5. Third Parties: The United States

(a) Arguments of the United States in its written submission relating to the EC�s claim under Article 6.8 of the AD Agreement

4.589 In its written submission, the US made the following arguments relating to the EC�s claim under Article 6.8 of the AD Agreement.

4.590 The EC claims that, by disregarding the exporters� information without valid justification, Argentina acted inconsistently with Article 6.8 and Annex II of the AD Agreement, which only allows the use of �facts available� in those cases where an interested party does not provide timely information or significantly impedes the investigation. Argentina asserts that it fully complied with Article 6.8 of the AD Agreement because its application of �facts available� in this case was justified by the exporters� failure to provide necessary information in the time and form required.

4.591 Paragraph 6 of Annex II of the AD Agreement places an obligation on the investigating authority to inform an interested party in a timely manner when the investigating authority intends to reject the party�s information and to provide the reasons therefor. Paragraph 6 of Annex II also states that the investigating authority should allow the party an opportunity to provide further explanations, due account being taken of the time limits of the investigation.

4.592 The United States is not familiar with the underlying facts of this case and, therefore, cannot comment on whether the letters to the exporters cited by Argentina in its first written submission satisfy Argentina�s obligations under Annex II, paragraph 6. However, in the view of the United States, the purpose of the requirement that parties be informed if their information is not accepted is the same as the purpose behind Article 6.9, namely, to ensure that parties are able to defend their interests. Thus, any notice informing the parties of the reasons their information is not accepted must be sufficiently explicit to put the parties on notice that they must provide further explanation as contemplated by paragraph 6 of Annex II.

4.593 The United States did not address in its oral statement the EC�s claim under Article 6.8 of the AD Agreement.

B. CLAIM UNDER ARTICLE 6.10 OF THE AD AGREEMENT

1. The EC

(a) Arguments of the EC in its first written submission in support of its claim under Article 6.10 of the AD Agreement

4.594 In its first written submission, the EC made the following arguments relating to its claim under Article 6.10 of the AD Agreement.

4.595 The EC first presented the facts relevant to its claim under Article 6.10.

4.596 In spite of agreeing to the sampling proposed by Assopiastrelle, the DCD did not determine an individual margin of dumping for each of the four exporters included in the sample.

4.597 Instead, as explained earlier, the DCD calculated two dumping margins for each size category of porcellanato by using mainly data supplied by the petitioner and official import statistics. Resoluci�n 1385/99 then imposed the same duty rate on all imports of porcellanato falling within each size category, irrespective of the exporter.

4.598 The EC then presented its legal arguments relating to this claim.

4.599 The EC recalled that Article 6.10 of the AD Agreement requires that:

The authorities shall, as a rule, determine an individual margin of dumping for each known exporter or producer concerned of the product under investigation. In cases where the number of exporters, producers, importers or types of products involved is so large as to make such determination impracticable, the authorities may limit their examination either to a reasonable number of interested parties or products by using samples which are statistically valid on the basis of information available to the authorities at the time of the selection, or to the largest percentage of the volume of the exports from the country in question which can be reasonably investigated.

4.600 Thus, in accordance with Article 6.10, the investigating authorities must, �as a rule�, determine an individual dumping margin for each known producer or exporter concerned. By way of exception to that rule, where the number of producers and exporters concerned is so large as to make such determination �impracticable�, the investigating authorities may limit their examination to some of them. In such case, nevertheless, the investigating authorities must determine an individual dumping margin for each of the producers or exporters included in the examination.

4.601 Where the investigating authorities have made a selection of producers/exporters in accordance with the second sentence of Article 6.10, they cannot pretend that the determination of individual margins for each of those producers/exporters would be �impracticable�. Indeed, the very purpose of the selection is to make �practicable� such determination. Therefore, in those circumstances, there can be no valid justification to depart from the general rule set out in the first sentence of Article 6.10 with respect to those exporters.

4.602 The above is confirmed by Article 6.10.2 of the AD Agreement, which provides that:

In cases where the authorities have limited their examination, as provided for in this paragraph, they shall nevertheless determine an individual dumping margin of dumping for any exporter or producer not initially selected who submits the necessary information in time to be considered during the course of the investigation, except where the number of exporters or producers is so large that individual examinations would be unduly burdensome to the authorities and prevent the timely completion of the investigation. Voluntary responses shall not be discouraged (emphasis added by the EC).

4.603 This presupposes that the investigating authorities are required to determine individual margins for each of the producers/exporters �initially selected�. Otherwise, it would have been illogical to allow the �not initially selected� producers/exporters to request the determination of individual dumping margins in accordance with Article 6.10.2, and not to give the same opportunity to the �initially selected� producers/exporters.

4.604 Further confirmation is provided by Article 9.4, which stipulates that, where the investigating authorities have limited their examination in accordance with the second sentence of paragraph 10 of Article 6, any anti-dumping duty applied to imports from exporters not included in the examination shall not exceed:

(a) the weighted average margin of dumping established with respect to the selected exporters or producers, or

(b) where the liability for payment of anti-dumping duties is calculated on the basis of prospective normal values, the difference between the weighted average normal value of the selected exporters or producers and the exporters not individually examined.

4.605 The calculation of a weighted average dumping margin or of a weighted average [prospective] normal value presupposes necessarily that individual dumping margins or individual prospective normal values, respectively, have been determined first for each of the selected producers/exporters.

4.606 Article 9.4 further states that:

� the authorities shall disregard for the purposes of this paragraph any zero and de minimis margins and margins established under the circumstances referred to in paragraph 8 of Article 6 (emphasis added by the EC).

4.607 Again, this presupposes that individual dumping margins have been determined previously for each selected producer/exporter.

4.608 The Argentinean authorities agreed to make a selection of exporters in accordance with Article 6.10. Therefore, they were required to determine an individual margin of dumping for each of the four selected exporters. By failing to do so, and by calculating instead a single dumping margin for all the Italian producers/exporters, the Argentinean authorities acted inconsistently with Article 6.10.

(b) Arguments of the EC in its first oral statement in support of its claim under Article 6.10 of the AD Agreement

4.609 In its first oral statement, the EC made the following arguments in support of its claim under Article 6.10 of the AD Agreement.

4.610 The EC recalls that Article 6.10 provides that the investigating authorities must, �as a rule�, determine an individual dumping margin for each known producer or exporter concerned. By way of exception, where the number of exporters is so large as to make such determination �impracticable�, the investigating authorities may limit their examination to some exporters. In such case, nevertheless, the investigating authorities must still determine an individual dumping margin for each of the exporters included in the examination.

4.611 In the present case, the DCD decided to limit the examination of dumping to four Italian exporters. Therefore, the DCD was required by Article 6.10 to determine an individual margin of dumping for each of the four selected exporters. Yet the DCD calculated a single dumping margin for all the Italian producers/exporters, including those in the sample. By doing so, the DCD acted inconsistently with Article 6.10.

4.612 In its first written submission, Argentina argues that the information supplied by the exporters included in the sample did not allow the DCD to calculate individual dumping margins for those exporters. This is simply not correct.

4.613 Argentina does not say why the DCD could not have calculated an individual dumping margin for Casalgrande.

4.614 In the case of Bismantova, Argentina alleges that part of its domestic sales were made to a related party (Rondine). But this is not a valid ground for resorting to �facts available�. At most, it could have been a reason for calculating Bismantova�s normal value on the basis of the constructed value or of the export prices to third countries (see Article 2.2 of the AD Agreement).

4.615 It is true that Caesar only made export sales to Argentina of 40 cm x 40 cm tiles. But the product under investigation was ceramic tiles and not each of the three size categories defined by the DCD. Accordingly, the DCD was required to establish the existence of dumping for the product under investigation as a whole, and not for each single size category (Appelate Body Report, EC-Anti-Dumping Duties on Imports of Cotton Type Bed Linen from India, WT/DS141/AB/R, adopted 12 March 2001, at para. 53). Thus, the DCD could, and indeed should have calculated an individual dumping of margin for Caesar in respect of the product under investigation as a whole based on Caesar�s export sales of 40 cm x 40 cm tiles.

4.616 Finally, it is not correct that Marazzi submitted no price information.

4.617 The point which Argentina tries to make at paragraphs 115-122 of its first written submission is difficult to grasp. Argentina appears to be arguing, once again, that the sample was not representative. However, this argument is clearly irrelevant in this context. Assuming that the sample were in fact not representative, that could not justify to resort to �facts available� for the exporters included in the sample.

4.618 Finally, Argentina contends that the violation of Article 6.10 would be a �harmless error� (error inocuo) since the EC has not demonstrated that it caused a prejudice to the exporters concerned. For the reasons set out by the panel in Guatemala � Cement (II), the EC considers that this is not a valid defence under the WTO Agreement (Panel Report, Guatemala � Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted 17 November 2000, at para. 8.22.). In accordance with Article 3.8 of the DSU, all violations of the WTO Agreement are presumed to cause nullification or impairment. It is for Argentina to rebut that presumption.

(c) Replies of the EC to the first set of questions by the Panel relating to the EC�s claim under Article 6.10 of the AD Agreement

4.619 The EC replied to the first set of questions made by the Panel relating to the EC�s claim under Article 6.10 of the AD Agreement as follows.

4.620 The Panel recalled that Argentina argued that the questionnaire responses submitted by the exporters were incomplete since in many cases the exporters failed to report home sales of certain size categories. The Panel asked Argentina to clarify which exporters failed to provide what kinds of home sales? The Panel further asked Argentina to explain whether the exporters concerned made home sales in every size category during the period of investigation. If they did not, the Panel asked whether Argentina contended that the calculation of dumping margins for the product under investigation required the calculation of dumping margins for every size category devised by the DCD.

4.621 To this question, the EC provided the following reply.

4.622 Many models sold in Italy were not exported to Argentina, or only so in small quantities. The exporters reported in their responses all the domestic sales of each of the models that were exported to Argentina in significant quantities.

4.623 In a few cases where a model exported to Argentina was not sold profitably in Italy or where the domestic sales represented less than 5 per cent of the export sales to Argentina, the exporters reported the export sales of that model to third countries, as required by the questionnaire. In addition, the exporters supplied the cost of production for each of the reported models.

4.624 All the models exported to Argentina by Caesar were of 40 cm x 40 cm. Caesar did not report the domestic sales of other models, since that information was not required in order to make a model-to-model comparison. The other exporters reported domestic sales for models of the three size categories.

4.625 The Panel asked the parties whether there was a legal link between Article 6.8 of the AD Agreement and Article 6.10 AD Agreement. Assuming that an investigating authority was justified in using facts available, the Panel further asked whether in the view of the parties Article 6.10 of the AD Agreement nevertheless required an investigating authority to always determine an individual margin of dumping for each exporter included in the sample.

4.626 The EC replied that it was obvious that if the dumping margins for all the exporters included in the sample were based entirely on �facts available�, and if those facts were the same for all the exporters concerned, the dumping margin would also be the same.

(d) Replies of the EC to the questions made by Argentina, following the first meeting of the Panel with the parties, that relate to the EC�s claim under Article 6.10 of the AD Agreement

4.627 Argentina made one question to the EC in connection to the EC�s claim under Article 6.10 of the AD Agreement. In particular, Argentina asked the EC to clarify its statement to the effect that the DCD �was required to establish the existence of dumping for the product under investigation as a whole and not for each single size category�, in spite of the fact that the EC recognized that Caesar had exported tiles corresponding to the 40x40 category.

4.628 The EC replied that the existence of dumping must be established for the product under investigation as a whole. The product under investigation in this case was ceramic tiles, and not each of the size categories. Caesar�s dumping margin for the product under investigation could have been calculated by comparing the export price for its exports of models of 40 cm x 40 cm to the domestic prices for the same models.

(e) Arguments of the EC in its second written submission in support of its claim under Article 6.10 of the AD Agreement

4.629 In its second written submission, the EC made the following arguments in support of its claim under Article 6.10 of the AD Agreement.

4.630 In its first written submission, Argentina argues that the information supplied by the selected exporters did not allow the DCD to calculate individual dumping margins for those exporters. This argument is totally unfounded.

4.631 Argentina does not explain why it was not possible to calculate an individual dumping margin for Casalgrande.

4.632 As regards Bismantova, Argentina alleges that part of its domestic sales were made to a related party (Rondine). But this is not a valid ground for resorting to �facts available�. At most, it could have been a reason for calculating Bismantova�s normal value on the basis of the constructed value or of the export prices to third countries using the information provided by that exporter (see Article 2.2. of the AD Agreement).

4.633 All the models exported to Argentina by Caesar were of 40 cm x 40 cm. For that reason, Caesar did not report domestic sales of models of 20 cm x 20 cm or of 30 cm x cm. But this did not prevent the DCD from calculating an individual dumping margin for Caesar. The product under investigation were ceramic tiles and not each of the three size categories defined by the DCD. Accordingly, the DCD was required to establish the existence of dumping for the product under investigation as whole, and not for each single size category (Appellate Body Report, EC � Anti-Dumping Duties on Imports of Cotton Type Bed Linen from India, WT/DS141/AB/R, adopted 12 March 2001, at para. 53). Thus, the DCD could, and indeed was required to calculate an individual dumping of margin for Caesar in respect of the product under investigation as a whole based on Caesar�s export sales of 40 cm x 40 cm tiles.

4.634 Finally, it is not correct that Marazzi submitted no price information.

4.635 Argentina further contends that the violation of Article 6.10 would, in any event, be a �harmless error� (�error inocuo�) since the EC has not demonstrated that it caused a prejudice to the exporters concerned. For the reasons set out by the panel in Guatemala � Cement (II), the EC considers that this is not valid defence under the WTO Agreement (Panel Report, Guatemala � Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico (WT/DS156/R), adopted 24 October 2000, at para. 8.22). In accordance with Article 3.8 of the DSU, all violations of the WTO Agreement are presumed to cause nullification or impairment. It is for Argentina to rebut that presumption.

4.636 In its second oral statement, the EC did not address its claim under Article 6.10 of the AD Agreement.

4.637 The Panel did not ask the EC any questions following the second meeting relating to the EC�s claim under Article 6.10 of the AD Agreement.

2. Argentina

(a) Arguments of Argentina in its first written submission relating to the EC�s claim under Article 6.10 of the AD Agreement

4.638 In its first written submission, Argentina made the following arguments relating to the EC�s claim under Article 6.10 of the AD Agreement.

4.639 Argentina first presented a number of facts relevant for its arguments.

4.640 The EC argument concerning the failure to calculate an individual dumping margin for each producer is based on the erroneous hypothesis that the authority was in a position to make such a calculation using the elements at its disposal. To a certain extent the EC would seem, on the one hand, to be demanding what its own producers requested, i.e. that the authority work on the basis of the sample provided, while on the other hand blaming Argentina when the information contained in the sample was insufficient and it was impossible to determine an individual margin of dumping for each exporter.

4.641 In discussing Article 6.8, Argentina explained at length that Assopiastrelle itself had asked that the sample should be considered as representative of the Italian ceramics industry. In the same chapter, it pointed out the shortcomings of the sample as a valid tool to calculate normal value. The sample also suffered from shortcomings as a basis for calculating the margin of dumping for each firm.

4.642 The most notorious shortcomings which made it impossible to calculate an individual margin of dumping for each firm are as follows:

(a) 30 x 30 ceramic tiles:

Two companies in the sample (Caesar and Marazzi) failed to provide any information on average prices for this category.

In the case of Bismantova, it was found that 56 per cent of sales on the domestic market were to its controlling company, Rondine.

(b) 20 x 20 ceramic tiles:

The same two companies failed to provide any information for this category.

(c) 40 x 40 ceramic tiles:

The company Marazzi failed to provide any information for this category either.

In the case of Bismantova, it was found that 91 per cent of sales on the domestic market were to its controlling company, Rondine.

4.643 This lack of information in itself makes it impossible to calculate the individual margin of dumping for the company Marazzi in any of the three categories and for Caesar in categories 30 x 30 and 20 x 20. In the case of Bismantova, the high percentage of sales in abnormal trading conditions made it impossible to calculate the margin of dumping for the categories 30 x 30 and 40 x 40.

4.644 In other words, the sample, as such, could not serve to determine the margins of dumping for each company either.

4.645 Argentina presented next a number of legal arguments concerning the EC�s claim under Article 6.10 of the AD Agreement.

Continuation: Section 4.646

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