WRITTEN SUBMISSIONS OF THIRD PARTIES
Contents Page Annex B-1 Third Party Written Submission of China, People's Republic of B-2 Annex B-2 Third Party Written Submission of the European Communities B-10 Annex B-3 Third Party Written Submission of Japan B-16 Annex B-4 Third Party Written Submission of Korea, Republic of B-23 Annex B-5 Third Party Written Submission of Mexico B-30
THIRD PARTY WRITTEN SUBMISSION OF THE
PEOPLE’S REPUBLIC OF CHINA
26 April 2006
I. INTRODUCTION ............................................................................................................ 2
II. CHINA’S VIEWS ON ARTICLE 11.3 OF THE AD AGREEMENT .............................. 3
III. COLLECTING NEW INFORMATION IN A REVISED SUNSET REVIEW .............. 3 IV. THE LIKELIHOOD DETERMINATION IN THE SECTION 129
A. THE USDOC’S REASONING IN THE SECTION 129 DETERMINATION ................................... 5 B. THE USDOC’S FINDING OF LIKELY DUMPING ........................................................................ 5 C. THE USDOC’S FINDING OF DECLINING OCTG IMPORT VOLUMES ...................................... 6 D. THE USDOC’S CONSIDERATION OF THE FACTUAL FACTORS AND
CONCLUSION ON LIKELIHOOD OF DUMPING ........................................................................ 7 V. CONCLUSION ................................................................................................................. 9
1. China welcomes the opportunity to present its views in these proceedings on the dispute between Argentina and the United States ("US") with respect to the implementation by the US of the recommendations and rulings of the Dispute Settlement Body ("DSB") on United States – Sunset
Reviews of Anti-Dumping Measures on Oil Country Tubular Goods From Argentina.
2. In this submission, China will focus on the following four questions:
(1) Whether the US Department of Commerce ("USDOC") is permitted by Article 11.3
of the Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994 ("AD Agreement") to rely on the facts newly developed in its
2005 Section 129 proceeding and covering the original sunset review period;
(2) Whether the finding in the Section 129 Determination that Acindar likely was
dumping during the sunset review period was properly made in line with the
requirement of Article 11.3 of the AD Agreement;
(3) Whether the finding in the Section 129 Determination that declining import volumes
were apparently resulted from the imposition of an anti-dumping dumping order
constitutes a reasoned and adequate conclusion as required by Article 11.3 of the
(4) Whether the USDOC’s consideration of the factual findings and conclusion of
likelihood of dumping were made in a reasoned way as required by Article 11.3 of
the AD Agreement.
3. In China’s view, these issues are closely related to this Panel’s assessment on whether the US
has implemented the DSB recommendations and rulings and therefore deserve the attention by the Panel.
II. CHINA’S VIEWS ON ARTICLE 11.3 OF THE AD AGREEMENT
4. As the issues discussed in this submission mainly relate to Article 11.3 of the AD Agreement,
China would like to firstly present its understanding of the obligations imposed on investigating authorities in sunset reviews on the basis of the said provision and WTO jurisprudence.
5. First, the structure of Article 11.3 indicates that generally the definitive anti-dumping duty shall be terminated no later than five years. The only exception to this general rule is the case where the authorities, by means of sunset review, determine that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. As observed by the Appellate Body in US Corrosion-Resistant Steel Sunset Review, Article 11.3 imposes a temporal limitation on the 1maintenance of anti-dumping duties and lays down a mandatory rule with an exception.
6. Second, in a sunset review, the authorities shall play an active rather than a passive decision-
making role with appropriate degree of diligence to arrive at a reasoned conclusion that dumping 2would be probable if the duty were terminated. In other words, the investigating authorities must
have a sufficient factual basis to allow it to draw reasoned and adequate conclusions concerning the 3likelihood of continuation or recurrence of dumping.
7. Third, in sunset reviews, the evidence is essential for an affirmative determination though the nature and extent of the evidence required for the proof of likelihood of continuation or recurrence of 4dumping and injury will vary with the facts and circumstances of the case under review.
III. COLLECTING NEW INFORMATION IN A REVISED SUNSET REVIEW
8. Argentina argues that in the 2005 Section 129 Determination, the USDOC acted inconsistently with Articles 11.3 and 11.4 of the AD Agreement by developing new factual
information to support its 2001 Sunset Review Determination. According to Argentina, information on two of the key factual findings were developed in the 2005 Section 129 proceeding rather than in the review initiated "at that time" before the expiration of the original anti-dumping measure. In Argentina’s view, in relying on new information developed in 2005, the USDOC did not render a 5decision that brings the US into compliance with its obligations under Article 11.3 and 11.4.
9. With respect to this issue, China submits the following views for the consideration of this Panel.
1 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on
Corrosion - Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, para. 104 (adopted
9 January 2004)
("US ;- Corrosion-Resistant Steel Sunset Review (AB)"). 2 Ibid, para. 111. 3 Ibid, para. 114. 4 Appellate Body Report, United States – Anti-Dumping Measures on Oil Country Tubular Goods
(OCTG) from Mexico, WT/DS282/AB/R, adopted 28 November 2005, para. 123 ("US – OCTG from Mexico"). 5 Argentina First Submission, para. 57.
10. First, China notes that neither Article 11.3 of the AD Agreement by itself nor the DSU
prohibits the investigating authorities from collecting new factual information in the proceedings intended to bring its WTO-inconsistent measure into conformity with the DSB recommendations and rulings.
11. Second, China notes that the panel in US Countervailing Measures on Certain EC Products
(21.5EC) made a relevant observation in this respect. In that dispute, the USDOC, in a Section 129 ;
proceeding, refused to consider the additional evidence submitted by the respondents in the 6proceeding. The panel noted that "an investigating authority has the obligation to consider all
evidence placed on the record in making a likelihood of continuation or recurrence of subsidization re-determination. Without so doing, the investigating authority could not ensure that the new measure, that is, the likelihood-of-subsidization re-determination set out in the Section 129 determination, is based on a sufficient factual record and therefore satisfies the requirements of 7Article 21.3 of the SCM Agreement". The panel concluded that, with respect to "evidence provided
for the first time by the interested parties during the Section 129 proceedings. . . . Article 21.3 of the SCM Agreement imposes an obligation on the investigating authority during sunset review or revised
sunset review proceedings to take into account all the evidence placed on its record in making its 8determination of likelihood of continuation or recurrence of subsidization".
12. Therefore, the panel finds that the refusal to consider new evidence presented during the 9Section 129 proceedings is inconsistent with the requirement of Article 21.3 of the SCM Agreement.
13. China submits that the above panel’s ruling in respect of Article 21.3 of the SCM Agreement
also applies to Article 11.3 of the AD Agreement in this case. The Appellate Body in US Corrosion-
Resistant Steel Sunset Review has noted that Article 11.3 of the AD Agreement is textually identical to
Article 21.3 of the SCM Agreement, except that, in Article 21.3, the word "countervailing" is used in place of the word "anti-dumping" and the word "subsidization" is used in place of the word 10"dumping". Consequently, Article 11.3 of the AD Agreement also imposes an obligation on the
investigating authority during revised sunset review proceedings to take into account all the evidence in record, including newly submitted evidence, in making its determination of likelihood of continuation or recurrence of dumping.
14. Third, in this dispute, when finding the inconsistency of the anti-dumping measure at issue with Article 11.3 of the AD Agreement, the original panel held that such inconsistency stems from two aspects: (i) the USDOC’s reliance of its finding of continued dumping on the dumping margin found in the original investigation; (ii) the application of the WTO-inconsistent waivers provisions. In China’s view, these deficiencies are assumptions that lack in sufficient factual basis. In the attempt to remedy such deficiencies, the USDOC inevitably needs to solicit new factual information and make objective assessment on such information. If the USDOC is not permitted to seek new information to adapt its measure, the lack of information would leave the USDOC with no choice but to continue to apply the methodology found inconsistent with Article 11.3 of the AD Agreement – making
6 Panel Report, United States – Countervailing Measures Concerning Certain Products from the
European Communities (21.5;EC), WT/DS212/RW, para. 7.68 (adopted 17 August 2005)
("US – Countervailing Measures on Certain EC Products"). 7 Ibid, para. 7.238. (emphasis added) 8 Ibid, paras. 7.252-7.253. (emphasis added) 9 Ibid, para. 7.255. 10 Appellate Body Report, US Corrosion-Resistant Steel Sunset Review, footnote 114.
15. In summary, China holds the view that, in order to bring its measure into compliance with DSB recommendations and rulings, the USDOC is permitted to solicit and collect relevant factual information so as to make its determination on a sufficient factual basis. Notwithstanding, China does not consider that this position necessarily means the USDOC’s Section 129 Determination is a
reasoned and adequate conclusion based upon positive evidence.
IV THE LIKELIHOOD DETERMINATION IN THE SECTION 129 DETERMINATION
A. THE USDOC’S REASONING IN THE SECTION 129 DETERMINATION
16. China notes that, during the Section 129 proceeding, the USDOC requested information from three Argentine producers, i.e., Tubhier, Siderca and Acindar, none of which filed the statement of waiver including a statement that the respondent interested party is likely to dump if the order is revoked. Therefore, in accordance with the newly amended US regulations, no producer waived to participate in the proceedings and thus the USDOC simply made one likelihood determination on an order-wide basis.
17. During the Section 129 proceeding, it was reported by Tubhier and confirmed by the USDOC that Tubhier did not ship OCTG to the US during the sunset review period and did not intend to ship to the US in the future. Thus, the USDOC did not make any finding on whether Tubhier had dumped during the sunset review period.
18. With respect to Siderca, since the USDOC considered the estimated cost information provided by Siderca was unreliable and Siderca had no US sales of OCTG during the original sunset review period, the USDOC made "no findings regarding specific instances of likely dumping by 11Siderca during the original sunset review period".
19. With respect to Acindar, due to its failure to provide data adequate to calculate costs for the subject merchandise, the USDOC was unable to calculate the costs for Acindar. For that reason, the USDOC compared Acindar’s US selling prices during the original sunset review period with
prevailing US market prices during that same period and found that the former prices were substantially lower than the latter. In addition, the USDOC also found supports from the depression in the OCTG market as indicated by the losses shown by Acindar and other significant OCTG producers. On such basis, the USDOC reached the conclusion that Acindar likely was dumping 12significantly in the US market.
20, Before reaching its conclusion on likelihood of dumping, the USDOC referred to its previous finding regarding the declining import volumes of the subject merchandise for the period before and the period after the issuance of the anti-dumping duty order. The USDOC concluded that such declining volumes were "apparently resulting from" the imposition of the anti-dumping measure.
21. On the above basis, the USDOC found that there was likelihood of continuation or recurrence of dumping had the anti-dumping duty order on OCTG from Argentina been revoked in 2000, i.e., at the end of the original sunset review period.
B. THE USDOC’S FINDING OF LIKELY DUMPING
22. In the Section 129 Determination, USDOC compared the export price of Acindar with the prevailing US market price in reaching its finding of likely dumping in the sunset review period.
11 US Section 129 Determination, p. 9. 12 US Section 129 Determination, p. 8-10.
Such an approach obviously contradicts with the basic concept of "dumping" in Article 2.1 of the AD Agreement which is also applicable to the word "dumping" in Article 11.3.
23. In US Corrosion-Resistant Steel Sunset Review, the Appellate Body noted that:
However, as we have already observed, the opening words of Article 2.1
("[f]or the purpose of this Agreement") go beyond a cross-reference and
indicate that Article 2.1 applies to the entire Anti-Dumping Agreement.
By virtue of these words, the word "dumping" as used in Article 11.3 has 13the meaning described in Article 2.1. [footnote omitted]
24. Article 2.1 of the AD Agreement clearly provides for a definition of "dumping" which reads as follows:
For the purpose of this Agreement, a product is to be considered as being
dumped, i.e. introduced into the commerce of another country at less than its
normal value, if the export price of the product exported from one country to
another is less than the comparable price, in the ordinary course of trade, for the
like product when destined for consumption in the exporting country.
In addition, Article 2.2 further provides that normal value can be determined on the basis of export price to third country or so-called constructed value under certain specified circumstances. It is surprising to note that the US goes so far as to allege that "Article 2 does not contain a ‘notion’ of 14dumping but rather a methodology for calculating an actual dumping margin". The underlying logic
of the US argument is that given the fact that the US is not calculating a dumping margin, it can then ignore the concept of dumping and determine "likely dumping" with whatever criteria it deems fit. In China’s view, if one does not have a clear view of the concept of dumping or denies the existence of such a concept, he cannot reasonably make a finding of likely dumping.
25. Thus, the USDOC should have compared Acindar’s export price with its domestic sale price
in Argentina (or third-country export prices / constructed value) to determine whether Acindar dumped during the sunset review period. The improper comparison with the prevailing US market price led to a flawed finding of "likely dumping" which may not meet the requirement of making a reasoned and adequate determination on a sufficient factual basis as required by Article 11.3 of the AD Agreement.
C. THE USDOC’S FINDING OF DECLINING OCTG IMPORT VOLUMES
26. When making the Section 129 Determination, the USDOC also relied on its previous finding in 2000 sunset review regarding the import volume of the subject merchandise for the period before 15and the period after the issuance of the anti-dumping duty order.
27. China submits that such reliance seems to be inconsistent with Article 11.3 of the AD Agreement for the following reasons.
28. First, the US argues that the USDOC can legitimately rely on its previous finding of declining import volumes in 2000 in that the original panel found no WTO-inconsistency with respect 16to such finding.
13 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para 126. 14 US First Submission, para. 46. 15 US Section 129 Determination, at pages 4 and 6. 16 US First Submission, para 23.
29. China does not agree. China recalls that in the original dispute, the original panel found that the USDOC's reliance on the existence of the original dumping margin was inconsistent with Article 11.3 of the AD Agreement, and therefore did not need to continue to address whether, as the second factual basis, the USDOC's reliance on declining import volumes was yet another action 17 China does not believe the position held by the original panel can be inconsistent with that article.
understood to provide a safe haven to the US with respect to the said finding. Therefore, the original panel’s lack of analysis on the issue of declining import volumes simply cannot be a valid defending argument for the US in this proceeding.
30. Second, China notes that in the Section 129 Determination, the USDOC simply stated, without any reasoning, that "[d]eclining import volumes after, and apparently resulting from,
imposition of an anti-dumping order indicate that exporters would need to dump to sell at pre-order 18levels". The USDOC did not explain why such decline of import volumes is attributable to the imposition of the order. The word "apparently" indicates that the USDOC reached this conclusion by assumption instead of reasoning.
31. China submits the USDOC erred in assuming such conclusion, in that the Appellate Body in US Corrosion-Resistant Steel Sunset Review has clearly pointed out that assumptions are not enough
to support a determination under Article 11.3, and the decline in import volumes could well have been caused or reinforced by changes in the competitive conditions of the market-place or strategies of 19exporters, rather than by the imposition of the duty alone.
32. Therefore, the USDOC should have conducted a case-specific analysis of the factors behind the decline in import volumes in order to determine that dumping will continue or recur if the duty is terminated. A simple assumption of such causation is not such positive evidence as to enable the USDOC to draw a reasoned and adequate affirmative likelihood determination as required by Article 11.3 of the AD Agreement.
D. THE USDOC’S CONSIDERATION OF THE FACTUAL FACTORS AND CONCLUSION ON
LIKELIHOOD OF DUMPING
33. In the Section 129 Determination, the major factual bases that the USDOC relied on in making an affirmative likelihood-of-dumping determination are: (i) no findings regarding specific instances of likely dumping by Siderca during the original sunset review period; (ii) the finding of likely dumping by Acindar during the original sunset review period; and (iii) the previous finding regarding the import volumes of the subject merchandise for the period before and the period after the issuance of the anti-dumping duty order.
34. Even assuming, for the sake of argument, that the USDOC properly made a finding of likely dumping with respect to Acindar by the comparison between Acindar’s export prices and the
prevailing US market prices, such a finding, in combination with the finding of declining import volumes, cannot sufficiently support an affirmative determination of likelihood of dumping. The reasons are detailed below.
35. At the outset, in China’s view, it should be distinguished between "likelihood of continuation or recurrence of dumping if the anti-dumping duty order is terminated" and "likelihood of dumping
17 Panel Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular
Goods from Argentina, WT/DS268/R, paras. 6.11 and 7.221 (adopted 16 July 2004) (US – Oil Country Tubular
Goods Sunset Reviews). 18 US Section 129 Determination, page 11. 19 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 177.
during the sunset review period". These two concepts respectively address events that will occur in the future and events that have occurred in the past.
36. According to Article 11.3 of the AD Agreement, the conclusion on likelihood of continuation
or recurrence of dumping is one on future events that should be drawn from the past facts supported
Corrosion-Resistant Steel Sunset Review, the Appellate Body by positive evidence. In US ;
explained that "the likelihood determination is a prospective determination. In other words, the authorities must undertake a forward-looking analysis and seek to resolve the issue of what would be 20likely to occur if the duty were terminated."
37. On the other hand, the conclusion on likely dumping in the sunset review period is a speculation of the past facts. At the time of making the review determination, the sales by the respondent to the US market had been made and whether it had dumped the subject merchandise in the US was a matter of fact, rather than a possibility or likelihood of events that will occur. If the USDOC decides to rely on such a factual point, it has to make sure that the fact is supported by sufficient factual information. In other words, the USDOC can only draw a conclusion of "yes" or "no" instead of "likely yes". If the USDOC cannot satisfy itself with sufficient evidence that Acindar was dumping during the sunset review period, then it should not draw any conclusion on it at all.
38. Second, it is further noted that in its First Written Submission, the US submits that "[n]othing in Article 11.3 prevents authorities from looking at evidence of past behaviour, or past likely 21behaviour where respondents are unable to provide evidence of actual past behaviour". The logic
behind such an argument seems to be that if the respondents fail to provide specific evidence of actual past behaviour, then the authorities are free to look at evidence of likely past behaviour. But what the USDOC has done is not just "looking at". Rather, it relied on the finding of likely dumping in
reaching its affirmative conclusion on likelihood of continuation or recurrence of dumping.
39. As articulated by the Appellate Body, under Article 11.3 of the AD Agreement, the authorities
bear the treaty obligations to "arrive at a reasoned conclusion" on the basis of "positive evidence". The failure by the respondents to provide necessary information cannot simply discharge the authorities of such duties. Instead, under such circumstances, the authorities should follow an appropriate methodology and rely on positive evidence on the record to see if it can draw a permissible conclusion on the likelihood of continuation or recurrence of dumping.
49. Third, it is noted that in US - Corrosion-Resistant Steel Sunset Review, the Appellate Body
We would have difficulty accepting that dumping margins and import
volumes are always "highly probative" in a sunset review by USDOC if
this means that either or both of these factors are presumed, by
themselves, to constitute sufficient evidence that the expiry of the duty
would be likely to lead to continuation or recurrence of dumping. Such a
presumption might have some validity when dumping
has continued since the duty was imposed (as in the first scenario
identified in Section II.A.3 of the Sunset Policy Bulletin), particularly
when such dumping has continued with significant margins and import 22volumes. [emphasis added]
Therefore, in the view of the Appellate Body, even if dumping has continued with significant
margins and import volumes after the imposition of anti-dumping measure, such facts might only
20 Ibid., para. 105. 21 US First Submission, para 46. 22 Ibid, para. 177.
have some validity in forming an affirmative likelihood conclusion. In this case, the findings made by the USDOC are far from reaching such a level of certainty. The USDOC was only able to conclude that Acindar was likely dumping during the sunset review period and it is not even clear whether the import volume, after the declining following the imposition of the anti-dumping duty order, was still significant. Therefore, it is hard to accept that the likely dumping finding made on Acindar and the finding of declining import volumes, taken together, could permissibly form the factual bases upon which the USDOC relied in making a WTO-consistent and corrected sunset review determination.
41. In summary, China submits that the finding of likely dumping and that of declining import volumes do not seem to form a sufficient factual basis to reach an affirmative conclusion on
likelihood of dumping.
42. In conclusion, China is of the following views on the key issues discussed above:
(i) In the revised sunset review, the authorities are permitted to collect new information
so as to bring its measure into conformity with DSB recommendations and rulings;
(ii) The US’s finding of likely dumping with respect to Acindar contradicts with the
concept of dumping as provided for by Article 2 and therefore seems to fail to meet
the requirement of making a reasoned and adequate determination on sufficient
factual basis as required by Article 11.3 of the AD Agreement;
(iii) The USDOC assumed that the declining import volumes were due to the imposition
of the anti-dumping duty order which does not seem consistent with Article 11.3;
(iv) The findings in respect of likely dumping and declining import volumes do not seem
to constitute a sufficient factual basis for an affirmative determination.
THIRD PARTY WRITTEN SUBMISSION OF THE
26 April 2006
TABLE OF CONTENTS
I. INTRODUCTION .......................................................................................................... 10
II. THE BALANCE ENSHRINED IN ARTICLE 11.3 AND THE SPECIAL CARE
REQUIRED WHEN MAKING A PROSPECTIVE DETERMINATION .................... 10
III. ARTICLE 11.3 IN THE CONTEXT OF THE ANTI-DUMPING AGREEMENT:
CONSEQUENCES OF TERMINATION AND CONSEQUENCES OF
CONTINUATION .......................................................................................................... 11
IV. RELIANCE ON ORIGINAL DUMPING MARGIN AND DECLINE IN IMPORTS
INSUFFICIENT .............................................................................................................. 12
V. ZEROING ....................................................................................................................... 13
VI. AUTOMATIC DUMPING IN A DEPRESSED MARKET CYCLE ............................ 14
VII. CONCLUSION ............................................................................................................... 15
1. The EC makes these written observations because of its systemic interest in the correct
interpretation of the Anti-Dumping Agreement and the GATT 1994.
2. Consistent with our submissions to the original panel, we explain why we believe that the 1Article 11.3 re-determination is not consistent with the Anti-Dumping Agreement, and does not
comply with the findings and recommendations of the DSB in the original dispute.
II. THE BALANCE ENSHRINED IN ARTICLE 11.3 AND THE SPECIAL CARE
REQUIRED WHEN MAKING A PROSPECTIVE DETERMINATION
3. The EC re-iterates its submissions to the original panel. Article 11.3 of the Anti-Dumping
Agreement must be interpreted as striking a balance between the termination of an anti-dumping measure and its continuation. It cannot be interpreted in an entirely one-sided manner. Neither Article 11.3, nor any other provision of the Anti-Dumping Agreement, provides that anti-dumping measures may remain in place indefinitely or forever, on the assumption that "once a dumper, always a dumper". To permit such an interpretation would be to conclude that the addition of Article 11.3 to
1 Exhibit ARG-16: "Final Results of Sunset Review, Oil Country Tubular Goods from Argentina". This
new sunset review was initiated (apparently out of time) on 2 November 2005 (Exhibit ARG-16, page 2, second
para, penultimate sentence).