China – Measures Imposing Anti-Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP-SSST")

from Japan

AB-2015-4

China – Measures Imposing Anti-Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP-SSST")

from the European Union

AB-2015-5

Reports of the Appellate Body

The Appellate Body is issuing these Reports in the form of a single document constituting two separate Appellate Body Reports: WT/DS454/AB/R; and WT/DS460/AB/R. The cover page, preliminary pages, sections 1‑4, 5.3, the subsections of section 5.5 that are not attributed below to only DS454 or DS460, and the annexes contained in the Addendum (document WT/DS454/AB/R/Add.1, WT/DS460/AB/R/Add.1) are common to both Reports. The page header throughout the document bears the two document symbols WT/DS454/AB/R and WT/DS460/AB/R, with the following exceptions: sections 5.5.2.1 and 5.5.3.1.2, which bear the document symbol for the Appellate Body Report WT/DS454/AB/R; and sections 5.1, 5.2, 5.4, 5.5.1.2, and 5.6, which bear the document symbol for the Appellate Body Report WT/DS460/AB/R. Finally, Section 6, on pages JPN-103 and JPN-104, bears the document symbol for and contains the Appellate Body's conclusions and recommendation in the Appellate Body Report WT/DS454/AB/R; and Section 6, on pages EU-105 to EU-107, bears the document symbol for and contains the Appellate Body's conclusions and recommendation in the Appellate Body Report WT/DS460/AB/R.

Table of Contents

1 introduction.. 11

2 Arguments of the Participants. 17

3 Arguments of the Third Participants. 18

4 issues raised in these appeals. 18

5 analysis of the Appellate Body. 21

5.1 .. Data for SG&A amounts – Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement. 21

5.1.1      The Panel's terms of reference. 21

5.1.1.1   The Panel's findings. 21

5.1.1.2   The relevant legal standard under Article 6.2 of the DSU. 23

5.1.1.3   Whether the European Union's claims under Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement were within the scope of the Panel's terms of reference. 25

5.1.1.3.1     Article 2.2.1 of the Anti‑Dumping Agreement 25

5.1.1.3.2     Article 2.2.2 of the Anti‑Dumping Agreement 26

5.1.2      The Panel's interpretation and application of Article 2.2.2 of the Anti‑Dumping Agreement 29

5.1.2.1   The Panel's findings. 29

5.1.2.2   Analysis of the Panel's findings regarding MOFCOM's determination of an SG&A amount for SMST  30

5.1.2.3   Conclusion. 35

5.1.3      The European Union's conditional appeal under Articles 2.2 and 2.2.1.1 of the Anti‑Dumping Agreement 35

5.2 .. MOFCOM's alleged failure to take into account certain information provided during the verification visit. 35

5.2.1      The Panel's findings. 35

5.2.2      Whether the Panel erred in finding that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement by rejecting SMST's rectification request 37

5.2.3      The European Union's conditional appeal under Article 6.8 and paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement 39

5.3 .. Showing of "good cause" under Article 6.5 of the Anti‑Dumping Agreement. 41

5.3.1      The Panel's findings. 41

5.3.2      Assessment of the Panel's analysis. 43

5.3.3      Whether the Panel applied internally inconsistent reasoning in violation of Article 11 of the DSU  46

5.3.4      Whether the Panel made a case for the complainants. 48

5.3.5      Conclusion. 49

5.4 .. Disclosure of the essential facts concerning MOFCOM's dumping determination. 50

5.4.1      The Panel's findings. 50

5.4.2      Whether the Panel erred in rejecting the European Union's claim under Article 6.9 of the Anti‑Dumping Agreement 51

5.5 .. MOFCOM's injury determination. 56

5.5.1      Price effects – Articles 3.1 and 3.2 of the Anti‑Dumping Agreement 57

5.5.1.1   The Panel's interpretation of "price undercutting" in its review of MOFCOM's assessment of price effects for Grade C imports. 58

5.5.1.1.1     The Panel's findings. 58

5.5.1.1.2     Arguments on appeal 59

5.5.1.1.3     Analysis. 60

5.5.1.2   Whether MOFCOM was required to make a finding of price undercutting for the product as a whole  65

5.5.1.2.1     The Panel's findings. 65

5.5.1.2.2     Arguments on appeal 66

5.5.1.2.3     Analysis. 66

5.5.2      MOFCOM's impact analysis – Articles 3.1 and 3.4 of the Anti‑Dumping Agreement 68

5.5.2.1   Japan's claim under Article 6.2 of the DSU. 69

5.5.2.2   The Panel's assessment of MOFCOM's impact analysis. 71

5.5.2.2.1     The Panel's findings. 71

5.5.2.2.2     Arguments on appeal 72

5.5.2.2.3     Analysis. 72

5.5.3      MOFCOM's causation analysis – Articles 3.1 and 3.5 of the Anti‑Dumping Agreement 75

5.5.3.1   The Panel's assessment of MOFCOM's causation analysis. 76

5.5.3.1.1     The Panel's findings. 76

5.5.3.1.2     Japan's panel request and Article 6.2 of the DSU. 78

5.5.3.1.3     Whether the Panel made the case for the complainants. 81

5.5.3.1.4     Whether the Panel erred in finding that MOFCOM's causation analysis is inconsistent with Articles 3.1 and 3.5 of the Anti‑Dumping Agreement 82

5.5.3.1.4.1 Article 11 of the DSU. 83

5.5.3.1.4.2 The Panel's assessment regarding MOFCOM's findings concerning the market share of imports  83

5.5.3.1.4.3 MOFCOM's finding of price correlation . 84

5.5.3.1.4.4 Conclusion. 91

5.5.3.1.5     MOFCOM's non-attribution analysis. 91

5.5.3.1.5.1 The Panel's findings. 91

5.5.3.1.5.2 Arguments on appeal 91

5.5.3.1.5.3 Analysis. 92

5.5.3.1.6     Additional "independent" claims under Articles 3.1 and 3.5 of the Anti‑Dumping Agreement 93

5.5.3.1.6.1 The Panel's findings. 93

5.5.3.1.6.2 Arguments on appeal 94

5.5.3.1.6.3 Analysis. 94

5.5.3.2   Conclusions. 95

5.6 .. Additional working procedures concerning BCI. 97

5.6.1      The Panel's findings. 97

5.6.2      Arguments. 99

5.6.3      Analysis. 100

6 FINDINGS AND Conclusions in the APPELLATE BODY REPORT WT/DS454/AB/R. JPN-103

6 FINDINGS AND CONCLUSIONS IN THE APPELLATE BODY REPORT wt/ds460/ab/r EU-105

ABBREVIATIONS USED IN THESE REPORTS

Abbreviation	Description
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 (contained in Annex A-2 to the Panel Reports)
complainants	Japan and the European Union
COP	cost of production
DSB	Dispute Settlement Body
DSU	Understanding on Rules and Procedures Governing the Settlement of Disputes
EU Panel Report	Panel Report, China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS460/R, Add.1 and Corr.1
European Union's panel request	Request for the Establishment of a Panel by the European Union, WT/DS460/4, 16 August 2013
GAAP	generally accepted accounting principles
GATT 1994	General Agreement on Tariffs and Trade 1994
HP‑SSST	high‑performance stainless steel seamless tubes
Japan Panel Report	Panel Report, China – Measures Imposing Anti‑Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP‑SSST") from Japan, WT/DS454/R and Add.1
Japan's panel request	Request for the Establishment of a Panel by Japan, WT/DS454/4, 11 April 2013
Kobe	Kobe Special Tube Co., Ltd.
MOFCOM	Ministry of Commerce of the People's Republic of China
Panel Reports	Japan Panel Report and EU Panel Report
petitioners	jointly, Jiangsu Wujin Stainless Steel Pipe Group Co., Ltd. and Changshu Walsin Specialty Steel Co., Ltd.
POI	period of investigation
SCM Agreement	Agreement on Subsidies and Countervailing Measures
SG&A	administrative, selling and general
SMI	Sumitomo Metal Industries, Ltd.
SMST	Salzgitter Mannesmann Stainless Tubes
Tubacex	Tubacex Tubos Inoxidables, S.A.
Working Procedures	Working Procedures for Appellate Review, WT/AB/WP/6, 16 August 2010
WTO	World Trade Organization

 

PANEL EXHIBITS CITED IN THESE REPORTS

Exhibit	Abbreviation (if any)	Description
CHN-5-EN (BCI) EU-10 (BCI)	SMST's Dumping Questionnaire Response	Excerpts of the narrative of SMST's response to MOFCOM's dumping questionnaire of 21 November 2011
CHN-10-CH (BCI) CHN-10-EN (BCI) EU-14 (BCI)	SMST's Supplemental Dumping Questionnaire Response	Excerpts of the narrative of SMST's response to MOFCOM's supplemental dumping questionnaire of 20 February 2012
CHN-11-EN	MOFCOM's Verification Notification to SMST	Notification from MOFCOM to SMST concerning relevant issues for the on-site verification of 3 May 2012
CHN-12-EN (BCI)	MOFCOM's Preliminary Dumping Disclosure to SMST	Letter dated 9 May 2012 from MOFCOM to SMST concerning Disclosure of Basic Facts relied upon in the Dumping Part of the Preliminary Determination concerning Certain High-performance Stainless Steel Seamless Tubes
CHN-16-EN (BCI)		Objections as to the accuracy of English translations of exhibits attached to the first written submissions of Japan and/or the European Union to the Panel
CHN-19-EN (BCI)		Updated English version of Table 6 annexed to SMST's Dumping Questionnaire Response
CHN-20-CH (BCI) CHN-20-EN (BCI)	SMI's Injury Questionnaire Response	Extract (question 8) of the narrative of SMI's response to MOFCOM's injury questionnaire
EU-23-EN	MOFCOM's Verification Disclosure to SMST	MOFCOM, High-performance Stainless Steel Seamless Tubes Antidumping Investigation – Disclosure of Basic Verification Facts, 25 June 2012
EU-25-CH EU-25-EN	MOFCOM's Final Dumping Disclosure to SMST	MOFCOM, High-performance Stainless Steel Seamless Tubes Antidumping Investigation – Dumping Margin Calculation Disclosure before Final Determination, 26 September 2012
EU-27-CH EU-27-EN	MOFCOM's Final Dumping Disclosure to the EU	Annex, Government Disclosure prior to the Anti-Dumping Final Determination on Certain High-performance Stainless Steel Seamless Tubes, 26 September 2012
EU-28-CH (BCI) EU-28-EN (BCI)	SMST's Comments on Final Dumping Disclosure	Comments of the SMST on SMST Final Dumping Disclosure of 8 October 2012
JPN-1-CH JPN-1-EN EU-29	MOFCOM's Final Determination Notice	MOFCOM, Announcement No. 72 of 2012 on the Final Ruling of the Anti‑dumping Case against Imports of Certain High-performance Stainless Steel Seamless Tubes Originated in the EU and Japan, 8 November 2012
JPN-2-CH JPN-2-EN EU-30	MOFCOM's Final Determination	Final Determination Notice, Appendix: Final Determination in the Anti-dumping Investigation on Imports of Certain High-performance Stainless Steel Seamless Tubes from the EU and Japan
JPN-3-CH JPN-3-EN EU-1	Petition by the PRC Industry	Petition by the PRC Industry of Certain High-performance Stainless Steel Seamless Tubes for Anti-dumping Investigation on Imports of Certain High‑performance Stainless Steel Seamless Tubes Originating in Japan and the EU, 15 July 2011
JPN-6-CH JPN-6-EN EU-17	MOFCOM's Preliminary Determination Notice	MOFCOM, Announcement No. 21 of 2012 on Releasing the Preliminary Ruling on Anti-dumping Investigation on Imports of Certain High-performance Stainless Steel Seamless Tubes from the EU and Japan, 8 May 2012
JPN-7-CH JPN-7-EN EU-18	MOFCOM's Preliminary Determination	Preliminary Determination Notice, Appendix: Preliminary Determination in the Anti-dumping Investigation on Imports of Certain High‑performance Stainless Steel Seamless Tubes from the EU and Japan
JPN-18 (BCI)		Letter dated 9 May 2012 from MOFCOM to SMI on the Disclosure of Basic Facts upon Which the Preliminary Dumping Determination in the Anti-dumping Investigation on Imports of Certain High-performance Stainless Steel Seamless Tubes is Based
JPN-20 (BCI)		Letter 26 September 2012 from MOFCOM to SMI on the Disclosure of Basic Facts upon Which the Final Dumping Determination in the Anti-dumping Investigation on Imports of Certain High-performance Stainless Steel Seamless Tubes is Based
JPN-23-EN EU-24	MOFCOM's Injury Disclosure	MOFCOM, Notice on Information Disclosure Concerning Industry Injury Investigation in the Anti-dumping Investigation on Imports of Certain High-performance Stainless Steel Seamless Tubes from the EU and Japan, 7 August 2012
JPN-25-EN		Request for Considering Public Interest in the Anti‑Dumping Investigation on Certain High‑Performance Stainless Steel Seamless Tubes by Sumitomo Metal Industries, Ltd. and Kobe Special Tube Co., Ltd., February 2012
JPN-29 EU-32		Translation exhibit – Comments on Panel Exhibit CHN-16-EN (BCI)

 

 

CASES CITED IN THESE REPORTS

Short Title	Full Case Title and Citation
Australia – Apples	Appellate Body Report, Australia – Measures Affecting the Importation of Apples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010, DSR 2010:V, p. 2175
Australia – Salmon	Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p. 3327
Brazil – Desiccated Coconut	Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, p. 167
Brazil – Retreaded Tyres	Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527
Canada – Aircraft	Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1377
Canada – Aircraft (Article 21.5 – Brazil)	Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft – Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000, DSR 2000:IX, p. 4299
Canada – Periodicals	Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449
Canada – Renewable Energy / Canada – Feed-in Tariff Program	Appellate Body Reports, Canada – Certain Measures Affecting the Renewable Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff Program, WT/DS412/AB/R / WT/DS426/AB/R, adopted 24 May 2013, DSR 2013:I, p. 7
China – Broiler Products	Panel Report, China - Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States, WT/DS427/R and Add.1, adopted 25 September 2013, DSR 2013:IV, p. 1041
China – GOES	Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R, adopted 16 November 2012, DSR 2012:XII, p. 6251
China – HP-SSST (Japan) / China – HP‑SSST (EU)	Panel Reports, China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan / China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS454/R and Add.1 / WT/DS460/R, Add.1 and Corr.1, circulated to WTO Members 13 February 2015 [appeal in progress]
China – Rare Earths	Appellate Body Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, adopted 29 August 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, DSR 2013:III, p. 659
EC – Bananas III	Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591
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 – Bed Linen (Article 21.5 – India)	Appellate Body Report, European Communities – Anti‑Dumping Duties on Imports of Cotton‑Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965
EC – Chicken Cuts	Appellate Body Report, European Communities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27 September 2005, and Corr.1, DSR 2005:XIX, p. 9157
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 – Hormones	Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135
EC – Poultry	Appellate Body Report, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, p. 2031
EC – Salmon (Norway)	Panel Report, European Communities – Anti‑Dumping Measure on Farmed Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1, DSR 2008:I, p. 3
EC – Selected Customs Matters	Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EC – Tube or Pipe Fittings	Appellate Body Report, European Communities – Anti‑Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18 August 2003, DSR 2003:VI, p. 2613
EC and certain member States – Large Civil Aircraft	Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
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
India – Patents (US)	Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, p. 9
Japan – Agricultural Products II	Appellate Body Report, Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, p. 277
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 – Corn Syrup	Panel Report, Mexico – Anti‑Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States, WT/DS132/R, adopted 24 February 2000, and Corr.1, DSR 2000:III, p. 1345
Mexico – Steel Pipes and Tubes	Panel Report, Mexico – Anti‑Dumping Duties on Steel Pipes and Tubes from Guatemala, WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, p. 1207
Peru – Agricultural Products	Appellate Body Report, Peru – Additional Duty on Imports of Certain Agricultural Products, WT/DS457/AB/R and Add.1, adopted 31 July 2015
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
Thailand – H‑Beams	Panel Report, Thailand – Anti‑Dumping Duties on Angles, Shapes and Sections of Iron or Non‑Alloy Steel and H‑Beams from Poland, WT/DS122/R, adopted 5 April 2001, as modified by Appellate Body Report WT/DS122/AB/R, DSR 2001:VII, p. 2741
US – Anti-Dumping and Countervailing Duties (China)	Appellate Body Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011, DSR 2011:V, p. 2869
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 – Carbon Steel (India)	Appellate Body Report, United States – Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted 19 December 2014
US – Certain EC Products	Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, p. 373
US – COOL	Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012, DSR 2012:V, p. 2449
US – Corrosion‑Resistant Steel Sunset Review	Panel Report, United States – Sunset Review of Anti‑Dumping Duties on Corrosion‑Resistant Carbon Steel Flat Products from Japan, WT/DS244/R, adopted 9 January 2004, as modified by Appellate Body Report WT/DS244/AB/R, DSR 2004:I, p. 85
US – Countervailing and Anti‑Dumping Measures (China)	Appellate Body Report, United States – Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/AB/R and Corr.1, adopted 22 July 2014
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 – Countervailing Measures (China)	Appellate Body Report, United States – Countervailing Duty Measures on Certain Products from China, WT/DS437/AB/R, adopted 16 January 2015
US – FSC	Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, p. 1619
US – Gambling	Appellate Body Report, United States – Measures Affecting the Cross‑Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, p. 5663 (Corr.1, DSR 2006:XII, p. 5475)
US – Gasoline	Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
US – Hot‑Rolled Steel	Appellate Body Report, United States – Anti‑Dumping Measures on Certain Hot‑Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, p. 4697
US – Lamb	Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p. 4051
US – Large Civil Aircraft (2nd complaint)	Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012, DSR 2012:I, p. 7
US – Oil Country Tubular Goods Sunset Reviews	Appellate Body Report, United States – Sunset Reviews of Anti‑Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004, DSR 2004:VII, p. 3257
US – Section 211 Appropriations Act	Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589
US – Shrimp	Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p. 2755
US – Steel Safeguards	Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 2003:VII, p. 3117
US – 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 – Upland Cotton	Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, Add.1 to Add.3 and Corr.1, adopted 21 March 2005, as modified by Appellate Body Report WT/DS267/AB/R, DSR 2005:II, p. 299
US – Wheat Gluten	Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717
US – Wool Shirts and Blouses	Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323
US – Zeroing (Japan) (Article 21.5 – Japan)	Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441

 

World Trade Organization

Appellate Body

 

 

China – Measures Imposing Anti‑Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP‑SSST") from Japan (DS454)   China – Measures Imposing Anti‑Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP‑SSST") from the European Union (DS460)   Japan,  Appellant[1]/Appellee[2]/Third Participant[3] China,  Appellant[4]/Other Appellant[5]/Appellee[6] European Union,  Other Appellant[7]/Appellee[8]/Third Participant[9]   India, Third Participant Korea, Third Participant Russia, Third Participant Saudi Arabia, Third Participant Turkey, Third Participant United States, Third Participant

AB-2015-4       AB-2015-5       Appellate Body Division:   Van den Bossche, Presiding Member Graham, Member Ramírez-Hernández, Member

 

 

1  introduction

1.1.  Japan and China each appeals certain issues of law and legal interpretations developed in the Panel Report, China – Measures Imposing Anti‑Dumping Duties on High‑Performance Stainless Steel Seamless Tubes ("HP‑SSST") from Japan, WT/DS454/R^[10] (Japan Panel Report); and China and the European Union each appeals certain issues of law and legal interpretations developed in the Panel Report, China – Measures Imposing Anti‑Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS460/R^[11] (EU Panel Report).^[12]

1.2.  On 24 May 2013 and 30 August 2013, respectively, two panels were established to consider complaints by Japan^[13] and the European Union^[14] (the complainants) with respect to China's measures imposing anti‑dumping duties on imports of certain high‑performance stainless steel seamless tubes (HP‑SSST) from Japan and the European Union.^[15]

1.3.  On 27 September 2013, after consultation with the parties, the Panel^[16] adopted additional working procedures concerning business confidential information (BCI Procedures). Following a request for a preliminary ruling by the European Union, the Panel introduced modifications to the BCI Procedures on 22 May 2014.^[17]

1.4.  China's measures at issue in these disputes are set forth in the Preliminary Determination^[18] and the Final Determination^[19] of the Ministry of Commerce of the People's Republic of China (MOFCOM), including any annexes and amendments thereto.^[20] MOFCOM identified the scope of the products under investigation as imports of certain HP-SSST from the European Union and Japan.^[21] HP-SSST is mainly used in the manufacture of pressurized components such as superheaters and reheaters of supercritical and ultra-supercritical boilers.^[22] MOFCOM found that there are three main types or grades of HP-SSST, which the Panel referred to as Grade A, Grade B, and Grade C, respectively.^[23]

1.5.  Both complainants requested the Panel to find that China, in the conduct of the anti‑dumping investigation at issue, acted inconsistently with several provisions of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti‑Dumping Agreement), as well as Article VI of the General Agreement on Tariffs and Trade 1994 (GATT 1994). In particular, they requested the Panel to find that China acted contrary to the provisions of the Anti‑Dumping Agreement in its: (i) determination of injury; (ii) treatment of certain confidential information provided by the applicants; (iii) alleged failure to disclose certain essential facts; (iv) application of provisional measures; and (v) alleged provision of inadequate information in its Final Determination Notice. In addition, the European Union requested the Panel to find that China acted inconsistently with the Anti‑Dumping Agreement in arriving at its determination of dumping.^[24]

1.6.  The Panel Reports were circulated to Members of the World Trade Organization (WTO) on 13 February 2015.^[25] In the Japan Panel Report, the Panel concluded that MOFCOM's determination of injury is inconsistent with Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement, for the following reasons:

a.      MOFCOM failed to account properly 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;

b.     MOFCOM failed to evaluate properly 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;

c.      MOFCOM improperly relied on the market share of subject imports, and on 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

d.     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.^[26]

1.7.  The Panel, however, rejected Japan's claims under Articles 3.1, 3.2, 3.4, and 3.5 of the Anti‑Dumping Agreement that:

a.      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

b.     MOFCOM failed to undertake a segmented analysis and to weigh properly 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.^[27]

1.8.  The Panel concluded that MOFCOM allowed certain information supplied by the petitioners^[28] to remain confidential without objectively assessing the "good cause" alleged or scrutinizing the petitioners' showing of "good cause", contrary to Article 6.5 of the Anti‑Dumping Agreement.^[29]

1.9.  The Panel also concluded that China acted inconsistently with Article 6.5.1 of the Anti‑Dumping Agreement by failing to require the petitioners to provide sufficiently detailed non‑confidential summaries of information treated as confidential, or explanations as to why summarization of this information was not possible.^[30]

1.10.  The Panel found that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement by failing to disclose adequately essential facts in connection with:

a.      the methodology used to calculate the margins of dumping for Sumitomo Metal Industries, Ltd. (SMI) and Kobe Special Tube Co., Ltd. (Kobe); and

b.     import prices, domestic prices, and price comparisons considered by MOFCOM in its determination of injury.^[31]

1.11.  The Panel, however, rejected Japan's claim that China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to disclose adequately essential facts in connection with:

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

b.     the determination and the calculation of the dumping margins for all Japanese companies other than SMI and Kobe.^[32]

1.12.  The Panel also rejected Japan's claim that MOFCOM'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.^[33]

1.13.  In the EU Panel Report, the Panel found that the European Union's claim under Article 2.2 of the Anti‑Dumping Agreement fell outside the Panel's terms of reference.^[34] The Panel also found that the European Union's claims under Article 2.2.1.1 of the Anti‑Dumping Agreement
– pertaining to MOFCOM's use of data that: (i) allegedly were not in accordance with generally accepted accounting principles (GAAP); (ii) did not reasonably reflect the costs associated with the product under consideration; and (iii) were not historically utilized by Salzgitter Mannesmann Stainless Tubes (SMST) – fell outside the Panel's terms of reference.^[35]

1.14.   Turning to the European Union's claims that were within the Panel's terms of reference, the Panel concluded that:

a.      China acted inconsistently with Article 2.2.2 of the Anti‑Dumping Agreement by failing to determine an amount for administrative, selling and general (SG&A) costs for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product^[36]; consequently, the Panel did not consider it necessary to rule on the European Union's claims that China acted inconsistently with Articles 2.2.1 and 2.2.1.1 of the Anti‑Dumping Agreement^[37];

b.     China acted inconsistently with Article 2.4 of the Anti‑Dumping Agreement because MOFCOM failed to address SMST's request for an adjustment to ensure a fair comparison between the export price and the normal value for Grade C HP‑SSST^[38];

c.      China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement because MOFCOM rejected SMST's request for rectification only on the basis that it was not provided prior to the verification visit^[39]; and

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

i.        MOFCOM failed to account properly 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 evaluate properly 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 on 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.^[40]

1.15.  The Panel, however, rejected the European Union's claims under Articles 3.1, 3.2, 3.4, and 3.5 of the Anti‑Dumping Agreement that:

a.      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

b.     MOFCOM failed to undertake a segmented analysis and to weigh properly 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.^[41]

1.16.  The Panel also rejected the European Union's claims that 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 the verification.^[42] Likewise, the Panel rejected the European Union's claims that China's reliance on facts available to calculate the dumping margin for all EU companies other than SMST and Tubacex Tubos Inoxidables, S.A. (Tubacex) is inconsistent with Article 6.8 and paragraph 1 of Annex II to the Anti‑Dumping Agreement.^[43]

1.17.  The Panel concluded that MOFCOM allowed certain information supplied by the petitioners to remain confidential without objectively assessing the "good cause" alleged or scrutinizing the petitioners' showing of "good cause", contrary to Article 6.5 of the Anti‑Dumping Agreement.^[44]

1.18.  Similarly, the Panel found that China acted inconsistently with Article 6.5.1 of the Anti‑Dumping Agreement by failing to require the petitioners to provide sufficiently detailed non‑confidential summaries of information treated as confidential, or explanations as to why summarization of that information was not possible.^[45]

1.19.  The Panel also concluded that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement by failing to disclose adequately essential facts in connection with:

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

b.     import prices, domestic prices, and price comparisons considered by MOFCOM in its determination of injury.^[46]

1.20.  The Panel rejected the European Union's claims that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement by failing to disclose adequately essential facts in connection with:

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

b.     the determination and the calculation of the dumping margins for all EU companies other than SMST and Tubacex.^[47]

1.21.  In both the Japan and EU Panel Reports, the Panel concluded that, pursuant to Article 3.8 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), to the extent that China acted inconsistently with certain provisions of the Anti‑Dumping Agreement, China nullified or impaired benefits accruing to Japan and the European Union under that Agreement.^[48] Accordingly, pursuant to Article 19.1 of the DSU, the Panel recommended that China bring its measures into conformity with its obligations under the Anti‑Dumping Agreement.^[49]

1.22.  On 20 May 2015, Japan notified the Dispute Settlement Body (DSB) of its intention to appeal^[50] certain issues of law covered in the Japan Panel Report and certain legal interpretations developed by the Panel, and filed a Notice of Appeal and an appellant's submission.^[51] On 26 May 2015, China notified the DSB of its intention to appeal^[52] certain issues of law covered in the Japan Panel Report and certain legal interpretations developed by the Panel, and filed a Notice of Other Appeal and an other appellant's submission.^[53]

1.23.  On 20 May 2015, China notified the DSB of its intention to appeal^[54] certain issues of law covered in the EU Panel Report and certain legal interpretations developed by the Panel, and filed a Notice of Appeal and an appellant's submission.^[55] On 26 May 2015, the European Union notified the DSB of its intention to appeal^[56] certain issues of law covered in the EU Panel Report and certain legal interpretations developed by the Panel, and filed a Notice of Other Appeal and an other appellant's submission.^[57]

1.24.  By letter dated 28 May 2015, the Appellate Body informed the participants and third parties that it intended to consolidate the appellate proceedings in these disputes, and gave them an opportunity to comment. No objections were received. By letter dated 1 June 2015, the Appellate Body informed the participants and third parties that, in the interests of "fairness and orderly procedure", as referred to in Rule 16(1) of the Working Procedures for Appellate Review^[58] (Working Procedures), the appellate proceedings in respect of the aforementioned appeals would be consolidated due to the significant overlap in the content of these disputes for which the appeals were filed on the same date. A single Appellate Body Division was selected to hear both appeals, and a single oral hearing was held by the Division.

1.25.  On 8 June 2015, Japan, the European Union^[59], and China each filed an appellee's submission.^[60]

1.26.  On 10 June 2015, the United States filed a third participant's submission.^[61] On the same day, India, Korea, Russia, Saudi Arabia, and Turkey each notified its intention to appear at the oral hearing as a third participant.^[62]

1.27.  On 15 June 2015, in response to a letter from the Division specifying the dates of the oral hearing in these proceedings, Japan sent a letter to the Division indicating that it had concerns regarding the decision to hold the oral hearing on days 71‑72 of these proceedings.^[63] On 16 June 2015, the Division received a letter from the European Union, in response to Japan's letter, stating that the European Union assumed that, pursuant to Article 17.5 of the DSU, the Appellate Body would inform the DSB, in due course, of the reasons for the delay.^[64] On 17 June 2015, the Appellate Body received a communication from China indicating that it did not have any substantive comments on the procedures adopted by the Division in these appeals. On the same date, the Appellate Body received a letter from India indicating that it did not consider that more specific explanations regarding the Appellate Body's timetable were necessary.

1.28.  By letter dated 18 June 2015, the Division hearing these appeals indicated that it would inform the DSB of the reasons for the delay by letter within two months of the date of the filing of these appeals. The Division added that, in that letter, or as soon as possible thereafter, it would provide an estimated date of circulation of the Appellate Body Reports in these disputes.

1.29.  By letter dated 19 July 2015, the Chair of the Appellate Body notified the Chair of the DSB that the Appellate Body would not be able to circulate its Reports by the end of the 60‑day period, or within the 90‑day timeframe provided for in Article 17.5 of the DSU, due to the number and complexity of the issues raised in these appeals and parallel proceedings, scheduling issues arising from the overlap in the composition of the Divisions hearing the different appeals, and shortage of staff in the Appellate Body Secretariat. He further indicated that, due to a pending request for a change in the working schedule in the parallel appellate proceedings in DS381, the Appellate Body was not, at that time, in a position to inform the DSB of the estimated date of circulation of the Appellate Body Reports in DS454 and DS460. The Chair indicated, however, that the Appellate Body expected that matter to be resolved soon and that the Appellate Body would then inform the DSB of the estimated date of circulation.

1.30.  Subsequently, after the working schedule in DS381 was decided, the Chair of the Appellate Body informed the Chair of the DSB, by letter dated 28 July 2015, that the Appellate Body Reports in these appeals would be circulated no later than 14 October 2015.

1.31.  The oral hearing in these appeals was held on 30-31 July 2015. The participants and two third participants (Turkey and the United States) made oral statements. The participants and third participants responded to questions posed by the Members of the Appellate Body Division hearing these appeals.

2  Arguments of the Participants

2.1.  The claims and arguments of the participants are reflected in the executive summaries of their written submissions provided to the Appellate Body.^[65] The Notices of Appeal and Other Appeal, and the executive summaries of the participants' claims and arguments, are contained in Annexes A and B of the Addendum to these Reports, WT/DS454/AB/R/Add.1, WT/DS460/AB/R/Add.1.

3  Arguments of the Third Participants

3.1.  The arguments of the United States, as third participant, are reflected in the executive summary of its written submission provided to the Appellate Body^[66], contained in Annex C of the Addendum to these Reports, WT/DS454/AB/R/Add.1, WT/DS460/AB/R/Add.1.

4  issues raised in these appeals

4.1.  The following issues are raised in these appeals:

a.      with respect to the Panel's findings regarding Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement:

i.        whether the Panel erred in finding that the European Union's panel request, as it relates to Articles 2.2.1 and 2.2.2, 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 the problem clearly and, consequently, in finding that the European Union's claims under these provisions were within the Panel's terms of reference (raised in DS460 by China);

ii.       whether the Panel erred in its interpretation and application of Article 2.2.2 in finding that China 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 (raised in DS460 by China); and

iii.     whether, in reaching its finding under Article 2.2.2, the Panel acted inconsistently with its obligations under Articles 11 and 12.7 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement (raised in DS460 by China);

b.     whether the Panel erred in finding that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement by rejecting SMST's request for rectification of certain information only on the basis that it was not provided prior to verification (raised in DS460 by the European Union);

c.      with respect to the Panel's finding that China acted inconsistently with Article 6.5 of the Anti‑Dumping Agreement:

i.        whether the Panel erred in its interpretation and application of Article 6.5 in finding that China acted inconsistently with that provision because MOFCOM permitted the full text of the reports in appendix V and appendix VIII to the petition, appendix 59 to the petitioners' supplemental evidence of 1 March 2012, and the appendix to the petitioners' supplemental evidence of 29 March 2012, to remain confidential without objectively assessing the petitioners' showing of "good cause" (raised in DS454 and DS460 by China); and

ii.       whether the Panel applied an erroneous standard of review and failed to make an objective assessment of the facts contrary to the requirements of Article 11 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement (raised in DS454 and DS460 by China);

d.     with respect to the Panel's findings under Article 6.9 of the Anti‑Dumping Agreement:

i.        whether the Panel erred in its interpretation and application of Article 6.9 in rejecting the European Union's claim that China acted inconsistently with that provision because MOFCOM failed to disclose adequately the essential facts in connection with the data underlying MOFCOM's determination of dumping concerning SMST and Tubacex (raised in DS460 by the European Union); and

ii.       whether the Appellate Body can complete the legal analysis and find that China acted inconsistently with Article 6.9 because MOFCOM failed to disclose adequately the essential facts in connection with the data underlying MOFCOM's determination of dumping concerning SMST and Tubacex (raised in DS460 by the European Union);

e.     with respect to the Panel's findings under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement:

i.        whether the Panel erred in its interpretation of Article 3.2 in finding that, in its consideration of whether there has been a significant price undercutting, an investigating authority may consider simply whether dumped imports sell at lower prices than comparable domestic products (raised in DS454 by Japan and in DS460 by the European Union);

ii.       whether the Panel erred by rejecting Japan's and the European Union's claims that MOFCOM acted inconsistently with Articles 3.1 and 3.2 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 (raised in DS454 by Japan and in DS460 by the European Union);

iii.     whether the Appellate Body can complete the legal analysis and find that MOFCOM's assessment of whether there had been a significant price undercutting by Grade C imports from Japan, as compared with the price of domestic Grade C, is inconsistent with Articles 3.1 and 3.2 (raised in DS454 by Japan and in DS460 by the European Union); and

iv.     whether the Panel erred by rejecting the European Union's claim 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 (raised in DS460 by the European Union);

f.       with respect to the Panel's findings under Articles 3.1 and 3.4 of the Anti‑Dumping Agreement:

i.        whether the Panel erred in finding that Japan's claim, that MOFCOM failed to examine whether dumped imports provided explanatory force for the state of the domestic industry, fell outside the Panel's terms of reference (raised in DS454 by Japan); and

ii.       whether the Panel erred in rejecting Japan's and the European Union's claims that MOFCOM acted inconsistently with Articles 3.1 and 3.4 because MOFCOM was required to, but did not, undertake a segmented impact analysis (raised in DS454 by Japan and in DS460 by the European Union);

g.     with respect to the Panel's finding that China acted inconsistently with Articles 3.1 and 3.5 of the Anti‑Dumping Agreement:

i.        whether, in reaching its finding that MOFCOM improperly relied on the market share of dumped imports in determining a causal link between dumped imports and injury to the domestic industry, the Panel acted inconsistently with Article 6.2 of the DSU by addressing a claim by Japan that was outside the Panel's terms of reference (raised in DS454 by China);

ii.       whether, in reaching its finding that MOFCOM improperly relied on the market share of dumped imports in determining a causal link between dumped imports and injury to the domestic industry, the Panel acted inconsistently with Article 11 of the DSU because it ruled on a matter that was not before it, or, in the alternative, made the case for the complainant (raised in DS454 and DS460 by China);

iii.     whether the Panel erred in finding that MOFCOM improperly relied on the market share of dumped imports in determining a causal link between dumped imports and injury to the domestic industry, and made no finding of cross-grade price effects whereby price undercutting by Grade B and C imports might be shown to affect the price of domestic Grade A HP-SSST (raised in DS454 and DS460 by China);

iv.     whether the Panel erred in finding that China acted inconsistently with Articles 3.1 and 3.5 of the Anti‑Dumping Agreement because MOFCOM failed to ensure that the injury caused by the decrease in apparent consumption and the increase in domestic production capacity was not attributed to the dumped imports (raised in DS454 and DS460 by China); and

v.      whether the Panel acted inconsistently with Article 11 of the DSU in finding that the complainants had not advanced independent claims concerning MOFCOM's price effects and impact analyses, under Articles 3.1 and 3.5 of the Anti‑Dumping Agreement, other than those concerning MOFCOM's reliance on market shares and MOFCOM's non-attribution analysis (raised in DS454 by Japan and in DS460 by the European Union); and

h.     with respect to the Panel's designation of business confidential information (BCI) and its adoption of BCI Procedures, whether the Panel erred in its interpretation and application of Articles 18.2 and 13.1 of the DSU and Articles 17.7 and 6.5 of the Anti‑Dumping Agreement, and, in particular, in finding 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 then provided to a dispute settlement panel pursuant to Article 17.7 (raised in DS460 by the European Union).

5  analysis of the Appellate Body

5.1  Data for SG&A amounts – Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement

5.1.  We begin with China's claims as they relate to the Panel's assessment of MOFCOM's determination of dumping for SMST, one of the EU companies that were investigated. We recall, in this regard, that MOFCOM calculated the margin of dumping for a particular type of HP-SSST, referred to in the Panel Reports as Grade B, on the basis of a comparison between SMST's export prices to China and a constructed "normal value"^[67], that is, the sum of: (i) the cost of production (COP) in the country of origin; and (ii) amounts for SG&A costs and profits. With respect to the amounts for SG&A costs and profits, the chapeau of Article 2.2.2 of the Anti‑Dumping Agreement states that these "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."^[68]

5.2.  We examine, first, China's claims that the Panel erred in concluding that the European Union's panel request, as it relates to Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement, provides a "brief summary of the legal basis of the complaint sufficient to present the problem clearly", as required by Article 6.2 of the DSU. Thereafter, we examine China's claim that the Panel erred in its interpretation and application of Article 2.2.2 of the Anti‑Dumping Agreement, and acted inconsistently with its duties under Articles 11 and 12.7 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement when it found that MOFCOM had failed to determine an amount for SG&A costs for SMST on the basis of actual data pertaining to production and sales in the ordinary course of trade of the like product.

5.1.1  The Panel's terms of reference

5.1.1.1  The Panel's findings

5.3.  The European Union alleged in its panel request that China acted inconsistently with:

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 [SG&A] costs and for profits on the basis of records and actual data by the exporters or producers under investigation. In particular, the amounts for [SG&A] costs and for profits as constructed by China do not reflect the records and the actual data of the exporters or producers under investigation.^[69]

5.4.  In its first written submission to the Panel, the European Union relied on this language in its panel request as the basis for its claims that China acted inconsistently with:

·        Article 2.2 of the Anti‑Dumping Agreement because the unrepresentative and rejected data used by MOFCOM did not permit a proper comparison, and the amount for SG&A was not reasonable;

·        Article 2.2.1 of the Anti‑Dumping Agreement because MOFCOM used free samples, which by definition are not sales in the ordinary course of trade;

·        Article 2.2.1.1 of the Anti‑Dumping Agreement because MOFCOM used unrepresentative and rejected data that: (i) did not correspond to the records kept by SMST; (ii) were not in accordance with generally accepted accounting principles (GAAP); (iii) did not reasonably reflect the costs associated with the product under consideration; and (iv) had not been historically utilized by SMST; and

·        Article 2.2.2 of the Anti‑Dumping Agreement 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.^[70]

5.5.  China argued that several of these claims were outside the Panel's terms of reference because the European Union had not complied with the requirements under Article 6.2 of the DSU with respect to those claims. In making this argument, China submitted that the European Union had 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.

5.6.  With regard to the European Union's "main claims", China accepted 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."^[71] However, China contended 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."^[72] With regard to what it described as the European Union's "additional claims", China accepted 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."^[73] However, China maintained that all remaining "additional claims" under Articles 2.2, 2.2.1, and 2.2.1.1 were outside the scope of the European Union's panel request.^[74] According to China, "such non‑inclusion" was "not a matter of a lack of any clarity or precision in the European Union's request for establishment of a panel".^[75] Rather, China asserted that the European Union "clearly specified the claims included in its request for establishment", and "expressly limited" its claims under Articles 2.2, 2.2.1, 2.2.1.1, and 2.2.2 to the claims that the SG&A amounts used by MOFCOM to construct normal value did not reflect the records kept by SMST, and were not based on "actual data".^[76] China contended that the use of the term "in particular" in the European Union's panel request clearly defined the claims raised by the European Union.^[77]

5.7.  Citing Appellate Body jurisprudence, the Panel recalled 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'"^[78], and 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."^[79] The Panel observed that the mere fact that the European Union referred to a particular provision in its panel request, allegedly without specifying the particular obligation being challenged, did not necessarily mean that the European Union's panel request fails to meet the requirements of Article 6.2 of the DSU. The Panel noted that this was "because the relevant WTO obligations may nevertheless be identifiable from a careful reading of the panel request as a whole."^[80] The Panel proceeded, therefore, to "examine whether a careful reading of the European Union's panel request, including any narrative explanation contained therein, 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."^[81]

5.8.  Regarding the European Union's claim under Article 2.2.1, the Panel described Article 2.2.1 as containing "one single obligation relating to when sales of the like product may be treated as not being in the ordinary course of trade"^[82], and considered that a "reference" to Article 2.2.1 was, therefore, "sufficient to clearly present a problem pertaining to the treatment of below‑cost sales".^[83] The Panel concluded that the European Union's panel request, with respect to the claim under Article 2.2.1 of the Anti-Dumping Agreement, complies with Article 6.2 of the DSU.

5.9.  With respect to the European Union's claim under Article 2.2.2, the Panel observed that the European Union's panel request alleges that "China did not determine the [SG&A amounts] on the basis of … actual data by the exporters or producers under investigation", and recalled that China had accepted that the European Union's claim under Article 2.2.2 relating to "actual data" was properly before the Panel.^[84] Further, the Panel pointed out that the panel request includes a reference to Article 2.2.1 of the Anti‑Dumping Agreement. Relying on the text of that provision, which stipulates the conditions under which "sales … at prices below per unit … costs of production plus [SG&A costs] may be treated as not being in the ordinary course of trade … and may be disregarded in determining normal value", the Panel considered that "a reasonably informed reader would understand from the reference to Article 2.2.1 that the European Union also takes issue … with whether or not SG&A amounts are based on data pertaining to the production and sales in the ordinary course of trade."^[85] Thus, the Panel concluded that the European Union's claim under Article 2.2.2 relating to "actual data pertaining to production and sales in the ordinary course of trade" was within the scope of its terms of reference.^[86]

5.1.1.2  The relevant legal standard under Article 6.2 of the DSU

5.10.  We begin our analysis by reviewing WTO jurisprudence regarding the requirements of Article 6.2 of the DSU. We then address the specific issues raised by China on appeal.

5.11.  Article 6.2 of the DSU reads, in relevant part:

The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.

5.12.  Article 6.2 of the DSU sets out two principal requirements: (i) the identification of the specific measures at issue; and (ii) the provision of a brief summary of the legal basis of the complaint sufficient to present the problem clearly.^[87] The requirements specified in Article 6.2 are significant because, "pursuant to Article 7 of the DSU, a panel's terms of reference are governed by the request for establishment of a panel."^[88] In other words, a panel request delimits the scope of a panel's jurisdiction.

5.13.  In assessing whether a panel request is "sufficiently precise" to comply with Article 6.2, panels must "scrutinize carefully the panel request, read as a whole, and on the basis of the language used".^[89] While submissions and statements made during the course of the panel proceedings may be consulted in order to confirm the meaning of the words used in the panel request^[90], they cannot "cure" defects in the request.^[91] Rather, a panel request must be examined on its face as it existed at the time of filing.^[92] The need to examine the panel request "on its face" and "on the basis of the language used" makes the narrative in the panel request a significant part of the assessment of whether the request provides "a brief summary of the legal basis of the complaint sufficient to present the problem clearly".^[93]

5.14.  With respect to this requirement, the Appellate Body has explained that the reference in Article 6.2 of the DSU to the "legal basis of the complaint" refers to the claims pertaining to a specific provision of a covered agreement containing the obligation alleged to be violated^[94]; and that it is the claims, and not the arguments, that are to be set out in a panel request in a way that is sufficient to present the problem clearly.^[95] For the purposes of Article 6.2, a "claim" refers to an allegation that "the respondent party has violated, or nullified or impaired the benefits arising from, an identified provision of a particular agreement."^[96] "Arguments", by contrast, are statements put forth by a complaining party "to demonstrate that the responding party's measure does indeed infringe upon the identified treaty provision".^[97] The Appellate Body has stated that the "[i]dentification of the treaty provisions claimed to have been violated by the respondent is always necessary" and is a "minimum prerequisite if the legal basis of the complaint is to be presented at all".^[98]

5.15.  Regarding the requirement that a complainant provide a "brief summary" that is sufficient to "present the problem clearly", the Appellate Body has explained that a panel request must "plainly connect the challenged measure(s) with the provision(s) of the covered agreements claimed to have been infringed".^[99] Thus, "to the extent that 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."^[100]

5.16.  A further element relevant to assessing the consistency of a panel request with Article 6.2 of the DSU is whether it complies with the due process objective in that provision of notifying the respondent and third parties of the nature of the complainant's case.^[101]

5.1.1.3  Whether the European Union's claims under Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement were within the scope of the Panel's terms of reference

5.17.  China contends, as it did before the Panel, that the European Union's panel request was expressly limited to two claims: (i) that MOFCOM did not determine SG&A amounts and profits on the basis of the records of the exporters or producers; and (ii) that MOFCOM did not determine SG&A amounts and profits on the basis of the actual data of the exporters or producers.^[102] For China, this was clear, given that the European Union alleged in its panel request that China acted inconsistently with the identified provisions of the Anti‑Dumping Agreement "because" China did not determine SG&A amounts "on the basis of records and actual data by the exporters or producers under investigation".^[103] China adds that the use of the term "in particular", in the second sentence of paragraph 1 of the European Union's panel request, further defines the claims raised by the European Union.^[104]

5.18.  The European Union counters that it did not expressly limit its panel request through the use of the term "because", but that this term was simply used to introduce a brief summary of the legal basis of the complaint.^[105] With respect to the expression "in particular", the European Union argues that the Panel correctly found that this language served to highlight that the European Union's claims under the provisions at issue would focus on the manner in which China determined the amount for SG&A costs for SMST "as constructed" by MOFCOM.^[106]

5.19.  We recall that the European Union's panel request includes specific references to Articles 2.2, 2.2.1, 2.2.1.1, and 2.2.2 of the Anti‑Dumping Agreement, and a specific listing of the grounds for the European Union's claims. The European Union alleged, in order, that: (i) China had violated Articles 2.2, 2.2.1, 2.2.1.1, and 2.2.2 of the Anti‑Dumping Agreement; (ii) this was so "because China did not determine the amounts for [SG&A] costs and for profits on the basis of records and actual data by the exporters or producers under investigation"; and (iii) "[i]n particular, the amounts for [SG&A] costs and for profits as constructed by China do not reflect the records and the actual data of the exporters or producers under investigation".^[107]

5.20.  We disagree with China to the extent it argues that it is not relevant to assess the nature of the provisions cited by the European Union in its panel request, including whether they contain a single obligation, or multiple, distinct obligations.^[108] Contrary to what China suggests, "[w]hether or not a general reference to a treaty provision will be adequate to meet the requirement of sufficiency under Article 6.2 is to be examined on a case-by-case basis, taking into account the extent to which such reference sheds light on the nature of the obligation at issue."^[109] Moreover, Article 6.2 of the DSU does not prohibit a party from including in the panel request statements "that foreshadow its arguments in substantiating the claim"^[110], and that the presence of such statements "should not be interpreted to narrow the scope of the measures or the claims".^[111]

5.1.1.3.1  Article 2.2.1 of the Anti‑Dumping Agreement

5.21.  With these considerations in mind, we turn to examine the nature and scope of Articles 2.2.1 and 2.2.2 of the Anti‑Dumping Agreement. We start with Article 2.2.1, which reads, in relevant part:

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 [SG&A] 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.^[112]

5.22.  Under Article 2.2.1, investigating authorities may treat below-cost sales of the like product as not being "in the ordinary course of trade" by reason of price, and may disregard such sales in determining normal value "only if" the authorities determine that such sales were: (i) made within an extended period of time; (ii) in substantial quantities; and (iii) at prices which do not provide for the recovery of all costs within a reasonable period of time. While an investigating authority can act inconsistently with Article 2.2.1 in different ways – e.g. by disregarding below-cost sales without determining whether they were "made within an extended period of time" or "in substantial quantities" – this does not mean, however, that Article 2.2.1 contains multiple, distinct obligations. Rather, as we see it, Article 2.2.1 sets out a single obligation whereby an investigating authority may disregard below-cost sales of the like product only if it determines that "such" below-cost sales display the three specific characteristics mentioned above. The fact that the European Union did not include statements in its panel request foreshadowing the arguments it would make in order to substantiate its claim under Article 2.2.1 does not mean that the European Union's panel request does not comply with the standard set out in Article 6.2 of the DSU.^[113]

5.23.  In the light of the above, we uphold the Panel's finding, in paragraph 7.49 of the EU Panel Report, that the European Union's panel request complies with the requirement in Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly" in respect of the European Union's claim under Article 2.2.1 of the Anti‑Dumping Agreement.

5.1.1.3.2  Article 2.2.2 of the Anti‑Dumping Agreement

5.24.  Turning to China's claim under Article 2.2.2 of the Anti‑Dumping Agreement, we note that this provision sets forth how the amounts for SG&A costs and profits are to be calculated for purposes of constructing normal value. The chapeau of Article 2.2.2 provides, in relevant part, that "the amounts for [SG&A] 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." Article 2.2.2 further clarifies that, "[w]hen such amounts cannot be determined on this basis" – i.e. "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" – an investigating authority may proceed to employ one of the other three methods provided in subparagraphs (i)‑(iii) of Article 2.2.2.

5.25.  By its express terms, Article 2.2.2 requires that an investigating authority, when calculating constructed normal value under Article 2.2, first attempt to make such a calculation using the "actual data pertaining to production and sales in the ordinary course of trade". Therefore, if actual data for SG&A costs and profits in the ordinary course of trade exists for the exporter under investigation, an investigating authority may not calculate constructed value using data from other sources.^[114]

5.26.  China reads the reference in the chapeau of Article 2.2.2 to "actual data pertaining to production and sales in the ordinary course" as setting out multiple, distinct obligations, including an obligation to determine an amount for SG&A costs on the basis of "actual data" that is "independent" and "distinct" from the obligation to determine such costs on the basis of data "pertaining to production and sales in the ordinary course of trade".^[115] Thus, while China accepts, based on the narrative explanation contained in the European Union's panel request, that the European Union's claim under Article 2.2.2 relating to "actual data" was within the Panel's terms of reference, China contends that this is not the case for the European Union's claim relating to the determination of an SG&A amount on the basis of actual data pertaining to production and sales in the ordinary course of trade.^[116] For its part, the European Union submits that the relevant terms in Article 2.2.2 are interlinked.^[117] Specifically, the European Union argues that the term "pertaining to" is a modifier that links the term "actual data" to what follows, so that "it is only the phrase as a whole that makes sense."^[118]

5.27.  Looking at the structure of Article 2.2.2, we note that the noun "data" is immediately preceded by the adjective "actual" and followed by the phrase "pertaining to production and sales in the ordinary course of trade". As we see it, the term "actual data" is clearly linked to the language that follows. The phrase "pertaining to production and sales in the ordinary course of trade" serves, in particular, to specify the actual data that is to be used in order to calculate an amount for SG&A costs for purposes of constructing normal value under Article 2.2.2. Thus, read as a whole, the relevant phrase imposes a single obligation, set out in the chapeau of Article 2.2.2, for investigating authorities to determine amounts for SG&A costs and profits on the basis of actual data that relates to, or concerns, production and sales in the ordinary course of trade. This reading of Article 2.2.2 would appear to be confirmed by the second sentence of that provision, which refers back to the first sentence, and provides that, when SG&A amounts "cannot be determined on this basis", thus referring in the singular to the preferred method to be used to calculate such SG&A amounts. This is consistent with the Appellate Body having referred to the chapeau of Article 2.2.2 as setting out "a general obligation ('shall') on an investigating authority to use 'actual data pertaining to production and sales in the ordinary course of trade' when determining amounts for SG&A and profits."^[119]

5.28.  China seeks to overcome the plain language in Article 2.2.2 by referring to the Appellate Body report in EC – Bed Linen.^[120] In that dispute, the Appellate Body explained, in the context of examining a substantive claim under Article 2.2.2(ii), that "all of 'the actual amounts incurred and realized' by other exporters or producers must be included [when constructing normal value], regardless of whether those amounts are incurred and realized on production and sales made in the ordinary course of trade or not."^[121] In making this statement, the Appellate Body did not address the question of whether Article 2.2.2 sets out distinct requirements concerning the determination of constructed normal value that would have to be spelt out explicitly in a panel request pursuant to Article 6.2 of the DSU in order to fall within a panel's terms of reference. The Appellate Body report in EC – Bed Linen, therefore, does not support China's position that Article 2.2.2 sets out distinct requirements with respect to "actual data", on the one hand, and "data pertaining to production and sales in the ordinary course of trade", on the other hand.

5.29.  China also takes issue with the Panel's reliance on the reference to Article 2.2.1 of the Anti‑Dumping Agreement in the European Union's panel request in concluding that the European Union's claim under Article 2.2.2 was within the Panel's terms of reference. This reference, as China contends, cannot be read to include a claim under Article 2.2.2 being within the Panel's terms of reference given that this claim "was not among the two claims to which the [European Union's] panel request was expressly limited".^[122] China adds that Article 2.2.1 and Article 2.2.2 were listed separately in the European Union's panel request, together with a number of other provisions.

5.30.  In response, the European Union argues that the reference to Article 2.2.1, with its single obligation regarding the ordinary course of trade, confirms or provides relevant context for understanding the reference to Article 2.2.2 in the panel request, since each of these provisions is a development of Article 2.2 "with respect to if and how normal value may be constructed".^[123]

5.31.  We agree with China that the reference to Article 2.2.1 in the European Union's panel request could be read to suggest that the European Union considered that MOFCOM erred by excluding sales that should have been considered as being in the ordinary course of trade from its determination of an SG&A amount for SMST, rather than by including sales that should have been excluded. This does not mean, however, that the Panel would have been precluded from taking into account the reference to Article 2.2.1 in the panel request as relevant context in determining whether the European Union's claim under Article 2.2.2 was properly within the Panel's terms of reference. Although claims under Article 2.2.1 and Article 2.2.2 require distinct identification, the obligations contained in these provisions are related insofar as they pertain to the calculation of constructed normal value. Thus, a reference to Article 2.2.1 may be useful to understand the scope of the claim raised under Article 2.2.2. We agree, therefore, with the Panel that the reference to Article 2.2.1 can relevantly inform the question of whether the European Union had sufficiently articulated a claim under Article 2.2.2. We do not consider that the Panel erred by looking at the language contained in the European Union's panel request as a whole, including the reference to Article 2.2.1 of the Anti‑Dumping Agreement.

5.32.  China contends that the Appellate Body's reasoning in EC – Fasteners (China) lends support to its position in this case, referring to a "similarly structured sentence" found in China's panel request in that case.^[124] We find China's arguments in this regard to be unavailing. Regardless of whether China's panel request in EC – Fasteners (China) may have contained a "similarly structured sentence"^[125], as China argues, the sufficiency of a panel request for the purposes of Article 6.2 of the DSU is to be determined on the basis of the language contained in the panel request and the nature of the obligations contained in the provisions at issue. Here, for the reasons described above, we consider the narrative provided by the European Union to be sufficient to identify a claim under Article 2.2.2 of the Anti‑Dumping Agreement regarding "actual data pertaining to production and sales in the ordinary course of trade", considering the nature of the single obligation contained in that provision. This was not the basis for the Appellate Body's finding in EC – Fasteners (China), where a claim "regarding the disclosure of the identity of the complainants and supporters" was not mentioned explicitly, and not covered by other language contained in China's panel request, or captured through a reference to any one of the identified treaty provisions by itself.

5.33.  China asserts that the Panel "distorted" the meaning of the relevant part of the European Union's panel request, and failed to make an objective assessment of the term "in particular" contained in the European Union's panel request, when it found that the European Union had raised more than two claims under Article 2 of the Anti‑Dumping Agreement regarding MOFCOM's calculation of a constructed normal value for SMST.^[126] China also submits that, in finding that the "mere mention" of Article 2.2.1 provides "a brief summary of the legal basis of the complaint" in relation to Article 2.2.2, and considering that "a reasonably informed reader" would understand from this reference to Article 2.2.1 that the European Union also takes issue "with whether or not SG&A amounts are based on data pertaining to the production and sales in the ordinary course of trade", the Panel failed to make an objective assessment of the matter before it, as required under Article 11 of the DSU.^[127] Having disagreed with China that the European Union's panel request was "expressly limited" to two claims under Article 2 of the Anti‑Dumping Agreement, and having agreed with the Panel that the reference in the European Union's panel request to Article 2.2.1 can relevantly inform the question of whether the European Union had sufficiently articulated a claim under Article 2.2.2, we do not consider it necessary to make additional findings regarding China's claims under Article 11 of the DSU.

5.34.  In sum, having reviewed the language in Article 2.2.2 of the Anti‑Dumping Agreement, we do not agree with China that Article 2.2.2 sets out separate obligations regarding "actual data" and "data pertaining to production and sales in the ordinary course of trade". Instead, we consider the narrative in the European Union's panel request – "China did not determine the amounts for [SG&A] costs and for profits on the basis of records and actual data by the exporters or producers under investigation"^[128] – to be broad enough to encompass the European Union's claim regarding "actual data pertaining to production and sales in the ordinary course of trade". That the European Union did not include further language from the text of Article 2.2.2 of the Anti‑Dumping Agreement does not, in our view, limit or reduce the scope of the European Union's claim to "actual data".

5.35.  For all these reasons, we uphold the Panel's finding, in paragraph 7.51 of the EU Panel Report, that the European Union's panel request complies with the requirement in Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly" in respect of the European Union's claim under Article 2.2.2 of the Anti‑Dumping Agreement.

5.1.2  The Panel's interpretation and application of Article 2.2.2 of the Anti‑Dumping Agreement

5.36.  We now turn to address whether, as China claims, the Panel erred in its interpretation and application of Article 2.2.2 of the Anti‑Dumping Agreement and acted inconsistently with Articles 11 and 12.7 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement in concluding that China acted inconsistently with Article 2.2.2 because MOFCOM did not 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".

5.1.2.1  The Panel's findings

5.37.  Before the Panel, the European Union claimed that China acted inconsistently with 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 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]."^[129] The European Union argued 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'."^[130] According to the European Union, this was because: (i) Table 6-3 included SG&A amounts derived from planned rates and not the actual expense; and (ii) the SG&A amounts in Table 6-3 were based on "abnormally high" COP, as it included two unrepresentative free sample production transactions.^[131] China, for its part, submitted that MOFCOM determined the SG&A amount on the basis of actual data reported by SMST for Grade B HP-SSST sold in the European Union included in Table 6‑3. Moreover, China argued 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 [COP], and Article 2.2.2 does not require the SG&A amount to be actual data in itself."^[132]

5.38.  The Panel began its assessment with the text of Article 2.2.2, which sets forth how the amounts for SG&A are to be calculated for purposes of a constructed normal value. The Panel understood the issue to be whether Table 6-3, which China submitted was the basis for the SG&A amounts used in MOFCOM's calculation of normal value, was "based on 'actual data pertaining to production and sales in the ordinary course of trade of the like product'".^[133] The Panel explained, in this regard, that "[i]t is undisputed that the SG&A amounts in table 6-3 consist of the [COP] multiplied by certain coefficients" and that these coefficients reflect "the planned internal rates used by SMST in preparing price/cost allocations for orders".^[134]

5.39.  Next, the Panel noted the apparent disagreement between MOFCOM and SMST with respect to the source of the data to be used to determine the SG&A amount. While the European Union asserted that SMST understood that MOFCOM should have been using the SG&A amount based on actual data from Table 6-5, China submitted that MOFCOM made it clear in its disclosures that it was using the data in Table 6-3.^[135] Regardless of the parties' differing understandings, the Panel found that it was undisputed that SMST requested MOFCOM, and MOFCOM accepted, "not to use in the constructed normal value calculations the [COP] in table 6-3 for Grade B sales in the European Union, because such [COP] was distorted due to the inclusion of the two free sample transactions."^[136] However, MOFCOM used the SG&A amounts in Table 6-3, even though these had been derived by applying certain coefficients to the disregarded COP data.

5.40.  While noting China's argument that the affected SG&A data could have been corrected by the relevant coefficients, the Panel did 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."^[137] Instead, the Panel agreed with the European Union that "any such assumption would have been 'speculative'."^[138] Thus, the Panel opined that, "by using SG&A 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 2.2.2."^[139] Put differently, the Panel concluded that MOFCOM improperly utilized data relating to two free samples, which MOFCOM had excluded for the purpose of determining the COP, to establish the SG&A amounts. On this basis, the Panel concluded 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."^[140]

5.1.2.2  Analysis of the Panel's findings regarding MOFCOM's determination of an SG&A amount for SMST

5.41.  China begins by raising a claim under Article 12.7 of the DSU, arguing that the Panel did not set out the findings of fact, the applicability of the relevant provisions, and the basic rationale behind its findings. According to China, it is not clear whether the Panel considered the measure at issue to be inconsistent with Article 2.2.2 of the Anti‑Dumping Agreement because it is not based "on actual data or on data pertaining to production and sales in the ordinary course of trade, or both".^[141] In addition, China argues that the Panel: (i) failed to set out how and why China allegedly violated these requirements; (ii) failed to address the interpretation of these requirements and the relevant facts that would lead to a conclusion of violation of these requirements; and (iii) precluded China from making an informed decision about whether and what to appeal.^[142] Moreover, China contends that the Panel acted inconsistently with its obligations under Article 11 of the DSU by failing to provide an adequate explanation for its findings.^[143]

5.42.  In response, the European Union argues that "the way forward for China is clear", and that "China can ensure that the measure taken to comply complies with Article 2.2.2, by ensuring that the amounts for [SG&A] are based on actual data pertaining to production and sales in the ordinary course of trade by SMST"^[144] contained in Table 6-5 (Profitability), Table 6-6 (Detailed Chart of Allocation of Administrative Expenses), Table 6-7 (Detailed Chart of Allocation of Sales Expenses), and Table 6-8 (Detailed Chart of Allocation of Financial Expenses) annexed to SMST's Dumping Questionnaire Response of 21 November 2011.^[145] The European Union submits that China's arguments are "largely a re-iteration of its arguments concerning the scope of the [European Union's] Panel Request, insofar as they attempt to de-link the relevant interlinked terms of Article 2.2.2".^[146] The European Union further argues that MOFCOM disregarded SMST's repeated statements directing MOFCOM to the actual data pertaining to production and sales in the ordinary course of trade by SMST contained in Tables 6-5 through 6-8, and that China had ample opportunity to defend itself during the Panel proceedings.^[147]

5.43.  We consider that China's arguments, although raised in the context of Articles 11 and 12.7 of the DSU, in fact concern the proper construction and application of the requirement in Article 2.2.2 of the Anti‑Dumping Agreement to determine constructed normal value on the basis of "actual data pertaining to production and sales in the ordinary course of trade". We have already addressed China's arguments pertaining to the interpretation of Article 2.2.2 of the Anti‑Dumping Agreement and disagreed with China's assertion that Article 2.2.2 sets out "independent" and "distinct" obligations in relation to "actual data" and "data pertaining to production and sales in the ordinary course of trade". We, therefore, do not consider there to be any basis for us to find that the Panel failed to make an objective assessment of the matter before it, as required under Article 11 of the DSU, or that the Panel failed to provide, in its Reports, the basic rationale for its findings as required under Article 12.7 of the DSU.

5.44.  As a second ground of appeal, China asserts that "[t]he Panel misinterpreted Article 2.2.2 as requiring an investigating authority not to base the SG&A amount on data that were not used for the determination of the [COP] amount."^[148] China submits that the Panel "seems to have erroneously considered" that it follows from "the fact that SG&A data are derived from [COP] that had not been taken into account by MOFCOM for the [COP] calculation in the normal value determination" that such data are, therefore, "not based on actual data and/or that these are not based on data pertaining to production and sales in the ordinary course of trade of the like product".^[149]

5.45.  Contrary to what China seems to suggest, the Panel did not make a finding as to whether or not the SG&A amount had to be determined on the basis of data that were used for the determination of COP amounts. Nor did the Panel address the issue of whether or not the coefficients reported by SMST, that is, "the planned internal rates used by SMST in preparing price/cost allocations for orders, are 'actual data' for purposes of Article 2.2.2."^[150]

5.46.  As a third ground of appeal, China submits that the Panel "should have assessed how, in fact, the SG&A amount was determined and how the data underlying this determination were obtained", and whether the SG&A amount used by MOFCOM in its calculation of normal value "was 'based on' data that: (i) is actual; and (ii) pertains to production and sales in the ordinary course of trade".^[151] In China's view, there was no reason for the Panel "to assume that MOFCOM disregarded the [COP] of Grade B sold domestically because it was not actual or did not pertain to production or sales in the ordinary course of trade".^[152] According to China, instead, the Panel should have analysed this question, and should also have looked into precisely which factual circumstances constituted the "certain particularity" referred to by MOFCOM when MOFCOM explained in its Preliminary Dumping Disclosure that it had "used the [COP] of Grade B sold in the Chinese market 'due to [a] certain particularity of the transactions of this model in the EU'".^[153]

5.47.  The European Union responds that the facts on the Panel record demonstrate that MOFCOM accepted SMST's request "not to use in the constructed normal value calculations the COP in table 6-3 for Grade B sales in the European Union, because such COP was abnormally high due to the inclusion of the two free samples."^[154] The European Union maintains that "the only pertinent particularity of the transactions" is that "the COP was abnormally high due to the two free samples."^[155] The European Union argues that the Panel was, therefore, "correct to state that it was undisputed that SMST requested MOFCOM, and MOFCOM accepted, not to use in the constructed normal value calculations the COP in Table 6-3 for Grade B sales in the European Union, because such COP was distorted due to the two free samples."^[156] The European Union adds that China had many opportunities during the Panel proceedings to step forward and assert that the phrase "certain particularity" means something other than the fact that the COP was abnormally high due to the two free samples, yet it failed to do so.^[157] The European Union submits that "China is precluded at this stage from making any new factual assertions in this respect", and cannot "reasonably fault the Panel" for concluding as it did based on the facts and evidence that were before it.^[158]

5.48.  China appears to conflate the obligations that apply to investigating authorities with those that apply to WTO panels. It was not for the Panel in the present case to determine what MOFCOM meant when it referred to a "certain particularity"; rather, this was an issue for MOFCOM to explain in its written determination. We also do not agree with China that the Panel "assumed" that MOFCOM disregarded the COP of Grade B sold domestically for the reason that "it was not actual or did not pertain to production or sales in the ordinary course of trade."^[159] Rather, as we understand it, the basis for the Panel's finding under Article 2.2.2 of the Anti‑Dumping Agreement was, instead, that MOFCOM "assumed the corrective potential of the relevant coefficients" used to calculate an SG&A amount for SMST "without supporting analysis or evidence".^[160] The Panel saw error, in particular, in MOFCOM's decision, without explanation or analysis, "to disregard the [COP] data in table 6-3 for Grade B sales in the European Union", while at the same time using "the SGA amounts in table 6-3, even though [those amounts] had been derived by applying certain coefficients to that disregarded [COP] data."^[161]

5.49.  As a fourth ground of appeal, China takes issue with the Panel's finding that "it is undisputed that … MOFCOM accepted not to use in the constructed normal value calculations the [COP] in table 6-3 for Grade B sales in the European Union, because such [COP] was distorted due to the inclusion of the two free sample transactions."^[162] China states that "it is undisputed that MOFCOM accepted not to use the [COP] in table 6-3 for Grade B sales in the European Union to determine the COP in the normal value determination."^[163] However, China considers that the Panel acted inconsistently with Article 11 of the DSU to the extent that it found that "MOFCOM decided not to use the [COP] of domestic sales because these costs were 'distorted due to the inclusion of the two free sample transactions' in the sense that they were not 'actual' and/or did not pertain to production and sales 'in the ordinary course of trade'."^[164]

5.50.  As noted above, SMST stated in its response to MOFCOM's initial dumping questionnaire that:

[t]he December 2010 production costs for [Grade B was] abnormally high and should not be used in BOFT's cost or constructed value calculations. This production relates to the zero price samples discussed above with respect to question 9, Item 6 of Section 4. These were test orders in very small quantities. This led to abnormally high per-unit raw material costs because, despite the small production quantity, an entire hollow had to be used for each order.^[165]

5.51.  MOFCOM responded that:

… due to [a] certain particularity of the transactions of [Grade B] in the EU, according to Article 4 of the Anti-Dumping Regulation of the People's Republic of China ("AD Regulation"), the Investigating Authority decides to provisionally use the production costs of [Grade B] exported to China, SG&A of sales in the EU and reasonable profitability as the basis to determine the constructed value.^[166]

5.52.  Regardless of what MOFCOM meant when it referred to a "certain particularity of the transactions of [Grade B] in the EU", and whether MOFCOM considered that the COP was distorted or not due to the inclusion of the two free samples, MOFCOM was required, in its determination, to explain why it determined an amount for SG&A costs "based on the application of coefficients to data that had already been excluded for the purpose of constructing normal value".^[167] In the absence of such an explanation provided by MOFCOM in its written report, we fail to see how the Panel could have found China to have acted consistently with its obligations under Article 2.2.2 of the Anti‑Dumping Agreement. We do not consider that the Panel erred in finding that "an unbiased and objective investigating authority could [not] have assumed the corrective potential of the relevant coefficients without any supporting analysis or evidence."^[168] Contrary to what China appears to argue, this does not constitute a finding, by the Panel, that MOFCOM could not rely on these (rejected) "transactions for the purposes of determining SG&A amounts"; rather, we understand the Panel simply to have found that MOFCOM was required to explain why it chose to do so, and failed to give such explanation.

5.53.  China argues that the Panel acted contrary to Article 11 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement by failing to take into account that "MOFCOM requested SMST to clarify the nature of the coefficients, but did not obtain the requested clarification."^[169] China contends that an objective assessment of the methodology used by MOFCOM to obtain the SG&A amount "would have led the Panel to conclude that China complied with its obligations to ensure that the SG&A amount is 'based on' data that is 'actual' and pertains to 'production and sales in the ordinary course of trade'."^[170]

5.54.  The European Union responds that "[t]here are no facts or evidence on the record that would explain how the use of the planned coefficients might have cancelled out the use of the COP of the samples and China has never offered any explanation in this respect."^[171] The European Union further submits that SMST did respond to MOFCOM's request for clarification, and directed MOFCOM to the actual data pertaining to production and sales in the ordinary course of trade by SMST, contained in Tables 6-5 through 6-8.^[172]

5.55.  It is well established that a panel must neither conduct a de novo review nor simply defer to the conclusions of the investigating authority. Instead, panels should test whether the conclusions reached by the investigating authority are reasoned and adequate in the light of the explanations provided by the investigating authority in its written determination.^[173] Contrary to what China suggests, it was for MOFCOM to explain why it considered that the relevant coefficients had corrective potential, and why it used SG&A data based on the application of coefficients to data that had already been excluded for the purpose of constructing normal value. Even accepting, as China argues, that MOFCOM had "requested SMST to clarify the nature of the coefficients, but did not obtain the requested clarification"^[174], this does not mean that the Panel erred in finding that "an unbiased and objective investigating authority could [not] have assumed the corrective potential of the relevant coefficients without any supporting analysis or evidence."^[175]

5.56.  Finally, with regard to the translation of SMST's request to MOFCOM to exclude the COP in Table 6-3 for Grade B sales in the European Union, China argues that the European Union "distorts SMST's response" by claiming that "SMST requested that MOFCOM not use the December production costs in constructed value calculations", whereas "the correct translation of SMST's request refers to 'constructed cost calculation' rather than 'constructed value calculation'."^[176]

5.57.  The European Union responds that, although China originally submitted its own translation of the relevant phrase in SMST's request as "cost or constructed value calculations"^[177], China subsequently changed its position and argued that the correct translation of this phrase was "cost or constructed cost calculations".^[178] For the European Union, these submissions are "manifestly unreasonable and untenable", since, "[i]f the COP of the free samples was unfit for the purposes of determining COP, it was equally unfit for the purposes of determining an amount for SG&A [costs]."^[179] The European Union contends that, when the Anti‑Dumping Agreement uses the term "constructed", it clearly refers to the entire calculation, and not merely to part of it, such as the COP.^[180] Furthermore, the European Union submits that the term "costs" on its own is not limited to the COP, to the exclusion of SG&A costs.^[181]

5.58.  The Panel found, in the light of its finding under Article 2.2.2 of the Anti‑Dumping Agreement, that it did not need to address the disagreement between the European Union and China concerning the correct translation into English of SMST's request to exclude the COP in Table 6‑3.^[182] We see no error in the approach taken by the Panel in this regard, and certainly no error arising to a violation of Article 11 of the DSU or Article 12.7 of the DSU.^[183]

5.1.2.3  Conclusion

5.59.  In the light of the above, we uphold the Panel's finding, in paragraphs 7.66 and 8.6.a of the EU Panel Report, 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.

5.1.3  The European Union's conditional appeal under Articles 2.2 and 2.2.1.1 of the Anti‑Dumping Agreement

5.60.  The European Union conditionally appeals the Panel's findings that both the European Union's claim under Article 2.2.1.1 of the Anti‑Dumping Agreement, as it relates to the obligation to "reasonably reflect the costs associated with the production and sale of the product under consideration", and its claim under Article 2.2 of the Anti‑Dumping Agreement, do not comply with the requirements of Article 6.2 of the DSU and that these claims were, therefore, outside the scope of the Panel's terms of reference.^[184] The European Union submits, however, that we need not consider these aspects of its appeal in the event that we uphold the Panel's findings concerning the European Union's claim under Article 2.2.2 of the Anti‑Dumping Agreement, or complete the legal analysis and confirm its claim under Article 2.2.2.^[185]

5.61.  Having upheld the Panel's finding 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, we need not address this aspect of the European Union's appeal.

5.2  MOFCOM's alleged failure to take into account certain information provided during the verification visit

5.62.  We now turn to address China's appeal of the Panel's findings that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement by rejecting SMST's request for rectification of information on the sole basis that this request was not made before the verification started.

5.63.  We begin by summarizing the relevant findings of the Panel before addressing specific arguments raised by China on appeal.

5.2.1  The Panel's findings

5.64.  Before the Panel, the European Union contended that: (i) SMST submitted to MOFCOM that certain financial expenses had been inadvertently double-counted in SMST's Dumping Questionnaire Response; and (ii) SMST "adduced corrected information that was duly verified".^[186] The European Union claimed 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 on-the-spot investigation.^[187] Pointing to language in MOFCOM's Final Determination and Final Dumping Disclosure to SMST, the European Union argued that the only reason provided by MOFCOM "for refusing to take the corrected information into account was that SMST did not raise this point before the verification started".^[188]

5.65.  In response, China argued that investigating authorities are not required, under Article 6.7 and paragraph 7 of Annex I, to accept all information presented during a verification visit. Moreover, while accepting that the purpose of a verification visit is to verify information provided or to obtain further details, China asserted that this "does not imply that an investigating authority is compelled to verify information provided or to obtain further details".^[189]

5.66.  The Panel began its analysis by observing that the European Union's claim was of a procedural nature and concerned the question of whether 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 the information provided by SMST on the sole basis that SMST did not raise this matter before the on-the-spot investigation started.^[190]

5.67.  The Panel noted that, in a communication sent to SMST prior to the on-the-spot investigation, MOFCOM had requested SMST to prepare certain documents relating to, inter alia, Table 6-5 ("Profitability"), which summarized the information concerning SG&A costs contained in Tables 6-6 ("Detailed Chart of Allocation of Administrative Expenses") and 6-8 ("Detailed Chart of Allocation of Financial Expenses") supplied by SMST as annexes to its initial dumping questionnaire response.^[191] The Panel considered, therefore, that there was "a clear and direct connection" between the information that SMST sought to correct in Tables 6-6 and 6-8 and the information expressly requested by MOFCOM relating to Table 6-5.^[192] Recalling that, under paragraph 7 of Annex I, "the main purpose of the on‑the‑spot investigation is to verify information", the Panel considered "that an investigating authority would normally welcome the rectification of information in these circumstances".^[193] The Panel found that, by first requesting SMST to prepare documents relating to Table 6-5, but then rejecting potentially relevant information "on the sole ground that SMST did not raise this matter before the verification started", MOFCOM acted contrary to the main purpose of the on‑the‑spot investigation.^[194] Having said this, the Panel agreed with China that Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement do not contain an obligation for an investigating authority "to accept all information presented to it during the verification visit".^[195] The Panel also agreed that an investigating authority "does not necessarily have to accept new information during verification"^[196], and that an investigating authority does not "have to accept voluminous amounts of corrected information".^[197] Turning to the specific facts before it, the Panel highlighted, however, that the European Union's claim concerned the rectification of "one piece of information", namely, the financial expenses of SMST's headquarters.^[198] The Panel therefore saw "no valid reason why MOFCOM did not accept the rectified information from SMST, particularly since MOFCOM appear[ed] to have understood the matter explained by SMST concerning the financial expenses at issue".^[199] In these circumstances, the Panel agreed with the European Union that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement because MOFCOM rejected this information submitted by SMST on the sole basis that it was not provided prior to the on-the-spot investigation.^[200]

5.2.2  Whether the Panel erred in finding that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement by rejecting SMST's rectification request

5.68.  On appeal, China contends that the Panel erred in finding that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement by rejecting SMST's request for rectification of information relating to SMST's financial expenses on the sole basis that this request was not made before the verification visit started. China maintains that, by creating the obligation to act in line with the main purpose of the verification visit, the Panel read into Article 6.7 and paragraph 7 of Annex I words that are not there. For China, Article 6.7 and paragraph 7 of Annex I do not contain an obligation for an investigating authority to act in line with the main purpose of the verification visit. China also maintains that Article 6.7 does not impose on an investigating authority an obligation to conduct on-the-spot verification in the territory of an exporting Member. Rather, for China, Article 6.7 grants an investigating authority the right to carry out a verification visit subject to a number of limitations, "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".^[201]

5.69.  The European Union counters that the Panel correctly found that "th[e] specific fact pattern [of the present case] demonstrates an inconsistency with Article 6.7 and paragraph 7".^[202] Referring to the language in paragraph 7 of Annex I concerning the main purpose of the on‑the‑spot investigation, the European Union argues that "it is inherently contradictory and internally inconsistent to ask for something, receive it, and then later reject it."^[203] According to the European Union, while an investigating authority enjoys a certain margin of appreciation under Article 6.7 and paragraph 7 to Annex I, it should decide whether to accept or reject information submitted to it "on the basis of objective criteria, such as the risk of undue delay in the conduct of the proceedings".^[204]

5.70.  The first sentence of Article 6.7^[205] stipulates that, "[i]n order to verify information provided or to obtain further details, the authorities may carry out investigations in the territory of other Members as required". This right to carry out on‑the‑spot investigations in the territory of another Member is limited, however, to instances where: (i) the investigating authority has obtained the agreement of the firm(s) concerned; (ii) the investigating authority has notified the representatives of the government of the Member in question; and (iii) that Member has not objected to the investigation.^[206] The second sentence of Article 6.7 prescribes that the procedures described in Annex I "shall apply to investigations carried out in the territory of other Members". While Article 6.7 lays out the basic framework for verifications in the territory of another Member, Annex I, entitled "Procedures for on-the-spot investigations pursuant to Paragraph 7 of Article 6", sets out further parameters for the conduct of such investigations.

5.71.  Paragraph 7 of Annex I states that, "[a]s the main purpose of the on‑the‑spot investigation is to verify information provided or to obtain further details", such investigation should generally "be carried out" after the investigating authority has received the response to the questionnaire that was used in the anti‑dumping investigation. Paragraph 7 further provides that "it should be standard practice" to advise firms in advance about the "general nature of the information to be verified and of any further information which needs to be provided", but that "this should not preclude requests to be made on the spot for further details to be provided in the light of information obtained."

5.72.  Moving to the immediate context for Article 6.7 and paragraph 7 of Annex I, we note that Article 6.6 of the Anti-Dumping Agreement stipulates that investigating "authorities shall during the course of an investigation satisfy themselves as to the accuracy of the information supplied by interested parties upon which their findings are based."^[207] The investigating authority can do so in several ways, including by conducting on-the-spot investigations, as contemplated under Article 6.7, "[i]n order to verify information provided or to obtain further details".^[208]

5.73.  We further note that Article 6 of the Anti-Dumping Agreement situates the conduct of on-the-spot investigations within a broader set of provisions regulating the process of identifying and gathering evidence for anti-dumping duty investigations.^[209] In addition to laying down evidentiary rules that apply throughout the course of an anti‑dumping investigation, Article 6 speaks to the due process rights that are enjoyed by interested parties during the investigation. This further reinforces the textual directive under Article 6.6 for investigating authorities to satisfy themselves as to the accuracy of the information supplied by interested parties, including in the context of carrying out on-the-spot investigations under Article 6.7.

5.74.  The requirement that investigating authorities "satisfy themselves as to the accuracy of the information supplied by interested parties" does not mean that they are under an obligation to accept and use all information that is submitted to them. Circumstances will vary, and investigating authorities have some degree of latitude in deciding whether to accept and use information submitted by interested parties during on-the-spot investigations or thereafter. That latitude is limited, however, by the investigating authority's obligation under Article 6.6 to ensure that the information on which its findings are based is accurate, and by the legitimate due process interests of the parties to an investigation.^[210] An investigating authority must balance these due process interests with the need to control and expedite the investigating process.^[211] This balance between the due process interests of the parties and controlling and expediting the investigating process applies throughout the investigation, including during on-the-spot investigations.

5.75.  Depending on the particularities of each case, factors bearing upon the latitude of an investigating authority to accept or reject information submitted during an on‑the‑spot investigation may include, for example, the timing of the presentation of new information; whether the acceptance of new information would cause undue difficulties in the conduct of the investigation^[212]; whether the interested party has submitted voluminous amounts of information or merely seeks to have an arithmetical or clerical error corrected; whether the information at issue relates to facts that are "essential" within the meaning of Article 6.9 of the Anti‑Dumping Agreement; or whether the information supplied by an interested party relates to the information specifically requested by the investigating authority. We agree with the Panel that Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement do not contain an obligation for an investigating authority "to accept all information presented to it during a verification visit".^[213] We also agree with the Panel that an investigating authority does not necessarily "have to accept voluminous amounts of corrected information".^[214] At the same time, an investigating authority may accept information provided during the on-the-spot investigation or, in appropriate circumstances, even at a later stage.^[215]

5.76.  With these considerations in mind, we recall that MOFCOM requested SMST to prepare documents relating to Table 6-5, and that SMST sought to correct information contained in Tables 6-6 and 6-8, which, in turn, were summarized in Table 6-5.^[216] The Panel found, therefore, that there was a "clear and direct connection" between the information that SMST sought to correct and the information expressly requested by MOFCOM.^[217] China does not contest this finding.^[218] It is also uncontested that SMST's request for rectification concerned one specific piece of information, that is, the financial expenses of SMST's headquarters.^[219] In refusing to take that information into account, MOFCOM did not reason that the acceptance of that information would have caused undue difficulties in the conduct of the investigation; that SMST would have submitted voluminous amounts of additional information to the investigating authority late in the proceedings; or impeded or delayed the conduct of the anti-dumping proceedings in some way. Instead, as the Panel found, MOFCOM rejected SMST's rectification request "on the sole ground that SMST did not raise this matter before the verification started".^[220] China does not contest that this was the only reason for the rejection given by MOFCOM in the Final Determination.^[221]

5.77.  In these circumstances, and in the absence of any further explanation by MOFCOM, we see no error in the Panel's finding that there seems to have been no valid reason why MOFCOM did not accept the corrected information provided by SMST. Moreover, contrary to what China suggests, the Panel did not find that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I because MOFCOM acted contrary to the main purpose of the verification visit. Instead, as we understand it, the Panel based its findings on the fact that, while MOFCOM expressly requested SMST to prepare certain information for the on-the-spot investigation, it then refused to take into account corrected information even though it had a "clear and direct connection" to the information that had been requested. MOFCOM rejected the corrected information although it consisted of only "one piece of information" regarding the financial expenses of SMST's headquarters, and did so solely on the basis that it was not provided prior to the verification visit, and without providing other reasons.

5.78.  In the light of the foregoing, we uphold the Panel's finding, in paragraphs 7.101 and 8.6.c. of the EU Panel Report, that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement by rejecting SMST's request for rectification only on the basis that it was not provided prior to verification.

5.2.3  The European Union's conditional appeal under Article 6.8 and paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement

5.79.  In the event that we reverse the Panel's findings under Article 6.7 and paragraph 7 of Annex I to the Anti‑Dumping Agreement, the European Union appeals the Panel's rejection of the European Union's claim under Article 6.8 and paragraphs 3 and 6 of Annex II to the Anti-Dumping Agreement.^[222]

5.80.  We recall that the Panel rejected the European Union's claims under Article 6.8 and paragraphs 3 and 6 of Annex II that MOFCOM had applied "facts available", and found, instead, that "MOFCOM based its determination on evidence contained in the records, which at that time MOFCOM considered were the correct facts submitted by SMST."^[223]

5.81.  Having upheld the Panel's finding that China acted inconsistently with Article 6.7 and paragraph 7 of Annex I to the Anti-Dumping Agreement by rejecting SMST's rectification request on the sole basis that it was not provided prior to the verification visit, we need not further address this aspect of the European Union's appeal.

5.3  Showing of "good cause" under Article 6.5 of the Anti‑Dumping Agreement

5.82.  China claims that the Panel erred in its interpretation and application of Article 6.5 of the Anti‑Dumping Agreement in finding that China acted inconsistently with its obligations under that provision by permitting the full text of certain reports submitted by the petitioners in the underlying investigation "to remain confidential without objectively assessing 'good cause' and scrutinizing the petitioners' showing".^[224] China further claims, on three grounds, that the Panel applied an erroneous standard of review and failed to make an objective assessment of the facts before it, contrary to the requirements of Article 11 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement. First, China alleges that the Panel erroneously limited its review to assessing whether MOFCOM had explained why it considered that the full text of the reports at issue warranted confidential treatment. Second, China contends that the Panel applied internally inconsistent reasoning in its analysis of the claims under Articles 6.5 and 6.5.1 of the Anti‑Dumping Agreement. Third, China asserts that the Panel improperly made the case for the complainants with regard to their claims under Article 6.5 of the Anti‑Dumping Agreement.

5.83.  Before addressing the specific claims raised by China, we first summarize the relevant findings of the Panel, and the context in which the Panel made those findings. We then examine Article 6.5 of the Anti‑Dumping Agreement, and the disciplines that apply thereunder.

5.3.1  The Panel's findings

5.84.  Before the Panel, Japan and the European Union argued that China acted inconsistently with Article 6.5 of the Anti‑Dumping Agreement because MOFCOM permitted the full text of four reports to remain confidential without objectively assessing the "good cause" alleged for confidential treatment and scrutinizing the petitioners' showing.^[225] These reports are 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.

5.85.  China responded that "good cause" had been adequately shown by the petitioners because they had provided several substantiated reasons as to why confidential treatment was warranted both for the names of the relevant third party institutes and the full text of the four reports at issue.^[226] In addition, China argued that the Anti‑Dumping Agreement does not impose an obligation on an investigating authority "to explain why it considers that confidential treatment [of information] is warranted".^[227]

5.86.  The Panel identified the issue before it as involving an examination of whether MOFCOM permitted the full text of the four reports 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.^[228] With regard to China's allegation that the European Union had failed to establish a prima facie case of violation, the Panel found that, although the European Union "could have been more specific in setting out its [] claim" under Article 6.5 in its first written submission, overall, it considered that the European Union had "sufficiently connected its Article 6.5 claim to the relevant appendices".^[229]

5.87.  The Panel noted that, in evaluating the complainants' claims under Article 6.5 of the Anti‑Dumping Agreement, it would be guided by the Appellate Body's pronouncements on "good cause" in EC – Fasteners (China).^[230] Turning to the specific facts before it, the Panel examined the petitioners' requests for confidential treatment of information contained in the four appendices at issue, and MOFCOM's statement granting confidential treatment.^[231]

5.88.  Regarding the scope of MOFCOM's statement, the Panel found that, although it was directed at the requests for confidential treatment of appendix V, it could "also be reasonably understood" to apply to the appendix to the petitioners' supplemental evidence of 29 March 2012, as the latter "builds on" the former.^[232]

5.89.  The Panel next turned to examine whether MOFCOM's statement was sufficient to demonstrate that MOFCOM objectively assessed the petitioners' showing of "good cause" with regard to both the names of the third party institutes and the full text of appendix V and the appendix to the petitioners' supplemental evidence of 29 March 2012. The Panel found that, while the petitioners' requests referred to both the names of the institutes and the full text of the reports, when accepting the petitioners' requests for confidential treatment, "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'."^[233] With respect to the confidential treatment of the full text of the two reports at issue, the Panel noted that MOFCOM's statement only "summariz[ed] the petitioners' arguments for confidential treatment and requests; rather than [having] reflect[ed] MOFCOM's explanation or reasoning".^[234] The Panel concluded that there was thus "no evidence" 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."^[235] With regard to appendix VIII to the petition and appendix 59 to the petitioners' supplemental evidence of 1 March 2012, the Panel found that, in the absence of any evidence that MOFCOM objectively assessed the "good cause" alleged and scrutinized the petitioners' requests, it had no basis to conclude that MOFCOM had done so.^[236]

5.90.  Having upheld the European Union's claim that MOFCOM did not objectively assess the "good cause" alleged by the petitioners for confidential treatment of the full text of the four appendices at issue, the Panel noted China's argument 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'."^[237] The Panel found that, "[i]n the absence of any explanation by MOFCOM", there was "no basis to conclude that MOFCOM properly determined that the petitioners had shown 'good cause' for their requests for confidential treatment".^[238] The Panel also considered that it had "no basis … 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".^[239]

5.91.  The Panel concluded that China acted inconsistently with Article 6.5 of the Anti‑Dumping Agreement by permitting the full text of the reports in appendix V and appendix VIII to the petition, appendix 59 to the petitioners' supplemental evidence of 1 March 2012, and the appendix to the petitioners' supplemental evidence of 29 March 2012 "to remain confidential without objectively assessing 'good cause' and scrutinizing the petitioners' showing".^[240]

5.3.2  Assessment of the Panel's analysis

5.92.  On appeal, China argues that the Panel erred in construing Article 6.5 of the Anti‑Dumping Agreement as imposing an obligation on an investigating authority to explain why it considers that confidential treatment is warranted.^[241] China refers to the panel report in Mexico – Steel Pipes and Tubes and the Appellate Body report in EC - Fasteners (China) to argue that, while an investigating authority must review and decide whether "good cause" was shown, there is no obligation for an investigating authority to provide any explanation regarding its assessment and scrutiny of the alleged showing of "good cause".^[242]

5.93.  Japan and the European Union observe that, contrary to what China suggests, the Panel did not find that Article 6.5 of the Anti‑Dumping Agreement contains an obligation for the investigating authority to "provide an explanation" for its reasons for granting confidentiality. Rather, the Panel's finding was that, in the absence of any explanation by MOFCOM, the Panel had no basis to conclude that MOFCOM undertook an objective assessment and properly determined that the petitioners had shown "good cause" for their requests for confidential treatment with respect to the full text of the four reports at issue. ^[243] At the oral hearing, Japan and the European Union agreed that the degree of substantiation required from an investigating authority depends on the nature of the information for which confidential treatment is sought, noting however that, in the absence of any evidence that MOFCOM had objectively assessed the "good cause" alleged for confidential treatment, the Panel correctly concluded that China had acted inconsistently with Article 6.5.^[244]

5.94.  We begin our analysis by examining the text of Article 6.5 of the Anti‑Dumping Agreement, which provides:

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. Such information shall not be disclosed without specific permission of the party submitting it.[*]

5.95.  In EC – Fasteners (China), the Appellate Body explained that Article 6.5 covers information that is "by nature confidential", as well as information that is "provided on a confidential basis", and that a "good cause" showing by the party seeking confidential treatment is required for both of these categories of information.^[245] The Appellate Body added that "[t]he '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."^[246] According to the Appellate Body, "'[g]ood 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."^[247] The Appellate Body further stated:

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".^[248]

5.96.  The Appellate Body further noted that, "[w]henever information is treated as confidential, transparency and due process concerns will necessarily arise because such treatment entails the withholding of information from other parties to an investigation."^[249] The Appellate Body stated that "Articles 6.5 and 6.5.1 accommodate the concerns of confidentiality, transparency, and due process by protecting information that is by nature confidential or is submitted on a confidential basis and upon 'good cause' shown, but establishing an alternative method for communicating its content so as to satisfy the right of other parties to the investigation to obtain a reasonable understanding of the substance of the confidential information, and to defend their interests."^[250]

5.97.  The Appellate Body added that an investigating 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".^[251] However, the Appellate Body did not further say how the sufficiency of a showing of "good cause" is to be assessed by an investigating authority, or how it is to be assessed by a reviewing panel. As we see it, a panel tasked with reviewing whether an investigating authority has objectively assessed the "good cause" alleged by a party must examine this issue on the basis of the investigating authority's published report and its related supporting documents, and in the light of the nature of the information at issue^[252] and the reasons given by the submitting party for its request for confidential treatment.^[253] The type of evidence and the extent of substantiation the investigating authority must require will depend on the nature of the information at issue and the particular "good cause" alleged.^[254] In reviewing whether an investigating authority has assessed and determined objectively that "good cause" for confidential treatment has been shown to exist, it is not for a panel to engage in a de novo review of the record of the investigation and determine for itself whether the existence of "good cause" has been sufficiently substantiated by the submitting party.

5.98.  Turning to the present case, we note that, in finding that there was no evidence that MOFCOM objectively assessed the "good cause" alleged for confidential treatment, the Panel stressed that it was not concluding that MOFCOM could not have treated the full text of the reports contained in appendix V and the appendix to the petitioners' supplemental evidence of 29 March 2012 as confidential.^[255] Rather, the Panel found that there was "no evidence that MOFCOM ever considered whether good cause had been shown for such treatment"^[256], and thus no evidence of an objective assessment.

5.99.  Pursuant to Article 6.5 of the Anti‑Dumping Agreement, it is for the investigating authority to require a party that seeks confidential treatment of information to explain and provide reasons as to why the information at issue should be treated as confidential. The investigating authority, in turn, is under an obligation to assess objectively the "good cause" alleged by the submitting party for confidential treatment, and to "scrutinize the party's showing in order to determine whether the submitting party has sufficiently substantiated its request".^[257] As the Appellate Body has explained, "'[g]ood 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."^[258] In the present case, however, MOFCOM merely summarized the reasons provided by the petitioners for confidential treatment of the full text of two of the four reports at issue.^[259]

5.100.  Therefore, we see no error in the Panel's finding that, in the absence of any evidence that MOFCOM objectively assessed the "good cause" alleged, it had no basis to conclude that MOFCOM undertook an objective assessment and properly determined that the petitioners had shown "good cause" for their requests for confidential treatment.^[260] In these circumstances, we also see no error in the Panel's conclusion that there was no basis for it to find 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."^[261]

5.101.  China also submits that, in reaching its findings under Article 6.5 of the Anti‑Dumping Agreement, the Panel applied an erroneous standard of review and failed to make an objective assessment of the facts before it, contrary to the requirements of Article 11 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement.^[262] According to China, the Panel applied an incorrect standard of review because it failed to take into account the information on the record that was before MOFCOM.^[263] Although China brings this claim as a separate one, it appears to be premised on the same contention as its claim that the Panel erred in the interpretation and application of Article 6.5, namely, that the Panel should have looked into the facts that were before MOFCOM in order to determine whether MOFCOM objectively assessed the "good cause" alleged.

5.102.  We do not consider that the Panel would have complied with the applicable standard of review if, in the absence of any evidence of an objective assessment by MOFCOM of the "good cause" alleged, it had engaged in a de novo review of evidence on the record of the investigation and determined for itself, or on the basis of subjective concerns of the petitioners, whether the request for confidential treatment was sufficiently substantiated and that "good cause" for such treatment objectively existed. Having rejected China's claim of error under Article 6.5 of the Anti‑Dumping Agreement, we also do not agree with China that the Panel acted inconsistently with Article 11 of the DSU and Article 17.6(i) of the Anti‑Dumping Agreement by failing to take into account the information on the record, including the requests for confidential treatment by the petitioners.^[264] We fail to see how the Panel, having found that there was no evidence that MOFCOM objectively assessed the "good cause" alleged, and that MOFCOM had instead only summarized the petitioners' requests and arguments for confidential treatment^[265], could have concluded that MOFCOM undertook an objective assessment and properly determined that the petitioners had shown "good cause" for their requests for confidential treatment.

5.3.3  Whether the Panel applied internally inconsistent reasoning in violation of Article 11 of the DSU

5.103.  We next turn to China's claim that the Panel applied internally inconsistent reasoning in its analysis of Japan's and the European Union's claims under Articles 6.5 and 6.5.1 of the Anti‑Dumping Agreement, contrary to the requirements of Article 11 of the DSU. China contends that, unlike under Article 6.5, in its analysis under Article 6.5.1 of the Anti‑Dumping Agreement, the Panel did not take issue with the absence of explanations by MOFCOM, and focused its examination, instead, on the non‑confidential summaries provided by the petitioners, as well as the statements provided by the petitioners as to why summarization was not possible.^[266] In support of its position, China argues that, in EC – Fasteners (China), in the context of its assessment under Article 6.5.1, "the Appellate Body examined the statements provided by certain parties who claimed that they could not provide a non‑confidential summary of information submitted in confidence, and did not require an analysis of statements by the investigating authority."^[267] In China's view, such internally inconsistent reasoning of the Panel in its analyses under Article 6.5 and Article 6.5.1 cannot be reconciled with the Panel's duty to make an objective assessment of the facts under Article 11 of the DSU.

5.104.  Japan and the European Union respond that, while there may be similarities between the obligations of an investigating authority under Article 6.5 and Article 6.5.1 of the Anti‑Dumping Agreement, a precondition for triggering the obligation under Article 6.5.1 for the investigating authority "to scrutinize the reasons advanced for not supplying non‑confidential summaries" is "the existence of a statement by the party pertaining to such reasons".^[268] According to the complainants, the Panel's finding that the record did not contain any reasons advanced by the petitioners for not supplying non‑confidential summaries was not a finding on the adequacy of the reasons.^[269]

5.105.  Article 6.5 and Article 6.5.1 of the Anti‑Dumping Agreement each imposes distinct obligations on an investigating authority. Under Article 6.5, the investigating authority is required objectively to assess the "good cause" alleged by the party requesting confidential treatment. By contrast, under Article 6.5.1, the investigating authority is obliged, in respect of information that an investigating authority has decided to treat as confidential under Article 6.5, "to require that a non‑confidential summary of the information be furnished, and to ensure that the summary contains 'sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence'."^[270] When it is not possible to supply a non‑confidential summary, Article 6.5.1 requires a party "to identify the exceptional circumstances and provide a statement explaining the reasons why summarization is not possible".^[271] For its part, the investigating authority must scrutinize such statements to determine whether they establish exceptional circumstances, and whether the reasons given explain why summarization is not possible.^[272] Thus, although the subject matter of Article 6.5 and Article 6.5.1 is similar, the nature of the obligations that apply under the two provisions is different.

5.106.  In the present disputes, the issue before the Panel under Article 6.5 was whether MOFCOM permitted the full text of the four appendices to remain confidential without objectively assessing and scrutinizing the petitioners' showing of "good cause". By contrast, under Article 6.5.1, the issue before the Panel was: (i) whether MOFCOM required the petitioners to provide sufficient non‑confidential summaries of the confidential information contained in reports found in the four appendices at issue; and (ii) whether MOFCOM required the petitioners to provide adequate statements as to why summarization was not possible with respect to the remaining 32 appendices.^[273]

5.107.  As we have noted above, whether an investigating authority has objectively assessed the "good cause" alleged by a party under Article 6.5 is to be examined on the basis of the investigating authority's published report and its related supporting documents, and in the light of the nature of the information at issue and the reasons given by the interested party for its request for confidential treatment. We have also found that the Panel did not err in stating that, in the absence of any evidence that MOFCOM had objectively assessed whether the petitioners had made a showing of "good cause" in the present case, it could not find that MOFCOM had complied with its obligation under Article 6.5.^[274]

5.108.  In addressing the complainants' claim under Article 6.5.1 that MOFCOM failed to require the petitioners to provide sufficient non‑confidential summaries of the confidential information, the Panel compared confidential versions and the non‑confidential summaries of the four appendices at issue. We recall that, in EC - Fasteners (China), the Appellate Body held that the sufficiency of the summary provided depends on the confidential information at issue, and that it must permit "a reasonable understanding of the substance of the information withheld".^[275] Thus, in order to determine whether MOFCOM ensured that the non-confidential summaries of the four reports at issue were sufficiently detailed, the Panel compared those summaries with the confidential versions of the underlying reports. Further, in assessing whether MOFCOM required the petitioners to provide adequate statements as to why summarization was not possible with regard to the remaining 32 appendices, the Panel examined the statements by the petitioners.^[276]

5.109.  We do not consider that the Panel's approach to addressing the complainants' claims under Articles 6.5 and 6.5.1 of the Anti‑Dumping Agreement was "internally inconsistent". Rather, as we see it, the Panel properly reflected the distinct nature of the substantive legal obligation at issue in each case.

5.110.  China also argues that the Panel's approach under Article 6.5 in the present disputes contradicts the approach adopted by the Appellate Body in EC – Fasteners (China) in its analysis of the claims under Article 6.5.1 of the Anti‑Dumping Agreement. In EC - Fasteners (China), the Appellate Body considered whether the investigating authority had ensured that two domestic producers – Agrati and Fontana Luigi – had provided adequate statements as to why summarization of confidential information was not possible. Having examined the Panel's assessment of the statements by Agrati and Fontana Luigi, the Appellate Body concluded that those statements did not contain sufficient explanations as to why summarization of certain information was not possible, and, accordingly, that the European Union had failed to comply with its obligations under Article 6.5.1.^[277] Moreover, the Appellate Body found that the investigating authority had failed to scrutinize the reasons provided in the statements of Agrati and Fontana Luigi, in violation of Article 6.5.1. We do not view the approach taken by the Appellate Body in EC – Fasteners (China) to support China's position regarding the alleged application of inconsistent reasoning by the Panel in the present disputes. Similarly to what we have noted above, we consider that the difference in the approaches taken by the Panel in its analysis under Article 6.5 and by the Appellate Body in EC – Fasteners (China) in its analysis under Article 6.5.1 reflects the distinct nature of the substantive legal obligations at issue. For all these reasons, we do not agree with China that the Panel failed to make an objective assessment of the matter before it by applying an "internally inconsistent" reasoning in its examination of the claims under Articles 6.5 and 6.5.1 of the Anti‑Dumping Agreement.

5.3.4  Whether the Panel made a case for the complainants

5.111.  China argues that the Panel acted inconsistently with Article 11 of the DSU by finding that China acted inconsistently with Article 6.5 of the Anti‑Dumping Agreement on grounds not alleged by the complainants in their first written submissions, contrary to paragraph 7 of the Joint Working Procedures of the Panels.^[278] More specifically, China explains that it had understood, on the basis of the complainants' panel requests, as well as the complainants' first written submissions, that they were claiming that China had violated Article 6.5 of the Anti‑Dumping Agreement because MOFCOM granted confidential treatment to the four appendices at issue "without 'good cause' being shown by the petitioners".^[279] According to China, it was not until after the parties had received question No. 67 from the Panel that the issue arose as to whether or not MOFCOM had objectively assessed and determined the showing of "good cause" by the petitioners.^[280]

5.112.  In response, Japan and the European Union submit that China's arguments are based on its erroneous understanding of the nature of the analysis under Article 6.5.^[281] According to the complainants, an allegation that confidential treatment was extended without "good cause" being shown is merely another way of expressing that the investigating authority failed to undertake an objective assessment as to whether "good cause" had been shown by the applicant.^[282]

5.113.  We understand China to distinguish between what it sees as two distinct issues: (i) whether MOFCOM "objectively assessed" and scrutinized the "good cause" alleged for confidential treatment in order to determine whether the petitioners' requests were sufficiently substantiated; and (ii) whether MOFCOM granted confidential treatment without a showing of "good cause" by the petitioners. China considers that the complainants did not argue – at any stage during the Panel proceedings, and, in any event, not in their first written submissions – the issue of whether MOFCOM objectively assessed the reasons given by the petitioners for their requests for confidential treatment.^[283]

5.114.  We note that, in their panel requests, the complainants alleged that China acted inconsistently with Article 6.5 because MOFCOM treated information supplied by the petitioners as confidential "without good cause shown".^[284] We consider this language to have been sufficient to put China on notice that the question of whether MOFCOM objectively assessed the "good cause" alleged by the petitioners would be an issue in these disputes.

5.115.  In their first written submissions, the complainants further argued that the petitioners did not show "good cause" for treating the full text of the relevant appendices as confidential, and therefore China acted inconsistently with Article 6.5 "in permitting the full texts of these Appendices to remain confidential".^[285] The complainants also contended that, by granting the confidential treatment to the full texts of the four aforementioned reports "without a showing of good cause", China violated Article 6.5.^[286] Moreover, in response to question No. 67 from the Panel, the complainants argued that "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".^[287]

5.116.  China takes issue with the fact that the complainants referred expressly to the obligation of the investigating authority to assess objectively the "good cause" only after having received the Panel's question.^[288] We recall that paragraph 7 of the Joint Working Procedures of the Panels provided that, "[b]efore the first substantive meeting of the Panels with the parties, each party shall submit a written submission in which it presents the facts of its case and its arguments, in accordance with the timetable adopted by the Panels."^[289] However, we see no reason why this language should be construed to have precluded the complainants from further elaborating on the claims identified in their panel requests in response to the Panel's questioning. We also note that the Appellate Body has previously found that "panels are entitled to ask questions of the parties that they deem relevant to the consideration of the issues before them."^[290] Moreover, it is within the competence of a panel "freely to use arguments submitted by any of the parties – or to develop its own legal reasoning – to support its own findings and conclusions on the matter under its consideration".^[291]

5.117.  Accordingly, we disagree with China's argument that the Panel made the case for the complainants and thereby acted inconsistently with Article 11 of the DSU.

5.3.5  Conclusion

5.118.  In the light of the above, we uphold the Panel's findings, in paragraphs 7.290 and 7.297‑7.303 of the Panel Reports, paragraph 8.1.b. of the Japan Panel Report, and paragraph 8.6.e of the EU Panel Report, that China acted inconsistently with Article 6.5 of the Anti‑Dumping Agreement because MOFCOM permitted the full text of the reports contained in appendix V and appendix VIII to the petition, appendix 59 to the petitioners' supplemental evidence of 1 March 2012, and the appendix to the petitioners' supplemental evidence of 29 March 2012 to remain confidential without objectively assessing the petitioners' showing of "good cause".

5.4  Disclosure of the essential facts concerning MOFCOM's dumping determination

5.119.  The European Union appeals the Panel's rejection of the European Union's claim that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement because MOFCOM failed to adequately disclose the essential facts in connection with the data underlying MOFCOM's determination of dumping concerning SMST and Tubacex.^[292] In its appeal, the European Union asserts that the Panel erred both in its interpretation and application of Article 6.9.

5.120.  We begin by recalling the relevant findings by the Panel before addressing the specific issues raised by the European Union on appeal, as well as China's contention that the European Union's challenge goes to the objectivity of the Panel's assessment of the facts and should therefore have been brought under Article 11 of the DSU.

5.4.1  The Panel's findings

5.121.  Before the Panel, Japan and the European Union contended that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement because MOFCOM had not disclosed the essential facts that formed the basis for its dumping determinations.^[293] In particular, the complainants argued that, in its dumping determinations, MOFCOM failed to disclose any information relating to: (i) the specific cost and sales data used to calculate 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 how MOFCOM applied these data in constructing normal value, export price, and production costs.^[294]

5.122.  In response, China argued that the complainants failed to make a prima facie case and, instead, relied on general, unsubstantiated allegations without any specific reference to the disclosure documents. China further contended that, contrary to the European Union's allegations, MOFCOM had disclosed all essential facts pertaining to its dumping determinations in its preliminary and final dumping disclosures. In particular, with regard to production costs, SG&A, and profits, China submitted that MOFCOM had "explained when it accepted the data submitted by the exporters, and when it resorted to constructed normal values or export prices".^[295] According to China, MOFCOM also indicated when it used the adjustments requested by the exporters, and the amount of the adjustments made in other instances. In addition, China argued that MOFCOM provided the necessary information for the respondents to understand the methodology used to calculate the margins of dumping.^[296]

5.123.  The Panel started its analysis of the complainants' claims by referring to WTO jurisprudence establishing that "the basic data underlying an investigating authority's dumping determination constitute 'essential facts' within the meaning of Article 6.9."^[297] Moreover, the Panel noted that, in China – Broiler Products, the panel 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."^[298] On this basis, the Panel found that Article 6.9 does not require investigating authorities to "prepare disclosures containing the entirety of the essential facts under consideration" in cases where the relevant essential facts are in the possession of the respondent.^[299] The Panel therefore did not consider that an investigating authority would necessarily need to disclose "a spread sheet 'duly completed with the data actually relied on by the investigating authority'", as the European Union suggested.^[300] The Panel noted that, "[w]hile 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."^[301]

5.124.  The Panel further observed that MOFCOM had made both preliminary and final dumping disclosures to the exporters at issue, the narrative of which "described the sales data under consideration, the basis for determining normal value and export price, and the adjustments made thereto".^[302] Moreover, "MOFCOM specified when it used data or made adjustments requested by the exporters" and "disclosed actual data when it departed from the data submitted by the exporters".^[303] The Panel expressed the view that, "[o]ther than observing that MOFCOM failed to provide actual data that was already in the respondents' possession, the complainants ha[d] 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" their interests.^[304] Therefore, the Panel saw "no basis … to find that the narrative descriptions provided by MOFCOM do not satisfy the requirements of Article 6.9 of the Anti‑Dumping Agreement".^[305]

5.4.2  Whether the Panel erred in rejecting the European Union's claim under Article 6.9 of the Anti‑Dumping Agreement

5.125.  As noted, the European Union takes issue with the Panel's interpretation and application of Article 6.9 of the Anti‑Dumping Agreement with respect to the data underlying MOFCOM's determination of dumping concerning SMST and Tubacex.^[306] The European Union submits, as it did before the Panel, that the "essential facts supporting an anti‑dumping margin determination include the data underlying the margin calculations and adjustments to the data"^[307], as well as information on the calculation methodology, such as the formulae used in calculations and the data applied in the formulae. According to the European Union, the lack of disclosure of such facts in the underlying investigation impaired the interested parties' ability to defend their interests, because the interested parties did not have "an opportunity to 'provide additional information or correct perceived errors, and comment on or make arguments as to the proper interpretation of those facts'".^[308] The European Union argues, in particular, that Article 6.9 "requires disclosure of all the essential facts under consideration which form the basis for the decision whether to apply definitive measures"^[309], and submits, contrary to what the Panel's analysis suggests, that the "[m]ere possession of the data set from which the facts have been selected is clearly insufficient for the interested party to defend its interests."^[310]

5.126.  In response, China argues that the European Union appears to challenge the Panel's examination and weighing of the evidence, rather than the Panel's interpretation and application of Article 6.9.^[311] China notes that the European Union has not raised a claim under Article 11 of the DSU concerning this aspect of the Panel's findings, and argues, on this basis, that the European Union's appeal concerning the Panel's findings under Article 6.9 should be rejected. In the alternative, China submits that the Panel correctly found that "there are several ways in which an investigating authority can satisfy" its obligations under Article 6.9.^[312] China adds that the Panel did not find that an investigating authority "is excused from disclosing the essential facts if they are already in the possession of the interested party".^[313] For China, the Panel simply distinguished between two possible manners of complying with Article 6.9: (i) the actual provision of specific data; and (ii) the inclusion of a narrative description of the data used that is in the possession of the respondents.

5.127.  Before embarking on our analysis, we note that, in addition to claiming that China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement because MOFCOM failed to disclose the essential facts underlying MOFCOM's determination of dumping for SMST and Tubacex, the European Union also claimed before the Panel that MOFCOM acted inconsistently with that provision because it did not disclose information on the calculation methodology applied by MOFCOM to determine the margins of dumping for the investigated companies. The Panel reasoned that an interested party would not be able properly to defend its interests if it were not informed of the methodology applied by the investigating authority to determine the margin of dumping. The Panel added that "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."^[314] The Panel concluded that, by failing to disclose the methodology used to calculate the margin of dumping, MOFCOM acted inconsistently with Article 6.9 of the Anti-Dumping Agreement. These findings have not been appealed. Instead, the European Union's appeal concerns MOFCOM's alleged failure to disclose the specific cost and sales data used to calculate the normal value and export prices underlying the margin calculations, and the adjustments to this data, for instance, to take account of taxes and freight.

5.128.  Turning to China's contention that the European Union ought to have brought this claim under Article 11 of the DSU, we recall the Appellate Body's finding that allegations implicating a panel's appreciation of facts and evidence fall under Article 11 of the DSU, whereas "[t]he consistency or inconsistency of a given fact or set of facts with the requirements of a given treaty provision is … a legal characterization issue" and is, therefore, a legal question.^[315] As we understand it, the European Union's key contention is that the Panel erred in determining that MOFCOM adequately disclosed the "essential facts" underlying its dumping determinations as required under Article 6.9. Although there are aspects of the Panel's analysis that concern the facts that were before MOFCOM, we understand the European Union's appeal to focus on the manner in which the Panel interpreted and applied Article 6.9 in its assessment of whether MOFCOM's dumping disclosures complied with the legal standard under that provision. In particular, we consider that the European Union's appeal raises issues as to the meaning and scope of the investigating authority's duty under Article 6.9 to disclose the "essential facts" under consideration. Hence, we do not agree with China that the European Union's appeal merely challenges the Panel's examination and weighing of the evidence, and should therefore have been brought under Article 11 of the DSU. We turn, therefore, to examine the issues raised by the European Union on appeal concerning the Panel's interpretation and application of the legal standard under Article 6.9 to MOFCOM's dumping disclosures.

5.129.  The first sentence of Article 6.9 of the Anti‑Dumping Agreement stipulates that "[t]he authorities shall, before a final determination is made, inform all interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures." The second sentence of Article 6.9 provides that "[s]uch disclosure should take place in sufficient time for the parties to defend their interests."^[316] As to the scope of information that must be disclosed, the Appellate Body has explained that Article 6.9 "cover[s] 'facts under consideration', that is, those facts on the record that may be taken into account by an authority in reaching a decision as to whether or not to apply definitive anti‑dumping … duties".^[317] As to what kinds of facts are "essential" under Article 6.9, the Appellate Body, in China – GOES, explained that:

Article[] 6.9 … do[es] not require the disclosure of all the facts that are before an authority but, instead, those that are "essential"; a word that carries a connotation of significant, important, or salient. In considering which facts are "essential", the following question arises: essential for what purpose? The context provided by the latter part of Article[] 6.9 … clarifies that such facts are, first, those that "form the basis for the decision whether to apply definitive measures" and, second, those that ensure the ability of interested parties to defend their interests. Thus, we understand the "essential facts" to refer 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. An authority must disclose such facts, in a coherent way, so as to permit an interested party to understand the basis for the decision whether or not to apply definitive measures. In our view, disclosing the essential facts under consideration pursuant to Article[] 6.9 … is paramount for ensuring the ability of the parties concerned to defend their interests.^[318]

5.130.  Essential facts are, therefore, "those that are salient for a decision to apply definitive measures, as well as those that are salient for a contrary outcome."^[319] In order to apply a definitive measure, an investigating authority must find dumping, injury to the domestic industry, and a causal link between the dumping and the injury. These findings, in turn, are based on various intermediate findings and conclusions reached by the investigating authority. Whether a particular fact is essential or "significant in the process of reaching a decision"^[320] depends on the nature and scope of the particular substantive obligations, the content of the particular findings needed to satisfy the substantive obligations at issue, and the factual circumstances of each case, including the arguments and evidence submitted by the interested parties.^[321] An investigating authority must disclose such facts "in a coherent way" that permits an interested party to understand the factual basis for each of the intermediate findings and conclusions reached by the authority, such that it is able properly to defend its interests.

5.131.  Thus, an investigating authority is expected, with respect to the determination of dumping, to disclose, inter alia, the home market and export sales being used, the adjustments made thereto, and the calculation methodology applied by the investigating authority to determine the margin of dumping. The mere fact that the investigating authority refers in its disclosure to data that are in the possession of an interested party does not mean that the investigating authority has disclosed the factual basis for its determination in a manner that enables interested parties to comment on the completeness and correctness of the conclusions the investigating authority reached from the facts being considered, and to comment on or make arguments as to the proper interpretation of those facts.^[322] Thus, while Article 6.9 does not prescribe a particular form for the disclosure of the essential facts, it does require in all cases that the investigating authority disclose those facts in such a manner that an interested party can understand clearly what data the investigating authority has used, and how those data were used to determine the margin of dumping.^[323]

5.132.  On appeal, the European Union's challenge focuses on paragraphs 7.235 and 7.236 of the EU Panel Report, where the Panel set out its understanding of the interpretation and application of Article 6.9 of the Anti-Dumping Agreement. The Panel stated:

Previous WTO dispute settlement panels have established that the basic data underlying an investigating authority dumping determination constitute "essential facts" within the meaning of Article 6.9. 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.[*] 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. 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.^[324]

5.133.  While the Panel's reading of the scope and meaning of Article 6.9 is not entirely clear, it appears to us that the Panel considered that a determination of whether an investigating authority has complied with its obligations under that provision hinges largely on whether the essential facts under consideration by the investigating authority were in the possession of an interested party affected by the determination.^[325] However, contrary to what the Panel stated, it does not suffice for an investigating authority to disclose "the essential facts under consideration"^[326] but, rather, it must disclose the essential facts under consideration that "form the basis for the decision whether to apply definitive measures". To the extent that the Panel suggested that a narrative description of the data used would constitute sufficient disclosure simply because the essential facts that the authority is referring to "are in the possession of the respondent", we disagree. Instead, we agree with the European Union that, "when the investigating authority has selected from amongst the facts originally provided by the interested party, [that] party has no way of knowing which facts have been selected."^[327] We do not see how the mere fact that the investigating authority may be referring to data that are in the possession of an interested party would mean that it has disclosed the essential facts "that are salient for a decision to apply definitive measures, as well as those that are salient for a contrary outcome … in a coherent way, so as to permit an interested party to understand the basis for the decision whether or not to apply definitive measures"^[328], and to defend its interests.

5.134.  In the light of the above, we find that the Panel erred in its interpretation of Article 6.9 of the Anti-Dumping Agreement set out in paragraph 7.235 of the EU Panel Report. The Panel subsequently relied on this erroneous interpretation of Article 6.9 in finding, in paragraph 7.236 of the EU Panel Report, that, "[o]ther 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."^[329] We therefore reverse the Panel's finding, in paragraphs 7.235 and 7.236, and the Panel's conclusion, in paragraph 8.7.d.i. of the EU Panel Report, rejecting the European Union's claim that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement because MOFCOM failed to disclose adequately the essential facts in connection with the data underlying MOFCOM's determination of dumping concerning SMST and Tubacex.

5.135.  This brings us to the question of whether we can complete the legal analysis by ruling on the European Union's claim that MOFCOM acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to disclose the data underlying MOFCOM's determination of dumping concerning SMST and Tubacex.^[330] Having reviewed MOFCOM's Preliminary and Final Dumping Disclosures^[331], we consider that MOFCOM did not disclose the essential facts underlying its dumping determinations so as to permit the companies concerned to understand clearly what data MOFCOM had used, and how that data had been used to determine the margins of dumping for SMST and Tubacex. Accordingly, we find that China acted inconsistently with Article 6.9 of the Anti‑Dumping Agreement because MOFCOM failed to disclose adequately the data underlying its determination of dumping concerning SMST and Tubacex.

5.5  MOFCOM's injury determination

5.136.  Each of the three participants has appealed different aspects of the Panel's findings relating to MOFCOM's injury determination. Before turning to our analysis of the issues raised by the participants on appeal, we first summarize briefly the relevant obligations under Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement regarding the conduct of injury investigations.^[332]

5.137.  The Appellate Body has found that Article 3.1 of the Anti‑Dumping Agreement "is an overarching provision that sets forth a Member's fundamental, substantive obligation" concerning the injury determination, and informs the more detailed obligations in the succeeding paragraphs.^[333] Article 3.1 states:

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.

5.138.  As the Appellate Body has found, the term "positive evidence" focuses on the facts underpinning and justifying the injury determination.^[334] It relates to the quality of the evidence that the investigating authorities may rely on in making a determination, and requires the evidence to be affirmative, objective, verifiable, and credible.^[335] Furthermore, the Appellate Body has interpreted the term "objective examination" as requiring an injury investigation under Article 3 to "conform to the dictates of the basic principles of good faith and fundamental fairness", and to be conducted "in an unbiased manner, without favouring the interests of any interested party, or group of interested parties, in the investigation".^[336]

5.139.  Several of the remaining paragraphs of Article 3 then elaborate on the elements that must be objectively examined, based on positive evidence, pursuant to Article 3.1. Article 3.2 specifies the content of an investigating authority's consideration regarding the volume of dumped imports and the effect of such imports on domestic prices. Articles 3.4 and 3.5 concern the consequent impact of the dumped imports on the domestic industry. Specifically, Article 3.4 sets out the economic factors that must be evaluated in the examination of the impact of the dumped imports on the domestic industry, while Article 3.5 requires an investigating authority to demonstrate that dumped imports are causing injury to the domestic industry.^[337]

5.140.  These paragraphs of Article 3 thus contemplate a "logical progression" in the investigating authority's examination leading to an ultimate determination of whether dumped imports are causing material injury to the domestic industry.^[338] This process entails a consideration of the volume of dumped imports and their price effects, and requires an examination of the impact of such imports on the state of the domestic industry as revealed by a number of economic factors and indices. These various elements are linked through a causation and non-attribution analysis between the dumped imports and the injury to the domestic industry, taking into account all factors that must be considered and evaluated.^[339]

5.141.  Article 3 does not prescribe a specific methodology to be relied on by an investigating authority in its determination of injury.^[340] Nor is there a prescribed template or format that an investigating authority must adhere to in making its determination of injury, provided that its determination comports with the disciplines that apply under the discrete paragraphs of Article 3. These disciplines are necessary, interlinked elements of a single, overall analysis addressing the question of whether dumped imports are causing injury to the domestic industry. Indeed, by its terms, Article 3.5 states that "[i]t must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury" to the domestic industry. Thus, the inquiries under Articles 3.2 and 3.4 should not be viewed in isolation, as they are necessary components to answering the ultimate question in Article 3.5 as to whether dumped imports are causing injury to the domestic industry.^[341] The interpretation of Articles 3.2, 3.4, and 3.5 should therefore be consistent with the role they play in the overall framework of an injury determination.

5.142.  With these considerations in mind, we turn to address the complainants' appeals as they relate to the Panel's assessment, under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement, of MOFCOM's price effects analysis. Thereafter, we examine the complainants' claims that the Panel erred in its findings under Articles 3.1 and 3.4 of the Anti‑Dumping Agreement regarding MOFCOM's impact analysis. Finally, we address the appeals by the complainants and China regarding the Panel's assessment of MOFCOM's causation analysis.

5.5.1  Price effects – Articles 3.1 and 3.2 of the Anti‑Dumping Agreement

5.143.  Before the Panel, Japan and the European Union submitted that MOFCOM's consideration of whether there had been a significant price undercutting by the imports of Grade B and Grade C HP-SSST was inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement, on three grounds. First, the complainants argued that MOFCOM's analysis of the price effects of Grade C dumped imports was analytically and factually flawed because MOFCOM improperly compared the price of Grade C dumped imports with the price of domestic Grade C, despite significant differences between the quantities of imported and domestic products sold. Second, the complainants asserted that MOFCOM improperly found price undercutting on the basis that the price of Grade C dumped imports was lower than the price of domestic Grade C products, without considering evidence suggesting that Grade C dumped imports did not place downward pressure on domestic prices, or prevent an increase in the prices of those domestic products.^[342] Third, the complainants submitted that MOFCOM improperly extended, without any analysis or explanation, its finding of price undercutting in respect of Grades B and C to the domestic like product as a whole, including domestic Grade A.^[343]

5.144.  The Panel addressed the three grounds of the complainants' claims separately. The Panel concluded that MOFCOM's failure to account properly for differences in quantities when comparing the price of Grade C dumped imports with the domestic Grade C price is inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement.^[344] However, the Panel rejected the complainants' claims that MOFCOM acted inconsistently with Articles 3.1 and 3.2 by failing to consider whether Grade C dumped 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.^[345] The Panel also rejected 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.^[346]

5.145.  On appeal, Japan and the European Union claim that the Panel erred in rejecting their claim that MOFCOM's determination of price undercutting in respect of Grade C imports was inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement by failing to consider whether Grade C dumped 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.^[347] The European Union also appeals the Panel's assessment of whether MOFCOM's findings of price undercutting in respect of Grades B and C were sufficient to comply with MOFCOM's obligation to consider whether or not the prices of the dumped imports had a significant effect on the prices of the domestic product as a whole, including Grade A.^[348] We address each of the issues raised on appeal in turn.

5.5.1.1  The Panel's interpretation of "price undercutting" in its review of MOFCOM's assessment of price effects for Grade C imports

5.5.1.1.1  The Panel's findings

5.146.  Before the Panel, Japan and the European Union asserted that MOFCOM improperly found price undercutting on the basis that the price of Grade C dumped imports was less than the price of domestic Grade C, without also considering evidence suggesting that Grade C dumped imports did not lead to any effect on the domestic prices such as lost sales volumes, downward pressure, or a prevention in the increase of those domestic prices.^[349] The complainants argued that a determination of price undercutting cannot be based solely on the existence of a mathematical difference between import and domestic prices. Instead, given that Article 3.2 is concerned with "the effect of the dumped imports on prices", the complainants contended that an investigating authority must also consider whether any price difference enabled the dumped imports to have an effect on domestic prices, such as a "loss of domestic sales volumes or at least [having] placed downward pressure on domestic prices".^[350]

5.147.  The Panel recalled the Appellate Body's observation that Article 3.2 establishes a "link" between the price of subject imports and the price of domestic like products by requiring that a comparison be made between the two.^[351] The Panel considered that the phrase "whether the effect of" in Article 3.2 applies only in respect of price depression or suppression, on the basis that the text of Article 3.2 does not refer to "whether the effect of subject imports is price undercutting".^[352] The Panel considered, therefore, that the question of whether there had been significant price undercutting within the meaning of Article 3.2 "was a simple factual issue" that could be answered by means of "a comparison of prices for domestic and imported product[s]".^[353]

5.148.  The Panel acknowledged the complainants' references to recognized dictionary definitions of the term "undercut" that spoke to the notion of "supplanting" or "rendering unstable".^[354] However, noting that there was no explicit reference to the notion of "supplanting" or "rendering unstable" in the text or context of Article 3.2, the Panel saw no reason why an investigating authority should not simply consider whether dumped imports "sell at lower prices than" comparable domestic products.^[355]

5.149.  The Panel further reasoned that, if an investigating authority were required to show that price undercutting by dumped 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. According to the Panel, 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 hand, suggests that there is no need to establish price depression or suppression when considering the existence of price undercutting, or vice versa.^[356] The Panel therefore found that, while price undercutting by imports may lead to lost domestic sales, or to 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.^[357]

5.150.  Based on this analysis, the Panel rejected the claims by the complainants that MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement by failing to consider whether Grade C dumped 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.^[358]

5.5.1.1.2  Arguments on appeal

5.151.  On appeal, Japan claims that the Panel erred in its interpretation of Articles 3.1 and 3.2 of the Anti‑Dumping Agreement by finding that the question of whether price undercutting exists is a "simple factual" question that "can be answered … by a comparison of prices for domestic and imported product[s]", and 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)".^[359] Japan submits that the Panel appears to have considered "that an investigating authority may conclude the price effect analysis under Articles 3.1 and 3.2 by simply finding that import prices are mathematically lower than the price of a domestic like product."^[360] Japan submits that the mere fact of dumped import prices being mathematically lower than comparable domestic prices does not, in and of itself, provide a "meaningful basis" for conducting a further causation analysis under Article 3.5 of the Anti‑Dumping Agreement.^[361]

5.152.  The European Union, for its part, claims that the Panel erred in finding that the obligation in Article 3.2 of the Anti‑Dumping Agreement can be met, and was met in this case, on the basis of the fact that, in 2010, the price of the dumped imports under consideration was below the price of the domestic product being compared.^[362] Given MOFCOM's decision to conduct a grade‑by‑grade analysis, the European Union submits that MOFCOM was required under Articles 3.1 and 3.2 to consider more than the "mere juxtaposition" of the price of the dumped imports under consideration and the price of the domestic product being compared.^[363] In particular, it was required to consider whether the juxtaposition of the price of the dumped imports under consideration and the price of the domestic product being compared, together with other relevant facts - such as specifically identified quantitative differences, inverse price movements, a sudden and substantial increase in the domestic prices, an increase in the market share of domestic Grade C products, and an absence of substitutability – have explanatory force for the effect of the prices of the dumped imports under consideration on the prices of the domestic product being compared.^[364]

5.153.  By contrast, China agrees with the Panel's interpretation of "price undercutting" in Article 3.2, and supports the Panel's finding that an investigating authority can "simply consider whether subject imports 'sell at lower prices than' comparable domestic products".^[365]

5.5.1.1.3  Analysis

5.154.  The second sentence of Article 3.2 of the Anti‑Dumping Agreement reads:

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.

5.155.  The second sentence of Article 3.2 begins with the clause "[w]ith regard to the effect of the dumped imports on prices". The definition of the word "effect" is, inter alia, "something accomplished, caused, or produced; a result, a consequence".^[366] By referring to "the effect of the dumped imports", Article 3.2 postulates certain inquiries with regard to the effect of those imports on domestic prices.^[367] In particular, an investigating authority is required to 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."^[368] With regard to the latter inquiry, the Appellate Body has noted that, to examine whether the effect of dumped imports "is otherwise to depress prices to a significant degree or prevent price increases", "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."^[369]

5.156.  The Appellate Body has further noted that the two inquiries under the second sentence of Article 3.2 are separated by the words "or" and "otherwise".^[370] The elements that are relevant to a consideration of whether there has been "significant price undercutting" may, therefore, "differ from those relevant to the consideration of significant price depression and suppression".^[371] We do not read Article 3.2 as suggesting that the "effect" of price undercutting must either be price depression or price suppression. Instead, we agree with the Panel that, while price undercutting by imports may lead to 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."^[372]

5.157.  Having said this, we recall that the focus of these appeals is on the meaning and scope of an investigating authority's obligation to consider whether there has been "significant price undercutting" within the meaning of the second sentence of Article 3.2 of the Anti-Dumping Agreement.

5.158.  Beginning with the ordinary meaning of the term "price undercutting", we note that dictionary definitions of the word "undercut" include: "sell at lower prices than"; and "make unstable or less firm, undermine".^[373] These definitions cover a range of possible meanings. However, in order to determine the ordinary meaning of the term "price undercutting", it should be read in the context in which it appears in Article 3.2. With this in mind, we recall that the introductory part of the second sentence – i.e. "With regard to the effect of the dumped imports on prices" – requires an investigating authority to 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. The meaning of "effect" is "a result" of something else.^[374] In the context of Article 3.2, this suggests inquiries as to the "effect" of dumped imports on domestic prices, and each inquiry links the dumped imports with the prices of the like domestic products.^[375] With respect to "price undercutting", the Appellate Body has found that Article 3.2 thus expressly establishes "a link between the price of subject imports and that of like domestic products" by requiring that a comparison be made between the two.^[376]

5.159.  Still in this regard, we observe that the term "price undercutting" in Article 3.2 is used in present participle, suggesting that the inquiry under Article 3.2 concerns pricing conduct that continues over time. Hence, Article 3.2 does not ask the question of whether an investigating authority can identify an isolated instance of the dumped imports being sold at lower prices than the domestic like products. Rather, a proper reading of "price undercutting" under Article 3.2 suggests that the inquiry requires a dynamic assessment of price developments and trends in the relationship between the prices of the dumped imports and those of domestic like products over the entire period of investigation (POI). An examination of such developments and trends includes assessing whether import and domestic prices are moving in the same or contrary directions, and whether there has been a sudden and substantial increase in the domestic prices.

5.160.  We note that the Panel described the investigating authority's obligation to consider whether there has been price undercutting as consisting of "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[s]."^[377] The Panel also found that an investigating authority should "simply consider whether subject imports 'sell at lower prices than' comparable domestic products".^[378] As we see it, the Panel appears to have assumed that price undercutting, under Article 3.2, is merely concerned with the question of whether there is a mathematical difference, at any point in time during the POI, between the prices of the dumped imports and the comparable domestic products. We disagree. As discussed above, while price undercutting involves situations where imports are being sold at prices lower than the domestic like products, an inquiry into price undercutting under Article 3.2 is not satisfied by a static examination of whether there is a mathematical difference at any point in time during the POI without any assessment of whether or how these prices interact over time. Rather, as noted above, Article 3.2 requires a dynamic assessment of price developments and trends in the relationship between the prices of the dumped imports and those of domestic like products over the duration of the POI.

5.161.  Moreover, we note that the term "price undercutting" in Article 3.2 is qualified by the word "significant", which is relevantly defined as "important, notable, consequential".^[379] As noted above, with respect to "price undercutting", Article 3.2 expressly establishes a link between the price of subject imports and that of like domestic products, by requiring that a comparison be made between the two.^[380] This comparison contemplates a dynamic assessment of price developments and trends in the relationship between the prices of the dumped imports and those of domestic like products over the duration of the POI. The significance of the price undercutting found on the basis of that dynamic assessment is a question of the magnitude of the price undercutting.^[381] What amounts to significant price undercutting – that is, whether the undercutting is important, notable, or consequential – will therefore necessarily depend on the circumstances of each case. In order to assess whether the observed price undercutting is significant, an investigating authority may, depending on the case, rely on all positive evidence relating to the nature of the product or product types at issue, how long the price undercutting has been taking place and to what extent, and, as appropriate, the relative market shares of the product types with respect to which the authority has made a finding of price undercutting. In all cases, an investigating authority must, pursuant to Article 3.1, objectively examine all positive evidence, and may not disregard relevant evidence suggesting that prices of dumped imports have no, or only a limited, effect on domestic prices.^[382]

5.162.  Furthermore, we recall that Article 3 contemplates a "logical progression" in the investigating authority's examination leading to an ultimate determination of whether dumped imports are causing material injury to the domestic industry.^[383] Indeed, as the Appellate Body has explained, the outcome of the price effects inquiry under Article 3.2 must be one that enables the investigating authority to advance its analysis so as to serve as a meaningful basis for its determination as to whether subject imports, through such price effects, are causing injury to the domestic industry.^[384] A proper assessment of price effects under Article 3.2 is, therefore, a necessary building block for the ultimate determination of injury.

5.163.  Turning to the case before us, we observe that the Panel, in its interpretation, focused only on the term "price undercutting" in Article 3.2, and appears not to have accorded any importance to the word "significant" or its implications for the inquiry required under Article 3.2. We are not persuaded that an outcome of a price effects inquiry under Article 3.2 that consists of a mere mathematical comparison is one that could serve as a meaningful basis for an investigating authority's determination of injury and causation. The fact that Article 3.2 expressly establishes "a link between the price of subject imports and that of like domestic products, by requiring that a comparison be made between the two"^[385], does not mean that an investigating authority can comply with its obligations under Article 3.2 by simply considering "whether subject imports 'sell at lower prices than' comparable domestic products".^[386] While an examination of whether there is a price differential between imported and domestic products may be a useful starting point for an analysis of price undercutting, it does not provide a sufficient basis for an investigating authority to satisfy its obligation under Article 3.2.

5.164.  In the light of the above, we find that the Panel erred in its interpretation of Article 3.2 of the Anti‑Dumping Agreement in finding that, in its consideration of whether there has been a significant price undercutting, an investigating authority may "simply consider whether subject imports 'sell at lower prices than' comparable domestic products".^[387] The Panel's finding rejecting the complainants' claims regarding MOFCOM's analysis of whether there was significant price undercutting by Grade C dumped imports was based on the Panel's erroneous interpretation of Article 3.2.^[388] We therefore reverse the Panel's findings, in paragraphs 7.130 and 7.144 of the Panel Reports, paragraph 8.2.a.i of the Japan Panel Report, and paragraph 8.7.b.i. of the EU Panel Report, regarding MOFCOM's finding of price undercutting with respect to Grade C HP‑SSST.

5.165.  This brings us to the question of whether we can complete the legal analysis, as requested by the complainants, and find that MOFCOM's consideration of price undercutting in respect of Grade C HP-SSST is inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement, including because MOFCOM failed to consider whether Grade C dumped imports had any price undercutting effect on domestic Grade C products. In previous cases, the Appellate Body has completed the legal analysis with a view to facilitating the prompt settlement and effective resolution of the dispute.^[389] The Appellate Body has completed the legal analysis when sufficient factual findings by the panel and undisputed facts on the panel record allowed it to do so.^[390]

5.166.  Turning to the case before us, we note China's assertion that, to the extent that the complainants have made arguments challenging the comparability of the prices between the Grade C dumped imports and domestic Grade C, we should exclude such arguments from our consideration.^[391] However, we see no reason why, in our assessment of the claims on appeal, we would be precluded from taking into account the totality of the parties' legal arguments to the extent that they are relevant to the issue raised on appeal.

5.167.  We note the Panel's finding that China acted inconsistently with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement because MOFCOM did not properly establish that the prices of imports and domestic like products were "comparable" for the purpose of considering price undercutting by imports of Grade C products given that it failed "to properly account for differences in quantities when comparing the price of Grade C subject imports with the domestic Grade C price".^[392] This finding by the Panel, not appealed by China, implies that MOFCOM could not have had an objective basis to determine the existence of price undercutting for Grade C HP-SSST.

5.168.  Moreover, we note, as did the Panel, 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."^[393] The Panel stated that this was 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 Grade C, "which actually fell over that period".^[394] As explained above, in order properly to carry out an analysis of whether there had been significant price undercutting by dumped imports of Grade C, MOFCOM would have been required, pursuant to Articles 3.1 and 3.2 of the Anti-Dumping Agreement, to undertake a dynamic assessment of price developments and trends in the relationship between the prices of the dumped imports of Grade C and those of the domestic Grade C over the duration of the POI. Yet, we note that MOFCOM did not explain the basis for its finding that imports of Grade C were underselling domestic Grade C despite the fact that the price of domestic Grade C "increased by 112.80% from 2009-2010", while the prices of dumped imports of Grade C "actually fell over that period".^[395]

5.169.   As explained above, the inquiry under Article 3.2 is concerned with the effect of the dumped imports on the prices of domestic like products. It was therefore not sufficient for MOFCOM to make a finding of price undercutting based only on the fact that, in 2010, there was a mathematical difference between the prices of the imports of Grade C HP‑SSST and those of domestic Grade C HP‑SSST. Instead, MOFCOM ought to have taken into account whether that mathematical difference amounted to significant price undercutting in the light of the facts underlying the investigation and the considerations we explained above. To our minds, an objective examination would have taken into account all the positive evidence relating to, inter alia, the contrary price movements of the Grade C imports and domestic Grade C, as well as the limited period during which the perceived mathematical difference occurred.

5.170.   We further recall that the provisions of Article 3 of the Anti‑Dumping Agreement contemplate a "logical progression" in the investigating authority's examination leading to an ultimate determination of whether dumped imports are causing material injury to the domestic industry.^[396] Accordingly, the outcome of the price effects inquiry under Article 3.2 must be one that enables the investigating authority to advance its analysis and to have a meaningful basis for its determination as to whether dumped imports, through such price effects, are causing injury to the domestic industry.^[397] We do not see how MOFCOM, under the specific facts of this case, could have provided a "meaningful basis" for an analysis of whether the dumped imports were causing injury without considering "record evidence that trends in domestic prices by grade had no apparent relationship in terms of magnitude or direction with trends in import prices".^[398]

5.171.  In the light of the above, we find that MOFCOM's assessment of whether there had been a significant price undercutting by Grade C imports from Japan and the European Union, as compared with the price of domestic Grade C, is inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement.

5.172.  Having addressed the first issue raised on appeal under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement, we now turn to the European Union's claim that the Panel erred in finding that MOFCOM was not required to make a finding of price undercutting for the product as a whole, including Grade A HP-SSST.