Source(s) of the information:

Lawyers, other representatives, expert(s), tribunal’s secretary

Recourse to article 21.5 of the DSU by the United States - Report of the Panel

CASES CITED IN THIS REPORT

Short titleFull case title and citation
Argentina – Hides and Leather (Article 21.3(c)) Award of the Arbitrator, Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather – Arbitration under Article 21.3(c) of the DSU, WT/DS155/10, 31 August 2001, DSR 2001:XII, p. 6013
Canada – Aircraft (Article 21.5 – Brazil) Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft – Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000, DSR 2000:IX, p. 4299
China – Broiler Products Panel Report, China - Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States, WT/DS427/R and Add.1, adopted 25 September 2013, DSR 2013:IV, p. 1041
China – Cellulose Pulp Panel Report, China – Anti-Dumping Measures on Imports of Cellulose Pulp from Canada, WT/DS483/R and Add.1, adopted 22 May 2017
China – GOES Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R, adopted 16 November 2012, DSR 2012:XII, p. 6251
China – HP-SSST (Japan) / China – HP-SSST (EU) Appellate Body Reports, China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan / China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS454/AB/R and Add.1 / WT/DS460/AB/R and Add.1, adopted 28 October 2015
China – HP-SSST (Japan) / China – HP-SSST (EU) Panel Reports, China – Measures Imposing Anti‑Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP‑SSST") from Japan / China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP‑SSST") from the European Union, WT/DS454/R and Add.1 / WT/DS460/R, Add.1 and Corr.1, adopted 28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R/ WT/DS460/AB/R
China – X-Ray Equipment Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment from the European Union, WT/DS425/R and Add.1, adopted 24 April 2013, DSR 2013:III, p. 659
EC – Bed Linen Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12 March 2001, as modified by Appellate Body Report WT/DS141/AB/R, DSR 2001:VI, p. 2077
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 DSUby India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965
EC – Bed Linen (Article 21.5 – India) Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSUby India, WT/DS141/RW, adopted 24 April 2003, as modified by Appellate Body Report WT/DS141/AB/RW, DSR 2003:IV, p. 1269
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1, adopted 28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R, DSR 2011:VIII, p. 4289
EC – Fasteners (China) (Article 21.5 – China) Appellate Body Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China – Recourse to Article 21.5 of the DSU by China, WT/DS397/AB/RW and Add.1, adopted 12 February 2016
EC – Fasteners (China) (Article 21.5 – China) Panel Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China – Recourse to Article 21.5 of the DSU by China, WT/DS397/RW and Add.1, adopted 12 February 2016, as modified by Appellate Body Report WT/DS397/AB/RW
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, p. 2031
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, DSR 2008:I, p. 3
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18 August 2003, DSR 2003:VI, p. 2613
EC and certain member States – Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
EU – Biodiesel (Argentina) Appellate Body Report, European Union – Anti-Dumping Measures on Biodiesel from Argentina, WT/DS473/AB/R and Add.1, adopted 26 October 2016
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear from China, WT/DS405/R, adopted 22 February 2012, DSR 2012:IX, p. 4585
India – Quantitative Restrictions Panel Report, India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/R, adopted 22 September 1999, upheld by Appellate Body Report WT/DS90/AB/R, DSR 1999:V, p. 1799
Mexico – Anti-Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, p. 10853
Russia – Commercial Vehicles Panel Report, Russia – Anti-Dumping Duties on Light Commercial Vehicles from Germany and Italy, WT/DS479/R and Add.1, circulated to WTO Members 27 January 2017 [appealed by Russia 20 February 2017]
Thailand – H-Beams Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 5 April 2001, as modified by Appellate Body Report WT/DS122/AB/R, DSR 2001:VII, p. 2741
Ukraine – Passenger Cars Panel Report, Ukraine – Definitive Safeguard Measures on Certain Passenger Cars, WT/DS468/R and Add.1, adopted 20 July 2015
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, DSR 2012: XI, p. 5751
US – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012, DSR 2012:V, p. 2449
US – Countervailing Duty Investigation on DRAMS Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
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, p. 4697
US – Hot-Rolled Steel Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/R, adopted 23 August 2001 modified by Appellate Body Report WT/DS184/AB/R, DSR 2001:X, p. 4769
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, p. 4051
US – Large Civil Aircraft (2nd complaint) (Article 21.5 – EU) Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) – Recourse to Article 21.5 of the DSU by the European Union, WT/DS353/RW and Add.1, circulated to WTO Members 9 June 2017 [appealed by the European Union 29 June 2017]
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, p. 3257
US – Shrimp II (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS429/R and Add.1, adopted 22 April 2015, upheld by Appellate Body Report WT/DS429/AB/R
US – Softwood Lumber IV (Article 21.5 – Canada) Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada – Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted 20 December 2005, DSR 2005:XXIII, p. 11357
US – Softwood Lumber IV (Article 21.5 – Canada) Panel Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada – Recourse by Canada to Article 21.5 [of the DSU], WT/DS257/RW, adopted 20 December 2005, upheld by Appellate Body Report WT/DS257/AB/RW, DSR 2005:XXIII, p. 11401
US – Softwood Lumber V Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, p. 1875
US – Softwood Lumber VI (Article 21.5 – Canada) Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p. 4865
US – Steel Plate Panel Report, United States – Anti-Dumping and Countervailing Measures on Steel Plate from India, WT/DS206/R and Corr.1, adopted 29 July 2002, DSR 2002:VI, p. 2073
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 2003:VII, p. 3117
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323
US – Zeroing (Japan) (Article 21.5 – Japan) Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441

ABBREVIATIONS

AbbreviationDescription
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
AUV Average unit values
CIF Cost, insurance, freight
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
JT&N Jincheng Tongda & Neal
Keystone Keystone Foods, LLC
MOFCOM Ministry of Commerce of the People's Republic of China
Pilgrim's Pride Pilgrim's Pride Corporation
POI Period of investigation
Redetermination Ministry of Commerce, Notice No. 44 of 8 July 2014 of the Redetermination of the Reinvestigation on the Anti-dumping and Countervailing Measures Imposed on the Broiler Products Originating in the US
SCM Agreement Agreement on Subsidies and Countervailing Measures
Steptoe Steptoe & Johnson LLP
RMB Chinese Renminbi
Tyson Tyson Foods, Inc.
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization

1 Introduction

1.1 Complaint by the United States

1.1.
This compliance dispute concerns the challenge by the United States to measures taken by China to comply with the rulings and recommendations of the Dispute Settlement Body (DSB) in the original proceeding China – Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States.
1.2.
Paragraph 1 of the Agreed Procedures under Articles 21 and 22 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) reached between the United States and China states that "[s]hould the United States consider that the situation described in Article 21.5 of the DSU exists, the United States will request that China enter into consultations with the United States." The United States considered that China's measures taken to comply with the recommendations and rulings of the DSB in China – Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States are not consistent with the covered agreements and therefore requested, on 17 May 2016, that China enter into consultations.
1.3.
Consultations were held on 24 May 2016, but failed to resolve the dispute.

1.2 Panel establishment and composition

1.4.
On 27 May 2016, the United States requested the establishment of a panel pursuant to Articles 6 and 21.5 of the DSU with standard terms of reference.1
1.5.
At its meeting on 22 June 2016, the DSB referred this dispute, if possible, to the original Panel, in accordance with Article 21.5 of the DSU.
1.6.
The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by the United States in documents WT/DS427/11 and WT/DS427/11/Corr.1 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.2

1.7.
In accordance with Article 21.5 of the DSU, the Panel was composed on 18 July 2016 as follows:

Chairperson: Mr Faizullah Khilji

Members: Mr Serge Fréchette

Ms Claudia Orozco

1.8.
Brazil, Ecuador, the European Union, and Japan reserved their rights to participate in the Panel proceedings as third parties.

1.3 Panel proceedings

1.3.1 General

1.9.
After consulting the parties, the Panel:

a. adopted its Working Procedures3 and timetable on 9 November 2016;

b. revised the timetable on 1 December 2016, and again on 4 July 2017; and

c. adopted, on 22 November 2016, additional procedures for the protection of Business Confidential Information (BCI).4

1.10.
The Panel held its substantive meeting with the parties on 25 and 26 April 2017. A session with the third parties took place on 26 April 2017. The Panel issued its Interim Report to the parties on 22 September 2017. The Panel issued its Final Report to the parties on 17 November 2017.
1.11.
In these panel proceedings, each party raised concerns regarding the late submission of exhibits by the other party, outside of the deadlines prescribed by the Working Procedures adopted by the Panel.5 As necessary and appropriate, we address the substance of these concerns in our findings below. We do, however, stress the importance of adherence by all parties and third parties to the time-limits for filing submissions provided for in the timetable, including exhibits, in the interests of fairness and the orderly conduct of panel proceedings.

1.3.2 Preliminary ruling

1.12.
In its first and second written submissions, China requested the Panel to rule that certain claims addressed by the United States are not within the scope of its request for the establishment of a panel in this dispute and are therefore not within the jurisdiction of this Panel. The United States responded to China's request in its second written submission.
1.13.
By communication dated 22 March 2017, the Panel issued a preliminary ruling, set out in Annex E-1.

2 The measures at issue

2.1.
This dispute concerns measures taken by China to implement the DSB recommendations and rulings in China – Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States. These measures comprise the Ministry of Commerce of the People's Republic of China (MOFCOM)'s redetermination6 issued on 8 July 2014 and the continued imposition of anti‑dumping and countervailing duties on imports of broiler products from the United States.

3 Parties' requests for findings and recommendations

3.1.
The United States requests that the Panel find that the measures at issue are inconsistent with the following provisions7:

a. Articles 3.1 and 3.2 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement), and Articles 15.1 and 15.2 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), because MOFCOM's analysis of the alleged price effects of imports under investigation did not involve an objective examination of the record and was not based on positive evidence. For example, MOFCOM:

i. failed to account for differences in the product mix between the average unit value (AUV) of subject imports and the AUV of domestic sales;

ii. failed to explain how it collected product-specific pricing data in the reinvestigation, why data was solicited from only four domestic producers, and what proportion of total domestic industry sales were covered by the data;

iii. failed to explain how the alleged price underselling could have suppressed domestic prices in the first half of 2009 when similar underselling had no price suppressive effects at other points during the period of investigation (POI); and

iv. failed to address evidence that prices for domestically produced products that competed with subject imports declined far less than prices for other domestic products in the first half of 2009.

b. Articles 3.1 and 3.4 of the Anti-Dumping Agreement, and Articles 15.1 and 15.4 of the SCM Agreement, because MOFCOM's findings that subject imports had an adverse impact on the domestic industry did not involve an objective evaluation of all relevant economic factors and indices having a bearing on the state of the industry. For example, MOFCOM did not address economic evidence and factors that contradicted its finding that the industry was suffering material injury on account of US imports.

c. Articles 3.1 and 3.5 of the Anti-Dumping Agreement, and Articles 15.1 and 15.5 of the SCM Agreement, because MOFCOM's determination that subject imports were causing injury to the domestic industry was not based on an examination of all relevant evidence, including that subject import volume did not increase at the expense of the domestic industry and that a large portion of subject imports consisted of products that could not have been injurious, and was based on MOFCOM's flawed price and impact analyses.

d. Articles 6.4 and 6.5 of the Anti-Dumping Agreement, and Articles 12.3 and 12.4 of the SCM Agreement, because during the reinvestigation MOFCOM did not provide interested parties timely opportunities to see all non-confidential information that was relevant to their case and that was used by the investigating authority, and MOFCOM treated information as confidential absent good cause. For example, MOFCOM failed to disclose the questionnaires it submitted to Chinese domestic producers during the reinvestigation.

e. Article 6.1 of the Anti-Dumping Agreement and Article 12.1 of the SCM Agreement because during the reinvestigation MOFCOM did not provide notice of the information that MOFCOM required and did not provide interested parties ample opportunity to present in writing all evidence they considered relevant. For example, MOFCOM did not disclose the questionnaires it submitted to Chinese domestic producers during the reinvestigation.

f. Article 6.9 of the Anti-Dumping Agreement and Article 12.8 of the SCM Agreement because MOFCOM failed to inform interested Members and parties of the essential facts under consideration which form the basis for its decision to apply definitive measures. For example, MOFCOM did not disclose the calculations utilized to determine the dumping and subsidy margins for US producers.

g. Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement, and Articles 22.3 and 22.5 of the SCM Agreement, because MOFCOM failed to provide in sufficient detail the findings and conclusions reached on all issues of fact and law it considered material, all relevant information on matters of fact and law and the reasons which led to the imposition of final measures, and the reasons for the acceptance or rejection of relevant arguments or claims. For example, MOFCOM's explanations with respect to its findings for its material injury determination fail to address key arguments made by interested parties.

h. Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement because MOFCOM improperly calculated the cost of production for US producers, failed to calculate costs on the basis of the records kept by the US producers under investigation, and did not consider all available evidence on the proper allocation of costs. For example, MOFCOM allocated production costs of non-subject merchandise to subject merchandise and failed to properly allocate processing costs for subject merchandise.

i. Article 9.4 of the Anti-Dumping Agreement because MOFCOM applied to imports from producers and exporters not included in the examination – and to which the application of facts available was not warranted – an anti-dumping duty that exceeded the weighted average margin of dumping established with respect to the selected exporters or producers. For example, MOFCOM failed to correctly calculate dumping margins for US interested parties, and then applied a rate to imports from producers and exporters not included in the examination that exceeded the selected exporters or producers' weighted average margin of dumping.

j. Article 6.8 and Annex II of the Anti-Dumping Agreement (including, inter alia, paragraphs 1, 3, 5, and 6) because MOFCOM made determinations for US producers on the basis of the facts available even though it:

i. failed to specify in detail the information required from interested parties and the manner in which it should be structured;

ii. did not take into account verifiable and appropriately submitted information; and

iii. failed to provide supplying parties of the reasons evidence or information was rejected and an opportunity to provide further explanations.

k. Article 1 of the Anti-Dumping Agreement as a consequence of the breaches of the Anti‑Dumping Agreement described above.

l. Article 10 of the SCM Agreement as a consequence of the breaches of the SCM Agreement described above.

m. Article VI of the General Agreement on Tariffs and Trade (GATT) 1994 as a consequence of the breaches of the Anti-Dumping Agreement and the SCM Agreement described above.

3.2.
China requests that the Panel reject the US claims in this dispute in their entirety.

4 Arguments of the parties

4.1.
The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 18 of the Working Procedures.8

5 Arguments of the thiRd parties

5.1.
The arguments of the European Union and Japan are reflected in their executive summaries, provided in accordance with paragraph 19 of the Working Procedures.9 Brazil and Ecuador did not submit written or oral arguments to the Panel.

6 Interim Review

6.1.
We issued the Interim Report to the parties on 22 September 2017. On 28 September 2017 China requested a one week extension of the deadline for submitting written requests for the Panel to review aspects of the interim report.10 On 29 September 2017 we sought comments from the United States. On 2 October 2017 the United States submitted a response in which it agreed to China's request for an extension on condition that there be no change in the date for the release of the Final Report.11 On 3 October 2017, the Chair of the Panel transmitted the following communication to the parties:

I refer to China's letter of 28 September 2017 and the response of the United States in its letter of 2 October 2017. China requests that the Panel extend the time-period for comments on the Interim Report from 6 October to 13 October 2017, to accommodate a Chinese national holiday. In the event China's request is acceded to, the United States requests a commensurate extension of the deadline for comments without further delay in the issuance of the final report.

My colleagues and I are sensitive to the importance of accommodating national holidays in timetables where possible. It may be recalled, for instance, that following their comments at the organizational meeting, the parties' requests to avoid domestic holiday periods (Thanksgiving, Christmas and Chinese New Year) were accommodated in setting the dates for the first and second written submissions.

It may also be kindly recalled that both parties were provided with the final revised timetable on 4 July 2017. China did not raise any concerns about the timetable at that time or, indeed, at any point before its letter of 28 September 2017. In its letter, China merely requests a one-week delay in the deadline for submission of requests for interim review. It neither explains why it failed to alert the Panel earlier of the possible impact of the Chinese National Day holiday on its ability to comment on the Interim Report, nor explains why it failed to do so at this point until nearly a week after it received the Interim Report.

It needs emphasizing that the Panel is mindful of the importance of national holidays, and recalls that it took such holidays into account in establishing the original timetable in this dispute. However, the Panel is also concerned with preserving the integrity of dispute settlement procedures and protecting the rights of both parties. In this regard, the Panel considers that it is necessary, as a rule, for a party to a dispute to:

1. raise procedural objections at the earliest point at which it becomes or ought to become aware of the facts underlying those objections; and

2. if it is unable to do so, set out clearly in its request for a remedy the reason why it could not have made its objections earlier.

China's letter of 28 September 2017 came very late in the proceedings – well after China knew, or should have known, of the potential conflict with its holiday. China's letter contains no explanation or justification for raising its objection so late in the proceedings, more than two months after the final revised timetable was issued to the parties. Please note that the United States requests a commensurate extension of the deadline for comments, in the event that China's request is acceded to, but further asks that the issuance of the final report not be delayed. It is not possible for the Panel to accommodate both parties in this matter. In these circumstances, and having considered the interests of both parties and of orderly proceedings and the needs of the Panel, the Panel has decided on balance to deny China's request for an extension of time to request review of precise aspects of the interim report.

The dates for the remainder of this dispute, as set forth in the Timetable circulated to the parties on 4 July 2017 are therefore confirmed:

· Deadline for parties to request review of part(s) of the report and to request interim review meeting: 6 October 2017, 5 p.m.

· Interim review meeting, if requested – If no meeting requested, deadline for comments on requests for review: 20 October 2017, 5 p.m.

· Issuance of final report to the parties: 17 November 2017, 5 p.m.12

6.2.
The parties submitted their written requests for the Panel to review aspects of the interim report and subsequent comments on those requests in accordance with the established deadlines.

7 Findings

7.1 General principles

7.1.1 Treaty interpretation

7.1.
Article 3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly requires panels to interpret that Agreement's provisions in accordance with the customary rules of interpretation of public international law.13 Articles 31 and 32 of the Vienna Convention on the Law of Treaties codify in part these customary rules.14 Finally, WTO Ministers have recognized with respect to the Anti-Dumping Agreement and Part V of the SCM Agreement, "the need for the consistent resolution of disputes arising from anti-dumping and countervailing duty measures".15

7.1.2 Standard of review

7.2.
Article 11 of the DSU provides that:

[A] panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements.

In addition, Article 17.6 of the Anti-Dumping Agreement sets out the special standard of review applicable to disputes under the Anti-Dumping Agreement:

(i) in its assessment of the facts of the matter, the panel shall determine whether the authorities' establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the evaluation shall not be overturned;

(ii) the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

Thus, Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement together establish the standard of review that a panel is required to apply with respect to both the factual and the legal aspects of the present dispute. This means that in reviewing the investigating authority's determination in this dispute, we must:

a. examine whether the authority has provided a reasoned16 and adequate17 explanation as to:

i. how the evidence on the record supported its factual findings18, and

ii. how those factual findings support the overall determination19;

b. not conduct a de novo review of the evidence or substitute our judgment for that of the investigating authority;

c. limit our examination to the evidence that was before the investigating authority during the course of the investigation20;

d. take into account all such evidence submitted by the parties to the dispute21; and

e. not simply defer to the conclusions of the investigating authority: our examination of those conclusions must be "in-depth" and "critical and searching".22

7.1.3 Burden of proof

7.3.
In WTO dispute settlement, "the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence".23 Where a party "adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption".24 A complaining party establishes a prima facie case where, in the absence of effective refutation by the defending party, a panel is required as a matter of law to rule in favour of the complaining party.25

7.1.4 Article 21.5 proceedings

7.4.
A panel in an Article 21.5 proceeding related to anti-dumping and countervailing investigations has three key and closely related responsibilities. It is charged with making findings as to whether:

a. the measures found inconsistent with the WTO Agreement have been brought into conformity;

b. the "measures taken to comply"26 are otherwise substantively consistent with the WTO Agreement27; and

c. in seeking to bring itself into compliance, the investigating authority observed the procedural protections of the relevant WTO agreements in the compliance investigation/determination/proceedings.

7.5.
In a compliance reinvestigation and redetermination it is not enough for an investigating authority to only address specific items of concerns identified by a panel in its original report finding inconsistency/ies. Although resolving problems identified by a panel in an original proceeding may well be the sine qua non in bringing the measure at issue into conformity, an adopted panel report requires a Member to bring its measure into conformity with the WTO Agreement/s at issue, and not just the specific findings.

7.2 Article 2.2.1.1 of the Anti-Dumping Agreement: the proper allocation of costs

7.2.1 Introduction

7.2.1.1 Our findings in the original report

7.6.
In the original report, we made certain findings under the first and the second sentences of Article 2.2.1.1 of the Anti-Dumping Agreement, which provide:

For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration. Authorities shall consider all available evidence on the proper allocation of costs, including that which is made available by the exporter or producer in the course of the investigation provided that such allocations have been historically utilized by the exporter or producer, in particular in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditures and other development costs.

The issue before us in this proceeding is whether, in its redetermination, MOFCOM complied with the second sentence of Article 2.2.1.1. Given the structure of the provision and the arguments of the parties in these proceedings, it is useful to briefly revisit our findings under both sentences of Article 2.2.1.1:

First sentence

a. The two conditions of the first sentence of Article 2.2.1.1 are cumulative28: for the requirement to use the respondents' books and records to apply, those books and records must be both consistent with Generally Acceptable Accounting Principles and reasonably reflect costs associated with production and sale.29

b. An investigating authority is required to explain why it has declined to use a respondent's books and records.30

c. MOFCOM did not explain its decision not to use the books and records of Keystone Foods, LLC (Keystone) and Tyson Foods, Inc. (Tyson), but in respect of Pilgrim's Pride Corporation (Pilgrim's Pride) it specifically found "the data as originally submitted was irreconcilable and that the information to correct the errors was untimely".31

d. China acted inconsistently with the first sentence of Article 2.2.1.1 when MOFCOM declined to use Keystone's and Tyson's books and records in calculating the cost of production for determining normal value.

e. With respect to Pilgrim's Pride, MOFCOM explained its reasons for departing from the norm and declining to use Pilgrim's Pride books and records. Therefore, with respect to Pilgrim's Pride, the United States did not establish that China acted inconsistently with the first sentence of Article 2.2.1.1.32

Second sentence

a. The requirement to "consider" evidence goes beyond merely taking note of evidence; it entails examining, and weighing the merits of, relevant evidence.33

b. An investigating authority is required to engage in "some degree of deliberation" in considering "all available evidence … so as to ensure that there is a proper allocation of costs".34

c. Although an investigating authority will not always have to examine and weigh the merits of evidence relating to alternative allocation methodologies, the circumstances of a particular case may require such consideration in order to act consistently with Article 2.2.1.135 and this must be reflected in the record of its decision.36

d. "Given the explanations and alternative cost methodologies proposed to MOFCOM by the respondents, there was 'compelling evidence' that more than one allocation methodology potentially may be appropriate. Therefore, MOFCOM was required to reflect on and weigh the merits of the various allocation methodologies".37

e. MOFCOM acted inconsistently with the second sentence of Article 2.2.1.1 because there was "no evidence on the record of the investigation that the merits of the alternative allocation methodologies put forward by the respondents after the Preliminary Anti‑Dumping Determination were weighed or reflected upon".38

f. MOFCOM's straight allocation of total processing costs to all products necessarily means that it included costs solely associated with processing certain subject broiler products in its calculation of costs to all subject broiler products.39

g. Evidence relied upon by China did not support its position that "the per pound costs assigned to each product were derived from total cost minus the costs associated with the production of the products derived from a chicken that are not in the list".40

h. MOFCOM acted inconsistently with the second sentence of Article 2.2.1.1 also because it "improperly allocated costs from certain products derived from a chicken to other products derived from a chicken".41

7.2.1.2 MOFCOM's redetermination

7.2.1.2.1 Tyson

7.7.
For certain product models, the volume of like products sold in the domestic market accounted for less than 5% of Tyson's total volume of "the product concerned"42 exported to China. Accordingly, MOFCOM proceeded to construct the normal value "by using weighted average production cost, plus reasonable expenses and profit".43

7.2.1.2.1.1 Tyson's initial value-based cost allocation

7.8.
At the time of the original investigation, Tyson was transitioning from one accounting system to another. Under the new system44, it allocated costs to various broiler product models on the basis of their value in the US domestic market. Wing-tips, feet, and gizzards – some of the broiler product models exported to China – were classified as "offal", which has a low value in the US market45; costs were allocated accordingly, with additional adjustments for freight and processing. MOFCOM found that "excessive meat cost were [sic] allocated to certain products disproportionately, while other products were allocated almost no meat cost".46
7.9.
In the reinvestigation, MOFCOM "conducted further investigation on the allocation method of meat cost and on the processing cost of each product model" for Tyson.47 MOFCOM found that:

a. In respect of certain broiler product models (such as chicken feet) valued and costed as offal, "export sales prices were much higher than the prices of other offal products sold in the domestic market".48

b. Tyson did not allocate costs on the basis of "overall sales price" to those broiler product models, but rather costs on the basis of their domestic price.49

c. Tyson did not allocate various other common costs (such as feed and common processing) to these broiler product models.

MOFCOM determined that Tyson's records did not "reasonably reflect the production cost associated with the product concerned".50

7.2.1.2.1.2 MOFCOM's weight-based cost allocation

7.10.
In the original investigation, MOFCOM found that:

a. "it was not able to distinguish which feeds were specifically used to produce which parts of the product concerned";

b. "weight-based method could be more objective and more reasonable than the value‑based method … [to] reflect the production cost associated with the product concerned"51; and

c. "[t]he weight-based methodology … would not allocate too much meat costs to a part of products, while allocate almost none of meat cost to other part of the products".52

In its comments in the original investigation and then again in the questionnaire response to the reinvestigation, Tyson argued that:

[I]f the Ministry of Commerce insists to use the weight-based cost allocation method in the final determination, it shall consider all products generated from live chickens, and use the cost data re-submitted by Tyson company.53

MOFCOM considered Tyson's approach "not reasonable"54 because:

a. Tyson's methodology did not account for weight loss due to dead birds or birds "inappropriate for processing"55;

b. "during the original investigation and re-investigation, the Investigating Authority calculated the production costs of each model of the products concerned … this production cost didn't include that of the non-concerned products, such as feather, blood, etc. … [t]he cost allocation method for other products generated from the live chicken products (e.g. feather, blood, deep processed product, cooked product) is not the target of this investigation"56;

c. "costs of live chickens were monthly different during the period of the investigation. The Company did not explain in details [sic] which parts of live chickens were used for the production of the product concerned, and which parts were used for the production of other products"57; and

d. "by using the method claimed by the Company to calculate the cost, the total cost of the product concerned would be lower than the total cost of the product concerned in the Company's accounting book, but the Company did not explain in details what cost was reduced therefrom".58

7.11.
MOFCOM then issued detailed supplemental questionnaires in the reinvestigation to ascertain processing costs per product model. It found that, "the production cost data submitted by the Company in the responses to the original investigation and the re-investigation could not fully and truly reflect the actual production cost of all models of the product concerned".59 Accordingly, it determined that:

a. "the meat cost for all models of the product concerned should be calculated by using the weight based methodology";

b. "processing cost of common process should be allocated to all products by using the weight-based methodology";

c. "processing cost incurred for the particular product should be allocated to the particular product"; and

d. "production costs for all models of the product concerned should be determined on the basis of facts available and best information available".60

7.2.1.2.2 Pilgrim's Pride

7.12.
MOFCOM determined that:

Since the Dispute Settlement Report does not address the determination of the investigating authority on the Company's normal value, export price, price adjusted items and [cost, insurance, freight (CIF)] price, the investigating authority decides in the re-investigation to maintain the determination of the original investigation with respect to the Company's normal value, export price, price adjusted items and CIF price.61

7.13.
In the reinvestigation, MOFCOM sought to comply with the Panel's findings regarding disclosure in its original report. In doing so, MOFCOM "found a calculation mistake" and proceeded to correct the error.62 In its redetermination, MOFCOM stressed that it did not "change the determination method and source of data with respect to the normal value and the export price in the original investigation", but rather corrected faulty calculations.63

7.2.2 Main arguments of the parties

7.2.2.1 United States

7.14.
MOFCOM failed to ensure a proper cost allocation in respect of Tyson and Pilgrim's Pride and therefore acted inconsistently with the second sentence of Article 2.2.1.1.64

7.2.2.1.1 Tyson

7.15.
In the redetermination, MOFCOM purported to apply a weight-based cost allocation methodology to determine the cost of production of the products at issue. It calculated the per‑pound cost of production by dividing the total cost of producing a chicken by the weight of the chicken less the weight of certain by-products; specifically, it excluded the weight of blood, feathers, and organs, on the basis that they were not "used for human consumption".
7.16.
MOFCOM's approach is inconsistent with the second sentence of Article 2.2.1.1, which requires a "proper allocation of costs". A "proper" cost allocation must be internally coherent. If MOFCOM applies a weight-based cost allocation methodology, it must fully account for all products that are produced from the live birds, including by-products. To do so, MOFCOM would have had to divide the total cost of the live birds by their total weight.65 Tyson did report this total cost in the event that MOFCOM rejected Tyson's value-based allocation approach and decided instead to adopt a weight-based allocation.66 MOFCOM's exclusion of by-products not "used for human consumption" is not relevant in this context "since the joint costs of the chicken are used to produce non-subject merchandise – and they are being distributed to only certain products".67

7.2.2.1.2 Pilgrim's Pride

7.17.
MOFCOM failed to consider any alternative allocation methodologies for Pilgrim's Pride.68 The Panel in its original report found that "there was insufficient evidence of consideration [by MOFCOM] of alternative allocation methodologies presented by the respondents".69 "The respondents" included Pilgrim's Pride.70 MOFCOM was required "to address that deficiency in its redetermination, and its failure to do so is inconsistent with China's WTO obligations".71 To ensure "a neutral, fact-driven consideration of the 'proper' allocation of costs", MOFCOM was required to "consider[] data submitted by Pilgrim's Pride – whether flawed or not".72 Regardless of whether the Panel in its original report had made this finding specifically in respect of Pilgrim's Pride, because the measure is within its terms of reference, the Panel is required to address the claim.

7.2.2.2 China

7.2.2.2.1 Tyson

7.18.
In its original report, the Panel did not "engage in any specific interpretation of what the word 'proper' in Article 2.2.1.1 meant, or what specific obligation that word created".73 While "some of the Panel's language in the original report could be read to suggest a substantive obligation"74, the Panel in the original report "did not present any interpretation that focused specifically on the legal issue of whether the second sentence of Article 2.2.1.1 imposes a substantive obligation or the nature of that obligation". For this reason, this "is the legal issue that the Panel should address anew in this proceeding".75
7.19.
First, the only obligation in the second sentence of Article 2.2.1.1 is to consider all available evidence; there is no substantive obligation to allocate costs properly.76 MOFCOM did consider all available evidence on the proper allocation of costs, including Tyson's proposed cost allocation methodology. The redetermination discusses Tyson's proposed cost allocation methodology, satisfying the three-part test set out by the Panel in its original report for "consideration" within the meaning of second sentence of Article 2.2.1.1.77
7.20.
Second, the information at issue is not "evidence" because it was not "historically utilized"78; therefore, there was no obligation to consider it.79
7.21.
Third, even if the second sentence of Article 2.2.1.1 contains substantive obligations, the Panel in its original report did not define the term "proper".80
7.22.
Fourth, the Panel's "finding in [paragraph] 7,198 [of its original report] was based on the Panel's understanding of the facts at that time. These facts have been significantly clarified during the re-investigation and this Article 21.5 proceeding".81
7.23.
MOFCOM met the requirements of Article 2.2.1.1 because it:

a. asked Tyson "for the breakdown of sales into subject and non-subject merchandise", adding a clarification with respect to "non-subject merchandise" that "products not for human consumption, such as chicken feather, chicken blood, internal organs" are not subject products82;

b. sought Tyson's own allocation method for dividing subject and non-subject products83 and accepted Tyson's division84;

c. found that Tyson "reasonably drew distinctions between higher revenue and lower revenue products"85 and accepted "Tyson's normal accounting approach for this initial distinction into subject and non-subject merchandise"86;

d. considered "the evidence about the proper way to allocate costs among the specific products within the subset of edible subject products"87 and "realized that the Tyson's [sic] value-based method in fact introduced a distortion by using a very low value of offal (or price of waste products) to establish costs for the certain products (like chicken paws)"88; and

e. rejected Tyson's proposed cost allocation methodology as not correctly reflecting costs.89

Article 2.2.1.1 focuses on the "product under consideration". Therefore, including products not under consideration, such as the by-products at issue here, would not "reasonably reflect" the cost of the products at issue.90 The US approach would require that "even though Tyson had itself assigned few costs to inedible waste products, MOFCOM had to go back and take costs that Tyson had itself allocated to edible broiler parts, and reallocate them back to the inedible waste products based on weight."91 MOFCOM accepted the total meat costs of the subject products reported by Tyson, and then allocated that total meat cost to individual models of the subject broiler products based on weight.92

7.2.2.2.2 Pilgrim's Pride

7.24.
The claim is not within the Panel's terms of reference. Even if it were:

a. the Panel in its original report "never found any inconsistency with the second sentence of Article 2.2.1.1 with regard to MOFCOM's determination for Pilgrim's Pride"93;

b. the reference to "respondents" in the original report is only to Tyson and Keystone94 because:

i. the Panel's summary of the arguments does not refer to Pilgrim's Pride95,

ii. the Panel's analysis does not mention Pilgrim's Pride96,

iii. the only finding specific to Pilgrim's Pride was in respect of the first sentence of Article 2.2.1.197, and

iv. the Panel in its original report could not have found that MOFCOM should have considered Pilgrim's Pride's alternative methodologies, because "[t]he errors in the [sic] Pilgrim's Pride data rendered any alternative allocations largely irrelevant, since they would have been based on fundamentally flawed information that had not been corrected on a timely basis"98;

c. because the Panel did not find any inconsistencies in an original panel report, China cannot be found not to have implemented a finding in a subsequent Article 21.5 dispute99; and

d. if there are any ambiguities in the original report, they should be resolved in favour of China because "it would be unfair to penalize China for not specifically addressing an issue not raised in the Panel Report".100

7.2.2.3 Main arguments of the third parties

7.25.
The European Unionargues that in respect of the first claim, the second sentence of Article 2.2.1.1 contains a substantive obligation of proper cost allocation. A cost allocation methodology must be applied in a coherent manner. In case of a weight-based cost allocation methodology, costs which occur with regard to the whole chicken must, in principle, be spread over all broiler products according to their weight.101
7.26.
In respect of the second claim, the findings made by the Panel in the original report in relation to the second sentence of Article 2.2.1.1 also relate to Pilgrim's Pride. But even if this should not be the case, the redetermination would nevertheless be subject to scrutiny in these compliance proceedings regarding the issue in dispute.102

7.2.3 Evaluation

7.2.3.1 The law

7.27.
Article 2.2.1.1 of the Anti-Dumping Agreement provides (for ease of reference, we set out the three sentences separately):

For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration.

Authorities shall consider all available evidence on the proper allocation of costs, including that which is made available by the exporter or producer in the course of the investigation provided that such allocations have been historically utilized by the exporter or producer, in particular in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditures and other development costs.

Unless already reflected in the cost allocations under this sub-paragraph, costs shall be adjusted appropriately for those non-recurring items of cost which benefit future and/or current production, or for circumstances in which costs during the period of investigation are affected by start-up operations.

7.28.
"Paragraph 2", referred to in the first sentence is Article 2.2 of the Anti‑Dumping Agreement, which provides:

When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits.103

Thus, by its own terms Article 2.2.1.1 sets out parameters for a methodology for arriving at a proper allocation of costs necessary to arrive at a "cost of production" that may be used in constructing a normal value for purposes of the comparison required under Article 2.2. This requires, in the context of the second sentence of Article 2.2.1.1, the investigating authority to "consider … all available evidence on the proper allocation of costs".

7.2.3.1.1 Consider

7.30.
The second sentence relates to the methodology for allocating costs: an investigating authority must "consider" all evidence on proper cost allocation. This consideration is not to be undertaken in the abstract. In context, its purpose is clear: to ensure that cost elements for the subject product are properly determined for, we recall, purposes of constructing a normal value for that product. The consideration of evidence as to cost allocation methodology goes to the heart of what Article 2.2.1.1 is about: coming up with a properly allocated cost of production for the product under investigation for use by an investigating authority in constructing a normal value for that product. This is further confirmed by the third sentence: "[u]nless already reflected in the cost allocations under this sub-paragraph". Fundamentally, a normal value for a product cannot be properly constructed unless costs of production are properly allocated to that product, and a proper allocation of costs cannot happen without consideration of all available evidence on the proper allocation of costs.
7.31.
Accordingly, Article 2.2.1.1 sets out an integrated obligation to calculate a cost of production for purposes of the comparison required under Article 2.2, with two elements:

a. in the first sentence, the rule as to the information to be used, including allocated costs; and

b. in the second sentence, the method for resolving issues of allocation when those records cannot be used in this respect:

i. consideration of all evidence as to proper allocation; and

ii. choosing an appropriate methodology to ensure a proper allocation of costs of production to the subject product in constructing normal value.

7.2.3.1.2 All available evidence

7.32.
Where an investigating authority constructs normal value on the basis of cost of production, and determines that the records of an exporter or a producer are not appropriate for purposes of properly allocating costs to the subject product, the second sentence sets out the evidentiary basis for the investigating authority's choice of a cost allocation methodology. The investigating authority is required to "consider":

a. all;

b. available;

c. evidence;

d. on the proper allocation of costs:

i. including that which is made available by the exporter or producer in the course of the investigation; and

ii. provided that such allocations have been historically utilized by the exporter or producer, in particular in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditures and other development costs.

7.33.
The term "evidence" is not defined in the Anti-Dumping Agreement. It is not necessary for us to do so in this case; at a minimum, it encompasses information provided to an investigating authority by an interested party, whether or not positive, accurate or adequate. Nothing in the Anti-Dumping Agreement, or the WTO Agreement as a whole, suggests that information loses its character as "evidence" by virtue of failing to meet certain criteria. Whether the evidence meets these criteria is a separate matter for the investigating authority to consider.
7.34.
First, given the requirements of Article 2.2.1.1, the evidence must be "on the proper allocation of costs". The qualifier "proper" has a range of meanings, not all of which are relevant for the purposes of the Anti-Dumping Agreement; it is in the context in which the term is found and with a view to giving effect to Article 2.2.1.1 that the relevant "ordinary meaning" is revealed:

a. The first sentence of Article 2.2.1.1 refers to "records [that] reasonably reflect the costs associated with the production and sale of the product under consideration".106

b. The last sentence of the same subparagraph provides that "costs shall be adjusted appropriately" for certain items or in respect of certain circumstances.107

c. Article 2.2.2 refers to costs that are "based on actual data pertaining to production and sales in the ordinary course of trade" of the product at issue.

7.35.
Thus, for example, evidence that a particular allocation methodology reasonably reflects the cost of production of the product at issue, evidence of "appropriate" adjustments to costs, or evidence that certain costs relate to production of the product in question, is evidence "on the proper allocation of costs". We do not mean to suggest that in every instance, there is a single "correct" allocation to be determined upon considering the evidence on cost allocation methodologies. Indeed, the use of the term "proper" suggests due deference to the circumstances of a product's life-cycle or a producer's or an exporter's production line and business model, as well as the availability of data and different accounting systems used.108
7.36.
Second, the reference to "all available" evidence requires, in our view, consideration of all evidence that is available to the investigating authority. The phrase beginning "including" makes clear that certain types of evidence must be considered if available, but does not limit the scope of "all available evidence" that must be considered in any event. Rather, it establishes, for instance, that an investigating authority must consider evidence on the proper allocation of costs made available by the exporter or producer where such allocations have been historically utilized, even if that exporter or producer's records were rejected as the basis for calculating costs under the first sentence of Article 2.2.1.1. Merely because an investigating authority determines that the records kept by an exporter or producer are not in accordance with the generally accepted accounting principles of the exporting country or do not reasonably reflect the costs associated with the production and sale of the product under consideration does not necessarily mean that the cost allocation methodologies reflected in those records may not be appropriate if properly applied using appropriate information. An investigating authority may not summarily dismiss evidence of cost allocation provided by the exporter or producer that it had historically used.
7.37.
This recognizes a commercial reality: the cost allocations in a company's records may be used for multiple reasons in internal accounting systems, but not, one would expect, generally in anticipation of an anti-dumping investigation. Where an exporter has historically utilized a cost allocation methodology, this suggests that the methodology was, in fact, not put in place for the sole purpose of the investigation. Thus, as noted above, even if the actual data on costs as reported in the records are rejected under the first sentence, the allocation methodology reflected in those records may nonetheless result in a proper allocation of costs if applied to a different set of data.
7.38.
In the light of the above, evidence of allocation in the records of an exporter, where such allocation is historically utilized, must be "considered" – alongside all other evidence – to arrive at an allocation methodology that can generate a "proper allocation of costs" in calculating "cost of production" for the "purposes of paragraph 2".

7.2.3.1.3 Conclusion

7.39.
To appreciate the import of the second sentence of Article 2.2.1.1, the entirety of the provision should be considered as a single obligation with multiple parts:

a. When an investigating authority constructs a normal value for purposes of the comparison under Article 2.2, Article 2.2.1.1 sets out two requirements for the calculation of costs of production.

b. Where the conditions of the first sentence are met, an investigating authority must use the information reported in the records kept by the exporter or producer in question to calculate cost of production for the product and the producer in question. This is the "normal" method, and an investigating authority may not reject the records without having first established, and explained, why the records are either not in accordance with the generally accepted accounting principles of the exporting country or do not reasonably reflect the costs associated with the production and sale of the product under consideration.

c. When questions of cost allocation arise in calculating cost of production for the purposes of constructing a normal value for purposes of the comparison under Article 2.2, whether or not on the basis of:

i. the information in the producer's records, or

ii. an alternative set of data because the producer's records are rejected under the first sentence of Article 2.2.1.1.

d. The investigating authority must consider all available evidence related to the proper allocation of costs.

e. This evidence includes:

i. evidence made available by exporters and producers, where the cost allocation was historically utilized: this includes evidence of cost allocation methodologies in records rejected under the first sentence, where the allocation is historically utilized;

ii. calculations, data, and allocation methodologies generated by an exporter at the behest or request of the investigating authority; and

iii. alternative allocation methodologies put forward by an exporter or producer during the investigative process (including a reinvestigation), either on its own, or to address concerns or questions raised by the investigating authority, in, for example questionnaires or follow-up questions, verification, etc.

f. Article 2.2.1.1 requires an investigating authority not just to "consider" certain evidence but to do so with a view to a proper allocation of costs for the purposes of Article 2.2.

g. There may be no single "proper" allocation of costs. An investigating authority's cost allocation is proper when it is appropriate to the facts and circumstances of the producer and product in question, and is arrived at following the investigating authority's consideration of all available relevant evidence.

h. An investigating authority must adequately explain its consideration of the evidence and its choice of allocation methodology based on that consideration as one that, if applied properly, will result in a proper allocation of costs.

7.2.3.2 Tyson

7.40.
We recall the product description set out in the redetermination:

Detailed description of the product concerned: broiler products after slaughter and processing of living broiler chickens, including whole chickens, parts of whole chicken after cutting, by-products of broiler chickens, regardless whether it is fresh, chilled or frozen. Living chickens, broiler products packed in cans and other similar ways, broiler sausages and similar products, cooked broiler products are all not included in the scope of the investigation.

Main application: the main application of the broiler products in domestic market is for human consumption, which normally reach the consumers directly or indirectly through whole-sales or retail-sales channels such as agricultural products markets or supermarkets, and through the catering industry.109

7.41.
The product description, the exclusions, and the "usage" or "application" have not changed substantially from the original investigation.110

7.2.3.2.1 Preliminary observations

7.42.
At the outset, we address two arguments that appear to have formed the core of each party's case.
7.43.
The United States argues that MOFCOM's allocation methodology was not "internally coherent" and therefore did not constitute "proper allocation" because MOFCOM used two different cost allocation methodologies for different parts of a chicken: for feathers, blood, and inedible viscera, MOFCOM relied on Tyson's cost allocation based on domestic market values; for all other models it used a weight-based allocation. Even granting that MOFCOM used two different cost allocation methodologies, this alone does not demonstrate that China acted inconsistently with Article 2.2.1.1, for at least two reasons.
7.44.
First, nothing in the text or context of Article 2.2.1.1 suggests that a "proper" allocation of costs is necessarily one that is "consistent", "internally coherent", or follows the same "logic" throughout. We see nothing in the text of the provision or in the concept of a "proper" allocation of cost that would require an investigating authority to use the same cost allocation methodology in every instance a cost allocation is necessary in an investigation. For instance, different stages of a subject product's production cycle, or the production of different models of a subject product, or the production of by-products in the process of producing a subject product, may all raise questions of the proper allocation of costs. We see no inherent reason that all such questions must be resolved by applying the same cost allocation methodology in a given investigation. An interpretation that would so narrow the meaning of "proper cost allocation" would be inconsistent with our understanding of the provision as requiring consideration of evidence of cost allocation that is appropriate to the circumstances.
7.45.
Second, nothing in the facts of this case as presented and argued to us demonstrates why, in the particular circumstances of this case, the use of the same cost allocation methodology throughout was necessary. The US argument that MOFCOM was required to use a "consistent" or "internally coherent" cost allocation methodology is not based on the circumstances of either Tyson or the broiler products at issue. For one thing, nothing in the record suggests that any evidence on whether such consistency would be necessary from an accounting or a commercial perspective was provided to MOFCOM. For another, we can envision a variety of situations in which strict consistency in the application of cost allocation methodologies might not be necessary or appropriate. For example, large manufacturing conglomerates with multiple subsidiaries, factories and business lines may well employ different cost accounting methodologies internally across their operations, vertically and horizontally. It would be neither practicable nor reasonable for such a company, in responding to an anti-dumping investigation involving one of its products, to be required to provide cost data for that product based on a "consistent methodology" of cost allocation. As we have stated, we see nothing in Article 2.2.1.1 or its context that would require an investigating authority to use the same cost allocation methodology in respect of a product throughout. Of course, to the extent that an investigating authority uses more than one cost allocation methodology in calculating costs of production for purposes of determining normal value, the basis for this approach would have to be reasonable and adequately explained in its determination.
7.46.
China asserts that it relied upon Tyson's value-based methodology for the first step of the cost allocation exercise (allocating costs between subject and non-subject goods) and argues that "[i]t is hard to fault MOFCOM for accepting Tyson's normal accounting approach for this initial distinction into subject and non-subject merchandise".111 We recall that MOFCOM provided Tyson a "clarification" that, according to MOFCOM, defined the scope of subject and non-subject broiler products, i.e. those models that were and were not the subject of the investigation.112 As we understand it, MOFCOM was well aware of Tyson's use of value-based cost allocation methodology – indeed, this was the very subject matter of the original case under Article 2.2.1.1, first sentence. Thus, when MOFCOM "clarified" the scope of the subject product definition, it in all likelihood was fully aware that Tyson would apply a value-based cost allocation to distinguish subject and non‑subject broiler product models. However, the fact that MOFCOM "accepted" this initial cost allocation does not elucidate in any way the reasons for its shift to a different cost allocation methodology at a later stage. Accordingly, we do not consider it relevant to our analysis.

7.2.3.2.2 MOFCOM's rejection of Tyson's value-based cost allocation

7.47.
MOFCOM accepted Tyson's initial cost allocation between "subject and non-subject merchandise" on the basis of a value-based cost allocation methodology. MOFCOM did so because it found that Tyson's value-based cost allocation between subject and non-subject products "reasonably drew distinctions between higher revenue and lower revenue products".113 MOFCOM did not, therefore, apparently have any objections in principle to the use of a value-based cost allocation in general or Tyson's value-based methodology specifically.
7.48.
MOFCOM next considered "the evidence about the proper way to allocate costs among the specific products within the subset of edible subject products".114 According to China, in examining Tyson's cost allocation among subject product models:

MOFCOM realized that the [sic] Tyson's value-based method in fact introduced a distortion by using a very low value of offal (or price of waste products) to establish costs for the certain products (like chicken paws).115

MOFCOM considered the use of the value of offal "a distortion" in Tyson's subject product allocation because, unlike certain other product models valued as offal in the United States, chicken feet had a consumer market outside the United States that valued those product models more highly. Accordingly:

MOFCOM then reasonably and objectively concluded that for this anti-dumping investigation, a weight-based allocation was more reasonable method than the Tyson value-based method to allocate costs among those products that were physically subject products.116

7.49.
The United States argues that, "[t]he essence of the problem is the internal inconsistency of MOFCOM's logic concerning a weight-based methodology".117 The "logic" the United States refers to concerns the application of MOFCOM's weight-based methodology. The United States argues, "under that logic, an objective investigating authority would need to account for all products that derive revenue and then allocate cost by weight to all of them".118 That is, for the United States, as a matter of logic, if a weight-based methodology is used to allocate costs among the subject product models, then the same methodology should have been used to allocate costs between subject and non-subject broiler product models, since both generated revenue.
7.50.
We have found that nothing in Article 2.2.1.1 requires an investigation authority to apply the same methodology to allocate costs at different stages of its investigation. An investigating authority may use different cost allocation methodologies consistently with the second sentence of Article 2.2.1.1, so long as:

a. the reasons for doing so are unbiased and reasonable in the circumstances;

b. the methodology chosen results in a proper allocation of costs; and

c. the investigating authority explains its choice as between different methodologies.

7.51.
The United States does not dispute that certain subject products have value in the Chinese consumer market that they do not have in the US market. MOFCOM's rejection of a value-based cost allocation that does not capture the value of a product model in its principal market does not, for the purposes of the second sentence of Article 2.2.1.1, strike us as inherently biased or unreasonable.

7.2.3.2.3 MOFCOM's use of weight-based cost allocation

7.52.
We now turn to the question of whether MOFCOM considered all available evidence before it on the proper allocation of costs. MOFCOM decided to use a weight-based cost allocation for the subject broiler products. The costs allocated among different models of subject broiler products were those Tyson had allocated to all subject products on the basis of its domestic value-based methodology. MOFCOM rejected that methodology for allocating costs among the different models of subject broiler products. We found in the original report that:

Of the two types of methodologies for doing so that were discussed in this case – one based on relative sales value ("value-based allocation") and one based on the weight of the products ("weight-based allocation"), the Panel is of the view that neither method is in principle inherently unreasonable.119

Having identified a problem with an exporter's cost allocation methodology, an investigating authority that is required to consider all available evidence may not, however, disregard evidence related to that allocation, and use its own methodology, without an explanation of its decision that is reasoned and adequate.

7.53.
MOFCOM accepted Tyson's domestic-value-only allocation of costs between subject and non-subject products on the basis that it drew a reasonable distinction "between higher revenue and lower revenue products". For the allocation of costs among subject broiler product models, however, MOFCOM in the redetermination concluded that a weight-based allocation methodology better reflected the costs of production of subject product models, than a methodology based on their value on the domestic market of the exporting country. In this respect, MOFCOM made the following observations:

a. "[p]roduction cost means the necessary expenses invested by a producer to produce products, rather than the income that a producer can gain from sales of a product"120; and

b. MOFCOM "was not able to distinguish which feeds were specifically used to produce which parts of the product concerned".121

In respect of subject product models, MOFCOM decided to allocate "the necessary expenses invested by a producer to produce products" on the basis of the weight of the entire broiler less the weight of feathers, blood, and viscera – because, it stated, the latter were non-subject products.

7.54.
There is no dispute between the parties that feathers, blood, and viscera are not "produced" for human consumption. At the same time, while there is no evidence directly on the record on this subject, it should be uncontroversial for us to take notice of the fact that feathers, blood, and viscera are essential parts of a live broiler, and thus they are intrinsic to the production of the subject broiler product models. MOFCOM does not explain why the cost of "producing" feathers, blood, and viscera is not part of "the necessary expenses invested by a producer to produce" the subject product models. Nowhere in the redetermination does MOFCOM explain why it was appropriate to exclude from its weight-based allocation of costs of producing subject product models "necessary expenses" of producing a live bird, merely because it had accepted an allocation of costs between subject and non-subject products based on domestic market value, i.e. "the income that a producer can gain from sales of a product".
7.55.
In respect of MOFCOM's exclusion of feathers, blood, and viscera, China argues that these products were "waste".122 We note in this regard MOFCOM's finding in the redetermination that "offal" (which includes viscera) can be turned into "feedstuff"123, as well as the reference to "feather meal"124, indicating that the products at issue were perhaps low-value by-products, but not "waste". Even if characterizing the product models at issue as "waste" were an explanation for its choice of methodology, this clearly was not a finding that MOFCOM made.
7.56.
China further argues that in the redetermination, MOFCOM stressed that feathers, blood, and viscera were not subject products. We had found otherwise in our original report125, but that is of no moment here: in our view, the distinction between subject and non-subject products or product models is not, in itself, determinative for the purposes of determining whether MOFCOM, considering all evidence on the proper allocation of costs, came to a reasoned conclusion in choosing a methodology to allocate costs to subject broiler product models. On the facts of this case, we note:

a. MOFCOM could, and did, isolate the cost of production of a broiler;

b. in respect of a broiler, MOFCOM found that it could not distinguish between the costs of feed used to grow breast meat and feed used to grow chicken feet;

c. feathers, blood, and viscera are broiler product models that, while according to China not subject to the investigation, are no less intrinsic to the production of a live broiler than subject broiler product models such as its breasts or feet; and

d. the other non-subject products comprised "[l]iving chickens, broiler products packed in cans and other similar ways, broiler sausages and similar products, cooked broiler products"126 – they do not form part of a single live broiler that will be slaughtered and separated into various product models before export, and are thus not intrinsic to the production of subject broiler product models.

7.57.
Article 2.2.1.1, second sentence requires consideration of all evidence on the proper allocation of costs, and a proper allocation of costs by an investigating authority is one that is appropriate to the circumstances of the subject product/product models and the company. We have already found that:

a. nothing in Article 2.2.1.1 requires an investigating authority to apply a single cost allocation methodology in all aspects of its investigation; and

b. in the facts of this case, use of both a value-based methodology and weight-based methodology was not, in itself, unreasonable.

7.58.
However, in the facts of this case, certain of the broiler product models identified by MOFCOM as "non-subject" were inseparable from and intrinsic to the production of the subject broiler product models. In its consideration of all available evidence related to a proper cost allocation, MOFCOM was required, at a minimum, to explain why the concern – that allocations must "reasonably reflect costs" of production – it relied upon to choose a weight-based cost allocation for subject product models nonetheless allowed for the exclusion of certain parts of a live broiler (feathers, blood, and viscera) that are necessarily part of the production of the subject broiler product models from its cost allocation.
7.59.
For this reason, we conclude that China did not act consistently with the second sentence of Article 2.2.1.1 of the Anti-Dumping Agreement.

7.2.3.2.4 Tyson's proposed weight-based methodology

7.60.
Tyson proposed a weight-based allocation methodology that took into account feathers, blood, and viscera. MOFCOM found this approach "not reasonable".127
7.61.
First, MOFCOM identified problems of an accounting nature in Tyson's proposed weight‑based cost allocation:

a. Tyson's methodology did not account for weight loss due to dead birds or birds "inappropriate for processing"128;

b. "costs of live chickens were monthly different during the period of the investigation. The Company did not explain in details [sic] which parts of live chickens were used for the production of the product concerned, and which parts were used for the production of other products"129; and

c. "by using the method claimed by the Company to calculate the cost, the total cost of the product concerned would be lower than the total cost of the product concerned in the Company's accounting book, but the Company did not explain in details [sic] what cost was reduced therefrom".130

Tyson disputed that these problems justified rejecting its proposed methodology.

7.62.
When an investigating authority identifies "problems" with evidence made available to it by a producer purporting to reflect a proper cost allocation methodology and disregards the evidence or the methodology on that basis, it must explain why those problems support a decision that the proposed methodology is inappropriate. In this instance, MOFCOM nowhere explains how any of the accounting problems it identified justified the conclusion that the weight-based cost allocation proposed by Tyson was not reasonable.
7.63.
Second, MOFCOM found that:

[D]uring the original investigation and re-investigation, the Investigating Authority calculated the production costs of each model of the products concerned … this production cost didn't include that of the non-concerned products, such as feather, blood, etc. … [t]he cost allocation method for other products generated from the live chicken products (e.g. feather, blood, deep processed product, cooked product) is not the target of this investigation.131

As MOFCOM itself acknowledged, albeit indirectly, the production costs of "each model of the products concerned" are not separable from the production costs of the live broiler from which both subject and non-subject products derive: the same feed that allows chicken breasts and chicken feet to grow, also enables the growth and "production" of feathers, blood, and viscera, without which neither feet nor breasts would exist. As well, MOFCOM's observation that "[t]he cost allocation method for other products generated from the live chicken products … is not the target of this investigation" is true, but not germane. This is because the distinction between subject and non-subject products by Tyson, based on domestic-value and accepted by MOFCOM, in fact resulted in the following formula:

Total cost of production - cost of non-subject goods = cost of subject goods

And so the cost figure that MOFCOM used in its weight-based cost allocation for subject products was inextricably linked to "[t]he cost allocation method for other [non-subject] products generated from the live chicken products". As we have explained, Article 2.2.1.1 does not require an investigating authority to use the same cost allocation methodology throughout the investigation. Nevertheless, in respect of cost allocation to parts of a single animal, reliance on a value-based distinction between subject and non-subject products, in a context where the costs of producing both are entwined, does not suffice in itself to justify rejecting evidence of a proposed methodology that purports to take this into account.

7.64.
For these reasons, we conclude that China did not act consistently with the second sentence of Article 2.2.1.1 of the Anti-Dumping Agreement.

7.2.3.2.5 "Historically utilized"

7.65.
China argues that MOFCOM had no obligation to consider Tyson's weight-based cost allocation methodology because it did not constitute "evidence" for the purposes of Article 2.2.1.1.132 MOFCOM does not appear to have addressed this point at all in the redetermination. Indeed, MOFCOM states that it conducted the reinvestigation "[b]ased on the evidence submitted by the interest [sic] parties and evidence collected by the Investigating Authority in the original investigation and re-investigation"133 and makes no distinction between "evidence submitted" and a putative category of "information submitted that did not constitute evidence". China's argument is thus after the fact justification and cannot play a part in our review of the consistency of the redetermination with Article 2.2.1.1.
7.66.
In any event, China's argument does not demonstrate that MOFCOM acted consistently with the second sentence of Article 2.2.1.1, for the following two reasons.
7.67.
First, nothing in the WTO Agreement defines "evidence" or makes a distinction between information that is "evidence" and information that is not. Information that purports to support an asserted fact is evidence; it may be good or bad, weak or strong, relevant, or not.
7.68.
Second, the subordinate clause starting with "including" does not limit the scope of the evidence to be considered; rather, it confirms the breadth of the phrase "all available evidence". This is a fortiori the case where, as here, the evidence submitted is expressly developed by an exporter or producer at the behest or request of an investigating authority, or in response to its concerns. We recall that MOFCOM had rejected Tyson's data based on its historical cost allocation methodology and demanded that Tyson generate new data based on a methodology inconsistent with Tyson's accounting system. To read the subordinate phrase in the second sentence as permitting an investigating authority to ignore any evidence of proper cost allocation unless it is "historically utilized" would mean that an investigating authority could simply ignore information and data submitted in response to its own questions and purporting to satisfy requirements without even examining it or weighing its merits.
7.69.
This strikes us as an unacceptable outcome and an unwarranted limitation of the explicit requirement to consider "all available evidence". Having failed to do so in this case, MOFCOM could not reject the data submitted by Tyson based on the methodology it developed in an effort to conform to MOFCOM's requirements, solely because that methodology was not "historically utilized", as China contends.
7.70.
For these reasons, we conclude that China did not act consistently with the second sentence of Article 2.2.1.1 of the Anti-Dumping Agreement.

7.2.3.3 Pilgrim's Pride

7.71.
The threshold legal question before us with respect to MOFCOM's redetermination regarding Pilgrim's Pride is whether, in our original report, our findings under the second sentence of Article 2.2.1.1 applied in respect of Pilgrim's Pride, or were limited to Tyson and Keystone. In the original report we identified the question we were to resolve as "whether MOFCOM took into consideration 'compelling evidence' with respect to the reasonableness of its own methodology and available alternatives".134 We then made the following observation:

China has not provided any citations to the record of the investigation where MOFCOM deliberated or explained the weight-based methodology it chose to apply or why it chose that methodology over the alternatives proposed by the respondents. All of the evidence of consideration that China points to in its submissions relates to MOFCOM's consideration of the original books and records of the respondents, rather than to the appropriateness of MOFCOM's allocations or the alternative methodologies that Keystone and Tyson proposed.135

7.72.
According to China, this finding – including our specific references to Keystone and Tyson – should be read against the background of our findings in respect of Pilgrim's Pride. In particular, China relies on our findings in the original report in respect of evidence submitted by Pilgrim's Pride as to its cost allocation methodology:

MOFCOM's basis for rejecting the costs as recorded in the respondent's books and records is not the unreasonableness of the allocation, but rather a specific determination that the data as originally submitted was irreconcilable and that the information to correct the errors was untimely. … Indeed, Pilgrim's Pride's Comments on the Preliminary Anti-Dumping Disclosure acknowledge and confirm that the data was incorrect as Pilgrim's Pride goes into great detail describing how the errors arose.136

7.73.
We note, of course, that these findings were made in the context of the first sentence of Article 2.2.1.1. Nothing in our original findings suggests that the fact that an investigating authority finds data to be "incorrect" or "irreconcilable" under the first sentence is or would be relevant in respect of "evidence" of a "potentially … appropriate" allocation methodology that an investigating authority would be required to "consider" under the second sentence. Nothing in our findings in the original report referring to "respondents" could be read to exclude any respondent on the basis that its data were rejected, consistently with the first sentence of Article 2.2.1.1, as being not a proper basis for the determination of costs of production.
7.74.
Consequently, we confirm that in the original report we found China to have acted inconsistently with the second sentence of Article 2.2.1.1 in respect of "respondents", including Pilgrim's Pride as well as Tyson and Keystone. MOFCOM did not reinvestigate Pilgrim's Pride in this context or do anything else to satisfy its implementation obligations. Thus, we conclude that China acted inconsistently with the second sentence of Article 2.2.1.1 of the Anti-Dumping Agreement with respect to Pilgrim's Pride.

7.2.4 Conclusion

7.75.
In respect of Tyson, China did not act consistently with Article 2.2.1.1 of the Anti‑Dumping Agreement because:

a. MOFCOM did not explain why the concern – that allocations must "reasonably reflect costs" of production – it had relied upon to choose a weight-based cost allocation for subject product models nonetheless allowed for the exclusion of certain parts of a live broiler (feathers, blood, and viscera) that are necessarily part of the production of the subject broiler product models from its cost allocation; and

b. MOFCOM did not provide a reasoned and adequate explanation for its rejection of Tyson's alternative weight-based cost allocation methodology.

7.76.
In respect of Pilgrim's Pride, China did not act consistently with Article 2.2.1.1 of the Anti‑Dumping Agreement because:

a. in the original report we found China to have acted inconsistently with the second sentence of Article 2.2.1.1 in respect of Pilgrim's Pride; and

b. China did not in any way address this implementation obligation.

7.3 Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement: price effects

7.3.1 Introduction

7.3.1.1 Our findings in the original report

7.77.
We found in the original report that:

a. an investigating authority has "a certain level of discretion" in the methodology used for a price effects analysis137;

b. that discretion is not unbounded: Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement138 require that "the prices being compared must correspond to products and transactions that are comparable"139;

c. "price comparability needs to be examined any time that a price comparison is performed in the context of a price undercutting analysis"140; and

d. where an investigating authority performs a price comparison on the basis of a "basket" of products or sales transactions, it must:

i. "ensure that the groups of products or transactions compared on both sides of the equation are sufficiently similar so that any price differential can reasonably be said to result from 'price undercutting' and not merely from differences in the composition of the two baskets being compared"141, or

ii. "make adjustments to control and adjust for relevant differences in the physical or other characteristics of the product".142

7.78.
Turning to MOFCOM's determination, we took note of China's arguments that:

a. the "like product" at issue was a broiler and nothing in the Anti-Dumping Agreement or the SCM Agreement requires "a price comparison on the basis of product segments within the single like product"143; and

b. "MOFCOM … considered that all chicken parts competed and were substitutable with one another".144

7.79.
We found in the original report that, as a matter of fact:

a. "the product mix varied considerably between the two sets of data compared by MOFCOM in the investigations at issue"145; and

b. "the information before MOFCOM … revealed important price differences between the different broiler products".146

7.80.
We concluded that:

China acted inconsistently with Articles 3.1/15.1 and 3.2/15.2 because MOFCOM relied for its findings of price undercutting on a comparison of subject import and domestic average unit values that included different product mixes without taking any steps to control for differences in physical characteristics affecting price comparability or making necessary adjustments.147

7.3.1.2 The redetermination's consideration of price effects

7.3.1.2.1 Price undercutting

7.81.
In the preliminary determination in the original investigation, MOFCOM had found that "the product concerned had caused price undercutting and suppression to the like product of the domestic industry".148 The US interested parties objected that, "there is apparent difference in the product mixes between the imported product concerned and the domestic like product".149 In response to these concerns, in the redetermination MOFCOM considered that it "can apply appropriate methodology based on specific facts of specific case".150 To that end, MOFCOM:

a. "conducted on-site verifications on four domestic producers in the reinvestigation";

b. "collected supplemental sales data that distinguish the different product specifications";

c. "analyzed these sales data"; and

d. "cross-checked with the Customs import data of the product concerned and the data provided in the injury questionnaire responses of the exporters".151

7.82.
On the basis of its reverification of the data, MOFCOM:

a. did not consider it necessary to conduct a new underselling analysis, as it had "confirmed" the reliability of the results of the original investigation and analysis;

b. found that "the basic facts on which the U.S. relevant claims were based are not consistent with the actual situation"152; and

c. "considered that the selling prices of the different product specifications in the domestic market supported by these evidences are representative".153

7.3.1.2.2 Price suppression

7.83.
MOFCOM in the redetermination found that the volume and market share of imports of the product concerned had increased continuously since 2006. It also found that the "import price of the product concerned had significant effect on the selling prices of the like product of the domestic industry".154 Specifically, according to MOFCOM:

[B]ecause the import volume of the product concerned increased continuously afterwards, the import price further undercut the price of the like product of the domestic industry, resulted in the selling price of the like product of the domestic industry was further suppressed [sic] …

During the investigation period, the increase of the import volume of the product concerned was obtained by making low-priced sales. Such low-prices [sic] sales caused price undercutting to the selling prices of the like product of the domestic industry, and further more suppressed the prices of the like product of the domestic industry significantly … [.]155

7.84.
In response to the arguments of the interested parties, MOFCOM noted that there was no disagreement with "the trend of substantial increase of the absolute import volume".156 MOFCOM was not, however, required to look at increases in relative terms as well. In particular, MOFCOM:

[C]onsidered that, from 2006 to 2008, although the domestic market had a continuously high demand in broiler products, the domestic like product also obtained some market shares. However, that did not imply that the domestic industry did not suffer from injury. On the contrary, because the import volume of the product concerned increased substantially and the import price remained at a relatively low level, resulted in significantly undercutting and suppression to the domestic like product …

[T]he effect of the import volume of the product concerned on the domestic industry should be investigated comprehensively combined with the situation of change of the import price in the corresponding period.157

7.85.
According to MOFCOM:

[T]he data indicates that the import price of the product concerned was still lower than the price of the domestic like product, and significantly undercut the price of the domestic like product. Affected by this, the domestic like product was forced to reduce the price substantially to maintain market share.158

7.3.2 Main arguments of the parties

7.3.2.1 Price undercutting

7.3.2.1.1 United States

7.86.
MOFCOM's price effects analysis remains inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement159, for two reasons.
7.87.
First, the Panel in the original report found that China failed to ensure price comparability because it did not control for differences in product mix when comparing the prices of different chicken products. MOFCOM, however, "took no action that complied with the Panel's instructions".160 It based its underselling findings "on the very same comparisons of the average unit value of subject imports to the average unit value of domestic industry sales that the original panel found deficient".161
7.88.
Second, China does not demonstrate that data collected from only four of the 17 domestic producers included in the domestic industry were representative. In particular, MOFCOM did not disclose why it narrowed down the sample, the methodology for selecting the producers, or their share in the total domestic sales.162 The data relied on cannot be considered as "positive evidence" and the analysis as an "objective examination" within the meaning of Article 3.1 of the Anti‑Dumping Agreement and Article 15.1 of the SCM Agreement163; MOFCOM's analysis is also inconsistent with the requirements in Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement164 that the injury analysis focus on the "domestic industry".165 Where "samples" are used, they must be properly representative.

7.3.2.1.2 China

7.89.
MOFCOM used AUVs rather than model-specific prices to compare price trends; the WTO Agreement permits reliance on AUVs for price comparison purposes166 and Articles 3.2 and 15.2 do not mandate a particular price-comparison methodology.167 Following the Panel's findings in the original report, MOFCOM collected additional data from four domestic producers to determine whether, as a factual matter, the product types exported by the United States were in fact low-value products in China's market or were high-value products.168 MOFCOM found that the subject imports consisted of products higher in value169 than the domestic like product used in determining AUVs. As a result, the initial use of AUVs in the original investigation was in fact biased in favour of the respondents. In this light, MOFCOM did not need to make any adjustments for differences in the product mix in the redetermination.170
7.90.
The underselling analysis therefore remained exactly the same as in the original investigation and is thus based on data from all domestic producers included in the original investigation. The more limited data collected in the redetermination served only to confirm that there was no bias in the original method (using aggregate AUVs rather than product-specific prices for the underselling analysis); for this more limited purpose, collecting data from four domestic producers was fully sufficient.
7.91.
MOFCOM's choice of the four domestic firms from which it sought additional data during the reinvestigation was based on time and resource constraints and MOFCOM's familiarity with the four firms.171 For three of the four firms MOFCOM had conducted full verifications in the original proceedings; the fourth was the largest of those for which it had conducted more limited verifications. MOFCOM made a specific finding in its redetermination, based on a review of all the evidence, "that the selling prices of the different product specifications in the domestic market supported by these evidences are representative".172

7.3.2.2 Price suppression

7.3.2.2.1 United States

7.92.
MOFCOM's price suppression finding relied exclusively on the flawed finding of price underselling. Because the latter was flawed, the former was also necessarily inconsistent with Articles 3.1, 3.2, 15.1, and 15.2.173
7.93.
The underselling analysis and product-specific pricing data did not support MOFCOM's findings of price suppression in the first half of 2009 because the evidence did not show any correlation between the alleged underselling and price suppression.174 Specifically:

a. The long-term trend in the domestic industry's net loss does not support the conclusion of price suppression.

i. The domestic industry's decrease in losses (due to prices increasing more than the increase in costs) during the period 2006 to 2008 is inconsistent with a finding of price suppression.

ii. MOFCOM failed to explain or investigate how the alleged underselling could have suppressed domestic prices in the first half of 2009 when similar underselling had no price suppressive effects between 2006 and 2008.175

b. The short-term price trend for domestic product types competing directly with subject imports compared to the price trend for other domestic product types suggests that other factors unrelated to the dumped imports were responsible for the alleged price suppression.176 MOFCOM disregarded evidence that prices for domestically produced products that competed directly with most subject imports (i.e. chicken drumsticks, feet, and gizzards) declined far less than prices for other domestic products in the first half of 2009.

7.3.2.2.2 China

7.94.
In relation to the United States' first argument, the price suppression finding relied not only on the underselling analysis but also on the effects of increased volumes of imports and the combined effects of both.177
7.95.
In relation to the United States' second argument:

a. The legal standard under Articles 3.2 and 15.2 is not a full causation analysis but asks whether subject imports have "explanatory force" for the price suppression. MOFCOM made such a showing on the basis of the correlation between domestic and import prices, the consistent underselling and losses of the domestic industry, the increase in the margin of price undercutting in 2008, and the consistent increase in import volume.178

b. Regarding the US argument on decreasing losses, losses only narrowed in 2007 which cannot preclude a finding of price suppression on the basis of the totality of the evidence over the full period, in particular the increase in volume and market share of subject imports.179

c. Regarding the US argument on price suppression during the first half of 2009 being driven by other factors180:

i. the US argument is not compatible with MOFCOM's aggregate approach;

ii. there was a price undercutting effect for the product as a whole and model-specific prices fell even if the degree of the decline varied between product models; and

iii. the price decline for those product models directly competing with imports was still "significant".

7.3.3 Evaluation

7.3.3.1 Price undercutting

7.3.3.1.1 Price comparison

7.96.
We recall the second sentence of Article 3.2 of the Anti-Dumping Agreement:

With regard to the effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing Member … [.]181

As we observed in the original report, "price comparability has to be ensured in terms of the various features of the products and transactions being compared".182 We concluded that, as a matter of law, where an authority:

[P]erforms a price comparison on the basis of a "basket" of products or sales transactions, the authority must ensure that the groups of products or transactions compared on both sides of the equation are sufficiently similar so that any price differential can reasonably be said to result from "price undercutting" and not merely from differences in the composition of the two baskets being compared. Alternatively, the authority must make adjustments to control and adjust for relevant differences in the physical or other characteristics of the product.183

7.97.
Neither party has directed us to any developments since that would require us to revisit this finding.
7.98.
Article 3 of the Anti-Dumping Agreement and Article 15 of the SCM Agreement184 set out the rules and conditions that apply with respect to the determination of injury, which is one of the fundamental prerequisites for the imposition of an anti-dumping measure.185 The provisions of Articles 3 and 15 requiring consideration, examination, and evaluation of various factors contemplate "a logical progression of inquiry leading to an investigating authority's ultimate injury and causation determination".186 The price comparison required in Articles 3.2 and 15.2 is an important analytical step in an investigating authority's injury and causation analysis under Article 3.5 of the Anti‑Dumping Agreement and Article 15.5 of the SCM Agreement. It requires an investigating authority to consider whether any observed significant price undercutting is "the effect of the dumped imports".187 A price comparison under Articles 3.2 and 15.2 is thus not a static snapshot of the relationship between two prices (or averages). It requires, rather, a dynamic consideration of two sets of prices in a specific market context and within a given time-frame. The consideration must address whether observed movements in domestic prices are the effect of the prices of the dumped imports.
7.99.
The facts relevant to our Articles 3.2 and 15.2 analysis in this proceeding may be summarized as follows:

a. In the original case, MOFCOM disagreed with the arguments of US interested parties that imports from the United States contained "low value" products, as opposed to what the United States characterized as "high value" domestic product models in the domestic comparator basket.188

b. In the redetermination, MOFCOM sought to verify whether "the selling prices of the different product specifications in the domestic market supported by these evidences [sic] are representative".189

c. MOFCOM selected four domestic producers for additional verification of data and obtained further product-specific information from these companies. The data verified and gathered were not for the purpose of comparing prices, but rather, "to establish price relationships across product types, irrespective of their absolute values".190

d. The data gathered from the four domestic producers indicated that product models identified by the United States as "low value"191 or "high value" do not have similar "values" in the Chinese market192, at least for those producers, and could not be considered "low value".

e. In the light of this model-specific evidence, MOFCOM considered that the domestic benchmark AUV it used for its price underselling analysis was more "conservative"193 than an AUV based on a basket of product models including only models in the US‑export basket.

7.100.
The discussion of comparability in our original report concentrated on the following point: to consider whether the AUV of a basket of imported goods has had the effect of undercutting the AUV of a basket of domestic like products, the product composition of the two baskets must be "comparable" such that the price of the products in one basket can have an effect on the price of the products in the other basket. This is because where the baskets are composed of different product models a consideration of the effect of the price of a basket of imported goods on the prices of the basket of domestic goods becomes complicated: the more the divergence in composition, the less accurate the comparison of average values and the less reliable any consideration of the effects of one set of prices (or AUVs) on another.
7.101.
In the original investigation194, MOFCOM's price comparison was further complicated by at least two other factors, and these complications were not addressed or rectified in the redetermination.
7.102.
First, in considering the price effects of dumped imports, MOFCOM undertook a price comparison between two baskets of dissimilar compositions and considered the effects of the AUV of a smaller import basket on the AUV of a larger domestic basket. In the original case MOFCOM had found that the "like product" for the purposes of the investigation was a broiler and not specific product models, and that many of the product models at issue were substitutable in the Chinese market.195 MOFCOM was thus aware of potential price effects as a result of competition among product models within each basket. Given substitutability of the product models within the larger domestic basket, there was some risk that price effects were the effects of competition from product models within the domestic basket that were not in the dumped import basket.
7.103.
Second, we note the observation by the United States that, "MOFCOM found that chilled chicken cuts accounted for 40 to 47 percent of subject imports and chicken feet accounted for 29 to 39 percent of subject imports, depending on the year".196 We recall the model-specific prices that MOFCOM found in the course of the reverification. Given the range of prices among the various product models and the change in the composition of the domestic basket from year to year, it is not a given that any observed price effects are "not merely from differences in the composition of the two baskets being compared".197 An unbiased and objective investigating authority would be expected to seek to control for these variations in considering the effect of the prices of subject imports on the prices of the domestic like product.
7.104.
As a matter of law, we continue to be of the view that:

a. a simple comparison of prices in respect of baskets with different compositions does not indicate the effect of one set of prices (of the subject import basket) on the other set of prices (the domestic basket, comprising a larger number of product models); and

b. where AUVs are based on baskets whose product mixes are not comparable, an investigating authority is required to seek to "control for differences in physical characteristics affecting price comparability or making necessary adjustments".198

7.105.
China argues that the reverification amounted to "controlling" for the different basket compositions, because it demonstrated that the domestic AUVs used for comparison purposes are more "conservative" than an AUV that might be derived from a basket composed of the same product models as the subject imports.199 While we might agree with China that, at least for the four producers subject to reverification, domestic AUVs appear to be more "conservative" than the dumped import AUVs, given our specific findings in the original case and the requirements of Article 3.2, this alone does not suffice to demonstrate that MOFCOM controlled for the different composition of the two baskets for the specific purpose of considering the effects of the price of subject imports on a comparator basket of the domestic like product.
7.106.
In the original report, we did not find, because Articles 3.2 and 15.2 do not require, that in a price comparison, MOFCOM had to adopt the "lower of the two" price benchmarks; our findings were about the comparability of the baskets rather than the relative value of different AUVs. The fact that a domestic AUV is more or less "conservative" or might otherwise benefit exporters or foreign producers does not affect our analysis. Rather, at issue under Articles 3.2 and 15.2 is the effect of subject imports on domestic like product prices during the POI. This requires that the baskets of goods used for comparison be comparable, or at least that any price comparison controls for or adjusts in respect of different compositions to ensure sufficient comparability.
7.107.
In this light, we find that MOFCOM's "reverification" did not suffice to bring China's measure into conformity with its obligations under Articles 3.2 of the Anti-Dumping Agreement and 15.2 of the SCM Agreement, in that it failed to address the comparability of AUVs derived from different baskets of products for the purpose of considering the effects of prices of subject imports on domestic like product prices.200

7.3.3.1.2 Representativeness

7.108.
In response to the arguments of the United States that the data collected from four domestic companies were not representative, China submits that in its view:

[T]he "representativeness" of the selected producers [is] a question regarding price comparability of specific products, which was not the purpose of the MOFCOM verification exercise and collection of supplemental information.201

China further argues that:

The exercise did not require any direct product price comparisons, but merely to establish pricing relationships across product types, whatever the absolute prices may be.202

[P]ricing evidence collected by MOFCOM through verification during the re‑investigation process further established a pricing spectrum showing products like paws to be high value. None of the U.S. interested parties submitted any evidence or argument during the re-investigation process in an attempt to rebut these facts and common knowledge.203

7.109.
The question of "representativeness" arises in the context of "sampling". Sampling is an exercise in which observations about the whole of a population are based on data collected from a subset of that population. The methodology used to sample from a larger population depends on the type of analysis being performed, but may include simple random sampling or systematic sampling. Whatever the sampling methodology, in the context of the Anti-Dumping Agreement and the SCM Agreement, application of sampling as an analytical tool is valid where it can be demonstrated that the sample is sufficiently representative to allow for a reasoned conclusion about the population as a whole.204 In this instance, MOFCOM obtained additional data from four domestic producers205 on "volume, value, and unit value on a product-specific basis"206 in the context of analysing "pricing relationships across product types". According to China, this was done "to establish" such relationships, in respect of not only the four domestic producers subject to verification, but also the domestic industry as defined. Moreover, according to China, "pricing evidence collected by MOFCOM through verification during the re-investigation process further established a pricing spectrum".207
7.110.
That is, on the basis of data gathered from a subset of the population (four producers), MOFCOM drew certain conclusions about the population as a whole ("a pricing spectrum" or "pricing relationships across product types" in respect of all domestic producers defined as the domestic industry). This is, in effect, a sampling exercise, regardless of the methodology employed by MOFCOM.
7.111.
Nothing in Articles 3.2 and 15.2 – or, indeed, in Articles 3 and 15 as a whole – expressly prohibits or permits, or specifically regulates, sampling as an analytical methodology.208 Nonetheless, any sample that is used to "establish" a conclusion about the population as a whole must be representative.209 An unbiased and objective investigating authority cannot reasonably draw conclusions about a population as a whole based on data gathered from a subset that is not representative.
7.112.
The redetermination is silent as to the selection criteria, the selection process, and the representativeness of the sample. The explanations proffered by China in its submissions do not in any way address the question of representativeness of the sample, but rather contend that the choice of the four companies reverified was not arbitrary. Accordingly, even if MOFCOM's "reverification" amounted to the type of "control" required for a proper price comparison, MOFCOM did not explain in the redetermination in what way its sample was sufficiently representative that it could draw a reasoned conclusion about the population as a whole.
7.113.
In this light, we find that China did not act consistently with Articles 3.2 of the Anti‑Dumping Agreement and 15.2 of the SCM Agreement because in conducting its "reverification", MOFCOM failed to explain in what way the companies chosen were "representative" such that a consideration of price effects based on data for these companies could be generalised to the domestic industry.

7.3.3.2 Price suppression

7.114.
We found in the original report that even if there were contributing factors, at a minimum price undercutting was a factor in MOFCOM's price suppression analysis.210
7.115.
For the redetermination, MOFCOM merely "confirmed" through the reverification of the four companies that the comparator basket was a "conservative" one and that its price undercutting analysis was accurate but left its original price effects analysis unchanged. MOFCOM did not, in the redetermination, seek to "disentangle" price undercutting, price suppression, and volume and market-share effects. We refer, for example, to MOFCOM's response to the argument that part of the injury to the domestic industry was attributable to grain price increases:

[B]ecause the import price of the product concerned was always lower than the average selling price of the like product of the domestic industry, it undercut the price of the like product significantly, resulted in the suppression on the selling price of the domestic like product, and could not pass through the cost caused by price increase of raw materials downward, and the due price increase of the like product which should have occurred hadn't been realized.211

And again, responding to the pork price argument of the interested parties:

While its price was significantly lower than that of the domestic like product, it caused apparent suppression on the price increase of the domestic like product, and the price was lower than the production cost for a long time, and could not gain the profit margin. Therefore, the low-priced activity of the product concerned was the direct reason causing the injury to the like product of the domestic market [sic].212

7.116.
In this light, we find that China acted inconsistently with Articles 3.2 of the Anti‑Dumping Agreement and 15.2 of the SCM Agreement because MOFCOM's consideration of price suppression still rests on its consideration of price undercutting, such that its price suppression analysis was undermined by a flawed analysis of price undercutting.
7.117.
Having made findings in respect of price undercutting and in the light of the foregoing, it is not necessary or useful for us to make additional findings in respect of the second line of argument of the United States regarding price suppression.

7.3.4 Conclusion

7.118.
For the foregoing reasons, we find that:

a. China acted inconsistently with Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement in respect of price undercutting;

b. China acted inconsistently with Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement in respect of price suppression; and

c. as a consequence, China acted inconsistently with Article 3.1 of the Anti‑Dumping Agreement and Article 15.1 of the SCM Agreement.

7.4 Article 3.4 of the Anti-Dumping Agreement and Article 15.4 of the SCM Agreement: impact on the domestic industry

7.4.1 Introduction

7.119.
In our original report we found MOFCOM's consideration of price undercutting and price suppression inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement.213 We did not consider that making additional findings in respect of Article 3.4 of the Anti-Dumping Agreement and Article 15.4 of the SCM Agreement214 would help the parties in resolving the dispute because:

a. MOFCOM's examination of the state of the domestic industry was "inextricably linked" to its flawed consideration of price effects; and

b. implementing the report on Articles 3.2 and 15.2 would require MOFCOM to re-examine its the impact of subject imports.

7.120.
In this implementation proceeding, the United States again asserts that MOFCOM erred in various aspects of its examination of the impact of subject imports:

a. In its redetermination, MOFCOM limited the scope of its reinvestigation to "the implementation of the rulings and recommendation of the DS427 Panel on the issues of injury and causality".215

b. MOFCOM did not examine different or additional information; its evaluation of all relevant factors is not different from that in its original investigation.

In these circumstances, to assist the parties to secure a positive resolution to the current dispute, we consider it appropriate to make findings with respect to the US claims.216

7.4.2 Main arguments of the parties

7.4.2.1 United States

7.121.
MOFCOM's impact analysis did not reflect an "examination of the impact of the subject imports on the domestic industry concerned" and an "evaluation of all relevant economic factors and indices having a bearing on the state of the industry" as required by Articles 3.4 and 15.4, for three reasons.
7.122.
First, MOFCOM relied exclusively217 (or primarily218) on a flawed analysis of the decrease in capacity utilization and an increase in end-of-year inventories, instead of evaluating all relevant factors and taking into account evidence that nearly all other factors were positive for the period 2006 to 2008.219
7.123.
Regarding capacity utilization:

a. MOFCOM ignored that between 2006 and 2008 the decline in capacity utilization was due to the fact that the domestic industry's capacity increased in excess of demand growth.220

b. The decline in capacity utilization between 2006 and 2008 was also not the effect of subject imports because their share of apparent consumption increased entirely at the expense of non-subject imports, not at the expense of the domestic industry, whose share of apparent consumption also increased.221

7.124.
Regarding end-of-period inventories, MOFCOM focused on an absolute increase in domestic industry end-of-period inventories. The relative increase in end-of-period inventories, both as a share of domestic industry production and as a share of domestic industry shipments, ranged between only 2.9% and 3.5% for the period 2006-2008, which was not significant.222
7.125.
Second:

[B]y China's own admission, MOFCOM's impact analysis focused on the first half of 2009, when the domestic industry's performance lagged, while failing to account for the impact of subject imports on the domestic industry between 2006 and 2008, when the domestic industry's performance strengthened.223

MOFCOM was required to consider the impact of subject imports on the domestic industry during the entire POI, including those periods in which the industry's performance improved.224 MOFCOM was not entitled to "focus" its impact analysis "on the financial indicators that were consistently weak throughout the period of investigation" to the exclusion of other contradictory factors.225

7.126.
Third, China expressly argues that MOFCOM also considered potential future imports. However, "future subject imports could have no impact whatsoever on the domestic industry during the period of investigation".226

7.4.2.2 China

7.127.
US arguments in respect of capacity utilization are problematic because:

a. they relate to causation, which is irrelevant under Articles 3.4 and 15.4227;

b. MOFCOM did not base its evaluation primarily or exclusively on capacity utilization, but evaluated "all of the injury factors, both individually and collectively"228;

c. the observed capacity expansion is in part the result of "a shift from smaller producers to large producers", reflecting the "recent trend in the Chinese market" of "larger firms consolidating a growing portion of the market"229; and

d. the "allegation that capacity grew in excess of increasing consumption is not factually true".230

7.128.
In respect of inventories, the United States failed to consider that inventories were growing in absolute and relative terms and MOFCOM had discretion on which basis to evaluate this factor.231
7.129.
In respect of US arguments on the POI, the United States focuses on the period from 2006 to 2008, and only on various non-financial indicators of the health of the domestic industry232, ignoring the most recent part of the POI, the first half of 2009.233 Thus, the United States:

a. improperly focused on volume indicators and ignored the weak financial indicators;

b. improperly focused on the period 2006-2008 and ignored the most recent period, the first half of 2009;

c. ignored the "cumulative impact of consistent pre-tax losses"234; and

d. did not take account of expected near term trends.

7.130.
By contrast, in its evaluation, MOFCOM "considered all of the evidence for the period as a whole"235 and put particular weight on236:

a. negative financial indicators over the full POI;

b. the deterioration in most injury factors during the first half of 2009237; and

c. expected negative near term trends.238

7.4.3 Evaluation

7.4.3.1 MOFCOM's redetermination

7.131.
MOFCOM conducted the reinvestigation on "procedural and substantive issues which formed the basis ofr [sic] the original anti-dumping measure and original countervailing measure".239 On injury, MOFCOM limited the scope of the reinvestigation to "the implementation of the rulings and recommendation of the DS427 Panel on the issues of injury and causality".240 MOFCOM did not examine any additional or different information in its redetermination, and based on largely the same evaluation of the facts, reached the same conclusions regarding the impact of subject imports on the domestic industry as in the original investigation.
7.132.
MOFCOM found that volume indicators were generally improving in 2006-2008. Financial indicators appeared generally weak and fluctuated over the same period. However, based on a comparison between the first half of 2008 and the first half of 2009, all indicators showed declining performance in the first half of 2009.

Table 1: Market trends

FactorObserved trends
Output volume of the domestic industry Increased throughout the 2006-2008 period, declined (by 4.37 percentage points) from H1 2008 to H1 2009.
Capacity utilization Remained at around 79-80% throughout the 2006-2008 period, decreased by 9.78 percentage points from H1 2008 to H1 2009, to 66.48%.241
Sales quantities Increased throughout the 2006-2008 period, dropped in H1 2009 by 7.74 percentage points compared to H1 2008.
Market share Increased slightly throughout the 2006-2008 period (37.81% in 2006, 41.62% in 2007, 42.42% in 2008), decreased very slightly in H1 2009 to 42.19%.242
Sales price Increased in the 2006-2008 period, decreased in H1 2009.243
Gross profit margin Fluctuated over the period considered; generally negative except for 2007; and worsened markedly in H1 2009: -2.46% in 2006, 5.03% in 2007, -0.21% in 2008, and -4.37% in H1 2009.
Sales income Year-on-year increase of 57.62% in 2007 and 19.65% in 2008; declined 26.80% from H1 2008 to H1 2009.
Profit before tax Negative throughout the period considered: -1,208 billion RMB in 2006, ‑0,084 billion RMB in 2007, -1,359 billion RMB in 2008, and -1,090 billion RMB in H1 2009. Losses grew by 1511.72% from 2007 to 2008 and by 307.28% from H1 2008 to H1 2009.
Return on investment Negative throughout the period considered: -13.42% in 2006, ‑0.86% in 2007, -12.18% in 2008, and -9.10% H1 2009 over H1 2008; year-on-year change of 12.56%, -11.31%, and -6.69% in 2007, 2008, and H1 2009.
Employment figures Increased in 2006-2008, but decreased by 11.29% in H1 2009.244
Labour productivity Remained more or less stable over POI.
Per capita payroll Rose throughout POI.
Ending inventory Increased in absolute numbers during POI, from 68,257 tons in 2006 to 91,713 tons in 2007, 98,755 tons in 2008, and 105,402 tons in H1 2009. Year-on-year increase of 34.36% to 2007, 7.68% to 2008, and 6.73% to H1 2009 over H1 2008.
Net cash flows from operating activities Fluctuated: -218 million RMB in 2006, -10 million RMB in 2007, +69 million RMB in 2008, -433 million RMB in H1 2009.

Source: Redetermination, (Exhibit CHN-1 (translated version)), pp. 65-68 and 78.

7.4.3.2 The law

7.133.
Article 3.4 of the Anti-Dumping Agreement provides:

The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments.

7.134.
Article 3 does not establish a strict order of analysis. It sets out substantive requirements for the determination of injury. The "consideration" required by Article 3.2 and the "examination" set out in Article 3.4 are meant to contribute to, rather than duplicate, the determination of causation required under Article 3.5.245 Article 3.4 requires an "examination" of the impact of the dumped imports including an "evaluation" of all relevant economic factors having a bearing on the state of the domestic industry. This examination involves consideration of the "explanatory force of subject imports for the state of the domestic industry".246 The fifteen factors listed in Article 3.4 are not exhaustive; other "economic factors" might well be relevant, and no one or several of the factors examined necessarily give decisive guidance. In examining the impact of dumped imports:

a. "[T]here is no requirement in Article 3.4 that each and every injury factor, individually, must be indicative of injury."247

b. The factors and indices evaluated under Article 3.4 may be found to be "negative" in terms of the state of the industry even in the absence of "an actual decline in performance".248 Similarly, "positive" trends (that is, where there is no absolute decline) may nonetheless be negative in terms of the state of the industry, for instance "when those increases are significantly less than the expansion in demand".249

c. Even if there are no actual declines – in absolute or relative terms – an investigating authority may consider potential negative effects or declines in the industry. At issue when a "potential negative effect" is evaluated is still the impact of imports during the POI on the domestic industry during the POI, and not the possible impact of future (possible or likely) imports on the future state of the industry.250 What is relevant is the existence of a latent, as yet unrealized decline (again, in absolute or relative terms).

d. Nothing in Article 3.4 prohibits an investigating authority from focussing on a part of the POI and undertaking a more detailed analysis of developments during that part of the POI in examining the impact of imports.251

7.4.3.3 Analysis

7.4.3.3.1 Capacity utilization

7.135.
As we understand it, the US argument rests on two factual bases: first, that the domestic industry's capacity increased in excess of growth in demand; and second, that MOFCOM relied on negative trends in inventories and capacity utilization rates without regard for positive trends in other areas in the redetermination. The United States relies on the following data:

a. Domestic industry capacity increased by 780,000 tons, or 26.2%, in 2006-2008.

b. Domestic demand (apparent consumption) increased by 955,000 tons, or 17%, in 2006‑2008 and the domestic industry's share of apparent consumption increased from 37.81% to 42.2% in 2006-2008.252

According to the United States, MOFCOM's reliance on capacity utilization rates without considering that total capacity (the denominator in the rates being compared) was actually expanding in this period was misplaced.

7.4.3.3.1.1 MOFCOM's comparison

7.136.
In discussing "capacity utilization" in the redetermination, MOFCOM sets out capacity utilization rates for each of 2006, 2007, 2008, and the first half of 2009. It notes minor increases in the first three years and a decline in the first half of 2009 of 9.78 percentage points compared with the first half of 2008.253 MOFCOM had also made the following findings in respect of production capacity, which establishes the denominator in the calculation of capacity utilization:

a. a continuous increase of domestic demand in broiler products, resulting in

b. expansion of capacity in each covered period254:

Table 2: Production capacity

2006200720082009 (H1)
Capacity (tons) 2,980,700 3,525,600 3,761,400 1,978,200
Increase (over previous corresponding period) 18.28% 6.69% 9.70%

Source: Redetermination, (Exhibit CHN-1 (translated version)), p. 65.

7.137.
In MOFCOM's discussion of the change in capacity utilization rates, there is no recognition that industry capacity – the denominator in the calculation of capacity utilization – was increasing throughout the POI. This is not just a question of "causation", as China argues.255 The US argument, as we understand it, is about the reliability of MOFCOM's comparison of capacity utilization rates over time in evaluating the impact of subject imports on the domestic industry: given the changing denominators, comparing raw percentages without some examination of the context would not enable an investigating authority to objectively evaluate capacity utilization as a factor in the examination of the impact of imports on the domestic industry, as required by Article 3.4.
7.138.
China argues that an investigating authority has discretion in its choice of analytical methodology in examining and evaluating data related to the state of the domestic market. We agree. However, that discretion is not unlimited: an investigating authority must use whatever methodology it chooses to objectively examine the evidence before it. If either the methodology it employs or the evidence on which it relies is not appropriate to the analytical task before it, an investigating authority is unlikely to be able to conduct the objective examination and evaluation that is required by the Anti-Dumping Agreement and the SCM Agreement. Thus, for instance, when examining trends or comparing data, an investigating authority may not rely upon conclusions based on flawed methodology in the evaluation of a relevant economic factor; otherwise, any "comparison" would say little about the impact of dumped or subsidized imports on the state of the domestic industry.
7.139.
A capacity utilization rate involves two figures: a numerator (the volume of production) and a denominator (the available production capacity of the domestic industry). Rates may be meaningfully compared for the domestic industry over a period of time where:

a. at least one factor is, or is kept, constant;

b. if both factors vary over time, at least one factor is controlled or adjusted for any changes; or

c. if both factors vary over time and are not controlled or adjusted for any changes, a reasonable explanation of the circumstances and any reliance on the comparison is provided.

We stress that there is nothing inherently wrong about comparing rates over time where both the numerator and the denominator change. Indeed, we do not understand the United States to be arguing that such a comparison is always faulty; the United States does not challenge the rate comparisons related to market share, profits or return on investment, even though in each case both factors were in a state of flux over the POI.

7.140.
Rather, the US argument is that, on the facts of this case, because the domestic industry capacity increased throughout the POI, a simple comparison of rates was unreliable for the purposes of evaluating the impact of subject imports on the domestic industry. We agree. In the absence of any effort by MOFCOM to either control or adjust for this change, or any explanation of the circumstances and why reliance on the comparison was nonetheless appropriate, we cannot conclude that MOFCOM's examination was such as would be expected of an objective investigating authority in this context. MOFCOM merely set out figures for "apparent consumption" and "production quantity", but did not put the capacity utilization rates in perspective. MOFCOM's response to the objections of the interested parties during the redetermination in fact highlights its failure to engage with the question:

[D]ata indicated that: when the domestic demand increased continuously, the production capacity utilization rate from 2006 to 2008 was lower than 80%, but … in the first half of 2009, the domestic demand further increased, but the production quantity of the like product of the domestic industry didn't increase correspondingly with the increase of production capacity, instead, it decreased by 4.37% compared to the same period of the previous year.256

MOFCOM did not address the problem of comparability of the rates in the light of continuous increases in production capacity. Given those increases, it is not clear what, if anything, the comparison of capacity utilization rates might explain in respect of the impact of imports. For instance, MOFCOM did not take into account in its evaluation:

a. whether capacity was increasing in response to, in tandem with, or ahead of domestic demand;

b. in what way any of these might affect the significance of any comparison of capacity utilization rates; or

c. how shifts in the industry from smaller producers outside the defined domestic industry257 to larger producers within it could explain or affect the reliability of the data before it.

7.141.
On the basis of the information and explanation set out in the redetermination, we find that MOFCOM did not provide a reasoned and adequate explanation of its examination of "capacity utilization" rates.

7.4.3.3.1.2 Capacity utilization and overall analysis

7.142.
The parties disagree about the importance of "capacity utilization rates" in MOFCOM's overall examination of the impact of subject imports. The United States argues that this was one of two negative factors on which MOFCOM impermissibly relied excessively. China responds that MOFCOM:

a. "reasonably focused on the adverse condition of the domestic industry at the end of its period of investigation, noting the sharp deterioration in numerous indicators of domestic industry health in the first half of 2009"258; and

b. "made a simple point about capacity utilization in its Redetermination – it was persistently low over the period of investigation".259

7.143.
China argues that "although the authority must address each factor, the authority need not show that each individual factor by itself has been linked to subject imports".260 We agree.261 Under Articles 3.4 and 15.4, the necessary corollary to this observation is that an investigating authority in examining the impact of subject imports must evaluate "all relevant economic factors" not in isolation from, but rather in relation to, one another. Capacity utilization is not just "a simple point"; it is one of the factors required to be evaluated under Article 3.4. A capacity utilization comparison that is not reasonable affects not just this one factor, but the entire examination of the impact of subject imports. This is apparent from China's own arguments:

But regardless of the increase in domestic capacity, the rate of capacity utilization would have been higher than it was, but for the presence of increasing volumes of subject imports.262

Where capacity increases outstrip increases in market demand, even a constant or declining volume of subject imports could result in a decline in capacity utilization without any decline in domestic production. We recall that MOFCOM found that: "When capacity utilization rate is at a relatively high level, the production of more chicken breast means increase of production quantity of more other broiler products."263 Combined with China's argument about cross-price elasticity of all broiler product models264, this would suggest that an expansion of production capacity in China would result in greater production of other broiler product models than wings and feet, with consequent impact on the prices of all product models. This is why an integrated examination of all of the factors evaluated is necessary in the examination of the impact of subject imports, and thus why a flawed capacity utilization comparison results in a flawed examination under Articles 3.4 and 15.4.

7.144.
In this light, it is not necessary for us to determine whether MOFCOM's capacity utilization rate evaluation was "central" to its overall findings, as the United States argues, or a "simple point", as China contends. Because MOFCOM's evaluation of "capacity utilization rates" was flawed, its overall examination of all relevant economic factors was inconsistent with Articles 3.4 of the Anti-Dumping Agreement and 15.4 of the SCM Agreement.

7.4.3.3.2 Inventories

7.145.
The United States does not dispute that inventories rose in both absolute and relative terms. Rather, according to the United States:

a. "MOFCOM focused on the purported increase in end-of-period inventories", while the observed relative increases were not significant265; and

b. MOFCOM relied exclusively266 (or primarily267) on such flawed analysis.

We have two observations in respect of these arguments.

7.146.
First, under Articles 3.4 and 15.4, an investigating authority is required to evaluate "all economic factors" including "actual and potential negative effects on … inventories".268 The United States does not argue that MOFCOM did not do so; nor does it argue that inventories did not increase.269 Rather, it argues that the observed negative effects were not "significant". The word "significant" does not appear in the text of the provisions, and the United States has not directed us to any authority that would require us to read a requirement to consider the significance of negative effects on inventories into Articles 3.4 and 15.4. Even if the "significance" of that increase were a required consideration in this context, the United States has not put forward any argument or explanation to demonstrate that the 2.9% or 3.5% increases are not "significant" in terms of the effect of imports on inventories in the specific context of the Chinese broiler market.
7.147.
And even if we agree that the observed inventory increases were not "significant" by whatever measure, the United States has not explained how this observation undermines MOFCOM's examination of the impact of subject imports in the context of its evaluation of all relevant economic factors. We recall that even positive trends may indicate negative effects; in itself, an inventory increase that is not "significant" does not establish that the increase has no negative effects.
7.148.
Second, nothing in the redetermination suggests that its evaluation of inventories was the sole or the primary focus of MOFCOM's examination of the impact of subject imports. After setting out the fifteen factors, MOFCOM set out the various factors it had considered, of which the "ending inventories" factor was one:

However, the capacity utilization of the like product of the domestic industry during the same period always remain [sic] at a relatively low level, the ending inventories presented an increasing trend. Because the selling price of the like product of the domestic industry remained below the sales cost for the long period of time, it resulted in that the like product of the domestic industry could not obtain reasonable profit margins, and the pre-tax profits of the like product of the domestic industry remained negative. … During the investigation period, the operational cash net flow of the like product experienced relatively significant fluctuations, which also influenced investment and financing activities of the domestic industry.270

The United States has not explained in what way this paragraph represents undue reliance on this one factor.

7.149.
In the light of the above, we find that the United States has not established that MOFCOM's evaluation of inventories was inconsistent with Articles 3.4 of the Anti‑Dumping Agreement and 15.4 of the SCM Agreement.

7.4.3.3.3 Focus on part of the POI

7.150.
The United States argues that:

[B]y China's own admission, MOFCOM's impact analysis focused on the first half of 2009, when the domestic industry's performance lagged, while failing to account for the impact of subject imports on the domestic industry between 2006 and 2008, when the domestic industry's performance strengthened.271

The United States does not contest that industry performance "lagged" in the last half-year of the POI. As well, the United States does not contest MOFCOM's findings that some factors evaluated showed negative effects throughout the POI.272 Rather, it asserts that "the domestic industry's performance strengthened" in 2006-2008, that MOFCOM did not adequately "focus" on this period and that MOFCOM focused its examination of impact "on the financial indicators that were consistently weak throughout the period of investigation", to the exclusion of other contradictory factors.273

7.151.
In its redetermination, MOFCOM examined the information regarding each relevant factor and described both positive and negative developments, where relevant, in absolute and relative terms, for the entire period:

The above evidence indicates that, during the investigation period, in order to meet the increasing demand of the domestic market, from 2006 to 2008, the production capacity, production quantity and sales volume of the like product of the domestic industry all increased, and the indicators including market share, employment, per capita wages and labor productivity also increased in different degrees. However, the capacity utilization of the like product of the domestic industry during the same period always remain [sic] at a relatively low level, the ending inventories presented an increasing trend. Because the selling price of the like product of the domestic industry remained below the sales cost for the long period of time, it resulted in that the like product of the domestic industry could not obtain reasonable profit margins, and the pre-tax profits of the like product of the domestic industry remained negative. … In the first half of 2009, all the economic indexes of domestic industry continued to deteriorate.274

7.152.
Even if we were to agree with the US assertion that MOFCOM "focused" on the first half of 2009, this does not, in itself, establish that MOFCOM acted inconsistently with Articles 3.4 and 15.4. In this respect, we make three observations.
7.153.
First, nothing in Articles 3.1, 3.4, 15.1, or 15.4 prevents an investigating authority from "focusing" on a part of the POI, as long as it does not ignore relevant data and arguments, and its resulting determination is one that an objective and unbiased investigating authority could reach based on the evidence and arguments before it and the explanations given. The United States has not demonstrated that MOFCOM's "focus" was unreasonable or resulted in any lack of objectivity; the fact that there were or might have been different trends in the preceding time-frame (which MOFCOM did discuss) does not, without more, suggest lack of objectivity in focussing on the most recent information.
7.154.
Second, the fact that industry performance might have "strengthened" in the 2006-2008 period does not, in itself, bring into question MOFCOM's determination based on its focus on 2009. Even positive trends in earlier parts of the POI may serve as evidence of negative effects275; here, domestic industry performance "strengthened" in some areas, though not others, and to the extent there were positive trends, it was in the context of an expanding market.276 At the same time, as MOFCOM noted, in the first half of 2009, "the losses were close to that of the whole year of 2008".277 The fact that it focused on the most recent data showing major losses does not, in itself, demonstrate that MOFCOM's examination was not objective or unreasonable.
7.155.
Third, it is not unreasonable or not objective for an investigating authority to examine the cumulative impact of imports on a domestic industry, but focus its attention on the end of the period examined, when dumping and/or subsidization of imports has been found.
7.156.
We find therefore that the United States has not established that MOFCOM's "focus" on the last part of the POI resulted in an examination of the impact of subject imports on the domestic industry inconsistent with the requirements of Articles 3.4 of the Anti-Dumping Agreement and 15.4 of the SCM Agreement.

7.4.3.3.4 "Potential" negative effect and future imports

7.157.
MOFCOM had found that US exporters "may expand exports to China and will cause further adverse impact on the domestic industry".278 In its first written submission China argued that the United States "improperly disregards MOFCOM's discussion of the continuing trend of U.S. exports".279 The United States replied that "future subject imports could have no impact whatsoever on the domestic industry during the period of investigation".280
7.158.
According to China, "the text of Articles 3.4 and 15.4 contemplate [sic] evaluation of both current adverse trends but also future declines".281 It argues that the phrase "all relevant economic factors" in Article 3.4 is "a phrase that itself can include both present and future trends"282, and "[t]o avoid any ambiguity, the text goes on to specify that these economic factors include the 'actual and potential decline' in a number of specifically enumerated factors".283 In particular, China relies on the findings of the panel in EC – Fasteners (China) to the effect that:

a. "potential" means "possible as opp{osed} to actual; capable of coming into being or action; latent"; and

b. "a decline need not have occurred during the period under consideration in order for an investigation authority to find injury".284

7.159.
We recall that in EC – Fasteners (China) the facts showed not "potential" decline but rather relative decline.285 The panel's exploration of the meaning of "potential" was, in this light, not essential to its findings; for that reason, we do not consider that the discussion is necessarily relevant to or persuasive for our consideration of this issue. More to the point in the context of this case is that MOFCOM's redetermination does not, in fact, appear to address "potential decline" in the sense that term is use in Articles 3.4 and 15.4.
7.160.
Articles 3.4 and 15.4 are concerned with the impact of imports during a recent past period on the present state of the domestic industry, and not the impact of future imports on the future state of the industry. The latter is specifically addressed in Articles 3.7 and 15.7, which establish additional criteria for consideration in the context of determining "threat of material injury". A "potential decline" in the sense of Articles 3.4 and 15.4 could not, in our view, be found to support the view that material injury is "possible" as a result of future imports, or that future imports could cause injury in the future. Rather, "potential decline" as a relevant factor in the examination of the impact of subject imports on the present state of the domestic industry would have to be a consequence of the dumped or subsidized imports during the period examined. "Potential decline" exists where, despite the absence of an actual decline (in either absolute or relative terms) during the period examined, imports during the period examined have an impact on the domestic industry such that there is a latent or potential decline with respect to a particular factor which has not yet become manifest.
7.161.
As part of its examination of the impact of subject imports, MOFCOM apparently considered the prospective impact of future imports on the state of the industry as a relevant factor. This is not an appropriate consideration in the context of an examination of the impact of dumped and subsidized imports on the domestic industry as part of a determination of present material injury caused by those imports. In our view, MOFCOM's understanding of the relevance of future imports in the context of evaluation of a "potential decline" was not consistent with a proper reading of Articles 3.4 and 15.4. In itself, this might suggest that the "potential decline" portions of MOFCOM's analysis are irrelevant, and nothing in the Agreements prohibits an investigating authority from examining or evaluating irrelevant factors if this does not otherwise have an impact on the investigating authority's overall examination and ultimate determination. In this case, however, China itself argues that MOFCOM relied on this irrelevant factor. In this context, we cannot conclude that MOFCOM's examination of the impact of subject imports was consistent with Article 3.4 of the Anti-Dumping Agreement and Article 15.4 of the SCM Agreement, as we cannot know what MOFCOM's conclusion would have been had it not relied on this irrelevant factor.
7.162.
In the light of the foregoing, we find that:

a. the requirement to consider "potential decline" under Articles 3.4 and 15.4 relates to the impact of current imports on the domestic industry such that even absent actual declines, the potential for such declines to materialise may be relevant to the examination of the present impact of subject imports; and

b. MOFCOM's overall examination and evaluation of all relevant economic factors was affected by its examination of and reliance on an irrelevant factor – the impact of likely future imports – such that its examination of the impact of subject imports on the domestic industry is not consistent with Articles 3.4 and 15.4.

7.4.4 Conclusion

7.163.
We find that China acted inconsistently with the requirements of Articles 3.4 of the Anti‑Dumping Agreement and 15.4 of the SCM Agreement because:

a. MOFCOM's evaluation of "capacity utilization rates" was faulty; and

b. MOFCOM relied on an irrelevant economic factor when it examined the impact of likely future imports on "potential decline" in the domestic industry.

7.164.
As a consequence, we find that China acted inconsistently with Articles 3.1 of the Anti‑Dumping Agreement and 15.1 of the SCM Agreement.
7.165.
We further find that the United States has not established that China acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement, and Articles 15.1 and 15.4 of the SCM Agreement because of MOFCOM's:

a. evaluation of inventories; or

b. "focus" on the last part of the POI.

7.5 Article 3.5 of the Anti-Dumping Agreement and Article 15.5 of the SCM Agreement: causation

7.5.1 Introduction

7.166.
In our original report we found MOFCOM's price undercutting and price suppression analysis inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement.286 In the light of the relationship between the considerations set out in Article 3.2 of the Anti-Dumping Agreement and Article 15.2287 of the SCM Agreement and the demonstration of causation required by Article 3.5 of the Anti‑Dumping Agreement and Article 15.5 of the SCM Agreement288, we were not in a position to determine whether MOFCOM properly demonstrated the existence of a causal link between the subject imports and injury to the domestic industry. We observed that because China's implementation of the Panel's findings in the original report concerning MOFCOM's consideration of price effects would necessarily require that it reconsider its findings of causation289 we did not consider it necessary for the resolution of the dispute to make additional findings under Articles 3.5 and 15.5.
7.167.
In this implementation proceeding, we have again found that MOFCOM's price effects analysis was not consistent with Articles 3.2 and 15.2. We have further found that MOFCOM's examination of the state of the industry was not consistent with Articles 3.4 and 15.4. Solely based on these two findings, we cannot conclude that MOFCOM properly demonstrated the existence of a causal link between the subject imports and any injury to the domestic industry.
7.168.
Having said that, we recognize that the Panel might well help the parties "secure a positive resolution of the current dispute" if it were to "to make findings with respect to the claims of the United States that are within the terms of reference for this compliance proceeding".290 Therefore, in order to enable the parties to secure a positive resolution of the dispute, whether through implementation of DSB recommendations and rulings in this dispute or otherwise, we will consider the parties' arguments and make findings on the US claims under Article 3.5 of the Anti‑Dumping Agreement and Article 15.5 of the SCM Agreement.

7.5.2 Main arguments of the parties

7.5.2.1 United States

7.169.
The US claims of violation of Articles 3.5 and 15.5 rest on four arguments.
7.170.
First, MOFCOM's demonstration of causation relied on its consideration of price effects, but MOFCOM's consideration of price underselling and price suppression are WTO-inconsistent, and there is also no evidence of price depression.
7.171.
Second, MOFCOM ignored record evidence that subject import volumes did not increase at the expense of the domestic industry:

a. the domestic industry gained market share at the same time as subject imports gained market share291; and

b. MOFCOM did not examine or explain why such evidence did not undermine its finding of causation, rather MOFCOM insisted that Chinese law allowed it to consider either the absolute volume increase or relative volume increase, but did not oblige it to consider both.292

7.172.
Third, MOFCOM failed to reconcile its analysis with evidence that the domestic industry's performance had improved as subject import volume and market share increased:

a. almost all indicators (market share, capacity, output, sales quantity, sales revenue, employment, decrease in loss) show an improvement in the domestic industry's performance between 2006 and 2008, the period during which subject import volume increased by 47%.293 Many performance indicators also show an improvement if the 2006 figures are compared to those for the first half of 2009294;

b. MOFCOM predicated its demonstration of causation entirely on developments in the first half of 2009, whereas it was required to examine the causal relationship in relation to the entire POI, not just for a selected period295; and

c. the domestic industry's lagging performance in the first half of 2009 could not have been the result of subject imports when the bulk of the increase in subject import volume – 90% of the total increase – coincided with strengthening domestic industry performance during the 2006-2008 period.296

7.173.
Fourth, MOFCOM ignored evidence that the substantial proportion of subject imports consisting of chicken feet could not have been injurious because domestic producers were incapable of producing more chicken feet without increasing production of other chicken products to uneconomic levels. Over 40% of subject imports consisted of chicken feet, which Chinese producers were incapable of supplying in adequate quantities.297

7.5.2.2 China

7.174.
MOFCOM did a proper causation analysis. It was only required to demonstrate that subject imports contributed in some meaningful way to the injury.298 MOFCOM based its determination of the existence of a causal link on a number of key factors, such as the increase in subject import volume and market share, consistent underselling, price suppression, and the domestic industry's inability to use available capacity.299 In particular:

a. MOFCOM did not ignore evidence about the domestic industry's market share.300 Rather, MOFCOM:

i. acknowledged and discussed the increase in market share of domestic firms; and

ii. focused on the increase in absolute volume, the drop in market share in the first half of 2009, and low prices/price suppression, which are sufficient to establish a causal link regardless of market share trends.

b. MOFCOM did not rely on a flawed analysis of price effects301, and its conclusions on import volume and price suppression stand and sufficiently support MOFCOM's causation analysis regardless of the Panel's findings on price undercutting.

c. MOFCOM did not fail to reconcile its analysis of subject import volume and market share with its analysis of causation and the condition of the domestic industry302:

i. the United States wrongly focuses on the period 2006-2008. MOFCOM drew a causal link between the increase of subject imports and the declining conditions particularly in the first half of 2009; and

ii. the United States selectively relies on volume indicators and downplays in particular the sharply weaker financial performance, which MOFCOM relied upon. The US argument that the operating loss narrowed between 2006 and 2008 ignores the growth of the operating loss in absolute terms (on which MOFCOM relied), the cumulative effect of continuing losses, and the increase in operative losses when taken as a percentage of sales.

7.5.3 Evaluation

7.5.3.1 The law

7.175.
Article 3.5 of the Anti-Dumping Agreement provides:

It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this Agreement. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry.303

7.176.
Articles 3.5 and 15.5 thus requires that an investigating authority, on the basis of an objective examination of positive evidence304:

a. demonstrate that subject imports are causing injury to the domestic industry; and

b. ensure that injury caused by other known factors is not attributed to the subject imports.

In making its determination, the investigating authority must demonstrate a relationship of cause and effect, such that subject imports are shown to have contributed to the injury to the domestic industry. Subject imports need not be "the" cause of the injury suffered by the domestic industry, provided they are "a" cause of such injury; that other factors may also have caused injury to the domestic industry is no bar to establishing this causal relationship.305

7.177.
With respect to non-attribution, Articles 3.5 and 15.5 require an investigating authority to:

a. examine other known factors that are causing injury to the domestic industry at the same time as subject imports; and

b. not attribute to subject imports injury caused by such other factors.

Articles 3.5 and 15.5 also set out an illustrative list. For these obligations to be triggered, however, Articles 3.5 and 15.5 require that the factor at issue be306:

a. "known" to the investigating authority;

b. a factor "other than dumped imports"; and

c. injuring the domestic industry at the same time as the dumped imports.

The investigating authority must make an assessment of such other factors that involves "separating and distinguishing the injurious effects of the other factors from the injurious effects of the dumped [or subsidized] imports".307 Neither Agreement, however, sets out specific guidance on how an investigating authority should undertake this assessment or ensure that injuries caused by other factors are not attributed to the subject imports.

7.5.3.2 MOFCOM's redetermination

7.178.
At issue before us is whether MOFCOM fulfilled the requirements of Articles 3.1, 3.5, 15.1, and 15.5 in demonstrating causation, and examining and ensuring non-attribution of injury. Because MOFCOM did not change its consideration of price effects, it relied on the same consideration in determining causation and non-attribution in the redetermination as in the Final Anti-Dumping and Countervailing Duties Determinations in the original dispute. In this section we summarize MOFCOM's findings in the redetermination to provide factual context for our evaluation of the US claims.

7.5.3.2.1 Causation

7.179.
MOFCOM found that throughout the POI, both the volume and the market share of subject imports "increased continuously"308 against a background of a "significant effect on the selling prices of the like product of the domestic industry" of those imports.309 At the same time, MOFCOM found that the domestic industry:

[C]ould not further reduce its losses or turn losses into profits, and both the pre-tax profit rate and the rate of return on investment were in an extremely low level [sic]. In addition, the operational net cash flow fluctuated significantly which also affected investment and financing activities of the domestic industry.310

7.180.
MOFCOM noted that even as "the demand of the domestic market increased continuously" in the course of the POI, the domestic industry's capacity utilization rate declined, most sharply between the first half of 2008 (79.96%) and the first half of 2009 (66%).311 It found a causal link between the "large quantity" of dumped and subsidized imports originating in the United States and material injury to the domestic broiler product industry.312
7.181.
US interested parties313 had argued that "the absolute quantity of the product concerned did not increase greatly, and the increased quantity just complemented the lost market share of other foreign producers in [sic] Chinese market".314 MOFCOM observed that China's anti-dumping law does not require an examination of both absolute and relative trends. As well, while the domestic like product gained market share in the first part of the POI, MOFCOM found that:

[B]ecause the import volume of the product concerned increased substantially and the import price remained at a relatively low level, resulted in significantly undercutting and suppression to the domestic like product; and the domestic like product, while to stabilize the market share, was forced to be sold at a price lower than the production cost [sic].315

7.182.
US interested parties had also argued that during the POI, "several economic indicators (production quantity, sales volume and sales revenue) presented a virtuously [sic] increasing trend".316 MOFCOM found that because:

[T]he domestic industry implemented some newly constructed projects and expansion projects, it was normal that the production capacity, production quantity, sales volume and market share of the like product presented an increase to certain extent [sic] in general, but this did not mean that the domestic industry did not suffer from injury. These indicators were not decisive for determining the injury of the domestic industry in its development period, and could not change the fact that the effective use of the production capacity and the inventory of the domestic industry increased continuously during the investigation period; neither could it change the worsening financial situations of the domestic industry.317

7.5.3.2.2 Non-attribution

7.183.
MOFCOM found that during the POI, the dumped imports increased even as "the quantity of imports from other countries and regions dropped in general"318, while "apparent consumption of the broiler products in China increased".319 Accordingly, MOFCOM concluded, "the material injury currently suffered by the domestic industry was not caused by the change of demand or change of consumption modes of the like product of the domestic industry".320 MOFCOM examined the technological competitiveness of the industry and noted that, "the industry has developed into a highly industrialized industry among domestic animal husbandry industries, with relatively complete industrial system and relatively smooth-running production chain".321 For this reason, "[t]here was no negative impact on the domestic industry caused by backward production process and technology and mismanagement".322 There were, MOFCOM observed, "no policies of limiting trade activities of the like product of the domestic industry".323 Exports of domestic products "were not significant enough to influence the trend and conclusions of the relevant indicators of the like product of the domestic industry".324 There was no force majeure and the financial crisis had no substantive impact on the domestic market.325
7.184.
US interested parties had argued that an increase in grain prices would affect the profitability of the broiler industry. MOFCOM noted the increased costs, but pointed out that:

[B]ecause the import price of the product concerned was always lower than the average selling price of the like product of the domestic industry, it undercut the price of the like product significantly, resulted in the suppression on the selling price of the domestic like product, and could not pass through the cost caused by price increase of raw materials downward, and the due price increase of the like product which should have occurred hadn't been realized.326

7.185.
US interested parties had further contended that "the change of pork price was the main reason that the price of chicken decreased during the investigation period".327 MOFCOM concluded that the evidence did not show a link between chicken and pork prices, observing that "the chicken price was not affected directly by the pork price, and was mainly decided by the supply and demand in the chicken market".328 MOFCOM stressed that:

[T]he demand of the domestic market increased continuously during the investigation period, but the good market environment didn't bring the due profit margin to the domestic industry. On the contrary, the impact of the low-priced import of the product concerned in a large quantity on the domestic industry was significant.329

7.5.3.3 Analysis

7.186.
We recall our findings that MOFCOM's consideration of price effects was not consistent with Articles 3.2 and 15.2. The United States argues that on that basis alone, MOFCOM's causation and non‑attribution analyses and determination are not consistent with Articles 3.1, 3.5, 15.1, and 15.5. Price effects were one among a number of factors MOFCOM took into account in its causation determination; as we observed in the original report, because its price effects consideration was inconsistent with the relevant provisions, we cannot conclude that MOFCOM properly demonstrated the existence of a causal link between the subject imports and any injury to the domestic industry. The United States raises three other arguments in this proceeding; we address these below.

7.5.3.3.1 Subject import volumes did not increase at the expense of the domestic industry

7.187.
The United States argues that "MOFCOM ignored evidence that subject import volume did not increase at the expense of the domestic industry"330 because it did not consider evidence that:

a. the domestic industry gained market share at the same time as subject imports;

b. "the domestic industry gained more market share between 2006 and the first half of 2009, 4.38 percentage points, than the 3.92 percentage points gained by subject imports over the same period"331;

c. "any increases in U.S. imports simply filled the gap left by Brazil and Argentina when they effectively exited the China [sic] market"332; and

d. "40 percent of subject imports consisted of chicken paws that could not have injured the domestic industry, which was incapable of increasing its production of chicken paws".333

7.188.
In response to the arguments of US interested parties, MOFCOM found:

As to the above claims, the investigating authority considered that, from 2006 to 2008, although the domestic market had a continuously high demand in broiler products, the domestic like product also obtained some market shares. However, that did not imply that the domestic industry did not suffer from injury. On the contrary, because the import volume of the product concerned increased substantially and the import price remained at a relatively low level, resulted in significantly undercutting and suppression to the domestic like product; and the domestic like product, while to stabilize the market share, was forced to be sold at a price lower than the production cost. [sic]

When the market demand increased continuously, affected by the further increase of import volume of the product concerned and the continuous decline of price of the product concerned, the production quantity, sales volume, capacity utilization rate and market share of the like product of the domestic market all presented a trend of decrease or reduction of different degrees.334

7.189.
Articles 3.5 and 15.5 require an examination of "all relevant evidence" to establish a "causal relationship" between subject imports and material injury to the domestic industry. Neither Article provides specific guidance as to how individual pieces of evidence – such as the volume of subject imports – should be taken into consideration in demonstrating causation.335 At a minimum, however, where an interested party makes an argument before the investigating authority as to the impact of a given volume of imports or change in the volume of imports relative to domestic production or other imports, an objective and unbiased investigating authority may not simply ignore the argument on the basis that it has considered the absolute volume of subject imports. There is no disagreement between the parties that such evidence was, indeed, put before MOFCOM; the United States argues that MOFCOM "ignored evidence that subject import volume did not increase at the expense of the domestic industry".
7.190.
We have examined MOFCOM's findings in the light of the US argument. We note that MOFCOM started its analysis by referring directly to the argument of the US interested parties:

The U.S. Poultry and Egg Export Council claimed in Comments after the Preliminary Determination that, from 2006 to 2008, the increase of the absolute import volume of the product concerned was to complement sales on the domestic market in China, and the sale volume of the domestic producers in China also increased in the corresponding period, so the import volume of the product concerned had a small effect on the domestic industry. In the first half of 2009, the increase of the import volume of the product concerned was caused by "the seasonal characteristics".336

Immediately following this paragraph, MOFCOM found that "because the import volume of the product concerned increased substantially and the import price remained at a relatively low level, resulted in significantly undercutting and suppression to the domestic like product".337 And later, MOFCOM noted: "When the market demand increased continuously, affected by the further increase of import volume of the product concerned and the continuous decline of price of the product concerned …".338 Given that MOFCOM expressly acknowledged the argument and responded to it, we cannot find that MOFCOM "ignored" the evidence before it, as the United States argues. Accordingly, we find that the United States has not established that China acted inconsistently with Articles 3.5 and 15.5 on the ground that MOFCOM ignored evidence of import volumes in relation to market share.

7.5.3.3.2 MOFCOM failed to reconcile its analysis with evidence of improved performance

7.191.
This argument of the United States has four supporting parts; we address each in turn.
7.192.
First, the United States argues that MOFCOM "failed to address" evidence that "the increase in subject import volume coincided with a significant improvement in the domestic industry's performance".339 We note, however, that the period in which the United States identifies certain "improvements" is not the entirety of the POI. MOFCOM did look at various trends in the POI, noted absolute and relative movements up and down, and drew certain conclusions. It did not "address" the data in the way the United States has done, but the United States has simply reorganized data that MOFCOM did address, and appears to be arguing that MOFCOM's analysis is deficient because it did not address the data organized in the same way. This does not, however, suffice to demonstrate that what MOFCOM did was insufficient or inconsistent with its obligations – merely that a different way of addressing the evidence might lead to a different outcome does not demonstrate error where, as here, there is no necessary reason why the different way should be preferred.
7.193.
Second, the United States notes "the lack of any positive evidence linking the increase in subject import volume during the 2006-2008 period to any significant decline in the domestic industry's performance".340 MOFCOM, however, is not required to find an actual decline in the performance of the domestic industry in order to find injury caused by dumped and subsidized imports.341
7.194.
Third, the United States argues that performance indicators show an improvement if 2006 figures are compared to those for the first half of 2009. Again, we see no basis on which to conclude that MOFCOM was required to rely on such a comparison in its analysis.342 Indeed, in some instances, such a comparison, without due consideration of intervening trends in the data considered, might well be misleading. The fact that certain performance indicators show improvement when data from 2006 are compared to data from 2009 says nothing about developments in the intervening period during which it is uncontested that the Chinese market expanded – for instance, whether any improvement tracked or lagged market expansion would seem to be a relevant consideration.
7.195.
Fourth, the United States argues that MOFCOM predicated its causal link determination entirely on developments in the first half of 2009. However, it is clear that MOFCOM examined year-on-year trends in the first three years of the POI, and period-on-period movements for the last six months. More to the point, we see no basis to conclude that MOFCOM was precluded from focusing on the last part of the POI, for at least three reasons:

a. Performance indicators were moving in different directions throughout the first three years of the POI; most indicators, however, trended downward in the first half of 2009. MOFCOM was entitled to look at the information before it and assess the cumulative impact of years of dumped imports on the domestic industry during the most recent period.

b. Information regarding the most recent period is generally most relevant for an analysis of present material injury.

c. An investigating authority is entitled to consider the possibility of a time-lag between dumped and subsidized imports and injury to the domestic industry through their effects.

7.196.
In the light of the foregoing, we find that the United States has not established that China acted inconsistently with Articles 3.5 of the Anti-Dumping Agreement and 15.5 of the SCM Agreement because MOFCOM "failed to reconcile its analysis with evidence of improved performance" in the domestic industry.

7.5.3.3.3 Constraints on domestic production of chicken feet

7.197.
The United States argues that domestic producers were incapable of producing more chicken feet without increasing production of other chicken product models to uneconomic levels. The United States does not question the fact, as found by MOFCOM, that the Chinese market was expanding, or that dumped and subsidized imports from the United States were increasing. China responds in two ways. First, it asserts that the domestic industry could "meet some of that demand with the excess capacity. In particular, since the domestic industry consistently had excess capacity of about 20 percent, the domestic industry could have provided 20 percent more chicken paws."343 China does not, however, identify where in the redetermination MOFCOM made this finding. Second:

MOFCOM was correct when it found that subject imports of chicken paws were adversely affecting the entire domestic industry producing the like product. The impact was felt on both domestic production of chicken paws, but also domestic production of other chicken parts.344

7.198.
We recall our findings, under Article 12.2 of the Anti-Dumping Agreement and Article 22.2 of the SCM Agreement, in the original report in respect of the same US argument: "MOFCOM acknowledged the argument in its Preliminary Determinations and indicated that it considered that all chicken parts competed and were substitutable with one another".345 We concluded that:

MOFCOM could in our view have satisfied its obligations under Articles 12.2 and 12.2.2, and Articles 22.3 and 22.5 through a simple reference to its treatment of the issue in the Preliminary Determination.

7.199.
In the redetermination, MOFCOM noted that "[t]he Investigating Authority has analyzed and made determination [sic] in the preliminary determination of the original investigation".346 Indeed, in the preliminary determination, MOFCOM had found that:

The Investigating Authority holds that as there are some differences between the Subject Products and the like products in terms of specific feature, usage and quality, they may have their respective types or specifications, and the relationship between them does not necessarily constitute a one-to-one correspondence. However, such differences do not prevent the Investigating Authority from deeming products of different types or specifications as the same category of product for the purpose of investigation. In this case, chicken feet are included in scope of the Subject Products, therefore, the Investigating Authority has carried out investigation on import of all Subject Products including chicken feet, and has analyzed and examined injuries brought to the domestic industry by the Subject Products [sic].347

7.200.
We find that the United States has not established that China acted inconsistently with Articles 3.5 of the Anti-Dumping Agreement and 15.5 of the SCM Agreement on the ground that MOFCOM failed to adequately consider alleged market constraints on greater domestic production of chicken feet.

7.5.4 Conclusion

7.201.
We have found that MOFCOM's consideration of price effects was inconsistent with Articles 3.2 and 15.2. MOFCOM took into account price effects as one element of its determination of causation. We further find that China acted inconsistently with Articles 3.5 and 15.5 by relying, in MOFCOM's demonstration of a causal link between the subject imports and injury to the domestic industry, on a defective consideration of price effects.
7.202.
As a consequence, we find China to have acted inconsistently with Articles 3.1 of the Anti‑Dumping Agreement and 15.1 of the SCM Agreement.
7.203.
We find, however, that the United States has not established that China acted inconsistently with Articles 3.5 of the Anti-Dumping Agreement and 15.5 of the SCM Agreement because MOFCOM:

a. did not consider the volume of dumped imports in both relative and absolute terms;

b. "failed to reconcile its analysis with evidence of improved performance" in the domestic industry; and

c. failed to adequately consider alleged market constraints on greater domestic production of chicken feet.

7.6 Article 6.1 of the Anti-Dumping Agreement and Article 12.1 of the SCM Agreement: notice and ample opportunity to present written evidence

7.6.1 Introduction

7.204.
In our original report, we found MOFCOM's consideration of price undercutting and price suppression inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement.348 During the reinvestigation, MOFCOM sought and collected new pricing data from four selected domestic Chinese producers and used these data for the purposes of its consideration of price effects in the redetermination.
7.205.
This claim concerns MOFCOM's procedural obligations under Article 6.1 of the Anti‑Dumping Agreement and Article 12.1 of the SCM Agreement349 in respect of the interested parties from the United States in the context of the request for pricing information from the Chinese producers.

7.6.2 Main arguments of the parties

7.6.2.1 United States

7.206.
China acted inconsistently with Articles 6.1 and 12.1 because MOFCOM did not give notice to the investigated US producers and the US Government (US interested parties) of the information it required, the pricing data, from the Chinese producers during the reinvestigation.350
7.207.
The notice requirements in Articles 6.1 and 12.1 are not limited to the interested party to which a request for information is directed.351 In this instance, the provisions entitle "all interested parties", including the US interested parties, to notice of the information required from the Chinese producers (as well as ample opportunity to present written evidence).
7.208.
The notice requirements relate to making all interested parties aware of the specific information that the investigating authority requires, including the specific questions and requests issued.352 Also, the notice has to come in advance, such that interested parties are afforded the opportunity to defend their interests. These requirements were not met in this case.
7.209.
China argues that read together, three documents in the reinvestigation record constitute the "notice" required by Articles 6.1 and 12.1: the Notice of Initiation, the General Verification Letter, and non-confidential summaries provided by the Chinese producers. Yet MOFCOM did not identify the information it required of Chinese producers in any of these documents.353 They lacked the requisite content, in particular because they did not set out MOFCOM's questions or requests or in any other way identify the relevant information. Nor did they give notice to the US interested parties, in particular to the extent that they were merely made available in MOFCOM's trade remedy public information room without informing the US interested parties.354
7.210.
Without notice of the information required from Chinese producers, the US interested parties were also necessarily denied ample opportunity to present written evidence pursuant to the second requirement in Articles 6.1 and 12.1.355 None of the documents cited by China afforded such an opportunity.356 Without knowledge of the required information, there could be no basis for ample opportunity to present relevant evidence.357 Interested parties cannot address through relevant evidence what they do not know.358

7.6.2.2 China

7.211.
Articles 6.1 and 12.1 do not apply to the US interested parties in respect of information required of Chinese producers. Rather, these provisions "should be read more directly in relation to those interested parties that are the target of information requests".359 The obligations to give notice and to provide ample opportunity therefore only concern those interested parties that are the target of an information request.360 This position is consistent with the arguments of the European Union.361 Article 6.4 of the Anti-Dumping Agreement and Article 12.3 of the SCM Agreement would protect other interested parties, such as the US interested parties.
7.212.
Even if applicable to interested parties not subject to an information request, the requirement to give "notice" has a flexible meaning and can be met by different means depending on the situation of the interested party.362 Articles 6.1 and Article 12.1 require:

a. giving advance and "active notification" in respect of the party from whom information is required363; and

b. access to the required information, in respect of all other interested parties, for example by placing the information provided in response to the information request in a public reading room.364

7.213.
MOFCOM complied with its obligations under Articles 6.1 and 12.1 as they apply in respect of US interested parties who were not the target of an information request. MOFCOM was not required to provide to US interested parties the precise questions MOFCOM put to the Chinese producers.365 MOFCOM provided appropriate notice in respect of newly solicited information and its nature and scope, by way of366:

a. the Notice of Initiation No. 88 (Notice of Initiation) of 25 December 2013.367 The Notice of Initiation indicated that evidence would be re-examined. It referred to the scope of the Panel's finding in its original report, instead of providing interested parties with a listing of the specific information to be requested from the Chinese producers;

b. the General Verification Letter of 19 February 2014 addressed to Chinese producers and released in MOFCOM's trade remedy public information room, announcing on-the-spot "verifications"368; and

c. the non-confidential summaries of the sales data provided by the four Chinese producers made available on 20 May 2014 in MOFCOM's trade remedy public information room.369

7.214.
A violation of the notice requirement does not necessarily result in a violation of the obligation to give ample opportunity to present written evidence.370 In this instance, MOFCOM complied with its obligation to provide US interested parties ample opportunity to present written evidence because:

a. it gave adequate notice to the US interested parties; and

b. throughout the reinvestigation, US interested parties were free to present evidence, and in fact they did so.371

7.6.3 Main arguments of the third parties

7.215.
The European Union argues that to avoid overburdening investigating authorities, Articles 6.1 and 12.1 should be interpreted narrowly. In particular the notice requirement should only concern information requests to those parties that are supposed to hold the relevant information but not to all other interested parties in an investigation.372 Likewise, the "ample opportunity" should not relate to opportunities to present written evidence on information provided by other interested parties.373

7.6.4 Evaluation

7.6.4.1 The law

7.216.
Article 6.1 of the Anti-Dumping Agreement provides:

All interested parties in an anti-dumping investigation shall be given notice of the information which the authorities require and ample opportunity to present in writing all evidence which they consider relevant in respect of the investigation in question.

The text of Article 12.1 of the SCM Agreement is essentially identical, with references to "interested members" in addition to "all interested parties" and "countervailing duty" rather than "anti-dumping" investigation.

7.217.
Each provision thus establishes two obligations on the investigating authority concerning the conduct of the investigation:

a. to give notice to all interested parties of information required by the investigating authorities; and

b. to provide to all interested parties ample opportunity to present relevant evidence in writing.

7.218.
Articles 6.1 and 12.1 enshrine fundamental due process rights.374 In each provision, the two obligations are distinct yet closely related, conferring rights on the same parties.375 The obligations in each provision are inextricably linked, given that they are set out not only in the same paragraph but also in one single sentence. They must be read together; each obligation imparts meaning to the other. In particular, the second obligation clarifies a key purpose of giving notice of the information required to all interested parties: in order to present evidence that is "relevant in respect of the investigation in question", they need to know what the "investigation" is about – that is, what kind of information the investigating authority requires; and implicit in "presenting" written evidence is preparing such evidence, which requires foreknowledge of the contours of the investigation and time to do so.
7.219.
Broken down to its constituent parts, the notice requirement has the following elements:

a. "all interested parties";

b. "shall be given notice"; and

c. "of the information which the authorities require".

Below, we consider the meaning of each of these phrases in context and in the light of the express purpose of the requirement embedded in the provisions themselves.

7.6.4.1.1 All interested parties

7.220.
"Interested parties", as defined in Article 6.11 of the Anti-Dumping Agreement and Article 12.9 of the SCM Agreement, include exporters or foreign producers.376 The term "interested parties" as used in Articles 6.1 and 12.1 is modified by the word "all". Unless otherwise defined or indicated, "all" means everyone. Nothing in Articles 6.1 and 12.1 suggests a different meaning of "all" in these provisions or otherwise suggests that "all" should be understood as anything other than all for purposes of both the notice requirement and the ample opportunity to present written evidence.
7.221.
The context of the provisions supports the view that "all" means all. Where the drafters intended to make a distinction between various interested parties in Article 6 of the Anti‑Dumping Agreement and Article 12 of the SCM Agreement, they did so expressly. For instance, the time‑period for replies provided for in Article 6.1.1 of the Anti-Dumping Agreement and Article 12.1.1 of the SCM Agreement is specifically for exporters or foreign producers receiving questionnaires.377 Had it been the intent of the drafters to limit the scope of the notice requirement or the ample opportunity to present written evidence to the recipients of information requests, the drafters could have done so. This is not the case, in contrast to the immediately following provision of Article 6.1.1 of the Anti‑Dumping Agreement and Article 12.1.1 of the SCM Agreement.378
7.222.
Nothing in the object and purpose of the Anti-Dumping Agreement or the SCM Agreement detracts from this conclusion.379 The provisions at issue here protect the right of interested parties to present written evidence relevant to the investigation. To give effect to this right, all interested parties have an interest in being given notice of the information that an investigating authority requires – not only of them but also of other interested parties – so that they may meaningfully participate and fully defend their interests in an investigation. Notice of information required is, in this sense, fundamental to having an "ample" opportunity to prepare and present written evidence relevant to the investigation. To limit the scope of "all interested parties" to a subgroup of interested parties, those of whom information is required, would thus impermissibly render Articles 6.1 and 12.1 ineffective.
7.223.
In the light of the above, the meaning of "all" interested parties is properly understood literally. Where an investigating authority requires information from a particular interested party, that interested party is one of the "all interested parties" to whom notice must be given, and so too are all other interested parties, from whom the information is not required.380

7.6.4.1.2 Shall be given notice

7.224.
An obligation to give notice is a requirement to make aware, to transmit information – possibly in a summary fashion – of a state of affairs. In principle, the word "notice" denotes providing information in advance of a given event.381 Nothing in Articles 6.1 and 12.1 establishes any guidance regarding the content, form or timing of notice. But turning to the context we discern some guidance in this regard.
7.225.
The immediate context of the notice obligation is, of course, the second obligation in Articles 6.1 and 12.1. As we have observed, a key purpose of the notice obligation is to ensure that all interested parties have ample opportunity to present relevant written evidence; implicit in this is that to "present" evidence that is "relevant", interested parties require time to prepare such evidence and enough information to be aware of what the investigation is about. The event in advance of which notice is to be given is, in the light of the context of the provisions, the "opportunities" referred to in the second half of the provision. This, in turn, means that the notice has to come sufficiently "in advance" of the point at which interested parties are to present written evidence in the investigation such that they have the time to do so in a meaningful fashion.382
7.226.
The context of the obligation to give "ample opportunity" in Articles 6.1 and 12.1 and the broader context of Article 6 of the Anti-Dumping Agreement and Article 12 of the SCM Agreement as a whole provide additional guidance for the understanding of the obligation to "give notice":

a. Article 6.1.2 of the Anti-Dumping Agreement and Article 12.1.2 of the SCM Agreement require that written evidence provided by one interested party "shall be made available promptly" to other participating interested parties;

b. Article 6.2 of the Anti-Dumping Agreement establishes an obligation to "provide opportunities" for all interested parties to meet with parties with adverse interests;

c. Article 6.4 of the Anti-Dumping Agreement and Article 12.3 of the SCM Agreement require that investigating authorities "provide timely opportunities" for all interested parties to see relevant non-confidential information used; and

d. Article 6.9 of the Anti-Dumping Agreement and Article 12.8 of the SCM Agreement require the investigating authority to "inform" all interested parties of essential facts.

7.227.
Although expressed in different ways, these provisions contemplate two modes of engagement between the investigating authority and interested parties in respect of the information in an investigation: the use of the verb "inform" denotes some form of "active" engagement on the part of the investigating authority, whereas the other formulations suggest a more "passive" obligation to provide opportunities or to make available. The obligation to "give notice" at issue here falls, in our view, closer to the requirement to "inform" on this spectrum of obligation, requiring a positive action on the part of the investigating authority.
7.228.
We draw the following conclusions in respect of the obligation to give notice of the information required.
7.229.
First, Articles 6.1 and 12.1 require an investigating authority to actively provide something (in this instance "notice of the information which the authorities require") to all interested parties. This obligation entails reaching out and making all interested parties aware of the information in question. Thus, it cannot be satisfied by merely providing access to something that conveys the required notice.
7.230.
Second, Articles 6.1 and 12.1 do not set out a specific time-frame for the giving of notice, but they do link the notice requirement with the obligation to give "ample opportunity" to present relevant written evidence. The timing of "notice" must, therefore, be understood in that specific context: sufficiently "in advance" that an interested parties will be able to prepare and present written evidence within the deadlines set by the investigating authority for submission of written evidence on, inter alia, the matters as to which information was sought.383
7.231.
Third, Articles 6.1 and 12.1 do not set out specific requirements for the form of the notice or the modalities by which notice is to be given. Form and modalities remain within the discretion of the investigating authority. There might be any number of ways for an investigating authority to give notice. In this regard, we are conscious of the concerns raised in respect of the administrative burden associated with giving notice of the information required to all interested parties. However, our interpretation does not require that an investigating authority give that notice immediately, or in individual communications to all other interested parties in each instance. An investigating authority may choose a manner of giving the required notice that imposes less of an administrative burden.

7.6.4.1.3 Of the information which the authorities require

7.232.
The required content of the notice follows from the requirement that notice is to be given "of the information which the authorities require", read in the light of the second half of the provision. The particular information that an investigating authority requires from interested parties thus will determine what the notice must convey, and will vary with the circumstances. At a minimum, a notice must convey an understanding of what information is required in order to enable all interested parties to prepare and submit relevant written evidence regarding the matters as to which information is sought.
7.233.
The obligation is to give notice of the information required; it is not an obligation to disclose the information request itself. Thus, an outline or description of the information required may well suffice to give the requisite notice. If an investigating authority issues a questionnaire to a particular interested party, sending or making available (to the extent this is made known to all other interested parties) this questionnaire to all other interested parties would certainly be one way of giving notice of the information the investigating authority requires. It is not, however, what the provisions necessarily require: nothing in Articles 6.1 and 12.1 specifically requires an investigating authority to provide to all other interested parties the actual questions or requests issued to a particular interested party, although this might be effective and good practice in this context.
7.234.
Articles 6.1 and 12.1 require notice of the information required by the investigating authority to enable interested parties to prepare and submit relevant written evidence. For this reason, a notice that informs other interested parties of the information actually submitted by the responding interested party(ies) does not, without more, constitute notice within the meaning of these provisions.

7.6.4.2 The facts

7.235.
During the reinvestigation, MOFCOM sought and obtained new pricing data from four Chinese producers through on-the-spot visits (referred to by China and MOFCOM as "verification" visits).384 These took place in early May 2014.385
7.236.
MOFCOM did not provide US interested parties with the questions posed to the Chinese producers, nor communicate in any other form directly with US interested parties in respect of the data requested from the Chinese producers.
7.237.
MOFCOM placed each of the three documents that China refers to as collectively constituting the alleged "notice" in its trade remedy public information room for any interested party to consult. Other than through the Notice of Initiation, MOFCOM did not, at any point, actively inform the US interested parties that the documents would be or had been made available in the trade remedy public information room.386

7.6.4.3 Analysis

7.6.4.3.1 Notice requirement

7.238.
China and the United States agree that "the scope of the notice requirement under the articles is not limited to the precise interested party from whom the information is requested".387 We agree. The US interested parties were therefore entitled to notice of the information MOFCOM required from the Chinese producers.
7.239.
China argues that MOFCOM did not act inconsistently with Articles 6.1 and 12.1 because "notice" has "flexible meanings" and can be "effected by different means depending on the situation of the interested party".388 In respect of the interested party receiving the information request, advance and active notice must be given.389 For all other interested parties, those not recipients of the information request, "the disclosure obligation under Articles 6.1 and 12.1 would be satisfied as long as those parties are provided with access to the required information".390 On the facts of this case, China contends that MOFCOM discharged its obligation under Articles 6.1 and 12.1 to give notice in three documents taken together: the Notice of Initiation, the General Verification Letter, and the non-confidential summaries of the sales data provided by the Chinese producers.
7.240.
The issue before us therefore is whether the documents invoked by China constitute, when viewed collectively391, notice to the US interested parties of the information MOFCOM required from the Chinese producers, pursuant to Articles 6.1 and 12.1.

7.6.4.3.1.1 Notice of Initiation

7.241.
The Notice of Initiation states:

On September 25, 2013, WTO dispute settlement body passed the panel report on the dispute case of "China's antidumping and countervailing measures against whitefeather broiler chicken products originated in the U.S.".

… [T]he Ministry of Commerce decides to reinvestigate this case in accordance with the rulings and suggestions in above relevant reports of WTO upon the date of issuance.

The Ministry of Commerce will re-examine the evidence and information obtained in the original anti-dumping and countervailing investigations, and carry out reinvestigations through questionnaires, hearings, and other measures.392

7.242.
We make three observations concerning this document.
7.243.
First, China asserts that the reference in the Notice of Initiation to the "panel report" provided sufficient notice of the information required by MOFCOM in its consideration of price effects under Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the SCM Agreement.393 However, our findings in the original report were not limited to price effects. Even if there had been a specific reference in the Notice of Initiation to our findings in the original report under Article 3.2 of the Anti‑Dumping Agreement and Article 15.2 of the SCM Agreement, it is not clear that that would have amounted to notice of the information required by MOFCOM in this reinvestigation. Indeed, our findings regarding price effects concerned the comparability of AUVs, whereas MOFCOM's information request to Chinese producers was with respect to a different issue.
7.244.
Second, China relies on the reference to "questionnaires, hearings, and other measures" to be carried out during the reinvestigation. This is, however, solely a reference to the means by which MOFCOM might gather information, and says nothing about the information that might or would be required. Articles 6.1 and 12.1 do not set out a notice requirement in respect of how information required is obtained, but in respect of what information is, in fact, required. In this instance, stating that information may be sought through questionnaires, hearings or other means, gives no indication of "the information" that MOFCOM requires. It is possible that conveying, or even making available (if that is made known to the interested parties), the relevant questionnaire to all interested parties would suffice to give notice regarding "the information" that an investigating authority requires. By contrast, merely indicating that there may be "questionnaires" in the document giving notice of the initiation of a proceeding conveys no understanding at all in respect of "the information" that is or may be required in those questionnaires.
7.245.
Third, China confirmed that "the earliest moment when US interested parties could learn of the fact that MOFCOM required information from Chinese producers and gain an understanding of what information was required" was through reading the General Verification Letter, dated 19 February 2014.394 In itself, this undermines China's reliance on the Notice of Initiation as one of the documents constituting notice for the purposes of Article 6.1 of the Anti-Dumping Agreement and Article 12.1 of the SCM Agreement.
7.246.
In the light of the above, we question whether the Notice of Initiation could have contributed to giving the required notice through the three documents at issue, considered in their totality.395

7.6.4.3.1.2 General Verification Letter

7.247.
China also relies on the General Verification Letter in support of its position that MOFCOM fulfilled the notice requirement. China asserts that this letter was placed in MOFCOM's trade remedy public information room on 19 February 2014. The letter was addressed to the Chinese producers subject to the on-the-spot verification and data collection.396 It states in part:

You are requested to prepare for the verification beforehand and fully cooperate with the Investigating Team during the verification. Please prepare all the materials and produce relevant evidence in view of the Panel Report.397

7.248.
The United States contends that the General Verification Letter constitutes neither in form nor in substance a notice pursuant to Articles 6.1 and 12.1.398
7.249.
The letter refers to a "verification" and requests the Chinese producers to "prepare all the materials and produce relevant evidence". It does not mention that additional data may or will be required; perforce, it does not identify what information might or would be required. Reference to a "verification", "all the materials" and "relevant evidence" does not provide any understanding of "the information" that MOFCOM required; mentioning certain sources of information ("materials", "evidence") does not suffice to provide notice of the information required. As we have observed, the reference to the "Panel Report", without more, does not provide additional clarification.399 Substantively, the contribution of the letter to MOFCOM's fulfilment of the "notice" requirement is questionable at best.
7.250.
MOFCOM placed the letter in its trade remedy public information room but did not actively inform US interested parties of the letter, nor of the fact that it was available in MOFCOM's trade remedy public information room.400 The Notice of Initiation did refer interested parties to the trade remedy public information room. Thus, interested parties that routinely "monitored the public reading room"401 presumably would have become aware of the letter soon after it was placed in that room.402 The Notice of Initiation states in this regard:

Any interested parties may refer to the public evidence and information via Trade Remedy Public Information Room of the Ministry of Commerce. The Ministry of Commerce will guarantee the legal rights of interested parties though such procedures as disclosing information and providing chances for statement of opinions and comments.403

Thus, as we understand it, China argues that:

a. the Notice of Initiation referred interested parties to the public information room for access to public evidence and information;

b. MOFCOM placed the General Verification Letter in the public information room;

c. an online index404 was immediately updated to list the non-confidential summaries as available in the public information room; and

d. the General Verification Letter conveyed more precision about the information required of the Chinese producers.

7.251.
China argues that "Article 6.1 of the AD Agreement and Article 12.1 of the SCM Agreement do not mandate the specific means that investigating authorities must follow to provide notice".405 We agree. Nothing in Article 6.1 or 12.1 specifies the form of a notice or how it is to be given. An investigating authority may give notice to all interested parties either individually in each instance that information is required or through more generalized means; properly worded and transmitted, a notice of initiation or verification letters might, singly or together, constitute "notice" within the meaning of Article 6.1 of the Anti-Dumping Agreement and Article 12.1 of the SCM Agreement.
7.252.
In this case, however, the Notice of Initiation simply refers all interested parties to the public information room but does not indicate what would be made available and when.406 A general reference in the Notice of Initiation to a designated location where public information can be consulted, in connection with subsequently making available at that location a document that purports to convey an understanding of the information required, does not suffice to give notice within the meaning of Articles 6.1 and 12.1. MOFCOM did not inform interested parties of the placing of the document allegedly conveying the notice of the information required in the public reading room. Rather, interested parties were expected "to avail themselves of the public reading room to review themselves the public record" and thus to identify on their own the fact that a notice of the information required of Chinese producers had been given.407 However, under Articles 6.1 and 12.1 it is for MOFCOM to "give" the interested parties notice – an obligation to give notice cannot be satisfied by expecting the interested parties to monitor the investigating authority to ensure they remain informed when the interested parties are not informed that that is the mechanism by which such notice will be given to them. China's position reduces the notice requirement to an obligation to make a general statement that interested parties may consult information in the public information room. The notice requirement would be stripped of its link to the information required; it would no longer be "of the information which authorities require". Such "notice" would fall short of the due process function of Articles 6.1 and 12.1. A panel may not adopt an interpretation that would render a treaty provision, or part of it, ineffective, and we do not do so in this instance.
7.253.
The fact that information was only requested for what China alleges to be a "limited purpose" does not absolve MOFCOM of the obligation to comply with Articles 6.1 and 12.1.408 The obligation under the notice requirement to inform all interested parties of the information required is not subject to any limitations with respect to the purpose or use for which information is required.
7.254.
In view of the above, for at least two reasons we are not convinced that the General Verification Letter contributed to MOFCOM giving notice to the US interested parties through the three documents at issue considered together:

a. the letter did not convey any understanding of the additional (pricing) information MOFCOM required from the Chinese producers and thus did not relate to the information required; and

b. by merely placing the letter in MOFCOM's trade remedy public information room in connection with a reference to that room in the Notice of Initiation, MOFCOM failed to give notice.

7.6.4.3.1.3 Non-confidential summaries

7.255.
China refers to the non-confidential summaries of the data provided by the Chinese producers as the last of the three documents through which MOFCOM allegedly satisfied the notice requirement at issue.409 Chinese producers prepared these non-confidential summaries of information they provided to MOFCOM, and MOFCOM placed them its trade remedy public information room on 20 May 2014.410
7.256.
Even if the non-confidential summaries conveyed the information required, MOFCOM failed to give US interested parties notice in respect of these documents. MOFCOM placed the non‑confidential summaries in its trade remedy public information room. As with the General Verification Letter, this does not fulfil China's obligation in respect of the notice requirement. China neither alleges, nor provides evidence to suggest, that MOFCOM informed US interested parties specifically that the non-confidential summaries would be or were available in the trade remedy public information room. Merely making information available in this room without, in any way, calling the attention of the interested parties to this information is, however, not sufficient for purposes of Articles 6.1 and 12.1.
7.257.
We are therefore not persuaded that the non-confidential summaries contributed to ensuring MOFCOM's compliance with the obligation to give notice.

7.6.4.3.1.4 Conclusion

7.258.
China argues that the three documents at issue collectively satisfy the obligation to give "notice" pursuant to Articles 6.1 and 12.1. While each document may have some connection to China's obligation to give notice of the information required, none, in our view, makes enough of a contribution such that, taken together, they suffice to demonstrate that MOFCOM gave notice to US interested parties of the information required consistently with the requirements of Articles 6.1 and 12.1.
7.259.
Neither the Notice of Initiation, nor the General Verification Letter conveyed any understanding in respect of "the information" that MOFCOM required. In respect of the General Verification Letter and the non-confidential summaries, MOFCOM also failed to convey to interested parties the fact that these documents were available for consultation in its trade remedy public information room. This failure was not remedied through the Notice of Initiation, which merely informed interested parties that evidence and information would be available in that room, but in no way informed them that notices required by Articles 6.1 and 12.1 would also be made available in the reading room. Therefore, all three documents, even considered together, do not add up to a complete whole whereby MOFCOM could have given the US interested parties notice of the information required from the Chinese producers.
7.260.
Consequently, we find that China acted inconsistently with the notice requirement in Article 6.1 of the Anti-Dumping Agreement and Article 12.1 of the SCM Agreement by failing to give notice to US interested parties of the information it required of Chinese producers during the reinvestigation.

7.6.4.3.2 Obligation to provide ample opportunity to present written evidence

7.261.
The United States argues that as a consequence of MOFCOM's failure to provide notice of the required information, MOFCOM also failed to provide the US interested parties with ample opportunity to present written evidence.
7.262.
We have found that MOFCOM failed to give notice to the US interested parties and that China thereby acted inconsistently with the notice requirement in Articles 6.1 and 12.1. In this context, it is not necessary for us to make additional findings as to whether, as a consequence of the violation of the notice requirement, MOFCOM also failed to give interested parties ample opportunity to present in writing all evidence which they consider relevant.411

7.6.5 Conclusion

7.263.
The United States has established that MOFCOM did not give notice to the US interested parties of the information it required from Chinese producers during the reinvestigation. We therefore find that China acted inconsistently with the notice requirement in Article 6.1 of the Anti‑Dumping Agreement and Article 12.1 of the SCM Agreement. As a consequence, it is not necessary for us to make additional findings in respect of the obligation to provide ample opportunities to present written evidence under the same provisions.

7.7 Article 6.4 of the Anti-Dumping Agreement and Article 12.3 of the SCM Agreement: timely opportunities to see information and to prepare presentations on the basis of this information

7.7.1 Introduction

7.264.
In our original report, we found MOFCOM's consideration of price undercutting and price suppression inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement. During the reinvestigation, MOFCOM sought and collected new pricing data from four selected Chinese domestic producers and used these data in its consideration of price effects in the redetermination.
7.265.
This claim concerns whether MOFCOM acted in accordance with its obligations under Article 6.4 of the Anti-Dumping Agreement and Article 12.3 of the SCM Agreement to provide US interested parties timely opportunities to see information and to prepare presentations on the basis of this information, specifically with reference to information with respect to price effects.412

7.7.2 Main arguments of the parties

7.7.2.1 United States

7.266.
MOFCOM failed to provide US interested parties timely opportunities to see information in respect of:

a. non-confidential summaries of pricing data provided by four Chinese producers during the reinvestigation at the request of MOFCOM413;

b. the precise identities of these Chinese producers414;

c. MOFCOM's questions or requests issued to these Chinese producers415;

d. the "context"416 of these data, including "the specific products for which pricing was requested, whether the pricing was requested and/or reported on the basis of one sale, quarterly sales, annual sales, or sampled invoices; and what quantity of each producer's sales, or of the domestic industry's sales, were represented by the pricing sample"417;

e. aggregate data reflecting the information received from the Chinese producers418; and

f. MOFCOM's "basis for selecting [the four Chinese] producers for the sample and its methodology for collecting pricing data from them".419

7.267.
MOFCOM did not make available non-confidential summaries of the pricing data provided by the Chinese producers in MOFCOM's trade remedy public information room on 20 May 2014, as China alleges.420 Even if this were the case, MOFCOM did not give notice to the US interested parties, as required by Articles 6.4 and 12.3.421 Moreover, in the light of the injury disclosure on 21 May 2014 and the deadline for comments one week later, the opportunity was not "timely" for purposes of these provisions.422
7.268.
MOFCOM's failure to provide timely opportunities to see the information at issue "necessarily" resulted in a breach of the obligation to provide timely opportunities to prepare presentations on the basis of that information.423 Also, a hearing that China refers to "in no way provided interested parties with an opportunity to prepare presentations" and "itself breached AD Agreement Article 6.4 and SCM Agreement Article 12.3".424

7.7.2.2 China

7.269.
MOFCOM acted consistently with Articles 6.4 and 12.3. These provisions do not require active disclosure of information.425 They contain an obligation of a passive nature that MOFCOM satisfied by releasing the information at issue in its trade remedy public information room. Moreover, the United States did not demonstrate that MOFCOM had denied a request by the US interested parties to see the information.426
7.270.
Regarding the pricing data and identities of the Chinese producers, MOFCOM provided timely opportunities for all interested parties to see this information through non-confidential summaries submitted by Chinese producers of the information provided by them during the verifications. These non-confidential summaries were received by MOFCOM and made available to US interested parties in its trade remedy public information room on 20 May 2014.427 They contained indexed information on unit prices, sales quantity and value.428 They also disclosed in full the precise identities of the Chinese producers.429
7.271.
In respect of the alleged questions or requests posed by MOFCOM, MOFCOM did not issue any questionnaires to the Chinese producers in order to collect additional information. MOFCOM was also not under an obligation under Articles 6.4 and 12.3 to give opportunities to see its oral questions or requests.430 The questions or requests posed by MOFCOM were not "information" that was "used" by MOFCOM within the meaning of Articles 6.4 and 12.3.431
7.272.
MOFCOM also afforded US interested parties the opportunity to prepare presentations because it complied with its obligation to give US interested parties opportunities to see all information.432 Also, Pilgrim's Pride met with MOFCOM in a disclosure meeting433 and all US interested parties in fact presented their cases in a hearing with MOFCOM.434

7.7.3 Main arguments of the third parties

7.273.
The European Union argues that "relevant information" pursuant to Articles 6.4 and 12.3 includes information requests addressed to other interested parties.435 "Timely opportunities" within the meaning of these provisions must enable interested parties to provide their comments on content, reliability and probative value of the information (and possible counter-evidence). To this end, the information must be made available early enough in the process that the comments can still be taken into account in the decision-making of the investigating authorities.436 Making the information available in an electronic or physical reading room satisfies the obligation to provide opportunities to see the information. There is no requirement to give notice to the interested parties that the information is made available.437

7.7.4 Evaluation

7.7.4.1 The law

7.274.
Article 6.4 of the Anti-Dumping Agreement provides:

The authorities shall whenever practicable provide timely opportunities for all interested parties to see all information that is relevant to the presentation of their cases, that is not confidential as defined in paragraph 5, and that is used by the authorities in an anti-dumping investigation, and to prepare presentations on the basis of this information.

The text of Article 12.3 of the SCM Agreement is essentially identical, with references to "all interested Members and interested parties" instead of "all interested parties", "paragraph 4" instead of "paragraph 5" and "countervailing duty" rather than "anti-dumping" investigation.

7.275.
Each provision thus requires the investigating authorities to:

a. whenever practicable, provide timely opportunities for all interested parties;

b. to see all information that is:

i. relevant to the presentation of their cases,

ii. not confidential as defined in paragraph 5, and

iii. used by the authorities in the investigation; and

c. to prepare presentations on the basis of this information.

We address each of these criteria below.

7.7.4.1.1 Whenever practicable provide timely opportunities to see

7.276.
"Timely opportunities" to see information must be provided "whenever practicable" throughout the investigation: they must be timely enough for the interested party to be able to prepare presentations on the basis of the information seen.438 Whether "timely opportunities" have been provided to see information must be considered in the light of the circumstances of each case, including the specific information at issue, the step of the investigation to which such information relates, and the practicability of disclosure at certain points in time in the investigation vis-à-vis others.439
7.277.
The obligation is to "provide … opportunities" to see all information. The verb "provide" refers to opportunities, not to the information itself. The obligation is to give opportunities to see the information, not to convey the information itself. At paragraphs 7,226 and 7,227 above, we observed that the modes of engagement between the investigating authority and interested parties in respect of information contemplated in Article 6 of the Anti-Dumping Agreement and Article 12 of the SCM Agreement ranged along a spectrum from some form of active engagement on the part of the investigating authority to "passive" obligations. The obligation to "provide … opportunities" falls closer to the passive end of the spectrum. Thus, the obligation to "provide … opportunities" to see information requires an investigating authority to make available or to provide access to the information at issue. It is not an "active" disclosure obligation in the sense that it requires an investigating authority to reach out to the interested parties, in particular by giving notice to, or otherwise informing the interested parties.
7.278.
Nothing in Articles 6.4 and 12.3 sets out conditions for the manner in which an investigating authority must "provide … opportunities". An investigating authority may proceed in any number of ways, including by making available the information in a physical or electronic reading room.

7.7.4.1.2 All information

7.279.
Articles 6.4 and 12.3 refer to "all information". The provisions thus apply to a broad range of information qualified only by three cumulative conditions: the information must be "relevant to the presentation of [the interested parties'] cases", "not confidential" and "used by the authorities".440 The information may take various forms, including facts or raw data submitted by the interested parties and information that has been processed, organized or summarized by the investigating authority.441 An investigating authority's reasoning, internal deliberations, analysis or methodologies in respect of the information, however, do not constitute "information" subject to the obligations under Articles 6.4 and 12.3.442

7.7.4.1.2.1 That is relevant to the presentation of their cases

7.280.
Information is "relevant" for purposes of Articles 6.4 and 12.3 when the interested party considers that the information is relevant to the presentation of its case in the context of the investigation.443

7.7.4.1.2.2 That is not confidential as defined in paragraph 5

7.281.
Articles 6.4 and 12.3 only relate to information "that is not confidential as defined in paragraph 5 [paragraph 4 of the SCM Agreement]". Thus, information that has been accorded confidential treatment in accordance with Article 6.5 of the Anti-Dumping Agreement or Article 12.4 of the SCM Agreement is excluded from the scope of these provisions. If information has been treated as confidential in a manner that does not conform to the requirements of Article 6.5 of the Anti-Dumping Agreement or Article 12.4 of the SCM Agreement, there is no legal basis for according it confidential treatment and such information would, for the purposes of Article 6.4 of the Anti-Dumping Agreement, be considered as information "that is not confidential as defined in paragraph 5".444

7.7.4.1.2.3 That is used by the authorities

7.282.
The "information" covered by Articles 6.4 and 12.3 is information that is relevant, non‑confidential and used by the authorities. The term "used" is not further defined in the Anti‑Dumping Agreement or the SCM Agreement, or indeed elsewhere in the WTO Agreement; it can have a broader or a narrower meaning. A narrow interpretation of the term "used" might restrict the information at issue to only those specific items of information that an investigating authority in fact relies upon in making its determinations. This interpretation has been rejected by panels and the Appellate Body.445 A broader interpretation of the term might include all information that in one way or another comes before the investigating authority; there are other interpretations possible along this spectrum. For purposes of our task, it suffices to say that nothing in the term "used" in itself tells us where to draw the appropriate line.
7.283.
In this light, we turn to the immediate context. The information, we recall, must be non‑confidential and relevant "to the presentation of [the interested parties'] cases". The term "used" thus further limits the scope of information that is covered by the provisions. An overly narrow interpretation of the term "used" could so limit the scope of such information as to undermine the due process protection given by Articles 6.4 and 12.3, denying an interested party the opportunity to see non-confidential information that is relevant to the presentation of its case.
7.284.
We now turn to the broader context. Article 6.9 of the Anti-Dumping Agreement and Article 12.8 of the SCM Agreement establish an obligation to disclose the essential facts under consideration which form the basis for the decision whether or not to apply definitive measures. The "essential facts" for purposes of this provision are not all the facts before the investigating authority.446 It would thus appear that where the negotiators envisaged a "narrow" scope of information, i.e. facts that, while they may be "used" are not necessarily "essential", they could and did formulate their intent in precise terms. While previous decisions suggest an unacknowledged premise that information for purposes of Articles 6.4 and 12.3 is in the nature of data, facts or other evidence bearing on the issues to be resolved by an investigating authority, it does not necessarily follow that the understanding of information "used" must be so limited.447 The reference to information "used" in Articles 6.4 and 12.3, by contrast to Articles 6.9 and 12.8, thus suggests that information "used" may be broader than facts or data relevant to the issues that must be, or actually are, resolved in an investigation. Contextual guidance, though limited, therefore supports the view that a broader interpretation of the concept of information "used" is warranted.
7.285.
The purpose of Articles 6.4 and 12.3, to which we must give effect in interpreting them, is clear: Interested parties must be able to prepare presentations on the basis of information which is before the investigating authority which they consider relevant, and which they are to be given opportunities to see under the first part of the provisions. Articles 6.4 and 12.3 are among the important procedural safeguards that ensure that interested parties can defend their interests. Our interpretation of the term "used" ought, we believe, give effect to this important purpose.
7.286.
In the light of the above, we conclude that information "used" within the meaning of Articles 6.4 of the Anti-Dumping Agreement and 12.3 of the SCM Agreement can be broader than facts or data relating to issues which the investigating authority is required to consider, or which it does, in fact, consider in the course of an anti‑dumping or countervailing duty investigation. Whether a particular item of information is one that is "used" by the authorities in a broader sense will depend on the facts and circumstances of each case.

7.7.4.1.3 Provide timely opportunities … to prepare presentations on the basis of this information

7.287.
The two obligations in Articles 6.4 and 12.3 are distinct, yet related. In particular, the second obligation concerns providing opportunities to prepare presentations "on the basis of this information" – that is, the information that interested parties must be given timely opportunities to see. Where an investigating authority has not provided any opportunity to see relevant and non‑confidential information that is used by it, it perforce cannot provide any opportunity to prepare presentations on the basis of this information. However, where an opportunity to see information is provided, it may be found to be insufficient if it is not provided in sufficient time to allow the interested parties seeing the information to prepare presentations based on it.

7.7.4.2 Analysis

7.288.
The United States brings its claim under Articles 6.4 and 12.3 in respect of the opportunities to see different items of "information" and to prepare presentations on the basis of this information. We address each of these below.

7.7.4.2.1 Providing timely opportunities to see

7.7.4.2.1.1 Preliminary observations

7.289.
China argues first that the US claim fails because the United States has not demonstrated that the US interested parties requested to see the information at issue and that MOFCOM denied such request. According to China, an investigating authority does not need to take any action at all in order to comply with Articles 6.4 and 12.3, unless an interested party requests to see the information at issue. It relies on the statement of the panel in EC – Fasteners (China) that:

[A] violation of Article 6.4 would normally require a showing that the investigating authorities denied an interested party's request to see information used by the authorities, which was relevant to the presentation of that interested party's case and which was not confidential.448

7.290.
Articles 6.4 and 12.3 contain "limited" procedural and due process rights449; they are limited by the requirements that providing opportunities be "practicable" and that the information be "relevant", "not confidential" and "used". China asks the Panel to further limit the rights of interested parties beyond the limitations already expressly set forth in the provisions by introducing a requirement for a "request".
7.291.
We do not find any basis for requiring a "request" to see information before a claim of violation of Articles 6.4 and 12.3 can be made. Textually, the obligation is for investigating authorities to "provide" opportunities. This is in contrast to other obligations in Article 6 of the Anti-Dumping Agreement and Article 12 of the SCM Agreement that condition the obligation to "provide opportunities" or to "make available" on a "request":

a. Article 6.1.3 of the Anti-Dumping Agreement and Article 12.1.3 of the SCM Agreement require that the investigating authority "shall provide" the written application to the known exporters and the authorities of the exporting Member (without reference to any request), and "shall make it available, upon request, to other interested parties involved"450; and

b. Article 6.2 of the Anti-Dumping Agreement conditions the obligation to "provide opportunities" to meet with adverse interests with the phrase "on request".451

The fact that the "relevance" of the information must be assessed from the perspective of the interested party does not detract from our understanding that investigating authorities must provide opportunities irrespective of a request to see the information being made.452 Interested parties that are not aware of the existence of certain information before the investigating authority obviously cannot make a request to see that information.453 Such interested parties may well be most in need of the due process protection afforded by Articles 6.4 and 12.3. Yet, a requirement for a request would render void their right to have an opportunity to see information of which they are unaware.454 Attributing such a meaning to a treaty provision would lead to an unreasonable result.

7.292.
The failure to provide opportunities to see certain information is a violation by omission. There are evidentiary challenges associated with a claim based on an alleged omission. It may be difficult to prove the absence of an opportunity to see information. From an evidentiary perspective, it is therefore useful if a complainant can demonstrate, by reference to record evidence, that an interested party requested to see information that the investigating authority then failed to make available. But the absence of a request by an interested party in itself does not, as a matter of law or fact, mean that an investigating authority has satisfied its obligation to provide timely opportunities to see information under Articles 6.4 and 12.3. Viewed in context, the quotation from EC – Fasteners (China) relied on by China does not support its position to the contrary. The panel in that case had already observed that Article 6.4 did not require an investigating authority to "actively disclose" information, and was addressing China's argument that "the investigating authorities were under the obligation to provide" information even in the absence of a request.455 The panel rejected the view that there was any obligation to actively disclose information under Article 6.4. In this context, the statement that a "violation of Article 6.4 would normally require a showing that the investigating authorities denied an interested party's request to see information" in our view reflects that one way of demonstrating a violation of Article 6.4 would be to show that a request to see information was denied. This does not, however, mean that such a request (and denial) are necessary in order to demonstrate a violation of Articles 6.4 and 12.3.