6.115 In the Preliminary Determination, the DCD acknowledged that there existed a large variety of types and models of ceramic tiles with significant price differences between them.¹⁰⁴ In the Final Determination, the DCD further specifies that there existed significant price differences between various models of the same size, and that for certain models the smaller size tiles were sometimes more expensive than certain other models� larger size tiles.¹⁰⁵ We note that, in spite of this acknowledgement, the DCD failed to make any further adjustments for these apparent differences in price caused by factors other than size. Neither did the DCD indicate to the parties what information it required in order to make these further adjustments. Argentina argues that the DCD did in fact request the exporters to provide information per model in the questionnaire but that the exporters replied that such model specific information was not available. We note that the information requested in Annexes IV-VI of the questionnaire, to which Argentina refers in support of its argument, does not relate to information necessary to determine normal value and export price but concerns information of a more general nature concerning the domestic market of the exporters and their sales performance in general. If the DCD was dissatisfied with the information provided by the exporters concerning the technical characteristics of the models in their questionnaire responses, it could have and should have, according to Article 2.4, requested additional information. The DCD did not do so.

6.116 In addition to accounting for size differences, the DCD�s methodology took account of two other physical differences affecting price comparability. As to quality, the DCD collected data only on first-quality tiles, thereby avoiding the need to make adjustments for tile quality. By the same token, the DCD�s methodology made due allowance for the degree of processing, in that data were collected only on unpolished tiles.¹⁰⁶ In effect then, the DCD made due allowance within the meaning of Article 2.4 for three physical differences affecting price comparability. Nonetheless, other important differences remained, as the DCD acknowledged in its final determination. We do not agree with Argentina�s view that Article 2.4, through the qualifying language that due allowance shall be made �in each case� �on its merits�, permits an investigating authority to adjust only for the most important of the physical differences that affect price comparability, even if making the remaining adjustments would have been, as the parties agree, complex. The DCD chose not to conduct a model-by-model comparison and it was then left to find other means to account for the remaining physical differences affecting price comparability. It did not do so.

3. Conclusion

6.117 In conclusion, we consider that, in light of the facts on the record, there were other factors significantly affecting price comparability. An objective and unbiased evaluation of the facts of this case would have required the DCD to make additional adjustments for physical differences affecting price comparability. We therefore find that the DCD acted inconsistently with Article 2.4 by failing to make adjustments for physical differences affecting price comparability.

G. CLAIM 4: ARTICLE 6.9: FAILURE TO INFORM THE EXPORTERS OF THE �ESSENTIAL FACTS� ON WHICH THE DECISION IS BASED

1. Arguments of the parties

6.118 The EC submits that Argentina failed to disclose the essential facts under consideration which form the basis for the decision whether to apply definitive measures as required by Article 6.9 of the AD Agreement. The EC argues that Article 6.9 of the AD Agreement entails a positive action by the investigating authorities, and requires the authorities to actively disclose those essential facts on which the decision whether to apply definitive measures is based. According to the EC, Argentina merely invited interested parties to examine the public file.¹⁰⁷ The EC asserts that the public file of an anti-dumping investigation essentially consists of often contradictory questionnaire responses and allegations of different interested parties and thus clearly does not identify the �essential facts� on which the decision to impose a measure is based. The EC argues that in this case the final dumping determination (unlike the final injury determination) was not available in the public file. Nor did the public file contain any other document prepared by the DCD which identified the "essential facts" that would form the basis for the final dumping determination.

6.119 Argentina argues that the DCD complied with the requirement of Article 6.9 of the AD Agreement to inform the interested parties of the essential facts which form the basis for the decision whether to apply definitive measures by inviting the exporters to view the complete file. According to Argentina, the exporters viewed the file that contained all the information on which the determination was based, including the essential facts. Argentina argues that what is important is that the result envisaged by Article 6.9 is achieved, not how this result was achieved. Argentina asserts that the Ad Hoc Group on Implementation of the Committee on Anti-Dumping Practices has discussed the kind of information which needs to be disclosed under Article 6.9. Argentina submits that the fact that the Ad Hoc Group has not yet issued a recommendation on this matter demonstrates the diversity of criteria used by the Members in complying with this requirement. Finally, Argentina argues that in any case the exporters did not suffer any injury from this alleged lack of notification of the essential facts. In case the Panel were to find a violation of Article 6.9 of the AD Agreement, Argentina submits this constituted a harmless error.

6.120 The EC submits that the requirement concerning the disclosure of essential facts is not an empty formality, as Argentina seems to suggest, and therefore rejects Argentina�s argument that the alleged failure to comply with Article 6.9 constituted a harmless error.

6.121 We also recall in this respect some of the arguments made by the third parties on this matter. Japan, as a third party, fully supports the EC position that the provisions of Article 6.9 of the AD Agreement must be read as imposing obligations that go beyond those in Article 6.4 of the AD Agreement to provide timely opportunities for interested parties to have access to all relevant information. Japan asserts that the requirement of Article 6.9 to disclose the essential facts that the authority will actually rely on is not satisfied by merely opening for inspection a file that includes both facts that will be relied upon and facts that will not be. Turkey, as a third party, also considers that the requirement of Article 6.9 goes beyond the obligation to provide timely opportunities to see all information as set out in Article 6.4 of the AD Agreement.

6.122 The United States, as a third party, does not take a position on whether, under the facts of this case, the measure is consistent with Article 6.9 of the AD Agreement. However, the United States agrees with Argentina that Article 6.9 requires only that interested parties be informed of the essential facts and that this requirement does not impose a particular means of disclosure. According to the United States, Members may implement the obligation under Article 6.9 in a variety of ways. In particular, the United States argues, Members may choose to establish an investigative process which allows interested parties to be presented with all of the facts as they are presented to the authority, as well as arguments made about those facts.

2. Analysis by the Panel

6.123 We note that there does not exist any disagreement between the parties concerning the relevant facts in respect of this claim. The record shows that the exporters were invited to view the information on the record, and made use of this possibility on 18 June 1999, 3 September 1999 and 21 September 1999. The EC submits, however, that by merely being given the opportunity to view the complete file the exporters were not informed of the essential facts under consideration which form the basis for the decision whether to apply definitive measures as required by Article 6.9 of the AD Agreement.

6.124 Article 6.9 provides that:

"The authorities shall, before a final determination is made, inform all interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures. Such disclosure should take place in sufficient time for the parties to defend their interests".

6.125 We agree with Argentina that the requirement to inform all interested parties of the essential facts under consideration may be complied with in a number of ways. Article 6.9 of the AD Agreement does not prescribe the manner in which the authority is to comply with this disclosure obligation. The requirement to disclose the �essential facts under consideration� may well be met, for example, by disclosing a specially prepared document summarizing the essential facts under consideration by the investigating authority or through the inclusion in the record of documents � such as verification reports, a preliminary determination, or correspondence exchanged between the investigating authorities and individual exporters � which actually disclose to the interested parties the essential facts which, being under consideration, are anticipated by the authorities as being those which will form the basis for the decision whether to apply definitive measures. This view is based on our understanding that Article 6.9 anticipates that a final determination will be made and that the authorities have identified and are considering the essential facts on which that decision is to be made. Under Article 6.9, these facts must be disclosed so that parties can defend their interests, for example by commenting on the completeness of the essential facts under consideration.

6.126 The question before us is whether, under the facts of this case, the DCD complied with its obligation under Article 6.9 of the AD Agreement to inform the interested parties of the essential facts under consideration which form the basis for the determination whether to apply definitive measures. The DCD in this case invited the exporters to view the entire file.

6.127 In this case, the DCD relied primarily upon evidence submitted by petitioners and derived from secondary sources, rather than upon information provided by the exporters, as the factual basis for a determination of the existence of dumping. Thus, petitioner and secondary source information, rather than exporters' information, represented (with respect to the existence of dumping) the essential facts which formed the basis for the decision whether to apply definitive measures. We therefore examined the record in order to determine whether exporters were informed by the Argentine authority, through access to the file, that it was on these facts that the authority would primarily rely in its determination regarding the existence of dumping.

6.128 In considering this question, we observe that the file contained inter alia the Preliminary Dumping Determination, in which the DCD explained that it considered that the confidential nature of the information supplied by the exporters in the questionnaire responses concerning normal value and export price limited the use it could make of this information. In the Preliminary Determination, the DCD calculated the dumping margin without relying on any of the information supplied by the exporters in confidence. The file also contained the three letters the DCD sent to the exporters following the preliminary determination with the requests for declassification of the information discussed above in paras. 6.41 � 6.47. The exporters were further advised of the DCD�s request for additional supporting documentation, as discussed above in paras. 6.59 - 6.65. We note in this regard that a meeting took place between the exporters� representatives and the case-handlers. As Argentina clarified, this was an informal meeting convened at the request of the exporters and no official record, which could have been included in the file, exists of what was agreed upon at that meeting. The exporters nonetheless supplied the invoices covering about 50 per cent of their reported domestic sales which they considered had been requested by the DCD.¹⁰⁸ We found above that the exporters also complied with the various requests for declassification of the information and never received any deficiency letters nor were any such deficiency notices put on the record. The file further contained a large variety of data from various sources such as the petitioner, importers and official registers.

3. Conclusion

6.129 In light of the state of the record, we find that the exporters could not be aware in this case, simply by reviewing the complete record of the investigation, that evidence submitted by petitioners and derived from secondary sources, rather than facts submitted by the exporters, would, despite the responses of the exporters to the DCD�s information requests as summarized above, form the primary basis for the determination of the existence and extent of dumping. The DCD thus failed to put the exporters on notice of an essential fact under consideration. As a result, the exporters were unable to defend their interests within the meaning of Article 6.9, for example, by giving reasons why their responses should not be rejected and by suggesting alternative sources for facts available if their responses were nonetheless disregarded. Under these circumstances, we find that the DCD did not, by referring the exporters to the complete file of the investigation, fulfil its obligation under Article 6.9 to inform the exporters of the �essential facts under consideration which form the basis for the decision whether to apply definitive measures�.¹⁰⁹

6.130 Argentina again raises the concept of harmless error as a defence. As discussed above, in our view it does not suffice to merely raise the issue of harmless error. Indeed, Article 3.8 of the DSU provides for a presumption that, in the case of an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. Article 3.8 of the DSU also provides for the possibility that the Member found to have violated a provision may rebut the presumption. In light of the presumption of Article 3.8 of the DSU, the EC having established that Argentina has acted in a manner inconsistent with the AD Agreement, it is up to Argentina to show that the failure to determine an individual dumping margin has not nullified or impaired benefits accruing to the EC under the Agreement. Argentina has failed to adduce any evidence in this respect. Accordingly, we find that the presumption of nullification or impairment of benefits caused by the violation of Article 6.9 of the AD Agreement has not been rebutted by Argentina.

6.131 In conclusion, we find that the DCD acted inconsistently with Article 6.9 as it failed to inform the interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures thereby failing to allow the exporters to defend their interests.

VII. CONCLUSIONS AND RECOMMENDATION

7.1 In light of the findings above, we conclude

(a) that Argentina acted inconsistently with Article 6.8 and Annex II AD Agreement by disregarding in large part the information provided by the exporters for the determination of normal value and export price, and this without informing the exporters of the reasons for the rejection;

(b) that Argentina acted inconsistently with Article 6.10 AD Agreement by not determining an individual margin of dumping for each exporter included in the sample for the product under investigation;

(c) that Argentina acted inconsistently with Article 2.4 AD Agreement by failing to make due allowance for differences in physical characteristics affecting price comparability;

(d) that Argentina acted inconsistently with Article 6.9 AD Agreement by not disclosing to the exporters the essential facts under consideration which form the basis for the decision whether to apply definitive measures.

7.2 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement. Argentina has failed to adduce any evidence to rebut this presumption. Accordingly, we conclude that, to the extent Argentina has acted inconsistently with the provisions of the AD Agreement, it has nullified or impaired benefits accruing to the EC under that Agreement.

7.3 We recommend that the Dispute Settlement Body request Argentina to bring its measure into conformity with its obligations under the AD Agreement.

<sup>104 Preliminary Dumping Determination, p. 34, Exhibit ARG-8.

105 Final Dumping Determination, p. 28. Exhibit EC-2.

106 Moreover, when advised that one exporter, Marazzi, sold one model of tiles as a polished tile on the domestic market while this model was sold under the same name in Argentina as an unpolished tile, the DCD accepted the need to make an adjustment to account for this physical difference affecting price comparability.

107 Exhibit EC-7C. The EC asserts that if all that was required is to provide access to the public file, Article 6.9 would not add anything to the requirement of Article 6.4 to provide timely opportunities for all interested parties to see all information that is relevant to the presentation of their case. Argentina, on the other hand, argues that it complied with Article 6.9 by having provided an opportunity to view the complete file.

108 Exhibit EC-10.

109 In light of our findings under the facts of this case, we need not reach the larger question discussed by the Panel in the case of Guatemala � Cement (II) concerning the relationship between Article 6.9 and Article 6.4 of the AD Agreement.</sup>

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