3. Speculative Analysis of Future Dumping

a) Claim Raised by Korea

1.194 Korea claims that by imposing a "no likelihood/not likely" recurrence of dumping criterion which must be met for an order to be revoked, the United States is in violation of Article 11.2 which does not allow a forward looking analysis in the case of dumping. The following are Korea's arguments in support of that claim:

1.195 The "no likelihood/not likely" criterion focuses on whether dumping will recur in the future.¹²⁸ Speculation as to whether dumping will recur is not permitted by Paragraph 2 of Article 11 of the AD Agreement.

1.196 The relevant sentence of Paragraph 2 is the second:

First, this sentence provides rights to interested parties, thus imposing requirements on Members. Second, it limits Members' discretion as to the type of analysis they can conduct. Although the sentence allows Members to conduct a forward-looking analysis of whether injury would be likely to continue or recur,¹²⁹ it does not call for or allow a prospective analysis of whether dumping "would be likely to continue or recur." As revealed in the plain language of the sentence, the negotiators did not extend the "likely to" concept to the dumping context and doing so by implication is impermissible. Rather, regarding dumping, the Member is permitted only to examine "whether the continued imposition of the duty is necessary to offset dumping."¹³⁰ Where, as here, no dumping has occurred for three consecutive years, the duty is not "necessary to offset dumping" because there is no dumping (much less injury).

1.197 This analysis is confirmed by a review of Paragraph 3 of Article 11, the so-called "sunset provision." Paragraph 3 requires a Member to revoke a duty no later than five years from its imposition. The only exception to this rule is where a Member conducts a review and determines "that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury" (footnote omitted; emphasis added by Korea). The fact that the negotiators specifically provided for a forward-looking analysis of dumping and applied the word "likely" to cover both dumping and injury in Paragraph 3, but not in Paragraph 2, confirms that such an analysis is not permitted under Paragraph 2 of Article 11.

1.198 Korea, in response to a question from the Panel¹³¹, subsequently further argued as follows:

1.199 First, as a matter of textual interpretation, there is no relationship between "necessary" in Article 11.1 and "likely" in Article 11.3, and thus a finding of "likelihood" under Paragraph 3 can neither satisfy nor fail to satisfy the "necessary" requirement in Paragraph 1. Paragraph 3 begins: "Notwithstanding the provisions of paragraphs 1 and 2, . . .." Thus, this Paragraph is an exception from Paragraphs 1 and 2 that is segregable from them and should not be used to interpret those Paragraphs.

1.200 Second, this point is confirmed by an examination of the differing requirements and standards of Paragraphs 2 and 3. 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 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, 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, while Paragraph 2 provides for a "likely" analysis only for injury, demonstrates that the negotiators were aware that they could extend a forward-looking analysis to dumping as well as to injury under Paragraph 2, but decided not to do so. For purposes of Article 11.2, then, the question of whether a duty is "necessary to counteract dumping," as set out in Paragraph 1, is answered by reference to whether "continued imposition of the duty is necessary to offset dumping."

1.201 The negotiators: (i) chose a "likely" standard for Paragraph 3; (ii) did not change the Paragraph 2 dumping standard; and (iii) included at the start of Paragraph 3 the phrase, "Notwithstanding the provisions of paragraphs 1 and 2." These facts confirm that the United States violated its Article 11 obligations when it conducted a forward-looking analysis of dumping in this case.

1.202 After finding for three consecutive reviews that no dumping was occurring, the United States should have revoked on that basis alone. Having failed to revoke (in violation of Article 11), the United States should have conducted only the present-tense dumping examination provided for by Paragraph 2; the United States violated Paragraph 2 by conducting a forward-looking analysis. But, even assuming, for the sake of argument, that Paragraph 2 (or, somehow, Paragraph 3) permits the United States to conduct a forward-looking review, the United States violated those provisions: (i) by devolving the likely criterion to "no likelihood/not likely" (which enables the United States to maintain anti-dumping duties years after dumping and any resulting injury have ceased); (ii) by shifting the burden of proof to Respondents; and (iii) by setting the standard so that, in this case at least, it simply could not be met. And the United States took all of these actions and created these insurmountable barriers after finding for three-and-one-half consecutive years that Respondents had not dumped (and, thus, had not caused injury).

b) Response by the United States

1.203 The following are the United States arguments in response to Korea's claim:

1.204 Korea focuses on the time period that the DOC examined when it determined that an absence of dumping by Respondents was "not likely" in Final Results Third Review. In particular, Korea contends that Article 11.2 of the AD Agreement does not permit investigating authorities (i) to examine whether dumping will recur, and (ii) to conduct a "forward-looking analysis." These arguments fail.

1.205 The United States demonstrated that Article 11 does not require Members to revoke anti-dumping orders as soon as a Respondent stops dumping. Thus, if an order may cover an exporter or reseller that was found not to be dumping during the most recent assessment period, it is only logical that the inquiry under Article 11.2 may, when appropriate, look at whether "dumping will recur." There certainly is nothing in Article 11.2 or the context of the AD Agreement which precludes this type of examination.

1.206 There also is nothing in Article 11 which defines the time period that investigating authorities must examine when deciding if an order is "necessary to offset dumping." In the instant case, the DOC conducted an extensive analysis of the entire record which included Respondents' past conduct (e.g., three years of no dumping), as well as data regarding the first part of 1997, which Respondents characterized as a market upturn.¹³² In describing the temporal scope of its review, the DOC stated, in part:

1.207 Korea seeks to pick and choose the information in the record that it thinks is most helpful to Respondents. In doing so, however, it never provides any authority for its position nor explains why an investigating authority should not be allowed to rely on the most current information available when making a determination under Article 11.2.

1.208 Finally, Korea's construction of Articles 11.2 and 11.3 and, in particular, its discussion of the term "likely," is flawed. Article 11.2 articulates a relatively broad standard regarding the revocation (or "termination") of anti-dumping duties that implements the "general rule" set forth in Article 11.1. Article 11.3, on the other hand, articulates a very specific standard. It requires WTO Members to revoke all anti-dumping measures after five years unless "the authorities determine ... that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury.¹³⁴ While it is true that Article 11.3 (but not Article 11.2) uses the term "likely" in the dumping context, this does not mean the specific standard does not (or cannot) fit within the more general standard. It simply means the "likely" standard is mandatory in the context of Article 11.3 and a "permissible" interpretation of the AD Agreement in the context of Article 11.2. Indeed, it is impossible to imagine how section 353.25, when it uses a term found in Article 11.2 and Article 11.3, could be anything other than a permissible interpretation of the AD Agreement.

1.209 The United States, in response to a question from the Panel¹³⁵, further argued as follows:

1.210 Article VI and Article 11 address different questions. Article VI asks whether an anti-dumping duty needs to be imposed because an industry currently is being injured by dumped imports. Article 11, on the other hand, takes as a given that the imposition of the definitive anti-dumping duty was necessary to offset injurious dumping. It, therefore, asks whether the "continued imposition of the duty is necessary to offset dumping" or whether the injury originally found would be likely to "continue or recur if the duty were removed or varied" (emphasis added by the United States).

1.211 The Appellate Body has affirmed, on more than one occasion, that the principles of treaty interpretation laid down in the Vienna Convention should guide panels when they seek to discern the meaning of WTO agreements.¹³⁶ Article 31 of the Vienna Convention provides that the terms of a treaty must form the starting point for the process of interpretation. In this regard, terms must be interpreted according to their "ordinary meaning" taking into account, inter alia, their "context" (i.e., the other provisions of the agreement).

1.212 If this approach is followed with respect to the language in Article 11 of the AD Agreement, it becomes quite clear that the provisions of Article 11 do not condition the maintenance of definitive anti-dumping duties (i.e., anti-dumping orders) upon a finding that present dumping is presently causing (or presently threatening to cause) material injury. Specifically, Article 11.2 states that, in conducting a review, authorities must examine, inter alia, "whether the injury would be likely to continue or recur if the duty was removed or varied." This indicates that "recurrence" of injury is reason to keep an order in effect. In other words, that injury may have ceased does not warrant revocation of an order if the revocation is likely to cause injury to recur. Similarly, Article 11.3 allows maintenance of anti-dumping duties beyond five years when "expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury." The "recurrence" language indicates that anti-dumping orders can be maintained when dumping and/or injury do not currently exist, but is likely to recur upon revocation of the order. In sum, it would be inconsistent with Articles 11.2 and 11.3 of the AD Agreement to construe Article 11.1 as requiring that an order be kept in effect only if there is present dumping which is presently causing or presently threatening to cause material injury.

1.213 In this regard, the panel in the Swedish Plate case found that Article 9.1 of the Tokyo Round Anti-Dumping Code called for a prospective analysis.¹³⁷ But for the deletion of a comma, Article 9.1 is identical to Article 11.1 of the AD Agreement.

c) Rebuttal Arguments Made by Korea

1.214 Korea makes the following arguments in rebuttal to the United States' response:

1.215 Paragraph 2 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.

1.216 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 engraft a specious requirement on to the plain language of Paragraph 2, especially after the negotiators chose not to.

d) Rebuttal Arguments Made by the United States

1.217 The United States makes the following arguments in rebuttal:

1.218 The purpose of the AD Agreement is to ensure that relief is made available to producers adversely affected by dumping. The agreement accomplishes this goal by establishing a broad framework of rights and obligations which regulates the determination of dumping and the application of remedial anti-dumping duties. Within this framework, Article 11 seeks to ensure that anti-dumping measures do not become permanent fixtures that take on a life of their own. In particular, Article 11.1 states the general principle that "[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."¹³⁸

1.219 Article 11 does not pursue this principle by stating a per se rule which mandates revocation whenever a Respondent goes three years without dumping. Indeed, as the United States has stated repeatedly throughout this dispute settlement proceeding, Article 11 does not prescribe the specific circumstances that must lead to revocation or the factors that an administering authority must consider when deciding if an order is "necessary to offset dumping." The drafters of Article 11 chose instead to impose upon Members an obligation to "review," under certain circumstances, the "need for the continued imposition" of the anti-dumping duty. Once that review is completed, and only if the investigating authority "determine[s] that the anti-dumping duty is no longer warranted" based upon one or more of the reviews described in Article 11.2, must a Member revoke an anti-dumping order.

1.220 Korea's allegation that Article 11 somehow proscribes a prospective (or "forward-looking") analysis under Article 11.2 is completely without merit. First, Article 11, as discussed, does not define the time period that an investigating authority must examine when deciding if the "continued imposition of the duty is necessary to offset dumping." Second, Article 11.3, footnote 22, clearly permits a Member with a retrospective assessment system, such as the United States, to maintain an anti-dumping duty (i.e., an order) even though the most recent assessment period may have revealed an absence of dumping. Given this fact, it is only logical that the inquiry under Article 11.2 may involve a prospective analysis of whether dumping is likely to resume. Finally, the ordinary meaning of the expression "continued imposition," in Article 11.2, suggests an analysis that goes beyond the immediate question of whether a Respondent is presently dumping. Rather, it suggests a broad inquiry into the anti-dumping order's continuing necessity -- necessity based upon past and expected behavior. This is precisely the type of inquiry that is provided for under section 353.25(a) of the DOC's regulations.

1.221 The United States, in response to a question from the Panel,¹³⁹ further argued as follows:

1.222 Article 11 does not indicate what time period should be considered when determining whether the continued imposition of the duty is necessary to offset dumping. In most cases under section 353.25(a), the arguments of the parties determine which time period will be important to the DOC's analysis. In this regard, the DOC examines current trends that may have some bearing on the foreseeable future (e.g., within the coming year). For example, the existence of inventories and capacity utilization may offer some indication about what is likely to happen in the next few months. Still, high inventories for different industries may have different implications on the period of time which is relevant. Similarly, different industries may have business cycles of different lengths. Therefore, the experience of the United States in administering the anti-dumping duty law suggests that the specific business cycles and trends of the industry in question are relevant. The appropriate time period depends on the facts of each case.

1.223 With regard to when the relevant time period is set, it is the parties themselves that provide evidence deemed relevant to the inquiry. Thus, the DOC does not "establish" a time period under section 353.25(a). The DOC may conclude as it did in DRAMs from Korea, that, of all the evidence, some is more probative of likelihood of future dumping than others. However, even in this context, the DOC still did not "establish" a time period in the sense of declaring evidence related to a particular time period as irrelevant or inadmissible.

To continue with Burden of Proof

¹²⁸ See 19 C.F.R. � 353.25(a)(2)(ii) (1996).

¹²⁹ Korea notes, in this regard, that the United States has failed to comply with this requirement as well. Under US law, when the ITC examines whether a duty should be revoked for changed circumstances, it is required to presume that future sales will be dumped, absent a review of the matter and contrary conclusion by the DOC. See Matsushita Elec. Indus. Co. v. United States, 569 F. Supp. 853, 856 (C.I.T. 1983), rev'd on other grounds, 750 F.2d 927 (Fed. Cir. 1984) (Ex. ROK-55); American Permac, Inc. v. United States, 656 F. Supp. 1228 (C.I.T. 1986), aff'd, 831 F.2d 269, cert. denied, 485 U.S. 901, 108 S. Ct. 1067 (Ex. ROK-56).

¹³⁰ This analysis complies with the directive of the Vienna Convention, Article 31.1 ("A treaty shall be interpreted in good faith 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.").

¹³¹ The Panel recalls that the question was as follows: "The Panel notes that Article 11.1 of the ADP Agreement provides that 'an anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury', whereas the penultimate sentence of Article 11.3 provides for the continued application of an anti dumping duty if its expiry 'would be likely to lead to continuation or recurrence of dumping and injury.' What is the relationship between the concept of necessity in Article 11.1 and the concept of likelihood in Article 11.3? How does a finding of 'likelihood' under Article 11.3 satisfy the "necessity" requirement of Article 11.1?"

¹³² Final Results Third Review, 62 Fed. Reg. at 39814 (Ex. USA-1).

¹³³ Id.

¹³⁴ AD Agreement, art. 11.3 (emphasis added by the United States).

¹³⁵ The Panel recalls that the question was: "Article 11.1 of the ADP Agreement provides that an anti-dumping duty may only remain in force as long as it is necessary to counteract dumping which 'is' causing injury. Article VI:1 of GATT 1994 condemns dumping if it "causes" or 'threatens' material injury. The verbs quoted from these provisions are expressed in the present tense. Does the United States consider that the use of the present tense suggests that anti-dumping measures should only remain in place to the extent that present dumping is presently causing or presently threatening to cause material injury? If not, why not?"

¹³⁶ See, e.g., United States - Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, Report of the Appellate Body adopted 20 May 1996, at 17; Japan - Taxes on Alcoholic Beverages, WT/DS8/AB/R, Report of the Appellate Body adopted 1 November 1996, at 10.

¹³⁷ United States - Anti-Dumping Duties on Imports of Stainless Steel Plate from Sweden, ADP/117 and Corr. 1, Report of the Panel issued 24 February 1994 (unadopted), para. 233.

¹³⁸ AD Agreement, art. 11.1.

¹³⁹ The Panel recalls that the question was: "At what point during the revocation review proceeding is the time period for examining the 'not likely' criterion determined and notified to the parties? Has it always been the same point? If not, why not?