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UNITED STATES � COUNTERVAILING DUTY INVESTIGATION ON DYNAMIC
Report of the Appellate Body
I. Introduction II. Arguments of the Participants and the Third Participants
III. Issues Raised in This Appeal IV. Consultations
V. Interpretation of Article 1.1(a)(1)(iv) of the SCM Agreement
VI. The Panel's Review of the USDOC's Evidence
VIII. Findings and Conclusions ANNEX I Notification of an Appeal by the United States under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 20(1) of the Working Procedures for Appellate Review
ANNEX II Notification of an Other Appeal by Korea under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 23(1) of the Working Procedures for Appellate Review ANNEX III Request for Consultations by Korea
ANNEX IV Request for Consultations by Korea, Addendum
ANNEX V Request for the Establishment of a Panel by Korea
TABLE OF CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation Appellate Body Report, United States � Subsidies
on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005 TABLE OF ABBREVIATIONS USED IN THIS REPORT
Abbreviation
Definition
WORLD TRADE ORGANIZATION United States, Appellant/Appellee Korea, I. Introduction
1. The United States and Korea each appeals certain issues of
law and legal interpretations developed in the Panel Report, United States �
Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors
(DRAMS) from Korea (the "Panel Report").1 The Panel was established to
consider a complaint by Korea against the United States regarding the imposition
of countervailing duties ("CVDs") on DRAMS and memory models containing DRAMS2
from Korea, following an investigation by the United States Department of
Commerce (the "USDOC") and the United States International Trade Commission (the
"USITC"). 2. The CVD investigation was initiated in November 2002, in
response to a petition filed by Micron Technology, Inc. ("Micron").3 The Korean
companies investigated included Hynix Semiconductor, Inc. ("Hynix") and Samsung
Electronics Co., Ltd. ("Samsung").4 The Government of Korea (the "GOK")
participated in the investigation as an interested party. The USDOC published a
final subsidy determination on 23 June 20035, concluding that Hynix had received
financial contributions from the GOK by virtue of, inter alia, the
GOK's entrustment or direction of Hynix's creditors to maintain the financial
viability of Hynix.6 The USDOC determined that Hynix's countervailable subsidy
rate was 44.29 per cent.7 3. The USITC published a preliminary injury
determination on 27 December 2002 and a final injury determination on 11 August
2003.8 In its final injury determination, the USITC concluded that the United
States DRAMS industry had been materially injured by reason of imports of
subsidized DRAMS from Korea. On the basis of these subsidy and injury
determinations by the USDOC and the USITC, respectively, the USDOC issued a CVD
order on 11 August 2003, imposing CVDs of 44.29 per cent on Hynix, which would
be paid by importers as cash deposits at the same time as they would normally
deposit estimated customs duties.9 4. Before the Panel, Korea alleged that the United States
acted inconsistently with its obligations under Articles 1, 2, 10, 12, 14, 15,
19, 22, and 32 of the Agreement on Subsidies and Countervailing Measures
(the "SCM Agreement"), as well as under Article VI:3 of the General
Agreement on Tariffs and Trade 1994 (the "GATT 1994").10 5. In the Panel Report, circulated to Members of the World
Trade Organization (the "WTO") ... the [US]DOC's Final Subsidy Determination,
the [US]ITC's Final Injury Determination, and the Final
Countervailing Duty Order based thereon, are inconsistent with
Articles 1, 2 and 15.5 of the SCM Agreement. We therefore
conclude that the [United States] is in violation of those provisions of
the SCM Agreement.11 6. The Panel rejected Korea's claims that the United States
acted inconsistently with Articles 212, 12.6, 15.2, 15.4, and 15.513 of the SCM
Agreement.14 Moreover, the Panel did "not consider it necessary to address"
certain additional claims made by Korea under Articles 1 and 2 of the SCM
Agreement, or the claims Korea made pursuant to Articles 10, 14, 15.1, 19.4,
22.3, and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994.15 In
the course of its examination of Korea's claims, the Panel also dismissed a
request by the United States that the Panel reject Korea's claims against the
CVD order because Korea's request for consultations did not meet the
requirements of Article 4.4 of the Understanding on Rules and Procedures
Governing the Settlement of disputes (the "DSU").16 7. In the light of its findings, the Panel recommended that
the United States "bring the [US]DOC's Final Subsidy Determination, the
[US]ITC's Final Injury Determination, and the [US]DOC's final [CVD]
order, into conformity with the SCM Agreement".17 8. On 29 March 2005, the United States notified the Dispute
Settlement Body (the "DSB") of its intention to appeal certain issues of law
covered in the Panel Report and certain legal interpretations developed by the
Panel, pursuant to paragraph 4 of Article 16 of the DSU, and filed a Notice of
Appeal18 pursuant to Rule 20 of the Working Procedures for Appellate
Review (the "Working Procedures").19 On 11 April 2005, Korea notified
the DSB of its intention to appeal certain issues of law covered in the Panel
Report and certain legal interpretations developed by the Panel, pursuant to
paragraph 4 of Article 16 of the DSU, and filed a Notice of Other Appeal20
pursuant to Rule 23(1) of the Working Procedures. On 5 April 2005, the
United States filed an appellant's submission.21 On 13 April 2005, Korea filed an
other appellant's submission.22 On 25 April 2005, Korea and the United States each
filed an appellee's submission.23 On the same day, China, the European
Communities, Japan, and the Separate Customs Territory of Taiwan, Penghu,
Kinmen, and Matsu, each filed a third participant's submission.24 9. The oral hearing in this appeal was held on 11 May 2005.
The participants and third participants presented oral arguments (with the
exception of the Separate Customs Territory of Taiwan, Penghu, Kinmen, and
Matsu) and responded to questions posed by the Members of the Division hearing
the appeal.
II. Arguments of the Participants and the Third
Participants A. Claims of Error by the United States �
Appellant
10. The United States appeals the Panel's finding that
Korea's request for consultations met the requirements of Article 4.4 of the
DSU. According to the United States, Korea's request for consultations failed to
provide the legal basis for the complaint with respect to the CVD order. The
United States therefore requests the Appellate Body to reverse the Panel's
finding. 11. The United States argues that it is "not credible"25 to
assert that, by referring to the fact that it had filed a prior request for
consultations on one set of alleged measures, Korea satisfied its obligation to
provide an indication of the legal basis for its complaint with respect to the
CVD order, which was identified only in the second request for consultations.
The United States further contends that Korea cited numerous provisions in its
first request for consultations and that the United States could not have been
"supposed to guess which provision(s) applied to the [CVD] order".26 In addition,
the United States maintains that Korea refused to identify the provision(s) of a
covered agreement with which it considered the CVD order to be inconsistent,
even when specifically asked to do so by the United States after the filing of
the second request for consultations. In the United States' submission "the
requirements of Article 4.4 are minimal, [but] they cannot be ignored."27 2. Interpretation of Article 1.1(a)(1)(iv) of
the SCM Agreement
12. The United States claims that the Panel incorrectly
interpreted the terms "entrusts" and "directs" in Article 1.1(a)(1)(iv) of the
SCM Agreement28 and then applied that erroneous interpretation to its
assessment of the record evidence. According to the United States, the Panel's
interpretation of the terms "entrusts" and "directs" is inconsistent with the
ordinary meanings of these terms. The proper interpretation of "entrusts" and
"directs" would have considered the multiple meanings of these terms found in
their dictionary definitions. In the United States' view, had the Panel looked
to these meanings, it would have arrived at an understanding of "entrusts" and
"directs" that takes account of the full range of government actions that fall
within the ordinary meanings of these terms, namely: a government investing
trust in a private body to carry out a task; a government giving responsibility
to a private body to carry out a task; a government informing or guiding a
private body as to how to carry out a task; a government regulating the course
of a private body's conduct; as well as a government delegating or commanding a
private body to carry out a task. The Panel, however, disregarded these
definitions and settled on a definition of "entrusts" and "directs" as
"delegation" and "command"29, respectively. The United States alleges that this
narrow interpretation fails to recognize the numerous means by which a
government may provide subsidies through private bodies. 13. The United States submits that the Panel also failed to
consider sufficiently the context of the terms "entrusts" and "directs", because
the use of the term "practice" in Article 1.1(a)(1)(iv) clearly implies that
entrustment or direction cannot be limited to an official or formal program, but
also must include broader "practices". The United States argues that the context
also makes clear that the negotiators did not intend that governments would be
able to evade the subsidy disciplines by using other means�that is, means that
differ "in no real sense"30 from those normally used by governments�of granting
subsidies. In the United States' view, the words "in no real sense" as used in
Article 1.1(a)(1)(iv) suggest that the drafters were seeking to avoid
circumvention of the obligation not to provide prohibited subsidies. This
understanding, according to the United States, would support an interpretation
of "entrusts" and "directs" that gives effect to their full range of meanings so
as not to permit subsidization in any form by governments through private
bodies. The United States further asserts that the Panel's interpretation is not
supported by the object and purpose of the SCM Agreement because the
Panel's reading of Article 1.1(a)(1)(iv) would cover an unduly limited range of
government subsidization achieved through the actions of private bodies. 14. Finally, the United States contends that the Panel's
narrow interpretation of "entrusts" and "directs" permeates the rest of its
analysis. The United States points to several of the Panel's findings as
examples of errors resulting from this interpretation, including the Panel's
analyses of Prime Minister's Decree No. 408, meetings between Hynix creditors
and GOK officials, and Kookmin Bank's prospectus for the United States
Securities and Exchange Commission. Taken together, these findings undermine the
Panel's ultimate conclusion of inconsistency with Article 1.1(a)(1)(iv).
Therefore, the United States requests the Appellate Body to reverse the Panel's
findings with respect to its interpretation of "entrusts" and "directs", as well
as the Panel's conclusions based on that interpretation. 3. Review of the USDOC's Evidence of
Entrustment or Direction
(a) The Panel's "Probative and Compelling"
Evidentiary Standard
15. The United States argues that the Panel erroneously
applied a "probative and compelling" evidentiary standard in its review of the
USDOC's subsidy determination and requests the Appellate Body to reverse the
Panel's findings setting forth its evidentiary standard and the subsequent
findings based on the application of that standard. 16. According to the United States, there is no basis in the
SCM Agreement, the DSU, or any other covered agreement for the Panel's
finding that evidence of entrustment or direction "must in all cases be
probative and compelling".31 The United States recognizes that provisions of
various covered agreements set forth a number of evidentiary standards, such as
"positive evidence"32, "relevant evidence"33, or "sufficient evidence".34 The United
States also recalls the Appellate Body's interpretation of the term "positive
evidence" in US � Hot-Rolled Steel that "[t]he word 'positive' means
[...] that the evidence must be of an affirmative, objective and verifiable
character, and that it must be credible."35 The United States contends, however,
that this requirement does not translate into an evidentiary standard of
"probative and compelling". 17. Referring to the definition of the term
"compelling", the United States argues that a standard of "compelling" evidence
would appear to require evidence that "forces" or "obliges" a fact-finder to
reach a particular conclusion, or evidence that is "overwhelming"36 or
"irrefutable".37 In the United States' view, such a standard cannot be reconciled
with the decision of the Appellate Body in US � Lamb38, according to which
a panel's duty is to determine whether an investigation authority provided a
reasoned and adequate explanation as to why the evidence led to a particular
conclusion, rather than whether that conclusion was based on probative and
compelling evidence. (b) The Panel's Approach to the Evidence
(i) Reviewing the Totality of the Evidence
18. The United States alleges that the Panel erred by
assessing the USDOC's determination of entrustment or direction on the basis of
each piece of evidence in isolation, without considering the totality of the
evidence. In the United States' submission, this approach necessarily led to a
finding of insufficiency of the evidence underlying the USDOC's determination.
Therefore, the United States requests the Appellate Body to reverse the Panel's
findings as to the individual pieces of evidence, as well as those findings that
were the product of the Panel's erroneous approach.39 19. The United States observes that the Panel indicated that
it would adopt the same approach in examining the evidence as did the USDOC,
"rel[ying] on the totality of the evidence before it, without attaching
particular importance to one or several evidentiary factors".40 However, the
United States argues, the Panel Report reveals that the Panel in fact assessed
whether each piece of evidence, in and of itself, demonstrated
entrustment or direction, rather than assessing whether the evidence in its
entirety supports the finding of entrustment or direction.41 20. In particular, the United States alleges that the Panel
employed this "piecemeal approach"42 at several points in its analysis of the
USDOC's finding on entrustment or direction. The United States points to the
Panel's examination of various items of evidence relied on by the
USDOC�including the Public Funds Oversight Act, Prime Minister's Decree No. 408,
and Kookmin Bank's prospectus for the United States Securities and Exchange
Commission�as examples of the Panel's failure to consider the evidence in its
totality.43 The United States further alleges that, even where the Panel claimed
to consider pieces of evidence in a broader context, it "marginalized"44 this
evidence, as in the Panel's failure to appreciate the relevance of GOK ownership
or control of the dominant Hynix creditors.45 Therefore, the United States
requests the Appellate Body to reverse those findings that were based on the
Panel's error of reviewing in isolation pieces of evidence supporting the
USDOC's determination of entrustment or direction. (ii) Circumstantial Evidence
21. The United States alleges that the Panel effectively
required every piece of evidence to be direct evidence of entrustment or
direction and thereby precluded legitimate inferences drawn from circumstantial
and secondary evidence. The United States therefore requests the Appellate Body
to reverse the Panel's findings affected by its "legally erroneous"46 analytical
framework. 22. As an example of the Panel's error, the United States
refers to the Panel's discussion of the GOK's coercion of Hana Bank, where the
Panel stated that "[a]n objective and impartial investigating authority would
not have treated a simple reference to a footnote in an article as sufficient
proof of such a significant issue as government entrustment or direction."47 The
United States argues that this statement reveals the Panel's failure to
recognize that the value of a piece of circumstantial evidence is not in its
sufficiency, but rather, in "the inferences created, together with other
pieces of evidence, regarding the existence of a particular fact or set of
facts".48 23. The United States contends that instead of "fixating" on
whether certain individual pieces of evidence were dispositive of entrustment or
direction, the Panel should have drawn from the totality of circumstantial
evidence that "the GOK had an established practice, purpose, and process for
entrusting and directing Hynix's creditors".49 In doing so, it should have given
special attention to "the GOK's longstanding policy of supporting Hynix; the
GOK's powerful influence over Hynix's creditors as a consequence of, inter
alia, the significant GOK ownership interests in the Korean financial
sector; and the utter lack of any commercial basis for assisting Hynix."50 24. The United States submits that the Panel's treatment of
circumstantial evidence differs sharply from the way prior panels and the
Appellate Body have assessed circumstantial evidence. In addition to the panel
reports in Argentina � Textiles and Apparel and Canada � Aircraft,
the United States points to the statement of the Appellate Body in Canada �
Aircraft that "inferences derived may be inferences of law: for example the
ensemble of facts found to exist warrants the characterization of a
'subsidy'".51 According to the United States, circumstantial evidence is
particularly relevant to establishing a financial contribution under
Article 1.1(a)(1)(iv). Direct evidence of government entrustment or direction is
difficult for outside parties to obtain because such information typically will
be treated by the exporting government or foreign parties as confidential. As a
result, the United States submits, the Panel's failure to appreciate the
circumstantial evidence on which the USDOC relied effectively established an
evidentiary requirement that is "virtually impossible" to meet in cases
involving government entrustment or direction.52 (iii) Burden of Proof
25. The United States argues that the manner in which the
Panel assessed the evidence in the present case effectively led to an improper
shift in the burden of proof from Korea to the United States and, therefore,
requests the Appellate Body to reverse the Panel's findings that resulted from
this error. According to the United States, the Panel recognized�in accordance
with prior WTO decisions�that Korea bears the burden of proof as the complaining
party. However, the United States alleges, the Panel analyzed pieces of evidence
in isolation, required that each piece of evidence be "compelling", and
disregarded inferences drawn from circumstantial evidence, thereby requiring the
United States to produce a "smoking gun"53 document that itself would be
dispositive of entrustment or direction. Because the Panel did not find such a
"smoking gun", the United States submits, it concluded that the USDOC had not
demonstrated entrustment or direction. Requiring the United States to justify
the USDOC's determination with evidence of a "smoking gun"�instead of requiring
Korea to establish how the evidence could not collectively support a finding of
entrustment or direction�amounted to a shift in the burden of proof from Korea
to the United States. (iv) Ex post Rationalization
26. The United States submits that the Panel erroneously
characterized the United States' reliance on certain record evidence during the
Panel proceedings as ex post rationalizations and consequently erred in
declining to consider this evidence when assessing the USDOC's finding of
entrustment or direction. Accordingly, the United States requests the Appellate
Body to reverse the Panel's findings regarding ex post rationalization as
well as the conclusions that resulted from these findings. 27. The United States acknowledges that some panels have
rejected arguments and reasoning on the grounds that they constituted ex post
rationalizations.54 However, the United States argues, in those cases, panels
objected to the introduction of new reasoning, whereas, in this case, the
United States merely provided to the Panel additional evidentiary support
relating to reasoning that had already been employed in the
USDOC's published determination. Specifically, the United States submits that
each of these items of evidence�such as the article in the Dong-A Daily,
entitled "'Gangster-Style' Solution for Hynix", which the Panel refused to
consider55�related directly to the reasoning of the USDOC regarding certain
factual inferences underlying the USDOC's finding of entrustment or direction,
and thus, do not constitute ex post rationalizations. 28. In support of this argument, the United States refers to
Article 22.5 of the SCM Agreement, which provides that an agency's
published determination at the end of a CVD investigation "shall contain ... all
relevant information on the matters of fact and law and reasons which have led
to the imposition of final measures". In the United States' view, this provision
addresses what must be contained in a final determination and, by its plain
language, does not require an investigating authority "to cite to every piece of
record evidence that supports its reasons for the imposition of final measures".56
Therefore, the United States contends, nothing in the SCM Agreement
permits a panel to disregard record evidence, even when not cited in the final
determination, provided that it is not being introduced to support new
reasoning. By concluding to the contrary, the United States argues, the Panel
impermissibly limited the evidence on which a Member may rely under Article 22.5
of the SCM Agreement, in contravention of Articles 3.2 and 19.2 of the
DSU. 29. The United States additionally points to a GATT panel
decision applying Article 2.15 of the Agreement on Interpretation and
Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs
and Trade (the "Tokyo Round Subsidies Code"), which is "quite
similar" to Article 22.5 of the SCM Agreement.57 That panel decision
recognized that a panel was not precluded, by virtue of Article 2.15, from
considering evidence not included in a published determination, provided that it
could reasonably be inferred that the agency had relied on such evidence. The
United States also refers to the Appellate Body Report in US � Upland Cotton.
In that case, the Appellate Body, in the context of the panel's application of
Article 6.3 of the SCM Agreement, found no error where the panel did not
refer to every item of evidence provided by the parties to the dispute because
it had found certain items less significant for its reasoning than others.58 In
the United States' view, similar reasoning should apply in this case so as not
to require an investigating authority to cite every item of supporting evidence
from the agency's record. 30. Finally, the United States argues that the USDOC did, in
fact, explicitly cite, in its Direction of Credit Memorandum59, some of the
articles that the Panel refused to take into account, such as articles in the
Korea Economic Daily, Euromoney, and the Korea Times. The
United States submits that the Direction of Credit Memorandum had
been referenced in the USDOC's determination in support of the USDOC's finding
of entrustment or direction. Therefore, according to the United States, the
Panel erred in basing its refusal to take these articles into consideration on
the fact that they had not been cited in the USDOC's published determination.
(c) The Panel's Failure to Comply with
Article 11 of the DSU
(i) Non-record Evidence
31. The United States contends that the Panel improperly
relied on evidence that was not on the record before the USDOC and that, in so
doing, the Panel engaged in an impermissible de novo review of the
USDOC's subsidy determination in violation of Article 11 of the DSU. The United
States accordingly requests the Appellate Body to reverse those findings of the
Panel that were based on the erroneous use of non-record evidence. 32. Referring to the Appellate Body Report in US � Cotton
Yarn and the panel report in Egypt � Steel Rebar, the United States
submits that reliance on non-record evidence constitutes a de novo review
and results in a violation of Article 11 of the DSU. Additionally, the United
States relies on Article 12.2 of the SCM Agreement, which provides, in
relevant part, that a "decision of the investigating authorities can only be
based on such information and arguments as were on the written record of this
authority". 33. The United States points, in particular, to the findings
of the Panel contained in paragraphs 7.63, 7.91, and 7.155 of the Panel Report.
In the United States' submission, each of these findings was expressly based on
the Panel's finding that certain creditors of Hynix exercised mediation rights
in connection with the October 2001 restructuring. However, the United States
argues, there was no evidence on the record of the USDOC that certain Hynix
creditors did, in fact, engage in mediation and thereby avoid the restructuring
terms established by the dominant GOK-owned and -controlled creditors. According
to the United States, the only evidence of such mediation was submitted by Korea
in the course of the Panel proceedings, and not by any interested party to the
USDOC during the CVD investigation. 34. With regard to the Panel's conclusion that Article 29(5)
of the Corporate Restructuring Promotion Act (the "CRPA") should have put the
USDOC on notice about the possibility of mediation, the United States contends
that, absent evidence on the record from Hynix or the GOK regarding "actual
instances of mediation", the USDOC was in no position to consider how such
mediation would affect its findings.60 In the United States' view, a reference to
the possibility of mediation alone does not constitute record evidence
that mediation did take place. 35. Moreover, the United States argues, the USDOC, in the
course of the investigation, asked specific questions regarding the CRPA and the
different options provided to Hynix's creditors at the time of the October 2001
restructuring. Notwithstanding this request for information, the United States
submits, "neither Hynix nor the GOK ever mentioned anything about mediation".61
Furthermore, the United States asserts, neither Hynix nor the GOK ever mentioned
in their submissions to the USDOC that mediation had in fact taken place. 36. The United States disagrees with the Panel's finding that
a statement in Hynix's 2001 Audit Report indicated that the mediation provisions
had been invoked and that this should have put the USDOC on notice that a
request for mediation had been filed.62 In the United States' view, the referenced
excerpt to the Hynix 2001 Audit Report did not indicate that mediation had
occurred, only that certain banks had "raised objections"63, without clarifying
the relationship, if any, between the "raising of objections" and the recourse
to mediation.
(ii) Standard of Review
37. The United States submits that, in addition to the
individual Panel errors listed above64, the cumulative effect of these errors also
constitutes a violation of Article 11 of the DSU. The United States asserts that
it was appropriate for the USDOC to examine the evidence in its totality, to
rely on circumstantial and secondary evidence, and to draw reasonable inferences
from this evidence. The Panel's task in reviewing the USDOC's determination was
to decide whether the USDOC properly established the facts and evaluated them in
an unbiased and objective way, and whether the USDOC, given the totality of the
record evidence, including circumstantial evidence, could have found entrustment
or direction. In the United States' submission, however, the individual errors
committed by the Panel led it to substitute a "new analytic framework" for that
used by the USDOC, redefine the scope and structure of the USDOC's analysis, and
reweigh the USDOC's evidence.65 In so doing, the United States argues, the Panel
failed to follow the proper standard of review and thereby exceeded the bounds
of its discretion under Article 11 of the DSU. The United States, therefore,
requests the Appellate Body to reverse the Panel's conclusions stemming from its
improper application of the standard of review. 38. The United States appeals the Panel's findings regarding
the USDOC's determination of benefit and specificity. The United States observes
that the Panel found the USDOC's benefit determination to be inconsistent with
Article 1.1(b) of the SCM Agreement, and its specificity determination to
be inconsistent with Article 2 of the SCM Agreement insofar as it relates
to alleged subsidies by creditors not identified by the USDOC as public bodies.
The United States submits that these findings are based solely on the
Panel's erroneous conclusion that the USDOC's determination of GOK entrustment
or direction of certain Hynix creditors is inconsistent with
Article 1.1(a)(1)(iv) of the SCM Agreement. Accordingly, the United
States requests the Appellate Body to reverse the Panel's findings on benefit
and specificity. B. Arguments of Korea � Appellee
39. Korea submits that the United States' appeal regarding
the request for consultations is not properly before the Appellate Body because
the United States' Notice of Appeal does not sufficiently identify the alleged
errors of law and legal interpretations as required by Rule 20(2)(d) of the
Working Procedures. Korea argues that subparagraph (i) of
Rule 20(2)(d) would be rendered redundant, in the light of subparagraphs (ii)
and (iii), if it were sufficient for an appellant to state merely what the panel
holds, and claim simply that it disagrees. In its Notice of Appeal, the United
States failed to offer "the least bit of description of what the [United States]
considers to be the legal error".66 Korea, therefore, requests the Appellate Body
to dismiss this claim of the United States. 40. In the alternative, Korea argues that the United States'
claim regarding Article 4.4 of the DSU should be dismissed because Korea's
request for consultations did satisfy the requirements of that provision. Korea
refers to its request for consultations, dated 30 June 200367, and to the addendum
to this request, dated 18 August 2003 (the "Addendum").68 Korea disagrees with the
United States that Korea did not indicate the legal provisions with which the
CVD order is alleged to be inconsistent. Korea submits that the 18 August 2003
document made clear that it was an "addendum" to the 30 June 2003 request for
consultations and that, therefore, the same violations set out in the initial
request were being alleged in the Addendum with respect to the CVD order. Korea
further argues that the CVD order is "dependent" on the final determinations of
the USDOC and the USITC and is effectively a "ministerial function without
discretion".69 In Korea's view, it follows that the legal basis for the complaint
as to the CVD order is identical to the legal basis for the complaint as to the
underlying determinations. Therefore, Korea submits that its request for
consultations and Addendum met the requirements of Article 4.4 of the DSU and
requests the Appellate Body to dismiss the United States' appeal of this issue.
2. Interpretation of Article 1.1(a)(1)(iv) of
the SCM Agreement 41. Korea contests the United States' challenge to the
Panel's interpretation of Article 1.1(a)(1)(iv) of the the SCM Agreement, and
therefore submits that the interpretation should be upheld by the Appellate
Body. In particular, Korea argues that the Panel's interpretation of the terms
"entrusts" and "directs" was consistent with the ordinary meanings of these
terms. Korea recalls that the Panel agreed with the panel in US � Export
Restraints that "entrustment" and "direction" contain an element of
"delegation" and "command". Korea contends that the definitions of the terms
"entrusts" and "directs" proposed by the United States were chosen selectively
and that, in so choosing, the United States arrives at an overly broad reading
of these terms. Korea presents several examples applying the definitions
suggested by the United States, arguing that such examples reveal that these
definitions incorporate a broader range of government action than contemplated
by the SCM Agreement. 42. Korea further submits that the Panel's proper
understanding of the context of the terms "entrusts" and "directs" supports its
interpretation. Korea rejects the United States' reading of the term "practice"
in Article 1.1(a)(1)(iv) as implying that entrustment or direction cannot be
limited to an official programme, but may also include broader "practices".
Korea argues that "[t]he term 'practices' refers to what is being
entrusted or directed, not whether such types of governmental activities
have been so entrusted or directed".70 Similarly, Korea disagrees with the United
States' assertion that by equating "entrusts" and "directs" with "delegation"
and "command", the Panel did not take account of the "full range of methods"71 by
which a government might provide a subsidy. Korea submits that, although there
may be a broad range of the types of financial transactions covered by
Article 1.1(a)(1), that is a "distinct matter" from determining whether such
transactions can be attributed to the Member's government due to
entrustment or direction by the government to a private body.72 43. Korea agrees with the United States that the SCM
Agreement aims to discipline subsidies offered by governments. In Korea's
view, under the United States' interpretation, a Member would be allowed to
countervail a private body's actions that are not affirmatively entrusted
or directed by the government. This would "turn the SCM Agreement from a
pro-competitive agreement to a tool of gross protectionism".73 44. Korea responds to the various examples submitted by the
United States with a view to demonstrating the Panel's application of its
interpretation of the terms "entrusts" and "directs" to the facts of this case.
In Korea's view, the Panel's findings referred to by the United States are not
based on an improper reading of Article 1.1(a)(1)(iv); the Panel found instead
that the USDOC had improperly relied on evidence to support conclusions that do
not logically follow from the evidence. Korea further emphasizes that the Panel
agreed with the United States on the principal legal issues relating to the
interpretation of Article 1.1(a)(1)(iv) and that, in fact, the United States is
"trying to appeal factual issues under the guise of spurious legal claims".74
Korea, therefore, requests the Appellate Body to uphold the Panel's findings
claimed by the United States to be based on the Panel's erroneous interpretation
of Article 1.1(a)(1)(iv). 3. Review of the USDOC's Evidence of
Entrustment or Direction
(a) The Panel's "Probative and Compelling"
Evidentiary Standard
45. Korea contests the United States' claim that the Panel
impermissibly created a new legal standard for evaluating evidence by requiring
evidence to be "probative and compelling". Korea submits that the term
"probative and compelling" is not a new legal standard, but rather, a
description of the type of circumstantial evidence that would be sufficient to
establish entrustment or direction. 46. In Korea's view, the Panel addressed the question whether
an investigating authority could properly base its finding of entrustment or
direction on circumstantial evidence, or whether direct evidence was required to
sustain such a finding. Korea notes that the Panel found that an agency may rest
its finding of entrustment or direction on circumstantial evidence, and argues
that the Panel's statement at issue must be understood in this particular
context. Korea contends that the Panel should be understood to have found that
the further away from direct evidence one moves, the more important it is that
the circumstantial evidence be persuasive. When assessing what sort of evidence
could be considered persuasive in this context, the Panel required the evidence
to be "probative and compelling". Therefore, Korea submits, the Panel employed
these terms merely to give a description of the quality or type of evidence that
was required in the specific circumstances of the present case, without
purporting to define a new evidentiary standard under the SCM Agreement.
47. Furthermore, Korea alleges that the United States
mischaracterizes the evidentiary standard articulated by the Panel by reading
the Panel's description of "probative and compelling" evidence to require
"overwhelming"75 or "irrefutable" evidence.76 Based on dictionary definitions of
"probative" and "compelling", as well as synonyms for "compelling", Korea
concludes that evidence can be regarded as "probative and compelling" if it has
a "quality of proof and [has] fitness to induce conviction of truth".77 Korea
submits that the Panel followed this standard in finding that there was adequate
evidence that Korea First Bank ("KFB") had been coerced by reason of alleged
verbal threats from an official from the Financial Supervisory Service, even
though the sole evidence for this finding consisted of a single newspaper
report. Therefore, Korea concludes, if there is any criticism of the Panel in
its examination of the evidence, it is that the Panel "set the bar too low".78
(b) The Panel's Approach to the Evidence
(i) Reviewing the Totality of the Evidence
48. Korea challenges the United States' allegation that the
Panel evaluated the evidence in a manner that required that each piece of
evidence, in and of itself, demonstrate entrustment or direction. Korea
submits that, although the Panel did look at individual pieces of evidence, it
did not state that each piece of evidence, in and of itself, had to
demonstrate entrustment and direction. Korea points instead to instances in
which the Panel explicitly stated that it viewed a piece of evidence "in
conjunction with" other evidentiary factors.79 49. Moreover, according to Korea, if the Panel found that a
piece of evidence was of little or no evidentiary value�in the sense that it did
not support the conclusion that the USDOC derived from it, or that it was
contradicted, or that it was inaccurate�there would be no merit in taking into
account several such pieces of evidence as a whole. In other words, Korea
submits, "[i]t is a mathematical truism that no matter how many zeros and
negative numbers one adds together, the sum can never be a positive number."80
Korea further alleges that, by arguing that the Panel reviewed the evidence in
an improper manner, the United States attempts to re-argue on appeal the
specific facts of the case. 50. Korea contests the examples of Panel findings cited by
the United States in support of its allegation. Korea submits that a correct
reading of the Panel's reasoning does not reveal the Panel to have required each
piece of evidence, in and of itself, to establish entrustment or
direction. Instead, according to Korea, these examples reflect the Panel's
finding that several pieces of evidence relied upon by the USDOC were not
probative, that is, they did not support the conclusion of entrustment or
direction that the USDOC sought to draw on the basis of that evidence. In
Korea's view, the United States' appeal amounts to a disagreement with the
Panel's weighing of the evidence, which does not provide a permissible basis for
appeal.
(ii) Circumstantial Evidence
51. Korea argues that, contrary to the United States'
submission, the Panel did not effectively require every piece of evidence to be
direct evidence of entrustment or direction. Accordingly, Korea requests
the Appellate Body to uphold the findings challenged by the United States on the
basis that the Panel erred in its assessment of the USDOC's circumstantial
evidence. 52. Korea asserts that the Panel did, in fact, accept
circumstantial and secondary evidence. In support of its argument, Korea submits
that the Panel found entrustment or direction of KFB on the basis of a single
newspaper article, which was "both secondary and circumstantial" evidence.81
Because the Panel considered such evidence in its analysis, as the United States
requested, Korea submits that there is no basis for the United States' appeal.
53. In Korea's submission, the Panel did not reject evidence
because it was circumstantial or secondary evidence, but rather, because much of
the evidence was inaccurate, illogical, or simply not probative. For example, in
response to the United States' argument that the Panel did not properly assess
the evidence regarding GOK coercion of Hana Bank, Korea submits that the Panel
Report does not indicate that the basis for finding this evidence insufficient
was its circumstantial nature. Rather, in Korea's view, this evidence was
rejected because the record showed that the USDOC had not itself examined the
evidence submitted before the Panel, instead having relied on a mere citation
of that evidence contained in a footnote of another document. 54. Korea submits that the Panel's examination of
circumstantial evidence in the present case is consistent with prior panel
decisions, in particular, with the panel reports in Argentina � Textiles and
Apparel and Canada � Aircraft, cited by the United States in support
of its appeal. Korea asserts that these two cases essentially stand for the same
proposition ultimately accepted by the Panel in this dispute at the urging of
the United States, namely, that a Member may establish the existence of certain
conditions on the basis of circumstantial rather than direct evidence. In
Korea's view, the Panel's articulation of a "probative and compelling"
requirement for the evidence does not diminish a Member's right to rely on
circumstantial evidence because the "probative and compelling" requirement
"exists whether or not the evidence is circumstantial or direct".82 (iii) Burden of Proof 55. Korea submits that the United States' claim�that the
Panel's assessment of the USDOC's determination led to a shift in the burden of
proof from Korea to the United States�is "baseless" and should be rejected by
the Appellate Body.83 Korea disagrees with the United States' contention that the
Panel required the United States to produce a "smoking gun".84 Korea asserts that,
rather than looking for each piece of evidence in isolation to be dispositive of
entrustment or direction, the Panel assessed whether an objective and impartial
investigating authority could reasonably have relied on the USDOC's evidence "as
a part of building a finding of entrustment or direction".85 Reliance on such
evidence, Korea argues, was in any event found by the Panel to be inappropriate
because the evidence was typically not relevant to the inference or conclusion
it was meant to support and, therefore, was neither probative nor compelling. In
Korea's view, the Panel's refusal to accept unquestioningly the United States'
assertions as to the relevance of certain evidence does not constitute an
improper allocation of the burden of proof to the United States. (iv) Ex post Rationalization 56. Korea submits that the Panel correctly identified
evidence submitted by the United States as ex post rationalizations and
requests the Appellate Body to uphold the Panel's findings refusing to consider
such evidence. Referring to Article 22.5 of the SCM Agreement, Korea
contends that an investigating authority must cite, in its published
determination, every piece of record evidence that supports the agency's
reasons for the imposition of final measures. Korea submits that the United
States' argument�that a panel must accept any evidence not being submitted to
support new reasoning�is not consistent with the plain text of Article
22.5. Korea points, in particular, to the requirement that the published
determination contain "all relevant information" in support of its view
that evidence not cited by the agency�and, therefore, presumably not
"relevant"�may not subsequently be relied on by that Member in WTO dispute
settlement proceedings. 57. Korea contends that the United States' reliance on a GATT
panel decision is misplaced because that decision was under the Tokyo Round
Subsidies Code, which differs significantly in pertinent respects from the
SCM Agreement. Korea notes that, whereas the Tokyo Round Subsidies
Code obliged an investigating authority to include "all issues of fact and
law" in its published determination86, the SCM Agreement requires the
inclusion of "all relevant information".87 Korea maintains that this difference in
language suggests that, whatever may have been the understanding of this
obligation under the Tokyo Round Subsides Code, the plain language of the
SCM Agreement now requires that every piece of information upon
which the investigating authority relied in making its determination be
contained in the agency's published determination. 58. Korea submits that the United States' reliance on the
Appellate Body decision in US � Upland Cotton is similarly "inapposite".88
According to Korea, the section of that Appellate Body Report cited by the
United States considers the question whether a panel evaluating the consistency
of a measure with a particular provision needs to "address"89 each piece of
evidence or each argument raised by the parties, or whether it suffices,
instead, for a panel to explain the reasoning underlying its conclusions. This
issue, in Korea's view, has "nothing to do with"90 the requirement in Article 22.5
of the SCM Agreement that the agency's determination contain "all
relevant information". 59. Furthermore, Korea disagrees with the United States'
assertion that the newspaper and journal articles disregarded by the Panel were
cited by the USDOC in the Direction of Credit Memorandum. Korea submits,
first, that certain of the articles implicated by this issue on appeal are not
included among the citations in that document. In addition, according to Korea,
the Direction of Credit Memorandum is merely a list of citations
that does not contain any discussion of the evidence listed and,
therefore, cannot establish that the documents were in fact taken into account
by the USDOC so that contradictions and nuances found therein could be
reasonably and adequately explained by the agency. Finally, Korea asserts that
the date of the Direction of Credit Memorandum, which is the same date as
that of the USDOC's preliminary subsidy determination91, as well as the fact that
no reference is made to materials supporting the respondent's arguments,
suggest that it was drafted "at the last second ... to support a decision
already reached without reliance on the articles".92 (c) The Panel's Failure to Comply with
Article 11 of the DSU (i) Non-record Evidence 60. Korea submits that the Panel did not base its findings on
non-record information and, therefore, requests the Appellate Body to uphold the
respective findings of the Panel as well as the Panel's conclusions that the
United States contends resulted from this alleged error. The United States bases
its argument on the premise that the record evidence shows only that creditors
had the possibility of going to mediation in connection with the
October 2001 restructuring, not, as the Panel found, that certain creditors
exercised mediation rights. In Korea's view, however, the Panel's analysis
did not rest on the fact that certain creditors did engage in mediation.
Instead, according to Korea, the Panel faulted the USDOC for not conducting
further inquiry on this issue, given that Article 29(5) of the CRPA, which was
on the record, explicitly provided for the option of mediation to determine
appraisal rights.93 61. Korea also challenges the United States' argument that
the record evidence does not establish that certain Hynix creditors exercised
their rights to pursue mediation. Korea argues that the Panel linked
Article 29(5) of the CRPA to other pieces of evidence, which together could
support the Panel's understanding that mediation did take place.94 Korea refers,
in particular, to the Panel's discussion of the Hynix 2001 Audit Report, which
states that three creditors "raised objections" to the terms of reimbursement
"[b]ased on" the CRPA.95 Korea submits that this language was properly understood
by the Panel to indicate recourse to mediation by certain creditors of Hynix. 62. Finally, Korea contends that the United States fails to
recognize that the Panel pointed also to contradictory evidence from one of the
USDOC's own experts. According to Korea, the Panel quoted the USDOC's expert as
acknowledging that "certain creditors were able to act independently within the
framework of the CRPA".96 Because the USDOC did not even take this statement into
account in its explanation, Korea argues, the Panel properly concluded that the
record evidence put the USDOC on notice as to certain creditors' recourse to
mediation in connection with the October 2001 restructuring. 63. Korea concludes that there was evidence on the record
that mediation occurred pursuant to the authority of the CRPA and, therefore,
that the Panel did not impermissibly base its findings on non-record
information, in violation of Article 11 of the DSU. (ii) Standard of Review
64. Korea challenges the United States' contention that the
cumulative effect of the alleged errors that the Panel made in its review of the
evidence constitutes a separate violation of Article 11 of the DSU. Korea argues
that the United States adds no new arguments when it alleges a separate
violation of Article 11 of the DSU, relying instead on its previous claims
relating to the totality of the evidence, circumstantial and secondary evidence,
the burden of proof, and the Panel's alleged use of non-record evidence.97 Having
already established the absence of any basis for these claims, Korea requests
the Appellate Body to dismiss the United States' additional claim as to the
Panel's application of the standard of review under Article 11 of the DSU.
65. Korea submits that the United States' sole argument with
regard to benefit and specificity is that the Panel based its conclusions on its
allegedly erroneous findings with respect to GOK entrustment or direction.98
Because the Panel correctly found the USDOC's determination of entrustment or
direction to rest on insufficient evidence, Korea contends that the Appellate
Body should dismiss the United States' claims relating to benefit and
specificity.
C. Claim of Error by Korea � Other Appellant
66. Korea appeals the Panel's finding that a private body,
KFB, was entrusted or directed by the GOK to undertake a financial contribution
within the meaning of Article 1.1(a)(1)(iv) of the SCM Agreement. Korea
contends that this finding was premised on the Panel's erroneous understanding
that there could be entrustment or direction under Article 1.1(a)(1)(iv) when
the action that the private body was supposed to "carry out"�in this case the
participation in the Fast Track Debenture Programme�never took place. Korea
maintains that KFB did not "carry out" the allegedly entrusted action and that,
accordingly, the Panel was incorrect in finding that an objective and impartial
investigating authority could have found that there was entrustment or direction
of KFB to participate in the Fast Track Debenture Programme.99 Korea further
asserts that its appeal focuses on the Panel's interpretation of
Article 1.1(a)(1)(iv) and that, although Korea disagrees with the Panel's
factual finding that there was coercion by the GOK with respect to KFB, it
is not challenging this factual finding on appeal.100 67. According to Korea, the Panel's interpretation of
Article 1.1(a)(1)(iv)�that a private body may be entrusted to take an action
even when the action never occurs�is legally and logically incorrect. Korea
submits that the terms "entrusts" and "directs" cannot be read in isolation from
the remainder of Article 1.1(a)(1)(iv), in particular, the requirement that the
private body "carry out" one of the functions identified in Article 1.1(a)(i)
through (iii). Korea submits that Article 1.1(a)(1)(iv) further requires that
the private body engage in a "practice" of a governmental type and that a
"practice" is the application of a plan, not simply the plan itself.101 In
Korea's view, to read "entrusts" and "directs" without regard to these
subsequent terms in the same provision "makes no linguistic or logical sense".102
68. Korea finds support for its reading of Article
1.1(a)(1)(iv) in the Appellate Body Report in US � Corrosion-Resistant Steel
Sunset Review, which established that only overt government actions
or omissions may constitute a "measure" that can be challenged in WTO
dispute settlement proceedings.103 Korea argues that in the absence of such action
or omission�in this case, the participation of KFB in the Fast Track Debenture
Programme�there can be no basis for the Panel's finding of entrustment or
direction. 69. Korea additionally refers to Article 8 of the
International Law Commission's Draft Articles on State Responsibility.104 Korea
explains that Article 8, which is entitled ";Conduct directed or controlled by
a State", provides that private conduct shall be attributed to a State only
"if the person[] or group of persons is in fact acting on the instructions of,
or under the direction or control of, that State in carrying out the conduct.105"
Korea finds "striking" the similarity of wording in the reference to "carrying
out" a conduct and submits that the requirement of conduct taking place in order
to establish State responsibility is a matter of "common sense".106 Consequently,
Korea requests the Appellate Body to reverse the Panel's finding that the GOK
had entrusted or directed KFB to participate in the Fast Track Debenture
Programme. D. Arguments of the United States � Appellee 70. The United States submits that the Panel correctly found,
based upon press accounts of GOK threats directed at KFB, that it was reasonable
for the USDOC to conclude that there was GOK entrustment or direction in respect
of KFB. 71. The United States argues that Korea has misunderstood the
analysis and findings of the Panel. In the United States' view, the Panel
addressed GOK coercion and threats against Hynix creditors as evidence of
entrustment or direction generally, rather than specifically in relation to the
Fast Track Debenture Programme. The United States asserts that the Panel
explicitly clarified in footnote 136 to paragraph 7.117 of the Panel Report that
it would also consider, in a subsequent portion of the Panel Report, "[t]he
issue of the evidentiary value of the coercion of KFB in respect of the alleged
entrustment or direction of other private creditors".107 Thus, according to the
United States, the action entrusted or directed to KFB, properly understood, is
KFB's participation in the broader bailout of Hynix, which action was in fact
"carr[ied] out". 72. The United States considers "axiomatic" Korea's argument
that "an act by a private body cannot be attributed to the government unless
there is an act by the private body to attribute."108 According to the United
States, the existence of such acts by private bodies was not in dispute before
the Panel, as the Panel itself recognized in footnote 42 to paragraph 7.27 of
the Panel Report. In the United States' view, Korea "confuse[s]"109 the question of
"entrust[ment] or direct[ion]", in the first part of Article 1.1(a)(1)(iv), with
that of whether one of the functions identified in Article 1.1(a)(1)(i) through
(iii) has been "carr[ied] out" by the private body, as required by the
subsequent part of Article 1.1(a)(1)(iv). Therefore, the United States requests
the Appellate Body to uphold the Panel's finding as to the GOK's entrustment or
direction of KFB. E. Arguments of the Third Participants
1. China
73. China agrees with the Panel's interpretation of the terms
"entrusts" and "directs" as well as with the "probative and compelling" standard
adopted by the Panel. With regard to the interpretation of the terms "entrusts"
and "directs", China contends that, pursuant to Article 31 of the Vienna
Convention on the Law of Treaties110 (the "Vienna Convention"), the
decision-maker begins the interpretive process with the ordinary meaning, but
does not end its inquiry there. Looking beyond the terms "entrusts" and
"directs" to the other language in Article 1.1(a)(1)(iv) of the SCM Agreement,
China submits that the term "directs", when followed by "to" and a verb, can be
interpreted only to mean "give a formal order or command to".111 74. Furthermore, in China's view, there is no support in
Article 31 of the Vienna Convention or in WTO jurisprudence for the view,
implicitly advanced by the United States, that in ascertaining the ordinary
meaning of a certain term, all possible meanings listed in a dictionary
should be taken into account. A proper understanding of the terms "entrusts" and
"directs" reveals that these terms do not include "vague concepts"112 such as the
meanings proffered by the United States. 75. China disagrees with the United States that the Panel
articulated and adopted a new "probative and compelling" evidentiary standard.
China maintains that the Panel adopted and applied the general standard of
review based on Article 11 of the DSU, as specified by the Appellate Body in
US � Lamb. China submits that, even though the Panel did mention that "the
evidence of entrustment or direction must in all cases be probative and
compelling"113, this does not amount to a "special" evidentiary standard because
the Panel's statements purporting to apply this standard are only "general in
nature".114
76. The European Communities agrees with the United States
that the Panel (i) erred in its interpretation of the terms "entrusts" and
"directs" in Article 1.1(a)(1)(iv) of the SCM Agreement; (ii) applied an
improper standard of review; (iii) impermissibly shifted the burden of proof;
and (iv) incorrectly refused to consider certain United States evidence on the
ground of ex post rationalization. With regard to the interpretation of
"entrusts" and "directs", the European Communities submits that the Panel
reformulated these terms in a restrictive way, in particular by limiting their
meanings to "affirmative action[s]" of "delegation" and "command" as set out in
the panel report in US � Export Restraints. The Panel then applied
this reformulated understanding to the facts of the present case. The European
Communities maintains that this constitutes legal error as the factual
circumstances in the present case are fundamentally different from those in
US � Export Restraints. 77. The European Communities agrees with the United States
that, in applying the restrictive and very specific language of that panel
report, the Panel incorrectly discarded some of the ordinary meanings of the
words "entrusts" and "directs", which meanings were recognized by the US �
Export Restraints panel. In particular, the European Communities maintains
that a government can entrust one or more private bodies to carry out not only a
specific task�such as the payment of funds to a particular firm�but also to
carry out a more general task�such as a public policy objective.115 The European
Communities contends that, although the Panel recognized that leaving discretion
to a private body is not necessarily at odds with entrustment or direction of
the private body, the Panel failed to fully appreciate this point in its
analysis of the facts of the case. 78. The European Communities agrees with the United States
that the conclusions of the USDOC were reasonable and that the Panel
impermissibly engaged in a de novo review of the USDOC's determination.
The European Communities submits that, by considering the facts and evidence
only in isolation, without assessing the weight of the individual facts when
taken together, the Panel effectively applied a "different methodological
approach" from that adopted by the investigating authority.116 The European
Communities maintains that the Panel's sole task was to determine whether or not
the conclusion of the USDOC with respect to "entrustment" or "direction" was "so
outlandish, so unreasonable, so lacking in objectivity"117 that it left no choice
for the Panel but to rule against the investigating authority. Instead, the
Panel examined whether certain facts, on their own, were decisive of the
question of entrustment or direction and, finding that they were not, failed to
include them in its weighing of all the facts in question collectively. In doing
so, according to the European Communities, the Panel conducted its own
independent assessment of GOK entrustment or direction of Hynix's creditors. 79. Furthermore, the European Communities agrees with the
United States that the Panel effectively shifted the burden of proof from Korea
to the United States through its erroneous review of the USDOC's evidence. In
this respect, the European Communities agrees with the United States that the
Panel's "probative and compelling" evidentiary standard has no basis in the
SCM Agreement or any other covered agreement, and that such standard
essentially requires the investigating authority to produce a "smoking gun".118
Furthermore, the European Communities emphasizes the importance of
circumstantial evidence in subsidies investigations, and that the Panel's
approach improperly limits an investigating authority's ability to rely on such
evidence. The European Communities asserts that, as the complaining party, Korea
bore the burden of establishing a prima facie case and that, as such, if
certain events�such as meetings with GOK officials�had no connection with
entrustment or direction, Korea should have been required to produce certain
exculpatory evidence, which could have been only in its control.119 80. Finally, the European Communities agrees with the United
States that it is appropriate for a Member to provide additional details and
evidence of the elements on which its findings were based, provided that the
Member does not seek to alter the reasoning set out in the agency's decision. In
the European Communities' view, the submission of record evidence relied upon
but not cited in the agency's decision does not constitute the introduction of
new reasoning, because such evidence is merely an additional part of a factual
or legal finding already articulated in the agency's decision.120 3. Japan
81. Japan agrees with the United States that the Panel (i)
erred in the interpretation and application of the terms "entrusts" and
"directs" in Article 1.1(a)(1)(iv) of the SCM Agreement; (ii) applied an
erroneous "probative and compelling" evidentiary standard; (iii) improperly
assessed the probative value of each item of evidence separately; and (iv) erred
in disregarding evidence not specifically mentioned in the USDOC's
determination. 82. With regard to the interpretation of the terms "entrusts"
and "directs", Japan submits that the Panel did not base its analysis on the
full range of meanings of these terms, but rather interpreted these terms in an
overly narrow manner to mean only "delegation" and "command". According to
Japan, the Panel failed to recognize that the terms "entrusts" and "directs"
"encompass a wide range of acts", including "a government's offer to a person to
do something".121 83. In relation to the standard of review, Japan agrees with
the United States that the Panel erred in requiring evidence to be "probative
and compelling". Japan contends that nothing in the SCM Agreement or the
DSU provides a legal basis for the Panel's standard. Indeed, Japan argues, the
proper evidentiary standard for this case is found in Article 11 of the DSU,
which requires a panel to determine only whether "an objective assessment of
evidence on the record reasonably allows the conclusion reached by the
authority."122 The use of any other standard for the examination of an
investigating authority's evidence, in Japan's view, amounts to legal error. 84. Japan further contends that the Panel erroneously considered
that each item of evidence, in and of itself, must be probative of
entrustment or direction. Japan notes that the Panel correctly recognized that
the USDOC relied on the totality of the evidence before it to determine
entrustment or direction. The Panel erred, however, in subsequently considering
that it "must consider the [US]DOC's assessment of the probative value of each
evidentiary factor separately".123 Instead, Japan submits, the Panel's task under
Article 11 of the DSU was simply to find whether the USDOC's conclusion was
supported by evidence on the record as a whole. Reviewing the evidence in
its entirety is particularly important in cases, such as the present dispute,
where the evidence by its nature would be circumstantial because "[a]n
individual piece of circumstantial evidence shows a limited aspect of the entire
picture."124 According to Japan, the Panel's failure to evaluate the evidence in
its totality resulted in several findings that are inconsistent with Article 11
of the DSU and Article 1.1 of the SCM Agreement. 85. Japan also argues that the Panel erred in rejecting
certain evidence submitted by the United States on the ground that the USDOC did
not explicitly refer to such evidence in its published subsidy determination.
Japan contends that neither Article 11 of the DSU, nor any other provision of
the DSU or the SCM Agreement, obliges the authority to discuss in its
determination "each and every reason and fact" on which the authority based its
conclusion, or precludes a Member from relying before a panel on record evidence
that was not explicitly referred to in the investigating
authority's determination.125 Japan finds support for its view in the Appellate
Body decisions in Thailand � H-Beams and EC � Tube or Pipe Fittings,
which explained that a panel's obligation under Article 17.6(i) of the
Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 (the "Anti-Dumping Agreement") to review the
agency's fact-finding does not prevent the respondent Member from relying before
a panel on facts that are not discernible from the published determination.
Japan submits that, given the similar obligation of panels to review facts under
Article 11 of the DSU, the rationale of these decisions applies equally in the
present case to permit the United States to rely on the evidence improperly
rejected by the Panel. 4. Separate Customs Territory of Taiwan,
Penghu, Kinmen, and Matsu 86. The Separate Customs Territory of Taiwan, Penghu, Kinmen,
and Matsu agrees with the Panel's interpretation of the terms "entrusts" and
"directs" in Article 1.1(a)(1)(iv) of the SCM Agreement and submits that,
contrary to the United States' assertion, the Panel did not erroneously apply a
special evidentiary standard. The Separate Customs Territory of Taiwan, Penghu,
Kinmen, and Matsu contends that the interpretation of the terms "entrusts" and
"directs" suggested by the United States "blurs the line" between a subsidy
captured by the provisions of the SCM Agreement, on the one hand, and the
"general administrative discretion"126 of Members to adopt WTO-consistent practices
to regulate or influence their industries or markets, on the other hand. In
contrast, the Panel's interpretation of "entrusts" and "directs" ensures that
government actions under Article 1.1(a)(1)(iv) are differentiated from more
routine government interventions in the marketplace. 87. The Separate Customs Territory of Taiwan, Penghu, Kinmen,
and Matsu disagrees with the United States' claim that the Panel erroneously
applied a "probative and compelling" evidentiary standard. Pointing to the
Panel's own description of what it meant by the term "probative and
compelling"�namely, that the evidence "demonstrate" entrustment or direction127�the
Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu maintains that
the Panel's application of this standard does not impose additional obligations
on investigating authorities. In the view of the Separate Customs Territory of
Taiwan, Penghu, Kinmen, and Matsu, the Panel's characterization falls within its
discretion as the trier of fact, and is merely "an extension of Article 11 of
the DSU".128 The Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu
asserts that, even though the Panel could have elaborated further on its
understanding of the "probative and compelling" standard, it agrees with that
standard and requests the Appellate Body to take its views into account should
the Appellate Body "feel the need to further elaborate on this standard".129
III. Issues Raised in This Appeal
88. The following issues are raised in this appeal: (a) whether the Panel erred in finding that Korea's
request for consultations did not fail (b) as regards the USDOC's finding of entrustment or
direction:
(i) whether the Panel erred in interpreting
Article 1.1(a)(1)(iv) of the Agreement on Subsidies and
Countervailing Measures (the "SCM Agreement "), in
particular:
(A) in finding that, in order to constitute
entrustment or direction under Article 1.1(a)(1)(iv), "the
action of the government must contain a notion of delegation (in
the case of entrustment) or command (in the case of direction)";
and
(B) in finding that the evidence was
"sufficient for an objective and impartial investigating
authority to properly find government entrustment or direction
in respect of KFB", notwithstanding that Korea First Bank
("KFB") did not carry out the activity allegedly entrusted or
directed by the Government of Korea (the "GOK");
(ii) whether the Panel erred in its review of the
USDOC's finding of entrustment or direction under
Article 1.1(a)(1)(iv) of the SCM Agreement, in particular:
(A) in finding that evidence of entrustment
or direction must be "probative and compelling";
(B) in failing to examine the USDOC's
evidence in its totality, and instead, requiring that individual
pieces of evidence, in and of themselves, establish entrustment
or direction by the GOK of the creditors of Hynix
Semiconductors, Inc. ("Hynix");
(C) in declining to consider certain evidence
on the record of the underlying investigation but not cited by
the USDOC in its published determination;
(D) in failing to comply with its obligations
under Article 11 of the DSU by finding that "the mediation
provisions [of the Corporate Restructuring Promotion Act
("CRPA")] had actually been invoked by three creditors in
respect of the October 2001 restructuring", in the absence of
supporting evidence on the record of the underlying
investigation; and
(E) in failing to apply the proper standard
of review and, therefore, failing to comply with its obligations
under Article 11 of the DSU; and, consequently,
(iii) whether the Panel erred in finding that the
USDOC's determination of GOK entrustment or direction of certain of
Hynix's creditors is inconsistent with Article 1.1(a)(1)(iv) of the
SCM Agreement;
(c) whether the Panel erred in finding that the
USDOC's benefit determination is inconsistent with Article 1.1(b) of the
SCM Agreement; and
(d) whether the Panel erred in finding that the
USDOC's determination of specificity, insofar as it relates to subsidies
provided by virtue of GOK entrustment or direction of certain of Hynix's
creditors, is inconsistent with Article 2 of the SCM Agreement. IV. Consultations
A. Introduction and Relevant Procedural Background
89. We begin with the United States' assertion that the Panel
erred by failing to reject Korea's claims against the USDOC's CVD order on the
grounds that Korea did not provide, in its request for consultations, the legal
basis for its complaint against this measure, as required by Article 4.4 of the
DSU. 90. Before examining the United States' appeal, we set out
the relevant procedural history of the dispute. Korea requested consultations
with the United States, for the first time, on 30 June 2003.130 In its request for
consultations, Korea referred to the preliminary and final subsidy
determinations of the USDOC and to the preliminary injury determination of the
United States International Trade Commission (the "USITC"). The request also
indicated the provisions of the General Agreement on Tariffs and Trade 1994
(the "GATT 1994") and the SCM Agreement with which Korea considered
"these determinations" to be inconsistent.131 Consultations were held on 20 August
2003.132 91. On 18 August 2003, Korea submitted an addendum to its
request for consultations (the "Addendum"), which stated: With reference to document WT/DS296/1 ... circulated
on 8 July 2003 [the original request for consultations], my authorities
have instructed me to request further consultations with the Government
of the United States ... with regard to the [USITC's] final
determination of material injury, ... and the [USDOC's] final [CVD]
order... . Both of these actions relate to the same underlying measures
at issue in our previous request for consultations.133
This language was followed by a list of provisions with which
Korea considered "these determinations" to be inconsistent.134 Another round of
consultations was held on 1 October 2003, prior to which Korea and the United
States exchanged correspondence indicating that they disagreed about the
conformity of Korea's request for consultations with Article 4.4 of the DSU.135
Korea submitted a request for the establishment of a panel on 19 November 2003.136
The request identified the USDOC's CVD order and stated that it "was the result"
of the USDOC's final CVD determination and of the USITC's final material injury
determination. The United States objected to the establishment of a panel on the
grounds that the parties had not held consultations on the CVD order.137 The Panel
was established on 23 January 2004.138 92. The United States requested the Panel to reject Korea's
claims in respect of the USDOC's CVD order.139 According to the United States,
Korea failed to comply with the requirements of Article 4.4 of the DSU because
it did not provide "any indication of the legal basis of its complaint" in
respect of the CVD order.140 The Panel disagreed, noting that Korea's second
request for consultations referred to Korea's first request for consultations.141
This reference, in the Panel's view, was "sufficient for the second request to
be read in light of the first request" and consequently, "in addition to the
provisions of the SCM Agreement set forth (in a non-exhaustive manner)
in Korea's second request for consultations, its claims in that document should
also be read in light of the provisions of the SCM Agreement and
GATT 1994 set out in" the original request.142 The Panel concluded that "the
totality of these provisions provides sufficient 'indication of the legal basis
for the complaint' within the meaning of Article 4.4 of the DSU."143 93. The United States appeals this Panel finding. According
to the United States, "it is not credible to assert that by simply referring to
the fact that it had filed a prior consultation request on one set of alleged
measures, Korea satisfied its obligation to provide an indication of the legal
basis for its complaint with respect to a different measure."144 It adds that,
given that Korea cited many provisions in its first request for consultations,
the United States could not have been expected
"to guess which provision(s) applied to the [CVD] order".145 "At a minimum", the
United States explains, Article 4.4 requires "an indication of at least one
provision with which a measure is considered to be inconsistent".146 For these
reasons, the United States submits, the Panel should have rejected Korea's
claims in respect of the CVD order. 94. Korea requests the Appellate Body to dismiss the United
States' appeal with respect to this issue on the grounds that the Notice of
Appeal did not meet the requirements of Rule 20(2)(d) of the Working
Procedures for Appellate Review (the "Working Procedures").147 In
Korea's submission, the United States' Notice of Appeal does not identify the
"alleged errors in the issues of law covered in the panel report and legal
interpretations developed by the panel" as required by Rule 20(2)(d)(i);
instead, the Notice of Appeal "repeats a [United States] version of what the
Panel stated and says the [United States] disagrees".148 In any event, Korea
asserts, the Panel was correct in declining the United States' request to reject
Korea's claim in respect of the CVD order. Korea explains that "[b]ecause the
[CVD] order is wholly dependant on the administrative determinations and is
effectively a ministerial function without discretion, it follows that the legal
claims of the underlying determinations are identical to the legal claims with
respect to the [CVD] order."149 B. Sufficiency of the United States' Notice of
Appeal 95. Before turning to the United States' claim relating to
Korea's request for consultations, we address Korea's assertion that the United
States' Notice of Appeal does not meet the requirements of Rule 20(2)(d) of the
Working Procedures in respect of this claim. Rule 20(2) provides, in
relevant part:
A Notice of Appeal shall include ...
(d) a brief statement of the nature of the appeal,
including:
(i) identification of the alleged errors in
the issues of law covered in the panel report and legal
interpretations developed by the panel;
(ii) a list of the legal provision(s) of the
covered agreements that the panel is alleged to have erred in
interpreting or applying; and
(iii) without prejudice to the ability of the
appellant to refer to other paragraphs of the panel report in
the context of its appeal, an indicative list of the paragraphs
of the panel report containing the alleged errors.
96. In its Notice of Appeal, the United States indicates that
it seeks review of:
... the Panel's legal conclusion that, with respect
to the [US]DOC [CVD] order, Korea's consultation request provides a
sufficient indication of the legal basis of the complaint within the
meaning of Article 4.4 of the DSU. This conclusion is in error and is
based on erroneous findings on issues of law and related legal
interpretations.10
_________________________________
10Panel Report, paragraphs 7.414‑7.415.
97. Korea alleges that the United States' Notice of Appeal does not identify the alleged errors in the issues of law covered in the Panel Report and legal interpretations developed by the Panel. We disagree. Although Korea is correct that the United States' Notice of Appeal simply tracks the Panel's finding150, nevertheless, the Notice of Appeal states that the alleged error of the Panel is the finding that Korea's request for consultations provides sufficient indication of the legal basis for the complaint; it mentions that Article 4.4 of the DSU is the relevant legal provision, and it indicates the paragraphs of the Panel Report where this finding is made. Thus, the United States' Notice of Appeal provides adequate notice to Korea of the "nature of the appeal" in order to allow it to know the case to which it must respond.151 In our view, this is sufficient, in this case, for purposes of Rule 20(2)(d) of the Working Procedures.
98. Having disposed of Korea's objection regarding the United States' Notice of Appeal, we examine the United States' claim on appeal. The requirements that apply to a request for consultations are set out in Article 4.4 of the DSU, which provides, in relevant part:
99. As observed above152, Korea's initial request for consultations did not refer to the CVD order, which was not in existence at the time the request was made. In the Addendum to its request for consultations, Korea sought "further consultations" with regard to the USITC's final injury determination and the USDOC's CVD order. The Addendum referred to the original request for consultations and expressly indicated that both the USITC's final affirmative injury determination and the CVD order "relate to the same underlying measures at issue in our previous request for consultations".153 The United States considers that this language does not permit a conclusion that the claims asserted in the initial request for consultations apply also to the CVD order, which is referred to only in the Addendum. 100. We disagree. The Addendum expressly refers to the initial request for consultations. It is clear that the Addendum was intended to be read together with the original request for consultations; indeed, that is the very nature of an addendum. Moreover, we recall that Korea explains that, under United States law, "the [CVD] order is wholly dependant on the administrative determinations and is effectively a ministerial function without discretion".154 According to Korea, "it follows that the legal claims of the underlying determinations are identical to the legal claims with respect to the [CVD] order."155 At the oral hearing, the United States confirmed that this is an accurate description of a CVD order under United States law. In these circumstances, it should have been apparent that the allegations of inconsistency, set forth by Korea in the original request for consultations and in the Addendum in relation to the USDOC's subsidy determination and the USITC's injury determination, applied also to the CVD order. Nor can it be said that the United States was expected "to guess which provision(s) applied to the [CVD] order".156 Accordingly, we find that it was reasonable for the Panel to conclude that the "totality" of the provisions in Korea's initial request for consultations and in the Addendum provides, with respect to the USDOC's CVD order, a sufficient indication of the legal basis for the complaint within the meaning of Article 4.4.157 101. For these reasons, we uphold the Panel's finding, in paragraph 7.415 of the Panel Report, that Korea's request for consultations did not fail to indicate the legal basis for the complaint in relation to the USDOC's CVD order, as required by Article 4.4 of the DSU. V. Interpretation of Article 1.1(a)(1)(iv) of the SCM Agreement
102. We examine next the United States' and Korea's contentions that the Panel incorrectly interpreted Article 1.1(a)(1)(iv) of the SCM Agreement. 103. In the course of its analysis of Korea's claim under Article 1.1(a)(1)(iv), the Panel stated that it "agree[d] with the US � Export Restraints panel that '[i]t follows from the ordinary meanings of the two words "entrust" and "direct" that the action of the government must contain a notion of delegation (in the case of entrustment) or command (in the case of direction).'"158 104. The United States asserts that the Panel's interpretation of the terms "entrusts" and "directs" is erroneous because it fails to "take[] account of the full range of government actions that fall within the ordinary meaning[s] of th[ese] term[s]".159 In response, Korea argues that the Panel's interpretation of the terms "entrusts" and "directs" is "appropriate" and, consequently, should be upheld by the Appellate Body.160 105. Korea's challenge relates to a different aspect of the Panel's interpretation of Article 1.1(a)(1)(iv). In particular, Korea appeals the Panel's finding that certain evidence relied on by the USDOC was "sufficient for an objective and impartial investigating authority to properly find government entrustment or direction in respect of KFB".161 According to Korea, this finding is a consequence of the Panel's incorrect interpretation that an affirmative finding of entrustment or direction under Article 1.1(a)(1)(iv) is possible, even though the act that the private body was allegedly entrusted or directed to carry out was never undertaken.162 The United States requests the Appellate Body to uphold the Panel's finding that the USDOC had a sufficient factual basis to conclude that there was entrustment or direction by the GOK with respect to KFB.163
106. Article 1.1 lays down when a "subsidy" shall be deemed to exist for purposes of the SCM Agreement, namely, when (i) there is a "financial contribution by a government or any public body", and (ii) "a benefit is thereby conferred".164 This part of the appeal is concerned with the "financial contribution" element of the definition of a "subsidy".165 Article 1.1(a)(1) of the SCM Agreement states that there is a financial contribution by a government or any public body where:
107. Article 1.1(a)(1) makes clear that a "financial contribution" by a government or public body is an essential component of a "subsidy" under the SCM Agreement. No product may be found to be subsidized under Article 1.1(a)(1), nor may it be countervailed, in the absence of a financial contribution. Furthermore, situations involving exclusively private conduct�that is, conduct that is not in some way attributable to a government or public body�cannot constitute a "financial contribution" for purposes of determining the existence of a subsidy under the SCM Agreement. 108. Paragraphs (i) through (iv) of Article 1.1(a)(1) set forth the situations where there is a financial contribution by a government or public body. The situations listed in paragraphs (i) through (iii) refer to a financial contribution that is provided directly by the government through the direct transfer of funds, the foregoing of revenue, the provision of goods or services, or the purchase of goods.166 By virtue of paragraph (iv), a financial contribution may also be provided indirectly p; by a government where it "makes payments to a funding mechanism", or, as alleged in this case, where a government "entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) ... which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments". Thus, paragraphs (i) through (iii) identify the types of actions that, when taken by private bodies that have been so "entrusted" or "directed" by the government, fall within the scope of paragraph (iv). In other words, paragraph (iv) covers situations where a private body is being used as a proxy by the government to carry out one of the types of functions listed in paragraphs (i) through (iii). Seen in this light, the terms "entrusts" and "directs" in paragraph (iv) identify the instances where seemingly private conduct may be attributable to a government for purposes of determining whether there has been a financial contribution within the meaning of the SCM Agreement. 109. With this in mind, we turn to examine the meanings of the terms "entrusts" and "directs" in Article 1.1(a)(1)(iv). We recall that the Panel stated that it "agree[d] with the US � Export Restraints panel that '[i]t follows from the ordinary meanings of the two words "entrust" and "direct" that the action of the government must contain a notion of delegation (in the case of entrustment) or command (in the case of direction).'"167 In so doing, the Panel effectively replaced the terms "entrusts" and "directs" with two other terms, "delegation" and "command", whose scope it did not define, and went no further in clarifying the meaning of any of these terms.168 The United States asserts that the Panel "failed to give full meaning and effect to the treaty terms at issue".169 It points out that the dictionary definitions of the term "entrust" include "[i]nvest with a trust; give (a person, etc.) the responsibility for a task ... [c]ommit the ... execution of (a task) to a person".170 The United States also notes that the dictionary definitions of "direct" include "[c]ause to move in or take a specified direction; turn towards a specified destination or target"; "[g]ive authoritative instructions to; to ordain, order (a person) to do,o, (a thing) to be done; order the performance of"; and "[r]egulate the course of; guide with advice".171 The United States, therefore, would have us adopt an interpretation of the terms "entrusts" and "directs" that includes all the dictionary definitions of these terms. 110. The term "entrusts" connotes the action of giving responsibility to someone for a task or an object.172 In the context of paragraph (iv) of Article 1.1(a)(1), the government gives responsibility to a private body "to carry out" one of the types of functions listed in paragraphs (i) through (iii) of Article 1.1(a)(1). As the United States acknowledges173, "delegation" (the word used by the Panel) may be a means by which a government gives responsibility to a private body to carry out one of the functions listed in paragraphs (i) through (iii). Delegation is usually achieved by formal means, but delegation also could be informal. Moreover, there may be other means, be they formal or informal, that governments could employ for the same purpose. Therefore, an interpretation of the term "entrusts" that is limited to acts of "delegation" is too narrow. 111. As for the term "directs", we note that some of the definitions�such as "give authoritative instructions to" and "order (a person) to do"�suggest that the person or entity that "directs" has authority over the person or entity that is directed. In contrast, some of the other definitions�such as "inform or guide"�do not necessarily convey this sense of authority. In our view, that the private body under paragraph (iv) is directed "to carry out" a function underscores the notion of authority that is included in some of the definitions of the term "direct". This understanding of the term "directs" is reinforced by the Spanish and French versions of the SCM Agreement, which use the verbs "ordenar"174 and "ordonner"175, respectively.176 Both of these verbs unambiguously convey a sense of authority exercised over someone. In the context of paragraph (iv), this authority is exercised by a government over a private body. A "command" (the word used by the Panel) is certainly one way in which a government can exercise authority over a private body in the sense foreseen by Article 1.1(a)(1)(iv), but governments are likely to have other means at their disposal to exercise authority over a private body. Some of these means may be more subtle than a "command" or may not involve the same degree of compulsion. Thus, an interpretation of the term "directs" that is limited to acts of "command" is also too narrow. 112. Paragraph (iv) of Article 1.1(a)(1) further states that the private body must have been entrusted or directed to carry out one of the type of functions in paragraphs (i) through (iii). As the panel in US � Export Restraints explained, this means that "the scope of the actions ... covered by subparagraph (iv) must be the same as those covered by subparagraphs (i)-(iii)".177 A situation where the government entrusts or directs a private body to carry out a function that is outside the scope of paragraphs (i) through (iii) would consequently fall outside the scope of paragraph (iv). Thus, we agree with the US � Export Restraints panel that "the difference between subparagraphs (i)-(iii) on the one hand, and subparagraph (iv) on the other, has to do with the identity of the actor, and not with the nature of the action."178 In addition, we must not lose sight of the fact that Article 1.1(a)(1)(iv) requires the participation of the government, albeit indirectly. We therefore agree with Korea that there must be a demonstrable link between the government and the conduct of the private body.179 113. We recall, moreover, that Article 1.1(a)(1) of the SCM Agreement is concerned with the existence of a financial contribution. Paragraph (iv), in particular, is intended to ensure that governments do not evade their obligations under the SCM Agreement by using private bodies to take actions that would otherwise fall within Article 1.1(a)(1), were they to be taken by the government itself. In other words, Article 1.1(a)(1)(iv) is, in essence, an anti-circumvention provision.180 A finding of entrustment or direction, therefore, requires that the government give responsibility to a private body�or exercise its authority over a private body�in order to effectuate a financial contribution. 114. It follows, therefore, that not all government acts necessarily amount to entrustment or direction. We note that both the United States and Korea agree that "mere policy pronouncements" by a government would not, by themselves, constitute entrustment or direction for purposes of Article 1.1(a)(1)(iv).181 Furthermore, entrustment and direction�through the giving of responsibility to or exercise of authority over a private body�imply a more active role than mere acts of encouragement.182 Additionally, we agree with the panel in US � Export Restraints that entrustment and direction do not cover "the situation in which the government intervenes in the market in some way, which may or may not have a particular result simply based on the given factual circumstances and the exercise of free choice by the actors in that market".183 Thus, government "entrustment" or "direction" cannot be inadvertent or a mere by-product of governmental regulation.184 This is consistent with the Appellate Body's statement in US � Softwood Lumber IV that "not all government measures capable of conferring benefits would necessarily fall within Article 1.1(a)"; otherwise paragraphs (i) through (iv) of Article 1.1(a) would not be necessary "because all government measures conferring benefits, per se, would be subsidies."185 115. Furthermore, such an interpretation is consistent with the object and purpose of the SCM Agreement, which reflects a delicate balance between the Members that sought to impose more disciplines on the use of subsidies and those that sought to impose more disciplines on the application of countervailing measures. Indeed, the Appellate Body has said that the object and purpose of the SCM Agreement is "to strengthen and improve GATT disciplines relating to the use of both subsidies and countervailing measures, while, recognizing at the same time, the right of Members to impose such measures under certain conditions".186 This balance must be borne in mind in interpreting paragraph (iv), which allows Members to apply countervailing measures to products in situations where a government uses a private body as a proxy to provide a financial contribution (provided, of course, that the other requirements of a countervailable subsidy are proved as well). At the same time, the interpretation of paragraph (iv) cannot be so broad so as to allow Members to apply countervailing measures to products whenever a government is merely exercising its general regulatory powers. 116. In sum, we are of the view that, pursuant to paragraph (iv), "entrustment" occurs where a government gives responsibility to a private body, and "direction" refers to situations where the government exercises its authority over a private body. In both instances, the government uses a private body as proxy to effectuate one of the types of financial contributions listed in paragraphs (i) through (iii). It may be difficult to identify precisely, in the abstract, the types of government actions that constitute entrustment or direction and those that do not. The particular label used to describe the governmental action is not necessarily dispositive. Indeed, as Korea acknowledges, in some circumstances, "guidance" by a government can constitute direction.187 In most cases, one would expect entrustment or direction of a private body to involve some form of threat or inducement, which could, in turn, serve as evidence of entrustment or direction. The determination of entrustment or direction will hinge on the particular facts of the case.188 117. The United States alleges that, by equating "entrustment" and "direction" with "delegation" and "command", the Panel failed to interpret those treaty terms in accordance with the customary rules of interpretation codified in the Vienna Convention on the Law of Treaties.189 In this respect, the United States submits that, had the Panel properly interpreted "entrusts" and "directs", it would have recognized that these terms also encompass:
The United States refers to several findings191 allegedly demonstrating that the Panel applied an incorrect interpretation of Article 1.1(a)(1)(iv), and that "the Panel's erroneous interpretation of ... Article 1.1(a)(1)(iv) affected its entire analysis of the [US]DOC's findings concerning the Hynix bailout."192 118. As Korea explains193, the issue raised on appeal by the United States�that is, the range of government actions that constitute entrustment or direction�was not the main interpretative issue before the Panel. Instead, the Panel was considering whether entrustment or direction needs to be demonstrated on the basis of explicit (as opposed to implicit) government acts only. On this issue, the Panel essentially agreed with the United States and held that Article 1.1(a)(1)(iv) does not "require[] an investigating authority to demonstrate an explicit government action addressed to a particular entity, entrusting or directing a particular task or duty".194 In the course of its analysis, the Panel "agree[d] with the US � Export Restraints panel that '[i]t follows from the ordinary meanings of the two words "entrust" and "direct" that the action of the government must contain a notion of delegation (in the case of entrustment) or command (in the case of direction).'"195 We explained earlier that the terms "entrusts" and "directs" in Article 1.1(a)(1)(iv) are not limited to "delegation" and "command", respectively. In our view, there may be other means by which governments can give responsibility to or exercise authority over a private body that may not fall within the terms "delegation" and "command", if these terms are strictly construed. We note that the Panel initially used the expression "a notion of" delegation or command.196 This suggests that the Panel was using the terms "delegation" and "command" with a certain degree of flexibility. However, the Panel's repeated use of the terms "delegation" and "command", without qualification, in its subsequent analysis, could give the impression that the terms "entrusts" and "directs" correspond strictly to "delegation" and "command". We do not consider that these words, on their own, convey what we understand by "entrusts" or "directs", as used in Article 1.1(a)(1)(iv), for the terms "delegation" and "command", as we have explained above, are too narrow. Therefore, we modify the Panel's interpretation of Article 1.1(a)(1)(iv) of the SCM Agreement, set out in paragraph 7.31 of the Panel Report, to the extent that it may be understood as limiting the terms "entrusts" and "directs" to acts of "delegation" and "command". 119. The United States' request, that the Appellate Body review the Panel's application of Article 1.1(a)(1)(iv) to the particular facts of this case197, is examined in the next Section of this Report.198
1 WT/DS296/R, 21 February 2005. 2 Hereinafter, these products will be referred to collectively as "DRAMS". 3 Notice of Initiation of Countervailing Duty Investigation: Dynamic Random Access Memory Semiconductors from the Republic of Korea, United States Federal Register, Vol. 67, No. 229 (27 November 2002), p. 70927 (Exhibit GOK-2 submitted by Korea to the Panel).
4 The countervailable subsidy rate determined for Samsung was
0.04 per cent, which is below the 5 Final Affirmative Countervailing Duty Determination, supra, footnote 4, amended as Notice of Amended Final Affirmative Countervailing Duty Determination: Dynamic Random Access Memory Semiconductors from the Republic of Korea, United States Federal Register, Vol. 68, No. 144 (28 July 2003), p. 44290 (Exhibit GOK-6 submitted by Korea to the Panel). 6 Issues and Decision Memorandum, for Final Affirmative Countervailing Duty Determination, supra, footnote 4, dated 16 June 2003 (the "Issues and Decision Memorandum"), pp. 61-62 (Exhibit GOK-5 submitted by Korea to the Panel). 7 Notice of Amended Final Affirmative Countervailing Duty Determination, supra, footnote 5, p. 44290, at p. 44291. 8 DRAMs and DRAM Modules from Korea, Investigation No. 701-TA-431 (Preliminary), USITC Pub. 3569 (December 2002) (Exhibit GOK-9 submitted by Korea to the Panel); DRAMs and DRAM Modules from Korea, Investigation No. 701-TA-431 (Final), USITC Pub. 3616 (August 2003) (Exhibit GOK-10 submitted by Korea to the Panel). 9
Notice of Countervailing Duty Order: Dynamic Random Access
Memory Semiconductors from the Republic of Korea, United States Federal
Register, Vol. 68, No. 154 (11 August 2003), p. 47546 (Exhibit 10 Panel Report, para. 3.1. 11 Panel Report, para. 8.1. 12 The Panel rejected Korea's claim pursuant to Article 2 of the SCM Agreement insofar as it concerned the USDOC's finding of specificity in relation to the alleged subsidies provided by public bodies. (Panel Report, para. 7.208) With respect to other creditors, however, the Panel agreed with Korea that the USDOC's subsidy determination did not satisfy the requirements of Article 2. 13 The Panel rejected Korea's claim that the United States acted inconsistently with Article 15.5 of the SCM Agreement because the USITC "failed to demonstrate the requisite causal link between subject imports and injury". (Panel Report, para. 8.2) 14 Ibid. 15 Ibid., para. 8.3. 16 Ibid., paras. 7.410 and 7.415. 17 Ibid., para. 8.4. 18 WT/DS296/5 (attached as Annex I to this Report). 19 WT/AB/WP/5, 4 January 2005. 20 WT/DS296/6 (attached as Annex II to this Report). 21 Pursuant to Rule 21 of the Working Procedures. 22 Pursuant to Rule 23(3) of the Working Procedures. 23 Pursuant to Rules 22 and 23(4) of the Working Procedures. 24 Pursuant to Rule 24(1) of the Working Procedures. 25 United States' appellant's submission, para. 143. 26 Ibid. 27 United States' appellant's submission, para. 144. 28 Article 1.1(a)(1)(iv) of the SCM Agreement states that a financial contribution exists where:
29 Panel Report, para. 7.31. 30 Article 1.1(a)(1)(iv) of the SCM Agreement. 31 Panel Report, para. 7.35. 32 Article 3.1 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement"). 33 Articles 3.5 and 5.2 of the Anti-Dumping Agreement; Articles 42 and 50.1(b) of the Agreement on Trade-Related Aspects of Intellectual Property Rights. 34 Articles 5.3, 5.6, 5.8, 10.7, and 12.1 of the Anti-Dumping Agreement; Article 5.4 of the Agreement on Textiles and Clothing. 35 United States' appellant's submission, para. 51 (quoting Appellate Body Report, US � Hot-Rolled Steel, para. 192). 36 Ibid., para. 49 (quoting The New Shorter Oxford English Dictionary, L. Brown (ed.) (Clarendon Press, 1993), Vol. 1, p. 458). 37 Ibid. 38 Ibid., para. 54 (referring to Appellate Body Report, US � Lamb, para. 103). 39 Ibid., para. 73. 40 Ibid., para. 58 (quoting Panel Report, para. 7.45). 41 Ibid. 42 United States' appellant's submission, para. 65. 43 Ibid., paras. 60-67. 44 Ibid., para. 69. 45 Ibid., para. 68. 46 Ibid., para. 85. 47 Ibid., para. 76 (quoting Panel Report, para. 7.129). (emphasis added by the United States) 48 Ibid. (footnote omitted) 49 United States' appellant's submission, para. 80. 50 Ibid., para. 79. (footnotes omitted) 51 Ibid., para. 82 (quoting Appellate Body Report, Canada � Aircraft, para. 198). (original emphasis) 52 Ibid., para. 83. 53 Ibid., para. 87. 54 United States' appellant's submission, para. 89 (referring to Panel Report Argentina � Ceramic Tiles, para. 6.27; and Panel Report, Guatemala � Cement II, para. 8.245). 55 Panel Report, para. 7.88. 56 United States' appellant's submission, para. 91. 57 United States' appellant's submission, para. 92 (referring to GATT Panel Report, Brazil � EEC Milk, paras. 286-287). 58 Ibid., para. 93 (quoting Appellate Body Report, US � Upland Cotton, para. 446). 59 Direction of Credit Memorandum for Countervailing Duty Investigation: Dynamic Random Access Memory Semiconductors from the Republic of Korea, dated 31 March 2003 (Exhibit US-8 submitted by the United States to the Panel). 60 United States' appellant's submission, para. 109. (original emphasis) 61 Ibid., footnote 156 to para. 108. 62 Ibid., para. 111 (referring to Panel Report, paras. 7.85-7.86). 63 United States' appellant's submission, para. 111 (quoting 2001 Hynix Audit Report, p. 40 (Exhibit US-125 submitted by the United States to the Panel)). The Panel also quoted the Hynix 2001 Audit Report at paragraph 7.85 of the Panel Report. 64 Supra, Section II.A.3(a)-(c)(i). 65 United States' appellant's submission, para. 119. 66 Korea's appellee's submission, para. 230. 67 WT/DS296/1 (attached as Annex III to this Report). 68 WT/DS296/1/Add. 1 (attached as Annex IV to this Report). 69 Korea's appellee's submission, para. 242. 70 Korea's appellee's submission, para. 43. (original emphasis) 71 Ibid., para. 48 (quoting United States' appellant's submission, para. 37). 72 Ibid., para. 50. 73 Ibid., para. 52. 74 Korea's appellee's submission, para. 53. 75 Ibid., para. 86 (quoting United States' appellant's submission, para. 49; in turn quoting The New Shorter Oxford English Dictionary, supra, footnote 36, Vol. 1, p. 458). 76 Ibid. (quoting United States' appellant's submission, para. 49). 77 Ibid., para. 98 (quoting Black's Law Dictionary, 7th edn, B.A. Garner (ed.) (West Group, 1999), p. 628). 78 Korea's appellee's submission, para. 109. 79 Ibid., para. 111 (quoting Panel Report, paras. 7.56 and referring to paras. 7.63, 7.168, and 7.177). 80 Ibid., para. 114. 81 Korea's appellee's submission, para. 164. (emphasis omitted) 82 Ibid., para. 173. 83 Korea's appellee's submission, heading II.E. 84 Ibid., para. 176 (quoting United States' appellant's submission, para. 87). 85 Ibid., para. 175. (original emphasis) 86 Article 2.15 of the Tokyo Round Subsidies Code. 87 Article 22.5 of the SCM Agreement. 88 Korea's appellee's submission, para. 186. 89 Ibid. (quoting Appellate Body Report, US � Upland Cotton, para. 446). 90 Ibid. 91 Preliminary Affirmative Countervailing Duty Determination: Dynamic Random Access Memory Semiconductors from the Republic of Korea, United States Federal Register, Vol. 68, No. 66 (7 April 2003), p. 16766 (Exhibit GOK-4 submitted by Korea to the Panel). 92 Korea's appellee's submission, para. 193. 93 Korea's appellee's submission, para. 198. 94 Ibid., para. 200. 95 Ibid., para. 201 (quoting Hynix 2001 Audit Report, supra, footnote 63, p. 40; also quoted in Panel Report, para. 7.85). (Korea's emphasis omitted) 96 Ibid., para. 210 (quoting Panel Report, footnote 98 to para. 7.87; in turn quoting Issues and Decision Memorandum, supra, footnote 6, p. 55). 97 Korea's appellee's submission, para. 215. 98 Ibid., para. 226. 99 Ibid., paras. 15-16. 100 Ibid., para. 4. 101 Korea's other appellant's submission, para. 20. 102 Ibid., para. 18. 103 Ibid., para. 21 (referring to Appellate Body Report, US � Corrosion Resistant Steel Sunset Review, para. 81). 104 International Law Commission's Draft Articles on Responsibility of States for internationally wrongful acts, Report of the ILC on the work of its Fifty-third session, Official Records of the General Assembly, Fifty-sixth session, Supplement No. 10 (A/56/10), chp. IV.E.2 ("ILC Draft Articles"). 105 Korea's other appellant's submission, para. 25 (quoting ILC Draft Articles, supra, footnote 104, Article 8). (Korea's emphasis omitted) 106 Ibid., para. 26. 107 Panel Report, footnote 136 to para. 117 (referred to in United States' appellee's submission, para. 5). 108 United States' appellee's submission, para. 6 (referring to Korea's other appellant's submission, para. 26). 109 Ibid., para. 7. 110 Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679. 111 China's third participant's submission, para. 5 (quoting Panel Report, US � Export Restraints, para. 8.28). 112 Ibid., paras. 13, 14, 16, and 20. 113 Ibid., para. 25 (quoting Panel Report, para. 7.35). 114 Ibid. 115 European Communities' third participant's submission, para. 10. 116 Ibid., para. 20. 117 Ibid., para. 19. 118 Ibid., para. 23. 119 European Communities' third participant's submission, para. 25. 120 Ibid., para. 26. 121 Japan's third participant's submission, para. 5. (original emphasis) 122 Ibid., para. 9. 123 Japan's third participant's submission, para. 12 (quoting Panel Report, para. 7.45). 124 Ibid., para. 14. 125 Ibid., para. 25. 126 Third participant's submission of the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu, para. 3. 127 Ibid., para. 6 (quoting Panel Report, paras. 7.35 and 7.46). 128 Ibid., para. 7. 129 Ibid., para. 8. 130 WT/DS296/1 (attached as Annex III to this Report). 131 The request refers to Articles 1, 2, 10, 11, 12, 14, 17, 22, and 32.1 of the SCM Agreement and to Articles VI:3 and X:3 of the GATT 1994. 132 According to the United States, the consultations "were limited to the preliminary and final determinations of the [US]DOC". (United States' appellant's submission, para. 134) 133 WT/DS296/1/Add.1 (attached as Annex IV to this Report), p. 1. 134 Each item on the list identified a paragraph of Article 15 of the SCM Agreement with which "these determinations" were allegedly inconsistent. 135 In its letter accepting further consultations, the United States noted Korea's alleged failure to provide the legal basis for its complaint in respect of the USDOC's CVD order. (United States' appellant's submission, para. 136 (referring to letter from the Ambassador and Permanent Representative of the United States to the WTO to the Ambassador and Permanent Representative of the Republic of Korea to the WTO, dated 28 August 2003 (Exhibit US-2 submitted by the United States to the Panel))) Korea responded by letter, explaining that the bases for its complaint were "found in both of [its] consultation requests", and that "under U.S. law, the [CVD] order cannot be imposed without affirmative determinations by both" the USDOC and the USITC. (Letter from the Ambassador and Permanent Representative of the Republic of Korea to the WTO to the Ambassador and Permanent Representative of the United States to the WTO, dated 8 September 2003 (Exhibit US-3 submitted by the United States to the Panel)) According to the United States, during the consultations, "the parties agreed to disagree concerning the conformity of Korea's consultation request with Article 4.4 of the DSU" and "the United States declined to engage in any discussions regarding the [CVD] order." (United States' appellant's submission, para. 137) 136 WT/DS296/2 (attached as Annex V to this Report). 137 The United States observes that "[a]t the meeting of the [DSB] at which Korea�s request was first considered, the United States objected to the establishment of a panel on the grounds that Korea�s panel request sought to cover matters on which the parties had not consulted" and "described Korea�s failure to comply with Article 4.4 of the DSU and the resulting absence of consultations with respect to the [USDOC's CVD] order". (United States' appellant's submission, para. 138 (referring to WT/DSB/M/159, paras. 32-38 (Exhibit US-5 submitted by the United States to the Panel))) 138 Panel Report, para. 1.5. 139 Ibid., para. 7.410. 140 Panel Report, para. 7.410. 141 Ibid., para. 7.414. 142 Ibid., para. 7.415. 143 Ibid. (footnote omitted) 144 United States' appellant's submission, para. 143. 145 Ibid. 146 Ibid., para. 144. 147 Korea's appellee's submission, para. 228. 148 Ibid., para. 230. 149 Korea's appellee's submission, para. 242. 150 The Panel found that "the totality of these provisions [referred to in Korea's request for consultations and the Addendum] provides sufficient 'indication of the legal basis for the complaint' within the meaning of Article 4.4 of the DSU." (Panel Report, para. 7.415) (footnote omitted) 151 Appellate Body Report, US � Countervailing Measures on Certain EC Products, para. 62; Appellate Body Report, EC � Export Subsidies on Sugar, para. 344. 152 Supra, para. 90. 153 WT/DS296/1/Add.1 (attached as Annex IV to this Report), p. 1. 154 Korea's appellee's submission, para. 242. 155 Korea's appellee's submission, para. 242. 156 United States' appellant's submission, para. 143. 157 Panel Report, para. 7.415. 158 Ibid., para. 7.31 (quoting Panel Report, US � Export Restraints, para. 8.29). 159 United States' appellant's submission, para. 24. The European Communities and Japan support the United States' position. (European Communities' third participant's submission, para. 3; Japan's third participant's submission, para. 2) 160 Korea's appellee's submission, heading II.A. China and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu also assert that the United States' appeal should be rejected. (China's third participant's submission, para. 20; Third participant's submission of the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu, para. 3) 161 Panel Report, para. 7.117. (footnote omitted) 162 Korea's other appellant's submission, para. 4. 163 United States' appellee's submission, para. 9. 164 We note that, pursuant to Articles 1.1(a)(2) and 1.1(b) of the SCM Agreement, a subsidy shall also be deemed to exist if "there is a form of income or price support in the sense of Article XVI of the GATT 1994" and "a benefit is thereby conferred". This case does not raise the issue of subsidies granted in the form of income or price support. 165 We examine the United States' appeal of the Panel's finding relating to "benefit" in Section VII of this Report. 166 Like the SCM Agreement, we use the term "government" to refer to "a government or any public body within the territory of a Member", unless otherwise noted. 167 Panel Report, para. 7.31 (quoting Panel Report, US � Export Restraints, para. 8.29). 168 The Panel's subsequent discussion of the context and the object and purpose of the terms "entrusts" and "directs" focused on whether Article 1.1(a)(1)(iv) requires that the government action allegedly constituting entrustment or direction be explicit. (Ibid.. 7.36-7.41) 169 United States' appellant's submission, para. 28. 170 Ibid., para. 19 (quoting The New Shorter Oxford English Dictionary, supra, footnote 36, Vol. 1, p. 831. 171 Ibid., para. 20 (quoting The New Shorter Oxford English Dictionary, supra, footnote 36, Vol. 1, p. 679. (original italics) 172 The Spanish and French versions of the SCM Agreement use the verbs "encomendar" and "charger", respectively, which have similar meanings. The Diccionario de la lengua espa�ola defines "encomendar" as:
(Diccionario de la lengua espa�ola, 22nd edn (Real
Academia Espa�ola, 2001), p. 612)
Le Nouveau Petit Robert
(Le Nouveau Petit Robert, P. Varrod (ed.) (Dictionnaires Le Robert, 1993), p. 403) 173 United States' appellant's submission, para. 24; United States' response to questioning at the oral hearing. 174 The Diccionario de la lengua espa�ola defines "ordenar" as:
(Diccionario de la lengua espa�ola, supra, footnote 172, p. 1105) 175 Le Nouveau Petit Robert defines "ordonner " as:
(Le Nouveau Petit Robert, supra, footnote 172, p. 1795) 176 In this respect, we recall Article 33(3) of the Vienna Convention, which provides that "[t]he terms of the treaty are presumed to have the same meaning in each authentic text." 177 Panel Report, US � Export Restraints, para. 8.53. 178 Ibid. (original emphasis) 179 Korea's appellee's submission, para. 22. We note that the conduct of private bodies is presumptively not attributable to the State. The Commentaries to the ILC Draft Articles explain that "[s]ince corporate entities, although owned by and in that sense subject to the control of the State, are considered to be separate, prima facie their conduct in carrying out their activities is not attributable to the State unless they are exercising elements of governmental authority". (Commentaries to the ILC Draft Articles, supra, footnote 104, Article 8, Commentary (6), pp. 107-108); see also Korea's appellee's submission, paras. 58-59) 180 Appellate Body Report, US � Softwood Lumber IV, para. 52. 181 Korea's and the United States' responses to questioning at the oral hearing. The United States asserts, however, that a policy pronouncement may be relevant evidence for demonstrating entrustment or direction. 182 In contrast to Article 1.1(a)(1)(iv) of the SCM Agreement, Article 11.3 of the Agreement on Safeguards uses the term "encourage". It reads:
Paragraph 1 refers to voluntary export restraints, orderly marketing arrangements, or any other similar measures on the export or import side. 183 Panel Report, US � Export Restraints, para. 8.31. 184 In interpreting the phrase "payments � financed by virtue of governmental action" in Article 9.1(c) of the Agreement on Agriculture, the Appellate Body has stated that "[g]overnments are constantly engaged in regulation of different kinds in pursuit of a variety of objectives." It further explained that where regulation merely enables payments to occur, "the link between the governmental action and the financing of the payments is too tenuous for the 'payments' to be regarded as 'financed by virtue of governmental action' � within the meaning of Article 9.1(c). Rather, there must be a tighter nexus between the mechanism or process by which the payments are financed, even if by a third person, and governmental action." (Appellate Body Report, Canada � Dairy (Article 21.5 � New Zealand and US), para. 115 (original emphasis); see also Appellate Body Report, Canada � Dairy (Article 21.5 � New Zealand and US II), para. 131) 185 Appellate Body Report, US � Softwood Lumber IV, footnote 35 to para. 52. The Appellate Body referred to the following discussion of the panel in US � Export Restraints:
(Panel Report, US � Export Restraints, para. 8.65 (quoted in Appellate Body Report, US � Softwood Lumber IV, footnote 35 to para. 52)) 186 Appellate Body Report, US � Softwood Lumber IV, para. 64. (footnote omitted) 187 Korea's response to questioning at the oral hearing.
188 The Commentaries to the ILC Draft Articles similarly state
that "it is a matter for appreciation in 189 Supra, footnote 110. 190 United States' appellant's submission, para. 24. 191 Ibid., paras. 40-46. 192 Ibid., para. 46. (footnote omitted) 193 Korea's appellee's submission, paras. 24-25. 194 Panel Report, para. 7.42. 195 Ibid., para. 7.31 (quoting Panel Report, US � Export Restraints, para. 8.29). 196 Ibid. As the United States points out, however, the Panel did not consistently use the phrase "the notion of" in the paragraphs that followed. (United States' appellant's submission, para. 21 (referring to Panel Report, paras. 7.33-7.35)) 197 United States' appellant's submission, para. 46.
198 See infra, Section VI. |
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