WorldTradeLaw.

net Dispute Settlement Commentary (DSC)

Appellate Body 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/AB/RW) / DSR 2003:III, 965
Timeline of Dispute
Panel Request: May 7, 2002
Matter Referred to Original Panel: May 22, 2002
Panel Composed with New Panelist: June 25, 2002
Final Report Circulated: November 29, 2002
Notice of Appeal: January 8, 2003
AB Report Circulated: April 8, 2003
Adoption: April 24, 2003

Participants
Appellant: India
Appellee: EC
Third Participants: Japan, Korea, U.S.
Appellate Body Division
Abi-Saab (Presiding Member),
Bacchus, Taniguchi

Table of Contents
BACKGROUND ...........................................................................................................................................................2
SUMMARY OF APPELLATE BODY'S FINDINGS ..................................................................................................3
PROCEDURAL AND SYSTEMIC ISSUES .........................................................................................................................3
Terms of Reference in DSU Article 21.5 Proceedings - Claim Resolved Before Original Panel..........................3
AD Agreement Article 17.6(i) / DSU Article 11 - Objective Assessment / Factual Standard of Review .............4
SUBSTANTIVE ISSUES .................................................................................................................................................6
AD Agreement Articles 3.1 and 3.2 - Volume of "Dumped Imports"...................................................................6
COMMENTARY ........................................................................................................................................................10
AD Agreement Articles 3.1 and 3.2 - Volume of "Dumped Imports".................................................................10

Key Findings

Found that with respect to import volumes attributable to producers/exporters that were not examined
individually, the European Communities, by treating all such imports as "dumped," failed to determine
the volume of "dumped imports" on the basis of "positive evidence" and an "objective examination," as
required by AD Agreement Articles 3.1 and 3.2. On this basis, the Appellate Body concluded that the
European Communities acted inconsistently with Articles 3.1 and 3.2, and it reversed the Panel's finding
to the contrary.

Upheld the Panel's finding that India's claim under AD Agreement Article 3.5 relating to the
consideration of "other factors" was outside the terms of reference because it had been resolved before
the original panel.

Rejected India's allegation that the Panel, by not seeking information from the European Communities
under DSU Article 13, failed to comply with AD Agreement Article 17.6(i); rejected India's allegation
that the Panel "otherwise" failed to review the facts "actively" under Article 17.6(i).

Rejected India's argument that, by failing to shift the burden of proof, the Panel did not properly
discharge its duty to assess objectively the facts of the case, as required by DSU Article 11; rejected
India's argument that the Panel violated DSU Article 11 by "distort[ing] the evidence" before it.

Given its findings that the Panel properly discharged its duties under AD Agreement Article 17.6 and
DSU Article 11, upheld the Panel's finding that the European Communities had information on the
economic factors listed in AD Agreement Article 3.4 when making its injury determination.

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

BACKGROUND
On March 12, 2001, the DSB adopted the panel and Appellate Body reports in the original EC Bed Linen dispute. See DSC for EC - Bed Linen (Panel) and DSC for EC - Bed Linen (AB). These
reports found that the European Communities' anti-dumping measure against bed linen from India was
inconsistent with various provisions of the AD Agreement. As a result of this finding, the European
Communities was required to bring its measure into conformity with its AD Agreement obligations.
India and the European Communities agreed on a reasonable period of time for implementation of five
months and two days, expiring on August 14, 2001.
After adoption of the reports, the European Communities reassessed the original anti-dumping
measure. In this regard, on August 7, 2001 the Council of the European Union (the "Council") adopted
Regulation 1644/2001. This "redetermination" amended the original measure, establishing lower
dumping margins for Indian imports. It did not address the margins for the other countries originally
investigated, Egypt and Pakistan. The redetermination concluded that dumped imports from each of these
three countries caused material injury to the EC industry. However, the Council did not "consider it
appropriate to continue to collect duties for exports from India," and it suspended the application of antidumping duties on Indian imports. The redetermination provided that if no review were initiated within
six months, the duties would expire; however, if a review were initiated, the suspension would continue.
On December 19, 2001, Eurocoton, the trade association acting on behalf of the EC industry,
requested a review. On February 13, 2002, the European Communities initiated a "partial interim review"
of the dumping aspect of the measure. Pursuant to Regulation 1644/2001, the application of antidumping duties on imports from India remained suspended during this review.
In addition, on January 28, 2002, the Council adopted Regulation 160/2002, which amended the
prior measures by terminating the proceeding against Pakistan. This Regulation also provided that the
measure against Egypt would expire as of February 28, 2002 if no review were requested. When no
review was requested as of this date, this measure expired.
Finally, on April 22, 2002, the Council adopted Regulation 696/2002, which stated that, in light
of the termination of the Pakistan and Egypt proceedings, the EC authorities considered it appropriate to
reassess the findings on injury and causal link as they relate to Indian imports. This reassessment resulted
in a conclusion that there was a causal link between dumped imports from India and material injury to the
EC industry, and "a resulting conclusion" confirming the anti-dumping duty imposed on imports of
cotton-type bed linen from India. As noted above, however, pursuant to Regulation 1644/2001, the antidumping duties on imports from India remained suspended, and no duties have been collected pursuant to
the measure.
(Panel report, paras. 2.1-11; AB report, para. 3)
India argued that through the bed linen redetermination and the other measures taken by the
Council, the European Communities did not comply with the DSB recommendations and rulings in the
original dispute. In particular, India alleged that the new measures violate AD Agreement Articles
2.2.2(ii), 3.1, 3.2, 3.3, 3.4, 3.5, 5.7 and 15, as well as DSU Article 21.2.
The Panel rejected all of India's claims. On appeal, India argued: (1) that the Panel's findings
related to consideration of the volume of "dumped imports" under Articles 3.1 and 3.2 were in error; (2)
that the Panel's decision to exclude one of India's claims under Article 3.5 from the terms of reference was

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

in error (and that the Panel's "alternative" finding on the substance of this issue was in error); and (3) that
one of the Panel's findings related to "all relevant economic factors" under Article 3.4 was inconsistent
with AD Agreement Article 17.6(i) and DSU Article 11.
SUMMARY OF APPELLATE BODY'S FINDINGS
PROCEDURAL AND SYSTEMIC ISSUES
Terms of Reference in DSU Article 21.5 Proceedings - Claim Resolved Before Original Panel
Before the Panel, India had argued that the European Communities acted inconsistently with AD
Agreement Article 3.5 by failing to ensure that injury caused by "other factors" was not attributed to the
dumped imports. The Panel concluded that this claim was outside its terms of reference, as this claim had
been made in the original proceedings and the original panel found that India failed to make its prima
facie case on this claim. As a result, the Panel found that this aspect of India's claim is not properly
before it, "having been disposed of by the Panel in the original Report and not appealed." (Paras. 71-74)
India appealed the Panel's decision to exclude this claim, arguing that the measure at issue in this Article
21.5 dispute is a "new measure" that is "legally separate and distinct from the original measure." (Para.
75) As described by the Appellate Body, India contended that it is not challenging "the same measure
that was before the original panel." While "some aspects of the measure remain the same," it argued, "the
redetermination must be considered 'as a whole new measure' because it is not capable of being divided
into separate elements." (Para. 82)
In terms of the relevant measures involved here, the Appellate Body noted that the original EC
determination was revised in order to comply with the DSB recommendations and rulings in the original
proceedings. To this end, the European Communities re-calculated the dumping margins and reexamined the causation analysis. (Para. 85) However, the Appellate Body noted that this revised analysis
would not have any impact on the examination of "other factors" pursuant to Article 3.5. Therefore, the
European Communities was not required to change the determination as it related to the "effects of other
factors." Moreover, the Appellate Body rejected India's argument that the redetermination can only be
considered "as a whole new measure." (Para. 86)
On this basis, the Appellate Body concluded that India had raised "the same claim" under Article
3.5 in these proceedings as it had in the original proceedings. This "same claim," it said, "was dismissed
by the original panel, and India did not appeal that finding." As stated by the Appellate Body, India is
seeking "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."
(Paras. 80, 87) The Appellate Body distinguished this situation from two prior Article 21.5 disputes,
where the parties raised new claims in the Article 21.5 proceeding. (Paras. 88-89)
Next, the Appellate Body considered the EC argument 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." In this regard, the Appellate Body noted its conclusion in paragraph 97
of U.S. - Shrimp, Article 21.5 that an adopted Appellate Body report must be treated as a final resolution
to a dispute between the parties to that dispute. This conclusion was based on DSU Article 17.14, which
deals with the effect of adopted Appellate Body reports. The Appellate Body noted that the issue raised
in this appeal is "similar" to the issue in that case. Here, however, the original panel's finding at issue was
not appealed in the original dispute. Therefore, the relevant finding was adopted by the DSB as part of a
panel report, so Article 17.14, it said, "does not dispose of the issue ." (Paras. 90-92)

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

The Appellate Body then explained that based on other provisions of the DSU -- Articles 16.4,
19.1, 21.1, 21.3 and 22.1 -- "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 occurs, it said, "in the same
way and with the same finality as a finding included in an Appellate Body Report adopted by the DSB."
(Para. 93) The Appellate Body said that it agreed with the Panel's finding to this effect. (Para. 95)
Finally, the Appellate Body considered the relevance of the fact that, here, the Panel had
dismissed India's claim in the original proceedings based on a failure to establish a prima facie case, as
opposed to a finding that the measure is inconsistent with WTO rules. According to the Appellate Body,
"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." (Para. 96)
Therefore, the Appellate Body agreed with the Panel's conclusion that "the Panel's ruling in the original
dispute disposed of India's claim in this regard [and 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." (Para. 97) In this regard, the Appellate Body said that "[i]t 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." (Para. 98)
On this basis, the Appellate Body concluded 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 respect ,
because it was not appealed, and forms part of a panel report adopted by the DSB." Therefore, the
Appellate Body upheld the Panel's finding that India's claim under AD Agreement Article 3.5, as it
relates to the consideration of "other factors," was not properly before the Panel. (Para. 99) As a
result, the Appellate Body said that it did not need to rule on whether the Panel erred in its "alternative"
finding that the European Communities had ensured that injuries caused by "other factors" were not
attributed to the dumped imports, and thus had not acted inconsistently with Article 3.5. (Para. 100)
AD Agreement Article 17.6(i) / DSU Article 11 - Objective Assessment / Factual Standard of Review
In the original proceeding in this dispute, the original panel had found a violation of AD
Agreement Article 3.4. In doing so, the original panel said that it appeared from the European
Communities' regulation imposing provisional antidumping measures that data had not been collected for
all relevant economic factors listed in Article 3.4, and that, "[w]hile some of the data collected may
have included data for the factors not mentioned, we cannot be expected to assume that this was the case
without some indication to that effect in the determination." This finding was not appealed as part of the
original proceeding. It was undisputed by the parties that the European Communities did not collect
additional data as part of its redetermination. (Paras. 149-150)
Before the Panel in this Article 21.5 proceeding, India claimed, based in part on the original
panel's statements on this issue, that the European Communities "never" collected data on stocks and
capacity utilization, two of the factors under Article 3.4. The Panel rejected this argument, stating: "It is
apparent to us, on the face of the redetermination, that the EC did, in fact, have information on the
Article 3.4 factors, which is specifically addressed. Thus, we find this no basis as a matter of fact for this
aspect of India's claim." (Para. 152) The Panel clarified that India had misunderstood the original panel's
statements and that the original panel had not found, as a matter of fact or law, that no information had
been collected on certain of the Article 3.4 factors. (Para. 153) Finally, the Panel concluded that it was

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

clear that the European Communities had "in its record" information on stocks and capacity utilization
and that "unlike the original determination, the EC's consideration of these factors is clearly set out on the
face of the redetermination." (Para. 154)
On appeal, India claimed that the Panel's findings relating to the consideration of "all relevant
economic factors" under Article 3.4 were inconsistent with AD Agreement Article 17.6(i) and DSU
Article 11. (Para. 147) The Appellate Body began its analysis with Article 17.6(i), noting that this
provision is "particularly relevant" in this appeal. (Para. 164)
AD Agreement Article 17.6(i)
AD Agreement Article 17.6(i) states in part: "in its assessment of the facts of the matter, the
panel shall determine whether the authorities' establishment of the facts was proper ." With regard to
this provision, India argued that the Panel failed to "actively" review the facts, in that it did not use its
powers to seek information from the European Communities under DSU Article 13 and because it did not
"review[] these facts otherwise." Specifically, India argued that by refusing India's request for the Panel
to use its investigative powers under DSU Article 13, and by concluding that the European Communities
had the data in the record of the investigation without offering any proof or reasoning to support such a
conclusion, the Panel failed to comply with Article 17.6(i). (Paras. 157, 165, 168)
In addressing this issue, the Appellate Body first noted its statement in paragraph 302 of EC Sardines that a panel's right to seek information pursuant to DSU Article 13 is discretionary, not
mandatory, and that the duty under Article 17.6(i) does not imply that a panel must exercise this
discretion. The Appellate Body stated, "it is for panels to decide whether it is necessary to request
information from any relevant source pursuant to Article 13 of the DSU," and it noted that "[t]he mere
fact that the Panel did not consider it necessary to seek information does not, by itself, imply that the
Panel's exercise of its discretion was not 'due.'" Therefore, the Appellate Body rejected India's
allegation that the Panel failed to comply with the requirements of Article 17.6(i) by not seeking
information pursuant to DSU Article 13. (Paras. 166-167)
With regard to the argument that the Panel failed to "review[] these facts otherwise," India
submitted that the Panel "merely stated" that it was "clear" that the European Communities had the data in
its record, without offering any "proof or reasoning." (Para. 168) On this point, the Appellate Body
noted the Panel's statements that it was apparent from both "the face of the redetermination," as well as
based on the investigating authorities' "record," that the European Communities had information on stocks
and capacity utilization. As a result, the Appellate Body concluded that, contrary to India's contention,
the Panel did not arrive at its conclusion based exclusively "on the face" of the redetermination.
Furthermore, the Appellate Body observed that the Panel also had before it "explanations as to how the
European Communities had collected information on stocks and capacity utilization." (Paras. 170-171)
Therefore, the Appellate Body rejected India's argument that the Panel "otherwise" failed to
review the facts "actively" under Article 17.6(i). (Para. 171)
DSU Article 11
With regard to DSU Article 11, India first argued that the Panel failed to meet its obligations
under this provision by incorrectly applying the rules on burden of proof. Specifically, India contended
that it had presented a prima facie case that data on a number of injury factors had never been collected
and that, therefore, the Panel should have shifted the burden of proof to the European Communities to
rebut that case. (Paras. 155, 174)

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

In addressing this issue, the Appellate Body noted the Panel's statements, at the outset of its
report, regarding the burden of proof. It then stated, in the context of the issue at hand, that there is
nothing in the Panel's reasoning to suggest that the Panel "premised its ultimate conclusion on whether or
not India had presented a prima facie case." Rather, "the Panel assessed and weighed all the evidence
before itwhich was put forward by both India and the European Communitiesand, having done so,
ultimately, was persuaded that the European Communities did, in fact, have information before it on all
relevant economic factors listed in Article 3.4 of the Anti-Dumping Agreement." Therefore, the Appellate
Body agreed with the European Communities' assertion "that India's argument is, for all practical
purposes, one related to the Panel's weighing and appreciation of the evidence." (Paras. 174-175) On this
point, the Appellate Body said, India has not proved that the Panel "exceeded its discretion as the trier of
facts" in assessing and weighing the evidence. Therefore, the Appellate Body rejected India's
argument that, by failing to shift the burden of proof, the Panel did not properly discharge its duty
to assess objectively the facts of the case, as required by DSU Article 11. (Paras. 176-177)
In the alternative, India argued that the Panel "distorted the evidence" by accepting as fact the
"mere assertion" by the European Communities, in EC Regulation 1644/2001, that it had collected data
on all relevant economic factors, including stocks and capacity utilization. This acceptance, India argued,
constitutes a failure by the Panel to make an objective assessment of the facts of the case, as required by
Article 11. (Paras. 156, 178)
Reviewing past decisions where a violation of DSU Article 11 was found, the Appellate Body
stated that "none of these examples assists India with the claim it raises on appeal." As with the claim
related to the burden of proof, the Appellate Body observed that the weighing of the evidence is within
the discretion of the Panel as the trier of facts, and it said "there is no indication in this case that the Panel
exceeded the bounds of this discretion." Therefore, the Appellate Body rejected India's argument
that the Panel distorted the evidence before it. (Para. 181)
Conclusion
On this basis, the Appellate Body found that the Panel "properly discharged its duties"
under AD Agreement Article 17.6 and DSU Article 11. Therefore, it upheld the Panel's finding that
the European Communities had information before it on the relevant economic factors listed in AD
Agreement Article 3.4 when making the injury determination. (Para. 182)
SUBSTANTIVE ISSUES
AD Agreement Articles 3.1 and 3.2 - Volume of "Dumped Imports"
In the course of the re-determination of the anti-dumping measure at issue, the European
Communities, because of the large number of Indian bed linen producers, examined only five of those
producers on an individual basis. Within this group of examined producers, the European Communities
determined that two producers, who accounted for 53 percent of the volume of the examined group's
imports, had not been dumping. In its injury determination, the European Communities "made alternative
calculations of the volume of dumped imports from India; one calculation included imports attributable to
the producers that were found not to be dumping, while the other did not." Under both calculations, the
European Communities found that the domestic industry was suffering injury. (Para. 103)
At the same time, the European Communities concluded that all imports from Indian producers
that had not been examined individually were dumped, and it included the volume of these imports in its
injury analysis, under both calculations. (Para. 103)

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

According to India, the European Communities' methodology was in error because Articles 3.1
and 3.2 require a Member to determine the volume of dumped imports attributable to producers that were
not examined individually on the basis of the proportion of imports found to be dumped for the producers
that were examined individually. Specifically, India argued that in examining the increase in the volume
of dumped imports under Article 3.2, the European Communities should have excluded from the volume
of dumped imports of non-examined producers the same proportion it had excluded for examined
producers, i.e., 53 percent. In this regard, India argued that the proportion of dumped imports from
"sampled" producers is the only "positive evidence" of the volume of dumped imports from
uninvestigated producers. (Paras. 101, 103) On this basis, India claimed that the European Communities
violated AD Agreement Articles 3.1 and 3.2 by finding that all imports from Indian producers that had
not been individually examined were dumped, as it failed to determine the volume of dumped imports
attributable to non-examined producers on the basis of "positive evidence" and an "objective
examination." (Para. 104)
The Panel had rejected this claim, noting in part that AD Agreement Article 9.4 provides for antidumping duties to be collected on imports from non-examined producers. The Panel concluded that the
AD Agreement "does not require an investigating authority to determine the volume of imports from
producers outside the sample that is properly considered 'dumped imports' for purposes of injury analysis
on the basis of the proportion of imports from sampled producers that is found to be dumped" and that the
European Communities had acted consistently with Articles 3.1 and 3.2. (Paras. 105, 119) India
appealed the Panel's finding. (Para. 106)
In considering this issue, the Appellate Body began by quoting the relevant provisions of Articles
3.1 and 3.2. Article 3.1 requires, in part, that an injury determination be based on "positive evidence" and
involve an "objective examination" of the volume of the dumped imports. Article 3.2 then states: "With
regard to the volume of the dumped imports, the investigating authorities shall consider whether there has
been a significant increase in dumped imports, either in absolute terms or relative to production or
consumption in the importing Member." It then also refers to the effect of "the dumped imports" on
prices. (Para. 109) The Appellate Body noted that Article 3.1 makes clear that an injury determination
must be made on the basis of "positive evidence" and an "objective examination" of the volume and effect
of imports that "are dumped," as opposed to the volume and effect of imports that "are not dumped."
(Para. 111) Furthermore, it said, none of the cited provisions of the AD Agreement suggest that Members
may include in the volume of dumped imports the imports from producers that are not found to be
dumping. (Para. 112) Then, noting that Articles 3.1 and 3.2 "do not set out a specific methodology that
investigating authorities are required to follow when calculating the volume of 'dumped imports,'" the
Appellate Body said that "this does not mean that paragraphs 1 and 2 of Article 3 confer unfettered
discretion on investigating authorities to pick and choose whatever methodology they see fit for
determining the volume and effects of the dumped imports." In this regard, the Appellate Body stated:
"whatever methodology investigating authorities choose for determining the volume of dumped imports,
if that methodology fails to ensure that a determination of injury is made on the basis of 'positive
evidence' and involves an 'objective examination' of dumped importsrather than imports that are found
not to be dumpedit is not consistent with paragraphs 1 and 2 of Article 3." (Para. 113)
Next, the Appellate Body elaborated on the meaning of the terms "positive evidence" and
"objective examination" by referring to its decision in U.S. - Hot-Rolled Steel. There, it had noted in
paragraph 192 that "positive evidence" refers to evidence that is "of an affirmative, objective and
verifiable character, and that must be credible." Similarly, in paragraph 193 of that decision it said
that an "objective examination" requires that the investigation be "unbiased," without favoring the
interests of any particular party. (Para. 114)

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

Turning to this case, the Appellate Body observed that the issue raised on appeal "relates to the
appropriate treatment of imports from producers or exporters that were not examined individually ."
Specifically, the appeal "involves an investigation in which individual margins of dumping have not been
determined for each Indian producer exporting to the European Communities." In this regard, the
Appellate Body observed that AD Agreement Article 6.10 permits investigating authorities, where the
number of producers/exporters is so large that an individual determination for each one would be
"impracticable," to limit their examination to certain producers/exporters. In addition, the Appellate Body
noted that Articles 3.1 and 3.2 must be interpreted so as to permit investigating authorities "to satisfy the
requirements of 'positive evidence' and an 'objective examination' without having to investigate each
producer or exporter individually." (Para. 116)
In addressing this issue, the Appellate Body reiterated that AD Agreement Articles 3.1 and 3.2 do
not set out a specific methodology that must be followed when calculating the volume of dumped imports
as part of the injury determination. However, it emphasized again that this determination must be made
on the basis of "positive evidence" and involve an "objective examination." These requirements, it said,
"are not ambiguous," and "they do not 'admit of more than one permissible interpretation' within the
meaning of the second sentence of Article 17.6(ii)." As a result, the Appellate Body said, "our
interpretation of these requirements is based on customary rules of interpretation of public international
law, as required by the first sentence of Article 17.6(ii) This leaves no room, in this appeal, for
recourse to the second sentence of Article 17.6(ii) in interpreting [Articles 3.1 and 3.2]." (Para. 118)
The Appellate Body then considered the substance of India's claim. It noted that the European
Communities justified its approach by reference to AD Agreement Article 9.4, which defines the
maximum anti-dumping duty rate that may be applied to imports from producers for which an individual
dumping margin has not been separately established (commonly referred to as the "all others" rate). In
particular, the European Communities argued that, "inasmuch as Article 9.4 does not limit the volume of
imports from non-examined producers to which the 'all others' duty rate may be applied, the practice of
the European Communities must be permissible because the volume of imports subject to anti-dumping
duties under Article 9 must be the same as the volume considered to be dumped for purposes of
determining injury under Article 3." (Para. 119)
In its analysis of this issue, the Appellate Body emphasized the significance of the use of the
present perfect tense in paragraphs 1 and 4 of Article 9 ("have been fulfilled" and "have limited").
Specifically, it said the use of this tense indicates that the imposition and collection of anti-dumping
duties under Article 9 "is a separate and distinct phase of an anti-dumping action that necessarily occurs
after the determination of dumping, injury, and causation under Articles 2 and 3 has been made." Thus,
the right to impose anti-dumping duties under Article 9 "is a consequence of the prior determination of
the existence of dumping margins, injury, and a causal link." (Para. 123) As a result, it said, Article 9.4
"is of little relevance" for interpreting Article 3. (Para. 124) Furthermore, the Appellate Body noted that
as an "exception" to Article 9.3, Article 9.4 permits the imposition of duties on imports from certain
producers regardless of whether they would have been found to be dumping if examined individually.
Therefore, "[i]t is likely that this 'all others' duty rate will be imposed on imports attributable at least to
some producers that, in reality, might not be dumping." As a result, it said, "the reliance by the European
Communities on Article 9.4, in interpreting paragraphs 1 and 2 of Article 3, is misplaced." (Para. 125)
Applying this analysis to the facts of this case, the Appellate Body recalled that the evidence
showed that producers accounting for 47 percent of all imports attributable to examined producers were
found to be dumping and that producers accounting for 53 percent of those imports were found not to be
dumping. The Appellate Body noted the agreement of the participants in the appeal that "there is no other
evidence on the record that could serve as 'positive evidence' for determining the volume of dumped
imports" for the non-examined producers. (Para. 128)

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

According to the Appellate Body, this evidence is "positive," in the sense that it is "affirmative,
objective, verifiable, and credible." Furthermore, evidence of dumping margins that are more than "de
minimis" for examined producers is relevant for determining "which import volumes may be attributed to
non-examined producers that are dumping." Therefore, the Appellate Body concluded that the European
Communities "met the first requirement of [Articles 3.1 and 3.2] by basing its determination on that
'positive evidence.'" (Para. 130)
Next, the Appellate Body considered whether the European Communities' determination was
based on an "objective examination" of that evidence. Here, the Appellate Body noted, under the
European Communities' approach, "imports attributable to non-examined producers are simply presumed,
in all circumstances, to be dumped, for purposes of Article 3, solely because they are subject to the
imposition of anti-dumping duties under Article 9.4." This approach, it said, "makes it more likely [that
the investigating authorities] will determine that the domestic industry is injured" and therefore cannot be
"objective." Moreover, such an approach means that where smaller numbers of producers are examined
individually, a larger amount of imports will be presumed to be dumped. (Paras. 131-132)
For these reasons, the Appellate Body concluded that "the European Communities' determination
that all imports attributable to non-examined producers were dumpedeven though the evidence from
examined producers showed that producers accounting for 53 percent of imports attributed to examined
producers were not dumpingdid not lead to a result that was unbiased, even-handed, and fair."
Therefore, the European Communities did not satisfy the requirements of Articles 3.1 and 3.2 to
determine the volume of dumped imports on the basis of an examination that is "objective." (Para. 133)
The Appellate Body also noted, in this context, India's appeal of the Panel's finding that the
European Communities chose the "second alternative" under Article 6.10, second sentence. In discussing
this issue, the Appellate Body noted that Article 6.10 clearly "does not stipulate that investigating
authorities must follow a specific methodology when determining the volume of dumped imports under
paragraphs 1 and 2 of Article 3." However, it said, "this does not mean that evidence emerging from the
determination of margins of dumping for individual producers or exporters pursuant to Article 6.10 is
irrelevant for the determination of the volume of dumped imports in paragraphs 1 and 2 of Article 3."
Rather, "such evidence may well form part of the 'positive evidence' on which an 'objective examination'
of the volume of dumped imports for purposes of determining injury may be based." In cases where the
examination has been limited to a select number of producers under the second sentence of Article 6.10,
the Appellate Body said that it "is difficult to conceive of a determination based on 'positive evidence' and
an 'objective examination' that is made other than through some form of extrapolation of the evidence."
(Paras. 135-137)
The Appellate Body noted that India's proposed methodology "may be one way of adducing
'positive evidence' from the record of an investigation and of conducting an 'objective examination,'
especially if producers selected for individual examination constitute a statistically valid sample
representative of all producers." Even if the producers are selected based on the largest percentage of
exports that could reasonably be investigated, the Appellate Body did not "exclude the possibility that the
evidence from those examined producers could, nonetheless, qualify as part of the 'positive evidence' that
might serve as a basis for an 'objective examination' of import volumes that can be attributed to the
remaining non-examined producers." However, it noted that "[t]here may, indeed, be other ways of
making these calculations that satisfy the requirements of paragraphs 1 and 2 of Article 3." (Para. 138)
Ultimately, though, the Appellate Body concluded that it was not necessary to make findings on
this issue in order to resolve the dispute, because its findings were not premised on which of the
alternatives in Article 6.10 was chosen by the European Communities in this investigation. (Para. 139)

2003 WorldTradeLaw.net LLC, All rights reserved

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

Finally, the Appellate Body also noted the United States' arguments as a third participant. First,
the United States argued that Article 2.1 defines "dumped products" on a "countrywide" basis, and
therefore the references to "dumped imports" in Articles 3.1 and 3.2 refer to all imports from the countries
in question. The Appellate Body rejected this argument, stating: "Nowhere in the text of Article 2.1 is
there authority for treating all imports from non-examined producers as dumped for purposes of
determining injury under Article 3." (Paras. 141-144) Second, the United States also argued that the
interpretation that all imports attributable to non-examined producers may be considered as "dumped" is
necessary to give meaning and effect to Article 3.3. On this point, the Appellate Body found no conflict
between its interpretation of Articles 3.1 and 3.2 and the cumulation of dumped imports from different
countries permitted by Article 3.3. (Paras. 144-145)
For the above reasons, the Appellate Body concluded that the Panel did not properly interpret
Articles 3.1 and 3.2. Therefore, the Appellate Body found that "with respect to import volumes
attributable to producers or exporters that were not examined individually in this investigation, the
European Communities has failed to determine the 'volume of dumped imports' on the basis of 'positive
evidence' and an 'objective examination' as explicitly required by [Articles 3.1 and 3.2]." On the other
hand, the Appellate Body agreed with the Panel "that the [Anti-Dumping] Agreement does not require an
investigating authority to determine the volume of imports from producers outside the sample that is
properly considered 'dumped imports' for purposes of injury analysis on the basis of the proportion of
imports from sampled producers that is found to be dumped" according to the specific methodology
suggested by India in this appeal. (Para. 146)
On this basis, the Appellate Body reversed the Panel's finding, and it concluded that the
European Communities acted inconsistently with Articles 3.1 and 3.2. (Para. 146)
COMMENTARY
AD Agreement Articles 3.1 and 3.2 - Volume of "Dumped Imports"
The Appellate Body's statements on the issue of the volume of "dumped imports" under Articles
3.1 and 3.2 have important implications for investigating authorities conducting anti-dumping
investigations, in two ways. First, the specific finding at issue here addresses the situation where, due to
the large number of producers/exporters, certain producers/exporters have not been examined individually
as part of the dumping margin calculation (pursuant to AD Agreement Article 6.10). Under the Appellate
Body's interpretation of the relevant provisions, in this situation investigating authorities may not simply
presume that all imports from the non-examined producers/exporters are dumped for purposes of the
injury determination (as the EC investigating authorities had done here). Rather, they must determine,
based on "positive evidence" and an "objective examination," whether imports from non-examined
producers/exporters are actually "dumped." Only where it is determined that imports are dumped may
these imports be included in the volume of "dumped imports" considered as part of the injury analysis.
Second, the Appellate Body's ruling may have a broader impact on injury determinations, outside
the context of situations where some producers are not examined individually. In particular, the
Appellate Body emphasized that an injury determination must be made on the basis of "positive
evidence" and an "objective examination" of the volume and effect of imports that "are dumped," as
opposed to the volume and effect of imports that "are not dumped." In this regard, it said that none of the
cited provisions of the AD Agreement "can be construed to suggest that Members may include in the
volume of dumped imports the imports from producers that are not found to be dumping." (See paras.
111-113) Thus, the Appellate Body seems to have expressed the view that where producers/exporters are

2003 WorldTradeLaw.net LLC, All rights reserved

10

WorldTradeLaw.net DSC

EC - Bed Linen, Article 21.5 (AB)

examined as part of the dumping margin calculation, investigating authorities may only include a
particular producer's/exporter's imports in the volume of dumped imports where that producer is found to
be dumping. Where it is found that a particular producer/exporter is not dumping, its imports may not be
included. (Of course, this was not the specific issue on appeal, so the Appellate Body's statement may be
viewed as obiter dicta. Nonetheless, the Appellate Body stated its view on this point in fairly clear terms.
Similar statements to this effect were made in paragraph 6.138 of the original EC - Bed Linen panel
report, also as obiter dicta.)
One of the implications of the Appellate Body's statements on this latter point is that investigating
authorities cannot just presume that whenever dumping from one or some producers/exporters in a
particular country is found, all imports from that country can be treated as "dumped." This issue was
discussed recently as part of the ongoing negotiations on improvements to the WTO's rules on antidumping measures. In a paper submitted by a number of WTO Members (including Japan and Korea,
two of the third participants in this case), a clearer, more detailed, definition of "dumped imports" was
called for, "in order to avoid misinterpretations and consequently the misuse of antidumping duties." This
paper was submitted on November 14, 2002, prior to the appeal in this case. As stated in the paper:
Although the text of the Agreement refers clearly to "dumped imports,"
considered as such following a positive determination, some Members
understand that such expression or concept might mean the total volume
of imports from the country under investigation. This particular view
might lead to serious distortions in the application of antidumping
measures. We believe this interpretation is not consistent with the
Agreement, since the term "dumped imports" should not be expanded to
cover all imports.1
Arguably, the Appellate Body's statements in this case resolve this issue. (Some might even say the
Appellate Body could be seen as having filled a "gap" in the text of the AD Agreement.) In particular, the
Appellate Body's findings make clear that the term "dumped imports" cannot be taken to mean "the total
volume of imports from the country under investigation," which was the concern expressed in the paper.
(See paras. 111-113, as well as paras. 141-142, where the Appellate Body rejected the U.S. argument that
"the references to 'dumped imports' in Articles 3.1 and 3.2 and throughout Article 3 refer to all imports of
the product from the countries subject to the investigation.") Rather, the Appellate Body said, only those
imports from producers/exporters found to be "dumping" may be considered under Articles 3.1 and 3.2.
(See paras. 111-113)
This report was circulated on April 8, 2003. Two weeks later, on April 22, 2003, the Argentina Poultry AD Duties panel addressed this issue as well. (See paras. 7.295-307 of that report) In that case,
the panel made a clear finding that "non-dumped" imports, that is, imports from companies found not to
be dumping, may not be included in the injury analysis. See DSC for Argentina - Poultry AD Duties
(Panel).
Last Update: January 6, 2006

THIRD CONTRIBUTION TO DISCUSSION OF THE NEGOTIATING GROUP ON RULES ON ANTIDUMPING MEASURES, Paper from Brazil; Chile; Colombia; Costa Rica; Hong Kong, China; Japan; Korea;
Norway; Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Singapore; Switzerland; Thailand;
and Turkey, TN/RL/W/29 (November 15, 2002), pages 1-2; see also, THIRD SET OF QUESTIONS FROM THE
UNITED STATES ON PAPERS SUBMITTED TO THE RULES NEGOTIATING GROUP, TN/RL/W/54
(February 6, 2003), page 2.

2003 WorldTradeLaw.net LLC, All rights reserved

11