VI. Findings

A. Introduction

1.1 This dispute arises out of the US Department of Commerce ("DOC") 24 July 1997 Notice of Final Results of Antidumping Duty Administrative Review and Determination Not to Revoke Order in Part: Dynamic Random Access Memory Semiconductors of One Megabyte or Above From the Republic of Korea ("Final Results Third Review").⁴⁶⁶

1.2 An anti-dumping order was imposed on DRAMs from Korea ("DRAMs from Korea") on 10 May 1993,⁴⁶⁷ following an investigation initiated pursuant to an application filed on 22 April 1992 by Micron Technologies, Inc. ("Micron"). Two administrative reviews were initiated by the DOC on 15 June 1994 and 15 June 1995, covering the periods 29 October 1992 to 30 April 1994 and 1 May 1994 to 30 April 1995 respectively. The DOC found that LG Semicon Co., Ltd. ("LGS") and Hyundai Electronics Industries, Inc. ("Hyundai") (the "respondents") had not dumped in either period of review.

1.3 The DOC initiated a third annual review on 25 June 1996, covering the period 1 May 1995 to 30 April 1996. At the same time, the DOC initiated a revocation review pursuant to a request from the respondents under section 353.25(a)(2) of the DOC regulations to revoke DRAMs from Korea in part. On 24 July 1997, the DOC issued its Final Results Third Review, which contained a determination not to revoke DRAMs from Korea in part, and a finding that the respondents had not dumped during the period of the third administrative review.

1.4 On 14 August 1997, Korea requested consultations with the United States concerning the DOC's determination not to revoke DRAMs from Korea.⁴⁶⁸ Consultations were requested under Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("Dispute Settlement Understanding", or "DSU") and Article 17.3 of the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("AD Agreement"). Consultations were held in Geneva on 9 October 1997, but the parties failed to reach a mutually satisfactory solution.

1.5 On 6 November 1997, Korea requested the establishment of a panel⁴⁶⁹ to examine inter alia the consistency of (1) section 353.25(a)(2)(ii) and (iii) of the DOC regulations, and (2) the DOC's determination not to revoke, with various provisions of the AD Agreement. This Panel was established on 16 January 1998, with standard terms of reference.⁴⁷⁰

B. Preliminary Issues

1.6 The United States initially raised three preliminary objections. First, the United States asserted that claims raised by Korea under Articles 1, 2, 3 and 17 of the AD Agreement were not properly before the Panel (i.e., were inadmissible) because they were not identified in Korea's request for consultations. Second, the United States asserted that Korea's Article 1 claim was inadmissible because it was not included in Korea's request for establishment of a panel. Third, the United States argued that product scope claims raised by Korea under Articles 2, 3 and 18.4 of the AD Agreement, and Article XVI:4 of the WTO Agreement, were inadmissible because they concerned a product scope determination that is not subject to the disciplines of the AD Agreement.

1.7 In response to questions from the Panel, Korea stated that it "intended to advance no arguments under Article 1",⁴⁷¹ and that it "does not take the position that the United States 'violated' Article 17.6 ...".⁴⁷² We therefore consider that Korea has not raised any claims under Articles 1 and 17.6 of the AD Agreement, and do not consider it necessary to rule on the US preliminary objections concerning these issues.

1.8 In response to a question from the Panel, the United States asserted that "a Member should be permitted to refer a claim to a panel if it was actually raised during consultations, even though it may not have been included in the written request for consultations."⁴⁷³ The United States also asserted that the parties to the present case actually consulted on Korea's claims under Articles 2.1, 2.2, 2.2.1.1 and 3.1 of the AD Agreement. In its second submission, the United States repeated its request for the Panel to find Korea's claims under Articles 1, 2, 3 and 17 of the AD Agreement inadmissible, "with the exception of claims under Articles 2.1, 2.2, 2.2.1.1, and 3.1".⁴⁷⁴ We therefore consider that the United States has withdrawn its preliminary objection to Korea's Article 2.1, 2.2, 2.2.1.1 and 3.1 claims, and do not consider it necessary to rule on this matter.

1.9 Furthermore, Korea stated at the second meeting with the Panel that it is not raising separate claims under Article 18.4 of the AD Agreement or Article XVI:4 of the WTO Agreement.⁴⁷⁵ Accordingly, it is not necessary for us to rule on the US preliminary objection concerning such claims.

1.10 In light of the above, we consider that the only preliminary issue before us is the admissibility of Korea's claims under Articles 2 and 3 of the AD Agreement concerning product scope. More particularly, the outstanding preliminary issue concerns the admissibility of Korea's claim that the United States violated Articles 2 and 3 of the AD Agreement by "includ[ing] 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)." The United States argues that this claim is inadmissible because, in accordance with Article 18.3 of the AD Agreement, there is no product scope determination that is subject to the AD Agreement.

1.11 Article 18.3 provides for the application of the AD Agreement to:

1.12 We note that the WTO Agreement entered into force for the United States on 1 January 1995.

1.13 We recall that Article 3.2 of the DSU requires panels to interpret "covered agreements", including the AD Agreement, "in accordance with customary rules of interpretation of public international law". The rules of treaty interpretation set forth in Article 31 of the Vienna Convention on the Law of Treaties ("Vienna Convention"), have "attained the status of a rule of customary or general international law".⁴⁷⁶ Article 31.1 of the Vienna Convention provides:

1.14 In our view, pre-WTO measures do not become subject to the AD Agreement simply because they continue to be applied on or after the date of entry into force of the WTO Agreement for the Member concerned. Rather, by virtue of the ordinary meaning of the terms of Article 18.3, the AD Agreement applies only to "reviews of existing measures" initiated pursuant to applications made on or after the date of entry into force of the AD Agreement for the Member concerned ("post-WTO reviews").⁴⁷⁷ However, we do not believe that the terms of Article 18.3 provide for the application of the AD Agreement to all aspects of a pre-WTO measure simply because parts of that measure are under post-WTO review. Instead, we believe that the wording of Article 18.3 only applies the AD Agreement to the post-WTO review. In other words, the scope of application of the AD Agreement is determined by the scope of the post-WTO review, so that pursuant to Article 18.3, the AD Agreement only applies to those parts of a pre-WTO measure that are included in the scope of a post-WTO review. Any aspects of a pre-WTO measure that are not covered by the scope of the post-WTO review do not become subject to the AD Agreement by virtue of Article 18.3 of the AD Agreement. By way of example, a pre-WTO injury determination does not become subject to the AD Agreement merely because a post-WTO review is conducted relating to the pre-WTO determination of the margin of dumping.

1.15 The principal issue in this dispute, therefore, is whether the DOC's 1993 product scope determination was subject to review in the third administrative review.⁴⁷⁸ Also at issue, however, is whether US "administrative reviews", i.e., Article 9.3.1 duty assessments, constitute "reviews" within the meaning of Article 18.3 of the AD Agreement. In the present case, we note that both parties consider that Article 9.3.1 duty assessment procedures constitute "reviews" within the meaning of Article 18.3.⁴⁷⁹ For the purpose of our analysis in this case, therefore, we shall proceed on the assumption that Article 9.3.1 duty assessment procedures do constitute "reviews" within the meaning of Article 18.3.

1.16 There is nothing in the Final Results Third Review to indicate that the third administrative review included a review of the 1993 DRAMs from Korea product scope determination. Although the Final Results Third Review contain a section entitled "Scope of the Review",⁴⁸⁰ this does not by itself mean that the 1993 product scope determination was subject to review. To the contrary, the product scope of the DRAMs from Korea order, and thus of the third administrative review, was determined once and only once in the original pre-WTO investigation, well before the entry into force of the WTO Agreement for the United States on 1 January 1995. The product scope of the order was not subject to any re-examination in the third administrative review, nor was any determination regarding product scope made at that time. In effect, therefore, Korea is asking the Panel to review the WTO-consistency of an anti-dumping measure with regard to an aspect governed solely by a pre-WTO determination.

1.17 Thus, we find that the scope of the third administrative review set forth in the Final Results Third Review did not include the 1993 product scope determination. Proceeding on the basis of the parties' agreement that Article 9.3.1 duty assessments constitute "reviews" within the meaning of Article 18.3 of the AD Agreement (an issue on which we do not make any findings or conclusions), the 1993 product scope determination was not part of that "review" and is therefore not rendered subject to the AD Agreement by virtue of Article 18.3 of the AD Agreement. For this reason, Korea's product scope claim concerning Articles 2 and 3 of the AD Agreement is not admissible.

C. Consistency of Section 353.25(A)(2)(II) and (III) With Article 11.2 of the AD Agreement

1.18 The determination not to revoke in part DRAMs from Korea was based on section 353.25(a)(2) of the DOC regulations.⁴⁸¹ Section 353.25(a)(2) of the DOC regulations provides that:

"The Secretary may revoke an order in part if the Secretary concludes that:

1.19 Korea has raised a number of claims concerning the consistency of section 353.25(a)(2)(ii) and (iii) with Article 11.2 of the AD Agreement.⁴⁸²

1.20 Article 11.2 of the AD Agreement provides:

1.21 In interpreting Article 11.2 of the AD Agreement, we bear in mind that Article 3.2 of the DSU requires panels to interpret "covered agreements", including the AD Agreement, "in accordance with customary rules of interpretation of public international law". We recall that the rules of treaty interpretation set forth in Article 31 of the Vienna Convention have "attained the status of a rule of customary or general international law".⁴⁸³ We note that Article 31.2 of the Vienna Convention expressly defines the context of the treaty to include the text of the treaty. Thus, the entire text of the AD Agreement may be relevant to a proper interpretation of any particular provision thereof.

1.22 In examining Korea's claims, we also bear in mind the standard of review set forth in Article 17.6(ii) of the AD Agreement:

1.23 In addressing Korea's claims, the Panel is required to examine:

1. Whether Article 11.2 of the AD Agreement Precludes an Anti-Dumping Duty Being Deemed "Necessary to Offset Dumping" Where There is no Present Dumping to Offset

1.24 Korea argues that Article 11.2 of the AD Agreement contains procedures to ensure that a duty is not applied when it is no longer "necessary to offset dumping" that is causing injury, e.g., where an exporter is found not to have been dumping. ⁴⁸⁴ We understand Korea to claim that Article 11.2 of the AD Agreement precludes an anti-dumping duty being deemed "necessary to offset dumping" where there is no present dumping to offset, and that Article 11.2 requires duties to be revoked as soon as there is a finding of "no dumping". ⁴⁸⁵

1.25 Having regard to the rules of treaty interpretation contained in Article 31.1 of the Vienna Convention, we consider that the following textual and contextual analysis of Article 11.2 of the AD Agreement is appropriate in resolving this issue.

1.26 First, we note that the second sentence of Article 11.2 refers to an examination of "whether the continued imposition of the duty is necessary to offset dumping." We note further that this sentence is expressed in the present tense. In addition, the second sentence of Article 11.2 does not explicitly include any reference to dumping being "likely" to "recur", as is the case with the injury review envisaged by that sentence.

1.27 However, the second sentence of Article 11.2 requires an investigating authority to examine whether the "continued imposition" of the duty is necessary to offset dumping. The word "continued" covers a temporal relationship between past and future. In our view, the word "continued" would be redundant if the investigating authority were restricted to considering only whether the duty was necessary to offset present dumping. Thus, the inclusion of the word "continued" signifies that the investigating authority is entitled to examine whether imposition of the duty may be applied henceforth to offset dumping.

1.28 Furthermore, with regard to injury, Article 11.2 provides for a review of "whether the injury would be likely to continue or recur if the duty were removed or varied" (emphasis supplied). In conducting an Article 11.2 injury review, an investigating authority may examine the causal link between injury and dumped imports. If, in the context of a review of such a causal link, the only injury under examination is injury that may recur following revocation (i.e., future rather than present injury), an investigating authority must necessarily be examining whether that future injury would be caused by dumping with a commensurately prospective timeframe. To do so, the investigating authority would first need to have established a status regarding the prospects of dumping. For these reasons, we do not agree that Article 11.2 precludes a priori the justification of continued imposition of anti-dumping duties when there is no present dumping.

1.29 In addition, we note that there is nothing in the text of Article 11.2 of the AD Agreement that explicitly limits a Member to a "present" analysis, and forecloses a prospective analysis, when conducting an Article 11.2 review.

To continue with Whether Article 11.2 of the AD Agreement Precludes an Anti-Dumping Duty

⁴⁶⁶ 62 Fed. Reg. 39809 (24 July 1997).

⁴⁶⁷ 58 Fed. Reg. 27520 (10 May 1993).

⁴⁶⁸ WT/DS99/1.

⁴⁶⁹ WT/DS99/2.

⁴⁷⁰ WT/DS99/3.

⁴⁷¹ See para.4.20, supra.

⁴⁷² See para.4.22, supra.

⁴⁷³ See para.4.15, supra.

⁴⁷⁴ See para.3.2(a), supra.

⁴⁷⁵ See para.4.43, supra.

⁴⁷⁶ United States - Standards for Reformulated and Conventional Gasoline (hereinafter Gasoline), WT/DS2/AB/R, adopted 20 May 1996, p. 17.

⁴⁷⁷ We note that this approach is in line with that adopted by the panel in Desiccated Coconut in respect of Article 32.3 of the SCM Agreement, which is virtually identical to Article 18.3 of the AD Agreement. That panel stated that "Article 32.3 defines comprehensively the situations in which the SCM Agreement applies to measures which were imposed pursuant to investigations not subject to that Agreement. Specifically, the SCM Agreement applies to reviews of existing measures initiated pursuant to applications made on or after the date of entry into force of the WTO Agreement. It is thus through the mechanism of reviews provided for in the SCM Agreement, and only through that mechanism, that the Agreement becomes effective with respect to measures imposed pursuant to investigations to which the SCM Agreement does not apply" (Brazil - Measures Affecting Desiccated Coconut, WT/DS22/R, para. 230, upheld by the Appellate Body in WT/DS22/AB/R, adopted on 20 March 1997).

⁴⁷⁸ Korea's claim appears to include all three post-WTO administrative reviews initiated by the DOC (see para. 4.612, supra). However, we note that only the third administrative review, i.e., the Final Results Third Review, is included in Korea's request for establishment. In line with consistent WTO panel and Appellate Body practice, the two preceding administrative reviews therefore fall outside the Panel's terms of reference.

⁴⁷⁹ In response to questions from the Panel, both parties confirmed their view that administrative reviews (i.e., Article 9.3.1 duty assessment procedures) constitute "reviews" within the meaning of Article 18.3. The United States also asserted that "the third administrative review ... is subject to the AD Agreement by virtue of Article 18.3." (See para. 4.38, supra.)

⁴⁸⁰ 62 Fed. Reg. 39809 (24 July 1997), at 39809.

⁴⁸¹ 19 C.F.R �353.25(a)(2) (1997).

⁴⁸² We recall that the consistency of section 353.25(a)(2)(i) of the DOC regulations with Article 11.2 of the AD Agreement is not at issue (see note 50, supra).

⁴⁸³ Gasoline, WT/DS2/AB/R, adopted 20 May 1996, p. 17.

⁴⁸⁴ See para. 4.93, supra.

⁴⁸⁵ In the US, an anti-dumping order does not of itself result in the levying/assessment of duties, but sets a rate of deposit for estimated duties to be paid on future imports. In the anniversary month of every order, interested parties may request an "administrative review" of the anti-dumping order (i.e., an Article 9.3.1 duty assessment procedure). In an administrative review, the DOC calculates the anti-dumping duties actually owed on imports during the previous 12 months, and sets a new deposit rate for estimated duties on future imports. If the actual duties levied fall short of the deposit rate in the order, the excess is repaid. If the actual duties levied exceed the deposit rate, the additional amount is collected. Despite the imposition of an anti-dumping order, therefore, it is possible that no anti-dumping duties are actually levied. In cases where no anti-dumping duties are levied, one could query whether Article 11.2, which concerns the imposition of a "duty", applies. However, neither party disputes the application of Article 11.2 in such circumstances. In particular, in response to the Panel's question: "Is the United States of the view that an anti-dumping duty is not being 'imposed' within the meaning of Article 11 in cases where no duties are collected as a result of determinations in administrative reviews that there has been no dumping?", the United States asserted that "a definitive anti-dumping duty (or 'order' in U.S. parlance) is 'imposed' within the meaning of Art. 11 even when no duties are actually being 'assessed' (or collected) ...". Korea concurred orally with this view, as it applies in this case. For the purpose of our analysis in this case, therefore, we proceed on the assumption that Article 11.2 does apply.