european communities – definitive anti-dumping measures
on certain iron or steel fasteners from china

Recourse to Article 21.5 of the DSU by China

Report of the Panel

TABLE OF CONTENTS

1   Introduction.. 10

1.1   Complaint by China. 10

1.2   Panel establishment and composition. 10

1.3   Panel proceedings. 11

1.3.1   General 11

2   Factual aspects. 11

3   Parties' requests for findings and recommendations. 12

4   Arguments of the parties. 13

5   Arguments of the thiRd parties. 13

6   Interim review... 13

6.1   Introduction. 13

6.2   Parties' requests for changes to the interim report 13

7   Findings. 16

7.1   General principles regarding treaty interpretation, the applicable standard of review, and the burden of proof 16

7.1.1   Treaty interpretation. 16

7.1.2   Standard of Review.. 16

7.1.3   Burden of Proof 17

7.2   Alleged violations of Articles 6.5 and 6.5.1 of the AD Agreement 17

7.2.1   Legal provisions at issue. 17

7.2.2   Relevant facts. 17

7.2.3   Arguments of parties. 18

7.2.3.1   China. 18

7.2.3.2   European Union. 19

7.2.4   Arguments of third parties. 20

7.2.5   Evaluation by the Panel 20

7.2.5.1   Terms of reference of the Panel 21

7.2.5.2   Assessment of the claim on the merits. 24

7.2.5.2.1   Conclusion. 27

7.3   Alleged violations of Articles 6.4 and 6.2 of the AD Agreement 28

7.3.1   Legal provisions at issue. 28

7.3.2   Arguments of parties. 28

7.3.2.1   China. 28

7.3.2.2   European Union. 29

7.3.3   Arguments of third parties. 30

7.3.4   Evaluation by the Panel 30

7.3.4.1   Terms of reference of the Panel 30

7.3.4.1.1   Is this a claim that could have been but was not raised in the original proceedings?. 30

7.3.4.1.2   Adequacy of China's panel request 34

7.3.4.2   Assessment of the claim on the merits. 35

7.4   Alleged violation of Article 6.1.2 of the AD Agreement 37

7.4.1   Legal provisions at issue. 37

7.4.2   Arguments of parties. 37

7.4.2.1   China. 37

7.4.2.2   European Union. 37

7.4.3   Arguments of third parties. 38

7.4.4   Evaluation by the Panel 38

7.4.4.1   Is this a claim that could have been but was not raised in the original proceedings?. 38

7.4.4.2   Assessment of the claim on its merits. 41

7.5   Alleged violation of Article 2.4 of the AD Agreement: failure to provide information to enable Chinese exporters to request adjustments. 42

7.5.1   Legal provision at issue. 42

7.5.2   Arguments of parties. 43

7.5.2.1   China. 43

7.5.2.2   European Union. 44

7.5.3   Arguments of third parties. 45

7.5.4   Evaluation by the Panel 45

7.6   Alleged violation of Article 2.4 of the AD Agreement: failure to ensure that price comparisons were made on the basis of same types of fasteners. 50

7.6.1   Arguments of parties. 50

7.6.1.1   China. 50

7.6.1.2   European Union. 50

7.6.2   Arguments of third parties. 51

7.6.3   Evaluation by the Panel 51

7.6.3.1   Terms of reference of the Panel 51

7.6.3.2   Assessment of the claim on the merits. 55

7.6.3.2.1   The Commission's treatment of fasteners sold to high-end users and which were not made to a customer drawing. 56

7.6.3.2.2   The Commission's assessment of the accuracy of the lists of standard and special fasteners provided by Pooja Forge. 59

7.6.3.2.3   Conclusion. 60

7.7   Alleged violation of Article 2.4 of the AD Agreement: failure to make adjustments for differences that affect price comparability. 61

7.7.1   Arguments of parties. 61

7.7.1.1   China. 61

7.7.1.2   European Union. 62

7.7.2   Arguments of third parties. 64

7.7.3   Evaluation by the Panel 64

7.7.3.1   Differences in taxation. 64

7.7.3.2   Differences in physical characteristics. 68

7.7.3.2.1   Differences in physical characteristics that were included in the original PCNs. 69

7.7.3.2.2   Differences in physical characteristics that were not included in the original PCNs. 70

7.7.3.2.2.1   Terms of reference of the Panel 70

7.7.3.2.2.2   Assessment of the claim on the merits. 71

7.7.3.3   Certain other differences. 72

7.7.3.3.1.1   Terms of reference of the Panel 72

7.7.3.3.1.2   Assessment of the claim on the merits. 72

7.7.3.4   Conclusion. 75

7.8   Alleged violation of Articles 2.4 and 2.4.2 of the AD Agreement: failure to take into account all comparable export transactions. 75

7.8.1   Legal provisions at issue. 75

7.8.2   Arguments of parties. 76

7.8.2.1   China. 76

7.8.2.2   European Union. 76

7.8.3   Arguments of third parties. 77

7.8.4   Evaluation by the Panel 77

7.9   Alleged violation of Articles 4.1 and 3.1 of the AD Agreement with respect to the definition of domestic industry. 82

7.9.1   Legal provisions at issue. 82

7.9.2   Arguments of parties. 82

7.9.2.1   China. 82

7.9.2.2   European Union. 83

7.9.3   Arguments of third parties. 84

7.9.4   Evaluation by the Panel 84

7.9.4.1   Terms of reference of the Panel 84

7.9.4.2   Assessment of the claim on the merits. 86

8   Conclusions and Recommendation.. 89

List of Annexes

ANNEX A

WORKING PROCEDURES OF THE PANEL

ANNEX B

ARGUMENTS OF CHINA

ANNEX C

ARGUMENTS OF the EUROPEAN UNION

ANNEX D

ARGUMENTS OF THIRD PARTIES

CASES CITED IN THIS REPORT

EXHIBITS REFERRED TO IN THIS REPORT

ABBREVIATIONS USED IN THis REPORT

1  Introduction

1.1  Complaint by China

1.1.  On 30 October 2013, China requested consultations^[1] with the European Union (EU) pursuant to Articles 21.5 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 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (AD Agreement) and paragraph 1 of the Agreed Procedures under Articles 21 and 22 of the Dispute Settlement Understanding between China and the European Union^[2] with respect to the issues identified below.

1.2.  Consultations were held on 27 November 2013, but did not settle the dispute.

1.2  Panel establishment and composition

1.3.  On 5 December 2013, China requested the establishment of a panel pursuant to Articles 6 and 21.5 of the DSU, Article XXIII of the GATT 1994, Article 17 of the AD Agreement and paragraph 1 of the Agreed Procedures under Articles 21 and 22 of the Dispute Settlement Understanding between China and the European Union with standard terms of reference.^[3] At its meeting on 18 December 2013, the Dispute Settlement Body (DSB) referred this dispute, if possible, to the original panel in accordance with Article 21.5 of the DSU to examine the matter referred to the DSB by China in document WT/DS397/18.^[4]

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

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by China in document WT/DS397/18 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.

1.5.  On 17 March 2014, China requested the Director-General to determine the composition of the Panel pursuant to paragraph 7 of Article 8 of the DSU. This paragraph provides:

If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.

1.6.  On 27 March 2014, the Director-General accordingly composed the Panel as follows:

        Chairperson:    Mr Jose Antonio Buencamino^[5]

        Members:                Mr Michael Mulgrew

                                Mr Arie Reich

1.7.  Japan and the United States reserved their rights to participate in the Panel proceedings as third parties.

1.3  Panel proceedings

1.3.1  General

1.8.  After consultation with the parties, the Panel adopted its Working Procedures^[6] and timetable on 5 May 2014. The timetable was further modified on 16 May 2014.

1.9.  The Panel held its substantive meeting with the parties on 11-12 November 2014. A session with the third parties took place on 12 November 2014. The Panel issued its Interim Report to the parties on 6 March 2015. The Panel issued its Final Report to the parties on 4 May 2015.

2  Factual aspects

2.1.  In these compliance proceedings initiated under Article 21.5 of the DSU, China challenges the consistency with the covered agreements of the measure taken by the European Union to comply with the DSB recommendations and rulings issued following the panel and Appellate Body reports in EC – Fasteners (China).

2.2.  On 26 January 2009, the European Union imposed, through Council Regulation (EC) No. 91/2009, definitive anti-dumping duties on imports of certain iron or steel fasteners originating in China. China challenged the imposition of such duties and initiated dispute settlement proceedings against the European Union. In the original dispute, China challenged two measures adopted by the European Union, namely 1) Article 9(5) of Council Regulation (EC) No. 384/96 of 22 December 1995 on Protection against Dumped Imports from Countries not Members of the European Community, as amended (Basic AD Regulation) with respect to the issue of the individual treatment of producers from non-market economies (NME) in anti-dumping investigations conducted by the European Union, and 2) Council Regulation (EC) No. 91/2009 of 26 January 2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People's Republic of China.

2.3.  With respect to Article 9(5) of the Basic AD Regulation, the original panel found violations of various provisions of the AD Agreement, the GATT 1994 and the WTO Agreement. With respect to Council Regulation (EC) No. 91/2009 imposing definitive duties on fasteners from China, the original panel found certain violations of the AD Agreement.^[7] It rejected certain claims and applied judicial economy with respect to others.^[8] On appeal, the Appellate Body made mixed findings. The original panel's findings regarding Article 9(5) of the Basic Regulation were mainly upheld. As far as the claims regarding the fasteners investigation were concerned, the Appellate Body upheld some of the panel's findings and reversed others.^[9]

2.4.  With a view to implementing the DSB recommendations and rulings concerning Article 9(5) of the Basic Regulation, the European Union adopted Regulation (EU) no. 765/2012.^[10] In relation to the implementation of the DSB recommendations and rulings regarding the fasteners investigation, the European Commission initiated an investigation (review investigation), pursuant to its WTO enabling Regulation^[11], in order to "inform interested parties of the manner in which the [DSB's] findings in regard to the measures in force on imports of certain iron or steel fasteners originating in the People's Republic of China [would] be taken into account".^[12] In the notice initiating the review investigation, the Commission explained how it was planning to implement each aspect of the DSB recommendations and rulings.

2.5.  The review investigation was conducted by the Commission and its results were announced in the Council Implementing Regulation (EU) No 924/2012 of 4 October 2012 amending Regulation (EC) No 91/2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People's Republic of China (review regulation). The review regulation explains the determinations made by the Commission and comes to the conclusion that "the injurious dumping determined in the original investigation is confirmed". It therefore continues definitive duties on certain fasteners from China, at revised rates.^[13]

2.6.  In these compliance proceedings, China does not question the existence, or consistency with the covered agreements, of the EU's implementation of the DSB recommendations and rulings regarding Article 9(5) of the Basic Regulation. This dispute concerns exclusively China's claims concerning the conduct of the review investigation by the Commission. In these proceedings, China takes issue with the measure taken by the European Union to implement the DSB recommendations and rulings in relation to the anti-dumping duties on imports of certain iron or steel fasteners originating in China through the review regulation. China considers that the review regulation does not fully and correctly implement the DSB recommendations and rulings and that it is inconsistent with various provisions of the AD Agreement and of the GATT 1994.

3  Parties' requests for findings and recommendations

3.1.  China requests that the Panel find that:

a.      The measures taken by the European Union to implement the recommendations and rulings of the DSB in relation to the AD duties on imports of certain iron or steel fasteners originating in China through Council Regulation (EU) No 924/2012 of 4 October 2012 are not consistent with:

i.        Article 6.5 of the AD Agreement since the European Union treated as confidential, information concerning the products sold by the Indian producer while such information had not been provided on a confidential basis and/or in the absence of good cause shown and Article 6.5.1 to the extent that the European Union failed to ensure that the Indian analogue producer provided a non-confidential summary of the information provided on an allegedly confidential basis in sufficient detail to enable a reasonable understanding of the substance of such information or establish that there were "exceptional circumstances" and provide a statement of reasons why, in such exceptional circumstances, summarization was not possible;

ii.       Articles 6.4 and 6.2 of the AD Agreement since the European Union failed to provide to the Chinese interested parties a full opportunity for the defence of their interests and because the European Union did not provide timely opportunities for them to see all information that was not confidential as defined in Article 6.5, that was relevant to defend their interests and that was used by the authorities in the AD investigation, with regard to the products sold by the Indian producer;

iii.     Article 6.1.2 of the AD Agreement because the evidence presented by the Indian producer concerning its products was not made available promptly to the Chinese interested parties participating in the investigation;

iv.     Article 2.4 of the AD Agreement because the European Union failed to indicate to the Chinese interested parties what information was necessary to ensure a fair comparison and, in particular, since the European Union failed to provide information on the products sold by the Indian producer which was used for the determination of the normal value and since it failed to indicate to the Chinese interested parties what information was necessary to substantiate their requests for adjustments;

v.      Article 2.4 of the AD Agreement because the European Union failed to ensure that the export price of standard fasteners manufactured by the Chinese exporters was not compared to the normal value of special fasteners;

vi.     Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994 because the European Union failed to make a fair comparison between the normal value and the export price, in particular in failing to make allowances for differences affecting price comparability, namely differences in taxation, differences in certain physical characteristics and other differences affecting price comparability;

vii.   Articles 2.4 and 2.4.2 of the AD Agreement because the European Union failed to take into account all export transactions in determining the margin of dumping of each of the Chinese exporters concerned; and

viii.  Articles 4.1 and 3.1 of the AD Agreement because the European Union re-defined the domestic industry by merely using the data of the EU producers which had come forward within the deadline laid down in paragraph 6(b)(i) of the Notice of Initiation of the original investigation and thereby failed to remedy the self-selection process imposed by its approach and to carry out an injury determination involving an objective examination.

b.     The European Union has failed to comply with the recommendations and rulings of the DSB.

3.2.  China also requests the Panel to recommend that the DSB request the European Union to bring its measures into conformity with its obligations under the AD Agreement and the GATT 1994.

3.3.  The European Union requests that the Panel reject China's claims in this dispute in their entirety.

4  Arguments of the parties

4.1.  The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 17 of the Working Procedures adopted by the Panel (see Annexes B and C).

5  Arguments of the thiRd parties

5.1.  The arguments of Japan and the United States are reflected in their integrated executive summaries, provided in accordance with paragraph 18 of the Working Procedures adopted by the Panel (see Annex D).

6  Interim review

6.1  Introduction

6.1.  On 6 March 2015, we issued our interim report to the parties. In accordance with our working procedures, both parties submitted requests for the review of precise aspects of the interim report on 20 March 2015. On 1 April 2015, both parties also submitted their comments on each other's written requests. Neither party requested an additional meeting with the Panel.

6.2.  Parties' requests and our treatment thereof are explained below. 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.  China requests that paragraphs 1.3 and 2.6 be modified in order to accurately reflect China's panel request. The European Union has not commented on these requests. We have modified these two paragraphs in order to address China's concerns.

6.4.  China requests the Panel to modify paragraph 7.9 in order to better reflect the facts. Specifically, China requests that the phrase "because Pooja Forge indicated that 'it was impossible to provide a meaningful summary of it without revealing sensitive business information'" be deleted from this paragraph because it is not supported by evidence on the record. China also requests that the phrase "according to the European Union" be inserted in this paragraph in order to reflect the fact that the statement regarding the contents of the Pooja Forge's company brochure reflects the EU's allegation. The European Union disagrees with this request, noting that interim review is not the stage in panel proceedings to re-litigate factual issues and that granting China's request would raise due process concerns. Further, with respect to the first aspect of China's request, the European Union submits that the statement at issue is supported by evidence. With respect to the second aspect of China's request, the European Union notes that during the panel proceedings China did not contest the EU's statements regarding the contents of the company brochure and it even made references to the brochure as containing the type of information referred to in the EU's statement. As footnotes 25 and 26 show, the statements in paragraph 7.9 which China challenges reflect the EU's arguments in its first written submission. We have modified paragraph 7.9 in order to underline this.

6.5.  China requests the Panel to modify paragraphs 7.11, 7.12, 7.35, 7.43, 7.99, 7.126, 7.150, 7.151, 7.171, 7.173, 7.175, 7.177, 7.210, 7.224, 7.225, 7.227, 7.232, 7.238, 7.243, 7.245, 7.254, 7.280 and 7.287 in order to better reflect China's arguments. The European Union argues that China's request concerning paragraph 7.99 should be rejected because China fails to indicate where in its submissions the requested additional language is found. We agree with the European Union that China does not identify where in its submissions the additional language that it requested the Panel to add to paragraph 7.99 is found. Further, we do not consider that the request serves to improve the summary of China's arguments. We therefore decline to make this change. The European Union objects to the proposed modifications to paragraphs 7.150, 7.151, 7.171, 7.173 and 7.177 because the Panel accurately reflects China's arguments in these paragraphs. We consider that the changes China requested to these five paragraphs are useful and have reflected them. The European Union contends that China's request to modify paragraph 7.175 should be rejected because it concerns the Panel's own conclusions that accurately reflect China's claim. China's comment on this paragraph has to do with the scope of China's claim regarding the types of fasteners. In the context of this claim, we understand China to challenge the Commission's treatment of fasteners sold to high-end users such as automotive producers, which were not made according to the customer's drawing, as opposed to such fasteners that were made according to the customer's drawing. We have modified paragraph 7.175 in order to clarify this. The European Union considers that China's request for the modification of paragraph 7.243 is also unwarranted but proposes an alternative modification should the Panel decide to modify this paragraph. In the EU's view, China's request for the modification of paragraph 7.245 is also unwarranted because in this paragraph the Panel sets out its own findings, rather than describing China's arguments. We have modified paragraphs 7.243 and 7.245 in order to reflect certain arguments raised in China's second written submission. The European Union has not commented on China's requests to modify the other paragraphs cited above in this paragraph. Taking into account China's specific comments, we have also modified paragraphs 7.11, 7.12, 7.35, 7.43, 7.126, 7.210, 7.224, 7.225, 7.227, 7.232, 7.238, 7.254, 7.280 and 7.287.

6.6.  China requests that paragraphs 7.20 and 7.292 be modified in order to clarify that these paragraphs describe the EU's arguments. The European Union disagrees with the request to modify paragraph 7.20, noting that making this modification would be inconsistent with the Panel's drafting style generally in this Report and would necessitate modifications to other parts of the Report for the sake of consistency. Since paragraph 7.20 summarizes the EU's arguments, we have modified it in a way that underlines this. Contrary to the EU's argument, we do not consider that such a modification requires similar modifications to other parts of this Report. The European Union has not commented on the requested modification to paragraph 7.292. We have modified this paragraph.

6.7.  China requests the Panel to modify paragraph 7.57 in order to better reflect the EU's arguments. The European Union has not commented on this request by China. We have modified this paragraph.

6.8.  China requests the Panel to modify paragraphs 7.111, 7.112, 7.128 and 7.144 in order to better reflect the facts. The European Union maintains that China's request with respect to paragraphs 7.111 and 7.112 should be rejected because China did not dispute the relevant facts during the panel proceedings. Since Exhibit EU-6 shows that during the review investigation Pooja Forge submitted information regarding the coating of its products, we have modified paragraphs 7.9, 7.111, 7.112 and 7.114 in order to reflect this fact. The European Union does not object to the requested modification to paragraph 7.128 aimed at clarifying China's own arguments. We have modified this paragraph. The European Union objects to the proposed modification to paragraph 7.144 on the basis that this paragraph describes the Panel's own reasoning. As argued by the European Union, the part of this paragraph that China requests the Panel to delete reflects the Panel's own reasoning. We therefore decline to make the requested modification.

6.9.  The European Union requests the Panel to modify paragraph 7.9 in order to better reflect the EU's and China's arguments. China submits that this paragraph describes the relevant facts, not the parties' arguments, and asks the Panel to reject the EU's request. China adds that the textual addition requested by the European Union does not correctly describe China's arguments. We have modified paragraph 7.9 in order to provide further clarity with respect to the EU's arguments. However, we have not introduced the part of the requested modification concerning China's arguments because we believe the current version correctly reflects such arguments.

6.10.  The European Union requests the Panel to modify paragraphs 7.14, 7.15, 7.16 and 7.91 in order to better reflect the EU's arguments. China requests the Panel to reject the modifications requested to paragraphs 7.14 and 7.15. We agree with the EU's suggestion and have modified these two paragraphs. China argues that no modification is needed to paragraph 7.16 but suggests an alternative modification should the Panel consider granting the EU's request. Since this paragraph contains the EU's arguments, we have modified this paragraph as requested by the European Union. China has not commented on the requested modification to paragraph 7.91. We agree with the EU's request and have modified this paragraph accordingly.

6.11.  The European Union requests the Panel to modify paragraph 7.273 in order to address the EU's argument that there was nothing "inherently unfair" about the methodology used by the Commission in calculating dumping margins. China submits that the EU's argument about the lack of inherent unfairness is irrelevant to the Panel's assessment and that therefore the Panel should not make any changes to this paragraph. We have made the necessary modification to address this argument but found it more appropriate to add it to paragraph 7.275 of our Report.

6.12.  The European Union requests the Panel to modify paragraph 7.283 in order to add certain aspects of the EU's arguments that are missing in this paragraph and then to address such aspects in the Panel's findings. China contends that this paragraph adequately addresses the EU's arguments regarding the domestic industry claim. However, should the Panel decide to modify this paragraph, China requests the Panel to also fully reflect the counterarguments raised by China in this regard. We have added the EU's arguments to paragraphs 7.283, 7.297 and 7.298 and assessed such arguments in paragraphs 7.297 and 7.298 of the Report. In paragraphs 7.297 and 7.298, we have also reflected China's relevant counterarguments.

6.13.  Finally, the European Union requests the Panel to modify paragraph 7.287 in order to apply the test that the Panel itself developed for determining whether claims that could have been but were not raised in original panel proceedings are within this Panel's terms of reference. China maintains that there is no need to modify this paragraph because the concern identified by the European Union is already addressed in paragraph 7.290 of the Report. As the European Union notes, in paragraph 7.287, we state that "China could have raised the present claim as an additional argument under the domestic industry claim in the original proceedings". In paragraph 7.289, we note that the issue raised by China's claim regarding the Commission's domestic industry definition is whether or not the Commission complied with the DSB recommendations and rulings in defining the domestic industry in the review investigation and conclude that this issue "goes to the very heart of a compliance panel's task under Article 21.5 of the DSU and falls within our terms of reference". In paragraph 7.290 of the Report, we state that "[g]iven this, we do not consider relevant for our present inquiry whether or not China could have raised this claim during the original proceedings. However, assuming that China could have raised it in the original proceedings, we would still have found the claim to fall within our terms of reference given the decisive role that the contested statement in the original notice of initiation played in the Commission's definition of domestic industry in the review investigation." As China notes, this part of paragraph 7.290 applies to the present claim the test that we developed with respect to the issue of whether or not claims that could have been but were not raised in the original proceedings fall within our terms of reference in these compliance proceedings. We have, nevertheless, added one sentence to this paragraph in order to underline this.

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 dispute settlement system serves to clarify the provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". It is generally accepted that these customary rules are reflected in Articles 31-32 of the Vienna Convention on the Law of Treaties (Vienna Convention).

7.2.  A number of WTO reports address the application of these provisions on treaty interpretation in dispute settlement in the WTO. It is clear that interpretation must be based above all on the text of the treaty^[14], and that the context of the treaty provisions also plays a role. It is also well established that these principles of interpretation "neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended".^[15] Furthermore, panels "must be guided by the rules of treaty interpretation set out in the Vienna Convention, and must not add to or diminish rights and obligations provided in the WTO Agreement".^[16]

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

7.1.2  Standard of Review

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

7.5.  The Appellate Body has explained that where a panel is reviewing an investigating authority's (IA) determination, the "objective assessment" standard in Article 11 of the DSU requires a panel to review whether the authority has 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.^[17] Furthermore, in addition to the obligation to conduct an objective assessment under Article 11 of the DSU, with respect to disputes that arise under the AD Agreement, Article 17.6(i) of the AD Agreement provides that:

[I]n 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.

7.6.  The Appellate Body has clarified that a panel should not conduct a de novo review of the evidence, nor substitute its judgement 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.^[18] 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".^[19]

7.1.3  Burden of Proof

7.7.  The general principles applicable to burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of the WTO Agreement by another Member assert and prove its claim.^[20] China, as the complaining party in this dispute, must therefore make a prima facie case of violation of the relevant provisions of the WTO agreements it cites, which the European Union must refute in order not to have the Panel rule against it. We also note that it is generally for each party asserting a fact, whether complainant or respondent, to provide proof thereof.^[21] We recall that a prima facie case is one which, in the absence of effective refutation by the other party, requires a panel, as a matter of law, to rule in favour of the party presenting the prima facie case.^[22]

7.2  Alleged violations of Articles 6.5 and 6.5.1 of the AD Agreement

7.2.1  Legal provisions at issue

7.8.  Articles 6.5 and 6.5.1 of the AD Agreement read:

6.5 Any information which is by nature confidential (for example, because its disclosure would be of significant competitive advantage to a competitor or because its disclosure would have a significantly adverse effect upon a person supplying the information or upon a person from whom that person acquired the information), or which is provided on a confidential basis by parties to an investigation shall, upon good cause shown, be treated as such by the authorities. Such information shall not be disclosed without specific permission of the party submitting it.

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

7.2.2  Relevant facts

7.9.  We recall that in the original investigation, the Commission resorted to the so-called "analogue country" methodology in determining normal values because it considered China to be an NME. The Commission chose India as the analogue country and sent questionnaires to Indian companies producing the investigated product, i.e. fasteners. In the letter accompanying the questionnaire, the Commission confirmed that any information provided by the company would be treated as strictly confidential and reminded the company that, in any event, non-confidential summaries would need to be provided.^[23] Two Indian producers cooperated and submitted questionnaire responses. Only one of these two companies, Pooja Forge, provided a response that contained sufficiently detailed data needed by the Commission in determining the normal value.^[24] However, Pooja Forge's initial questionnaire response, submitted in March 2008, was not complete. It did not include a detailed domestic sales listing (DMSAL), nor did Pooja Forge fill out section B of the questionnaire concerning product description. A few weeks after the submission of Pooja Forge's questionnaire response, the Commission officials went to that company's premises in order to collect the missing information and to confirm its suitability as an analogue country producer. During that verification visit, Pooja Forge provided the DMSAL file, which contained information on approximately 80,000 transactions. For each transaction, this file provided information such as prices, quantities, internal item codes and a product description text string. No non-confidential summary of the DMSAL file was provided because, the European Union argues, Pooja Forge indicated that "it was impossible to provide a meaningful summary of it without revealing sensitive business information".^[25] During the verification visit, Pooja Forge also provided a non-confidential summary of its questionnaire response as well as a company brochure which, according to the European Union, contained information on product range, production process and other company sensitive details, such as production capacity and number of employees.^[26] The present claim, as well as some of the other claims raised by China, which we examine below, takes issue with two pieces of information, namely, the list of Pooja Forge's products and the characteristics of such products. The information on the list of Pooja Forge's products was submitted in the DMSAL file presented during the verification visit. The information on the characteristics of such products was provided partly in the DMSAL file and partly through other documents submitted by Pooja Forge, such as its company brochure.^[27] Certain information regarding product characteristics, namely, coating, was also presented to the Commission during the review investigation.^[28]

7.2.3  Arguments of parties

7.2.3.1  China

7.10.  China argues that the Commission acted inconsistently with Article 6.5 of the AD Agreement by treating as confidential the information submitted by Pooja Forge regarding the list and characteristics of its products. China asserts that this information was neither by nature confidential nor submitted on a confidential basis and that no good cause was shown for its confidential treatment.

7.11.  For both types of information, China contends that such information is routinely provided to potential customers and therefore cannot be by nature confidential.^[29] China notes that the guidelines issued by the European Union on how to complete the non-confidential version of a questionnaire response define the "product catalogue" as non-confidential, which further proves that the information at issue could not be treated as confidential by nature.^[30] As to whether the information was submitted on a confidential basis, China distinguishes between the list of products and the product characteristics. With regard to the list of products, China notes Pooja Forge's email to the Commission, dated 2 July 2012^[31], indicating that Pooja Forge would not like to disclose its company details to interested parties, but contends that this cannot constitute a request for confidential treatment, nor the submission on a confidential basis. According to China, a party seeking confidential treatment for its information should at least identify the information for which such request is made.^[32] With regard to product characteristics, China maintains that nothing on the record indicates that Pooja Forge requested confidential treatment for this information.^[33] In any case, China argues, with regard to both types of information, that Pooja Forge failed to show good cause that would justify their confidential treatment.^[34]

7.12.  Should the Panel disagree with China's assertion that the EU's treatment of Pooja Forge's information as confidential was inconsistent with Article 6.5, China argues, in the alternative, that the European Union in any event violated Article 6.5.1 of the AD Agreement because the Commission failed to require Pooja Forge to provide a non-confidential summary of that information. With regard to the third sentence of Article 6.5.1, China also asserts that Pooja Forge failed to establish that there were exceptional circumstances that made summarization of confidential information impossible, and failed to provide a statement of reasons on that matter.^[35]

7.2.3.2  European Union

7.13.  The European Union submits that China is precluded from presenting this claim in these compliance proceedings because it was raised in the original proceedings and ultimately rejected by the Appellate Body.^[36] In the original dispute, China brought a claim under Articles 6.5 and 6.5.1 of the AD Agreement with respect to the confidential treatment of all information provided in Pooja Forge's questionnaire response but only presented supporting evidence and arguments with respect to information regarding "product types". The panel made a finding of violation of Article 6.5 of the Agreement with regard to the information on product types. On appeal, the Appellate Body found that China had not substantiated its claim under Article 6.5 in a timely fashion, thus failing to observe the panel's working procedures and the requirement of due process of law, and reversed the panel's finding that the European Union had acted inconsistently with Article 6.5. In the EU's view, therefore, China should not be given a second chance to provide evidence and arguments that it failed to provide in the original proceedings.^[37]

7.14.  The European Union also requests the Panel to reject this claim on its merits. The European Union contends that the information submitted by Pooja Forge was properly treated as confidential pursuant to the requirements of Article 6.5. The European Union maintains that the information provided by Pooja Forge, concerning both the list and the characteristics of its products, was confidential by nature. With respect to the list of products, the European Union asserts that this is proprietary information. It is the kind of sensitive information that companies do not like to share with their competitors. Regarding product characteristics, the European Union posits that this information is by nature confidential because knowing the products sold in a market in detail would indicate which types of products a competitor could offer in that market. It would also show which product types are not sold in that market so that competitors can offer such products. In the EU's view, this also applies to the company brochure because the latter includes sensitive information about the company, such as its production process, production capacity and the number of employees.^[38] The European Union also submits that, at the time of the original investigation as well as the review investigation, the Indian producer did not give its company brochure to anyone who was not its customer, since this would allow its competitors to see exactly what it made and how.^[39]

7.15.  In any case, the European Union argues that the information at issue was submitted by Pooja Forge on a confidential basis and that good cause was shown to justify confidential treatment of such information, as envisaged by Article 6.5.^[40] In this regard, the European Union underlines the fact that Pooja Forge agreed to cooperate with the Commission in the original investigation as an analogue country producer on the condition that no company details would be disclosed to interested parties.^[41] In the context of the verification visit that took place in April 2008, Pooja Forge requested Commission officials to maintain the confidentiality of the information on the list and characteristics of its products.^[42] The company maintained the same position in the review investigation and told the Commission officials, through an email dated 2 July 2012, that it did not agree to the disclosure of any company details to interested parties. In another email, dated 3 July 2012^[43], Pooja Forge pointed out that the list of products should not be disclosed because such disclosure would give an advantage to its competitors.

7.16.  With respect to China's claim under Article 6.5.1 of the AD Agreement, the European Union contends that Pooja Forge provided the summary "fasteners" as a general summary contained in Pooja Forge's response to the questionnaire about its product range.^[44] When this information was first obtained from Pooja Forge in 2008, during the original investigation, Pooja Forge had expressed its views about the impossibility of summarising the information on the list and characteristics of its products in a way other than by means of this general summary.^[45] After careful consideration, it seemed obvious to the Commission that, other than the general statement "fasteners", Pooja Forge could not provide another, more meaningful confidential summary of a list of 80,000 item codes relating to specific transactions as well as their product description text strings without either revealing internal company details or other sensitive market information to competitors.^[46] Therefore, the European Union requests that the Panel also reject China's claim under Article 6.5.1.

7.2.4  Arguments of third parties

7.17.  Japan recognizes the important balance that needs to be struck between providing interested parties in an anti-dumping investigation with adequate access to confidential information to enable them to defend their interests, and the need to protect the confidentiality of the information. In Japan's view, the good cause requirement of Article 6.5 of the AD Agreement aims to ensure that the avoidance of the risk of disclosure of confidential information is important enough to warrant non-disclosure. Japan contends that good cause must be determined objectively by the IA, and should not be based on the subjective considerations of the party submitting the information. Japan notes that the interested party submitting confidential information may provide evidence that the IA may use in determining whether there is good cause justifying confidential treatment. However, the ultimate determination in this regard has to be made by the IA. In making such a determination, the IA has to take into account not only the evidence provided by the interested party seeking confidential treatment, but also any other evidence submitted by other parties or obtained from other sources.^[47] In Japan's view, the consideration of good cause should also appear on the investigation record. Japan considers that where the IA itself decides to treat information as confidential, it has to demonstrate that good cause exists for such treatment.^[48] In order to decide whether good cause was shown in this review investigation, Japan invites the Panel to consider "whether there was any other way to disclose more specific information relating to possible differences in product comparability, while still protecting the confidential information".^[49]

7.18.  The United States disagrees with China's argument that information that is routinely provided to potential customers cannot be by nature confidential, as a categorical matter, for purposes of Article 6.5 of the Agreement. Article 6.5 contains no such carve out and there may be situations where information that is by nature confidential is provided to potential customers on the condition that it not be shared with others.^[50] The United States, however, does not take a position as to whether or not the Commission acted consistently with the requirements of Article 6.5 in treating the information at issue as confidential in this review investigation. As for China's claim under Article 6.5.1 of the AD Agreement, the United States notes that this provision's requirement to provide non-confidential summaries only applies to information presented by "interested parties". China has not established that Pooja Forge was an interested party within the meaning of the AD Agreement. Article 6.11 of the AD Agreement provides a list of interested parties. In the view of the United States, Pooja Forge does not fall under any of the categories in that list. Because Pooja Forge was not an interested party, the Commission was not obliged to require that a non-confidential summary be provided for the confidential information submitted by Pooja Forge.^[51]

7.2.5  Evaluation by the Panel

7.19.  In our assessment of the present claim, we will first address the European Union's argument that China is precluded from raising this claim before this compliance Panel. We will only proceed with our assessment of the claim on the merits if we find that China is allowed to raise it in these proceedings.

7.2.5.1  Terms of reference of the Panel

7.20.  The European Union contends that China is precluded from raising this claim in these compliance proceedings because this claim was raised in the original dispute settlement proceedings and was ultimately rejected by the Appellate Body. The European Union notes that although China presented a broadly-defined claim under Article 6.5 of the AD Agreement before the original panel whereby it challenged the confidential treatment of "all information" presented in Pooja Forge's questionnaire response, it provided supporting evidence only with respect to part of that information, namely, "product types". The European Union recalls that the original panel noted this and assessed China's claim only with respect to the information on "product types". The European Union also underlines that, on appeal, the Appellate Body noted that China had not developed its Article 6.5 claim in a timely fashion before the original panel. In the EU's view, through the present claim, China is attempting to provide additional evidence and arguments with respect to the confidential treatment of information other than "product types", which it failed to provide in the original dispute. Citing the relevant WTO jurisprudence, including the Appellate Body report in EC – Bed Linen (Article 21.5 – India), the European Union argues that China should not be given a "second chance" to make a case that it was supposed, but failed, to make in the original dispute.^[52]

7.21.  China disagrees with the European Union for four reasons. First, China asserts that the WTO jurisprudence relied upon by the European Union precludes the presentation before a compliance panel of the same claim against a component of the original measure that remained unchanged in the implementation phase and was not found to be WTO-inconsistent in the original dispute settlement proceedings. The present claim, however, does not challenge an unchanged component of the original measure. The original claim concerned information on "product types", whereas the present claim concerns information on the list and characteristics of Pooja Forge's products. Second, China could not have raised the present claim in the original proceedings because the Chinese producers became aware of the confidential treatment of information on the list and characteristics of Pooja Forge's products during the review investigation. Third, China argues that, if the Panel does not consider these two aspects to be new components, it should nevertheless conclude that these are "changed" components. Fourth, China submits that, differently from the EC – Bed Linen (Article 21.5 – India) case where the contested claim did not challenge an "inseparable" element of the measure taken to comply, in the present proceedings, the confidential treatment by the Commission of information on the list and characteristics of Pooja Forge's products represents an "integral" part of the measure taken to comply with the DSB rulings and recommendations after the original dispute.^[53]

7.22.  The function of a compliance panel is described in Article 21.5 of the DSU, which reads as follows in relevant part:

Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel.

7.23.  Article 21.5 states that a compliance proceeding under this provision may concern either the existence or the consistency with a covered agreement of measures taken to comply with DSB recommendations and rulings. That is, a complainant in a compliance proceeding may argue that the defendant has not taken any measures to comply with the DSB recommendations and rulings or that the measure taken to comply with such recommendations and rulings is inconsistent with the covered agreements.

7.24.  It is now well established in WTO jurisprudence that the scope of the claims that may be raised in compliance proceedings is "not unbounded".^[54] One limitation in the scope of such proceedings is the claims raised in the original dispute settlement proceedings with respect to which the complainant failed to make a prima facie case. Those claims cannot ordinarily be raised in compliance proceedings. The European Union contends that because China raised a claim under Articles 6.5 and 6.5.1 in the original proceedings but failed to make a prima facie case thereon, this same claim cannot be raised before this compliance Panel. We note that this specific issue has been discussed in WTO jurisprudence, including in EC – Bed Linen (Article 21.5 – India) and US – Upland Cotton (Article 21.5 – Brazil), which the parties also cite in their arguments regarding this jurisdictional issue. It is therefore useful to recall the gist of the Appellate Body's findings in these disputes on this particular issue.

7.25.  In EC – Bed Linen (Article 21.5 – India), one of the issues raised was whether or not a claim which had been raised in original proceedings, dismissed by the original panel and not appealed by the complainant, could be raised in compliance proceedings under Article 21.5 of the DSU. The compliance panel declined to rule on this claim, noting that doing so would open "[t]he possibility for manipulative or abusive litigation tactics[.]".^[55] On appeal, the Appellate Body agreed with the compliance panel. In its analysis, the Appellate Body noted, inter alia, that, in this regard, there was no difference between a case where the original panel found that the complainant failed to make a prima facie case of violation or where it found that the challenged measure was not inconsistent with the WTO Agreement.^[56]

7.26.  In US – Upland Cotton (Article 21.5 – Brazil), the original panel found that the complainant, Brazil, had shown a violation of the Agreement on Agriculture with respect to export credit guarantees provided to rice but that it had not made the same showing with respect to export credit guarantees provided to certain other agricultural goods; in doing so, the original panel did not analyse specifically Brazil's argument with respect to the guarantees other than those provided to rice.^[57] On appeal, the Appellate Body found that the panel had erred in concluding that the export credit guarantees provided other than to rice were inconsistent with the United States' WTO obligations because it had not examined Brazil's arguments on these export credit guarantees.^[58] The Appellate Body, however, did not complete the analysis because of the absence of uncontested facts on the record.^[59] Brazil raised the same claim in the compliance proceedings. In a preliminary ruling issued at the request of the respondent, the United States, the compliance panel found this claim to be within its terms of reference because of the close nexus between the measure taken to comply and the measure that the contested claim challenged.^[60] On appeal, the Appellate Body reiterated its finding in EC – Bed Linen (Article 21.5 – India) that a complainant that failed to make out a prima facie case in the original proceedings regarding an element of the original measure which remained unchanged in the implementation phase cannot re-litigate that claim before a compliance panel with respect to the same aspect of the measure.^[61] However, the Appellate Body observed that the situation presented in US – Upland Cotton (Article 21.5 – Brazil) was different in that the disputed claim had not been resolved on its merits in the original proceedings because the Appellate Body had not completed the analysis. Therefore, according to the Appellate Body, allowing such a claim in compliance proceedings would not raise the due process concerns identified by the respondent.^[62]

7.27.  In the light of this jurisprudence, we must consider whether the present claim under Articles 6.5 and 6.5.1 of the AD Agreement is the same as the claim raised in the original proceedings under the same two provisions. If we find that these are the same claims, we will conclude that the present claim is outside our terms of reference and will refrain from addressing it on its merits. If, however, we conclude that these claims are not the same, the present claim will be within our terms of reference and we will proceed to make an assessment on the merits.

7.28.  Turning to the facts that are relevant to our examination, we recall that China raised a claim under Articles 6.5 and 6.5.1 of the AD Agreement in the original proceedings. The scope of that claim was described by the original panel as follows:

With respect to the non-confidential version of the Indian producer's questionnaire response, China alleges a violation of both Articles 6.5 and 6.5.1. China contends that the non-confidential version of the questionnaire response does not contain any information at all, particularly with respect to the product types on the basis of which the information was provided by this producer. China argues that the Commission erred by treating the information in this questionnaire response as confidential without good cause and thus acted inconsistently with Article 6.5 of the AD Agreement. If the Panel finds that the information was properly treated as confidential, China claims a violation of Article 6.5.1 of the AD Agreement …^[63] (emphasis added)

7.29.  The European Union argued before the original panel that China had dropped its Article 6.5 claim with respect to Pooja Forge's questionnaire response because China had not developed arguments in this regard in its first written submission. China clarified in its second written submission that it had not dropped this claim and provided its supporting arguments with respect to the claim. In response to questioning from the panel, the European Union stated that the way in which China had developed this claim violated the European Union's due process rights and the panel's working procedures.^[64] The panel expressed concern over the way in which China had developed this claim but decided that, overall, the European Union had not been deprived of its due process rights; accordingly, it addressed the claim on its merits.^[65] However, in terms of the scope of the claim, the panel noted that China's claim concerned all the information submitted in Pooja Forge's questionnaire response and that China had only presented evidence and arguments with respect to information concerning "product types". For this reason, the panel limited its substantive assessment of the claim under Article 6.5 to the information on product types.^[66] The panel then noted that the Commission had treated the information about Pooja Forge's product types as confidential without a showing of good cause and found this to be in violation of Article 6.5. Having found a violation of Article 6.5, the panel refrained from making a finding under Article 6.5.1.^[67] On appeal, the Appellate Body found that China had not substantiated its claim under Article 6.5 with respect to the "product type" information in the questionnaire because it had asserted it late in the proceedings and had failed to provide supporting arguments and evidence. Therefore, the Appellate Body concluded that the European Union was not called upon to respond to this claim. On this basis, the Appellate Body reversed the panel's finding that the European Union had acted inconsistently with Article 6.5.^[68]

7.30.  As noted above, in the original proceedings, the claim under Articles 6.5 and 6.5.1 of the AD Agreement was initially presented with respect to the confidential treatment of information in Pooja Forge's questionnaire response but was subsequently pursued only with respect to information on "product types". The EU's jurisdictional objection is based on the contention that the claim in the original proceedings concerned "all information" in Pooja Forge's "questionnaire response" and that therefore it also encompassed information on the list and characteristics of this company's products, which is the object of the present claim. We note, however, that, in terms of its object, the present claim is distinct from the original claim. The present claim concerns information on the "list and characteristics" of the products sold by Pooja Forge, whereas the original claim was presented with respect to the entirety of Pooja Forge's questionnaire response but was pursued only with respect to information on this company's product types. Indeed, China makes it clear that its claim does not challenge Pooja Forge's questionnaire response, but only the information on the list and characteristics of the company's products.^[69]

7.31.  Importantly, the information on the "list and characteristics" of Pooja Forge's products was not submitted in Pooja Forge's questionnaire response. It was submitted separately from the questionnaire response. Parties have no disagreement on this particular factual aspect. In this regard, we note the EU's statement that:

Pooja Forge submitted the information regarding the "list of products" and the characteristics of the products sold in the Indian market during the IP in the DMSAL file during the verification visit that took place in April 2008 …

With respect to other more general information about Pooja Forge's product range, the European Commission also obtained Pooja Forge's company brochure during its verification visit. However, such information, as well as other information collected during the inspection by the European Commission, was not provided by Pooja Forge as part of its questionnaire response; rather, it was provided as part of the verification visit and thus placed on the confidential part of the investigation record.^[70] (emphasis added)

7.32.  In its first written submission, the European Union also clarifies that "[Pooja Forge's questionnaire response] did not contain a detailed domestic sales listing (DMSAL) file, nor did Pooja Forge fill out Section B (on product description) in its questionnaire response".^[71]

7.33.  As to when the information on the list of Pooja Forge's products was submitted, China also refers to the DMSAL file obtained during the verification visit in 2008. As for the information on product characteristics, China refers to the DMSAL file for certain characteristics, such as "diameter and length" and "type of fastener", and to other parts of the investigation file, such as certain emails and references to websites, for certain other characteristics, such as "type of coating" and "type of chrome".^[72]

7.34.  This clarifies that the information that the present claim under Articles 6.5 and 6.5.1 takes issue with was not part of Pooja Forge's questionnaire response, which was the object of the claim presented in the original proceedings. The EU's assertion is that the present claim was raised and rejected in the original proceedings. However, since the record shows that these two claims take issue with different types of information, in our view they cannot be the same. Consequently, allowing China to present the claim under Articles 6.5 and 6.5.1 in these proceedings would not prejudice the EU's due process rights, as it would not give China a second chance to argue a claim that was raised and rejected in the original proceedings.^[73] On the basis of the foregoing, we find China's claim under Articles 6.5 and 6.5.1 to be within our terms of reference and therefore we will proceed with our assessment of that claim on its merits.

7.2.5.2  Assessment of the claim on the merits

7.35.  China contends that the information on the list and characteristics of Pooja Forge's products was neither by nature confidential^[74] nor submitted on a confidential basis.^[75] Further, no good cause was shown to justify its confidential treatment.^[76] Therefore, the Commission violated Article 6.5 of the AD Agreement by treating this information as confidential. The European Union asserts that the information at issue was by nature confidential^[77] and was also submitted on a confidential basis^[78] by Pooja Forge. The European Union also submits that Pooja Forge showed good cause^[79] for the confidential treatment of this information, which the Commission assessed and accepted.^[80] Therefore, the Commission did not act inconsistently with Article 6.5.

7.36.  China's argument is two-tiered. China first alleges a violation of Article 6.5 of the AD Agreement on the grounds that the Commission erred in treating the information on the list and characteristics of Pooja Forge's products as confidential. China's second allegation is that should we find that the Commission's confidential treatment of that information was consistent with the requirements of Article 6.5, the Commission acted inconsistently with Article 6.5.1 by failing to ensure that Pooja Forge submitted a non-confidential summary in sufficient detail to permit a reasonable understanding of the information submitted in confidence. In terms of the order of our evaluation, we will first assess the alleged violation of Article 6.5. If we find a violation of Article 6.5, we will not address the alleged violation of Article 6.5.1. If, however, we do not find a violation of Article 6.5, we will evaluate the claim under Article 6.5.1.

7.37.  We find it useful to start out by noting that there is no disagreement between the parties as to the applicability of the disciplines in Article 6.5 to the information submitted by Pooja Forge. The European Union does not submit that Article 6.5 does not apply to information submitted by Pooja Forge by virtue of that entity not being a "party" to the investigation. In fact, the European Union clearly states that, in its view, "the obligations under Article 6.5 of the AD Agreement also apply in the case of analogue country producers".^[81]

7.38.  China alleges a violation of Article 6.5 on two grounds: first, the information on the list and characteristics of Pooja Forge's products was neither by nature confidential nor submitted on a confidential basis; and, second, no good cause was shown to justify the confidential treatment of this information. These two aspects of the Article 6.5 claim are very closely related; indeed, in practice, they go hand in hand. When an interested party submits confidential information to an IA, it explains why the information is to be kept confidential. In turn, a showing of good cause naturally encompasses the underlying aspect that the information being submitted is confidential. Under the circumstances, we see no need to break the claim into the two components referred to by China and will assess this claim in a holistic fashion, with a focus on the more inclusive issue of good cause.

7.39.  The European Union disagrees with China's allegation that good cause was not shown to justify the confidential treatment of the information on the list and characteristics of Pooja Forge's products. In support of this argument, the European Union states generally that disclosing such information could have given an advantage to Pooja Forge's competitors and could have caused adverse effects to the company.^[82] In response to China's objection that such arguments represent a posteriori justification and that good cause must be shown by the party seeking confidential treatment, the European Union contends that the determination of good cause is the IA's task.^[83] In this regard, the European Union relies on the Appellate Body's findings in the original dispute, particularly its statement that good cause "must be assessed and determined objectively by the investigating authority".^[84]

7.40.  We do not agree with the EU's interpretation of the Appellate Body's findings at issue. In the original proceedings in this dispute, the Appellate Body pointed out that the requirement to show good cause applies both to information that is by nature confidential and information submitted on a confidential basis. It also indicated that the good cause that has to be shown "must demonstrate the risk of a potential consequence, the avoidance of which is important enough to warrant the non-disclosure of the information." The Appellate Body stressed that claim of good cause has to be assessed objectively by the IA and that it cannot be simply based on the subjective concerns raised by the party submitting the confidential information.^[85] Importantly, the Appellate Body distinguished between the role of the party submitting confidential information and that of the IA:

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

7.41.  We note that this interpretation makes a clear distinction between the role of a party seeking confidential treatment of information and that of the IA receiving such a request. It is for the IA to require the party submitting the confidential information to show good cause – that is, to show the reasons why the information deserves to be treated as confidential. Once the reasons have been provided by the submitting party, the IA is under an obligation to assess them objectively, and thereby determine whether the party has shown good cause for treating the information as confidential. We therefore disagree with the European Union that the determination of good cause lies with the IA. It is rather the assessment of good cause claimed by the submitting party that lies with the IA.

7.42.  In support of its argument that Pooja Forge showed good cause to justify the confidential treatment of the information at issue, the European Union also refers^[86] to an email from Pooja Forge, dated 3 July 2012, which reads:

Kindly note that the list of the products sold by Pooja Forge cannot be provided because this information if disclosed, will give advantage to our competitor.^[87]

7.43.  China submits that this email should not be taken into consideration by the Panel because it was not part of the investigation record.^[88] The European Union disagrees.^[89] We recall that, pursuant to Article 17.5(ii) of the AD Agreement, we have to make our findings on the basis of the facts contained on the record of the investigation at issue. Following our meeting with the parties, we asked them a question in order to clarify this matter. In response, the European Union stated that this email was part of the confidential file, but not the public file. China submitted an index^[90] of the review investigation dated 9 July 2012, which also includes the contents of the confidential file, but it does not list this email. The European Union submitted a full index of the review investigation dated 25 April 2013, which does list this email as a confidential document concerning the dumping aspect of the investigation submitted by Pooja Forge on 12 July 2012.^[91]

7.44.  There is no explanation on the record as to why this email was treated as confidential by the Commission. The European Union does not explain what information contained in this email was treated as confidential and on what basis. In fact, the email itself simply conveys Pooja Forge's assertion that disclosing its information would give an advantage to its competitors. Therefore, it is not clear to us why it was placed on the confidential file. It is clear, however, from the documents presented to the Panel that this email was not on the public file which the Chinese producers could have consulted. In our view, this is where the problem lies. Placing the email on the confidential file rather than the public one deprived the Chinese producers of the opportunity to know of this argument made by Pooja Forge and eventually to respond to it during the course of the review investigation. In any case, we also think that, in terms of its contents, the email does not seem to support the argument that Pooja Forge provided good cause to justify confidential treatment of Pooja Forge's information. It is no more than a bald assertion on the part of Pooja Forge.

7.45.  We asked the European Union to explain to the Panel, on the basis of the record of the investigation at issue, the manner in which any confidentiality requirement by Pooja Forge was assessed by the Commission. In response, the European Union states that the investigation record does not contain "much" about this:

To recall, the confidentiality of Pooja Forge's product range was a non-issue in the original investigation. The Chinese exporting producers never contested this aspect of the investigation; nor did China take issue with this aspect of the original investigation in the original panel proceedings. Hence, there is not much explicit reference to the European Commission's assessment of Pooja Forge's request in the file of the original investigation.^[92]

7.46.  In our view, this admission leaves no doubt that the Commission never performed "an objective assessment" on whether the information was confidential by nature or whether good cause had been shown to justify its confidential treatment as required under Article 6.5 and elaborated by the Appellate Body in the original proceedings. In our view, the duty to perform such an assessment was not dependent upon whether or not the underlying issue was contested by the Chinese producers in the investigation. Lack of such contestation by the Chinese parties could not be an excuse for the absence of any assessment by the Commission on this matter.

7.47.  The European Union maintains, however, that because the issue of confidentiality did arise in the review investigation, the steps taken by the Commission in this respect in the review investigation are a good proxy of how this issue was treated during the original investigation. In this regard, the European Union refers to Pooja Forge's email dated 3 July 2012, which, as already noted, we do not consider sufficient to constitute an objective showing of good cause to justify confidential treatment of information.

7.48.  Before leaving the issue of confidentiality, we would like to underline an inconsistency in the EU's arguments. While the EU's main argument under the present claim is that the information on the list and characteristics of Pooja Forge's products was confidential, in connection with China's claim under Articles 6.4 and 6.2, which we address below, the European Union maintains that some of this information was disclosed to the Chinese producers. For instance, the European Union contends^[93] and, as noted in paragraph 7.74 below, the record shows that, through a letter dated 5 July 2012, the Commission provided the Chinese producers with information regarding the characteristics of Pooja Forge's products, in particular on coating and diameter. Similarly, as noted in paragraph 7.91 below, the European Union also asserts that through the final disclosure, the Commission disclosed information on the characteristics of Pooja Forge's products. In our view, these contradictions also undermine the EU's contention that the information at issue was confidential and that good cause was shown to keep it as confidential.

7.49.  Before concluding our analysis of Article 6.5, we note that, as part of its argumentation under this claim, China submitted, in Exhibit CHN-51, a price list which purportedly belonged to Pooja Forge and was extracted from the public domain. This exhibit was first introduced during the Panel's substantive meeting with the parties and subsequently submitted in the attachment to the written version of China's oral statement. During the meeting and in its written comments on China's response to the Panel's question on this matter, the European Union expressed concern about the authenticity of this document and stated that it might have been obtained illegally and disclosed without Pooja Forge's permission. The European Union therefore requested that this document not be used in the context of WTO dispute settlement. The European Union added that, in any case, this exhibit did not support China's arguments under this claim.^[94] In our evaluation of this claim, we did not use the price list presented in Exhibit CHN-51. We therefore need not, and do not, address the issue of the admissibility of this document as evidence in these proceedings.

7.2.5.2.1  Conclusion

7.50.  On the basis of the foregoing, we find that the Commission failed to act consistently with Article 6.5 of the AD Agreement by treating as confidential the information submitted by Pooja Forge regarding the list and characteristics of its products. Having found a violation of Article 6.5 with respect to the confidential treatment of this information, we need not, and do not, make a finding with respect to China's claim under Article 6.5.1 of the AD Agreement concerning the non-confidential summary of the same information.

7.51.  We wish to note that by finding a violation of Article 6.5 of the AD Agreement with respect to the confidential treatment of the information regarding the list and characteristics of Pooja Forge's products, we do not necessarily say that such information was not of a confidential nature. In fact, the standard of review that we have to follow in these proceedings would not allow us to make such a conclusion since this would have been a de novo review. Our finding only indicates that, in according confidential treatment to this information, the Commission failed to observe the obligations set forth in Article 6.5. We should also note that, in light of our finding under this claim, where relevant in the following parts of this Report, we will consider the information on the list and characteristics of Pooja Forge's products as not requiring confidential treatment within the meaning of Article 6.5 of the Agreement.

7.3  Alleged violations of Articles 6.4 and 6.2 of the AD Agreement

7.3.1  Legal provisions at issue

7.52.  Article 6.4 of the AD Agreement reads:

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

7.53.  Article 6.2 of the AD Agreement provides:

Throughout the anti‑dumping investigation all interested parties shall have a full opportunity for the defence of their interests. To this end, the authorities shall, on request, provide opportunities for all interested parties to meet those parties with adverse interests, so that opposing views may be presented and rebuttal arguments offered. Provision of such opportunities must take account of the need to preserve confidentiality and of the convenience to the parties. There shall be no obligation on any party to attend a meeting, and failure to do so shall not be prejudicial to that party's case. Interested parties shall also have the right, on justification, to present other information orally.

7.54.  Article 6.2 of the DSU provides:

The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. In case the applicant requests the establishment of a panel with other than standard terms of reference, the written request shall include the proposed text of special terms of reference.

7.3.2  Arguments of parties

7.3.2.1  China

7.55.  China submits that by failing to provide opportunities to the Chinese producers to see the information regarding the list and characteristics of products sold by Pooja Forge, which were used in the determination of the normal value, the European Union violated its obligation under Article 6.4 of the AD Agreement. In this regard, China notes the requirements on which this obligation is conditioned and argues that all those conditions were met in this case: first, the fact that the Chinese producers repeatedly requested to see the information concerning the lists and characteristics of Pooja Forge's products shows that they found such information to be "relevant" to the presentation of their cases; second, the information that the Chinese producers requested to see was "not confidential" within the meaning of Article 6.5 of the Agreement; and third, the information at issue was "used" by the Commission in this review investigation.^[95]

7.56.  China argues that by failing to provide the Chinese producers with the information on the list and characteristics of Pooja Forge's products, the European Union also violated Article 6.2 of the Agreement. This aspect of China's claim is two-tiered. First, China contends that the violation of Article 6.4 also led to a violation of Article 6.2. Second, China maintains that, even if there is no violation of Article 6.4, the European Union in any case violated Article 6.2 by not allowing the Chinese producers to access information on the list and characteristics of Pooja Forge's products that the Chinese producers needed for the defence of their interests.^[96]

7.3.2.2  European Union

7.57.  The European Union raises two sets of jurisdictional objections to China's claim under Articles 6.4 and 6.2 of the AD Agreement. First, the European Union asserts that this claim could have been but was not raised by China in the original proceedings. In the EU's view, this claim pertains to an unchanged aspect of the original determination that was incorporated into the measure taken to comply with the DSB rulings and recommendations, and that it is separable from the measure taken to comply. Therefore, the European Union contends that this claim falls outside the Panel's terms of reference altogether.^[97] Second, should we disagree with the first jurisdictional objection, the European Union asserts that China expanded the scope of the dispute in respect of this claim as far as the list of products is concerned. Specifically, the European Union contends that whereas in its panel request China raises the claim under Articles 6.4 and 6.2 "with regard to, inter alia, the products sold by the Indian producer", in its first written submission, China takes issue with Pooja Forge's internal company codes and product description text strings which, unless the internal reference to match the item codes is obtained from Pooja Forge, "do not say much" about the products sold by this company.^[98] Therefore, argues the European Union, the Panel should refrain from addressing the part of China's claim that takes issue with the list of products.^[99]

7.58.  On the substance of China's claims, the European Union contends that the three conditions set forth in Article 6.4 that must be met in order to give rise to the obligation regarding information that interested parties must have timely opportunities to see, were not met in this review investigation. As for the first condition, namely the relevancy of the information, the European Union argues that a list of 80,000 transactions, including internal item codes and the company product description text strings, could not be relevant to the presentation of the Chinese producers' cases. In the EU's view, what was relevant was the information on the characteristics of the products sold by Pooja Forge, and which was used in the determination of the normal value. This information was disclosed by the Commission to these producers.^[100] Second, the European Union maintains that the information at issue was confidential; therefore, it did not fall within the scope of the obligation set forth in Article 6.4.^[101] Third, the Commission did not use all the raw data provided by Pooja Forge regarding its sales in India. For instance, it did not use the internal item codes. Whatever information the Commission used was disclosed to the Chinese producers. Specifically, the European Union notes that, together with the final disclosure, the Chinese producers received detailed dumping margin calculations where they could see the export transactions that were matched with the Indian producer's normal value.^[102] For these reasons, the European Union requests the Panel to reject China's claim under Article 6.4.

7.59.  On the basis of the same substantive arguments, the European Union also requests the Panel to reject China's claim under Article 6.2. In the EU's view, the Panel cannot find a violation of Article 6.2 if it finds that there is no violation of Article 6.4, since the Article 6.2 claim is entirely consequential to the Article 6.4 claim.^[103]

7.3.3  Arguments of third parties

7.60.  The United States considers that the ability of an interested party to defend its interests in an anti-dumping investigation is particularly important with respect to the information on the calculation of the normal value and the price comparisons made by the IA. Article 6.4 requires an IA to provide access to all non-confidential information on the investigation file that an interested party finds relevant to the presentation of its case. Failure to observe this obligation would violate not only Article 6.4 but also Article 6.2 of the Agreement, which requires that interested parties be given a full opportunity for the defence of their interests.^[104] The United States takes no position as to whether treating the information at issue as confidential was consistent with the requirements of Article 6.5. However, to the extent that such treatment was inconsistent with Article 6.5, the United States contends that it would have to be disclosed pursuant to Article 6.4.^[105] The United States adds that even if the information provided by Pooja Forge could not be disclosed in full, if the Commission relied on that information and if the Chinese producers needed to see it in order to defend their interests, Article 6.2 required the Commission to adopt some sort of mechanism that would give the Chinese producers such an opportunity.^[106]

7.3.4  Evaluation by the Panel

7.61.  In our assessment of the present claim, we will first address the EU's jurisdictional objections. Specifically, we will first examine the EU's argument that this claim falls outside our terms of reference because it could have been but was not raised in the original proceedings. If we reject this objection, we will then assess the EU's second jurisdictional objection, namely that the part of China's claim regarding the list of Pooja Forge's products falls outside our terms of reference because it was not identified in China's panel request. We will then proceed with our assessment of the claim on its merits, the scope of which will depend upon our finding regarding the EU's second jurisdictional objection. If we reject the EU's second jurisdictional objection, our substantive assessment will cover information on both the list and characteristics of Pooja Forge's products. If, however, we accept that objection, our substantive assessment will cover only the information on the characteristics of those products.

7.3.4.1   Terms of reference of the Panel

7.62.  As noted above, the European Union makes two jurisdictional objections. First, it argues that this claim falls outside our terms of reference altogether because it could have been but was not raised in the original proceedings, and it pertains to an unchanged aspect of the original measure and is separable from the measure taken to comply. Second, it contends that the part of the claim pertaining to the list of Pooja Forge's products falls outside our terms of reference because it was not identified in China's panel request. We will examine these two objections in turn.

7.3.4.1.1  Is this a claim that could have been but was not raised in the original proceedings?

7.63.  In the EU's view, China's claim under Articles 6.4 and 6.2 pertains to unchanged aspects of the original measure which were incorporated into the measure taken to comply but which are separable from it; therefore, this claim falls outside this compliance Panel's terms of reference.^[107]

7.64.  We note that the jurisdictional issue that arose in US – Zeroing (EC) (Article 21.5 – EC) and which the Appellate Body addressed in its report was the extent to which new claims, i.e. claims not raised in original proceedings, may be raised in compliance proceedings. In the original proceedings of that dispute, which also concerned anti-dumping measures, the complainant raised claims regarding the so-called "zeroing" methodology.^[108] In the compliance proceedings, the complainant raised a claim regarding an alleged arithmetical error in the IA's dumping calculation, which was not related to zeroing, and which had not been raised in the original proceedings.^[109] The compliance panel found that this claim was outside its terms of reference because it pertained to an unchanged aspect of the original measure and could have been but had not been raised in the original proceedings.^[110]

7.65.  The Appellate Body disagreed, noting that its jurisprudence on this matter, on which the panel had relied, "does not preclude raising new claims against measures taken to comply that incorporate unchanged aspects of original measures that could have been made, but were not made, in the original proceedings".^[111] The Appellate Body noted that, in principle, claims that could have been but were not pursued in the original proceedings may not be brought in compliance proceedings. However, the Appellate Body stressed that this does not preclude bringing new claims against unchanged aspects of the original measure which are incorporated in the measure taken to comply and which are not separable from it.^[112] According to the Appellate Body, therefore, the critical question for the compliance panel in that dispute was "whether the alleged arithmetical error was an integral part of the measure taken to comply".^[113] However, because of a lack of factual findings by the panel and of undisputed evidence on the panel record, the Appellate Body was not able to complete the analysis of the complainant's claim in that dispute.^[114]

7.66.  The Appellate Body's reasoning applies to situations where the complainant brings a claim in compliance proceedings, which it could have brought but did not bring in original proceedings and that such claims challenge aspects of the measure taken to comply that are incorporated from the original measure. Where the measure taken to comply incorporates an aspect of the original measure which could have been but was not challenged in the original proceedings and such aspect is an integral part of the measure taken to comply, the Appellate Body's reasoning explains that claims may be brought against such aspect in compliance proceedings. If, however, that aspect of the original measure is not an integral part of the measure taken to comply, claims against such an aspect will fall outside the compliance panel's terms of reference.

7.67.  Applying this jurisprudence to the claim before us, we have to consider first whether the present claim is one that could have been but was not brought in the original proceedings. If we find that it could not have been brought in the original proceedings, we will conclude that this claim falls within our terms of reference. If we find that it could have been brought in the original proceedings, we will then determine whether this claim challenges an unchanged aspect of the original measure which has become an integral part of the measure taken to comply. If so, this claim will fall within our terms of reference, otherwise it will not.

7.68.  In deciding whether this claim could have been brought by China in the original proceedings, we have to take into account the factual circumstances in the review investigation under which the claim was raised and examine to what extent such circumstances also existed in the original investigation. We recall that the obligations contained in Articles 6.4 and 6.2 concern the interested parties' right to see the information on the investigation file and to defend their interests on that basis. Such procedural obligations may be violated by an IA in respect of a request made by an interested party to see a particular piece of information, or to make a presentation on a particular issue. Such violations could occur multiple times during an investigation, depending on the piece of information that an interested party requests to see or the presentation that such a party wishes to make for the defence of its interests. Therefore, an assessment of whether or not two sets of claims raised under these two provisions are the same requires a comparison of the factual circumstances under which the relevant interested party made a request to use these procedural rights, which was denied by the IA. With this in mind, let us now turn to the facts before us.

7.69.  In the original proceedings, China presented a claim under Articles 6.4 and 6.2 challenging the Commission's failure to let Chinese producers see information regarding (i) Pooja Forge's product types; (ii) the Commission's normal value determinations; and (iii) the comparison between the normal value and the export price. With respect to the first aspect, the original panel found a violation of Articles 6.4 and 6.2.^[115] With respect to the second and third aspects, the panel rejected China's claim.^[116] On appeal, the Appellate Body upheld the original panel's finding of violation with respect to the first aspect.^[117] Importantly, the scope of China's claim did not include the information on the list and characteristics of Pooja Forge's products in particular.

7.70.  In the review investigation, the Commission took steps to implement the DSB recommendations and rulings stemming from the violations of Articles 6.4, 6.2 and 2.4 of the AD Agreement in connection with the Chinese producers' right to see the information on Pooja Forge's product types. The record shows that this triggered a series of communications between the Commission and the Chinese producers which seem to have given rise to the present claim.

7.71.  The notice of initiation of the review investigation states, in this regard, that:

[T]he Commission intends to re-disclose to all interested parties that participated in the fasteners investigation more precise information regarding the product characteristics which were found to be pertinent in the determination of the normal value that was used in the comparison with the product concerned.^[118]

7.72.  To this end, the Commission conveyed to the Chinese producers, through a letter dated 30 May 2012, information regarding the determination of normal values in the original investigation. The attachment to this letter explains the process of the determination of normal values. It describes the characteristics of product control numbers (PCN) on the basis of which the Commission initially requested information from interested parties and the reasons why the Indian producer was unable to present its information on the basis of such characteristics.^[119]

7.73.  Thereafter, the Chinese producers wrote to the Commission, arguing that the disclosure was insufficient and seeking further information, including regarding the Indian producer's products. A letter dated 12 June 2012, sent on behalf of two Chinese producers, asserts that "[t]he disclosure of 30 May 2012 … does not provide any information whatsoever as regards the type of products of the Indian producer that were used for the determination of the dumping margin[]" and seeks more information on the "precise and detailed characteristics" of the product types sold by the Indian producer. This letter also makes more detailed and specific comments about "chrome" and "chrome on coating" used in such product types.^[120] Another letter, dated 19 June 2012 and sent on behalf of China Chamber of Commerce for Import & Export Machinery & Electronic Products, complains, among other things, that "by merely disclosing the criteria used for creating the categories which were used to determine the normal value, the Commission fails to give the appropriate information to the parties on the products or product groups".^[121]

7.74.  In response to these letters, the Commission stated, in an email sent on 26 June 2012, that "the models" sold by the Indian cooperating producer were provided to the Commission on a confidential basis and could not be disclosed".^[122] In subsequent letters addressed to the Commission, the Chinese producers underlined the difficulty of making requests for adjustments without having information about the products sold by the Indian producer and reiterated their request for further information about the characteristics of such products.^[123] Following these exchanges, the Commission, through a letter dated 5 July 2012, provided further information regarding the characteristics of Pooja Forge's products, in particular on coating and diameter.^[124] The review regulation notes the fact that some exporting producers "requested further clarifications and information in order to be able to make a possible request for adjustments to their own dumping margin" with respect, among others, to "characteristics of the products sold by the Indian producer used for the determination of the normal value".^[125] The review regulation states that "…for confidentiality reasons, it is not possible to disclose the exact types of model of screws and bolts sold by the Indian producer".^[126]

7.75.  In our view, these facts show that what gave rise to the present claim was the communications that were exchanged between the Commission and the Chinese producers with respect to access to information regarding characteristics of Pooja Forge's products. Such communications were triggered by the Commission's disclosure, through its letter dated 30 May 2012, of further information to the Chinese producers regarding the determination of normal values in the original investigation. As we note in paragraphs 7.112-7.114 below, in the original investigation, there were no discussions with respect to the Chinese producers' request to access information on the list and characteristics of Pooja Forge's products. As a result, no claim was raised in the original proceedings under Articles 6.4 and 6.2 with respect to the Chinese producers' right to access the mentioned information.

7.76.  In this regard, we note the EU's statement that:

The disclosure of the product types used for the normal value determinations of the Chinese interested parties (i.e. the revised PCNs) is indeed a new element of the measure taken to comply; in contrast, the information relating to Pooja Forge's products is an element that remained unchanged (the European Commission did not reopen it, no new evidence was provided by Pooja Forge and the confidential treatment remained the same) in the review investigation, and that the European Commission treated in a separable manner from the "product types" or "product grouping" discussion.^[127] (emphasis added)

7.77.  This statement confirms our understanding of the facts. The Commission had in its possession certain information on the list and characteristics of Pooja Forge's products. Part of such information, which had not been provided to the Chinese producers in the original investigation, was provided for the first time in the review investigation. As we noted above, it is this disclosure of new information that triggered further discussions between the Chinese producers and the Commission, which ultimately gave rise to the present claim.

7.78.  If an interested party is not aware of the existence of certain information on the investigation record, it cannot make a request to see that information or make presentations on that basis to defend its interests. Naturally, no claim of violation of Articles 6.4 or 6.2 may be brought in connection with such information. We are persuaded therefore that the present claim does not challenge an aspect of the original measure which was incorporated into the measure taken to comply.

7.79.  We also note that, in anti-dumping investigations, the disclosure of certain information may trigger further requests by interested parties to see other information on the record or to challenge certain aspects of the IA's determinations which they might not have been in a position to challenge in the absence of the disclosed information. This is what happened in this case. Following the Commission's disclosure of information on normal values, which was not disclosed in the original investigation, the Chinese producers made repeated requests to see the information on the list and characteristics of Pooja Forge's products, the rejection of which gave rise to the present claim. Therefore, we disagree with the EU's contention that this claim could have been but was not raised by China in the original proceedings.

7.80.  On this basis, we reject the EU's first jurisdictional objection. In light of this finding, we need not, and do not, determine whether this claim challenges an unchanged aspect of the original measure which has become an integral part of the measure taken to comply.

7.3.4.1.2  Adequacy of China's panel request

7.81.  The EU's second jurisdictional objection is that the aspect of China's claim pertaining to the list of Pooja Forge's products falls outside our terms of reference because it was not identified in China's panel request in these compliance proceedings. Specifically, the European Union contends that "item codes" and "product description text strings" are not covered by China's panel request. The European Union therefore submits that the Panel should limit its examination of the present claim to the characteristics of Pooja Forge's products.^[128] China disagrees with the European Union, arguing that the wording of its panel request is sufficiently wide to cover the claim it raised under Articles 6.4 and 6.2.^[129]

7.82.  Article 7.1 of the DSU provides that a panel's terms of reference are determined by the complainant's panel request.^[130] Therefore, the panel request identifies the claims that a panel has authority to examine and on which it may make findings.^[131] According to Article 6.2 of the DSU, a panel request must identify the specific measures at issue and must provide a brief summary of the legal basis of the complaint. Together, these two elements comprise the "matter referred to the DSB", which forms the basis for a panel's terms of reference under Article 7.1 of the DSU. It is important that the panel request include these elements for two reasons. First, it defines the scope of the dispute. Second, it serves the due process objective of notifying the parties and third parties of the nature of a complainant's case.^[132] Article 6.2 of the DSU also applies to compliance proceedings under Article 21.5 of the DSU, subject to the particularities of such proceedings.^[133] In this regard, therefore, compliance proceedings are similar to original proceedings: the "matter" at issue in compliance proceedings consists of: (i) the specific measure at issue, as identified in the panel request; and (ii) the legal basis of the complaint, i.e. the claims, as set forth in the panel request.^[134]

7.83.  Turning now to China's panel request, we note that it reads in pertinent part:

Articles 6.4 and 6.2 of the AD Agreement because the EU failed to provide to the Chinese interested parties a full opportunity for the defence of their interests and because the EU did not provide timely opportunities for them to see all information that was not confidential as defined in Article 6.5, that was relevant to defend their interests and that was used by the authority in the anti-dumping investigation with regard to, inter alia, the products sold by the Indian producer[]^[135] (italic in original, underlining added)

7.84.  The panel request alleges violations of Articles 6.4 and 6.2 on the grounds that the European Union failed to provide the Chinese interested parties with an opportunity to see all information with regard to, inter alia, the products sold by Pooja Forge. Thus, the panel request clearly refers to information pertaining to the products sold by Pooja Forge. Further, the request refers to "all information" pertaining to such products.

7.85.  The claim that China raised before this Panel pertains to the "list and the characteristics" of the products sold by Pooja Forge. The European Union argues that because of the alleged deficiency in China's panel request, the part of the present claim taking issue with "the list of products" is outside the Panel's terms of reference. That is, the European Union maintains that the reference to "all information" regarding the products sold by Pooja Forge did not suffice to put the European Union on notice that China's claim stemming from this part of the panel request could take issue with the list of the products sold by Pooja Forge. We consider that this argument represents an overly restrictive interpretation of China's panel request.^[136] We find it reasonable that a complaining party can raise a claim regarding the list of products sold by a company if the complainant's panel request refers to "all information" regarding the products sold by that company.

7.86.  On this basis, we also reject the EU's second jurisdictional objection and proceed with an assessment of China's claim on its merits.

7.3.4.2  Assessment of the claim on the merits

7.87.  China's claim has two aspects - one under Article 6.4 and the other under Article 6.2 of the AD Agreement. In connection with Article 6.4 of the Agreement, China submits that the Commission violated this provision by failing to provide timely opportunities to the Chinese producers to see the information regarding the list and characteristics of Pooja Forge's products. We note at the outset that the information at issue here is the same information that is the object of China's claim under Articles 6.5 and 6.5.1, which we assessed above.

7.88.  We recall that the obligation under Article 6.4 applies to information that meets three conditions: first, the information has to be relevant to the presentation of the interested parties' cases; second, it should not be confidential within the meaning of Article 6.5 of the Agreement; and third, it must have been used by the IA.^[137] We have already found that there was no evidence before the Commission justifying confidential treatment of the information on the list and characteristics of Pooja Forge's products and thus that the Commission acted inconsistently with Article 6.5 of the Agreement in according confidential treatment to that information. Accordingly, for purposes of the present claim, we treat that information as not confidential within the meaning of Article 6.5. This means that the second condition is met.

7.89.  With respect to the first condition, we recall that the question of whether or not information is relevant has to be answered from the perspective of the interested parties requesting to see the information, not from the IA's perspective.^[138] In paragraphs 7.70-7.74 above, we cited the many instances where the Chinese producers requested to see the information on the list and characteristics of Pooja Forge's products and noted that such requests were not granted on the grounds of confidentiality. Indeed, the European Union does not contest that the Chinese producers did request to see the information at issue and that it was not provided to them. To us, these requests show that the Chinese producers found this information to be relevant to the presentation of their cases. Further, the nature of the information at issue underlines its relevance to the presentation of the Chinese producers' cases. These producers made repeated requests to see this information because it concerned the determination of their normal values, which, together with export prices, determined the dumping margins that the Commission would calculate for the Chinese producers. It goes without saying that dumping calculations are one of the most important aspects of an anti-dumping investigation. Thus, we consider that the first condition is also met.

7.90.  Turning now to the third condition, we recall that whether information was "used" by the IA does not depend on whether the IA specifically relied on that information in its determinations. The information should be considered as having been used by the IA if it pertains to "a required step" in an anti-dumping investigation.^[139] As we have mentioned, the information at issue had to do with the determination of normal values in the calculation of dumping margins for the Chinese producers. Dumping calculations being one of the fundamental steps of an anti-dumping investigation, it seems clear to us that the information at issue was used by the Commission in this review investigation. In our view, therefore, the third condition is also met in this case.

7.91.  Finally in this regard, we note the EU's argument that the information on the characteristics of Pooja Forge's products was disclosed to the Chinese producers.^[140] The European Union refers to both the general and company-specific final disclosures made to the Chinese producers in order to satisfy the obligation set forth under Article 6.9 of the AD Agreement.^[141] We note that Article 6.9 requires the disclosure of essential facts under consideration which form the basis for the decision whether to apply definitive measures. It requires that such disclosure take place "before a final determination is made". Hence, a disclosure under Article 6.9 occurs towards the end of an investigation, before the final decision is made. We therefore consider that the final disclosure was too late to afford the Chinese producers an appropriate opportunity to use the information in the presentation of their cases. In this sense, the Chinese producers were not provided with "timely opportunities" to see the information, as Article 6.4 requires. Nor does the European Union seek to argue that the final disclosure at issue was made to satisfy the requirements of Article 6.4. Hence this argument does not affect our assessment of this aspect of China's claim.

7.92.  On the basis of the foregoing, we conclude that the Commission violated Article 6.4 of the AD Agreement by failing to provide the Chinese producers with timely opportunities to see the information on the list and characteristics of Pooja Forge's products, which information was not confidential within the meaning of Article 6.5, and which was relevant to the presentation of the Chinese producers' cases and used by the Commission.

7.93.  The second aspect of China's claim concerns Article 6.2 of the AD Agreement. China argues that by failing to provide the Chinese producers with timely opportunities to see the information on the list and characteristics of Pooja Forge's products, the Commission violated the obligation set forth in Article 6.2 of the AD Agreement. China's argument in this regard is two-fold. First, China maintains that by violating Article 6.4, the Commission also violated Article 6.2. Second, independently from this consequential argument, China contends that failure to provide timely opportunities to see the information at issue was in violation of Article 6.2 on its own account.

7.94.  We have found that the Commission violated Article 6.4 of the AD Agreement by failing to provide the Chinese producers with timely opportunities to see the information on the list and characteristics of Pooja Forge's products. Accessing this information potentially would have allowed the Chinese producers to request adjustments to their normal values, determined on the basis of Pooja Forge's prices, or to their export prices. Therefore, we do not see how the Chinese producers could be considered to have had full opportunity to defend their interests, within the meaning of Article 6.2, without first seeing this information.

7.95.  We recall the important link between the obligations under Articles 6.4 and 6.2, underlined by the Appellate Body in EC – Tube or Pipe Fittings:

One of the stated objectives of the disclosure of information required under Article 6.4 is to allow interested parties "to prepare presentations on the basis of this information". The "presentations" referred to in Article 6.4, whether written or oral, logically are the principal mechanisms through which an exporter subject to an anti-dumping investigation can defend its interests. Thus, by failing to disclose Exhibit EC‑12 and thereby depriving the Brazilian exporter of an opportunity to present its defense, the European Communities did not act consistently with Article 6.2.^[142]

7.96.  Guided by the Appellate Body's finding, we find that by not allowing the Chinese producers to see the information on the file regarding the list and characteristics of Pooja Forge's products, the Commission also violated the obligation laid down in Article 6.2.

7.4  Alleged violation of Article 6.1.2 of the AD Agreement

7.4.1  Legal provisions at issue

7.97.  Article 6.1.2 of the AD Agreement provides:

Subject to the requirement to protect confidential information, evidence presented in writing by one interested party shall be made available promptly to other interested parties participating in the investigation.

7.98.  Article 6.11 of the AD Agreement reads:

6.11 For the purposes of this Agreement, "interested parties" shall include:

i.        an exporter or foreign producer or the importer of a product subject to investigation, or a trade or business association a majority of the members of which are producers, exporters or importers of such product;

ii.   the government of the exporting Member; and

iii.      a producer of the like product in the importing Member or a trade and business association a majority of the members of which produce the like product in the territory of the importing Member.

This list shall not preclude Members from allowing domestic or foreign parties other than those mentioned above to be included as interested parties. (emphasis added)

7.4.2  Arguments of parties

7.4.2.1  China

7.99.  China argues that by failing to ensure that the information provided by Pooja Forge concerning the list and characteristics of its products was made available promptly to the Chinese producers, the European Union acted inconsistently with the obligation set forth in Article 6.1.2 of the AD Agreement. China reiterates its view that the information regarding Pooja Forge's products sold in the Indian market was not confidential within the meaning of Article 6.5.^[143] China maintains that Pooja Forge was an interested party in this investigation and that therefore the obligation set forth in Article 6.1.2 does apply to the information submitted by this company. In this regard, China acknowledges that producers in a third country do not appear in the list of interested parties in Article 6.11 of the AD Agreement. However, given that Pooja Forge actively participated in this investigation and provided a significant amount of information, it had an interest in the investigation and should therefore be considered as an interested party.^[144]

7.100.  China also maintains that by finding in the original proceedings that the obligation under Articles 6.5 and 6.5.1 apply to the information submitted by Pooja Forge, the Appellate Body meant that Pooja Forge should be treated as an "interested party".^[145]

7.4.2.2  European Union

7.101.  The European Union maintains that China's claim under Article 6.1.2 of the AD Agreement could have been but was not raised in the original proceedings. The European Union asserts that this claim relates to an unchanged aspect of the original determination that was incorporated into the measure taken to comply with the DSB rulings and recommendations, and that it is separable from the measure taken to comply. Therefore, the European Union contends that this claim falls outside the Panel's terms of reference.^[146]

7.102.  The European Union also disagrees with this claim on substance. The European Union contends that Pooja Forge was not an interested party in the review investigation at issue. In the EU's view, the Appellate Body in the original proceedings stated that the obligations set forth in Articles 6.5 and 6.5.1 apply to the information provided by Pooja Forge, not that Pooja was an "interested party" in the sense of Article 6.11 of the Agreement.^[147] In the review investigation at issue, the Commission did not designate Pooja Forge as an interested party although it could have done so under Article 6.11 of the AD Agreement.^[148] It follows that the obligation under Article 6.1.2 does not apply in respect of the information provided by Pooja Forge.

7.103.  Further, the European Union reiterates that the information at issue was confidential and that therefore there was no obligation to make it available to the Chinese producers. It also repeats the argument that the information about the characteristics of Pooja Forge's products sold in the Indian market and which was used by the Commission in determining the normal value was disclosed to the Chinese producers.^[149] Therefore, the European Union requests the Panel to reject this claim.

7.4.3  Arguments of third parties

7.104.  The United States notes that transparency is an important element of anti-dumping proceedings and that it requires that all information on the record of a proceeding be made available to all interested parties. However, the United States does not share China's view that a party that submits information to the IA in the context of an anti-dumping investigation should be considered as an interested party for purposes of Article 6.1.2 of the AD Agreement. The United States argues that "a party that submits information to the IA" does not appear in the list of interested parties in Article 6.11 of the Agreement. The United States recognizes that Article 6.11 gives an IA discretion to treat as an interested party entities other than those listed therein, but argues that neither this provision nor the Appellate Body's interpretations cited by China oblige an IA to grant interested party status to entities that are not listed in Article 6.11.^[150]

7.4.4  Evaluation by the Panel

7.105.  In resolving this claim, we will first address the EU's procedural objection, followed, if necessary, by our assessment on the merits of the claim.

7.4.4.1  Is this a claim that could have been but was not raised in the original proceedings?

7.106.  The European Union contends that China could have raised its claim under Article 6.1.2 in the original proceedings but did not do so. According to the European Union, this claim pertains to unchanged aspects of the original measure which were incorporated into the measure taken to comply but which are separable from it, and that therefore it falls outside this compliance Panel's terms of reference.^[151]

7.107.  The EU's jurisdictional objection is the same as that raised with respect to China's claim under Articles 6.4 and 6.2 of the AD Agreement, which we have assessed above. In order to avoid repetition, we incorporate by reference our understanding, in paragraphs 7.64-7.66 above, of the Appellate Body's findings in US – Zeroing (EC) (Article 21.5 – EC) and apply it mutatis mutandis to the EU's objection with respect to the present claim.

7.108.  Applying the Appellate Body's jurisprudence to the claim before us, we have to first consider whether the present claim is one which could have been but was not brought in the original proceedings. If we find that it could not have been brought in the original proceedings, we will conclude that this claim falls within our terms of reference. If we find that it could have been brought in the original proceedings, we will then determine whether this claim challenges an unchanged aspect of the original measure which has become an integral part of the measure taken to comply. If so, this claim will fall within our terms of reference, otherwise it will not.

7.109.  China's claim is that the Commission violated Article 6.1.2 of the AD Agreement by not making the information submitted by Pooja Forge about the list and characteristics of its products available promptly to the Chinese producers. Article 6.1.2 stipulates that evidence presented in writing by one interested party has to be made available promptly to other interested parties participating in the investigation. However, this obligation is subject to the requirement to protect confidential information. Thus, Article 6.1.2 only requires the disclosure of non-confidential information presented by an interested party. Further, under Article 6.1.2, evidence presented in writing by an interested party has to be made available "promptly" to other interested parties participating in the investigation. Promptness implies that this obligation has to be fulfilled relatively quickly by the IA. We recall, for instance, that the panel in Guatemala – Cement II stated that a 20-day delay did not meet the promptness requirement of this provision.^[152]

7.110.  We also note that the obligation under Article 6.1.2 applies to "evidence presented in writing" by one interested party. Typically, interested parties present evidence in writing to the IA at different stages of an investigation and on different issues that are relevant to the IA's determinations. For instance, questionnaire responses are submitted by foreign producers within the deadline given by the IA; responses are also submitted to any supplementary questionnaires that the IA may send; domestic producers have to present in writing the information requested by the IA, which may or may not be sought by means of a questionnaire; other interested parties, such as producers and associations of producers, may also submit evidence in writing concerning various aspects of the investigation. In our view, the obligation under Article 6.1.2 applies on a submission-specific basis; this is only logical given the nature of such investigations, which usually involve several requests for information from several sources and at different times. In other words, each time evidence is submitted in writing to the IA, Article 6.1.2 requires that such evidence be made available "promptly" to other interested parties participating in the investigation.

7.111.  In the present dispute, the evidence presented in writing which China argues was not made available to the Chinese producers is the information regarding the list and characteristics of Pooja Forge's products.^[153] As noted in paragraph 7.9 above, the list of Pooja Forge's products was presented to the Commission in the DMSAL file provided during the verification visit conducted in 2008 in the context of the original investigation. As for the evidence regarding the characteristics of Pooja Forge's products, it was submitted in the DMSAL file and in certain other documents presented to the Commission during the original investigation and the review investigation. It is undisputed that these pieces of evidence were not made available to the Chinese producers during the original investigation or the review investigation.

7.112.  With regard to the evidence concerning the list and characteristics of Pooja Forge's products that was submitted in the course of the original investigation, it should have been made available promptly after their presentation during that investigation, provided, of course, that the other conditions set forth in Article 6.1.2 were met. We note, however, that during the original investigation, the Chinese producers were not aware of this information. China maintains that the Chinese producers were informed of the presence of the information at issue through the explanation provided by the Commission in its note for the file dated 11 July 2012.^[154]

7.113.  This note does indeed suggest that certain information regarding Pooja Forge's products was being brought to the Chinese producers' attention for the first time. It reads in relevant parts:

Subject: Reclassification of normal value from one producer in India

The purpose of this note is to further explain the evolution of the classification of the normal value, based on the domestic sales of one producer in India.

1. ORIGINAL SUBMISSION

The company provided a domestic sales listing ('DMSAL') without PCNs. The only identifier of each sale was an Item Code, which was an internal code for each product, and a product description text string…

…

4. COMMENTS TO THE FIRST DISCLOSURE

Interested parties made reference to the lack of comparison on the basis of coating, diameter and length of the fastener and argued that this might have an effect on the level of the normal value originally calculated.

4.1. Diameter and length

In the absence of the PCN, the Description text string of each transaction…was analysed to extract the diameter and length of the fastener sold:

…

To ensure matching between the normal value and the export price, we then ranged the diameter and length into three equal bands, as set out in the second disclosure letter of 5 July 2012:

…

4.2. Coating

It is clear from the example above that the product description text string does not include any information on the coating used by the Indian domestic producer.

The investigation file was therefore checked for any evidence of the type of coating, if any, used by the Indian producer for their [sic] sales of standard fasteners on their [sic] domestic market.

Confidential evidence in the file, verified at the premises of the Indian producer shows the use of electroplating (PCN type A) on standard fasteners on the domestic market and this was disclosed to all parties on July 5.

The website of the Indian producer Pooja Forge confirms the existence of their [sic] facilities for electroplating ….^[155] (emphasis added)

7.114.  The note starts by saying that its purpose is to further explain the evolution of the classification of the normal value, based on Pooja Forge's domestic sales. It also notes that interested parties took issue with the lack of comparison on the basis of such characteristics as coating, diameter and length of the fasteners and argued that these factors might affect the level of the normal value. It then provides information on such factors. This note suggests that information on product characteristics, such as diameter, length and coating was being provided to the Chinese producers for the first time in the investigative process. Indeed, the European Union also acknowledges that the information at issue was submitted during the original investigation and that it was only disclosed to the Chinese producers during the review investigation.^[156] It follows that without the Chinese producers being aware of the information on the list and characteristics of Pooja Forge's products, China could not have brought a claim under Article 6.1.2 in the original proceedings to challenge the Commission's failure to provide that information promptly to the Chinese producers. We also recall that Pooja Forge provided information on coating during the review investigation.^[157] China could not have brought a claim under Article 6.1.2 in the original proceedings with respect to the disclosure of this information.

7.115.  On this basis, we find this claim to be within our terms of reference in these compliance proceedings and proceed with our assessment of the claim on its merits. In light of this finding, we need not, and do not, determine whether this claim challenges an unchanged aspect of the original measure which has become an integral part of the measure taken to comply.

7.4.4.2  Assessment of the claim on its merits

7.116.  China argues that the Commission violated Article 6.1.2 by not making the information on the list and characteristics of Pooja Forge's products available promptly to the Chinese producers. Underlying China's claim are the arguments that: (i) the information at issue was not confidential; and (ii) Pooja Forge was an interested party in the investigation at issue. The European Union disagrees with both arguments, contending that the information was confidential and that Pooja Forge was not an interested party in the investigation. As noted in paragraph 7.51 above, in light of our finding that the Commission violated Article 6.5 of the Agreement in treating the information on the list and characteristics of Pooja Forge's products as confidential, we are proceeding on the basis that it has not been established that this information had to be treated as confidential. Therefore, the only remaining issue is whether Pooja Forge was an interested party in the review investigation at issue. If we find that it was, we will find a violation of Article 6.1.2; otherwise we will reject China's claim.

7.117.  We recall that Article 6.11 of the AD Agreement defines "interested party" for purposes of the AD Agreement. The definition consists of two parts. The first part, which stipulates what "interested parties shall include" for purposes of the AD Agreement, contains a list of entities that an IA must treat as an interested party, by virtue of the use of the word "shall". The word "include" in the chapeau indicates that this list is not exhaustive. The second part of Article 6.11 is permissive; it stipulates that a Member is not precluded from allowing entities other than those explicitly listed in the first part of the provision to be included as interested parties in a given investigation.

7.118.  There is no dispute between the parties that Pooja Forge, an analogue country producer, is not one of the entities listed in the first part of Article 6.11. China submits, however, that, given its active participation in the investigation, and the significant amount of information it provided, Pooja Forge was an interested party in this investigation. We note that the second part of Article 6.11 does not state that a party that submits significant information to the IA or that participates actively in an investigation automatically becomes an "interested party". Rather, it conditions the acquisition of "interested party" status on a decision by the IA.

7.119.  In stating that Members are not precluded from allowing other domestic or foreign parties not mentioned in the earlier part of Article 6.11 to be included as interested parties, the second part of Article 6.11 implies in our view that if an IA so wishes, it may allow an entity, such as an analogue country producer or another party, to participate in an investigation as an interested party. Although not stated explicitly in Article 6.11, it is logical to assume that such decision normally would be made at the request of the party in question. Arguably, such party would request to be included as an interested party in a given investigation if it expects to be affected by the outcome of the investigation. This is because gaining "interested party" status creates not only obligations, but also rights for such parties. One obligation that the Agreement imposes on interested parties is the preparation of a non-confidential summary of confidential information presented to the IA. Similarly, when the IA requests information from an interested party, the latter must provide it; otherwise, the consequences laid down in Article 6.8 of the Agreement will follow. As for the rights that stem from "interested party" status, we note, among others, the right to have a full opportunity for the defence of its interests under Article 6.2, and the right to see the non-confidential information on the investigation file, pursuant to Article 6.4. To us, this shows that the decision to allow a party not specifically listed in Article 6.11 to be included as an interested party is an important one such that it is likely to appear on the investigation record. This was not the case in the dispute before us. Nowhere in the record is it indicated that the Commission decided to include Pooja Forge as an "interested party" in this investigation. We therefore find that Pooja Forge was not an "interested party" in this investigation and therefore the obligation set forth under Article 6.1.2 of the Agreement did not arise with respect to the evidence provided by this company.

7.120.  China asserts that, in connection with its assessment of China's claim under Articles 6.5 and 6.5.1 in the original proceedings, the Appellate Body found that Pooja Forge was an "interested party" in the original investigation. China argues, however, that the Appellate Body did so implicitly, not explicitly.^[158] In this regard, China refers to the following findings in paragraph 540 of the Appellate Body's report:

… Article 6.5 does not limit the protection afforded to sensitive information to the "interested parties" expressly listed under Article 6.11 of the Anti‑Dumping Agreement. In our view, the term "parties to an investigation" refers to any person who takes part or is implicated in the investigation. Moreover, Article 6.11 does not contain an exhaustive list of "interested parties", but states that "'interested parties' shall include" the persons or groups listed in that Article. In our view, the persons expressly listed in Article 6.11 are those who are in every case considered to be "interested parties", but are not the only persons who may be considered "interested parties" in a particular investigation. We do not believe that an investigating authority is relieved of its obligations under Article 6.5 merely because a participant in the investigation does not appear on the list of "interested parties" in Article 6.11.⁷⁸⁰ Rather, once "good cause" is shown, confidential treatment of sensitive information must be afforded to any party who takes part or is implicated in the investigation or in the provision of information to an authority. Pursuant to Article 6.5 such parties include persons supplying information, persons from whom confidential information is acquired, and parties to an investigation.

_______________

⁷⁸⁰ … In our view, the decision by the Commission to determine normal value based on information from an analogue country producer, and the participation of Pooja Forge in the investigation, require that Pooja Forge be afforded the protection of sensitive information upon "good cause" shown and the obligations of both Articles 6.5 and 6.5.1 apply.^[159] (two footnotes omitted, emphasis added)

7.121.  With respect to the findings in the body of paragraph 540 of the Appellate Body's report, China maintains that by noting that parties other than those listed in Article 6.11 may also be considered as interested parties, the Appellate Body "appears to take the view that this was the case of Pooja Forge in the fasteners investigation".^[160] We disagree. First, the Appellate Body's statement merely repeats what the second part of Article 6.11 of the AD Agreement stipulates. Second, we note that the Appellate Body makes this statement, en passant, as part of its reasoning regarding the scope of the obligation set forth in Article 6.5 of the Agreement, which concerns the protection of confidential information.

7.122.  China points to the Appellate Body's statement in footnote 780 above and argues that through this statement, "the Appellate Body confirmed that Pooja Forge should be treated as an 'interested party' although not listed on the list of Article 6.11".^[161] We do not read the Appellate Body's finding in the same way. Again, the Appellate Body's statement in this footnote concerns the scope of the obligation under Article 6.5, not the issue of whether or not Pooja Forge was an interested party in the original investigation. All that the Appellate Body says is that the Commission had to accord the protection provided for in Articles 6.5 and 6.5.1 of the AD Agreement to the information provided by Pooja Forge. In our view, this statement alone does not suffice to conclude that Pooja Forge was an interested party in the original investigation, or that the Appellate Body considered that it was.

7.123.  On the basis of the foregoing, we reject China's claim under Article 6.1.2 of the AD Agreement on substance.

7.5  Alleged violation of Article 2.4 of the AD Agreement: failure to provide information to enable Chinese exporters to request adjustments

7.5.1  Legal provision at issue

7.124.  Article 2.4 of the AD Agreement reads in relevant part:

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

7.5.2  Arguments of parties

7.5.2.1  China

7.125.  China argues that by failing to provide the Chinese producers with the information concerning the characteristics of the products sold by Pooja Forge in the Indian market, the Commission violated Article 2.4 of the AD Agreement. In this regard, China distinguishes between two types of product characteristics, namely, (i) characteristics affecting price comparability identified in the original PCNs and which have been partially taken into account by the Commission, and (ii) characteristics affecting price comparability not identified in the original PCNs and which have not been taken into account by the Commission.

7.126.  As far as product characteristics that were identified in the original PCNs and partially taken into account by the Commission are concerned, China cites four specific characteristics, namely, (i) diameter and length, (ii) types of fasteners, (iii) coating, and (iv) chrome. With respect to diameter and length, China contends that in the review investigation the Commission initially indicated that it would not take diameter and length into account because this characteristic was not considered to be relevant to the price comparison. Later, however, the Commission indicated that it extracted this information from the text string of sales coding provided by Pooja Forge, and took it into account in the determination of normal value. China notes that the Commission took diameter and length into account in terms of ranges, as opposed to actual numbers, and argues that it should have taken them into account fully. China also maintains that the Commission should have provided this information in full to the Chinese producers because this was essential for these producers to substantiate their requests for adjustments.^[162] With respect to types of fasteners, China argues that the information provided by Pooja Forge included types of fasteners sold by this company in the Indian market but that such information was not provided to the Chinese producers, in violation of Article 2.4. China emphasises that such information was essential for the Chinese exporters to be in a position to request adjustments and to substantiate their requests for adjustments.^[163] China also argues that the Commission noted that the information provided by Pooja Forge indicated that adjustments may be needed for the differences between various types of fasteners.^[164] China further argues that the categorisation according to type of fasteners on the basis of CN codes is insufficient, as within a single CN code, significant differences may exist.^[165] With regard to coating, China argues that, in the review investigation, the Commission initially indicated that Pooja Forge had not provided any information on the type of coating. Later, however, it pointed out that Pooja Forge's products used for the determination of the normal value had two types of coating, namely, type A or type B. Subsequently, the Commission stated that Pooja Forge's domestic sales of standard fasteners were electroplated, i.e. that they had type A coating. Chinese producers requested to see the information on the basis of which the Commission came to this conclusion, which the Commission did not allow. China argues that failure to provide this information violated Article 2.4.^[166] With respect to chrome, China maintains that, in the review investigation, the Commission initially provided no information regarding chrome, stating that there was no indication of a difference with regard to this factor. Later, however, the Commission stated that the information on chrome had been clarified and that the fasteners that Pooja Forge sold in the Indian market contained chrome Cr3. China argues that the Commission came to this conclusion regarding chrome without providing any information in this regard to the Chinese producers and that this violates Article 2.4.^[167]

7.127.  As for product characteristics not identified in the original PCNs, China argues that two Chinese producers informed the Commission that some product characteristics other than those included in the original PCNs could affect price comparability, asked that these differences be taken into account, and asked that the Commission indicate what kind of further evidence it required regarding these factors in order to ensure a fair comparison. The factors raised by the Chinese producers were traceability; ISO 9000; unit of defective rate; and hardness, bending, strength impact toughness, friction coefficient.^[168] The Commission rejected the Chinese producers' requests for adjustments on the basis that the requesting Chinese producers had not shown that these factors affected price comparability.^[169] In China's view, however, in the absence of information about the actual characteristics of the products sold by Pooja Forge, the Chinese producers were not in a position to identify which one of these factors affected price comparability. China claims that, in respect of these factors, the Commission violated Article 2.4 in two ways: (i) by failing to inform the Chinese producers on whether any of these factors were present in the products sold by Pooja Forge, and if so to what extent, and (ii) by not providing further information to the Chinese producers in order to enable them to substantiate their requests for adjustments with regard to these factors.^[170]

7.128.  China also contends that the Commission did not provide the Chinese producers with information regarding characteristics of Pooja Forge's products other than those reflected in the PCNs. For instance, China submits that the Chinese producers "did not know if there were fasteners complying with traceability requirements or with lower defective rates".^[171] Therefore, these producers were not in a position to know whether adjustments could be requested for any other characteristic.^[172]

7.129.  China adds that by failing to indicate to the Chinese exporters the information that their requests should contain, the Commission acted inconsistently with Article 2.4. Further, the Commission imposed an undue burden on the Chinese producers by rejecting their requests for adjustments on the grounds that they were not based on evidence.^[173]

7.5.2.2  European Union

7.130.  The European Union argues that Article 2.4 only requires that interested parties be informed of the approach adopted by an IA on fair comparison, but does not require the disclosure of raw data provided by an interested party. Nor does it require the disclosure of confidential information.^[174] The European Union contends that, in the review investigation at issue, the Commission engaged in an extensive dialogue with the Chinese producers, which led to detailed product categories that took into consideration many of the suggestions made by such producers. Further, information on the characteristics of the products used in the dumping determination and information on Pooja Forge's sales of such product categories were made available to the Chinese producers.^[175] The dialogue maintained with the Chinese producers informed them of product categories used in the dumping determination.^[176] Further, together with the final disclosure, the Chinese producers received detailed dumping calculations which allowed them to see their export transactions that were matched with the normal value determined on the basis of Pooja Forge's sales. Chinese producers were given three weeks to comment on the disclosure and were also given the opportunity to request adjustments.^[177] Thus, the European Union concludes that it complied with its obligations under Article 2.4.

7.131.  In response to China's arguments regarding product characteristics that were included in the original PCNs, the European Union submits that an IA is not required "to permit interested parties to satisfy themselves of the accuracy of the information provided by other interested parties or entities".^[178] It is the IA's task to satisfy itself as to the accuracy of the information provided by interested parties and on which the IA bases its determinations.^[179] Further, the European Union notes that the actual sales information presented by Pooja Forge was confidential.^[180]

7.132.  As for product characteristics not identified in the original PCNs, the European Union states that the Commission did review the information received from the Chinese producers regarding these factors and explained, consistently with the requirements of Article 2.4, why those requests were rejected. Specifically, the Commission concluded that the requesting Chinese producers had not shown how these alleged factors affected price comparability. The European Union notes that Article 2.4 does not require an adjustment for all differences, but only for those that affect price comparability.^[181]

7.5.3  Arguments of third parties

7.133.  The United States submits that Article 2.4 of the AD Agreement requires an IA to solicit information regarding what differences in physical characteristics affect price comparability. In the view of the United States, the transparency requirements of Article 6 of the Agreement, reinforced by the last sentence of Article 2.4, require an IA to exercise transparency with respect to the products used in the determination of normal value, the considered physical differences between such products, and the way in which such differences have been taken into consideration. Failure to provide information regarding the products and transactions used for the normal value determination would deprive the interested parties of their right to defend their interests. Thus, the United States maintains that, to the extent the Commission failed to provide Chinese producers with information on the full range of product characteristics considered in the price comparisons, the European Union acted inconsistently with the obligation set forth in Article 2.4.^[182]

7.5.4  Evaluation by the Panel

7.134.  China asserts that the Commission violated Article 2.4 of the AD Agreement by failing to provide to the Chinese producers information on the characteristics of Pooja Forge's products which was used for the calculation of the normal values in the review investigation at issue and therefore failed to implement the DSB recommendations and rulings. The specific basis of this claim is the last sentence of Article 2.4, which stipulates that "[t]he authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties".^[183] China identifies two types of information that the Commission allegedly failed to provide: (i) characteristics identified in the original PCNs and which have been partially taken into account by the Commission, and (ii) characteristics affecting price comparability not identified in the original PCNs and which have not been taken into account by the Commission.

7.135.  We note that in its argumentation under this claim China draws heavily on the Appellate Body's findings in the original proceedings and requests this Panel to find a violation of Article 2.4 by following that reasoning. We therefore find it useful to start our evaluation of the present claim with a brief summary of how China's claim under Article 2.4 was evaluated by the panel and the Appellate Body in the original proceedings. We will then identify the relevant facts from the review investigation and finally decide the extent to which, if at all, the Appellate Body's findings in the original proceedings are pertinent to our assessment of the present claim.

7.136.  In the original investigation, the Commission requested dumping-related information from Pooja Forge and from the Chinese producers on the basis of PCNs which included six characteristics, namely type of fasteners (by CN code), strength/hardness, coating, presence of chrome on coating, diameter, and length/thickness. However, Pooja Forge did not provide its information on the basis of such PCNs. For this reason, the Commission used what it called "product types" in comparing the normal value with the export price. "Product types" were defined by two factors, namely, strength class and the distinction between standard and special fasteners.^[184] The remaining factors in the original PCNs were not taken into consideration in the price comparison.

7.137.  In the original dispute settlement proceedings, China brought a claim under Article 6.4, arguing, among other things, that the Commission had violated this provision by not allowing the Chinese producers to see the information on the record regarding the product types sold by Pooja Forge until very late in the process.^[185] The original panel found a violation of Article 6.4 on the grounds that the Commission had failed to give the Chinese producers a timely opportunity to see this information.^[186] China also raised a claim under Article 2.4, arguing, among other things, that the Commission had failed to consider whether adjustments needed to be made for elements of the PCNs which were not reflected in the "product types" used in price comparisons. The interim review section of the panel's final report shows that, in its interim report, the original panel rejected this claim on the grounds that during the original investigation, none of the Chinese producers had required adjustments with respect to factors other than the two factors included in "product types", which affected price comparability within the meaning of Article 2.4 of the AD Agreement.^[187]

7.138.  In its comments on the interim report, China argued that the panel had failed to take into consideration China's argument, under the last sentence of Article 2.4, that the Commission had erred by not informing the interested parties of the comparison method used and of the fact that the comparison was no longer made on the basis of the PCNs but on the basis of other product characteristics.^[188] The original panel disagreed, noting that this argument had been raised by China in connection with its claims under Articles 6.2, 6.4, 6.5 and 6.9 of the AD Agreement and had already been addressed by the panel in that context.^[189] China appealed this finding by the original panel. The Appellate Body observed that China had not raised a separate claim under the last sentence of Article 2.4, but only an argument in support of its claim that the European Commission had failed to conduct a fair comparison under Article 2.4. The Appellate Body nevertheless faulted the original panel for having failed to address China's argument under the last sentence of Article 2.4 in the light of its findings under Article 6.4:

[W]e nonetheless consider that, in the light of its findings under Article 6.4 of the Anti‑Dumping Agreement, the Panel should have considered China's argument under the last sentence of Article 2.4 of the Anti‑Dumping Agreement in reaching its finding. As discussed above, Article 2.4 obliges investigating authorities to indicate to the parties what information is necessary to ensure a fair comparison and requires an investigating authority, at a minimum, to inform the parties of the products or product groups used for purposes of the price comparison. This will then allow the parties to decide whether a request for adjustment regarding any differences affecting price comparability should be made.^[190] (emphasis added)

[T]he Panel correctly found, in its analysis under Article 6.4, that, without knowing what "product types" were used by the Commission, "it would be difficult if not impossible, for foreign producers to request adjustments that they consider necessary in order to ensure a fair comparison." Thus, the facts of the case indicate that, because the Commission did not clearly indicate the product types used for purposes of price comparisons until very late in the proceedings, the European Union acted inconsistently with its obligations under Article 2.4 by depriving the Chinese producers of the ability to request adjustments for differences that could have affected price comparability. (footnote ommitted)^[191]

The Panel found, however, that the European Union acted consistently with Article 2.4 of the Anti‑Dumping Agreement. In so finding, the Panel analyzed China's claim under Article 2.4 in isolation from its analysis under Article 6.4 of that Agreement.^[192] (emphasis added)

7.139.  Turning to the facts presented in the review investigation at issue, we note that the Commission initially intended to base its dumping determination on the same two factors used in the original investigation, namely strength class and the distinction between standard and special fasteners. However, following the Chinese producers' comments and requests to see further information regarding Pooja Forge's products, the Commission used the so-called "revised PCNs" which were based on the following product characteristics: standard/special, strength class, coating, diameter (per ranges) and length (per ranges).^[193] The composition of such revised PCNs was communicated to the Chinese producers. However, as noted in paragraphs 7.70‑7.74 above in connection with China's claim under Article 6.5 of the AD Agreement, the Commission rejected the Chinese producers' repeated requests to see the information regarding the characteristics of Pooja Forge's products. Thus, although the Chinese producers knew the basis on which the Commission grouped the products on the normal value and the export price sides in comparing prices, they did not know the specific product types of Pooja Forge with which their own product types were being compared.

7.140.  We note that the facts underlying the present claim as well as the claim under Article 6.4, which we evaluated above, are very similar to the facts that underlay China's claims under Articles 6.4 and 2.4 in the original proceedings. Whereas in the original proceedings China based these claims on the Commission's failure to let the Chinese producers see the information regarding the "product types" of Pooja Forge, in these proceedings the claims under these two provisions are based on a similar contention, namely that the Commission did not provide the Chinese producers with information on the "characteristics" of Pooja Forge's products. Mindful of the Appellate Body's guidance referred to above, we turn now to examine China's claim under the last sentence of Article 2.4 in light of our findings with respect to the claim under Article 6.4.

7.141.  Above, we have found that the Commission violated Article 6.4 of the AD Agreement by failing to provide the Chinese producers with timely opportunities to see the information on the list and characteristics of Pooja Forge's products. Although the Chinese producers knew which product characteristics the Commission took into consideration in comparing the normal value with the export price, they did not know which specific product types were being compared with one another. Therefore, they were not in a position to know whether the product types were grouped consistently with the revised PCNs established by the Commission. Nor were they in a position to know whether, in light of the product types that were being compared, there were factors other than those included in the revised PCNs which could have justified further adjustments. In the review investigation, the Commission used revised PCNs, which contained more product characteristics compared to product types used in the original investigation. The fact remained, however, that the Chinese producers were still left in the dark with respect to the characteristics of the product types that were actually being compared.

7.142.  In our view, this runs counter to the obligation set forth in the last sentence of Article 2.4. We recall that the last sentence of Article 2.4 adds a procedural requirement to the obligation to make a fair comparison. Whereas the exporters have to substantiate their requests for adjustments, the IA has first to "tell the parties what information the authority will need in order to ensure a fair comparison".^[194] As the Appellate Body made clear, the IA has to inform the interested parties, at a minimum, of the product groups on the basis of which it will make the price comparisons.^[195] By failing to provide the Chinese producers with the information regarding the characteristics of Pooja Forge's products which were used in determining the normal value and which were then compared with the products of the Chinese producers, the Commission deprived these producers of the opportunity to make informed decisions on whether to request adjustments under Article 2.4. This, in our view, is inconsistent with the obligation set forth in the last sentence of Article 2.4. We do not see how the Chinese producers could have made requests for adjustments without having adequate knowledge of the product types with which their own products were being compared by the Commission.

7.143.  The European Union maintains that this information was provided to the Chinese producers through the Commission's final disclosure. Specifically, the European Union contends that, together with the final disclosure, the Chinese exporters received detailed dumping calculations in which they saw the export transactions that matched with Pooja Forge's normal value. The European Union argues further that:

As can be seen in those calculations, the European Commission disclosed the characteristics of the products sold by Pooja Forge and which were used for the normal value determination of each Chinese exporter. To recall, those transactions were organised by reference to the simplified PCNs used for the purpose of making the dumping determination, including six letters (i.e., coating, codes A to N; chrome yes or no, codes P – Q; type of fastener, codes PCN 0 to 9; strength, codes A to Y; diameter, codes S, M and L; and length, codes S, M and L). When there was a match between export transactions and domestic transactions, this was indicated in the dumping calculation. Then, by looking into the specific PCN for those transactions (e.g. AP4GSS), the Chinese exporters could see that Pooja Forge had sold e.g. a standard hexagon socket head screw, with chrome, with a strength class of 8.8 and small diameter and length. Thus, the Chinese exporters knew about the characteristics of the products sold by Pooja Forge. The Chinese exporters were given three weeks to make comments on the disclosure, including the possibility of asking for adjustments.^[196] (footnote omitted, emphasis added)

7.144.  We have looked at the disclosure documents referred to by the European Union.^[197] As China also argues^[198], however, such disclosures indicate the PCN characteristics of the products that were matched on the normal value and export price sides but do not indicate which models were being compared. To follow on the EU's example, underlined in the above quote, the disclosure did indicate that Pooja Forge had sold e.g. a standard hexagon socket head screw, with chrome, with a strength class of 8.8 and small diameter and length. Contrary to what the European Union asserts, however, this does not show the characteristics of Pooja Forge's product with which the products of the Chinese producers were compared. It only shows how a particular product compares to each of the PCN characteristics taken into account in categorizing different product types. It does not show what particular model of Pooja Forge's products was being compared with what model sold by the Chinese producers. Without seeing such product types, and understanding their characteristics, the Chinese producers could not, in our view, have had a meaningful opportunity to request adjustments. Further, we do not consider that the information provided in the final disclosure, which conveys the essential facts under consideration with respect to the decision to impose definitive measures, and which therefore is sent to interested parties towards the end of an investigation, satisfies the requirements of Article 2.4. The Appellate Body has made clear that Article 2.4 imposes an obligation on the IA "to tell the parties what information the authority will need in order to ensure a fair comparison"^[199], not what information it has used.

7.145.  With respect to the EU's argument that the information at issue was confidential, we recall our finding in paragraph 7.50 above that the Commission's confidential treatment of Pooja Forge's information was inconsistent with Article 6.5 of the AD Agreement. We therefore also reject the EU's confidentiality argument in connection with the present claim.^[200]

7.146.  We note that in developing its arguments under this claim, China gave a detailed account of specific product characteristics, both those included in the original PCNs and those that were not included, in respect of which the Chinese producers requested information which the Commission failed to provide. We see these arguments as specific examples of the Commission's failure generally to provide information regarding the characteristics of Pooja Forge's products. Because we have found as a matter of fact that the Commission refused the Chinese producers' requests to access information regarding the characteristics of Pooja Forge's products and that the information provided in this regard was limited to what was in the final disclosure, we need not, and do not, review China's arguments with respect to the Commission's failure to provide information regarding each of the characteristics of Pooja Forge's products.

7.147.  We also note that in presenting such arguments, China sometimes contends that the Commission failed to make certain adjustments that it had to make, or that the way it made certain adjustments was not appropriate. For instance, with respect to "diameter and length", China asserts that the Commission did not take these characteristics fully into account.^[201] Because such assertions concern the actual adjustments made by the Commission, or lack thereof, we have not taken them into consideration in the context of the present claim, which concerns the Commission's alleged failure to provide information regarding the characteristics of Pooja Forge's products as required under the last sentence of Article 2.4. We note that the issue of the adjustments that allegedly had to be made but were not made is raised under China's last claim under Article 2.4, which we examine below.

7.148.  On this basis, we conclude that the Commission violated Article 2.4 of the AD Agreement by failing to provide the Chinese producers with information regarding the characteristics of Pooja Forge's products that were used in determining normal values in the investigation at issue.

7.149.  We would like to underline, however, that our finding of violation under this claim is made in the context of a very particular factual situation. In the investigation at issue, the Commission used the so-called analogue country methodology in determining normal values for the Chinese producers because the European Union considered China to be an NME. The Commission determined the normal values of the Chinese producers on the basis of the prices of Pooja Forge, the analogue country producer selected for this purpose. This aspect makes this investigation very different from a typical anti-dumping investigation. In a normal investigation where the normal value is based on the foreign producer's own prices, the latter can participate meaningfully in the dialogue envisaged under Article 2.4 aiming to ensure a fair comparison between the normal value and the export price. In such an investigation, the foreign producer is well positioned to make informed decisions about the adjustments that it deems necessary for a fair comparison. By contrast, in an investigation, such as the one before us, where the normal value information is obtained from a third source, an issue arises as to the foreign producer's access to that information. Fair comparison is to be carried out between two prices, namely the normal value and the export price. Where the IA uses the analogue country methodology, the foreign exporter will be left in the dark to the extent it does not have access to the normal value information. The IA's task in such an investigation is to find ways to disclose as much information on normal value as the foreign producer would need in order to meaningfully participate in the fair comparison process. In other words, the IA has to endeavour to put the foreign producer on an equal footing with a producer in a normal investigation in terms of access to the information on the basis of which requests for adjustments may be formulated. Failure to do so would preclude the exchange of information from taking place and would frustrate the purpose of Article 2.4, which is to ensure fair comparison between the normal value and the export price. We would also like to underline, however, that our findings under this claim should not be interpreted to mean that the last sentence of Article 2.4 requires an IA to suggest to exporters differences in respect of which they may require adjustments. That would have blurred the line between the responsibilities of an IA and the interested parties, in particular foreign producers, in the process of making a fair comparison. We only find that, given the particular factual circumstances presented in this review investigation, the Commission failed to observe the obligation under the last sentence of Article 2.4.

7.6  Alleged violation of Article 2.4 of the AD Agreement: failure to ensure that price comparisons were made on the basis of same types of fasteners

7.6.1  Arguments of parties

7.6.1.1  China

7.150.  China submits that the European Union acted inconsistently with Article 2.4 of the AD Agreement by failing to ensure that the export price of standard fasteners sold by Chinese producers to the European Union was compared to the normal value of standard fasteners sold by Pooja Forge, in the calculation of dumping margins for the Chinese producers.^[202] China's claim has two aspects. First, China contends that the Commission failed to consider as "special" those fasteners destined for high-end applications and which were not made according to a customer drawing.^[203] Second, China maintains that the Commission did not act objectively in assessing the accuracy of the lists of standard and special fasteners provided by Pooja Forge.^[204]

7.151.  Regarding the first aspect of its claim, China argues that the Commission should have treated as "special" fasteners destined for high-end applications and which were not made according to a customer drawing, but failed to do so.^[205] China also asserts that the Commission, in its communications with the Chinese producers in the course of the review investigation, made ambiguous and inconsistent statements on whether or not fasteners sold to high-end users, in particular the automotive industry, which were not based on special customer drawing, were considered as standard or special fasteners in the determination of the normal value.^[206] China recognizes that the review regulation indicates that the fasteners that Pooja Forge sold to the automotive industry which were not based on a customer drawing were considered as special fasteners and were not taken into account in the determination of the normal value, but asserts that these are a posteriori justifications provided by the Commission and have no basis.^[207]

7.152.  Regarding the second aspect of its claim, China contends that on the basis of the evidence on the record, the Commission could not reasonably and objectively have concluded that the lists of standard and special fasteners provided by Pooja Forge were accurate. Specifically, China argues that the Commission could not have concluded that the distinction between standard and special fasteners used in the lists provided by Pooja Forge corresponded to the distinction that the Commission followed in this review investigation. China notes the part of the review regulation indicating that the distinction reflected in the lists provided by Pooja Forge was based solely on whether or not the fasteners were made pursuant to a customer drawing, and that the Commission was unable to conduct an on-the-spot verification of these lists. Although the review regulation states that the Commission conducted walk-through tests and checked the split of the sales listings provided by Pooja Forge against an average price level of the split, China submits that such tests did not suffice to confirm the accuracy of those lists.^[208]

7.6.1.2  European Union

7.153.  The European Union notes that China raised this claim, albeit in the injury context, in the original dispute, which was rejected by the original panel. In the EU's view, the fact that in the original dispute this claim was raised in the injury context is immaterial because the underlying issue, i.e. the distinction between standard and special fasteners, is the same. The European Union maintains that the issue of the distinction between standard and special fasteners represents an inseparable element of the original measure that did not change during the review investigation. The European Union also submits that China could have raised this issue in the original dispute in connection with the Commission's dumping determination, but did not do so. The European Union notes that a complainant ordinarily would not be allowed to raise before a compliance panel claims that it could have but did not raise in original proceedings.^[209]

7.154.  On substance, the European Union disagrees with both aspects of China's claim. Regarding the first aspect, the European Union recalls that in the original investigation, the original PCNs did not include the distinction between standard and special fasteners. This distinction was later raised by the Chinese producers and the Commission took it into account because it was considered to affect price comparability. As stated in the final determination in the original investigation, "customer drawing" was taken as the basic difference between special and standard fasteners. Thus, special fasteners were fasteners "on demand", whereas standard fasteners were those that met general industry standards. Where fasteners produced at the request of a customer also met general industry standards, they were considered as special fasteners and were not taken into consideration in the dumping margin calculations.^[210] The Commission followed the same approach in the review investigation. The European Union maintains that in the review investigation, there was no ambiguity about the distinction between standard and special fasteners. The review regulation makes it very clear that Pooja Forge split its domestic sales into standard and special fasteners, based on whether or not they were manufactured to a customer drawing. In the EU's view, therefore, China's claim is based on speculation and lacks a basis on the record.^[211]

7.155.  Regarding the second aspect of China's claim, the European Union contends that the Commission took the steps necessary to verify the accuracy of the sales listings provided by Pooja Forge in order to ensure that special fasteners were not improperly included in the list of standard fasteners. Since the fasteners sold to the automotive industry are significantly more expensive than standard fasteners, the Commission also checked the split between standard and special fasteners against the average price level, again to ensure that no special fasteners were included in the sales list of standard fasteners. The European Union notes that the AD Agreement does not require an on-the-spot verification of the information submitted. The European Union adds that the Commission did not simply accept the information provided by Pooja Forge at face value, but checked that information by a number of walk-through tests, as explained in the review regulation.^[212]

7.6.2  Arguments of third parties

7.156.  The United States recalls that Article 2.4 of the AD Agreement requires an IA to inform the interested parties of the products and transactions at issue so that they can provide relevant information and arguments in response. Citing the Appellate Body decision in the original dispute, the United States maintains that an IA must communicate to the parties, in a clear manner, what information their requests for adjustments should contain. Failure to provide clarity on this aspect may prevent the interested parties from defending their interests. Without taking any position about the merits of China's factual allegations, the United States presents the view that "a mere statement by an investigating authority that a certain product grouping is defined the same in both markets, without providing further information, is likely to be inconsistent with the requirements of Article 2.4".^[213]

7.6.3  Evaluation by the Panel

7.157.  In resolving this claim, we will first address the EU's terms of reference objection. We will proceed with an assessment of the claim on the merits only if we find it to be within our terms of reference.

7.6.3.1  Terms of reference of the Panel

7.158.  The European Union argues that this claim is outside our terms of reference. Early in these proceedings, the European Union based this assertion on the fact that this claim repeated a claim that was raised and rejected in the original proceedings.^[214] Later in the process, the European Union also argued that this claim could have been but was not raised in the original proceedings.

7.159.  As noted in paragraphs 7.24-7.26 above, WTO jurisprudence suggests that claims raised in original proceedings, which respect to which the complainant failed to make a prima facie case, may not ordinarily be raised in compliance proceedings. In the original proceedings in this dispute, China raised a claim challenging the distinction between standard and special fasteners in the context of the Commission's price undercutting determination. Under this claim, China argued that the Commission had violated Articles 3.2 and 3.1 of the AD Agreement by failing to take into consideration the fact that all Chinese standard fasteners which were "basic standard fasteners" simply met the relevant industry standards, whereas an important part of the standard fasteners produced by the EU producers were "standard-plus fasteners" which, in addition to meeting the relevant industry standards, also met specific customer requirements.^[215] The original panel rejected this claim on the grounds that China failed to show that this was indeed how the Commission had made its price undercutting determination.^[216]

7.160.  The present claim challenges the Commission's dumping determinations. China argues that the Commission failed to compare the prices of Chinese standard fasteners exported to the European Union with the standard fasteners sold by Pooja Forge in the Indian market. By contrast, the claim in the original proceedings challenged the Commission's injury determination, in particular its assessment of the effects of dumped imports on the prices of the domestic industry in the European Union. The object of that claim was the alleged differences between fasteners exported by China to the European Union and those produced by the EU producers. These two claims are legally different in that one concerns the Commission's dumping determination and the other its injury determination. They are also different factually because they take issue with the alleged differences between different sets of fasteners. Given these important legal and factual differences, we do not consider these two to be the same claims and therefore reject the EU's first argument regarding our terms of reference.

7.161.  The EU's second argument with respect to our terms of reference is that China could have raised the present claim in the original proceedings, but chose not to do so. In this regard, the European Union submits that the Commission followed the same approach in distinguishing between standard and special fasteners in the context of its injury and dumping determinations. The European Union contends that, since in the original proceedings China only brought a claim challenging this distinction in the injury context and it did not appeal the original panel's finding rejecting that claim, it "could legitimately understand that China was not contesting the validity of using the same approach in any measure taken to comply".^[217]

7.162.  In paragraphs 7.64-7.66 above, we have discussed the Appellate Body's findings in US – Zeroing (EC) (Article 21.5 – EC) on the issue of whether a claim that could have been but was not raised in original dispute settlement proceedings may be raised before a compliance panel. As noted above, in resolving this issue, we have to first consider whether the present claim is one which could have been but was not brought in the original proceedings. If we find that it could not have been brought in the original proceedings, we will conclude that this claim falls within our terms of reference. If we find that it could have been brought in the original proceedings, we will then determine whether this claim challenges an unchanged aspect of the original measure which has become an integral part of the measure taken to comply. If so, this claim will fall within our terms of reference, otherwise it will not.

7.163.  As noted in paragraph 7.68 above, in examining whether the present claim could have been brought by China in the original proceedings, we will take into account the factual circumstances in the review investigation under which the claim was raised and examine the extent to which such circumstances also existed in the original investigation. In this respect, although the European Union contends that the distinction between standard and special fasteners in the dumping context was known to the Chinese producers during the original investigation, it has not submitted any proof of such knowledge, or any evidence that a discussion took place between the Commission and the Chinese interested parties in the original investigation on this particular issue. In the review investigation, however, the evidence demonstrates that this issue became controversial, and triggered many exchanges between the Commission and the Chinese producers.

7.164.  The notice of initiation of the review investigation states that:

[T]he Commission intends to re-disclose to all interested parties that participated in the fasteners investigation more precise information regarding the product characteristics which were found to be pertinent in the determination of the normal value that was used in the comparison with the product concerned.^[218]

7.165.  To this end, the Commission conveyed to the Chinese producers, through a letter dated 30 May 2012, information regarding the determination of normal values in the original investigation. In this regard, this letter states:

3. DETERMINATION OF NORMAL VALUE

Normal value was determined based on the prices of the product concerned on the domestic market of India…

[The analogue country producers] provided data on their domestic sales during the investigation period but without the full PCN requested. They however were able to identify the strength class of the fastener sold, and also whether that fastener was 'standard' or 'special' as defined in the final Regulation.

The need to distinguish between standard and special fasteners had not been identified at the start of the investigation when the PCN had been created. It therefore does not appear in the list of characteristics in point 1 above. However the Commission noted that this distinction affected price comparability and therefore this data was requested from the Indian producer and was provided.^[219] (footnote omitted)

7.166.  Through a letter dated 12 June 2012, two Chinese producers responded to the Commission's letter and stated:

However, it is unclear what was considered to be a 'standard' fastener and what was considered to be a 'special' fastener. The disclosure of 30 May 2012 refers to the fact that the cooperating producer in the analogue country was able to identify "whether that [sic] fasteners was 'standard' or 'special' as defined in the final Regulation". Unfortunately, the final Regulation does not seem to clarify on the basis of which criteria fasteners were classified as either 'standard' or 'special'. This is, however, necessary to assess whether or not allowances should be made. Therefore, can the Commission please explain in a detailed way how the distinction between special and standard fasteners were made and which elements were taken into account in this distinction?

Our clients are not even in a position to assess whether or not their own products are special or standard. Can the Commission please inform us of how the exported product of Changshu City Standard Parts Factory and Changshu British Shanghai International Fasteners Co. were considered (standard or special)?^[220] (emphasis in original)

7.167.  Other Chinese producers also reacted to the Commission's letter of 30 May and sought clarification with respect to the distinction between standard and special fasteners:

[T]he Commission should provide a detailed explanation of how it has distinguished special from standard fasteners. Which criteria have been taken into account?^[221]

Were the automobile fasteners manufactured by the Indian producer considered as special or standard fasteners …?^[222]

7.168.  On 21 June 2012, the Commission replied by email:

"[S]pecial" fasteners have to conform to a particular user's design and/or requirements and are used in sectors such as the automotive, chemical and other high end industries … Nonetheless, in order to ensure a fair price comparison, these fasteners destined to industrial high end applications such as the automotive, earth moving, engineering, chemicals, etc. were considered as specials and not compared with the standard fasteners exported by your clients.^[223]

7.169.  These discussions between the Commission and the Chinese interested parties continued through the review investigation, including the hearing meetings. The review regulation also contains many references to the discussions between the Commission and the Chinese producers on this particular issue. Such references include the following:

The statement made by the said parties according to which the Commission stated that 'the split of the normal value between special and standard fasteners was carried out, inter alia, on the basis of the names of the customers', is therefore incomplete as more information regarding this issue has been provided as mentioned in the recital below.^[224]

On the difference between standard and special fasteners, the Commission's note of 13 July 2012 explained that 'it cannot be excluded that the automotive industry also uses standard fasteners for certain applications'. Some parties argued that the Commission considered that automotive fasteners could also have been regarded as standard. Such allegation is unfounded.^[225]

The Chinese Chamber of Commerce and a Chinese exporting producer made similar claims as above regarding the possible inclusion of fasteners destined to the automotive sector in the normal value and, in addition, alleged that …^[226]

With regard to the claim concerning the absence of verification of the split made by the Indian producer, the Commission verified the sales listing through …^[227]

In particular the exporting producers raised the following issues:

(a) the methodology by which the Indian producer had split its domestic sales into standard and special;

(b) in the event that some fasteners sold to the automotive industry were considered as standard fasteners, an 'important adjustment' would be warranted;^[228]

The Commission is thus confident that standard fasteners destined to the automotive industry were not included in the list of standard fasteners …^[229]

The Commission considers that the information available in the file is sufficiently reliable to ensure that only standard fasteners were used for the determination of the normal value used for the comparison with the export prices of the said Chinese exporter.^[230]

7.170.  Thus, the record shows that the issue of the distinction between standard and special fasteners in the context of the Commission's dumping determinations was an important aspect of the review investigation. In fact, these communications demonstrate that the Chinese producers asked for, and the Commission provided, additional information regarding the distinction between standard and special fasteners in the dumping context. This, in turn, indicates that this particular issue was closely related to the debate regarding the consistency of the measure taken by the European Union to comply with the DSB recommendations and rulings following the original proceedings. We also find it important that, as discussed below, one of China's main arguments on the merits of this claim is an alleged lack of clarity regarding the distinction made between standard and special fasteners in the dumping context. The Chinese producers asked various questions to the Commission regarding the criterion on the basis of which the Commission distinguished standard fasteners from special fasteners because they found this to be unclear. This reinforces our observation that the issue of the distinction between standard and special fasteners in the context of the Commission's dumping determinations was critical to the review investigation.

7.171.  We recall that the gist of China's claim is that the Commission treated as "standard" those fasteners destined for high-end applications and which were not made according to a customer drawing, and therefore compared their prices with the prices of the standard fasteners exported to the European Union by the Chinese producers. We note that the record does not show any discussion that took place on this particular issue during the original investigation. In the review investigation, however, the Commission disclosed information about this distinction which triggered considerable exchange between the Commission and the Chinese producers. Given these facts, we do not see how China could have brought a claim on this issue in the original proceedings. We therefore conclude that the present claim falls within our terms of reference and proceed with the assessment of the claim on the merits. In light of this finding, we need not, and do not, determine whether this claim challenges an unchanged aspect of the original measure which has become an integral part of the measure taken to comply.

7.6.3.2  Assessment of the claim on the merits

7.172.  We recall that in the original investigation the Commission requested dumping-related information from Pooja Forge and from the Chinese producers on the basis of PCNs which included six characteristics. The distinction between standard and special fasteners was not one of these characteristics. However, Pooja Forge did not provide its information on the basis of such PCNs. For this reason, the Commission used what it called "product types" in comparing the normal value with the export price. "Product types" were defined by two factors, namely, strength class and the distinction between standard and special fasteners. The reason why the distinction between standard and special fasteners was taken into consideration was because the Commission found this factor to affect price comparability.^[231] Because the comparison in the dumping context - that is, between Pooja Forge's prices and those of the Chinese producers - was going to take into account the distinction between standard and special fasteners, the Commission asked Pooja Forge to provide two DMSAL files, one reporting its sales of standard fasteners and the other reporting its sales of special fasteners.

7.173.  China claims that the Commission failed to ensure that it compared the prices of standard fasteners sold by Pooja Forge with the prices of standard fasteners exported by the Chinese producers to the European Union. China's assertion focuses on the Commission's treatment of a specific type of fastener in determining normal values on the basis of Pooja Forge's data, namely fasteners destined for high-end applications and which were not made according to a customer drawing.

7.174.  We understand from the arguments of the parties that, sometimes, a high-end user such as an automotive producer may order fasteners which, according to the definition referred to above, would be considered as "standard". This may occur in two different ways. First, the high-end user may order standard fasteners but ask that there be fewer variations within the products ordered. In this case, the customer makes a specific order for standard fasteners that conform to certain industry standards, instead of buying them from the producer's stock of that particular type of fastener. The producer produces the fasteners ordered and verifies that there are no variations from the relevant standard or fewer variations than what is allowed under the relevant industry norms. In other words, the fasteners sold are standard fasteners but the producer incurs additional costs because of eliminating, or limiting beyond what is allowed under the relevant industry norms, the variations from the standard at issue.^[232] Second, a high-end user may buy standard fasteners without any additional requirements whatsoever. Our understanding is that the only factor that distinguishes such sales is the fact that the buyer is a high-end user, such as an automotive producer, rather than a traditional buyer of fasteners, such as one who engages in construction.

7.175.  China's claim does not concern the fasteners described in the first situation above, namely fasteners sold to high-end users such as automotive producers, which met the customer's additional requirements. Rather, China argues that the fasteners sold to high-end users such as automotive producers in the second situation described above were not treated as "special" - although in China's view they should have been - and were taken into account in determining the normal values for the Chinese producers. In China's view, this is of paramount importance because such fasteners are more expensive than standard fasteners exported to the European Union by the Chinese producers.^[233] It follows that if such fasteners were treated as "standard" and taken into consideration in determining the normal values, this would increase the resulting dumping margins. The treatment by the Commission of this type of fasteners is the focus of the present claim.

7.176.  We recall that under this claim China presents two main arguments, namely (i) that the Commission failed to consider as "special" those fasteners sold to high-end users and which were not made according to a customer drawing, and (ii) that the Commission did not act objectively in assessing the accuracy of the lists of standard and special fasteners provided by Pooja Forge. Below, we examine these two arguments in turn.

7.6.3.2.1  The Commission's treatment of fasteners sold to high-end users and which were not made to a customer drawing

7.177.  China contends that the Commission should have treated as "special" those fasteners destined for high-end applications such as automotive fasteners and which were not made to a customer drawing, but failed to do so. This argument challenges the way the Commission made the distinction between standard and special fasteners.

7.178.  We note that the definitive regulation defines standard versus special fasteners as follows:

Standard products are described in detail by industry standards such as, for example, Deutsches Institut für Normung (DIN) or German Institute for Standardisation standards. These standards ensure that the products manufactured by different suppliers in different countries are essentially interchangeable from a user point of view. Special fasteners, on the other hand, conform to a particular user's design and/or requirements. It is also generally recognised that special fasteners tend to be used in more demanding applications such as the automotive, chemical and other industries and are, on average, significantly more expensive to produce and sell than standard fasteners.^[234]

7.179.  Thus, the definitive regulation clarifies that the distinction between standard and special fasteners was made on the basis of whether a fastener conformed to the relevant industry standards or whether it met the customers' special design or other requirements. Put simply, a "standard fastener" is one that conforms to the relevant industry standards, whereas a "special fastener" is one that meets a particular customer's requirements. Standard fasteners are made to stock and not on specific request of a customer. When an order is received for standard fasteners, such fasteners are taken from the stock, packaged and shipped to the customer. Special fasteners are made on request, when a customer submits its own drawing or a particular specification, which the producer will have to follow.^[235] This distinction between standard and special fasteners was maintained in the review investigation.^[236]

7.180.  In its opening statement at the Panel's meeting with the parties, China presented arguments that challenge the distinction between standard and special fasteners used by the Commission:

China submits that the fact that the existence of a customer drawing was the sole criterion clearly shows that the European Union has excluded high-end fasteners that were not made according to a customer drawing from the group of special fasteners.^[237]

China's argument is that the categorization of special fasteners on the sole basis of the existence of a customer drawing is improper, as it fails to ensure that all sales of special fasteners are excluded from Pooja Forge's domestic sales of standard fasteners. The sole criterion of the existence of a customer drawing fails to properly categorize as special fasteners those that are used in high-end applications, such as the automotive industry, but which are not made according to a customer drawing.^[238]

7.181.  However, China has not explained to the Panel why a definition of standard fasteners based on the existence of a customer's drawing is inconsistent with the obligation to conduct a fair comparison between the normal value and the export price set forth under Article 2.4 of the AD Agreement. China implies that the definition of a special fastener should include criteria other than the presence of a customer's drawing, but it does not explain what such criteria should be.

7.182.  In the circumstances of the investigation at issue, we do not see any reason to find that the Commission acted in a non-objective or biased manner in adopting a definition that uses the existence of a customer drawing as the distinguishing criterion between standard and special fasteners. China has not explained to us why standard fasteners, which are not made to a customer drawing, should be treated as "special" when sold to a high-end user such as an automotive maker. The mere fact that the seller charges a higher price when selling such standard fasteners to automotive producers does not in our view transform a standard fastener into a special one. We note that it is not uncommon in the business world to charge different prices to different buyers for the same product. Such price differentiation does not necessarily render the products sold different from one another. We also note that under China's interpretation, the same fasteners would be considered as "standard" when sold to someone engaged in construction but "special" when sold to an automotive producer. We are not persuaded by this argument.

7.183.  China also contends that, in the review investigation, the Commission's explanations regarding the distinction between standard and special fasteners were ambiguous. To support this argument, China refers to various communications from the Commission which allegedly were inconsistent with one another.^[239] From such alleged ambiguities, China concludes that the Commission failed "to ensure that fasteners destined for high-end applications but not made according to a customer drawing were considered by the parties to the investigation, in particular by Pooja Forge, as 'special' fasteners".^[240]

7.184.  We do not agree. The record shows that during the review investigation, the Commission explained how it distinguished between standard and special fasteners. In this regard, the review regulation states in relevant part:

(47) On the difference between standard and special fasteners, the Commission's note of 13 July 2012 explained that 'it cannot be excluded that the automotive industry also uses standard fasteners for certain applications'. Some parties argued that the Commission considered that automotive fasteners could also have been regarded as standard. Such allegation is unfounded. As is clearly explained in that note, the Commission's statement was made in the absence of a customer list from the Indian producer. However, as established in the original investigation and further explained in section 2.7 below, for quality and commercial reasons, automotive producers always order fasteners which are custom designed in order to comply with that industry's ISO requirements. Therefore, all fasteners destined for the automotive sector that [sic] are considered as 'special' products by fasteners producers, including in India, according to information found on the websites of Indian automotive producers. Since the Indian producer clearly defined as 'special fasteners' all parts manufactured to a custom design, the Commission considers that standard fasteners destined to the automotive industry were not included in the list of standard fasteners provided during the original investigation.^[241] (emphasis added)

7.185.  The review regulation addresses the specific argument made by the Chinese producers that the Commission might have treated as "standard" fasteners sold to automotive producers and explains why such argument is misplaced. The regulation conveys the Commission's finding that automotive producers always order fasteners which are custom designed and that therefore they are considered as "special" fasteners. It follows that Pooja Forge's sales that the Commission took into account in determining normal values for the Chinese producers did not include fasteners sold to automotive producers.

7.186.  China submits that this explanation "is an a posteriori justification provided by the Commission in order to address the arguments raised by the interested parties during the review investigation". China finds this to be inconsistent with an IA's obligation to act in an even-handed manner.^[242] We are puzzled by this argument. First, we note that an IA is under an obligation to address the pertinent arguments made by interested parties on the IA's determinations made in an investigation.^[243] Second, in terms of its timing, we do not see the review regulation as a determination that post-dates the review investigation. Indeed, it was probably the most important step in the review investigation in that it explains in detail the Commission's determinations and their underpinnings. In any case, we note that the Commission's final disclosure issued pursuant to Article 6.9 of the AD Agreement, more than two months before the review regulation, also contained, almost verbatim, the same explanations about the distinction between standard and special fasteners that were found in the part of the review regulation that we have quoted above.^[244] The Chinese interested parties were given almost three weeks to comment on such disclosure.^[245] This, in our view, puts paid to the argument that the Commission's explanations in the review regulation constituted a posteriori justification.

7.187.  Finally, we also note that, under the present claim, China challenges the consistency with Article 2.4 of the Commission's definition, albeit without showing why such definition is inconsistent with that provision. To us, the very fact that China challenges the WTO-consistency of the Commission's definition shows that such definition was explained to the Chinese producers in the investigation at issue and that they understood its contours. Whether or not that definition was properly applied by the Commission to Pooja Forge's sales is another issue, to which we now turn.

7.6.3.2.2  The Commission's assessment of the accuracy of the lists of standard and special fasteners provided by Pooja Forge

7.188.  China maintains that on the basis of what was on the record, the Commission could not conclude that the lists of standard and special fasteners provided by Pooja Forge were accurate. Put differently, China claims that "the Commission could not reasonably and objectively conclude that the lists of standard and of special fasteners provided by Pooja Forge … included respectively only standard and special fasteners as defined for the purposes of the investigation".^[246] In making this argument, China points to the failure of the Commission to conduct an on-the-spot verification to verify the lists provided by Pooja Forge. China recognizes that the Commission took two initiatives with a view to verifying the lists at issue: (i) it conducted walk-through tests, and (ii) it checked the split made by Pooja Forge against average price levels. China contends, however, that these steps did not suffice to verify the accuracy of Pooja Forge's lists. We disagree with China, for the reasons explained below.

7.189.  The record shows that the Commission conducted a series of walk-through tests in order to verify the accuracy of the two lists provided by Pooja Forge. The European Union describes a walk-through test as follows:

A "walk-through" test is an in-depth verification of the accuracy of the information provided on a transaction by transaction sales listing, by testing the sales information on one line of this listing against the different documents relating to that particular sale. A "walk-through" test involves the selection of a sample of invoices and examining the original documents that "walk" the European Commission "through" the process of sale. For example for a domestic sale contained in the listing, we would expect to see a contract or purchase order; price negotiation; production or stock order; stock movements; packaging; handling and shipping and finally payment. A significant number of lines are checked through this test until the investigating authority is satisfied of the accuracy of the information provided.^[247]

7.190.  Hence, a walk-through test seems to be a process that allows the Commission to verify the accuracy of a range of documents pertaining to a group of sales that are selected from among the entirety of the sales reported by a given company. China does not dispute the fact that the Commission did carry out walk-through tests in order to verify the accuracy of Pooja Forge's lists. China's argument is that such a test would not allow the Commission to verify the accuracy of the information provided by Pooja Forge. We do not see why this would be the case.

7.191.  It is common knowledge that anti-dumping investigations often entail the collection of information pertaining to thousands of sales made by the companies involved, be it on the dumping or the injury side of the investigation. Article 6.6 of the AD Agreement generally requires an IA to "satisfy [itself] as to the accuracy of the information supplied by interested parties upon which [its] findings are based." Article 6.7 provides that an IA may conduct an on-the-spot verification "[i]n order to verify information provided or to obtain further details". This provision does not oblige an IA to conduct on-the-spot verifications in order to verify information provided by interested parties. The general obligation laid down in Article 6.6 is that an IA must ensure that the information on which it bases its findings is accurate. The Agreement does not prescribe specific ways in which this general obligation has to be observed. It is now well settled in WTO case law that "[w]hile such on-site verification visits are common practice, the Agreement does not say that this is the only way or even the preferred way for an investigating authority to fulfil its obligation under Article 6.6 to satisfy itself as to the accuracy of the information supplied by interested parties on which its findings are based".^[248] On-the-spot verification is one but by no means the only way in which an IA may verify the accuracy of the information provided by interested parties. China does not argue otherwise but contends that in this investigation, the Commission should have conducted an on-the-spot verification. However, in light of the facts on the record and the explanation by the European Union of what a walk-through test entails, we see no reason that would compel such a conclusion. We are not persuaded that in the investigation at issue, conducting walk-through tests in order to verify the accuracy of the information provided by Pooja Forge was incompatible with what would have been expected from an objective an unbiased IA.

7.192.  As noted above, the record shows that, in addition to walk-through tests, the Commission also conducted a price analysis in an effort to verify the accuracy of the lists provided by Pooja Forge. The review regulation provides in this regard that:

With regard to the claim concerning the absence of verification of the split made by the Indian producer, the Commission verified the sales listing through a number of 'walk-through' tests (i.e. in-depth verification of a sample of sales transactions included in the sales listing in order to verify its accuracy) as per standard verification practices. In addition, the subsequent split of that sales listing provided by the Indian producer was checked against an average price level of the split as explained in the said note. Therefore, the allegation that the Commission took at face value the data provided by the Indian producer is not founded.^[249]

7.193.  China posits that an average price check would not ensure that the export price of standard fasteners was not compared to the normal value of special fasteners. The reason for this, argues China, is that "[a]n average price check does not allow for the detection of special fasteners of which the price is low as the result of other product characteristics".^[250] China adds that "[i]t is perfectly possible that the sales listing of 'standard' fasteners contain fasteners which in fact should have been included in the listing of 'special' fasteners".^[251] China also asserts that an average price check "offers no conclusive evidence that all the fasteners labelled as standard were indeed standard fasteners".^[252] We agree with these views in the abstract. By its nature, an average price check cannot verify that each and every transaction included in the list of special fasteners indeed pertains to a special fastener and that each and every transaction included in the list of standard fasteners pertains to a standard fastener. We are not aware of any provision in the AD Agreement which requires such conclusive evidence from an IA in a case like this. Nor would such a showing have been possible or practicable given the particularly high number of sales transactions involved in this investigation.^[253] The issue here is whether or not the steps taken by the Commission to verify the accuracy of the sales lists provided by Pooja Forge represented an unbiased and objective evaluation of facts as required under Article 17.6(i) of the AD Agreement. China has not shown to us that this was not the case. In our view, an average price check, in addition to the walk-through tests conducted, would only enhance the quality of the verification made by the Commission. We therefore reject China's argument that the Commission failed to objectively assess the accuracy of the sales lists provided by Pooja Forge.

7.6.3.2.3  Conclusion

7.194.  In light of our findings above, we reject China's claim under Article 2.4 of the AD Agreement that the Commission failed to compare the prices of standard fasteners with the prices of standard fasteners in calculating dumping margins for the Chinese producers in the review investigation at issue.

7.195.  China asked the Panel to exercise its fact-seeking power under Article 13 of the DSU to request the European Union to provide a copy of Pooja Forge's DMSAL file, and other information, used to distinguish between standard and special fasteners and to verify the accuracy of the split made by Pooja Forge.^[254] We did not make such a request because we did not find it necessary to consult the mentioned file or other information in our evaluation of China's claim.

7.7  Alleged violation of Article 2.4 of the AD Agreement: failure to make adjustments for differences that affect price comparability

7.7.1  Arguments of parties

7.7.1.1  China

7.196.  China asserts that the European Union acted inconsistently with Article 2.4 of the AD Agreement by failing to make adjustments for certain factors that affected price comparability. Specifically, China takes issue with three differences that allegedly affected price comparability and that were not taken into account by the Commission: (i) differences in taxation, (ii) differences in physical characteristics, and (iii) certain other differences.

7.197.  First, with respect to differences in taxation, China notes that Pooja Forge imported 80% of its raw material - wire rod - and paid import duties and other indirect taxes on such imports. The Chinese producers, however, bought their wire rod from the domestic market. These Chinese producers asked the Commission to make an adjustment to the normal value for this difference, but the Commission declined to do so on the grounds that the Chinese producers had not provided evidence showing that exports of fasteners from China to the European Union would benefit from a non-collection or refund of import charges on imports of wire rod. China contends that these explanations are not relevant where the normal value is established on the basis of the prices of an analogue country producer.^[255] Under Chinese law, Chinese producers of fasteners could benefit from a duty drawback had they imported their raw materials. Similarly, Indian law would have allowed Indian fasteners producers to request duty drawback for the imports of wire rod when they exported fasteners.^[256] China therefore argues that, by choosing an analogue country producer that imported most of its raw materials and incurred significant import duties and other indirect taxes, and by not making an adjustment to account for this difference, the Commission failed to make a fair comparison as required under Article 2.4.^[257]

7.198.  Second, with respect to differences in physical characteristics, China argues that, during the review investigation, Chinese producers demonstrated to the Commission that all characteristics which were included in the original PCNs, as well as others which were not included in the PCNs, affected price comparability and asked that adjustments be made for them. The Commission failed to make such adjustments, in violation of the fair comparison obligation set forth in Article 2.4.^[258] As regards the differences in physical characteristics that were reflected in the PCNs, China refers specifically to coating, chrome, diameter and length and types of fasteners, and argues that, with respect to each of these characteristics, the Commission should have made the necessary adjustments. Regarding coating, China takes issue with the Commission's determination that all fasteners produced by Pooja Forge were electroplated. This determination was based on confidential evidence on the investigation file and information posted on Pooja Forge's website. China submits that this did not represent a proper establishment of facts and an objective and unbiased evaluation thereof.^[259] With regard to chrome, China argues similarly that the Commission's determination that only chrome Cr3 was used in the fasteners manufactured by Pooja Forge did not represent a proper establishment of facts and an objective and unbiased evaluation thereof.^[260] Regarding diameter and length, China contends that the Commission took these differences only partially into account by grouping fasteners on the basis of ranges rather than per specific diameter and length.^[261] With regard to types of fasteners, China maintains that the way the Commission took this difference into account was not satisfactory for two reasons: first, because the Commission failed to take into account the different characteristics of fasteners that fall within the same CN code; and second, because it made this adjustment on the basis of differences between the types of fasteners sold in the EU market.^[262]

7.199.  As regards the differences in physical characteristics that were not reflected in the original PCNs, China maintains that, during the review investigation, the Chinese producers argued before the Commission that certain factors other than those reflected in the PCNs, such as traceability, standards, unit of defective rate, hardness, bending strength, impact toughness and friction coefficient, affected price comparability but that they could not further substantiate their requests in this regard without information about the products of the Indian producer, Pooja Forge. The Commission rejected these requests on the grounds that they were not substantiated by evidence. China asserts that such rejection violated Article 2.4 because, by requiring the Chinese producers to substantiate their requests for these adjustments without first giving them sufficient information about the products sold by Pooja Forge, the Commission imposed an undue burden on these producers.^[263]

7.200.  Third, with respect to certain other differences, China argues that, during the review investigation, the Chinese producers argued before the Commission that the differences with regard to "easier access to raw materials", "use of self-generated electricity", and "efficiency and productivity", affected price comparability, and requested that adjustments be made to the normal value for such differences.^[264] The Commission declined these requests on two grounds, namely, (i) that the EU's Basic Regulation referred to prices, as opposed to costs, in respect of adjustments, and that the Chinese producers did not present evidence showing that these differences affected price comparability; and (ii) that in investigations against NMEs, the costs and prices of producers in functioning market economies were used in the determination of normal values.^[265] With respect to the first ground, China argues that the Chinese producers did provide some evidence regarding the alleged differences and that they could not further substantiate their requests because they did not have sufficient information about the characteristics of the fasteners produced by Pooja Forge.^[266] China also adds that it is the EU's practice, in investigations against NMEs, to make adjustments to the normal value calculated on the basis of the prices of analogue country producers, to account for the comparative advantages enjoyed by NME producers subject to the investigation.^[267] With respect to the second ground, China submits that the adjustments that the Chinese producers requested did not pertain to their own prices, but to the prices of the Indian producer. China further argues that China's status as an NME is irrelevant to the Commission's obligation under Article 2.4 of the Agreement to make a fair comparison between the normal value and the export price.^[268]

7.7.1.2  European Union

7.201.  The European Union argues as a general matter that the Commission evaluated the Chinese producers' requests for adjustments for alleged differences in taxation, physical characteristics and certain other differences, and rejected them because the Chinese producers failed to provide evidence showing that such differences affected price comparability, as required under Article 2.4.^[269] The European Union then presents counter arguments to the three main aspects of China's claim.

7.202.  First, with respect to the alleged differences in taxation, the European Union asserts that the Commission examined the Chinese producers' request for an adjustment for this factor and rejected it because these producers did not submit evidence showing that Chinese exporters of fasteners to the European Union would benefit from a non-collection or refund of import charges for the imports of raw materials, i.e. wire rod.^[270] The European Union also points out that the fact that the Chinese producers do not import the raw materials and do not pay import charges on them is one of the main reasons why market economy status could not be extended to the Chinese producers in the fasteners investigation.^[271] For the European Union, the fact that the Chinese producers do not pay import charges on their imports of raw materials is immaterial to the question of adjustments.^[272]

7.203.  Second, with respect to alleged differences in physical characteristics, the European Union contends that China has failed to show that the Commission's decision to reject these requests for adjustments was unreasonable or biased or that the Commission did not engage in an active and substantive dialogue with the Chinese producers in this regard.^[273] In the EU's view, Article 2.4 does not impose any particular evidentiary burden on an IA, and therefore the latter is entitled to rely on the information provided by the relevant interested parties and make determinations on that basis.^[274] As far as the differences in physical characteristics that were reflected in the PCNs are concerned, the European Union argues, with respect to the alleged difference concerning coating, that the Indian producer stated, in an email addressed to the Commission, that it used only electroplating on its standard fasteners. It also notes in this regard that the AD Agreement does not impose a verification obligation on an IA and that China has not raised a claim under Article 6.6 of the Agreement concerning an IA's obligation to satisfy itself about the accuracy of the information provided by interested parties on which the IA's findings are based.^[275] With regard to chrome, the European Union submits that the Commission examined the information available in order to address the Chinese producers' claim regarding alleged differences in chrome, and relied on the information provided in Pooja Forge's questionnaire response, which was corroborated by other sources. This information showed that Pooja Forge used only chrome Cr3, and not the more expensive chrome VI, in its standard fasteners.^[276] Regarding diameter and length, the European Union asserts that the fact that prices of products falling within a certain range may differ does not necessarily preclude an IA from using ranges in distinguishing different product types in the context of price comparisons under Article 2.4.^[277] With respect to types of fasteners, the European Union argues that it was at the request of the Chinese producers that the Commission decided to distinguish between different types of fasteners in making a fair comparison between the normal value and the export price. Since Pooja Forge had not provided CN code information about its products, the Commission made the distinction between standard and special fasteners on the basis of an alternative methodology, looking at the fasteners sold in the EU market. In the EU's view, China's argument that the Commission failed to take into account the different characteristics of fasteners that fall within the same CN code seeks to impose an unreasonable burden on the IA. The European Union adds that the Chinese producers did not submit evidence during the review investigation showing that the general price differences used to distinguish between standard and special fasteners were inaccurate or inappropriate.^[278]

7.204.  Regarding the differences in physical characteristics that were not reflected in the PCNs, such as traceability, standards, unit of defective rate, hardness, bending strength, impact toughness and friction coefficient, the European Union first underlines that this aspect of the claim could have been but was not raised by China during the original proceedings. It is therefore inappropriate for China to raise this in these compliance proceedings. The European Union does not present this as a procedural objection. However, it notes that, because jurisdiction is a matter for the Panel to examine on its own initiative, the European Union would not object if the Panel concluded that this aspect of China's claim could not be raised in these proceedings.^[279] On substance, the European Union maintains that an interested party has to demonstrate under Article 2.4 the existence or absence of product features that affect price comparability when comparing the normal value with the export price. The Chinese producers did not do this and the Commission rightly rejected their request for lack of substantiation. China has not shown before this Panel that such rejection was not objective and unbiased.^[280]

7.205.  Third, with respect to certain other differences alleged by China, namely "easier access to raw materials", "use of self-generated electricity", and "efficiency and productivity", the European Union maintains that this aspect of the claim could have been but was not raised by China during the original proceedings.^[281] On substance, the European Union underlines that raw materials and energy distortions are among the typical features of an NME.^[282] The European Union contends that the Chinese producers failed to substantiate their requests for adjustments for these alleged differences and the Commission rejected such requests. The European Union again argues that such rejection represented an objective and unbiased assessment on the part of the Commission.^[283] The European Union asserts that, under Article 2.4, the burden to substantiate a request for an adjustment lies with the requesting interested party, whereas, through this claim, China seeks to switch that burden to the IA.^[284] The European Union adds that this aspect of China's claim suggests that the Commission should have assumed that the analogue country producer, Pooja Forge, used more or less the same production factors as the Chinese exporters. This, in the EU's view, seeks to undo the recourse to the analogue country methodology.^[285]

7.7.2  Arguments of third parties

7.206.  The United States notes that, as underlined by the Appellate Body in US – Hot-Rolled Steel, the obligation to ensure fair comparison under Article 2.4 is on the IA, not the foreign producers. However, interested parties are under an obligation to support their requests for adjustments for differences that affect price comparability. Without taking any position on whether necessary adjustments were made in the review investigation at issue, the United States argues that to the extent that any such differences were demonstrated to affect price comparability, the Commission was obliged under Article 2.4 to make the necessary adjustments. The United States adds, however, that the Commission was under no such obligation with regard to requests for adjustments in respect of differences that were not demonstrated to affect price comparability.^[286]

7.207.  As far as the aspect of the claim regarding certain other differences is concerned, the United States notes that this aspect does not concern the obligation set forth in Article 2.4. Rather, it raises the issue of whether India was an appropriate analogue country. Whereas the underlying concern in Article 2.4 is "price comparability", this aspect of China's claim pertains to alleged differences in costs. In this regard, the United States agrees with the European Union that in investigations against NMEs, it is appropriate not to base normal value on prices charged in the domestic market of the exporting country because of, inter alia, distorted raw material prices and that when such an approach is followed, such as in the investigation at issue here, it would be inappropriate to make adjustments for alleged differences in costs. The United States finds China's argument to be 'fundamentally circular' and contends that such an argument disregards the purpose of not relying on the prices of NME producers in determining normal value.^[287]

7.7.3  Evaluation by the Panel

7.208.  China maintains that the Commission violated Article 2.4 of the AD Agreement by failing to make adjustments for three types of differences that allegedly affected price comparability: (i) differences in taxation, (ii) differences in physical characteristics, and (iii) certain other differences. We will examine each of these three allegations in turn.

7.7.3.1  Differences in taxation

7.209.  China notes that whereas Pooja Forge imported 80% of wire rod, the raw material it needed to produce fasteners, the Chinese producers bought their wire rod from the Chinese market. Since Pooja Forge paid import duties and other indirect taxes on its imports of wire rod, which the Chinese producers did not have to pay, China argues that the Commission should have made an adjustment to the normal value in order to account for this difference affecting price comparability. By failing to do so, argues China, the Commission violated the fair comparison obligation set forth in Article 2.4 of the Agreement. The European Union disagrees, arguing that China's argument effectively aims to undo the effect of the analogue country methodology, an issue which is not part of this dispute. Moreover, the European Union maintains that the Commission was not required to make an adjustment to the normal value for alleged differences in taxation because the Chinese producers failed to demonstrate to the Commission that this was a difference that affected price comparability.

7.210.  Turning to the relevant facts, we note that the Commission's final disclosure states that Pooja Forge paid "the basic customs duty (5% of assessable value) and the Customs Education Cess (3% of the basic customs duty value plus the CVD amount)" on the raw material that it imported.^[288] China notes that the CVD amount exceeded 20% of the customs value which resulted in total import duties ranging between 26 and 30% of the customs value during the period of investigation.^[289] During the review investigation, the Chinese producers argued that they did not import their raw material and therefore did not pay such duties, and that therefore the Commission should make an adjustment for this difference that affected price comparability. Following the Commission's letter dated 30 May 2012, in which further information was disclosed regarding Pooja Forge's products, one Chinese producer wrote to the Commission to argue that:

The annual reports (see Annexes 1 and 2) reveal that the Indian producer during the IP imported 80% of raw materials (wire rod) from abroad. This relates to the fact that the Indian producer had, in order to produce the fasteners with the particular physical characteristics it is producing, to use particular types of wire rod. Our client, by contrast, purchased its raw materials for the production of fasteners with different physical characteristics, on the domestic market.

Obviously, this results in additional costs that are being incurred by the Indian producer (for instance, freight and import duty) that are not born [sic] by our client. This is thus a difference that affects price comparability.

With a view to ensuring a fair comparison, the normal value should thus be adjusted to account for the difference between the Indian domestic price of wire rod and the purchase price paid by the Indian producer during the IP. On the basis of the comparison included in Annex 3, the normal value should be lowered by 7.026 Rupee per ton.^[290] (emphasis added)