b) Rebuttal Response by Korea

1.58 Korea makes the following arguments in rebuttal to the United States submission on standard of review:

1.59 Unlike the other WTO agreements, the AD Agreement prescribes a standard of review. With regard to review of facts, there is no significant difference in the views of Korea and the United States regarding the appropriate standard of review. However, with regard to review of legal interpretations, the standard proposed by the United States-that the Panel must uphold US interpretations unless Korea proves that they are "forbidden"--finds no support in the text or interpretive assessments of Article 17.6(ii) of the AD Agreement.

(i) In Reviewing Facts, the Panel Should Determine Whether a Reasonable, Unprejudiced Person Would Have Found, Based on the Evidence Before the DOC, That the Facts Reasonably Supported the Conclusions of the DOC.

1.60 The standard of review regarding assessment of facts is set out in Article 17.6(i) of the AD Agreement:

1.61 This standard was interpreted by the panel in the recent decision in Guatemala -- Anti-dumping Investigation Regarding Portland Cement from Mexico.²⁸ There, at paragraphs 7.54 through 7.57, the Panel cited as sensible and consistent with the standard of review under Article 17.6(i) the approach spelled out by the Panel in United States -- Measures Affecting Softwood Lumber from Canada.²⁹ As set forth by the Guatemala -- Cement panel:

1.62 There is no significant dispute between Korea and the United States regarding this standard, but there is total disagreement as to its application in this dispute. Korea establishes that the DOC based its determination not to revoke on unverified information and mere conjecture from the US petitioner, while failing to consider fairly and objectively verified and verifiable information submitted by the Korean Respondent companies. Korea is confident that the Panel will share its view that, given the evidence in the DOC's record, an unbiased and objective person would have concluded that, even assuming that DOC's criteria for revocation were consistent with the United States' WTO obligations, the Korean Respondent companies satisfied them. Korea does not accept that the DOC's revocation criteria are permissible under the WTO, but even assuming for the sake of argument that they are, the United States made a determination that is not supportable under the Article 17.6(i) standard of review.

(ii) In Reviewing Legal Interpretations, the Panel Should Follow the Interpretive Rules of the Vienna Convention; There is no Basis for virtually total deference to the DOC, as Argued by the United States.

1.63 The standard of review regarding legal interpretation is set out in Article 17.6(ii) of the AD Agreement:

1.64 The United States, focusing on the second sentence of this provision, argues that the legal interpretation of the United States regarding Article 11 of the AD Agreement must be upheld unless it is "forbidden."

1.65 The United States ignores the first sentence of Article 17.6(ii), which mandates the Panel in the first instance to interpret Article 11 (and the other provisions of the AD Agreement at issue in this dispute) "in accordance with customary rules of interpretation of public international law" (i.e., in accordance with Articles 31 and 32 of the Vienna Convention).

1.66 One of the world's leading GATT/WTO scholars, Professor John Jackson, has analyzed Article 17.6(ii) in depth.³¹ He decisively rejects the extremely deferential standard of review advocated by the United States, based on a thorough review of Article 17, the Vienna Convention and the reasons cited in support of a deferential review standard. First, he establishes that the purpose of the Vienna Convention is to resolve ambiguities in the text of an agreement. Thus, after Article 31 (and, where appropriate, Article 32) is applied, there will be no lingering ambiguities. The second sentence of Article 17.6(ii) will rarely come into play because there usually will not be "more than one permissible interpretation" of Article 11 (or any other provision of the AD Agreement).

1.67 Second, Professor Jackson demolishes the intellectual underpinnings for application of a deferential standard of review. At pages 202 through 211 of his article, he critiques the applicability in the WTO context of the US court decision that is widely recognized as the model used by the US negotiators in proposing what became Article 17.6(ii)--Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.³² Professor Jackson demonstrates that none of the three bases for deference to administrative agencies that may apply to domestic legal proceedings is relevant in the context of WTO panel reviews. First, unlike domestic legal proceedings, in which an administrative agency has "expertise" regarding its particular regulatory area, no WTO Member has any greater expertise relative to other WTO Members regarding the interpretation and application of provisions of the WTO agreements. In Professor Jackson's words:

1.68 Next, Professor Jackson demonstrates that the so-called "democracy" rationale is inapplicable. (This is based on the principle that because federal judges in the United States are not elected, judicial deference to agency decisions, which flow from decisions taken by elected presidents and legislators, enhances the legitimacy of administrative decisionmaking.) National authorities are not accountable to the WTO Membership at large; indeed, WTO panels are the Members' delegates. Thus, the concept of deference to those accountable to the populace has no counterpart in the WTO context.

1.69 Finally, Professor Jackson dissects and rejects the "efficiency" rationale of Chevron--that a single interpretation by the agency charged to administer a law is preferable to the potential of multiple interpretations by different courts. At page 210 of his article he shows that, in the WTO context, deference to national authorities would lead to the very multiplicity of interpretations that the "efficiency" rationale was meant to prevent:

1.70 This extensive analysis of Professor Jackson's article proves the intellectual deficiencies of the deferential standard of review advocated by the United States. Because the virtually total deference advocated by the United States, in addition to not being mandated by the text of Article 17.6(ii), is intellectually unsound, the Panel should reject it. The Panel should, as commanded by the first sentence of Article 17.6(ii), apply the interpretive rules of the Vienna Convention to the legal interpretations involved in this dispute. When the Panel does so, Korea is confident that it will agree with Korea that the United States has violated its obligations under Articles 2, 5.8, 6, 11.1 and 11.2 of the AD Agreement.

c) Rebuttal Response by the United States

1.71 The United States made the following arguments in its second oral statement before the Panel:

1.72 With one possible exception, there seems to be agreement between Korea and the United States over the standard of review to be applied by this Panel to factual issues. That exception concerns the panel's report in the Guatemala Cement case, which Korea quotes with approval in its rebuttal submission. At paragraph 57 (Findings) and elsewhere, the panel in the Guatemala Cement case articulates the standard as "whether an unbiased and objective investigating authority evaluating that evidence could properly have determined ..." (emphasis added by the United States). While the panel purports to be following the standard in Lumber, which it quotes in the preceding paragraph, we believe the panel inserts the word "properly" which suggests a higher degree of second-guessing on the part of the panel than either Lumber or Article 17.6(i) would seem to contemplate. The panel may have thought it was simply incorporating the word "proper" from the phrase "establishment of the facts was proper" in 17.6(i); however, if that was the intention, we respectfully submit that this was a mistake because that phrase deals with questions like whether the authorities improperly refused to allow certain information to be on the record.

1.73 With respect to the assessment of factual matters before an investigating authority, Article 17.6(i) directs panels to, first, "determine whether the authorities' establishment of the facts was proper." This means that the Panel should determine whether the DOC followed procedures for collecting, evaluating, and processing facts during its administrative proceeding which were consistent with the requirements of the AD Agreement. Second, panels must determine whether the authorities' "evaluation of those facts was unbiased and objective." This provision means that the Panel must evaluate whether (a) the DOC examined all of the relevant facts before it, including facts which might detract from the challenged determination, (b) whether adequate explanation has been provided of how the determination made by the DOC is supported by facts in the record, and (c) whether the DOC based its determination on an examination of factors required by the AD Agreement.

1.74 It must be emphasized, that Article 17.6(i) directs the Panel not to substitute its judgment of the facts for those of the investigating authority. There may be situations where the facts in a hotly contested case, such as the one here, could lead to more than one conclusion. Thus, there may be some facts lending support to Korea's arguments. However, there are also many facts - indeed, we would argue, the bulk of the evidence - which support the determination made by the DOC in this case. The significance of Article 17.6(i) is that it prohibits the Panel from overturning the evaluations of the DOC as long as the "establishment of the facts was proper" and the "evaluation was unbiased and objective." The United States respectfully submits that this interpretation of Article 17.6(i) is consistent with its text (as well as its object and purpose), and with the decisions of numerous GATT 1947 panels.

C. Burden of Proof

a) Submission by the United States

1.75 The United States submits that Korea has the burden of establishing a violation of a provision of a WTO agreement. The following are the arguments of the United States in support of this claim:

1.76 The fact that the complainant has the burden of proof has been made clear by the Appellate Body in the Wool Shirts case when it stated:

1.77 This principle is not affected by Korea's incorrect assertion that anti-dumping measures constitute "derogations" from alleged free-trade principles of the WTO.³⁶ To the contrary, the right conferred by Article VI and the AD Agreement to impose anti-dumping measures forms part of the carefully constructed balance of rights and obligations that make up the WTO free-trade regime. To diminish this right, as suggested by Korea, by characterizing Article VI and the AD Agreement as "derogations" would constitute an impermissible failure to respect this balance.

1.78 Even if anti-dumping measures could be described as a derogation from, or an "exception" to, such alleged free-trade principles, this would not affect the assignment of the burden of producing evidence of a violation. As the Appellate Body stated in the Hormones case:

1.79 More generally, there simply is no justification for treating anti-dumping measures as derogations or exceptions. The case typically cited by proponents of this view is the Pork from Canada case, in which the panel characterized Article VI:3 of GATT 1947, which authorized the imposition of countervailing duties, "as an exception to basic principles of the General Agreement had to be interpreted narrowly and that it was up to the United States, as the party invoking the exception, to demonstrate that it had met the requirements of Article VI:3."³⁸ However, the panel's statement was conclusory in nature, and the panel cited no authority for the proposition that Article VI was an "exception." Moreover, this aspect of the panel's decision was dicta, because nothing in the remainder of the panel report indicates that the panel's characterization of Article VI:3 as an "exception" influenced the panel's analysis of the matter.

1.80 Perhaps more significantly, other than Pork from Canada, of the fourteen panel reports following the Wine and Grape Products case that addressed Article VI of GATT 1947 or the Tokyo Round agreements based on Article VI, none of the panels (1) found that Article VI was an exception, (2) imposed the "burden of proof" on the party imposing anti-dumping or countervailing duties, or (3) expressly indicated a requirement to interpret Article VI in a narrow manner. In all of these disputes, the complaining party complied with its burden of producing prima facie evidence of a violation, and the defending party responded with argument and other evidence.

1.81 Moreover, in the only case thus far to consider Article VI of GATT 1994, both the panel and the Appellate Body refrained from treating Article VI as an "exception." In the Desiccated Coconut case, the Philippines made the "Article VI-as-exception" argument in support of its claim that it could challenge Brazil's countervailing duty order as a violation of Article VI of GATT 1994.³⁹ Brazil, in turn, argued that Article VI could not be applied independently of the SCM Agreement, and that under the transition rules of the SCM Agreement, the Brazilian determination was not subject to the SCM Agreement. If the Philippines were correct that Article VI is an exception, then both the panel and the Appellate Body presumably would have focused on the violation of the "core rules" of GATT 1994 (Articles I and II) that allegedly occurred after 1 January 1995, and they would have placed the burden on Brazil to establish that its determination was not subject to Article VI. However, neither the panel nor the Appellate Body accepted the Philippines' "Article VI-as-exception" argument.⁴⁰

1.82 Article VI and the AD Agreement do not constitute derogations or exceptions from the rest of the WTO framework. Even if they did, they would be subject to the same rules of interpretation as any other provision of the WTO agreements, and the burden of producing evidence of a violation still would rest with Korea as the complaining party.

(b) Rebuttal response by Korea

1.83 Korea makes the following arguments in rebuttal to the US position on burden of proof:

1.84 Korea's view of the burden of proof in this case is reasonable, balanced and accurate. It is firmly rooted in the decision of the Appellate Body in United States -- Measure Affecting Imports of Woven Wool Shirts and Blouses from India.⁴¹ First, Korea initially bears the burden of showing the US violations--it is for Korea "to submit a prima facie case of violation."⁴² In response, the United States must rebut Korea's presentation--it is "for the United States to convince the Panel that, at the time of its determination it had respected" its WTO obligations.⁴³ (The United States has chosen not to directly counter Korea's Article 11 arguments.) Second, Korea need only demonstrate that the United States violated a specific provision. In doing so here, Korea need only present an interpretation of the specific provision, e.g., Article 11, that shows the precise nature of the US violation. Contrary to the assertions of the United States, Korea is not obliged to set forth a "Treatise on the Law of" each of the provisions Korea has demonstrated that the United States has violated. In this case, neither Korea, nor the Panel, need to define precisely the location of the "line of violation" which the United States obviously has crossed. Rather, a demonstration that the United States has crossed that line is sufficient. If a prosecutor can prove that a defendant murdered the victim, does the defendant go free because the prosecutor cannot prove the precise moment in time that the defendant murdered the victim? Certainly not. The violation is established, and that is sufficient for a finding of guilt.

To continue with Claims under Article 11 of the AD Agreement

²⁸ WT/DS60/R (dated 19 June 1998).

²⁹ BISD 40S/358, page 490, para. 335 (27 October 1993).

³⁰ WT/DS60/R at para. 7.57 (footnote omitted).

³¹ See Steven P. Croley & John H. Jackson, WTO Dispute Procedures, Standard of Review, and Deference to National Governments, 90 AM. J. INT'L L. 193 (1996) (Ex. ROK-88).

³² 467 US 837 (1984) (Ex. ROK-89).

³³ 90 AM. J. INT'L L. at 209.

³⁴ Id. at 210.

³⁵ 1.WT/DS33/AB/R, at 14 (footnote omitted).

³⁶ The Panel notes that this argument by Korea is set out at paragraph 4.90 of this report.

³⁷ EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, Report of the Appellate Body adopted 13 February 1998, para. 104.

³⁸ United States - Countervailing Duties on Fresh, Chilled and Frozen Pork from Canada, DS7/R, Report of the Panel adopted 11 July 1991, BISD 38S/30, para. 4.4.

³⁹ WT/DS22R, Report of the Panel, as modified by the Appellate Body, adopted 20 March 1997, para. 73 and 85.

⁴⁰ Id.; and WT/DS22/AB/R.

⁴¹ WT/DS33/AB/R (25 April 1997), pages 15-20.

⁴² Id., page 16 (quoting United States -- Measure Affecting Imports of Woolen Shirts and Blouses from India (6 January 1997), WT/DS33/R, para. 6.7).

⁴³ Id.