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WT/DS219/AB/R
22 July 2003

(03-3920)

  Original: English

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

AB-2003-2

Report of the Appellate Body

(Continued)


VII. Exhibit EC-12: Articles 3.1, 3.4, and 17.6(i) of the Anti-Dumping Agreement

119. We turn next to Brazil's claims relating to Exhibit EC-12, an "internal 'note for the file'" submitted by the European Communities to the Panel in the context of the Panel's assessment of the evaluation of the injury factors listed in Article 3.4 of the Anti-Dumping Agreement .125 Exhibit EC-12 sets out the European Commission's consideration of certain injury factors listed in Article 3.4, namely return on investments, wages, productivity, cash flow, ability to raise capital, and magnitude of the margin of dumping.126 The document was not disclosed to the interested parties during the course of the anti-dumping investigation.127

120. Brazil expressed doubts before the Panel about whether Exhibit EC-12 formed part of the record of the underlying anti-dumping investigation and requested the Panel to find that Exhibit EC-12 was not properly before it.128 The Panel found that:

Given the EC responses, we find no basis to question whether Exhibit EC-12 forms part of the record of the underlying investigation and we must consequently take its contents into account in our examination of the relevant substantive claims made by Brazil.129

The Panel therefore "decline[d] Brazil's request � to rule that Exhibit EC-12 [was] not properly before [it]."130 After examining other issues raised by Brazil in relation to the injury determination, the Panel concluded that the European Communities did not act inconsistently with its obligations under Articles 3.1 or 3.4 of the Anti-Dumping Agreement in the evaluation of the injury factors.131

121. Brazil claims that the Panel incorrectly interpreted Articles 3.1 and 3.4, and that the Panel failed to assess whether the European Commission's establishment of the facts was proper under Article 17.6(i) of the Anti-Dumping Agreement.132

A. Article 17.6(i) of the Anti-Dumping Agreement

122. We begin our examination with Brazil's claim under Article 17.6(i) of the Anti-Dumping Agreement . Brazil recognizes that, in assessing the facts of the matter, panels enjoy discretion as triers of facts.133 Nevertheless, Brazil asserts that, in this case, the Panel did not properly exercise its discretion because "it based its findings as to the contemporaneous nature of Exhibit EC-12 exclusively on a mere unsubstantiated assertion from the EC which was accepted by the Panel on the basis of a presumption of good faith."134 According to Brazil, "[n]o positive facts were available to support such a finding."135

123. The European Communities rejects Brazil's suggestion that the sole justification given by the Panel for accepting the validity of Exhibit EC-12 was the European Communities' assertion that the document was indeed valid.136 The European Communities also contends that it was within the Panel's discretion to decide the extent to which it relied on the presumption of good faith.137

124. The issue before us is whether the Panel's assessment of the facts was proper, under Article 17.6(i) of the Anti-Dumping Agreement , when it found that Exhibit EC-12 formed part of the record of the underlying anti-dumping investigation.138 Article 17.6 reads, in relevant part:

In examining the matter referred to in paragraph 5:

(i) in its assessment of the facts of the matter, the panel shall determine whether the authorities' establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the evaluation shall not be overturned[.]

125. We recently stated, in EC - Bed Linen (Article 21.5 - India ), that "we 'will not interfere lightly with [a] panel's exercise of its discretion' under Article 17.6(i) of the Anti-Dumping Agreement ."139 In that appeal, we also explained that "[a]n appellant must persuade us, with sufficiently compelling reasons, that we should disturb a panel's assessment of the facts or interfere with a panel's discretion as the trier of facts."140 In this appeal, Brazil has not offered sufficiently compelling reasons to persuade us that we should disturb the Panel's finding that Exhibit EC-12 is part of the record of the underlying anti-dumping investigation.

126. Brazil's claim rests, in our view, on an incorrect characterization of the Panel's reasoning. Brazil asserts that, in reaching its finding on this issue, the Panel relied solely on the European Communities' assertion that Exhibit EC-12 was produced during the investigation.141 We disagree. Indeed, we find in the following excerpt from the Panel Report evidence that the Panel inquired into the genuineness of Exhibit EC-12:

We asked the European Communities to indicate in the record of the investigation the sources of information and the methodology on which the statements and information in Exhibit EC-12 are based. The European Communities gave an account of the methodology and the sources of information on the basis of which the statements in Exhibit EC-12 were made. We further asked the European Communities to confirm and substantiate to us that Exhibit EC-12 was written within the time period of the investigation. The European Communities confirmed that this was the case. Given the EC responses, we find no basis to question whether Exhibit EC-12 forms part of the record of the underlying investigation and we must consequently take its contents into account in our examination of the relevant substantive claims made by Brazil.142 (footnotes omitted)

127. This excerpt demonstrates that the Panel took into account the European Communities' responses to its questions before reaching its finding.143 It also indicates that the Panel did not rely exclusively on the presumption of good faith, as Brazil suggests, given that some of the Panel's questions were directed at the validity of Exhibit EC-12. If the Panel had placed total reliance on the presumption of good faith, it would have simply accepted the European Communities' assertion that Exhibit EC-12 formed part of the record of the investigation and would not have posed questions to assess the consistency of Exhibit EC-12 with other evidence contained in the record. Therefore, we are satisfied that the Panel "took steps to assure [itself] of the validity of [Exhibit EC-12] and of the fact that it forms part of the contemporaneous written record of the EC investigation."144

128. In addition, to the extent that Brazil may be understood to be calling into question the value placed by the Panel on the responses given by the European Communities, relative to that accorded to Brazil's own assertions, these allegations can only be regarded as directed at the Panel's appreciation of the evidence. In making such a claim under Article 17.6(i), it is not sufficient for Brazil simply to disagree with the Panel's weighing of the evidence, without substantiating its claim of error by the Panel. As we have recently reiterated, "[i]t is not 'an error, let alone an egregious error', for the Panel to have declined to accord to the evidence the weight" that one of the parties sought to have accorded to it.145 Based on our reading of the Panel Record, Brazil did not substantiate its allegation that Exhibit EC-12 was not contemporaneous with the investigation. In these circumstances, we are unable to conclude that the Panel's assessment was in error. Therefore, we reject Brazil's claim that the Panel failed to assess whether the establishment of the facts was proper pursuant to Article 17.6(i) of the Anti-Dumping Agreement , when it found that Exhibit EC-12 was part of the record of the underlying anti-dumping investigation.

B. Articles 3.1 and 3.4 of the Anti-Dumping Agreement

129. We proceed to Brazil's claim that the Panel incorrectly interpreted the requirements of Articles 3.1 and 3.4 of the Anti-Dumping Agreement . At the oral hearing, Brazil clarified that it is not alleging that the Panel erred by relying on our Report in Thailand - H-Beams in reaching its finding that it was "required" to include Exhibit EC-12 in its examination, despite the fact that Exhibit EC-12 was not disclosed to the interested parties during the anti-dumping investigation.146 Rather, Brazil asserts that the issue here is that there was no verifiable evidence of the contemporaneous character of Exhibit EC-12147 and, therefore, the European Communities was not entitled to rely on that document to evidence its compliance with Articles 3.1 and 3.4 of the Anti-Dumping Agreement .

130. Article 3.4 of the Anti-Dumping Agreement provides:

The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.

131. This provision requires an investigating authority to evaluate all relevant economic factors in its examination of the impact of the dumped imports. By its terms, it does not address the manner in which the results of this evaluation are to be set out, nor the type of evidence that may be produced before a panel for the purpose of demonstrating that this evaluation was indeed conducted.148 The provision simply requires Members to include an evaluation of all relevant economic factors in its examination of the impact of the dumped imports. In this dispute, the European Communities submitted Exhibit EC-12 as the only evidence that its investigating authority evaluated certain of the factors listed in Article 3.4.149 Upon satisfying itself that Exhibit EC-12 formed part of the record of the investigation-a finding that we have found to be consistent with the Panel's obligations under Article 17.6(i)-the Panel was entitled to rely on Exhibit EC-12 in assessing whether the European Communities evaluated all of the injury factors listed in Article 3.4.

132. Turning to Brazil's allegations relating to Article 3.1, we fail to see any basis for Brazil's allegations that the Panel incorrectly interpreted the requirement to determine injury on the basis of positive evidence and involving an objective examination. Once the Panel found that Exhibit EC-12 did form part of the record of the underlying anti-dumping investigation-a finding we do not disturb-there was no longer any reason for the Panel to find that Exhibit EC-12 did not constitute "positive evidence", in the sense of the evidence being of an "affirmative, objective and verifiable character, and � credible", or to find that the evaluation in Exhibit EC-12 did not constitute an "objective examination", in the sense of it being "unbiased".150 Brazil has not put forward any reason to substantiate a violation of Article 3.1 other than the rejected allegation that Exhibit EC-12 did not form part of the contemporaneous record of the anti-dumping investigation.

133. For these reasons, we find that the Panel did not fail to assess whether the European Commission's establishment of the facts was proper under Article 17.6(i), and did not incorrectly interpret the requirements of Articles 3.1 and 3.4 of the Anti-Dumping Agreement by including Exhibit EC-12 within its assessment of the European Commission's evaluation of the injury factors listed in Article 3.4. We therefore uphold the finding, in paragraphs 7.46 and 7.47 of the Panel Report, that Exhibit EC-12 was properly before the Panel.

VIII. Disclosure of Information: Articles 6.2 and 6.4 of the Anti-Dumping Agreement

134. We examine next Brazil's claim that the Panel erred in finding that the European Communities did not act inconsistently with Articles 6.2 and 6.4 of the Anti-Dumping Agreement by failing to disclose the information contained in Exhibit EC-12.

135. The Panel found that the information in Exhibit EC-12 "was considered not relevant and was not specifically relied upon by the EC in reaching the anti-dumping determination" and that, therefore, the Brazilian exporter was not "deprived of timely opportunities to see information relevant to its case nor of an opportunity for defence of its interests."151 Thus, the Panel found that "the European Communities has not violated Articles 6.2 and 6.4 with respect to the information on injury factors referred to exclusively in Exhibit EC-12." 152

136. On appeal, Brazil claims that the Panel based its finding on an incorrect interpretation of the obligations arising from Articles 6.2 and 6.4 of the Anti-Dumping Agreement . Brazil asserts that "the findings of the investigating authorities regarding each of these factors [listed in Article 3.4] are necessarily 'relevant' within the meaning of Article 6.4."153 In Brazil's view, the Panel erred in finding that the European Commission could decide whether the information contained in Exhibit EC-12 had any "added value" for the parties and was relevant within the meaning of Article 6.4, and whether the information related to the defence of the parties' interests within the meaning of Article 6.2.154

137. The European Communities agrees with the Panel's ultimate conclusion on Article 6.4, but disagrees with the Panel's interpretation of that provision.155 According to the European Communities, the term "information" in Article 6.4 does not include "the reasoning that the authorities applied to the data they have collected."156 The European Communities asserts that it had no obligation to disclose Exhibit EC-12 because its contents do not constitute "information" in the sense of Article 6.4; rather, Exhibit EC-12 contains its investigating authority's conclusions with respect to the data that had been collected, and the "raw data" had been disclosed to the interested parties.157 With respect to Article 6.2, the European Communities asserts that, although the first sentence contains a right that is "very general in nature", it does not "impose a specific obligation on investigating authorities to inform interested parties of the legal basis for its final determination on injury during the course of an investigation".158

138. At the outset, we wish to underscore the importance of the obligations contained in Article 6 of the Anti-Dumping Agreement . This Article "establishes a framework of procedural and due process obligations".159 Its provisions "set out evidentiary rules that apply throughout the course of the anti-dumping investigation, and provide also for due process rights that are enjoyed by 'interested parties' throughout such an investigation".160

139. We begin our analysis of Brazil's claims with Article 6.4, which reads:

The authorities shall whenever practicable provide timely opportunities for all interested parties to see all information that is relevant to the presentation of their cases, that is not confidential as defined in paragraph 5, and that is used by the authorities in an anti dumping investigation, and to prepare presentations on the basis of this information.

140. At the oral hearing, the European Communities conceded that Exhibit EC-12 contains more than the conclusions or reasoning of its investigating authority because the document also contains "a summary of the raw data" on some of the injury factors listed in Article 3.4.161 The European Communities did not deny that the data are "information" for purposes of the disclosure requirements of Article 6.4.162 Instead, the European Communities asserted that, despite the fact that Exhibit EC-12 also contains data, it was under no obligation to disclose the document because the raw data used to prepare Exhibit EC-12 had been disclosed to the interested parties to the extent that it was compatible with confidentiality requirements.163

141. We observe, however, that the European Communities' contention that the data in Exhibit EC-12 had been disclosed to the interested parties during the anti-dumping investigation cannot be reconciled with the Panel's finding of fact on this matter. The Panel noted that "the information in Exhibit EC-12 was not disclosed in any form to the interested parties in the course of the investigation."164 This appears, to us, to be an unequivocal factual finding.165 The European Communities has not challenged this finding on appeal and, therefore, we decline to review it, in conformity with Article 17.6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes.

142. Thus, we turn to an examination of whether the Panel was correct in concluding that the European Communities was under no obligation to disclose Exhibit EC-12 during the anti-dumping investigation. Article 6.4 requires that, "whenever practicable", investigating authorities provide timely opportunities for all interested parties to see and prepare presentations on the basis of "all information" that meets the following criteria:

(a) the information is relevant to the presentation of the interested parties' cases;

(b) the information is not confidential as defined in Article 6.5; and

(c) the information is used by the authorities in an anti-dumping investigation.

143. The European Communities has not asserted in any of its submissions that it was not "practicable" to disclose Exhibit EC-12. In addition, the European Communities acknowledged at the oral hearing that Exhibit EC-12 did not contain confidential information covered by Article 6.5 of the Anti-Dumping Agreement .166 We will therefore limit our examination to determining whether the information in Exhibit EC-12 was "relevant" to the interested parties and "used" by the European Commission.

144. We recall that the Panel found that the Brazilian exporter was "not deprived of timely opportunities to see information relevant to its case" because the "information [in Exhibit EC-12] was considered not relevant and was not specifically relied upon by the EC in reaching the anti-dumping determination."167 In our view, the Panel incorrectly interpreted the requirement in Article 6.4 that the information be "relevant", and it incorrectly applied the requirement that the information be "used" by the investigating authorities.

145. We turn first to the requirement that the information be "relevant". From the Panel's reasoning, it is apparent that it read this requirement to mean "relevant" from the perspective of the investigating authority. We disagree. Article 6.4 refers to "provid[ing] timely opportunities for all interested parties to see all information that is relevant to the presentation of their cases". (emphasis added) The possessive pronoun "their" clearly refers to the earlier reference in that sentence to "interested parties". The investigating authorities are not mentioned in Article 6.4 until later in the sentence, when the provision refers to the additional requirement that the information be "used by the authorities". Thus, whether or not the investigating authorities regarded the information in Exhibit EC-12 to be relevant does not determine whether the information would in fact have been "relevant" for the purposes of Article 6.4.

146. This conclusion is supported by our reasoning in US - Hot Rolled Steel, where we explained that "Article 3.4 lists certain factors which are deemed to be relevant in every investigation and which must always be evaluated by the investigating authorities."168 Thus, because Exhibit EC-12 contains information on some of the injury factors listed in Article 3.4, and the injury factors listed in that provision "are deemed to be relevant in every investigation", Exhibit EC-12 must be considered to contain information that is relevant to the investigation carried out by the European Commission. As such, the information in Exhibit EC-12 was necessarily relevant to the presentation of the interested parties' cases and is, therefore, "relevant" for purposes of Article 6.4.

147. We disagree also with the Panel's conclusion on whether the investigating authorities "used" the information in Exhibit EC-12. The Panel did not expressly determine that the European Commission did not "use" the information in Exhibit EC-12 as contemplated under Article 6.4. Instead, the Panel stated that the information in Exhibit EC-12 "was not specifically relied upon by the EC in reaching the anti-dumping determination".169 It appears that the Panel arrived at this conclusion because, in its view, the European Commission had "essentially concluded that this data was 'in line' with other data (that was disclosed) and that there was no 'value added' to the substance of their investigation in the analysis of these factors."170 In our view, however, the Panel's reasoning overlooks the fact that the European Commission was required to evaluate all the injury factors listed in Article 3.4, and the evaluation of some of these factors is set out exclusively in Exhibit EC-12.171 In other words, Exhibit EC-12 relates to a required step in the anti-dumping investigation. The European Communities relies on Exhibit EC-12 as the sole evidence that it performed this required step. As we see it, this necessarily leads to the conclusion that the information in Exhibit EC-12 was in fact "used" by the European Commission in the anti-dumping investigation and that, therefore, Exhibit EC-12 also satisfies this criterion of Article 6.4. Thus, the European Communities was not entitled to exclude this information on the basis that it did not consider that it provided "value added" to the investigation.

148. Therefore, we are of the view that the information contained in Exhibit EC-12 should have been disclosed to the interested parties, pursuant to Article 6.4, because the information was relevant to the interested parties, used by the European Commission in the investigation, and not confidential.

149. The European Communities recognized during the oral hearing that a finding of violation in this case under Article 6.4 would necessarily entail a violation of Article 6.2.172 We are also of the view that, by failing to meet its legal obligation to disclose Exhibit EC-12, the European Communities did not afford the Brazilian exporter "a full opportunity for the defence of [its] interests" as required under Article 6.2 of the Anti-Dumping Agreement . One of the stated objectives of the disclosure of information required under Article 6.4 is to allow interested parties "to prepare presentations on the basis of this information". The "presentations" referred to in Article 6.4, whether written or oral, logically are the principal mechanisms through which an exporter subject to an anti-dumping investigation can defend its interests. Thus, by failing to disclose Exhibit EC-12 and thereby depriving the Brazilian exporter of an opportunity to present its defence, the European Communities did not act consistently with Article 6.2.

150. For all these reasons, we reverse the Panel's finding in paragraphs 7.348 and 7.349 of the Panel Report and find, instead, that the European Communities acted inconsistently with Articles 6.2 and 6.4 of the Anti-Dumping Agreement , by failing to disclose to the 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.

IX. Implicit Analysis of the "Growth" Factor: Article 3.4 of the Anti-Dumping Agreement

151. We turn now to Brazil's claim relating to the European Communities' evaluation of the injury factor "growth" pursuant to Article 3.4 of the Anti-Dumping Agreement .

152. Before the Panel, Brazil claimed that the European Communities had not explicitly addressed "growth", one of the injury factors listed in Article 3.4.173 The European Communities admitted that no separate record was made of the evaluation of actual and potential negative effects on "growth".174 The European Communities argued, however, that "while no separate record was made of its evaluation of 'growth', its consideration of this factor is implicit in its analysis of the other factors."175

153. The Panel began its analysis of this issue by noting that, although a "formalistic 'checklist'" approach to the evaluation of the factors listed in Article 3.4 would be "highly desirable", it found "no such obligation in the text of the provision and consequently [did] not believe that this is a required approach to [the] analysis under Article 3.4."176 According to the Panel, the "provision requires substantive, rather than purely formal, compliance", so that the "requirements of this provision will be satisfied where it is at least apparent that a factor has been addressed, if only implicitly."177 The Panel thus found that:

The facts on the record of the investigation and taken into account in the EC injury analysis indicate to us that, in its examination of other injury factors - in particular, sales, profits, output, market share, productivity and capacity utilisation - satisfy us that, in addressing developments in relation to these other factors in the manner that it did in this particular investigation, the European Communities implicitly addressed the factor of "growth". [sic]

We therefore find that the European Communities did not violate its obligations under Article 3.4 in its treatment of "growth" and that it at least addressed each of the listed Article 3.4 factors.178

154. Brazil appeals from this finding of the Panel. It contends that Articles 3.1 and 3.4 require "explicit" analysis of each injury factor.179 Thus, in Brazil's view:

[e]ven if a checklist is not a required approach under Article 3.4, it must however be apparent somehow that each of the fifteen factors was indeed evaluated by the investigating authority. In other words, that a given factor was properly evaluated by an investigating authority cannot simply be deducted from the evaluation of other factors.180 (original emphasis)

Brazil also asserts that if it were sufficient to deduce from the evaluation of other factors that a certain factor has been addressed, then the requirement that all fifteen of the injury factors listed in Article 3.4 be evaluated would lose effectiveness.181

155. The European Communities rejects Brazil's contentions because, in its view, our Report in Thailand - H-Beams "established that the obligation to consider the factors in Article 3.4 was quite distinct from the various obligations in the [Anti-Dumping] Agreement to disclose or publish information about that consideration."182 The European Communities further explains that, in stating that "growth" was addressed implicitly, the Panel established as a factual matter that European Communities had properly considered the factor "growth".183

156. The participants in this appeal do not dispute that it is mandatory for investigating authorities to evaluate all of the fifteen injury factors listed in Article 3.4 of the Anti-Dumping Agreement .184 One of the fifteen factors expressly listed in Article 3.4 is the "actual and potential negative effects on � growth". The issue raised by Brazil in this appeal is whether the requirements of Article 3.4 were satisfied in this case, even though the factor "growth" was evaluated only "implicitly" and no separate record of its evaluation was made.

157. Looking first to the text of Article 3.4, we find that it calls for "an evaluation of all relevant economic factors and indices having a bearing on the state of the industry". The text, however, does not address the manner in which the results of the investigating authority's analysis of each injury factor are to be set out in the published documents.

158. The requirements of "positive evidence" and "objective examination" in Article 3.1 of the Anti-Dumping Agreement similarly do not regulate the manner in which the results of the analysis are to be set out. In Thailand - H-Beams, we examined a claim under Article 3.1, relating to the use of a confidential document for purposes of an injury determination under Article 3.4, and found that:

� the requirement in Article 3.1 that an injury determination be based on "positive" evidence and involve an "objective" examination of the required elements of injury does not imply that the determination must be based only on reasoning or facts that were disclosed to, or discernible by, the parties to an anti-dumping investigation.185 (original emphasis)

159. Our conclusion in that case regarding the obligations in Article 3.1 was premised on the notion that the manner in which the analysis of the injury factors and the results of the injury determination are to be disclosed to interested parties and set forth in the published documents is a matter regulated by other provisions of the Anti-Dumping Agreement . Thus, in that case, we explained that:

[w]hether evidence or reasoning is disclosed or made discernible to interested parties by the final determination is a matter of procedure and due process. These matters are very important, but they are comprehensively dealt with in other provisions, notably Articles 6 and 12 of the Anti-Dumping Agreement .186 (original italics; underlining added)

In our view, this same premise also indicates that Articles 3.1 and 3.4 do not regulate the manner in which the results of the "evaluation" of each injury factor are to be set out in the published documents.

160. Brazil argues that the Panel's interpretation of Article 3.4 would reduce that provision to inutility. It explains that:

[i]f, as it is the case in the Panel's findings, it is sufficient to deduct from the examination of some factors that a third one has been addressed in order to comply with Article 3.4, then the requirements that each of the fifteen factors must be addressed loses effectiveness. Such an interpretation would have the effect of nullifying the obligation of Article 3.4 that each of the fifteen factors must be evaluated.187 (original italics; original underlining)

We disagree. The obligation to evaluate all fifteen factors is distinct from the manner in which the evaluation is to be set out in the published documents. As the European Communities contends, that the analysis of a factor is implicit in the analyses of other factors does not necessarily lead to the conclusion that such a factor was not evaluated.188

161. Accordingly, because Articles 3.1 and 3.4 do not regulate the manner in which the results of the analysis of each injury factor are to be set out in the published documents, we share the Panel's conclusion that it is not required that in every anti-dumping investigation a separate record be made of the evaluation of each of the injury factors listed in Article 3.4. Whether a panel conducting an assessment of an anti-dumping measure is able to find in the record sufficient and credible evidence to satisfy itself that a factor has been evaluated, even though a separate record of the evaluation of that factor has not been made, will depend on the particular facts of each case. Having said this, we believe that, under the particular facts of this case, it was reasonable for the Panel to have concluded that the European Commission addressed and evaluated the factor "growth".

162. Having regard to the nature of the factor "growth", we believe that an evaluation of that factor necessarily entails an analysis of certain other factors listed in Article 3.4. Consequently, the evaluation of those factors could cover also the evaluation of the factor "growth". This relationship was recognized by Brazil during the oral hearing, when we inquired about the nature of the factor "growth" and whether it may be reflected in the performance of certain other factors listed in Article 3.4.189

163. Moreover, we note that the Panel explained that in analyzing certain of the other factors listed in Article 3.4�including sales, profits, output, market share, productivity, return on investment and capacity utilization-the European Commission "traced developments from 1995 through the end of the [POI]" and "[t]his examination touched upon the performance and relative diminution or expansion of the domestic industry."190 The Panel then went on to give the following specific example: "� the Provisional Regulation (recital 150) indicates that there was a decrease in EC production in 1995 and 1996, and an increase between 1996 and the [POI], while EC production capacity, sales volume, profitability and market share decreased."191

164. Brazil argues that, even if the evaluation of "growth" implies examining other factors listed in Article 3.4, an investigating authority must still put them into context, weigh them against each other and draw an appropriate overall conclusion.192 We note that the Panel did review whether the European Commission examined the factors "in context", as Brazil contends is required:

We have examined the injury indicators which the European Communities found relevant and significant for its injury determination. The European Communities found material injury during the period of investigation on the basis, in particular, of declines in production, production capacity, sales and market share. Moreover, the European Communities stated that the Community industry suffered a "significant loss" of employment and a decline in investments, as well as an increase of stocks. It also determined that the increase in capacity utilisation depended on reduced production capacity. Furthermore, it placed its evaluation of factors affecting domestic prices in the context of developments in market share and profitability. We have observed that the European Communities places its evaluation of each of these factors within the context of its own internal evolution and in terms of its relationship with movements in other injury factors and that the record data with respect to those factors deemed relevant by the European Communities overall bears out the EC evaluation of these factors.193 (emphasis added; footnote omitted)

165. Looking also at the regulation imposing provisional anti-dumping duties in this case, we find that it supports the conclusion that the European Commission evaluated "growth":

The examination of the above mentioned injury factors shows that the situation of the Community industry deteriorated. In particular, the Community industry experienced a decline in production, production capacity, sales and market share. Moreover, the Community industry suffered a significant loss of employment and a decline in investments, as well as an increase of stocks. As to the capacity utilisation, its increase depended on the reduced production capacity.194

From our perspective, the "declines" and "losses" observed with respect to several of the factors examined in this particular case necessarily relate to the issue of "growth" as well. To put it more precisely, the negative trends in these factors point to a lack of "growth". This, in turn, supports the conclusion that the European Commission evaluated this injury factor.

166. For all these reasons, we uphold the Panel's finding in paragraph 7.311 of the Panel Report that the European Communities did not violate its obligations under Article 3.4 of the Anti-Dumping Agreement in respect of the injury factor "growth".

X. Causality: Article 3.5 of the Anti-Dumping Agreement

167. We turn now to Brazil's allegations of error under Article 3.5 of the Anti-Dumping Agreement . Brazil identifies two errors by the Panel related to the European Commission's causality analysis:

(a) the finding that the relatively higher cost of production of the European Communities' domestic industry did not constitute a "known factor [ ]other than dumped imports" under Article 3.5; and

(b) the finding that the European Commission's methodology in this investigation of analyzing causal factors other than dumped imports on an individual basis, without consideration of the collective effects of these factors, did not result in the attribution to dumped imports of injuries caused by other causal factors.

We address each of these alleged errors in turn.

A. "Known Factors Other Than the Dumped Imports Which at the Same Time are Injuring the Domestic Industry"

168. Brazil argued before the Panel that the relative cost efficiency of the Brazilian exporter under investigation vis-�-vis European Communities producers should have been examined by the European Commission as a "known factor[ ] other than the dumped imports" causing injury.195 Before the European Commission, the Brazilian exporter under investigation had asserted that the fittings the exporter sold in the European Communities market ("black heart" fittings) had a lower cost of production than those sold by European Communities producers in the European Communities market ("white heart" fittings), although both were considered "like products" for purposes of the investigation.196 The Brazilian exporter had also claimed that it was this lower cost of production that was reflected in the products' selling prices.197 The Brazilian exporter had raised this cost efficiency issue before the European Commission in relation to the dumping- and injury-related segments of the investigation, but not with regard to the causality analysis.198 Nevertheless, Brazil argued before the Panel that the European Commission should have examined this cost efficiency as a "known" factor in the causality analysis in the light of the significant difference between the dumping and underselling margins determined during the investigation (which difference Brazil terms the "margins analysis"), and because the European Commission had been alerted to this advantage of the Brazilian exporter in an earlier phase of the investigation.199

169. The Panel observed that the Brazilian exporter had identified this cost efficiency before the European Commission in the context of the dumping and injury determinations.200 The Panel also found that the European Commission "did investigate the alleged differences in cost of production and market perception between white and black heart variants of the product concerned and made factual findings that the difference in cost of production was minimal and that there was no significant difference in market perception."201 The Panel then went on to reject Brazil's claim:

In light of these findings, these factors, although "known" to them in the context of the dumping and injury analysis, would not be a "known" causal factor, that is, a factor that the European Communities was aware would possibly be causing injury to the domestic industry. We therefore find that the European Communities did examine these factors, and, in light of its findings, did not perceive of them as "known" causal factors.202 (emphasis added)

170. Brazil appeals the Panel's finding that the relatively higher cost of production for European Communities producers was not a "known" causal factor that the European Commission had to examine under Article 3.5. Brazil contends that the text of Article 3.5 does not support the Panel's interpretation that investigating authorities can limit their examination only to those factors raised by the parties in the context of the causality analysis.203 In any event, Brazil notes that the cost of production data of the European Communities producers were required for a proper comparison between the Brazilian and European Communities producers. As such data was available only to the European Commission and not to Brazil (for reasons of confidentiality), Brazil submits that its exporter had sufficiently raised the cost of production difference before the European Commission on the basis of information available to it at the time of the investigation.204

171. Furthermore, according to Brazil, its so-called "margins analysis", which is based on data from the European Commission's disclosure documents released before publication of the definitive determination, confirms that the Brazilian exporter enjoys a lower cost of production than the European Communities domestic industry and that "a significant part" of the industry's injury was not due to the effects of dumping.205 Thus, Brazil argues that the relatively higher cost of production of the European Communities industry is a "known factor" other than dumped imports, which the European Commission was required to examine under Article 3.5, and that, by failing to do so, the European Commission attributed to dumped imports those injuries that were caused by this unexamined causal factor.

172. The European Communities requests us to reject Brazil's arguments on appeal. The European Communities explains that the Brazilian exporter did not raise during the investigation the possible comparative advantage resulting from any difference in costs of production between the Brazilian exporter and the European Communities industry.206 Rather, the alleged differences in the cost of production and market perception between the "white heart" and "black heart" variants of the product were raised by the Brazilian exporter when requesting an adjustment to its prices for purposes of the European Commission's calculation of the undercutting margin.207 According to the European Communities, the fact that Brazil raised this factor in one phase of the investigation does not render the factor "known" by the European Commission to have caused injury to the domestic industry. In any event, the European Communities argues, such a difference in costs of production is not a "factor other than the dumped imports" that the European Commission was required to "examine" in terms of the third sentence of Article 3.5.208

173. The issue before us is whether, under Article 3.5, the alleged higher cost of production of the European Communities industry, raised by the Brazilian exporter solely in the context of the European Commission's dumping and injury determinations, was a "known factor[ ] other than the dumped imports which at the same time [was] injuring the domestic industry", thereby requiring examination by the European Commission.

174. We begin our examination with the text of the provision governing an investigating authority's causality analysis. Article 3.5 of the Anti-Dumping Agreement provides:

It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this Agreement. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry. (underlining added)

175. Article 3.5 requires that an investigating authority establish a "causal relationship" between dumped imports and the domestic industry's injury. In the course of identifying this causal relationship, investigating authorities are not permitted to attribute to dumped imports injuries caused by other factors. Critical to the effective operation of the non-attribution obligation, and indeed, the entire causality analysis, is the requirement of Article 3.5 to "examine any known factors other than the dumped imports which at the same time are injuring the domestic industry", for it is the "injuries" of those "known factors" that must not be attributed to dumped imports. In order for this obligation to be triggered, Article 3.5 requires that the factor at issue:

(a) be "known" to the investigating authority;

(b) be a factor "other than dumped imports"; and

(c) be injuring the domestic industry at the same time as the dumped imports.

176. We are mindful that the Anti-Dumping Agreement does not expressly state how such factors should become "known" to the investigating authority, or if and in what manner they must be raised by interested parties, in order to qualify as "known". We also recognize that the Anti-Dumping Agreement does not expressly state to what degree a factor must be unrelated to the dumped imports, or whether it must be extrinsic to the exporter and the dumped product, in order to constitute a factor "other than the dumped imports". We need not, however, resolve such questions in this appeal, given the factual findings of the European Commission in this investigation and the Panel in this case.

177. We note that Brazil's claim rests entirely on the assumption that there was a marked difference in the costs of production between the Brazilian exporter and the European Communities producers. Brazil's factual allegation regarding the difference in costs of production, however, was rejected by the European Commission. As the Panel noted, the "European Communities did investigate the alleged differences in cost of production and market perception � and made factual findings that the difference in cost of production was minimal and that there was no significant difference in market perception."209 These factual findings of the European Commission were affirmed by the Panel210, and as such, we do not inquire into them on appeal. Having rejected the Brazilian exporter's factual premise in the context of one phase of the investigation, the European Commission, in our view, had no reason to undertake an analysis in a subsequent phase of the investigation that would have been predicated upon the very correctness of the same premise. In other words, once the European Commission had determined that the allegation of the difference in cost of production was unfounded, it had no obligation to examine its effects on the domestic industry under Article 3.5.

178. Thus, we agree with the Panel that "the European Communities did examine these factors, and, in light of its findings, did not perceive of them as 'known' causal factors."211 However, we disagree with the Panel's apparent understanding of the term "known" in Article 3.5. We understand the Panel, in rejecting this aspect of Brazil's claim under Article 3.5, to have stated that the alleged causal factor was "known" to the European Commission in the context of its dumping and injury analyses, but that the factor was nevertheless not "known" in the context of its causality analysis.212 In our view, a factor is either "known" to the investigating authority, or it is not "known"; it cannot be "known" in one stage of the investigation and unknown in a subsequent stage. This does not, however, affect our finding, which is premised on the fact that once the cost of production difference was found by the European Commission to be "minimal", the factor claimed by Brazil to be "injuring the domestic industry" had effectively been found not to exist.213 As such, there was no "factor" for the European Commission to "examine" further pursuant to Article 3.5.

179. We therefore uphold the Panel's finding, in paragraph 7.362 of the Panel Report, that the difference in 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".

B. Non-Attribution

180. The Panel made the following findings regarding the non-attribution analysis undertaken by the European Commission in this investigation:

In its determination, the European Communities identified certain factors, other than dumped imports, that were potentially causing injury to the domestic industry including imports from third countries not subject [to] the investigation; decline in consumption and substitution. With respect to each of these factors individually, the European Communities conducted a separate examination and found either that it "is not such as to have contributed in any significant way to the material injury suffered by the Community industry" (decline in consumption); that it made "no significant contribution" (export performance) or that "no significant influence" could have resulted (own imports of the product concerned), that it cannot have significantly contributed to injury (substitution), or (in the case of imports from the countries not subject to the investigation) "even if imports from other third countries may have contributed to the material injury suffered by the Community industry, it is hereby confirmed that they are not such to have broken the causal link between the dumping and the injury found"). The European Communities concluded that any other factors that may have contributed to the injury to the domestic industry were "not such as to have broken the casual link" between dumped imports and injury.

These aspects of the EC determination indicate to us that the European Communities analysed individually the causal factors concerned and identified the individual effects of each of these causal factors. With respect to each of the factors, the European Communities concluded that the extent of the contribution to injury was not significant, or, in one case, extrapolated that, even if the effect were significant, it would not be such as to "break the causal link" between dumped imports and material injury. The European Communities' overall conclusion was that none of these factors had an effect that was such to have broken the causal link between dumped imports and material injury.214 (emphasis added; footnotes omitted)

181. Based on these findings, the Panel determined that, notwithstanding the European Commission's analysis of each causal factor solely on an individual basis, such analysis nevertheless ensured that the effects of causal factors other than dumped imports were not improperly attributed to dumped imports:

We are certainly aware of the theoretical possibility that a causation methodology which separates and distinguishes between individual injury factors may not accommodate the possibility that multiple "insignificant factors" might collectively constitute a significant cause of injury such as to sever the link between dumped imports and injury. However, the EC methodology-which we understand to separate and distinguish between the effects of each of these causal factors and the dumped imports including through an examination as to whether the extent of the effects of each causal factor are such that it is necessary to separate and distinguish its effects-does not leave the effects of those factors entirely lumped together and indistinguishable.215 (original emphasis; footnote omitted)

182. The Panel therefore determined that Article 3.5 does not require an evaluation of the collective impact of other causal factors. With respect to this particular case, the Panel found that, based on what it understood to be the operation of the European Communities' causality methodology, the effects of other causal factors were sufficiently separated and distinguished so as to avoid improper attribution of injuries to dumped imports.

1. European Communities' Procedural Objection

183. The European Communities raises an initial objection to our consideration of Brazil's claim regarding the European Commission's failure to examine the collective impact of other causal factors. The European Communities argues that the issue is not properly before us because it was never raised directly before the Panel, stating that, "although, in the arguments it presented to the Panel, Brazil criticized the EC authorities' handling of 'other factors', at no point did it accuse them of failing to consider properly the collective effect of those factors."216 Because this issue was not raised before the Panel, the European Communities argues, the Panel should not have ruled on this issue, and by doing so, the Panel denied the European Communities a "fair hearing".217 As a result, the European Communities requests us to declare the Panel's legal interpretation to be "of no effect"218 and its factual findings "irrelevant to the determination".219

184. We disagree with the European Communities' contention that Brazil never identified the collective effect of other causal factors as part of its Article 3.5 claim during the Panel proceedings. Before the Panel, the European Communities made the following statement:

Furthermore, Brazil effectively asks that the injuries from other factors be cumulated and contrasted as such with those caused by dumped imports. Article 3.5 indicates that this is not the correct procedure since it requires the authorities to examine the "injuries", rather than the injury, caused by these other factors. The investigating authorities are therefore not obliged to identify the cumulated effect of the individual "other" factors.220 (emphasis added)

We view this statement by the European Communities before the Panel to reflect accurately the precise point argued on appeal by Brazil, namely, that the European Commission was required in its causality analysis to examine the collective effects (what the European Communities referred to as "cumulated effect") of other causal factors vis-�-vis those of dumped imports. We also understand from this statement that the European Communities had opportunity to respond to Brazil's argument on this issue before the Panel and, in fact, did so. In the light of its apparent understanding of and response to Brazil's argument regarding the requirement to examine other causal factors collectively, the European Communities cannot be said to have had insufficient notice of this issue, or to have been denied a "fair hearing" before the Panel. We therefore find no due process concerns raised by our consideration of the merits of this issue and, consequently, we find the European Communities' objection to be without merit.

2. Merits of Brazil's Claim

185. Brazil challenges the European Communities' causality methodology, as applied in this investigation, because it fails to ensure that injury caused by any other factor is not attributed to the dumped imports. According to Brazil, an investigating authority that has separated and distinguished the injurious effects of other causal factors individually from the effects of dumped imports has not fully discharged its obligation under the non-attribution language of Article 3.5.221 The investigating authority must also separate and distinguish the collective effects of the other causal factors from the effects of dumped imports by "evaluat[ing] the collective effect of those factors on the alleged causal link between the dumped imports and the injury."222 Only by separating the collective effects of these other causal factors from the effects of dumped imports can an investigating authority ensure that factors other than dumped imports are not a sufficient cause to sever the causal link between the dumped imports and injury.223

186. The European Communities argues that the causality methodology employed in this investigation is consistent with the obligations under Article 3.5. The European Communities recognizes that its investigating authority was required to separate and distinguish the injurious effects of the various causal factors so as to ensure that injuries caused by other factors were not attributed to dumped imports.224 It points out, however, that the Anti-Dumping Agreement does not compel a particular methodology to be employed when fulfilling this requirement.225 The European Communities therefore argues that Brazil seeks to impose a legal requirement that is not specified in the Anti-Dumping Agreement .226

187. The issue before us, therefore, is whether the non-attribution language of Article 3.5 requires an investigating authority, in conducting its causality analysis, to examine the effects of the other causal factors collectively after having examined them individually.

188. Article 3.5 provides, in relevant part:

The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports. (emphasis added)

This obligates investigating authorities in their causality determinations not to attribute to dumped imports the injurious effects of other causal factors, so as to ensure that dumped imports are, in fact, "causing injury" to the domestic industry. In US - Hot-Rolled Steel we described the non-attribution obligation as follows:

� In order that investigating authorities, applying Article 3.5, are able to ensure that the injurious effects of the other known factors are not "attributed" to dumped imports, they must appropriately assess the injurious effects of those other factors. Logically, such an assessment must involve separating and distinguishing the injurious effects of the other factors from the injurious effects of the dumped imports. If the injurious effects of the dumped imports are not appropriately separated and distinguished from the injurious effects of the other factors, the authorities will be unable to conclude that the injury they ascribe to dumped imports is actually caused by those imports, rather than by the other factors. Thus, in the absence of such separation and distinction of the different injurious effects, the investigating authorities would have no rational basis to conclude that the dumped imports are indeed causing the injury which, under the Anti-Dumping Agreement , justifies the imposition of anti-dumping duties. (emphasis added)

� [I]n order to comply with the non-attribution language in [Article 3.5], investigating authorities must make an appropriate assessment of the injury caused to the domestic industry by the other known factors, and they must separate and distinguish the injurious effects of the dumped imports from the injurious effects of those other factors.227

Non-attribution therefore requires separation and distinguishing of the effects of other causal factors from those of the dumped imports so that injuries caused by the dumped imports and those caused by other factors are not "lumped together" and made "indistinguishable".228

189. We underscored in US - Hot-Rolled Steel, however, that the Anti-Dumping Agreement does not prescribe the methodology by which an investigating authority must avoid attributing the injuries of other causal factors to dumped imports:

We emphasize that the particular methods and approaches by which WTO Members choose to carry out the process of separating and distinguishing the injurious effects of dumped imports from the injurious effects of the other known causal factors are not prescribed by the Anti-Dumping Agreement . What the Agreement requires is simply that the obligations in Article 3.5 be respected when a determination of injury is made.229

Thus, provided that an investigating authority does not attribute the injuries of other causal factors to dumped imports, it is free to choose the methodology it will use in examining the "causal relationship" between dumped imports and injury.

190. Turning to Brazil's arguments in this appeal, we do not read Article 3.5 as requiring, in each and every case, an examination of the collective effects of other causal factors in addition to examining those factors' individual effects. We observed in US - Hot-Rolled Steel that the non-attribution language of the Anti-Dumping Agreement necessarily requires that an investigating authority separate and distinguish the effects of other causal factors from the effects of dumped imports, because only by doing so can an investigating authority "conclude that the injury they ascribe to dumped imports is actually caused by those imports, rather than by the other factors."230

191. In contrast, we do not find that an examination of collective effects is necessarily required by the non-attribution language of the Anti-Dumping Agreement. In particular, we are of the view that Article 3.5 does not compel, in every case, an assessment of the collective effects of other causal factors, because such an assessment is not always necessary to conclude that injuries ascribed to dumped imports are actually caused by those imports and not by other factors.

192. We believe that, depending on the facts at issue, an investigating authority could reasonably conclude, without further inquiry into collective effects, that "the injury � ascribe[d] to dumped imports is actually caused by those imports, rather than by the other factors."231 At the same time, we recognize that there may be cases where, because of the specific factual circumstances therein, the failure to undertake an examination of the collective impact of other causal factors would result in the investigating authority improperly attributing the effects of other causal factors to dumped imports.232 We are therefore of the view that an investigating authority is not required to examine the collective impact of other causal factors, provided that, under the specific factual circumstances of the case, it fulfils its obligation not to attribute to dumped imports the injuries caused by other causal factors.

193. We now turn to the facts of this case to examine whether the European Communities has failed to discharge its non-attribution obligation under Article 3.5 by not conducting an examination of the collective impact of other factors. We begin by noting that the European Commission in this investigation expressly identified the proper attribution of injuries as one of the purposes of its causality analysis, stating that it "examined whether the material injury suffered by the Community industry has been caused by the dumped imports and whether other factors might have caused or contributed to that injury, in order not to attribute possible injury caused by other factors to the dumped imports."233 The European Commission first identified other factors that may be causing injury to the domestic industry.234 In then evaluating each "other factor" individually, the European Commission determined that each factor's contribution to injury was insignificant (or, for one factor, not so much as to break the causal link between dumped imports and injury).235 As a result, the European Commission concluded that dumped imports were causing material injury to the domestic industry, without consideration of whether the collective effects of the other causal factors undermined the causal relationship between dumped imports and injury.236

194. On appeal, Brazil does not contest the European Communities' individual separating and distinguishing of the effects of other factors. It relies instead on its argument that an investigating authority is also required under Article 3.5 to examine other causal factors collectively in every investigation. Aside from this legal argument, which we have rejected, Brazil has not identified how, under the facts of this case, the European Commission's failure to examine the collective impact of the other causal factors resulted in this case in the attribution to dumped imports of injuries resulting from those other factors. If Brazil viewed the analysis of the European Commission in this case to have attributed improperly to dumped imports the injuries caused by other factors, Brazil had the opportunity before the Panel to adduce evidence to this effect. As far as we are aware from the Panel Record, Brazil proffered no such evidence. Nor has the Panel made any factual finding in this regard. We find no basis, therefore, to find that the causality analysis of the European Commission in this investigation was inconsistent with the non-attribution obligation of the European Communities under Article 3.5 of the Anti-Dumping Agreement .

195. We therefore uphold the Panel's finding, in paragraphs 7.369 and 7.370 of the Panel Report, that the causality methodology applied by the European Commission 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.

XI. Findings and Conclusions

196. For the reasons set out in this Report, the Appellate Body:

(a) upholds the Panel's finding, in paragraphs 7.106-7.108 of the Panel Report, that the European Communities did not act inconsistently with its obligations under Article VI:2 of the GATT 1994 or Article 1 of 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"). As the finding on this issue resolves Brazil's claim with respect to the impact of the devaluation of the Real on the European Commission's dumping determination, the Appellate Body does not consider it necessary to make a finding 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";

(b) upholds 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 administrative, selling and general costs ("SG&A") and profits for the construction of normal value;

(c) upholds the Panel's finding, 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;

(d) upholds the Panel's finding, in paragraphs 7.46 and 7.47 of the Panel Report, that Exhibit EC-12 was properly before the Panel;

(e) reverses the Panel's finding, in paragraphs 7.348 and 7.349 of the Panel Report, and finds, instead, that the European Communities acted inconsistently with Articles 6.2 and 6.4 of the Anti-Dumping Agreement , by failing to disclose to the 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) upholds the Panel's finding, in paragraph 7.311 of the Panel Report, that the European Communities did not act inconsistently with its obligations under Article 3.4 of the Anti-Dumping Agreement in respect of the injury factor "growth"; and

(g) upholds the Panel's findings, in paragraphs 7.362 and 7.369-7.370 of the Panel Report, that the European Communities did not act inconsistently with Article 3.5 of the Anti-Dumping Agreement , and, in particular,

(i) upholds the Panel's finding, in paragraph 7.362 of the Panel Report, that the difference in 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) upholds the Panel's finding, in paragraphs 7.369 and 7.370 of the Panel Report, that 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.

197. The Appellate Body therefore recommends that the Dispute Settlement Body request the European Communities to bring its measure, which has been found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with its obligations under the Anti-Dumping Agreement , into conformity with that Agreement.

Signed in the original at Geneva this 7th day of July 2003 by:

_______________________
A. V. Ganesan
Presiding Member

 

___________________
Luiz Olavo Baptista
Member
 

____________________
Giorgio Sacerdoti
Member


To continue with Annex 1

Return to Index


125Panel Report, para. 7.42. Exhibit EC-12 is an unsigned, two-page document, attached to which are two pages of tables and graphs. The document is produced on European Commission letterhead. It is dated 14 April 2000. The Provisional Regulation is dated 28 February 2000, and the Definitive Regulation is dated 11 August 2000.

126Panel Report, para. 7.341.

127Ibid., para. 7.45.

128Ibid., para. 7.43.

129Ibid., para. 7.46. The Panel, however, "deplore[d] the fact that this information, or an accurate non-confidential summary of any confidential information contained therein, was not disclosed to interested parties during the investigation, and that the fact of consideration of the elements discussed in EC-12 is not directly discernible from the published documents." (Ibid., para. 7.45) (original emphasis)

130Ibid., para. 7.47.

131Panel Report, para. 7.342.

132In its Notice of Appeal, Brazil also included a claim that the Panel breached its obligations under Article 11 of the DSU. (Notice of Appeal, p.3, attached as Annex 1 to this Report) However, Brazil confirmed at the oral hearing that it is pursuing only its claim under Article 17.6(i) of the Anti-Dumping Agreement . Brazil also raised Article 17.5(ii) of the Anti-Dumping Agreement , arguing that, to the extent that the Panel failed to examine properly the contemporaneous character of Exhibit EC-12, the Panel did not examine the matter based upon "the facts made available in conformity with appropriate domestic procedures to the authorities of the importing Member". Brazil's allegation under Article 17.5(ii) is thus part of its claim under Article 17.6(i) that the Panel erred in finding that Exhibit EC-12 formed part of the record of the underlying anti-dumping investigation. (Brazil's appellant's submission, paras. 135 and 153) Brazil made no separate arguments in its pleadings regarding Article 17.5(ii).

133Brazil's appellant's submission, para. 143.

134Brazil's statement at the oral hearing.

135Ibid.

136European Communities' response to questioning at the oral hearing.

137European Communities' appellee's submission, para. 124.

138Brazil is not challenging on appeal the contents of Exhibit EC-12. (Brazil's response to questioning at the oral hearing)

139Appellate Body Report, EC - Bed Linen (Article 21.5 - India), para. 169, quoting Appellate Body Report, US - Wheat Gluten, para. 151.

140Ibid., para. 170.

141Brazil's statement at the oral hearing.

142Panel Report, para. 7.46.

143At the oral hearing, Brazil suggested that the Panel had made two separate inquiries: one related to the "validity" of Exhibit EC-12, the other directed at whether the document formed part of the record of the anti-dumping investigation. According to Brazil, although the European Communities' responses about the methodology and sources of information that underlie Exhibit EC-12 could have been considered evidence of the document's validity, they do not support the European Communities' assertion that the document was produced during the anti-dumping investigation. (Brazil's response to questioning at the oral hearing) We do not agree with Brazil's contention that the Panel made separate inquiries as to the "validity" of Exhibit EC-12, on the one hand, and when it was produced, on the other. The Panel, in our view, conducted an overall inquiry into the genuineness of Exhibit EC-12, including whether it formed part of the record of the anti-dumping investigation, and arrived at an overall finding on the basis of the results of that inquiry.

144Panel Report, para. 7.307.

145Appellate Body Report, EC - Bed Linen (Article 21.5 - India), para. 177, quoting Appellate Body Report, Korea - Alcoholic Beverages, para. 164. (footnote omitted)

146Panel Report, para. 7.45, citing Appellate Body Report, Thailand - H-Beams, paras. 107, 111, and 118. (original emphasis)

147Brazil's response to questioning at the oral hearing.

148See infra, paras. 157-159.

149Panel Report, para. 7.42. We recall that Brazil is not challenging on appeal the contents of Exhibit EC-12. See supra, footnote 138.

150Appellate Body Report, US - Hot-Rolled Steel, paras. 192-193.

151Panel Report, para. 7.348.

152Ibid., para. 7.349. The Panel, however, found a violation of Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement because "it is not directly discernible from the published Provisional or Definitive Determination that the European Communities addressed or explained the lack of significance of certain listed Article 3.4 factors." (Ibid., para. 7.435) This finding has not been appealed.

153Brazil's appellant's submission, para. 176. (underlining omitted)

154Ibid., para. 177.

155European Communities' appellee's submission, para. 153. However, the European Communities has not appealed this interpretation.

156Ibid., para. 146.

157European Communities' response to questioning at the oral hearing.

158European Communities' appellee's submission, para. 149, quoting Panel Report, Guatemala - Cement II, para. 8.238.

159Appellate Body Report, Thailand - H-Beams, para. 109.

160Appellate Body Report, EC - Bed Linen (Article 21.5 - India), para. 136. (emphasis added)

161European Communities' response to questioning at the oral hearing.

162We note also that the Panel refers to the "information" in Exhibit EC-12. See, for example, Panel Report, paras. 7.45 and 7.349.

163European Communities' response to questioning at the oral hearing.

164Panel Report, para. 7.45. (emphasis added)

165In paragraph 7.348 of the Panel Report, the Panel states that the "European Communities also gathered and analysed data with respect to the injury factors referred to exclusively in Exhibit EC-12, but essentially concluded that this data was 'in line' with other data (that was disclosed)". The use of the adjective "other" to describe the data that were disclosed indicates, to us, that the Panel did not mean to imply that the disclosed data were the same as the data that are contained in Exhibit EC-12.

166European Communities' response to questioning at the oral hearing.

167Panel Report, para. 7.348.

168Appellate Body Report, US - Hot-Rolled Steel, para. 194. (emphasis added)

169Panel Report, para. 7.348.

170Ibid.

171These factors are productivity, return on investments, cash flow, wages, ability to raise capital, and magnitude of the margin of dumping.

172European Communities' response to questioning at the oral hearing.

173Panel Report, para. 7.309.

174Ibid., para. 7.310.

175Ibid., para. 7.299.

176Ibid., para. 7.310.

177Ibid.

178Ibid., paras. 7.310-7.311. We understand that the Panel used the term "address" when referring to the requirements to "examine" and "evaluate" in Article 3.4 of the Anti-Dumping Agreement .

179Brazil's response to questioning at the oral hearing.

180Brazil's appellant's submission, para. 162.

181Ibid., para. 165.

182European Communities' appellee's submission, para. 132, referring to Appellate Body Report, Thailand - H-Beams, para. 117.

183Ibid., para. 138.

184Appellate Body Report, Thailand - H-Beams, para. 125; Appellate Body Report, US - Hot-Rolled Steel, para. 194.

185Appellate Body Report, Thailand - H-Beams, para. 111.

186Ibid., para. 117.

187Brazil's appellant's submission, para. 165.

188European Communities' appellee's submission, para. 136.

189Brazil's response to questioning at the oral hearing.

190Panel Report, para. 7.310.

191Panel Report, para. 7.310.

192Brazil's statement at the oral hearing.

193Panel Report, para. 7.337.

194Provisional Regulation, recital 160.

195The "known factor[ ] other than the dumped imports" at issue has been labelled in various ways throughout these proceedings, including "margins analysis" (Panel Report, para. 7.361; Brazil's appellant's submission, paras. 181, 192, and 198; European Communities' appellee's submission, paras. 156, 163, 171, and 172), "cost efficiency" (Panel Report, para. 7.361; Brazil's appellant's submission, paras. 184 and 191), and "comparative advantage" (Ibid., para. 7.361; Brazil's appellant's submission, para. 184; Japan's third participant's submission, paras. 12 and 15). At the oral hearing, Brazil confirmed that when it referred to the causal factor that the European Commission had failed to examine, Brazil was referring to "the cost of production difference [between the European Communities producers and the Brazilian exporter], especially the high cost of production of the European industry". (Brazil's response to questioning at the oral hearing)

196Panel Report, para. 7.361.

197Ibid. Brazil also identified before the Panel the difference in market perception as a "known factor[ ] other than the dumped imports" that required examination by the European Commission during the investigation. (Ibid., paras. 7.350 and 7.357) Whether the European Commission should have examined the difference in market perception pursuant to Article 3.5 is not an issue appealed by Brazil.

198Panel Report, para. 7.362.

199Ibid., paras. 7.350 and 7.361.

200Ibid., para. 7.362.

201Ibid. (emphasis added)

202Ibid.

203Brazil's appellant's submission, para. 195.

204Brazil's response to questioning at the oral hearing.

205Brazil's appellant's submission, para. 191; Brazil's response to questioning at the oral hearing. See also, supra, para. 33.

206European Communities' appellee's submission, para. 166.

207European Communities' response to questioning at the oral hearing.

208European Communities' appellee's submission, paras. 171 and 174-176.

209Panel Report, para. 7.362.

210Before the Panel, Brazil challenged the European Commission's refusal to adjust the Brazilian exporter's prices when evaluating the price effects of dumped imports. (Ibid., para. 7.286) While addressing this challenge, the Panel evaluated the factual conclusions of the European Commission with respect to the differences in cost of production and market perception between black heart (imported from Brazil) and white heart (produced by European Communities producers) variants of the product under investigation. (Ibid., paras. 7.294-7.295) The Panel rejected Brazil's challenge to the European Commission's factual findings, concluding as follows:

Thus, the European Communities gathered and evaluated facts in respect of the alleged differences in cost of production and market perception between black and white heart variants of the products concerned, and came to the conclusion that differences in cost of production were not significant and that there was no significant difference in consumer perception. A reasonable and objective authority could have reached this determination on the basis of the record of this investigation. It is not our task to substitute our judgement for that of the investigating authority.

(Panel Report, para. 7.296)

211Panel Report, para. 7.362.

212The Panel found:

In light of these findings, these factors, although "known" to them in the context of the dumping and injury analysis, would not be a "known" causal factor, that is, a factor that the European Communities was aware would possibly be causing injury to the domestic industry.

(Ibid.)

213It is of no consequence for our analysis in this case that the alleged difference in the cost of production between the Brazilian exporter and the domestic industry was found to be "minimal" rather than some other level, a factual issue decided by the Panel. See supra footnote 210. What is dispositive of this issue, in our view, is that the European Commission effectively rejected the claim of the Brazilian exporter (properly, in the view of the Panel) that there was a difference in the cost of production.

214Panel Report, paras. 7.367-7.368.

215Panel Report, para. 7.369.

216European Communities' appellee's submission, para. 181. (emphasis added)

217Ibid., para. 182.

218Ibid.

219Ibid., para. 187.

220European Communities' second oral statement before the Panel, para. 146.

221Brazil's appellant's submission, para. 214.

222Brazil's appellant's submission, para. 211. (emphasis added)

223Brazil's response to questioning at the oral hearing.

224European Communities' appellee's submission, para. 193.

225Ibid., paras. 195-196.

226Ibid., para. 199.

227Appellate Body Report, US - Hot Rolled Steel, paras. 223 and 226.

228Ibid., para. 228.

229Appellate Body Report, US - Hot Rolled Steel, para. 224. We made a similar observation when discussing the non-attribution requirement under the Agreement on Safeguards:

We emphasize that the method and approach WTO Members choose to carry out the process of separating the effects of increased imports and the effects of the other causal factors is not specified by the Agreement on Safeguards.

(Appellate Body Report, US - Lamb, para. 181)

230Appellate Body Report, US - Hot-Rolled Steel, para. 223.

231Ibid.

232We therefore agree with the Panel's statement that:

We are certainly aware of the theoretical possibility that a causation methodology which separates and distinguishes between individual injury factors may not accommodate the possibility that multiple "insignificant factors" might collectively constitute a significant cause of injury such as to sever the link between dumped imports and injury. (original emphasis)

(Panel Report, para. 7.369)

233Provisional Regulation, recital 162.

234Panel Report, para. 7.367.

235Ibid., paras. 7.367-7.368.

236The European Communities disagrees with the description by the Panel of the European Commission's evaluation of the factors as having been undertaken solely on an individual basis. (European Communities' appellee's submission, paras. 188-191) The European Communities points to the following paragraph as evidence of its consideration of the collective impact of other causal factors:

It is therefore provisionally concluded that the dumped imports originating in Brazil, the Czech Republic, Japan, China, Korea and Thailand have caused material injury to the Community industry. Any other factors that may have contributed to the injurious situation of the Community industry, in particular imports from third countries, are such that they cannot be considered to break the causal link between the dumping and the material injury found in light of the strong increase in the imports [c]oncerned made at particularly low prices. (emphasis added)

(Provisional Regulation, recital 177) The European Communities, however, has not appealed the Panel's description of the European Commission's causality methodology as applied in this case.