ANNEX B
Arguments
Of The Participants
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Contents
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Page
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Annex B-1
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Executive
summary of the European Union's appellant's submission
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B-2
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Annex B-2
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Executive
summary of China's other appellant's submission
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B-11
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Annex B-3
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Executive
summary of China's appellee's submission
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B-15
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Annex B-4
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Executive
summary of the European Union's appellee's submission
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B-21
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ANNEX B-1
EXECUTIVE
SUMMARY OF the European union's APPELLANT'S SUBMISSION
1.1 The Panel erred by finding that China's claims under Articles 6.5,
6.4, 6.2, 6.1.2, 2.4, 4.1 and 3.1 of the AD Agreement fell within its terms of
reference
1.
The European Union submits that the Panel erred in the interpretation
and application of Article 21.5 of the DSU and also failed to comply with its
functions as required by Article 11 of the DSU when finding that China's claims
under Article 6.5, 6.4, 6.2, 6.1.2, 2.4, 4.1 and 3.1 of the AD Agreement
fell within its terms of reference. As a result, the European Union requests
the Appellate Body to reverse the
Panel's findings in paragraphs 7.34, 7.80, 7.114, 7.115, 7.171, 7.291, as well
as 8.1(i)-(iii) and (v) of its Report.
2.
The European Union considers that Article 21.5 of the DSU instructs a
panel in the context of compliance proceedings to evaluate the existence or
consistency with a covered agreement of measures taken to comply with the
recommendations and rulings. In this respect, the DSB's recommendations and
rulings are crucial to determine whether a measure taken to comply exists, what
aspects of such measure (including omissions) fall within the scope of the
compliance review (e.g. because they are new aspects), and also in evaluating
whether such a measure is consistent with the covered agreements. Thus, the
recommendations and rulings of the DSB will always provide the starting point
for a panel's analysis under Article 21.5. The steps taken by the
responding Member to comply with those DSB's recommendations and rulings
are also relevant to determine whether certain aspects in the measure taken to
comply are "new" (i.e. where modified pursuant to the measure taken
to comply), or remain unchanged and incorporated into the measure taken to
comply. Panels in Article 21.5 proceeding are precluded from considering
several types of issues relating to those unchanged aspects. In particular, the
DSU does not allow complaining Members to use compliance proceedings to
re-raise claims and arguments that were rejected during the original
proceedings. In addition, Members generally may not make claims in compliance
proceedings that they could have pursued during the original proceedings, but
did not. In order to determine whether a particular claim against an unchanged
aspect of the original measure incorporated into the measure taken to comply
falls within the scope of those compliance proceedings, the compliance panel
will have to assess whether such aspect forms an integral part of the measure
taken to comply (e.g. like in US-OCTG Sunset Reviews
(Article 21.5)) or is separate from the measure taken to comply
(e.g. like in EC – Bed Linen (Article 21.5 – India))
in particular by examining the original DSB's recommendations and rulings, the
steps taken by the responding Member to comply with them though the declared
measure taken to comply, and the close relationship between those unchanged
aspects and the ones that the responding Member was called to modify.
3.
The Panel wrongly concluded that the claims made in the original and
compliance proceedings took issue "with different types of
information". With a different label applied to the same information, in
the compliance proceedings China sought to challenge the fact that the European
Commission had treated as confidential the same information (i.e. Pooja Forge's
product categories reflecting its characteristics) also in the context of the
review investigation. Nothing changed when compared with the facts as
challenged by China in the original proceedings. China complained that the
European Commission had treated as confidential the information provided by
Pooja Forge regarding its product categories reflecting product characteristics
in the original proceedings, and failed. Now, in compliance proceedings, China
also raised the same claim against the same underlying facts in the context of
the review investigation.
4.
Had the Panel examined what the European Union was required to do
following the adopted DSB reports, the Panel would have concluded that, since
China failed to make its prima facie
case with respect to all the information submitted by Pooja Forge in its
Questionnaire Response, including the categories of products sold (i.e. Pooja
Forge's product characteristics), China was prevented from raising the same claim
against the same facts which remained unchanged in the review investigation
(i.e. the treatment as confidential of certain information submitted by Pooja
Forge regarding the products sold in India). This issue did not bear any close
relationship with the original DSB's recommendations and rulings. Simply, there
were no recommendations or rulings on this matter, since China failed to prove
its case. Allowing China to raise the same matter again in the context of these
compliance proceedings precisely would confer a "second chance" to
re-open the same issue which was discussed in the original proceedings, i.e.
the treatment as confidential of the information provided by Pooja Forge,
including its product types.
1.1.1.2 The Panel made an error when
finding that China's claim under Article 6.2 and 6.4 of the AD Agreement was
within its terms of reference
5.
The information provided by Pooja Forge with respect to its products
sold in India was not "new". In the review investigation, the
European Commission based itself on the data which Pooja Forge had provided in
the context of the original investigation. Further, in the original
investigation, the Chinese exporting producers repeatedly requested to see the
categorisations or product types on the basis of which Pooja Forge had provided
information. This aspect, therefore, was not "new". The Panel failed
when considering that this information was "new" and hence a new
aspect in the measure taken to comply. In addition, the European Union
considers that, had the Panel followed the guidance set out by the Appellate
Body in US – Zeroing (Article 21.5 – EC), the
Panel should have concluded that this aspect of the review investigation did
not change when compared to the original investigation (since it was based on
the same information) and that such aspect was separable from the measure taken
to comply, in light of the relevant DSB's recommendations and rulings.
1.1.1.3 The Panel made an error when
finding that China's claim under Article 6.1.2 of the AD Agreement was
within its terms of reference
6.
The Panel erred in the interpretation and application of Article 21.5 of
the DSU when examining the European Union's objection against China's claim
under Article 6.1.2 of the AD Agreement. The reasons mentioned by the
European Union in Section 3.2.4 also apply here mutatis
mutandi. The European Union further takes issue specifically with
the following factual finding made by the Panel in paragraph 7.114: "[w]e
also recall that Pooja Forge provided information on coating during the review
investigation [referring to Exhibit EU-6]". The European Union considers
that the Panel erred under Article 11 of the DSU when drawing this conclusion
from the record and which vitally supported its ultimate findings.
1.1.1.4 The Panel made an error when finding that certain aspects of China's
claims under Article 2.4 of the AD Agreement were within its terms of reference
7.
The Panel erred when finding that China's claims under Article 2.4 of
the AD Agreement with respect to the use of the special/standard distinction in
the dumping determination as well as the failure to make adjustments relating
to features that were not included in the revised product categories (like
traceability, standards, unit of defective rate, hardness, bending strength,
impact toughness and friction coefficient) were within its terms of reference.
8.
With respect to the special versus standard
distinction, like in the original proceedings, China sought to argue in the
compliance proceedings that there was a "third" category of fasteners
(yet another "standard-plus fasteners") which, in reality, did not
exist either in the original or compliance proceedings. The methodology applied
with respect to the special/standard distinction used by the European
Commission in the original and review investigations did not change. In this
respect, the European Union considers that, regardless of whether China raised
the special/standard distinction in different contexts in the original and
compliance proceedings, the essence of the claim was identical in both proceedings
and, in fact, was rejected in several occasions in the original proceedings.
9.
Moreover, China could have contested in the original proceedings how the
European Commission applied its special/standard distinction also in the
dumping context but did not do so. Had the Panel examined the DSB's
recommendations and rulings, it would have concluded that the use of the
special/standard distinction in the dumping context was an unchanged aspect
which was separable from the measure taken to comply by the European Union in
this case. Indeed, since in essence the panel and the Appellate Body in the
original proceedings confirmed the European Commission's approach and therefore
rejected the existence of a third category of fasteners (irrespective of
whether it was called "standard-plus fastener" or "high-end
fastener"), the European Union was entitled to continue with its original
special/standard distinction also in the review investigation.
10. With respect to the adjustments
regarding differences in physical characteristics that were not included in the
original PCNs, the Panel wrongly focussed its analysis on whether the
alleged differences (such as traceability, standards, unit of defective rate,
hardness, bending strength, impact toughness and friction coefficient) were
"discussed" in the original investigation. The relevant issue was,
instead, whether China could have raised a claim in the original proceedings
that the European Union also failed to comply with its obligations under
Article 2.4 of the AD Agreement because it failed to take into account
those differences in the product characteristics which were not reflected in
the original PCNs. And indeed China could have brought such a claim.
1.1.1.5 The Panel made an error when finding that China's claim under Articles
4.1 and 3.1 of the AD Agreement was within its terms of reference
11. An examination of the original
DSB's recommendations and rulings would have led the Panel to conclude that
what the European Union was required to do was to amend its domestic industry definition
so that it did not exclude those domestic producers that came forward but
decided not to cooperate in the investigation.
12. In any event, whilst the Panel
itself acknowledged that this aspect remained unchanged in the measure taken to
comply, the Panel also erred when considering this unchanged aspect as an
integral part of the measure taken to comply. The European Union was not
required to re-open this issue in view of the original DSB's recommendations
and rulings, which found the violation in the exclusion from the domestic
industry definition of the producers coming forward within the deadline. The
European Union was not called upon to modify the underlying data (i.e. the
information collected as a result of the original Notice of Initiation, in particular
the number of domestic producers who came forward within the deadline); rather,
the European Union was required to change its methodology of selecting from the
underlying data the universe of producers which would amount to the domestic
industry in that investigation (and indeed it did so by taking into account all
domestic producers as opposed to only those who expressed their intention to
cooperate).
13. The European Union submits that
the Panel incorrectly interpreted and applied Article 6.5 of the AD Agreement
to the facts of the case and also failed to comply with its functions as
required by Article 11 of the DSU when finding that the European Union violated
Article 6.5 by treating as confidential the information submitted by Pooja
Forge regarding the list and characteristics of its products.
14. First, the Panel erred when
failing to examine the reasons provided by Pooja Forge to request confidential
treatment in their proper context. The Panel wrongly narrowed its analysis down
to the fact that an e-mail where Pooja Forge provided reasons to justify the
confidential treatment of its products was placed in the confidential file of
the review investigation. The Panel was wrong to exclude this information from
its consideration. Further, the Panel's ultimate concerns for disregarding this
e-mail were also misguided. The Panel considered that the Chinese producers
could not know the reason adduced by Pooja Forge, which, however, was known to
the Chinese producers. In paragraph 7.44 of its Report, the Panel omits any
discussion or reference to the Hearing Officer's Report dated 18 July
2012. The Panel further erred when finding that Pooja Forge's request was
merely a "bald assertion". The Panel ignored the considerations
submitted by the EU.
15. The European Union further
submits that the Panel erred when finding that the European Commission
"never" performed an objective assessment. This is in contradiction
with the record. For example, the European Union explained that Pooja Forge's
request for confidential treatment regarding the list and its product
characteristics was made in the context of the verification visit that took
place in April 2008 (Exhibit EU-5). The e-mail of 2 July 2012 confirmed
that Pooja Forge stated the same concerns back in 2008. They were also
mentioned in the Hearing Officer's Report dated 18 July 2012.
16. Moreover, the Panel did not
attribute proper weight to the fact that the confidentiality of Pooja Forge's
product range was a non-issue in the original investigation.
17. Neither did the Panel attribute
proper weight to the circumstance that the facts and events to which the
European Union needed to refer in this case date back to 2008.
18. The European Union also showed
that the relevant assessment conducted in the review investigation was a
"good proxy" of how the European Commission assessed the same matter
back in 2008.
19. The European Union maintains that
the Panel wrongly relied on an alleged logical inconsistency in the European
Union's arguments that, on the one hand, the European Commission treated as
confidential the information provided by Pooja Forge about its products for the
purpose of the claim under Article 6.5, but that, on the other hand, the
European Commission provided the Chinese exporting producers with certain
information on the characteristics of Pooja Forge's products in the context of
the claims under Articles 6.2 and 6.4, to conclude that this undermined the
European Union's contention that the information at issue was confidential and
that good cause was shown to keep it confidential.
20. This balancing which the European
Union applied is laid down in the AD Agreement itself. The European Commission
stroke a balance between protecting the information deemed confidential and the
information that was needed by the Chinese exporting producers to defend their interests.
21. It is not logically inconsistent
to argue that the entirety of certain information as a whole is confidential
whereas specific bits of information are not equally confidential.
22. Further, the Panel erred when
finding, without a proper analysis, that the information relating to Pooja
Forge's products was not confidential. In paragraph 7.51 of its Report, the
Panel specified that its finding only indicated that the European Commission
failed to observe the obligations set forth in Article 6.5. The Panel
explicitly did not make a finding on the nature of such information as
confidential or not. There is no reasoning apparent in the Panel Report which
would reconcile these two sentences: " … we do not necessarily say that
such information was not of a confidential nature" (para. 7.51) versus
"… we treat that information as not confidential …" (para. 7.88).
The second sentence does not logically flow from the first one, contrary to
what the Panel seems to assume.
23. In light of the foregoing, the
European Union requests the Appellate Body to reverse the Panel's findings in
paragraphs 7.50, 7.51 and 8.1(i) of its Report.
24. The European Union submits that
the Panel erred in the interpretation and application of Article 6.4 of the AD
Agreement when finding that the Commission violated this provision 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.
The European Union further submits that the Panel erred in the interpretation
and application of Article 6.2 of the AD Agreement when finding that the
Commission violated this provision by not allowing the Chinese producers to see
the information on the file regarding the list and characteristics of Pooja
Forge's products.
25. Article 6.4 of the AD Agreement
applies to information that meets three conditions: (i) the information has to
be relevant to the presentation of the interested parties' cases; (ii) it
should not be confidential as defined in Article 6.5; and (iii) it must have
been used by the investigating authority.
26. With respect to condition (i):
first, the fact that an interested party requests certain information cannot be
equated with the determination that such information is "relevant".
Second, the information about the list and characteristics of Pooja Forge's
products the Chinese producers were asking for did not concern directly the
dumping calculations. That part of the information which indeed did concern the
dumping calculations was provided to the Chinese producers. In addition, the
Chinese exporting producers could have made requests on the basis of the
company specific disclosures.
27. With respect to condition (ii):
the Panel erred when automatically concluding that an alleged error made by the
European Union in assessing such information meant that the information itself
was not confidential in the meaning of the second condition under Article 6.4.
28. With respect to condition (iii):
the mere fact that information "relates" to a particular issue that
is before the investigating authority does not establish that the information
was "used" by the authority in making its determination. That
information as a whole (as opposed to more specific parts of it) was not used
by the Commission.
29. The Panel wrongly considered that
providing this information at the time of the company specific disclosures was
too late. The Chinese exporters, however, were given three weeks to make
comments on the disclosure, including the possibility of asking for adjustments
- preceded by three months of an active dialogue.
30. The Panel also found that the
Commission violated Article 6.2 by not allowing the Chinese producers to see
the information on the file regarding the list and characteristics of Pooja
Forge's products. The European Union submits that this finding is in error for
similar reasons as those mentioned before in the context of Article 6.4.
31. In light of the foregoing, the
European Union requests the Appellate Body to reverse the Panel's findings in
paragraphs 7.92, 7.96 and 8.1(ii) of its Report.
32. The European Union submits that
the Panel erred when finding that the Commission violated Article 2.4 of the AD
Agreement by failing to provide the Chinese producers with specific product
data regarding the characteristics of Pooja Forge's products that were used in
determining normal values in the investigation at issue.
33. In particular, the Panel
committed a legal error by turning the "fair comparison" requirement
of Article 2.4 of the AD Agreement into a procedural provision that would
require the investigating authority to disclose raw data and evidence to
interested parties. Article 2.4 requires the authority to indicate to the
parties what information is necessary to ensure a fair comparison, and provides
that the authority shall not impose an unreasonable burden of proof on those
parties in this respect. Rather than examining whether the Commission failed to
indicate the information that was required and to examine if the Commission
imposed an unreasonable burden of proof on the Chinese producers, the Panel
simply re-interpreted one sentence in the original Appellate Body Report and,
on that basis, read Article 2.4 to require that in an investigation involving
NME countries, all of the raw product data from the analogue country producer
needs to be disclosed to the interested parties. There is no basis for this
requirement in the text of Article 2.4 of the AD Agreement or in the
original Appellate Body Report.
34. Article 2.4 of the AD Agreement
requires that the interested parties be informed of the approach adopted by the
investigating authority for ensuring a fair comparison and of the
characteristics of the product groupings that will be used for purposes of the
dumping determination. A dialogue needs to exist between the investigating
authorities and the interested parties on the product groupings and on the
request for adjustments. That is what the Appellate Body found in the original
dispute. The investigating authority is to communicate clearly with the
interested parties on the method it will use and the product types it has
developed to make the fair comparison. It is then for the interested parties to
request that additional characteristics be added to the product types or that
particular adjustments are required given the type of products they are
exporting.
35. Article 2.4 does not require a
disclosure of the raw data provided by an interested party or of the verified
evidence with respect to each product sold by an interested party, and
certainly not when it concerns confidential information. The relevant
obligation relating to the disclosure of information used in the determination
is to be found in Articles 6.2 and 6.4 of the AD Agreement. As noted above,
these provisions concern only information that is used by the investigating
authority in the anti-dumping investigation and do not allow for the disclosure
of confidential information.
36. In particular, the European Union
argues that the Panel Report contains five errors of law.
37. First, the Panel expressly acknowledges that "the Chinese producers knew
the basis on which the Commission grouped the products on the normal value and
the export price side in comparing prices". In other words, the Panel
confirms that the European Union complied with the requirement identified by
the Appellate Body. The finding of the Panel that the Commission deprived the
Chinese producers of the opportunity to make informed decisions on whether to
request adjustments under Article 2.4 is thus clearly in error. Based on the
Panel's own findings, the European Union did not fail to implement the
Appellate Body's ruling and complied with the "procedural
requirement" of Article 2.4 of the AD Agreement.
38. Second, the European Union considers that the Panel's conclusion in paragraph
7.144 that 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" is wrong. These
findings reveal a number of fundamental errors of law. Importantly, the facts of
the case reveal that the Commission disclosed the "product types" on
the basis of six relevant product characteristics. The Panel ignores the fact
that the Chinese producers could thus have claimed an adjustment on the basis
of other relevant characteristics e.g. if their mixed bag of transactions
reflected such different characteristics likely to affect price comparability.
However, China failed to provide any relevant evidence in respect of the
alleged differences relating to the characteristics that were part of the PCNs.
The Panel did not find otherwise. The Panel erred by accepting China's approach
that a fair comparison can only be made if the producers can verify and confirm
themselves if an adjustment is required based on all of the information available
to the investigating authority. That is not what Article 2.4 provides.
39. Third, insofar as the Panel considers that the final disclosure documents
were not a timely way of informing interested parties, the Panel erred as well.
The Panel's finding to this effect in paragraph 7.144 is based on a reading
which takes the Appellate Body's findings relating to the required dialogue out
of context. The situation in the context of the review investigation in which
the dialogue started well before the General Disclosure and which led to the
Commission fully informing the interested parties of the product types it was
using at the time it provided the company-specific disclosures, thus leaving
sufficient time for comments (three weeks) is entirely different. The Panel
erred in failing to appreciate that difference and in finding that providing
full disclosure of the product types that were used in the final disclosure
documents only violated Article 2.4.
40. Fourth, the European Union also considers that the Panel erred in law in
suggesting that the obligation in Article 2.4 differs based on whether one or
another permissible normal value methodology is used. There is no basis in the
text of the AD Agreement or China's accession protocol for the Panel's finding
that in investigations involving NME countries, Article 2.4 imposes a different
and more far reaching disclosure obligation. What the Appellate Body required
under the procedural requirement of Article 2.4 was that the Commission would
enter into an active dialogue with Chinese producers. That is what the
Commission did. The Appellate Body made this finding in the context of this NME
investigation. The Appellate Body did not find that in an NME investigation
Article 2.4 imposes additional obligations on investigating authorities.
41. Fifth, the Panel also erred when it found that the confidential nature of the
information should not have prevented the Commission from disclosing a summary
of the product information. The European Commission disclosed all of the necessary
information on the product groupings (including the detailed product
characteristics) that were used in the normal value determination to each of
the Chinese exporters and engaged in an active dialogue with the Chinese
interested parties, as required by Article 2.4 of the AD Agreement. In so
doing, the European Commission fully implemented the recommendations and
rulings of the DSB and complied with its obligations under Article 2.4 of the
AD Agreement
42. The European Union therefore
requests the Appellate Body to reverse the Panel's findings of violation in
paragraphs 7.148, 7.149 and 8.1(iii) of its Report.
43. The European Union submits that
the Panel erred when finding that the Commission violated Article 2.4.2 of the
AD Agreement by not taking into consideration, in its dumping determinations,
Chinese producers' exports of models that did not match any of the models sold
by the Indian analogue country producer Pooja Forge. The Panel ignored the term
"comparable" in Article 2.4.2 and failed to interpret the requirement
of Article 2.4.2 in the context of the overarching "fair comparison"
obligation of Article 2.4 which distinguishes this situation from the one
addressed in the zeroing disputes. The Commission applied a neutral methodology
that included all comparable export transactions for which there was a
comparable domestic sale. The European Union therefore requests that the
Panel's findings in paragraphs 7.276 and 8.1(iv) be reversed.
44. The obligation in Article 2.4.2
is to compare only comparable transactions but to make sure to compare and use
all of such comparable transactions. That is exactly what the European
Commission did. The European Commission included only the comparable export
transactions in its dumping calculation in order to ensure the accuracy of the
calculations. In so doing, the European Commission included all comparable
export transactions in the dumping margin determination and did not exclude any
comparable transactions or otherwise sought to skew the averaging that followed
the model-to-model comparison as had been the issue in the zeroing disputes.
There is therefore nothing "inherently unfair" about this approach.
The Panel did not find otherwise. The evidence presented by the European Union
showed that both qualitatively and quantitatively the amount of matching sales
was such as to ensure a fair comparison between comparable sales. The European
Commission excluded some export transactions from its dumping calculation,
because including them would have resulted in inaccurate findings based on
non-comparable transactions. This situation cannot be compared with the zeroing
situation that the Panel based its analysis on.
45. In sum, by including "all
comparable export transactions" – and including both quantitatively and
qualitatively a significant amount of matching sales – the European Commission
ensured a "fair comparison" between the export price and normal value
in accordance with Articles 2.4 and 2.4.2 of the AD Agreement. The
European Union respectfully request the Appellate Body to reverse the Panel's
conclusion to the contrary. The Panel's finding that the Commission violated
Article 2.4.2 of the AD Agreement by not taking into consideration, in its
dumping determinations, Chinese producers' exports of models that did not match
any of the models sold by Pooja Forge was based on a legal error in the
interpretation and application of Article 2.4.2 of the AD Agreement and
the Panel's findings in paragraphs 7.276 and 8.1(iv) should thus be
reversed.
46. The European Union submits that
the Panel erred when finding that by defining the domestic industry on the
basis of domestic producers that came forward in response to a notice of
initiation which stated that only those producers willing to be included in the
injury sample would be considered as cooperating, the Commission acted
inconsistently with Article 4.1 of the AD agreement and consequently with
Article 3.1 of the AD Agreement. In fact, the Panel recognised that the
Commission implemented the finding of the Appellate Body by including all
producers that came forward within the deadline. However, its ultimate contrary
conclusion in paragraphs 7.299 and 8.1(v) is based on an erroneous reading of
the Appellate Body Report and is not supported by the text of Article 4.1, and
should therefore be reversed.
47. With respect to the original
determination, the Appellate Body found that the exclusion from the definition
of the domestic industry of domestic producers that indicated that they would
not be willing to be part of the sample and to be verified constituted a
violation of the European Union's obligations under Article 4.1 and 3.1 of the
AD Agreement.
48. In the Implementing Regulation,
the European Commission therefore re-examined the file and included all
previously excluded domestic producers into the definition of the domestic
industry. Following a review of the Appellate Body's findings the Panel expressly
found, as argued by the European Union, that the finding of the Appellate Body
related only to the exclusion of the domestic producers that came forward
within the deadline. The Panel also found that as a matter of fact in the
review investigation "[n]one of those [previously excluded] producers was
excluded from the new definition of domestic industry". However, rather
than drawing the logical conclusion that the inclusion of such previously
excluded producers thus brought the European Union into conformity with the
Appellate Body's ruling, as it should have, the Panel considered that the legal
reasoning of the Appellate Body required something additional of the European
Union. This is in error as the problematic approach identified by the Appellate
Body was the exclusion of producers that provided relevant information, and not
the mere fact of having requested producers to indicate whether they would be
willing to participate in the sample and cooperate in the investigation.
49. In fact, as a practical matter,
every domestic industry determination is based on self-selection as producers
are informed of the initiation of an investigation and are invited to make
themselves known. There is no obligation to come forward. And any producer that
comes forward knows that if it does not accept verification of the information
and is thus uncooperative, its information may be disregarded anyway. Thus, it
is not realistic to suggest that the mere question of willingness to
participate in the sample would cause a material risk of distortion when it
simply raises an issue that any producer is all too well aware of. Finally, no
evidence of such a distortion was provided by China and the conclusion of the
panel is thus based purely on speculation. That as well constitutes legal
error.
50. Given that the European Union
demonstrated that the Implementing Regulation's definition of the domestic
industry was consistent with its obligations under Article 4.1 of the AD Agreement,
the Panel's entirely consequential finding of violation of Article 3.1 of the
AD Agreement is also flawed
51. In sum, the Panel committed legal
error when finding that the European Union's domestic industry definition was
inconsistent with Articles 4.1 and 3.1 of the AD Agreement because of a line in
the Notice of Initiation that requested producers to inform the authorities of
their willingness to be included in the sample. The European Union requests the
Appellate Body to reverse the Panel's findings in paragraphs 7.299 and 8.1(v)
that the European Union's definition of domestic industry was inconsistent with
Article 4.1 of the AD Agreement and that the resulting injury determination was
inconsistent with Article 3.1 of the AD Agreement.
ANNEX B-2
EXECUTIVE
SUMMARY OF China's OTHER APPELLANT'S SUBMISSION
1 introduction
1.
The Report issued
by the compliance Panel in the case European Communities –
Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China
– Recourse to Article 21.5 by China contains a number of legal
errors and errors of legal interpretation of the provisions of the AD Agreement
and of the DSU. These errors have led to Panel to erroneous findings and
conclusions with respect to China's claims under Articles 2.4, 6.1.2 and 6.5.1
of the AD Agreement. China requests the Appellate Body to reverse the
Panel's findings and conclusions and to complete the analysis, with respect to
these legal errors and errors of legal interpretation committed by the Panel.
2 the Panel erred in finding
that the European Union did not violate Article 2.4 of the AD Agreement by
rejecting the Chinese producers' requests for an adjustment for differences in
taxation
2.
China submits
that the Panel erred in its interpretation and application of Article 2.4 of
the AD Agreement when it found that the European Union did not violate Article
2.4 by rejecting the Chinese producers' requests for an adjustment for
differences in taxation.
3.
First, the Panel
erred in finding that the Commission was not required to make an adjustment for
differences in the taxation of wire rod in India because of the use of the
analogue country methodology. This finding
is contrary to Article 2.4 and is not supported by the special rules included
in China's Accession Protocol. Indeed, Article 2.4 imposes on the investigating
authorities the obligation to ensure a fair comparison between the normal value
and the export price, which applies equally in all anti-dumping investigations,
including those involving imports from China in which the analogue country
methodology is used.
4.
By finding that
the Commission was under no obligation to make an adjustment for differences in
taxation when the analogue country methodology was used, the Panel has confused
the issue of the determination of the normal value and the issue of the
comparison of the normal value and the export price.
5.
The Panel
misunderstood the nature of the adjustment claimed by the Chinese producers by
considering that it related to a difference in input costs resulting from the
difference in the taxation of inputs between India and China while actually
China's claim relates to the difference in tax treatment between domestic
and export sales incorporating the same inputs, namely wire rod. Thus, the
claim was unrelated to the choice of the analogue country but dealt with the
comparability of the domestic and export prices.
6.
Furthermore, the
Panel erred in concluding that making adjustments for differences in taxation
on inputs would undermine the Commission's right to have recourse to the
analogue country methodology. The difference in taxation of wire rod results
from the non-recognition by the European Union of the drawback systems
applicable in both China and India and has nothing to do with the cost of wire
rod itself which is allegedly affected by non-market economy conditions in
China. Furthermore, making an adjustment for differences in the taxation of
inputs, such as wire rod, does not prevent the use of data from the analogue
country producer, and thus, in no way undermines the use of the analogue
country methodology.
7.
Second, the Panel
erred in its application of Article 2.4 of the AD Agreement in finding that the
Chinese producers did not show that the difference in taxation affected price
comparability. By showing that no import duties on raw materials are
included in the export price of Chinese fasteners, while the domestic
price of Pooja Forge's fasteners used for the establishment of the normal value
included such import duties, the Chinese producers demonstrated the existence
of a difference in taxation that affects price comparability.
8.
In light of the
above, China requests the Appellate Body to reverse the Panel's findings and
conclusions with respect to China's claim under Article 2.4 of the AD Agreement
concerning the adjustments for differences in taxation; and to find that by rejecting
the Chinese producers' request the European Union failed to make a fair
comparison and thus violated Article 2.4 of the AD Agreement.
3 the Panel erred in finding
that the European Union did not violate Article 2.4 of the AD AGreemebt by
rejecting the Chinese producers' requests for adjustments for differences with
regard to "easier access to raw materials", "use of
self-generated electricity", and "efficiency and productivity"
which affect price comparability
9.
China submits
that the Panel erred in its interpretation and application of Article 2.4 of
the AD Agreement when it found that the European Union did not violate Article
2.4 by rejecting the Chinese producers' requests for adjustments for
differences with regard to "easier access to raw materials", "use
of self-generated electricity", and "efficiency and productivity"
which affected price comparability.
10.
First, the Panel
erred in finding that the investigating authority is not obliged to make
adjustments to reflect differences in costs in an investigation where the
analogue country methodology is used. Such a finding is contrary to Article 2.4
which imposes the obligation to ensure a fair comparison also in investigations
in which the analogue country methodology is used. By reaching this conclusion
the Panel confused two distinct steps (i.e. the use of the analogue country
methodology for determining normal value and the making of due allowances for
differences affecting price comparability between such normal value and export
price) and effectively established two different standards under Article 2.4.
In any event, the differences raised by China were completely unrelated to its
non-market economy status and the requested adjustments would only have used
analogue country cost data and not the data from China.
11.
Second, the Panel
erred in its application of Article 2.4 when it found that the Chinese
producers did not show that the alleged differences in costs affected price
comparability. In fact, in light of the particular circumstances of the investigation
at issue, which involved the use of information from an analogue country
producer, the Panel should have found that the Chinese requests were properly
substantiated and thus, required adjustments under Article 2.4. Furthermore,
the Panel misunderstood the requirement of differences "affecting price
comparability" under Article 2.4. Having acknowledged that the differences
in costs factors likely will have an impact on prices, the Panel thereafter
erroneously concluded that these differences could not justify any adjustment
merely because the normal values of the Chinese companies have been based on
the data of an analogue country producer.
12.
Third, the Panel
failed to make an objective assessment of the facts, as required by
Article 11 of the DSU, by failing to address all aspects of China's claim
and by failing to consider the evidence presented by China in its totality.
Indeed, the Panel focused exclusively on the differences in terms of
electricity consumption and examined different pieces of evidence presented by
China in isolation from one another.
13.
In light of the
above, China requests the Appellate Body to reverse the Panel's findings and
conclusions and to find that by rejecting the Chinese producers' requests for
adjustments for the differences with regard to easier access to raw materials,
use of self-generated electricity, and efficiency and productivity the European
Union failed to make a fair comparison and thus violated Article 2.4 of the AD
Agreement.
4 REVIEW OF THE PANEL'S
FINDINGS THAT THE EUROPEAN UNION DID NOT VIOLATE ARTICLE 2.4 OF THE AD
AGREEMENT BY REJECTING THE CHINESE PRODUCERS' REQUESTS FOR ADJUSTMENTS FOR
DIFFERENCES IN PHYSICAL CHARACTERISTICS
14.
China submits that if the Appellate Body were to reverse the Panel's
findings under Article 2.4 of the AD Agreement that the European Union
failed to provide the Chinese producers with information regarding the
characteristics of Pooja Forge's products that were used in determining normal
values, the Appellate Body should reverse the Panel's findings that the
European Union did not violate Article 2.4 by rejecting the Chinese producers'
requests for adjustment for differences in physical characteristics both
included and not included in the original PCNs and find that, in doing so, the European Union failed to make a fair comparison and
violated Article 2.4.
15.
First, the Panel
erred in assessing China's claim with respect to differences in physical
characteristics included in the original PCNs (coating and chrome, diameter and
length and types of fasteners) and, more specifically, failed to examine
whether the Commission acted in an unbiased and even-handed manner because it
based its decision to reject China's requests on an improper factual basis.
16.
Second, the Panel
erred in assessing China's claim with respect to differences in physical
characteristics not included in the original PCNs. By using all the information
available to them, the Chinese producers made constructive requests for
adjustments which were rejected by the European Union without any further
analysis. The European Union thereby failed to comply with its requirements
under Article 2.4.
5 THE PANEL ERRED IN FINDING
THAT THE EUROPEAN UNION DID NOT VIOLATE ARTICLE 6.1.2 OF THE AD AGREEMENT BY
NOT MAKING THE INFORMATION ON THE LIST AND CHARACTERISTICS OF POOJA FORGE'S
PRODUCTS AVAILABLE PROMPTLY TO THE CHINESE PRODUCERS
17.
China submits
that the Panel erred in its interpretation and application of Article 6.1.2 of
the AD Agreement when it found that the European Union did not violate 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.
18.
First, the Panel erred in its interpretation of the term "interested
parties" in Article 6.11 in considering that the status of "interested
parties" is dependent on a decision of the investigating authorities which
must appear in the investigation record and in stating that such decision is
made at the request of the party concerned. In the present case, the fact that
the Commission chose Pooja Forge as the analogue country producer and used its
information to establish the normal values of the Chinese producers shows that
the Commission decided to treat Pooja Forge as an interested party.
19.
Second, the Panel erred in its interpretation and application of Article
6.1.2 and, in particular, of its scope, in concluding that the obligation in
Article 6.1.2 only applies to those parties which are "interested parties"
under Article 6.11. The Panel should have examined whether Pooja Forge should
not be assimilated to "interested parties" presenting evidence for
the purposes of Article 6.1.2. Given the key role of Pooja Forge in the
investigation at issue and the purpose of Article 6.1.2, Pooja Forge should be
assimilated to an "interested party" presenting evidence under
Article 6.1.2 and thus, the information provided by this company should come
within the scope of Article 6.1.2.
20.
Third, the Panel erred in its interpretation of the Appellate Body's
findings in the original dispute. Indeed, the Panel's interpretation fails to
reconcile the finding that Article 6.5.1 applies to Pooja Forge with the fact
that this provision expressly refers to the confidential information provided
by an "interested party". China submits that the Appellate Body's
finding that Article 6.5.1 applies to Pooja Forge despite the fact that
Article 6.5.1 uses the term "interested parties" supports the
conclusion that Pooja Forge should also be covered by Article 6.1.2.
21.
In light of the above, China requests the Appellate Body to reverse the
Panel's findings and to find that the European Union violated Article 6.1.2 of
the AD Agreement by failing to make the information on the list and
characteristics of Pooja Forge's products available promptly to the Chinese
producers.
6 REVIEW OF THE PANEL'S
FINDINGS WITH RESPECT TO CHINA'S CLAIM UNDER ARTICLE 6.5.1 OF THE AD AGREEMENT
22.
China submits that if the Appellate Body were to reverse the Panel's
findings that the European Union acted inconsistently with Article 6.5 of the
AD Agreement by treating as confidential information submitted by Pooja Forge
regarding the list and characteristics of its products, China requests the
Appellate Body to complete the analysis of China's claim under Article 6.5.1
for which the Panel did not make findings.
23.
China requests the Appellate Body to find that the European Union
violated Article 6.5.1 of the AD Agreement because it failed to ensure that
Pooja Forge provides a non-confidential summary of the information regarding
its products and/or failed to ensure that Pooja Forge establishes the existence
of exceptional circumstances and provides a statement of reasons why, in such
exceptional circumstances, summarization was not possible.
ANNEX B-3
EXECUTIVE
SUMMARY OF China's APPELLEE'S SUBMISSION
1 introduction
1. In its Appellant Submission, the
European Union appeals and requests the Appellate Body to reverse a number of
findings and conclusions of the Panel. In the first place, the European Union
takes issue with the scope of the Panel's jurisdiction and appeals the Panel's
findings that China's claims under Articles 6.5, 6.4, 6.2, 6.1.2, 2.4, 4.1 and
3.1 of the AD Agreement fell within its terms of reference in accordance with
Article 21.5 of the DSU. Furthermore, the European Union appeals the Panel's
findings on the merits under Articles 6.5, 6.2, 6.4, 2.4, 2.4.2, 4.1 and 3.1 of
the AD Agreement. China submits that all claims of the European Union are
without merit and therefore requests the Appellate Body to reject the European
Union's appeal in its entirety.
2 The Panel correctly found that China's
claims under Articles 6.5, 6.4, 6.2, 6.1.2, 2.4, 4.1 and 3.1 of the AD
Agreement fell within its terms of reference
2. China submits that, contrary to the
European Union's arguments, the Panel correctly found that China's claims under
Articles 6.5, 6.4, 6.2, 6.1.2, 2.4, 4.1 and 3.1 of the AD Agreement were within
its terms of reference. These findings are consistent with a correct
interpretation and application of Article 21.5 of the DSU in light of the
existing case-law of the Appellate Body. Furthermore, in reaching its
conclusions the Panel acted in accordance with the requirements set out in
Article 11 of the DSU.
2.1 China's claim under Article 6.5 of the AD Agreement
3. The Panel correctly found that
China's claim under Article 6.5 fell within its terms of reference. All claims
of error raised in this regard by the European Union must be rejected.
4. First, while the European Union
essentially claims that the Panel erroneously assessed the facts in the
original and compliance proceedings regarding the type of information that was
the object of the claims, it has not raised Article 11 of the DSU and thus the
Appellate Body should simply reject its claim.
5. Second, and in any event, the Panel correctly concluded that the claims raised by
China in the original and compliance proceedings took issue "with
different types of information" and consequently that the object of the
claim under Articles 6.5 and 6.5.1 presented in the original and compliance
proceedings was not the same. In that regard, China notes that the European
Union distorts the scope of China's claims under Article 6.5 in the original
and compliance proceedings and disregards the important fact that the object of
China's claim in the original proceedings was limited to Pooja Forge's
questionnaire response while the information at issue in the compliance
proceedings was not part of that questionnaire response.
6. Third, the
Panel did not err when relying on the fact that the issue of the confidentiality
and non-disclosure of information regarding the list and characteristics of
Pooja Forge's products had been subject to extensive debate.
7. Fourth, the
Panel correctly followed the guidance of the Appellate Body's findings in EC – Bed Linen (Article 21.5 – India). Indeed, the Panel
correctly started its examination by considering whether the claim raised in
the compliance proceedings was the same as the claim raised in the context of
the original proceedings. Having found that the claims were not the same, the
Panel correctly found that China's claim under Article 6.5 and 6.5.1 fell
within its terms of reference.
2.2 China's claim under Articles 6.4 and 6.2 of the AD Agreement
8. The Panel correctly found that China's claim under Articles 6.4 and 6.2 fell within its
terms of reference.
9. First, contrary to the European
Union's arguments, the Panel properly examined and concluded that China's claim
under Articles 6.4 and 6.2 could not have been brought in the original
proceedings. The European Union's argument that the Panel erred in considering
that the information at issue was new is irrelevant since whether the list of
products and the information on Pooja Forge's products has been submitted
during the original investigation or the review investigation was irrelevant to
the Panel's examination as to whether China's claim under Articles 6.4 and
6.2 was a claim that could have been brought by China during the original
proceedings. In any case, at least part of the information concerned has been
provided by Pooja Forge during the review investigation. Furthermore, the European Union erroneously argues that requests made
by the Chinese producers during the original and review investigations related
to the same information. Finally, the European Union fails to take into
account that this claim relates to the violation of a procedural obligation.
10. Second, the European Union is
incorrect in arguing that the Panel failed to follow the guidance set out by
the Appellate Body in US – Zeroing (Article 21.5
– EC). In line with the latter dispute, the Panel correctly
concluded that China's claim under Articles 6.4 and 6.2 was a claim that it
could not have brought in the original proceedings. As a result, the Panel was
not required to examine whether the claim challenged an unchanged aspect of the
original measure which has become an integral part of the measure taken to
comply. However, if the Appellate Body were to consider these issues, China
submits that it should conclude that the aspect being challenged by this claim
is an aspect which has changed when compared to the original investigation and
furthermore that it is an aspect which is not separable from the measure taken
to comply.
2.3 China's claim under Article 6.1.2 of the AD Agreement
11. The Panel correctly found that China's claim under Article 6.1.2 fell within its terms of
reference. Contrary to the European Union's argument, the Panel properly
examined and concluded that China's claim under Article 6.1.2 could not have
been brought during the original proceedings. The fact that the Chinese
producers only became aware of the existence of the information concerning
Pooja Forge's products during the review investigation is essential as it
proves that China could not have brought a claim under Article 6.1.2 in the
original proceedings. Furthermore, this aspect is not only a changed aspect but
also an aspect which is not separable from the measure taken to comply.
Finally, the European Union's allegation of violation of Article 11 of the
DSU is without merit. Indeed, Exhibit EU-6, referred to by the Panel,
demonstrates that Pooja Forge provided information on coating during the review
investigation.
2.4 China's claims under Article 2.4 of the AD Agreement
12. The Panel correctly found that
China's claims under Article 2.4 fell within its terms of reference. The
European Union takes issue with two aspects of China's claims under Article
2.4. First, since China does not appeal the Panel's findings with regard to its
claim under Article 2.4 with respect to the special/standard distinction, China
understands that the European Union will withdraw its claim, and thus China
does not address this claim in the present submission. Second, with respect to
the claim concerning adjustments for differences in physical characteristics
not included in the original PCNs, China submits that since any such
differences were not discussed in the original investigation China could not
have made a claim under Article 2.4 during the original proceedings arguing
that the Commission should have made due allowances for such differences.
Furthermore, the Chinese producers were precluded from making such requests in
the original investigation since the European Union did not clearly indicate
the basis on which the price comparison was going to be made until very late in
the original investigation.
2.5 China's claim under Articles 4.1 and 3.1 of the AD Agreement
13. The Panel correctly found that
China's claim under Articles 4.1 and 3.1 fell within its terms of reference. In
this regard, China submits that the Panel examined the relationship between
China's claim in the compliance proceedings and the original
DSB recommendations and rulings and correctly concluded that China's claim
goes to the very heart of a compliance panel's task under Article 21.5 of the
DSU. Furthermore, contrary to the European Union's
arguments, the Panel correctly concluded that the aspect at issue became an
integral part of the measure taken to comply.
14. In light of the foregoing, China
requests the Appellate Body to reject the European Union's appeal and to uphold
the Panel's finding that China's claims under Articles 6.5, 6.4, 6.2, 6.1.2,
2.4, 4.1 and 3.1 of the AD Agreement fell within the Panel's terms of
reference.
3 The PANEL CORRECTLY FOUND THAT THE EUROPEAN
UNION VIOLATED 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
15. China submits
that the Panel correctly interpreted and applied Article 6.5 of the
AD Agreement to the fact of this case.
16. First, contrary to the European
Union's allegation, the Panel did not fail to examine the reasons provided by
Pooja Forge to request confidential treatment in their proper context. More specifically, the Panel did not narrow its analysis down
to the fact that the email of 3 July 2012 was placed in the confidential file
of the review investigation. Instead, the
Panel examined this email in detail and found that it did not support the
argument that Pooja Forge provided good cause to justify confidential treatment
of its information. At the same time, the Panel correctly found that 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. The Panel also correctly found that Pooja
Forge's request was merely a "bald assertion" which was insufficient
to justify confidential treatment of Pooja Forge's information.
17. Second, the Panel correctly
found that the European Commission never performed an objective assessment on
whether the information provided by Pooja Forge was confidential by nature or
whether good cause had been shown to justify its confidential treatment.
Contrary to the European Union's argument, the Panel made an objective
assessment of the facts as required by Article 11 of the DSU. There is simply
no evidence on the record showing that the Commission objectively assessed the
request for confidential treatment of Pooja Forge. Furthermore, the circumstances invoked by the European Union are simply
irrelevant. The Panel properly discussed and disregarded all such
circumstances.
18. Third, the Panel
correctly found that the European Union's contention that the information at
issue as a whole was confidential was logically inconsistent with the European
Union disclosing part of that information. To the extent that
specific bits of information can be disclosed under Article 6.4, the
treatment of such information as confidential is inconsistent with Article 6.5.
Thus, it is correct that the European Union's argument that the European
Commission disclosed certain information about the characteristics of Pooja
Forge's products undermined the European Union's contention that the
information at issue was confidential and that good cause was shown to keep it
confidential.
19. Fourth, the Panel did not
err in treating the information relating to Pooja Forge's products as not
confidential. The Panel focused its analysis under Article 6.5 on
whether "good cause" had been shown by Pooja Forge and whether the
Commission objectively assessed any confidentiality request by Pooja Forge. The
Panel rightly found that no "good cause" had been shown and that, in
any case, the Commission did not make any objective assessment. On that basis,
the Panel rightly considered that information as not requiring confidential
treatment within the meaning of Article 6.5 of the AD Agreement. Indeed,
without good cause being shown information cannot be treated as confidential
under Article 6.5, regardless of whether such information is by nature confidential
or not. In any event, China has explained that contrary to the European Union's
arguments the information regarding the list and characteristics of Pooja
Forge's products was not confidential by nature.
20. In light of the above, China
requests the Appellate Body to reject the European Union's appeal and to uphold
the Panel's finding that the European Union violated 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.
4 THE PANEL CORRECTLY FOUND THAT THE EUROPEAN
UNION VIOLATED ARTICLES 6.4 AND 6.2 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
21. China submits that the appeal
brought by the European Union should be rejected by the Appellate Body because
the Panel appropriately interpreted and applied Articles 6.4 and 6.2 of
the AD Agreement to the facts of the case.
22. With respect to Article 6.4, and
contrary to the European Union's contention, the Panel correctly found that all
three conditions set out in this provision were met in the present case. First,
the Panel correctly found that the information
requested by the Chinese producers was relevant to the presentation of their
cases. Indeed, the repeated requests made by the Chinese producers
indicated why access to such information was relevant. Furthermore, the Panel
correctly examined the type and nature of the information at issue and rightly
concluded that such information concerned the determination of the normal
values and ultimately the dumping margins for the Chinese producers. Second,
the Panel correctly found that the information requested by the Chinese
producers was not confidential as defined in Article 6.5. Third, the Panel correctly found that the information at issue was used by
the Commission in the review investigation. In addition, contrary to what
the European Union argues, providing information through disclosure documents
before making final determination does not meet the requirement of "timely
opportunities" under Article 6.4. In any case, China notes that the
disclosure documents invoked by the European Union did not contain the
information at issue.
23. With respect to Article 6.2, China
submits that the Panel did not commit any errors and correctly found that the
European Union violated this provision. Indeed, by depriving the Chinese
producers from having access to see the relevant information, in violation of
Article 6.4, the Commission prevented the Chinese producers from having a full
opportunity to defend their interests and thus also violated Article 6.2.
Furthermore, even if the Appellate Body were to reverse the Panel's findings
under Article 6.4, it should nonetheless uphold the Panel's findings under
Article 6.2. Indeed, the fact that without the information at issue the Chinese
producers were not in a position to make relevant requests for adjustment in
order to ensure a fair comparison under Article 2.4 demonstrates that this
information was essential for the defense of the Chinese producers' interests.
24. In light of the above, China
requests the Appellate Body to reject the European Union's appeal and to uphold
the Panel's finding that the European Union violated Article 6.4 and
Article 6.2 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.
5 THE PANEL correctly found 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
25. China submits that, contrary to the
European Union's allegation, the Panel correctly found that the European
Union violated Article 2.4 of the AD Agreement.
26. First, the Panel correctly
concluded that the European Union failed to implement the Appellate Body's
ruling and did not comply with the procedural requirement under the last
sentence of Article 2.4 of the AD Agreement. Apart from providing the
information about the product groups used for the purpose of price comparison –
which is the minimum required from the investigating authorities – the European Union was
also required to inform the interested parties about the specific products with regard
to which the normal value was determined. Since it failed to do so, the Panel
was correct to conclude that it did not comply with the last sentence of
Article 2.4 of the AD Agreement.
27. Second, contrary
to the European Union's arguments, the Panel did not err when interpreting
the scope of the procedural requirement under the last sentence of Article 2.4
as requiring the investigating authorities to provide information regarding the
characteristics of the products used in determining normal values, since the
purpose is to ensure that the interested parties are in a position to make
informed decisions on whether to request adjustments under Article 2.4.
Furthermore, the Panel did not err in assessing the value of the company
specific disclosures, which did not provide any information on the
characteristics of the specific products of Pooja Forge, on the basis of which
normal value was determined.
28. Third, since the disclosure
documents provided by the European Union did not include information on the
characteristics of Pooja Forge's products, necessary for the Chinese producers
to be in a position to request adjustments, the Panel was correct to consider
that they did not satisfy the requirements under Article 2.4 of the AD
Agreement.
29. Fourth, the
Panel correctly interpreted the obligation under Article 2.4 in the context of
an investigation involving the use of an analogue country methodology.
Indeed, when the normal value is established on the basis of data of an
analogue country producer, not known to the foreign exporter under
investigation, the investigating authority is required to provide information
concerning the products used in the normal value determination in order to
ensure that the exporters are in a position to meaningfully request relevant
adjustments.
30. Fifth, China submits that the Panel correctly assessed the relationship between
the confidential treatment of certain information and the obligations arising
under Article 2.4 of the AD Agreement. In any event, the Appellate Body
should uphold the Panel's findings that the European Union violated Article 2.4
because it failed to provide the Chinese producers with the information on the
characteristics of Pooja Forge's products that were used in determining the
normal value.
31. China also submits that the
European Union errs when considering that it entered into an active dialogue as
required by Article 2.4 of the AD Agreement. In fact, there can be simply no
"dialogue" on the need of adjustments if the foreign producers are
not sufficiently informed about the products used for determining their normal
values.
32. In light
of the above, China requests the Appellate Body to reject the European Union's appeal
and uphold the Panel's findings that the European Union 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.
6 The Panel correctly found that the
Commission violated Article 2.4.2 of the AD Agreement by not taking into
consideration, in its dumping determinations, Chinese producers' exports of
models that did not match any of the models sold by Pooja Forge
33. China
submits that the European Union's appeal of the Panel's findings under Article
2.4.2 should be rejected.
34. First,
contrary to the European Union's allegation, the Panel's interpretation of the
term "all comparable export transactions" in Article 2.4.2 is correct
and consistent with the previous case-law, the definition of dumping in Article
2.1 of the AD Agreement and the context provided by the "fair
comparison" obligation in Article 2.4. Accordingly, all export transactions
of different types of fasteners falling within the scope of like product are
comparable and should be taken into account in the establishment of the dumping
margin.
35. Second, the
Panel correctly rejected the European Union's arguments. The Panel did not
confuse the situation addressed in previous zeroing cases with the allegedly
"neutral" methodology adopted by the European Union. While zeroing
deals with different stage of the WA‑WA methodology, the findings in
zeroing cases are relevant for the present dispute since they provide a
comprehensive interpretation of the term "all comparable export
transactions" in Article 2.4.2 of the AD Agreement. Furthermore, the
use of multiple averaging does not allow for the exclusion of certain exported
models that do not have a perfect matching on the normal value side. Such
conclusion is also not supported by the possibility of sampling foreseen by
Article 6.10 or the Panel's findings concerning the issue of timing of
transactions in US – Stainless Steel (Korea). Finally,
the alleged representativeness of the export sales included in the comparison
is irrelevant to the legal obligation under Article 2.4.2, i.e. to take into
account all comparable export transactions for calculating dumping
margin. In any event, the European Union's argument, illustrated by a chart, is
factually incorrect.
36. Third, the
European Union's characterization of its methodology as "neutral" is
misleading. The European Union took into account only those Chinese producers'
exports of fasteners for which there was a matching model sold by Pooja Forge.
The other export transactions were simply ignored. As a result, the comparison
made by the European Union resulted in a presumption of dumping for those
export transactions that were not used in the dumping determination. Therefore,
it is clear that such methodology cannot be described as "neutral".
37. In light of
the above, China requests the Appellate Body to reject the European Union's
appeal and to uphold the Panel's finding that the European Union violated
Article 2.4.2 of the AD Agreement by not taking into consideration, in its
dumping determinations, Chinese producers' exports of models that did not match
any of the models sold by Pooja Forge.
7 The Panel correctly found that by defining
the domestic industry on the basis of domestic producers that came forward in
response to a notice of initiation which stated that only those producers
willing to be included in the injury sample would be considered as cooperating,
the Commission acted inconsistently with Article 4.1 of the AD Agreement and
consequently with Article 3.1 of the AD Agreement
38. China submits that contrary to the
European Union's allegation the Panel correctly interpreted and applied Article 4.1 of the AD Agreement.
39. First, the
Panel correctly found that the European Union acted inconsistently with Article
4.1 since it failed to eliminate the material risk of distortion from the way
it defined its domestic industry. Second, the Panel
correctly read the Appellate Body's findings in the original dispute as
taking issue with the link between the producer's willingness
to be included in the sample and the definition of the domestic industry and
not simply the actual exclusion of certain domestic producers. Third, the Panel's approach was reasonable, supported
by the Appellate Body's findings and consistent with the text of Article 4.1 of
the AD Agreement, which requires the investigating authority to ensure that the
process of defining the domestic industry does not give rise to a material risk
of distortion.
40. Furthermore,
contrary to what the European Union claims, the Panel correctly concluded that due to a wrongly-defined domestic industry, the
European Union's injury determination was inconsistent with Article 3.1 of the
AD Agreement.
41. In light of the above, China
requests the Appellate Body to reject the European Union's appeal and to uphold
the Panel's findings that the European Union's definition of domestic industry
was inconsistent with Article 4.1 of the AD Agreement and that the resulting
injury determination was inconsistent with Article 3.1 of the AD Agreement.
ANNEX B-4
EXECUTIVE
SUMMARY OF the european union's APPELLEE'S SUBMISSION
1.
In its Other Appellant Submission, China mischaracterises the Panel's
findings and effectively tries to re-litigate the factual and evidentiary
issues that were adequately addressed by the Panel in its findings.
2.
In addition, and despite its repeated statements to the contrary, it is
clear that China is in fact challenging the appropriate use of the analogue
country methodology by the European Union. However, the Commission resorted to
the prices of the Indian producer Pooja Forge to establish the normal value in
line with China's Accession Protocol. China's claims as developed before the
Panel and as repeated in its Other Appellant Submission, effectively take issue
with the European Union's Non Market Economy (NME) methodology and seeks to
change the normal value determination so as to have it reflect the Chinese
producers' distorted market conditions. According to China, the prices of the
Indian producer may be used as long as they are then changed to reflect
conditions in the Chinese market and are adapted to the specifics of the
Chinese producers on input costs, taxes, access to raw materials, etc. No matter
how many times China states that it is not challenging the analogue country
methodology and asserts that the Panel erred when viewing its claims for
adjustments as related to the analogue country approach, this is in essence
what its entire case under Article 2.4 of the AD Agreement turns on.
3.
This is not to say that Article 2.4 does not apply when a NME
methodology is used. That is not the issue. The European Union itself regularly
makes adjustments for differences affecting price comparability between product
sold by the analogue country producer on the home market and products exported
by the Chinese producer. In fact, the Commission did so even in the context of
the fasteners investigation for differences relating to quality control. It
made this adjustment because the fact that the Indian producer undertakes
additional quality control involved an additional step in the production
process of the Indian analogue country producer which is not part of the
Chinese producers' process for export sales. Clearly, the fact that an NME
methodology is used does not mean that Article 2.4 no longer applies. China's
attempt at casting this debate as an all-or-nothing, black-and-white debate
about the relevance of making adjustments and due allowances for differences
affecting price comparability in the context of NME situations is a hoax. The
European Union did not argue, and the Panel did not find that as soon as an NME
methodology is used, Article 2.4 of the AD Agreement no longer applies and no
adjustments must ever be made to reflect differences affecting price
comparability.
4.
China's three claims based on the Panel's rejection of China's
adjustment claims under Article 2.4 of the AD Agreement are in error and must
be rejected. China's claims under Article 11 of the DSU should equally be
dismissed.
5.
China's claims of error made by the Panel with respect to the
interpretation and application of Article 6.1.2 of the AD Agreement are also
without merit. China is seeking to read obligations in a provision by forcing
its text and the rationale of the other provisions of the AD Agreement.
6.
Finally, China's attempt to reopen the debate regarding its claim under
Article 6.5.1 of the AD Agreement should be rejected, since there are no
factual findings or undisputed facts on the record for the Appellate Body to
complete the analysis.
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