What's New?
 - Sitemap - Calendar
Trade Agreements - FTAA Process - Trade Issues 

espa�ol - fran�ais - portugu�s
Search

WORLD TRADE
ORGANIZATION

WT/DS141/AB/RW
8 April 2003

(03-1917)

  Original: English

EUROPEAN COMMUNITIES � ANTI-DUMPING DUTIES ON IMPORTS
OF COTTON-TYPE BED LINEN FROM INDIA

RECOURSE TO ARTICLE 21.5 OF THE DSU BY INDIA

AB-2003-1

Report of the Appellate Body


  

I. Introduction

II. Arguments of the Participants and the Third Participants

  1. Claims of Error by India � Appellant 

  1. Article 21.5 of the DSU

  2. Paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement 

  3. Article 17.6 of the  Anti-Dumping Agreement  and Article 11 of the DSU 

  4. Article 3.5 of the  Anti-Dumping Agreement 

  1. Arguments of the European Communities � Appellee 

  1. Article 21.5 of the DSU 

  2. Paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement 

  3. Article 17.6 of the  Anti-Dumping Agreement  and Article 11 of the DSU

  4. Article 3.5 of the  Anti-Dumping Agreement 

  1. Arguments of the Third Participants

  1. Japan

  2. United States

III. Issues Raised in this Appeal

IV. Article 21.5 of the DSU

  1. Introduction
     

  2. Analysis

V. Paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement

  1. Introduction
     

  2. Analysis 

VI. Article 17.6 of the  Anti-Dumping Agreement  and Article 11 of the DSU

  1. Introduction
     

  2. Analysis

VII. Findings and Conclusions 

ANNEX 1: Notification of an Appeal by India under paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
 


TABLE OF CASES CITED IN THIS REPORT

Short Title

Full Case Title and Citation

Australia � Automotive Leather II (Article 21.5 � US)   Panel Report, Australia � Subsidies Provided to Producers and Exporters of Automotive Leather � Recourse to Article 21.5 of the DSU by the United States, WT/DS126/RW and Corr.1, adopted 11 February 2000, DSR 2000:III, 1189
Australia � Salmon   Appellate Body Report, Australia � Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327
Australia � Salmon
(Article 21.5 � Canada)
 
Panel Report, Australia � Measures Affecting Importation of Salmon � Recourse to Article 21.5 of the DSU by Canada, WT/DS18/RW, adopted 20 March 2000, DSR 2000:IV, 2035
Canada � Aircraft
(Article 21.5 � Brazil)
 
Appellate Body Report, Canada � Measures Affecting the Export of Civilian Aircraft � Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000, DSR 2000:IX, 4299
Chile � Price Band System   Appellate Body Report, Chile � Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002
EC � Bananas III
(Article 21.5 � Ecuador) 
Panel Report, European Communities � Regime for the Importation, Sale and Distribution of Bananas � Recourse to Article 21.5 of the DSU by Ecuador, WT/DS27/RW/ECU, 12 April 1999, DSR 1999:II, 803
EC � Bed Linen   Appellate Body Report, European Communities � Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R, adopted 12 March 2001

Panel Report, European Communities � Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12 March 2001, as modified by the Appellate Body Report, WT/DS141/AB/R

EC � Bed Linen
(Article 21.5 � India)
 
Panel Report, European Communities � Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India � Recourse to Article 21.5 of the DSU by India, WT/DS141/RW, 29 November 2002
EC � Hormones   Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135
EC � Sardines   Appellate Body Report, European Communities � Trade Description of Sardines, WT/DS231/AB/R, adopted 23 October 2002
Guatemala � Cement I   Appellate Body Report, Guatemala � Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, 3767
Japan � Alcoholic Beverages II   Appellate Body Report, Japan � Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, 97
Korea � Alcoholic Beverages   Appellate Body Report, Korea � Taxes on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, 3
Mexico � Corn Syrup
(Article 21.5 � US)
 
Appellate Body Report, Mexico � Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States � Recourse to Article 21.5 of the DSU by the United States, WT/DS132/AB/RW, adopted 21 November 2001
Thailand � H-Beams   Appellate Body Report, Thailand � Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001
US � Carbon Steel   Appellate Body Report, United States � Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002
US � Cotton Yarn   Appellate Body Report, United States � Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan, WT/DS192/AB/R, adopted 5 November 2001
US � FSC   Appellate Body Report, United States � Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 1619
US � FSC
(Article 21.5 � EC)
 
Appellate Body Report, United States � Tax Treatment for "Foreign Sales Corporations" � Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted 29 January 2002
US � Hot-Rolled Steel   Appellate Body Report, United States � Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001
US � Lamb   Appellate Body Report, United States � Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001
US � Lead and Bismuth II   Appellate Body Report, United States � Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, 2601
US � Offset Act
(Byrd Amendment )
Appellate Body Report, United States � Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003
US � Shrimp
(Article 21.5 � Malaysia)
 
Appellate Body Report, United States � Import Prohibition of Certain Shrimp and Shrimp Products � Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, adopted 21 November 2001
US � Wheat Gluten   Appellate Body Report, United States � Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001
US � Wool Shirts and Blouses   Appellate Body Report, United States � Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R and Corr.1, adopted 23 May 1997, DSR 1997:I, 323

World Trade Organization
Appellate Body

  

European Communities � Anti-Dumping Duties
on Imports of Cotton-Type Bed Linen from India

Recourse to Article 21.5 of the DSU by India

India, Appellant
European Communities, Appellee

Japan, Third Participant
Korea, Third Participant
United States, Third Participant

AB-2003-1

Present:

Abi-Saab, Presiding Member
Bacchus, Member
Taniguchi, Member

I. Introduction

1. India appeals certain issues of law and legal interpretations in the Panel Report,  European Communities � Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India � Recourse to Article 21.5 of the DSU by India  (the "Panel Report").1  The Panel was established to consider a complaint by India with respect to the consistency with the  Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994  (the "Anti-Dumping Agreement ") and the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU") of the measures taken by the European Communities to comply with the recommendations and rulings of the Dispute Settlement Body (the "DSB") in  EC � Bed Linen.2 

2. The original panel found that Council Regulation (EC) No 2398/97 of 28 November 19973, imposing definitive anti-dumping duties on imports of cotton-type bed linen from India, is inconsistent with Articles 2.4.2, 3.4, and 15 of the  Anti-Dumping Agreement.4  India and the European Communities appealed certain issues of law and legal interpretations developed by the original panel. The Appellate Body upheld the original panel's finding that "the practice of 'zeroing' when establishing 'the existence of margins of dumping', as applied by the European Communities in the anti-dumping investigation at issue" is inconsistent with Article 2.4.2 of the  Anti-Dumping Agreement.5  In addition, the Appellate Body found that "the European Communities, in calculating amounts for administrative, selling and general costs and profits in the anti-dumping investigation at issue", had acted inconsistently with its obligations under Article 2.2.2(ii) of the  Anti-Dumping Agreement  and, therefore, reversed the findings of the original panel to the contrary in paragraphs 6.75 and 6.87 of the original panel report.6 

3. On 12 March 2001, the DSB adopted the Appellate Body Report and the original panel report, as modified by the Appellate Body Report.7  The parties to the dispute mutually agreed that the European Communities should have until 14 August 2001 to implement the recommendations and rulings of the DSB.8  On 7 August 2001, the Council of the European Union adopted Council Regulation (EC) No 1644/2001, amending the original definitive anti‑dumping measure on cotton-type bed linen from India.9  Subsequently, on 28 January 2002 and 22 April 2002, the Council of the European Union adopted Council Regulations (EC) No 160/2002 and No 696/2002, respectively.10  EC Regulation 160/2002 terminated the anti‑dumping proceedings against cotton-type bed linen imports from Pakistan and established that the anti-dumping measures against Egypt would expire on 28 February 2002, if a review were not requested by that date. This review was not requested, and the anti-dumping measures against Egypt expired. EC Regulation 696/2002 established that a reassessment of the injury and causal link based on imports from India alone had revealed that there was a causal link between the dumped imports from India and material injury to the European Communities industry. Additional factual aspects of this dispute are set out in greater detail in the Panel Report.11 

4. India was of the view that the European Communities had failed to comply with the recommendations and rulings of the DSB, and that EC Regulations 1644/2001, 160/2002, and 696/2002 were inconsistent with several provisions of the  Anti-Dumping Agreement  and Article 21.2 of the DSU. India, therefore, requested that the matter be referred to a panel pursuant to Article 21.5 of the DSU.12  On 22 May 2002, in accordance with Article 21.5 of the DSU, the DSB referred the matter to the original panel. A member of the original panel was unable to participate in the proceedings and the parties therefore agreed on a new panelist on 25 June 2002.13  The Panel Report was circulated to the Members of the World Trade Organization (the "WTO") on 29 November 2002.

5. Before making findings on India's claims, the Panel made the following rulings on four preliminary matters raised by the European Communities. The Panel:

(i) ruled that EC Regulations 160/2002 and 696/2002 are not "measures taken to comply" with the recommendation of the DSB, within the meaning of Article 21.5 of the DSU.14  Thus, the Panel limited its examination to EC Regulation 1644/2001;

(ii) declined to assess whether the measures "taken to comply" were adopted within the "reasonable period of time" agreed by the parties under Article 21.3 of the DSU15;

(iii) found that India's "claim 6" was not properly before the Panel, to the extent that it concerned the consistency of the European Communities' measure with the obligation under Article 3.5 of the  Anti-Dumping Agreement  to ensure that injuries caused by "other factors" not be attributed to the dumped imports, because it was disposed of by the original panel and not appealed.16  The Panel, however, rejected the European Communities' request to exclude India's "claim 5" because the Panel found that India could not have presented that claim in the original dispute17; and

(iv) rejected the European Communities' request that the Panel exclude India's claims relating to Article 4.1(i) of the  Anti-Dumping Agreement  and Article 21.3 of the DSU, given that India itself denied making such claims.18 

6. The Panel then examined India's claims and found that:

(i) India had failed to demonstrate that the European Communities' calculation of a weighted average for administrative, selling, and general costs on the basis of sales value violates Article 2.2.2(ii) of the  Anti-Dumping Agreement19;

(ii) even assuming EC Regulations 160/2002 and 696/2002 properly formed part of the Panel's evaluation, the European Communities had not violated paragraphs 1 and 3 of Article 3 or Article  5.7 of the  Anti-Dumping Agreement  in conducting a cumulative assessment of the effects of dumped imports from India and Pakistan (and Egypt), in subsequently re‑examining whether imports from Pakistan were being dumped, and subsequently in reassessing the effects of the dumped imports from India alone20;

(iii) the European Communities had not acted inconsistently with paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement  in considering "dumped imports"21;

(iv) the analysis and conclusions of the European Communities with respect to injury
are not inconsistent with paragraphs 1 and 4 of Article 3 of the  Anti-Dumping Agreement22;

(v) the European Communities' finding of a causal link between the dumped imports and the injury is not inconsistent with Article 3.5 of the  Anti-Dumping Agreement23;

(vi) the European Communities had not acted inconsistently with Article 15 of the Anti‑Dumping Agreement  by failing to explore possibilities of constructive remedies before applying anti-dumping duties24; and

(vii) the European Communities had not violated Article 21.2 of the DSU.25 

7. Having excluded, as a preliminary matter, India's claim that the European Communities had failed to ensure that injuries caused by "other factors" was not attributed to the dumped imports pursuant to Article 3.5 of the Anti-Dumping Agreement,  the Panel nevertheless made an alternative finding on this issue and determined that the European Communities had not acted inconsistently with Article 3.5 in this regard.26 

8. For these reasons, the Panel concluded that EC Regulation 1644/2001 is not inconsistent with the Anti-Dumping Agreement or the DSU.27 Therefore, the Panel found that the European Communities had implemented the recommendation of the DSB to bring its measure into conformity with its obligations under the Anti-Dumping Agreement.28 In the light of these conclusions, the Panel did not make any recommendations under Article 19.1 of the DSU.29 

9. On 8 January 2003, India notified the DSB of its intention to appeal certain issues of law covered in the Panel Report and legal interpretations developed by the Panel, pursuant to paragraph 4 of Article 16 of the DSU, and filed a Notice of Appeal pursuant to Rule 20 of the  Working Procedures for Appellate Review (the "Working Procedures").30  On 20 January 2003, India filed an appellant's submission.31  On 3 February 2003, the European Communities filed an appellee's submission.32  On the same day, Japan and the United States each filed a third participant's submission.33  Korea notified its intention to appear at the oral hearing as a third participant.34

10. The oral hearing in this appeal was held on 20 February 2003. The participants and third participants presented oral arguments and responded to questions put to them by the Members of the Division hearing the appeal.

11. We recall that the Panel found, as a preliminary matter, that only EC Regulation 1644/2001 was a measure "taken to comply" within the meaning of Article 21.5 of the DSU, and thus the Panel excluded EC Regulations 160/2002 and 696/2002 from the scope of its examination.35  India has not appealed this finding. During the oral hearing, India and the European Communities agreed, moreover, that the measure at issue in this appeal is EC Regulation 1644/2001.36  Therefore, we will confine our analysis in this appeal to EC Regulation 1644/2001.

II. Arguments of the Participants and the Third Participants

A. Claims of Error by India � Appellant

1. Article 21.5 of the DSU

12. India asserts that the Panel erred in finding, as a preliminary matter, that India's claim, concerning the consistency of EC Regulation 1644/2001 with the obligation under Article 3.5 of the Anti‑Dumping Agreement  to ensure that injuries caused by "other factors" are not attributed to the dumped imports, was not properly before the Panel. India notes that the European Communities based its request for a preliminary ruling on two arguments: (i) that India should not be allowed to raise claims before the Article 21.5 Panel that it could have raised before the original panel; and (ii) that India was acting in bad faith. India submits that, although the Panel found that India's claim was  raised during the original proceedings, and also that India  was  pursuing the matter in  good faith,  the Panel nevertheless granted the European Communities' request for a preliminary ruling.

13. According to India, instead of focusing on the facts of the case, the Panel based some of its conclusions on overarching considerations of the appropriate functioning of Article 21.5 panels and the dispute settlement system as a whole. For example, the Panel determined that defending Members in Article 21.5 proceedings would  always  be prejudiced by a finding in Article 21.5 proceedings of a violation made on the basis of a claim that could have been pursued in the original proceedings, but was not, because the defending member would not have a reasonable period of time for implementation. India submits that it had argued before the Panel that the European Communities would not, in this particular case, suffer any prejudice from lack of a reasonable period for implementation, since India's claim under Article 3.5 is not the only claim in these proceedings. However, according to India, the Panel "declined to address [India's] argument".37 

14. India contends that the Panel failed to take into account the Appellate Body Report in US � FSC (Article 21.5 � EC),  where the European Communities raised a claim in the Article 21.5 proceedings that it had not raised in the original proceedings. The Article 21.5 panel and the Appellate Body, nevertheless, made findings with respect to that claim. In India's view, EC Regulation 1644/2001, like the measure before the Appellate Body in  US � FSC (Article 21.5 � EC),  is a new and different measure from the measure subject to the original dispute.38 

15. India argues that the Panel erred in considering the situation in  US � Shrimp (Article 21.5 � Malaysia)  to be analogous to the situation in the present case. India asserts that in  US � Shrimp (Article 21.5 � Malaysia),  the complainant sought to challenge exactly the same measure that had been found to be WTO-consistent in the original proceedings, whereas in the present case, the measure challenged by India is a  new  measure that is separate and distinct from the original measure. According to India, in  US � Shrimp (Article 21.5 � Malaysia),  the "measure" consisted of several sub-measures, and the Appellate Body had found, in the original dispute, that one of these sub-measures, Section 609, was consistent with the  General Agreement on Tariffs and Trade 1994 (the "GATT 1994").39  Therefore, in those Article 21.5 proceedings, the Appellate Body declined to re-examine Section 609 because it had already found that it was consistent with the GATT 1994. In India's view, the issue in this appeal is different from that in  US � Shrimp (Article 21.5 � Malaysia)  because the "measure" cannot be divided into sub-measures. According to India, all the aspects of the original measure have been changed�there has been a redetermination of dumping and injury, as well as a re‑examination of causation. India notes that the fact that the European Communities analyzed causation anew, makes that analysis part of the new implementation measure. In India's view, the European Communities should have similarly re-ensured that the injury caused by other factors was not attributed to the dumped imports.40 

16. India also submits that the Panel should have followed the Appellate Body's conclusion in Canada � Aircraft (Article 21.5 � Brazil),  that Article 21.5 panels are not confined to examining the "measures taken to comply" from the perspective of the claims, arguments, and factual circumstances related to the measure that was the subject of the original proceedings.41 

2. Paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement

17. India appeals the Panel's finding that the European Communities did not act inconsistently with paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement  when determining the volume of "dumped imports" for purposes of making a determination of injury. According to India, the European Communities mistakenly concluded that 86 percent of the total volume of imports of bed linen from India were dumped. India argues that the proportion of imports attributable to  sampled producers found to be dumping (47 percent) constitutes the only  positive evidence  that could have been used to  objectively examine  and determine the volume of  total  imports from India that are dumped. India contends that if the basis for determining dumped imports is the calculation of dumping margins for sampled producers, and that calculation reveals no dumping for producers representing 53 percent of the imports attributable to sampled producers, one cannot objectively reach the conclusion that 86 percent of the total volume of imports are positively dumped.

18. Second, India argues that the Panel erred in finding that Article 3 does not provide any guidance on how to determine the volume of  dumped imports  for purposes of making a determination of injury. In India's view, Article 3.1 provides that an injury determination, including a determination of the volume of dumped imports,  shall  be based on  positive evidence  and involve an objective examination. Thus, according to India, Article 3.1 casts an  overarching obligation  on domestic authorities to make an objective examination of the volume of dumped imports based on positive evidence. India refers to the Appellate Body Report in  Thailand � H-Beams  as supporting this interpretation.42 

19. India asserts that the Panel mistakenly found that the European Communities had resorted to the  second  option provided for in the second sentence of Article 6.10 of the  Anti-Dumping Agreement,  namely that the European Communities individually examined producers accounting for the largest percentage of the volume of exports which could reasonably be investigated. This finding, according to India, is at odds with the conclusion reached by the original panel in this dispute, which correctly established that the European Communities had conducted its analysis of dumping based on a statistically valid sample  of Indian producers and exporters within the meaning of the  first  option found in the second sentence of Article 6.10. Thus, India asserts that the Panel ignored its own factual determinations in the original proceedings. India notes that the evidence it presented to the Panel demonstrated that the European Communities sought to select a statistically valid sample. For example, India points to the Notice of initiation of the investigation which provides for the use of sampling  techniques in this investigation. India refers also to an exchange of letters between the association of Indian exporters and the European Commission which, in India's view, demonstrates that the investigating authorities sought to select a sample representing Indian producers and exporters.43  India concludes that the failure of the European Communities to objectively examine the positive evidence resulting from the sample of investigated Indian producers or exporters runs directly counter to the overarching obligation under Article 3.1 to base the determination of the volume of dumped imports on positive evidence and an objective examination.

20. Third, India argues that the Panel confused two distinct stages of the investigation�the stage of determining dumping and the stage of duty collection. India notes that, instead of seeking guidance in the text of Article 3, the Panel looked to Article 9.4 of the  Anti-Dumping Agreement,  which concerns duty collection. India contends that it cannot be inferred that the  Anti-Dumping Agreement provides that all imports from producers or exporters that have not been individually examined may be considered dumped for purposes of analyzing injury, from the fact that Article 9.4 permits the collection of anti-dumping duties from non-examined producers  after  having completed a determination of  dumpinginjury,  and  causality. In other words, India asserts that the Panel was wrong in concluding, on the basis of the premise that a duty may be collected from non-examined producers, that all non-examined producers have dumped and caused injury. According to India, the Panel's reasoning disregards the fact that the dumping and injury findings logically  precede  the collection of duties. In addition, India contends that Article 9.4 expressly restricts the scope of its application to the imposition of anti-dumping duties.  Therefore, according to India, it would be contrary to previous Appellate Body rulings regarding effective treaty interpretation to read into Articles 2, 3, and 6 of the  Anti-Dumping Agreement  the method set forth in Article 9.4 for the calculation of anti-dumping duties. Moreover, India argues that extending the application of the method set forth in Article 9.4 to other provisions of the  Anti-Dumping Agreement  would upset the delicate balance of rights and obligations agreed to by the Uruguay Round negotiators. Accordingly, India asserts that this finding of the Panel is contrary not only to the  Anti-Dumping Agreement,  but also to Articles 3.2 and 19.2 of the DSU, which provide that findings and recommendations cannot add to or diminish the rights and obligations provided in the covered agreements.

21. Fourth, India argues that the Panel erred in concluding that India's proposed interpretation would lead to bizarre and unacceptable results for which there are no remedial mechanisms. The Panel determined that these results would be a consequence of the fact that only 47 percent of the total imports from India would be considered dumped for purposes of making a determination of injury, whereas pursuant to Article 9.4, anti-dumping duties would be applied to  all  imports from exporters or producers not individually examined. India notes that the Panel recognized the possibility of refunds and reviews as mechanisms for remedying the situation where a duty would be collected on imports from an unexamined producer that might not have been dumped. In India's view, the reference to Article 11.2 (review possibilities) and to Article 9.3 (refund possibilities) supports India's interpretation rather than that of the Panel.

22. Finally, India asserts that, if the sample of European Communities producers was accepted in this investigation to fully represent the European Communities producers, the sample of exporting producers likewise should have been considered to fully represent the Indian exporters.

3. Article 17.6 of the  Anti-Dumping Agreement  and Article 11 of the DSU

23. India submits that the Panel did not properly discharge its duties under Article 17.6 of the Anti-Dumping Agreement  and Article 11 of the DSU in concluding that the European Communities did have information before it on all relevant economic factors listed in Article 3.4 of the Anti‑Dumping Agreement  when making its injury determination.

24. India contends that the Panel misapplied the rules on the allocation of the burden of proof and, therefore, acted inconsistently with Article 11 of the DSU. India asserts that it had made a prima facie  case before the Panel, showing that information on a number of economic factors had never been collected by the European Communities' investigating authorities. India argues that, as a consequence, the Panel should have required the European Communities to present evidence to rebut India's  prima facie  case. India submits that, by not shifting the burden of proof to the European Communities, the Panel failed to make an objective assessment of the facts as required by Article 11 of the DSU.

25. India asserts, furthermore, that if the Appellate Body were to conclude that the Panel correctly applied the rules on the allocation of the burden of proof, the Appellate Body should then find that the Panel distorted the evidence by accepting, as constituting evidence of a fact, a mere assertion by the European Communities that data was collected. Accordingly, India maintains that the Panel acted inconsistently with Article 11 of the DSU, which requires panels to make an objective assessment of the matter, including an objective assessment of the facts of the case.

26. Referring to the Appellate Body Report in  US � Hot-Rolled Steel,  India argues that Article 17.6(i) of the Anti-Dumping Agreement  requires panels to actively review or examine the facts.44  India submits that despite the existence of this obligation, the Panel did not actively review the assertions of the European Communities that it had collected data on all relevant economic factors listed in Article 3.4, nor did the Panel use its investigative power under Article 13 of the DSU to inquire about the missing information on stocks and capacity utilization. In India's view, the fact-specific nature of this dispute  required  the Panel to use its right to seek information under Article 13 of the DSU in order to discharge its obligation, under Article 17.6(i), to actively review or examine the facts. India argues, furthermore, that Article 17.6(i) requires the Panel to do more than to merely state that it was clear to it that the European Communities had the data in its record. In India's view, by failing to actively review the facts, the Panel acted contrary to the obligation contained in Article 17.6(i) of the Anti-Dumping Agreement.

4. Article 3.5 of the  Anti-Dumping Agreement

27. India submits that, if the Appellate Body were to conclude that the Panel erred in dismissing, as not being properly before it, India's claim challenging EC Regulation 1644/2001 as inconsistent with the obligation in Article 3.5 of the  Anti-Dumping Agreement  to ensure that injuries caused by "other factors" are not attributed to the dumped imports, then the Appellate Body should examine the Panel's finding, in the alternative, that the European Communities did not act inconsistently with that provision. First, India challenges the Panel's finding that India could not rely upon recital (50) of EC Regulation 1644/2001 as evidence of the fact that the European Communities was aware of other factors simultaneously causing injury to the European Communities industry. In India's view, the Panel was wrong to dismiss India's argument on the grounds that recital (50) of the redetermination is included in the section entitled "Conclusion on injury", and not in the section on "Causation". India contends that a factual finding does not cease to be a factual finding solely because it is contained in the preamble, conclusion, or other section of the same document.

28. Second, India contends that the conclusions of the Panel are based on a misrepresentation of the facts and an incorrect causation analysis. India argues that the Panel reviewed the findings of the European Communities on the basis of  ex post  justifications, instead of analyzing whether the European Communities (i) had properly examined the possible injurious effects of inflation and of the increase in the cost of raw cotton and (ii) had separated and distinguished the injury caused by those factors. Thus, India argues that the Panel erred in its analysis by relying upon explanations which are not discernible from EC Regulation 1644/2001 and the record of the investigation.

29. In addition, India argues that the Panel's misrepresentation of the facts of the case is a consequence of two other errors. First, India asserts that the Panel erred in reading into Article 3.5 an arbitrary distinction between "independent" and "dependent" factors causing injury, and in mistakenly assigning the authorship of this distinction to India. India submits that it never made such a distinction. In India's view, the effect of the Panel's distinction between independent and dependent causes of injury is to render redundant the requirement to demonstrate a causal relationship between the dumped imports and the injury to the domestic industry. India explains that, if the Panel's theory were followed, investigating authorities would be able to argue (i) that the injurious effects of every other known factor could have been remedied through an increase in price and (ii) that this increase was not possible due to price suppression. As a result, India argues, the injury in its entirety would automatically be attributed to the dumped imports. According to India, this approach cannot be considered to be consistent with the aim of Article 3.5, which is to establish that injury to the domestic industry is indeed caused by the dumped imports.

30. Second, in India's view, the Panel also erred by disregarding the guidance provided by the Appellate Body in  US � Hot-Rolled Steel  on the interpretation of Article 3.5.45  India submits that, in US � Hot-Rolled Steel,  the Appellate Body made it clear that if an investigating authority has come to the conclusion that a known factor, other than the dumped imports, is causing injury to the domestic industry, that authority must ensure that the injurious effects of this other factor are not attributed to the dumped imports. India argues that, although the European Communities "tried" in recital (103) of Commission Regulation (EC) No 1069/9746  to follow the Appellate Body's guidance, it failed to do so.47 

31. India argues, finally, that the Panel misunderstood India's argument with respect to inflation and again based its conclusions on a misrepresentation of facts. India disagrees with the Panel's finding that the European Communities did not identify the inability of bed linen prices to keep pace with inflation in prices of consumer goods as a cause of injury. India contends that, in recital (50) of EC Regulation 1644/2001, the European Communities does identify inflation in consumer prices as a cause of injury. India submits that, in spite of this, the European Communities failed to mention, let alone examine and distinguish, in its causation analysis the injurious effects of the inability of European Communities producers to keep pace with inflation. India notes that, although the Panel interpreted the inability of bed linen prices to increase commensurate with inflation as an  indicator (instead of a cause) of injury, in India's view, the inability of bed linen prices to keep pace with inflation is a factor partly responsible for declining profitability of the European Communities industry.

B. Arguments of the European Communities � Appellee

1. Article 21.5 of the DSU

32. The European Communities submits that the Panel correctly dismissed India's claim that the European Communities violated Article 3.5 of the  Anti-Dumping Agreement  by failing to ensure that injuries caused by "other factors" not be attributed to the dumped imports, because that claim was not properly before the Panel. According to the European Communities, the determination on the "other factors" is an element of the original measure that was not modified and thus cannot be regarded as part of the implementation measure. Consequently, that determination cannot be challenged before an Article 21.5 panel.

33. The European Communities contends that Article 21.5 of the DSU is not intended to provide a "second service" to complainants which, by negligence or calculation, have omitted to raise or argue certain claims during the original proceedings.48  In the European Communities' view, India's reading of Article 21.5 would diminish the procedural rights of defending parties, altering the balance of rights and obligations of Members that the DSU purports to maintain.

34. According to the European Communities, in  US � FSC49, Mexico � Corn Syrup (Article 21.5 � US)50, and US � Offset Act (Byrd Amendment)51, the Appellate Body emphasized that procedural actions under the DSU must be taken in a timely fashion. The European Communities submits that, in a similar way, the right to make a claim must be exercised promptly. Consequently, Article 21.5 must be interpreted as excluding the possibility of raising a claim for the first time before an Article 21.5 panel when such claim could have been pursued before the original panel.

35. Furthermore, the European Communities contends that the decision of the original panel rejecting India's claim "has  res judicata  effects" between the parties.52  Therefore, in the view of the European Communities, India is precluded from reasserting the same claim before another panel. The European Communities asserts, in this regard, that the applicability of the principle of  res judicata  to disputes under the DSU was confirmed in US � Shrimp (Article 21.5 � Malaysia),  where the Appellate Body noted that Appellate Body Reports that are adopted by the DSB must be treated by the parties to a particular dispute as a final resolution to that dispute.53  The same principle applies, according to the European Communities, to adopted panel reports.

36. The European Communities argues that India's allegation that the European Communities did not suffer prejudice is irrelevant and wrong. According to the European Communities, the defendant is not required to demonstrate prejudice. In addition, the European Communities submits that prejudice to the defending party arises whenever a claim that could have been pursued in the original proceedings is brought before an Article 21.5 panel, because, as a result, the defending party will be deprived of the possibility of correcting the alleged violation within a reasonable period of time, if indeed a violation is found.

37. The European Communities argues that whether or not India acted in good faith is also irrelevant for the interpretation of Article 21.5 of the DSU. The European Communities contends that, as explained by the Panel, a decision on this issue does not turn on the facts of any particular dispute. In the European Communities' view, even though India might not, in this specific case, have acted in bad faith, India's proposed interpretation of Article 21.5 would allow the kind of litigation techniques that are incompatible with the good faith requirement set out in Article 3.10 of the DSU.

38. According to the European Communities, the Panel's ruling is consistent with earlier decisions of the Appellate Body. The European Communities submits that, contrary to India's arguments, the facts of the present dispute are different from those in  Canada � Aircraft (Article 21.5 � Brazil),  where Brazil raised claims against a new and different measure.54  In the present case, in contrast, India's claim relates to an element that is not part of the new measure, because the findings on the "other factors" included in the original determination were not affected by the redetermination. Furthermore, the European Communities asserts that the present case differs from US � FSC (Article 21.5 � EC)  because, in the latter case, the United States did not object to the claim raised by the European Communities under Article III:4 of the GATT 1994.55  In that case, moreover, the claim brought by the European Communities under Article III:4 against the measure "taken to comply" was different from the claims that the European Communities could have brought under the same provision before the original panel, because the United States had repealed the measure at issue in the original dispute and replaced it with an entirely new measure. The European Communities argues that, in the current appeal, India is challenging findings that were not modified in the implementation measure and, therefore, cannot be considered as part of the measure "taken to comply".

2. Paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement

39. The European Communities asserts that the Panel did not err in finding that the European Communities did not act inconsistently with paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement  when determining the volume of "dumped imports" for purposes of making a determination of injury.

40. The European Communities first notes that the Panel's observation that the European Communities' investigating authorities did not use a "statistically valid sample", within the meaning of the first option in the second sentence of Article 6.10 of the  Anti-Dumping Agreement,  is a factual finding beyond the scope of appellate review. The European Communities submits that the group of exporters selected for purposes of the dumping examination represents the largest percentage of the volume of exports which could reasonably be investigated, within the meaning of the second option in the second sentence of Article 6.10. Therefore, the Panel's factual observation that the European Communities did  not  resort to a "statistically valid sample" is correct. According to the European Communities, the selection of companies of different types was aimed at improving the representativeness of the selection, but it cannot be considered sufficient to produce a "statistically valid sample".

41. In addition, the European Communities explains that the fact that its investigating authorities, on a few occasions, referred to the group of examined exporters as a "sample", does not mean that the dumping examination was based on a "statistically valid sample" within the meaning of Article 6.10. The European Communities notes that if all "samples" were by definition "statistically valid", it would have been superfluous to add that precision into Article 6.10. According to the European Communities, the investigating authorities used the term "sample" because, in European Communities law and practice, the terms "sampling" and "sample" are used to designate indistinctly either of the two options envisaged in Article 6.10 of the  Anti-Dumping Agreement. Similarly, the references made by the original panel and the Article 21.5 Panel to a "sample" merely reflect the European Communities' use of that term.

42. The European Communities states that, in any event, the Panel did not attach any legal consequences to the finding that the European Communities did not use a statistically valid sample. The Panel's conclusion that the European Communities did not act inconsistently with paragraphs 1 and 2 of Article 3 would be equally valid were the Appellate Body not to agree with this finding of fact. The European Communities contends that, even if the examined exporters selected by the investigating authorities constituted a "statistically valid sample", there would still be no basis to assume that the proportion of imports found to be dumped within the sample is positive evidence of the proportion of imports outside the sample which would have been found to be dumped had all the exporters been examined individually.

43. The European Communities asserts that "dumped imports" are those imports for which a positive determination of dumping, whether individual or collective, has been made. The European Communities contends that, following this reasoning, its investigating authorities determined that all the imports from the unexamined exporters (cooperating and non-cooperating) were dumped. As India has not challenged the dumping determination in these proceedings, it is illogical and contradictory for India now to claim that some of those imports should be considered not dumped for purposes of making a determination of injury. According to the European Communities, the obligation to determine dumped imports objectively and on the basis of positive evidence is satisfied where the imports have been found to be dumped in accordance with the relevant provisions of the Anti‑Dumping Agreement  governing the determination of dumping.

44. The European Communities agrees with the Panel's conclusion that Article 3 of the Anti‑Dumping Agreement  contains no guidance with respect to the determination of the volume of dumped imports. In the European Communities' view, the general requirement to make an objective examination of injury based on "positive evidence", set forth in Article 3.1, cannot be read as imposing a new obligation with respect to the determination of dumping where none is provided in the relevant provisions of the  Anti-Dumping Agreement.

45. In addition, the European Communities argues that India's proposed interpretation would lead to an absurd result�where the same imports could be simultaneously considered dumped and not dumped under different provisions of the  Anti-Dumping Agreement�because Article 9.4 would allow the application of duties to imports which have been previously found not to be dumped for purposes of injury determinations under Article 3.

46. The European Communities contends, furthermore, that India's proposed interpretation assumes that no dumping margin needs to be assigned to unexamined exporters. However, in the European Communities' view, if the dumping margin of the unexamined exporters is not calculated, it is impossible to establish whether the country-wide dumping margin is above  de minimis,  as required by Article 5.8.

47. The European Communities states that, although the  Anti-Dumping Agreement  does not prescribe any specific rules for calculating the dumping margin of the unexamined exporters, it is implicit in Article 6.10 that, where the investigating authorities limit the investigation of dumping to some exporters, they may use the data collected for those examined exporters in order to calculate the dumping margin of the unexamined exporters. In addition, the European Communities refers to Article 9.3, which expressly states that there is a logical link between the level of the dumping margin and that of the dumping duty. Therefore, it contends that if Article 9.4 allows the investigating authorities to apply anti-dumping duties to  all  imports from the unexamined exporters, it is because all  such imports can be considered dumped, including for purposes of paragraphs 1 and 2 of Article 3. In the light of this, the European Communities asserts that its investigating authorities were entitled to regard all imports from the unexamined exporters as dumped.

48. Finally, the European Communities argues that its investigating authorities were entitled to treat as "dumped" all imports from non-cooperating exporters, upon calculating the corresponding dumping margin for the non-cooperating exporters in accordance with the methodology set out in Article 6.8 and Annex II to the Anti-Dumping Agreement. In addition, the European Communities contends that, even if India's interpretation were correct, the proportion of dumped imports from the examined exporters within the sample could not be considered as representative of the proportion of dumped imports from the non-cooperating exporters, because the non-cooperating exporters were not included in the pool of exporters from which the sample was selected.

3. Article 17.6 of the  Anti-Dumping Agreement  and Article 11 of the DSU

49. The European Communities argues that the Panel did not err in finding that the European Communities had information before it on all relevant economic factors listed in Article 3.4 of the Anti‑Dumping Agreement,  including stocks and capacity utilization, and thus acted consistently with Article 3.4. According to the European Communities, the Panel correctly applied the rules regarding the allocation of the burden of proof, did not distort the evidence before it, nor did it fail to actively review the facts.

50. The European Communities submits that because India did not properly establish a  prima facie  case that no data was collected by the European Communities' investigating authorities, the Panel did not fail to apply the rules on the allocation of the burden of proof. Alternatively, the European Communities argues that, even if India had established a  prima facie  case, this  prima facie  case had been refuted by the European Communities. Furthermore, the European Communities emphasizes that the weighing of evidence is within the discretion of the Panel as the trier of facts. Consequently, the European Communities argues that the Panel was entitled to conclude that the European Communities had the relevant information in its possession, and acted consistently with Article 11 of the DSU.

51. In the European Communities' view, the Panel did not distort the evidence. The European Communities argues that the information contained in EC Regulation 1644/2001 is not "a mere assertion" as claimed by India. Rather, the regulation explains the basis of the European Communities' conclusion that stocks and capacity utilization did not have a bearing on the state of the domestic industry. The European Communities refers to the statement in the Appellate Body Report in  EC � Hormones  to the effect that a claim of distortion implies that a panel committed an egregious error that calls into question its good faith.56  The European Communities then underscores that India has explicitly admitted that it is not alleging that the Panel in this case committed an egregious error or acted in bad faith.

52. The European Communities submits that the Panel did not fail to actively review the facts as required by Article 17.6(i) of the  Anti-Dumping Agreement. According to the European Communities, India failed to demonstrate that the Panel's assessment of the evidence is inconsistent with Article 11 of the DSU; therefore, its identical claim under Article 17.6(i) is equally unfounded. In addition, the European Communities argues that the Panel's decision not to use its power of investigation under Article 13.2 of the DSU does not constitute a violation of Article 17.6(i), because a panel's right to seek information under Article 13.2 is discretionary. In the European Communities' view, the Appellate Body's ruling in  EC � Sardines  supports the conclusion that the Panel's decision not to seek information does not imply that the Panel failed to make an objective assessment of the facts.57 

4. Article 3.5 of the  Anti-Dumping Agreement

53. The European Communities argues that the Panel did not err in finding that the European Communities did not act inconsistently with Article 3.5 of the  Anti-Dumping Agreement  by failing to ensure that injuries caused by "others factors" were not attributed to the dumped imports. In the European Communities' view, the Panel's finding that the increase in the cost of raw cotton and inflation were not causes of injury is a factual finding and thus beyond the scope of appellate review.

54. The European Communities submits that India's arguments misrepresent the findings of the investigating authorities. According to the European Communities, the passages of EC Regulation 1644/2001 referred to by India demonstrate that the investigating authorities did not consider the increase in the cost of raw cotton as a separate cause of injury.

55. The European Communities notes that "price suppression" is one of the possible "effects" of dumping set forth in Article 3.2 of the  Anti-Dumping Agreement. Accordingly, price suppression cannot be, at the same time, one of the "other causes" of injury to be examined under Article 3.5. The European Communities asserts that the increase in the cost of raw cotton is not the cause of price suppression, but rather the fact that renders necessary the price increase. According to the European Communities, this is in accordance with Article 3.2, which provides that the "cause" of the "price suppression" is the fact that "prevents" the price increase, and not the fact that renders necessary such price increase. The European Communities contends, moreover, that India has not argued that any other factor that was not examined by the investigating authorities prevented the European Communities producers from increasing their prices to reflect the increase in the cost of raw cotton.

56. Furthermore, the European Communities argues that the injurious effects of the increase in the cost of raw cotton cannot be separated and distinguished from the effects of the dumped imports. In the European Communities' view, the existence of "price suppression" presupposes the existence of two elements:  (i) a factor that renders a price increase necessary;  and (ii) a factor that "prevents" such price increase. If either of these elements is absent, there can be no "price suppression" within the meaning of Article 3.2 and, consequently, no injury. The European Communities contends that the injurious effects of the two constituent elements of price suppression cannot, therefore, be "separated and distinguished".

57. The European Communities argues that, contrary to India's allegation, the Panel's reasoning does not render redundant Article 3.5, because a price increase cannot be said to remedy the injury caused by the factors listed in that Article. As an example, the European Communities explains that a price increase would not remedy the injurious effects of a contraction of demand, but rather would aggravate them.

58. The European Communities submits that its investigating authorities did not find, as alleged by India, that the failure of bed linen prices to keep pace with inflation in the prices of consumer goods was a cause of injury. According to the European Communities, EC Regulation 1644/2001 mentioned the failure of bed linen prices to keep pace with inflation as a further indication of the existence of price suppression. In any event, the European Communities contends that the failure of bed linen prices to keep pace with inflation cannot be a  cause of injury in the form of declining and inadequate profitability. The European Communities notes that the profitability of bed linen is a function  of its cost of production and of its sales price. The inflation rate for other consumer goods does not affect either of these two variables. Therefore, the European Communities argues, the inflation rate cannot be the cause of the injury suffered by the European Communities industry. Rather, it is an indication or symptom of injury, as indicated by the Panel.

C. Arguments of the Third Participants

1. Japan

59. Japan submits arguments relating only to the determination of the volume of dumped imports for purposes of making a determination of injury under Article 3 of the  Anti-Dumping Agreement. Japan submits that an analysis of the text, the context, and the object and purpose of Article 9.4 of the Anti‑Dumping Agreement  demonstrates that Article 9.4 does not apply to the determination of dumping, injury, and causation under Articles 2 and 3 of the  Anti-Dumping Agreement. Japan contends that Article 9.4 provides rules applicable only to the stage where duties are collected, which follows the investigating authorities' affirmative determination of dumping, injury, and causation.

60. Japan argues that the use of the term "duty" or "duties" in Article 9.4 confirms the understanding that Article 9.4 applies only to the stage of imposition of anti-dumping duties. In addition, Japan contends that the use of the present perfect tense in Article 9.4 indicates that Article 9.4 becomes relevant only after the investigation phase has been completed and the investigating authorities have found dumping, injury, and causation. In Japan's view, the title of Article 9, as well as the principles set forth in Article 9.1, clarify that Article 9 sets forth rules concerning imposition and collection of duties, and that it does not affect the determinations of dumping, injury, and causation.

61. Japan also contends that Article 9.4 contains a very narrowly-focused set of rules that apply only in exceptional cases where an examination of all responding parties is "impracticable," as set forth in the second sentence of Article 6.10.

62. Japan finds support in the Appellate Body Report in  US � Hot-Rolled Steel  for its argument that the European Communities' position would dilute the requirement established in Article 3.1 that a determination of injury be based on "positive evidence" and an "objective examination."58  Japan submits that the European Communities' methodology is inconsistent with the requirement that the evidence "must be of an affirmative, objective and verifiable character, and that it must be credible."59  In addition, Japan alleges that by using the data of the sampled producers in a biased and unfair manner, the European Communities failed to comply with the requirement that a determination of injury must involve an objective examination�that is, that the " 'examination' process must conform to the dictates of the basic principles of good faith and fundamental fairness."60 

63. Japan contends, moreover, that its interpretation is supported by Article 17.6(i) of the Anti‑Dumping Agreement. Japan argues that although Article 17.6(i) is directed to panels, the obligation of an unbiased and objective evaluation of facts applies equally to the investigating authorities, because panels review the investigating authorities' evaluation of facts in accordance with that standard.

2. United States

64. The United States agrees with the finding of the Panel that when a party's argument is rejected in a report adopted by the DSB, that party cannot raise new arguments on the same claim in a proceeding under Article 21.5 of the DSU. The United States disagrees with India's view that the mere inclusion of a finding in the legislative or administrative vehicle that implements a DSB recommendation makes it a measure taken to comply subject to Article 21.5 review. The text of that provision premises a panel's jurisdiction over a claim under Article 21.5 on whether that claim challenges measures that were taken to comply with DSB recommendations and rulings.

65. The United States submits that the Panel correctly concluded that investigating authorities may treat all imports from producers or exporters for which an affirmative dumping determination has been made as "dumped imports" for purposes of making a determination of injury. The United States submits that Article 2.1 of the  Anti-Dumping Agreement  defines dumped products "[f]or the purpose of [the Anti-Dumping] Agreement", on a country-wide basis, and that, therefore, the references to "dumped imports" in paragraphs 1 and 2 of Article 3 and throughout Article 3 refer to all imports of the product from the countries subject to the investigation.

66. In the United States' view, the  Anti-Dumping Agreement  requires investigating authorities to examine, on the one hand, the volume and price effects of the  dumped imports,  and, on the other hand, all relevant economic factors having a bearing on the state of the domestic industry. The United States argues that, through this examination of both the  dumped imports  and the injury factors, the investigating authorities examine the "consequent impact" of those  dumped imports  on the domestic industry, as set out in paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement.

67. The United States contends that Article 9.4 confirms this conclusion, as that provision does not provide for any separation of imports from each non-examined producer or exporter into two categories�dumped and not dumped. Rather, the United States contends that the provision provides for a calculated duty to apply to  all  of the imports from each non-examined producer.

68. The United States believes that the Panel correctly recognized that, under the  Anti-Dumping Agreement,  an investigating authority may appropriately draw a distinction between the economic factors and indicia that indicate whether an industry's overall condition is declining, and "other factors" that may be causing such decline. Only the latter are subject to the non-attribution provisions of Article 3.5 of the  Anti-Dumping Agreement.

69. The United States agrees with the Panel's finding that the European Communities properly found that the industry's rising raw material costs and inflation were not "other factors" causing injury subject to the non-attribution provision of Article 3.5. Even if the Appellate Body were to conclude that these factors should have been considered "other factors", subject to the provisions of Article 3.5, the United States believes that the European Communities' analysis of the effect of the factors on the industry represents a reasoned and adequate discussion that does not attribute to imports the effects, if any, of these two factors. The United States believes that the European Communities' analysis of the effects of rising raw material costs and inflation would satisfy the European Communities' non-attribution obligation under Article 3.5, as that obligation has been interpreted by the Appellate Body.

III. Issues Raised in this Appeal

70. The following issues are raised in this appeal:

(a) (i) whether the Article 21.5 Panel61  erred in dismissing India's claim that the European Communities had acted inconsistently with Article 3.5 of the  Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994  (the "Anti-Dumping Agreement ") �by failing to ensure that injuries caused by "other factors" was not attributed to the dumped imports�because that claim was not properly before the Panel; and, if so

(ii) whether the Panel erred in finding, in the alternative, that the European Communities had ensured that injuries caused by "other factors" was not attributed to the dumped imports and, therefore, had not acted inconsistently with Article 3.5 of the  Anti-Dumping Agreement;

(b) whether the Panel erred in concluding that the European Communities had acted consistently with paragraphs 1 and 2 of Article 3 of the  Anti-Dumping Agreement  in calculating the volume of dumped imports, for purposes of determining injury; and

(c) whether the Panel failed to discharge its duties properly under Article 17.6 of the Anti‑Dumping Agreement  and Article 11 of the  Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), in finding that the European Communities had information before it on all relevant economic factors listed in Article 3.4 of the  Anti-Dumping Agreement,  including stocks and capacity utilization.

IV. Article 21.5 of the DSU

A. Introduction

71. We turn first to the issue raised by India that the Panel erred in dismissing India's claim that the European Communities had acted inconsistently with the requirement of Article 3.5 of the Anti‑Dumping Agreement  by failing to ensure that injuries caused by "other factors" was not attributed to the dumped imports. We recall that India claimed before the  original panel  that the European Communities had acted inconsistently with Article 3.5 of the  Anti-Dumping Agreement  by failing to determine to what extent injuries caused by "other factors" were responsible for the injury allegedly suffered by the domestic industry.62  The original panel ruled:

Finally, with respect to India's claim that the European Communities failed to properly consider "other factors" which might have been causing injury to the domestic industry, as required by Article 3.5 of the AD Agreement, we note that, with the exception of the argument concerning improper consideration of "dumped" imports, India has made no other arguments in support of this claim. Having rejected India's position in that regard, we consider that India has failed to present a  prima facie  case in this regard.63 

India did not appeal this panel finding in the original dispute. Thus, the panel report in the original dispute was adopted by the Dispute Settlement Body (the "DSB") without modification of this finding.

72. In order to comply with the recommendations and rulings of the DSB in the original dispute, the European Communities adopted Council Regulation (EC) No 1644/200164, reflecting the investigating authorities' revised determinations of dumping and injury. In the light of these revised determinations, the European Communities also re-examined whether a causal link existed between the dumped imports and injury suffered by the domestic industry.65  The European Communities did not,  however, revise the analysis of "other factors" made in the original determination.66  Rather, in EC Regulation 1644/2001, the European Communities confirmed the findings of the original determination in this respect, except for a minor change.67 

73. Subsequently, before the  Article 21.5 Panel,  India claimed that the European Communities had violated Article 3.5,  inter alia,  because it had disregarded the obligation to not attribute to the dumped imports injuries caused by "other factors", and had failed to separate and distinguish injuries caused by those "other factors" from the injury caused by the dumped imports.68  The European Communities responded with a request for a preliminary ruling, asking the Panel to dismiss India's claim under Article 3.5 insofar as it concerned aspects of the original determination which were the subject of a claim before the original panel, which was not pursued before that panel.69  India asked the Panel to reject the European Communities' request for a preliminary ruling.70 

74. The Panel stated that:

� a claim which, as a legal and practical matter, could have been raised and pursued in the original dispute, but was not, cannot be raised on the same facts and legal premises in an Article 21.5 proceeding to determine the existence or consistency of measures taken to comply with the recommendation of the DSB in the original dispute.71 

According to the Panel, neither Article 21.5 of the DSU nor any other provision entitles India to such a "second chance".72  The Panel concluded that:

�  with respect to India's claim 6, insofar as it concerns the consistency of the EC's measure with the obligation in Article 3.5 to ensure that injuries caused by "other factors" not be attributed to the dumped imports, the EC's request for preliminary ruling has merit. We consider that this aspect of India's claim is not properly before us, having been disposed of by the Panel in the original Report and not appealed, and will not make any ruling on it.73 

75. In this appeal, India requests that we  reverse  the Panel's finding dismissing its claim under Article 3.5 relating to "other factors", and complete the legal analysis.74  India argues that its claim under Article 3.5 forms part of the matter before the Article 21.5 Panel because India identified this claim in its request for the establishment of that Panel. In India's view, the Panel was not precluded from examining this claim, even though the original panel had dismissed it. Referring to our Report in  Canada � Aircraft (Article 21.5 � Brazil),  India submits that the measure at issue in this implementation dispute is a  new  measure that is legally separate and distinct from the  original measure.75  India argues further that an implementation dispute is not confined to examining the measures taken to comply from the perspective of the claims, arguments, and factual circumstances related to the measure that was the subject of the  original  proceedings.76  In support of this position, India asserts that, in the  US � FSC (Article 21.5 � EC)  implementation dispute, a claim under Article III of the  General Agreement on Tariffs and Trade 1994 (the "GATT 1994") was accepted on appeal, even though the European Communities could have raised it during the original proceedings, but did not.77 

76. India also contends that the Panel erred in finding the situation in these implementation proceedings to be analogous to the situation in  US � Shrimp (Article 21.5 � Malaysia).78  In India's view, the measure in  US �Shrimp (Article 21.5 � Malaysia)  was the  same  measure that had been found to be consistent with obligations of the World Trade Organization (the "WTO") in the original proceedings.79  In this dispute, India notes that the European Communities re-examined causation in the redetermination as a consequence of revised dumping and injury findings. Therefore, in India's view, the causation analysis is a  new component of the measure taken to comply that was not part of the measure before the original panel.80 

77. The European Communities responds that we should  uphold  the Panel's ruling dismissing India's claim under Article 3.5 relating to "other factors".81  The European Communities argues that it was under no obligation to correct, in the redetermination, its findings on "other factors", because the original panel had not ruled that these findings were inconsistent with Article 3.5.82  The European Communities concludes, therefore, that the aspects of the redetermination relating to "other factors" are not part of the measure "taken to comply" with the recommendations and rulings of the DSB in the original dispute.83  According to the European Communities, claims challenging measures  other than those taken to comply cannot form part of Article 21.5 proceedings. The European Communities agrees with the Panel's reliance on our findings in  US �Shrimp (Article 21.5 � Malaysia).84  In the European Communities' view, the implementation disputes in Canada � Aircraft (Article 21.5 � Brazil) and in  US � FSC (Article 21.5 � EC)  can be distinguished from the present Article 21.5 proceedings because those disputes concerned  new  claims challenging  modified  aspects of the measure.85  The European Communities emphasizes that the original panel's finding rejecting India's claim relating to "other factors" represents the final resolution of the dispute between the parties, because it forms part of a panel report adopted by the DSB. For this reason, the European Communities maintains that India is precluded from reasserting this claim in these Article 21.5 proceedings.

B. Analysis

78. In examining whether India's claim under Article 3.5 relating to "other factors" was properly before the Panel, we must first establish the appropriate  subject-matter  of Article 21.5 proceedings. Article 21.5 provides in relevant part:

Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel.

As in  original  dispute settlement proceedings, the "matter" in Article 21.5 proceedings consists of two elements: the specific  measures  at issue and the legal basis of the complaint (that is, the claims).86  If a claim  challenges a  measure  which is not a "measure taken to comply", that  claim cannot properly be raised in Article 21.5 proceedings. We agree with the Panel that it is, ultimately, for an Article 21.5 panel�and not for the complainant or the respondent�to determine which of the measures listed in the request for its establishment are "measures taken to comply".87  Although the issue raised by India in this appeal relates primarily to the scope of  claims  that may be raised in Article 21.5 proceedings, this issue is intertwined with the question of which  measures  may be considered as "measures  taken to comply" with the DSB rulings in an original dispute.

79. We addressed the function and scope of Article 21.5 proceedings for the first time in  Canada � Aircraft (Article 21.5 � Brazil). There, we found that Article 21.5 panels are not merely called upon to assess whether "measures taken to comply" implement specific "recommendations and rulings" adopted by the DSB in the original dispute.88  We explained there that the mandate of Article 21.5 panels is to examine either the "existence" of "measures taken to comply" or, more frequently, the "consistency with a covered agreement" of implementing measures.89  This implies that an Article 21.5 panel is not confined to examining the "measures taken to comply" from the perspective of the claims, arguments, and factual circumstances relating to the measure that was the subject of the original  proceedings.90  Moreover, the relevant facts bearing upon the "measure taken to comply" may be different from the facts relevant to the measure at issue in the original proceedings. It is to be expected, therefore, that the claims, arguments, and factual circumstances relating to the "measure taken to comply" will not, necessarily, be the same as those relating to the measure in the original dispute.91  Indeed, a complainant in Article 21.5 proceedings may well raise new  claims, arguments, and factual circumstances different from those raised in the original proceedings, because a "measure taken to comply" may be  inconsistent  with WTO obligations in ways different from the original measure. In our view, therefore, an Article 21.5 panel could not properly carry out its mandate to assess whether a "measure taken to comply" is  fully consistent  with WTO obligations if it were precluded from examining claims additional to, and different from, the claims raised in the original proceedings.92 

80. This appeal, however, raises an issue different from the issue that was before us in  Canada � Aircraft (Article 21.5 � Brazil). Here, India did not raise a  new  claim before the Article 21.5 Panel; rather, India reasserted in the Article 21.5 proceedings the  same  claim that it had raised before the original  panel in respect of a component of the implementation measure which was the same as in the original measure. This same  claim was dismissed by the original panel, and India did not appeal that finding.

81. Despite this previous dismissal, and despite India's decision not to appeal it, India insists that it should be entitled to reassert its claim under Article 3.5 relating to "other factors" in these Article 21.5 proceedings. India argues that it should be entitled to do so because the "measure taken to comply" in this dispute is "separate and distinct" from the measure subject to the original dispute.93  For support, India refers to our Report in Canada � Aircraft (Article 21.5 � Brazil),  where we stated that:

In principle, a measure which has been "taken to comply with the recommendations and rulings" of the DSB will  not  be the same measure as the measure which was the subject of the original dispute, so that, in principle, there would be two separate and distinct measures: the original measure which  gave rise  to the recommendations and rulings of the DSB, and the "measures taken to comply" which are � or should be � adopted to  implement  those recommendations and rulings.94  (original italics; footnote omitted)

82. Relying on this, India contends that it is  not,  in fact, challenging the same measure that was before the original panel. India maintains that, although some aspects of the measure remain the same, the redetermination must be considered "as a whole new measure" because it is not capable of being divided into separate elements.95 

83. In contrast, the European Communities contends that there are  limits  to the scope of the claims that may be raised in Article 21.5 proceedings, even where such claims challenge "measures taken to comply" as inconsistent with WTO obligations, in contrast to measures that gave rise to the original  proceedings. The European Communities refers to our Report in  US � Shrimp (Article 21.5 � Malaysia), on which the Panel also relied96, where we stated:

With respect to a claim that  has  been made when a matter is referred by the DSB for an Article 21.5 proceeding, Malaysia seems to suggest as well that a panel must re-examine, for WTO-consistency, even those aspects of a new measure that were part of a previous measure that was the subject of a dispute, and were found by the Appellate Body to be  WTO�consistent  in that dispute, and that remain unchanged as part of the new measure.97  (original italics)

We concluded in that appeal that:

� the [US � Shrimp (Article 21.5 � Malaysia)] Panel properly examined Section 609 as part of its examination of the totality of the new measure, correctly found that Section 609 had not been changed since the original proceedings, and rightly concluded that our ruling in  United States � Shrimp  with respect to the consistency of Section 609, therefore, still stands.98 

84. In the light of these considerations, we turn to an examination of the measure taken to comply in this implementation dispute. In doing so, we look to the various aspects of the redetermination carried out by the European Communities in order to comply with the DSB rulings in the original dispute.

85. We agree with India that the investigating authorities of the European Communities were required to revise the original determination of dumping and injury in order to comply with the DSB recommendations and rulings. Towards this end, the European Communities recalculated the dumping margins without  applying the practice of "zeroing" that had been found to be inconsistent with WTO obligations in the original dispute. According to the recalculation, two of the  individually examined Indian producers were  not  dumping.99  The investigating authorities deducted the imports attributable to those two producers from the  volume  of dumped imports, and, accordingly, the volume of dumped imports in the redetermination was  lower  than in the original determination. According to EC Regulation 1644/2001, the investigating authorities of the European Communities also "re-examined" whether a causal link between the two  revised  elements�dumped imports and the injury to the domestic industry�still existed, and the Panel reviewed that re-examination.100 

86. The  amount  of dumped imports will, of course, have an impact on the assessment of the effects  of the "dumped imports" for the purposes of determining  injury. It is clear, therefore, that the revised findings on dumping and injury could have a bearing on whether a causal link exists between dumping and injury. But whilst a revised finding of  dumping  will, in all likelihood, have an impact on the "effect of  dumped  imports", we see no reason to conclude as well that this revised finding would have any impact on the "effects � of known factors  other than  the dumped imports" in this dispute.101  Accordingly, we are of the view that the investigating authorities of the European Communities were not required to change the determination as it related to the "effects of other factors" in this particular dispute. Moreover, we do not see why that part of the redetermination that merely incorporates elements of the original determination on "other factors" would constitute an inseparable element of a measure taken to comply with the DSB rulings in the original dispute. Indeed, the investigating authorities of the European Communities were able to treat this element separately. Therefore, we do not agree with India that the redetermination can only be considered "as a whole new measure".102 

87. We conclude, therefore, that, in these Article 21.5 proceedings, India has raised the  same claim under Article 3.5 relating to "other factors" as it did in the original proceedings. In doing so, India seeks to challenge an aspect of the original measure which has not changed, and which the European Communities did not have to change, in order to comply with the DSB recommendations and rulings to make that measure consistent with the European Communities' WTO obligations.

88. For these reasons, we agree with the Panel's statement distinguishing, in this respect, the Canada � Aircraft (Article 21.5 � Brazil)  dispute from these Article 21.5 proceedings:

In that case, Canada had implemented the recommendation of the DSB by adopting a new and different measure. In the Article 21.5 proceeding, Brazil made claims regarding that measure that it had not made in the original dispute. Canada objected to claims raised by Brazil against the new measure on the grounds that no similar claims had been raised against the original measure. Had Canada's objection been upheld, Brazil would have been barred from making claims that could not have been raised in the original proceedings. The issue before us is whether India should be allowed to raise, in this Article 21.5 proceeding, claims with respect to Article 3.5 which it could and did raise before the original panel, but which it did not pursue, and which the Panel dismissed for failure to present a  prima facie  case of violation.103  (original boldface)

We agree with the Panel that the  Canada � Aircraft (Article 21.5 � Brazil) dispute involved a  new claim challenging a  new  component of the measure taken to comply which was not part of the original measure. The situation in  Canada � Aircraft (Article 21.5 � Brazil)  was thus different from the situation in this appeal.

89. Nor does our finding in  US � FSC (Article 21.5 � EC)  support India's position in this appeal.104  In that implementation dispute, the Article 21.5 panel ruled on a  new  claim under Article III of the GATT 1994 that the European Communities had not raised in the original proceedings. We upheld that ruling on appeal. In that dispute, the European Communities challenged a "foreign content limit" (which is similar to a local content requirement) imposed by the "FSC Repeal and Extraterritorial Income Exclusion Act of 2000 (ETI)"105  on foreign trade property eligible for special tax treatment. That provision established a  different  "foreign content limit" from the one contained in the original "Foreign Sales Corporation (FSC) regime"106, which the United States had changed  in order to comply with the DSB recommendations and rulings in the original dispute. In other words, the  US � FSC (Article 21.5 � EC)  dispute involved a  new  claim challenging a changed  component of the measure taken to comply, while this dispute, by contrast, concerns the same  claim against an  unchanged  component of the implementation measure that was part of the original measure and that was not found to be inconsistent with WTO obligations.107  Therefore, the situation in  US � FSC (Article 21.5 � EC)  was different from the situation in this appeal.

90. Having distinguished the situations in these two previous implementation disputes from the situation in this appeal, we turn next to the question of the effect of a ruling adopted by the DSB in an original dispute for the parties to Article 21.5 proceedings. The European Communities argues  that a ruling adopted by the DSB provides a final resolution to the dispute between the parties as it relates to the particular claim and the specific aspect of the measure.108  As we have noted, the US � Shrimp (Article 21.5 � Malaysia) dispute involved a claim against an aspect of the implementation measure that was the same  as in the  original  measure, and that we had found to be not  inconsistent  with WTO obligations in the original dispute. In that Article 21.5 dispute, we ruled:

We wish to recall that panel proceedings under Article 21.5 of the DSU are, as the title of Article 21 states, part of the process of the "Surveillance of Implementation of Recommendations and Rulings" of the DSB. This includes Appellate Body Reports. To be sure, the right of WTO Members to have recourse to the DSU, including under Article 21.5, must be respected. Even so, it must also be kept in mind that Article 17.14 of the DSU provides not only that Reports of the Appellate Body "shall be" adopted by the DSB, by consensus, but also that such Reports "shall be � unconditionally accepted by the parties to the dispute. �" Thus, Appellate Body Reports that are adopted by the DSB are, as Article 17.14 provides, "� unconditionally accepted by the parties to the dispute", and, therefore, must be treated by the parties to a particular dispute as a final resolution to that dispute. In this regard, we recall, too, that Article 3.3 of the DSU states that the "prompt settlement" of disputes "is essential to the effective functioning of the WTO".109  (underlining added)

91. Thus, we concluded there that an adopted Appellate Body Report must be treated as a  final resolution  to a dispute between the parties to that dispute. We based this conclusion on Article 17.14 of the DSU, which deals with the effect of adopted Appellate Body Reports (as opposed to  panel reports). Article 17.14 reads, in relevant part:

Adoption of Appellate Body Reports

An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body report within 30 days following its circulation to the Members. (footnote omitted)

92. The issue raised in this appeal is similar to the issue we resolved in  US � Shrimp (Article 21.5 � Malaysia). In this appeal, however, the original panel's finding on India's claim under Article 3.5 relating to "other factors" was  not appealed  in the original dispute. Accordingly, the finding of the original panel relating to that claim was adopted by the DSB as part of a  panel  report, and, therefore, Article 17.14, which deals with the adoption of  Appellate Body  Reports, does not dispose of the issue before us.

93. All the same, in our view, an  unappealed  finding included in a panel report that is  adopted by the DSB must be treated as a  final resolution  to a dispute between the parties in respect of the particular  claim and the  specific  component of a measure that is the subject of that claim. This conclusion is supported by Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and Article 22.1 of the DSU. Where a panel concludes that a measure is inconsistent with a covered agreement, that panel shall  recommend, according to Article 19.1, that the Member concerned bring that measure into conformity with that agreement. A panel report, including the  recommendations  contained therein, shall be  adopted  by the DSB within the time period specified in Article 16.4�unless appealed. Members are to  comply with recommendations and rulings adopted  by the DSB promptly, or within a reasonable period of time, in accordance with paragraphs 1 and 3 of Article 21 of the DSU. A Member that does not comply with the recommendations and rulings adopted by the DSB within these time periods must face the consequences set out in Article 22.1, relating to compensation and suspension of concessions. Thus, a reading of Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and Article 22.1, taken together, makes it abundantly clear that a panel finding which is not appealed, and which is included in a panel report  adopted  by the DSB, must be accepted by the parties as a  final  resolution to the dispute between them, in the same way and with the same finality as a finding included in an Appellate Body Report adopted by the DSB�with respect to the particular claim and the specific component of the measure that is the subject of the claim. Indeed, the European Communities and India agreed at the oral hearing that both panel reports and Appellate Body Reports would have the same effect, in this respect, once adopted by the DSB.110 

94. On this point, we recall that we resolved the question of the effect of findings adopted by the DSB as part of a  panel  report in the same vein in  Mexico � Corn Syrup (Article 21.5 � US). In that implementation dispute, we relied on Article 3.2 of the DSU, which emphasizes the need for security and predictability in the trading system, and on Article 3.3 of the DSU, which stresses the necessity for the prompt settlement of disputes. There, we treated certain findings of the original panel that had not  been appealed in the original proceedings, and that had been adopted by the DSB, as a final resolution to the dispute between the parties in respect of the particular claim and the specific component of the measure that was the subject of the claim. We observed there that "Mexico seems to seek to have us revisit the original panel report"111, and added that:

� the original panel report, regarding the  initial measure (SECOFI's original determination), has been adopted and that these Article 21.5 proceedings concern a  subsequent measure (SECOFI's redetermination). We also note that Mexico did not appeal the original panel's report, and that Articles 3.2 and 3.3 of the DSU reflect the importance to the multilateral trading system of security, predictability and the prompt settlement of disputes. We see no basis for us to examine the original panel's treatment of the alleged restraint agreement.112  (original italics)

95. We, therefore, agree with the Panel in this dispute that:

� the same principle [as that expressed in Article 17.14] applies to those aspects of the Panel's report that are not appealed and are thus not addressed by the Appellate Body. Thus, the portions of the original Report of the Panel that are not appealed, together with the Appellate Body report resolving the issues appealed, must, in our view, be considered as the final resolution of the dispute, and must be treated as such by the parties, and by us, in this proceeding.113  (footnote omitted)

96. We consider next whether the fact that the Panel dismissed India's claim because India had not established a  prima facie  case has any relevance for our decision on the effect of the adoption by the DSB of a finding of a panel report that was not appealed. We recall that, when we ruled in  US � Shrimp (Article 21.5 � Malaysia)  that a finding adopted by the DSB should be treated as a final resolution to a dispute, we relied on the fact that, in our original Report in  US � Shrimp,  we had found that the  unchanged  aspect of the measure, as such, was  consistent  with Article XX of the GATT 1994. Here, however, the original panel ruled that India had failed to present a  prima facie case in respect of its claim under Article 3.5 relating to "other factors".114  In our view, the effect, for the parties, of findings adopted by the DSB as part of a panel report is the same, regardless of whether a panel found that the complainant failed to establish a  prima facie  case that the measure is inconsistent with WTO obligations, that the Panel found that the measure is fully consistent with WTO obligations, or that the Panel found that the measure is not consistent with WTO obligations. A complainant that, in an original proceeding, fails to establish a  prima facie  case should not be given a "second chance" in an Article 21.5 proceeding, and thus be treated more favourably than a complainant that did establish a  prima facie  case but, ultimately, failed to prevail before the original panel, with the result that the panel did not find the challenged measure to be inconsistent with WTO obligations. Nor should a defending party be subject to a second challenge of the measure found not to be inconsistent with WTO obligations, merely because the complainant failed to establish a  prima facie  case, as opposed to failing ultimately to persuade the original panel. Once adopted by the DSB, both findings amount to a final resolution to the issue between the parties with respect to the particular claim and the specific aspects of the measure that are the subject of the claim.115  Moreover, here, India decided not to appeal the panel finding at issue in the original proceedings, even though it could have done so, inasmuch as the issue was not of an exclusively factual nature. Hence, India itself seems to have accepted the finding as final.

97. Therefore, we agree with the Panel's conclusion that:

When considering the status of adopted panel reports, the Appellate Body has indicated that they are binding on the parties "with respect to that particular dispute".  In our view, the Panel's ruling in the original dispute disposed of India's claim in this regard. Thus, we consider that India is precluded from reasserting in this proceeding and presenting arguments in support of a claim challenging the EC's consideration of "other factors" of injury.116  (footnotes omitted)

98. The Panel's ruling that India's claim under Article 3.5 relating to "other factors" was not properly before it is also consistent with the object and purpose of the DSU. Article 3.3 provides that the  prompt  settlement of disputes is "essential to the effective functioning of the WTO". Article 21.5 advances the purpose of achieving a prompt settlement of disputes by providing an expeditious procedure to establish whether a Member has fully complied with the recommendations and rulings of the DSB.117  For that purpose, an Article 21.5 panel is to complete its work within 90 days, whereas a panel in an original dispute is to complete its work within 9 months of its establishment, or within 6 months of its composition. It would be incompatible with the function and purpose of the WTO dispute settlement system if a claim could be reasserted in Article 21.5 proceedings after the original panel or the Appellate Body has made a finding that the challenged aspect of the original measure is not  inconsistent with WTO obligations, and that report has been adopted by the DSB. At some point, disputes must be viewed as definitely  settled  by the WTO dispute settlement system.

99. In the light of the foregoing, we conclude that the original panel's finding on India's claim under Article 3.5 relating to "other factors" provides a "final resolution" to the dispute in this respect118  between the parties, because it was not appealed, and forms part of a panel report adopted by the DSB. Therefore, we  uphold  the Panel's finding, in paragraph 6.53 of the Panel Report, that India's claim under Article 3.5 of the  Anti-Dumping Agreement,  as far as it relates to the European Communities' consideration of "other factors", was not properly before the Panel.

100. As a result, we do not need to rule on the issue of whether the Panel erred, in its alternative finding, in paragraph 6.246 of the Panel Report, that the European Communities had ensured that injuries caused by "other factors" was not attributed to the dumped imports, and thus had not acted inconsistently with Article 3.5 of the  Anti-Dumping Agreement. We recall that, at the oral hearing, India confirmed that its appeal against the Panel's alternative finding is conditional on our reversing the Panel's finding that India's claim under Article 3.5 relating to "other factors" was not properly before the Panel, and that, therefore, we need not reach this issue if we were to rule as we, in fact, have ruled.119 


 

1 WT/DS141/RW, 29 November 2002.

2 The recommendations and rulings of the DSB resulted from the adoption, by the DSB, of the Appellate Body Report and the panel report, as modified by the Appellate Body Report, in  EC � Bed Linen.

3 Council Regulation (EC) No 2398/97, 28 November 1997, imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan, published in the Official Journal of the European Communities, 4 December 1997, L-series, No. 332 ("EC Regulation 2398/97").

4 Original Panel Report, WT/DS141/R, adopted 12 March 2001, as modified by the Appellate Body Report, WT/DS141/AB/R.

5 Appellate Body Report, EC � Bed Linen, adopted 12 March 2001, para. 86(1).

6 Ibid., para. 86(2).

7 WT/DS141/9, 22 March 2001.

8 WT/DS141/10, 1 May 2001.

9 Council Regulation (EC) No 1644/2001, 7 August 2001, amending Regulation (EC) No 2398/97 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan and suspending its application with regard to imports originating in India, published in
the Official Journal of the European Communities, 14 August 2001, L-series, No. 219 ("EC Regulation 1644/2001").

10 Council Regulation (EC) No 160/2002, 28 January 2002, amending Council Regulation (EC) No 2398/97 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan, and terminating the proceeding with regard to imports originating in Pakistan, published in the Official Journal of the European Communities, 30 January 2002, L-series, No. 26 ("EC Regulation 160/2002").

Council Regulation (EC) No 696/2002, 22 April 2002, confirming the definitive anti-dumping duty imposed on imports of cotton-type bed linen originating in India by Regulation (EC) No 2398/97, as amended and suspended by Council Regulation (EC) No 1644/2001, published in the Official Journal of the European Communities, 25 April 2002, L-series, No. 109 ("EC Regulation 696/2002").

11 Panel Report, paras. 2.1-2.11.

12 WT/DS141/13/Rev.1, 8 May 2002.

13 WT/DS141/14, 2 July 2002; WT/DS141/14/Corr.1, 10 July 2002.

14 Panel Report, para. 6.22.

15 Ibid., para. 6.27.

16 Ibid., para. 6.53.

17 Ibid., para. 6.57. India's "claim 5" related to the assessment of whether the European Communities' reconsideration of injury was consistent with Article 3.4.

18 Panel Report., para. 6.68.

19 Panel Report, para. 6.94.

20 Ibid., para. 6.116.

21 Ibid., para. 6.144.

22 Ibid., para. 6.217.

23 Ibid., para. 6.233.

24 Ibid., para. 6.260.

25 Ibid., para. 6.271.

26 Panel Report, para. 6.246.

27 Ibid., para. 7.1.

28 Ibid., para. 7.2.

29  Ibid., para. 7.3.

30 WT/DS141/16, 9 January 2003.

31 Pursuant to Rule 21(1) of the Working Procedures.

32 Pursuant to Rule 22(1) of the Working Procedures.

33 Pursuant to Rule 24(1) of the Working Procedures.

34 Pursuant to Rule 24(2) of the Working Procedures.

35 Panel Report, para. 6.22.

36 India's and the European Communities' responses to questioning at the oral hearing.

37 India's appellant's submission, para. 145.

38 India's response to questioning at the oral hearing.

39 India's response to questioning at the oral hearing.

40 Ibid.

41 Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), para. 41.

42 Appellate Body Report, Thailand � H-Beams, para. 106.

43 India's appellant submission, paras. 56 and 59.

44 Appellate Body Report, US � Hot-Rolled Steel, para. 55.

45 Appellate Body Report, US � Hot-Rolled Steel, paras. 221-223.

46 Commission Regulation (EC) No 1069/97, 12 June 1997, imposing a provisional anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan, published in the Official Journal of the European Communities, 13 June 1997, L-series, No. 156 ("EC Regulation 1069/97").

47 India's appellant's submission, para. 178.

48 European Communities' appellee's submission, para. 140.

49 Appellate Body Report, US � FSC, para. 166.

50 Appellate Body Report, Mexico � Corn Syrup (Article 21.5 � US), para. 50.

51 Appellate Body Report, US � Offset Act (Byrd Amendment), para. 314.

52 European Communities' appellee's submission, para. 150.

53 Appellate body Report, US � Shrimp (Article 21.5 � Malaysia), para. 97.

54 Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), paras. 8-14.

55 Appellate Body Report, US � FSC (Article 21.5 � EC), paras. 40-44.

56 Appellate Body Report, EC � Hormones, para. 133.

57 Appellate Body Report, EC � Sardines, para. 302.

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

59 Ibid., para. 192.

60 Ibid., para. 193.

61 Hereinafter "the Panel".

62 Original Panel Report, para. 6.123. India also claimed under Article 3.5 that the European Communities had failed to establish the existence of a causal link between dumped imports and injury suffered by the domestic industry. According to India, by cumulating  all  imports from the countries under investigation, the European Communities had included in its calculation of "dumped imports" what India considered to be  non-dumped  import transactions. (Ibid., paras. 6.121-6.122) The original panel found  no violation of Article 3.5 in relation to this particular claim. (Ibid., para. 6.142) India did not appeal this finding in the original dispute.

63 Ibid., para. 6.144.

64 Council Regulation (EC) No 1644/2001, 7 August 2001, amending Council Regulation (EC) No 2398/97, imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India, and Pakistan and suspending its application with regard to imports originating in India, published in
the Official Journal of the European Communities, 14 August 2001, L-series, No. 219 ("EC Regulation 1644/2001").

65 Ibid., recitals (52)-(53).

66 Ibid., recitals (59)-(64).

67 The Panel noted that the European Communities expanded its findings in the redetermination with respect to the development of consumption of bed linen in order to take into account slightly different figures on domestic industry sales. The Panel stated that India's claim in the Article 21.5 proceedings did not rely on this minor change. (Panel Report, footnote 75 to para. 6.52)

68 In addition, India claimed before the Article 21.5 Panel that the European Communities had acted inconsistently with Article 3.5 by failing to establish a causal link between dumped imports and the injury allegedly suffered by the domestic industry. (Panel Report, para. 6.218)

69 Ibid., para. 6.30.

70 Ibid., para. 6.34.

71 Ibid., para. 6.43. The Panel disagreed with India that the original panel's finding on India's claim under Article 3.5 concerning "other factors" was an exercise of  judicial economy. In the Panel's view, it was a finding that India had failed to present a  prima facie  case of violation. (Ibid., para. 6.44)

72 Ibid., para. 6.43.

73 Ibid., para. 6.53. However, the Panel did rule on the merits of another aspect of India's claim under Article 3.5, namely the existence of a causal link between dumped imports and injury. The Panel found that the European Communities' finding of a causal link is not inconsistent with Article 3.5. (Ibid., para. 6.233) India has not appealed this finding.

74 India's appellant's submission, para. 154.

75 Ibid., paras. 151-152, referring to Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), paras. 36 and 41.

76 Ibid., para. 136.

77 Ibid., para. 146.

78 Ibid., paras. 148 ff, referring to Panel Report, paras. 6.50 and 6.52.

79 Ibid., para. 149, referring to Appellate Body Report, US � Shrimp (Article 21.5 � Malaysia), para. 89.

80 India's statement at the oral hearing.

81 European Communities' appellee's submission, para. 121.

82 Ibid., para. 142.

83 European Communities' appellee's submission, para. 134.

84 Ibid., para. 149.

85 Ibid., paras. 136 and 160.

86 Appellate Body Report, Guatemala � Cement I, paras. 72 and 76, interpreting Article 7 of the DSU.

87 The Panel stated in paragraph 6.17 of the Panel Report:

To the extent a party may have challenged, in a request for establishment of an Article 21.5 panel, measures which were not "taken to comply" by the implementing Member, it is our view that a Panel may decline to address claims concerning such measures. (original boldface)

In paragraphs 6.13 ff of the Panel Report, the Panel refers, in support of this interpretation, to the panel reports in  Australia � Salmon (Article 21.5 � Canada) (para. 7.10.22) and  Australia � Automotive Leather II (Article 21.5 � US) (para. 6.4).

88 Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), para. 40.

89 Ibid., paras. 40-41. The panels in  EC � Bananas III (Article 21.5 � Ecuador) (paras. 6.8-6.9) and
Australia � Salmon (Article 21.5 � Canada)
(para. 7.10.9) reached essentially the same conclusion.

90 Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), para. 41.

91 Ibid.

92 As we put it in  Canada � Aircraft (Article 21.5 � Brazil):

Indeed, the utility of the review envisaged under Article 21.5 of the DSU would be seriously undermined if a panel were restricted to examining the new measure from the perspective of the claims, arguments and factual circumstances that related to the original measure, because an Article 21.5 panel would then be unable to examine fully the "consistency with a covered agreement of the measures taken to comply", as required by Article 21.5 of the DSU.

(Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), para. 41) We defined the function of Article 21.5 proceedings in the same vein in our Report in  US � Shrimp (Article 21.5 � Malaysia) (para. 87).

93 India's appellant's submission, para. 151.

94 Appellate Body Report, Canada � Aircraft (Article 21.5 � Brazil), para. 36. In  US � Shrimp (Article 21.5 � Malaysia), we recalled our rulings on this issue, explicitly referring to our Report in  Canada � Aircraft (Article 21.5 � Brazil). (Appellate Body Report, US � Shrimp (Article 21.5 � Malaysia), para. 86)

95 India's response to questioning at the oral hearing.

96 Panel Report, para. 6.50.

97 Appellate Body Report, US � Shrimp (Article 21.5 � Malaysia), para. 89.

98 Ibid., para. 96.

99 In the original determination, the European Communities treated all imports from India as "dumped" because it found, in applying the practice of "zeroing", that all of the individually-examined producers were dumping. The original panel ruled that all import transactions attributable to a producer found to be dumping may be considered as "dumped" for purposes of making a determination of injury. (Original Panel Report, para. 6.137)

100 Panel Report, paras. 6.228 and 6.233.

101 We do not see how a change in the volume of "dumped imports" would affect the relationship between injury caused by "dumped imports" and injury caused by "other factors" in a situation where those "other factors" alone do not  cause injury. However, a change in the volume of "dumped imports" could affect this relationship in a situation where "other factors" cause a certain amount of injury.

102 India's response to questioning at the oral hearing.

103 Panel Report, para. 6.48.

104 India's appellant's submission, para. 146.

105 United States Public Law 106-519, 114 Stat. 2423 (2002).

106 Sections 921-927 of the Internal Revenue Code and Related Measures Establishing Special Tax Treatment for Foreign Sales Corporations.

107 We also agree with the Panel's statements, in paragraphs 6.46 and 6.49 of the Panel Report, that the claims raised in  EC � Bananas III (Article 21.5 � Ecuador),  as well as those raised in  Australia � Salmon (Article 21.5 � Canada),  concerned aspects of the "measures taken to comply" in those disputes which were different  from the measures subject to the respective original disputes.

108 European Communities' appellee's submission, paras. 150-151.

109 Appellate Body Report, US � Shrimp (Article 21.5 � Malaysia), para. 97.

110 India's and the European Communities' responses to questioning at the oral hearing.

111 Appellate Body Report, Mexico � Corn Syrup (Article 21.5 � US), para. 78.

112 Ibid., para. 79.

113 Panel Report, para. 6.51. The Panel found support for its view in our finding in  Japan � Alcoholic Beverages II   that "[a]dopted panel reports are an important part of the GATT  acquis. � They create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute. However, they are not binding, except with respect to resolving the particular dispute between the parties to that dispute". (Ibid., footnote 73 to para. 6.51, quoting Appellate Body Report, Japan � Alcoholic Beverages II, at 108) (emphasis added)

114 The Panel stated that:

Neither the Panel nor the Appellate Body in the original dispute had the opportunity to consider arguments with respect to India's claim in the original proceeding concerning the consistency of the EC's anti-dumping duty with Article 3.5 of the AD Agreement concerning consideration of "other factors" of injury, because India did not present arguments in support of its claim. The Panel did, however, rule on India's claim, finding that India had failed to present a prima facie case on this claim, and that aspect of the Panel's report was adopted without modification.

(Panel Report, para. 6.52) (original boldface)

115 We note that, at the oral hearing, the participants agreed that a finding adopted by the DSB, expressed in terms of WTO-consistency or the failure to present a  prima facie  case, has the same effect in terms of providing a final resolution to a dispute, in this respect, between the parties.

We also recall that the Panel noted, in paragraph 6.44 of the Panel Report, that the original panel's dismissal of India's claim under Article 3.5 relating to "other factors" was  not  an exercise of "judicial economy". The issue raised in this appeal is different from a situation where a panel, on  its  own initiative, exercises "judicial economy" by not ruling on the substance of a claim. In this respect, we recall our statement in  Australia � Salmon  that:

The principle of judicial economy has to be applied keeping in mind the aim of the dispute settlement system. This aim is to resolve the matter at issue and "to secure a positive solution to a dispute". To provide only a partial resolution of the matter at issue would be false judicial economy. A panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings "in order to ensure effective resolution of disputes to the benefit of all Members."

(Appellate Body Report, Australia � Salmon, para. 223) (footnotes omitted)

We believe that in a situation where a panel, in declining to rule on a certain claim, has provided only a partial resolution of the matter at issue, a complainant should not be held responsible for the panel's false exercise of judicial economy, such that a complainant would not be prevented from raising the claim in a subsequent proceeding.

116 Panel Report, para. 6.52.

117 Ibid., para. 6.45.

118 By this we mean this particular claim and the specific component of the measure that was the subject of that claim.

119 India's response to questioning at the oral hearing.