Questions from india to the european communities and the united states



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WT/DS141/R
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ANNEX 1-5

QUESTIONS FROM INDIA TO THE EUROPEAN COMMUNITIES AND THE UNITED STATES


(15 May 2000)

To the EC
1. The EC states at paragraph 38 of its First Oral Statement that "even if, during the course of the investigation, information became available which caused the authorities to conclude that they had been mistaken regarding the sufficiency of the evidence for the purposes of the initiation decision, that would not in itself be a basis for halting the investigation." In light of this statement, could the EC please clarify whether it agrees with the past panels (Swedish steel; Mexican cement) that have held that the failure to effect a proper standing determination is a fatal error which cannot be cured retro-actively?
2. In its paragraph 34 of its First Oral Statement the EC acknowledges that in fact it has considered "information gained during a previous investigation on bedlinen." Can the EC please provide details of this information that it considered?
3. Similarly, Can the EC provide details of the "number of exchanges" that took place in the process of verification of standing, as referred to in the Footnote 1 of EC Exhibit-4. Can the EC provide details of other similar "exchanges", if any, between itself and producers [or Eurocoton and/or national associations] in the period between the termination of Bed Linen-I and the initiation of Bed Linen-II?

4. In paragraph 41 of its First Oral Statement the EC implies to have relied on the 25 per cent test as the minimum required to determine standing. In view of the absence of any comments on the separate 50 per cent test, and India’s Exhibit-79, is it factually correct that the EC did not in fact before 13 September 1996 consider the six Spanish companies not opposed to the initiation?

5. In paragraph 43 of its oral statement the EC explains that the arguments concerning the initiation were "not relevant at the point at which they were posed." Would the EC not agree that in the EC anti-dumping system it is not known when a complaint is filed and hence when a dumping case would be initiated? Could the EC indicate when the arguments should have been posed in order to have been considered relevant? Is it the EC’s position that exporters should "guess" that a complaint has been filed and that a proceeding "could" start and that the only moment at which a comment is relevant is when such a "guess" is indeed made at the right moment?
6. As agreed during the first meeting with the Panel, the EC will submit the original faxed copies of the producers’ and national associations’ declarations of support so that the dates of receipt by the EC of the declarations of producers’ support can be verified. In reply to the question by the Chairman of the Panel why the fax headers were removed, the EC stated that the fax headers had been removed to protect the – apparently confidential – fax numbers of the EC producers. However, this information (that is the telephone and fax numbers) was as it is to be supplied by the company expressing support. Could the EC therefore explain why the fax headers were removed?

7. Moreover, under the EC system of confidentiality of information, it is incumbent upon the party supplying confidential information, to simultaneously provide a non-confidential version thereof (Article 19.2 EC Basic Regulation) that is to be placed in the non-confidential file. Failure to do so by an interested party will lead the EC to use best information available (Article 19.3). Why then did the EC, in violation of its own Basic Regulation and its standard practice, not follow this standard practice, and instead, of its own volition remove the fax headers?

8. Would the EC agree that in other EC anti-dumping proceedings it does not normally remove fax headers? Would the EC also not agree that in other EC anti-dumping proceedings the declarations of support are normally contained in an Annex to the complaint rather than being separately obtained and filed in a non-confidential standing file?
9. The European Commission maintains a ‘chron-in’ log in which all incoming correspondence is recorded. Could the EC indicate on the basis of this chron-in log when the faxed declarations of producers’ support were received by the EC?
10. Exhibit EC-4, appended to the first submission of the EC, now indicates that the declarations of support from the eight French producers were submitted. However, these eight declarations of support were never in the non-confidential file on 8 January 1997. When did the EC receive the declarations of support from these eight French producers? Why were these eight declarations of support not included in the non-confidential file? Did the EC rely on these declarations of support during any part of the standing determination? Could the EC provide the original faxed copies of these eight declarations of support?
11. Paragraph 3 of the working procedures indicates documents submitted to the Panel shall be kept confidential by all. In light of this confidentiality requirement, why did the EC not disclose producer-specific production-output details of EC Exhibit-4? Can the EC provide the individual producer-wise production-output details, not contained in EC Exhibit-4, but forming the basis for the country-wide figures?
12. Can the EC confirm that the information on production output contained in Exhibit EC-4 was available at the time initiation and at the time of sample selection?

13. It has been argued that the German companies Irisette and Frankische Bettwarenfabrik are, respectively, a trader and a producer with production outside the EC. Can the EC provide an explanation on these assertions?

14. Why did it take four months from the date of initiation, for the EC to grant access to the non-confidential file?
15. The EC takes the position that the filing of an anti-dumping complaint by a trade association on behalf of domestic producers is in accordance with Article 5.4 ADA. Does the EC agree that the objective of Article 5.4 is the prevention of the filing of frivolous complaints? Would the EC agree that its position in this case may undermine that objective to the extent that it could occur that a trade association files a complaint which later turns out not to be backed by members of the association? Would the EC agree that this has in fact occurred in several EC anti-dumping proceedings?
16. Supposing, for the sake of argument, that the EC did ‘examine’ as per Article 5.3 the adequacy and accuracy of the complaint. Can the EC confirm whether it shares the view that such examination should take place before initiation? Can the EC confirm that in this Bed Linen proceeding such examination indeed took place before initiation?

17. In paragraph 97 of its first written submission the EC acknowledges that support for (or opposition to) an application must be expressed by domestic producers. The EC then takes the position that the expressions of support from the domestic producers need not necessarily be expressed directly to the investigating authorities, but could be expressed to a trade association. India agrees with this argument. However, in examining standing, the authorities under Article 5.4 must examine the declarations of support of the domestic producers and it does not suffice to rely solely on declarations made by trade associations. Would the EC agree that, while declarations of support may indeed be addressed/expressed to or channelled through a trade association, Article 5.4 obliges the investigating authorities to examine the declarations of the domestic producers before the initiation?

18. In paragraph 99 of its first written submission the EC states that "on the basis of information they had received from various sources, the authorities estimated the total EC production in 1995 to be between 123,917 and 130,128 tonnes." Could the EC divulge to the panel which sources are referred to here? Assuming that this information came from the complainants, would the EC agree that such information might be self-serving? If so, could the EC explain which steps it took to verify the accuracy of the data provided on total EC production?
19. Does the EC agree that the exclusion of sales below cost for Article 2.2.2(ii) purposes will by definition when not all sales are profitable lead to the calculation of a higher dumping margin than would otherwise exist?
20. At paragraph 57 of its First Oral Statement the EC states that "ordinary course of trade is part of the basic definition of dumping contained in Article 2.1". At its paragraph 69 the EC states that "Article 2.2 enounces that . . . profit included in the constructed normal value must be ‘reasonable’." Could the EC please explain why under Article 2.2.2(ii), which contains neither the words ‘ordinary course of trade’ nor the word ‘reasonable’ only the concept of ‘ordinary course of trade’ applies, and not the concept of ‘reasonable’ [other than that such approach invariably leads to a higher dumping margin].

21. At its paragraph 73 the EC in the context of…asserts that "India has presented no relevant evidence to that effect." At countless times during the disclosure comments India has explained that 18+ per cent profit for Bed Linen is not reasonable, together with a variety of prima facie proof. Could the EC indicate what it means by ‘relevant’? Were the arguments not relevant because they were posed at a wrong moment [such as suggested in paragraph 43 of its First Oral Statement]? Or was the evidence not relevant because it was not "significant independent factor" [such as in 253 of its First Written Submission]?

22. In paragraph 76 of its first oral statement the EC suggests that the profit margin of Bombay Dyeing calculated in the ordinary course of trade was representative beyond question because all of its sales nearly reached 80 per cent of the domestic market. Would the EC not agree that nearly half of the sales of Bombay Dyeing were loss making and that the profit margin so established was based on the profitable sales only?
23. At paragraph 78 of its first oral statement the EC states that "the ‘zeroing’ practice . . . is not covered by Article 2.4.2." This view is repeated in paragraph 79 of its oral statement where the EC states that "’zeroing’ took place only at the subsequent stage of combining the dumping margins determined for each type in accordance with Article 2.4.2 into a single dumping margin. That stage of calculation, however, is not subject to Article 2.4.2." In light of these assertions could the EC please indicate, in the alleged absence of the applicability of Article 2.4.2, what Article of the ADA covers the zeroing practice and what Article covers of the ADA covers the ‘subsequent stage’ of determining a ‘single dumping margin’?

24. The EC in paras. 144-148 of its first written submission tries to show with theoretical examples that the method advocated by India leads to "absurd" and "perverse" results. Would the EC not agree that in the real life situation presented by the case at issue the only reason why the EC was able to find significant dumping for all Indian exporters other than Bombay Dyeing and Anglo-French was through its use of an 18.64 per cent profit margin, which itself was largely the result of the inflation of the real profit margin of Bombay Dyeing through exclusion of all below cost sales?

25. The EC in paragraph 156 of its first written statement tries to create the impression that one of the reasons why it prefers to use Article 2.2.2(ii) over Article 2.2.2(i) is to accommodate difficulties experienced by interested parties, in particular small companies. It is India’s experience that exporters prefer use of their own data (method 2.2.2(i)) over use of other producers’ data, particularly in EC anti-dumping proceedings, because under the EC system of confidentiality of information, method 2.2.2(ii) completely precludes companies from checking the dumping margin calculations of the EC (because the SGA and profit data of the other producer(s) used are considered as business proprietary). India appreciates the EC’s apparent concern for small exporters, but has never seen any concrete evidence of this concern, either in the present anti-dumping case or in other EC anti-dumping cases. Could the EC produce such evidence?
26. The Article 2.2.2(ii) option, especially after exclusion of sales below cost (as advocated by the EC), can lead to establishment of huge profit margins. Yet, the EC position is that any profit thus found is by its very nature reasonable. Suppose that a profit margin thus established would be 1,000 per cent; would this then be reasonable?

27. In paragraph 190 of its first written submission the EC states that where "…one producer can have 80 per cent of its domestic market and make a profit of over 18 per cent while the numerous other producers ignore this market and devote themselves to exporting, may be an uncommon situation." Does the EC agree that Bombay Dyeing did not in fact make 18.64 per cent profit on its domestic sales of bed linen, but that the 18.64 per cent profit quoted by the EC is the profit established by the EC after systematic exclusion of all domestic sales at a loss? Does the EC agree that the actual overall profit made by Bombay Dyeing on domestic sales of bed linen is only 12.09 per cent and its overall profit only 4.66 per cent?

28. Does the EC agree that Article 2.4.2 provides for a two step analysis under which a mixing of methodologies for establishing normal value and export price comes into play only in the second step, i.e. where there is a pattern of differing export prices? Does the EC agree that the first step of Article 2.4.2 does not allow such mixing?
29. Suppose that a producer has been found not to have dumped, would the EC include such producer’s exports for the purposes of the injury determination? If so, does this not mean that the causal link between dumping and injury is broken because injury cannot logically be caused by a non-dumping producer?
30. If the EC persists in the argument that countries are dumping, then why has the EC on occasion initiated anti-dumping proceedings against specific producers (Orion and Funai) in a country (Japan)? Similarly why has the EC on occasion excluded specific dumping producers in a country from the injury determination (BASF: 23.1 per cent; Eastman Chemical: 9.9 per cent and Celanese Fibres: 9.2 per cent in Synthetic fibres of polyesters from the United States)?
31. If the EC persists in the argument that countries are dumping, then why has it on several occasions initiated company-specific reviews?
32. Similar to its First Written Statement [paragraph 309] the EC again presents its arguments concerning the permissibility of a double domestic industry definition within a single investigation [paragraph 135 First Oral]. In light of paragraph 308 of its First Written Submission and the statements during the First Meeting with the Panel can the EC confirm that it only used one of the permissible definition during the Bed Linen proceeding?

33. In paragraph 221 of its first written submission, the EC posits that the ordinary meaning proposed by the EC is straightforward. But would the EC not agree that the EC’s reading of the term ‘dumped imports’ renders the word ‘dumped’ obsolete, and this throughout the entire Article 3?

34. Could the EC confirm that the theory of the "found not to be a significant independent factor" has been advanced for the first time in the first submission of the EC to this Panel? In other words, could the EC confirm that this theory has never before been communicated to the Indian exporters, either in the published Regulations or in any other communications to the Indian exporters?
35. Could the EC explain the interconnection (paragraph 253 EC’s first written submission) between on the one hand the 7 factors it did evaluate, albeit at varying levels, i.e. actual and potential decline in sales, profits, output, market share, factors affecting domestic prices, employment and, on the other hand, the 11 factors it did not address anywhere, i.e. productivity, return on investments, utilization of capacity, magnitude of margin of dumping, actual and potential negative effects on cash flow, inventories, wages, growth and ability to raise capital or investments?
36. Does the EC interpret the word relevant in Article 3.4 as providing unlimited discretion to the administering authority to unilaterally determine which factors it considers relevant and to then base its injury determination on those factors only?
37. Does the EC agree that in an ASCM case (Brazil-milk) the EC itself argued that the comparable ASCM provision should be interpreted as requiring an evaluation of all injury factors listed in the comparable provision?

38. Does the EC agree that its position taken in paras. 271 to 277 of its first written statement, would encourage domestic producers to provide information only on the factors that are beneficial to their case, as apparently happened in the bed linen case?

39. Would the EC agree that the company Luxorette was part of the sample? Would the EC also agree that Luxorette was not one of the 35 companies which were determined to make up the domestic industry? Would it be therefore correct to conclude that in any event EC relied on at least one company not part of the domestic industry for its injury finding?
40. Can the EC explain whether the sample was established before, after, or simultaneous with the date on which the Community Industry [the 35 producers] were established? More specifically: can the EC provide the dates on which it established the Community Industry and the EC sample (of 17 producers)?
41. Could the EC provide any support for its contention in paragraphs 309 and 332 that "a member may use both definitions of the domestic industry in the course of a single investigation"?
42. Would the EC agree that it only referred to trends of all EC producers or the complaining producers (as opposed to the sampled producers) where this benefited its conclusion that there was injury? Would the EC agree that this approach can be described as ‘picking and choosing’?
43. In paragraph 325 of its first written statement the EC states that "India does not explain in what way the EC could have, but did not, take account of data concerning exporters not part of the sample nor what difference this would have made." Would the EC agree that India explained this in great detail in Section III.A.1, paras 3.2 to 3.13, of its first submission to the Panel and that this statement is therefore factually incorrect?

44. The EC acknowledges in paragraph 349 of its first written submission that the Regulation imposing definitive duties repeatedly referred to companies that ceased production/disappeared in the years preceding the investigation period. As such statements were used to substantiate the finding of injury, does the EC then not agree that as a matter of pure logic, the EC is assuming that pre-investigation imports were also dumped because any other interpretation would break the causal link between dumping and resulting injury and the repeated statements would therefore be non-sensical?

45. Article 15 of the Agreement specifically indicates that ‘special regard must be given by developed country Members to the special situation of developing country member when considering the application of anti-dumping measures’. It is therefore clear that the onus of exploring constructive remedies is on the developed country Members. Can the EC explain how it fulfilled this obligation?
46. The EC states in paragraph 80 of its first submission that the (Article 12.2.2 ADA) obligation on the Member concerned is to deal with relevant arguments and claims. Is it the position of the EC that a Member can then ignore arguments and claims made by interested parties on the simple ground that the Member unilaterally judges such arguments and claims not relevant?

To the US
1. In paragraph 19 of its Oral Statement made on 11 May, the US has stated that Article 15 of the Anti-Dumping Agreement "provides important procedural safeguards to developing countries". Could the US please explain and elaborate, on the basis of its own experience of implementing Article 15, what these important procedural safeguards are?
2. In paragraph 25 of its Oral Statement, the US has referred to the draft recommendations of the WTO Committee on Anti-Dumping Practices on the period of data collection for anti-dumping investigations. Would the US agree that these guidelines are only in the form of recommendations?


ANNEX 1-6

RESPONSES OF INDIA TO QUESTIONS



FOLLOWING THE FIRST MEETING OF THE PANEL
(18 May 2000)

Questions from the Panel for India

1.A At paragraphs 41-46 of its first oral statement, India seems to agree that the "reasonable" criterion, which it has suggested applies to the result of the calculations under Article 2.2.2 (i) and (ii), and which India asserts derives from Article 2.2, applies to the chapeau. Could India confirm whether the Panel’s understanding of India’s position is correct, that the test of "reasonableness" India is proposing applies to the chapeau of Article 2.2.2 as well as to the subparagraphs?

India confirms that this understanding is correct. The criterion of reasonableness, as laid down in Article 2.2 instructs the chapeau of Article 2.2.2 and its subparagraphs.
1.B Does India acknowledge that, as the proponent of the claim that the EC has violated Article 2.2.2 (ii) in its interpretation and application, India bears the burden of presenting a prima facie case on these questions.
India acknowledges this. In this connection India wishes to recall that in its view it has made a prima facie case at many instances during the proceeding, especially at the time of provisional disclosure comments, the hearings, as well as at the time of definitive disclosure comments.
For example, India has shown the profit in other countries to be three times lower, and the profit in the same general category on the domestic market to be much lower as well. In this connection India recalls the following paragraphs of its first written submission: paragraph 3.23, especially sub-paragraphs 3, 4, and 5; paragraph 3.24, sub-paragraphs 2 [B] and 3; paragraph 3.26, sub-paragraphs 2.3 and 2.4; paragraph 3.27, sub-paragraph 2.1; paragraph 3.28; paragraph 3.29; paragraph 3.30; paragraph 3.31; paragraph 3.32; and, as far as comments on the definitive disclosure are concerned, India Exhibits-34, 35, 36, 37, and 38.
2.A The Panel understood India to state, in responding orally to the Panel’s questions during the first meeting, that the reasonableness test applies to the chapeau of Article 2.2.2, and that in the case of the chapeau, the reasonableness test is satisfied by the limitation to sales in the ordinary course of trade. Is the Panel’s understanding correct?

The Panel is correct in its understanding that in India’s view the test of reasonableness applies to the chapeau of Article 2.2.2 [see also paragraph 3.128 of India’s First Written Submission]. India accepts that for the calculation of profit under the chapeau of Article 2.2.2 the authorities are indeed explicitly allowed to restrict themselves to sales in the ordinary course of trade. However, for the profit calculation under Article 2.2.2 (ii) no such restriction to the ordinary course of trade is envisaged.

This does not imply that any profit established under the method of Article 2.2.2 chapeau and Article 2.2.2 (ii) is automatically reasonable; for example, if a profit of 1,000 per cent would be established is this then reasonable? In the view of India not. However, what India would like to stress is that it is concerned that the profit of 18+ per cent calculated on the basis of Article 2.2.2(ii) for Bombay Dyeing was applied to all other producers.




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