c) Rebuttal Arguments Made by Korea

1.125 Korea makes the following arguments in rebuttal to the United States responses:

1.126 In an attempt to interpret the nature of the obligations imposed by Article 11, the United States asserts:

This amounts to avoidance of interpretation. As they appear in Paragraphs 1 and 2, "need," "necessary" and "warranted" are not terms requiring dictionary interpretation in the first place.

1.127 Paragraph 1 of Article 11 imposes a clear, substantive obligation upon all Members that use anti-dumping duties:

1.128 Moreover, Paragraph 1, on its face, clearly states that a Member shall not maintain a duty where a Respondent is dumping, but is causing no injury. The Panel, then, should reject the United States' argument that Article 11 allows a Member to maintain a duty on a Respondent which the Member itself has found, for three-and-one-half consecutive years, is not dumping.

1.129 The fact that Paragraph 1 does not prescribe specific circumstances requiring revocation (or detail factors to be considered) is inapposite. It establishes a rule of general application--like the vast majority of legal requirements--which Members must follow. Paragraph 2 then establishes procedural guidelines for implementing the Paragraph 1 rule.

1.130 The United States suggests that the fact that the rule is general means it has no force. This is incorrect. Indeed, the fact that it is general means that it has greater force. Thus, the US assertion that the rule, being "broad-based," gives "wide latitude" to Members is incorrect. The negotiators wisely left the rule in its general form, knowing they could not specify each and every example in which a Member would be required to revoke. They presumably also knew that, if they tried to do so, they would create a "blueprint for avoidance" that would allow the most recalcitrant authorities to maintain duties in ways not specifically prohibited, but nonetheless contrary to the general principles of the AD Agreement. Paragraph 1 is a crystal clear statement of the limits of a Member's ability to impose antidumping duties.

1.131 Paragraph 2 also is instructive. It provides for a review of "whether the continued imposition of the duty is necessary to offset dumping." The words "is" and "offset" are the keys to this inquiry. The negotiators chose the present-tense verb "is" and tied it to another present-tense verb, "offset." They did not select either "will be" for "is" or "prevent" for "offset." Nor did they permit a forward-looking "likely" analysis. Thus, the forward-looking analysis used by the United States is an impermissible interpretation of this provision.

1.132 Also, "offset" has a specific meaning in the anti-dumping context. It means to impose a duty on the imported product to re-establish competitive equilibrium or to "offset" the competitive advantage the Respondent has obtained in the Member's market through low prices. Thus, the word "offset" presumes that dumping is occurring.

1.133 In sum, contrary to the United States' assertions,⁸¹ the text of Paragraphs 1 and 2 require revocation in this case. The analysis above further establishes that the United States is in violation of its Article 11 obligations.

1.134 Paragraph 3 Article 11, including Footnote 22, confirm Korea's position on paragraphs 1 and 2. The relevant portions of Paragraph 3 of Article 11, including Footnote 22, are:

1.135 A number of aspects of Paragraph 3 and its relationship to Paragraphs 1 and 2 illuminate the issues Korea has raised in this case. First, there is no basis to the US claim that Korea's interpretation of Paragraphs 1 and 2 renders Paragraph 3 superfluous. To the contrary, the US reading of Paragraphs 1 and 2 would render Paragraph 3 surplusage. Paragraphs 2 and 3, interpreted in light of Paragraph 1, impose two very distinct sets of obligations on Members. Korea has demonstrated that after a Member has found that a Respondent has not dumped for three-and-one-half consecutive years, Paragraphs 1 and 2 require revocation. Paragraph 3, in contrast, requires Members either to revoke a duty or re-establish that dumping is causing injury through sunset (or expiry) reviews within five years of the most recent dumping, injury and causation findings. Importantly, this provision applies even where a Member has found that a Respondent has engaged in significant dumping in every single review period leading up to the sunset (or expiry) review. Thus, Korea's demonstration of the US violations does not even encroach upon Paragraph 3, much less render it superfluous.⁸³

1.136 Second, even though Paragraph 3 addresses sunset (or expiry) reviews, an analysis of its provisions may illuminate the meaning and scope of Paragraphs 1 and 2. Paragraph 3 contains language indicating that the negotiators could have, but decided not to, expand a Member's authority to conduct a forward-looking "likely" analysis in conducting dumping reviews under Paragraph 2. Paragraph 3 requires revocation of a duty no later than five years after its imposition, unless the Member conducts injury and dumping reviews and determines "that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury." In contrast, Paragraph 2 allows a similar inquiry regarding injury only. Paragraph 2 limits dumping reviews to an examination of "whether the continued imposition of the duty is necessary to offset dumping." The use of present-tense language (e.g., "offset dumping" vs. "prevent dumping"), coupled with the omission of the "likely to continue or recur" provision, indicates that a forward-looking analysis is not permitted in regard to Paragraph 2 dumping reviews. The fact that Paragraph 3 specifies a forward-looking "likely to continue or recur" analysis both for dumping and injury (and that Paragraph 2 provides for a "likely" analysis for injury, but not dumping) demonstrates that the negotiators could have chosen to extend a forward-looking analysis to dumping as well as to injury under Paragraph 2, but decided not to and, instead, expressly limited the analysis. The United States should not be permitted to add a requirement to the plain language of Paragraph 2, especially after the negotiators chose not to.

1.137 Finally, Footnote 22 does not support the US position in any way. Instead, it further confirms Korea's interpretation of Article 11.

1.138 The United States would have the Panel believe that Footnote 22 operates as a blanket, fully insulating Members with retrospective regimes from having to revoke a definitive duty after finding no dumping. First, the footnote establishes an exception only under Paragraph 3 (which, of course, is an exception to Paragraphs 1 and 2). Second, the exception applies only to those Members with retrospective regimes. Third, the limit is set at one year ("the most recent assessment proceeding"). Finally, Footnote 22 is discretionary in operation.

1.139 Most significantly, though, Footnote 22 has nothing to do with this proceeding. The obvious implication is that the exception of Footnote 22 is limited to one year and that, if in the most recent assessment proceedings, the Member repeatedly has found no dumping, the Member's conduct no longer falls within the special terms of Footnote 22 and the Member must revoke because "[a]n anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury." Thus, Footnote 22, which in any case applies only to Paragraph 3, not to Paragraphs 1 and 2, cannot insulate the US conduct at issue here.

1.140 In any event, the Panel should not countenance the US attempt to: (i) export Footnote 22 from Paragraph 3 and import it into Paragraphs 1 and 2; and then (ii) expand it so as to allow the United States to refuse to revoke (or even conduct an injury investigation) where Respondents were found to have small dumping margins in the six-month period of the original investigation (1992), but have been found not to have dumped in every subsequent review, covering some 42 months.

1.141 In Swedish Stainless Steel Plate, the panel examined, among other things, Sweden's claim that the procedures employed by the United States in deciding not to review an injury determination, i.e., a decision not to initiate an injury review, violated Paragraphs 1 and 2 of Article 9 of the 1979 AD Agreement (the predecessors of Paragraphs 1 and 2 of Article 11).⁸⁴ As the United States concedes by citing this report, although the panel's conclusions are not part of the WTO acquis (it was not adopted), the panel's analysis provides useful guidance and its conclusions are well-founded.⁸⁵ However, the United States has not accurately presented the findings of the panel with respect to Article 9.1/11.1 and 9.2/11.2.

1.142 According to the United States, "the panel concluded that paragraph 1 did not impose an independent legal obligation upon GATT signatories." This mischaracterizes the panel's conclusion. Sweden had argued that the United States had breached procedural obligations under both paragraphs 1 and 2.⁸⁶ In contrast to the US account, the panel actually found that Paragraph 1 imposes a far-reaching substantive obligation and that Paragraph 2 imposes a procedural obligation:

1.143 Thus, Paragraph 1 of Article 11 does impose substantive legal obligations. Moreover, contrary to the United States' assertion, it constitutes an independent legal ground obligating revocation in certain cases, including this one. Finally, paragraph 224 of the Panel Report confirms that Paragraph 1 establishes the legal obligation that guides the application and interpretation of Paragraph 2.

1.144 The United States violated Article 11 of the AD Agreement not only because of the way it applied its revocation scheme in the DRAMs from Korea case, but also because the regime on its face is inconsistent with Article 11 of the AD Agreement.

1.145 Article 11.1 permits imposition of anti-dumping duties "only as long as and to the extent necessary to counteract dumping which is causing injury." Where the duty is no longer warranted under this standard, Article 11.2 requires that "it shall be terminated immediately."

1.146 Contrary to the dictates of Article 11, which require revocation when duties are not necessary to counteract dumping which is causing injury, the US revocation scheme permits duties to continue indefinitely except where the Secretary of Commerce, on the basis of unfettered discretion rather than objective criteria, decides to revoke. In addition to the lack of objective criteria and the concomitant existence of unfettered discretion, the US revocation regime also mandates proof of no likelihood of resumption of dumping and forces Respondents, as a condition of revocation, to agree to forgo their rights to an injury determination if the DOC concludes that Respondent has resumed dumping.

1.147 Thus, this case is not analogous to situations in which legislation permits, but does not mandate, action inconsistent with a WTO obligation. This is not like US Superfund, in which the law directed imposition of a tax inconsistent with Article III of the General Agreement, but provided for the possibility of regulations setting out requirements under which this penalty tax would not be applied.⁸⁸ Nor is it like Thai Cigarettes, in which a Thai law authorized the imposition of discriminatory excise taxes, but regulations promulgated under the law taxed imported and domestic cigarettes at the same rate.⁸⁹

1.148 Unlike US Superfund, Thai Cigarettes and similar disputes, in this case the Secretary of Commerce cannot act in conformity with the obligations of Article 11. Inclusion of the "no likelihood/not likely" criterion and the mandatory cession of the right to an injury review (embedded in a Respondent's agreement to immediate reinstatement in the anti-dumping duty order), on their face, require action that is inconsistent with the dictates of Article ll.1.

1.149 Thus, the first, not the second, principle set out in the US Tobacco decision applies:

The US revocation scheme mandates action inconsistent with the WTO AD Agreement and so it can be challenged as such.

1.150 The US revocation scheme also breaches both of Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization, which requires each Member to "ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements," and of Article 18.4 of the AD Agreement, which mandates that "[e]ach Member shall take all necessary steps... to ensure ... the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement . . .."

1.151 Thus, the US revocation scheme, on its face, by allowing the US to maintain duties in situations in which Article 11 requires revocation, violates not only Article 11 itself, but also Article 18.4 of the AD Agreement and Article XVI:4 of the Marrakesh Agreement.⁹¹

d) Rebuttal Arguments Made by the United States

1.152 The United States makes the following arguments in rebuttal:

1.153 Article 11.1 does not impose, as Korea seems to suggest, an independent obligation on WTO Members to: (i) revoke anti-dumping orders as soon as dumping stops, and/or (ii) examine dumping and injury as part of every review under Article 11.2.⁹² With respect to the first point, the plain terms of Article 11.1 simply do not direct a Member to take any action to implement the general principle contained in Article 11.1. There certainly is no language in Article 11.1 which requires WTO Members to revoke (i.e., "terminate") anti-dumping orders as soon as dumping stops.⁹³ With respect to the second point, Article 11.2 cannot be given its full meaning, as it must, if Korea's interpretation of Article 11.1 is correct (i.e., if Article 11.1 requires an examination of dumping and injury in every review under Article 11). Article 11.2 provides for several different types of reviews. For example, under Article 11.2, investigating authorities are directed to review, in certain instances, whether the "continued imposition of the duty is necessary to offset dumping." These provisions would be a nullity if Korea's interpretation of Article 11.1 were correct.⁹⁴

1.154 The better view of Article 11.1, and the one which comports with the ordinary meaning of its terms, is that Article 11.1 states a general rule which informs the rest of Article 11. The specific obligations established in Article 11 are set forth in Articles 11.2 through 11.5.⁹⁵ Of these provisions, only Article 11.2 is directly at issue in this case.

1.155 If the terms of Article 11 are given their ordinary meaning in the context within which they occur, it becomes manifestly apparent that Article 11.2 does not require revocation after one year (or even three years) of no dumping. First, footnote 22 to Article 11.3, disposes of any suggestion that revocation is mandated whenever a Respondent stops dumping. Second, Article 11.2 simply does not prescribe the specific circumstances that must lead to revocation. It certainly does not contain language which mandates revocation in the event that a Respondent goes three years without dumping. Third, a review of the negotiating history of Article 11 reveals that Korea and several other WTO Members supported a provision in the AD Agreement which would have required the automatic revocation (or "termination") of all anti-dumping orders after three years. These types of proposals were rejected in favor of the "sunset" provision now found in Article 11.3, which requires the sunset process to commence after five years. Thus, far from contradicting the plain-text interpretation advanced by the United States, the negotiating history of Article 11 confirms the views of the United States.

1.156 Finally, Korea's interpretation of Article 11.2 is at odds with Article 11.3, footnote 22. Under Article 11.3, once every five years, investigating authorities must review, inter alia, whether revocation of the "duty would be likely to lead to continuation or recurrence of dumping ... ." According to footnote 22, however, "a finding in the most recent assessment proceeding under subparagraph 3.1 of Article 9 that no duty is to be levied shall not by itself require the authorities to terminate the definitive duty." Yet, under Korea's construction of Article 11.2, any time a Respondent ceases dumping, investigating authorities must immediately terminate (i.e., revoke) the duty. Thus, under Korea's construction, footnote 22 never can come into play, because a finding of no dumping must result in the immediate revocation of an order. In other words, footnote 22 is superfluous.⁹⁶

1.157 In sum, Korea is asking the Panel to go far beyond an interpretation of the AD Agreement and to prescribe the circumstances under which an anti-dumping order must be revoked. As discussed, Korea's "interpretation" of Article 11 is contrary to the "customary rules of interpretation of public international law" prescribed by Article 17.6(ii) of the AD Agreement and Article 3.2 of the DSU. Furthermore, if Korea's position were embraced by the Panel and adopted by the Dispute Settlement Body ("DSB"), it would create, contrary to Articles 3.2 and 19.2 of the DSU, a right or obligation where none currently exists.

1.158 In response to a question by the Panel,⁹⁷ the United States further argued:

1.159 In U.S. - Tobacco and the Superfund case, the panels recognized that legislation mandatorily requiring authorities to impose GATT-inconsistent measures, whether or not such legislation has been applied, may constitute a violation of the General Agreement. However, in both of those cases, there existed legislation or regulations providing the authorities with the possibility of avoiding the need to apply the GATT-inconsistent legislation. As a result, the panels concluded that the mere existence of the mandatory, GATT-inconsistent legislation did not, by itself, constitute a violation of the General Agreement.⁹⁸

1.160 Thus, where legislation which, "on its face" (or as a matter of law), mandates action inconsistent with Article 11.2, but additional legislative or regulatory provisions permit action consistent with Article 11.2, a Member may not challenge the mandatory piece of legislation until it (or some other enactment) is applied in a manner that violates Article 11.2.

1.161 In the instant case, section 353.25(a) does not mandate action inconsistent with Article 11.2. and even if it does, other legislative avenues for revocation exist. First, on its face and as applied, section 353.25(a) rests upon a permissible interpretation of Article 11.2. Second, section 353.25(a) is not "mandatory" in the sense that it requires WTO inconsistent action. Indeed, Korea has often said in this proceeding that the regulation allegedly confers upon the Secretary of Commerce "unfettered discretion." As the United States explained at the second meeting of the Panel, the Secretary cannot have the "unfettered discretion" to revoke an anti-dumping order and, at the same time, be required to apply the regulation in a mandatory fashion. The two arguments are mutually exclusive. Finally, even assuming arguendo that section 353.25(a) mandates action inconsistent with Article 11.2, respondents are free to pursue revocation through an Article 11.2-type review under section 751(b) of the Act (and sections 353.22(f) and 353.25(d) of the DOC's regulations).

To continue with Secretary of Commerce's Discretion

⁷⁹ The United States avoids the clear meaning of the English language again when it states that the terms "not likely" and "no likelihood" have the same meaning as a matter of English (as a matter of law, they arguably might, but certainly not as a matter of English); Wieland-Werke AG v. United States, Customs Bulletin and Decisions, 32(16), Ct. No. 96-10-02297, Slip Op. 98-23 (22 April 1998), at pages 35-36 (Ex. ROK-85).

⁸⁰ The Panel should look to the text of a provision to determine its nature. The text of Paragraph 1 is strongly worded and establishes that the drafters meant to confine anti-dumping duties to certain limited situations.

⁸¹ Korea also notes that according to the United States, "the DOC has revoked literally hundreds of anti-dumping measures based upon an absence of dumping." Indeed, the United States has not revoked hundreds, or even dozens, of orders based on the absence of dumping where it has conducted a full-blown "no likelihood/not likely" analysis. The United States applies the full analysis where it wishes to block revocation. This exercise of unfettered discretion violates Paragraphs 1and 2 of Article 11. The Panel notes that this argument by the United States is reflected in Paragraph 4.180.

⁸² Korea notes that this introductory clause establishes that Paragraph 3 is an exception to Paragraphs 1 and 2. However, an analysis of Paragraph 3 nonetheless is instructive.

⁸³ Indeed, the Panel should reject the United States' position, which focuses on Paragraph 3, because that position would reduce Paragraphs 1 and 2 to "inutility." See United States -- Standards for Reformulated and Conventional Gasoline (20 May 1996), WT/DS2/AB/R, page 23.

The United States also asserts that the AD Agreement's negotiating history indicates that Korea and several other Members supported a sunset or expiry review position with a three-year threshold, instead of a five-year threshold. Because the texts of Paragraphs 1 and 2 are quite clear, this point is not admissible under Article 32 of the Vienna Convention. But, even if it were admissible, it is irrelevant. A three-year sunset or expiry review provision would apply even where dumping was occurring and in the context of a retrospective regime would serve to ensure that a Member was not maintaining a duty absent injury and causation.

⁸⁴ In Swedish Stainless Steel Plate, unlike here, the DOC never found that the Respondent had stopped dumping.

⁸⁵ See Japan -- Taxes on Alcoholic Beverages (1 November 1996), WT/DS8, 10 & 11/AB/R, page 15 and United States -- Import Prohibition of Certain Shrimp and Shrimp Products (15 May 1998), WT/DS58/R, para. 7.16, note 623, for discussions of the relevance of adopted and unadopted panel reports.

⁸⁶ See United States -- Anti-Dumping Duties on Imports of Stainless Steel Plate from Sweden (24 February 1994), APD/117, para. 221 (unadopted).

⁸⁷ Id. at paras. 223-25 (emphasis added by Korea).

⁸⁸ See United States -- Taxes on Petroleum and Certain Imported Substances (17 June 1987), BISD 34S/136, pages 163-64, para. 5.2.9, ("US - Gasoline").

⁸⁹ See Thailand -- Restrictions on Importation and Internal Taxes on Cigarettes (7 November 1990), BISD 37S/200, page 227, para. 86, ("Thailand - Cigarettes").

⁹⁰ See United States -- Measures Affecting the Importation, Sale and Use of Tobacco (4 October 1994), DS44/R, para. 118, ("US - Tobacco") (emphasis added by Korea).

⁹¹ The Panel notes that the United States raised a preliminary objection with regards to 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 arguments of the Parties on this matter can be found in Section IV.A.3 of this report.

⁹² In its first written submission, Korea appeared to concede that Article 11.1 merely states a general rule which is implemented by, inter alia, Articles 11.2 and 11.3. However, at various times since then, including in its oral statement before the Panel, Korea seems to suggest that Article 11.1 creates a legal obligation, quite apart from Articles 11.2 and 11.3, which the United States is claimed to have violated.

⁹³ Indeed, a prior panel recognized that Article 9.1 of the Tokyo Round Anti-Dumping Code (which is virtually identical to Article 11.1 of the AD Agreement) calls for a prospective analysis. Plate from Sweden, ADP/117, para. 233.

⁹⁴ Korea's interpretation of Article 11 would violate the principle of interpretation expressed in the maxim: Ut res magis valeat quam pereat, often referred to as the rule of "effectiveness." Under this rule, courts and panels should interpret treaty provisions so as to give full effect to their ordinary meaning. As the Appellate Body has stated: "An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility." United States - Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, WT/DS4/AB/R, Report of the Appellate Body adopted 20 May 1996, p. 23.

⁹⁵ A similar type of framework was identified by the Appellate Body in the Japan Taxes case which had before it Article III of GATT 1994. In ruling that Japan's Liquor Tax Law violated provisions of Article III, the Appellate Body stated that Article III:1 articulates the general rule that "internal measures should not be applied so as to afford protection to domestic production." Japan - Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, Report of the Appellate Body adopted 1 November 1996, p. 18. This rule, the Appellate Body stated, "informs" the rest of Article III, including Article III:2, which "'provides for specific obligations regarding internal taxes and internal charges.'" Id.

⁹⁶ Hence, Korea's interpretation of Article 11.2 would, once again, violate the rule of "effectiveness." In this regard, in the recently issued report in the Indonesia Autos case, the panel rejected an argument by Indonesia that, if accepted, would have reduced Article III:2 of GATT 1994 to inutility. Indonesia - Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, Report of the Panel issued 2 July 1998, para. 14.40 (unadopted).

⁹⁷ The Panel recalls that the question was as follows: "In US - Tobacco, the panel recalled 'that panels had consistently ruled that legislation which mandated action inconsistent with the General Agreement could be challenged as such, whereas legislation which merely gave the discretion to the executive authority ... to act inconsistently with the General Agreement could not be challenged as such...' In the event that a particular review provision does not allow a Member to terminate a duty in circumstances where such termination is required by Article 11.2, is this in and of itself sufficient for a finding of 'mandatory' legislation inconsistent with the ADP Agreement, i.e., if other legislative avenues exist whereby termination of an anti-dumping duty through an Article 11.2-type review could be sought, is this relevant? Why or why not?"

⁹⁸ Thailand - Restrictions on Importation of and Internal Taxes on Cigarettes, BISD 37S/200 (adopted 7 November 1990) at paras. 84-86; United States - Taxes on Petroleum and Certain Imported Substances, BISD 34S/136 (adopted 17 June 1987) at paras. 5.2.9-5.2.10.