Article 17.6 Anti Dumping Agreement

11. In addition, Brazil argues that Article VI:2 of the 1994 GATT required the European Commission to establish dumping under Article 2.4.2, second sentence. Article VI:2 allows a WTO member to collect anti-dumping duties only «in order to compensate or prevent dumping.» To fulfil this basic requirement, he said, the European Commission was obliged to adopt a «reasonable assumption for the future» based on the data collected in the POI, in order to «anticipate the level of anti-dumping duty, which was absolutely necessary to avoid dumping in the future». 16 The European Commission was therefore obliged to choose the method most in accordance with Article 2.4.2, that is, the method prescribed in Article 2.4.2, the second sentence, and in particular a comparison between the average normal value applied (based on the data relating to the whole POI) and the prices of individual export transactions that took place following the devaluation in the POI. By not using this method and imposing tariffs despite the effects of the devaluation, Brazil acted in contradiction with Article VI:2 of the 1994 GATT and, therefore, Article 1 of the anti-dumping agreement. 39. The European Communities argues, referring to the report of the appeal body in the sheets this31, that there is nothing in Article 2.4.2 to indicate that an investigating authority can choose from among the export operations within the POI. Article 2.4.2, the second sentence, deals in particular, in the opinion of the European Communities, with «targeted dumping», i.e. dumping, which focuses on sales in certain regions, customers or periods. The European Communities therefore argues that this phrase does not allow an investigating authority to choose operations within the POI on the basis of a «reasonable assumption for the future». In addition, the investigating authorities are not required to apply a particular method in accordance with Article 2.4.2. On the contrary, the investigating authorities should, in the opinion of the European Communities, use in principle one of the two methods of the first sentence. They can only use the second sentence method if certain circumstances are mentioned, which was not the case at the anti-dumping investigation.

(iii) the basis on which dumping is alleged in the application; Brazil argues that the use of an IRO in a dumping investigation is to acquire a finite data set for a more recent historical period, which can be extrapolated in order to reach a «reasonable assumption» about the future. According to Brazil, the 42% depreciation of the Brazilian real constituted a fundamental and lasting change in the trading conditions of Brazilian exports, and the extent of the devaluation was greater than the dumping margin of 34.8%. Dumping was completely eliminated by devaluation and, if the data had been used after the devaluation, it would not be conceivable to «reasonably assume» that there would be dumping in the future. 42. The European Communities argues that there is a rational explanation for the fact that unrepresentative sales have been excluded from a normal value based on selling prices, while being integrated into a built normal value. Typically, a product`s dumping margin is calculated by establishing a weighted average of dumping margins for different versions of the similar product based on the volume and price of export sales. When domestic sales are low for a given version, there is a greater risk of atypical prices that affect the calculation, since the prices of these low volume sales are weighted according to the product`s export sales and not domestic sales.