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UNITED
STATES � ANTI-DUMPING MEASURES ON
Report of the Panel (Continued)
ORAL STATEMENT OF KOREA
(13-14 June 2000)
CONTENTS
1. The United States Government has imposed duties on imports of Korean steel in violation of its obligations under the WTO Agreements. As the two governments were not able to resolve this matter through consultations, the Korean Government has found it necessary to request the establishment of this Panel.
2. I shall begin today with a brief overview of the case. Then, as the substantive errors at issue before this Panel concern the United States' treatment of three issues that arose in the calculation of the dumping margins, I shall take each issue in turn. Within my discussion on each issue, I shall present the factual background and Korea's argument. And then, I shall respond preliminarily to several general arguments made in the United States' First Submission. Following my oral statement, my colleagues and I would be honoured to answer questions from the Panel.
3. So that this presentation will not be unduly long, I shall not attempt to discuss today every single argument made by Korea and the United States in the First Submissions. Please understand that my focus on certain arguments today does not imply that Korea has withdrawn any other arguments, and it is not intended to preclude Korea from making additional arguments at a later stage.
4. In the past two-and-a-half years, the United States has launched many anti-dumping investigations covering virtually all steel products from countries all over the world. This dispute arises out of two of those anti-dumping investigations and the resulting anti-dumping measures. Specifically, this dispute concerns the US anti-dumping investigations and measures against imports of Stainless Steel Plate in Coils ("Plate") and Stainless Steel Sheet and Strip ("Sheet") from the Pohang Iron & Steel Co., Ltd. ("POSCO").
5. The United States preliminarily determined that the dumping margin was only 2.77% for Plate and only 3.92% for Sheet. In the final determinations, however, the United States changed its methodology for calculating the extent of dumping in several key respects. As a result of these changes, the final dumping margins shot up to 16.26% for Plate and to 12.12% for Sheet.1
6. The methodology used by the United States to calculate the final dumping margins for Plate and Sheet was improper. That methodology was not consistent with the methodology required by Article VI of GATT 1994 and by the Anti-Dumping Agreement. That improper methodology distorted the calculation of POSCO's dumping margins. Those distortions caused the United States to impose greater anti-dumping measures than would otherwise have been appropriate - if, indeed, any anti-dumping measures at all would have been appropriate under a proper methodology.
7. Anti-dumping duties have a single purpose in the WTO regime: to offset injurious dumping. Where there is no dumping, there can be no anti-dumping duties. Even where there is injurious dumping, anti-dumping duties can be imposed only to the extent of the dumping - and no more. These rules are an essential bulwark against abuse of anti-dumping duties. It is these rules that confine anti-dumping duties to their limited sphere. Without these rules, Members could readily circumvent their tariff bindings, most-favoured-nation commitments, and other obligations under the WTO Agreements.
8. To guard against abuse of anti-dumping measures, the WTO Agreements contain highly detailed substantive and procedural rules that Members must follow before they may impose anti-dumping duties. These rules are necessary, because the use of an improper methodology - even in what might appear to be a minor issue - can create dumping margins or inflate small margins enormously.2
9. To implement these rules, close scrutiny and effective oversight by dispute settlement Panels are critical. Otherwise, importing countries will invariably be tempted to use technical-sounding arguments to impose unwarranted anti-dumping duties when convenient for domestic political purposes. Thus, despite the technical nature of some of the arguments made in this case, this is not "only" a technical dispute. Instead, the flaws in the US methodologies for calculating the dumping margins on Plate and Sheet go to the very heart of the limitations imposed by GATT 1994 and the Anti-Dumping Agreement.
10. The starting point for Korea's legal argument is Article 1 of the Anti-Dumping Agreement. This Article is entitled "Principles." Its first sentence reads as follows: "An anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement." In a nutshell, the anti-dumping measures on Plate and Sheet violate this Article because (1) they have been applied even though the existence of dumping was not properly established and (2) they have been applied pursuant to investigations that were not conducted in accordance with the substantive and procedural requirements of the Anti-Dumping Agreement.3
11. As I mentioned earlier, the substantive errors at issue concern three issues that arose in the calculation of POSCO's dumping margins for Plate and Sheet. First, the United States reduced POSCO's export price to adjust for the fact that an unaffiliated US customer went bankrupt after receiving POSCO's goods without paying POSCO. Second, the United States split the investigation period into multiple sub-periods, calculated separate averages for each sub-period, and recombined the data into an overall average in a manner that effectively excluded from consideration sales that would have reduced POSCO's dumping margins. Third, the United States "double converted" POSCO's dollar-denominated sales in Korea from dollars to won and back to dollars at a different exchange rate, thereby creating or inflating the dumping margins. The WTO Agreements clearly do not allow dumping margins to be calculated so arbitrarily. Each of the methodologies used by the United States would place a cloud of uncertainty over exporters that would chill international trade. Thus, these methodologies are obviously, fundamentally flawed.
12. In addition to these substantive errors, the United States also failed to follow proper procedures in the Plate and Sheet investigations. These procedural errors constitute a legally distinct basis on which the Panel can and should find that the anti-dumping duties on Plate and Sheet are inconsistent with WTO disciplines. The procedural irregularities also serve to highlight the substantive errors committed by the United States.
13. These substantive and procedural errors led to the imposition of improper and excessive anti-dumping measures. In accordance with WTO rules and principles, the improper anti-dumping measures should not be allowed to stand. This Panel now has the opportunity and responsibility to uphold WTO disciplines by finding that the US measures at issue are inconsistent with WTO rules and by recommending that the United States bring its measures into conformity with those rules.
14. I shall now begin with the first of the three major issues in this case: the United States' treatment of POSCO's sales to a US customer that went bankrupt without paying POSCO for goods it received. I shall first describe the factual background on this issue before discussing Korea's views.
15. The ABC Company (as we call it) had been a valued US customer of POSCO. It is not affiliated with POSCO. It often bought on credit from POSCO. It had never previously defaulted on a payment due POSCO. Indeed, in the entire history of POSCO's exports to the United States, none of its US customers had ever previously defaulted. Then, during the period of investigation, the ABC Company went bankrupt. To date, it has not paid POSCO for certain sales.4
16. None of these facts are in dispute.
17. It is clear that the bankruptcy was an unprecedented, unanticipated event. It was beyond POSCO's control. As the United States has admitted, POSCO did not know that the customer would not pay when it set its prices.5 Thus, the non-payment did not affect POSCO's pricing policies during the relevant period.
18. Nonetheless, the United States penalized POSCO by making an adjustment that reduced its export price and thus inflated or created the dumping margins.
19. The US Submission unnecessarily complicates the facts. It discusses extensively the US decision to treat the unpaid sales as "bad debt.6 That discussion is irrelevant here. The issue is not whether or not the unpaid sales can be called "bad debt." The real issue is whether the US treatment of those unpaid sales was consistent with WTO rules.
20. The United States' treatment of the unpaid sales was flawed in numerous respects, which are detailed in Korea's First Submission.7 I shall focus on two of those respects here: First, the United States made a price adjustment that is not consistent with the WTO rules governing allowances for differences affecting price comparability. Second, the United States did not make a "fair comparison" between the export price and normal value.
21. Before turning to the details of these arguments, however, it is important to consider the consequences of permitting adjustments like those made by the United States. The adjustment for the non-payment by the ABC Company punished POSCO for an event beyond its control that occurred after it set its prices. If anti-dumping duties could be imposed in that manner, then no exporter anywhere in the world could ever sell its goods with assurance that it would not be found to be dumping. No matter how high the exporter set its actual export prices, there would always be the possibility that later events - even highly unpredictable events - would lead to adjustments that would reduce its export prices enough to cause a finding of dumping. All else being equal, a company that sold its goods for more in an export market than at home could still be found dumping solely as the result of the bankruptcy of an export customer. It is unfair for a finding of dumping to be based on later events beyond the exporter's control in this manner.
22. The adjustment made by the United States reducing POSCO's export price was improper.
23. An understanding of the function of price adjustments begins with the nature of dumping. What is dumping? Under Article VI of GATT 1994 and Article 2.1 of the Anti-Dumping Agreement, dumping generally occurs when the export price of a good is less than its price in the home market. The comparison of prices is, therefore, the key to a proper determination of dumping.8
24. Adjustments to prices are permitted if - and only if - they account for differences in the factors that affect those prices. Thus, Article 2.4 states in relevant part, "Due allowance shall be made . . . for differences which affect price comparability." The Article continues by enumerating five factors that are deemed to affect price comparability: "differences in conditions and terms of sale, taxation, levels of trade, quantities, [and] physical characteristics." Any other difference beyond these five can support an adjustment only if it is "demonstrated to affect price comparability.9
25. Korea has shown that ABC Company's failure to pay POSCO is not a factor affecting price comparability.10 In response, the US Submission argues that the ABC Company's failure to pay POSCO is a "condition" of the sale.11 Leaving aside for the moment the absurdity of that contention, it is important to consider what the United States does not argue. The US Submission does not argue that unpaid sales were an "other difference[] . . . demonstrated to affect price comparability." Thus, the United States concedes that, if the failure to pay was not a "condition and term of sale," then the adjustment was improper.
26. The US Submission takes the word "condition" out of context, selects one of the word's many dictionary definitions, and argues that this is a permissible choice to which this Panel must defer unquestioningly.12 But the meaning of the phrase "conditions and terms of sale" is not ambiguous. When the word "condition" appears in the context of that standard phrase, as in Article 2.4, its meaning is evident. As the EC observes in its Third Party Submission, "The word 'conditions,' as used in Article 2.4, is largely synonymous with the word 'terms.' Both words allude to the conditions agreed by the seller and the purchaser, and not to the general conditions prevailing in the market in which the sale takes place.13
27. Furthermore, it is unclear from the US Submission just what the United States considers to be the relevant "condition" warranting the price adjustment.
28. Therefore, the adjustment for unpaid sales cannot be justified under Article 2.4.
29. Confronted with this reality, the United States has advanced a novel argument to circumvent its obligations under Article 2.4. The US Submission argues that, at least for some sales, the Department of Commerce did not make an adjustment to export price under Article 2.4, but rather made a deduction to construct the export price under Article 2.14 That argument is, at best, incomplete. Article 2.3 addresses certain additional adjustments that are permitted only for the analysis of sales through affiliated importers. Consequently, the United States' proposed defense under Article 2.3 only applies to POSCO's sales through its affiliated distributor and not to POSCO's other US sales. But, as the US Submission admits, the Department of Commerce also made the same adjustments to POSCO's other US sales.15 Article 2.3 does not, therefore, justify the adjustment made to these other sales.
30. Moreover, the US argument under Article 2.3 cannot be correct. Article 2.3 has a particular purpose: for sales through affiliated distributors, it allows the export price to be "constructed on the basis of the price at which the imported products are first resold to an independent buyer." Article 2.3 thus allows such calculations as are needed to look beyond the affiliated distributor to determine what the export price would be if the goods were sold directly from the exporter to an independent customer. Article 2.3 calculations are limited to that particular purpose. Article 2.3 does not allow investigating authorities to arbitrarily adjust prices for other reasons. To the contrary, any other changes must conform to Article 2.4's limitations on adjustments.
31. Non-payment by a customer is not related to the issue of affiliated distributors, so it is not the type of circumstance governed by Article 2.3. In fact, the US practice in the cases at issue prove that point: It is clear that the adjustment for unpaid sales was not made to account for the use of an affiliated distributor, because the Commerce Department made the same adjustment to all of POSCO's US sales regardless of their distribution channel. Therefore, despite the US claim that it was constructing export price under Article 2.3, in reality it was making price adjustments under Article 2.4.16
32. There is also another problem with the United States' treatment of the unpaid sales: It caused the comparison of export price and normal value to be "unfair." It is therefore flatly inconsistent with the first sentence of Article 2.4.
33. The first sentence of Article 2.4 requires that "A fair comparison shall be made between the export price and the normal value." The "fair comparison" requirement imposes important limitations on anti-dumping investigations that go beyond the other substantive rules in Article 2.4. The "fair comparison" requirement of Article 2.4 is a free-standing and substantial rule governing anti-dumping investigations, and it is not satisfied merely by compliance with the other requirements of Article 2.17
34. The US Submission essentially denies the existence of the first sentence of Article 2.4. It argues that conformity with the rules on adjustments in the other sentences of Article 2.4 is "all that Article 2.4 requires.18 And, it insinuates that Korea's arguments based on that sentence are trying to "add to or diminish the rights and obligations provided" in the WTO Agreements.19
35. The US position is obviously incorrect. The "fair comparison" requirement in the first sentence of Article 2.4 is express. The Appellate Body has consistently recognized that the WTO Agreements must not be read so as to render a whole sentence redundant or inutile.20 Moreover, the changes from the predecessor provision of Article 2.4 in the Tokyo Round to the present text confirm that the "fair comparison" requirement is intended to be absolute and unconditional.
36. In the cases at issue, the price comparisons were clearly unfair. This is evident in several respects:
37. I shall now turn to the second main issue: the division of the period of investigation into sub-periods and the resulting practice of "multiple averaging."
38. In both the Plate and Sheet cases, the United States divided the period of investigation into two sub-periods. In Plate, the first sub-period was ten months and the second was two months. In Sheet, the sub-periods were seven months and five months. In both cases, the second sub-period started in November 1997.23
39. Then, the United States calculated (1) a separate average normal value for each sub-period, (2) a separate average export price for each sub-period, and (3) a separate dumping margin for each sub-period. The separate dumping margins were then combined into a single dumping margin for each case. When the separate averages were combined, sub-periods with negative dumping margins were assigned a margin of zero. This is known as "zeroing" and it obviously minimizes the impact of negative margins on the overall average.
40. Of course, this multiple-averaging approach is not the normal methodology for calculating dumping margins. The normal methodology is to calculate a single weighted-average normal value and export price for each product for the full period of investigation, and then calculate the dumping margin based on the difference between the average normal value and export price. In these cases, that normal methodology would have resulted in low dumping margins for POSCO.
41. To avoid that result, the US petitioners asked the Department of Commerce to modify the dumping calculations to "wall off" POSCO's sales after October 1997 (which had relatively lower dumping margins). In its preliminary determination, the Department of Commerce rejected that request, calling it "unwarranted." In its final determination, however, the Department of Commerce reversed course, and adopted the multiple-averaging methodology. As a result, the dumping margins increased dramatically.
42. As mentioned, the multiple-averaging methodology adopted by the United States inflated the dumping margins because of "zeroing." If an exporter sold its goods at 10% below normal value for the first six months of the year and at 10% above normal value for the last six months, then (assuming equal sales volumes) one would expect it to be found that the exporter was not dumping for the year. And that is exactly what would be found if one calculated the dumping margin for the year as a whole. Under "multiple averaging," however, dumping would be found. The first sub-period would have a margin of 10%. Because of zeroing, the second sub-period would be assigned a margin of zero rather than its true margin of negative 10%. Thus, the exporter would be given a 5% dumping margin for the year.
43. So, the effect of dividing the investigation period into sub-periods is to allow the authorities to effectively exclude times when the dumping margin is inconveniently low, thus inflating the overall result.
44. The multiple-averaging practice employed by the United States is directly contrary to the express language of Article 2.4.2 of the Anti-Dumping Agreement. That Article does not tolerate the manipulation of methodology in this arbitrary fashion. Rather, Article 2.4.2 expressly mandates that prices shall be compared on the basis of either "a weighted average normal value with a weighted average of prices of all comparable export transactions" or on a transaction-to-transaction basis.24
45. Article 2.4.2 repeatedly uses the distinctly singular phrase "a weighted average". That is, one average - not two averages. That is confirmed by the requirement for an average that takes into account "all comparable export transactions." Clearly, there can be only one average if it takes into account all data.
46. So, the text is unambiguous. And it is reinforced by the provision's context and object and purpose. Article 2.4.2 is part of Article 2.4. Its function is to promote the fairness of price comparisons in anti-dumping investigations, so as to ensure that anti-dumping measures are imposed only where there is dumping and to the extent thereof. An interpretation of Article 2.4.2 that permits the manipulation and effective exclusion of data cannot be squared with the object and purpose of Articles 2.4 and 2.4.2.
47. In response, the United States relies principally on a post hoc argument about the word "comparable" in Article 2.4.2. The US Submission asserts that the Department of Commerce concluded that Korean home-market sales after November 1997 "were not comparable" to earlier export sales because of the currency depreciation.25 That assertion has no basis in the Final Determinations or the Final Analysis Memoranda. It is a post hoc rationale created for the benefit of this Panel, in a belated attempt to reconcile the Department's actions with the requirements of Article 2.4.2.
48. We shall respond more fully to this belated argument in our subsequent written submissions. For the present, we would offer the following initial observations:
49. The US effort to define comparability in terms of exchange rates also ignores the nature of exchange rates. To begin with, exchange rates are not conditions of sale; they are tools for converting amounts from one currency to another. Moreover, they are necessarily volatile and imperfect tools. In hindsight, one might say that the Korean won was overvalued (at roughly 900 won per dollar) throughout much of 1997, until it "crashed" in November. The won then overshot the proper exchange rate and remained undervalued (at a rate as high as 1960 won per dollar in December 1997), until it finally rebounded to a mid-point of around 1400 won per dollar at the end of March 1998. The distortions caused by these exchange rate movements could have been minimized by the use of an averaging period that included both the period of overvaluation and the period of undervaluation. By contrast, the "multiple-averaging" methodology employed by the United States essentially calculated one dumping margin for the period when the won was overvalued and a separate margin for the period when the won was undervalued - and then effectively ignored the latter through "zeroing." It thus created and inflated dumping margins from the imperfections in exchange rate movements.
50. The United States has admitted that the purpose of its departure from the normal price comparison methodology was to increase the dumping margins.26 It claims that this methodology was appropriate to address a situation of currency depreciation that would otherwise "disguise" dumping margins.27 This argument has it backwards, however. The "correct" dumping margins are those that are calculated in accordance with the requirements of the Anti-Dumping Agreement. If such calculations result in low dumping margins, then the only permissible conclusion is that there were low dumping margins - and not that higher margins were somehow disguised. An effort to inflate the dumping margins in such circumstances is not a permissible remedy for "disguised" dumping. It is a violation of the Agreement.
51. The Anti-Dumping Agreement does establish specific rules for addressing currency movements in the dumping margin calculations. As a general matter, Article 2.4.1, which is the only provision in the Anti-Dumping Agreement that addresses currency movements, requires the investigating authorities to disregard currency fluctuations. Article 2.4.1 does expressly authorize a change from the normal methodology in cases involving sustained currency appreciation. But Article 2.4.1 does not permit any change from the normal methodology for currency depreciation. The multiple-averaging methodology is nothing more than an attempt to circumvent the requirements of Article 2.4.1 - by adjusting the calculation methodology for a currency depreciation even though Article 2.4.1 does not permit such a modification.28
52. This violation led to particularly unfair results in these cases, in contravention of the "fair comparison" requirement of Article 2.4. The US methodology excluded from the price comparisons the very sales that were the basis of petitioners' injury claims: the sales late in the investigation period. A price comparison that excluded the most relevant sales cannot be said to be fair.29 In response, the US Submission merely states that Korea's objection "has no bearing" on Article 2.4, because it addresses injury determinations that Korea is not currently challenging.30 But that argument is not correct. Whether or not the injury determinations were legitimate, a calculation of the dumping margin that effectively excluded the period that was the basis for the injury determination is plainly unfair and cannot be upheld under the "fair comparison" requirement of Article 2.4.
53. In short, the "multiple averaging" methodology used by the United States is inconsistent with (1) the requirements of Article 2.4.2 requiring the comparison of a single weighted-average normal value to a single weighted-average export price, (2) the provisions of Article 2.4.1 which permit adjustments to the dumping calculation methodology only for sustained appreciation in the exporter's currency and not for depreciations, and (3) the "fair comparison" requirement of Article 2.4.
54. Finally, please allow me to make an aside here to clarify a point obfuscated by the US Submission: Korea does not argue that Article 2.4.2 precludes Members from calculating separate averages for different products.31 That is a very different issue from dividing and recombining the investigation period, and it is not in dispute here. A ruling by this Panel that clarified that Article 2.4.2 prohibits splitting the investigation period into sub-periods would have no effect on Members' ability to calculate separate averages for separate products.
55. I shall next turn to the third major issue: the "double conversion" of dollar-denominated local sales to won and back to dollars at a different exchange rate.
56. Most of POSCO's sales in Korea are denominated in won. But some of POSCO's sales in Korea are denominated in dollars instead. These are known as "local sales.32
57. When calculating normal value, the United States refused to use the dollar value of Korea's local sales. Instead, the United States converted the dollar value into won at one exchange rate, calculated normal value in won, and then converted the won normal value into dollars at a different exchange rate. The potential for distortion is obvious. In fact, an example set forth in paragraph 3.58 of Korea's Submission demonstrates how this methodology increased the normal value of one actual sale by more than 70%.
58. Let me try to explain the reason for this distortion. The United States determined the won amount of these sales using POSCO' s internal conversion, which converted the dollars into won using the official Korean Exchange Bank rate on the date of the invoice for the home-market sale. But the United States then converted the won amount back into dollars using the Federal Reserve exchange rate on the date of the US sale. By using the exchange rate from one date to convert the dollar price into won, and then using a different exchange rate for a different date to convert the won amount back into dollars, distortion was inevitable.
59. The United States attempts to defend this methodology by arguing that the local sales were really made in won, so that the United States only made one conversion from won to dollars.33 That view is simply not correct, and it is not supported by the facts of this case.
60. The evidence shows that local sales are negotiated in a foreign currency (typically, US dollars), and invoiced in that same currency. On the payment date, the customer converts the dollar amount due into won at the market rate published by the official Korean Exchange Bank, and pays POSCO the resulting amount in won. Because the won amount is determined by applying the exchange rate on the date of payment to the dollar amount shown on the invoice, it is clear that the true economic value of the invoice is fixed by the dollar amount.
61. The United States claims that it acted appropriately in ignoring the dollar amount shown on the invoice, because the invoices also showed an amount in won. It should be emphasized, however, that the won amounts shown on the invoices were not the amounts that the customer actually paid. Instead, the won amount shown on the invoice was simply an accounting convenience, since the transactions have to be recorded in won in POSCO's accounting records. As mentioned, the actual won amount of the payment was determined by multiplying the dollar price shown on the invoice by the exchange rate on the date of payment. That amount did not correspond to the won amount shown on the invoice, which was calculated using an earlier and different exchange rate.
62. This point is illustrated by the sample accounting entries at paragraph 3.54 of Korea's Submission (which, I should mention, have been revised from our initial submission to correct a typographical error). Those tables show that the economic value for local sales is fixed in dollars at the time of sale. Significantly, this accounting was verified by the Department of Commerce during the investigations, and it has not been disputed by the United States in this proceeding.
63. It is clear, then, that the prices for the local sales were really fixed in dollars, and not in won. Nevertheless, the United States treated these sales as if the won amounts shown on the invoices were the real prices - even though those won amounts were simply an accounting convenience and did not correspond to the amounts actually paid by the customer. By the same token, the United States simply ignored both the dollar prices shown on the invoices (which determined the amount actually paid) and the actual amount in won that the customer paid.
64. Article 2.4.1 only permits currency conversion when "require[d]" for a comparison under Article 2.4. Clearly, a "double conversion" is not required. The local sales are valued in US dollars and they can be compared with other US dollar sales without need for conversion to won and back.34
65. The "double conversion" also denied POSCO the "fair comparison" required by Article 2.4. The United States did not compare export price to normal value, but to an inflated normal value. The price comparisons were not based on POSCO's actual prices, but on prices fabricated by the United States through the unnecessary application of distortive exchange rates.35
66. The United States attempts to avoid these problems by repeating that its calculations used the exchange rate on the date of sale, as requested by POSCO and required by Article 2.4.36 That statement is disingenuous. The problem in this case is not that the United States selected the wrong exchange rate. Rather, the problem is that the United States used a double conversion, applying the exchange rates in an inconsistent manner. The inconsistency arose because the United States made the final conversion from won to dollars using not the exchange rate on the date of the home-market sale (which had been used to calculate the won amount), but the exchange rate on the date of the US sale (which could differ considerably from the exchange rate used to calculate the won amount). The mere repetition of the fact that the United States used the exchange rate on the "date of sale" does not cure the problem caused when one "date of sale" is used for the initial conversion from dollars to won, and another "date of sale" is used for the conversion back from won to dollars.
67. Finally, it should also be noted that the "double conversion" is inconsistent with established US practice. As explained in Korea's Submission, the United States has a well-established policy of accepting prices and charges in the currency in which they are made. In Roses from Colombia, for example, the United States properly declined to "double convert" the home-market sales that were priced in dollars. The United States departed from that practice here. Its reasons for doing so made no sense. The many problems with the US reasoning are detailed in Korea's Submission.37 For now, I'd like to emphasize only one key point. The US Submission admits that its stated rationale for making the "double conversion " is in error. Hidden in Footnote 161 is the admission that "Korea is correct that the Department mistakenly used adjusted exchange rates in the SSPC case.38 That footnote goes on to explain why the United States considers that its error does not matter. But those explanations are irrelevant. The United States has conceded that its anti-dumping measures are based on a faulty rationale.
68. In addition to the substantive errors that I have already discussed, the United States also failed to comply with the procedural requirements of the WTO with respect to each of the three main issues before this Panel. In the interests of time, I will not belabour these procedural points. Instead, I will simply refer the Panel to the detailed discussion in Korea's Submission, and will of course be happy to answer any questions the Panel may have about them.39
69. I shall now respond preliminarily to several general arguments made in the US Submission, beginning with the "burden of presenting a prima facie case."
70. The US Submission states that a complaining party "bears the initial burden of coming forward with evidence and argument that establishes a prima facie case of a violation.40 This statement, while true, is wholly irrelevant. Korea has already borne that burden. Korea has come forward with evidence and argument that establishes a prima facie violation. Although the US Submission introduces contrary argument on certain points, it does not dispute that Korea has met its initial burden. And, considering the ample evidence and argument submitted by Korea, the United States could not do so.
71. Instead, it seems that the United States had a different purpose for making this statement. The US Submission set up a phantom argument that Korea did not make in an attempt to obscure a key point in this case.
72. The United States argues at great length that Korea's burden is not affected by the fact that anti-dumping measures are a derogation from the trade-liberalization purposes of the WTO.41 The US argument implies that Korea argued that it is exempt from the initial burden of presenting a prima facie case. But Korea never made such an argument. To the contrary, Korea introduced considerable evidence and argument to meet its initial burden.
73. So, what is the significance of the fact that anti-dumping measures are a derogation from the main thrust of the WTO? The authority to impose anti-dumping duties is narrowly limited to circumstances where there is injurious dumping, and anti-dumping duties cannot exceed the dumping margin. This has always been the rule under GATT 1947, and it is very explicit in Articles 1 and 9.3 of the Anti-Dumping Agreement. These limitations are essential to the proper functioning of the WTO regime. Without these limitations, Members could readily circumvent their tariff bindings and most-favoured-nation commitments simply by labeling any new duties as "anti-dumping duties" without regard to whether there was any dumping to offset. It is precisely because of the centrality of calculating the dumping margin that the substantive and procedural rules governing that calculation are so important. The detailed rules of the Anti-Dumping Agreement must, therefore, be interpreted in accordance with this object and purpose.
74. The US Submission also complains that "Korea invites the Panel to step into the shoes of the DOC and engage in a de novo review of the facts.42 That statement has no basis. Korea never invited de novo review.
75. To the extent that there are factual disputes, Korea expects that this Panel will assess the facts of this matter in accordance with Article 17.6(i) of the Anti-Dumping Agreement. Under that Article , factual conclusions are to be rejected if the facts were not established properly or they were not evaluated objectively and without bias. Thus, contrary to the United States' suggestion, the Anti-Dumping Agreement does not preclude the Panel from reviewing factual conclusions altogether. To the contrary, Article 17.6(i) expressly requires that factual conclusions be reviewed under an appropriate standard.
76. In any event, there actually are very few, if any, facts in dispute. For all of the substantive issues, the question is solely whether the US methodology for dealing with the facts conforms to its WTO obligations.
77. As a separate matter, the United States also misstates the rule for construing the Anti-Dumping Agreement in Article 17.6(ii). The United States contends that "the relevant question in every case is not whether the challenged determination rests upon the best or the 'correct' interpretation of the Anti-Dumping Agreement, but whether it rests upon a 'permissible interpretation' (of which there may be many).43 That argument virtually ignores the first sentence of Article 17.6(ii), while distorting the meaning of the second. In fact, this Panel is expressly charged with interpreting the Anti-Dumping Agreement in accordance with customary rules of treaty interpretation. If that process leads the Panel to conclude that there is a correct interpretation, then an anti-dumping measure based on a different interpretation cannot stand. Only in those rare circumstances where the interpretative process leads the Panel to conclude that "there is more than one permissible interpretation," does the second sentence of Article 17.6(ii) apply.
78. Article X:3(a) of GATT 1994 requires each WTO Member to "administer � its laws, regulations, decisions and rulings" relating to duties and other restrictions on imports (such as anti-dumping measures) "in a uniform, impartial and reasonable manner.44 The United States contends that somehow this provision did not restrict the ability of the Department of Commerce to interpret and apply the US antidumping laws in these cases in a manner that was both inconsistent with past practice and highly arbitrary.45
79. That proposition is clearly without merit. When the Department makes its determinations in antidumping investigations as the US "administering authority," it plainly is "administering" the US laws (which, in the US common-law system, include not only codified statutes and regulations, but also past judicial and agency decisions). If it applies those laws inconsistently from case to case in reliance on flawed or arbitrary distinctions, then it cannot be said to be "administer[ing] � its laws, regulations, decisions and rulings � in a uniform, impartial and reasonable manner."
80. Of course, an administering authority must have the ability to tailor its decisions to the facts of each case. Article X:3(a) clearly does not preclude that. However, it does require that the decisions in each case be reached in a "uniform, impartial and reasonable manner." When the Department of Commerce simply ignores past precedent, or when it refuses to follow past decisions based on meaningless, arbitrary or erroneous distinctions, then it has not complied with Article X:3(a), and a Panel should not permit its actions to pass unchallenged.
81. The United States refers to domestic judicial review as if that were the proper forum to decide Korea's claim that the United States has failed to administer its anti-dumping laws and regulations in the "uniform, impartial, and reasonable" manner required by GATT Article X:3(a)46 That cannot be correct. GATT 1994 is a "covered agreement," and dispute settlement before this Panel is the proper forum to hear Korea's claims. This Panel has the responsibility to determine whether the United States has administered its anti-dumping laws and regulations in a "uniform" and "reasonable" manner. That inherently entails consideration of whether the decisions at issue are consistent with previous US decisions and of the reasoning for any departures.
82. Domestic appeals and WTO dispute settlement are fundamentally different. They are between different parties, are established under different systems of law, serve different purposes, follow different procedures, apply different substantive rules, and offer different remedies. In these circumstances, a decision by POSCO whether or not to pursue a domestic appeal in the United States can have no impact on the Korean government's ability to pursue its sovereign rights through WTO dispute settlement.
83. Therefore, despite the US suggestion, POSCO's decision not to pursue a domestic appeal is wholly irrelevant to Korea's claims under Article X:3(a).
84. Finally, the United States opposes Korea's request for the Panel to suggest that the United States revoke its anti-dumping orders concerning Korean Plate and Sheet. The United States argues that revocation "far exceeds what would be necessary to bring these measures into conformity with the [Anti-Dumping] Agreement.47 That argument, however, ignores the plain dictates of Article 1 of the Anti-Dumping Agreement. Under Article 1, antidumping measures may be applied "only � pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement." If the United States did not conduct its investigations of Plate and Sheet in accordance with the provisions of the Agreement, then it does not have the authority, under Article 1, to maintain antidumping measures. The proper remedy for the violations described in Korea's Submission is, therefore, the revocation of the measures.
85. In conclusion, the anti-dumping measures imposed by the United States against Plate and Sheet, and the US investigations leading to the imposition of those measures, are inconsistent with numerous substantive and procedural requirements of the WTO Agreements. This Panel now has the opportunity and responsibility to uphold WTO rules by finding the US anti-dumping measures inconsistent with those rules and by suggesting that the United States revoke those measures.
1 See Korea�s First Submission, paras. 3.13, 3.16, 3.22, 3.25.
2 See Korea�s First Submission, paras. 5.1 - 5.4.
3 See Korea�s First Submission, paras. 4.3 - 4.4.
4 See Korea�s First Submission, paras. 3.30 - 3.39.
5 US First Submission, paras. 103-104.
6 US First Submission, paras. 54-58.
7 Korea�s First Submission, paras. 4.6 - 4.42.
8 See Korea�s First Submission, paras. 4.10 - 4.13.
9 See Korea�s First Submission, paras. 4.14 - 4.16.
10 See Korea�s First Submission, paras. 4.17 - 4.23.
11 US First Submission, paras. 82-83.
12 US First Submission, paras. 82-83.
13 EC Third Party Submission, para. 21.
14 US First Submission, para. 76.
15 US First Submission, para. 81.
16 Id.
17 See Korea� s First Submission, paras. 4.25 - 4.27 & ROK Ex.
54.
18 US First Submission, para. 72.
19 US First Submission, para. 62.
20 See Korea�s First Submission, para. 4.15 n. 99.
21 See Korea�s First Submission, para. 4.27.
22 US First Submission, paras. 103-104.
23 See Korea�s First Submission, paras. 3.40 - 3.48.
24 See Korea�s First Submission, paras. 4.45 - 4.48.
25 US First Submission, para. 109; para. 137; see also para. 155
("determined that [currency devaluation] had as much of an effect on
comparability of transactions as did physical characteristics, levels of trade
or high inflation").
26 US First Submission, para. 137, 139, 155.
27 US First Submission, para. 137.
28 See Korea�s First Submission, paras. 4.49 - 4.53.
29 See Korea�s First Submission, paras. 4.59 - 4.63.
30 US First Submission, para. 167 n. 151.
31 See US First Submission, para. 153.
32 See Korea�s First Submission, paras. 3.49 - 3.62.
33 US First Submission, para. 172 ("The United States also
concluded . . . that these home market sales were in Koran won, not US
dollars.").
34 See Korea�s First Submission, paras. 4.66 - 4.69.
35 See Korea�s First Submission, paras. 4.83 - 4.88.
36 See, e.g., US First Submission, para. 175.
37 See Korea�s First Submission, paras. 4.70 - 4.82.
38 US First Submission, para. 173 n. 161.
39 See Korea�s First Submission, paras. 4.35 - 4.42, 4.54 -
4.58, 4.70 - 4.82.
40 US First Submission, para. 36.
41 US First Submission, paras. 37, 39.
42 US First Submission, para. 27.
43 US First Submission, para. 35.
44 See Korea�s First Submission, paras. 4.35 - 4.37.
45 See, e.g., US First Submission, paras. 41-48.
46 See, e.g., US First Submission, para. 51.
47 US First Submission, para. 196.
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