UNITED STATES � ANTI-DUMPING MEASURES ON
STAINLESS STEEL PLATE IN COILS AND STAINLESS
STEEL SHEET AND STRIP
FROM KOREA

Report of the Panel

(Continued)

(ii) Was the DOC's adjustment for unpaid sales in respect of sales through unaffiliated importers a permissible allowance for a difference affecting price comparability?

6.71. As we have seen, Korea claims that the AD Agreement allows adjustments only for "differences which are . . . demonstrated to affect price comparability" within the meaning of Article 2.4, and that because the non-payment by ABC company of certain sales was not such a difference, the adjustments made by the DOC were inconsistent with that Article. Although the United States contends, and we have found, that in its treatment of sales through affiliated importer POSAM the DOC was constructing an export price, the United States does not dispute that the WTO-consistency of its adjustments with respect to sales to unaffiliated buyers must be assessed by reference to the "due allowance" provision cited by Korea⁷⁷.

6.72. In examining this claim, therefore, we first consider the relevant provisions of the AD Agreement. Article 2.4 of the AD Agreement provides as follows:

"A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade, normally at the ex factory level, and in respect of sales made at as nearly as possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability⁷. In the cases referred to in paragraph 3, allowances for costs, including duties and taxes, incurred between importation and resale, and for profits accruing, should also be made. If in these cases price comparability has been affected, the authorities shall establish the normal value at a level of trade equivalent to the level of trade of the constructed export price, or shall make due allowance as warranted under this paragraph. The authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties." (emphasis added)

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⁷It is understood that some of the above factors may overlap, and authorities shall ensure that they do not duplicate adjustments that have been already made under this provision.

6.73. The third sentence of Article 2.4 identifies five specific categories of "differences which affect price comparability": differences in conditions and terms of sale, taxation, levels of trade, quantities, and physical characteristics. The United States does not assert that the cost of unpaid sales represents a difference in taxation, levels of trade, quantities or physical characteristics.

6.74. The United States does contend, however, that the allowances it made here were for "differences in conditions and terms of sale". It considers that a permissible interpretation of differences in "conditions and terms of sale" encompasses differences in costs associated with the terms of the sales contract and other expenses that are directly related to the sale, i.e., but for the sale the expense would not be incurred. In the United States' view, bad debt is an expense directly related to the payment terms of the contract, because whenever a seller sells on credit he accepts a credit expense, which includes any bad debt that may result from the sale. Korea responds that "conditions and terms of sale" are the agreed upon bundle of rights and obligations created by the sales agreement, and that no contract contains terms authorizing a customer to go bankrupt and refuse to pay.

6.75. We do not consider that the phrase "differences in conditions and terms of sale", interpreted in accordance with customary rules of interpretation of public international law, can be understood to encompass differences arising from the unforeseen bankruptcy of a customer and consequent failure to pay for certain sales. In this respect, we note that Article 2.4 refers to the "terms and conditions of sale". Although of course both words � "term" and "condition" � have many meanings, both are commonly used in relation to contracts and agreements. Thus, "term" is defined, inter alia, to mean "conditions with regard to payment for goods or services⁷⁸", while "condition" is defined, inter alia, as "a provision in a will, contract, etc., on which the force or effect of the document depends⁷⁹". Thus, we consider that, read as a whole, the phrase "conditions and terms of sale" refers to the bundle of rights and obligations created by the sales agreement, and "differences in conditions and terms of sale" refers to differences in that bundle of contractual rights and obligations. Thus, to the extent that there are, for example, differences in payment terms in the two markets, a difference in the conditions and terms of sale exists. The failure of a customer to pay is not a condition or term of sale in this sense, however. Rather, non-payment involves a situation where the purchaser has violated the "conditions and terms of sale" by breaching its obligation to pay for the merchandise in question.

6.76. We perceive no textual basis for the United States' effort to characterize all differences in costs associated with the terms of the contract and expenses directly related to the sale as "differences in terms and conditions of sale". The United States contends that "conditions" of sale can be read in this context to mean the "mode or state of being" of sales, such that "differences in conditions and terms of sale" include the "mode or circumstances" under which sales are made⁸⁰. Assuming this interpretation to be a permissible one, it might allow for adjustments for "differences in conditions and terms of sale" in cases where the contractual provisions governing sales in the two markets were identical but the seller was aware from circumstances existing at the time of sale that those provisions would likely entail different costs⁸¹. Thus to take an example often cited by the United States in this dispute, a seller might extend identical warranties in different markets or to different customers, knowing in advance that the costs related to those warranties in one market would likely be higher than in the other. Similarly, a seller might extend sales on the same credit terms in two different markets or to two different customers in the awareness that the risk of default � and thus the likely costs associated with the extension of credit � would be higher in one case than in the other. However, we fail to see how the fact that a customer who has purchased on credit subsequently went bankrupt and failed to pay for his purchases could be deemed a "circumstance under which sales are made", at least in a case such as this one where the seller had no knowledge of the precarious financial situation of the purchaser⁸².

6.77. We consider that an examination of the context in which the phrase "differences in conditions and terms of sale" is used supports our understanding of the ordinary meaning of this phrase. We recall that Article 2.4 identifies "differences in conditions and terms of sale" as one of several "differences which affect price comparability⁸³". Thus, the notion of price comparability informs our interpretation of "differences in conditions and terms of sale". In our view, the requirement to make due allowance for differences that affect price comparability is intended to neutralise differences in a transaction that an exporter could be expected to have reflected in his pricing⁸⁴. A difference that could not reasonably have been anticipated and thus taken into account by the exporter when determining the price to be charged for the product in different markets or to different customers is not a difference that affects the comparability of prices within the meaning of Article 2.4. This reinforces our view that the phrase "differences in conditions and terms of sale" cannot permissibly be interpreted to encompass an unanticipated failure of a customer to pay for certain sales.

6.78. In the latter phases of the proceeding, and in response to a question from the Panel, the United States contended that its methodology for the treatment of bad debt was simply a practical way to address differing levels of risks between markets in cases where sales are made on credit⁸⁵. As our previous discussion suggests, we agree with the United States that a difference in risk of non-payment between markets that was known at the time of sale might represent a difference for which due allowance could properly be made under Article 2.4. Nor do we preclude that actual bad debt experience during the period of investigation might be evidence relevant to establishing the existence of such a difference⁸⁶. The United States did not however treat actual experience with respect to levels of unpaid sales as evidence of different levels of risk in the two markets in these investigations. Rather, it stated that it was the DOC's practice to treat bad debt as a direct selling expense when the expense was incurred in respect of the subject merchandise⁸⁷. Thus, even assuming that the US methodology was somehow intended to address differences in risk of non-payment, we do not accept the proposition that the existence of a higher level of non-payment in one market than in another during the period of investigation may be deemed to demonstrate the existence of such differences in risk and thus represent a permissible adjustment for "differences in conditions and terms of sale⁸⁸".

6.79. We note that the United States does not appear to argue that the adjustment made by the DOC in these investigations is justified on the basis that it represented an adjustment for "other differences which are also demonstrated to affect price comparability⁸⁹." Nevertheless, taking into account the ambiguity of the United States' position on this question, and in the interests of achieving a full resolution of this dispute, we conclude that, for the reasons set forth in paragraph 6.77 above, the adjustment in question in this dispute could not be justified as an adjustment for "other differences which are also demonstrated to affect price comparability".

6.80. For the foregoing reasons, we conclude that the DOC's adjustment for unpaid sales through unaffiliated importers was not a permissible due allowance for differences affecting price comparability and was thus inconsistent with the third sentence of Article 2.4 of the AD Agreement⁹⁰.

(iii Is Korea's claim regarding the DOC's adjustment for unpaid sales in respect of sales through POSAM to construct an export price within the Panel's terms of reference?

6.81. In the preceding section, we concluded that the DOC's adjustment for unpaid sales in respect of sales through unaffiliated purchasers was not a permissible due allowance for differences affecting price comparability and was thus inconsistent with the third sentence of Article 2.4 of the AD Agreement. We also concluded, however, that the DOC's adjustment for unpaid sales in respect of sales by POSCO through its affiliated US importer POSAM was not an adjustment for differences affecting price comparability but was rather one aspect of the construction of an export price, the WTO-consistency of which must therefore be measured against the provisions governing such construction. Before considering the substantive issue, however, we must first consider whether claims regarding the construction of the export price are within this Panel's terms of reference.

6.82. The United States contends that, because Korea has made no claim under Article 2.3 of the AD Agreement, the DOC's decision to construct an export price and the methodology it employed to do so are not issues before this Panel⁹¹. The United States considers that, while the fourth sentence of Article 2.4 provides guidance on how to construct the export price, it uses non-mandatory language. Thus, a claim that the construction of an export price is in violation of the AD Agreement must be based on Article 2.3.⁹²

6.83. Korea, citing the Appellate Body report in Argentina - Footwear⁹³, responds that the fact that Article 2.4 specifically refers to Article 2.3 should be sufficient to bring Article 2.3 within the Panel's terms of reference. In any event, Korea asserts that it has not claimed that Article 2.3 establishes a separate basis for a finding that the United States acted inconsistently with the AD Agreement. Rather, Korea has addressed Article 2.3 merely to refute a defense offered by the United States. Finally, Korea considers that the rules governing the methodology used to construct an export price are found in the fourth sentence of Article 2.4, not in Article 2.3.⁹⁴

 6.84. In considering this issue, we note first that Korea's request for establishment of a panel, which represents the basis for our terms of reference, contains no mention whatsoever of Article 2.3 of the AD Agreement, nor of Article 2 generally. Rather, it refers exclusively to Articles 2.1 and 2.4⁹⁵. It is well established that a panel may not, consistent with Article 6.2 of the DSU, consider a claim of violation of a treaty provision which has not been identified in the request for establishment underlying the panel's terms of reference⁹⁶. Nor do we consider that a claim of violation of Article 2.3 would be within this Panel's terms of reference merely because Article 2.4 makes a reference to Article 2.3⁹⁷.

 6.85. We recall however Korea's statement that it has not claimed that Article 2.3 establishes a separate basis for a finding that the United States acted inconsistently with the AD Agreement. Thus, the question before us is not whether a claim under Article 2.3 is within our terms of reference. Nor does the United States anywhere in its submissions suggest that a claim under Article 2.4 regarding treatment of bad debt in respect of construction of the export price is not within the Panel's terms of reference. Rather, the issue as framed by the parties relates to the nature of the obligations, if any, imposed by Article 2.4 in respect of the construction of an export price. This is an issue relating to the substance of Korea's claim, not to its admissibility.

(iv) Is the DOC's adjustment for unpaid sales in respect of sales through POSAM to construct an export price consistent with Article 2.4, fourth sentence, of the AD Agreement?

6.86. As is evident from the preceding section, the parties to this dispute disagree as to what obligations, if any, Article 2.4 imposes in respect of the construction of the export price. In considering this question, we must of course turn first to the relevant provisions of the AD Agreement.

6.87. Article 2.1 of the AD Agreement provides as follows:

"For the purposes of this Agreement, a product is to be considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.

6.88. Article 2.3 of the AD Agreement provides as follows:

"In cases where there is no export price or where it appears to the authorities concerned that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer, or if the products are not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as the authorities may determine." (emphasis added)

6.89. Article 2.4 of the AD Agreement provides as follows:

"A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade, normally at the ex factory level, and in respect of sales made at as nearly as possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability⁷. In the cases referred to in paragraph 3, allowances for costs, including duties and taxes, incurred between importation and resale, and for profits accruing, should also be made. If in these cases price comparability has been affected, the authorities shall establish the normal value at a level of trade equivalent to the level of trade of the constructed export price, or shall make due allowance as warranted under this paragraph. The authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties." (emphasis added).

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7 It is understood that some of the above factors may overlap, and authorities shall ensure that they do not duplicate adjustments that have been already made under this provision.

6.90. In our view, both Article 2.3 and Article 2.4 play an important role in respect of the construction of export prices. When determining whether dumping exists, Article 2.1 usually requires a comparison of the export price with the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country. Article 2.3, however, authorizes a Member to construct the export price where, inter alia, the actual export price is unreliable because of association between the exporter and the importer. As discussed in section VI.C.2.(b)(i), it was pursuant to this authorization that the DOC disregarded the export price charged by POSCO to its affiliated importer POSAM in these investigations and instead constructed the export price.

6.91. Further, Article 2.3 specifies that the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer. It is clear from this language that, while the price charged to the first independent buyer is a starting-point for the construction of an export price, it is not itself the constructed export price. Nor does Article 2.3 itself contain any guidance regarding the methodology to be employed in order to construct the export price. Rather, the only rules governing the methodology for construction of an export price are set forth in Article 2.4 of the AD Agreement, which provides that, "[i]n the cases referred to in paragraph 3, allowances for costs, including duties and taxes, incurred between importation and resale, and for profits accruing, should also be made." Although the United States repeatedly refers to these allowances as "Article 2.3 adjustments⁹⁸", the provision governing these allowances is found in Article 2.4 and it is therefore evident to us that a claim regarding the appropriateness of allowances made to construct an export price may be made pursuant to that Article⁹⁹.

6.92. The United States contends that, because Article 2.4 provides that allowances for costs and profits "should" be made in constructing an export price, that provision is not mandatory, and that this provision of Article 2.4 therefore does not provide a basis for claim of violation¹⁰⁰. We cannot agree.

6.93. The term "should" in its ordinary meaning generally is non-mandatory, i.e., its use in this sentence indicates that a Member is not required to make allowance for costs and profits when constructing an export price¹⁰¹. We believe that, because the failure to make allowance for costs and profits could only result in a higher export price � and thus a lower dumping margin � the AD Agreement merely permits, but does not require, that such allowances be made¹⁰².

6.94. Korea does not however assert that the DOC failed to make allowance for all costs and profits. Rather, as discussed below, Korea asserts that the DOC made allowances in constructing the export price which can not be justified as allowances "for costs . . . incurred between importation and resale". In our view, that the AD Agreement does not require such allowances does not mean that a Member is free to make any allowances it desires, including allowances not specified in this provision. To the contrary, we view this sentence as providing an authorization to make certain specific allowances. We therefore consider that allowances not within the scope of that authorization cannot be made¹⁰³. If a Member were free to make any additional allowances it desired, there would be no effective disciplines on the methodology for construction of an export price and the provision in question would in our view be reduced to inutility¹⁰⁴. Thus, we conclude that it would be inconsistent with Article 2.4 of the AD Agreement to make allowances in the construction of the export price that are not within the scope of the authorization found in that Article.

6.95. Our conclusion that Article 2.4 contains binding obligations regarding the scope of the permissible allowances that can be made in constructing an export price does not mean that we equate allowances for differences which affect price comparability with allowances relating to the construction of the export price. Rather, the third sentence of Article 2.4 requires due allowance to be made for differences affecting price comparability, while the fourth sentence provides that in the cases referred to in paragraph 3 � i.e., when constructing an export price � allowance for certain costs and profits should also be made. Finally, the fifth sentence of Article 2.4 makes clear that allowances relating to the construction of the export price could in fact reduce price comparability, such that one of several compensating steps should be taken. For all these reasons, it is clear to us that allowances in respect of construction of the export price are separate and distinct from allowances for differences which affect price comparability and are governed by different substantive rules.

6.96. With the foregoing in mind, the question before us can be simply posed: was the deduction from the price charged by POSAM to independent purchasers of an allocated amount of the unpaid sales an allowance for "costs, including duties and taxes, incurred between importation and resale" such that it was authorized by the fourth sentence of Article 2.4¹⁰⁵?

6.97. It seems reasonably clear, and the parties do not dispute, that non-payment by ABC company represents a "cost" within the meaning of Article 2.4. They do not agree, however, as to whether that cost was incurred between importation and resale. In this respect, Korea argues that non-payment does not occur between importation and resale but rather occurs only after resale. The United States responds that the reference to costs incurred "between importation and resale" cannot be a mere temporal limitation as that would be inconsistent with the object and purpose of Article 2.3, which is to construct a reliable export price to the associated importer. Rather, the United States considers that this provision distinguishes between costs incurred in connection with the import transaction and those incurred in connection with the resale. It is the view of the United States that price is equal to cost plus profit, therefore the deduction from the resale price of all costs and profits associated with the resale leads to the effective price between the exporter and the associated importer for the transaction.

6.98. In considering this question, we note that Article 2.4 uses the word "between". That term is defined to mean, inter alia, "[i]n the interval separating two points of time, events, etc."¹⁰⁶. Thus, the phrase costs "incurred between importation and resale" in its ordinary meaning is most naturally read to refer to costs that were incurred between the date of importation and the date of resale. Under this reading, it might be difficult to conclude that a cost incurred after the date of resale was a cost incurred "between importation and resale".

6.99. We are cognizant, however, that dictionary definitions can only take the interpreter so far, and that in interpreting a provision of a treaty we must take into account both context and object and purpose¹⁰⁷. As discussed above, it is clear that the purpose of allowances to construct an export price is not to insure price comparability per se. Rather, an export price is constructed, and the appropriate allowances made, because it appears to the investigating authorities that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or third party. By working backwards from the price at which the imported products are first resold to an independent buyer, it is possible to remove the unreliability. Thus, we agree with the United States that the purpose of these allowances is to construct a reliable export price to use in lieu of the actual export price¹⁰⁸ or, as expressed by the EC as third party, to arrive at the price that would have been paid by the related importer had the sale been made on a commercial basis¹⁰⁹.

6.100. Read in light of this object and purpose, we recognize that costs related to the resale transaction but not incurred in a temporal sense between the date of importation and resale could as a general matter be considered to be "incurred between importation and resale" and thus deducted in order to construct an export price. Nor do we preclude that an amount to cover the risk of non-payment might be considered to be such a cost. We do not believe, however, that this interpretation of costs "incurred between importation and resale" can be stretched to include costs that not only were not incurred in an accounting sense until after the date of resale but which were entirely unforeseen at that time. In this regard, we observe that, while we agree with the United States that as a general principle a related importer may be expected to establish price based on costs plus profit, a price certainly cannot be expected to reflect an amount for costs that were entirely unforeseen at the time the price was set. To deduct costs which not only were incurred after the date of resale but which were entirely unforeseen at that time would not result in a "reliable" export price in the sense of the price that would have been paid by the related exporter had the sale been made on a commercial basis.

6.101. Applying this principle to the case at hand, it is clear that the costs arising from the failure of ABC company were incurred in a temporal sense after the date of resale. Further, the unpaid sales in these investigations, which represented a substantial share¹¹⁰ of total sales of subject merchandise in the United States during the periods of investigation, arose as a result of the unforeseen bankruptcy of a single customer¹¹¹. We further note the admission of the United States that "[t]here was no evidence in either case that POSCO had any knowledge at the time of sale that ABC company was in a precarious financial situation¹¹²". Thus, it is clear that these costs not only were incurred after the date of resale but were entirely unforeseen as of that date. Under these circumstances, we do not consider the amount for unpaid sales deducted by the United States in constructing an export price was a cost "incurred between importation and resale" within the meaning of Article 2.4 of the AD Agreement.

77. First submission of the United States, para. 81, Annex 2-1 ("When comparing that export price [i.e., the price charged by POSCO to independent buyers] to normal value, the United States made an adjustment to normal value to account for differences affecting price comparability that was consistent with Article 2.4.") 

78. New Shorter Oxford English Dictionary, Oxford University Press, 1993, p. 3253. The United States apparently agrees that "terms" in Article 2.4 refers to contractual terms, as it states that an ordinary meaning of "terms of sale" is "the situations and conditions that define the nature and extent of the sales contract (e.g., quantity, delivery)". First Submission of the United States, para.83, Annex 2-1. 

79. Id., p. 472. 

80. First Submission of the United States, para. 83, Annex 2-1. Like the dictionary relied on by the United States, the Shorter Oxford English Dictionary identifies "State, mode of being" as one broad definition of the word "condition" (the other broad category being "A convention, proviso, etc."). For example, one may speak of the "human condition", or note that a person is "in no condition" to do something. Read in context, however, we doubt that this alternative meaning is applicable in the context of Article 2.4.

81. We note however that such a situation might more properly be considered to be an "other difference . . . affecting price comparability".

82. The United States concedes that there was no evidence in the record in either investigation that POSCO had any knowledge at the time of sale that ABC company was in a precarious financial situation. Responses of the United States to Questions posed by the Panel at the First Meeting of the Panel, (Question 2 on treatment of unpaid sales at the first meeting of the Panel, Annex 2-4).

 83. The parties disagree as to whether a "difference in conditions and terms of sale" is by definition a difference affecting price comparability or whether, having established that such a difference exists, it is still necessary to determine that such a difference affects price comparability in order to make an adjustment. See responses of Korea and the United States to Questions Posed by the Panel at the Second Meeting of the Panel, (Question 6 on treatment of unpaid sales, Annexes 1-7 and 2-7). This is not however an issue we need resolve in this dispute. 

84. The United States appears to have a similar view. Thus, it states that "[s]elling expenses such as warranty costs and bad debt not only reflect conditions of sale in the market, they are also an element of price.[footnote omitted]. Therefore, differences in such selling expenses affect price comparability". First Submission of the United States, para. 84, Annex 2-1. 

85. The United States contended that the risk of non-payment "may differ between the two markets being compared and thus have different effects on prices in the two markets. Because it is the only practical means - and a method as reasonable as any other - of making a due allowance for any such difference, we base the allowance on the company's actual bad debt experience in the two markets during the period of investigation.[footnote omitted] That is, we rely on the actual bad debt expenses the company recognizes with respect to each of the two markets being compared." Responses of the United States to Questions Posed by the Panel at the Second Meeting of the Panel. (Question 8 on bad debt, Annex 2-4).

86. Although in our view the existence of different levels of non-payment during prior periods would appear to be much more relevant. 

87. Final Determination on Plate, p. 15448, at Korea Exhibit 11; Final Determination on Sheet, p. 30674, Korea Exhibit 24. 

88. The United States contends that, "during the period of investigation, POSCO actually recognized greater bad debt expenses, as a proportion of sales, in the US market than in the Korean market. This evidence would indicate that POSCO should be charging higher prices in the US market than in the Korean market." In the absence of any evidence in the record that the level of non-payment in the US market was foreseeable or that the historical risk of non-payment was higher in the US than the Korean market, the conclusion that POSCO should have been charging higher prices in the US than in the Korean market seems unwarranted. 

89. In response to a question from the Panel, the United States stated that "Because bad debt falls within the meaning of 'conditions and terms of sale', we have not relied on the reference in Article 2.4 to 'any other differences' demonstrated to affect price comparability. That does not constitute a concession that bad debt could not fall within 'other differences'". Responses of the United States to Questions Posed by the Panel at the First Meeting of the Panel, (Question 5 regarding unpaid debt, Annex 2-4). 

90. In light of our conclusion on this issue, we need not address Korea's additional argument that the allocation by the DOC of the cost of unpaid sales of ABC Company over all US sales to all customers is inconsistent with Article 2.4 because the failure of one company to pay did not affect the price comparability of sales to other customers who did pay for their purchases.

91. Second Submission of the United States, para. 22, Annex 2-5.

92. Responses of the United States to Questions Posed by the Panel at the Second Meeting of the Panel, (Question 2 on unpaid sales, Annex 2-7).

93. Argentina - Safeguard Measures on Imports of Footwear, Appellate Body Report, WT/DS121/AB/R, adopted 1 January 2000, para. 74.

94. Responses of Korea to Questions Posed by the Panel at the Second Meeting of the Panel, (Question 2 on unpaid sales, Annex 1-7).

95. WT/DS179/2.

96. Article 6.2 of the DSU provides that the request for the establishment of a panel "shall provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly." The Appellate Body has observed that:

"Identification of the treaty provisions claimed to have been violated by the respondent is always necessary both for the purposes of defining the terms of reference of a panel and for informing the respondent and the third parties of the claims made by the complainant; such identification is a minimum prerequisite if the legal basis of the complaint is to be presented at all."