China - anti-dumping and countervailing duties

on certain automobiles from the united states

Report of the Panel

TABLE OF CONTENTS

1   Introduction.. 10

1.1   Complaint by the United States. 10

1.2   Panel establishment and composition. 10

1.3   Panel proceedings. 10

1.3.1   General 10

1.3.2   Working procedures concerning Business Confidential Information ("BCI") 11

1.3.3   Additional comments of the United States following the second Panel meeting. 11

2   Factual aspects. 11

3   Parties' requests for findings and recommendations. 13

3.1   United States. 13

3.2   China. 15

4   Arguments of the parties. 15

5   Arguments of the thiRd parties. 15

6   Interim review... 15

6.1   Introduction. 15

6.2   Parties' requests for changes to the interim report 16

7   Findings. 20

7.1   General principles regarding treaty interpretation, the applicable standard of review, and the burden of proof 20

7.1.1   Treaty interpretation. 20

7.1.2   Standard of review.. 20

7.1.3   Burden of proof 21

7.2   Whether the non-confidential summary of the petition was consistent with Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement 21

7.2.1   Provisions at issue. 21

7.2.2   Factual background. 21

7.2.3   Arguments of the parties. 22

7.2.3.1   United States. 22

7.2.3.2   China. 23

7.2.4   Arguments of the third parties. 25

7.2.5   Evaluation by the Panel 25

7.2.5.1   Horizontal assessment 26

7.2.5.2   Confidential information in respect of which data in tables is redacted, but percentage changes are provided. 28

7.2.5.3   Confidential information in respect of which data in tables is wholly redacted, and no percentage changes are provided. 30

7.2.6   Conclusion. 31

7.3   Whether MOFCOM disclosed the "essential facts" as required by Article 6.9 of the Anti-Dumping Agreement 32

7.3.1   Provision at issue. 32

7.3.2   Factual background. 32

7.3.3   Arguments of the parties. 32

7.3.3.1   United States. 32

7.3.3.2   China. 33

7.3.4   Arguments of the third parties. 34

7.3.5   Evaluation by the Panel 34

7.3.6   Conclusion. 39

7.4   Determination of "residual" AD and CVD rates. 39

7.4.1   Factual background. 39

7.4.2   Introduction. 41

7.4.3   Determination of the residual AD duty rate: Alleged violations of Articles 6.8, 6.9, 12.2 and 12.2.2 and Paragraph 1 of Annex II of the Anti-Dumping Agreement 42

7.4.3.1   Provisions at issue. 42

7.4.3.2   Arguments of the parties. 43

7.4.3.3   Arguments of the third parties. 46

7.4.3.4   Evaluation by the Panel 47

7.4.4   Determination of the residual CVD rate: Alleged violations of Articles 12.7, 12.8, 22.3, and 22.5 of the SCM Agreement 56

7.4.4.1   Provisions at issue. 56

7.4.4.2   Arguments of the parties. 57

7.4.4.3   Arguments of the third parties. 58

7.4.4.4   Evaluation by the Panel 58

7.5   Whether MOFCOM properly defined the domestic industry for the purposes of its injury determination  60

7.5.1   Provisions at issue. 60

7.5.2   Factual background. 61

7.5.3   Arguments of the parties. 62

7.5.3.1   United States. 62

7.5.3.2   China. 63

7.5.4   Arguments of the third parties. 65

7.5.5   Evaluation by the Panel 66

7.5.5.1   Whether MOFCOM's domestic industry definition was distorted. 67

7.5.5.2   Whether the domestic industry defined by MOFCOM included producers accounting for a major proportion of total domestic production. 72

7.5.6   Conclusion. 73

7.6   Whether MOFCOM's price effects analysis was consistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement 73

7.6.1   Provisions at issue. 73

7.6.2   Factual background. 74

7.6.3   Arguments of the parties. 75

7.6.3.1   United States. 75

7.6.3.2   China. 76

7.6.4   Arguments of the third parties. 78

7.6.5   Evaluation by the Panel 79

7.6.5.1   Whether MOFCOM's findings on parallel pricing were supported by the evidence. 79

7.6.5.2   Whether MOFCOM's finding of price depression was warranted in light of evidence of overselling by subject imports. 82

7.6.5.3   Whether MOFCOM's reliance on unadjusted AUVs in its price effects analysis was justified  83

7.6.5.4   Whether MOFCOM's findings on market share supported its finding of price depression. 85

7.6.5.5   Whether MOFCOM's domestic industry definition resulted in a flawed price effects analysis  88

7.6.6   Conclusion. 88

7.7   Whether MOFCOM's causation determination was consistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement 88

7.7.1   Provisions at issue. 88

7.7.2   Factual background. 89

7.7.3   Arguments of the parties. 89

7.7.3.1   United States. 89

7.7.3.2   China. 91

7.7.4   Arguments of the third parties. 93

7.7.5   Evaluation by the Panel 94

7.7.5.1   Whether MOFCOM's domestic industry definition and price effects analysis resulted in a flawed causation determination. 95

7.7.5.2   Whether MOFCOM erred in failing to consider the market share of Chinese producers not part of the domestic industry and third country imports in its causation analysis. 95

7.7.5.3   Whether MOFCOM erred in failing to consider industry productivity and labor costs in its causation analysis. 96

7.7.5.4   Whether MOFCOM erred in failing to consider the alleged lack of competitive overlap between domestic and imported automobiles in its causation analysis. 98

7.7.5.5   Whether MOFCOM erred in failing to properly examine known factors other than subject imports causing injury to the domestic industry, and failed to ensure that the injuries caused by these other factors were not attributed to subject imports. 99

7.7.6   Conclusion. 102

7.8   Consequential violations. 103

7.8.1   Provisions at issue. 103

7.8.2   Arguments of the parties. 103

7.8.3   Evaluation by the Panel 103

8   Conclusions and Recommendation.. 104

List of Annexes

ANNEX A

WORKING PROCEDURES OF THE PANEL

ANNEX B

ARGUMENTS OF THE united states

ANNEX C

ARGUMENTS OF china

ANNEX D

ARGUMENTS OF THIRD PARTIES

CASES CITED IN THIS REPORT

ABBREVIATIONS USED IN THis REPORT

1  Introduction

1.1  Complaint by the United States

1.1.  On 5 July 2012, the United States requested consultations with China pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article XXIII:1 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), Article 30 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement") (to the extent that Article 30 incorporates Article XXIII of the GATT 1994), and Article 17.3 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("Anti-Dumping Agreement") with respect to the measures and claims set out below.^[1]

1.2.  Consultations were held on 23 August 2012. No mutually agreed solution was reached.

1.2  Panel establishment and composition

1.3.  On 17 September 2012, the United States requested the establishment of a panel pursuant to Article 6 of the DSU with standard terms of reference.^[2] At its meeting on 23 October 2012, the Dispute Settlement Body ("DSB") established a panel pursuant to the request of the United States in document WT/DS440/2, in accordance with Article 6 of the DSU.^[3]

1.4.  The Panel's terms of reference are the following:

[t]o examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by the United States in document WT/DS440/2 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.^[4]

1.5.  On 1 February 2013, the United States requested the Director-General to determine the composition of the Panel, pursuant to Article 8.7 of the DSU. On 11 February 2013, the Director-General accordingly composed the Panel as follows:

Chairperson:   Mr Pierre Pettigrew

Members:               Ms Andrea Marie Brown

                       Ms Enie Neri De Ross^[5]

1.6.  Colombia, the European Union ("EU"), India, Japan, Korea, Oman, the Kingdom of Saudi Arabia ("Saudi Arabia"), and Turkey notified their interest in participating in the Panel proceedings as third parties.

1.3  Panel proceedings

1.3.1  General

1.7.  After consultation with the parties, the Panel adopted its working procedures^[6] on 28 February 2013 (amended on 16 April 2013) and timetable on 28 February 2013 (finalized on 10 March 2014).

1.8.  The Panel held a first substantive meeting with the parties on 25 June 2013. A session with the third parties took place on 26 June 2013. The Panel held a second substantive meeting with the parties on 15 October 2013. On 15 November 2013, the Panel issued the descriptive part of its report to the parties. The Panel issued its interim report to the parties on 21 February 2014. The Panel issued its final report to the parties on 24 March 2014.

1.3.2   Working procedures concerning Business Confidential Information ("BCI")

1.9.  On 28 February 2013, the Panel adopted additional working procedures concerning BCI.^[7]

1.3.3  Additional comments of the United States following the second Panel meeting

1.10.  On 15 November 2013, the United States requested the Panel's leave to submit additional comments on China's reaction to the US opening statement at the second Panel meeting, which the United States attached to its request letter. On 19 November 2013, China requested the Panel to reject the US request for leave, citing the requirement in Article 12 of the DSU that disputing parties respect the various deadlines for written submissions set by the panel to a dispute. In the alternative, China requested the Panel to grant it a reasonable period of time to provide comments on the US additional comments.

1.11.  On 20 November 2013, the Panel notified the parties that it would admit the US additional comments into the record, and gave China until close of business on 27 November 2013 to react to these additional comments. The Panel also adjusted the deadline for the parties' comments on the draft descriptive part of the Panel report to accommodate this additional comment period. On 27 November 2013, China submitted its comments on the US additional comments.  

2  Factual aspects

2.1.  The US claims concern various aspects of the anti-dumping ("AD") and countervailing duty ("CVD") measures imposed by China on certain automobiles from the United States with engine displacements equal to or greater than 2500 cubic centimetres ("cc"), set forth in MOFCOM Notices Nos. 20 and 84 of 2011, and accompanying annexes, as well as various aspects of the investigations leading to the imposition of these measures.^[8] Notice No. 20 of 2011 contains MOFCOM's final determinations in the AD and CVD investigations of certain imports of automobiles from the United States. In that Notice, MOFCOM found that the dumped and subsidized imports from the United States had caused material injury to the domestic industry. MOFCOM determined individual dumping margins for five of the six respondent companies in the AD investigation. The sixth respondent company (Ford Motor Company) did not export during the periods of investigation ("POI"), and therefore MOFCOM did not calculate an individual dumping margin rate for it. Furthermore, MOFCOM determined individual CVD rates for all six respondent companies in the CVD investigation. Despite finding dumping, subsidization, and injury, MOFCOM provisionally determined not to levy AD or CVD rates on US automobiles as of the date of its final determination.^[9] Subsequently, MOFCOM issued Notice No. 84 of 2011, which authorized the levying of AD and CVD rates on certain US automobiles effective 15 December 2011, at the rates established in the final determination.

2.2.  On 9 September 2009, the China Association of Automobile Manufacturers ("CAAM"), an association of Chinese domestic automobile manufacturers, filed a petition seeking the imposition of anti-dumping and countervailing duties on imports of certain automobiles with an engine capacity equal to or greater than 2000cc from the United States.^[10] On 19 October 2009, the CAAM filed an amended petition containing more industry data.^[11] The original petition identified General Motors LLC ("GM USA"), Ford Motor Company ("Ford USA") and Chrysler Group LLC ("Chrysler USA") as known exporters of the subject product.^[12] MOFCOM initiated AD and CVD investigations on 6 November 2009.^[13]

2.3.  In its notices of initiation, MOFCOM set the POI for the AD and CVD investigations as 1 September 2008 to 31 August 2009, and for the injury aspect of the investigations as 1 January 2006 to 30 September 2009.^[14] Also in its notices of initiation, MOFCOM set a 20-day deadline for interested parties to register to participate in the AD and CVD investigations.^[15] GM USA, Ford USA, Chrysler USA, Mercedes-Benz USA International Inc. and Daimler AG (collectively, "Mercedes-Benz USA"), BMW Manufacturing LLC ("BMW USA"), Honda of America Mfg. Inc. and American Honda Motor Co., Inc. (collectively, "Honda USA"), and Mitsubishi North America Inc. ("Mitsubishi USA") registered as respondent companies in both investigations prior to the closing date of 26 November 2009. The Office of the United States Trade Representative ("USTR") registered to participate on behalf of the United States as a CVD respondent within the period for registration.^[16] MOFCOM sent these respondents AD and/or CVD questionnaires on 9 December 2009. The deadline for responses to these questionnaires was extended upon request to 29 January 2010. All respondents except Mitsubishi USA submitted responses to MOFCOM's questionnaires by this date.^[17]

2.4.  MOFCOM issued separate notices, also on 6 November 2009, inviting interested parties to register to participate in its AD and CVD injury investigations.^[18] The CAAM registered to participate in these investigations.^[19] No other interested parties registered as domestic producers. Concurrently with their responses to the notices of initiation, GM USA, Ford USA, Chrysler USA, Mercedes-Benz USA, BMW USA, Honda USA, and Mitsubishi USA registered to participate as foreign producers and exporters in MOFCOM's injury investigations prior to the closing date of 26 November 2009 specified in the injury registration notices.^[20] Mitsubishi USA subsequently withdrew from the investigations, on 28 December 2009.^[21]

2.5.  MOFCOM issued notices of extension in both investigations on 6 November 2010.^[22] On 10 March 2011, MOFCOM sent supplemental injury questionnaires to the remaining respondents. All remaining respondents submitted their responses on time.^[23] On 8 March 2011, the petitioner applied to have the scope of the investigations amended to include only imports of certain US automobiles of a cylinder capacity equal to or greater than 2500cc.^[24] The petitioner submitted supplementary domestic industry data on such automobiles on 21 March 2011.^[25] MOFCOM accepted the petitioner's application, and adjusted the scope of the product under investigation to include only saloon cars and cross-country cars of a cylinder capacity equal to or greater than 2500cc.^[26]

2.6.  MOFCOM issued its preliminary determinations on 2 April 2011. It found that the subject product was dumped and subsidized, and that the dumped and subsidized imports caused material injury to the domestic industry.^[27] MOFCOM established the following AD and CVD rates in its preliminary determinations:

Table 1: Preliminary Duty Rates

2.7.  MOFCOM issued its final determinations on 5 May 2011. It found that the subject product was dumped and subsidized, and that the dumped and subsidized imports caused injury to the domestic industry.^[28] MOFCOM established the following AD and CVD rates in its final determinations:

Table 2: Final Duty Rates

3  Parties' requests for findings and recommendations

3.1  United States

3.1.  The United States requests that the Panel find as follows^[29]:

a.      With respect to the alleged procedural violations, that:

i.        MOFCOM acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement by failing to require the petitioner to provide adequate non-confidential summaries of allegedly confidential information.

ii.       MOFCOM acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by failing to disclose essential facts to US respondents, particularly the data and calculations underlying their respective dumping margins.

b.     With respect to MOFCOM's reasoning and conclusions for its AD determinations, that:

i.        MOFCOM acted inconsistently with Articles 6.8, 6.9, 12.2, 12.2.2, and paragraph 1 of Annex II of the Anti-Dumping Agreement by: (i) imposing an "all others" rate based on facts available to producers that MOFCOM did not notify of the information required of them, and that did not refuse to provide necessary information or otherwise impede the dumping investigation; (ii) failing to inform the United States and other interested parties of the essential facts under consideration that formed the basis for the application of facts available or the margin calculation; and (iii) failing to disclose in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by MOFCOM, or all relevant information on matters of fact and law and reasons which led to the imposition of final measures.

c.      With respect to MOFCOM's reasoning and conclusions for its CVD determinations, that:

i.        MOFCOM acted inconsistently with Articles 12.7, 12.8, 22.3, and 22.5 of the SCM Agreement by: (i) imposing an "all others" rate based on facts available to producers that MOFCOM did not notify of the information required of them, and that did not refuse to provide necessary information or otherwise impede the CVD investigation; (ii) failing to inform the United States and other interested parties of the essential facts under consideration that formed the basis for this calculation; and (iii) failing to disclose in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by MOFCOM, or all relevant information on matters of fact and law and reasons which have led to the imposition of final measures.

d.     With respect to MOFCOM's reasoning and conclusions for its injury determinations, that:

i.        MOFCOM acted inconsistently with Articles 3.1 and 4.1 of the Anti-Dumping Agreement and Articles 15.1 and 16.1 of the SCM Agreement by defining the domestic industry to include only those firms that supported the AD and CVD investigations and by failing to ensure that the domestic industry, as MOFCOM defined it, was capable of providing ample data that would ensure an accurate injury analysis.

ii.       MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement because its price effects finding was not based on positive evidence and did not involve an objective examination, as: (i) MOFCOM's finding of parallel pricing was contradicted by record evidence and, in any event, MOFCOM failed to explain the relevance of parallel pricing; (ii) MOFCOM failed to address evidence that subject imports oversold the domestic like product during the period in which MOFCOM identified price depression; (iii) MOFCOM failed to make needed adjustments to average unit values that it used in its price effects analysis; (iv) MOFCOM failed to consider or address evidence that the market share of domestic products increased along with that of subject imports; and (v) MOFCOM's price effects analysis was compromised by its flawed domestic industry definition.

iii.     MOFCOM acted inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement because its causation analysis was neither objective nor based on positive evidence, as: (i) MOFCOM's causation analysis was premised on its flawed domestic industry definition and its flawed price effects analysis; (ii) MOFCOM failed to examine evidence indicating that subject imports took market share from non-subject imports and not from domestic like products; (iii) MOFCOM failed to examine evidence regarding the Chinese industry's sharp decline in productivity throughout the period of investigation; (iv) MOFCOM failed to examine the lack of competition between subject imports and the domestic like products; (v) MOFCOM failed to examine the sharp drop in demand during the period in which it found material injury; (vi) MOFCOM failed to examine the effect of an increase in sales tax on larger engine vehicles during the period in which it found material injury; and (vii) MOFCOM failed to examine the effect of increases in average wages and employment over the period of investigation on the domestic industry's pre-tax profits.

e.     And, as a consequence of these violations, that:

i.        MOFCOM's conduct in the AD investigation violated Article 1 of the Anti‑Dumping Agreement.

ii.       MOFCOM's conduct in the CVD investigation violated Article 10 of the SCM Agreement.

3.2.  The United States further requests that, pursuant to Article 19.1 of the DSU, the Panel recommend that China bring its measures into conformity with the Anti-Dumping and SCM Agreements.^[30]

3.2  China

3.3.  China requests that the Panel reject the US claims, finding instead that MOFCOM's determinations in the underlying investigations were fully consistent with China's WTO rights and obligations.^[31]

4  Arguments of the parties

4.1.  The arguments of the parties, other than in their answers to questions, are reflected in their written submissions, oral statements or executive summaries thereof, provided to the Panel in accordance with paragraph 18 of the working procedures adopted by the Panel (see Annexes B and C).

5  Arguments of the thiRd parties

5.1.  The arguments of the third parties, other than in their answers to questions, are reflected in their written submissions, oral statements or executive summaries thereof, provided to the Panel in accordance with paragraph 18 of the working procedures adopted by the Panel (see Annex D). Colombia, India and Oman did not submit written or oral arguments to the Panel.

6  Interim review

6.1  Introduction

6.1.  On 21 February 2014, we issued our interim report to the parties. In accordance with our working procedures, the United States submitted a written request for the review of precise aspects of the interim report on 5 March 2014. China did not submit its written request by the agreed deadline, citing technical communications problems between its representation in Geneva, and Beijing. China did submit its written request for the review of precise aspects of the interim report on 6 March 2014. On 10 March 2014, the United States requested that, given the delay in China's submission of its written request for the review of the interim report, the Panel grant the parties a one-day extension, until 13 March 2014, to provide comments on each other’s written request. We granted the US request, changed the date in our timetable for the submission of parties' comments on each other's written request from 12 to 13 March and communicated this to the parties on 10 March 2014. Neither party requested an additional meeting with the Panel.

6.2.  In this section of our report, we explain how we addressed the changes of a substantive nature requested by the parties. As a result of the changes that we have made to our interim report, the numbering of footnotes in the final report has changed from the interim report. However, none of these changes have affected the numbering of the footnotes referred to below in our evaluation of the parties' requests for changes to the interim report. The numbering of paragraphs is unchanged from the interim report. We have also corrected typographical and other non-substantive errors throughout the report, including those identified by the parties, which are not referred to specifically below.

6.2  Parties' requests for changes to the interim report

6.3.  Paragraph 7.30: China notes that the sixth sentence of this paragraph mischaracterizes China's argument regarding the relevance of US respondents' failure to object to the non-confidential summary of the petition in the underlying investigations to our assessment of the US claims under Articles 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of the SCM Agreement and requests that the sentence be deleted. Specifically, China underlines that its argument is that such failure should impact the Panel's evaluation of the merits of the US claims, not that it precludes the Panel from addressing such claims. China therefore requests that this sentence be deleted. The United States has not commented on this request by China.

6.4.  Since the requested modification represents an accurate description of China's argument, we have granted it. To this end, we have not deleted but modified the sentence cited by China and made further modifications to paragraph 7.30 to preserve its internal coherence in light of this change.

6.5.  Paragraph 7.70: China takes issue with the description by the Panel of the issue before it in respect of the US claim under Article 6.9 of the Anti-Dumping Agreement. China notes that in paragraph 7.70 the Panel describes the issue before it as the adequacy of MOFCOM's disclosure and requests the Panel to clarify that another issue presented by this claim is the extent of the burden of proof on the United States as the complaining party. The United States disagrees with China and argues that the issue before the Panel is correctly described as whether MOFCOM's disclosure letters contained the essential facts and that in analysing that issue the Panel devotes considerable attention to whether the United States has made a prima facie case.

6.6.  In paragraphs 7.69 and 7.70 of our report, we identify the crux of the US claim under Article 6.9 of the Anti-Dumping Agreement and note that the principal question that this claim raises is whether or not MOFCOM disclosed essential facts to the US respondents as required under Article 6.9 of the Anti-Dumping Agreement. In the three paragraphs that follow, we analyse the legal provision at issue and in paragraph 7.74 we note that the resolution of the issue presented by this claim centres on burden of proof. From paragraph 7.75 onwards, we discuss the allocation of the burden of proof in the particular circumstances of this dispute and come to a conclusion in paragraph 7.86. As such, our assessment of this claim follows a logical path and correctly describes the issue before us. In our view, it is obvious that the central element of our assessment of the issue raised under this claim is the incidence of the burden of proof but the issue is whether MOFCOM disclosed essential facts pursuant to Article 6.9 of the Anti-Dumping Agreement. We therefore have not modified paragraph 7.70 of the report.

6.7.  Paragraphs 7.72 and 7.73: China contends that the Panel's expression of agreement with the reasoning of the panel in China – Broiler Products that the formula used by MOFCOM to calculate dumping margins constitutes an essential fact within the meaning of Article 6.9 of the Anti-Dumping Agreement is not well explained and holds MOFCOM to a broader standard of disclosure than that contemplated in this provision. In China's view, the Panel fails to explain how a formula can constitute a "fact", rather than "reasoning" within the meaning of Article 6.9. The United States asserts that China offers no basis for the Panel to modify its reasoning or findings in these paragraphs and that therefore China's request should not be granted.

6.8.  In paragraphs 7.71-7.73 of the report, we note the reasoning of previous panels, including the panel in China – Broiler Products, with respect to what constitutes an essential fact within the meaning of Article 6.9 of the Anti-Dumping Agreement and express our agreement with that reasoning. In our view, paragraph 7.72 as originally drafted explained clearly why we agree with the reasoning of the panel in China – Broiler Products on whether or not the formula used in dumping margin calculations constitutes an essential fact. We nevertheless modified paragraph 7.73 to provide further clarity in this regard.

6.9.  Paragraph 7.77: China disagrees with the Panel's finding that the United States satisfied its burden of proof by submitting to the Panel MOFCOM's disclosure letter to the US government and assertions about its understanding of the substance of MOFCOM's disclosure letters to the US company respondents. China argues that documents other than those forming the basis for the US claim and speculation about the contents of those documents do not suffice to discharge the burden of proof on the United States in respect of this claim. China considers that the interim report does not adequately explain how the burden of proof shifted to China. For the same reasons, China asserts that the Panel had no factual basis to make findings as to the adequacy of MOFCOM's company-specific disclosure documents. The United States argues that China's request should be rejected because the Panel adequately explains why the burden of proof shifted to China and that it is unclear what review China is seeking through this request.

6.10.  China's argument regarding the shifting of the burden of proof to China simply repeats the arguments made by China throughout these proceedings and which we address in our evaluation of the US claim. As for China's assertion that the Panel made findings regarding the adequacy of MOFCOM's company-specific disclosures, we note that we have not made such a finding. China does not refer to a specific part of the interim report where such a finding is made. Indeed, in relation to the letter submitted by Mercedes-Benz USA, we note in paragraph 7.84 of the report that "[w]hile this [letter] does not demonstrate, in itself, that the disclosure was inconsistent with the requirements of Article 6.9, it does lend support to the US claim, and is unrebutted by any evidence put forward by China." This statement shows that in finding that the United States satisfied its burden of proof in respect of this claim, we did not make any legal conclusions regarding the substantive adequacy of the company-specific disclosures sent by MOFCOM. We therefore have not modified our report in this regard.

6.11.   Paragraph 7.77, footnote 166: China notes our reference to the panel report in Argentina – Textiles and Apparel regarding a responding party's obligation to provide documents in its sole possession, including in particular paragraph 6.40 of that report where the panel states that this obligation "does not arise until the claimant has done its best to secure evidence and has actually produced some prima facie evidence in support of its case." While China agrees with this reasoning, it argues that in our report, we do not hold the United States to this standard. More specifically, China contends that our report does not explain how the burden to produce company-specific disclosure letters could have shifted to China without the United States doing its best to provide such letters. The United States has not commented on this request by China.

6.12.  In paragraph 7.77 of our report, we explain the reasons that led us to conclude that the United States had done its best in order to discharge its burden of proof regarding the alleged inadequacy of the company-specific disclosures sent by MOFCOM. Specifically, we note the fact that, in the normal course of an AD investigation, company-specific disclosures are only sent to the companies subject to the investigation, not to the government of the exporting Member and that therefore it is normal for the United States not to have the actual company-specific disclosures in its possession. Therefore, we have not made any substantive modifications to our report in this regard. We did however add one sentence to the text of footnote 166 specifically relating the reasoning of the panel in Argentina – Textiles and Apparel to the circumstances of this dispute.

6.13.  Paragraph 7.78: China argues that the Panel's statement that the part of the record cited by China as demonstrating that company-specific disclosure letters were in fact sent to US respondents gives the wrong impression that China attempted before the Panel to demonstrate the substantive adequacy of those letters. China therefore requests that this paragraph be deleted from the report. The United States disagrees with China, arguing that China did in fact endeavour to defend the adequacy of the company-specific disclosure letters. In the US view, therefore, this paragraph should not be deleted.

6.14.  We accept China's representation that it did not defend the substantive adequacy of MOFCOM's company-specific disclosure letters on the basis that the burden of proof did not shift to it to do so. Paragraph 7.78 of our report was not meant to say otherwise. The part of the final determination quoted in that paragraph is an element of China's argument in response to the US claim under Article 6.9 of the Anti-Dumping Agreement, other than its burden of proof argument. However, because China's comment concerns the description of its own arguments in respect of this claim, we have modified the text of this paragraph to clarify that China indeed did not argue before the Panel that the company-specific disclosure letters sent to US respondents were substantively in conformity with the requirements of Article 6.9 of the Anti-Dumping Agreement.

6.15.  Paragraphs 7.79 to 7.83: China expresses concern regarding the Panel's acceptance of the Mercedes-Benz USA letter, submitted by the United States during the second Panel meeting, into evidence. China considers that the Panel's approach in this regard may set a precedent that could encourage parties in future WTO panel proceedings to abuse panel flexibility by delaying the submission of evidence that, as with the Mercedes-Benz USA letter, could have been submitted earlier. Accordingly, China requests the Panel to clarify that circumstances may arise in which the submission of relevant evidence at the second Panel meeting would compromise the other party's rights of due process. China otherwise reiterates its disagreement with the Panel's finding that the Mercedes-Benz USA letter, which is a document other than the actual disclosure letters sent by MOFCOM to the US respondents, can constitute an adequate basis for the burden of proof to shift to China. The United States argues that China expresses dissatisfaction with the Panel's conclusion without offering specific suggestions on how to correct the perceived problems. In the US view, the Panel's statements are clear and China's concerns on due process and potential adverse precedent are misplaced. Therefore, the United States contends that China's request should be dismissed.

6.16.  In our view, paragraphs 7.79-7.83 of our report make it abundantly clear that we discuss the issue of the acceptance of the Mercedes-Benz USA letter into evidence in light of the particular circumstances of this dispute, and do not consider that the same outcome would be required in future WTO disputes, as argued by China. We nevertheless added language to paragraph 7.83 to further clarify this. As for China's argument that the Mercedes-Benz USA letter does not suffice to shift the burden of proof to China, this simply repeats China's argument regarding this claim, which we thoroughly addressed in our decision. In this regard, we note that there are two types of burdens, namely the burden of coming forward with evidence and the burden of proof. With respect to the US claim under Article 6.9 of the Anti-Dumping Agreement, it is the former, not the latter, burden that shifted to China in these proceedings. The United States made its claim and came forward with some evidence to support it. While the burden of proof always rested on the United States as the party making the claim, for the reasons that are explained as from paragraph 7.74 of our report, we considered that the burden of coming forward with evidence shifted to China, which burden China has failed to satisfy despite the Panel's invitation to submit MOFCOM's company-specific disclosure letters. We therefore do not make any modification to our report in this regard.

6.17.  Paragraph 7.125 and footnote 215: The United States requests that the Panel modify the last sentence of this paragraph to more accurately reflect its argument that the unknown US exporters were not notified of the information required and thus cannot be said to have failed to cooperate and that therefore MOFCOM's notification efforts were insufficient to justify the use of facts available in the calculation of the residual duty rates. The United States also proposes to add a portion of its response to Panel question No. 7 to footnote 215 of the report in order to give a more precise description of its argument. China has not commented on this request by the United States.

6.18.  Given that the requested modification concerns the description of the US own arguments as presented to the Panel and that it has a basis on the record, we have granted it and modified paragraph 7.125 accordingly. We have also added to footnote 215 the part of the US answer to Panel question No. 7 cited by the United States.

6.19.  Paragraphs 7.136 and 7.138: China takes issue with our finding that the disparity between the information required in the registration process and that subsequently requested through exporter's questionnaires undermines the due process rights of the parties concerned. Specifically, China argues that MOFCOM could reasonably conclude that by not registering for participation, the relevant US respondents conveyed to MOFCOM their decision not to provide any information. China draws attention to our finding that MOFCOM's efforts in reaching out to the US respondents were adequate, and contends that therefore MOFCOM could conclude that non-registering US respondents would respond to none of MOFCOM's subsequent information requests. China therefore requests that we modify our finding concerning the impact of MOFCOM's use of facts available on the due process rights of the potential US respondents. China also reiterates its point of view that a decision not to participate in an investigation is tantamount to a decision to refuse access to relevant information within the meaning of Article 6.8 of the Anti-Dumping Agreement. China therefore disagrees with our finding that failure to register to participate in an investigation does not establish a legal prerequisite allowing the use of facts available in the calculation of residual duty rates. The United States argues that China's request regarding these two paragraphs amounts to re-arguing the merits of the claim and therefore should be dismissed.

6.20.  These aspects of China's request merely repeat China's main argument regarding this particular claim, which we rejected for the reasons that are explained in paragraphs 7.129-7.140 of our report. We therefore see no reason to make any modification to our report in this regard.

6.21.  Paragraphs 7.281 and 7.282: China disagrees with two aspects of the Panel's finding that MOFCOM should have inquired further into price comparability issues in the course of its price depression analysis. First, in China's view, adjusting for price comparability is not necessary in a price depression analysis, where an IA is not comparing prices, but rather is assessing price trends over time. China contends that the Panel's finding goes beyond that of the Appellate Body in China – GOES and prior panels, insofar as WTO precedent on price comparability is limited to instances of price undercutting. Second, China submits that the Panel has applied an unduly rigid standard in finding that MOFCOM should have known that subject imports were not "identical" to the domestic like product. China considers that the issue is not whether the products were "identical", but rather whether they were sufficiently similar such that adjustments for price comparability were not needed. China refers the Panel in this regard to MOFCOM's determination that there was sufficient competitive overlap between both baskets of goods, which in China's view obviated the need for price adjustments. China adds that MOFCOM found no evidence that the product mix of either basket of goods changed over time, which in its view further obviated the need for price adjustments in MOFCOM's price depression analysis. The United States submits that China's request repeats its arguments regarding this claim and offers no basis for the Panel to modify its findings in these two paragraphs. China does not even request the Panel to make modifications in this regard. The United States also argues that China mischaracterises the Panel's findings by arguing that the Panel reasons that adjustments are needed when the goods being compared are not identical. The United States therefore requests that China's request be rejected.

6.22.  With respect to China's first comment, we have rejected China's contention that price adjustments are only required in a price undercutting analysis, as distinct from a price depression (or suppression) analysis. For the reasons set forth in paragraph 7.277 and footnote 438 of our report, we consider that the Appellate Body's findings in China – GOES on the importance of ensuring price comparability between subject imports and the domestic like product, with which we agree, apply as well in the context of price depression analyses. We also reject China's contention, in its second comment, that price adjustments were not required in MOFCOM's investigations, having regard to the competitive overlap between subject imports and the domestic like product, and static product mix during the POI. Nevertheless, we have added a footnote to paragraph 7.281 to clarify that price adjustments are not necessarily required where subject imports and the domestic like product are identical.

6.23.  Paragraph 7.288: The United States requests that the Panel modify this paragraph to more accurately reflect its arguments. Specifically, the United States maintains that its argument is not that subject imports took market share from Chinese producers not part of the domestic industry as defined by MOFCOM and third country imports, as opposed to taking it from the domestic industry. Rather, the US argument was that Chinese producers not part of the domestic industry and third country imports gained most of the market share lost by the domestic industry, while the market share of subject imports increased only very modestly. China argues that the United States did in fact argue that subject imports took market share from Chinese producers outside the domestic industry definition and third country imports and that therefore the US request should be dismissed.

6.24.  We note that the requested modification represents an accurate description of the US argument as presented to the Panel. We disagree with China's contention that the United States argued in this context that subject imports took market share from Chinese producers outside the domestic industry definition and third country imports. In support of its comment, China refers to the statement in paragraph 79 of the US opening statement at the first substantive meeting with the Panel. That statement, however, pertains to the developments between interim 2008-interim 2009, not between 2006-2007 which is what the US request is about. We have therefore granted the request and modified paragraph 7.288 of the report accordingly. We note that the description of the US argument in the modified paragraph 7.288 is identical to that in paragraph 7.242 of our report.

6.25.  Paragraph 7.303: The United States requests that the Panel modify the penultimate sentence of this paragraph to better describe its argument that the domestic industry lost nearly half its market share in the 2006-2008 period. China has not commented on this modification requested by the United States.

6.26.  Given that the modification requested accurately reflects the US argument as presented to the Panel, we have granted it and modified the penultimate sentence of paragraph 7.303 accordingly.

6.27.  Paragraph 8.3: China states that the AD and CVD measures at issue in this dispute were terminated on 15 December 2013 and that therefore there is no basis for the Panel to make recommendations under Article 19.1 of the DSU. In support of its request, China cites the WTO jurisprudence on whether a panel should make recommendations regarding a measure that is no longer in existence. On this basis, China requests that the recommendation in paragraph 8.3 of our report be deleted. The United States notes that there is no evidence on the record of this dispute to support China's assertion that the AD and CVD measures at issue have been terminated. If China's request is premised on the Panel's accepting China's assertion as new evidence, the United States asserts that the Panel should reject the introduction of new evidence during the interim review stage of the case. The United States argues that Article 19.1 of the DSU requires the Panel to make recommendations in these circumstances. In the view of the United States, whether the measures at issue are still in force, whether they have been replaced by new measures and whether any such new measures are WTO-consistent are matters that have to be discussed by the parties to the dispute following the adoption of the Panel report by the DSB. On this basis, the United States contends that China's request should be rejected and the Panel should make recommendations regarding the measures that are found to be inconsistent with China's WTO obligations.

6.28.  While China argues that the AD and CVD measures at issue in this dispute were repealed on 15 December 2013, China has not brought to our attention any official documentation that would support this contention. Therefore, as far as the official record of this dispute is concerned, we are not in a position to find that the measures have been terminated. Hence, we have no basis to grant China's request. We therefore dismiss China's request and maintain our recommendation, as provided for in Article 19.1 of the DSU, that China bring its measures into conformity with its obligations under the Anti-Dumping and SCM Agreements.

7  Findings

7.1  General principles regarding treaty interpretation, the applicable standard of review, and the burden of proof

7.1.1  Treaty interpretation

7.1.  Article 3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". Likewise, Article 17.6(ii) of the Anti-Dumping Agreement requires panels to interpret that Agreement's provisions in accordance with the customary rules of interpretation of public international law. It is generally accepted that the principles codified in Articles 31 and 32 of the Vienna Convention on the Law of Treaties are such customary rules.

7.2.  Article 17.6(ii) of the Anti-Dumping Agreement also provides that if a panel finds that a provision of the Anti-Dumping Agreement admits of more than one permissible interpretation, it shall uphold a measure that rests upon one of those interpretations.

7.1.2  Standard of review

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

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

7.4.  The Appellate Body has explained that where a panel is reviewing an investigating authority's ("IA"'s) determination, the "objective assessment" standard in Article 11 of the DSU requires a panel to review whether the authorities have provided a reasoned and adequate explanation as to (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings support the overall determination.^[32] Furthermore, in addition to the obligation to conduct an objective assessment under Article 11 of the DSU, in AD disputes, Article 17.6(i) of the Anti‑Dumping Agreement provides that:

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

7.5.  The Appellate Body has clarified that a panel should not conduct a de novo review of the evidence, nor substitute its judgment for that of the IA. A panel must limit its examination to the evidence that was before the IA during the course of the investigation and must take into account all such evidence submitted by the parties to the dispute.^[33] At the same time, a panel must not simply defer to the conclusions of the IA; a panel's examination of those conclusions must be "in-depth" and "critical and searching".^[34]

7.1.3  Burden of proof

7.6.  The general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.^[35] Therefore, as the complaining party, the United States bears the burden of demonstrating that certain aspects of the AD and CVD measures at issue are inconsistent with the Anti-Dumping Agreement and the SCM Agreement. The Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima facie case, namely a case which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party.^[36] Finally, it is generally for each party asserting a fact to provide proof thereof.^[37]

7.2  Whether the non-confidential summary of the petition was consistent with Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement

7.2.1  Provisions at issue

7.7.  Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement provide:

[t]he authorities shall require [interested Members or] interested parties providing confidential information to furnish non confidential summaries thereof. These summaries shall be in sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence. In exceptional circumstances, such [Members or] parties may indicate that such information is not susceptible of summary. In such exceptional circumstances, a statement of the reasons why summarization is not possible must be provided.^[38]

7.2.2  Factual background

7.8.  The petitioner, the CAAM, filed a single petition on behalf of Chinese producers of automobiles requesting the initiation of both the AD and CVD investigations on 9 September 2009^[39], which it amended with additional data on 19 October 2009.^[40] The CAAM submitted two versions of the petition to MOFCOM: a confidential version and a non-confidential version. The non-confidential version includes a section entitled "Application for Confidentiality", which contains the following statement under the heading "Non-confidential Summary":

[f]or the purpose that the interested parties of this case can learn the comprehensive substance of the information treated as confidential, the petitioner hereby makes the non-confidential part for the petition and annexes, in which the explanation and non-confidential summary are provided for the information and annexes treated as confidential. Since the confidential part of the petition involves the business confidential information of CAAM and the domestic industry represented by CAAM, to whom the disclosure of the confidential information would cause a significantly adverse effect, the petitioner hereby requests to treat it as confidential.^[41]

7.9.  Injury data was presented in the petition in a section entitled "Impact of the Subject Product on Domestic Industry" for the following periods: 2006, 2007, 2008, the first three quarters of 2008 ("interim 2008"), and the first three quarters of 2009 ("interim 2009").^[42] The non-confidential version of the petition redacts information pertaining to various injury factors, including the factors identified by the United States in its complaint.^[43] Where information is redacted, the non-confidential version of the petition states "Confidential".^[44] Where confidential information is redacted, a non-confidential summary of the redacted information is provided. It is the adequacy of some of those summaries that is in dispute.

7.10.  Each non-confidential summary contains a table in which the column or row displaying aggregated yearly data for the domestic industry is redacted. The tables do not present this information in the same format. In some cases, the data is presented in rows, with the POI years identified as column headings, and in others the data is presented in columns, with the POI years identified as row headings. These tables may contain a second column or row, depending on how information is presented, displaying year-on-year percentage changes in the redacted data over the POI. Each summary is followed by text describing trends in the table. Some summaries also contain a graph showing a trend line representing the data whose X-axis (horizontal) is labelled with yearly intervals corresponding to the POI but whose Y-axis (vertical) is unlabelled.

7.2.3  Arguments of the parties

7.2.3.1  United States

7.11.  The United States argues that MOFCOM acted inconsistently with Article 6.5.1 of the Anti‑Dumping Agreement and Article 12.4.1 of the SCM Agreement by failing to require the petitioner to provide adequate non-confidential summaries of certain confidential information submitted in the petition.^[45] The United States observes that the obligation to either provide a non-confidential summary or an explanation of why summarisation is not possible rests on the interested party submitting the information, and not on the IA.^[46] The United States contends that MOFCOM failed to require the petitioner either to prepare adequate non-confidential summaries of information contained in the confidential version of the petition, or to provide an explanation as to why this information was not susceptible to summarization.^[47]

7.12.  In assessing the conformity of the non-confidential summaries at issue with Articles 6.5.1 and 12.4.1, the United States disagrees with China's suggestion that the obligation to provide adequate non-confidential summaries under these provisions should be assessed in light of the particular substantive provisions contained in Article 3.4 of the Anti-Dumping Agreement and Article 15.4 of the SCM Agreement, and notes that these provisions contain no cross-reference to Articles 6.5.1 and 12.4.1, and vice-versa.^[48]

7.13.  The United States specifies 12 injury factors with respect to which the non-confidential version of the petition allegedly contained inadequate summaries: sales-to-output ratio, return on investment, salary, apparent consumption, product capacity, output, sales volume, inventory, pre-tax profit, number of employees, productivity, and cash flow.^[49] The United States alleges the following deficiencies in the non-confidential summaries: (i) the textual explanations provided consist of general statements addressing topics only peripherally related to the confidential information^[50], (ii) the year-on-year percentage changes provided in tables lack any indication of the significance of the changes^[51], and (iii) the trend lines provided are labelled only by year, and lack any indication of scale, without which, the United States argues, US respondents could not form a reasonable understanding of the substance of the confidential information.^[52]

7.14.  The United States submits that MOFCOM could have provided an average of absolute values per year in the tables, instead of percentage changes. This would have given US respondents a reasonable understanding of the substance of the confidential information.^[53] The United States contends in this regard that reading the percentage changes contained in some of the tables in conjunction with the trend lines in the non-confidential summaries at issue does not remedy these inconsistencies, insofar as both elements are themselves inconsistent with Articles 6.5.1 and 12.4.1.^[54]

7.15.   The United States submits that insofar as China argues that non-confidential summaries of some of the confidential information at issue can be ascertained in terms of their relationships with other data in the non-confidential version of the petition, this would require that interested parties infer, derive and piece together possible non-confidential summaries in a manner inconsistent with Articles 6.5.1 and 12.4.1.^[55]

7.16.  The United States disagrees with China's contention that MOFCOM was only obligated to require adequate non-confidential summaries where an interested party objected to the adequacy of such summaries in the underlying investigations. Noting that it is the IA's responsibility, not that of opposing interested parties, to ensure that adequate non-confidential summaries accompany any confidential information submitted by an interested party in an investigation, the United States contends that the fact that no US respondent objected to the adequacy of the non-confidential summaries in the course of these investigations is immaterial to a finding of a violation of Articles 6.5.1 and 12.4.1.^[56]

7.2.3.2  China

7.17.  China argues that since MOFCOM deemed the non-confidential summaries submitted by the petitioner adequate for the purposes of Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement, the record contains no explanation as to why the information at issue was not susceptible to summarization.^[57] China maintains in this regard that neither Article 6.5.1 nor Article 12.4.1 sets a specific level of detail or format for non-confidential summaries and that therefore the adequacy of non-confidential summaries must be evaluated on a case-by-case basis.^[58] China observes, in this respect, that Articles 6.5.1 and 12.4.1 seek to balance the protection of confidential information submitted to the IA by an interested party with the need for transparency in such an investigation.^[59]

7.18.  China argues that the term "substance" in Articles 6.5.1 and 12.4.1 should be understood in light of the substantive obligations of Article 3.4 of the Anti-Dumping Agreement and Article 15.4 of the SCM Agreement, which require an IA to evaluate industry indicators bearing upon the state of the domestic industry in terms of trends in the movement of various indicators, rather than changes in the underlying absolute figures themselves. China contends that the panel in EU – Footwear (China) followed a similar approach in evaluating the "substance" of certain confidential information at issue in that dispute against other provisions of the Anti‑Dumping Agreement.^[60] From this point of view, China contends that the non-confidential summaries at issue provide a reasonable understanding of the "substance" of relevant trends.^[61]

7.19.  China considers that the US claim ignores significant information contained in the non-confidential version of the petition. Specifically, China argues that the United States ignores: (i) the text^[62] that appear below each of the tables that the United States alleges are not adequately summarized, (ii) the year-on-year percentage changes reported in some of these tables^[63], and/or (iii) trend lines^[64] representing the redacted data for the injury factors at issue under this claim.^[65] China contends that the provision of year-on-year percentage changes in the tables is functionally equivalent to the use of indices, and submits that the trend lines visually depict the percentage changes set out in the tables.^[66]

7.20.  According to China, the non-confidential summaries of redacted domestic industry-wide aggregated figures per year at issue were sufficiently detailed to allow interested parties a reasonable understanding of the substance of the relevant confidential information.^[67] China notes in this regard that the US claim relates to MOFCOM's treatment of non-confidential summaries provided in the petition, and not to MOFCOM's decision to grant confidential treatment to the information at issue.^[68] China characterizes the US argument that MOFCOM could have requested the petitioner to provide averages of absolute values per year in the non-confidential version of the petition as circular, contending that it seeks to have MOFCOM disclose the very data for which it granted confidential treatment.^[69]

7.21.  China submits that the non-confidential summary of the sales-to-output ratio provides more than a reasonable understanding of the substance of the information at issue, particularly when examined in terms of its relationship with the non-confidential summaries for apparent consumption and inventory shifts.^[70] With respect to the non-confidential summary for apparent consumption, China adds that if viewed alongside figures for total domestic demand, found elsewhere in the non-confidential version of the petition, this summary provides interested parties with a reasonable understanding of the substance of the confidential information within the meaning of Articles 6.5.1 and 12.4.1.^[71]

7.22.  Finally, China contends that if any of the respondents felt prejudiced by the alleged inadequacies in the non-confidential version of the petition, they should have raised this concern during the investigations at issue, which they did not. In China's view, raising this issue for the first time before the Panel should be taken into consideration in the assessment of the merits of the US claim.^[72] China considers that the panel in Korea – Commercial Vessels came to a similar conclusion in characterizing an argument raised by one of the parties late in the panel proceedings as lacking in conviction.^[73]

7.2.4  Arguments of the third parties

7.23.  Japan notes that non-confidential summaries should provide a reasonable understanding of the substance of the confidential information and argues that an IA may permit an interested party not to submit such a non-confidential summary only where there is a reason that outweighs the due process rights of other interested parties. In such exceptional circumstances, an IA must issue a statement of reasons for non-summarization. Japan considers that general statements on non-summarization are insufficient to meet an IA's obligation in these situations, as such statements constitute unsupported assertions rather than a statement of reasons for the purposes of Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement.^[74]

7.2.5  Evaluation by the Panel

7.24.  The issue before us with respect to this claim is whether the non-confidential summaries of data concerning 12 injury factors referenced by the United States were adequate. The United States argues that the non-confidential summaries did not meet the requirements of Article 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of the SCM Agreement. China's position is that the non-confidential version of the petition contains summaries in the form of text and tables adjoining the redacted information, permitting a reasonable understanding of the relevant confidential information. In order to decide this claim, we must determine whether those summaries allowed interested parties a reasonable understanding of the substance of the confidential information as required by Articles 6.5.1 and 12.4.1.

7.25.  Articles 6.5.1 and 12.4.1 require an IA, when granting confidential treatment to information submitted by interested parties, to ensure that the party submitting the information provides, in addition to the confidential information, a non-confidential summary of that information that is "in sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence". In EC – Fasteners (China), the Appellate Body stated that while the sufficiency of a non-confidential summary will turn on the confidential information at issue, the summary must be sufficiently detailed to allow a reasonable understanding of the substance of the information withheld, and allow the other parties to the investigation a meaningful opportunity to respond and defend their interests.^[75]

7.26.  Prior panels have found that neither general statements unsupported by evidence^[76], nor the possibility for interested parties to infer the "main point" of the confidential information from the context surrounding redaction^[77], suffice for the purposes of conforming to Articles 6.5.1 and 12.4.1. In this respect, panels have considered that an IA does not discharge its obligation to require adequate non-confidential summaries where the non-confidential version of the petition requires interested parties to "infer, derive and piece together a possible summary of the confidential information."^[78] Further, data gaps in non-confidential summaries may deprive respondents of a "reasonable understanding" of the substance of the confidential information at issue.^[79]

7.27.  Recognizing that it is not always possible to summarize confidential information in non-confidential form, Articles 6.5.1 and 12.4.1 provide that, in exceptional circumstances, where summarization of the confidential information submitted is not possible, a statement explaining the reasons for this must be submitted by the party submitting the information. In this case, it is undisputed that the petitioner did not assert that "exceptional circumstances" made summarization of any of the confidential information submitted impossible, and provided no explanations in this regard.

7.28.  Before examining whether the 12 non-confidential summaries challenged by the United States satisfy the requirements of Articles 6.5.1 and 12.4.1, we find it useful to discuss two issues. First, we address China's argument that the adequacy of these summaries should be assessed against what China contends is the "trends-based nature" of Article 3.4 of the Anti-Dumping Agreement and Article 15.4 of the SCM Agreement. Second, we address China's argument that the fact that no US respondent challenged the adequacy of these summaries during MOFCOM's investigations should affect our assessment of the merits of the US claim.

7.29.  China argues that the 12 non-confidential summaries should be assessed against the "substance" required of an injury enquiry pursuant to Articles 3.4 and 15.4. We find this argument unconvincing for three reasons. First, we note that the text of Articles 6.5.1 and 12.4.1 does not refer to particular substantive obligations. It merely requires the submission of non-confidential summaries of any confidential information submitted to an IA by an interested party, unless an explanation of why summarization is impossible is provided (and accepted by the IA). Second, the legal basis for China's argument is not entirely clear. China cites the panel report in EU – Footwear (China) to support its argument.^[80] Yet, that panel examined the adequacy of a non-confidential summary of price information in the form of average prices in light of Article 5.2(iii) of the Anti-Dumping Agreement, which requires a complainant to provide "information" on normal value and export price.^[81] Articles 3.4 and 15.4, in contrast, address the obligations of an IA to assess the consequent impact of subject imports on various industry indicators in the course of its injury determination. We do not see anything in that panel decision which would suggest that whether a non-confidential summary is adequate should be judged in relation to the analysis of injury information that the IA will undertake in its investigation. Third, we note that Articles 3.4 and 15.4 provide no guidance as to how an IA is to evaluate the relevant factors in analysing injury. Thus, although we make no finding in this regard, we see no basis for the view, underlying China's argument, that Articles 3.4 and 15.4 in fact require an IA to evaluate industry indicators on the basis of trends. Accordingly, we consider that there is no reason to conclude that non-confidential trend information will satisfy the requirements of Articles 6.5.1 and 12.4.1 because of the nature of the injury analysis.

7.30.  China also argues that the failure of US respondents to object to the adequacy of the non-confidential summaries during the investigations should affect our evaluation of the merits of the US claim. We see no legal basis for this argument. China cites the panel report in Korea – Commercial Vessels to support this argument.^[82] However, the situation in that dispute was entirely different from the situation here. In Korea – Commercial Vessels, the panel was addressing whether Korea's failure to object to the European Communities' use of a specified time period for the construction of a market benchmark at an earlier stage of panel proceedings rendered Korea's objection at a later stage of those proceedings as lacking in conviction.^[83] We see nothing in this report which would suggest that a party's failure to object to an aspect of an AD or CVD investigation should affect the assessment by a WTO panel of a claim pertaining to that particular aspect of the investigation. We thus find China's argument unconvincing, and will consider the US claim without taking into account whether or not any objections to the non-confidential summaries were made during the investigations.

7.2.5.1  Horizontal assessment

7.31.  Turning now to the issue of adequacy of the non-confidential summaries, we note that the 12 non-confidential summaries at issue are not identical in form or content, although there are certain common elements among them. Thus, each summary contains a table from which confidential yearly industry-wide absolute values are redacted in the relevant rows or columns.^[84] In addition, each summary contains at least one of the following two elements: a second column or row in the table showing the year-on-year percentage changes in the data over the period and/or a trend line depicting the data graphically over the same period. Finally, each summary contains some text, which in each case describes trends in the data shown in the tables and/or trend lines with respect to the injury factor concerned.

7.32.  Given the common elements among the 12 non-confidential summaries at issue, we find it useful to first consider whether, as a general matter, these tables, trend lines and texts can constitute an adequate non-confidential summary of the confidential information submitted, before evaluating the adequacy of each of the individual non-confidential summaries at issue.

7.33.  The tables present data for each injury factor at issue on an annual basis for the period, either in columns or rows.^[85] The tables set out yearly industry-wide absolute values, which are in each case redacted from the non-confidential version. Some of the tables contain an additional column or row setting out year-on-year percentage changes in the redacted data throughout the relevant period.^[86] Hence percentage changes from 2006 to 2007, from 2007 to 2008 and from interim 2008 to interim 2009 are shown in each such table. The year-on-year percentage changes do not indicate the significance of the changes. That is, an increase of 100%, for instance, may represent an increase from 1 to 2 units, or an increase from 100 to 200 units in any given case.^[87]

7.34.  China asserts that the year-on-year percentage changes are "functionally equivalent" to the use of indices, insofar as both methods show the degree or magnitude of changes.^[88] In our view, the significance of the absolute change in the data being summarized is not a critical component of an adequate non-confidential summary. For instance, a decline from 100,000 units to 50,000 units produced, and a decline from 1,000,000 units to 500,000 units produced over a period, is in either case a 50% decline in production. Knowing that the industry's production declined by 50% during the period is, in our view, generally sufficient to "permit a reasonable understanding of the substance of the information submitted in confidence" as required by Articles 6.5.1 and 12.4.1, even without knowing the significance, in absolute terms, of the change.^[89] Therefore, we consider that percentage changes such as those used in this case, are similar, in terms of the understanding of the redacted confidential information conveyed, to the use of indexing based on year-on-year changes. In the case of indexing, an absolute value (e.g. 100) is used to represent the information for the first year, and is shown in a table as a baseline. The data for the subsequent years is shown as percentage changes from the baseline. Thus, an increase of 25% in the second year would be represented by an index value of 125, and a decrease of 20% in the third year would be represented by an index value of 100. As is the case with the percentage changes at issue here, the significance of the changes in absolute terms is unknown in the case of indexing.^[90] We therefore find that the tables, where they set out percentage changes, give interested parties a reasonable understanding of the substance of the confidential information at issue.^[91]

7.35.  The trend lines, set out below the tables, are only partially labelled: while the X-axes are labelled with the same yearly intervals as are set out in the tables, the Y-axes are unlabelled. The United States argues that the trend lines lack any indication of scale, without which, interested parties could not form a reasonable understanding of the substance of the confidential information. China, in its written submissions, states that the trend lines graphically depict the percentage changes shown in the tables.

7.36.  We consider that the trend lines correspond to the percentage changes contained in some of the tables at issue. However, because they are unlabelled on the Y-axis, it is impossible to determine the percentage changes being depicted. Thus, no value is added to the information on percentage changes reported in the tables.^[92] We therefore find that the trend lines alone do not allow interested parties a reasonable understanding of the substance of the confidential information at issue.

7.37.  The texts come after the tables and/or trend lines, and describe the trends in the data depicted in the tables and/or trend lines for the relevant period with respect to each injury factor at issue. The United States submits that these texts are not revealing of the contents of the redacted information. China contends that the texts contain narrative that allowed interested parties a reasonable understanding of the substance of the confidential information at issue.

7.38.  The texts in question typically set out in words what is shown graphically in the relevant tables and/or trend lines. In doing so, absolute figures are redacted from the texts. In some instances, the texts also refer to matters other than the data in the relevant table and/or the trend line. However, these references, in most cases are in our view either irrelevant to the data or the injury factor at issue or simply state a conclusion that subject imports are the cause of negative trends in the data. We therefore find that, like the unlabelled trend lines, the texts add no additional explanation to the tables. Accordingly, we find that the texts alone do not permit a reasonable understanding of the substance of the confidential information at issue.

7.39.  We now turn to our evaluation of the adequacy of each of the 12 non-confidential summaries challenged by the United States. Having concluded that the additional elements relied on by China, unlabelled trend lines and text, do not provide additional bases to permit a reasonable understanding of the confidential information at issue, we focus on the non-confidential tables summarizing the data for each of the 12 injury factors concerned. In doing so, we have found it useful to group those summaries into the following two categories:

·         confidential information in respect of which data in tables is redacted, but percentage changes are provided; and

·         confidential information in respect of which data in tables is redacted and no percentage changes are provided.

7.2.5.2  Confidential information in respect of which data in tables is redacted, but percentage changes are provided

7.40.  This category includes non-confidential summaries of information concerning production capacity, output, sales volume, inventory, pre-tax profits, number of employees, productivity, apparent consumption, and cash flow. However, the summary for apparent consumption differs from the other eight summaries in this category, in that the parties present additional arguments with respect to the adequacy of this summary. We will first consider the non-confidential summaries for production capacity, output, sales volume, inventory, pre-tax profits, number of employees, productivity, and cash flow, before moving on to an assessment of the non-confidential summary for apparent consumption.

7.2.5.2.1  Production capacity, output, sales volume, inventory, pre-tax profits, number of employees, productivity, and cash flow

7.41.  The non-confidential summaries of information regarding production capacity^[93], output^[94], sales volume^[95], inventory^[96], pre-tax profits^[97], number of employees^[98], productivity^[99], and cash flow^[100] all follow a similar pattern, with a table setting out year-on-year percentage changes from 2006 to 2007, 2007 to 2008, and interim 2008 to interim 2009, as well as text describing the information therein. With the exception of the summaries of data relating to the number of employees and cash flow, they also contain a trend line which seems to correspond to the percentage changes in the table.

7.42.  We note the US argument that MOFCOM could have provided averages of absolute values per year, instead of year-on-year percentage changes, to provide respondents a reasonable understanding of the substance of the confidential information.^[101] We recall that the confidential information at issue here is aggregate data pertaining to the domestic industry as a whole.^[102] The confidential aggregate data could be derived from average annual data simply by multiplying the average for each year by the number of domestic industry producers in that year. The United States has not challenged MOFCOM's decision to grant confidential treatment to the aggregate data in the petition. We find the US position, which would make possible the disclosure of the very information treated as confidential, to be unpersuasive.^[103]

7.43.  As stated above^[104], we consider that the percentage changes shown in the tables permit a reasonable understanding of the redacted confidential information, and consequently satisfy the requirements of those provisions, fulfilling the objective of the requirement to provide non-confidential summaries. Although, as also stated above^[105], the trend lines and textual explanations do not add to the understanding of the data in the tables, we consider that the tables, on their own, are sufficient to permit a reasonable understanding of the substance of the redacted information. We therefore conclude that the non-confidential summaries for production capacity, output, sales volume, inventory, pre-tax profits, number of employees, productivity, and cash flow are consistent with Articles 6.5.1 and 12.4.1.

7.2.5.2.2  Apparent consumption

7.44.  The non-confidential summary of data regarding apparent consumption includes two tables showing "Changes in Market Share of the Domestic Like Product" in 2006, 2007, 2008, and interim 2009, and text describing the information therein. The first table contains a column setting out year-on-year percentage changes in apparent consumption for the domestic industry from 2006 to 2008.^[106] Percentage changes from interim 2008 to interim 2009 are redacted in this table. The second table contains a column setting out yearly market share figures for the POI.^[107] Data for sales volume and apparent consumption are redacted from this table.

7.45.  The United States argues that the non-confidential summary for apparent consumption is inadequate for the reasons we have already addressed above, but also points out that in the case of this table, the percentage change from interim 2008 to interim 2009 is missing. In addition, the United States observes that China refers to other parts of the petition to explain how a reasonable understanding of the substance of redacted confidential information can be formed. Thus, following China's own reasoning, the United States contends that interested parties would have to infer, derive and piece together a possible summary of confidential information for themselves.^[108] In addition to general arguments we have already addressed, China asserts that figures for total domestic demand are indicated elsewhere in the petition, and contends that the non-confidential summary for apparent consumption, coupled with these figures, provided interested parties a reasonable understanding of the substance of the confidential information at issue.^[109]

7.46.  We are of the view that the non-confidential summary for apparent consumption is inconsistent with Articles 6.5.1 and 12.4.1. While we have found that the tables, where they contain a column or row displaying percentage changes, are generally sufficient to provide interested parties with an understanding of the redacted information^[110], in this instance, percentage change information for the period interim 2008 to interim 2009 is not reported, despite the corresponding information having been included in the other non-confidential summaries at issue. There is no explanation for this omission in the case of the non-confidential summary of data for apparent consumption. China argues that the reason for this omission was because there was no underlying confidential data for apparent consumption for this particular period, and this was clear from the record.^[111] We find this argument unconvincing, however, as the record does not so state. We consider that the absence of this data creates a gap in the non-confidential summary for apparent consumption that deprived interested parties of a reasonable understanding of the substance of the redacted information.^[112] Even if we were to accept China's argument that apparent consumption data could be found elsewhere in the petition, further, we note that the data on total domestic demand referred to by China does not cover interim 2009.^[113] In any event, we consider that a non-confidential summary that requires interested parties to connect information from different parts of the petition in order to obtain a reasonable understanding of the substance of the confidential information is not consistent with Articles 6.5.1 and 12.4.1.^[114]

7.2.5.3  Confidential information in respect of which data in tables is wholly redacted, and no percentage changes are provided

7.47.  This category includes non-confidential summaries for sales-to-output ratio, return on investment and salary. However, the summary for sales-to-output ratio differs from the other two summaries in this category, in that the parties present additional arguments with respect to this summary. Therefore, we will first consider the non-confidential summaries for return on investment and salary, before moving onto an assessment of the summary for sales-to-output ratio.

7.2.5.3.1  Return on investment and salary

7.48.  The non-confidential summaries for return on investment^[115] and salary^[116] follow a similar pattern. These summaries include a table setting out information concerning developments in each injury factor in 2006, 2007, 2008, interim 2008, and interim 2009, in which percentage changes are wholly redacted. These summaries also include a trend line which displays "changes" in each injury factor over the POI.^[117] The tables and trend lines are followed by text describing the information in the tables.

7.49.  As stated above^[118], partially unlabelled trend lines and text such as those provided in these summaries are not, on their own, sufficient to permit a reasonable understanding of the substance of the redacted information. In the absence of additional information, such as that provided in other summaries by the tables showing percentage changes, we consider that these summaries fail to permit a reasonable understanding of the substance of the confidential information at issue. We therefore conclude that the non-confidential summaries for return on investment and salary are inconsistent with Articles 6.5.1 and 12.4.1.

7.2.5.3.2  Sales-to-output ratio

7.50.  The non-confidential summary of confidential information concerning the sales-to-output ratio includes a table from which percentage changes are wholly redacted.^[119] This summary also includes a trend line showing "Changes in the Proportion of Products Sold" over the POI.^[120] The table and trend line are followed by a text describing the information.

7.51.  In addition to arguments we have already addressed above, the United States observes that China refers interested parties to other parts of the petition to explain how a reasonable understanding of the substance of redacted confidential information can be formed. Thus, following China's own reasoning, interested parties would have to infer, derive and piece together a possible summary of confidential information for themselves.^[121] China asserts that the trend line and text adequately provided interested parties with a reasonable understanding of the changes in sales-to-output ratio over the POI, particularly when considered in terms of the relationship of data for sales-to-output ratio with data for apparent consumption and inventory shifts.^[122]

7.52.  We are of the view that the non-confidential summary for sales-to-output ratio is inconsistent with Articles 6.5.1 and 12.4.1. As stated above^[123], we consider that partially labelled trend lines and text alone are not generally sufficient to provide an adequate understanding of confidential information, unlike a table showing year-on-year percentage changes. We note that the confidential information is redacted from the text that China relies on in this context^[124], and accordingly, it does nothing to permit a reasonable understanding of the confidential information in question. Moreover, as we have previously found, a non-confidential summary that only provides a reasonable understanding of confidential information if interested parties themselves connect information from different parts of the petition is generally inconsistent with Articles 6.5.1 and 12.4.1.^[125] Even assuming we were to accept China's position that the non-confidential summary for sales-to-output ratio should be assessed in terms of its relationship with the non-confidential summaries for apparent consumption and inventory, we recall that we have found above that the non-confidential summary for apparent consumption is inconsistent with Articles 6.5.1 and 12.4.1.^[126] We fail to see how considering another insufficient non-confidential summary together with the summary at issue here would serve to permit a reasonable understanding of the confidential information in question.

7.2.6  Conclusion

7.53.  In light of the above, we conclude that the non-confidential summaries of confidential information concerning production capacity, output, sales volume, inventory, pre-tax profits, number of employees, productivity, and cash flow permit a reasonable understanding of the substance of the confidential information at issue, and thus were consistent with Article 6.5.1 of the Anti-Dumping Agreement and Article 12.4.1 of the SCM Agreement.

7.54.  However, with respect to the non-confidential summaries of confidential information concerning apparent consumption, return on investment, salary, and sales-to-output ratio, we conclude that these do not permit a reasonable understanding of the substance of the confidential information at issue, and accordingly, we find that China failed to comply with the requirements of Articles 6.5.1 and 12.4.1 with respect to these four non-confidential summaries in the investigations at issue.

7.3  Whether MOFCOM disclosed the "essential facts" as required by Article 6.9 of the Anti-Dumping Agreement

7.3.1  Provision at issue

7.55.  Article 6.9 provides:

[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. Such disclosure should take place in sufficient time for the parties to defend their interests.

7.3.2  Factual background

7.56.  This claim only concerns MOFCOM's AD investigation. In the investigations at issue, MOFCOM issued final disclosure letters to the individual US respondents, as well as two final disclosure letters to the US government, purportedly setting out the "basic facts" that would underpin the final determination. The first letter sent to the US government set out factors upon which MOFCOM would base its injury determinations in the final determination.^[127] The second letter sent to the US government addressed the AD and CVD rates to be set in the final determination.^[128] The final disclosure letters to the US respondents other than the US government have not been submitted as evidence in this dispute.

7.57.  The second letter to the US government provides a narrative description of how MOFCOM determined normal value, export price, and certain adjustments to normal value and export price. This description is accompanied by a table setting out company-specific total dumping margins, and the "all others" residual AD duty rate.^[129] The company-specific data is redacted in the second final disclosure letter to the US government, showing only the "all others" residual AD duty rate of 21.5%.

7.3.3  Arguments of the parties

7.3.3.1  United States

7.58.  The United States argues that MOFCOM acted inconsistently with Article 6.9 of the Anti- Dumping Agreement by failing to inform the US respondents of all "essential facts" forming the basis of its decision to apply the AD duties prior to releasing its final determination.^[130]

7.59.  The United States contends that MOFCOM should have disclosed data and calculations to US respondents, including details of any data adjustments or manipulations, bearing upon determinations of: (i) normal values, (ii) export prices, and (iii) costs of production.^[131] The United States considers that without the data underlying MOFCOM's calculations, the US respondents were deprived of an understanding of basic information relating to how dumping margins were determined. The United States adds that without the actual calculations used by MOFCOM, these respondents could not verify the completeness and accuracy of MOFCOM's calculations.^[132] The United States argues that China's reference to language in MOFCOM's final determination as evidence that MOFCOM disclosed essential facts to US respondents fails to establish this as a fact, contending that the final determination is conclusory in this regard.^[133]

7.60.  The United States asserts that it does not have copies of the final disclosure letters sent to the US respondents in its possession, and contends that it is for China to submit these letters to the Panel. The United States notes in this regard that these documents are necessarily within China's possession, following from the normal course of an AD proceeding.^[134] Noting China's concern that submitting these letters to the Panel would result in the unauthorized release of BCI, the United States argues that the Panel's BCI procedures adequately address such concerns.^[135] The United States asks the Panel to infer from China's failure to submit the letters in this dispute that these letters contain information unfavourable to China's position.^[136]

7.61.  At the second Panel meeting, the United States submitted into evidence a letter^[137] from Mercedes-Benz USA to MOFCOM dated 28 April 2011 which, in the US view, demonstrates that MOFCOM failed to disclose the essential facts to the US respondents. Responding to China's objection to the submission of this evidence after the first Panel meeting, the United States draws the Panel's attention to paragraph 8 of the Panel's working procedures, which allows for the submission of evidence after the first Panel meeting for the purposes of rebuttal. Specifically, the United States contends that the Mercedes Benz USA letter rebuts China's assertion that MOFCOM's final disclosures to the US respondents disclosed essential facts within the meaning of Article 6.9.^[138]

7.3.3.2  China

7.62.  China contends that it is for a complaining party to provide adequate evidence and legal argument tying alleged facts to a claim, in the absence of which the burden cannot shift to the responding party.^[139] China argues that as the United States claims that the final disclosures sent by MOFCOM to the US respondents were inconsistent with Article 6.9 of the Anti-Dumping Agreement, it is for the United States, as complainant, to provide proof of these allegedly flawed disclosures to the Panel.^[140] China submits that the United States has not adduced any evidence showing the alleged deficiencies in the final disclosures sent by MOFCOM to the US respondents.^[141] China notes in this respect that the United States has previously submitted final disclosures into evidence in other disputes.^[142]

7.63.  China asserts that the record contains evidence that MOFCOM did make such disclosures of essential facts, drawing the Panel's attention to a statement to this effect in the final determination.^[143] In China's view, data underlying dumping margin calculations may or may not constitute essential facts, depending on their overall significance to the findings and determinations reached by an IA. Calculations, in contrast, constitute the "consideration" of facts for the purposes of Article 6.9, and thus, for China, fall outside the scope of Article 6.9.^[144]

7.64.  China objects to the US submission into evidence of the letter from Mercedes-Benz USA to MOFCOM dated 28 April 2011 at the second Panel meeting. In China's view, the timing of this submission infringes its due process rights. In this regard, China points to paragraphs 6 and 8 of the Panel's working procedures, which China asserts establish the rule that each party must submit factual evidence to the Panel no later than during the first Panel meeting. China contends that the United States cannot submit this letter as a rebuttal to the contention that MOFCOM's final disclosures to the US respondents contained the essential facts, as China never argued before the Panel that the substance of those final disclosures satisfied Article 6.9. In China's view, the burden of proof never shifted so as to require it to make such a substantive argument.^[145]

7.3.4  Arguments of the third parties

7.65.  The European Union contends that the actual data and calculations used to establish dumping margins constitute "essential facts" within the meaning of Article 6.9 of the Anti-Dumping Agreement. The European Union observes that such data and calculations are both material to an IA's final decision and form an important component of any final determination.^[146] Further, the European Union submits that without access to such data, affected exporters cannot check an IA's methodology and calculations for errors. The European Union adds in this regard that even seemingly small errors can lead to serious distortions of dumping margins.^[147]

7.66.  Japan argues that the Article 6.9 disclosure obligation applies to facts "related to" the existence of the dumping margin, and includes transaction-specific price and adjustment data developed and used by an IA to establish a dumping margin.^[148] In this regard, Japan notes that disclosure of the finally-calculated normal value and export price would be insufficient to allow an interested party a fair opportunity to prepare and present their defence.^[149]

7.67.  Saudi Arabia observes that "essential facts", which may vary according to the factual circumstances of a dispute, must in all cases include facts relating to the requisite elements for the imposition of definitive measures, which necessarily include facts relating to the existence of dumping, injury and causation.^[150] Saudi Arabia submits in this regard that essential facts should encompass not only the facts that support the final decision reached by the IA but also the facts necessary to ascertain "the process of analysis and decision-making" by an IA in reaching that decision.^[151]

7.68.  Turkey submits that the actual data and calculations used to establish dumping margins, in addition to those facts related to injury to the domestic industry and the causal link between subject imports and such injury, constitute "essential facts" within the meaning of Article 6.9 of the Anti-Dumping Agreement.^[152] Turkey notes that the Article 6.9 disclosure obligation, which in most cases will include company-specific confidential information, should only be made to the company whose confidential data forms the subject of the disclosure.^[153]

7.3.5  Evaluation by the Panel

7.69.  The question before us is whether MOFCOM disclosed "essential facts" within the meaning of Article 6.9 of the Anti-Dumping Agreement to the US respondents in the AD investigation at issue. Article 6.9 does not require the disclosure of the IA's reasoning; nor does it require the disclosure of all facts, but rather of "essential" facts.^[154] In resolving this issue, we will thus have to consider the meaning of the term "essential facts".

7.70.  Article 6.9 requires an IA to notify interested parties, before a final determination is made, of the essential facts under consideration which form the basis for the decision whether to apply definitive measures. Article 6.9 is silent on the form that such a disclosure should take, but makes clear that this disclosure must occur before the IA issues its final determination.^[155] In the investigation at issue, MOFCOM issued letters to US respondent companies and to the US government which China contends disclosed the essential facts. There is no dispute that those letters were provided prior to the final determination. Thus, the only question before us is the adequacy of the disclosure, that is, whether the contents of those letters set out the relevant "essential facts".

7.71.  In addressing this question, we recall that prior panels have found that the term "essential facts" within the meaning of Article 6.9 refers to the body of facts essential to the determinations that must be made by the IA before it can decide whether to apply definitive measures. In order to apply definitive measures at the conclusion of AD investigations, an IA must find three key elements: (i) dumping; (ii) injury; and (iii) a causal link. Therefore, the "essential facts" underlying the findings and conclusions relating to these elements form the basis for the decision to apply definitive measures, and must be disclosed.^[156] We also note that the panel in EC – Salmon (Norway) stated that the "essential facts" are the:

body of facts essential to the determinations that must be made by the IA before it can decide whether to apply definitive measures. That is, they are the facts necessary to the process of analysis and decision-making by the IA, not only those that support the decision ultimately reached.^[157]

7.72.  What constitutes essential facts must therefore be understood in light of the content of the findings needed to satisfy the substantive obligations with respect to the application of definitive measures under the Anti-Dumping Agreement, as well as the factual circumstances of each case. In the context of assessing what data constitutes essential facts for the purposes of a dumping determination, we recall the views of the panel in China – Broiler Products, which concluded that such data must relate to the elements set forth in Article 2 of the Anti-Dumping Agreement, including the determination of normal value and export price, the determination of constructed normal value and constructed export price, if relevant, and the fair comparison between these normal values and export prices.^[158] The panel in China – Broiler Products further concluded that the formula used by MOFCOM to calculate dumping margins calculations, as distinct from any internal work product of the IA containing dumping margin calculations or mathematical determinations, constitutes an essential fact within the meaning of Article 6.9.^[159]

7.73.  We agree with these views. Like the panel in China – Broiler Products, we consider that knowing the formula that an IA applied in dumping calculations is as important to a foreign exporter as knowing the domestic and export sales transactions that were taken into consideration in that calculation.^[160] In our view, a foreign exporter would be left at least partly in the dark in terms of how dumping margins were calculated by an IA without knowing the particular formula employed in the calculation. In this regard, we see a formula, which in our view is a fact within the meaning of Article 6.9, as being different from the application of such a formula in a given investigation, which represents an aspect of the IA's reasoning. We will therefore evaluate the US claim on the basis of this distinction.

7.74.  The United States asserts that essential facts were not disclosed to the US respondents in the AD investigation underlying this dispute. In this regard, we note that there seems to be no dispute between the parties that MOFCOM actually sent final disclosures to the US respondents.^[161] Rather, the issue before us is whether these disclosures conformed to the substantive requirements of Article 6.9 of the Anti-Dumping Agreement. The United States contends that they did not, and are therefore inconsistent with Article 6.9, whereas China maintains that the United States has not made a prima facie case of a violation of Article 6.9.

7.75.  It is important to note that we have not been provided with copies of the final disclosures sent to the US respondent companies in this dispute. Those letters are presumably in China's possession, as they were prepared by MOFCOM in the course of the AD investigation. However, China, despite having been requested to do so by the Panel, declined to submit them in evidence, resting on its view that the burden of proof lies with the United States, and has not been satisfied in this regard, and that the United States has therefore failed to make a prima facie case in support of its claim and there is nothing for China to rebut.

7.76.  We recall that the general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim. It is thus clear that the United States, as complainant, bears the burden of demonstrating the violations it alleges, both legally and as a matter of fact.^[162] However, we also recall that it is generally for each party asserting a fact to provide proof thereof.^[163]

7.77.  Certainly, submission of the final disclosures sent to the US respondent companies by the United States would have allowed us to review those letters to determine whether the United States had discharged its burden of proof in this regard. However, the United States asserts that it does not have copies of these disclosures in its possession, an assertion which is undisputed by China. The United States submits that this follows naturally from the normal course of an AD investigation, in which an IA sends final disclosures (which may contain confidential information) directly to each respondent company concerned. Indeed, based on our understanding of events, this is what MOFCOM did in this case.^[164] In these circumstances, we accept that the United States cannot produce copies of MOFCOM’s final disclosures to the US respondent companies for our review in this dispute.^[165] The United States submitted the final disclosure which was sent to the US government as a party to the investigation. We do not believe that the United States is precluded from making a claim in this regard. The United States appears to have based its claim on the contents of the disclosure letters sent to the US government, and its understanding of the contents of the disclosure letters to the US respondent companies, which are not in its possession. Thus, in our view, the United States has made a claim based on an assertion of law and fact with respect to the contents of the disclosure letters which is supported by facts, and which, in our view, China must rebut in order to prevail.^[166]

7.78.  In response to the US claim, China relies on its view that the United States failed to make a prima facie case, and therefore there is nothing for China to rebut. China's sole affirmative assertion with respect to this claim is that MOFCOM did in fact send final disclosures to the US respondents as required under Article 6.9. In support of this, China points to the statement in the final determination that:

MOFCOM, the investigating authority disclosed and explained essential facts to American Government and all respondents on the basis of which MOFCOM calculate [sic.] dumping margins of all companies before the final determination of this case, as well as provided opportunities of comments and opinions to all interested parties.^[167]

While this statement factually shows that company-specific disclosure letters were sent to the US respondents, it does not shed light on the issue before us, namely whether or not such disclosures were substantively consistent with the requirements of Article 6.9. In any event, we note that China has not attempted to demonstrate to the Panel the substantive consistency of such disclosure letters with the requirements of Article 6.9 on the basis that the burden has not shifted to it to do so.

7.79.  The United States submitted a letter from Mercedes-Benz USA to MOFCOM dated 28 April 2011 into evidence at the second Panel meeting, which the United States characterises as rebuttal evidence to China's assertion that MOFCOM's final disclosures to the US respondents contained the essential facts within the meaning of Article 6.9. China contends that, the United States having failed to make a prima facie case of violation, the burden of making a substantive showing that MOFCOM's final disclosures contained essential facts within the meaning of Article 6.9 never fell upon China. Therefore, in China's view, the Mercedes-Benz USA letter cannot be characterized as rebuttal evidence, and may not be taken into consideration by the Panel. We thus must resolve whether to accept this letter as evidence.

7.80.  Having reviewed the parties' arguments, we consider it appropriate to accept the Mercedes-Benz USA letter. While we acknowledge that China did not affirmatively argue that the substance of MOFCOM's final disclosures to the US respondents satisfied the requirements of Article 6.9, which leaves in some question whether the letter may be characterized formally as rebuttal evidence, we nevertheless consider the letter to be relevant to the issues before us, and therefore should be considered, provided that doing so does not infringe on China's due process rights in this dispute.

7.81.  We note that nothing in the DSU or our working procedures precludes us from accepting evidence after the first Panel meeting.^[168] The DSU does not address the timing of submission of evidence.^[169] Nor do our working procedures, which do address the timing of submission of evidence by the parties, establish inflexible barriers to our ability to accept evidence, even if such evidence is not submitted in compliance with the procedures.^[170] While our working procedures are to be respected, the principal goal of those procedures is to enable us to resolve the dispute presented to us on the basis of an objective evaluation of relevant evidence, while respecting the due process rights of the parties involved. Thus, the particular circumstances must be considered in deciding whether we will consider evidence which is not submitted in conformity with the normal timeline provided for in our working procedures. Indeed, this is clear in the working procedures themselves, which provide that, while factual evidence should be submitted no later than during the first meeting, exceptions shall be granted upon a showing of good cause, in which case the other party must be given an opportunity for comment. This is, in our view, the situation here.

7.82.  While the Mercedes-Benz USA letter was not submitted prior to, or even at, the first meeting with the Panel, we recall that we made several efforts between the first and second Panel meetings to obtain from the parties copies of MOFCOM's final disclosures to the US respondents. The United States could not provide them, as it did not possess copies of these disclosures^[171], and China declined to do so. While this letter was submitted at our second meeting, later than provided for in our working procedures, this was the first opportunity after it became clear that the most relevant evidence, the final disclosures themselves, would not be produced. Indeed, it seems to us that the letter, which is less probative than the final disclosures would have been with respect to the issue of the consistency of the final disclosures with Article 6.9, might not have been submitted into evidence at all, but for China's refusal to submit the final disclosures to us in the course of these proceedings.

7.83.  Following the US submission of the Mercedes Benz USA letter, we specifically afforded China the opportunity, after the second Panel meeting, to submit copies of MOFCOM's final disclosures to the US respondents into evidence. This would have enabled China to rebut the letter from Mercedes-Benz USA to MOFCOM. China declined to do so, maintaining its position that it was for the United States as complainant to adduce this evidence. We do not consider it would be appropriate for us to make a decision on the basis that the United States did not produce evidence that was not in its possession. China recognizes the Panel's right under Article 13 of the DSU to seek information from any individual or body which it deems appropriate. However, citing the Appellate Body report in Japan – Agricultural Products II, China argues that the Panel should not use this right so as to rule in favour of the United States, which China argues has failed to make a prima facie case.^[172] In our view, China's objection is misplaced. We note that the letter at issue was not submitted by the United States in response to a request by the Panel under Article 13 of the DSU. Rather, the United States submitted this letter at its own initiative. Having accepted this letter into evidence, the Panel of course used it in its assessment of the US claim. Finally, China clearly had an adequate opportunity to comment on the substance of this letter, and the US arguments concerning it. Indeed, China made detailed arguments in this regard in its responses to Panel questions and its comments on the US responses to Panel questions following the second Panel meeting.^[173] Thus, it is clear to us that China's due process rights have not been adversely affected by our consideration of the letter in resolving this claim.^[174] Before turning to a substantive assessment of the Mercedes-Benz USA letter, we would underline that our decision to accept this letter into evidence is based solely on the circumstances presented in this dispute. There may well be other cases where circumstances are different and accepting evidence submitted during a panel's second meeting with the parties would not be appropriate.

7.84.  Having accepted the Mercedes-Benz USA letter into evidence, we note that this letter shows that Mercedes-Benz USA objected to the substance of the final disclosure to it, maintaining that it was insufficient. The letter states in relevant part:

[f]inally, [Mercedes-Benz USA] reiterates MOFCOM did not provide sufficient information in the final disclosure. [Mercedes-Benz USA] cannot fully understand the related measures and methodology MOFCOM adopted in the final disclosure. Regarding the sufficiency of the information disclosure, MOFCOM says:

“The investigating authority determines that the investigating authority has already fully disclosed all the facts including data, source of data and detailed calculation in the disclosure after the preliminary determination. The investigating authority does not accept this position”.

However, the actual situation was not as described above. The insufficiency of the information disclosure appeared most obvious in the adjustment MOFCOM made to the indirect sales costs and profits in the calculation of China export price. This is the most important adjustment to the data [Mercedes-Benz USA] submitted, a key factor leading to the dumping margin. MOFCOM failed to explain in detail how it generated the margins in the final disclosure and did not provide the calculation steps, detailed descriptions, formulas and program language, nor did MOFCOM describe the relevant calculation process in the final disclosure. Though [Mercedes-Benz USA] made great efforts, MOFCOM still has not taken into account the data it provided or put forward a detailed explanation of the information relevant to the margin calculation. Therefore, MOFCOM did not provide meaningful disclosure to this most important adjustment item.^[175] (original emphasis)

This clearly shows that Mercedes-Benz USA was of the view that MOFCOM's final disclosure of essential facts with respect to it was inadequate, and objected to the final disclosure on that basis, which objection MOFCOM dismissed. While this does not demonstrate, in itself, that the disclosure was inconsistent with the requirements of Article 6.9, it does lend support to the US claim, and is unrebutted by any evidence put forward by China.

7.85.  On the basis of the above, we find that the United States has made a prima facie case that MOFCOM failed to disclose the essential facts to the US respondents. China has made no argument and provided no evidence, other than the reference to the final determination, that would suggest that MOFCOM's disclosures to the US respondents were, in fact, consistent with the requirements of Article 6.9. In light of this, and in addition, taking account of the Mercedes-Benz USA letter, we therefore conclude that China has failed to rebut the US prima facie case. Accordingly, we find that the United States has shown that China acted inconsistently with Article 6.9.^[176]

7.3.6  Conclusion

7.86.  For the reasons set forth above, we find that China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement, in that MOFCOM failed to disclose essential facts to US respondents prior to making its final determination in the AD investigation at issue.

7.4  Determination of "residual" AD and CVD rates

7.4.1  Factual background

7.87.  MOFCOM initiated the AD and CVD investigations at issue on 6 November 2009. It published AD^[177] and CVD^[178] notices of initiation, posted them, together with the relevant registration forms, on its website^[179] and transmitted them to the US Embassy in Beijing.^[180] In the notices, MOFCOM provided basic information concerning the investigations, indicated that any interested party – including any US exporters – that wished to participate in the investigations was required to register with MOFCOM by 26 November 2009, and stated that failure to participate and provide the information requested by MOFCOM could result in a determination based on facts available.^[181] The notices of initiation asked foreign exporters to provide information on the volume and value of their exports of the subject product to China during the POI.^[182] The registration forms^[183], attached to the notices, also asked foreign exporters to provide contact information for their companies, and information on the volume and value of their sales of automobiles exported to China during the POI.

7.88.  MOFCOM received AD and CVD registration forms from seven US exporters (three of which were named in the petition): General Motors USA, Chrysler USA, Mercedes-Benz USA, BMW USA, Honda USA, Mitsubishi and Ford USA. MOFCOM sent AD and CVD questionnaires to these seven respondents on 9 December 2009.^[184] One of the seven, Mitsubishi, withdrew from MOFCOM's investigations on 28 December 2009.^[185] The remaining respondents submitted their responses to the questionnaires on 15 and 29 January 2010.^[186]

7.89.  In its preliminary AD determination, MOFCOM determined the following individual dumping margins for five of the six remaining respondents: General Motors USA, 9.9%; Chrysler USA, 8.8%; Mercedes-Benz, 2.7%; BMW USA, 2.0%; and Honda USA, 4.4%.^[187] MOFCOM also determined the following subsidy rates for these respondents: General Motors USA, 12.9%; Chrysler USA, 6.2%; Mercedes-Benz USA, 0%; BMW USA, 0%; Honda USA, 0%, and Ford USA, 0%.^[188]

7.90.  MOFCOM preliminarily determined a dumping margin of 21.5% for "all other" US companies, which had not registered with MOFCOM in the AD investigation (and as a consequence, had not filed a questionnaire response).^[189] The preliminary determination states that:

[w]ith regard to all other American companies, in accordance with Article 21 of Anti-dumping Regulation, the investigating authority decides to adopt the facts already known and the best information available, and applies the dumping margin claimed in the petition to them.^[190]

MOFCOM preliminarily determined a subsidy rate of 12.9% for "all other" US companies, which had not registered with MOFCOM in the CVD investigation (and as a consequence, had not filed a questionnaire response).^[191] The preliminary determination states that:

[r]egarding all other companies, in accordance with Article 21 of Countervailing Regulation, the investigating authority decides to adopt facts available, and applied the ad valorem subsidy rate of General Motors to them.^[192]

7.91.  In the final disclosure sent to the US government, MOFCOM redacted the respondent-specific dumping margins and subsidy rates, and listed only the dumping margin and subsidy rate for "all others".^[193] These remained unchanged from the preliminary determination.

7.92.  In the final determination, MOFCOM determined lower dumping margins for two companies: General Motors USA 8.9%; and Honda USA, 4.1%. MOFCOM made no changes to the individual dumping margins or the individual subsidy rates determined for the other remaining respondents.^[194] The dumping margins and subsidy rates determined for individual companies are not at issue in this dispute. The "all others" dumping margin and subsidy rate were also unchanged in MOFCOM's final determination.^[195]

7.93.  MOFCOM, noting arguments by the US government with respect to the application of facts available to determine the "all others" dumping margin and the use of such facts to determine the dumping margin for Ford USA, stated the following in its final determination:

[a]fter the preliminary determination, the U.S. Government claimed in its comments that, the investigating authority adopted adverse data to determine the dumping margin of other American companies in the preliminary determination without providing the reasons, and did not explain how the exporters did not cooperate in this investigation. The U.S. Government requested the investigating authority to apply weighted average duty rates to the companies which were not uncooperative clearly in this investigation.

In this regard, the investigating authority finds that: before and after the initiation, the investigating authority had informed all exporters or producers listed in the petition, and also required the U.S. Government to inform all exporters or producers. The public notice of initiation can also be obtained on the website of MOFCOM. After the initiation, the investigating authority set the procedures of registration for participating in the investigation; meanwhile, the investigating authority also issued the investigation questionnaire to the companies filing for participating in this investigation. Besides, the investigation questionnaire can also be obtained by public on the website of MOFCOM. The investigating authority holds that within the best of its abilities, all exporters have obtained the opportunities to cooperate in the investigation through the aforesaid procedures; any exporter willing to cooperate in the investigation should have made the proper response. As to any exporter who did not make clear response, the investigating authority may certainly and reasonably believe that it did not have the intention of cooperation, and determined the dumping margin in accordance with the best information available rather than the adverse information. Therefore, the investigating authority decides not to accept the claims of the U.S. Government and maintain its finding in the preliminary determination.

After the preliminary determination, Ford Company claimed in its comments that, although it did not export during the POI, the investigating authority shall determine the dumping margin for it due to its cooperation in the investigation. Upon examination, the investigating authority holds that, the dumping margin shall be established based on the comparison between the normal value and the export price, and since Ford Company did not export during the POI, there was no export price for it. Therefore, this claim has no factual and legal basis. The investigating authority does not accept this claim. When complying with conditions, Ford Company may apply to the investigating authority for the new exporter review in order to obtain an individual duty rate.^[196]

7.94.  MOFCOM, in reaffirming the "all others" subsidy rate in its final determination, noted that the United States submitted comments on that rate, stated that it had responded to those arguments in the dumping determination, and did not repeat that discussion.^[197]

7.4.2  Introduction

7.95.  The United States challenges the "all others" rates imposed by China in the AD and the CVD investigations at issue in these proceedings under Articles 6.8, 6.9, 12.2, 12.2.2 and paragraph 1 of Annex II of the Anti-Dumping Agreement and Articles 12.7, 12.8, 22.3, and 22.5 of the SCM Agreement. Before addressing the parties' arguments and resolving those claims, we find it useful to clarify the terminology we have used in referring to the duty rates at issue.

7.96.  Both parties refer to the duty rates at issue as the "all others" rates. However, we find the term "all others" unclear as used in this context. We note that an IA may determine various duty rates for different exporters or foreign producers in an AD (or CVD) investigation. The general rule under the Anti-Dumping Agreement calls for the determination of an individual duty rate for each known foreign producer or exporter, up to the amount of the dumping margins calculated in accordance with Article 2 of the Agreement for each of them. Some of these dumping margins may be calculated based entirely or in part on facts available, depending on whether or not an individual producer or exporter provided the information required to calculate an individual dumping margin for it in the investigation. In addition, an IA may limit the number of individually calculated dumping margins in certain circumstances, pursuant to Article 6.10 of the Anti-Dumping Agreement. In these cases, the IA may nonetheless apply an AD duty to the remaining known foreign producers or exporters, which it did not individually examine ("unexamined exporters"). The rate that may be applied is limited by the cap calculated pursuant to Article 9.4 of the Anti-Dumping Agreement. This rate is commonly referred to as an "all others" rate, as it applies to "all other" producers known to the IA, but which were not individually examined.

7.97.  However, an IA may also wish to determine an AD duty rate which could be applied to exporters or foreign producers that either were not known to the IA (for whatever reason) or did not exist at the time of the investigation, in the event that such enterprises commence exporting the product subject to the investigation to the investigating country at a later date while a measure is in force. It is such a duty rate that is at issue in this dispute. In these proceedings, and in several previous disputes in which similar duty rates were considered, parties have used the term "all others" rate to refer to the rates applicable to companies that either were not known to the IA (for whatever reason) or did not exist at the time of the investigation. We find the use of the same term to refer to AD duty rates applied to groups of exporters or foreign producers in two distinct and separate situations to be potentially confusing. Therefore, in order to avoid such confusion, we consider it more appropriate to refer to the rate applied in situations under Articles 6.10 and 9.4 as a "limited examination" rate and to refer to the rate applied to exporters that either were not known to the IA (for whatever reason) or did not exist at the time of the investigation, which is the situation in this dispute, as a "residual duty" rate. There is no equivalent to Articles 6.10 and 9.4 of the Anti-Dumping Agreement in the SCM Agreement, so it is not clear whether or how a "limited examination rate" would apply in a CVD context. However, the possibility of a residual duty rate is equally likely to arise in a CVD investigation, as it did in these investigations. Thus, for the sake of clarity and consistency, we will also use the term "residual duty" rate in respect of the CVD rate at issue in this dispute.

7.98.  We also find it useful to underline at the outset that the US claims regarding the residual AD and CVD rates at issue do not concern the permissibility in general of imposing residual duties with respect to exporters that either were not known to the IA (for whatever reason) or did not exist at the time of the investigation. The United States makes no claim or argument suggesting that residual duties are in general not allowed under the Agreements.^[198] Rather, its claims concern the way in which MOFCOM determined the residual AD and CVD rates applied in the investigations at issue.

7.99.  We agree with the general understanding of the parties that residual duty rates are permitted in AD and CVD cases. In our view, Article 9.5 of the Anti-Dumping Agreement and Article 19.3 of the SCM Agreement, which require that IAs undertake a review for the purpose of determining individual margins of dumping or subsidy rates for any exporters or foreign producers in the exporting country in question that did not export the subject product to the investigating country during the POI, strongly support the conclusion that residual duties are generally allowed under both Agreements. While no duties may be levied until such reviews are carried out, these provisions allow the authorities in the investigating country to request guarantees to ensure that, if the review results in a determination of dumping or subsidization with respect to the new exporter, duties can be levied retroactively to the date of initiation of the review. In the absence of residual duties, the importing country would have no basis on which to establish a level for such guarantees, and thus, the provisions of the Agreements in this regard would be inutile.

7.100.  We also consider that residual duties serve an important policy objective, namely, ensuring the effectiveness of anti-dumping and countervailing measures which the WTO rules allow its Members to impose provided they determine through the appropriate investigative process that the conditions set forth in the Anti-Dumping or the SCM Agreements are satisfied. We note that imposing residual duties may allow an IA to preclude the circumvention of AD and CVD rates imposed following an investigation. This is because, in the absence of residual duties, exporters that refrained from making themselves known to the IA during an investigation, as well as those that started exporting the subject product to the investigating country following the imposition of duties, could access the market of that country free of AD or CVD duties, thus undermining their effectiveness. Moreover, existing exporters may consider that there is no incentive for them to try to cooperate with the investigating authorities of the importing country, if residual duties were not permitted under the Agreements. Obviously, such a result would frustrate the objective of anti-dumping and countervailing measures, to offset the injurious effects of dumped and subsidized imports on the domestic industry in the importing country.

7.4.3  Determination of the residual AD duty rate: Alleged violations of Articles 6.8, 6.9, 12.2 and 12.2.2 and Paragraph 1 of Annex II of the Anti-Dumping Agreement

7.4.3.1  Provisions at issue

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

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

7.102.  Paragraph 1 of Annex II to the Anti-Dumping Agreement reads:

[a]s soon as possible after the initiation of the investigation, the investigating authorities should specify in detail the information required from any interested party, and the manner in which that information should be structured by the interested party in its response. The authorities should also ensure that the party is aware that if information is not supplied within a reasonable time, the authorities will be free to make determinations on the basis of the facts available, including those contained in the application for the initiation of the investigation by the domestic industry.

7.103.  Article 6.9 of the Anti-Dumping Agreement requires the disclosure of "the essential facts under consideration". Its text is set out in preceding sections of this Report.^[199]

7.104.  Article 12.2 of the Anti-Dumping Agreement requires public notice of "the findings and conclusions reached on all issues of fact and law considered material" in an AD investigation as follows:

[p]ublic notice shall be given of any preliminary or final determination, whether affirmative or negative, of any decision to accept an undertaking pursuant to Article 8, of the termination of such an undertaking, and of the termination of a definitive anti‑dumping duty. Each such notice shall set forth, or otherwise make available through a separate report, in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities. All such notices and reports shall be forwarded to the Member or Members the products of which are subject to such determination or undertaking and to other interested parties known to have an interest therein.

The obligation in Article 12.2 in relation to a final determination is further elaborated in subparagraph Article 12.2.2, as follows:

[a] public notice of conclusion or suspension of an investigation in the case of an affirmative determination providing for the imposition of a definitive duty or the acceptance of a price undertaking shall contain, or otherwise make available through a separate report, all relevant information on the matters of fact and law and reasons which have led to the imposition of final measures or the acceptance of a price undertaking, due regard being paid to the requirement for the protection of confidential information. In particular, the notice or report shall contain the information described in subparagraph 2.1, as well as the reasons for the acceptance or rejection of relevant arguments or claims made by the exporters and importers, and the basis for any decision made under subparagraph 10.2 of Article 6.

7.4.3.2  Arguments of the parties

7.4.3.2.1  United States

7.105.  The United States argues that MOFCOM erred by determining the residual AD duty rate on the basis of facts available and thereby violated Article 6.8 of the Anti-Dumping Agreement and paragraph 1 of its Annex II. The United States contends that following the initiation of the AD investigation at issue, MOFCOM sent questionnaires only to the exporters that the petitioners had identified in the petition. It did not make a further effort to identify other exporters.^[200] The United States acknowledges that MOFCOM also notified the US Embassy of the initiation and requested that it notify the relevant US exporters, but argues that any notification steps that MOFCOM may have taken in reaching out to such US exporters are irrelevant because, as a matter of logic, the unknown US exporters were not notified of the information required and cannot be said to have engaged in any of the acts identified in Article 6.8 as justifying the use of facts available. In any event, the United States contends that the notification steps taken by MOFCOM were insufficient to justify the use of facts available.^[201] In this regard, the United States submits that posting the notice of initiation on MOFCOM's website does not provide sufficient notice to an exporter unless that exporter actively reviews that website. Second, placing the notice in a public reading room, with no additional targeted communication, is even less likely to give adequate notice. Third, as noted by the Appellate Body in China – GOES, an embassy is not obliged to make its exporters aware of an investigation.^[202] Whether or not US exporters other than those identified in the petition came forward to participate in the investigation is, in the view of the United States, beside the point because the fact remains that the residual duty rate imposed by MOFCOM did apply to US exporters that did not register or were otherwise unknown to MOFCOM.

7.106.  The United States claims that under the Anti-Dumping Agreement, the pre-condition to resort to facts available with respect to an exporter is to give that exporter an opportunity to provide the information required of it. Use of facts available can only be justified if the exporter then engages in any of the behaviours set out in Article 6.8 of the Anti‑Dumping Agreement, namely refusing access to or otherwise not providing information that is necessary to the investigation, or otherwise significantly impeding the investigation. In this investigation, no US exporter was found to have engaged in any of these acts. In fact, the US exporters to which the contested residual rate applied were non-existent. Hence, it was logically impossible to inform a non-existent exporter of the information required by the IA and for that exporter to then fail to cooperate with the IA. Therefore, argues the United States, MOFCOM's use of facts available in the determination of the residual AD duty rate was inconsistent with the Anti‑Dumping Agreement. In respect of this claim, the United States finds the reasoning of the panel in China – GOES to be persuasive and requests that this Panel follow the same approach. The US claim under Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement relates to MOFCOM's use of facts available in the calculation of the contested residual AD duty rate; it does not extend to MOFCOM's choice of facts available.^[203]

7.107.  Further, the United States argues that in applying facts available in the determination of the contested residual AD duty rate, MOFCOM also violated certain procedural obligations set forth in the Anti-Dumping Agreement. First, the United States contends that MOFCOM violated Article 6.9 of the Anti-Dumping Agreement by failing to disclose the essential facts underlying the determination of the residual AD duty rate. Specifically, the United States submits that MOFCOM failed to disclose essential facts with regard to: (i) whether the US exporters refused access to necessary information or significantly impeded the investigation; (ii) why a 21.5% residual AD duty rate was deemed to be appropriate; and (iii) the facts underpinning and details of the calculation of the 21.5% rate.^[204] The United States notes that the MOFCOM's explanation in the final determination was limited to a cursory explanation in one sentence, which also appeared in its preliminary determination and the final disclosure. The lack of sufficient explanation deprived the investigated US exporters of their right to defend their interests.

7.108.  Second, the United States asserts that MOFCOM acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement because it failed to explain the factual and legal bases of its decision to apply facts available in the determination of the residual AD duty rate. In this regard, the United States refers to the factual and legal bases for MOFCOM's use of facts available pursuant to its regulations as relevant information on matters of fact and law and reasons that led to the imposition of final measures within the meaning of Article 12.2.2.^[205]

7.4.3.2.2  China

7.109.  China acknowledges that MOFCOM determined a residual AD duty rate based on facts available, using in this regard the 21.5% dumping margin alleged in the petition. China notes that the Anti-Dumping Agreement does not prescribe a particular methodology for the determination of the residual rate where the IA calculates individual margins for all foreign exporters subject to an investigation, as it did in this case, and asserts that this "silence" gives IAs discretion in determining residual duty rates. Given this "gap" in the Anti‑Dumping Agreement, China considers that Article 6.8 provides a logical basis for the determination of residual duty rates in the situation of this investigation.^[206]

7.110.  China claims that in the AD investigation at issue, MOFCOM complied with the requirements of Article 6.8 of the Anti-Dumping Agreement and Annex II in using facts available in the determination of the residual AD duty rate. It took all the reasonable steps to identify all exporters of the subject product from the United States. The notice of initiation invited all interested parties to register for participation in the investigation within 20 days of its publication and specified that, in the event of non-cooperation, MOFCOM could make its determinations on the basis of existing materials. The notice was posted on MOFCOM's website and made available in its public reading room. MOFCOM also asked the US government to inform all US exporters of the subject product of the initiation of the investigation. MOFCOM subsequently sent questionnaires to the US exporters identified in the petition, and also to four additional exporters that had registered for participation by the relevant deadline. In China's view, these steps constituted a reasonable and comprehensive notification effort, and consequently, MOFCOM was justified in considering as non-cooperating any US exporters that had failed to register for participation within the 20‑day period and applying a residual duty rate determined on the basis of facts available to any exports from such exporters. China argues that the fact that four US exporters in addition to those identified in the petition registered for participation in the investigations at issue underlines the adequacy of MOFCOM's notification efforts.^[207]

7.111.  China also submits that the logic of applying a residual rate determined on the basis of facts available to non-cooperating foreign exporters is to encourage cooperation in AD investigations. China disagrees with the reasoning of the panel in China – GOES, which, China contends, failed to take into account MOFCOM's reasonable approach in the underlying investigation, namely that any exporter not responding to the notice of initiation can be treated as non-cooperating for purposes of Article 6.8 of the Anti-Dumping Agreement. In China's view, contrary to the reasoning of that panel, "an investigating authority should not be required to conduct the futile act of continuing to solicit information from an interested party that has, upon notification of the requirements for participation in an investigation, determined not to cooperate."^[208] China is of the view that provided an IA engages in a reasonable and comprehensive notification effort, it can treat as non-cooperating any exporter that fails to participate in the investigation, irrespective of whether such exporter does not exist or exists but has chosen not to make itself known.^[209] In this regard, China notes the finding by the panel in China – Broiler Products that it would be reasonable for an IA to consider as non-cooperating exporters that fail to make themselves known following the initiation of an investigation and to calculate a residual duty rate on the basis of facts available for such exporters.

7.112.  As far as the procedural violations alleged by the United States are concerned, China notes that this case is different from China – GOES. Unlike China – GOES, where the basis of the determination of the residual rate was unclear, in the AD investigation at issue here it is abundantly clear that the residual duty rate was based on the dumping margin alleged in the petition. Therefore, China contends that MOFCOM's final disclosure contained, as required under Article 6.9 of the Anti-Dumping Agreement, all pertinent facts on which the determination of the residual rate was based. To the extent that the United States argues that the Article 6.9 disclosure obligation also applies to the IA's reasoning, China disagrees, asserting that the obligation only applies to facts underlying the decision on the application of definitive measures.

7.113.  China also submits that the public notice given by MOFCOM in respect of the residual duty rate complied with the requirements of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement. China argues that the legal and factual bases for MOFCOM's determination of the contested residual AD duty rate are explained on the record and reflected in MOFCOM's final determination of which public notice was given. Specifically, China states that the final determination explains that, following its notification efforts to US exporters, MOFCOM considered as non-cooperating those producers that failed to register for participation and calculated a residual duty rate for them on the basis of facts available. It also explains that as facts available MOFCOM relied on the dumping margin claimed in the petition. Regarding the notice obligation under Article 12 of the Agreement, China sees an important difference between the facts of the investigation at issue and the investigation subject to the China – GOES dispute. Specifically, China asserts that, unlike in the automobiles investigation, in the GOES investigation the basis on which the residual AD duty had been calculated was not clear. Thus, China urges the Panel not to follow the reasoning of the panel in China – GOES with regard to this aspect of the US claim.^[210]

7.4.3.3  Arguments of the third parties

7.114.  With regard to the US claim under Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement, the European Union notes that the United States relies on the Appellate Body report in Mexico – Anti-Dumping Measures on Rice and the panel report in China – GOES. However, the European Union notes that the panel in China – GOES decided the issue on the narrow proposition that the notice of initiation was insufficiently detailed and that it declined to comment on the question of whether notice can ever be given publically. The European Union notes that the United States does not explain how an IA can give notice to producers that exist but are not known and do not make themselves known to the IA.^[211] The European Union anticipates that this Panel will follow prior decisions on this matter unless it finds cogent reasons not to do so but notes that this would nevertheless leave the question of what an IA should do in order to ensure public notice of investigations. In this regard, the European Union is of the view that an IA can request the government of the exporting country to identify the exporters of the subject product.

7.115.  With respect to the Articles 6.9 and 12.2 aspects of the claim, the European Union agrees with the United States that MOFCOM did not provide an adequate final disclosure or public notice of the final determination, respectively.

7.116.  Japan notes that the prerequisite to using facts available in an AD investigation is to give the interested party concerned notice of the information requested of it and of the fact that failure to provide that information may lead to a determination based on facts available. Hence, an IA cannot base the dumping margin determination for a foreign exporter on facts available without first putting the exporter on notice of the information requested of it for that determination. Japan is of the view that, as clarified by the panel in China – GOES, posting a notice in a public place or on the internet may not necessarily satisfy this notice requirement. This is all the more true with respect to exporters that did not exist during the relevant POI because such exporters cannot possibly refuse to cooperate with the IA.

7.117.  Korea divides non-investigated foreign exporters in an AD investigation into three categories, namely, (i) those willing to participate in the investigation but which are discouraged from doing so for reasons of impracticability; (ii) those unwilling or having no interest in participating in the investigation, and (iii) those that are either unaware of, or non-existent at the time of, the investigation. Korea contends that exporters in the first category should be subjected to a duty rate calculated pursuant to Article 9.4 of the Anti-Dumping Agreement. Those in the second category may have their margins calculated on the basis of facts available. Margins for exporters in the third category may be calculated based on facts available if the IA made its best efforts in notifying interested parties of the initiation of the investigation. In Korea's view, exporters that did not exist at the time of the investigation may request a new shipper's review under Article 9.5 of the Agreement.

7.118.  Saudi Arabia underlines that an IA may only have recourse to facts available after notice is given to the relevant interested party of the information required of it and the latter fails to cooperate with the IA. It also submits that where the IA resorts to facts available to make a certain determination, its Article 6.9 disclosure and Article 12.2 public notice should explain, inter alia, the facts that lead the IA to resort to facts available. Further, facts available may only be used in order to fill in the gaps in the necessary information requested of the relevant interested party. In filling in such gaps, argues Saudi Arabia, the IA has to use the most fitting or most appropriate facts available. In Saudi Arabia's view, facts available may not be used where the absence of the information is directly attributable to the IA's own failure to request it.

7.119.  Turkey contends that there is no rule, principle or guidance in the Anti-Dumping Agreement regarding the imposition of a residual duty for exporters that are not identified by the complainant or the IA, and which did not cooperate during the investigation. In Turkey's view, there is a lacuna in the Anti-Dumping Agreement in this regard and the lacuna should be addressed in a way that would observe due process rights of foreign exporters while having regard to the ultimate objective of trade remedies to protect domestic industries against unfair trade practices. Turkey notes that the WTO jurisprudence limits an IA's discretion in resorting to facts available in the determination of dumping margins for unknown exporters and contends that this has the potential to seriously undermine the effectiveness of AD and CVD measures. Turkey underlines that the issue before this Panel is whether facts available may be used in the determination of a residual AD duty rate, not the more fundamental question of whether the imposition of such a rate is generally permitted under the Agreement. Nonetheless, Turkey points out that it considers the imposition of a residual AD duty rate essential for several reasons. First, the absence of such a rate will undermine the effectiveness of AD measures. Second, without a residual duty rate, exporters for which no individual duty has been imposed will continue to ship the subject product to the importing country by taking advantage of the extra costs borne by cooperating exporters. Third, non-imposition of a residual duty rate would render inutile the provision of Article 9.5 of the Agreement regarding new shipper's reviews.

7.4.3.4  Evaluation by the Panel

7.120.  The US claim before us has two aspects, namely a) the substantive aspect, under Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement, concerning the use of facts available in the determination of the residual AD duty at issue, and b) the procedural aspect that alleges violations of Articles 6.9, 12.2 and 12.2.2 of the Anti-Dumping Agreement concerning disclosure and notice obligations in the process that lead to the imposition of the residual duty. We will first evaluate the substantive aspect of the claim, followed by the two procedural aspects.

7.4.3.4.1  Alleged violation of Article 6.8 and Annex II of the Anti-Dumping Agreement

7.121.  Article 6.8 of the Anti-Dumping Agreement allows an IA to base its determinations regarding an interested party that refuses access to or otherwise fails to provide necessary information within a reasonable period or significantly impedes the investigation on facts available. It is clear from the text of this provision that unless the IA concludes that an interested party refused access to or otherwise did not provide necessary information within a reasonable period or significantly impeded the investigation, it cannot use facts available in its determinations concerning that party.

7.122.  Paragraph 1 of Annex II to the Anti-Dumping Agreement establishes two important requirements with regard to the use of facts available. First, it requires that, after initiation, the IA specify in detail the information required of an interested party and the manner in which that information is to be structured. Second, it requires that the IA ensure that the interested party is aware of the fact that if the required information is not provided within a reasonable time, the IA may make its determinations on the basis of facts available. This ensures that a party is given the opportunity to submit the specific information required of it before the IA may resort to facts available.^[212] The first aspect parallels the requirement set forth in Article 6.1 of the Anti-Dumping Agreement that "[a]ll interested parties in an anti‑dumping investigation shall be given notice of the information which the authorities require [. . .]," but is more specific and detailed.^[213]

7.123.  In our view, read together, these provisions make it clear that an IA cannot use facts available unless the interested party at issue has been informed of the specific information requested of it, and of the fact that failure to provide that information may lead to a determination based on facts available. However, there is nothing in the AD Agreement regarding how the IA is to fulfil these requirements. The United States asserts that MOFCOM acted inconsistently with Article 6.8 and paragraph 1 of Annex II by applying facts available in the determination of the residual AD duty rate without first giving unknown US exporters notice of the information required of them and of the fact that failure to provide that information may lead to a determination based on facts available. China, on the other hand, submits that MOFCOM adequately gave the required notice and that therefore MOFCOM was justified in using facts available in the determination of the residual AD duty.

7.124.  The parties' disagreement is over whether MOFCOM's reliance on facts available in the determination of the residual duty rate was permissible. The United States argues that MOFCOM acted inconsistently with Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement by resorting to facts available in the determination of the residual AD duty rate because it did not give the entities to which that rate would apply notice of (1) the information requested and (2) the fact that failure to provide the requested information could lead to a determination based on facts available. China disagrees and contends that given the multi-faceted approach taken by MOFCOM to notify foreign producers and exporters of the investigation and the registration requirement, it was reasonable for MOFCOM to consider as non-cooperative any US exporter that did not come forward and register as an interested party and to determine a residual duty for such exporters on the basis of facts available.

7.125.  The facts in this case are undisputed. MOFCOM received an application for the initiation of AD and CVD investigations on 9 September 2009, which was amended on 19 October 2009. The application identified three US exporters of the subject automobiles, General Motors USA, Ford USA and Chrysler USA.^[214] MOFCOM initiated the investigations by publishing notices of initiation on 6 November 2009. MOFCOM individually contacted the US exporters identified in the petition of the initiations, posted the notices of initiation on its website, and made them available in its public reading room. In addition, on the same day, MOFCOM sent the notices of initiation and the public version of the petition to the US Embassy in Beijing and requested that the US government provide copies of the notices to any interested parties. The notices of initiation set forth the procedures for registering for participation in the AD and CVD investigations, and indicated that MOFCOM had the right to "refuse to accept relevant materials" of interested parties that failed to register, and could "determine based on the existing materials available." Interested parties had until 26 November 2009 to register to participate in the investigation. The United States does not take issue with China's assertion that MOFCOM made efforts to reach out to all US exporters of the subject product^[215], and that as a result of those efforts, four additional US exporters and exporters that were not identified in the application, Mercedes-Benz USA, BMW USA, Honda USA, and Mitsubishi USA, came forward and registered for participation in addition to the three companies, General Motors USA, Ford USA and Chrysler USA, named in the application.^[216]

7.126.  MOFCOM determined a residual AD duty rate for unknown US exporters on the basis of facts available. The record shows that MOFCOM calculated individual dumping margins for five US exporters and determined a residual AD duty rate for all other US exporters. Concerning the basis for the determination of the residual duty rate, the preliminary determination states that "[w]ith regard to all other American companies, in accordance with Article 21 of Anti-dumping Regulation, the investigating authority decides to adopt the facts already known and the best information available, and applies the dumping margin claimed in the petition to them."^[217] The final determination confirms the determination of the residual duty on the same basis.^[218] Hence, it is clear, MOFCOM considered the dumping margin alleged in the petition to be facts available, and applied it as the residual AD duty rate for all other US exporters. MOFCOM did not itself make any calculation in determining the residual duty rate.

7.127.  In order to resolve this aspect of the US claim, we need to determine whether MOFCOM, in using facts available in the determination of the residual AD duty, complied with the requirements set out in paragraph 1 of Annex II. That is, did MOFCOM specify in detail the information required of the US respondents and inform them that, if information was not supplied within a reasonable time, determinations could be made on the basis of facts available?

7.128.  As noted, in this investigation, MOFCOM took steps to notify US respondents of the initiation of the investigation, and requested certain information of them as part of the process of registration. Following its publication, the notice of initiation was posted at MOFCOM's website and made available in its public reading room. Further, MOFCOM forwarded the notice to the US embassy in Beijing and asked that it be conveyed to the producers of the subject product in the United States. The notice of initiation, in a section entitled "Register to Respond" states that:

[a]ny interested party involved in the anti-dumping investigation can apply to the Bureau of Fair Trade for Imports and Exports, MOFCOM for participating in the responding within twenty days since this Announcement is published. The respondent exporters or manufacturers shall provide the quantity and value of the Subject Product exported to China from September 1, 2008 to August 31, 2009.^[219]

The notice then references the Registration Form^[220] which requests the same information and, in the subsequent section entitled "Not Register to Respond", states:

[i]f any interested party fails to register with the Ministry of Commerce for responding within the time stipulated in this Announcement, the Ministry of Commerce shall have the right to refuse to accept relevant materials it submitted, and shall have the right to determine based on the existing materials available.

7.129.  The issue is whether the notice of initiation and the registration form sufficed for purposes of Article 6.8 and, in particular, paragraph 1 of Annex II, to specify in detail the information required of the US respondents such that a failure to provide the information requested in such notice could justify resorting to facts available in determining a margin of dumping for unknown exporters. We recall that the Agreement does not provide any guidance for how an IA is to "specify in detail" the information it requires. While sending questionnaires to known foreign producers will generally suffice in this regard, the situation is more complicated in the case of foreign producers that are unknown to the IA, or which do not exist at the time of the investigation, but for whom the IA may wish to determine a residual duty.

7.130.  In our view, a residual duty rate may be determined on the basis of facts available if the record of the investigation shows that the IA took all reasonable steps that might be expected from an objective and unbiased IA to specify in detail the information requested from unknown producers.^[221] We do not preclude that such specification may be made through a public notification.^[222] Indeed, it seems to us that, public notice may be one of the ways, if not the only way, in which an IA could specify to exporters unknown to it the information required of them, as well as inform them of the fact that if the information is not provided, determinations may be made on the basis of facts available.

7.131.  It is undisputed that, following its publication, MOFCOM posted the notice of initiation on its website and placed it in its public reading room and sent the notice to the US embassy in Beijing to be forwarded to the US exporters of the subject product. In our view, the fact that four additional producers that were not identified in the application, Mercedes-Benz USA, BMW USA, Honda USA, and Mitsubishi USA, came forward and registered to participate in the investigation confirms that public notice can be effective in reaching exporters unknown to the IA. Indeed, we do not understand the United States to argue otherwise, as a general matter.

7.132.  The United States cites the panel and Appellate Body reports in Mexico – Anti-Dumping Measures on Rice in support of its contention that MOFCOM failed to comply with the requirements of Article 6.8 and paragraph 1 of Annex II. In Mexico – Anti-Dumping Measures on Rice, the panel^[223] and the Appellate Body^[224] concluded that an IA could not resort to facts available in the calculation of a residual duty rate without having given unknown foreign producers notice of the information required and without giving them an opportunity to submit that information. We agree. However, neither the panel nor the Appellate Body in Mexico – Anti-Dumping Measures on Rice addressed the question we consider to be the crux of the issue before us – whether the steps taken by MOFCOM to notify unknown US exporters of the initiation of the investigation, and the information requested in that context, was sufficient for us to conclude that MOFCOM specified in detail the information required of foreign exporters who did not participate in the investigation, and thus did not provide the requested information, and therefore that a resort to facts available in determining a residual duty rate for such exporters was warranted pursuant to Article 6.8 and Annex II.

7.133.  We consider that MOFCOM took the steps that could reasonably be expected from an IA to contact the unknown exporters. Indeed, the fact that four additional US exporters came forward in response to MOFCOM's effort suggests that the notice of initiation, together with MOFCOM's other efforts to contact US exporters, sufficed to ensure that potentially interested parties were made aware of the investigation and offered an opportunity to participate.^[225] However, in our view, this alone is not necessarily sufficient to justify the subsequent use of facts available, as it does not satisfy the obligation set forth in paragraph 1 of Annex II. What matters for purposes of this obligation is that the IA specify in detail to the unknown exporters the information required from them for the determination of the residual AD rate.

7.134.  In this regard, we consider that, read in light of the provisions of Annex II, in particular paragraph 1, Article 6.8 of the Anti-Dumping Agreement allows an IA to use facts available in order to be able to make a determination in a situation where information necessary for that determination was requested but was not provided. In our view, it is a matter of due process, and generally required under the Anti-Dumping Agreement, that a determination affecting an interested party should be made on the basis of information relevant to the issue and the party. In the case of dumping margin determinations, this means, preferably, information provided by the party in question. However, where a party does not provide information, the Agreement makes clear that the absence of information should not preclude the IA from making a determination. Thus, Article 6.8 permits the use of facts available in making the necessary determination. However, it seems self-evident to us that, as a matter of due process, and as paragraph 1 of Annex II provides, a party must first be given the opportunity to provide the necessary information, before a determination can be justifiably made on the basis of facts available. For us, this entails that, in principle, there is a parallel between the scope of the information requested and not provided by an interested party and the scope of facts available used by an IA in place of the missing information to make necessary determinations.^[226]

7.135.  In this investigation, the notice of initiation required the respondents "to provide the quantity and value of the Subject Product exported to China from September 1, 2008 to August 31, 2009".^[227] The notice also referenced the registration form that foreign producers had to fill out in order to participate in the investigation, which was available from MOFCOM's website. Apart from general information about the company concerned, the registration form, like the notice of initiation, only asked respondents to provide information on the quantity and value of the subject product shipped to China during the POI.^[228] Following the expiry of the deadline for registration, MOFCOM sent a full questionnaire to the seven US exporters that had registered to participate.^[229] Those questionnaires, as is generally the case, requested comprehensive information concerning all aspects of the calculation of dumping margins from each respondent, including information relevant to the determination of normal value and export price, as well as any adjustments that might be appropriate. MOFCOM presumably used that information in calculating dumping margins for the individual respondents.^[230]

7.136.  However, for the residual duty rate, MOFCOM used the dumping margin alleged in the petition as facts available. That allegation must have been based on a comparison of some normal value with some export price, and may even have reflected some adjustments.^[231] Thus, MOFCOM's use of the margin alleged in the petition as facts available to determine the residual duty rate necessarily encompassed the petition information on normal value, export price and possibly certain adjustments. In our view, this demonstrates that the scope of facts available used by MOFCOM was much wider than the scope of the information requested in the notice of initiation and/or the registration form. While it is true that the notice of initiation indicates that, in the event of non-registration, determinations might be made on facts available, in our view, a request for information concerning the identity, volume and value of exporters of the product is not a sufficiently specific request for information to justify the determination of a dumping margin on the basis of facts available for unknown or non-existent exporters. Such an approach in our view is inconsistent with Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement. A disparity between the information requested from a producer and the determination ultimately made on the basis of facts available undermines the due process rights of the parties concerned.

7.137.  China argues that the registration form and the subsequent dumping questionnaire serve a complementary purpose in China's anti-dumping system. A notice of initiation, which contains a link to the registration form, is designed to reach all potential interested producers, solicit from them certain data that is necessary for an orderly investigative process and notify them of the consequences of a failure to register. Once the universe of registered producers is ascertained, MOFCOM sends each of them a dumping questionnaire seeking data necessary for the calculation of dumping margins. In China's view, non-registration demonstrates a failure to cooperate, and determinations with respect to non-cooperating producers may be made on the basis of facts available.^[232] We are not persuaded by this argument.

7.138.  First, we recall that Article 6.8 does not condition the use of facts available on a failure to cooperate by declining to participate in an investigation.^[233] Rather, it establishes that determinations may be made based on facts available if an interested party (1) refuses access to necessary information within a reasonable period, (2) otherwise does not provide necessary information within a reasonable period, or (3) significantly impedes the investigation. We do not accept that a failure to register in response to a notice of initiation necessarily establishes that any one of these prerequisites is satisfied, unless that notice specifies in detail the information requested from the respondents and such information is not submitted. China's position would mean that the IA decides at the outset of the process, before dispatching dumping questionnaires or otherwise specifying the information that will be necessary to make the determinations required for the imposition of an AD duty, which foreign producers will be found to have refused access to or otherwise not provided necessary information within a reasonable time, all without those producers having been made aware of what the necessary information is.^[234] Moreover, it results in certain producers being deprived of the opportunity to provide information very early in the investigation, without having been informed of the full extent of the information requested. In our view, this is not acceptable under Article 6.8 and Annex II.

7.139.  We are cognizant that a registration process, such as the one used by MOFCOM in this investigation, may help ensure an orderly investigative process by allowing the IA to identify interested parties which will participate in the investigation. There is nothing in the Anti-Dumping Agreement that would preclude the use of such a tool to help manage the process of investigation. However, the use of such a tool does not relieve an IA of its obligation to comply with the requirements of Article 6.8 and Annex II of the Anti-Dumping Agreement. Similarly, we see nothing to preclude an IA from using a public notice mechanism to make potential interested parties aware of the information that will be necessary for the determinations the IA will have to make, and of the consequences of a failure to provide that information. However, we conclude that the notice of initiation and registration form relied upon by MOFCOM in this case were insufficient in this respect because they did not specify in detail the information requested from the US respondents.^[235] As discussed above, the only information requested in the notice of initiation and the registration form concerned the identity of companies, and the volume and value of their exports to China of the subject products. This information is far from the type or scope of information necessary for purposes of determining dumping margins. We do not mean to suggest that an IA would necessarily have to publicly notify the dumping questionnaire in order to satisfy the requirements of Article 6.8 and paragraph 1 of Annex II, although such a step would obviously be sufficient. However, at a minimum a request for information in this context would have to be more specific as to the type and scope of the necessary information for purposes of determinations to be made by the IA. In addition, in our view, it would be preferable if the consequences of a failure to provide information were made known with more specificity, for instance, that AD duty rates may be determined based on facts available.

7.140.  On the basis of the foregoing, we find that China acted inconsistently with its obligations under Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement in its use of facts available in the determination of the residual AD duty rate in the automobiles investigation.

7.4.3.4.2  Alleged violation of Article 6.9 of the Anti-Dumping Agreement

7.141.  We recall that Article 6.9 of the Anti-Dumping Agreement requires the disclosure of essential facts under consideration which form the basis for the decision on the application of definitive measures. This obligation applies to facts, as opposed to reasoning. Further, it only requires disclosure of facts that are "essential" and which are pertinent to the IA's consideration of whether or not definitive measures should be applied.^[236] In this regard, "essential facts" are not limited to those that support the decision ultimately reached by the IA, but encompass all facts necessary to the process of analysis and decision-making by the IA.^[237]

7.142.  The United States claims that China failed to disclose the essential facts underlying MOFCOM's determination of the residual AD duty rate. Specifically, the United States submits that MOFCOM failed to disclose essential facts under consideration with regard to: (i) whether the US exporters refused access to necessary information or significantly impeded the investigation; (ii) why a 21.5% residual AD duty rate was deemed to be appropriate; and (iii) details of the calculation of the 21.5% residual duty rate. China contends that MOFCOM complied with the disclosure requirement of Article 6.9. According to China, all pertinent facts regarding the use of facts available in the calculation of the residual AD duty were laid out in MOFCOM's final disclosure.

7.143.  In the investigation at issue, MOFCOM sent a final disclosure to the government of the United States, which states, in relevant part:

6. Other U.S. companies (All Others)

For other U.S. companies, in accordance with Article 21 of the Antidumping Regulations of the P.R.C., the Investigating Authority decided to use the available facts and the best information available and to apply the dumping margin claimed in the petition.

After the preliminary determination, the USG commented that in making its preliminary determination, the Investigating Authority adopted adverse data for determining the dumping margin for other U.S companies and failed to explain the reasoning behind its use of adverse inferences in calculating the rate for “all other” companies. Further, the Investigating Authority has not explained how other exporters that would be subject to this “all-others” rate have failed to cooperate in this investigation. The USG urges the Investigating Authority to apply the weighted average of the rates calculated for firms that have not expressly been un-cooperative in the investigation [.]

The Investigating Authority believes that before initiation, the Investigating Authority notified relevant exporters and producers listed in the petition; also, it urged the USG to notify the relevant exporters or producers. The initiation notice was publicly available on the MOFCOM website. After initiation, the Investigating Authority set up the registration procedure; meanwhile, it issued questionnaires to registered respondents, which were also available on the MOFCOM website. The Investigating Authority believes that within the best of its ability, all exporters were given sufficient opportunities through the above mentioned procedures, and they could appropriately respond if they were willing to cooperate with the investigation. Regarding exporters that did not clearly respond to the investigation, the Investigating Authority could reasonably believe they had no intention to cooperate with the investigation, so the Investigation Authority decided their dumping margin based on best information available, not adverse information.^[238]

7.144.  The final disclosure clearly states that MOFCOM determined the residual AD duty rate for all other US exporters on the basis of facts available and that as facts available it used the margin claimed in the petition. The final disclosure also reflects that the US government objected to MOFCOM's use of facts available in this regard, arguing in particular that MOFCOM had not explained how the all other US exporters had failed to cooperate in the investigation. In response, MOFCOM explains the steps taken in giving notice of the initiation of the investigation and states that it was reasonable under these circumstances to deem the US exporters that had not made themselves known to be non-cooperating, and to determine the residual AD duty rate that would apply to their exports on the basis of facts available.

7.145.  Before discussing the specific issues that, according to the United States, should have been but were not included in the final disclosure, we would like to underline that, in our view, the disclosure obligation under Article 6.9 applies to the facts underlying the findings actually made by an IA during an investigation. In other words, the maximum scope of this obligation is the facts on the record, and what is actually decided. Whether or not the IA should have made a different decision on a given issue, or should have made a finding on an issue but did not, is a matter that falls with the scope of the relevant substantive provisions of the Agreement establishing obligations on IAs in the course of investigations, and not under Article 6.9. With this in mind, we turn to the specific arguments presented by the United States in support of this claim.

7.146.  First, the United States argues that the final disclosure fails to explain whether the US exporters refused access to necessary information or significantly impeded the investigation. We disagree. As noted above, the final disclosure explains the efforts made by MOFCOM following the initiation of the investigation to contact the US exporters, states that all producers were given an opportunity to participate in the investigation if they so wished and that therefore MOFCOM reasonably concluded that the producers that failed to respond to MOFCOM did not wish to cooperate in the investigation. In our view, the final disclosure explains the facts on the basis of which MOFCOM based its conclusion that unknown US exporters to have failed to cooperate in the investigation and therefore that it would resort to facts available. Whether those facts justified MOFCOM's decision is a substantive question we have already addressed above.

7.147.  Second, the United States submits that the final disclosure does not explain why a 21.5% residual AD duty rate was deemed to be appropriate. However, as discussed above, the Article 6.9 disclosure obligation applies to facts, and not to explanations or reasoning for the decisions based on those facts. Whether or not a particular rate is appropriate as the level of a residual duty seems to us to be a matter of reasoning, not fact, and thus would not come within the scope of the obligation set forth in Article 6.9. Moreover, the United States has not argued or shown that there were any other relevant facts on this matter that were or should have been considered by MOFCOM in deciding the residual rate, but that were not included in the final disclosure.

7.148.  Third, the United States refers to the details of the calculation of the 21.5% residual duty rate. We note, however, that the disclosure clearly states that this duty rate was based on the margin alleged in the petition. We asked the United States to specify what specific types of information on the record of the investigation at issue MOFCOM should have included in its final disclosure but did not do so. In response, the United States did not point to anything other than the three issues discussed above.^[239] Moreover, it is not clear to us that the "details of the calculation" of a residual duty rate per se constitute facts, as opposed to reasoning or analysis, which as noted above, do not fall within the scope of the Article 6.9 disclosure obligation. As it is clear that MOFCOM made no calculation in this regard, simply applying the margin set out in the petition as the residual rate, we fail to see what other facts could possibly have been relevant in this regard and included in the final disclosure.

7.149.  The United States also contends that MOFCOM's use of the margin claimed in the petition as facts available does not suffice to fulfil China's obligations under Article 6.9. Since this meant using information from a secondary source, argues the United States, the final disclosure should have explained whether MOFCOM used special circumspection in using that information, as required under paragraph 7 of Annex II of the Agreement.^[240] However, whether or not MOFCOM respected the provisions of paragraph 7 of Annex II is a question regarding the substantive obligations for its determination, not the disclosure obligation under Article 6.9. In this regard, we also note that the United States has not made a claim under paragraph 7 of Annex II in these proceedings.

7.150.  On this basis, we reject the US claim that MOFCOM acted inconsistently with the disclosure obligation under Article 6.9 of the Anti-Dumping Agreement in connection with the determination of the residual AD duty rate at issue.

7.4.3.4.3  Alleged violations of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement

7.151.  Article 12.2 of the Anti-Dumping Agreement sets forth the requirements regarding the contents of the required public notices of preliminary and final determinations in general. It provides that each such notice has to set forth in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the IA. Article 12.2.2 in turn sets out more specific requirements for the required public notice in the case of a final affirmative determination, reiterating that such a public notice should contain all the information required under Article 12.2, including all relevant information on the matters of fact and law and going on to require that it contain reasons which have led to the imposition of final measures as well as the reasons for the acceptance or rejection of arguments or claims made by exporters and importers.

7.152.  Article 12.2.2 requires that the public notice of an affirmative final determination, or the separate report that may be provided instead, must contain "all relevant information" on "matters of fact and law and reasons which have led to the imposition of final measures". An IA is not required to set out in its determinations all the factual information that is before it, but rather those facts that allow an understanding of the factual basis that led to the imposition of final measures.^[241] An IA must give a reasoned account of the factual support for the decision to impose final measures.

7.153.  The United States contends that MOFCOM acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to explain in the final determination the factual and legal bases for its resort to facts available in the determination of the residual AD duty rate. China asserts that MOFCOM's final determination explains the basis on which the residual AD duty rate was determined. In this regard, China attaches importance to the fact that, unlike the investigation at issue in China – GOES, where it was unclear how MOFCOM had calculated the residual AD duty rate, in the investigation at issue here the final determination explains clearly that the residual AD duty rate applied was the margin claimed in the petition.^[242]

7.154.  In support of its position, China refers to MOFCOM's final determination, which states that, as in the preliminary determination, MOFCOM "applied the dumping margin claimed in the petition" to all other exporters, including unknown exporters.^[243] The final determination also contains MOFCOM's explanations as to why it was justified to treat the unknown US exporters as non-cooperating and therefore to determine the residual duty rate using the margin alleged in the application as facts available, and MOFCOM's discussion of the arguments of parties in this regard.

7.155.  As with the obligation under Article 6.9 of the Agreement, in our view, the notice obligations set out in Articles 12.2 and 12.2.2 apply to the issues of fact and law resolved by the IA and the underlying facts on the record of the investigation. Whether or not the IA should have resolved a particular issue of fact or law differently, or whether it failed to address a necessary issue, is a matter that arises under the relevant substantive provisions of the Agreement governing determinations, and not under Articles 12.2 and 12.2.2.

7.156.  In this case, as the excerpt in paragraph 7.93 above shows, the final determination explains clearly the issues of fact and law considered by MOFCOM relating to the determination of the residual AD duty rate. It states that MOFCOM determined the residual duty rate on the basis of facts available and that as facts available it used the dumping margin claimed in the petition. The final determination also notes the US government's comments on the methodology used by MOFCOM and the latter's explanations in response. Specifically, it explains the steps taken by MOFCOM to contact the US exporters and states that all producers were given an opportunity to participate in the investigation. It says that the producers that did not indicate their willingness to participate were deemed to be non-cooperating and that a residual duty rate was determined for them on the basis of facts available.

7.157.  We asked the United States which other types of information MOFCOM should have included in its public notice but failed to do so. In response, the United States referred to the fact that MOFCOM failed to explain its use of facts available to determine the residual duty rate and why the facts available were appropriate.^[244] However, in our view, the final determination does explain the issues of fact and law underlying MOFCOM's use of facts available. As for the appropriateness of using facts available, the United States has not demonstrated that there were issues of fact and law concerning the appropriateness of relying on facts available which MOFCOM failed to address in its final determination.

7.158.  Therefore, we reject the US claim that MOFCOM acted inconsistently with its obligations under Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement in connection with the imposition of the residual AD duty rate at issue.

7.4.4  Determination of the residual CVD rate: Alleged violations of Articles 12.7, 12.8, 22.3, and 22.5 of the SCM Agreement

7.4.4.1  Provisions at issue

7.159.  Article 12.7 of the SCM Agreement sets forth the conditions under which an IA may apply facts available in a CVD investigation. It provides:

[i]n cases in which any interested Member or interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available.

7.160.  Article 12.8 of the SCM Agreement requires that:

[t]he authorities shall, before a final determination is made, inform all interested Members and interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures. Such disclosure should take place in sufficient time for the parties to defend their interests.

7.161.  Articles 22.3 and 22.5 set forth the requirement to give public notice of certain actions or determinations in a CVD investigation as follows:

22.3.      Public notice shall be given of any preliminary or final determination, whether affirmative or negative, of any decision to accept an undertaking pursuant to Article 18, of the termination of such an undertaking, and of the termination of a definitive countervailing duty. Each such notice shall set forth, or otherwise make available through a separate report, in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities. All such notices and reports shall be forwarded to the Member or Members the products of which are subject to such determination or undertaking and to other interested parties known to have an interest therein. . .

22.5.       A public notice of conclusion or suspension of an investigation in the case of an affirmative determination providing for the imposition of a definitive duty or the acceptance of an undertaking shall contain, or otherwise make available through a separate report, all relevant information on the matters of fact and law and reasons which have led to the imposition of final measures or the acceptance of an undertaking, due regard being paid to the requirement for the protection of confidential information. In particular, the notice or report shall contain the information described in paragraph 4, as well as the reasons for the acceptance or rejection of relevant arguments or claims made by interested Members and by the exporters and importers.

7.4.4.2  Arguments of the parties

7.4.4.2.1  United States

7.162.  The United States asserts that by using facts available in the calculation of the residual CVD rate in the investigation at issue here, without first informing the US exporters of the information required of them and of the fact that failure to provide that information could lead to a determination based on facts available, MOFCOM acted inconsistently with Article 12.7 of the SCM Agreement. The United States argues that MOFCOM sent anti-subsidy questionnaires only to US exporters identified in the petition, and that it did not attempt to identify other US exporters.^[245] The United States notes that the circumstances under which an IA may resort to facts available in its determinations in a CVD investigation are cited in Article 12.7 as a) refusing access to necessary information within a reasonable period, b) otherwise failing to provide such information within a reasonable period, or c) significantly impeding the investigation. Since none of this was the case in the CVD investigation at issue, MOFCOM violated Article 12.7 of the SCM Agreement by resorting to facts available in the calculation of the residual CVD rate. According to the United States, since the US exporters other than those named in the petition were non-existent, it was logically impossible for them to have engaged in any of the acts set forth in Article 12.7.^[246]

7.163.  The United States also contends that MOFCOM violated two procedural obligations in the calculation of the contested residual CVD rate. First, the United States alleges that MOFCOM acted inconsistently with Article 12.8 of the SCM Agreement by failing to disclose to the US exporters essential facts under consideration concerning the calculation of the residual CVD rate. In the view of the United States, MOFCOM's explanation in the final disclosure, which repeated what was in the preliminary and final determinations, was cursory. It was limited to one sentence stating that, on the basis of facts available, the IA had decided to apply the ad valorem subsidy rate calculated for General Motors LLC to all other US exporters. Second, the United States alleges that MOFCOM failed to explain the factual and legal bases for the determination of the residual CVD rate and thus violated Articles 22.3 and 22.5 of the SCM Agreement. According to the United States, the factual and legal bases for MOFCOM's resort to facts available in the calculation of the residual CVD rate were relevant information on matters of fact and law within the meaning of Articles 22.3 and 22.5 and should have been explained.

7.4.4.2.2  China

7.164.  China rejects the US arguments. In China's view, there is a gap in the SCM Agreement regarding the calculation of residual CVD rates. Given this gap, Article 12.7 of the Agreement provides a logical basis for such calculations and this is what MOFCOM did in this investigation. Contrary to the US assertion, China maintains that MOFCOM took several steps to reach all US exporters of automobiles. Specifically, MOFCOM posted the notice of initiation on its website and placed it in its public reading room. The notice of initiation was also sent to the US embassy in Beijing to be forwarded to all US exporters. The notice explained the procedure for registration to participate in the investigation and also warned that failure to participate could result in determinations based on facts available. These were the best efforts that MOFCOM could have taken. Four US exporters, in addition to the three identified in the petition, came forward to register following MOFCOM's notification efforts. In these circumstances, argues China, it was reasonable for MOFCOM, and consistent with Article 12.7 of the SCM Agreement, to consider all other US exporters as being non-cooperating and to calculate, on the basis of facts available, a residual CVD rate that would apply to their exports to China.^[247]

7.165.  China submits that MOFCOM's disclosure of essential facts conformed to the requirements of Article 12.8 of the SCM Agreement. It disclosed all the pertinent facts that were on the record. MOFCOM applied the 12.9% subsidy rate calculated for General Motors as the residual CVD rate, with no adjustments and this is clear from the final disclosure.^[248] To the extent the United States argues that MOFCOM should also have disclosed its reasoning, China contends that Article 12.8 contains no such obligation.

7.166.  Similarly, China contends that all the legal and factual bases for the residual CVD rate imposed by MOFCOM were clearly indicated on the record, consistently with Articles 22.3 and 22.5 of the SCM Agreement.^[249] As explained in the final determination, MOFCOM determined the residual CVD rate on the basis of facts available, and used as facts available the subsidy rate calculated for General Motors which was the highest individual rate calculated.

7.4.4.3  Arguments of the third parties

7.167.  The European Union argues that the status of the government of the exporting country as an interested party is different in AD investigations compared to CVD investigations because, unlike the Anti-Dumping Agreement which uses the term "interested parties" to refer to all interested parties including the government of the exporting country, the SCM Agreement refers to "interested Members" and "interested parties" as two different categories.

7.168.  Further, the European Union notes that, unlike an AD investigation which concerns prices applied by private companies, in a CVD investigation the government of the exporting country is "directly implicated in the act of subsidisation". Therefore, the WTO jurisprudence on the issue of the determination of residual AD duties on the basis of facts available should not be directly transposed into the SCM Agreement. One implication of this would be the possibility of arguing that in the context of a CVD investigation notice to the government of the exporting country may serve as notice to the exporters from that country.

7.4.4.4  Evaluation by the Panel

7.169.  The CVD investigation at issue was initiated and conducted simultaneously with the AD investigation on the same product. As noted above, the facts relevant to the US claims regarding the residual CVD rate are almost identical to the facts concerning the residual AD rate. So are the arguments presented by the parties. The legal provisions at issue, Articles 12.7, 12.8, 22.3, and 22.5 of the SCM Agreement are virtually identical to Articles 6.8, 6.9, 12.2 and 12.2.2 of the Anti-Dumping Agreement. Therefore, in order to avoid repetition, in our assessment of the US claims regarding the residual CVD rate at issue, we will refer to the reasoning set forth above in respect of the claims regarding the residual AD duty rate as appropriate.

7.4.4.4.1  Alleged violation of Article 12.7 of the SCM Agreement

7.170.  This aspect of the US claim challenges the use of facts available in the determination of the residual CVD rate. The arguments presented by the United States, and China's counter-arguments, are substantively the same as those made in connection with the residual AD duty rate, which we discussed above. In short, the United States contends that MOFCOM erred by determining the residual CVD rate on the basis of facts available without first giving unknown US exporters notice of the information required of them and of the fact that failure to provide that information could lead to a determination based on facts available. China points to the efforts made by MOFCOM to contact the US exporters and argues that it was reasonable for MOFCOM to conclude that any US exporters that failed to register for participation were non-cooperating, and therefore to determine a residual CVD rate applicable to them on the basis of facts available. The US claim with respect to the CVD residual duty claim raises the same issue as the claim with respect to the AD residual duty: did MOFCOM, in using facts available in the determination of the residual CVD rate at issue, comply with the requirements set out in Article 12.7 of the SCM Agreement?

7.171.  There is one difference between this claim and the claim regarding the residual AD duty rate, in terms of the legal basis of the US claim. The SCM Agreement does not have a provision analogous to Annex II to the Anti-Dumping Agreement setting out additional requirements with respect to the use of facts available. Thus, the United States relies on Articles 12.1 and 12.7 of the SCM Agreement, the provisions corresponding to Articles 6.1 and 6.8 of the Anti-Dumping Agreement, to establish the existence of an obligation for MOFCOM to inform the interested parties of the information required from them, while in the AD context, the United States relied on paragraph 1 of Annex II, in addition to Articles 6.1 and 6.8 of the Anti-Dumping Agreement in this regard.

7.172.  Previous panels and the Appellate Body have concluded that the SCM Agreement establishes the same general requirements regarding the use of facts available as the Anti-Dumping Agreement, despite the lack of an analogue to Annex II. Thus, in Mexico – Anti-Dumping Measures on Rice, the Appellate Body interpreted the provisions of the SCM Agreement regarding the use of facts available in conjunction with the corresponding provisions of the Anti-Dumping Agreement. In doing so, the Appellate Body noted that the SCM Agreement did not have an annex similar to Annex II of the Anti-Dumping Agreement, but concluded that this did not mean "that no such conditions exist[ed] in the SCM Agreement."^[250] On this basis, the Appellate Body concluded that "it would be anomalous if Article 12.7 of the SCM Agreement were to permit the use of "facts available" in countervailing duty investigations in a manner markedly different from that in anti-dumping investigations."^[251] We also note that the panels in China – GOES^[252] and China – Broiler Products^[253] took the same approach. Such an interpretation is also consistent with the Ministerial Declaration on Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing Measures, in which Ministers underlined "the need for the consistent resolution of disputes arising from anti-dumping and countervailing duty measures."^[254]

7.173.  For the same reasons as set out in these reports, we consider it appropriate to interpret Article 12.7 of the SCM Agreement in harmony with the provisions of Article 6.8 and Annex II of the Anti-Dumping Agreement, and resolve the US claims under both Agreements in a consistent fashion. Therefore, as we did in respect of the US claim regarding the residual AD duty rate, with regard to the present claim, we will consider whether MOFCOM specified in detail the information required from the US exporters and informed them that, if information was not supplied within a reasonable time, determinations could be made on the basis of facts available. This requires us to assess whether MOFCOM took the steps necessary to contact the US exporters and whether it informed such producers of the information requested from them for the determinations it would make.

7.174.  Given that the facts underlying the determination of the residual CVD rate, the US arguments in support of its claim regarding the residual CVD duty rate and China's counter-arguments are identical to the facts, arguments and counter-arguments addressed above in connection with the United States claim under Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping Agreement, we consider it appropriate to apply the same legal reasoning, mutatis mutandis, in resolving the US claim under Article 12.7 of the SCM Agreement, and reach the same conclusions.^[255]

7.175.  On this basis, we find that the scope of facts available used by MOFCOM was greater than the scope of the information it requested from unknown US exporters through the notice of initiation and the CVD registration form. We therefore conclude that MOFCOM acted inconsistently with Article 12.7 of the SCM Agreement in determining the residual CVD rate on the basis of facts available.

7.4.4.4.2  Alleged violation of Article 12.8 of the SCM Agreement

7.176.  The United States asserts that MOFCOM acted inconsistently with Article 12.8 of the SCM Agreement by failing to disclose to the US exporters essential facts under consideration concerning the calculation of the residual CVD rate. China responds that MOFCOM's final disclosure conveyed all essential facts on the record regarding the contested residual CVD rate and was therefore consistent with Article 12.8.

7.177.  The factual background of this claim is again generally identical to that of the claim under Article 6.9 of the Anti-Dumping Agreement discussed above. It is clear from the final disclosure sent to the US government that MOFCOM relied on facts available in determining the residual CVD rate, and used the 12.9% rate calculated for General Motors as facts available.^[256] We asked the United States to identify any other essential facts on the record that MOFCOM should have disclosed which it failed to do so and the United States has not brought any to our attention.^[257]

7.178.  The arguments of the parties presented in respect of this claim are the same as they made in respect of the analogous claim under Article 6.9 of the Anti-Dumping Agreement. Therefore, we consider it appropriate to apply the same legal reasoning, mutatis mutandis, in resolving the US claim under Article 12.8 of the SCM Agreement, and reach the same conclusions.^[258] On this basis, we reject the US claim that MOFCOM acted inconsistently with Article 12.8 of the SCM Agreement in connection with the determination of the residual CVD duty rate at issue.

7.4.4.4.3  Alleged violation of Articles 22.3 and 22.5 of the SCM Agreement

7.179.  The United States claims that MOFCOM acted inconsistently with Articles 22.3 and 22.5 of the SCM Agreement by failing to explain the factual and legal bases for its determination of the residual CVD rate. China counters the US claim and submits that MOFCOM's notice conveyed all factual and legal bases of MOFCOM's determination of the residual CVD rate.

7.180.  The factual background of this claim is the same as that of the US claim under Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement, which we discussed above. It is clear from the final determination that MOFCOM relied on facts available in the determination of the residual CVD rate and used the 12.9% rate calculated for General Motors as facts available.^[259] We asked the United States to identify any other issues of fact or law on the record of which MOFCOM should have addressed in the final determination but which it failed to do so and the United States has not pointed to any.^[260]

7.181.  The arguments of the parties presented in respect of this claim are the same as they made in respect of the analogous claim under Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement. Therefore, we consider it appropriate to apply the same legal reasoning, mutatis mutandis, in resolving the US claim under Articles 22.3 and 22.5 of the SCM Agreement, and reach the same conclusions.^[261] On this basis, we reject the US claim that MOFCOM acted inconsistently with Article 22.3 and 22.5 of the SCM Agreement in connection with the determination of the residual CVD duty rate at issue.

7.5  Whether MOFCOM properly defined the domestic industry for the purposes of its injury determination

7.5.1  Provisions at issue

7.182.  Articles 3.1 of the Anti-Dumping Agreement and 15.1 of the SCM Agreement both provide, in nearly identical terms:

[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 [subsidized] imports and the effect of the dumped [subsidized] imports on prices in the domestic market for like products, and (b) the consequent impact of these imports on domestic producers of such products. (footnotes omitted)

7.183.  Article 4.1 of the Anti-Dumping Agreement provides in pertinent part^[262]:

[f]or the purposes of this Agreement, the term "domestic industry" shall be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products.

7.184.  Article 16.1 of the SCM Agreement is substantively identical, albeit formatted differently, and provides in pertinent part:

[f]or the purposes of this Agreement, the term "domestic industry" shall, except as provided in paragraph 2, be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products.^[263]

7.5.2  Factual background

7.185.  MOFCOM published two sets of notices relating to its AD and CVD investigations on 6 November 2009, consisting of a notice of initiation and an injury registration notice for each investigation.^[264] These four notices each set a 20-day deadline of 26 November 2009 for interested parties to register to participate in the respective investigations.^[265] Both investigations were initiated upon the application of the same petitioner, the CAAM. MOFCOM determined that the petitioner had standing to file the petition on behalf of the domestic industry. MOFCOM stated in the notices of initiation that the companies represented by the petitioner produced more than 50% of the domestic like product throughout the POI.^[266]

7.186.  In its notices of initiation, MOFCOM stated:

[f]or the industry injury investigation, interested parties and interested government can register with the Industry Injury Investigation Bureau of MOFCOM ("IBII") within 20 days of the release of this Notice. The registration form to the IBII shall contain the information of production capacity, output, inventory, and production capacity under construction/planed [sic.] production capacity, as well as volume and value of subject product exports to China during the POI. The "Application for Participating in the Industry Injury Investigation of Saloon Cars and Cross-country Cars (of a cylinder capacity ≥ 2000cc)" can be downloaded from http://www.cacs.gov.cn/cacs/anjian/anjianshow.aspx?str1=1&articleId=62087.^[267]

7.187.  The injury registration notices contained the "Application for Participating in the Industry Injury Investigation Saloon Cars and Cross-country Cars of a cylinder capacity ≥ 2000cc"^[268]. These application forms required interested parties to supply contact details and company-specific data on capacity, production and trade performance during the POI.^[269] The petitioner was the only domestic entity to register by the deadline of 26 November 2009.^[270]

7.188.  In its preliminary and final determinations, MOFCOM indicates that on 24 December 2009, MOFCOM distributed a domestic producer's questionnaire to the petitioner, acting on behalf of the domestic industry.^[271] MOFCOM also indicates that, prior to limiting the scope of the investigation from the imports originally identified, certain US automobiles with engine displacements equal to or greater than 2000cc, to certain US automobiles with engine displacements equal to or greater than 2500cc, it verified that the CAAM continued to represent a major proportion of the total domestic production of the like product.^[272]

7.189.  MOFCOM determined that the aggregate annual output of the producers represented by the petitioner accounted for 54.16% (2006), 33.54% (2007), 33.75% (2008), 36.32% (interim 2008), and 41.94% (interim 2009) of total Chinese production of the domestic like product.^[273] Accordingly, MOFCOM found that "the collective production of the like product of the aforesaid producers constitutes a major proportion of the total production of the domestic like product"^[274].

7.5.3  Arguments of the parties

7.5.3.1  United States

7.190.  The United States contends that MOFCOM's definition of the domestic industry in the investigations at issue failed to conform to the requirements of Article 4.1 of the Anti‑Dumping Agreement and Article 16.1 of the SCM Agreement. The United States submits that the domestic industry as defined did not conform to these two definitional provisions because, first, it was distorted, and second, it failed to capture a major proportion of total production of the domestic like product. As a result of these two inconsistencies, the United States submits that MOFCOM's domestic industry definition was inconsistent with Article 3.1 of the Anti-Dumping Agreement and Article 15.1 of the SCM Agreement.^[275]

7.191.  The United States argues that MOFCOM's domestic industry definition was distorted in two respects. First, the United States argues that MOFCOM, in conditioning the inclusion of domestic producers in the domestic industry definition on a willingness to participate in MOFCOM's injury investigations, introduced a material risk of distortion in using a process capable of leading to self-selection among domestic producers.^[276] In the US view, MOFCOM's registration requirement reduced the data coverage that could have served as the basis for its injury analysis, thereby creating a material risk of distorting MOFCOM's injury determination, which the United States asserts materialized in this case.^[277] The United States adds in this regard that domestic producers posting the weakest performance would have the most to gain from a positive injury determination, and would therefore have a greater financial incentive to register and participate in MOFCOM's injury investigations.^[278] Those domestic producers posting the strongest performance, conversely, would have less incentive to participate in the investigations. The United States contends that the withholding of the performance data of the stronger-performing producers would, in these circumstances, skew the economic data towards an affirmative finding of injury, leading to the risk of higher duties on subject imports.^[279] In allowing self-selection, the United States submits that MOFCOM effectively delegated its investigatory function to these domestic producers.^[280]

7.192.  The United States likens MOFCOM's actions in this regard to those at issue in the EC – Fasteners (China) dispute, insofar as both involved the conditioning of inclusion of domestic producers in the domestic industry definition on a willingness to cooperate with the IA. The United States submits that there is no substantive difference between conditioning inclusion in the domestic industry definition on the willingness of producers to be included in the sample of the domestic industry in EC – Fasteners (China), and conditioning inclusion in the domestic industry definition on the willingness of producers in the investigations at issue to participate in MOFCOM's injury investigations.^[281]

7.193.  The second aspect of distortion in MOFCOM's domestic industry definition, in the US view, arises from the fact that only eight companies among the CAAM's allegedly broad membership provided data for MOFCOM's investigations.^[282] The United States contends that this shows self-selection among CAAM members, resulting in a material distortion to MOFCOM's injury determination.^[283]

7.194.  Turning to the second alleged inconsistency, the United States contends that MOFCOM's domestic industry definition failed to capture a major proportion of total production of the domestic like product, in excluding 60% of domestic production from its investigations.^[284] In the US view, MOFCOM should have obtained wide ranging information concerning "relevant economic factors in order to ensure the accuracy of an investigation concerning the state of the industry and the injury it has suffered" in order to define the domestic industry on the basis of a "relatively high proportion of the total domestic production." The United States contends that MOFCOM, in gathering data from a small portion of the CAAM's membership, failed to capture such a "relatively high" proportion in this dispute.^[285] Under these circumstances, the United States considers that MOFCOM should have sought additional domestic industry data, or at least explained on the record why it could not collect additional data in light of the particular conditions of the automobile industry in China.^[286]

7.195.  As a result of these two alleged inconsistencies with Articles 4.1 and 16.1, the United States argues that MOFCOM's injury determination was inconsistent with the obligation set forth in Article 3.1 of the Anti-Dumping Agreement and Article 15.1 of the SCM Agreement that an IA make an injury determination based on an objective examination of positive evidence.^[287]

7.5.3.2  China

7.196.  China maintains that MOFCOM's definition of the domestic industry was not distorted, and captured sufficient domestic production to qualify as a major proportion of total domestic production within the meaning of Articles 4.1 of the Anti-Dumping Agreement and 16.1 of the SCM Agreement.^[288] While China agrees with the United States that Article 3.1 of the Anti-Dumping Agreement and Article 15.1 of the SCM Agreement can inform an IA's definition of the domestic industry in the context of its injury determination, insofar as the United States argues for the introduction of a self-standing distortion test into Articles 4.1 and 16.1, China contends that such a test is unsupported by the language of these provisions.^[289]

7.197.  China contends that MOFCOM provided public notice inviting all domestic producers to register and participate in MOFCOM's injury investigations.^[290] This notice contained a short form that domestic producers willing to participate in the investigation had to fill out and return to MOFCOM. In China's view, MOFCOM's registration requirement was simply meant to ensure an orderly investigation process and did not create any disincentive for participation in the investigations, and was thus not capable of introducing any risk of distortion in the resulting domestic industry definition. China maintains that there is no provision in either the Anti-Dumping or the SCM Agreement that prohibits such a registration requirement.^[291] China stresses that all Chinese domestic producers had the opportunity to register to participate in the investigations, and that the domestic industry as defined by MOFCOM accounted for a major proportion of total domestic production of the like product.^[292] Insofar as no domestic producers other than those represented by the petitioner in fact registered, China contends that MOFCOM took no steps to prevent such parties from participating.^[293] China adds in this regard that MOFCOM lacks legal authority to compel interested parties to provide data.^[294] Further, China contends that the non-participation of domestic producers not members of the CAAM is not surprising, as the CAAM represents all producers of automobiles in China.^[295]

7.198.  China disagrees with the logic of the US contention that MOFCOM's registration requirement favoured the domestic producers posting the weakest performance and therefore more inclined to support the petition. China submits in this regard that it would have been equally plausible for domestic producers opposing the petition to participate in MOFCOM's injury investigations in order to provide data and arguments showing that subject imports did not cause injury to the domestic industry. Insofar as no domestic producer opposed the petition in the underlying investigations, China submits that this non-participation cannot be attributed to any action on MOFCOM's part, with the latter merely including data for all producers that chose to participate.^[296] China adds in this regard that, contrary to the US assertion that MOFCOM remained passive in its investigations, the record supports China's contention that MOFCOM actively assessed and verified the data submitted to it by the CAAM.^[297]

7.199.  Regarding the US argument likening MOFCOM's actions to those at issue in the EC – Fasteners (China) dispute, China submits that the cases are different in two material respects. First, China contends that in EC – Fasteners (China), the IA affirmatively excluded 25 domestic producers from its domestic industry definition out of a pool of 70 producers that had supplied some information to it on the basis that those 25 producers declined to participate in a sample. The Appellate Body found that the IA had narrowed the pool of producers whose data could have been used for its injury determination in that case. In the investigations at issue here, China argues that MOFCOM did not engage in such narrowing.^[298] Second, the IA in EC – Fasteners (China) relied on a 25% benchmark in concluding that the 27% of total domestic production captured by the domestic industry it defined constituted a "major proportion" of total domestic production. The Appellate Body concluded that by so doing, the IA had reduced the data coverage on which it based its injury analysis, thereby introducing a material risk of distortion to its injury determination. In this case, China asserts that MOFCOM applied no benchmarks in the underlying investigations, and in fact the domestic industry it defined represented a larger percentage of total domestic production than was the case in the EC – Fasteners (China) domestic industry definition.^[299] China submits that, by seeking to draw parallels between the issues in EC – Fasteners (China) and MOFCOM's actions in the investigations at issue, the United States would have the Panel apply a freestanding distortion test that is unsupported by Article 4.1 of the Anti-Dumping Agreement and Article 16.1 of the SCM Agreement.^[300]

7.200.  China contends that the US allegation that there was self-selection within the CAAM rests entirely on speculation.^[301] China objects in this regard to the comments made by the United States on the CAAM's allegedly partial role in acting as conduit for the information submitted on behalf of its members to MOFCOM. China adds that MOFCOM's registration form was made available to all CAAM members, who in turn were free to decide whether to participate.^[302] China asserts that a third of the CAAM's membership consisted of joint ventures affiliated with the US respondents that chose as a group not to participate in these investigations.^[303] China suggests that this may explain their non-participation in MOFCOM's investigations, and thus why only a subset of the CAAM's members participated.

7.201.  Regarding the second aspect of the US argument, China asserts that MOFCOM's domestic industry definition, which included four national car makers and four joint ventures that requested confidential treatment of their identities^[304], satisfies the major proportion basis for defining the domestic industry in the Anti‑Dumping and SCM Agreements.^[305] China adds in this regard that there is no specific quantitative threshold to satisfy in relation to the major proportion basis for defining the domestic industry.^[306] China notes, further, that neither Article 4.1 of the Anti-Dumping Agreement nor Article 16.1 of the SCM Agreement express a preference between defining the domestic industry as producers as a whole, or those of them accounting for a major proportion of total domestic production.^[307] Nor do these provisions require an IA to identify any practical constraints encountered in gathering data from domestic producers not included in its domestic industry definition, where the IA defines the domestic industry as accounting for an allegedly low proportion of total domestic production.^[308]

7.202.  China rejects the alleged consequential violations of Article 3.1 of the Anti-Dumping Agreement and Article 15.1 of the SCM Agreement put forward by the United States. China submits in this regard that each provision of the Anti‑Dumping and SCM Agreements gives rise to distinct standards and obligations, requiring claims under each article to be assessed independently and separately.^[309] China contends in this regard that the United States bears the initial burden of showing that MOFCOM's injury determination was inconsistent with Article 3 of the Anti-Dumping Agreement and Article 15 of the SCM Agreement.^[310]

7.5.4  Arguments of the third parties

7.203.  Korea argues that a domestic industry defined on the basis of a major proportion of total domestic production should encompass producers whose collective output represents "a relatively high proportion that substantially reflects the total domestic production".^[311] In Korea's view, such "proportion" may be lower in investigations involving fragmented industries where collection of industry-wide information may cause practical constraints on the IA. Korea cites the Appellate Body report in EC – Fasteners in support of its arguments.^[312]