DS: China — Anti-Dumping Measures on Imports of Cellulose Pulp from Canada

This dispute concerned the anti-dumping measure imposed by China on imports of cellulose pulp originating from Canada. Canada challenged MOFCOM's determination of injury in the anti-dumping investigation at issue. Although Canada's panel request included claims regarding the determination of dumping and procedural aspects of the investigation, Canada specifically abandoned these claims in its first written submission. Canada requested that the Panel find that the measure at issue is inconsistent with China's obligations under Articles 3.1, 3.2, 3.4, and 3.5 of the Anti-Dumping Agreement, and as a consequence also inconsistent with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

Canada claimed that MOFCOM acted inconsistently with Articles 3.1 and 3.2 of the Anti-Dumping Agreement by failing to assess the significance of an absolute increase in dumped imports in light of the factual circumstances in the market, such as domestic demand, volume of domestic like product and non-dumped imports. The Panel rejected Canada's claim, concluding, inter alia, that MOFCOM was not obligated to consider the significance of an absolute increase in imports in the context of changes in other factors. The Panel noted, however, that the investigating authority's decision whether any given increase in imports, whether considered significant or not, ultimately supports a determination of injury caused by dumped imports is an element of causation analysis under Article 3.5.

Canada claimed that MOFCOM's consideration of price effects was inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement. MOFCOM considered that the effect of the dumped imports was to depress prices to a significant degree. Canada submitted several allegations of error in the MOFCOM's consideration of price depression. The Panel upheld Canada's contention that MOFCOM failed to explain the role of parallel price trends in the decline of the domestic like product prices. The Panel also considered that MOFCOM failed to adequately explain its conclusion that the dumped imports had the effect of significant price depression in light of the fact that the prices of the dumped imports were higher than those of the domestic like product during the latter part of the period of investigation. The Panel rejected Canada's arguments regarding MOFCOM's consideration of certain business information and changes in the market share of the dumped imports. The Panel concluded that MOFCOM's consideration of the price effects was inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement.

Canada claimed that MOFCOM acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement by failing to objectively examine the domestic industry's market share and to properly analyse and interpret data relating to factors that showed an improvement in the state of the domestic industry. The Panel considered that MOFCOM provided a plausible and reasonable explanation of the positive trends in several factors, in particular that they were driven by the expansion of the market for cellulose pulp in China and the domestic industry's expansion. The Panel also considered that MOFCOM's evaluation of market share was reasonable and objective. The Panel found that Canada had not established that MOFCOM acted inconsistently with Articles 3.1 and 3.4.

Canada claimed that MOFCOM's demonstration of a causal relationship between the dumped imports and injury to the domestic industry is inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement. Canada also claimed that MOFCOM failed to objectively examine several “other factors” allegedly causing injury to the domestic industry simultaneously with the dumped imports, namely: (a) changes in cotton and viscose staple fibre prices; (b) domestic industry overexpansion, overproduction and inventory build-up; (c) non-dumped imports; and (d) shortage of cotton linter. The Panel found that MOFCOM failed to demonstrate a causal relationship between the dumped imports and the injury to the domestic industry consistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement. The Panel rejected Canada's allegation with regard to the shortage of cotton linter, but upheld Canada's claim with regard to the remaining “other factors”. 

The Panel also upheld Canada's consequential claims that China acted inconsistently with Article 1 of the Anti-Dumping Agreement and Article VI of the GATT 1994.