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WTO ANALYTICAL INDEX: ANTI-DUMPING AGREEMENT Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement) |
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Article 3: Determination of Injury(9) (footnote original) 9 Under this Agreement the term "injury" shall, unless otherwise specified, be taken to mean material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry and shall be interpreted in accordance with the provisions of this Article.
3.1 A determination of injury for purposes of Article VI of GATT 1994 shall be based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and (b) the consequent impact of these imports on domestic producers of such products.
3.2 With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member. With regard to the effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing Member, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. No one or several of these factors can necessarily give decisive guidance.
3.3 Where imports of a product from more than one country are simultaneously subject to anti-dumping investigations, the investigating authorities may cumulatively assess the effects of such imports only if they determine that (a) the margin of dumping established in relation to the imports from each country is more than de minimis as defined in paragraph 8 of Article 5 and the volume of imports from each country is not negligible and (b) a cumulative assessment of the effects of the imports is appropriate in light of the conditions of competition between the imported products and the conditions of competition between the imported products and the like domestic product.
3.4 The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.
3.5 It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this Agreement. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry.
3.6 The effect of the dumped imports shall be assessed in relation to the domestic production of the like product when available data permit the separate identification of that production on the basis of such criteria as the production process, producers' sales and profits. If such separate identification of that production is not possible, the effects of the dumped imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided.
3.7 A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent.(10) In making a determination regarding the existence of a threat of material injury, the authorities should consider, inter alia, such factors as:
(footnote original) 10 One example, though not an exclusive one, is that there is convincing reason to believe that there will be, in the near future, substantially increased importation of the product at dumped prices.
(i) a significant rate of increase of dumped imports into the domestic market indicating the likelihood of substantially increased importation;
(ii) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to the importing Member's market, taking into account the availability of other export markets to absorb any additional exports;
(iii) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and
(iv) inventories of the product being investigated.
No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur.
3.8 With respect to cases where injury is threatened by dumped imports, the application of anti-dumping measures shall be considered and decided with special care. (a) Relationship between the paragraphs of Article 3 78. In Thailand - H-Beams, the Appellate Body explained the relationship between the paragraphs of Article 3: "Article 3 as a whole deals with obligations of Members with respect to the determination of injury. Article 3.1 is an overarching provision that sets forth a Member's fundamental, substantive obligation in this respect. Article 3.1 informs the more detailed obligations in succeeding paragraphs. These obligations concern the determination of the volume of dumped imports, and their effect on prices (Article 3.2), investigations of imports from more than one country (Article 3.3), the impact of dumped imports on the domestic industry (Article 3.4), causality between dumped imports and injury (Article 3.5), the assessment of the domestic production of the like product (Article 3.6), and the determination of the threat of material injury (Articles 3.7 and 3.8). The focus of Article 3 is thus on substantive obligations that a Member must fulfill in making an injury determination."(96) 79. In Egypt - Steel Rebar, the Panel confirmed the role of Article 3.1 and explained the relationship between paragraph 5 and paragraphs 2 and 4: "...It is clear that Article 3.1 provides overarching general guidance as to the nature of the injury investigation and analysis that must be conducted by an investigating authority. Article 3.5 makes clear, through its cross-references, that Articles 3.2 and 3.4 are the provisions containing the specific guidance of the AD Agreement on the examination of the volume and price effects of the dumped imports, and of the consequent impact of the imports on the domestic industry, respectively..."(97) 80. In Egypt - Steel Rebar, Turkey claimed that because the period of investigation for dumping ended on 31 December 1998, and most of the injury found by the investigating authorities occurred in the first quarter of 1999, the investigating authorities had failed to demonstrate that dumping and injury occurred at the same point in time and that there was a link between the imports that were specifically found to be dumped and the injury found, violating Articles 3.5 and 3.1.(98) The Panel disagreed: "... neither of the articles cited in this claim [Articles 3.1 and 3.5], nor any other provision of the AD Agreement, contains any specific rule as to the time periods to be covered by the injury or dumping investigations, or any overlap of those time periods.(99)
In fact, the only provisions that provide guidance as to how the price effects and effects on the domestic industry of the dumped imports are to be gauged are (as cross-referenced in Article 3.5), Articles 3.2 (volume and price effects of dumped imports), and Article 3.4 (impact of the dumped imports on the domestic industry). Neither of these provisions specifies particular time periods for these analyses..."(100) (ii) Recommendation by the Committee on Anti-Dumping Practices 81. With respect to the recommendation by the Committee on Anti-Dumping Practices on the period of data collection, see paragraph 7 above. 82. Referring to footnote 9 to Article 3 and to Article 4.1, the Panel on Mexico - Corn Syrup stated: "These two provisions inescapably require the conclusion that the domestic industry with respect to which injury is considered and determined must be the domestic industry defined in accordance with Article 4.1".(101) (a) Significance of paragraph 1 within the context of Article 3 83. In Thailand - H-Beams, the Appellate Body explained the legal status of paragraph 1 in the provisions of Article 3. See paragraph 78 above.(102) See also paragraph 79 above (b) Investigating authorities' obligation under Article 3.1 84. In US - Hot-Rolled Steel, the Appellate Body ruled that "the thrust of the investigating authorities' obligation, in Article 3.1, lies in the requirement that they base their determination on 'positive evidence' and conduct an 'objective examination'".(103) Meaning of positive evidence 85. In US - Hot-Rolled Steel, the Appellate Body ruled that "the term "positive evidence" relates, in our view, to the quality of the evidence that authorities may rely upon in making a determination." It further explained that "[t]he word "positive" means, to us, that the evidence must be of an affirmative, objective and verifiable character, and that it must be credible. "(104) Scope of positive evidence 86. In Thailand - H-Beams, the Appellate Body reversed the Panel's finding that an injury determination must be based only upon evidence disclosed to, or discernible by, the parties to the investigation, and concluded that "Article 3.1 ... permits an investigating authority making an injury determination to base its determination on all relevant reasoning and facts before it."(105) The Appellate Body explained: "Even if we accept that the ordinary meaning of these terms is reflected in the dictionary definitions cited by the Panel, in our view, the ordinary meaning of these terms does not suggest that an investigating authority is required to base an injury determination only upon evidence disclosed to, or discernible by, the parties to the investigation. An anti-dumping investigation involves the commercial behaviour of firms, and, under the provisions of the Anti-Dumping Agreement, involves the collection and assessment of both confidential and non-confidential information. An injury determination conducted pursuant to the provisions of Article 3 of the Anti-Dumping Agreement must be based on the totality of that evidence. We see nothing in Article 3.1 which limits an investigating authority to base an injury determination only upon non-confidential information."(106) 87. In Thailand - H-Beams, the Appellate Body provided the following contextual support for its finding that a determination of injury pursuant to Article 3.1 need not be based exclusively on evidence which has been disclosed to the parties to the investigation: "Contextual support for this interpretation of Article 3.1 can be found in Article 3.7, which states that a threat of material injury must be 'based on facts and not merely on allegation, conjecture or remote possibility'. This choice of words shows that, as in Article 3.1, which overarches and informs it, it is the nature of the evidence that is being addressed in Article 3.7. A similar requirement for an investigating authority can be found in Article 5.2, which requires that an application for initiation of an anti-dumping investigation may not be based on '[s]imple assertion, unsubstantiated by relevant evidence'. Article 5.3 requires an investigating authority to 'examine the accuracy and adequacy' of the evidence provided in such an application.
Further contextual support for this reading of Article 3.1 is provided by other provisions of the Anti-Dumping Agreement. Article 6 (entitled 'Evidence') establishes a framework of procedural and due process obligations which, amongst other matters, requires investigating authorities to disclose certain evidence, during the investigation, to the interested parties. Article 6.2 requires that parties to an investigation 'shall have a full opportunity for the defence of their interests'. Article 6.9 requires that, before a final determination is made, authorities shall 'inform all interested parties of the essential facts under consideration which form the basis for the decision'. There is no justification for reading these obligations, which appear in Article 6, into the substantive provisions of Article 3.1. We do not, however, imply that the injury determination by the Thai authorities in this case necessarily met the requirements of Article 6. As the Panel found that Poland's claim under Article 6 did not meet the requirements of Article 6.2 of the DSU, the issue was not considered by the Panel.
Article 12 (entitled 'Public Notice and Explanation of Determinations') also provides contextual support for our interpretation of the meaning of 'positive evidence' and 'objective examination' in Article 3.1. In a similar manner to Article 6, Article 12 establishes a framework of procedural and due process obligations concerning, notably, the contents of a final determination. Article 12.2.2 requires, in particular, that a final determination contain 'all relevant information on the matters of fact and law and reasons which have led to the imposition of final measures', and 'the reasons for the acceptance or rejection of relevant arguments or claims made by the exporters and importers'. Article 12, like Article 6, sets forth important procedural and due process obligations. However, as in the case of Article 6, there is no justification for reading these obligations into the substantive provisions of Article 3.1. We do not, however, imply that the injury determination of the Thai authorities in this case necessarily met the requirements of Article 12. This issue was not considered by the Panel, since Poland did not make a claim under this provision."(107) 88. Further, in Thailand - H-Beams, the Appellate Body rejected the Panel's reasoning that in reviewing the determination of injury by the investigating authority under Article 3, the Panel "is required, under Article 17.6(i), in assessing whether the establishment of facts is proper, to ascertain whether the 'factual basis' of the determination is 'discernible' from the documents that were available to the interested parties and/or their legal counsel in the course of the investigation and at the time of the final determination; and, in assessing whether the evaluation of the facts is unbiased and objective, to examine the 'analysis and reasoning' in only those documents 'to ascertain the connection between the disclosed factual basis and the findings.'"(108) The Panel had linked the obligation of national authorities under Article 3.1 to base the determination of injury on positive evidence, i.e. excluding confidential information not disclosed to the parties to the investigation, to the Panel's obligation under Articles 17.5 and 17.6, stating that "we as a panel should base our review on the reasoning and analysis reflected in the final determination and in communications and disclosures to which the Polish firms had access in the course of the investigation or at the time of the final determination". The Appellate Body had already found that under Article 3.1, contrary to the Panel's finding, the investigating authority was not precluded from basing its determination of injury on information not disclosed to the parties to the investigation. The Appellate Body then also disagreed with the link, established by the Panel, between Article 3.1 on the one hand and Articles 17.5 and 17.6 on the other: "[W]hile the obligations in Article 3.1 apply to all injury determinations undertaken by Members, those in Articles 17.5 and 17.6 apply only when an injury determination is examined by a WTO panel. The obligations in Articles 17.5 and 17.6 are distinct from those in Article 3.1."(109) 89. In Thailand - H-Beams, the Appellate Body then also reversed the Panel's findings that the Panel was precluded from examining facts not disclosed to interested parties in the national investigation: "Articles 17.5 and 17.6(i) require a panel to examine the facts made available to the investigating authority of the importing Member. These provisions do not prevent a panel from examining facts that were not disclosed to, or discernible by, the interested parties at the time of the final determination."(110) Concept of objective examination 90. In US - Hot-Rolled Steel, the Appellate Body analysed the concept of "objective assessment" as compared to "positive evidence", indicating that the latter is concerned with the investigating process itself as opposed to the facts justifying the injury determination: "The term "objective examination" aims at a different aspect of the investigating authorities' determination. While the term "positive evidence" focuses on the facts underpinning and justifying the injury determination, the term "objective examination" is concerned with the investigative process itself. The word "examination" relates, in our view, to the way in which the evidence is gathered, inquired into and, subsequently, evaluated; that is, it relates to the conduct of the investigation generally. The word "objective", which qualifies the word "examination", indicates essentially that the "examination" process must conform to the dictates of the basic principles of good faith and fundamental fairness.(111) In short, an "objective examination" requires that the domestic industry, and the effects of dumped imports, be investigated in an unbiased manner, without favouring the interests of any interested party, or group of interested parties, in the investigation. The duty of the investigating authorities to conduct an "objective examination" recognizes that the determination will be influenced by the objectivity, or any lack thereof, of the investigative process. (112)"(113) Extent of the objective examination 91. In US - Hot-Rolled Steel, Japan had challenged Section 771(7)(C)(iv) of the United States Tariff Act of 1930, as amended, (the so-called "captive production provision") which provided that, in certain statutorily defined circumstances, the investigating authorities when conducting an injury determination "shall focus primarily" on a particular segment of the "domestic industry", when "determining market share and the factors affecting financial performance". The Appellate Body examined whether the investigating authorities could make a sectoral examination of the domestic industry when conducting an injury determination under Article 3.1. As indicated in paragraph 111 below the Appellate Body concluded by reference to Article 3.4 that it may be highly pertinent to examine the domestic industry by part, sector or segment provided that such an examination be conducted in an "objective" manner as mandated by Article 3.1. The Appellate Body interprets the obligation to make an "objective" assessment in this regard as meaning that "where investigating authorities undertake an examination of one part of a domestic industry, they should, in principle, examine, in like manner, all of the other parts that make up the industry, as well as examine the industry as a whole" or, "in the alternative," provide "a satisfactory explanation as to why it is not necessary to examine directly or specifically the other parts...". It therefore found that an examination of only certain parts of a domestic industry does not ensure a proper evaluation of the state of the domestic industry as a whole, and does not, therefore, satisfy the requirements of "objectiv[ity]" in Article 3.1 of the Anti-Dumping Agreement: "...it may be highly pertinent for investigating authorities to examine a domestic industry by part, sector or segment. However, as with all other aspects of the evaluation of the domestic industry, Article 3.1 of the Anti-Dumping Agreement requires that such a sectoral examination be conducted in an "objective" manner. In our view, this requirement means that, where investigating authorities undertake an examination of one part of a domestic industry, they should, in principle, examine, in like manner, all of the other parts that make up the industry, as well as examine the industry as a whole. Or, in the alternative, the investigating authorities should provide a satisfactory explanation as to why it is not necessary to examine directly or specifically the other parts of the domestic industry. Different parts of an industry may exhibit quite different economic performance during any given period. Some parts may be performing well, while others are performing poorly. To examine only the poorly performing parts of an industry, even if coupled with an examination of the whole industry, may give a misleading impression of the data relating to the industry as a whole, and may overlook positive developments in other parts of the industry. Such an examination may result in highlighting the negative data in the poorly performing part, without drawing attention to the positive data in other parts of the industry. We note that the reverse may also be true - to examine only the parts of an industry which are performing well may lead to overlooking the significance of deteriorating performance in other parts of the industry.
Moreover, by examining only one part of an industry, the investigating authorities may fail properly to appreciate the economic relationship between that part of the industry and the other parts of the industry, or between one or more of those parts and the whole industry. For instance, we can envisage that an industry, with two parts, may be overall in mild recession, where one part is performing very poorly and the other part is performing very well. It may be that the relationship between the two parts is such that the healthier part will lead the other part, and the industry as a whole, out of recession. Alternatively, the healthy part may follow the other part, and the industry as a whole, into recession.
Accordingly, an examination of only certain parts of a domestic industry does not ensure a proper evaluation of the state of the domestic industry as a whole, and does not, therefore, satisfy the requirements of "objectiv[ity]" in Article 3.1 of the Anti-Dumping Agreement."(114) Relationship with Article 3.4 92. In US - Hot-Rolled Steel, the Appellate Body explained that "an important aspect of the "objective examination" required by Article 3.1 is further elaborated in Article 3.4 as an obligation to "examin[e] the impact of the dumped imports on the domestic industry" through "an evaluation of all relevant economic factors and indices having a bearing on the state of the industry"." See also paragraphs 91 above and 111 below. 93. The Panel on EC - Bed Linen, in a finding subsequently not reviewed by the Appellate Body, rejected the argument advanced by India that the term "dumped imports" must be understood to refer only to imports which are the subject of transactions in which the export price was below normal value. Rather, the Panel endorsed the argument by the European Communities that once a determination has been made that a product in question from particular producers is being dumped, this conclusion will then apply to all imports of that product from that source: "[W]e consider that dumping is a determination made with reference to a product from a particular producer/exporter, and not with reference to individual transactions. That is, the determination of dumping is made on the basis of consideration of transactions involving a particular product from particular producers/exporters. If the result of that consideration is a conclusion that the product in question from particular producers/exporters is dumped, we are of the view that the conclusion applies to all imports of that product from such source(s), at least over the period for which dumping was considered. Thus, we consider that the investigating authority is entitled to consider all such imports in its analysis of 'dumped imports' under Articles 3.1, 3.4, and 3.5 of the AD Agreement."(115) 94. The Panel on EC - Bed Linen also indicated some practical reasons for why the phrase "dumped imports" could not refer only to those imports attributable to transactions in which export price was below normal value: "Our conclusion that investigating authorities may treat all imports from producers/exporters for which an affirmative determination of dumping is made as 'dumped imports' "or purposes of injury analysis under Article 3 is bolstered by our view that the interpretation proposed by India, which entails the conclusion that the phrase 'dumped imports' refers only to those imports attributable to transactions in which export price is below normal value, would lead to an unworkable result in certain cases. One of the objects and purposes of the AD Agreement is to establish the conditions under which Members may impose anti-dumping duties in cases of injurious dumping. An interpretation which would, in many cases, make it impossible to assess one of the necessary elements, injury, is not consistent with that object and purpose.
An assessment of the volume, price effects, and consequent impact, only of imports attributable to transactions for which a positive margin was calculated would be, in many cases, impossible, or at least impracticable. Attempting to segregate individual transactions as to whether they were 'dumped' or not, even assuming it could be done, would leave investigating authorities in a quandary in cases in which the dumping investigation is undertaken for a sample of companies or products. Such sampling is specifically provided for in the AD Agreement, yet it would not be possible, in such cases, accurately to determine the volume of imports attributable to 'dumped' transactions. Similarly, if dumping is determined on the basis of a comparison of weighted average normal value to weighted average export price, there would be no comparisons concerning individual transactions which could serve as the basis for segregating imports in 'dumped' and 'not-dumped' categories."(116) (d) "the effect of dumped imports" 95. In Guatemala - Cement II, Mexico claimed that Guatemala's investigating authority had violated Articles 3.1 and 3.2 by not considering at all, in its investigation, certain other cement imports. The Panel understood the Mexican claim to be that the Guatemalan authorities considered the type of cement under the not scrutinized imports as being "unlike" the cement under the imports subject to investigation, an assessment which Mexico considered erroneous. Mexico further claimed that the erroneous exclusion of certain imports from the investigation resulted in the following consequences: (i) the resulting volume of total imports of the product under investigation was lower; (ii) the share of allegedly dumped imports in total imports of the product under investigation was artificially inflated; (iii) the consideration of a faulty and incomplete figure for total imports of the product under investigation yielded a distorted figure for apparent domestic consumption; and (iv) because of this incorrect figure for apparent domestic consumption, the relationship between the increase in dumped imports and consumption was ultimately incorrect.(117) The Panel considered that consequences (i) through (iv), if proven, would constitute a violation of Articles 3.1 and 3.2, in that an exclusion of the imports at issue from the figures for domestic consumption of the like product affected the comparison that was made with the figures for volume of dumped imports for purposes of determining that there had been a significant increase in dumped imports relative to domestic consumption in the importing Member.(118) After reviewing the evidence submitted by Mexico and inconsistencies in Guatemala's replies in this regard, the Panel ultimately found that Mexico had established a prima facie case of inconsistency with respect to Articles 3.1 and 3.2.(119) (e) Relationship with other paragraphs in Article 3 96. In Thailand - H-Beams, the Appellate Body referred to Article 3.7 as well as Articles 5.2, 5.3, 6 and 12 in interpreting Article 3.1. See paragraph 87 above. (a) Choice of analytical methodology 97. With respect to Article 3.2, the Panel on Thailand - H-Beams stated that "it is for the investigating authorities in the first instance to determine the analytical methodologies that will be applied in the course of an investigation, as Article 3 contains no requirements concerning the methodology to be used."(120) 98. In Egypt - Steel Rebar, the Panel did not find on the plain text of Article 3.2 any requirement that the price undercutting analysis must be conducted at any particular level of trade. See paragraph 105 below. 99. The Panel on Thailand - H-Beams considered that a quarterly analysis of the trend in import volume is not required under Article 3.2, and went on to state that "[g]iven that on an annual basis over a multi-year period, imports from Poland increased in every period examined, we do not believe that quarter-to-quarter fluctuation in import volumes during one of the twelve-month periods examined invalidates the Thai authorities' finding that the import volume of the subject imports 'increased continuously'."(121) (iii) Length of period of investigation 100. In Guatemala - Cement II, the Panel did not agree with Mexico's argument that Guatemala's authority had acted inconsistently with Article 3.2 by examining import data only for the one-year period of investigation. The Panel explained: "A recent recommendation of the Committee on Anti-Dumping Practices calls on Members to use a data collection period of at least three years. This recommendation reflects the common practice of Members.(122) That said, there is no provision in the Agreement which specifies the precise duration of the period of data collection. Thus, it cannot be said a priori that the use of a one-year period of data collection would not be consistent with the requirement of Article 3.2 to consider whether there has been a significant increase in the volume of dumped imports in the circumstances of a particular case. In this case, Guatemala argues that the reason for the short period of data collection was that exports by Cruz Azul did not become significant until 1995. The record of the investigation supports this conclusion."(123) With respect to the recommendation by the Committee on Anti-Dumping Practices on this topic, see paragraph 7 above. (b) "a significant increase in dumped imports" 101. In Thailand - H-Beams, the Panel considered that Article 3.2 does not require that the term "significant" be used to characterize a subject increase in imports in the determination of an investigating authority. The Panel explained: "We note that the text of Article 3.2 requires that the investigating authorities 'consider whether there has been a significant increase in dumped imports'. The Concise Oxford Dictionary defines 'consider' as, inter alia: 'contemplate mentally, especially in order to reach a conclusion'; 'give attention to'; and 'reckon with; take into account'. We therefore do not read the textual term 'consider' in Article 3.2 to require an explicit 'finding' or 'determination' by the investigating authorities as to whether the increase in dumped imports is 'significant'. While it would certainly be preferable for a Member explicitly to characterize whether any increase in imports as 'significant', and to give a reasoned explanation of that characterization, we believe that the word 'significant' does not necessarily need to appear in the text of the relevant document in order for the requirements of this provision to be fulfilled. Nevertheless, we consider that it must be apparent in the relevant documents in the record that the investigating authorities have given attention to and taken into account whether there has been a significant increase in dumped imports, in absolute or relative terms."(124) 102. In Guatemala - Cement II, the Panel agreed with Mexico that Guatemala's authority had acted inconsistently with Articles 3.1 and 3.2 by not taking into account imports other than those from the supplier under investigation. See paragraph 95 above.(125) (c) "the effect of the dumped imports on prices" 103. In Guatemala - Cement II, disagreeing with Mexico's claim that in violation of Article 3.2, Guatemala's authority did not properly examine the effect of dumped imports on the price of domestic sales, the Panel stated that "[b]ased on the evidence of declining prices and inability to achieve established price levels, coinciding with imports at lower prices we find that an objective and unbiased investigating authority could have properly concluded that the dumped imports were having a negative effect on the prices of the domestic industry."(126) 104. In Guatemala - Cement II, the Panel also rejected Mexico's argument that Guatemala's authority conducted the examination of the price effect of dumped imports at the regional level only and not also at the national level and therefore acted inconsistently with Article 3.2. Rather, the Panel found that Guatemala had not limited its analysis to a particular region. The Panel also added that there was only one cement producer in Guatemala, and thus, even if the negative effect of the dumped imports on the prices of the domestic like product was only evidenced in one particular region (where that producer was located), this could still be viewed as causing injury to that producer.(127) 105. In Egypt - Steel Rebar, Turkey had argued that, to satisfy the requirements of Article 3.2, a price undercutting analysis must be made on a delivered-to-the-customer basis, as, in its view, it is only at that level that any such undercutting can influence customers' purchasing decisions. The Panel did not find on the basis of the plain text of Article 3.2 any requirement that the price undercutting analysis must be conducted in any particular way, that is, at any particular level of trade.(128) (e) Relationship with other paragraphs of Article 3 106. With respect to the relationship of paragraph 2 with paragraphs 1, 3, 4 and 5 of Article 3, see paragraphs 78-79 above. (a) Relationship with other paragraphs of Article 3 107. With respect to the relationship of paragraph 3 with paragraphs 1, 2, 4 and 5 of Article 3, see paragraph 78 above. 108. In EC - Bed Linen, the Panel rejected the argument that "dumped imports" must be understood to refer only to imports which are the subject of transactions in which the export price was below normal value. See paragraph 93 above. 109. In EC - Bed Linen, the Panel examined whether, further to having defined the Community industry as a group of 35 producers and resorted to a sample of those producers, the European Communities was precluded from considering information relating to producers not within that sample, or not within the Community industry.(129) The Panel, in a finding subsequently not addressed by the Appellate Body, resolved the issue whether "consideration of evidence for domestic producers outside the selected sample but within the domestic industry constitutes, ipso facto, a violation of Article 3.4"(130), as follows: "[I]t is clear from the language of the AD Agreement, in particular Articles 3.1, 3.4, and 3.5, that the determination of injury has to be reached for the domestic industry that is the subject of the investigation. ... In our view, it would be anomalous to conclude that, because the [investigating Member] chose to consider a sample of the domestic industry, it was required to close its eyes to and ignore other information available to it concerning the domestic industry it had defined. Such a conclusion would be inconsistent with the fundamental underlying principle that anti-dumping investigations should be fair and that investigating authorities should base their conclusions on an objective evaluation of the evidence. It is not possible to have an objective evaluation of the evidence if some of the evidence is required to be ignored, even though it relates precisely to the issues to be resolved. Thus, we consider that the [investigating authority] did not act inconsistently with Articles 3.1, 3.4, and 3.5 of the AD Agreement by taking into account in its analysis information regarding the ... industry as a whole, including information pertaining to companies that were not included in the sample."(131) 110. Regarding the issue of information concerning Article 3.4 factors for companies outside the domestic industry, the Panel on EC - Bed Linen held that information about companies which are not part of the domestic industry "provides no basis for conclusions about the impact of dumped imports on the domestic industry": "In our view, information concerning companies that are not within the domestic industry is irrelevant to the evaluation of the 'relevant economic factors and indices having a bearing on the state of the industry' required under Article 3.4. This is true even though those companies may presently produce, or may have in the past produced, the like product ... . Information concerning the Article 3.4 factors for companies outside the domestic industry provides no basis for conclusions about the impact of dumped imports on the domestic industry itself."(132) 111. The Appellate Body in US - Hot-Rolled Steel ruled that investigating authorities can undertake "an evaluation of particular parts, sectors or segments within a domestic industry", provided they respect the fundamental obligation in Article 3.1 to conduct an "objective assessment"(133): "... it seems to us perfectly compatible with Article 3.4 for investigating authorities to undertake, or for a Member to require its investigating authorities to undertake, an evaluation of particular parts, sectors or segments within a domestic industry.(134) Such a sectoral analysis may be highly pertinent, from an economic perspective, in assessing the state of an industry as a whole.
However, the investigating authorities' evaluation of the relevant factors must respect the fundamental obligation, in Article 3.1, of those authorities to conduct an "objective examination". If an examination is to be "objective", the identification, investigation and evaluation of the relevant factors must be even-handed. Thus, investigating authorities are not entitled to conduct their investigation in such a way that it becomes more likely that, as a result of the fact-finding or evaluation process, they will determine that the domestic industry is injured.
Instead, Articles 3.1 and 3.4 indicate that the investigating authorities must determine, objectively, and on the basis of positive evidence, the importance to be attached to each potentially relevant factor and the weight to be attached to it. In every investigation, this determination turns on the "bearing" that the relevant factors have "on the state of the [domestic] industry"."(135) (c) "all relevant economic factors and indices having a bearing on the state of the industry" (i) Mandatory or illustrative nature of the list of factors 112. The Panel on EC - Bed Linen, in a finding not addressed by the Appellate Body(136), considered whether the list of factors in Article 3.4 is illustrative or mandatory. Further to concluding that the list is mandatory, the Panel addressed the issue of whether only the four groups of "factors" represented by the subgroups separated by semicolons in Article 3.4 must be evaluated, or whether each individual factor listed must be considered: "The use of the phrase 'shall include' in Article 3.4 strongly suggests to us that the evaluation of the listed factors in that provision is properly interpreted as mandatory in all cases. That is, in our view, the ordinary meaning of the provision is that the examination of the impact of dumped imports must include an evaluation of all the listed factors in Article 3.4. ... With regard to the use of the word 'including', we consider that this simply emphasises that there may be other 'relevant factors and indices having a bearing on the state of the industry' among 'all' such factors that must be evaluated. We recall that, in the Tokyo Round AD Code, the same list of factors was preceded by the phrase 'such as', which was changed to the word 'including' that now appears in Article 3.4 of the AD Agreement. ... We thus read the phrase 'shall include an evaluation of all relevant factors and indices having a bearing on the state of the industry, including ...' as introducing a mandatory list of relevant factors which must be evaluated in every case. The change in the wording that was introduced in the Uruguay Round in our view supports an interpretation of the current text of Article 3.4 as setting forth a list that is mandatory, and not merely indicative or illustrative.
... [I]n our view, neither the presence of semicolons separating certain groups of factors in the text of Article 3.4, nor the presence of the word 'or' within the first and fourth of these groups, serves to render the mandatory list in Article 3.4 a list of only four 'factors'. We further note that the two 'ors' appear within - rather than between - the groups of factors separated by semicolons. Thus, we consider that the use of the term 'or' here does not detract from the mandatory nature of the textual requirement that 'all relevant economic factors' shall be evaluated. With respect to the second 'or,' it appears in the phrase 'ability to raise capital or investments', which clearly indicates that the factor that an investigating authority must examine is the 'ability to raise capital' or the 'ability to raise investments', or both. ... Based on the foregoing, we conclude that each of the fifteen factors listed in Article 3.4 of the AD Agreement must be evaluated by the investigating authorities in each case in examining the impact of the dumped imports on the domestic industry concerned."(137) 113. The Panel on Mexico - Corn Syrup confirmed the mandatory nature of the list of factors in Article 3.4. The Panel indicated that, in its view, the language of Article 3.4 makes it clear that the listed factors in Article 3.4 must be considered in all cases "even though such consideration may lead the investigating authority to conclude that a particular factor is not probative in the circumstances of a particular industry or a particular case, and therefore is not relevant to the actual determination. Moreover, the consideration of each of the Article 3.4 factors must be apparent in the final determination of the investigating authority.(138)"(139) 114. The Panel on Thailand - H-Beams, in a finding subsequently explicitly endorsed by the Appellate Body(140), also confirmed that Article 3.4 requires the examination of all the listed factors: "We note Thailand's argument that the list of factors in Article 3.4 is illustrative only, and that no change in meaning was intended in the change in drafting from the 'such as' that appeared in the corresponding provision in the Tokyo Round Antidumping Code to the 'including' that now appears in Article 3.4 of the AD Agreement.(141) The term 'such as' is defined as '[o]f the kind, degree, category being or about to be specified' ... 'for example'. By contrast, the verb 'included' is defined to mean 'enclose'; 'contain as part of a whole or as a subordinate element; contain by implication, involve'; or 'place in a class or category; treat or regard as part of a whole'. We thus read the Article 3.4 phrase 'shall include an evaluation of all relevant factors and indices having a bearing on the state of the industry, including...' as introducing a mandatory list of relevant factors which must be evaluated in every case. We are of the view that the change that occurred in the wording of the relevant provision during the Uruguay Round (from 'such as' to 'including') was made for a reason and that it supports an interpretation of the current text of Article 3.4 as setting forth a list that is not merely indicative or illustrative, but, rather, mandatory.(142)"(143) 115. Also, in support of its proposition referenced in paragraph 114 above, in Thailand - H-Beams, the Panel examined the presence of the word "or" in Article 3.4, but concluded that the use of this word did not serve to detract from the mandatory nature of the list of factors under this provision: "We are of the view that the language in Article 3.4 makes it clear that all of the listed factors in Article 3.4 must be considered in all cases. The provision is specific and mandatory in this regard. We do not consider that the presence of semi-colons separating certain groups of factors in the text of Article 3.4, nor the presence of the word 'or' within the first and fourth of these groups serve to render the mandatory list in Article 3.4 a list of only four 'factors'. We note that the two 'ors' appear within - rather than between - the groups of factors separated by semi-colons. The first 'or' in Article 3.4 appears at the end of a group of factors that may indicate declines in the domestic industry (i.e. 'actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity' (emphasis added)). In our view, the use of the word 'or' here is textually linked to the phrase 'actual and potential decline', and may indicate that such 'declines' need not occur in respect of each and every one of the factors listed in this group in order to support a finding of injury. Thus, we do not consider that the use of the term 'or' here detracts from the textual requirement that 'all relevant economic factors' be evaluated. Moreover, we note that this first group of factors in Article 3.4 contains factors that all relate to, and are indicative of, the state of the industry.(144)
With respect to the second 'or,' we note that it appears in the phrase 'ability to raise capital or investments'. In our view, this 'or' indicates that the factor that an investigating authority must examine is 'ability to raise capital' or 'ability to raise investments', or both."(145) 116. In Guatemala - Cement II, the Panel found that in violation of Article 3.4, Guatemala's authority had not considered certain factors among those enumerated in that Article. In doing so, the Panel agreed with the finding of the Panel on Mexico - Corn Syrup referenced in paragraph 113 above. In further support of its finding, the Panel also noted a finding of the Panel on Korea - Dairy with respect to Article 4.2 of the Agreement on Safeguards, "which is very similar to Article 3.4 of the AD Agreement."(146) (ii) Other factors not listed in Article 3.4 117. The Panel on Mexico - Corn Syrup indicated that, in a particular case, the examination of relevant economic factors other than those listed in Article 3.4 could be required: "In our view, this language [of Article 3.4] makes it clear that the listed factors in Article 3.4 must be considered in all cases. There may be other relevant economic factors in the circumstances of a particular case, consideration of which would also be required. In a threat of injury case, for instance, the AD Agreement itself establishes that consideration of the Article 3.7 factors is also required..."(147) 118. In US - Hot-Rolled Steel, the Appellate Body ruled that the obligation of evaluation that Article 3.4 imposes on investigating authorities is not confined to the listed factors, but extends to "all relevant economic factors": "Article 3.4 lists certain factors which are deemed to be relevant in every investigation and which must always be evaluated by the investigating authorities.(148) However, the obligation of evaluation imposed on investigating authorities, by Article 3.4, is not confined to the listed factors, but extends to "all relevant economic factors". We see nothing in the Anti-Dumping Agreement which prevents a Member from requiring that its investigating authorities examine, in every investigation, the potential relevance of a particular "other factor", not listed in Article 3.4, as part of its overall "examination" of the state of the domestic industry."(149) 119. In Egypt - Steel Rebar, the Panel rejected Turkey's argument that Article 3.4 required a full causation analysis, including a non-attribution analysis, which, according to the Panel, stemmed from Turkey's reading of the words "having a bearing on" as having to do exclusively with causation: "Turkey's argument that Article 3.4 requires a full "non-attribution" analysis appears to stem from its reading of the term "having a bearing on" as having to do exclusively with causation, (i.e., as meaning factors having an effect on the state of the industry). There is another meaning of this term which we find more pertinent in the overall context of Article 3.4, however. In particular, the term "having a bearing on" can mean relevant to or having to do with the state of the industry(150), and this meaning is consistent with the fact that many of the factors listed in Article 3.4 are descriptors or indicators of the state of the industry, rather than being factors having an effect thereon. For example, sales levels, profits, output, etc. are not in themselves causes of an industry's condition. They are, rather, among the factual indicators by which that condition can be judged and assessed as injured or not. Put another way, taken as a whole, these factors are more in the nature of effects than causes.
This reading of "having a bearing on" finds contextual support in the wording of the last group of factors in Article 3.4, namely "actual and potential negative effects on cash flow, inventories, ..." (emphasis added). Further contextual support is found in the cross-reference to Article 3.4 contained in the first sentence of Article 3.5: "... the effects of dumping as set forth in paragraph [] 4 [of Article 3]".(emphasis added)
We note in addition that if Turkey were correct that the full causation analysis, including non-attribution, were required by Article 3.4, this would effectively render redundant Article 3.5, which explicitly addresses causation, including non-attribution. Such an outcome would not be in keeping with the relevant principles of international treaty law interpretation, or with consistent practice in WTO dispute settlement.(151)"(152) (d) Evaluation of relevant factors 120. In Thailand - H-Beams, the Panel opined that each of the factors listed in Article 3.4 must be evaluated, not merely as to whether it is "relevant" or "irrelevant", but on the basis of a "thorough evaluation" of the state of the industry at issue. While the Appellate Body in Thailand - H-Beams explicitly endorsed the Panel's finding that consideration of all factors listed under Article 3.4 is mandatory, it did not address this particular finding: "... Article 3.4 requires the authorities properly to establish whether a factual basis exists to support a well-reasoned and meaningful analysis of the state of the industry and a finding of injury. This analysis does not derive from a mere characterization of the degree of 'relevance or irrelevance' of each and every individual factor, but rather must be based on a thorough evaluation of the state of the industry and, in light of the last sentence of Article 3.4(153), must contain a persuasive explanation as to how the evaluation of relevant factors led to the determination of injury."(154) 121. In Egypt - Steel Rebar, the Panel faced the question of whether the mere presentation of tables of data, without more, constitutes an "evaluation" in the sense of Article 3.4. Egypt had gathered data on all of the listed factors but could not adduce sufficient evidence of its authorities' evaluation of all those factors. The Panel considered that "the "evaluation" to which Article 3.4 refers is the process of analysis and interpretation of the facts established in relation to each listed factor". Since, in spite of having gathered data on all of the factors listed in Article 3.4, the Egyptian investigating authority failed to evaluate a number of listed factors, the Panel found that Egypt acted inconsistently with Article 3.4:(155) "We first consider the ordinary meaning of the word 'evaluation'. The Oxford English Dictionary defines 'evaluation' as follows:
'(1) The action of appraising or valuing (goods, etc.); a calculation or statement of value. (2) The action of evaluating or determining the value of (a mathematical expression, a physical quantity, etc.), or of estimating the force of (probabilities, evidence).'(156)(emphasis added)
The Merriam-Webster's Collegiate Dictionary defines 'evaluation' as follows:
'(1) To determine or fix the value of. (2) To determine the significance, worth, or condition of usually by careful appraisal or study.'(157) (emphasis added)
The Merriam-Webster's Thesaurus lists as synonyms for "evaluation" the following:
'(1) appraisal, appraisement, assessment, estimation, valuation (with related words: interpreting; judging, rating); (2) appraisal, appraisement, assessment, estimate, judgement, stock (with related words: appreciation; interpretation; decision).'(158)
We find significant that all of these definitions and synonyms connote, particularly in the context of 'evaluation' of evidence, the act of analysis, judgement, or assessment. That is, the first definition recited above refers to 'estimating the force of' evidence, evoking a process of weighing evidence and reaching conclusions thereon. The second definition recited above - to determine the significance, worth, or condition of, usually by careful appraisal or study - confirms this meaning. Thus, for an investigating authority to 'evaluate evidence concerning a given factor in the sense of Article 3.4, it must not only gather data, but it must analyze and interpret those data.
We nevertheless do recognize that, in addition to the dictionary meanings of 'evaluation' that we have cited, the definitions set forth above also refer to a purely quantitative process (i.e., calculating, stating, determining or fixing the value of something). If this were the definition applicable to the word 'evaluation' as used in Article 3.4, arguably mere compilation of data on the listed factors, without any narrative explanation or analysis, might suffice to satisfy the requirements of Article 3.4. We find, however, contextual support in Article 17.6(i) of the AD Agreement for our reading that 'evaluation' is something different from, and more than, simple compilation of tables of data. We recognize that Article 17.6(i) does not apply directly to investigating authorities, and that instead, it is part of the standard of review to be applied by panels in reviewing determinations of investigating authorities. However, Article 17.6(i) identifies as the object of a panel's review two basic components of a determination: first, the investigating authority's 'establishment of the facts', and second, the investigating authority's 'evaluation of those facts'. Thus, Article 17.6(i)'s characterization of the essential components of a determination juxtaposes 'establishment of the facts' with the 'evaluation of those facts'. That panels are instructed to determine whether an investigating authority's 'establishment of the facts' was proper connotes an assessment by the panel of the means by which the data before the investigating authority were gathered and compiled. By contrast, the fact that panels are instructed to determine whether an investigating authority's 'evaluation of those facts' was objective and unbiased, provides further support for our view that the 'evaluation' to which Article 3.4 refers is the process of analysis and interpretation of the facts established in relation to each listed factor."(159) (ii) Evaluation of all listed factors Evaluation of all listed factors must be apparent in the authorities' conclusions 122. The Panel on EC - Bed Linen, in a finding not specifically addressed by the Appellate Body, stated that the evaluation of all the factors by the investigating authorities must be apparent in the final determination: "[W]hile the authorities may determine that some factors are not relevant or do not weigh significantly in the decision, the authorities may not simply disregard such factors, but must explain their conclusion as to the lack of relevance or significance of such factors. ... [W]e are of the view that every factor in Article 3.4 must be considered, and that the nature of this consideration, including whether the investigating authority considered the factor relevant in its analysis of the impact of dumped imports on the domestic industry, must be apparent in the final determination."(160) 123. Similarly, the Panel on Guatemala - Cement II stated that "the consideration of the factors in Article 3.4 must be apparent in the determination so the Panel may assess whether the authority acted in accordance with Article 3.4 at the time of the investigation."(161) Checklist approach 124. In EC - Bed Linen, the European Community objected to what it termed the "checklist" approach to the list of factors under Article 3.4 and argued that the relevance of some factors may be apparent early in the investigation. The Panel, in a finding not reviewed by the Appellate Body, concluded that "as long as the lack of relevance or materiality of the factors not central to the decision is at least implicitly apparent from the final determination, the Agreement's requirements are satisfied. While a checklist would perhaps increase an authority's and a panel's confidence that all factors were considered, we believe that it is not a required approach to decision-making under Article 3.4."(162) 125. In US - Hot-Rolled Steel, the issue was whether the US investigating authority had violated Article 3.4 by failing to explicitly discuss, in its determination, certain factors for each year of the period of investigation. In that case, according to the Panel, the authority had discussed each of the factors for the final two years of the three-year period of investigation, and only some of them for the first year of that period. The Panel found that the determination explained the particular relevance of the second and third years of the period, and that the authority's failure to explicitly address each factor in its discussion of the first year of the period did not constitute a violation of Article 3.4.(163) The Panel thus found that each of the listed Article 3.4 factors was explicitly discussed in the authority's determination, and given the explanations provided in that determination for the particular emphasis on a part of the period of investigation, the evaluation of the facts was deemed adequate by the panel.(164) Relevance of written record of authorities' evaluation 126. In Egypt - Steel Rebar, Egypt had gathered data on all of the listed factors but could not adduce sufficient evidence of its authorities' evaluation of all those factors on its written analysis. See paragraph 121 above. The Panel stressed the importance of the written record in the context of an anti-dumping investigation for burden of proof purposes. "Here we must emphasize that in the context of an anti-dumping investigation, which is by definition subject to multilateral rules and multilateral review, a Member is placed in a difficult position in rebutting a prima facie case that an evaluation has not taken place if it is unable to direct the attention of a panel to some contemporaneous written record of that process. If there is no such written record - whether in the disclosure documents, in the published determination, or in other internal documents - of how certain factors have been interpreted or appreciated by an investigating authority during the course of the investigation, there is no basis on which a Member can rebut a prima facie case that its 'evaluation' under Article 3.4 was inadequate or did not take place at all. In particular, without a written record of the analytical process undertaken by the investigating authority, a panel would be forced to embark on a post hoc speculation about the thought process by which an investigating authority arrived at its ultimate conclusions as to the impact of the dumped imports on the domestic industry. A speculative exercise by a panel is something that the special standard of review in Article 17.6 is intended to prevent. Thus, while Egypt attempts to derive support from the panel report in the US - Hot-Rolled Steel dispute for its position that Article 3.4 does not require an explicit written analysis of all of the factors listed therein(165), to us, the findings in that dispute confirms our interpretation, in that what was at issue, was the substantive adequacy of the authority's written analysis of each of those factors."(166) 127. In Egypt - Steel Rebar, the Panel rejected the argument of one of the parties whereby the requirement of a written analysis of the Article 3.4 factors would be exclusively governed by Article 12 of the Anti-Dumping Agreement: "Nor do we consider, as suggested by Egypt [footnote omitted], that the requirement of a written analysis of the Article 3.4 factors is exclusively governed by Article 12 of the AD Agreement (public notice and explanation of determinations). While Article 12 contains a requirement to publish, and to make available to the interested parties in the investigation, some form of a report on the investigating authority's determination, this is, as the Appellate Body has noted, a procedural requirement having to do with due process(167), rather than with the relevant substantive analytical requirements (which in the context of this claim are found in Article 3.4)."(168) Evaluation of specific listed factors "profits" 128. In Egypt - Steel Rebar, Turkey claimed that Egypt had violated Article 3.4 because its investigating authorities had not examined all factors affecting profits. The Panel disagreed: "We recall that Turkey's claim is that Egypt violated Article 3.4 because the IA did not examine all factors affecting profits, and did not examine all factors affecting domestic prices. The above text indicates to us, however, a different requirement on an investigating authority. In particular, the text is straightforward in that the requirement is to examine all relevant factors and indices having a bearing on the state of the industry. The text then lists a variety of such factors and indices that are presumptively relevant to the investigation and must be examined, one of which is 'profits'. The text does not say, as argued by Turkey, 'all factors affecting profits'. To us, this text means that in its evaluation of the state of the industry, an investigating authority must include an analysis of the domestic industry's profits. Turkey has raised no claim that the IA failed to conduct such an analysis in the rebar investigation."(169) "factors affecting domestic prices" 129. In Egypt - Steel Rebar, Turkey claimed that Egypt had violated Article 3.4 because its investigating authorities had not examined all factors affecting prices. The Panel disagreed: "We recall that Turkey's claim is that Egypt violated Article 3.4 because the IA did not examine ... all factors affecting domestic prices.
... Here again, we note that contrary to Turkey's argument, the text does not read "all factors affecting domestic prices". Rather, what is required is that there be an evaluation of factors affecting domestic prices. This requirement is clearly linked to the requirements of Articles 3.1 and 3.2 for an "objective examination" of "the effect of dumped imports on prices in the domestic market for like products"...
In our view, this means that in its evaluation of the state of the industry, an investigating authority must in every case include a price analysis of the type required by Articles 3.1 and 3.2. Turkey has raised no claim that the IA failed to conduct such an analysis in the rebar investigation. In addition, in our view, an investigating authority must consider generally the question of "factors affecting domestic prices"..."(170) "growth" 130. In Egypt - Steel Rebar, the Panel considered that Article 3.4 threshold as regards addressing the factor "growth" had been satisfied by Egypt since its authorities had addressed sales volume and market share in their final determinations.(171) (e) Relationship with other paragraphs in Article 3 131. With respect to the relationship of paragraph 4 with paragraphs 1, 2, 3 and 5 of Article 3, see paragraphs 78-79 above. 132. With respect to the relationship between Article 3.4 and Article 3.7, see paragraphs 148-149 below. (a) Article 3.5 requirements for investigating authorities 133. In US - Hot-Rolled Steel, the Appellate Body laid down the requirements that Article 3.5 imposes on the investigating authorities when performing a causation analysis as follows: "This provision requires investigating authorities, as part of their causation analysis, first, to examine all 'known factors', 'other than dumped imports', which are causing injury to the domestic industry 'at the same time' as dumped imports. Second, investigating authorities must ensure that injuries which are caused to the domestic industry by known factors, other than dumped imports, are not 'attributed to the dumped imports.' (emphasis added)"(172) (b) Scope of the non-attribution language in Article 3.5 134. The Appellate Body in US - Hot-Rolled Steel delimitated the situations where the non-attribution language of Article 3.5 plays a role. In this regard, the Appellate Body specified that this language applies "solely [to] situations where dumped imports and other known factors are causing injury to the domestic industry at the same time".(173) 135. In EC - Bed Linen, the Panel rejected the argument that "dumped imports" must be understood to refer only to imports which are the subject of transactions in which the export price was below normal value. See paragraph 93 above. (d) "any known factors other than dumped imports" 136. On the issue of what are "known factors" other than the dumped imports, the Panel on Thailand - H-Beams, in a finding not reviewed by the Appellate Body, found that other "known factors" would include factors "clearly raised before the investigating authorities by interested parties in the course of an AD investigation" and that investigating authorities are not required to seek out such factors on their own initiative: "We consider that other 'known' factors would include those causal factors that are clearly raised before the investigating authorities by interested parties in the course of an AD investigation. We are of the view that there is no express requirement in Article 3.5 AD that investigating authorities seek out and examine in each case on their own initiative the effects of all possible factors other than imports that may be causing injury to the domestic industry under investigation.(174) ... We note that there may be cases where, at the time of the investigation, a certain factor may be 'known' to the investigating authorities without being known to the interested parties. In such a case, an issue might arise as to whether the authorities would be compelled to examine such a known factor that is affecting the state of the domestic industry. However, it has not been argued that such factors are present in this case."(175) 137. In Guatemala - Cement II, the Panel agreed with Mexico's claim that Guatemala's authority failed to take into account certain undumped imports, and accordingly, failed to assess other factors which were injuring the domestic industry at the same time, in violation of Article 3.5.(176) (ii) Illustrative list of known factors 138. In Thailand - H-Beams, in a finding not reviewed by the Appellate Body, the Panel further stated that "[t]he text of Article 3.5 indicates that the list of other possible causal factors enumerated in that provision is illustrative."(177) (e) Non-attribution methodology 139. In US - Hot-Rolled Steel, the Appellate Body considered that the Panel had erred in its interpretation of the non-attribution language by finding that this language does not require the investigating authorities to separate and distinguish the injurious effects of the other known causal factors from the injurious effects of the dumped imports. The Panel had followed the interpretive approach set forth by the GATT 1947 Panel in United States - Atlantic Salmon Anti-Dumping Duties which the Appellate Body thus also presumably considered erroneous. The Appellate Body ruled that "in order to comply with the non-attribution language in that provision, investigating authorities must make an appropriate assessment of the injury caused to the domestic industry by the other known factors, and they must separate and distinguish the injurious effects of the dumped imports from the injurious effects of those other factors." The Appellate Body further considered that "[t]his requires a satisfactory explanation of the nature and extent of the injurious effects of the other factors, as distinguished from the injurious effects of the dumped imports": "The non-attribution language in Article 3.5 of the Anti-Dumping Agreement applies solely in situations where dumped imports and other known factors are causing injury to the domestic industry at the same time. In order that investigating authorities, applying Article 3.5, are able to ensure that the injurious effects of the other known factors are not "attributed" to dumped imports, they must appropriately assess the injurious effects of those other factors. Logically, such an assessment must involve separating and distinguishing the injurious effects of the other factors from the injurious effects of the dumped imports. If the injurious effects of the dumped imports are not appropriately separated and distinguished from the injurious effects of the other factors, the authorities will be unable to conclude that the injury they ascribe to dumped imports is actually caused by those imports, rather than by the other factors. Thus, in the absence of such separation and distinction of the different injurious effects, the investigating authorities would have no rational basis to conclude that the dumped imports are indeed causing the injury which, under the Anti-Dumping Agreement, justifies the imposition of anti-dumping duties.
We emphasize that the particular methods and approaches by which WTO Members choose to carry out the process of separating and distinguishing the injurious effects of dumped imports from the injurious effects of the other known causal factors are not prescribed by the Anti-Dumping Agreement. What the Agreement requires is simply that the obligations in Article 3.5 be respected when a determination of injury is made."(178) 140. The Appellate Body in US - Hot-Rolled Steel acknowledged the practical difficulty of separating and distinguishing the injurious effects of different causal factors but indicated that "although this process may not be easy, this is precisely what is envisaged by the non-attribution language. If the injurious effects of the dumped imports and the other known factors remain lumped together and indistinguishable, there is simply no means of knowing whether injury ascribed to dumped imports was, in reality, caused by other factors. Article 3.5, therefore, requires investigating authorities to undertake the process of assessing appropriately, and separating and distinguishing, the injurious effects of dumped imports from those of other known causal factors."(179) 141. The Appellate Body in US - Hot-Rolled Steel supported its interpretation of the non-attribution language of Article 3.5 by referring to its decisions in two safeguards Reports, US - Wheat Gluten and US - Lamb where it interpreted the non-attribution language in Article 4.2(b) of the Agreement on Safeguards in a similar manner.(180) (f) Relationship with other paragraphs of Article 3 142. With respect to the relationship of paragraph 5 with paragraphs 1, 2, 3 and 4 of Article 3, see paragraphs 78-79 above. (a) Domestic industry production 143. The Panel on Mexico - Corn Syrup addressed the issue of allowing the determination of injury on the basis of the portion of the domestic industry's production sold in one sector of the domestic market, as follows: "Article 3.6 does not, on its face, allow the determination of injury or threat of injury on the basis of the portion of the domestic industry's production sold in one sector of the domestic market, rather than on the basis of the industry as a whole. Indeed, Article 3.6 relates to a situation different from that at issue here. Article 3.6 provides for the situation where information concerning the production of the like product, such as producers' profits and sales, cannot be separately identified. In such cases, Article 3.6 allows the authority to consider information concerning production of a broader product group than the like product produced by the domestic industry, which includes the like product, in evaluating the effect of imports. Nothing in Article 3.6 allows the investigating authority to consider information concerning production of a product sub-group that is narrower than the like product produced by the domestic industry. In particular, nothing in Article 3.6 allows the investigating authority to limit its examination of injury to an analysis of the portion of domestic production of the like product sold in the particular market sector where competition with the dumped imports is most direct."(181) 144. In US - Hot-Rolled Steel, the Appellate Body examined whether the investigating authorities could make a sectoral examination of the domestic industry. See paragraphs 91 and 111 above. 9. Article 3.7: Threat of material injury 145. In Egypt - Steel Rebar, the Panel considered that the text of Article 3.7 makes explicit that the central question in a threat of injury investigation is whether there will be a "change in circumstances" that would cause the dumping to begin to injure the domestic industry: "... the text of this provision makes explicit that in a threat of injury investigation, the central question is whether there will be a 'change in circumstances' that would cause the dumping to begin to injure the domestic industry. Solely as a matter of logic, it would seem necessary, in order to assess the likelihood that a particular change in circumstances would cause an industry to begin experiencing present material injury, to know about the condition of the domestic industry at the outset. For example, if an industry is increasing its production, sales, employment, etc., and is earning a record level of profits, even if dumped imports are increasing rapidly, presumably it would be more difficult for an investigating authority to conclude that it is threatened with imminent injury than if its production, sales, employment, profits and other indicators are low and/or declining."(182) (b) Article 3.7(i): "likelihood of substantially increased importation" 146. The Panel on Mexico - Corn Syrup found that the investigating authority had failed to adequately address the likelihood of substantially increased imports by failing to properly evaluate the facts concerning, and to provide a reasoned explanation of its conclusions regarding the potential effects of the alleged restraint agreement. The Panel considered as follows:(183) "In our view, the question for purposes of an anti-dumping investigation is not whether an alleged restraint agreement in violation of Mexican law existed, an issue which might well be beyond the jurisdiction of an anti-dumping authority to resolve, but whether there was evidence of and arguments concerning the effect of the alleged restraint agreement(184), which, if it existed, would be relevant to the analysis of the likelihood of increased dumped imports in the near future. If the latter is the case, in our view, the investigating authority is obliged to consider the effects of such an alleged agreement, assuming it exists."(185) (c) Analysis of the "consequent impact" of dumped imports on the domestic industry 147. The Panel on Mexico - Corn Syrup considered the requirements imposed upon investigating authorities in a determination of a "threat of injury" under Article 3.7. One of the issues which arose in this context was whether a specific analysis of the consequent impact of the dumped imports on the domestic industry is required in a threat of injury determination. Referring to Article 3.7, the Panel stated that "[t]his language, in our view, recognizes that factors other than those set out in Article 3.7 itself will necessarily be relevant to the determination."(186) The Panel concluded that "an analysis of the consequent impact of imports is required in a threat of material injury determination": "[I]t is clear that in making a determination regarding the threat of material injury, the investigating authority must conclude that 'material injury would occur' (emphasis added) in the absence of an anti-dumping duty or price undertaking. A determination that material injury would occur cannot, in our view, be made solely on the basis of consideration of the Article 3.7 factors. Rather, it must include consideration of the likely impact of further dumped imports on the domestic industry.
While an examination of the Article 3.7 factors is required in a threat of injury case, that analysis alone is not a sufficient basis for a determination of threat of injury, because the Article 3.7 factors do not relate to the consideration of the impact of the dumped imports on the domestic industry. The Article 3.7 factors relate specifically to the questions of the likelihood of increased imports (based on the rate of increase of imports, the capacity of exporters to increase exports, and the availability of other export markets), the effects of imports on future prices and likely future demand for imports, and inventories. They are not, in themselves, relevant to a decision concerning what the 'consequent impact' of continued dumped imports on the domestic industry is likely to be. However, it is precisely this latter question - whether the 'consequent impact' of continued dumped imports is likely to be material injury to the domestic industry - which must be answered in a threat of material injury analysis. Thus, we conclude that an analysis of the consequent impact of imports is required in a threat of material injury determination."(187) 148. Having established that an analysis of the impact of imports on the domestic industry is required also in the context of the determination of a "threat of injury", the Panel on Mexico - Corn Syrup held that this analysis is to be performed pursuant to Article 3.4, since "[n]othing in the text or context of Article 3.4 limits consideration of the Article 3.4 factors to cases involving material injury": "Turning to the question of the nature of the analysis required, we note that Article 3.4 of the AD Agreement sets forth factors to be evaluated in the examination of the impact of dumped imports on the domestic industry. Nothing in the text or context of Article 3.4 limits consideration of the Article 3.4 factors to cases involving material injury. To the contrary, as noted above, Article 3.1 requires that a determination of "injury", which includes threat of material injury, involve an examination of the impact of imports, while Article 3.4 sets forth factors relevant to that examination. Article 3.7 requires that the investigating authorities determine whether, in the absence of protective action, material injury would occur. In our view, consideration of the Article 3.4 factors in examining the consequent impact of imports is required in a case involving threat of injury in order to make a determination consistent with the requirements of Articles 3.1 and 3.7."(188) 149. The Panel on Mexico - Corn Syrup concluded that consideration of the factors in Article 3.4 "is necessary in order to establish a background against which the investigating authority can evaluate whether imminent further dumped imports will affect the industry's condition in such a manner that material injury would occur in the absence of protective actions, as required by Article 3.7."(189) It further indicated that "[t]he text of the AD Agreement requires consideration of the Article 3.4 factors in a threat determination. Article 3.7 sets out additional factors that must be considered in a threat case, but does not eliminate the obligation to consider the impact of dumped imports on the domestic industry in accordance with the requirements of Article 3.4".(190) (d) Distinction between the roles of the investigating authorities and the Panel 150. In Mexico - Corn Syrup (Article 21.5 - US), Mexico had requested the Appellate Body to reverse the finding of the Panel regarding the likelihood of increased imports on the grounds that the Panel had wrongly interpreted Article 3.7 of the Anti-Dumping Agreement and incorrectly applied the standard of review prescribed by Articles 17.5 and 17.6 of that Agreement. The Appellate Body drew the line between the roles of the investigating authorities and the panel in respect to Article 3.7 of the Anti-Dumping Agreement as follows: "In previous anti-dumping cases, we have emphasized the importance of distinguishing between the different roles of panels and investigating authorities.(191) We note, in this regard, that Article 3.7 of the Anti-Dumping Agreement sets forth a number of requirements that must be respected in order to reach a valid determination of a threat of material injury. The third sentence of Article 3.7 explicitly recognizes that it is the investigating authorities who make a determination of threat of material injury, and that such determination - by the investigating authorities - 'must be based on facts and not merely on allegation, conjecture or remote p |
