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ARGENTINA - DEFINITIVE ANTI-DUMPING
(Continuation)
2. Argentina
(a) Arguments of Argentina in its first written submission relating to the EC�s
claim under Article 2.4 of the AD Agreement
4.830 In its first written submission, Argentina made the following arguments
relating to the EC�s claim under Article 2.4 of the AD Agreement.
4.831 Argentina first presented a number of facts relevant to its legal
arguments.
4.832 To begin with, when considering the differences which affect price
comparability, account was taken, essentially, of the dimensions of the product
in question.
4.833 The implementing authority had to establish some kind of criterion for
facilitating a fair comparison of different products which, because they were
designer products, were very difficult to compare. The task was made even more
difficult by the fact that there were 78 manufacturers of porcellanato, each of
which produced dozens of different varieties which, in their turn, could be
discontinued at any time or replaced by similar articles with a different
product code or trade name. This applies to each supplier. Since these
circumstances made the implementing authority�s job infinitely more difficult,
it decided to establish as a basis for comparison the only variable that applied
to all of the articles from all of the suppliers and that was not affected by
market considerations from one supplier to the other as could be the case with
the other variables, such as colour or design. Since the sizes 20 cm x 20 cm, 30
cm x 30 cm and 40 cm x 40 cm were the most representative, it was these sizes
that were considered according to the volume exported.
4.834 Once the investigation had been initiated, all of the parties concerned
were given ample opportunity to supply as much information as possible so that
the implementing authority could rely on homogeneous data in order to make a
fair comparison.
4.835 Moreover, the exporting firms did not submit, during the procedure, any
evidence to invalidate the product breakdown applied at the opening of the
investigation and maintained in the final determination.
4.836 It should be stressed that the DCD always tries to put some order into its
investigations by seeking a criterion for ensuring the homogeneity of the
products under analysis. In this case, Argentina stresses that there was no
objection by the parties to the use of product size as a criterion. Thus,
Argentina considers that the implementing authority acted properly and
objectively on the basis of a criterion agreed upon by the parties.
4.837 Argentina presented next its legal arguments concerning the EC�s claim
under Article 2.4.
4.838 The EC has argued that there has been an infringement of Article 2.4,
which states that:
A fair comparison shall be made between the export price and the normal value �
. Due allowance shall be made in each case, on its merits, for differences which
affect price comparability, including differences in conditions and terms of
sale � physical characteristics � .
(i) The standard of review applicable to the case
4.839 The obligation to make a �fair comparison�, an obligation qualified by the
words �on its merits�, is inspired by the standard of review applied in the
framework of the AD Agreement as defined in Article 17.6 thereof.
4.840 This peculiarity of the AD Agreement, the only agreement to contain a
specific standard for the review of provisional or definitive anti-dumping
measures or price undertakings when they are questioned under the DSU, has been
recognized in a number of precedents, such as United States � Underwear: �We
note that the ATC does not establish a standard of review for panels, contrary,
for example, to the WTO Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994, where Article 17.6 defines the standard of
review that panels have to apply when reviewing cases arising under that
Agreement. We further note that the DSU does not contain a provision mandating a
specific standard of review� (Panel Report, United States � Restrictions on
Imports of Cotton and Man-Made Fibre Underwear, WT/DS24/R, adopted 25 February
1997, at para. 7.8).
4.841 This same point, that the only exception to the general standard of review
set forth in Article 11 of the DSU is the AD Agreement, was also made in EC �
Hormones with reference to the treatment that should be given to the facts
(�Only Article 17.6(i) of the Anti-Dumping Agreement has language on the
standard of review to be employed by panels engaged in the �assessment of the
facts of the matter�. We find no indication in the SPS Agreement of an intent on
the part of the Members to adopt or incorporate into that Agreement the
standards set out in Article 17.6(i) of the Anti-Dumping Agreement. Textually,
Article 17.6(i) is specific to the Anti-Dumping Agreement�. Appellate Body
Report, EC � Measures Concerning Meat and Meat Products, WT/DS26/AB/R, adopted
13 February 1998, at page 49), and in a general sense both with respect to the
facts and the standards of the Agreement, in Argentina � Footwear (�We have
stated, on more than one occasion, that, for all but one of the covered
agreements, Article 11 of the DSU sets forth the appropriate standard of review
for panels. The only exception is the Agreement on Implementation of Article VI
of the General Agreement on Tariffs and Trade 1994, in which a specific
provision, Article 17.6, sets out a special standard of review for disputes
arising under that Agreement�. Appellate Body Report, Argentina � Safeguard
Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000).
4.842 Ultimately, these precedents reflect the principle of �deference� towards
the methodology applied by the investigating authorities in anti-dumping cases
in accordance with Article 17.6(i) and 17.6(ii) of the AD Agreement.
4.843 Indeed, the second sentence of Article 17.6(ii) states that �Where the
Panel finds that a relevant provision of the Agreement admits of more than one
permissible interpretation, the Panel shall find the authority�s measure to be
in conformity with the Agreement if it rests upon one of those permissible
interpretations.� The wording of this provision suggests that it requires the
principle of deference to be subjected to a sort of double test before it can be
invoked to defend an interpretation of the Agreement, i.e.:
- There should be several permissible interpretations;
- The measure should rest upon one of those permissible interpretations.
4.844 This had been described by Jackson as follows in his book The
Jurisprudence of GATT and the WTO: �subsection (ii) seems to establish a
two-step process � First, the Panel must consider whether the provisions of the
agreement in question admit of more than one interpretation. If not, the Panel
must vindicate the provision�s only permissible interpretation. If, on the other
hand, the Panel determines that the provisions indeed admit of more than one
interpretation, the Panel shall proceed to the second step of the analysis and
consider whether the national interpretation is within the set of permissible
interpretations. If so, the Panel must defer to the interpretation given to the
provision by the national government� (Jackson, page 148).
4.845 The concept of deference refers to the existence of various permissible
interpretations that may arise from the text of the Agreement, in this case
Article 2.4 which calls for a �fair� comparison taking account of the �merits�
of each case, inter alia, physical characteristics.
4.846 The permissibility of the interpretation made by the Authority, in this
case of the criterion used as a basis for making a �fair� comparison, according
to the standard of �deference� established in Article 17.6, is precisely what
enables the authority, as a matter of law, to rely, within the limits of the
Article, on its own discretion in choosing a method for making the comparison.
4.847 In other words if two different approaches or methodologies are
reasonable, and derive from an interpretation of the text, then both are
permitted under the Agreement, even if they result in totally different
conclusions.
4.848 Generally speaking, and originally in connection with the weighing of the
facts, this concept of �deference� towards the national authority forms part of
GATT/WTO jurisprudence and has been addressed on a number of occasions in the
past, in particular in the case United States�Salmon:
� the mere fact that in a given case reasonable, unprejudiced minds could differ
as to the weight to be accorded to certain facts was not a sufficient ground to
find that a determination of material injury based on such facts was not based
on positive evidence � The question of whether a determination of injury was
based on positive evidence therefore was distinct from the question of the
weight to be accorded to the facts before the investigating authorities � (GATT
Panel Report, United States � Imposition of Anti-Dumping Duties on Imports of
Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 494).
(ii) Deference to the investigating authority
4.849 The EC states that it recognizes the discretion of the investigating
authorities or the margin available to them in applying Article 2.4:
�Admittedly, the terms �due allowance� leave some discretion to the
investigating authorities � the DCD could have chosen to make �due allowance�
for the differences at issue by using a different method from that suggested by
the exporters ��. The problem arises when the EC goes on to suggest an
alternative method of adjustment � �by making adjustment a posteriori to the
normal value or the export price� � and argues that the fact that the DCD did
not apply the alternative method proposed by the EC in itself invalidates the
DCD�s option of making an adjustment on the basis of differences in size.
4.850 This begs the question of why an a posteriori adjustment of the normal
value would be a valid way of complying with the obligation of making a �fair�
comparison.
4.851 As indicated, the authority developed the idea of �homogenization� which
ultimately amounts to a standardization based on certain parameters which by
their nature reflect a certain universality within the product investigated.
4.852 Why, then, should one consider that whereas an adjustment of the kind
proposed by the EC would be consistent with Article 2.4, the fact that the
authority should base its comparison on a factor such as �physical
characteristics� invalidates the comparison?
4.853 What the DCD did, in keeping with Article 2.4, was to use the physical
characteristics as a basis and to make a fair comparison. This unquestionably
resulted in an adjustment which ultimately produced lower final margins of
dumping than those relied upon to initiate the investigation.
4.854 In the end, the authority chose to interpret the scope of the obligation
contained in the Agreement on the basis of a physical characteristic of the
product, i.e. its size (20 x 20, 30 x 30 or 40 x 40), which was the most
universal feature. This factor, applicable to the greatest quantity of imports
of the product investigated, would permit the authority, on the basis of the
greatest quantity of elements in common, to make the most comprehensive fair
comparison �on the merits� of the case (infinite number of models according to colour, design etc.).
4.855 The DCD made a fair comparison taking account of the diversity of the
ceramic tiles investigated and chose to use a factor which, in its view,
established a �reasonable� basis for comparison and met the Article 2.4
requirement. Thus the DCD made a �reasonable� analysis of the facts, applying to
them the obligations set forth in the Agreement, in accordance with the text
thereof, and without having to resort to procedures such as the a posteriori
adjustment, which does not appear in the text of Article 2.4. To follow the
approach suggested by the EC would have meant sacrificing some of the
�deference� owed to the investigating authority and specifically recognized in
Article 17.6 of the AD Agreement. This double standard involving acceptance of
what can reasonably be inferred from the facts available and the interpretation
of the obligations arising from the text of the Agreement has been recognized by
GATT panels, in particular the United States � Salmon Panel cited above.
4.856 In that case, the Panel first examined whether the Agreement imposed an
obligation on the United States to use the methodology put forward by Norway:
�The Panel noted � that � it had specifically requested Norway to present
arguments as to why � the text of Article 2.4 mandated the use of acquisition
prices paid by exporters � � (GATT Panel Report, United States � Imposition of
Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway,
ADP/87, adopted 28 April 1994, at para. 406, emphasis added by Argentina).
Similarly: �the Panel � found that � the United States was not under an
obligation to first consider the use of export prices to third countries as a
basis for the establishment of normal values before resorting to the use of
constructed normal values� (GATT Panel Report, United States � Imposition of
Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway,
ADP/87, adopted 28 April 1994, at para. 393, emphasis added by Argentina). This
required an analysis of the text, which included ascertaining whether it
contained criteria which the Panel could review to determine whether the
Department had used the methodology correctly. Otherwise, the Panel review was
limited to examining whether the methodology used could �reasonably � be
sufficient to serve its stated purpose� (GATT Panel Report, United States �
Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic
Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 414) or whether the
Department of Commerce had acted reasonably in the light of the information
before it (GATT Panel Report, United States � Imposition of Anti-Dumping Duties
on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28
April 1994, at para. 442) Similarly, in the case at issue, the Panel should
assess whether the �homogenization� criterion selected by the implementing
authority for the purposes of making a fair comparison was, first of all,
reasonable, and whether in addition, the Argentine interpretation of the
obligations arising from Article 2.4 was consistent with the requirements of the
Agreement, regardless of whether there existed another permissible
interpretation.
4.857 In this case, the EC submits that its interpretation of the obligations of
the Agreement should be substituted for those of the national authorities in a
specific context such as the AD Agreement, Article 17.6 of which refers both to
the assessment of the facts and to the scope of the interpretations of the
Agreement. Thus, even though an interpretation of the obligation different from
that made by Argentina may be permissible, provided the �fair comparison�
methodology used is in keeping with Article 2.4 � and here the EC does not
disagree, but maintains that the methodology should be replaced by its own � the
comparison made by Argentina must be considered consistent with that Article.
(b) Arguments of Argentina in its first oral statement relating to the EC�s
claim under Article 2.4 of the AD Agreement
4.858 In its first oral statement, Argentina made the following arguments
relating to the EC�s claim under Article 2.4 of the AD Agreement.
4.859 Particularly relevant with respect to the analysis of compliance with the
obligation set forth in Article 2.4 of the AD Agreement is the standard of
review contained in Article 17.6 thereof.
4.860 In its first written submission, Argentina discussed the various elements
of that article as regards both the interpretation of the scope of the Agreement
(Article 17.6(ii)) and the assessment of the facts on the basis of the above
provision (Article 17.6(i)).
4.861 The determination of whether the �fair comparison� made by the authority
was consistent with the AD Agreement should be based on the definition of the
content or scope of the obligation, without having to resort to Article 17.6(ii)
(legal interpretations).
4.862 In paragraph 83 of its first written submission, the EC specifically
stated that it recognized that the Agreement left some discretion to the
investigating authorities (�Admittedly, the terms �due allowance� leave some
discretion to the investigating authorities�). This being the case, the
discussion concerns not so much the scope of the obligation laid down in the
Agreement regarding the content of the �due allowance� as the assessment of the
facts (differences in the ceramic tiles) requiring an adjustment in order to
make a �fair comparison�, a process which should make it possible to evaluate
the facts in an �unbiased� and �objective� manner.
4.863 Having confirmed this, i.e. that the authority evaluated the facts in an
�unbiased� and �objective� manner in conformity with the principle of deference
contained in Article 17.6(i), the Panel must respect the authority�s evaluation
even though it could reach a different conclusion.
4.864 Can the fact that the authority opted for the common parameter which
reflected the greatest universality, i.e. the size, a physical characteristic,
as a criterion on which to base the fair comparison, be qualified as �biased� or
�unobjective�? It would be difficult to find a more universal criterion on which
to base an adjustment than the physical characteristics of the product, i.e. the
size of the tiles. The authority�s final determination, following the market
segmentation duly established by the authority and accepted by the exporting
firms, states that the volume of 30 cm x 30 cm tiles exported to Argentina
represented 70.04 per cent of the total, while 40 cm x 40 cm tiles represented
16.17 per cent and 20 cm x 20 cm tiles 13.08 per cent. Argentina wonders whether
the EC actually expected the DCD to make the adjustment for the 0.71 per cent
that was not included in any of these categories.
(i) Information requested
4.865 It is important, at this point, to refer to the information duly requested
by the authority. It must be borne in mind that Annex II of the questionnaire
for producers/exporters is entitled �Identification of the product at issue�.
One of the questions in that Annex refers to �technical specifications for each
model/type/code of goods sold in the domestic market and those exported to
Argentina�.
4.866 The answer given to this question by some of the exporting firms was the
following: �The technical characteristics of the porcellanato are specified in
detail in the catalogues annexed hereto.� However, Annex II also asks for
general catalogues and/or brochures and/or plans. In other words, it seems clear
that the submission of catalogues or brochures could not make up for the lack of
information referring to the technical specifications for each model/type/code,
no matter what the producing/exporting firms may erroneously have understood.
4.867 Moreover, the EC�s questions suggesting that the segmentation of the
product by the DCD represented a breach of Article 2.4 is incomprehensible. The
only way in which the DCD could have carried out an a posteriori adjustment once
the investigation had been opened would have been on the basis of new
information submitted by the interested parties, more specifically the
producers/exporters.
4.868 However, even accepting the hypothesis that a posteriori adjustment was
the way to make the fair comparison (and the text of Article 2.4 does not
suggest this), as stated above with respect to the information from the
producers/exporters relating to the technical specifications for the product
under investigation, the producers/exporters did not provide the documentation
the DCD would have needed to carry out a new analysis in this connection.
4.869 This attitude of the producers/exporters during the investigation is
consistent with the fact that at no time during the proceedings did these
interested parties raise any objections to the segmentation of the product and
the adjustments made.
(ii) The authority�s decision
4.870 One wonders how the DCD could have obtained technical characteristics of
the product under investigation, without prejudice to the segmentation applied
at the opening of the investigation, on the basis of catalogues containing an
infinite number of models, designs, uses, etc.: not only is this not the DCD�s
responsibility, but it would have been impossible to do.
4.871 Perhaps Annex IV (Information on the producer/exporter market) would have
helped, since it contains an item referring to �model/code/type�. However, the
reply given by all of the producers/exporters to this question was: �This type
of information is not available by model, code or type. The information provided
refers to porcellanato in general�.
4.872 What other parameter could have provided a common standard on which to
base the adjustment? There are an infinite number of colours, for example. The
same applies to designs, not to mention the other characteristics listed in
Article 2.4 of the Agreement. What other non-confidential criterion supplied
during the investigation could the authority rely on?
4.873 How could the EC require an undefined a posteriori adjustment without
specifying the parameters on which it should be based? Indeed, Argentina is
certain that, as with Article 6.8, the EC itself recognizes the difficulties
involved in making an adjustment on the basis of information on which the DCD
could not rely. In other words, even if, for instance, the methodology used by
the EC (a code by which its sales in its domestic market would be made
comparable to export sales) had been adopted for the purpose, the exporters did
not supply any quantification of the adjustments to be made either to the normal
value or to the export price. Consequently, making an adjustment was not
feasible.
4.874 This being so, the Panel should confirm that in this case, as in the case
of US � Salmon from Norway, the DCD �acted reasonably in the light of the
information before it�.
4.875 In the end, the DCD was inhibited by the confidential and incomplete
nature of the information submitted. In the circumstances, what the DCD had to
do was to reach a factual determination in the light of the information
available (non-confidential summaries), in which connection Article 17.6(i)
prescribes the standard of deference to the national authorities (�That standard
provides that panels shall ask only whether the authority�s factual
determinations were �proper� and whether an authority�s evaluation of those
facts was �unbiased and objective��. John Jackson, The Jurisprudence of GATT &
the WTO, at page 154).
4.876 It is clear from the above that the DCD did not have the possibility of
carrying out a new segmentation of the product under investigation and making
the corresponding adjustments, since the information needed to do so was not
provided. The DCD unquestionably acted in good faith and on good advice, using,
in its determination of dumping, all of the information submitted. In the case
of the segmentation of the product and the corresponding adjustments, the
producers/exporters, i.e. the parties in possession of the information, did not
provide any alternative to the DCD�s analysis, nor did they object to that
analysis.
4.877 If, as the EC claims, there was any other way of making the adjustment,
the elements required for doing so should have been included in the record of
the case as non-confidential summaries. Argentina is not aware of the existence
of any other summaries in connection with this question of �due allowance�.
Consequently, there was no other information that could be taken into account.
4.878 Furthermore, if there had been any other information submitted as
confidential information that would refute this and the EC wanted to prove its
point, it should have removed the confidentiality and contributed it to this
Panel. Since no further non-confidential summaries were provided and the
confidentiality was not removed, it can only be inferred that there was
insufficient information and that the DCD�s conclusion was reasonable.
(c) Replies of Argentina to the first set of questions by the Panel relating to
the EC�s claim under Article 2.4 of the AD Agreement
4.879 Argentina replied to the first set of questions by the Panel relating to
the EC�s claim under Article 2.4 of the AD Agreement as follows.
4.880 The Panel asked the parties to clarify whether the exporters that replied
to the questionnaire requested the DCD at some point to calculate the dumping
margin on the basis of model-based comparisons. If so, the Panel further asked,
what specific model-matching methodology was proposed? Could the parties provide
the Panel with the relevant references either in the report or in the
administrative record? The Panel also asked the EC to comment on the relevance
in this respect of Exhibit EC-10.
4.881 To this question, Argentina provided the following reply.
4.882 Upon opening the investigation, the DCD decided on the segmentation of the
product according to the universal criterion that offered the greatest
homogeneity, i.e. porcellanato in its different sizes, establishing three
categories: 20 x 20, 30 x 30 and 40 x 40. This segmentation not only met with no
objection at any time during the investigation, but in fact, as shown by point 2
of Exhibit EC-10, it was suggested in the note sent by the representative of
Assopiastrelle to its principal on 12 May 1999: �� Regarding non-confidential
invoices, I suggest to select the some invoices of each segment (20 x 20, 30 x
30, etc.), with prices closer to the weight average of the segment.� The first
time the EC suggested that model-based comparisons could have been used was
during the formal consultations under the DSU.
4.883 With respect to model-based determinations, Argentina submits the
following: although certain submissions by some of the participating firms
suggest that they were interested in model based comparisons for the goods
previously segmented according to their physical dimensions (30 x 30, 20 x 20
and 40 x 40), the documentation and information supplied for that purpose did
not enable the implementing authority to carry out the required analysis with
any accuracy. Moreover, the implementing authority was not in a position to
conduct a comprehensive analysis of all of the information and documentation in
the record of the proceedings since it did not have at its disposal all of the
documentation to back the assertions of the interested parties and to permit a
correlation with the information contained in the official registers.
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