WORLD TRADE
ORGANIZATIONWT/DS141/RW
29 November 2002
(02-6519)
Original:  English
EUROPEAN COMMUNITIES - ANTI-DUMPING DUTIES ON
IMPORTS OF COTTON-TYPE BED LINEN FROM INDIA
Recourse to Article 21.5 of the DSU by India
Report of the Panel
The report of the Panel on European Communities - Anti-Dumping Duties on Imports of Cotton-Type
Bed Linen from India - Recourse to Article 21.5 of the DSU by India  is being circulated to all
Members, pursuant to the DSU.  The report is being circulated as an unrestricted document from 29
November 2002 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents
(WT/L/452).WT/DS141/RW
Page i
TABLE OF CONTENTS
Page
I. INTRO DUCTION ................................................................................................................. ...1
II. FACTUAL ASPECTS ............................................................................................................. .2
III. PARTIES' REQUESTS FOR FINDINGS AND RECO MMENDATIONS ........................4
A. I NDIA ............................................................................................................................... ............4
B. T HE EUROPEAN COMMUNITIES ...................................................................................................4
IV. ARGUMENTS OF THE PART IES ........................................................................................5
V. ARGUMENTS OF THE THIRD PART IES ..........................................................................5
VI. FINDINGS.................................................................................................................... .............5
A. GENERAL ISSUES .........................................................................................................................5
1. Standard of Review........................................................................................................... ........5
2. Burden of Proof.............................................................................................................. ...........6
B. REQUEST FOR PRELIMINARY RULINGS ........................................................................................6
1. Regulations 160/2002 and 696/2002 are not me asures “taken to comply” with the
DSB’s rulings and recommendations within  the meaning of Article 21.5 of the
DSU and, therefore, are not with in the Panel’s jurisdic tion.................................................7
(a) Arguments of  the parties.................................................................................................... .........7
(b) Evaluation by  the Panel ..................................................................................................... .........8
2. The relevant date for assessing the consistency of the measures “taken to
comply” is the date of esta blishment of the Panel................................................................10
(a) Arguments of  the parties.................................................................................................... .......10
(b) Arguments of third parties .................................................................................................. ......11
(c) Evaluation by  the Panel ..................................................................................................... .......11
3. Certain claims raised by India in this  dispute with respect to aspects of the
original measure which were the subject of claims by India, but were not
pursued before the original Panel,  are not properly before this Panel.............................12
(a) Arguments of  the parties.................................................................................................... .......12
(b) Evaluation by  the Panel ..................................................................................................... .......14
4. Claims not stated in the request for establishment of the Panel.........................................19
(a) Arguments of  the parties.................................................................................................... .......19
(b) Evaluation by  the Panel ..................................................................................................... .......20
C. CLAIMS AND AR GUMENTS................................................................................................22
1. Claim 1: The EC acted inconsistently with its obligations under Article 2.2.2(ii)
of the AD Agreement ............................................................................................................ ..22
(a) Factual background.......................................................................................................... .........22
(b) Arguments of  the parties.................................................................................................... .......22WT/DS141/RW
Page ii
(c) Arguments of third parties .................................................................................................. ......24
(d) Evaluation by  the Panel ..................................................................................................... .......25
2. Claims 2 and 3: The EC acted inconsistently with its obligations under
Articles 3.1, 3.3 and 5.7 of the AD Agreement......................................................................29
(a) Factual background.......................................................................................................... .........29
(b) Arguments of  the parties.................................................................................................... .......31
(c) Arguments of third parties .................................................................................................. ......32
(d) Evaluation by  the Panel ..................................................................................................... .......32
3. Claim 4: The EC acted inconsistently with its obligations under Articles 3.1 and
3.2 of the AD Agreement ........................................................................................................ 34
(a) Factual background.......................................................................................................... .........34
(b) Arguments of  the Parties.................................................................................................... .......35
(c) Arguments of third parties .................................................................................................. ......36
(d) Evaluation by  the Panel ..................................................................................................... .......38
4. Claim 5: The EC acted inconsistently with its obligations under Articles 3.1 and
3.4 of the AD Agreement ........................................................................................................ 42
(a) Factual background.......................................................................................................... .........42
(b) Arguments of  the parties.................................................................................................... .......43
(c) Arguments of third parties .................................................................................................. ......44
(d) Evaluation by  the Panel ..................................................................................................... .......45
(ii) Alleged failure to collect  data............................................................................................ .......47
(iii) Alleged inadequacy of evaluation of the Article 3.4 factors .....................................................48
(iv) Facts allege dly ignored .................................................................................................... ........56
(v) Facts allegedly changed  without explanation...........................................................................56
(vi) Facts allegedl y misrepresented............................................................................................. ....57
(vii) Alleged failure to conduct an overall recons ideration and analysis ........................................57
5. Claim 6: The EC acted inconsistently with its obligations under Article 3.5 of the
AD Agreement................................................................................................................... ......58
(a) Arguments of  the parties.................................................................................................... .......58
(b) Arguments of third parties .................................................................................................. ......59
(c) Evaluation by  the Panel ..................................................................................................... .......60
(d) Additional finding in  the alte rnative ....................................................................................... ..62
6. Claim 7: The EC acted inconsistently with its obligations under Article 15 of the
AD Agreement................................................................................................................... ......65
(a) Factual background.......................................................................................................... .........65
(b) Arguments of  the parties.................................................................................................... .......66
(c) Evaluation by  the Panel ..................................................................................................... .......66WT/DS141/RW
Page iii
7. Claim 8: The EC acted inconsistently with its obligations under Article 21.2 of
the DSU ........................................................................................................................ ............69
(a) Arguments of  the parties.................................................................................................... .......69
(b) Arguments of third parties .................................................................................................. ......69
(c) Evaluation by  the Panel ..................................................................................................... .......69
VII. CONCLUSIONS AND RECOMMENDAT ION..................................................................71WT/DS141/RW
Page v
LIST OF ANNEXES
Content Page
Annex A-1 First Written Submission of India A-2
Annex A-2 First Submission of the European Communities A-50
Annex B-1 Third Party Submission of Japan B-2
Annex B-2 Third Party Submission of the United States B-3
Annex C-1 Second Written Submission of India C-2
Annex C-2 Second Submission of the European Communities C-42
Annex D-1 Oral Statement of Korea D-2
Annex D-2 Oral Statement of the United States at the Third Party Session D-5
Annex D-3 Oral Statement of the European Communities D-8
Annex D-4 Closing Statement of the European Communities D-33
Annex D-5 Oral Statement of India D-35
Annex D-6 Closing Statement of India D-46
Annex E-1 India's Answers to the Panel's Questions E-2
Annex E-2 Answers of the European Communities to the Questions from the
PanelE-36
Annex E-3 Answers of the European Communities to the Questions from India E-49
Annex E-4 Responses of the United States to Questions from the Panel E-54
Annex E-5 Written Answers of the Republic of Korea to the Questions of the
PanelE-60
Annex E-6 Written Responses of Japan E-61
Annex E-7 Comments of India on Answers of the European Communities to
the Questions from the PanelE-63
Annex E-8 Comments of India on Answers of the European Communities to
the Questions from IndiaE-81
Annex E-9 Comments of the European Communities to India's Answers to the
Questions from the PanelE-88WT/DS141/RW
Page 1
I. INTRODUCTION
1.1 On 8 March 2002 India requested consultations with the European Communities pursuant to
Articles 4 and 21.5 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (hereinafter "DSU"), Article XXIII of the General Agreement on Tariffs and Trade, and
Article 17 of the Agreement on Implementation of Article VI of the GATT 1994 (hereinafter"AD Agreement") concerning, inter alia , the European Communities alleged non-compliance with the
DSB rulings and recommendations in the dispute " European Communities - Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India " and various provisions of the AD Agreement and
Article VI of GATT 1994.
1 The European Communities and India consulted on 25 and 26 March
2002, but failed to settle the dispute.
1.2 On 7 May 2002, India requested the Dispute Settleme nt Body (hereinafter "DSB") to establish
a panel pursuant to Articles 6 and 21.5 of the DSU, Article 17 of the AD Agreement andArticle XXIII of GATT 1994, and as envisaged in a 13 September 2001 agreement on the "Agreed
Procedures between India and the European Communities under Articles 21 and 22 of the DSU in the
follow-up to the dispute ' European Communities - Anti-Dumping Duties on Imports of Cotton-Type
Bed Linen from India .'"
2
1.3 At its meeting on 22 May 2002, the DSB referred this dispute to the original panel in
accordance with Article 21.5 of the DSU to examine the matter referred to the DSB by India in
document WT/DS141/13/Rev.1.  At that meeting, the pa rties to the dispute also agreed that the Panel
should have standard terms of reference.  The terms of reference are, therefore, the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by India in document WT/DS141/13/Rev.1, th e matter referred by India to the DSB
in that document, and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements".
1.4 Article 21.5 of the DSU provides that a dispute under that provision shall be decided through
recourse to the DSU, including, "wherever possible, resort to the original panel".  In this case, one
original panellist was unavailable to serve.  On 25 June 2002, the parties agreed on a replacementpanellist, and as a result the Panel was composed as follows:
3
Chairman: Mr.  Dariusz ROSATI
Members : Mr.  Paul O' CONNOR
            Mr.  Virachai PLASAI
1.5 Japan, Korea and the United States reserved their rights to participate in the Panel's
proceedings as third parties.
1.6 The Panel met with the parties on 10-11 September 2002.  It met with the third parties on
11 September 2002.
                                                     
1 WT/DS141/12.
2 WT/DS141/13/Rev.1.
3 WT/DS141/14.WT/DS141/RW
Page 2
II. FACTUAL ASPECTS
2.1 This dispute concerns the parties' disagreement as to the existence or consistency with a
covered agreement of measures taken to comply with the DSB recommendation in the dispute
"European Communities - Anti-Dumping Duties on Im ports of Cotton-Type Bed Linen from India".
2.2 On 12 March 2001, the DSB adopted the Report of the Appellate Body4 and the Report of the
Panel, 5 as modified by the Appellate Body, in the dispute " European Communities – Anti-Dumping
Duties On Imports Of Cotton-Type Bed Linen From India " (WT/DS141).  Pursuant to the
recommendations of the Panel and Appellate Body, the DSB requested the European Communities to
bring its measure into conformity with its obligations under the AD Agreement.  6
2.3 On 26 April 2001, pursuant to Article 21.3(b) of the DSU, the EC and India mutually agreed
on a reasonable period of five months and two days to implement the recommendations and rulings of
the DSB.7  This period expired on 14 August 2001.
2.4 Following adoption of the Panel and Appellate Body Reports, the EC undertook to reassess its
findings in light of the Panel and Appellate Body decisions.  On 3 July 2001, the EC held a hearing in
the proceedings in this respect.
2.5 On 26 July 2001, the Council adopted Regulation 1515/2001 on the measures that may be
taken by the EC following a report adopted by th e Dispute Settlement Body concerning anti-dumping
and anti-subsidy matters.8
2.6 On 7 August 2001, the Council of the European Union adopted Regulation 1644/2001
(hereinafter "redetermination" or "Regulation 1644/2001"), published 14 August 2001.9  Regulation
1644/2001 amended the original definitive anti-dumping measure on bed linen from India.  The
redetermination established different, lower, dumping margins for imports from India.  It did notaddress the dumping margins for the other countries originally investigated, Egypt and Pakistan.  It
further concluded that dumped imports from India, Egypt and Pakistan caused material injury to the
EC industry.  While concluding that the imports from India, Egypt and Pakistan were still injuriously
dumped, the Council suspended the application of anti-dumping duties on imports of bed linen from
India.  The Regulation provided that if no review were initiated within 6 months, the anti-dumpingduties would expire, but if a review were initiated, the application of the duties would continue to be
suspended.
10
                                                     
4 Appellate Body Report, European Communities - Anti-Dumping Duties on Imports of Cotton-Type
Bed Linen from India  ("EC-Bed Linen ") WT/DS141/AB/R, adopted 12 March 2001.
5 Panel Report, European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen
from India ("EC-Bed Linen ")(hereinafter "original Panel Report, EC-Bed Linen ) WT/DS141/AB/R, adopted 12
March 2001.
6 WT/DS141/9.
7 WT/DS141/10.
8 Council Regulation (EC) No 1515/2001 of 23 July 2001 on the measures that may be taken by the
Community following a report adopted by the WTO Dispute Settlement Body concerning anti-dumping andanti-subsidy measures, published in Official Journal of the European Communities of 26 July 2001, L-series, No201, (hereinafter "Regulation 1515/2001"), Exhibit-India-RW-16.
9 Council Regulation (EC) No 1644/2001 of 7 August 2001 amending Regulation (EC) No 2398/97,
imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and
Pakistan and suspending its application with regard to imports originating in India, published in Official Journalof the European Communities of 14 August 2001, L-series, No 219, Exhibit- Indis-RW-18.
10 Regulation 1644/2001.WT/DS141/RW
Page 3
2.7 On 19 December 2001, Eurocoton, the trade association acting on behalf of the EC industry,
filed a request with the EC authorities for a review.11  On 13 February 2002 the EC initiated a "partial
interim review" of the dumping aspect of the measure respecting imports from India based on
Eurocoton's request.12  Pursuant to Regulation 1644/2001, the anti-dumping duties on imports from
India remained suspended, and no anti-dumping duties have been collected pursuant to measure.
2.8 On 28 January 2002, the Council of the European Union adopted Regulation 160/2002. 13
This regulation amended the anti-dumping measures on imports of bed linen by terminating the
proceeding against Pakistan.  The regulation also provided that, unless a review were requested with
respect to the anti-dumping measure against imports from Egypt, that measure would expire as of 28
February 2002.  No review was requested with respect to imports from Egypt, and on 28 February
2002 the anti-dumping measure against imports from Egypt expired.14
2.9 On 19 April 2002, the EC held a hearing in connection with the on-going review proceeding.
2.10 On 22 April 2002 the Council of the European Union adopted Regulation 696/2002. 15  The
Regulation states that, in light of the termination of the proceeding on imports from Pakistan and the
expiry of the measure on imports from Egypt, the EC authorities considered it appropriate to reassess
the findings, limited to the determination of injury a nd causal link to the extent that this determination
had been based on the examination of the impact of imports from India, Egypt, and Pakistan on acumulative basis.   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 definitive anti-dumping duty imposed on imports of cotton-type bed linen originating
in India.  Pursuant to Regulation 1644/2001, the anti-dumping duties on imports from India remained
suspended.
2.11 On 8 March 2002 India had requested consultations under Article 21.5 of the DSU.  In that
request, India challenged the determination of the EC in Council Regulation 1644/2001, the
redetermination, and the initiation of the partial interim review.
16  Although consultations were held,
they failed to settle the dispute.  India submitted a request for establishment of a panel under
Article 21.5 of the DSU on 4 April 2002, challenging the redetermination, as well as the furtheractions taken by the EC.
17  A revised request for establishment of a panel, mentioning specifically the
redetermination and the two subsequent regulations, was subsequently submitted by India on 7 May
2002,18 and this Panel was established pursuant to that request on 22 May 2002.
                                                     
11 Exhibit-India-RW-21.
12 Notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of
cotton-type bed linen originating in India, published in Official Journal of the European Communities of 13
February 2002, C-series, No 39.  Exhibit-India-RW-23.
13 Council Regulation (EC) No 160/2002 of 28 January 2002 amending Regulation (EC) No 2398/97
imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India andPakistan and terminating the proceeding with regard to imports originating in Pakistan, published in Official
Journal of the European Communities of 30 January 2002, L-series, No 26, (hereinafter "Regulation 160/2002").
Exhibit-India-RW-22.
14 Notice of the expiry of certain anti-dumping measures, published in Official Journal of the European
Communities of 14 March 2002, C-series, No 65, page 12.   Exhibit-India-RW-24.
15 Council Regulation (EC) No 696/2002 of 22 April 2002 confirming the definitive anti-dumping duty
imposed on imports of cotton-type bed linen originating in India by Regulation (EC) No 2398/97, as amendedand suspended by Council Regulation (EC) No 1644/2001, published in Official Journal of the European
Communities of 25 April 2002, L-series, No 109, (hereinafter "Regulation 696/2002").  Exhibit-India-RW-30.
16 WT/DS141/12 .
17 WT/DS141/13.
18 WT/DS141/13/Rev.1.WT/DS141/RW
Page 4
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. INDIA
3.1 India requests that the Panel make the following findings:
(a) By failing to withdraw the measures found to be inconsistent with the AD Agreement
and to bring its measures into conformity with its obligations under theAD Agreement within the mutually agreed reasonable period of time, the EC failed to
comply with the DSB recommendations and rulings in this dispute; and
(b) The redetermination, as amended, and the subsequent actions, as identified above, are
inconsistent with the following provisions of the AD Agreement and the DSU:
• Article 2.2.2(ii) of the AD Agreement by not properly calculating a "weighted
average" of amounts for SG&A and profits;
• Articles 3.1 and 3.3 of the AD Agreement by  cumulating Indian imports with those
from a country for which no dumping was found;
• Article 5.7 of the AD Agreement by not simultaneously considering the evidence of
dumping and injury;
• Articles 3.1 and 3.2 of the AD Agreement by not properly excluding the portion of
non-dumped imports from the total volume of Indian imports;
• Articles 3.1 and 3.4 of the AD Agreement by reciting factors without even collecting
them and by failing to enter into an overall reconsideration and analysis of the
information in light of the requirements of the AD Agreement;
• Article 3.5 of the AD Agreement by incorrectly establishing a causal relationship
between dumped imports and injury and by disregarding the non-attributionlanguage;
• Article 15 of the AD Agreement by not exploring any remedy, constructive or
otherwise; and
• Article 21.2 of the DSU by failing to pay particular attention to this matter affecting
India; and which already had formed the subject of dispute settlement.
B. T
HE EUROPEAN COMMUNITIES
3.2 The European Communities requests that the Pa nel make the following preliminary rulings in
accordance with paragraph 13 of its Working Procedures:
(a) Regulations 160/2002 and 696/2002 are not measures "taken to comply" with the
DSB' s rulings and recommendations within the meaning of Article 21.5 of the DSU
and therefore, are not within the Panel's jurisdiction;
(b) the relevant date for assessing the consistency of the measures "taken to comply" with
the covered agreements is the date of establishment of the Panel;
(c) certain claims raised by India in its first submission with respect to findings set out in
the original measure which were not challenged by India before the original Panel,
and which have not been modified by the measures at issue in this dispute, are not
properly before this Panel; and
(d) the following claims raised by India in its first submission were not stated in its
request for establishment of the Panel, contrary to the requirement imposed by
Article 6.2 of the DSU, and are, therefore, not within the Panel's terms of reference:WT/DS141/RW
Page 5
• the claim that the EC acted inconsistently with Article 4.1(i) of the
AD Agreement by excluding from the "Community industry" a producerwhich had imported bed linen from Pakistan;
• the claim that the EC failed to respect the "reasonable period of time" agreed
by the parties under Article 21.3 (b) of the DSU.
3.3  The EC further requests the Panel to find in the EC's favor on the claims submitted by India
for the reasons stated in Section III of the EC's first written submission.
3.4 Finally, the EC requests that, should the Panel conclude that the EC has violated
Article 2.2.2(ii) of the AD Agreement, it should find  that such violation has not nullified or impaired
the benefits accrued to India under that provision.
IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are set out in their submissions to the Panel.  The parties'
submissions are attached to this Report as Annexes (see List of Annexes, page v).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The arguments of the third parties, Japan, Korea, and the United States are set out in their
submissions to the Panel and are attached to this Report as Annexes (see List of Annexes, page v).
VI. FINDINGS
A. 
GENERAL ISSUES
1. Standard of Review
6.1 Although neither party has explicitly addressed these general issues, we consider it useful to
recall, at the outset of our examination, the standard of review we must apply to the matter before us.
6.2 Article 11 of the DSU  sets forth the appropriate standard of review for panels.  Article 11
imposes upon panels a comprehensive obligation to make an "objective assessment of the matter", an
obligation which embraces all aspects of a panel's examination of the "matter", both factual and legal.
6.3 Article 17.6 of the AD Agreement  sets forth the special standard of review applicable to anti-
dumping disputes.  Certain elements of Article 17.6 of the AD Agreement  complement -- or
supplement -- the standard contained in Article 11 of the DSU.  In particular, with regard to factual
issues, Article 17.6(i) provides:
“in its assessment of the facts of the matter, the panel shall determine whether the
authorities’ establishment of the facts was proper and whether their evaluation ofthose facts was unbiased and objective.  If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the panel might have
reached a different conclusion, the evaluation shall not be overturned”.
6.4 With respect to legal questions of the interp retation of the AD Agreement, Article 17.6(ii)
provides:WT/DS141/RW
Page 6
“the panel shall interpret the relevant provisions of the Agreement in accordance with
customary rules of interpretation of public international law.  Where the panel finds
that a relevant provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the author ities’ measure to be in conformity with
the Agreement if it rests upon one of those permissible interpretations".
6.5 Thus, together, Article 11 of the DSU and Article 17.6 of the AD Agreement set out the
standard of review we must apply with respect to both the factual and legal aspects of our examination
of the claims and arguments raised by the parties.19
6.6 In light of this standard of review, in examining this matter referred to us under Article 21.5
of the DSU, we must evaluate the existence or consistency with a covered agreement of measures
taken to comply with the recommendation of the DSB.  We must find that a measure taken to comply
with the recommendation of the DSB is consistent with the AD Agreement if we find that the EC
investigating authorities properly established the facts and evaluated them in an unbiased and
objective manner,  and  that the measure rests upon a "permissible" interpretation of the relevant
provisions.  Our task is not to perform a de novo  review of the information and evidence on the record
of the underlying anti-dumping investigation, nor to substitute our judgment for that of the EC
investigating authority, even though we may have arrived at a different determination were weexamining the record ourselves.
2. Burden of Proof
6.7 We recall that the general principles applicable to burden of proof in WTO dispute settlement
require that a party claiming a violation of a provision of the WTO Agreement by another Member
must assert and prove its claim.
20  In these Panel proceedings, we thus observe that it is for India,
which has challenged the consistency of the EC measure, to bear the burden of demonstrating that the
measure is not consistent with the relevant provisions of the AD Agreement.  We also note, however,
that it is generally for each party asserting a fact, whether complainant or respondent, to provide proof
thereof.21  In this respect, therefore, it is also for the EC to provide evidence for the facts which it
asserts.  We also recall that a prima facie  case is one which, in the absence of effective refutation by
the other party, requires a panel, as a matter of law, to rule in favour of the party presenting the prima
facie  case.  In addition, we consider that both parties generally have a duty to cooperate in the
proceedings in order to assist us in fulfilling our mandate, through the provision of relevant
information.22
B. REQUEST FOR PRELIMINARY RULINGS
6.8 The EC requested that the Panel make four preliminary rulings.  Given that we held only one
hearing in this matter, we did not rule on any of these requests during the course of the proceeding, aswe considered that there would have been no signficant benefit to either the parties or the orderly
conduct of the proceeding by early rulings in this case.  However, we have now considered and
disposed of the EC's request, and our findings in this regard are set out below.
                                                     
19 Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel
Products from Japan  ("US - Hot-Rolled Steel "), WT/DS184/AB/R, adopted 23 August 2001, at para. 54.
20 Appellate Body Report , United States – Measure Affecting Imports of Woven Wool Shirts and
Blouses from India ("US – Wool  Shirts and Blouses "), WT/DS33/AB/R, adopted 23 May 1997, at p. 14,
DSR 1997:I, 323, at 337.
21 Appellate Body Report, US – Wool Shirts and Blouses , at p. 14.
22 Appellate Body Report , Canada  – Measures Affecting the Export of Civilian Aircraft ("Canada –
Aircraft") , WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377, at para. 190.WT/DS141/RW
Page 7
1. Regulations 160/2002 and 696/2002 are not measu res “taken to comply” with the DSB’s
rulings and recommendations within the meaning of Article 21.5 of the DSU and,
therefore, are not within the Panel’s jurisdiction
(a) Arguments of the parties
6.9 The EC argues that the original Panel proceeding involved no claims against the findings of
dumping with respect to imports originating in Pakistan and Egypt, and that consequently, no
recommendations or rulings were made by the DSB w ith respect to those findings, and the EC had no
implementation obligations with respect to those fi ndings.  The EC maintains that its authorities
decided, on their own motion,23 to apply the principles set out in the original Panel determination with
respect to the calculation of the dumping margin, and particularly the prohibition on zeroing, to the
findings of dumping with respect to imports from Pa kistan and Egypt.  That reassessment of Pakistani
imports, set out in Regulation 160/2002, resulted in the conclusion that imports from Pakistan werenot dumped,
24  and the proceeding was terminated with respect to those imports.25  The EC authorities
concluded that they lacked the necessary informati on to re-calculate the dumping margin for Egyptian
producers, and consequently decided to suspend the application of the anti-dumping duties on imports
from Egypt,26 and provided that the duties would expire unless an interested party requested a review
within a certain time-limit.27  No such review was requested and the duties on imports originating in
Egypt expired as of 28 February 2002.28
6.10 Subsequently, the EC authorities re-assessed the fi nding of injury in the context of the partial
interim review that had been initiated based on Eurocoton's request, in order to determine whether
imports from India were, on their own, causing injury to the domestic industry.  The results of that re-
assessment are set out in Regulation 696/2002, which concluded that imports from India, consideredalone, caused material injury to the EC industry, and, therefore, confirmed the imposition of definitive
anti-dumping duties on those imports.
29  At the same time, the EC authorities confirmed the
suspension of the application of those anti-dumping duties.30
6.11 The EC argues that neither of these latter two measures, Regulations 160/2002 and 696/2002,
were measures "taken to comply" with the DSB's recommendation in the original dispute, and thattherefore any claims involving the findings made by  the EC authorities in those two regulations are
beyond this Panel’s jurisdiction.  The EC considers that since there were no rulings by the DSB
concerning the anti-dumping measures against imports from Egypt and Pakistan, there was nothing
for the EC to "comply" with, and no obligation to undertake any reassessment of the original findings.
Therefore, the EC maintains that Regulation 160/2002 cannot be considered as a measure “taken to
comply” within the meaning of Article 21.5.   Simila rly, the EC asserts that the injury redetermination
in Regulation 696/2002 was rendered necessary by the decision of the EC authorities to re-examinethe findings of dumping for Pakistan and Egypt, which decision was not itself a measure “taken to
comply” with the DSB’s recommendation.  Thus, the EC asserts this measure was also independent,
and not a measure "taken to comply".   In the EC's view, India's claims against these two measures
can only be heard in the context of a new dispute.  Of the measures cited in India’s panel request, the
EC considers that the only measure “taken to comply” with the DSB’s recommendation is Regulation
                                                     
23 In response to a question from the Panel, the EC indicated that there were in fact requests from
Egyptian and Pakistani exporters to recalculate the dumping margins.  It asserts that the statement that it acted
"on its own initiative" is intended to mean that the EC was under no obligation to adopt the later two regulations
pursuant to the WTO Agreement.  EC's answer to the Panel's question 20 at para. 20, Annex E-2.
24 Regulation 160/2002, at para.13.
25 Id., at Article 2.
26 Id., at Article 1.1.
27 Id., at Article 1.2.
28 Notice of Expiry, published at OJ C65/12, 14 March 2002.  Exhibit-India–RW–24.
29 Regulation 696/2002, at Article 1.
30 Id.WT/DS141/RW
Page 8
1644/2001.  Accordingly, the EC argues that is the only measure which should be considered by the
Panel when addressing India’s claims.
6.12 India asserts that Regulations 1644/2001, 160/ 2002 and 696/2002 are closely connected to the
Panel and Appellate Body reports in the original dispute.  India maintains that it is important that the
EC not be allowed to decide for itself what are meas ures "taken to comply", citing in this regard the
decision of the Panel in Australia–Salmon (Article 21.5-Canada) .31  India considers that the Panel
should not rule on the EC's request without undertaking a substantive consideration of the issue, as
this would leave it to the EC's discretion, as the implementing Member, to decide what are measures
"taken to comply".
(b) Evaluation by the Panel
6.13 India is certainly correct that the EC is not entitled to determine which measures the Panel
may consider as measures "taken to comply".   The Panel in Australia–Salmon (Article 21.5 –
Canada)  considered this question, and stated:
"We note that an Article 21.5 panel cannot leave it to the full discretion of the
implementing Member to decide whether or not a measure is one "taken to comply".
If one were to allow that, an implementing Member could simply avoid any scrutiny
of certain measures by a compliance panel, even where such measures would be soclearly connected to the panel and Appellate Body reports concerned, both in time
and in respect of the subject-matter, that any impartial observer would consider them
to be measures "taken to comply"".
32
6.14 Similarly, in Australia – Automotive Leather II (Article 21.5 – US) , the Panel rejected
Australia’s argument that a measure cited in the request for the establishment of a panel was notwithin the terms of reference of a panel since it was not part of the implementation of the DSB’s
ruling and recommendation:
"For us to rule, as suggested by Australia, that we are precluded from considering the
1999 loan, would allow Australia to establish the scope of our terms of reference by
choosing what measure or measures it will notify, or not notify, to the DSB inconnection with its implementation of the DSB's ruling".
33
6.15 Thus, it is clear that it is the Panel, and not the EC, which decides whether the measures cited
by India in the request for establishment are to be considered "measures taken to comply" and
therefore fall within the purview of this dispute.  That said, however, it is also not India's right to
determine which measures taken by the EC are measures taken to comply.  Rather, this is an issue
which must be considered and decided by an Article 21.5 panel.
6.16 In this case, the complaining Member, India, is arguing that the first of a series of measures
was inadequate  to establish compliance with the DSB's recommendation, and that subsequent
measures demonstrate that fact in that they sought to remedy the inadequacies of the first measure.
The EC considers that only the first measure was taken to comply with the DSB's recommendation to
bring its measure into conformity, and that the subsequent measures were not taken to justify or
                                                     
31 Panel Report, Australia – Measures Affecting Importation of Salmon – Recourse to Article 21.5 of
the DSU by Canada ("Australia – Salmon (Article 21.5 – Canada) "), WT/DS18/RW, adopted 20 March 2000,
DSR 2000:IV, 2035, at para. 7.10, subparagraph 22
32 Id., para. 7.10, subparagraph 22
33 Panel Report, Australia – Subs idies Prov ided to Producers and Exporters of Automotive Leather –
Recourse to Article 21.5 of the DSU by the United States ("Australia – Automotive Leather II (Article 21.5 – US) "),
WT/DS126/RW and Corr.1, adopted 11 February 2000, DSR 2000:III, 1189, at para. 6.4.WT/DS141/RW
Page 9
remedy errors in the first measure.34  The situation in this case is thus fundamentally different from
that facing the Panel in the Article 21.5 proceeding in Australia – Automotive Leather II (Article 21.5 –
US).  In that case, the complaining Member, the United States, argued that Australia had taken two
measures, the first of which purported to implement the DSB's ruling, while the second measure undid
the purported compliance.  Australia argued that only the first measure was a "measure taken tocomply", and that the second measure was not within the Panel's mandate.
6.17 While clearly, it is India in the first instance which decides the scope of its request for
establishment, including the measures it wishes to challenge, the Panel is not without a role in
establishing the scope of its mandate.  The complaining Member in an Article 21.5 proceeding cannot
be allowed to sweep into the dispute measures which are not "so clearly connected to the panel and
Appellate Body reports concerned, both in time and in  respect of the subject-matter, that any impartial
observer would consider them to be measures "taken to comply""
35, any more than the implementing
Member can be allowed to exclude such measures from the proceeding.  To the extent a party may
have challenged, in a request for establishment of an Article 21.5 panel, measures which were not
"taken to comply" by the implementing Member, it is  our view that a Panel may decline to address
claims concerning such measures.
6.18 We consider that this is precisely the situation before us in this case.  The original dispute did
not involve the anti-dumping measures with respect to imports from Egypt or Pakistan.  Thus, neither
the Panel nor the Appellate Body found any violation with respect to the anti-dumping measures
concerning imports from Egypt or Pakistan.  As a consequence, the DSB's rulings cannot have
touched upon these anti-dumping measures.  Nor c ould the DSB have recommended that the EC bring
into conformity with its obligations measures as to which there was no finding of violation.   Thus, theEC was under no legal obligation to do anything with respect to the anti-dumping measures on
imports from Egypt and Pakistan.
36
6.19 The EC chose, at its own volition, to open th e determinations of dumping with respect to
imports from Egypt and Pakistan so as to apply to those determinations the conclusion of the adopted
Reports finding the practice of “zeroing” to be inconsistent with the AD Agreement.37  While this
decision on the part of the EC may have been prudent, and is commendable, it was not required by the
DSB's recommendation in the original dispute, which was to bring the measure at issue, viz., the anti-
dumping measure on imports of bed linen from India, into conformity with the EC's obligations under
the AD Agreement.38   Therefore, we conclude that Regulation 160/2002 was not a measure "taken to
                                                     
34 The EC does argue that, if the Panel were to conclude that all three measures were "measures taken
to comply", then the consistency of it compliance should be judged as of the date of establishment of the Panel,
i.e., with reference to the situation as it stood after all three measures had been adopted.
35 Australia - Salmon (Article 21.5 – Canada) , at para. 7.10, subparagraph 22.
36 The situation might be different had there been a claim in the original dispute challenging the
cumulative assessment of the effects of imports from India, Egypt, and Pakistan.
37 The EC clarified, in response to a question from the Panel, that while EC authorities adopted
Regulation 160/2002 "on their own initiative", this did not suggest that they had not acted in response to a
request from exporters, but rather that they were under no obligation to adopt that regulation.  EC's answer tothe Panel's question 20, at para. 20, Annex E-2.  The EC further noted that both Pakistani and Egyptianexporters requested the EC to redetermine their dumping margins.  Id.  The EC has also provided exporters
affected by the practice of zeroing in other cases the opportunity to request a re-examination in light of theadopted Reports.  id.  at paras. 18 –19.  At least one review has been initiated in response to the request of an
exporter.  id.  at para. 18
38 We note that the original dispute was not one in which India challenged the EC's law or regulations
per se , and thus, the recommendation of the DSB had no necessary implications for anything other than the anti-
dumping measure at issue in that dispute.WT/DS141/RW
Page 10
comply" and its consistency with the AD Agreement, or  lack thereof, will not be considered in this
proceeding.39
6.20 Similarly, the fact that the EC, subsequent to its re-examination of the dumping
determinations with respect to imports from Egypt and Pakistan, and in the context of a review
initiated based on the request of Eurocoton, carried out an analysis of whether injury was caused byimports from India alone does not, ipso facto , establish that Regulation 696/2002 is a measure "taken
to comply".  Rather the opposite would seem to be the case – that Regulation  would seem to be an
entirely new determination, reached as a result of events subsequent to the EC having adopted a
measure to comply with the DSB's recommendation.
6.21 In this case, India argues that the first measure, Regulation 1644/2001 is insufficient to
establish compliance, and that the subsequent two measures do not cure that insufficiency.  It does not
argue that the subsequent two measures undo the compliance effectuated by the first measure.  In thiscircumstance, if we were to find that the first measure, Regulation 1644/2001, is sufficient to
conclude that the EC has complied with the DSB's recommendation to bring its measure into
conformity,  there would be no need to go on to  consider whether the two subsequent mesures were
inconsistent with the AD Agreement, in the contex t of this Article 21.5 proceeding.  This as well
implies that only Regulation 1644/2001 is properly deemed a "measure taken to comply".
6.22 Based on the foregoing, we grant the EC's first request for preliminary ruling, and determine
that Regulations 160/2002 and 696/2002 are not "measures taken to comply" with the DSB's
recommendation.  We therefore will not make any fi ndings as to the consistency of those measures
with the covered agreements in this dispute.
40
2. The relevant date for assessing the consistency of the measures “taken to comply” is the
date of establishment of the Panel
(a) Arguments of the parties
6.23 The EC notes India's argument that, even if the alleged inconsistencies with the
AD Agreement in the redetermination, Regulation 1644/2001 had been "cured" by Regulations
160/2002 and 696/2002, those latter regulations cannot provide a valid “justification” because theywere adopted outside the “reasonable period of time”.
41  The EC asserts that India is incorrect in
arguing that the scope of a panel's mandate in an  Article 21.5 proceeding is limited to determining
whether measures taken to comply within the reasonable period of time  for implementation are
consistent with the covered agreements.  Rather, the EC submits that assuming the Panel were to
conclude that the latter two measures are relevant to the assessment of the EC's compliance, that
compliance should be judged as of the date of establishment of the Panel, and not as of the end of the
reasonable period of time.  Therefore, the EC considers, in the alternative, that the Panel should takeinto account any "cure" effected by the two later Regulations with respect to any inconsistencies in
Regulation into account in assessing the EC's implementation.
6.24 India does not see any conflict between its position and the argument of the EC.  India
submits that it is possible to have the date of establishment of the Panel as the relevant date for
assessing the overall  consistency of the measures "taken to comply" while at the same time having the
                                                     
39 Our conclusion in this regard is bolstered by the consideration that, had India sought to challenge the
EC's implementation for an alleged failure  to enact this regulation, we would not have been able to find such
failure alone demonstrated that the EC had not taken measures to comply with the DSB's recommendation.
40 We note, in fact, that India has not actually made claims of violation with respect to these two
regulations.  Rather, India argues that the two latter meas ures cannot be considered as having "corrected" what
India considers to be violations in the first measure.
41 See e.g. ,  paras. 73, 82, 134  and 247 of India’s First Written Submission (hereinafter "India's FWS"),
Annex A-1.WT/DS141/RW
Page 11
date of expiration of the reasonable period of time for compliance as the relevant date for assessing
the consistency of measures "taken to comply" within  the reasonable period of time.  Thus, India
asserts, a panel should examine the consistency of measures taken to comply not only as a matter of
substance, but also with respect to whether those measures were taken within the reasonable period of
time.  India argues that the end of the reasonable period establishes a deadline, under Article 21.3, forcompliance, and that therefore whether compliance occurred within that period must be considered.
Once the Panel has made a determination in this respect, and assuming it concludes that there was no
compliance within the reasonable period of time, it can also examine measures taken to comply
subsequently, outside the reasonable period of time, so as to establish whether, as of the date of
establishment of the Panel, the recommendations of the DSB have been implemented.
(b) Arguments of third parties
6.25 The United States asserts that a Member’s chance to comply with the recommendations and
rulings of the DSB does not end with the reasonable period of time for compliance.  Nothing in the
DSU prevents a Member from modifying a compliance measure taken during the reasonable period of
time, replacing it with another measure, or even ta king its compliance measure for the first time after
the end of the reasonable period of time.  Furthermore, any of these measures could be subject to
review by a panel under Article 21.5 of the DSU.  The United States notes that the EC took its initialmeasure to comply, Regulation 1644/2001, within the reasonable period of time, and amended that
measure in Regulation 696/2002, outside the reasona ble period of time.  In the US view, DSU does
not support India’s position that the EC may not demonstrate its compliance based on Council
Regulation 696/2002, because the measure was taken after the end of the reasonable period of time.
The United States considers that India itself provides no legal support for this contention.  To thecontrary, the United States notes that several DSU provisions appear to presume the possibility of a
Member’s bringing its measure into compliance after the reasonable period of time has expired, citing
in this regard Articles 21.6 and 22.8 of the DSU.
6.26 The United States suggests that, to the extent India may be arguing that an obligation to
comply with recommendations and rulings of the DS B before expiration of the reasonable period of
time defines the bounds of the mandate of a panel proceeding under DSU Article 21.5, the text of the
DSU belies this view.  In the US view, the text of Article 21.5, viewed in its context, does not limit
the Panel’s mandate to examining measures taken before the reasonable period of time expired, or in
any other way place a time limit on taking such measures.  The United States considers that since
Regulation 696/2002 predates both the request for establishment and the establishment of the Panel,
there is no need in this proceeding to reac h the issue of which is the proper benchmark.
(c)  Evaluation by the Panel
6.27 As discussed above, we have concluded that only the first of the challenged measures in this
dispute, Regulation 1644/2001, was a "measure taken to comply" with the DSB's recommendation
that the EC bring its measure into conformity.  There is no dispute that Regulation 1644/2001 was
taken within the reasonable period of time agreed upon by the parties.  Thus, we need not and will not
address India's arguments with respect to whethe r, assuming Regulation 1644/2001 were found to be
inconsistent with the covered agreements, that inconsistency could be cured by subsequent measures
taken after the reasonable period of time to implement.   As noted above, India has not made any
specific claims with respect to the subsequent measures themselves.
6.28 We note, however, that India's position regarding the appropriate assessment of compliance
evolved during the course of this proceeding.  We understand India to argue that we may consider the
latter two measures in determining whether the EC has complied with the DSB's recommendation to
bring its measure into conformity, but that we must first determine whether it has done so within the
reasonable period of time.  Thus, it appears India considers that we must make two decisions on the
existence or consistency of measures taken to comply – one as of the end of the reasonable period ofWT/DS141/RW
Page 12
time, and one as of the date of establishment of the Panel.42  We do not consider that it would be
either necessary or appropriate, as a matter of judicial economy, to first examine whether compliance
had occurred as of the end of the reasonable period of time, and second consider compliance as of the
later date.  There would be no useful purpose served by a ruling regarding compliance as of the end of
the reasonable period of time in this case.   India has made no specific claim of violation of any WTOAgreement with respect to the timing of the EC's compliance
43 – it has merely asserted that the first
Regulation adopted by the EC did not bring the EC's measure into conformity with the
AD Agreement, and that the later Regulations cannot be considered as curing the defects it alleges to
exist in the first Regulation.
6.29 In any event, we have concluded that only Regulation 1644/2001 is a "measure taken to
comply" with the DSB's recommendation and ruling , and the EC is content for us to judge its
compliance only with reference to that measure.  India has not, in fact, made any specific claims ofviolation in the subsequent measures, and we will not make any rulings regarding those measures.
While we need not ignore the subsequent regulations, we consider them unnecessary to the resolution
of the question whether the EC has complied with the DSB's recommendation.
3. Certain claims raised by India in this dispute with respect to aspects of the original
measure which were the subject of claims by India, but were not pursued before theoriginal Panel,  are not properly before this Panel
(a) Arguments of the parties
6.30 The EC asserts that India has made claims in this proceeding concerning some of the findings
in the original EC determination which were incor porated without change as part of the reasoning in
the redetermination.  The EC asserts that India did not challenge these aspects of the originaldetermination in the original dispute, that the EC therefore had no implementation obligation with
respect to those aspects of its original determination, and that the EC therefore did not modify them in
the redetermination.  Specifically, the EC notes that India’s only claim under Article 3.5 of the
AD Agreement in the original dispute was that the EC authorities had not established that injury had
been caused “through the effects of dumping” because they had treated as “dumped imports” whatIndia considered to be “non-dumped transactions”.
44  That claim was dismissed by the Panel.45  In this
proceeding, however, India argues that the causality determination is inconsistent with Article 3.5,
inter alia , because the EC authorities failed to properly examine the effects of "other factors" causing
injury to the domestic industry, specifically, the effects of the increase in consumer prices,46 and to
separate the effects of the increase in the cost of raw cotton.47
                                                     
42 Since the measures at issue in this respect were both adopted prior to the date of the revised request
for establishment, and the consequent establishment of this Panel, which date is appropriate has no effect on ourdecision.  We note, however, that in our view, the clear import of the decision of the Panel in US – Shrimp (21.5
-  Malaysia)  is that the appropriate date for assessing the compliance of a Member with the recommendations of
the DSB is the date of establishment of the Article 21.5 panel.  Panel Report, United States – Import Prohibition
of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia  ("US – Shrimp (Article
21.5 – Malaysia)
 "), WT/DS58/RW, adopted 21 November 2001, as upheld by the Appellate Body Report,
WT/DS58/AB/RW, at paras. 5.12 – 5.13.
43 See discussion at paragraph 6.66 below.   See also India's Second Written Submission (hereinafter
"India's SWS"), Annex C-2, at paras. 47 - 50, and India's Closing Statement, Annex D-6, at para. 27.
44 India’s First Written Submission to the original Panel, paras. 4.217 - 4.220, reproduced in original
Panel report, p. 221.
45 Original Panel report,  EC - Bed Linen , at para. 6.142.
46 India’s FWS, at para. 250.
47 Id., at para. 256.WT/DS141/RW
Page 13
6.31 The EC also points out that in the original proceeding, India’s only claim under Article 3.4
was that the EC authorities had failed to consider all the relevant injury factors.48  India prevailed on
that claim, the Panel finding a violation in the failu re to address all the Article 3.4 factors.  In this
proceeding, however, India contests the adequacy  of the findings made by the EC authorities with
respect to Article 3.4 factors which had been considered by the EC authorities in the originaldetermination, and as to which the Panel made no finding of violation.  The EC specifically points to
India's claim that the evaluation of factors such as sales
49, market share50, price development51,
production52, profitability53 or employment54 is inadequate.  The EC notes that its authorities did not
make any new findings with respect to these factors, as Regulation 1644/2001 merely confirms the
findings with respect to those factors that had been made in the original Regulation 1069/97.55  In the
EC's view, India is making claims which it could have, and should have, raised in the original
proceeding.
6.32 The EC submits that, to the extent that the redetermination does nothing but confirm findings
already set out in the measure at issue in the original dispute, it cannot be considered that the
redetermination constitutes a measure “taken to co mply” within the meaning of Article 21.5 of the
DSU.  Therefore, in the EC’s view, any claims rela ting to those findings should be dismissed as not
being properly before the Panel.
6.33 Finally, the EC argues that even if the Panel were to take the view that the claims at issue
concern measures “taken to comply”, by not raising those claims in a timely manner, India has acted
inconsistently with the requirements of Article 3.10 of the DSU that Members engage in dispute
settlement procedures "in good faith in an effort to resolve the dispute".
6.34 India argues, with respect to Article 3.5 and its claim concerning the failure of the EC to
ensure that it did not attribute to dumped imports the injuries caused by other factors, that it had made
a claim in this regard in the original proceeding, which India acknowledges was dismissed by the
Panel for failure to make a prima facie  case.  Nonetheless, India argues that the factual premise for the
EC's request is baseless.  India also considers that the fact that the claim was dismissed in the original
proceedings does not preclude the Panel from examining it in this Article 21.5 proceeding .
6.35 As regards Article 3.4, India notes that it is in part precisely the fact that the EC "confirmed"
aspects of its original determination that India cons iders to constitute the inconsistency of the injury
redetermination with the requirements of Article 3.4 of the AD Agreement.  India's second argument
under its claim 5 is that the EC did not engage in an overall reconsideration and analysis even though
the findings of the Panel and the Appellate Body warranted exactly that.
6.36 Finally, India states that it "fails to see the problem"56 of the EC as to alleged failure to raise
the claims in a timely manner, as these were duly id entified in the request for establishment and form
part of the matter before the Panel.
                                                     
48 India’s First Written Submission to the original Panel, paras. 4.56 - 4.76, reproduced in original
Panel report, pp. 170 - 177.
49 India’s FWS, at paras. 166 - 171.
50 Id.
51 Id.
52 Id., at paras. 180 - 182.
53 Id., at paras. 172 - 179.
54 Id., at paras. 201 - 204.
55 Commission Regulation (EC) No 1069/97, of 12 June 1997, imposing a provisional anti-dumping
duty on imports of cotton-type bed linen originating In Egypt, India and Pakistan, (OJ 13.6.97 L 156/11)(hereinafter “Regulation 1069/97”) (Exhibit India – 8), at paras. 31, 34 and 36.
56 India's SWS, at para. 39.WT/DS141/RW
Page 14
(b) Evaluation by the Panel
6.37 The EC argues that, to the extent the redetermin ation confirms findings set out in the original
determination, the redetermination is not a "measure taken to comply", and the Panel should not rule
on claims addressing the redetermination to the extent it is not a measure taken to comply.  This
request by the EC raises novel and difficult issues concerning the scope of a panel's mandate underArticle 21.5 of the DSU.  That provision states, in pertinent part:
"Where there is disagreement as to the existence or consistency with a covered
agreement of measures taken to comply w ith the recommendations and rulings [of the
DSB in the underlying dispute] such dispute shall be decided through recourse to
these dispute settlement procedures, including wherever possible resort to the original
panel".
6.38 The concept of "measure" in an anti-dumping dispute has been addressed by the Appellate
Body in the context of determining what constitu tes the "measures" that may be challenged in an
original dispute under the AD Agreement.  In Guatemala – Cement I , the Appellate Body concluded
that the measures that may thus be challenged are the imposition of a definitive anti-dumping duty, a
provisional measure, and a price undertaking.
57
6.39 The Appellate Body was, of course, considering th e issue in the context of an original dispute,
and not in the context of an Article 21.5 proceeding.  If applied in the context of an Article 21.5
proceeding, this understanding of measure would im ply that all aspects of the anti-dumping duty at
issue, that is to say, all aspects of Regulation 1644/2001, may be challenged by a Member and must
be resolved by the Panel.  This would include underlying factual and legal issues that were not
addressed by the original Report because no claim was made with respect to such issues, as well asissues that may have been resolved in favor of the defending Member.  Thus, the application of this
understanding of "measure" in the context of an Article 21.5 panel  has troubling consequences which
suggest to us the need for a thorough consideration of the EC's request.
6.40 As an extreme example, assume a complaining Member challenges an anti-dumping duty in
dispute settlement, and alleges violations only in connection with the investigating authorities'determination of injury.  Assume the Panel concludes that the anti-dumping duty is inconsistent with
the AD Agreement because of a violation of Article 3.4 in the determination of injury, and the DSB
recommends that the defending Member "bring the m easure into conformity".  Assume the defending
Member re-evaluates only the injury aspect of its original decision, makes a new determination of
injury, and continues the imposition of the anti-dumping duty on the basis of the new finding of injury
and the pre-existing finding of dumping and causal li nk.  If that anti-dumping duty, and all aspects of
the determinations underlying that duty, are considered the "measure taken to comply", then thecomplaining Member could, in a subsequent Article 21.5 proceeding, allege a violation in connection
with the dumping determination which had not been challenged in the original dispute.  If the
Article 21.5 panel found a violation of the AD Agreem ent in the determination of dumping, it would
presumably conclude that the measure taken to comply is inconsistent with the AD Agreement.  In
this circumstance, the defending Member would have no opportunity to bring its measure intoconformity with the AD Agreement with respec t to the dumping calculation.  Moreover, the
defending Member would be subject to potential suspension of concessions as a result of a finding of
violation with respect to the dumping aspect of the original determination which, because it was not
                                                     
57 Appellate Body Report , Guatemala – Anti-Dumping Investigation Regarding Portland Cement from
Mexico  ("Guatemala – Cement I "), WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, 3767, at para.
79.  Subsequently, the Appellate Body has made it clear that a challenge can be brought concerning the
consistency of anti-dumping legislation as such with the AD Agreement.  Appellate Body Report, United States –
Anti-Dumping Act of 1916 ("US – 1916 Act "), WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000,
at para. 83.WT/DS141/RW
Page 15
the subject of any finding of violation in the origin al report, the Member was entitled to assume was
consistent with its obligations under the relevant ag reement.   Such an outcome would not seem to be
consistent with the overall object and purpose of the DSU to achieve satisfactory resolution of
disputes, effective functioning of the WTO, to maintain a proper balance between the rights and
obligations of Members, and to ensure that benefits accruing to any Member under coveredagreements are not to nullified or impaired.
58
6.41 This is, in fact, much the case that is before us, with the, to us, significant addition that the
claim with respect to non-attribution to dumped impor ts of injuries caused by "other factors" which
India is now pursuing was raised by India in the original proceeding, and was dismissed  by the Panel,
without a finding of violation.  In the original di spute, India made two claims alleging violation of
Article 3.5 of the AD Agreement.  With respect to one of those claims, the Panel found no violation.
With respect to the other claim, the Panel stated:
"Finally, with respect to India's claim that the European Communities failed to
properly consider "other factors" which might have been causing injury to the
domestic industry, as required by Article 3.5 of the AD Agreement, we note that, with
the exception of the argument concerning improper consideration of "dumped"
imports, India has made no other arguments in support of this claim.  Having rejectedIndia's position in that regard, we consider that India has failed to present a prima
facie  case in this regard".
59
6.42 In this proceeding, India again claims a violation of Article 3.5 of the AD Agreement,
arguing, inter alia , that the EC failed to properly consider "other factors" which might have been
causing injury to the domestic industry.  The EC did not, however, undertake a reconsideration of the"other factors" identified by India.  Rather, it referred back to and confirmed its original consideration
of these factors.  Thus, India is now challenging aspects of the EC determination that it raised, and
could have pursued in the original dispute, but did no t.  Although India stated a claim in respect of the
EC's consideration of "other factors" causing injury in the original Panel proceeding, other than an
argument concerning the alleged obligation to distinguish "dumped" and "undumped" transactions indetermining import volumes, which the Panel rejected, India made no arguments in support of its
claim.
6.43 To rule on this aspect of India's claim under Article 3.5 in this proceeding would be to allow
India a second chance to prevail on a claim which it raised, but did not pursue, in the original
proceeding.  We cannot conclude that such a result is required by Article 21.5 of the DSU, or any
other provision.  The possibility for manipulative or abusive litigation tactics that would be opened by
allowing Members an opportunity to obtain a ruling in an Article 21.5 that they could have sought andobtained in the original dispute would, in our view, be inestimably harmful to the effective operation
of the dispute settlement system.
60  We hasten to emphasise that we do not consider that India has
engaged in any such harmful tactics, or has engaged in this dispute settlement procedure in anything
other than entirely good faith in an effort to resolve the dispute, as required by Article 3.10 of the
DSU.  We nonetheless consider that a claim which, as a legal and practical matter, could have beenraised and pursued in the original dispute, but was not, cannot be raised on the same facts and legal
premises in an Article 21.5 proceeding to determine the existence or consistency of measures taken to
comply with the recommendation of the DSB in the original dispute.  In our view, this ruling furthers
the object and purpose of the DSU..
                                                     
58 See Articles 3.2 - 3.3 of the DSU.
59 Original Panel Report, EC-Bed Linen , at para. 6.144.
60 As the Appellate Body has noted, "The procedural rules of WTO dispute settlement are designed to
promote, not the development of litigation techniques, but simply the fair, prompt and effective resolution oftrade disputes".  Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations" ("US –
FSC
 "), WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 1619,  at para. 166.WT/DS141/RW
Page 16
6.44 India submits that while it may be clear at this point that it should have pursued its Article 3.5
claim concerning "other factors" causing injury in the original dispute, it did not do so, not because of
a lack of good faith, but in order not to overload the original Panel with too many claims.  India's
argument also suggests that the Panel's decision in the original case was an exercise of judicial
economy.61 As noted, we do not ascribe any bad faith to India in this dispute – we are convinced that
India is pursuing this matter in entirely good faith.  However, the decision by the Panel to dismiss
India's claim under Article 3.5 concerning "other factor s" of injury in the original dispute was not an
exercise of judicial economy, but a finding that India had failed to present a prima  facie  case of
violation.  In our view, it is entirely appropriate to hold a Member to the consequences of the choices
it makes in dispute settlement –where the complaining Member has failed to pursue a claim by
presenting arguments in support of that claim in the original dispute, we consider it would be unfair to
the defending Member to entertain the same claim on the same unchanged aspects of the measure inan Article 21.5 proceeding.  To conclude otherwise would allow a Member to state claims in a request
for establishment, and preserve any arguments on those claims for a subsequent Article 21.5
proceeding.
6.45 India argues that prejudice to the defending Member from a lack of a reasonable period for
implementation following a decision by an Article 21.5 panel on a claim that could have been assertedin the original dispute but was not, would only arise if the reasserted claim were the only claim in the
Article 21.5 proceeding, or where the Article 21.5 panel found all other aspects of the measure taken
to comply consistent with the defending Member's obligations.
62  However, in our view, a decision on
this issue does not turn on the facts of any particular dispute, but on more overarching considerations
of the appropriate functioning of Article 21.5 pane ls and the dispute settlement system as a whole.
The accelerated process in Article 21.5 proceedings serves to ensure that a complaining Member, after
having prevailed once in dispute settlement, is not obligated to nonetheless go through an entire
dispute settlement proceeding if the implementing measure violates the provisions of a covered
agreement.63  On the other hand, the dispute settlement system provides Members with time to bring
inconsistent measures into conformity, prefers mutually acceptable solutions, and provides forsuspension of concessions only as a last resort.
64  Yet, a Member found to have violated a provision in
an Article 21.5 proceeding pursuant to a claim that could have been pursued in the original dispute but
was not would be deprived of the opportunity to seek a mutually acceptable solution, of the
opportunity to bring its measure into conformity, and might, depending on the nature of the violation,
be subjected to suspension of concessions.
6.46 India asserts that the Panel in EC – Bananas III (Article 21.5 – Ecuador)  rejected the
argument made by the EC in that case that the EC would be prejudiced if Ecuador were allowed tobring new claims in the Article 21.5 proceeding, beca use of a lack of time to implement.  However, in
that case, the measures challenged by Ecuador modified aspects of the EC's banana import regime that
had been found by the original panel and Appellate Body reports to be inconsistent with the EC's
obligations.  Moreover, while the Panel observed that the issues raised by Ecuador were "quite
similar" to those raised in the original dispute, there is no suggestion in the Report that Ecuadorsought to raise claims in the Article 21.5 proceeding concerning unchanged aspects of the measures
which it could have pursued in the original dispute but had not.
65
6.47 India points out that, in Canada – Aircraft (Article 21.5 - Brazil) , the Appellate Body noted
that
                                                     
61 India's answer to the Panel's question 2 at para. 5, Annex E-1.
62 India's answer to the Panel's question 2 at para. 6, Annex E-1.
63 See Australia -  Salmon (Article 21.5 – Canada)  at para. 7.10, subparagraph 9.
64 Articles 21.3 and 3.7 of the DSU.
65 Panel Report, European Communities – Regime for th e Importation, Sale and Distribution of
Bananas – Recourse to Article 21.5 of the DSU by Ecuador  ("EC – Bananas III (Article 21.5 – Ecuador) "),
WT/DS27/RW/ECU, 12 April 1999, DSR 1999:II, 803, at paras. 6.8 - 6.10WT/DS141/RW
Page 17
"in carrying out its review under Article 21.5 of the DSU, a panel is not confined to
examining the “measures taken to comply”, from the perspective of the claims,
arguments and factual circumstances that related to the measure that was the subject
of the original proceedings".66
6.48 We agree with this conclusion of the Appellate Body.  It may often be the case that the nature
of the measure taken to comply is such that entirely new claims, and even claims under agreements
not at issue in the original dispute, are appropriately raised in an Article 21.5 proceeding concerning
that measure.  However, the case before us here is very different from that before the Appellate Body
in Canada – Aircraft (Article 21.5 - Brazil ).  In that case, Canada had implemented the
recommendation of the DSB by adopting a new and different measure.  In the Article 21.5
proceeding, Brazil made claims regarding that measure that it had not made in the original dispute.
Canada objected to claims raised by Brazil against the new measure on the grounds that no similarclaims had been raised against the original measure.  Had Canada’s objection been upheld, Brazil
would have been barred from making claims that could not have been raised in the original
proceedings.  The issue before us is whether India should be allowed to raise, in this Article 21.5
proceeding, claims with respect to Article 3.5 which it could and  did raise before the original panel,
but which it did not pursue, and which the Panel dismissed for failure to present a prima  facie  case of
violation.
6.49 Similarly, we do not disagree with the views of the Panel in Australia – Salmon (Article 21.5
– Canada) .  In that case, the Panel concluded that:
"Article 21.5 is not limited to consistency of certain measures with the DSB
recommendations and rulings adopted as a result of the original dispute; nor to
consistency with those covered agreements or specific provisions thereof that fell
within the mandate of the original panel; nor to consistency with specific WTO
provisions under which the original panel found violations".67
The Panel went on to rule, with respect to Australia's request to limit the scope of the Panel's
examination to exclude claims of discrimination under Articles 2.3 and 5.5 of the SPS Agreement,
"even assuming that no finding of discrimi nation under Articles 2.3 or 5.5 was made
in the original dispute – a matter contested by Canada -- the fact that no such claim
may have been dealt with in the original dispute does not prevent an Article 21.5
compliance panel from doing so.  Nowhere in the DSU can we trace the requirement
referred to by Australia that Article 21.5 compliance panels can only reconsider WTO
provisions dealt with by the original panel in case of a "change in circumstances".  If,indeed, no "change in circumstances" occurred, as a matter of substance, one could
expect that a compliance panel would simply confirm the finding made by the
original panel".
68
Again, however, the facts of Australia – Salmon (Article 21.5 – Canada)  are different.  In that case,
Canada argued first that Australia had failed to take measures necessary to comply with the DSB'srecommendation, and, second, that even if it had implemented some measures purporting to comply,
those new measures were themselves inconsistent with relevant covered agreements.  Thus, again,
                                                     
66 Appellate Body Report, Canada – Measures Affecting the Export  of Civilian Aircraft – Recourse by
Brazil to Article 21.5 of the DSU ("Canada – Aircraft (Article 21.5 – Brazil) "), WT/DS70/AB/RW, adopted
4 August 2000, at para. 41.
67 Panel Report, Australia – Salmon (Article 21.5 – Canada)  at para. 7.10, subparagraph 9 (emphasis in
original).
68 Panel Report, Australia – Salmon (Article 21.5 – Canada)  at para. 7.10 subparagraph 14 .WT/DS141/RW
Page 18
there is no suggestion that Canada sought to pursue a claim in the Article 21.5 proceeding that it could
have, but did not, pursue in the original dispute.
6.50 In our view, the case before us is more analogous to the situation faced by the Article 21.5
Panel in United States – Shrimp (Article 21.5 - Malaysia) .69  In that case, the measure at issue – the
measure taken by the United States to comply - consisted of three elements, section 609, the Revised
Guidelines for the implementation of section 609, and the application in practice of both section 609
and the Revised guidelines.70  Section 609 had been an element of the original measure, as well, and
its wording had not changed since the original dispute.  In the original proceeding, the Appellate Body
had ruled that section 609 was entitled to "provisional justification" under Article XX of the GATT
1994, but found deficiencies in the application of the original measure that were unrelated to section
609 itself.  In the Article 21.5 proceeding, the Panel found that since section 609 had not beenchanged, the findings of the Appellate Body concerning that provision remained valid.  On appeal,
Malaysia argued that the Panel failed to properly examine the consistency of the US measure with
provisions of GATT 1994.  The Appellate Body rejected this argument.  The Appellate Body found
that the Panel had properly examined section 609, correctly found it had not been changed since the
original proceeding, and rightly concluded that the Appellate Body's ruling with respect to the
consistency of section 609 therefore still stood.  Thus, the Appellate Body rejected Malaysia's
argument which it considered "seems to suggest as well that an Article 21.5 panel must re-examine,
for WTO consistency, even those aspects of a new measure that were part of a previous measure that
was the subject of a dispute, and were found by the Appellate Body to be WTO-consistent  in that
dispute, and that remain unchanged as part of the new measure".
71
6.51 In reaching its conclusion, the Appellate Body stated that:
"Appellate Body reports that are adopted by the DSB are, as Article 17.14 provides,
"…unconditionally accepted by the parties to the dispute", and, therefore must be
treated by the parties to a particular dispute as a final resolution to that dispute".72
We consider that the same principle applies to those aspects of the Panel's report that are not appealed
and are thus not addressed by the Appellate Body.  Thus, the portions of the original Report of the
Panel that are not appealed, together with the Appellate Body report resolving the issues appealed,
must, in our view, be considered as the final resolution of the dispute, and must be treated as such by
the parties, and by us, in this proceeding.73
6.52 Neither the Panel nor the Appellate Body in the original dispute had the opportunity to
consider arguments with respect to India's claim in the original proceeding concerning the consistencyof the EC's anti-dumping duty with Article 3.5 of the AD Agreement concerning consideration of
"other factors "of injury, because India did not present arguments in support of its claim.  The Panel
did, however, rule on India's claim, finding that India had failed to present a prima facie  case on this
claim, and that aspect of the Panel's report was adopted without modification.  When considering the
                                                     
69 Appellate Body Report, " United States – Shrimp  (Article 21.5  -  Malaysia )".
70 Id., at para. 79.
71 Id., at para. 89
72 Id., at para. 97.
73 We find support for our view in the finding of the Appellate Body in Japan – Alcoholic Beverages II :
"Adopted panel reports are an important part of the GATT acquis .  They are often considered
by subsequent panels.  They create legitimate expectations among WTO Members, and,therefore, should be taken into account where they  are relevant to any dispute.  However, they
are not binding, except with respect to resolving th e particular dispute between the
parties to that dispute ".
Appellate Body Report, Japan – Taxes on Alcoholic Beverages ("Japan – Alcoholic Beverages II
 "),
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, 97 at pp. 14 - 15(emphasis added).WT/DS141/RW
Page 19
status of adopted panel reports, the Appellate Body has indicated that they are binding on the parties
"with respect to that particular dispute".74  In our view, the Panel's ruling in the original dispute
disposed of India's claim in this regard.  Thus, we consider that India is precluded from reasserting in
this proceeding and presenting arguments in support  of a claim challenging the EC's consideration of
"other factors" of injury.75
6.53 We therefore conclude that, with respect to India's claim 6, insofar as it concerns the
consistency of the EC's measure with the obligation in Article 3.5 to ensure that injuries caused by
"other factors" not be attributed to the dumped imports, the EC's request for preliminary ruling has
merit.  We consider that this aspect of India's claim is not properly before us, ha ving been disposed of by
the Panel in the original Report and not appealed, and will not make any ruling on it.
6.54 Turning to the second aspect of the EC's third request for preliminary ruling.  In the original
proceeding, India had alleged a violation of Article 3.4 of the AD Agreement, arguing specificallythat the EC had failed to consider the following: productivity; return on investments; utilisation of
capacity; magnitude of margin of dumping; cash flow; inventories; wages; growth; and ability to raise
capital or investments.  India prevailed on this claim, the Panel concluding that:
" the European Communities did not conduct “an evaluation of all relevant economic
factors and indices having a bearing on the state of the industry” and, therefore, failedto act consistently with its obligations under Article 3.4 of the AD Agreement".
76
6.55 India made no claims or arguments concerning the substance of the EC's consideration of
those Article 3.4 factors which the EC authorities did address in the original determination.
6.56 In the redetermination, with respect to those Article 3.4 factors which had been addressed in
the original determination, the EC "confirmed" the findings in that original determination.  With
respect to those factors the Panel had found had not been considered in the original determination,  the
EC set out in Regulation 1644/2001 its consideration of  those factors.  India does not now dispute that
the EC has considered "all relevant economic factors and indices having a bearing on the state of the
industry" as required by Article 3.4.  Rather, I ndia now argues that the EC failed to carry out an
overall reconsideration and analysis of the determination of injury, challenging the substance of theEC's evaluation of all the Article 3.4 factors, those factors that had been addressed in the original
determination, and those factors that had not.
6.57 This latter is not a claim that India could have presented in the original dispute, as it relates
primarily to the analysis in the redetermination.   Thus, in our view, the EC's request for preliminary
ruling is without merit insofar as it seeks to have us decline to rule on India's claim 5.
4. Claims not stated in the request for establishment of the Panel
(a) Arguments of the parties
6.58 The EC argues that certain claims raised by India in its first submission were not stated in its
request for the establishment of the Panel, contrary to the requirement imposed by Article 6.2 of the
DSU, and are, therefore, not within the Panel’s terms of reference.  Specifically the EC considers that
(1) India's claim that the EC acted inconsistently with Article 4.1(i) of the AD Agreement by
excluding from the “Community industry” a producer which had imported bed linen from Pakistan,
                                                     
74 Appellate Body Report, Japan – Alcoholic Beverages II , at p. 14.
75 The EC confirmed the findings set out in the original determination, and expanded on them in respect
of one element, the development of consumption of bed linen in the EC, in order to take into account slightly
different figures on domestic industry sales.  Regulation 1644/2001, at paras. 59 – 64.    India's claim in thisproceeding does not rely on this minor change.
76 Original Panel Report, EC - Bed Linen , at para. 6.169.WT/DS141/RW
Page 20
and (2) India's claim that the EC failed to respect the “reasonable period of time” agreed by the parties
under Article 21.3(b) of the DSU, are not within the Panel's terms of reference.
6.59 With respect to the first claim, the EC notes India's allegation that, by not taking into account
for the purposes of the injury analysis evidence concerning a company which was excluded from the
“Community industry” in the original investig ation because it had imported the product under
investigation from Pakistan, the EC did not base its injury determination on "positive evidence" and
therefore acted inconsistently with Article 3.1.  The EC recognizes that India has alleged only a
violation of Article 3.1.  However, in the EC's view, India's position necessarily involves a claim
under Article 4.1(i).  The EC considers that the Panel cannot find a violation of Article 3.1 as alleged
by India unless it were to first determine whether the exclusion of the company concerned from the
“domestic industry” was consistent with Article 4.1(i).  As that provision does not appear as the
subject of a claim in the request for establishment of th is Panel, the EC argues that it is not within the
Panel's terms of reference.
6.60 With respect to the second claim, that the EC failed to respect the agreed “reasonable period
of time”, the EC asserts that this claim is also not mentioned in the panel request.  Furthermore, the
EC maintains that India does not identify these allegations as a separate claim even in its first
submission, and that India has cited the wrong legal basis for any such claim, which the EC maintainsis Article 21.3 of the DSU, and not Article 21.5 as cited by India.
6.61 India considers that the EC has misrepresented  the nature of India's claims and arguments.
First, India maintains that it has not made any claim under Article 4(1)(i), and is not seeking a finding
of violation of Article 4(1)(i).  India asserts that the EC cannot create a claim by stating that India's
claim under Article 3.1 "involves necessarily a claim based on Article 4(1)(i)".
77   India argues that in
support of its claim 5, concerning alleged violations of Articles 3.1 and 3.4, it argues that factual
evidence on the record concerning one producer was disregarded in the EC's analysis, despite having
been verified.  In India's view, the fact that this producer's information was excluded demonstrates
that the EC failed to conduct an overall reconsideration of the evidence.   Thus, while India considers
that the EC's actions also violate Article 4(1)(i) separately, it has made no claim under that provision.
6.62 With respect to the EC's request concerning the reasonable period of time claim, India
maintains that the EC  has simply failed to grasp that there is no reason to allege a violation of
Article 21.3, because India's claim is with respect to compliance with the ruling of the DSB within the
reasonable period of time, and the Article 21.5 proceeding is intended to assess that compliance.
(b) Evaluation by the Panel
6.63 Article 6.2 of the DSU provides that the request for the establishment of a panel "shall
provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly".Thus, the complaining party must set out, with sufficient clarity, the claims it seeks to have resolved.
The Appellate Body has observed in this context that:
"identification of the treaty provisions  claimed to have been violated by the
respondent  is always necessary … such  identification is a minimum prerequisite if
the legal basis of the complaint is to be presented at all".  
78
                                                     
77 First Written Submission of the European Communities (hereinafter "EC FWS"), at para. 54, Annex
A-2.
78 Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products  ("Korea - Dairy
Safeguard "), Appellate Body Report, WT/DS98/AB/R, adopted  12 January 2000, at para. 124 (emphasis added).WT/DS141/RW
Page 21
The Appellate Body has distinguished between claims  which must be specified in the request for
establishment, and arguments , which may be developed throughout the course of the proceeding.
For instance, in EC-Bananas , the Appellate Body noted that:
"Article 6.2 of the DSU requires that the claims , but not the arguments , must all be
specified sufficiently in the request for the establishment of a panel in order to allow
the defending party and any third parties to know the legal basis of the complaint.  If
a claim  is not specified in the request for the establishment of a panel, then a faulty
request cannot be subsequently "cured" by a complaining party's argumentation in its
first written submission to the panel or in any other submission or statement made
later in the panel proceeding".79
On the other hand, there is no obligation on a party to limit its arguments to only those treaty
provisions about which claims have been identified in the request for establishment.
6.64 In this case, the EC asserts that India has pursued claims in its first written submission with
respect to treaty provisions which India did not identify at all in the request for establishment,
specifically Article 4.1(i) of the AD Agreement, and Article 21.3 of the DSU.  India has respondedthat the EC has misunderstood its position, and that its references to the referenced treaty provisions
are simply aspects of its argument with respect to claims which are, undisputedly, identified in its
request for establishment.
6.65 With respect to the putative claim under Article 4.1(i) of the AD Agreement, India has
expressly stated that it is not seeking to have the Panel rule with respect to Article 4.1(i).  The EC'sposition rests on its view that a claim under Article 4.1(i) is necessary in order for India to prevail.
Whether or not this is the case is a question we may find necessary to consider in addressing India's
claims.  However, it does not, in our basis, constitute any basis for a preliminary ruling.  India has
stated that it makes no claim under Article 4.1(i).
80  As it is the complaining party that determines
what claims it wishes to pursue, we respect India's statement of its claims, and will make no rulingwith respect to Article 4.1(i).
6.66 The situation is similar with respect to the putative claim under Article 21.3 of the DSU.  The
EC's position rests on its view that India's assertion that the EC failed to respect the reasonable period
of implementation can only be addressed in the context of a claim under Article 21.3(b), which the EC
asserts India did not make.  India responds that it  did not make a claim under Article 21.3 because its
dispute with the EC involves the alleged failure to comply  with the recommendation of the DSU
within the reasonable period of time, and thus it made no separate claim under Article 21.3(b) withrespect to the timing of compliance.
81  As with the first part of the EC's request in this regard, we
consider that the complaining Member is entitled to  formulate its complaint as it wishes.  Based on
India's representations, we will make no ruling with respect to Article 21.3 of the DSU.
6.67 Of course, the fact that we will make no rulings concerning putative violations of
Article 4.1(i) of the AD Agreement and Article 2 1.3 of the DSU does not mean that we may not
address these provisions if we consider them relevant to our analysis of the claims India did make.
However, if we were to conclude that a finding of violation under either Article 4.1(i) or Article 21.3
were a necessary predicate to allow us to reach a conclusion with respect to the alleged violations that
are the subject of India's claims, we would be unable to resolve the claims India has actually made.
We cannot exceed the scope of our mandate and cannot resolve claims that have not been properly
                                                     
79 European Communities - Regime for the Importation, Sale and Distribution of Bananas  ("EC -
Bananas "), Appellate Body Report, WT/DS27/AB/R, adopted 25 September 1997, at para. 143.
80 India's SWS at paras. 42, 46, and India's Closing Statement at para. 27.
81 India's SWS at paras. 47 - 50, and India's Closing Statement at para. 27.WT/DS141/RW
Page 22
brought before us, even if this prevents us from ruling on claims that have been properly brought
before us.
6.68 Based on the foregoing, we deny the EC's fourth request for preliminary ruling as unnecessary
in light of the fact that India has not made the claims addressed by the request.
C. CLAIMS AND ARGUMENTS
1. Claim 1: The EC acted inconsistently with its obligations under Article 2.2.2(ii) of the
AD Agreement
(a) Factual background
6.69 In its redetermination, Regulation 1644/2001, the EC recalculated dumping margins for five
Indian producers/exporters on an individual basis.82  On the basis of the recalculation, two companies
were found to have a dumping margin of zero.  In the redetermination, the EC used constructed
normal value for all five companies for which individual dumping margins were calculated.  Theamounts for selling, general, and administrative expenses (SG&A) and for profits for one company,
Bombay Dyeing, were established under the chapeau of Article 2.2.2 of the AD Agreement, that is, on
the basis of Bombay Dyeing's actual data pertaining to production and sales in the ordinary course of
trade of the like product.  The other four companies receiving individual rates did not have sufficient
sales in the ordinary course of trade to allow use of the chapeau methodology, and therefore the ECapplied the method set out in Article 2.2.2(ii).   That provisions calls for use of the "weighted average
of the actual amounts incurred and realized by other exporters or producers subject to investigation in
respect of production and sales of the like product in the domestic market of the country of origin" in
constructing normal value.  Taking into account th e Appellate Body's ruling that the data of only one
company could not be used in this context, the EC took the weighted average of the figures forBombay Dyeing and Standard Industries.  Standard Industries was not included in the sample, but
information had been collected from that company in  the original investigation and held in reserve in
case of need.  The EC weighted the data for SG&A and profits reported by these two companies on
the basis of the net value of their domestic sales.
(b) Arguments of the parties
6.70 India argues that the EC erred by weighting the data for SG&A and profits by sales value,
asserting that Article 2.2.2(ii) requires weighting on the basis of sales volume.  India recognizes that
the text of Article 2.2.2(ii) does not address this point.  Nevertheless, India argues that Article 2.2.2(ii)
does not permit the calculation of the weighted average on the basis of sales value.  India asserts that
the Appellate Body has held that the obligation to "weight" the average in Article 2.2.2(ii) is
necessary to reflect the relative importance of the different companies whose data is being averaged.
India maintains that weighting on the basis of sales value fails to accomplish this goal.  India points tovarious provisions of the AD Agreement as contextual support for its position.  India notes that
footnote 2 of the AD Agreement, which defines when a company has sufficient sales in the domestic
market to allow its own data to be used for the calc ulation of normal value, provides that such sales
"shall normally be considered a sufficient quantity for the determination of the normal value if such
sales constitute 5 per cent or more … ".  (emphasis added).  India also points to footnote 5, which
defines when sales below cost are in sufficient quantities to allow them to be disregarded in the
calculation of normal value.  Finally, India point s to Article 6.10 of the AD Agreement, which
provides that in selecting a sample to be examined for the calculation of dumping, investigating
authorities should use a sample which includes the largest percentage of the volume of exports which
can reasonable by investigated.  In India's view, these provisions recognize the importance of salesvolume in establishing cut-off points pertaining to the relative importance of domestic sales, and
                                                     
82 Regulation 1644/2001, at paras. 5 – 14.WT/DS141/RW
Page 23
therefore provide contextual support for the proposition that the average calculated under
Article 2.2.2(ii) must be weighted on the basis of sales volume, and not on the basis of sales value.
6.71 India also points to a case from the European Court of First Instance in which the court held
that the EC had not acted improperly in considering sales volume, and not sales value, in applying a
secondary cut-off in the determination of whether there were sufficient sales in the ordinary course oftrade to allow determination of normal value on the basis of those sales.
83  Footnote 5 of the
AD Agreement provides that where sales below unit costs are 20 percent or more of the domestic
sales volume, such sales may be disregarded in de termining normal  value.  The EC, after applying
this test, normally bases its determination of normal value on the remaining sales, except  where those
sales are less than 10 percent of the total volume of domestic sales.  In the case cited by India, the
complaining party argued that the second part of  the EC's test, the 10 percent cut-off, should be
calculated on the basis of sales value, rather than sales volume.  The Court rejected that argument.India refers to this Court case to argue that the EC  authorities and the Court attach, in the context of
measuring domestic sales, importance to volume rather than value.
6.72 India also argues that the EC has changed its position in this regard from that taken in the
original Panel proceeding, asserting that during that proceeding, the EC had based its statements
regarding the relative importance of Bombay Dyeing's sales in the domestic market on the basis ofvolume, not value.
6.73 The EC argues that Article 2.2.2(ii) does not establish any particular weighting factor as
either necessary or appropriate.  The EC further considers that the provisions of the AD Agreement
cited by India are not relevant context for understanding Article 2.2.2(ii), and in any event do not
establish that only volume may be used as the weighting factor under Article 2.2.2(ii).  Rather, the ECasserts, the very fact that the cited provisions refer to quantity as the relevant criterion suggests that
the specific reference was necessary, and that where a provision is silent, there is no obligation in this
regard.  The EC also considers that the judgement of the Court of First Instance does not constitute
"context" for the interpretation of Article 2.2.2(ii) in terms of the Vienna Convention.  Moreover, the
EC maintains that the Court's judgment did not address the provision of EC law equivalent toArticle 2.2.2(ii) of the AD Agreement, and in any event upheld the decision of the EC to rely on
volume rather than value in applying the 20 percent rule as within the EC's discretion, not as a legal
requirement.
6.74 Finally, the EC asserts that India is mistaken as a matter of fact in asserting that during the
original Panel proceeding the EC relied on the volume of Bombay Dyeing's sales in making
arguments about its relative importance in the domestic market.  The EC states that the calculation of
the relative importance of Bombay Dyeing's sales has always been based on value – the differencebetween the 80 percent figure referred to in the original proceeding and the 90 percent relied upon in
calculating the weighted average under Article 2.2.2(ii) is because the denominator in the original
case referred to domestic sales by all producers, while in the Article 2.2.2(ii) calculation, the
denominator refers only to domestic sales by Standard and Bombay.
6.75 The EC asserts that the averaging method used in this case is the same as generally applied by
the EC authorities when acting under Article 2.2.2(i i).  Moreover, the EC asserts that, even assuming
weighting the average by volume rather than value were appropriate or required, there is no reason to
accept India's conclusions that the volume should be calculated on the basis of the number of units of
bed linen sold.  This calculation treats as equivalent a unit of one pillow case and a unit of an entire
sheet set, depending on packaging, which the EC considers obviously inappropriate, as it entirely failsto reflect the relative importance of the producers' transactions in the domestic market.  If sales
                                                     
83 Case T-118/96, Thai Bicycle Industry Co.  Ltd v.  Council of the European Union, Judgment of the
Court of First Instance of 17 July 1998, Exhibit-India-RW-33, at para. 79.WT/DS141/RW
Page 24
volume were calculated by weight, the results would again be different, and would result in higher
dumping margins than India's proposed method.
(c) Arguments of third parties
6.76 Korea considers that the EC did not act consistently with Article 2.2.2(ii) in relying on sales
value to weight average SG&A and profit for purposes of constructing normal value.  Korea
recognizes that Article  2.2.2 (ii) does not prescribe the use of any specific weighting factor in
determining the weighted average.  Korea considers th at the fact that the use of a weighted average is
required under several provisions of the AD Agreement, but that none of them prescribes the factor tobe used in weighting the average, implies not that the investigating authorities enjoy discretion in the
choice of averaging factor, but that investigating authorities may choose an averaging factor of their
choice, but the choice is not immune from scrutiny.  Korea considers that the important question is
that the weighted averaging should take into account in an appropriate manner the relative importance
of different exporters.  Korea is of the view that the use of sales value, rather than sales quantity orvolume as the weight-averaging factor, resulted in distorting the relative importance of the exporters
concerned, because it is biased towards overemphasis of the relative importance of a company with
higher SG&A and profits – in this case, Bombay Dyeing - as SG&A and profits, and sales value, are
price-related indexes.  Therefore, weighting based on sales value leads to a higher weighted average
SG&A and profits, and consequently a higher constructed normal value, in Korea's view thus
artificially inflating the dumping margins.  Korea notes that the EC uses sales value as the weighting
factor in calculating the weighted average dumping margin under Article 9.4(i) of the AD Agreement.In Korea's view, because the dumping margin in Article 9.4 is independent of sales value, weighting
the average on the basis of sales value will not distort the resulting weighted average dumping margin.
The selling price of the company with the higher dumping margin can be lower than that of the
company with a lower dumping margin because these two variables are not correlated.  Therefore,
Korea considers that weighting by sales value under Article 9.4(i) will not produce any distortion.Korea asserts that, a contrario , weighting by value for purposes of Article 2.2.2 (ii) would lead to
distortion and thus inflate the dumping margin, as SG&A and profits, and sales value are positively
correlated.  Korea also considers that weighting the average based on volume of sales by weight,
rather than by the number of transactions is inappropriate, as the averaging method should reflect the
actual method of transactions and practice.  Bed linen end-products are in general sold in differentunits and rarely, if ever, sold by weight or in bulk.
6.77 The United States disagrees with India’s position on Article 2.2.2(ii) of the AD Agreement.
In the US view, although Article 2.2.2(ii) specifies that a weighted average is to be utilised, it does not
specify the manner in which the weighting is to be performed, and provides no guidance, express or
implied, as to whether the weighting should be done on the basis of sales value or sales volume.  TheUnited States also disagrees with India’s claim that the “context” of Article 2.2.2(ii) indicates that
only a quantity-based weighted average is permissible.  In the US view, the fact that distinct sections
of the AD Agreement refer to sales volume and quantity cannot be taken as evidence that
Article 2.2.2(ii) requires a quantity-based weighted average.  The United States considers that, in the
face of the silence of Article 2.2.2(ii) on this issue, India’s argument regarding “context” indicatesthat Members knew how to insert references to vo lume or quantity when they wanted to require a
calculation to be performed on that basis.  Thus, where they have omitted such a reference, it should
be considered equally relevant.  Moreover, the United States asserts that the sections relied on as
"context" by India are wholly unrelated to the averag ing of SG&A and profit.  As both sales value and
sales volume represent permissible bases for weight-averaging these figures, a Member conducting an
investigation retains the discretion to choose between them.  In the US view, if the Panel were to
require use of a particular method, it would add to the obligations to which the WTO Members haveagreed, in direct contravention of Article 3.2 of the DSU.  The United States submits that the Panel
should not disturb the EC’s reliance on a value-based weight-averaging in this instance.WT/DS141/RW
Page 25
(d) Evaluation by the Panel
6.78 The European Communities weight-averaged the data provided by two companies in
determining the amounts for costs and profits to be used in constructing normal value.  The EC
weighted the data on the basis of the net value of the domestic sales of the two companies in question.
India asserts that weighting on the basis of sales value is inconsistent with the requirements ofArticle 2.2.2(ii) of the AD Agreement, and that the EC has therefore violated this provision of the
AD Agreement.  The question before us, therefore, is whether Article 2.2.2(ii) imposes any
requirement as to the basis on which the averages of the amounts for costs and profits, to be used in
constructing normal value, must be weighted, and if so, whether the EC has acted inconsistently with
that requirement in this case.
6.79 Article 17.6(ii) of the AD Agreement provides that a panel "shall interpret the relevant
provisions of the AD Agreement in accordance with customary rules of interpretation of publicinternational law".  In this regard, the Appellate Body has stated that Article 31(1) of the Vienna
Convention on the Law of Treaties  ("Vienna Convention") "has attained the status of a rule of
customary or general international law.  As such, it forms part of the 'customary rules of interpretation
of public international law'"
84.  Article 31(1) of the Vienna Convention provides:
"A treaty shall be interpreted in good fait h in accordance with the ordinary meaning
to be given to the terms of the treaty in their context and in the light of its object and
purpose".85
Article 31 of the Vienna Convention goes on to provide:
"2. The context for the purpose of the interpretation of a treaty shall comprise, in
addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the
parties in connexion with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in connexion
with the conclusion of the treaty and accepted by the other parties as an instrument
related to the treaty.
3. There shall be taken into account together with the context:
(a) any subsequent agreement between the parties regarding the
interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation;
(c) any relevant rules of international law applicable in the relations
between the parties".86
6.80 We turn therefore to the text of Article 2.2.2(ii), which provides that, when, for the purposes
of constructing normal value, the amounts for administrative, selling and general costs and for profits
cannot be determined on the basis of actual data pertaining to production and sales in the ordinary
                                                     
84 Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline
("United States – Gasoline "), WT/DS2/AB/R, adopted 20 May 1996, at p. 17 (footnote omitted).
85 (1969) 8 International Legal Materials 679.
86 (1969) 8 International Legal Materials 679.WT/DS141/RW
Page 26
course of trade of the like product by the exporter or producer under investigation, those amounts may
be determined on the basis of, inter alia :
"(ii) the weighted average of the actual amounts incurred and realized by other
exporters or producers subject to investigation in respect of production and sales of
the like product in the domestic market of the country of origin".
6.81 It is clear from the text of Article 2.2.2(ii) that the amounts for SG&A and for profits to be
used in constructing normal value must be weighted averages.  However, nothing in the text specifies
the factor to be used in calculating those weighted averages.  There is clearly no specific direction
requiring that the averages be weighted on the basis of volume, rather than value.  Article 2.2.2(ii) is
simply silent on this issue.
6.82 In this regard, we note the finding of the Appellate Body in India – Patents (US) :
"The duty of a treaty interpreter is to exam ine the words of the treaty to determine the
intentions of the parties.  This should be done in accordance with the principles of
treaty interpretation set out in Article 31 of the Vienna Convention .  But these
principles of interpretation neither require nor condone the imputation into a treaty of
words that are not there or the importation into a treaty of concepts that were not
intended".87
6.83 India argues that the Appellate Body has held that the obligation to weight the average
calculated under Article 2.2.2(ii) is necessary to reflect the relative importance of the companies
whose data is being averaged, and that this can only be done by weighting on the basis of volume.  In
this regard, India refers to the finding of the Appellate Body that
"the "average" which results from combining the data from different exporters or
producers must reflect the relative importance of these different exporters or
producers in the overall mean.41
__________
41  To weight" is defined as "multiply the components of (an average) by factors to take
account of their importance".  See  The Concise Oxford Dictionary of Current English , supra ,
footnote 24, p. 1589.  "Weighted average" is defined as "resulting from the multiplication ofeach component by a factor reflecting its importance".  See  The New Shorter Oxford English
Dictionary  (Clarendon Press, 1993), Vol.  II, p. 3651".
6.84 To accept India's argument on this issue would be to accept as fact that an average weighted
on the basis of sales value cannot reflect the relative importance of the different companies whose
data is being averaged in a way that is meaningful in  the context of the calculation that is at issue here.
India has entirely failed to demonstrate this point.  India asserts that "volume is neutral as regards the
sizes of the companies and does not attach relativel y more relevance to companies that sell at higher
prices"88 and suggests that therefore volume is a more appropriate basis for weighting.  It is, however,
clear that any factor may be used to weight an av erage, and the resulting weighted average will reflect
the importance of each of the components in the average with respect to that factor .  Thus, an
average of two companies' data weighted on the basis of sales value reflects the relative importance of
each of those companies in the total sales value.  Similarly, an average of two companies' data
weighted on the basis of sales volume reflects th e relative importance of each of those companies in
the total sales volume.  Of course, in the context of Article 2.2.2(ii), it would be necessary to ensure
that the relative importance of the components is c onsidered in a manner that is relevant to the
                                                     
87 Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products ("India – Patents (US) "), WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9,at para. 45.
88 India's answer to the Panel's question 12, Annex –E-1.WT/DS141/RW
Page 27
analysis.  In our view, either volume or value may be relevant in the context of Article 2.2.2(ii), and
both are "neutral" in the sense that the weighted average will reflect the relative importance of the
companies with respect to that factor.  The fact th at the choice of the factor used in calculating the
weighted average will affect the outcome is simply irrelevant to the question whether Article 2.2.2(ii)
requires the use of one volume rather than value as the weighting factor.89  In particular, the fact that
using volume calculated in units may result in an outcome more favorable to exporters (i.e., a lower
dumping margin) in a particular case is irrelevant to the interpretation of Article 2.2.2(ii).90
6.85 India refers to other elements of the AD Agreement as "context" for its position, arguing that
these demonstrate that the "weighted average" required in Article 2.2.2(ii) must be weighted on the
basis of volume.  India refers to footnote 2 of the AD Agreement, which defines when a company has
sufficient sales in the domestic market to allow its own data to be used for the calculation of normal
value, footnote 5 of the AD Agreement, which defines when sales below cost are in sufficientquantities to be disregarded in the calculation of normal value, and Article 6.10 of the AD Agreement,
which provides that investigating authorities may, in  the calculation of dumping  margins, limit their
examination to the largest percentage of the volume of the exports from the country in question which
can reasonably be investigated.
6.86 Under the Vienna Convention, the context of a particular provision is not an independent
element giving meaning to the text of a provision.  Rather, the text is to be read in its context and in
the light of  the object and purpose of the treaty.  As the Appellate Body has stated, in US – Shrimp :
"A treaty interpreter must begin with, and focus upon, the text of the particular
provision to be interpreted.  It is in the words constituting that provision, read in their
context, that the object and purpose of the states parties to the treaty must first besought.  Where the meaning imparted by the text itself is equivocal or inconclusive,
or where confirmation of the correctness of the reading of the text itself is desired,
light from the object and purpose of the treaty as a whole may usefully be sought".
91
6.87 We note that there are other provisions of the AD Agreement which refer to the concept of a
weighted average – Articles 2.2.1, 2.4.2(ii), and 9.4(i).  None of these provisions contains anyguidance on the factor or factors to be used in weighting the average to be calculated.  Thus, what
might be considered the most relevant context is entirely silent on the question at issue.  The most
logical conclusion to be drawn from this silence is that the choice of factor is up to the investigating
authority.
6.88 None of the elements of the AD Agreement pointed to by India as contextual support refers to
the calculation of averages, much less to the calculation of weighted averages or the basis on which
                                                     
89 The EC pointed out that volume could be calculated on different bases, and the outcome would be
different depending on whether it was calculated in units, or by weight, with one choice resulting in even higherdumping margins than the value-based weighing relied on by the EC.  India indicated that it had not specifiedthe basis on which volume should be calculated.
90 Korea, as third party, asserts that calculation of weighted averages under Article 2.2.2(ii) based on
sales value is biased towards overemphasising the relative importance of a company with higher SG&A and
profits.  Korea asserts that SG&A and profit, and sales value, are price-related indices, and in the majority of
cases, the sales price of companies with higher SG&A and profits would be higher than those of companies withlower SG&A and profits.  Thus, in Korea's view, normally an average weighted on the basis of sales value willbe higher than an average weighted on the basis of sales volume, resulting in a higher constructed normal value,and higher dumping margins.  However, even assuming Korea's analysis were factually correct in a particularcase, we simply do not consider that the results in partic ular cases, whether more or less favorable to one or the
other side in an anti-dumping investigation, are, in and of themselves, relevant to the interpretation of the legal
obligations of the AD Agreement.
91 United States – Import Prohibition of Certain Shrimp and Shrimp Products  ("US – Shrimp "), Report
of the Appellate Body, WT/DS58/AB/R, adopted 6 November 1998, at para. 114 (footnote omitted).WT/DS141/RW
Page 28
such averages must be weighted.  Even assuming that provisions dealing with such entirely different
matters may appropriately be considered "context" of Article 2.2.2(ii) and thus relevant to its
interpretation in accordance with the Vienna Convention, there is nothing in these provisions which
necessarily implies that, despite the lack of any sp ecific textual directive, the averages calculated
under Article 2.2.2(ii) must be weighted on the basis of sales volume.  If anything, the provisionspointed to by India suggest that the drafters of the AD Agreement knew how to specify when certain
calculations should be made on the basis of volume, indicating that where there is no such basis
specified, the text simply does not establish any requirement, or prohibition, in this regard.
6.89 India also points to a case from the European Court of First Instance in which that Court
approved an EC decision relying on sales volume in determining whether there was a sufficient
quantity of sales made in the ordinary course of trade.  India argues that the principle of good faith, as
enshrined in the Vienna Convention, ensures that such case law can serve as relevant context.  In thisregard, India submits that the EC is "estopped" from advocating before us an interpretation of a
provision of the AD Agreement which is different from the interpretation by the European Court of
First Instance of a provision in the EC's municipal anti-dumping law which is identical to the
AD Agreement provision.  Alternatively, India argues that even if the Panel were to not accept the
EC's argument, and were to "develop its own line of reasoning similar to the one contained in theinterpretations proposed by the EC, the panel still should find a violation of the respective provision
of the [AD Agreement] as being applied in bad faith".
92  It is in this sense that India considers the
court decision cited to be relevant context for the interpretation of the AD Agreement under the
Vienna Convention.
6.90 We note first that court decision referred to by India does not constitute "context", as that
term is used in Article 31 of the Vienna Conventi on, for the interpretation of Article 2.2.2(ii).  Thus,
we do not consider it relevant to our interpretation of that provision.  Moreover, the Court's judgment
did not address the provision of EC law equiva lent to Article 2.2.2(ii) of the Agreement.93  Thus, its
persuasive value on the issue before us, the proper interpretation of that provision, would be limited in
any event.
6.91 More fundamentally, we reject the assertion that a WTO dispute settlement panel should find
a violation of a provision of a covered agreement, not on the basis of inconsistency of a Member's
measure with a provision of a covered agreement, but rather on the basis that a provision of a covered
agreement is "being applied in bad faith".  Whatever may be the implications of national court
decisions for the arguments of Members before WTO dispute settlement panels, a question which we
neither address nor resolve here, "estoppel" based on national court decisions interpreting municipal
law does not limit the decisions of WTO panels interpreting a covered agreement.  A WTO panel isobligated to interpret the terms of covered agr eements in accordance with customary rules of
interpretation of public international law.
94  We know of no basis in international law, and India has
not cited any, that would require us to conclude that a measure which is consistent with a Member's
obligations under a provision of a covered agreement that we have interpreted in accordance with
                                                     
92 India's answer to the Panel's question 4, Annex E-1.
93 The case in question involves the application of what  is referred to in EC practice as the "80-10 rule".
Footnote 5 of the AD Agreement provides that where sales at a loss exceed 20 percent of the domestic sales
volume, these may be disregarded in establishing the weighted average price.  The EC, in practice, would thenbase itself on the remaining sales at a profit, except  where the profitable remaining quantity of sales is less than
10 percent of the total quantity of sales.  Since only the first part of this practice is found in the AD Agreement,and the relevant EC Regulation, the complaining party in the Court case argued, inter alia , that the 10 percent
rule, the second cut-off point, should be calculated on the basis of value rather than volume, the basis on which
the first cut-off is calculated.  The Court rejected that  argument, upholding the decision of the EC to rely on
volume rather than value as within the EC's discretion.  Case T-118/96, Thai Bicycle Industry Co.  Ltd v.Council of the European Union, Judgment of the Court of First Instance of 17 July 1998, Exhibit-India-RW-33.
94 Article 3.2 of the DSU.WT/DS141/RW
Page 29
customary rules of interpretation of public international law could nonetheless be found to be in
violation of that provision on the basis of alleged "bad faith".
6.92 India also argues that during the original Panel proceeding, the EC had asserted that Bombay
Dyeing, one of the two companies whose data was included in the weighted average, represented 80
percent of the Indian market, while it was now asserting that Bombay Dyeing's share in the averagecalculated under Article 2.2.2(ii), is 90 percent.  India argues that an "unbiased and objective authority
cannot be permitted to shift positions as regards important aspects of a proceeding, thereby rendering
the outcome into a moving target, displaying various views as and when deemed fit".
95
6.93 If India were arguing that the EC applied a different methodology in the redetermination that
than used in the original determination, there mi ght be a basis for concern.  However, the factual
premise for such an argument has not been alleged, much less established, in this case.  The EC has
explained that in both the original dispute, and in this proceeding, the calculation in question wasbased on sales value, but that in the original dispute, the reference pointed to by India was in a
different context, referring to the share of Bo mbay Dyeing in the total domestic sales value  of all
Indian producers , while in calculating the weighted averages, the reference was to the share of
Bombay Dyeing in the total domestic sales value of the two companies whose data were being
averaged .  Since the denominator was different, it is clear that Bombay Dyeing's share will be
different.
96  India's argument is thus incorrect as a matter of fact, even assuming it were relevant to the
legal question of the interpretation of Article 2.2.2(ii).97  In any event, a Member's measures are
judged for consistency with its obligations under the AD Agreement, and not with consistency to
statements in arguments that Member may have made or positions it may have taken in dispute
settlement involving that measure, or any other.98
6.94 In the absence of any guidance in the text, and in view of the fact that weighting on the basis
of sales value does  reflect the relative importance of the two companies in the resulting weighted
average on a relevant basis, we conclude that India has failed to demonstrate that the EC's calculation
of an average weighted on the basis of sales value violates Article 2.2.2(ii).
2. Claims 2 and 3: The EC acted inconsistently with its obligations under Articles 3.1, 3.3
and 5.7 of the AD Agreement
(a) Factual background
6.95 On 12 March 2001, the Dispute Settlement Body  (hereinafter "DSB") adopted the Report of
the Appellate Body99 and the Report of the Panel, 100 as modified by the Appellate Body, in the
dispute " European Communities – Anti-Dumping Duties On Imports Of Cotton-Type Bed Linen From
India " (WT/DS141).  Pursuant to the recommendations of the Panel and Appellate Body, the DSB
                                                     
95 India's FWS at paragraph 65.
96 We note as well that the amounts used for weighting the averages for selling, general and
administrative costs and profits were based on revised figures for sales value supplied by Standard in itsquestionnaire response during the course of the investigation, and not the original figures relied on in the first
calculation.  Exhibit EC-1.
97 We note that, in response to a question from the Panel, the EC has specified that it is the standing
practice of the EC to use sales value to weight average the amounts of selling, general and administrative costsand profits, and that it believed there was no case in recent years where this practice was not followed.  EC'sanswer to the Panel's question 16, at paras. 4 and 6, Annex E-2.
98 We note in this context that we did not find either pertinent or persuasive arguments to the effect that
the EC had taken a position in dispute settlement involving some other matter which position or analysis, if
applied to the issues this case, might lead to a differe nt result than that advocated by the EC in this case.
99 Appellate Body Report, EC-Bed Linen ..
100 Original Panel Report, EC-Bed Linen ..WT/DS141/RW
Page 30
requested the European Communities to bring its measure into conformity with its obligations under
the AD Agreement.101
6.96 On 26 July 2001, the Council adopted Regulation 1515/2001 regarding measures that may be
taken by the EC following adoption of a report by the Dispute Settlement Body in an anti-dumping or
countervailing measure dispute.102  That regulation provides, inter alia , that the Council, acting on a
proposal by the Commission, may  repeal or amend th e disputed measure, or adopt any other special
measures deemed appropriate in the circumstances.  It also provides that the Commission may request
interested parties to provide information and may conduct reviews, and that the Council may suspend
the disputed or amended measure.  The Regulation provides that the Council may repeal or amend a
non-disputed measure, or adopt any other special measures deemed appropriate in the circumstances,
if such action is considered appropriate, in order to take into account the legal interpretations made in
a report adopted by the DSB.  Finally, the Regulation states that the Commission may requestinterested parties to provide information and ma y conduct a review, and the Council may suspend the
non-disputed measure.
6.97 Following adoption of the Panel and Appellate Body Reports, and having regard to
Regulation 1515/2001, the EC reassessed the anti-dumping duties imposed on imports of bed linen
from India, Egypt and Pakistan, in light of the Panel and Appellate Body decisions.  On 7 August2001, the Council of the European Communities adopted Regulation 1644/2001.  Regulation
1644/2001 amended the original definitive anti-dumping measure on bed linen from India.
6.98 In the redetermination, the EC calculated and established different (lower) dumping margins
for imports from India, but did not address the dumping margins for the other countries originally
investigated (Egypt and Pakistan).  The EC conc luded that dumped imports from India, Egypt and
Pakistan caused material injury to the EC industry.
6.99 Notwithstanding this conclusion, the Council did not "consider it appropriate to continue to
collect duties for exports from India".
103  Therefore, in the same Regulation, the EC suspended the
collection of duties at the rates established in the redetermination, and invited all interested parties to
submit comments and/or a review request.  The Regulation further provided that, if no review wereinitiated within six months of entry into force of the Regulation, the anti-dumping measure would
automatically expire with regard to imports originatin g in India, but if such review were initiated, the
suspension should continue during the review investigation.
104  On 19 December 2001, Eurocoton, the
trade association acting on behalf of the domestic industry, filed a request with the EC authorities for
a review of the redetermination.105  On 13 February 2002 the EC initiated a "partial interim review" of
the dumping aspects of the measure with respect to Indian imports based on Eurocoton's request.106
That review is still on-going, and consequently, no anti-dumping duties have as yet been collected
pursuant to the redetermination.
6.100  On 28 January 2002, the Council adopted Regulation 160/2002.  This EC authorities in this
Regulation, acting pursuant to the authority provided for in Regulation 1515/2001, considered it
appropriate to take into account the legal interpre tations of the DSB in the bed linen dispute with
regard to the anti-dumping measures on imports of bed linen from Egypt and Pakistan.  The EC madea redetermination with respect to dumping for Pakistan, and concluded that since the revised
calculation showed no dumping by the producers for which an individual margin of dumping was
                                                     
101 WT/DS141/9.
102 Regulation 1515/2001.
103 Regulation 1644/2001, at  para.72 and Article 2.
104 Id.  at paras. 75 and 78 and Article 2.
105 Exhibit-India-RW-21.
106 Notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of
cotton-type bed linen originating in India, published in Official Journal of the European Communities of 13February 2002, C-series, No 39.  Exhibit-India-RW-23.WT/DS141/RW
Page 31
calculated, the proceeding should be terminated.107  With respect to Egypt, the EC found that there
were insufficient data to allow the recalculation of dumping margins.  Therefore, the EC considered it
appropriate to suspend the anti-dumping measure on imports of bed linen from Egypt and provide an
opportunity to request a review.  If no review were requested, the anti-dumping measure would
automatically expire, and if a review were reques ted, the measure would remain suspended during the
review investigation.108  No review was requested, and on 28 February 2002 the anti-dumping
measure on imports of bed linen from Egypt expired.109
6.101  On 22 April 2002 the EC issued Council Regula tion (EC) No 696/2002.  The EC considered
it appropriate, in light of the termination of the proceeding regarding imports from Pakistan and the
expiry of the anti-dumping measure on imports from Egypt to undertake a reassessment.  The
reassessment was limited to the determination of injury and causal link to the extent that this
determination had been based on an examination of the impact of imports from India, Egypt, andPakistan on a cumulative basis.  Thus, the EC reconsidered injury and causal link on the basis of the
dumped imports from India alone.  The EC confirmed the amended and suspended definitive anti-
dumping duty imposed on imports of cotton-type bed linen originating in India.
110
(b) Arguments of the parties
6.102  India asserts that the EC acted inconsistently with its obligations under Articles 3.3 and 3.1 of
the AD Agreement by cumulating imports which were not dumped in making its injury assessment in
Regulation 1644/2001.  India relies on the fact that imports from Pakistan were subsequently
determined (in Regulation 160/2002) not to be dumped.  Moreover, India argues that should the EC
rely on the fact that Regulation 160/2002 was made at a later date than the injury determination in
Regulation 1644/2001, this would evidence that the EC did not act within the reasonable period oftime.  In addition, in this latter situation, India submits that the EC acted contrary to Article 5.7 by
failing to consider the evidence of dumping and injury simultaneously.  In any event, India also
submits that the EC acted contrary to Article 5.7 when it separately considered the dumping
determination for Pakistan in Regulation 160/2002 of 28 January 2002 and the subsequent injury
reassessment in Regulation 696/2002 of 22 April 2002.
6.103  The EC argues that since only the redetermination in Regulation 1644/2001, is a “measure
taken to comply”,  that is the only measure within the Panel’s jurisdiction.  The EC asserts that at the
time that Regulation 1644/2001 was adopted, the EC authorities were entitled to treat imports
originating in Pakistan as “dumped” and, consequently, to cumulate them with imports from India.
6.104  The EC considers that India cannot rely on the finding of no dumping reached subsequently in
Regulation 160/2002 in order to claim that imports from Pakistan were “in fact” not dumped when
Regulation 1644/2001 was adopted.   The EC further argues that, should the Panel take the view thatthe other regulations cited in India’s panel request are also measures “taken to comply” and, therefore,
within its jurisdiction, the Panel should recognise th at the EC subsequently established, in Regulation
696/2002, that imports from India, taken in isolation, were a cause of injury.  Therefore, as of the date
of establishment of the Panel, the “measures taken to comply” were not based on the cumulation of
imports from India with non-dumped imports from Pakistan.
6.105  With respect to India's argument concerning Article 5.7, the EC asserts that Article 5.7 applies
only with respect to the original investigation, but do es not apply to subsequent reviews.  In the EC’s
view, Articles 11.2, which provides for a review limited to dumping or to injury, and Article 11.4,
                                                     
107 Regulation 160/2002.
108 Id.  at paras. 14, 22, 25, and Article 1.
109 Notice of the expiry of certain anti-dumping measures, published in Official Journal of the European
Communities of 14 March 2002, C-series, No 65.   Exhibit-India-RW-24.
110 Regulation 696/2002.WT/DS141/RW
Page 32
which does not include Article 5.7 among the procedural provisions that apply to reviews carried out
under Article 11, confirm its view.   The EC submits that, by the same token, Article 5.7 does not
apply to the redetermination of dumping or inju ry findings for the purposes of implementing the
DSB’s recommendation, even assuming such redeterm inations may be characterised as reviews under
Article 11.2.  In the EC’s view, implementation rede terminations do not involve an “investigation”,
but rather a reassessment of the evidence.
(c) Arguments of third parties
6.106  The United States notes that measures not “taken to comply with the recommendations and
rulings” are not within the scope of Article 21.5 of the DSU.  Thus, the United States considers that,
to the extent that the EC’s re-examination of its application of anti-dumping duties to Pakistan in
Regulation 160/2002 was independent of the measure it took to comply with the recommendations
and rulings of the DSB, it is not subject to this Article 21.5 review.111  The United States notes India's
reliance on the EC’s independent examination of imports from Pakistan, after the measures taken to
comply, to assert that the EC improperly cumulated imports from India with non-dumped imports
from Pakistan.  However, the United States points out that the EC found in the original investigation
that imports from Pakistan were dumped, and India did not in the original dispute challenge that
finding, or the cumulation of imports from I ndia with those from Pakistan.  Under those
circumstances, the United States considers that the EC did not act inconsistently with the
AD Agreement or the DSU by continuing to treat the imports from Pakistan as dumped for the
purposes of making its redetermination with regard to imports from India.
6.107  The United States also considers India’s reliance on Article 5.7 of the AD Agreement to show
noncompliance by the EC is unavailing.112  The United States agrees with the EC's position that
Article 5.7, which addresses the simultaneous consideration of both dumping and injury, applies only
to the initiation and the “course of the [original] investigation".  In the US view, neither Article 5.7
nor any other provision of the AD Agreement requires investigating authorities to revisit aspects of
the determination that were upheld or were not subject to the dispute.  For example, the DSB might
recommend that a Member bring an anti-dumping measure into conformity with its obligations basedon a finding that one discrete aspect of an injury determination, such as the evaluation of one relevant
factor reflecting the condition of the domestic industry, was inconsistent with those obligations.
Nothing in Article 5.7 or elsewhere in the Anti-D umping Agreement would support a view that the
Member in those circumstances had an obligation to perform the entire investigation anew, including
reaching a new dumping determination.
(d) Evaluation by the Panel
6.108  We have concluded, in our consideration of the EC's requests for preliminary rulings, that our
evaluation of the existence and consistency of measures taken by the EC to comply with the DSB's
recommendations should be undertaken with respect to Regulation 1644/2001.  Article 3.3 of the
AD Agreement provides that, in certain circumstan ces, investigating authorities may cumulatively
assess the effects of imports from more than one country.  A primary criterion for such cumulative
assessment is that the margin of dumping for imports from each country is more than de minimis .  At
the time the EC adopted the redetermination, Re gulation 1644/2001, the outstanding determination
with regard to dumping by Pakistani producers, set forth in the original Regulation 2398/97, was
affirmative – that is, the margin of dumping for imports from Pakistan was more than de minimis .
That finding had not been challenged in dispute settlement, and the EC was entitled to continue to
consider imports from Pakistan as dumped for purposes of the redetermination.  It would be entirely
                                                     
111 The United States notes that the EC makes the same point with respect to imports from Egypt, but
remarks that since the United States limited its discussion to certain arguments raised by India in thisproceedings, only imports from Pakistan were referred to in its argument.
112 India’s FWS, at paras. 73 - 84.WT/DS141/RW
Page 33
unreasonable to find a violation of the AD Agreement in the redetermination based exclusively  on
subsequent events of which the EC could have had no knowledge at the time.  Thus, the EC was not
precluded,  on the basis of that criterion, from undertaking a cumulative assessment of imports from
India and Pakistan in the redetermination.113
6.109  Assuming, however, that the subse quent EC regulations are relevant to our assessment of the
EC's compliance in this dispute, we turn to a further consideration of India's arguments.  As noted
above, at the time the EC adopted regulation 1644/2001, the only determination in effect regarding
imports of bed linen from Pakistan established that those imports were dumped.  Thus, in our view,
there can have been no violation of Article 3.3 of the AD Agreement in that aspect of the
redetermination.  As noted above, it would violate fundamental precepts of fairness to hold the EC
accountable for a subsequent change in the determination regarding dumped imports from Pakistan.
This is particularly the case when the EC was under no obligation to reconsider the question ofdumping with regard to imports from Pakistan.  That determination had not been the subject of
dispute settlement, so the EC did not undertake th at reconsideration in order to comply with a
recommendation of the DSB.
6.110  India argues that by first reconsidering the question of dumping with respect to imports from
India, and undertaking a cumulative assessment of the effects of imports from India and Pakistan (andEgypt), and subsequently reconsidering the question of dumping with respect to Pakistani imports,
and finally reassessing the question of injury and causation with respect to imports from India alone,
the EC violated Article 5.7.  The EC, on the other hand, asserts that Article 5.7 does not apply in
reviews under Article 11, and by the same token does not apply to the redetermination of dumping or
injury findings for the purposes of implemen ting DSB recommendations and ruling, regardless of
whether such redeterminations may be considered "reviews" under Article 11.2.
6.111  Article 5.7 provides:
“The evidence of both dumping and injury shall be considered simultaneously (a) in
the decision whether or not to initiate an investigation, and, b) thereafter, during the
course of the investigation, starting on a date not later that the earliest date on whichin accordance with the provisions of this Agreement provisional measures may be
applied".
6.112  As always, we apply the rules of the Vienna C onvention to elucidate our understanding of this
provision.
6.113  Article 5.7 requires that the evidence of dumping and injury be considered simultaneously in
certain circumstances.  It is  found in Article 5 of the AD Agreement, which is entitled "Initiation and
Subsequent Investigation".  Thus, at first glance, Ar ticle 5.7 would be expected to apply in those two
situations – initiation and investigation.  Of course, a closer look must be taken at the specific text of
Article 5.7, in its context and in light of its object and purpose, to see whether it should be understood
to apply in other situations.
6.114  It is clear to us that the text of Article 5.7 is specific as to when it applies.  As might be
anticipated from the title of Article 5, Article 5.7 specifies that the obligation in that provision appliesfirst, in the initiation decision, and subsequently, during the course of the investigation.  We agree
with the view stated by another panel that, "In the context of Article 5 of the AD Agreement, it is
clear to us that the term "investigation" mean s the investigative phase leading up to the final
                                                     
113 The other criteria for a cumulative assessment set out in Article 3.3 are not at issue in this dispute,
and we have not considered them.  Furthermore, India has made no argument with respect to cumulation ofimports from Egypt, and we do not address that question.WT/DS141/RW
Page 34
determination of the investigating authority".114  Thus, we consider that the obligation set out in
Article 5.7 to consider evidence of dumping and injury simultaneously simply does not apply in the
circumstances of the redetermination and subsequent Regulations at issue here.
6.115  We note, moreover, that to find otherwise could have absurd consequences.  Assume a
dispute under the AD Agreement in which only the determination of injury is challenged.  Assumefurther that the Panel finds a violation of the AD Agreement in the determination of injury, and the
DSB recommends that the measure be brought into conformity with the requirements of the
AD Agreement.  In principle, the Member whose measure was found to be inconsistent with the
AD Agreement may undertake to bring its measure into conformity by re-examining the injury
determination and issuing a redetermination.  There would be no need in such a case to re-examine
the calculation of the dumping margin, as the fi nding of violation in connection with the injury
determination could have no effect on the calculation of the margin.  Yet under India's theory, theredetermination in such a situation would violate Article 5.7.  India, in response to this proposition,
asserts that "once both dumping and injury are under review the synchronicity requirement should be
respected".
115   However, while this might be a useful principle, it finds no support in the text of
Article 5.7.116   We therefore consider that the obligation of Article 5.7 applies only during the course
of original investigations, and thus that I ndia’s claim under Article 5.7 does not have merit.
6.116  We thus conclude that, even assuming that the subsequent Regulations 160/2002 and
696/2002 properly formed part of our evaluation of the EC's compliance in this case, the EC did not
violate Articles 3.1, 3.3, or 5.7 in this case in conducting a cumulative assessment of the effects of
dumped imports from India and Pakistan (and Egypt) in Regulation 1644/2001, in subsequently re-
examining the question of dumping with respect to  imports from Pakistan (Regulation 160/2002), and
in subsequently reassessing the effects of dumped imports from India alone (Regulation 696/2002).
3. Claim 4: The EC acted inconsistently with its obligations under Articles 3.1 and 3.2 of
the AD Agreement
(a) Factual background
6.117  In the original measure imposing anti-dumping duties (Regulation 2398/97 imposing
definitive duties), the EC's injury determination was based on the total volume of dumped imports
                                                     
114 Panel Report, United States - Anti-Dumping Duty on Dynamic Random Access Memory
Semiconductors (Drams) of One Megabit or Above from Korea  ("US – DRAMS "), WT/DS99/R, adopted
19 March 1999, DSR 1999:II, 521, at footnote 519.
115 India's SWS at para. 117.
116 India also relied on the fact that the EC in a di fferent dispute, under the Agreement on Subsidies and
Countervailing Measures (SCM Agreement), argued that the de minimis  standard set out in Article 11.9 of the
SCM Agreement, in the section entitled "Initiation and Subsequent Investigation", should be understood to
apply in the context of a review under Article 21.3 of that Agreement.  The Panel in that dispute found in theEC's favor on that issue.  United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat
Products from Germany  ("US – Carbon Steel
 "), WT/DS213/R and Corr.1, circulated 3 July 2002.  While we note
that it might be desirable for Members to be consistent in the positions adopted in WTO dispute settlement,there is no rule in WTO dispute settlement that requires such consistency.  In any event, India's argument is not,
in our view, compelling on the issue before us.  In the first place, it is not clear that the redetermination at issue
here may be considered a "review" in the sense of Article 11 of the AD Agreement, the analogous provision toArticle 21.3 of the SCM Agreement.  In addition, the Panel in that case relied heavily on considerations of theobject and purpose of the de minimis  provision.  Consideration of object and purpose may not be relevant here.
Indeed, India does not even argue that the object and purpose of Article 5.7 suggest that it should apply in thecontext of a review, much less in the context of a redetermination such as that at issue here.  Finally, we note
that the decision of the Panel in that US – Carbon Steel
  has been appealed.  Thus, as an unadopted Panel report, it
has no legal status in the WTO system, although we could find useful guidance in its reasoning if we considered itto be relevant.  Japan – Alcohol  at p. 15.  As discussed above, we are doubtful of the relevance of that decision in
this case.   WT/DS141/RW
Page 35
from all three countries under investigation.  (Egypt,  India, and Pakistan).  In the redetermination,
Regulation 1644/2001, the injury findings were based on the total volume of dumped imports from
Egypt and Pakistan and the volume of dumped imports from India.  The EC calculated the volume of
dumped imports from India in the alternative, both including and excluding imports attributable to the
two Indian companies, Omar and Prakash, which were found not to be dumping, and made alternativedeterminations based on these two volume calculat ions.  The two Indian producers found not to be
dumping accounted for 53 percent of the imports from the five companies for which individual
margins of dumping were calculated.  The EC calculated margins of dumping for all other Indian
producers on the basis of the margins calculated for the individually investigated producers or on the
basis of facts available, resulting in different margins for cooperating and non-cooperating producers.
The EC considered all imports from all Indian sources for which margins of dumping were not
individually calculated to be dumped, and included them in the volume of dumped Indian imports,even when it excluded imports attributable to Omar and Prakash.
(b) Arguments of the Parties
6.118  India argues that the EC should have excluded from the volume of dumped imports
considered in the injury analysis the same proportion, 53 percent, of imports from producers not
included in the sample for which dumping was not individually determined.
117  In India's view,
imports from producers for which an individual determination of dumping is not made as part of the
sample must be presumed to be not-dumped in the same proportion as imports which were determined
to be not-dumped from producers for which an individual determination of dumping was made.  Any
other approach, India argues, violates the obligation of Article 3.1 to base injury determinations on
"positive evidence" and an "objective examinatio n".  India maintains that the proportion of imports
found to be dumped from producers in the sample is the only positive evidence of the proportion of
imports from producers not included in the sample that is dumped.
6.119  India bases its argument in part on the statement of the original Panel that:
"It is possible that a calculation conducted consistently with the AD Agreement
would lead to the conclusion that one or another Indian producer should be attributeda zero or de minimis margin of dumping.  In such a case, it is our view that the
imports attributable to such a producer/exporter may not be considered as "dumped"
for the purposes of injury analysis".
118
6.120  India considers that the five producers selected by the EC, after consultation with the Indian
exporters, for individual examination of dumping constitute a sample which represents the whole of
the Indian industry.  Relying on the definition of "sample" as a "a relatively small part or quantity
intended to show what the whole is like; a specimen"119, India maintains that the proportion of imports
from those five companies found not to be dumped shows what proportion of imports from companies
not included in the sample must be treated as not dumped.  India adds that in the context of statistics,
sample is defined as "a portion selected from a population, the study of which is intended to provide
statistical estimates relating to the whole".120
                                                     
117 India argues that if the dumping margins were recalculated using a volume-weighted amount for
SG&A and profits in the construction of normal value, a third producer, Madhu, would be found to be notdumping, and the proportion of non-dumped imports in the sample be 70 percent, and that proportion of importsfrom producers not included in the sample should be cons idered as not dumped.  However, as we have decided
above that a volume-based weighted average is not re quired by Article 2.2.2(ii), we do not consider this
argument further.
118 Original Panel Report, EC – Bed Linen , at para. 6.138.
119 New Shorter Oxford Dictionary, Clarendon Press, 1993.
120 Id.WT/DS141/RW
Page 36
6.121  The EC notes that the Panel statement relied on by India was an element of the original
Panel's rejection of India's argument in the original dispute that only the volume of imports
attributable to transactions  for which a margin of dumping was found could be considered dumped
for purposes of the injury analysis.  The EC had argued that dumping was determined for countries as
a whole, and that therefore it was entitled to consider as dumped all imports from a country for whicha determination of dumping was made.  The Panel di d not rule on this aspect of the EC's argument,
and in the original determination, no Indian producers for which dumping was separately determined
had been found not to be dumping.
6.122  The EC maintains that it is entitled to treat as dumped all imports from producers for which it
did not make a determination of no dumping, whether or not individually investigated, including all
cooperating and non-cooperating producers not included in the sample.  In this regard, the EC notes
that Article 6.10 of the AD Agreement allows inve stigating authorities to separately investigate
dumping for only a limited number of producers.  The EC maintains that in this case, it followed the
second option provided for under Article 6.10, and calculated individual dumping margins for a
sample comprising the five Indian producers accounting for the largest percentage of exports which
could reasonable be investigated.  The EC then points out that Article 9.4 of the AD Agreement
defines the maximum anti-dumping duty that may be applied to exports from producers for which anindividual dumping margin is not separately calculated, but Article 9.4 does not limit the volume of
imports from such non-investigated producers to which that maximum dumping margin may be
applied.  Consequently, the EC argues, all imports from such uninvestigated producers, for which a
dumping margin above de minimis  is calculated, may be considered to be dumped for purposes of
injury analysis.
(c) Arguments of third parties
6.123  Japan, in response to questions from the Panel, took the view that the term “dumped imports”
used in Articles 3.1 and 3.2 means those imports from suppliers which are found to be dumped (with a
dumping margin in excess of the de minimis  threshold) in accordance with Articles 2 and 6, which
provide for substantive rules for the determination of dumping and evidentiary rules, respectively.With respect to unexamined producers for which a determination of individual dumping margin has
not been made in accordance with Article 2, Japan considers that Article 6.10 would apply, and
obligate the investigating authorities, if it is impracticable to determine an individual margin of
dumping for each known exporter or producer, to “limit their examination … to a reasonable number
of interested parties or products by using samples which are statistically val id …” (emphasis added)
Japan posits that “statistical validity” is required directly for sampling , but would be required
indirectly for the estimation  of the individual margin of dumping using samples; these two processes
are logically intertwined and inseparable.  Japan also notes the obligation to provide a detailed
explanation for the estimation of individual dumping margins of unexamined producers pursuant to
Article 12.2.  Japan considers, however, that the au thorities may not base the estimation methodology
on Article 9.4.  Article 9.4 sets forth restrictions on the amount of anti-dumping duties imposed on
unexamined producers (the calculation of the so-called “all others rate”) after the investigatingauthorities determine to impose an anti-dumping duty.  In the view of Japan, this is irrelevant to the
determination of injury and causation under Article 3.  Japan considers that the text of Article 9.4
demonstrates Members’ understanding that this Article applies only to the determination of dumping
duties, not to the determination of “dumping”.  Indeed, the formula set forth in Article 9.4
presupposes that some  amount of anti-dumping duties should be imposed on unexamined producers.
Thus, Japan considers that Article 9.4 is applicable to anti-dumping cases only after the authority
finds that all the requirements for imposing anti-dumping duties, i.e.  dumping, injury and causation,
are met with respect to unexamined producers in accordance with the relevant Articles, in particular,
Articles 2, 3 and 6.   Japan asserts that if Article 9.4 were to be applied to the determination of
“dumping”, it could result in illogical and unreasonable consequences.WT/DS141/RW
Page 37
6.124  The United States, in response to questions from the Panel, notes that in its original report the
Panel in this dispute thoroughly addressed the meaning of the term “the dumped imports” as used
throughout Article 3  of the AD Agreement.121 The Panel found that the dumping determination is
made with reference to a product , not with reference to individual transactions.122  Consequently, the
Panel correctly concluded that investigating authorities may treat all imports from producers/exportersfor which an affirmative determination has been made as “dumped imports” for the purposes of the
injury analysis.
123  The United States agrees with the analysis and findings of the original Panel.  In
the United States' view, the rationale for the Panel’s original findings clearly extends to show that the
injury analysis under Article 3 may include consideration of the volume and price effects of imports
from unexamined producers for which a determination of dumping under Article 2 has not been made.
Article 2.1 defines  dumped  products “[f]or the purpose of [the AD] Agreement,” on a countrywide
basis.  In the US view, the references to “dumped imports” in Articles 3.1 and 3.2 and throughoutArticle 3 therefore refer to all imports of the product from the countries subject to the investigation.
124
The United States considers that “the dumped imports” referenced in Article 3 are not confined toparticular companies which have been examined for dumping determinations.  This interpretation is
consistent with the AD Agreement’s recognition that it will be impracticable in some cases to make
individual dumping determinations for each known exporter or producer.  In those cases, Article 6.10allows the authorities to limit their dumping examination to either a sampled selection or the largest
percentage of the volume of exports from the subject country which “can reasonably be investigated”.
In addition, Article 9.4 provides bases for determining the anti-dumping duty margin to be applied to
the non-examined exporters or producers.  In each of the circumstances illustrated above, the dumping
determinations for examined companies would appl y equally to the non-examined companies.  All
imports subject to either their own calculated marg in or to a dumping margin for other imports should
be treated as “dumped imports” for purposes of the injury determination.  The United States further
notes that Article 6.10 of the AD Agreement sets forth the circumstances under which an
administering authority need not individually de termine the margin of dumping for each known
exporter or producer of a product under investigation.  When Article 6.10 has been invoked to limitthe number of examined exporters or producers, Arti cle 9.4 provides bases for determining the anti-
dumping duty to be applied to the non-examined exporters or producers.   Finally, the United States
considers that there are no specific provisions in the AD Agreement which either prohibit the analysis
applied by the EC or require the analysis proposed by India.  However, the United States asserts that
Article 9.4 of the AD Agreement permits the EC analysis.
                                                     
121 Original Panel Report, EC – Bed Linen , at paras. 6.121–141.
122 Id., at para. 6.136.
123 Id., at paras. 6.136 and 6.139.
124 The United States clarified its view on the question of whether dumping is determined for countries.
See id., at para. 6.131 and note 50.  The United States agrees with the EC that dumping is determined for
countries.  In the original panel proceedings in this di spute, the Panel asked the third parties to comment on –
whether, in their view, investigating authorities are obligated to exclude, from theirexamination of volume and price effects, imports attributable to companies for which anegative determination of dumping has been made based on the determination of a zero or deminimis margin of dumping.
The United States explained in its response to this question that its own practice is to exclude from the injury
evaluation companies for which a negative determination of dumping margins has been made based on thedetermination of a zero or de minimis  margin.
Thus, once there has been a specific negative dumping determination made with respect to imports
from a particular company, the investigating authorities examining injury will not consider those imports as“dumped” for the purposes of the injury evaluation.  Absent a negative dumping determination, the Agreement
permits, and it is the US practice to include in its injury evaluation, all imports from the subject country.  The
United States notes that this approach is consistent with the analysis and findings of the Panel in paragraph6.138 of the original Panel Report in EC – Bed Linen.WT/DS141/RW
Page 38
(d) Evaluation by the Panel
6.125  Articles 3.1 and 3.2 of the AD Agreement provide, in pertinent part:
"3.1 A determination of injury for purposes of Article VI of GATT 1994 shall be
based on positive evidence and involve an objective examination of both (a) the
volume of the dumped imports and the effect of the dumped imports on prices in thedomestic market for like products, and (b) the consequent impact of these imports on
domestic producers of such products.
3.2 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…".
6.126  India's argument is essentially that the volume of dumped imports must be determined, for
purposes of Articles 3.1 and 3.2, by reference to the proportion of the imports from "sampled"
producers which is actually found to be dumped, because the sample is the only "positive evidence" of
the volume of dumped imports from uninvestigated producers.  Thus, India's argument rests on the
premise that the volume of "dumped imports" for purposes of Article 3.1 and 3.2 is determined
independently of the calculation of dumping margins.  We do not agree.
6.127  While Articles 3.1 and 3.2 refer to the volume of  "dumped" imports, those provisions are in a
section of the AD Agreement entitled "Determination of Injury", and contain no guidance whatsoever
regarding the determination of the volume of dumped imports.  We do not consider that the
requirement in Article 3.1 of the AD Agreement, that an injury determination "shall be based on
positive evidence and involve an objective examination of … the volume of dumped imports"establishes that the volume of dumped imports must be determined independently of the
determination of dumping, based on the calculation of dumping margins in accordance with the
AD Agreement.
6.128  In considering the meaning of the term "dumped imports" as used in Articles 3.1 and 3.2, we
are, as always, guided by the Vienna Convention.  As noted, there is nothing in the text of thoseArticles which specifically informs the term "dumped imports".  Looking to other provisions of the
AD Agreement, we note that Article 2 is entitled "Determination of Dumping".  This suggests to us
that the question of what constitutes "dumped imports" must be made by reference not to Article 3
alone, but by reference to other provisions of the AD Agreement, starting with Article 2, which
govern the determination of dumping by establishing rules for the calculation of dumping margins.
6.129  Looking at Article 2, we note that it defines when a product is to be considered as dumped, in
Article 2.1, as the case where
"the export price of the product exported from one country to another is less than the
comparable price, in the ordinary course of trade, for the like product when destined
for consumption in the exporting country".
6.130  Article 2 then goes on to establish rules for th e determination of the export price, the normal
value, and the comparison of the two, which result in the calculation of a dumping margin for theimported products.  As the Panel found in the original proceeding, all imports from a producer for
which an affirmative determination of dumping is made are properly considered "dumped imports",
without regard to the price differences calculated for individual transactions in the process of
calculating the dumping margin.  It appears to us that the calculation of a dumping margin pursuant to
Article 2 constitutes a determination of dumping.WT/DS141/RW
Page 39
6.131  We agree fully with the observation of the Panel in the original proceeding that :
"It is possible that a calculation conducted consistently with the AD Agreement
would lead to the conclusion that one or another Indian producer should be attributed
a zero or de minimis margin of dumping.  In such a case, it is our view that the
imports attributable to such a producer/exporter may not be considered as
"dumped" for the purposes of injury analysis ".125
The logical corollary to this observation is that imports attributable to a producer/exporter for which a
calculation conducted consistently with the AD Agreement yields a greater than de minimis  margin of
dumping may properly be considered as "dumped" for injury purposes.126
6.132  We thus turn to the question of how dumping ma rgins are to be calculated consistently with
the AD Agreement.  Of course, Article 2 is the principal provision in this regard, setting forth detailedrules for the calculation of normal value, export price, and the comparison of the two to yield a
dumping margin.  However, other provisions of th e AD Agreement are also relevant to this question.
6.133  Article 6.10 of the AD Agreement provides, in pertinent part:
"The authorities shall, as a rule, determine an individual margin of dumping for each
known exporter or producer concerned of the product under investigation".
Thus, the AD Agreement contemplates that a determin ation of dumping, that is the calculation of a
dumping margin, will as a rule be made for each producer or exporter of the product.  Thus the
question of which imports are to be considered dumped is readily answered – "dumped imports" are
all imports attributable to producers or exporters for which a margin of dumping greater than de
minimis  is calculated.  This was the decision of the original Panel in this dispute, rejecting the
argument that the imports attributable to a single producer found to be dumping should be divided
into two categories – "dumped" and "not-dumped" sales transactions.  The problem posed in this
dispute arises when, as in this case, the investigating authorities do not calculate a dumping margin
for each producer or exporter, and thus do not make an individual determination of dumping for each
producer or exporter.
6.134  Article 6.10 recognizes that it may not be feasible to calculate an individual dumping margin
for each producer or exporter, providing:
"In cases where the number of exporters, producers, importers or types of products
involved is so large as to make such a determination impracticable, the authorities
may limit their examination either to a reasonable number of interested parties or
products by using samples which are statistically valid on the basis of informationavailable to the authorities at the time of the selection, or to the largest percentage of
the volume of the exports from the country in question which can reasonably be
investigated".
Thus, the AD Agreement sets out two bases on which fewer than all producers and exporters of the
product subject to investigation may have an individual margin calculated.  Investigating authoritiesmay limit their efforts to the calculation of individual dumping margins for producers or products
                                                     
125 Original Panel Report, EC - Bed Linen , at para. 6.138 (emphasis added).  We note that, contrary to
the statements in argument by India, the Panel did not find a violation on this basis in the original dispute, asthere had been no claim of violation in this regard.
126 We note that, in response to a question from the Panel asking whether it considered "that the
calculation of a dumping margin above de minimis for unexamined producers (i.e.  those not examined as partof the sample) constitutes a determination of dumping with respect to those producers?", the EC responded"Yes".  EC's answer to the Panel's question 19, at para. 17, Annex E.2.WT/DS141/RW
Page 40
constituting a "statistically valid" sample or may limit their efforts to the calculation of individual
dumping margins for those producers accounting for the "largest percentage of the volume of the
exports…which can reasonably be investigated".
6.135  In this case, the EC chose the latter option.127  India does not contend that the EC did not
properly follow Article 6.10 in establishing the sample of Indian producers for which individual
dumping margins would be calculated.  The question before us is thus, in such a case, how is
existence (or not) of dumping to be determined for those producers for which a dumping margin is not
individually calculated – that is, the producers or exporters not included in the sample, or
"unexamined producers".
6.136  We can find no provision of the AD Agreement which specifically addresses this issue, nor
have the parties pointed to any provision which does so.  However, Article 9.4 of the AD Agreementis relevant to this question.  That Article provides:
"When the authorities have limited their examination in accordance with the second
sentence of paragraph 10 of Article 6, any anti-dumping duty applied to imports from
exporters or producers not included in the examination shall not exceed:
(i) the weighted average margin of dumping established with respect to
the selected exporters or producers or,
(ii) where the liability for payment of anti-dumping duties is calculated
on the basis of a prospective normal value, the difference between the weighted
average normal value of the selected exporters or producers and the export prices of
exporters or producers not individually examined,
provided that the authorities shall disregard for the purpose of this paragraph any zero
and de minimis  margins and margins established under the circumstances referred to
in paragraph 8 of Article 6.  The authorities shall apply individual duties or normal
values to imports from any exporter or producer not included in the examination who
has provided the necessary information during the course of the investigation, asprovided for in subparagraph 10.2 of Article 6".
6.137  Thus, Article 9.4 allows anti-dumping duties to be collected  on imports from producers for
which an individual determination of dumping, based on the calculation of a dumping margin under
Article 2, was not made.  It also establishes an upper limit for any such duties.  In our view, the fact
that an anti-dumping duty may properly be collected on imports from producers for which an
individual calculation of dumping was not made, necessarily entails that such producers are properly
considered to be dumping.  Consequently, we consider inescapable the conclusion that the importsfrom those producers are properly considered as "dumped imports" for the purposes of Articles 3.1
and 3.2.
6.138  India argues that the proportion of imports of bed linen found to be dumped within the sample
constitutes "positive evidence" of the proportion of imports from producers outside of the sample
which may be considered as "dumped imports" for purposes of Articles 3.1 and 3.2.  We disagree.
                                                     
127 In a letter to the representatives of the Indian exporters and their association, TEXPROCIL
concerning the selection of Indian companies to be included in the sample, the EC specified:
"The aim of this exercise is to select a sample representing the largest volume of exports
which can reasonably be investigated within the time available  taking also into account the
need to cover companies with domestic sales as well as companies of different types (i.e.
integrated, semi-integrated, merchant exporters)".  (emphasis added).
This letter was attached as Annex 22 to India’s First Written Submission to the original Panel, and is cited in theEC's Comments to India's Answers to the Panel's questions at para. 2, Annex E-9.WT/DS141/RW
Page 41
Positive evidence concerning whether imports are dumped may be found in the analysis and
determination of the existence of dumping pursuant to the AD Agreement.  If the determination of a
maximum rate of dumping under Article 9.4 is sufficient evidence to allow anti-dumping duties to be
collected, in our view it must constitute "positive evidence" of dumping with respect to the imports of
the producers to which that rate is applicable sufficient for purposes of the analysis of injury underArticle 3.1 of the AD Agreement.
6.139  We can find no textual obligation in the AD Agreement to separate out the unexamined
producers' imports into dumped and not dumped for purposes of the injury analysis based on the
proportion of the imports attributable to sampled producers found not to be dumping.  In the original
dispute, the Panel considered, and rejected, an argume nt by India similar to the one it now makes.  In
that case, India argued that only imports attributable to transactions in which normal value was greater
than export price could be considered as "dumped imports" for purposes of injury analysis underArticle 3.   In rejecting India's position, the Panel noted:
"Attempting to segregate individual transactions as to whether they were "dumped" or
not, even assuming it could be done, would leave investigating authorities in a
quandary in cases in which the dumping investigation is undertaken for a sample of
companies or products.  Such sampling is specifically provided for in theAD Agreement, yet it would not be possible, in such cases, accurately to determine
the volume of imports attributable to "dumped" transactions.
53
____________________
53  India's argument suggests that the propo rtion of imports attributable to dumped
transactions for one producer or country could be applied to determine the volume ofdumped imports for a different producer or country.  We do not consider that such a
practice would satisfy the general requirements of the AD Agreement for
consideration of positive evidence and objective decision-making".
128
There is an obvious difference between imports from producers specifically found not to be
dumping , and imports from producers for which a dumping margin is not individually calculated .
In the former case, there is a determination of no dumping, and thus no legal basis for the
consideration of such imports as "dumped imports", while in the latter case, there is no such
determination.
6.140  Moreover, Article 9.4 requires the calculation of an individual rate of duty for any
unexamined producer or exporter who has provided the necessary information during the course of
the investigation, but was not examined individually in accordance with Article 6.10.  Finally,Article 9.3 requires Members to establish a system for granting refunds or reimbursement of amounts
collected in excess of actual rates of dumping on import transactions.  The results of these
proceedings may establish a basis for a review of the injury determination, under Article 11.2 of the
AD Agreement.  Thus, to the extent the consideration of imports from unexamined producers or
exporters during the investigation may have been inaccurate, the AD Agreement itself containsmechanisms for remedying that situation.  This supports our view as to the interpretation and
application of the relevant provisions of the AD Agreement.
6.141   The treatment of a proportion of imports from unexamined producers as dumped based on
the proportion of the imports from individually examined producers as dumped, on the other hand,
leads to bizarre and unacceptable results, for which there is no remedial mechanism in theAD Agreement.  Assume an investigating authority, under Article 9.4, calculates a maximum rate of
duty for unexamined imports and imposes anti-dumping duties on imports from those producers on
                                                     
128 Original Panel Report, EC - Bed Linen , at para. 6.140.WT/DS141/RW
Page 42
that basis.  Under India's approach, only a portion of imports from producers subject to that anti-
dumping duty could be considered as "dumped" for injury purposes.  This effectively treats the
imports from the same producers as dumped for purposes of duty assessment, and not dumped for
purposes of injury analysis.  In our view, this is an unacceptable outcome, suggesting that the analysis
which leads to it is untenable.
6.142  In response to a question on this point, India asserts that:
"the rules on the collection and imposition of duties must be separated from the rules
that establish dumping and injury.  …The dumping and injury findings logically
precede the establishment of the level of a duty.  The determination of the level of a
duty takes place only if and when dumping and injury have been found to exist.  The
Article 9 that regulates the imposition of a duty is also clearly separate from the rules
on the determination of dumping, injury, and the use of a sample".129
6.143  While we agree that the findings of dumping, injury, and causation logically precede the
imposition of any anti-dumping duty, we do not agree that Article 9.4 is "clearly separate" from the
rules on the determination of dumping, injury and the use of a sample.  In the first place, Article 9.4
specifically refers to Article 6.10, which governs the use of sampling, and as noted, specifies the
maximum duty that may be collected on imports from producers or exporters for which an individualdumping margin was not calculated.  For those producers for which an individual dumping margin
was calculated, Article 2 serves the same purpose, as specified in Article 9.3, which provides that the
amount of the anti-dumping duty shall not exceed the margin of dumping as established under
Article 2.  Moreover, we can see nothing in the text which suggests that a determination of the volume
of "dumped imports" for purposes of Article 3 can be made on any basis other than a determination ofdumping based on the calculation of dumping margins for the producers or exporters of the imports in
question.  We can see nothing in the AD Agreement which provides for a determination of dumping
on any basis other than the calculation of a dumping margin, whether on an individual or collective
basis.
6.144  We consider 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.  Consequently, we conclude that the EC did not act
inconsistently with Articles 3.1 and 3.2 of the AD Agreement in its consideration of "dumped
imports" in this case.
4. Claim 5: The EC acted inconsistently with its obligations under Articles 3.1 and 3.4 of
the AD Agreement
(a) Factual background
6.145  In the redetermination, Regulation 1644/2001, the EC reassessed its original findings on
injury, taking account of the recommendations in the adopted Reports, and on the basis of information
collected in the original investiga tion.  The EC recalled that the original Panel had concluded that the
EC had failed to evaluate all relevant factors ha ving a bearing on the state of the Community industry,
and specifically all the factors set forth in Article 3.4 of the AD Agreement.  In this respect, the EC
recalled that the Panel had mentioned specifically productivity, inventories, utilisation of capacity,
ability to raise capital or investments, cash fl ow, wages, and the magnitude of dumping.  The EC
specifically addressed all the Article 3.4 factors in  the redetermination, setting forth its consideration
of the information previously collected.
                                                     
129 India's answers to the Panel's question 6(D), Annex E-1.WT/DS141/RW
Page 43
(b) Arguments of the parties
6.146  India argues first that the EC had never collected data on some of the Article 3.4 factors, and
since data not collected cannot be evaluated, the EC's redetermination is perforce inconsistent with the
AD Agreement, as it is not based on positive evidence as required by Article 3.1
6.147  In making this argument, India relies on the statement of the Panel in the original Report that:
"[i]t appears from this listing [in the Provisional Regulation] that data was not even
collected for all the factors in Article 3.4, let alone evaluated by the EC investigating
authorities".130
6.148  In India's view, the Panel concluded that there had been no collection of data with respect to
certain factors.  The EC did not collect any additional data for purposes of the redetermination.
Therefore, India asserts, in the redetermination the EC could not have had data on the Article 3.4
factors for which the EC did not collect any new data prior to making the redetermination.  Indiapoints specifically to the factors of inventories (stocks) and utilisation of capacity in connection with
this argument.  With respect to inventories, India asserts that the EC's redetermination first explained
that this factor did not have a bearing on the state of the industry, and then stated that "some increase
in stocks was observed in some companies", but th at "neither the complainant [sic] nor any sampled
Community producer adduced increase in stocks as ev idence of injury".  With respect to capacity
utilisation, India maintains that the EC first explained why the factor did not have a bearing on the
industry, and then explained that reliable figures were extremely difficult to establish.  It then explains
that there was a high rate of capacity utilisation, to the extent that some production had to be sub-
contracted.  In India's view, the EC's approach puts the cart before the horse, by stating the lack of
relevance of the factor before evaluating the data on the factor, and only last indicating what the datais.  With respect to the latter aspect, India maintains that as the data on these points was not requested
in the questionnaire, it is clear that no data were collected.
6.149  India also argues that even if there had been data collected and evaluated, the findings of the
Panel and the Appellate Body necessitated an "overall reconsideration and analysis" of the
determination of injury.  Such an overall reconsideration and analysis was necessary, India maintains,in view of the findings of the Panel which had an impact on the dumping margin, an impact on the
definition of the domestic industry, and an impact on which dumped imports to consider.  India
asserts that the EC failed to undertake such an overall reconsideration and analysis.
131  In India's view,
the redetermination merely puts a new gloss on the original determination, but fails to remedy the
errors in that determination.  Furthermore, India cons iders that the EC's injury findings contain factual
errors, which demonstrate that no objective examination on the basis of positive evidence was
undertaken.
6.150  India addresses the EC's analysis of each of the injury factors, and sets out what it considers
to be the inadequacy of the analysis, or asserts that "analysis", as opposed to unsupported conclusions,
did not even take place.  India also points to what it considers to be errors in the facts as stated in the
redetermination, which in India's view invalidate the redetermination.   India asserts that the existence
of such errors makes it clear that the EC's evaluation was not based on positive evidence and alsocasts doubt on the objectivity of the examination.
                                                     
130 Original Panel Report, EC - Bed Linen , at para. 6.167.
131 In this regard, India relies on Panel Report, Mexico – Anti-Dumping Investigation of High Fructose
Corn Syrup (HFCS) from the United States  -  Recourse to Article 21.5 of the DSU  by the United States ("Mexico
– Corn Syrup (Article 21.5 – US) "), WT/DS132/RW, adopted 21 November 2001, as upheld by the Appellate
Body Report, WT/DS132/AB/RW, at para. 6.37.WT/DS141/RW
Page 44
6.151  The EC disputes India's charge that information on certain of the Article 3.4 factors was never
collected.  It points out that the statement relied upon by India was in the context of the original
Panel's assessment of the original determination.  The EC had argued in the original dispute that it had
in fact considered all of the Article 3.4 factors, but that it had concluded that some were not relevant
to its determination, and had not addressed them explicitly in its provisional or definitive Regulations.The Panel concluded that it could not determine, from the EC Regulations, that certain of the
Article 3.4 factors were in fact considered in making the injury determination, and that it would not
assume that such consideration had taken place.  In the context of this conclusion, the Panel observed
that the EC had listed, in the Regulation, parties from whom it had collected certain information, and
that this listing did not refer to all of the Article 3.4 factors.  However, the EC asserts that the Panel
did not conclude, as a matter of fact, that information had never been collected regarding certain of
the Article 3.4 factors.  Rather, the EC maintains, th e Panel stated that in the absence of any reference
to certain of the Article 3.4 factors in the determination, it could not simply assume that those factors
had been considered by the EC.  The EC notes that the Panel continued, immediately after the
sentence quoted by India, to state:
"While some of the data collected for the factors that are mentioned in the Provisional
Regulation by the EC authorities may have included data for the factors notmentioned, we cannot be expected to assume that this was the case without some
indication to that effect in the determination".
132
The EC always asserted, even during the original investigation, that information was, in fact, in therecord on all of the Article 3.4 factors, but that since some of the factors, and the relevant information,
were not considered relevant, there was no discussion on the face of the determination.
6.152  Now, in making its redetermination, the EC argues that it has explicitly addressed that
information on the face of the redetermination, evaluated it together with the information it had
evaluated in the original determination, and made a new conclusion regarding injury based on a
consideration of all the Article 3.4 factors.
6.153  The EC then details its consideration of the data, and asserts that the evaluation of the
information was adequate and reasonable, and supported its conclusion of material injury.  The EC
notes that part of India's argument rests on the premise that where the EC "reconfirmed" findings
made in the original determination, it failed to rec onsider the information.  The EC asserts that this is
a purely formalistic argument and must be rejected.  The EC argues that the original determination,
where reconfirmed, and the new determination (Reg ulation 1644/2001) must be read together as
constituting the analysis underlying the conclusions reached.  The EC disputes India's allegations offactual error, and submits that it undertook an overall reconsideration and analysis of the economic
indicators pertain to injury, concluding that despite some positive indicators, the declining and
inadequate profitability of the industry warranted a conclusion of material injury.
(c) Arguments of third parties
6.154  Japan notes that it generally agrees with India’s Claim 5, in that information related to factors
listed in Article.  3.4 of the AD Agreement must be collected and adequately evaluated to determine
injury to the domestic industry.  Accordingly, Japan requests that the Panel carefully examine the
consistency of the EC measure at issue with Article 3.4 of the AD Agreement.
6.155  Korea is of the view that the EC acted inconsistently with Articles 3.1 and 3.4 because it
failed to collect sufficient data prior to making its evaluation in the redetermination.  Korea notes thatin order to comply with the recommendation of th e DSB, the EC reassessed and evaluated all of the
relevant injury factors, but it did not collect additional information for the redetermination, and thus
                                                     
132 Original Panel Report, EC - Bed Linen , at para. 6.167.WT/DS141/RW
Page 45
its findings are based on information collected during original investigation.  In Korea's view, the EC
took account of this problem in the redetermination and suspended the imposition of the anti-dumping
duty on imports of bed linen from India.
6.156  Korea considers that the original Panel found that necessary data was not even collected for
all the factors listed in Article 3.4 of the AD Agreement.  Thus, in Korea's view, the Panel concludedthat the EC did not conduct an objective evaluation of all relevant economic factors and failed to act
consistently with its obligations under Article 3.4 of the Agreement.  Korea believes that the EC's
redetermination, based on the original information without any additional collection of information,
does not satisfy the recommendations or rulings of the DSB.  Korea notes that Article 3.1 states that
an injury determination shall be based on positive evidence and an objective examination of the injury
factors mentioned on Article 3.4.  Korea considers that the EC’s redetermination does not meet this
requirement, and that in order to fully carry out implementation, the EC should have collected
additional information for the redetermination.
6.157  The United States takes no view on the facts of the EC's injury determination, but makes
several general observations about the EC’s obligations under Article 3.4 of the AD Agreement as it
relates to the direction of the Panel in its original Report.  The United States notes India's reliance on
the observation of the Panel in the original Report that “the text of Article 3.4 indicates that the listedfactors are a priori  ‘relevant’ factors ‘having a bearing on the state of the industry,’ and therefore
must be evaluated  in all cases".
133  The United States considers that the discussion that followed that
comment set the actual framework for what the Panel believes a Member’s obligations are under
Article 3.4, and, in particular what the EC was obligated to do to bring its measure into compliance.
In the US view, the Panel recognized that, depe nding on facts and circumstances of the industry in
question, a particular factor “either is or is not relevant to the determination of whether there is
injury".134  The Panel did not determine that every enumerated factor was relevant nor did it impose
an obligation on the EC to rely on any particular factor.  Rather, the Panel simply found that because
the EC’s determination did not even refer to certain of the Article 3.4 factors, there was nothing in the
determination to indicate that the authorities considered them not to be relevant.135  The United States
notes that Article 12.2 of the AD Agreement  requires only that the authorities set forth “in sufficient
detail the findings and conclusions reached on all issues of fact and law considered material by the
investigating authorities.”  In light of Article 12 .2, the United States considers that investigating
authorities are not required in each case to make a specific finding on each enumerated factor in
Articles 3.2 and 3.4, but, as the United States maintains the original Panel found, it should be
discernible from the authorities’ determination that  they evaluated each of the enumerated factors.
(d) Evaluation by the Panel
6.158  We start, as always, with the text of the AD Agreement.  Article 3.1 sets forth a fundamental
obligation that informs the remainder of Article 3 of the AD Agreement.   Article 3.1 provides:
"A determination of injury for purposes of Article VI of GATT 1994 shall be based
on positive evidence and involve an objective examination of both (a) the volume of
the dumped imports and the effect of the dumped imports on prices in the domesticmarket for like products, and (b) the consequent impact of these imports on domestic
producers of such products".
6.159  The term "positive evidence" relates to the quality of the evidence upon which the authorities
may rely in making a determination.  We understand the word "positive" as meaning that the evidence
                                                     
133 Id., at para. 6.155 (emphasis added).
134 Id., at para. 6.168.
135 Id.WT/DS141/RW
Page 46
must be of an affirmative, objective and verifiable character, and that it must be credible.136  While the
term "positive evidence" focuses on the facts underpinning and justifying the injury determination, the
term "objective examination" is concerned with the investigative process itself.  We see the term
"examination" as relating to the way in which the evidence is gathered, inquired into and,
subsequently, evaluated.  Thus, this term relates to the conduct of the investigation generally.  Thequalifying term, "objective", indicates that the "examination" process must conform to the dictates of
the basic principles of good faith and fundamental fa irness.  We consider that, as the Appellate Body
has noted, an "objective examination" requires that the domestic industry, and the effects of dumped
imports, be investigated in an unbiased manner, without favouring the interests of any interested
party, or group of interested parties, in the investigation.  The duty of the investigating authorities to
conduct an "objective examination" recognizes that  the determination will be influenced by the
objectivity, or any lack thereof, of the investigative process.
137
6.160  Article 3.4 of the AD Agreement provides that,
"The examination of the impact of the dumped imports on the domestic industry
concerned shall include an evaluation of all relevant economic factors and indices
having a bearing on the state of the industry, including actual and potential decline in
sales, profits, output, market share, productivity, return on investments, or utilizationof capacity;  factors affecting domestic prices;  the magnitude of the margin of
dumping;  actual and potential negative effects on cash flow, inventories,
employment, wages, growth, ability to raise capital or investments.  This list is not
exhaustive, nor can one or several of these factors necessarily give decisive
guidance".
It is by now undisputed, and the parties in this case agree, that all of the listed factors must be
evaluated in every anti-dumping injury investigati on.  India does not now dispute that the EC has, in
fact, evaluated all the Article 3.4 factors.  Rather, India challenges the adequacy of that evaluation.
6.161  Our task in this instance is thus to examine the adequacy of the evaluation by the European
Communities of each of the listed factors.  The fo cus of our examination is whether the treatment of
the listed Article 3.4 factors in the EC investigation and determination is sufficient to satisfy the
requirements of Article 3.4 concerning the "evaluation" of the listed factors having a bearing on the
state of the industry.
6.162  The term "evaluate" is defined as: "To work out the value of …; To reckon up, ascertain the
amount of; to express in terms of the known;"
138  "To determine or fix the value of; To determine the
significance, worth of condition of usually by careful appraisal or study".139  These definitions reveal
that an "evaluation" is a process of analysis and assessment requiring the exercise of judgment on the
part of the investigating authority.140  It is not simply a matter of form, and the list of relevant factors
to be evaluated is not a mere checklist.141  As the relative weight or significance of a given factor may
naturally vary from investigation to investigation, th e investigating authority must therefore assess the
role, relevance and relative weight of each factor in the particular investigation.  Where the authoritydetermines that certain factors are not relevant or do not weigh significantly in the determination, the
authority may not simply disregard such factors, but  must explain their conclusion as to the lack of
                                                     
136 Appellate Body Report, US - Hot-Rolled Steel , at para. 192.
137 Id., at para. 193.
138 New Shorter Oxford English Dictionary, Clarendon Press, 1993..
139 Merriam-Webster's Collegiate Dictionary online: http://www.m-w.com.
140 Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from Turkey ("Egypt –Steel
Rebar "), WT/DS211/R, adopted 1 October 2002, at para. 7.43.
141 Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen
Lamb Meat from New Zealand and Australia ("US – Lamb "), WT/DS177/AB/R, WT/DS178/AB/R, adopted
16 May 2001, at , para. 104.WT/DS141/RW
Page 47
relevance or significance of such factors.142  The assessment of the relevance or materiality of certain
factors, including those factors that are judged to be not central to the decision, must therefore be at
least implicitly apparent from the determination.  Silence on the relevance or irrelevance of a given
factor will not suffice.143  Moreover, an evaluation of a factor is not limited to a mere characterization
of its relevance or irrelevance.144   Rather, we believe that an "evaluation" implies the analysis of data
through placing it in context in terms of the particular evolution of the data pertaining to each factor
individually, as well as in relation to other factors examined.145
6.163  Finally, we note that there is no requirement in Article 3.4 that each and every injury factor,
individually, must be indicative of injury.  Indeed, Article 3.4 itself is quite clear on this point, stating
that the list of factors is not exhaustive, and "nor can one or several of these factors necessarily give
decisive guidance".  If no one factor can give d ecisive guidance on the question of the state of the
domestic industry, it is self-evident that the fact th at one or more factors do not, taken individually, point
toward injury, does not preclude the possibility of a finding that there is material injury.  An
examination of the impact of the dumped imports on the domestic industry under Article 3.4 includes
an evaluation of all relevant economic factors having a bearing on the state of the industry to produce
an overall impression of the state of the domestic industry.  We must consider whether, in light of the
interaction among injury indicators and the explana tions given in the redetermination, the information
before the EC precluded a finding by an unbiased and objective investigating authority that the
domestic industry was injured.  We therefore find unpersuasive India's contentions, with respect to
certain of the Article 3.4 factors, that they do not, individually, point toward injury.
(ii) Alleged failure to collect data
6.164  Before turning to our assessment of the EC's evaluation of the Article 3.4 factors, we must
first, however, dispose of India's allegation that no data were ever collected with respect to certain of
the Article 3.4 factors, and in particular, the factors regarding inventories and utilisation of capacity.
India's argument, as noted above, is premised on a statement in the original Panel report.   We have
considered carefully that statement, and are persuaded that India has misunderstood its import and the
context in which it was made.  Contrary to India's understanding, the original Panel did not find, as a
matter of fact or law , that no information had been collected on certain of the Article 3.4 factors.
Rather, as alluded to by the EC, the Panel was making an observation as to the lack of any basis, on
the face of the provisional and definitive Regulations, for a conclusion that certain of the factors had
actually been considered by the EC authorities in  making their determination.  Indeed, the Panel
specifically went on to note that, in the absence of any reference to the relevant information in the
Regulations, it was not willing to assume that such data had been considered.146
                                                     
142 Original Panel Report, EC–Bed Linen  para. 6.162.
143 Id., at para. 6.168.
144 Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy
Steel and H-Beams from Poland ("Thailand – H-Beams "), WT/DS122/R, adopted 5 April 2001, as modified by the
Appellate Body Report, WT/DS122/AB/R, at para. 7.236.
145 Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan ("US – Hot-Rolled Steel "), WT/DS184/R, adopted 23 August 2001 as modified by the Appellate Body
Report, WT/DS184/AB/R, at paras. 7. 232, 7.233.  In this context, we note and agree with the view of the
Appellate Body that “Articles 3.1 and 3.4 indicate that the investigating authorities must determine, objectively,and on the basis of positive evidence, the importance to be attached to each potentially relevant factor and the
weight to be attached to it.  In every investigation, this determination turns on the "bearing" that the relevantfactors have "on the state of the [domestic] industry"".  See Appellate Body Report, US – Hot-Rolled Steel , at
para. 197
146  "While some of the data collected for the factors that are mentioned in the Provisional
Regulation by the EC authorities may have included data for the factors not mentioned, wecannot be expected to assume that this was th e case without some indication to that effect in
the determination".WT/DS141/RW
Page 48
6.165  It is clear, and the EC acknowledges, that no new or additional information was collected in
the course of the redetermination.  Therefore, whatever information is discussed in the
redetermination must have been in the record of the original investigation.  Indeed, India does not
assert otherwise.   In the redetermination, the EC has set out its consideration of that information, with
respect to all the Article 3.4 factors.  Nonetheless, India maintains that no data had been collected, andpoints to the discussion of two of the Article 3.4 fact ors in the redetermination in support of its view.
6.166  India appears to argue that because the EC's redetermination sets out the conclusion at the
outset, and only then addresses the information in support of that conclusion, this somehow indicates
that fact collection followed the conclusion.  India asserts that "the very order of the sequence
evaluating the facts and setting forth the conclusions based on the data on record could indeed and
very well negatively affect the result.  The formal aspect of data collection and the substantive aspect
of objective evaluation of the data should not be mixed".
147  While certainly, we agree that facts must
be collected before they can be evaluated, there is no indication that the EC pre-judged the outcome of
the fact collection.  Indeed, the fault found with the original determination was, as pointed out above,
not that information was not collected, but that there was no basis on which the Panel could conclude
that there had been an evaluation of information with respect to certain of the Article 3.4 factors.
6.167  In our view, it is clear that the EC had, in its record, information on stocks and utilisation of
capacity, as well as the other Article 3.4 factors.  As it had asserted in the original determination, it
did not consider the information on inventories and capacity utilisation to have a bearing on the state
of the EC industry.  However, unlike the original determination, the EC's consideration of these
factors is clearly set out on the face of the redetermination.
6.168  It is true that the EC opens its discussion of these two factors in the redetermination by
observing "These indicators were found not to have a bearing on the state of the Community
industry".148  However, in our view, the order of the discussion has no implications for whether or not
information was actually collected.  Merely that the conclusion of the analysis is stated in the
determination before the supporting evidence and analysis is meaningless with respect to the question
at issue here.  Moreover, the next paragraph of the report addresses the information and analysis onwhich that conclusion is based, starting:  "As to stocks, this is the case for two reasons".
149  T h e
remainder of the paragraph addresses these two reasons, and notes that some increase in stocks was
observed in some companies, but that this was not considered as evidence of injury.  Similarly, the
following paragraph addresses the reasons the EC considered production capacity and utilisation to
not have a bearing on the state of the industry, and in so doing notes that reliable production capacity
figures were difficult to establish because of the relative ease with which equipment could be bought,
sold, or used for other products.  It concludes by noting that many producers were able to maintainhigh rates of capacity utilisation.
6.169  It is thus 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.
(iii) Alleged inadequacy of evaluation of the Article 3.4 factors
6.170  Turning then to the evaluation of the Article 3.4 factors in the redetermination, we recall that
India's claim is two-fold.  India argues that the EC's evaluation was inadequate because the EC failed
to carry out an "overall reconsideration and analysis", and that errors in the factual record invalidate
the redetermination.
                                                                                                                                                                    
Original Panel Report, EC - Bed Linen ,  at para. 6.167.
147 India's answer to the Panel's question 8, Annex E-1.
148 Regulation 1644/2001, at para. 28.
149 Id.,  at para. 29.WT/DS141/RW
Page 49
6.171  With respect to the first argument, we note that India argues that the examination by the EC
of the Article 3.4 factors is "curt and includes references to the original provisional Regulation, in
itself a sign that no re-consideration took place".150  We disagree.  The original Panel Report in this
dispute found a violation of Article 3.4 in that the EC had failed to consider all the Article 3.4 factors,
and the DSB recommended that the EC bring its measure into conformity.  There were no suggestionsas to what action the EC might take to bring its measure into conformity with its obligations under the
AD Agreement.  One possible method would be to issue an entirely new determination, with an
explicit consideration and new overall evaluation of a ll the Article 3.4 factors.  This would appear to
be what India would have preferred.  The EC chose another way.  Thus, in the redetermination, the
EC addressed the Article 3.4 factors in different ways – the EC in some cases set out the information
on a particular factor and evaluated it, and in other cases referred to and confirmed the evaluation of a
factor in the original determination.  We do not consider that this choice, and the resultingredetermination, which includes a section setting out the EC's conclusions on injury, necessarily
demonstrates that no "overall reconsideration and analysis" took place.
6.172  The situation facing us with respect to the re determination in this case is much like the
situation facing the original Panel with respect to the original Provisional and Definitive Regulations.
In its report, the original Panel noted:
"Finally, we note that, as a general matter, the object of a panel's review of a final
anti-dumping measure focuses on the final determination of the investigating
authority, in this case, the European Communities' Definitive Regulation (Exhibit
India-9).  However, it is clear to us, and the European Communities has confirmed,
that in EC practice the Definitive Regulation does not stand alone as the finaldetermination.  Rather, the European Communities reaches many of its conclusions in
the preliminary phase of the investigative process, and announces those decisions in
the Provisional Regulation (Exhibit India-8).  Unless there is a change in the
substance of such decisions during the final phase of the investigative process, these
decisions are often simply confirmed in the Definitive Regulation, without repeatingthe underlying analysis and facts in detail, although there may be additional facts or
explanation given.  Thus, to the extent we seek to understand the European
Communities' analysis and explanation concerning any given element of its final
determination in order to evaluate India's claims, we consider it appropriate to look to
both the Provisional Regulation and the Definitive Regulation to inform ourselves as
to the substance of the challenged decision".
151
6.173  We consider the relationship between the original determination (which as noted comprised
elements of both the Provisional and Definitive Regulations) and the redetermination to be analogous.
Thus, with respect to those elements in the redetermination as to which the EC confirmed or adopted
its original views as set out in the original determ ination, we must look to the original determination
to assess the adequacy of the evaluation.  With respect to the adequacy of the evaluation of the
elements as an overall matter, we look to the expl anation of the EC regarding its conclusions, based
on the combination of elements discussed in the original determination and redetermination.  While
this is perhaps less straightforward than we might wish, it is clear to us that merely because the
redetermination confirms or adopts certain findin gs made in the original determination does not
demonstrate  a failure to carry out an overall evaluation of the information in making the injury
redetermination.
6.174  We thus come to the assessment of the EC's evaluation of the Article 3.4 factors and its
conclusions regarding injury.  As we stated above in paragraphs 6.162 and 6.163, we do not consider
the fact that one or another factor does not show a  decline or does not individually indicate injury to
                                                     
150 India's FWS at para. 164.
151 Original Panel Report, EC - Bed Linen , at para. 6.47.WT/DS141/RW
Page 50
be determinative.  The evaluation of the Article 3.4 factors having a bearing on the state of the
industry must be adequate to produce an overall und erstanding of the state of the domestic industry.
Our task, therefore, is to determine whether, in light of the overall development and interaction among
injury indicators taken together, the evidence before  the EC, in light of the explanations given, would
preclude a finding by an unbiased  and objective investigating authority that the domestic industrywas injured.  Against that standard, we have examined carefully the EC's discussion of the Article 3.4
factors, as set out below.
Sales, market share, prices
6.175  India argues that the EC found that sales
152 and market share increased, and that since sales
value increased more than sales volume, average prices also increased.  India then asserts that the EC
did not evaluate these three factors, which in Indi a's view do not point towards injury.  Finally, India
contends that the EC's statement that the increase in market share was due to sales of higher value
niche products "does not meet any standard of a proper evaluation".  India maintains that this
observation is contrary to the conclusion that there is one like product, and that the market is
characterized by product substitutability and transparency.
6.176  The EC argued that, while it was undisputed that average prices increased, this did not take
into account the change in product mix sold by the EC  producers.  The EC noted that this change in
product mix was obvious when the average prices, which increase, are compared with data for the
defined reference products, which decreased over roughly the same period.  We reject India's
argument that this explanation undermines the EC's finding of one like product, and the
characterization of the market.  While it is clear that the EC is obligated to make its determinationwith respect to the domestic industry, this does not mean that the EC was precluded from considering
the information on prices with respect to defined reference products within the like product in order to
be able to understand the dynamics of the market and the impact of imports, so long as it ultimately
reached conclusions with respect to the industry as a whole.
153  Moreover, it is apparent to us that the
statement that the product mix sold changed, as producers sold more higher value niche products,does not undermine the conclusion that there is one like product.  It was undisputed in the original
investigation, and is not challenged here, that there is a great diversity of bed linen products.
154  The
EC did not consider that these differences required a conclusion that there was more than one like
product, and that determination has never been challenged.  The fact that the increase in overall prices
and in market share was found to be explained by the shift in the product mix does not demonstrate
that the EC failed to evaluate these indicators at  the level of the industry producing the single like
product bed linen.  Moreover, the fact that the market for bed linen is characterised by productsubstitutability does not necessarily undermine the finding that there are some high quality niche
products.  Indeed, it seems entirely reasonable that, while the highest and lowest quality of bed linen
may not be perfectly substitutable with one another, they may be sufficiently substitutable to be
considered a like product.
                                                     
152 With respect to the sales information, India appears to suggest that the EC should have ignored the
information on sales from the sample of domestic producers, and relied only on the information for the "industryas a whole".  There is no basis for a requirement to ignore any relevant information in an anti-dumping
investigation, and to the extent India relies on statements in the original panel Report in this regard, we consider
that those statements have been misunderstood.   In any event, our reading of the redetermination, together withthe original determination, makes clear that the EC did consider the information for the domestic industry as awhole.
153 Cf.  Appellate Body Report, US – Hot-Rolled Steel .  In that case, the Appellate Body noted that "it
seems to us perfectly compatible with Article 3.4 for investigating authorities to undertake, or for a Member to
require its investigating authorities to undertake, and evalua tion of particular parts, sectors or segments within a
domestic industry.  Such a sectoral analysis may be highly pertinent, from an economic perspective, in assessingthe state of an industry as a whole".  Id., at para. 195 (footnote omitted).
154 E.g., Regulation 1069/97 at paras. 69, 72, 75.WT/DS141/RW
Page 51
Profits
6.177  India asserts that the entire injury determination is based on what it characterizes as "a
doubtful and limited piece of information", the profits of the sampled producers.155  Moreover, India
states that it "has reservations with the absolute fi gures of profits attributed to the "domestic industry"
in paragraph 36 of the redetermination".156  In any event, India points out that it is undisputed that the
sampled companies were profitable throughout the investigation period.  India maintains that the EC
does not evaluate this profit figure other than to confirm the provisional Regulation, which found that
the profit was below the minimum level of 5 per cent.  In India's view, the EC did not demonstrate
that this was indeed a "minimum" level of profit.   It only stated that this minimum was the level of
profits made in 1991, prior to the injury investigation period.  Accordingly, India submits that the EC
has failed to adequately evaluate the factor profits.
6.178  We have reviewed the data regarding profits in the original determination and in the
redetermination, and consider that it is clear that the EC evaluated profitability for the sampled
domestic producers, and considered this to be representative of the industry as a whole.  India has not
challenged the EC's investigation or determination on the basis of the decision to sample domestic
producers.  Thus, we find no merit in India's suggestion that an analysis of profits which did notinclude an evaluation of profits for all EC producers fails to meet the requirements of objectivity in
Article  3.1.  The obligation of objective evaluati on under Article 3.1 of the AD Agreement is with
respect to the examination of the information gathered.  It does itself not address the completeness or
the level at which the information was gathered.
157
6.179  It is not disputed that the profit rates of sampled producers decreased by over 50 per cent from
3.6 per cent to 1.6 per cent.158  The EC found that that the sampled producers had achieved higher
profits in the past, in a year in which dumped imports were 30 per cent lower than in the IP, and based
the 5 percent minimum on that information.159   The EC considered it significant that profit rates had
declined and were significantly below that level.
Output
6.180  India notes that the output of the domestic industry increased.  In India's view, this factor
clearly does not point toward injury.  India points out that the EC had found that output increased
because a number of producers had ceased operations, and those which remained, and whose output
increased as a result, were those "strong enough" to survive competition from dumped imports.160  In
India's view, this reference to producers outside the domestic industry is not to be considered part of
the EC's redetermination, noting the EC's statemen t in paragraph 19 of the redetermination that the
references to producers not forming part of the Co mmunity industry should be considered eliminated.
India considers either that the EC has not addressed output, if the relevant paragraph is eliminated
from the redetermination, or else it is relying on producers outside the industry, which the original
Panel found to be in violation of the EC's obligations.
                                                     
155 India's FWS at para. 173.
156 Id.  at para. 174.
157 This is not to suggest that an investigating authority has no obligations in this regard with respect to
the proper establishment of facts.
158 The EC acknowledges that the information it disclosed to the parties during the redetermination was
incorrect, due to a clerical error.  In the disclosure  document, the turnover for sampled producers is shown as
ECU 276.9 million in 1992 and ECU 281.2 million in the IP.  The actual, correct figures are found in paragraph83 of the Provisional Regulation, Regulation 1069/1997, 280.6 million in 1992 and  ECU 285.3 million in the
IP.  We agree with the EC's characterization of this error as minor, and do not consider that it had any effect on
the EC's analysis.
159 Regulation 1069/97, at para.89.
160 Id., at para. 81.WT/DS141/RW
Page 52
6.181  The EC found that output increased, and attributed this fact to circumstances involving
producers that were not part of the domestic industry.  While it is true that the original Panel found
that the EC had acted inconsistently with the AD Agreement by basing conclusions regarding injury
on negative developments for producers that were not part of the domestic industry, we do not
understand the Panel's determination to have precluded references to producers that are not part of thedomestic industry in an effort to put in contex t the information relating to the domestic industry.
Moreover, the EC points out that from 1994 to the IP the domestic industry’s output actually
decreased by 1.6 per cent.
161  Furthermore, exports had also increased, which the EC considered to
have also contributed to the overall increase in production.162
Productivity
6.182  India asserts that the productivity of the domestic industry increased by 11 per cent from the
beginning to the end of the injury investigation period.  It appears that India is relying on the
"productivity index" calculated for sampled EC producers, which increased from 100 in 1992 to 111
in 1996.163  In India's view, this factor remains completely unevaluated and does not point towards
injury.
6.183  The EC concluded that this increase was explained by the combination of increased total
production and a decline in employment.  For the industry as a whole, production increased by 8.7
percent during the IP, while employment declined by 5.3 percent, and the sampled producers showed
the same trends.164   The investigation showed that the ga in in productivity occurred mainly in the
period from 1992 to 1994 when most of the jobs were lost.165
Return on investments
6.184  India asserts that the investments made throughout the entire injury investigation period were
substantial, stating that "investments by sample companies for Bed Linen production were over 20 per
cent (!) for each year  (!) of the injury investigation period".166  India also asserts that throughout the
injury investigation period the companies obtained a positive return on investments.  India maintains
that there was no evaluation of this factor, and that the this factor does not point toward injury.
6.185  The EC points out that the figures for investments referenced by India represent accumulated
and not yearly amounts.167  Moreover, the EC notes that while the return on investments remained
positive throughout the injury analysis period, it decreased by over 50 per cent.168
Capacity utilisation
6.186  India makes no argument concerning the consideration of capacity utilisation beyond the
allegation that no data were obtained and that therefore no proper evaluation could be made.  As we
have found above that this argument is without meri t, as the EC clearly did have information on this
                                                     
161 The "IP" refers to the period covered by the investigation of dumping, in this case 1 July 1995 to 30
June 1996.  The investigation of parameters relevant in the injury assessment covered the period 1 January 1992
to the end of the IP, 30 June 1996 (the "injury investigation period").  Regulation 1644/2001, at para. 4.
162 Regulation 1069/97 at para.81.
163 Regulation 1644/2001, at para. 32.
164 Id., at para. 31.
165 Id., at para. 31.
166 India's FWS at para. 184.  It is not clear how India has derived this figure from the cited source, the
table attached to Exhibit-India-RW-5.
167 The EC points to the table at page 8 of the EC’s fax to Texprocil of 27 July 2001 (Exhibit-India-
RW-17), in support of this contention.
168 Regulation 1644/2001,  at para. 39.WT/DS141/RW
Page 53
factor, we do not consider it necessary to address the adequacy of the EC's consideration of this
element.
6.187  We note, however, that the EC found, based on information which was submitted in the
original investigation and verified, that reliable statistics on production machinery for the product
concerned were extremely difficult to establish because the machinery can be bought, sold  or used fordifferent products with relative ease.
169   As the same machinery could have different capacity ratings
depending on the product mix, it would be difficult to obtain any meaningful data.  The EC did find
that a number of producers were contracting out surplus production and may therefore have been able
to maintain a high rate of capacity utilisation, but this data was not available for all sampled producers
or the domestic industry for the reasons explained above.  Thus, the EC concluded that in the absence
of meaningful data for all companies in the sample, this factor did not "have a bearing on the state of
the Community industry".170
Factors affecting domestic prices
6.188  India notes that the EC refers to the contraction in demand and raw cotton prices as factors
affecting domestic prices.  In India's view, the EC did not  evaluate the first factor, but merely
concluded that "given that the prices of the dumped imports were the lowest", "the contraction indemand in itself did not have an overriding impact on prices".
171  India also considers as
incomprehensible the statement of the EC that "contraction of demand in itself did not have an
overriding impact on prices" because the prices of dumped imports were the lowest of all operators in
the market.
6.189  As regards the price of raw cotton, the EC found that the price of raw cotton "can represent up
to 15 per cent" of bed linen costs, that the price of raw cotton "increased significantly",172 and that EC
producers were not able to pass on this cost increase.  In India's view, this is a factor that has nothing
to do with imports from India.
6.190  The EC found, with respect to the increase in ra w cotton prices, that in fair market conditions,
and in the absence of other factors preventing it, domestic producers should have been able to increaseprices and pass on to their customers the increase in the cost of the raw material.
173  Furthermore, the
EC found that despite the contraction in demand, the EC industry should have been able to benefit
from the gap in supply left by factory closures, but instead, the growth of the Community industry
was negative between 1994 and the IP in terms of sales volume.174  The EC also noted that between
1994 and the IP, dumped imports increased by 35 percent, and increased their market share by up to
6.2 percentage points.175
The magnitude of the margin of dumping
6.191  India notes that the EC concluded that the dumping margins found in the redetermination
were "still substantial and distinctly above de minimis  levels".  India considers this statement to be at
odds with the facts.  In India's view, two producers had zero dumping margins, one producer had a
                                                     
169 We reject India's suggestion that the EC's discussion of capacity utilization under the heading
"production capacity" confused the two factors.  India argues that the EC confuses "production capacity" and
"utilisation of capacity".  In order to analyse utilisation of capacity, as noted, it is necessary to consider the levelof production capacity.  The EC addressed both elements under the heading "capacity".
170 Regulation 1644/2001, at para. 28.
171 Id., at para. 44.
172 Regulation 1069/97 states, at para. 88, that prices of raw cotton increased by 48 percent between
1992 and the IP, or by 59 percent between 1993 and the IP.
173 Regulation 1644/2001, at para. 45.  See also Regulation 1069/97, at para. 88.
174 Id., at para. 43.
175 Id.WT/DS141/RW
Page 54
margin of 3 per cent, which India considers not to be consistent with the statement, and these three
producers represented 70 per cent of the imports attributable to the sampled producers.  Thus, India
considers that the evaluation by the EC was cursory, inadequate and factually incorrect.
6.192  In our view, the EC's conclusion is not unreasonable in light of the fact that the dumping
margins found for Indian producers ranged from 3 percent to 9.8 percent.
Cash flow
6.193  India asserts that the evaluation of cash flow is restricted to two sentences, which state that
cash flow remained positive but declined from 25 million ECU to 18 million ECU, and that cash flow
followed a similar decreasing trend as profitability.
6.194  The EC found that as with profitability, cash flow had decreased by 28 per cent from 1992 to
the IP.  This is not disputed.
Inventories
6.195  India makes no argument concerning the consideration of inventories beyond the allegation
that no data for inventories were obtained and that therefore no proper evaluation could be made.  As
we have found above that this argument is without merit, because the EC clearly did have information
on this factor, we do not consider it necessary to address the adequacy of the EC's consideration of
this element.
6.196  Nonetheless, we observe that the EC explained, at paragraph 29 of Regulation 1644/2001,
that production of bed linen often takes place in response to or in anticipation of orders placed by
particular clients.  The EC continued to observe that inventory valuation often takes place at31 December, which is towards the end of a peak period for the bed linen sector.  While some
increase in inventories was observed in some companies, there was no suggestion that this was
evidence of injury.  An increase in inventories or decrease in inventories in this sector can thus
indicate actual or anticipated orders rather than unsold production.
176  Consequently, the EC
concluded that inventories did not have a bearing on the state of the domestic industry.177
Employment
6.197  India notes that the EC found that employment decreased.  India objects to the EC having
discussed employment together with production and productivity.  In India's view, "under the EC’s
logic, the producers suffered from imports, had to lay off 300 jobs, managed to force the remaining
labour to work 8.7 per cent per cent harder (without any trade union protests), and—notwithstanding
their injured position, spent 20 per cent on investments in new Bed Linen machinery".178  India
considers that such reasoning is fallacious.  Instead, India considers it more probable that investments
in new machinery resulted in increased production, and the increased production from more efficient
machines could have been the reason to the 300 lay-offs in the sector.  India also considers that since
production increased during the same period the decrease in employment was not caused by imports
but was a function of the productivity increase.  India also asserts that there is a factual error in theredetermination, in the calculation of the percent decline in employment.
                                                     
176 Id., at para. 29.
177 As regards India’s argument that inventory levels should have been taken into account when
establishing consumption, the EC pointed out that complete industry data was not available from all theCommunity producers.  The EC observed that this was often the case in anti-dumping investigations, and that
consumption is analysed in such circumstances on the basis of apparent consumption, without taking account of
inventories.  The EC pointed out that during the original investigation neither India nor any other interestedparty questioned this calculation
178 India's FWS at para. 201.WT/DS141/RW
Page 55
6.198  India has proffered an alternative explanation for the decline in employment.  However, there
is no specific evidence cited by India that would suggest that only this view of the facts could be taken
by an unbiased and objective investigating authority.  Moreover, contrary to India's theory, there was
a decrease in production in the period overlapping the period in which employment in the EC industry
decreased.179  With respect to the alleged factual error, paragraph 91 of Regulation 1069/97 states that
direct employment in the Community industry decr eased from “around 7000 jobs to 6700”.  The exact
figures (7059 in 1992 to 6684 in the IP) correspond to the percent decline, 5.3 percent mentioned in
the redetermination.180
Wages
6.199  India notes that the EC found that wages increased during the injury investigation period.
India asserts that the EC's evaluation is limited to the observation that for part of the injuryinvestigation period the wages went up in line with consumer prices, which India considers
inadequate, and in any event, India maintains that the factor does not point towards injury.  There is
no dispute that wages increased over the injury investigation period.
181
Growth
6.200  In India's view, the EC's evaluation of growth of the Community industry is restricted to part
of the facts, data  from 1994 to the IP,  and to data regarding sales volume.  India asserts that the EC
disregards that overall sales volume increased, and that other important growth factors such as output,
productivity, capacity utilisation, market share, wages, ability to raise capital, all showed a positive
trend.  India considers that the evaluation was not adequate.
6.201  The EC notes that sales volume overall increased, but that growth was negative for a
significant period of the injury analysis period, i.e.  between 1994 and the IP, and that growth in
market share was also limited during that period.  Th e EC maintains that in analysing the trends over
the whole of the injury investigation period an investigating authority cannot be expected to ignore
clear negative trends during that period, citi ng the statement of the Appellate Body in Argentina –
Footwear Safeguard :
"we do not dispute the view and ultimate conclusion that the competent authorities
are required to consider the trends  in imports over the period of investigation (rather
than just comparing the end points) under Article 4.2 (a)".182
6.202  Moreover, the EC argues that a comparison of  the growth of the domestic industry to the
growth of the dumped imports shows that growth in the EC industry was far less significant in both
absolute and relative terms.
Ability to raise capital
6.203  India points out that the sampled producers were able to raise capital throughout the injury
investigation period at a stable and eventually increasing level.  In India's view, the EC's evaluation is
limited to the observation that there was no claim nor any indication that there were problems to raisecapital.  India considers that the EC's statement that no major investments were made is belied by the
fact that the average yearly investments amounted to approximately 20 per cent.  India considers that
                                                     
179 Exhibit–India-RW-5, at table 1.
180 Exhibit-India-RW-18, at para. 31.
181 Regulation 1644/2001, at para. 33.
182 Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear ("Argentina –
Footwear (EC) "), WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, 515, at para. 129.WT/DS141/RW
Page 56
the evaluation was factually wrong, not adequate and that also this factor does not point towards
injury.
6.204  The EC evaluated the sampled producers’ ability to raise capital and found that the level of
credits increased by 3 per cent from 1992 to the IP.  While the level of credits raised first decreased
and then increased during the IP, there was no indication that the Community industry hadencountered difficulties in raising capital.  The fact that credits raised increased does not necessarily
indicate that sampled producers were performing better.  Indeed, while the level of credits remained
fairly stable, the debt ratio was particularly high.  Moreover, as discussed above in paragraph 6.184,
India appears to have misunderstood data on overall investment as annual investment rates.
(iv) Facts allegedly ignored
6.205  India also argues that facts on the record have been ignored.  In this respect, India notes that
in the original determination, the EC had excl uded one company from the domestic industry,
presumably as a related party, under Article 4.1(i), because it imported bed linen from Pakistan, and
had not considered that company's data in evaluating the domestic industry.
183  India maintains that,
since Pakistan was not dumping, in the redetermination, the EC should have included the information
for this producer in its evaluation of injury.
6.206  As discussed above at paragraph 6.116, at the time the redetermination was made, the EC was
entitled to treat Pakistani imports as dumped.  Consequently, and assuming that the import of product
from Pakistan was in fact the reason for the exclusion of this producer, there was no reason for the EC
to reconsider that decision in making the redetermination.  In any event, as India has not made a claim
under Article 4.1(i) in connection with this aspect of the redetermination, we can discern no basis on
which we could rule whether the exclusion of this company was consistent with the AD Agreement ornot.  India insists that it is alleging a violation of the Article 3.1 obligation to rely on "positive
evidence" in this connection.  However, as discussed above, we consider the notion of "positive
evidence" to refer to the quality of the evidence relied upon.  There is no dispute as to the quality of
the evidence supplied by this producer, or of the evidence relied upon by the EC.  Rather, India argues
that some evidence excluded from the "positive evidence" considered by the EC should have beenincluded.  Absent some basis in the text of the AD Agreement for the conclusion that it was improper
to exclude this company's evidence, we find India's position that the EC disregarded positive evidence
to be without merit.
(v) Facts allegedly changed without explanation
6.207  India argues that the facts concerning sales value for sampled producers and market share
were different in the redetermination than in the provisional regulation, and no explanation was given
for this change.  India asserts that despite the difference in the sales value figures, the profit ratereported by the EC remained the same.
6.208  The EC acknowledged a clerical error in respect of sales values as disclosed to the Indian
producers during the course of the redetermination, bu t maintains that the facts concerning profit rate
as reported in the redetermination are correct.  India has not disputed this assertion.  Therefore, we
consider that the clerical error does not establish that the facts relied upon by the EC changed from theprovisional Regulation to the redetermination.   With regard to market share, there was no change in
the data.  Rather, the first set of figures referred to by India concerned market share by value, while
the second set of figures referred to by India concerned market share by volume.  India acknowledged
this fact in its second written submission.
184
                                                     
183 Regulation 1069/97, at para. 54.
184 India's SWS at 187.  See Regulation 1069/97, at para. 85, and Regulation 1644/2001, at para. 35.WT/DS141/RW
Page 57
(vi) Facts allegedly misrepresented
6.209  India maintains that the redetermination misrep resents information on profits, cash flow, and
return on investments.  India asserts that the rede termination states that the EC collected information
on profit, cash flow, and investments only for the sampled EC producers.  Nonetheless, India argues
that the EC made conclusions for the EC industry  with regard to profits on the basis of data for the
sampled producers.  India asserts that the same errors are repeated for cash flow and for investments.
6.210  The EC explained, in paragraph 19 of Regulation 1644/2001, that certain information was
collected only at the level of the sampled producers.  The fact that India points this provision out itself
demonstrates that it was not misled by any of these figures, rather, it understood perfectly well that
they related to sampled producers.  That the EC drew conclusion on the basis of information regarding
the sampled producers as representing the domestic industry is, in our view, entirely reasonable.  This
particularly so with respect to factors such as pr ofits, cash flow, and return on investments, where the
only source of information is likely to be the producers themselves.  India has never challenged the
EC's reliance on a sample of domestic producers in the context of the injury determination.   We do
not consider that there is any error in the redetermination in this regard.
6.211  India also considers as a misrepresentation the statement in Regulation 696/2002, the re-
examination of injury with respect to imports fro m India alone, that "the dumping margins found are
still substantial and distinctly above de minimis  levels".185  India notes that the dumping margin for
two of the exporters was zero,  lower than de minimis , and argues that therefore, the statement is
clearly not true.  India finds puzzling the statement in paragraph 19 of that Regulation that "one third
of the undercutting would have disappeared if the imports from India had not been dumped".  India
considers these alleged misrepresentations to be material, since the conclusions drawn are based onthese misrepresentations.
6.212  As discussed above, we do not consider Regulation 696/2002 to be properly before us in this
dispute, and therefore will not make any rulings with  regard to that determination.  In any event, we
note that India has made no claims with respect to the substance of that determination, merely vague
allegations of misrepresentation of facts.  We do not consider that these would form any basis for afinding of error on the EC's part.
(vii) Alleged failure to conduct an overall recons ideration and analysis
6.213  As we discussed above in paragraphs 6.162, 6.163, and 6.174, an analysis of injury does not
rest on the evaluation of the Article 3.4 factors individually, or in isolation.  Nor is it necessary that all
factors show negative trends or declines.  Rather, the analysis and conclusions must consider each
factor, determine the relevance of each factor, or lack thereof, to the analysis, and consider the
relevant factors together, in the context of the particular industry at issue, to make a reasonedconclusion as to the state of the domestic industry.
6.214  In this case, the EC found that the volume of imports was high, and that the market share of
dumped imports increased, while prices of dumped imports declined and there was significant price
undercutting.  The EC specifically addressed the information relevant to each of the Article 3.4
factors, concluding that some of them (inventories, production capacity and capacity utilisation) werenot relevant to its analysis.  The EC concluded that although the domestic industry managed to
increase production and to slightly increase its sales volume and market share by concentrating on
sales of higher value niche products, it nevertheless suffered declining and inadequate profitability,
which was basically the result of price suppression – the inability, due to the presence of low priced
dumped imports, to pass along increases in costs.  The EC found that information regarding cash flow,
return on investments and employment also showed  declining trends.  The EC thus confirmed the
                                                     
185 Regulation 1644/2001, at para. 19WT/DS141/RW
Page 58
conclusion in the original determination that the domestic industry had suffered material injury "On
this basis, and in particular because of the declining and inadequate profitability and price suppression
suffered by the Community industry".186
6.215  In our view, it is clear that the EC did conduct an overall reconsideration and analysis of the
facts on the record with respect to the injury dete rmination.  The redetermination, read together with
the original determination, presents information on each of the Article 3.4 factors, and presents the
investigating authorities' analysis and conclusions as  to why, overall, that information indicated the
existence of material injury.
6.216  In our view, India has essentially presented alternative interpretations of the facts.  However,
as noted above, pursuant to the standard of review in anti-dumping disputes, our role is not to assess
whether there is an alternative view of the facts that might be supported, but to determine whether an
objective and unbiased investigating authority could have reached the conclusions that were reachedby the EC.  India has failed to demonstrate that, ba sed on the information before the EC authorities,
and in light of the analysis in the redetermination as we understand it, an objective and unbiased
investigating authority could not have reached the conclusions that were reached by the EC.
6.217  We therefore find that the EC's analysis and conclusions regarding injury are not inconsistent
with Articles 3.1 and 3.4 of the AD Agreement.
5. Claim 6: The EC acted inconsistently with its obligations under Article 3.5 of the
AD Agreement
(a) Arguments of the parties
6.218  India asserts that the EC's determination is inconsistent with the AD Agreement because the
EC failed to demonstrate that the dumped imports caused material injury, in particular, because theEC failed to ensure that the injurious effects of other known factors were not attributed to dumped
imports, as is required by Article 3.5 of the AD Agreement.  India asserts that the EC completely
failed to ensure that the injurious effects of the other known factors are not "attributed" to dumped
imports.  As an example, India notes that the fact that prices of bed linen were not able to keep pace
with inflation in prices of consumer goods, is no t even discussed in the context of other factors
causing injury.  India also points to the fact that the EC's conclusion that "increases in raw material
prices had caused injury",
187 is not separated and distinguished from the injury caused by dumped
imports.  India also asserts that further factors that are curtly discussed, are also not separated, and are
merely lumped together and remain indistinguishable from alleged injury caused by dumped imports.
In India's view, in the absence of separation and distinction of the different injurious effects, the EC
had no rational basis to conclude that the dumped imports were indeed causing injury.  Accordingly,
India considers that the EC acted contrary to Article 3.5 when it concluded, without more, that thealleged injury was caused by the dumped imports.
6.219  India reads the decision of the Appellate Body in US - Hot-Rolled Steel  as imposing the
obligation to separate and distinguish the different injurious effects caused by other factors, from the
effects of the dumped imports.  In India's view, the EC did not engage in such separation nor did it
distinguish the different injurious effects.  In suppo rt of its view, India asserts that the EC nowhere
separated the injurious effects caused by the increase in the price of raw cotton and distinguished
them from the effects of the dumped imports.
                                                     
186 Id., at para. 51.
187 Regulation 1069/97, at para. 103.WT/DS141/RW
Page 59
6.220  India also asserts that, in any event, the EC's determination of causality is incorrect.  India
considers that the EC concluded that the increase in market share of dumped imports from India was
"the cause " of the decline in domestic industry profits.
6.221  The EC considers that India’s claim and its arguments are both legally and factually
erroneous.  The EC asserts that Article 3.5 does not require that dumped imports be the sole cause ofinjury.  The EC further maintains that, assuming the Panel reaches the question of the adequacy of the
EC's consideration of "other factors" causing injury, that the EC did properly consider whether other
factors were causing injury and did not attribute to dumped imports injury caused by such other
factors..
6.222  The EC contends that India's argument with respect to market share is legally and factually
incorrect.  The EC considers that Article 3.5 does not require that dumped imports be the sole cause of
injury, and that in any event injury can be found to exist even if dumped imports have not gainedmarket share.   The EC also contends that its finding of injury was not based on loss of market share
by the domestic industry.  Finally, the EC asserts that the increase in the market share of the dumped
imports was, in any event, significant.
6.223  The EC asserts that India misrepresents the EC 's findings when it argues that the EC found
that the increase in consumer prices was one of the causes of injury but then failed to examine it as an
“other factor” under Article 3.5.  The EC maintains that its authorities did observe that prices of the
domestic industry did not keep pace with inflation in consumer prices, but did not identify that fact as
a cause of injury, but rather as part of the assessment of the state of the domestic industry.  The EC
considers unsupported India's allegation that the EC authorities failed separate and distinguish the
effects of dumped imports from those of other, unspec ified, causes of injury.  The EC notes that India
presents argument in this regard only with respect to one alleged “other factor”, the increase in the
cost of raw cotton.  In this context, the EC again considers that India’s arguments misrepresent the
findings of the EC authorities.  The context of the statement of the EC authorities that the increase in
the cost of raw cotton “had caused injury”, makes it clear that the EC authorities did not consider that
factor as a separate cause of injury -- that is, the EC authorities considered that the increase in the cost
of raw cotton “had caused injury” only because the EC industry was unable to reflect that increase in
its prices – and consequently the EC industry had suffered price suppression.  The EC authorities
found that the reason the EC industry could not pa ss on the cost increases was the downward pressure
on prices exerted by the dumped imports.  Since the increase in the cost of the raw cotton was not a
separate cause of injury, its injurious effects cannot possibly be “separated/distinguished” from those
of the dumped imports.
(b) Arguments of third parties
6.224  Japan notes that it agrees with India’s Claim 6.  Japan considers that Article 3.5 of the Anti-
Dumping Agreement requires that investigation aut horities, as part of their causation analysis,
examine all “known factors”, “other than dumped imports”, which are causing injury to the domestic
industry “at the same time” as dumped imports.  Investigation authorities also must ensure that
injuries, which are caused to the domestic industry by known factors other than dumped imports, arenot “ attributed  to the dumped imports.”  Accordingly, Japan requests that the Panel carefully examine
the consistency of the EC measures at issue with this Article.
6.225  The United States agrees with the EC's position that Article 3.5 does not require that the
dumped imports be the sole cause of injury, or that the dumped imports alone have caused the injury.
To the extent India suggests that the absence of absolu te or relative increases in the volume of subject
imports defeats an affirmative determination, the United States agrees with the EC that the
AD Agreement does not require that there be an increase in import volume in order to find that the
dumped imports caused material injury to the domestic industry.  Moreover, the United States points
out that the AD Agreement recognizes that in some investigations, the causal effects of the dumpedWT/DS141/RW
Page 60
imports may be manifested through price effects, notwithstanding small or stable volumes of imports,
referring in this regard to Article 3.2 of the AD Agreement.  The United States also asserts that in
certain market conditions even declining import volumes can produce injurious effects.
(c) Evaluation by the Panel
6.226  We have concluded above, in paragraph 6.53, that India's claim with respect to the EC's
analysis of "other factors" causing injury to the domestic industry is not properly before us, having
been disposed of by the Panel and not appealed in the original dispute.
6.227  Nonetheless, we consider it appropriate, in order to ensure prompt resolution of this
Article 21.5 dispute, to make, in the alternative, find ings on India's claim in this regard.  In this way,
should our findings be subject to appellate review, and should the Appellate Body deem it necessary
to complete the analysis by making findings regarding this claim for the purpose of effectively settling
this dispute, it could do so notwithstanding our decision that this claim is not properly before us.188
We emphasize that no recommendation or ruling by th e DSB would be necessary with respect to our
alternative findings if our preliminary ruling, that  India's claim concerning "other factors" causing
injury is not properly before us, is adopted.
6.228  One aspect of India's claim under Article 3.5 is not  disposed of by our preliminary ruling, as it
relates to the determination of causal link per se , and not the consideration of other factors causing
injury.  We therefore address that aspect before setting forth our alternative findings.
6.229  India maintains that the EC has not adequately "proven" that the increase in market share of
dumped imports from India was the cause of the decline in the EC industry's profit rate from 3.6 to
1.6 per cent over a period of five years.  India asserts that the market share of dumped Indian imports
increased 1.9 per cent over a five year period, which period coincided with an increase in the marketshare of the Community industry.  We note first that the market share figures referred to by India are
not those on which the EC based its decision.  The EC made its determination on the basis of a
                                                     
188 We find support for this manner of proceeding in Panel Report, Canada – Measures Affecting the
Importation of Milk and the Exportation of Dairy Products ("Canada – Dairy "), WT/DS103/R, WT/DS113/R,
adopted 27 October 1999, as modified by the Appellate Body Report, WT/DS103/AB/R and Corr.1,WT/DS113/AB/R and Corr.1, DSR 1999:VI, 2097, at para. 7.119.  In that dispute, the Panel made alternativefindings on Article 10.1 of the Agreement on Agriculture, despite having made findings under Article 9.1 of that
Agreement which, if adopted, would exclude the possibility of concurrent findings under the mutually exclusive
provisions of Articles 9.1 and 10.1.  The Panel made the alternative findings in order to i) enable the AppellateBody and the DSB to make findings on Article 10.1 in the event that it considers it necessary and (ii) avoid acontinuation of the dispute.  The Panel specifically noted that it included the examination of Article 10.1 as oneon which no recommendation or ruling by the DSB would be necessary if its findings under Article 9.1 were
adopted.  We note, as did the Canada - Dairy  Panel, the Appellate Body's statements in Australia – Measures
Affecting Importation of Salmon  (WT/DS18/AB/R, adopted 6 November 1998), where the Appellate Body, after
having reversed certain Panel findings, was "unable to come to a conclusion on [the claim under Article 5.6 ofthe SPS Agreement] due to the insufficiency of the factual findings of the Panel and of facts that are undisputedbetween the parties" (para. 213; see also para. 241), and in Canada – Certain Measures Concerning Periodicals
(WT/DS31/AB/R, adopted 30 July 1997, p. 22, where the Appellate Body stated:  "We note that, due to the
absence of adequate analysis in the Panel Report in this  respect, it is not possible to  proceed to a determination
of like products [under Article III:2, first sentence, of GATT 1994]").  See also  Panel Report, India – Patent
Protection for Pharmaceutical and Agricultural Chemical Products  (WT/DS50/R, adopted 16 January 1998)
where the Panel decided to continue its examination under Article 63 of the TRIPS Agreement after it had founda violation under Article 70.8 of that Agreement (para. 7.44:  "Although the United States formulates it [theArticle 63 claim] as an alternative claim in the event that the Panel were to find that India has a valid mailbox
system in place, and we have, as stated above, found that  the current mailbox system in India is at variance with
Article 70.8(a) of the TRIPS Agreement, we believe it necessary to make our findings clear on the issue oftransparency in order to avoid a legal vacuum in the event that, upon appeal, the Appellate Body were to reverseour findings on Article 70.8").WT/DS141/RW
Page 61
cumulative assessment of dumped imports from all three countries investigated, India, Egypt, and
Pakistan, and considered as "dumped" all imports attributable to all producers for which the EC did
not make a negative determination of dumping .  We have found these aspects of the EC's
determination not inconsistent with the AD Agreement.  Thus, the EC was entitled to rely on the fact
that dumped imports increased by 30 percent during the period considered, and that the market shareof dumped imports increased by 40 percent, representing more than 21 percent of the EC market
during the IP.189
6.230  Moreover, in this case, the EC did not ground its finding of causation in an increase in market
share held by dumped imports.  The EC found that dumped imports suppressed prices, thereby
causing material injury to the EC industry.  We note that India’s argument suggests that if the level of,
or the increase in, the market share of dumped imports is relatively small, those imports cannot be
considered a cause of injury.  That suggestion is incorrect.  We find nothing in the text of Article 3 tosupport such a suggestion, and indeed, India has not specifically argued otherwise.  We note that
Article 3.2 of the AD Agreement requires the investigating authorities to consider not only the volume
of imports, but also the effect of the dumped imports on prices.  Clearly, the existence of price
depression and price suppression may support a finding of injury, yet neither of these would
necessarily require an increase in dumped import volume or market share at the same time.  Indeed,there could be price depression or price suppression in a situation where there is no increase, or even
in some circumstances a decrease, in the volume or market share of dumped imports.
6.231  Article 3.5 provides that "It must be demonstrated that the dumped imports are, through the
effects of dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement.  The demonstration of a causal relationship between the dumped imports and the injury
to the domestic industry shall be based on an examination of all relevant evidence before the
authorities" (emphasis added).  We consider that there is no obligation under the AD Agreement for
the investigating authority to determine that dumped imports are the sole cause of injury.  We note in
this regard the Panel Report in US – Hot-Rolled Steel .  In that case, the Panel found that there is no
obligation in Article 3.5 of the AD Agreement that an investigating authority "demonstrate thatdumped imports alone have caused material injury by deducting the injury caused by other factors
from the overall injury found to exist, in order to determine whether the remaining injury rises to the
level of material injury".
190,191
6.232  In this respect, we note that the EC did not, in our view, determine that the increase in market
share was the cause of the EC industry's declining and inadequate profits.  Indeed, it is clear that the
EC considered the principle cause of the poor profit picture to be price suppression, which resulted
from the increased volume of dumped imports from all three countries investigated entering the ECmarket at prices which undercut the domestic industry's prices by significant margins.  Those dumped
imports prevented price increases which otherwise would have occurred, during a period when the
industry's costs increased.
                                                     
189 Regulation 1644/2001, at para. 22.
190 Panel Report US – Hot-Rolled Steel , at para. 7.260.  This aspect of the Panel's decision was not
raised on appeal.
191 Interpreting similar language in Article 4.2 (b) of the Agreement on Safeguards , which provides that
a determination of causal link shall not be made unless "investigation demonstrates, on the basis of objective
evidence, the existence of the causal link between increased imports of the product concerned and serious injuryor threat thereof", the Appellate Body stated "the la nguage in the first sentence of Article 4.2 (b) [of the
Agreement on Safeguards ] does not suggest that increased imports be the sole cause of injury, or that “other
factors” causing injury must be excluded from the determination of serious injury.  To the contrary, the languageof Article 4.2 (b), as a whole, suggests that “causal link” between increased imports and serious injury may
exist, even though other factors are also contributing, “at the same time”, to the situation of the domestic
industry".  Appellate Body Report, United States – Definitive Safeguard Measure on Imports of Wheat Gluten
from the European Communities (“US – Wheat Gluten ”), WT/DS166/AB/R, adopted 19 January 2001, at para.
67.  See also, Appellate Body report in US – Lamb at para. 166.WT/DS141/RW
Page 62
6.233  We consider that India has failed to demonstrate on this basis that the EC's causation
determination is one that an unbiased and objective investigating authority could not reach on the
basis of the facts before the EC.   We therefore conclude that the EC's finding of causal link is not
inconsistent with the requirements of Article 3.5 of the AD Agreement.
(d) Additional finding in the alternative
6.234  We come then to our alternative findings with respect to India's claim that the EC failed to
separate and distinguish the different injurious effects caused by other factors from the effects of the
dumped imports.  Turning first, as always, to the text, we note that Article 3.5 of the AD Agreement
provides
"It must be demonstrated that the dumped imports are, through the effects of
dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement.  The demonstration of a causal relationship between the dumped importsand the injury to the domestic industry shall be based on an examination of all
relevant evidence before the authorities.  The authorities shall also examine any
known factors other than the dumped imports which at the same time are
injuring the domestic industry, and the injuries caused by these other factors
must not be attributed to the dumped imports.  Factors which may be relevant in
this respect include,  inter alia , the volume and prices of imports not sold at dumping
prices, contraction in demand or changes in the patterns of consumption, trade
restrictive practices of and competition between the foreign and domestic producers,
developments in technology and the export performance and productivity of the
domestic industry".  (emphasis added).
6.235  With respect to the non-attribution requirement of Article 3.5 of the AD Agreement the
Appellate Body in US - Hot Rolled Steel  noted that:
"222. This provision requires investigating authorities, as part of their causation
analysis, first, to examine  all  "known factors", "other than dumped imports", which
are causing injury to the domestic industry "at the same time" as dumped imports.Second, investigating authorities must ensure that injuries which are caused to the
domestic industry by known factors, other than dumped imports, are not " attributed  
to the dumped imports." (emphasis in original)
223. The non-attribution language in Article 3.5 of the  Anti-Dumping Agreement  
applies solely in situations where dumped imports and other known factors are
causing injury to the domestic industry at the same time .  In order that investigating
authorities, applying Article 3.5, are able to ensure that the injurious effects of theother known factors are not "attributed" to dumped imports, they must appropriately
assess the injurious effects of those other factors.  Logically, such an assessment must
involve separating and distinguishing the injurious effects of the other factors from
the injurious effects of the dumped imports.  If the injurious effects of the dumped
imports are not appropriately separated and distinguished from the injurious effects ofthe other factors, the authorities will be unable to conclude that the injury they ascribe
to dumped imports is actually caused by those imports, rather than by the other
factors.  Thus, in the absence of such separation and distinction of the different
injurious effects, the investigating authorities would have no rational basis to
conclude that the dumped imports are indeed causing the injury which, under the Anti-Dumping Agreement , justifies the imposition of anti-dumping duties.
224. We emphasize that the particular methods and approaches by which WTO
Members choose to carry out the process of separating and distinguishing theWT/DS141/RW
Page 63
injurious effects of dumped imports from the injurious effects of the other known
causal factors are not prescribed by the  Anti-Dumping Agreement .  What the
Agreement requires is simply that the obligations in Article 3.5 be respected when a
determination of injury is made.
228. … If the injurious effects of the dumped imports and the other known factors
remain lumped together and indistinguishable, there is simply no means of knowing
whether injury ascribed to dumped imports was, in reality, caused by other factors.
Article 3.5, therefore, requires investigating authorities to undertake the process of
assessing appropriately, and separating and distinguishing, the injurious effects of
dumped imports from those of other known causal factors".192
6.236  India asserts that the statement of the EC in th e redetermination that injury was "basically the
result of prices which had not been able to reflect the increases in the costs of raw cotton or to keeppace with inflation in prices of consumer goods" indicates that injury was caused by other factors than
dumped imports, viz.  the increase in costs of raw cotton, and/or inflation.  Thus, India maintains that
the EC failed to ensure that the injurious effects of the other known factors were not "attributed" to
dumped imports, and failed to separate and distinguish the injury caused by these factors from the
injury caused by dumped imports.  India also asserts that "further" factors are only curtly discussed,and are also not separated but are merely lumped together and remain indistinguishable from alleged
injury caused by dumped imports.  In this respect, I ndia points to the statement in the redetermination
that "the analysis of the effects of other factors than dumped imports on the state of the Community
industry has likewise confirmed the … direct causal link".
193  In India's view, in the absence of
separation and distinction of the different injurious effects, the EC would have no rational basis toconclude that the dumped imports were causing injury.  Accordingly, India considers that the EC
acted contrary to Article 3.5 when it concluded, without more, that the alleged injury was caused by
the dumped imports.
6.237  As we have noted above in paragraph 6.230, Article 3.5 provides that "It must be
demonstrated that the dumped imports are, through the effects of dumping, as set forth inparagraphs 2 and 4, causing injury within the meaning of this Agreement.  The demonstration of a
causal relationship between the dumped imports and the injury to the domestic industry shall be
based on an examination of all relevant evidence before the authorities.  The authorities shall also
examine any known factors other than the dumped  imports which at the same time are injuring
the domestic industry, and the injuries caused by these other factors must not be attributed to
the dumped imports " (emphasis added).
6.238  India argues that paragraph 50 of the redetermination contains a "declaration" that injury was
actually caused by another factor, when it states that the declining and inadequate profitability of the
EC industry is "basically the result of prices which had not been able to reflect the increases in the
costs of raw cotton or to keep pace with inflation in prices of consumer goods".  We note that this
paragraph is in the part of the redetermination entitled "Conclusions on injury", in which the EC
described the situation of the domestic industry.  In  our view, India takes this passage out of context
in asserting that it constitutes a "recognition" by the EC that these factors were "other factors" causing
injury.  We consider that this passage does not address causation at all.
6.239  India maintains that the effect of increases in  the cost of raw cotton must be considered an
independent factor causing injury, whose effects must be "separated and distinguished" from the
effects of the dumped imports.  The EC considered that "the extent of [injury due to increases in rawmaterial prices] depends on the ability of the producer to pass on some or all of the increased cost.  In
this case, it was reasonable to asses that the dumped imports were the main reason why such pass-
                                                     
192 Appellate Body Report, US – Hot-Rolled Steel , at paras. 222
193 Regulation 1644/2001, at para. 69.WT/DS141/RW
Page 64
through did not occur."194   India does not now argue, and did not argue before the investigating
authority, that EC producers should have adjusted to  cost increases in an effort to maintain profit
levels in some other fashion than by increasing prices.  Nor did India assert before the investigating
authority, or argue before us now, that any factor other than dumped imports prevented EC producers
from increasing prices in light of the increased costs.   The EC considered that increased costs of raw
cotton would under normal competitive conditions, have resulted in an increase in the price charged
by EC bed linen producers.  However, the EC concluded that the presence of low priced dumped
imports in the EC market, which undersold the EC product by significant margins, prevented EC
producers from passing along the cost increases.  Th is is a classic example of a cost-price squeeze and
price suppression – that is, the effect of imports preventing price increases which otherwise would
have occurred.  In the circumstances of this case, we cannot conclude that India has demonstrated that
the conclusion reached by the EC, that increased raw material costs alone  were not a factor causing
injury independent of the effect of dumped imports, could not have been reached by an objective and
unbiased investigating authority.
6.240  With respect to inflation, the EC observed that the prices of the domestic industry did not
keep pace with inflation in consumer prices, but did not identify this fact as a cause of injury.  Rather,
it was cited as an indication of price suppression and inadequate profitability.195  Again, we simply do
not view the reference to the failure of bed linen prices to increase commensurate with inflation to be
a reference to a "cause" of injury.  In our view, it rather reflects a symptom of injury, as, all other
things being equal, one might expect that bed linen prices would increase equivalent to consumer
inflation – the fact that they did not might be viewed as indicating injury.
6.241  India considers that the EC's determination on causation contains some "perplexing" factual
determinations.  Although India fails to explain how, in its view, these alleged factual errors
undermine the conclusions reached by the EC, we have nonetheless considered the arguments in this
regard.  India argues that the redetermination is so mehow internally inconsistent, in that in paragraph
53, it states that the EC does not consider relevant the references to producers not forming part of the
Community industry; yet in paragraph 61 the EC incl udes such a reference.  We do not consider that
India has demonstrated a legal or logical basis for concluding that this fact demonstrates that the EC
failed to adequately consider the injurious effect of "other factors".  It appears that India's criticism is
based upon a statement in the original Report,
"information concerning companies that are not within the domestic industry is
irrelevant to the evaluation of the ‘relevant economic factors and indices having a
bearing on the state of the industry” required under Article 3.4".196
We understand the original panel to have found that information concerning producers that are not
within the domestic industry is irrelevant for the purpose of assessing the question of injury.
However, paragraph 61 of Regulation 1644/2001 addresses the question of causation, and not the state
of the EC industry producing bed linen.  We understand paragraph 61 to state that the domestic
industry was not affected to any significant degree by the decrease in consumption, which affected
rather producers not considered part of the domestic industry.  In this sense, we do not consider thatthere is any basis to conclude that the EC was precluded from drawing  the conclusion set forth in
paragraph 61.
6.242  With respect to India's assertions concerning the alleged "errors" in the calculation of the
volume of dumped imports, as we have found above, the EC was entitled to consider imports fromPakistan and Egypt as dumped in its redetermination.  India also asserts that the EC's statements, in
                                                     
194 Regulation1069/97 at para. 103.  The EC confirmed this finding in Regulation 1644/2001, at para.
60.
195 Regulation 1644/2001, at para. 44, Regulation 1069/97 at para. 86.
196 Original Panel Report, EC – Bed Linen , at para. 6.182.WT/DS141/RW
Page 65
paragraphs 55 and 57 of the redetermination, that (1) the weighted average sales price was "by and
large stable" and "average sales prices did not increase", cannot be correct, since sales prices
increased by 3.1 percent, while a decrease in profits of 2 percent was described as "declining".197
6.243  In this regard, we note that India’s comparison is misleading.  India compares a decrease in
percentage points , for profits, to an increase in percentage , for sales.  These two are simply not
comparable figures.  The EC points out that, in percentage terms, profits fell by 56 percent, which
certainly merits the description "declining".  Nor do we consider it necessarily inaccurate for the EC
to have described prices, which increased by 3.1 percent over five years, as “by and large stable".
With respect to the statement that "average sale s prices did not increase", we note that the EC
explained that this referred to the average price per kilogram of the specified reference products,
which fell between 1993 and the IP,198 as opposed to the average price per kilogram for all bed linen
products, which increased over the same period.199  Thus, we do not find that there is any
inconsistency in the EC's statements.  In any event, as discussed above, the EC's conclusion on
causation was based on its findings regarding price suppression, and not on a decrease in sales.200
6.244  With respect to India's arguments regarding Regulation 696/2002, as we have found that that
regulation is not a measure taken to comply, we make no findings concerning it.  In any event, India
has made no specific claims of violation of the AD Agreement with respect to that regulation.
6.245  Thus, we consider that the "other causes" of injury allegedly not adequately addressed by the
EC were not, in fact, "causes" of injury at all.  We consider that the EC's explanations in its
determinations  of how the dumped imports caused injury through price suppression are reasonable,
and are consistent with the facts that were before the EC at the time of its original determination, and
its redetermination.  Given the standard of review under which we operate, we could not in any eventsubstitute our judgement for that of the EC authorities in this regard, even if we ourselves had a
different view of the facts.
6.246  We therefore conclude, in the alternative, that the EC's measure is not inconsistent with
Article 3.5 for failure to properly ensure that injuries caused by other factors are not attributed to
dumped imports.
6. Claim 7: The EC acted inconsistently with its obligations under Article 15 of the
AD Agreement
(a) Factual background
6.247  Following adoption of the Panel and Appellate Body Reports, and having regard to
Regulation 1515/2001,
 201  the EC reassessed the anti-dumping duties imposed on imports of bed linen
from India, Egypt and Pakistan, in light of the Panel and Appellate Body decisions.  On 7 August
2001, the Council of the European Communities adopted Regulation 1644/2001.  Regulation1644/2001 amended the original definitive anti-dumping measure on bed linen from India.  In the
redetermination, the EC calculated and establis hed different (lower) dumping margins for imports
from India, but did not address the dumping margins for the other countries originally investigated
(Egypt and Pakistan).  The EC concluded that dumpe d imports from India, Egypt and Pakistan caused
material injury to the EC industry.
                                                     
197 Regulation 1644/2001, at para. 50.
198 Regulation 1069/97, at para. 86.
199 EC's answer to the Panel's question 22 at paras. 30 - 31, Annex E-2.  As we have noted, the EC
attributed this increase to the change in the product mix sold to higher value niche products.
200 Cf.  Regulation 1644/2001, at paras. 50 and 51.
201 Regulation 1515/2001 .WT/DS141/RW
Page 66
6.248  Notwithstanding this conclusion, the Council did not "consider it appropriate to continue to
collect duties for exports from India".202  Therefore, in the same Regulation, the EC suspended the
collection of duties at the rates established in the redetermination, and invited all interested parties to
submit comments and/or a review request.  The Regulation further provided that, if no review were
initiated within six months of entry into force of the Regulation, the anti-dumping measure would
automatically expire with regard to imports originatin g in India, but if such review were initiated, the
suspension should continue during the review investigation.203  On 19 December 2001, Eurocoton, the
trade association acting on behalf of the domestic industry, filed a request with the EC authorities for
a review of the redetermination.204 On 13 February 2002 the EC initiated a "partial interim review" of
the measure with respect to Indian imports based on Eurocoton's request.205  That review is still on-
going, and consequently, no anti-dumping duties have been collected pursuant to the redetermination.
(b) Arguments of the parties
6.249  India argues that the EC failed to explore the possibilities of constructive remedies prior to the
application of anti-dumping measures, as required by Article 15.  India acknowledges that the EC
suspended the application of anti-dumping measures, but argues that a decision not to apply an anti-
dumping duty is not a remedy of any kind, citing the original Panel report, and therefore is inadequate
to fulfill the requirement of Article 15.
6.250  The EC notes that the obligation to explore constructive remedies set out in Article 15 must
be fulfilled before “applying” anti-dumping duties.  The EC argues that it has suspended the
application of anti-dumping duties on imports of bed linen from India, and that therefore it has no
obligation as yet under Article 15.  If and when the EC authorities decide to apply anti-dumping
duties as a result of the ongoing review, the EC asserts they will, as required, explore the possibilitiesof constructive remedies, and more specifically the possibility of a price undertaking with the Indian
exporters.  In the meantime, the EC maintains that India’s claim is premature and should be rejected
by the Panel.
6.251  Furthermore, assuming arguendo  that the EC authorities had been required to explore
possibilities of constructive remedies, notwithstandin g their decision to suspend the application of the
duties, the EC submits in the alternative that such suspension would qualify as a “constructive
remedy” for the purposes of Article 15.
(c) Evaluation by the Panel
6.252  Article 15 provides:
“It is recognized that special regard must be given by developed country Members to
the special situation of developing country Members when considering the
application of anti-dumping measures under this Agreement.  Possibilities ofconstructive remedies provided for by this Agreement shall be explored before
applying anti-dumping duties where they would affect the essential interests of
developing country Members".
6.253  We turn our attention to the text of the second sentence of Article 15, which is the basis of
India's claim.  This provision was specifically addressed by the Panel in the original dispute, whichconcluded that Article 15 required a Member to actively consider, with an open mind, the possibility
                                                     
202 Regulation 1644/2001 , at para. 72 and Article 2.
203 Id.,  at paras. 75 and 78 and Article 2.
204 Exhibit-India-RW-21.
205 Notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of
cotton-type bed linen originating in India, published in Official Journal of the European Communities of 13February 2002, C-series, No 39.  Exhibit-India-RW-23.WT/DS141/RW
Page 67
of applying a constructive remedy provided for under the AD Agreement, before it applied a final
anti-dumping measure that would affect the essential interests of a developing country.206
6.254  The issue before us is whether the EC was obligated to explore possibilities of constructive
remedies in the circumstances of this case, in which, at the same time as it adopted the regulation
imposing anti-dumping duties on imports of bed linen from India, the EC suspended the application ofthose anti-dumping duties, has not collected any anti-dumping duties on imports of bed linen from
India, and has represented that it will explore possibilities of constructive remedies, in particular price
undertakings, before anti-dumping duties are applied.
207  India argues that the suspension is irrelevant
in this case, because in its view, "the suspension of an imposition of duties can in itself also qualify as
a form of application".208  Thus, in India's view, the EC has "applied" an anti-dumping duty without
first exploring the possibilities of constructive remedies.  We must therefore consider what it means to
"apply" anti-dumping duties as used in the phrase "applying anti-dumping duties" in Article 15.
6.255  The verb "apply" is defined, inter alia , as "be operative".209  Thus, it would seem that whether
anti-dumping duties are "applied" in a particular case might be understood to refer to whether they
have legal effect, that is, whether they are operative as a matter of law.  That is, one might consider an
anti-dumping duty to be "applied" when it is legally in effect with respect to imports of the product in
question.  We find contextual support for this understanding in the use of the term "apply" inArticle 10.1 of the AD Agreement.   That Article provides:
"Provisional measures and anti-dumping duties shall only be applied to products which
enter for consumption after the time when the decision taken under paragraph 1 of
Article 7 and paragraph 1 of Article 9, respec tively, enters into fo rce, subject to the
exceptions set out in this Article".
The decisions referred to in Article 10.1 are the decisions, respectively, to "apply" provisional
measures and to "impose" an anti-dumping duty.  This suggests to us a distinction between the
decision authorizing  or justifying  the application of anti-dumping duties, and the application of anti-
dumping duties itself.
6.256  India argues that the anti-dumping duties apply in this case, stating "The measures are
dormant, but they apply.  If they would not apply then there would be no need to suspend their
imposition.  This suspension is conditional upon the partial review not being concluded.  There is
therefore a very clear timing condition within which imports have to take place – a condition which
moreover will soon run out and after which no more imports can take place".
210  India relies, in
support of its argument, on the statement of the Appellate Body in US – Line Pipe  that
"duties are "applied against a product " when a Member imposes conditions under
which that product can enter that Member's market – including when that Member
establishes, as the United States did here, a duty to be imposed on over-quota imports.
Thus, in our view, duties are "applied" irrespective of whether they result in making
                                                     
206 See Original Panel Report, EC - Bed Linen , at para. 6.233.
207 "[W]ere the EC to end the suspension in place, it would explore first the possibilities of constructive
remedies".  EC's answer to India's question 10, at para. 14, Annex E-3.
208 India's SWS at para. 226.  See also Comments of India on Answers of the European Communities to
the Questions from India, Comment on answer to India's question 4, Annex E-8, where concerning the
"suspension of anti-dumping duties" India states that "Undoubtedly, the latter is a form of application of anti-
dumping measures".
209 New Shorter Oxford English Dictionary, Clarendon Press, 1993.
210 India's SWS at para. 228.WT/DS141/RW
Page 68
imports more expensive, in discouraging imports because they become more
expensive, or in preventing imports altogether".211
6.257  India’s reliance upon the report of the Appellate Body in US  – Line Pipe is unavailing.  The
facts in the US-Line Pipe  dispute and this case are so different as to render any comparison unfruitful.
In the US-Line Pipe  case, the United States argued that the safeguard measure at issue did not “apply”
to imports from developing countries accounting for less than three per cent of imports because
imports below 9,000 tons were exempted and the US authorities “expected” that any country
exceeding that limit would, in practice, account for more than three per cent of total imports.  Thus,
the US contention that the safeguard measure did not “apply” to imports from developing countries
with a small share of imports was speculative, based on the expectation that imports from those
countries would not reach the level that triggered the application of the safeguard measure.  The
Appellate Body rejected the U.S.  argument.   In fact, however, it is clear that the measure was legallyin force, and the duty applied to all imports from all sources that exceeded the 9,000 ton limit.
6.258  In this case, however, the measure is not in force as a matter of law – its application is
suspended, and thus the EC has, at present, imposed no "conditions" on the entry of bed linen from
India into the EC market.  The Council of the European Union has adopted a regulation which
authorizes an anti-dumping duty, but at the same time states clearly that "the application of the anti-dumping duty shall remain suspended" until the cu rrently pending review proceeding is completed.
6.259  This establishes explicitly, in our view, that the anti-dumping duty on imports of bed linen
from India authorized by the Regulation  does not and will not "apply" to such imports while the
currently pending review is on-going.  It seems clear to us that the EC has taken a decision
authorizing the application of anti-dumping duties on imports of bed linen from India, but that as aresult of the suspension of the application, the anti- dumping duties have no legal effect with respect to
imports of bed linen from India pending completion of the on-going review.  The application of the
measure is suspended as a matter of EC law, and imports of bed linen may enter the EC free of any
anti-dumping duties, and no circumstance triggered by changes in the level of imports or their prices
will change that fact.  The EC has stated in this proceeding that "This legal situation will remainunchanged as long as the Council of the European Union does not adopt another regulation repealing
formally the decision to suspend the application of the duties".
212  We accept this statement as an
accurate representation of EC law in this regard.213  Presumably, at the conclusion of the review, the
anti-dumping duty on imports of bed linen from I ndia may be confirmed, terminated, or modified.
The EC has represented in this proceeding, and we accept that representation, that before applying an
anti-dumping duty on imports of bed linen from India, (assuming such a duty is confirmed or
modified in the review), the EC authorities will explore the possibilities of constructive remedies.
6.260  In these circumstances, we conclude that the EC did not violate Article 15 by failing to
explore possibilities of constructive remedies before applying anti-dumping duties, because it has not,
as yet, applied such duties in this case.
6.261  Having determined that the EC has not violated Article 15, because it is still in the period
"before" applying anti-dumping duties, we do not address the EC's alternative argument that,assuming arguendo  that the EC was required to explore possibilities of constructive remedies prior to
the suspension, such suspension would qualify as a “constructive remedy” for the purposes of
Article 15.
                                                     
211 India's SWS at para. 227, quoting Appellate Body Report, United States – Definitive Safeguard
Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea ("US – Line Pipe "),
WT/DS202/AB/R, adopted 8 March 2002, at para. 129
212 EC Oral Statement at para. 118, Annex D-3.
213 We note that questions of municipal law are treated as matters of fact.WT/DS141/RW
Page 69
7. Claim 8: The EC acted inconsistently with its obligations under Article 21.2 of the DSU
(a) Arguments of the parties
6.262  In India's view, Article 21.2 of the DSU sets out a clear obligation that must be fulfilled once
the two criteria in that provision, that the matter affect the interests of a developing country, and have
been subject to dispute settlement, are satisfied.  India maintains that it is indisputable that the ECanti-dumping measure affects India's interests, and has been subject to dispute settlement.  India
asserts that “the EC did not pay any particular attention to the Article.  Nothing particular happened,
except the suspension of measures, which, however, as already indicated by the original panel, is not a
remedy of any type, constructive or otherwise".  Moreover, India notes, the EC is yet again
investigating dumped imports of bed linen from India.
6.263  The EC maintains that Article 21.2 of the DSU is not a mandatory provision, and therefore
imposes no binding obligations upon developed country Members, such as the EC.  In any event, theEC asserts that its authorities did pay “particular attention” to the interests of India.  
(b) Arguments of third parties
6.264  The United States concurs with the EC’s conclusion that Article 21.2 is not mandatory.  The
United States emphasizes that, as used in the covered agreements, “should” is a hortatory term, and
not a mandatory term.  Moreover, if the use of “should” were to create an obligation, it would havethe same meaning as “shall”.   In the US view, this would deprive the decision by the drafters of the
covered agreements to use one term rather than the other all significance, thus violating the principle
that “words must not be read into the Agreement that are not there".
(c) Evaluation by the Panel
6.265  Article 21.2 of the DSU provides that:
"Particular attention should be paid to matters affecting the interests of developing
country Members with respect to measures which have been subject to dispute
settlement".
6.266  India asserts that this provision is mandatory, arguing that the use of the word "should"
establishes that fact.  However, India has not indicated what specific obligation it considers isimposed by Article 21.2 but which the EC has failed to perform.  Rather, India asserts, the provision
is clear that " Particular attention should  be paid, yet the EC did entirely nothing".
214  India suggests
that the concept of "particular attention" can encompass a decision not to act, and asserts that a
published decision not to initiate (presumably the review proceeding) could have qualified.  India
argues that even if parameters are not defined, that does not mean that nothing should be done.215  In
response to a question from the Panel on this issue, India stated that the specific obligation imposed
by Article 21.2 should be decided on a case-by-case basis, and that the EC had violated Article 21.2by initiating a partial interim review of the anti-dumping measure against India, and by failing to
comply with the original Panel finding under Article 15 of the AD Agreement.
216
6.267  Turning first to the text of Article 21.2, we find nothing in that provision which explicitly
requires a Member to take any particular action in any case.  Nor has India pointed to any contextual
element which would suggest that the hortatory word "should" must nonetheless be understood, inArticle 21.2 of the DSU, to have the mandatory meaning of "shall".  India merely argues that in
                                                     
214 India's SWS at para. 248.
215 India's SWS at para. 250.
216 India's answer to the Panel's question 31, Annex E-1.WT/DS141/RW
Page 70
another case, the Appellate Body found that the word "should" had the meaning of "shall", and
asserts, without more, that the same result is appropriate in this case.  We disagree.  The case India
relies upon, Canada –Aircraft , involved a very different provision of a different agreement,
concerning the duty of Members to respond promptly and fully to requests for information from
Panels.  Moreover, even in that case, the Appellate Body noted the dictionary definition of "should""ordinarily impl[ies] duty or obligation; although usually no more than an obligation of propriety or
expediency, or moral obligation, thereby distinguishing it from 'ought'".
217  In addition, the fact that
there is no specific action set out in Article 21.2 makes it unlikely that Members intended the
provision to be mandatory – the lack of specificity in this regard implies rather a hortatory use of
should.
6.268  In light of this, we cannot agree with India's conclusion that Article 21.2 imposes some
obligation to act.  Moreover, we cannot accept I ndia's argument that what action will satisfy the
obligation can only be determined based on a case-by-case basis.  As was recently stated by another
Panel considering similar text in Article 15 of the AD Agreement, "Members cannot be expected to
comply with an obligation whose parameters are entirely undefined".218  The Panel in that case was
considering the first sentence of Article 15 of the AD Agreement, which provides "It is recognized
that special regard must be given by developed country Members to the special situation ofdeveloping country Members when considering the application of anti-dumping measures under this
Agreement".  We note that the Panel made its decision in that case notwithstanding the use of the
word "must", which more clearly suggests an obligation than the word "should" in Article 21.2.  In
our view, Article 21.2 imposes no specific or general obligation on Members to undertake any
particular action.
6.269  That said, we do not consider that Article 21.2 is devoid of meaning.  It clearly reflects the
concern of Members with ensuring that appropriate attention is given the interests of developing
Members, and thus states an important general policy.  As was noted by the Arbitrator in Indonesia –
Autos ,
 219 "Although the language of this provision [Article 21.2] is rather general and does not
provide a great deal of guidance, it is a provision that forms part of the context for Article 21.3".220
The Arbitrator went on to take account of the fact that Indonesia was not only a developing country,
but in a dire economic and financial situation, in deciding to award an additional period of time for
Indonesia to implement the DSB's recommendation in that dispute.  In our view, the Arbitrator's
decision reflected one appropriate consideration of the instruction in Article 21.2.  However, that is
different from a conclusion that Article 21.2 establishes a binding obligation on Members to do, or not
do, particular things in the context of their effort s to comply with a DSB ruling in a dispute that
affects the interests of a developing country.  There may be any number of ways in which the policyset forth in Article 21.2 might be effectuated.  However, nothing in that provision obliges any
Member actually to effectuate that general policy, or  to do so in any particular way in any particular
case.
6.270  Thus, we cannot accept India's assertion that the EC's initiation of a partial interim review of
the anti-dumping measures regarding imports of bed linen from India violates Article 21.2.
221  Th e
                                                     
217 Appellate Body Report, Canada – Aircraft , at para. 187, note 120, citing, inter alia , Black's Law
Dictionary , (West Publishing Co., 1990), p. 1379.
218 Panel Report, United States – Anti-Dumping and Countervailing Measures on Steel Plate from India
("US – Steel Plate "), WT/DS206/R and Corr.1, adopted 29 July 2002, at para. 7.110.
219 Award of the Arbitrator, Indonesia – Certain Measures Affecting the Automobile Industry –
Arbitration under Article 21.3(c) of the DSU  ("Indonesia – Autos "), WT/DS54/15, WT/DS55/14, WT/DS59/13,
WT/DS64/12, 7 December 1998, DSR 1998:IX, 4029.
220 Id.  at para. 24.
221 India suggests that a published decision not to initiate the pending review could have qualified as
"particular attention" in this case.  India's SWS at para. 249.  This, and the initiation of the review itself, are theonly specific acts referred to by India in the context of its argument regarding the interpretation and applicationof Article 21.2 of the DSU.WT/DS141/RW
Page 71
review of anti-dumping measures is specifically provided for in Article 11 of the AD Agreement.  As
there is no claim that the EC violated this provision in initiating a partial interim review, we must
assume it to be consistent with the requirements of the AD Agreement.  In light of this, we fail to see
how the legitimate initiation of a proceeding specifically provided for in the AD Agreement could be
considered to violate Article 21.2 of the DSU.  With respect to India's assertion that the failure of theEC to comply with the original Panel finding under Article 15 of the AD Agreement constitutes a
violation, there has been no finding that the EC fa iled to comply with the original Panel finding
regarding Article 15.  Nor have we concluded that the EC acted inconsistently with Article 15 in the
course of the redetermination proceeding.  Therefore, even assuming we had found Article 21.2 of the
DSU to impose some obligation on the EC in this cas e, there would be no basis to find a consequent
violation of Article 21.2 in this regard.
6.271   We consequently conclude that the European Communities did not act inconsistently with
Article 21.2 of the DSU.
VII. CONCLUSIONS AND RECOMMENDATION
7.1 In light of the findings above, we conclude that the EC's definitive anti-dumping measure on
imports of bed linen from India, EC Regulation 1644/2001, is not inconsistent with the
AD Agreement or the DSU.
7.2 We therefore consider that the EC has implemented the recommendation of the original
Panel, the Appellate Body, and the DSB to bring its measure into conformity with its obligations
under the AD Agreement.
7.3 In the light of our conclusions, we make no recommend ations under Article 19.1 of the DSU.