EUROPEAN COMMUNITIES - ANTI-DUMPING DUTIES ON MALLEABLE CAST
 IRON TUBE OR PIPE FITTINGS FROM BRAZIL

AB-2003-2

Report of the Appellate Body

(Continued)

C. Arguments of the Third Participants⁴⁰

1. Japan

57. Japan argues that the Panel erred in concluding that the European Communities did not act inconsistently with Article 6.2 of the Anti-Dumping Agreement by not disclosing to interested parties Exhibit EC-12 or a non-confidential summary of Exhibit EC-12. In Japan's view, all the evidence used by investigating authorities to evaluate the factors under Article 3.4 constitutes "essential facts" under Article 6.9, and the "full opportunity" guaranteed by Article 6.2 exists only where investigating authorities disclose such facts to interested parties in sufficient time to respond and defend their interests. Contrary to these requirements, the European Communities based its definitive determination on data that were available only in Exhibit EC-12 and were not disclosed. In Japan's view, if the Panel's interpretation were correct, the investigating process could be "skew[ed]" and could prevent interested parties from fully defending their interests.⁴¹

58. Japan also disagrees with the Panel's conclusion that the European Communities did not act inconsistently with Article 3.5 of the Anti-Dumping Agreement and, in particular, the Panel's finding that the comparative advantage of foreign producers over European Communities producers was not a "known" causal factor. Japan claims that Article 3.5 requires that the causal relationship between dumped imports and injury be established "through the effects of dumping". Understood in this context, Japan argues, "known" factors under Article 3.5 are not limited to factors external to the dumped imports. Any factor other than the magnitude of the margin of dumping could be a "known factor[] other than the dumped imports", in terms of Article 3.5. Japan submits that "known" factors also include factors that may not necessarily have been raised by a party during a certain stage of the anti-dumping investigation, particularly given Members' obligations of good faith in applying the Anti-Dumping Agreement . In Japan's view, an exporter's comparative advantage (whether minimal or not) is a causal factor that is "the crux" of foreign and domestic competition and domestic productivity as listed in Article 3.5.⁴² Thus, according to Japan, the comparative advantage of the Brazilian exporter was a factor known to the European Commission, which it was consequently required to examine under Article 3.5.

 2. United States

59. The United States submits that the Panel was correct in finding that investigating authorities are not required to consider whether the volume and price effects of imports from each individual country are significant before considering whether to cumulate imports under Article 3.3 of the Anti-Dumping Agreement. In the United States' view, the only prerequisites to cumulation under Article 3.3 are as set out in the text: first, that the dumping margin for each country is more than de minimis ; second, that the volume of imports from each country is not negligible; and third, that a cumulative assessment is appropriate in the light of the conditions of competition both between the imported products and between the imported products and the like domestic product. According to the United States, Brazil's contrary interpretation would render Article 3.3 "meaningless"⁴³.

60. The United States agrees with the Panel's conclusion that the European Communities acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement by failing to set forth in a discernible manner how it evaluated certain factors listed in Article 3.4 of the Anti-Dumping Agreement . In the light of this conclusion, and in view of the fact that this finding is not appealed, the United States maintains that it is not necessary for the Appellate Body to decide whether the European Communities also acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement .

61. The United States agrees with Brazil that the Panel erred in concluding that the European Communities did not act inconsistently with Articles 6.2 and 6.4 of the Anti-Dumping Agreement with respect to the information on injury factors referred to exclusively in Exhibit EC-12. According to the United States, this information was relevant, was used by the investigating authority, and was not confidential, yet the European Commission did not disclose it in any form to interested parties during the investigation. Nor did the European Commission give interested parties an opportunity to present arguments or provide information in response to Exhibit EC-12. The United States submits that the European Communities has provided no reasonable explanation as to why it did not do so.

62. The United States agrees with the Panel that the "margins analysis" was not a "known" causal factor that the European Communities was required to examine as part of its causality analysis under Article 3.5. In the United States' view, investigating authorities are not required under Article 3.5 to examine on their own initiative all possible factors that may be causing injury. According to the United States, the burden was on Brazil to establish a prima facie case that the margins analysis was a "known" factor that was injuring the domestic industry, and Brazil failed to discharge this burden.

63. The United States agrees with the Panel that the European Communities did not act inconsistently with Article 3.5 of the Anti-Dumping Agreement in examining other factors individually. The United States submits that nothing in the text of Article 3.5 requires investigating authorities to determine whether other injury factors are themselves a sufficient cause of injury or to determine that the injurious effects of the dumped imports are more significant than the combined effects of other factors. Therefore, the United States argues, in the absence of such specific language in the Anti-Dumping Agreement , investigating authorities have discretion to determine their own causality methodologies.

III. Issues Raised in this Appeal

64. The following issues are raised in this appeal:

(a) whether the Panel erred in finding that:

(i) the European Communities did not act inconsistently with Article VI:2 of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994") or Article 1 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement ") in imposing anti-dumping duties in this case following the devaluation of the Brazilian Real at the beginning of the fourth quarter of the period of investigation ("POI"); and

(ii) under Article 2.4.2 of the Anti-Dumping Agreement , the European Commission "could not have based its dumping analysis on the export prices relating to the period after the devaluation only";

(b) whether the Panel erred in finding that the European Communities did not act inconsistently with Article 2.2.2 of the Anti-Dumping Agreement by including actual data from "low-volume" sales in determining the amounts for administrative, selling and general costs ("SG&A") and profits for the construction of normal value;

(c) whether the Panel erred in finding that the European Communities did not act inconsistently with Articles 3.2 or 3.3 of the Anti-Dumping Agreement , even though the European Commission did not analyze the volume and prices of dumped imports from Brazil individually, pursuant to Article 3.2, as a pre-condition to cumulatively assessing the effects of dumped imports under Article 3.3;

(d) whether the Panel erred in finding that Exhibit EC-12 was properly before it for purposes of assessing the European Commission's evaluation of the injury factors listed in Article 3.4 of the Anti-Dumping Agreement , and, in particular, whether, in so finding, the Panel:

(i) failed to assess whether the European Commission's establishment of the facts was proper under Article 17.6(i) of the Anti-Dumping Agreement ; and

(ii) incorrectly interpreted the requirements of Articles 3.1 and 3.4 of the Anti-Dumping Agreement ;

(e) whether the Panel erred in finding that the European Communities did not act inconsistently with Articles 6.2 or 6.4 of the Anti-Dumping Agreement by failing to disclose to interested parties during the anti-dumping investigation the information on the injury factors listed in Article 3.4 that is contained in Exhibit EC-12;

(f) whether the Panel erred in finding that the European Communities did not act inconsistently with Article 3.4, in respect of the injury factor "growth"; and

(g) whether the Panel erred in finding that the European Communities did not act inconsistently with Article 3.5 of the Anti-Dumping Agreement in the assessment of the causal relationship between injury and the dumped imports, and, in particular, whether the Panel erred in finding that:

(i) the difference in the cost of production between the Brazilian exporter and the European Communities industry was not a "known factor[ ] other than the dumped imports which at the same time [was] injuring the domestic industry"; and

(ii) the causality methodology applied in this investigation, which did not include an examination of the collective impact of other known causal factors, did not attribute the injuries caused by those other factors to the dumped imports.

IV. Devaluation of the Brazilian Real During the Period of Investigation: Article VI:2 of the GATT 1994 and Article 1 of the Anti-Dumping Agreement

65. Brazil claims that the European Communities acted inconsistently with Article VI:2 of the GATT 1994 and Article 1 of the Anti-Dumping Agreement by making its dumping determination on the basis of the data from the entire one-year period of investigation ("POI"), including the period prior to the devaluation of the Brazilian Real. In resolving this claim, we will address Brazil's arguments that:

(a) Article VI:2 of the GATT 1994 and Article 1 of the Anti-Dumping Agreement compel the selection of a particular methodology under Article 2.4.2 of the Anti-Dumping Agreement ; and

(b) Article 2.4.2 permits a comparison of normal value and export price based on data solely from a subset of the POI.⁴⁴

66. We recall that, in its examination of whether there was dumping by the Brazilian exporter under investigation, the European Commission conducted its examination using a POI of one year from 1 April 1998 to 31 March 1999.⁴⁵ The Brazilian Real was devalued by 42 percent towards the end of this period in January 1999.⁴⁶ Using the data from the entire one-year POI, and making a comparison of weighted average normal values with weighted average export prices for the entire period, the European Commission found a dumping margin for the Brazilian exporter of 34.8 percent.⁴⁷

67. Brazil claimed before the Panel that the European Commission's dumping determination was based on an inappropriate comparison of normal value and export prices. Brazil asserted that Article VI:2 of the GATT 1994 permits imposition of anti-dumping duties "only against and in order to offset present dumping".⁴⁸ According to Brazil, the "mechanical approach"⁴⁹ of the European Commission, in using export price data from the entire POI to make a weighted average-to-weighted average comparison, "however compatible with the technical requirements of the Anti-Dumping Agreement "⁵⁰, resulted in a dumping determination that did not accurately reflect whether dumping existed in the present. Because the devaluation of the Real had eliminated dumping by the Brazilian exporter, Brazil argued, the European Commission was obligated to compare normal values with export prices solely from the post-devaluation period.⁵¹

68. When evaluating Brazil's claim, the Panel first examined the requirements imposed by the Anti-Dumping Agreement with respect to the methodology to be employed by an investigating authority in comparing normal value with export prices. The Panel noted that two methodologies are prescribed in the first sentence of Article 2.4.2, either of which is "generally" to be used when comparing normal value and export price.⁵² The first sentence of Article 2.4.2 provides:

Subject to the provisions governing fair comparison in paragraph 4, the existence of margins of dumping during the investigation phase shall normally be established on the basis of a comparison of a weighted average normal value with a weighted average of prices of all comparable export transactions or by a comparison of normal value and export prices on a transaction to transaction basis.

The Panel found as follows:

Either of these methodologies would seem to require, in general, that data throughout the entire investigation period would necessarily consistently be taken into account. That is, an investigating authority would generally be precluded from limiting its dumping analysis to a selective subset of that data from only a temporal sub-segment of the [POI].⁵³ (original emphasis)

69. The Panel rejected Brazil's argument that the methodology selected by the European Commission in this investigation "defeat[ed] the 'object and purpose'"⁵⁴ of the Anti-Dumping Agreement , because the Panel did not find the obligation claimed by Brazil in the text:

[W]e see no foundation in the text of the Agreement � for a requirement that an investigating authority re-assess its own determination made on the basis of an examination of data pertaining to the [POI] prior to the imposition of an anti-dumping measure in the light of an event which occurred during the [POI]. We decline to read such a provision into the text.⁵⁵ (footnotes omitted)

70. Brazil's arguments on appeal are nuanced somewhat differently from those advanced before the Panel. On appeal Brazil identifies Article VI:2 of the GATT 1994, and specifically, the phrase "[i]n order to offset or prevent dumping", as the source of the obligation allegedly breached by the European Communities with respect to the selection of the appropriate methodology prescribed by Article 2.4.2 of the Anti-Dumping Agreement.⁵⁶ Brazil emphasizes that, from the phrase "[i]n order to offset or prevent dumping" contained in Article VI:2, there flows an obligation for investigating authorities to "anticipate the level of anti-dumping duty that is strictly necessary to prevent dumping in the future [by making] a reasonable assumption for the future on the basis of the data collected in the [POI]."⁵⁷ In Brazil's view, only the export price data from the post-devaluation period within the POI could have formed the basis for a "reasonable assumption" as to what level of duty was necessary "to prevent future dumping" in this case.⁵⁸ The European Commission should therefore have relied solely on the post-devaluation export prices in making its dumping determination. By failing to do so, Brazil argues, the European Communities acted inconsistently with its obligation under Article VI:2 of the GATT 1994. Brazil acknowledges that Article 2.4.2 of the Anti-Dumping Agreement provides an investigating authority with discretion to select from among the three comparison methodologies prescribed in that provision. Such discretion, however, is subject in Brazil's view to the basic obligation under Article VI:2 of the GATT 1994 to impose duties only when necessary to "offset or prevent dumping".⁵⁹ Brazil argues that in order to arrive at a "reasonable assumption for the future", an investigating authority is compelled to select, among the three comparison methodologies prescribed in Article 2.4.2, the one that is most appropriate to prevent future dumping.⁶⁰ In particular, Brazil argued during the oral hearing that Article VI:2 required the European Commission to "choose among the three comparison methodologies foreseen by Article 2.4.2 [of the Anti-Dumping Agreement], the one that best takes into account the disappearance of any previous dumping after the devaluation of the Brazilian Real."⁶¹

71. In this case, Brazil finds that methodology in the second sentence of Article 2.4.2. The second sentence of Article 2.4.2 provides:

A normal value established on a weighted average basis may be compared to prices of individual export transactions if the authorities find a pattern of export prices which differ significantly among different purchasers, regions or time periods, and if an explanation is provided as to why such differences cannot be taken into account appropriately by the use of a weighted average to weighted average or transaction to transaction comparison.

72. Brazil submits that, contrary to the Panel's legal interpretation of Article 2.4.2, this sentence explicitly recognizes that export prices that "differ significantly" in a particular time-period within the POI may need to be examined on their own. Thus, in the light of the aforementioned obligation in Article VI:2, the European Commission was required to perform its dumping determination in this case by comparing weighted-average normal values (based on data from the entire one-year POI) with prices of individual export transactions from the time within the POI subsequent to the devaluation of the Real.⁶² Brazil submits that such a comparison, based on export price data solely from the post-devaluation time-period within the POI, is specifically permitted by the second sentence of Article 2.4.2. Thus, according to Brazil, because the European Commission performed a weighted average-to-weighted average comparison based on data from the entire POI (specified in the first sentence of Article 2.4.2), instead of comparing weighted average normal value with post-devaluation export transactions (permitted by the second sentence of Article 2.4.2), the European Communities acted inconsistently with the obligation, contained in Article VI:2 of the GATT 1994, to impose anti-dumping duties only when it is necessary "to offset or prevent dumping".⁶³ Furthermore, in Brazil's view, this violation of Article VI:2 of the GATT 1994 leads to a consequential violation of Article 1 of the Anti-Dumping Agreement⁶⁴, which provides that "[a]n anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994".⁶⁵ We note that Brazil does not characterize the error of the European Communities on this issue as a violation of Article 2.4.2 per se.

73. The European Communities rejects Brazil's challenge, under Article VI:2 of the GATT 1994, to the European Commission's use of a weighted average-to-weighted average comparison of normal value and export prices on the basis of all data from the one-year POI. According to the European Communities, Article 2 of the Anti-Dumping Agreement , rather than Article VI:2 of the GATT 1994, establishes the rules for an objective and unbiased dumping determination to be made by an investigating authority.⁶⁶ The European Communities submits that its authorities have complied with the requirements of the Anti-Dumping Agreement by using all data from the POI, as contemplated by Article 2, and have thereby ensured objectivity in arriving at the dumping determination in this investigation.⁶⁷ The European Communities further argues that, consistent with the emphasis on objectivity rather than subjectivity in Article 2, Article 2.4.2 does not permit an investigating authority to select among export transactions in making the margin calculation for the purposes of a dumping determination.⁶⁸

74. Brazil's claim on appeal thus raises two related issues. First, we must determine whether Article VI:2 of the GATT 1994 imposes an obligation on an investigating authority to select a particular comparison methodology under Article 2.4.2 of the Anti-Dumping Agreement . Second, if we find such an obligation to exist in Article VI:2, we must determine whether the facts of this case required the European Commission, pursuant to Article 2.4.2, to compare weighted average normal value for the entire POI with prices of individual export transactions from the post-devaluation period of the POI.

75. We begin our analysis with the text of the provision cited as the source of the obligation claimed by Brazil. Article VI:2 of the GATT 1994 provides, in relevant part:

In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product.

76. Brazil focuses exclusively on the phrase "[i]n order to offset or prevent dumping" to substantiate its claimed obligation that a dumping determination must be made on the basis of whether dumping will occur in the future. As noted above, Brazil seeks to import a "reasonable assumption for the future" standard into Article VI:2 of the GATT 1994 and, consequently, into Article 2.4.2 of the Anti-Dumping Agreement . We fail to see how Article VI:2, by stating that the purpose of anti-dumping duties is "to offset or prevent dumping", imposes upon investigating authorities an obligation to select any particular methodology for comparing normal value and export prices under Article 2.4.2 of the Anti-Dumping Agreement when calculating a dumping margin. As we see it, the obligation that flows from the purpose of "offset[ing] or prevent[ing] dumping" is clear from the text of Article VI:2 itself, namely, that an anti-dumping duty shall "not [be] greater in amount than the margin of dumping in respect of [the dumped] product".⁶⁹ This limitation of anti-dumping duties to the margin of dumping is the only requirement imposed on investigating authorities by the first sentence of Article VI:2.⁷⁰ The precise rules relating to the determination as to whether there is dumping and, if dumping exists, how the dumping margin is to be calculated, are set out, not in Article VI:2 of the GATT 1994, but rather in Article 2 of the Anti-Dumping Agreement , which is the agreement on the implementation of Article VI of the GATT 1994. In our view, therefore, Article 2 is a more appropriate source than the opening phrase "[i]n order to offset or prevent dumping" of Article VI:2, for ascertaining specifically what is required for the proper determination of dumping by an investigating authority. We are unable to see an obligation flowing from the opening phrase of Article VI:2 of the GATT 1994 to Article 2 of the Anti-Dumping Agreement that the determination of dumping must be based on the standard of a "reasonable assumption for the future", or that this, in turn, would require that a particular methodology be chosen under Article 2.4.2.

77. Thus, the rules for ensuring that an anti-dumping duty is imposed only on the basis of a proper determination that there is dumping as defined in Article VI:1 of the GATT 1994 are set out in Article 2 of the Anti-Dumping Agreement . Article 2 sets forth, in great detail, the rules governing various aspects of an investigating authority's dumping determination. That provision defines dumping, details the precise comparison to be made between prices, provides flexibility for exporters to respond in their pricing to fluctuations in exchange rates, and stipulates the data to be relied upon in performing many of the necessary calculations in an anti-dumping investigation. We are of the view that, if negotiators had intended to include in the covered agreements an obligation for an investigating authority to select a particular methodology when comparing normal value and export prices, such an obligation would be found in Article 2 itself and not, as Brazil argues, in Article VI:2 of the GATT 1994.

78. We also consider that certain anomalous results would flow from Brazil's assertion that when a major change, such as in this case a steep and lasting devaluation, occurs at a late stage of the POI, the dumping determination should be confined to and based on the data following that major change. If such a change were to take place at the very end of the POI, Brazil's approach would imply that the determination would have to be based on the data of a very short period.⁷¹ By the same logic, if the major change were to occur after the end of the POI, but before the provisional determination of the investigating authority (in this case, for example, after 1 April 1999 but before 28 February 2000), the investigating authority, under Brazil's approach, should ignore the analysis based on the data of the entire POI and review or reassess the determination on the basis of post-POI data. Indeed, this could imply an obligation on the investigating authority to select a new POI starting from the time of the major change.⁷²

79. We can also foresee the opposite situation. Suppose, for example, that the major change is not devaluation, but revaluation or appreciation of the currency of the exporting country. Suppose further that the investigating authority finds no dumping on the basis of the data pertaining to the first three quarters of the POI, but the revaluation in the last quarter has resulted in a situation where only sales in that last quarter were made at less than normal value. Brazil's assertion in this case could open up the possibility of the investigating authority making an affirmative dumping determination based solely on the data of the last quarter of the POI.

80. Permitting such discretionary selection of data from a period of time within the POI would defeat the objectives underlying investigating authorities' reliance on a POI for the purposes of a dumping determination.⁷³ As the Panel correctly noted, the POI "form[s] the basis for an objective and unbiased determination by the investigating authority."⁷⁴ Like the Panel and the parties to this dispute, we understand a POI to provide data collected over a sustained period of time, which period can allow the investigating authority to make a dumping determination that is less likely to be subject to market fluctuations or other vagaries that may distort a proper evaluation.⁷⁵ We agree with the Panel that the standardized reliance on a POI, although not fixed in duration by the Anti-Dumping Agreement , assures the investigating authority and exporters of "a consistent and reasonable methodology for determining present dumping", which anti-dumping duties are intended to offset.⁷⁶ In contrast to this consistency and reliability, Brazil's approach would introduce a significant level of subjectivity on the part of the investigating authority to determine when data from a subset of the POI may be a reliable indicator of an exporter's future pricing behaviour. As the European Communities points out, the "broad judgmental role" accorded investigating authorities by Brazil's approach is not consistent with the detailed nature of the rules and obligations of the Anti-Dumping Agreement governing various aspects of the dumping determination.⁷⁷

81. In our view, the Anti-Dumping Agreement takes into account the possibility of such major changes occurring at a late stage of the POI, or even after the POI, not by allowing investigating authorities to pick and choose a subset of data or sub-periods of a POI according to their subjective considerations, but by review mechanisms. Article 11.1 of the Anti-Dumping Agreement is categorical that "[a]n anti dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury." In furtherance of this general rule, Article 11.2 requires investigating authorities in certain circumstances, including at the request of an interested party after a reasonable period of time, to "review the need for the continued imposition of the duty". The Anti-Dumping Agreement , in sub-paragraphs 1 through 3 of Article 9.3, also lays down that the anti-dumping duty collected shall at no point in time exceed the dumping margin and that any such excess shall be refunded. Therefore, if a major change that occurs during or after the POI has reduced the margin of dumping or eliminated the dumping altogether, these provisions of the Anti-Dumping Agreement ensure that the exporter's legitimate interests are safeguarded.⁷⁸

82. Brazil has also made a factual assertion that, the devaluation of January 1999 being of the order of 42 percent, and the dumping margin found by the investigating authorities being of the order of 34.8 percent, the devaluation had eliminated dumping altogether. This is based on the assumption that the Brazilian exporter's domestic price (in Reals) and export price (in the currency of the importing country) would remain the same after the devaluation. Firstly, we note that neither the Panel nor the European Communities has made a factual finding that the devaluation of the Brazilian Real had eliminated dumping. Secondly, it is not inherent or automatic that the consequence of a steep devaluation is the elimination of dumping. The consequences of a devaluation in the short and long terms on the normal value and export prices of an exporter depend on a number of factors, including, in particular, the pricing behaviour of the exporter post-devaluation. These will inevitably vary from case to case. The lasting impact of a devaluation will therefore have to be determined on the basis of objective and reliable post-devaluation data and not on the basis of a priori assumptions.

83. Lastly, we observe that Brazil has not challenged, either before the Panel or before us, that the European Communities acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement in its selection of the appropriate methodology to compare normal value and export prices.⁷⁹ As noted earlier, Brazil's claim rests on the argument that there is a fundamental obligation flowing into Article 2.4.2 from the phrase "[i]n order to offset or prevent dumping" contained in Article VI:2 of the GATT 1994, and that this obligation compelled the European Communities to choose in this particular case the comparison methodology contained in the second sentence of Article 2.4.2, rather than one of the methodologies contained in the first sentence of that Article. We are therefore not called upon in this appeal to express any findings on the consistency of the European Communities' methodology selection with the requirements of Article 2.4.2. Furthermore, with respect to Brazil's challenge to the Panel's interpretation of Article 2.4.2, our finding that the obligation claimed by Brazil does not exist in Article VI:2 of the GATT 1994 resolves Brazil's appeal with respect to the comparison methodology employed by the European Commission in its dumping determination. As such, it is not necessary for us to rule on whether, under Article 2.4.2 of the Anti-Dumping Agreement , the European Commission "could not have based its dumping analysis on the export prices relating to the period after the devaluation only."⁸⁰

84. In the light of the preceding analysis, we uphold the finding of the Panel, in paragraphs 7.106 and 7.108 of the Panel Report, that the European Communities did not act inconsistently with its obligations under Article VI:2 of the GATT 1994 in imposing anti-dumping duties in this case following the devaluation of the Brazilian Real at the beginning of the fourth quarter of the POI. Given this finding, and because Brazil's allegation as to the European Communities' failure to comply with Article 1 of the Anti-Dumping Agreement was premised entirely on a finding of inconsistency with respect to Article VI:2, we also uphold the Panel's finding, in paragraphs 7.107 and 7.108 of the Panel Report, that the European Communities did not act inconsistently with Article 1 of the Anti-Dumping Agreement .

V. Data for SG&A and Profits: Article 2.2.2 of the Anti-Dumping Agreement

85. We turn now to examine Brazil's claim that the European Communities acted inconsistently with the chapeau of Article 2.2.2 by relying, in the calculation of constructed normal value, on actual data from "low-volume" sales for purposes of determining the amounts for selling, general and administrative costs ("SG&A") and profits.

86. In the anti-dumping investigation, the European Commission determined that the normal values of certain types of the like product could not be based on the price at which they were sold in the domestic market because of the low quantity of sales in Brazil.⁸¹ The European Commission therefore resorted to constructing normal values for these products in accordance with Article 2.2.⁸² When calculating constructed normal value, the European Commission used actual SG&A and profit data from the Brazilian exporter to the extent the data were based on production and sales in the ordinary course of trade.⁸³ As a result, the actual data relied upon by the European Commission in constructing normal values included data from sales of those types of products deemed to be sold in insufficient quantities for the purpose of deriving normal value.⁸⁴

87. Brazil argued before the Panel that the European Commission's reliance on data from these low-volume sales, already deemed by the European Commission not to "permit a proper comparison" of prices under Article 2.2, was inconsistent with the European Communities' obligation under Article 2.2.2 of the Anti-Dumping Agreement . According to Brazil, once the European Commission had found the sales to be of such a low volume that their prices could not be used for determining normal values under Article 2.2, the European Commission was precluded from using data from those same sales to calculate constructed normal value in accordance with Article 2.2.2.

88. The chapeau of Article 2.2.2 provides, in relevant part:

For the purpose of paragraph 2, the amounts for administrative, selling and general costs and for profits shall be based on actual data pertaining to production and sales in the ordinary course of trade of the like product by the exporter or producer under investigation.

89. The Panel found that this text allows investigating authorities to exclude only data from production and sales that were not made in the ordinary course of trade.⁸⁵ The Panel then reasoned that, because low-volume sales are included in the "ordinary course of trade", such sales had to be included in the actual data relied upon in the construction of normal value.⁸⁶ The Panel therefore found that the European Communities had not acted inconsistently with its obligation under Article 2.2.2 by including data from low-volume sales in constructing normal value.

90. On appeal, Brazil challenges the Panel's legal interpretation of the chapeau of Article 2.2.2 of the Anti-Dumping Agreement . Brazil points out that the chapeau of Article 2.2.2 requires the use of actual data, but not all actual data. Brazil claims that the text of Article 2.2.2 does not compel the use of actual data from sales previously determined by an investigating authority not to "permit a proper comparison" under Article 2.2. Emphasizing that the purpose of Article 2.2.2 is to arrive at a constructed value where normal value could not be based on "unrepresentative" domestic sales prices, Brazil claims that using data from those previously excluded sales would result in a constructed value that is as "unrepresentative" as the domestic sales prices rejected for normal value determination under Article 2.2.⁸⁷ Interpreting Article 2.2.2 to permit such a result would render Article 2.2 a nullity.

91. The European Communities argues that while Article 2.2 refers specifically to sales in the ordinary course of trade as well as to low-volume sales, the chapeau of Article 2.2.2 refers only to sales in the ordinary course of trade.⁸⁸ The omission of low-volume sales from the chapeau of Article 2.2.2, therefore, must be considered significant and held to have meaning.⁸⁹ In addition, the European Communities observes that using actual data from low-volume sales for the construction of normal value, when prices from those sales were rejected for normal value determination under Article 2.2, does not distort constructed normal values, because the sales are weighted differently in the calculations under the respective provisions.⁹⁰ Therefore, in the European Communities' view, actual data from low-volume sales must be included in the calculation of constructed normal value in accordance with the chapeau of Article 2.2.2.

92. The issue before us, therefore, is whether an investigating authority must exclude data from low-volume sales when determining the amounts for SG&A and profits under the chapeau of Article 2.2.2, having disregarded such low-volume sales for normal value determination under Article 2.2.

93. We begin our analysis with a review of the provisions that lead to the calculation of constructed normal value. Article 2.1 of the Anti-Dumping Agreement identifies a product as "dumped" where the product is introduced into the commerce of another country at "less than its normal value". "Normal value" is understood by virtue of that provision to be the "price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country". Where the price of the product in the home (exporting country) market is not "comparable" to the export price of the like product, Article 2.2 provides alternative bases for deriving "normal value":

When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country², such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits.

________________
² Sales of the like product destined for consumption in the domestic market of the exporting country shall normally be considered a sufficient quantity for the determination of the normal value if such sales constitute 5 per cent or more of the sales of the product under consideration to the importing Member, provided that a lower ratio should be acceptable where the evidence demonstrates that domestic sales at such lower ratio are nonetheless of sufficient magnitude to provide for a proper comparison.

94. Article 2.2 makes clear that an alternative basis for deriving "normal value" must be relied upon by an investigating authority where one of three conditions exists:

(a) there are no sales in the exporting country of the like product in the ordinary course of trade; or

(b) sales in the exporting country's market do not "permit a proper comparison" because of "the particular market situation"; or

(c) sales in the exporting country's market do not "permit a proper comparison" because of their low volume.

95. Where one of these conditions exists, Article 2.2 further specifies two alternative bases for the calculation of "normal value":

(a) third-country sales, that is, the comparable price of the like product when exported to an "appropriate" third country, provided the price is "representative"; or

(b) constructed normal value, that is, the sum of:

(i) the cost of production in the country of origin;

(ii) a "reasonable amount" for SG&A; and

(iii) a "reasonable amount" for profits.

96. Article 2.2.2 establishes, in the following terms, criteria for determining "reasonable amount[s]" for SG&A and profits when calculating constructed normal value pursuant to Article 2.2:

For the purpose of paragraph 2, the amounts for administrative, selling and general costs and for profits shall be based on actual data pertaining to production and sales in the ordinary course of trade of the like product by the exporter or producer under investigation. When such amounts cannot be determined on this basis, the amounts may be determined on the basis of:

(i) the actual amounts incurred and realized by the exporter or producer in question in respect of production and sales in the domestic market of the country of origin of the same general category of products;

(ii) the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin;

(iii) any other reasonable method, provided that the amount for profit so established shall not exceed the profit normally realized by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin.

97. Examining the text of the chapeau of Article 2.2.2, we observe that this provision imposes a general obligation ("shall") on an investigating authority to use "actual data pertaining to production and sales in the ordinary course of trade" when determining amounts for SG&A and profits. Only "[w]hen such amounts cannot be determined on this basis" may an investigating authority proceed to employ one of the other three methods provided in sub-paragraphs (i)-(iii). In our view, the language of the chapeau indicates that an investigating authority, when determining SG&A and profits under Article 2.2.2, must first attempt to make such a determination using the "actual data pertaining to production and sales in the ordinary course of trade". If actual SG&A and profit data for sales in the ordinary course of trade do exist for the exporter and the like product under investigation, an investigating authority is obliged to use that data for purposes of constructing normal value; it may not calculate constructed normal value using SG&A and profit data by reference to different data or by using an alternative method.

98. As the Panel correctly observed, it is meaningful for the interpretation of Article 2.2.2 that Article 2.2 specifically identifies low-volume sales in addition to sales outside the ordinary course of trade.⁹¹ In contrast to Article 2.2, the chapeau of Article 2.2.2 explicitly excludes only sales outside the ordinary course of trade. The absence of any qualifying language related to low volumes in Article 2.2.2 implies that an exception for low-volume sales should not be read into Article 2.2.2. As we explained in India - Patents (US):

[t]he duty of a treaty interpreter is to examine the words of the treaty to determine the intentions of the parties. This should be done in accordance with the principles of treaty interpretation set out in Article 31 of the Vienna Convention. But these principles of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended.⁹²

Accordingly, we conclude that a requirement that low-volume sales be excluded from the calculation of SG&A and profits cannot be read into the text of Article 2.2.2.

99. We also observe the very detailed nature of the provisions of the Anti-Dumping Agreement under Article 2.2 in respect of the calculation of constructed normal value. In comparison with the corresponding provisions in the Tokyo Round Anti-Dumping Code⁹³, the present Anti-Dumping Agreement outlines with significantly greater precision the manner in which an investigating authority is to calculate constructed normal value. For example, Article 2.2.1.1 identifies the "records kept by the exporter or producer under investigation" to be the preferred source for cost of production data. Similarly, as discussed, Article 2.2.2 establishes that SG&A and profit data are to be determined on the basis of actual data for production and sales in the ordinary course of trade, and further provides three alternatives (in sub-paragraphs (i)-(iii)) to be followed when such data are unavailable. Considering that the treaty negotiators covered in great detail various aspects of the constructed value calculation, the omission of any reference to low-volume sales in the chapeau of Article 2.2.2 is telling.⁹⁴

100. Brazil rejects this reading of the text, arguing instead that Article 2.2.2 only requires the use of "actual" data in the ordinary course of trade, not all data in the ordinary course of trade, and that the purpose of Article 2.2 would be nullified unless data from low-volume sales were excluded from the calculation of constructed normal value.⁹⁵ As the European Communities correctly observes⁹⁶, we faced a similar interpretive argument when construing another provision of the Anti-Dumping Agreement on constructed value in EC - Bed Linen. In that case, the relevant provision to be clarified was Article 2.2.2(ii), which provides:

� When such amounts cannot be determined on this basis, the amounts may be determined on the basis of:

�

(ii) the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin[.]

It was argued in that case that the reference to "actual amounts incurred and realized" did not preclude exclusion of sales outside the ordinary course of trade. This reading was put forward as the proper understanding of Article 2.2.2(ii), despite the fact that sales outside of the ordinary course of trade were expressly excluded in the chapeau of Article 2.2.2, but not mentioned in sub-paragraph (ii).⁹⁷ We rejected that argument and found as follows:

There is no basis in Article 2.2.2(ii) for excluding some amounts that were actually incurred or realized from the "actual amounts incurred or realized". It follows that, in the calculation of the "weighted average", all of "the actual amounts incurred and realized" by other exporters or producers must be included, regardless of whether those amounts are incurred and realized on production and sales made in the ordinary course of trade or not.

�

The exclusion in the chapeau leads us to believe that, where there is no such explicit exclusion elsewhere in the same Article of the Anti-Dumping Agreement , no exclusion should be implied. And there is no such explicit exclusion in Article 2.2.2(ii). Article 2.2.2(ii) provides for an alternative calculation method that can be employed precisely when the method contemplated by the chapeau cannot be used. Article 2.2.2(ii) contains its own specific requirements. On their face, these requirements do not call for the exclusion of sales not made in the ordinary course of trade. Reading into the text of Article 2.2.2(ii) a requirement provided for in the chapeau of Article 2.2.2 is not justified either by the text or by the context of Article 2.2.2(ii).⁹⁸ (original italics; underlining added).

101. We are of the view that our reasoning in EC - Bed Linen supports our interpretation in this case. We find it significant that Article 2.2.2 specifies the data to be used by an investigating authority when constructing normal value. The text of that provision excludes actual data outside the ordinary course of trade, but does not exclude data from low-volume sales. The negotiators' express reference to sales outside the ordinary course of trade and to low-volume sales in Article 2.2, and the omission of a reference to low-volume sales in the chapeau of Article 2.2.2, confirms our view that low-volume sales are not excluded from the chapeau of Article 2.2.2 for the calculation of SG&A profits. We therefore disagree with Brazil's argument that the absence of the word "all" before the word "actual" in the chapeau of Article 2.2.2, coupled with the rationale for the construction of normal value under Article 2.2, implicitly incorporates an obligation to exclude data from low-volume sales.⁹⁹ In our view, where, as in this investigation, low-volume sales are in the ordinary course of trade, an investigating authority does not act inconsistently with the chapeau of Article 2.2.2 by including actual data from those sales to derive SG&A and profits for the construction of normal value.

102. For all these reasons, we uphold the Panel's finding, in paragraphs 7.138 and 7.139 of the Panel Report, that the European Communities did not act inconsistently with Article 2.2.2 of the Anti-Dumping Agreement by including actual data from "low-volume" sales in determining the amounts for SG&A and profits for the construction of normal value.

VI. Cumulation: Articles 3.2 and 3.3 of the Anti-Dumping Agreement

103. We next examine Brazil's claim that the European Communities acted inconsistently with Articles 3.2 and 3.3 of the Anti-Dumping Agreement by cumulatively assessing the effects of dumped imports from several countries, including Brazil, without analyzing the volume and prices of dumped imports from Brazil individually, pursuant to Article 3.2.

104. The Panel began its analysis by observing that the "threshold issue" it was required to determine in addressing Brazil's claim was whether an investigating authority is permitted to conduct a cumulative assessment after having concluded that the conditions of Article 3.3 are fulfilled, or whether the investigating authority must first conduct an assessment of imports from each individual country in order to determine whether it may conduct a cumulative assessment at all.¹⁰⁰ The Panel found, on the basis of the text in Article 3.3, and citing contextual support in Articles 3.4 and 3.5, that the conditions identified in Article 3.3 are the sole conditions that must be satisfied by an investigating authority in order to undertake a cumulative assessment of the effects of dumped imports.¹⁰¹ In particular, with respect to Brazil's allegation that an investigating authority must first consider whether country-specific import volumes have significantly increased before cumulating them, the Panel found as follows:

[T]he text of this provision [Article 3.3] contains no additional requirement that authorities shall also consider whether there has been a significant increase in imports country-by-country before progressing to a cumulative assessment.¹⁰²

105. Brazil argues on appeal that the volume and price analyses prescribed by Article 3.2 must first be performed on a country-by-country basis as a pre-condition to cumulative assessment under Article 3.3. According to Brazil, only if such a country-specific analysis has identified the imports of the particular country as a likely source of negative effects on the domestic industry, is it permissible under Article 3.3 for an investigating authority to cumulatively assess the negative effects of all imports likely to have caused injury.¹⁰³ Because Article 3.3 does not expressly permit an investigating authority to "derogate" from the required analyses in Article 3.2, Brazil argues that such a derogation should not be read into the Anti-Dumping Agreement.¹⁰⁴ Brazil observes further that Article 3.3 only permits cumulative assessment of the "effects" of dumped imports. In Brazil's view, import volumes and prices cannot be considered as "effects" of imports; on the contrary, import volumes and prices "are precisely the factors which may cause the effects envisaged by Article 3.4."¹⁰⁵ Brazil therefore argues that import volumes and prices cannot be cumulated under Article 3.3.¹⁰⁶ It submits that the Panel's contrary interpretation of Articles 3.2 and 3.3 would permit an investigating authority to impose anti-dumping duties on products from a country when those products, in contrast to those from other countries, may not be causing injury to the domestic industry.¹⁰⁷

106. The European Communities submits that the text of Article 3.3 refers only to negligible import volumes from each country and that, therefore, no further analysis of country-specific import volumes is required before cumulation is permitted.¹⁰⁸ The European Communities further argues that Brazil's alleged distinction between "factors" and "effects" cannot be reconciled with the text of various provisions of Article 3. In particular, the European Communities notes that Article 3.5 refers to the "effects" set forth in Article 3.2, which in turn prescribes analyses of volume and prices.¹⁰⁹ The European Communities also explains that Article 3.4 requires an examination of the "impact" of the dumped imports (which the European Communities considers to be synonymous with the "effects" of the dumped imports) on the basis of an evaluation of fifteen "factors". This shows, according to the European Communities, that "effects" and "factors" are treated in the same way in Article 3.¹¹⁰ The European Communities asserts that the legal interpretation provided by the Panel properly recognizes that a country-by-country examination of import volumes would be inconsistent with the object and purpose of cumulation, which is to permit investigating authorities to impose anti-dumping duties on dumped imports from several countries if they cause injury.¹¹¹

107. The issue before us is whether an investigating authority must first analyze the volumes and prices of dumped imports on a country-by-country basis under Article 3.2 as a pre-condition to cumulatively assessing the effects of the dumped imports under Article 3.3.

108. We begin our analysis with the text of Article 3.3, which is the only provision in the Anti-Dumping Agreement that specifically addresses the practice of cumulation.¹¹² That Article provides:

Where imports of a product from more than one country are simultaneously subject to anti dumping investigations, the investigating authorities may cumulatively assess the effects of such imports only if they determine that (a) the margin of dumping established in relation to the imports from each country is more than de minimis as defined in paragraph 8 of Article 5 and the volume of imports from each country is not negligible and (b) a cumulative assessment of the effects of the imports is appropriate in light of the conditions of competition between the imported products and the conditions of competition between the imported products and the like domestic product.

109. The text of Article 3.3 expressly identifies three conditions that must be satisfied before an investigating authority is permitted under the Anti-Dumping Agreement to assess cumulatively the effects of imports from several countries. These conditions are:

(a) the dumping margin from each individual country must be more than de minimis;

(b) the volume of imports from each individual country must not be negligible; and

(c) cumulation must be appropriate in the light of the conditions of competition

(i) between the imported products; and

(ii) between the imported products and the like domestic product.

By the terms of Article 3.3, it is "only if" the above conditions are established that an investigating authority "may" make a cumulative assessment of the effects of dumped imports from several countries.¹¹³

110. We find no basis in the text of Article 3.3 for Brazil's assertion that a country-specific analysis of the potential negative effects of volumes and prices of dumped imports is a pre-condition for a cumulative assessment of the effects of all dumped imports. Article 3.3 sets out expressly the conditions that must be fulfilled before the investigating authorities may cumulatively assess the effects of dumped imports from more than one country. There is no reference to the country-by-country volume and price analyses that Brazil contends are pre-conditions to cumulation. In fact, Article 3.3 expressly requires an investigating authority to examine country-specific volumes, not in the manner suggested by Brazil, but for purposes of determining whether the "volume of imports from each country is not negligible".

111. Nor do we find a basis for Brazil's argument in Article 3.2, which reads:

With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member. With regard to the effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing Member, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. No one or several of these factors can necessarily give decisive guidance.

In stipulating how to undertake the analyses of volume and prices, Article 3.2 refers consistently to the "dumped imports". There is no indication in the text of Article 3.2 that the analyses of volume and prices must be performed on a country-by-country basis where an investigation involves imports from several countries.¹¹⁴

112. Examining the general structure of Article 3, we note that the requirement to analyze volumes and prices under Article 3.2 stems from Article 3.1, which we have said is "an overarching provision that sets forth a Member's fundamental, substantive obligation" with respect to the determination of injury and that "informs the more detailed obligations in [the] succeeding paragraphs" of that provision.¹¹⁵ Article 3.1 provides:

A determination of injury for purposes of Article VI of GATT 1994 shall be based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and (b) the consequent impact of these imports on domestic producers of such products.

Here again we find that the text of this provision refers to the "dumped imports" and gives no indication that the analyses of volume and prices of the "dumped imports" must be country-specific in multiple-country investigations. Article 3.4, which contains requirements also stemming from Article 3.1 and that relate to the examination of the impact of the "dumped imports" on the domestic industry, is equally consistent in referring broadly to the "dumped imports". Therefore, in our view, Brazil's argument that country-specific analyses of volumes and prices are a pre-condition for cumulation in multiple-country investigations, has no basis in either the text or the immediate context of Articles 3.2 and 3.3.

113. We also believe that cumulation without a country-specific analysis does not result in a "derog[ation]" of Article 3.2, as Brazil has asserted.¹¹⁶ We wish to emphasize that Article 3.2 plays a central role in the determination of injury and is a necessary step in any anti-dumping investigation.¹¹⁷ As the Panel correctly observed, it is possible for the analyses of volume and prices envisaged under Article 3.2 to be done on a cumulative basis, as opposed to an individual country basis, when dumped imports originate from more than one country.¹¹⁸

114. We now turn to Brazil's argument based on the fine distinction that it sees between "factors" and "effects". According to Brazil, volumes and prices are "factors" that cause the "effects" envisaged by Article 3.4, but they cannot be considered in themselves as effects of imports which may be cumulatively assessed under Article 3.3.¹¹⁹

115. We are unable to see such a fine distinction in Article 3 of the Anti-Dumping Agreement . First, we cannot overlook the fact that Article 3.5 refers to the "effects of dumping, as set forth in paragraphs 2 and 4". (emphasis added) This reference directly contradicts Brazil's contention that volumes and prices are contemplated solely as "factors" under Article 3.2.¹²⁰ In addition, Article 3.1 and the succeeding paragraphs of Article 3 clearly indicate that volume and prices, and the consequent impact on the domestic industry, are closely interrelated for purposes of the injury determination. These provisions, moreover, do not suggest that a strict labelling of volume and prices as "factors", as opposed to "effects", is intended, because the terms "factors" and "effects" appear to be used interchangeably in Article 3. For example, Article 3.4 uses the term "factors" when referring to variables that must be examined in the context of the examination of the "impact" of the dumped imports on the domestic industry, and Brazil recognizes that there is no distinction between the terms "impact" and "effects" as they are used in Article 3.¹²¹ Therefore, the text of Article 3 does not support Brazil's contention that volume and prices are deemed exclusively to be "factors", and not "effects", for the purposes of Article 3.3 of the Anti-Dumping Agreement .

116. The apparent rationale behind the practice of cumulation confirms our interpretation that both volume and prices qualify as "effects" that may be cumulatively assessed under Article 3.3. A cumulative analysis logically is premised on a recognition that the domestic industry faces the impact of the "dumped imports" as a whole and that it may be injured by the total impact of the dumped imports, even though those imports originate from various countries. If, for example, the dumped imports from some countries are low in volume or are declining, an exclusively country-specific analysis may not identify the causal relationship between the dumped imports from those countries and the injury suffered by the domestic industry. The outcome may then be that, because imports from such countries could not individually be identified as causing injury, the dumped imports from these countries would not be subject to anti-dumping duties, even though they are in fact causing injury. In our view, therefore, by expressly providing for cumulation in Article 3.3 of the Anti-Dumping Agreement , the negotiators appear to have recognized that a domestic industry confronted with dumped imports originating from several countries may be injured by the cumulated effects of those imports, and that those effects may not be adequately taken into account in a country-specific analysis of the injurious effects of dumped imports. Consistent with the rationale behind cumulation, we consider that changes in import volumes from individual countries, and the effect of those country-specific volumes on prices in the importing country's market, are of little significance in determining whether injury is being caused to the domestic industry by the dumped imports as a whole.¹²²

117. By seeking to place additional obligations on investigating authorities beyond those specified in Article 3.3, namely, that investigating authorities first determine on a country-specific basis the existence of significant increases in dumped imports, and their potential for causing injury to the domestic industry, Brazil ignores the role of cumulation in ensuring that each of the multiple sources of "dumped imports" that cumulatively contribute to a domestic industry's material injury be subject to anti-dumping duties.¹²³ We therefore agree with the Panel that Brazil's interpretation of the relationship between Articles 3.2 and 3.3 "would undermine the very concept of a cumulative analysis."¹²⁴

118. For these reasons, we uphold the finding of the Panel, in paragraphs 7.234-7.236 of the Panel Report, that the European Communities did not act inconsistently with Articles 3.2 or 3.3 of the Anti-Dumping Agreement , even though the European Commission did not analyze the volume and prices of dumped imports from Brazil individually, pursuant to Article 3.2, as a pre-condition to cumulatively assessing the effects of the dumped imports under Article 3.3.

40Neither Chile nor Mexico filed written submissions, and they did not make oral statements at the hearing.

41Japan's third participant's submission, para. 25.

42 Japan's third participant's submission, para. 15.

43 United States' third participant's submission, para. 19.

44 Brazil appeals "the Panel's finding that the EC could not have based its dumping analysis on the export prices relating to the period after the devaluation only." (Notice of Appeal, p. 2, attached as Annex 1 to this Report) This finding, according to Brazil, is inherent in the Panel's view that "an investigating authority would generally be precluded from limiting its dumping analysis to a selective subset of that data from only a temporal sub-segment of the [POI]." (Panel Report, para. 7.104)

45 Panel Report, para. 2.3. We note that the European Commission's selection of the POI from
1 April 1998 to 31 March 1999 is not challenged by Brazil.

46 Ibid., para. 2.4.

47 Commission Regulation (EC) No 449/2000 of 28 February 2000, imposing a provisional anti-dumping duty on imports of malleable cast iron tube or pipe fittings originating in Brazil, the Czech Republic, Japan, the People's Republic of China, the Republic of Korea and Thailand and accepting an undertaking offered by an exporting producer in the Czech Republic, published in the Official Journal of the European Communities, 29 February 2000, L-series, No. 55 ("Provisional Regulation"), recital 31; Council Regulation (EC) No 1784/2000 of 11 August 2000, imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain malleable cast iron tube or pipe fittings originating in Brazil, the Czech Republic, Japan, the People's Republic of China, the Republic of Korea and Thailand, published in the Official Journal of the European Communities, 18 August 2000, L-series, No. 208 ("Definitive Regulation"), recitals 62-63.

48 Panel Report, para. 7.87, quoting Brazil's second submission to the Panel, para. 27. (original emphasis) Brazil also claimed that the European Communities acted inconsistently with the Article 1 of the Anti-Dumping Agreement , as a consequence of its failure to fulfil its obligation under Article VI:2 of the GATT 1994. (Request for the Establishment of a Panel, WT/DS219/2, 8 June 2001, reproduced in Panel Report, Section IX, p. 120)

49 Panel Report, para. 7.103, quoting Brazil's second submission to the Panel, para. 31.

50Ibid., para. 7.106, quoting Brazil's second submission to the Panel, para. 33.

51Ibid., para. 7.103-7.104.

52Ibid., para. 7.104. A third methodology, prescribed in the second sentence of Article 2.4.2, is put forward by Brazil as the methodology the European Commission should have employed in this investigation. See infra, paras. 71-72.

53Panel Report, para. 7.104.

54Panel Report, para. 7.106, quoting Brazil's second submission to the Panel, para. 33.

55Ibid., para. 7.106.

56Brazil's appellant's submission, para. 54.

57Ibid., para. 58. (original emphasis)

58Ibid., para. 59. (original emphasis)

59 Brazil's response to questioning at the oral hearing.

60Brazil's response to questioning at the oral hearing.

61 Brazil's statement at the oral hearing.

62 Brazil does not object to the weighted average calculation using the data from the entire POI for normal values because, according to Brazil, the devaluation had not affected the normal values. (Brazil's appellant's submission, footnote 8 to para. 52) For the purpose of export prices, however, export transactions preceding the devaluation should have been excluded from the data set because, according to Brazil, the devaluation constituted a "fundamental and lasting change in the trading conditions of Brazilian exports." (Brazil's statement at the oral hearing)

63 Brazil's response to questioning at the oral hearing.

64 Ibid.

65 Article 1 of the Anti-Dumping Agreement in its entirety provides:

An anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement. The following provisions govern the application of Article VI of GATT 1994 in so far as action is taken under anti-dumping legislation or regulations. (footnote omitted)