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World Trade
Organization

WT/DS99/R
29 January 1999
(99-0256)
Original: English

United States - Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of one Megabit or Above from Korea

Report of the Panel

(Continued)


H. Article 5.8 of the AD Agreement

1.83 Korea claims that the United States violates Article 5.8 by setting the de minimis dumping margin threshold for Article 9.3 duty assessment procedures at 0.5%, instead of the 2% standard set forth in Article 5.8.517 Korea argues that "[t]he obligation of Article 5.8 applies to 'cases', including [Article 9.3] reviews as well as investigations."518

1.84 The text of Article 5.8 reads in relevant part:

"An application under paragraph 1 shall be rejected and an investigation shall be terminated promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of either dumping or of injury to justify proceeding with the case. There shall be immediate termination in cases where the authorities determine that the margin of dumping is de minimis, or that the volume of dumped imports, actual or potential, or the injury, is negligible. The margin of dumping shall be considered to be de minimis if this margin is less than 2 per cent, expressed as a percentage of the export price. ... "

1.85 Essentially, the parties disagree as to whether the second sentence (and therefore the de minimis standard contained in the third sentence) of Article 5.8 applies to both anti-dumping investigations and Article 9.3 duty assessment procedures (referred to in US parlance as "administrative reviews"), or only to anti-dumping investigations.

1.86 In our view, the scope of the obligation in the second sentence of Article 5.8 is defined by the term "cases". However, the ordinary meaning of that term does not clarify whether it refers to both anti-dumping investigations and Article 9.3 duty assessment procedures, or only to the former. To resolve this matter, therefore, we must consider the following context of Article 5.8, second sentence.

1.87 First, the term "case" is used in the first sentence of Article 5.8. The first sentence is concerned explicitly and exclusively with the circumstances in which an "application" ("under [Article 5,] paragraph 1") shall be rejected and an "investigation" terminated as a result of insufficient evidence to justify proceeding with the "case". As the treatment of the "application" and conduct of the "investigation" is dependent on the sufficiency of evidence concerning the "case", we consider that the term "case" in the first sentence must at least encompass the notions of "application" and "investigation". In our view, it would meaningless for the term "case" in the first sentence to also encompass the concept of an Article 9.3 duty assessment procedure, since we fail to see how the sufficiency of evidence concerning a subsequent duty assessment could be relevant to the treatment of an "application" or the conduct of an "investigation", both of which precede the Article 9.3 duty assessment procedure.519 As we consider that the term "case" in the first sentence of Article 5.8 does not include the concept of "duty assessment", we see no reason to adopt a different approach to the term "cases" in the second sentence of that provision.

1.88 Second, we consider that note 22 of the AD Agreement effectively provides that a finding in a US duty assessment procedure that no duty is to be levied "shall not by itself require the authorities to terminate the definitive duty." According to note 22, therefore, a finding in an Article 9.3 duty assessment procedure of a zero percent margin of dumping, which is de minimis under both the US 0.5 percent standard and the 2 percent standard advocated by Korea on the basis of Article 5.8, shall not by itself lead to termination of the duty. Nevertheless, by arguing that Article 5.8, including the second sentence thereof, applies in the context of Article 9.3 duty assessments, Korea is effectively arguing that a zero percent, i.e., de minimis, margin of dumping shall lead to "immediate termination" of the duty. Thus, to the extent that Korea's interpretation of Article 5.8, second sentence, requires "immediate termination" of the duty in circumstances where termination "shall not" be required by note 22 of the AD Agreement, Korea's interpretation renders note 22 meaningless.520

1.89 For these reasons, we conclude that Article 5.8, second sentence, does not apply in the context of Article 9.3 duty assessment procedures. As Article 5.8, second sentence, does not require Members to apply a de minimis test in Article 9.3 duty assessment procedures, it certainly cannot require Members to apply a particular de minimis standard in such procedures.

1.90 Korea argues that there is "no logical reason why the de minimis level during the [Article 9.3.1] review stage of a proceeding should be different than at the investigation stage. That which is the legal equivalent of a zero margin for purposes of determining whether to impose an anti-dumping duty is also the legal equivalent of zero for collecting anti-dumping duties."521 As explained above, we consider that the text of Article 5.8, when read in its context, does not require that a Member apply the Article 5.8 de minimis test in an Article 9.3 duty assessment procedure. In any event, there are possible logical explanations for applying different de minimis standards in investigations and Article 9.3 duty assessment procedures. Article 5.8 requires the termination of investigations in cases where the margin of dumping is de minimis. Thus, in the context of Article 5.8, the function of the de minimis test is to determine whether or not an exporter is subject to an anti-dumping order. In the context of Article 9.3 duty assessment procedures, however, the function of any de minimis test applied by Members is to determine whether or not an exporter should pay a duty. A de minimis test in the context of an Article 9.3 duty assessment procedure will not remove an exporter from the scope of the order. Thus, the implications of the de minimis test required by Article 5.8, and any de minimis test that Members choose to apply in Article 9.3 duty assessment procedures, differ significantly. Accordingly, we are not convinced that Korea's policy argument requires us to abandon our conclusion that the text of Article 5.8, when read in its context, does not require that a Member apply the Article 5.8 de minimis test in an Article 9.3 duty assessment procedure.

1.91 In light of our conclusion that Article 5.8, second sentence, does not apply in the context of Article 9.3 duty assessment procedures, we reject Korea's claim that the United States violates Article 5.8 by applying a 0.5 percent de minimis standard in the context of Article 9.3 duty assessment procedures.

I. Korea's Claims under GATT 1994

1.92 We note that Korea has made a number of claims concerning the consistency of the application of section 353.25(a)(2)(ii) and (iii) of the DOC regulations, and the consistency of the Final Results Third Review, with Articles I and X of the GATT 1994. We note that a panel "need only address those claims which must be addressed in order to resolve the matter in issue in the dispute."522 Since we have already found that section 353.25(a)(2)(ii) of the DOC regulations, and the Final Results Third Review based on that provision, are inconsistent with Article 11.2 of the AD Agreement, we do not consider it necessary to examine Korea's claims under Articles I and X of the GATT 1994.

VII. Conclusions and Recommendation

1.1 We conclude that, for the reasons outlined in this report, section 353.25(a)(2)(ii) of the DOC regulations, and the Final Results Third Review based on that provision, are inconsistent with the US obligations under Article 11.2 of the AD Agreement.

1.2 The Panel recommends that the Dispute Settlement Body request the United States to bring section 353.25(a)(2)(ii) of the DOC regulations, and the Final Results Third Review, into conformity with its obligations under Article 11.2 of the AD Agreement.

1.3 Korea has requested us to suggest that the United States (i) revoke DRAMs from Korea and (ii) eliminate the section 353.25(a)(2)(ii) "not likely" criterion. In this regard we note Article 19.1 of the DSU, which provides in relevant part that:

"In addition to its recommendations, the panel or Appellate Body may suggest ways in which the Member concerned could implement the recommendations".

1.4 By virtue of Article 19.1 of the DSU, therefore, the Panel has discretion to suggest ways in which it believes the United States could appropriately implement the above recommendation. However, in light of the range of possible ways in which we believe the United States could appropriately implement our recommendation, we decline to make any suggestion in the present case.


517 The Panel notes that the relevant provision is set forth in section 351.106(c) of the DOC regulations.

518 See para. 4.628, supra.

519 In this regard, we note that Korea has not argued before us that an Article 9.3 duty assessment procedure should be included within the notion of "investigation" for the purpose of Article 5.8. In the context of Article 5 of the AD Agreement, it is clear to us that the term "investigation" means the investigative phase leading up to the final determination of the investigating authority.

520 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" (Gasoline, WT/DS2/AB/R, adopted 20 May 1996, p. 23).

521 See para. 4.624, supra.

522 United States - Measures Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, page 19.