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UNITED
STATES � ANTI-DUMPING MEASURES ON
Report of the Panel (Continued) 4. The Exchange Rate Policy Applied in This Case Is Consistent With Article 2.4.2 of The AD Agreement 145. As noted in the previous section, Article 2.4.1 does not specifically address large and precipitous declines in the value of a foreign currency. Article 2.4.2 similarly does not specifically address this subject. However, Article 2.4.2 does authorize Members to determine which transactions are " comparable," and to limit their comparisons to such transactions. With this authority, the United States determined that prices set prior to the period of such a drop in the home market currency were not comparable to prices established during that period, and thus that it should create separate averages for comparison purposes.
146. Article 2.4.2 addresses the bases which may be used for comparison of normal value with export price or constructed export price. It is not disputed that in this case, the United States used average-to-average comparisons. Such comparisons are governed by the following phrase of Article 2.4.2:
147. This provision requires that margins of dumping be based upon a comparison of an average of normal value prices with an average of the prices for export transactions, but requires that the transactions included in these averages be comparable.128 The reason for this limitation is clear: including merchandise in the averages to be compared which is not comparable could result in a dumping margin based upon factors which are not related to dumping.
148. For example, an investigating authority may conduct an investigation of a product which comes in high quality and low quality forms. If producers tend to sell more of the high quality merchandise in the home market, while exporting more of the low quality product, creating a single average normal value and a single average of prices for export transaction might result in a dumping margin solely because the exported merchandise is of lower quality and commands a lower price for that reason. While it may be possible to make an adjustment to the prices to approximate the effect of such a difference, the AD Agreement recognizes that it may be better not to make such a comparison in the first place.
149. The concept of comparability is expressed in the AD Agreement not only by the use of the word "comparable" in Article 2.4.2, but also by the fact that application of Article 2.4.2 is explicitly subject to the provisions of Article 2.4. As discussed elsewhere, Article 2.4 details that the comparison of normal value and export price is to be made "at the same level of trade. . . in respect of sales made at as nearly as possible the same time," and requires that due allowance be made, inter alia, for differences in physical characteristics."
150. The considerations of levels of trade, time and physical characteristics, inter alia, illustrate that Article 2.4 contemplates that comparisons normally must be made on a level-of-trade basis, a product-specific basis (to account for differences in physical characteristics) and a time-period basis. Thus, the mandate of Article 2.4 contemplates that there may be several to several thousand export prices and normal values which are compared within an investigation for a respondent company, depending on such factors as the variety of products, levels of trade, selling conditions involved, and the time periods chosen.
151. The significance of the concept that transactions included in the averages be "comparable," and thus that such averages should not encompass all transactions taking place during the period of investigation, can also be seen from the negotiating history of Article 2.4.2.129 During the Uruguay Round negotiations, it was proposed that averages should encompass all transactions, with few exceptions.130 Significantly, the only difference between the language of Article 2.4.2 contained in the Dunkel Draft, and the final version of Article 2.4.2 is the addition of the word "comparable."131 It is a fundamental principle that an interpretation of a provision should not render a word a nullity.132 This is particularly true where, as here, the only change negotiators made to a draft provision was to insert a single qualifying word. In such a situation it is plain that the word was carefully considered. Moreover, seen in light of the proposals that averages should encompass all transactions, an interpretation which might have been reflected had no modification of earlier drafts been made, the addition of the qualifier "comparable" can only have been intended to limit the transactions which were to be averaged together.
152. In light of the requirement of Article 2.4.2 that averages be limited to "comparable" transactions, the United States, in every case, creates numerous averages to ensure that comparisons are not distorted by averaging of non-comparable transactions. As an example of the identification of comparable transactions, the United States created multiple averages in the present case to account for differences in physical characteristics among different types of the merchandise under investigation. Early in the case, the United States gathered, based upon suggestions from the parties,133 a list of the most significant physical characteristics which should be used to identify individual models of the merchandise.134 Each unique set of physical characteristics is considered a "model" of the merchandise. All sales of a model in the United States are averaged, and the resulting average is compared to an average of sales of the same model in the home market, or, if the identical model is not sold in the home market, with the most similar model which is sold in the home market. In this way, the United States ensures that averages of normal values are only compared to averages of comparable export transactions.
153. Contrary to the position Korea now advances before the panel, POSCO argued that the United States was not only permitted to, but should, create multiple averages. For example, during the SSPC investigation POSCO filed a submission with the United States fully endorsing the "hierarchy" of physical characteristics which the United States would use to create its various average normal values and export prices.135 In the SSSS investigation POSCO affirmatively argued that certain physical distinctions not identified by the United States should be used in creating multiple averages for comparison purposes.136 In both cases, POSCO argued in its legal brief to the United States that the United States should create separate averages for prime and secondary quality merchandise.137 In other words, POSCO argued that the United States should not create a single weighted-average normal value and export price, but rather should create numerous such averages. This position is inconsistent with the argument advanced now by Korea that Article 2.4.2 prohibits creation of more than one average normal value and export price.138
154. Although in every case the United States creates multiple averages based on the "comparability" of the physical characteristics of the models of merchandise, the United States also identifies transactions as not comparable based upon factors other than the physical characteristics of the merchandise being compared. For example, in order to fulfill the requirement of Article 2.4 that the "comparison shall be made at the same level of trade," in all cases in which the United States identifies more than one level of trade, it creates average normal values and average export prices for sales at each level of trade.139 In this way, the United States avoids having to make an adjustment for differences in levels of trade whenever possible. Further, when conducting an investigation of sales from a country suffering from high levels of inflation, the United States typically divides the averages by month to ensure that the effect of inflation on prices does not distort the comparison.140
155. Although the United States had not previously been faced with the situation of a sudden plummet in the value of a foreign currency of the magnitude presented by the facts of SSPC and SSSS, the United States reasonably determined that this characteristic had as much of an effect on comparability of transactions as did physical characteristics, levels of trade or high inflation. This is because comparison of a given amount of dollars received for an export transaction with a given amount of won on a normal value transaction produces a dramatically different margin of dumping depending on whether the sales occurred before or during the devaluation period.
156. Because of this exaggerated effect on the margin in this case of the timing of the sales used for comparison, the United States reasonably concluded that the timing of the sales, before or during the devaluation period, should be a factor used to determine whether sales are comparable for purposes of constructing averages within the meaning of Article 2.4.2, and for purposes of making a fair comparison under Article 2.4.
157. Korea's contention that the United States acted in a manner not in accordance with Article 2.4.2 is without merit.141 Korea argues that a simple textual analysis reveals that Article 2.4.2 is written in the singular. This, according to Korea, requires the conclusion that all sales in the home market must be averaged together, and that all sales in the US market must be averaged together. However, the fact that Article 2.4.2 uses singular terms only indicates that, once an investigating authority has identified which transactions are "comparable," it may only create a single average from those transactions. It does not require creation of a single average of all transactions.
158. In light of the above, the antidumping measures against SSPC and SSSS are consistent with Article 1 and Article 2.4.2 of the AD Agreement.142
159. Korea further argues that the United States acted in a manner inconsistent with the procedural requirements of GATT 1994 and the AD Agreement. Specifically, Korea argues that the United States, in reaching its determination to create separate averages for sales made prior to and during the devaluation period was not in accordance with the requirements of Articles 6.1, 6.1, 6.9 and 12.2 of the AD Agreement. According to Korea, taken together these provisions "establish a broad requirement that the investigating authorities interpret the relevant laws in a reasonable and consistent manner - and that they provide private parties of an explanation of their proposed interpretation of the relevant laws in a manner that will allow the private parties a "full" and "ample opportunity" to defend their interests.
160. The United States agrees that the AD Agreement requires investigating authorities to interpret the Agreement in a reasonable manner. Indeed, this understanding is at the heart of Article 17.6(ii).143
161. Further, the United States agrees that under Articles 6.1, 6.2 and 6.9 parties should be afforded a full and ample opportunity to defend their interests. Access to all information before the investigating authority, issuance of a preliminary determination including all matters covered in Article 12.2.1,144 and establishment of a period for argument provides such an opportunity. As noted above, the United States provided POSCO with access to its complete factual record, issued a detailed preliminary determination, and provided an opportunity to present arguments and to request a hearing. POSCO, in fact, availed itself of such opportunities.
162. Korea argues that because the United States did not create separate averages in the preliminary determination, POSCO did not have a full and ample opportunity to defend its interests with respect to this issue. Korea neglects to mention, however, that in its preliminary determination, although the United States did not create separate averages for sales prior to and during the devaluation period, it specifically notified all parties that it was considering adopting such a policy for the final determination, and requested parties comment on this issue.145 Articles 6.1, 6.2, and 6.9 require investigating authorities to provide an opportunity for a party to defend its interests. In this case, the United States not only provided an opportunity for POSCO to comment on this issue, it went well beyond its obligations and provided an explicit invitation to do so. Therefore, the United States acted in accordance with Article 6.1, 6.2 and 6.9 in this regard.
163. Korea also argues that the United States failed to address the determination in Preserved Mushrooms from Indonesia146 in which, according to Korea, the United States "rejected the petitioners' request for multiple averaging, and maintained the established practice of declining to deviate from its standard methodology because of a currency devaluation."147 However, Korea again neglects to mention that in Preserved Mushrooms the United States did not find that creation of multiple averages in light of a fall in the value of the currency was improper. Rather, the United States found that creation of multiple averaging periods, under the specific facts of that case, had no effect on the overall margin of dumping. In light of that fact, the United States declined to address the issue of whether creation of multiple averages was proper or not.148 However, in a foreshadowing of SSPC and SSSS, the United States warned that large changes in exchange rates might result in the use of multiple averaging periods. The determination in that case reads, in relevant part:
164. Further, even assuming arguendo that Preserved Mushrooms did address the issue of whether multiple averages should be created in light of a falling currency, such a decision hardly would represent an "established policy." First, the Preserved Mushrooms case would represent only a single decision, and admittedly a case of first impression, and thus hardly constitutes an established "practice." Second, the issue of whether the fall of a currency's value warrants use of multiple averages turns on the facts surrounding that fall: how significant was the drop, and how quickly did it occur. Thus any conclusion in Preserved Mushrooms about whether a decline in the value of the Indonesian Rupiah of a certain magnitude over a certain period warrants separate averages does not necessarily determine whether a decline in the value of the Korean won of a different magnitude and over a different period warrants separate averages.150
165. In any event, the benefits of consistency do not always outweigh the need of investigating authorities to allow their policies to evolve to suit new factual scenarios. Consistency with prior cases is a laudable goal, to the extent the actions taken in such cases were themselves consistent with the AD Agreement, in that it enhances predictability and transparency. Moreover, consistency with prior cases reinforces the conclusion that publication of a notice in accordance with Article 12.2.1 has given parties a full and ample opportunity to defend their interests. However, investigating authorities may change their policies, to the extent the new policies are consistent with the AD Agreement. Given this authority, parties who wish a policy applied in a prior case to be either adopted or abandoned in the instant case, should be afforded an opportunity to present such arguments. However, the obligation of members to provide a full and ample opportunity for parties to defend their interests does not equate to a prohibition on changes in policy.
166. Korea cites Article 6.9 for the proposition that any decision to change policy between the preliminary and final determination constitutes an "essential fact" which must be disclosed to parties prior to issuance of the final determination. This position would amount to a requirement that, if the investigating authority decides to change any aspect of the preliminary determination, it must issue a new preliminary determination, and seek new legal arguments. This process would continue until all aspects of the preliminary determination would remain unchanged for the final determination, at which point the investigating authority could issue the final determination.
167. The AD Agreement contains no support for this proposed procedure; indeed Articles 7.1 and 12.2 only contemplate a single preliminary determination. Moreover, the requirements contained in Article 6 that parties be given a full and ample opportunity to defend their interests implies that, if the investigating authority is persuaded by such arguments, it will change its decision in the final determination. Finally, a decision to change policy by the investigating authority is not a "fact under consideration which form[s] the basis for the decision" within the meaning of Article 6.9. Rather, such a change in policy is the decision.151
168. In light of the above considerations, the panel should conclude that the United States' decision that transactions prior to the period of devaluation and transactions during that period were not comparable within the meaning of Article 2.4.2, and the resulting use of separate averages for those transactions, was based upon properly established and objectively evaluated facts and represented a permissible interpretation of the AD Agreement.
169. Pursuant to its obligations under the Uruguay Round Agreements, and specifically Article 2.4 of the Anti-Dumping Agreement, the United States enacted into law a specific provision on currency conversion, as discussed in the preceding section.152 Consistent with Article 2.4.1 of the Agreement, the United States converts foreign currencies into US dollars on the date of sale for purposes of its anti-dumping analysis. The United States' well-established practice is to accept the currency of the transaction (i.e., to use the currency in which the sales price is earned or incurred).153
170. The sales at issue here are sales between POSCO and a customer in Korea, which POSCO reported as home market sales. POSCO reported the won amount of the sale154 and stated that the sales were paid in won. The won amount on the invoice was recorded in POSCO's accounting records.155 Later in the proceeding, POSCO volunteered dollar-denominated amounts for these sales and argued that these domestic sales should be treated as transactions in dollars.156
171. In its preliminary determination in the SSPC case, the United States had excluded these home market sales from its calculation of normal value based upon its mis-impression that the sales were not sold for consumption in the home market and therefore did not qualify as home market sales.157 In case briefs before the Department, POSCO pointed out that the United States erred in its conclusion and that, in fact, the merchandise was consumed in the home market by POSCO's customers.158
172. In its final determinations, the United States accepted POSCO's argument that the sales were in fact for consumption in the home market and therefore included the sales in its calculation of normal value.159 The United States also concluded, based upon the facts discussed above, that these home market sales were in Korean won, not US dollars.160
173. Having determined that these home market sales were made in Korean won, the United States next considered whether the situation that led to the exception in Roses From Colombia was present in these cases, as POSCO had claimed. In both SSSS and SSPC, the United States cited "a disparity between the exchange rates reflected in POSCO's accounting records and those [rates] used by the Department" as the primary basis for finding that the exception did not apply.161
174. Because there was no need to deviate from the standard methodology for determining normal value, the United States used the currency in which the transaction occurred, i.e. Korean won, and made a single conversion from won into dollars in its determination of normal value.162
175. The principal issue in this section is whether Article 2.4.1 mandates that the United States accept POSCO's exchange rates in lieu of exchange rates determined under the rules of Article 2.4.1. Korea believes that Article 2.4.1 obligates an investigating authority to avoid a currency conversion where a "reasonable alternative" is available.163 However, Article 2.4.1, when interpreted in accordance with the fundamental rules of treaty interpretation, contains no such requirement.164
176. Article 2.4.1 sets out rules governing the use of exchange rates. It does not in any way address the issue of how to determine the currency in which a sale is transacted. Article 2.4.1 states:
177. When read in context and given its ordinary meaning, the phrase "[w]hen the comparison under paragraph 4 requires a conversion of currencies" establishes the condition under which the rules that follow will apply. Article 2.4.1 presupposes that the condition exists; it does not define when the condition exists. Therefore, Article 2.4.1 cannot be read to require that currency conversions be avoided in any particular circumstances, particularly where the transaction occurs in a foreign currency.
178. Nevertheless, Korea argues, in effect, that the United States acted inconsistently with Article 2.4.1 when it converted these won-sales into dollars using exchange rates determined under the requirements of Article 2.4.1 because POSCO had already made the conversions. However, the conversion formula used by POSCO does not satisfy the rules set forth in Article 2.4.1. For example, POSCO's formula does not account for fluctuations. In effect, therefore, Korea asks the panel to read into Article 2.4.1 an obligation to use a conversion methodology that is inconsistent with the rules otherwise set out in that provision. Such a reading has no basis in the customary rules of treaty interpretation.
179. As discussed above, the "object and purpose" of Article 2.4.1 is to provide explicit rules for currency conversions. Those rules require the use of (1) the exchange rate on the date of sale, provided that rate does not constitute a "fluctuation;" (2) the exchange rate of a forward contract directly linked to the sale; or (3) a special exchange rate in the event of a sustained movement, as discussed in the preceding section. The United States has established an exchange rate methodology that selects an exchange rate consistent with the requirements of Article 2.4. Using that exchange rate methodology, the United States converted the won price for POSCO's local sales into dollars to establish normal value. Therefore, its methodology was consistent with the Agreement.
180. Korea attempts to have the Panel retry the Department's factual determination that the currency of the transactions were Korean won, not US dollars. In the alternative, Korea seeks to have the Panel find it "unfair" to convert the won amount to dollars because the currency conversion causes a "distortion." These arguments are without merit.
181. First, panel review is not a substitute for proceedings conducted by national investigating authorities.165 Numerous panels have recognized that the role of panels is not to conduct a de novo review of factual issues.166 As set forth in Article 17.6(i), the panel's review of findings of fact is limited to determining whether the establishment of the facts was proper, and whether the evaluation of the facts was unbiased and objective.
182. The United States' determination that these sales were transacted in won is supported by a proper assessment of the facts. As discussed above, POSCO reported these transactions as home market sales and stated that the sales were paid in won. The reported won amounts were reflected on POSCO's invoices and records. Although the invoices also reflected dollar amounts, when viewed as a whole, the facts provide a reasonable basis for the United States' conclusion that these were won transactions.
183. Moreover, there is no "unfairness" in converting sales in foreign currencies into US dollars in the manner provided for under Article 2.4.1. Contrary to Korea's claims, the United States made no "double-conversion" of currencies in these investigations. In each case, POSCO reported the invoiced won amount for each transaction. As a factual matter, the United States made one currency conversion. The United States simply converted the won amount reported by POSCO in its response into dollars consistent with the methodology established under Article 2.4.1 of the Agreement.
184. Korea argues that use of the dollar amount is necessary to avoid distortions caused by currency conversions. The premise underlying that argument appears to be that the parties have locked in a dollar price, and therefore, any differences due to currency conversion constitute a "distortion" which is eliminated if no currency conversion takes place. However, this argument is simply another way of saying that the appropriate conversion formula is the one established by POSCO, rather than the method established by the United States consistent with Article 2.4.1. As we have demonstrated above, this argument is without foundation.
185. Korea further argues that the United States acted in a manner inconsistent with the minimum standards for transparency and procedural fairness under Article X:3(a) which is amplified by the procedural requirements of Article 6.1, 6.2, 6.9 and 12.2. Taken together, Korea argues, these provisions establish a broad requirement that investigating authorities interpret the relevant laws in a reasonable and consistent manner, and provide parties with an explanation that will allow for a full and ample opportunity to defend their interests.
186. As discussed above, the United States agrees that the Anti-dumping Agreement requires investigating authorities to interpret the agreement in a reasonable manner. Indeed, this understanding is at the heart of Article 17.6(ii).
187. Further, the United States agrees that under Articles 6.1, 6.2, and 6.9 parties should be afforded a full and ample opportunity to defend their interests. As noted above, issuance of a preliminary determination including all matters covered in Article 12.2.1, followed by a period for written and oral argument, provides ample opportunity for the parties to defend their interests. In both proceedings before the Department, POSCO availed itself of these opportunities. In addition, as discussed above, throughout US anti-dumping investigations the parties are afforded timely access to all information provided to or obtained by the Department, including confidential information made available under administrative protective order, all comments and legal arguments presented by the parties and the Department's internal memoranda.
188. Korea argues that the United States' decision to convert the won amount into dollars was an unprecedented departure from established policy of accepting the charges in the currency in which the charges are made.167 Korea concludes, therefore, that the United States acted inconsistently with Article X:3 of GATT 1994 by failing to follow its established methodology and by providing incorrect and incoherent justifications.168 Moreover, Korea claims that the United States violated Article 12.2 by failing to provide an adequate statement of reasons as required by that Article .
189. Korea specifically alleges that there is no distinction between the facts in these cases and those of Roses from Colombia; that the rates from the Korean Exchange Bank were actual market rates; and that the actual differences between the Federal Reserve rates and the Korean Exchange Bank rates were, in fact, quite small.169 Finally, Korea claims that use of the Federal Reserve exchange rate "unreasonably penalized" POSCO, and asserts that the United States failed to explain why its rates should be considered more accurate than the rates used by POSCO.
190. The fundamental issue for the Panel in these cases is not a question of which source for exchange rates is more accurate. Rather, it is a question of whether the exchange rates used by the United States in these cases satisfy the requirements of Article 2.4.1. As demonstrated above, the exchange rates applied by the United States in the instant investigations were specifically selected in accordance with the requirements of Article 2.4.1.
191. Moreover, as discussed above, consistency with domestic law is not for the panel to determine. Nevertheless, the United States' decision in these cases was entirely consistent with its established practice. In arguing to the contrary, Korea relies upon Roses from Colombia. However, that case pre-dates the Uruguay Round Agreements Act of the United States in which the new Article 2.4.1 was first implemented.170 Accordingly, none of the requirements of Article 2.4.1 were considered in the context of that case.
192. In addition, Roses represented an exception to the United States' practice, not the rule. In the proceedings at issue, the United States fully explained and properly distinguished the instant cases from its determination in Roses from Colombia. The United States reasoned that, unlike Roses from Colombia, where "the exchange rates reflected in the dollar-to-peso conversion coincided with the exchange rates used by the Department," in this case "there is a disparity between the exchange rates reflected in POSCO's accounting records and those used by the Department."171 The evidence concerning exchange rates supports that determination. Contrary to Korea's claim, a comparison of the exchange rates demonstrates that during the month of November 1997, the rates varied by as much as { } per cent. Thus, assuming arguendo that Roses from Colombia is relevant, the facts of the present cases differ significantly. The evidence in these cases fully supports the United States' determination.
193. Korea's argument that companies are "penalized" because the exchange rates are not the rates used in Korea and are not used in the company's accounting system also misses the mark. No company is "penalized" when an investigating authority (a) sets forth rules that are designed to ensure that the exchange rates used in its dumping analysis are consistent with the Agreement, and (b) adheres to those rules in the course of its proceedings. The United States' exchange rate methodology is transparent. The United States has publicly announced, for purposes of anti-dumping analysis, that it will use its official exchange rates for currency conversions. The methodology used by the United States to select the exchange rates for its dumping analysis have also been published. Indeed, the United States has taken several steps to "ensure that all exporters, when they set their prices and whether under order or not, can know with certainty the daily exchange rate the Department will use in a dumping analysis."172 For example, companies know that the United States relies upon the Federal Reserve rates,173 and that fluctuations in the exchange rate, in accordance with Article 2.4.1, "shall be ignored" (i.e., that the average exchange rate for the last 40 days will be applicable). To ensure that companies can ascertain the applicable exchange rate, the United States has taken the unusual step of publishing on the Internet the computer code to allow parties to reproduce the United States' calculations and thus "monitor exchange rates.174
194. While there are some natural and inherent constraints to ascertaining the exchange rate for the day on which a transaction occurs, the rules adopted by the United States are highly transparent ones. These rules, and the monitoring tools provided by the United States, enable companies to obtain the applicable exchange rate with a high degree of precision and certainty. Companies can, with the knowledge of the United States' rules, reasonably determine the daily exchange rate. These rules are as transparent as they can be. Thus, the suggestion by Korea that the United States violated the transparency requirements of the Agreement is without merit.
195. In its first submission, Korea requests the Panel suggest that the United States "revoke the anti-dumping duty orders concerning SSPC and SSSS from Korea.".175 In so doing, Korea seeks to turn the Panel's discretionary mechanism of suggesting ways that the Member could implement its recommendations under Article 19.1 of the DSU into a device for obtaining a specific remedy that is inconsistent with established GATT/WTO practice and the DSU. Therefore, should the Panel agree with Korea on the merits, the Panel nonetheless should reject Korea's request, and instead, make a general recommendation and any suggestions for implementation, consistent with the DSU and established GATT/WTO practice.
196. Furthermore, Korea's request that the Panel suggest revocation far exceeds what would be necessary to bring these measures into conformity with the Agreement. There is simply no basis upon which the Panel could conclude that revocation of the anti-dumping duty orders is necessary for the United States to bring its measures into conformity with the Agreement. Even if the panel were to agree with Korea on the merits, it is impossible for the panel even to know whether a dumping analysis that conformed to the panel's decision would result in a de minimis margin for POSCO.
197. In sum, specific remedies are at odds with established GATT and WTO practice and the express terms of the DSU. Moreover, revocation of the anti-dumping orders on SSSS and SSPC far exceeds what would be necessary to bring these measures into conformity with the Agreement. Therefore, regardless of how the merits of this case are decided, Korea's request for revocation of the anti-dumping duty orders on SSSS and SSPC should be rejected.
IV. CONCLUSION 198. For the reasons discussed above, the actions of the United States in conducting the subject investigations were in conformity with the requirements of the AD Agreement and GATT 1994.
128 Article 2.4.2 also permits comparisons of individual
transactions with individual transactions, or, in certain situations, of
individual export transactions with an average of normal values. However,
neither of these methodologies is relevant in the cases before the panel.
129 Under Article 32 of the Vienna Convention, where the
meaning of a provision is not clear from the language of the provision itself,
read in context, and in light of its object and purpose, then the "preparatory
work of the treaty and the circumstances of its conclusion" may be considered to
confirm the meaning.
130 The GATT Uruguay Round: A Negotiating History (1986-1992):
Antidumping, Stewart, T., Ed. (1993, Kluwer) at 157, (US Ex. 23).
131 Id. at 159.
132 As noted above, the "fundamental principle of effet utile
is that a treaty interpreter is not free to adopt a meaning that would reduce
parts of a treaty to redundancy or inutility." Automotive Leather, at
para. 6.25. Further, in Reformulated Gasoline, the Appellate Body noted
that "[o]ne of the corollaries of the 'general rule of interpretation' in the
Vienna Convention is that interpretation must give meaning and effect to
all the terms of the treaty" (emphasis supplied). Reformulated Gasoline,
at 23.
133 See, e.g. Letter from POSCO to the Department in the SSSS
Investigation, dated 27 July 1998, (US Ex. 24).
134 The list of physical characteristics on which the United
States would base its averages, and, in turn, its matches of normal value
transactions with export transactions was set forth in the questionnaire issued
to POSCO. See, (US Ex. 1), and (US Ex. 2).
135 Letter from POSCO to the Department in the SSPC
Investigation, dated 21 May 1998, (US Ex. 25).
136 Letter from POSCO to the Department in the SSSS
Investigation, dated 27 July 1998, (US Ex. 24).
137 (ROK Ex. 7), at 7-8; (ROK Ex. 20), at 6-7.
138 See ROK First Submission, at para 4.48 ("The US practice of
comparing "multiple averages" to "multiple averages" finds no support in Article
2.4.2.").
139 In both SSPC and SSSS , the Department stated
that "to the extent practicable, we determine NV [i.e. "normal value"] based on
sales in the comparison market at the same level of trade ( "LOT") as the EP
[i.e. "export price"] or constructed export price . . . transaction." SSPC
Preliminary Determination, 63 Fed. Reg. at 59537 (ROK Ex. 4); SSSS
Preliminary Determination, 64 Fed. Reg. at 142 (ROK Ex. 16).
140 See, e.g. Notice of Preliminary Results of Antidumping
Duty Administrative Review: Certain Pasta from Turkey, 64 Fed. Reg. 43157,
43158 (9 August 1999) (US Ex. 26) (in light of annual inflation of over 60 per
cent during the period of review, the Department limited its comparisons to
sales made in the same month). Note that in the preliminary determination in the
SSSS case, the domestic interested parties alleged that the inflation
rate in Korea during three months of the period of investigation warranted use
of these special inflation procedures. However, the United States responded that
it looks for an annual inflation of over 25 per cent for purposes of
determining whether the special procedures for highly inflationary economies
should be applied. The United States noted that the actual inflation in Korea
for the period of investigation was only 17.06 per cent. SSSS Preliminary
Determination, 64 Fed. Reg. at 139 (ROK Ex. 16).
141 ROK First Submission, at para. 4.45 - 4.48
142 Finally, in several places Korea mentions the issue of
"zeroing," that is, measurement of dumping according to the amount by which
subject merchandise is sold at less than fair value under Article 2.1, without
offsetting that amount by the amount by which other models of subject
merchandise may be sold at more than fair value. ROK First Submission, at para.
3.46 and 4.43. However, the issue of zeroing is not directly relevant to
creation of separate averages for prices established before and during the
depreciation of the won. In other words, the panel can address the issue of
whether investigating authorities may calculate more than one average normal
value and export price without addressing the entirely separate issue of
whether, after such averages are constructed, and after comparisons are made,
investigating authorities are required to offset dumping found under such
comparisons with "negative dumping," i.e. sales at greater than normal value.
According to the Appellate Body's report in Wool Shirts the normal
practice of WTO and GATT panels has been to "address[ ] only those issues that
such panels considered necessary for the resolution of the matter between the
parties, and [to] decline[ ] to decide other issues." Thus, panels "have
refrained from examining each and every claim made by the complaining party and
have made findings only on those claims that such panels concluded were
necessary to resolve the particular matter." Wool Shirts, at 19 (emphasis
in original).
143 Although the United States agrees that a panel should
determine, in situations in which the AD Agreement permits more than one
possible interpretation, whether the investigating authority has offered a
reasonable interpretation, the United States disagrees with the suggestion in
Korea�s submission that the panel should determine whether a Member has
interpreted all "relevant laws" in a reasonable manner. This statement suggests
that the panel could engage in the exercise of determining, notwithstanding
consistency with the AD Agreement, whether the actions of a member represented
reasonable interpretations of that member�s national legislation. Such an
exercise is decidedly not the province of a panel formed under Article 17 of the
Agreement and the Dispute Settlement Understanding. Indeed the terms of
reference of this panel relate to consistency with the AD Agreement, and not to
consistency with national legislation. If Korea wanted review of the consistency
of the United States� actions with the domestic laws of the United States, POSCO
was free to pursue judicial remedies before the Federal Courts of the United
States. As noted elsewhere, POSCO elected not to pursue such remedies.
144 Article 12.2.1 requires preliminary determinations to
include: "(i) the names of the suppliers, or when this is impracticable, the
supplying countries involved; (ii) a description of the product which is
sufficient for customs purposes; (iii) the margins of dumping established and a
full explanation of the reasons for the methodology used in the establishment
and comparison of the export price and the normal value under Article 2; (iv)
considerations relevant to the injury determination as set out in Article 3;
[and] (v) the main reasons leading to the determination."
145 As noted previously, in both preliminary determinations, the
United States included the following statement:
The Department makes this determination without the
benefit of extensive case precedent dealing with this area of our currency
conversion policy. The Department therefore welcomes comments from
interested parties on all aspects of our analysis and the time
period-specific exchange rates used. For the purposes of the final
determination, the Department will continue to analyze the implications, if
any, of the decline in the won during 1997 for price averaging and whether
multiple averages are warranted. SSPC Preliminary Determination, 63
Fed. Reg. at 59539 (ROK Ex. 4); SSSS Preliminary Determination, 64
Fed. Reg. at 145 (ROK Ex. 16).
146 Final Determination of Sales at Less Than Fair Value: Certain
Preserved Mushrooms from Indonesia, 63 Fed. Reg. 72268, 72272 (31 December 1998)
(Preserved Mushrooms) (ROK Ex. 40).
147 ROK First Submission, at para. 3.44.
148 Note that this decision by the United States is similar to
the policy discussed elsewhere that adjudicating bodies should not address
issues not necessary for resolution of the dispute before them.
149 Preserved Mushrooms, 63 Fed. Reg. at 72272 (emphasis
supplied) (ROK Ex. 40).
150 Korea repeatedly asserts that the similarities between the
decline of the Indonesian rupiah addressed in Preserved Mushrooms and the
devaluation of the Korean won demanded the same treatment. ROK First Submission,
at para. 3.45 and 4.56 - 4.58. However, while the 50 per cent devaluation of the
won occurred over a two month period, the 60 per cent devaluation of the rupiah
occurred over a seven month period. See, Preserved Mushrooms, at 72272
(noting a 60 per cent decrease in the value of the rupiah between July and
December 1997), (ROK Ex. 40). Although the United States has not been required
to address the devaluation of the rupiah, it has stated that the "
precipitousness" of the devaluation is a relevant consideration. Thus, the
situations may not be as similar as asserted by Korea.
151 Korea also argues that, while "dumping [was] based solely on
pre-devaluation sales," injury was based primarily on the "Asian economic crisis
that accompanied the devaluation of the Korean won." ROK First Submission at
para. 4.61 - 4.63. This argument, however, has no bearing on the question of
whether the United States properly constructed averages for comparison purposes
under Article 2.4.2, or even whether the United States made a fair comparison
under Article 2.4. Even if Korea�s argument were relevant to the issue of the
consistency of the measured with Article 3 of the AD Agreement, Korea did not
raise a claim under Article 3 in its request for panel review. Consequently,
this issue is outside the panel�s terms of reference, and must be disregarded.
152 19 USC. 1677b-1 (1994). (ROK Exh.1). See also
Notice: Change in Policy Regarding Currency Conversions, 61 Fed. Reg. 9434
(8 March 1996). (ROK Exh.49).
153 See, e.g., 3 August 1998 Questionnaire in SSSS, at
B-20, (US Ex. 2). See also Final Determination of Sales at Less Than
Fair Value: Fresh Cut Roses From Colombia, 60 Fed. Reg. 6980, 7006 (6
February 1995) (ROK Ex. 52) ("It is the Department�s practice to accept charges
in the currency in which the charges are made.") ("Roses from Colombia").
In rare instances, the Department has used something other than the currency of
the transaction. See, e.g. Roses from Colombia, discussed further below.
In Final Determination of Sales At Less Than Fair Value: Silicon Metal From
Argentina, 56 Fed. Reg. 37891, 37896 (9 August 1991) (ROK Ex. 53), also
addressed by Korea, the Department used a dollar amount; however, this
determination was based upon its finding at verification that "the Argentine
economy is indeed dollarized."
154 SSSS 23 September 1998 Section B Response, at B-22, (US Ex.
27); see also SSPC Section B Response, at B-22, (US Ex. 21). POSCO stated
that it has "reported the actual invoiced price per metric ton in Korean won"
and further reported that "[a]ll sales have been recorded in Korean Won in the
database."
155 See SSPC Final Determination, 64 Fed. Reg. at 15456. (ROK Ex.
11). The won amount is listed on the tax invoice issued to the customer. The won
amount is also listed on the invoice (known as the shipping invoice or shipping
list) for channel 2 sales. See SSSS Sales Verification Report, Exhibit 17, (US
Ex. 28); see also SSPC Sales Verification Report, Exhibit 6, and Exhibit 23, (US
Ex. 29).
156 SSSS 23 November 1998 Supplemental Sales Response, at 19,
(ROK Ex. 45); see also POSCO's SSPC Case Brief, at 4. (ROK Ex. 7).
157 SSPC Preliminary Determination, 63 Fed. Reg. at 59536
(4 November 1998). (ROK Ex. 4).
158 POSCO�s SSPC 26 January 1999, Case Brief, at 4. (ROK Ex. 7);
see also POSCO�s SSSS Case Brief, at 3-5 (ROK Ex. 20). In the preliminary
determination in SSSS, the Department included the sales in its calculation of
normal value. The Department, however, mistakenly converted the
dollar-denominated amount into won for the preliminary determination, but
corrected the error for the final determination, using instead the won amount
reported by POSCO. See Preliminary Analysis Memorandum for SSSS, at 9.
(ROK Ex.17).
159 SSPC Final Determination, 64 Fed. Reg. at 15456. (ROK
Ex. 11).
160 Id.; see also SSSS Final Determination, 64 Fed.
Reg. at 30678. (ROK Ex. 24).
161 Id. The factual data on exchange rates supports the
United States� conclusions that the exchange rates varied. For example, in the
month of November 1997, which is an "overlap" month (i.e., a month
included in both investigations) the exchange rates are as follows:
Although Korea is correct that the Department mistakenly used adjusted exchange rates in the SSPC case, correction of the error does not alter the conclusion that POSCO's rates did not mirror the official rates, as demonstrated by the table above. The table reflects sale dates within the periods of investigation of both SSSS and SSPC. For a listing of such exchange rates, see, e.g ., SSPC Sales Verification Report, Exh. 6 (US Ex. 29). See also, New York Federal Reserve Daily Exchange Rates (ROK Ex. 50), and Korean Exchange Bank Exchange Rates, (ROK Ex. 44). 162 SSSS Final Determination, 64 Fed. Reg. at 30678; see also SSPC Final Determination, 64 Fed. Reg. at 15456. 163 ROK First Submission, at para. 4.66-4.67. 164 As discussed above, Article 31 of the Vienna Convention provides that the words of a treaty must form the starting point for the process of interpretation. In this regard, words must be interpreted according to their "ordinary meaning" taking into account their "context" (i.e., other provisions of the treaty) and the "object and purpose" of the agreement. 165 United States - Restrictions on Imports of Cotton and Man-Made Fibre Underwear, WT/DS24/R, Report of the Panel, as modified by the Appellate Body, adopted 25 February 1997, para. 7.12. 166 See, e.g., Id., citing Korea Resins, at para. 227; and Softwood Lumber, at para. 335. See also, Plate from Sweden, at para. 284 and 387 and the panel report in Argentina Footwear , at para. 8.117. 167 ROK First Submission, at para. 4.72. 168 As discussed previously, it is the position of the United States that Korea has mis-interpreted the scope of Article X:3 of GATT 1994. 169 ROK First Submission, at para. 4.74. 170 Similarly, the other case Korea also relies upon, Silicon Metal from Argentina, also pre-dates the Uruguay Round Agreements Act of the United States. 56 Fed. Reg. 37891 (9 August 1991). (ROK Ex. 53). 171 SSSS Final Determination, 64 Fed. Reg. at 30678. (ROK Ex. 24). 172 Notice: Change in Policy Regarding Currency Conversions, 61 Fed. Reg. at 9435. (ROK Ex. 49). 173 Id. at 61 Fed. Reg. 9435, n. 3. 174 Id. at 61 Fed. Reg. 9435. 175 ROK First Submission, at para 5.9
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