EUROPEAN UNION – ANTI‑DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA

Report of the Panel

TABLE OF CONTENTS

1   Introduction.. 12

1.1   Complaint by Argentina. 12

1.2   Panel establishment and composition. 12

1.3   Panel proceedings. 13

1.3.1   General 13

1.3.2   Request for preliminary ruling. 13

2   Factual aspects and measures at issue. 13

3   Parties' requests for findings and recommendations. 14

4   Arguments of the parties. 15

5   Arguments of the thiRd parties. 15

6   Interim review... 15

6.1   Introduction. 15

6.2   Specific requests for review submitted by the parties. 16

7   Findings. 24

7.1   General principles regarding treaty interpretation, the applicable standard of review and burden of proof 25

7.1.1   Treaty interpretation. 25

7.1.2   Standard of review.. 25

7.1.3   Burden of proof 26

7.2   Terms of reference – European Union's request for a preliminary ruling. 26

7.2.1   Introduction. 26

7.2.2   Objection concerning the claim of inconsistency with Article 9.3 of the Anti‑Dumping Agreement in paragraph 2(B)(6) of Argentina's panel request 28

7.2.3   Objection concerning the claims of inconsistency with Article VI:1 of the GATT 1994 in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request 32

7.2.4   Objection concerning the claim of inconsistency with Article 2.2 of the Anti‑Dumping Agreement in paragraph 2(A)(2) of Argentina's panel request 37

7.3   Argentina's claims concerning whether Article 2(5), second subparagraph, of the Basic Regulation is inconsistent "as such" with Articles 2.2, 2.2.1.1 and 18.4 of the Anti‑Dumping Agreement, Article VI:1(b)(ii) of the GATT 1994, and Article XVI:4 of the WTO Agreement 39

7.3.1   Introduction. 39

7.3.2   Relevant provisions of the covered agreements. 40

7.3.3   Factual background. 41

7.3.4   Main arguments of the parties. 42

7.3.5   Arguments of the third parties. 47

7.3.6   Evaluation by the Panel 51

7.4   Argentina's claims concerning whether the EU anti-dumping measures on imports of biodiesel from Argentina are inconsistent with Articles 2.1, 2.2, 2.2.1.1, 2.2.2(iii), 2.4, 3.1, 3.4, 3.5, and 9.3 of the Anti-Dumping Agreement and Articles VI:1, VI:1(b)(ii) and VI:2 of the GATT 1994, "as applied". 66

7.4.1   Whether the EU anti-dumping measures on imports of biodiesel from Argentina are inconsistent with Articles 2.1, 2.2, and 2.2.1.1 of the Anti-Dumping Agreement and with Articles VI:1 and VI:1(b)(ii) of the GATT 1994. 66

7.4.2   Whether the European Union acted inconsistently with Article 2.4 of the Anti‑Dumping Agreement by failing to make a fair comparison between the normal value and the export price. 92

7.4.3   Whether the European Union acted inconsistently with Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement by failing to base the determination of the amount for profits on a "reasonable method"  99

7.4.4   Whether the European Union acted inconsistently with Article 9.3 of the Anti‑Dumping Agreement and Article VI:2 of the GATT 1994 by imposing and levying anti‑dumping duties in excess of the margins of dumping  110

7.4.5   Whether the EU authorities' evaluation of production capacity, capacity utilization and return on investments is inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement 113

7.4.6   Whether the EU authorities' non-attribution findings are inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement 129

8   Conclusions and Recommendation.. 152

List of Annexes

ANNEX A

working procedures of the panel

ANNEX B

arguments of ARGENTINA

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 Argentina

1.1.  On 19 December 2013, Argentina requested consultations with the European Union pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement) with respect to Article 2(5) of Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (the Basic Regulation^[1]) and with respect to the anti-dumping measures imposed by the European Union on imports of biodiesel originating in, inter alia, Argentina.^[2]

1.2.  Consultations were held on 31 January 2014 but failed to resolve the dispute.

1.2  Panel establishment and composition

1.3.  On 13 March 2014, Argentina requested the establishment of a panel pursuant to Articles 4.7 and 6 of the DSU, Article XXIII of the GATT 1994 and Article 17.4 of the Anti-Dumping Agreement with standard terms of reference.^[3] At its meeting on 25 April 2014, the Dispute Settlement Body (DSB) established a panel pursuant to the request of Argentina in document WT/DS473/5, in accordance with Article 6 of the DSU.^[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 Argentina in document WT/DS473/5 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.^[5]

1.5.  On 13 June 2014, Argentina requested the Director-General to determine the composition of the Panel, pursuant to Article 8.7 of the DSU. On 23 June 2014, the Director-General accordingly composed the Panel as follows:

Chairperson:   Mr Arumugamangalam V. Ganesan

Members:               Mr Gilles Le Blanc

                       Mr Scott Gallacher^[6]

1.6.  Mr Scott Gallacher resigned from the Panel on 15 February 2015. On 18 February 2015, the Director-General appointed a new member of the Panel, Mr Mathias Francke. Accordingly, the Panel is composed as follows:

        Chairperson:    Mr Arumugamangalam V. Ganesan

        Members:                Mr Gilles Le Blanc

                       Mr Mathias Francke^[7]

1.7.  Australia, China, Colombia, Indonesia, Malaysia, Mexico, Norway, the Russian Federation, the Kingdom of Saudi Arabia, Turkey and the United States notified their interest in participating 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^[8] and timetable on 21 August 2014.^[9] On 25 November 2014, the Panel adopted Additional Working Procedures Concerning Business Confidential Information (BCI).^[10]

1.9.  The Panel held a first substantive meeting with the parties on 18 and 19 March 2015. A session with the third parties took place on 19 March 2015. The Panel held a second substantive meeting with the parties on 9 and 10 June 2015. On 16 July 2015, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 8 December 2015. The Panel issued its Final Report to the parties on 23 February 2016.

1.3.2  Request for preliminary ruling

1.10.  On 24 November 2014, the European Union submitted to the Panel a request for a preliminary ruling, arguing that certain of Argentina's claims were outside the Panel's terms of reference.^[11] On 18 December 2014, Argentina submitted a response to the European Union's request.^[12] The parties further addressed each other's arguments in their subsequent submissions to the Panel. Some third parties also commented on the European Union's request in their third‑party submission.

1.11.  The Panel addresses the European Union's request for a preliminary ruling in its findings below.

2  Factual aspects and measures at issue

2.1.  This dispute concerns two sets of measures of the European Union.

2.2.  First, Argentina makes "as such" claims against Article 2(5), second subparagraph, of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (the Basic Regulation).

2.3.  Second, Argentina challenges certain aspects of the anti-dumping measures imposed by the European Union on imports of biodiesel from Argentina. These measures were adopted at the conclusion of an investigation on imports of biodiesel originating in Argentina and Indonesia that was initiated by the European Commission on 29 August 2012^[13] following a complaint submitted by the European Biodiesel Board (EBB).^[14] Provisional anti-dumping duties were imposed on 29 May 2013^[15], and definitive anti-dumping duties on 27 November 2013.^[16] With regard to Argentine producers/exporters, in the Definitive Regulation, the EU authorities^[17] calculated dumping margins ranging from 41.9% to 49.2% and applied anti-dumping duties corresponding to the injury margins they calculated, which ranged from 22.0% to 25.7%.^[18] The duties were applied in the form of specific duties expressed as a fixed amount in euro/tonne.

3  Parties' requests for findings and recommendations

3.1.  Argentina requests that the Panel find that:^[19]

a.    Article 2(5), second subparagraph, of the Basic Regulation is "as such" inconsistent with:

i.    Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by providing that the authorities shall reject or adjust the cost data of the exporters as included in their records when those costs reflect prices which are "abnormally or artificially low", because the costs do not reflect market prices or because they are allegedly affected by a distortion;

ii.   Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by providing that the costs shall be adjusted or established in certain cases "on any other reasonable basis, including information from other representative markets", even though neither provision allows for an establishment of the costs on this basis; and

iii.  As a result, with Article XVI:4 of the Marrakesh Agreement Establishing the WTO and Article 18.4 of the Anti-Dumping Agreement.

b.    The anti-dumping measures imposed by the European Union on imports of biodiesel from Argentina are inconsistent with:

i.    Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 because the European Union failed to calculate the cost of production on the basis of the records kept by the producers under investigation;

ii.   Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 because the European Union failed to construct the normal value of the exports of biodiesel on the basis of the cost of production in the country of origin;

iii.  Article 2.2.1.1 of the Anti-Dumping Agreement because the European Union included costs not associated with the production and sale of biodiesel in the calculation of the cost of production;

iv.  Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 as a result of the inconsistencies in points (i) – (iii) above affecting the dumping margin determinations;

v.   Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement because the European Union failed to base the profit margin as a component of the constructed normal value on a reasonable method within the meaning of Article 2.2.2(iii) of the Anti-Dumping Agreement;

vi.  Article 2.4 of the Anti-Dumping Agreement because the European Union failed to make due allowance for differences affecting price comparability, including differences in taxation, thereby precluding a fair comparison between the export price and the normal value;

vii. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 because the European Union imposed and levied anti-dumping duties in excess of the margin of dumping that should have been established in accordance with Article 2 of the Anti-Dumping Agreement;

viii.        Articles 3.1 and 3.4 of the Anti-Dumping Agreement because the European Union's injury determination is not based on positive evidence and does not involve an objective examination of the consequent impact of the allegedly dumped imports on domestic producers of the like product in relation to capacity, utilization of production capacity and return on investment of the European Union industry; and

ix.  Articles 3.1 and 3.5 of the Anti-Dumping Agreement since the European Union failed to conduct an objective examination, based on positive evidence, of known factors other than the allegedly dumped imports in its non-attribution analysis; hence, the European Union failed to ensure that the injury suffered by the domestic industry of the European Union resulting from other factors was not attributed to the allegedly dumped imports.

3.2.  Argentina requests the Panel to make use of its discretion under the second sentence of Article 19.1 of the DSU by suggesting ways in which the European Union should implement the recommendations and rulings of the DSB to bring its measures into conformity with the Anti‑Dumping Agreement and the GATT 1994.^[20]

3.3.  The European Union requests that the Panel reject Argentina's claims in their entirety.^[21]

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 paragraphs 19 and 21 of the Working Procedures adopted by the Panel (see Annexes B-1 to B-5 and C-1 to C-5).

5  Arguments of the thiRd parties

5.1.  The arguments of Australia, China, Colombia, Indonesia, Mexico, Norway, the Russian Federation, the Kingdom of Saudi Arabia, Turkey, and the United States are reflected in their executive summaries provided to the Panel in accordance with paragraph 20 of the Working Procedures adopted by the Panel (see Annexes D-1 to D-10). Malaysia did not submit any written or oral arguments to the Panel.

6  Interim review

6.1  Introduction

6.1.  On 8 December 2015, the Panel issued its Interim Report to the parties. On 22 December 2015, Argentina and the European Union each submitted written requests for the Panel to review aspects of the Interim Report. On 15 January 2016, both parties submitted comments on the other party's requests for review. Neither party requested an interim review meeting. In addition, on 5 February 2016, the Panel provided an opportunity for the parties to comment on the relevance for the present dispute of the Appellate Body Report in EC – Fasteners (China) (Article 21.5 – China), which was circulated after the issuance of the Interim Report. In this context, the Panel invited the parties to comment on a proposed revision to paragraph 7.302 of the Interim Report (paragraph 7.303 of the Final Report).

6.2.  In accordance with Article 15.3 of the DSU, this section of the Report sets out the parties' requests for modifications made at the interim review stage as well as the Panel's response to these requests. In addition, the Panel has made a number of changes of an editorial nature to improve the clarity and accuracy of the Report or to correct typographical and other non-substantive errors, certain of which were suggested by the parties.

6.3.  The numbering of some of the paragraphs and footnotes in the Final Report has changed from the numbering in the Interim Report. The discussion below refers to the numbering in the Final Report and, where appropriate, includes the corresponding numbering in the Interim Report.

6.2  Specific requests for review submitted by the parties

Paragraph 7.13

6.4.  Argentina requests that the Panel modify paragraph 7.13 to properly reflect its position, namely, that for most of the claims identified in this paragraph, Argentina did not raise claims that it decided not to pursue, but rather, the European Union raised procedural objections with regard to non-existent issues. The European Union objects to Argentina's request and notes that the text suggested by Argentina is already included in a footnote.

6.5.  In addition, the European Union requests the Panel to reformulate the penultimate sentence of paragraph 7.13 to indicate that the absence of claims being made or pursued pertains to points arising from Argentina's panel request. Argentina does not comment on this request.

6.6.  We have amended the text of paragraph 7.13 to better reflect Argentina's arguments and the Panel's reasoning. We note however that footnote 45 to paragraph 7.13 already quotes the text suggested by Argentina; we therefore did not repeat this text in the body of paragraph 7.13. The changes suggested by the European Union are, in our view, unwarranted, and we decline to make them. We have, however, amended the penultimate sentence of paragraph 7.13 to express with more clarity the point made in this sentence.

Paragraphs 7.56-7.57

6.7.  The European Union requests the Panel to reformulate paragraphs 7.56 and 7.57 and to amend footnote 105 to paragraph 7.59. According to the European Union, paragraph 2(A)(2) of Argentina's panel request introduced two new elements, both of which the European Union challenged: (a) a reference to Article 2.2 of the Anti-Dumping Agreement; and (b) a reference to a "second reason", namely, "that the costs used be associated with the production and sale of the product". In the European Union's view, this second element was properly covered in paragraphs 7.12 and 7.13, and has no place in the section beginning with paragraph 7.56. Argentina requests the Panel to reject the reformulations proposed by the European Union. Argentina considers it appropriate in paragraph 7.56 to refer to the entire objection raised by the European Union pertaining to "new claims" against Article 2(5) of the Basic Regulation.

6.8.  We are not persuaded that the specific changes requested by the European Union would add any clarity to the paragraphs and footnote concerned or are necessary. We note, in this regard, that footnote 99 to paragraph 7.56 refers back to paragraph 7.12, which relates to the first element of paragraph 2(A)(2) of Argentina's panel request challenged by the European Union. We further note that, in paragraph 7.57, we clarify that we will consider the European Union's objection pertaining to Article 2.2 of the Anti-Dumping Agreement. However, in order to avoid any risk of confusion, we have made certain amendments to the text of paragraphs 7.56 and 7.57 with a view to clarifying those aspects of the European Union's objection to paragraph 2(A)(2) of Argentina's panel request that the European Union no longer appears to pursue, in contrast to those aspects that the European Union continues to "invite" the Panel to consider.

Paragraph 7.67

6.9.  The European Union suggests adding language ("due to an alleged distortion in the operation of the markets of the exporting country resulting from a measure of the government of the exporting country; and") to qualify the term "distortion" at the end of the last sentence of subparagraph (a) to paragraph 7.67 to avoid confusion and to render it consistent with paragraph 7.113. Moreover, the European Union suggests adding language – "and when information on the costs of other producers or exporters in the same country is not available, or cannot be used" – at the end of subparagraph (b) of the same paragraph to make it clear that a determination that a producer/exporter's records do not reasonably reflect the costs is not the only condition for the recourse to "prices prevailing on other markets than the market of the country of origin". Argentina opposes these requests. Argentina considers that subparagraph (a) of paragraph 7.67 accurately reflects its claim, as consistently referred to in its submissions, and that the description is consistent with the wording included in paragraphs 7.69 and 7.74 of the Interim Report. Argentina also considers that the wording of subparagraph (b) correctly reflects the issue raised by Argentina's claim.

6.10.  We decline to add the language suggested by the European Union. In our view, the two sub‑paragraphs of paragraph 7.67 accurately reflect the questions of interpretation that arise from Argentina's claims.

Paragraph 7.112

6.11.  Argentina requests that the Panel add a third subparagraph to paragraph 7.112 to clarify that with respect to both of its "as such" claims, Argentina also claimed that even if it granted the EU authorities the discretion alleged by the European Union, Article 2(5), second subparagraph, of the Basic Regulation would nonetheless be inconsistent with Articles 2.2.1.1 and 2.2. The European Union objects to Argentina's request. The European Union notes that paragraph 7.112 reflects the Panel's understanding of the "essence of Argentina's claims" and that Argentina seems to accept the Panel's summary of its arguments in relation to this claim as it does not request any changes to paragraphs 7.74 to 7.86. The European Union submits that the Panel's understanding is accurate, while the new text suggested by Argentina is inaccurate. Moreover, the European Union submits that the purpose of the interim review is not to allow the complaining party to dictate to the Panel the understanding that the Panel should have, or the reasoning the Panel should follow.

6.12.  We note that the Interim Report already included several references to the alternative line of argumentation that Argentina would have us reflect in paragraph 7.112, notably in footnote 189 of the Interim Report. Nonetheless, we have added the language requested by Argentina, albeit with some minor changes, but have included it in a new paragraph after paragraph 7.117 rather than as a new subparagraph of paragraph 7.112. Consequently, we have deleted footnote 189 of the Interim Report. We have also included a brief summary of the European Union's response to this argument in the new paragraph, and amended paragraph 7.81 to reflect the alternative argument as it pertains to Argentina's Article 2.2.1.1 claim in the summary of its arguments.

Paragraphs 7.116, 7.142 and 7.143

6.13.  The European Union suggests adding the qualifier "government induced" to the term "distortion" in paragraphs 7.116 and 7.142 and to the term "market distortion" in paragraph 7.143. Argentina objects to the modification proposed by the European Union, which, it submits, is a new terminology that the European Union seeks to introduce at a late stage of the proceedings. Argentina submits that the current wording is clear and is in line with Argentina's claims as formulated in its submissions to the Panel.

6.14.  We decline to make the change requested by the European Union, particularly as the European Union did not itself refer to a "government induced" distortion in these contexts. Nor do Recital 4, Article 2(3), second subparagraph, or Argentina's submissions use such a qualifier.

Paragraph 7.132

6.15.  The European Union suggests replacing the terms "after a determination is made" with "after a determination has been made". Argentina objects to this request.

6.16.  We have made the amendment suggested by the European Union.

Paragraph 7.133

6.17.  Argentina requests the addition of footnote references to its second written submission at the end of the second sentence of paragraph 7.133. The European Union does not object to the Panel adding the footnote suggested by Argentina provided that the text of the main body of the paragraph is not modified.

6.18.  We have added the footnote references suggested by Argentina.

Paragraph 7.140

6.19.  Argentina requests that paragraph 7.140 be amended to more accurately reflect its arguments to the Panel regarding the relevance of Recital 4 for purposes of interpreting Article 2(5), second subparagraph. The European Union objects to the proposed amendments on the ground that the paragraph already accurately describes Argentina's argument and contains the references to Argentina's submissions which Argentina suggests adding.

6.20.  We have modified paragraph 7.140 to more accurately reflect Argentina's arguments albeit in somewhat different terms than suggested by Argentina.

Paragraph 7.142

6.21.  The European Union suggests reformulating the last sentence of paragraph 7.142 to ensure consistency with paragraphs 7.138 and 7.141, which indicate that Recital 4 relates to Article 2(5) of the Basic Regulation. Argentina does not comment on this request.

6.22.  We have amended the last sentence of paragraph 7.142 in accordance with the European Union's request.

Paragraph 7.146

6.23.  Argentina requests the addition of language at the end of paragraph 7.146 to clarify its arguments before the Panel. The European Union objects to Argentina's request as it considers the proposed changes unnecessary and considers the paragraph in its current form to be satisfactory. The European Union submits that if the Panel were to accept the redundant new text requested by Argentina, it should also move the content of footnote 224 into the main body of the Report and explain in detail the reason for which Argentina's assertions are erroneous, as already reflected in footnote 224.

6.24.  We have, in the light of Argentina's request, modified footnote 224 to better reflect Argentina's arguments.

Paragraph 7.149

6.25.  Argentina requests that we add language to paragraph 7.149 in order to more completely reflect the arguments it presented with respect to the judgments of the General Court. The European Union objects to Argentina's request. The European Union submits that it is unnecessary to reproduce in this paragraph all of the arguments presented by Argentina on the judgments of the General Court given that the following paragraphs directly address all of these arguments.

6.26.  We decline to add the language suggested by Argentina, which we do not consider to be necessary particularly as, in this section, the Panel addresses the relevant arguments submitted by Argentina with respect to the judgments of the General Court.

Paragraphs 7.149-7.152

6.27.  The European Union suggests adding language to paragraphs 7.149-7.152 to reflect the Panel's conclusion that the judgments confirm that the EU authorities are not "required" or "mandated" to act in any particular way, which is already reflected in paragraphs 7.167-7.168. Argentina opposes this request, noting that in this section of its Report, the Panel only examines the judgments in relation to the issue of the relationship between the first two subparagraphs of Article 2(5) of the Basic Regulation. Argentina takes the view that paragraphs 7.167-7.168 relate to a different issue; the conclusion in these paragraphs therefore cannot merely be transposed in paragraphs 7.149-7.152 and the latter cannot include any conclusion regarding the issue whether the authorities are "required" or "mandated" to act in a particular way without examining this issue in detail.

6.28.  We agree with Argentina, and therefore decline the European Union's request.

Paragraph 7.150

6.29.  Argentina requests that the Panel add a footnote in the second sentence of paragraph 7.150 to refer to the relevant paragraphs of the judgments. The European Union does not comment on this request.

6.30.  We have included footnote references to the relevant paragraphs of the judgments at issue.

Footnote 227 to paragraph 7.150

6.31.  Argentina requests that, in footnote 227 to paragraph 7.150, the Panel include a reference to its response to Panel question No. 98. The European Union does not object to Argentina's request in this regard, provided that the rest of the footnote and of the paragraph are not modified.

6.32.  We have included the additional reference requested by Argentina.

Paragraph 7.155

6.33.  Argentina requests that the Panel modify paragraph 7.155 in order to clarify that it also submits that Article 2(5) of the Basic Regulation is inconsistent with Article 2.2 of the Anti‑Dumping Agreement regardless of whether it is mandatory. The European Union opposes this request because, it submits, this point is already addressed in paragraphs 7.173 and 7.174, whereas paragraph 7.155 presents the Panel's understanding of Argentina's main claim, which is that Article 2(5) mandates the investigating authorities to act in a certain way.

6.34.  As indicated above, in our response to Argentina's request concerning paragraph 7.112, the Interim Report already included several references to the alternative line of argumentation that Argentina would have us reflect in paragraph 7.155, and we have added such a reference in a new paragraph, paragraph 7.118. Moreover, footnote 229 to paragraph 7.155 already referred to Argentina's alternative line of argumentation. In light of the foregoing, we do not consider it necessary to modify paragraph 7.155 as requested by Argentina. We have, instead, amended footnote 229 to clarify it and to refer back to paragraph 7.118.

Paragraph 7.165

6.35.  Argentina requests the Panel to identify in a footnote the examples of EU determinations supporting the statement contained in paragraph 7.165. The European Union does not comment on this request.

6.36.  We have amended paragraph 7.165 and added a footnote to add greater precision to the discussion of the examples of EU determination cited by Argentina.

Paragraph 7.166

6.37.  The European Union suggests reformulating the final sentence of paragraph 7.166. Argentina does not comment on this request.

6.38.  We have revised the final sentence of paragraph 7.166 in the light of the European Union's comment.

Paragraph 7.172

6.39.  The European Union suggests reformulating paragraph 7.172 to clarify the conclusion that, under Article 2(5) of the Basic Regulation, the authorities may use the listed sources of information to establish an investigated producer/exporter's costs in constructing its normal value, but are not required to do so. Argentina objects to this request as it considers that the paragraph as currently worded is clear and does not need to be modified.

6.40.  We note that the European Union did not explain the reason for its suggested revision. In our view, paragraph 7.172 is sufficiently clear. Accordingly, we see no reason to modify it.

Paragraphs 7.173 and 7.174

6.41.  The European Union suggests merging paragraphs 7.173 and 7.174 and treating the arguments of Argentina addressed in these paragraphs as different formulations of the same legal interpretation. Argentina takes the view that the two paragraphs deal with different arguments and requests that the Panel reject this request.

6.42.  We reject the request of the European Union. Paragraphs 7.173 and 7.174 address different, alternative arguments submitted by Argentina with respect to what it must establish for its "as such" claims to succeed.

Paragraph 7.174

6.43.  The European Union suggests breaking up the second sentence of paragraph 7.174 into separate sentences because the present formulation may create some confusion as to what "as discussed above" refers to. Argentina considers that paragraph 7.174 is clear and does not need to be modified.

6.44.  We have amended paragraph 7.174 to eliminate the risk of confusion identified by the European Union.

Paragraph 7.240

6.45.  Argentina requests that paragraph 7.240 be modified to include the word "alleged" before the words "distortion arising out of government actions or circumstances". The European Union objects to this request, noting that Argentina acknowledged in its reply to Panel question No. 43 that its export tax system has a significant "impact on soybean prices as an input material for biodiesel".

6.46.  We decline to make the change requested by Argentina. Paragraph 7.240 discusses distortions in the abstract as they might relate to the second Ad Note to Articles VI:2 and VI:3 of GATT 1994, rather than articulating any conclusions with respect to Argentina's export tax system in particular.

Footnote 421 to paragraph 7.249

6.47.  The European Union suggests that it would be more accurate in footnote 421 to paragraph 7.249 to preface the word "regulated" with the word "directly". Argentina requests the Panel to reject this modification because, in its view, the parties did not dispute that the domestic prices of soybean are not regulated.

6.48.  In light of the considerations raised by the parties, we have reformulated the last sentence of footnote 421 to paragraph 7.249.

Paragraph 7.257

6.49.  The European Union suggests that the Panel add a sentence at the end of paragraph 7.257 to reflect Argentina's acknowledgement that the prices used by the EU authorities "would have been the prices paid by the Argentine producers of biodiesel in the absence of the export tax system, possibly with small variations depending on the particular terms of each transaction." In the European Union's view, this addition would make the description of the facts in that paragraph more accurate. Argentina objects, asserting that it did not agree that the price to be paid by exporters would be the reference price minus fobbing costs.

6.50.  We see no basis for making the change suggested by the European Union. The paragraph at issue contains a brief restatement of pertinent aspects of the findings of the EU authorities, whereas the addition suggested by the European Union concerns Argentina's arguments before the Panel, which are addressed elsewhere in the Report.

Paragraphs 7.261-7.269

6.51.  Argentina requests the Panel to complete its reasoning with respect to its second "as applied" claim concerning Article 2.2.1.1 of the Anti-Dumping Agreement. In Argentina's view, its second claim is of a different nature to its first claim. In Argentina's view, a finding on this second claim would be necessary to preserve its rights at subsequent stages of the proceeding. The European Union does not consider that Argentina's request is justified. In the European Union's view, in light of its finding in paragraph 7.249, the Panel is justified in concluding in paragraph 7.269 that a finding on a logically identical claim under Article 2.2.1.1 of the Anti‑Dumping Agreement is not necessary for the effective resolution of the dispute.

6.52.  We reject Argentina's request. For the reasons explained in paragraph 7.269, we maintain our view that a finding on Argentina's second claim under Article 2.2.1.1 of the Anti-Dumping Agreement is not necessary for the effective resolution of this dispute.

Paragraph 7.293

6.53.  The European Union requests that we delete the words "pursuant to Article 2.1" from the first sentence of paragraph 7.293 given that these words are not mentioned in the text of Article 2.4 of the Anti-Dumping Agreement. Argentina requests that we reject the request of the European Union. Argentina considers that the European Union misreads the sentence at issue and that the sentence is accurate.

6.54.  Although the sentence at issue did not, as the European Union suggests, state that the opening sentence of Article 2.4 refers to Article 2.1, in order to avoid any risk of confusion, we have omitted the words "pursuant to Article 2.1" from the first sentence of paragraph 7.293.

Footnote 511 to paragraph 7.296

6.55.  The European Union suggests that the Panel delete the text in footnote 511 starting with "[w]e note, however …". The European Union does not see the connection between this text and the reference to the panel report in EU – Footwear (China), nor between this text and the sentence in paragraph 7.296 to which footnote 511 is appended. Argentina requests the Panel to reject the request of the European Union. According to Argentina, the text that the European Union seeks to delete is related to the content of paragraph 7.296.

6.56.  The text that the European Union seeks to delete in footnote 511 to paragraph 7.296 reflects a nuance that is not otherwise reflected in the attendant quotations and considerations in paragraph 7.296. As we explain in that paragraph, the subject matter of Article 2.4 can be contrasted with that of Articles 2.1, 2.2, and 2.3, which pertain to the methodology of determining the normal value and the export price. However, as we explain in footnote 511 to that paragraph, the fourth and fifth sentences of Article 2.4 pertain to the construction of the export price under Article 2.3. Omitting this nuance would dilute the accuracy of the Panel's discussion. Nonetheless, in order to avoid any risk of confusion, and since the text referred to by the European Union is not directly connected to the reference to EC – Footwear (China) in the same footnote, we have moved this text to a new footnote at the end of the following sentence (footnote 512).

Paragraphs 7.303 and 7.304

6.57.  In the evaluation of Argentina's claim under Article 2.4 of the Anti-Dumping Agreement, the Interim Report made reference to certain findings of the panel in EC – Fasteners (China) (Article 21.5 – China). On 18 January 2016, the Appellate Body issued its Report in the same dispute. In this Report, the Appellate Body addressed, inter alia, the findings of the EC – Fasteners (China) (Article 21.5 – China) panel referred to in this Panel's Interim Report. This being the case, on 5 February 2016, the Panel amended paragraph 7.303 and included a new paragraph (now paragraph 7.304) in order to reflect the reasoning of the Appellate Body, and invited the parties to provide their comments, if any, on these revisions. Argentina provided comments, and the European Union provided comments on Argentina's comments.

6.58.  Argentina does not request any changes to the revised paragraph 7.303, but makes three sets of requests for revisions to paragraph 7.304. First, Argentina takes issue with the statement in that paragraph that, in EC – Fasteners (China) (Article 21.5 – China), the "Appellate Body agreed with the panel that, in the context of an investigation in which the analogue country methodology is applied, the investigating authority is not required under Article 2.4 to adjust for differences in costs where this would lead it to adjust back to the costs in the NME industry that it had found to be distorted".^[22] Argentina considers that rather than agreeing with the panel, the Appellate Body faulted the panel for the lack of care and detailed evaluation in assessing whether the investigating authority had complied with its duty to determine whether the adjustments requested were warranted pursuant to Article 2.4. As a consequence, Argentina requests that we replace the term "agreed" in the first sentence with the term "found". Second, Argentina considers that the Appellate Body's findings in EC – Fasteners (China) (Article 21.5 – China) do not stand for the "broad, unqualified and far-reaching" proposition that methodological approaches for establishing the normal value cannot be challenged under Article 2.4 as "differences affecting price comparability" without more, as – in Argentina's view – the Panel's language seems to suggest. Rather, Argentina considers that the Appellate Body (like the panel) found that recourse to the analogue country methodology did not relieve the investigating authority from the obligation to make a fair comparison under Article 2.4, and the Appellate Body clarified the conditions under which a determination as to whether adjustments are warranted should be made. Argentina therefore suggests that we make certain changes to the last sentence of paragraph 7.304, specifically that we qualify the term "proposition" in that sentence with the term "general", and that we add "provided that the fair comparison requirement is not affected" at the end of that sentence. Finally, Argentina requests that we qualify the term "distortion" in footnote 527 to paragraph 7.304 with the term "alleged", that we replace the term "mitigated" in that footnote with the term "found", and that we qualify the term "replace" with the term "improperly" in the same footnote.

6.59.  The European Union only comments on Argentina's requests for revisions concerning the footnote to paragraph 7.304. In this respect, the European Union notes that the Panel had already used the word "mitigated" elsewhere in the Report and that Argentina had not expressed any comment in this respect in its initial requests for review. Further, the European Union considers that the term "found", suggested by Argentina, does not accurately reflect the meaning expressed by the relevant sentence, and suggests that any change should use the terms "eliminated" or "addressed". The European Union also asks us to reject Argentina's request to qualify the term "distortion" with the term "alleged" on grounds that the relevant sentence describes the actions taken by the investigating authorities as opposed the parties', or the Panel's, assessment of whether the distortion was "alleged" or real. Finally, the European Union asks us to reject Argentina's request to qualify the term "replace" with the term "improperly" on grounds that the relevant sentence is simply describing facts and does not assess whether the actions of the investigating authority were "proper".

6.60.  We made certain changes to the language of paragraph 7.304 and the corresponding footnote in light of Argentina's comments and the European Union's comments thereon. In particular, we have modified the first sentence of paragraph 7.304. In this respect, we note however that both the panel and the Appellate Body in EC – Fasteners (China) (Article 21.5 – China) considered that, in the context of an investigation in which the analogue country methodology is applied, the investigating authority is not required under Article 2.4 to adjust for differences in a manner that would lead it to adjust back to the costs in the NME industry that it had found to be distorted, thereby undermining the use of the analogue country methodology. The footnote to paragraph 7.304 already highlighted the differences in the approaches adopted by the panel and Appellate Body; we modified our text to provide even greater clarity in this respect. We decline to qualify certain language in the footnote by adding "alleged" and "improperly" before "distortion" and "replace", as requested by Argentina, because the language at issue reflects certain factual aspects of the EU authorities' determination rather than findings of the Panel. However, we replaced the term "mitigated" by "addressed" to better reflect the EU authorities' determination. Finally, we modified the last sentence of paragraph 7.304 to better reflect our understanding of the essence of the Appellate Body's findings in EC – Fasteners (China) (Article 21.5 – China) and of its relevance to the present dispute. As a result, we also amended the first sentence of paragraph 7.305.

Footnote 581 to paragraph 7.337

6.61.  The European Union notes that in footnote 581 to paragraph 7.337, the reference to the panel report in Thailand – H-Beams relates to subparagraphs (i) and (ii) of Article 2.2.2 of the Anti-Dumping Agreement, whereas the present dispute involves subparagraph (iii) of Article 2.2.2. Argentina considers the European Union's observation inapposite because the paragraph of the panel report in Thailand – H-Beams points out the connection between Article 2.2.2(iii) and the preceding subparagraphs of Article 2.2.2.

6.62.  Paragraph 7.112 of the panel report in Thailand – H-Beams discusses the "chapeau and overall structure" of Article 2.2.2 of the Anti-Dumping Agreement. We therefore decline to amend that reference. However, we have omitted an inaccurate reference to EU – Footwear (China) in the same footnote, identified by the European Union.

Paragraph 7.347

6.63.  The European Union suggests that the Panel include the word "particularly" before the clause beginning "when reliable data concerning …" in paragraph 7.347. According to the European Union, this would be more consistent with footnote 579. Argentina objects on the ground that the modification suggested by the European Union is unnecessary.

6.64.  In order to avoid any risk of misunderstanding, we substituted the word "might" for the word "may" in the sentence referred to by the European Union.

Paragraph 7.361

6.65.  The European Union submits that paragraph 7.361 inaccurately attributes to the Appellate Body in US – Zeroing (EC) a quotation ("that is, a margin established consistently with Article 2"). In response, Argentina notes that the language identified by the European Union is not part of the quotation in paragraph 7.361.

6.66.  We see no reason to modify paragraph 7.361. The text referred to by the European Union does not appear in quotation marks, nor does it misrepresent the quotation from US – Zeroing (EC) extracted in paragraph 7.361.

Paragraph 7.370

6.67.  Argentina requests that the Panel modify paragraph 7.370 to reflect the fact that its claims under Articles 3.1 and 3.4 should be read jointly with the claims under Articles 3.1 and 3.5. The European Union disagrees with Argentina's request, arguing that footnote 618 already makes the same point.

6.68.  We reject Argentina's request. Paragraph 7.370 and footnote 618 to the same paragraph already make clear the link between Argentina's claims under Articles 3.1 and 3.4, on the one hand, and its claims under Articles 3.1 and 3.5, on the other.

Paragraphs 7.416-7.422

6.69.  Argentina submits that the Panel's finding that the EU authorities failed to base their evaluation of production capacity and capacity utilization on positive evidence and failed to conduct an objective examination of the impact of dumped imports on the domestic industry insofar as it relates to these two factors only provides a partial resolution of the matter at issue. Argentina considers that to ensure a complete resolution of the dispute, it is also necessary for the Panel to make a finding regarding the issue whether the EU authorities acted inconsistently with Article 3.4 in their definition of capacity and capacity utilization. The European Union does not comment on this request.

6.70.  Argentina has not demonstrated that findings with respect to its allegation concerning the EU authorities' definition of capacity utilization are necessary to the resolution of the dispute between the parties in light of the Panel's conclusions in paragraphs 7.413 and 7.415. We therefore maintain our view that we need not make such findings.

Paragraph 7.429

6.71.  The European Union suggests adding a reference to the panel reports in China – Raw Materials (second phase of the preliminary ruling, paragraphs 74 to 76) to this paragraph. Argentina objects to this suggestion. Argentina argues that it is too late at the interim review stage to advance new arguments or to refer to prior reports that were not brought to the Panel's attention earlier.

6.72.  We do not consider it necessary to include a reference to the panel reports in China – Raw Materials and have therefore not made the addition suggested by the European Union.

Paragraph 7.462

6.73.  Argentina requests that we clarify that its argument with regard to overcapacity discussed in paragraph 7.462 focuses on the violation of both Articles 3.1 and 3.5. The European Union does not provide comments on this request.

6.74.  The relevant clarification has been inserted into the text.

Paragraphs 7.463 and 7.465

6.75.  The European Union suggests that, in its description of the findings of the EU investigating authorities, the Panel add footnote references to the relevant documents containing these findings. Argentina does not comment on this request.

6.76.  In the light of the European Union's request, we have inserted relevant footnote references where appropriate (footnotes 783-785 and 788-790).

Paragraph 7.471

6.77.  The European Union suggests adding footnotes indicating the source of certain statements in paragraph 7.471. Argentina does not comment on this request.

6.78.  The relevant footnotes have been inserted in the Final Report (footnotes 798, 800, and 802).

Paragraph 7.509

6.79.  The European Union suggests adding footnotes indicating the source of certain statements in paragraph 7.509. Argentina does not comment on this request.

6.80.  The Panel has made certain changes to paragraphs 7.503, 7.505, 7.508, and 7.509 to clarify its findings and, in doing so, has added footnotes to identify the source of the statements or arguments it refers to, where appropriate (footnotes 867, 872-873, and 875-878).

7  Findings

7.1.  This dispute concerns European Union measures imposing anti-dumping duties on biodiesel from Argentina, which Argentina challenges on an "as applied" basis, as well as Article 2(5), second subparagraph, of the Basic Regulation, which Argentina challenges on an "as such" basis. Argentina's claims proceed under various provisions of the Anti-Dumping Agreement; Articles VI:1, including subparagraph (b)(ii) thereof, and VI:2 of the GATT 1994; and Article XVI:4 of the World Trade Organization (WTO) Agreement. The European Union requests that the Panel reject each of the claims presented by Argentina, and in addition, requests the Panel to find that certain of Argentina's claims are not within the Panel's terms of reference.

7.2.  We begin by examining the request for a preliminary ruling submitted by the European Union prior to the filing by Argentina of its first written submission. Thereafter, we consider Argentina's "as such" claims against Article 2(5), second subparagraph, of the Basic Regulation, before considering Argentina's "as applied" claims, which pertain to the EU authorities' Provisional Regulation and Definitive Regulation in the biodiesel investigation. However, before proceeding to do so, we briefly recall the relevant general principles regarding treaty interpretation, the standard of review and the burden of proof in WTO dispute settlement proceedings, as laid down by the Appellate Body.

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

7.1.1  Treaty interpretation

7.3.  Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". It is generally accepted that the principles codified in Articles 31 and 32 of the Vienna Convention are such customary rules.^[23]

7.1.2  Standard of review

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

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

7.5.  Further to Article 11 of the DSU, Article 17.6 of the Anti-Dumping Agreement sets forth a specific standard of review applicable to anti-dumping disputes, namely:

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

(ii)   the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

7.6.  The Appellate Body has stated that the "objective assessment" to be made by a panel reviewing an investigating authority's determination is to be informed by an examination of whether the agency provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings supported the overall determination.^[24]

7.7.  The Appellate Body has also stated that a panel reviewing an investigating authority's determination may not undertake a de novo review of the evidence or substitute its judgment for that of the investigating authority. A panel must limit its examination to the evidence that was before the agency during the course of the investigation and must take into account all such evidence submitted by the parties to the dispute.^[25] At the same time, a panel must not simply defer to the conclusions of the investigating authority. A panel's examination of those conclusions must be "in-depth" and "critical and searching".^[26]

7.1.3  Burden of proof

7.8.  The general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.^[27] Therefore, as the complaining party, Argentina bears the burden of demonstrating that the EU measures it challenges are inconsistent with the provisions of the covered agreements that it invokes. The Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima facie case, namely, a case which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party.^[28] It is generally for each party asserting a fact to provide proof thereof.^[29]

7.2  Terms of reference – European Union's request for a preliminary ruling

7.2.1  Introduction

7.9.  On 24 November 2014, the European Union submitted a request for a preliminary ruling in which it objected to the inclusion of certain claims and measures in Argentina's panel request. In its request, the European Union argued that Argentina's panel request failed to identify the specific measure(s) at issue, failed to provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly, and/or added claims that had not been included in Argentina's request for consultations.

7.10.  Specifically, the European Union requested the Panel to find that:

a.    the references to "implementing measures and related instruments or practices" in paragraph 1(A) and footnote 7 of Argentina's panel request, and the reference to "related measures and implementing measures" in paragraph 1(B) of Argentina's panel request, fail to "identify the specific measures at issue" as required by Article 6.2 of the DSU and, as a consequence, any claims with respect to these measures fall outside the scope of the Panel's terms of reference^[30];

b.    the use of the term "inter alia" in section 2(A) of Argentina's panel request, in the description of the provisions of the covered agreements allegedly violated by Article 2(5) of the Basic Regulation, fails to properly identify the legal basis of the complaint and to present the problem clearly and, as a consequence, the relevant claims are outside the Panel's terms of reference^[31];

c.    paragraph 2(B)(6) of Argentina's panel request, to the effect that the Provisional and Definitive Regulations are inconsistent with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994, fails to properly identify the legal basis of the complaint and to present the problem clearly and, as a consequence, falls outside the Panel's terms of reference^[32];

d.    the claim in respect of "related … practices" in paragraph 1(A) of Argentina's panel request (the paragraph that identifies Article 2(5) of the Basic Regulation as a measure at issue), refers to a measure that was not included in Argentina's consultations request, thereby expanding the scope of the dispute and changing the essence of Argentina's complaint and, as a consequence, falls outside the Panel's terms of reference^[33];

e.    an unnumbered paragraph inserted between paragraphs 2(B)(3) and 2(B)(4) of Argentina's panel request appears to set forth a new "as applied" claim in respect of Article 2(5) of the Basic Regulation that was not included in Argentina's consultations request and expands the scope of the dispute, and which, as a consequence, falls outside the Panel's terms of reference^[34];

f.     the claim under Article 9.3 of the Anti-Dumping Agreement against Article 2(5) of the Basic Regulation in paragraph 2(A)(3) of Argentina's panel request is a new claim that was not included in Argentina's request for consultations, expands the scope of the dispute and changes the essence of the complaint, and, as a consequence, falls outside the Panel's terms of reference^[35];

g.    the claims under Article VI:1 of the GATT 1994 in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request are new claims that were not included in Argentina's request for consultations, expand the original scope of the dispute and, as a consequence, fall outside the scope of the panel's terms of reference^[36];

h.    the claims in paragraph 2(A)(2) of Argentina's panel request that Article 2(5) of the Basic Regulation is inconsistent with the requirement in Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement that "the costs used be associated with the production and sale of the product under consideration" are new claims that were not included in Argentina's request for consultations, expand the original scope of the dispute and, as a consequence, fall outside the scope of the Panel's terms of reference^[37]; and

i.     the claim under Article 2.1 of the Anti-Dumping Agreement in paragraph 2(B)(4) of Argentina's panel request concerning the amount for profits is a new claim that was not included in Argentina's request for consultations and, as a consequence, falls outside the scope of the Panel's terms of reference.^[38]

7.11.  Argentina responded to the European Union's request on 18 December 2014.^[39] The European Union submitted comments on Argentina's response on 19 January 2015 as part of its first written submission^[40] and both parties further commented on the matter as part of their subsequent submissions and statements before the Panel. In addition, China and Mexico submitted comments on the European Union's request as third parties.^[41]

7.12.  The European Union's request for a preliminary ruling pre-dated Argentina's filing of its first written submission. Argentina submitted that the European Union's objections concerning "implementing measures and related instruments or practices", "related measures and implementing measures", the terms "inter alia" and "related practices", and the "as such" claim against Article 2(5) of the Basic Regulation based on Article 9.3 of the Anti-Dumping Agreement, were unnecessary because, at the time these objections were made, Argentina had not yet made any submissions indicating that it was challenging measures on those bases.^[42] The European Union subsequently contended in its first written submission that:

Argentina has abandoned: (1) any claim against "related practices", mentioned in Paragraph 1(A) and in Footnote 7 of Argentina's Panel Request; (2) any claim under an "inter alia" legal basis, mentioned in Paragraph 2(A) of Argentina's Panel Request; (3) the claim against Article 2(5) of the Basic Regulation based on Article 9.3 of the Anti-dumping Agreement, mentioned in Paragraph 2(A)3 of Argentina's Panel Request; (4) any distinct "as applied" claim against Article 2(5) of the Basic Regulation, mentioned in the not-numbered paragraph between paragraphs 2(B)3 and 2(B)4 of Argentina's Panel Request; (5) the claim against Article 2(5) of the Basic Regulation for the "second reason" mentioned in Paragraph 2(A)2 of Argentina's Panel Request, namely that the costs used are allegedly not "associated with the production and sale of the product under consideration"; and (6) the claim against the "profit determination" based on Article 2.1 of the Anti-Dumping Agreement, mentioned in Paragraph 2(B)4 of Argentina's Panel Request.^[43] (emphasis original; fns omitted)

7.13.  On the basis of that understanding, the European Union submitted that the Panel cannot examine or make any findings on those particular claims, and stated that it would "not address these claims further, because they are outside the scope of the present dispute".^[44] Argentina noted these statements of the European Union, and stated that "these issues appear to be moot and, in Argentina's view, the Panel therefore does not need to examine them any further".^[45] Therefore, we understand the parties to agree that there is no need for us to rule on these aspects of the European Union's request for a preliminary ruling. In light of Argentina's submissions and in the absence of claims being made or pursued in relation to these aspects of the European Union's request for a preliminary ruling, we consider them moot. Accordingly, we make no findings on these aspects of the European Union's request.

7.14.  We also note that, in response to the European Union's objection concerning "implementing measures and related instruments or practices" and "related measures and implementing measures" in paragraph 1(A), paragraph 1(B) and footnote 7 of Argentina's panel request, Argentina indicated that a ruling by the Panel would have no "practical implications for the dispute at issue".^[46] The European Union responded that this "confirms that Argentina has abandoned these claims" and that its arguments pertaining to the other allegedly abandoned claims applied.^[47] In that context, and in view of our understanding that Argentina has not, in fact, pursued claims concerning "implementing measures and related instruments or practices", we consider these aspects of the European Union's request for a preliminary ruling to be moot, and will therefore make no findings on these aspects.

7.15.  Below, we consider and resolve the remaining objections raised by the European Union in its request for a preliminary ruling.^[48]

7.2.2  Objection concerning the claim of inconsistency with Article 9.3 of the Anti‑Dumping Agreement in paragraph 2(B)(6) of Argentina's panel request

7.16.  The European Union requests that we find paragraph 2(B)(6) of Argentina's panel request to be inconsistent with Article 6.2 of the DSU, and thus outside the scope of the Panel's terms of reference.^[49]

7.2.2.1  Main arguments of the parties

7.2.2.1.1  European Union

7.17.  The European Union submits four arguments in support of its assertion that paragraph 2(B)(6) of Argentina's panel request is inconsistent with the requirement in Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly".^[50]

7.18.  First, the European Union argues that panel requests must specify which specific subparagraph of a provision is alleged to be infringed where the provision contains different subparagraphs containing different sets of obligations.^[51] Accordingly, the failure of Argentina to specify in paragraph 2(B)(6) which of the chapeau or three subparagraph of Article 9.3 of the Anti‑Dumping Agreement is alleged to be infringed is inconsistent with Article 6.2 of the DSU.

7.19.  Second, the European Union argues that the allegation in paragraph 2(B)(6) that it "imposed and levied anti-dumping duties in excess of the margin of dumping that should have been established" does not articulate clearly the exact claim that Argentina advances.^[52] For the European Union, this allegation could refer either to a challenge to the comparison between the anti-dumping duty and the margin of dumping (e.g. as a result of a numerical mistake in setting the anti-dumping duty), or to a challenge to the method of calculation of the margin of dumping itself.

7.20.  Third, assuming arguendo that the claim in paragraph 2(B)(6) pertains to the method of calculation of the margin of dumping itself, the European Union argues that it is unclear which aspect of this calculation is challenged by Argentina's claim.^[53] In particular, the European Union points out that the determination of the dumping margin by the EU authorities was based on four separate components or aspects (the determination of the normal value, the determination of the export price, the comparison between the two, and the analysis of certain requests by Argentine exporters), and that these are dealt with by the challenged measures in four different sections with four different titles. For the European Union, the failure to specify which component or aspect of the measures is challenged means that it cannot understand the scope of the challenge it faces.

7.21.  Finally, assuming arguendo that the claim in paragraph 2(B)(6) pertains to the fourth section of the challenged measures entitled "Dumping Margins", the European Union submits that this section discusses two different and distinct issues pertaining to requests submitted by Argentine exporters.^[54] The failure of Argentina to specify which of those two issues are under challenge in paragraph 2(B)(6) falls short of the applicable standard under Article 6.2.

7.2.2.1.2  Argentina

7.22.  Argentina contends that there is no general requirement under Article 6.2 to refer to the specific paragraphs of a provision of the covered agreements that is alleged to be infringed.^[55] Rather, according to Argentina, WTO jurisprudence suggests that the question of whether a general reference to a treaty provision is adequate to meet the "sufficiency" requirement of Article 6.2 calls for a case-by-case assessment, taking into account the extent to which such reference sheds light on the nature of the obligation at issue.^[56]

7.23.  In the particular circumstances of this case, Argentina points to an alignment between the language used in paragraph 2(B)(6) of its panel request and the chapeau of Article 9.3 of the Anti‑Dumping Agreement.^[57] In particular, the chapeau of Article 9.3 states that "the amount of the anti-dumping duty shall not exceed the margin of dumping as established under Article 2", and paragraph 2(B)(6) of Argentina's panel request states that there is a violation of Article 9.3 "because the European Union imposed and levied anti-dumping duties in excess of the margin of dumping that should have been established in accordance with Article 2". In the light of this textual alignment, Argentina submits that it is clear that the claim set out in paragraph 2(B)(6) of its panel request is directed at the chapeau of Article 9.3 of the Anti-Dumping Agreement. In this regard, Argentina cites the Appellate Body Report in Thailand – H-Beams, in which an explicit reference to the specific language of Article 3 of the Anti-Dumping Agreement was found to be sufficient to meet the requirements of Article 6.2, without identifying the specific paragraphs of Article 3 alleged to have been infringed.^[58] Moreover, Argentina argues that the conclusion that the claim is directed at the chapeau is further supported by the fact that the claim relates at the same time to Article VI:2 of the GATT 1994.

7.24.  In Argentina's view, the nature of the obligation in the chapeau of Article 9.3 of the Anti‑Dumping Agreement clarifies that the claim in paragraph 2(B)(6) of its panel request could not be construed as pertaining to the method of calculating dumping margins, contrary to the argument of the European Union.^[59] This is because the chapeau of Article 9.3, and Article 9 generally, do not deal with the determination of dumping. Rather, they deal with the imposition and collection of anti-dumping duties.

7.25.  In the light of its other claims concerning the determination of the dumping margin under Article 2 of the Anti-Dumping Agreement, Argentina submits that its claim under Article 9.3 of the Anti-Dumping Agreement logically refers to the levying of anti-dumping duties that exceed the margins of dumping that the European Union should have calculated without violating its obligations under Article 2.^[60] In any case, Argentina claims that the European Union has failed to demonstrate that any ambiguity in its panel request prejudiced the European Union's ability to defend itself.^[61]

7.2.2.2  Arguments of the third parties

7.26.  China submits that there is no general and mandatory requirement to refer to a specific subparagraph of a WTO treaty provision, but rather, a panel should examine whether a general reference to a treaty provision meets the requirement under Article 6.2 on a case-by-case basis, taking into account the extent to which such reference sheds light on the nature of the obligation at issue.^[62] In China's view, the language of paragraph 2(B)(6) of Argentina's panel request indicates that the factual basis of the alleged inconsistency with Article 9.3 is that the anti-dumping duties were levied in excess of the margins of dumping, which connected the challenged measure with the chapeau of Article 9.3.

7.2.2.3  Evaluation by the Panel

7.27.  Pursuant to Article 6.2 of the DSU, the request for the establishment of a panel must, inter alia, "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly". A panel must determine whether a panel request is sufficiently clear on the basis of an objective examination of the panel request as a whole, as it existed at the time of filing, and on the basis of the language used therein^[63], that is, "'on the face' of the panel request".^[64] Parties' submissions and statements during the panel proceedings cannot "cure" defects in the panel request.^[65]

7.28.   As a minimum requirement, the panel request must list the provision(s) of the covered agreement(s) claimed to have been violated.^[66] There may be situations, however, where such listing is not "sufficient to present the problem clearly", for instance, where the provisions contain multiple and/or distinct obligations.^[67] On the other hand, there may be situations where a general reference to a treaty provision is sufficient under Article 6.2.^[68] Thus, the determination of conformity with Article 6.2 must be undertaken on a case-by-case basis, taking account of the nature of the measure(s) at issue, and the manner in which it is (or they are) described in the panel request, as well as the nature and scope of the provision(s) of the covered agreements alleged to have been violated.^[69]

7.29.  Finally, in order to "present the problem clearly", a panel request must "plainly connect" the challenged measure(s) with the provision(s) claimed to have been infringed such that a respondent can "know what case it has to answer, and … begin preparing its defence".^[70]

7.30.  With this understanding of the relevant principles, we now address the objection raised by the European Union with respect to the claim under Article 9.3 of the Anti-Dumping Agreement set forth in paragraph 2(B)(6) of Argentina's panel request.

7.31.  Paragraph 2(B)(6) of Argentina's panel request states that Argentina considers that the anti-dumping measures imposed by the European Union on imports of biodiesel, and the underlying investigation in that regard, are inconsistent with:

Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 because the European Union imposed and levied anti-dumping duties in excess of the margin of dumping that should have been established in accordance with Article 2 of the Anti‑Dumping Agreement.

The question before us is whether this text suffices to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly".

7.32.  The text of paragraph 2(B)(6) refers to Article 9.3 of the Anti-Dumping Agreement. That Article consists of a chapeau and three subparagraphs, each of which sets out different obligations. Taken in isolation, the reference to Article 9.3 in paragraph 2(B)(6) of Argentina's panel request may cause some confusion over which particular obligation contained therein is the object of the claim. However, paragraph 2(B)(6) contains an additional narrative referring to "anti-dumping duties in excess of the margin of dumping that should have been established in accordance with Article 2 of the Anti-Dumping Agreement". This narrative is clear enough to align it with the text of the chapeau of Article 9.3, which states that "[t]he amount of the anti-dumping duty shall not exceed the margin of dumping as established under Article 2". Thus, in our view, this additional narrative clarifies that the obligation in Article 9.3 at issue is that contained in the chapeau of the provision. Our understanding is further confirmed by the reference in paragraph 2(B)(6) of Argentina's panel request to Article VI:2 of the GATT 1994. That provision provides, in relevant part, that "a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product". The similarity between that provision and the chapeau of Article 9.3 of the Anti-Dumping Agreement provide a further indication that the reference to Article 9.3 in paragraph 2(B)(6) of Argentina's panel request concerns the obligation contained in the chapeau.

7.33.  Turning to the structure of Argentina's panel request, we note that paragraph 2(B)(6) of that request is part of a series of claims concerning the anti-dumping measures imposed by the European Union on imports of biodiesel from Argentina. In particular, it is preceded by claims under Article 2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 pertaining to alleged failures in the calculation of the cost of production and in the construction of the normal value for the producers under investigation, as well as those pertaining to the fairness of the comparison between the export price and the normal value. It is in this context that Argentina subsequently claims in paragraph 2(B)(6) that "the European Union imposed and levied anti-dumping duties in excess of the margin of dumping that should have been established in accordance with Article 2 of the Anti-Dumping Agreement." When read in this context, it is apparent that the claim in paragraph 2(B)(6) of Argentina's panel request is premised on a number of other claims pertaining to Article 2 of the Anti-Dumping Agreement. In our view, it is sufficiently clear from this context that Argentina makes a claim in paragraph 2(B)(6) of its panel request that the alleged inconsistencies with Article 2 in the calculation of the margin of dumping led, in turn, to the levying of an amount of anti-dumping duty that exceeds the level at which the margin of dumping would have been established if the disciplines of Article 2 had been properly observed.

7.34.  For the foregoing reasons, we reject the European Union's request and conclude that the claim under Article 9.3 of the Anti-Dumping Agreement set forth in paragraph 2(B)(6) of Argentina's panel request falls within our terms of reference.

7.2.3  Objection concerning the claims of inconsistency with Article VI:1 of the GATT 1994 in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request

7.35.  The European Union submits that Argentina's claims under Article VI:1 of the GATT 1994 against Article 2(5) of the Basic Regulation in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request fall outside the scope of the Panel's terms of reference as they are new claims which were not included in Argentina's request for consultations, and which expand the scope of the dispute.^[71]

7.2.3.1  Main arguments of the parties

7.2.3.1.1  European Union

7.36.  The European Union contends that Argentina's request for consultations did not contain any claims based on Article VI:1 of the GATT or any claims regarding Article 2(5) of the Basic Regulation based on the GATT 1994 more generally.^[72] For the European Union, the claims under Article VI:1 set out in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request expand the original scope of the dispute, and there are no facts that suggest that these new claims might reasonably be said to have evolved from the consultations.^[73] In particular, the European Union submits that nothing prevented Argentina from presenting the same claims in the request for consultations, as is evidenced by the fact that the request for consultations contains other claims regarding the same provision. Further, the European Union asserts that the addition of these new claims is indicative of Argentina's view that this provision has a different scope to the provisions of the Anti-Dumping Agreement listed in its request for consultations, and thus, the "essence" of these respective provisions and claims is different.^[74]

7.2.3.1.2  Argentina

7.37.  Argentina first notes that it has limited the claims set out in paragraphs 2(A)(1) and 2(A)(2) of its panel request to Article VI:1(b)(ii) of the GATT 1994.^[75] In addition, Argentina submits that nothing prevents it from adding provisions that are identical in scope to an existing claim on which consultations were held.^[76] Argentina considers that the claim does not expand the scope of the dispute, and, in its view, a comparison of the text and context of that provision, and the provisions of the Anti-Dumping Agreement cited in its request for consultations, demonstrates that those sets of provisions do not differ in essence or scope.^[77] Argentina draws on criteria mentioned by the panel in China – Broiler Products to argue that there is a strong connection between the panel request and the request for consultations due to the obligations at issue (obligation to construct normal value on the basis of the cost of production of the producers, and cost in the country of origin) being the same, and the factual circumstances leading to the alleged violation (failure to allow, in the costs calculation, for the use of costs in the country of production, and failure to require that the costs be calculated on the basis of producers' records) being identical.^[78] Argentina also submits that Article VI:1 of the GATT 1994 is cited in its request for consultations in respect of "as applied" claims that are similar to the "as such" claims at issue. On the basis of the foregoing, Argentina submits that "consultations were held" with the European Union on Article VI:1(b)(ii) of the GATT 1994 regarding Argentina's claims under paragraphs 2(A)(1) and 2(A)(2) of its panel request.^[79]

7.2.3.2  Arguments of the third parties

7.38.  Mexico submits that the Appellate Body has established that Articles 4 and 6 of the DSU do not require a precise and exact identity between the request for consultations and the panel request with respect to the "legal basis" of the complaint.^[80] According to Mexico, the Panel should look at whether the allegedly "new claims" actually derive from claims previously identified by Argentina in the request for consultations, and should consider whether "some connection" exists between the respective claims.^[81]

7.2.3.3  Evaluation by the Panel

7.39.  The European Union's objection concerns the relationship between the claims set forth in Argentina's consultations request, on the one hand, and those set forth in its panel request, on the other.

7.40.  Pursuant to Article 7.1 of the DSU, a panel's terms of reference are normally defined on the basis of the panel request made pursuant to Article 6.2 of the DSU. However, the request for consultations made under Article 4 of the DSU constitutes a prerequisite for the panel request.^[82] Articles 4 and 6 of the DSU "set forth a process by which a complaining party must request consultations, and consultations must be held, before a matter may be referred to the DSB for the establishment of a panel".^[83] Moreover, "consultations provide the parties an opportunity to define and delimit the scope of the dispute between them".^[84] As a result, the request for consultations circumscribes the scope of the panel request and, therefore, the panel's terms of reference.^[85]

7.41.  However, Articles 4 and 6 do not "require a precise and exact identity" between the specific provisions of the covered agreements identified in the request for consultations, and those identified in the panel request.^[86] This is because a complaining party may come to know of additional information during consultations – for example, it may develop a better understanding of the operation of a challenged measure – that could warrant revising the list of treaty provisions with which the measure is alleged to be inconsistent.^[87] Thus, it is not necessary that the provisions referred to in the request for consultations be identical to those set out in the panel request, provided that the "legal basis" in the panel request may reasonably be said to have evolved from the "legal basis" that formed the subject of consultations.^[88] In other words, the addition of provisions must not have the effect of changing the essence of the complaint.^[89]

7.42.  Paragraphs 2(A)(1) and (2) of Argentina's panel request provide, in relevant part:

Argentina considers that Article 2(5) of the Basic Regulation is inconsistent as such with, inter alia, the following provisions of the Anti-Dumping Agreement, the GATT 1994 and the Marrakesh Agreement Establishing the World Trade Organization ("Marrakesh Agreement"):

1. Article 2.2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, because these provisions do not permit to adjust or establish the cost of production on the basis of data or information other than that in the country of origin.

2. Articles 2.2, 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 for two reasons: first, since these provisions require that the costs be calculated on the basis of the records kept by the producers under investigation when such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration and do not permit to adjust or replace the costs actually incurred by the producers under investigation by other costs simply because they are considered to be artificially low or distorted; secondly, since these provisions require that the costs used be associated with the production and sale of the product under consideration.

7.43.  The corresponding paragraphs of Argentina's request for consultations appear to be paragraphs b(1) and (2), which set forth claims under Articles 2.2 and 2.2.1.1 of the Anti‑Dumping Agreement. These two paragraphs indicate that Argentina is seeking consultations with respect to:

Article 2(5) of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community in that it establishes that if costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets. This measure appears to be inconsistent as such with the following obligations of the European Union:

1. Article 2.2 of the Anti‑Dumping Agreement, which requires that the cost of production in the country of origin be used to determine the margin of dumping on the basis of a comparison between the export price and the production cost plus a reasonable amount for administrative, selling and general costs and for profits;

2. Article 2.2.1.1 of the Anti‑Dumping Agreement, which requires that costs normally be calculated on the basis of records kept by the exporter or producer under investigation … . (emphasis original; fn omitted)

7.44.  Neither Article VI:1 nor any other provision of the GATT 1994 is mentioned in these paragraphs of Argentina's request for consultations.^[90]

7.45.  As Article VI:1 of the GATT 1994 was added as a legal basis for the claims set out in paragraphs 2(A)(1) and 2(A)(2) of Argentina's panel request, we now consider whether the addition of this provision as a legal basis for those claims changes the essence of the complaint or whether the legal basis for these claims may reasonably be said to have evolved from the legal basis that formed the subject of consultations.

7.46.  We first consider the texts of the provisions at issue. Article VI:1 of the GATT 1994 provides, in relevant part^[91]:

[A] product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another:

(b) in the absence of such domestic price, is less than …

(ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit. (emphasis added)

7.47.  Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement provide, in relevant part, that:

2.2 When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits.

…

2.2.1.1 For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration. (emphasis added; fn omitted)

7.48.  Based on our understanding of the foregoing extracts, we consider that there is a close correlation between the content – in terms of the obligations imposed – of Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement, on the one hand, and Article VI:1(b)(ii) of the GATT 1994, on the other. In particular, these provisions concern, inter alia, whether a product is to be considered as being introduced into the commerce of an importing country at less than its normal value by reference to the cost of production in the country of origin in instances where domestic prices are unavailable or unsuitable.

7.49.  We next consider the texts of the claims in Argentina's request for consultations, on the one hand, and the corresponding claims in Argentina's panel request, on the other. As noted above, paragraph 2(A)(1) of Argentina's panel request specifically claims that Article 2(5) of the Basic Regulation is inconsistent with Article 2.2 of the Anti-Dumping Agreement and with Article VI:1 of the GATT 1994 on the basis that these provisions "do not permit to adjust or establish the cost of production on the basis of data or information other than that in the country of origin".^[92]

7.50.  This can be juxtaposed against Argentina's request for consultations. The consultations request alleges that whereas Article 2.2 of the Anti-Dumping Agreement "requires that the cost of production in the country of origin be used to determine the margin of dumping"^[93], Article 2(5) of the Basic Regulation:

[E]stablishes that if costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets.^[94]

7.51.  Paragraph 2(A)(2) of Argentina's panel request claims that Article 2(5) of the Basic Regulation is inconsistent with Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and with Article VI:1 of the GATT 1994, on the basis that these provisions:

[R]equire that the costs be calculated on the basis of the records kept by the producers under investigation when such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration and do not permit to adjust or replace the costs actually incurred by the producers under investigation by other costs simply because they are considered to be artificially low or distorted; … [and] that the costs used be associated with the production and sale of the product under consideration.^[95]

7.52.  This can be juxtaposed against the language of paragraph b(2) of Argentina's consultations request, which alleges, for the same reasons as under paragraph b(1), that Article 2(5) of the Basic Regulation is inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement, which "requires that costs normally be calculated on the basis of records kept by the exporter or producer under investigation".

7.53.  When these claims are compared, it is apparent to us that they are sufficiently similar in terms of the alleged circumstances leading to the alleged violation and that the "essence" of these claims is the same. In particular, the claims under paragraph 2(A)(1) of the panel request and b(1) of the consultations request both concern the fact that Article 2(5) is inconsistent with an alleged prohibition against determining the cost of production on a basis other than data or information in the country of origin. The claims under paragraph 2(A)(2) of the panel request and under paragraph b(2) of the consultations request both take issue with the fact that Article 2(5) of the Basic Regulation allegedly makes it permissible to determine the cost of production on a basis other than the records kept by the producers, despite those records conforming to the specified requirements.

7.54.  In view of the foregoing, we consider that there is a close and clear relationship between the claims set forth in the request for consultations, on the one hand, and those included in the panel request, on the other, in terms of the obligations at issue, the provisions cited, the measure being challenged, and the alleged violation resulting from this measure. Therefore, in our view, the claims in the panel request may reasonably be said to have evolved from those in the request for consultations such that the essence of the dispute has not been changed by the addition of Article VI:1 as a legal basis for the claims included in the panel request.^[96]

7.55.  For these reasons, we conclude that these claims under Article VI:1 of the GATT 1994 do fall within our terms of reference.

7.2.4  Objection concerning the claim of inconsistency with Article 2.2 of the Anti‑Dumping Agreement in paragraph 2(A)(2) of Argentina's panel request

7.56.  The European Union initially requested that the Panel find that the "as such" claims of inconsistency against Article 2(5) of the Basic Regulation with the requirement in Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement that "the costs used be associated with the production and sale of the product under consideration" contained in paragraph 2(A)(2) of Argentina's panel request are new claims not included in Argentina's request for consultations and, as a result, fall outside the Panel's terms of reference.^[97] Specifically, the European Union contended that these claims in Argentina's panel request introduce a new legal basis not found in Argentina's consultations request, namely, Article 2.2 of the Anti-Dumping Agreement, and further, that they introduce a new type of complaint, namely, the alleged use of costs not "associated with the production and sale of the product under consideration".^[98] As mentioned above, in its first written submission, the European Union appeared to take the view that Argentina had abandoned the claim against Article 2(5) of the Basic Regulation for the "second reason" mentioned in paragraph 2(A)(2) of Argentina's panel request, namely, that the costs used are allegedly not "associated with the production and sale of the product under consideration".^[99] As we discuss above, the parties appear to concur that this aspect of the European Union's request for a preliminary ruling is moot.^[100] However, we also note that, in its discussion of one of the objections that were not moot, the European Union stated the following^[101]:

In these circumstances, the question of whether the claims against Article 2(5) of the Basic Regulation based on Article VI:1 of the GATT are within the Panel's terms of reference is of very limited value for the present dispute. For this reason, the European Union invites the Panel to consider whether this claim is properly within its terms of reference, but will not discuss the issue any further.[*]

_______________

[*fn original]⁴³ The same is true for Argentina's reference to Article 2.2 of the Anti‑Dumping Agreement, mentioned in Paragraph 2(A)2 of its Panel Request and in paragraph 133 of its First Written Submission.

7.57.  Thus, the European Union appears to call upon the Panel to consider whether Argentina's reference to Article 2.2 of the Anti-Dumping Agreement in paragraph 2(A)(2) of its panel request insofar as it relates to the first basis specified in paragraph 2(A)(2) – namely, the EU authorities' alleged failure to calculate the costs on the basis of the records kept by the producers/exporters under investigation – is within the Panel's terms of reference.^[102] Accordingly, we now consider the European Union's objection in this respect.

7.2.4.1  Main arguments of the parties

7.2.4.2  European Union

7.58.  With respect to its objection pertaining to Article 2.2 of the Anti-Dumping Agreement, the European Union argues that the allegedly new claims in paragraph 2(A)(2) of Argentina's panel request expand the scope of the dispute and change the essence of the complaint by introducing a new legal basis. In particular, the European Union argues that the corresponding portion of Argentina's request for consultations only included a claim based on Article 2.2.1.1 of the Anti‑Dumping Agreement, rather than on Article 2.2.^[103] The European Union submits that the addition of Article 2.2 could not "'reasonably be said to have evolved' from the consultations" given that Argentina was fully aware of the European Union's interpretation and application of Article 2(5) of the Basic Regulation at the time of its consultations request, and was aware of all the facts that would have allowed it to articulate this claim in its consultations request, particularly as Argentina's consultations request already included "as applied" claims alleging a violation of Article 2.2.^[104]

7.2.4.2.1  Argentina

7.59.  Argentina disagrees with the European Union's contention that it added a provision in the panel request. Argentina argues that paragraph 2(A)(2) of its panel request should not be read by reference to paragraph b(2) of its request for consultations only. Rather, Argentina submits that the issue of the calculation of costs for the purpose of the construction of normal value is also addressed in paragraph b(1) of its request for consultations, which refers to Article 2.2 of the Anti‑Dumping Agreement. On this basis, Argentina argues that consultations were held on Article 2.2 and with respect to the same substantive obligations at issue. Moreover, Argentina argues, there is a clear and logical connection between Article 2.2.1.1 and Article 2.2, the former being a specific provision governing the calculation of costs for the construction of normal value while the latter concerns, among other matters, the construction of normal value and its components, including the cost of production. Argentina submits that consultations on the calculation of costs for the construction of normal value pursuant to Article 2.2.1.1 logically also cover the construction of normal value pursuant to Article 2.2, when such costs are being included in the construction of normal value. Therefore, even assuming that Argentina had only referred to Article 2.2.1.1 in its consultations request, the inclusion of Article 2.2 in the panel request can "reasonably be said to have evolved" from the consultations.^[105]

7.2.4.2.2  Arguments of the third parties

7.60.  China submits that Article 2.2 of the Anti-Dumping Agreement was invoked to challenge Article 2(5) of the Basic Regulation in both the request for consultations and the panel request.^[106] Thus, it appears to China that Argentina has not added a new legal basis in the panel request, but has merely clarified or reformulated the connection between the challenged measure and the legal basis. Further, China submits that Articles 4.4 and 6.2 of the DSU set different requirements for the request for consultations and the panel request; in particular, it is sufficient for a consultations request to include an indication of the legal basis for the complaint. Therefore, the terms "which requires" in the consultations request, in contrast with the terms "because" or "for two reasons" used in the panel request, suggest that Argentina's intention in the consultations request was not to "present the problem clearly" but just to indicate the legal basis of the claim.^[107]

7.2.4.2.3  Evaluation by the Panel

7.61.  As we have noted in the previous subsection, the claim set forth in paragraph 2(A)(2) of Argentina's panel request corresponds to the claim set forth in paragraph b(2) of Argentina's request for consultations. Hence, Argentina's panel request added a reference to Article 2.2 in a claim which already cited Article 2.2.1.1.

7.62.  In light of the close relationship and – to some extent – even identity between the measure that is being challenged, the grounds for the alleged violation, and the obligations and provisions involved, we are of the view that the Article 2.2 claim can reasonably be said to have evolved from the Article 2.2.1.1 claim set forth in the request for consultations.^[108] In particular, with respect to the obligations at issue, we note that Article 2.2.1.1 is a subparagraph of Article 2.2 and serves to further refine the obligation set forth under that provision as it provides how the "cost of production in the country of origin" is to be determined. Moreover, the corresponding paragraphs of the request for consultations and of the panel request make it clear that Argentina takes issue in both documents with the fact that Article 2(5) of the Basic Regulation allegedly permits not constructing the cost of production on the basis of producers' records. The language of Argentina's panel request clearly implies that the alleged violation of Article 2.2 is closely related to the alleged violation of Article 2.2.1.1.

7.63.  Moreover, we note that Argentina's consultations request already included an "as applied" claim under Article 2.2 challenging the EU authorities' failure to calculate the costs on the basis of the records kept by the producers/exporters under investigation similar to the "as such" claim to which the European Union objects. Argentina's consultations request also included an "as such" claim under Article 2.2 based on the requirement to construct the normal value using the cost of production in the country of origin. The fact that Argentina's consultations request already included these claims under Article 2.2, does not, in our view, mean that the scope of the dispute was broadened by the addition in its panel request of an "as such" claim under Article 2.2 challenging the failure to calculate the costs on the basis of the records kept by the producers/exporters under investigation. In particular, in our view, the addition of a reference to Article 2.2 in a claim already listing Article 2.2.1.1 is indicative of a further refinement of the legal basis for the claim that was in the request for consultations. Thus, it does not follow that the addition of Article 2.2 in paragraph 2(A)(2) of Argentina's panel request could not reasonably have evolved from the corresponding claim in Argentina's request for consultations on the basis that this provision had already been cited in the request for consultations in another sense.

7.64.  In light of the foregoing, we find that the claim of inconsistency with Article 2.2 of the Anti‑Dumping Agreement set forth in paragraph 2(A)(2) of Argentina's panel request falls within our terms of reference.

7.65.  Having considered the request of the European Union for a preliminary ruling on the terms of reference of the Panel, we now turn to address the "as such" and "as applied" claims of Argentina.

7.3  Argentina's claims concerning whether Article 2(5), second subparagraph, of the Basic Regulation is inconsistent "as such" with Articles 2.2, 2.2.1.1 and 18.4 of the Anti‑Dumping Agreement, Article VI:1(b)(ii) of the GATT 1994, and Article XVI:4 of the WTO Agreement

7.3.1  Introduction

7.66.  Argentina makes a number of claims pertaining to Article 2(5), second subparagraph, of the Basic Regulation, both "as such" and with respect to the application of this provision in the EU anti-dumping measures on biodiesel from Argentina.

7.67.  Argentina's claims raise complex questions pertaining to the interpretation of Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 that have not been addressed previously by panels or the Appellate Body concerning the following issues:

a.    whether, under Article 2.2.1.1 of the Anti-Dumping Agreement, an investigating authority may find that a producer/exporter's records do not "reasonably reflect the costs associated with the production and sale of the product under consideration" on the ground that the records reflect costs (notably for inputs) that the authority considers to be abnormally or artificially low due to an alleged distortion; and

b.    whether an investigating authority may, under Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, adjust or calculate the producer/exporter's costs of production by using information pertaining to prices prevailing on other markets than the market of the country of origin when it has been determined that a producer/exporter's records do not "reasonably reflect" the costs of production and sale.

7.68.  In this section, we consider Argentina's claims that Article 2(5), second subparagraph, of the Basic Regulation is "as such" (i.e. independently of its application in specific instances), inconsistent with the covered agreements. We address Argentina's "as applied" claims in the following section of this Report.

7.69.  With respect to its claims concerning Article 2(5), second subparagraph, of the Basic Regulation "as such", specifically, Argentina claims that:

a.    by providing that the authorities shall reject or adjust the cost data of the producers/exporters as included in their records when those costs reflect prices which are "abnormally or artificially low" because they are affected by an alleged distortion, Article 2(5), second subparagraph, of the Basic Regulation is inconsistent with Article 2.2.1.1 of the Anti‑Dumping Agreement; and this violation in turn leads to a violation of Article 2.2 of the Anti‑Dumping Agreement and of Article VI:1(b)(ii) of the GATT 1994;

b.    by providing that the costs shall be adjusted or established in certain cases "on any other reasonable basis, including information from other representative markets", Article 2(5), second subparagraph, of the Basic Regulation is inconsistent with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994; and

c.    as a consequence of these violations, Article 2(5) of the Basic Regulation is inconsistent with Article XVI:4 of the WTO Agreement and Article 18.4 of the Anti-Dumping Agreement.^[109]

7.3.2  Relevant provisions of the covered agreements

7.70.  Articles 2.2 and 2.2.1.1 of the Anti‑Dumping Agreement provide as follows:

2.2 When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits. (fn omitted)

…

2.2.1.1  For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration. Authorities shall consider all available evidence on the proper allocation of costs, including that which is made available by the exporter or producer in the course of the investigation provided that such allocations have been historically utilized by the exporter or producer, in particular in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditures and other development costs. Unless already reflected in the cost allocations under this sub‑paragraph, costs shall be adjusted appropriately for those non‑recurring items of cost which benefit future and/or current production, or for circumstances in which costs during the period of investigation are affected by start‑up operations.[*]

_______________

[*fn original]⁶ The adjustment made for start-up operations shall reflect the costs at the end of the start-up period or, if that period extends beyond the period of investigation, the most recent costs which can reasonably be taken into account by the authorities during the investigation.

7.71.  Article VI:1 of the GATT 1994 reads, in relevant part:

The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another

…

       (b)    … is less than …

…

(ii)   the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit.

7.3.3  Factual background

7.72.  Article 2 of the Basic Regulation provides, in relevant part:

Article 2

Determination of dumping

A. NORMAL VALUE

1. The normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country.

However, where the exporter in the exporting country does not produce or does not sell the like product, the normal value may be established on the basis of prices of other sellers or producers.

…

2. Sales of the like product intended for domestic consumption shall normally be used to determine normal value if such sales volume constitutes 5% or more of the sales volume of the product under consideration to the Community. However, a lower volume of sales may be used when, for example, the prices charged are considered representative for the market concerned.

3. When there are no or insufficient sales of the like product in the ordinary course of trade, or where because of the particular market situation such sales do not permit a proper comparison, the normal value of the like product shall be calculated on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits, or on the basis of the export prices, in the ordinary course of trade, to an appropriate third country, provided that those prices are representative.

A particular market situation for the product concerned within the meaning of the first subparagraph may be deemed to exist, inter alia, when prices are artificially low, when there is significant barter trade, or when there are non-commercial processing arrangements.

…

5. Costs shall normally be calculated on the basis of records kept by the party under investigation, provided that such records are in accordance with the generally accepted accounting principles of the country concerned and that it is shown that the records reasonably reflect the costs associated with the production and sale of the product under consideration.

If costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets.

7.73.  Argentina challenges only the second subparagraph of Article 2(5) above and not any other part or provision of the Basic Regulation.^[110]

7.3.4  Main arguments of the parties

7.3.4.1  Argentina

7.74.  Argentina argues that the second subparagraph of Article 2(5) contains a rule that:

[W]hen the costs associated with the production and sale of the product concerned are not reasonably reflected in the records of the producer concerned, that is, according to the European Union, when the prices of the raw materials included in the records of the exporters are considered as being abnormally or artificially low because the market is regulated or because of some alleged distortion, then they must be adjusted or established on the basis of the costs of other producers in the same country, or on any other reasonable basis, including information from other representative markets.^[111]

7.75.  Argentina adds that this rule is "reflected in the continued and consistent practice of the European Union"^[112], but indicates that it is not challenging this alleged consistent practice as a separate measure at issue.

7.76.  In support of its interpretation of the second subparagraph of Article 2(5), Argentina submits evidence pertaining to the text of this provision, its legislative history, its consistent application by the EU authorities, and judgments of the General Court of the European Union.

7.77.  With respect to the text of the provision at issue, Argentina argues that Article 2(5), first subparagraph, only repeats the general rule under Article 2.2.1.1 that when the records reasonably reflect the costs associated with the production and sale of the product under consideration and are in accordance with generally accepted accounting principles (GAAP), those records must be used. However, the first subparagraph does not lay down the criteria that must lead to the determination that the records do not reasonably reflect the costs. Argentina submits that it is the second subparagraph of Article 2(5) that gives meaning and content to the situations in which the records are to be found not to reasonably reflect the costs of production and sale of the product under investigation. According to Argentina, it is the second subparagraph that leads to the determination that records do not reasonably reflect costs if the prices for inputs are artificially or abnormally low due to an alleged distortion. This is clarified by the fact that the second subparagraph requires the authorities to adjust or establish the costs on any other reasonable basis, including information from other representative markets, where information from the domestic market cannot be used. Thus, Argentina argues, the second subparagraph of Article 2(5) provides the legal basis for disregarding the records of the producers in those situations.^[113] Argentina also argues that Article 2(5), second subparagraph, establishes a mandatory rule in this respect: where this condition is met, then the second part of the sentence automatically applies, i.e. the recorded costs must be adjusted or established on another basis, including potentially, "from other representative markets".^[114]

7.78.  With respect to the legislative history^[115] of the second subparagraph of Article 2(5), Argentina submits that this subparagraph was introduced by Council Regulation 1972/2002 at the same time as the Russian Federation was granted full market economy status, with the purpose of allowing the EU authorities to continue to apply non-market economy techniques in investigations involving products from the Russian Federation. Argentina draws attention to Recital 4 of Council Regulation 1972/2002, which it submits sheds light on the meaning of Article 2(5), second subparagraph, by making it clear that it was added in order to provide a legal basis for the authorities to reject the cost data included in the records when those costs are found to be "artificially low" or "abnormally low" because they are affected by a "distortion" and to adjust or replace these costs by data which are not affected by such "distortion".^[116] Argentina also refers to Article 2(3), second subparagraph, of Council Regulation 1972/2002, which was added to clarify what circumstances could be considered as constituting a "particular market situation". Argentina argues that, taken together, Recital 4 and the second subparagraph of Article 2(3) clarify that the opening phrase of the second subparagraph of Article 2(5), viz. "[i]f costs associated with the production and sale of the product … are not reasonably reflected in the records", refers to situations where prices are abnormally or artificially low or affected by a distortion.

7.79.  With respect to the consistent practice of the EU authorities in applying the second subparagraph of Article 2(5), Argentina argues that the EU authorities have followed the practice that if the prices of certain raw materials are, in their view, "abnormally or artificially low" in comparison with the prices in other markets, that means that the costs associated with the production and sale of the product under investigation are not reasonably reflected in the producer's records, notwithstanding the fact that the records may have accurately reported the actual prices paid by the producers/exporters.

7.80.  Argentina refers the Panel to four judgments of the General Court of Justice of the European Union in which the General Court considered issues pertaining to the application of Article 2(5).^[117] Argentina argues that these judgments, and particularly the judgment of the Court in Acron, confirm that the second subparagraph to Article 2(5) covers situations where prices are regulated or distorted.^[118]

7.81.  Argentina claims that Article 2(5), second subparagraph, is inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement (and, as a consequence, with Article 2.2 of the Anti‑Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994) because it requires the EU authorities to determine that a producer's records do not reasonably reflect the costs of production in situations in which the records reflect prices which are artificially or abnormally low, by reference to prices prevailing in other markets, whereas Article 2.2.1.1 requires that that determination be solely made by reference to the costs actually incurred by the producer and reflected in its records.^[119] In addition, Argentina submits that even if the authorities had the discretion alleged by the European Union, the mere fact that Article 2(5), second subparagraph, provides for the possibility to find that the records do not reasonably reflect the costs on the ground that costs are artificially or abnormally low would render it inconsistent with Article 2.2.1.1.^[120]

7.82.  In addition, Argentina claims that Article 2(5), second subparagraph, is inconsistent with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 as it provides that, where the costs of other producers or exporters in the same country are not available or cannot be used, the costs shall be adjusted or established on "any other reasonable basis, including information from other representative markets", i.e. it provides for the use of costs not in the country of origin in establishing a producer's costs of production.

7.83.  By contrast, Argentina argues, Article 2.2 of the Anti-Dumping Agreement requires that, when the margin of dumping is established by comparison with a constructed normal value, the comparison shall be made with "the cost of production in the country of origin".^[121] Argentina submits that the term "shall" denotes an obligation, and the term "country of origin" refers to the exporting country. Article V1:1(b)(ii) of the GATT 1994 similarly refers to "the cost of production of the product in the country of origin".^[122] For Argentina, the "cost of production in the country of origin" refers to the "price to be paid for the act of producing" in the country of origin, which necessarily implies that the evidence or data used are those in the country of origin.^[123] Assuming for the sake of argument that evidence outside the country of origin could be used, Argentina considers that adjustments would need to be made in order to ensure that it correctly reflects the situation in the country of origin^[124], and it would need to be demonstrated how such evidence reflects the "cost of production" in the exporter's country of origin.^[125] On this basis, Argentina rejects what it considers to be an artificial distinction drawn by the European Union between the "cost" and the "evidence", whereby evidence from outside the country of origin could be used to determine the cost of production in the country of origin.

7.84.  In this respect, Argentina argues that in Article 2(5), second subparagraph, the "information from other representative markets" constitutes the evidence which is used to determine the cost of production. However, the mere fact that evidence is used "for the purposes" of determining the "cost of production in the country of origin" does not demonstrate that such evidence reflects the situation in the country of origin. Moreover, Argentina submits that the consistent practice of the EU authorities actually confirms the absence of a "connection" or "nexus" between the evidence used, namely the information from other representative markets, and the cost of production in the "country of origin".^[126]

7.85.  Argentina argues that, to establish that a measure is "as such" inconsistent with the covered agreements, it is not necessary to demonstrate that it leads to WTO-inconsistent results in each and every case. Rather, it is sufficient to demonstrate that the rule will necessarily lead to WTO-inconsistent results. Thus, Argentina considers that, whether Article 2(5), second subparagraph, grants discretion to the authorities or not is irrelevant; insofar as Article 2.2 prohibits the construction of normal value on a basis other than the cost of production in the country of origin, the fact that Article 2(5), second subparagraph, provides for the use of a basis other than the cost of production in the country of origin renders that measure inconsistent with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.^[127]

7.86.  In any event, Argentina argues, Article 2(5), second subparagraph, does not give the authorities "broad discretion" as is claimed by the European Union. Argentina submits that, under Article 2(5), second subparagraph, in every case where domestic information is not available or cannot be used, the authorities have to adjust or replace the costs on any other reasonable basis, including information from other representative markets.^[128] Argentina argues that "any other reasonable basis" necessarily refers to information outside the country of origin^[129], and that "other representative markets" necessarily is not "the cost of production in the country of origin". Argentina asserts that the consistent practice of the EU authorities confirms the absence of discretion since, in the cases referred to by Argentina, where the authorities have found that prices were "artificially low" or "abnormally low" because of a distortion, they have used information other than information from the country of origin.^[130]

7.3.4.2  European Union

7.87.  The European Union argues that, to succeed in its "as such" claims, Argentina must establish that Article 2(5) requires the EU authorities to act inconsistently with the relevant provisions of the covered agreements in all cases.^[131] According to the European Union, neither the first nor the second subparagraph of Article 2(5) of the Basic Regulation mandates the EU authorities to act in any particular manner but, quite to the contrary, both provisions allow the EU authorities discretion.^[132]

7.88.  The European Union submits that the scope, meaning and content of the second subparagraph of Article 2(5) are clear "on its face", and that therefore, the consistency of this measure with the covered agreements must be assessed on the basis of the text of the legal instrument alone.^[133] The European Union considers that Argentina attributes to the second subparagraph of Article 2(5) a meaning not found in its text.^[134] The European Union argues that it is clear from the text of Article 2(5) that the determination whether a producer's records "reasonably reflect" the costs of production and sales is made under the first subparagraph of Article 2(5), and not under the second subparagraph of that provision.^[135] The European Union asserts that the second subparagraph only describes what the authorities can do when one of the provisos of the first subparagraph is not met, and in such situations, gives them alternative options for establishing or adjusting the costs of production. The European Union also submits that the text of Article 2(5) does not include the terms – "abnormally low", "artificially distorted", "reflect market values", "regulated market" – used by Argentina in describing the alleged measure; that the second subparagraph does not define the notion of records that "reasonably reflect costs"; and that it does not impose on the authorities the obligation to treat as "unreasonable" cost data that are "abnormally or artificially low" or "distorted".^[136]

7.89.  The European Union argues that even if the scope, meaning and content of the second subparagraph of Article 2(5) were not clear "on its face", quod non, none of the other evidence invoked by Argentina supports Argentina's reading of the measure at issue.

7.90.  With respect to the legislative history, the European Union argues that the introduction of the second subparagraph in 2002 had no impact on the scope, meaning or content of the terms "reasonably reflects costs" in Article 2(5) since those terms already existed in that Article and the EU authorities had determined that records did not reasonably reflect costs based on similar grounds in many cases even prior to that date.^[137] The European Union also argues that Recital 4 of Council Regulation 1972/2002 and the second subparagraph of Article 2(3) are not relevant to the interpretation of the second subparagraph of Article 2(5) as they pertain to only one of the two situations under the Basic Regulation where the authorities may construct the normal value, i.e. where there is a "particular market situation".^[138]

7.91.  With respect to the evidence submitted by Argentina on the "consistent practice" of the EU authorities applying the measure, the European Union argues that Argentina needs to establish that: (i) the practice forms an integral part of (i.e. is not distinct from) the measure itself and that it is necessarily applied in all instances; and (ii) that the practice is required by the measure and constitutes a binding requirement to apply the measure in the same way in all cases.^[139] The European Union considers that Argentina fails to establish any of these requirements. Moreover, the European Union argues that the examples of alleged consistent practice of the EU authorities cited by Argentina do not support its interpretation because: (i) in the precedents cited by Argentina, the EU authorities invoke the first, rather than the second, subparagraph of Article 2(5) in the analysis of whether company records "reasonably reflect" costs; (ii) Argentina cites too few examples and its examples mostly pertain to the issue of dual pricing of gas in Russia; and (iii) Argentina excludes cases where the EU authorities found that company records did not reasonably reflect costs on grounds other than the artificially low value of inputs.^[140]

7.92.  The European Union argues that the judgments of the General Court of the European Union cited by Argentina do not support Argentina's assertions because: (i) they make clear that the determination of whether company records "reasonably reflect" costs is made pursuant to the first rather than the second subparagraph of Article 2(5); and (ii) they confirm that Article 2(5) entitles – but does not require – the EU authorities to find that the records do not "reasonably reflect costs" if the prices are "abnormally or artificially low".^[141]

7.93.  In sum, the European Union argues that Article 2(5), second subparagraph, is not inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement because it does not govern the determination whether producers' costs are reasonably reflected in their records or provide criteria for the authorities to make such a determination, let alone require them to reach a determination that the costs are not reasonably reflected in a producer's records in the situations identified by Argentina. Moreover, the European Union considers that Article 2.2.1.1 does not require an authority to determine whether a producer's records "reasonably reflect" the costs of production and sale solely with reference to the costs actually incurred by that producer, but allows it to examine whether the costs themselves are "reasonable".^[142]

7.94.  With respect to Argentina's claim under Article 2.2 of the Anti-Dumping Agreement, the European Union argues that Argentina misinterprets Article 2(5), second subparagraph, when it asserts that this provision establishes a mandatory rule. According to the European Union, this provision affords the EU authorities broad discretion in choosing between different options to establish or adjust the costs, imposes no limitation or direction as to what constitutes an "other representative market", and does not prescribe that the latter should be a market outside the country of origin.^[143] Thus, the European Union submits, the text of Article 2(5), the judgments of EU courts, and the EU authorities' determinations in prior investigations all show that Article 2(5), second subparagraph, does not require the authorities to use information from other countries in all cases, as it does not require them to engage in any particular conduct and, much less, in any conduct necessarily inconsistent with the covered agreements.^[144]

7.95.  In addition, the European Union argues that, although Article 2.2 of the Anti‑Dumping Agreement and Article VI:1 of the GATT 1994 require that an investigating authority determine the costs of production in the country of origin, the evidence that may be used in constructing these costs is not subject to this limitation.

7.96.  In particular, in respect of Article 2.2 of the Anti-Dumping Agreement, the European Union submits that the determination of a firm's costs of production in a particular country will typically require evidence pertaining to that country, but it cannot be excluded that evidence relating to that determination might originate in other countries. For example, evidence of the cost of imports might be verified by means of invoices issued by exporters in other countries.^[145] Thus, the European Union contends that there is a conceptual distinction between the "costs", on the one hand, and the "evidence" pertaining to the determination of those costs, on the other.^[146] The European Union argues that support for the distinction between costs and the evidence pertaining to the determination of costs can be found in the context of Article 2.2. The European Union refers in particular to the second sentence of Article 2.2.1.1 in this regard. The European Union notes that whereas "costs" in Article 2.2 refers to "the country of origin", the requirement to consider "all available evidence" in Article 2.2.1.1 in the proper allocation of such costs is not restricted in that way^[147], and that Article 6.12 of the Anti-Dumping Agreement expressly provides that various groups outside the country of origin can provide information relevant to the investigation regarding dumping.^[148] The European Union argues that the conditional permission in Article 2.2.2 of the Anti‑Dumping Agreement to calculate amounts for administrative, selling, and general costs using "any reasonable method" supports its understanding, because it implies that Article 2.2, as a whole, does not impose an absolute prohibition on the use of data on the cost of production from countries other than the country of origin.^[149]

7.97.  In respect of Article VI:1(b)(ii) of the GATT 1994, the European Union submits that, pursuant to Article 17.6(i) of the Anti-Dumping Agreement, a criterion of reasonableness applies to the evidence used by investigating authorities in establishing the exporter's costs in the country of origin.^[150]

7.3.5  Arguments of the third parties^[151]

7.98.  Australia considers that the mandatory/discretionary distinction is relevant to the Panel's analysis of Argentina's "as such" claims in the present dispute. Australia refers to the Appellate Body Report in US – 1916 Act, which endorsed the approach developed by GATT panels that only legislation which mandates WTO-inconsistent conduct can be challenged "as such".^[152] Australia submits that this approach was recently confirmed by the Appellate Body in US – Carbon Steel (India), in which the Appellate Body rejected "as such" claims on the basis that the challenged measure did not require inconsistent conduct but instead was of a "discretionary nature".^[153] Australia further notes that Argentina does not challenge the European Union's practice of application of Article 2(5), but only the provision itself. In this regard, Australia considers that the Appellate Body's findings in US – Carbon Steel (India) suggest that the practice must not be distinct and separate from Article 2(5) and that it must require the European Union to engage in inconsistent conduct.^[154]

7.99.  Australia submits that the "country of origin" requirement in Article 2.2 does not preclude evidence from being obtained from outside the country concerned.^[155] However, the authorities should explain why the evidence is useful for providing a basis for comparison to determine dumping margins.

7.100.  China submits that, in view of the special link between the first and second subparagraphs of Article 2(5), these two paragraphs simultaneously require the authority to make the same determination as to whether the company records "reasonably reflect" costs. China considers that, read together with Recital 4 of Council Regulation 1972/2002, the second subparagraph of Article 2(3) and Recital 3 of the same Council Regulation, the second subparagraph of Article 2(5) appears to require the investigating authority to reject the records of the parties concerned on the ground that "prices are artificially low" or for reasons relating to the situation of the entire market caused by governmental policy interventions.^[156] China argues that this reading is confirmed by the EU authorities' practice in applying Article 2(5), which shows that they apply the two subparagraphs simultaneously, and that in determining whether the records reasonably reflect the costs, they compare the producer's costs with hypothetical costs that would be borne by a producer in a theoretical market where the prices of relevant inputs were not affected by governmental policy interventions.^[157]

7.101.  China argues that in order for a rule or norm of general and prospective application to be found to be inconsistent, "as such", with the Anti-Dumping Agreement, it is not necessary that it "mandate" a WTO-inconsistent outcome in every case; rather the complainant must provide evidence demonstrating that, in defined circumstances, the application of the impugned rule will necessarily lead to a violation of that Member's WTO obligations. China argues that Article 2(5), second subparagraph, appears necessarily to require the EU authorities to reject records of a producer/exporter that accurately account for the costs incurred by that producer/exporter for the sole reason that the recorded costs are "artificially low" compared to the hypothetical costs that would be incurred in a market unaffected by governmental policy interventions. This being the case, China argues, the impugned provision is inconsistent with Article 2.2.1.1. China also considers that Article 2(5), second subparagraph, appears to require, in the same situations, the adjustment of the costs recorded in the producer/exporter's records on the basis of information outside the country of origin when the costs of other producers/exporters in the same country are also "artificially low" and other "reasonable" bases are not available. China submits that Article 2.2 of the Anti-Dumping Agreement requires that the cost of production that may be used to construct normal value must be the cost "in the country of origin".^[158] For China, evidence in the form of prices from outside the country of origin will not itself reflect costs in the country of origin.^[159] China considers that by explicitly authorizing the EU authorities to act in violation of Article 2.2 by using information outside the country of origin, Article 2(5), second subparagraph, is "as such" inconsistent with Article 2.2 of the Anti-Dumping Agreement.^[160]

7.102.  Colombia argues that a complainant bringing an "as such" claim must demonstrate that the challenged law has general and prospective application.^[161] Colombia refers to previous panel and Appellate Body reports that indicate that evidence in support of an "as such" claim is not limited to the text of the measure, but can include, as appropriate, decisions and jurisprudence of domestic courts on the meaning of such laws, doctrine issued by legal experts and examples of application of the challenged law.^[162] Thus, Colombia argues, the Panel should take into consideration all the evidence submitted by the parties in examining Argentina's "as such" claims.^[163]

7.103.  Indonesia submits that previous Appellate Body reports suggest that evidence submitted by Argentina in support of its "as such" claim beyond the text of the measure, including the legislative background, administrative practice and domestic court rulings, must be reviewed by the Panel.^[164] Indonesia further submits that Recital 4 of Council Regulation 1972/2002 and the application of Article 2(5) in previous anti-dumping investigations support the above understanding of the scope and content of the challenged provision.^[165]

7.104.  Indonesia considers that the second subparagraph of Article 2(5) of the Basic Regulation establishes a rule which mandates WTO-inconsistent conduct by the European Union and that it constitutes a WTO-inconsistent condition or requirement in the form of a "non‑distortion" test not provided for in the Anti-Dumping Agreement or in any of the other WTO covered agreements.^[166] Indonesia submits that this requirement has been "woven" into the requirement that the costs be "reasonably reflected" in the records of the investigated producer/exporter.^[167] Indonesia also submits that in case the producer/exporter's costs are found to be distorted, the EU authorities are required to replace or adjust them with prices from outside the country of origin.^[168]

7.105.  With respect to Argentina's claims under Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, Indonesia submits that, once an investigating authority decides to construct the normal value under Article 2.2, it does not have the discretion to use third country prices or cost data.^[169] By unequivocally referring to the cost of production in the "country of origin", Article 2.2 expressly limits the cost of production to be assessed on the basis of, and to be based on, costs that exist in the country where the investigated producer/exporter produces the product under consideration.^[170] The text and context of Article 2.2 do not permit any exceptions to this rule. For Indonesia, once out-of-country evidence is used, the actual cost of the producer/exporter in the country of origin is disregarded and replaced by the out-of-country evidence or cost.^[171]

7.106.  The Russian Federation notes that amendments to Articles 2(3) and 2(5) of the Basic Regulation were introduced simultaneously with the granting of full market economy status to the Russian Federation in 2002. The Russian Federation considers that these amendments were introduced to allow the EU authorities to use data from markets other than the country of origin for constructing the normal value. In particular, the amendment to Article 2(5) gave the EU authorities the right to reject or adjust costs reflected in the producers/exporters' records and to establish such costs based on "information from other representative markets". The Russian Federation argues that this practice is similar to the EU authorities' treatment of non‑market economies applied to the Russian Federation before it was granted market economy status.^[172] The Russian Federation argues that the relevance of the mandatory/discretionary distinction is "highly questionable", because the distinction is not based on any provision of the covered agreements.^[173]

7.107.  Saudi Arabia submits that the ordinary meaning of Article 2.2 is unequivocal in that it only permits investigating authorities to construct the normal value on the basis of the "cost of production in the country of origin" and not on the basis of costs of production in a third country market or the world market.^[174] For Saudi Arabia, this is reflective of the country-specific nature of an anti‑dumping investigation, and is confirmed by the context afforded by Articles 2.2.1.1 and 2.2.2, which suggest that the constructed cost of production and the constructed amounts for administrative, selling and general costs and for profits must be based on data from the country under investigation and cannot be established by reference to out-of-country benchmarks such as international reference prices.^[175]

7.108.  The United States considers that to succeed in an "as such" claim, a complainant has to demonstrate that the measure at issue requires an investigating authority to act in a WTO‑inconsistent manner, and that if the measure can be applied in a WTO-consistent manner, there is no basis for finding a violation.^[176] The United States notes that in US – Carbon Steel (India) the Appellate Body found that the evidence submitted (which included, beyond the text of the measures, also judicial decisions, legislative history, and evidence of the application of the measure) did not "establish conclusively that the measure requires an investigating authority to consistently" act contrary to the WTO obligations.^[177] Therefore, the Unites States submits, the Panel should consider whether Argentina has demonstrated that Article 2(5) of the Basic Regulation requires that the EU authorities act in a WTO-inconsistent manner.^[178] The United States submits that if the text of the challenged law provides discretion to act in a WTO-inconsistent manner, the complainant must submit additional evidence in order to identify "elements requiring an investigating authority to engage" in WTO-inconsistent conduct.^[179] In this regard, the United States notes the European Union's arguments that Article 2(5) expressly provides for discretion for the EU authorities to adjust costs and that it does not require the EU authorities to depart from the producers' cost data. The United States considers that the practice of the application of a challenged measure can be reviewed in considering an "as such" claim, but the practice must demonstrate that the measure itself mandates WTO-inconsistent action.^[180] The United States takes the view that the additional evidence submitted by Argentina does not show that the EU authorities are mandated to act in a particular manner.^[181]

7.109.  The United States submits that Article 2.2 does not limit the evaluation of record evidence to evidence obtained in the country of origin, and further, that revising particular elements of the cost calculation based on record evidence from outside the country of origin would not undermine the constructed normal value as a proxy for home market value.^[182] However, the United States notes that it is for the investigating authority to demonstrate, based on the record evidence, that such costs serve as an appropriate comparator or alternative source of data, and that such costs are only appropriate to the extent that they aid in determining the cost of production in the domestic market.^[183]

7.3.6  Evaluation by the Panel

7.3.6.1  Introduction

7.110.  Argentina challenges "as such", that is, independently of its application in specific instances, Article 2(5), second subparagraph, of the Basic Regulation as being inconsistent with several provisions of the Anti-Dumping Agreement and the GATT 1994. Argentina's challenge is limited to this second subparagraph of Article 2(5) of the Basic Regulation and does not extend to the first subparagraph of the same provision.^[184] In addition, while Argentina has referred to the EU authorities' consistent practice in applying the second subparagraph of Article 2(5), it has repeatedly made it clear that it only refers to this practice in support of its interpretation of the text of Article 2(5), second subparagraph, but does not challenge this alleged practice in and of itself.^[185]

7.111.  Argentina has used different formulations in describing the scope, meaning and content of the challenged measure during these proceedings. While we would have preferred greater consistency in this regard, we do not consider that these variations amount to a failure on its part to articulate properly, with the requisite evidence, the precise content of the measure challenged, as the European Union alleges.^[186]

7.112.  We understand the essence of Argentina's claims to be as follows:

a.    When the EU authorities take the view that the costs reported in an investigated producer's records reflect prices that are "abnormally low" or "artificially low" because of what they consider to be a "distortion", Article 2(5), second subparagraph, of the Basic Regulation requires the EU authorities to determine that the costs of production and sale of the product under investigation are not "reasonably reflected" in the producer's records and, consequently, to reject or adjust those costs in establishing the investigated producer's costs of production and sale.^[187] Argentina submits that this renders Article 2(5), second subparagraph, inconsistent with Article 2.2.1.1 of the Anti‑Dumping Agreement, and as a consequence, with Articles 2.2 of the same Agreement and Article VI:1(b)(ii) of the GATT 1994.

b.    When the aforesaid determination is made, Article 2(5), second subparagraph, further requires the EU authorities to adjust or establish the costs on the basis of other information, including costs other than those prevailing in the country of origin. Argentina submits that this renders Article 2(5), second subparagraph, inconsistent with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.

7.113.  Argentina explains that it uses the terms "abnormally" and "artificially" to indicate that the prices are "lower" as a result of an alleged "distortion" in the form of price regulation, an export tax, or other government intervention. In addition, Argentina points out that these terms, and the terms "distorted or affected by a distortion" and "do not reflect market values or prices", which it uses in describing the measure at issue, are not included in the text of Article 2(5), second subparagraph, of the Basic Regulation, but have been used in the other evidence it submits to the Panel to support its understanding of the scope, meaning and content of this provision.^[188]

7.114.  The European Union takes the view that Argentina challenges two separate measures.^[189] However, it is clear to us that Argentina challenges two related aspects of the same measure, namely Article 2(5), second subparagraph, of the Basic Regulation under two separate but related claims or groups of claims. For ease of reference, we hereafter refer to these claims as two separate "claims" advanced by Argentina.

7.115.  Before we proceed with our analysis, we consider it useful to recapitulate the main points of disagreement between the parties with respect to the meaning and operation of the measure at issue as it relates to each of Argentina's two claims.

7.116.  First, with respect to Argentina's first claim, which principally involves Article 2.2.1.1 of the Anti-Dumping Agreement, the European Union disputes that Article 2(5), second subparagraph, is the provision governing the determination whether the costs of production are "reasonably reflected" in the producer's records. The European Union argues that the relevant provision for this determination is the first, and not the second, subparagraph of Article 2(5). Even with respect to such a determination under the first subparagraph of Article 2(5), the European Union contends that the EU authorities are not required to find that the costs are not "reasonably reflected" in the records in the situations identified by Argentina (i.e. where the records reflect prices that are artificially or abnormally low due to a distortion). According to the European Union, the authorities are merely afforded discretion based on their view of the facts and circumstances of each case.

7.117.  With respect to Argentina's second claim, which involves Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the disagreement between the parties centres on "the discretion" afforded to the EU authorities to resort to information prevailing in "other representative markets", particularly in the situations identified by Argentina. According to Argentina, the reference to "information from other representative markets" in Article 2(5), second subparagraph, mandates the use of costs not prevailing in the country of origin. On the contrary, the European Union contends that the provision grants wide discretion to the EU authorities to resort to various options when they have determined under the first subparagraph of Article 2(5) that the costs are not reasonably reflected in the records.

7.118.  Although it considers that Article 2(5), second subparagraph, of the Basic Regulation, contains a rule or requirement, Argentina argues, in the alternative, that even if the authorities had the discretion alleged by the European Union, this provision would nonetheless be inconsistent with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. With respect to Article 2.2.1.1 of the Anti-Dumping Agreement, Argentina submits that even if Article 2(5), second subparagraph, only provided for the possibility – and did not require – that the authorities reject the records in situations where prices are artificially low or abnormally low, the mere possibility would render it inconsistent with Article 2.2.1.1. With respect to Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the fact that Article 2(5), second subparagraph, provides for the use of a basis other than the cost of production in the country of origin renders that measure inconsistent with Article 2.2 of the Anti‑Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.^[190] The European Union considers that Argentina needs to establish that the measure mandates WTO-inconsistent action for its claims to succeed.^[191]

7.3.6.2  General principles relevant to a panel's examination of "as such" claims and of municipal legislation

7.119.  We begin our analysis by recalling the relevant principles established under WTO jurisprudence on the examination of the scope, content and meaning of provisions of the municipal (i.e. domestic) legislation of a Member, under "as such" claims.

7.120.  First, we note that the Appellate Body has emphasized that "as such" challenges to a Member's legislation are "serious challenges", particularly as Members are presumed to have enacted their laws in good faith.^[192] We also note that, consistent with the generally applicable principles regarding the burden of proof applicable in WTO disputes, it is for the complainant to establish the WTO-inconsistency of provisions of domestic law.

7.121.  In the recent US – Carbon Steel (India) dispute, the Appellate Body explained that:

With regard to the construction of municipal law, the Appellate Body explained in US – Hot-Rolled Steel that, "[a]lthough it is not the role of panels or the Appellate Body to interpret a Member's domestic legislation as such, it is permissible, indeed essential, to conduct a detailed examination of that legislation in assessing its consistency with WTO law".[*] As part of their duties under Article 11 of the DSU, panels have the obligation to examine the meaning and content of the municipal law at issue in order to make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability and conformity with the covered agreements. This obligation under Article 11 means that panels must conduct their own objective and independent assessment of the meaning of municipal law, instead of deferring to a party's characterization of such law.[*]^[193]

_______________

[*fn original]¹¹¹⁵ Appellate Body Report, US – Hot-Rolled Steel, para. 200.

[*fn original]¹¹¹⁶ Appellate Body Report, India – Patents (US), para. 66.

7.122.  The Appellate Body has also emphasized that when a panel is called upon to interpret domestic legislation to decide on its WTO-consistency, the panel should undertake a "holistic assessment" of all relevant elements, including, for instance, the consistent application of the relevant domestic laws, pronouncements of domestic courts on the meaning of such laws, the opinion of legal experts, and the writings of recognized scholars.^[194]

7.123.  In the recent US – Shrimp II (Viet Nam) case, the Appellate Body explained that:

In respect of the types of elements that are required to be considered in order to establish the content and meaning of municipal law, the Appellate Body has clarified that, in some cases, the text of the relevant legislation may suffice. In other cases, the complainant will also need to support its understanding of the content and meaning of the measure at issue with evidence beyond the text, such as evidence of consistent application of the measure, pronouncements of domestic courts, and the writings of recognized scholars.[*] Furthermore, the Appellate Body has held that, "in ascertaining the meaning of municipal law, a panel should undertake a holistic assessment of all relevant elements, starting with the text of the law and including, but not limited to, relevant practices of administering agencies."[*] An examination of such elements, including legal interpretations given by domestic courts or domestic administering authorities, may inform the question of whether a measure is consistent with a WTO Member's obligations under the covered agreements. In respect of the burden of proof, the Appellate Body has clarified that "[t]he party asserting that another party's municipal law, as such, is inconsistent with relevant treaty obligations bears the burden of introducing evidence as to the scope and meaning of such law to substantiate that assertion."[*]^[195]

_______________

[*fn original]¹⁸⁴ Appellate Body Reports, US – Countervailing and Anti-Dumping Measures (China), para. 4.101; US – Carbon Steel, para. 157; US – Carbon Steel (India), para. 4.446.

[*fn original]¹⁸⁵ Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.101.

[*fn original]¹⁸⁶ Appellate Body Report, US – Carbon Steel (India), para. 4.446 (quoting Appellate Body Report, US – Carbon Steel, para. 157, in turn referring to Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335).

7.124.  While the Appellate Body has stated that where the meaning of a provision is clear on the face of its text, the text of the relevant legislation may suffice to establish the content and meaning of municipal law, in recent disputes the Appellate Body has clarified that:

[I]n order to conduct a "detailed examination" of the measure at issue, and to engage in an "objective assessment of the matter", it is incumbent on a panel to engage in a thorough analysis of the measure on its face and to address evidence submitted by a party that the alleged inconsistency with the covered agreements arises from a particular manner in which a measure is applied. While a review of such evidence may ultimately reveal that it is not particularly relevant, that it lacks probative value, or that it is not of a nature or significance to establish a prima facie case, this can only be determined after its probative value has been reviewed and assessed.^[196] (emphasis added)

7.125.  Our reading of these statements of the Appellate Body suggests to us that, depending on the probative value of the facts and the evidence before it, a panel may well be required to go beyond the text of the impugned measure regardless of how clear the text might be on its face and that a panel may be required to make a "holistic assessment" of all the relevant elements.^[197] In the present dispute, we understand Argentina to take the position that confining the analysis to the text of Article 2(5), second subparagraph, itself will not suffice to arrive at a proper interpretation of this provision. Argentina's interpretation of Article 2(5), second subparagraph, of the Basic Regulation relies on its reading of the text of this provision, on the legislative history that led to its introduction, on an alleged consistent practice of the EU authorities in applying it, and on judgments of the General Court of the European Union.

7.126.  With these principles in mind, and mindful of the need to conduct a "holistic assessment" of the evidence put forward by the parties, we proceed to determine the scope, meaning and content of the measure at issue, as they pertain to each of Argentina's two claims.

7.3.6.3  Argentina's first "as such" claim under Article 2.2.1.1 of the Anti-Dumping Agreement and, as a consequence, Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994

7.127.  We first consider the text of Article 2(5), second subparagraph, and the other evidence submitted by Argentina in order to determine whether they support Argentina's allegations concerning the scope, meaning, and content of this provision.

7.3.6.3.1  Text of Article 2(5), second subparagraph, of the Basic Regulation

7.128.  With respect to its first claim, Argentina's case is premised on its view that the EU authorities make the determination that the records do not "reasonably reflect" the costs pursuant to the opening phrase of the second subparagraph of Article 2(5) ("If costs …"). The European Union disagrees and argues that the determination whether a producer's records reasonably reflect the costs of production and sale of the product is made pursuant to the first subparagraph of Article 2(5) of the Basic Regulation. In addition, the European Union contends that neither the first nor the second subparagraph set forth the criteria for the EU authorities to make that determination.

7.129.  Although Argentina initially contended that the determination is governed by the opening phrase of Article 2(5), second subparagraph, Argentina later clarified that its position is that while Article 2(5), first subparagraph, is – or may be – the provision generally authorising authorities to reject data when that data does not reasonably reflect the costs of production, the second subparagraph of the Article is the real provision that identifies the situations where costs are artificially or abnormally low as a result of a distortion as constituting the basis for the determination that records do not reasonably reflect the costs. In other words, according to Argentina, the second subparagraph is the provision requiring the EU authorities to determine that the records do not "reasonably reflect" the costs when the costs included in the records are "artificially" or "abnormally low" as a result of a distortion.^[198]

7.130.  The European Union has objected to this subsequent clarification of Argentina, alleging that it amounts to a "change [in] the factual basis" of Argentina's claims introduced for the first time in Argentina's responses to the Panel's questions after the second meeting.^[199] We decline to reject this clarification of its arguments by Argentina, as the European Union would have us do. Contrary to what the European Union suggests, the Working Procedures adopted by the Panel do not impose a time limit on the submission of arguments to the Panel, but only on the factual evidence submitted to the Panel.^[200] In our view, the clarification is more properly regarded as a clarification or refinement of Argentina's argumentation, rather than as the introduction of a new "factual basis". In any event, the European Union has had the opportunity to respond to Argentina's "clarification", and has done so, such that due process has been preserved.

7.131.  We now consider whether the text of Article 2(5) of the Basic Regulation supports Argentina's reading of that provision.^[201] In our view, it does not. Article 2(5) applies to the calculation of costs of production for purposes of: (i) applying the below-cost ("ordinary course of trade") test; or (ii) constructing the normal value on the basis of the costs of production. With respect to the latter, Article 2(3) provides for two separate grounds on which the investigating authority may be permitted to resort to a constructed normal value: (i) where there are no or insufficient sales in the ordinary course of trade; or (ii) where sales in the ordinary course of trade do not permit a proper comparison because of a particular market situation. Article 2(5) applies in both situations. The first subparagraph of Article 2(5) reproduces almost word for word the first sentence of Article 2.2.1.1. It sets out the source of the data which is to be preferred in the construction of a producer's costs of production, i.e. the producer's records, and subjects this preference to two conditions: that the records be consistent with the generally accepted accounting principles of the exporting Member, and that they reasonably reflect the costs of production.

7.132.  The second subparagraph of Article 2(5) begins with a condition: "If costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned", followed by "they shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets." Thus, the text of the second subparagraph of Article 2(5) strongly suggests that this provision takes effect following a determination under the first subparagraph that a producer's records do not reasonably reflect the costs associated with the production and sale of the product under investigation. This is clear from the use of the word "[i]f", which clearly refers to the second condition under the first subparagraph. Thus, the plain text of Article 2(5), second subparagraph, does not support Argentina's contention that it governs the issue as to when the EU authorities are to reach the conclusion that the producer's records do not reasonably reflect the costs of production and sale of the product under investigation. On the contrary, on the face of the language used therein, this is an issue that is governed by the first subparagraph of Article 2(5) of the Basic Regulation. We therefore agree with the European Union that the relevant determination is made under the first subparagraph of Article 2(5) and that the second subparagraph of the Article comes into play only after a determination has been made under the first subparagraph that the records do not reasonably reflect the costs associated with the production and sale of the product under investigation.

7.133.  Moreover, we note that the text of the first and the second subparagraphs do not provide any criteria for the determination of whether the costs are reasonably reflected in a producer's records. Argentina argues that the options that are given to the investigating authorities under the second part of the second subparagraph constitute or inform the reasons why information from the domestic market cannot be used to determine the costs of production.^[202] By this, we understand Argentina to argue that the phrase "shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets" in the second subparagraph requires the EU authorities to find that the producer's records do not reasonably reflect costs where they differ from costs in other representative markets. Argentina's argument disregards the fact that the phrase quoted above refers not only to "information from other representative markets", but also to the costs of producers or exporters in the exporting country, and to "any other reasonable basis".

7.134.  In sum, Argentina would have us read the second subparagraph in a manner that is contrary to its text. We agree with the European Union that the second subparagraph of Article 2(5) only lays down what the authorities can do – and allows them to exercise any one of the listed options for determining the costs of production – after they have made a determination under the first subparagraph that the records do not reasonably reflect the costs. We also find, as a matter of considerable significance to the meaning and content of both of the subparagraphs of Article 2(5) that neither subparagraph contains any of the terms or concepts used by Argentina to describe the measure at issue, i.e. "artificially low", "abnormally low", "distortion", "reflects market values"; "regulated market", "artificially distorted", etc. None of these terms are found in the text of the Article to be used by the EU authorities as criteria for determining whether the records reasonably reflect the costs of production and sale of the product under consideration.

7.135.  We are therefore of the view that the text of Article 2(5), second subparagraph, does not support Argentina's allegations with respect to the scope, meaning, and content of that provision. Having reached these preliminary conclusions on the basis of the text we now consider the other evidence submitted by Argentina. We start with the legislative history pertaining to the introduction of the second subparagraph of Article 2(5).

7.3.6.3.2  Legislative history pertaining to the inclusion of the second subparagraph of Article 2(5) in the Basic Regulation

7.136.  Argentina relies on the legislative history that led to the introduction of the second subparagraph of Article 2(5) in support of its interpretation of this provision. Argentina refers in particular to: (i) Recital 4 of Council Regulation 1972/2002, which is the Regulation that added the second subparagraph to Article 2(5); (ii) the second subparagraph of Article 2(3), which was added at the same time as the second subparagraph of Article 2(5); and (iii) academic writings drawing a link between the introduction of the second subparagraph and the granting, by the European Union, of market economy status to the Russian Federation.

7.137.  Argentina submits that the introduction of the second subparagraph in Article 2(5) by Council Regulation 1972/2002 gave a specific meaning and content to the condition that the "costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned", such that the EU authorities are required to conclude that the records do not reasonably reflect costs associated with the production and sale of the product under consideration where they find that the costs of the inputs reflect prices that are "abnormally or artificially low" in comparison to prices in other markets.^[203]

7.138.  Recital 4 of Council Regulation 1972/2002, which explains the addition of the second subparagraph of Article 2(5) of the Basic Regulation, states as follows:

It is considered appropriate to give some guidance as to what has to be done if, pursuant to Article 2(5) of Regulation (EC) No 384/96, the records do not reasonably reflect the costs associated with the production and sale of the product under consideration, in particular in situations where because of a particular market situation sales of the like product do not permit a proper comparison. In such circumstances, the relevant data should be obtained from sources which are unaffected by such distortions. Such sources can be the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, any other reasonable basis, including information from other representative markets. The relevant data can be used either for adjusting certain items of the records of the party under consideration or, where this is not possible, for establishing the costs of the party under consideration.^[204] (emphasis added)

7.139.  In addition, Argentina refers to the second subparagraph of Article 2(3), which was also introduced by Council Regulation 1972/2002 and which provides that:

A particular market situation for the product concerned within the meaning of the preceding sentence may be deemed to exist, inter alia, when prices are artificially low, when there is significant barter trade, or when there are non-commercial processing arrangements.^[205]

7.140.  Argentina submits that Recital 4, read together with the new Article 2(3), makes clear that, pursuant to Article 2(5), second subparagraph, when the costs are "artificially low" or "affected by a distortion", the costs must be adjusted or established on another basis. Argentina further submits that Recital 4 does more than merely identify the options available in case the records do not reasonably reflect the costs, as it also identifies the situations in which recourse to such options will be made, namely when costs are affected by a distortion.^[206] Argentina submits that even though Recital 4 refers to situations in which normal value is constructed because of the existence of a "particular market situation", it is relevant for the purposes of interpreting Article 2(5), second subparagraph, as this provision applies not only in cases in which the authorities proceed to construct the normal value due to the existence of a "particular market situation", but also in cases in which the authorities construct normal value following a finding that there are no or insufficient sales in the ordinary course of trade.^[207]

7.141.  It is clear from Recital 4 that the second subparagraph was added to Article 2(5) to give some guidance as to what has to be done if "pursuant to Article 2(5)" – which clearly refers to what is now the first subparagraph^[208] – "the records do not reasonably reflect the costs associated with the production and sale of the product under consideration", before proceeding to list what sources may be used in so doing, essentially repeating the language contained in the second subparagraph. This is consistent with our reading of the second subparagraph of Article 2(5) above, namely, that it applies only after the EU authorities have determined that the producer's records do not reasonably reflect the costs of production and sale of the investigated product, and that it governs how the EU authorities are to establish the cost of production in such a situation.

7.142.  We consider next the second subparagraph of Article 2(3). This new subparagraph provides guidance as to the meaning of the terms "particular market situation" in the first subparagraph of the same Article. It provides that such a "particular market situation" may exist "when prices are artificially low, when there is significant barter trade, or when there are non‑commercial processing arrangements". Reading the second subparagraph of Article 2(3) in conjunction with Recital 4 suggests that, when they determine that a particular market situation exists on the basis of the existence, inter alia, of "artificially low" prices due to a distortion, the authorities should establish or adjust the costs of a producer on a basis that is not affected by that distortion. However, it is not at all apparent from the text of Article 2(3), even read in conjunction with that of Recital 4, firstly, that it applies to Article 2(5) and secondly, that these considerations govern the determination that the costs of production are not "reasonably reflected" in the producer's records.

7.143.  Hence, neither Recital 4 nor the second subparagraph of Article 2(3) support the notion that the determination that records do not reasonably reflect the costs of production if prices are artificially low due to a market distortion is made pursuant to the second subparagraph of Article 2(5) in certain situations, while in other situations, the determination is made pursuant to the first subparagraph of Article 2(5).^{[209], [210]}

7.144.  Argentina also argues that the modifications made to Articles 2(3) and 2(5) of the Basic Regulation by Council Regulation 1972/2002 sought to enable the EU authorities to continue using non-market economy techniques vis-à-vis the Russian Federation at the same time as the European Union granted the Russian Federation full market economy status. Argentina refers us to an article published in a law journal and to excerpts from a book. Argentina also comments on an article submitted to the Panel by the European Union.^[211] The authors of these articles express a personal view that by virtue of Article 2(3), second subparagraph, the EU authorities might extend the non‑market economy techniques to market economies as well. However, we consider it particularly relevant that the authors of these articles do not suggest that the 2002 amendments to the Basic Regulation require that the EU authorities conclude that the records do not "reasonably reflect" costs where prices are artificially low, but merely suggest that it enables them to do so. More importantly, they do not suggest that it is the second subparagraph of Article 2(5) that governs the determination whether costs are reasonably reflected in a producer's records.

7.3.6.3.3  Alleged consistent practice of the EU authorities

7.145.  We now turn to Argentina's allegations concerning the alleged consistent "practice" of the EU authorities in applying Article 2(5), second subparagraph. We recall that Argentina does not challenge the alleged consistent practice in and of itself as a measure at issue but only relies on this alleged consistent practice as evidence in support of its interpretation of Article 2(5), second subparagraph. Therefore, we consider whether this alleged practice sheds light on the meaning of the impugned provision.

7.146.  Argentina refers us to decisions of the EU authorities in a series of anti‑dumping proceedings, Potassium Chloride from Belarus, Russia or Ukraine^[212], Seamless Pipes and Tubes of Iron or Steel from Croatia, Romania, Russia and Ukraine^[213], Solutions of Urea and Ammonium Nitrate from inter alia Russia and Algeria^[214], Ammonium Nitrate from Russia^[215], Ammonium Nitrate from Ukraine^[216], Urea from Russia^[217], Urea from, inter alia, Croatia and Ukraine^[218], Certain Welded Tubes and Pipes of Iron or Non-Alloy Steel from inter alia Russia^[219], and the investigation concerning imports of biodiesel from Argentina and Indonesia^[220] which is the subject of Argentina's "as applied" claims in the present dispute.

7.147.  Having reviewed the decisions of the EU authorities cited by Argentina, we find that they do evidence a certain pattern of the EU authorities concluding that the costs of production of the product under investigation were not reasonably reflected in the records of a producer/exporter in situations in which the prices of inputs (particularly energy) were lower than world prices, prices in third country markets, the cost of production of the input, or the price of the same input when exported from the country of origin (e.g. the Russian Federation). However, we also note that in almost all these cases, the input or energy prices were set and regulated by the government, which raises in our view doubts as to whether they can be regarded as establishing a "consistent practice" or as convincing evidence that Article 2(5), second subparagraph, mandates the authorities to disregard the producer's actual costs in every case in which the authorities find the input prices to be artificially low.^[221], [222]

7.148.  In any event, we do not consider it necessary to examine at any greater length whether the examples of application cited by Argentina can properly be characterised as reflecting, or be constitutive of, a consistent "practice" of the EU authorities. This is because the decisions cited by Argentina do not establish, or even suggest, that the second subparagraph of Article 2(5) is the provision pursuant to which these determinations of whether the costs were reasonably reflected in the records were made. The decisions in general refer to Article 2(5) without distinguishing between its two subparagraphs; contrary to Argentina's assertions, the wording used by the EU authorities in the regulations does not suggest that their determinations that its records did not "reasonably reflect" a producer's costs were made pursuant to Article 2(5), second subparagraph.^[223] In sum, the determinations submitted to our attention by Argentina do not undermine our preliminary conclusion, reached above on the basis of the text of the impugned provision and of its legislative history, that the relevant determination is made pursuant to the first subparagraph of Article 2(5).^[224]

7.3.6.3.4   Judgments of the General Court of the European Union interpreting the measure at issue

7.149.  In support of its interpretation of the second subparagraph to Article 2(5), Argentina submits evidence pertaining to four judgments of the General Court of the European Union that were issued on the same date by a bench composed of the same three judges, address similar claims, and largely share the same reasoning.^[225]

7.150.  Of significance for the purposes of our consideration of Argentina's claims, these judgments do not suggest that the determination whether the costs are reasonably reflected in the records of a producer is one which is governed by the second subparagraph of Article 2(5). On the contrary, it is obvious to us that the General Court considered in each case that this determination is one which is governed by Article 2(5), first subparagraph.^[226] We note that Argentina directs our attention to a statement of the General Court in one of the judgments, which Argentina reads as supporting its view that the second subparagraph of Article 2(5) is the provision governing the determination of whether the records reasonably reflect the costs of production and sales in certain situations.^[227] In our view, Argentina reads out of context a statement that the Court intended to be a mere restatement of its earlier findings, which as we have stated above, do not support Argentina's position.

7.151.  Similarly, we are unconvinced by Argentina's suggestion that the judgments confirm, on the basis of Recital 4 of Council Regulation 1972/2002 that the second subparagraph of Article 2(5) was introduced to provide a legal basis to reject the cost data contained in the records where such costs reflect prices that are found to be "abnormally" or "artificially low" because of a distortion. On the contrary, in the judgments, the General Court reads Recital 4 of Council Regulation 1972/2002 as we do, i.e. as indicating that the second subparagraph of Article 2(5) was inserted to provide guidance as to "what has to be done" following a determination that the records do not reasonably reflect the costs pursuant to the first subparagraph.

7.152.  In sum, nothing in the judgments cited by Argentina supports Argentina's reading of the relationship between the first two subparagraphs of Article 2(5), i.e. that the determination of whether the producer's records reasonably reflect the costs of production is made pursuant to the first subparagraph in certain situations and pursuant to the second subparagraph in other situations. Rather, the four judgments of the General Court cited by Argentina point in the direction of this determination being made pursuant to the first subparagraph of Article 2(5).

7.3.6.3.5   Conclusion with respect to Argentina's first claim that Article 2(5), second subparagraph, of the Basic Regulation is inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement and, as a consequence, Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994

7.153.  On the basis of the foregoing, and based on our "holistic assessment" of the evidence submitted by Argentina in support of its interpretation of the provision at issue, we conclude that Article 2(5), second subparagraph, of the Basic Regulation does not require the European Union to determine that a producer's records do not reasonably reflect the costs associated with the production and sale of the product under consideration when these records reflect prices that are considered to be artificially or abnormally low as a result of a distortion. In fact, the evidence indicates that Article 2(5), second subparagraph, applies to an entirely different issue, i.e. what has to be done after the EU authorities have determined that a producer's records do not reasonably reflect the costs of production pursuant to the first subparagraph.

7.154.  This aspect of Argentina's claims is associated with its claims of inconsistency under Article 2.2.1.1 of the Anti-Dumping Agreement and, as a consequence, Article 2.2 of the Anti‑Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. As we conclude that Argentina has not established its case regarding the scope, meaning, and content of the challenged measure on which these claims are based, we find that Argentina has not established that Article 2(5), second subparagraph, of the Basic Regulation, is inconsistent "as such" with Article 2.2.1.1 of the Anti‑Dumping Agreement and, as a consequence, Article 2.2 of the same Agreement and Article VI:1(b)(ii) of the GATT 1994.

7.3.6.4   Argentina's second claim under Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994

7.155.  With respect to Argentina's second claim, which involves Article 2.2 of the Anti‑Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the disagreement between the parties centres on the "discretion" afforded (or not) to the EU authorities to resort to information prevailing in "other representative markets" in establishing or adjusting the normal value where they have concluded that a producer's records do not reasonably reflect the costs of production of the investigated product, particularly in the situations identified by Argentina. Argentina's claims are premised on its reading of Article 2(5), second subparagraph, as requiring the EU authorities to adjust or establish a producer's costs on the basis of information from countries other than the country of origin if the EU authorities have determined that the records reflect prices which are artificially or abnormally low as a result of a distortion and if information from other producers/exporters from the same country is not available or cannot be used.^[228] According to Argentina, the references to "any other reasonable basis" and to "information from other representative markets" in Article 2(5), second subparagraph, mandate the use of costs not prevailing in the country of origin.^[229] On the contrary, the European Union contends that the provision grants wide discretion to the EU authorities to resort to various options in constructing the normal value when they have determined under the first subparagraph of Article 2(5) that the costs are not reasonably reflected in the records.

7.156.  We proceed to analyse the text of Article 2(5), second subparagraph, and the other evidence submitted by Argentina in order to determine whether they support Argentina's allegations concerning the scope, meaning and content of this provision with respect to this second claim.

7.3.6.4.1  Text of Article 2(5), second subparagraph, of the Basic Regulation

7.157.  We note that the text of Article 2(5), second subparagraph, provides a number of alternative bases on which the EU authorities may establish or adjust the costs where they have determined pursuant to the first subparagraph of Article 2(5) that the costs reported in a producer's records do not "reasonably reflect" the costs of production of the investigated product. On its face, the phrase of the second subparagraph at issue is formulated in permissive terms. The first – and it seems, preferred – option is for the EU authorities to use the costs of other producers or exporters in the country of origin. Where "such information is not available or cannot be used", they can resort to "any other reasonable basis", including "information from other representative markets". Hence, the text of Article 2(5), second subparagraph, suggests that the EU authorities would first seek to establish or adjust a producer's costs of production on the basis of information originating from producers in the same country. It only permits the authorities to adjust or establish the costs on the basis of information from other representative markets as one of several options that they can consider if such information is not available or cannot be used.

7.158.  In support of its reading of the text of Article 2(5), second subparagraph, as requiring the EU authorities to use information outside the country of origin, Argentina argues that as the term "on any other reasonable basis" necessarily relates to information other than information from other domestic producers, it can refer only to information from outside the country of origin.

7.159.  Certainly, as Argentina argues, the plain text of the second subparagraph makes it clear that the phrase "any other reasonable basis" refers to something other than "the costs of other producers or exporters in the same country". However, in our view, there may be "bases" or sources of information in the country of origin other than the costs of other producers or exporters of the investigated products. This is particularly so as Argentina's reading would render the phrase "including information from other representative markets" inutile. Hence, we are not convinced by Argentina's argument that the reference to "any other reasonable basis" necessarily is a reference to costs outside the country of origin.

7.160.  In addition, we note that Argentina considers that Article 2(5) necessarily implies that the authorities will use not only "information", but will actually construct the normal value on the basis of "costs" in countries other than the country of origin when they decide to resort to "information" from "other representative markets". We note, however, that the text of the second subparagraph refers to "adjust[ing] or establish[ing]" the costs "on the basis" of "information". As Article 2(5), second subparagraph, refers to the sources of information (as opposed to the costs themselves) that may be used to establish an investigated producer or exporter's costs, it does not, in our view, require the EU authorities to construct the normal value so as to reflect costs prevailing in other countries. Hence, the text of Article 2(5), second subparagraph, does not, in our view, support Argentina's argument that this provision requires the EU authorities, where they take the view that the costs of other domestic producers or exporters are not available or cannot be used, to construct the normal value on the basis of costs prevailing in other countries than the country of origin.

7.161.  On the basis of the foregoing, we are of the view that the text of Article 2(5), second subparagraph, does not support Argentina's allegations with respect to the scope, meaning, and content of that provision as regards Argentina's second claim. Rather, in our view, the text of Article 2(5), second subparagraph, suggests that it provides the EU authorities with a wide range of options concerning the information they may use in constructing the normal value where they have determined that producers/exporters' records do not reasonably reflect the costs of production.

7.162.  Having reached these preliminary conclusions on the basis of the text, we now consider the other evidence submitted by Argentina.

7.3.6.4.2  Legislative history pertaining to the inclusion of the second subparagraph of Article 2(5) in the Basic Regulation

7.163.  As we have stated above, in the context of addressing Argentina's first claim, our reading of the second subparagraph of Article 2(3) in conjunction with Recital 4 of Council Regulation 1972/2002 suggests that when the authorities determine that a particular market situation exists on the basis of the existence, inter alia, of "artificially low" prices due to a distortion, they should establish or adjust the costs of a producer on a basis that is not affected by that distortion. However, neither the second subparagraph of Article 2(3) nor Recital 4 of Council Regulation 1972/2002 suggests that the options available to the EU authorities are constrained in such a way that they must systematically resort to information or prices not in the country of origin.^[230]

7.3.6.4.3  Alleged consistent practice of the EU authorities

7.164.  We now focus on the application of Article 2(5), second subparagraph, by the EU authorities as it pertains to Argentina's claim under Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.

7.165.  As we have noted above, in our evaluation of Argentina's first claim under Article 2.2.1.1, Argentina has brought to our attention a number of instances in which the EU authorities, having determined (primarily in situations in which the prices for certain energy inputs were regulated by the government) that the producer's records did not reasonably reflect its costs, adjusted the costs on the basis of information from sources that they did not consider to be affected by the distortion.^[231] The decisions of the EU authorities cited by Argentina contain explicit statements by the EU authorities to the effect that Article 2(5) allows recourse to data from other representative markets including third countries.^[232] Indeed, in the majority of the examples cited by Argentina, the EU authorities adjusted the actual costs incurred by the producer on the basis of prices prevailing in other countries or on the basis of the price for export of the input concerned.^[233] As discussed below, in the Biodiesel case, the EU authorities adjusted the actual input costs on the basis of reference prices which, in their view, reflected what the domestic prices for the inputs would have been in the absence of the distortions created by the export tax systems maintained by Argentina and Indonesia.^[234]