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WORLD TRADE
ORGANIZATION

WT/DS189/R
28 September 2001
(01-4470)

 
  Original: English

ARGENTINA - DEFINITIVE ANTI-DUMPING
MEASURES ON IMPORTS OF CERAMIC
FLOOR TILES FROM ITALY



Report of the Panel

(Continuation)



III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

A. THE EUROPEAN COMMUNITIES 3.1 The EC requests that the Panel finds that the anti-dumping measures applied by Argentina with respect to imports of porcellanato originating in Italy are inconsistent with Article 6.8 and Annex II, and Articles 6.10, 2.4, and 6.9 of the AD Agreement.

B. ARGENTINA

3.2 Argentina requests that the Panel rejects the EC's claims with respect to the alleged breaches of Article 6.8 and paragraph 6 of Annex II, and Articles 6.10, 2.4 and 6.9 of the AD Agreement.

IV. ARGUMENTS OF THE PARTIES AND THIRD PARTIES

A. CLAIM UNDER ARTICLE 6.8 OF THE AD AGREEMENT

1. The EC

(a) Arguments of the EC in its first written submission in support of its claim under Article 6.8 of the AD Agreement

4.1 In its first written submission, the EC made the following arguments regarding its claim under Article 6.8 of the AD Agreement.

4.2 The EC submits that in its Final Dumping Determination the DCD disregarded all the information on normal value and on export prices provided by the four exporters included in the sample and relied instead upon the petitioner's allegations and import statistics.

4.3 By disregarding the exporters' information without any valid justification, the DCD violated Article 6.8 and Annex II of the AD Agreement, which only allow the investigating authorities to resort to "facts available" in those cases where the exporters do not provide timely necessary information or significantly impede the investigation.

4.4 The EC presented first a number of facts relevant to its claim under Article 6.8.

4.5 All the four exporters included in the sample submitted complete responses to the questionnaires received from the DCD within the prescribed deadline (at the request of the exporters, the DCD agreed to extend the deadline to submit the questionnaire responses from 30 November 1998 until 9 December 1998; see Final Dumping Determination, Section III.4, p. 9. The four exporters included in the sample filed their responses on 9 December 1998. At a meeting held at the DCD on 10 May 1999, the case-handlers requested that Casalgrande and Bismantova submit copies of invoices covering at least 50 per cent of their sales in Italy and for export, both to Argentina and to third countries, during the period of investigation. The requested invoices were submitted by those two exporters within the deadline of 31 May 1999 set by the DCD. The submission of these invoices is mentioned expressly in the Final Dumping Determination; see Section V.1.3, page 26, paragraphs 6 and 7. The DCD made no further request for additional information). Moreover, the exporters agreed in advance to the verification of their responses, should the DCD consider it necessary (Final Dumping Determination, Section III.6, pp. 15-17).

4.6 Although the exporters timely provided all the necessary information, the DCD disregarded their responses and resorted to the petitioner's allegations, for the normal value, and to official import statistics, for the export price.

(i) Normal value

4.7 According to the table included in page 30 of the Final Dumping Determination (reproduced below as Table I), the DCD calculated three different normal values.

Table I


Source of Information

Supplied by

US$/m2


20 cm x 20 cm
Price list Petitioner 8.65
Invoices (weighted average) Italian Firms 5.54
30 x 30 cm
Price list Petitioner 9.89
Invoices (weighted average) Petitioner 10.16
Invoices (weighted average) Italian Firms 6.70
40 cm x 40 cm
Price lists Petitioner 11.04
Invoices (weighted average) Petitioner 10.83
Invoices (weighted average) Italian Firms 7.10

4.8 The first normal value was derived by the DCD from a series of price lists submitted by Zanon (although the precise method used by the DCD to derive the normal value from these lists is explained nowhere in the Final Dumping Determination), namely:

(i) the "Prezzi Informativi delle Opere Edili in Milano 1997" (reference prices in the building industry in Milan 1997);

(ii) the "Prezzi Informativi dell'Edilizia - febbraio 1997" (information prices in the Building Industry);

(iii) a price list of Bismantova;

(iv) a price list of Casalgrande;

(v) a price list of Floor Gres (an Italian producer not included in the sample);

(vi) a price list of Mirage (an Italian producer not included in the sample); and

(vii) a price list of Cooperativa Ceramica d'Imola (an Italian producer not included in the sample).

4.9 The producers' list prices supplied by Zanon provide a rough indication of the prices paid by the end-users of porcellanato. But they bear little resemblance to the prices actually charged to distributors and wholesalers, who normally receive large discounts (of up to 75 per cent of the list price). Thus, they are not comparable to the prices for the export sales to Argentina, which are made to distributors and wholesalers and not to final users.

4.10 Similarly, the reference prices shown in the other two documents supplied by Zanon are also prices to end-users. Moreover, they are prices for February and August 1997, i.e., for a period not covered by the dumping investigation.

4.11 The second normal value in Table I is described by the DCD as a weighted average of the prices shown in the invoices supplied by the petitioner. Yet, according to the information available in the public file, Zanon provided to the DCD only seven invoices. In contrast, the four exporters included in the sample reported in their responses several hundred transactions.

4.12 The third normal value in Table I is the weighted average of the invoice prices reported in their responses by the four exporters included in the sample. As explained below, this normal value was not used subsequently by the DCD in order to calculate the dumping margin. Indeed, as shown in Table V below, had the DCD used this normal value, it would have found no dumping.

(ii) Export price

4.13 The export prices compared by the DCD to the normal value are shown in the table included on page 37 of the Final Dumping Determination (reproduced here below as Table II).

Table II


Size

Unit FOB price in US$


20 cm x 20 cm 6.43
0 cm x 30 cm 37.00
40 cm x 40 cm 9.84
   

4.14 The export prices in Table II have been derived from the Summary Table (Cuadro Resumen) included in the Annex to the Final Dumping Determination, which in turn appears to be a weighted average of the import statistics collected by the Delegaci�n II - Unidad Inform�tica within the Secretar�a de Industria, Comercio and Miner�a and of the data supplied by two importers: Quadri y Cia. and Canteras Cerro Negro S.A ("Cerro Negro").

(iii) Dumping margin

4.15 The DCD calculated two different dumping margins for each size category of porcellanato. The details of the calculation are set out in two tables included on page 45 of the Final Dumping Determination (reproduced here below as Tables III and IV).

Table III


Product Normal Value.
US$/m2
FOB Export price US$/m2 Dumping Margin

Porcellanato 20 cm x    20  cm 8.65 6.43 34.52 per cent
Porcellanato 30 cm x     30 cm 10.02 7.00 43.14 per cent
Porcellanato 40 cm x     40 cm 10.94 9.84 11.18 per cent
       

Table IV


Product Normal Value. FOB Export Dumping margin
  US$/m2 priceUS$/m2  

Porcellanato 20 cm x 7.10 6.43 10.42 per cent
 20 cm      
Porcellanato 30 cm x 8.92 7.00  27.43 per cent
30 cm      
Porcellanato 40 cm x 9.66 9.84 ---
40 cm      

4.16 The export prices in Table III and in Table IV are the same: those shown in Table II. The difference in the level of the dumping margins results exclusively from the use of higher normal values in Table III than in Table IV.

4.17 The normal values in Table III are a simple (i.e. non-weighted) average of the first two normal values in Table I, i.e. the normal value based on the price lists supplied by Zanon, and the normal value based on the seven invoices provided by Zanon.

4.18 In turn, the normal values in Table IV are the simple average of the three normal values in Table I, i.e. of the two normal values based on Zanon's information and the normal value based on the data reported by the exporters included in the sample.

4.19 Thus, neither of the two dumping margins calculated by the DCD are based on the normal value data provided by the exporters. Such data was not used at all in the first calculation and was arbitrarily averaged with the petitioner's data in the second calculation.

4.20 As evidenced by Table V, had the DCD compared the export prices in Table II to the normal value determined by the DCD itself on the basis of the exporters' responses, it would have found no dumping.

Table V


Product A) Normal Value B) FOB Export price C) Dumping margin
  US$/m2 US$/m2  (A - B))

Porcellanato 20 cm x  5.54 6.43 - 0.89
20 cm      
Porcellanato 30 cm x 6.70 7.00  - 0.30
30 cm      
Porcellanato 40 cm x 7.10  9.84  - 2.74
40 cm      

4.21 In the Final Dumping Determination, the DCD appears to have regarded the two dumping calculations reproduced in Tables III and IV as being equally relevant. Similarly, Resoluci�n 1385/99 makes no express choice between them. As a result, it is unclear on which of the two dumping margins the anti-dumping measures in place are based.

4.22 The EC presented next its legal arguments concerning its claim under Article 6.8 of the AD Agreement.

4.23 The EC recalled that Article 6.8 of the AD Agreement provided that:

In cases in which any interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available. The provisions of Annex II shall be observed in the application of this paragraph.

4.24 Therefore, when making a dumping determination, the investigating authorities may resort to facts available only to the extent that the exporter concerned:

(a) refuses access to necessary information; or

(b) otherwise fails to provide necessary information within a reasonable period of time; or

(c) significantly impedes the investigation.

4.25 None of those three circumstances was present in this investigation. The four exporters included in the sample cooperated fully in the investigation. They provided all the information requested by the DCD within the prescribed time limits and volunteered their agreement to receive a verification visit, should it be considered necessary by the DCD.

4.26 The DCD did at no point during the investigation suggest that the exporters failed to provide necessary information or that they impeded in any other way the investigation. Indeed, during the consultations, Argentina did not argue that the exporters' responses had been disregarded on any of the grounds mentioned in Article 6.8. Instead, Argentina argued that the exporters' responses had been "considered" by the DCD "on an equal footing" with the information provided by the petitioner, but eventually the investigating authorities decided to rely on the latter.

4.27 However, the export prices reported by the exporters were totally ignored by the DCD. In turn, the exporters' normal value information was not used at all in calculating one of the two dumping margins calculated by the Argentinean authorities and was arbitrarily averaged with the petitioner's data in order to calculate the other dumping margin. Thus, it is beyond question that the DCD effectively rejected the information supplied by the exporters.

4.28 The position taken by Argentina during the consultations reflects a gross misunderstanding of the requirements imposed by the AD Agreement. Argentina seems to consider that, when making a dumping determination, the investigating authorities have complete discretion to pick and choose data from different sources, including the petitioner, provided that, previously, they have "considered" all of them. That view is manifestly mistaken.

4.29 The information supplied by each exporter is, in principle, the most direct and reliable source of evidence of that exporter's normal value and export price (with respect to cost of production data, Article 2.2.1.1 provides expressly that: "For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration". This provision is but an expression of the principle underlying the AD Agreement that dumping determinations should be based, in principle, on the normal value and export price information provided by the exporter). The investigating authorities may not disregard such information and substitute information from other sources, including the petitioner, except in the well defined circumstances enumerated in Article 6.8.

4.30 Argentina's interpretation would render totally redundant Article 6.8 and Annex II. If the investigating authorities were free to choose between the information provided by the exporters and that supplied by the petitioner, the restrictions imposed by Article 6.8 and Annex II on the use of facts available would become meaningless.

4.31 Consider, for example, paragraph 1 of Annex II, which provides that:

[�] The authorities should also ensure that the party is aware that if information is not supplied within a reasonable period of time, the authorities will be free to make determinations on the basis of the facts available, including those contained in the application for the initiation of the investigation by the domestic industry.

4.32 The warning mandated by paragraph 1 of Annex II would be totally unnecessary if, as argued by Argentina, the investigating authorities were entitled to use information provided by the petitioner also where, as in the present case, the exporters have provided timely all the necessary information.

4.33 Further confirmation is provided by paragraph 7 of Annex II, which states that:

If the authorities have to base their findings, including those with respect to normal value, on information from a secondary source, including the information supplied in the application for the initiation of the investigation, they should do so with special circumspection [�].

4.34 Paragraph 7 evidences that the investigating authorities are not allowed to consider all sources of information "on an equal footing". Paragraph 7 recognises a hierarchy between "primary" and "secondary" sources. For the purposes of establishing whether an exporter is dumping, the "primary source" of information is the normal value and export price information supplied by that exporter. Paragraph 7 confirms that investigating authorities are not free to substitute secondary sources, such as the information provided by the petitioner, to the primary sources. In accordance with Paragraph 7, investigating authorities may resort to secondary sources only when they "have to", i.e. where the relevant primary sources cannot be used as a result of one of the circumstances described in Article 6.8.

4.35 For the above reasons, the EC submits that, by substituting the information provided by the petitioners and import statistics to the normal value and export price data supplied by the exporters, respectively, the DCD acted inconsistently with Article 6.8 and Annex II.

(b) Arguments of the EC in its first oral statement in support of its claim under Article 6.8 of the AD Agreement

4.36 In its first oral statement, the EC presented the following arguments with respect to its claim under Article 6.8 of the AD Agreement.

4.37 The main claim submitted by the EC in this case is based on Article 6.8 and Annex II of the AD Agreement.

4.38 The DCD disregarded the normal value and export price information provided by the exporters and substituted information from other sources, including the petitioners. This allowed the DCD to find a high margin of dumping where there was none.

4.39 The AD Agreement only allows the use of "facts available" in one of the three situations specified in Article 6.8, i.e. where the exporters:

(a) refuse access to necessary information; or

(b) otherwise fail to provide necessary information within a reasonably period of time; or

(c) significantly impede the investigation.

4.40 None of those circumstances was present in this investigation. By disregarding the information provided by the exporters without any valid justification, the DCD violated Article 6.8 and Annex II of the AD Agreement.

4.41 During the consultations, Argentina argued that the exporters' responses had not been rejected. Rather, according to Argentina, they had been considered on an "equal footing" with the petitioners' information.

4.42 That position is, of course, legally untenable. In its first written submission, Argentina changes its line of defence and argues that that the exporters' responses were in fact rejected pursuant to Article 6.8.

4.43 The grounds invoked by Argentina for rejecting the exporters' responses are either factually inaccurate, or insufficient as a matter of law, or both. Moreover, all of them are ex-post facto justifications. The DCD did not inform the exporters during the investigation of the reasons why their responses had been rejected. Nor are those reasons stated in the Final Dumping Determination. Indeed, the Final Dumping Determination does not even say expressly that the exporters' responses have been rejected. This has to be inferred from the fact that the exporters' data are not used at all in one of the two dumping margin calculations made by the DCD and are arbitrarily averaged with the petitioners' data in the other calculation.


Continuation: Section 4.44

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