4. Rejection and Acceptance of Data

a) Claim Raised by Korea

1.581 Korea claims that the United States by rejecting verified and corroborated evidence from the Korean Respondent companies while accepting the US petitioner's claims violated its obligations under Article X:3(a) of GATT 1994. The following are Koreas' arguments in support of that claim:

1.582 The United States, by rejecting and accepting data in a biased fashion, also breached its obligations under Article X:3(a) of the General Agreement. Article X:3(a) requires Members to administer their anti-dumping laws in a uniform, impartial and reasonable manner.

1.583 In its efforts to satisfy the DOC that there was "no likelihood" of future dumping, the Korean companies submitted large amounts of current data regarding pricing trends, inventory levels and various other aspects of market conditions for DRAMs. All of these data were corroborated; indeed, the DOC verified much of it. The US petitioner, on the other hand, generally submitted speculation and innuendo, little of which was corroborated and none of which the DOC verified. Despite this, the DOC uniformly rejected verified and corroborated Korean data and accepted the US petitioner's speculative claims. For example, with respect to pricing trends in the DRAM industry, the DOC conceded that the Korean companies had established that prices had stabilized, indeed recovered somewhat, during 1997.⁴²⁴ Yet, the DOC speculatively concluded that "a large degree of uncertainty about the direction of the market remains."⁴²⁵ Similarly, with respect to inventory levels, the DOC rejected the companies' publicly announced and published plans to decrease production levels (even while noting that "the market . . . reacted with higher prices") and instead accepted speculative assertions that production might increase, due to the possibility that there might be a temporary spike in demand (which would increase prices, of course).⁴²⁶ Thirdly, although acknowledging that below-cost sales by the Korean companies were not sufficiently numerous to be disregarded in the normal value calculations, the DOC concluded that the record "suggests that the number of below-cost sales increased . . .."⁴²⁷ This is nothing more than a transparent effort by the DOC to substantiate its groundless conclusion.

1.584 The pattern of bias is pervasive. The DOC wanted to conclude that continued dumping was likely, so it discounted evidence that contradicted this belief. This is not a matter of a few isolated incidents. The pattern is universal--claims by the US petitioner were accepted even if speculative, while those of the Korean companies were rejected even if corroborated and verified. This violates the US obligation under Article X:3(a) to administer its anti-dumping law in a uniform, impartial and reasonable manner.

b) Response by the United States

1.585 The United States responds to Korea's claim with the following arguments:

1.586 Korea assails the DOC's consideration of the evidence submitted for the record as "biased" and states that "[t]he pattern of bias is pervasive." Korea couches these allegations in the context of an argument under Article X:3(a). As the Final Results Third Review make vividly clear, the DOC afforded all parties an opportunity to submit evidence. The DOC thoroughly evaluated all of the evidence and data submitted by the parties and provided a well-reasoned analysis of this information. The fact that the DOC's evaluation of this data did not produce a result that Korea favors does not provide a basis for Korea's claims of bias. As such, the DOC's consideration of this data did not violate the United States' obligations under Article X:3(a).

c) Rebuttal Arguments Made by Korea to All Claims under Article X:3(A) of GATT 1994

1.587 Korea makes the following arguments in rebuttal to the United States responses on all Article X:3(a) claims (i.e. the United States revoked anti-dumping duties in like cases, Korea submitted an effective data collection proposal, variance of the "no likelihood/not likely" criterion and the time-period selected rejection, and acceptance of data):

1.588 Article X:3(a) of the General Agreement requires governments to administer their laws, regulations and administrative rulings of general application in a "uniform, impartial and reasonable manner." It embodies the fundamental principle of due process. If government measures are arbitrarily applied, the resulting procedural protectionism is as damaging as would be the application of measures that are discriminatory on their face.

1.589 Four aspects of the DOC's actions in DRAMs from Korea violate the United States' due process obligation under Article X:3(a):

1.590 As was true with regard to Article X:1, this is not, as the United States alleges, an argument addressing the substance of the US revocation scheme. Rather, it condemns the arbitrary administration of the law by the DOC. Korea has never argued that the Department denied rights of participation in this proceeding. What it has established is that the United States applied different criteria in this case than in other cases and that it accepted and evaluated data in a biased fashion. These are the denials of due process contrary to Article X:3(a).

1.591 The US argument that its anti-dumping revocation regime is administered in conformity with Article X:3(a) because the same regulation (Section 353.25(a)(2)) ostensibly is applied in all cases, and that different outcomes are due to different facts is no defense. To conform to Article X:3(a), the United States would have had to uniformly apply the standards for determining whether to revoke. Either in its laws, regulations or administrative rulings of general application the United States would have had to set out the specific, objective criteria on which it bases its revocation decisions. The United States has not done so. As acknowledged repeatedly by its own courts, in the United States there are no objective criteria governing revocation.

1.592 The United States claims that the Brass Sheet and Strip determination sets out the factors always used by the DOC in analyzing the "no likelihood/not likely" criterion. Yet, at page 49727 of the Final Results of the Third Review,⁴²⁸ the DOC admits that the determination does not specify the factors the DOC will use in revocation determinations and that Brass Sheet and Strip in fact did not set out the factors used in the DRAMs from Korea decision.

1.593 In most cases the United States revokes anti-dumping duties without conducting a substantive analysis of the "no likelihood/not likely" criterion. In only a very few cases, including DRAMs from Korea, did the DOC substantively analyze this criterion and require Respondents to prove it to the satisfaction of the Secretary. The United States terminated the anti-dumping proceeding on 256K and above DRAMs from Japan in return for a data collection proposal. However, the DOC refused even to allow Korea the opportunity to negotiate a similar proposal. The DOC arbitrarily chose the time period it examined in determining whether the "no likelihood/not likely" criterion was satisfied. Finally, the DOC systematically rejected verified or verifiable evidence submitted by the Korean Respondent companies while accepting the US petitioner's unverified, speculative claims.

1.594 Each of the four actions set out above demonstrates that the DOC applied its revocation regime in a manner that was neither uniform, impartial, nor reasonable.

1.595 Facts differ from case to case, but Article X:3(a) requires that they be analyzed in a uniform, impartial and reasonable manner. The United States did not do so, and thereby violated its obligations under Article X:3(a).

d) Rebuttal Response Made by the United States to All Claims under Article X:3(A) of GATT 1994

1.596 The United States makes the following arguments in rebuttal all Article X:3(a) claims made by Korea⁴²⁹ (i.e. the United States revoked anti-dumping duties in like cases, Korea submitted an effective data collection proposal, variance of the "no likelihood/not likely" criterion and the time-period selected rejection, and acceptance of data):

1.597 Korea has failed to establish a violation under Article X:3(a). Korea bears the burden of providing evidence that the DOC, in reaching its determination in Final Results Third Review, failed to administer its regulations in a "uniform, impartial and reasonable manner."⁴³⁰ Considering the Appellate Body's finding that "the mere assertion of a claim" does not amount to proof,⁴³¹ this Panel should reject Korea's baseless claims under Article X:3(a).

1.598 Korea asserts that "[t]he criteria the DOC uses will vary from case to case" and, thus, "[t]hey are not uniform or impartial." The United States has established, however, that the criteria contained in section 353.25(a)(2) have remained substantially the same since the promulgation of this regulation in 1980, and apply in each case where an anti-dumping order may be revoked pursuant to this regulation. Therefore, the premise underlying Korea's claim that the criteria are not uniform or impartial is not grounded in fact. Because Article X:3(a) concerns itself with the administration of the DOC's regulations, Korea's failure to present evidence (beyond mere assertions) that the DOC has applied section 353.25(a)(2) in a non-uniform and biased manner. Korea's claim fails.

1.599 Korea alleges bias by stating that "[t]he DOC wanted to conclude that continued dumping was likely . . ." The only support offered by Korea consists of isolated instances where the DOC concluded that evidence presented by the Korean Respondents did not support their arguments. A proper review of the record in the underlying administrative proceeding reveals that the DOC's conclusions in the Final Results Third Review were based on an objective and unbiased evaluation of the facts. While the DOC's conclusions may have been to the detriment of the Respondents, this does not substantiate a claim that the DOC administered its law and regulations in a biased or unreasonable fashion.

1.600 Korea also alleges that "the period chosen by the United States [in which to consider the likelihood issue] was neither impartial nor reasonable, and the United States breached its obligations under Article X:3(a) of the General Agreement." The DOC determined the relevant period in which to consider the likelihood issue on the basis of the evidence provided by the parties to the administrative review. The fact that different periods of time may be examined in different cases derives from the simple fact that the evidentiary records in each case will differ. For the same reasons, Korea's arguments that the DOC rejected a data collection proposal (DCP) after having accepted such a proposal in "another similar case," and that the United States has revoked duties "in like cases in the past," do not establish a violation under Article X:3(a). Korea fails to demonstrate that, despite the different results in different cases with different facts, the DOC failed to administer its laws, regulations, decisions and rulings in a uniform, impartial and reasonable manner. Stated differently, Korea's claims must be rejected, because what little evidence Korea has provided does not relate to the legal obligation imposed by Article X:3(a).

H. Claims under Articles 2 and 3 of the AD Agreement

1. The DOC's Decision Regarding the Scope of the Proceeding

a) Claim Raised by Korea

1.601 Korea claims that the United States violated its obligations under Articles 2 and 3 of the AD Agreement because, during the original investigation of DRAMs from Korea the DOC (i) failed to include in the scope products that were in existence and that are like products to the investigated products; and (ii) included products in the scope of its proceeding that did not exist at the time of the original investigation. The following are Koreas arguments in support of this claim:

1.602 Articles 2 and 3 of the AD Agreement set forth procedures and requirements for Members to employ and follow in determining whether a product is dumped and whether that dumping has caused injury to a Member's domestic industry. In order for an anti-dumping measure to be taken, a Member must determine that a like product is being sold at a price below its normal value and that the sales below normal value of the like product cause (or threaten) material injury to a domestic industry of the Member.⁴³²

1.603 The United States violated its obligations under Articles 2 and 3 of the Agreement by including within the scope of the proceeding products that were not in existence at the time of the original investigation and therefore could not have been investigated to determine if they were dumped and injured an industry in the United States.⁴³³ The United States also violated its obligations under Articles 2 and 3 of the Agreement by excluding certain products that were like those considered in the investigation. The exclusion of the like products contributed to the issuance of the anti-dumping duty order because they could have significantly altered the dumping and injury results.⁴³⁴

1.604 The AD Agreement does not envision manipulation of the scope of a proceeding to, on the one hand, exclude a substantial portion of like products⁴³⁵ from the original dumping and injury analyses and, on the other hand, create a completely open-ended scope that includes future generations of DRAMs with a memory capacity 64 times, 256 times, or greater, than that of the products originally investigated. Common sense alone dictates that a definition of like products that defines a 64 megabit DRAM (64 times the memory capacity of a one megabit DRAM) as a like product to the one megabit DRAM investigated in the original investigation and defines a 256 kilobit DRAM (a one megabit DRAM has only 4 times the memory capacity of a 256 kilobit DRAM) not a like product is indefensible. Not only does the memory capacity difference between DRAM generations separate DRAMs such as one megabit and four megabit and 64 megabit DRAMs into different like products, an examination of design and process differences further distinguishes one and four megabit DRAMs from 64 megabit and above DRAMs. There are significant design, process and application differences between the categories, that demonstrate that the one and four megabit DRAMs are not like products to the 64 megabit and above DRAMs.

1.605 The open-ended nature of the product scope suggested by Micron and accepted by the DOC embraced not only infinitely increasing memory capacities, but also infinitely advancing technologies. The product scope of the anti-dumping duty order extends to memory devices that are so technically advanced that they cannot reasonably be considered like products to the originally investigated products--they are not merely model-year changes. This, also, violates the United States' obligations under Articles 2⁴³⁶ and 3 of the AD Agreement.

1.606 A basic limitation faced by DRAM producers is speed. The speed of a DRAM, whether a Fast Page Mode (FPM) DRAM, the type of DRAM investigated during the original investigation, or an Extended Data Output (EDO) DRAM, does not match that of microprocessors. Significant, costly delays, or "wait states," occur when speed mismatches between the DRAM and the microprocessor develop. FPM and EDO DRAMs are referred to as asynchronous DRAMs and, in order to decrease wait states, each type has been subjected to advanced engineering techniques. FPM speeds have been increased by process and photolithographic advances; minor architectural changes have increased the speed of EDO DRAMs. However, FPM and EDO DRAMs still suffer from the mismatch speed problem.

1.607 Synchronous DRAMs (SDRAMs), on the other hand, represent a major technological advance in the memory market. The operation of an SDRAM is fully synchronized with an internal system clock. This is completely different from a conventional DRAM, such as FPM and EDO DRAMs, which lack such a clock. Also, the architecture of SDRAMs (i.e., design topology, operation diagram and function) is radically different from previous DRAMs. The architecture of SDRAMs supports multiple and new functions to synchronize (e.g., multi-bank, on-chip programmable functions and multi-operational mode). The system clock and radical architectural changes synchronize the function of the SDRAM with that of the microprocessor so as to provide a data rate in line with the speed of the microprocessor. Thus, SDRAMs are a complete reinvention of random access memory that provide "burst" technology to deliver data faster and cheaper. In somewhat simpler terms, SDRAMs multiply and synchronize memory access to avoid downtime for the microprocessor and to increase data retrieval speed.

1.608 In addition, future DRAMs will have new, completely distinct architectures, such as Rambus DRAMs, SyncLink DRAMs and DRAMs with embedded logic. The name, "DRAM," likely will still be used, even though the products are distinct and do not compete.

1.609 Thus, the technological advance from the FPM/EDO DRAMs to SDRAMs is not a matter of generational or memory capacity change. The advance is so radical that including this new type of memory in a proceeding where the original investigation was limited only to sales of FPM and EDO DRAMs is akin to including Ferraris in an anti-dumping proceeding regarding one-horse carts. Articles 2 and 3 of the AD Agreement simply do not permit the open-ended application of anti-dumping duties so as to capture products that because of technological advances are virtually unrelated to the products originally investigated.

1.610 Therefore, the United States violated its obligations under Articles 2 and 3 of the AD Agreement when it excluded products that were clearly like products from its investigation and at the same time determined that there was no upper limit on the memory capacities and additional features or functions of DRAMs considered to be like products and subject to its anti-dumping duty order.

1.611 In response to a question by the Panel,⁴³⁷ Korea further argued as follows:

1.612 Korea is making two legally distinct claims. First, Korea argues that every time since the WTO entered into force that the United States has forced the Respondents to report data for a new product, e.g., the 64M DRAM, and has calculated a dumping margin based in part on that data, the United States has engaged in a "post-GATT" action. These "post-GATT" actions are not, as the United States asserts, insulated from review. They must comply with the dictates of the WTO agreements. In this case, the United States improperly has acted to include within the scope of administrative reviews products that did not even exist at the time of the investigation (indeed, products made using technologies and machines that did not even exist at the time of the investigation). This violates Articles 2 and 3 of the Anti-Dumping Agreement.

1.613 Second, Korea claims that the United States is in violation of its Anti-Dumping Agreement obligations by continuing to apply the original product scope determination in the 1993 DRAMs from Korea order. Although the scope determination was made in 1993, the United States has not modified it to conform to its WTO obligations. Thus, each time the United States has published a determination with the same scope it has violated Article 18.4 of the Anti-Dumping Agreement and Article XVI:4 of the WTO Agreement.

1.614 The United States has argued throughout this proceeding that its Federal Register determinations, e.g., the Final Results in Brass Sheet and Strip⁴³⁸, constitute "administrative rulings of general application" within the meaning of GATT Article X:1. (Korea concurs.) If, indeed, one can (indeed, must) rely on the U.S. administrative rulings to ascertain U.S. law, then obviously those rulings must comply with Article 18.4 and Article XVI:4. If this is true of the "no likelihood/not likely" analysis in Brass Sheet and Strip, then it is true of the scope determinations in this proceeding.

b) Response by the United States

1.615 The Panel notes that the United States raised a preliminary objection with regards to Korea's claims under Articles 2 and 3 of the AD Agreement. In light of its preliminary objection the United States did not respond directly to Korea's claim. The arguments of the Parties on this matter can be found in Section IV.A.2 of this report.

To continue with Claims under Article 5.8 of the AD Agreement

⁴²⁴ 62 Fed. Reg. 39809, 39814 and 39817 (24 July 1997) (Ex. ROK-3).

⁴²⁵ Id. at 39817.

⁴²⁶ Id.

⁴²⁷ 62 Fed. Reg. 39809, 39817 (24 July 1997) (Ex. ROK-3).

⁴²⁸ See Ex. ROK-36.

⁴²⁹ The Panel notes that this includes those Article X:3 claims made in conjunction with Article I claims.

⁴³⁰ GATT 1994, Art. X:3(a).

⁴³¹ Wool Shirts, WT/DS33/AB/R, at 14.

⁴³² Articles 2 and 3 of the AD Agreement.

⁴³³ The scope of the anti-dumping duty order includes DRAMs of one megabit and above. See Notice of Final Results of Anti-dumping Duty Administrative Review and Determination Not to Revoke Order in Part; DRAMs from Korea, 62 Fed. Reg. 39809 (24 July 1997) (Ex. ROK-3). Theoretically, this scope includes products such as 64 megabit DRAMs that were not even shipped to the United States until 1996, as well as DRAMs with higher densities (memory capacities) that have not yet been developed.

⁴³⁴ The DOC's investigation did not examine sales of Korean DRAMs with densities of less than one megabit. In previous investigation, the DOC treated 256 kilobit DRAMs as like products to one megabit DRAMs. See DRAMs from Japan, 51 Fed. Reg. 9475 (19 March 1986) (Ex. ROK-54).

⁴³⁵ During the period of investigation (November 1991 - April 1992), 256 kilobit DRAMs represented a sizable segment of DRAM shipments.

⁴³⁶ The Panel notes that there was an error in Korea's first submission which originally refered to Article 1 of the AD Agreement. All further incorrect references have also been revised. See also footnote 15.

⁴³⁷ The Panel recalls that the question was: "Could Korea confirm that it is challenging the product scope determination in the 1997 refusal to revoke, and not product scope determination in the original 1993 DRAMs from Korea determination? Is Korea making two legally distinct claims: (1) against the original product scope determination in the 1993 DRAMs from Korea order, and (2) against the product scope determination contained in the 1997 refusal to revoke? Or does Korea consider that these two claims are essentially linked, to the extent that one claim cannot exist independently of the other?"

⁴³⁸ 61 Fed. Reg. 49727 (23 September 1996) (Ex. ROK-36))