Ref. Ares(2018)2607090-18/05/2018 As delivered In the World Trade Organization Panel Proceedings Measures Related to Price Comparison Methodologies by the Geneva, 15 May 2018
_ TABLE OF CONTENTS 1. THE REPEAL OF ARTICLE 2(7) OF THE EU BASIC ANTI-DUMPING REGULATION 2 1.1. Issues concerning the evidence, the burden of proof and the burden of persuasion... 2 1.2. The provisions of the Anti-Dumping Agreement relating to original investigations as opposed to the provisions of the Anti-Dumping Agreement relating to certain types of reviews... 5 1.3. The provisions of the EU Basic Anti-Dumping Regulation relating to original investigations as opposed to the provisions of the EU Basic Anti- Dumping Regulation relating to certain types of reviews... 6 1.4. China's Consultations Request in DS516 (which relates only to original investigations) as opposed to China's Consultations Request in DS515 (which relates to original investigations and reviews)... 8 1.5. China's First and Second Claims (which relate to original investigations) as opposed to the provisions of Regulation (EU) 2017/2321 that relate to certain types of reviews, and which, in addition, are transitional in nature 9 1.6. The repeal of Article 2(7) of the EU Basic Anti-Dumping Regulation and China's "Combined Response" to Panel Questions 28 to 30... 11 1.7. The intertemporal application of the law, and the necessary and WTO consistent transitional rule about the law applicable in time... 12 1.8. Conclusion: Article 2(7) of the EU Basic Anti-Dumping Regulation has been repealed and China has not demonstrated otherwise the Panel must not make a recommendation and should not make findings with respect to Article 2(7)... 13 2. EU REQUEST FOR PRELIMINARY RULINGS... 14 3. THE OVERARCHING LEGAL FRAMEWORK... 17 3.1. Article VI of the GATT 1994 (including the Ad Notes), the Anti-Dumping Agreement and the SCM Agreement... 17 3.1.1. The disagrees with China's assertion that, for the purposes of its objective assessment, the Panel should replace the terms actually used in the treaty and the measures at issue with China's self-defined terms "home market normal value" and "third country normal value", and disagrees with China's use of other terms that do not appear in the treaty or in the measures at issue.. 17 3.1.2. Contrary to what China asserts, the is not arguing that this case concerns "a single methodology"... 19 3.1.3. The Parties now agree that the comparison under Article 2 of the Anti-Dumping Agreement must be proper and fair... 22 3.1.4. The Parties now agree that a "proper comparison" is one that is "apt to reveal dumping" as that term has been defined in Article VI of - i -
_ the GATT 1994 and the Anti-Dumping Agreement, irrespective of the basis on which normal value is determined... 22 3.1.5. The Parties now agree that there are circumstances in which domestic costs are distorted and unreliable, and are not therefore apt to be used as the basis for a dumping calculation and may be rejected... 22 3.2. The relationship between Article VI of the GATT 1994, the Anti-Dumping Agreement and the SCM Agreement on the one hand, and Section 15 on the other hand... 23 3.2.1. The old Section 15... 23 3.2.2. The new Section 15... 29 3.3. The Parties now agree that Section 15 is not within the Panel's terms of reference... 31 4. CHINA'S FIRST CLAIM: CHINA HAS FAILED TO DEMONSTRATE THAT ARTICLES 2(1) TO 2(7) OF THE EU BASIC ANTI-DUMPING REGULATION WERE INCONSISTENT WITH ARTICLE I:1 OF THE GATT 1994... 34 5. CHINA'S SECOND CLAIM: CHINA HAS FAILED TO DEMONSTRATE THAT (THE NOW REPEALED) ARTICLE 2(7) OF THE EU BASIC ANTI-DUMPING REGULATION WAS INCONSISTENT WITH ARTICLE VI:1 OF THE GATT 1994, THE SECOND PARAGRAPH OF THE AD NOTE TO ARTICLE VI:1 AND ARTICLES 2.1 AND 2.2 OF THE ANTI-DUMPING AGREEMENT... 42 5.1. Contrary to what China asserts, the question of whether or not there are circumstances in which an investigating authority may reject costs (as well as prices), is relevant to this dispute... 43 5.2. Contrary to what China asserts, the presence of the term "market-economy conditions" in (the now repealed) Article 2(7) of the EU Basic Anti- Dumping Regulation does not demonstrate, per se, that it was inconsistent with Article 2.2 of the Anti-Dumping Agreement... 45 5.3. Contrary to what China asserts, the question of whether or not there are circumstances in which an investigating authority may have recourse to data or evidence from a third country, as a proxy, adjusted when necessary, is relevant to this dispute... 47 5.4. Contrary to what China asserts, in making its objective assessment, the Panel is not permitted to replace the terms actually used in the treaty and the measures at issue with China's preferred term "default" that term is not apt to disclose any prima facie case that (the now repealed) Article 2(7) of the EU Basic Anti-Dumping Regulation was inconsistent with Article 2.2 of the Anti-Dumping Agreement... 50 5.4.1. The term "default" does not appear anywhere in the terms actually used in the treaty and the measure at issue... 50 5.4.2. The term "default" does not appear in China's Consultations Request or Panel Request and was never part of China's case or the Panel's terms of reference... 50 - ii -
_ 5.4.3. The term "default" as a disguised reference to the burden of proof issue and an attempt to evade China's own burden of proof as the complainant, whilst still securing findings against the measure at issue 52 5.4.4. The term "default" as a disguised reference to China and an attempt to circumvent the EU rebuttal of China's First Claim... 55 5.4.5. The term "default" as a disguised attempt to introduce the term "only" into the measure at issue... 57 5.4.6. China's misguided and erroneous attempt to transpose the term "default" from other contexts... 59 5.4.7. Conclusion: the Panel must not build its objective assessment around the term "default" it must strip that term out of China's arguments, and conclude, also having regard to its terms of reference as set out in China's Consultations Request and Panel Request, that China has failed to make a prima face case... 61 6. CONCLUSION... 61 - iii -
_ TABLE OF EXHIBITS Exhibit Number Exhibit EU-40 Exhibit EU-41 Exhibit EU-42 Exhibit EU-43 Document Court of Justice of the, Judgment of the Court (Fourth Chamber) of 8 July 2010 in Case C-343/09, Afton Chemical Limited v Secretary of State for Transport (European Court Reports 2010 I-07027) (ECLI:EU:C:2010:419) (extract). https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:62009cj0343&qid=152611802365 5&from=EN Court of Justice of the, Judgment of the Court (Second Chamber) of 4 May 2016 in Case C-477/14, Pillbox 38 (UK) Ltd v The Secretary of State for Health (ECLI:EU:C:2016:324) (extract). https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:62014cj0477&qid=152611779535 7&from=EN Commission Implementing Regulation (EU) 2015/1963 of 30 October 2015 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of acesulfame potassium originating in the People's Republic of China (Official Journal of the L 287/52 of 31.10.2015) (extract). https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:32015r1963&qid=1526117710574 &from=en Council Regulation (EU) No 626/2012 of 26 June 2012 amending Implementing Regulation (EU) No 349/2012 imposing a definitive antidumping duty on imports of tartaric acid originating in the People's Republic of China (Official Journal of the L 182/1 of 13.7.2012) (extract). https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:32012r0626&qid=1526117645072 &from=en Exhibit EU-44 Council Implementing Regulation (EU) No 412/2013 of 13 May 2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of ceramic tableware and kitchenware originating in the People's Republic of China (Official Journal of the L 131/1 of 15.5.2013) (extract). https://eur-lex.europa.eu/legalcontent/en/txt/pdf/?uri=celex:32013r0412&qid=1526117071428 &from=en - iv -
1. 2. Mr. Chairman, distinguished Members of the Panel. China's First and Second Claims are "as such" Claims. There are no "as applied" claims included or properly included in this dispute. We therefore begin by recalling what the jurisprudence tells us about "as such" claims, which are considered particularly serious and far-reaching: 1 the complainant is expected to be especially diligent in setting out its "as such" Claims already in its Panel Request; and the complainant's "as such" Claims are expected, already in its Panel Request, to identify unambiguously the legal basis of the complaint and the specific measure at issue challenged. 3. We submit that China has failed to meet this standard even at this stage of the second hearing. If there is one word that fairly sums up China's submissions at this point with respect to both the legal basis of the complaint and the specific measure at issue, it is: ambiguous. China is still being highly ambiguous: about what it is trying to achieve by reversing its First and Second Claims, and attempting to introduce a new Third Claim; by trying to transpose the essence of its (defunct) First Claim into its Second Claim; and indeed about what its Claims are supposed to be, given that it insists on ignoring the terms actually used in the treaty and the measure at issue, and uses instead terms unilaterally defined by China, and changed at China's whim. 1 Appellate Body Report, US Oil Country Tubular Goods Sunset Reviews, paras. 172 and 173: 172. In our view, 'as such' challenges against a Member's measures in WTO dispute settlement proceedings are serious challenges. By definition, an 'as such' claim challenges laws, regulations, or other instruments of a Member that have general and prospective application, asserting that a Member's conduct not only in a particular instance that has occurred, but in future situations as well will necessarily be inconsistent with that Member's WTO obligations. 173. The presumption that WTO Members act in good faith in the implementation of their WTO commitments is particularly apt in the context of measures challenged 'as such'. We would therefore urge complaining parties to be especially diligent in setting out 'as such' claims in their panel requests as clearly as possible. In particular, we would expect that 'as such' claims state unambiguously the specific measures of municipal law challenged by the complaining party and the legal basis for the allegation that those measures are not consistent with particular provisions of the covered agreements. Through such straightforward presentations of 'as such' claims, panel requests should leave respondent parties in little doubt that, notwithstanding their own considered views on the WTO-consistency of their measures, another Member intends to challenge those measures, as such, in WTO dispute settlement proceedings. See also: Appellate Body Report, US Zeroing (EC), para. 243; Appellate Body Report, EU Biodiesel (Argentina), para. 6.226. - 1 -
4. We respectfully submit that enough is enough. It should not be our job, and it is certainly not the Panel's job, to attempt to unscramble China's arguments. If the premises are wrong the argument fails and that should be that. In any event, the measure at issue, Article 2(7) of the EU Basic Anti-Dumping Regulation, has been repealed. The underlying issues are too important to the entire Membership for this case to serve as a vehicle for an advisory opinion on these matters. It is obviously time for a re-set, and it would be best that it would be done quickly. 1. THE REPEAL OF ARTICLE 2(7) OF THE EU BASIC ANTI-DUMPING REGULATION 5. In its Second Written Submission, China asserts that Article 2(7) has not been repealed, 2 notwithstanding the fact that it clearly has. We would therefore like to address this issue first. We consider that making relevant findings on this issue provides the Panel with the most efficient and appropriate way of dealing with this case. To borrow China's words, with which we agree, the Panel should take all necessary steps to achieve "clarity now" 3 on this issue. 1.1. ISSUES CONCERNING THE EVIDENCE, THE BURDEN OF PROOF AND THE BURDEN OF PERSUASION 6. 7. 8. We would first like to comment on certain issues concerning the evidence, the burden of proof and the burden of persuasion. In sum, the considers that: the Panel has the evidence it requires in order to determine that Article 2(7) has been repealed (the text of Regulation (EU) 2017/2321); consequently, there is no issue concerning burden of proof; and it is for China to explain why it asserts that the has introduced new measures that are "in essence the same" and have the same legal implications as Article 2(7), which China has failed to do. In this respect, we wish to make four specific points. First, we would like to briefly address the question of what evidence the Panel requires in order to determine that Article 2(7) was repealed with effect from 20 December 2017 (that is, after the first hearing, but before the replies to the Panel's first set of questions). The considers that the text of Regulation 2 China's Second Written Submission, Section III.B. 3 China's Second Written Submission, para. 28. - 2 -
(EU) 2017/2321, and particularly its Article 1(2), evidences the repeal of Article 2(7). Furthermore, we understand that the Parties agree that the relevant evidence consists of the text of Regulation (EU) 2017/2321. 4 9. 10. 11. Second, we would like to briefly address the question of whether or not that evidence (the text of Regulation (EU) 2017/2321) is on the Panel record; and whether or not the Panel is in a position to rely on that evidence for the purposes of making that determination. We address this issue because, somewhat surprisingly, China appears to cast doubt on these matters, 5 although, in this respect, it may well be that China's latest representations are just being carried-over from the representations it made before Regulation (EU) 2017/2321 was adopted and entered into force. 6 The considers that the relevant evidence is on the Panel record and that the Panel can rely upon it. At the first opportunity, the provided the Panel, China and the Third Parties with a link to Regulation (EU) 2017/2321 in its Response to Panel Question 31; 7 and China itself similarly exhibited that document to its Response to Panel Question 30 8 (as the European Union anticipated China would). 9 Therefore, the Parties agree that the Panel has the evidence necessary for it to determine that Article 2(7) has been repealed; and that the Panel is in a position to rely on that evidence for the purposes of making that determination. 10 In this respect, China's assertion that the objects to the Panel examining Articles 1(2) to (4) and 4 of Regulation (EU) 2017/2321 for that purpose is inaccurate. 11 The considers that the Panel can and must consider those provisions, as evidence of facts that each Party is asserting, for the purposes of deciding whether or not Article 2(7) has been repealed; and for 4 China's Second Written Submission, paras. 20 ("the amending Regulation"), 21 ("the amending Regulation"), 23 ("the amending Regulation"), 24 ("the amending Regulation"), 25 ("the amending Regulation"), 26 ("the amending Regulation"), and 27 ("the amending Regulation"). 5 China's Second Written Submission, paras. 17-28. 6 China's Second Written Submissions, para. 17, final sentence. 7 EU Response to Panel Question 31, para. 99 and footnote 49. See, similarly, for example, the links at: China's First Written Submission, footnotes 16 and 76. 8 China's Response to Panel Question 30, para. 262 and footnote 241. 9 EU First Opening Oral Statement, para. 46, second bullet point. 10 China's Second Written Submission, para. 23, noting that: (" a copy of the amending Regulation [is] on the record "). 11 China's Second Written Submission, paras. 13-14, 17 (heading) and 25-26. - 3 -
the purposes of deciding whether or not the has introduced new measures that are "in essence the same" and have the same legal implications as the measure that China originally complained about. The point that we made in our response to the Panel's first set of questions was a different one: notwithstanding the preceding observations, we nevertheless wish to be clear that none of these provisions are measures at issue within or properly within the scope of these panel proceedings. 12. 13. 14. 15. Third, with respect to the question of whether the has introduced new measures that are "in essence the same" and have the same legal implications as the measures that China originally complained about, China asserts that the bears the burden of proof. 12 We do not agree. China, as the complainant, bears the burden of proof. Therefore, it is for China to substantiate its assertion that the has introduced new measures that are "in essence the same" and have the same legal implications as the measures originally challenged by China. However, in any event, as we have just recalled, this is not a live issue in this case, because the relevant evidence is on the Panel record. In this respect, the European Union has directed the Panel to Article 1(2) of Regulation (EU) 2017/2321, whilst China has referred to Articles 1(3), 1(4) and 4. So the Panel has the evidence, and is in a position to decide accordingly. Insofar as China is referring to a burden of persuasion, 13 that is, a burden to bring forward arguments in support of assertions, we respectfully submit that such burden rests on China, 14 that China has not met that burden, and that in any event the has demonstrated that the provisions to which China is referring are not "in essence the same" and do not have the same legal implications as those that China originally complained about. Fourth, in this respect, the respectfully submits that, by its own terms, Article 1(2) of Regulation (EU) 2017/2321 establishes that Article 2(7) has 12 China's Second Written Submission, para. 18. 13 China's Second Written Submission, para. 21: (" the also fails to explain ") and para. 22. 14 Appellate Body Report, US Carbon Steel, para. 157: (" a responding Member's law will be treated as WTO-consistent until proven otherwise. "). - 4 -
been repealed. It expressly provides that Article 2(7) is replaced by a provision that applies only to countries that are not Members of the WTO and China has no complaint with respect to that new provision. Thus, the has established what it needs to establish, and provided persuasive arguments in support of its position, whilst China has not. We therefore disagree with China's assertion that our position is "unsupported". 15 Consequently, we respectfully submit that the Panel should find that Article 2(7) has been repealed. 1.2. THE PROVISIONS OF THE ANTI-DUMPING AGREEMENT RELATING TO ORIGINAL INVESTIGATIONS AS OPPOSED TO THE PROVISIONS OF THE ANTI-DUMPING AGREEMENT RELATING TO CERTAIN TYPES OF REVIEWS 16. 17. We turn now to the provisions of the Anti-Dumping Agreement relating to original investigations as opposed to those relating to certain types of reviews. We understand that China's position is that the provisions of the Anti-Dumping Agreement relating to interim and newcomer reviews are "in essence the same" and have the same legal implications as those relating to original investigations. We further understand that China's position is that the prohibition that China alleges is contained in Article 2.2 of the Anti-Dumping Agreement (that is, on using data or evidence from a third country, as a proxy, adjusted when necessary) is also to be found in the provisions of the Anti-Dumping Agreement relating to such reviews, and applies in the context of those provisions in the same way. We disagree. When we consider, for example, Article 11.2 of the Anti-Dumping Agreement (which relates to interim reviews) we note that the terms actually used in the treaty do not refer to the determination of a normal value. All that we read is that, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, the authorities shall review the need for the continued imposition of the duty. We further read that the authority is only obliged to do so when an interested party submits positive information substantiating the need for such a review. If no such positive information is submitted, or if the information submitted is insufficient, then no obligation to conduct an interim review arises. 15 China's Second Written Submission, paras. 14 and 17 (heading). - 5 -
18. 19. 20. Even if such a review would be initiated, the terms of Article 11.2 do not contain an obligation to determine a normal value, still less a normal value for a particular producer, still less a normal value in accordance with particular data or rules. Rather, the authority may simply consider whether the continued imposition of the duty is necessary to offset dumping, whether injury would be likely to continue or recur if the duty were removed or varied, or both. Significantly, Article 11.4 provides that the provisions of Article 6 of the Anti-Dumping Agreement regarding evidence and procedure shall apply to any review carried out under Article 11 it does not provide that the provisions of Article 2 apply. Similarly, newcomer reviews are also subject to specific rules set out in Article 9.5 of the Anti-Dumping Agreement. Accordingly, we disagree with China's position that the provisions of the Anti- Dumping Agreement relating to such reviews are "in essence the same" and have the same legal implications as those relating to original investigations. We also disagree with China's position that the prohibition that China alleges is contained in Article 2.2 of the Anti-Dumping Agreement (that is, on using data or evidence from a third country, as a proxy, adjusted when necessary) is also to be found in the provisions of the Anti-Dumping Agreement relating to such reviews, and applies in the context of those provisions in the same way. 1.3. THE PROVISIONS OF THE EU BASIC ANTI-DUMPING REGULATION RELATING TO ORIGINAL INVESTIGATIONS AS OPPOSED TO THE PROVISIONS OF THE EU BASIC ANTI-DUMPING REGULATION RELATING TO CERTAIN TYPES OF REVIEWS 21. 22. Turning to the provisions of the EU Basic Anti-Dumping Regulation relating to original investigations as opposed to the provisions of the EU Basic Anti- Dumping Regulation relating to certain types of reviews, we have similar comments. We understand that China's position is that the provisions of the EU Basic Anti-Dumping Regulation relating to interim and newcomer reviews are "in essence the same" and have the same legal implications as those relating to original investigations. That is simply incorrect. And we can make this statement with some confidence, since we are speaking of our own legislation. Thus, the provisions of the EU Basic Anti-Dumping Regulation relating to reviews are contained in a specific provision, Article 11, which, by its own terms, relates - 6 -
to reviews as opposed to original investigations. Article 11(3) of the EU Basic Anti-Dumping Regulation (which relates to interim reviews) tracks the provisions of Article 11.2 of the Anti-Dumping Agreement. It does not contain any obligation to even determine a normal value. It merely provides that, provided that a reasonable period of time (of at least one year) has elapsed since the imposition of the definitive anti-dumping duty, the authorities shall review the need for the continued imposition of the duty. The authority is only obliged to do so when an interested party submits sufficient evidence substantiating the need for such a review. If sufficient evidence is not submitted, then no obligation to conduct an interim review arises. 23. 24. 25. 26. Even if such a review would be initiated, there is still no obligation to determine a normal value, still less a normal value for a particular producer, still less a normal value in accordance with particular data or rules. Rather, the authority may simply consider whether the continued imposition of the duty is necessary to offset dumping, whether injury would be likely to continue or recur if the duty were removed or varied, or both. In this context, the only provisions of the EU Basic Anti-Dumping Regulation that are cross-referenced are procedural in nature (in other words, Article 11(5) of the EU Basic Anti-Dumping Regulation simply mirrors Article 11.4 of the Anti-Dumping Agreement). Similarly, newcomer reviews are also subject to specific rules set out in Article 11(4) of the EU Basic Anti-Dumping Regulation. Accordingly, we disagree with China's position that the provisions of the EU Basic Anti-Dumping Regulation relating to such reviews are "in essence the same" and have the same legal implications as those relating to original investigations. Furthermore, we point out that Articles 11(3) and (4) of the EU Basic Anti- Dumping Regulation are not measures at issue in these panel proceedings. If China had wanted to make representations about those provisions it should have included them in its Consultations Request and Panel Request, which it failed to do. In these circumstances, as a matter of law, the Panel is obliged to presume that Articles 11(3) and (4) are fully consistent with the 's WTO obligations, and is precluded from entertaining any representations to the contrary on China's part at this point in the proceedings. - 7 -
1.4. CHINA'S CONSULTATIONS REQUEST IN DS516 (WHICH RELATES ONLY TO ORIGINAL INVESTIGATIONS) AS OPPOSED TO CHINA'S CONSULTATIONS REQUEST IN DS515 (WHICH RELATES TO ORIGINAL INVESTIGATIONS AND REVIEWS) 27. 28. 29. 30. We turn now to China's Consultations Request in DS516 (which relates only to original investigations) as opposed to China's Consultations Request in DS515 (which relates to original investigations and reviews). As we have explained in our submissions, we consider that China is, in effect, attempting to proceed as if the scope of these two proceedings is "in essence the same", with the same legal implications. We do not agree that China is permitted to do that. Rather, we submit that the scope of the two proceedings is different, and those differences must be respected. Therefore, in DS516, China is not permitted to make representations to the Panel about the alleged WTO inconsistency of Articles 11(3) and (4) of the EU Basic Anti-Dumping Regulation, which relate to interim and newcomer reviews. Rather, as a matter of law, the Panel must proceed on the basis of the presumption that those provisions are WTO consistent. This means that China's submissions are unavailing, because, at most, what China appears to be asserting is that Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 contain provisions that are "in essence the same" and have the same legal implications as the provisions contained in Articles 11(3) and (4) of the EU Basic Anti-Dumping Regulation. However, as we have just recalled, Articles 11(3) and (4) are not within the Panel's terms of reference and, in any event, as a matter of law, the Panel must presume them to be WTO consistent. If one provision (such as Article 1(3) of Regulation (EU) 2017/2321) is "in essence the same" and has the same legal implications as another provision that is WTO consistent (such as Article 11(3) of the EU Basic Anti-Dumping Regulation), it is obviously not possible to conclude that the first provision is WTO inconsistent. The existence of the Consultations Request in DS515 shows that China well understands the difference between bringing a case only against provisions of a Member's anti-dumping legislation that concern original investigations (as in DS516) or also against provisions of a Member's anti-dumping legislation that concern reviews (as in DS515). It means that, in this respect, China cannot plead ignorance, and cannot now argue that the scope of the panel proceedings in DS516 is somehow co-extensive with the scope of the panel proceedings in DS515. - 8 -
1.5. CHINA'S FIRST AND SECOND CLAIMS (WHICH RELATE TO ORIGINAL INVESTIGATIONS) AS OPPOSED TO THE PROVISIONS OF REGULATION (EU) 2017/2321 THAT RELATE TO CERTAIN TYPES OF REVIEWS, AND WHICH, IN ADDITION, ARE TRANSITIONAL IN NATURE 31. 32. 33. 34. 35. Turning to the provisions of Regulation (EU) 2017/2321 to which China refers, we have similar observations. China's First and Second Claims relate to original investigations. By contrast, Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 (which are not within the scope of the dispute) amend Articles 11(3) and (4) of the EU Basic Anti-Dumping Regulation (which are not measures at issue and which concern respectively interim reviews and newcomer reviews), not Article 2(7) (which has been repealed). China argues that Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 refer to "the original methodology". 16 However, China is misunderstanding those references. Those references are to the original methodology used in the particular "as applied" determination. For example, if the original methodology used in the particular "as applied" determination would have been based in whole or in part, on Chinese prices or costs, pursuant to the relevant provisions of Article 2(7), 17 then that same methodology would normally be used in any review proceeding. This is just a specific reflection of the rule in Article 11(9) of the EU Basic Anti- Dumping Regulation, pursuant to which the methodology used in an original investigation will also in principle be used in all review proceedings. That in turn is just a specific reflection of the rule in Article 18.3.1 of the Anti-Dumping Agreement. Neither of these provisions is within or properly within the scope of this dispute. Thus, what Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 are actually doing is adjusting these rules to the advantage of Chinese exporters, by providing that the methodologies laid down in Articles 2(1) to (6a) will apply in the first expiry review. Absent that clarification, some interested parties might argue for the use of the methodology used in the original measure. These provisions also ensure that 16 China's Second Written Submission, para. 24. 17 See, for example, the cases cited in Section 5.4.5 of this Oral Statement. - 9 -
all Chinese exporters will be treated, in the first expiry review, in the same way, which also reflects reasonable EU law constraints about non-discrimination. Again, none of these provisions are the subject of any claims or representations by China, and none of them are within or properly within the scope of this dispute. 36. 37. 38. Furthermore, we point out that, by the terms of Regulation (EU) 2017/2321 itself, unlike Article 2(7) (the measure at issue), these are transitional measures. 18 That is, unlike (the now repealed) Article 2(7), which applied indefinitely for the purposes of an indeterminate number of new anti-dumping investigations, these provisions will apply for a limited period of time to a closed and limited category of proceedings (interim and newcomer reviews of certain prior determinations), the number of which is diminishing with time and will attain zero within the relatively near future. Transitional measures cannot reasonably be described as "in essence the same" and as having the same legal implications as measures that are not transitional in nature. China is not entitled to simply assume that the legal framework governing such transitional measures would be the same as the legal framework that China has referred to in its submissions to the Panel. There are specific provisions of WTO law and public international law that would be relevant to any consideration of such transitional measures. In this respect, we have already explained to the Panel our views concerning the consequences of the expiry of Section 15(a)(ii), the inter-temporal application of WTO law and the date of application as the relevant operative event. 19 China has not responded. These matters are therefore not contested by China. Specifically, the WTO legal system is silent as to the transitional regime to be applied following the change that occurred on 11 December 2016. In these circumstances, nothing in public international law precludes a WTO Member from adopting reasonable transitional measures in order to wind-up the past in a methodical way, and facilitate the efficient, orderly and equitable administration of the applicable rules. 20 18 Regulation (EU) 2017/2321, Recital (9). 19 EU First Written Submission, Section 11. 20 Regulation (EU) 2017/2321, Recital (9), final sentence. - 10 -
39. 40. 41. 42. In this respect, given the fifty-or-so anti-dumping measures that the European Union has had to adopt as a result of dumping by Chinese producers, it would not be reasonable to require the investigating authority to instantly review all those measures upon adoption of the EU's new anti-dumping legislation. Various provisions of the Anti-Dumping Agreement make it clear that the reasonable capacity of a Member to administer anti-dumping law is something that is to be taken into account. For example, Article 6.10.2 provides that it is appropriate to take into account whether a particular approach will be "unduly burdensome to the authorities" and "prevent the timely completion" of the proceedings. Similarly, Article 9 provides that it is appropriate to take into account whether or not a particular approach is "impracticable". It would clearly have been "unduly burdensome" and "impracticable" for the EU authorities to instantly review all existing anti-dumping measures relating to China upon adoption of the EU's new anti-dumping legislation, and impossible to achieve that in a timely manner. Therefore, the has adopted a transitional approach of providing for such review, for all Chinese exporters, at the same time, and on an equal footing, on the occasion of the first expiry review pursuant to Article 11.3 of the Anti-Dumping Agreement, thus folding any potential reviews under Articles 11(3) and (4) of the EU Basic Anti-Dumping Regulation into that first expiry review. This is a reasonable approach and an approach that is also deemed appropriate in light of EU municipal law, and in particular the basic objective of aiming to treat all exporters from a particular country on an equal footing. In conclusion, given the transitional nature of these measures, and the specific justifications on which they rest, Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 cannot reasonably be characterised as being "in essence the same" and as having the same legal implications as (the now repealed) Article 2(7). 1.6. THE REPEAL OF ARTICLE 2(7) OF THE EU BASIC ANTI-DUMPING REGULATION AND CHINA'S "COMBINED RESPONSE" TO PANEL QUESTIONS 28 TO 30 43. Accordingly, we respectfully submit that we have demonstrated that Article 2(7) has been repealed, and China has not demonstrated otherwise. - 11 -
44. 45. We are particularly perplexed by China's position that, because Regulation (EU) 2017/2321 amended the EU Basic Anti-Dumping Regulation, it follows that the Panel now has the "competence" to consider any provision of the EU Basic Anti- Dumping Regulation. 21 On that logic, the Panel could now entertain, for example, representations by China relating to expiry reviews (which are governed by Article 11.3 of the Anti-Dumping Agreement) or for that matter injury (which is governed by Article 3 of the Anti-Dumping Agreement). We think that this proposition is clearly wrong and must be rejected by the Panel. In fact, we have elsewhere established that none of these provisions are within or properly within the scope of this dispute. 22 In short, there is clearly a critical missing link in China's arguments. If China would have wished to argue that the rules in Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 are "in essence the same" and have the same legal implications as the rules in (the now repealed) Article 2(7), it was incumbent on China to demonstrate that the rules in Articles 11(3) and (4) of the EU Basic Anti-Dumping Regulation are "in essence the same" and have the same legal implications as both the rules in Articles 1(3) and 1(4) of Regulation (EU) 2017/2321 and the rules in (the now repealed) Article 2(7). That is something that China has not done, and indeed cannot do, because it is simply not the case, and in any event these provisions are not within or properly within the Panel's terms of reference. 1.7. THE INTERTEMPORAL APPLICATION OF THE LAW, AND THE NECESSARY AND WTO CONSISTENT TRANSITIONAL RULE ABOUT THE LAW APPLICABLE IN TIME 46. Turning to Article 4 of Regulation (EU) 2017/2321, we first observe that this provision does not even incorporate anything into the EU Basic Anti-Dumping Regulation. It is just a provision of Regulation (EU) 2017/2321, which is not within the scope of this dispute. In any event, Article 4 of Regulation (EU) 2017/2321 simply contains a necessary and WTO consistent transitional rule about the law applicable in time. It is not "in essence the same" and does not have the same legal implications as (the now repealed) Article 2(7). Article 2(7) was a legislative provision that applied indefinitely to an indeterminate number of new 21 China's "Combined Response" to Panel Questions 28 to 30, para. 275, first and second sentences; EU Second Written Submission, para. 48 and footnote 37. 22 EU First Written Submission, Section 7.2; EU Second Written Submission, Section 8. - 12 -
investigations. The transitional rule on the law applicable in time concerns a closed and limited category of proceedings that will be completed in the near future, and will only give rise to "as applied" measures of a nature that is completely different from the legislative measures challenged by China in these proceedings. Furthermore, the justification for such transitional rules on the law applicable in time is not the same as the justification for (the now repealed) Article 2(7), and these provisions do not have the same legal implications. 47. Therefore, a provision such as Article 4 of Regulation (EU) 2017/2321 is not a rule of a type apt to support the proposition that a measure has not been repealed; or apt to support the proposition that, notwithstanding the repeal, a panel should nevertheless make findings (a point to which we will return shortly). 1.8. CONCLUSION: ARTICLE 2(7) OF THE EU BASIC ANTI-DUMPING REGULATION HAS BEEN REPEALED AND CHINA HAS NOT DEMONSTRATED OTHERWISE THE PANEL MUST NOT MAKE A RECOMMENDATION AND SHOULD NOT MAKE FINDINGS WITH RESPECT TO ARTICLE 2(7) 48. 49. 50. 51. In conclusion, for these reasons, we submit that the Panel should find that Article 2(7) has been repealed, China not having demonstrated otherwise. In these circumstances, the Panel must not make a recommendation. A panel cannot write in its report that it finds a measure no longer exists, but then recommend that such non-existent measure should be brought into conformity with the respondent's obligations under the Anti-Dumping Agreement. 23 In addition, we respectfully submit that the Panel should exercise its discretion not to make findings with respect to (the now repealed) Article 2(7). 24 Finally, we recall that we have requested a separate report from the Panel on these matters. In this respect, we note that China also "urges" the Panel to decide on these matters "now". 25 The Parties therefore appear to agree that the Panel should 23 See, in this respect: Appellate Body Reports, China Raw Materials, para. 260: (" While a finding by a panel concerns a measure as it existed at the time the panel was established, a recommendation is prospective in nature in the sense that it has an effect on, or consequences for, a WTO Member's implementation obligations that arise after the adoption of a panel and/or Appellate Body report by the DSB. ") and para. 264: (" The absence of a recommendation in such a case would effectively mean that a finding of inconsistency involving such measures would not result in implementation obligations for a responding member "). 24 See footnote 23. 25 China's Second Written Submission, para. 28. - 13 -
deal with these issues, immediately, as threshold issues. Furthermore, we also note that China agrees with the that it would be appropriate for the Parties to have "clarity" with respect to these issues "now". 26 We think that such "clarity now" can only reasonably be achieved by having recourse to a separate report on these matters, which either Party can appeal should they wish to do so. 52. In our respectful submission, the Panel should not permit China to "play poker" with the dispute settlement system, by getting so far into a misconceived case that it becomes problematic for an adjudicator to point out that original misconception at a later stage. Thus, in order to prevent China from taking advantage of the conundrum it seeks to create, the Panel should proceed to the rapid and final adjudication of these threshold issues, by dealing with them in a separate report. That is what we respectfully request the Panel to do. 2. EU REQUEST FOR PRELIMINARY RULINGS 53. 54. 55. We turn now to briefly address the EU Request for Preliminary Rulings. 27 We have the following observations. First, China blends together the issues concerning the EU Request for Preliminary Rulings 28 and the issues concerning the repeal of Article 2(7), 29 plus the issues concerning the new Section 15. 30 China does this on the grounds that there are "common threads" 31 between these three distinct matters, although China does not specify what they are supposed to be. China's approach is unhelpful and only serves to obfuscate. We assume that China does this because, in truth, it still has nothing of substance to say about the EU Request for Preliminary Rulings. 32 The issues concerning the repeal of Article 2(7) have just been dealt with in the preceding section. The issues concerning the new 26 China's Second Written Submission, para. 28. 27 EU First Written Submission, Section 7; EU Second Written Submission, Section 8. 28 China's Second Written Submission, para. 9, second bullet point. 29 China's Second Written Submission, para. 9, first bullet point. 30 China's Second Written Submission, para. 9, third bullet point. 31 China's Second Written Submission, para. 10. 32 EU First Written Submission, Section 7; EU Second Written Submission, Section 8. - 14 -
Section 15 are dealt with elsewhere in this Oral Statement. 33 The issues concerning the EU Request for Preliminary Rulings are dealt with in this section. 56. 57. 58. 59. Second, in making its Request for Preliminary Rulings 34 the did not assert that the Panel's terms of reference were insufficient for the Panel to make any findings regarding China's Claims. 35 We have submitted other reasons why the Panel cannot or should not make findings on China's Claims, or should find in favour of the. Rather, the EU Request for Preliminary Rulings is concerned with a different matter, namely being precise about issues that are not within or properly within the scope of this dispute, notwithstanding the ambiguities in China's Consultations Request and Panel Request. For example, we provided precise reasons why Articles 1, 2(8) to 2(12) and 3 to 25 of the EU Basic Anti-Dumping Regulation are not within or properly within the scope of this dispute, notably because, in this respect, China's Consultations Request and Panel Request do not comply with Articles 4.4 and 6.2 of the DSU. 36 China has never engaged with these arguments. In these circumstances, at this point, we are content to leave it to the Panel's good sense to determine whether or not China has "contested" 37 the EU's submissions on these matters; and which of the Parties, in this respect, is making representations to the Panel that are "manifestly incorrect". 38 Third, we note that China describes the EU Request for Preliminary Rulings as "unsupported" 39 and hence "meritless". 40 However, it is the that has supported its Request for Preliminary Rulings with detailed and careful submissions, 41 whilst China has remained silent on the substance of these matters. The truth, therefore, is that the EU position is fully supported, whilst China's position on the substance of the requests is not even stated, let alone supported with any arguments. We do not think that the Panel can find the EU position to be 33 See Section 3.3 of this Oral Statement. 34 EU First Written Submission, Section 7. 35 China's Second Written Submission, Heading of Section II and para. 12. 36 EU First Written Submission, Section 7.2; EU Second Written Submission, Section 8. 37 China's Second Written Submission, para. 9, first bullet point. 38 China's Second Written Submission, para. 9. 39 China's Second Written Submission, para. 9. 40 China's Second Written Submission, para. 12. 41 EU First Written Submission, Section 7; EU Second Written Submission, Section 8. - 15 -
"without merit" compared to the "merits" of a Chinese position that has not even been stated, let alone argued. 60. 61. 62. Fourth, we note that China asserts, in paragraph 10 of its Second Written Submission, that it addresses later in the submission certain "discrete issues" relating to the EU Request for Preliminary Rulings. However, there is no footnote directing the reader to any specific part of China's Second Written Submission. Furthermore, the is unable to locate in any subsequent part of China's Second Written Submission any further representations made by China with respect to the EU Request for Preliminary Rulings. 42 China itself therefore appears to be pointing at silence, and the silence is deafening. Therefore, the again respectfully submits that the matters raised by the European Union in the EU Request for Preliminary Rulings 43 are closed, and must be decided by the Panel in favour of the. Fifth, we note that China suggests that the Panel could ask China questions about the matters raised in the EU Request for Preliminary Rulings. 44 We formally object to that. China has now had several opportunities to engage with these matters, none of which it has taken up. 45 These matters are therefore closed, and must be decided in favour of the. Sixth, we formally take note of the fact that, having referred to certain matters in its Consultations Request and Panel Request, or in its First Written Submission, China now formally requests the Panel not to rule on these matters. 46 That includes, for example, any other provisions of the EU Basic Anti-Dumping Regulation and any "as applied" measures. In other words, of its own volition, China is now withdrawing and/or not pursuing any claims with respect to those particular matters. Should it wish to do so in the future, China would of course be entitled to commence fresh original proceedings. However, as a matter of law, China is now precluded from attempting to revert to these matters in this particular dispute. 42 EU First Written Submission, Section 7; EU Second Written Submission, Section 8. 43 EU First Written Submission, Section 7; EU Second Written Submission, Section 8. 44 China's Second Written Submission, para. 12. 45 EU First Written Submission, Section 7; EU Second Written Submission, Section 8. 46 China's Second Written Submission, para. 9, second bullet point. - 16 -
63. Seventh, we wish to make it clear that, irrespective of whether or not the Panel issues a preliminary ruling on these matters, and notwithstanding China's withdrawal, we nevertheless respectfully request the Panel to rule on them in its final report. These are matters that the has placed before the Panel, and the Panel is required to make an objective assessment of the matters before it. 3. THE OVERARCHING LEGAL FRAMEWORK 3.1. ARTICLE VI OF THE GATT 1994 (INCLUDING THE AD NOTES), THE ANTI- DUMPING AGREEMENT AND THE SCM AGREEMENT 64. We turn now to a few observations regarding the overarching legal framework of Article VI of the GATT 1994 (including the Ad Notes), the Anti-Dumping Agreement and the SCM Agreement. As we observed in our Second Written Submission, the Parties now agree on many issues, although there are some outstanding points of disagreement that the Panel will have to consider in making its adjudication. In this respect, we have the following reactions to China's Second Written Submission. 3.1.1. The disagrees with China's assertion that, for the purposes of its objective assessment, the Panel should replace the terms actually used in the treaty and the measures at issue with China's self-defined terms "home market normal value" and "third country normal value", and disagrees with China's use of other terms that do not appear in the treaty or in the measures at issue 65. First, we note that China continues to ask the Panel to replace the terms actually used in the treaty and the measure at issue with China's self-defined terms "home market normal value" and "third country normal value". 47 Remarkably, these terms appear 213 times in China's Second Written Submission. We continue to object for the reasons we have already given in our submissions. 48 To borrow China's own words, "the simplistic premise for transforming these terms which are found nowhere in the Anti-Dumping Agreement or the GATT 1994" 49 into the entire 47 China's Second Written Submission, para. 15. 48 Notably, EU Second Written Submission, Section 3.1.1.5. 49 China's Second Written Submission, para. 125. - 17 -
basis for the Panel's analysis is that China has simply asserted that the Panel must proceed in this way. 50 66. 67. 68. We also continue to object to China's assertion that the alleged "distinction" between China's self-defined terms can be "readily ascertained from the record". 51 As we have explained in our submissions, China's self-defined terms conflate different legal provisions, some of which may involve recourse to data or evidence from a third country and some of which may not. 52 They also conflate, or fail to accurately distinguish, different scenarios in which an investigating authority may have recourse to data or evidence from a third country. 53 In fact, extraordinarily, China now even provides yet further re-definitions of the meaning that it subjectively gives to those terms, different from the definitions that it has previously given. 54 This only serves to underline the point that we have been making since the start: the Panel must conduct its objective assessment on the basis of the terms actually used in the treaty and the measures at issue. We also continue to object to China's similar use of other terms, such as the term "default", as we will shortly further explain. 55 In these respects, we agree with China that " the terms of Article 2(7) of the Basic Regulation [were] straightforward ". 56 We also agree with China that argument must be "based on the text of the relevant EU legislation." 57 Since the Parties agree that the terms of Article 2(7) were "straightforward" and that argument must be "based on the text of the relevant EU legislation" we cannot see any reason to depart from the terms actually used in (the now repealed) Article 2(7), by replacing them with terms preferred by China. 50 China's First Opening Oral Statement, para. 28. 51 China's Second Written Submission, paras. 34, 35, 38 44 and 58. 52 Notably, EU Second Written Submission, Sections 3.1.1.5, 3.1.2.2, 3.3.1 and 3.4.1 53 Notably, EU Second Written Submission, Section 3.1.2.6. 54 Compare: the definition of "home market normal value" in China's First Opening Oral Statement with the different definition of "home market normal value" in China's Second Written Submission, footnote 4 and para. 36; and the definition of "third country normal value" in China's First Opening Oral Statement with the different definition of "third country normal value" in China's Second Written Submission, footnote 3 and para. 37. 55 See Section 5.4 of this Oral Statement. 56 China's Second Written Submission, para. 13. 57 China's Second Written Submission, para. 28. - 18 -