( INDIA'S CLAIM 1,
ARGUMENT 1)
7. India argues that the EC’s use of the SG&A and profit from a single company in the
calculation of constructed value for other companies without domestic market sales was inconsistent
with Article 2.2.2(ii) of the Agreement. Specifically, India charges that the EC was not entitled to use
the calculation method specified by Article 2.2.2(ii) because the relevant language of Article 2.2.2(ii)
is in the plural, and thus can only refer to a "weighted average" of SG&A and profit for more than one
company. India argues that the words "weighted average," "amounts" and "other producers or
exporters" clearly refer to a calculation based on the profit and SG&A of more than one other
company.
4
8. The EC contends that it was entitled to use th e profits and SG&A of a single producer in its
calculation of normal value. In its definitive Regulation, the EC stated:

2 We note that it is unclear whether the document stands for the proposition for which it is cited. India
states that "it may be clear from the tables [...]" that the EC is inconsistent with respect to its practice of
zeroing negative differences between normal value and export price. First Submission of India, para. 3.160
(emphasis added). Having reviewed the document in question, the United States is of the view that it is not
clear that this document demonstrates any inconsistency on the part of the EC.
3 The United States argument with respect to the constructed value profit issue should not be construed
as expressing agreement or disagreement with the EC’s actual calculation of a profit amount in this case, as the
United States does not have access to t he specific factual information considered by the EC.
4 First Submission of India, paras. 3.54 - 3.77.

(18)... [T]he reference in Article 2(6)(a) of the basic Regulation [i.e., the provision of
EC anti-dumping law corresponding to Article 2.2.2(ii) of the Agreement] to a
weighted average amount for profits determined for other exporters or producers,
does not exclude that such amount can be determined by reference to a weighted
average of transactions and/or product types of a single exporter or producer.
In the EC’s view, the use of the plural does not require the use of more than one company in the profit
and SG&A calculations.
9. In the view of the United States, Article 2.2.2(ii) does not require a minimum number of
companies to be used in calculating profit and SG &A amounts, and it neither forbids an investigating
authority to use a single company for purposes of this calculation, nor requires it to use more than one
company. The use of plural forms in this provision, without more, is not determinative of this issue.
10. Article 2.2.2(ii) of the Agreement provides that SG&A and profit may be calculated as
follows:
the weighted average of the actual amounts incurred and realized by other exporters
or producers subject to investigation in respect of production and sales of the like
product in the domestic market of the country of origin.
11. The use of the term "weighted average" is not determinative of this issue. Notwithstanding
that an average normally is based on more than one figure, it is possible to calculate weighted average
SG&A and profit amounts for one company. In such a case, the SG&A and profit amounts of that
single company receive 100 per cent weighting and the result is the SG&A and profit amounts of that
company. The use of the weighted average term inology simply makes clear the methodology to be
employed when there are two or more other companies from which the SG&A and profit amounts
will be utilized.
12. The use of the word "amounts" also is not determinative. As India correctly notes,
5 the word
"amounts " as used in Article 2.2.2(ii), refers back to the language in the chapeau referring to the
"amounts for administrative, selling and general costs and for profits." In this context, "amounts"
refers to two things: the SG&A am ount and the profit amount. The use of this term cannot fairly be
read to specify anything further about whether the SG&A and profit amounts are to be drawn from a
single company or multiple companies.
13. The use of the term "other exporters or producers" cannot be read as excluding a single
exporter or producer without creating absurd results throughout the Agreement. For example, if the
use of a plural term necessarily excludes the singular, then a domestic industry composed of a single
producer may never obtain relief from dumping;
6 if there is only a single exporter or producer, they
would not be entitled to some of the procedural safeguards contained in Article 6 of the Agreement; 7
and a single other exporter or producer could never be the basis for a profit cap pursuant to

5 First Submission of India, paras. 3.61 - 3.62.
6 Article 3.1 specifies that a determination of injury must consider, inter alia , the impact of dumped
imports on domestic producers of like products and Article 4.1 of the Agreement defines the domestic industry
as " the domestic producers as a whole of the like products..." (emphasis added).
7 For example, Article 6.1.1 provides that "[e]xporters or foreign producers" must have at least 30 days
to respond to a questionnaire and Article 6.1.3 requires the investigating authorities to provide the text of the
application for anti-dumping duties "to the known exporters."

Article 2.2.2(iii).8 Interpretations of the Agreement which lead to such absurd results should be
avoided.9
B. ARTICLE 2.2.2(ii) DOES NOT PROHIBIT AN INTERPRETATION THAT BELOW -COST SALES MAY
BE EXCLUDED FROM THE PROFIT AND SG&A CALCULATIONS (INDIA'S CLAIM 1, ARGUMENT 2)
14. India argues that the EC relied on an impermissible interpretation of Article 2.2.2(ii) when it
excluded the profit and SG&A amounts obtained on below cost sales from the profit and SG&A
amounts utilized pursuant to this provision. India contends that the term "actual amounts incurred and
realized by other producers or exporters" in Article 2.2.2(ii) cannot be interpreted as permitting the
exclusion of the profit amounts on such below cost sales, even when they are made within an
extended period of time, in substantial quantities, and at prices which do not provide for the recovery
of all costs within a reasonable period of time.10
15. The United States disagrees with this aspect of India’s interpretation of Article 2.2.2(ii). The
United States believes that it is a permissible interpretation of Article 2.2.2(ii) to restrict consideration
of "actual amounts incurred and realized" to sales made in the ordinary course of trade. Such an
application of Article 2.2.2(ii) is not prohibited by the Agreement and, in fact, would be a more
reasonable interpretation of the Agreement.
16. First, as is obvious from a reading of Article 2.2.2(ii), there is no reference within that
provision to sales which are not in the ordinary course of trade. In other words, there is no explicit
requirement that such sales be included or excluded from the calculation of profit and SG&A to be
used to calculate the constructed value for other producers or exporters.
17. Second, Article 2.1 provides the basic definition of when a product is dumped. Specifically,
it defines a product as dumped when "the export price of the product exported from one country to
another is less than the comparable price, in the ordinary course of trade, for the like product when
destined for consumption in the exporting country." (Emphasis added.) Thus, the basic concept of
dumping in the Agreement incorporates the concept of ordinary course of trade.
18. Consistent with Article 2.1, Article 2.2 of the Agreement provides for the use of a constructed
normal value when domestic market sales are in such low volumes that they do not permit a proper
comparison or when there are "no sales of the like product in the ordinary course of trade in the
domestic market of the exporting country...." The Agreement further specifies, in Article 2.2.1, that
sales may be treated as not in the ordinary course of trade by reason of price "and may be disregarded
in determining normal value" if such sales are made within an extended period of time in substantial
quantities and at prices which do not provide for the recovery of all costs within a reasonable period
of time. Thus, the type of situation in which the investigating authorities may have to resort to
constructed normal value is when all of a producer’s or exporter’s domestic market sales have been
made below the cost of production.
19. The constructed normal value provided for in Article 2.2 consists of the cost of production in
the country of origin plus a reasonable amount for SG&A costs and for profits. Article 2.2.2 of the
Agreement provides several methodologies for determining the amounts for SG&A and for profit. In
this case, the methodology which was utilized was that provided for in Article 2.2.2(ii):

8 Article 2.2.2(iii) provides that when the profit amount is determined by other reasonable means, the
amount may not exceed "the profit normally realized by other exporters or producers..." (emphasis added).
9 See Vienna Convention on the Law of Treaties ("the Vienna Convention") Articles 31 and 32, done at
Vienna, 23 May 1969, 1155 U.N.T.S. 221; 8 International Legal Materials 697 (1969)(a treaty should be
interpreted in good faith and supplementary means of interpretation may be used when the interpretation leads
to absurd or unreasonable results).
10 First Submission of India, paras. 3.78-3.96.

the weighted average of the actual amounts incurred and realized by other exporters
or producers subject to investigation in respect of production and sales of the like
product in the domestic market of the country of origin.
Although Article 2.2.2(ii) does not explicitly provide for the exclusion of below cost sales, as noted
above, Article 2.2.1 makes it clear that when below costs sales have been made, the investigating
authorities are under no obligation to consider them in the determination of normal value, provided
that certain conditions have been met.
20. Moreover, excluding the profit and SG&A on sales not in the ordinary course of trade from
the figures used pursuant to Article 2.2.2(ii) is consistent with the overall operation of Article 2 of the
Agreement. This simply means that in an investigation involving two producers (A and B), if
producer A has no domestic market sales that are in the ordinary course of trade, and producer B has
50 per cent of its domestic market sales in the ordinary course of trade, producer A will be assigned
the same profit rate as producer B, rather than a more favorable rate.
11
C. THE TEXT OF ARTICLE 2.2.2. IS NOT HIERARCHICAL WITH RESPECT TO THE ALTERNATIVE
METHODS FOR COMPUTING PROFIT AND SG&A (INDIA'S CLAIM 1, ARGUMENT 3)
21. India argues that Article 2.2.2 of the Agreement establishes a hierarchy of alternative methods
to be used in calculating profit and SG&A am ounts, when constructing normal value pursuant to
Article 2.2. India contends that the EC’ s Basic Regulation reverses the order of 2.2.2(i) and 2.2.2(ii),
causing it to prefer using the weighted average of domestic sales of the like product by other exporters
and producers, rather than using the domestic sales of the same general category of products of the
exporter or producer in question . India contends that the EC’s use of profit and SG&A amounts
pursuant to Article 2.2.2(ii), when the EC could have determined profit and SG&A pursuant to
Article 2.2.2(i), was inconsistent with the Agreement.12 To this end, India contends:
Dumping being a highly producer-specific concept [note omitted] should by its
intrinsic nature be calculated as much as possible on the basis of the data of the
producer whose behaviour is under scrutiny. In this regard the order of the
Agreement makes sense, since it establishes a preference for producer-specific data.13
22. The United States respectfully differs with India’s Claim that Article 2.2.2 is clearly
hierarchical in nature. While we agree that there is indeed an explicit hierarchy as between the
chapeau of Article 2.2.2 and the three alternative methods described under Article 2.2.2(i) through
(iii), we do not agree that the Agreement contains a hierarchy of preference among the three
alternative methods, based on the order in which they appear. Dumping is both a producer-specific
and product-specific determination; therefore, the chapeau of Article 2.2.2 expresses a clear
preference for the use of actual data of the producer or exporter under investigation, for sales of the
like product in the ordinary course of trade. When the method of the chapeau of Article 2.2.2 cannot
be applied, any of the three alternatives that follow may be applied instead.
23. Notably, the Agreement provides an explicit hierarchy between Article 2.2.2 and the three
alternatives that follow. To that end, Article 2.2.2 provides for the use of the alternative

11 If producer B’s profit rate on the ordinary course of trade sales was 15 per cent, but on all domestic
market sales (including below cost sales) was only 4 per cent, it would be illogical to interpret the Agreement as
requiring the investigating authorities to use the 15 per cent profit for producer B, but to use the more favorable
profit rate of 4 per cent for producer A (the company that made all of its domestic sales outside the ordinary
course of trade).
12 First Submission of India, paras. 3.97-3.107.

methodologies "[w]hen such [profit and SG&A] amounts cannot be determined" on the basis of the
methodology in the chapeau. The Agreement, however, does not contain a hierarchy among the three
alternatives. It is permissible to infer both from the presence of an explicit hierarchy between the
chapeau and the three alternatives that follow, and from the absence of such a hierarchy among the
three alternatives, that the drafters of the Agreement intended no such hierarchy to exist among
Article 2.2.2(i), (ii), and (iii).144 Such an interpretation would be consistent with Article 31(1) of the
Vienna Convention, which provides, inter alia, for good faith interpretations of treaties in light of
their object and purpose.
24. Articles 2.2.2(i) and 2.2.2(ii) call for profit and SG&A to be based on information from either
(i) the same exporter or producer in question, but for production and sales in the domestic market of
the same general category of goods, or (ii) sales of the like product in the domestic market by other
exporters or producers subject to investigation. To the extent that the Agreement contains clear
preferences that dumping be measured on an exporter- or producer-specific basis AND with respect to
the like product, there is no basis for saying that exporter-specific comparisons are preferred over
like-product comparisons-- that is, that Article 2.2.2(i) is preferable to Article 2.2.2(ii). There is no
hierarchy intended or implied among Articles 2.2.2(i)-(iii).
25. For all of the above reasons, the United States believes that India’s legal claims should be
rejected and that the EC’s method for calculating the SG&A and profit amount used in constructed
normal value was a permissible interpretation of Article 2.2.2.
D.
OPTIONS FOR THE CALCULATION OF CONSTRUCTED VALUE PROFIT CONSISTENT WITH
ARTICLES 2.2 AND 2.2.2 ARE LIMITED , BUT NOT IN TH E MANNER ADVOCATED BY INDIA
(INDIA'S CLAIM 4)
26. Articles 2.2 and 2.2.2 of the Agreement set forth the requirements for calculating profit when
normal value is based on constructed value instead of prices. Article 2.2 provides for the addition to
cost of production of a reasonable amount for profit, inter alia. Article 2.2.2 then sets forth several
explicit options for how a reasonable profit may be determined.
27. India argues that the EC impermissibly used an "unreasonable" amount for constructed value
profit. According to India, Article 2.2, read in conjunction with Article 2.2.2(iii), imposes a
comparative "reasonableness" standard which limits the amount for profit that can be utilized in
calculating constructed value. India contends that Article 2.2 imposes a "reasonableness" standard on
both the method used to determine profits, as well as the substantive result
.15 In addition, India
claims that Article 2.2.2(iii) contains an implicit definition of what is "reasonable" under Article 2.2:
that whatever method is used, the resulting profit should not exceed that normally realized by other
exporters or producers
16 India reads this definition of "reasonableness" into the other provisions of
Article 2.2.2, viz., the chapeau, Article 2.2.2(i) and 2.2.2(ii). 17 Using this standard, India compares
the profit amount calculated by the EC with profit figures for other Indian textile producers under
investigation,18 and concludes that the profit figure used by the EC is impermissible under the

14 Article 6.10 contains a similar example of an explicit hierarchy in which the preferred method is
followed by alternative methods of equal importance, where it is similarly clear that either alternative method is
equally available if the preferred option is unavailable. Here again, the drafters of the Agreement made clear
that the hierarchy was between the first method and the alternatives, and not between the alternative methods.
16 Id., paras. 3.129-3.131.
17 Id., para. 3.132.
18 India also compares the profit determined by the EC to the profits obtained by other countries subject
to investigation, Egypt and Pakistan, and to the reasonable profit imputed to the EC industry.

agreement because it "stands out as a complete anomaly," and "does not in any way reflect the profit
actually realized by the Bed Linen producers inside and outside India."19
28. The United States disagrees with India’s interpretation of Articles 2.2 and 2.2.2 which
imposes a limitation on the amount for constructed valu e profit where no such limitation exists in the
Agreement. The general requirement of Article 2.2, which provides for the addition to cost of
production of a "reasonable" amount for profit, does not itself create an absolute limit on the profit
amount because Article 2.2 provides no specific or express standard against which to judge a profit
figure. The only explicit limitations on the determination of constructed value profit found in the
Agreement are those in Article 2.2.2. With one exception, discussed below, these methodologies in
Article 2.2.2 limit how the administering authorities may determine profit amount, not the amount of
the profit itself. Therefore, if a profit amount is determined pursuant to one of the methodologies
specified under Article 2.2.2, it is "reasonable" within the meaning of Article 2.2.
29. The chapeau of Article 2.2.2 provides that the preferred option for constructed value profit is
to calculate an amount for profit based on "actual data pertaining to production and sales in the
ordinary course of trade of the like product by the exporter or producer under investigation." If,
however, an amount for profit cannot be determined on this basis, it may be based on any of the
following three alternatives:
1. the actual amounts incurred and realized by the exporter or producer in question in
respect of product and sales in the domestic market of the country of origin of the
same general category of products;
2. the weighted average of the actual amounts incurred and realized by other exporters
or producers subject to investigation in respect of production and sales of the like
product in the domestic market of the country of origin;
3. any other reasonable method, provided that the amount for profit so established shall
not exceed the profit normally realized by other exporters or producers on sales of
products of the same general category in the domestic market of the country of origin.
The chapeau of Article 2.2.2 and subparts (i) and (ii), therefore, provide limitations only as to the
source of the data used to calculate a profit figure ( i.e., the location of the sales and the types of
products), but not as to the amount. In contrast, subpart (iii) does contain a limitation on profit
amount. Specifically, subpart (iii) provides a cap on the amount of constructed value profit when the
profit amount is calculated by any reasonable method not articulated in Article 2.2.2 by requiring that
the profit amount not exceed profits normally realized by other exporters or producers on sales of
products in the same general category in the domestic market.
30. The "profit cap" in subpart (iii), therefore, is the only explicit limitation on the choice of a
constructed value profit figure – and is applicable only to profit amounts determined under subpart
(iii). The cap is necessary in this instance to impose some limitations on "other" "reasonable"
methodologies for determining profit not specifically articulated in the Agreement. Significantly,
subpart (iii) does not expressly or implicitly impose a similar limitation upon the preferred profit
methodology in the chapeau or the alternatives in subparts (i) or (ii). Such a limitation is not
necessary with respect to these provisions because each of these provisions defines a specific
"reasonable " methodology. In fact, subpart (iii)’s initial language of "any other reasonable method"
explicitly recognizes the methods previously detailed in Article 2.2.2 as "reasonable."

19 First Submission of India, para. 3.138. See also paras. 3.134-3.139.

31. Article 31(1) of the Vienna Convention20 states: "A treaty shall be interpreted in good faith in
accordance with the ordinary meaning to be given to the terms of the treaty in their context and in
light of its object and purpose." Furthermore, "it is the duty of any treaty interpreter to ‘read all
applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously.'"21 India’s
interpretation of the constructed normal value profit provisions bundles the various provisions
together in order to imply the existence of a limita tion where none exists. Such an interpretation is
contrary to the plain language of Article 2.2.2, which provides the only explicit limitations on the
methodology for calculating constructed normal value profit. Furthermore, India’s construction of the
constructed normal value profit provisions would render the preferred option found in the chapeau of
Article 2.2.2, as well as those in subparts (i) and (ii) of Article 2.2.2, superfluous.
32. Finally, the negotiating history of the Agreement 22 reveals the delicate negotiated balance
reflected in Article 2.2.2. 23 The 1979 Code provided that constructed value include a "reasonable"
amount for profit. The term "reasonable", however, was not defined; nor were explicit profit
calculation methodologies included in the 1979 Code. During the Uruguay Round negotiations, a
number of delegations advocated that profit be determined on the basis of a company’s actual data
and proposed alternative methodologies for determining profit when actual data was unavailable.
24
The resulting provisions of Article 2.2.2 of the Agreement reflect a similar structure, i.e., a preferred
option and three alternatives. India’s interpretation accords neither with the negotiators’ intent nor
with the meaning of Articles 2.2 and 2.2.2.
33. For these reasons, the United States believes that the EC’s interpretation of the profit
provisions found in Articles 2.2 and 2.2.2 is correct . At a minimum, it is plainly a permissible
interpretation, under Article 17.6(ii) of the Agreement. Furthermore, in accordance with
Article 17.6(i), should the panel determine that the EC’s establishment of the facts was proper, that
the facts on the record support the methodology employed, and that the evaluation was unbiased and
objective, the panel should sustain the EC ’s calculation of constructed normal value profit as
consistent with Article 2.2.2.
E.
ARTICLES 2.4 AND 2.4.2 DO NOT PROHIBIT THE ZEROING OF NEGATIVE DIFFERENCES BETWEEN
NORMAL VALUE AND EXPORT PRICE (INDIA'S CLAIM 7)
 25
34. Articles 2.4 and 2.4.2 of the Agreement set forth the provisions for making a fair comparison
between export price and normal value. Article 2.4 contains the general requirement, calling for
comparisons to be made to the extent possible at the same level of trade, based on sales at the same
time, and with due allowance for differences affe cting price comparability. Article 2.4.2 provides
that, in an investigation, the comparison of prices shall normally be made on a weighted-average to
weighted-average basis or a transaction-to-transaction basis, unless certain conditions are met.
35. India argues that the EC acted inconsistently with Article 2.4.2 of the Agreement when it
calculated the overall margins of dumping in this investigation. In the course of calculating dumping
margins, the EC reset negative differences between normal value and export price determined on a

20 Vienna Convention on the Law of Treaties, supra fn. 9.
21 See Korea – Definitive Safeguard Measures on Imports of Certain Dairy Products , Report of the
Appellate Body, AB 1999-8 (adopted 14 December 1999), para. 81.
22 Under Article 32 of the Vienna Convention, this material may be considered to confirm the meaning
of a provision of a treaty.
23 See generally Terence P. Stewart, et al. , The GATT Uruguay Round: A Negotiating History
(1986-1992) 171-190 (1993) (discussing the negotiations concerning constructed value profit, inter alia).
24 See Stewart, supra n. 23 at 175-77 n.1012-1024, and GATT documents cited therein.
25 Nothing the United States has said with respect to this zeroing issue should be construed as
expressing agreement or disagreement with the EC’s actual calculation of the dumping margin in this case,
because the United States does not have access to the specific factual information considered by the EC.

product-specific basis to zero, prior to calculating an overall margin of dumping for each Indian
producer.26 India claims that this practice is inconsistent with Article 2.4.2's requirement to
determine dumping based on a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions.
36. The United States disagrees with India’s interpretation of Article 2.4.2 which, if taken to its
logical conclusion, would distort many of the requirements of Article 2.4 for a fair comparison and
the making of due allowances for differences which affect price comparability.
37. The comparison of export prices and normal values is addressed in Articles 2.4, 2.41,
27 and
2.4.2. Article 2.4 requires that "A fair comparison shall be made between the export price and the
normal value." The Article then proceeds to detail that such a comparison shall be made
at the same level of trade, normally at the ex-factory level, and in respect of sales
made at as nearly as possible the same time. Due allowance shall be made in each
case, on its merits, for differences which affect price comparability, including
differences in conditions and terms of sale, taxation, levels of trade, quantities,
physical characteristics, and any other differences which are also demonstrated to
affect price comparability [...].
These considerations of time, selling conditions, quantities, inter alia, illustrate that Article 2.4 clearly
contemplates that comparisons normally must be made on a level-of-trade basis, a product-specific
basis (to account for differences in physical characteristics) and a time-period basis. Thus,
notwithstanding the use of the singular terms of "the export price and the normal value" in the first
sentence of Article 2.4, the mandate of a fair comparison contemplates that there may be several to
several thousand export prices and normal values which are compared within an investigation for a
respondent company, depending on, inter alia , the variety of products, levels of trade, and selling
conditions involved. This multitude of comparisons may result in the calculation of varying dumping
amounts, both positive and negative.
38. The Agreement further provides, in Article 2.4.2, that:
Subject to the provisions governing fair comparison in paragraph 4, the existence of
margins of dumping during the investigation phase shall normally be established on
the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions or by a comparison of normal
value and export prices on a transaction-to-transaction basis[....]
39. All that Article 2.4.2 requires is that, in making comparisons between the export price and the
normal value of the like product in an investigation, each comparison shall be made either on a
weighted-average-to-weighted-average basis or a transaction-to-transaction basis. This requirement
of comparing weighted-average-to-weighted-average figures or transaction-to-transaction figures is
explicitly made subject to the requirements of Article 2.4. Thus, it is clear that the weight-averaging
normally is not to involve transactions which are distinct in terms of physical characteristics of the
products, conditions and terms of sale, and other differences affecting price comparability.
40. It is worth recognizing that Article 2.4.2 was newly introduced with the Uruguay Round of
negotiations to address a specific concern of certain Members with respect to the conduct of
investigations. Previously, the practice of some Members, including the EC and the United States,

26 First Submission of India, paras. 3.152-3.171.
27 Article 2.4.1 contains provisions regarding the conversion of currency which are not relevant to this
issue.

was to compare individual export price transactions to weighted-average normal values. Article 2.4.2
was included in the Agreement to provide that, except in the case of targeted dumping, margin
calculations in an investigation would be made on a consistent basis, i.e., weight-average to
weight-average or transaction to transaction. 28 Thus, the intent was to eliminate
transaction-to-average comparisons in investigations, not to alter the manner in which authorities
calculated overall margins after all appropriate comparisons were made.
41. As discussed above, Articles 2.4 and 2.4.2 provide for a fair comparison between export price
and normal value and further provide that such comparisons in investigations should normally be on a
weight-average-to-weight-average basis or on a transaction-to-transaction basis. The "zeroing"
practice about which India objects is not covered by Articles 2.4 and 2.4.2 because it arises at a step
subsequent to the comparison of export price and normal value. The "zeroing" took place at the stage
when the individual, product-specific margins were combined into an overall average rate of
dumping.29 This point is confirmed by the fact that Article 2.4.2 explicitly permits
transaction-to-transaction comparisons without providing a methodology for combining margins
calculated pursuant to that methodology either.
42. When this stage is reached, the individual, product-specific differences between normal value
and export price may be positive or negative. If positive, they represent the aggregate amount of
dumping duties that the importing country is permitted to collect for that product or group of
transactions. If negative, they represent the amount by which the export price exceeded the normal
value; however, the Agreement imposes no liability on the importing country to make payments to the
importer or anyone else involved in the transaction for not dumping the merchandise in question. The
negative difference between normal value and export price simply means there is no dumping; i.e., the
dumping margin for that product or group of transact ions is zero. Thus, for such products with no
dumping margins, the amount of dumping duties which the importing country is permitted to collect
is zero.
43. Equally important, when the investigating authority calculates an overall, average rate of
dumping, neither Article 2.4.2 nor any other Article of the Agreement requires that more credit be
given for negative dumping amounts than if the dumping duties were to be collected on a
product-specific basis. Nevertheless, that would be the result if India’s interpretation of Article 2.4.2
were accepted. This problem may be illustrated with the following example:

28 See generally Stewart, et al. , supra n. 23 at 155-61 (discussing the negotiations concerning
weighted-average comparisons, inter alia ); see also, EC - Anti-dumping Duties on Audio Tapes in Cassettes
Originating in Japan , ADP/136, Report of the Panel (28 April 1995), para. 348 (unadopted) (discussing the
EC’s prior practice of comparing individual export prices to weight-average normal values).
29 See e.g., EC - Imposition of Anti-dumping Duties on Imports of Cotton Yarn from Brazil , ADP/137,
(4 July 1995) paras. 500-501 (finding the practice of "zeroing" not to be inconsistent with the Anti-dumping
Code).

Aggregate Domestic
Market Value in
Currency Units (CU)
Aggregate
Importing Country
Value in CU
Aggregate Dumping
Amount Calculated in
CU
Product-specific
Aggregate Dumping
Duties Which May
be Collected in CU
Product 1 5,500 5,000 500 500
Product 2 1,800 2,000 -200 0
Product 3 3,300 3,000 300 300
Product 4 4,500 5,000 -500 0
Product 5 2,200 2,000 200 200
TOTAL 17,300 17,000 300 1,000
44. Based on the above figures, the overall, average rate of dumping is 5.88 per cent
(1,000/17,000). Moreover, the application of that dumping margin to the total import value (5.88 per
cent * 17,000) would result in the collection of 1,000 CU in dumping duties – no more and no less
than the importing country is permitted to collect on a product-specific basis.
45. By contrast, if this calculation were to be performed based on the India’s interpretation, the
overall, average rate of dumping would be 1.76 per cent (300/17,000). Even if we were to ignore the
fact that this is a de minimis margin, the application of that margin of dumping to the total import
value (1.76 per cent * 17,000) would result in th e collection of only 300 CU in dumping duties.
Stated another way, there would be an additi onal 700 CU in dumping which the importing country
would not be permitted to remedy. Moreover, because, as noted above, this methodology would
result in the calculation of a de minimis dumping margin, the importing country would actually be
unable to place any dumping duties on these products, despite the fact that the majority of the
products (on a value and volume basis) were dumped at an average rate of 10 per cent
(1,000/10,000)
30
46. The United States also disagrees with India’s reading of Article 2.4.2 as requiring positive
margins to be offset by negative margins because it would fail to give meaning to the requirements of
Article 2.4, which, as noted above, contemplate that comparisons be made at least on a
product-specific basis in order to account for physical and other differences which affect price
comparability. This failure may be observed utilizing the above example by noting that the difference
between the total aggregate home market prices and the total aggregate importing country prices
(17,300-17,000) is 300 CU. In other words, India’s methodology necessarily distorts the effect of
making the product-specific comparisons and is equivalent to simply aggregating normal values and
export prices regardless of comparability.
47. For these reasons, the United States believes that resetting negative dumping amounts
calculated on a product-specific basis to zeros is a permissible interpretation of Articles 2.4 and 2.4.2.
F. A
RTICLE 5.3 DID NOT OBLIGATE THE EC TO CONSIDER A PREVIOUSLY TERMINATED ,
INCOMPLETE INVESTIGATION AGAINST A DIFFERENT GROUP OF COUNTRIES BEFORE
INITIATING THE UNDERLYING INVESTIGATION (INDIA'S CLAIM 23)
48. India argues that the EC’s initiation of the underlying investigation was inconsistent with
Article 5.3 of the Agreement. India’s argument is based, in part, on its Claim that neither the
application for the anti-dumping investigation nor the EC’s initiation of the investigation took account

30 The 10,000 CU denominator is the aggregate value of the imports for which there were positive
dumping duties.

of the fact that the EC had recently terminated an investigation of the same products from a different
mix of countries.31
49. The United States disagrees with India’s Claim that the EC’s initiation of the underlying
investigation was faulty based on its failure to consider the termination of the prior investigation.
Specifically, the United States disagrees that the termination of the prior investigation constituted a
tacit admission by the EC domestic industry that it was not injured during that period of investigation
and that such a tacit admission must be given evidentiary weight in the investigation of the subsequent
investigation pursuant to the provisions of Article 5.3 of the Agreement.
32
50. First, it should be noted that the basic requirem ents for an application for an investigation are
contained in Article 5.2 of the Agreement. Therein, the Agreement provides:
An application under paragraph 1 shall include evidence of (a) dumping, (b) injury
[...] and (c) a causal link between the dumped imports and the alleged injury. Simple
assertion, unsubstantiated by relevant evidence, cannot be considered sufficient to
meet the requirements of this paragraph. The application shall contain such
information as is reasonably available to the applicant [....]
Thus, what is required in an application is, inter alia, evidence of injury which is reasonably available
to the applicant. An applicant is not required to furnish evidence, if any exists, which weighs against
its application.
51. Article 5.3 of the Agreement provides for the investigating authorities’ evaluation of the
application, and states:
The authorities shall examine the accuracy and adequacy of the evidence provided in
the application to determine whether there is sufficient evidence to justify the
initiation of an investigation.
Once again, it is important to note the specific requirements of Article 5.3. The evidence which the
authorities are required to examine is "the evidence provided in the application." Moreover, there is
no obligation that the authorities weigh this evidence against contrary evidence; rather, they are
required merely to determine whether "there is sufficient evidence to justify the initiation of an
investigation."
52. The premise of each aspect of Articles 5.2 and 5.3 is that the information covered is
"evidence." The chapeau of Article 5.2 specifies that "Simple assertion, unsubstantiated by relevant
evidence, cannot be considered sufficient to meet the requirements of this paragraph."
53. In this case, the United States does not believe that the earlier investigation must be
considered evidence within the meaning of Articles 5.2 and 5.3. First, the earlier investigation was
terminated based upon the withdrawal of the applic ation for relief without any final determination by
the investigating authorities.

31 First Submission of India, paras 5.28 - 5.31. The first aspect of India’s argument concerns whether
the EC conducted a sufficient examination of the adequacy and accuracy of the application for relief and, if so,
whether it provided adequate no tice of that examination. Id. at paras. 5.23 - 5.27. The United States does not
have the detailed records of the initiation to evaluate the facts of this Claim and takes no position with respect to
this issue.
32 See First Submission of India, paras 5.29 - 5.30.

54. Second, that earlier investigation, although it may have involved the same products, involved
a different mix of countries. Specifically, the earlier investigation concerned India, Pakistan, Thailand
and Turkey, whereas the underlying investigation concerned India, Egypt and Pakistan. 33 Thus, two
countries were dropped from the earlier investigation and another country was added. Consequently,
the United States believes that India’s Claim th at the termination of the earlier investigation
constitutes evidence of a lack of injury is mere speculation or, in the words of Article 5.2, "simple
assertion." Speculation regarding the import of prior actions cannot, by itself, rise to the level of
evidence recognized by Article 5.3 of the Agreement; moreover, as the Appellate Body has stated in
the Wool Shirts decision, "we find it difficult, indeed, to see how any system of judicial settlement
could work if it incorporated the proposition that the mere assertion of a Claim might amount to
proof."
34
55. Finally, each bedlinen investigation constituted a separate proceeding for which a separate
record was established by the European Commission. Even if the two investigations involved the
same countries and the same period of time, it is quite possible that there would have been substantial
differences in the two records. The EC was obligated, consistent with the Agreement, to base its
determination on its assessment of the facts of the matter which were before it. To the extent that it
did so, and its decision was based on an unbiased and objective evaluation of the facts before it,
consistent with the standard contained in Article 17.6(i), that decision should not be overturned.
G. CONSIDERATION OF INDUSTRY SUPPORT INFORMATION SUBMITTED BY ASSOCIATIONS OF
DOMESTIC PRODUCERS IS NOT INCONSISTENT WITH ARTICLE 5.4 (INDIA'S CLAIM 26)
56. Article 5.4 of the Agreement provides that an investigation shall not be initiated unless the
authorities have determined that the application for relief has been made by or on behalf of the
domestic industry. Article 5.4 further provides for certain numeric tests to determine whether the
application has been filed by or on behalf of the domestic industry.
57. India asserts that the EU has violated Article 5.4 in its initiation of the investigation of
bedlinen from India by accepting statements of support by and from certain associations of domestic
bedlinen manufacturers. India claims that Article 5.4's reference to "the degree of support for, or
opposition to, the application expressed by domestic producers of the like product" (footnote omitted)
requires that the expressions of support (or, presumably, opposition) must come directly from the
domestic producer.
35
58. The United States disagrees with India’s interpretation of Article 5.4 of the Agreement. In
particular, the United States believes that India’ s focus on Article 5.4, to the exclusion of Article 6 of
the Agreement, has resulted in an incorrect assessment of the requirements of Article 5.4.
59. Article 5.4 of the Agreement provides:
An investigation shall not be initiated pursuant to paragraph 1 unless the authorities
have determined, on the basis of an examination of the degree of support for, or
opposition to, the application expressed13 by domestic producers of the like product,
that the application has been made by or on behalf of the domestic industry.14 The
application shall be considered to have been made "by or on behalf of the domestic
industry" if it is supported by those domestic producers whose collective output

33 First Submission of India, paras. 5.3 (regarding the earlier investigation) and 2.2 (regarding the
underlying investigation).
34 United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India,
DS33/AB/R, p. 14.
35 First Submission of India, paras. 5.94 - 5.101.

constitutes more than 50 per cent of the total production of the like product produced
by that portion of the domestic industry expressing either support for or opposition to
the application. However, no investigation shall be initiated when domestic
producers expressly supporting the application account for less than 25 per cent of
total production of the like product produced by the domestic industry.
13 In the case of fragmented industries involving an exceptionally large number of
producers, authorities may determine support and opposition by using statistically
valid sampling techniques.
14 Members are aware that in the territory of certain Members employees of domestic
producers of the like product or representatives of those employees may make or
support an application for an investigation under paragraph 1.
60. While the United States does not disagree with India that Article 5.4 places certain affirmative
obligations upon the authorities to evaluate the evid ence before it prior to initiating an anti-dumping
investigation and establishes numeric standards which the authorities must find to have been met prior
to initiation, Article 5.4 does not address from whom the authorities may receive this evidence.
61. The evidence which may be considered by the authorities in making any determinations and
the parties entitled to provide such evidence is discussed in Article 6 of the Agreement. This
Article includes, in relevant part, the following provisions:
6.2 Throughout the anti-dumping investigation all interested parties shall have a full
opportunity for the defence of their interests. [...]
6.6 Except in circumstances provided for in paragraph 8, the authorities shall during
the course of an investigation satisfy themselves as to the accuracy of the information
supplied by interested parties upon which their findings are based.
6.11 For the purposes of this Agreement, "interested parties" shall include:
(i) an exporter or foreign producer or the importer of a product
subject to investigation, or a trade or business association a majority
of the members of which are producers, exporters or importers of
such product;
(ii) the government of the exporting Member; and
(iii) a producer of the like product in the importing Member or a
trade and business association a majority of the members of
which produce the like product in the territory of the importing
Member.
This list shall not preclude Members from allowing domestic or foreign parties other
than those mentioned above to be included as interested parties.
(Emphasis added.)
As Article 6.11(iii) of the Agreement makes clear, trade and business associations qualify as
interested parties provided that a majority of their members produce the like product in the territory of
the importing Member.

62. As interested parties, Article 6.2 provides that such trade and business associations shall have
the full opportunity to defend their interests. Th ese interests may include an interest in having the
anti-dumping investigation be conducted by the authorities. The Agreement does not prohibit trade
and business associations from defending these interests.
63. Thus, to the extent that an association qualifies as an interested party because a majority of its
members produce the like product in the territory of the importing Member, the Agreement does not
prohibit that association from expressing the views of its member companies. In fact, if anything, it
could be argued that the Agreement expressly protects the rights of such associations to express the
views of its members.
64. The Agreement, however, does provide a limited counter-balance to trade and business
associations representing their members. Article 6.6 of the Agreement requires the authorities to
satisfy themselves as to the accuracy of the information provided by interested parties upon which
their findings are based. Thus, to the extent that an investigating authority relies upon representations
by or through an association of support for an application for anti-dumping relief, that authority must
first satisfy itself as to the accuracy of those repr esentations. Nevertheless, if the authority has, in
fact, confirmed the accuracy of the representations, contrary to the position of India, the Agreement
does not prohibit reliance on the representations of the associations.
65. For the above stated reasons, the United States contends that the EC’s interpretations of the
Agreement was permissible, under Article 17.6(ii) of the Agreement and would suggest that the panel
reject the interpretation advocated by India. The United States, however, takes no position as to
whether the EC’s determination of industry support, as a factual matter, was consistent with the
standards required by Articles 5.4 and 6 of the Agreement.
H. A
RTICLE 15 OF THE ANTI -DUMPING AGREEMENT DOES NOT REQUIRE ANY PARTICULAR
SUBSTANTIVE OUTCOME , NOR DOES IT REQUIRE ANY SPECIFIC ACCOMMODATIONS TO BE
MADE ON THE BASIS OF DEVELOPING COUNTRY STATUS (INDIA'S CLAIM 29)
66. India argues that the EC acted inconsistently with Article 15 of the Agreement by not
exploring possibilities of a constructive remedy and by failing to address arguments from Indian
exporters that the textile industry, including the bed linen industry, is of essential interest to the Indian
economy. India further contends that special consideration, in terms of changes in the questionnaire,
flexibility in the enforcement of deadlines, and the li ke, is not sufficient to meet the requirements of
Article 15. In addition, India asserts that under Article 15, and particularly under the second sentence
thereof, an investigating authority must give special consideration to developing country status before
any provisional measures are taken.
36
67. The EC contends that, during the anti-dumping investigation, it made a number of specific
concessions to Indian firms in view of their locatio n in a developing country, such as the preparation
of simplified questionnaires for exporters, the acceptance of responses submitted after stated
deadlines, and the individual treatment of newcomers despite the case having been based on sampling.
In addition, the EC notes that discussions on undertakings did take place, and argues that although the
discussions did not result in undertakings between India and the EC, the fact that the discussions took
place is sufficient to comply with the requirements of Article 15.
68. The United States is of the view that Article 15 of the Agreement provides important
procedural safeguards to developing countries when their essential interests are at stake, but it does
not require any particular substantive outcome, nor does it specify any particular accommodations
which must be made on the basis of developing country status.

36 First Submission of India, paras. 6.28-6.53.

69. Article 15 provides that:
It is recognized that special regard must be given by developed country Members to
the special situation of developing country Members when considering the
application of anti-dumping measures under this Agreement. Possibilities of
constructive remedies provided for by this Agreement shall be explored before
applying anti-dumping duties where they would affect the essential interests of
developing country Members.
70. The United States agrees with the interpretation of India that the first sentence is couched in
precatory language which creates a "statement of preferred policy,"
37 rather than a substantive
obligation. The words "[i]t is recognized that" are hortatory, not mandatory, and the Article does not
define the "special regard" that it is to be given.
71. The United States respectfully differs with India about the nature of the second sentence of
Article 15. Although the second sentence is not prefaced by any language such as " it is recognized,"
which would clarify the extent of the obligations that follow, the language and structure do not impose
anything other than a procedural obligation to "explore" the "[p]ossibilities of constructive remedies
provided for by this Agreement..." The word "explore" cannot fairly be read to imply an obligation to
reach a particular substantive outcome; it merely requires the consideration of these possibilities.
72. In the Tokyo Round Anti-dumping Code panel report on Cotton Yarn From Brazil,
38 the
panel construed the second sentence of Article 13 of the GATT – a provision essentially identical to
Article 15 of the Agreement39 – finding that:
[I]f the application of anti-dumping measures "would affect the essential interests of
developing countries," the obligation that then arose was to explore the "possibilities"
of "constructive remedies." It was clear from the words "[p]ossibilities" and
"explored" that the investigating authorities were not required to adopt the
constructive remedies merely because they were proposed.
40
The panel underscored this position, noting that "...there was no obligation to enter into the
constructive remedies, merely to consider the possibility of entering into constructive remedies."
41
The question, then, is whether the EC explored the possibility of entering into such constructive
remedies. This is a factual determination; because the United States is not privy to the factual record
in this case, we take no position on whether the EC’s actions were sufficient under Article 15.
73. With regard to the timing of the "exploration of possibilities of constructive remedies"
required by the second sentence of Article 15, India further argues that because these possibilities
"shall" be explored "before applying anti-dumping duties," the EC was required to conduct this
exploration prior to its imposition of provisional anti-dumping duties.

38 EC-Imposition of Anti-Dumping Duties on Imports of Cotton Yarn from Brazil, ADP/137,
4 July 1995.
39 Article 13 provided:
It is recognized that special regard must be given by developed countries to the special
situation of developing countries when considering the application of anti-dumping measures
under this Code. Possibilities of constructive remedies provided for by this Code shall be
explored before applying anti-dumping duties where they would affect the essential interests
of developing countries.
Id., para. 582.

74. The United States respectfully disagrees. The reference in Article 15 to "applying
anti-dumping duties" relates to the actual imposition and collection of anti-dumping duties pursuant to
Article 9 of the Agreement. That did not occur un til the EC made its final determination of dumping
and injury. Article 7 of the Agreement recognizes the imposition of provisional measures, which may
be provisional anti-dumping duties, as a separate and earlier step which is distinct from the
application of anti-dumping duties themselves.
75. Furthermore, if, as India proposes, the "possibilities" to be explored include price
undertakings,42 it is clear that this exploration must occur after any provisional determination by the
investigating authority. Article 8.2 provides that "[p]rice undertakings shall not be sought or accepted
from exporters unless the authorities of the importing Member have made a preliminary affirmative
determination of dumping and injury caused by such dumping." (Emphasis added.) This more
specific language of Article 8.2, along with the Agreement’s recognition of the distinction between
provisional duties and the imposition of anti-dumping duties, makes it clear that there is no obligation
that the exploration of constructive remedies occur before the imposition of provisional measures.
76. In sum, the United States is of the view that Article 15 of the Agreement does not require any
particular substantive outcome, nor does it require any specific accommodations to be made on the
basis of developing country status. With respect to timing, an investigating authority is not compelled
to give special regard, or to explore possible constructive remedies, prior to the issuance of its
provisional findings. Thus, the United States believes that the EC’s interpretation of Article 15 was
permissible, and should be sustained in accordance with Article 17.6(ii).
IV. CLAIMS RELATED TO THE INJURY DETERMINATION AND THE
EXPLANATION THEREOF
A.
DEFINITION OF DOMESTIC INDUSTRY UNDER ARTICLE 4.1 OF THE ANTI-DUMPING AGREEMENT
77. In determining the scope of the domestic indust ry ( "Community industry") in this case, the
EC authorities explained –
In conclusion, that the 35 complainant companies represent a major proportion
[34 per cent] of total Community production within the meaning of Article 5(4) of the
basic Regulation and that they therefore constitute the Community industry within
Article 4(1) of the basic Regulation is confirmed.
The Anti-dumping Regulation defines "Community industry" as "the Community producers as a
whole of the like product or those whose collective output of the products constitutes a major
proportion, as defined in Article 5(4) of the total production of those products."
43 Article 5(4) of the
Regulation in turn defines "major proportion" as "those Community producers whose collective
output constitutes more than 50 per cent of the total production produced by that proportion of the
domestic industry expressing either support or opposition to the application."
78. India has not objected to the EC’s definition of domestic industry, but argues that the EC
should not have included other Community producers in its injury evaluation. 44 India has missed an
important point. In the view of the United States, the EC’s application of its regulation led to an
industry definition, injury investigation, and injury analysis that contravened Articles 3 and 4 of the
Agreement, because the EC limited the domestic industry to those producers that came forward to
affirmatively pursue the investigation.

43 See First Submission of India at para. 4.94.
44 First Submission of India at para. 4.95.

79. Article 4.1 of the Anti-dumping Agreement provides that
the term "domestic industry" shall be interpreted as referring to the domestic
producers as a whole of the like products or to those of them whose collective output
of the products constitutes a major proportion of the total domestic production of
those products
80. In the Bed Linens investigation, the EC defined the domestic like product as "bed linens of
cotton fibres."45 Article 4.1 would therefore have called for the EC to define the "domestic industry"
as the Community producers of bed linens of cotton fibres. The EC did not do so, but instead defined
the domestic industry as limited to those Community producers who had filed the application for an
investigation. This definition is inconsistent with Article 4.1. The EC ’s action in this case appears to
have been mandated by its Anti-dumping Regulation, 46 which defines the domestic industry as those
producers who filed the "complaint." 47 If the definition of industry employed in this case is
inconsistent with Article 4.1, and this definition was indeed mandated by the EC Regulation, then it
follows that the EC is systematically and repeatedly violating the Anti-dumping Agreement.
81. The EC’s basic regulation equates the "domestic industry" as defined in Article 4.1 of the
Agreement with the portion of the domestic indust ry that has demonstrated sufficient support to
permit initiation of the investigation under Article 5.4 of the Agreement. Such a reading of the two
articles misconstrues the relationship between the two articles.
82. If the EC were correct, Article 4.1 of the Agreement could have simply defined the domestic
industry as those producers who expressly supporte d the petition. But Article 4.1 does not, for
reasons that should be obvious. With such a defi nition, an injury investigation would be mostly a
pro-forma exercise in which the authorities would simply check whether the petitioning firms really
were materially injured. Article 5.4 does not provide a basis for the creation of such a self-selecting
industry. It does not reference or purport to define the term "a major proportion" as used in
Article 4.1.
83. The sole purpose of Article 5.4 is to provide a standard for determining whether a
investigation should be initiated. Neither on its face nor by implication does that Article purport to
affect the substantive requirements that an auth ority must meet in conducting an investigation, or
allow an authority to limit its investigation to those domestic producers who have supported an
application. Determining whether an application meets the requirements of Article 5.4 merely
involves determining the degree of support for the petition. Article 5.4 recognizes that the petitioning
producers may constitute only a portion of the "domestic industry" and distinguishes between "that
portion of the domestic industry" that expresses support for the petition and the "total production of
the like product produced by the domestic industry." Further, by using the phrase "on behalf of,"
Article 5.1 contemplates that those supporting an application as ascertained under Article 5.4 will be
representative of an industry that will often include other members, not as the EC regulation implies
that they will ordinarily constitute the entirety of the industry.
84. The gap in the EC’s reading of Articles 4.1 and 5.4 is illustrated by the shifts in its reasoning
supporting the instant determination. In both the provisional and definitive determinations in this
case, the EC defined the domestic industry by starting only with the complaining companies, and then

45 Definitive Regulation at para.9.
46 Council Regulation (EC) No 384/96 (22 Dec. 1995).
47 Definitive Regulation at para. 34. The term "complaint" used by the EC corresponds to the
"application" in Article 5.4 of the Anti-dumping Agreement and the "petition" in U.S. law.

eliminating certain companies within that group from consideration. 48 The EC never appears to have
even discussed the option of defining the domestic industry as the Community producers as a whole
of the like product. Rather, the EC explained th at "the finding that the 35 complainant companies
represent a major proportion of total Community production within the meaning of Article 5(4) of the
basic Regulation and that they therefore constitute the Community industry within the meaning of
Article 4(1) of the basic Regulation is confirmed." 49 In short, it appears from its contemporaneous
statement that the EC during its investigation never considered whether to include within the domestic
industry any non–petitioning producers. Effectively, then, the EC’s application of its Regulation
reads out of the Agreement any necessity to consider the industry consisting of the domestic
producers as a whole of the like product. Apparently in retrospect recognizing the shortcomings of
such a practice as a reading of the Agreement, in its first submission, the EC for the first time states
that, throughout the investigation, it applied "the option" in Article 4.1 of the Agreement "of defining
the domestic producers as a group or producers whose collective output constituted a ‘major
proportion of the total domestic production’ of the products in question."
50 The EC then goes on to
argue that "a Member may use both definitions of the domestic industry in the course of a single
investigation."51
85. The EC suggests that Article 4.1 gives the importing Member the option of choosing in each
case to define the domestic industry as all producers or only as the complaining producers. The
Agreement does not support this view. As the EC’s statement during its investigation reflect, such a
view effectively reads out of the Agreement any necessity to consider the industry as a whole. If this
reading of the Agreement were correct, there would have been no need to refer in Article 4.1 to the
domestic producers as a whole of the like products.
86. Such an interpretation contradicts the requirement of Article 3.1 that the injury evaluation
involve an "objective" examination of, inter alia , the impact of the dumped imports on "domestic
producers" of the like products. Article 3.1 on its face does not limit that inquiry to only those
domestic producers who support an investigation. Likewise, Article 3.6 refers to assessing the effect
of the imports "in relation to the domestic production of the like product." The EC’s interpretation
allows an authority to decide in advance that it will examine only some domestic production of the
like product. Indeed, an injury investigation that systematically excludes all producers except those
which submitted the complaint cannot be described as "objective." The EC’s interpretation of
Article 4.1 encourages the exact opposite of an "objective" examination, as it would let an importing
Member bias an injury investigation by initiating on the basis of a complaint filed solely by those
producers who are most adversely affected by certain imports, and totally ignoring the firms in the
same industry that are prospering.
87. Thus, Article 3.1 reflects that Article 4.1 establishes a preference for basing an injury
determination on examination of the domestic producers as a whole. Such an interpretation is also
borne out by the very specific requirements in Article 4.1 for excluding producers related to exporters
or importers and for defining an industry as consis ting of producers only with certain areas. It would
be anomalous for the negotiators of the Agreement to articulate such precise conditions for excluding
some domestic producers from the industry and not to include a cross-reference to Article 5.4 if they

48 Provisional Regulation at paras. 52-57, Definitive Regulation at paras. 32-34. The EC eliminated
seven companies that were found not to be complainants, one company whose core interests were found not to
be in the production of bed linen within the Community, one company that no longer produced bed linen, and
two companies that did not respond to the requests for information. The EC’s elimination of the non-responsive
complaining producers is further indicative of the way in which the EC’s approach deviates from the
requirements of the Agreement. Under Article 6.8, the EC should have relied on the facts available rather than
redefining the domestic industry to exclude the non-responsive producers.
49 Definitive Regulation at para. 34.
50 EC’s First Submission at para. 308
51 EC’s First Submission at para. 309.

had intended an injury inquiry could be conducted solely by an inquiry concerning the universe of
producers supporting an application.
88. The Agreement provides no better support for the revised version of the EC’s theory reflected
in its initial submission to this panel. Articles 3.4 and 3.5 specifically direct that an injury analysis
shall concern "the domestic industry." These provisions accordingly do not contemplate that an
authority will at its discretion use one industry de finition in a determination examining injury and
another definition in that determination for other purposes.
89. Notwithstanding its obvious bias in favor of complainant producers, the EC’s definition of
domestic industry may, as here, occasionally have the anomalous result of working to the detriment of
the producers which filed the complaint. In this particular case, some Community producers had
ceased production in the period prior to initiation, and therefore could not be included in the
"domestic industry" as defined by the EC’s basic regulation. Apparently in an effort to remedy this
result, the EC defined a separate pool of producers–"total Community producers" or "EC-15" for the
purposes of evaluating trends concerning production, consumption, and market share.
52 Notably, the
trends for these factors for the broader producer group were more indicative of injury than were the
trends for the restrictive "Community industry" de fined by the EC. India has claimed that the EC
acted impermissibly in looking to total EC-15 producers for any purpose in the injury evaluation. In
contrast, the United States believes that the EC acted inconsistently with the Agreement by not
including all Community producers in the domestic industry for the purposes of evaluating other
factors such as price and impact under Articles 3.1, 3.2, 3.4 and 3.5.53
90. Moreover, by using the standard for ascertaining the adequacy of support for an investigation
to define the industry to be investigated, the EC’s regulation fits poorly with Article 6 concerning the
conduct of investigations. Article 6.11 includes within the definition of "interested party " all
producers of the like product in the importing Member. Article 6.11 is part of the context against
which Article 3.4 must be interpreted. Investigating authorities are obligated under Article 6.1 to
provide all interested parties with notice of the information which the authorities require and ample
opportunity to present in writing all evidence which they consider relevant in respect of the
investigation in question. 54 Furthermore, Article 6.21 entitles all interested parties, and hence all
domestic producers, to a full opportunity for defense of their interests. Paragraph I of Annex II to the
Agreement reinforces this concept, by stating that "[a]s soon as possible after the initiation of an
investigation, the investigating authorities should specify in detail the information required from any
interested party, and the manner in which that information should be structured by the interested party
in its response." By excluding some domestic producers from the domestic industry a priori, the EC
not only contravenes its obligation to gather information from all domestic producers, but also appears
impermissibly to prevent non-complainant interested party producers from having the same degree of
participation and consideration that it affords to complainant interested party producers.
91. In sum, the EC erred not, as India alleges, in including information from non-petitioning
producers as part of its injury evaluation, but rather in including only some information from those
producers and in excluding them in general from the coverage of the investigation.

52 Provisional Regulation at para. 62.
53 The United States notes that, had the EC adopted the proper definition of the domestic industry, the
numerous Community producers which went out of business during the period of injury assessment (1992-July
1995) would have been included in the industry. Consequently, India’s Claim that the EC looked beyond the
domestic industry in making the injury evaluation would be rejected.
54 It is not clear from the facts available about the Bed Linens investigation whether the EC sought
information from the non-complaining Community producers.

B. CLAIMS CONCERNING SAMPLING
92. For the purposes of evaluating prices and profitability, the EC sent questionnaires to a sample
of 17 producers selected from the group of 35 that the EC defined as the Community industry. 55 In
the provisional Regulation, the EC explained that it selected companies to be included in the sample
in consultation with the complainant Eurocoton, and selected companies located in the four Member
States in which most of the production of the complainant companies occurs. The sample group
represented 20.7 per cent of total Community production.
56
93. The United States agrees with the EC and India 57 that the Agreement permits an importing
Member to use a sample of the domestic industry in evaluating the effects and impact of the dumped
imports. Although the Agreement does not explicitly refer to the use of sampling in this context, it
does specify that sampling is appropriate in other contexts, e.g., "using samples which are statistically
valid" to determine dumping margins, 58 and use of "statistically valid sampling techniques" to
determine support and opposition for an application in the case of fragmented industries. 59 T h e
United States notes that the critical criterion for sampling is that it be "statistically valid."
94. As the United States has discussed with respect to the EC’s domestic industry definition, the
EC defined the industry too narrowly, and as consequence, did not draw its sample from the
appropriate base of all domestic producers. While nothing in the Agreement required the EC to
describe the precise methodology by which it selected companies for inclusion in its sample, the Panel
must be able to discern that the sample is statistically valid. Further, the selection of the sample must
be, as the EC acknowledges, consistent with the EC’s obligations to conduct an "objective" injury
examination.
60 The only information the EC has provided is that it selected the companies from a
subset (companies within four Member States) of a subset (complaining producers) of the domestic
industry, and that the sample included the largest members of the first subset and "also smaller
producers."
61 A statistically valid sample must fairly represent the entire underlying population from
which the sample was taken. The correct population to be represented in this case was the entire
domestic industry; however, the EC drew its sample in a manner that systematically excluded a
significant part of that population in a manner that is manifestly likely to bias the results. For that
reason there is no basis to conclude that the sample was "statistically valid."62
C. CLAIMS REGARDING EC'S EXAMINATION OF INJURY FACTORS UNDER ARTICLE 3.4
95. Article 3.4 of the Anti-dumping Agreement specifically requires that the investigating
authorities’ examination of the impact of the dumped imports on the domestic industry
include an evaluation of all relevant economic factors and indices having a bearing on
the state of the industry, including actual and potential decline in sales, profits,
output, market share, productivity, return on investments, or utilization of capacity;
factors affecting domestic prices; the magnitude of the margin of dumping; actual and
potential negative effects on cash flow, in ventories, employment, wages, growth,
ability to raise capital or investments.

55 Provisional Regulation at 58-59.
56 Provisional Regulation at 61.
57 See First Submission of India at paras. 4.145- 4.146.
58 Article 6.10.
59 Article 5.4, note 13.
60 See First Submission of EC at para. 226.
61 Provisional Regulation at para. 61.
62 The United States does not take a position concerning the statistical validity of the EC’s actual
method for selecting the companies from the given pool.

96. As India points out, the EC did not include explicit findings concerning each and every factor
in Article 3.4.63 This allegation in itself does not, in the view of the United States, set out a violation.
The Agreement, in requiring that each factor be evaluated, does not require that the investigating
authorities make a finding as to each factor. Rather, Article 12.2 requires only that the authorities set
forth "in sufficient detail the findings and conclusions reached on all issues of fact and law considered
material by the investigating authorities." While all enumerated factors must be evaluated, not all are
necessarily material in any particular case.
97. While the United States does not believe that, in light of Article 12.2, investigating authorities
are required in each case to make a specific finding on each enumerated factor in Articles 3.2 and 3.4,
it should be discernible from the authorities’ determination that they evaluated each of the enumerated
factors. This objective may be achieved when a determination, through its demonstration of why the
authorities relied on the specific factors they found to be material in the case, thereby discloses why
other factors on which they do not make specific findings were accorded little weight. In the current
case, the United States shares some of India’s concerns about the adequacy of the EC’s findings
because the EC’s specific findings on the factors it addressed do not elucidate why it did not give
weight to factors it did not discuss.
64
98. The United States notes that the Panel in the dispute on Mexico - Anti-dumping Investigation
of High Fructose Corn Syrup from the United States discussed the issue of consideration of the factors
listed in Article 3.4. The panel stated that "consideration" of the factors is required in every case,
although such consideration may lead the investigating authority to conclude that a particular factor is
not probative in the circumstances of a particular industry and therefore is not relevant to the
particular determination.65 The United States does not support the EC’s efforts to dismiss the HFCS
panel’s discussion of this argument.66 That panel did not, as the EC argues, make its decision based
on "simplistic reliance on the inappropriate precedent of safeguard cases." Rather, the parties to the
dispute fully argued the issue to the panel, citing GATT anti-dumping determinations such as Korea
Resins.67
99. Nor does the United States agree that this Panel should reach a different conclusion than those
reached by the HFCS and Resins Panels on the basis of the EC’s argument that some of the
Article 3.4 factors are negative in character. In this regard, the EC argues that, because the phrase
"decline in" or "negative effects on" precedes some of the factors, these factors need not be considered
if they are positive. To support its related argument that the word "impact" denotes a negative
meaning, the EC contrasts the word "impact" as us ed in Article 3.4 of the Anti-dumping Agreement
with the reference in Article 6 of the Agreement on Textiles and Clothing to "the effect of the
imports." However, the EC’s argument ignores that Article 3.5 of the Anti-dumping Agreement refers
to "the effects of dumping , as set forth in paragraphs 2 and 4 of Article 3. Article 3.2 also refers to
the "effect" of the dumped imports on prices, and Article 3.4 discusses cumulative assessment of "the
effects" of subject imports from more than one country. The "relevance" of the Article 3.4 factors

63 First Submission of India at para. 4.47.
64 In its First Submission to the Panel, the EC provides a table setting out the required factors, noting
where some of the factors are discussed, and indicating that certain factors - such as productivity, return on
investments, capacity utilization, effects on cash flow, inventories, wages, growth, ability to raise capital or
investments - were "found not to be a significant independent factor." First Submission of EC at para. 250-255
and Table 4. The EC’s conclusion that these factors were found not to be significant, however, does not appear
to have been included in the EC’s provisional or definitive regulation, nor is it possible to discern from the EC’s
discussion of the factors it did find to be material why the other factors were not significant.
65 HFCS at para. 7.128.
66 See First Submission of EC at para. 288-289.
67 See HFCS at paras. 5.4666, 7.135-7.142 & n.610 (citing Korea – Anti-Dumping Duties on Imports
of Polyacetal Resins from the United States (Korea-Resins), BISD 40S/205 (Korea-Resins Panel Report),
adopted 27 April 1993).

extends beyond supporting an injury determination. Article 3.4 states that "all relevant economic
factors and indices having a bearing on the state of the industry" must be evaluated. Thus, even if a
factor does not lend support to an affirmative injury determination, the authority must evaluate it so
long as it sheds light on the condition of the domestic industry. For example, the Panel in Korea
Resins concluded that the investigating authority could not focus solely on factors supporting a
conclusion that the domestic industry would likely encounter difficulties while disregarding other
factors.
68
D. CLAIMS REGARDING TREATMENT OF ALL SUBJECT IMPORTS AS DUMPED IMPORTS
100. India argues that the EC acted inconsistently with Articles 3.1, 3.2, 3.4, 3.5 and 3.6 of the
Anti-dumping Agreement in that the EC failed to limit its examination to "dumped transactions only"
for the purposes of the injury determination. 69 India makes two main points in respect to this
argument. First, India challenges the EC’s failure to separate out transactions found to be dumped
from those found not to be dumped for the purposes of evaluating the volume of dumped imports
during the investigation period.
70 With respect to these claims, the United States generally supports
the views expressed in paragraphs 219-241 of the EC’s First Submission. The United States finds the
EC’s views to be reasonable in light of the Agreement’s requirement that investigating authorities
consider weighted average margins and the Agreement’s focus on "products" that are dumped 71 and
the effects of imports of those products on domestic producers of like products.72
101. India also challenges the EC’s apparent assumption that all imports from India were dumped
during the injury evaluation period (1992-1996).73 The EC denies that it makes such assumptions as
a matter of practice or that it specifically made such an assumption in this case. 74 If the Panel agrees
that the EC did not make such an assumption, there will be no need for the Panel to address India’s
claims on these counts.
102. Even assuming the EC did treat all subject imports during the injury assessment period as
dumped, that treatment would have been consistent with the Anti-dumping Agreement. The reasons
supporting the EC’s view that it acted consistently with the Agreement in treating all subject imports
as dumped during the period of investigation likewise apply with respect to the treatment of subject
imports during the portion of the injury assessment period that was prior to the dumping investigation
period.
75
103. In order to determine whether dumping is occurring, the importing Member may look at a
"snapshot" of time. As footnote 4 to Article 2.2.1 of the Agreement provides, the time period covered
by such a "snapshot" should be one year, but in no case less than six months. The determination of
dumping normally need not consider trends over ti me. In contrast, the requirements of Article 3.1
concerning a determination of injury necessarily contemplate that the importing Member will gather
information covering several years in order to evaluate volume and price changes. An importing
Member’s consideration of whether there have been significant absolute or relative increases in the
volume of dumped imports and of whether the dumped imports have to a significant degree depressed
or suppressed prices for the like product in the domestic market must be made in the context of an
appropriate time frame, which will almost always extend longer than the period of investigation for
making a dumping calculation. Indeed, the effects of import volume increases or price undercutting

68 Korea-Resins Panel Report, paras. 274-76, 287.
69 First Submission of India at para. 4.35.
70 First Submission of India at paras. 4.12-4.35.
71 Anti-dumping Agreement Article 2.
72 Anti-dumping Agreement Article 3.
73 First Submission of India at paras. 4.198-4.216.
74 First Submission of EC at paras. 340-345 and 351-353.
75 See First Submission of EC at paras. 219-241.

often take longer than a year to reach the level where they would be significant, and the impact of
those effects on the domestic industry’s condition may take even longer to become apparent.
Furthermore, the fact that execution of sales in some industries can take as long as a year, and that in
some industries sales are made pursuant to annual contracts, further demonstrates the need for
examining a multi-year period in injury investigations. The disparity between the typical period of
investigation of 12 months for calculating dumping and the several times lengthier period of
investigation for making an injury determination existed well before the Uruguay Round. Thus, the
negotiators were well aware that the period for ca lculating dumping would be shorter than that for
assessing injury. With this awareness, they reaffi rmed the requirement that investigating authorities
evaluate injury based upon an examination of volume and price effects and impact that inherently
would cover more than one year.
104. Since an injury assessment period of only one year would hardly be meaningful for making
the evaluation required under Articles 3.1, 3.2 and 3.4, the only way to assure that volume, price
effects and impact are assessed for the same period as that covered by the dumping determination
would be to extend by several years the investigative period for determining dumping, and require the
production and examination of several years’ worth of data on prices (and costs when appropriate).
This "solution" to India’s concerns would be unduly burdensome both to the authorities and to
exporters and foreign producers, particularly those in developing countries, and in this respect, would
be contrary to the spirit of Articles 6.10, 6.13 and 15.
105. The United States recalls the GATT Panel decisions in the Salmon cases.
76 In considering the
significance of the volume and volume increases of dumped imports, the United States had viewed all
imports of salmon from Norway during the three year injury period of investigation as "dumped" or
"subject" imports. In examining whether the United States had properly considered whether there had
been a significant increase in the volume of dumped imports, the Panels found that the United States
had met the requirements of, and had not acted inconsistently with its obligations under, Articles 3:1
and 3:2 of the Anti-dumping and Subsidies Codes.
77 The EC’s evaluation of the volume of subject
imports in the Bed Linen investigation was consistent with the Panel’s conclusions in the Salmon
cases. As the EC notes, the drafters of the Anti-dumping Agreement chose to use the same text in the
Agreement as that used in the Tokyo Round Codes and interpreted by the Salmon Panels.

76 Imposition of Anti-dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway
("Salmon Anti-dumping Duties "), ADP/87, adopted on 27 April 1994, BISD 41S/228; Imposition of
Countervailing Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway ("Salmon Countervailing
Duties") SCM/153, adopted on 28 April 1994, BISD 41S/576.
77 Salmon Anti-dumping Duties at paras. 498-501; Salmon Countervailing Duties at paras. 264-267.

ANNEX 3-4
ORAL STATEMENT OF EGYPT
FIRST MEETING OF THE PANEL
(11 May 2000)
1. The Government of the Arab Republic of Egypt decided to reserve its third party rights in this
case because of the systemic implications for this area of WTO law. Egypt is a substantial producer
and exporter of cotton and cotton products including bedlinen, and as such has a substantial interest
in the outcome of this proceeding, especially considering that the European Communities (EC) is the
destination for a significant proportion of Egypt's exports of cotton-type bedlinen. It must be said that
this is the first time that Egypt has participated in a WTO case as a third party.
2. Egypt is of the considered view that the initiation of anti-dumping proceedings, the
imposition of provisional duties, and the imposition of definitive duties on Egyptian cotton-type
bedlinen by the EC are unjustified and contrary to relevant rules of the World Trade Organization
(WTO). In this context, Egypt endorses all the arguments advanced by India in this case.
3. Egypt believes that the EC acted in breach of the procedural requirements of the WTO Anti-
dumping Agreement ("ADA") by launching an investigation on the petition of Eurocoton, an
association which did not have the backing of a significant proportion of Community producers of the
relevant products at issue. The European Co mmission ("Commission") had earlier terminated an
investigation it launched at the request of Eurocoton, after it became apparent that the petition did not
enjoy the support of other significant producers of bedlinen in the European Communities.
4. Prudence would have required the Commission to satisfy itself if the new complaint by
Eurocoton had been lodged by or on behalf the domestic industry producing a like product as required
by Article 5.4 of the ADA before taking any further steps. Had it scrupulously followed the
provisions of the ADA, it would have realised that the Eurocoton did not have the standing required
under Article 5.4 of the ADA to lodge a complaint. The EC's assertion that the complaint was filed
on behalf of the Community industry is not supported by the facts in this case. The investigation
revealed that those Community producers who supported the complaint were in the minority. Even
among them, several complainants had to be excluded for various reasons. As many as 7 complainants
had to be excluded because they were "found not to be complainants" by the Commission.
Furthermore, out of the remaining producers, three failed to co-operate with the Commission in the
course of the investigation and one was found to be no longer producing bed linen. Finally it was
found that one company in the sample had to be excluded because it imported a significant proportion
of the product under investigation from Pakistan. The level of co-operation from the remaining
Community producers was, on the whole, extremely low. Many producers failed to provide - at least
in non-confidential form - information, which is usually required during investigations of this kind.
5. In the instant case, the proportion of the complaining industry is extremely low (34 per cent)
but the Commission and Council claim that the thresholds set out in the EC basic regulation had been
met throughout the proceeding (Recitals 32 to 34 of the Regulation imposing definitive measures).
That the figure of 34 per cent is sufficient under the ADA, provided the remaining 66 per cent did not
object to the initiation of the investigation. This argument by the EC does not appear to be supported
by the evidence so far adduced in this case. Neither the non-confidential files made available to the
interested parties, nor the disclosure documents or the Regulation imposing definitive duties offers
conclusive proof that the complainants indeed represented 34 per cent of total EU production.

Furthermore, in order to ascertain whether the above-mentioned thresholds were met, the Commission
was supposed to have made a preliminary determination as to which producers were to be excluded
from the Community industry on the basis that they themselves were importers of the allegedly
dumped products. There is no mention of this determination in any of the available files open for
inspection.
6. It is the submission of Egypt that it is not sufficient for the complaining industry to represent
25 per cent of total Community production to pass the "representative" test provided for in ADA.
Given the above-mentioned facts, the Commission was supposed to have closely scrutinized whether
the remaining Community producers who co-operated with the investigation accounted for more than
50 per cent of the total production of bed linen in the EC. Since the co-operating producers were
found by the Commission to represent only 34 per cent and the other Community producers claimed
by Eurocoton to be supporting the complaint repr esented only 15 per cent of total EU production, it
can be concluded that all the producers in favour of the complaint accounted for 49 per cent of total
Community production.
7. Given the difficulties that had been experienced by Eurocoton in getting the support of other
Community producers, it could be inferred that the producers accounting for 51 per cent of
Community production were opposed to the complaint. The true position could have been
established, if the Commission had launched a thorough enquiry to ascertain the position of the
various producers of bed linen in the EC and verified the claims of Eurocoton that it represented a
"major proportion of the Community industry" within the meaning of the ADA. By failing to launch
this enquiry, the Commission was obliged to terminate the proceeding immediately. The
interpretation given to what the EC claims to be the relevant phrase in Article 5.4 i.e., "the authorities
have determined" is not supported by the context, object and purpose of the Article. The purpose of
Article 5.4 of the ADA is to safeguard the interests of exporters by requiring investigative authorities
not to initiate frivolous actions which could disrupt trade. Had the ADA wanted to give wide
discretion to investigative authorities, it would have stated so explicitly.
8. Contrary to the express wording of Article 5.3 of the ADA, the EC failed to examine
thoroughly the allegations in the complaint. It failed to take into account information available to it at
time of initiation pointing to lack of material injury caused by dumped imports. Even if the EC
carried out the examination, it failed to disclose this fact to the interested parties. As such, it acted in
breach of Articles 12.1 and 12.2 of the ADA. The EC's argument that in paragraph 81 of its First
Written Submissions seems to stretch the relevant language of the Article. A breach of any provision
of the WTO Anti-dumping Agreement could invalidate the decision made by a Member country.
Thus, it is not open to the EC to minimise or disregard its breaches of explicit provisions in the WTO
Agreement.
9. It is the contention of Egypt that in determining the normal value of the alleged dumped
product, the European Communities disregarded the provisions of Articles 2.2.1.1 and 2.2.2 of the
ADA. Costs calculated by the Commission were not based on the records kept by the exporters or
producers under investigation in the case of Egypt, nor were amounts for SGA costs based on actual
data submitted by the relevant parties. Instead, higher amounts for administrative, selling and general
costs than were ever incurred and properly reported in the records kept by the producer, were used in
the calculation of the constructed normal value. The Commission, in adding more SGA costs than
were ever incurred, violated the above provisions. Accordingly, the normal values have been
overstated resulting in artificially inflated dumping margins.
10. The argument of the EC in paragraph 137 of its first written submissions that they "were
correct to put certain limits on what data they would consider for the purposes of constructing the
normal value" is overstated. While in certain cases, adjustments could be made, the overriding goal is
that the use of any method should not result in excess profit margins. By inflating the figures, the EC

grossly exaggerated the profits of the 4 sampled Egyptian exporters permitting it to arrive at a higher
normal value and consequently an unrealistic dumping margin.
11. In establishing the margin of dumping in this case, the EC violated the provisions of
Article 2.4.2. Paragraph 46 of the EC Regulation imposing provisional duties notes that weighted
average constructed normal value "by type" was compared with weighted average export price "by
type" with regard to Egyptian exporters. In effect, the EC chose to apply the first option stipulated in
Article 2.4.2 of the ADA. However, its manipulation of the calculation by zeroing negative dumping
amounts on a per-type basis goes beyond what could legitimately be done within the bounds of
Article 2.4.2 of the ADA. Had the Commission followed strictly its own established practice, the
outcome would have been different. In failing to do that, it is clear that the EC was determined to
have bigger dumping margins.
12. In imposing provisional anti-dumping duties, the EC violated the provisions of Article 9.4 of
the ADA. The EC Regulations imposing provisional and definitive duties distinguished between
state-owned and private enterprises, while the investigation covered three state-owned enterprises and
one private enterprise. However, one weighted average dumping margin was calculated for the three
state-owned companies which was then applied to all state companies, regardless of whether or not
they offered to co-operate with the EC authorities during the investigation. The resulting margin was
13.5 per cent. An individual dumping margin of 9.1 per cent was calculated for the private
investigated company. However, the 9.1 per cent margin was not applied across the board to all
private companies including the non-sampled private companies which offered to co-operate with the
EC authorities during the investigation. Rather, th e EC authorities attributed the weighted average
dumping of the four companies in the sample, weighted on the basis of their export turnover to the
EC, and came up with a dumping margin of 13 per cent applicable to the entire private sector. Clearly,
the approach adopted by the EC is unjustified under the ADA. The EC should have been consistent,
rather than manipulate the relevant figures to enable it to achieve its objective.
13. It would appear that the standard practice of the EC in injury determinations is to consider all
imports of the products under consideration as dumped, once the weighted average dumping margin
has been established. In other words, all the relevant products originating in the investigated country
would be deemed to have been dumped. Follow ing this standard practice, the Commission noted in
the Regulation imposing provisional duties that:
"(67) Dumped imports from the three countries concerned increased from
33,825 tonnes in 1992 to 46656 tones during the investigating period i.e. an increase
of 12,831 tonnes or 38 per cent during the same period their market share increased
from 16.9 per cent to 25.1 per cent."
An examination of the evidence revealed that there was no segregation between dumped exports and
those that were not dumped. There is no textual support for the approach adopted by the EC in the
ADA. In fact, its approach is contrary to Articles 3.1, 3.2, 3.4, 3.5 and 3.6 of the ADA.
14. The EC's interpretation of Article 3.1 of the ADA is not supported by the cardinal rules of
interpretation laid down in Article 31 of the Vienna Convention on the Law of Treaties as clarified
and applied in a number of cases by the Appellate B ody starting with United States - Standards for
Reformulated and Conventional Gasoline (WT/ DS2/AB/R, adopted by the DSB on 20 May 1996).
The relevant words in Article 3.1 of the ADA are "dumped imports". Thus, if certain products are
not dumped, then they cannot be taken into account for the purposes of determining injury. The EC
has read too much into the provisions of Articl e 3.1 of the ADA a nd that should not be permitted by
the Panel.

15. It is Egypt's submission that by taking into account data of companies not supporting the
complaint to establish injury, the European Communities acted in breach of Article 3.1 (as well as
Articles 3.3, 3.4, 3.5 and 3.6). By ignoring data collected on sampled companies in its injury analysis,
the Commission failed to make an unbiased and objective assessment of the facts and thus acted
inconsistently with Article 6.10 in conjunction with Article 3.4, 3.5 and 3.6. Similarly by failing to
consider relevant data for the domestic industry on a factor-by-factor basis, the Commission also
acted inconsistently with Article 3.5 of the ADA.
16. In assessing whether the Community industry had suffered material injury, the Commission
appeared to have treated indifferently the EC indus try and the total EC production. It also drew a
number of conclusions relating to the situation of the EC industry on the basis of statistical
information concerning the total EC production. These indices are completely different and should be
treated as such, otherwise a distorted picture would be given. The evidence available in this case
shows that the EC industry is in a healthy state and could not have been injured by the imports of bed-
linen from the targeted countries. The following facts are indicative:
(a) The total production of bed linen by the EC industry increased by 8.7 per cent between 1992
and the period of the investigation. The fact that production by some producers in the EC fell
is irrelevant, since pursuant to Article 3 of the basic EC Regulation, the Commission must
only examine whether material injury had been caused to the relevant EC industry. The
allegation by the EC that the closure of certain companies was due to the alleged dumped
imports, and not attributable to other independent causes, is unsubstantiated by any evidence.
Carried to its logical conclusion, the EC argument would mean that the dumped products
were able to selectively injure only those industries that did not support the complaint lodged
by Eurocoton. There is no textual support for EC's interpretation of Article 3 of the ADA.
The more logical explanation of the reduction in production on the part of the non-EC
relevant industry is due to reasons other than dumping, as there is sufficient evidence to
indicate that global production in the EC had increased during the period of investigation.
(b) The Commission alleges that sales of total Community producers fell by 17 per cent and that
sales for the sampled producers fell by 1.5 per cent. However, for reasons best known to it,
the Commission fails to provide the figures that are really important, i.e. the sales trends in
volume terms of the EC industry, even though it does provide this information in value terms.
The Disclosure document indicates, however, that sales by the EC industry have actually
increased during the relevant period. Indeed, if the relationship between sales trends in
volume and in value terms of the sampled producers is contrasted to the trend in sales values
of the EC industry, it becomes apparent that the sales volume of the EC industry increased by
around 2.5 per cent between 1992 and the period of the investigation. Given this result, the
figures given by the Commission are quite dubious.
(c) The evidence discloses that between 1992 and the period of the investigation, there was an
increase of 4.2 per cent in sales value terms for the EC industry and an increase of 1.7 per
cent for the sampled producers. Thus, the assertion by the EC that the alleged dumped
products had an effect on domestic sales values is unsubstantiated.
(d) In value terms, the market share of the EC industry increased by a respectable 11.8 per cent
between 1992 and the investigation period. The market share of the sampled producers
increased by 9 per cent between 1992 and the investigation period and by as much as 17.2 per
cent between 1991 and the investigation period. In volume terms, the market share of the
sampled producers increased by 5.6 per cent between 1992 and investigation period. No data
was provided with respect to the EC industry. However, even if one considers that sales
volume remained stable as indicated by the Commission, the market share of the EC industry
must have, at least, increased by a similar ratio.

(e) The evidence discloses that there was an insignificant decrease in the level of employment as
far as the EC industry is concerned. Out of the 7,000 persons engaged in this sector, only
375 persons lost their jobs. It should be borne in mind, however, that production increased
during the same period, which points to the fact that increased efficiency rather than alleged
dumped imports was responsible for the decrease in the level of employment.
(f) Considering the decline in Community c onsumption, the Community producers have been
able to maintain remarkably stable prices and actually managed to increase them by over
3 per cent during the relevant period and remain profitable.
17. It follows from the forgoing that virtually all the indicators that Commission relied on to
demonstrate injury to the domestic industry actually proves the contrary. In other words, they confirm
that the EC industry in a good state of health and has not been injured by any dumped exports. From
the available evidence, the EC cannot controvert the fact that between 1992 and the period of
investigation, the EC industry increased its production, increased its sales, increased its market share,
increased its prices and remained profitable in spite of a significant decrease in consumption.
18. The Commission's observation that in analyzing data on the EC industry, account should be
taken of the 29 companies, other than the EC industry, which ceased or reduced bed linen production
in the Community between 1992 and the investigation period (page 18 of the disclosure) is irrelevant,
since injury must be assessed in respect of the basic Regulation and not in respect of the Community
production.
19. Among the requirements (dumping, injury, causality) necessary for anti-dumping duties to be
lawfully imposed, causality is the only purely legal requirement. The causality requirement will be
satisfied under the ADA when two conditions are pr oved: that dumping through its effects caused
injury to the domestic industry producing a like product; and that the injury to the domestic industry is
not to be attributed to any other factor.
20. The Commission's assertion that it satisfied both conditions is not supported by the evidence.
In paragraphs 95-99 of the Regulation imposing provisional duties, the Commission noted that "it can
be concluded that there was a direct causal link between these imports and the material injury found".
What is intriguing is that it was only after making this finding that the EC examines whether other
factors could have caused the injury. The approach adopted by is inconsistent with Article 3.5 of the
ADA.
21. There is no evidence that the EC took into acco unt in its analysis the fact that consumption of
the like product in the EC decreased over the relevant period. Had it taken into account, it could not
have arrived at the conclusion that the alleged dumped products were the source of injury to the EC
industry. By ignoring this important fact, the EC failed to make a fair and objective determination
under Article 3.4 of the ADA.
22. Last but not least, the EC acted in breach of Article 15 of the ADA, as it failed to explore the
possibilities of constructive remedies before imposing antidumping duties on Egypt and the other
developing countries. At no point in time did the EC suggest to the Egyptian exporters the possibility
of giving, for example, price undertakings. It appears that the EC is of the view that the offer has to
come from the exporters. Its interpretation of the provisions of Article 15 is erroneous for the simple
reason that since it is a legal obligation which has to be fulfilled by developed countries anytime they
contemplate on imposing antidumping duties, they should have suggested to the developing countries
involved whether or not they would be interested in offering price undertakings. By failing to offer
Egyptian exporters the possibility of giving price undertakings, the EC acted inconsistently with the
provisions of Article 15 of the ADA.

ANNEX 3-5
ORAL STATEMENT OF JAPAN
FIRST MEETING OF THE PANEL
(11 May 2000)
The Government of Japan would like to express its appreciation to the Panel for providing
this opportunity to present its views on the important issues raised in this proceeding. In our
presentation today, we wish to focus on the four issues set out in our written submission and,
furthermore, would like to respond to several of the arguments raised by the United States in its own
submission.
I. ARTICLE 2.4.2 – ZEROING
From a systemic perspective, the issue of "zeroing" is one of the most important issues before
the Panel in this particular case. We urge the Panel to think very carefully about how it should handle
this issue.
For the reasons put forth in our written submission, Japan believes that the EC practice of
using "zeroing" dumping margins is not consistent with the requirements of Article 2.4.2. This
provision explicitly calls for the "existence of margins of dumping" to be based on a weighted average
comparison. A proper weighted aver age does not arbitrarily raise some of the figures in the average
in order to simply increase the final result of the weighted average.
The EC seems to believe that if it properly weight-averages just once within the product
category, it need not then carry out proper weight-averages in the next stage of its aggregation across
the various product categories. The United States has also embraced this argument. This argument,
however, ignores the plain meaning of the provision at issue.
The text of Article 2.4.2 calls for a weighted average based on "all" comparable export
transactions, not just those transactions found to be dumped. The first sentence of Article 2.4.2
explicitly calls for a weight average of the "prices" of export transactions. Yet, setting the value of the
non-dumped product category to zero essentially amounts to resetting the "prices" of the underlying
export transactions. Nothing in Article 2.4.2 contemplates such rigging of the export prices before
conducting a proper overall weighted average.
Nor does Article 2.4.2 in any way mention subdividing the analysis and then using the
weight-average methodology only for part of the anal ysis. Such an approach ignores some words in
the provision and instead tries to introduce other concepts into the provision.
The US submission largely repeats the logic that the United States offered during the Uruguay
Round to justify its then practice of looking at individual transaction prices. During the Uruguay
Round negotiations, the US argued that there was no rationale to reduce dumping liability by
deducting the amount by which certain prices of products into the importing country exceed those in
the home market. However, that logic being opposed by the other countries, the Anti-dumping

Agreement adopted Article 2.4.2 that embraced the concept of averaging. Thus Article 2.4.2 should
be interpreted to represent a new set of obligations for WTO Members..1
The US submission itself reveals the important underlying logic behind Article 2.4.2. In the
example given, the United States argues that through averaging, the company in question would not
have been found to be dumping. That is the exact point. Article 2.4.2 reflects the basic concept that a
company should not be subject to antidumping measures if it has so many sales at non-dumped prices
and, as a result, a complete and fair weight-average margin shows only de minimis dumping.
Indeed, the unfairness of such an approach can be seen in this case. A company that had not
been dumping under a proper weight-average comparison was suddenly deemed to have been
dumping because of the EC methodology. The plain meaning of Article 2.4.2 does not permit such an
unfair methodology.
II. ARTICLE 2.2.2 – "PROFITS"
Japan believes that Article 2.2.2(ii) does not allow the exclusion of below cost sales before
determining the profit amount. If they choose this option, the authorities must determine the weight
average of the actual profit margins reported by the exporters or producers in their accounting records,
or reflected in the price and cost of the transactions at issue. The authorities cannot modify these
actual profit margins.
This interpretation reflects both the plain text and the overall context of Article 2.2.2 (ii).
This provision does not contain the concept of an "ordinary course of trade". Thus, the EC and US
interpretation, which grafts this concept onto Article 2.2.2 (ii), contains several flaws in the matter of
treaty interpretation that we discussed in our written submission, and simply cannot be considered a
permissible interpretation of this provision.
The US Submission confuses two distinct concepts. Article 2.2.1 permits the exclusion of the
prices of a particular exporter that are below cost from the normal value calculation of that exporter.
That concept of disregarding the particular home market sales in determining the normal value
stipulated in Article 2.2.1, however, is quite different from the methodology evoked in Article 2.2.2
(ii) to determine the profit and selling, general, and administrative (SG & A) amount for use in a
constructed value. Article 2.2.2 (i-iii) provides guid ance as to how the authorities may identify, at a
more general level, a surrogate profit and the SG & A amount as the constructed value. In the real
economy, even those companies that are quite profitable rarely earn a profit on all of their sales.
The Panel must adhere strictly to the wording of the provision. Japan believes that the
language of the provision, understood in context, simply does not permit the authorities to exclude
below cost sales.
III. ARTICLE 3 – "DUMPED IMPORTS"
In various places, Article 3 refers to the concept of "dumped imports". Japan believe that this
language means that the injury determination, set forth in Article 3, must reflect the authorities’
assessment of only "dumped imports", and not the imports that have not been found to be "dumped".

1 See generally Terence P. Stewart, et al., The GATT Uruguay Round: A Negotiating History ( 1986-
1992) (1993): page 1537-1543, discussing the negotiations concerning use of Weighted Averages in the
Calculation of Export Prices and Normal Values.

This language has a readily discernible plain meaning. If the authorities find that some
imports are "dumped" and that others are not "dumped", then the authorities must distinguish
between the two types of imports when making injury determinations. The fact that some imports
from a company may be "dumped" does not give the authorities a license to assume that all imports
from that company should be deemed as having been "dumped".
Our written submission discusses the problems with the various EC arguments on this point.
The US submission stresses the argument that the authorities must look at longer periods of time for
the purposes of injury determination, and that they cannot be expected to conduct an analysis for that
entire period. That may be true, but the United States never explains why those sales are presumed to
have been dumped when the relevant sales have yet to be investigated.
More importantly, the United States never explains why some portion of the sales
affirmatively found not to have been dumped shou ld be deemed to have been dumped. Allowing
some "dumped" imports to taint all imports from that company seriously skews the fundamental
injury analysis of Article 3. The core analysis of Article 3.1 and 3.2 requires the assessment of the
volume and price impact of "dumped imports". According to the EC and US interpretations, the
volume of actually "dumped" imports could be lower than the volume presumed to have been
dumped, although the authorities would never realise this discrepancy because they would neither
have to nor try to distinguish the dumped from non-dumped imports.
IV. ARTICLE 3.4 – "ALL RELEVANT ECONOMIC FACTORS AND INDICES"
Japan believes that the language of Article 3.4 requires all listed factors to be considered.
Such list of factors in Article 3.4 is the minimum requirement that must be evaluated by the
authorities. The degree of importance of each factor may vary from case to case, but all of the factors
must be fully considered and evaluated in each case. In other words, the authorities may not exclude
certain factors because they deem these to be irrelevant.
Note that we do not suggest a mechanical rule, but it must be possible to discern from the
decision of the authorities themselves, how each factor has been considered and why the factor was
deemed not important in a particular case.
This concludes our statement.

ANNEX 3-6
ORAL STATEMENT OF THE UNITED STATES
FIRST MEETING OF THE PANEL
(11 May 2000)
I. INTRODUCTION
1. For the record, my name is Bruce Hirsh and I am with USTR Geneva. With me today are
Mark Barnett and Peter Kirchgraber of the Department of Commerce in Washington. It is a pleasure
for us to appear before you today to present the views of the United States in this proceeding. The
purpose of this oral statement is to highlight certain aspects of our written statement, in light of issues
raised by other third parties, and to comment on new issues raised in those third party submissions.
My colleague Mr. Barnett will begin our presentation with a discussion of dumping issues. I will then
conclude with a discussion of injury and one other issue.
II. CONSTRUCTED VALUE PROFIT
2. With respect to constructed value profit, as stated in our third party written submission, the
United States disagrees with India’s interpretation of Article 2.2.2(ii), because it would artificially
limit the permissible range of data from which constructed value profit may be calculated, where no
such limit exists in the Agreement. The United States would like to stress the following points.
3. India argues that Article 2.2.2(ii) – specifically the terms "weighted average," and the plural
forms "amounts," and "exporters and producers" – expressly excludes the use of selling, general and
administrative expenses (SG&A) and profit data from a single company. This argument is without
merit.
4. With regard to the use of plural forms, such as "amounts" and "exporters and producers," it is
common both in general usage, and in the particul ar context of the Anti-Dumping Agreement, that
plural forms are understood to include both the si ngular and the plural. If plural terms were
automatically read to exclude the singular, then, for example, a domestic industry composed of a
single producer could never obtain relief from dumping. Such a result could not have been intended.
5. The United States concurs with the EC’s view that Article 2.2.2(ii) does not require a
minimum number of companies to be used in calculating profit and SG&A amounts. It does not
forbid an investigating authority to use a single company as the basis of this calculation, nor does it
require it to use more than one company.
6. The United States likewise concurs with the EC that Article 2.2.2(ii) – specifically, the phrase
"actual amounts incurred and realized by other exporters or producers" – does not prohibit an
investigating authority from excluding below-cost sales from constructed value calculations of profit.
7. Article 2.2.2(ii) contains no explicit requirement that sales not in the ordinary course of trade
should be included in, or excluded from, these calculations. However, the concept of ordinary course
of trade is integral to the very definition of dumping. Article 2.1 of the Agreement provides the basic
definition, that a product is dumped when "the export price of the product exported from one country

to another is less than the comparable price, in the ordinary course of trade , for the like product
when destined for consumption in the exporting country."
8. Consistent with this basic definition of dumping, when sales in the domestic market are in
such low volumes that they do not permit a proper comparison, or, when there are no sales of the like
product in the ordinary course of trade in the exporting country, Article 2.2 of the Agreement provides
for the use of a constructed normal value. When below-cost sales have been made, Article 2.2.1
makes clear that investigating authorities are under no obligation to consider them in the
determination of normal value, provided that certain conditions have been met. Thus, the type of
situation in which an investigating authority may have to resort to constructed normal value is when
all of a producer’s or exporter’s domestic market sales have been made below the cost of production.
9. Moreover, it is consistent with the overall operation of Article 2 of the Agreement to exclude
the profit on sales not in the ordinary course of trade from the figures used pursuant to
Article 2.2.2(ii). Indeed, excluding sales below cost avoids the creation of perverse incentives that
otherwise would reward most those exporters and producers with the greatest amount of sales not in
the ordinary course of trade. Such an unfair result could not have been intended.
10. The United States also respectfully disagrees with India’s claim that Article 2.2.2 is clearly
hierarchical in nature. While there is an explicit hierarchy as between the chapeau of Article 2.2.2
and the three alternative methods described under Article 2.2.2(i) through (iii), we do not agree that
the Agreement contains a hierarchy or preference among the three alternative methods, based on the
order in which they appear. It is permissible to infer from the presence of an explicit hierarchy
between the chapeau and the three alternatives that follow, and from the absence of such a hierarchy
among the three alternatives, that the drafters of the Agreement intended no such hierarchy to exist
among Article 2.2.2(i), (ii), and (iii). Such an interpretation is consistent with Article 31(1) of the
Vienna Convention, which provides, inter alia , for a good faith interpretation of treaties in light of
their object and purpose.
11. It also must be noted, in response to India’s argument, that dumping is both a
producer-specific and a product-specific determination; therefore, the chapeau of Article 2.2.2
expresses a clear preference for the use of actual data of the producer or exporter under investigation
for sales of the like product in the ordinary course of trade. When the chapeau methodology cannot
be applied, it is clear that any of the three alternatives that follow may be applied instead, whether it
be producer-specific, as in Article 2.2.2(i), product-specific, as in Article 2.2.2(ii), or any other
reasonable means, as in Article 2.2.2(iii). No hierarchy is intended or implied among Articles 2.2.2(i)
through (iii).
12. For these reasons, the United States believes that India’s interpretation of the constructed
normal value profit provisions of Article 2.2.2(ii) should be rejected.
III. THE ZEROING OF NEGATIVE DIFFERENCES BETWEEN NORMAL VALUE
AND EXPORT PRICE
13. Turning now to the issue of zeroing negativ e differences between normal value and export
price, as stated in the United States’ submission, the Anti-Dumping Agreement does not prohibit the
EC from zeroing such negative differences. In our written submission, we discussed this issue in
some depth. Rather than repeat that detailed explanation, we would like to emphasize the single most
important point in that discussion: the zeroing of negative differences between normal value and
export price, about which India complains, takes place after the step in the calculation of dumping
margins to which Articles 2.4 and 2.4.2 apply.

14. Article 2.4 provides for a fair comparison between export price and normal value. In
particular, it contemplates that comparisons normally must be made on a level-of-trade basis, a
product-specific basis and a time-period basis. Consequently, even though Article 2.4 uses singular
terms such as "export price" and "normal value," the fair comparison requirement necessitates that,
depending upon the product subject to investigation, there may be as many as several thousand
comparisons taking place – with each comparison, for example, representing a particular product
configuration sold at a particular level of trade.
15. Article 2.4.2 requires that, in making comparisons between export price and normal value,
each comparison shall be made either on a weighted-average-to-weighted-average basis or a
transaction-to-transaction basis. In other words, in a given investigation, if there were multiple export
price and normal value transactions of a particular product configuration at a particular level of trade,
the comparison between them must be made either on a weight-average-to-weight-average basis or on
a transaction-to-transaction basis; rather than comparing individual export price transactions to
weighted-average normal values, as some administering authorities used to do.
16. That, however, is as far as Articles 2.4 and 2.4.2 go. They establish that an importing country
is permitted to collect anti-dumping duties equivalent to the positive differences between export price
and normal value on that product-specific, level-of-trade-specific basis. Those Articles, and the
Anti-Dumping Agreement itself, do not address how an administering authority is to go about
combining all of those product-specific, level-of-trade specific dumping levels into an overall
anti-dumping duty rate. As we demonstrated in our written submission, the mathematical process of
zeroing negative margins is simply a means by whic h an importing country may be certain to collect
dumping duties equivalent to all of the positive differences between export price and normal value.
The Anti-Dumping Agreement does not require that the importing country credit an importer for not
dumping. To read such a requirement into the Agreement would effectively counter-act the explicit
requirements regarding fair comparisons contained in Article 2.4.
IV. THE PRIOR, TERMINATED INVESTIGATION
17. With respect to India’s argument regardin g the prior, terminated investigation, the
United States disagrees with India’s claim that the EC was required to consider the termination of the
earlier investigation into bedlinen prior to initiating the investigation at issue before this panel.
Articles 5.2 and 5.3 of the Anti-Dumping Agreement discuss the basic requirements for an application
for an investigation and the investigating authorities’ evaluation of that application. The Agreement
does not require the application to contain contrary evidence, nor are the investigating authorities
obligated to weigh the evidence in the application against contrary evidence. To that end, the fact that
a prior investigation involving a different mix of countries was terminated following the withdrawal
of the complaint by the European producers does not appear to go to the accuracy or the adequacy of
the evidence provided in the application for the current investigation.
V. SUPPORT BY ASSOCIATIONS
18. Next, as explained in our written submissi on, the United States disagrees with India’s
interpretation that Article 5.4 prevents an investigating authority from considering support for an
application for relief from an association of domestic producers. Article 6.11 of the Anti-Dumping
Agreement specifically provides that "a trade and business association a majority of the members of
which produce the like product in the territory of the importing Member" qualifies as an interested
party within the meaning of the Agreement. This recognition is important, particularly with respect to
maintaining the ability of very fragmented industr ies, such as those producing various agricultural
products, to exercise their right to seek relief under the Anti-Dumping Agreement. Moreover,
Article 6.2 of the Agreement provides that interested parties are entitled to a full opportunity to defend
their interests in an anti-dumping investigation. Thus, without positing whether the EC’s

determination of industry support, as a factual matter, was consistent with the Agreement, the
United States contends that the EC’s consideration of the position of associations of EC producers in
determining industry support was permissible under the Agreement.
VI. CLAIMS RELATING TO ARTICLE 15 TREATMENT
19. On another issue, the United States is of the view that Article 15 of the Agreement provides
important procedural safeguards to developing countries when their essential interests are at stake, but
does not require any particular substantive outcome, nor does it specify any particular
accommodations which must be made on the basis of developing country status.
20. In particular, the United States respectfully differs with India about the nature of the second
sentence of Article 15. In the view of the United States, the second sentence imposes a procedural
obligation to "explore" the "[p]ossibilities of constructive remedies provided for by this Agreement..."
The word "explore" cannot fairly be read to impl y an obligation to reach a particular substantive
outcome; it merely requires consideration of these possibilities. Construing a nearly identical
provision of the Tokyo Round Anti-dumping Code, the Panel in Cotton Yarn From Brazil reached the
same conclusion.
21. The United States likewise disagrees that the second sentence of Article 15 required the EC to
explore the possibilities of constructive remedies prior to its imposition of provisional anti-dumping
duties. We also reject India’s argument regarding the timing for the exploration of price undertakings.
Article 8.2 explicitly provides that price undertakings shall not be sought or accepted unless
 the
investigating authority has made a preliminary determination of dumping and injury caused by such
dumping. This more specific language of Article 8.2, along with the Agreement’s recognition of the
distinction between provisional duties and the application of anti-dumping duties, makes clear that
there is no obligation that the exploration of constructive remedies occur before the imposition of
provisional measures.
22. In sum, the United States believes that the EC’s interpretation of Article 15 was permissible,
and should be sustained.
VII. INJURY ISSUES
23. We turn now to highlighting certain points made by the United States on material injury.
Article 6.10 of the Anti-Dumping Agreement permits investigating authorities, in certain
circumstances, to make dumping determinations and to calculate dumping margins on the basis of a
limited examination of foreign producers/exporters and products either by sampling or by examining
the largest percentage of the volume of exports which can reasonably be investigated. India, Egypt
and Japan suggest that when investigating authorities use either of these methods to assess dumping, it
must also assess the effects of dumped imports on the domestic industry, by considering only imports
that have specifically been found to have been dumped. The United States disagrees.
24. Such a requirement would defeat the purpose of the limited examination for which
Article 6.10 provides. The purpose of this Article is to permit authorities to apply the results of such a
limited examination to non-examined foreign producers/exporters or products. Further, Article 2.4 of
the Agreement permits investigating authorities to calculate dumping margins by comparing
weighted-average-to-weighted-average figures. India’s approach would render this provision a
nullity; the importing Member would still have to perform a transaction-to-transaction comparison to
know whether each import was dumped.
25. The EC’s use of all imports from the subject countries to conduct its injury analysis in this
investigation was consistent with Article 3 of th e Anti-Dumping Agreement. If the reading asserted

by India were correct, then an importing Member would not be permitted to consider for injury
purposes the volume and price effects of any imports that fall outside the typical twelve-month period
used by most investigating authorities as the period of investigation for determining dumping. Just
last week, on 5 May 2000, the WTO Committee on Anti-Dumping Practices adopted the Draft
Recommendation Concerning the Periods of Data Collection for Anti-Dumping Investigations, which
states that the period of data collection for investigations normally should be twelve months for
dumping and at least three years for injury. All parties here today, including India and Japan, were
active participants in the consensus-building process which led to the adoption of the Draft
Recommendation. In our written submission, the United States explained why it is usually necessary
to examine a period of at least three years for injury purposes. In particular, we noted that Article 3
contemplates a comparative evaluation of the import volumes and prices of the dumped imports over
time and of the relevant Article 3.4 industry factors. Thus, Article 3.2 explicitly requires the
investigating authority to consider whether ther e has been a significant increase in the absolute
volume or market share of dumped imports, and whether there has been significant price undercutting
by the dumped imports or whether the effect of the dumped imports is to depress or suppress prices to
a significant degree. In order to determine whether there have been significant volume increases or
significant price effects, the investigating authority must look at the volumes and prices for both the
imports and the domestic like product over a period of several years.
26. Thus, the injury investigation, unlike the dumping investigation, cannot focus on a relatively
short period of time. In order to consider whether there have been significant volume or price effects,
it usually will be necessary to compare the volumes and prices of the imported products and any
changes in those volumes or prices to the volumes, prices, and any changes for the domestic product.
Further, under Articles 3.4 and 3.5, an assessment of the impact of dumped imports on the domestic
industry inevitably requires that the investigating authority conduct a year-to-year comparative
analysis of the factors bearing on the state of the industry. The language of Article 3.4 is explicit on
this point in at least one respect, that is, that the factors to be considered include "actual and potential
declines in sales, profits, output, market share, productivity, return on investments, or utilization of
capacity."
27. India, Egypt and Japan fail to explain how their interpretation would be applied in making a
threat determination under Article 3.7. That Article allows the investigating authority to make an
affirmative threat determination where a totality of the factors lead to the conclusion that "further
dumped exports are imminent." Among the factors are the exporter’s available capacity and
imminent capacity increases, which indicate "the likelihood of substantially increased dumped
imports." If the investigating authority must segregate dumped and non-dumped imports from the
same exporter, how is the investigating authority to guess whether the exporter is likely to devote
available or increased capacity to dumped exports or to non-dumped exports?
28. The approach suggested by India, Egypt and Japan would require the importing Member to
make a segregated injury analysis for each import from each company found to be dumping. First, the
importing Member would be required to trace each import back to production and exportation and
then follow it through entry into and sale within the importing Member in order to evaluate the
volume and price effects and impact on the domestic industry. This would create any number of
impracticalities. For example, the purchaser of imported product would be unlikely to know whether
the particular import was dumped or not. Without this information, the investigating authority would
be unable to compare the purchase prices for the dumped imports, versus those for non-dumped
imports, with those for the domestic product. In turn, the investigating authority would be hindered in
its ability to determine the price effects of the dumped imports.
29. Moreover, the interpretation suggested by India, Egypt and Japan is inconsistent with
Article 3.3. That Article provides that as long as certain conditions are met, "where imports from
more than one country are simultaneously subject to anti-dumping investigations, the investigating

authorities may cumulatively assess the effects of such imports." This provision clarifies that all
imports from the subject countries may be considered in the injury determination. Japan argues that,
while the discretion to cumulate applies to all imports from the subject countries, investigating
authorities must make their injury determinatio ns based on segregated cumulative data covering
solely dumped transactions. That, however, is not what Article 3.3 states. Rather, Article 3.3
explicitly states that the investigating authority may cumulatively assess the effects of "such" (i.e., all)
imports from the subject countries.
30. If the interpretation urged by India, Egypt and Japan were correct, that would mean the
drafters of Article 3 intentionally created an anomaly: in multi-country investigations, investigating
authorities could assess the effects of all imports from the subject country, whereas, in single-country
investigations, investigating authorities would be required to make an import-by-import dumping
determination and then could consider the effects only of imports specifically found to have been
dumped.
31. Contrary to Egypt’s suggestion in paragraph 22 of its submission, application of the rules of
interpretation set forth in Article 31 of the Vienna Convention supports the EC ’s interpretation of
Article 3 of the Anti-Dumping Agreement. The EC’s interpretation gives meaning to all the terms of
the Article in their context and in the light of the object and purpose of the Anti-Dumping Agreement.
32. Further with respect to Article 3, the United States wishes to address one additional argument
summarily made by Egypt. At paragraph 34 of its written submission, Egypt states that the causality
requirement can be satisfied under the Anti-Dumping Agreement when two conditions are proved: (1)
"that the dumping through its effects caused injury to the domestic industry producing a like product;"
and (2) " that the injury to the domestic industry is not attributed to any other factor." The
United States agrees with the first condition stated by the Egyptians, but does not agree with the
second condition. Article 3.5 of the Anti-Dumping Agreement requires investigating authorities to
"examine any known factors other than the dumped imports which at the same time are injuring the
domestic industry, and the injuries caused by these factors must not be attributed to the dumped
imports." Thus, the Agreement prohibits investig ating authorities from attributing to the dumped
imports the injuries caused by factors other than the imports. However, it plainly contains no
requirement for a finding that the injury to the domes tic industry is not attributed to any other factor.
Such a requirement would mean that the dumped impor ts must be the sole cause of injury to the
domestic industry – a requirement that is patently absent from the Agreement. Indeed, it is a basic
premise of the Anti-Dumping Agreement that dumping need not be the exclusive cause of injury.
33. Egypt, at paragraph 35 of its submission, objects to the fact that the EC considered other
factors after first determining that there was a causal link between the dumped imports and the
material injury found. In the United States’ view, investigating authorities may consider the matters
required by the Agreement in any order they choose, so long as they set forth in sufficient detail and
with sufficient clarity to ascertain their reasoning, the findings and conclusions required by
Article 12.2.1.
34. Turning to Article 3.5 of the Anti-Dumping Agreement, the United States has addressed at
length in its written submission its views concerning the EC’s definition of the domestic industry. To
summarize, the United States believes that the EC acted inconsistently with Articles 3, 4, 5 and 6 of
the Agreement by limiting the domestic industry to those producers who supported the application for
an investigation. The Agreement in no way indicates that the group of producers sufficiently
representative under Article 5.4 constitutes the "domestic industry" defined in Article 4.1 as the
producers as a whole of the like product. The EC’s practice reflected in this case will obviously skew
the data in favor of the domestic industry in most cases. Yet the fact that the EC violated the
Agreement did not necessarily mean that the EC could not have found material injury in a lawful
manner. If the EC had properly defined the industry in this case, it would have included in the

industry those producers who went out of business just prior to the initiation of the investigation, and
whose data the EC in fact relied on to support the affirmative injury finding.
VIII. ANTI-DUMPING MEASURES NOT EXCEPTION (JAPAN’S SUBMISSION)
35. Finally, the United States disagrees with Japan’s characterization, in their third party
submission, of anti-dumping measures as an exception to free-trade principles of the WTO. Quite to
the contrary, the right conferred by Article VI and the Anti-Dumping Agreement to impose
anti-dumping measures forms part of the carefully crafted balance of rights and obligations under the
WTO.
36. The Anti-Dumping Agreement embodies positive rules that are part of the WTO balance of
rights and obligations. They are not an exception that must be proved or which is subject to any
special scrutiny. Similar arguments have been recognized by WTO panels and the Appellate Body.
For example, in Wool Shirts and Blouses from India (WT/DS33/AB/R), the Appellate Body
recognized (at page 16) that it must respect the balance of rights and obligations embodied in the
transitional safeguard mechanism of Article 6 of the Agreement on Textiles and Clothing. It rejected
the argument that the positive obligations in the transitional safeguard mechanism were "exceptions"
imposing the burden of proof on the party assertin g their use. In doing so, the Appellate Body
distinguished between affirmative defences, that is, limited exceptions from obligations under certain
other provisions of the GATT 1994, and positive rules that establish obligations in and of themselves.
37. In summary, anti-dumping measures are subject to the same rules of interpretation as any
other provision of the WTO Agreements. Therefore, the Panel should decline to endorse Japan’s
assertion that anti-dumping measures constitute an exception to free trade principles or, by
implication, require the application of a heightened level of scrutiny.
IX. CONCLUSION
38. Thank you very much for the opportunity to present our views. We will be happy to receive
any questions from the Panel or the parties.

ANNEX 3-7
RESPONSES OF EGYPT TO QUESTIONS FROM
THE PANEL AND THE EUROPEAN COMMUNITIES
CONTENTS
Page
I. REPLIES TO THE P ANEL’S QUESTIONS.....................................................................603
II. REPLY TO THE EC’S QUESTION...................................................................................607
I. REPLIES TO THE PANEL’S QUESTIONS (22 May 2000)
Q.1. India’s argument against zeroing relies on the language of Article 2.4.2 concerning
weighted average prices. Assume, for the sake of argument, that a transaction-to-transaction
comparison were used. There is no weighted average of prices in that case. Would zeroing still
be prohibited? If so, why? If not, how would the overall dumping margin be calculated from
the individual transaction margins? How is th is different from the calculation of an overall
margin from individual model margins?
Reply
Concerning "zeroing" in case of establishing dumping margin on the basis of the transaction-
to-transaction method, we would like to clarify th at the weighted average method could leads to
artificial inflated dumping margin, also it could leads to remedies being applied where no dumping in
reality exists, the volume of dumped imports may not be determined by using this approach. The
extent of the dumping may will be incorrect or alternatively give a result showing no dumping when
dumping is occurring. Calculating dumping margin on the basis of "transaction-to-transaction"
comparison, the calculation of the overall dumping margin without "zeroing" will be determined by
summing up dumping amount for each transaction whether the transactions are dumped or non-
dumped. Transaction-to-transaction methodology provides the information, which identifies the
dumping, and the volume of dumped goods, it also reflects any variations in export price and normal
value over the investigation period.
Q.2. Would the third parties indicate whether, in their view, in a case in which there is
information from more than one exporter or pr oducer available for use in the calculation of
profit amounts under Article 2.2.2(ii) (including the case in which a proper sample includes
more than one exporter or producer), the invest igating authorities may nonetheless choose to
rely on the information concerning only one of those exporters or producers?
Reply
Article 2.2.2(ii) of the WTO AD Agreement provides that the amounts of the SG&A and the
profits may be determined on the basis of the weighted average of the actual amounts incurred and
realized by other exporters or producers subject to investigation, while Article 2.2.2(iii) of the WTO
AD Agreement provides that the amounts of the SG&A and profits may be determined on the basis of
any reasonable method.
According to the first methodology the inve stigating authorities could not rely on the
information related to only one exporter or producer to calculate the profit amounts, instead, it should
rely on "the weighted average of the actual amounts incurred or realized by other exporters or

producers". The question here is whether such information are available or not, and could the
investigating authority use as a reasonable method, the information that relating to only one exporter
in the case of the other information are not availabl e. To answer this question, in relation to the case
under dispute, we would like to note that the information related to all cooperating exporters in the
sample were available to the investigating auth ority, which means that the use of the first
methodology must be applied in order to determine the profit amounts and there was no reason to
apply the last methodology in the presence of all information required to determine the profit amounts
under Article 2.2.2(ii) of the WTO AD Agreement. In our opinion, that the only reason to use the
information related to one exporter is that there were no information related to the other exporters,
which was not the case in the case under dispute.
Q.3. Where an investigation involv es multiple product types, investigating authorities will
have different SGA for each of them, not all of which product types may be sold for profit. As a
result, if the investigating authority excludes from consideration sales of one or more product
types as being not sold in the ordinary course of trade, they will have different data sets for
calculation of SGA expenses as compared to those for calculation of profit. In the view of the
third parties, would such a methodology fu lfil the "fair comparison" requirement of
Article 2.4?
Reply
It should be noted that the Agreement does not include any rule concerning the situation
where the investigating authority will have different data sets for calculating SGA expenses as
compared to those available for profit calculations. The sole rule concerning calculating SG&A
expenses and profits is that they should be "reasonable" according to Article 2.2. Consequently, if
SG&A expenses and profits are calculated as stated in Article 2.2, this methodology will fulfil the
"fair comparison" required in Article 2.4.
Q.4. As the Panel understands it, India takes the position that in the case of multiple
comparisons of weighted average normal value to weighted average export price, Article 2.4.2
specifically precludes "zeroing", but that Article 2.4.2 does not address the question of
"zeroing" in the process of "summing up" the results of multiple transaction-to-transaction
comparisons of normal value and export price. The Panel notes that if a member makes
separate comparisons of weighted average normal value and weighted average export price for
each quarter during the dumping investigation period, the same question of "summing up"
arise. Could the third parties explain, with sp ecific reference to the text of the provision,
whether, and if so how, Article 2.4.2 governs this process of "summing up" in these situations?
Reply
Article 2.4.2 provides that "the existence of margins of dumping during the investigation
phase shall normally be established on the basis of a comparison of a weighted average normal value
with a weighted average of all prices of all comparable export transactions or by the comparison of
normal value and export price on a transaction-to-transaction basis.
Article 2.4.2 of WTO AD Agreement makes no reference what is known as "zeroing" in the
calculation of dumping through either weighted average method or transaction-to-transaction
approach, nor does it refer to how the "summing up" exercise should be calculated.
If a weighted average to weighted average comparison is applied, the use of "zeroing" is
redundant as a direct comparison is made between the weighted average normal value calculated over
the period and the weighted average export price determined - individual transactions are not
compared with one another.

As the use of "zeroing" increases the exporter's overall dumping margin by deducting from
the dumping calculation exercise, those shipments made at non dumped prices, it would appear to be
an approach contrary to the "fairness" requirements set out in the WTO AD Agreement.
Q.5. Could the third parties comment on whether, in their view, investigating authorities are
obligated to exclude, from their examination of volume and price effects, imports attributable to
companies for which a negative determination of dumping has been made based on the
determination of a zero or de minimis margin of dumping.
Reply
As a general rule, an anti-dumping duty shall be collected on imports of a certain product
found to be dumped and causing injury to the domestic industry in the importing Member.
Articles 3.1 of the WTO AD Agreement provides that a determination of injury for purposes
of Article VI of GATT 1994 shall be based on positive evidence and involve an objective examination
of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the
domestic market for like products and (b) the consequent impact of these imports on domestic
producers of such products.
By reading the above-mentioned article, it show s that it imposes an obligation based on two
conditions. The first one is that the investigating authority must determine the existence of injury on
the basis of the volume of the dumped imports and its effect on the domestic prices. The second one
is the examination of the impacts of the dumped imports on the domestic producers of the like
products. The Article was very clear and more precise in determining the word of "dumped imports"
and not all the imports from the exporting Members. This means that the investigating authority
should base its determination of injury on the dumped imports only, therefore, investigating authority
should exclude non-dumped imports from its determination.
In addition, Article 3.2 of the WTO AD Agreement provides that the investigating authorities
shall consider whether there has been a significant increase in dumped imports, either in absolute
terms or relative to production or consumption in the importing Member . . . etc. This Article, also, is
a self explanatory and clear in its requirements to the investigating authorities, that they shall limit
their examination to the dumped imports only, and not all imports from the exporting Member.
In all cases, Article 3 of WTO AD Agreement creates an obligation on the investigating
authorities to examine the effects of the dumped imports only.
Q.6. In view of the third parties, does the fulfilment of obligations imposed by Article 15 go
beyond the fulfilment of obligations under Article 8.3? If so, what would that involve? In
particular, is it necessary for the investigating Member, for instance, to take the initiative to
seek an understanding, and if so, how, and when, is that to be done?
Reply
Yes, the fulfilment of obligations imposed by Article 15 go beyond the fulfilment of
obligations under Article 8.3.
In our opinion that Article 15 of the WTO AD Agreement imposes two obligations. The first
obligation is to have a special regard to the situation of developing Members when considering the
application of the anti-dumping measures under the Agreement. The second obligation is to explore
constructive remedies.

The term "special regard" required the inve stigating authorities to examine information
submitted by the exporters of the developing Members, to acknowledge the receipt of and to reply to
submissions, to consider those submissions, to note those submissions in the public statement of
reasons.
The word "special" in Article 15 made clear that the result of the treatment of developing
country Members should be "special" in all meanings.
The second obligation created by Article 15 of the WTO AD Agreement is to explore
possibilities of constructive remedies before applying anti-dumping duties. The word "possibilities of
constructive remedies provided for by this Agreement shall be explored" creates an obligation to
explore options other than the imposition the anti-dumping duties. The terms of "provided for by this
agreement" are not intended to be limited to a reference to undertakings alone. Undertakings are only
one of the forms of constructive remedies provided for by the Agreement. It the meaning was limited
only to the undertakings, a cross-reference to Article 8 of the WTO AD Agreement would have been
inserted.
Suitable constructive remedies would have been the adjustments or allowances in relation to
the normal value and export price requested by the exporters during the course of the investigation,
excluding the non-dumped imports, applying the duty which was calculated for the private
investigated company to all cooperating, non-sampled, private companies, instead of applying the
weighted average dumping margin that was applied to the all cooperating, non-sampled, state-owned
companies (as in the case of Egypt), and any other constructive remedies depending on the case.
The words "when considering the application of anti-dumping measures" does not mean that
the obligation under Article 15 of the WTO AD Ag reement only arise immediately prior to the
imposition of a final anti-dumping duty. In the case of imposition a provisional anti-dumping duty,
such words should be interpreted to mean at any stage during the investigation process.
It should be noted that Article 15 of the WTO AD Agreement was introduced under the
umbrella of the provisions on special and differential treatment of developing countries. The WTO
Agreements (including the WTO AD Agreement) contain provisions for the extension of special and
differential treatment to developing country Members. Under these provisions, developing country
Members are given "more favourable" treatment than developed country Members. The provisions of
Article 15 of the WTO AD Agreement is one of the provisions of WTO Agreements that requires
countries to take measures to facilitate the trade of developing country Members. Therefore
investigating Member, obliged to take the initiative to seek an understanding at any stage during the
investigation process, by inviting, for example, the exporters to submit an undertakings or any other
forms of remedies based on the situation and the circumstances of the case taking into consideration
that such invitation is not a contradiction to Article 8 of WTO AD Agreement, as we explained above
that the Article 15 of the WTO AD Agreement provides a special treatment to the developing country
Members and the developed country Member must show good intention to apply this Article as a part
of their obligation under the WTO Agreements.
Article 8.3 of the WTO AD Agreement deals only with the possibility that the investigating
authorities of the importing Members may consider the acceptance of undertakings impracticable in
the case when the "number of actual or potential exporters is to great". In addition, this Article covers
the normal situation of an investigation and does not cover the special circumstances that might be
faced by the developing country Members.

II. REPLY TO THE EC’S QUESTION (19 May 2000)
Q.1. The EC notices that, both in the written submission and in the oral statement, Egypt
refers to a figure of 15% as the share of total EU production passively supporting the Eurocoton
complaint. Could Egypt identify the source of this data?
Reply
First, Egypt would like to thank the EC for its question.
In replying to this question, we would like to note that during the investigation process, the
Egyptian exporters through their legal representative submitted a letter to the Commission on
27 June 1997.
This letter contained the Egyptian exporters’ comments on the disclosure of the provisional
dumping calculation, which was received on 2 June 1997.
We refer to paragraph 5 of the letter dated 27 June 1997, which contained the 15% figure.
In this letter we asked the Commission to verify several issues, inter alia , the information
concerning the standing of the EU industry.
But, since no reply to this letter has been received from the Commission confirming whether
or not this information was correct, therefore we mentioned in our oral and written submissions to the
panel this argument hoping that the EC or other parties would be able to verify and comment on this
particular issue.

ANNEX 3-8
RESPONSES OF JAPAN TO QUESTIONS FROM THE PANEL
(24 May 2000)
CONTENTS
Page
I. THE LANGUAGE OF ARTIC LE 2.4.2 ON ITS FACE...................................................609
II. BACKGROUND TO THE CONCE PT OF "ZEROING"................................................609
III. THE LANGUAGE OF ARTICLE 2.4.2 IN LIGHT OF THIS HISTORICAL
CONTEXT.............................................................................................................................610
Q.1. India's argument against zeroing relies on the language of Article 2.4.2 concerning
weighted average prices. Assume for the sake of argument, that a transaction-to-transaction
comparison were used. There is no weighted aver age of prices in that case. Would zeroing still
be prohibited? If so, why? If not, how would the overall dumping margin be calculated from
the individual transaction margins? How is th is different from the calculation of an overall
margin from individual model margins?
Reply
Japan believes that zeroing is not permitted under Article 2.4.2 when the comparison is based
on either the transaction-to-transaction or average-to-average methodology identified in the first
sentence of that article. In interpreting Article 2.4.2, the panel should consider, at first, the ordinary
meaning of Article 2.4.2.
1 As the language of Article 2.4.2 is not clear about this question, the panel
should consider the negotiations during the Uruguay Round that led to this provision.2 This historical
context shown below is important because it demonstrates that zeroing has always occurred at the
"summing up" stage under any comparison methodology.3 In response to this zeroing at the summing
up stage, Article 2.4.2 created two preferred comparison methodologies (i.e., average-to-average, and
transaction-to-transaction), and one exceptional comparison methodology. The first sentence of
Article 2.4.2 eliminated zeroing in the two "prefe rred" comparison methodologies. The structure of
Article 2.4.2 and the circumstances that led to its adoption show that Article 2.4.2 permits zeroing in
only one situation: when the authorities find it necessary to calculate a margin based on a comparison

1 Article 31(1) of the Vienna Convention on the Law of Treaties.
2 Article 32 of the Vienna Convention on the Law of Treaties permits the use of supplementary means
of interpretation when interpretatio n according to Article 31 leaves the meaning ambiguous or obscure. The
Appellate Body has noted that both Article 31 and Article 32 of the Vienna Convention have attained the status
of a rule of customary or general international law. See Japan – Taxes on Alcoholic Beverage s, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, Report of the Appellate Body adopted 1 November 1996, at 10.
3 The summing up can occur at least in the following circumstances:
- when the margins of individual export sales are summed up after transaction-to-transaction
comparisons or after transaction to weighted average comparisons;
- when the margins of various su b-products are summed-up after average-to-average comparisons,
or
- when the margins of various sub-periods are summed up after dividing a period of
investigation into months or other periods.

of individual export prices to a weighted average normal value under certain circumstances stipulated
in the article.
I. THE LANGUAGE OF ARTICLE 2.4.2 ON ITS FACE
Japan admits that the language of Article 2.4.2 does not appear to demonstrate on its face that
zeroing is prohibited under average-to-average and transaction-to-transaction comparisons. It simply
provides that the weighted-average to weighted -average comparison or transaction-to-transaction
comparison is preferred to weighted-average to transaction comparison. It does not specifically
provide how to sum up the results of transaction-to -transaction comparison. In this case, in order to
answer the question posed by the panel for the sake of argument, we should turn to the historical
backgrounds which led to the provision of Article 2.4.2.
II. BACKGROUND TO THE CONCEPT OF "ZEROING"
Prior to the Uruguay Round, the prevailing methodology among major users of the dumping
law involved a comparison of individual export prices to weighted-average normal value. After
making these comparisons, investigating authorities set to zero the margins for any export sale that
was found to have negative margins (i.e., where the export price exceeded the normal value). After
setting to zero the negative margins, the inve stigating Members would then sum up the positive
margins to calculate an overall margin for the product.
The permissibility of this comparison methodology was addressed by a GATT panel in EC –
Antidumping Duties On Audio Tapes In Cassettes Originating In Japan (full cite) (unadopted). In that
dispute, the panel noted that zeroing occurred after dumping comparisons were made (i.e., at the
summing up stage after the comparison of individual export prices to a weighted average normal
value). ¶ 349. Importantly, the panel noted that th e issue of zeroing would not arise if margins were
based on a comparison of weighted average export prices to weighted average normal values. Id. In
that dispute, the panel determined that under the terms of the former Antidumping Code, zeroing was
allowed.
The problem of zeroing was best understood in the hypothesis discussed by that Panel in
which an exporter sold the same product, at the be ginning of each month, in its home market at the
same price as a sale to the export market.
Export Home Market Margin
Date Price Quant. Price Weighted
Average Price
Quant. Transaction-
to-
Transaction
Export Price to
Weighted
Average Normal
Value
Sale #1 Jan. 1 120 1 120 100 1 0 -20
Sale #2 Feb. 1 100 1 100 100 1 0 0
Sale #3 Mar. 1 80 1 80 100 1 0 20
0 20
(total after
"zeroing")
In this example, a transaction-to-transaction comparison demonstrates that the exporter was
never dumping because the prices would always track one another over time. However, a comparison
of the individual export prices to a weighted average would always lead to a determination of

dumping, if at the summing up stage, the negative margins were zeroed. 4 In the example above, the
negative margin related to the January 1 sale is rese t to zero when the margins for all of the sales are
summed up. Importantly, a comparison of weighted averages to weighted averages would lead to the
same result as the transaction-to-transaction comparison (i.e., no dumping). 5 For this reason, the
Audio - Cassette panel observed that zeroing "does not arise" when an average-to-average comparison
is used.
In response to this practice, various Members urged the adoption of a provision in the
Antidumping Agreement that would eliminate this zeroing, and ensure that the dumping calculation
accounted correctly for negative margins. 6 Members such as the US opposed this suggestion by
arguing that any methodology that would allow expo rters to get "credit" for negative margins would
be unacceptable.7
Ultimately, the Members adopted Article 2.4.2 which elevates average-to-average and
transaction-to-transaction as the preferred comparison methodologies. Consistent with the GATT
panel's observation in Audio - Cassettes that zeroing would not arise when comparisons were based
on weighted averages, Article 2.4.2 eliminated zeroing when the preferred comparison methodologies
are used.
To win support for the use of such comparison methodologies, however, the last sentence of
Article 2.4.2 preserved Members' right to base margin calculations on comparisons between
individual export transactions and a weight ed average normal value under certain defined
circumstances. Under this methodology commonl y used by Members prior to the Uruguay Round,
zeroing would be permitted.
III. THE LANGUAGE OF ARTICLE 2.4.2 IN LIGHT OF THIS HISTORICAL
CONTEXT
In light of this historical context, the language of Article 2.4.2 demonstrates that zeroing is
not allowed for either of the comparison methodologies identified in the first sentence of that article.
Consistency Between The Preferred Methodologies - As a threshold matter, Article 2.4.2
classifies average-to-average and transaction-to-transaction in the same category of preferred
comparisons. By virtue of the classification of these two methodologies in the same preferred
category in Article 2.4.2, and to ensure consistency within this preferred category, zeroing is
prohibited under both methodologies.
Adoption of the average-to-average compar ison methodology eliminated zeroing at the
transaction-specific level. As a Audio - Cassettes Panel observed, zeroing "does not arise" when
average-to-average comparisons are used. Even the US and the EC do not contest that a feature of
average-to-average comparisons is that it eliminates the zeroing of negative margins at the
transaction-specific level (See US submission pa ras. 34-47, EC submission para. 201-214). Zeroing
does not arise under a proper average-to-average comparisons because there is no need to sum up
transaction-specific margins.

4 In the example, the overall dumping percentage would be 6.67% (i.e., 20/300)
5 In the example above, an average to average comparison would compare an average export price of
100 to an average normal value of 100.
6 See generally, Terence P. Stewart, et al., The GATT Uruguay Round: A Negotiating History (1986-
1992)(1993): page 1537-1543 (discussing the negotiations concerning the use of weighted averages in the
calculation of export prices and normal values).
7 Id. at 1540.

Since average-to-average comparisons mathematically eliminate the step of zeroing margins
of individual export transactions (when the indi vidual margins would otherwise be summed up), it
would be illogical then to read Article 2.4.2, first sentence, as allowing zeroing when the transaction-
specific margins are summed up under the transaction-to-transaction methodology, the other preferred
comparison methodology. A more natural reading of the requirements of Article 2.4.2 is that the first
sentence of the Article eliminates zeroing of individual transaction margins with the use of average-
to-average comparisons, and at the same time, disallows zeroing of individual transaction margins
under the transaction-to-transaction methodology.
Consistency Between Stages in the Dumping Calculation - Independent of any inconsistency
between the two preferred methodologies in Article 2.4.2, the panel should also avoid an
interpretation that creates an inconsistency at different levels of the dumping calculation. Once it is
acknowledged that average-to-average comparisons eliminate zeroing at the transaction level, it
would then be inconsistent to interpret Article 2.4.2 to allow zeroing at a subsequent stage in the
margin calculation (i.e., at a summing up stage). Arti cle 2.4.2 provides no basis to conclude that the
Article was designed to eliminate zeroing at one level, but then permit it at another level. This applies
to zeroing at the summing up stage of sub-product margins (under average-to-average comparisons),
and the summing up of transaction margins (under the transaction-to-transaction approach). Again, to
suggest a different interpretation reads into the first sentence of Article 2.4.2 an unnatural and
unreasonable inconsistency with respect to zeroing.
The panel should ensure that its interpretation of Article 2.4.2 avoids this internal
inconsistency. As a result, using as an interpretive tool, the circumstances that led to the inclusion of
Article 2.4.2 in the Anti-dumping Agreement, the panel should avoid an interpretation of the first
sentence of Article 2.4.2 that results in a conceptual inconsistency with respect to zeroing.
Unreasonable Results - The panel should also avoid an interpretation of Article 2.4.2 that
leads to unreasonable results. If the panel were to find that zeroing were allowed at the summing up
stage under either of the preferred methodologies, this would provide a clear incentive for
investigating Members to sub-divide the dumpin g calculation into the most narrow average-to-
average comparisons possible. This division could take place, for example, at the sub-product level,
in which the overall product subject to investigation would be sub-divided into hundreds of sub-
products. The mathematical effect of this would be to isolate all products with negative margins from
products with positive margins. The authorities could then zero away any negative margins at the
summing up stage, effectively circumventing the ma thematical averaging that would normally occur
if a broader average-to-average comparison were used.
The artificial division could also occur by dividing the overall period of investigation into
multiple sub-periods. In this scenario, the Member could sub-divide the period into two or numerous
periods so that the sales with positive margins are isolated from sales with negative margins. Then, at
the summing up stage, the negative margins would be zeroed, leaving only the positive margins to
contribute to the calculation of the overall margin.
The mathematics of zeroing when sub-periods are summed up is identical to the pre-Uruguay
Round zeroing problem when transaction-specific margins were summed up after a comparison of
individual export price to a weighted average normal value.

Export Home Market Margin
Date Average
Price for
the
Month
Quant. Average
Price for
the
Month
Quant. Monthly Period Average to
Period Average
Jan 120 10 80 10
Feb 100 10 100 10 0
Mar 80 10 120 10 40
100
(period
average)
100
(period
average)
40
(after zeroing)
0
As the example demonstrates, if zeroing is allowed at the summing up stage of the sub-
periods, there is an incentive to create multiple sub-periods. That is, there is a disincentive to
calculate margins on an average to average basis over the period. Since Article 2.4.2 requires an
average-to-average comparison using "all" comparable export transactions, it would be unnatural to
interpret Article 2.4.2 to provide an incentive to subdivide the dumping comparisons into the
narrowest possible average-to-average comparisons. Such an interpretation would create a built-in
incentive to minimize the volume of comparisons made within each average-to-average comparison,
and to maximize the process of summing up. Given the negotiating history of Article 2.4.2, the
language of Article 2.4.2 should not be read to create this perverse incentive. To the contrary, the
negotiating history demonstrates that Article 2.4.2 was intended to create the opposite scenario, where
zeroing was eliminated in all circumstances except when a Member could justify comparisons under
the second sentence of Article 2.4.2.
Q.2. Would the third parties indicate whether, in their view, in a case in which there is
information from more than one exporter or pr oducer available for use in the calculation of
profit amounts under Article 2.2.2(ii) (including the case in which a proper sample includes
more than one exporter or producer), the invest igating authorities may nonetheless choose to
rely on the information concerning only one of those exporters or producers?
Reply
Japan believes that Article 2.2.2(ii) does not permit the authorities to pick and choose among
the companies that have provided profit data in a particular investigation.
First, the language of Article 2.2.2(ii) is plain on its face. The language contemplates a
"weighted average" of data of "the other exporters or producers" subject to investigation, and in no
way contemplate picking and choosing the particular data of one exporter or producer. The EU and
US have argued that the use of plural here ("exporters or producers") does not have any substantive
meaning. In Japan's view, the use of the phrase "weighted average" combined with the use of the
plural in this particular provision together means th at all the available data must be used. It would
have been easy for the drafters to provide authorities with the discretion to pick profit data from "any
of the other exporters or producers," but the provision does not use such language. Nor does the
language of Article 2.2.2(ii) provide any qualifying language such as "ordinary course of trade" as
seen in other context (e.g., Article 2.2 and the chapeau of Article 2.2.2). The plain meaning of the
provision is unambiguous, and the language should be respected.

Second, the interpretation offered by the EC and US (See EC submission paras. 115-134, US
submission paras. 7-13) poses enormous risks of abus es. If authorities can pick and choose at their
discretion, then Article 2.2.2(ii) provides no discipline at all. Authorities can distort the result of the
investigation in how they pick and choose the particular profit levels to use. The requirement of
Article 2.2.2(ii) to use a weighted average of all the available data provides a clear, transparent, and
predictable rule.
Third, the rule of Article 2.2.2(ii) minimizes the risk of a company under investigation being
unfairly punished or benefited by the anomalous profit experience of a single company, rather than an
average of profit results for all companies. The weighted average is far more likely to be a more
typical and representative surrogate than the result of any single company.
Q.3. Where an investigation involv es multiple product types, investigating authorities will
have different SGA expenses for each of them, no t all of which product types may be sold for
profit. As a result, if the investigating authority excludes from consideration sales of one or
more product types as being not sold in the ordinary course of trade, they will have different
data sets for calculation of SGA expenses as compared to those for calculation of profit. In the
view of the third parties, would such a methodology fulfill the "fair comparison" requirement of
Article 2.4?
Reply
Japan believes the situation raised in this question would violate the requirement of "fair
comparison."
The EC and US interpretation of Article 2.2.2 (See EC submission para. 135-152, US
submission paras. 14-20) reads the phrase "ordinary course of trade" too narrowly. This phrase means
more than just sales below cost. Article 2.2.1 makes clear that below cost sales may be treated as
being outside "the ordinary course of trade" under some specific situations, but does not regard all the
below cost sales as sales "out of the ordinary course of trade". Thus it is not appropriate to exclude
from consideration sales of one or more product types merely as being not sold for profit.
This interpretation also avoids the dilemma identified by the panel question. If sales are
below cost but not outside the ordinary course of trade, they should be used for both profit rates and
for SGA rates. If the sales are below cost and trea ted as outside the ordinary course of trade, then
they should be excluded for both purposes. Thus it is not necessary to use different data set to
calculate profit rates and SGA rates.
Q.4. As the Panel understands it, India takes the position that in the case of multiple
comparisons of weighted average normal value to weighted average export price, Article 2.4.2
specifically precludes "zeroing", but that Article 2.4.2 does not address the question of
"zeroing" in the process of "summing up" the results of multiple transaction to transaction
comparisons of normal value and export price. The Panel notes that if a Member makes
separate comparisons of weighted average normal value and weighted average export price for
each quarter during the dumping investigation period, the same question of "summing up"
arises. Could the third parties explain, with specific reference to the text of the provision,
whether, and if so how, Article 2.4.2 governs this process of "summing up" in these situations?
Reply
As discussed in response to Question 1, it is Japan's position that the text of Article 2.4.2
governs zeroing due to the hierarchy of comparison methodologies created by the text and structure of
that article. By designating, in the first se ntence, the weighted-average-to-weighted average

comparison as the preferred comparison methodology, the structure of the Article expressly directs
Members to a methodology whose main attribute is to eliminate zeroing. 8 The transaction-to-
transaction methodology is also a preferred methodo logy. As discussed in response to Question 1,
however, it is reasonable to assume that zeroing is prohibited for this methodology as well to ensure a
consistency with respect to zeroing between the two preferred methodologies.
On the other hand, by relegating the "export price-to-weighted average normal value"
methodology to a secondary methodology, only to be used in exceptional circumstances, the text of
Article 2.4.2 expressly demotes the only methodology that historically allowed zeroing at the
summing up stage. Thus, the textual hierarchy between the first and second sentences of
Article 2.4.2, and the inclusion of the average-to-average methodology in the first sentence
demonstrates that Article 2.4.2 is intended to avoid comparison methodologies that permit zeroing. In
this sense, Article 2.4.2 governs and prohibits the use of zeroing at the summing up stage for the
preferred comparison methodologies.
Q.5. Could the third parties comment on whether, in their view, investigating authorities are
obligated to exclude, from their examination of volume and price effects, imports attributable to
companies for which a negative determination of dumping has been made based on the
determination of a zero or de minimis margin of dumping.
Reply
As discussed in our submission, Japan believes that Article 3 unambiguously requires
authorities to consider only the impact of "dumped imports," and not the impact of all imports
whether dumped or not. If a company has been found not to be dumping, the imports from that
company must be excluded in the examination of price and volume effects.
Q.6. In the view of the third parties, does the fulfilment of obligations imposed by Article 15
go beyond the fulfilment of obligations under Article 8.3? If so, what would that involve? In
particular, is it necessary for the investigating Member, for instance, to take the initiative to
seek an understanding, and if so, how, and when, is that to be done?
Reply
No. The reference to "constructive remedies" under Article 15 would include a possible price
undertaking pursuant to Article 8. Article 15 does not impose any specific requirements on developed
country Members.

8 As discussed in response to Question #1, the fundamental virtue of average-to-average comparisons is
that it eliminates the mathematical step of "summing up" sale-specific margins, thereby obviating the possibility
of zeroing.

ANNEX 3-9
RESPONSES OF THE UNITED STATES
TO QUESTIONS FROM THE PANEL,
INDIA AND THE EUROPEAN COMMUNITIES
(24 May 2000)
Panel Questions to Third Parties
Q1. India’s argument against zeroing relies on the language of Article 2.4.2 concerning
weighted average prices. Assume, for the sake of argument, that a transaction-to-transaction
comparison were used. There is no weighted average of prices in that case. Would zeroing still
be prohibited? If so, why? If not, how would the overall dumping margin be calculated from
the individual transaction margins? How is th is different from the calculation of an overall
margin from individual model margins?
1. The United States is of the view that "zeroing" is not prohibited in the calculation of the
overall dumping margin, regardless of whether the comparisons between normal value and export
price were made on a weight-average-to-weight-average basis or a transaction-to-transaction basis. In
either case, the Anti-Dumping Agreement does not prohibit, in the calculation of the overall dumping
margin, the zeroing of negative differences between normal value and export price calculated on the
weight-average-comparison basis or on the transaction-specific-comparison basis. In both cases, the
mathematical process of zeroing these negative amounts would simply permit the importing country
to collect dumping duties equivalent to all of the positive differences between export price and normal
value.
Q2. Would the third parties indicate whether, in their view, in a case in which there is
information from more than one exporter or pr oducer available for use in the calculation of
profit amounts under Article 2.2.2(ii) (including the case in which a proper sample includes
more than one exporter or producer), the invest igating authorities may nonetheless choose to
rely on the information concerning only one of those exporters or producers?
2. The United States declines to venture beyond the present case to address this question at this
time, because the circumstances described in this question are not now before the Panel.
Q3. Where an investigation involv es multiple product types, investigating authorities will
have different SGA expenses for each of them, no t all of which product types may be sold for
profit. As a result, if the investigating authority excludes from consideration sales of one or
more product types as being not sold in the ordinary course of trade, they will have different
data sets for calculation of SGA expenses as compared to those for calculation of profit. In the
view of the third parties, would such a methodology fulfill the "fair comparison" requirement of
Article 2.4?
3. The "fair comparison" language of Article 2.4 relates to the manner in which export price and
normal value are to be compared with each other. Based upon the United States’ understanding of
this question, it does not involve this fundamental dumping comparison, and, thus, does not clearly
implicate the "fair comparison" language of Article 2.4.
Q4. As the Panel understands it, India take the position that in the case of multiple
comparisons of weighted average normal value to weighted average export price, Article 2.4.2

specifically precludes "zeroing", but that Article 2.4.2 does not address the question of
"zeroing" in the process of "summing up" the results of multiple transaction to transaction
comparisons of normal value and export price. The Panel notes that if a Member makes
separate comparisons of weighted average normal value and weighted average export price for
each quarter during the dumping investigation period, the same question of "summing up"
arises. Could the third parties explain, with specific reference to the text of the provision,
whether, and if so how, Article 2.4.2 governs this process of "summing up" in these situations?
4. As the United States discussed in its Third Party Submission (at paras. 39-41), Article 2.4.2
requires that, in making comparisons between the export price and the normal value in an
investigation, each comparison shall be made either on a weighted-average-to-weighted-average basis
or a transaction-to-transaction basis. Neither Ar ticle 2.4.2 nor 2.4 addresses the subsequent step of
"summing up" the results of these comparisons into a single overall dumping margin.
Q5. Could the third parties comm ent on whether, in their view, investigating authorities are
obligated to exclude, from their examination of volume and price effects, imports attributable to
companies for which a negative determination of dumping has been made based on the
determination of a zero or de minimis margin of dumping.
5. It is the United States’ practice to exclude from the injury evaluation companies for which a
negative determination of dumping margins has been made based in the determination of a zero or
de minimis margin. The United States regards such a practice as permitted by the Anti-Dumping
Agreement but does not contend that it is required.
Q6. In the view of the third parties, does the fulfilment of obligations imposed by Article 15
go beyond the fulfilment of obligations under Article 8.3? If so, what would that involve? In
particular, is it necessary for the investigating Member, for instance, to take the initiative to
seek an understanding, and if so, how, and when, is that to be done?
6a. The United States is of the view that Articl e 8.3 and Article 15 are complementary provisions,
and that Article 15 does not impose any obligations that would conflict with, or go beyond what is
called for in Article 8.3. Article 8.3 speaks to the conditions under which an investigating authority
may choose to reject an undertaking, once offered, and, in the event of such a rejection, it calls on
investigating authorities, where practicable, to provide the exporter with reasons for the rejection and
an opportunity to comment thereon. The precatory language of the provision
1 makes clear that a hard
and fast obligation is not intended.
6b. Likewise couched in precatory language, Article 15 asks developed country Members to
extend "special consideration" to developing country Members when considering the application of
anti-dumping measures, and calls for the exploration of constructive remedies before the application
of anti-dumping duties, where such application would affect the essential interests of developing
country Members.
6c. The internal logic of Article 15 does suggest, however, that a developing country should take
the initiative to identify to the developed country when the developing country’s essential interests
may be affected if the developed country were to apply anti-dumping duties, because the developing
country would be in the best position to know what these essential interests are, and when they may
be affected. The obligation to explore constructive remedies can only be triggered when the

1 viz., “need not be accepted,” “reasons of general policy,” “where practicable,” and “to the extent
possible.”

developed country is aware that its impending action would affect the essential interests of the
developing country.
6d. Also with regard to timing, Article 15 addresses the desirability of exploring constructive
remedies prior to application of anti-dumping duties, where such constructive remedies have not yet
been explored, whereas Article 8.3 addresses the situation in which such remedies have been
explored, and an undertaking has already been offered. To the extent that the two provisions suggest
an intended sequence of events, Article 15 does not appear to suggest any timing that would conflict
with Article 8.3. As we have noted previously, Article 15 seeks to protect developing countries when
their essential interests would be affected by the application of anti-dumping duties, but it does not
require any particular substantive result, nor does it create a substantive obligation.
EC Questions to the United States
1. Initiation Questions
(1) According to the United States, what type of evidence has to be evaluated in order to
determine whether or not to initiate an anti-dumping investigation under Article 5.3 of the Anti-
dumping Agreement?
1. The "evidence [that] has to be evaluated in order to determine whether or not to initiate an
anti-dumping investigation under Article 5.3" is, as stated in Article 5.3, the "evidence provided in the
application." However, as the Panel noted in Guatemala Cement, "there is nothing in the Agreement
to prevent an investigating authority from seekin g evidence and information on its own, that would
allow any gaps in the evidence set forth in the application to be filled."
2 Regardless of whether the
information was contained in the application or ob tained by the investigating authority on its own,
Article 5.3 requires an examination of the accuracy and adequacy of that evidence.
(2) What is the standard of proof that the Unit ed States considers necessary for purposes of
initiation of an anti-dumping investigation under Article 5.3 of the Anti-dumping Agreement?
2. Article 5.2 provides that an application for an anti-dumping investigation must contain
evidence of dumping, injury, and a causal link between the dumped imports and the alleged injury.
The application must contain relevant evidence, rather than simple assertion, and the investigating
authority, as discussed in response to EC Question 1, must examine the accuracy and adequacy of that
evidence. That said, the Anti-Dumping Agreement does not contain a "standard of proof" for
purposes of initiation; rather, the proof of dumping, injury and the causal link between dumping and
injury will be established in the course of any investigation.
3
(3) The US has maintained that Article 5.4 of the Anti-dumping Agreement allows
associations of producers to bring a complaint on behalf of the domestic industry. Could the
United States illustrate what type of enquir y they consider necessary on the part of the
investigative authorities to satisfy themselves th at the complaint is in fact brought "on behalf
of" the domestic industry?
3. The type of inquiry necessary to determine whether an application for an anti-dumping
investigation has been brought on behalf of a domestic industry does not differ based upon whether
the application is brought by individual domestic producers or an association which qualifies as an

2 Panel report on Guatemala - Anti-dumping Investigation Regarding Portland Cement from Mexico
(“Guatemala Cement”) , WT/DS60/R (19 June 1998), para. 7.53.
3 See the discussion of this issue in Guatemala Cement, paras. 7.54-7.57.

interested party consistent with Article 6.11(iii) of the Anti-Dumping Agreement. To that end, the
inquiry involves satisfaction of the 25 per cent and 50 per cent standards provided in Article 5.4 of the
Agreement.
(4) Does the US consider that an investigat ing authority should close an anti-dumping
proceeding that it has initiated if it should dete rmine, during the course of an investigation and
on the basis of information that was not availa ble to the authority before the investigation was
initiated, that the domestic producers expressly supporting the application do not account for at
least 25% of total domestic production?
4. Article 5.8 provides that an investigation shall be terminated as soon as the authorities are
satisfied that there is not sufficient evidence of either dumping or of injury to justify proceeding with
the case. Article 5.8 does not provide for termination of an investigation based upon new, post-
initiation information indicating that there is not sufficient industry support for the investigation.
2. Injury Questions
(5) Article 4.1 Anti-dumping Agreement provides that the term "domestic industry" shall
be interpreted as referring to the domestic producers as a whole of the like products or to those
of them whose collective output of the products constitutes a major proportion of the total
domestic production of those products.
Why does the US consider that
"The EC acted inconsistently with the Agreement by not including all
Community producers in the domestic industry for the purposes of evaluating
other factors such as price and impact under Articles 3.1, 3.2, 3.4 and 3.5."
4
5. In context, the quoted statement responds to India’s claim that the EC acted impermissibly in
looking to total EC-15 producers for any purpose in the injury evaluation. India appears to argue that
the EC should have confined its analysis of injury factors to those producers who were complainants,
and should not have sought or relied on any data covering any other producers. In the United States’
view, the Anti-Dumping Agreement required th e EC to seek information from all Community
producers ("EC-15 producers") of the like product (or, in the special circumstances discussed in
response to question 10, producers representative of all Community producers). For example, the EC
should have sent questionnaires to all Community producers, rather than just to complainant-
producers. To the extent the EC chose at the outse t to seek complainant-only data for any factors, it
acted inconsistently with the Agreement. We do not disagree with the EC that it properly sought
information from or concerning producers other than complainants, but rather that it should have done
so with respect to all factors.
(6) The US states that India has not made a claim that the EC should have defined the
Community Industry as all the producers. Need the Panel therefore consider these comments of
the US?
6a. The United States brought its views on the domestic industry definition to the Panel’s
attention as a predicate to its response concerning arguments made by the complaining Party, India.
In challenging the breadth of the data and other information relied on by the EC, India assumes that
the EC properly confined the domestic industry to the complaining producers; but, in India’s view, the
EC acted impermissibly in looking at Community -wide production, consumption and market share
data, and by relying on the closures of numerous domestic bedlinen firms during the two-year period

preceding initiation as evidence of the industry’s financial condition. The United States believes the
EC acted correctly in considering both Community-wide data and evidence about recent closures of
domestic firms. However, the United States believes the EC’s inclusion of this information was
correct for reasons other than those argued by the EC, i.e., the United States believes the inclusion of
this information was required by the Agreement because the information concerns producers who are
properly members of the domestic industry.
6b. The Panel can take into account the third party comments of the United States concerning the
definition of the domestic industry in order to avoid resolving this case on the basis of an incorrect
view of the Anti-Dumping Agreement. The United States supports the implicit point of the EC’s
question that the Panel cannot go beyond its terms of reference, nor may arguments made only by a
third party satisfy a party’s burden of proof with respect to a claim. If the Panel does not address the
issue concerning the correct domestic industry definition, the United States strongly urges that the
Panel expressly state that it is not addressing that issue. Such a statement will insure that neither the
parties to this investigation nor other Members infer that the Panel reached a conclusion that it did not
in fact reach or that this Panel endorsed an EC practice that may be directly challenged in other cases.
(7) How does the US interpret the term "a major proportion" of the industry?
7a. Article 4.1 of the Anti-dumping Agreement provides that
the term "domestic industry" shall be interpreted as referring to the domestic
producers as a whole of the like products or to those of them whose collective output
of the products constitutes a major proportion of the total domestic production of
those products, except that
(i) when producers are related to the exporters or importers or are themselves
importers of the allegedly dumped product, the term "domestic industry" may
be interpreted as referring to the rest of the producers;
(ii) in exceptional circumstances the territory of a Member may, for the
production in question, be divided into two or more competitive markets and
the producers within each market may be regarded as a separate industry if
{certain conditions are met}
7b. The chapeau of the Article provides only one definition of the domestic industry: "the
domestic producers as a whole of the like products or to those of them whose collective output of the
products constitutes a major proportion of the total domestic production of those products." The use
of the word "or" does not, as the EC seems to imply,
5 mean that in a given investigation there are two
alternative definitions of "domestic industry," either of which the investigating authority may choose.
Rather, the definition recognizes the reality of many anti-dumping investigations: that it will not
always be possible to obtain the requested information from all domestic producers of the like
product. Article 4.1 makes clear that a determination is adequate even if an investigating authority is
not successful in obtaining information from all producers.
7c. Thus, the investigating authority is charged broadly under Article 3.1 with conducting an
objective examination of volume, price effects, and the impact of the imports on "domestic producers"
of like products, not "a major proportion" of domestic producers. The more specific provisions of
Article 3.4 address the relevant factors about which information must be obtained to evaluate the
impact of the imports on the "domestic industry," a term defined for the purposes of the Agreement in
Article 4.1. Read together, these provisions spell out an investigating authority’s obligations with

respect to evaluation of injury to domestic producer s–the investigating authority should seek in an
objective (i.e., unbiased) manner to obtain data from all producers of the like product ("producers as a
whole).6 But in circumstances where some producers fail to respond, the investigating authority’s
analysis under Article 3 may concern those pro ducers whose collective output of the products
constitutes a major proportion of the total domestic production of the like product. Thus, the term
"major proportion" as used in Article 4.1 refers to all the producers who responded to the information
requests sent to all producers.
7d. "Major proportion" does not have a numerical benchmark, and will vary from one
investigation to another. Indeed, both approaches to the domestic industry may inform the injury
analysis in a single investigation. For example, an authority may obtain public or official data on
some factors covering all producers, but on other factors for which questionnaires must be sent may
receive responses from only some producers. In such circumstances, Article 4.1 allows an authority
to use both sets of information through an "objective examination" under Article 3.1 Nor does "major
proportion" automatically equate, as the EC Anti-Dumping Regulation and practice presume, to the
same group of producers who filed the application. If the EC’s presumption were correct, the
producers who filed the application would always constitute the "domestic industry," and the " or on
behalf of the domestic industry" language in Article 5.4 would be superfluous.
7e. Further, to be consistent with Article 3.1's requirement for an "objective examination," the
phrase "major proportion" cannot be read to define the domestic industry as a particular self-selected
group of less than all producers of the like product. Nor can it mean any other pre-selected sub-group
of the producers as a whole that is likely to tilt the database in most investigations towards an
affirmative injury finding, as the EC’s Regulation and practice generally do.
(8) Does the US consider that the only cases where less than all producers may be
considered to be the domestic industry are thos e set out in sub-paragraphs (i) and (ii) of
Article 4.1? If so, why does not Article 4.1 say this? If not, what are the criteria which,
according to the US, allow less than all producers to be considered to constitute the domestic
industry?
8. As discussed in response to the previous question, the definition of "domestic industry"
provided in the chapeau of Article 4.1. includes all domestic producers from whom the investigating
authority is able to obtain information. Subparagr aphs (i) and (ii) of that Article set out the only
instances in which the investigating authority may deliberately exclude certain domestic producers
from the domestic industry. These exclusions apply to except certain producers from the domestic
industry regardless of whether the industry ultimately includes all producers or the major proportion
that complies with the investigating authority’s efforts to obtain information. The Agreement’s
reference to these specific exclusions reinforces that an investigating authority’s reliance on a "major
proportion" is not a matter of excluding some producers from the domestic industry. Rather, the
reference to a "major proportion" reflects the practical consideration that complete information may
not be forthcoming in response to requests to all producers.
(9) Does the US consider that an investigatin g authority must irrevocably choose at the
beginning of an investigation its definition of "domestic industry"?

6 As discussed below, in response to EC question 10, the investigating authority may at the onset
determine that the nature of the industry makes it necessary to send questionnaires to a representative sample of
the industry rather than to every producer in the industry. Even in that case, the definition of the industry would
be the same as that defined in the text above, although the neutral group to whom questionnaires were sent
would be narrower.

9. No. The investigating authority cannot irrevocably choose its definition of the "domestic
industry" at the beginning of an investigation. The investigating authority may make a threshold
definition of domestic industry to decide whether to initiate an investigation under Article 5.4.
However, the final definitions of the domestic like product and domestic industry for the injury
determination under Article 3 must be based upon the information obtained during the investigation.
(10) The US argues in paragraph 93 that the sample of domestic producers must be
"statistically valid". In this context, does "statistically valid" mean the same as
"representative"? The US criticisms of the EC sample of domestic producers seem to derive
exclusively from its view that it was wron g to define the complaining and co-operating
producers as the "Community industry". Is this correct?
10a. Nothing in Articles 3 and 4 prohibits sampling, and the United States agrees with the EC and
India that investigating authorities may use a sample of the domestic industry in evaluating the effects
and impact of the subject imports. In its third pa rty written submission, the United States noted the
express references in other Articles of the Agreement to "statistically valid" sampling. 7 At this time,
we wish to clarify the views expressed earlier concerning the use of sampling for the purposes of an
injury determination. The United States concurs with the EC that in the context of reaching an injury
determination, the criterion for judging whether the sampling was consistent with the Agreement is
whether the sample was representative of the domestic industry, not whether it is statistically valid.
However, it is only by properly defining the domestic industry in the first instance as all producers
that a representative sample of producers will assure that the investigating authority conducts the
"objective examination" of the industry that is required under Article 3.1.
10b. The United States’ principal criticism of the EC’s sample of domestic producers rests on the
EC’s improper definition of the domestic indu stry, from which the EC drew its sample.
8 Since the
population from which the EC took the sample was likely to have been biased toward those producers
who consider themselves as injured, any sample taken from that base was similarly likely to be
biased. The United States has not reviewed the entire record in this investigation and takes no
position as to whether the particular sampling methodology used by the EC in this investigation would
have been objective had it been taken from the entire group of EC bedlinen producers.
(11) The US invokes Article 6 in support of its view that the EC should have looked at all the
Community Industry. The EC does not deny that an excluded domestic producer is an
‘interested party’ within the meaning of Articl e 6 and is entitled to depend its interests i.e.
present information to the investigating authority. But is the US really arguing that this means
that all interested parties must be investigated ?
11. Yes, investigating authorities must make active efforts to investigate all interested parties or
an unbiased sample of those interested parties. Here, the EC failed to investigate fully even all the
domestic producers known to it.
(12) In paragraph 96 of its submission, the United States states that it considers that "all
enumerated factors [in Article 3.4] must be evaluated". On what basis does the US construe an

7 Article 6.10 refers to “using samples which are statistically valid” to determine dumping margins, and
Article 5.4, note 13 refers to the use of “statistically valid sampling techniques” to determine support and
opposition for an application in the case of fragmented industries.
8 The United States does not agree with the EC’s characterization of the group it defined as the
“Community industry” as including the “cooperating” pr oducers. This characterization inaccurately suggests
that some producers were cooperating while others were not. While it is undoubtedly true that the complaining
producers cooperated by responding to the questionnaires they received, this fact does not that mean the non-
complaining Community producers who were not sent questionnaires were not cooperative.

obligation to evaluate all relevant factors (the terms of Article 3.4) as an obligation to evaluate
all factors, even if it is apparent at the outset that some factors are not relevant? The US seeks
to defend the HFCS panel discussion of this issue. Where in its report did the panel in that case
consider the EC’s arguments presented in its First Written Submission and its Oral Statement
(which the US now has)? The US also refers to the Korea – resins report.9 Where in that report
is there any statement that all factors must be evaluated, whether relevant or not, or any
consideration of the arguments that the EC has made in this case?
12a. The EC quotes the US comment out of context. The entire sentence from which the quote is
taken reads, " [w]hile all enumerated factors must be evaluated, not all are necessarily material in any
particular case."10 In its third party submission, the United States went on to further explain that it
does not believe that investigating authorities are required in each case to make a specific finding on
each enumerated factor in Articles 3.2 and 3.4. Thus, the United States draws a distinction between
what must be evaluated and what must be contai ned in the public notice or report under Article 12.2.
Article 3.4 delineates certain relevant factors that must be evaluated. Article 12.2 requires an
authority’s notice or report to include findings only on what it considers "material." If, upon
evaluation, the authority determines that a particular factor is not material to the investigation, the
authority is not required to discuss that factor in its notice or report. In order to demonstrate that the
investigating authority has conducted the evaluation required by Article 3, however, it should be
discernible from the authority’s determination that it evaluated each of the enumerated factors. This
objective may be achieved when a determination, through its demonstration of why the authorities
relied on the specific factors they found to be material in the case, thereby discloses why other factors
on which they do not make specific findings were accorded little weight or were deemed not relevant
at all.
12b. The United States believes the HFCS decision provides a reasoned analysis of the
Agreement’s requirements concerning a panel’s ability to discern from an investigating authority’s
report that the authority fulfilled its obligations to consider the factors enumerated in Article 3.4. In
that case, the panel stated that "consideration" of the factors is required in every case, although such
consideration may lead the investigating authority to conclude that a particular factor is not probative
in the circumstances of a particular industry and therefore is not relevant to the particular
determination.
11 The United States has not contended that the HFCS panel considered all of the
counter arguments that the EC now makes to the panel’s conclusions regarding this issue. The United
States disagrees, however, with the EC’s assertions that the HFCS panel based its decision on
"simplistic reliance on the inappropriate precedent of safeguard cases." As illustrated by
Attachment 1,
12 the parties to that dispute presented the HFCS Panel with thorough analysis,
discussion, and case precedent for the panel’s consideration of this issue.
12c. Relative to the issue of which factors an investigating authority must consider, the EC has
argued that Article 3.4 only requires consideration of factors that have declined. As discussed in the
US original submission, the United States disagree s with this view. An "objective examination" as
required by Article 3.1 encompasses those factors tending to support an injury finding as well as those
tending against it. In explaining the fallacy of the EC’s position, the United States cited the Korea
Resins decision, wherein the panel concluded that the investigating authority could not focus solely on

9 Panel report on Korea – Anti-Dumping Duties on Imports of Polyacetal Resins from the
United States (Korea-Resins), BISD 40S/205, adopted 27 April 1993.
11 Panel report on Mexico - Anti-dumping Investigation of High Fructose Corn Syrup (HFCS) from the
12 US Exhibit 1, attached hereto, contains portions of the United States’ second submission (paras. 118-
125) to the HFCS panel.

factors supporting a conclusion that the domestic industry would likely encounter difficulties while
disregarding other factors.13
Indian Questions to the United States
1. In paragraph 19 of its Oral Statement made on 11th May, the US has stated that
Article 15 of the Anti-Dumping Agreement "p rovides important procedural safeguards to
developing countries". Could the US please explain and elaborate, on the basis of its own
experience of implementing Article 15, what these important procedural safeguards are?
1. The United States is of the view that Article 15 creates two safeguards that are procedural,
rather than substantive. The first sentence of Article 15 calls on developed country members to give
"special regard" to a developing country when considering the application of anti-dumping measures
under the ADA, while the second sentence requires that possibilities of constructive remedies "shall
be explored" before applying anti-dumping duties wh ere they would affect the essential interests of
developing country members. Article 15 does not define what "special regard" is, nor does it say
what "exploration" is required. It does not require any particular substantive result. Absent a more
specific requirement, the exact substance of that "special regard" and "exploration" depends upon a
good-faith interpretation of the provision, in accordance with Article 31 of the Vienna Convention on
the Law of Treaties. Insofar as Article 15 calls for a good-faith exploration of constructive remedies
prior to applying anti-dumping duties, it creates a procedural safeguard, as opposed to a substantive
one, that is designed to protect developing countries when their essential interests would be affected
by the application of anti-dumping duties.
2. In paragraph 25 of its Oral Statement, the US has referred to the draft
recommendations of the WTO committee on Anti-Dumping Practices on the period of data
collection for anti-dumping investigations. Would the US agree that these guidelines are only in
the form of recommendations?
2a. The United States agrees that these guidelines take the forms of a recommendation. The
United States did not mean to imply that these guidelines were requirements. The United States
referred to this recommendation to show that WTO Members have, by consensus, endorsed the
practice of collecting data for a one year period for dumping determinations and for at least a three
year period for evaluating injury. Under this practice, there will not, by definition, be data on dumped
imports for at least two of the three years of the injury investigation period. If there had been a
question consistency of this widely-used practice with the Anti-Dumping Agreement, WTO Members
would not have given it their endorsement.
2b. By referring to the recommendation, the United States also points out that India itself has
participated in the consensus to adopt these guidel ines, while at the same time taking issue with the
EC’s practice which appears to be consistent with those guidelines. India presumably would not have
acquiesced to this type of practice, by consenting to the Committee’s adoption of the guidelines, if it
questioned the consistency of this practice with the Anti-Dumping Agreement. Having agreed to the
recommendation, it is inconsistent for India to suggest that the EC violated the Anti-Dumping
Agreement by following a practice that the recommendation endorses.