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 (Cont.)

1.30 Turning to the context of Article 11.2, we consider that Article 11.3 of the AD Agreement is particularly relevant in giving support for and reinforcing this interpretation. Article 11.3 provides:

1.31 We note that, with regard to dumping, the "sunset provision" in Article 11.3 of the AD Agreement envisages inter alia an examination of whether the expiry of an anti-dumping duty would be likely to lead to "continuation or recurrence"⁴⁸⁶ of dumping. If, as argued by Korea, an anti-dumping duty must be revoked as soon as present dumping is found to have ceased, the possibility (explicitly envisaged by Article 11.3) of the expiry of that duty causing dumping to recur could never arise. This is because the reference to "expiry" in Article 11.3 assumes that the duty is still in force, and the reference to "recurrence" of dumping assumes that dumping has ceased, but may "recur" as a result of revocation. Korea's textual interpretation of Article 11.2 would effectively exclude the possibility of an Article 11.3 review in circumstances where dumping has ceased but the duty remains in force. Korea's interpretation therefore renders part of Article 11.3 ineffective. As stated by the Appellate Body in Gasoline, "[a]n interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility".⁴⁸⁷ An interpretation of Article 11.2 which renders part of Article 11.3 meaningless is contrary to the customary or general rules of treaty interpretation, and thus should be rejected.

1.32 Furthermore, Korea's argument that Article 11.2 requires the immediate revocation of an anti-dumping duty in case of a finding of "no dumping" (e.g., when a retrospective assessment finds that no duty is to be levied) is also inconsistent with note 22 of the AD Agreement. Note 22 states that, in cases where anti-dumping duties are levied on a retrospective basis, "a finding in the most recent assessment proceeding ... that no duty is to be levied shall not by itself require the authorities to terminate the definitive duty". If Korea's interpretation of Article 11.2 were accurate, then an investigating authority would be obligated under Article 11.2 to terminate an anti-dumping duty upon making such a finding, and note 22 would be meaningless. In our view, this confirms a finding that the absence of present dumping does not in and of itself require the immediate termination of an anti-dumping duty pursuant to Article 11.2.

1.33 We have also taken into account the basic operation of the AD Agreement more generally. Under the AD Agreement, a Member is entitled to impose anti-dumping duties with prospective effect on the basis of an examination of past dumping during a recent period of investigation, provided that it creates a duty assessment mechanism under Article 9.3 to ensure that the amount of the anti-dumping duty does not exceed the margin of dumping.⁴⁸⁸ As the basic operation of the AD Agreement is intrinsically prospective, it appears to us that any departure from this approach would be explicitly provided for, which, as noted in para. 6.29 above, is manifestly not the case. Thus, the Panel finds that, absent any such explicit provision, the AD Agreement does not require the automatic revocation of anti-dumping duties as soon as dumping ceases after the date of imposition of the duties.

1.34 In light of the above, the Panel rejects the claim that Article 11.2 of the AD Agreement requires revocation as soon as an exporter is found to have ceased dumping, and that the continuation of an anti-dumping duty is precluded a priori in any circumstances other than where there is present dumping.⁴⁸⁹

2. Are Sub-Paragraphs (II) and (III) of Section 353.25(A)(2) Consistent with Article 11.2?

1.35 Korea claims that both the section 353.25(a)(2)(ii) "not likely" test and the section 353.25(a)(2)(iii) certification requirement violate Article 11.2 of the AD Agreement. We will address the consistency of both provisions with Article 11.2 in turn.

(a) Consistency of the Section 353.25(a)(2)(ii) "Not Likely" Criterion with Article 11.2

1.36 Korea claims that the section 353.25(a)(ii) "not likely" criterion is inconsistent with Article 11.2 of the AD Agreement. Korea argues inter alia that Article 11.2 only applies a "likely" test in the context of injury, and not dumping. Korea argues that, even assuming the Article 11.2 "likely" test were to apply in the context of dumping as well as injury, "the United States has pushed the text of Paragraph 2 still further without support. The United States has turned the 'likely' standard on its head, transmogrifying it to 'not likely', ...."

1.37 We recall that section 353.25(a)(2) of the DOC regulations provides in relevant part that:

1.38 We note that in the Final Results Third Review, the DOC states that it "must be satisfied that future dumping is not likely in order to revoke an order. In this case, based upon the evidence in the record, this standard has not been met and, therefore, we conclude that there is a need for the order to remain in place". ⁴⁹⁰ On the basis of the clear evidence of record, therefore, it is apparent that section 353.25(a)(ii) is in fact a "not likely" criterion, such that the only determination made under section 353.25(a)(2)(ii) is whether recurrence of dumping is "not likely". If the DOC fails to satisfy itself that recurrence of dumping is "not likely", it will find that there is a need for the continued imposition of the anti-dumping duty.

1.39 In light of the above, we must consider whether the section 353.25(a)(2)(ii) "not likely" criterion is, as claimed by Korea, inconsistent with the terms of Article 11.2. In particular, we must examine whether the terms of Article 11.2 preclude the continued imposition of anti-dumping duties on the basis that an authority fails to satisfy itself that recurrence of dumping is "not likely". In order to do so, we must first examine the relationship between Articles 11.2 and 11.1. In our view, the references in Article 11.2 to "the need for the continued imposition of the duty" and "whether the continued imposition of the duty is necessary to offset dumping" can only be understood in a meaningful manner when read in conjunction with the obligation in Article 11.1, whereby:

1.40 Both parties agree that Article 11.2 of the AD Agreement implements Article 11.1. Both parties have argued that Article 11.1 of the AD Agreement contains a general rule that anti-dumping duties shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury. Both parties have also argued that the general rule contained in Article 11.1 is implemented through Article 11.2 (and Article 11.3).⁴⁹¹

1.41 We agree with the parties that, by virtue of Article 11.1 of the AD Agreement, an anti-dumping duty may only continue to be imposed if it remains "necessary" to offset injurious dumping. We are of the view that Article 11.1 contains a general necessity requirement, whereby anti-dumping duties "shall remain in force only as long as and to the extent necessary" to counteract injurious dumping. That anti-dumping duties "shall remain in force only as long as and to the extent necessary" to counteract injurious dumping is therefore an unambiguous requirement of Article 11.1. We also agree with the parties that the application of the general rule in Article 11.1 is specified in Article 11.2, which provides generally that "authorities shall review the need for the continued imposition of the duty", and requires authorities "to examine whether the continued imposition of the duty is necessary to offset dumping" in the context of Article 11.2 dumping reviews.

1.42 Accordingly, we must assess the essential character of the necessity involved in cases of continued imposition of an anti-dumping duty. We note that the necessity of the measure is a function of certain objective conditions being in place, i.e. whether circumstances require continued imposition of the anti-dumping duty. That being so, such continued imposition must, in our view, be essentially dependent on, and therefore assignable to, a foundation of positive evidence that circumstances demand it. In other words, the need for the continued imposition of the duty must be demonstrable on the basis of the evidence adduced.

1.43 The necessity of the continued imposition of the anti-dumping duty can only arise in a defined situation pursuant to Article 11.2: viz to offset dumping. Absent the prescribed situation, there is no basis for continued imposition of the duty: the duty cannot be "necessary" in the sense of being demonstrable on the basis of the evidence adduced because it has been deprived of its essential foundation. In this context, we recall our finding⁴⁹² that Article 11.2 does not preclude a priori continued imposition of anti-dumping duties in the absence of present dumping. However, it is also clear from the plain meaning of the text of Article 11.2 that the continued imposition must still satisfy the "necessity" standard, even where the need for the continued imposition of an anti-dumping duty is tied to the "recurrence" of dumping. We recognize that the certainty inherent to such a prospective analysis could be conceivably somewhat less than that attached to purely retrospective analysis, reflecting the simple fact that analysis involving prediction can scarcely aspire to a standard of inevitability. This is, in our view, a discernable distinction in the degree of certainty, but not one which would be sufficient to preclude that the standard of necessity could be met. In our view, this reflects the fact that the necessity involved in Article 11.2 is not to be construed in some absolute and abstract sense, but as that appropriate to circumstances of practical reasoning intrinsic to a review process. Mathematical certainty is not required, but the conclusions should be demonstrable on the basis of the evidence adduced. This is as much applicable to a case relating to the prospect of recurrence of dumping as to one of present dumping.

1.44 We must now consider whether a failure to find that the recurrence of dumping is "not likely" meets the standard that the continued imposition of the anti-dumping duty be demonstrable on the basis of the evidence adduced. In doing so, we note the US argument that "under section 353.25, the Department seeks to determine ... whether the dumping which had occurred in the past, and which led to the imposition of the order, is likely to recur if the order is revoked. If a resumption of dumping is likely should the order be terminated, then a plain reading of the terms of Article 11 indicate that the "continued imposition of the duty is necessary to offset dumping.""⁴⁹³ As a first step, therefore, we must consider whether the section 353.25(a)(2)(ii) "not likely" approach utilised by the United States is indeed equivalent to a test of whether dumping is "likely to recur". This is without prejudice to any view at this stage regarding the second step of whether the "likely to recur" standard would be, in turn, itself consistent with the terms of Article 11.2 as regards the necessity of the anti-dumping duty to offset dumping.

1.45 We consider that a failure to find that an event is "not likely" is not equivalent to a finding that the event is "likely". We see a clear conceptual difference between establishing something as a positive finding, and failing to establish something as a negative finding. It is perfectly possible that one could not determine that someone was unlikely to dump and find that they were also likely to dump. But the former determination does not, in and of itself, amount to a demonstrable basis for concluding the latter. This is evident from the fact that the former finding is manifestly compatible also with the reverse of the latter situation, i.e., it is perfectly logical to find that you cannot determine that someone is unlikely to dump, yet also be unable to determine that they were actually likely to dump. In other words, determining that something is not "not likely" is entailed by, but does not itself entail, that something is likely.

1.46 We consider that this reflects common usage of the relevant terms. A finding that an event is "likely" implies a greater degree of certainty that the event will occur than a finding that the event is not "not likely". For example, in common parlance, a statement that it is "likely" to rain implies a greater likelihood of rain than a statement that rain is not unlikely, or not "not likely". Similarly, a statement that a horse is "likely" to win a race implies a greater likelihood of victory than a statement that the same horse is not unlikely to win, or not "not likely" to win. The difference between the concepts of "likely" and "not likely" is perhaps made clearer by interpreting the word "likely" in accordance with its normal meaning of "probable". The question then becomes whether not "not probable" is equivalent to "probable". In our view, the fact that an event is not "not probable" does not by itself render that event "probable".

1.47 Given this reality, it is a priori possible that situations could arise where the not "not likely" criterion is satisfied but where the likelihood criterion is not satisfied. Reliance on the not likely criterion clearly fails to provide any reliable means to avoid or preclude this flaw. Given such a fundamental flaw, it cannot constitute a demonstrable basis for consistently and reliably determining that the likelihood criterion is satisfied.

1.48 In light of the above analysis, we conclude that the section 353.25(a)(2)(ii) "not likely" standard is not in fact equivalent to, and falls decisively short of, establishing that dumping is "likely to recur if the order is revoked". This being so, we do not need to address the potential second step of whether, in turn, the "likely" standard is itself consistent with the terms of Article 11.2 of the AD Agreement.⁴⁹⁴

1.49 We have not found any other detailed argument developed by the United States in justification of its view that the section 353.25(a)(2)(ii) "not likely" criterion is consistent with the terms of Article 11.2. We consider, however, that the US submission could be construed to argue that the necessity of the continued imposition of a duty may be somehow more directly warranted by a finding that it is not possible to determine that recurrence of dumping is "not likely", irrespective of the fact that a finding that recurrence of dumping is not "not likely" is not equivalent to a finding that recurrence of dumping is "likely".

1.50 Recalling our views in para. 6.42 above, we note that "necessity" in the context of Article 11.2 requires the need for the continued imposition of an anti-dumping duty being demonstrable on the basis of the evidence adduced. In our view, given that we have found that a determination that it is not possible to conclude that recurrence of dumping is "not likely" does not in and of itself provide a demonstrable basis to reliably conclude that recurrence of dumping is "likely", we also find that it is logically incapable of providing any predictive assurance at even an equivalent, and certainly not a higher, level than likelihood. Nor has the United States in any case provided any argument as to what, if any, other standard of predictive assurance is in fact consistent with the terms of Article 11.2 short of likelihood. As outlined in para. 6.43 above, while mathematical certainty of recurrence of dumping is not required, the conclusions must still be demonstrable on the basis of the evidence adduced. In this case, however, it is not even established that recurrence of dumping is likely. Absent any other rationale, this amounts to an effective presumption that, in the absence of a finding that recurrence of dumping is not "not likely", anti-dumping duties may continue to be imposed. But "presumption", by definition, exists only where there is no requirement of justification or proof. As such, it is manifestly irreconcilable with the requirements of meeting a standard of necessity which involves demonstrability on the basis of the evidence adduced. In light of this, we are unable to find that the section 353.25(a)(2)(ii) "not likely" criterion provides any demonstrable basis on which to reliably conclude that the continued imposition of the duty is necessary to offset dumping.

1.51 For these reasons, we find that the section 353.25(a)(2)(ii) "not likely" criterion operates to effectively require⁴⁹⁵ the continued imposition of anti-dumping duties, and prevents revocation, in circumstances inconsistent with and outside of those provided for in Article 11.2. Accordingly, we find that section 353.25(a)(2)(ii) constitutes a mandatory requirement inconsistent with Article 11.2 of the AD Agreement.⁴⁹⁶

(b) Is the Section 353.25(a)(2)(iii) Certification Requirement Consistent with Article 11.2 of the AD Agreement?

1.52 Korea raises two claims concerning the section 353.25(a)(2)(iii) certification requirement. First, Korea claims that "the limited authority granted Members under Article 11 to impose and maintain anti-dumping duties does not extend so far as to permit a Member to impose a certification requirement for revocation". ⁴⁹⁷ Second, Korea claims that the certification requirement "requires a respondent to forgo its right under Paragraph 2 of Article 11 to an injury finding. This violates Paragraph 2 of Article 11 of the Anti-Dumping Agreement, which requires Members to impose duties only where dumping exists and is causing injury and obliges Members to conduct investigations of dumping and injury before imposing (or maintaining) any duty".⁴⁹⁸

1.53 We note section 751(b) of the 1930 Tariff Act (as amended) and section 353.25(d) of the DOC's regulations, whereby an anti-dumping order may be revoked on the basis of "changed circumstances". We note that neither of these provisions imposes a certification requirement. In other words, an anti-dumping order may be revoked under these provisions absent fulfilment of the section 353.25(a)(2)(iii) certification requirement. We also note that Korea has not challenged the consistency of these provisions with the WTO Agreement. Thus, because of the existence of legislative avenues for Article 11.2-type reviews that do not impose a certification requirement, and which have not been found inconsistent with the WTO Agreement, we are precluded from finding that the section 353.25(a)(2)(iii) certification requirement in and of itself amounts to a mandatory requirement inconsistent with Article 11.2 of the AD Agreement.

To continue with Conclusion

⁴⁸⁶ Emphasis supplied.

⁴⁸⁷ Gasoline, WT/DS2/AB/R, adopted 20 May 1996, p. 23.

⁴⁸⁸ It has long been recognised in the GATT system that such an approach, sometimes referred to as a "pre-selection system", is permissible. See, for example, the Second Report on Anti-Dumping and Countervailing Duties, adopted on 27 May 1960, BISD 9S/194, at 195.

⁴⁸⁹ Of course, the absence of dumping and the length of time that situation has existed may well be relevant to the issue of the prospect of recurrence of dumping.

⁴⁹⁰ 62 Fed. Reg. 39809 (24 July 1997), at 39819.

⁴⁹¹ See, for example, paras. 4.91 (Korea) and 4.154 (United States) supra.

⁴⁹² See section VI.C.1, supra.

⁴⁹³ See para. 4.124 supra.

⁴⁹⁴ While we do not need to proceed to the second step, and have not done so, we make the following observations. We note that Article 11.3 provides for termination of a definitive anti-dumping duty five years from its imposition. However, such termination is conditional. First, the terms of Article 11.3 itself lay down that this should occur unless the authorities determine that the expiry would be "likely to lead to continuation or recurrence of dumping and injury." Where there is a determination that both are likely, the duty may remain in force, and the five year clock is reset to start again from that point. Second, Article 11.3 provides also for another situation whereby this five year period can be otherwise effectively extended, viz in a situation where a review under paragraph 2 covering both dumping and injury has taken place. If, for instance, such a review took place at the four year point, it could effectively extend the sunset review until 9 years from the original determination. In the first case, we note that the provisions of Article 11.3 explicitly conditions the prolongation of the five year period on a finding that there is likelihood of dumping and injury continuing or recurring. In the second case, where there is reference to review under Article 11.2, there is no such explicit reference.

However, we note that both instances of review have the same practical effect of prolonging the application of anti-dumping duties beyond the five year point of an initial sunset review. This at the very least suggests, in our view, that there could be reason to support a view that authorities are entitled to apply the same test concerning the likelihood of recurrence or continuation of dumping for both Article 11.2 and 11.3 reviews. There certainly appears to be nothing that explicitly provides to the contrary. Nor do we see any reason why this conclusion would be materially affected by whether or not the dumping review occurred in conjunction with an injury review. There is nothing in the text of Article 11 which suggests there should be some fundamental bifurcation of the applicable standard for dumping review contingent on whether there is also an Article 11.2 injury review being undertaken.

We also note that "likelihood" or "likely" carries with it the ordinary meaning of "probable". That being so, it seems to us that a "likely standard" amounts to the view that where recurrence of dumping is found to be probable as a consequence of revocation of an anti-dumping duty, this probability would constitute a proper basis for entitlement to maintain that anti-dumping duty in force. Without prejudice to the legal status of such a view in terms of its consistency with the terms of Article 11.2 - a matter on which we are not required to rule as noted in the text above - we feel obliged to at least take note that, at least as a practical matter, rejection of such a view would effectively amount to a systematic requirement that reviewing authorities are obliged to revoke anti-dumping duties precisely where doing so would render recurrence of dumping probable.

⁴⁹⁵ In making this finding, we note that the DOC's determination in the Final Results Third Review is not separable from, or contingent to, the terms of the DOC regulations. Rather, our finding of inconsistency with the terms of the AD Agreement are rooted in and tied to the terms of the DOC regulations. In this way, it is by reason of the section 353.25(a)(2) "not likely" criterion that we find the United States to be in breach of the terms of Article 11.2. The United States is effectively obliged to act upon the DOC regulations, such that to all practical intents and purposes the DOC regulations are mandatorily applicable.

⁴⁹⁶ According to the United States, "respondents are free to pursue revocation through an Article 11.2-type review under section 751(b)" of the 1930 Tariff Act, in addition to section 751(a) thereof. We take note of the view that, consistent with reasoning that has been applied in earlier GATT/WTO disputes, the existence of alternative, WTO-consistent legislative avenues for Article 11.2-type reviews (such as section 751(b)) could be considered capable of precluding a finding that the inability of the United States to revoke under section 353.25(a)(2) in and of itself constitutes a mandatory requirement inconsistent with Article 11.2. This issue does not arise in respect of the section 353.25(a)(2)(ii) "not likely" criterion, however, since there are, in any case, no alternative, WTO-consistent avenues for Article 11.2-type reviews available. The United States asserts that "[r]egardless of the procedural mechanism used (e.g., section 751(a) of the Act and section 353.25(a) of the Department's regulations, or section 751(b) of the Act and section 353.25(d) of the Department's regulations), the Department will not revoke an anti-dumping order based on a cessation of dumping unless it determines that a resumption of dumping is not likely" (emphasis supplied). In other words, because the WTO-inconsistent "not likely" criterion will be applied in all cases, there are necessarily no WTO-consistent alternative avenues for Article 11.2-type reviews.

⁴⁹⁷ See para. 4.285, supra.

⁴⁹⁸ See para. 4.286, supra.