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Source(s) of the information:
Source(s) of the information:

Reports of the Panels

CASES CITED IN THESE REPORTS

Short titleFull case title and citation
China – Autos (US) Panel Report, China – Anti-Dumping and Countervailing Duties on Certain Automobiles from the United States, WT/DS440/R and Add.1, adopted 18 June 2014
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R - WT/DS395/AB/R - WT/DS398/AB/R, adopted 22 February 2012, DSR 2012:VII, p. 3295
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
EC – Bed Linen Appellate Body Report, European Communities – Anti‑Dumping Duties on Imports of Cotton‑Type Bed Linen from India, WT/DS141/AB/R, adopted 12 March 2001, DSR 2001:V, p. 2049
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 – 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 – 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 – Tube or Pipe Fittings Panel Report, European Communities – Anti‑Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, p. 2701
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
Egypt – Steel Rebar Panel Report, Egypt – Definitive Anti‑Dumping Measures on Steel Rebar from Turkey, WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, p. 2667
Guatemala – Cement I Appellate Body Report, Guatemala – Anti‑Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, p. 3767
Korea – Alcoholic Beverages Panel Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/R, WT/DS84/R, adopted 17 February 1999, as modified by Appellate Body Report WT/DS75/AB/R, WT/DS84/AB/R, DSR 1999:I, p. 44
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3
Mexico – Anti‑Dumping Measures on Rice Panel Report, Mexico – Definitive Anti‑Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/R, adopted 20 December 2005, as modified by Appellate Body Report WT/DS295/AB/R, DSR 2005:XXIII, p. 11007
Thailand – H‑Beams Appellate Body Report, Thailand – Anti‑Dumping Duties on Angles, Shapes and Sections of Iron or Non‑Alloy Steel and H‑Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 2701
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain Corrosion‑Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291
US – Countervailing and Anti‑Dumping Measures (China) Panel Report, United States – Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/R and Add.1, adopted 22 July 2014, as modified by Appellate Body Report WT/DS449/AB/R
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 – 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 – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted 5 October 2011, DSR 2011:IX, p. 4811
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
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

ABBREVIATIONS

AbbreviationDescription
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
BCI Business confidential information
BCI Procedures Additional working procedures of the Panels concerning business confidential information
Complainants Japan and the European Union
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
Final Determination notice MOFCOM Notice No. 72 [2012]
GAAP Generally accepted accounting principles
GATT 1994 General Agreement on Tariffs and Trade 1994
HP-SSST High-performance stainless steel seamless tubes
Kobe Kobe Special Tube Co., Ltd.
MOFCOM Ministry of Commerce of the People's Republic of China
China People's Republic of China
Preliminary Determination notice MOFCOM Notice No. 21 [2012]
SMI Sumitomo Metal Industries, Ltd.
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 COMPLAINTS BY JAPAN AND THE EUROPEAN UNION

1.1.
On 20 December 2012, Japan requested consultations1 with China pursuant to Articles 1 and 4 of the DSU, Article XXII:1 of the GATT 1994, and Articles 17.2 and 17.3 of the Anti-Dumping Agreement with respect to the measures and claims set out below. On 13 June 2013, the European Union requested consultations2 with China pursuant to the same, above-mentioned provisions and with respect to the measures and claims set out below. In both complaints, the consultations concerned China's measures imposing anti-dumping duties on certain HP-SSST from Japan and the European Union respectively, as set forth in MOFCOM's Preliminary Determination notice, and MOFCOM's Final Determination notice, including any and all annexes and any amendments thereof.3
1.2.
Consultations were held between Japan and China on 31 January and 1 February 2013, and between the European Union and China on 17 and 18 July 2013. These consultations failed to resolve the disputes.

1.2 PANEL ESTABLISHMENT AND COMPOSITION

1.3.
On 11 April 2013 and 16 August 2013 respectively, Japan and the European Union each requested the establishment of a panel pursuant to Articles 4.7 and 6 of the DSU, Article XXIII of the GATT 1994, and Article 17.4 of the Anti-Dumping Agreement with standard terms of reference.4 At its meetings on 24 May 2013 and 30 August 2013, the DSB established two panels pursuant to, respectively, the request of Japan in document WT/DS454/4 and the request of the European Union in document WT/DS460/4, in accordance with Article 6 of the DSU.5
1.4.
The Panels' 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 Japan in document WT/DS454/4 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.6

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 European Union in document WT/DS460/4 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.7

1.5.
With respect to WT/DS454, on 17 July 2013, Japan requested the Director-General to determine the composition of the Panel, pursuant to Article 8.7 of the DSU. On 29 July 2013, the Director-General accordingly composed the Panel as follows:

Chairperson: Mr Miguel Rodríguez Mendoza

Members: Ms Stephanie Sin Far Lee

Mr Gustav Francois Brink

1.6.
With respect to WT/DS460, following the agreement of the parties, the Panel was composed with the same persons on 11 September 2013. Following consultations with the parties, the Panels in the two disputes decided to harmonize their timetables to the greatest extent possible, in accordance with Article 9.3 of the DSU.8
1.7.
India, Korea, the Russian Federation, the Kingdom of Saudi Arabia, Turkey and the United States reserved their rights to participate in the Panel proceedings as third parties in both disputes. In addition, the European Union reserved its rights to participate as a third party in the Panel proceedings in WT/DS454, and Japan reserved its rights to participate as a third party in the Panel proceedings in WT/DS460.

1.3 PANEL PROCEEDINGS

1.3.1 General

1.8.
After consultation with the parties, the Panel adopted its Joint Working Procedures9 and timetable on 27 September 2013. The Panel introduced modifications to its Joint Working Procedures and timetable on 22 May 2014.10
1.9.
The Panel held a first substantive meeting with the parties on 25-26 February 2014. A session with the third parties took place on 26 February 2014. The Panel held a second substantive meeting with the parties on 20-21 May 2014. On 18 July 2014, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 19 September 2014. The Panel issued its Final Report to the parties on 7 November 2014.

1.3.2 Working procedures on Business Confidential Information (BCI)

1.10.
After consultation with the parties, the Panel adopted additional working procedures concerning BCI on 27 September 2013.11 The Panel introduced modifications to its additional working procedures concerning BCI on 22 May 2014.

2 FACTUAL ASPECTS

2.1 THE MEASURES AT ISSUE

2.1.
These disputes concern China's measures imposing anti-dumping duties on certain HP-SSST, as set forth in MOFCOM's Preliminary Determination, and MOFCOM's Final Determination, including any and all annexes and any amendments thereof.

3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

3.1 JAPAN

3.1.
Japan requests the Panel to find that:

a. China's injury determination is inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement. Specifically:

i. China's price effects analysis is inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement;

ii. China's impact analysis is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement;

iii. China's demonstration of the alleged causal relationship between the imports under investigation and the alleged injury to the domestic industry is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement; and

iv. China's attribution of the domestic industry's injury to imports under investigation is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement;

b. China's treatment of certain information supplied by the applicants as confidential is inconsistent with Article 6.5 of the Anti-Dumping Agreement;

c. China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement by failing to require applicants to furnish adequate non-confidential summaries of information treated as confidential or explanations as to why summarization was not possible;

d. China's reliance on facts available to calculate the dumping margin for all Japanese companies other than SMI and Kobe is inconsistent with Article 6.8 and Paragraph 1 of Annex II to the Anti-Dumping Agreement;

e. China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to adequately disclose essential facts in connection with:

i. the determination of the existence of dumping and the calculation of dumping margins for SMI and Kobe, including relevant data and calculation methodologies;

ii. the determination and the calculation of the dumping margins for all Japanese companies other than SMI and Kobe; and

iii. China's determinations of injury and causation, including the import prices and domestic prices used therein;

f. China's application of provisional measures for a period exceeding four months is inconsistent with Article 7.4 of the Anti-Dumping Agreement;

g. China acted inconsistently with Article 12.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report China's findings and conclusions on all material issues of fact and law in connection with:

i. the determination and the calculation of dumping margins for all Japanese companies other than SMI and Kobe; and

ii. the determinations of injury and causation, including the import prices and domestic prices used therein;

h. China acted inconsistently with Article 12.2.2 of the Anti-Dumping Agreement by failing to include in its Final Determination notice or a separate report all relevant information on matters of fact and law and reasons in connection with:

i. the determination and the calculation of the dumping margins for all Japanese companies other than SMI and Kobe; and

ii. the determinations of injury and causation, including the import prices and domestic prices used therein; and

i. As a consequence of the inconsistencies described above, China's anti-dumping measures on HP-SSST from Japan are also inconsistent with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

3.2.
Pursuant to Article 19.1 of the DSU, Japan requests the Panel to recommend that China bring its measures into conformity with the GATT 1994 and the Anti-Dumping Agreement.12
3.3.
Japan also requests that the Panel make findings with respect to each of Japan's claims under the GATT 1994 and the Anti-Dumping Agreement, including each claim under Article 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement, without exercising judicial economy as to any of Japan's claims, so as to secure a prompt resolution of this dispute.13

3.2 EUROPEAN UNION

3.4.
The European Union requests the Panel to find that:

a. China's determination of certain SG&A amount is inconsistent with Articles 2.2, 2.2.1, 2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement;

b. China acted inconsistently with Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement by failing to establish the existence of margins of dumping on the basis of a fair comparison between the export price and the normal value;

c. China's volume and price effect analyses in connection with MOFCOM's injury determination are inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement;

d. China's impact analysis in connection with MOFCOM's injury determination is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement;

e. China's determination of causal link is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement;

f. China acted inconsistently with Article 6.4 of the Anti-Dumping Agreement by failing to disclose to interested parties all information that is relevant to the presentation of their cases and that is used by the authorities in an anti-dumping investigation;

g. China's treatment of certain information supplied by the applicants as confidential is inconsistent with Article 6.5 of the Anti-Dumping Agreement;

h. China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement by failing to require applicants to furnish adequate non-confidential summaries of information treated as confidential or explanations as to why furnishing such summaries was not possible;

i. China acted inconsistently with Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement by refusing to take into account information relevant for the determination of the margins of dumping provided during the on-the-spot investigation;

j. China acted inconsistently with Article 6.8 and Paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement by failing to take into account certain information pertaining to the determination of the margins of dumping;

k. China's reliance on facts available to determine the margin of dumping for all European Union companies other than those for which individual margins of dumping were determined is inconsistent with Article 6.8 and Paragraph 1 of Annex II to the Anti-Dumping Agreement;

l. China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to inform the interested parties of the essential facts under consideration which form the basis for the decision to impose definitive anti-dumping measures;

m. China's application of provisional measures for a period exceeding four months is inconsistent with Article 7.4 of the Anti-Dumping Agreement;

n. China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to provide in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities, as well as all relevant information on the matters of fact and law and reasons which have led to the imposition of final measures; and

o. As a consequence of the inconsistencies described above, China's anti-dumping measures on HP-SSST from the European Union are also inconsistent with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

3.5.
Pursuant to Article 19.1 of the DSU, the European Union requests the Panel to recommend that China bring its measures into conformity with the GATT 1994 and the Anti-Dumping Agreement, and make appropriate suggestions to that effect, including that China refund the duties collected with respect to the period in which the provisional measure was applied inconsistently with Article 7.4 of the Anti-Dumping Agreement.14
3.6.
The European Union also requests the Panel to exercise its right, pursuant to Article 13.1 of the DSU, to seek information from China equivalent to full disclosure that should have been made during the underlying proceedings.15

3.3 CHINA

3.7.
China requests the Panel to find that certain of the European Union's claims under Article 2 of the Anti-Dumping Agreement fall outside the Panel's terms of reference. In addition, China requests the Panel to reject Japan's and the European Union's claims in these disputes.

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 19 of the Joint Working Procedures adopted by the Panel (see list of Annexes on page 3).

5 ARGUMENTS OF THE THIRD PARTIES

5.1.
The arguments of Korea, the Kingdom of Saudi Arabia, Turkey and the United States are reflected in their integrated executive summaries or third-party statements, provided in accordance with paragraph 19 of the Joint Working Procedures adopted by the Panel (see list of Annexes on page 3). India and the Russian Federation did not submit third-party written submissions or statements to the Panel.

6 INTERIM REVIEW

6.1 INTRODUCTION

6.1.
The Panel issued its Interim Reports to the parties on 19 September 2014. On 3 October 2014, the parties submitted written requests for review of precise aspects of the Interim Reports. On 10 October 2014, the parties submitted comments on the other parties' requests for review. None of the parties asked the Panel to hold an interim review meeting.
6.2.
The Panel explains below its response to issues raised by the parties in the context of interim review. The Panel has also corrected a number of typographical errors identified by the parties, and is grateful for their assistance in this regard.
6.3.
Due to changes as a result of our review, the numbering of the footnotes in the Final Reports has changed from the Interim Reports. The text below refers to the footnote numbers in the Interim Reports, with the corresponding footnote numbers in the Final Reports provided in parentheses for ease of reference. There is no change to the paragraph numbering of the Panel's findings.
6.4.
Before turning to the parties' requests for interim review, we address a procedural issue raised by China concerning the fact that Japan, which brought the DS454 proceeding, requested review in respect of the Panel's evaluation of claims also brought by the European Union in the DS460 proceeding.

6.2 PROCEDURAL ISSUE RAISED BY CHINA CONCERNING JAPAN'S REQUESTS FOR INTERIM REVIEW IN RESPECT OF CLAIMS ALSO RAISED IN THE DS460 PROCEEDING

6.5.
China objects16 to Japan being allowed to make requests for interim review in respect of the Panel's Report in DS454 that would also affect the Panel's Report in respect of DS460. China observes in this regard that Japan is a third party in the DS460 proceeding, and that third parties do not have the right to request interim review.
6.6.
We are not persuaded by China's arguments. China's approach would undermine Paragraph 1 of the Panels' Working Procedures, which specifies that:

The Panels shall, to the greatest extent possible, conduct a single panel process, with a single record, resulting in separate reports contained in a single document, taking into account the rights of all Members concerned, and in such a manner that the rights that parties or third parties would otherwise have enjoyed are in no way impaired.

6.7.
Paragraph 1 of the Working Procedures is designed to simplify the drafting of their reports, whereas China's position would complicate that task by requiring a panel to issue separate findings in respect of claims brought by both complainants when they accept to modify their findings on the basis of a request for interim review raised by only one of the complainants. China's position is inconsistent with the single panel process envisaged in Paragraph 1 of the Working Procedures. In our view, the Panels' approach should be governed by the overarching requirement in Paragraph 1 of the Working Procedures not to impair the rights of the parties or third parties. We note in this regard that China neither states nor demonstrates that its rights have been impaired by the way that the Panel has conducted Interim Review. In addition, we observe that the European Union has in any event supported Japan's requests and comments in respect of the Interim Reports.17

6.3 REQUESTS FOR INTERIM REVIEW BY JAPAN

6.3.1 Paragraph 7.105: potential for subject imports to have price effects

6.8.
Japan objects to the Panel suggesting that Japan had argued that an investigating authority need only consider the potential for subject imports to have price effects. Japan asserts that an investigating authority must consider whether subject imports had actual price effects. Japan asks the Panel to amend paragraph 7,105 (and other parts) of its Interim Reports accordingly.
6.9.
In order to avoid any risk of misrepresenting Japan's argument, we have made the changes requested by Japan. In addition to amending paragraph 7,105, we have also amended the heading to Section 7.5.1.3.2, footnote 252 (of the Final Reports), and paragraphs 7,121, 7,130, 7,138, 7,144, 8.2(a)(i) and 8.7(b)(i).

6.3.2 Paragraph 7.114: price comparability

6.10.
Japan submits that record evidence with respect to pricing, which Japan relied on in the context of other issues, also demonstrates the lack of price comparability between imported and domestic Product C. Japan asks the Panel to refer to this additional evidence in support of its findings.
6.11.
China objects to Japan's request. China asserts that Japan did not rely on the relevant evidence in respect of the claim at issue.
6.12.
We reject Japan's request. Japan did not rely on the relevant evidence when advancing its claims before the Panel. In addition, the Panel's findings are adequately supported by the reasoning provided.

6.3.3 Paragraph 7.130: competitive relationship

6.13.
Japan asks the Panel to address its argument concerning the competitive relationship between subject imports and domestic like products. Japan suggests that this argument is relevant irrespective of whether the price undercutting analysis necessarily involves the examination of whether the dumped imports had an effect of placing downward pressure on domestic prices. Japan refers to paragraph 23 of its second written submission and paragraph 9 of its oral statement at the second substantive meeting to argue that its competitive relationship argument relates to comparability and the making of price comparisons, irrespective of the effect issue.
6.14.
China asks the Panel to reject Japan's request, on the basis that the Panel's position is clear, and that Japan essentially requests the Panel to assess legal and factual questions that are not at stake in the present dispute.
6.15.
The relevant section of the Interim Reports is concerned with the complainants' effect argument. Paragraph 23 of Japan's second written submission was also drafted in that context. We note in this regard that the preceding paragraph relates expressly to China's argument that an investigating authority is not required to establish that a price differential is an effect of dumped imports. Similarly, paragraph 9 of Japan's oral statement at the second substantive meeting states in relevant part that "[w]ithout such a competitive relationship, there can be no proper finding that the dumped imports had an effect of placing downward pressure on domestic prices". Japan's argument, therefore, was not made irrespective of the effect issue, as suggested by Japan. Since the Panel rejects the notion that an investigating authority need consider the effect of subject imports in the context of price undercutting, there is no need for the Panel to address the complainants' argument that such effect cannot not exist absent a competitive relationship between imported and domestic like products. We reject Japan's request accordingly.

6.3.4 Paragraph 7.132: clarification

6.16.
Japan has proposed a minor modification to clarify the nature of the argument being made by the complainants. Japan proposes to replace "deny" with "explain".
6.17.
China agrees with Japan's proposal to delete "deny", but suggests the use of the word "assert" instead.
6.18.
We have clarified the argument being made, as requested by Japan. We have done so by using the term "assert", as suggested by China.

6.3.5 Paragraphs 7.132 and 7.137, footnotes 239 and 246 (footnotes 254 and 262 of the Final Reports): translation

6.19.
Japan observes that the Panel failed to note Japan's objection to China's translation of part of MOFCOM's Final Determination. Japan notes that it had used "noticeable", whereas China had proposed the use of "significant" instead. Japan asks the Panel to amend footnotes 239 and 246 accordingly.
6.20.
We have amended footnotes 254 and 262 – and paragraphs 7,132 and 7,137 – of the Final Reports to address the concern raised by Japan. We have done so by including both the terms "significant" and "noticeable" in square brackets. There is no need for the Panel to choose between these terms, since the precise term used does not impact on the Panels' evaluation of the substantive matter at hand.

6.3.6 Paragraphs 7.136-7.143: scope of MOFCOM's price undercutting determination

6.21.
Japan suggests that the Panel has misunderstood the scope of the price undercutting finding made by MOFCOM. Japan asserts that MOFCOM's finding is ambiguous, and may be interpreted in a different manner. Japan also asks the Panel to rule that MOFCOM's determination is deficient because of such alleged ambiguity.
6.22.
China objects to Japan's request. China considers that Japan is essentially requesting the Panel to reach beyond what is necessary to resolve the dispute and to make certain findings assuming that the facts of the case would be different.
6.23.
We see no need for the Panel to amend its findings. First, while we observe at paragraph 7,137 that MOFCOM "might have expressed itself more clearly", our understanding of the scope of MOFCOM's finding is reasonable in light of the language used by MOFCOM. Second, the specific part of MOFCOM's finding referred to by Japan (i.e. the sentence immediately preceding the one cited by the Panel) does not refer to price undercutting per se. That sentence, therefore, should not determine our understanding of the scope of MOFCOM's price undercutting finding.

6.3.7 Paragraph 7.140: use of indefinite article

6.24.
Japan suggests that the Panel's analysis of the use of the indefinite article "a" preceding "like product" in the second sentence of Article 3.2 is "absurd", since it means that only a trivial volume of subject imports sold at undercutting prices would be sufficient to establish price effects under Articles 3.1 and 3.2.
6.25.
China asks the Panel to reject Japan's request. China suggests that Japan is merely seeking to re-argue points that it made in its submissions to the Panel.
6.26.
We are not persuaded by Japan's arguments. We consider that each case would need to be examined on its facts, and that in any event establishment of price effects for the purpose of Articles 3.1 and 3.2 is not sufficient, by itself, to establish causation under Article 3.5. Further, we consider that Japan's suggestion that the Panel's analysis is "absurd" is not an appropriate basis for requesting interim review.

6.3.8 Paragraph 7.141, footnote: request for deletion

6.27.
Japan asks the Panel to delete a footnote in paragraph 7,141, on the basis that it is unclear, and in any event not necessary to support the Panel's reasoning.
6.28.
We accept that the relevant footnote is not necessary, and have deleted it accordingly.

6.3.9 Paragraphs 7.145 and 7.170: the number of claims pursued by Japan

6.29.
Japan submits that the Panel has failed to acknowledge or address a fourth Article 3.4 claim by Japan concerning MOFCOM's alleged failure to examine whether subject imports provided explanatory force for the state of the domestic industry.
6.30.
China objects to Japan's request, on the basis that the claim was addressed in the Panel's findings.
6.31.
We consider that the relevant claim falls outside the Panel's terms of reference. The Panel's terms of reference are determined by Japan's Request for Establishment. Section 1.b of Japan's Request for Establishment provides in relevant part:

China's analysis of the impact of the dumped imports on the domestic industry: (i) failed to make an objective examination, based on positive evidence, of the impact of subject imports on the domestic industry based on the volume of such imports and their effect on prices; (ii) failed to evaluate the magnitude of the margin of dumping; and (iii) failed to objectively determine the relative importance and weight to be attached to relevant economic factors and indices, and improperly disregarded the majority of those factors and indices indicating that the domestic industry did not suffer material injury. Accordingly, China acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement.18

There is no reference in Japan's Request for Establishment to any claim concerning MOFCOM's alleged failure to examine whether subject imports provided explanatory force for the state of the domestic industry. We have reflected our analysis in footnote 274 of the Final Reports.

6.3.10 Paragraph 7.163: Article 3.4 implementing Article 3.1

6.32.
Japan asks the Panel to delete the phrase "To the extent that" from the final sentence of paragraph 7,163. Japan asserts that this phrase is unnecessary, since it is clear that Article 3.4 implements the requirement in Article 3.1 pertaining to "the consequent impact" of dumped imports on the domestic industry.
6.33.
China objects to Japan's request, on the basis that the relevant provision contains multiple obligations.
6.34.
We uphold Japan's request. We have replaced the relevant phrase by the word "as".

6.3.11 Paragraphs 7.166-7.168: interplay between positive and negative injury factors

6.35.
Japan disagrees with the Panel's finding that Japan failed to establish a prima facie case in support of its claim. First, Japan asserts that, contrary to the Panel's finding, Japan did demonstrate the inadequacy of specific elements of MOFCOM's analysis. Japan's assertion is based on comments it made in its second written submission in respect of China's reply to Panel question No. 34. Second, Japan suggests that the Panel's position is that provided an investigating authority supplies some explanation concerning the interplay between positive and negative factors, any Article 3.4 claim would fail.
6.36.
China suggests that Japan is seeking to re-argue points that it made during its submissions.
6.37.
Regarding Japan's first concern, we note that Panel question No. 34 was not concerned with MOFCOM's assessment of the relationship between positive and negative injury factors. Accordingly, there is no basis to conclude that Japan's comments in respect of China's reply to Panel question No. 34 constitute a prima facie case in support of the claim at issue.
6.38.
Regarding Japan's second point, the Panel manifestly did not find that any Article 3.4 claim would fail provided an investigating authority supplies some explanation concerning the interplay between positive and negative factors. The Panel's findings simply address in relevant part the complainants' argument that the Final Determination was "silent" on the interplay between the positive and negative injury factors, and their argument that MOFCOM failed to provide any explanation "whatsoever" regarding the weighing of those factors. While Japan also refers to the finding by the panel in Thailand – H-Beams that the investigating authority must provide a "compelling explanation" of the interplay between positive and negative injury factors, we recall that, even under the "compelling explanation" standard, the burden of proof is on the complainant. As explained by the Panel, the complainants did not meet this burden.

6.3.12 Section 7.5.3 heading: inclusion of a reference to Article 3.1

6.39.
Japan asks the Panel to include a reference to Article 3.1 of the Anti-Dumping Agreement in the heading of Section 7.5.3.
6.40.
Since the Panel's findings also cover Article 3.1, we have made the amendment requested by Japan.

6.3.13 Paragraphs 7.173, 7.189, 7.192, and 7.205: independent Article 3.5 claims

6.41.
Japan disagrees with the Panel's conclusion that Japan did not make independent Article 3.5 claims based on alleged flaws in MOFCOM's price effects and volume analyses. Japan explains that the purpose of the approach it adopted in its first written submission was to argue both that: (i) any instances where the Panel agrees with violations of Articles 3.2 and 3.4 result in consequent violations of Article 3.5; and (ii) any instances where the Panel rejects violations of Articles 3.2 and 3.4 result in independent violations of Article 3.5.
6.42.
China objects to Japan's request. China suggests that Japan has failed to respond to the Panel's reasoning.
6.43.
We observe that, despite Japan's explanation of the way it intended its first written submission to be read, this is not what its first written submission actually says. Furthermore, while Japan refers to its reply to Panel question No. 88, we recall that the Panel addressed Japan's reply to this question at paragraph 7,192 of its findings. The Panel concluded that the complainants' replies to that question failed either to identify any relevant independent Article 3.5 claims in their written submissions, or to identify arguments explaining how the alleged flaws in MOFCOM's price effects and impact analyses result in independent violations of Article 3.5. There is nothing in Japan's request for interim review to suggest that the Panel's assessment of those replies is inaccurate.

6.3.14 Paragraph 7.182: expansion of Panel's reasoning

6.44.
Japan asks the Panel to include an additional element in its assessment of MOFCOM's reliance on the market shares of subject imports. In particular, Japan asks the Panel to include a reference to the fact that the sales and market share of domestic Grade A increased.
6.45.
China objects to Japan's request. China does not consider the relevant facts as contrary to MOFCOM's conclusion.
6.46.
We uphold Japan's request, and have amended our findings accordingly.

6.3.15 Paragraph 7.184: inclusion of citation

6.47.
Japan asks the Panel to include a citation to Appellate Body case law concerning the rejection of ex post rationalization. Japan notes that such citation has been provided elsewhere by the Panel.
6.48.
We have included the citation identified by Japan in footnote 331 of the Final Reports.

6.3.16 Paragraphs 7.202-7.203

6.49.
Japan asks the Panel to delete the phrase "it is not meaningful" from paragraph 7,202. Japan also asks the Panel to address certain fact-based arguments made by Japan concerning MOFCOM's non-attribution analysis.
6.50.
China objects to Japan's request, on the basis that the original wording more accurately reflects the Panel's rationale for not engaging in an analysis of all aspects. China also suggests that it would be inappropriate for the Panel to address all of Japan's non-attribution arguments, since this would not be a meaningful exercise.
6.51.
We consider that Japan's first request should be accommodated by using the words "it is not necessary" instead of "it is not meaningful". Regarding judicial economy, we maintain our view that, in light of the fundamental flaw in MOFCOM's analysis, it is not necessary to address every aspect of the parties' non-attribution arguments in detail.

6.3.17 Paragraphs 7.208 and 7.221: scope of arguments

6.52.
Japan asks the Panel to include Japan's argument that MOFCOM violated Article 6.8 and Annex II by failing to use the "best information available" and "special circumspection" in applying the highest margin of dumping as the all others rate. Japan also asks the Panel to address that argument in its findings.
6.53.
China objects to Japan's requests. China asserts that Japan failed to set out these arguments in its first written submission.
6.54.
We reject Japan's request. The relevant argument was first raised by Japan in paragraphs 76-81 of its second written submission. Japan asserted that its argument raised a "fundamental point". As explained in footnote 328 of the Interim Reports (footnote 347 of the Final Reports), Japan was required by paragraph 7 of the Panel's Working Procedures to set out its case and arguments in its first written submission. This provision serves an important due process purpose. While a complainant may need to raise new arguments in its second written submission in order to respond to arguments made by the other party, this was not the context in which Japan raised its "fundamental point" in its second written submission.

6.3.18 Paragraph 7.259: correction of scope of findings

6.55.
Japan identifies an error in the Panel's description of its treatment of Japan's Article 6.9 claim. Japan suggests that this should result in parts of paragraph 7,259 being deleted.
6.56.
China objects to the point raised by Japan. China denies that there is any error in the Panel's findings.
6.57.
We have made the changes proposed by Japan, to avoid any possibility of error in the Panel's findings.

6.3.19 Paragraph 7.260: expansion of quote

6.58.
Japan asks the Panel to avoid uncertainty by including an additional part in its quotation of paragraph 102 of Japan's second written submission.
6.59.
We have included the additional language requested by Japan.

6.3.20 Paragraphs 7.277 and 7.281: judicial economy

6.60.
Japan asks the Panel to reconsider its exercise of judicial economy in respect of Japan's Article 12.2 and 12.2.2 claims, on the basis that the obligations in these provisions differ from the obligations in Article 3.2.
6.61.
China considers that the Panel's exercise of judicial economy is appropriate.
6.62.
We maintain our exercise of judicial economy. As indicated in the Panel's reasoning, MOFCOM will in any event need to revise its Final Determination in order to implement the Panel's finding under Article 3.2.

6.3.21 Paragraph 7.298, footnote 455 (footnote 475 of the Final Reports): cross-referencing between DS454 and DS460

6.63.
Japan notes that footnote 455 (footnote 475 of the Final Reports) cross-references footnote 166 (footnote 174 of the Final Reports), and that the latter relates only to the DS460 Report. For the avoidance of any doubt that the relevant footnote is pertinent to the DS454 Report, Japan suggests that the Panel repeat the entirety of the text of that footnote in footnote 455.
6.64.
China agrees with Japan's requests.
6.65.
We have amended footnote 475 of the final Reports in the manner requested by Japan.

6.3.22 Paragraph 7.336: consequential claims

6.66.
Japan notes an inconsistency between the Panel's exercise of judicial economy in paragraph 7,336 and the summary of its conclusions in paras. 8.1 and 8.6. Japan asks the Panel to amend paragraph 7,336, and make the appropriate findings instead of exercising judicial economy.
6.67.
China objects to Japan's request, in the sense that China asks19 the Panel to make its conclusions in paragraphs 8.1 and 8.6 consistent with its findings in paragraph 7,336, and therefore continue to exercise judicial economy.
6.68.
We have amended paragraph 7,336 in order to ensure consistency with Section 8 of the Final Reports.

6.3.23 Paragraphs 8.2 and 8.7: scope of conclusions

6.69.
Japan notes that the Panel has failed to include certain claims in its conclusions, and asks the Panel to adjust its conclusions accordingly.
6.70.
China objects to Japan's request to the extent that it also concerns the Panel's conclusions in respect of a claim brought by the European Union in the DS460 proceeding.
6.71.
As explained above, we do not consider that China's objection is consistent with the Paragraph 1 of the Panel's Working Procedures. We have included the additional elements proposed by Japan.

6.4 REQUESTS FOR INTERIM REVIEW BY THE EUROPEAN UNION

6.4.1 Paragraph 7.114: price comparability

6.72.
The European Union requests the addition of a reference to record evidence about prices regarding the lack of comparability between domestic and imported Grade C products.
6.73.
China objects to the European Union's request, on the ground that it is not sufficiently specific. China also asserts that the European Union did not rely on the relevant evidence in respect of the claim at issue.
6.74.
We reject the European Union's request. We note that the same request was made by Japan. Like Japan, the European Union did not rely on the relevant evidence when advancing its claims before the Panel. In addition, the Panel's findings are adequately supported by the reasoning provided.

6.4.2 Paragraphs 7.132 and 7.137, footnotes 239 and 246 (footnotes 254 and 262 of the Final Reports): translation

6.75.
The European Union observes that the Panel failed to note its objection to China's translation of part of MOFCOM's Final Determination. The European Union asks the Panel to amend footnotes 239 and 246 of the Interim Reports accordingly.
6.76.
We note that the same request was made by Japan. As explained in respect of Japan's request, we have amended footnotes 254 and 262 – and paragraphs 7,132 and 7,137 – of the Final Reports to address this issue.

6.4.3 Paragraphs 7.226, 7.235, and 7.262: clarification of argument

6.77.
The European Union asks the Panel to clarify that the European Union's argument described in the second sentence of paragraph 7,226 – concerning the disclosure of a spread sheet by the investigating authority - relates to Article 6.4, rather than Article 6.9.
6.78.
China states that it has no objection to the Panel clarifying that the relevant argument relates to Article 6.9 (whereas we observe that the European Union's request states that the argument actually relates to Article 6.4).
6.79.
We are not persuaded that the relevant argument should necessarily be understood to relate to Article 6.4, as opposed to Article 6.9. The argument is made in paragraph 111 of the European Union's first written submission. That paragraph is found in a section whose heading refers to alleged inconsistencies with both Articles 6.4 and 6.9. The first sentence of paragraph 111 contains a reference to Article 6.4. The relevant argument is contained in the second sentence. While the proximity to the first sentence of paragraph 111 might suggest that the argument set forth in the second sentence relates to Article 6.4, the third sentence of paragraph 111 then refers to an Appellate Body Report concerning Article 6.9. In addition, the second sentence of paragraph 111 (in which the relevant argument is set forth) refers to the "disclosure" of a spread sheet by the investigating authority. The term "disclos[e]" is found in Article 6.9, not Article 6.4. In these circumstances, there is no basis to conclude that the Panel should necessarily understand the relevant argument to relate to Article 6.4, rather than Article 6.9. The European Union does not explain why this should be the case.

6.5 REQUESTS FOR INTERIM REVIEW BY CHINA

6.5.1 Footnote 16: overlap between the complainants' claims and arguments

6.80.
China suggests that footnote 16 does not reflect the extent to which the complainants' claims and arguments differ, and proposes amended text.
6.81.
In order to avoid any uncertainty, we have deleted the relevant footnote from the Final Reports.

6.5.2 Paragraph 7.27: BCI Procedures

6.82.
China objects to the Panel's statement that "[f]or purposes of Article 17.7, China's interpretation effectively results in equating the term 'provided' with 'disclosed'". China agrees with the Panel that the term "provided" has a different meaning from the term "disclosed". China asks the Panel to delete this sentence, so as to prevent any suggestion that China took the position that the term "provided" could be equated with "disclosing".
6.83.
In order to avoid any misunderstanding of China's position, we have deleted the relevant sentence.

6.5.3 Paragraphs 7.39, 7.45, and 7.110: scope of China's arguments

6.84.
China asks the Panel to include additional elements in its summary of China's main arguments.
6.85.
We accept China's request with respect to paragraphs 7.39 and 7,110. However, we reject China's request relating to paragraph 7.45. First, this paragraph introduces the Panel's evaluation by setting out the main issue before it. Introducing a detailed explanation of one of China's arguments would not necessarily help to identify the main issue in dispute. Second, the argument China would like the Panel to include in paragraph 7.45 is already explained and addressed in footnote 108 of the Final Reports. Third, by including a detailed summary of this argument in paragraph 7.39, we see no need to include another detailed summary of it – beyond what is already included in the above-mentioned footnote 108.

6.5.4 Footnote 88 (footnote 94 of the Final Reports): information obtained during consultations

6.86.
China asks the Panel to first cite to the European Union's first written submission, instead of China's opening statement at the first meeting of the Panel, because the European Union was the first party to refer to information obtained during the consultations.
6.87.
We have amended footnote 94 of our Final Reports accordingly.

6.5.5 Paragraphs 7.59 and 7.60: facts before MOFCOM

6.88.
China asks the Panel to amend its summary of China's argument to include that China considers that MOFCOM relied on the facts that were before it during the investigation.
6.89.
We have amended our Reports accordingly.

6.5.6 Footnote 128 (footnote 136 of the Final Reports): table 6-3

6.90.
China disagrees with the Panel's interpretation of China's position in this footnote. China contends that its statement did not directly concern whether MOFCOM's determination complied with Article 2.2.2 of the Anti-Dumping Agreement. Rather, according to China, its statement rebutted the argument put forward by the European Union in support of its claim that MOFCOM did not verify the SG&A data in table 6.3.
6.91.
The Panel has not interpreted China's position in this footnote. Instead, the Panel quoted China's argument directly from China's response to Panel question No22(a), paragraph 74, and paragraph 52 of its second written submission. Further, this discussion took place in the context of the European Union's Article 2.2.2 claim. As explained in paragraph 7.65 of the Panel Report, the issue before the Panel, concerning Article 2.2.2 of the Anti-Dumping Agreement, was whether table 6-3, which China submits was the basis for the SG&A amounts used in MOFCOM's calculation of normal value, can be said to be based on "actual data pertaining to production and sales in the ordinary course of trade of the like product". Thus, whether or not table 6-3 was verified may be relevant in addressing this claim. In fact, in footnote 134 of the Final Reports, the Panel noted that "nothing in the Panel record indicates that MOFCOM verified table 6.3". Nevertheless, it was unclear how China's statement would excuse China from complying with the Article 2.2.2 requirements or justify MOFCOM's failure to meet such requirements. This is exactly what the last sentence of footnote 128 of the Interim Reports (footnote 136 of the Final Reports) states. Nevertheless, we have included text at the beginning of footnote 136 of the Final Reports for clarification.

6.5.7 Paragraph 7.95: MOFCOM's dumping determination

6.92.
China asks the Panel to further develop the summary of China's argument in the section summarizing China's main arguments.
6.93.
We have amended paragraph 7.95 accordingly.

6.5.8 Paragraph 7.112: headings of sub-sections in the complainants' submissions

6.94.
China disagrees with the relevance attached by the Panel to the titles of the relevant sub-sections of the complainants' submissions. China asks the Panel to clarify that the relevant sub-sections are not limited to the claim at issue.
6.95.
Japan submits that China's request is unnecessary, and should be rejected by the Panel. Japan asserts that the fact that Japan made two claims within the relevant sub-section of its written submission does not detract from the fact that one of those claims relates to the claim at issue.
6.96.
We consider that it is appropriate for the Panel to refer to the headings of the relevant sub-sections of the complainants' submissions to understand the scope of a particular claim, even if those sub-headings also cover other claims. We therefore reject China's request.

6.5.9 Paragraph 7.113: clarification of China's arguments

6.97.
China suggests that the Panel has misrepresented the position taken by China regarding the effect of quantitative differences on comparability.
6.98.
We do not consider that the Panel has misrepresented China's position. Notably, China does not ask the Panel to delete the phrase "[t]here is no disagreement between the parties regarding the potential for a large difference in the volume of imports and domestic sales to affect price comparability". However, in order to avoid any risk of misunderstanding, we have amended the relevant part of paragraph 7,113.
6.99.
China has also suggested the inclusion of additional argumentation from paragraph 132 of its second written submission, and its reply to Panel question No. 33. Rather than including such arguments in the Panel's evaluation, we have included them in the description of China's arguments at paragraph 7,110.

6.5.10 Paragraphs 7.120, 7.134, 7.135, 7.157, 7.183, 7.210, 7.230, 7.287, footnotes 436, 437, 440, 459, 461 (footnotes 456, 457, 460, 479 and 481 of the Final Reports): clarification of China's position

6.100.
China asks the Panel to include additional argumentation in the Panel's summary of the main arguments made by China. For the most part, we have acceded to China's requests.
6.101.
In respect of paragraph 7,135, Japan objects to China's formulation of the additional argument at issue. Japan asserts that China's formulation does not properly reflect the findings in MOFCOM's Final Determination. In order to accommodate Japan's request, we have used language making it clear that the additional argument concerns China's understanding of the scope of MOFCOM's findings.

6.5.11 Paragraph 7.171: inclusion of a cite to Final Determination

6.102.
China asks the Panel to include a citation to the Final Determination.
6.103.
We have included the relevant citation in footnote 306 of the Final Reports.

6.5.12 Paragraphs 7.180-7.188 and 7.192: market shares of subject imports

6.104.
China disagrees with the Panel's reliance on elements relating to the price effects and impact analyses when addressing the claim in respect of MOFCOM's reliance on market shares in its causation analysis. China asserts that it has been unable to identify any arguments by the complainants referring to those items in such context. China asserts that the complainants' claims with respect to market share relate to only "two elements", namely: (i) whether the market share retained by subject imports may be relevant for the causation analysis; and (ii) whether a causation finding may be made absent a significant increase in subject import volume. In the event that the Panel rejects China's request, China asks that the Panel should at least amend footnote 325 of the Interim Reports (footnote 344 of the Final Reports) to clarify that China objects to the scope of the claim as addressed by the Panel. China also asks the Panel to amend the wording of paragraph 7,181, to avoid any suggestion that the Panel is "agreeing" with arguments that the complainants did not make. China further observes that the Panel should only refer to arguments made by Japan in this context.
6.105.
Japan asserts that it should be evident from several aspects of its submissions that Japan's causation claim as it related to market share was broader than the two elements identified by China. Japan refers to a series of extracts from its written submissions and oral statements in support.
6.106.
We are not persuaded that we should amend our findings in the precise manner requested by China. In respect of MOFCOM's findings on the market share of subject imports, both complainants referred to the relevance of market share data in the context of price effects.20 The Panel's reasoning picks up on this point, and addresses the issue of whether or not MOFCOM showed that the market shares of subject imports "enabled those imports, through price effects, to cause injury to the domestic industry". While the Panel's reasoning may be more detailed than the arguments of the complainants, the basis for the Panel's reasoning nevertheless lies in the complainants' submissions.
6.107.
Regarding footnote 325 of the Interim Reports (footnote 344 of the Final Reports), the matter raised by China relates to interim review, and should therefore only be addressed in Section 6 of the Panel's Final Reports. It should not feature in Section 7, which concerns the Panel's findings.
6.108.
Concerning the word "agree" in paragraph 7,181, we have replaced the phrase "agree with the complainants" by the word "consider".

6.5.13 Paragraph 7.297 and 7.298: MOFCOM's statement and relevant appendices

6.109.
China submits that it does not consider that it adopted a narrower approach, as suggested in paragraph 7,297; rather China merely clarified its position. Thus, China proposes certain amendments to paragraphs 7,297 and 7,298.
6.110.
Japan considers that the Panel should not delete the final sentence of paragraph 7,298 as proposed by China, but rather rephrase it.
6.111.
We have amended paragraph 7,297 of the Final Reports according to China's request. We have rephrased the relevant part of paragraph 7,298 of the Final Reports in accordance with Japan's suggestion.

6.5.14 Footnotes 482, 495, and 501 (footnotes 502, 515 and 521 of the Final Reports): non-confidential summaries

6.112.
China understands the Panel to refer to the lack of an explicit statement by China as to whether the relevant information should have been included in the non-confidential summary. In addition, China notes that it has generally taken the position that "the non-confidential summaries of the four appendices at issue are sufficiently detailed to provide a 'reasonable understanding' of the substance of the information submitted in confidence".21 Thus, China asks the Panel to amend these footnotes accordingly.
6.113.
We have amended footnotes 502, 515 and 521 of the Final Reports, as requested by China.

6.5.15 Paragraphs 8.1, 8.3, 8.6, and 8.8: consequential claims

6.114.
As noted above in respect of Japan's request for interim review of paragraph 7,336, China asks the Panel to record the exercise of judicial economy in respect of certain consequential claims in the summary of its conclusions set forth in Section 8.
6.115.
As explained above in respect of Japan's request, we have amended paragraph 7,336 to reflect Section 8 (as requested by Japan), rather than the other way round (as requested by China).

7 FINDINGS

7.1.
These disputes concern China's measures imposing anti-dumping duties on certain imports of HP-SSST from Japan and the European Union in the context of the investigation at issue. The complainants' claims pertain to various procedural and substantive provisions of the Anti-Dumping Agreement and, consequently, to Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994. China asks the Panel to reject the complainants' claims.
7.2.
We shall begin by examining certain requests relating to (i) the Panel's Joint Working Procedures, and (ii) the Panel's terms of reference. Thereafter, we shall turn to the claims relating to MOFCOM's dumping and injury determinations. Finally, we shall examine the remaining, mostly procedural claims. Before examining the issues before us, though, we recall a number of general principles regarding treaty interpretation, standard of review and burden of proof in WTO dispute settlement proceedings.

7.1 GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION, THE APPLICABLE STANDARD OF REVIEW AND BURDEN OF PROOF

7.1.1 Treaty Interpretation

7.3.
Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". It is generally accepted that the principles codified in Articles 31 and 32 of the Vienna Convention are such customary rules.

7.1.2 Standard of Review

7.4.
Panels generally are bound by the standard of review set forth in Article 11 of the DSU, which provides, in relevant part:

[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. (emphasis added)

7.5.
The Appellate Body has stated that the "objective assessment" to be made by a panel reviewing an investigating authority's determination is to be informed by an examination of whether the agency provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings supported the overall determination.22
7.6.
The Appellate Body has also commented that a panel reviewing an investigating authority's determination may not conduct a de novo review of the evidence or substitute its judgment for that of the investigating authority. A panel must limit its examination to the evidence that was before the agency during the course of the investigation and must take into account all such evidence submitted by the parties to the dispute.23 At the same time, a panel must not simply defer to the conclusions of the investigating authority. A panel's examination of those conclusions must be "in-depth" and "critical and searching".24
7.7.
Further to Article 11 of the DSU, Article 17.6 of the Anti-Dumping Agreement sets forth a specific standard of review applicable to anti-dumping disputes, namely:

(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; and

(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.

7.1.3 Burden of Proof

7.8.
The general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.25 Therefore, as the complaining parties, Japan and the European Union bear the burden of demonstrating that the Chinese measures are inconsistent with the WTO agreements invoked by the complainants. The Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima facie case, namely a case which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party.26 Finally, it is generally for each party asserting a fact to provide proof thereof.27

7.2 BCI PROCEDURES

7.9.
The European Union takes issue with two aspects of the BCI Procedures originally adopted by the Panel, namely (i) the designation of BCI, and (ii) the requirement to provide authorizing letters from entities participating in the underlying anti-dumping proceedings. The European Union requests that the Panel amend the BCI Procedures accordingly. While Japan generally agrees with the European Union's requests, China asks the Panel to reject the European Union's requests.

7.2.1 Relevant provisions of the BCI Procedures

7.10.
Paragraphs 1 and 2 of the BCI Procedures originally provided:

1. These procedures apply to any business confidential information (BCI) that a party wishes to submit to the Panels. For the purposes of these procedures, BCI is defined as any information that has been designated as such by the Party submitting the information, that is not available in the public domain, and the release of which could seriously prejudice an essential interest of the person or entity that supplied the information to the Party. In this regard, BCI shall include information that was previously submitted to China's Ministry of Commerce ("MOFCOM") as BCI in the anti-dumping investigation at issue in these disputes. However, these procedures do not apply to information that is available in the public domain. In addition, these procedures do not apply to any BCI if the person who provided the information in the course of the aforementioned investigation agrees in writing to make the information publicly available.

2. The first time that a party submits to the Panels BCI as defined above from an entity that submitted that information in the anti-dumping investigation at issue in these disputes, the party shall also provide, with a copy to the other parties, an authorizing letter from the entity. That letter shall authorize China, the European Union and Japan to submit in these disputes, in accordance with these procedures, any confidential information submitted by that entity in the course of the investigation at issue. (emphasis added)

7.2.2 Main arguments of the parties

7.2.2.1 European Union

7.11.
The European Union claims that the provisions in the BCI Procedures concerning (i) designation of BCI, and (ii) authorizing letters from entities participating in the underlying anti-dumping proceedings are WTO-inconsistent.28
7.12.
The European Union objects to the Panel automatically classifying as BCI information that was submitted as confidential in the underlying anti-dumping proceedings, because the designation of confidential information cannot be delegated, in absolute terms, to non-WTO entities or persons. The European Union recalls that, pursuant to Article 18.2 of the DSU, in dispute settlement, Members shall treat as confidential information submitted by another Member which the latter has designated as confidential. In addition, the European Union submits that, in case of disagreement, WTO adjudicators should ultimately decide on BCI designation, on the basis of objective criteria, without delegating this decision to any other entity or person.29 The European Union requests that the relevant sentence in paragraph 1 of the BCI Procedures be modified to read: "In this regard, parties and third parties are encouraged to designate as BCI information that was previously submitted to China's Ministry of Commerce ('MOFCOM') as BCI in the anti-dumping investigation at issue in these disputes".30 The European Union also requests that the following final sentence be added to this paragraph: "In case of disagreement, the Panels shall decide on BCI designation".31
7.13.
The European Union also objects to the requirement that a party must seek and provide prior written authorization from the entity that submitted the confidential information in the underlying anti-dumping proceedings when submitting such information to the Panel. Regardless of whether the BCI designation was appropriate or not, the European Union contends that a particular firm could simply withhold authorization and effectively limit the information that may be submitted in WTO dispute settlement. According to the European Union, this is particularly relevant when, as in these disputes, a Member challenges another Member to disclose certain information that was originally submitted by private firms in the underlying anti-dumping proceedings.32 The European Union also contends that Article 17.7 of the Anti-Dumping Agreement makes clear that a Member is not required to obtain authorization before providing confidential information to panels.33 The European Union requests that paragraph 2 of the BCI Procedures be deleted or modified by replacing the verb "shall" with "may" in both sentences.34 Finally, to the extent the Panel is concerned about protecting the WTO from any consequences of disclosure, the European Union suggests that the following sentence be added: "Each party and third party shall be solely responsible for ensuring its own compliance with any applicable confidentiality rules and solely responsible for the confidentiality designation it makes when submitting information to the Panel, and any consequences thereof".35

7.2.2.2 Japan

7.14.
Japan generally agrees with the European Union's requests to modify paragraphs 1 and 2 of the BCI Procedures. Japan recalls that it is Members that have the right to designate information as confidential in DSU proceedings. According to Japan, "a panel may not give total deference (or an absolute delegation) for the resolution of the issue of the designation of BCI to some other party, such as the firm submitting the information in the underlying proceeding or even the investigating authority".36 With respect to paragraph 2 of the BCI Procedures, to the extent it effectively takes out of the hands of the submitting Member and the Panel the question of what may be submitted in DSU proceedings, Japan agrees with the European Union. Japan notes that a firm that submitted information in the underlying domestic proceeding could withhold authorization by simply refusing the issuance of an authorizing letter.37

7.2.2.3 China

7.15.
China notes that, after consulting with the parties, the Panel adopted additional protection for certain confidential information, while at the same time balancing the interests of all WTO Members by requiring the submission of non-confidential versions of any written submission containing BCI.38 China contends that the challenged aspects of the BCI Procedures add to rather than detract from the protection provided by the DSU, as they do not deprive Members of the possibility to designate information as confidential under Article 18.2 of the DSU. China also submits that the additional protection in the BCI Procedures for information previously submitted to MOFCOM as BCI is in line with the confidentiality requirements set forth in Article 6.5 of the Anti-Dumping Agreement.39 Specifically with regard to paragraph 2 of the BCI Procedures, China submits that "an authorizing letter is a necessary instrument to ensure compliance by the investigating authority with its obligations under Article 6.5 of the Anti-Dumping Agreement".40 China contends that it is not uncommon to require the presentation of such an authorizing letter in WTO dispute settlement proceedings concerning trade remedies, and this requirement, to China's knowledge, has never been found to be WTO-inconsistent.41

7.2.3 Main arguments of third parties

7.2.3.1 United States

7.16.
The United States submits that it is sympathetic to the concern that it could be difficult for Members and panels to evaluate compliance with obligations under the Anti-Dumping Agreement where a Member fails to meet its transparency obligations. However, the United States submits that "the correct course of action is not for the Panel to request China to submit to the Panel information which MOFCOM treated as confidential during the antidumping proceedings without permission of the party that submitted the information to MOFCOM".42 The United States contends that such course of action would implicate Article 6.5 of the Anti-Dumping Agreement, which requires investigating authorities to not disclose information accepted as confidential during anti-dumping proceedings without permission of the party that submitted such information. The United States notes that Article 6.5 does not contain any exception for WTO proceedings.43 The United States observes that if a Member has failed to meet its Anti-Dumping Agreement transparency obligations, complaining Members may, as in these disputes, bring claims under such transparency obligations. Should a panel find a breach of these obligations, the responding party would then be required to bring its measures into compliance with those transparency obligations.44

7.2.4 Evaluation by the Panel

7.17.
There are two main issues before the Panel: (i) whether the Panel may delegate, in absolute terms, the BCI designation to non-WTO entities; and (ii) whether disputing parties should be required to provide an authorizing letter from the entity that submitted confidential information in the underlying anti-dumping proceedings, when providing such information to the Panel. We address below each of these issues.

7.2.4.1 BCI designation

7.18.
The European Union takes issue with the "absolute" delegation of BCI designation to entities participating in the underlying anti-dumping proceedings. The sentence at issue in paragraph 1 of the BCI Procedures originally provided in relevant part: "BCI shall include information that was previously submitted to … MOFCOM … as BCI in the anti-dumping investigation at issue in these disputes". (emphasis added) We agree with the European Union that the original wording of this sentence suggests that BCI designation is determined by the party submitting information to MOFCOM.45 Thus, we have amended this sentence to read as follows in relevant part: "BCI shall include information that was previously treated by … MOFCOM … as BCI in the anti-dumping investigation at issue in these disputes".46 (emphasis added)
7.19.
However, the European Union submits that it is for the submitting Member, in the first place, to designate information as confidential. Thus, the European Union considers that its concerns would not be addressed if the designation of BCI were dependent on the investigating authority's determination to treat information as confidential in the underlying anti-dumping proceedings.47
7.20.
We agree with China that the BCI Procedures do not detract from the ability of Members to designate information as confidential under Article 18.2 of the DSU. It is clear that the designation of confidential information in anti-dumping proceedings, as provided for in Article 6.5 of the Anti-Dumping Agreement, is distinct from the designation of BCI for purposes of DSU proceedings. However, we consider that these designations are closely related because in disputes under the Anti-Dumping Agreement the Panel is not the initial trier of facts. Rather, according to the proper standard of review, the Panel must review whether the investigating authority's establishment of the facts was proper, and whether its evaluation of those facts was unbiased and objective.48 The Panel's review must be based on the record developed by the investigating authority. The Panel may not have regard to new information that was not on the authority's record.
7.21.
In our view, Article 17.7 of the Anti-Dumping Agreement reflects this relationship when it provides that "[c]onfidential information provided to the panel shall not be disclosed without formal authorization from the person, body or authority providing such information". We note that this provision is included as a special or additional rule and procedure in Appendix 2 of the DSU, which prevail over the rules and procedures in the DSU to the extent that there is a difference between these two sets of provisions.49 We understand that, in the context of a dispute brought under the Anti-Dumping Agreement, the phrase "confidential information" in Article 17.7 refers to the confidential information previously examined by the investigating authority and treated as confidential pursuant to Article 6.5 – and which is now provided to a dispute settlement panel pursuant to Article 17.7. This understanding is supported by the terms of Article 17.7 of the Anti-Dumping Agreement and Article 18.2 of the DSU. Article 17.7 refers to confidential information provided by a "person, body or authority"; whereas Article 18.2 refers to confidential information provided by a "Member". In other words, Article 17.7 envisages that confidential information on the authority's record – obtained from a "person, body or authority" - may be provided to a panel, and imposes on the panel a non-disclosure obligation50 similar to that imposed on the authority by the last sentence of Article 6.5. Considering that a panel's review is limited to the authority's record, in practice the designation under Article 18.2 of the DSU should generally not arise in a case brought under the Anti-Dumping Agreement, since the issue of designation of the information on the authority's record is already addressed by Articles 6.5 and 17.7 of the Anti-Dumping Agreement.
7.22.
The European Union submits that "[s]hould [the European Union] choose to un-designate information from [its] own firms (for example because, with the passage of time, it is no longer sensitive or has come into the public domain) [the European Union] fail[s] to see what interest any other party or third party might have in objecting to such course of action".51 We are not persuaded by the European Union's argument. First, we recall that paragraph 1 of the BCI Procedures provides that "these procedures do not apply to information that is available in the public domain". Second, if the information from the European Union's firms "is no longer sensitive", we agree with the European Union and also fail to see the "interest any other party or third party might have in objecting to [the 'un-designation']". In our view, the hypothetical scenario raised by the European Union should not result in any disagreement between the parties. Indeed, if the information is no longer sensitive, even the entity that initially provided the information would agree. The situation envisaged by the European Union would then fall within the scope of paragraph 1 of the BCI Procedures, which provides that "these procedures do not apply to any BCI if the person who provided the information in the course of the … investigation agrees in writing to make the information publicly available". This safeguard is important, for a WTO Member is not necessarily best placed to determine whether or not information submitted on a confidential basis in the context of an anti-dumping proceeding remains sensitive. Indeed, the relevant Member may not even be aware of the specific reasons why confidentiality was requested in the first place.52
7.23.
Furthermore, we fail to see the concern relating to designation by WTO Members, as raised by the European Union in the present case, because China, as a party to these disputes, has designated all information treated as confidential in the underlying anti-dumping proceedings as BCI for purposes of these DSU proceedings.53 This constitutes designation by a WTO Member, as proposed by the European Union.
7.24.
The European Union also submits that "[i]f … information is automatically to be designated as BCI in the present proceedings, then that would seriously risk to pre-judge one of the very issues that is supposed to be in dispute".54 Similarly, Japan contends that to "categorically include within the definition of BCI any information accepted by the investigating authority as confidential in an underlying proceeding would be problematic, because this would presume or prejudge the propriety of the BCI designation by the investigating authority in a dispute like the present one in which the WTO consistency of the confidential treatment of information by the investigating authority is itself in dispute".55 The European Union and Japan appear to conflate the question of proper BCI designation in the present DSU proceedings with the question of proper treatment of confidential information in the underlying anti-dumping proceedings.56 Designating information as BCI in the present proceedings allows the Panel, the parties and third parties to receive and examine such information, while controlling its disclosure to any person not authorized under the BCI Procedures. We agree with China57 that this has no bearing on the Panel's assessment of whether MOFCOM treated information as confidential in the underlying anti-dumping proceedings consistently with the provisions of the Anti-Dumping Agreement. In fact, contrary to the apparent suggestion by the complainants, we consider that the BCI Procedures assist the Panel in accessing all necessary information for a proper and objective examination of the claims, in the present disputes, relating to the treatment of confidential information in the underlying anti-dumping proceedings.
7.25.
In light of the foregoing, we have decided not to modify paragraph 1 of the BCI Procedures in the manner proposed by the European Union. We have amended paragraph 1 of the BCI Procedures only in the manner explained above in paragraph 7.18

7.2.4.2 Authorizing letter

7.26.
With respect to paragraph 2 of the BCI Procedures, the European Union takes issue with the requirement for parties to provide an authorizing letter from the entity that submitted confidential information in the underlying anti-dumping proceedings, when submitting such information to the Panel.
7.27.
With respect to WTO dispute settlement, Article 17.7 of the Anti-Dumping Agreement sets forth that "[c]onfidential information provided to the panel shall not be disclosed without formal authorization from the person, body or authority providing such information". (emphasis added) With respect to anti-dumping proceedings, Article 6.5 of the Anti-Dumping Agreement uses the same terms, setting forth that "[a]ny information which is by nature confidential …, or which is provided on a confidential basis … shall … be treated as such by the authorities. Such information shall not be disclosed without specific permission …". (emphasis added) China argues that the authorizing letter is necessary to ensure compliance by the investigating authority with its obligations under Article 6.5, including when information is "disclosed" to the Panel in the context of a dispute under the Anti-Dumping Agreement.58 In China's view, "when … information is 'disclosed' to the panel under Article 6.5, it is 'provided' to the panel under Article 17.7".59 However, in our view, the use of different terms – i.e. "provided" and "disclosed" – in the same sentence in Article 17.7 strongly suggests that they have different meanings.
7.28.
In addition, we consider there is a clear relationship between Articles 6.5 and 17.7. While the former provision regulates when confidential information may be disclosed by investigating authorities, the latter provision regulates when such information may be disclosed by a panel. As stated above, panels are not the initial triers of facts. Rather, panels review an investigating authority's establishment and evaluation of facts. Thus, it would seem logical that a panel should be subject to similar non-disclosure obligations when reviewing the investigating authority's assessment of the body of information, including confidential information, available on the record of the anti-dumping proceedings.60 In our view, this indicates that the "provision" of confidential information to the panel in the context of a dispute under the Anti-Dumping Agreement does not amount to its "disclosure" under Article 6.5.61 Accordingly, we do not consider that a Member "providing" confidential information to a panel under Article 17.7 of the Anti-Dumping Agreement would cause its investigating authority to violate its obligation under Article 6.5 not to "disclose" that information.
7.29.
In light of the foregoing, we have decided to accommodate the European Union's request to delete paragraph 2 of the original version of the BCI Procedures.62

7.3 PANEL'S TERMS OF REFERENCE

7.30.
China submits that certain claims under Article 2 of the Anti-Dumping Agreement63 advanced by the European Union in its first written submission fall outside the Panel's terms of reference.64 China's request is based on Article 6.2 of the DSU.
7.31.
In its request for the establishment of a panel65, the European Union alleged a violation of:

Articles 2.2, 2.2.1, 2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement because China did not determine the amounts for administrative, selling and general costs and for profits on the basis of records and actual data by the exporters or producers under investigation. In particular, the amounts for administrative, selling and general costs and for profits as constructed by China do not reflect the records and the actual data of the exporters or producers under investigation.

7.32.
In its first written submission, the European Union claims that China acted inconsistently with the following provisions of the Anti-Dumping Agreement:

Article 2.2 because the unrepresentative and rejected data used by MOFCOM did not permit a proper comparison, and the SG&A amount was not reasonable66;

Article 2.2.1 because MOFCOM used free samples, which by definition are not sales in the ordinary course of trade67;

Article 2.2.1.1 because MOFCOM used unrepresentative and rejected data which (i) did not correspond to the records kept by SMST, (ii) were not in accordance with GAAP, (iii) did not reasonably reflect the costs associated with the product under consideration, and (iv) had been historically utilized by SMST68; and

Article 2.2.2 because MOFCOM failed to determine an SG&A amount for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product.69

7.3.1 Relevant WTO provisions

7.33.
Article 6.2 of the DSU provides:

The request for the establishment of a panel shall … identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.

7.34.
Article 2.2 of the Anti-Dumping Agreement 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. (footnote omitted)

7.35.
Article 2.2.1 of the Anti-Dumping Agreement provides:

Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price and may be disregarded in determining normal value only if the authorities determine that such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs within a reasonable period of time. If prices which are below per unit costs at the time of sale are above weighted average per unit costs for the period of investigation, such prices shall be considered to provide for recovery of costs within a reasonable period of time. (footnotes omitted)

7.36.
Article 2.2.1.1 of the Anti-Dumping Agreement provides:

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. (footnote omitted)

7.37.
Article 2.2.2 of the Anti-Dumping Agreement provides in relevant part:

For the purpose of paragraph 2, the amounts for administrative, selling and general costs and for profits shall be based on actual data pertaining to production and sales in the ordinary course of trade of the like product by the exporter or producer under investigation.

7.3.2 Main arguments of the parties

7.3.2.1 China

7.38.
China submits that certain of the claims in the European Union's first written submission concerning Articles 2.2, 2.2.1, 2.2.1.1, and 2.2.2 of the Anti-Dumping Agreement fall outside the Panel's terms of reference because the European Union's panel request failed to comply with the requirements of Article 6.2 of the DSU in respect of those claims.
7.39.
China understands the European Union to have presented two sets of claims in its first written submission: (i) main claims under Article 2.2.2, and (ii) "additional/support claims" under Articles 2.2, 2.2.1, and 2.2.1.1 in support of its main claims. With regard to the European Union's main claims, China accepts that the European Union's claim under Article 2.2.2 that the SG&A amount was not based on actual data falls within the Panel's terms of reference.70 However, China contends that the European Union's panel request does not include a claim under Article 2.2.2 that the SG&A amount did not pertain to production and sales in the ordinary course of trade.71 With regard to the European Union's "additional claims", China accepts that the European Union's claim under Article 2.2.1.1 that data used did not correspond to the records kept by SMST falls within the Panel's terms of reference.72 However, China contends that all remaining "additional claims" under Articles 2.2, 2.2.1, and 2.2.1.1 were not included in the European Union's panel request.73 China submits that such non-inclusion is not a matter of a lack of any clarity or precision in the European Union's request for establishment of a panel. Rather, China asserts that the European Union clearly specified the claims included in its request for establishment. According to China, the European Union expressly limited its claims under Articles 2.2, 2.2.1, 2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement to the claims that the SG&A amounts "do not reflect the records and the actual data". China contends that the use of the term "in particular" clearly defined the claims raised by the European Union.74

7.3.2.2 European Union

7.40.
The European Union submits that its panel request complies with the requirements of Article 6.2 of the DSU in respect of the claims at issue.
7.41.
With regard to Article 2.2.2 of the Anti-Dumping Agreement, the European Union submits three main arguments.75 First, the European Union contends that certain contextual elements permitted China to fully understand the nature of the problem raised by the European Union in its panel request before receiving the European Union's first written submission. The European Union initially notes that China itself demonstrated that MOFCOM acted inconsistently with China's WTO obligations, since "China expressly acknowledges … that it was relying on data that was not actual and that it had already rejected as unrepresentative and unreliable".76 Moreover, the European Union contends that the defending Member's disclosure of the legal and factual basis for its measure "sets the parameters for what the complaining Member may have to do in order to fulfil the standard set out in Article 6.2 of the DSU".77 Finally, the European Union argues that "the sufficiency of a panel request must be assessed in the light of the discussion between the investigating Member and the interested party during the administrative proceedings, as reflected in the measure at issue".78
7.42.
Second, the European Union submits that complaining Members are entitled to refer in their panel requests "to provisions of a covered agreement, in effect incorporating them by reference, without writing them out verbatim in the Panel Request".79 Thus, the European Union's reference to "actual data" in its panel request does not limit the request only to this part of the single sentence in Article 2.2.2.80
7.43.
Third, the European Union contends that Article 2.2.2 contains one single obligation. The European Union argues that the terms "shall", "this basis", "be based on", and "pertaining to" support the European Union's understanding.81 The European Union "does not generally consider that it makes much sense to attempt to deconstruct complex, interlinked, compound rules into different parts and characterise some … as an obligation, and … other … as a condition or separate qualifier".82
7.44.
Turning to the European Union's "additional claims" under Articles 2.2, 2.2.1 and 2.2.1.1, the European Union submits that these provisions are clearly referenced in its panel request. The European Union recalls that panel requests need not set out the text of the provisions verbatim, particularly when the defending Member has failed to properly disclose the reasons for the measure at issue.83 In addition, the European Union submits that these provisions contain a single operative phrase with mandatory language, apparently suggesting that they contain each one single obligation.84 Finally, with regard to "China's attempt to split the terms of Article 2.2.1.1", the European Union contends that the reference to a particular obligation in Article 2.2.1.1 must be also understood as a reference to any related conditions included in this provision.85

7.3.3 Evaluation by the Panel

7.45.
The main issue before the Panel is whether the European Union's panel request provides "a brief summary of the legal basis of the complaint sufficient to present the problem clearly" in respect of each of the claims at issue made by the European Union in its first written submission.86 This issue arises principally because China and the European Union disagree on whether Articles 2.2, 2.2.1, 2.2.1.1 and 2.2.2 of the Anti-Dumping Agreement each contain single or multiple obligations. Therefore, we now examine each of these provisions separately below to determine whether they contain single or multiple obligations.
7.46.
Article 2.2 of the Anti-Dumping Agreement identifies the circumstances where an investigating authority may be entitled to determine the margin of dumping through a comparison between export price and (i) the export price of the like product exported to a third country, or (ii) the constructed normal value.87 We agree with China that this provision contains multiple obligations. The European Union emphasizes that "Article 2.2 contains a single operative phrase with mandatory language ('shall be determined')".88 In our view, the fact of whether or not a particular provision contains a "single operative phrase with mandatory language" is not necessarily determinative of whether such provision contains one or more distinct legal obligations. Indeed, we note that elsewhere, where the European Union explains its claim and arguments under Article 2.2, even the European Union appears to suggest that Article 2.2 contains multiple obligations.89
7.47.
While the Appellate Body has explained that when "a provision contains not one single, distinct obligation, but rather multiple obligations, a panel request might need to specify which of the obligations contained in the provision is being challenged"90, the Appellate Body has also indicated that "compliance with the requirements of Article 6.2 [of the DSU] must be determined on the merits of each case, having considered the panel request as a whole, and in the light of attendant circumstances".91 Thus, the mere fact that the European Union referred to a particular provision in its panel request, allegedly without specifying the particular obligation being challenged, does not necessarily mean that the European Union's panel request fails to meet the requirements of Article 6.2 of the DSU. This is because the relevant WTO obligations may nevertheless be identifiable from a careful reading of the panel request as a whole.92 Accordingly, we examine whether a careful reading of the European Union's panel request, including any narrative explanation contained therein93, permits a sufficiently clear identification of the legal basis regarding each of the Article 2 claims pursued in the European Union's first written submission.94
7.48.
With respect to the European Union's Article 2.2 claim, we do not consider that the narrative explanation contained in the European Union's panel request refers to this claim. We are unable to see, and the European Union has not explained, how this narrative explanation specifies which of the multiple obligations contained in Article 2.2 is being challenged.95 Thus, we find that the European Union's panel request does not comply with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present [any] problem clearly" in respect of the European Union's Article 2.2 claim. Consequently, we conclude that the Article 2.2 arguments in the European Union's submissions96 relate to a claim that is not within the Panel's terms of reference.
7.49.
With regard to the European Union's Article 2.2.1 claim, we observe that Article 2.2.1 of the Anti-Dumping Agreement describes a methodology for determining whether below-cost sales may be treated as not being made in the ordinary course of trade, setting forth the only circumstances under which sales of the like product may be disregarded.97 We consider that Article 2.2.1 contains one single obligation relating to when sales of the like product may be treated as not being in the ordinary course of trade.98 In our view, a reference to Article 2.2.1 is sufficient to clearly present a problem pertaining to the treatment of below-cost sales. Thus, it puts the responding party on notice that the treatment of below-cost sales, i.e. sales "below per unit … costs of production plus administrative, selling and general costs", of the like product outside the ordinary course of trade will be an issue in dispute. China accepts that "[w]here a provision contains only a single obligation, a simple reference to the provision may be a sufficient summary of the legal basis of the complaint".99 Thus, we find that, the European Union's panel request complies with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present [a] problem clearly" in respect of the European Union's Article 2.2.1 claim. Consequently, we conclude that the Article 2.2.1 arguments in the European Union's submissions100 relate to a claim that is within the Panel's terms of reference.
7.50.
Article 2.2.1.1 of the Anti-Dumping Agreement concerns the calculation of costs of production for the purpose of constructing normal value, and for the purpose of determining whether below-cost sales may be treated as not being made in the ordinary course of trade.101 This provision contains three sentences. In our view, the wording of each sentence makes it clear that this provision contains multiple legal obligations. The first sentence provides that "cost shall normally be calculated on the basis of records kept by the exporter or producer under investigation". The second sentence provides that "[a]uthorities shall consider all available evidence on the proper allocation of cost". The third and final sentence provides that "cost shall be adjusted appropriately" for those non-recurring cost and start-up costs. We note that the narrative explanation contained in the European Union's panel request states that "China did not determine the amounts for administrative, selling and general costs and for profits on the basis of records … by the exporters or producers under investigation". We also note that China accepts that the European Union's claim under Article 2.2.1.1 relating to the obligation that "cost shall normally be calculated on the basis of records kept by the exporters" is within the Panel's terms of reference.102 However, we are not persuaded that the European Union's panel request as a whole, including the narrative explanation contained therein, clearly presents any problem pertaining to the remaining obligations contained in Article 2.2.1.1. In our view, the European Union's panel request is not sufficient to bring these remaining obligations within the Panel's terms of reference.103 Thus, we find that the European Union's panel request does not comply with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present [a] problem clearly" pertaining to these remaining Article 2.2.1.1 obligations. Consequently, we conclude that the Article 2.2.1.1 arguments in the European Union's submissions referring to such obligations104 relate to claims that are not within the Panel's terms of reference.
7.51.
Article 2.2.2 of the Anti-Dumping Agreement sets forth how the amounts for SG&A and profits are to be calculated for purposes of a constructed normal value.105 This provision provides that SG&A amounts "shall be based on actual data pertaining to production and sales in the ordinary course of trade of the like product".106 We note that the narrative explanation contained in the European Union's panel request states that "China did not determine the amounts for administrative, selling and general costs and for profits on the basis of … actual data by the exporters or producers under investigation". We also note that China accepts that the European Union's claim under Article 2.2.2 relating to "actual data" is within the Panel's terms of reference.107 We recall that the European Union's panel request includes a reference to Article 2.2.1 of the Anti-Dumping Agreement. With regard to the latter provision, we have concluded above that a reference to Article 2.2.1 puts the responding party on notice that below-cost sales, i.e. sales "below per unit … costs of production plus administrative, selling and general costs", of the like product outside the ordinary course of trade will be an issue in dispute. Although the narrative explanation contained in the European Union's panel request does not refer to "administrative, selling and general costs … pertaining to production and sales in the ordinary course of trade of the like product", in our view, a reasonably informed reader would understand from the reference to Article 2.2.1 that the European Union also takes issue, in its panel request, with whether or not SG&A amounts are based on data pertaining to the production and sales in the ordinary course of trade.108 Thus, we find that the European Union's panel request complies with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present [a] problem clearly" pertaining to the European Union's Article 2.2.2 claim. Consequently, we conclude that the Article 2.2.2 arguments relating to "actual data pertaining to production and sales in the ordinary course of trade" in the European Union's submissions relate to claims that are within the Panel's terms of reference.

7.4 MOFCOM'S DUMPING DETERMINATION

7.52.
The European Union makes a number of claims in respect of MOFCOM's dumping determination for SMST, one of the European Union exporters/producers. These claims concern (i) the use of SG&A amounts for Grade B; (ii) the fair comparison concerning Grade C; and (iii) the alleged double-counting of certain administrative expenses concerning Grade B.

7.4.1 The use of SG&A amounts for Grade B

7.53.
The European Union claims that China acted inconsistently with Articles 2.2.1, 2.2.1.1, and 2.2.2 of the Anti-Dumping Agreement because "China did not determine the amount for [SG&A] on the basis of records and actual data kept by the exporter or producer under investigation (SMST) or in a manner that reasonably reflects the costs associated with the production and sale of [Grade B]".109 China asks the Panel to reject the European Union's claims.

7.4.1.1 Relevant WTO provisions

7.54.
Articles 2.2.1, 2.2.1.1, and 2.2.2 of the Anti-Dumping Agreement are set forth above.110

7.4.1.2 Main arguments of the parties

7.4.1.2.1 European Union

7.55.
The European Union claims that China acted inconsistently with Article 2.2.2 of the Anti-Dumping Agreement by failing to determine an SG&A amount for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product.111 The European Union submits that the data from table 6-3 of SMST's questionnaire response, which was used by China to construct normal value, was not "actual data pertaining to production and sales in the ordinary course of trade". This is because, the European Union argues, table 6-3 (i) included SG&A amounts derived from planned rates – i.e. hypothetical projected administrative expense – and not the actual expense;112 and (ii) was based on abnormally high cost of production, as it included two free sample product transactions, which are unrepresentative and cannot be used to construct normal value.113
7.56.
The European Union also claims that China acted inconsistently with Article 2.2.1.1 of the Anti-Dumping Agreement because "it is the representative and duly verified data in [Table 6-5 of SMST's Questionnaire Response] that corresponds to the records kept by SMST, and that is in accordance with GAAP and reasonably reflects the costs associated with the production and sale of the product under consideration".114
7.57.
Finally, the European Union claims that China acted inconsistently with Article 2.2.1 of the Anti-Dumping Agreement. The European Union submits that this provision "expressly provides for the treatment of sales made below cost as being not made in the ordinary course of trade …, and further indicates that they should be disregarded. By definition, free samples are below cost, and thus not sales in the ordinary course of trade".115

7.4.1.2.2 China

7.58.
China submits that MOFCOM determined the SG&A amount on the basis of actual data reported by SMST for Grade B sold in the European Union, which according to China was included in table 6-3 of SMST's Questionnaire Response. China also submits that there was no evidence that such data were neither actual nor based on SMST's records.116
7.59.
China contends that, on the basis of the facts before MOFCOM during the investigation117, the costs of production included in table 6-3 are actual data. According to China, since the SG&A amounts at issue were based on costs of production in table 6-3, it is clear that the SG&A amounts used by MOFCOM were based on "actual data".118 China considers that it is irrelevant whether or not the coefficients used to determine the SG&A amounts are also actual data, because the SG&A amounts at issue were "based on" actual data, i.e. actual costs of production, and Article 2.2.2 does not require the SG&A amount to be actual data in itself. In any event, China contends that the coefficients themselves also constitute "actual data", because "[t]he coefficients were used by SMST in its daily operations and are data that pertained to acts, existed in fact, are real, and were in existence at the time".119
7.60.
Moreover, China submits that, on the basis of the facts before MOFCOM during the investigation120, the data used by MOFCOM were based on SMST's records. China contends that it was reasonable for MOFCOM to conclude that the source of the SG&A amount was SMST's records because SMST stated that "[t]he figures reported in Table 6-3 were taken from cost calculations for the individual orders of subject merchandise produced during the POI".121

7.4.1.3 Main arguments of third parties

7.4.1.3.1 Kingdom of Saudi Arabia

7.61.
Saudi Arabia submits that Article 2.2.1.1 of the Anti-Dumping Agreement imposes an obligation on investigating authorities to use an exporter's records when such records (i) are in accordance with GAAP, and (ii) reasonably reflect the costs associated with the production and sale of the product under consideration.122 Saudi Arabia contends that the "second condition is met where there is a sufficiently close relationship between the recorded cost and the actual cost to the company for the production and sale of the product at issue".123

7.4.1.3.2 United States

7.62.
With respect to the European Union's claim under Article 2.2.2 of the Anti-Dumping Agreement, the United States contends that the Anti-Dumping Agreement does not require an investigating authority to treat all sample sales as outside the ordinary course of trade. According to the United States, an authority must instead evaluate the record evidence to determine whether it supports finding that the sample sale was concluded on terms and conditions that are incompatible with normal commercial practice for sales of the like product, in the market in question, at the relevant time.124 The United States understands that "China acted inconsistently with Article 2.2.2 of the [Anti-Dumping] Agreement to the extent that MOFCOM relied on information for sales outside the ordinary course of trade when information on sales in the ordinary course of trade were available".125
7.63.
With respect to the European Union's claim under Article 2.2.1.1 of the Anti-Dumping Agreement, the United States submits that if the evidence establishes that the records of the exporter or producer under investigation were in accordance with GAAP and reasonably reflected the costs associated with the production and sale of the products under consideration, "MOFCOM would have been obligated to use those records … or … provide a reason supported by the record evidence to depart from the 'normal' methodology provided for in Article 2.2.1.1".126

7.4.1.4 Evaluation by the Panel

7.64.
The disagreement between the European Union and China concerns the SG&A amounts used by MOFCOM in its calculation of normal value for Grade B produced and sold by SMST. As Article 2.2.2 of the Anti-Dumping Agreement sets forth how the amounts for SG&A are to be calculated for purposes of a constructed normal value, we start our assessment with this provision.
7.65.
Concerning Article 2.2.2 of the Anti-Dumping Agreement, the issue before the Panel is whether table 6-3, which China submits was the basis for the SG&A amounts used in MOFCOM's calculation of normal value127, can be said to be based on "actual data pertaining to production and sales in the ordinary course of trade of the like product". It is undisputed that the SG&A amounts in table 6-3 consist of the cost of production multiplied by certain coefficients. These coefficients are the planned internal rates used by SMST in preparing price/cost allocations for orders.128
7.66.
We note that it appears that there was a disagreement between MOFCOM and SMST with respect to the source of data to determine the SG&A amount. While the European Union submits that SMST understood that MOFCOM should have been using the SG&A amount based on actual data from table 6-5129, China submits that MOFCOM understood that it made clear in its disclosures that it was using the data contained in table 6-3.130 Irrespective of these understandings, we observe that it is undisputed that SMST requested MOFCOM, and MOFCOM accepted, not to use in the constructed normal value calculations the cost of production in table 6-3 for Grade B sales in the European Union, because such cost of production was distorted due to the inclusion of the two free sample transactions.131 Despite MOFCOM's decision to disregard the cost of production data in table 6-3 for Grade B sales in the European Union, MOFCOM nevertheless used the SGA amounts in table 6-3, even though they had been derived by applying certain coefficients to that disregarded cost of production data. We note China's argument that the "SG&A data affected by the disregarded cost of production could have been corrected by [the relevant] coefficients" used in the calculation of the SG&A amounts.132 Although China has submitted that (i) MOFCOM requested SMST to explain its SG&A methodology and the sources of the coefficients at issue, and (ii) SMST failed to do so133, we do not consider that an unbiased and objective investigating authority could have assumed the corrective potential of the relevant coefficients without any supporting analysis or evidence.134 We agree with the European Union that any such assumption would have been "speculative".135 In our view, by using SGA data based on the application of coefficients to data that had already been excluded for the purpose of constructing normal value, MOFCOM failed to fulfil the requirements of Article 2.2.2136, namely that the SG&A amounts "be based on actual data pertaining to production and sales in the ordinary course of trade of the like product".137 In light of the foregoing, we uphold the European Union's claim that China acted inconsistently with Article 2.2.2 of the Anti-Dumping Agreement by failing to determine an SG&A amount for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product.
7.67.
Having upheld the European Union's claim under Article 2.2.2, we exercise judicial economy with respect to the European Union's claims under Articles 2.2.1 and 2.2.1.1 of the Anti-Dumping Agreement.138

7.4.2 Fair comparison: SMST's sales of Grade C

7.68.
The European Union claims that China acted inconsistently with Article 2.4 of the Anti-Dumping Agreement because China did not establish the existence of a margin of dumping for SMST on the basis of a fair comparison between the export price and the normal value for Grade C.139 China asks the Panel to reject the European Union's claim.

7.4.2.1 Relevant WTO provision

7.69.
Article 2.4 of the Anti-Dumping Agreement provides in relevant part:

A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade, normally at the ex‑factory level, and in respect of sales made at as nearly as possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability. … The authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties. (footnote omitted)

7.4.2.2 Main arguments of the parties

7.4.2.2.1 European Union

7.70.
The European Union contends that, when calculating the normal value for Grade C, MOFCOM failed to account for differences in physical characteristics between certain goods sold in the European Union and goods exported to China. The European Union submits that, as explained by SMST, "[l]arge differences in tube outer diameter … affected price comparability" because "[t]hin diameter tube requires more extensive rolling/drawing, resulting in higher costs of production and prices", and "[t]hin diameter tubes also cannot be used in a primary boiler system but rather are used in secondary systems such as measuring temperatures or controlling valves".140 The European Union argues that it was not appropriate for China to include certain sales of thinner tubes, which were designed and produced for secondary systems, in calculating the normal value for Grade C, because such sales are not comparable, without adjustment, to the Grade C primary boiler tube exported to China.141 By doing so, the European Union submits that China's comparison of export prices and domestic prices included different product mixes. The European Union contends that China failed to take any steps to control for differences in physical characteristic affecting price comparability, or make the necessary adjustments in order to ensure a fair comparison.142

7.4.2.2.2 China

7.71.
China submits that, in order to minimize the need for adjustments, "MOFCOM requested [SMST] … to list its own product types … [and] used these product types to carry out the comparison under Article 2.4 [of the Anti-Dumping Agreement]".143 China contends that SMST initially stated, through its questionnaire responses and supporting documents, that there were no physical differences affecting price comparability between Grade C exported to China and Grade C sold domestically by SMST.144 China submits that subsequently, when SMST referred to physical differences, it did not attempt to "quantify the price difference or to provide any evidence in support of its claim", and "provided no explanation concerning the manifest contradiction between the newly introduced claim based on physical differences and the very clear and detailed answers in its questionnaire response, in which it stated, and repeated several times, exactly the opposite".145 China submits that, while SMST made several contradictory and incoherent statements, SMST never lodged any substantiated request in relation to a fair comparison concerning the relevant sales.146

7.4.2.3 Main arguments of third parties

7.4.2.3.1 Korea

7.72.
Korea contends that the burden under Article 2.4 of the Anti-Dumping Agreement to ensure a fair comparison does not shift to an exporter only because such exporter failed to claim that there is a price difference between the products being compared under this provision.147 Korea notes that the parties in this dispute agree that SMST claimed that there were differences in physical characteristics between certain products sold in the European Union and products exported to China. Korea considers that "[i]f such a factual claim was raised at the time of the investigation, through which an investigating authority could have thrown suspicion on the issue of fair comparison, the investigating authority should have evaluated further to determine whether the product it ha[d] chosen for the comparison was appropriate, and if it did not, the investigating authority's obligation … under Article 2.4 … could not be deemed to have been released".148

7.4.2.3.2 Kingdom of Saudi Arabia

7.73.
Saudi Arabia submits that the adjusted values that form the basis for a determination of dumping should depart as little as possible from actual prices in the markets at issue.149 In addition, Saudi Arabia contends that "normal value" must be specific to the exported product and its unique product and pricing characteristics.150 Saudi Arabia also submits that the comparison in Article 2.4 refers to two interrelated values, and does not permit an investigating authority to ignore any similarity or difference that might affect "comparability".151

7.4.2.3.3 United States

7.74.
The United States submits that a fair comparison, under Article 2.4 of the Anti-Dumping Agreement, requires an investigating authority to strive to compare similar products as well as transactions. Where the product under consideration consists of two or more significantly diverse product models, the United States contends that an investigating authority "must conduct an exercise such as a model matching", whereby certain imported and domestic like products are matched "to assure accurate price comparisons within but not across relevant product categories".152 The United States submits that "because model matching ensures that only sales of products with similar physical characteristics are compared to each other or necessary adjustments for the differences are made, some sort of model matching exercise is an essential component of establishing a fair comparison between the export price and normal value".153
7.75.
The United States also submits that a failure to make due allowance for differences in physical characteristics that affect price comparability would be a breach of the obligation contained in Article 2.4 of the Anti-Dumping Agreement.154 The United States contends that "[i]f an investigating authority sought … information [on differences in physical characteristics that may affect price comparability], but an exporter or producer merely identified differences in physical characteristics … without claiming that those differences affected price, then the investigating authority need not independently undertake an analysis of the differences in physical characteristics to determine whether they affected price comparability".155

7.4.2.4 Evaluation by the Panel

7.76.
The main issue before the Panel is whether or not SMST actually made a request for due allowance concerning physical differences affecting price comparability within the meaning of Article 2.4 of the Anti-Dumping Agreement.
7.77.
Article 2.4 provides that "[d]ue allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in … physical characteristics". The Appellate Body in EC – Fasteners stated that "[d]ifferences between products … would not always affect price comparability and require adjustments by the authorities".156 The Appellate Body considered that the investigating authority may be unduly burdened if it were required "to assess each difference in order to determine whether adjustment is needed in every case, even without a request by the interested party".157 Yet, the Appellate Body concluded that "it is the investigating authority's duty to review the requested adjustments in order to determine whether any physical differences identified before it are differences that affect price comparability within the meaning of Article 2.4".158
7.78.
Concerning the methodology in Article 2.4, there is no guidance in this provision as to how due allowance for differences affecting price comparability is to be made.159 The Panel in EC – Fasteners explained that "most investigating authorities either make comparisons of transaction prices for groups of goods within the like product that share common characteristics, or by making an adjustments for each difference affecting price comparability to either the normal value or the export price of each transaction to be compared".160 In that same case, the Appellate Body later considered that:

For example, the authority may choose to make comparisons of transaction prices for a number of groups of goods within the like product that share common characteristics, thus minimizing the need for adjustments, or it may choose to make adjustments for each difference affecting price comparability to either the normal value or the export price of each transaction to be compared.161

7.79.
Turning to the facts before the Panel, we note that SMST's Questionnaire Response did not request any adjustments for differences in physical characteristics.162 Nevertheless, it is undisputed that, in its comments on MOFCOM's preliminary dumping disclosure, SMST stated that MOFCOM should not have included certain sales because they involved very thin tubes that are not used in primary boiler systems.163 SMST submitted that:

These thin tubes cannot be used in the primary boiler system designed to transport steam. Rather, they are used in secondary system such as measuring temperatures or controlling [valves]. Also, because of their very thin dimensions, they require more extensive rolling/drawing resulting in higher costs of production. The price of these thin tubes can therefore not be properly compared to the price of the DMV 310N [i.e. Grade C] tubes exported to China.164

7.80.
It is also undisputed that, during verification, (i) SMST provided a diagram showing that tubes in certain European Union sales were thinner than those sold in China and that there were certain differences in the production process between comparatively thinner and thicker tubes;165 and (ii) MOFCOM's officials marked such document, at the verification site, with hand-written text that translates as: "Why SMST-I's [certain] domestic transactions … cannot be included in the domestic sales and compared with the export sales? Because the small tube of H310N is used for the connection of boiler's control system".166
7.81.
With respect to Grade C, MOFCOM stated in the SMST final dumping disclosure that:

[SMST] presented evidence in the course of the verification in order to prove that the product [in certain sales] that should be allegedly excluded has a difference with [SMST]'s products exported to China in terms of processing technology, etc. However, since no evidence proves that aforementioned products do not meet the specific description of the investigated products provided for in the initiation notice, the investigating authority decides to maintain, in the final determination, its decision in the preliminary determination not to exclude the aforementioned … relatively small amount transactions when determining the normal value of this grade.167

7.82.
In its comments on the final dumping disclosure, SMST stated that:

In calculating normal value for [Grade C], BOFT included [certain] EU sales of merchandise that were not comparable to the merchandise sold for export to China. … Large differences in tube outer diameter affected price comparability. Thin diameter tube requires more extensive rolling/drawing, resulting in higher costs of production and prices. Thin diameter tubes also cannot be used in the primary boiler system but rather are used in secondary systems such as measuring temperatures or controlling valves and therefore are sold in much smaller quantities than normal boiler tube. This also affects price comparability.

It is therefore not appropriate for BOFT to continue to include [certain sales] in calculating normal value for DMV 310N [i.e. Grade C] …

This issue was thoroughly reviewed at verification. At verification, the BOFT officials reviewed technical information concerning boiler construction, as well as technical specifications and invoices for [certain] transactions. … The information confirmed the difference between primary and secondary boiler systems and showed that the secondary system tube sold … had a price per metric ton that was [higher than] the thicker DMV 310N primary boiler tube sold in the EU and Chinese markets.

The only reason given by BOFT in its disclosure before the final determination for continuing to include the secondary system tube in its normal value calculation was that SMST 'did not prove that these products do not meet the scope description of the subject merchandise in the initiation notice.' It is however not an issue of whether secondary system tube is included within the scope of subject merchandise but rather whether secondary system tube can properly be compared to primary boiler tube under Article 2.4 of the WTO Antidumping Agreement.

Article 2.4 … requires that a 'fair comparison shall be made between the export price and the normal value' and that 'due allowance' shall be made for any 'differences which affect price comparability,' including differences in 'physical characteristics.' As discussed above the verified record evidence in this case demonstrates that major differences in outer dimensions affect the price comparability of secondary system tube and primary boiler tube, with the unit prices of secondary system tube being [higher than] primary boiler tube. Given the fact that there were sufficient home market sales of DMV 310N primary boiler tube for comparison with the DMV 310N primary boiler tube exported to China, BOFT should have excluded the secondary system tube sold [in the EU market] in its calculation of normal value for DMV 310N.168

7.83.
In light of the foregoing, we consider that SMST did request an adjustment, under Article 2.4169, to reflect physical differences affecting price comparability.170 Although SMST had initially reported in its questionnaire response that there were no differences affecting price comparability, it should have been clear to MOFCOM that SMST changed its position in this regard during the course of the investigation. In its comments on MOFCOM's final dumping disclosure, SMST clearly referred to differences affecting price comparability, and the obligation on MOFCOM to ensure a fair price comparison pursuant to Article 2.4. In these circumstances, we consider that an objective and impartial investigating authority would not have "assessed the physical differences and the information provided by SMST in this respect in the framework of exclusion from the scope of products under consideration", as MOFCOM did.171 At a minimum, an objective and impartial investigating authority would have acknowledged the fact that an adjustment was being sought, and considered whether that adjustment was warranted, and if the necessary information had been provided.
7.84.
China contends that MOFCOM should not have understood SMST to have requested any adjustment to differences in physical characteristics because SMST did not present a substantiated request to that effect. China submits that SMST did not attempt to quantify or explain the price difference or provide any evidence suggesting that such differences had an impact on prices or costs.172
7.85.
We note that China accepts that, during verification, MOFCOM received a diagram from SMST showing that certain tubes sold in the European Union were thinner than those sold in China, and that there were certain differences in the production process between comparatively thinner and thicker tubes.173 China has not shown that MOFCOM rejected SMST's request for want of it being "substantiated". We recall that it is well established that a Member may not offer, during WTO dispute settlement, a new rationale for its investigating authority's determinations.174 MOFCOM's determinations must be evaluated in light of the rationale provided by MOFCOM during the underlying anti-dumping proceedings. Thus, we find that China's arguments relating to such lack of a "substantiated" request constitute ex post rationalization, which we are bound not to consider when examining the European Union's claim at issue.
7.86.
In light of the foregoing, we uphold the European Union's claim that China acted inconsistently with Article 2.4 of the Anti-Dumping Agreement by failing to address SMST's adjustment request under this provision with a view to determining the existence of a margin of dumping for SMST on the basis of a fair comparison between the export price and the normal value for Grade C.

7.4.3 Alleged failure to take into account certain information provided during verification

7.87.
The European Union claims that China acted inconsistently with Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement because MOFCOM refused to take into account certain information provided by SMST during the verification "[o]n the ground that the company did not raise this point before the onsite verification started, the Investigation Authority decided to deny the above request".175 The European Union further claims that China acted inconsistently with Article 6.8 and Paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement by failing to comply with the requirements to apply "facts available".176 China asks the Panel to reject the European Union's claims.

7.4.3.1 Relevant WTO provisions

7.88.
Article 6.7 of the Anti-Dumping Agreement provides:

In order to verify information provided or to obtain further details, the authorities may carry out investigations in the territory of other Members as required, provided they obtain the agreement of the firms concerned and notify the representatives of the government of the Member in question, and unless that Member objects to the investigation. The procedures described in Annex I shall apply to investigations carried out in the territory of other Members. Subject to the requirement to protect confidential information, the authorities shall make the results of any such investigations available, or shall provide disclosure thereof pursuant to paragraph 9, to the firms to which they pertain and may make such results available to the applicants.

7.89.
Paragraph 7 of Annex I to the Anti-Dumping Agreement provides:

As the main purpose of the on‑the‑spot investigation is to verify information provided or to obtain further details, it should be carried out after the response to the questionnaire has been received unless the firm agrees to the contrary and the government of the exporting Member is informed by the investigating authorities of the anticipated visit and does not object to it; further, it should be standard practice prior to the visit to advise the firms concerned of the general nature of the information to be verified and of any further information which needs to be provided, though this should not preclude requests to be made on the spot for further details to be provided in the light of information obtained.

7.90.
Article 6.8 of the Anti-Dumping Agreement provides:

In cases in which any interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available. The provisions of Annex II shall be observed in the application of this paragraph.

7.91.
Paragraph 3 of Annex II to the Anti-Dumping Agreement provides:

All information which is verifiable, which is appropriately submitted so that it can be used in the investigation without undue difficulties, which is supplied in a timely fashion, and, where applicable, which is supplied in a medium or computer language requested by the authorities, should be taken into account when determinations are made. If a party does not respond in the preferred medium or computer language but the authorities find that the circumstances set out in paragraph 2 have been satisfied, the failure to respond in the preferred medium or computer language should not be considered to significantly impede the investigation.

7.92.
Paragraph 6 of Annex II to the Anti-Dumping Agreement provides:

If evidence or information is not accepted, the supplying party should be informed forthwith of the reasons therefor, and should have an opportunity to provide further explanations within a reasonable period, due account being taken of the time‑limits of the investigation. If the explanations are considered by the authorities as not being satisfactory, the reasons for the rejection of such evidence or information should be given in any published determinations.

7.4.3.2 Main arguments of the parties

7.4.3.2.1 European Union

7.93.
The European Union contends that, in the context of calculating SMST's margin of dumping for Grade B, (i) SMST submitted to the investigating authorities that certain financial expenses had been inadvertently double-counted in the SMST dumping questionnaire response, and (ii) SMST adduced corrected information that was duly verified. The European Union claims that China acted inconsistently with Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement by refusing to take into account the corrected information provided during the verification.177 The European Union takes issue with the fact that "[t]he only reason provided by China in the SMST Final Disclosure and in the Final Determination for refusing to take the corrected information into account was that SMST did not raise this point before the verification started".178
7.94.
In addition, the European Union claims that China acted inconsistently with Article 6.8 and Paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement because China failed to take into account all information pertaining to the determination of SMST's margin of dumping which was (i) verifiable; (ii) appropriately submitted so that it could have been used in the investigation without undue difficulties, and (iii) supplied in a timely fashion.179 The European Union contends that "the question of what information an investigating authority must rely on is closely linked to the related question of the circumstances in which an investigating authority may rely on other information, which is essentially what China did in this case when it relied on the erroneous and uncorrected data relating to financial expenses".180 The European Union submits that it "makes the same claim with respect to the information contained in" certain of SMST's questionnaire responses and verification exhibits.181

7.4.3.2.2 China

7.95.
China contends that there was no double-counting in the dumping margin determination and that, accordingly, the claims lack any factual basis and that the alleged procedural violation did not and could not have had any adverse impact on the European Union, as there is no case of nullification or impairment of the European Union's rights.182 In addition, China argues that Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement do not mandate investigating authorities to accept all information presented during a verification visit.183 China submits that these provisions grant an investigating authority the right to conduct an on-the-spot verification in the territory of the exporting Member under certain circumstances. China contends that such provisions do not, by contrast, impose any obligation to conduct any verification or accept all information. According to China, the fact that the purpose of a verification visit is to "verify information provided or to obtain further details" does not imply that an investigating authority is compelled to verify information provided or to obtain further details.184 Moreover, China submits that Article 6.8 and Annex II of the Anti-Dumping Agreement are irrelevant to the matter at issue because MOFCOM did not make any determinations on the basis of "facts available".185 Finally, China submits that European Union's claims concerning the SMST's questionnaire responses and verification exhibits are difficult to understand and fall short of making a prima facie case.186

7.4.3.3 Main arguments of third parties

7.4.3.3.1 Turkey

7.96.
Turkey submits that "there should be no legal responsibility on side of the authority to accept or consider any newly prepared information [submitted at verification] which profoundly alters the basis of dumping calculation, namely normal value, export price and cost of production, or explanations that extensively modify the answers in the questionnaire".187

7.4.3.3.2 United States

7.97.
The United States agrees with the European Union that an investigating authority is "not entitled to reject information on the sole ground that such information was proffered at verification".188 Nevertheless, the United States submits that on-the-spot investigations are not opportunities for interested parties to submit a significant amount of new information.189 According to the United States, "if a firm always could provide substantial corrections once it realized what specific information an investigating authority was verifying during an on-the-spot investigation, the effectiveness of the on-the-spot investigation would be undermined … [T]he flexibility to accept clerical corrections should not be construed such that the firm could be less motivated to prepare carefully its data submissions".190 Finally, the United States submits that Article 6.8 and Annex II of the Anti-Dumping Agreement provide relevant context to the consideration of what information must be accepted by the investigating authority.191

7.4.3.4 Evaluation by the Panel

7.98.
Although the European Union refers to an actual occurrence of double-counting, we understand that the European Union is rather concerned with the potential for double-counting that results from the fact that financial expenses of the headquarters were included in both table 6-6 and table 6-8.192 We note that table 6-8 was not used by MOFCOM in its SG&A determination for Grade B in the initial investigation, because MOFCOM relied instead on table 6-3.193 However, we understand that the European Union is concerned that, when implementing the Panel's possible findings regarding its Article 2 claims against the SGA determined by MOFCOM for Grade B, MOFCOM will rely on table 6-8, which could then result in double-counting of the relevant financial expenses, since they could be imported into the SGA amount from both table 6-6 and table 6-8. For this reason, the European Union seeks a finding by the Panel that MOFCOM committed a procedural error in failing to allow SMST to rectify certain information only on the basis that SMST did not raise this matter before the verification started.194 Thus, with respect to the European Union's first set of claims, the issue before the Panel is whether MOFCOM acted inconsistently with Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement by rejecting SMST's rectification only on the basis that SMST did not raise this matter before the verification started.195
7.99.
We note that SMST's rectification request relates to tables 6-6 and 6-8.196 It is undisputed that the detailed information concerning SG&A in tables 6-6 and 6-8 is summarized in table 6-5.197 In our view, there is therefore a clear and direct connection between the information in tables 6-6 and 6-8, on the one hand, and the information in table 6-5, on the other hand. We also note that in MOFCOM's notification to SMST prior to verification, MOFCOM requested SMST to prepare documents relating inter alia to table 6-5.198 Thus, in our view, SMST's rectification request (concerning tables 6-6 and 6-8) has a clear and direct connection to the information (concerning table 6-5) expressly requested by MOFCOM to be verified during the on-the-spot investigation. Recalling that Paragraph 7 of Annex I of the Anti-Dumping Agreement provides that "the main purpose of the on-the-spot investigation is to verify information", we consider that an investigating authority would normally welcome the rectification of information in these circumstances. On this basis, we consider that MOFCOM acted contrary to the main purpose of the on-the-spot investigation when it expressly requested SMST to prepare documents relating to table 6-5, but later rejected information which was potentially relevant to such table on the sole ground that SMST did not raise this matter before the verification started.
7.100.
We agree with China that Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement "contain no obligation for an investigating authority to accept all information presented to it during the verification visit".199 As indicated by the United States, an authority does not necessarily have to accept new information during verification.200 Nor does it have to accept voluminous amounts of corrected information. Late in the investigation, such information probably could not be used without undue difficulties by the authority. However, we understand that the present case simply concerns the rectification of one piece of information: the financial expenses of the headquarters. There seems to be no valid reason why MOFCOM did not accept the rectified information from SMST, particularly since MOFCOM appears to have understood the matter explained by SMST concerning the financial expenses at issue (as evidenced by the verification disclosure201).
7.101.
In light of the foregoing, we uphold the European Union's procedural claim that China acted inconsistently with Article 6.7 and Paragraph 7 of Annex I to the Anti-Dumping Agreement by rejecting SMST's rectification at issue only on the basis that it was not provided prior to verification.
7.102.
Turning to the European Union's claims under Article 6.8 and Paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement, the European Union suggests that MOFCOM applied "facts available" when MOFCOM "relied on the erroneous and uncorrected data relating to financial expenses".202 However, China submits that "MOFCOM did not make any determinations on the basis of 'facts available'" and that "the situation at hand simply does not fall within the scope of the Article 6.8 and Annex II of the Anti-Dumping Agreement".203 The European Union has pointed to no evidence on the Panel record to demonstrate otherwise. In addition, we note that China submits that "MOFCOM did not rely on the SG&A reported in table 6-5 [rather] MOFCOM used the … SG&A data provided by SMST in table 6-3".204 We recall our conclusion above that it appears there was a disagreement between MOFCOM and SMST concerning the use of tables 6-3 and 6-5 with regard to the proper SG&A amount for MOFCOM's constructed normal value.205 Thus, we fail to see how this may be considered as a determination on the basis of "facts available". In our view, MOFCOM based its determination on evidence contained in the records, which at that time MOFCOM considered were the correct facts submitted by SMST.206 As MOFCOM did not apply "facts available" in making the determination at issue, we see no factual basis for the European Union's claims under Article 6.8 and Paragraphs 3 and 6 of Annex II. Thus, we reject these claims accordingly.207

7.5 MOFCOM'S DETERMINATION THAT SUBJECT IMPORTS CAUSED MATERIAL INJURY TO THE DOMESTIC INDUSTRY

7.103.
The complainants, Japan and the European Union, make a number of claims concerning MOFCOM's determination that dumped imports from Japan and the European Union caused material injury to the domestic industry. First, they claim that MOFCOM's consideration of the price effects of subject imports is inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement. Second, they claim that MOFCOM's assessment of the impact of the dumped imports on the state of the domestic industry is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement. Third, they claim that MOFCOM's determination that there is a causal link between dumped imports and material injury to the domestic industry is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.208
7.104.
China asks the Panel to reject each of the complainants' claims.

7.5.1 Whether MOFCOM's consideration of the price effects of subject imports is inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement

7.5.1.1 Introduction

7.105.
The complainants submit that MOFCOM's consideration of price undercutting in respect of subject imports is inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement. First, the complainants contend that MOFCOM's analysis of the price effects of Grade C subject imports is analytically and factually flawed. The complainants contend in this regard that MOFCOM improperly compared the price of Grade C subject imports with the price of Grade C domestic products, despite significant differences between the quantities of imported and domestic product sold. The complainants also assert that MOFCOM improperly found price undercutting simply on the basis that the price of Grade C subject imports was less than the price of domestic Grade C products, without any consideration of evidence suggesting that Grade C subject imports did not have any price undercutting effect on Grade C domestic products. Second, the complainants submit that MOFCOM improperly extended its finding of price undercutting in respect of Grades B and C to the like domestic product as a whole, including Grade A.

7.5.1.2 Relevant provisions

7.106.
Article 3.1 of the Anti-Dumping Agreement provides:

A determination of injury for purposes of Article VI of GATT 1994 shall be based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and (b) the consequent impact of these imports on domestic producers of such products.

7.107.
Article 3.2 of the Anti-Dumping Agreement provides:

With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member. 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, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. No one or several of these factors can necessarily give decisive guidance.

7.5.1.3 Alleged flaws in MOFCOM's consideration of price undercutting in respect of Grade C

7.5.1.3.1 The difference between the volume of Grade C subject imports and the volume of domestic Grade C products

7.5.1.3.1.1 Main arguments of the parties

Japan and the European Union209

7.108.
The complainants submit that MOFCOM improperly compared the price of imported Grade C with the price of domestic Grade C for 2009 and 2010, despite its finding that there was a "huge difference in quantity" between the volumes of imported and domestic products during these years. The complainants contend that the significant difference meant that the relevant import and domestic prices were not comparable. They assert that the price comparison undertaken by MOFCOM therefore lacked objectivity and provided no basis for establishing the existence of price undercutting, contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement.
7.109.
The complainants observe that the Appellate Body in China – GOES stated that "an investigating authority's consideration under Article[] 3.2 … must be reflected in relevant documentation, such as an authority's final determination, so as to allow an interested party to verify whether the authority indeed considered such factors".210 The complainants submit that MOFCOM failed to explain how it considered that these import and domestic prices could properly be considered comparable, despite the significant difference in quantity. The complainants contend that it was therefore impossible to verify how MOFCOM considered the existence of price undercutting in respect of Grade C, with the result that its consideration of that matter is inconsistent with Article 3.2 of the Anti-Dumping Agreement.

China

7.110.
China contends that the methodology adopted by MOFCOM to take into account the quantity differences in respect of Grade C was clearly set out in the Final Determination and other documents. China submits that the complainants' claims thus lack any factual basis.211 China further asserts that there is no legal basis in Articles 3.1 or 3.2 for any claim that MOFCOM failed to explain how it accounted for the relevant differences. China contends that there is no obligation to explain in Articles 3.1 or 3.2. China contends that the obligation to explain is rather found in procedural provisions of the Anti-Dumping Agreement, such as Article 12.2.2. China contends that the complainants' reliance on the finding of the Appellate Body in China – GOES is inapposite, since that finding only means that the fact that the authority has considered price effects needs to be reflected in the relevant documentation.212 China explains that the complainants limit themselves to alleging that MOFCOM provided no explanation of the methodology followed, but notes that, in any event, MOFCOM had discretion regarding the methodology to follow in taking into account the quantitative difference, and asserts that MOFCOM applied its methodology in an objective way.213 In addition, China maintains that MOFCOM ensured that Grade C subject import prices could properly be compared with Grade C domestic prices, without any risk of price distortions resulting from the relevant quantitative difference.214 China contends that, under Article 3.2, the relevant element of a price effects consideration is the perception by the market215, and that quantitative differences between the total import volume and the total domestic sales do not "have a perceived importance to customers" (while a quantitative difference may impact costs, which could mandate an adjustment in a dumping determination).216

7.5.1.3.1.2 Evaluation by the Panel

7.111.
We begin by addressing China's argument that the complainants' claims lack any basis in law.217 According to China, the complainants' claims concern the alleged failure by MOFCOM to explain its treatment of the difference in quantities, rather than the substance of how MOFCOM actually addressed that difference with a view to ensuring price comparability. China submits that there is no obligation to explain in Articles 3.1 or 3.2 of the Anti-Dumping Agreement.
7.112.
We are not persuaded by China's understanding of the scope of the complainants' claims. We acknowledge that the complainants did refer in their first written submissions218 to the Appellate Body's finding in China – GOES that "an investigating authority's consideration under Article[] 3.2 … must be reflected in relevant documentation …".219 However, we do not understand the complainants' claim to principally concern merely whether or not MOFCOM adequately explained its treatment of the difference in quantity between imports and domestic sales of Grade C. Rather, we understand their claim to concern whether MOFCOM's determination in this regard was, as explained, consistent with the requirements of Article 3.2. We note that the heading of the relevant sub-section in the European Union's first written submission reads "China's analysis of price-undercutting with respect to Grade C is flawed".220 The relevant heading in Japan's first written submission reads "MOFCOM's analysis of the price effects of imported Grade C is analytically and factually flawed".221 At paragraph 85 of its oral statement at the Panel's first substantive meeting with the parties, the European Union asserted that the limited number of domestic Grade C transactions provided "an unreliable basis for any price undercutting conclusions". For its part, Japan asserted that "[w]ithout a meaningful quantity of both import and domestic sales for a given product, it is difficult to see how any objective price undercutting conclusion could be reached with respect to that product".222 In its oral statement at the first substantive meeting, Japan stated that "the trivial quantity of domestic sales of [Grade] C in both 2009 and 2010 should indicate that those domestic sales may have been one-off outlier transactions made for any variety of reasons, and therefore not comparable with such a large quantity of imports sales of [Grade] C …".223 In light of these considerations, we understand the complainants' claim to concern the substantive issue of comparability, to which we now turn.
7.113.
Although investigating authorities have discretion in how they consider price effects in the context of Article 3.2, this discretion is not unlimited. Given the overarching requirements of Article 3.1, an investigating authority's price effects analysis must involve an "objective examination", and must be based on "positive evidence". This means inter alia that, whenever an investigating authority's consideration of the price effects of imports involves a comparison between imported and domestic prices, the authority must ensure that such prices are comparable.224 In the words of the China – GOES panel, "[a]s soon as price comparisons are made, price comparability necessarily arises as an issue".225 China has not expressly denied this. China acknowledges that MOFCOM verified whether such quantitative difference might "preclude[] a meaningful price effect consideration".226 In addition, MOFCOM referred to "the huge difference in quantity", and stated that such difference "should be taken into consideration when making [the] price comparison".227 We similarly consider that significant differences in quantities are likely to have an impact on comparability, and thus, if there are such differences, they must be looked into in considering price effects.228
7.114.
China submits that MOFCOM properly ensured price comparability, notwithstanding the volume difference at issue, by ascertaining that "the difference was similar" in both 2009 and 2010".229 According to China, this provided the basis for MOFCOM to proceed with its price comparison "without risking the distortion of any considerations by the quantitative differences".230 In this regard, we note that MOFCOM did find that "there was a similar quantitative difference" between the volume of Grade C imports and the volume of Grade C domestic sales for both 2009 and 2010.231 However, there is no explanation by MOFCOM of how this fact is relevant to ensuring price comparability in light of the differences in quantities. Nor is there any explanation of how this fact eliminates the risk of distortion, as suggested by China. The risk of a distorted price comparison results from the fact that there is a significant difference between the volumes of the products whose prices are being compared, which may have an effect on their prices. The fact that such a difference remains constant over a period of time does not address the possible distortion of the comparison. It simply means that if there is any distortion, it continues for that period. Accordingly, in the absence of additional explanation or clarification by MOFCOM, we are not persuaded that MOFCOM properly established that, notwithstanding the significant difference between the quantities of Grade C imports and the quantity of Grade C domestic sales, the prices of imports and domestic product were comparable for the purpose of considering price undercutting by imports of Grade C.
7.115.
For the above reasons, we uphold the complainants' claims that MOFCOM's failure to properly account for differences in quantities when comparing the price of Grade C subject imports with the domestic Grade C price is inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement.

7.5.1.3.2 Whether Grade C subject imports had any price undercutting effect on domestic Grade C products

7.5.1.3.2.1 Main arguments of the parties

Japan and the European Union

7.116.
The complainants submit that a determination that price "undercutting" exists cannot be based solely on the existence of a mathematical difference between import and domestic prices. They submit that, pursuant to Article 3.2, an investigating authority must also consider whether any price difference enabled subject imports to have a price undercutting effect on domestic prices.
7.117.
The complainants contend that their position is based on: the text of Article 3.2, including the phrase "the effect of the dumped imports on prices" and relevant definitions of the term "undercutting"; its context, including Articles 3.1 ("the effect of the dumped imports on prices in the domestic market for like products") and 3.5 ("the effects of dumping, as set forth in paragraphs 2 and 4"); the purpose of Article 3 (to ensure that anti-dumping measures are imposed only where dumped imports are found to be causing injury through a "logical progression" of inquiry); and previous panel and Appellate Body reports.232 Concerning dictionary definitions of the term "undercut", the complainants suggest that the relevant definitions of "undercut" are: "[t]o supplant … by selling at lower prices" or "[t]o render unstable; to render less firm, to undermine".233 According to the complainants, these definitions indicate that, for a proper price "undercutting" finding to be made, the mere fact that the import price is lower than the domestic price does not suffice. They submit that an investigating authority must also show that dumped imports replaced domestic like products and thereby resulted in a loss of domestic sales volumes, or at least placed downward pressure on domestic prices. Concerning precedent, the complainants refer in particular to the finding by the Appellate Body in China – GOES that Article 3.2 requires the investigating authority to consider "domestic prices in conjunction with subject imports", or "the relationship between subject imports and prices of like domestic products", to determine whether dumped imports provide "explanatory force" for the occurrence of effects on the prices of the domestic like product.234 The European Union relies on the Appellate Body's findings to argue that an investigating authority is required to consider whether a first variable – that is, a price differential per se – has explanatory force for the occurrence of a second variable – that is, price undercutting.
7.118.
The complainants contend that there was no basis for MOFCOM to conclude that Grade C subject imports had a price undercutting effect on domestic Grade C products, because subject import prices remained higher than domestic prices until the latter increased by 112.80%. The complainants observe in this regard that, according to MOFCOM's own analysis, in 2010 the price of the domestic Grade C increased by 112.80% from 2009, while the price of the subject imports of the same grade decreased by 36.32%. The complainants assert that the dynamic relationship of the prices of both imported and domestic products shows that subject imports of Product C did not have a significant undercutting effect on the prices of the corresponding like domestic products. The complainants assert that MOFCOM failed to take account of the increase in domestic price of Grade C in its price undercutting consideration. The complainants also assert that the vast difference in import and domestic price levels and the inverse price movements suggest that the domestic sales of Grade C were not in competition with imports of Product C during the POI in the Chinese market. They refer to record evidence showing that domestic importers unanimously considered the subject imports and domestic like products not to be substitutable.235 The complainants assert that, in these circumstances, there was no basis for MOFCOM to conclude that subject imports of Grade C drove down domestic Grade C prices, or otherwise caused any tangible decrease, or prevented any increase, in domestic Grade C prices.236

China

7.119.
China considers that Article 3.2 allows an investigating authority to "presume conclusively" that there is price undercutting within the meaning of Article 3.2 whenever dumped import prices are below comparable domestic prices.237 According to China, no additional "effect" consideration is required since price undercutting is in itself an effect. China asserts that the complainants only refer to one of the definitions of the term "undercut" given in the Oxford English Dictionary. China notes that the dictionary also defines the term "undercut" as meaning to "sell at lower prices than".238 Further, China contends that if an investigating authority were required by Article 3.2 to show that a price differential had the effect of depressing or suppressing domestic prices, the Article 3.2 distinction between price undercutting on the one hand, and price depression and price suppression on the other, would be undermined.
7.120.
China also submits that MOFCOM properly found, in the context of its like product determination, that Grade C imports and Grade C domestic products are substitutable, and do compete with one another.239 China contends that MOFCOM properly found that domestically produced Grade C is "like" imported Grade C. In this respect, China considers that a likeness finding does not necessarily imply that all domestic products within the basket of "like products" are "like" all imported products. However, China considers that such finding does imply a "likeness" between the domestic product type that was explicitly found to be "like" the corresponding product type of the product under consideration.240 China asserts that such determination of likeness inevitably implies that there is a competitive relationship between imported Grade C and domestically produced Grade C241, relying on the Appellate Body's findings in previous disputes.242 China contends that because the complainants have not challenged MOFCOM's likeness determination under Article 2.6 of the Anti-Dumping Agreement, they are precluded from challenging the existence of competition between Grade C subject imports and Grade C domestic products in the context of Articles 3.1 and 3.2.

7.5.1.3.2.2 Evaluation by the Panel

7.121.
The main issue raised by the complainants' claims is whether MOFCOM was precluded by Articles 3.1 and 3.2 of the Anti-Dumping Agreement from finding price undercutting purely on the basis that the price of imported Grade C was lower than the price of domestic Grade C, or whether MOFCOM was required by Article 3.2 to consider if Grade C subject imports had a price undercutting effect on the price of domestic Grade C, in the sense of placing downward pressure on those domestic prices by being sold at lower prices.
7.122.
Article 3.1 of the Anti-Dumping Agreement sets forth an overarching requirement that a determination of injury shall involve inter alia an objective examination of "the effect of the dumped imports on prices in the domestic market for like products". In respect of price undercutting, Article 3.2 provides that "[w]ith 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".
7.123.
We note that the complainants rely on the Appellate Body's discussion of Article 3.2 in China – GOES to argue that dumped imports must be shown to have "explanatory force" for the price undercutting effect on domestic like products.243 The complainants refer in particular to paragraphs 135 and 136 of the Appellate Body's report in this regard. Since we shall refer to those Appellate Body findings to guide us in our own interpretation of Article 3.2 of the Anti-Dumping Agreement, we reproduce them here:

135. The definition of the word "effect" is, inter alia, "something accomplished, caused, or produced; a result, a consequence". The definition of this word thus implies that an "effect" is "a result" of something else. Although the word "effect" could be used independently of the factors that produced it, this is not the case in Articles 3.2 and 15.2. Rather, these provisions postulate certain inquiries as to the "effect" of subject imports on domestic prices, and each inquiry links the subject imports with the prices of the like domestic products.

136. First, an investigating authority must consider "whether there has been a significant price undercutting by the [dumped or subsidized] imports as compared with the price of a like product of the importing Member". Thus, with regard to significant price undercutting, Articles 3.2 and 15.2 expressly establish a link between the price of subject imports and that of like domestic products, by requiring that a comparison be made between the two. Second, an investigating authority is required to consider "whetherthe effect of such [dumped or subsidized] imports" on the prices of the like domestic products is to depress or suppress such prices to a significant degree. By asking the question "whether the effect of" the subject importsis significant price depression or suppression, the second sentence of Articles 3.2 and 15.2 specifically instructs an investigating authority to consider whether certain price effects are the consequences of subject imports. Moreover, the syntactic relation expressed by the terms "to depress prices" and "[to] prevent price increases" is of a subject (dumped or subsidized imports) doing something to an object (domestic prices). The language of Articles 3.2 and 15.2 thus expressly links significant price depression and suppression with subject imports, and contemplates an inquiry into the relationship between two variables, namely, subject imports and domestic prices. More specifically, an investigating authority is required to consider whether a first variable—that is, subject imports—has explanatory force for the occurrence of significant depression or suppression of a second variable—that is, domestic prices.244

7.124.
We understand the Appellate Body to have considered that, with regard to price effects generally, Article 3.2 of the Anti-Dumping Agreement is concerned with considering the relationship between subject imports and the price of like domestic products. In respect of price depression or price suppression, the Appellate Body explained that such a relationship is addressed when the investigating authority considers whether the first variable, subject imports, has "explanatory force" for the second variable, domestic prices. In respect of price undercutting, however, the Appellate Body observed that Article 3.2 establishes a "link" (i.erelationship) between the price of subject imports and that of like domestic products by "requiring that a comparison be made between the two". The Appellate Body referred simply to a comparison between subject import prices and domestic prices. There is no suggestion by the Appellate Body that, in respect of price undercutting, one variable must be shown to have "explanatory force" for the second. Indeed, although the Appellate Body repeated the phrase "explanatory force" numerous times in its findings, at no time did it do so when addressing the requirements of Article 3.2 in respect of price undercutting. This is consistent with the Appellate Body's express statement that, because the two inquiries provided for in the second sentence of Article 3.2 are separated by the words "or" and "otherwise", "the elements relevant to the consideration of significant price undercutting may differ from those relevant to the consideration of significant price depression or suppression".245
7.125.
In our view, the Appellate Body's approach is entirely consistent with the text of Article 3.2. The second sentence of Article 3.2 begins "[w]ith 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" (emphasis supplied). The text therefore suggests that the consideration of whether there "has been" a significant price undercutting provides the requisite insight "regard[ing] … the effect of the dumped imports on prices", that is, whether as a matter of fact, "undercutting" existed during the POI. The text of Article 3.2 envisages that the existence of price undercutting (i.ewhether there "has been" price undercutting) should be established on the basis of a comparison of subject import prices and domestic prices.
7.126.
With regard to price depression and price suppression, by contrast, the text of Article 3.2 requires more than a simple comparison of the prices of two products. In this context, investigating authorities are required to consider whether one variable, namely subject imports, has "the effect of" depressing or suppressing a second variable, namely the domestic price ("whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree") (emphasis supplied). As observed by the Appellate Body, "[b]y asking the question 'whether the effect of'the subject importsis significant price depression or suppression, the second sentence of Articles 3.2 and 15.2 specifically instructs an investigating authority to consider whether certain price effects are the consequences of subject imports".246 It is this analysis that provides the relevant insight into the relationship between subject import and domestic prices, by revealing whether the first variable has "explanatory force for" the second variable. However, as noted above, the text of Article 3.2 does not require that authorities consider whether one variable has any particular effect on, or "explanatory force for", the second variable in the context of price undercutting. The relevant relationship between the prices of the two products with respect to price undercutting is the factual question of which is higher and which is lower. The Article 3.2 phrase "whether the effect of" applies only in respect of price depression or suppression. The text of Article 3.2 does not refer to "whether the effect of subject imports is price undercutting". Rather, it refers simply to whether or not "there has been" price undercutting. This is a simple factual issue - is there price undercutting or not? – which can be answered, as Article 3.2 suggests, by a comparison of prices for domestic and imported product. The text of Article 3.2 envisages that the existence of price undercutting itself provides the requisite insight into the effect of the dumped imports (and the relationship of subject import prices with domestic prices). It is such "effect[] of dumping as set forth in paragraph[] 2" – that is, the effect of any price undercutting found, which must then be considered, pursuant to the first sentence of Article 3.5 of the Anti-Dumping Agreement, in determining whether the requisite causal link exists.
7.127.
We note that the complainants find support for their interpretation of Article 3.2 in the dictionary definition of the word "undercut" as meaning "to supplant … by selling at lower prices". According to Japan, this means that an investigating authority must show that dumped imports are having the effect of taking the place of domestic like products by selling at lower prices, or of depressing domestic prices. Japan contends that the word "undercut" may also mean: "To render unstable; to render less firm, to undermine".247 According to Japan, this suggests that, even if subject imports are not replacing domestic like products and thereby resulting in a loss of domestic sales volumes, subject imports must still have the effect of rendering domestic prices less firm – that is, placing downward pressure on domestic prices – in order for a finding of "price undercutting" to be made. As a result, Japan asserts that an investigating authority must consider whether the effect of dumped imports was such that the observed differential between import and domestic prices may be considered to have given rise to an actual decrease or prevention of increase in prices in the domestic market for like products.248 The European Union similarly relies on the dictionary definitions advanced by Japan to argue that subject imports of Grade C did not drive down domestic Grade C prices, or prevent any increase in those prices.249
7.128.
We accept that the complainants have referred to recognized dictionary definitions of the term "undercut". However, other recognized dictionary definitions also exist. In particular, the term "undercut" is also defined, very simply, as to "sell at lower prices than".250 In the context of Article 3.2, we see no reason why the term "undercut" should necessarily be interpreted in the particular manner proposed by the complainants. Since there is no reference to the notion of "supplanting" or "render[ing] unstable" in the text or context of Article 3.2, we see no reason why an investigating authority should not adopt a more simple definition, and simply consider whether subject imports "sell at lower prices than" comparable domestic products.
7.129.
Furthermore, if an authority were required to show that price undercutting by imports had the effect of depressing or suppressing prices, as suggested by the complainants, this would duplicate the other price effects considerations provided for in Article 3.2. The fact that Article 3.2 identifies three distinct price effects, and distinguishes between price undercutting on the one hand, and price depression and price suppression on the other, suggests that there is no need to establish price depression or suppression when considering the existence of price undercutting, or indeed, vice versa. Moreover, we see nothing in the text of Article 3.2 that would suggest that the fact that import prices are lower than domestic prices may be disregarded unless the investigating authority determined that, as a consequence of such lower import prices, the domestic industry has lost sales, as suggested by the complainants' arguments.251 While price undercutting by imports may lead to lost domestic sales, or price depression or price suppression, there is no requirement in Article 3.2 to demonstrate the existence of these other phenomena when considering the existence of price undercutting.
7.130.
For the above reasons, we reject the complainants' claims that MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to consider whether Grade C subject imports had any price undercutting effect on domestic Grade C products, in the sense of placing downward pressure on those domestic prices by being sold at lower prices.252

7.5.1.4 Whether MOFCOM improperly extended its findings of price undercutting in respect of Grades B and C to the domestic like product as a whole

7.5.1.4.1 Main arguments of the parties

Japan and the European Union

7.131.
The complainants submit that MOFCOM erroneously extended its findings of price undercutting in respect of Grades B and C to the domestic like product as a whole, including domestic Grade A products. The complainants contend that MOFCOM thereby acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement.
7.132.
The complainants253 contend that, although MOFCOM only found price undercutting by subject imports of Grades B and C, MOFCOM made a more general determination that "[t]he imports of the subject products had a relatively [noticeable/significant] price undercutting effect on the price of domestic like products".254 The complainants understand that MOFCOM's reference to "the price of domestic like products" means that MOFCOM determined that subject imports had a price undercutting effect on the domestic like product as a whole, including domestic Grade A. According to the complainants, MOFCOM's extension of its price undercutting findings with respect to Grades B and C to the domestic like product as a whole is erroneous, since MOFCOM found no price undercutting in respect of Grade A (because of an absence of Grade A subject imports). The complainants assert that MOFCOM could only have made such a general finding regarding the domestic like product as a whole if it had examined whether subject imports of Grades B and/or C had any price effect on domestic Grade A. The complainants observe that MOFCOM failed to undertake any such cross-grade analysis. The complainants assert that there was no record evidence suggesting that subject imports of Grades B and C had any price undercutting effect on the domestic Grade A.
7.133.
The complainants also contend that MOFCOM's analysis runs counter to the Article 3.2 requirement that the investigating authority consider whether there has been a "significant" price undercutting.255 The complainants assert that the majority of domestic production was of Grade A. According to the complainants, the fact that China found some price undercutting limited to a minority industry sector (Grades B and C) that does not actually compete with other sectors (Grade A) means that the price undercutting found to exist is not "significant" within the meaning of Article 3.2 of the Anti-Dumping Agreement.

China

7.134.
China256 denies that MOFCOM was under an obligation to make any finding of price undercutting in respect of the domestic like product as a whole, including domestic Grade A. China asserts that MOFCOM's methodology was not specifically directed at considering whether or not the price undercutting by all dumped imports – i.e. Grade B and C subject imports - concerned each and every single like product or, in other words, the like product as a whole.257 China submits that no such finding was required by Article 3.2.258 China contends that MOFCOM complied with Article 3.2 by comparing the prices of the product grades that were actually imported (i.eGrades B and C) with the prices of the corresponding domestic product grade. China notes that Article 3.2 provides for the price of the imported product to be compared to the price of "a like product". China contends that the use of the indefinite article ("a") means that Article 3.2 does not require consideration of price undercutting in respect of the domestic like product as a whole.
7.135.
In the event that the Panel were to find that Article 3.2 required MOFCOM to find price undercutting effects in respect of the domestic like product as a whole, China asserts that MOFCOM properly found price correlation between the three product grades at issue. In this respect, China asserts that in its findings concerning the scope of the product under investigation, MOFCOM found that the imports (mainly consisting of high-end Grades B and C) could also impact the domestic products (mainly consisting of low-end Grade A). China contends that MOFCOM's finding took into account the price correlation between the different grades (imported grades and domestically produced grades). China asserts that such finding of cross-grade price correlation was justified because the price correlation is a clear consequence of the ability of subject imports of the high-end grades (Grades B and C) to substitute for the low-end grade (Grade A).259 China refers to evidence on the record in this regard.260

7.5.1.4.2 Evaluation by the Panel

7.136.
The complainants submit that MOFCOM improperly extended its findings of price undercutting in respect of Grades B and C to the domestic like product as a whole, including domestic Grade A, in a manner inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement. In our view, the complainants' claim is based on an erroneous understanding of the scope of the determination made by MOFCOM.
7.137.
We observe that MOFCOM initially found that "the adjusted import prices of the subject products were higher than the sales prices of the domestic like products".261 Because of price differences between the three grades of HP-SSST at issue, MOFCOM then conducted grade-by-grade price comparisons. MOFCOM found price undercutting in respect of Grades B and C. MOFCOM did not make any finding of price undercutting in respect of Grade A, because this product was only imported in 2008, in very small quantities. MOFCOM did not conduct any cross-grade price analysis. After finding price undercutting in respect of Grades B and C, MOFCOM determined that "[t]he imports of the subject products had a relatively [noticeable/significant] price undercutting effect on the price of domestic like products".262 While MOFCOM might have expressed itself more clearly, we consider that, in the context of MOFCOM's determination, it is clear that MOFCOM was only referring to price undercutting in respect of certain grades of the domestic like product, namely Grades B and C. This is because MOFCOM's preceding analysis only found price undercutting in respect of those grades. We see no basis to conclude that MOFCOM also purported to find price undercutting in respect of Grade A, particularly since MOFCOM expressly ruled out any such finding on the basis of the limited volume of Grade A subject imports, and because of the absence of any cross-grade price analysis.263
7.138.
It may be that the complainants' misunderstanding of the scope of MOFCOM's determination derives from their view that Article 3.2 required MOFCOM to "reach a price effects finding with respect to the product as a whole".264 This view leads the complainants to assert that MOFCOM "erroneously applied its findings with respect to a minority sector of domestic production to the domestic HP-SSST industry as a whole, despite the fact that, according to MOFCOM's own conclusions, the vast majority of domestic production was not subject to price undercutting by subject imports".265 To the extent that the complainants' claim is concerned with MOFCOM's alleged extension of the Grade B and C price undercutting effect to the domestic like product as a whole266, we have already explained that Articles 3.1 and 3.2 do not, in our view, require an investigating authority to consider whether subject imports had a price undercutting effect in the manner suggested by the complainants.
7.139.
Nor do we consider that MOFCOM was required by Articles 3.1 and 3.2 to find price undercutting in respect of the domestic like product as a whole. In our view, when an investigating authority considers the existence of price undercutting for the purpose of Article 3.2, that authority need only consider the existence of price undercutting in respect of the subject imports at issue. Where those imports are of different grades, it is in our view appropriate to consider price undercutting with respect to the comparable domestic grades. Our view is consistent with the text of both Articles 3.1 and 3.2 of the Anti-Dumping Agreement. Thus, Article 3.1 refers to the "effect of the dumped imports on prices in the domestic market for like products". While we consider that the reference to "the" dumped imports means the totality of such dumped imports, we observe that the definite article is not used before the phrase "like products". If Article 3.1 had been intended to require an analysis of the effect of (all) subject imports on the prices of the domestic like products as a whole, the drafters would have referred to the need to consider the effect of the subject imports on prices in the domestic market for "the" like products. They did not do so. The text refers simply to "prices in the domestic market for like products".
7.140.
Furthermore, the second sentence of Article 3.2 refers to price undercutting being established on the basis of a comparison of subject import prices with "the price of a like product" of the importing Member. Article 3.2 therefore uses the indefinite article in respect of the domestic like product, and does not refer to any obligation to compare subject import prices with the prices of all domestic like products, or the domestic like product as a whole. By contrast, Article 3.2 (like Article 3.1) does envisage consideration of price undercutting in respect of "the" dumped imports as a whole.
7.141.
We note the complainants'267 argument that Article 3.1 refers to "the effect of the dumped imports on prices in the domestic market for like products".268 According to them, the use of the definite article "the" in conjunction with "domestic market for like products" is necessarily a reference to the entire domestic market and therefore the like product as a whole. We disagree. We see nothing in Article 3.1 to suggest that the existence of price undercutting must be considered in respect of the entire range of the like product in the domestic market of the importing Member. Rather, Article 3.1 admits of an interpretation whereby an authority considers the effect of subject import prices on prices for certain goods within the like product in the domestic market. The reference to "the" domestic market simply means that prices in the domestic market should be used, rather than those in any other market. We note in this context that there can be one domestic like product, or more than one domestic like product, corresponding to the imports subject to an anti-dumping investigation. Thus, while the text leaves open the possibility of more than one like product, it does not, in our view, establish that price undercutting must be found with respect to the entire range of goods making up the domestic like product(s).269
7.142.
Regarding the complainants' argument that MOFCOM improperly found the relevant price undercutting to be "significant", given that the majority270 of domestic production (of Grade A products) was unaffected by such price undercutting, we note that this argument is again premised on the complainants' flawed understanding that MOFCOM was required by Article 3.2 to establish that subject imports had a price undercutting effect in respect of the domestic like product as a whole, including domestic Grade A. Furthermore, we observe that the panel in United States – Upland Cotton271 found that "it is the degree of price suppression or depression itself that must be 'significant' (i.e. important, notable or consequential)", and that "it may be relevant to look at the degree of the price suppression or depression in the context of the prices that have been affected – that is, at the degree of significance of suppression or depression".272 We agree with this finding, and consider that the significance of price undercutting by subject imports of Grades B and C should be assessed in relation to the price of domestically produced Grades B and C, and not in relation to other factors such as the proportion of domestic production for which no price undercutting was found. Furthermore, we recall that price undercutting must be established on the basis of a comparison of the prices of comparable goods. As a result, there may well be domestic product models or grades for which no price undercutting is established. This fact is merely a consequence of only comparing the prices of comparable goods and should not preclude a finding of "significant" price undercutting.273
7.143.
In light of the above, we reject the complainants' claims that MOFCOM acted inconsistently with Articles 3.1 and 3.2 by improperly extending its finding of price undercutting in respect of Grades B and C to the domestic like product as a whole, including domestic Grade A.

7.5.1.5 Conclusion

7.144.
We uphold the complainants' claims that MOFCOM's failure to properly account for differences in quantities when comparing the price of Grade C subject imports with the domestic Grade C price is inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement. We reject the complainants' claims that MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to consider whether Grade C subject imports had any price undercutting effect on domestic Grade C. We also reject the complainants' claims that MOFCOM acted inconsistently with Articles 3.1 and 3.2 by improperly extending its finding of price undercutting in respect of Grades B and C to the domestic like product as a whole, including domestic Grade A.

7.5.2 Whether MOFCOM's assessment of the impact of dumped imports on the state of the domestic industry is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement

7.5.2.1 Introduction

7.145.
The complainants submit that MOFCOM's evaluation of the impact of subject imports on the state of the domestic industry falls short of an objective examination, based on positive evidence. The complainants pursue three claims. First, they claim that MOFCOM improperly considered the impact of subject imports on the domestic industry as a whole, in respect of all three product grades, even though it had only found price effects in respect of Grades B and C. The complainants submit that MOFCOM should rather have undertaken a segmented impact analysis, focusing on those segments of the domestic industry producing Grades B and C. Second, the complainants claim that MOFCOM failed to evaluate the magnitude of the margin of dumping. Third, they claim that MOFCOM disregarded the relevant economic factors and indices showing that the domestic industry was not injured.274
7.146.
China asks the Panel to reject the complainants' claims.

7.5.2.2 Relevant provisions

7.147.
The text of Article 3.1 is set forth above. Article 3.4 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. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.

7.5.2.3 Whether MOFCOM should have undertaken a segmented analysis of the impact of dumped imports

7.5.2.3.1 Main arguments of the parties

7.5.2.3.1.1 Japan and the European Union

7.148.
The complainants submit that MOFCOM's Article 3.4 impact analysis was at odds with and did not follow from its Article 3.2 volume and price effects analyses. This is because MOFCOM assessed the impact of subject imports as a whole on the domestic industry as a whole, even though it had found no significant increase in the volume of subject imports, and had allegedly found price effects with respect to Grades B and C only.275 The complainants assert that, having found no significant increase in volume whatsoever and price undercutting effects with respect to only Grades B and C, to ensure a logical progression of inquiry, MOFCOM should have proceeded to analyse the impact of subject imports only on the segment of the domestic industry producing Grades B and C. While the complainants acknowledge that the impact of dumped imports should be examined on the domestic industry as a whole, they suggest that such examination should be premised on the fact that the segments of the domestic industry producing certain like products with respect to which no volume or price effects have been found could not have been impacted by the dumped imports. The complainants refer in this regard to the finding by the Appellate Body in China – GOES that Article 3.4 "contemplate[s] that an investigating authority must derive an understanding of the impact of subject imports on the basis of such an examination".276 They also note the Appellate Body's finding that Article 3.4 is concerned not just with the state of the domestic industry in isolation, but rather with "the relationship between subject imports and the state of the domestic industry" – that is, with "the explanatory force of subject imports for the state of the domestic industry".277 The complainants contend that the domestic industry segments producing Grade A products should have been excluded from the Article 3.4 impact analysis. According to Japan, MOFCOM's earlier conclusions with respect to volume and price effects could not plausibly have indicated that the segment of the domestic industry producing Grade A could be impacted by subject imports.278

7.5.2.3.1.2 China

7.149.
China denies that MOFCOM was required to conduct a segmented analysis of the impact of subject imports on the domestic industry. According to China, it is legally erroneous to require an investigating authority, which has carried out its price effects consideration on a per grade basis, to also carry out a segmented impact analysis or to explain how it viewed the industry-wide impact data in light of the logic of the grade-based consideration of the price effects. China contends that any difference between the nature of the price undercutting analysis undertaken by MOFCOM, and the nature of the impact analysis, was dictated by the requirements of Articles 3.2 and 3.4. China asserts in this regard that MOFCOM was required by Article 3.2 to carry out its price effects analysis on a per grade basis, in order to ensure comparability. China states, though, that MOFCOM was required by Article 3.4 to assess the impact of subject imports on the domestic industry "as a whole". China also notes that the two domestic producers making up the domestic industry are both producers of all three grades of the like product, such that it is not possible to distinguish any part of the domestic industry that is producing only Grade A.

7.5.2.3.2 Main arguments of third parties

7.5.2.3.2.1 Kingdom of Saudi Arabia

7.150.
Saudi Arabia considers that an investigating authority's determination under Article 3 of the Anti-Dumping Agreement must establish a logical progression of analysis among its "essential components" in order to constitute the requisite "objective examination" of "positive evidence". Saudi Arabia asserts that the sequential analysis contemplated by Article 3 and its repeated emphasis on the "same imports" establish that the injury components are "closely interrelated"279 and work together to produce a "logical" conclusion about whether subject imports caused material injury to the domestic industry. Saudi Arabia contends that although an investigating authority enjoys discretion as to the methodologies employed to determine injury under Article 3, its examination of the impact of subject imports on the domestic industry under Article 3.4 will constitute an "objective examination" only where it logically progresses from the assessment of those imports' volume effects and price effects under Article 3.2. Saudi Arabia submits that the inquiry under Article 3.4 complements and conforms to the analyses carried out under Article 3.2 in order to produce the ultimate conclusion on causation under Article 3.5. According to Saudi Arabia, this analysis necessarily involves a linkage between the identified volume and price effects and the state of the domestic industry.

7.5.2.3.2.2 Turkey

7.151.
Turkey queries whether the "logical progression" proposed by the complainants involves a legal obligation that requires an investigating authority to terminate its injury and causation analysis once it concludes that there is no absolute/relative increase in the volume of dumped imports and/or no price undercutting, depression or suppression caused by dumped imports. Turkey considers that, pursuant to Article 3.5 of the Anti-Dumping Agreement, the essence of causality should be the negative effects of dumped imports on the domestic industry, through the act of dumping, as set forth in paragraphs 2 and 4 of Article 3. The examination should include all relevant evidence before the authorities including those that weaken the causality between dumped imports and injury incurred by the domestic industry. Furthermore the investigating authority is also obliged to focus on known factors other than the influence of dumped imports to identify whether these factors erode the link between dumping and injury. Turkey suggests that the legal mechanics of Article 3.5 require the authority to undertake a full examination of different parts of the injury analysis, without keeping any relevant information out of the scope.

7.5.2.3.3 Evaluation by the Panel

7.152.
The complainants' claims regarding the scope of MOFCOM's impact analysis are premised on their interpretation of Article 3.2 of the Anti-Dumping Agreement. The complainants contend that the Article 3.4 impact analysis must "logically progress" from the Article 3.2 price effects analysis, and that MOFCOM's finding of price undercutting effects with respect to only Grades B and C required it to analyse the impact of subject imports only on the segments of the domestic industry producing Grades B and C. The complainants contend that this is because MOFCOM's conclusions on price effects indicate that the segment of the domestic industry producing Grade A could not be impacted by subject imports.280 As indicated above, we do not consider that Article 3.2 requires an investigating authority to consider the price undercutting effect of subject imports on the domestic like product. Thus, in finding price undercutting in respect of Grades B and C, MOFCOM was not required by Article 3.2 to consider the effect of subject Grade B and C imports on domestic Grade A. Accordingly, MOFCOM's failure to make this consideration did not require it to conclude, when conducting its Article 3.4 impact analysis, that the segment of the domestic industry producing Grade A products could not be impacted by subject imports.281
7.153.
Furthermore, we note that "the examination of the impact of the dumped imports on the domestic industry" provided for in Article 3.4 "shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry" (emphasis supplied). In our view, the complainants' approach to Article 3.4, and its focus on particular segments of the domestic industry, is overly focused on the causal connotations of the term "impact", and overlooks the obligation in Article 3.4 to evaluate the state of the domestic industry, as defined by Article 4.1 of the Anti-Dumping Agreement.282 In the present case, MOFCOM defined the domestic industry as comprising two domestic producers accounting for a major proportion of total domestic production of the domestic product like the subject imports. The evaluation of the state of the domestic industry envisaged by Article 3.4 must therefore consider the state of those two producers, with respect to their production of all types of HP-SSST. We see no basis in either Article 3.4 or Article 4.1 for limiting this evaluation to the state of those two domestic producers with respect to their production of only Grades B and C.
7.154.
The complainants acknowledge that the Article 3.4 impact inquiry must generally be conducted with respect to the domestic industry as a whole.283 However, the complainants observe the statement by the Appellate Body in China – GOES that the various provisions of Article 3 "contemplate a logical progression of inquiry leading to an investigating authority's ultimate injury and causation determination".284 According to the complainants, this means that the impact analysis with respect to the domestic industry as a whole must proceed on the premise that the segments of the domestic industry producing goods within the scope of the like product with respect to which no volume or price effects have been found have not been impacted by the dumped imports.285 In a similar vein, the European Union argues that MOFCOM had "no reasonable basis to undertake an impact analysis with respect to the entire domestic industry".286 We do not accept these arguments, for it is unclear to us how a determination of injury in respect of the domestic industry as a whole – including an evaluation of the state of that industry as a whole - may be premised, from the outset, on the exclusion of a given segment of that industry.
7.155.
Nor are we persuaded by the argument that the complainants' claim is supported by the findings of the Appellate Body in China – GOES. As indicated above, we consider that our interpretation of Article 3.2 is entirely consistent with the findings of the Appellate Body in that case. And we consider that our interpretation of Article 3.4 is entirely consistent with our approach to Article 3.2. This is an important consideration because, as confirmed by the Appellate Body in China – GOES, "the relationship between subject imports and the state of the domestic industry" envisaged by Article 3.4 "is analytically akin to the type of link contemplated by the term 'the effect of' under Article[] 3.2…". Since the Article 3.4 analysis is "analytically akin" to the Article 3.2 analysis, and since the Article 3.2 analysis in respect of price undercutting does not require the effect analysis proposed by the complainants, there is no reason why any such effect analysis should determine the nature of the Article 3.4 impact analysis undertaken following a finding of price undercutting. This would certainly not be a "logical progression" of the sort suggested by the complainants on the basis of the Appellate Body's findings in China – GOES. The Appellate Body's findings do not exclude that, in the context of price undercutting, the appropriate "relationship between subject imports and the state of the domestic industry" exists when the state of the domestic industry shows injury, and the subject imports are sold at prices that undercut certain like products produced and sold by that industry. Whether that relationship is sufficient to support a finding that subject imports caused injury to the domestic industry is a matter for consideration under Article 3.5, with due regard to all of the factors and considerations set forth in that provision.

7.5.2.4 Whether MOFCOM properly evaluated the magnitude of the margin of dumping

7.5.2.4.1 Main arguments of the parties

7.5.2.4.1.1 Japan and the European Union

7.156.
The complainants submit that China failed to evaluate the role played by the magnitude of the margin of dumping.287 They contend that MOFCOM merely referred to the margin of dumping, without evaluating the significance of the margin of dumping for the impact of subject imports on the domestic industry.

7.5.2.4.1.2 China

7.157.
China submits that it is factually incorrect for the complainants to state that MOFCOM "simply referred to the dumping margins in the sub-section entitled 'Dumping Margin' at page 41 of its Final Determination, as well as in the section entitled 'Final Conclusions' at pages 79 and 80 of the same document".288 China observes that, in the section of the Final Determination addressing injury, MOFCOM considered that "the dumping margins of the subject products from the EU and Japan are both above 2%".289 China further submits that no analysis of the magnitude of the dumping margin is required beyond the analysis of such margin as set out in those other provisions, similar to the type of evaluation required in relation to "factors affecting domestic prices".290 In this respect, China relies on the fact that factors affecting domestic prices and the magnitude of the margin of dumping are possible causes of an industry's condition, rather than descriptors of the state of the industry (as with all other factors listed in Article 3.4). Moreover, China asserts that other provisions of the Anti-Dumping Agreement also address these two factors.291

7.5.2.4.2 Main arguments of third parties

7.5.2.4.2.1 United States

7.158.
The United States notes that Articles 3.1 and 3.4 do not require an authority to evaluate the significance of dumping margins. Moreover, neither Article 3.1 nor Article 3.4 requires that the magnitude of the margins of dumping be given any particular weight, or that they be evaluated in any particular way. The United States asserts that it is also unclear what further evaluation of the dumping margins the European Union and Japan consider MOFCOM should have performed pursuant to Article 3.4.292

7.5.2.4.3 Evaluation by the Panel

7.159.
Pursuant to Article 3.4 of the Anti-Dumping Agreement, investigating authorities are required to evaluate of all relevant economic factors and indices having a bearing on the state of the industry, including the magnitude of the margin of dumping. China does not deny that MOFCOM was required to undertake that evaluation. China argues rather that MOFCOM did evaluate the magnitude of the margin of dumping, as evidenced by various references to the amount of the margin of dumping in MOFCOM's Final Determination.
7.160.
We note that MOFCOM's Final Determination contains several references to the magnitude of the margin of dumping, as asserted by China. However, we do not consider that such references constitute an evaluation of the magnitude of the margin of dumping, as required by Article 3.4. MOFCOM's Final Determination merely lists the margins at issue, but does not assess in any way the relevance of the margins of dumping in the determination, or indicate what weight it attributed to the margins of dumping in the injury assessment. We agree with the panel in China – X-ray Equipment that a mere listing of the margins of dumping does not constitute evaluation within the meaning of Article 3.4.293
7.161.
China submits that MOFCOM provided more than a mere listing of the margins of dumping because, in addressing the cumulative assessment of injury, MOFCOM noted that "the dumping margins of the subject products from the EU and Japan are both above 2%".294 According to China, this provides "sufficient evidence that the magnitude of the margin of dumping was evaluated in the context of examining the state of the domestic industry".295 We disagree. MOFCOM's simple assertion that the margins of dumping are more than de minimis provides no basis on which we can conclude that MOFCOM actually evaluated the magnitude of those margins in the context of its Article 3.4 analysis.
7.162.
We also reject China's argument that no analysis of the margin of dumping is required beyond that set out in substantive provisions governing the determination of the margin of dumping. The text of Article 3.4 is clear in requiring an evaluation of the magnitude of the margin of dumping in the assessment of the impact of dumped imports on the domestic industry. Accordingly, that evaluation must be undertaken as a substantive matter, and not merely paid lip service by referring to the margins determined. Whether the margin of dumping was determined in a manner consistent with, for example, Article 2 of the Anti-Dumping Agreement, is irrelevant to the question of whether or not the evaluation required by Article 3.4 has been undertaken.
7.163.
We therefore uphold the complainants' claims that MOFCOM failed to evaluate the magnitude of the margin of dumping, contrary to Article 3.4 of the Anti-Dumping Agreement. As Article 3.4 implements the requirement in Article 3.1 pertaining to "the consequent impact" of dumped imports on the domestic industry, we also uphold the complainants' claims under that provision.

7.5.2.5 Whether MOFCOM properly weighed positive and negative injury factors

7.5.2.5.1 Main arguments of the parties

7.5.2.5.1.1 Japan and the European Union

7.164.
The complainants submit that MOFCOM improperly disregarded the economic factors and indices which showed that the domestic industry was not injured.296 In particular, they claim that MOFCOM "did not provide any explanation whatsoever regarding the weight attributed to any given factor, nor of the inferences it drew from those factors and indices that were positive for the domestic industry".297 According to them, the Final Determination is "silent" as to why MOFCOM "disregarded the relevance of the majority of the factors and indices having a positive bearing on the state of the domestic industry".298

7.5.2.5.1.2 China

7.165.
China considers that Japan and the European Union fail to make a prima facie case concerning MOFCOM's weighing of the positive and negative injury factors, because they fail to discuss any particular indicators that were "improperly disregarded".299 China submits that MOFCOM's Final Determination in any event evaluated each of the requisite injury factors, with the exception of capacity utilization.300 China asserts that MOFCOM explained that this factor could not be effectively evaluated because of difficulties in allocating capacity to the product at issue. With respect to the positive factors, China submits that MOFCOM properly weighed these factors against other negative factors, and in light of other positive factors. China notes in this regard that MOFCOM explained that the increase in salary per head had to be seen in light of the general background of rising labour costs in China. In relation to the increase in domestic sales, MOFCOM stated that this was "outstripped by price cuts". MOFCOM also considered that job creation and labour productivity were a result of a synchronous increase in capacity and output of the domestic industry. China contends that the Final Determination thus provides a solid reflection of MOFCOM's reasoned evaluation of the weight and relevance of the positive and negative factors, also in relation to the other factors.

7.5.2.5.2 Evaluation by the Panel

7.166.
We are not persuaded by the complainants' argument that MOFCOM failed to provide any explanation "whatsoever" regarding the weight attributed to any given factor, or of the inferences it drew from those factors and indices that were positive for the domestic industry. Nor do we accept their argument that MOFCOM's Final Determination is "silent" as to why MOFCOM disregarded the relevance of the majority of the factors and indices having a positive bearing on the state of the domestic industry. MOFCOM explains its consideration of the various positive and negative injury factors in the following terms:

The Investigation Authority is of the view that available evidence suggests from 2008 to 2010, domestic sales and market share of the domestic industry of like products have both increased. The capacity and output of the domestic industry of like products have increased synchronously. Driven by capacity and output growth, job creation and labor productivity of the domestic industry of like products also increased. Against the general backdrop of rising labor costs domestically, salary per head in the domestic industry of like products showed an upward trend. However, EOP inventories of the domestic industry of like products was rising year on year whereas the domestic sales price of domestic like products dropped by 31.05% on an annualized basis. Despite a year-on-year increase of 22.43% in domestic sales, such increase was outstripped by price cuts. As a result, domestic sales revenue for 2009 was down 61.07% from 2008. The number for 2010 was up 83.41% on 2009. From 2008 to 2010, revenue decline on an annualized basis was 15.50%. The differential between domestic sales price and cost of goods per unit narrowed further. Unit operating margin decreased 56.39% annually. As a consequence, pretax profits and net cash flow from operating activities of the domestic industry of like products both dropped, 67.47% and 47.78% respectively on an annualized basis. Shrinking pretax profits resulted in lower ROI for the domestic industry of like products. ROI for 2010 was 29.70 percentage points lower than that of 2008. Due to continued profitability erosion and deteriorating operating conditions of the domestic industry of like products, capital investment in capacity expansion by the domestic industry had been suspended or blocked.

In the first six months of 2011, profitability levels of the domestic industry of like products continued to go down and operating conditions further worsened. Despite recoveries of varying degree in the domestic industry on indicators such as domestic sales, market share, capacity, output, labor productivity, salary per head and net cash flow from operating activities, EOP inventories nonetheless increased by 23.49% compared with the same period of 2010. Domestic sales price of domestic like products was 8.90% lower than the same period of 2010. As a direct result, sales revenue dropped by 0.38% year on-year. The differential between domestic sales price and cost of goods per unit continued to narrow. Unit operating margin decreased 52.50% compared with the same period of 2010. As a consequence, pretax profits of the domestic industry of like products dropped by 72.19% compared with the same period of 2010. Shrinking pretax profits resulted in a drop of 2.58 percentage points in ROI for the domestic industry of like products.

Based on the above, the Investigation Authority concludes the domestic industry is materially injured.301

7.167.
Although brief, MOFCOM's determination does discuss the interplay between the positive and negative injury factors. Thus, while MOFCOM acknowledges that factors such as domestic sales, market share, capacity, output and employment indicate that the domestic industry has grown, it also observes that sales revenue has declined as a result of the fall in domestic prices. MOFCOM finds that this, in turn, has resulted in a decline in profitability, as sales revenue has not kept pace with cost increases. MOFCOM's Final Determination is therefore not "silent" on the interplay between positive and negative injury factors. Nor does MOFCOM fail to provide any explanation "whatsoever" regarding its weighing of negative and positive injury factors.
7.168.
As complainants, the onus is on Japan and the European Union to establish that MOFCOM's analysis and explanation is inconsistent with Article 3.4. The complainants fail in this regard, because they fail to demonstrate the inadequacy of the specific elements of analysis and explanation set out in MOFCOM's Final Determination, relying instead on generalities. Thus, they fail to establish that MOFCOM's explanation is not a reasoned analysis of the facts, or that MOFCOM erred in its consideration of the interplay of the positive factors in relation to the decline in sales revenue and profitability. The complainants also fail to establish that MOFCOM's assessment is insufficient, or inadequately reasoned in light of the facts. For this reason, we find that the complainants fail to establish a prima facie case in support of their claim.
7.169.
We note the complainants' argument that MOFCOM's dismissal of certain positive factors is "contradicted" by MOFCOM's findings in other parts of its Final Determination.302 The complainants observe in this regard that, in assessing non-attribution factors for the purpose of Article 3.5, MOFCOM referred to the rapid increase in the sales volume of domestic products in concluding that the decline in domestic demand for HP-SSST products did not "materially injure[]" the domestic industry in terms of volume.303 The complainants contend that MOFCOM failed to attach appropriate weight to this positive indicator when assessing the state of the domestic industry pursuant to Article 3.4.304 In its Final Determination, MOFCOM noted the increase in domestic sales, but continued by referring to the decrease in sales price and pre-tax profit. The complainants have not explained why MOFCOM could not, in considering the impact of imports under Article 3.4, discount the increase in domestic sales given that the increase was accompanied by a decline in sales price and profit. The mere fact that the increase in domestic sales is referred to by MOFCOM in different contexts, and in a manner that ultimately supports a determination that injury is caused by subject imports, does not necessarily mean that MOFCOM's reference to that factor in those different contexts is contradictory, or otherwise flawed. It is simply a reflection of the substance of MOFCOM's analysis. In the absence of any meaningful critique by the complainants of the substance of that analysis, the alleged contradiction provides no basis for drawing conclusions regarding the consistency of MOFCOM's impact analysis with Article 3.4 of the Anti-Dumping Agreement.

7.5.2.6 Conclusion

7.170.
For the above reasons, we uphold the complainants' claims that MOFCOM failed to evaluate the magnitude of the margins of dumping, contrary to Articles 3.1 and 3.4 of the Anti-Dumping Agreement. We reject the complainants' claims that MOFCOM was required by Articles 3.1 and 3.4 to undertake a segmented impact analysis. We also reject the complainants' claims that MOFCOM acted inconsistently with Articles 3.1 and 3.4 by failing to properly weigh the positive and negative injury factors.

7.5.3 Whether MOFCOM's causation analysis is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement

7.5.3.1 Introduction

7.171.
MOFCOM determined that "the large quantities of imports of the subject products … dumped into China at low prices" caused material injury to the domestic industry.305 The determination was based on the price effects of the subject imports. MOFCOM did not find that subject imports had any volume effects on the domestic industry, in light of the fact that the absolute volume of subject imports declined during the period of investigation.306 However, MOFCOM did find that the market share of subject imports as a whole "remained high at around 50%".307 MOFCOM also found that the market share held by subject imports of both Grade B and C was around 90%.308 MOFCOM considered this market share relevant in assessing the price undercutting effect of subject imports. After considering the market share data and pricing information, MOFCOM found that "the imports of the subject products had a relatively big impact on the price of the domestic like products".309
7.172.
MOFCOM's causation determination was also based on its findings of price undercutting, and its assessment of the impact of subject imports on the state of the domestic industry.310 We have addressed the complainants' specific challenges under Articles 3.2 and 3.4 to those aspects of MOFCOM's analysis above. MOFCOM also considered whether any injury was caused by other known factors, including a decline in apparent consumption and an expansion in domestic production capacity, and concluded that any injury caused by these factors did not break the causal link between subject imports and material injury to the domestic industry.311
7.173.
The complainants make three claims concerning MOFCOM's causation determination. First, they claim that MOFCOM's reliance on the market share of subject imports in its causation analysis is inconsistent with Article 3.5. Second, the complainants also make consequential claims in respect of MOFCOM's reliance on its price effects and impact analyses in determining causation. They submit that because, in their view, those analyses are inconsistent with Articles 3.2 and 3.4 respectively, MOFCOM's subsequent reliance on those analyses and conclusions in the context of its causation determination is inconsistent with Article 3.5. Third, the complainants challenge MOFCOM's non-attribution analysis in respect of the decrease in apparent consumption, and the increase in domestic production capacity.
7.174.
China asks the Panel to reject Japan's claims.

7.5.3.2 Relevant provisions

7.175.
Article 3.1 of the Anti-Dumping Agreement is set forth above. 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.

7.5.3.3 MOFCOM's reliance on the market share of subject imports

7.5.3.3.1 Main arguments of the parties

7.5.3.3.1.1 Japan and the European Union

7.176.
The complainants challenge MOFCOM's reliance on the market share of subject imports in finding a causal link between subject imports and material injury to the domestic industry. The complainants note that MOFCOM found that the absolute volume of subject imports decreased by a considerable amount during the period of investigation. They also note that the market share of subject imports as a whole decreased during the period of investigation. The complainants submit that the fact that the market share of imported products under investigation was still relatively large at the end of the period of investigation is "irrelevant"312 for an objective examination under Articles 3.1 and 3.2 of the Anti-Dumping Agreement, and accordingly for a causation determination under Article 3.5. The complainants contend that Article 3.2 requires an investigating authority to consider "whether there has been a significant increase in dumped imports". They assert that the text of Article 3.2 does not envisage consideration of the market share retained by subject imports at the end of the period of investigation.
7.177.
The complainants acknowledge that the absence of a significant increase in the volume of subject imports does not necessarily preclude a finding of causation. However, they contend that the consideration of whether imports increased significantly cannot be stripped of all significance by overlooking the fact that, despite dumping and price undercutting, there was a considerable decrease in the volume and market share of subject imports of HP-SSST. The complainants argue that the decrease in imports to China of HP-SSST tends to exclude the possibility that such imports caused injury to the domestic industry.313

7.5.3.3.1.2 China

7.178.
China submits that a distinction must be made between MOFCOM's conclusion that there was no significant increase in the volume of the dumped imports under Article 3.2 of the Anti-Dumping Agreement, and MOFCOM's reliance on the fact that dumped imports retained a high market share in a finding of causal link under Article 3.5. China asserts that, consistent with its conclusion under Article 3.2 that there was no significant increase in the volume of subject imports, MOFCOM did not rely on any volume effects of subject imports for the purpose of its causation determination. China contends that MOFCOM's reference to the market share of subject imports should not be understood as a finding that the volume of imports, in itself, had an impact on the domestic industry, nor that the material injury suffered by the domestic industry was caused by the volume of subject imports in itself. According to China, MOFCOM simply referred to the market share of subject imports in order to fully assess the price effects of subject imports, concluding that "the imports of the subject products had a relatively big impact on the price of the domestic like products".314 China submits that this approach is consistent with the finding by the panel in EC – Tube or Pipe Fittings that "[t]he interaction of two variables would essentially determine the extent of impact of price undercutting on the domestic industry: the quantity of sales at undercutting prices; and the margin of undercutting of such sales".315

7.5.3.3.2 Main arguments of third parties

7.5.3.3.2.1 United States

7.179.
The United States disagrees with the complainants to the extent that they suggest that an authority may not attach significance to the fact that imports "retain" a significant share of the market over the period. The United States notes that although Article 3.2 does specify that an authority "shall consider whether there has been a significant increase in dumped imports", either on an absolute or relative basis, Article 3.2 does not expressly or implicitly prevent an authority from considering in its analysis the fact that imports have a significant market share level. The United States asserts that in a situation in which significant volumes of subject imports are having a significant adverse impact on domestic prices, the existence of significant import volumes or market share is obviously one item of "relevant evidence" that an authority may want to consider in its analysis under Article 3.5.316

7.5.3.3.3 Evaluation by the Panel

7.180.
As a general matter, we are not persuaded that it is erroneous for an investigating authority to take the market share of subject imports into consideration in its Article 3.5 causation analysis, even if the volume of those imports has not increased in absolute terms. Article 3.5 provides that causation "shall be based on an examination of all relevant evidence before the authorities". We agree with China that the market share of subject imports sold at undercutting prices may be relevant in considering the overall price effects of those imports in an Article 3.5 causation analysis. In addition, we note that the Appellate Body has confirmed that while "significant increases in imports have to be 'considered' by investigating authorities under Article 3.2, (…) the text does not indicate that in the absence of such a significant increase, these imports could not be found to be causing injury" within the meaning of Article 3.5.317 If a significant increase in the volume of imports is not necessary in order to find causation, we see no reason why the relative significance of the volume of imports, that is, its market share, may not be a relevant consideration in the assessment of causation.
7.181.
However, having regard to the facts of the present case, we consider that MOFCOM's reliance on the market shares of subject imports did not establish a sufficient basis for a determination that "the imports of the subject products had a relatively big impact on the price of the domestic like products"318, and a consequent finding of causation consistent with Article 3.5. We note that although MOFCOM relied on the fact that the market share of subject imports "remained high at around 50%"319, MOFCOM failed to account for the fact that the market share of subject imports had actually dropped from around 90% in 2008 and 2009 to around 50% in 2010 and H1 2011, and that domestic market shares increased correspondingly.320 While an investigating authority might properly determine, given the necessary facts, that high market shares exacerbate the price effects of dumped imports, an objective and impartial investigating authority would also consider whether the fact that import market shares are declining significantly indicates that the price effects are in fact somewhat attenuated.
7.182.
Furthermore, after referring to the 50% market share for the subject imports as a whole, MOFCOM observed that subject imports of Grades B and C both held market shares of around 90%. MOFCOM then found that "the imports of the subject products had a relatively big impact on the price of the domestic like products".321 We note that the market share of imported Grade B fluctuated, rising from 89.48% in 2008 to 96.65% in 2009, falling to 90.49% in 2010, and rising to 97.63% in the first half of 2011.322 The market share of imported Grade C was 100% in 2008, 99.94% in 2009, 99.10% in 2010, and 90.69% in the first half of 2011, which shows a decrease of almost 10 percentage points during the POI.323 The majority324 of domestic sales, however, were of Grade A. The market share held by Grade A subject imports in 2008 was only 1.45%.325 There were no Grade A subject imports thereafter. Nor was there any finding of price undercutting in respect of Grade A subject imports. Furthermore, although subject imports and domestic sales were concentrated in different segments of the HP-SSST market, MOFCOM made no finding of cross-grade price effects, whereby price undercutting by subject imports of Grades B and C might be shown to affect the price of domestic sales of Grade A. In these circumstances, we would expect an objective and impartial investigating authority to have examined and explained how the 90% market shares of Grade B and C subject imports enabled those imports, through price effects, to cause injury to the domestic industry as a whole, notwithstanding the fact that the bulk of domestic production was of Grade A, the sales and market share of domestic Grade A increased, the negligible market share of subject imports of Grade A and the absence of cross-grade price effects, and despite the decline in the absolute volume of those imports and the declining market share of Grade C imports and the fluctuating market share of Grade B imports. MOFCOM failed to provide any such explanation. In the absence of any such examination or analysis, it remains unclear how the market shares of imports of Grade B and C HP-SSST are relevant in assessing whether subject imports caused injury to a domestic industry producing primarily Grade A HP-SSST.
7.183.
China argues326 that, although MOFCOM made no finding of cross-grade price effects, it expressly found that "the price changes of the three [grades] are to a certain extent correlated with one another".327 China states that this finding was based on the fact that higher-grade Grade B and C can, "as a matter of logic", substitute for lower-grade Grade A products. China asserts that because of such substitutability, a price decrease in high-end HP-SSST (Grades B and C) produces price pressure on the low-end HP-SSST (Grade A), which need to maintain a certain price differential with the high-end HP-SSST. China contends that MOFCOM's finding of price correlation was supported by the Petitioners' assertion that "a large margin decrease of the prices of [Grade B] and [Grade C] products, both high-end products, will certainly drive down the price of [Grade A] products, so that a certain price difference among the three can be maintained".328 According to China, the correlation between prices of Grade A, on the one hand, and Grade B and C, on the other hand, is a normal feature for a single product consisting of high-end and low-end grades. China contends that, as a result of MOFCOM's finding that the three grades constitute a "single product" with correlation between their prices, the finding of price undercutting in respect of imports of Grades B and C necessarily implies that this price undercutting had an effect on the domestic industry as a whole, including domestic Grade A. China describes this conclusion as a corollary to MOFCOM's findings concerning product scope, also taking into account MOFCOM's like product findings.329
7.184.
We are unable to accept China's argument regarding the existence of cross-grade price correlation as sufficient to demonstrate cross-grade price effects. Even assuming, as China contends, that such correlation is a normal feature for a single product consisting of high-end and low-end grades, there is no meaningful analysis in MOFCOM's Final Determination of whether or how this feature manifests itself in the specific circumstances of the product at issue, being HP-SSST. After recording the Applicants' argument that price correlation exists, MOFCOM simply states that "the price changes of the three [grades] are to a certain extent correlated with one another".330 There is no discussion of the basis on which MOFCOM makes that finding, nor any evaluation of the Applicants' argument. This implies that MOFCOM simply accepted the Applicants' argument, without any consideration of the accuracy thereof. China seems to suggest that there was no need for MOFCOM to evaluate this matter, since its finding of price correlation follows "as a matter of logic" from the fact that higher-grade products may substitute for lower-grade products. However, there is no evidence of any consideration of whether there is, in fact, such substitutability of lower and higher-end HP-SSST by MOFCOM. For us, this demonstrates that China's substitutability argument is, therefore, ex post rationalization rather than an element of MOFCOM's analysis, and thus of no import for our determination.331 China also asserts that evidence of substitutability was provided by a Japanese exporter, SMI.332 However, there is no reference to this evidence in MOFCOM's Final Determination. In addition, even if evidence of some form of substitutability did exist and was presented to MOFCOM, in the absence of any analysis by MOFCOM of the extent to which higher-grade (Grades B and C) imports are actually used in domestic Grade A applications, such evidence cannot be considered to show that the alleged substitutability demonstrates price correlation.333 Nor is there any consideration by MOFCOM of how this unspecified degree of substitutability, and resultant price correlation, might enable Grade B and C subject imports to cause injury to the domestic industry's Grade A operations.
7.185.
Furthermore, we emphasise that MOFCOM only found that prices of the different grades were to a "certain extent" correlated with one another.334 This leaves open the important issue of the degree of impact that movements in the prices of imported Grades B and C might have had on the price of domestic Grade A. MOFCOM makes no assessment of whether the effect would be minimal, or sufficiently pronounced to cause prices for domestic Grade A to fall by the amounts that they did. MOFCOM's reference to the market shares of subject imports sheds no light on this issue.
7.186.
In addition, it would appear that MOFCOM failed to account for record evidence that trends in domestic prices by grade had no apparent relationship in terms of magnitude or direction with trends in import prices. This is particularly apparent in respect of domestic Grade C, the price of which increased by 112.80% from 2009-2010, without any corresponding movement in prices for subject imports of Grades B and C, which actually fell over that period. In addition, the price of domestic Grade A increased by 9.35% from 2010 to H1 2011, whereas the price of imported Grade B fell by 10.63% during that period. An objective and impartial investigating authority would not have found price correlation without at least addressing, and explaining, such contrary price movements.335
7.187.
It would also appear that MOFCOM assumed that the alleged cross-grade price correlation would result in Grade B and C subject import prices driving down domestic prices for Grade A, rather than vice-versa. This is a particularly important consideration given that the domestic industry's production was primarily of Grade A. In this regard, we note China's reliance on the Petitioners' argument that "[a] large margin decrease of the prices of [Grades B and C] … will certainly drive down the price of [Grade A] products, so that a certain price difference among the three can be maintained".336 However, there is nothing in the Final Determination to suggest that MOFCOM ever explored this issue meaningfully. In finding a "certain extent" of price correlation, MOFCOM made no finding that the prices of imported Grades B and C had pushed down the price of domestic Grade A. Thus, MOFCOM never considered, and certainly failed to exclude, the equally logical possibility that Grade B and C subject import prices declined in response to the decline in domestic Grade A prices in 2009 and 2010, in order to maintain the price differential between the various grades.337
7.188.
For all of the above reasons, we consider that MOFCOM's reference to the market shares held by subject imports is not sufficient to establish that subject imports, through price undercutting, had "a relatively big impact on the price of the domestic like products", and therefore caused injury to the domestic industry through their price effects. We consider that MOFCOM's reliance on the market shares of subject imports was central to its determination that subject imports, through their price effects, caused injury to the domestic industry. Given the flaws in MOFCOM's analysis of those market shares in that context, we find that MOFCOM's determination of causation is inconsistent with Article 3.5 of the Anti-Dumping Agreement.338

7.5.3.4 Consequential Article 3.5 claims concerning MOFCOM's reliance on its Article 3.2 and 3.4 analyses of the price effects and impact of subject imports

7.5.3.4.1 Main arguments of the parties

7.5.3.4.1.1 Japan and the European Union

7.189.
The complainants have made consequential Article 3.5 claims based on alleged inconsistencies in MOFCOM's Article 3.2 price effects and Article 3.4 impact analyses. The complainants recall their claims that MOFCOM's price effects and impact analyses are respectively inconsistent with Articles 3.2 and 3.4 of the Anti-Dumping Agreement. They submit that, as a consequence, MOFCOM's reliance on those price effects and impact analyses to determine causation is inconsistent with Article 3.5 of the Anti-Dumping Agreement. The complainants rely in this regard on the finding of the panel in China – X-Ray Equipment that, because the investigating authority's price effects analysis was inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement, "the flaws in the price effects analysis also undermine[d] … the conclusion on the causal link between the subject imports and the injury suffered by the industry".339

7.5.3.4.1.2 China

7.190.
China asks the Panel to reject the complainants' claims. China submits that MOFCOM properly linked its Article 3.2 price effects consideration and its Article 3.4 impact analysis in making its causation determination.340 China contends that because MOFCOM's price effects and impact analyses are not inconsistent with Articles 3.2 and 3.4, MOFCOM's reliance on those analyses for the purpose of determining causation is not inconsistent with Article 3.5.341

7.5.3.4.2 Evaluation by the Panel

7.191.
We recall our findings that certain aspects of MOFCOM's price effects analysis are inconsistent with Article 3.2 of the Anti-Dumping Agreement, and that one aspect of its impact analysis is inconsistent with Article 3.4 of the Anti-Dumping Agreement. We find that MOFCOM's reliance on the WTO-inconsistent aspects of its price effects and impact analyses in determining that subject imports caused material injury to the domestic industry undermines MOFCOM's analysis of causation, and therefore renders MOFCOM's causation determination inconsistent with Article 3.5 of the Anti-Dumping Agreement.342
7.192.
We have not upheld all aspects of the complainants' Article 3.2 and 3.4 claims. Those aspects of the claims that we have rejected clearly cannot form the basis for any consequential Article 3.5 claims. While many of the issues raised by the complainants in the context of their Article 3.2 and 3.4 claims could, in our view, form the basis for independent claims under Article 3.5, the complainants did not originally dispute China's position343 that no such independent Article 3.5 claims based on MOFCOM's price effects and impact analyses had been pursued by the complainants.344 To avoid uncertainty, we asked the complainants to address China's understanding of the scope of their claims.345 We also asked China to explain the basis for its view.346 In their replies to the Panel's question, and their comments on China's reply, the complainants neither identify any relevant independent Article 3.5 claims set out in their written submissions347, nor identify arguments explaining how alleged flaws in MOFCOM's price effects and impact analyses result in independent violations of Article 3.5, as distinct from violations of Articles 3.2 or 3.4. Accordingly, we conclude that the complainants have not advanced any independent Article 3.5 claims, other than those concerning MOFCOM's reliance on market shares, and MOFCOM's non-attribution analysis, concerning MOFCOM's price effects and impact analyses.

7.5.3.5 Whether MOFCOM properly ensured that the injury caused by certain known factors was not attributed to subject imports

7.193.
Pursuant to the third sentence of Article 3.5, investigating authorities are required, as part of their causation analysis, to examine all "known factors" other than dumped imports which are causing injury to the domestic industry. Where such other known factors are causing injury, the investigating authority must ensure that the injurious effects of these factors are not "attributed" to the dumped imports.
7.194.
The complainants claim that MOFCOM failed to properly ensure that injury caused by two known "other factors", the decline in apparent consumption, and the increase in domestic production capacity, was not attributed to subject imports. China asks us to reject the complainants' claim.

7.5.3.5.1 Main arguments of the parties

7.5.3.5.1.1 Japan and the European Union

7.195.
The complainants submit that MOFCOM conducted its non-attribution analysis regarding the decline in domestic demand and expansion of domestic production capacity with respect to all grades of HP-SSST taken together, without considering any possibility that these other factors may have influenced different segments of the market differently. They contend that MOFCOM did this despite the facts on the record demonstrating that imported and domestic HP-SSST were concentrated in different segments of the market (i.e., imported products were concentrated almost entirely in Grades B and C, while domestic HP-SSST was concentrated overwhelmingly in Grade A), and despite the absence of any cross-grade price effects of subject imports of Grade B and C on domestic grade A.348 The complainants also contend that MOFCOM's non-attribution analysis, which considered whether injury caused by other factors broke the causal link between subject imports and injury to the domestic industry, would necessarily be flawed if its initial determination of the causal link between subject imports and material injury to the domestic industry were itself flawed.349
7.196.
Concerning the decline in apparent consumption, the complainants contend that despite acknowledging that a decline in apparent consumption could negatively affect the volume and price of domestic sales350, MOFCOM simply concluded that "the price undercutting effect of the imports of subject products [was] the reason for the drop in price of domestic like products".351 They assert that a sudden drop in domestic demand for a good on a given market causes the market price of such a good to decrease accordingly.
7.197.
Concerning the increase in the domestic industry's production capacity, the complainants352 note MOFCOM's statement that "capacity expansion can lead to output increase and supply increase in the domestic market, thus intensifying competition and indirectly affecting such operational metrics as price, sales volume, sales revenue and pre-tax profit".353 The complainants contend that, having acknowledged the possibility that an increase in capacity can cause injury, MOFCOM improperly went on to find that the increase in production capacity did not break the causal link between dumped imports and material injury. The complainants challenge MOFCOM's finding that, despite the increase in production capacity, "there was no case of oversupply" because the output of like domestic products "was much less than apparent consumption among domestic producers" and "remained far below demand". They contend that MOFCOM failed to take account of imports in its consideration of supply and demand in the domestic market as a whole. The complainants also contend that MOFCOM erroneously compared domestic production - the vast majority of which was of Grade A - to domestic demand for all HP-SSST, rather than domestic demand for Grade A only. The complainants assert that MOFCOM's analysis should have been grade-specific, because of the lack of competition between the grades. They observe that, although demand for Grade A increased, the price of domestic Grade A fell. They suggest that this was because of oversupply of Grade A, resulting from the expansion in capacity.

7.5.3.5.1.2 China

7.198.
Regarding apparent consumption, China notes the complainants' assertion that a sudden drop in domestic demand of a good on a given market causes the market price of such a good to decrease accordingly. China asserts, though, that MOFCOM only found that apparent consumption of Grades B and C declined. MOFCOM found that apparent consumption of Grade A increased significantly. China queries why, if domestic prices for Grades B and C dropped due to reduced apparent consumption, prices for Grade A dropped at the same rate, despite apparent consumption of Grade A increasing by 74.07% during the POI.354 China contends that MOFCOM properly found that, although reduced apparent consumption had acertain effect on the domestic prices, it could not explain the drop in domestic prices that actually occurred – including the decline in the price for Grade A. According to China, therefore, MOFCOM properly found that the effects of the reduced apparent consumption are not sufficient to break the causal link between the dumped imports and the material injury.
7.199.
Regarding the increase in domestic capacity, China contends that MOFCOM was entitled to consider potential oversupply on the basis of domestic supply only, since there was no evidence to suggest that imports might occur at non-dumped prices. China submits that MOFCOM was not required to assess supply in the abstract, on the basis that imports might occur at non-dumped prices. China asserts that MOFCOM's analysis was rather based on its concrete finding that, during the POI, all imports were dumped. China also disagrees with the complainants' suggestion that MOFCOM should have compared domestic production of Grade A with Chinese demand for Grade A only. China contends that the domestic industry was able to manufacture and sell all three grades355, which constituted a single product. China also contends that the fact that, during most of the POI, growth in domestic output was nearly double the increase in production capacity, is crucial to MOFCOM's conclusion that the increased domestic capacity had no material effects on domestic prices.356

7.5.3.5.2 Evaluation by the Panel

7.200.
It is well established that, in order to ensure that any injury caused by other factors is not attributed to dumped imports, Article 3.5 requires investigating authorities to "separate and distinguish" the injurious effects of the dumped imports from the injurious effects of known other factors causing injury at the same time.357 MOFCOM sought to comply with this obligation by considering whether certain other factors broke the causal link between subject imports and the material injury to the domestic industry it had found. As a matter of law, we consider that such methodology provides an appropriate basis for ensuring non-attribution. Indeed, this "break the causal link" methodology has been accepted in other WTO dispute settlement proceedings.358 In the factual circumstances of the present case, however, we consider that MOFCOM's application of this methodology was fundamentally flawed, and therefore its determination is inconsistent with the requirements of Article 3.5.
7.201.
Before it becomes relevant or necessary for an investigating authority to separate and distinguish the injury caused by other factors from the injury caused by subject imports, the investigating authority must first properly establish that the dumped imports have caused material injury, and the "nature and extent"359 of the injury caused by subject imports and the injury caused by the other factor(s). As discussed in detail above, we have concluded that MOFCOM failed to properly establish the causal link between subject imports and material injury to the domestic industry in this case. In these circumstances, MOFCOM's assessment of the "nature and extent" of the injury caused by subject imports was necessarily flawed. Thus, having failed to properly establish the causal link between subject imports and material injury to the domestic industry, MOFCOM could not have meaningfully assessed whether or not injury caused by other factors was sufficient to break that wrongly-determined causal link.
7.202.
In light of the fundamental flaw in MOFCOM's causation determination, it is not necessary for us to address every aspect of the parties' non-attribution arguments in detail. We do observe, however, that MOFCOM's analyses of the injurious effects of both the decline in apparent consumption and the increase in domestic production capacity failed to address the fact that subject imports were comprised almost exclusively of Grades B and C, while the domestic industry's operations were focused on Grade A. Those analyses also failed to account for the fact that MOFCOM had not established that subject imports of Grades B and C had injurious price effects on domestic Grade A. In these circumstances, and bearing in mind the standard of review set forth in Article 17.6(i) of the Anti-Dumping Agreement, we would expect an investigating authority to have considered the possibility that other known causes of injury might affect the different grades produced and sold by the domestic industry differently. We would also expect an investigating authority to have considered whether injury suffered by the domestic industry affected its Grade A operations disproportionately to its overall HP-SSST operations, whether this disproportionate effect might have been caused by factors other than subject imports, and whether these other factors might also account for injury suffered in respect of Grade B and C operations.360
7.203.
By way of example, we note that MOFCOM's analysis regarding the decline in apparent consumption is based in part on the fact that the domestic price for Grade A fell at the same rate as the price of Grades B and C361, even though apparent consumption of Grade A increased. China explains that MOFCOM determined that "the decrease in prices of Grade A can only be explained by the dumped imports"362, and that "MOFCOM could properly consider that injury to Grade A was caused by dumped imports of Grade B and Grade C, which can substitute Grade A".363 However, since MOFCOM did not find that subject imports of Grades B and C had price effects on domestic Grade A products, and since there was no basis for MOFCOM to find cross-grade substitution or price correlation364, MOFCOM had no basis for determining that subject imports (of Grades B and C) had any effect on the price of domestic Grade A. In these circumstances, there was no basis for MOFCOM to rely on the fact that the domestic Grade A price had fallen at the same rate as domestic Grade B and C prices as a basis to reject the decline in apparent consumption as a potential cause of injury.
7.204.
For the above reasons, we find that MOFCOM's examination of the injury caused by the decrease in apparent consumption and the increase in production capacity is flawed and not objective. MOFCOM's non-attribution analysis of these factors is therefore insufficient, and its determination inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.

7.5.3.6 Conclusion

7.205.
For the above reasons, we uphold the complainants' claims that MOFCOM's reliance on the market share of subject imports in its causation analysis is inconsistent with Articles 3.1 and 3.5. We also uphold the complainants' consequential claims that because MOFCOM's price effects and impact analyses are inconsistent with Articles 3.2 and 3.4 respectively, MOFCOM's subsequent reliance on those analyses and conclusions in the context of its causation determination is inconsistent with Article 3.5. We also uphold the complainants' claims that MOFCOM's non-attribution analysis in respect of the decrease in apparent consumption and the increase in domestic production capacity is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.

7.6 USE OF FACTS AVAILABLE FOR THE ALL OTHERS RATE

7.6.1 Introduction

7.206.
MOFCOM applied all others rates that were based on the highest margins of dumping for the cooperating European and Japanese exporters. The all others rate for European companies was based on the margin of dumping established for SMST. The all others rate for Japanese exporters was based on the margin of dumping established for Kobe. Japan and the European Union challenge the all others rates for Japanese and European exporters respectively, claiming that the requirements of Article 6.8 and Annex II:1 of the Anti-Dumping Agreement were not complied with. China asks the Panel to reject their claims.

7.6.2 Main arguments of the parties

7.6.2.1 Japan and the European Union

7.207.
The complainants contend that MOFCOM failed to fulfil the requirements of Article 6.8 and Annex II:1 in applying facts available to determine the all others rates. They submit that MOFCOM could not properly have determined that unknown exporters had failed to provide necessary information, in the sense of Article 6.8, since MOFCOM had failed to "specify in detail the information required" of unknown exporters, or "ensure" that unknown exporters were "aware that if information is not supplied within a reasonable time, the authorities will be free to make determinations on the basis of the facts available", consistent with Annex II:1. According to the complainants365, the Appellate Body in Mexico – Rice explained that an exporter must be given the opportunity to provide information required by an investigating authority before the investigating authority could resort to facts available that could be adverse to the exporter's interests. The complainants assert that this Appellate Body finding was relied on by the panel in China – GOES, where the panel found that the investigating authority had improperly applied facts available because the authority failed to inform interested parties of the necessary information required of them.
7.208.
In addition, Japan asserts that even if MOFCOM could be understood to have requested certain quantity and value information in its Notice of Initiation, the application of facts available to determine the all others rate was much broader in scope. The European Union raises two additional, consequential claims regarding MOFCOM's use of facts available to determine the all others rate. First, the European Union contends that alleged flaws in MOFCOM's determination of a margin of dumping for SMST (which was used as the basis for the all others rate) render the application of such determination, through the facts available mechanism, inconsistent with Article 6.8. Second, the European Union contends that MOFCOM violated Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement as a result of "any possible substantive consequences" for the SMST margin "of any and all of the above procedural claims insofar as they relate to dumping".366

7.6.2.2 China

7.209.
In respect of the complainants' principal claims, China refers to the findings of the panel in China – Broiler Products to argue that the reference to the use of facts available for non-cooperating exporters in MOFCOM's Notice of Initiation was sufficient for the purposes of Article 6.8 and Annex II:1. China also asserts that the facts of the present case are different from those in China – GOES because, in addition to its Notice of Initiation, MOFCOM also posted the exporters' questionnaire on its website. According to China, therefore, exporters had ample notice of the information that they were required to submit, and of the consequences for not doing so.
7.210.
Regarding the additional claim pursued by Japan, China notes that the failure by unknown producers/exporters to register and provide information requested in the Notice of Initiation implied that MOFCOM had no basis on which to determine their margin of dumping, and that MOFCOM was thus justified in determining this margin on the basis of facts available. Moreover, China denies that MOFCOM applied facts available more broadly than the scope of the information requested in the Notice of Initiation. China contends that MOFCOM applied facts available in respect of the information requested in the exporters' questionnaire, which was published on the website address provided in the Notice of Initiation.
7.211.
China also asks the Panel to reject the European Union's consequential claim regarding alleged inconsistencies with Article 2 of the Anti-Dumping Agreement. China in any event denies that the application of a dumping rate that is inconsistent with Article 2 as facts available would necessarily violate Article 6.8 and Annex II. China submits that this is a matter that should be assessed under paragraph 7 of Annex II, the only provision dealing with the substantive quality of the "facts available" that are relied upon. China notes that no such claim has been brought by the European Union. Concerning the European Union's second consequential claim regarding the potential substantive consequences of procedural violations in respect of SMST's margin, China argues that it is unclear as to which possible consequences should allegedly form the basis of this consequential claim.

7.6.3 Main arguments of third parties

7.6.3.1 United States

7.212.
The United States considers that China acted inconsistently with Article 6.8 and Annex II:1 of the Anti-Dumping Agreement by applying facts available to the extent that MOFCOM had no evidence that any interested party "refused access to" or otherwise "did not provide" information that was "necessary" to the antidumping investigation, or otherwise "significantly impeded" the antidumping investigation.367

7.6.4 Evaluation by the Panel

7.6.4.1 The complainants' principal claims

7.213.
We are unable to accept the complainants' principal Article 6.8 claims since, taking into account the totality of the facts, we consider that MOFCOM had sufficient basis to determine that unknown exporters had failed to provide necessary information it had sought to obtain.
7.214.
We note the complainants' reliance on the findings of the panel in China – GOES. We observe in particular that panel's finding that "given that the unknown exporters were not notified of the "necessary information" required of them, the Panel cannot conclude that they refused access to or failed to provide the information".368
7.215.
China, on the other hand, relies on the findings of the panel in China – Broiler Products. Although that case involved facts similar to those in China – GOES, the panel did not follow the analysis of the China – GOES panel, and reached a different conclusion. The panel observed that requiring an authority to establish that unknown exporters had actually failed to cooperate with the investigation "would make it difficult, if not impossible, for a Member to determine an appropriate anti-dumping duty rate for certain unknown producers/exporters and thus apply anti-dumping measures with respect to their imports".369 The panel also observed that MOFCOM had posted the Notice of Initiation and Registration Form - which requested information from interested parties, including producers/exporters, in order to register to participate in the proceedings, and included a warning that facts available could be resorted to in the case of failure to register - on its website. The panel concluded that "MOFCOM reasonably considered that the failure to register meant that an interested party failed to 'otherwise … provide … necessary information' within the meaning of Article 6.8".370
7.216.
There are similarities between the facts of the present case and the facts in the two above-mentioned proceedings. Most notably, in all three cases MOFCOM published a Notice of Initiation calling on interested parties to register for the investigation. The Notice specified that:

If any interested party fails to register for responding to the investigation within the time limit, MOFCOM shall have the right to reject the relevant materials submitted by the interested party and make determinations on the basis of the available materials when that determination is made.371

7.217.
There is also a significant difference between the facts of the present case and the facts of China – GOES and China – Broiler Products. This difference concerns the fact that, in the present case, MOFCOM published the exporter questionnaire on its website, at a web address set forth in the Notice of Initiation.372 The questionnaire informed exporters of the information that was required of them. The questionnaire also specified that:

If your company fails to provide the response to this questionnaire according to the requirements in this questionnaire within the prescribed time limit, or fails to provide the complete and accurate response, or does not allow the Bureau of Fair Trade for Imports & Exports of MOFCOM to verify the provided information and materials, pursuant to the provisions of the Antidumping Regulations of the People's Republic of China, the Bureau of Fair Trade for Imports & Exports of MOFCOM may make its determinations on the facts already known and best information available.373

7.218.
We consider that the publication of MOFCOM's questionnaire on its website374 is an important factor, since it informed all exporters – even those unknown to MOFCOM – of the necessary information that MOFCOM required them to provide. It also indicated that facts available would be used in the event that they failed to provide that information. In other words, unknown exporters were on notice of what information was required of them, and of what the consequences would be if they failed to provide that information. Thus, in our view, this action by MOFCOM satisfied the requirement of Annex II:1 to "specify in detail the information required" of foreign producers and exporters, including those not known to MOFCOM, sufficiently to allow MOFCOM to conclude that the failure of such foreign producers or exporters to come forward constituted a failure to provide necessary information within the meaning of Article 6.8, and thus that the facts available could be used in making determinations with respect to such entities.375 In light of this additional, and important, factual element, we consider that there is no basis for a finding that "unknown exporters were not notified of the 'necessary information' required of them"376, and therefore that the use of facts available was not justified.
7.219.
We note Japan's argument377 that MOFCOM provided no official public notice that the questionnaire would be available on its website. However, we agree with the panel in China – Broiler Products that neither Article 6.8 nor Annex II of the Anti-Dumping Agreement specifies what form the investigating authority's request for information should take.378 We also agree with the finding by the panel in China – Autos (US) that an investigating authority need not "publicly notify the dumping questionnaire in order to satisfy the requirements of Article 6.8 and paragraph 1 of Annex II".379 There may be more effective means through which MOFCOM could have informed interested parties that its questionnaire would be published on its website. However, the publication of MOFCOM's web address in the Notice of Initiation, and the subsequent positing of its questionnaire at that address, meant that it was not unduly difficult for interested parties that had not registered with MOFCOM to ascertain the information being sought by MOFCOM.
7.220.
For these reasons, we reject the complainants' claims that MOFCOM failed to comply with the requirements of Article 6.8 and Annex II:1 when it applied facts available to determine the all others rates.

7.6.4.2 Additional claims pursued by the complainants

7.221.
While Japan claims that MOFCOM applied facts available more broadly than the scope of the limited information sought in the Notice of Initiation, it has not argued that MOFCOM applied facts available more broadly than the scope of the information requested in the exporters' questionnaire. In light of our finding that MOFCOM informed exporters of the information required of them by posting the exporters' questionnaire on its website, there is no basis for Japan's claim.
7.222.
The European Union has made two consequential claims. The first relates to its substantive Article 2 claim regarding the margin of dumping determined in respect of SMST. The European Union contends that any substantive inconsistency regarding this margin will necessarily contaminate any all others rate based on that margin, rendering the all others rate inconsistent with Article 6.8. We recall that we have upheld the European Union's claims that MOFCOM's determination of a margin of dumping for SMST is inconsistent with Articles 2.2.2 and 2.4 of the Anti-Dumping Agreement. We agree with the European Union that any all others rate determined on the basis of the margin established for SMST as facts available therefore lacks an appropriate factual foundation, contrary to Article 6.8 of the Anti-Dumping Agreement.380 Since the requirement that the use of facts available be based on an appropriate factual foundation derives from Article 6.8, there is no need for the European Union to have pursued a claim under Annex II:7, as suggested by China.
7.223.
Second, the European Union claims that China violated Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement by applying SMST's margin of dumping as the all others rate as a result of "any possible substantive consequences of any and all of the above procedural claims insofar as they relate to dumping".381 In response to China's argument that it is unclear as to which possible consequences form the basis of this consequential claim, the European Union states that "it is in the nature of a procedural claim that one does not know what the substantive consequences may eventually be of remedying the procedural defect".382 We consider that the European Union has failed to establish a prima facie case in respect of this claim. At a minimum, the European Union should have reviewed its procedural claims, and explained which alleged inconsistencies resulted in a violation of Article 6.8 and Annex II:1, and how. The European Union has failed to do so, and we decline to make out a case on its behalf. Furthermore, in its second written submission the European Union asserts383 that "what the substantive consequences may or may not be is not a matter for these panel proceedings, but rather, in the first place, for the implementing Member, subject to review in compliance proceedings". We agree. China will need to consider the substantive consequences of any procedural violations as it implements any recommendation of the DSB in respect of such violations. If the complainants consider that China fails to address any substantive issues raised by the procedural violations, they would be able to raise those substantive issues in Article 21.5 compliance proceedings. In referring to potential review in compliance proceedings, the European Union appears to acknowledge that there is no basis for any findings by the Panel regarding the substantive consequences of procedural violations in the present proceeding.

7.6.4.3 Conclusion

7.224.
We reject the complainants' principal claims under Article 6.8 and Annex II:1 that MOFCOM failed to properly apply facts available because it had failed to inform unknown exporters of the information required of them. We also reject Japan's supplemental claim regarding the scope of the facts available applied by MOFCOM. We uphold the European Union's claim that, as a consequence of SMST's margin of dumping not having been determined consistent with Articles 2.2.2 and 2.4 of the Anti-Dumping Agreement, the use of SMST's margin of dumping as facts available to establish the all others rate for exporters from the European Union is inconsistent with Article 6.8 of the Anti-Dumping Agreement. We reject the European Union's claim regarding the substantive consequences of procedural violations in respect of SMST's margin of dumping.

7.7 ESSENTIAL FACTS

7.225.
The complainants submit that MOFCOM failed to comply with the Article 6.9 obligation to disclose essential facts regarding its dumping and injury determinations, and its determination of the all others rates. The European Union also makes a claim under Article 6.4 in respect of MOFCOM's determination of the all others rate on the same grounds.

7.7.1 Main arguments of the parties

7.7.1.1 Japan and the European Union

7.226.
Regarding the dumping determination, the complainants contend that MOFCOM failed to disclose essential facts, specifically: (i) the specific cost and sales data applied for the calculation of normal value and export prices underlying the margin calculations; (ii) adjustments to this data, for instance, to take account of taxes and freight; and (iii) information on the calculation methodology, namely the formulae used in calculations, the data applied in these formulae, and information on how MOFCOM applied these data in calculations for normal value, export price and production costs. The complainants assert that MOFCOM failed to disclose any of this information. The European Union submits that "[i]t is particularly difficult to understand why, if a firm provides a spread sheet with certain data destined to be used to calculate a dumping margin, it should not receive disclosure of what is in essence the same spread sheet, duly completed with the data actually relied on by the investigating authority".384 The European Union further submits that MOFCOM's alleged failure to disclose the essential facts for its dumping determination also violates Article 6.4.
7.227.
Regarding the injury determination, the complainants contend that MOFCOM failed to disclose, specifically: (i) complete information about the import prices it used in its price effects analysis for Grades A and C; (ii) any domestic prices; (iii) the percentage change in the domestic price of Grade C in the first half of 2011 as compared with the first half of 2010; (iv) the margins of overselling for Grade A in 2008 and the HP-SSST product as a whole (to the extent that there were relevant domestic sales); (v) the margin of overselling or underselling for Grade C in the first half of 2011; and (vi) the margin of underselling for Grade B for the years 2008, 2009 and 2010.385
7.228.
Regarding the all others rates, the complainants claim that MOFCOM violated Article 6.9 by failing to disclose (i) the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rate, (ii) the particular facts that were used to determine the all others rates, and (iii) the justification for using the highest dumping margin found for a cooperating exporter as the all others rate.386 The European Union also claims a violation of Article 6.4 on the same grounds.

7.7.1.2 China

7.229.
China asks the Panel to reject the complainants' claims. China submits that MOFCOM disclosed all "essential facts", and provided sufficient non-confidential summaries in respect of those "essential facts" for which it was bound by confidentiality obligations.
7.230.
China submits that the complainants fail to make a prima facie case, as they only rely on general allegations that are not substantiated in any way by means of a specific reference to the disclosure documents. According to China, the European Union's failure to provide the disclosure document with respect to Tubacex as an exhibit implies that no prima facie case was made. China further contends that MOFCOM disclosed all essential facts pertaining to its dumping determinations in its preliminary and final dumping disclosures. In particular, China submits that MOFCOM explained when it accepted data reported by the respondents, and when it resorted to constructed normal values or export prices. Concerning production costs, SG&A and profits, China asserts that MOFCOM explained when it accepted the data submitted by the exporting producers, and when it resorted to other data. China also asserts that MOFCOM indicated when adjustments requested by respondents were upheld, and the amount of adjustments made in other cases. China also contends that MOFCOM provided the necessary information for respondents to understand the margin calculation methodology. In addition, China contends that the margin calculation methodology is part of MOFCOM's reasoning, and therefore falls outside the scope of Article 6.9, which only applies in respect of "facts".387 China also submits that MOFCOM generally disclosed all relevant information supporting its injury and causation determinations. China contends, though, that MOFCOM was not required to disclose some of the information identified by the complainants because of its obligation (under Article 6.5) to protect confidentiality and that, in this case, China in any event provided a sufficient non-confidential summary. China further contends that the findings of the panel and Appellate Body in China – GOES confirm that the relationship between the prices of the subject imports and the domestic prices is what is to be disclosed.388
7.231.
China asks the Panel to reject the complainants' claims concerning the disclosure of essential facts in respect of the all others rates. China submits that MOFCOM properly disclosed that facts available were applied in respect of the all others rates because of unknown exporters' failure to respond to the Notice of Initiation, to register with MOFCOM, or to respond to MOFCOM questionnaire for exporters. China submits that MOFCOM properly disclosed that the all others rates would be determined on the basis of the highest dumping margin determined for European and Japanese exporters respectively. China denies that MOFCOM's justification for applying the highest rates from cooperating exporters as the all others rates is an "essential fact" within the meaning of Article 6.9. With regard to the additional Article 6.4 claim pursued by the European Union, China denies that Article 6.4 imposes any active disclosure obligation on investigating authorities. China contends that, in order to pursue a claim under Article 6.4, the European Union should have shown that MOFCOM had denied an interested party's request to see information used by the authorities.

7.7.2 Main arguments of third parties

7.7.2.1 United States

7.232.
The United States389 asserts that the calculations relied on by an investigating authority to determine the normal value and export prices, as well as the data underlying those calculations, constitute "essential facts" forming the basis of the investigating authority's imposition of final measures within the meaning of Article 6.9. The United States contends that the calculations and underlying data are facts that are "absolutely indispensable" to the determination of the existence and magnitude of dumping.390 The United States asserts that, without such information, no affirmative determination could be made and no definitive duties could be imposed. The United States considers that if the interested parties are not provided access to these facts used by the investigating authority on a timely basis, they cannot defend their interests. The United States submits that the fact that a party has provided information to the investigating authority does not mean that the exporter knows with certainty which of that information will be used and in what capacity. The United States also asserts that MOFCOM should have disclosed the essential facts forming the basis for the calculation of the all others rate. The United States also considers that MOFCOM should have disclosed to the interested parties information related to domestic prices, import prices, and the comparison of these prices.391

7.7.3 Evaluation by the Panel

7.233.
We begin by addressing the complainants' Article 6.9 claims in respect of MOFCOM's dumping determination. We shall then turn to the Article 6.9 claims in respect of MOFCOM's injury determination. Thereafter, we address the complainants' Article 6.9 and 6.4 claims in respect of MOFCOM's determination of the all others rates.392

7.7.3.1 MOFCOM's dumping determination

7.7.3.1.1 Data underlying MOFCOM's determination of dumping

7.234.
The complainants' claims concerning MOFCOM's alleged failure to disclose the data underlying its dumping determinations are based on the fact that MOFCOM provided a narrative description of the cost and sales data, and adjustments, on which its findings would be based, rather than disclosing the actual data.393 The complainants consider that MOFCOM's choice to provide a narrative description, rather than actual data, is insufficient for the purposes of Article 6.9. Japan asserts in this regard that "MOFCOM's disclosure documents included only brief narrative descriptions of how the dumping margins were calculated, without any disclosure of the underlying cost or sales data that was used, how particular adjustments were applied to the cost or sales data, and the calculation methodology applied to all of these data to determine dumping margins".394
7.235.
Previous WTO dispute settlement proceedings have established that the basic data underlying an investigating authority's dumping determination constitute "essential facts" within the meaning of Article 6.9.395 We agree. In addition, the panel in China – Broiler Products found that a narrative description of the data used cannot ipso facto be considered insufficient disclosure, provided the essential facts the authority is referring to are in the possession of the respondent.396 We agree. In cases where the relevant essential facts are already in the possession of the respondents, we do not consider that Article 6.9 requires investigating authorities to prepare disclosures containing the entirety of the essential facts under consideration. In particular, we do not consider that the authority need necessarily disclose a spread sheet "duly completed with the data actually relied on by the investigating authority", as suggested by the European Union.397 While this would be one way of complying with Article 6.9, a narrative description would also suffice in the appropriate circumstances, provided that such description does not leave uncertainty as to the essential facts under consideration.
7.236.
MOFCOM made both preliminary and final dumping disclosures to the Japanese and European exporters at issue. The narrative in those disclosures described the sales data under consideration, the basis for determining normal value and export price, and the adjustments made thereto. MOFCOM specified when it used data or made adjustments requested by the exporters. In addition, MOFCOM disclosed actual data when it departed from the data submitted by the exporters.398 Other than observing that MOFCOM failed to provide actual data that was already in the respondents' possession, the complainants have not identified any flaws in MOFCOM's narrative description, or otherwise explained how such description would not have been sufficient for the relevant exporters to defend its interests. In these circumstances, there is no basis for us to find that the narrative descriptions provided by MOFCOM do not satisfy the requirements of Article 6.9 of the Anti-Dumping Agreement.

7.7.3.1.2 Calculation methodology

7.237.
Regarding the complainants' claims that MOFCOM was required by Article 6.9 to disclose its dumping margin calculation methodology, we note that the Article 6.9 disclosure obligation only applies in respect of essential "facts". The ordinary meaning of the term "fact" is "[a] thing known for certain to have occurred or to be true".399 The word "methodology" is defined as "[a] body of methods used in a particular branch of study or activity".400 These definitions tend to suggest that a dumping calculation "methodology" should not be treated as a "fact". However, pursuant to Article 31.1 of the Vienna Convention, treaty terms must also be interpreted in their context, and in the light of their object and purpose. In this regard, we note the immediate context provided by the second sentence of Article 6.9, which provides that the disclosure of essential facts "should take place in sufficient time for the parties to defend their interests". This provision indicates that the terms of the first sentence of Article 6.9 should be interpreted in a manner that allows interested parties to defend their interests. We therefore agree with the finding by the panel in EC – Salmon (Norway) that "the purpose of disclosure under Article 6.9 is to provide the interested parties with the necessary information to enable them to … comment on or make arguments as to the proper interpretation of those facts".401
7.238.
We are not persuaded that disclosure of the data underlying a dumping determination would enable an interested party to properly defend its interests – through, for example, commenting on the proper interpretation of those facts - unless that interested party were also informed of the methodology applied by the investigating authority to determine the margin of dumping. Since the application of different methodologies to the same data would likely give rise to different results, merely disclosing the underlying data under consideration, without also disclosing the methodology under consideration, would be of little use in clarifying the factual basis of the investigating authority's determinations. We note that this was the approach adopted by the panel in China – Broiler Products, which found that:

a proper disclosure of the comparison would require not only identification of the home market and export sales being used, but also the formula being applied to compare them. What formula was applied is an essential element of a comparison of normal value to export price and is just as fundamental to an understanding of the establishment of the margin of dumping as the data reflecting the individual sales. The disclosure of the formulas applied is necessary to enable the respondent to comment on the completeness and correctness of the conclusions the investigating authority reached from the facts being considered, provide additional information or correct perceived errors, and comment on or make arguments as to the proper interpretation of those facts. Without these formulas, a respondent would have an insufficient understanding of what the authority has done with its information and how that information was being used to determine the dumping margin.402

7.239.
We agree with the approach adopted by the panel in China – Broiler Products, and adopt it as our own. Accordingly, we consider that, in disclosing the essential facts underlying its dumping determination, MOFCOM should also have disclosed the calculation methodology used to calculate the margin of dumping on the basis of those essential facts. By failing to disclose that methodology, MOFCOM acted inconsistently with Article 6.9 of the Anti-Dumping Agreement.

7.7.3.2 Essential facts concerning MOFCOM's injury determination

7.240.
We recall that the purpose of the Article 6.9 disclosure obligation is to allow interested parties to understand the factual basis for the decision whether to apply definitive measures in order to be able to defend their interests, before a final determination is actually made. MOFCOM's injury determination was based on its conclusions regarding the price effects of subject imports, based on findings of price undercutting in respect of Grade B and C subject imports. Accordingly, we consider that MOFCOM was required by Article 6.9 to disclose to interested parties the actual price comparisons on which those findings of price undercutting and price effects were based, and all of the underlying data considered by MOFCOM in making those findings. This approach is consistent with the finding of the Appellate Body in China – GOES that all "essential facts relating to the price comparisons"403 should be disclosed.404 Our approach is also consistent with the finding by the panel in China – X-ray Equipment that Article 6.9 requires the disclosure of "the entire body of facts essential to [the investigating authority's] analysis of the price effects of the dumped imports".405 With these considerations in mind, we now turn to the detail of Japan's Article 6.9 claims in respect of MOFCOM's injury determination.

7.7.3.2.1 Import price data

7.241.
Turning first to the complainants' claims in respect of Grade A and C import price data, we consider, for the reasons set forth in the preceding paragraph, that the import price data considered by MOFCOM was part of the body of facts essential to MOFCOM's price effects analysis. We do not understand China to deny that import price data constitute essential facts falling within the scope of Article 6.9. China rather asserts that MOFCOM was prevented from disclosing such data by virtue of the confidentiality requirements of Article 6.5. We recall in this regard that the Appellate Body confirmed in China – GOES that the Article 6.5 obligation to protect confidentiality does not excuse a total failure of disclosure, in the sense that a non-confidential summary of the relevant essential facts should be disclosed instead. We agree with that finding, and adopt it as our own.
7.242.
Regarding Grade A, MOFCOM failed to disclose any import price data whatsoever, even though a small quantity of such products were imported in 2008. MOFCOM stated that this price data was confidential, since imports came from only one exporter.406 As indicated above, we do not consider that the confidentiality of an essential fact justifies the total absence of any disclosure in respect thereof. Rather than disclosing nothing about Grade A import prices, MOFCOM should have disclosed a meaningful non-confidential summary thereof. Japan suggests that MOFCOM might, for example, have disclosed a meaningful non-confidential price range. We do not disagree, although we are not suggesting that any particular form of non-confidential disclosure is required. MOFCOM's failure to disclose any essential facts in respect of Grade A import prices for 2008 is inconsistent with the requirements of Article 6.9.
7.243.
Regarding Grade C, China asserts that MOFCOM properly treated the relevant import price data as confidential because only two foreign producers exported that product during the POI. China contends that MOFCOM complied with Article 6.9 by disclosing a meaningful non-confidential summary thereof, in the form of the relative change in their adjusted annual weighted average price. A similar argument was addressed by the panel in China – X-Ray Equipment. That panel found that "by simply informing interested parties of the trends in subject import and domestic prices, MOFCOM provided little basis for interested parties to defend their interests".407 We agree with that panel's finding. We do not consider that MOFCOM's disclosure of the change in adjusted annual weighted average prices provides any meaningful basis for interested parties to defend their interests. MOFCOM's disclosure in respect of Grade C import prices is therefore inconsistent with Article 6.9.

7.7.3.2.2 Domestic prices

7.244.
For the reasons explained above408, we consider that the domestic price data considered by MOFCOM was part of the body of facts essential to MOFCOM's price effects analysis, and should therefore have been disclosed by MOFCOM pursuant to Article 6.9 of the Anti-Dumping Agreement.
7.245.
China asserts that domestic prices do not constitute "essential facts" to be disclosed pursuant to Article 6.9 in respect of those grades and time periods for which either (i) the absence of domestic sales or imports meant that no price comparisons could be made, or (ii) no price undercutting was found. China further asserts that the domestic price information was provided by only two producers, and therefore treated by MOFCOM as confidential. China contends that MOFCOM complied with Article 6.9 by disclosing, where necessary, meaningful non-confidential summaries of this information, in the form of year-on-year price differences expressed in percentages.409
7.246.
We are not persuaded by China's argument that certain domestic price information falls outside the scope of Article 6.9 because either no price comparisons were made, or because no price underselling was found. The body of essential facts to be disclosed under Article 6.9 concerns the facts "under consideration" by the investigating authority in determining whether (or not) to apply measures. It is not comprised solely of the facts that support the final determination to apply measures. In this regard, we note the finding by the Appellate Body in China – GOES that Article 6.9 "refer[s] to those facts that are significant in the process of reaching a decision as to whether or not to apply definitive measures. Such facts are those that are salient for a decision to apply definitive measures, as well as those that are salient for a contrary outcome".410 We agree with this finding, and are guided by it in rejecting China's argument. Even though certain domestic price information was not ultimately used in price comparisons, or comparisons based on that price information did not reveal price undercutting, the domestic price information was still "under consideration" by the authority, and should therefore have been disclosed to interested parties.
7.247.
Regarding China's argument that MOFCOM complied with Article 6.9 by disclosing non-confidential year-on-year price differences expressed in percentages411, we have already found that simple price trend information does not provide a meaningful basis for interested parties to defend their interests. Accordingly, MOFCOM's disclosure of such information does not satisfy the disclosure obligation specified in the second sentence of Article 6.9.

7.7.3.2.3 Price comparisons

7.248.
Concerning price comparisons, the complainants claim that MOFCOM failed to disclose (i) the margins of overselling for Grade A in 2008 and the HP-SSST product as a whole (to the extent that there were relevant domestic sales); (ii) the margin of overselling or underselling for Grade C in the first half of 2011; and (iii) the margin of underselling for Grade B for the years 2008, 2009 and 2010. The complainants challenge MOFCOM's disclosure of only a range of underselling (i.e., -3% to -28%) for Grade B for those years, without specifying the particular margin of underselling for any given year.
7.249.
We consider that the price comparisons made by MOFCOM were part of the body of facts essential to MOFCOM's price effects analysis, and should therefore have been disclosed by MOFCOM pursuant to Article 6.9 of the Anti-Dumping Agreement. We note in this regard that the Appellate Body stated in China – GOES that the essential facts to be disclosed "include the price comparisons between subject imports and the like domestic products".412 We recall our earlier finding that the mere fact that a price comparison showed price overselling does not mean that it need not be disclosed pursuant to Article 6.9.413
7.250.
Concerning the complainants' claim that MOFCOM failed to disclose the margin of overselling or underselling for Grade C in the first half of 2011, China has explained in these proceedings that there were either no imports or no domestic sales during this period, such that no price comparison could be made.414 While this means that there was effectively no price comparison for MOFCOM to disclose pursuant to Article 6.9, the fact that interested parties were not aware of this during MOFCOM's investigation confirms our view that MOFCOM should have disclosed all of the domestic and import price data under its consideration, properly summarized so as to avoid disclosing confidential information where necessary.
7.251.
Regarding the margin of price overselling or underselling in respect of Grade A for 2008, and for the product as a whole, China advances no specific defence. We note China's assertion that MOFCOM found that the Grade A import price was higher than the domestic sales price in 2008.415 We also note MOFCOM's finding that "the adjusted import prices of the subject products were higher than the sales prices of the domestic like products"416 as a whole. These price comparisons should have been disclosed to interested parties, but were not. We therefore uphold the complainants' claims in respect of these comparisons.
7.252.
Regarding MOFCOM's disclosure that the range of underselling for Grade B for the years 2008, 2009 and 2010 varied from 3-28%, the complainants do not dispute that MOFCOM was entitled to disclose merely a range of underselling in order to protect the confidentiality of the actual margins of underselling. However, they argue that the disclosure of a single range to cover underselling over a period of three years was not sufficient to enable interested parties to defend their interests, as required by Article 6.9. We agree. In particular, disclosure of a single range provides no indication as to whether the margin of underselling increased or decreased during that three-year period. Nor does it disclose the year in which the margin of underselling was greatest, even though this may be relevant to the issue of causation. In order to allow interested parties to properly defend their interests, MOFCOM should have provided a more nuanced disclosure, perhaps of non-confidential ranges for each of the years at issue, as it did for the first half of 2011, which would have provided a meaningful understanding of the essential facts and enabled the parties to defend their interests. MOFCOM's failure to do so is inconsistent with Article 6.9 of the Anti-Dumping Agreement.
7.253.
For the above reasons, we uphold the complainants' claims in respect of MOFCOM's failure to disclose the relevant margins of overselling or underselling for Grade A for 2008 and for the product as a whole, and its failure to disclose the annual ranges of underselling for Grade B for the years 2008, 2009, and 2010. We reject the complainants' claims regarding MOFCOM's failure to disclose the margin of overselling or underselling in respect of Grade C for the first half of 2011.

7.7.3.3 Essential facts concerning the all others rates

7.254.
The complainants' Article 6.9 claims are focused on the alleged shortcomings of MOFCOM's Final Dumping Disclosures to the complainants' respective diplomatic representations in China.417 In the Final Dumping Disclosure to Japan's Embassy, MOFCOM stated:

for those Japanese companies that did not respond or submit the questionnaire response, the Investigation Authority decides to base its determinations on dumping and dumping margin on facts already known or best information available, and apply the highest dumping margin found for the Japanese respondents to such companies.418

7.255.
In the Final Dumping Disclosure to the European Union, MOFCOM stated:

As regards other EU companies that did not respond to the questionnaire, the Investigation Authority decided to use known facts or best information available to determine the relevant dumping and dumping margin and to use the highest dumping margin among the dumping margins of the EU responding companies.419

7.256.
Regarding the question of whether MOFCOM properly disclosed the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rate, we note that the above extracts from MOFCOM's Final Dumping Disclosures expressly state that facts available were used in respect of companies that did not respond or submit questionnaire responses. We consider that, in the context of the use of facts available, the obvious implication of this statement is that MOFCOM considered the use of facts available warranted by virtue of the failure of unknown exporters to provide the necessary information set forth in the exporter questionnaire.
7.257.
The complainants420 rely on the finding of the panel in China – GOES to argue that, because MOFCOM failed to comply with Article 6.8 by determining that the relevant entities had either failed to provide necessary information or significantly impede the investigation, MOFCOM was not able to disclose, pursuant to Article 6.9, that the factual basis for applying facts available was failure to provide necessary information or significant impediment of the investigation. In other words, the complainants' Article 6.9 claims are very closely tied to, if not dependent on, their Article 6.8 claims. As we explained when rejecting the complainants' Article 6.8 claims421, the facts of the present case are different from those in China – GOES, and our conclusion is also different. In our view, the finding by the panel in China – GOES in respect of Article 6.9 is a consequence of it having upheld the United States' claim under Article 6.8. However, in the present case, we have concluded that MOFCOM did not violate Article 6.8 in concluding that unknown exporters failed to provide necessary information, and therefore in resorting to the use of facts available. In these circumstances, we reject the complainants' Article 6.9 claims that MOFCOM failed to disclose the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rate.
7.258.
Concerning the question of whether MOFCOM properly disclosed the particular facts that were used to determine the all others rates, we note that the Final Dumping Disclosures clearly indicate that the all others rates would be based on the highest margin of dumping for cooperating exporters. In our view, such disclosure is sufficient for the purpose of Article 6.9. Unlike the situation in China – GOES, where the panel found the large disparity between the all others rate and the rates determined for respondents left uncertainty as to how the all others rate had been determined "based on transaction information of the respondents", in the present case, there is no disparity between the all others rates and the rates of the cooperating respondents with the highest margins of dumping, and thus no lack of clarity. In these circumstances, MOFCOM's disclosure that the all others rates would be based on the highest margins determined for cooperating respondents is sufficient for the purpose of Article 6.9.
7.259.
Japan also claims that MOFCOM's alleged failure to disclose all essential facts pertaining to Kobe, the Japanese exporter with the highest margin of dumping, also invalidated MOFCOM's disclosure with respect to the all others rate for unknown Japanese exporters, which was based on Kobe's rate.422 However, as a matter of law, we recall that the purpose of Article 6.9 disclosure is to allow interested parties to defend their interests. The interests of an entity subject to an all others rate based on facts available, or of the exporting Member in respect of an all others rate based on facts available, are not necessarily the same as those of cooperating respondents participating in the investigation, whose margin is established on the basis of their own data. Such respondents may wish to challenge the investigating authority's determination of their margin of dumping, and the Article 6.9 disclosure obligation ensures that the essential facts underlying that determination are disclosed to them in order to enable them to do so. This issue does not arise in respect of exporters that have not cooperated and are not participating in the investigation, and whose rate will be based on facts available pursuant to Article 6.8. The primary interest of such exporters is to ensure that the requirements of Article 6.8 (including in particular the need for a factual foundation) are complied with. If the authority discloses that the all others rate for non-cooperating exporters will be based on facts available in the form of the highest margin for cooperating exporters, and if the final determination states what that highest rate is, the interests of the relevant interested parties are effectively addressed.
7.260.
Regarding MOFCOM's failure to disclose the justification for using the highest dumping margins found for cooperating exporters as the all others rates, we agree with China's argument423 that such justification, or reasoning, need not be disclosed as an essential "fact" pursuant to Article 6.9. Japan424 asserts that "[a]n investigating authority must use the 'best information available' and 'special circumspection', and may not resort to 'adverse inferences'. The facts underpinning MOFCOM's determination that the highest dumping margin for an investigated respondent was the 'best information available' for determining the all others rate are therefore 'essential' or 'material' facts necessary to understand MOFCOM's decision to impose final anti-dumping measures on unknown Japanese exporters".425 We disagree, and consider that Japan's argument is really aimed at MOFCOM's qualitative assessment of why the highest margin of dumping established for cooperating exporters was the best information available to use as the all others rate. Such qualitative assessment is not a "fact" within the meaning of Article 6.9.426
7.261.
For the above reasons, we reject the complainants' Article 6.9 claims that MOFCOM failed to disclose certain essential facts regarding the all others rate.
7.262.
Regarding the Article 6.4 claim pursued by the European Union, we observe that Article 6.4 requires investigating authorities "whenever practicable [to] provide timely opportunities for all interested parties to see all information that is relevant to the presentation of their cases, that is not confidential (…), and that is used by the authorities in an anti-dumping investigation…". The panel in EC – Fasteners (China) held that Article 6.4 "does not obligate the investigating authorities to actively disclose information to interested parties", and 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".427 We agree with these findings, and adopt them as our own. Since the European Union has not even asserted, much less demonstrated, that MOFCOM denied any request by any interested party to see information used by MOFCOM, we reject the European Union's Article 6.4 claim.

7.8 PUBLIC NOTICE

7.263.
The complainants contend that MOFCOM failed to ensure that its public notice of the Final Determination complied with the public notice requirements set forth in Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement. They claim that MOFCOM failed to include in its public notice "all relevant information on the matters of fact or law and reasons which have led to the imposition of final measures". Their claims pertain to information concerning MOFCOM's injury determination, and MOFCOM's determination of the all others rates.
7.264.
China asks the Panel to reject the complainants' claims.

7.8.1 Main arguments of the parties

7.8.1.1 Japan and the European Union

7.265.
In respect of MOFCOM's injury determination, the complainants contend that MOFCOM failed to include two types of "key factual information" in its public notice.428 First, they refer to the "pricing information underlying [MOFCOM's] price undercutting analysis". Second, they refer to details of how MOFCOM accommodated the "quantitative differences" between the volume of subject imports of Grade C and the volume of domestic sales of Grade C in its price undercutting analysis.429
7.266.
In respect of the all others rates, the complainants submit that MOFCOM's public notice is inconsistent with Articles 12.2 and 12.2.2 because it fails to include (i) the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rates, (ii) the facts that were used to determine the all others rates, and (iii) facts or reasoning behind why it was appropriate to apply the highest margin of dumping calculated for cooperating exporters as the all others rate.430

7.8.1.2 China

7.267.
Regarding the injury determination, China claims that, for reasons similar to those explained in relation to the complainants' Article 6.9 essential facts claims, MOFCOM's Final Determination included all relevant information on matters of fact where appropriate, in the form of non-confidential summaries.431 Regarding the "quantitative differences" in respect of Grade C, China contends that the treatment of such "quantitative differences" was a methodological matter falling within MOFCOM's discretion that, although it did not need to be included in the public notice, was clearly explained by MOFCOM.
7.268.
Regarding the all others rates, China submits that the Final Determination addresses the efforts MOFCOM made to notify all interested parties and to inform them all of the consequences of not registering as respondents and/or of not submitting questionnaire responses432, before specifying that MOFCOM resorts to facts available for "those EU and Japanese companies that did not respond or submit the questionnaire response".433 China also contends that the Final Determination explains that the all others rate used for Japanese exporters is the margin of dumping established for Kobe, and the all others rate used for European exporters is the margin of dumping established for SMST.434

7.8.2 Main arguments of third parties

7.8.2.1 United States

7.269.
The United States asserts that the factual and legal bases for the investigative authority to resort to facts available with respect to all other exporters that it did not examine constitute material issues of fact and law considered. The United States suggests that these issues go to the very heart of the determination of what margin to apply to unexamined exporters, and should therefore have been included in the public notice pursuant to Article 12.2. The United States submits that Article 12.2.2 required MOFCOM include in its public notice "all relevant information" on the relevant facts underlying its determination that recourse to facts available was warranted in the calculations of the all others rates.435 The United States also asserts that any facts related to the price comparisons of the subject imports and domestic products are relevant information on the matters of fact that China should have disclosed in MOFCOM's Final Determination.436

7.8.3 Evaluation by the Panel

7.8.3.1 General interpretive approach

7.270.
Articles 12.2 and 12.2.2 have been interpreted by panels and the Appellate Body in a number of prior cases. In China – X-ray Equipment, the panel provided the following overview of the relevant case law:

In interpreting the scope of the obligation set forth in the first sentence of Article 12.2.2, we note that the text of Article 12.2.2 refers to Article 12.2.1. Accordingly, the information described in Article 12.2.1 must be included in public notices issued pursuant to Article 12.2.2. We consider that it is also appropriate to have regard to the contextual guidance afforded by Article 12.2, which applies to public notices of both preliminary and final determinations. Article 12.2 provides that such public notices shall set forth "in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities". In considering the contextual guidance afforded by Article 12.2, we have regard to the followings findings made by the panels in EU – Footwear (China) and EC – Tube or Pipe Fittings:

The chapeau of Article 12.2.2, Article 12.2, requires the publication of "findings and conclusions on all issues of fact and law considered material by the investigating authorities" (emphasis added). In our view, this is relevant context for a proper understanding of Article 12.2.2, and thus informs our understanding of what must be included in a public notice under that provision. China suggests that whether information and reasons for the acceptance or rejection of arguments must be provided in such a notice should be judged from the perspective of the interested parties. We do not agree. We consider that while an investigating authority must make innumerable decisions during the course of an anti-dumping investigation, with respect to procedural matters, investigating methods, factual considerations, and legal analysis, which may be of importance to individual interested parties, not all of these are "material" within the meaning of Article 12.2.2. In our view, what is "material" in this respect refers to an issue which must be resolved in the course of the investigation in order for the investigating authority to reach its determination whether to impose a definitive anti-dumping duty. We note in this regard the views of the panel in EC – Tube or Pipe Fittings:

Article 12.2 provides that the findings and conclusions on issues of fact and law which are to be included in the public notices, or separate report, are those considered "material" by the investigating authority. The ordinary meaning of the term of "material" is "important, essential, relevant".

We understand a "material" issue to be an issue that has arisen in the course of the investigation that must necessarily be resolved in order for the investigating authorities to be able to reach their determination. We observe that the list of topics in Article 12.2.1 is limited to matters associated with the determinations of dumping and injury, while Article 12.2.2 is more generally phrased ("all relevant information on matters of fact and law and reasons which have led to the imposition of final measures, or the acceptance of a price undertaking"). Nevertheless, the phrase "have led to", implies those matters on which a factual or legal determination must necessarily be made in connection with the decision to impose a definitive anti-dumping duty. … contextual considerations also support this interpretation since, the only matters referred to "in particular" in subparagraph 12.2.2 are, in addition to the information described in subparagraph 2.1, the reasons for acceptance or rejection of relevant arguments or claims, and the basis for certain decisions.

We cannot conclude that every single decision of an investigating authority in the course of an investigation can be considered as having "led to" the imposition of the final measures, such that it must be described, together with the "information" relevant to the decision, in the published notice of the final determination. Not every question or issue which arises during an investigation, and which is resolved by the investigating authority, is necessarily considered material by the investigating authorities, and may be said to have "led to" the imposition of the anti-dumping duty, even though it may be of interest or significant to one or more interested parties. In our view, the notions of "material" and "relevant" in Article 12.2.2 must be judged primarily from the perspective of the actual final determination of which notice is being given, and not the entirety of the investigative process. Other provisions of the Dumping Agreement, notably Articles 6.1.2, 6.2, 6.4, and 6.9 address the obligations of the investigating authority to make information available to parties, disclose information, and provide opportunities for parties to defend their interests. In our view, Article 12.2.2 does not replicate these provisions, but rather, requires the investigating authority to explain its final determination, providing sufficient background and reasons for that determination, such that its reasons for concluding as it did can be discerned and are understood.437

We are in broad agreement with these findings. Consistent therewith, we consider that the first sentence of Article 12.2.2 requires an investigating authority to include in its public notice a description of its findings and conclusions on the issues of fact and law that it considered material438 to its decision to impose final measures. That description must include "sufficient detail". While the sufficiency of the detail of the description may depend on the precise nature of the findings made by the investigating authority, it should in any event be sufficient to ensure that the investigating authority's reasons for concluding as it did can be discerned and understood by the public439. The ability of the public to understand the findings and conclusions of the investigating authority is important, for the concept of "public" is broad: it includes "interested parties" within the meaning of Article 6.11 of the Anti-Dumping Agreement and, for example, consumer organizations that might be expected to have an interest in the imposition of anti-dumping measures. Article 13 of the Anti-Dumping Agreement provides for judicial review of the final determinations referred to in Article 12.2.2. In our view, the level of detail of the description of the authority's findings and conclusions must be sufficient to allow the abovementioned entities to assess the conformity of those findings and conclusions with domestic law, and avail themselves of the Article 13 judicial review mechanism where they consider it necessary. In a similar vein, we also consider that the level of detail should be sufficient to allow the relevant exporting Member to ascertain the conformity of the findings and conclusions with the provisions of the WTO Agreement, and to avail itself of the WTO dispute settlement procedures where it considers it necessary. Our approach is consistent with the following findings recently made by the Appellate Body in China – GOES:

Article[] 12.2.2 […] capture[s] the principle that those parties whose interests are affected by the imposition of final anti-dumping and countervailing duties are entitled to know, as a matter of fairness and due process, the facts, law and reasons that have led to the imposition of such duties. The obligation of disclosure under Article[] 12.2.2 … is framed by the requirement of "relevance", which entails the disclosure of the matrix of facts, law and reasons that logically fit together to render the decision to impose final measures. By requiring the disclosure of "all relevant information" regarding these categories of information, Article[] 12.2.2 … seek[s] to guarantee that interested parties are able to pursue judicial review of a final determination as provided in Article 13 of the Anti-Dumping Agreement440

7.271.
We agree with these findings, and shall be guided by them in evaluating the complainants' claims.

7.8.3.2 Injury determination

7.272.
The complainants' claim that MOFCOM's Final Determination omitted the pricing information underlying MOFCOM's price undercutting analysis, and a description of MOFCOM's treatment of the "quantitative differences" between the volume of subject imports of Grade C and the volume of domestic sales of Grade C. The complainants contend that Articles 12.2 and 12.2.2 required the inclusion of such factual information in MOFCOM's Final Determination.
7.273.
Regarding the requirements of Articles 12.2 and 12.2.2 in respect of MOFCOM's price undercutting analysis, we consider that such analysis was "material" to its decision to impose measures, such that "relevant information on the matters of fact" pertaining to that issue should have been included in MOFCOM's public notice. However, we are not persuaded that such "relevant information" should necessarily have included the pricing information underlying MOFCOM's price undercutting analysis. We consider that the inclusion of such underlying information would have introduced a level of detail into the Final Determination that was not necessary for the public to understand the basis for MOFCOM's finding of price undercutting.
7.274.
While detailed factual information may need to be disclosed as "essential facts" pursuant to Article 6.9 of the Anti-Dumping Agreement, we observe that the scope of Articles 12.2 and 12.2.2 does not mirror the scope of Article 6.9. We note that the panel in China – X-ray Equipment made the following finding in this regard:

Article 12.2.2 does not require that all "essential facts" underlying the margin of dumping should be included in the public notice. The scope of Article 12.2.2 is more nuanced, and would not require the inclusion of all underlying data.441

7.275.
We agree with this finding. The object of Article 6.9 is to provide interested parties with sufficient factual information to defend their interests during the investigation. By contrast, the object of Article 12.2.2 is to ensure that the investigating authority's reasons for concluding as it did can be discerned and understood by the public. We are not persuaded that the public would need the pricing information underlying MOFCOM's price undercutting analysis in order to understand MOFCOM's finding that there was significant price undercutting.
7.276.
The complainants suggest that the findings of the panel and Appellate Body in China – GOES indicate that the "relevant information" to be set forth in MOFCOM's public notice should have included domestic price data.442 The complainants rely in particular on the Appellate Body's observation in that case that the public notice had not included "the prices of domestic products".443 We do not understand the Appellate Body to have found that domestic price information should be included in the public notice by virtue of Article 12 of the Anti-Dumping Agreement. The Appellate Body referred to the absence of domestic price information when summarizing the contents of the public notice. The Appellate Body observed that whereas subject import price information was included, domestic price information was not.444 However, the Appellate Body did not refer to this fact as a basis for its findings. In making its findings, the Appellate referred instead to the finding by the panel that the public notice did not contain "information relating to the price comparisons between subject imports and domestic products". The Appellate Body concluded on this basis that the public notice was not sufficient to convey all the relevant information on the matters of fact relating to the investigating authority's finding of low subject import pricing.445 Thereafter, the Appellate Body stated that the public notice should also have included "the facts of price undercutting that were required to understand" the authority's finding of low subject import pricing. The Appellate Body faulted the public notice for not including "any facts relating to the price comparisons of subject imports and domestic products", and agreed with the findings of the panel in this respect.446 For its part, the China – GOES panel had found that the public notice did not meet the requirements of Article 12 because it did not "include any indication that a comparative analysis of prices had been performed or provide the factual information arising from the comparison".447 Thus, although findings were made in respect of facts relating to the price comparisons made, neither the panel nor the Appellate Body in China – GOES made any finding that the price information underlying those price comparisons should have been included in the public notice.
7.277.
Regarding the "quantitative differences" between the volume of subject imports of Grade C and the volume of domestic sales of Grade C, we recall that we have already upheld the complainants' Article 3.2 claims concerning this matter. Given our concerns with the substance of MOFCOM's treatment of the relevant quantitative differences, and given the need for MOFCOM to revise its Final Determination to reflect its implementation of our Article 3.2 finding, we see no need to evaluate the complainants' procedural claim concerning this matter.

7.8.3.3 Dumping determination

7.278.
The complainants submit that MOFCOM's public notice is inconsistent with Articles 12.2 and 12.2.2 because it fails to include (i) the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rates, (ii) the facts that were used to determine the all others rates, and (iii) the facts or reasoning behind why it was appropriate to apply the highest margin of dumping calculated for cooperating exporters as the all others rates.
7.279.
We observe that the complainants' claims under Articles 12.2 and 12.2.2 essentially mirror their Article 6.9 claims concerning this matter. We also observe the complainants' assertion that MOFCOM's Final Determination repeats the statements made in MOFCOM's Dumping Disclosures concerning this matter.448 We recall that we have rejected the complainants' Article 6.9 claims concerning MOFCOM's disclosure of the essential facts leading to the conclusion that the use of facts available was warranted, and the essential facts that were used to determine the all others rates. Since MOFCOM's disclosure was sufficiently detailed to meet the requirements of Article 6.9, since the complainants contend that the same information was included in the Final Determination, and since the scope of the Article 6.9 obligation is broader than the relevant449 scope of Articles 12.2 and 12.2.2, we find that MOFCOM's Final Determination is sufficient to meet the requirements of Articles 12.2 and 12.2.2.
7.280.
Regarding the reasons why it was appropriate to apply the highest margins of dumping calculated for cooperating exporters as the all others rates, we recall our finding that such reasoning falls outside the scope of Article 6.9 disclosure obligation. However, we consider that the scope of Articles 12.2 and 12.2.2 does cover such reasoning, for Article 12.2.2 refers to "relevant information on the … reasons which have led to the imposition of final measures". (emphasis supplied.) We consider that the all others rates are material and that "relevant information" pertaining to the reasons for applying the highest margins of dumping as the all others rates should therefore have been included in MOFCOM's Final Determination. We see nothing in the Final Determination concerning this matter. Nor has China identified any part of the Final Determination explaining MOFCOM's reasoning in this regard. Accordingly, we find that the Final Determination is inconsistent with the requirements of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement.

7.8.3.4 Conclusion

7.281.
For the above reasons, we reject the complainants' claims that MOFCOM's Final Determination is inconsistent with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement because it does not contain relevant information concerning the pricing information underlying MOFCOM's price undercutting findings, the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rates, or the facts that were used to determine the all others rates. We exercise judicial economy in respect of the complainants' Article 12.2 and 12.2.2 claims concerning MOFCOM's treatment of the "quantitative differences" in respect of Grade C. We uphold the complainants' Article 12.2 and 12.2.2 claim concerning MOFCOM's failure to explain in the Final Determination the reasons why MOFCOM considered it appropriate to use the highest margins of dumping for cooperating exporters as the all others rates.

7.9 TREATMENT OF CONFIDENTIAL INFORMATION

7.282.
Japan and the European Union claim that China acted inconsistently with Article 6.5 of the Anti-Dumping Agreement because MOFCOM permitted the full text of certain reports to remain confidential without a proper showing of "good cause" for such treatment by the petitioners.450 In addition, Japan and the European Union claim that China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement because MOFCOM failed to require sufficient non-confidential summaries or explanations as to why such summaries were not possible.451 China asks the Panel to reject the complainants' claims.

7.9.1 Relevant WTO provisions

7.283.
Article 6.5 of the Anti-Dumping Agreement provides in relevant part:

Any information which is by nature confidential (for example, because its disclosure would be of significant competitive advantage to a competitor or because its disclosure would have a significantly adverse effect upon a person supplying the information or upon a person from whom that person acquired the information), or which is provided on a confidential basis by parties to an investigation shall, upon good cause shown, be treated as such by the authorities.

7.284.
Article 6.5.1 of the Anti-Dumping Agreement provides:

The authorities shall require interested parties providing confidential information to furnish non‑confidential summaries thereof. These summaries shall be in sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence. In exceptional circumstances, such parties may indicate that such information is not susceptible of summary. In such exceptional circumstances, a statement of the reasons why summarization is not possible must be provided.

7.9.2 Main arguments of the parties

7.9.2.1 Japan and the European Union

7.285.
The complainants claim that China acted inconsistently with Article 6.5 of the Anti-Dumping Agreement because MOFCOM permitted the full text452 of the reports in (i) appendix V to the petition; (ii) appendix VIII to the petition; (iii) appendix 59 to the petitioners' supplemental evidence of 1 March 2012; and (iv) the appendix to the petitioners' supplemental evidence of 29 March 2012 to remain confidential without a showing of "good cause" for such treatment by the petitioners submitting such information.453 The complainants argue that MOFCOM failed to objectively assess the "good cause" alleged for confidential treatment, and scrutinize the petitioners' showing to determine whether the request was sufficiently substantiated.454
7.286.
In addition, the complainants claim that China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement because MOFCOM failed to require sufficient non-confidential summaries or explanations as to why such summaries were not possible for the following documents: appendices V and VIII to the petition; appendices 1, 7-8, 24-28, 31-33, 35-52, and 56-59 to the petitioners' supplemental evidence of 1 March 2012; and appendix to the petitioners' supplemental evidence of 29 March 2012.455

7.9.2.2 China

7.287.
With respect to the complainants' claims under Article 6.5 of the Anti-Dumping Agreement, China contends that "good cause" was adequately shown by the petitioners. China submits that the petitioners provided several substantiated reasons as to why confidential treatment was warranted for the names of the relevant third party institutes and the full text of the reports referred to in the four appendices at issue. In addition, China argues that investigating authorities have a broad margin of discretion in determining whether "good cause" has been shown. China also notes that the Anti-Dumping Agreement imposes no obligation on an investigating authority to explain why it considers that confidential information is warranted. Finally, China submits that MOFCOM assessed and determined the demonstration of good cause for granting confidential treatment to the relevant appendices.456
7.288.
As for the claims under Article 6.5.1 of the Anti-Dumping Agreement, China submits that the petitioners provided either the required non-confidential summaries or statements as to why summarization was not possible. With respect to (i) appendix V to the petition; (ii) appendix VIII to the petition; (iii) appendix 59 to the petitioners' supplemental evidence of 1 March 2012; and (iv) the appendix to the petitioners' supplemental evidence of 29 March 2012, China submits that the non-confidential summaries even provided integral parts of the information contained in each original, confidential report. China contends that these non-confidential summaries were sufficiently detailed to provide a reasonable understanding of the substance of the information submitted in confidence. As for the remaining 32 appendices at issue, China submits that the petitioners adequately explained why summarization was not possible.457

7.9.3 Main arguments of third parties

7.9.3.1 United States

7.289.
The United States recalls that, in anti-dumping investigations, the submission of confidential information is a necessary and frequent occurrence. The United States submits that, while Article 6.5 of the Anti-Dumping Agreement requires that authorities, upon good cause shown, ensure the confidential treatment of such information, Article 6.5.1 of the Anti-Dumping Agreement balances the need to protect confidential information against the disclosure requirements of other Article 6 provisions.458 The United States contends that "where an investigating authority accepts confidential information without providing or otherwise assuring timely adequate non-confidential summaries of that information, significant prejudice to the ability of companies and Members to defend their interests could occur".459

7.9.4 Evaluation by the Panel

7.9.4.1 Article 6.5 of the Anti-Dumping Agreement: showing of "good cause" with respect to the full text of certain reports

7.290.
The issue before the Panel is whether or not MOFCOM permitted the full text of the four confidential reports in (i) appendix V to the petition; (ii) appendix VIII to the petition; (iii) appendix 59 to the petitioners' supplemental evidence of 1 March 2012; and (iv) the appendix to the petitioners' supplemental evidence of 29 March 2012460 to remain confidential without objectively assessing the "good cause" alleged for confidential treatment, and scrutinizing the petitioners' showing to determine whether the requests were sufficiently substantiated.461
7.291.
Article 6.5 of the Anti-Dumping Agreement provides that "[a]ny information which is by nature confidential …, or which is provided on a confidential basis by parties to an investigation shall, upon good cause shown, be treated as such by the authorities". (emphasis added) We note that China accepts that the "investigating authority's obligation to afford confidential treatment to information arises upon a showing of 'good cause'".462 The requirement to show "good cause" was examined by the Appellate Body in EC – Fasteners. The Appellate Body stated:

The requirement to show "good cause" for confidential treatment applies to both information that is "by nature" confidential and that which is provided to the authority "on a confidential basis". The "good cause" alleged must constitute a reason sufficient to justify the withholding of information from both the public and from the other parties interested in the investigation, who would otherwise have a right to view this information under Article 6 of the Anti-Dumping Agreement. Put another way, "good cause" must demonstrate the risk of a potential consequence, the avoidance of which is important enough to warrant the non-disclosure of the information. "Good cause" must be assessed and determined objectively by the investigating authority, and cannot be determined merely based on the subjective concerns of the submitting party.

We find that the examples provided in Article 6.5 in the context of information that is "by nature" confidential are helpful in interpreting "good cause" generally, because they illustrate the type of harm that might result from the disclosure of sensitive information, and the protectable interests involved. Article 6.5 states that the disclosure of such information "would be of significant competitive advantage to a competitor" or "would have a significantly adverse effect upon a person supplying the information or upon a person from whom that person acquired the information". These examples suggest that a "good cause" which could justify the non-disclosure of confidential information might include an advantage being bestowed on a competitor, or the experience of an adverse effect on the submitting party or the party from which it was acquired. These examples are only illustrative, however, and we consider that a wide range of other reasons could constitute "good cause" justifying the treatment of information as confidential under Article 6.5.

In practice, a party seeking confidential treatment for information must make its "good cause" showing to the investigating authority upon submission of the information. The authority must objectively assess the "good cause" alleged for confidential treatment, and scrutinize the party's showing in order to determine whether the submitting party has sufficiently substantiated its request. In making its assessment, the investigating authority must seek to balance the submitting party's interest in protecting its confidential information with the prejudicial effect that the non-disclosure of the information may have on the transparency and due process interests of other parties involved in the investigation to present their cases and defend their interests. The type of evidence and the extent of substantiation an authority must require will depend on the nature of the information at issue and the particular "good cause" alleged. The obligation remains with the investigating authority to examine objectively the justification given for the need for confidential treatment. If information is treated as confidential by an authority without such a "good cause" showing having been made, the authority would be acting inconsistently with its obligations under Article 6.5 to grant such treatment only "upon good cause shown".463 (footnotes omitted)

We agree with these findings, and shall be guided by them in evaluating the complainants' claims under Article 6.5 of the Anti-Dumping Agreement.

7.9.4.1.1 Petitioners' requests

7.292.
Turning to the facts before the Panel, it is undisputed that, with respect to the four reports referred to in the appendices at issue, the petitioners requested confidential treatment for certain information. With regard to appendix V to the petition, the petitioners stated:

To produce this statement, the organization had spent a great amount of time and resources into research, analysis, screening and consolidation of relevant fact and data. The statement was provided in a form of a report to the petitioners at a cost. The disclosure of the full text of the report itself and the name of the organization would likely make it difficult for the organization to conduct a similar research exercise (e.g. a third party may refuse to answer survey questions) and to provide the full report with the same or similar information and data to other third parties for a fee. It would also seriously jeopardize its normal conduct of business. Therefore, at the request of the organization, the petitioners request confidentiality treatment of the full text of the reportitself.464

7.293.
With respect to appendix VIII to the petition, the petitioners stated:

The market information contained in this appendix was provided by a third party at a cost. The disclosure of such information would likely cause disruption to normal business or other adverse impact on the third party. Therefore, at the request of the third party, the petitioners are keeping the full text of this appendixitself confidential.465

7.294.
With respect to appendix 59 to the petitioners' supplemental evidence of 1 March 2012, the petitioners stated:

The market information contained in this appendix was provided by a third party at a cost. The disclosure of such information would likely cause disruption to normal business or other adverse impact on the third party. Therefore, at the request of the third party, the petitioners are keeping the full text of this appendixitself confidential.466

7.295.
Finally, concerning the appendix to the petitioners' supplemental evidence of 29 March 2012, the petitioners stated:

This appendix is provided by a respected organization from the Chinese stainless steel industry. It builds on the "summary of market conditions of certain high-performance stainless steel seamless tubes" submitted [as appendix V to the petition].

In order to provide this further summary, the third-party organization has used its proprietary sources and access and invested a tremendous amount of time and energy in collecting, screening, analyzing and formatting relevant data and information. The disclosure of the full text of the third-party summary itself and the organization's name would likely cause serious adverse impact on the normal operation of the organization. Therefore, at the request of the third-party organization, the petitioners request that the full text of this further summary itself be kept confidential.467

7.9.4.1.2 MOFCOM's statement

7.296.
In its injury disclosure and final determination, MOFCOM stated:

With regard to the legitimacy of the petitioners' application to treat the name of the "authoritative third party institute" as confidential, out of consideration that the disclosure of the name of the said institute would affect the normal business of this data providing institute and may lead to business retaliations, the Investigation Authority acknowledges the reason for the confidential treatment request of the petitioners18, and accepts the confidentiality application.

18 According to the reason provided by the petitioners for confidential treatment, a certain authoritative institute in the domestic stainless steel tube industry provided information on domestic and international markets for certain high-performance stainless steel seamless tubes. To do this, the institute in question spent a large amount of time and energy on the research, analysis and selection of relevant data and information, and provided the final report to the petitioners at a certain price. If the petitioners were to disclose the full report itself and the name of the said institute, it would on the one hand create obstacles for this institute to carry out similar research in the future (for example, a third party may not want to cooperate with the institute on its future researches) and on the other hand seriously affect the prospects of the institute to sell reports with same or similar information and data to other third parties. In addition, it would also cause serious negative impacts on the daily operations of the institute. Therefore, at the request of this institute, the petitioners applied for confidential treatment for the full text of the report itself.468

7.297.
Although MOFCOM's statement is directed at the request for confidential treatment in appendix V to the petition469, China submits that "MOFCOM's explanation can be extrapolated to apply to the remaining three appendices, as the Petitioners' reasons for requesting confidential treatment were similar, if not identical, for all four appendices in question".470 Subsequently, China clarified that it submits that, since Appendix V was elaborated upon in the Appendix to the Petitioners' Supplemental Evidence of 29 March 2012, "MOFCOM's statements refer to both Appendix V and the Appendix to the Petitioners' Supplemental Evidence of 29 March 2012", and that "[g]iven the similarity between the reasons for confidential treatment included in Appendix VIII to the Petition and Appendix 59 to the Petitioners' Supplemental Evidence of 1 March 2012, the reasoning included in footnote 18 can be extrapolated to apply to the latter appendices as well".471 We therefore begin by examining the scope of MOFCOM's statement, in order to determine the appendices to which it may reasonably be understood to apply.
7.298.
There is no doubt that MOFCOM's statement concerns appendix V to the petition. To the extent that the appendix to the petitioners' supplemental evidence of 29 March 2012 "builds on" appendix V, providing "supplementary information and further explanation" on the domestic production of certain HP-SSST472, MOFCOM's statement can also be reasonably understood to apply to that supplemental appendix. However, China has not identified any basis for understanding MOFCOM's statement to also apply to the remaining two appendices at issue.473 We agree with the complainants474 that China's "extrapolation" argument constitutes ex post rationalization, which we are bound not to consider when examining the complainants' claims at issue.475 This is also consistent with the clarification of the scope of MOFCOM's statement subsequently expressed by China, as described above.
7.299.
We now examine whether MOFCOM's statement is sufficient to demonstrate that MOFCOM objectively assessed the alleged "good cause", and scrutinized the petitioners' showing of "good cause" with regards to both the name of the third party institute and the full text of appendix V and appendix to the petitioners' supplemental evidence of 29 March 2012. We note that the petitioners' requests relating to the two appendices at issue refer to both (i) the name of the institute, and (ii) the full text of the reports. In addition, the petitioners' requests allude to possible adverse effects on the normal operation of the institute, and in conducting research and selling the same or similar information in the future.476 However, when "acknowledg[ing] the reason for the confidential treatment request" and accepting the "confidentiality application", we agree with the complainants477 that MOFCOM limited its statement to address only "the legitimacy of the petitioners' application to treat the name of the 'authoritative third party institute' as confidential".478 (emphasis added) China appears to understand that MOFCOM considered that the request was justified with respect to the full text of the two reports at issue in footnote 18 of MOFCOM's statement, quoted above.479 However, we agree with the complainants480 that it is clear from the text of footnote 18 that it only summarizes the petitioners' arguments for confidential treatment and requests; rather than reflecting MOFCOM's explanation or reasoning.481 Thus, there is no evidence, and China has not demonstrated otherwise, that MOFCOM objectively assessed the "good cause" alleged for confidential treatment, and scrutinized the petitioners' requests relating to the full text of appendix V, and appendix to the petitioners' supplemental evidence of 29 March 2012.482
7.300.
We now turn to the remaining two appendices at issue under the Article 6.5 claims. As noted above483, MOFCOM's explanation in its injury disclosure and final determination does not apply to appendix VIII to the petition, or to appendix 59 to the petitioners' supplemental evidence of 1 March 2012. In the absence of any evidence that MOFCOM objectively assessed the "good cause" alleged for confidential treatment, and scrutinized the petitioners' requests relating to the full text of these two appendices, there is no basis for us to conclude that it did.

7.9.4.1.3 Whether MOFCOM was required to examine the requests for confidential treatment, and explain its conclusions

7.301.
We have already established that MOFCOM did not objectively assess the "good cause" alleged for confidential treatment, or scrutinize the petitioners' requests relating to the full text of the four appendices at issue. China submits that an investigating authority enjoys a considerable margin of discretion in its examination of a request for confidential treatment and in determining whether "good cause" has been shown, provided that the outcome is not unreasonable.484 China also contends that "an investigating authority need not explain why it considers that confidential treatment is warranted", and that the "Anti-Dumping Agreement does not require an investigating authority which found that confidential treatment is warranted to do or specify anything, beyond the obligation to treat such information as confidential".485
7.302.
We are not persuaded by China's argument, since it is well established that a panel's review of an investigating authority's determinations must be based on the explanations provided by that authority. We recall, for example, that the Appellate Body in US – Tyres (China) noted that it had "previously clarified that a panel's examination of the conclusions of an investigating authority 'must be critical and searching, and be based on the information contained in the record and the explanations given by the authority in its published report'".486 In the absence of any explanation by MOFCOM, we have no basis to conclude that MOFCOM properly determined that the petitioners had shown "good cause" for their requests for confidential treatment.487 There is certainly also no basis for us to imply that MOFCOM properly determined that the petitioners had shown "good cause" for their requests for confidential treatment from the fact that MOFCOM ultimately granted their request for confidential treatment.488

7.9.4.1.4 Conclusion

7.303.
In light of the foregoing, we uphold the complainants' claims that China acted inconsistently with Article 6.5 of the Anti-Dumping Agreement by permitting the full text of the reports in appendix V, appendix VIII, appendix 59 to the petitioners' supplemental evidence of 1 March 2012, and appendix to the petitioners' supplemental evidence of 29 March 2012 to remain confidential without objectively assessing "good cause" and scrutinizing the petitioners' showing.

7.9.4.2 Article 6.5.1 of the Anti-Dumping Agreement

7.304.
Turning to the claims under Article 6.5.1 of the Anti-Dumping Agreement, there are two issues before the Panel. The first issue is whether MOFCOM required the petitioners to provide sufficient non-confidential summaries of the substance of each type of confidential information contained in (i) appendix V to the petition; (ii) appendix VIII to the petition; (iii) appendix 59 to the petitioners' supplemental evidence of 1 March 2012; and (iv) the appendix to the petitioners' supplemental evidence of 29 March 2012. The second issue is whether MOFCOM required the petitioners to provide adequate statements as to why summarization was not possible with respect to appendices 1, 7, 8, 24-28, 31-33, 35-52, and 56-58 to the petitioners' supplemental evidence of 1 March 2012.

7.9.4.2.1 Non-confidential summaries

7.305.
Article 6.5.1 of the Anti-Dumping Agreement sets forth that investigating authorities shall require interested parties providing confidential information to furnish non-confidential summaries thereof. We recall that the panel in China – X-Ray Equipment stated that "[t]he Article 6.5.1 obligation to summarize the substance of confidential information applies to all information designated as confidential. In cases where multiple types of information are designated as confidential, the substance of each type of confidential information must be summarized".489 We agree with these findings490, and shall be guided by them in evaluating the complainants' claims at issue under Article 6.5.1.
7.306.
The complainants submit that the non-confidential summaries of the four appendices at issue491 only disclose the final data provided in each confidential report, without summarizing other confidential information492 pertaining to the methodologies utilized by the third party institutes to obtain the relevant data, or the underlying evidence they relied upon.493 The complainants also submit that no explanation was provided as to why summarization is not possible.494
7.307.
China generally disagrees with the complainants' allegations, submitting that "the Petitioners provided detailed and adequate non-confidential summaries of the four appendices at issue, explaining the content of the reports, including information and data. For every document, the relevant information was summarized".495

7.9.4.2.1.1 Appendix V to the petition

7.308.
With respect to the non-confidential version of this appendix496, the complainants submit that, although it includes data on domestic and global HP-SSST demand, it does not contain any information on how this data was derived.497
7.309.
China asserts that "[r]egarding the evidence on which the source relied and the methodologies utilized, the Petitioners for instance explained that this evidence was obtained from the third party's proprietary sources, and from the collection, screening and analysis of relevant market data".498 China also submits that "[t]he original reports that received confidential treatment do not contain further information regarding the methodologies utilized by the third party institutes to obtain the data, or the underlying evidence they relied upon. Therefore, such non-existent information could not be included in the non-confidential summaries of these reports".499
7.310.
Concerning the methodology used in appendix V, we note China's reliance on the fact that the non-confidential version of this appendix states that "[t]o produce this statement, the organization had spent a great amount of time and resources into research, analysis, screening and consolidation of relevant facts and data".500 We do not consider this statement to be a sufficiently detailed non-confidential summary to permit a reasonable understanding of or provide any insight into the type of methodology used to determine domestic demand. In addition, we note that the original, confidential version of appendix V briefly explains the methodology used to obtain data on domestic demand, and contains information on the source of the underlying evidence relied upon.501 In our view, this information is not sufficiently reflected in the non-confidential summary of appendix V.502

7.9.4.2.1.2 Appendix to the petitioners' supplemental evidence of 29 March 2012

7.311.
With respect to the non-confidential version of this appendix503, the complainants submit that it neither indicates the various grades of HP-SSST products, nor specifies which domestic producers provided the data used to compile domestic production figures.504
7.312.
China submits that the original, confidential version of this appendix "do[es] not contain further information regarding the methodologies utilized by the third party institutes to obtain the data, or the underlying evidence they relied upon. Therefore, such non-existent information could not be included in the non-confidential summaries of these reports".505
7.313.
Concerning the fact that the non-confidential summary does not include which domestic producers provided the data used to compile the domestic production figures506, we note that the original, confidential version of this appendix does not include this information.507 MOFCOM clearly cannot be faulted for failing to require the submitter to summarize the substance of certain information which was not in the original, confidential version of this appendix. Turning to the complainants' allegation that the non-confidential summary of this appendix does not indicate the various grades of HP-SSST products508, we disagree with the complainants' factual description. The non-confidential summary includes the Sumitomo/SMI serial number for HP-SSST product classification, when it states "… for the three steel numbers of products, namely HR3C, Super 304[H] and 347HFG".509 On this basis, with respect to the appendix to the petitioners' supplemental evidence of 29 March 2012, we reject the complainants' Article 6.5.1 claims accordingly.

7.9.4.2.1.3 Appendix VIII to the petition

7.314.
With respect to the non-confidential version of this appendix510, the complainants submit that it does not summarize confidential information pertaining to the methodology utilized, or the source of data used.511
7.315.
China provides a general description of the non-confidential summary in appendix VIII512, and generally disagrees with the complainants' claims that information on methodology, underlying evidence, and sources of data was not sufficiently summarized in the non-confidential version.513 However, China does not submit any specific argument relating to the methodology used to obtain the relevant data or the source of data relied upon in appendix VIII.
7.316.
We note that the original, confidential version of appendix VIII briefly explains the methodology used to obtain the relevant data included in the report, and contains information on the source of data relied upon.514 In our view, this information is not sufficiently reflected in the non-confidential summary of appendix VIII.515

7.9.4.2.1.4 Appendix 59 to the petitioners' supplemental evidence of 1 March 2012

7.317.
With respect to the non-confidential version of this appendix516, the complainants submit that it does not summarize confidential information pertaining to the methodology utilized, or the source of a certain fee.517
7.318.
China provides a general description of the non-confidential summary in appendix 59518, and generally disagrees with the complainants' claims that information on methodology, underlying evidence, and sources of data was not sufficiently summarized in the non-confidential version.519 However, China does not submit any specific argument relating to the methodology used to obtain the relevant data or the source of data relied upon in appendix 59.
7.319.
We note that the original, confidential version of appendix 59 very briefly explains the methodology used to obtain the relevant data included in the report, and contains information on the source of data with respect to one particular fee.520 In our view, this information is not sufficiently reflected in the non-confidential summary of appendix 59.521

7.9.4.2.1.5 Conclusion

7.320.
In light of the foregoing, we uphold the complainants' claims that China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement by failing to require that the petitioners provide sufficiently detailed non-confidential summaries of the substance of the confidential information at issue in appendices V and VIII to the petition, and appendix 59 to the petitioners' supplemental evidence of 1 March 2012.522

7.9.4.2.2 Statements as to why summarization was not possible

7.321.
With respect to the remaining 32 appendices523, the main issue before the Panel is whether the petitioners provided adequate statements as to why summarization was not possible for purposes of Article 6.5.1 of the Anti-Dumping Agreement.
7.322.
Article 6.5.1 of the Anti-Dumping Agreement provides that in exceptional circumstances, where parties indicate that confidential information is not susceptible of summary, a statement of the reasons why summarization is not possible must be provided.
7.323.
The Appellate Body in EC – Fasteners examined whether a particular statement addressed the issue of why summarization was not possible. The Appellate Body stated:

With respect to Agrati, its statement asserting for each category that "[t]he information cannot be summarized without disclosing confidential information" speaks to a justification for providing confidential treatment in the first place. It does not address the issue of why summarization of the information is not possible, or why the particular information presents exceptional circumstances that would justify a failure to provide a non-confidential summary. Nor can the single statement repeated by Agrati be read as adequate justification for treating a number of different pieces of information as equally unsusceptible to summarization. … We agree with the Panel that Agrati's statement did not "relate to any of the specific information for which no non-confidential summary [was] provided or to anything having to do with Agrati itself". Therefore, we consider that the Commission failed to ensure that Agrati provided an appropriate statement of why summarization of certain portions of its questionnaire response was not possible.524

We agree with the reasoning underlying these findings, and shall be guided by them in evaluating the complainants' claims under Article 6.5.1 of the Anti-Dumping Agreement.

7.324.
In the present disputes, the petitioners repeatedly provided the following statement in respect of all of the remaining 32 appendices:

Concerns the company's business secrets and therefore confidential treatment is requested, cannot be disclosed. [as translated by China]

It concerns the company's business secrets and therefore we request confidential treatment and no disclosure is hereby made. [as translated by Japan and the European Union]525

7.325.
According to China, this is a statement by petitioners of the reasons as to why summarization is not possible.526 China argues that this statement clarifies that no alternative method of presenting that information can be developed that would not necessarily disclose the sensitive information. In China's view, this is because of "the nature of the information, which entirely consists of business confidential information. The sensitivity of this information makes it impossible to summarize, as indicated by the statement made by the Petitioners".527
7.326.
We are not persuaded by China's argument. The statement at issue only addresses the question of why confidential treatment should be provided. It does not provide the reasons why the particular information is not susceptible of summary.528 In addition, the statement does not relate to any specific information for which it was not possible to provide a non-confidential summary. Our understanding is supported by the fact that the exact same statement is repeatedly used with respect to a large number of different pieces of information. Guided by the Appellate Body's findings in EC – Fasteners, we do not consider that the repetition of this single statement can serve as a valid statement of the reasons why summarization of a number of different pieces of information is not possible.
7.327.
In light of the foregoing, we uphold the complainants' claims that China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement, because MOFCOM failed to require the petitioners to provide adequate statements as to why summarization was not possible.

7.10 APPLICATION OF PROVISIONAL MEASURES

7.328.
Japan and the European Union claim that, by applying provisional measures for a period exceeding four months, China acted inconsistently with Article 7.4 of the Anti-Dumping Agreement.529 China does not submit arguments in response to this claim.

7.10.1 Relevant WTO provision

7.329.
Article 7.4 of the Anti-Dumping Agreement provides:

The application of provisional measures shall be limited to as short a period as possible, not exceeding four months or, on decision of the authorities concerned, upon request by exporters representing a significant percentage of the trade involved, to a period not exceeding six months. When authorities, in the course of an investigation, examine whether a duty lower than the margin of dumping would be sufficient to remove injury, these periods may be six and nine months, respectively.

7.10.2 Main arguments of the parties

7.10.2.1 Japan and the European Union

7.330.
Japan and European Union submit that MOFCOM imposed provisional anti-dumping measures from 9 May 2012 to 9 November 2012, after which MOFCOM imposed final anti-dumping measures. MOFCOM thus applied provisional measures for a period of six months.530
7.331.
Japan and European Union contend that provisional measures should not have been applied for more than four months, because (i) there was no request by exporters representing a significant percentage of the trade involved, and (ii) China did not examine whether a duty lower than the margin of dumping would be sufficient to remove injury.531

7.10.2.2 China

7.332.
Although China acknowledges the Article 7.4 claim532, China does not submit arguments in response to it. China only submits that "it acknowledged this claim in good faith, and opted not to rebut any prima facie case that may or may not have been made in this respect".533

7.10.3 Main arguments of third parties

7.10.3.1 United States

7.333.
The United States submits that "the text of Article 7.4 [of the Anti-Dumping Agreement] provides that without [a] request from a sufficient percentage of exporters or the imposition of a lesser duty, an investigating authority may not impose provisional measures for a period exceeding four months".534

7.10.4 Evaluation by the Panel

7.334.
Article 7.4 of the Anti-Dumping Agreement is clear and explicit on the question of the allowable duration of a provisional measure.535 The complainants submit that MOFCOM imposed provisional anti-dumping measures for six months.536 The complainants also submit that (i) there was no "request by exporters representing a significant percentage of the trade involved"; and (ii) China did not "examine whether a duty lower than the margin of dumping would be sufficient to remove injury".537 Thus, the maximum period allowed for the provisional measures at issue was four months. China does not submit arguments in response to this claim. In light of the foregoing, we uphold the complainants' claims that China acted inconsistently with Article 7.4 by applying provisional measures for a period exceeding four months.

7.11 CONSEQUENTIAL CLAIMS

7.335.
Japan and the European Union claim that, by failing to comply with the provisions of the Anti-Dumping Agreement, China has consequently acted inconsistently with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.538
7.336.
We note that the complainants' claims under Article 1 of the Anti-Dumping Agreement, and Article VI of the GATT 1994 are purely consequential, in the sense that they depend on the outcome of other claims pursued by the complainants under other provisions of the Anti-Dumping Agreement. As a consequence of the inconsistencies we have already found to exist with the Anti-Dumping Agreement, we uphold the complainants' consequential claims under Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

8 CONCLUSIONS AND RECOMMENDATIONS

8.1 COMPLAINT BY JAPAN (DS454)

8.1.1 Conclusions

8.1.
We uphold Japan's claims that:

a. China's injury determination is inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement, because:

i. MOFCOM failed to properly account for differences in quantities when comparing the price of Grade C subject imports with the domestic Grade C price in its price effects analysis, contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement;

ii. MOFCOM failed to properly evaluate the magnitude of the margin of dumping in considering the impact of subject imports on the domestic industry, contrary to Articles 3.1 and 3.4 of the Anti-Dumping Agreement;

iii. MOFCOM improperly relied on the market share of subject imports, and its flawed price effects and impact analyses, in determining a causal link between subject imports and material injury to the domestic industry, contrary to Articles 3.1 and 3.5 of the Anti-Dumping Agreement; and

iv. MOFCOM failed to ensure that injury caused by the decrease in apparent consumption and the increase in production capacity was not attributed to subject imports, contrary to Articles 3.1 and 3.5 of the Anti-Dumping Agreement;

b. MOFCOM allowed certain information supplied by the petitioners to remain confidential without objectively assessing "good cause" or scrutinizing the petitioners' showing of "good cause", contrary to Article 6.5 of the Anti-Dumping Agreement;

c. China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement by failing to require petitioners to provide sufficiently detailed non-confidential summaries of information treated as confidential, or explanations as to why summarization was not possible;

d. China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to adequately disclose essential facts in connection with:

i. the methodology used to calculate the margins of dumping for SMI and Kobe; and

ii. import prices, domestic prices, and price comparisons considered by MOFCOM in its injury determination;

e. China's application of provisional measures for a period exceeding four months is inconsistent with Article 7.4 of the Anti-Dumping Agreement;

f. China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report the reasons why MOFCOM considered it appropriate to apply the highest margin of dumping calculated for cooperating exporters as the all others rate for Japanese companies other than SMI and Kobe;

g. As a consequence of the inconsistencies described above, China's anti-dumping measures on HP-SSST from Japan are also inconsistent with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

8.2.
We reject Japan's claims that:

a. China's injury determination is inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement, because:

i. MOFCOM failed to consider whether Grade C subject imports had any price undercutting effect on domestic Grade C products, and improperly extended its findings of price undercutting in respect of Grades B and C to the domestic like product as a whole, contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement; and

ii. MOFCOM failed to undertake a segmented analysis, and failed to properly weigh the positive and negative injury factors, when assessing the impact of subject imports on the domestic industry, contrary to Articles 3.1 and 3.4 of the Anti-Dumping Agreement;

b. China's reliance on facts available to calculate the dumping margin for all Japanese companies other than SMI and Kobe is inconsistent with Article 6.8 and Paragraph 1 of Annex II to the Anti-Dumping Agreement;

c. China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to adequately disclose essential facts in connection with:

i. the data underlying MOFCOM's determination of dumping in respect of SMI and Kobe; and

ii. the determination and the calculation of the dumping margins for all Japanese companies other than SMI and Kobe.

d. China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report:

i. relevant information concerning pricing information underlying MOFCOM's price undercutting findings; and

ii. the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rate, and the facts that were used to determine the all others rate.

8.3.
In light of the conclusions set forth in paragraphs 8.1 and 8.2 above, we do not consider it necessary to rule on Japan's claim that China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report MOFCOM's treatment, in the context of its price effects analysis, of the difference between the volume of Grade C subject imports and the volume of Grade C domestic products.

8.1.2 Recommendations

8.4.
Pursuant to Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement. Accordingly, to the extent China has acted inconsistently with certain provisions of the Anti-Dumping Agreement, we conclude that China has nullified or impaired benefits accruing to Japan under that Agreement.
8.5.
Pursuant to Article 19.1 of the DSU, having found that China acted inconsistently with certain provisions of the Anti-Dumping Agreement, we recommend that China bring its measures into conformity with its obligations under that Agreement.

8.2 COMPLAINT BY THE EUROPEAN UNION (DS460)

8.2.1 Conclusions

8.6.
We uphold the European Union's claims that:

a. China acted inconsistently with Article 2.2.2 of the Anti-Dumping Agreement by failing to determine an SG&A amount for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product;

b. China acted inconsistently with Article 2.4 of the Anti-Dumping Agreement by failing to address SMST's request for an adjustment to ensure a fair comparison between the export price and the normal value for Grade C;

c. China acted inconsistently with Article 6.7 and Paragraph 7 of Annex I of the Anti-Dumping Agreement by rejecting SMST's request for rectification only on the basis that it was not provided prior to verification;

d. China's injury determination is inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement, because:

i. MOFCOM failed to properly account for differences in quantities when comparing the price of Grade C subject imports with the domestic Grade C price in its price effects analysis, contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement;

ii. MOFCOM failed to properly evaluate the magnitude of the margin of dumping in considering the impact of subject imports on the domestic industry, contrary to Articles 3.1 and 3.4 of the Anti-Dumping Agreement;

iii. MOFCOM improperly relied on the market share of subject imports, and its flawed price effects and impact analyses, in determining a causal link between subject imports and material injury to the domestic industry, contrary to Articles 3.1 and 3.5 of the Anti-Dumping Agreement; and

iv. MOFCOM failed to ensure that injury caused by the decrease in apparent consumption and the increase in production capacity was not attributed to subject imports, contrary to Articles 3.1 and 3.5 of the Anti-Dumping Agreement;

e. MOFCOM allowed certain information supplied by the petitioners to remain confidential without objectively assessing "good cause" or scrutinizing the petitioners' showing of "good cause", contrary to Article 6.5 of the Anti-Dumping Agreement;

f. China acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement by failing to require petitioners to provide sufficiently detailed non-confidential summaries of information treated as confidential, or explanations as to why summarization was not possible;

g. China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to adequately disclose essential facts in connection with:

i. the methodology used to calculate the margins of dumping for SMST and Tubacex; and

ii. import prices, domestic prices, and price comparisons considered by MOFCOM in its injury determination;

h. China's application of provisional measures for a period exceeding four months is inconsistent with Article 7.4 of the Anti-Dumping Agreement;

i. China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report the reasons why MOFCOM considered it appropriate to apply the highest margin of dumping calculated for cooperating exporters as the all others rate for European Union companies other than SMST and Tubacex;

j. As a consequence of the inconsistencies described above, China's anti-dumping measures on HP-SSST from the European Union are also inconsistent with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

8.7.
We reject the European Union's claims that:

a. China acted inconsistently with Article 6.8 and paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement by applying facts available in respect of certain information that SMST sought to rectify at verification;

b. China's injury determination is inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement, because:

i. MOFCOM failed to consider whether Grade C subject imports had any price undercutting effect on domestic Grade C products, and improperly extended its findings of price undercutting in respect of Grades B and C to the domestic like product as a whole, contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement; and

ii. MOFCOM failed to undertake a segmented analysis, and failed to properly weigh the positive and negative injury factors, when assessing the impact of subject imports on the domestic industry, contrary to Articles 3.1 and 3.4 of the Anti-Dumping Agreement;

c. China's reliance on facts available to calculate the dumping margin for all European Union companies other than SMST and Tubacex is inconsistent with Article 6.8 and Paragraph 1 of Annex II to the Anti-Dumping Agreement;

d. China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to adequately disclose essential facts in connection with:

i. the data underlying MOFCOM's determination of dumping in respect of SMST and Tubacex; and

ii. the determination and the calculation of the dumping margins for all European Union companies other than SMST and Tubacex.

e. China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report:

i. relevant information concerning pricing information underlying MOFCOM's price undercutting findings; and

ii. the facts leading to the conclusion that the use of facts available was warranted to calculate the all others rate, and the facts that were used to determine the all others rate.

8.8.
In light of the conclusions set forth in paragraphs 8.6 and 8.7 above, we do not consider it necessary to rule on the European Union's claims that:

a. China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in sufficient detail in its Final Determination notice or a separate report MOFCOM's treatment, in the context of its price effects analysis, of the difference between the volume of Grade C subject imports and the volume of Grade C domestic products; and

b. China acted inconsistently with Articles 2.2.1 and 2.2.1.1 of the Anti-Dumping Agreement by failing to determine an SG&A amount for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product.

8.9.
Consistent with our terms of reference, we find that the Article 2.2.1 claim advanced by the European Union in its first written submission falls outside our terms of reference. We also find that the Article 2.2.1.1 claims advanced by the European Union in its first written submission pertaining to MOFCOM's use of data that allegedly were not in accordance with GAAP, did not reasonably reflect the costs associated with the product under consideration, and were historically utilized by SMST, fall outside our terms of reference.

8.2.2 Recommendations

8.10.
Pursuant to Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement. Accordingly, to the extent China has acted inconsistently with certain provisions of the Anti-Dumping Agreement, we conclude that China has nullified or impaired benefits accruing to the European Union under that Agreement.
8.11.
Pursuant to Article 19.1 of the DSU, having found that China acted inconsistently with certain provisions of the Anti-Dumping Agreement, we recommend that China bring its measures into conformity with its obligations under that Agreement. The second sentence of Article 19.1 provides the Panel with the discretion to suggest ways in which China might implement this recommendation. In this regard, the European Union has proposed specific suggestions for us to make, and requested the Panel to formulate other suggestions539 Given the complexities to which implementation may give rise, we decline to exercise our discretion under the second sentence of Article 19.1 in the manner requested by the European Union.
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