First Written Submission by the European Union

Transcription

1 CERTIFIED AS DELIVERED In the World Trade Organization Panel Proceedings RUSSIA ANTI-DUMPING DUTIES ON LIGHT COMMERCIAL VEHICLES FROM GERMANY AND ITALY Geneva, 7 December 2015

2 TABLE OF CONTENTS 1. INTRODUCTION PROCEDURAL BACKGROUND FACTUAL BACKGROUND STANDARD OF REVIEW LEGAL ARGUMENT CLAIM UNDER ARTICLES 3.1 AND 4.1 OF THE AD AGREEMENT: FAILURE TO PROPERLY DETERMINE THE DOMESTIC INDUSTRY INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard The EAEC failed to take into account GAZ as a known domestic producer and hence wrongly defined the domestic industry The EAEC failed to conduct an objective examination, based on positive evidence, of the facts with respect to the domestic industry producing the subject products CONCLUSION CLAIM UNDER ARTICLES 3.1, 3.2, 3.4 AND 3.5 OF THE AD AGREEMENT: SELECTION OF NONCONSECUTIVE PERIODS OF NON-EQUAL DURATION IN THE INJURY AND CAUSATION ANALYSES INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard The EAEC failed to make an objective examination based on positive evidence in its injury determination CONCLUSIONS CLAIM UNDER ARTICLES 3.1 AND 3.2 OF THE AD AGREEMENT: FAILURE TO MAKE AN OBJECTIVE EXAMINATION BASED ON POSITIVE EVIDENCE OF WHETHER THE EFFECT OF THE ALLEGEDLY DUMPED IMPORTS WAS TO PREVENT DOMESTIC PRICE INCREASES, WHICH OTHERWISE WOULD HAVE OCCURRED, TO A SIGNIFICANT DEGREE INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard The EAEC failed to make an objective examination based on positive evidence when considering whether the effect of the allegedly dumped imports was to prevent domestic price increases, which otherwise would have occurred, to a significant degree i-

3 CONCLUSIONS CLAIM UNDER ARTICLES 3.1 AND 3.4 OF THE AD AGREEMENT: STATE OF THE DOMESTIC INDUSTRY INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard under Articles 3.1 and 3.4 of the AD Agreement The EAEC failed to base its evaluation on positive evidence The EAEC failed to make a proper evaluation of the overall development and interaction among injury factors taken together The EAEC failed to examine all factors in the proper context, making contradictory observations in a manner that is not even-handed The EAEC failed to take into account all facts and arguments on the record relating to the state of the industry The EAEC failed to examine all factors listed in Article 3.4 of the AD Agreement CONCLUSIONS CLAIM UNDER ARTICLES 3.1 AND 3.5 OF THE AD AGREEMENT: CAUSATION INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard under Articles 3.1 and 3.5 of the AD Agreement The EAEC failed to properly examine the causal relationship between dumped imports and injury Import volume Import prices The EAEC failed to examine the relevance of other known factors CONCLUSIONS CLAIM UNDER ARTICLES 6.5 AND OF THE AD AGREEMENT: TREATMENT OF INFORMATION AS CONFIDENTIAL WITHOUT SHOWING GOOD CAUSE AND WITHOUT PROVIDING A MEANINGFUL SUMMARY INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard Article 6.5 of the AD Agreement Article of the AD Agreement The Europea U io s clai s u der Articles. a d..1 of the AD Agreement Claims related to Sollers' Application (a) Information on the production of LCVs by GAZ (b) Information on major consumers of Sollers' goods (c) Information on export volumes (d) Information on the volume of imports to Kazakhstan and Belarus (e) Information on aggregate import volumes (f) Information on the volumes of allegedly dumped imports (g) Information on export price data (h) I for atio o Sollers sales prices o the do estic market (i) Information on changes in stocks ii -

4 (j) (k) Information on the drop in the profit and profit margin Information on the supposed effect of the allegedly dumped imports on Sollers' obligations (l) Information on the supposed effect of the allegedly dumped imports on the diesel engine production project (m) Information on the market shares of imported and domestic products (n) The annexes to Sollers' Application Claims related to Sollers' questionnaire responses (a) Information on the legal organizational form of Sollers (b) Information on catalogues, brochures and application areas (c) Information on quality complaints (d) Information on the major consumers of LCVs (e) Information on production capacity (f) Information on accounting system and principles (g) Information on prices (h) Information on terms of sale (i) Various indexed numerical data Claims related to Turin-Auto's questionnaire responses (a) Information on Articles of Association (b) Various indexed numerical data Claims related to Sollers' submission after the hearing (a) Information on stakeholders and their commercial interests (b) Information on the goods subject to the investigation (c) Information on the production of the goods by Sollers (d) Information on capacity utilisation (e) Information on the sales of goods in the domestic market to independent buyers (f) Information on the financial and economic results from the sales of goods in the domestic market (g) Information on the dynamics of investments, staff headcount and salaries (h) Information on price suppression (i) Various indexed numerical data (j) Confidential treatment of annexes in Sollers' comments after the hearing The EAEC failed to require the provision of a non-confidential version of GAZ's questionnaire responses and other documents CONCLUSION CLAIM UNDER ARTICLE 6.9 OF THE AD AGREEMENT: FAILURE TO DISCLOSE ALL ESSENTIAL FACTS UNDER CONSIDERATION THAT FORMED THE BASIS FOR THE DECISION BY THE EAEC INTRODUCTION FACTUAL BACKGROUND LEGAL ARGUMENT Legal standard The EAEC failed to inform Volkswagen AG and Daimler AG of the essential facts under consideration underlying the determinations of the existence of dumping iii -

5 The EAEC failed to disclose to Volkswagen AG and Daimler AG the essential facts under consideration that formed the basis for the calculation of the normal value of LCVs for Volkswagen AG and Daimler AG The EAEC failed to disclose to Volkswagen AG and Daimler AG the essential facts under consideration that formed the basis for the calculation of the export price The EAEC failed to disclose to Volkswagen AG and Daimler AG the source of the information concerning import volumes and values The EAEC failed to disclose to interested parties the essential facts under consideration that formed the basis for the determination of injury and causality The EAEC failed to disclose to the interested parties the essential facts under consideration that formed the basis for the determination of injury The EAEC failed to disclose to the interested parties the essential facts under consideration that formed the basis for the determination of a causal link between the alleged dumping and the alleged injury The EAEC failed to disclose to Volkswagen AG and Daimler AG the source of the information concerning import volumes and values CONCLUSION RUSSIA'S ANTI-DUMPING MEASURES ON LCVS FROM THE GERMANY AND ITALY FURTHER ARE INCONSISTENT WITH ARTICLES 1 AND 18.4 OF THE AD AGREEMENT AND ARTICLE VI OF THE GATT 1994, ALSO AS A CONSEQUENCE OF THE BREACHES OF THE AD AGREEMENT DESCRIBED ABOVE CONCLUSIONS AND REQUEST FOR RELIEF iv -

6 TABLE OF CASES CITED Short Title Full Case Title and Citation Argentina Poultry Anti-Dumping Duties Panel Report, Argentina Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R, adopted 19 May 2003, DSR 2003:V, p China Autos (US) Panel Report, China Anti-Dumping and Countervailing Duties on Certain Automobiles from the United States, WT/DS440/R and Add.1, adopted 18 June 2014 China Broiler Products Panel Report, China Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States, WT/DS427/R and Add.1, adopted 25 September 2013, DSR 2013:IV, p China GOES Appellate Body Report, China Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R, adopted 16 November 2012, DSR 2012:XII, p China GOES Panel Report, China Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/R and Add.1, adopted 16 November 2012, upheld by Appellate Body Report WT/DS414/AB/R, DSR 2012:XII, p China GOES (Article 21.5 US) Panel Report, China Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States Recourse to Article 21.5 of the DSU by the United States, WT/DS414/RW and Add.1, adopted 31 August 2015 China HP-SSST (Japan) / China HP-SSST (EU) Appellate Body Reports, China Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan / China Measures Imposing Anti-Dumping Duties on HighPerformance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS454/AB/R and Add.1 / WT/DS460/AB/R and Add.1, adopted 28 October 2015 China HP-SSST (Japan) / China HP-SSST (EU) Panel Reports, China Measures Imposing Anti-Dumping Duties on HighPerformance Stainless Steel Seamless Tubes ("HP-SSST") from Japan / China Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS454/R and Add.1 / WT/DS460/R, Add.1 and Corr.1, adopted 28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R / WT/DS460/AB/R China X-Ray Equipment Panel Report, China Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment from the European Union, WT/DS425/R and Add.1, adopted 24 April 2013, DSR 2013:III, p. 659 EC Bed Linen Panel Report, European Communities Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12 March 2001, as modified by Appellate Body Report WT/DS141/AB/R, DSR 2001:VI, p EC Bed Linen (Article 21.5 India) Panel Report, European Communities Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India Recourse to Article 21.5 of the DSU by India, WT/DS141/RW, adopted 24 April 2003, as modified by Appellate Body Report WT/DS141/AB/RW, DSR 2003:IV, p EC Countervailing Measures on DRAM Chips Panel Report, European Communities Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R, adopted 3 August 2005, DSR 2005:XVIII, p EC Fasteners (China) Appellate Body Report, European Communities Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p v-

7 Short Title Full Case Title and Citation EC Fasteners (China) Panel Report, European Communities Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1, adopted 28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R, DSR 2011:VIII, p EC Salmon (Norway) Panel Report, European Communities Anti-Dumping Measure on Farmed Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1, DSR 2008:I, p. 3 EC Tube or Pipe Fittings Appellate Body Report, European Communities Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18 August 2003, DSR 2003:VI, p EC Tube or Pipe Fittings Panel Report, European Communities Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, p Egypt Steel Rebar Panel Report, Egypt Definitive Anti-Dumping Measures on Steel Rebar from Turkey, WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, p EU Footwear (China) Panel Report, European Union Anti-Dumping Measures on Certain Footwear from China, WT/DS405/R, adopted 22 February 2012, DSR 2012:IX, p Guatemala Cement I Panel Report, Guatemala Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/R, adopted 25 November 1998, as reversed by Appellate Body Report WT/DS60/AB/R, DSR 1998:IX, p Guatemala Cement II Panel Report, Guatemala Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted 17 November 2000, DSR 2000:XI, p Japan DRAMs (Korea) Appellate Body Report, Japan Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/AB/R and Corr.1, adopted 17 December 2007, DSR 2007:VII, p Korea Certain Paper Panel Report, Korea Anti-Dumping Duties on Imports of Certain Paper from Indonesia, WT/DS312/R, adopted 28 November 2005, DSR 2005:XXII, p Mexico Anti-Dumping Measures on Rice Appellate Body Report, Mexico Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, p Mexico Anti-Dumping Measures on Rice Panel Report, Mexico Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/R, adopted 20 December 2005, as modified by Appellate Body Report WT/DS295/AB/R, DSR 2005:XXIII, p Mexico Corn Syrup Panel Report, Mexico Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States, WT/DS132/R, adopted 24 February 2000, and Corr.1, DSR 2000:III, p Mexico Olive Oil Panel Report, Mexico Definitive Countervailing Measures on Olive Oil from the European Communities, WT/DS341/R, adopted 21 October 2008, DSR 2008:IX, p Mexico Steel Pipes and Tubes Panel Report, Mexico Anti-Dumping Duties on Steel Pipes and Tubes from Guatemala, WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, p Thailand H-Beams Appellate Body Report, Thailand Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p vi -

8 Short Title Full Case Title and Citation Thailand H-Beams Appellate Body Report, Thailand Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p Thailand H-Beams Panel Report, Thailand Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 5 April 2001, as modified by Appellate Body Report WT/DS122/AB/R, DSR 2001:VII, p US Corrosion-Resistant Steel Sunset Review Appellate Body Report, United States Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3 US Hot-Rolled Steel Appellate Body Report, United States Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, p US Lamb Appellate Body Report, United States Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p US Softwood Lumber VI (Article 21.5 Canada) Appellate Body Report, United States Investigation of the International Trade Commission in Softwood Lumber from Canada Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p US Softwood Lumber VI (Article 21.5 Canada) Appellate Body Report, United States Investigation of the International Trade Commission in Softwood Lumber from Canada Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p US Tyres (China) Appellate Body Report, United States Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted 5 October 2011, DSR 2011:IX, p vii -

9 LIST OF ABBREVIATIONS Abbreviation Full Name AD Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 The Agreement Agreement on the Application of Safeguards, Anti-Dumping and Countervailing Measures against Third Countries (Moscow, 25 January 2008) DIP Dumping Investigation Period DSB Dispute Settlement Body DSU Understanding on Rules and Procedures Governing the Settlement of Disputes EAEC Eurasian Economic Commission GATT 1994 General Agreement on Tariffs and Trade 1994 GAZ Gorkovsky Avtomobilny Zavod IIP Injury Investigation Period LCV Light Commercial Vehicle The Draft Report Report FindinРs from tсe anti-dumping investigation relating to light commercial vehicles originating in Germany, Italy, Poland and Turkey and imported into tсe common customs territory of tсe Customs Union of tсe Domestic Market Protection Department of the Eurasian Economic Commission, as sent to the interested parties on 28 March 2013 The Report Report FindinРs from tсe anti-dumping investigation relating to light commercial vehicles originating in Germany, Italy, Poland and Turkey and imported into tсe common customs territory of tсe Customs Union of tсe Domestic Market Protection Department of the Eurasian Economic Commission, as referred to in Decision 113 of 14 May 2013 of the College of the Eurasian Economic Commission RUB Russian Rubles Russia Russian Federation SEZ Special Economic Zone SKD Semi-Knocked Down set Sollers Sollers-Elabuga LLC USD US Dollars - viii -

10 TABLE OF EXHIBITS Exhibit No. Title EU-1 Application EU-2 Notice of Initiation EU-3 Sollers' Questionnaire Response of 3 March 2012 EU-4 Sollers' Updated Questionnaire Response of 31 January 2013 EU-5 Turin Auto's Questionnaire Response of 3 March 2012 EU-6 Turin Auto's Updated Questionnaire Response of 31 January 2013 EU-7 Turin Auto's Amendment of 13 February 2013 to its Questionnaire Responses EU-8 Daimler s Comments of 16 March 2012 regarding the Public Hearing EU-9 Minutes of the Public Hearing of 22 March 2012 EU-10 Sollers' Comments of 6 April 2012 regarding the Public Hearing of 22 March 2012 EU-11 Volkswagen's submission of 6 April 2012 regarding the Public Hearing of 22 March 2012 EU-12 Annex 2 to VolkswaРen s letter of 6 April 2012 EU-13 PCA's Injury Submission of 6 April 2012 following the Public Hearing of 22 March 2012 EU-14 Annexes to PCA's Injury Submission of 6 April 2012 EU-15 Autostat, Marketing Report, April 2011 EU-16 Draft Report EU-17 Cover letter of the Draft Report, as received by Volkswagen EU-18 Cover letter of the Draft Report, as received by Daimler EU-19 Comments by Daimler on the Report of 28 March 2013 EU-20 PCA's and PCR's Comments on the Draft Report of 28 March 2013 EU-21 Report EU-22 Decision No. 113 of the Board of the Eurasian Economic Commission, 14 May ix -

11 Exhibit No. Title EU-23 GAZ letter of 13 May 2013 EU-24 WTO Committee on Anti-Dumping Practices, Recommendation Concerning the Periods of Data Collection for Anti-Dumping Investigations, G/ADP/6, 16 May 2000 EU-25 Committee on Anti-Dumping Practices - Committee on Subsidies and Countervailing Measures - Committee on Safeguards - Notification of laws and regulations und under Articles 18.5, 32.6 and 12.6 of the Agreements Russian Federation, G/ADP/N/1/RUS/1, 3 October 2012 EU-26 Agreement between the Governments of CIS Member States dated 20 November 2009 on the Rules for Determining the Country of Origin of Goods in the Commonwealth of Independent States EU-27 Order of the Ministry of Economic Development of the Russian Federation No. 73, of the Ministry of Industry and Energy of the Russian Federation No. 81, of tсe Ministry of Finance of tсe RF No. 58н dated 15 April 2005 (as of 24 December 2010) On approval of tсe procedure defininр tсe concept of industrial assembly and establisсinр tсe application of tсat concept for the import into the territory of the Russian Federation of automotive components for the production of motor vehicles, classified under codes of the FEACN CU, their structural components and aррreрates (reрistered at tсe Ministry of Justice of the Russian Federation on 25 April 2005, No. 6543) EU-28 About the SEZ Alabuga EU-29 Alabuga, For the Investor EU-30 Presentation on the SEZ Alabuga -x-

12 1. INTRODUCTION 1. In this dispute, the European Union claims that the Russian Federation ("Russia") imposes and collects anti-dumping duties on light commercial vehicles ("LCVs") from Germany and Italy in violation of numerous provisions of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("AD Agreement"). These violations were brought about by the Eurasian Economic Commission's ("EAEC")1 Decision of 14 May 2013, pursuant to which those anti-dumping duties are levied by Russia. 2. In this first written submission, the European Union will show, inter alia, that the EAEC failed to properly determine the domestic industry, as required by Articles 3.1 and 4.1 of the AD Agreement; relied on non-consecutive periods of non-equal duration in violation of Articles 3.1, 3.2, 3.4 and 3.5 of the AD Agreement; failed to make an objective examination based on positive evidence of whether price suppression took place to a significant degree, in violation of Articles 3.1 and 3.2 of the AD Agreement; infringed Articles 3.1 and 3.4 of the AD Agreement in its analysis of the state of the domestic industry; infringed Articles 3.1 and 3.5 of the AD Agreement in its analysis of causation; treated information as confidential without showing good cause and without providing a meaningful summary, in violation of Articles 6.5 and of the AD Agreement; failed to disclose the essential facts under consideration as required by Article 6.9 of the AD Agreement; and violated Articles 1 and 18.4 of the AD Agreement, as well as Article VI of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"). 1 As a member of the Eurasian Economic Union (EAEU) and, previously, of the Customs Union of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation, Russia shares its external customs tariff with Armenia, Belarus, Kazakhstan and Kyrgyzstan (see paragraphs of the Working Party Report on the Accession of the Russian Federation to the WTO). As a WTO Member, Russia has committed to ensure that measures within the purview of the CU, and today the EAEU, will be aliрned witс Russia s WTO obliрations (see paragraph 185 of the Working Party Report). Russia s commitment to ensure tсe compatibility of CU and EAEU measures with WTO law is also clear from several paragraphs of the Working Party Report that are incorporated into paragraph 2 of its Protocol of Accession by way of reference to paragraph 1450 of the Working Party Report. These paragraphs contain specific commitments of Russia that have become integral parts of the WTO Agreement (see, inter alia, paragraphs 214 and 275 of the Working Party Report). With respect to anti-dumping measures, paragraph 620 of the Working Party Report shows that Russia has taken further specific commitments to ensure compliance with tсe provisions of tсe AD AРreement wсetсer by tсe competent autсorities of tсe Russian Federation or tсe competent bodies of tсe CU, includinр witс respect to any trade remedy measure procedure launched before the date of accession as well as any trade remedy measure resulting therefrom, whether by the competent authority of the Russian Federation or the competent bodies of tсe CU. -1-

13 Accordingly, Russia infringes those provisions when levying anti-dumping duties on LCVs originating in Germany and Italy. 3. While the European Union has not submitted any claim with regard to the substantive aspects of the determination of dumping made by the EAEC, this does not mean that the European Union agrees with that determination. Rather, due to the failure of the EAEC to comply with the transparency requirements imposed by the AD Agreement, in particular its Articles 6.5, and 6.9, the European Union has been unable to understand how the EAEC reached that determination. In turn, on the basis of the facts on the record, the European Union considers that the EAEC's injury determination is manifestly flawed. 2. PROCEDURAL BACKGROUND 4. On 21 May 2014, the European Union requested consultations with the Government of Russia pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article XXIII:1 of the GATT 1994, and Articles 17.2 and 17.3 of the AD Agreement with respect to the levy of anti-dumping duties on LCVs from Germany and Italy by Russia pursuant to Decision No. 113 of 14 May 2013 of the College of the Eurasian Economic Commission, as set forth therein, including any and all annexes, notices and reports of the Department for the Protection of the Internal Market of the EAEC, and any amendments thereof. 5. The European Union held consultations with Russia on 18 June These consultations did not resolve the dispute. 6. On 15 September 2014, the European Union requested the establishment of a panel. At its meeting on 26 September 2014, the DSB deferred the establishment of a panel. At its meeting on 20 October 2014, the Dispute Settlement Body ( DSB ) established a panel pursuant to the request of the European Union in document WT/DS479/2 in accordance with Article 6 of the DSU. 7. On 8 December 2014, the European Union requested the Director-General to determine the composition of the Panel, pursuant to Article 8.7 of the DSU. -2-

14 8. On 18 December 2014, the Director-General accordingly composed the Panel as follows:2 Chairperson: Mr Simon Farbenbloom Members: Mr Matthew Kronby Mr Luis Catibayan 9. Brazil, China, India, Japan, Korea, Turkey, Ukraine and the United States reserved their rights to participate in the Panel proceedings as third parties. 3. FACTUAL BACKGROUND 10. On 3 October 2011 Sollers-Elabuga LLC ("Sollers") filed an Application requesting the imposition of anti-dumping duties on imports of light commercial vehicles from Germany, Italy and Turkey on the territory of the Customs Union of Belarus, Kazakhstan and Russia. 11. The product concerned is light commercial vehicles of gross vehicle weight from 2.8 tonnes to 3.5 tonnes, van-type bodies and diesel engines with cylinder capacity not exceeding cc, designed for the transport of cargo of up to two tonnes (cargo all-metal van version) or for the combined transport of cargo and passengers (combi cargo and passenger van version) falling under HS code and HS code and imported in the Customs Union from Germany, Italy and Turkey. 12. The applicant argued that its output during the first half of 2011 amounted to 85.2% of the total production of the like product, and identified another producer of the like product, Gorkovsky Avtomobilny Zavod ("GAZ") for the period concerned. 13. The anti-dumping investigation was initiated on 16 November The dumping investigation period ("DIP") is from 1 July 2010 until 30 June The injury investigation period ("IIP") is from 1 January 2008 until 31 December By 2 On 1 December 2015, the Chairperson of the DSB received separate communications from both Mr. Farbenbloom and Mr. Kronby to inform him that they are stepping down as chairperson and member of the Panel, respectively, on the request of the Russian Federation. At the moment of finalising this first written submission, no new chairperson and panel member were appointed yet. -3-

15 Notice of 16 November 2012 the EAEC extended the duration of the investigation for 6 months, until 16 May With Decision No 113 of 14 May the EAEC introduced anti-dumping duties on imports of light commercial vehicles ("LCVs") from Germany, Italy and Turkey on the territory of the Customs Union of Belarus, Kazakhstan and Russia. The Decision was published on 16 May 2013 and entered into force on 15 June The anti-dumping duties are 29.6% for imports from Germany, 23% for imports from Italy and 11.1% for imports from Turkey. The Decision is based on the Report "Findings from the anti-dumping investigation relating to light commercial vehicles originating in Germany, Italy, Poland and Turkey and imported into the common customs territory of the Customs Union of tсe Domestic Market Protection Department of the Eurasian Economic Commission" ("the Report").4 4. STANDARD OF REVIEW 15. In examining an investigating authority's determination, a panel must neither conduct a de novo review nor simply defer to the conclusions of the investigating authority. Rather, a panel should examine whether the conclusions reached by the investigating authority are reasoned and adequate in the light of the evidence on the record and other plausible alternative explanations. A panel's examination of an investigating authority's conclusions must be critical, and be based on the information contained on the record and the explanations given by the authority in its published report.5 A panel must examine whether, in the light of the evidence on the record, the conclusions reached by the investigating authority are reasoned and adequate What is "adequate" will inevitably depend on the facts and circumstances of the case and the particular claims made, but several general lines of inquiry are likely 3 Decision No. 113 of the Board of the Eurasian Economic Commission, 14 May 2013 (Exhibit EU22). 4 Exhibit EU See Appellate Body Report, US Tyres (China), para The European Union recalls that it is well-established that the complaining party is not confined to the arguments made by the exporters during the anti-dumping investigation (see Appellate Body Report, Thailand H Beams, para. 94; Appellate Body Report, US Lamb, para. 113; and Appellate Body Report, US Corrosion Resistant Steel, para. 131). -4-

16 to be relevant. The panel's scrutiny should test whether the reasoning of the authority is coherent and internally consistent. The panel must undertake an indepth examination of whether the explanations given disclose how the investigating authority treated the facts and evidence on the record and whether there was positive evidence before it to support the inferences made and conclusions reached by it. The panel must examine whether the explanations provided demonstrate that the investigating authority took proper account of the complexities of the data before it, and that it explained why it rejected or discounted alternative explanations and interpretations of the record evidence. 17. A panel must be open to the possibility that the explanations given by the authority are not reasoned or adequate in the light of other plausible alternative explanations, and must take care not to assume itself the role of initial trier of facts, nor to be passive by "simply accept[ing] the conclusions of the competent authorities".7 5. LEGAL ARGUMENT 5.1. CLAIM UNDER ARTICLES 3.1 AND 4.1 OF THE PROPERLY DETERMINE THE DOMESTIC INDUSTRY AD AGREEMENT: FAILURE TO Introduction 18. The European Union submits that, by excluding GAZ from the definition of "domestic industry", the EAEC acted in a biased manner, potentially leading to a risk of materially distorting the injury analysis and, thus, violating the obligations under Articles 3.1 and 4.1 of the AD Agreement. Indeed, without providing any reasons for it, the EAEC defined the domestic industry in this case as comprised exclusively of Sollers, despite the fact that it was well aware that GAZ, the leader in the overall LCVs market in Russia, was a producer engaged in the full production cycle (hereinafter "producer") manufacturing the product concerned (in particular LCVs with diesel engine) in Russia and directly competing with Sollers, which was more adequately described as an assembler of LCVs from mainly imported parts in a Special Economic Zone in Russia. 7 Appellate Body Report, US Softwood Lumber VI (Article 21.5 Canada), para

17 19. As a consequence of such an incorrect definition of the domestic industry, the EAEC's injury determination was also based on an incorrect data set, in violation of Article 3.1 of the AD Agreement. 20. The European Union will start by recalling the main facts dealing with this claim. Then, the European Union will address the legal standard under Articles 3.1 and 4.1 of the AD Agreement when defining "domestic industry". Then, the European Union will apply this standard to the facts of the present case Factual background 21. In its Application, Sollers identified itself and GAZ as domestic producers of the like product during the period concerned.8 Sollers declared itself as a manufacturer of LCVs within the territory of the Customs Union,9 specifically as a company established at the Special Economic Zone ("SEZ") of Elabuga Sollers maintained that, during the first half of 2011, it held 85% of the total domestic production of the like product within the territory of the Customs Union and, hence, amounted to the domestic industry in accordance with Article 2 of the Agreement on the Application of Safeguards, Anti-Dumping and Countervailing Measures against Third Countries (Moscow, 25 January 2008) ("the Agreement"). Article 2 of the Agreement defines the domestic industry as follows: "'industry of the States parties' all producers of tсe like products in tсe States Parties, or tсose wсose sсare in total production of tсe States Parties of tсe like product constitutes a significant part but not less than 25 per cent" In its Notice of Initiation, the Ministry of Industry and Trade of the Russian Federation12 noted that the applicant's production between 2008 and the first half 8 See Application (Exhibit EU-1), pp See Application (Exhibit EU-1), p See About the SEZ Alabuga (Exhibit EU-28). 11 See Committee on Anti-Dumping Practices - Committee on Subsidies and Countervailing Measures - Committee on Safeguards - Notification of laws and regulations und under Articles 18.5, 32.6 and 12.6 of the Agreements Russian Federation, G/ADP/N/1/RUS/1, 3 October 2012 (Exhibit EU25). 12 It should be noted that the Ministry of Industry and Trade of the Russian Federation was formally replaced by the Domestic Market Protection Department of the EAEC ("the Department" or "the EAEC") by Decision No. 44 of the EAEC dated 16 May Thus, the EAEC is the investigating authority in this case (see Report (Exhibit EU-21), p. 4). -6-

18 of 2011 amounted to 95% of the total production of the like product in the territory of the Customs Union and, thus, the applicant was found to be the domestic industry in accordance with Article 2 of the Agreement referred before At the public hearing of 22 March 2012, Sollers and other participants confirmed that GAZ produced like products during the relevant period.14 This was again confirmed in Sollers' comments after the hearing In its Report outlining the findings of the anti-dumping investigation at issue, the EAEC noted the following: the Notice of Initiation was forwarded to the domestic producers of the like product, Sollers and GAZ;16 an anti-dumping questionnaire to determine the existence of material injury to the domestic industry was sent to Sollers and GAZ;17 both Sollers and GAZ replied to the Anti-Dumping Questionnaire;18 a public hearing took place on 22 March 2012 in which both Sollers and GAZ participated;19 the minutes of the hearing were sent to both Sollers and GAZ upon their written requests;20 in their letters of 25 December 2012 and 6 March 2013, both Sollers and GAZ respectively stated that they were interested in the continuation of the investigation and in the application of antidumping duties;21 both Sollers and GAZ participated in the investigation and received a non-confidential version of the EAEC's Report In Section 1.6 of its Report, the EAEC stated the following: 13 See Notice of Initiation, pp. 1 and 2 (Exhibit EU-2). 14 See Minutes of the Public Hearing of 22 March 2012 (Exhibit EU-9), pp. 8, 11-13, 29 and See Sollers' Comments of 6 April 2012 regarding the Public Hearing of 22 March 2012 (Exhibit EU-10), p See Report (Exhibit EU-21), Section Ibid., Section Ibid. Sollers provided its Questionnaire Response on 3 March 2012 (see Exhibit EU-3, p. 1: Deadline to Reply to tсe Questionnaire: 3 MarcС 2012 ). It would appear tсat GAZ also provided its questionnaire response in March 2012 as well. 19 See Report (Exhibit EU-21), Section Ibid. 21 Ibid. 22 Ibid., Section

19 1.6. Information on the applicant As regards the period from 2008 to 2011, the applicant, SollersElabuga, accounted for an average of 87.9% of the total production volume of light commercial vehicles in the Customs Union. Thus, Sollers-Elabuga meets the requirements for an applicant contained in Article 29(3) of the Agreement, the limits for the applicant. 27. Article 29(3) of the Agreement provides that: The application referred to in paragraph 1 of this Article shall be attached with the evidence that the producers of the like or directly competitive product or the like product in the States Parties support such an application. Sufficient evidence of the support of such an application shall be: 28. 1) documents demonstrating that other producers of the like or directly competitive product in the States Parties join the application, producing together with the applicant a substantial part, but not less than 25 per cent of the total production of the like or directly competitive product in the Parties (submitting application on a safeguard measure); 2) documents demonstrating that the share of production of the like product producers in the States Parties supporting the application (including the applicant), is not less than 25 per cent of the total production of the like product in the States Parties, provided that the volume of production of the like product by producers in the States Parties supporting the statement (including the applicant), is more than 50 per cent of the production of the like product by producers in the States Parties expressed their opinion (support or opposition) regarding the application (applying for antidumping or countervailing measure). In other words, for the purpose of determining the standing of the applicant, the EAEC found that in the period from 2008 to 2011 Sollers accounted for an average of 87.9% of the total production volume of LCVs in the Customs Union. 29. Section 2.1 of the Report, which details the product concerned, shows that the products of GAZ were taken into account together with the products assembled by Sollers. Table 2.1 describes the technical characteristics of LCV models Gaz-2705 and Gaz-2752 alongside those of the Fiat Ducato in order to compare them with imported products See Report (Exhibit EU-21), pp

20 30. In Section 4.2 of its Report, the EAEC noted that the examination of the state of the domestic industry was conducted with respect to Sollers, which accounted for an average of 87.9% of the total production for the period 2008 to Thus, the EAEC defined the domestic industry in this case as consisting exclusively of Sollers. 31. In Section 5.3.2, when examining non-attribution factors, the EAEC recognised that GAZ was manufacturing the product concerned, but considered that its market share for the period from 2008 to 2010 was negligible. The EAEC further observed that, starting from 2011, GAZ competed with Sollers During consultations, Russia clarified that Table regarding production and sales volumes of the product concerned within the Customs Territory included data regarding to both Sollers and GAZ. Russia further noted, however, that GAZ's Questionnaire Response was deficient. Russia stated that the EAEC sent several s to GAZ and had also sent a deficiency letter to GAZ on 18 February None of these were placed in the non-confidential file. It would appear that no verification visit to GAZ's premises was conducted by the EAEC, which considered GAZ as not cooperating in the investigation Legal argument 33. As will be explained below, the EAEC acted in a biased manner when excluding GAZ from the definition of "domestic industry", leading to a risk of materially distorting the injury analysis and, thus, to a violation of the obligations under Articles 3.1 and 4.1 of the AD Agreement. As a consequence of such a wronglydefined domestic industry, the EAEC's injury determination was also based on an incorrect data set, in violation of Article 3.1 of the AD Agreement. The European Union will recall the legal standard under Articles 3.1 and 4.1 of the AD Agreement when defining "domestic industry". Then, it will apply this standard to the facts of the present case to show that Russia violated those provisions Legal standard 34. Article 4.1 of the AD Agreement provides, in its relevant part, that: 24 See Report (Exhibit EU-21), p See Report (Exhibit EU-21), p

21 For the purposes of this Agreement, the term "domestic industry" shall be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of tсose products ( ) 35. Thus, "domestic" (as opposed to non-domestic or foreign) producers of the "like product" are the starting point for the determination of the domestic industry. Article 4.1 defines the domestic industry as either domestic producers of the like product "as a whole", or a subset of those producers, who collectively account for a "major proportion" of total domestic production. This provision does not specify a hierarchy between these different bases for defining the domestic industry, and thus, in principle, an investigating authority may define the domestic industry in an investigation on either basis.26 Indeed, the use of the term "or" indicates certain flexibility provided to investigating authorities with respect to defining the domestic industry. 36. The Appellate Body has further confirmed that the use of "a major proportion" within the meaning of Article 4.1 provides an investigating authority with flexibility to define the domestic industry in the light of what is reasonable and practically possible in a given case.27 This inherent flexibility means that investigating authorities are not required by the AD Agreement to first attempt to identify every domestic producer before they can define the domestic industry as those producers whose output constitutes a major proportion of total domestic production. 37. Nevertheless, the discretion given to investigating authorities to define domestic industry in view of such flexibility is not unfettered. An investigating authority is not allowed to ignore the situation of other domestic producers in its injury determination. For example, an investigating authority will make its analysis under Articles 3.2 and 3.4 with reference to the defined domestic industry, but will still need to assess the situation of other domestic producers in its evaluation of whether it is the impact of the subject imports that have explanatory force for the changes in the various economic factors and whether the strength of other 26 Panel Report, China Broiler Products, paras ; Panel Report, China Autos, para Appellate Body Report, EC Fasteners (China), paras

22 domestic producers could be a possible separate cause of injury to the defined "domestic industry" The text of Article 4.1 of the AD Agreement subsequently sets out circumstances in which some producers of the like product may be left out of the domestic industry definition. Thus, Article 4.1(i) provides for the exclusion of producers related to exporters or importers, or producers who are themselves importers of the allegedly dumped product. Article 4.1(ii) provides that, in the exceptional circumstances of two or more competitive markets within the territory of a Member, producers within each market may be regarded as a separate industry if certain conditions are satisfied. Nothing in the text of Article 4.1 gives any support to the notion that there is any other circumstance in which the domestic industry can be interpreted, from the outset, as not including certain categories of producers of the like product, other than those set out in that provision Moreover, Article 3.1 of the AD Agreement provides that: 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. 40. Article 3.1 thus requires that a determination of injury "involve an objective examination" of, inter alia, the impact of the dumped imports on domestic producers. The Appellate Body in China GOES explained that Article 3.1 of the AD Agreement (like Article 15.1 of the SCM Agreement) set forth "the overarching obligation regarding the manner in which an investigating authority must conduct a determination of injury caused by subject imports to the domestic industry".30 The Appellate Body considered that this general obligation informs the more detailed obligations in the remainder of Article 3 of the AD Agreement. In particular, the Appellate Body in China GOES stated that "the term 'positive evidence' relates to the quality of the evidence that an investigating authority may rely upon in making a determination, and requires the evidence to be affirmative, 28 Panel Report, China Broiler Products, para Panel Report, EC Fasteners (China), para Appellate Body Report, China GOES, para

23 objective, verifiable, and credible".31 Furthermore, the Appellate Body has found that the term "objective examination" requires that an investigating authority's examination "conform to the dictates of the basic principles of good faith and fundamental fairness", and be conducted "in an unbiased manner, without favouring the interests of any interested party, or group of interested parties, in the investigation" In other words, to ensure the accuracy of an injury determination, an investigating authority must not act so as to give rise to a material risk of distortion in defining the domestic industry, for example, by excluding a whole category of producers of the like product. The risk of introducing distortion will not arise when no producers are excluded and the domestic industry is defined as "the domestic producers as a whole". Where a domestic industry is defined as those producers whose collective output constitutes a major proportion of the total domestic production, it follows that the higher the proportion, the more producers will be included, and the less likely the injury determination conducted on this basis would be distorted. Nevertheless, such distortion does not depend solely on market shares. More broadly, an investigating authority bears the obligation to ensure that the way in which it defines the domestic industry does not introduce a material risk of skewing the economic data and, consequently, distorting its analysis of the state of the industry.33 For example, in EC Fasteners (China), the Appellate Body found that, by limiting the domestic industry definition to those producers willing to be part of the sample, the European Commission excluded producers that provided relevant information, and in so doing, the European Commission reduced the data coverage that could have served as a basis for its injury analysis and introduced a material risk of distorting the injury determination Thus, "a major proportion of the total domestic production" should be determined so as to ensure that the domestic industry defined on this basis is capable of providing ample data that ensure an accurate injury analysis.35 In other words, the 31 Appellate Body Report, China GOES, para Appellate Body Report, US Hot-Rolled Steel, para Appellate Body Report, EC Fasteners (China), paras. 414 and Appellate Body Report, EC Fasteners (China), para Appellate Body Report, EC Fasteners (China), para

24 obligation to conduct an objective examination in Article 3.1 of the AD Agreement requires an investigating authority to assess the significance, if any, of information it is made aware of during the process of defining the domestic industry for its assessment of injury. This would include, for instance, information related to known domestic producers, which may affect its analysis of the various economic factors and causation under Article 3 of the AD Agreement In sum, pursuant to Articles 3.1 and 4.1 of the AD Agreement, provisions which are inextricably linked,37 the "domestic industry" should be defined as referring to the domestic producers as a whole of the like products. Some of those producers may be left out from the definition of "domestic industry" in view of the reasons provided for in subparagraphs (i) and (ii) of Article 4.1 of the AD Agreement. Further, as an alternative, an investigating authority may reduce the universe of domestic producers to be caught under the definition of "domestic producers" if they amount to a "major proportion" of the total domestic production. However, this alternative is not unfettered. In so doing, investigating authorities should proceed in an unbiased manner, without favouring the interests of any interested party in the investigation, and thus ensuring that the way in which the domestic industry is defined does not introduce a material risk of skewing the economic data and, consequently, distorting its analysis of the state of the industry The EAEC failed to take into account GAZ as a known domestic producer and hence wrongly defined the domestic industry As noted before, in this case the EAEC defined "domestic industry" on the basis of one single producer of the like product, i.e. Sollers, which allegedly accounted for 87.9% of the total production of those like products in the Customs Territory. 38 The EAEC therefore deliberately excluded GAZ from the definition of "domestic industry", despite the fact that GAZ was a known producer of the like products which participated throughout the investigation. 36 Panel Report, China Broiler Products, para Panel Report, China Broiler Products, para See Report (Exhibit EU-21), Section