4.828 A misunderstanding on the part of Mr. Cyrulnik cannot be ruled out either. Ecolatina was little else than a mail box for Van Bael & Bellis. Mr. Cyrulnik was not involved in the preparation of the responses, which was carried out exclusively by Van Bael & Bellis. Therefore, he had only a superficial knowledge of the information contained in the responses and of the issues raised by the investigation. 4.829 At any rate, even if the exporters had become aware at a certain point in time of the DCD�s alleged decision to make the comparison �per size�, it would not follow from this that they acquiesced to such decision, nor that such decision was consistent with the AD Agreement.

2. Argentina

(a) Arguments of Argentina in its first written submission relating to the EC�s claim under Article 2.4 of the AD Agreement

4.830 In its first written submission, Argentina made the following arguments relating to the EC�s claim under Article 2.4 of the AD Agreement.

4.831 Argentina first presented a number of facts relevant to its legal arguments.

4.832 To begin with, when considering the differences which affect price comparability, account was taken, essentially, of the dimensions of the product in question.

4.833 The implementing authority had to establish some kind of criterion for facilitating a fair comparison of different products which, because they were designer products, were very difficult to compare. The task was made even more difficult by the fact that there were 78 manufacturers of porcellanato, each of which produced dozens of different varieties which, in their turn, could be discontinued at any time or replaced by similar articles with a different product code or trade name. This applies to each supplier. Since these circumstances made the implementing authority�s job infinitely more difficult, it decided to establish as a basis for comparison the only variable that applied to all of the articles from all of the suppliers and that was not affected by market considerations from one supplier to the other as could be the case with the other variables, such as colour or design. Since the sizes 20 cm x 20 cm, 30 cm x 30 cm and 40 cm x 40 cm were the most representative, it was these sizes that were considered according to the volume exported.

4.834 Once the investigation had been initiated, all of the parties concerned were given ample opportunity to supply as much information as possible so that the implementing authority could rely on homogeneous data in order to make a fair comparison.

4.835 Moreover, the exporting firms did not submit, during the procedure, any evidence to invalidate the product breakdown applied at the opening of the investigation and maintained in the final determination.

4.836 It should be stressed that the DCD always tries to put some order into its investigations by seeking a criterion for ensuring the homogeneity of the products under analysis. In this case, Argentina stresses that there was no objection by the parties to the use of product size as a criterion. Thus, Argentina considers that the implementing authority acted properly and objectively on the basis of a criterion agreed upon by the parties.

4.837 Argentina presented next its legal arguments concerning the EC�s claim under Article 2.4.

4.838 The EC has argued that there has been an infringement of Article 2.4, which states that:

A fair comparison shall be made between the export price and the normal value � . 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 � physical characteristics � .

(i) The standard of review applicable to the case

4.839 The obligation to make a �fair comparison�, an obligation qualified by the words �on its merits�, is inspired by the standard of review applied in the framework of the AD Agreement as defined in Article 17.6 thereof.

4.840 This peculiarity of the AD Agreement, the only agreement to contain a specific standard for the review of provisional or definitive anti-dumping measures or price undertakings when they are questioned under the DSU, has been recognized in a number of precedents, such as United States � Underwear: �We note that the ATC does not establish a standard of review for panels, contrary, for example, to the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, where Article 17.6 defines the standard of review that panels have to apply when reviewing cases arising under that Agreement. We further note that the DSU does not contain a provision mandating a specific standard of review� (Panel Report, United States � Restrictions on Imports of Cotton and Man-Made Fibre Underwear, WT/DS24/R, adopted 25 February 1997, at para. 7.8).

4.841 This same point, that the only exception to the general standard of review set forth in Article 11 of the DSU is the AD Agreement, was also made in EC � Hormones with reference to the treatment that should be given to the facts (�Only Article 17.6(i) of the Anti-Dumping Agreement has language on the standard of review to be employed by panels engaged in the �assessment of the facts of the matter�. We find no indication in the SPS Agreement of an intent on the part of the Members to adopt or incorporate into that Agreement the standards set out in Article 17.6(i) of the Anti-Dumping Agreement. Textually, Article 17.6(i) is specific to the Anti-Dumping Agreement�. Appellate Body Report, EC � Measures Concerning Meat and Meat Products, WT/DS26/AB/R, adopted 13 February 1998, at page 49), and in a general sense both with respect to the facts and the standards of the Agreement, in Argentina � Footwear (�We have stated, on more than one occasion, that, for all but one of the covered agreements, Article 11 of the DSU sets forth the appropriate standard of review for panels. The only exception is the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, in which a specific provision, Article 17.6, sets out a special standard of review for disputes arising under that Agreement�. Appellate Body Report, Argentina � Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000).

4.842 Ultimately, these precedents reflect the principle of �deference� towards the methodology applied by the investigating authorities in anti-dumping cases in accordance with Article 17.6(i) and 17.6(ii) of the AD Agreement.

4.843 Indeed, the second sentence of Article 17.6(ii) states that �Where the Panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the Panel shall find the authority�s measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.� The wording of this provision suggests that it requires the principle of deference to be subjected to a sort of double test before it can be invoked to defend an interpretation of the Agreement, i.e.:

- There should be several permissible interpretations;

- The measure should rest upon one of those permissible interpretations.

4.844 This had been described by Jackson as follows in his book The Jurisprudence of GATT and the WTO: �subsection (ii) seems to establish a two-step process � First, the Panel must consider whether the provisions of the agreement in question admit of more than one interpretation. If not, the Panel must vindicate the provision�s only permissible interpretation. If, on the other hand, the Panel determines that the provisions indeed admit of more than one interpretation, the Panel shall proceed to the second step of the analysis and consider whether the national interpretation is within the set of permissible interpretations. If so, the Panel must defer to the interpretation given to the provision by the national government� (Jackson, page 148).

4.845 The concept of deference refers to the existence of various permissible interpretations that may arise from the text of the Agreement, in this case Article 2.4 which calls for a �fair� comparison taking account of the �merits� of each case, inter alia, physical characteristics.

4.846 The permissibility of the interpretation made by the Authority, in this case of the criterion used as a basis for making a �fair� comparison, according to the standard of �deference� established in Article 17.6, is precisely what enables the authority, as a matter of law, to rely, within the limits of the Article, on its own discretion in choosing a method for making the comparison.

4.847 In other words if two different approaches or methodologies are reasonable, and derive from an interpretation of the text, then both are permitted under the Agreement, even if they result in totally different conclusions.

4.848 Generally speaking, and originally in connection with the weighing of the facts, this concept of �deference� towards the national authority forms part of GATT/WTO jurisprudence and has been addressed on a number of occasions in the past, in particular in the case United States�Salmon:

� the mere fact that in a given case reasonable, unprejudiced minds could differ as to the weight to be accorded to certain facts was not a sufficient ground to find that a determination of material injury based on such facts was not based on positive evidence � The question of whether a determination of injury was based on positive evidence therefore was distinct from the question of the weight to be accorded to the facts before the investigating authorities � (GATT Panel Report, United States � Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 494).

(ii) Deference to the investigating authority

4.849 The EC states that it recognizes the discretion of the investigating authorities or the margin available to them in applying Article 2.4: �Admittedly, the terms �due allowance� leave some discretion to the investigating authorities � the DCD could have chosen to make �due allowance� for the differences at issue by using a different method from that suggested by the exporters ��. The problem arises when the EC goes on to suggest an alternative method of adjustment � �by making adjustment a posteriori to the normal value or the export price� � and argues that the fact that the DCD did not apply the alternative method proposed by the EC in itself invalidates the DCD�s option of making an adjustment on the basis of differences in size.

4.850 This begs the question of why an a posteriori adjustment of the normal value would be a valid way of complying with the obligation of making a �fair� comparison.

4.851 As indicated, the authority developed the idea of �homogenization� which ultimately amounts to a standardization based on certain parameters which by their nature reflect a certain universality within the product investigated.

4.852 Why, then, should one consider that whereas an adjustment of the kind proposed by the EC would be consistent with Article 2.4, the fact that the authority should base its comparison on a factor such as �physical characteristics� invalidates the comparison?

4.853 What the DCD did, in keeping with Article 2.4, was to use the physical characteristics as a basis and to make a fair comparison. This unquestionably resulted in an adjustment which ultimately produced lower final margins of dumping than those relied upon to initiate the investigation.

4.854 In the end, the authority chose to interpret the scope of the obligation contained in the Agreement on the basis of a physical characteristic of the product, i.e. its size (20 x 20, 30 x 30 or 40 x 40), which was the most universal feature. This factor, applicable to the greatest quantity of imports of the product investigated, would permit the authority, on the basis of the greatest quantity of elements in common, to make the most comprehensive fair comparison �on the merits� of the case (infinite number of models according to colour, design etc.).

4.855 The DCD made a fair comparison taking account of the diversity of the ceramic tiles investigated and chose to use a factor which, in its view, established a �reasonable� basis for comparison and met the Article 2.4 requirement. Thus the DCD made a �reasonable� analysis of the facts, applying to them the obligations set forth in the Agreement, in accordance with the text thereof, and without having to resort to procedures such as the a posteriori adjustment, which does not appear in the text of Article 2.4. To follow the approach suggested by the EC would have meant sacrificing some of the �deference� owed to the investigating authority and specifically recognized in Article 17.6 of the AD Agreement. This double standard involving acceptance of what can reasonably be inferred from the facts available and the interpretation of the obligations arising from the text of the Agreement has been recognized by GATT panels, in particular the United States � Salmon Panel cited above.

4.856 In that case, the Panel first examined whether the Agreement imposed an obligation on the United States to use the methodology put forward by Norway: �The Panel noted � that � it had specifically requested Norway to present arguments as to why � the text of Article 2.4 mandated the use of acquisition prices paid by exporters � � (GATT Panel Report, United States � Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 406, emphasis added by Argentina). Similarly: �the Panel � found that � the United States was not under an obligation to first consider the use of export prices to third countries as a basis for the establishment of normal values before resorting to the use of constructed normal values� (GATT Panel Report, United States � Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 393, emphasis added by Argentina). This required an analysis of the text, which included ascertaining whether it contained criteria which the Panel could review to determine whether the Department had used the methodology correctly. Otherwise, the Panel review was limited to examining whether the methodology used could �reasonably � be sufficient to serve its stated purpose� (GATT Panel Report, United States � Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 414) or whether the Department of Commerce had acted reasonably in the light of the information before it (GATT Panel Report, United States � Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/87, adopted 28 April 1994, at para. 442) Similarly, in the case at issue, the Panel should assess whether the �homogenization� criterion selected by the implementing authority for the purposes of making a fair comparison was, first of all, reasonable, and whether in addition, the Argentine interpretation of the obligations arising from Article 2.4 was consistent with the requirements of the Agreement, regardless of whether there existed another permissible interpretation.

4.857 In this case, the EC submits that its interpretation of the obligations of the Agreement should be substituted for those of the national authorities in a specific context such as the AD Agreement, Article 17.6 of which refers both to the assessment of the facts and to the scope of the interpretations of the Agreement. Thus, even though an interpretation of the obligation different from that made by Argentina may be permissible, provided the �fair comparison� methodology used is in keeping with Article 2.4 � and here the EC does not disagree, but maintains that the methodology should be replaced by its own � the comparison made by Argentina must be considered consistent with that Article.

(b) Arguments of Argentina in its first oral statement relating to the EC�s claim under Article 2.4 of the AD Agreement

4.858 In its first oral statement, Argentina made the following arguments relating to the EC�s claim under Article 2.4 of the AD Agreement.

4.859 Particularly relevant with respect to the analysis of compliance with the obligation set forth in Article 2.4 of the AD Agreement is the standard of review contained in Article 17.6 thereof.

4.860 In its first written submission, Argentina discussed the various elements of that article as regards both the interpretation of the scope of the Agreement (Article 17.6(ii)) and the assessment of the facts on the basis of the above provision (Article 17.6(i)).

4.861 The determination of whether the �fair comparison� made by the authority was consistent with the AD Agreement should be based on the definition of the content or scope of the obligation, without having to resort to Article 17.6(ii) (legal interpretations).

4.862 In paragraph 83 of its first written submission, the EC specifically stated that it recognized that the Agreement left some discretion to the investigating authorities (�Admittedly, the terms �due allowance� leave some discretion to the investigating authorities�). This being the case, the discussion concerns not so much the scope of the obligation laid down in the Agreement regarding the content of the �due allowance� as the assessment of the facts (differences in the ceramic tiles) requiring an adjustment in order to make a �fair comparison�, a process which should make it possible to evaluate the facts in an �unbiased� and �objective� manner.

4.863 Having confirmed this, i.e. that the authority evaluated the facts in an �unbiased� and �objective� manner in conformity with the principle of deference contained in Article 17.6(i), the Panel must respect the authority�s evaluation even though it could reach a different conclusion.

4.864 Can the fact that the authority opted for the common parameter which reflected the greatest universality, i.e. the size, a physical characteristic, as a criterion on which to base the fair comparison, be qualified as �biased� or �unobjective�? It would be difficult to find a more universal criterion on which to base an adjustment than the physical characteristics of the product, i.e. the size of the tiles. The authority�s final determination, following the market segmentation duly established by the authority and accepted by the exporting firms, states that the volume of 30 cm x 30 cm tiles exported to Argentina represented 70.04 per cent of the total, while 40 cm x 40 cm tiles represented 16.17 per cent and 20 cm x 20 cm tiles 13.08 per cent. Argentina wonders whether the EC actually expected the DCD to make the adjustment for the 0.71 per cent that was not included in any of these categories.

(i) Information requested

4.865 It is important, at this point, to refer to the information duly requested by the authority. It must be borne in mind that Annex II of the questionnaire for producers/exporters is entitled �Identification of the product at issue�. One of the questions in that Annex refers to �technical specifications for each model/type/code of goods sold in the domestic market and those exported to Argentina�.

4.866 The answer given to this question by some of the exporting firms was the following: �The technical characteristics of the porcellanato are specified in detail in the catalogues annexed hereto.� However, Annex II also asks for general catalogues and/or brochures and/or plans. In other words, it seems clear that the submission of catalogues or brochures could not make up for the lack of information referring to the technical specifications for each model/type/code, no matter what the producing/exporting firms may erroneously have understood.

4.867 Moreover, the EC�s questions suggesting that the segmentation of the product by the DCD represented a breach of Article 2.4 is incomprehensible. The only way in which the DCD could have carried out an a posteriori adjustment once the investigation had been opened would have been on the basis of new information submitted by the interested parties, more specifically the producers/exporters.

4.868 However, even accepting the hypothesis that a posteriori adjustment was the way to make the fair comparison (and the text of Article 2.4 does not suggest this), as stated above with respect to the information from the producers/exporters relating to the technical specifications for the product under investigation, the producers/exporters did not provide the documentation the DCD would have needed to carry out a new analysis in this connection.

4.869 This attitude of the producers/exporters during the investigation is consistent with the fact that at no time during the proceedings did these interested parties raise any objections to the segmentation of the product and the adjustments made.

(ii) The authority�s decision

4.870 One wonders how the DCD could have obtained technical characteristics of the product under investigation, without prejudice to the segmentation applied at the opening of the investigation, on the basis of catalogues containing an infinite number of models, designs, uses, etc.: not only is this not the DCD�s responsibility, but it would have been impossible to do.

4.871 Perhaps Annex IV (Information on the producer/exporter market) would have helped, since it contains an item referring to �model/code/type�. However, the reply given by all of the producers/exporters to this question was: �This type of information is not available by model, code or type. The information provided refers to porcellanato in general�.

4.872 What other parameter could have provided a common standard on which to base the adjustment? There are an infinite number of colours, for example. The same applies to designs, not to mention the other characteristics listed in Article 2.4 of the Agreement. What other non-confidential criterion supplied during the investigation could the authority rely on?

4.873 How could the EC require an undefined a posteriori adjustment without specifying the parameters on which it should be based? Indeed, Argentina is certain that, as with Article 6.8, the EC itself recognizes the difficulties involved in making an adjustment on the basis of information on which the DCD could not rely. In other words, even if, for instance, the methodology used by the EC (a code by which its sales in its domestic market would be made comparable to export sales) had been adopted for the purpose, the exporters did not supply any quantification of the adjustments to be made either to the normal value or to the export price. Consequently, making an adjustment was not feasible.

4.874 This being so, the Panel should confirm that in this case, as in the case of US � Salmon from Norway, the DCD �acted reasonably in the light of the information before it�.

4.875 In the end, the DCD was inhibited by the confidential and incomplete nature of the information submitted. In the circumstances, what the DCD had to do was to reach a factual determination in the light of the information available (non-confidential summaries), in which connection Article 17.6(i) prescribes the standard of deference to the national authorities (�That standard provides that panels shall ask only whether the authority�s factual determinations were �proper� and whether an authority�s evaluation of those facts was �unbiased and objective��. John Jackson, The Jurisprudence of GATT & the WTO, at page 154).

4.876 It is clear from the above that the DCD did not have the possibility of carrying out a new segmentation of the product under investigation and making the corresponding adjustments, since the information needed to do so was not provided. The DCD unquestionably acted in good faith and on good advice, using, in its determination of dumping, all of the information submitted. In the case of the segmentation of the product and the corresponding adjustments, the producers/exporters, i.e. the parties in possession of the information, did not provide any alternative to the DCD�s analysis, nor did they object to that analysis.

4.877 If, as the EC claims, there was any other way of making the adjustment, the elements required for doing so should have been included in the record of the case as non-confidential summaries. Argentina is not aware of the existence of any other summaries in connection with this question of �due allowance�. Consequently, there was no other information that could be taken into account.

4.878 Furthermore, if there had been any other information submitted as confidential information that would refute this and the EC wanted to prove its point, it should have removed the confidentiality and contributed it to this Panel. Since no further non-confidential summaries were provided and the confidentiality was not removed, it can only be inferred that there was insufficient information and that the DCD�s conclusion was reasonable.

(c) Replies of Argentina to the first set of questions by the Panel relating to the EC�s claim under Article 2.4 of the AD Agreement

4.879 Argentina replied to the first set of questions by the Panel relating to the EC�s claim under Article 2.4 of the AD Agreement as follows.

4.880 The Panel asked the parties to clarify whether the exporters that replied to the questionnaire requested the DCD at some point to calculate the dumping margin on the basis of model-based comparisons. If so, the Panel further asked, what specific model-matching methodology was proposed? Could the parties provide the Panel with the relevant references either in the report or in the administrative record? The Panel also asked the EC to comment on the relevance in this respect of Exhibit EC-10.

4.881 To this question, Argentina provided the following reply.

4.882 Upon opening the investigation, the DCD decided on the segmentation of the product according to the universal criterion that offered the greatest homogeneity, i.e. porcellanato in its different sizes, establishing three categories: 20 x 20, 30 x 30 and 40 x 40. This segmentation not only met with no objection at any time during the investigation, but in fact, as shown by point 2 of Exhibit EC-10, it was suggested in the note sent by the representative of Assopiastrelle to its principal on 12 May 1999: �� Regarding non-confidential invoices, I suggest to select the some invoices of each segment (20 x 20, 30 x 30, etc.), with prices closer to the weight average of the segment.� The first time the EC suggested that model-based comparisons could have been used was during the formal consultations under the DSU.

4.883 With respect to model-based determinations, Argentina submits the following: although certain submissions by some of the participating firms suggest that they were interested in model based comparisons for the goods previously segmented according to their physical dimensions (30 x 30, 20 x 20 and 40 x 40), the documentation and information supplied for that purpose did not enable the implementing authority to carry out the required analysis with any accuracy. Moreover, the implementing authority was not in a position to conduct a comprehensive analysis of all of the information and documentation in the record of the proceedings since it did not have at its disposal all of the documentation to back the assertions of the interested parties and to permit a correlation with the information contained in the official registers.

Continuation: Section 4.884

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