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World Trade Organisation Panel Proceedings

European Union – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China

(WT/DS397)

Second Written Submission by the European Union

[Business Confidential Information removed]

Geneva 19 April 2010

EU – AD on Fasteners from China Second Written Submission (DS397) by the European Union ________________________________________________________________________

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TABLE OF CONTENTS

I. INTRODUCTION .......................................................................................................................................... 1 II. CHINA'S "AS SUCH" CLAIM AGAINST ARTICLE 9(5) OF COUNCIL REGULATION NO

384/96, AS AMENDED .................................................................................................................................. 3 A. Panel's Terms of Reference .................................................................................................................. 3

1. China's Panel Request failed to meet the requirements of Article 6.2 of the DSU ............................. 3 2. The Panel should not enter into the substantive analysis of China's claims ..................................... 10 3. Other issues outside the Panel's terms of reference .......................................................................... 11 4. Conclusion on the Panel's terms of reference ................................................................................... 14

B. Article 9(5) of Council Regulation No 384/96 "as such" is in conformity with the provisions invoked by China ................................................................................................................................ 15 1. Claim under Article 9.2 of the Anti-Dumping Agreement ................................................................ 15 2. Claim under Article I:1 of the GATT 1994 ....................................................................................... 32

C. Conclusion............................................................................................................................................ 33 III. CLAIM 1: ARTICLE 9(5) OF COUNCIL REGULATION NO 384/96 "AS APPLIED" IN COUNCIL

REGULATION NO 91/2009 (ARTICLES 6.10, 9.2 AND 9.4 OF THE ANTI-DUMPING AGREEMENT)............................................................................................................................................. 33

IV. CLAIM 2: STANDING OF THE EU DOMESTIC INDUSTRY FOR THE PURPOSES OF

INITIATION (ARTICLE 5.4 OF THE ANTI-DUMPING AGREEMENT)........................................... 33 V. CLAIM 3: DETERMINATION OF "DOMESTIC INDUSTRY" (ARTICLES 4.1 AND 3.1 OF THE

ANTI-DUMPING AGREEMENT) ............................................................................................................. 34 A. China's claim that the EU's exclusion from the "domestic industry" of producers that did not

make themselves known within 15 days from the date of initiation of the investigation or that did not support the complaint is inconsistent with Articles 4.1 and 3.1 of the Anti-Dumping Agreement is flawed............................................................................................................................ 34

B. China’s claim that the domestic industry as defined by the authorities is not composed of domestic producers whose collective output of the like product constitutes a major proportion of the total domestic production and is therefore in violation of Article 4.1 of the Anti-Dumping Agreement is flawed............................................................................................................................ 43

C. China’s claim that the domestic industry was not defined in relation to the investigation period and would thus be inconsistent with Article 3.1 finds no basis in the text of the Anti-dumping Agreement............................................................................................................................................ 49

D. China’s claim that the EU improperly made an injury determination with respect to a sample of EU producers that was not representative of the entire domestic production and thus violated Articles 4.1 and 3.1 of the Anti-Dumping Agreement is flawed ...................................................... 50

E. China’s claim that the European Union included in the domestic industry and in the sample a number of EU producers that were related to the exporters or importers or where themselves importers of the dumped product is based on an erroneous reading of Article 4.1 and is therefore to be rejected. ...................................................................................................................... 51

F. Conclusion............................................................................................................................................ 53 VI. CLAIM 4: SELECTION OF THE PRODUCT CONCERNED (ARTICLES 2.1 AND 2.6 OF THE

ANTI-DUMPING AGREEMENT) ............................................................................................................. 53 VII. CLAIM 5: DETERMINATION OF DUMPING (ARTICLE 2.4 OF THE ANTI-DUMPING

AGREEMENT.............................................................................................................................................. 53 VIII. CLAIM 6: PRICE UNDERCUTTING ANALYSIS (ARTICLES 3.1 AND 3.2 OF THE ANTI-

DUMPING AGREEMENT).......................................................................................................................... 58 IX. CLAIM 7: EXAMINATION OF THE VOLUME OF DUMPED IMPORTS (ARTICLES 3.1, 3,2, 3.4

AND 3.5 OF THE ANTI-DUMPING AGREEMENT)............................................................................. 62


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X. CLAIM 8: IMPACT OF DUMPED IMPORTS ON DOMESTIC PRODUCERS (ARTICLES 3.1 AND

3.4 OF THE ANTI-DUMPING AGREEMENT) ......................................................................................... 66 A. China’s allegation that the European Union did not conduct an objective examination by not

consistently using the same dataset is flawed.................................................................................... 66 B. China’s claim that the European Union failed to examine objectively the "profitability" of the

domestic industry is based on a distortion of the findings of the EU authorities and is thus to be rejected................................................................................................................................................. 70

C. China’s claim that the EU’s overall analysis of the impact of the dumped imports on the domestic industry is not objective is to be rejected since it lacks any factual basis and would require the Panel to substitute its judgment for that of the authority............................................ 71

D. China’s claim that the European Union improperly considered the displacement of EU products by Chinese imports in some market segment as being relevant and that this would constitute a violation of the "objective examination" requirement of Article 3.1 is without merit.................. 73

E. Conclusion............................................................................................................................................ 75 XI. CLAIM 9: CAUSATION AND NON-ATTRIBUTION ANALYSIS ARTICLES 3.1 AND 3.5 OF THE

ANTI-DUMPING AGREEMENT) ............................................................................................................... 75 XII. CLAIM 10: CHINA'S PROCEDURAL CLAIMS UNDER ARTICLES 6 AND 12 OF THE ANTI-

DUMPING AGREEMENT.......................................................................................................................... 78 XIII. CONCLUSION ............................................................................................................................................. 81

TABLE OF CASES


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Short Title Full Case Title and Citation

Argentina – Poultry Anti-Dumping Duties

Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R, adopted 19 May 2003, DSR 2003:V, 1727

Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3045 (Corr.1, DSR 2006:XII, 5473)

China – Publications and Audiovisual Products

Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010

Dominican Republic – Import and Sale of Cigarettes

Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, 7425

EC – Bed Linen (Article 21.5 – India)

Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, 965

EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27 September 2005, and Corr.1, DSR 2005:XIX, 9157

EC – Countervailing Measures on DRAM Chips

Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R, adopted 3 August 2005, DSR 2005:XVIII, 8671

EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1

EC – Selected Customs Matters Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, 3791

EC – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, 2701

Egypt – Steel Rebar Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from Turkey, WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, 2667

Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/R, adopted 17 December 2007, as modified by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, 2805

Korea – Certain Paper Panel Report, Korea – Anti-Dumping Duties on Imports of Certain Paper from Indonesia, WT/DS312/R, adopted 28 November 2005, DSR 2005:XXII, 10637

Mexico – Corn Syrup Panel Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States, WT/DS132/R, adopted 24 February 2000, and Corr.1, DSR 2000:III, 1345

Mexico – Corn Syrup (Article 21.5 – US)

Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSU by the United States, WT/DS132/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6675


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Short Title Full Case Title and Citation

Mexico – Steel Pipes and Tubes

Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from Guatemala, WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, 1207

Mexico – Taxes on Soft Drinks Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/AB/R, adopted 24 March 2006, DSR 2006:I, 3

Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701

US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 3779

US – Certain EC Products Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373

US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS320/AB/R, adopted 14 November 2008

US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009

US – Corrosion-Resistant Steel Sunset Review

Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3

US – Corrosion-Resistant Steel Sunset Review

Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3

US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, 5663 (Corr.1, DSR 2006:XII, 5475)

US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, 4697

US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, 4051

US – Oil Country Tubular Goods Sunset Reviews

Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004, DSR 2004:VII, 3257

US – Softwood Lumber V Panel Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/R, adopted 31 August 2004, as modified by Appellate Body Report WT/DS264/AB/R, DSR 2004:V, 1937

US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted 9 May 2006, and Corr.1, DSR 2006:II, 417


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I. INTRODUCTION

1. At the outset, the European Union would like to take issue with China's attempt to

disregard the numerous and precise arguments raised by the European Union under

Articles 4.2, 4.3, 4.5, 4.7, 6.2, 7.1 and 11 of the DSU. China argues that the

European Union has raised a broad range of procedural arguments as tactical

instruments to prevent the Panel from addressing the substantive issues underlying

this dispute.1 China also considers that the absence of a request for a preliminary

ruling on the procedural deficiencies has denied China the opportunity to reply in

writing to the procedural objections before the first meeting with the Panel.2

2. To begin with, as a matter of fact, the European Union's First Written Submission

has addressed all the claims raised by China in its Panel Request and its First Written

Submission, going even beyond in many aspects of what was required, due to the

lack of both factual evidence and clarity of the legal arguments made by China. In

this respect, the European Union has attempted to shed some light on all the issues

even where China has failed to make a prima facie case.

3. Furthermore, the European Union agrees with the Appellate Body's statement that

"the procedural rules of WTO dispute settlement are designed to promote, not the

development of litigation techniques, but simply the fair, prompt and effective

resolution of trade disputes".3 As the Appellate Body clarified in the same passage,

this statement applies to both parties in the dispute. Indeed, the Appellate Body

noted that the principle of good faith "requires both complaining and responding

Members to comply with the requirements of the DSU" and considered that, by good

faith compliance, "complaining Members accord to the responding Members the full

measure of protection and opportunity to defend, contemplated by the letter and

spirit of the procedural rules". (emphasis added) Thus, complaining Members must

comply with the letter and spirit of the procedural rules as required by the DSU.

1 China's Opening Oral Statement, First Meeting with the Panel, paras 3 and 5. 2 China's Opening Oral Statement, First Meeting with the Panel, para. 4. 3 Appellate Body Report, US – FSC, para. 166.


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4. This also follows from the Appellate Body's consideration that the obligation to

afford due process is "inherent in the WTO dispute settlement system"4 and that due

process requirements are "fundamental to ensuring a fair and orderly conduct of

dispute settlement proceedings".5 In this respect, the protection of due process is an

essential feature of a rules-based system of adjudication. Moreover, the Appellate

Body has found that due process is required by Article 11 of the DSU.6 The

"procedural" arguments – as China qualifies them – raised by the European Union

are thus fundamental rules under the DSU granting rights to the parties and

governing dispute settlement proceedings which must be respected for a proper

functioning of the multilateral trading system. China's attempt to downgrade them as

somehow inferior to the provisions of the Anti-Dumping Agreement and/or the GATT

1994 must be clearly rejected for fundamental systemic reasons.

5. The absence of a request for a preliminary ruling on these issues should not surprise

China and did not deny China the opportunity to reply to those objections in writing

before the first meeting with the Panel. Indeed, the possibility to request such a

preliminary ruling is an option available to both parties, not an obligation.7 Such

possibility can be exercised when submitting the First Written Submission at the

latest.8 Moreover, should the European Union have chosen to file such a request,

China would have had to reply to them prior to the first substantive meeting with the

Panel. The fact that the European Union chose instead to make substantive

arguments on the basis of Articles 4.2, 4.3, 4.5, 4.7, 6.2, 7.1 and 11 of the DSU in its

First Written Submission without formally requesting a preliminary ruling, if

anything, permits China to rebut these precise arguments in the course of these

proceedings.

6. In any event, the European Union observes that panels have the right to determine

whether they have jurisdiction in a given case, as well as to determine the scope of

their jurisdiction. In this regard, the Appellate Body has previously stated that "it is

a widely accepted rule that an international tribunal is entitled to consider the issue

4 Appellate Body Report, Chile – Price Band System, para. 176; and Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 107. 5 Appellate Body Report, Thailand – H-Beams, para. 88. 6 Appellate Body Report, US – Gambling, para. 273. 7 Panel's Working Procedures, para. 15. 8 Panel's Working Procedures, para. 15, fist sentence.


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of its own jurisdiction on its own initiative, and to satisfy itself that it has jurisdiction

in any case that comes before it". 9 Therefore, pursuant to Article 11 of the DSU, the

European Union requests the Panel to examine whether China has complied with the

fundamental rules contained in the DSU when making its claims in the present

dispute.

7. In this submission, the European Union will address first China's claims with respect

to Article 9(5) of Council Regulation No 384/96, as amended. Then, the European

Union will address China's claims against Council Regulation No 91/2009 in the

consecutive order followed by China in its First Written Submission. Since China

has not rebutted the very numerous detailed arguments contain in our First Written

Submission, the European Union will not repeat all of them in this Second Written

Submission; rather, where necessary, the European Union will add some additional

comments on China's claims.

II. CHINA'S "AS SUCH" CLAIM AGAINST ARTICLE 9(5) OF COUNCIL REGULATION NO 384/96, AS AMENDED

A. Panel's Terms of Reference

1. China's Panel Request failed to meet the requirements of Article 6.2 of the DSU

8. The European Union maintains that China's Panel Request failed to meet the

requirements of Article 6.2 of the DSU with respect to its claims relating to Articles

6.10, 9.3 and 9.4 of the Anti-Dumping Agreement and Article X:3(a) of the GATT

1994.10

9. China argues that Article 6.2 of the DSU merely requires the complaining Member

to identify in its Panel Request the specific measure at issue and the claims so as to

enable the defending Member to know the problem at issue. Since China's Panel

Request identifies Article 9(5) of Council Regulation No 384/96, as amended, and

Articles 6.10, 9.2, 9.3 and 9.4 of the Anti-Dumping Agreement and Articles I and

X:3(a) of the GATT 1994, China maintains that the European Union was aware of

9 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 42. 10 EU First Written Submission, paras 46 – 71.


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the specific measure and legal claims.11 China also considers that a panel request

must contain a reference to the legal "claim" and that any required "explanation" to

plainly connect the specific measure with the legal basis for the complaint contained

in the panel request would amount to an "argument".12 The European Union

disagrees with China's views on Article 6.2 of the DSU.

10. The Appellate Body has clarified that the brief summary of the legal basis of the

complaint required by Article 6.2 of the DSU aims to explain succinctly how or why

the measure at issue is considered by the complaining Member to be violating the

WTO obligation in question. This brief summary must be sufficient to present the

problem clearly.13 The Appellate Body has also noted that, in order to "present the

problem clearly", the panel request must plainly connect the challenged measure

with the provision(s) of the covered agreements claimed to have been infringed, so

that the respondent party is aware of the basis for the alleged nullification or

impairment of the complaining party's benefits.14

11. Article 6.2 of the DSU thus does not require that the brief summary of the legal basis

of the complaint amounts to an "argument" (something which is developed at a later

stage in the course of the panel proceedings); however, it requires that the brief

summary of the legal basis of the complaint explains how and why the measure at

issue violates the WTO obligation in question in a sufficient manner to present the

problem clearly. Naturally, if a panel request does not plainly connect the measure at

issue with the legal basis for the complaint, the respondent will not know what case

it has to answer and will not be able to begin preparing its defence. Put simply, if a

panel request identifies a measure in a precise manner but then includes legal claims

which do not directly pertain to the operation of the measure, the respondent

Member is left wondering how that measure can be the source of the alleged

impairment.15

11 China's Opening Oral Statement, First Meeting with the Panel, paras 21 and 22. 12 China's Opening Oral Statement, First Meeting with the Panel, paras 24 and 25. 13 Appellate Body Report, EC – Selected Customs Matters, para. 130. 14 Appellate Body Report, US – OCTG Sunset Reviews, para. 162. 15 Appellate Body Report, US – Gambling, para. 121.


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12. In its Panel Request, China challenged a precise measure (i.e., Article 9(5) of

Council Regulation No 384/96, as amended)16 as being "as such" inconsistent with

certain provisions of the Anti-Dumping Agreement and the GATT 1994. As

explained in our First Written Submission,17 Article 9(5) of Council Regulation No

384/96 deals with a very precise issue: the imposition of anti-dumping duties on a

country-wide basis or on an individual basis, if certain criteria are met, in the case of

imports from non-market economy countries. In view of the "as such" nature of

China's claim18 and the requirement that the complaining Member has to state

unambiguously the specific measures which are subject to "as such" claims,19 the

European Union was puzzled when reading in China's Panel Request as well as its

First Written Submission that the brief summary of the legal claims related to other

issues (such as the calculation or determination of dumping margins, the level of

anti-dumping duties, and the imposition of anti-dumping duties in a specific context

such as sampling)20 which are not addressed by the specific measure at hand.

13. China claims that the European Union has failed to demonstrate that China's failure

to "present the problem clearly" has prejudiced its ability to defend itself, arguing

that the extensive argumentation and analysis in the EU First Written Submission

concerning all claims is sufficient proof that the EU's ability to defend itself has not

been prejudiced.21 In this respect, the European Union strongly disagrees. Indeed,

the panel in Japan – DRAMs (Korea) noted that:22

We believe that consideration of an actual prejudice suffered during the panel process undermines that due process objective, since it allows a Member to correct any lack of clarity in its request during the panel proceedings, even though the request may not have been sufficiently clear for the respondent to begin preparing its defence at the beginning of the panel process (emphasis added).

16 In the present submission, the European Union refers to Article 9(5) of Council Regulation No 384/96, as amended, as "Article 9(5) of Council Regulation No 384/96". 17 EU First Written Submission, paras 18 – 26, 31, 41 and 44. 18 EU First Written Submission, paras 36 – 39. 19 Appellate Body Report, US – OCTG Sunset Reviews, paras 172-173 ("We would therefore urge complaining parties to be especially diligent in setting out "as such" claims in their panel requests as clearly as possible"). 20 For the reasons mentioned in our First Written Submission, which China has failed to address, the European Union also maintains that China's claim under Article X:3(a) of the GATT 1994 fails to meet the requirements of Article 6.2 of the DSU (see EU First Written Submission, paras 64 – 70). 21 China's Opening Oral Statement, First Meeting with the Panel, para. 26. 22 Panel Report, Japan – DRAMs (Korea), para. 7.9.


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14. Like the panel in Japan – DRAMs (Korea), the European Union considers that the

lack of clarity in a panel request cannot be rewarded by allowing the complaining

Member to amend it in the course of panel proceedings. Moreover, the significant

efforts made by the respondent Member to be as comprehensive as possible and

react to all the issues raised in the First Written Submission of the complainant,

despite its lack of clarity, cannot be penalised by ignoring its rights to a due process.

Furthermore, China seems to disregard that the identification of the matter in a

precise manner (as required by Article 6.2 of the DSU) allows third parties to know

about the issues which are going to be discussed in the dispute and take a decision as

whether to participate in those panel proceedings. Needless to say, if a Member

identifies a measure or a matter in a particular manner and then seeks to expand the

matter to other issues, this directly puts into question the third parties' right to an

adequate information on the issues raised by the dispute at hand.23

15. In a further attempt to expand the Panel's terms of reference to other issues which

were not identified in its Panel Request as required by Article 6.2 of the DSU, China

argues that there is a disagreement between the parties as to the scope of the measure

at issue.24 In this respect, the European Union considers that, in view of the "as such"

nature of China's claim, any disagreement between the parties on this issue should be

resolved by examining the text of Article 9(5) of Council Regulation No 384/96, as

amended. As the Appellate Body has noted:25

When a measure is challenged 'as such', the starting point for an analysis must be the measure on its face. If the meaning and content of the measure are clear on its face, then the consistency of the measure as such can be assessed on that basis alone. If, however, the meaning or content of the measure is not evident on its face, further examination is required. (emphasis added)

16. The text of Article 9(5) of Council Regulation No 384/96 leaves no doubt that the

issue contained in that provision refers to the imposition of anti-dumping duties:

"[a]n anti-dumping duty shall be imposed". In its relevant part, this provision states

that: "[t]he Regulation imposing the duty shall specify the duty for each supplier or,

if that is impracticable, and in general where Article 2(7)(a) applies, the supplying

country concerned". The third sentence of this provision states that, in cases of

23 Appellate Body Report, US – Carbon Steel, para. 126. 24 China's Opening Oral Statement. First Meeting with the Panel, paras 23 and 32.


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imports from non-market economy countries where suppliers cannot show that

market economy conditions prevail in respect of the manufacture and sale of the

product concerned, "an individual duty shall, however, be specified for the exporters

which can demonstrate" that they meet certain criteria. Those criteria examine the

degree of independency of the supplier concerned from the State in its export

activities. As can be observed from the text of Article 9(5) of Council Regulation No

384/96, the only issue which results from this provision is, strictu sensu, the

imposition of anti-dumping duties on a country-wide basis or on an individual basis

if certain criteria are met in the case of imports from non-market economy countries.

17. When Article 9(5) of Council Regulation No 384/96 is seen in the context of its

other provisions, the same conclusion is reached about its meaning and content.

Indeed, Article 9(5) of Council Regulation No 384/96 is included in the provision

titled "Termination without measures; imposition of definitive duties". Other

provisions in Council Regulation No 384/96 deal with separate issues, such as the

"Determination of dumping" (Article 2),26 the level of anti-dumping duties (Article

9(4)) or the calculation of dumping margins and the imposition of duties in the

specific context of sampling (Article 9(6)). In this respect, it should be noted that

Council Regulation No 384/96 sought to bring into the EU's legal order the

provisions of the Anti-Dumping Agreement and thus Council Regulation No 384/96

follows the structure and language of that agreement as far as possible.27 Thus,

Article 9(5) of Council Regulation No 384/96 mirrors the language of Article 9.2 of

the Anti-Dumping Agreement, whereas Articles 2, 9(4), last sentence and 9(6) of

Council Regulation No 384/96 mirrors the language of Articles 2, 9.3 and 9.4 of the

Anti-Dumping Agreement as far as possible.

25 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 168. 26 China seems to acknowledge that there is a difference between the determination of dumping margins (and issue contained in Article 2 of Council Regulation No 384/96) and the imposition of duties (contained in Article 9 of Council Regulation No 384/96). See China's Opening Oral Statement, First Meeting with the Panel, para. 10, last three sentences. 27 Council Regulation No 384/96, recital 5 ("Whereas the new agreement on dumping, namely, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as ‘the 1994 Anti-Dumping Agreement’), contains new and detailed rules, relating in particular to the calculation of dumping, procedures for initiating and pursuing an investigation, including the establishment and treatment of the facts, the imposition of provisional measures, the imposition and collection of anti-dumping duties, the duration and review of anti-dumping measures and the public disclosure of information relating to anti-dumping investigations; whereas, in view of the extent of the changes and to ensure a proper and transparent application of the new rules, the language of the new agreements should be brought into Community legislation as far as possible") (emphasis added).


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18. Since the meaning and content of Article 9(5) of Council Regulation No 384/96 are

clear on its face, then the Panel should assess the consistency of this measure as such

on that basis alone. In any event, the European Union has also explained in its First

Written Submission how Article 9(5) of Council Regulation No 384/96 operates in

practice.28 Indeed, the application of this provision by the EU authorities in cases of

imports originating from China takes place at the beginning of the investigation and

amounts to a purely threshold question: can the applicant company be considered as

a supplier acting independently from the State? If in examining the information

provided in relation to the five criteria the answer by the EU authorities is positive,

that IT supplier is considered an independent exporter or producer and the source of

the alleged price discrimination, and an individual anti-dumping duty will be

specified for that IT supplier in the provisional and/or definitive measure. In contrast,

if the answer is negative, that non-IT supplier is not considered a genuine exporter or

producer, but an entity which does not act independently from the State (which is

ultimately the actual producer and the source of the alleged price discrimination)

and, thus, that non-IT supplier will be subject to the actual producer, country-wide

duty rate.

19. The fact that an individual dumping margin is calculated for IT suppliers and not for

non-IT suppliers or the question how the dumping margin calculations are carried

out for IT suppliers or for the actual producer (i.e., the State) and its related non-IT

suppliers are separate issues not provided for in Article 9(5) of Council Regulation

No 384/96; rather, these and other issues are the result of the application of other

provisions (such as Articles 2, 9(4) and 9(6) of Council Regulation No 384/96). As

stated in our First Written Submission,29 once the threshold question provided for in

Article 9(5) of Council Regulation No 384/96 has been solved, the EU investigating

authorities apply the relevant rules for the purposes of determining the proper duty

rate for IT and non-IT suppliers. Those relevant rules include the relevant provisions

to establish the level of the final duty rate, which not only relate to the calculation of

dumping margins, but also to the establishment of injury margins, the determination

of the cooperation of the IT/non-IT suppliers, etc.30 Thus, China wrongly argues that

28 EU First Written Submission, paras 19 – 22. 29 EU First Written Submission, paras 23, 55, 80 and 81. 30 China appears to distort or misunderstand the explanations on how Article 9(5) of Council Regulation No 384/96 is applied (China's Opening Oral Statement, First Meeting with the Panel, paras 41 – 43).


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Article 9(5) of Council Regulation No 384/96 is a threshold test that determines

whether or not an individual dumping margin will be calculated31 and how such

dumping margins are calculated.32

20. What China pretends in its attempt to expand the Panel's terms of reference to other

issues which were not identified in its Panel Request is that any consequences from

the determination provided by Article 9(5) of Council Regulation No 384/96 should

be included in the measure at issue. That approach should be rejected. The measure

at issue identified by China in its "as such" claim the Panel is requested to examine33

is Article 9(5) of Council Regulation No 384/96, on its face, and not everything

which may derive from the determination provided for by that provision, or anything

under the other provisions of the same regulation that may sequentially come after

the Article 9(5) determination during the investigation.

21. To illustrate this with analogous examples: If a Member challenges a statutory

provision which requires to disregard replies provided by suppliers to the

questionnaires within a particular time limit as being contrary to Article 6.8 of the

Anti-Dumping Agreement, the manner in which dumping margins are calculated for

the non-cooperating suppliers or the level of duty rates would be governed by

separate and distinct provisions that do not address the specific matter raised.

Similarly, if a Member challenges the manner in which another Member applies

rules to determine that certain suppliers are related, the manner in which dumping

margins are calculated as a result of such determination would manifestly be a

separate issue. The European Union wonders whether China considers that if a

Member, for instance, identifies in its panel's request the provisions dealing with the

standing determination as the measure at issue, then all the consequences of that

31 China's Opening Oral Statement, First Meeting with the Panel, paras 23 and 34. Furthermore, China wrongly argues that the purpose of Article 9(5) of Council Regulation No 384/96 is to determine whether an exporter should be made subject to an individual duty based on its individual margin (China's Opening Oral Statement, First Meeting with the Panel, para. 62, final sentence). The individual duty for IT-suppliers is not based on its individual margin; the proper duty rate is established by looking at certain elements, not only the dumping margin, but also the injury margin, the cooperation of the supplier concerned throughout the investigation, etc; and, ultimately, both the need for adopting anti-dumping measures and the proper level of anti-dumping duties imposed are left to the discretion of the investigating authorities (Article 9.1 of the Anti-Dumping Agreement). 32 China's Opening Oral Statement, First Meeting with the Panel, para. 40, final sentence ("This specific issue of how the dumping margin is to be determined is specifically addressed by Article 9(5) of the Basic AD Regulation"). 33 China's Opening Oral Statement, First Meeting with the Panel, para. 31.


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determination as indirect as they may be (i.e., the initiation of the investigation and

all the steps taken in all subsequent aspects of an anti-dumping investigation) would

also fall within the jurisdiction of the panel since they follow in sequence that

determination. Would China consider that if the identified measure at issue consists

of a methodology which results in creating dumping margins by inflating the results

of the comparison, a panel would also be entitled to examine how the Member

concerned determines the volume of dumped imports in the context of Article 3.1 of

the Anti-Dumping Agreement?

22. The European Union believes that the answer to these questions must be negative.

When a measure has been very specifically identified in a panel request, the measure

at issue cannot include any consequence, result or subsequent separate determination

which may or may not be connected to the specific meaning and content of the

identified measure. This must be the case a fortiori in the context of an alleged "as

such" violation, which must according to the Appellate Body be set out especially

diligently.34 Otherwise, it would be sufficient to identify a specific provision in a

given act as the measure at issue in order to have the whole act or omission and any

other act or omission of the Member that is directly or indirectly related to that act

within the jurisdiction of the panel. That simply must be wrong because the

jurisdiction of the panel becomes necessarily a moving "matter" during the panel

proceedings.

23. Consequently, the European Union considers that China's Panel Request failed to

meet the requirements of Article 6.2 of the DSU with respect to its claims relating to

Articles 6.10, 9.3 and 9.4 of the Anti-Dumping Agreement and Article X:3(a) of the

GATT 1994.35

2. The Panel should not enter into the substantive analysis of China's claims

24. Should the Panel find that China's Panel Request plainly connects the challenged

measure with the provisions of the covered agreements in accordance with Article

6.2 of the DSU (quod non), the European Union submits that the Panel should refrain

34 Appellate Body Report in US – OCGT reviews, paras 172 to 173. 35 EU First Written Submission, paras 46 – 71.


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from examining China's claims under Articles 6.10, 9.2, 9.3 and 9.4 of the Anti-

Dumping Agreement and Article X:3(a) of the GATT 1994 since the specific

measure described by China in its Panel Request (i.e., Article 9(5) of Council

Regulation No 384/96) does not fall within the scope of the obligations contained in

the provisions of the covered agreements invoked by China.36

25. In this respect, since the measure at issue on its face does not require or provide for

the calculation or determination of dumping margins, the level of anti-dumping

duties, the imposition of anti-dumping duties in a specific context such as sampling

or how it is to be administered,37 it cannot be found to be the source of the alleged

impairment caused by the violation of the relevant provisions invoked by China.

3. Other issues outside the Panel's terms of reference

26. The European Union requests the Panel to refrain from examining measures and

issues outside its terms of reference in relation to China's "as such" claim, including

Article 9(5) of Council Regulation No 1225/2009, any matters pertaining to the

calculation or individual determination of dumping margins, or any other matters

raised by China in its First Written Submission or in any other subsequent

submission which is different from the one specifically identified by China in its

Panel Request (i.e., Article 9(5) of Council Regulation No 384/96, insofar as it

provides for the imposition of anti-dumping duties on a country-wide basis or on an

individual basis, if certain criteria are met, in the case of imports from non-market

economy countries).38

27. China considers that Article 9(5) of Council Regulation No 1225/2009 falls within

the Panel's terms of reference since, although it replaced Council Regulation No

384/96 after the establishment of the Panel, the content or substance of the measure

has not changed.39 China also maintains that, even if the Panel were to conclude that

Article 9(5) of Council Regulation No 1225/2009 is not within the Panel's terms of

reference, the Panel must examine Article 9(5) of Council Regulation No 384/96 and

36 EU First Written Submission, paras 96 – 102, 133 – 138, 156 – 159, 166 – 168 and 182 – 186. 37 See paras 15 – 20 above. 38 EU First Written Submission, paras 72 – 84. 39 China's Opening Oral Statement, First Meeting with the Parties, para. 28.


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make findings and recommendations since the matter is still outstanding.40 The

European Union disagrees.

28. Contrary to what China asserts,41 the EU's contention that Article 9(5) of Council

Regulation No 1225/2009 is not within the Panel's terms of reference is not purely

based on semantics. Article 6.2 of the DSU requires the complaining Member to

identify the measure at issue in a specific manner. When identifying the measure at

issue, nothing precludes the complaining Member from describing the measure by

reference to the substance of the matter, the form of the measure or any combination

of both. Likewise, nothing precludes the complaining Member from including

amendments, implementing measures, related measures, replacements, etc. In the

present case, despite the fact that several months before China's Consultation

Request a proposal to repeal Council Regulation No 384/96 had been published,42

China decided to identify the measure at issue, as amended, but did not request the

Panel to also examine measures replacing that measure. The identification of the

measure at issue by reference to Article 9(5) of Council Regulation No 384/96 in the

context of an "as such" claim, where the complaining Member has to state

unambiguously the specific measures,43 has as a consequence that any measure

adopted after the establishment of the Panel which replaced the measure identified

by China in its Panel Request does not fall within the Panel's terms of reference.

29. Even if on substance Article 9(5) of Council Regulation No 384/96 is similar to

Article 9(5) of Council Regulation No 1225/2009, China should not be allowed to

40 China's Opening Oral Statement, First Meeting with the Parties, para. 29. 41 China's Opening Oral Statement, First Meeting with the Parties, para. 28. 42 Commission of the European Communities, Proposal for a Council Regulation on protection against dumped imports from countries not members of the European Community (codified version), COM(2009) 168 final, 16.4.2009 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0168: FIN:EN:PDF, last visited 16 April 2010). Similar Council Regulations in other areas dealing with the imposition of countervailing duties and safeguard measures had also been published before China's Consultations Request (see Council Regulation No 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community (codified version) (Official Journal of the European Union L 188/93, 18.7.2009) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:188:0093:0126:EN:PDF, last visited 16 April 2010); Council Regulation No 260/2009 of 26 February 2009 on the common rules for imports (codified version) (Official Journal of the European Union L 84/01, 31.3.2009) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:084:0001:0017:EN:PDF, last visited 16 April 2010); and Council Regulation 625/2009 of 7 July 2009 on common rules for imports from certain third countries (codified version) (Official Journal of the European Union L 185/1, 17.7.2009) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:185:0001:0015:EN:PDF, last visited 16 April 2010)). 43 Appellate Body Report, US – OCTG Sunset Reviews, paras 172-173.


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bring the latter within the Panel's terms of reference. In EC – Chicken Cuts, Brazil

and Thailand also argued that two subsequent measures fell within the panel's terms

of reference because they have the "same effect" and bring about the same result as

the two original measures contained in their panel's request.44 However, the

Appellate Body rejected such a request since the notion of measures having the

"same effect" is too vague and could undermine the requirement of specificity and

the due process objective enshrined in Article 6.2 of the DSU.45

30. The European Union thus requests the Panel to conclude that Article 9(5) of Council

Regulation No 1225/2009 does not fall within its terms of reference as a logical

conclusion of how China identified the measure at issue in its Panel Request. This

result would not undermine the effectiveness of the dispute settlement system since,

as mentioned before, nothing prevents the complaining Member from including in its

panel request subsequent, implementing or related measures. The European Union

agrees with the Appellate Body's statement in Chile – Price Band, that a practice of

amending measures during dispute settlement proceedings should not be condoned if

such changes are made with a view to shielding a measure from scrutiny by a panel

or by the Appellate Body. Needless to say, this is not the case in the present dispute

since a proposal to repeal the measure identified in China's Panel Request had been

put forward in April 2009 (i.e., three months before China's requests for

consultations). Moreover, in that case, the Appellate Body also noted that:46

Generally speaking, the demands of due process are such that a complaining party should not have to adjust its pleadings throughout dispute settlement proceedings in order to deal with a disputed measure as a "moving target". If the terms of reference in a dispute are broad enough to include amendments to a measure—as they are in this case—and if it is necessary to consider an amendment in order to secure a positive solution to the dispute—as it is here—then it is appropriate to consider the measure as amended in coming to a decision in a dispute.

44 Like China's Panel Request, these panel's requests did not contain any reference to "subsequent or related measures". 45 Appellate Body Report, EC – Chicken Cuts, para. 160. 46 Appellate Body Report, Chile – Price Band, para. 144.


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31. Unlike in Chile – Price Band,47 in the present case, the terms of reference (as

contained in China's Panel Request) are not broad enough as to include

implementing, related, subsequent or replacement measures. Furthermore, the

Appellate Body has already confirmed that even if a positive and effective resolution

of a dispute is one of the key objectives of the WTO dispute settlement system, "this

objective cannot be pursued at the expense of complying with the specific

requirements and obligations of Article 6.2".48 Therefore, the European Union

submits that Article 9(5) of Council Regulation No 1225/2009 does not fall within

the Panel's terms of reference.

32. In addition, the European Union agrees with China that the Panel is entitled to

examine Article 9(5) of Council Regulation No 384/96 and make findings on that

measure as falling within its terms of reference. However, the European Union

considers that, since Council Regulation No 384/96 has been repealed (as China also

acknowledges)49 the Panel should refrain from making recommendations pursuant to

Article 19 of the DSU. Indeed, the measure identified by China (i.e., Article 9(5) of

Council Regulation No 384/96) has already been withdrawn.50

4. Conclusion on the Panel's terms of reference

33. In view of the foregoing, the European Union submits that the Panel's mandate in the

present dispute is to examine whether Article 9(5) of Council Regulation No 384/96

–insofar as its meaning and content provides that, in case of imports from non-

market economy countries, an individual anti-dumping duty shall be specified for

suppliers that can demonstrate, on the basis of properly substantiated claims, that

they fulfil the five criteria listed in that provision; and that, otherwise, the anti-

dumping duty shall be specified for the supplying country concerned and not for

each supplier– is as such inconsistent with Articles 9.2 and 18.4 of the Anti-Dumping

Agreement, Article I:1 of the GATT 1994 and Article XVI:4 of the WTO Agreement

47 Appellate Body Report, Chile – Price Band, para. 135 ("Argentina's request for the establishment of a panel refers to the measure in issue as the price band system 'under Law 18.525, as amended by Law 18.591 and subsequently by Law 19.546, as well as the regulations and complementary provisions and/or amendments' (emphasis added). Such amendments, in our view, include Law 19.772. The broad scope of the Panel request suggests that Argentina intended the request to cover the measure even as amended"). 48 Appellate Body Report, EC – Chicken Cuts, para. 161. 49 China's Opening Oral Statement, First Written Submission, para. 28, first sentence.


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(i.e., the provisions of the covered agreements raised in China's Panel Request in

conformity with the requirements set out by Article 6.2 of the DSU). Anything

beyond examining whether Article 9(5) of Council Regulation No 384/96 as such is

consistent with those claims invoked by China is outside the Panel's terms of

reference and, thus, the Panel should refrain from examining any other issues raised

by China in connection with its "as such" claim.

B. Article 9(5) of Council Regulation No 384/96 "as such" is in conformity with the provisions invoked by China

34. For the reasons mentioned in our First Written Submission, the European Union

maintains that Article 9(5) of Council Regulation No 384/96 is as such consistent

with the provisions invoked by China.51 The European Union will therefore not

repeat again those arguments in this submission; rather, the European Union will

focus on addressing the specific points made by China in the first meeting with the

Panel in connection with its claims falling within the Panel's terms of reference.52 In

particular, the European Union will address China's claim under Article 9.2 of the

Anti-Dumping Agreement, by examining that provision and referring to Article 6.10,

where relevant, as context to address the relationship between these two provisions,

and to China's Protocol of Accession. The European Union will also briefly address

China's claim under Article I:1 of the GATT 1994.

1. Claim under Article 9.2 of the Anti-Dumping Agreement

35. The European Union submits that the Panel should reject China's claim that Article

9(5) of Council Regulation No 384/96 is inconsistent with Article 9.2 of the Anti-

Dumping Agreement.53 In this submission, the European Union will examine the

relationship between Articles 6.10 and 9.2 in order to show that China's main

argument based on the parallelism between these two provisions is in error.

Moreover, the European Union will rebut China's specific comments made on these

50 See e.g., Panel Report, Dominican Republic – Import and Sale of Cigarettes, paras 7.363, 7.393 and 7.419; Appellate Body Report, US – Certain EC Products, paras 81 and 129. 51 EU First Written Submission, paras 85 – 196. 52 The European Union maintains that China's claims under Article 18.4 of the Anti-Dumping Agreement and Article XVI:4 of the WTO Agreement are consequential. Since China has not made additional arguments in connection with these claims, the European Union will not repeat its arguments in the present submission (see EU First Written Submission, paras 195 – 196).


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provisions in the first meeting with the Panel. Finally, the European Union will

address China's comments on its Protocol of Accession.

(a) Relationship between Articles 6.10 and 9.2 of the Anti-Dumping Agreement

36. The European Union understands that China's claims against Article 9(5) of Council

Regulation No 384/96 are premised on the existence of an obligation in Articles 6.10

and 9.2 of the Anti-Dumping Agreement to always determine dumping margins and

impose anti-dumping duties on an individual basis, with the only exception of the

sampling situation. In this respect, China argues that, as a rule, Article 6.10 of the

Anti-Dumping Agreement requires the determination of dumping margins on an

individual basis in all cases but one. According to China, the sole exception to that

strict rule is where the number of suppliers is so large as to make the determination

of an individual margin of dumping impracticable, in which case the authorities may

limit their examination to some of the interested parties (i.e., sampling).54 Similarly,

China maintains that Article 9.2 of the Anti-Dumping Agreement requires that anti-

dumping duties are applied on an individual basis for each supplier involved.55

China argues that the only exception to this rule is where it is impracticable to do so

because of the number of suppliers involved (i.e., sampling).56 China's claims are

thus based on a parallelism between Articles 6.10 and 9.2 of the Anti-Dumping

Agreement.

37. China's understanding of Articles 6.10 and 9.2 of the Anti-Dumping Agreement is

flawed on numerous grounds. First, Article 6.10 does not contain a strict rule

requiring investigating authorities to always determine dumping margins on an

individual basis. In this respect, the European Union questions the interpretation of

the terms "as a rule" in Article 6.10, first sentence, as providing for a strict obligation

to determine an individual dumping margin in each and every single case. Indeed,

Article 6.10, first sentence does not impose an unqualified obligation to determine

individual margins. The terms "as a rule" which are inserted after the word "shall"

53 EU First Written Submission, paras 94 – 131. 54 China's First Written Submission, para. 43. 55 China's First Written Submission, paras 68, final sentence; 70, final sentence; 71, final sentence; 74, penultimate sentence; and 75, final sentence. 56 China's First Written Submission, paras 71, penultimate sentence, and 74, final sentence.


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rather indicate that the obligation is only a general principle and not a strict

obligation that is to be complied with in any and all circumstances. This is even

more clear in the French and Spanish version of Article 6.10, which states that: "En

règle générale, les autorités détermineront une marge de dumping individuelle" and

"Por regla general,...".

38. If the drafters had wanted to provide for a strict rule with only one exception they

would have used the structure of, for example, Article 11.3 on sunset reviews ("shall

be terminated, unless")57 or stronger language to connect the first and the second

sentences (e.g., begin the second sentence with "Only in cases where…").58 They did

not do so but rather decided to express a clear preference for individual margins, but

no more than that. In other words, Article 6.10, first sentence contains the expression

of a preference, as a general rule, not a strict obligation which must be complied

with in each and every case.

39. The negotiating history of Article 6.10 also confirms this natural reading of this first

sentence, as one moved away from a rule/exception structure59 to a more neutral

juxtaposition of two affirmative statements60 of which the first is further qualified

(and thus softer in tone than one would expect of a strict obligation) by the

introduction of the qualifier, "as a rule"/"en règle générale"/"por regla general".

What would be the purpose of inserting this qualifier and removing the

rule/exception structure if it is not to relax the obligation imposed in the first

sentence? Consequently, in the European Union's view, Article 6.10 should not be

read as being structured in the manner of "rule/only exception", as China alleges;

rather, that provision contains a preference for determining individual dumping

margins and then refers to one affirmative situation (i.e., sampling) where such a

preference "may" not be followed.

40. Second, contrary to what China asserts, Article 6.10 does not contemplate only one

exception (i.e., sampling) where investigating authorities are permitted to depart

57 Other provisions in the Anti-Dumping Agreement clearly show a "rule/unless or except" structure, e.g., Articles 4.1, 5.5, 5.8, 5.10, 6.5.2, 8.2, 9.2 and 18.3.2. 58 E.g., Articles 2.2.1, 3.1 and 4.2 of the Anti-Dumping Agreement. 59 See e.g., New Zealand I Text where the first and second sentences were joined together into one sentence through the terms "provided that" (Exhibit EU-3). 60 See subsequent texts (New Zealand II and III), where the first and second sentences were separated (Exhibit EU-3).


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from the general principle of determining dumping margins on individual basis. The

second sentence of Article 6.10 on sampling is simply an affirmative statement

relating to (i) the conditions for sampling and (ii) the composition of the sample.

There is no direct link between the general principle of the first sentence and the

possibility of sampling in the second sentence. These two sentences are simply two

affirmative statements of what an authority ought to do in general (individual margin

determination), and what it is allowed to do (sampling).

41. The interpretation that Article 6.10, first sentence, does not contain a strict obligation

and sampling is just but one situation where the preference for the individual

determination of dumping margins does not need to be followed is supported by the

existence of other situations where the preference mentioned in Article 6.10, first

sentence, may not apply. For instance:

• A supplier which initially agreed to cooperate with the investigating authorities may decide to cease its cooperation in the middle of the investigation (e.g., because it feels that its dumping margin could be higher than the dumping margin which could result for non-cooperating suppliers, or because of any other reason). In that case, even if that supplier would be a "known exporter or producer" in the sense of Article 6.10, first sentence, no individual dumping margin would be calculated for that supplier. It would be considered as a non-cooperating supplier and thus would be subject to the anti-dumping duty for non-cooperating producers.

• In other cases, it may occur that an exporter has not produced the product

concerned during the Period of Investigation but merely has exported the products of another supplier. Such an "exporter" would be considered as a mere trader of the product concerned and, thus, would be subject to the anti-dumping duty found for the actual supplier.61

• Investigating authorities may also face problems in identifying the actual

producer of the product concerned.62 61 E.g., Council Regulation No 1212/2005 of 25 July 2005 imposing a definitive anti-dumping duty on imports of certain castings originating in the People's Republic of China (Official Journal of the European Union, L 199/1, 29.7.2005), recitals 37, 42 and 44, where some applicant companies were considered as traders and received the duty of the actual manufacturer (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:199:0001:0027:EN:PDF, last visited 16 April 2010). 62 For instance, the EU authorities found that it was impracticable to impose individual duty rates in a case involving imports of Salmon from Norway because the functions of producing and selling the product concerned were split between numerous farmers and traders and it was found impossible to determine the identity of the relevant grower upon imports into the European Union. See Council Regulation No 930/2003 of 26 May 2003 terminating the anti-dumping and anti-subsidy proceedings concerning imports of farmed Atlantic salmon originating in Norway and the anti-dumping proceeding concerning imports of farmed Atlantic salmon originating in Chile and the Faeroe Islands (Official Journal of the European Union, L 133/1, 29.5.2003), recital 36 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:


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• It may also occur that the information gathered by the investigating

authorities in the course of an investigation does not allow for distinguishing individual dumping margins per supplier and, thus, a single dumping margin needs to be calculated (e.g., if normal value and export price have to be constructed for all suppliers on the basis of the same information since, e.g., it was not possible to verify such information).63

42. As illustrated by these examples, the general rule in Article 6.10 should not be

interpreted as a strict rule which must be complied with in all cases, and the

sampling scenario mentioned in Article 6.10, second sentence, is merely one

situation where investigating authorities may depart from that general preference.

43. Third, as the relevant case-law has clarified,64 Article 6.10 should not be interpreted

as requiring the determination of dumping margins for each legal entity in all cases,

regardless of whether they are economically related to each other. Investigating

authorities are allowed to determine one dumping margin for related companies as a

whole.65 This may be seen as another situation (other than sampling) where the

"general guiding principle" contained in Article 6.10, first sentence, does not need to

be followed, or as a threshold question embedded in Article 6.10 (i.e., who is the

exporter or producer for the purpose of that provision?) In that latter sense, Article

6.10, first sentence, would require the identification of the actual exporters/producers

in an investigation as a condition precedent to the determination of the dumping

margin. Once the single producer has been identified, investigating authorities would

be able to impose anti-dumping duties on the basis of that identification.

44. Fourth, as explained in our First Written Submission, Article 9.2 does not contain a

strict rule to impose anti-dumping duties on individual basis; rather Article 9.2

133:0001:0035:EN:PDF, last visited 16 April 2010); see also Commission Regulation No 1628/2003 of 17 September 2003 imposing a provisional anti-dumping duty on imports of large rainbow trout originating in Norway and the Faeroe Islands (Official Journal of the European Union, L 232/29, 18.9.2003), recitals 23 and 24 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L: 2003:232:0029:0049:EN:PDF, last visited 16 April 2010). 63 E.g., Council Regulation No 397/2004 of 2 March 2004 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Pakistan (Official Journal of the European Union L66/01, 4.3.2004), recital 51 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:066:0001: 0014:EN:PDF, last visited 16 April 2010). 64 Panel Report, Korea - Anti-Dumping Duties on Imports of Certain Paper from Indonesia, paras 7.159 – 7.162 and 7.168; and Panel Report, EC – Salmon (Norway), paras 7.165, 7.167, 7.168 and 7.178. 65 EU First Written Submission, paras 139 – 154.


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expressly allows for the imposition of anti-dumping duties on a country-wide basis.66

This is also the consequence of the preference or guiding principle contained in

Article 6.10, first sentence.

45. Fifth, even if Article 9.2 could be read as requiring the imposition of anti-dumping

duties on an individual basis, its third sentence provides for exceptions to that

obligation (other than sampling) when it is "impracticable" to do so.67 Even by its

own admission, China concedes that such situation arises not only in cases where

sampling is used but also in other situations, such as when certain suppliers are not

known.68 The fact that anti-dumping duties do not need to be imposed on individual

basis in other situations (e.g., non-cooperating suppliers) mirrors the fact that there

are more situations (other than sampling) where the investigating authorities can

depart from the general rule contained in Article 6.10, first sentence.

46. In sum, the European Union considers that Article 9.2, when interpreted by using

Article 6.10 as a context, does not support China's claim that there is a strict

obligation to impose anti-dumping duties on an individual basis, with the only

exception of the sampling situation. Indeed, Article 6.10 allows investigating

authorities to depart from the general rule to determine dumping margins on an

individual basis in other situations than in the sampling scenario. Likewise, Article

9.2 permits the imposition of duties on a country-wide basis in other cases than the

sampling scenario, in particular when it is impracticable to do so on an individual

basis.

47. Following the rationale of Article 9.2 of the Anti-Dumping Agreement, Article 9(5)

of Council Regulation No 384/96 contains certain criteria to assess when it is

impracticable to impose anti-dumping duties on an individual basis in the case of

imports from non-market economy countries. These criteria serve to identify

whether the applicant company is related to the State, i.e., the actual supplier, or is an

independent, non-related supplier. If the applicant company is considered as a

supplier acting independently from the State, that IT supplier is considered an

independent exporter or producer and the source of the alleged price discrimination.

66 EU First Written Submission, paras 99 – 102. 67 EU First Written Submission, paras 103 – 122. 68 China's Opening Oral Statement, First Meeting with the Panel, para. 50.


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Then, an individual anti-dumping duty will be specified for that IT supplier in the

provisional and/or definitive measure. In contrast, if the applicant company is

considered as a supplier not acting independently from the State, that non-IT supplier

is not considered a genuine exporter or producer, but related to State (which is

ultimately the actual producer and the source of the alleged price discrimination).

Then, that non-IT supplier will be subject to the country-wide duty rate. If the

supplier is not acting independently of the State, there is also a risk that the actual

producer of the product concerned (i.e., China) would channel all its exports through

the company with the lowest duty-rate, thereby undermining the main objective of

the anti-dumping measure, i.e., to offset or prevent dumping.

48. Thus, Article 9(5) of Council Regulation No 384/96 amounts to a threshold question

at the beginning of the investigation which serves to distinguish between the State

(as one supplier) and other independent, non-related suppliers for the purpose of

imposing anti-dumping duties on a country-wide or an individual basis; and, as such,

it is consistent with Article 9.2 of the Anti-Dumping Agreement.

(b) China's comments on Article 9.2 of the Anti-Dumping Agreement

49. China considers that Article 9.2 requires the imposition of anti-dumping duties on an

individual basis since this provision refers to the collection of anti-dumping duties in

the "appropriate amounts (…) from all sources found to be dumped and causing

injury". According to China, the term "appropriate amounts" can only be interpreted

as referring to the duty determined for that individual exporter and it would make no

sense to require the suppliers to be named on an individual basis if the intention was

to impose a country-wide duty. China also argues that the term "sources" refers to

individual exporters since, according to Article 8, only exporters may offer price

undertakings.69 The European Union disagrees.

50. First, the term "appropriate amounts" cannot only be interpreted as referring to the

duty determined for individual exporters. The meaning of "appropriate" in Article

69 China's Opening Oral Statement, First Meeting with the Panel, para. 45.


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9.2 of the Anti-Dumping Agreement was discussed by the panel in EC-Salmon as

follows:70

Article 9.2 of the AD Agreement is one of several provisions in Article 9 addressing the "Imposition and Collection of Anti-Dumping Duties". One of its requirements is that any antidumping duties imposed must be collected "in the appropriate amounts". However, Article 9.2 does not explain how to determine the "appropriate" amounts of any anti-dumping duty to be collected. The dictionary definitions of the word "appropriate" include "specially suitable (for, to); proper, fitting". This suggests that the "appropriate" amount of anti-dumping duty is the amount of duty that is "proper" or "fitting" in the context of an anti-dumping investigation. (…) Article VI:2 of the GATT 1994 reveals that the purpose of imposing and collecting antidumping duties is to "offset or prevent dumping". This principle is reflected in Article 9.1 of the AD Agreement, which provides that an anti-dumping duty may only be imposed when "all requirements for the imposition have been fulfilled". It follows that the "appropriate" amount of antidumping duty must be an amount that results in offsetting or preventing dumping, when all other requirements for the imposition of anti-dumping duties have been fulfilled. (emphasis added)

51. It follows from these observations that "appropriate" amounts in Article 9.2 of the

Anti-Dumping Agreement is the amount of anti-dumping duty that is "proper" or

"fitting" in the context of an anti-dumping investigation. In this respect, the

European Union considers that the imposition of anti-dumping duties on a country-

wide basis in the context of anti-dumping investigations in case of imports from

non-market economy countries is "proper" in order to address the actual source of

price discrimination, i.e., the State. The amount imposed is also "appropriate" since

it does not exceed the margin of dumping found for the actual supplier, i.e., the

State.

52. Second, the term "appropriate amounts" can also be interpreted as referring to the

amounts which are collected from the importers. Indeed, anti-dumping duties are

collected from importers, not from exporters. Thus, the reference to "appropriate

amounts" (in plural) indicates that the authorities have to apply the anti-dumping

duty on the prices as contained in the relevant documents (i.e., customs declarations,

invoices, etc). Logically, the application of the duty rate to different values would

70 Panel Report, EC – Salmon, paras 7.704 – 7.705.


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lead to different "amounts", all of which are "appropriate" if the correct duty rate is

applied to the specific transaction.

53. Third, the requirement to name the suppliers on an individual basis even if anti-

dumping duties are imposed on a country-wide basis makes sense in the context of

reviews pursuant to Article 9.5 of the Anti-Dumping Agreement. Provided that they

are not related to any supplier subject to the anti-dumping duties (and thus named),

suppliers who did not export the product concerned during the period of

investigation are entitled to request the investigating authorities to calculate an anti-

dumping duty which is "proper". It thus makes perfect sense to impose anti-dumping

duties on a country-wide basis in case of imports from non-market economy

countries, including China, and then allow new exporters to show that they are not

related (through the State or to any other supplier) in the context of a new exporter

review.71

54. Fourth, even if Article 8 refers to "exporters" in the context of price undertakings,

there is nothing in the term "sources" indicating that it can only be interpreted as

referring to individual companies who export the product concerned. Like the term

"exporter" in Article 6.10 cannot be interpreted as "each legal entity", the term

"exporter" in Article 8 should be interpreted in a broad manner. In this respect, if the

source of the actual price discrimination is the State, the "source" in Article 9.2 and

thus "the exporter" in Article 8 can also be the State.

55. Consequently, China's contention that Article 9.2 requires the imposition of anti-

dumping duties on an individual basis should be rejected.

56. In addition, China argues that the term "impracticable" in the third sentence of

Article 9.2 refers to something which is "not feasible in practice", rather than

71 The EU authorities have granted IT to Chinese applicant companies in the context of new exporter reviews in several cases, e.g., Council Implementing Regulation (EU) No 77/2010 of 19 January 2010 amending Regulation (EC) No 452/2007 imposing a definitive anti-dumping duty on imports of ironing boards originating, inter alia , in the People’s Republic of China (Official Journal of the European Union L 24/6, 28.1.2010), Recital 26 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:024:0001:0006:EN:PDF, last visited 16 April 2010); and Council Regulation (EC) No 692/2005 of 28 April 2005 amending Regulation (EC) No 2605/2000 imposing definitive anti-dumping duties on imports of certain electronic weighing scales (REWS) originating, inter alia, in the People’s Republic of China (Official Journal of the European Union L 112/1, 3.5.2005, Recital 28 (http://eur-


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"ineffective" and covers only situations in which the specific action (i.e., of naming

the suppliers and determining the duties applicable to them) is not feasible for

practical reasons. To support this view, China refers to Article 8.3 as a context,

indicating that investigating authorities can reject price undertakings when it is

impractical or for any other reason, insofar as the acceptance of such undertakings

would be "inappropriate".72 China also maintains that the negotiating history of

Article 8 of the Kennedy Round Anti-Dumping Code (now Article 9.2) also supports

this conclusion.73 The European Union disagrees.

57. First, when interpreting the term "impracticable" in the third sentence of Article 9.2

in a holistic manner,74 it should be concluded that "impracticable" means ineffective,

not feasible or not suited for being used for a particular purpose, i.e., offsetting or

preventing dumping.75 In other words, the action of naming the suppliers and

determining the duties applicable to them on an individual basis would render those

duties ineffective, not feasible or not suited for being used for a particular purpose,

i.e., offsetting or preventing dumping.

58. Second, the context provided by Article 8.3 confirms this interpretation. Indeed, the

second sentence in Article 8.3 requires investigating authorities to provide reasons

which have led them to consider the acceptance of an undertaking as "inappropriate".

The term "inappropriate" means "unsuitable to the particular case" and thus is similar

to "impractical". Further, to read "or for other reasons" as separate from

"impractical", as China asserts, would imply that investigating authorities can reject

undertakings "for any reason", regardless of whether such a reason is appropriate or

not. This would render the second sentence of Article 8.3 and, in particular, the term

"inappropriate", meaningless.

59. Third, according to China, the sole purpose of Article 8(b) of the Kennedy Round

Anti-Dumping Code was to clarify whether a Member was entitled to impose duties

lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:112:0001:0007:EN:PDF, last visited 16 April 2010). 72 China's Opening Oral Statement, First Meeting with the Panel, paras 48 – 51. 73 China's Opening Oral Statement, First Meeting with the Panel, para. 53. 74 Appellate Body Report, US – Continued Zeroing, para. 268 ("The principles of interpretation that are set out in Articles 31 and 32 are to be followed in a holistic fashion. The interpretative exercise is engaged so as to yield an interpretation that is harmonious and coherent and fits comfortably in the treaty as a whole so as to render the treaty provision legally effective"). 75 EU First Written Submission, paras 108 – 117.


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only with respect to the specific exporters found to be dumped or on imports from all

sources, including companies which had not been investigated (e.g., because of the

lack of cooperation).76 However, the evolution of the drafting of that provision

indicates something different. Even if initially the wording of that provision referred

to the name of the supplier of the dumped imports and the possibility to impose

duties on a country-wide basis if refunds were provided later on,77 subsequent drafts

reshaped the scope of the obligation contained in Article 8(b) of the Kenney Round

Anti-Dumping Code. Notably, the last draft version strengthened the obligation

("shall") to name the suppliers (regardless of whether they were suppliers of dumped

imports) and introduced, at the same time, Article 2(g) in the Code (i.e., the

provision which incorporated the Ad Note to Article VI of the GATT 1947).78 These

changes were no mere coincidence since the issue of the application of Article VI of

the GATT 1947 to state-trading countries was posed directly at the same time as the

Kennedy Round Anti-Dumping Code was being agreed.79 In any event, even if the

context in which Article 8(b) of the Kenney Round Anti-Dumping Code was

negotiated confirms the interpretation provided by the European Union, recourse to

the negotiating history of the Kennedy Round Anti-Dumping Code (as well as the

negotiating history following the adoption of that provision until the discussions

76 China's Opening Oral Statement, First Meeting with the Panel, para. 53. 77 Subcommittee on Non-Tariff Barriers, Group on Anti-Dumping Policies, Possible Elements to be Considered for Inclusion in an Anti-Dumping Code (TN.64/NTB/W/13, 23 August 1966), Article 7(f) ("Normally anti-dumping duties should be imposed only on the named supplier of the dumped imports. If several suppliers from the same country are involved, duties may be imposed on all imports of the goods in question from the country concerned, it being understood that for those goods which can be shown not to have been dumped the duties will be reimbursed"). 78 Compare Subcommittee on Non-Tariff Barriers, Group on Anti-Dumping Policies, Draft Anti-Dumping Code (TN.64/NTB/W/16, 3 March 1967), Article 10(b) ("When an anti-dumping duty is imposed in respect of the goods in question, such anti-dumping duty shall be imposed, in the appropriate amounts in each case, on a non-discriminatory basis on imports of such goods from all sources found to be dumped and causing material Injury. Normally, the authorities will name the supplier or suppliers of the goods concerned. If several suppliers from the same country are involved, and it is impracticable to name all these suppliers, the authorities may name the supplying country concerned. If several suppliers from more than one country are involved, the authorities may name either all the suppliers involved, or, if this is impracticable, all the supplying countries involved") with Subcommittee on Non-Tariff Barriers, Group on Anti-Dumping Policies, Revised Draft Anti-Dumping Code (TN.64/NTB/W/16, 28 March 1967), Article 9(b) ("When an anti-dumping duty is imposed in respect of any goods, such anti-dumping duty shall be levied, in the appropriate amounts in each case, on a non-discriminatory basis on imports of such goods from all sources found to be dumped and causing injury. The authorities shall name the supplier or suppliers of the goods concerned. If, however, several suppliers from the same country are involved, and it is impracticable to name all these suppliers, the authorities may name the supplying country concerned. If several suppliers from more than one country are involved, the authorities may name either all the suppliers involved, or, if this is impracticable, all the supplying countries involved"). 79 See Francis Snyder, "The Origins of the 'Nonmarket Economy': Ideas, Pluralism and Power in the EC Anti-Dumping Law about China", European Law Journal, Vol.7 No. 4, p. 392 (Exhibit EU-1).


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which took place in the Uruguay Round) may not be necessary in the present case

since the application of Article 31 of the VCLT yields a proper conclusion on the

interpretation of Article 9.2 of the Anti-Dumping Agreement.80

60. In view of the above, China's views on the meaning of the term "impracticable" in

Article 9.2, third sentence should also be rejected.

(c) China's comments on Article 6.10 of the Anti-Dumping Agreement

61. Although the European Union considers that China's claim under Article 6.10 does

not fall within the Panel's terms of reference, the European Union will address the

specific comments made by China in this respect, since the Panel may consider

Article 6.10 as context to interpret Article 9.2.

62. China argues that the European Union has separate rules to deal with the issue of

related companies and that Article 9(5) of Council Regulation No 384/96 applies in

addition to them.81 The European Union considers that the application of rules to

consider related companies or companies belonging to the same group as one single

entity either before or after or in addition to Article 9(5) of Council Regulation No

384/96 is irrelevant. There is nothing wrong in applying the general rules to examine

whether separate legal entities are related and then apply Article 9(5) of Council

Regulation No 384/96 to the single entity; or even doing the opposite, i.e., apply the

criteria of Article 9(5) of Council Regulation No 384/96 to examine whether the

applicant companies are related through the State and then if they are not, apply the

general rules to examine whether they are related to other companies. As a matter of

EU's practice, the EU authorities prefer to examine first whether the applicant

companies are related or belong to the same group in order to then apply Article 9(5)

of Council Regulation No 384/96 to the group as a whole.82 Information about the

80 Appellate Body Report, China – Audiovisual Services, para. 411 ("We have expressed the view that the Panel's recourse to Article 32 of the Vienna Convention was not in error, but that it was also not necessary, given that the application of Article 31 yielded a conclusion on the proper interpretation of this entry in China's GATS Schedule"). 81 China's Opening Oral Statement, First Meeting with the Parties, para. 60. The European Union notes that China asserts that "it is undisputed that the criteria in Article 9(5) make it more likely that no individual dumping and duty will be determined for an exporter than the criteria used to determine whether several exporters are related". The European Union disputes China's assertion. 82 See e.g., Council Regulation (EC) No 692/2005 of 28 April 2005 amending Regulation (EC) No 2605/2000 imposing definitive anti-dumping duties on imports of certain electronic weighing scales


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applicant company and its relationship with other companies is requested together

with the MET/IT Claim Form and, in that respect, the analysis is made at the same

time. In any event, the separate or cumulative application of rules to examine

whether related companies or companies belonging to the same group as one single

entity does not interfere with the application of Article 9(5) of Council Regulation

No 384/96, which is the measure China has challenged as such in the present dispute

and, thus, China's argument is inapposite.

63. In addition, while China agrees that, pursuant to Article 6.10, as interpreted by the

panel in Korea – Certain Paper, one individual dumping margin can be determined

for several legal entities that are found to be related, China considers that Article

9(5) of Council Regulation No 384/96 does not seek to determine whether several

entities constitute a single supplier for the purpose of imposing anti-dumping

duties.83 In that respect, China considers that Article 9(5) of Council Regulation No

384/96 deals with a different matter than the issue examined by the panel in Korea –

Certain Paper (i.e., whether several legal entities are related and should be regarded

as one exporter).84

64. The European Union disagrees. In this respect, the European Union considers that

the relationship between non-IT suppliers and the State is similar to that addressed

by the panel in Korea – Certain Paper.

65. In that case, the reasoning of the panel sought to identify the actual source of price

discrimination and thus determine an individual dumping margin for the actual

supplier reflecting its real economic structure, duly delineated in legal and factual

terms. In order to do so, the panel examined the close relationship of three

companies and concluded that they were related in view of the fact that (i) one

company owned a majority of shares of the three companies and thus had a

considerably controlling power over the operations of its three subsidiaries; (ii) there

was a significant commonality with respect to the management of the three

companies, where most of the directors of each company were present as directors of

(REWS) originating, inter alia, in the People’s Republic of China (Official Journal of the European Union L 112/1, 3.5.2005, Recital 13 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:112:0001:0007:EN:PDF, last visited 16 April 2010). 83 China's Opening Oral Statement, First Meeting with the Parties, paras 61 – 62.


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the other companies; (iii) the three companies concerned had the ability to shift

products among themselves to harmonise their commercial activities to fulfil

common corporate objectives; and (iv) the three companies made almost all their

domestic sales through one company.85

66. Similarly, the criteria under Article 9(5) of Council Regulation No 384/96 examine

whether the Chinese suppliers act sufficiently independently from the State by

examining, inter alia, that (i) the majority of the shares belong to private persons,

and not to the State; that (ii) State officials appearing on the board of Directors or

holding key management positions are in minority; that (iii) export prices and

quantities, and conditions and terms of sale are freely determined, rather than

directed or controlled by the State; and that (iv) State interference is not such as to

permit circumvention of measures if individual exporters are given different rates of

duty. In this sense, the criteria contained in Article 9(5) of Council Regulation No

384/96 aim at examining whether the applicant companies are related through the

State. By examining whether the applicant company is free to both repatriate capital

and profits and determine export prices, quantities and terms of sales, whether it is

controlled by the State (because a majority of shares belong to the State or the State

participation in the board of directors or the key management positions), whether

exchange rate conversions are carried out at the market rate, and the level of State

interference, the EU authorities can determine whether the applicant companies act

sufficiently independently from the State or whether they are related through the

State. Thus, like in Korea – Certain Paper, the reasoning behind these criteria is to

identify the actual source of price discrimination, the single supplier of the product

concerned. Only by doing so, the anti-dumping duty imposed will address the actual

source of price discrimination effectively.86

67. Moreover, the European Union observes that the notion of whether producers are

"related" appears in Article 4.1(i) of the Anti-Dumping Agreement and thus may

serve as context to interpret this implicit notion in Article 6.10. In particular,

Footnote 11 identifies "related" with direct or indirect control, where one is legally

84 China's Opening Oral Statement, First Meeting with the Parties, para. 60, final sentence. 85 Panel Report, Korea - Anti-Dumping Duties on Imports of Certain Paper from Indonesia, paras 7.163 –7.168.


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or operationally in a position to exercise restrain or direction over the other. In other

words, the notion of "related" indicates some kind of de jure or de facto control in

the sense of exercising restrain or direction. As mentioned in our First Written

Submission, in non-market economy countries and, in particular, China, State

intervention in the economy and international trade is the rule.87 China has not

contested this so far. Thus, the criteria contained in Article 9(5) of Council

Regulation No 384/96 seek to determine whether the State de jure or de facto

controls or is capable of exercising direct influence over the applicant company.

68. China also asserts that the dumping margins for non-IT suppliers are not based on

the data concerning all exporters/producers found to be related.88 This statement is

wrong as a matter of fact. As explained in our First Written Submission,89 the EU

authorities use the export prices of the non-IT suppliers to determine the dumping

margin of the actual producer, i.e., the State. If the number of cooperating non-IT

suppliers is high, in the sense that they represent a high volume of total exports to the

European Union, their export prices are compared to an analogue country normal

value to calculate the dumping margin for the actual producer, i.e., the State. In this

respect, the manner in which the EU authorities determine the dumping margin for

the actual producer, i.e., the State, is similar to the manner in which a single

dumping margin is calculated for a single group of related companies.

69. If the number of cooperating non-IT suppliers is low, the export prices of those

suppliers may be still used (as actual data of transactions carried out by the actual

producer) and the EU authorities use facts available to determine the dumping

margin for the actual producer (e.g., by looking at EUROSTAT import statistics to

obtain an average export price for the country concerned). Then, a weighted average

of the results obtained when comparing the analogue country normal value with the

export prices of non-IT suppliers and the results found for non-cooperating suppliers

is carried out to establish the dumping margin for the actual producer, i.e., the State.

In this respect, the manner in which the EU authorities determine the dumping

margin for the actual producer, i.e., the State, does not differ significantly with the

86 See also Brazil's Third Party Written Submission, paras 22 and 23; and US Third Party Written Submission, paras 9 – 10. 87 EU First Written Submission, para. 128. 88 China's Opening Oral Statement, First Meeting with the Parties, para. 64.


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manner in which a single dumping margin is calculated for a single group of related

companies, when some information concerning companies within the group is

missing.

70. Finally, China questions why State-owned or State-controlled companies should be

treated differently from other related group companies in the context of Article 9(5)

of Council Regulation No 384/96.90 With the greatest of respect, China misses the

point. State-owned or State-controlled companies are considered to be related

through the State when applying the criteria of Article 9(5) of Council Regulation

No 384/96.91 Thus, China's question is irrelevant.

(d) China's comments on its Protocol of Accession

71. China maintains that its Protocol of Accession, including the Working Party Report,

only addresses the issue of the normal value determination and does not provide for

any derogation from the obligation to determine individual dumping margins and

individual anti-dumping duties.92 China appears to support its position on the term

"domestic" in Paragraph 15(a) of China's Protocol of Accession ("the importing

Member may use a methodology that is not based on a strict comparison with

domestic prices or costs in China").93

72. As explained in our First Written Submission, 94 the European Union considers that

China's Protocol of Accession cannot be read in such a narrow manner. The term

"domestic" in Paragraph 15(a) of China's Protocol of Accession seems to address the

fact that domestic prices in China are significantly distorted due to State intervention

in the economy. However, the term "market economy conditions" also encompasses

the situation when State intervention in the economy including international trade is

so substantial that operators cannot act independently from the State in their export

activities.95 This is the case of China.96 Likewise, the term "sale" also includes

89 EU First Written Submission, paras 23 and 161. 90 China's Opening Oral Statement, First Meeting with the Panel, para. 65. 91 See, in particular, Article 9(5)(c) of Council Regulation No 384/96, which requires that the majority of shares belongs to private persons. 92 China's First Written Submission, para. 48, final sentence. 93 China's Opening Oral Statement, First Meeting with the Panel, para. 73. 94 EU First Written Submission, paras 123 – 129. 95 EU First Written Submission, footnote 7 (definition of "non-market economy" in UNCTAD's Glossary of Customs Terms).


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"export" sales. Thus, the terms "market economy conditions" in Paragraph 15(i) and

(ii) of China's Protocol of Accession would appear to allow investigating authorities

to have recourse to "a methodology that is not based on a strict comparison with

domestic prices or costs in China (…) in determining price comparability under

Article VI of the GATT 1994 and the Anti Dumping Agreement".97 A methodology

which considers the State as the actual producer of the product concerned and uses

information available to compare export prices of the actual producer with an

analogue country normal value is also "a methodology that is not based of a strict

comparison with domestic prices or costs in China".

73. China also maintains that it has gradually evolved into a market economy and that

this has been recognised by other WTO Members that have granted full market

economy status to China.98 In this respect, the European Union notes that, as China

expressly acknowledged in the course of the first meeting with the Panel, the

recognition of China as a full market economy by other WTO Members has taken

place in the context of bilateral negotiations with a view to concluding trade

agreements and/or further boosting commercial relations. Needless to say, in such a

context, the recognition of China as a market economy is a concession by the other

party precisely because, according the China's Protocol of Accession,99 China is not

yet a market economy and Members are free to establish whether China is a full

market economy until the end of 2016. In such a context, such a concession is also

coupled with other concessions granted by China to obtain such recognition in

return. Consequently, this shows that, as confirmed by its Protocol of Accession, the

European Union (like other WTO Members) is entitled to consider China as a non-

market economy country.

(e) Conclusion

74. If follows from the foregoing that Article 9(5) of Council Regulation No 384/96 is

consistent with Article 9.2 of the Anti-Dumping Agreement, alone or seen in the

context of Article 6.10 or in light of China's Protocol of Accession. Therefore, the

European Union submits that the Panel should reject China's claim that Article 9(5)

96 EU First Written Submission, para. 128. 97 See Brazil's Third Party Written Submission, para. 19; and US Third Party Written Submission, para. 9. 98 China's Opening Oral Statement, First Meeting with the Panel, paras 8 and 69.


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of Council Regulation No 384/96 is inconsistent with Article 9.2 of the Anti-

Dumping Agreement.

2. Claim under Article I:1 of the GATT 1994

75. China considers that Article I:1 of the GATT 1994 is not in conflict with the Anti-

Dumping Agreement, but merely that the latter provides for a complementary result

and thus, the General Interpretative Note to Annex 1A of the WTO would not apply.

In China's view, since the Anti-Dumping Agreement does not authorise investigating

authorities to discriminate against non-market economy countries by requiring

exporting producers to prove that certain conditions are met before they can obtain

an individual dumping margin, there is no conflict.100

76. The European Union notes that China's argument is based on the presumption that

the Anti-Dumping Agreement does not allow for treating suppliers from non-market

economy countries differently. In other words, China assumes what it pleads for (i.e.,

that Article 9(5) of Council Regulation No 384/96 violates certain provisions of the

Anti-Dumping Agreement) in order to conclude that there is no conflict with Article

I:1 of the GATT 1994. Such a circular argument should be rejected.101 More so

where there are other references in the Anti-Dumping Agreement which allow WTO

Members to treat non-market economy countries differently.102

77. In addition, China appears to argue that only in cases where the Anti-Dumping

Agreement or China's Protocol of Accession expressly allows for a particular

difference in treatment, such a result would amount to a conflict which is resolved by

the General Interpretative Note to Annex 1A of the WTO.103 The European Union

considers that the General Interpretative Note to Annex 1A of the WTO applies in all

situations where the particular result is permitted by the Anti-Dumping Agreement,

regardless of whether such a result is expressly provided in black and white in the

text or is the result of the interpretation of the provisions of the Anti-Dumping

Agreement.

99 China's Protocol of Accession, Paragraph 15(d). 100 China's Opening Oral Statement, First Meeting with the Panel, paras 80 – 81. 101 EU First Written Submission, para. 173. 102 Anti-Dumping Agreement, Article 2.7 (and by implication the Ad Note to Article VI of the GATT 1994). 103 China's Opening Oral Statement, First Meeting with the Panel, para. 81.


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78. In essence, China appears to argue that treating two things which are different (i.e.,

suppliers from market and non-market economy countries) in a different manner

implies discrimination between countries and is, thus, a violation of the MFN

principle. However, this is simply not the case. Indeed, imports from market and

non-market economy countries may be subject to different treatment in the context

of the anti-dumping rules precisely because they are different in nature. Therefore,

by definition, no discrimination can arise and, thus, there cannot be a violation of

Article I:1 of the GATT 1994.

C. Conclusion

79. In view of the foregoing, the European Union requests the Panel to reject China's

claim that Article 9(5) of Council Regulation No 384/96 is "as such" inconsistent

with Articles 9.2 and 18.4 of the Anti-Dumping Agreement, Article I:1 of the GATT

1994 and Article XVI:4 of the WTO Agreement. Should the Panel examine China's

claims under Articles 6.10, 9.3 and 9.4 of the Anti-Dumping Agreement and Article

X:3(a) of the GATT 1994, for the reasons mentioned in our First Written

Submission, the European Union also requests the Panel to reject them in full.104

III. CLAIM 1: ARTICLE 9(5) OF COUNCIL REGULATION NO 384/96 "AS APPLIED" IN COUNCIL REGULATION NO 91/2009 (ARTICLES 6.10, 9.2 AND 9.4 OF THE ANTI-DUMPING AGREEMENT)

80. The European Union observes China has not raised any additional arguments in

connection with this claim. Thus, the European Union requests the Panel to reject

China's claim that Council Regulation No 91/2009 is inconsistent with Articles 6.10,

9.2 and 9.4 of the Anti-Dumping Agreement.105

IV. CLAIM 2: STANDING OF THE EU DOMESTIC INDUSTRY FOR THE PURPOSES OF INITIATION (ARTICLE 5.4 OF THE ANTI-DUMPING AGREEMENT)


connection with this claim. In fact, by implication, it would appear that China

104 EU First Written Submission, paras 132 – 172 and 181 – 194. 105 EU First Written Submission, paras 202 – 218.


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acknowledges that the standing determination was properly made.106 Thus, the

European Union respectfully requests the Panel to reject China's claims.107

V. CLAIM 3: DETERMINATION OF "DOMESTIC INDUSTRY" (ARTICLES 4.1 AND 3.1 OF THE ANTI-DUMPING AGREEMENT)

82. China claims that the EU's determination of the "domestic industry" violated Articles

4.1 and 3.1 of the Anti-Dumping Agreement. In our First Written submission, we

addressed in great detail the five claims made by China in respect of the EU

authorities' definition of the domestic industry in the fasteners investigation. At the

oral hearing China presented only a very minimal rebuttal of our arguments and

there is therefore no need for us to repeat all of our detailed arguments in this Second

Written Submission. We will next briefly summarise the main points of our

argument and address the few points raised by China in the course of the meeting of

the Panel with the parties.

A. China's claim that the EU's exclusion from the "domestic industry" of producers that did not make themselves known within 15 days from the date of initiation of the investigation or that did not support the complaint is inconsistent with Articles 4.1 and 3.1 of the Anti-Dumping Agreement is flawed

83. China claims that the European Union was not allowed to define the domestic

industry as consisting of only those cooperating producers that made themselves

known within 15 days of initiation of the investigation.

84. By way of summary, we recall that the European Union has demonstrated in its First

Written Submission that China's claim is to be rejected.108 For the sake of

completeness, we summarise the main elements of the argument as presented in the

First Written Submission.

85. First, China's claim was not included in the Consultation Request, and is therefore

outside the Panel's mandate.

106 China's Opening Oral Statement, First Meeting with the Panel, para. 83 ("[The European Union] assumed that the major proportion requirement was satisfied once the selected producers met the standing requirements for complainants in the last sentence of Article 5.4 of the [Anti-Dumping Agreement]"). 107 EU First Written Submission, paras 219 – 275. 108 EU First Written Submission, paras 279 – 309.


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86. Second, China's claim is based on a flawed legal interpretation of Article 4.1 that

suggests that the definition of the domestic industry is to include all producers or as

close to all producers as possible, while it is well established in WTO jurisprudence

that there is no hierarchy of preference between the two equally valid options of

Article 4.1 of defining the industry as all producers of the like product or those

whose production constitutes a major proportion of total domestic output.

87. Third, the EU's determination of the domestic industry is entirely reasonable and in

accordance with the obligation of Article 4.1 of the Anti-Dumping Agreement. The

EU authorities contacted all known producers and further invited all domestic

producers to come forward and indicate their willingness the participate in the

investigation within a reasonable deadline of 15 days following initiation and

defined the domestic industry as consisting of all producers that so expressed their

willingness to cooperate. Since these producers represented a major proportion of

total domestic output, the EU's definition of domestic industry is entirely consistent

with Article 4.1.

88. Fourth, China's reference to Articles 4.1 (i) and (ii) is misplaced since the EU

authorities never "arbitrarily excluded" any domestic producers but simply imposed

an objective and reasonable benchmark of 15 days for any domestic producer to

come forward and express its willingness to cooperate with the investigation, and no

producers were excluded when determining the major proportion of total domestic

output.

89. Fifth, China's reliance on Article 3.1 of the Anti-Dumping Agreement is in error

since this provision deals with the quality of the injury data relating to the domestic

industry as defined in accordance with Article 4.1 and the way in which these data

are examined. Article 3.1 does not impact on the definition of the domestic industry,

but affects only the approach of the authorities in respect of the domestic industry as

correctly identified under Article 4.1. It is therefore to be read in function of Article

4.1 and not the other way around.

90. China did not present any convincing rebuttal of the EU's arguments in its oral

statements to the Panel. It is however noteworthy that during the first substantive

meeting of the Panel with the parties, China accepted the fact that investigating


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authorities may impose deadlines on interested parties to come forward and to make

their interest in participating in the investigation known. This is an important

modification of the argument it had made before. In its First Written Submission,

China developed the argument that only in case of related parties (Article 4.1 (i)) or

in case of a regional industry (Article 4.1 (ii)) was it possible under the Anti-

Dumping Agreement to have a definition of the domestic industry which comprised

less than all domestic producers.

91. The European Union welcomes this shift in the position of China. It is a well

accepted fact that investigating authorities are entitled to maintain control over the

investigations and need to impose deadlines in order to be able to proceed

expeditiously with the investigation, as they are entitled to do under Article 6.14 of

the Anti-Dumping Agreement. The EU authorities are actually required to impose

such deadlines in order to comply with their obligation under Article 5.10 of the

Anti-Dumping Agreement to conclude the investigation within 12, maximum 18

months. That is precisely what the Appellate Body found in its report on US – Hot-

Rolled Steel, stating that investigating authorities can and actually must set

deadlines. As stated by the Appellate Body:

[I]t is fully consistent with the Anti-Dumping Agreement for investigating authorities to impose time-limits for the submission of questionnaire responses. Investigating authorities must be able to control the conduct of their investigation and to carry out the multiple steps in an investigation required to reach a final determination. Indeed, in the absence of time-limits, authorities would effectively cede control of investigations to the interested parties, and could find themselves unable to complete their investigations within the time-limits mandated under the Anti-Dumping Agreement. We note, in that respect, that Article 5.10 of the Anti-Dumping Agreement stipulates that anti-dumping investigations shall normally be completed within one year, and in any event in no longer than 18 months, after initiation. Furthermore, Article 6.14 provides generally that the procedures set out in Article 6 "are not intended to prevent the authorities of a Member from proceeding expeditiously ". (emphasis added) We, therefore, agree with the Panel that "in the interest of orderly administration investigating authorities do, and indeed must establish such deadlines."109

92. China fails to demonstrate that there was anything improper about the way in which

the EU authorities established the facts or anything biased in its evaluation of the

facts. China has failed to even attempt to demonstrate that this deadline was not

109 Appellate Body Report, US – Hot-Rolled Steel, para. 71.


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reasonable. The use of this deadline for purposes of defining the domestic industry

was an entirely reasonable and objective way of grouping all cooperative domestic

producers, and was thus a method which did not "favour either side". Domestic

producers which in the pre-initiation phase had expressed opposition to the

investigation were invited to come forward as well as producers that had supported

the initiation of the investigation.

93. The European Union wishes to underline that it has clarified both in its First Written

Submission and in its Opening Oral Statement that it is not so that any producers

were "arbitrarily excluded" from the scope of the domestic industry. It is not correct

that more producers came forward and were subsequently excluded. Rather, the

deadline that was set at initiation was maintained. Of course, a number of EU

producers made themselves known after the deadline. This is inevitable. Actually, at

the request of the Chinese interested parties which expressed doubts about the

standing determination, a number of domestic producers were contacted even after

initiation, and even after the 15 day deadline had expired, and this to enquire about

their position in respect of the application. This parallel process has caused some

confusion, so it seems. However, it is not so that information was received from a

large number of domestic producers and that such data could have been used but

that, much after the 15 day deadline, it was decided to limit the investigation to only

those producers that had come forward within the 15 day deadline. That is simply

not the case.

94. The Information Document to which China likes to refer for lack of any solid

argument in respect of the measure actually challenged (i.e., Council Regulation No

91/2009), refers to 114 companies coming forward, and 86 producers doing so in a

positive manner within the period of time indicated. Actually, as explained in our

answers to the questions of the Panel, these numbers refer to producers that were

known to the authorities either before the investigation (through the complaint), or

after initiation, because they came forward at some point in time, or because they

were identified by interested parties in the course of the investigation. Not all these

producers provided all the information necessary to conduct the injury analysis, nor

were they asked to provide such information.


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95. A better approach is to separate the two processes: on the one hand, the examination

into standing in the pre-initiation phase and, on the other hand, the process of

defining the domestic industry which started from zero at the moment of initiation. It

is this approach which is reflected in the relevant official documents, the General

Disclosure document and Council Regulation No 91/2009. The record shows that 71

producers came forward within the required 15 days; of those 71, 25 producers

stated that they did not want to cooperate / participate in the investigation. The 46

other producers that came forward indicated that they were willing to cooperate with

the authorities, i.e., to accept to receive questionnaires and allow verification of the

information provided. Those producers and the information they provided formed

the basis for the selection of the sample of 7 producers (later reduced to 6 after one

producer failed to cooperate, which also explains the reference to 45 producers in

certain places).

96. The EU authorities obviously did not wait until after the issuance of the Information

Document before sending out questionnaires and starting the injury examination.110

Thus, clearly, it is not so that the domestic industry was defined after excluding

certain producers that had provided data before and which could have therefore been

examined; rather, the industry was defined in a consistent manner from the

beginning as those producers that made themselves known within the 15 days

deadline and expressed a willingness to cooperate with the authorities.

97. Furthermore, and as also clarified by the European Union in its oral statement,111 as

well as in our responses to a number of the Panel's questions, it is simply not so that

any producers were excluded from the definition of the domestic industry for reason

of the fact that they had not supported the initiation of the investigation. The "sample

questionnaires" that were sent at the time of initiation were sent to all known

producers and included an invitation to all to come forward and to express their

willingness to participate and cooperate in the investigation. These questionnaires

did not ask the producers about their position in respect of the complaint.112 In other

words, this was a new beginning and not the continuation of the pre-initiation

110 Questionnaires were sent to the Community producers not long after initiation, i.e., they were sent out early January 2008. The Information Document only dates from July 2008. 111 EU Opening Oral Statement, First Meeting with the Panel, para. 24.


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standing process. It was not simply an exercise in which the complainants formed

the basis for the definition of the domestic industry and others were invited to join

the complainants. For example, certain producers which had supported the complaint

before the initiation, responded to the invitation, but indicated that they would not be

cooperating with the EU authorities. They were thus not included in the definition of

the domestic industry.

98. In sum, and focusing on the measure before the Panel (i.e., Council Regulation No

91/2009), it is clear that China has failed to make a prima facie case that there was

anything unreasonable, biased, or unlawful about the determination by the EU

authorities that the domestic industry whose data were going to be examined

consisted of all those producers that made themselves known within a reasonable

period of time and expressed a willingness to cooperate with the investigation.

These producers represented a major proportion of total domestic output and

therefore the definition of the domestic industry is entirely consistent with Article

4.1 of the Anti-Dumping Agreement.

99. For the sake of completeness, the European Union notes that in its oral statement,

China tries to discredit the EU's legal argument which is in line with the text of the

Anti-Dumping Agreement and the relevant WTO case law by distorting the EU's

reasoning. China asserts that the EU "takes the view that Article 4.1 gives the

investigating authorities the discretion to choose the producers to be included in the

'domestic industry' as long as producers thus selected represent a 'major proportion'

of the total domestic production".113 That is simply not correct. It is not what

happened in the fasteners investigation. And it is not the EU's legal position that an

authority may pick and choose those producers that it considers to be appropriate as

long as they represent a major proportion of total production. The European Union

considers that a correct approach to Article 4.1 allows an investigating authority to

define the domestic industry based on those producers that express a willingness to

cooperate in the investigation and that do so within a reasonable period of time, as

long as they represent a major proportion of domestic production. Article 4.1 does

not require an authority to include producers that indicate from the outset that they

112 A sample questionnaire was submitted as Exhibit EU–20 as part of the EU’s response to the Panel’s Question 32. 113 China’s Opening Oral Statement, First Meeting with the Panel, para. 86.


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are not going to cooperate. This is not an arbitrary pick-and-choose approach. To the

contrary, it is an entirely reasonable approach which is consistent with the discretion

that is given to authorities by Article 4.1 and the lack of a hierarchy of preference in

this provision. It is a reasonable approach that rightly takes into consideration the

practical reality of conducting anti-dumping investigations in a timely manner.

100. The European Union also disagrees with the suggestion by China that producers that

fail to respect the deadline for making themselves known or that indicate that they

are not going to cooperate are "certain categories of producers", which, according to

the panel in EC – Salmon (Norway) cannot be excluded from the outset. That panel

report cannot seriously be interpreted as requiring an authority to include in the

definition of the domestic industry producers that do not come forward or that

indicate that they are not willing to cooperate with the investigation. To require that

such producers be included would make the investigation impossible since, in the

absence of subpoena powers of the authority, it would not be possible to complete

the investigation.

101. In its oral statement, China has also argued based on a dictionary definition of the

term "proportion" that the term "major proportion" means that domestic producers

must constitute a "part", a "“share" of the whole.114 The European Union agrees.

However, China then re-interprets this dictionary definition to mean that these

producers "must be representative of the whole".115 Leaving aside for a minute the

question of whether certain producer can be deliberately excluded from the

definition of the domestic industry, it is clear that China is making an unwarranted

leap of logic here. There is nothing inherently "representative" in the term "part" or

"proportion", which refers to simply that, a part of the whole. If I am entitled to a

"part" of a fruit pie which has mango, blueberries, strawberries and grapes on it, then

I cannot complain when I am given a quarter of the cake, even when it so happens

that my part has some mango and grapes, but no strawberries on it.

102. In support of its interpretation, China refers to a partial quote from the Appellate

Body Report in US – Lamb.116 China frequently relied on this quote in the course of

114 China's Opening Oral Statement, First Meeting with the Panel, para. 98. 115 China's Opening Oral Statement, First Meeting with the Panel, para. 98. 116 China's Opening Oral Statement, First Meeting with the Panel, para. 99


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the first meeting of the Panel with the parties when responding to the Panel's oral

questions arguing that the Appellate Body itself had insisted on the representative

nature of a "major proportion". The European Union considers that China mis-

represents both the meaning and relevance of this Appellate Body quote which does

not suggest that the term "proportion" is always a "representative proportion".

103. Below, we provide the full quote of the Appellate Body in this report, since China

quoted only selectively from the relevant paragraph of the report in US – Lamb. The

full quotation immediately reveals the fact that the Appellate Body was not

interpreting the term "major proportion" but was simply rebutting the US argument

that the terms "producers of the product as a whole" allowed an authority, in the

context of a safeguards investigation, to include in the definition of the industry also

producers of the input product (live lambs) and not only producers of the like or

directly competitive product (lamb meat). The terms interpreted were thus "product

as a whole", and not "major proportion". In addition, the reason for the statement

was to explain that the term "as a whole" had nothing to do with the "product as a

whole" but rather with the number of producers, i.e., all producers:117

In this respect, we are not persuaded that the words "as a whole" in Article 4.1(c), appearing in the phrase "producers as a whole", offer support to the United States' position. These words do not alter the requirement that the "domestic industry" extends only to producers of "like or directly competitive products". The words "as a whole" apply to "producers" and, when read together with the terms "collective output" and "major proportion" which follow, clearly address the number and the representative nature of producers making up the domestic industry. The words "as a whole" do not imply that producers of other products, which are not like or directly competitive with the imported product, can be included in the definition of domestic industry. Like the Panel, we see the words "as a whole" as no more than "a quantitative benchmark for the proportion of producers … which a safeguards investigation has to cover." (emphasis added)

104. In other words, it seems that an out-of-context reading of a not directly applicable

Appellate Body statement made in the context of a different covered agreement than

the one being examined here,118 is the strongest "textual" argument that China can

117 Appellate Body Report, US – Lamb, para. 91 118 Indeed, we note that this statement was made by the Appellate Body interpreting the Safeguards Agreement, where there is no contextual guidance such as that of Article 5.4 on what constitutes a major proportion.


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come up with in support of its interpretation of the term "proportion". Clearly

China’s legal interpretation is in error.

105. In any case, and as stated on numerous occasions, the EU authorities did not

deliberately exclude certain producers based on their position in respect of the

initiation of the investigation, and there is therefore no question about the

representativeness of the producers included.

106. Finally, we note that in the oral statement China reiterates the view that Article 3.1

governs the industry definition of Article 4.1. In support, China quotes the panel in

Mexico – Steel Pipes and Tubes which stated that "the concept of 'domestic industry'

is critical to an injury determination, as it defines the framework for data collection

and analysis".119 However, a full quote of the paragraph in which the panel made this

statement reveals that this panel actually fully supports, not China's interpretation of

the term domestic industry, but rather that of the European Union which has

advocated that the issue of injury under Article 3 which is to be examined in an

objective manner and based on positive evidence is the injury to the domestic

industry as defined in accordance with Article 4.1. This means that, first, the

industry is to be defined in a manner that is consistent with Article 4.1, and that only

subsequently under Article 3.1, and based on the definition adopted (all producers or

only a major proportion) the injury data of this industry is to be examined in an

objective, and unbiased manner. Article 3.1 kicks in after the industry has been

defined and does not impose any obligations in respect of this industry definition: 120

The provision in Article 4.1 and footnote 9, which defines injury as "material injury to a domestic industry,[…] interpreted in accordance with the provisions of [this] Article [3]", inescapably requires the conclusion that the domestic industry with respect to which injury is considered and determined must be the domestic industry as defined in accordance with Article 4.1.121 It follows that an anti-dumping injury determination is, in fact, a determination that the domestic producers "as a whole", or a "major proportion" of them, are "injured". Indeed, the concept of "domestic industry" is critical to an injury determination, as it defines the framework for data collection and analysis.

119 China’s Opening Oral Statement, First Meeting with the Panel, para. 112, referring to Panel Report Mexico – Steel Pipes and Tubes. Of course, that panel was not interpreting the terms “major proportion” when it made this statement. 120 Panel Report, Mexico – Steel Pipes and Tubes, paras 7.321 – 7.322. 121 We note that the Panel Report, Mexico - Corn Syrup, para. 7.147, expressed a similar view.


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Article 4.1 defines the domestic industry in two ways, either 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". The text of Article 4.1 indicates no hierarchy of preference between these two options. However, this does not lead us to conclude that an investigating authority is permitted to switch back and forth between these two possibilities in the course of a single injury analysis (or to oscillate back and forth between various allegedly "major proportions" of the domestic industry in the course of the same injury analysis). Article 4.1, and in particular the term "a major proportion", permits a degree of flexibility in defining the domestic industry or "major proportion" thereof, but once an investigating authority has identified the framework for its analysis - whether an entire domestic industry or a major proportion thereof - it must use this identified framework consistently and coherently throughout an investigation.

107. Thus, what the panel is confirming in this context is simply that once an industry is

defined in a particular manner, the data-set is to be examined in a consistent manner

and based on the industry as defined.122

B. China’s claim that the domestic industry as defined by the authorities is not composed of domestic producers whose collective output of the like product constitutes a major proportion of the total domestic production and is therefore in violation of Article 4.1 of the Anti-Dumping Agreement is flawed

108. China argues that the domestic industry as defined by the European Union does not

consist of producers producing "a major proportion" of domestic output since these

producers represent "only" 27% of total domestic production.

109. The European Union recalls that it rebutted all of China’s arguments in the First

Written Submission.123 The main elements of our argument are summarised below.

110. The terms "a major proportion" refer to an "important, serious or significant"

proportion. Article 4.1 does not require that this proportion be as close as possible to

122 This is clear from the panel’s summary of the issue before it: “the issue raised by Guatemala [is] that Mexico violated Article 3.1 and other relevant obligations in Article 3 as it did not use a consistent and representative data-set pertaining to the "domestic industry", as this was defined by Economía, in conducting its injury analysis”. Panel Report, Mexico – Steel Pipes and Tubes, para. 7.325. 123 EU First Written Submission, paras 311 – 349.


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100% as erroneously argued by China. It does not even have to be more than 50%.

The text of the Anti-Dumping Agreement and the WTO case law interpreting this

text confirm the EU’s interpretation of these terms.124 China’s argument as

expressed in its first written submission that "a major proportion" has to be as close

as possible to 100% is thus in error. The WTO case-law to which China itself refers

with approval clearly disavows this erroneous interpretation stating clearly that there

is no hierarchy of preference between the two options under Article 4.1.125

111. China has failed to demonstrate why 27 % is not an important, significant or serious

proportion in the particular circumstances of this case, even though this is what the

panel in Argentina – Poultry Anti-Dumping Duties considered it was required to do

in order to demonstrate a violation of Article 4.1. In this investigation, the producers

representing 27 % of production included producers producing the different types of

fasteners (screws, bolts, washers) and consisted of both small and large companies.

China has therefore failed to establish that the EU’s definition of the domestic

industry is inconsistent with the EU’s obligations under Article 4.1.

112. The contextual guidance of Article 5.4 of the Anti-Dumping Agreement supports the

EU’s view that it is legitimate to presume that if producers represent more than 25 %

of production, they constitute “a major proportion” of total domestic output. The

EU’s argument is not that, in all circumstances, it is necessarily so that the “major

proportion” requirement will be met as soon as producers represent 25 % of

domestic production, nor is that the legal question before the Panel.

113. In its oral statement, China failed to rebut any of these arguments. Interestingly, the

Panel will undoubtedly recall that, in the course of discussion that took place at the

first substantive meeting of the Panel with the parties, China accepted that “a major

proportion” could be much less than 100%, and even less than 25 % depending on

the circumstances of the case. The European Union welcomes this shift in approach

of China and awaits further clarification of China’s position in the second written

submission.

124 Panel Report, Argentina – Poultry Anti-Dumping Duties, paras 7.3141 - 7.342. 125 See, for example, Panel Report, Mexico – Steel Pipes and Tubes, para. 7.322.


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114. In any case, it is clear that China acknowledges that it should have demonstrated

why, in the particular circumstances of this case, 27 % of total domestic production

does not represent “a major proportion” of total domestic output. It clearly failed to

do so in its first written submission and for that reason its claim should be rejected.

115. In its oral statement, China makes an unconvincing attempt at correcting its legal

error by raising, for the first time, what it considers to be “circumstances of the case”

that allegedly demonstrate that the collective output of the producers representing 27

% does not constitute a major proportion.126 The two particular “circumstances” that

China refers to are, first, the fact that it was allegedly practicable to include more

producers in the definition of the domestic industry and second the number of

domestic producers of fasteners. The European Union will deal with both sets of

arguments in turn.

116. The first set of “circumstances” that China refers to are simply a different packaging

of the erroneous argument made in its first written submission that the term “a major

proportion” has to be as close as practically possible to 100%. China argues that

“the first circumstance which is relevant to assess whether a given proportion of total

output constitutes a major proportion is the practicability for the investigating

authorities to include more producers in its definition of the domestic industry” and

further that “the fact that the domestic industry may be limited to a “major

proportion” seeks to address the practical impossibility for investigating authorities

in some cases to examine all producers of the like product”.127

117. However, it is clear that this is simply another way of saying the same thing: that

there is a preference for defining the domestic industry as consisting of all producers

of the like product and that one can only define the industry on a “major proportion”

basis when the “all inclusive”-option is not “practically possible”. As explained in

our First Written Submission, the text of Article 4.1 that simply refers to two

alternative options separated by a neutral “or” argues against this interpretation. Had

the drafters of the Anti-Dumping Agreement wanted to suggest a preference and

allow for the use of the major proportion-option only when it was “not practicable”

126 China's Opening Oral Statement, First Meeting with the Panel, paras 103 – 107. 127 China's Opening Oral Statement, First Meeting with the Panel, para. 104.


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or in case of a “practical impossibility” only, they would have said so, as they have

done in other places in the Anti-Dumping Agreement.128

118. As noted before, WTO jurisprudence, both at the panel level129 and the Appellate

Body130 have also adopted an interpretation that is not consistent with China’s

approach, and have clearly stated that there is no “hierarchy of preference” between

these two options. Nor is there thus an obligation in the agreement to include as

many domestic producers as possible. In the absence of such an obligation, China’s

factual argument that more producers had been identified than were ultimately

included in the definition of the domestic industry is thus not relevant.

119. In any case, and looking at the facts of the fasteners investigation, it is clear that

China errs in its assertion that the EU authorities had identified “at the beginning of

their investigation” producers accounting for almost double the output represented

by the producers finally included in the domestic industry and that therefore “it is

hardly possible to argue that 27% constitutes a major proportion”.131 China argues

that “the EU may have tried to identify as many producers as possible but once they

were identified, it unilaterally decided to exclude a majority of them”.132 This is

simply incorrect.

120. China refers to the Information Document which mentions 114 companies

representing 45% of total domestic production. However, it is clear that the

Information Document, which is an informal document that simply reflects a work in

progress and has no legal status whatsoever in EU law or in the context of the Anti-

Dumping Agreement, sets forth a confused and erroneous statement of the facts.133

The correct statement of facts is contained in the two relevant documents which do

128 See Articles 6.1.1, 6.4, 8.3, 6.10, 9.2, 12.2.1 (i) of the AD Agreement. 129 See, for example, Panel Report, Mexico – Steel Pipes and Tubes, para. 7.322 130 As noted by the Appellate Body in US – Hot-Rolled Steel, “an injury determination, under the Anti-Dumping Agreement, is a determination that the domestic producers "as a whole", or a "major proportion" of them, are "injured".” (emphasis added). Appellate Body report, US – Hot-Rolled Steel , para. 190. 131 China’s oral statement at the first substantive meeting of the Panel with the parties, para. 106. 132 China’s oral statement at the first substantive meeting of the Panel with the parties, para. 106. 133 The European Union explains the cause of the confusion in its answer to question 31 of the Panel’s questions after the first hearing of the Panel with the parties, para. 97. This confused approach was later clarified as the standing-related information was distinguished from the sampling-related information. The General Disclosure Document and Council Regulation No 91/2009 – the two official documents of relevance – reconnect with the Notice of Initiation – that other official document – and accurately reflect what had throughout been the approach adopted by the authorities: the domestic producers that are to constitute the


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have legal status, i.e., the General Disclosure Document through which the EU

complies with its obligation under Article 6.9 of the Anti-Dumping Agreement, and

of course, Council Regulation No 91/2009 which forms the basis for the imposition

of the duties and which is the measure being challenged by China, although China

prefers to forget that. Both documents explain that only 46 producers came forward

within the set deadline and expressed a willingness to cooperate with the

authorities.134

121. It is therefore not factually correct to argue as China does that the data of many more

producers were available but that the authorities decided to “exclude a majority of

them”. All producers were invited to come forward and all that did so within the

deadline and expressed their willingness to cooperate were included; all of them.

Authorities have the right to conduct the investigation in an expeditious manner as

set forth in Article 6.14 of the Anti-Dumping Agreement. In addition, authorities

have the obligation under article 5.10 of the Anti-Dumping Agreement. Finally, the

EU authorities lack subpoena powers to force producers to cooperate in the

investigation. For all of these reasons, it would clearly not be correct to require the

authorities to include producers that are not willing to cooperate or that make

themselves known after the reasonable deadline that was set. In that sense as well

the argument that it was “practically possible” to include more producers is in error.

122. Second, China argues that given the number of producers, limiting the definition of

the domestic industry to 45 producers representing only one sixth of the number of

producers is inconsistent with the major proportion requirement of Article 4.1.135 In

other words, China’s second argument relating to the “circumstances of this case”

relates to the number of producers, while the Anti-Dumping Agreement refers to the

output or production as the relevant benchmark. China’s argument is thus not

pertinent. It is clear that such an irrelevant fact cannot have been what the panel in

Argentina – Poultry Anti-Dumping Duties had in mind when it referred to the

“circumstances” of the case that could lead to a conclusion that a particular

percentage of production that prima facie seems to be important and significant

domestic industry are those that make themselves known within 15 days following initiation, provide the requested information and express their willingness to participate in the investigation. 134 See recitals 23 - 24 of the General Disclosure Document (Exhibit CHN – 18) and recitals 24 – 25 of Council Regulation 91/2009 (Exhibit CHN - 4)


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would not be a “major proportion” in the sense of Article 4.1. Quite to the contrary,

it is precisely in the context of a fragmented industry with an important number of

producers that it is likely that the definition will be based on producers representing

less than the totality but still a major proportion of domestic production. To impose

a requirement in such cases that these producers need to represent a major proportion

in terms of numbers of producers is counterintuitive in addition to the fact that it

lacks any basis in the text of the Anti-Dumping Agreement.

123. Thus, the two sets of “circumstances” of this case, which China itself at the time of

the meeting acknowledged to be the key aspect of an evaluation of the consistency of

the domestic industry definition with the major proportion requirement, are (i) a

simple re-packaging of a clearly flawed approach to Article 4.1 which is further

based on an erroneous factual assertion, and (ii) a completely irrelevant factor such

as the proportion of producers in terms of the number of total producers.

124. China has therefore clearly failed to meet its burden of establishing a prima facie

case. It has adopted a substantively flawed legal position and has failed to

demonstrate that there is anything in the circumstances of this case that would

detract from the reasonable determination that producers representing 27% of

production and including different types of producers, producing all three sorts of

covered fasteners represented “a major proportion of total domestic production”.

125. Finally, China’s assertion in the oral statement that the European Union allegedly

argued that “it is irrelevant how the domestic industry is defined when sampling is

used”136 is of course not a correct reading of the EU’s argument. In the two

paragraphs of the EU First Written Submission that China refers to, the European

Union simply stated that it is ultimately not important to add as many producers as

possible in the definition of the domestic industry in a situation of sampling since the

data to be examined will mainly be those of the sampled producers. That does not

mean that the European Union considers that the use of sampling implies that the

domestic industry does not need to be defined in a WTO consistent manner or that

135 China's Opening Oral Statement, First Meeting with the Panel, para. 107. 136 China's Opening Oral Statement, First Meeting with the Panel, para. 109


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certain categories of producers may be excluded from the outset, as China

erroneously suggested.137

C. China’s claim that the domestic industry was not defined in relation to the investigation period and would thus be inconsistent with Article 3.1 finds no basis in the text of the Anti-dumping Agreement

126. China claims that the European Union violated Article 3.1 of the Anti-Dumping

Agreement that obliges an investigating authority to make a determination of injury

based "on positive evidence" and which involves "an objective examination" of the

domestic industry because the European Union allegedly failed to determine the

domestic industry "in relation to the same period that is used for the assessment of

the injury factors, that is the Period of Investigation".138

127. As explained in the EU First Written Submission139, and as summarised below,

China errs both in respect of the facts on the record and in respect of the applicable

law.

128. First, China’s reference to the October 2006 – 2007 period as the period for

determination of injury is in error since this is actually primarily the period of

investigation for dumping. The injury data examined covered the period January

2003 – October 2007. The determination of a "major proportion" was based on data

relating to the last full year prior to initiation for which statistics were available, the

year 2006. Absent any evidence to the contrary, this is an objective and entirely

reasonable approach to take.

129. Second, Article 3.1 simply does not impose an obligation to expressly determine the

existence of a major proportion, or to make this determination in respect of a

particular period of time such as the exact same period as the period of investigation

for dumping purposes.

130. In any case, and applying for the sake of argument the generally applicable

reasonableness standard to the determination of "a major proportion", it is clear that

a recent and relevant period was used consisting of the last full year prior to

137 China's Opening Oral Statement, First Meeting with the Panel, para. 109. 138 China's First Written Submission, para. 272. 139 EU First Written Submission, paras 353 – 368.


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initiation for which statistical data were available, including part of the period of

investigation for dumping purposes.

131. The European Union has thus demonstrated that there is no factual nor legal basis for

China's claim of violation in respect of the EU's determination of the domestic

industry in the context of the investigation period.

132. Neither in its oral statement, nor in the course of the first substantive meeting with

the Panel did China even attempt to rebut the EU’s arguments.

D. China’s claim that the EU improperly made an injury determination with respect to a sample of EU producers that was not representative of the entire domestic production and thus violated Articles 4.1 and 3.1 of the Anti-Dumping Agreement is flawed

133. China claims that the European Union improperly made an injury determination with

respect to a sample of EU producers that was not representative. China argues that a

sample selected in the context of an injury determination "must comply with the

requirements laid down in Article 4.1 of the Anti-Dumping Agreement" in the sense

that "the producers selected in the sample must nonetheless comply with the

definition of the domestic industry set out in Article 4.1".140 China submits that "by

selecting a sample consisting of producers whose production amounted to only

17.5% of the total EC production, the EC violated Article 4.1 of the Anti-Dumping

Agreement".141 China also makes the consequential claim that the EU’s sample of

producers representing 17% of total production is not sufficiently representative of

the domestic industry as a whole and is therefore not consistent with the

requirements of Article 3.1 of the Anti-Dumping Agreement requiring an "objective

examination" of injury based on "positive evidence".

134. In its First Written Submission142, the European Union has rebutted China’s flawed

arguments. China failed to address these arguments in its oral statement and the EU

therefore limits itself to summarizing briefly the main aspects of its reasoning.

140 China's First Written Submission, paras 276 – 277. 141 China's First Written Submission, para. 278. 142 EU First Written Submission, paras 371- 394


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135. First, China fails to demonstrate that Article 4.1 imposes any obligation in respect of

sampling and has therefore failed to establish a prima facie case.

136. Second, it would not make sense to require a sample to comply with the same "major

proportion" obligation that the domestic industry itself is to comply with, as this

would vitiate the purpose of sampling.

137. Third, the requirement of Article 3.1 is arguably that the sampled data should be

sufficiently representative of the domestic industry as defined in accordance with

Article 4.1. That is different from requiring that the sample be representative of the

totality of the domestic producers as a whole, as China erroneously alleges to be

required. The sample chosen was representative of the domestic industry both in

terms of volume, types of products and size of the producers. China does not argue

otherwise.

138. The European Union thus considers that it has been clearly established that China's

argument in respect of the volume of total production represented by the sampled

producers is without merit. As noted before, in the course of the oral hearing, China

did not even attempt to rebut the EU’s argument.

E. China’s claim that the European Union included in the domestic industry and in the sample a number of EU producers that were related to the exporters or importers or where themselves importers of the dumped product is based on an erroneous reading of Article 4.1 and is therefore to be rejected.

139. China claims that the European Union "violated Article 4.1 of the Anti-Dumping

Agreement" and this "by failing to exclude from the definition of the domestic

industry those Community producers related to Chinese exporting producers".143

China submits that "the discretion conferred upon the EC in Article 4.1(i) of the

Anti-Dumping Agreement to determine whether or not to exclude certain EC

producers from the definition of the domestic industry is not without limits".144

China considers that "the determination of whether to include or exclude EC

producers that are related to producers in the exporting country must be based on an

143 China's First Written Submission, para. 296. 144 China's First Written Submission, para. 291.


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objective examination"145 and argues that "the EC failed to conduct an objective

examination of whether the relationship between the EC producers concerned and

their Chinese subsidiaries was such that they deserved to be excluded from the

definition of the domestic industry".146 (emphasis added)

140. In the First Written Submission147, the European Union has demonstrated that

China’s claims have no basis in the text of the Agreement. Since China did not even

attempt top rebut the EU’s arguments in this respect in the oral statement, the EU

simply summarises the main elements of its reasoning below.

141. First, it is clear that the Anti-Dumping Agreement permits, under certain conditions,

the authority to exclude related producers, but certainly does not require an authority

to do so. Even China accepts this. Without an "obligation" to do something there can

be no "violation."

142. Furthermore, the EU authorities did not actually exclude any related producers and

therefore no obligation to make an objective determination could have been violated.

143. Finally, China fails to demonstrate that the facts do not support the reasonable

finding of the EU authorities that the centre of interest of these “related” domestic

producers remained in the European Union and that it was therefore neither

necessary nor appropriate to exclude these producers from the scope of the domestic

industry.

144. As noted before, China did not even attempt to rebut these basic elements of the

EU’s argument. China acknowledged in the course of responding to the Panel’s oral

questions that the Agreement does not require the exclusion of related domestic

producers, which of course totally undermines China’s original position that certain

producers “deserved” to be excluded.

145 China's First Written Submission, para. 293. 146 China's First Written Submission, para. 294. 147 EU First Written Submission, paras 396 – 412.


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F. Conclusion

145. In sum, and for all the reasons expressed in our First Written Submission, as well as

in the oral statement and this Second Written Submission, the European Union

requests the Panel to reject all of China' claims under Articles 3.1 and 4.1 of the

Anti-Dumping Agreement in respect of the EU's determination of the domestic

industry.

VI. CLAIM 4: SELECTION OF THE PRODUCT CONCERNED (ARTICLES 2.1 AND 2.6 OF THE ANTI-DUMPING AGREEMENT)


connection with this claim. Thus, the European Union requests the Panel to reject

China's claim that Council Regulation No 91/2009 is inconsistent with Articles 2.1

and 2.6 of the Anti-Dumping Agreement since it erroneously considered fasteners

produced and sold by the Community industry, fasteners produced and sold on the

domestic market in India and fasteners produced in China and sold to the European

Union as being "alike".148

VII. CLAIM 5: DETERMINATION OF DUMPING (ARTICLE 2.4 OF THE ANTI-DUMPING AGREEMENT

147. China claims that the EU’s determination of dumping violated Article 2.4 of the

Anti-Dumping Agreement. China argues that by failing to make a comparison on the

basis of the full Product Control Number ("PCN"), the European Union failed to

make a fair comparison between the export price and the normal value.149 In

addition, China claims that the European Union failed to make the necessary

adjustments for differences affecting price comparability. In particular, China argues

that "there are several physical characteristics that affect price comparability which

are reflected in the PCNs" and that by failing to make adjustments for these physical

characteristics when making the comparison, the European Union violated Article

2.4 of the Anti-Dumping Agreement.150

148 EU First Written Submission, paras 414 – 443. 149 China's First Written Submission, para. 383. 150 China's First Written Submission, para. 386


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148. In the First Written Submission151, the European Union explained why China’s

claims based on the alleged failure to use the full PCN are in error and should be

rejected by the Panel. China did not address any of these arguments in its oral

statement. We therefore briefly summarise the main elements of our argument

which was not rebutted.

149. First, it is well established that Article 2.4 of the Anti-Dumping Agreement does not

specify the methodology to be followed in order to conduct a fair comparison.152 It

sets forth a “general and abstract”153 obligation only, thus leaving a broad

discretionary power to the investigating authority. The Anti-Dumping Agreement

does not at all require the use of PCNs and it is clear therefore that the mere fact that

the comparison was not made on the basis of the full PCN cannot ipso facto

constitute a violation of Article 2.4 as erroneously argued by China.

150. Second, it is not correct to argue, as China seems to do, that simply because the

information was requested to be provided on the basis of a particular PCN, that any

other method would be unfair or not even-handed, and that the authority would be

precluded from adopting a different methodology for comparing normal value and

export price.

151. As explained in the First Written Submission154 and at the time of the oral hearing,

the PCNs are merely a tool for gathering information in a particular manner that may

allow the authority to compare identical products without the need to make any

adjustments. The PCN is determined at the beginning of the investigation, at a time

that it is not even clear which elements are actually affecting price comparability. It

intends to identify completely identical products, not to identify differences that

affect price comparability. Whether the PCN will ultimately be used, or be used in

the form as originally designed depends on numerous factors, including the

arguments of the parties, and the practical limitations of the information available.

152. It is clear from the record that the EU authorities conducted a fair comparison

between normal value and export price by distinguishing between products on the

151 EU First Written Submission, paras 445 – 483. 152 See, for example, Panel Report, US – Softwood Lumber V, para. 7.167; Panel Report, EC – Tube or Pipe Fittings, para. 7.178. 153 Appellate Body Report, US – Zeroing (EC), para. 146.


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basis of strength class and between standard and special fasteners. These were the

two main characteristics referred to by the interested parties in the course of the

investigation, including but not limited to the Jiaxing Association of Chinese

Exporters and Importers of Fasteners.155 In addition, and as explained in recitals 103

and 104 of Council Regulation No 91/2009 adjustments were made for differences

relating to inter alia the cost of quality control.

153. As noted before, China did not address the EU’s arguments in its oral statement. In

the closing statement, China raised the question of the PCNs only in respect of the

price undercutting analysis, not in respect of the dumping comparison under Article

2.4. The above summarised EU arguments therefore remain un-rebutted and China’s

claims are thus to be rejected.

154. Nevertheless, the European Union wishes to address at this stage one issue that was

raised by China in the course of the discussion at the oral hearing. China raised the

argument that it did not know what the difference was between special and standard

fasteners, and that this lack of transparency hindered the defence of the Chinese

exporters’ interests at the time of the investigation and of China in the current

proceedings. In this respect, the European Union considers it important to point

China to Council Regulation No 91/2009 in which this difference is clearly

explained in the following manner:

(50) In that respect it is recalled that during the adversarial meeting it was recognised by all parties that there is an important distinction in the fasteners industry between standard and so-called ‘special’ fasteners. Standard products are described in detail by industry standards such as, for example, Deutsches Institut für Normung (DIN) or German Institute for Standardisation standards. These standards ensure that the products manufactured by different suppliers in different countries are essentially interchangeable from a user point of view. Special fasteners, on the other hand, conform to a particular user's design and/or requirements. It is also generally recognised that special fasteners tend to be used in more demanding applications such as the automotive, chemical and other industries and are, on average, significantly more expensive to produce and sell than standard fasteners.

154 EU First Written Submission, paras. 465 – 467. 155 Exhibit EU-13


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155. In fact this explanation is entirely in line with the information provided by the

Chinese interested parties themselves which throughout the investigation insisted on

this distinction between standard and special fasteners. For example, the Report of

the Confrontation Hearing reflects the views of the Chinese interested parties on this

difference describing special fasteners as “customer drawing products” in line with

the explanation provided by the domestic industry which uses the same terms.156

Special fasteners are fastener products “on demand” which conform to a particular

user’s design and / or requirements. They can be identical to a standard product, but

not necessarily so.157

156. Importantly, the Report of the Confrontation hearing also confirms that the other

element to which the Chinese interested parties referred was the difference between

mass-production and “high strength products”158 thus confirming the potential

relevance of strength class as a factor to take into consideration in a given

comparison. In sum, the Report of the Confrontation Hearing clearly demonstrates

that it was the common position of the Chinese interested parties, and not just of one

producer association, that strength class and the distinction between standard and

special fasteners were the most important elements to take into consideration when

examining and comparing fasteners.

157. That the Chinese interested parties considered that these are the two drivers for

distinguishing fasteners is further reflected in recital 48 of Council Regulation No

91/2009 in the following manner:

156 Report of the Confrontation Hearing, p. 2 (Exhibit CHN-27). 157 Report of the Confrontation Hearing, p. 4 (Exhibit CHN-27). 158 Report of the Confrontation Hearing, p. 5 (Exhibit CHN-27).


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(48) A number of parties claimed that the fasteners manufactured in the PRC for export to the Community were not comparable to those manufactured by the Community industry, and that the latter are used in applications which differed from fasteners produced in the PRC, thus not being in direct competition with them. In particular, they claimed that the majority of fasteners produced in the PRC: (i) are standard products (mainly ranging between 4.8 and 8.8 class of resistance) having no special characteristics regarding raw material, resistance, coating, or certification/safety related aspects; (ii) they are destined for lower-end applications (nonprofessional use and general distribution) as opposed to high-tech applications; and (iii) they do not meet the strict requirements of specific end-users such as the automotive, chemical or aerospace industry. Those claims were stated in a number of written submissions and in the adversarial meeting. They were also stated in a written submission received from the PRC authorities.

158. In other words, it is clear that the Chinese interested parties emphasised the

“standard” nature of their products identified by their strength class (class of

resistance) and “having no special characteristics regarding raw material,

resistance, coating, or certification/safety related aspects”. The same standard

fasteners were produced by the producer in the analogue country, thus further

undermining any alleged need to make adjustments for factors which were not

argued to have been affecting price comparability among standard fasteners.

159. At no point in time did the Chinese interested parties raise any other important

differences that could affect price comparability between the Chinese exports of

fasteners and the sales of fasteners by the producer in the analogue country, India.

Recital 56 of Council Regulation No 91/2009 reflects the fact that the focus of the

discussion was on the distinction between special and standard fasteners:

(56) It was also argued by several importers and exporting producers that the fasteners produced in the analogue country, India, are mostly high-value product types destined for the automotive industry and similar applications,

and therefore are not alike to the fasteners exported to the Community by the PRC producers. The investigation has shown, however, that both special and standard products are also produced and sold in India. As explained above those fasteners have been found to have the same basic physical and technical characteristics as products exported from the PRC.

160. Indeed, there is one other, related point that should not be ignored. Standard

fasteners are essentially interchangeable from an end-user’s point of view and the


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international norms and standards that apply to these standard fasteners tend to

reduce the need to make any further adjustments for differences affecting price

comparability. These are all the same products, fasteners, further distinguished

between special and standard fasteners to ensure a fair comparison. Unless there are

clear differences affecting price comparability between the group of exported

standard / special products and the group of like standard / special products sold in

the analogue country, there is no need to make adjustments in order to ensure a fair

comparison. The only adjustment that was found to be justified and required was for

differences in the cost of quality control in India. This adjustment was made.159 In

addition, as explained in recital 104 of Council Regulation No 91/2009, “appropriate

adjustments concerning transport, insurance, handling and ancillary costs, packing,

credit, and bank charges were granted”.

161. In the absence of any prescribed methodology and taking into consideration the fact

that comparisons were made between normal value and export price between

products based on the two main drivers that the exporters themselves considered to

be affecting price comparability, it is clear that China has failed to demonstrate that

the comparison that was made was not a “fair comparison” as required by Article

2.4.

162. For all of the reasons expressed in the First Written Submission as reiterated and

elaborated upon in this submission, the European Union requests the panel to reject

all of China’s claims in respect of the dumping comparison under Article 2.4 of the

Anti-Dumping Agreement.

VIII. CLAIM 6: PRICE UNDERCUTTING ANALYSIS (ARTICLES 3.1 AND 3.2 OF THE ANTI-DUMPING AGREEMENT)

163. China argues that the European Union "violated Articles 3.1 and 3.2 of the Anti-

Dumping Agreement by failing to make a product comparison on the basis of the full

PCN and by comparing standard and special fasteners without making any

adjustments for the differences affecting price comparability when determining the

159 Council Regulation No 91/2009, recital 103 (Exhibit CHN – 4)


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price undercutting margin".160 China acknowledges that Article 3.2 "does not impose

a specific methodology that must be followed to calculate price undercutting"161, but

that that the requirement of Article 3.1 of "objectivity" implies "that the comparison

must be made in an even-handed manner and that comparable products must be

compared".162

164. For the reasons explained in our First Written Submission,163 China’s claim of

violation of Articles 3.1 and 3.2 of the Anti-Dumping Agreement for reason of the

fact that the EU authorities allegedly failed to make a price undercutting comparison

between export prices and prices of domestic producers on the basis of the full PCN

is to be rejected. Once again, none of the EU’s arguments were addressed in China’s

opening oral statement. The European Union therefore recalls the main elements of

its argument as developed in the First Written Submission which remains unrebutted.

165. First, China’s price undercutting claim was not part of China's Consultations Request

and, thus, this claim is outside the Panel's terms of reference.

166. Second, on the substance, it is clear that China’s claim lacks merit since Article 3.2

of the Anti-Dumping Agreement does not require any particular methodology for

conducting a price undercutting analysis. This is clear from the text of the

Agreement and has been confirmed by the case law referred to in our first written

submission acknowledging the “considerable discretion” of the authorities in this

respect.164 The mere fact that the comparison was allegedly not based on the full

PCN, therefore does not suffice to find a violation of the general requirement to

conduct an objective examination of whether there existed significant price

undercutting. This is even more so because Article 3.2 does not even require that

adjustments be made as does Article 2.4 of the Anti-Dumping Agreement, and even

under Article 2.4 there is no requirement to base a comparison on the PCNs, as

demonstrated above. It is well established that the obligations of Article 2.4 cannot

simply be transposed to the price undercutting analysis.165 That is precisely what

160 China's First Written Submission, para. 396. 161 China's First Written Submission, para. 392. 162 China's First Written Submission, para. 393. 163 EU First Written Submission, paras 485 – 504. 164 See, for example, Panel Report, EC – Tube or Pipe Fittings, para. 7.277; Panel Report, Egypt – Steel Rebar, para. 7.73. 165 Panel Report, EC – Tube or Pipe Fittings, para. 7.291 – 7.293.


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China does, however, arguing that the price undercutting comparison was required to

have been made on the basis of the full PCN and applying language and arguments

that come straight from Article 2.4 and the dumping comparison.

167. In any case, and even assuming arguendo that any requirement to make adjustments

or compare identical models exists, it is clear that in this case the comparison was

actually made on the basis of 5 out of the 6 PCN features. In addition, and at the

express insistence of Chinese interested parties, a distinction was made between

special and standard fasteners. In so doing the EU authorities ensured a comparison

which was undoubtedly fair and unbiased since the authorities went well beyond

what they were obliged to do under the Anti-Dumping Agreement. The evidence and

arguments of China fail to point to anything in the EU authorities’ reasoning that

would support its allegation of lack of even-handedness

168. The EU authorities thus clearly complied with any obligation of reasonableness that

could be imposed in this respect.

169. As noted before, in its oral statement, China did not even attempt to rebut the EU’s

arguments. In its closing statement, China simply repeated its erroneous argument

that the mere fact that the EU authorities requested that the information be provided

on the basis of the PCN features is evidence that “the PCN factors were necessary to

make a fair comparison”. As explained before, that is not correct. China also

reiterates the alleged uncertainty over the way in which the product types were

grouped together and repeats the argument that the price differences that it pointed to

in respect of these different groups demonstrates that the comparison was not fair or

unbiased.166

170. The European Union already dealt with this same argument in paragraph 504 of its

First Written Submission, essentially explaining that the mere fact that there are

price differences within the different products as defined on the basis of the PCNs is

not an indication of bias or lack of even-handedness. China fails to demonstrate that

merely because there are differences in price between the cheapest and the most

expensive product in that group that the comparisons would "favour the interests of

166 China's Closing Oral Statement, First Meeting with the Panel, p. 3 – 4.


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either side" in the sense that it makes a finding of price undercutting more or less

likely.

171. The European Union considers that it is important to address one additional

argument that China consistently made in the course of the oral hearing relating to

the alleged lack of transparency in respect of the PCNs used for purposes of the price

undercutting analysis. Actually, China’s insistence in respect of this argument

reveals the extent to which China’s arguments in these proceedings simply disregard

the facts on the record. China’s allegations may sound appealing but they are

blatantly incorrect.

172. Indeed, as clarified in response to a number of the Panel’s questions, China cannot

seriously argue that it was not aware of how the product groups were constituted or

what the methodology was that was followed for the price undercutting analysis.

China’s own exhibit CHN-50 which is an example of a disclosure document sent to

the Chinese producers clearly explains it all in great detail. This disclosure

document that China submitted in these proceedings explains that for the injury

analysis, the full PCNs was used but that the “dimension characters were

…truncated to show only the length in tens centimetres”.167 It also confirms, once

again that “special fasteners” are “customer designed fasteners”168 and explains in

great detail the method of comparison. This exhibit shows (1) that the Chinese

exporters knew exactly how the price undercutting analysis was conducted; (2) that

the only difference between what China argues should have been done (full PCN

comparison) and what was actually done is the reduction of two features of the PCN,

diameter and length into one feature, “size” expressed in tens of centimetres. Exhibit

CHN – 55 which China alleges demonstrates the important price differences

between these grouped products shows the limited replacement of the six last

numbers of the PCN which reflected diameter and length with two new numbers

reflecting size in tens of centimetres. Clearly, China knew very well how this new

grouping took place, and any suggestion to the contrary is inconsistent with the

information on the record. Actually, a closer look at Exhibit CHN-55 on which

167 Individual Disclosure Document, Exhibit CHN-50, p. 4. 168 Individual Disclosure Document, Exhibit CHN-50, p. 4.


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China’s entire price differential argument is based reveals the extent to which these

products are actually very similar in price within the group.169

173. A final important point to note is that the disclosure document (Exhibit CHN-50)

was sent to all cooperating exporters on 3 November 2008 and three weeks were

given to provide comments. No such comments challenging the reasonableness of

the methodology of the price undercutting comparison were received.

174. In sum, and for all of the reasons mentioned before in our First Written Submission,

as elaborated upon in this submission, the European Union requests the Panel to

reject China’s claims under Articles 3.1 and 3.2 of the Anti-Dumping Agreement in

respect of the price undercutting analysis.

IX. CLAIM 7: EXAMINATION OF THE VOLUME OF DUMPED IMPORTS (ARTICLES 3.1, 3,2, 3.4 AND 3.5 OF THE ANTI-DUMPING AGREEMENT)

175. China claims that the European Union violated its obligations under Articles 3.1, 3.2,

3.4 and 3.5 of the Anti-Dumping Agreement because the European Union allegedly

failed to exclude from the volume of dumped imports, imports from Chinese

producers that were found not to have dumped and because it included in the volume

of dumped imports all imports from non-sampled producers.170

176. In the First Written Submission171 and at the oral hearing the European Union

demonstrated that China's claim is without merit. China did not even attempt to rebut

the EU’s arguments at the time of the first substantive meeting with the Panel. We

therefore limit ourselves to a brief summary of the main elements of our argument in

respect of the EU authorities’ volume analysis.

177. First, in respect of China’s claim based on the failure to exclude two exporters that

were not found to be dumping, the facts on the record reveal that the only two

exporters for which no dumping was found to exist, represented a totally negligible

volume of imports of [[…]]. Under Article 3.2 of the Anti-Dumping Agreement, an

investigating authority is not required to make a finding that the volume of dumped

169 As we already explained in paragraph 504 of our First Written Submission, China focuses on the differences between the two extremes. It has to do so in order to keep its argument alive, since its own exhibit reveals to what extent the extremes to which it refers are outliers. 170 China’s First Written Submission, para. 397. 171 EU First Written Submission, paras. 509 – 555.


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imports increased. It is merely required to “consider” whether there has been a

significant increase in the volume of dumped imports. It is clear that the EU

considered this aspect. Based on the statistics relating to imports from China, the

EU considered that the volume of dumped imports increased by 103%. That is

clearly a significant increase in the volume of dumped imports. The completely

negligible amount of non-dumped imports is incapable of undermining the

objectivity of this determination.

178. It is important not to loose sight of the fact that the obligation under Article 3.2 is to

consider whether there exists a "significant" increase in dumped imports. This

provides a good benchmark for determining whether any failure to exclude certain

imports for reason of the fact that they were not dumped affects the consistency of

the determination made. Clearly, the fact that [[…]] of imports were not excluded is

not capable of impacting on the "significance" of the increase found to exist,

especially in a situation like this one where the increase found to exist was 103%.

179. The European Union requests the Panel not to approach this matter in a mechanistic

fashion. The Appellate Body has warned against such a mechanistic approach on

many occasions172, thus calling for a substantive over a formalistic approach.173 It is

not so that any inclusion of non-dumped imports would necessarily, and ipso facto

constitute a violation of Articles 3.1 and 3.2. A violation will exist only if the failure

to do so jeopardizes the objectivity of the examination.174 As explained before, as

well as in our First Written Submission, such was not the case in respect of the

fasteners investigation.

180. The bottom line is that the evidence available to the EU authorities, even if [[…]] of

imports would have been excluded, clearly supported its conclusion of a significant

increase in the volume of dumped imports. When the Panel examines whether the

EU’s consideration of whether there has been a significant increase in dumped

imports was inconsistent for the simple reason that it included [[…]] of non-dumped

172 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 93; Appellate Body Report, US - Carbon – Steel, para. 142; Appellate Body Report, US – Continued Suspension, para. 360. 173 Appellate Body Report, EC – Tube or Pipe Fittings, paras 161 – 162. In that report, the Appellate Body found in favor of the EU in respect of the consideration of all injury factors under Article 3.4 even though from a formalistic point of view it was clear that the EU authorities had not separately evaluated one factor, growth. As the Panel in that same case had found however what is important is “substantive rather than pure formal compliance”. Panel Report, EC – Tube or Pipe Fittings, para. 7.310.


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imports in this analysis, it must reach the conclusion that such was not the case. It is

clear that if the volume of non-dumped imports had been excluded, the outcome

would have been exactly the same: dumped imports would have been found to have

significantly increased. Substantively, there is therefore no violation of the limited

obligation of Articles 3.1 and 3.2 of the Anti-Dumping Agreement. In addition, it is

clear that not excluding [[…]] of the volume of imports from China is not in any way

capable of impacting on the evaluation of the injury factors under Article 3.4 of the

Anti-Dumping Agreement or on the causation analysis of Article 3.5 of the Anti-

Dumping Agreement.

181. Second, China’s claim that the EU authorities were not entitled to include the

imports of all non-examined producers in the total volume of dumped imports is in

error and contradicted by well-established WTO jurisprudence. As explained in our

First Written Submission, all of the sampled producers were found to be dumping.

In a situation of sampling, when not all exports are examined, it is clear that the only

way to make an objective determination about the volume of dumped imports from

non-sampled producers is by extrapolation. That is the important clarification that

was provided by the Appellate Body in the EC – Bed Linen (Article 21.5 DSU –

India) case. The Appellate Body recognised that there is a right to conduct a limited

examination in the circumstances described in the second sentence of Article 6.10,

and that paragraphs 1 and 2 of Article 3 must, accordingly, be interpreted in a way

that permits investigating authorities to satisfy the requirements of "positive

evidence" and an "objective examination" without having to investigate each

producer or exporter individually.175 The Appellate Body considered that it would

be legitimate to extrapolate the volume of dumped imports based on the volume of

imports of the sampled companies that were dumped.176 Similarly, the Panel in EC

– Salmon (Norway), faulted the European Union for assuming that all non-sampled

producers had been dumping since "not all examined sampled producers were

found to be dumping, and to the extent that the EC extrapolated to all imports on

174 See Appellate Body Report, EC – Bed Linen (Article 21.5 DSU – India), para. 113. 175 Appellate Body report, EC – Bed Linen (Article 21.5 DSU - India), para. 117. 176 Appellate Body report, EC – Bed Linen (Article 21.5 DSU - India), paras 137 – 138.


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the basis of a conclusion that all imports attributable to the examined producers were

dumped, it erred".177 (emphasis added)

182. In contrast, the facts on the record show that in the fasteners case, all sampled

producers were found to be dumping. Indeed, in the fastener case, 100% of the

sampled producers representing 61% of exports from the cooperating companies and

39% of total exports from the People's Republic of China were all found to be

dumping. Clearly the authority’s extrapolation of dumping in respect of the non-

sampled exporters on this basis was not in error. Since all sampled producers were

found to be dumping and the non-sampled examined producers that were not found

to be dumping represented [[…]] of imports, it is clear that, by extrapolation, the

European Union was justified in including in the volume of dumped imports all

imports from non-sampled exporters.

183. For the reason explained here as well as in our First Written Submission, China’s

claim that the European Union violated Articles 3.1 and 3.2 of the Anti-Dumping

Agreement and failed to make an "objective examination" of the volume of dumped

imports that is "based on positive evidence" because it treated all imports from China

as being dumped is to be rejected.

184. As explained in our First Written Submission, China’s claim under Articles 3.4 and

3.5 is entirely dependant on a finding of violation under Article 3.1 and 3.2. Since

the Panel should reject these claims under Articles 3.1 and 3.2, the European Union

thus requests that the claims under Article 3.4 and 3.5 be rejected as well.

185. Furthermore, and assuming arguendo that the Panel would uphold China’s claim of

violation of Article 3.1 and 3.2, the European Union requests that China’s claims

under Articles 3.4 and 3.5 nevertheless be rejected since China failed to meet its

burden of proof and did not establish a prima facie case of violation. Article 3.4

does not "as such" refer to the volume of dumped imports, but to their "impact"

which is to be based on an "evaluation" of a number of factors. The Panel is thus not

allowed to simply conclude that in each case there is a violation of Article 3.2, there

necessarily also is a violation of Article 3.4, and this without additional evidence or

argumentation relating to the impact of this error on the objective examination of the

177 Panel Report, EC – Salmon, para. 7.634.


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injury factors. China did not present such arguments. In any case, as explained

before, the evidence clearly shows that the effect of this alleged error is inexistent.

A difference of [[…]] in terms of the volume of imports impacting the industry

simply cannot be meaningful and the inclusion of this marginal amount of imports in

the analysis cannot be held to ipso facto undermine the analysis performed under

Articles 3.4 and 3.5.

186. As noted before, China failed to even attempt to rebut these arguments in the course

of its oral statement.

187. For all of the reasons explained in the First Written Submission as summarized and

elaborated upon in this submission, the European Union requests the Panel to reject

China’s claims under Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement

against the examination of the volume of dumped imports.

X. CLAIM 8: IMPACT OF DUMPED IMPORTS ON DOMESTIC PRODUCERS (ARTICLES 3.1 AND 3.4 OF THE ANTI-DUMPING AGREEMENT)

188. China claims that the European Union violated Articles 3.1 and 3.4 of the Anti-

Dumping Agreement because it failed to objectively examine the impact of dumped

imports on domestic producers, including all relevant factors having a bearing on the

state of the industry. China makes four sets of claims in respect of the injury

determination. For the reasons explained in our First Written Submission,178 all four

are to be rejected.

A. China’s allegation that the European Union did not conduct an objective examination by not consistently using the same dataset is flawed

189. China alleges that "the EC did not examine all injury factors in relation to a

Community industry defined in a consistent manner" and that the European Union

"should have consistently used the same set of companies in order to make its injury

analysis rather than examining some injury factors in relation to a domestic industry

consisting of 46 producers and other factors in relation to a domestic industry

178 EU First Written Submission, paras 558 – 630.


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consisting of six sampled producers".179 China considers that this alleged lack of

consistency is "fundamentally non-objective and biased".180

190. In the First Written Submission, the European Union explained that China’s claim

lacks merit since the record clearly shows that the EU authorities did consistently use

data relating only to the same domestic industry. Indeed, the European Union agrees

that it would not be correct for an authority to define a domestic industry in a

particular way but then to examine data from producers outside of that definition.

Evidence from producers that are not part of the domestic industry would of course

not be "positive evidence" of the state of the defined domestic industry. That was

also the view expressed by the panel in Mexico – Steel Pipes and Tubes. As stated

by that Panel, "once an investigating authority has identified the framework for its

analysis - whether an entire domestic industry or a major proportion thereof - it must

use this identified framework consistently and coherently throughout an

investigation".181 That is exactly what the European Union did.

191. Recital 127 of Council Regulation No 91/2009 explains that the data examined in the

context of the injury factors are those of the sampled producers but that seven factors

were examined on the basis of more complete information provided by the

Community industry as a whole, i.e., the 45 domestic producers that together were

considered to constitute the relevant domestic industry for purposes of this

investigation. It is thus not so that for any of the injury factors, data of producers that

did not form part of the domestic industry were used. The data that were used for

purposes of the injury analysis were data concerning the domestic industry as

defined in accordance with Article 4.1 and were not data that related to producers

outside the domestic industry so defined.

192. In our First Written Submission,182 we explained why the case law to which China

referred in its submission does not support its argument given the important

difference between the fasteners investigation and the situation discussed in the

WTO cases that China referred to. Contrary to the situation in the Mexico- Steel

Pipes and Tubes report, the information that was used for the injury analysis in the

179 China’s First Written Submission, para. 438. 180 China’s First Written Submission, para. 438. 181 Panel Report, Mexico – Steel Pipes and Tubes, para. 7.322.


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fasteners investigation was reflective of the state of the entire domestic industry as

defined in accordance with Article 4.1. The EU authorities did not simply examine

certain factors using data of only one or two producers, but based their conclusion

either on data from a representative sample of producers or from all of the producers

that constituted the domestic industry. Contrary to the situation addressed in the US

– Hot-Rolled Steel report, in the fasteners investigation it was not so that only "parts"

or "segments" of the industry were examined, in the sense that producers of certain

types of products or certain types of producers (e.g., small producers) were not

examined.

193. Furthermore, it would be intuitively wrong to suggest that the mere fact that the EU

authorities examined certain factors on the basis of data relating to a representative

sample of the domestic industry while other factors were examined based on data

relating to all producers that are part of the domestic industry vitiated the objectivity

of the analysis. To actually examine the data of all of the producers of the domestic

industry rather than to rely on the legitimate assumption that the sampled producers

are representative of the industry as a whole, leads to a determination which is based

on more accurate and thus more "positive" evidence about the state of the industry.

Certainly that cannot be WTO inconsistent. In the words of the panel in EC – Bed

Linen in respect of an identical argument by India, to require an authority to ignore

such more complete information would be "anomalous" and "inconsistent with the

fundamental underlying principle that anti-dumping investigations should be fair and

that investigating authorities should base their conclusions on an objective

evaluation of the evidence".183

194. Nor has China presented any credible evidence demonstrating that there is anything

inherently biased about the EU’s approach either. In the First Written

Submission,184 the European Union explained why the example of market share to

which China refers is inapposite. Looking at the factor "market share" in Council

Regulation No 91/2009 (the measure at issue), it is clear that this factor was

examined on the basis of positive evidence, i.e., based on complete and reliable data

for the entire domestic industry. There is no indication that the figures that resulted

182 EU First Written Submission, paras. 568 – 580. 183 Panel Report, EC – Bed Linen, para. 6.181. 184 EU First Written Submission, paras. 581 – 588.


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from this examination were not examined in an objective manner, since the authority

simply re-stated what the evidence shows and the authorities’ analysis is thus

supported by the facts and evidence on the record.

195. China’s argument is based on the alleged difference in the conclusions by the EU

authorities between the Information Document and Council Regulation No 91/2009.

However, China’s presentation of the facts is inaccurate as the conclusions of the EU

authorities are essentially similar in the Information Document and the Council

Regulation No 91/2009, whether based on the sampled data or on the data for the

industry as a whole. Whether in the preliminary determination or in the final

determination, the EU authorities reach similar conclusions. They find that there

was an increase in volume compared to 2003, but that there was hardly any increase,

or even a slight decrease if one takes 2004185 as the starting point and this despite the

significant increase in consumption of 29 % as of 2004 thus leading to significant

loss of market share. It is clear that the discrepancy that China refers to in order to

demonstrate the biased approach of the EU authorities simply does not exist.

196. In any case, even if one were to assume arguendo that the use of a different method,

based only on sampled data, would have led to a marginally different outcome, it is

clear that the mere fact that another approach could have been adopted and that this

other approach could have been more favourable to China, does not imply that the

equally legitimate approach that was adopted was "biased" or "not even handed".186

As was made clear by the Panel in its report on EC – Countervailing Duty measures

on DRAM Chips, there is no requirement to always opt for the approach which leads

to results which are most favourable to the exporters. In that case, the record showed

that that the EU authorities “examined the question of price undercutting using three

different methodologies”.187 One of these methodologies resulted in no price

undercutting, while the second one resulted in some price undercutting, and the third

185 As is clear from the recitals 119 – 120 and the table attached to recital 120 of Council regulation No 91/2009, 2004 is the first year for which Community consumption data are available and it thus provides a better starting point for the analysis. 186 This was clearly the view adopted by the Panel in its report on EC – Countervailing Measures on DRAM Chips, para. 7.336: "In our view, while such methodologies could also have been used under Article 15.2, this does not imply that the other methodology on which the EC based itself is necessarily biased. It appears to us that every methodology has its strengths and weaknesses, but that, in the absence of any prescribed methodology in the SCM Agreement, as long as the methodology used is not unreasonable, the Panel cannot find against it". 187 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.333.


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one revealed a significant margin of undercutting. The EU authorities reasonably

explained why the first methodology was not to be preferred, and the Panel upheld

this determination, considering that “while such methodologies could also have been

used under Article 15.2, this does not imply that the other methodology on which the

EC based itself is necessarily biased”188.

197. For all of these reasons, the European Union requests the panel to reject China’s

claim in this respect.

B. China’s claim that the European Union failed to examine objectively the "profitability" of the domestic industry is based on a distortion of the findings of the EU authorities and is thus to be rejected

198. China claims that the European Union failed to examine objectively the

"profitability" of the domestic industry. China asserts that the "reported data show a

substantial improvement in the profitability of the domestic industry"189 and that

therefore the "conclusion by the EC that the alleged dumped imports had a negative

impact on the domestic industry’s profitability is clearly inconsistent with the

available evidence".190

199. As demonstrated in our First Written Submission,191 China’s argument is quoting

selectively from the findings of the authorities. Recitals 141 – 143 of Council

Regulation No 91/2009 show that the European Union found that profitability

remained very low and that the slight increase in profitability since 2003 was

disproportionately low when compared to the increase in demand. Erring on the side

of caution, the authority used a "target profit" rate of 5%, and this based on the

statements made by the Community producers that this is the minimum profit level

which would be needed to finance new investments. Based on the evidence before it,

the EU authorities thus reasonably reached the conclusion in recital 154 of Council

Regulation No 91/2009 of "continuing low levels of profitability". As is clear from

recital 142 of Council Regulation No 91/2009, the EU authorities never denied that

there was a moderate increase in profitability if one compares 2003 to the IP (2.1%

to 4.4%) stating that "Profitability was at its lowest level in 2003 (2.1%) but it has

188 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.336. 189 China’s First Written Submission, para. 447. 190 China’s First Written Submission, para. 449.


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since improved". The EU authorities provided the proper context for this slight

increase in the same recital by explaining that this was due to the fact that the

industry "concentrated their efforts on the supply of high quality products generating

higher revenues than standard products". However, when one compares the situation

using 2004 as the starting point, as was the case for a number of factors, there was a

decrease in profitability (from 4.8% to 4.4%) and thus the EU authorities were

equally correct to note in recital 141 that "levels of profits from the sale of the like

product by the Community industry fluctuated throughout the period". In sum, the

EU authorities put the numbers in their context, recognised some positive aspects of

the developments in respect of this factor, but equally reasonably concluded that

profitability remained low.

200. As stated in our First Written Submission, China is essentially requesting the Panel

to do is to substitute its judgment for that of the EU authorities. That is precisely

what the Panel is not allowed to do under Article 17.6 of the Anti-Dumping

Agreement and Article 11 of the DSU.

C. China’s claim that the EU’s overall analysis of the impact of the dumped imports on the domestic industry is not objective is to be rejected since it lacks any factual basis and would require the Panel to substitute its judgment for that of the authority

201. China claims that the EU’s overall analysis of the impact of the dumped imports on

the domestic industry is not objective "since an examination of the relevant factors

pursuant to Article 3.4 shows a positive state of the domestic industry"192. China

alleges that the explanation provided by the European Union is "not persuasive"

since "almost all factors regarding the situation of the EC industry showed a

favourable trend between 2003 and the IP". According to China, "[t]he sole factor

possibly showing a negative trend was market share".193 China asserts that a finding

of material injury "cannot solely be based on one negative factor" and that "[h]aving

found that all factors showed a positive trend over the period concerned, the EC

should have concluded that the EC industry had not suffered material injury".194 In

191 EU First Written Submission, paras 592 – 599. 192 China’s First Written Submission, para. 451. 193 China’s First Written Submission, para. 453. 194 China’s First Written Submission, para. 454.


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its closing statement, China even went so far as to argue that the EU authorities

made their determination of injury “solely on a loss of potential sales”.195

202. In the First Written Submission,196 the European Union explained at length that it is

simply not so that market share was the "sole factor possibly showing a negative

trend", as erroneously argued by China. It is certainly not so that the EU authorities

concluded that injury existed "after having found that all factors showed a positive

trend over the period concerned", as China wants the Panel to believe. Nor, of

course is it factually correct to argue, as does China in its Closing Oral Statement,

that the injury determination was based “solely on a loss of potential sales”.

203. The EU’s determination that the Community Industry is suffering injury is set forth

in recitals 127 – 160 of Council Regulation No 91/2009. These recitals of Council

Regulation No 91/2009 reveal that a reasonable and reasoned determination was

made in respect of all injury factors, leading the EU authorities to the conclusion that

a number of factors were negative when examined in the light of the significant

increase in demand. Recitals 129 – 130 of Council Regulation No 91/2009 show that

the European Union found that production, productivity and capacity utilisation

remained low despite significant increase in demand /consumption. Recitals 139 –

140 of Council Regulation No 91/2009 show that the European Union found a

significant decline in market share as the volume of sales did not follow the

significant increase in demand. Recitals 141 – 143 of Council Regulation No

91/2009 show that the European Union found that profitability remained very low

and that the slight increase in profitability since 2003 was disproportionately low

when compared to the increase in demand. As the chart of recital 140 shows,

profitability in the three years preceding the imposition of the measure was very low

ranging from 2.9% to 4.4% during the dumping period of investigation, leading the

EU authorities to the reasonable conclusion in recital 154 of “continuing low levels

of profitability”. Recital 144 of Council Regulation No 91/2009 and the data

provided in the chart accompanying this recital show that cash flow declined from

80 874 in 2005 to 65 200, a decline by almost 20% such that cash flow was again

almost at the level of 2003. Recital 151 re-affirms the fact that the margins of

195 China’s Closing Oral Statement, First Meeting with the Panel, p. 2. 196 EU First Written Submission, paras 604 – 625.


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dumping, a factor of injury listed in Article 3.4 of the Anti-Dumping Agreement,

were very significant.

204. In sum, the EU authorities made an objective determination of the facts in respect of

all of these important factors, and provided a reasonable and reasoned analysis of

how these facts support a determination of injury to the domestic industry. This

conclusion is summarised in section 5.9 of Council Regulation No 91/2009. It is

correct that not all injury factors were negative. However, it is clear that it is not at

all necessary for a positive injury determination to be made that all factors show a

negative trend197. What is important is that the positive developments are recognised

as part of an objective examination and that a reasonable and reasoned explanation is

provided why they do not detract from the overall conclusion of injury. As

explained in our First Written Submission, this is exactly what the EU authorities did

in this case.

205. China argued that the loss of market share was caused by the EU industry’s decision

to move into the special fastener market. However, first, this causation-related

argument is irrelevant in the context of an Article 3.4 analysis. Furthermore, this

argument is contradicted by the facts on the record and the reasonable explanations

provided by the authorities which found that the negative impact of the dumped

imports was "mitigated"198 by the necessary move of the industry into the higher-end

market segment. According to the EU authorities, this move allowed the industry to

"avoid a further deterioration of profitability".199 China has failed to demonstrate

that the EU authorities' evaluation was somehow not "objective" or not "persuasive".

China’s attempt to have the Panel substitute its judgement for that of the

EUauthorities is thus to be rejected. Article 17.6 of the Anti-Dumping Agreement and

Article 11 of the DSU clearly do not allow the panel to engage in such a de novo

review.

D. China’s claim that the European Union improperly considered the displacement of EU products by Chinese imports in some market segment as being relevant and that this would constitute a violation of the "objective examination" requirement of Article 3.1 is without merit

197 Panel Report, EC – Bed Linen (Article 21.5 DSU – India), para. 6.213 198 Council Regulation No 91/2009, recital 156. 199 Council Regulation No 91/2009, recital 167.


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206. China claims that the European Union improperly considered the displacement of

EU products by Chinese imports in some market segment as being relevant for the

injury determination with respect to fasteners. China argues that "to the extent that

the finding of material injury by the EC is based on the fact that there has been a

significant "displacement of products in important market segments",200 this

determination is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping

Agreement since "[I]njury cannot be found to result from a displacement of sales

from one product segment to another product segment within the same 'like

product'".201

207. As explained in the First Written Submission202, China’s argument is simply

factually incorrect since the EU authorities did not make a finding of market

displacement, but related its injury finding to fasteners as a whole. The record does

not support China’s argument that injury was found to exist only in respect of one

segment of the like product. Recital 160203 to which China refers in its First Written

Submission, rather explains why the EU authorities concluded that the industry was

suffering injury and how certain positive developments may be explained. The EU

authorities referred to the move of the domestic industry in the direction of a greater

focus on special fasteners as an indicator of how the industry tried to deal with the

competition from the dumped imports (which were concentrated in the standard

fastener market) by moving into the special fastener market. As explained in our

First Written Submission, this conclusion is thus the opposite of a conclusion of

injury for only a particular segment of the market; rather, it puts the two market

segments together to conclude that overall, the industry is suffering injury as the

positive developments in the special fasteners market are not sufficient to overcome

the negative developments in the relatively more important high-volume market and

are thus merely attenuating, temporarily, the injurious consequences of the dumping

200 China’s First Written Submission, para. 461. 201 China’s First Written Submission, para. 460. 202 EU First Written Submission, paras 627 – 629. 203 In recital 160 referred to by China, the EU authorities were simply explaining that the injury that was found to exist in the form of low profitability levels, significant loss of market share, low capacity utilisation, low sales volumes, etc. resulted from the fact that dumped Chinese imports took over the high-volume standard fastener market and that the worst was avoided due to the fact that the industry decided to move into the specialty fastener market, resulting nevertheless in a state of injury to the domestic producers of fasteners in general.


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on domestic producers of fasteners as a whole. It seems that China blames the EU

authorities for discussing this development in a nuanced and balanced manner.

208. China’s claim of violation of Articles 3.1 and 3.4 which is based on a distorted

reading of the EU authorities conclusions about the relevance of the displacement of

the industry from the standard fastener market is thus to be rejected.

E. Conclusion

209. Once again, China did not even seriously attempt to rebut the EU’s arguments in

respect of China’s injury related claims under Articles 3.1 and 3.4.

210. In view of the foregoing, and for the reasons expressed in our First Written

Submission and reiterated in this submission in summary form, the European Union

requests the Panel to reject China's claim that Council Regulation No 91/2009

violates Articles 3.1 and 3.4 of the Anti-Dumping Agreement.

XI. CLAIM 9: CAUSATION AND NON-ATTRIBUTION ANALYSIS ARTICLES 3.1 AND 3.5 OF THE ANTI-DUMPING AGREEMENT)

211. China claims that the EU’s causation and non-attribution analysis violated Articles

3.1 and 3.5 of the Anti-Dumping Agreement.

212. First, China argues that the European Union failed to demonstrate that the dumped

imports are, through the effects of dumping causing injury to the domestic industry.

213. As explained in our First Written Submission,204 China's claim in respect of the

causation analysis of the EU authorities is limited to the speculative assertion that if

the domestic industry had not decided to move into the special fastener segment it

would not have lost market share. China's assertion unduly limits the injury found to

exist to a mere loss of market share. Furthermore, as noted before, the EU

authorities provided a reasonable and reasoned explanation of how the industry’s

move to the special fastener market mitigated the injury caused by the dumped

imports, rather than being a cause of injury in its own right. China fails to point to

any flaws in the EU authorities' findings in this respect. China’s unsubstantiated

causation related argument is thus clearly without merit. In the European Union’s


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view, China has failed to establish a prima facie case of violation of Articles 3.1 and

3.5 of the Anti-Dumping Agreement. The Panel is not allowed to make the case for

China. In any case, and as explained in our First Written Submission, it is clear from

recitals 162 – 171 of Council Regulation No 91/2009205 and the facts on the record

that the EU authorities made a reasonable and reasoned determination that the injury

was caused by the effects of the dumped imports. China has not demonstrated

otherwise and has failed to even address the EU’s arguments in its oral statement.

214. Second, in terms of the non-attribution requirement, it has been demonstrated in our

First Written Submission206 that China's allegation that the EU authorities did not

adequately distinguish the effects of other factors such as the increase in raw

material prices and the export performance of the EU industry is equally

unsubstantiated.

215. China argues that the EU authorities' conclusion that the increase in raw material

prices was not the decisive factor since the "deterioration was rather due to a loss of

market share" is in error since the loss of market share may be an aspect of injury, it

is "not a cause of deterioration" of the situation of the industry.207 As explained in

our First Written Submission, a proper reading of recital 176 – to which China refers

– in combination with recital 165 – to which recital 176 in turn refers – makes it

clear that the authorities did not refer to loss of market share as the cause of the

problem but as an indicating factor of injury caused by the effects of dumped

imports.

216. In any case, the extensive discussion about the impact of raw material prices makes

clear that the EU authorities identified the nature and extent of the injury caused by

raw material prices. As explained in our First Written Submission,208 it is clear from

the record that the EU authorities examined the role of the increase in raw material

prices but found that there did not exist a similar direct link between the increase in

raw material prices and the injury found to exist in respect of the dumped imports.

The time pattern did not match, the increase in raw material prices was not specific

204 EU First Written Submission, paras. 634 – 638. 205 The conclusions on causation are set forth in recitals 180 – 184 of Council Regulation No 91/2009. 206 EU First Written Submission, paras. 639 – 667. 207 China’s First Written Submission, para. 484. 208 EU First Written Submission, paras. 652 – 657.


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to the EU industry and should have affected all producers, and in any case, under

normal circumstances such price increases would have been passed on to consumers.

217. In its First Written Submission, China simply seems to express its disagreement

about the fact that the EU authorities did not consider this factor (raw material

prices) to be the decisive factor that China clearly considers it is. But, of course, the

question is not whether China agrees with the EU authorities. Nor is the question

whether the Panel would have reached the same conclusions as the EU authorities in

respect of the relevance of this factor. In sum, China’s claim in respect of the

consideration of raw material prices is to be rejected since China fails to demonstrate

that the EU authorities did not provide a reasonable and reasoned explanation of how

the facts support the determination made.

218. For the reasons explained in our First Written Submission, China's claim in respect

of the EU authorities' treatment of the export performance of the domestic industry is

equally without merit. In recital 175 of Council Regulation No 91/2009, it is

explained that the EU authorities found that exports increased significantly (by 81%)

during this period and thus were clearly "not a source of material injury" to the

Community industry. The EU authorities also found that these "exports were

consistently made at prices significantly above sales prices on the Community

market". Hence, it cannot be argued that had these sales been made domestically no

injury would have occurred. In any case, the EU authorities stated that "exports

represented only around 11% of the Community industry's production of the like

product in 2006". In other words, exports represent only a small portion of

production as even with this significant increase. Thus, the finding of the EU

authorities is that export performance is simply not a very relevant factor,

irrespective of the performance, good or bad. That is the reasonable and reasoned

conclusion of the EU authorities thereby complying with the obligation under Article

3.5 not to attribute injury to dumped imports that is caused by other factors. Export

performance was not a source of material injury and China has failed to point to any

flaws in the EU authorities’ analysis. China's unsubstantiated speculation about what

could have happened had more of the export sales been made on the domestic

market is not relevant and is in any case contradicted by the facts on the record.


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219. China argues that export performance was examined on the basis of statistical data

for all EU producers and that this was not a proper basis for examining export

performance. However, as explained in our First written Submission, it should be

clear that this is one way of examining export performance of the industry.

Especially in a case such as this one where none of the interested parties raised the

issue of export performance as an important "other factor", it was reasonable of the

EU authorities to conduct their examination of this factor based on the COMEXT

data publicly available rather than sending out questionnaires to obtain company

specific data about this factor. At no point in time during the proceedings did any of

the exporters take issue with this approach, even though comments similar to those

made in the current proceedings could have been made. In our First Written

Submission, we explained that China’s attempt to construct the export performance

for the 46 domestic producers is an inappropriate attempt at getting the Panel to

engage in a de novo review. Moreover, China’s construction of the figures for the

Community industry’s export performance is incorrect.

220. Once again, in the oral statement China completely failed to address let alone rebut

any of the EU’s arguments in respect of the causation and non-attribution analysis.

221. In sum, the European Union respectfully requests the Panel to reject China's claim

that the causation and non-attribution analysis contained in Council Regulation No

91/2009 violated Articles 3.1 and 3.5 of the Anti-Dumping Agreement because it

failed to establish a causal link and did not properly assess the injurious effects of

other factors.

XII. CLAIM 10: CHINA'S PROCEDURAL CLAIMS UNDER ARTICLES 6 AND 12 OF THE ANTI-DUMPING AGREEMENT

222. The European Union addressed all of China's 13 procedural claims under Articles 6

and 12 of the Anti-Dumping Agreement in its First Written Submission. All but one

of the claims suffered of some fundamental problem, be it jurisdictional,

presentational or both.209 In essence, the European Union and the Panel were left

guessing what China was complaining about. The guessing unfortunately continues.

209 EU Opening Oral Statement, First Meeting with the Panel, para 53.


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223. Rather than clarifying its position on these claims, China preferred to add to the

confusion in its first oral statement. Not a single serious argument was advanced on

the procedural claims, no evidence was provided.210 Instead, a new 14th claim

seemed to be in the making when China asserted that "no information was given on

how price undercutting was calculated".211 However, it is wholly unclear on what

basis this claim is made.

224. With the greatest of respect, it is simply not acceptable to accuse the European

Union of "obscure reasons"212 when China continuously and repeatedly fails to

respect the most basic rules of dispute settlement procedures. The "matter" before

the Panel is not a continuously moving target. It is fixed in the Panel request in

which the complainant has to present the problem clearly. The European Union fails

entirely to see where in the Panel request China has included a claim relating to a

breach of due process rights as regards price undercutting. Indeed, it is manifestly

clear that no such claim was made in China's First Written Submission.

225. This is illustrative of the whole case. One almost begins to wonder whether there

really is a genuine dispute between the Parties because the European Union is left

waiting to understand what it allegedly has done wrong. The European Union would

like to emphasise that there must be a limit to China's repeated failure to make its

case. That limit is provided for in the principles and rules enshrined in the DSU as

clarified by the Appellate Body.

226. First, the jurisdiction of the Panel is laid down in the Panel request in accordance

with Article 6.2 of the DSU. Second, assuming that a claim is within the jurisdiction

of the Panel, the complainant has to first present evidence and legal arguments

sufficient to demonstrate that the measure in question is inconsistent with the

relevant legal obligations. Only after such a prima facie determination has been

made by a panel, can the onus be shifted to the respondent.213 China has failed to

respect these very basic rules of WTO dispute settlement.

210 China's Opening Oral Statement, First Meeting with the Panel, paras 114 and 115. 211 China's Opening Oral Statement, First Meeting with the Panel, para. 115. 212 China's Opening Oral Statement, First Meeting with the Panel, para. 114. 213 See e.g. EU First Written Submission, para. 670 and footnote 525.


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227. Third, Parties to a dispute must adhere to the working procedures of the Panel in

order not to compromise due process. In this respect, the European Union would like

to emphasise that according to paragraph 16 of the Panel's working procedures:

Each party shall submit all factual evidence to the Panel no later than during the first substantive meeting, except with respect to evidence necessary for purposes of rebuttals or answers to questions. Exceptions to this procedure will be granted upon showing of good cause. The other party shall be accorded a period of time for comments, as appropriate, on any new factual evidence submitted after the first substantive meeting.

228. China did not submit any further factual evidence to the Panel during the first

substantive meeting. Therefore, China is barred from presenting new evidence to the

Panel except in the specific circumstances foreseen by the working procedures. If

China were allowed to do so, or if the Panel were to ask for such evidence on its own

initiative in an attempt to cure China's numerous omissions, the Panel would risk

being in conflict with the Appellate Body's established case law relating to the

prohibition to make the case for the complaining party214 assuming, of course, there

would be some substance to the claims (quod non).

229. To illustrate this in the context of the present case: The only procedural claim that

did not suffer of some fundamental problem in China's First Written Submission was

its claim based on Article 6.1.1 of the Anti-Dumping Agreement.215 The claim

appeared to be relatively straight-forward: China considers that the MET claim form

is a "questionnaire" within the meaning of Article 6.1.1 and therefore subject to the

time limit therein, although China conveniently omits recognising that the document

is clearly not even entitled "questionnaire on MET" or equivalent. However, China

has failed to present the claim form as evidence in support of its claim so that the

Panel would be able to understand what China is actually complaining about. Thus,

even this claim is now subject to a basic problem as China has manifestly failed to

make a prima facie case because China did not present the MET claim form "no later

than during the first substantive meeting" as prescribed by the Panel's working

procedures.

214 See most recently Appellate Body Report, US – Continued Zeroing, para. 343 ("[W]hile panels have 'broad authority to pose such questions to the parties as it deems relevant for purposes of considering the issues that are before it', such authority cannot be used 'to make the case for a complaining party'"). 215 China's First Written Submission, paras 623 – 631.


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230. Although the European Union would be happy to provide the Panel with a copy of

the MET claim form, it is systemically of utmost importance to require that it is for

the complainant to first present evidence and legal arguments in support of its claim.

And it is also systemically very important that the Panel draws the necessary

consequences if the complainant fails to fulfil its burden to make a prima facie case.

231. The European Union has nothing to hide in these proceedings. However, as much as

it would like to defend itself when faced with so many unsubstantiated assertions,

the European Union considers that the fundamental rules under the DSU cannot be

compromised.216 If a complainant fails to make its case, that must be the end of the

story no matter how tempting it might be to get into more details of the case.

232. China's speculation "that the real reason is other, namely that the EU simply lacks

any substantive arguments and evidence to rebut China's claims" is, with the greatest

of respect, inapposite. China can of course speculate as much as it likes and throw as

many unsubstantiated assertions up in the air, but since it has not adhered to the

basic principles of WTO dispute settlement proceedings and has not come forward

with sound legal arguments coupled with the necessary evidence, the only

conclusion the Panel can draw is to dismiss all of China's 13 (or now perhaps 14?)

claims under Articles 6 and 12 of the Anti-Dumping Agreement as mere speculation

to the extent they even fall within the jurisdiction of the Panel.

XIII. CONCLUSION

233. In view of the foregoing, the European Union requests the Panel to reject all of

China's claims and arguments, finding instead that, with respect to each of them, the

European Union acted consistently with all its obligations under the Anti-Dumping

Agreement, the GATT 1994 and the WTO Agreement.

216 China's reference to the use of and adherence to the very basic rules of the DSU as merely "procedural arguments" (see e.g., China's Opening Oral Statement, First Meeting with the Panel, paras 3 and 115) or relating to "litigation tactics" (see e.g., China's Opening Oral Statement, First Meeting with the Panel, para. 4) is very unfortunate. There can hardly be more fundamental rules than the very basic principles of due process and the rules and principles concerning the jurisdiction of a panel. See more in detail the introduction to this submission.

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