7. Need for Injury Finding

a) Claim Raised by Korea

1.299 Korea claims that by failing to initiate ex officio an injury review where evidence showed that it was warranted the United States violates Article 11 of the AD Agreement. The following are Korea's arguments in support of this claim:

1.300 Sales at less than normal value (dumping), alone, are not prohibited by the WTO agreements; rather, the WTO agreements prohibit only dumping that is causing injury.²⁰¹ A Member must establish that a Respondent is dumping and also that the dumping is causing injury before it can impose or maintain a duty.²⁰² Thus, even assuming for the sake of argument that the DOC's finding that renewed dumping was likely was correct (and that the DOC's imposition of the various criteria was permissible), the US Government failed to make any determination that dumping which is causing injury was likely.

1.301 The provisions of the AD Agreement establish three requirements on Members that would impose or maintain a duty: dumping, injury and causation. First, the Member must establish that a product is being dumped, i.e., "introduced into [its] commerce . . . at less than its normal value."²⁰³ The methodology for establishing dumping is set out in Article 2. Second, the Member must establish that its domestic industry is materially injured. The methodology for establishing injury is set out in Article 3. Finally, the Member must establish that the dumping is causing the material injury. Guidelines for establishing causation are set forth in Article 3.5. Absent any one of these three elements, a Member shall not impose or maintain an anti-dumping duty.

1.302 In regard to maintaining a duty, Paragraph 2 of Article 11 of the AD Agreement requires a Member, on its own initiative, to conduct a review of injury to the domestic industry (as well as of dumping) "where warranted." According to the first sentence of Paragraph 2:

According to the third sentence of Paragraph 2:

1.303 In DRAMs from Korea, circumstances clearly "warranted" an injury review by the US Government. For three consecutive years, the US Government, itself, had found that no dumping existed. The logical consequence of this finding is that no injury caused by dumping could have occurred during this same three-year period--if there is no dumping, there is no injury and, of course, the duty is not necessary. But, even if the authorities had been justified in concluding that a resumption of dumping was likely, they made no determination as to whether a resumption of injury--after three years of no injury--was likely. After concluding that for three years no injury was occurring as a result of dumping, the authorities had an obligation on their own initiative (it was "warranted") to investigate whether injury as well as dumping would be likely to resume if the order were revoked. Paragraph 2 of Article 11 required a separate determination regarding injury and the US Government failed to comply with this requirement and thereby violated Article 11.

1.304 Furthermore, the ITC, the US agency that conducts injury investigations, does not even have the authority to conduct such a review so as to be able to meet its obligation under Paragraph 2 of Article 11. Quite simply, the United States has failed to implement this requirement of Paragraph 2 of Article 11 and this, too, is a violation of the AD Agreement.

1.305 Korea, in response to a question from the Panel,²⁰⁵ further argued as follows:

1.306 The Korean Government's understanding is that the Respondents requested revocation under Section 353.25(a)(2) and not Section 207.45(a) for a number of reasons. In the United States, after the original investigation is complete, the procedure shifts away from the ITC. The DOC is the entity that conducts the administrative reviews. Having been found not to be dumping by the Department for three consecutive reviews, covering three-and-one-half years, the Respondents presumably thought that revocation pursuant to the DOC's regulation was basically a formality, as it is in most cases.

1.307 In any case, as the title of Section 353.25(a) is "Revocation based on absence of dumping," this regulation is the more appropriate regulation. The ITC, of course, does not have a regulation providing for revocation based upon an absence of dumping. Instead, Section 207.45(a) is the ITC's "changed circumstances" review regulation--it presumes that dumping is occurring, but allows a respondent to demonstrate that market circumstances have changed such that the dumping no longer is causing injury. (The DOC also has a changed circumstances regulation, at Section 353.25(d).)

1.308 The United States suggests that the Respondents should have pursued a changed circumstances review at the DOC and/or the ITC. The United States thus continues to attempt to improperly burden the Respondents. The United States implies that the fact that they did not seek such a review somehow undermines Korea's case. But this is not true. The DOC's regulations provide specifically for "Revocation based on absence of dumping," and, as Korea has demonstrated, even if that regulation complied with the AD Agreement (which it does not), the Respondents met its requirements and were denied revocation only because of bias and the Secretary of Commerce's unfettered discretion in these matters. The implication of the United States that, had Respondents requested changed circumstances reviews, the United States would have revoked the order, is baseless given the DOC's conduct in this case. Also, it is another attempt by the United States to shirk its Article 11 obligations to self-initiate where warranted.

1.309 Finally, in its response to Korea's claims that the United States improperly failed to initiate a changed circumstances injury review (or dumping review), which clearly was warranted, the United States apparently is attempting improperly to conflate two of the obligations of Article 11.2--the obligation to self-initiate where warranted and the obligation to provide for initiation upon request under certain circumstances. As stated above, the Government supposes that the companies did not request an ITC review because they understood that the ITC injury provision applies where a company is dumping, but nonetheless is seeking revocation on the basis that, due to "changed circumstances" in the market, the dumping no longer is injuring the domestic industry. Thus, this provision is not appropriate here. (Moreover, based on U.S. procedure, Respondents would have had no cause to do so until after the DOC denied revocation.)

1.310 The U.S. position on this point demonstrates, in general, the poverty of the U.S. position. In this case, what would the ITC have examined? Korea's argument is not changed circumstances but revocation based on no dumping and no injury caused by dumping. In this context, what is the relevance of a change in market conditions?

1.311 Also, the United States conveniently fails to note that its suggestion would have imposed on the Korean companies the burden of establishing "changed circumstances sufficient to warrant the institution of a review investigation." 19 C.F.R. � 207.45(a). In other words, simply to obtain a review that might, possibly, result in revocation, the companies would have had to meet a burden of proof that Article 11 does not allow a Member to assign to a company to obtain revocation itself. The companies then, of course, would have had to meet an even greater and more improper burden to obtain revocation. Thus, even the procedure for simply requesting an injury review under 19 C.F.R. 207.45(a) violates Article 11.2.

1.312 With this argument, the United States apparently has conceded that Korea is correct that the United States improperly places the burden of proof on the responding companies. Perhaps more importantly, under Article 11.2, the United States was required to self-initiate an injury investigation "where warranted," a standard that certainly was met here, where for over 3 years the Department found no dumping, and thus the injury finding from the original investigation was stale and no longer applicable.

1.313 Korea, in response to another question from the Panel,²⁰⁶ also made the following arguments:

1.314 If the Department fails to revoke, the ITC must self-initiate, because three consecutive reviews of no dumping is the strongest possible evidence that, at the very least, the ITC's original finding of injury by reason of dumping is no longer valid and that an injury review is necessary.

b) Response by the United States

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

1.316 Korea argues that the United States was obligated to conduct an "injury review" pursuant to Article 11.2 of the AD Agreement. According to Korea, an inquiry into whether a "resumption of injury ... was likely" was "warranted" because Respondents had gone three years without dumping. Korea also asserts that the United States lacks the ability to comply with Article 11.2 because the ITC lacks the authority under United States law to conduct this type of review. As with Korea's other claims, these too fail.

1.317 First, the ITC's authority to self-initiate a review of its injury determination is expressly provided for in section 751(b) of the Act²⁰⁷ and section 207.45(c) of its regulations.²⁰⁸ Secondly, Respondents never asked the ITC to exercise its authority in this regard. No one, including Korea, ever raised this issue until after the DOC issued the Final Results Third Review. As a result, this Panel lacks an adequate factual and legal record to review under Articles 17.5 and 17.6 of the AD Agreement. Lastly, as the complaining party, Korea bears the burden of coming forward with evidence to support its claim. To support its claim that a review of the injury question was "warranted," Korea must present evidence which shows: (i) that injury to the domestic industry in the United States was not likely "to continue or recur if the duty were removed or varied," and (ii) that the responsible investigating authority in the United States was in possession of this information a reasonable period of time before Korea instituted the present action.²⁰⁹ Korea has done neither. All it has done is cite to the fact that Respondents were found not to be dumping during a three-year period when the order was in existence.²¹⁰

1.318 The United States, in response to a question from the Panel,²¹¹ further argued as follows:

1.319 A Member is required to self-initiate a review only "where warranted." In this case, Korea has not asserted that anything, other than an absence of dumping for three years, indicated that an injury review was "warranted" within the meaning of Article 11.2.

1.320 Evidence that dumping has stopped does not, in and of itself, indicate that an injury review is "warranted" under Article 11.2. For one thing, a lack of current dumping does not necessarily indicate a change in the relevant market conditions. Rather, a Respondent may simply have changed its pricing practices in response to the issuance of the anti-dumping order or may even have ceased or curtailed its exports because of an inability to compete at a fairly traded price.

1.321 It also is not enough to claim, as Korea does, that injury has stopped subsequent to the issuance of an order. First of all, the AD Agreement recognizes that this may be the case in a particular situation; that is why Article 11.2 calls for evidence that the injury is not likely to "recur." It also explains why the test turns on what will happen if the "duty were removed or varied." In other words, the drafters of Article 11.2 assumed that in some, but not necessarily all cases, maintenance of the order will remedy injury.

1.322 In short, a self-initiated review of injury is "warranted" within the meaning of Art. 11.2 when a Member is in possession of information which bears on what the condition of the industry would be after an anti-dumping order is "removed or varied." Evidence limited exclusively to a Respondent's pricing practices during the existence of the order misses the mark because it says next to nothing about the condition of the industry if the duty is removed or varied. Under section 751(b), interested parties also have the opportunity to request a review of the ITC's injury determination.

c) Rebuttal Arguments Made by Korea

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

1.324 The United States asserts that for a self-initiated review to be warranted:

1.325 As this statement demonstrates, even in the context of the standard for simply initiating a self-initiated review, the United States seeks to impose on a Respondent the burden of "show[ing] that injury . . . was not likely to continue or recur . . .."

1.326 This is not a permissible interpretation of the requirement of Paragraph 2 of Article 11. Paragraph 2 does not allow a Member to impose on a Respondent a burden equal to proving that a duty should be revoked merely to obtain initiation of a self-initiated review.

1.327 A self-initiated review is just that--self-initiated. It is not initiated because a Respondent has made a certain showing--that is termed a "review upon request" in Paragraph 2. The two are quite distinct. The provision of a review upon request is contingent on an interested party having submitted "positive information substantiating the need for review." The United States, however, would import this requirement from the "review upon request" provision to the self-initiated review provision. In doing so, it would completely undercut the reason for having a separate self-initiated review provision in the first place. Thus, the US "criticism" that "Respondents never asked the ITC to exercise its authority in this regard" misses the point entirely.

1.328 This is not the first time that the United States has sought to avoid its Article 11.2 responsibilities regarding injury reviews.²¹² In Swedish Stainless Steel Plate, the panel concluded that the predecessor of Article 11.2 established two distinct sets of obligations regarding injury reviews--one set relating to self-initiated reviews and one set relating to reviews upon request.²¹³ Moreover, the panel found that, in the context of a self-initiated review, a Member cannot impose on the Respondent a burden drawn from thin air in order to protect the Member's market. Rather, the Member must self-initiate an injury review, where warranted, including in situations where the data warranting the review are possessed only by the Member.²¹⁴ As the panel aptly noted:

1.329 In sum, the United States imports the burden of proof from "review upon request" into a self-initiated review, in an attempt to deflect Korea's demonstration in its first submission that the United States violated the Article 11.2 obligation to self-initiate an injury review.

1.330 Self-initiation by the United States of an injury review clearly was warranted in this case. Apart from any evidence which the United States had regarding the state of the US market and the impact of Japan- and EC-based competitors on the domestic DRAM industry, Korea demonstrated to the US Government for a period of more than three consecutive years that it was not dumping. Three-and-one-half years of no dumping means three-and-one-half years of no injury and three-and-one-half years of no causation. Thus, for over three years, Korea demonstrated that not one of the three prerequisites for imposing an anti-dumping duty was met. What, possibly, could the ITC have examined? There was no dumping. Therefore, even if there was injury, there was no causation.²¹⁶

d) Rebuttal Arguments Made by the United States

1.331 The United States makes the following arguments in rebuttal:

1.332 Korea has not cited to any evidence which "warranted" a review under Article 11.2 of whether injury to the US DRAM industry would be likely to continue or recur if the duty were removed or varied. All Korea has done is cite to the Respondents' lack of dumping during a three-year period. However, as the United States discussed during the Panel meeting, evidence limited exclusively to a Respondent's pricing practices during the existence of an order says next to nothing about the condition of the industry if the duty is "removed or varied."²¹⁷

1.333 Nor is it correct that the ITC lacks the authority to initiate, on its own initiative, an injury review if there are no current dumping margins. Briefly, the ITC has previously conducted such reviews (pursuant to section 751(b) of the Act) both when the most recent dumping margins have been zero, see Electric Golf Carts from Poland, Inv. No. 751-TA-1, USITC Pub. 1069 (June 1980) (Ex. USA-86), and when there are current dumping margins, see Salmon Gill Fish Netting of Manmade Fiber from Japan, Inv. No. 751-TA-7, USITC Pub. 1387 (June 1983) (Ex. USA-87). That the ITC's conduct of a section 751(b) review is dependent on neither the presence or absence of a current dumping margin is illustrated by the pending injury review concerning Titanium Sponge from Japan, Kazakstan, Russia, and Ukraine, Inv. No. 751-TA-17-20, in which the imports from Japan have been subject to a zero duty rate for the past three years, but current duties are in effect with respect to imports from the other three subject countries.

1.334 Next, Korea accuses the United States of conflating the standard for initiating reviews upon request with the standard for self-initiated reviews. To buttress its argument, though, Korea misconstrues the statement made by the United States at the first meeting of the Panel. The United States was not referring to an evidentiary showing applicable to respondents before the investigating authorities in the United States. Rather, the United States was discussing the showing that Korea, before this Panel, must make in order to establish that a self-initiated injury review was "warranted" within the meaning of Article 11.2.

To continue with Respondents Met the Criteria for Revocation

²⁰¹ See General Agreement, Article VI; AD Agreement, Articles 11:1 and 11:2. See also United States-Anti-Dumping Duties on Imports of Stainless Steel Plate from Sweden (24 February 1994), ADP/117, para. 231 (see also para. 232) (unadopted).

²⁰² Id.

²⁰³ AD Agreement, Article 2:1.

²⁰⁴ See also United States-Anti-Dumping Duties on Imports of Stainless Steel Plate from Sweden (24 February 1994), ADP/117, paras. 251-252 (unadopted).

²⁰⁵ The Panel recalls that the question was: "At para. 4.4, Korea states that 'the United States...failed to conduct an injury review, which clearly was warranted in this case'. At para. 4.55, Korea states that Art. 11.2 'obliges Members to conduct investigations of dumping and injury before imposing (or maintaining) any duty'. Could Korea please explain why the respondents requested revocation under section 353.25(a)(2) of the DOC regulations, and why they did not request revocation under section 207.45(a) of the ITC regulations?"

²⁰⁶ The Panel recalls that the question was: "Under Article 11.2 of the AD Agreement, investigating authorities are to 'review the need for the continued imposition of the duty, where warranted'. At para. 4.60 of its first submission, Korea asserts that the United States was required to self-initiate an injury review in this case. Does Korea argue that the ITC should self-initiate an injury review as soon as the DOC finds that respondents have not dumped for three consecutive years, or does Korea consider that additional conditions should also be met before the ITC must self-initiate? If so, what other conditions were met in the present case?"

²⁰⁷ 19 U.S.C. � 1675(b) (1997) (Ex. USA-19).

²⁰⁸ 19 C.F.R. � 207.45(c) (1997) (Ex. USA-78).

²⁰⁹ See AD Agreement, art. 11.2 .

²¹⁰ Korea's argument also glosses over an important fact. At the time the DOC initiated the challenged (third) administrative review in June of 1996, only one administrative review had been completed which revealed zero or de minimis margins for Respondents. See First Review 61 Fed. Reg. 20216 (Ex. USA-22). Presumably, Korea does not believe that a single year without dumping "warrants" a review of the injury issue.

²¹¹ The Panel recalls that the question was: "The United States argues that the respondents never asked the ITC to 'self-initiate' a review of its injury determination, that Korea did not raise this issue until after the final results of the third administrative review were issued, and that, as a result, the Panel lacks an adequate factual and legal record to review under Articles 17.5 and 17.6 of the AD Agreement. Is it the view of the United States that the obligation of a Member to review the need for the continued imposition of an anti-dumping duty on its own initiative can only be challenged in WTO dispute settlement if such a 'self-initiation' comes in response to a request from an interested party?"

²¹² See, e.g., United States -- Anti-Dumping Duties on Imports of Stainless Steel Plate from Sweden (24 February 1994), ADP/117, paras. 247-52 (unadopted).

²¹³ Id. at para. 251.

²¹⁴ Id.

²¹⁵ Id.

²¹⁶ The United States cites as "important" the fact that at the time the DOC initiated the Third Review, only one administrative review had been completed. But, Korea's injury argument, does not depend upon all of the reviews having been completed at the start of the Third Review. Rather, Korea's argument is based upon the fact that the United States itself, after completing three reviews, effectively determined that there had been 3.5 years of no injury, and did not determine that a recurrence of injury was likely (even assuming that a recurrence of dumping was likely), as required by Paragraph 2 of Article 11.

²¹⁷ See AD Agreement, art. 11.2.