2. Admissibility of Claims Regarding the Scope of the US Anti-Dumping Order

a) Objection of the United States

1.23 The following are the arguments of the United States in support of its preliminary objection:

1.24 The Panel must dismiss Korea's claim because the original anti-dumping investigation on DRAMs from Korea simply is not subject to the AD Agreement. Article 18.3 of the AD Agreement provides:

1.25 The application ("petition" in US terminology) for anti-dumping duties in the instant case was made on 22 April 1992, and resulted in a final determination by the DOC on 23 March 1993. As noted previously, the DOC issued an anti-dumping order (definitive duties) on 10 May 1993. Thus, the investigation began and finished well before 1 January 1995, the date on which the WTO Agreement entered into force for the United States. Therefore, determinations made by US authorities in the course of that investigation are not subject to the provisions of the AD Agreement and may not be reviewed by this Panel.

1.26 The Appellate Body reached a similar conclusion in the Desiccated Coconut case. That case dealt with the transition provision for countervailing duties contained in Article 32.3 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), a provision that the Appellate Body found to be "identical" to Article 18.3 of the AD Agreement.²⁰ The Appellate Body described Article 32.3 (and, thus, Article 18.3) as follows:

1.27 By challenging a determination made before the WTO Agreement came into effect, Korea is attempting to undo the sharp line drawn by the drafters and generate the very uncertainty, unpredictability, and unfairness that the drafters sought to avoid. The Panel should reject this attempt by dismissing Korea's claim regarding the determination made by the DOC and the ITC during the original anti-dumping investigation.

b) Response by Korea

1.28 In a letter to the Panel dated 17 June 1998, Korea made the following arguments in response to the US preliminary objection:

1.29 The Panel has the authority and is obliged to examine Korea's claims regarding the scope of the US anti-dumping order because: (i) not reviewing the claim would allow the United States to act inconsistently with the AD Agreement; and (ii) reviewing the claim would be consistent with the Vienna Convention on the Law of Treaties ("Vienna Convention").

1.30 When the WTO Agreement entered into force for the United States, the United States assumed the obligation not to act after that date in a manner inconsistent with the AD Agreement regardless of when the application for anti-dumping duties was made. The United States' continued imposition of the flawed scope decision made in the original investigation and each instance of the United States' bringing within the proceeding a higher density chip constitute action inconsistent with the AD Agreement. According to Article 18.3 of the AD Agreement, the provisions of the AD Agreement apply to reviews of existing measures made on or after the date of entry into force of the WTO Agreements. The Third Review in this proceeding was initiated on 8 May 1996, thus Korea's claim regarding the continuing flawed scope determination would be properly before the Panel.

1.31 The application of the AD Agreement in this case would not constitute retroactive application of the AD Agreement. According to Article 28 of the Vienna Convention:

1.32 The United States' continued imposition of the flawed scope decision has not "ceased to exist" and, thus, is subject to the AD Agreement. The United States' continued imposition of the flawed scope decision subject to the AD Agreement is an act occurring after 1 January 1995, as is each instance of the United States' bringing within the proceeding a higher density chip.

c) Rebuttal Arguments Made by the United States

1.33 At the second meeting of the Panel, the United States made the following additional arguments:

1.34 Korea's claims under Articles 2 and 3 are vulnerable to attack on all fronts. In its first written submission, Korea complained about two, and only two, decisions by the United States. First, Korea alleged that the Commission, in its original investigation, failed to include DRAMs with densities of less than one megabit in its injury analysis. Second, Korea alleged that the DOC, by issuing an anti-dumping order that covered DRAMs of one megabit or above, improperly included products that were not in existence at the time of the original investigation. According to Korea's first submission, the scope of the order "includes products such as 64 megabit DRAMs that were not even shipped to the United States until 1996 ..." These statements and others in Korea's first submission establish, without doubt, that Korea seeks to overturn determinations made before the WTO entered into force. Such challenges are prohibited by the express terms of Article 18.3 of the AD Agreement. If Korea or the respondents thought these determinations were wrong, they should have challenged them back in 1992-93. Now is too late and beyond the authority of this Panel to entertain.

1.35 In its rebuttal submission, Korea attempts to make it appear that it is challenging determinations made after 1 January 1995, when the WTO entered into force for the United States. However, Korea never identifies which determinations it is challenging or the basis for its challenge. Is it challenging the questionnaire that the DOC sent out in the third administrative review of the anti-dumping order on DRAMs from Korea? If it is, it has provided no evidence for its claim that respondents reported data for an allegedly new product, 64 megabit ("Meg") DRAM, or that the DOC calculated a dumping margin based on that data. Korea also seems to believe 64 Meg DRAMs were not "in existence" when the original investigation was conducted; were 16 Meg in existence when the original investigation was conducted? And how does Korea define "in existence" - must the DRAM be produced or shipped, and shipped on a commercial basis or is a trial basis good enough? These and other questions are never addressed by Korea and the Panel has no way of answering them largely because the evidence that was before the investigating authorities when they made their original determinations on scope and like product is not before this Panel.

1.36 In response to a question from the Panel,²² the United States made the following clarification concerning the application of Article 18.3 of the AD Agreement in the context of administrative reviews:

1.37 The United States considers reviews under section 751(a) of the Tariff Act of 1930, as amended (the "Act"), and section 353.22 of the regulations promulgated by the DOC (commonly referred to as "administrative reviews") to constitute "reviews of existing measures" within the meaning of Article 18.3 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "AD Agreement"). Administrative reviews contain elements of both an Article 9.3 assessment proceeding (because they determine, inter alia, final liability for duties) and an Article 11.2 review (because they alter the cash deposit rate and may lead to revocation). Accordingly, the relevance of Article 18.3.1 to this case is unclear.

1.38 In the instant case, the third administrative review of the anti-dumping duty order on DRAMs from Korea (for purposes of determining the amount of duties to be assessed on prior entries, the estimated cash deposit to be required on future entries, and whether the order should be revoked pursuant to section 353.25(a)) is subject to the AD Agreement by virtue of Article 18.3. Korea's scope challenge, however, is not directed at the administrative review but, rather, at the original investigation. Indeed, Korea is challenging not a new decision on scope in the administrative review, but an immutable aspect of the order which was adopted before the WTO Agreement took effect for the United States.

1.39 Finally, the United States wishes to emphasize that Article 18.3 is an entry-into-force provision. It is not intended to override the language of the other 17 articles by making all provisions that apply to investigations applicable to reviews. Thus, Article 18.3 does not preempt the AD Agreement's distinction between investigations and other administrative proceedings.

3. Admissibility of Claims under Article XVI.4 of the Marrakesh Agreement Establishing the World Trade Organization and Article 18.4 of the AD Agreement

a) Objection of the United States

1.40 The United States in its oral statement at the second meeting of the Panel with the Parties raised a preliminary objection questioning the admissibility of Korea's claims under Article XVI.4 of the Marrakesh Agreement Establishing the World Trade Organization and Article 18.4 of the AD Agreement. The following are the US arguments in support of its preliminary objection:

1.41 In its 10 July 1998 rebuttal submission, Korea raises several new claims to which the United States objects. Korea's claims regarding Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization and Article 18.4 of the AD Agreement are entirely new. These new claims (i) were not consulted on, (ii) were not included in Korea's panel request, and (iii) heretofore, have not made an appearance in this dispute settlement proceeding. The dispute settlement process under the AD Agreement and the DSU cannot (and does not) condone these types of actions by Korea. It is settled law under the Appellate Body decisions in Bananas III and the India Patents decisions that claims not raised in the request for the establishment of a panel are not within the Panel's terms of reference and must be dismissed.

b) Response by Korea

1.42 In answer to a question by the Panel²³ and during the second meeting of the Panel with the Parties, Korea made the following arguments in response to the US preliminary objection:

1.43 Korea is not making a separate claim because a Member automatically violates Article 18.4 whenever a Member violates another provision of the AD Agreement. Korea takes the same position with respect to claims under Article XVI.4 of the Marrakesh Agreement Establishing the World Trade Organization.²⁴

B. Standard of Review

a) Submission by the United States

1.44 The United States submits that Korea seeks to retry the factual issues that were before the DOC in the underlying administrative proceeding. The following are the arguments of the United States in support of this submission:

1.45 Panel review is not a substitute for proceedings conducted by national investigating authorities. Numerous panels have recognized that the role of panels is not to conduct a de novo review of factual issues. In describing the role of panels when reviewing factual issues, the panel in the Korea - Anti-Dumping Duties on Imports of Polyacetal Resins from the United States (Korean resins) case stated, in part:

1.46 The standard of review to be applied by this Panel is set forth in Article 17.6 of the AD Agreement. In sub-paragraph "(i)," panels are instructed not to substitute their judgment for that of the national investigating authorities:

1.47 Moreover, when applying this standard, Article 17.5(ii) directs the Panel to limit its review to the facts that were before the DOC when it made its determination (i.e., the evidence contained in the administrative record).

1.48 In reviewing legal questions that turn on the proper meaning to be ascribed to the AD Agreement, sub-paragraph "(ii)" of Article 17.6 states:

1.49 Thus, the relevant question in every case is not whether the challenged determination rests upon the best or the "correct" interpretation of the AD Agreement, but whether it rests upon a "permissible interpretation" (of which there may be many). If it does, then this Panel must uphold the determination.

1.50 The United States, in its oral presentation at the first meeting of the Panel with the Parties, further argued as follows:

1.51 Both Korea and the United States agree that the applicable standard of review in this dispute is Article 17.6 of the AD Agreement. This standard of review governs the Panel's review of determinations by administrative agencies such as the DOC in this case. It relates to both factual establishment and evaluation of the facts of the matter, as well as legal interpretation of the AD Agreement.

(i) Article 17.6(i)

1.52 With respect to its assessment of factual matters before the administrative authorities, Article 17.6(i) provides that the Panel shall do the following:

This means that the Panel should determine whether the authorities followed procedures for collecting, evaluating, and processing facts during their investigation which were consistent with the requirements of the AD Agreement.

This provision means that the Panel must evaluate whether (a) the authorities examined all of the relevant facts before it, including facts which might detract from an affirmative determination, (b) whether adequate explanation has been provided of how the determinations made by the authorities are supported by facts in the record, and (c) whether the authorities based their determinations on an examination of factors required by the AD Agreement.

1.53 In making this evaluation, Article 17.6(i) directs the Panel not to substitute its judgement of the facts for those of the authorities. There may be situations where the facts in a hotly-contested case such as the one presented in this dispute could lead to more than one conclusion. Thus, there may well be some facts lending support to Korea's arguments that dumping is not likely. However, there are also many facts -- indeed it is argued, the bulk of the evidence in this case -- supporting the conclusion that dumping is likely. The significance of Article 17.6(i) is that it prohibits the Panel from overturning the evaluation of the authorities as long as the "establishment of the facts was proper" and the "evaluation was unbiased and objective." Thus, if the process by which the domestic authorities established the facts is consistent with the AD Agreement, and the authorities assessed all of the evidence in the record, then the authorities' determination must be upheld by the Panel if it is supported by a factual basis in the record.

1.54 This interpretation of Article 17.6(i) is consistent with its text, as well as its object and purpose, as well as with decisions of numerous GATT 1947 panels.

(ii) Article 17.6(ii)

1.55 Another important aspect of the standard of review is Article 17.6(ii) which addresses procedures for assessing the interpretation of the relevant portions of the AD Agreement. The first sentence of Article 17.6(ii) directs the panel to interpret the relevant provisions of the Agreement in accordance with the customary rules of interpretation of public international law. In the context of practice developed by the Appellate Body and panels, such a direction has meant the application, inter alia, of the provisions of the Vienna Convention. In the typical case, a panel or the Appellate Body has used the Vienna Convention as a tool for determining a single meaning for a particular WTO text. However, Article 17.6(ii) reveals that the negotiators anticipated that it may well be possible for Members' authorities to interpret the text of provisions of the AD Agreement in more than one "permissible" way. In making the assessment whether there is more than one permissible way to interpret an AD text, the panel could make use of the Vienna Convention to determine whether an interpretation of a particular authority -- such as the United States in this dispute -- is permissible. If the panel finds that the text is susceptible to more than one permissible meaning, then Article 17.6(ii) provides that "the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations."

1.56 Accordingly, Article 17.6(ii) is intended to provide a certain flexibility -- where the language was undefined or otherwise ambiguous -- for authorities to establish (or maintain) implementing procedures. This is particularly the case such as the instant dispute where the key terms are undefined, such as the terms "necessary" and "warranted" in Article 11.2.

1.57 The DOC's decision not to revoke the anti-dumping duty order on DRAMs from Korea rests upon a "permissible" interpretation of Article 11 of the AD Agreement that is based upon both the ordinary meaning of the terms of Article 11, as well as their context and the general object and purpose of the AD Agreement. Moreover, in considering whether the DOC's determination rests upon a "permissible" interpretation of the relevant WTO provisions, the Panel will discover that the agency assembled a voluminous record. In fact, the DOC compiled an extensive record. The agency then conducted a painstaking, fact-intensive review of that record, including all arguments presented by Hyundai and LG Semicon, before deciding not to revoke the anti-dumping order on DRAMs from Korea. Consistent with Article 17.6(i) of the AD Agreement, the facts of this case were properly established and reasonably supported the determination made by the DOC. Pursuant to Article 17.6(i), the only question is whether the DOC's establishment of the facts was "proper" and whether its "evaluation of those facts was unbiased and objective." If it was, then Article 17.6(i) of the AD Agreement requires the Panel to uphold this determination.

To continue with Rebuttal Response by Korea

²⁰ WT/DS/22/AB/R, Report of the Appellate Body adopted 20 March 1997, at 19 n. 23.

²¹ Id. at 19 (footnotes omitted).

²² The Panel recalls that the question was: "Does the United States consider that 'administrative reviews' constitute 'reviews of existing measures' within the meaning of Article 18.3 ADP. Why or why not? Please address the relevance, if any, of footnote 21 and Article 18.3.1 to your answer."

²³ The Panel recall that the question was: "In response to a from the Panel, (Ex. ROK-84), Korea states that the US "has violated Article 18.4" AD Agreement . Is Korea raising a separate claim under Article 18.4? If so, please specify where this claim is identified in Korea's request for establishment (WT/DS99/2)."

²⁴ The Panel notes that Korea made this last statement orally during the second meeting of the Panel with the Parties.

²⁵ Korea - Anti-Dumping Duties on Imports of Polyacetal Resins from the United States, BISD 40S/205, para. 227.

²⁶ AD Agreement, art. 17.6(i).

²⁷ Id., art. 17.6(ii).