WT/DS504/R  
 
12 April 2018  
(18-2223) Page: 1/149 
    
 
  
 
KOREA – ANTI -DUMPING DUTIES ON PN EUMATIC  
VALVES FROM JAPAN  
 
REPORT OF THE PANEL  
 
 
 
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  TABLE OF CONTENTS  
1   INTRODUCTION  ................................ ................................ ................................ ........  12 
1.1   Complaint by Japan  ................................ ................................ ................................ ....12 
1.2   Panel establishment and composition  ................................ ................................ ............ 12 
1.3   Panel proceedings  ................................ ................................ ................................ .......12 
1.3.1    General  ................................ ................................ ................................ .................. 12 
1.3.2    Preliminary ruling request  ................................ ................................ ......................... 13 
1.3.3    Objections to the accuracy of translations  ................................ ................................ ...13 
2   FACTUAL ASPECTS ................................ ................................ ................................ ..... 13 
3   PART IES' REQUESTS FOR FI NDINGS AND RECOMMEND ATIONS  ................................  15 
4   ARGUMENTS OF THE PAR TIES  ................................ ................................ ...................  16 
5   ARGUMENTS OF THE THI RD PARTIES  ................................ ................................ ........  16 
6   INTERIM REVIEW  ................................ ................................ ................................ ...... 16 
7   FINDINGS  ................................ ................................ ................................ .................  16 
7.1   Introduction  ................................ ................................ ................................ ............... 16 
7.2   Standard of review, treaty interpretation, and burden of proof  ................................ ......... 17 
7.2.1    Standard of review ................................ ................................ ................................ ...17 
7.2.2    Treaty interpretation  ................................ ................................ ................................ 18 
7.2.3    Burden of proof  ................................ ................................ ................................ .......18 
7.3   Panel's terms of reference  ................................ ................................ ........................... 19 
7.3.1    Introduction  ................................ ................................ ................................ ............ 19 
7.3.2    Legal  background  ................................ ................................ ................................ ....19 
7.3.3    The requirement  for an o bjective examination based on positive evidence under 
Article 3.1 of the Anti -Dumping Agreement  ................................ ................................ ........... 21 
7.4   Definition of the Domestic  Industry  ................................ ................................ ............... 23 
7.4.1    Introduction  ................................ ................................ ................................ ............ 23 
7.4.2    Main arguments of the parties  ................................ ................................ ................... 23 
7.4.2.1    Japan  ................................ ................................ ................................ .................. 23 
7.4.2.2    Korea  ................................ ................................ ................................ .................. 24 
7.4.3    Relevant facts  ................................ ................................ ................................ ......... 25 
7.4.4    Panel's terms of reference  ................................ ................................ ........................ 28 
7.4.4.1    Main arguments  of the parties  ................................ ................................ ................ 28 
7.4.4.2    Evaluation by the Panel  ................................ ................................ ......................... 29 
7.5   Volume  of the dumped imports  ................................ ................................ .................... 31 
7.5.1    Introduction  ................................ ................................ ................................ ............ 31 
7.5.2    Main arguments  of the parties  ................................ ................................ ................... 31 
7.5.2.1    Japan  ................................ ................................ ................................ .................. 31 
7.5.2.2    Korea  ................................ ................................ ................................ .................. 32 
7.5.3    Relevant facts ................................ ................................ ................................ ......... 33 
7.5.4    Panel's terms of reference  ................................ ................................ ........................ 34 
7.5.4.1    Main arguments of the parties  ................................ ................................ ................ 34 WT/DS504/R  
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  7.5.4.2    Evaluation  by the Panel  ................................ ................................ ......................... 35 
7.6   Effect of the dumped  imports on prices  ................................ ................................ ......... 36 
7.6.1    Introduction  ................................ ................................ ................................ ............ 36 
7.6.2    Main arguments  of the parties  ................................ ................................ ................... 37 
7.6.2.1    Japan  ................................ ................................ ................................ .................. 37 
7.6.2.2    Korea  ................................ ................................ ................................ .................. 38 
7.6.3    Relevant facts  ................................ ................................ ................................ ......... 40 
7.6.4    Panel's terms of reference  ................................ ................................ ........................ 42 
7.6.4.1    Main arguments of the parties  ................................ ................................ ................ 42 
7.6.4.2    Evaluation  by the Panel  ................................ ................................ ......................... 43 
7.7   Impact of the dumped imports on the domestic industry  ................................ ................. 46 
7.7.1    Introduction  ................................ ................................ ................................ ............ 46 
7.7.2    Main arguments  of the parties  ................................ ................................ ................... 46 
7.7.2.1    Alleged  failure to link findings on volume and price effects with findings on the 
state of the domestic industry  ................................ ................................ ............................. 46 
7.7.2.1.1    Japan  ................................ ................................ ................................ ............... 46 
7.7.2.1.2    Korea  ................................ ................................ ................................ ............... 47 
7.7.2.2    Alleged failure to examine the explanatory force of the dumped  imports on the 
state of the domestic industry  ................................ ................................ ............................. 48 
7.7.2.2.1    Japan  ................................ ................................ ................................ ............... 48 
7.7.2.2.2    Korea  ................................ ................................ ................................ ............... 48 
7.7.2.3    Alleged failure  to examine relevant economic factors listed in Article 3.4 of the 
Anti-Dumping Agreement  ................................ ................................ ................................ ....49 
7.7.2.3.1    Japan  ................................ ................................ ................................ ............... 49 
7.7.2.3.2    Korea  ................................ ................................ ................................ ............... 49 
7.7.2.4    Alleged failure to properly tak e into account positive trends  ................................ .......49 
7.7.2.4.1    Japan  ................................ ................................ ................................ ............... 49 
7.7.2.4.2    Korea  ................................ ................................ ................................ ............... 50 
7.7.3    Relevant facts ................................ ................................ ................................ ......... 50 
7.7.4    Panel's  terms of reference  ................................ ................................ ........................ 53 
7.7.4.1    Main arguments of the parties  ................................ ................................ ................ 53 
7.7.4.2    Evaluation by the Pane l ................................ ................................ ......................... 54 
7.7.5    Alleged failure to examine two economic factors listed in Article 3.4 of the 
Anti-Dumping Agreement  ................................ ................................ ................................ ....56 
7.7.5.1    Relevant  provisions  ................................ ................................ ............................... 56 
7.7.5.2    Evalua tion by the Panel  ................................ ................................ ......................... 57 
7.7.5.2.1    Ability to raise capital or investments  ................................ ................................ ...57 
7.7.5.2.2    Magnitude of the margin of dumping  ................................ ................................ ....59 
7.7.5.3    Conclusion  ................................ ................................ ................................ ........... 60 
7.8   Causation  ................................ ................................ ................................ .................. 60 
7.8.1    Introduction  ................................ ................................ ................................ ............ 60 
7.8.2    Main arguments of the parties  ................................ ................................ ................... 60 WT/DS504/R  
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  7.8.2.1    Japan  ................................ ................................ ................................ .................. 60 
7.8.2.1.1    First claim: "independent" causation  claim ................................ ............................ 60 
7.8.2.1.2    Second claim: Alleged failure to properly establish a causal link  ............................... 60 
7.8.2.1.3    Third claim: Alleged failure to conduct a proper non -attribution analysis  ................... 61 
7.8.2.2    Korea  ................................ ................................ ................................ .................. 62 
7.8.2.2.1    First claim: " independent " causation cla im ................................ ............................ 62 
7.8.2.2.2    Second  claim: Alleged failure to establish a causal link ................................ ............ 62 
7.8.2.2.3    Third claim: Alleged failure to conduct a proper non -attribution analysis  ................... 63 
7.8.3    Panel's terms of reference  ................................ ................................ ........................ 64 
7.8.3.1    Japan's first claim  under Article s 3.1 and 3.5 of the A nti-Dumping  Agreement  .............. 64 
7.8.3.1.1    Main arguments of the parties  ................................ ................................ ............. 64 
7.8.3.1.2    Evaluation by the Panel  ................................ ................................ ....................... 65 
7.8.3.2    Japan's second claim under  Articles 3.1 and 3.5 of the Anti -Dumping Agreement  .......... 67 
7.8.3.2.1    Main arguments  of the parties  ................................ ................................ ............. 67 
7.8.3.2.2    Evaluation by the Panel  ................................ ................................ ....................... 67 
7.8.3.3    Japan's third claim under Articles  3.1 and 3.5 of the Anti -Dumping Agreement  ............. 68 
7.8.3.3.1    Main arguments  of the parties  ................................ ................................ ............. 68 
7.8.3.3.2    Evaluation by the Panel  ................................ ................................ ....................... 69 
7.8.3.4    Conclusion on the Panel's terms of reference  ................................ ............................ 69 
7.8.4    Evaluation by the Panel  ................................ ................................ ............................ 70 
7.8.4.1    Relevant provisions  ................................ ................................ ............................... 70 
7.8.4.2    First claim: independent causation claim  ................................ ................................ ..71 
7.8.4.2.1    Volume  ................................ ................................ ................................ ............. 71 
7.8.4.2.1.1    Consideration of volume  ................................ ................................ ................... 71 
7.8.4.2.1.2    Conclusion regarding volume  ................................ ................................ ............ 74 
7.8.4.2.2    Price ................................ ................................ ................................ ................. 74 
7.8.4.2.2. 1   The KTC's findings on price effects ................................ ................................ .....74 
7.8.4.2.2.2    Price comparability  ................................ ................................ .......................... 75 
7.8.4.2.2.3    Diverging price trends  ................................ ................................ ...................... 78 
7.8.4.2.2.4    Overselling  ................................ ................................ ................................ .....85 
7.8.4.2.2.5    Conclusion regarding price  ................................ ................................ ................ 93 
7.8.4.2.3    Impact  ................................ ................................ ................................ .............. 93 
7.8.4.2.3.1    Alleged failure to link the volume and price effects with the state of the 
domestic industry  ................................ ................................ ................................ .............. 94 
7.8.4.2.3.2    Alleged failure to demonstrate any explanatory force of the dumped imports 
on the state of the domestic industry  ................................ ................................ ................... 96 
7.8.4.2.3.3    Alleged failure to properly take i nto account "positive trends"  ............................... 97 
7.8.4.2.3.4    Conclusion regarding impact  ................................ ................................ ............. 99 
7.8.4.2.4    Conclusion regarding Japan's first claim  ................................ ................................ 99 
7.8.4.3    Second claim: Alleged failure to properly demonstrate a causal relationship  ...............  100 
7.8.4.3.1    The KTC's findings on causation  ................................ ................................ .........  100 WT/DS504/R  
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  7.8.4.3.2    Volume correlation  ................................ ................................ ...........................  100 
7.8.4.3.3    Price correlation  ................................ ................................ ...............................  100 
7.8.4.3.4    Profits correlation  ................................ ................................ .............................  101 
7.8.4.3.5    Conclusion regarding Japan's second claim  ................................ ..........................  102 
7.8.4.4    Third claim: Alleged  failure to conduct a proper non -attribution analysis  ....................  102 
7.8.4.4.1    Third country imports  ................................ ................................ .......................  102 
7.8.4.4.2    Domestic consumption  ................................ ................................ ......................  104 
7.8.4.4.3    The domestic industry's  export  performance  ................................ ........................  106 
7.8.4.4.4    Cumulative effects of the other "known" factors  ................................ ...................  108 
7.8.4.4.5    Conclusion regarding Japan's third claim  ................................ .............................  109 
7.9   Confidential treatment of informat ion ................................ ................................ ..........  109 
7.9.1    Main arguments  of the parties  ................................ ................................ .................  109 
7.9.1.1    Japan  ................................ ................................ ................................ ................  109 
7.9.1.2    Korea ................................ ................................ ................................ ................  110 
7.9.2    Relevant facts ................................ ................................ ................................ ....... 111 
7.9.3    Panel's terms of reference  ................................ ................................ ......................  113 
7.9.4    Evaluation by the Panel  ................................ ................................ ..........................  115 
7.9.4.1    Relevant provisions  ................................ ................................ .............................  115 
7.9.4.2    Alleged violations of Articles 6.5 and 6.5.1 of the Anti -Dumping Agreement  ...............  116 
7.9.5    Conclusion  ................................ ................................ ................................ ............  120 
7.10   Disclosure  of essential facts  ................................ ................................ .....................  121 
7.10.1    Main arguments  of the parties  ................................ ................................ ...............  121 
7.10.1.1    Japan  ................................ ................................ ................................ ..............  121 
7.10.1.2    Korea  ................................ ................................ ................................ ..............  122 
7.10.2    Relevant facts ................................ ................................ ................................ ...... 124 
7.10.2.1    Procedural aspects of the decision whether to apply definitive anti -dumping 
measures in Korea  ................................ ................................ ................................ ...........  124 
7.10.2.2    Facts regarding price effects  ................................ ................................ ...............  126 
7.10.2 .3   Facts regarding volume  ................................ ................................ ......................  132 
7.10.2.4    Facts regarding the state of the domestic industry  ................................ ................  134 
7.10.2.5    Facts regarding causation  ................................ ................................ ...................  138 
7.10.3    Panel's terms of reference  ................................ ................................ .....................  140 
7.10.4    Conclusion  ................................ ................................ ................................ ..........  141 
7.11   Public Notice  ................................ ................................ ................................ ..........  141 
7.11.1    Main arguments  of the parties  ................................ ................................ ...............  141 
7.11.1.1    Japan  ................................ ................................ ................................ ..............  141 
7.11.1.2    Korea  ................................ ................................ ................................ ..............  142 
7.11.2    Relevant facts ................................ ................................ ................................ ...... 143 
7.11.3    Panel's terms of reference  ................................ ................................ .....................  144 
7.11.4    Conclusion  ................................ ................................ ................................ ..........  145 
7.12   Consequential claims  ................................ ................................ ...............................  145 WT/DS504/R  
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  7.12.1    Main arguments of the parties  ................................ ................................ ...............  145 
7.12.1.1    Japan  ................................ ................................ ................................ ..............  145 
7.12.1.2    Korea  ................................ ................................ ................................ ..............  145 
7.12.2    Panel's terms of reference  ................................ ................................ .....................  146 
7.12.2.1    Evaluation  by the Panel  ................................ ................................ ......................  146 
7.12.2.2    Conclusion  ................................ ................................ ................................ ....... 147 
7.12.3    Evaluation by the Panel  ................................ ................................ ........................  147 
7.12.4    Conclusion  ................................ ................................ ................................ ..........  147 
8   CONCLUSIONS AND RECO MMENDATION  ................................ ................................ . 147  
8.1   Conclusions  ................................ ................................ ................................ .............  147 
8.2   Recommendation  ................................ ................................ ................................ ...... 149 
 WT/DS504/R  
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  LIST OF ANNEXES  
ANNEX A  
WORKING PROCEDURES O F THE PANEL AND INTE RIM REVIEW  
Contents  Page  
Annex A -1 Working Procedures of the Panel  A-2 
Annex  A-2 Additional Working Procedures on Business Confidential Information  A-7 
Annex  A-3 Interim Review  A-9 
ANNEX B  
ARGUMENTS OF JAPAN  
Contents  Page  
Annex B-1 First integrated executive summary of the arguments of Japan  B-2 
Annex  B-2 Second integrated executive summary of the arguments of Japan  B-10 
ANNEX C  
ARGUMENTS OF KOREA  
Contents  Page  
Annex C-1 First integrated executive summary of the arguments of Korea  C-2 
Annex  C-2 Second integrated executive summary of the arguments of Korea  C-12 
ANNEX D  
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex D -1 Integrated executive summary of the arguments of Brazil  D-2 
Annex D -2 Integrated executive summary of the arguments of Canada  D-4 
Annex D -3 Integrated executive summary of the arguments of Ecuador  D-7 
Annex D -4 Integrated executive summary of the arguments of the European Union  D-9 
Annex D -5 Integrated executive summary of the arguments of the United States  D-12 
 
 WT/DS504/R  
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  CASES CITED IN THIS REPORT  
Short title  Full case title and citation  
Argentina – Ceramic Tiles  Panel Report, Argentina – Definitive Anti -Dumping Measures on Imports of 
Ceramic Floor Tiles from Italy , WT/DS189/R , adopted 5 November 2001, 
DSR 2001:XII, p. 6241  
Argentina – Poultry 
Anti-Dumping Duties  Panel Report, Argentina – Definitive Anti -Dumping Duties on Poultry from 
Brazil , WT/DS241/R , adopted 19 May 2003, DSR 2003:V, p. 1727  
Australia – Apples  Appel late Body Report, Australia – Measures Affecting the Importation of 
Apples from New Zealand , WT/DS367/AB/R , adopted 17 December 2010, 
DSR 2010:V, p. 2175  
Brazil – Desiccated Coconut  Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut , 
WT/DS22/AB/R , adopted 20 March 1997, DSR 1997:I, p. 167  
China – Autos (US)  Panel Report, China – Anti-Dumping and Countervailing Duties on Certain 
Automobiles from the United States , WT/DS440/R  and Add.1, ad opted 
18 June 2014, DSR 2014:VII, p. 2655  
China – Cellulose Pulp  Panel Report, China – Anti-Dumping Measures on Imports of Cellulose Pulp 
from Canada , WT/DS483/R  and Add.1, adopted 22 May 2017  
China – GOES  Appellate Body Report, China – Countervailing and Anti -Dumping Duties on 
Grain Oriented Flat -Rolled Electrical Steel from the United States , 
WT/DS414/AB/R , adopted 16 November 2012, DSR 2012:XII, p. 6251  
China – GOES  Panel Report, China – Countervailing and Anti -Dumping Duties on Grain 
Oriented Flat -Rolled Electrical Steel from the United States , WT/DS414/R  
and Add.1, adopted 16 November 2012, uph eld by Appellate Body Report 
WT/DS414/AB/R, DSR 2012:XII, p. 6369  
China – GOES  
(Article 21.5 – US) Panel Report, China – Countervailing and Anti -Dumping Duties on Grain 
Oriented Flat -Rolled Electrical Steel from the United States – Recourse to 
Article 21 .5 of the DSU by the United States , WT/DS414/RW  and Add.1, 
adopted 31 Augu st 2015  
China – HP-SSST (Japan) / 
China – HP-SSST (EU)  Appellate Body Reports, China – Measures Imposing Anti -Dumping Duties on 
High-Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High-Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European Union , 
WT/DS454/AB/R  and Add.1 / WT/DS460/AB/R  and Add.1, adopted 
28 October 2015  
China – HP-SSST (Japan) / 
China – HP-SSST (EU)  Panel Reports, China – Measures Imposing Anti -Dumping Duties on High -
Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High-Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European Union , 
WT/DS454/R  and Add.1 / WT/DS460/R , Add.1 and Corr.1, adopted 
28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R / 
WT/DS460/AB/R  
China – Raw Materials  Appellate Body Reports, China – Measures Related to the Exportation of 
Various Raw Materials , WT/DS394/AB/R  / WT/DS395/AB/R  / 
WT/DS398/AB/R , adopted 22 February 2012, DSR 2012:VII, p. 3295  
China – X-Ray Equipment  Panel Report,  China – Definitive Anti -Dumping Duties on X -Ray Security 
Inspection Equipment from the European Union , WT/DS425/R  and Add.1, 
adopted 24 April 2013, DSR 2013:III, p. 659  
Dominican Republic – Import 
and Sale of Cigarettes  Appellate Body Report, Dominican Republic – Measures Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R , adopted 
19 May 2005, DSR 2005:XV, p. 7367  
EC – Approval and  Marketing of 
Biotech Products  Panel Reports, European Communities – Measures Affecting the Approval 
and Marketing of Biotech Products , WT/DS291/R , Add.1 to Add.9 and Corr.1 
/ WT/DS292/R , Add.1 to Add.9 and Corr.1 / WT/DS293/ R, Add.1 to Add.9 
and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847  
EC – Bananas III  Appellate Body Report, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R , adopted 
25 September 1997, DSR 1997:II, p. 591  
EC – Bed Linen  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India , WT/DS141/AB/R , adopted WT/DS504/R  
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  Short title  Full case title and citation  
Argentina – Ceramic Tiles  Panel Report, Argentina – Definitive Anti -Dumping Measures on Imports of 
Ceramic Floor Tiles from Italy , WT/DS189/R , adopted 5 November 2001, 
DSR 2001:XII, p. 6241  
12 March 2001, DSR 2001:V, p.  2049 
EC – Bed Linen  
(Article  21.5 – India)  Panel Report, European Communities – Anti-Dumping Duties on Imports of 
Cotton -Type Bed Linen from India – Recourse to Article  21.5 of the DSU  by 
India, WT/DS141/RW , adopted 24 April 2003, as modified by Appellate Body 
Report WT/DS141/AB/RW, DSR 2003:IV, p. 1269 
EC – Fasteners (China)  Appellate Body Report, European Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R , 
adopted 28 July 2011, DSR 2011:VII, p. 3995  
EC – Fasteners (China)  Panel Report, European Communities – Definitive Anti -Dumping Measures on 
Certain Iron or Steel Fasteners from China , WT/DS397/R  and Corr.1, 
adopted 28 July 2011, as modified by Appellate Body Re port 
WT/DS397/AB/R, DSR 2011:VIII, p. 4289  
EC – Fasteners (China) 
(Article  21.5 – China)  Appellate Body Report, European Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China – Recourse to 
Article  21.5 of the DSU by China , WT/DS397/AB/RW  and Add.1 , adopted 
12 February 2016  
EC – Hormones  Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 13 February 1998, 
DSR 1998:I, p. 135  
EC – Selected Customs Matters  Appellate Body Report, European Communities – Selected Customs Matters , 
WT/DS315/AB/R , adopted 11 December 2006, DSR 20 06:IX, p. 3791  
EC – Tube or Pipe Fittings  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R , 
adopted 18 August 2003, DSR 2003:VI, p. 2613  
Guatemala – Cement I  Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding 
Portland Cement from Mexico , WT/DS60/AB/R , adopted 25 November 1998, 
DSR 1998:IX, p. 3767  
India – Patent s (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R , adopted 16 January 1998, 
DSR 1998:I, p. 9  
Japan – Alcoholic Beverages II  Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R , WT/DS10/AB/R , WT/DS11/AB/R , adopted 1 November 1996, 
DSR 1996:I, p. 97  
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R , adopted 12 January 2000, 
DSR 2000:I, p. 3  
Mexico – Corn Syrup 
(Article  21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High 
Fructose Corn Syrup (HFCS) from the United States – Recourse to 
Article  21.5 of the DSU  by the United States , WT/DS132/AB/RW , adopted 
21 Novembe r 2001, DSR 2001:XIII, p. 6675  
Mexico – Steel Pipes and Tubes  Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from 
Guatemala , WT/DS331/R , adopted 24 July 2007, DSR 2007:IV, p. 1207  
Russia – Commercial Ve hicles  Panel Report, Russia – Anti-Dumping Duties on Light Commercial Vehicles 
from Germany and Italy , WT/DS479/R  and Add.1, circulated to WTO 
Members 27 January 2017, adopted 9  April 2018 , as modified by 
Appellate  Body Report WT/DS479/AB/R  
Thailand – H-Beams  Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes 
and Sections of Iron or Non -Alloy Steel and H -Beams from Poland , 
WT/DS122/AB/R , adopted 5 April 2001, DSR 2001:VI I, p. 2701  
Thailand – H-Beams  Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and 
Sections of Iron or Non -Alloy Steel and H -Beams from Poland , WT/DS122/R , 
adopted 5 April 2001, as modified by Appellate Body Report 
WT/DS12 2/AB/R, DSR 2001:VII, p. 2741  WT/DS504/R  
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  Short title  Full case title and citation  
Argentina – Ceramic Tiles  Panel Report, Argentina – Definitive Anti -Dumping Measures on Imports of 
Ceramic Floor Tiles from Italy , WT/DS189/R , adopted 5 November 2001, 
DSR 2001:XII, p. 6241  
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion -Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R  and Corr.1, adopted 19  December 2002, DSR 2002:IX, 
p. 3779 
US – Continued Zeroing  Appellate Body Report, United States – Continued Existence and Application 
of Zeroing Methodology , WT/DS350/AB/R , adopted 19 February 2009, 
DSR 2009:III, p. 1291  
US – Countervailing and Anti -
Dumping Measures (China)  Appellate Body Report, United States – Countervailing and Anti -Dumping 
Measures on Certain Products from China , WT/DS449/AB/R  and Corr.1, 
adopted 22 July 2 014, DSR 2014:VIII, p. 3027  
US – Countervailing Duty 
Investigation on DRAMS  Appellate Body Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20 July 2005, DSR 2005:XVI, p. 8131  
US – Hot-Rolled Steel  Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R , adopted 
23 August  2001, DSR 2001:X, p. 4697  
US – Lamb  Appellate Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R , WT/DS178/AB/R , adopted 16 May 2001, DSR 2001:IX, 
p. 4051 
US – Oil Country Tubular 
Goods Sunset Reviews  Appellate Body Report, United  States – Sunset Reviews of Anti -Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R , 
adopted 17 December 2004, DSR 2004:VII, p. 3257  
US – Softwood Lumber VI 
(Article 21.5 – Canada)  Appellate Body Report, United States – Investigation of the International 
Trade Commission in Softwood Lumber fr om Canada – Recourse to 
Article  21.5 of the DSU by Canada , WT/DS277/AB/RW , adopte d 9 May 2006, 
and Corr.1, DSR 2006:XI, p. 4865  
US – Steel Safeguards  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R , WT/DS249/AB/R , 
WT/DS251/AB/R , WT/DS252/AB/R , WT/DS253/AB/R , WT/DS254/AB/R , 
WT/DS258/AB/R , WT/DS259/AB/R , adopted 10 December 2003, 
DSR 2003:VII, p. 3117  
US – Tyres (China)  Appellate Body Report, United States – Measures Affecting Imports of 
Certain Passenger Vehicle and Light Tru ck Tyres from China , 
WT/DS399/AB/R , adopted 5 October 2011 , DSR 2011:IX, p. 4811  
US – Wheat Gluten  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R , 
adopted 19 January 2001, DSR 2001:II, p. 717  
US – Wool Shir ts and Blouses  Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R , adopted 23 May 1997, 
and Corr.1, DSR 1997:I, p. 323  
US – Zeroing (Japan) 
(Article  21.5 – Japan)  Appellate Body Report, United States – Measures Relating to Zeroing and 
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan , 
WT/DS322/AB/RW , adopted 31  August 2009, DSR 2009:VIII, p. 3441  
 
 WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  ABBREVIATIONS USED I N THIS REPORT  
Abbreviation  Description  
Anti-Dumping  Agreement  Agreement on Implementation of Article VI of the General Agreement on Tariffs 
and Trade 1994  
BCI Business confidential information  
CKD CKD Corporation  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes  
GATT 1994  General Agreement on Tariffs and Trade 1994  
Korean Investigating 
Authorities  Korea Trade Commission and Office of Trade Investigation  
KCC KCC Co., Ltd.  
KRW South Korean Won  
KTC Korea Trade Commission  
KTC's Preliminary 
Resolution  KTC, Resolution of Preliminary Determination on Dumping and Injury to the 
Domestic Industry of Valves for Pneumatic Transmissions from Japan 
(26 June 2014), (Exhibit JPN -1) 
KTC's Final Resolution  KTC, Resolution of Final Determination on Dumping and Injury to Domestic 
Industry of Valves for Pneumatic Transmissions from Japan (20 January 2015) , 
(Exhibits JPN -4 (public version) and KOR -1 (BCI)) 
MOSF  Minister/Ministry of Strategy and Finance  
OTI Office of Trade Investigation  
MOSF's Decree No. 498  MOSF, Decree No. 498, Regulation Concerning the Imposition of Anti -Dumping 
Duties on Valves for Pneumatic Transmissions originating from Japan 
(19 August 2015) , (Exhibit JPN -6) 
MOSF's Public 
Announcement  MOSF, Public Announcement No. 2015 -156, Decision to Apply Anti -Dumping 
Duties on the Pneumatic Transmissions Valves from Japan (19 August 2015), 
(Exhibit KOR -3 (BCI) ) 
OTI's Preliminary Report  OTI, Preliminary Report on Dumping and Injury to Domestic Industry of Valves 
for Pneumatic Transmissions imported from Japan (26 June 2014), 
(Exhibit  JPN-2) 
OTI's Interim Report  OTI, Interim Investigation Report on Dumping and Injury to Domestic Industry 
of Valves for Pneumatic Transmissions from Japan (23 October 2014), 
(Exhibit  JPN-3) 
OTI's Final Report  OTI, Final Report  on Dumping and Injury to Domestic Industry of Valves for 
Pneumatic Transmissions Imported from Japan (20 January 2015), 
(Exhibits  JPN-5 (public version) and KOR -2 (BCI) ) 
POI Period of investigation  
R&D Research and development  
SG&A  Selling, general, and administrative  (costs)  
SMC SMC Corporation  
Toyooki  Toyooki Kogyo Co., Ltd.  
TPC TPC Mechatronics Corporation  
Vienna Convention  Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 
1155 UNTS 331; 8 International Legal Materials 679  
WTO World Trade Organization  
 
 
 WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  1  INTRODUCTION  
1.1  Complaint  by Japan  
1.1.  On 15 March 2016 , Japan  requested consultations with Korea  pursuant to Articles 1 and 4 of 
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) , 
Article  XXIII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), and  Article s 17.2 
and 17.3 of the Agreement on Implementa tion of Article VI of the General Agreement on Tariffs 
and Trade 1994  (Anti-Dumping  Agreement) , with respect to the measures and claims set out 
below.1 
1.2.  Consultations were held on 28 April 2016. These consultations failed to settle the dispute .2 
1.2  Panel estab lishment and composition  
1.3.  On 9 June 2016 , Japan requested the establishment of a panel pursuant to Article s 4.7 and 6 
of the DSU , Article  XXIII of the GATT 1994, and Article 17.4 of the Anti-Dumping  Agreement , with 
standard terms of reference.3 At its meeting on 4 July 2016 , the Dispute Settlement Body (DSB) 
established a panel pursuant to the request of Japan in document WT/DS 504/2 , in accordance with 
Article  6 of the DSU.4 
1.4.  The Panel's terms of reference are the following:  
To examine, in the li ght of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by Japan  in document 
WT/DS 504/2 and to make such findings as will assist the DSB in making the 
recommendations or in giving the rul ings provided for in those agreements.5 
1.5.  On 22 August 2016, Japan requested the Director -General to determine the composition of 
the panel, pursuant to Article 8.7 of the DSU . On 29 August 2016 , the Director -General 
accordingly composed the Panel as follows : 
Chairperson:  Mr Mateo Diego -Fernández  
 
Members:   Ms Leora Blumberg  
   Mr Dennis Francis  
 
1.6.  Brazil,  Canada, China, Ecuador, the European Union, Norway, Singapore, Turkey,  the 
United  States, and Viet Nam  notified their interest in participating in the Pan el proceedings as 
third parties.  
1.3  Panel proceedings  
1.3.1   General  
1.7.  After consultation with the parties, on 15 November 2016, the Panel adopted its Working 
Procedures , as well as additional Working Procedures concerning Business Confidential Information  
(BCI)6, and ti metable . The Panel revised its timetable, after consulting the parties, on 21 June and 
20 July 2017 . 
1.8.  The Panel held a first substantive meeting with the parties on 1 and 2 March 2017 . A session 
with the third parties took place on 2 March 2017 . 
                                                
1 Request for Consultations by Japan, WT/DS504/1, G/L/1143, G/ADP/D113/1 (Japan's consultations 
request).  
2 Request for the Establishment of a Panel by Japan, WT/DS504/2 (Japan's panel request).  
3 Japan's panel request.  
4 Dispute Settlement Body, Minutes of Meeting held in the Centre William Rappard on 4  July 2016, 
WT/DSB/M/381, p. 1.  
5 Constitution of the Pane l Established at the Request of Japan, WT/DS 504/3. 
6 See the Panel's Working Procedures in Annex A -1; and Panel's Additional Working Procedures 
Concerning Business Confidential Information in Annex A -2. WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  1.9.  The Panel h eld a second substantive meeting with the parties on 30 and 31 May 2017 . 
1.10.   On 20 July 2017 , the Pa nel issued the descriptive part of its report to the parties.  
1.11.   The Panel issued its Interim Report to the parties on  10 October 2017 .The Panel issued its 
Final R eport to the parties on 23 November 2017.  
1.3.2   Preliminary ruling  request  
1.12.   On 24 November 2016, Korea filed a request  for the Panel to issue a preliminary ruling that 
Japan's claims under Articles  3.1, 3.2, 3.4, 3.5, and 4.1 of  the Anti-Dumping  Agreement are 
outside the Panel's terms of reference for this dispute. Korea asserted that, with respect to these 
claims , Japan's panel request fails to "provide a brief summary of the legal basis of the complaint 
sufficient to present the problem clearly" , as required by Article  6.2 of the DSU .7 
1.13.   At the invitation of the Panel, Japan submitted a written response to Korea 's request on 
16 December 2016. Korea responded to Japan 's views in its firs t written submission filed on 
6 January 2017. The European Union and the Unit ed States provided their views on Korea 's 
request in their respective third -party submissions filed on 13 January 201 7. The Panel posed 
questions concerning Korea 's request to the parties and third parties after the first substantive 
meeting , to which the parties and certain third parties  (Ecuador, the European Union, and the 
United States ) responded in writing . Further, both Japan and Korea filed additional comments 
regarding the sufficiency of Japan's panel request under Article 6.2 of the DSU in their respective 
second written submissions.  The Panel posed further questions to the parties concerning Korea 's 
request after the second substantive meeting , to which the parties submitted written responses 
and comments on each other's responses . 
1.14.   On 7 July 2017, the Panel informed the parties that, in view of the circumstances of the 
case, and the extraordinary scope o f Korea's request, which involved seven of the 13 claims raised 
by Japan in this dispute, the Panel had decided not to issue a separate ruling on the matter of the 
sufficiency of Japan's panel request under Article 6.2 of the DSU , indicating that it would instead 
address the matter in its final report.8 
1.3.3   Objections to the accuracy of translations  
1.15.   On 2 March 2017, Japan raised objections concerning the accuracy of 12 specific aspects of 
the English translation of exhibits  submitted by Korea with its first wri tten submission . Having 
heard the views of both parties, on 28 March 2017 the Panel informed them that: (a) two of the 
objections raised by Japan were valid and the translation of the original exhibits should be read as 
corrected by Japan; and (b) four of the objections raised by Japan were rejected as they 
constituted minor changes in language that did not affect the substance of the translation provided 
by Korea. With respect to the six remaining objections raised by Japan, the Panel invited t he 
parties to seek to provide mutually acceptable translations . On 18 April 2017, Korea proposed 
alternative translations for the se discrepancies , which Japan accepted in a communication dated 
21 April 2017.  
1.16.   On 6 April 2017, Korea raised objections concern ing the accuracy of ten specific aspects of 
the English translation of exhibits submitted by Japan with its first written submission. Having 
heard the views of both parties, on 20 April 2017 the Panel rejected  Korea's objections  as they 
were submitted outside of the deadline established in paragraph 8  of the Panel's Working 
Procedures  and without any showing of good cause for granting an exception to the deadline.  
2  FACTUAL  ASPECTS  
2.1.  This dispute concerns anti-dumping duties imposed by Korea on imports of valve s for 
pneumatic transmission s (pneumatic valves) originating from Japan, as described in the Resolution 
of Final Determination on Dumping and Injury to Domestic Industry of Valves for Pneumatic 
                                                
7 Korea's preliminary ruling  request, pp. 1 and 20.  
8 See sections 7.3, 7.4.4, 7.5.4, 7.6.4, 7.7.4 , and 7.8.3 of this Report.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  Transmissions from Japan adopted by the Korea Trade Commission  (KTC)  (Final Resolution)9 and 
the Report by the KTC's Office of Trade Investigation  (OTI)  (Final Report)10, both dated 
20 January  2015.  
2.2.  The investigation was initiated by the KTC based on an application filed on 
23 December  2013 by TPC Mechatronics Corpora tion (TPC) and KCC Co ., Ltd. (KCC).11 The notice 
of initiation of the investigation was published in the Official Gazette on 21 February 2014.12 The 
investigation was conducted by the KTC and its OTI (the Korean Investigating Authorities) .13 The 
period of inv estigation (POI) for the examination of dumping wa s from 1 April 2012 to 
31 March  2013, and the POI for the examination of injur y was from 1 January 2010 to 
31 December 2013 .14 
2.3.  On 26  June 2014 , the KTC made a preliminary determination that there was suffici ent 
evidence to presume the existence of dumping of pneumatic valves from Japan and of material 
injury suffered by the domestic industry caused by the dumped imports . The KTC did not 
recommend the imposition of provisional anti -dumping duties on imports of  pneumatic valves from 
Japan .15 The Korean Minister of Strategy and Finance (MOSF) did not impose provisional 
anti-dumping duties. On 23 October 2014, the OTI issued an Interim Investigation Report.16 
2.4.  On 20 January 2015 , based on the OTI's Final Report of the same date, the KTC issued its 
Final Resolution , determining  that the Korean domestic industry producing the like product was 
materially injured by reason of the dumping of pneumatic v alves from Japan and recommending  
the imposition of anti -dumping duti es on such imports for five years at the following rates: (a ) for 
SMC Corporation (SMC) and exporters of its products, 11.66%; and ( b) for CKD Corporation (CKD) 
and exporters of its products, Toyooki Kogyo Co., Ltd. (Toyooki) and exporters of its products,  and 
other suppliers of Japan, 22.77%.17 The OTI's Final Report and the KTC's Final Resolution were 
notified to domestic producers, importers, and consumers on 17 March 2015.18 
2.5.  On 19 August 2015, based on the KTC's Final Resolution, the MOSF adopted Decree N o. 498, 
which contains the Regulation Concerning the Imposition of Anti -Dumping Duties on Valves for 
Pneumatic Transmissions originating from Japan.  Decree No. 498 impose s anti-dumping duties for 
five years on the imports of pneumatic valves from Japan at the following rates: (a ) for SMC and 
persons exporting  its products at 11.66%; and (b ) for CKD and Toyooki and persons exporting its 
products, and other suppliers, at 22.77%.19 
                                                
9 KTC, Resolution of Final Determination on Dumping and Injury to Domestic Industry  of Valves for 
Pneumatic Transmissions from Japan  (20 January 2015) (KTC's Final Resolution) (Exhibits JPN -4 (public 
version) and KOR -1 (BCI)). Unless otherwise indicated, the panel will subsequently refer to the translated 
version of the KTC's Final Resolution in Exhibit KOR -1(b). 
10 OTI, Final Report  on Dumping and Injury to Domestic Industry  of Valves for Pneumatic Transmissions 
Imported from Japan  (20 January 2015) (OTI's Final Report) (Exhibits JPN -5 (public version) and KOR -2 
(BCI)). Unless otherwise indicated, the panel will subsequently refer to th e translated version of the OTI's Final 
Report in Exhibit KOR -2(b). 
11 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 2; OTI's Final Report, (Exhibit KOR -2(b) (BCI)), 
p. 1. See Investigation Application Required to Impose Anti -Dumping Duties on Pneuma tic Transmission Valves 
from Japan (23 December 2013) (Investigation Application) (Exhibit JPN -7(b)).  
12 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 2.  
13 Japan's first written submission, para. 12; Korea's response to Panel question No. 15(a).  
14 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 31 and 177.  
15 KTC, Resolution of Preliminary Determination on Dumping and Injury to the Domestic Industry  of 
Valves for Pneumatic Transmissions from Japan  (26 June 2014) (KTC's Preliminary Resolution) 
(Exhibi t JPN-1(b)); OTI, Preliminary Report on Dumping and Injury to Domestic Industry  of Valves for 
Pneumatic Transmissions imported from Japan  (26 June 2014) (OTI's Preliminary Report) (Exhibit JPN -2(b)).  
16 OTI, Interim Investigation Report on Dumping and Injur y to Domestic Industry  of Valves for 
Pneumatic Transmissions from Japan  (23 October 2014) (OTI's Interim Report) (Exhibit JPN -3(b)).  
17 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 1.  
18 Notification of final determination on dumping and injury to do mestic industry of valves for pneumatic 
transmissions from Japan, (Exhibit JPN -29(b)).  
19 MOSF, Decree No. 498, Regulation Concerning the Imposition of Anti -Dumping Duties on Valves for 
Pneumatic Transmissions originating from Japan ( 19 August 2015)  (MOSF's  Decree No. 498), 
(Exhibit  JPN-6(b)). See also MOSF, Public Announcement No. 2015 -156, Decision to Apply Anti -Dumping 
Duties on the Pneumatic Transmissions Valves from Japan  (19 August 2015) (MOSF's Public Announcement ) 
(Exhibit KOR -3(b) (BCI)).  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 15 - 
 
  3  PARTIES' REQUESTS FO R FINDINGS AND RECOMMENDATIONS  
3.1.  Japan  requests that the Panel  find that Korea's measures imposing anti -dumping duties on 
pneumatic valves from Japan are  inconsistent with Korea 's obligations under  the following 
provisions of the Anti-Dumping  Agreement  and the GATT 1994 : 
a. Articles 3.1 and 3.2 of the Anti-Dumping  Agreement , because Korea's analysis of a 
significant increase  of the imports under investigation  did not involve an objective 
examination based on positive evidence;  
b. Articles 3.1 and 3.2 of the Anti-Dumping  Agreement , because Korea's analysis of the 
effect  of the imports under investigation on prices in the domestic market for like 
products did not involve an objective examination based on positive evidence; and 
because Korea failed to properly consider whether the effect of the imports under 
investigation was to depress prices to a significant degree or prevent price increase, 
which otherwise would have occurred, to a significant degree;  
c. Articles 3.1 and 3.4 of the Anti-Dumping  Agreement , because Korea's analysis  of the 
impact of the imports under investiga tion on the domestic industry at issue  did not 
involve an objective examination  based on  positive evidence , including an evaluation of 
all relevant economic factors and indices having a bearing on the state of the domestic 
industry at issue;  
d. Articles 3.1 a nd 3.5 of the Anti-Dumping  Agreement , because Korea  failed to 
demonstrate that the imports under investigation were, through the effects of dumping, 
causing injury  to the domestic industry  based on an objective examination  of the alleged 
causal relationshi p between the imports under investigation and the alleged injury to the 
domestic industry , on the basis  of all relevant positive e vidence before the authorities;  
e. Articles 3.1 and 3.5 of the Anti-Dumping  Agreement , because Korea failed to consider 
adequately all known factors other than the imports under investigation that were 
injuring the domestic industry at the same time and therefore incorrectly attributed 
injury caused by these other factors to the imports under investigation ; 
f. Article s 3.1 and 3.5 of the Anti-Dumping  Agreement , because Korea's demonstration of 
causation lacks any foundation in its analyses of the volume of the imports under 
investigation, the effects of the imports under investigation on prices, and/or the impact 
of the imports under investigation on the domestic industry at issue, irrespective and 
independent of whether Korea's flawed analysis of the volume and/or flawed analysis of 
the effects of the imports under investigation on prices, on the one hand, and Korea's 
flawed analysis of the impact of the imports under investigation on the domestic industry 
on the other, would be inconsistent with, respectively, Articles 3.1 and 3.2 of the 
Anti-Dumping  Agreement and Articles 3.1 and 3.4 of the Anti-Dumping  Agreement;  
g. Articles 3.1 and  4.1 of the Anti-Dumping  Agreement , because Korea  failed to make an 
objective examination based on positive evidence in defining the domestic industry 
producing the like product and consequently in making a determination of injury ; 
h. Article 6.5  of the Anti-Dumping  Agreement , because Korea treated allegedly confidential 
information provided by the interested parties as confidential  without good cause  shown ; 
i. Article 6.5.1 of the Anti-Dumping  Agreement , because Korea: ( i) failed to require the 
applicants to furnish non -confidential summaries of their submissions, questionnaire 
responses, and amendments thereof; and ( ii) where such summaries were provided, 
they were not in sufficient detail to permit a reasonable understanding of the substance 
of the information submitted in confidence ; 
j. Article 6.9 of the Anti-Dumping  Agreement , because Korea failed to inform the 
interested parties of the essential facts under consideration which formed the basis for 
the decision to impose definitive anti -dumping measures ; WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 16 - 
 
  k. Article 12.2 of the Anti-Dumping  Agreement , because Korea failed to provide in sufficient 
detail the findings and conclusions reached on all issues of fact and law considered 
material by the investigating authorities ; 
l. Article 12.2.2 of the Anti-Dumping  Agreement , because Korea failed to make available 
all relevant information on the matters of fact and law and reasons which have led to the 
imposition of final measures ; and  
m. Article 1 of the Anti-Dumping  Agreement and Article VI of the GATT 1994 , as a 
consequence of the breaches of the Anti-Dumping  Agreement described above.  
3.2.  Japan further requests, pursuant to Article 19.1 of the DSU, that the Panel recommend that 
Korea  bring its measures into conformity with its obligations  under the GATT 1994 and the 
Anti-Dumping  Agreement . 
3.3.  Japan requests that the Panel make findings with respect to each of Japan's claims under 
Articles 3.1, 3.2, 3.4, and 3.5 of  the Anti-Dumping  Agreement without exercising judicial economy, 
because findings with respect to each cl aim could influence Korea's implementation measures and 
therefore be necessary to secure the prompt resolution of the dispute.20 
3.4.  Korea requests that the Panel determine that Japan's claims under Articles  3.1, 3.2, 3.4, 3.5, 
and 4.1 of  the Anti-Dumping  Agreement are outside the Panel's terms of reference for this dispute , 
and reject Japan's remaining claims . Alternatively, Korea requests that the Panel reject the 
entirety of Japan's claims in this dispute and find that the challenged measures are not 
inconsistent with Korea's obligations under the GATT 1994 and the Anti-Dumping  Agreement . 
4  ARGUMENTS OF THE PAR TIES  
4.1.  The arguments of the parties are reflected in their executive summaries, provided to the 
Panel in accordance with paragraph 17 of the Working Pr ocedures adopted by the Pan el (see 
Annexes B -1, B-2, C-1, and C -2). 
5  ARGUMENTS OF THE THI RD PARTIES  
5.1.  The arguments of Brazil, Canada, Ecuador, the European Union, and the United States  are 
reflected in their executive summaries, provided in accordance with paragraph 17 of the Working 
Procedures adopted by the Panel (see annex es D-1, D-2, D-3, D-4, and D -5). China, Norway, 
Singapore, Turkey, and Viet Nam  did not submit written or oral arguments to the Panel.  
6  INTERIM REVIEW  
6.1.  On 10 October 2017 , the Panel issued its Interim Report to the parties. On 24 October 2017 , 
Japan and Korea each submitted written requests for the Panel t o review aspects of the 
Interim  Report. Neither party requested an interim review meeting. On 31 October 2017 , 
both parties submitted comments on the other party's requests for review.  
6.2.  The parties' requests made at the interim review stage as well as the Panel's discussion and 
disposition of those requests are set out in Annex A -3.  
7  FINDINGS  
7.1  Introduction  
7.1.  This dispute conc erns anti-dumping duties imposed by Korea on imports of pneumatic valves 
from Japan, as described in the KTC's Final Resolution21 and in the OTI's Final Report22, both dated 
20 January  2015. On 19 August 2015, based on the recommendations contained in the KT C's Final 
Resolution, the Korean MOSF adopted Decree No. 498, imposing anti -dumping duties for five years 
                                                
20 Japan's opening statement at the first meeting of the Panel, para. 96.  
21 KTC's Final Resolution, (Exhibits JPN -4 (public version) and KOR -1 (BCI)).  
22 OTI's Final Report, (Exhibits JPN -5 (public version) and KOR -2 (BCI)).  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 17 - 
 
  on imports of pneumatic valves from Japan at the following rates: (a) for SMC and persons 
exporting its products, 11.66%; and (b) for CKD and Toyooki and persons exporting its products, 
and other suppliers, 22.77%.23 
7.2.  Japan claims that Korea's anti -dumping duties on pneumatic valves from Japan are 
inconsistent  with Korea's obligations under Articles 1, 3.1, 3.2, 3.4, 3.5, 4.1,  6.5, 6.5.1, 6.9, 12.2, 
and 12.2.2 of the Anti-Dumping Agreement and Article VI of the GATT 1994 . 
7.3.  Korea requests that the Panel determine that Japan 's claims under Articles  3.1, 3.2, 3.4, 3.5, 
and 4.1 of the Anti-Dumping  Agreement are outside the Panel 's terms of reference. Korea als o 
invites the Panel to examine ex officio  whether Japan's remaining claims (under Articles 1, 6.5, 
6.5.1, 6.9, 12.2, and 12.2.2 of the Anti-Dumping Agreement and Article VI of the GATT 1994) are 
within the Panel's terms of reference. For all claims that th e Panel considers to be within its terms 
of reference, Korea requests the Panel to reject Japan's claims and find that the challenged 
measures are not inconsistent with Korea's obligations under the GATT 1994 and the 
Anti-Dumping  Agreement.  
7.4.  In addressing t he issues raised in this dispute, the Panel will first set out the relevant 
principles guiding its review. It will then address the issues related to the Panel's terms of 
reference. The Panel will subsequently examine, as appropriate,  whether the measures challenged 
by Japan are inconsistent with the cited provisions of the Anti-Dumping Agreement and the 
GATT  1994. The Panel will finalize by setting forth its conclusions and recommendation.  
7.2  Standard of review , treaty interpretation , and burden of proof 
7.2.1   Standard of review  
7.5.  Panels  are bound by the standard of review set forth in Article  11 of the DSU, which provides, 
in relevant part:  
[A] panel should make an objective assessment of the matter  before it, including an 
objective assessment of the facts of the case and the applicability of and conformity 
with the relevant covered agreements.24 
7.6.  In addition, Article  17.6 of the Anti -Dumping Agreement sets forth a specific standard of 
review applicable to disputes under the Anti -Dumping Agreement:  
(i) in its assessm ent of the facts of the matter, the panel shall determine whether 
the authorities ' establishment of the facts was proper and whether their evaluation of 
those facts was unbiased and objective. If the establishment of the facts was proper 
and the evaluation  was unbiased and objective, even though the panel might have 
reached a different conclusion, the evaluation shall not be overturned;  
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance 
with customary rules of interpretati on of public international law. Where the panel 
finds that a relevant provision of the Agreement admits of more than one permissible 
interpretation, the panel shall find the authorities ' measure to be in conformity with 
the Agreement if it rests upon one o f those permissible interpretations.  
7.7.  Thus, Article  11 of the DSU and Article  17.6 of the Anti -Dumping Agreement together 
establish the standard of review the Panel will apply with respect to both the factual and the legal 
aspects of the present dispute.  
7.8.  It is well understood that:  
[T]he task of a WTO panel is to examine whether the investigating authority has 
adequately performed its investigative function, and has adequately explained how 
                                                
23 MOSF's Decree No. 498, (Exhibit JPN -6(b)). See also MOSF's Public Announcement, 
(Exhibit  KOR-3(b) (BCI)).  
24 Emphasis added.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 18 - 
 
  the evidence supports its conclusions. It follows from the requireme nt that the 
investigating authority provide a "reasoned and adequate" explanation for its 
conclusions that the entire rationale for the investigating authority 's decision must be 
set out in its report on the determination. This is not to say that the meani ng of a 
determination cannot be explained or buttressed by referring to evidence on the 
record. Yet, in all instances, it is the explanation provided in the written report of the 
investigating authorities (and supporting documents) that is to be assessed i n order to 
determine whether the determination was sufficiently explained and reasoned.25 
7.9.  Moreover, a panel reviewing an investigating authority 's determination may not conduct a de 
novo review of the evidence or substitute its judgment for that of the inve stigating authority. A 
panel must limit its examination to the evidence that was before the agency during the course of 
the investigation and must take into account all such evidence submitted by the parties to the 
dispute.26 At the same time, a panel must not simply defer to the conclusions of the investigating 
authority. A panel 's examination of those conclusions must be "in -depth" and "critical and 
searching".27 
7.10.   A panel must limit its examination to the evidence that was before the investigating 
authority during the course of the investigation28 and must take into account all such evidence 
submitted by the parties to the dispute.29 A panel's examination in that regard is not necessarily 
limited to the pieces of evidence expressly  relied upon by an investigati ng authority in its 
establishment and evaluation of the facts in arriving at a particular conclusion.30 Rather, a panel 
may also take into consideration other pieces of evidence that were on the record and that are 
connected to the explanation provided by t he investigating authority in its determination. This 
flows from the principle that investigating authorities are not required to cite or discuss every  
piece of supporting record evidence for each fact in the final determination.31 That 
notwithstanding, since a panel's review is not de novo , ex post  rationalizations unconnected to the 
investigating authority's explanation – even when founded on record evidence – cannot form the 
basis of a panel's conclusion.32 
7.2.2   Treaty  interpretation  
7.11.   Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the 
existing provisions  of the covered agreements "in accordance with customary rules of 
interpretation of public international law". As noted above, Article  17.6(ii) of th e Anti -Dumping 
Agreement similarly requires panels to interpret that Agreement 's provisions in accordance with 
the customary rules of interpretation of public internation al law. It is generally accepted that the 
principles codified in Articles  31 and 32 of  the Vienna Convention are such customary rules.33 
7.2.3   Burden of proof  
7.12.   The general  rule in WTO dispute settlement is that the burden of proof rests upon the party, 
whether complaining or defending, who asserts the affirmative of a particular claim or defence.34 
Following this principle, the Appellate Body has explained that the complaining party in any given 
dispute should establish a prima facie case of inconsistency of a measure with a provision of the 
WTO covered agreements, before the burden of showing consis tency with that provision or 
                                                
25 Appellate Body Report s, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.255.  
26 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 187. 
27 Appellate Body Report, US – Softwood Lumber  VI (Article 21.5 – Canada) , para.  93. 
28 Article 17.5 of the Anti-Dumping  Agreement is clear in this regard: "The DSB shall, at the request of 
the complaining party, establish a panel to examine the matter based upon: … (ii) the facts made available in 
conformity with appropriate domestic procedures to the authorities of the importing Member."  
29 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , paras. 187 -188. 
30 Appellate Body Report, Thailand – H-Beams , paras. 117 -119. 
31 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 164.  
32 Appellate Body Report, US – Lamb , paras. 153 -161. See also Appellate Body Reports, US – Steel 
Safeguards , para. 326; and US – Softwoo d Lumber VI (Article  21.5 – Canada) , para. 97; and Panel Reports, 
Argentina – Ceramic Tiles , para. 6.27; and Argentina – Poultry Anti -Dumping Duties , para. 7.48.  
33 Appellate Body Report, Japan – Alcoholic Beverages  II, section  D, pp. 10-12, DSR 1996:I, p. 97, 
pp. 104-106. 
34 Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p. 323, p. 335.  WT/DS504/R  
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  defending it under an exception must be assumed by the defending party.35 In other words, "a 
party claiming a violation of a provision of the WTO Agreement  by another Member must assert 
and prove its claim" .36 
7.13.   Therefore , as the c omplaining party, Japan bears the burden of demonstrating that the 
measures at issue are inconsistent with the provisions of the  covered a greements that Japan has 
invoked . If the Panel finds that Japan has made out its prima facie  case, it is for Korea to provide 
rebuttal arguments and evidence that is needed to support that rebuttal.  
7.3  Panel's  terms of reference  
7.3.1   Introduction  
7.14.   On 24 November 2016, Korea filed a request  for the Panel to issue a preliminary ruling that 
Japan 's claims under Articles  3.1, 3.2, 3.4, 3.5, and 4.1 of  the Anti-Dumping  Agreement are 
outside the Panel 's terms of reference for this dispute. Korea asserted that, with respect to these 
claims , Japan 's panel request fails to "provide a brief summary of the legal basis of the complaint 
sufficient to present the problem clearly" , as required by Article  6.2 of the DSU .37 Korea 
subsequently invited  the Panel , in addition, to examine ex officio  whether the  remaining claims 
(under Articles 1, 6.5, 6.5.1, 6.9, 12.2, and 12.2.2 of the Anti-Dumping Agreement and Article VI 
of the GATT 1994) are within the Panel's terms of reference.38 
7.15.   Korea's challenge thus extends to all 13 claims that Japan set out in its panel request. Both 
parties addressed the sufficiency of Japan's panel request in their written  submissions, as well as 
in their responses  to questions posed by the Panel and comments on each other's responses. 
Some third parties (Ecuador, the European Union, and the United States) also offered their views 
on the issue in their written submissions a nd in their responses to questions posed by the Panel.  
7.16.   In view of the extraordinary scope of Korea's challenge, and the particular provisions at 
issue in this dispute, the Panel decided not to issue a separate ruling on the matter of the 
sufficiency of Jap an's panel request under Article 6.2 of the DSU, and informed the parties that it 
would instead address this issue in its final report.39 
7.17.   In this section of our Report, we set out general considerations regarding Korea's challenge. 
We will subsequently addr ess whether Japan 's panel request has provide d the requisite brief 
summary of the legal basis of the complaint sufficient to present the problem clearly , as required 
by Article  6.2 of the DSU , with respect to each of the specific claims in turn . 
7.3.2   Legal  background  
7.18.   Article 6.2 of the DSU provides that:  
The request for the establishment of a panel shall be made in writing. It shall indicate 
whether consultations were held, identify the specific measures at issue and provide a 
brief summary of the legal basis of the complaint sufficient to present the problem 
clearly . 
7.19.   The "matter" referred to a panel for consideration consists of: (a) the measures at issue; 
and (b) the specific claims advanced by the complaining party.40 The identification of the specific 
measures at issue and the legal basis of the complaint serves a dual function: (a) it forms the 
basis for a panel 's terms of reference under Article 7.1 of the DSU; and (b) it informs other 
WTO Members of the nature of the dispute, which in turn allows the respondent to prepare its 
defence and allows other Members to assess whether they have an interest in the matter, for 
                                                
35 Appellate Body Report, EC – Hormones , para.  104. 
36 Appellate Body Report, US – Wool Shirts and Blouses , p. 16, DSR 1997:I, p. 323, p. 337.  
37 Korea's preliminary ruling  request, pp. 1 and 20.  
38 Korea's response to Panel question No. 14. See also second written submission, annex, para . 3. 
39 Panel communication to the parties dated 7 July 2017 regarding Korea's preliminary ruling  request.  
40 Appel late Body Reports, Guatemala – Cement I , paras. 69 -76; US – Carbon Steel , para. 125.  WT/DS504/R  
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  example, to decide whether to participate as third parties.41 The Appellate Body has observed that, 
since a panel request is usually approved automatically at the DSB meeting following that at which 
the request first appears  on the DSB 's agenda, and therefore the request is normally not subject 
to detailed scrutiny by the DSB, "it  is incumbent upon a panel to examine the request for the 
establishment of the panel very carefully to ensure its compliance with both the letter and the 
spirit of Article 6.2 of the DSU" .42 
7.20.   Compliance  with the requirements of Article 6.2 must be demonstrat ed on the face of the 
panel request. Defects in a panel request cannot be cured in subsequent submissions. However, in 
considering the sufficiency of a panel request, a panel may consider submissions and statements 
made by the parties in order to: (a) conf irm the meaning of the words used in the panel request; 
and (b)  assess whether the ability of the respondent to defend itself was prejudiced.43 
7.21.   In the present case, Korea 's challenge concerns the identification of the legal basis of the 
complaint  as describ ed in Japan 's panel request , as opposed to the identification of the measures . 
The term "legal basis of the complaint" in Article 6.2 of the DSU refers to the "claims" made by the 
complaining party.44 In turn, a claim refers to the allegation "that the resp ondent party has 
violated, or nullified or impaired the benefits arising from, an identified provision of a particular 
agreement".45 
7.22.   In examining the sufficiency of a panel request, a distinction must be drawn between 
"claims" and "arguments". A claim sets forth the complainant 's view that the respondent party has 
violated, or nullified or impaired the benefits arising from, an identified provision of a particular 
agreement. By contrast, "arguments" are statements put forth by a complaining party to 
demonstr ate that the responding party 's measure does indeed infringe upon the identified treaty 
provision.46 A panel request must identify the claims  put forward by the complainant, but need not 
identify the complainant 's arguments, which may be set out and progressively clarified in the 
course of the proceedings though the parties ' submissions and statements.47 
7.23.   Article 6.2 of the DSU requires only a summary of the legal basis of the complaint, and it 
may be a brief one. The summary must, however, be one that is "suf ficient to present the problem 
clearly ". Accordingly, for purposes of Article 6.2, it is not enough that "the legal basis of the 
complaint " is summarily identi fied; the identi fication must "present the problem clearly ".48 
7.24.   It is well understood that, in order to present the problem clearly, a panel request must 
plainly connect the challenged measures with the provisions of the covered agreements claimed to 
have been infringed , so that the respondent party is aware of the basis for the alleged nullifica tion 
or impairment of the complaining party 's benefits. Only by such connection between the measures 
and the relevant provisions can a respondent know what case it has to answer, and begin 
preparing its defence.49 The narrative of a panel request functions to explain succinctly how or why 
the measure at issue is considered by the complaining Member to be violating the WTO obligations 
in question.50 
7.25.   As a minimum requirement, a complainant must list, in the panel reques t, the provisions of 
the covered agreements claimed to have been violated. The identification of the treaty provisions 
claimed to have been violated by the respondent is always necessary and is a minimum 
prerequisite if the legal basis of the complaint is to be presented at all.51 
                                                
41 Appellate Body Reports, Brazil – Desiccated Coconut , p. 22, DSR 1997: I, p. 186; EC – Bananas III , 
para. 142; US – Carbon Steel , para. 126; US – Continued Zeroing , para. 161; and US – Zeroing (Japan)  
(Article  21.5 – Japan) , para. 108.  
42 Appellate Body Report, EC – Bananas III , para. 142.  
43 Appellate Body Reports, US – Carbon Steel , para. 127; Australia – Apples , para. 418.  
44 Appellate Body Report, Guatemala – Cement I , para. 72.  
45 Appellate Body Report, Korea – Dairy , para. 139.  
46 Appellate Body Report, Korea – Dairy , para. 139.  
47 Appellate Body Report, EC – Bananas III , para. 141.  
48 Appellate Body Report, Korea – Dairy , para. 120.  
49 Appellate Body Report,  US – Oil Count ry Tubular Goods Sunset Review , para. 162.  
50 Appellate Body Report s, EC – Selected Customs Matters , para. 130; China – Raw Materials , 
para. 226; and US – Countervailing and Anti -Dumping Measures (China) , para. 4.26.  
51 Appellate Body Report, Korea – Dairy , para. 124.  WT/DS504/R  
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  7.26.   There are , however, situations in which a "mere listing" of treaty provisions does not satisfy 
the standards of clarity in the statement of the legal basis of the complaint required by Article 6.2. 
This is the case, for example, wh ere the provisions listed in the panel request establish not one 
single, distinct obligation, but rather multiple obligations.52 To the extent that a provision contains 
multiple obligations, a panel request must specify which of them is being challenged.  
7.27.   Whether the listing of treaty provisions allegedly violated is sufficient  to constitute a "brief 
summary of the legal basis of the complaint sufficient to present the problem clearly" depends on 
the circumstances of each case, and in particular on the extent  to which mere reference to a treaty 
provision sheds light on the nature of the obligation at issue.53 
7.3.3   The requirement  for an o bjective examination based on positive evidence  under 
Article  3.1 of the A nti-Dumping  Agreement  
7.28.   Of the 13 claims set out in Japan 's panel request, seven relate  to Korea 's injury 
determination. In each of these seven claims, Japan 's panel request invokes Article 3.1 of the 
Anti-Dumping Agreement together with another subparagraph of Article 3 , or, in one c laim, 
Article  4.1 of the Anti -Dumping Agreement. In five of these claims , Japan 's panel request 
paraphrases the language in the first part of Article 3.1 and asserts that the Korean Investigating 
Authorit ies' analysis was not based on positive evidence  and did not involve an objective  
examination , with respect to the obligation in the other provision set out in the claim.  
7.29.   We will address the sufficiency of Japan 's panel request for each of the individual claims set 
out therein. We note that previous decisions of panels and the Appellat e Body have elaborated on 
the meaning of the different paragraphs of Article  3 referred to in Japan's claims. In this context, 
we find it useful to explain  our understanding of the legal framework for injury determination , in 
order to provide the context f or our consideration of whether the claims raised by Japan are 
properly before the Panel and, if so, for our consideration of Japan's claims regarding Korea's 
injury determination.  
7.30.   Article  3 of the Anti -Dumping Agreement  is entitled "Determination of Injur y" and its 
provisions require an investigating authority to consider, examine, and evaluate a broad range of 
factors, and to demonstrate that dumped imports are causing injury to the domestic industry. The 
provisions of Article  3 are interrelated in the se nse that the consideration, examination, and 
evaluation of the required elements all contribute to the explanation of the ultimate determination 
whether dumped imports are causing injury to the domestic industry of the importing Member.54 
7.31.   Article  3.1 establishes the basic principles that a determination of injury  for purposes of 
Article  VI of GATT 1994 : 
[S]hall be based on positive evidence and involve an objective examination of both 
(a) the volume of the dumped imports and the effect of the dumped im ports on prices 
in the domestic market for like products, and (b) the consequent impact of these 
imports on domestic producers of such products.  
7.32.   The reference in Article 3.1 to "positive evidence" refers to "the facts underpinning and 
justifying the injury  determination"55, and to "the quality of the evidence that an investigating 
authority may rely upon in making a determination".56 "Positive" suggests that the evidence 
should be "affirmative, objective, verifiable, and credible".57 The reference to an "objec tive 
examination" relates to the investigative process itself, and requires that the process "conform to 
the dictates of the basic principles of good faith and fundamental fairness", and be conducted "in 
                                                
52 Appellate Body Report, Korea – Dairy , para. 124.  
53,Panel Report, EC – Approval and Marketing of Biotech Products , para.  7.47, preliminary ruling, 
para. 79. 
54 Panel Report, China – Cellulose Pulp , para. 7.10.  
55 Appellate Body Report, US – Hot-Rolled Steel , para.  193. See also Panel Report, China – Cellulose 
Pulp, para. 7.12.  
56 Appellate Body Report, China – GOES , para.  126 ( referring to Appellate Body Report,  US – Hot-Rolled 
Steel, para.  192).  See also Panel Report, China – Cellulose Pulp , para. 7.12.  
57 Appellate Body Report, China – GOES , para.  126 ( referring to Appellate Body Report,  US – Hot-Rolled 
Steel, para.  192).  See also Panel Report, China – Cellulose Pulp , para. 7.12.  WT/DS504/R  
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  an unbiased manner, without favouring the interests of any interested party, or group of 
interested parties, in the investigation".58 
7.33.   Article  3.1 "is a fundamental and substantial obligation that functions as a chapeau , and 
informs the rest of Article  3".59 It is " an overarching provision that sets forth a Me mber's 
fundamental, substant ive obligation [w ith respect t o the determination of injury].  Article 3.1 
informs the more detailed obligat ions in succeeding paragraphs" .60 The basic principles in 
Article  3.1 "do not  … establish independent obligations which ca n be judged in the abstract, or in 
isolation and separately from the substantive requirements set out in the remainder of Article  3. 
Instead, they inform the application of all the provisions of Article 3 ".61 There is no doubt that a 
determination of injury  may be challenged, so that a panel may be required to review it, and 
decide whether the investigating authority complied with the relevant substantive and procedural 
obligations, consistently with the fundamental principles set out in Article  3.1. This do es not, 
however, mean that a claim of inconsistency with Article  3.1 can normally be made independently 
from other obligations in the Anti -Dumping Agreement .62 
7.34.   The requisite degree of specificity and clarity in a panel request may depend  on the 
particular circumstances of each case, and must be examined on a case -by-case basis . As noted 
by the Appellate Body:  
Whether or not a general reference to a treaty provision will be adequate to meet the 
requirement of sufficiency under Article  6.2 is to be examined on a case -by-case 
basis, taking into account the extent to which such reference sheds light on the nature 
of the obligation at issue.63 
7.35.   Having said that , mere ly to mention the first part of Article 3.1, or use the language of that 
provisio n (i.e. a determination shall be "based on positive evidence" and involve an "objective 
examination"), in a panel request will not in itself normally suffice to present a problem clearly 
with respect to an allegation of violation of the Anti -Dumping Agreem ent. Such mention in itself 
would not explain how or why a complainant consider s the measure at issue to be in consistent 
with a specific obligation under the Anti -Dumping Agreement. It would not be precise enough to 
serve the dual function of a panel reque st, which we recall is : (a) to define the basis for the 
panel's terms of reference under Article  7.1 of the DSU; and (b) to inform other WTO Members, 
including the respondent, of the nature of the dispute.  An allegation in a panel request that an 
investiga ting authority 's determination was not based on positive evidence and did not involve an 
objective examination requires some additional information with respect to the alleged 
inconsistency, in order to provide the summary of the legal basis of the complaint sufficient to 
present the problem clearly  required by Article 6.2 of the DSU . 
7.36.   As noted above, this does not mean that the complainant is required to set out its 
arguments in the panel request. " Article 6.2 of the DSU requires that the claims , but not the 
arguments , must all be specified sufficiently in the [panel request] in order to allow the defending 
party and any third parties to know the legal basis of the complaint".64 Although Article 6.2 
demands only a summary of the legal basis of the comp laint, and that summary may be a brief 
one, the summary must be sufficient to present the problem clearly.65 
7.37.   We shall be guided by the considerations expressed above in our assessment of whether 
each of the claims of inconsistency with obligations under the  WTO Agreements raised by Japan in 
this dispute has been properly identified in Japan's panel request in accordance with Article 6.2 of 
the DSU, and is therefore appropriately before the Panel. We shall also examine each of the 
allegations that the Korean Investigating Authorit ies' determination  did not involve an objective 
examination  or were not based on positive evidence  in order to assess whether the panel request 
                                                
58 Appellate Body Report, China – GOES , para.  126 ( referring to A ppellate Body Report,  US – Hot-Rolled 
Steel, para.  193).  See also Panel Report, China – Cellulose Pulp , para. 7.12.  
59 Appellate Body Report, Thailand – H-Beams , para. 90.  
60 Appellate Body Report, Thailand – H-Beams , para. 106.  
61 Panel Report, China – Cellulose Pulp , para. 7.13.  
62 Panel Report, China – Cellulose Pulp , para. 7.15.  
63 Appellate Body Report, US – Countervailing and Anti -Dumping Measures (China) , para. 4.17.  
64 Appellate Body Report, EC – Bananas III , para. 143. (emphasis original)  
65 Appellate Bod y Report, Korea – Dairy , para. 120.  WT/DS504/R  
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  has properly explained how and why in Japan's view the determination breached the specific  treaty 
obligations.  
7.4  Definition  of the Domestic Industry  
7.4.1   Introduction  
7.38.   Japan  claims that the KTC 's definition  of the domestic industry was not based on an 
objective examination of positive evidence as required by Articles 3.1 and 4.1  of the 
Anti-Dumping  Agreement . 
7.39.   Korea  argues that Japan 's claim concerning the definition of the domestic industry is outside 
the Panel 's terms of reference because Japan's  panel request does not compl y with the 
requirements under Article 6.2 of the DSU with respect to this c laim. In the alternative, Korea  asks 
the Panel to reject Japan 's claim . 
7.4.2   Main  arguments of the parties  
7.4.2.1   Japan  
7.40.   In its panel request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 4.1 of the A nti-Dumping  Agreement:  
[B]ecause Korea failed to make an objective examination based on positive evidence 
in defining the domestic industry producing the like product and consequently in 
making a determination of injury [.]66 
7.41.   As articulated over the course of the proceedings, Japan  claims  that Korea acted 
inconsistently with Articles 3.1 and 4.1 of the Anti-Dumping  Agreement  by failing to ensure that 
the process of defining the domestic  industry did not give rise to a material risk of distortion .67 
Japan contends that the term "a major proportion" under Article 4.1, when the domestic industry 
is defined based on the major proportion of the total domestic production, requires both qualitative 
and quantitative assessments.68 According to Japan, the following circumstances in the present 
case lead to a risk of distortion : 
a. the KTC defined the domestic industry to include only two domestic producers 
representing about half of the total domestic production of the like product  (55.4% ), 
leaving aside seven  other producers representing "the other half of the i ndustry" ; 
b. the KTC defined the domestic industry to include  the applicants only , introducing a 
substantial risk of bias and distortion , and failed to provide an adequate explanation as 
to why such risk was disregard ed; 
c. the KTC did not make an effort to coll ect information from domestic producers other 
than the applicants, or to collect data from other sources known to the Government of 
Korea or from other publicly available information69; 
d. the two producers included in the definition of the domestic industry a re not 
representative of the total domestic production because they produce a wide range of 
models both individually and as part of pneumatic system s, whereas other smaller 
                                                
66 Japan's panel request, p. 2.  
67 Japan 's first written submission , para . 233. 
68 Japan's second written submission, paras. 191 -193 (referring to Appellate Body Reports, EC – 
Fasteners (China) , para. 419;  and EC – Fasteners (China) (Article 21.5 – China) , paras. 5.301 -5.302) . 
69 Japan 's first written submission, paras. 233, 241, and 244 -254. See also second written submission, 
paras. 189, 195, and 199; opening statement at the first meeting of the Panel, para s. 79-86; and response to 
Panel question No. 108, paras. 72 -74. WT/DS504/R  
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  producers apparently do not sell a wide range of products, make only limited sales as 
part of systems, and do not cover the same broad range of industries70; and  
e. the KTC did not consider objectively the available evidence on the level of production of 
Korean  producers because it allowed the petitioners to provide the data on the level of 
production of other domestic producers and did not resolve the conflicting evidence 
regarding figures on domestic production.71 
7.42.   Japan argues in addition  that t he KTC 's discussion of certain information regarding two 
domestic producers  that were not formally  included in the definition of the "domestic industry " was 
not adequately  reasoned, and failed to resolve the material risk of distortion.72 Japan also asserts 
that the KTC, ignoring contentions of Japanese respondents, defined the domestic industry based 
on unverified data regarding the production levels of each domestic producer other than the 
petitioners.73 Japan argues that , in the particul ar circumstances of the present case, the KTC 
should have instead defined the domestic industry as follows : 
First, when the KTC received the questionnaire responses from only the two 
petitioning firms, the KTC should have assessed whether those two firms w ere 
sufficiently representative of the total domestic production. Second, if the KTC could 
not ensure, based on positive evidence, that the two petitioning firms alone were 
sufficiently representative of the total domestic production, then, the KTC should have 
included more domestic producers (regardless of whether they were willing to 
cooperate at that point of time) in the domestic industry definition so that the 
definition would be sufficiently representative. Finally, the KTC should have preceded 
the in vestigation with that sufficiently representative domestic industry definition. [*] 
For those firms that would continue to be uncooperative with the investigation, the 
KTC should have resort ed to "facts available " in accordance with Article 6.8  [of the 
Anti-Dumping  Agreement ].74 
[*fn original]191 Japan  Response to Panel Q6 0, para. 117. 
7.4.2.2   Korea  
7.43.   Korea argues  that Japan 's claim under Articles 3.1 and 4.1 of the Anti-Dumping  Agreement , 
with respect to the definition of the domestic industry , is outside of the Panel 's terms of reference 
and that it should therefore be rejected by the Panel.75 
7.44.   Alternatively , Korea  argues that Article  4.1 of the Anti-Dumping  Agreement does not 
stipulate any specific proportion for evaluating  whether a certain percentage  constitutes  a major  
proportion  of the total domestic production . In Korea 's view, the proportion of production 
represented by the domestic producers that were included in the definition of the domestic 
industry ( i.e. 55.4% ) was " relatively high " and, as determined by th e KTC, constituted a major 
proportion of the total domestic production.76 The two domestic producers are genuinely  
representative  of the total domestic production from a qualitative point of view, in terms of the 
range of the models produced , sales method s, distribution channel s, and end -user industries.77 
Moreover, Korea asserts that:  
                                                
70 Japan 's opening statement at the first meeting of the Panel, para. 85.  See also response to Panel 
question No. 110, paras. 77 -78. 
71 Japan 's second written submission, paras.  197-198. See also openin g statement at the first meeting 
of the Panel, paras. 84 and 86.  
72 Japan 's first written submission, paras. 249 -252. 
73 Japan 's response to Panel question No. 104, paras. 60 -61. See also second written submission, 
para. 4. 
74 Japan 's second written submission, para.  201. See also response to Panel question No. 107, 
paras.  65-71. 
75 Korea 's preliminary ruling request, para . 12. See also first written submission, annex, para. 6; 
second  written submission, annex, para. 1 . 
76 Korea 's first written submission, paras. 307-308. See also second written submission, paras.  134-135. 
77 Korea 's first written submission, paras. 308-311. See also second written submission, paras.  134 
and 145. WT/DS504/R  
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  There is no basis in the text of the Agreement or  in WTO jurisprudence for Japan' s 
argument that a domestic industry definition is consistent with Article 4.1 only when 
the pro ducers included in the domestic industry defined as "a major proportion " are 
qualitatively similar to the other producers which are not part of the domestic 
industry. The major proportion requirement is not a sampling situation but rather 
concerns, quantit atively, whether the producers included in the definition produce a 
significant, notable, important and thus "major " proportion of total production and 
qualitatively whether the process by which the industry was defined was objective and 
not biased.78 
7.45.   Korea  submits that there is no evidence that the process by which the KTC defined the 
domestic industry  was in any way biased or gave rise t o a material risk of distortion . The KTC 
invited all domestic producers to participate and each of them received questionnaires . As 
explained in the KTC's Final Resolution,  only two producers responded in full to the questionnaires; 
two other  producer s informed the KTC that they were not in a position to respond to the 
questionnaires due to lack of personnel, but ind icated that they too had suffered material injury as 
a result of the dumped imports ; and the remaining producers did not respond at all .79 In Korea's 
view, Japan 's allegation that those producers who did not join the application for anti -dumping 
measures "m ay well have viewed the market and competitive dynamics differently than the 
applicants" is unsubstantiated speculation .80 Korea submits that, i n any event, there is no 
requirement in the Anti-Dumping Agreement for an investigating authority to ensure that its 
definition of the domestic industry include s producers with different views about the application . 
Korea adds that t he OTI found no alternative source  of reliable data , such as industry associations 
or research institutions , to assess the state of the domestic industry of pneumatic valves .81 
7.4.3   Relevant facts  
7.46.   The application for the initiation of an investigation and the imposition of anti -dumping 
duties on imports of pneumatic valves from Japan was filed on 23  December  2013 by TPC and 
KCC.82 The application noted  that there were some ten domestic companies producing pneumatic 
valves in Korea, most of which were small to mid -sized companies; TPC was the leading domestic 
producer.83 The applicants declared that their volume of production fulfille d the representativeness 
requirements stipulated in the Korean domestic legislation, that they had not imported the 
products at issue within the six months previous to the filing of the application, and that they had 
no affiliation or special relationship with suppliers (exporters) or importers of the products at 
issue.84 
7.47.   In its Preliminary Report, citing the application and the responses from the domestic 
industry, the OTI found that there were 11 domestic producers of the like product, including the 
two applicants; it also noted that only the applicants submitted response s.85 Based on the fact that 
they "were included in the range of domestic industry" (including the fact that one of the 
applicants (TPC) had no recent history of importing the product under investigation and that the 
other applicant (KCC) had imported only a  small quantity of the product), and the percentage of 
the total domestic production constituted by "[their] aggregate production quantity of [the] like 
product", the OTI considered that the two applicants were "regarded to take a significant portion of 
the total production in [Korea]". Accordingly, the OTI recommended that "in the examination for 
whether there was injury to domestic industry  … 'domestic industry' [be] regarded as 'the total 
production by TPC Mechatronics and KCC'".86 Noting the OTI's statem ents, the KTC determined 
                                                
78 Korea 's second written submission, para.  144. 
79 Korea 's first written submission , para . 312. See also second written submission, paras.  139-143. 
80 Korea 's first written submission , para. 314 . 
81 Korea 's first written submission, paras. 312 -316. See also second written submission, paras.  139-143. 
82 Investigation Applic ation, (Exhibit JPN -7(b)). See also KTC's Final Resolution, (Exhibit KOR -
1(b) (BCI)), p.  2; and OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 1.  
83 Investigation Application, (Exhibit JPN -7(b)), pp. 2 -3. 
84 Investigation Application, (Exhibit JPN -7(b)), pp. 21 -22. 
85 OTI's Preliminary Report, (Exhibit JPN -2(b)), pp. 12 and 14.  
86 OTI's Preliminary Report, (Exhibit JPN -2(b)), p. 15. Under the relevant Korean legislation, the 
domestic industry may be considered to be either " the total domestic production busi ness producing the like 
product " or a " considerable portion of the total domestic production of the like product ". A production business 
which is " managed by a producer who has [a] special relationship with suppliers or importers of the product " 
and a prod uction business which is " managed by such a producer who is an importer of the imported product " WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  that it was appropriate to include the two applicants (TPC  and KCC ) in the scope of the domestic 
industry, and that the collective production of the like product of  these two companies constituted  
"a major proportion of the total d omestic production " so that it was " appropriate to set the term 
'domestic industry ' as 'the production of like product by TPC Mechatronics and KCC ' for the 
investigation of injury to domestic industry ".87 
7.48.   In its Interim Report, citing the application, the r esponses from the domestic industry, and 
the confirmation of the competent ministry, the OTI again referred to the existence of 11 domestic 
producers of the like product, including the two applicants; it also noted that only the applicants 
submitted respon ses. The OTI noted that the production quantity of the two applicants constituted 
51% of the total domestic production of the like product. The OTI indicated that of the nine 
domestic producers other than the applicants, eight expressed their support for t he application, 
while one producer did not respond.88 The OTI also indicated that two domestic producers (Yonwoo 
Pneumatic and Shin Yeong Mechatronics) confirmed their respective quantities of production of the 
like product as reported.89 The OTI indicated t hat the two applicants should be "included in the 
range of domestic industry", that their "aggregate production quantity of like product  … 
constituted  51% of the total domestic production", and that therefore they should be "regarded to 
take a significant portion of the total production in the country". The OTI concluded that, 
accordingly, "[i]n the examination for whether there was injury to domestic industry in this 
investigation, 'domestic industry' [should be] regarded as 'the total production of like p roduct by 
TPC Mechatronics and KCC '".90 
7.49.   In its Final Report , citing the application and the responses from the domes tic industry, 
the OTI referred to the existence of nine domestic producers of the like product, including the 
two applicants. The OTI stated that two of the producers that supported the application and were 
included as part of domestic production at the initial stage of the investigation (Hyoshin Electronic 
and A -one Tech) produced two -port valves which were subsequently excluded from the produ ct 
under investigation; accordingly, these two producers were also excluded from the list of domestic 
producers. The OTI noted that the production quantity of the two applicants constituted 55.4% of 
the total domestic production of the like product.91 The O TI indicated that questionnaires were 
sent to all nine domestic producers that produced the like product, but only the applicants 
submitted responses. Two additional producers expressed their support for the investigation but 
indicated that, due to the lac k of accounting personnel, they had difficulty responding to the 
questionnaires.92 Accordingly, since it "did not have any reliable source from which it could obtain 
accurate production data of domestic producers of the pneumatic valves", the OTI calculated  the 
production volume of the other five domestic producers based upon the data provided by the 
applicants93. After the public hearing on 23 October 2014, one of the two domestic producers that 
supported the investigation but which did not submit a question naire response (Yonwoo), 
submitted that its production in 2013 was [[ ***]] units, and its sales volume was "similar ". The 
OTI used the same number ([[ ***]] units) both as Yonwoo's sales volume and production 
volume94, but it was not able to verify Yonwoo's statement that Yonwoo's sales volumes were 
similar to its production volumes.95 The OTI also noted that one of the applicants (TPC) had 
purchased an insignificant amount of the products under investigation from a firm that it had no 
special relationship wit h. The other applicant (KCC) had imported a small amount of products that 
                                                                                                                                                  
may be excluded. (OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 21; see also ibid. p. 19; OTI's Preliminary 
Report, (Exhibit JPN -2(b)), p. 13; and OTI's Int erim Report, (Exhibit JPN -3(b)), p. 15). In a communication 
dated 10 June 2014, one of the respondents (SMC) requested the KTC to investigate and review whether the 
total output of domestic producers agreeing to the investigation represented at least 25% o f the total domestic 
output of like products. ( Opinion of the respondent  on the rebuttal from the applicants (29 May 2014) 
(Respondent's opinion on the rebuttal), ( Exhibit  JPN-33(b) (BCI)), pp. 2 -3). 
87 KTC's Preliminary Resolution, (Exhibit JPN -1(b)), p. 1 1. 
88 OTI's Interim Report, (Exhibit JPN -3(b)), p. 14.  
89 OTI's Interim Report, (Exhibit JPN -3(b)), p. 14. In a communication dated 10 June 2014, one of the 
respondents (SMC) indicated that the KTC had not reflected the "indices of major producers, including  Yonwoo 
Pneumatic that took up a significant share in the domestic pneumatic valve industry". It asked the KTC to 
conduct an additional investigation on domestic producers including Yonwoo Pneumatic when reviewing injury 
to the domestic industry. ( Responde nt's opinion on the rebuttal, ( Exhibit JPN -33(b) (BCI)), pp. 2 -5). 
90 OTI's Interim Report, (Exhibit JPN -3(b)), p. 17.  
91 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 19.  
92 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 22 and fn 32.  
93 Korea's response  to Panel question No. 102, paras. 78 and 81 . 
94 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 19, 71, 110 , and 112 . 
95 Korea's response to Panel question No. 102, para. 83 . WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  had been excluded from the scope of the product under investigation. The OTI suggested that the 
two applicants were "within the scope of the domestic industry" and, since their combi ned 
production volume accounted for 55.4% of the total domestic production of the like product, they 
accounted for "a considerable portion of the total domestic production". Accordingly, the OTI 
suggested that, "[f]or the purpose of the investigation into the injury to the domestic industry  … 
the 'domestic industry' is defined as the 'total of TPC's and KCC's businesses producing a like 
product'".96 
7.50.   In the Final Report, the OTI noted the Japanese respondents' argument that, for the 
purpose of assessing the i njury to the domestic production, the Investigating Authority should take 
into account "all identified domestic producers based on various data and information available to 
the Commission". The OTI responded that:  
It is desirable to include all domestic pr oducers for the purpose of analyzing the 
industrial injury if it is possible to obtain the relevant data, however, if it is impossible 
to obtain such data on the entire domestic industry despite the relevant efforts of the 
investigation authorities, and if  the companies whose data are available account for a 
majority proportion of the domestic industry, it is appropriate and reasonable to 
analyze the injury to the domestic industry only based on the data from such 
companies given the WTO regulations or the general investigative practices of other 
investigation authorities.97 
7.51.   The OTI added that it had sent questionnaires to all identified domestic producers that 
produced the like product, but only the applicants submitted responses; "[t]herefore, the [OTI] 
could not objectively figure out the status of such producers that failed to respond". Also, "[s]ince 
most domestic producers [were] small and medium sized companies with no associations, groups 
or research institutions in connection with the pneumatic valve industry", the OTI found it 
"impossible to obtain reliable materials on the business conditions of the overall domestic industry, 
such as the indicators of production, sales and profit, etc." . Accordingly, the OTI deemed the 
production of the two applicants  "as the scope of the domestic industry ".98 
7.52.   Since the respondents had  referred to the specific cases of two domestic producers ( other 
than the applicants) "to support [their] argument that no injury has been inflicted on the domestic 
industry, the [OTI] conducted an additional investigation into the two companies above to a n 
available extent and then included the results thereof in its report" .99 In response to the specific 
arguments advanced by the respondents with respect to changes in profit, the OTI "conducted an 
additional analysis of subjects including data of some dome stic producers who [had] not 
participated in the investigation to an available extent" .100 In this respect, the OTI noted that t he 
respondents argued that the two domestic producers in question, which did not participate in the 
investigation, enjoyed increas ed profits during the POI, and that there would be no injury to the 
domestic industry if those producers that did not participate in the investigation were included  in 
that industry . In order to verify the respondents'  argument, the OTI examined the status of these 
two companies and found that both showed changes in indicators similar to those of the applicants 
during the POI as they recorded improved sales and operating profits in 2011, but showed 
deteriorated sales and operating profits  in 2012 and 2013.  The operating profit ratio of the se 
two companies was relatively good compared to that of the applicants, which the OTI attributed 
mainly to the fact that "the two companies spent a relatively small amount of [selling, general, and 
admin istrative  (SG&A )] expenses as their sales focused on regular customers and they maintained 
smaller sales forces ".101 
7.53.   Upon review of the investigation as described in the OTI 's Final Report, the KTC issued its 
Final Resolution determining  that the domestic in dustry producing the like product was materially 
injured by the dumping of pneumatic valves from Japan and recommending  that the MOSF  impose 
on suppliers of such pneumatic valves anti -dumping duties at the following rates for five years : 
                                                
96 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 22 -23. 
97 OTI's Final Report,  (Exhibit KOR -2(b) (BCI)), p. 23.  
98 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 23.  
99 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 24. See also ibid. pp. 70 -71. 
100 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 23 -24. 
101 OTI's Final Report, (Exhi bit KOR -2(b) (BCI)), pp. 70 -71. WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  (a) for SMC and ex porters of its products , 11.66% ; and (b) f or CKD and exporters of its products, 
Toyooki and exporters of its p roducts, and other suppliers  of products from Japan,  22.77% .102 
7.54.   The KTC's Final Resolution noted the OTI's finding that there were nine domestic producers 
of the like product, including the two applicants, and that the OTI sent questionnaires to all nine 
producers, but only the applicants submitted responses.103 The KTC also noted the 
respondents'  argument that both TPC and KCC had imported the produ ct under investigation. The 
KTC concluded, however, that there was no reason to exclude either of these companies from the 
scope of the domestic industry, since TPC was not in a special relationship with the supplier and 
had bought only a small volume and KCC had not, in fact, imported the product under 
investigation.104 The KTC considered therefore that the two applicants were properly included in 
the scope of the domestic industry and that their total production of the like product amounted 
to 55.4%, which was "a substantial portion of the gross domestic production". The KTC concluded 
that " in investigating an injury to the domestic industry caused by dumping in the present case, 
the 'domestic industry ' [would be] defined as the 'total of TPC's and KCC' s bus iness producing the 
like product ' in accordance with Article 59, Paragraph 2 of the Enforcem ent Decree of the Customs 
Act (' Enforcement Decree ')".105 The KTC also noted that, in analysing profit indicators, the OTI had 
"conducted an additional analysis by in cluding some producers mentioned by the Respondents 
among the domestic producers who did not participate in the investigation, to the extent that data 
related thereto were available ".106 
7.55.   With respect to the respondents' argument that the domestic industry sh ould not be limited 
to the two applicants but should include all domestic producers based on available data and 
information, the KTC indicated that, when it is impossible to obtain data of the entire domestic 
industry despite the efforts of the investigati ng authorities and the companies whose data are 
available account for a majority of the domestic production , analysing the injury to the domestic 
industry based only on the data from such companies would not violate WTO obligations nor 
applicable domestic laws and regulations, and would be " reasonable even compared to the general 
investigative practices of other investigating authorities ".107 The KTC noted that the OTI conducted 
an "additional investigation into the business status of [two domestic producers different from the 
applicants (Yonwoo Pneumatic and Shin Yeong Mechatronics)] with the cooperation of the 
two companies and found that the sales volume and operating profit of both companies increased 
in 2011 but the trends similar to the business indicato rs of the Applicants occurred in 2012 
and 2013, with their sales volume and sales amount decreasing and the operating profit 
worsening ".108 The KTC also noted that the operating profit of the two companies in question had a 
significant decrease  in 2013 "due to the adverse impact of the sharp increase in the import of the 
dumped products and the significant decrease in the sales price thereof ". The KTC concluded that 
the inclusion of these companies " would not significantly change the overall trends of the inj ury 
indicators of the domestic industry ".109 
7.4.4   Panel's  terms of reference  
7.4.4.1   Main arguments  of the parties  
7.56.   Korea argues that Japan 's claim under Articles 3.1 and 4.1 of the Anti-Dumping  Agreement  
with respect to the definition of the domestic industry is outside of the Panel 's terms of reference.  
According  to Korea, " Japan' s panel request does not provide a brief summary  of the complaint [as 
required by Article 6.2 of the DSU] but merely paraphrases the legal obligation contained in the 
articles alleged to  have been violated ".110 
7.57.   Korea argues that Article 4.1 "especially when read in the light of relevant WTO 
jurisprudence  … has many different aspects … [ it] effectively contains a multi -layered set of 
                                                
102 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), pp. 1 -2. 
103 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 12.  
104 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 13.  
105 KTC's Final Resolution, (Exhibit KOR -1(b) ( BCI)), p. 13.  
106 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 14. See also ibid. p. 24.  
107 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 13.  
108 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 24. (fn omitted)  
109 KTC's Final Resolution, (Exh ibit KOR -1(b) (BCI)), p. 24.  
110 Korea 's preliminary ruling request, para . 12 (emphasis original). See also first written submission, 
annex, para. 6; and second written submission, annex, para. 1 . WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  obligations and exceptions to such obligations that could be the basis for a multi -layered set of 
challenges ".111 
7.58.   In Korea 's view, "Japan 's panel request … is extremely short and completely uninformative 
when it comes to the identification of the claim in respect of the Korean investigating authority 's 
definition o f the domestic industry" .112 Korea asserts that " Japan 's panel [request ] fails to connect 
the relevant aspects of the investigating authority 's determination or the underlying investigation 
with the specific aspects of the provision alleged to have been viol ated" .113 Korea adds that 
"Japan 's panel request fails to identify the specific concern that Japan has with the definition of the 
domestic industry and does not provide any narrative that would allow Korea to understand the 
case it has to answer so that it c an start preparing its defence" .114 According to Korea, Japan 's 
panel request "merely mentions that KTC 'failed to make an objective examination based on 
positive evidence in defining the domestic industry '", and "does not mention anything about the 
'proportion ' of the domestic industry in the overall domestic producers or any potential 
'distortion '".115 
7.59.   In response, Japan argues that its "claim under Articles 3.1 and 4.1 is consistent with the 
requirement of Article 6.2 of the DSU" .116 In Japan's view, Korea is " suggesting that Japan should 
have advanced detailed legal arguments  about the interpretation of the provision in the Panel 
Request in order to comply with Article 6.2 of the DSU ".117 Japan asserts that this is " contrary to 
the Appellate Body 's interp retation of Article  6.2 of the DSU that it does not require a panel 
request to present the arguments in support of the claim" .118 Japan argues that the panel request 
"clearly points to Korea 's definition of 'the domestic industry ' that was used in the anti -dumping 
investigation at issue, and plainly connects it with the obligation under Article s 3.1 and 4.1 to 
ensure that the investigating authority 's definition of 'domestic industry ' complies with the 
specified requirements based on positive evidence and obj ective examination" .119 According to 
Japan, this approach sufficiently provides a brief summary of the legal basis of the complaint 
sufficient to present the problem clearly, as required by Article  6.2 of the DSU.120 Japan also 
argues that,"[a] s the author of the measure s, with access to the full record for many months, 
Korea had a more than sufficient idea of the problems in this dispute and how to prepare a 
response to them . … That Japan had not yet presented it s arguments did not limit Korea' s 
understanding of the claims themselves ".121 
7.4.4.2   Evaluation  by the Panel  
7.60.   We will start by examining the sufficiency of Japan 's panel request  with respect to Japan 's 
claim under Articles 3.1 and 4.1 of the Anti-Dumping  Agreement  regarding the definition of the 
domestic industry . We will consider in this regard whether, with respect to this claim and in 
accordance with Article 6.2 of the DSU , Japan 's panel request  provides a brief summary of the 
legal basis of the complaint which is sufficient to present the problem clearly. We will keep in mind 
in this regard the double function of a panel request: (a) to set the terms of reference for the 
Panel under Article  7.1 of the DSU  and define the scope of the dispute; and (b) to serve the due 
process objective of notifying the respon dent and the other WTO Members of the nature of the 
complainant's case.122 If Japan 's panel request fails to explain succinctly how or why the measure s 
at issue are considered by Japan to be inconsistent with the WTO obligations in question, it does 
                                                
111 Korea 's preliminary ruling  request, para. 42. See also first written submi ssion, annex, paras.  6 
and 12. 
112 Korea 's preliminary ruling  request, para. 42. 
113 Korea 's preliminary ruling  request, para. 43 . See also first written submission, annex, para . 5. 
114 Korea 's preliminary ruling  request, para. 44. See also first written submission, annex , paras. 5, 6 , 11, 
and 14 . 
115 Korea 's second written submi ssion, annex, para. 3 . 
116 Japan 's response to Korea 's preliminary ruling  request, para. 63. See also second w ritten submission, 
annex I, para . 1. 
117 Japan 's response to Korea 's preliminary ruling  request, para. 61 (emphasis original) . See also 
response to Panel question No. 85, para. 29.  
118 Japan 's response to Korea 's preliminary ruling  request, para. 61 (emphasis original) . See also 
response to Panel question No. 9, para.  3. 
119 Japan 's response to Korea 's preliminary ruling  request, para. 62 . 
120 Japan 's response to Korea 's preliminary ruling  request, para. 62. See also response to Panel question 
No. 85, para. 28.  
121 Japan 's second w ritten submission, annex I, para . 6. 
122 Appellate Body Reports, EC – Bananas III , para. 142; US – Carbon Steel , para. 126.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  not fulfil the requirement of Article 6.2 of the DSU . In that case, we will conclude that Japan 's 
claim under Articles 3.1 and 4.1 with respect to the definition of the domestic industry is not within 
the scope of the Panel 's terms of reference.  
7.61.   As noted above, i n its panel request, Japan asserts that Korea 's measures are inconsistent 
with Articles 3.1 and 4.1 of the Anti -Dumping Agreement, "because Korea failed to make an 
objective examination based on positive evidence in defining the domestic industry producing the 
like product and consequently in making a determination of injury ".123 With respect to the claim 
concerning the definition of the domestic industry, Japan 's panel request paraphrases the language 
in the first part of Article 3.1 (i.e. a determination sha ll be "based on positive evidence" and 
involve an "objective examination") . On its face, the panel request does not provide any indication  
or suggest ion as to  how or why Korea 's definition of the domestic industry is allegedly inconsistent 
with the obligat ions in Articles 3.1 and 4.1 of the Anti-Dumping Agreement.  
7.62.   We recall that Article 3.1 " is a fundamental and substantial obligation that functions as a 
chapeau, and informs the rest of Article  3".124 However, the basic principles in Article 3.1 " do not … 
establish independent obligations which can be judged in the abstract, or in isolation and 
separately from the substantive requirements set out in the remainder of Article  3. Instead, they 
inform the application of all the provisions of Article 3 ".125 Accord ingly, a claim that a measure is 
inconsistent with the principles contained in Article  3.1 cannot normally be made in isolation from 
other obligations in the Anti -Dumping Agreement .126 
7.63.   In other words, Article  3.1 establishes basic principles that inform othe r provisions in the 
Agreement setting out more detailed requirements for injury determinations. The obligation in the 
first part of Article 3.1 that an injury determination "shall be based on positive evidence and 
involve an objective examination" does not  in itself establish an independent obligation with 
respect to the definition of the domestic industry  in an anti -dumping investigation.  
7.64.   On its face, with respect  to the definition of the domestic industry, Japan 's panel request 
asserts that Korea 's measu res are inconsistent with Articles 3.1 and 4.1 of the Anti -Dumping 
Agreement, "because Korea  failed to make an objective examination based on positive evidence in 
defining the domestic industry producing the like product and consequently in making a 
determ ination of injury". In our view, this general reference to the language in Article  3.1 is not 
sufficient to present the problem clearly.  Merely paraphrasing the language in the first part of 
Article 3.1, and asserting that "Korea failed to make an objective examination based on positive 
evidence" does not explain how or why Japan considers the measure s at issue to be inconsistent 
with the specific obligations in Articles 3.1 and 4.1 of the Anti-Dumping  Agreeme nt, with respect to 
the definition of the domestic industry . More specifically, it does not explain how or why Japan 
considers that the Korean Investigating Authorit ies' definition of the domestic industry  did not 
involve an objective examination or was no t based on positive evidence.  Japan's claim is 
essentially generic – nothing in the panel request links the claim to the particular circumstances of 
the investigation at issue.  
7.65.   Accordingly , Japan's panel request, with respect to the claim under Articles  3.1 and 4.1 of 
the Anti-Dumping  Agreement , is not precise enough to serve the dual function of: (a) defi ning the 
basis for the Panel's  terms of reference under Article  7.1 of the DSU; and (b) inform ing other 
WTO Members, including the respondent, of the nature of the dispute.  
7.66.   Our conclusion is confirmed when we take into account the broad and diverse scope of the 
allegations concerning the alleged inconsistency in the definition of the domestic industry 
advanced in Japan 's submissions : (a) that the Korean  Investigating Authorit ies defined the 
domestic industry to include only two domestic producers representing about half of the total 
domestic production of the like product, and left aside other producers representing the other half 
of the domestic industry ; (b) that the Korean Investigating Authorit ies defined the domestic 
industry to include  the applicants only , introducing a substantial risk of bias and distortion, and 
failed to provide an adequate explanation as to why such risk was discarded ; (c) that the Korean 
Investigating Authorit ies made no effort to collect information from domestic producers other than 
                                                
123 Japan's panel request, p. 2.  
124 Appellate Body Report, Thailand – H-Beams , para. 90.  
125 Panel Report, China – Cellulose Pulp , para. 7.13.  
126 Panel Report, China – Cellulose Pulp, para. 7.15.  WT/DS504/R  
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  the applicants, or to collect data from other sources; (d) that the two producers included in the 
definition of the domestic industry are n ot representative of the total domestic production ; (e) that 
the Korean Investigating Authorit ies did not consider objectively the available evidence on the 
level of production of Korean producers; and (f) that the Korean Investigating 
Authorit ies' discuss ion of information regarding two domestic producers that were not formally 
included in the definition of the "domestic industry " was not adequately  reasoned, and failed to 
resolve the material risk of distortion . 
7.67.   For the reasons explained above , we conclude  that Japan's claim under Articles  3.1 and 4.1 
of the Anti -Dumping  Agreement,  concerning the definition of the domestic industry,  is not properly 
within the Panel 's terms of reference , and we will neither consider it further nor resolve it. 
7.5  Volume  of the dumped imports  
7.5.1   Introduction  
7.68.   Japan  claims that the KTC 's consideration of the volume of the dumped  imports was not 
based on an objective examination of positive evidence as required by Articles 3.1 and 3.2  of the 
Anti-Dumping  Agreement . According to Japan:  
a. the KTC improperly  concluded that there was a "significant increase" of the dumped 
imports;  
b. the KTC failed to demonstrate a competitive relationship between the dumped imports 
and the domestic like product;  
c. the KTC improperly included in its volume analysis the effect of imports which were held 
in inventory  and were not competing with domestic producers ; and 
d. the KTC improperly found displacement by the dumped imports.  
7.69.   Korea  argues that Japan 's claim concerning  the volume of dumped imports is outside the 
Panel 's terms of reference because Japan 's panel request  does not compl y with the requirements 
under Article 6.2 of the DSU with respect to this claim. In the alternative, Korea  asks the Panel to 
reject Japan 's claim . 
7.5.2   Main arguments  of the parties  
7.5.2.1   Japan  
7.70.   In its panel request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 3.2 of the Anti -Dumping Agreement, "because Korea 's analysis of a significant increase of the 
imports under investigation  did not involve an objective examination based on positive 
evidence".127 
7.71.   As articulated over the course of  the proceedings, Japan asserts  that t he KTC improperly 
concluded that there was a "significant increase" of the dumped imports despite th e fact that: 
(a) imports decreased during the first two years of the three -year period of trend analysis  
(2011  and 2012) ; and (b) when considering the full period of trend analysis , the dumped imports 
increased only slightly , by [[***]]% on an absolute bas is, and decreased relative to domestic 
consumption and production .128 According to Japan, "the KTC never said how much subject 
imports increased over the full period, or explained why that increase should be considered a 
'significant increase '".129 
7.72.   Japan argues that t he KTC failed to consider the existence of a competitive relationship 
between the dumped imports and the domestic like product, in conjunction with the margins of 
                                                
127 Japan's panel request , p. 1.  
128 Japan 's first written submission, paras. 116 -117 and 128 -130. 
129 Japan 's first written submission, para . 128. WT/DS504/R  
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  dumping.130 According to Japan, "[t]he consistent and significant overselling, the  diverging price 
trends, the differing magnitudes of price changes were all consistent with the lack of meaningful 
competitive relationship ".131 
7.73.   Japan asserts that t he KTC improperly included in its volume analysis the effect of imports 
which were held in inventory  in Korea and were not competing with domestic producers . In Japan 's 
view, imports in inventory have a different commercial  impact and should not be taken into 
account in determining whether there is a "significant increase" under Article  3.2.132 
7.74.   Japan argues that t he KTC improperly found displacement by the dumped imports 
notwithstanding that: 
a. domestic industry  market share was still higher at the end of the period than in 2010  
despite falling in 2013 ; 
b. the volume of domestic sales actually increased i n 2013 when compared with 2012;  and 
c. the KTC provided no supporting analysis or factual context for its assertion that there 
were instances of "aggressive marketing" by Japanese exporters, and it failed to explain 
to what degree this factor affected domesti c sales .133 
7.75.   Japan  argues that the increase  in dumped imports, when considered in the context of the 
increasing  demand, was due to growth  of the domestic Korean market , and did not occur at the 
expense  of domestic sales.134 
7.5.2.2   Korea  
7.76.   Korea asserts  that Japan 's claim under Articles 3.1 and 3.2 with respect to the volume 
analysis is outside the Panel 's terms of reference and that it should therefore be rejected . With 
respect to the substance of Japan 's arguments, according to Korea, the KTC properly explained 
how it found a significant increase in the volume of the dumped imports in absolute and relative 
terms. The KTC stated that the volume of dumped imports sharply increased by 78.9% in 2013 
alone, and by nearly [[ ***]]% over the whole POI. Similarly, the KTC s tated that the volume of 
the dumped imports increased by [[ ***]]% rel ative to domestic production in  2013. Finally, the 
market share of dumped products increased in 2013 by [[ ***]]% from the year before, while the 
market share of the domestic like product decreased by [[ ***]]%. Korea submits that 2013 was 
the most significant year for the anti -dumping investigation because it was the POI for dumping 
purposes.135 In response to an allegation by Japan, Korea asserts  that the KTC set out the amount 
of the end -point to end -point increase in dumped imports in the confidential version of the KTC 's 
Final Resolution , although it was redacted for confidentiality reasons from the non -confidential 
version.136 
7.77.   Korea contends  that Japan failed to substantiate its allegation that it was  "not at all obvious 
why this modest increase over the entire period [of [[ ***]]%] should be considered a 'significant 
increase '".137 In Korea 's view, an increase of nearly 10% on an end -point to end -point basis, 
together with a sharp increase of [[***]]% in absolute terms and [[ ***]]% relative to domestic 
production during the year when dumping occurred "is an important, notable or consequential 
increase under any standard".138 The fact that the market share of the dumped imports reached a 
level tha t was below the 2010 starting point of the period of trend analysis  does not undermine the 
KTC's overall finding. Rather than looking at th e end-point to end -point comparison of the dumped 
                                                
130 Japan 's second written submission, paras. 91  and 106-108. 
131 Japan 's first written submission, para. 133. See also ibid. paras. 117 and 132 -133. 
132 Japan 's first written submission, paras. 117 and 134 -136; second written submission, paras.  91 
and 113-117. 
133 Japan 's first written submission, paras. 117 and 137 -142; second written submission, para s. 98-105 
and 107. 
134 Japan' s second written submission, para . 110. 
135 Korea 's first written submission, paras. 165 -169 and 172.  
136 Korea 's first written submission, para. 173.  
137 Korea 's first written submission, para. 173 (referring to Japan 's first written submission, para. 129).  
138 Korea 's first written submission, para. 174.  WT/DS504/R  
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  import 's market share in isolation, the KTC considered the interven ing trends , which showed  a 
declining dumped import market share from 2010 to 2012, and a  dramatic rever sal to increase 
in 2013 when dumping occurred.139 
7.78.   Korea rejects Japan 's assertion  that the KTC improperly assumed a competitive relationship 
between the domestic products and the dumped imports. In Korea 's view, Japan 's arguments 
concerning interchangeability in this context are the same as those Japan made with respect to 
price effect s. Referring to its arguments in that context140, Korea asserts that the 
Korean  Investigating Authorities "thoroughly examined and assessed the degree of substitutability 
and competition between the dumped imports and the like product" and concluded that the re was 
sufficient overlap between the two groups, "all of which pointed to the existence of a competitive 
relationship".141 
7.79.   Korea disagrees with Japan 's position that it was improper for the KTC to include in its 
volume analysis dumped imports that went into  inventory after importation. According to Korea, 
there is no provision in the Anti-Dumping  Agreement  that an investigating authority must exclude 
from its import volume analysis dumped imports that are held in inventory. Korea argues that, in 
any event, t here was no evidence before the KTC that imports were being held as part of an 
inventory build -up in line with a change of the safety -stock policy.142 
7.80.   Finally, Korea rejects Japan 's view that the KTC improperly found displacement of domestic 
like product in the market by dumped imports even though domestic shipments were actually 
increasing. Korea argues that there is no provision in the Anti-Dumping  Agreement  requiring an 
investigating authority to conduct a causation and non -attribution analysis in the cont ext of  its 
volume consideration under Article 3.2. Korea notes  that the market share of the dumped imports 
decreased from 2010 to 2012 but increased sharply in 2013, thereby displacing domestic like 
product in the market in the context of an expansion of d omestic consumption. The fact that the 
dumped imports ' market share were at  2010 levels in 2013 does not vitiate the KTC 's observation 
that displacement occurred in 2013.143 
7.5.3   Relevant facts   
7.81.   In the underlying investigation, the  KTC considered  whether there was a significant increase 
in dumped imports in absolute terms, relative to domestic consumption , and relative to domestic 
production . The KTC found that, from each of these three perspectives, the volume of dumped 
imports decreased from 201 0 to 2012, and then  increased sharply from 2012 to 2013. With 
respect to the trends in market share, the KTC found that the decreasing trend from 2010 to 2012, 
reversed into a sharp increase in 2013; on an end -point to end -point basis from 2010 to 2013, 
however, the market share of the dumped imports decreased . In its ultimate  determination, the 
KTC relied upon the significant  increase in dumped imports from 2012 to 2013 as a factor in 
suppressing and depressing domestic prices, which in turn lead to a dete rioration of the state of 
the domestic industry.  
7.82.   In its Final Resolution , the KTC state d, concerning the volume of the dumped imports:  
According to the [OTI 's] Investigation Report [*], the import volume of the product 
under investigation ("dumped products") decreased from [[ ***]] units in 2010, to 
[[***]] units in 2011, to [[ ***]] units  in 2012, a decline of 9.8% and  32.0% year on 
year, and then increased to [[ ***]] units in 2013, an increase of 78.9% year on year. 
The import volume of 2013 represented an increase of [[ ***]]% from that of 2010.  
The market share of the dumped products in the domestic market also decreased 
from [[ ***]]% in 2010 to [[ ***]]% in 2011, to [[ ***]]% in 2012 and then sharply 
increased to [[ ***]]% in 2013. The ratio of  the import volume of the dumped 
products to the domestic production of the like product also decreased from [[ ***]]% 
                                                
139 Korea 's first written submission, paras. 173 -174. 
140 Korea 's first written submission, para. 176. See also response to Panel question No. 34(b).  
141 Korea 's first written submission, para. 129.  
142 Korea 's first written submission, paras. 177 -181. 
143 Korea 's first written submission, paras. 182 -184. WT/DS504/R  
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  in 2010 to [[ ***]]% in 2011, to [[ ***]]% in 2012 and then remarkably increased to 
[[***]]% in 2013.  
Hence, the import of the dumped produc ts decreased both in absolute and relative 
terms until 2012 and then sharply increased in 2013. Although the market share of 
the dumped products in 2013 did not reach that of 2010, it is clearly shown that the 
decreasing trend until 2012 was reversed into a sharp increase of imports in 2013.  
On the contrary, the domestic market share of the like product was on continuous rise 
from [[ ***]]% in 2010 to [[ ***]]% in 2011, to [[ ***]]% in 2012 and then 
plummeted to [[ ***]]% in 2013, a similar level to 2010. The s udden decrease of the 
market share in 2013 appears to have been affected by the dumped products given 
that the import volume of the dumped products largely increased and their price 
greatly fell in the same year.144 
[*fn original]19 Investigation Report, pp.  46-51[.] 
7.83.   During the investigation, interested parties had argued that in considering the volume of the 
dumped imports, the KTC should  not include dumped imports held in inventory  in Korea by the 
related importer of the exporting  producers. In response, the KTC stated , in its Final Resolution:  
Respondent SMC argued that the import of the dumped products increased in 2013 
because SMC  Korea increased imports to secure inventories due to a change of its 
inventory policy, and that the  actual sales after importation did not increase as much 
as the increase of imports.  
With respect to this, the Commission confirmed that under the Customs Act or the 
WTO Antidumping  Agreement, for the examination of increase of import volumes,  it is 
sufficient to examine  the increase of import volumes in absolute and relative terms, 
and that it is not necessary to consider  the purpose of imports or actual sales after 
importation.145 
7.84.   In the Final Report, the OTI found that [[***]]'s inventory cons isted of prod ucts that "are 
likely to be sold in the near future ".146 The OTI further stated:  
[[***]]147 
7.5.4   Panel 's terms of reference  
7.5.4.1   Main arguments of the parties  
7.85.   In its panel request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 3.2 of the Anti -Dumping Agreement , "because Korea 's analysis of a significant increase of the 
imports under investigation  did not involve an objective examination based on positive 
evidence".148 
7.86.   Korea argues that Japan 's claim under Articles 3.1 and 3.2 of the Anti -Dumping Agreement 
with respect to the analysis of the increase in dumped imports is outside of the Panel 's terms of 
reference.149 Accord ing to Korea, " Japan 's panel request does not provide a brief summary  of the 
compla int [as required by Article 6.2 of the DSU] but merely paraphrases the legal obligation 
contained in the articles alleged to have been violated".150 In Korea 's view, Japan 's panel request:  
                                                
144 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 14.  
145 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 1 5. (fn omitted)  
146 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 50  and fn 40.  
147 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 108 . 
148 Japan's panel request , p. 1.  
149 Korea 's preliminary ruling request, paras. 21 -23 and 27.  
150 Korea 's preliminary ruling request, para. 12 (empha sis original) . See also first written submission , 
annex , para. 6; and second written submission, annex , para. 1.  WT/DS504/R  
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  [S]imply refers to the general obligation of Article 3.1 of making an  objective 
determination of injury based on positive evidence concerning the increase in imports 
without connecting any aspect of the challenged measures with this obligation.151 
7.87.   Korea argues that "Articles 3.1 and 3.2 contain different legal obligations" an d "Japan 's 
panel request does not provide any information on which of these legal obligations it considers to 
have been violated". According to Korea, "it is not even clear if Japan is alleging a violation of 
Article  3.2 since it paraphrases only the legal  obligation of Article 3.1".152 Korea asserts that, with 
Japan 's panel request, it "is left to guess 'how or why ' the measures are alleged to be violating 
Articles 3.1 and 3.2".153 
7.88.   Japan argues that Article 3.1 "sets forth an overarching  obligation that should be read 
together with the other paragraphs of Article 3 of the Anti -Dumping Agreement".154 "[T]he first 
sentence of Article 3.2, read together with Article 3.1, provides for a single  obligation to 'consider 
whether there has been a si gnificant increase in dumped imports ' based on 'positive evidence ' and 
'objective examination '".155 In Japan 's view:  
The language of this claim plainly connects the challenged measure ("Korea 's analysis 
of a significant increase") with a single specific obli gation under Articles 3.1 and 3.2, 
first sentence. The "problem" being addressed by this claim is Korea 's failure to make 
a proper finding of volume. This language refers specifically to the "legal basis" for the 
claim – the failure to make a proper assess ment of whether there was a "significant 
increase" as required by Article 3.2. This language also refers to the two specific 
provisions at issue, and refers to the specific part of Article 3.2 that is at issue. The 
claim regarding volume has been distingui shed from the claim regarding price effects 
under Article 3.2  … This language is "sufficient to present the problem clearly" and to 
avoid any possible confusion about which of multiple obligations under Article 3.2 are 
at issue for this specific claim.156 
7.5.4.2   Evaluation  by the Panel  
7.89.   We will first examine the sufficiency of Japan 's panel request  with respect to Japan 's claim 
under 3.1 and 3.2 of the Anti-Dumping Agreement  regarding the Korean Investigating 
Authorit ies' consideration of the volume of the dumped  imports . We will consider  in this regard 
whether, with respect to this claim and in accordance with Article 6.2 of the DSU , Japan 's panel 
request  provides a brief summary of the legal basis of the complaint which is sufficient to present 
the problem clear ly. We will keep in mind in this regard the double function of a panel request: 
(a) to set the terms of reference for the Panel under Article  7.1 of the DSU  and define the scope of 
the dispute; and (b) to serve the due process objective of notifying the re spondent and the other 
WTO Members of the nature of the complainant 's case.157 If Japan 's panel request fails to explain 
succinctly how or why the measure s at issue are considered by Japan to be violating the WTO 
obligations in question, it would not fulfil the requirement of Article 6.2 of the DSU . In that case, 
Japan 's claim under Articles  3.1 and 3.2 with respect to the consideration of the volume of the 
dumped  imports  would not be within the scope of the Panel 's terms of reference.  
7.90.   As noted above, Article  3.1 "is a fundamental and substantial obligation that functions as a 
chapeau, and informs the rest of Article  3".158 The basic principles in Article 3.1 "do not … establish 
independent obligations  which can be judged in the abstract, or in isolation and sep arately from 
the substantive requirements set out in the remainder of Article  3. Instead, they inform the 
application of all the provisions of Article 3" .159 Accordingly, a claim that a measure is inconsistent 
                                                
151 Korea 's preliminary ruling request, para. 21.  
152 Korea 's preliminary ruling request, para. 21.  
153 Korea 's preliminary ruling  request, para. 23. See also Korea 's first written submission, annex , 
paras.  5, 6, and 11.  
154 Japan 's response to Korea 's preliminary ruling  request, para. 27. (emphasis original)  
155 Japan 's response to Korea 's preliminary ruling  request, para. 31. (emphasis original)  
156 Japan 's response to Panel question No. 85, para. 16.  (fn omitted)  
157 Appellate Body Reports, EC – Bananas III , para. 142; US – Carbon Steel , para. 126.  
158 Appellate Body Report, Thailand – H-Beams , para. 90.  
159 Panel Report, China – Cellulose Pulp , para. 7.13. WT/DS504/R  
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  with the principles contained in Article  3.1 can not normally be made in isolation from other 
obligations in the Anti -Dumping Agreement .160 
7.91.   On its face, Japan 's panel request  asserts that Korea 's analysis of a significant increase of 
the imports under investigation  is inconsistent with the obligation s contained in Articles 3.1 
and 3.2 of the Anti -Dumping Agreement because it " did not involve an objective examination 
based on positive evidence" . The panel request does not contain  any additional narrative 
description of the problem  or problems Japan consi ders constitute this alleged inconsistency . In 
our view, this general reference to the language in Article  3.1 is not sufficient to present the 
problem with respect to an alleged violation of Article 3.2 clearly. Merely paraphrasing the 
language in the first part of Article 3.1, and asserting that "Korea failed to make an objective 
examination based on positive evidence" does not explain how or why Japan considers the 
measure s at issue violat e the specific WTO obligations in question, namely those in  Articles  3.1 
and 3.2 of the Anti-Dumping  Agreement,  with respect to the consideration of the volume of 
imports . More specifically, it does not explain how or why Japan is of the view  that the Korean 
Investigating Authorit ies' consideration  of whether ther e had been a significant increase in the 
imports did not involve an objective examination or was not based on positive evidence.  Japan's 
panel request does not go beyond a mere reference to the requirements of Article 3.1, which is not 
sufficiently precise  to mark out the parameters of the case of alleged inconsistency with Article 3.2 
that it advance s in this dispute . Japan's claim is essentially generic – nothing in the panel request 
links the claim to the particular circumstances of the investigation at issue.  
7.92.   Therefore, we conclude that the language used in Japan 's panel request  is not precise 
enough to serve the dual function of a panel request: (a)  to define the basis for the Panel 's terms 
of reference under Article  7.1 of the DSU; and (b) to inform other WTO Members, including the 
respondent, of the nature of the dispute.  
7.93.   The conclusion above is confirmed when we take into account  the scope of the allegations 
concerning volume  effects advanced in Japan 's submissions : (a) that the KTC failed to find an 
increase in the volume of dumped imports that was "significant"161; (b) that the KTC improperly 
assumed a competitive relationship between domestic products and dumped imports162; (c) that 
the KTC improperly considered the effect of dumped imports that were still in inventory163; and 
(d) that the KTC failed to consider that no domestic volume  had been displaced by the dumped 
imports .164 
7.94.   For the reasons explained above , we conclude that Japan 's claim under Articles  3.1 and 3.2 
of the A nti-Dumping  Agreement,  concerning  the volume of the dumped imports , is not properly 
within the Panel 's terms of reference , and we will neither consider it further nor resolve it. 
7.6  Effect of the dumped  imports on prices  
7.6.1   Introduction  
7.95.   Japan claims that the KTC 's analysis of price effects was inconsistent with Articles 3.1 
and 3.2 of the A nti-Dumping  Agreement . In its written submissions,  Japan  challenges the KTC 's 
analyses of  price depression, price suppression , and price comparability between specific  products 
or product segments of the dumped  imports and the domestic like product.  
7.96.   Korea  argues that Japan 's claim concerning price effects is outside the Panel 's terms of 
reference because Japan 's panel request  does not comply with the requirements under Article 6.2 
of the DSU with respect to this claim. In the alternative, Korea  asks the Panel to reject Japan 's 
claim.  
                                                
160 Panel Report, China – Cellulose Pulp , para. 7.15.  
161 Japan 's first written submission, paras. 117 and 128.  
162 Japan 's first written submission, paras. 117 and 132 -133; second written submission, 
paras.  106-112. 
163 Japan 's first written submission, par as. 117 and 134 -136; second  written submission, 
paras.  113-117. 
164 Japan 's first written submission, paras. 117 and 139 -141; second written submission, paras. 98 -105. WT/DS504/R  
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  7.6.2   Main arguments  of the parties  
7.6.2.1   Japan  
7.97.   In its panel request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 3.2 of the Anti -Dumping Agreement, "b ecause Korea 's analysis of the effect of the imports 
under investigation on pr ices in the domestic market for like products did not involve an objective 
examination based on positive evidence; and because Korea failed to properly consider whether 
the effect of the imports under investigation was to depress prices to a significant de gree or 
prevent price increase, which otherwise would have occurred, to a significant degree".165 
7.98.   According  to Japan, as articulated over the course of the proceedings, the KTC  failed to 
conduct  objective analyses of price depression  and suppression because it: 
a. ignored "dramatically diverging price trends"  between dumped imports and domestic 
products , evidenced by the fact that the prices of dumped imports and the domestic like 
product moved in opposite directions from 2011 to 2012, and the rate of change in 
dumped import and domestic prices differed by large magnitudes from 2012 to 2013166; 
b. overlooked the fact that dumped import prices were consistently and significantly  higher 
than the prices of the domestic like product , and relied instead o n circumstantial 
evidence of isolated cases of pricing behaviour167; and  
c. failed to consider whether the alleged price depression  and price suppression effects of 
dumped imports were significant.168 
7.99.   Specifically  with respect to the KTC 's price suppression analy sis, Japan alleges 
two additional errors:  
a. the KTC  failed to explain its  "reasonable sales price" methodology. Moreover, the fact 
that the "reasonable sales price" estimated by the OTI followed similar trend s to those of 
the domestic industry 's prices  under mines the KTC 's finding of price suppression169; and 
b. the KTC 's finding of price suppression was based on an isolated consideration of 
domestic prices and costs of production in 2013 only. The KTC failed to explain how 
higher prices for the dumped imports could have suppressed lower domestic prices. 
Japan also argues that t he overall trends in the price -cost relationship  suggest that there 
was no price suppression in 2011 and 2012  and that , although domestic prices went 
down in 2013, these trends did not su pport the KTC's finding of price suppression for 
that year. Moreover,  the absence of price suppression in earlier years offset s the price 
suppression in 2013.170 
7.100.   Japan also argues that the KTC failed  to consider the counterfactual question  of how prices 
and volumes might have been different in the absence of dumping.171 According  to Japan , such a 
counterfactual  analysis is required for considering whether there are " truly price effects".172 Japan 
asserts that this exercise requires the investigating authority to consider the competitive 
relationship between the dumped imports and the domestic like product in conjunction with the 
dumping margins at issue.173 
                                                
165 Japan's panel request , p. 1.  
166 Japan 's first written submission, paras. 64 and 72 -83. 
167 Japan 's first written submission, paras. 84 -90 and 94; second written submission, paras. 46 -49. 
168 Japan 's first written submission, paras. 64, 90 , and 106. For the discussion of the price depression 
analysis, see Japan 's first written submission, paras. 72 -90. For the discussion of the price suppression analysis, 
see Japan 's first written submission, paras. 91-106. 
169 Japan 's first written submission, paras. 64, 92, and 97 -99. 
170 Japan 's first written submission, paras. 64, 91-93, and 100 -106. 
171 Japan 's second written submission, paras. 17  and 25-32. 
172 Japan 's second written submission, paras.  25-27. 
173 Japan 's second written submission, para. 31.  WT/DS504/R  
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  7.101.   Finally , Japan asserts that, i n its price effect analysis, the KTC failed to ensure 
comparability between the prices  of specific  products or product segments of the dumped  imports 
and the domestic like product . Dumped  imports consisted of a wide variety of models that were 
very different in terms of their physical characteristics, consumer preferences, end -uses, prices , 
and other factors.  However, according to Japan, the KTC assumed, without any basis, that the 
dumped  imports and the domestic like product  could be used interchangeably.174 Japan argues 
that the obligation of the investigating authority under Article 2.6 of the Anti -Dumping Agreement  
when defining "like product" is fundamentally different from its obligation with respect to  the price 
effects analysis under Article 3.2.175 Japan further argues that even a finding of the existence of 
some competitive relat ionship between the dumped imports and the domestic like product is not 
sufficient for purposes of an Article 3.2 price effects analysis because the requisite consideration of 
market interaction requires the examination of the competitive relationship in c onjunction with the 
dumping margins at issue.176 
7.6.2.2   Korea  
7.102.   Korea asserts that Japan 's claim under Articles 3.1 and 3.2 with respect to price effects is 
outside of the Panel 's terms of reference and that it should therefore be rejected by the Panel. 
With respect to the substance of Japan 's arguments, Korea  responds  that t he KTC 's consideration 
of price effects was based on an objective examination of positive evidence.177 According to Korea, 
in its price effects analysis, the KTC objectively considered  the existence of a competitive 
relationship between the dumped imports and the domestic like product through " model  to model " 
and "segment to segment" comparisons of the physical characteristics and customer evaluations of 
the valves. The KTC also evaluat ed the trends in the prices of the domestic like product and the 
dumped imports by using both a simple average sales price per unit and a price fluctuation index 
proposed by the Japanese respondents. The KTC found price suppression and depression on the 
basis of the "fierce competition" from the dumped imports, evidenced by a  number of instances 
where the dumped imports were offered at prices lower than those of the domestic like product to 
compete for customers .178 
7.103.   Korea rejects  Japan 's argument that diverge nt price trends for the dumped imports and 
the domestic like product undermine  the KTC 's finding of "market interaction ".179 Korea makes 
four arguments in this respect.  
7.104.   First, Korea asserts that the KTC considered the price trends of the dumped imports and 
the domestic like product on both an end -point to end -point and a year -on-year basis. Although 
prices moved in different directions in 2012, the difference in trends was too small to invalidate 
the price effects of the dumped imports found by the KTC.180 In Korea 's view, t he different 
magnitudes of domestic and dumped import price decreases in 2013 did not contradict but instead  
corroborated  the KTC 's findings of price depression  and price suppression. The drop in the prices of 
dumped imports narrowed the gap  between those prices and the prices of the domestic like 
product , resulting in a depression of  the domestic prices even though  the cost of production of the 
domestic like product increased.181 Furthermore, as the KTC explained, domestic prices decreased 
only slightly in 2013 because there was no more scope for further decreases in light of the 
operating loss suffered by the domestic industry.182 
7.105.   Second, Korea argues that the "average import price " trend alone cannot explain the full 
effect of dumped imports on  prices in the domestic market  because : (a) changes in the average 
import price may simply be the result of changes in the product mix of dumped imports ; and 
(b) the related importers of the Japanese exporters engaged in low pricing behavior when they 
                                                
174 Japan 's first written submission, paras. 64, 107-108, 110, and 112 ; second written submission, 
para. 17. 
175 Japan 's second written submission, para. 33 ; response to P anel question No. 18(a), paras.  18-22. 
176 Japan 's second written submission, para. 35.  
177 Korea 's first written submission, paras. 77 -80 and 93.  
178 Korea 's first written submission, paras. 90, 101, and  133. 
179 Korea 's first written submission, para s. 98-100 and 104 ; second written submission, paras.  22 
and 29-31. 
180 The average price of the dumped imports increased by 2.5% while the average price of the domestic 
like product decreased by 1.7% when compare d with 2011 levels. (Korea 's first written submission, para. 99 ). 
181 Korea 's first written submission, para. 102. 
182 Korea 's first written submission, para. 102.  WT/DS504/R  
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  actually sold the imported products in the domestic market . For these reasons, the KTC compared 
the "representative models" of the dumped imports which competed directly with the 
"representative  models " of the domestic like product. This comparison show ed that the average 
prices of the representative models  of the dumped imports and the average prices of the 
representative models of the domestic like product followed  the same trends.183  
7.106.   Third, the KTC noted that the "resale prices" of the dumped imports char ged by a related 
entity of the exporting producer showed the same trends as the prices of the domestic like 
product.184 
7.107.   Fourth, according to Korea, the verified instances in which the dumped imports were 
offered to customers at prices similar to or lower tha n the prices of the domestic like product  
demonstrate "market interaction" between the dumped imports and the domestic like product.185 
7.108.   Korea  maintains  that the KTC properly addressed the fact that the average price of 
dumped imports was higher than that of the domestic like product. The KTC found that the fact 
that the average sales price of the dumped imports was higher than that of the like product  did not 
undermine its conclusion that the dumped imports suppressed and depressed the prices of the 
domestic like product  because th e average price overselling  was caused by " price differentiation in  
accordance with models, option details or customers ". Korea als o states that the KTC additionally 
found that the "strengthened marketing activities" of [[ ***]] contributed to suppressing and 
depressing the prices of the domestic like product .186 Korea  points to passages of the KTC's Final 
Resolution and the OTI's Final Report where in its view the KTC  and the OTI specifically discussed 
this fact.187 
7.109.   Korea  contends  that the "reasonable sales price" the KTC considered in the context of price 
suppression is an expected price reflecting the actual cost of production and a reasonable 
operating profit.188 According to Korea, in this case the difference between the " reasonable  sales 
price" and the actual domestic price ( equivalent to approximately [[ ***]]% of the actual domestic 
price) shows that in the absence of dumping the domestic industry could have achieved a 
reasonable profit by raising its prices.189 Korea argues that the  relevance of this type of 
methodology is confirmed by WTO jurisprudence.190 However, in Korea's view, t he KTC was not 
required by Article 3.2 of the A nti-Dumping  Agreement  to explain  how the price increase would 
have happened  in the  absence of dumping.191 
7.110.   In response to Japan 's argument that there was no price suppression in 2011 and 2012  
and that this undermined the finding of price suppression in 2013 , Korea asserts  that an 
investigating  authority is not required under Article 3.2 to find price suppressio n for each and 
every year of its analysis. The KTC 's price suppression analysis considered  price trends over the 
entire period of trend analysis. In that context, the fact that domestic prices decreased despite the 
rising costs of production in 2013, the y ear in which the dumping and injury periods of 
investigation overlapped and  during which dumping occurred, was highly relevant to the KTC 's 
finding of price suppression.192  
7.111.   Korea  argues that the KTC "thoroughly examined and assessed the degree of 
substituta bility and competition between the dumped imports and the like product" and concluded 
that there was sufficient overlap between the two groups, all of which pointed to the existence of a 
                                                
183 Korea 's first written submission, paras. 105-109. 
184 Korea 's first written submission, para. 108. 
185 Korea 's first written submission, paras. 109 -110. 
186 Korea 's first written submission, para . 113 (referring to KTC's Final Resolution, (Exhibit KOR -1(b) 
(BCI)) , p. 19 ). 
187 Korea 's first written submission, paras. 113-124; second wr itten submission, pa ras. 23 and  33. 
188 Korea 's first written submission, paras. 11 and 147.  
189 Korea 's first written submission, para. 147.  
190 Korea 's second written submission, para. 72 (referring to Panel Report, Russia – Commercial 
Vehicles , para. 7.78  (adoption/appeal pending) ). 
191 Korea's first written submission, para. 148; second written submission, para. 70.  
192 Korea 's first written submission, paras. 149 -151. WT/DS504/R  
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  competitive relationship. In Korea 's view, its authorities properly e nsured price comparability 
between the dumped imports and the like product.193 
7.6.3   Relevant facts  
7.112.   The KTC 's consideration  of price effects in the Final Resolution  can be summarized as 
follows:  
a. On the basis of average sales price s, there was no price undercutting during the period 
of trend analysis . However, the extent of the "overselling" by the dumped imports 
narrowed in 2013 as compared to 2012.  
b. On the basis of the price fluctuation index194, the prices of dumped imports dropped t o a 
larger extent than those of the domestic like product from 2010 to 2013. This seems to 
be because the domestic products were sold at prices lower than the "reasonable sales 
price" and because the domestic industry was already suffering from operating l osses 
and could not decrease prices as much as those of the dumped imports.  
c. As a result of "fierce competition with the dumped products that had strong dominance 
in the domestic market", domestic like product prices were prevented from increasing to 
a reas onable level from 2010 to 2013195, and actually decreased in 2012 and 2013.  
d. In 2013, the significant decrease in the price of the dumped products apparently 
depressed the price of the like product despite strong factors warranting an increase of 
the sales p rice, such as the increase in the manufacturing cost of the like product.  
e. Average p rice overselling by the dumped imp orts was caused by the differential pricing 
of the dumped imports depending on the models, options or customers. However, l ower 
dumped impo rt prices for certain products or customers for which there was a high 
degree of competition with the domestic industry and strengthened marketing activities 
of SMC Korea depressed the domestic industry's prices or prevented the domestic 
industry from rais ing its prices.196 
f. The sharp increase in the import volume of the dumped products in 2013, coupled with 
the sharp decrease in the sales price of the dumped products in the same year, also had 
the effect of suppressing and depressing the price of the domestic  like product.197 
7.113.   In considering  price undercutting, the KTC compared average dumped imports prices and 
average domestic like product prices ("average to average comparisons"), and concluded that 
dumped products had not been sold at lower prices than the lik e product.198 In considering price 
suppression and depression, the KTC compare d, inter alia , individual resale transaction prices for 
dumped imports and average prices of the domestic like product ("transaction to average 
comparisons"), and concluded that "sales price of the dumped products was much lower than the 
                                                
193 Korea 's first written submission, paras. 47 -54 and 129 -143. 
194 Price fluctuation index is computed by first classifying yearly import and sales data from 2010 to 
2013 by each product item code, then calculating each year's price change rate for each product item code as 
compared to previous year's prices, and finally calculating the weighted average of such pric e change rates for 
all the product item codes based on the quantities of respective product items imported or sold in the relevant 
year. Each year's weighted average price change rate so calculated is then presented as an index of price 
changes using the 2 010's weighted average price as 100. (Korea's first written submission, fn 88) . By 
definition, the price fluctuation index does not reflect the actual absolute values of each product item . (Japan's 
opening statement at the second meeting of the Panel, para . 33). 
195 The gap between the reasonable prices and the actual domestic prices are KRW [[ ***]] in 2010, by 
KRW [[ ***]] in 2011, by KRW [[ ***]] in 2012 and by KRW [[ ***]] in 2013. (KTC's Final Resolution, 
(Exhibit  KOR-1(b) (BCI)) , p. 19). 
196 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 18-20. See also KTC's Final Resolution, 
(Exhibit  JPN-4(b)), pp. 18-20. 
197 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), pp. 18 -20 and 27. See also KTC's Final Resolution, 
(Exhibit  JPN-4(b)), pp. 18 -20 and 27 . 
198 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 18; OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , 
pp. 55-59.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  average sales price in the case of certain products or customers for whic h the degree of 
competition with the domestic industry was fierce".199 
7.114.   With respect to the transaction  to average comparisons, in  its Final Report, the OTI 
reported  price comparisons for certain transactions involving two models of dumped  import ed 
valves and  the corresponding domestic like product  models .200 The OTI stated that there were nine 
other models for which SMC Korea allegedly engaged in price discrimination .201 The OTI  did not 
state whether all of these nine models showed  any "price undercutting" compar isons. 
Exhibit  KOR-57, which is a list of 115 ,524 transactions , shows  comparisons of  the prices of all of 
the resale transactions of the Japanese respondent  SMC Korea  during 2013 with the average price 
of the corresponding models of the domestic like product.  There is no reference in the Final Report 
or the Final Resolution to Exhibit KOR -57. However, the data source for the price comparisons of 
the two models in the  Final Report indicate s that the comparisons were based on a ctual sales data 
submitted by the respondents and the applicants . Moreover , in its Onsite Verification Report202, the 
OTI stated that, as a follow -up measure, it would " [a]nalyze the system sale data (to substantiate 
the competition between product models of the  applicants and the respondents) ".203 Subsequently, 
the KTC requested and received from the importers of the Japanese respondents complete resale 
data for the dumped imports during the POI.204 
7.115.   In addition , the KTC examined "strengthened mark eting activities" of the related importer 
of the Japanese  respondents. During the investigation, the OTI received [[ ***]] customer 
statements testifying that [[ ***]] engaged in aggressive marketing activities by  offering lower 
prices in order to get new customers.205 All but five  of these statements was accompanied by 
sample transaction documents. The KTC 's Final Resolution states, in relevant part:  
The Commission finds that the dumped products suppressed price inc reases of the like 
product and caused decreases thereof, although the average sales price of the 
dumped products was higher than that of the like product.  
The average sales price of the dumped products was higher due to their price 
differentiation in accor dance with models, option details or customers, but it was 
found that the sales price of the dumped products was much lower than the average 
sales price in the case of certain products or customers for which the degree of 
competition with the domestic indu stry was fierce, which had the effect of suppressing 
increases in the price of the like product or causing decreases thereof . It was 
investigated that SMC Korea [[ ***]] strengthened marketing activities of SMC Korea, 
which consistently expanded its sales o rganizations and used its dominant position to 
attract distribution agents or discourage defections of its distribution agents, and thus 
the domestic industry had to respond to such strengthened marketing activities of 
                                                
199 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19. OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , 
pp. 98-101. 
200 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , pp. 100-101. 
201 OTI's Final Report , (Exhibit KOR -2(b) (BCI)) , p. 101 and fn 60. 
202 OTI, Excerpts from Report on Domestic On -Site Verification (Producers, Importers , and Customers) 
For Dumping Investigation of Valves for Pneumatic Transmissions from Japan (December 2014)  (Excerpts from 
On-Site Verification Report ), (Exhibit KOR -6(b) (BCI)) . 
203 Excerpts from On-Site Verification Report , (Exhibit KOR -6(b) (BCI)) , p. 7. 
204 KTC's Resale Data Request to the Importers of the Dumped Imports  (24 July 2014) (KTC's Resale 
Data Request) , (Exhibit KOR -56(b) (BCI)) . 
205 [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit  KOR-8(b) (BCI)) ; 
[[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt),  (Exhibit KOR -9(b) (BCI)) ; [[***]], 
[[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -10(b) (BCI)) ; [[***]], [[***]]'s 
Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR-11(b) (BCI)) ; [[***]], [[***]]'s Price 
Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -12(b) (BCI)); [[ ***]], [[***]]'s Price Underselling 
and Undercutting  Case (Excerpt), (Exhibit KOR -13(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and 
Undercutting  Case (Excerpt),  (Exhibit KOR -14(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  
Case (Excerpt), (Exhibit KOR -15(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case 
(Excerpt), (Exhibit  KOR-16(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), 
(Exhibit KOR -17(b)  (BCI));  and Additional Cases of [[ ***]]'s Price Underselling and Undercutting , 
(Exhibit  KOR-49(b) (BCI)) . WT/DS504/R  
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  SMC Korea and become forced to decrea se the sales price or refrain from increasing 
prices .206  
7.116.   The "reasonable sales price"  is a target domestic industry price constructed by the OTI . In 
its Final Report , the OTI appended two explanatory notes regarding the calculation of the 
reasonable sales p rice to the table reporting comparison s between the actual price and the 
reasonable sales price:  
Note 1) Reasonable sales price = (manufacturing cost per unit + SG&A expenses per 
unit)/(1 -reasonable operating profit ratio)  
Note 2) [[***]][.]207 
7.117.   In considering  price suppression, the KTC referred to the difference between the 
"reasonable sales price " and the actual average domestic prices in the Final Resolution:  
The average sales price per unit of the like product required price increase because 
the price it was lower than the reasonable sales price by KRW [[ ***]] in 2010, by 
KRW [[ ***]] in 2011, by KRW[[ ***]] in 2012 and by KRW [[ ***]] in 2013. However, 
the average sales price was not increased and on the contrary, it even decreased in 
2012 and 2013.  Such suppression of the price increase as well as the decrease in the 
price appears to have been caused by the fierce competition with the dumped 
products that had strong dominance in the domestic market.208 
7.6.4   Panel 's terms of reference  
7.6.4.1   Main arguments of the parties  
7.118.    In its panel request, Japan asserts that Korea 's measures are inconsistent with 
Articles  3.1 and 3.2 of the Anti -Dumping A greement, "b ecause Korea 's analysis of the effect of the 
imports under investigation on prices in the domestic market for lik e products did not involve an 
objective examination based on positive evidence; and because Korea failed to properly consider 
whether the effect of the imports under investigation was to depress prices to a significant degree 
or prevent price increase, whi ch otherwise would have occurred, to a significant degree".209 
7.119.   Korea argues that Japan 's claim under Articles 3.1 and 3.2 of the Anti -Dumping Agreement 
with respect to the analysis of the price effects is outside of the Panel 's terms of reference.210 
According to Korea, " Japan 's panel request does not provide a brief summary  of the complaint [as 
required by Article 6.2 of the DSU] but merely paraphrases the legal obligation contained in the 
articles alleged to have been violated".211 In Korea 's view, Ja pan's panel request:  
[M]erely paraphrases the general obligation of Article 3.1 without specifically linking 
what aspect of the challenged measures is supposedly not based on "positive 
evidence" and/or an "objective examination". It is totally unclear from  reading Japan 's 
panel request whether the problem under Article 3.1 that it identifies is an "evidence" 
or data problem or rather an "examination" and evaluation problem. Nor does Japan 's 
panel request provide any indication on what aspect of the determin ation it considers 
to be problematic under either aspect of this claim.  
In addition, Japan merely paraphrases the obligation in Article 3.2 about the need to 
consider the price effects of the dumped imports without explaining what it considers 
to be the pr oblem that allegedly vitiates the price effects analysis of the investigating 
authority. Japan 's panel request merely states that Korea violated the obligation in 
Article 3.2 to consider whether there has been a significant price suppressing or 
                                                
206 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19 . (em phasis added)  
207 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 57.  
208 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19.  
209 Japan's panel request , p. 1.  
210 Korea 's preliminary ruling request, paras. 24 -27. 
211 Korea 's preliminary ruling request, para. 12 (emphasis original) . See also first written submission , 
annex , para. 6; and second written submission, annex , para. 1.  WT/DS504/R  
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  depressing effect but does not identify the concern it has with the investigating 
authority 's analysis in light of this obligation . … 
… 
Korea can only speculate about the nature and scope of the claim of Japan in respect 
of the Korean investigating authority 's price effects analysis since Japan 's panel 
request fails to provide the "how and why" of these allegations.212 
7.120.   In response, Japan argues that Article 3.1 "sets forth an overarching  obligation that should 
be read together with the other paragraphs of Article 3 of t he Anti -Dumping Agreement".213 Japan 
adds that:  
As with the first sentence, the second sentence of Article 3.2 provides for a single  
obligation to consider "the effect of the dumped imports on prices" . … The text then 
sets forth several different ways in whi ch the authority might meet this obligation. The 
use of "or" between "price undercutting" and "depress prices" and "prevent price 
increases" makes clear these are not separate obligations that all must be met, but 
rather different aspects of the same core obligation [.] … 
Thus, the second sentence of Article 3.2, read together with Article 3.1, provides a 
single  obligation to consider whether there have been the relevant price effects of the 
dumped imports on the domestic like products based on "positive evi dence" and 
"objective examination".214 
7.121.   In Japan 's view, the text of the panel request "plainly connects Korea 's price effects 
analysis with the single  obligation under Articles 3.1 and 3.2 'to consider whether the effect of the 
imports  … was to depress price s to a significant degree or prevent price increase, which otherwise 
would have occurred, to a significant degree ' based on 'positive evidence ' and 'objective 
examination '".215 
7.122.   Japan also asserts that : 
The claim regarding volume has been distinguished from t he claim regarding price 
effects under Article 3.2 [.] … This language is "sufficient to present the problem 
clearly" and to avoid any possible confusion about which of multiple obligations under 
Article  3.2 are at issue for this specific claim.216 
7.6.4.2   Evaluation  by the Panel  
7.123.   We will first consider the sufficiency of Japan 's panel request  with respect to Japan 's claim 
under 3.1 and 3.2 of the Anti -Dumping Agreement regarding the Korean Investigating 
Authorit ies' consideration of the effect of the dumped imports on  prices. We will consider  in this 
regard whether, with respect to this claim and in accordance with Article 6.2 of the DSU , Japan 's 
panel request  provides a brief summary of the legal basis of the complaint which is sufficient to 
present the problem clearl y. We will keep in mind in this regard the double f unction of a panel 
request: (a)  to set the terms of reference for the Panel under Article  7.1 of the DSU  and define the 
scope of the dispute; and (b) to serve the due process objective of notifying the res pondent and 
the other WTO Members of the nature of the complainant 's case.217 If Japan 's panel request fails to 
explain succinctly how or why the measure s at issue are considered by Japan to be violating the 
WTO obligations in question, it would not fulfil the requirement of Article 6.2 of the DSU . In that 
case, Japan 's claim under Articles  3.1 and 3.2 with respect to the consideration of the price effects 
would not be within the scope of the Panel 's terms of reference.  
                                                
212 Korea 's preliminary ruling  request, paras. 24 -25 and 27. See also first written submission, annex , 
paras. 5, 6 , and 11.  
213 Japan 's response to Korea's preliminary ruling  request, para. 27. (emphasis original)  
214 Japan 's response to Korea 's preliminary ruling  request, paras. 34 -35. (emphasis original)  
215 Japan 's response to Korea 's preliminary ruling  request, para. 36. (emphasis original)  
216 Japan 's response to Panel question No. 85, para. 16.  
217 Appellate Body Reports, EC – Bananas III , para. 142; US – Carbon Steel , para. 126.  WT/DS504/R  
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  7.124.   As set out in the panel request, Japan 's claim under Articles 3.1 and 3.2 concerning the 
KTC's price effects analysis contains two elements:  
a. Korea 's analysis of the effect of the imports under investigation on prices in the domestic 
market for like products did not involve an objective examin ation based on positive 
evidence; and  
b. Korea failed to properly  consider whether the effect of the imports under investigation 
was to depress prices to a significant degree or prevent price increases, which otherwise 
would have occurred, to a significant d egree .218 
7.125.   The first element of the claim paraphrases the language in the first part of Article  3.1, 
alleging  that the KTC 's consideration of price effect s "did not involve objective examination based 
on positive evidence ". We recall our view that a general reference to the language in Article  3.1 in 
itself is not normally sufficient to present the problem clearly.219 This formulation  does not explain 
how or why Japan considers the measure s at issue to be violating the specific WTO obligations in 
quest ion, including that in Article  3.1 of the A nti-Dumping  Agreement.  We consider that the  
language used by Japan is not precise enough to serve the dual function of a panel request: (a) to 
define the basis for the Panel 's terms of reference under Article  7.1 of the DSU; and (b) to inform 
other WTO Members of the nature of the dispute, including the respondent as well as other 
WTO Members.   
7.126.   The second element of the claim paraphrases the language  of the second sentence of 
Article  3.2, with two notable differences. First, Japan 's price effects claim specifically refers to  
two of the three price effects mentioned in the second sentence of Article 3.2, price suppression  
and price depression. It is clear to us  on the face of the panel request, therefore,  that Japan  
challenges only the KTC's consideration of price depression and price suppression , and not its 
consideration of price undercutting. Second, the use of the word "properly" indicates that Japan  
takes issue with the manner in which the K TC considered price suppression and price depression, 
which would includ e the extent of the alleged price suppression and depression. However, Japan 's 
panel request falls short of explaining "how or why" it considers the KTC 's consideration of  price 
suppre ssion and price depression to be "improper" and consequently inconsistent with Articles 3.1 
and 3.2. The propriety  of an investigating authority 's consideration  of complex economic issues is 
a broad  concept. The true nature of the complaint cannot be prese nted clearly without some  
additional  identification of the main elements of the alleg ed violation(s) . 
7.127.   We note in this regard that both parties have re ferred to prior Appellate Body rulings 
concerning  the standard of clarity  in a panel request  in support of their respective positions .220 On 
the one hand, Korea emphasi zes the Appellate Body 's statements that a panel request must 
"explain succinctly how or why the measure at issue is considered by the complaining Member to 
be violating the WTO obli gation in question "221, and that the respondent must be put in a situation 
where it can "know what case it has to answer … so that it can begin preparing its defence ".222 
Conversely, Japan recall s the distinction between claims  and arguments223 and assert s that 
Korea 's challenge amounts to a requirement that a panel request should lay out the 
complainant 's arguments . 
7.128.   In practice, especially in cases alleging violations of provisions governing complex 
economic issue s such as those in the Anti -Dumping Agreeme nt, in which, in addition, the 
measures at issue rest on a series of intermediate considerations involving such issues and 
ultimate determinations resting on those considerations, the boundary between a claim  and an 
argument may not be entirely clear. The requisite degree of specificity and clarity sufficient to 
satisfy  Article 6.2 of the DSU thus necessarily will depend on the particular circumstances  of each 
                                                
218 Japan's panel request , p. 1. (emphasis added)  
219 See para. 7.35 above.  
220 Japan' s response to Panel question No. 10, paras.  4-11. Korea' s response to Panel question No.  10. 
221 Appellate Body Report, China – Raw Materials , para. 226 (referring to Appellate B ody Report, EC – 
Selected Customs Matters , para. 130 ). (emphasis  original)  
222 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 162 (quoting 
Appellate Body Report, Thailand – H-Beams , para. 88).  
223 Appellate  Body Report s, EC – Selected Customs Matters , para. 153 ; EC – Bananas III , para. 143. 
See also Appellate Body Report s, India – Patents (US) , para. 88; Korea – Dairy , para. 139; and 
Dominican  Republic – Import and Sale of Cigarettes , para. 121.  WT/DS504/R  
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  case, and must be examined on a case -by-case basis . This typically  require s a panel to consider 
the language of a panel request  to determine whether it contain s sufficiently clear allegations so as 
to allow WTO Member s, including the responding Member, to understand the material elements of 
the alleged inconsistency . In the words of the Appellate  Body,  the language used in the  panel 
request must " 'plainly connect ' the challenged  measure(s) with the provision(s) [of the covered 
agreements ] claimed to have been infringed".224 Where a complainant claims  that an investigating 
authority 's analysis "did not involve an objective examination based on positive evidence"  or that 
the contested analysis was "improper" or "unreasonable", the inclusion in the  panel request of 
some  additional  identification of the main elements of the alleg ed violation(s)  may be neces sary. 
That does not mean that the complainant is required to set out its arguments  in the panel 
request.225 The statement  of the claim  may be as short as the nature of the alleged violation  
reasonably allows.  At the same time, it must set forth sufficiently clear allegation (s) explaining  
how or why the measure is inconsistent with  a particular treaty provision. In some cases, the 
description of the material elements of the alleged inconsistency may overlap with some of the 
complainant 's arguments. We note in this regard that : 
Nothing in Article 6.2 prevents a complainant from making statements in the panel 
request that foreshadow its arguments in substantiating the claim. If the complainant 
chooses to do so, these arguments should not be interpreted to narrow the scope of 
the measures or the claims.226 
7.129.   On its face, with respect to this second element of its claim  under Articles 3.1 and 3.2 , 
Japan 's panel  request  asserts that Korea failed to properly consider whether the effect of the 
imports under investigation was to depress prices or to prevent price increases, to a significant 
degree, inconsistent ly with the obligations in those provisions . The panel request does not contai n 
any additional narrative description of the problem  or problems considered by Japan to constitute 
the alleged inconsistency . In our view, this general reference to the text of  Article  3.2 is not 
sufficient to present the problem clearly  in the circumstances . Merely paraphrasing the language in 
the second part of Article 3.2  does not explain how or why Japan considers the measure s at issue 
to be inconsistent with  the specific WTO obligations in question, Articles 3.1 and 3.2 of the 
Anti-Dumping  Agreement,  with respect to the consideration of the effect of the dumped imports on 
prices . More specifically, it does not explain how or why Japan considers that the Korean 
Investigating Authorit ies' consideration  of price effects was improper . Japan's claim is essentially 
generic – nothing in the panel request links the claim to the particular circumstances of the 
investigation at issue.  
7.130.   This conclusion is confirmed when we take into account  the scope of the allegations 
advanced in Japan 's submissi ons. As articulated in the course of the proceedings , Japan claims  
that the KTC failed to properly consider price depression and price suppression, inconsistent ly with 
Articles  3.1 and 3.2 of the Anti -Dumping Agreement , because : 
a. the KTC ignored the diverging price trends , different physical characteristics, consumer 
opinions, and other evidence that suggested the lack of a competitive relationship 
between dumped imports and the domestic like product, which would have been 
required to establish price comparability which is necessary when assessing price 
effects227; 
b. the KTC also ignored the implications of the "dramatically diverging price trends"  
between dumped imports and domestic products for its analysis of price depression228; 
c. with respect to the KTC 's consideration of price suppression , the KTC:  (a) failed to 
explain its  "reasonable sales price" methodology  and then ignored the consequences of 
                                                
224 Appellate  Body Report, US – Countervailing and Anti -Dumping Measures (China) , para. 4.8  (referring 
to Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 162, in turn quoting 
Appellate  Body Report, Thailand – H–Beams , para. 88 ). 
225 Appellate Body Report, EC – Selected Customs Matters , para. 153.  We note that Korea  does not 
argue that Japan  is required to advance arguments and evidence in the panel request in order to meet its legal 
obligation under Article 6.2 of the DSU . 
226 Appellate Body Report, EC – Selected Customs Matters , para. 153.  
227 Japan 's first written submission, paras. 64, 70 , and 107 -113. See also second written submission, 
para. 31.  
228 Japan 's first written submission, paras. 64 and 72 -83. WT/DS504/R  
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  the "reasonable sales price" estimated by the OTI229; and (b) the KTC 's finding s ignored 
the lack of evidence of price suppression in 2011 and 2012  and the fact that the absence 
of price suppression in earlier years offset the price suppression in 2013  and failed to 
explain how higher prices for the dumped imports could have suppressed lower domes tic 
prices230; and  
d. with respect to its consideration of price depression and price suppression, the 
KTC: (i) ignored the fact that dumped import prices were consistently and significantly  
higher than the prices of the domestic like product , as well as the im plications of this 
fact for its analysis of price depression  and price suppression231; (ii) failed to consider 
whether the alleged price depression  and price suppression effects of dumped imports 
were "significant "232; and (iii) failed to consider the counterf actual issue of how prices 
and volumes might have been different in the absence of dumping.233 
7.131.   For the reasons explained above , we find that, although  the language of Japan's  panel 
request is capable  of identifying the subject matter of its complaint , it is not sufficiently precise to 
present the problem clearly as required by Article 6.2 of DSU. Accordingly, we conclude that 
Japan 's claim under Articles  3.1 and 3.2 of the A nti-Dumping  Agreement,  with respect to the 
consideration of the effect of the dumped imports on prices,  is not properly within the Panel 's 
terms of reference , and we will neither consider it further nor resolve it. 
7.7  Impact of the dumped imports  on the domestic industry  
7.7.1   Introduction  
7.132.   Japan claims  that Korea 's measures are inconsistent with Articles 3.1 and 3.4 of the 
Anti-Dumping  Agreement , "because Korea 's analysis  of the impact of the imports under 
investigation on the domestic industry at issue  did not involve an objective examination  based on  
positive evi dence , including an evaluation of all relevant economic factors and indices having a 
bearing on the state of the domestic industry at issue".  Japan  challenges the KTC's examination of 
the impact of the dumped imports on the state of the domestic industry  in four 
respects:  (a) failure to link its analysis of volume and price effect s with the alleged consequent 
impact from the dumped imports ; (b) failure to demonstrate any "explanatory  force" of the 
dumped imports on the state of the domestic industry ; (c) failure to examine two economic factors  
explicitly listed in Article  3.4 of the Anti-Dumping  Agreement : the ability to raise capital or 
investments and the magnitude of the margin of dumping;  and (d) failure to properly take into 
account  positive trends du ring the period of trend analysis with respect to several economic factors . 
7.133.   Korea  argues that Japan 's claim concerning the impact of the dumped imports on the state 
of the domestic industry is outside the Panel 's terms of reference because Japan 's panel re quest 
does not comply with the requirements of Article 6.2 of the DSU with respect to this claim. In the 
alternative, Korea  asks the Panel to reject Japan 's claim . 
7.7.2   Main arguments  of the parties  
7.7.2.1   Alleged  failure to link findings on volume and price effect s with findings on the 
state of the domestic industry  
7.7.2.1.1   Japan  
7.134.   Japan  argues that the KTC failed to establish any logical link between its findings on 
volume and price effects under  Article 3.2 and its findings on the state of the domestic industry 
                                                
229 Japan 's first written submission, paras. 64, 92, and 97 -99. 
230 Japan 's first written submission, paras. 64, 91-93, and 100 -106. 
231 Japan 's first written submission, paras. 64, 84 -90, and 94; second written submission, paras. 46 -49. 
232 Japan 's first written submission, paras. 64, 90 , and 106. For the discussion of the price depression 
analysis, see Japan 's first written submission, paras. 72 -90. For the discussion of the price suppression analysis, 
see Japan 's first written submission, paras. 91-106. 
233 Japan 's second written submission, paras. 17 and 25 -32. WT/DS504/R  
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  under Article  3.4, in particular  with respect  to its evaluation of sales, production volume , market 
share, factors affecting domestic prices, and profits.234 
7.135.   Japan asserts that  the KTC did not clearly address the volume of dumped  imports in its 
discussion of domestic sal es volume, and addressed the volume of dumped  imports in its 
discussion of domestic production volume "only in passing". According to Japan, e vidence in the 
record suggested that the consequent impact of the volume of dumped  imports on the domestic 
industr y was negligible.235 
7.136.   Japan also asserts that t he KTC failed to consider the decrease in the  domestic industry 's 
market share from 2012 to 2013 in the context of : (a) an overall increase in the domestic 
industry 's market share from 2010 to 2013 ; (b) the export orientat ion of the domestic industry 
in 2013; and ( c) the impact of the increase in the market share of third countr y imports (even 
though this increase might be negligible in absolute terms). Furthermore, the KTC failed to discuss 
the relationship between the increase in the volume of domestic sales and the decrease in their 
market share.236 
7.137.   Japan submits that, i n its evaluation of the trends of domestic prices, the KTC failed to 
discuss how the fact that the prices of dumped  import s were consistently  higher than domestic 
prices affected its analysis of the impact of those imports on the state of the domestic industry , as 
well as its analyses of price effects and causation .237 
7.138.   According to Japan, t he trend in the domestic industry 's profits was largely u nrelated to 
dumped  imports . Japan asserts that the KTC failed to explain : 
a. why the operating losses of the domestic industry expanded in 2012 at a time when the 
volume of dumped  imports decreased and the prices of those imports increased ; 
b. why the effects of  dumped  imports on profits were different in 2012 and 2013 , including 
why those imports had an effect in 2013 when they did not have an effect earlier in the 
period; and 
c. why the dumped  imports would have an impact on the domestic industry when their 
prices were significantly higher than the domestic prices and even though the volume of 
domestic shipments increased in 2013.238 
7.139.   Japan also argues that in the absence of a proper consideration  of the dumped 
imports ' effects  on the domestic like product as a whole, the impact examination  in the present 
case is necessarily  inconsistent with Article  3.4 of the Anti -Dumping Agreement .239 
7.7.2.1.2   Korea  
7.140.   Korea  responds that Article 3.4 of the Anti-Dumping  Agree ment does not require an 
investigating authority to link its examination of each and every economic factor  in this provision 
with its consideration of the price and volume effects under Article 3.2. The focus of this 
examination should be on all relevant e conomic factors having a bearing on the state of the 
domestic  industry, and not on demonstrat ing that the dumped imports were causing injury  to the 
domestic industry. Article 3.4 requires the examination of the impact of the dumped imports "as a 
whole" on the domestic industry, based on the evaluation of "all relevant economic factors and 
indices having a bearing on the state of the industry". Korea argues that, in this sense, Japan's 
argument that the KTC's impact analysis was inconsistent with Article 3.4  because it failed to "link" 
each of the indices or factors it addressed specifically to the volume or price effect of the dumped 
imports, is unavailing. In addition, according to Korea, t he obligation under Article 3.4 is to 
examine  the impact of dumped i mports on the domestic industry, not to demonstrate  that dumped 
imports are causing injury to the domestic industry . Similarly, in its examination  of Article 3.4 
                                                
234 Japan 's first written submission, paras. 149 -162. 
235 Japan 's first written submission, paras. 150 -151. 
236 Japan 's first written submission, paras. 152 -159. 
237 Japan 's first written submission, para. 160.  
238 Japan 's first written submission, par as. 161 -162. 
239 Japan 's second written submission, para. 128.  WT/DS504/R  
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  economic  factors, an investigating authority is not required to conduct a fully -fledged 
non-attribution analysis, as Japan 's arguments seem to suggest .240 
7.7.2.2   Alleged failure to examine the explanatory force of the dumped  imports on the 
state of the domestic industry  
7.7.2.2.1   Japan  
7.141.   Japan  argues  that the KTC failed to meaningfully examine the explanatory  force of dumped  
imports on the state of the domestic industry under Article 3.4  of the Anti-Dumping  Agreement . 
According to Japan, the KTC did not engage in a meaningful examination of whether the state of 
the domestic industry could be connected to the effect of dumped  imports. Japan asserts that 
factors other than the dumped  imports have explanatory force on the state of the domestic 
industry:  
a. the decline  in consumption  in 2012 has more explanatory force for the decrease of 
domestic sales in 2012 than the dumped  imports which also decreased in 2012;  
b. the domestic industry 's loss of market share in 2013 was caused by the sharp increase 
of consumption in 2013, rather than by dumped  imports which were a less important 
explanatory  factor;  
c. the fact that dumped  import pr ices are higher than domestic prices undermines the 
explanatory force of those imports for the decrease in the prices of the domestic like 
product in 2013;  
d. competition between the two applicants, as a result of the increase in their respective 
capacity , has more explanatory force than the dumped  imports for the trends in the 
prices of the domestic industry; and 
e. the explanatory force of the dumped  imports for the decrease of domestic like product 
prices is undermined by the fact that domestic  prices decreased by 3.6% in 2012 
whereas dumped  import prices increased by 7%, and domestic prices decreased by 
only 1.2% in 2013, when dumped  import prices fell by 31.1%.241 
7.7.2.2.2   Korea  
7.142.   Korea  maintains  that Article 3.4 of the Anti-Dumping  Agreement  does not require an 
investigating authority  to determine causation. Korea asserts that the KTC examined and 
adequately explained the relationship  between the dumped imports and the state of the domestic 
industry.  In Korea 's view, Article 3.4 does not require an investigating authority to establish the 
"explanatory force" of the dumped imports for each factor individually.  Korea argues, however, 
that the KTC did examine and adequately explain "the relationship between [dumped  imports ] and 
the state of the d omestic industry" and, as such, derived an understanding of the impact of 
dumped  imports.242 Korea states that i n its Final Resolution, the KTC specifically included analysis 
explaining the impact of the dumped imports on the relevant economic factors.243 
7.143.   Korea also states that Japan 's specific arguments  concerning the lack of explanatory force 
of the dumped imports, such as the lack of "market interaction", price overselling , and others , are 
simply recast ing arguments previously made by Japan under the price effects analysis.244 
                                                
240 Korea 's first written submission, paras. 207 -213. 
241 Japan 's first written submission, paras. 163 -172. 
242 Korea' s first written submission, para. 215 (referring to Appellate Body Report s, China – HP-SSST 
(Japan) / China – HP-SSST (EU) , para. 5.205 ; and  China – GOES , para. 149).  
243 Korea 's first written submission, paras. 215 -221 (referring to KTC's Final Resolution, 
(Exhibit  KOR-1(b) (BCI)), pp. 21 -27). 
244 Korea 's first written submission, paras. 21 4-225. WT/DS504/R  
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  7.7.2.3   Alleged failure  to examine relevant economic factors listed in Article 3.4  of the 
Anti-Dumping Agreement  
7.7.2.3.1   Japan  
7.144.   Japan argues that t he KTC failed to adequately examine the following two factors explicitly 
listed in Article 3.4 of the Anti-Dumping  Agreement:  
a. concerning the ability  to raise capital or investments, the KTC provided a conclusory 
statement that the domestic industry 's funding ability had deteriorated due to 
continuous operating losses  and increasing liability , without any fa ctual support. 
Moreover, the KTC 's conclusion was contradicted by evidence in the record that there 
was massive investment in new facilities in 2011 and 2012 when the domestic industry 
was incurring losses245; and  
b. concerning the magnitude of the margin of du mping, the KTC merely stated that "the 
margin  was not small" and that "dumping influenced much on the selling price". This 
conclusion has no factual support , and  is contradicted by the fact that the prices of the 
dumped  imports were consistently higher tha n domestic like product prices.246 
7.7.2.3.2   Korea  
7.145.   Korea  maintains  that Article 3.4 does not require a comprehensive analysis  of whether the 
dumped imports caused injury . In Korea 's view, t he KTC examined the two factors  identified by 
Japan , and the basis for its find ings was explained  adequately in its Final Resolution and in the 
OTI's Final Report . According to Korea:  
a. concerning the ability to raise capital, the KTC found that the domestic industry 's ability 
to raise capital was negatively affected because of its operating loss es and its increasing 
indebtedness, on the basis of evidence contained in the audited reports. The fact that 
the domestic industry raised capital in 2011 and 2012 does not undermine the common 
sense conclusion that persistent operating  losses  and increasing debt were detrimental  
to the domestic industry 's ability to raise capital ; and  
b. concerning the magnitude of the margins of dumping, the KTC considered the actual 
figures for the margin of dumping (11.6 6% to 31.61%) and found that the  magnitu de 
was not insignificant  and had a significant  impact on the  prices of the dumped imports 
and those of the domestic industry like product.247 
7.7.2.4   Alleged failure  to properly tak e into account positive trends  
7.7.2.4.1   Japan  
7.146.   Japan argues that the KTC attached a high degree  of importance to economic factors 
showing negative trends for the domestic industry and disregarded or downplayed factors showing 
positive trends. The KTC also failed to explain the weight attributed to any given factor, as well as 
to explain the inferenc es it drew from those factors showing positive trends for the domestic 
industry, such as domestic sales and new investments.248 
7.147.   Japan asserts that the volume of domestic sales increased in two out of the three years 
that were part of the period of trend analysis, and increased by 14% over the full period. However, 
the KTC focused on the fact that the 7.6% increase in domestic sales  in 2013 was only a "slight 
                                                
245 Japan 's first written submission, para s. 174-176. 
246 Japan 's first written submission, para s. 177-178 (referring  to KTC's Final Resolution, 
(Exhibit  JPN-4(b)), p. 26 ). We note that Japan  uses direct quotations in a number  of places throughout its 
first written submission , but the quoted text do es not always accurately reflect the text in the KTC's Final 
Resolution, as translated in the exhibit provided by Japan itself . In this instance, the quoted text should read 
"the magnitude  of the margin  of dumping  was not small" and " such dumping margin had considerably 
influenced the selling price  of the dumped  imports and the price of like products ". 
247 Korea 's first written submission, paras.  226-232. 
248 Japan 's first written submission, para.  180. WT/DS504/R  
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  increase" and was "not much".249 The KTC failed to explain why this increase in 2013 was 
harmful.250 
7.148.   According to Japan, the KTC focused on the negative trend in investment in an unbalanced 
manner.  The KTC failed  to discuss the fact  that the domestic industry dramatically expanded 
capacity over the period, wh ich reflected a positive trend, albeit one that came with risks.  Instead, 
the KTC 's statement that in 2013 the dumped imports "started dominating the domestic 
market"251 ignores th e full period of trend analysis and is not supported by the facts. In Japan 's 
view, in 2013 t he dumped  imports were merely returning to the  market following a decrease in 
volume in 2011 and 2012 when overall consumption declined.252 
7.7.2.4.2   Korea  
7.149.   Korea  responds that  Japan  failed to substantiate its argument that the KTC improperly 
disregarded certain positive economic factors. According to Korea, t he KTC 's determination on the 
state of the domestic industry was based on a comprehensive  review of all relevant economic  
factors. The KTC 's overall conclusion  is not undermined by the fact that a few economic factors do 
not necessarily  indicate injury, because neither one nor  several  of these economic factors 
necessarily give decisive guidance.253  
7.150.   With respect to the two eco nomic factors referred to by Japan , Korea  argues that:  
a. the KTC evaluated  the trend in the domestic industry 's sales. The KTC explained that the 
slight increase in sales in 2013 was disappointing when viewed in the context of 
increased costs and the loss of market share amid the expansion of consumption; and  
b. the KTC also evaluated the sharp increase of investment in the beginning of the period of 
trend analysis , and its positive impact on the domestic industry 's manufacturing costs. 
Nevertheless, the KTC found that th at investment could not offset the overall injury to 
the domestic industry.254  
7.7.3   Relevant facts  
7.151.   The Korea n Investigating Authorities ' evaluat ion of  all of the economic factors set out in 
Article 3.4 in its examination  of the impact of the dumped imports on the state of the domestic 
industry  is set out in the Final Resolution of the KTC255 and the  Final Report  of the OTI .256 
7.152.   Concerning market  share  of the domestic industry , the KTC stated in its Final Resolution : 
The domestic market share of the like product increased from [[***]]% in 2010 to 
[[***]]% in 2011 and to [[***]]% in 2012 and then rapidly decreased in 2013 to 
[[***]]%, a similar level with 2010.  
                                                
249 As noted above, Japan  uses direct quotations throughout its first written submission , but the quoted 
text does not always accurately reflect the text in the KTC's Final Resolution, as translated in the exhibit 
provid ed by Japan itself . In this instance, t he text in the KTC's Final Resolution reads "in 2013,  the domestic 
sales of like products were increased by 7.6%  … [i]n spite of slight increase  of sales, there was a material 
injury to domestic industry of losing the  market share significantly" and "[i]n 2013, although the domestic 
consumption was increased, the domestic sales of like products did not increase as much as expected  due to a 
sharp increase of dumped imports".  (KTC's Final Resolution , (Exhibit JPN -4(b)), pp. 20 and 22 (emphasis 
added) ). 
250 Japan 's first written submission, para.  181. 
251 The quoted texts do not correspond with the text in the KTC's Final Resolution . The KTC's Final 
Resolution stated, in relevant part, that "in 2013, dumped imports largely eroded the domestic market , so the 
domestic industry failed to increase the output  in accordance with the expansion  of facility capability". (KTC's 
Final Resolution , (Exhibit JPN -4(b)), p. 25 ). 
252 Japan 's first written submission, para. 182.  
253 Korea 's first written submission, paras.  233-234. 
254 Korea 's first written submission, paras.  235-239. 
255 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 20-26. 
256 OTI's Final Report , (Exhibit KOR -2(b) (BCI)) , pp. 60 -76. WT/DS504/R  
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  In 2011, when domestic consumption decreased by 3.3%, the l ike product expanded 
its market share by increasing domestic sales by13.4%; in 2012, when domestic 
consumption decreased by as much as 22.9%, the decrease in the domestic sales of 
the like product was by only 6.6%, while its market share expanded by [[***]]%. 
Such expansion of the domestic market share by the domestic industry appears to 
have been enabled by suppressing the increase of, or decreasing, the sales price of 
the like product through cost reduction.  
However, in 2013, when domestic consumption soared by 52.8%, the market share of 
the like product decreased [[***]]%, while dome stic sales thereof increased by  7.6%. 
This indicates that the like product was materially injured  when its market share was 
lost significantly despite the slight increase in the sales volume .257 
7.153.   The KTC concluded that the loss in market share  despite a slight increase in sales  indicated 
that the domestic industry was materially injured. Moreover, the  domestic industry was not able to  
further reduce its sales price in 2013 to compete with the dumped imports (whose prices declined 
significantly in 2013) because of the deterioration in operating profit.258 As a consequence, the 
domestic industry lost a significant portion of its market sha re during this period : 
The sharp increase in the imports of the dumped products caused the domestic 
companies to lose their market share which they had struggled to expand until 2012, 
and in terms of the price, the price of the domestic like product was su ppressed from 
increases , or was reduced , in response to the decrease in the price of the dumped 
products. This clearly inflicted material injury to the domestic industry including the 
continued operating losses .259 
7.154.   In its Final Report, the OTI stated : 
The market share of the like products rose from [[ ***]]% in 2010 to [[ ***]]% 
in 2011 to [[ ***]]% in 2012 and then fell to [[ ***]]% in 2013.  
Throughout the entire period of investigation, the market share thereof remained 
unchanged.  
… 
During the entire period o f investigation, the like products undermined the domestic 
market share of the dumped products until 2012 and then lost most of the two -year 
increase in the market share in 2013.  
The domestic industry appears to have increased its market share until 2012 a s it 
endeavored to secure the market by enhancing its price competitiveness through 
reduction of manufacturing costs, etc. under the circumstances that domestic demand 
was on the decrease and the import of the dumped products decreased . 
… 
In 2013, under th e circumstances that domestic demand considerably increased, the 
import of dumped products increased as much as 78.9% and the dumped products 
recovered most of their lost market share through substantial price reduction and 
aggressive marketing activities.   
On the contrary, despite a drastic increase in domestic consumption, the like products 
appear to have lost the increased market share due to the difficulties in reducing 
prices additionally because of their operating deficits . 
                                                
257 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 20 . See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)) , pp. 62 -63. 
258 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 20 -21. 
259 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 21.  WT/DS504/R  
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  … 
During the period of inve stigation, SMC Korea, the importer of SMC products, was 
confirmed to have strived to expand its market share through a variety of aggressive 
marketing activities.260 
7.155.   Concerning domestic industry prices, the KTC stated:  
The average sales price of the like pro duct increased by 5.9% from KRW [[ ***]] in 
2010 to KRW [[ ***]] in 2011, but decreased by 3.6% to KRW [[ ***]] in 2012, and 
by 1.2% to KRW  [[***]] in 2013; in sum, the average sales price of the like product 
increased by 0.8% from 2010 to 2013.  
The review of  the changes in the price based on the price fluctuation index, which 
takes into consideration the changes in the composition of the products being sold, 
shows that, assuming the price of 2010 to be 100, the price index stood at 100.3 
in 2011, 98.6 in 2012  and 96.5 in 2013, indicating that the sales price of the like 
product decreased by [[ ***]]% throughout the entire period of investigation.261 
7.156.   Concerning  investment, the KTC stated : 
According to the [OTI 's] Investigation Report, the investment in facility by  the 
domestic industry was KRW [[ ***]] in 2010, KRW [[ ***]] in 2011, KRW [[ ***]] in 
2012 and KRW [[ ***]] in 2013, showing a sharp increase in 2011 and 2012 . As 
discussed previously, the domestic industry expanded its investment in facility, in the 
expectat ion that economic recovery and the expansion of investment in automation 
would increase demand, but the domestic and international demand significantly 
decreased in 2012 due to the fiscal crises in Europe, etc. and the dumped products 
largely dominated the  domestic market, resulting in the failure to increase output in 
accordance with the expansion of the production capacity.  
Accordingly, the domestic industry 's demand for investment in facility is expected to 
shrink significantly  for the time being, and it  appears that the dumped products are 
having potentially adverse impact on the domestic industry 's investment in facility.262 
7.157.   Concerning the domestic industry 's funding ability, the KTC observed  that the domestic 
industry research and development ( R&D) expen diture increased since 2011 despite operati ng 
losses , but noted at the same time that the ratio  of R&D expenditure  to sales inc reased only 
in 2011 and decreased continuously thereafter . The KTC stated:  
The domestic industry is making efforts for technological development, e.g., by 
spending more than KRW [[ ***]] per year since 2011 despite the operating losses, 
but the ratio of R&D spending to the sales amount increased only in 2011 and has 
since decreased continuously.  
Due to the continued operati ng loss, the domestic industry 's internal capability for 
investment is dwindling and the demand for investment in facility is shrinking as the 
capacity utilization of facilities and the market share decrease due to the rapid growth 
in the import of the dum ped products. In sum, it appears that the overall growth of 
the domestic industry has been significantly undermined.   
… 
The continuing operating loss of the domestic industry is weakening its internal capital 
raising capacity, and the increase in debt caus ed by such operating loss is weakening 
the external capital raising capacity as well.263 
                                                
260 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , pp. 62 -63. 
261 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 2 2. 
262 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 25.  (emphasis  added ; fn omitted)  WT/DS504/R  
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  7.158.   With respect to its evaluation of the magnitude of the margin of dumping, the KTC stated : 
As discussed previously, the final dumping margins of the dumped products were 
ranged between 11.66% and 31.61%, which means the size of dumping margin is not 
insignificant. Accordingly, such dumping appears to have had significant impact on the 
sales price of the dumped products and that of the like product.264 
7.159.   With respect to sales, the KTC stated:  
According to the Investigation Report,  the domestic shipment of the like product 
indicated yearly fluctuations, increasing by 13.4% from [[ ***]] units in 2010 to 
[[***]] units in 2011, decreasing by 6.6% to [[ ***]] units in 2012, and increasing 
again by 7.6% to [[ ***]] units in 2013. As such, the shipment in 2013 was [[ ***]]% 
higher than that of 2010 .  
… 
However, in 2013, when domestic consumption soared by 52.8%, the market share of 
the like product decreased [[ ***]]%, while dome stic sales thereof increased by  7.6%. 
This indicates that the like product was materially injured when its market share was 
lost significantly despite the slight increase in the sales volume.265 
7.160.   With respect of the domestic industry 's profitability, the KTC found  that the domestic 
industry  recorded negative growth over the entire period of trend analysis . The KTC attributed  the 
deterioration  of the operating profit after having improv ed in 2011 to the decreasing prices and 
increasing costs of the domestic industry : 
The operating profit from domestic sales by the domestic industry remained in deficit 
during the period of investigation, and the operating loss rate decreased from 
[[***]]% in deficit in 2010 to [[***]]% in deficit in 2011 and the loss rate widened  
again to [[***]]% in deficit in 2012 and to [[***]]% in deficit in 2013. As the 
operating loss continued, the domestic industry 's return on investment as a 
percentage of the assets invested in the production of the like product recorded 
negative growth th roughout the entire period of investigation.  
The deterioration of the operating profit in 2012, after improving in 2011, was a result 
of the price reduction of the like product and the increase in the operating cost in 
response to the competition with the  dumped products .266 
7.7.4   Panel 's terms of reference  
7.7.4.1   Main arguments of the parties  
7.161.   In its panel request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 3.4 of the A nti-Dumping  Agreement, "because Korea 's analysis  of the impact of the imports 
under investigation on the domestic industry at issue  did not involve an objective examination  
based on  positive evidence , including an evaluation of all relevant economic factors and indices 
having a bearing on the state of t he domestic industry at issue".267 
7.162.   Korea argues that Japan 's claim under Articles 3.1 and 3.4 of the Anti -Dumping Agreement 
with respect to the analysis of the impact of the imports under investigation on the domestic 
industry is outside of the Panel 's terms  of reference.268 According to Korea, " Japan 's panel request 
does not provide a brief summary  of the complaint [as required by Article 6.2 of the DSU] but 
                                                                                                                                                  
263 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 25-26. 
264 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 26.  
265 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 20.  (fn omitted)  
266 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 23; see also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)) , p. 6 8. 
267 Japan's panel request , p. 1.  
268 Korea 's preliminary ruling request, paras. 30 -32. WT/DS504/R  
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  merely paraphrases the legal obligation contained in the articles alleged to have been violated".269 
In Korea's view, Japan 's panel request:  
[M]erely paraphrases the obligations of Article 3.1 on positive evidence and an 
objective examination and copies the first part of the first sentence of Article 3.4 
asserting that Korea 's analysis did not involve an objective examination based on 
positive evidence "including an evaluation of all relevant economic factors and indices 
having a bearing on the state of the domestic industry".270 
7.163.   Korea argues  that: 
Article 3.4 establishes multiple obligations that must be co mplied with in an 
anti-dumping investigation  … However, Japan 's panel request in relation to this third 
claim under Article 3.4 does not explain which of these obligations included in 
Article  3.4 it considers to have been violated, nor does it identify the  specific aspects 
of the anti -dumping investigation or resulting final determination that it considers to 
be flawed in light of these obligations. There is no narrative of any kind to assist 
Korea, the third parties or the Panel for that matter to understa nd the complaint of 
Japan  … Korea is left to guess what the concern of Japan is and which aspect of the 
challenged measures it considers to violate the many o bligations set forth in 
Article  3.4.271 
7.164.   In response, Japan argues that Article 3.4 of the A nti-Dumping Agreement "provides for a 
single  obligation for an investigating authority to conduct the integrated  examination of the impact 
of the dumped imports on the domestic industry which 'shall include  an evaluation of all relevant 
economic factors and indices '". The different factors listed in Article 3.4 "must all be considered as 
part of the single obligation to examine the impact of dumped imports on the domestic industry" . 
"[R]ead with Article 3.1, Article 3.4 provides for a single obligation to examine 'the impact of the 
dumped imports on the domestic industry ' based on 'positive evidence ' and 'objective 
examination '".272 
7.7.4.2   Evaluation by the Panel  
7.165.   We will first examine the sufficiency  of Japan 's panel request  with respect to Japan 's claim 
under Articles 3.1 and 3.4 of the Anti-Dumping Agreement  regarding the examination of the 
impact of the imports under investigation on the domestic industry . We will consider  in this regard 
whether, with respect to this claim and in accordance with Article 6.2 of the DSU , Japan 's panel 
request  provides a brief summary of the legal basis of the complaint which is sufficient to present 
the problem clearly. We will keep in mind the double function of a panel request: (a) to set the 
terms of reference for the Panel under Arti cle 7.1 of the DSU  and define the scope of the dispute; 
and (b) to serve the due process objective of notifying t he respondent and the other 
WTO Members of the nature of the complainant 's case.273 If Japan 's panel request fails to explain 
succinctly how or why the measure s at issue are considered by Japan to be violating the WTO 
obligations in question, it would not fulfil the requirement of Article 6.2 of the DSU . In that case, 
Japan 's claim under Articles  3.1 and 3.4 with respect to the examination of the impact of the 
imports under investigation on the domestic industry  would not be within the scope of the Panel 's 
terms of reference.  
7.166.   With respect to the claim at issue, t he first part of the relevant paragraph paraphrases the 
first part of Article 3.1 , asserting that the KTC 's examination of the impact of the dumped imports 
on the state of the domestic industry "did not involve an objective examination based on positive 
evidence ". The second part of the paragraph refers to the alleged failure to conduct "an evaluation 
                                                
269 Korea 's preliminary ruling request, para. 12 (emphasis original) . See also first written submission , 
annex , para. 6;  and second written submission , annex , para. 1.  
270 Korea's preliminary ruling request, para. 31.  
271 Korea 's preliminary ruling  request, paras. 30 -31. See also first written submission, annex , paras. 5, 
6, and 11.  
272 Japan 's response to Korea 's preliminary ruling  request, paras. 41 -42 and 44 (emphasis original) . See 
also response to Panel question No. 11, para. 13.  
273 Appellate Body Reports, EC – Bananas III , para. 142; US – Carbon Steel , para. 126.  WT/DS504/R  
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  of all relevant economic factors and indices having a bearing on the state of the domestic industry 
at issue ". 
7.167.   As mentioned above , a general reference to the language in Article  3.1 in itself  is not 
normally sufficient to present the problem clearly.274 This formulation  does not explain how or why 
Japan considers the measure s at issue to be violating the specific WTO obligations in question, 
including that in Article  3.1 of the A nti-Dumping  Agreement.  
7.168.   Accordingly, we must  consider the second  part of the paragraph, i.e. the  assertion of an  
alleged failure to conduct "an evaluation of all relevant economic factors and indices having a 
bearing on the state of the domestic industry at issue ". We recall in this regard that the text of  3.4 
of the A nti-Dumping  Agreement requiring that "[t] he examination of the impact of the dumped 
imports on the domestic industry concerned shall include an evaluation of all relevant factors and 
indices having a bearing on the state of the industry, including  …"275 sets for th a mandatory list of 
relevant factors which must be evaluated in every case. The list of factors and indices in Article  3.4 
is therefore not merely indicative or illustrative, and the examination of each of them is necessary 
for compliance with the provi sion.276 
7.169.   Japan 's panel request refers  to whether, in examining the impact of the dumped imports 
on the domestic industry, the Korean Investigating Authorities properly evaluated each of the 
relevant factors and indices listed in Article 3.4. In this respect,  on its face Japan 's panel request 
suggests that the failure by the KTC  to evaluate one or more of these factors constitute s a 
violation of Articles 3.1 and 3.4 of the Anti -Dumping Agreement. This formulation  indicates  how or 
why Japan considers the measure s at issue to be inconsistent with  the specific WTO obligations in 
question, namely those in Articles  3.1 and 3.4 of the A nti-Dumping  Agreement.  
7.170.   The allegation s in Japan 's submissions that the KTC failed to evaluate two of the s pecific 
factors listed in Article  3.4 (the ability to raise capital or investments, and the magnitude of the 
margin of dumping) may be viewed  as arguments  seeking to demonstrate the claim  set out in the 
panel request. Accordingly, we consider these allegat ions to be within our terms of reference.  
7.171.   With respect to this claim, the language used by Japan is precise enough to serve the dual 
function of a panel request: (a) to define the basis for the Panel 's terms of reference under 
Article  7.1 of the DSU; and (b) to inform other WTO Members, including the respondent, of the 
nature of the dispute.  
7.172.   In the course of the proceedings, Japan has advanced other  allegations of violation  of 
Articles 3.1 and 3.4 of the A nti-Dumping  Agreement, specifically that : (a) t he KTC did not 
establish a logical link between its findings o n the volume and price effects under Article 3.2 and 
its finding of adverse impact under Article 3.4; (b) with respect to certain factors listed in 
Article  3.4, the KTC failed to demonstrate any exp lanatory force of dumped  imports for 
understanding domestic industry trends; and (c) the KTC attached a high degree of importance to 
the relevant factors highlighting negative aspects, while disregarding or downplaying without any 
explanation the factors s uggesting that the Korean industry was not suffering injury . 
7.173.   On its face, the panel request does not indicate or suggest that Japan 's claim regarding 
Korea 's analysis  of the impact of the imports under investigation on the domestic industry  extends 
to incl ude these allegations . With respect to these allegations, as mentioned above , a general 
reference to the language in Article  3.1 in itself  is not sufficient to present the problem concerning 
the KTC 's examination  of the impact of the dumped imports on the state of the domestic industry 
clearly. Japan 's assertion that Korea failed to conduct "an evaluation of all relevant economic 
factors and indices having a bearing on the state of the domestic industry at issue " does not cover 
these three additional allegations , which do not refer to any failure to evaluate relevant economic 
factors and indices . There is no indication in Japan 's panel request that these allegations are part 
of the how or why Japan considers the me asure s at issue to be violating the specific WTO 
obligations in question, namely those in Articles  3.1 and 3.4 of the A nti-Dumping  Agreement.  
                                                
274 See para. 7.35 above . 
275 Emphasis added.  
276 See, for example, Panel Reports, Thailand – H-Beams , para. 7.225; and Argentina – Poultry 
Anti-Dumping Duties , para. 7.314.  WT/DS504/R  
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  7.174.   With respect to these allegations,  the language used by Japan is not precise enough to 
serve the dual function of a panel request: (a) to define the basis for the Panel 's terms of 
reference under Article  7.1 of the DSU; and (b) to inform other WTO Members, including the 
respondent, of the nature of the dispute.  
7.175.   Accordingly, we find that Japan 's claim concerning the state of the domestic industry , 
under Articles  3.1 and 3.4 of the A nti-Dumping  Agreement,  is limited to the allegation that the KTC 
failed to evaluate two of the specific factors listed in Article  3.4. We conclude that all  other 
allegations of inconsistency with Article 3.4 argued by Japan are not properly within the Panel 's 
terms of reference , and we will neither consider them further nor resolve them . 
7.7.5   Alleged  failure to examine  two economic factors listed in Article 3.4  of the 
Anti-Dumping Agreement  
7.176.   Having concluded  that Japan 's claim that the KTC failed to evaluate two of the specific 
factors listed in Article 3.4 is properly before us, we now turn to examine this claim.  
7.7.5.1   Relevant  provisions  
7.177.   Article 3.1 of the Anti -Dumping Agreement provides : 
A determination of injury for purposes of Article VI of GATT 1994 shall be based on  
positive  evidence and involve an objective examination of both (a) the volume of the  
dumped imports and the effect of the dumped imports on prices in the domestic  
market for like products, and (b) the consequent impact of these imports on domestic  
producers of such products.  
Article  3.4 of the Anti -Dumping Agreement provides : 
 
The examination of the impact of the dumped imports on the domestic industry 
concerned sha ll include an evaluation of all relevant economic factors and indices 
having a bearing on the state of the industry, including actual and potential decline in 
sales, profits, output, market share, productivity, return on investments, or utilization 
of capa city; factors affecting domestic prices; the magnitude of the margin of 
dumping; actual and potential negative effects on cash flow, inventories, employment, 
wages, growth, ability to raise capital or investments. This list is not exhaustive, nor 
can one o r several of these factors necessarily give decisive guidance.  
7.178.   Article  3.4 does not require merely an examination of the state of the domestic industry  in 
the abstract. Rather, it contemplates that an investigating authority must also "derive an 
understand ing of the impact of  subject  imports" on the basis of an examination  of the relationship 
between dumped  imports and the state of the domestic industry.277 
7.179.   Article  3.4 requires  that the examination  of the impact  of the dumped imports on the 
domestic industry  shall include an evaluation  of all relevant economic factors, including each of the 
fifteen listed in that provision.278 Article  3.4 does not require an investigating authority to make a 
determination  regarding the impact of dumped imports, but rather to examin e that impact . The 
fact that no determination need be made makes it clear that no particular outcome is a necessary 
prerequisite for going on to address and resolve the "ultimate question" of injury caused by 
dumped imports.279 Neither Article 3.4 nor any other provision of the A nti-Dumping  Agreement 
provides any guidance regarding a specific methodology on how these factors and indices shall be 
evaluated.  The evaluation of the relevant factors must respect, however, the overarching principle 
set out in  Article 3.1 concerning the objective examination of positive evidence. An "evaluation" of 
each of the factors in Article  3.4 requires a process of analysis and assessment  of the role, 
                                                
277 Appellate  Body Report, China – GOES , para.  149 (emphasis original). See also Appellate  Body 
Report s, China – HP-SSST (Japan) / China – HP-SSST  (EU), para.  5.205.  
278 Appellate Body Report, Thailand – H-Beams , para. 125.  
279 Article  3.4 specifically provides that no one or several of the factors listed therein can necessarily 
give decisive guidance, which the panel i n China – Cellulose Pulp  understood to mean that "no one or several 
of the factors listed can give decisive guidance as to the ultimate question whether dumped imports are 
causing material injury to the domestic industry" . (Panel Report, China – Cellulose Pulp, fn 53 ). WT/DS504/R  
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  relevance and relative weight of each factor in the particular investig ation. In addition, if  an 
investigating authority concludes that a particular factor listed in Article  3.4 is not relevant, this 
conclusion must be explained.280 
7.7.5.2   Evaluation by the Panel  
7.180.   With respect to its assertion that the KTC failed to examine  the ability  to raise capital or 
investments and the magnitude of the margin of dumping , Japan's  argument is not that the KTC 
did not examine these factors  at all , but rather that the KTC did not adequately or properly 
examine these factors.281 We recall that neither  Article  3.4 nor any other provision of the 
Anti-Dumping  Agreement provides any methodology on how these factors and indices shall be 
evaluated , apart from the overarching principle set out in Article  3.1 concerning the objective 
examination of positive ev idence.282 Moreover, as discussed, no determination is required in the 
context of the Article 3.4 examination of factors. In this situation, it seems to us that, since the 
ultimate question is whether there is injury caused by dumped imports regardless of an y outcomes 
of the Article 3.4 examination, the only issue that remains to be decided is whether the KTC 's 
evaluation  of these two factors, in the context of its overall examination of the impact of dumped 
imports on the state of the domestic industry, was that of a reasonable and objective  investigating 
authority in light of the evidence and arguments that were before the KTC . 
7.7.5.2.1   Ability to raise capital or investments  
7.181.   Japan argues that the KTC 's statement that the domestic industry 's funding ability had 
deter iorated due to continuous operating losses  and increasing liability  was "contradicted " by 
evidence in the record that the domestic industry engaged in massive investment in new facilities 
in 2011 and 2012 at the same time when it was incurring losses.283 Japan also argues that 
continued operating loss does not always negatively affect the domestic industry's ability to raise 
capital. Japan contends that "[t]he markets are full of examples of companies and industries that 
have had continuing operating losses a nd are nevertheless eagerly sought out by investors and 
able to raise large amounts of capital" .284 For this reason, Japan argues that it is not sufficient for 
the KTC to state in its evaluation of the domestic industry's ability to raise capital that "the 
continuing operating loss of the domestic industry is weakening its internal capital raising capac ity, 
and the increase in debt caused by such operating loss is weakening the external capital raising 
capacity as well" . Korea argues that the KTC evaluated the domestic industry's ability to raise 
capital. Korea contends that the KTC has reached its concl usion on the basis of the audited reports 
of the domestic producers .285 
7.182.   The KTC stated, with respect to its evaluation of investment:  
According to the [OTI 's] Investigation Report, the investment in facility by the 
domestic industry was KRW [[ ***]] in 2010, KRW [[ ***]] in 2011, KRW [[ ***]] in 
2012 and KRW [[ ***]] in 2013, showing a sharp increase in 2011 and 2012 . As 
discussed previously, the domestic industry expanded its investment in facility, in the 
expectation that economic recovery and the expansion of investment in automation 
would increase demand, but the domestic and international demand significantly 
decreased in 2012 due to the fiscal crises in Europe, etc. and the dumped products 
largely dominated the domestic market, resulting in the failure to in crease output in 
accordance with the expansion of the production capacity.  
Accordingly, the domestic industry 's demand for investment in facility is expected to 
shrink significantly  for the time being, and it appears that the dumped products are 
having pot entially adverse impact on the domestic industry 's investment in facility.  
                                                
280 Panel Report, EC – Bed Linen (Article 21.5 – India) , para. 6.162.  
281 Japan argues in its first written submission  that the KTC failed to evaluate at all these two factors. 
(Japan 's first written submission, par a. 144). However, in its second  written submission, Japan argues instead 
that the KTC 's examination was not adequate.  (Japan 's second written submission, par as. 143-144 
and 145-147). 
282 Appellate  Body Reports, US – Hot-Rolled Steel , paras.  196-197; China – HP-SSST (Japan) / China – 
HP-SSST (EU) , para.  5.203.  
283 Japan 's first written submission, para s. 174-176. 
284 Japan's second written submission, para. 146.  
285 Korea's first written submission, para. 229.  WT/DS504/R  
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  The domestic industry is making efforts for technological development, e.g., by 
spending more than KRW [[ ***]] per year since 2011 despite the operating losses, 
but the ratio of R&D  spending to the sales amount increased only in 2011 and has 
since decreased continuously.  
Due to the continued operating loss, the domestic industry 's internal capability for 
investment is dwindling and the demand for investment in facility is shrinking a s the 
capacity utilization of facilities and the market share decrease due to the rapid growth 
in the import of the dumped products. In sum, it appears that the overall growth of 
the domestic industry has been significantly undermined.   
… 
The continuing op erating loss of the domestic industry is weakening its internal capital 
raising capacity, and the increase in debt caused by such operating loss is weakening 
the external capital raising capacity as well .286 
7.183.   The parties do not disagree that , as the KTC obser ved, investment expanded in 2011 
and 2012. The KTC itself characteri zed the expansion as a "sharp increase" in investment. Japan 
essentially takes issue with the relative weight the KTC gave to this expansion in its overall 
evaluation of the domestic indus try's ability to raise investments. In Japan 's view, th e fact that 
investment expan ded in those two years contradict s the KTC 's overall evaluation of the domestic 
industry 's ability to raise capital.  
7.184.   We are not persuaded by Japan 's arguments.  Having found  that investment increased 
sharply from 2011 to 2012, the KTC went on to analyse the reasons for the increase  in the  first 
place, and the impact of the fiscal crisis -led contraction in demand on investment. The KTC did not 
find any actual decline in invest ment, but referred to a potential decline in investment , noting "the 
domestic industry 's demand for investment in facility is expected to shrink significantly for the 
time being ". Concerning the domestic industry 's funding ability, the KTC again observed that the 
domestic industry 's R&D expenditure increased after 2011 despite operati ng losses , but noted that 
the ratio  of R&D expenditure  to sales increased only in 2011 and decreased continuously thereafter . 
7.185.   In order to demonstrate  that the KTC acted inconsi stently with Articles  3.1 and 3.4, Japan 
bears the burden of persuading us  that the KTC 's analysis was not objective and that a reasonable 
and unbiased investigating authority could not have evaluated the ability of the domestic industry 
to raise capital a s the KTC did. The m ere alleg ation that an increase in investment expansion 
during one part of the period of trend analysis somehow contradict s the KTC 's finding  that 
investment is expected to shrink due to over -investment and low capacity utilization is not 
sufficient in this regard.  In the context of declining demand for the product  in the domestic market 
and operating losses in the domestic industry , we do not see a necessary contradiction between 
the fact that investment  increase d in the first two year s of the period examined and the KTC 's 
overall evaluation  that the industry's ability to fund investment decreased by the end of the period.  
Moreover, we are not persuaded that the KTC's view that the continued operating losses weakened 
the domestic indust ry's ability to raise capital is one that no reasonable and unbiased investigating 
authority could have reached. While we agree that it is possible that a loss -making enterprise may 
still be able to raise capital on the market by taking a loan or selling i ts shares, under normal 
market conditions, a company's ability to raise capital is strengthened if it is profit making, and is 
weakened when it is loss making. Japan has not pointed to any facts on the record that would 
suggest that in this case, it was un reasonable for the KTC to consider that the normal situation 
prevailed.  
7.186.   In light of the above , Japan has not demonstrated that the KTC 's evaluation of the 
investment and funding ability of the domestic industry is not one that a reasonable and objective 
investigating authority could make in light of the evidence and arguments before it.  
                                                
286 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 25 -26. (emphasis added; fn  omitted)  WT/DS504/R  
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  7.7.5.2.2   Magnitude of the margin of dumping  
7.187.   Japan argues that the KTC 's conclusion regarding  the magnitude of the margin of dumping 
has no factual support and is contradicted by the fact that the dumped imports oversold the 
domestic like products .287 
7.188.   In its Final Resolution, the KTC stated, with respect to its evaluation of the magnitude of 
the margin of dumping:  
As discussed previously, the final dumping margins of the dumped products were 
ranged between 11.66% and 31.61%, which means the size of dumping margin is not 
insignificant. Accordingly, such dumping appears to have had significant impact on the 
sales price of the dumped products and that of the like product.288 
7.189.   Article 3.4 does n ot require that the magnitude of the margin of dumping be evaluated  in 
any particular manner or be given any particular weight. However an evaluation of the magnitude 
of the margin of dumping in the assessment of the impact of dumped imports on the domesti c 
industry must "be undertaken as a substantive matter".289 "[A]n investigating authority is required 
to evaluate the magnitude of the margin of dumping and to assess its relevance and the weight to 
be attributed to it in the injury assessment ."290 Simply listing of the margins of dumping , whether  
in the application for the initiation of the investigation291, in the  context of the determination of  
dumping in the investigation report292, in the consider ation of whether a cumulative assessment 
under Article 3.3 of th e Anti -Dumping  Agreement  is appropriate293, or in the consideration of 
whether margins of dumping are more than de minimis  within the meaning of Article 5.8 of the 
Anti-Dumping Agreement294, is not sufficient to demonstrate that the magnitude of the margin of 
dumping was evaluated within the meaning of Article 3.4.  
7.190.   In the present  case, the KTC did more than merely list or indicat e the existence of margins 
of dumping of a particular magnitude in its determination. Rather, it observed that the dumping 
margins were significan t, and consequently that dumping had had a significant impact on price s of 
both the dumped product and the dome stic like product . There is no dispute as to the actual 
information regarding the magnitude of the margins of dumping evaluated. Japan simply disagrees 
with the KTC's observations as to the import of those margins.  
7.191.   We recall that there is no guidance in th e Anti -Dumping Agreement regarding methodology 
for the evaluation of economic  factors in the context of Article 3.4. We fail to see any textual basis 
for Japan 's argument that , in order to evaluate the magnitude of the margins of dumping, an 
investigating authority is required  to undertake some form of  counterfactual analysis , specifically 
in this case  by adding  the dumping margin  to the actual prices of the dumped imports , or 
compar ing the magnitude of the dumping margin with the level of overselling.295 Japan itself 
acknowledges  that an investigating authority  is not always required to conduct a counterfactual 
analysis in order to evaluate the magnitude of the margins of dumping . Rather Japan suggests 
that such a n analysis may be of particular importance dep ending on the specific factual 
circumstances of a case.296 However, even assuming that such an analysis might be relevant, a 
question which is for an investigating authority to consider in the first instance, Japan has failed to 
demonstrate what specific factual circumstances made such an analysis obligatory in t his case. In 
our view, the KTC 's statement in its Final Resolution is sufficient to demonstrate that it evaluated 
the magnitude of the margins of dumping "as a substantive matter".  
                                                
287 Japan 's first written submission, para s. 177-178 (referring  to KTC's Final Resolution , 
(Exhibit  JPN-4(b)), p. 26 ). 
288 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 26.  
289 Panel Report s, China – HP-SSST (Japan)  / China – HP-SSST (EU) , para.  7.162.  
290 Panel Report, China – X-Ray Equipment , para. 7.183.  
291 Panel Report, Argentina – Poultry  Anti-Dumping Duties , para. 7.321.  
292 Panel Report, China – X-Ray Equipment , para s. 7.183 -7.184. 
293 Panel Report, Russia – Commercial Vehicles , para.  7.161  (adoption/appeal pending ). 
294 Panel Report s, China – HP-SSST (Japan)/C hina – HP-SSST (EU) , paras. 7.161 -7.162. 
295 Japan 's response s to Panel question No. 45 , para. 91, and No. 46, para.  95. 
296 Japan 's response to Panel question No. 47, para. 96.  WT/DS504/R  
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  7.7.5.3   Conclusion  
7.192.   Accordingly, we conclude that, to the extent its claim is within  the Panel's terms of 
reference, Japan  has failed to establish that  the Korean Investigating Authorities acted 
inconsistently with Articles 3.1 and 3.4 of the A nti-Dumping  Agreement  with respect to the 
examination of the impact of the dumped imports on the  state of the domestic industry . 
7.8  Causation  
7.8.1   Introduction  
7.193.   Japan  brings three separate claims under  Articles 3.1 and 3.5 of the Anti -Dumping 
Agreement.297 According to Japan : (a) the KTC's causation analysis is undermined by its flawed 
price effects and volume analyses under Article 3.2, and by its flawed impact analysis under 
Article  3.4, "irrespective and independent of" whether the Panel finds these three analyses to be 
inconsistent wit h Articles 3.2 and 3.4 ; (b) the KTC  failed to properly establish a causal link 
between the dumped imports and the alleged injury298; and (c) the KTC failed to conduct a proper 
non-attribution analysis.  
7.194.   Korea  argues that Japan 's claims under Articles 3.1 and 3.5 are all outside the Panel 's 
terms of reference because Japan's panel request  does not comply with the requirements of 
Article  6.2 of the DSU with respect to these claims. In the alternative, Korea  asks the Panel to 
reject Japan 's claims . 
7.8.2   Main arguments  of the parties  
7.8.2.1   Japan  
7.8.2.1.1   First claim: "i ndependent " causation  claim  
7.195.   Japan  argues that the KTC 's causation determination was undermined by its flawed 
analyses of the volume of the dumped imports, the price effects and  the impact of the dumped 
imports on the state of the domestic industry, "irrespective and independent" of whether the Panel 
finds the KTC 's analyses of volume, the price effects and  impact to be inconsistent with Articles 3.2 
and 3.4  of the Anti -Dumping A greement.299 
7.8.2.1.2   Second claim: Alleged failure  to properly establish a causal link  
7.196.   Japan asserts that t he KTC failed to demonstrate the existence of a causal link between 
the dumped  imports and the stat e of the domestic industry. In Japan 's view, t he absence of 
sufficient correlation between  the trends in volumes , prices, and the domestic  industry 's profits  
casts doubt on the existence of any causal link:  
a. Insufficient correlation in the key volume trends : The fact that the volume of dumped  
imports decreased from 2010 to 2012 (i.e. during most of the period of trend analysis), 
and the fact that the domestic industry 's market share remained stable on an end -point 
to end -point basis undermine the existence of a causal link.  
b. Insufficient correlation in the key price trends : The diverging price trends in 2012 and 
2013 do not suggest the necessary  causal link: ( i) prices of dumped  imports increased in 
2012 while the prices of the domestic like product decreased ; and ( ii) prices of the 
dumped  imports fell sharply  in 2013  while the prices of the domestic like product only 
decreased slightly.  
c. Insufficient correlation in the trends of the profits of the domestic industry : The domestic 
industry incurred losses  from 2010 to 2012 , when the prices of dumped  imports 
increased and  their volumes decreased. When the prices  of dumped  imports increased 
                                                
297 Japan 's panel request , p. 2.  
298 Japan 's first written submission, para. 185.  
299 Japan 's first written submission, para s. 192-196; second written submission, para s. 153-154. WT/DS504/R  
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  in 2012, and their volumes and market  share decreased , the domestic industry should 
have been in good health. Instead, t he declining profit s of the domestic  industry in 2012 
and 2013 sho w that the domestic industry was incurring losses  regardless of the trends 
in the dumped  imports ' volumes and prices.  
d. Finally , the KTC failed to consider the cumulative effects of the above -mentioned  
inconsistencies  in its reasoning .300 
7.197.   Japan  contends  that, although the OTI 's Final Report documented  the above -mentioned 
diverging trends and inconsistencies, the KTC 's Final Resolution largely overlooked them and , in its 
"overall evaluation " section , focused on the year 2013 in isolation.301 
7.8.2.1.3   Third  claim: Alleged f ailure to conduct a proper non -attribution analysis  
7.198.   Japan argues that t he KTC failed to conduct an objective analysis of certain known  factors 
other than the dumped  imports  allegedly causing injury to the domestic industry at the same time 
as dumped  imports , and failed to examine at all some other known factors. According to Japan, 
the following factors were inadequately considered by the KTC: ( a) third country imports; 
(b) trends in domestic consumption; and ( c) exports by the Korean industry. The f ollowing factors 
allegedly were not considered at all: ( a) the extent to which Korean producers other than the 
applicants were gaining volume and market share; ( b) the extent to which Korean producers other 
than the applicants were affecting domestic price s; and ( c) the competition between the 
two applicants.302 
7.199.   Japan asserts that t he KTC failed to explain its finding that third countr y imports played 
almost no role in the injury suffered by the domestic industry. The OTI mentioned in its F inal 
Report that third countr y imports  were minimal in absolute terms, but the KTC failed to make this 
point in its F inal Resolution . Moreover, the KTC failed to address the impact of the 62.2% decrease 
in the prices of third countr y imports on the prices of the domestic  industry. The KTC failed to 
examine the impact on the domestic industry of dumped  imports and third countr y imports (both 
of which were priced higher than the domestic like product ) consistently .303 Japan argues that the 
KTC failed to compare the rates of cha nge in the volumes of dumped imports and third countries 
imports, and to compare the sizes of the increased quantities of the dumped imports a nd the 
third country imports. In Japan's view, the KTC also failed to compare the changes in market share 
of the d umped imports and third country imports .304 
7.200.   Japan submits that, b y finding that it is uncertain whether the decrease in domestic 
consumption from 2010 to 2012 had a negative impact on the domestic industry , the KTC failed to 
conduct a proper non -attribution analysis. Japan  makes the following arguments in support of this 
assertion:  
a. The KTC "misleadingly cited" a 5.9% increase in domestic industry sales from 2010 to 
2012 when consumption declined during the same two -year period.305 The KTC 's reliance 
on this increase, which covers the two -year period from 2010 to 2012, is contradicted by 
the decrease in the domestic industry 's sales by 6.6% from 2011 to 2012.306 
b. The KTC "misleadingly cited" an increase in the dom estic industry 's market share 
in 2012. The domestic industry 's market share increased because the volume of dumped  
imports decreased much more than did the domestic industry 's sales. Therefore the 
increase in domestic industry market share does not support  the KTC 's conclusion that 
the domestic industry was not adversely affected by the sharp decline in consumption.307 
                                                
300 Japan 's first written submission, paras. 197 -210. 
301 Japan 's first written submission, para. 209.  
302 Japan 's first written submission, paras. 212 -229. 
303 Japan 's first written submission, para. 214.  
304 Japan's second written submission, paras. 173 and 175.  
305 Consumption declined by 25.4% from 2010 to 2012. (KTC's Final Resolution , (Exhibit JPN -4(b)), 
p. 26). 
306 Japan 's first written submission, para. 216.  
307 Japan 's first written submission, para. 217.  WT/DS504/R  
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  c. The KTC failed to consider the impact of the decline in consumption on the decline in 
domestic industry prices in 2012.308 
d. The KTC 's finding tha t the consumption hike in 2013 brought no positive impact is 
undermined  by the fact that the domestic industry 's sales increased by 7.6% following 
the 52.8% increase in consumption in 2013.309 
e. The KTC focused on quantities, but failed to examine the impact o f consumption on the 
domestic industry 's sales by value. When measured  by value, the trends strongly 
indicate that the domestic industry 's sales performance was  significantly  affected by the 
changes in consumption.310 
7.201.   Japan also argues that t he KTC failed to  conduct a proper non -attribution  analysis 
concerning the impact of the domestic industry 's export performance. The decline in the domestic 
industry 's exports contributed  to the adverse conditions in the industry  in 2012, such as the 
decline in sales and t he increased  operating losses. According to Japan, t he weak performance of 
the domestic industry in 2013 was also due to weak exports in that year.311 
7.202.   Japan submits that t he KTC entirely failed to conduct a non -attribution analysis of the 
impact of the domes tic producers not part of the domestic industry on the sales, prices, and 
market share of the domestic industry. In Japan 's view, t hese producers may have had some 
effect on market prices, and may have gained sales and market share from the domestic indust ry. 
Japan argues that the KTC had partial data from at least two such domestic producers (Yonwoo 
Pneumatic and Shin Yeong Mechatronics). Despite the fact that information concerning these 
producers was limited, the KTC should have examined the trends of sa les and market share for all 
four of these domestic producers as well as the extent to which the producers not part of the 
domestic industry were affecting domestic prices, instead of limiting its analysis to the 
two applicants only.312 
7.203.   Japan also argues tha t the KTC failed to conduct a proper non -attribution analysis of the 
impact of possible competition between the two applicants themselves . The expansion of the 
domestic industry 's capacity in 2011 and a sharp decline in consumption in 2012 set the stage for 
more intensive competition between these two domestic producers, leading to a decline in 
domestic industry sales and prices in 2012.313 
7.204.   Finally, Japan argues that t he KTC also failed to consider the cumulative effect of all known 
factors. Even if some of these known factors in isolation do not break the causal link, several of 
these factors collectively  may have broken this link.314 
7.8.2.2   Korea  
7.8.2.2.1   First claim: " independent " causation claim  
7.205.   Korea argues  that Japan 's "independent " causation claim is entirely con sequential, and 
should be rejected  for the same reasons it elaborated concerning Japan 's claims with respect to 
the KTC 's volume, price effects , and impact analyses .315 
7.8.2.2.2   Second  claim : Alleged f ailure to establish a causal link  
7.206.   Korea responds that the KTC examined and explained the basis for its finding of a causal 
relationship between the dumped imports and injury to the domestic industry by finding 
coincidence and correlation in trends between the dumped  imports and the injury factors.316 
                                                
308 Japan 's first written submission, para. 218.  
309 Japan 's first written submission, para. 219.  
310 Japan 's first written submission, para. 220.  
311 Japan 's first written submission, para. 222.  
312 Japan 's first written submission, paras. 225 -227. 
313 Japan 's first written submission, paras. 228 -229. 
314 Japan 's first written submission, paras. 230 -231. 
315 Korea 's first written  submission, para . 260. WT/DS504/R  
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  7.207.   Concerning the  volume trends, Korea  argues that the fact that the domestic industry 's 
market share in 2013 returned to its 2010 level does not in and of itself undermine the KTC 's 
finding of correlation between the key volume trends. The correlation between the dumped 
imports ' volume and the market share of the domestic industry is established by the fact that 
when the dumped imports ' volume decreased in 2011 and 2012, the market share of the domestic 
industry increased ; when the  volume of the dumped imports increased in  2013, the domestic 
industry 's market share fell sharply.317 
7.208.   Concerning the price trends, Korea reiterates its view that Japan 's argument , that there 
was a diverging trend  between dumped imports and the domestic like product , is without 
foundation.318 
7.209.   In respo nse to Japan 's argument that the domestic industry 's operating loss was 
unaffected by the dumped imports, Korea  argues that the KTC adequately explained its 
assessment of the domestic industry 's operating loss in 2012.319 
7.210.   In response to Japan 's argument that  the KTC 's causation determination was based on the 
situation in 2013 in i solation, Korea  argues that the KTC did not focus on 2013 in isolation but 
rather examined trends over the period of trend analysis, including 2013 , when dumping occurred. 
Korea  further argues that Japan  was incorrect to focus only on the KTC's Final Resolution . In 
Korea 's view, t he OTI's Final Report was available to all parties and contains important analyses of 
facts upon which the KTC based its determination.320 
7.8.2.2.3   Third claim: Alleged f ailure to conduct a proper non -attribution analysis  
7.211.   Korea argues that t he KTC properly examined the effect of imports from third  countries . 
The KTC examined the volume of those imports both in absolute terms and in terms of market 
share . The KTC als o examined the price effects of the third countr y imports , observing that those 
prices were the highest in the  domestic market. In light of the small market share of imports  from 
countries other than Japan , i.e. [[ ***]]%, the KTC properly concluded that third countr y import s 
"had almost no adverse impact on the domestic industry".321 
7.212.   Korea notes that Japan  takes issue with certain KTC findings relating to developments 
in 2011 and 2012. Korea argues, h owever, that the KTC 's injury determination was primarily 
based on the trends in 2013 , when the domestic industry lost significant  market share, despite a 
sharp increase  in consumption. For this reason, the KTC found that changes in domestic 
consumption did not affect the injury suffered by the domestic industry in 2013. The KTC also 
concluded that for the period between 2010 and 2012, the negative impact of decreased 
consumption on the domestic industry 's condition was not clear because during this period both 
the sales and the market share of the domestic indust ry increased.322 
7.213.   Korea also argues that t he KTC examined the impact of the domestic industry 's export 
performance by quantifying the impact of the export volume vis-à-vis the domestic industry 's 
capacity utilization, and found that the export volume did not affect domestic prices in light of the 
low capacity utilization. The KTC also examined the correlation between the domestic industry 's 
export performance  and the development of major indicators having a bearing on the state of the 
domestic industry, and co ncluded that the fluctuations in export performance did not coincide with 
the overall trends of the state of domestic industry.323 
7.214.   Finally, Korea rejects Japan 's assertion that the KTC should have considered the impact of 
competition between domestic produce rs. According to Korea, t he issue of domestic competition 
was not a "known" factor because it was not "clearly raised" before the investigating  authority.324 
                                                                                                                                                  
316 Korea 's first written submission, para. 262.  
317 Korea 's first written submission, paras. 264 -265. 
318 Korea 's first written submission, para. 266.  
319 Korea 's first written submission, paras. 267 -269. 
320 Korea 's first written submission, paras. 270 -274. 
321 Korea 's first writte n submission, para. 278. 
322 Korea 's first written submission, paras. 279-282 and fn 358.  
323 Korea 's first written submission, paras. 283 -286. 
324 Korea 's first written submission, paras. 287 -288. WT/DS504/R  
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  Korea argues that WTO jurisprudence confirms that only factors that are "clearly raised" before an 
investigating authority and that are properly substantiated with evidence of injury caused to the 
domestic industry must be examined by investigating authorities as part of the non -attribution 
analysis.325 According to Korea, there is no obligation under Article 3.5 for investigating authorities 
to seek out and examine on their own initiative the effects of all possible factors.326 
7.8.3   Panel 's terms of reference  
7.8.3.1   Japan 's first claim  under Article s 3.1 and 3.5 of t he Anti-Dumping  Agreement  
7.8.3.1.1   Main arguments of the parties  
7.215.   In its panel  request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 3.5 of the A nti-Dumping  Agreement : 
[B]ecause Korea 's demonstration of causation lacks any foundation in  its analyses of 
the volume of the imports under investigation, the effects of the imports under 
investigation on prices, and/or the impact of the imports under investigation on the 
domestic industry at issue, irrespective and independent  of whether Korea 's flawed 
analysis of the volume and/or flawed analysis of the effects of the imports under 
investigation on prices, on the one hand, and Korea 's flawed analysis of the impact of 
the imports under investigation on the domestic industry on the other, would b e 
inconsistent with, respectively, Articles 3.1 and 3.2 of the AD Agreement and 
Articles  3.1 and 3.4 of the AD Agreement [.]327 
7.216.   In its preliminary  ruling request, Korea argues that this claim : 
[I]s unclear at even the most general level and is clearly insuffi cient to present the 
problem clearly and to allow Korea to start preparing its defence . … Japan 's panel 
request seems to suggest that Article 3.5 would be violated as a consequence of the 
allegedly flawed volume, price effects and overall injury analysis e ven if the Panel 
were to reject all of the relevant challenges that Japan brought under Articles 3.1, 3.2 
and 3.4. Korea is left wondering whether this claim sets forth a new "claim " and if so 
what the legal basis of this claim would be . Is Japan 's claim t hat a WTO consistent 
volume, price and overall injury analysis cannot be the basis of a WTO consistent 
causation analysis? Or is the claim that there was a con sequential violation of 
Article  3.5 because the alleged flaws identified by Japan were perhaps no t sufficient to 
establish a WTO violation under the respective legal provision but still sufficiently 
problematic to have a consequential impact on the causation determination? It is 
simply impossible to tell from Japan 's panel request [.]328 
7.217.   Japan contends  that it set forth an "independent  [claim] of violation of Article 3.5 with 
respect to Korea 's flawed volume, price effects, and impact analyses, even if the Panel should find 
that those flaws do not constitute violations of Articles 3.2 and 3.4" . Accordin g to Japan, the 
Appellate Body has "clarified the distinction between a consequential  claim and an independent  
claim under Article 3.5 . … Thus, a panel may reach a conclusion that an investigating authority has 
violated Article 3.5 due to the flaws in its volume, price effects, and impact analyses, even if these 
analyses are consistent with Articles 3.2 and 3.4, but in order for a panel to address such 
possibility, the complaining Member must make it clear that it is advancing independent claims 
under Artic le 3.5" .329 
                                                
325 Korea's first written submission, para. 288 (referring to Panel Report, Thailand – H-Beams , 
para. 7.273; and China – X-Ray Equipment , para. 7.267; and Appellate Body Report, EC – Tube or Pipe 
Fittings , para. 175); second wr itten submission, para. 127; and response  to Panel question No.  53. 
326 Korea's second written submission, para. 128; response to Panel question No.  53. 
327 Japan's panel request , p. 2. (emphasis added)  
328 Korea 's preliminary ruling  request, para. 38. See also  first written submission, annex , paras.  5, 6, 
and 11.  
329 Japan 's response to Korea 's preliminary ruling  request, paras. 57 -58 (referring to  Panel Report s, 
China – HP-SSST  (Japan) / China – HP-SSST  (EU), paras. 7.189 -7.192;  and Appellate Body Report s, China – 
HP-SSST  (Japan) / China – HP-SSST  (EU), paras. 5.287 -5.298 ) (emphasis original) . We note that Japan 's WT/DS504/R  
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  7.8.3.1.2   Evaluation by the Panel  
7.218.   On its face, Japan 's panel request alleg es that Korea 's demonstration of causation lacks 
any foundation in its analyses of volume of dumped  imports, effects of imports on prices, and the 
impact of those imports on the domestic industry, "irrespectively and independently " of whether 
Korea 's analyses are found to be inconsistent with Articles 3.1, 3.2, and  3.4 of the A nti-Dumping  
Agreement.  Article 3.5 requires an investigating authority to demonstrate that "the dump ed 
imports  are, through the effects of dumping , as set forth in [Articles 3.2 and 3.4 ], causing injury " 
to the domestic industry. In our view, the narrative  in Japan 's panel  request, albeit brief, is 
sufficiently precise on its face to present the problem clearly, namely that , in Japan's view, the 
KTC's causation determination is undermined by certain aspects of its volume, price effects, and 
impact  analyses  whether or not those aspects are inconsistent with Article 3.1, 3.2, or 3.4 of the 
Anti-Dumping Agre ement . 
7.219.   Korea  argues that the term " irrespectively and independently " in Japan 's panel request 
make s it unclear whether this allegation  sets forth a new "claim " and if so what the legal basis of 
this claim would be . In our view, Japan 's "independent claim" is contingent in nature. If we were to 
find that the KTC 's consideration of volume  and price effects  and examination of impact  are 
inconsistent with Articles 3.1, 3.2 , and/or 3.4, such inconsistencies would support  finding a 
consequen tial violation  of Articles 3.1 and 3.5 , and there would be no need to go on to consider 
Japan's independent claim of inconsistency with Article s 3.1 and  3.5. However , if we were to reject 
all of Japan's allegations of inconsistency under Articles 3.1, 3.2 , and 3.4 , in light of the 
"irrespectively and independently " language, we would need to go on to examine whether the 
KTC's determination of a causal relationship is inconsistent with Article 3.5 because of the alleged 
flaws in the KTC's analysis of volume,  price effects, and impact  in that determination.  
7.220.   The first decision scenario described above is easy to understand. Panels have found 
consequential  violations  of Article  3.5 following findings of inconsistency in an investigating 
authority's consideration  of volume  and price effects  and examination of impact  under Articles  3.1, 
3.2, and 3.4, to the extent that the investigating authority relied on these analyses in finding a 
causal relationship .330 This aspect of Japan 's claim is clear on the face of the panel request, and is 
confirmed by Japan 's written submissions.331 
7.221.   The nature of the independent claim in the second decision scenario is less evident. 
Although a WTO -consistent consideration of volume and price effect , or examinatio n of impact 
cannot lead to a finding of consequential violation of Article  3.5, we cannot preclude  the possibility 
that an investigating authority's determination  of causation may be inconsistent with Article 3.5 
due to inadequacies in its analysis of the volume, price effect s, or impact of dumped imports,  even 
if the se do not demonstrate a violation of Articles  3.2 and /or 3.4. Japan 's claim seems to rest on 
the following premises:  
a. certain aspects of the KTC 's volume , price effects , and impact analyses were "flawed";  
b. these "flaws" were either unrelated to the obligations under Articles 3.1, 3.2 , and 3.4, or 
did not, in themselves, constitute violation s of Articles 3.1, 3.2 , and 3.4;  and 
c. these "flaws" nevertheless have a sufficient impact on the KTC 's causation determination  
to require the conclusion that that determination is inconsistent with Articles 3.1 
and 3.5. 
7.222.   In order to confirm our understanding  of the nature of Japan 's claim, we carefully reviewed 
its written submissions. We have found  that Japan 's arguments in the context of its independent 
claim are  the same as those in support of its allegations of inconsistency with Articles 3.1, 3.2, 
and 3.4. While its claim  may be independent, Japan  makes no new, separate or additional 
                                                                                                                                                  
independent causation claim is brought under Articles 3.1 and 3.5 , and not only under Article 3.5  of the 
Anti-Dumping Agreement.  
330 See, for example, Pane l Reports, China – GOES  (Article 21.5 – US), para. 7.124; China – X-
Ray Equipment , para. 7.239; China – Autos (US) , paras. 7.327 -7.328; China – HP-SSST (Japan)/China – HP-
SSST (EU) , para. 7.191; Russia – Commercial Vehicles , para. 7.182  (adoption/appeal pending ); and China – 
Cellulose Pulp , para. 7.146.  
331 Japan 's first written submission, para . 192; second written submission, paras . 153-154. WT/DS504/R  
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  arguments in support of that claim, simply referring back to certain of the arguments it made in 
support of its claims under Articles 3.1, 3.2, and 3.4 to support its independent claim of 
inconsistenc y with Article s 3.1 and 3.5. 
7.223.   In its first written submission , with respect to volume, Japan  argues that the following 
two elements  "disprove" the existence of a causal relationship between the dumped imports and 
the injury to the domestic industry : 
a. dumped  imports decreased  in two out of the three  years of  the period of trend analysis ; 
and 
b. the volume  of dumped  imports increased only modestly in absolute terms and decreased 
in market share in 2013 compared with  2010.332 
7.224.   With respect to price effects, Japan  argues that the following two elements "disprove " the 
existence of a causal relationship between the dumped imports and the injury to the domestic 
industry : 
a. dumped  import prices consistently and significantly oversold domestic prices ;  
b. there is a lack of parallelism in the price trends of the dumped imp orts and domestic like 
product ; and 
c. there is no competitive  relationship between the dumped imports and the domestic like 
product.333 
7.225.   With respect to impact , Japan  argues that  the following three elements  "disprove" the 
existence of a causal relationship  between the dumped imports and the injury to the domestic 
industry : 
a. there is no  logical connection between the effects of the dumped  imports and the 
condition of the domestic industry ; 
b. the KTC failed  to examine  two factors  specifically required  by the Anti-Dumping 
Agreement ; and 
c. the KTC ignored certain positive  trends.334 
7.226.   In the circumstances of the present case, it is clear that Japan has asserted an 
independent claim  that aspects of the KTC's consideration of the volume  and price effects , and 
examination of  the impact , of dumped imports preclude the finding of a causal relationship 
consistently with Articles 3.1 and 3.5 of the Anti -Dumping Agreement. We therefore conclude that 
the independent  causation claim advanced by Japan  is within the Panel 's terms of reference . 
7.227.   We note, however, that Japan  made a variety of arguments in support of its claims under 
Article s 3.1, 3.2, and 3.4 , but has only referred to a selected few of those arguments in support of 
its independent  causation  claim. We will limit our exami nation of Japan 's independent causation 
claim to those specific aspects of the KTC 's consideration of the volume  and price effect s, and 
examination of the impact , of dumped imports  identified by Japan  in its submissions as 
independently demonstrating the i nconsistency of the KTC's determination of causation. Further, 
we recall that we have concluded that Japan's claims under Articles 3.2 and 3.4 are outside the 
Panel's terms of reference in this dispute335, and we will therefore not consider any arguments 
made in connection only with those claims in our examination of Japan's independent causation 
claim.  
                                                
332 Japan 's first written submission, para . 194 (referring to first written submission , section V.C ). 
333 Japan 's first written submission, para . 193 (referring to first written submission , section V.B ). 
334 Japan 's first written submission, para . 195 (referring to first written submission , section V.D). 
335 See sections  7.5, 7.6, and 7.7 above . WT/DS504/R  
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  7.8.3.2   Japan 's second claim under  Articles 3.1 and 3.5 of the A nti-Dumping  Agreement  
7.8.3.2.1   Main arguments  of the parties  
7.228.   In its panel request, Japan asserts that Korea 's measures are inconsistent with Articles 3.1 
and 3.5 of the A nti-Dumping  Agreement, "because Korea  failed to demonstrate that the imports 
under investigation were, through the effects of dumping, causing injury  to the domestic industry  
based on an objecti ve examination  of the alleged causal relationship between the imports under 
investigation and the alleged injury to the domestic industry , on the basis  of all relevant positive 
evidence before the authorities".336 
7.229.   In its preliminary ruling request, Korea arg ues that Japan 's panel request : 
[S]imply refers to the challenged measures and the general obligations of Articles 3.1 
and 3.5 to demonstrate the existence of a causal relationship and to conduct a 
non-attribution analysis without connecting any specific a spect of the challenged final 
determination with a specific obligation contained in these provisions. Article 3.5 is a 
multi-faceted provision [.] … However, nothing in Japan 's panel request allows Korea 
to know which of these legal obligations Japan 's complaint is related to and "how and 
why" it considers that the Korean investigating authority acted inconsistently with 
these legal obligations.337 
7.230.   In response, Japan argues that its panel request comprises three separate and distinct 
claims related to Ar ticle 3.5. The claim at issue  relates "to the first two sentences of Article 3.5 
that both relate to the core obligation of demonstrating  the 'causal relationship '". According to 
Japan, its panel request "plainly connects Korea 's failure to demonstrate the  causal relationship 
with the specific obligation of the demonstration of the causal relationship" .338 
7.8.3.2.2   Evaluation by the Panel  
7.231.   Japan 's panel request with respect  to its second  causation claim alleges  that Korea's  
measure s are inconsistent with Articles 3.1 a nd 3.5 because : 
Korea failed to demonstrate  that the imports under investigation were, through the 
effects of dumping, causing  injury to the domestic  industry based on an objective 
examination of the alleged  causal relationship between the imports under 
investigation and the alleged injury to  the domestic industry, on the basis of all 
relevant positive evidence before the  authorities [.]339 
This formulation  paraphrases the language of the first part of Article 3.1 ("a determination of 
injury … shall be based  on positive evidence and involve an objective examination") and the first 
two sentences of Article 3.5.  
 
7.232.   On its face, Japan 's panel request  contains two aspects : 
a. Korea  failed to conduct an objective examination  of the alleged causal relationship on 
the ba sis of all relevant positive evidence before the authorities; and  
b. Korea  failed to demonstrate any causal relationship between the dumped imports and 
the injury  to the domestic industry . 
7.233.   With respect to the first aspect , as we have discussed  earlier, a  general reference to the 
language of Article  3.1 in itself  is not normally sufficient to present the problem clearly.340 
However, Japan 's claim is qualified by the second aspect, its assertion that Korea  failed to 
demonstrate any causal relationship between  the dumped imports and the injury  to the domestic 
                                                
336 Japan's panel request , p. 2.  
337 Korea 's preliminary ruling  reques t, para. 35. See also first written submission, annex , paras.  5, 6, 
and 11.  
338 Japan 's response to Korea 's preliminary ruling  request, paras. 46 and 48 -50. 
339 Japan's panel request , p. 2.  
340 See para. 7.35 above.  WT/DS504/R  
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  industry on the basis of all of the evidence before the investigating authority.  We recall that the 
first sentence of Article 3.5 provides specifically that it must be "demonstrated that the dumped 
imports  are, through the effects of dumping  … causing injury". Thus, this obligation establishes the 
ultimate question on which the imposition of an anti -dumping measure rests: whether there is a 
causal relationship between dumped imports and injury, that is, a relationship in which dumped 
imports co ntribute to "bringing about", "producing" , or "inducing" material injury.341 This question 
is fundamental given that anti -dumping measures can only be imposed if the answer is yes, in 
light of Article VI:1 of the GATT 1994, which provides "dumping  … is to be  condemned if it causes 
or threatens material injury".342 Absent a causal relationship between dumped imports and injury, 
no anti -dumping measure can be imposed regardless of the extent  of the dumping or the injury. 
Japan's presentation of the problem in its  panel request is unequivocal in this regard. It alleges 
that the KTC failed to demonstrate causation. In light of the nature of the obligation at issue, we 
consider that despite its brevity, the panel request makes it clear that Japan's claim focuses on t he 
alleged failure to demonstrate the existence of a causal relationship between dumped imports and 
injury to the domestic industry.  Japan's formulation thus meets the minimum requirement to 
connect the challenged measure with the obligation at issue, so t hat the respondent party and 
other Members are aware of the nature of the complaint.  
7.234.   The allegations  raised in Japan's submissions, that there is a lack of correlation in the 
trends of volumes, prices , and profits , can be considered  arguments in support of its claim that  the 
KTC failed to demonstrate any causal relationship between the dumped  imports and injury to the 
domestic industry . Japan's panel request in this regard is extremely succinct and could have 
provided a more explicit  description of the legal basis of the complaint. Nonetheless, in our view, 
with respect to Japan's claims concerning the Korean Investigating Authorit ies' demonstration of 
the existence of a causal relationship , the panel request suffices, albeit barely, to explain how or 
why Japan considers the measure s at issue to be inconsistent with the specific WTO obligations in 
question, namely those in Articles  3.1 and 3.5 of the Anti-Dumping  Agreement.  More specifically , 
the brief description provided in Japan's panel request is just sufficient to present the problem 
clearly  and to explain how or why Japan considers the measures at issue to be inconsistent with 
the specific WTO obligations in question . 
7.235.   Accordingly, we consider that Japan's allegation that the KTC failed to demonstrate any 
causal relationship between the dumped imports and the injury  to the domestic industry , and thus 
acted inconsistent ly with Articles 3.1 and 3.5 of the A nti-Dumping  Agreement , is within  the 
Panel 's terms of reference.  
7.8.3.3   Japan 's third claim under Articles  3.1 and 3.5 of the A nti-Dumping  Agreement  
7.8.3.3.1   Main arguments  of the parties  
7.236.   In its panel request, Japan asserts that Korea 's measure s are inconsistent with Articles 3.1 
and 3.5 of the A nti-Dumping Agreement, "because Korea failed to consider adequately all known 
factors other than the imports under investigation that were injuring the domestic industry at the 
same time and therefore incorrectly attributed injury caused by these other factors to  the imports 
under investigation".343 
7.237.   In its preliminary ruling request, Korea  argues that Japan 's panel request : 
[S]imply refers to the challenged measures and the general obligations of Articles 3.1 
and 3.5 to demonstrate the existence of a causal relationship and to conduct a 
non-attribution analysis without connecting any specific aspect of the challenged final 
determination with a specific obligation contained in these provisions. Article 3.5 is a 
multi-faceted provision . … However, nothing in Ja pan's panel request allows Korea to 
                                                
341 Appellate Body Report, US – Wheat Gluten , para. 67. While the Appellate Body was referring to the 
meaning of the "causal link" between increased imports and serious injury required u nder Article 4.2(b) of the 
Agreement on Safeguards in this case, we are of the view that prior decisions relating to the causation 
requirement in the Agreement on Safeguards can provide guidance in interpreting the very similar phrase 
"causal relationship"  in Article 3.5 of the Anti -Dumping Agreement. (Appellate Body Report, US – Hot-Rolled 
Steel, para. 230).  
342 Article VI of the GATT 1994.  
343 Japan's panel request , p. 2.  WT/DS504/R  
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  know which of these legal obligations Japan 's complaint is related to and "how and 
why" it considers that the Korean investigating authority acted inconsistently with 
these legal obligations.344 
7.238.   In response, Japan argues t hat this claim "concerns the distinct obligation regarding 
non-attribution analysis, as set forth in the third and fourth sentences of Article 3.5" . In Japan 's 
view, "[t] he text of Article 3.5 makes clear this obligation is distinct from and in addition to  the 
obligation to show the 'causal relationship '". Japan argues that "the third and fourth sentences of 
Article 3.5 provide for a single  integrated obligation to properly con duct a non -attribution 
analysis ". According to Japan, its panel request "plainly connects Korea 's inadequate 
non-attribution analysis to the obligation to properly conduct non -attribution analysis under 
Article  3.5".345 
7.8.3.3.2   Evaluation  by the Panel  
7.239.   On its face, Japan 's panel request alleg es that Korea failed to consider adequately all 
known factors other than the dumped  imports that were injuring the domestic industry at the 
same time and therefore incorrectly attributed injury caused by these inadequately considered 
other factors to the dumped  imports.  
7.240.   In our view, with respect to this claim , the panel request provides a brief explanation of 
how or why Japan considers the measure s at issue to be violating the specific WTO obligations in 
question, namely those in Articles  3.1 and 3.5 of the Anti-Dumping  Agreement, sufficient to 
present the problem clearly  and to explain how or why Japan considers that the Korean 
Investigating Authorit ies' non-attribution analysis was flawed . 
7.241.   In this context, the allegation s in Japan 's submissions that the KTC  considered three 
known factors other than the dumped imports that could be injuring the domestic industry  in 
isolation , and failed to examine them adequately , may be seen as argument s seeking to 
demonstrate the claim set out in the panel request. Accordingly, we consider this aspect of Japan's 
panel request as setting forth a claim that is within the Panel 's terms of reference.  
7.242.   In contrast, we recall that in the course of the proceedings, Japan has argued that the KTC 
ignored other known factors di fferent than the dumped imports that it should have considered . As 
discussed above, however, o n its face the panel request asserts that the KTC did not consider 
adequately  all known factors  causing injury to the domestic industry at the same time as import s. 
In our view, this allegation  does not extend to cover the allegation that the KTC failed to consider 
some known factors at all. Nothing in  the panel request even hints that the KTC failed to consider 
some known factors causing injury  at all, much less w hat other known factors in Japan's  view the 
KTC should have considered. Therefore, these additional assertions are not covered by the 
language used in Japan's panel request . 
7.243.   Accordingly, we conclude that Japan 's non-attribution claim under Articles  3.1 and  3.5 of 
the A nti-Dumping  Agreement,  is limited  to the allegation that the KTC considered certain known 
factors other than the dumped imports in isolation and dismissed them without adequately 
examining them. Any other allegations in this regard are not within  the Panel 's terms of reference , 
and we w ill neither consider them further nor resolve them . 
7.8.3.4   Conclusion  on the Panel's terms of reference  
7.244.   For the reasons  stated above, we conclude that:  
a. Japan's first causation  claim is within the Panel's terms of ref erence;  
b. Japan's second causation claim is within the Panel's terms of reference;  and 
                                                
344 Korea 's preliminary ruling  request, para. 35. See also  first written submission, annex , paras. 5, 6 , 
and 11.  
345 Japan 's response to Korea 's preliminary ruling  request, paras. 51 -52 and 54. (emphasis original)  WT/DS504/R  
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  c. Japan's third causation claim is within the Panel's terms of reference only to the extent 
that it alleges that certain other known factors were examined by th e KTC in an 
inadequate manner. All other allegations regarding the examination of other known 
factors are not within the Panel's terms of reference  for this dispute, and we will neither 
consider them further nor resolve them . 
7.8.4   Evaluation by the Panel  
7.245.   We now turn to Japan's three causation claims in turn.  
7.8.4.1   Relevant provisions  
7.246.   Article 3.1 of the Anti -Dumping Agreement is set forth above.  Article  3.5 of the 
Anti-Dumping Agreement provides that:  
It must be demonstrated that the dumped imports are, through the effects of 
dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this 
Agreement. The demonstration of a causal relationship between the dumped imports 
and the inju ry to the domestic industry shall be based on an examination of all 
relevant evidence before the authorities. The authorities shall also examine any known 
factors other than the dumped imports which at the same time are injuring the 
domestic industry, and the injuries caused by these other factors must not be 
attributed to the dumped imports. Factors which may be relevant in this respect 
include, inter alia , the volume and prices of imports not sold at dumping prices, 
contraction in demand or changes in the  patterns of consumption, trade restrictive 
practices of and competition between the foreign and domestic producers, 
developments in technology and the export performance and productivity of the 
domestic industry.  
7.247.   Article  3.5 requires that an investigating  authority demonstrate, on the basis of an 
objective examination of positive evidence, that:  
a. dumped imports are causing  injury to the domestic industry; and  
b. injury caused  by other known factors is not attributed to the dumped imports.346 
In making such a det ermination, the investigating authority must demonstrate a relationship of 
cause and effect, such that dumped imports are shown to have contributed to the injury to the 
domestic industry. Dumped  imports need not be "the" cause of the injury suffered by the  domestic 
industry, provided they are "a" cause of such injury .347 That other factors may also have caused 
injury to the domestic indu stry is no bar to establishing this causal relationship.  
 
7.248.   Article 3.5 specifically refers to the "effects of dumping, as  set forth in [Articles 3.2 
and 3.4]" as elements of the demonstrat ion of the causal relationship.  Thus, in order to impose 
anti-dumping measures, an investigating authority must demonstrate that dumped imports are, 
through their volume, price effects, and imp act on the domestic industry, causing material injury 
to the domestic industry. The outcomes of the consideration of volume and price effects of the 
dumped imports under Article 3.2 and the examination of the impact of the dumped imports on 
the state of th e domestic industry are "necessary building block [s]"348 for the demonstration 
required by Article 3.5.349 That being said, however, it is clear to us that no particular intermediate 
findings are a necessary prerequisite for reaching and resolving the "ultimate question" under 
Article 3.5.350 Moreover, an investigating authority is not limited, in addressing the  issue of 
causation, to the consideration, examination , and evaluation of evidence with respect to the 
factors set forth in Articles  3.2 and 3.4. Article 3.5 provides that the demonstration of a causal 
relationship "shall be based on the examination of all relevant evidence before the authorities" .351 
                                                
346 Panel Reports, Mexico – Steel Pipes and Tubes , para. 7.352; Thailand – H-Beams , para. 7.262.  
347 Appellate Body Report, US – Wheat Gluten , para. 67.  
348 Appellate Body Report s, China – HP-SSST (Japan) / China – HP-SSST (EU) , para . 5.162.  
349 Appellate Body Report, China – GOES , para. 143.  
350 Panel Report, China – Cellulose Pulp , paras. 7.21 -7.22. 
351 Emphasis added.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  It is in our view certainly possible that evidence that does not fall squarely within the parameters 
of Articles 3.2 and 3.4 may be relevant and persuasive with respect to whether a causal 
relationship can be de monstrated.  
7.249.   With respect to non -attribution, Article  3.5 requires an investigating authority  to examine 
other known factors that are causing injury to the domestic industry at the same time as dumped 
imports, and sets out an illustrative list of such facto rs.352 It further requires that the investigating 
authority not attribute to dumped imports injuries caused by such other factors. The investigating 
authority must undertake an assessment that enables it to "separat[e] and distinguish[] the 
injurious effects  of the other factors from the injurious effects of the dumped imports".353 For this 
obligation to be triggered, however, the "other factor" at issue must be:  
a. "known" to the investigating  authority;  
b. a factor "other than dumped imports"; and  
c. injuring the dome stic industry at the same time as the dumped imports.354 
Article  3.5 sets forth  no guidance on how an investigating authority is to analyse either causation 
of injury by dumped imports, or non -attribution.355 The investigating authority 's demonstration of 
causation and non -attribution is subject to the overarching obligation under Article 3.1 that the 
determination of injury must involve an objective examination based on positive evidence.  
 
7.8.4.2   First claim: independent  causation claim  
7.8.4.2.1   Volume  
7.8.4.2.1.1   Consideration of volume  
7.250.   We begin with Japan 's allegation that certain flaws in the KTC 's analysis of the volume of 
dumped imports "independently" undermine its causation determination.  
7.251.   Japan  advances two grounds  in support of this allegation : 
a. the fact that the volume of dumped  imports decreased in two years of the three -year 
period  of trend analysis ; and 
b. the fact that the volume of dumped  imports increased only modestly in absolute terms 
and decreased in terms of market share in 2013 compared with  2010.  
Before evaluating Japan 's arguments, we find it useful to set out the KTC 's findings concerning the 
volume of the dumped imports.  
 
7.252.   In its Final Resolution, the KTC made the following findings  concerning the volume of the 
dumped imports:  
According to the [OTI 's] Investigation Repor t [the OTI's Final Report] [*], the import 
volume of the product under investigation ("dumped products") decreased from 
[[***]] units in 2010, to [[ ***]] units in 2011, to [[ ***]] units in  2012, a decline of 
9.8% and 32.0% year on year, and then increased to [[***]] units in 2013, an 
increase of 78.9% yea r on year. The import volume of  2013 represented an increase 
of [[***]]% from that of 2010.  
The market share of the dumped products in the domestic market also decreased 
from [[ ***]]% in 2010 to [[ ***]]% in  2011, to [[ ***]]% in 2012 and then 
                                                
352 Panel Report, Thailand – H-Beams , para. 7.275.  
353 Appellate Body Report, US – Hot-Rolled Steel , para. 223. See also Appellate Body Reports , China – 
GOES , para. 151; and China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.283.  
354 Appellate Body Report, EC – Tube or Pipe Fitting s, para. 175.  
355 Appellate Body Report, US – Hot-Rolled Steel , para. 224 . WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  sharply  increased to [[ ***]]% in 2013. The ratio of the import volume of the dumped 
products to the domestic production of the like product also decreased from [[ ***]]% 
in 2010 to [[ ***]]% in 2011, to [[ ***]]% in 2012 an d then remarkably increased to 
[[***]]% in 2013.  
Hence, the import of the dumped products decreased both in absolute and relative 
terms until 2012 and then sharply increased in 2013. Although the market share of 
the dumped products in 2013 did not reach that of 2010, it is clearly shown that the 
decreasing trend until 2012 was reversed into a sharp increase of imports in 2013.  
On the contrary, the domestic market share of the like product was on continuous rise 
from [[ ***]]% in 2010 to [[ ***]]% in 2011, t o [[***]]% in 2012 and then 
plummeted to [[ ***]]% in 2013, a similar level to 2010. The sudden decrease of the 
market share in 2013 appears to have been affected by the dumped products given 
that the import volume of the dumped products largely increased a nd their price 
greatly fell in the same year .356 
[*fn original]19 Investigation Report, pp. 46 -51[.] 
The KTC concluded : 
 
The Commission found that the import of the dumped products increased sharply in 
2013 and their price also fell sharply in the same year,  thereby suppressing increase 
of the price of the like product, which had already been lower than the reasonable 
price, and even causing the price decrease thereof.  
Despite the sharp increase in the domestic consumption in 2013, the domestic 
industry lost most of its  market share it had gained up to 2012, due to the sharp 
growth in the import of the dumped products  and the sharp drop in their price.  … 
Such material injury to the domestic industry can be deemed to have been caused by 
the price effect  of the dumped products which was confirmed by the final dumping 
margins at 11.66% - 31.61% and  the increase in the import thereof.357 
7.253.   Therefore , it is clear that the KTC considered  whether there was a significant increase in 
dumped imports in absolute  terms, relati ve to domestic consumption , and relative to domestic 
production. The KTC found that, from each of these three perspectives, the volume of the dumped 
imports decreased from 2010 to 2012, then increased sharply from 2012 to 2013. With respect to 
market share , the KTC found  that, although the market share of the dumped imports decreased on 
an end -point to end -point basis from 2010 to 2013, the de cline from 2010 to 2012 turned into a 
sharp increase in 2013. In its determination of injury caused by dumped imports , the KTC 
considered  the significant  increase in dumped imports from 2012 to 2013 to be a factor 
suppressing and depressin g domestic prices, which in turn led to a deterioration in the state of the 
domestic industry.  
7.254.   We begin with Japan 's first argument, highlighting  the fact that the volume of dumped 
imports decreased during the first two years of the three -year period of trend analysis. As  
indicated in the Final Resolution, the KTC found a "sharp increase " from 2012 to 2013 in absolute 
terms, relat ive to consumption, and relative to domestic production. The KTC also noted that 
"[t]he import volume of 2013 represented an increase of [[ ***]]% from that of 2010", that is, it 
found an absolute increase on an end -point to end -point basis  from 2010 to 2013. In its causation 
determination, the KTC primarily relied upon the sharp increase in the volume of the dumped 
imports from 2012 to 2013. However, the KTC did not ignore  the decline in dumped imports from 
2010 to 2012. The KTC explained that, despite the decrease  in imports in the first two years, there 
was a significant  reversal in the  trend from 2012 to 2013. We do not consider it unreasonable  for 
the KTC to rely upon the 78.9% increase in the dumped imports from 2012 to 2013, the most  
recent  period , which was the same year in which dumping was found . Nor are we persuaded that 
the fact that the dumped imports decreased during an earlier part of the period of trend analysis , 
from 2010 to 2012 , undermine s the KTC 's causation determination, which as noted was primarily 
                                                
356 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 14.  (emphasis added)  
357 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 27.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  based on the undisputed  sharp increase from 2012 to 2013. There is no basis  in either the text of 
the Anti -Dumping Agreement or in logic for the view  that an investigating authority can only make 
a determination of causation if it finds a significant increase in dumped imports for the period of 
trend analysis as a whole , or for each year of the period of trend analysis.  The fact that the 
dumped imports decreased during the earlier part of the period of trend analysis does not , in itself, 
preclude the investigating authority from finding a causal link , particularly when, as in this case, 
the volume of the dumped imports increased sharply during the last year  of the period of trend 
analysis , when dumping was found . Accordingly, we reject Japan 's first ground of challenge.  
7.255.   We turn to Japan 's second argument , that the KTC 's causation determination is 
undermined by the fact that, on an end -point to end -point basis, there was no significant  increase  
in dumped imports.  
7.256.   First, Japan  argues that the [ [***]]% increase in dumped imports in absolute terms from 
2010 to 2013 was not significant . As mentioned above, we do not understand the KTC to have 
relied on a finding of a  significant increase in dumped imports for the entire period of trend 
analysis. Un like the increase from 2012 to 2013, which the KTC referred to variously as "sharp" or 
"remarkabl [e]", the KTC did not qualify the overall [[ ***]]% increase. The KTC merely observed 
that "[t]he import volume of 2013 represented an increase of [[ ***]]% from  that of 2010" , which 
is an undisputed fact . In this situation , we need not decide whether it would have been reasonable 
for the KTC to have considered a [[***]]% increase to be significant. In any event, in the context 
of its independent claim, it is for Japan, as the complaining party , to persuade us  that the 
[[***]]% increase in dumped imports in absolute terms from 2010 to 2013 necessarily 
contradicted or undermined the KTC 's causation determination , such that a reasonable 
investigating authority could not have reached that conclusion in the face of that evidence . Japan 
has failed to do so.  
7.257.   Second, Japan  argues that, despite the [[ ***]]% increase in absolute terms, the market 
share of the dumped imports decreased from [[ ***]]% in 2010 to [[ ***]]% in 2013 . Japan  
contends that this end -point to end -point decrease in dumped imports in relative terms 
"disprove s" causation. As mentioned above, the KTC not only examined the trends in volume and 
market share on an end -point to end point basis, but also took into  account the changes 
year-on-year. The KTC 's causation  determination was based primarily on the sharp increase  in 
dumped imports from 2012 to 2013, which coincided with an increase of [[ ***]] percentage points 
in their market share during this period, notw ithstanding  the end -point to end -point decline . We 
recall that a n increase in imports in relative terms is not required  for a proper finding  of causation, 
let alone an increase on an end -point to end -point basis.358 Indeed, a decrease in dumped import 
market share on an end -point to end -point basis would not necessarily undermine , much less 
disprove, a  causation determination , particularly when, as in this case, the market share of 
imports increased in the last year of the period of trend analysis, albe it to a level lower than at the 
beginning of the period. The fact that dumped imports increased in absolute terms while market 
share at the end of the period examined was lower than at the beginning might show, for example, 
that consumption was growing dur ing the relevant period. This is what happened in the present 
case. Domestic consumption increased by [[ ***]]% per year on average during the period of 
trend analysis , a [[***]]% increase on an end -point to end -point basis , and by 52.8%  from 2012 
to 2013 .359 In our view, th e fact that the market share of dumped imports did not increase from 
2010 to 2013 does not, in itself, make it unreasonable for the KTC to have conclude d that the 
increase in the absolute volume of imports , and in particular  the significant  increase from 2012 to 
2013, combined with the price effects  of the dumped imports, caused injury to the domestic 
industry.  Japan has not persuaded us that there is any inadequacy in the KTC 's consideration and 
explanation of the relevance and weight of th e volume of dumped imports , either in absolute or in 
relative terms,  in its determination  of causation. Accor dingly, we reject Japan's second ground of 
challenge.  
                                                
358 The first sentence of Article  3.2 sets out three parameters for the consideration of the volumes of the 
dumped import: in absolute terms, or relative to production, or relative to consumption in the importing 
country. The use of the disjunctive "either  … or" in the first sentence of Article 3.2 suggests that an 
investigating authority need only to consider whether there is a significant increase either in absolute terms or 
in relative terms  under the first sentence of Article 3.2 . The results of the investigat ion authority 's 
consideration from any of these perspectives can independently  serve as a basis for its consideration of the 
ultimate  causation  question under Article 3.5.  
359 KTC's Final Resolution , (Exhibit KOR -1(b) (BCI) ), p. 26; OTI's Final Report, (Exhibit KOR -2(b) (BCI)), 
p. 82. WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.8.4.2.1.2   Conclusion regarding volume  
7.258.   For the above reasons, we conclude  that Japan failed to demonstrate that the Korean 
Investigating Authorities acted inconsistently with Article s 3.1 and 3. 5 of the 
Anti-Dumping  Agreement because their causation determination  was undermined by alleged flaws 
in their consideration of the sig nificance of the increase in the volume of the dumped imports.  
7.8.4.2.2   Price  
7.259.   Japan  advances  three grounds in support of its claim that the KTC's analysis of the price 
effects of dumped imports "independently" undermined its causation determination:  
a. there is a lack  of parallelism between  the trends in dumped import  and domestic like 
product  prices;  
b. dumped import s consistently and significantly oversold the domestic like product ; and 
c. there is no competitive relationship between the dumped imports and the domestic lik e 
product , such that their prices are not comparable . 
7.260.   We will examine Japan 's arguments with respect to price comparability first, to be followed 
by its arguments with respect  to the absence  of parallel  price trends, and finally its arguments 
concerning overselling . We find it useful to first set out the facts of the KTC 's consideration of price 
effects.  
7.8.4.2.2.1   The KTC's  findings  on price effects  
7.261.   The KTC 's consideration  of price effects can be summari zed as follows:  
a. On the basis of a comparison of average sales prices, there was no price undercutting 
during the period of trend analysis. However, the degree  of "overselling" by the dumped 
imports declined in 2013 as compared to 2012.  
b. On the basis of a price fluctuation index, from 2010 to 2013  the prices of dumped 
imports dropped more than those of the domestic like product.  This was because 
domestic producers could  not reduce prices as much as those of the dumped imports, 
due to the fact that the dumped imports were sold at below what would be a reasonable  
sales pr ice for the domestic like product . 
c. As a result of "fierce competition  with the dumped products that had strong dominance 
in the domestic market", domestic like product prices were prevented from increasing to 
a reasonable level from 2010 to 2013360, and actually decreased in 2012 and 2013.  
d. In 2013, the significant decrease  in the price s of the dumped imports  depressed the 
price of the like product , despite strong factors , such as the increase in the 
manufacturing cost of the like product , that would have warrant ed an increase in 
domestic like product prices. 
e. Overselling by the dumped imports was caused by differential pricing of the dumped 
imports for different  models, options , or customers. Lower dumped import prices for 
certain products or customers and strengthened  marketing activities of SMC Korea 
depressed the domestic industry 's prices or prevented the domestic industry from raising 
its prices.361 
7.262.   The KTC stated  the following  regarding injury caused by the dumped imports : 
                                                
360 The gap between the reasonable prices and the actual domestic prices are KRW [[ ***]] in 2010, by 
KRW [[ ***]] in 2011, by KRW [[ ***]] in 2012 and by KRW [[ ***]] in 2013. (KTC's Final Resolution, 
(Exhibit  KOR-1(b) (BCI)) , p. 19). 
361 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 18-20. See also  KTC's Final Resolution,  
(Exhibit  JPN-4(b)), pp. 18-20. WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  The Commission finds that the d umped products suppressed price increases of the like 
product and caused decreases thereof, although the average sales price of the 
dumped products was higher than that of the like product.362 
7.263.   The KTC concluded  that: 
Despite the sharp increase in the domesti c consumption in 2013, the domestic 
industry lost most of its market share it had gained up to 2012, due to the sharp 
growth in the import of the dumped products and the sharp drop in their price. Also, 
the domestic industry suffered material injury across  the overall business indicators, 
including deterioration of profitability, delay in the recovery of capacity utilization, 
increase in inventory, decrease in wage and deterioration of productivity and growth, 
etc. 
Such material injury to the domestic indus try can be deemed to have been caused by 
the price effect  of the dumped products which was confirmed by the final dumping 
margins at 11.66% - 31.61% and  the increase in the import thereof.363  
It was investigated that in the same process, the strengthened marketing activities of 
the importer, a subsidiary of the supplier of the dumped products, also had impact on 
the domestic industry.  Based on the comprehensive review of the import volume and 
import price of the dumped products and their impact, and variou s business indicators 
of the domestic industry, the Commission determines that the domestic industry has 
suffered material injury due to the import of the dumped products.364 
7.8.4.2.2.2   Price comparability  
7.264.   Japan argues that, i n its price effects analysis , the KTC faile d to ensure price comparability 
between specific  products or product segments of the dumped imports and the domestic like 
product . Japan  contends that the KTC " failed to consider the comparability of products it used to 
reach its conclusions of price depre ssion and suppression, and equally failed to conduct an 
objective examination of the overall extent of price competition between subject imports and 
domestic products ".365 According to Japan, t he KTC assumed without any basis that the dumped  
imports and the domestic like product  could be used interchangeably.366 
7.265.   Korea responds  that:  
a. there is a presumption that the like product is in competition with the corresponding 
imported product367; 
b. the comparability of domestic like product and dumped import prices may be a relevant 
issue in a price undercutting context, but not in price suppression or depression , because 
the question is not specifically about the comparability of price368; and 
c. in any event, the KTC went beyond merely relying on its "like product" determinati on 
under Article 2.6, and properly examined the substitutability of the dumped imports and 
the domestic like product in terms of their physical characteristics, end uses, quality, and 
customer evaluations. The KTC objectively found, on the basis of this an alysis, the 
existence of a competitive relationship between the product groups.369 
7.266.   We recall that there is no specific guidance in the Anti -Dumping Agreement as to how a n 
investigating authority  is to consider the price effects of dumped imports. However,  whatever 
                                                
362 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19. 
363 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19. See also KTC's Final Resolution, 
(Exhibit  JPN-4(b)), p. 19. 
364 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 27.  
365 Japan 's second written submission, para. 17 . 
366 Japan 's first written submission, paras. 107 -108; second written submission, para s. 17 and 59-63. 
367 Korea 's response to Panel question No.  18(a). 
368 Korea 's response to Panel question No. 18 (a). 
369 Korea 's second written submission, para. 21.  WT/DS504/R  
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  methodology or approach it uses, it must respect the overarching principle of Article 3.1 that the 
determination of injury must involve an "objective examination" based on "positive evidence". This 
means, inter alia , that when an investigating autho rity compares the prices of the dumped imports 
and those of the domestic like product, it must ensure that the prices being compared are , in fact, 
properly  comparable.370 "As soon as price comparisons are made, price comparability necessarily 
arises as an is sue."371 Therefore, an investigating authority  must ensure price comparability 
whenever price comparisons are made, not just in a price undercutting analysis.  Of course, the 
most direct instance of price comparison is in the context of considering price undercutting. 
However, an investigating authority's consideration of price depression or price suppression may 
also involve comparison of prices, and to the ext ent it does, the investigating authority must 
ensure that the prices being compared are properly comparable.  
7.267.   In the present case, it is not disputed that the KTC undertook price comparisons : 
a. in its price undercutting analysis, the KTC compared average dump ed import prices to 
average domestic like product prices  ("average to average comparisons") , and concluded 
that dumped imports  had not been sold at lower prices than the domestic like product , 
that is, there was no price undercutti ng372; and  
b. in its price sup pression and depression analyses, the KTC  compared , inter alia373, 
individual resale transaction prices of the dumped imports to the average price of the 
corresponding  model of the domestic like product ("transaction to average 
comparisons"), and concluded t hat the "sales price of the dumped products was much 
lower than the average sales price in the case of certain products or customers for which 
the degree of competition with the domestic industry was fierce".374 
7.268.   The question for us is whether  an objective  and unbiased investigating authority could 
have relied on the se comparisons between dumped import and domestic like product prices in 
determining that dumped imports caused material injury to the domestic industry under 
Article s 3.1 and  3.5. 
Average  to average comparisons  
7.269.   It is undisputed  that the underlying investigation covered a wide variety and number of 
models of both imported dumped valves and Korean -produced valves, which were  different in 
terms of physical characteristics, consumer preferences, end -uses, prices, and other factors .375 
The OTI concluded, however, that despite the large number of different models, only a limited 
number of basic models were sold in large volumes. The OTI also found that most models of the 
product under investigation were created by adding detailed options to basic models .376 The 
disagreement between the parties is whether the KTC properly compared the prices of imported 
dumped and domestic like product valves, in light of this broad spectrum of non-identical models 
of the li ke product. Korea  argues that the KTC ensured that the prices were properly comparable  
through its " model  to model " and "segment to segment" comparisons . We recall that the KTC did 
not find price undercutting.377 Thus, the KTC did not rely on the results of any price comparisons 
between the average dumped import prices and the average domestic like product prices in its 
injury determination. Accordingly, we need not decide  whether the prices in these  average  to 
average comparisons were properly comparable.  
                                                
370 Appellate Body Report, China – GOES , para. 200.  
371 Panel Re port, China – GOES , para. 7.530 (upheld in Appellate  Body Report, China – GOES , 
para. 200).  
372 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 18. 
373 The KTC also compared the price of the domestic like products with their constructed "reasonable 
sales prices". (KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), pp. 17 -19 and 27 ; see also OTI's Final Report, 
(Exhibit KOR -2(b) (BCI)), pp. 55 -58 and 66 -67). 
374 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19. 
375 Korea 's first written submission, para. 47; Japan 's first written submission, para. 108.  
376 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 14-15. 
377 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 18. See also Korea 's first written submission, 
para. 128. WT/DS504/R  
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  Transaction  to average comparisons  
7.270.   The KTC found price suppression and depression based on, inter alia , individual 
transactions  in which  certain models of the dumped imports sold or offered to certain customers 
were priced lower than the average price of a  corresponding  model of the domestic like product.378 
Korea  referred to a series of comparisons between individual resale transaction prices of two 
models of dumped import ed valves  and the average prices379 of corresponding  model s of the 
domestic like product380 reported by the OTI in its Final Report : 
Table 1: Transactions  in which dumped import price to certain customers was lower than 
the average domestic price for the corresponding  model (underlined)  
Transactions for imported  model SY7120 -5LZ-02 
Classification  Series  Model name  Quantity in 2013  Average unit price  
Products under 
investigation  SY7000  SY7120 -5LZ-02 [[***]] [[***]] 
Domestic products  DV4000  DV4120 -5H-02 [[***]] [[***]] 
 
Customer  Date  Quantity (unit)  Unit price (KRW)  
A 02/01/2013  [[***]] [[***]] 
B 02/01/2013  [[***]] [[***]] 
C 02/01/2013  [[***]] [[***]] 
D 08/01/2013  [[***]] [[***]] 
E 14/01/2013  [[***]] [[***]] 
F 28/01/2013  [[***]] [[***]] 
Hereinafter omitted  
Source:  OTI's Final Report, (Exhibit KOR -2(b) (BCI) ), p. 100.  
Transactions for model VF3130 -5DZ1 -02 
Classification  Series  Model name  Quantity in 2013a Average unit price  
Products under 
investigation  VF3000  VF3130 -5DZ1 -02 [[***]] [[***]] 
Domestic products  TVF3000  DS3130 -5DZ-02 [[***]] [[***]] 
 
Customer  Date  Quantity (unit)a Unit price (KRW)  
A 02/01/2013  [[***]] [[***]] 
B 10/01/2013  [[***]] [[***]] 
C 17/01/2013  [[***]] [[***]] 
D 23/01/2013  [[***]] [[***]] 
E 20/03/2013  [[***]] [[***]] 
F 26/03/2013  [[***]] [[***]] 
G 07/12/2013  [[***]] [[***]] 
Hereinafter omitted  
Source:  OTI's Final Report, (Exhibit KOR -2(b) (BCI) ), pp. 100-101. 
                                                
378 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19. 
379 According to Korea , the average sale price of the domestic like products was calculated by dividing (x) 
the total sales amount of each relevant product model (i.e. domestic like product corresponding to the specific 
model of dumped products being compared) sold by the applicants  to independent customer in 2013 by (y) the 
total volume of such domestic like product sold in 2013.  (Korea' s response to Panel question  No. 88( b), 
paras. 19-20). 
380 Korea  argues that these are just examples of the price comparisons  that the OTI conducted. (Korea' s 
response to Panel question  No. 88(c), para. 22). As discussed at para. 7.305  below, in response to the Panel 's 
question No. 88(c) , Korea  supplied Exhibit KOR-57, which is the data sheet in which the OTI compared all of 
the transaction prices of SMC Korea  during 2013 w ith the average prices of the corresponding domestic like 
product.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.271.   As can be seen in the tables  above381, the listed transactions took place on different dates 
and involved different quantities , from 1 to 152 units. Different time periods and quantities may 
affect the prices  in the individual transactions, which may cast doubt on the relevance and 
significance of the comparisons. In this case, it can be observed that , in general,  the lower the 
quantity  involved in a transaction, the higher the unit price  of the dumped imported valve(s) . In 
our view, i n light of the possible effect on the comparisons made, an unbiased and reasonable 
investigating authority could not have properly compared these individual transaction  prices with 
the average domestic like product price  of a corresponding  model , without further consideration 
and explanation  of the relevance or significance of these differences . The evidence before us does  
not suggest that either the KTC or the OTI made any  effort to consider differences or their 
potential consequences for price suppression and depression  in the determination of material 
injury caused by dumped imports. This casts doubt on the validity of these price comparisons as 
support for the KTC 's dete rmination.  
7.272.   Given that the KTC relied upon the price differentials in these comparisons in finding that 
dumped imports had price suppressing and depressing effects o n domestic prices, which in turn 
was one of the bases for its ultimate determination under Article  3.5, we conclude  that the KTC 
acted inconsistently with Articles 3.1 and 3.5 by failing to ensure price comparability , in terms of 
the dates and sales quantities involved,  when it compare d the individual transaction prices of 
certain models of  dump ed imports with the average prices of corresponding models of the 
domestic like product.  
7.8.4.2.2.3   Diverging  price  trends  
7.273.   Japan argues that the prices of the dumped imports and the domestic like product 
diverged over the period of trend analysis , both on the basis o f average sales price and on the 
basis of the price fluctuation index. According to Japan, the se diverging price trends show that 
there was no market interaction between the dumped imports and the domestic like product, thus 
undermining the KTC 's price sup pression and depression analyses , which in turn formed the basis 
of the ultimate determination under Article 3.5 . 
7.274.   Korea 's defence is four -pronged:  
a. a number of factors may affect the price of a product, and it is not necessary that the 
prices of products mo ve in the same direction for the products to be in competition . In 
any event, the diverging trend on an average price basis in this case was not significant 
enough to undermine the existence of market interaction;  
b. considering the prices of  representative m odels, there is parallelism in the prices of the 
dumped imports and the domestic like product;  
c. considering  resale prices, there is parallelism in the prices of the dumped imports as 
resold to independent customers, and the domestic like product; and  
d. the verified instances in which the dumped imports were offered to customers at prices 
similar to or lower than the prices of the domestic like product  demonstrate "market 
interaction" between the dumped imports and the domestic like product . 
7.275.   In considering th e price effects  of dumped imports, nothing in the Anti -Dumping 
Agreement  stipulates how an investigating authority should proceed. Certainly there is nothing 
that would explicitly require  an investigating authority to consider the degree or nature of 
compe tition between the dumped imports and the domestic like product. We recall that Article 2.6  
of the Anti -Dumping Agreement defines the like product as a product which is either "alike in all 
respects" to, or ha s "characteristics closely resembling" those of  the imported products subject to 
the investigation. Based on this definition, it would be expected that allegedly dumped imports 
compete with the domestic like product. Indeed, if they did not, it is difficult to imagine on what 
basis a domestic industry could properly allege that dumped imports were causing injury to the 
domestic industry producing the like product, so as to justify the initiation of an investigation. 
                                                
381 This is further  confirmed by our examination  of Exhibit KOR -57, which is the entire data sheet on the 
basis of which the KTC conducted its price comparison  for the purpose of its price suppression and depression 
analyses . (Record Data on the Dumped Imports ' Individual Resale Transaction , (Exhibit KOR -57 (BCI)) ). WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  However, the fact that allegedly dumped imports compete with the domestic like product i n this 
broader sense does not necessarily mean that the dumped imports will have an effect on domestic 
like product prices. Competition in the market for the goods in question may depend on a 
multitud e of factors. Particularly where there is more than one model382 of either the dumped 
imports or the domestic like product, or both, the nature and extent of competition in the market 
between dumped imports and the domestic like product may come into question . If there is 
evidence in the record which may call int o question the nature and extent of the competitive 
relationship between dumped imports and the domestic like product , an investigating authority 
cannot disregard such evidence  in considering the effect of dumped imports on prices . An 
investigating authori ty's consideration of whether there is a sufficient degree of competition 
between the dumped imports and the domestic like product  so as to support finding  price effects 
and ultimately a determination of causation under Article  3.5 is subject to the overarching 
obligation that it be based on an objective examination of positive evidence.  
7.276.   With the above in mind, we consider Japan 's argument that the alleged absence of parallel 
price trends383 undermined the existence of a competitive re lationship between the dumped 
imports and the domestic like product. Issues concerning the existence and relevance of parallel  
trends between the prices of dumped imports and of the domestic like product  have arisen in a 
number of previous disputes. In China – GOES , the Appellate Body observed  that the existence of 
parallel price trends "might indicate the nature of competition between the products" and "may 
explain the extent to which factors relating to the pricing behaviour of importers have an effect on  
domestic prices"  and thus might  support an analysis of  price depression or suppression .384 
However, parallel price trends are not conclusive evidence that two product groups compete with 
each other.385 Equally, the absence of such trends does not necessarily indicate that there is no 
competitive relationship between two products groups , or that the prices of one group of products 
could not affect the prices of the other.386 We therefore do not accept Japan's premise that 
dumped imports could have had price effec ts only "if the price levels of the subject imports and 
domestic like product s had been close to each other, and their prices had been consistently 
moving in the same direction and by similar magnitudes".387 What relevance and weight an 
investigating authority attributes to the existence or absence of parallel trends in the prices of 
dumped imports and the domestic like product is a question that must be considered in each 
investigation based on the facts, and  arguments, in that particular case. Where price trends 
diverge, a reasonable investigating authority would be  expected to take this into account and 
explain why, nonetheless, it considers that the dumped imports affect domestic like product prices.  
7.277.   In the  present case, the prices of the dumped imports and the domestic like product 
moved in generally the same direction from 2010 to 2011. However, from 2011 to 2012, prices 
moved in opposite directions. The average price of the dumped imports in 2012 compared  with 
2011 increased by 7%, while the average price of the domestic like product decreased by 3.6%. 
On the basis of the price fluctuation index, the diverging trend is less pronounced: the average 
dumped import prices increased by [[ ***]]% whereas the aver age domestic sales price decreased 
by [[ ***]]%. From 2012 to 2013, the average price of the dom estic like product decreased 
                                                
382 We use the term "model" here to cover the many possible differences between different iterations of 
the dumped imports and do mestic like product which, while not affecting the fact of likeness, may affect the 
nature and degree of competition in the market. These might include differences in specifications, physical 
characteristics, quality, size, etc.  
383 The term "parallel price  trends" describes a situation in  which  the prices of two groups of products 
change in the same or similar direction  and degree over time. It is the antonym of diverging price trends.  
384 Appellate Body Report, China – GOES , para. 210. 
385 For example, paralle l price trends might just be indicative of fluctuations in the prices of certain 
common inputs.  
386 For example, in a market where company A and company B compete,  when A decreases its prices, 
B will normally respond to this decrease by reducing its own pric es. However, where B 's pre-existing price is 
already at a loss -making level, it may not be commercially feasible for B to reduce prices to the same extent as 
A, or at all . As a result, B's  price would remain at the same level , or decline less than A's, and  B would most 
likely lose sales to A. Thus, the prices would not move in parallel. This situation does not in itself call into 
question that a competitive relationship exists between A and B 's products . Nevertheless, if a decrease in A 's 
prices results in neither a drop in B 's prices nor a loss of B 's sales, this may indicate that the competition 
between A and B is affected  by some factor  other than price , for instance a consumer preference for B 's 
products , which may affect whether, or to what degree, A's product affects the prices of B's product . These 
sorts of issues , if raised by parties, must be taken into consideration by an investigating authority.  
387 Japan 's opening statement  at the first meeting of the Panel , para. 19; see also response to Panel 
question No. 18 (b), para. 27.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  by 1.2%, while the average price of the dumped imports decreased at a much greater rate, 
by 31.1%, as shown in Figure 1 below . On the basis of the price fluctuation index, the average 
dumped import prices decreased by [[ ***]]% whereas the average domestic sales price decreased 
by [[***]]%. 
Figure 1: Trends in average prices  
 
Source: KTC 's Final Resolution, (Exhibit KOR -1(b) (BCI)), pp. 17 and 19.  
7.278.   Although domestic like product prices did not decline as much as those of the dumped 
imports  from 2012 to 2013 , this  difference  in itself does not demonstrate that the KTC erred in 
considering that the dumped imports and the domestic like products competed with each other. 
The KTC 's explanation that the prices of the domestic industry were already at unsustainably low 
levels is not unreasona ble.388 We recall that the domestic industry reported losses during this 
period. With prices already at loss -making level s, it would have been difficult if not impossible for 
the Korean producers to lower  prices at the same rate as the decline in dumped impo rt prices  in an 
effort to maintain the price differential and consequently sales levels . An expected  consequence of 
these  price dynamics would be a loss of sales by the domestic industry, which is in fact what 
happened – from 2012 to 2013 the domestic indu stry lost [[ ***]] percentage points of market 
share , largely  to the dumped imports , whose market share increased by [[***]] percentage 
points .389 This is shown in Figure 2 below.  
                                                
388 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 1 8. 
389 Domestic industry 's market share decreased from [[ ***]]% to [[***]]% from 2012 to 2013.  
Dumped import's market share increased from [[ ***]]% to [[ ***]]% during the same period.  (KTC's Final 
Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 14 and  20). 
WT/DS504/R  
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  Figure 2: Trends in market share  
 
Source: KTC 's Final Resolution, (Exhibit KOR -1(b) (BCI)), pp. 14 and 20. 
7.279.   From 2011 to 2012, the average  price of the dumped imports increased by [[ ***]]%, 
while the domestic industry 's price decreased by [[ ***]]%. An increase in the price of the dumped 
imports might be expected  to be accompanied by an increase in domestic prices, especially where 
the domestic prices have allege dly been suppressed. Korea itself recognised  that such opposite 
price movements could suggest a "lack of competition that may result for example from a different 
product mix ".390 In such a situation, we would expect a reasonable investigating authority to 
explain why, nonetheless, it considers that the dumped imports affect the domestic like product 
prices.  And, indeed, t he OTI attribut ed the increase in the dumped import prices to changes in the 
product mix of the dumped imports to higher -priced valves in the context of the diverg ence 
from 2011 to 2012:  
In 2011 and 2012 when domestic consumption decreased, the average sales price of 
the dumped products rose because the composition of the dumped products was 
changed that  they were mainly composed of high-priced products. However, for the 
products in fierce  competition with the domestic industry, the prices of the dumped 
products appear to have  been frozen or even reduced, which suppressed the price 
increase in the like products.  
The average price of t he dumped products increased in 2011 and 2012 not because 
their actual sales  prices rose but mainly because the product composition was 
changed that they were mainly composed  of high -priced products.391 
7.280.   Korea  further argues that t he KTC examine d the nature a nd extent of the competition 
between the  dumped imports  and the domestic like product by undertaking  three separate 
alternative inquiries : (a) considering trends in the prices of "representative models"; 
(b) comparing price trends of the "resale prices" of  dumped imports  and the domestic like product ; 
and (c) comparing individual instances in which the dumped imports were offered at prices similar 
to or lower than the prices of the domestic like product .392 The KTC  found "fierce competition" 
between the dumpe d imports and the domestic like product  on the basis of these comparisons, 
which it relied on in finding price suppression and depression.  
7.281.   Japan argues that these three alleged alternative inquiries are all post hoc  explanations 
that are not relevant  for purpose s of the present proceedings .393 The question before us is whether 
                                                
390 Korea 's response to Panel question No. 18(b).  
391 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 58.  
392 Korea 's first written submission, para s. 106-109. 
393 Japan 's second written s ubmission, para. 72.  
WT/DS504/R  
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  the record indicates that the Korean Investigating Authorities  actually undertook these alternative 
analyses, and to the extent they did, whether they support the KTC 's considerat ion of the price 
effects of dumped imports , and consequently its ultimate determination  under Article 3.5, 
notwithstanding the diverg ence in average price trends from 2011  to 2012. 
Representative  models  
7.282.   Korea  argues that the  KTC considered  trends in the pr ices of "representative models" of 
the dumped imports and the domestic like product . These "r epresentative models " were selected 
models of the dumped imports and the domestic like product that: ( a) share d six key physical 
characteristics ; and ( b) were sold  in large quantities.394 [[***]]% of total sales of the dumped 
imports were of "representative models", whereas [[ ***]]% of total sales of the domestic like 
product were of "representative models" .395 According to Korea, the KTC essentially found that  the 
average prices of the representative models  moved in parallel , including in 2012  (see Figure 3 
below).396 
Figure 3: Price trends  of represe ntative models  
 
Source: Korea 's first written submission, para. 106.  
7.283.   Korea alleges that, on the basis of the above, the OTI drew the conclusion that there was 
strong market interaction  between the dumped imports and the domestic like product throughout 
the period of trend analysis , including in 2012.397 
7.284.   A sufficient degree of competitive overlap between the representative models would 
certainly be evidence of competition in the market bet ween the domestic like product and the 
imports and support the Korean Investigating Authorities'  consideration of price effect s as well as  
the KTC 's ultimate determination  under Article 3.5 . However, we must determine whether the KTC 
actually considered  this analysis on the basis of the "representative models " during the 
investigation, and if so, whether competition between [[ ***]]% of the dumped imports and 
[[***]]% of the domestic like product is sufficient to support the OTI 's conclusion that there was 
"strong market interaction" between the dumped imports and the domestic like product, which in 
turn was an element supporting the KTC 's findings of price suppression and depression  and its 
ultimate determination under Article 3.5 . 
7.285.   Korea  maintains  that, as a  part of this trend analysis, the OTI observed that the average 
import prices of the "representative models " of the dumped imports in 2012 decreased by 
[[***]]% as compared to 2011, and the average domestic sales prices of the "representative 
                                                
394 Korea 's response to Panel question No. 26 (a). 
395 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 15.  
396 Korea 's first written submission, paras. 106 -107; second written submission, para. 22.  
397 Korea 's first written submission, paras. 106-107. 
WT/DS504/R  
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  models " of the domestic like product also decreased , by [[***]]%, thereby showing parallel 
trends . However, neither this factual finding , nor the underlying calculation s, can be found  in 
either the OTI's Final Report or the KTC 's Final Resolution.  
7.286.   According to Korea, th e calculation was conducted by OTI as a follow -up examination , 
subsequent to its on -site verification of SMC Korea.398 In support of this argument, Korea refers to 
the OTI 's On-Site Verification Report , which listed , among  the follow -up steps to be taken  after the 
on-site verification, to "[a]nalyze the system sale data (to substantiate the competition between 
product models of the  applicants and the respondents) ". The verification  report, however,  does not 
itself contain any  analysis of price trends  for "representative models " of the dumped imports and 
the domestic like product, or the underlying calculation s for such an analysis .399 In response to the 
Panel 's question, Korea  submitted  a confidential two -page undated document in English with 
annexes entitled " Representative Model Import Price Analysis " together with the underlying sales 
data.400 
7.287.   This document sets forth  on its first page a table which is identical  to table A of Korea 's 
first written submission, and a graph which is identical to graph A of Korea 's first written 
submission.401 On its second page, it sets forth  a table showing  the quantity, value , and unit prices 
of the "representative models" of the dumped imports from 2010 to 2013.402 The underlying data  
is set forth on subsequent pages , which record the series, models, quantities, and value s of the 
resale transactions of SMC Korea , import transactions of SMC and the domestic sales of the Korean 
producer TPC from 2010 to 2013. There are no unit prices given for the reported transactions of  
either SMC or TPC.  
7.288.   Japan  questions the contemporaneity  of this document , arguing that it "is more likely to 
have been prepared, or at least re -formatted, for purposes of this panel proceeding ".403 We have 
no reason to doubt that the underlying data was in the record of the investigation. However, the 
existence of the underlying data in the record of the investigation does not necessarily mean that 
the investigating authority actually  considered whether prices for the representative models moved 
in pa rallel during the period of trend analysis , particularly in light of the fact that there is no 
mention of it in either the OTI's Final Report  or the KTC's Final  Resolution .404 Having examined the 
factual  record, we are not able to conclude  that the Korean In vestigating Authorities actually 
considered whether the prices of the "representative models"  of the dumped imports and the 
domestic like product actually followed parallel trends.  
Resale  prices  
7.289.   Korea argues that the OTI also considered the "resale prices " of the dumped imports 
charged by SMC Korea (an importer related to the Japanese exporter SMC) , which showed the 
same trends as the prices of the domestic like product  in 2012 . Korea asserts that this price 
parallelism strongly suggested the existence of price interaction between the dumped products and 
the domestic like product, which constituted another basis for OTI's observation that the dumped 
imports had an effect on the prices of the like product, despite the slight increase of the average 
price of the dumped imports in 2012.405 
                                                
398 Korea' s first written submission, fn 122. 
399 Excerpts from On-Site Verification Report , (Exhibit KOR -6(b) (BCI)) , p. 7 . 
400 Korea' s response to Panel question No. 89, para s. 36-38; Record Data and Analysis on the 
Representative Model,  (Exhibit KOR-58 (BCI)) . In its comments on Korea' s response to Panel question 
No. 88(c), Japan  requests the Panel to reject this exhibit for due process reasons. For the reasons explained 
below at para. 7.308 , we decide that Exhibit KOR -58 is properly before us.  
401 Korea' s first written  submission, para. 106, table A and graph A.  
402 In fact, the "dumped imports" prices set out in these tables pertain to SMC only, whereas the 
domestic like product prices pertain to TPC only.  
403 Japan' s comments on Korea' s response to Panel question No. 89, para s. 43-49 and fn 45 . (emphasis 
original)  
404 We also note that t he prices for the domestic like product on the first page of Exhibit KOR -58 do not 
match the average domestic like product prices calculated by dividing the total sales value by total quantity, as 
listed on the last page of Exhibit KOR -58. See also Japan' s comments on Korea' s response to Panel question 
No. 89, paras. 47-48. 
405 Korea 's first written submission, para . 108; response to Panel question No. 18 ; and OTI's Final 
Report, (Exhibit KOR -2(b) (BCI)) , p. 107. WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.290.   We note that, in response to SMC 's argument that [[ ***]], the OTI set forth,  in 
Reference  6 of its Final Report, import volumes, average import prices, resale volume s, and 
average resale prices and inventories. However, n othing  in this section  of its Final Report indicates 
that the OTI considered the trends in the reported dumped import resale prices and the domestic 
like product prices . Korea  has not identified any other relevant documentation which might show 
that either the K TC or the OTI actually considered this matter.  
Verified individual  instances of pricing behaviour and marketing activities  
7.291.   According  to Korea, verified instances in which the dumped imports were offered to 
customers at prices similar to or lower than the p rices of the domestic like product  demonstrate 
"market interaction" between the dumped imports and the domestic like product.406 
7.292.   Japan argues that the individual instances of pricing behavior and marketing activities 
identified by Korea amount to mere "circu mstantial evidence".  Japan contends that  the KTC failed 
to conduct any "dynamic " analysis of market interactions between the dumped  imports and the 
domestic like product as a whole. According to Japan , the KTC failed to show that these  instances 
of pricing behavior were representative for the domestic like product as a whole in the analysis of 
the overall price effects.407 Japan also challenges the probative value of the [[***]] customer 
statements submitted by Korea as evidence of market ing activities.408 
7.293.   The KTC 's Final Resolution states, in relevant part, that:  
The average sales price of the dumped products was higher due to their price 
differentiation in accordance with models, option details or customers, but it was 
found that the sales  price of the dumped products was much lower than the average 
sales price in the case of certain products or customers for which the degree of 
competition with the domestic industry was fierce, which had the effect of suppressing 
increases in the price of the like product or causing decreases thereof.409 
7.294.   The context of this passage indicates that the KTC made this statement in addressing the 
arguments of interested parties that the consistent lack of price undercutting undermined the 
KTC's findings of price s uppression and depression. The KTC based its price suppression and 
depression findings in part on the "fierce " competition  between certain dumped imports and the 
domestic like product,  evidenced  by SMC Korea 's alleged price discrimination among different 
customers with respect to specific products  and product ranges , and its strengthened marketing 
activities. The evidence of lower prices in sales of certain product  model s or to certain customers, 
while in itself not determinative, does support the conclusio n that there was competition between 
dumped imports and the domestic like product in the Korean market for valves (whether "fierce" 
or not), which in turn lend s support to the KTC 's price suppression and depression findings.  
7.295.   On the basis of the consideration s above, we draw the following conclusions concerning 
diverging trends in the average  prices of the dumped imports and the domestic like product:  
a. The absence of parallel price trends does not necessarily indicate a lack of competitive 
relatio nship between two products groups or that one group of products would not affect 
the prices of the other . Where price trends diverge, a reasonable investigating authority 
                                                
406 Korea 's first written submission, paras. 109 -110 (referring to OTI 's Final Report, (Exhibit KOR -2(b) 
(BCI)) , pp. 57 -59, 63 -64, 99 -101, and 111); [[***]], [[***]]'s Price Underselling and Undercutting  Case 
(Excerpt), (Exhibit KOR -8(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt),  
(Exhibit KOR -9(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -
10(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -11(b) (BCI)) ; 
[[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhib it KOR -12(b) (BCI)) ; [[***]], 
[[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -13(b)); [[***]], [[***]]'s Price 
Underselling and Undercutting  Case (Excerpt),  (Exhibit KOR -14(b) (BCI)) ; [[***]], [[***]]'s Price Underselling 
and Undercutting  Case (Excerpt), (Exhibit KOR -15(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and 
Undercutting  Case (Excerpt), (Exhibit  KOR-16(b) (BCI)) ; and [[***]], [[***]]'s Price Underselling and 
Undercutting  Case (Excerpt), (Exhibit KOR -17(b)  (BCI)).  
407 Japan 's second written submission, paras. 47 and 49.  
408 Japan' s second written submission, para. 89.  
409 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19.  WT/DS504/R  
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  is expected to take this into account and explain why, nonetheless, it considers that  the 
dumped imports affect the domestic like product prices.  
i. The different magnitude of the price decreases from 2012 to 2013 does not 
necessarily undermine  the KTC 's findings with respect to the competitive relationship 
between the dumped imports and the domestic like product.  The KTC 's explanation 
in this regard is reasonable and supported by the facts.  
ii. The opposing price movements from 2011 to 2012 could suggest a lack of 
competition between the dumped imports and the domestic like pr oduct . The KTC did 
not disregard this possibility in its analysis. The KTC explained that the diverging 
trend from 2011 to 2012 was caused by a change in the product mix of the dumped 
imports. In certain product groups, the prices of the dumped imports stagnated or 
decreased,  in line with the price trends of the corresponding domestic like products. 
The K TC's explanation is reasonable and supported by the facts.  
b. We find insufficient evidence on the record to conclude that the KTC actually considered  
whether  the prices of "representative  models" or resale prices  of the dumped imports 
moved in parallel with domestic like product prices . 
c. The verified instances in which  the dumped imports were sold at prices lower than those 
of the domestic  like product support the view that th ere was competition in the Korean 
market for valves . 
d. The KTC 's price suppression and depression findings were not solely, or even principally,  
based on a consideration of average price trends. The KTC primarily relied upon the  
alleged price discrimination among different customers with respect to specific products 
or product range s, and the strengthened marketing activities of SMC Korea . 
7.296.   Overall, based on the above, we find that the different magnitude of the price decreases 
from 2012 to 2013, and the oppos ing price movements from 2011 to 2012 , do not in themselves  
demonstrate that the KTC's determination of a causal relationship is inconsistent with Articles 3.1 
and 3.5 of the Anti -Dumping Agreement.  
7.8.4.2.2.4   Overselling  
7.297.   Japan argues that the consistent overselling by the dumped imports i.e. the absence of 
price un dercutting  on an average price basis , undermined  the KTC 's price effect s analysis, and 
consequently its ultimate determination under  Article 3.5 .410 Korea argues that the KTC addressed 
the fact that the average dumped  import price was higher than that of the domestic like product, 
but found that this did not undermine the KTC 's conclusion that the dumped imports suppressed 
and depressed the domestic price of the like produc t.411 
7.298.   It is well established that price undercutting, price depression, and price  suppression may 
be independent of each other in an investigating authority 's consideration of price effects of the 
dumped imports.412 Indeed:  
[E]ven if prices of subject imports do not significantly undercut those of like domestic 
products, subject imports could still have a price -depressing or price -suppressing 
effect on domestic prices.413 
In any event : 
 
[A]n investigating authority is  required to examine domestic prices in conjunction with 
subject imports in order to understand  whether subject imports have explanatory 
force for the occurrence of significant depression or  suppression of domestic prices. 
                                                
410 Japan 's first written submission , para s. 84-89 and 193 ; second written submission, para s. 78-82. 
411 Korea 's first written submission, para . 113. 
412 Appellate Body Report, China – GOES , para . 137; Panel Report s, China – Autos (US) , para . 7.272 ; 
China – Cellulose Pulp , para . 7.63; and China – HP-SSST (Japan) / China – HP-SSST (EU) , para . 7.129.  
413 Appellate Body Report, China – GOES , para. 137.  WT/DS504/R  
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  Moreover, the reference to "the effect of such [dumped or subsidized ] imports" in 
Articles 3.2 and 15.2 indicates that the effect stems from the relevant aspects of such  
imports, including the price and/or the volume of such imports.414 
7.299.   The existence of price undercutting is frequently relied on as an element suggesting that 
the effect of dumped  imports is price depression or price suppression. However, depending on the 
facts, an investigating  authority may properly consider that the effe ct of dumped  imports is price 
depres sion or price suppression  notwithstanding the fact that the prices of those imports are 
higher than those of the domestic like product . In such a situation, an objective examination of 
positive  evidence, in the context o f price suppression or depression  and the ultimate determination 
under Article 3.5  requires that an investigating  authority faced with evidence  of consistent average 
price overselling , or relevant arguments of interested parties, take this into account in its 
consideration and explanations . As one panel observed:  
We do not preclude the possibility that price depression may be found to exist in a 
case where there is overselling by subject imports. However, absent analysis and 
explanation by the IA, it is dif ficult to understand how a conclusion of price depression 
was reached in a situation where prices of imports were, for the most part, 
significantly higher than those of the domestic like product whose prices were 
purportedly being depressed during the POI.415 
7.300.   In the present case, interested parties argued during the domestic investigation that the 
fact that average dumped import prices were higher than those of the domestic like product 
throughout the period of trend analysis precluded a finding of price supp ression or price 
depression. The KTC rejected this argument because, in its view, the average price overselling was 
the result of the differential pricing of dumped imports  for different models  or options and to 
different customers. Instead, the KTC focused on : (a) the lower prices of certain products to 
certain customers ; and ( b) the "strengthened marketing activities" of the related importer SMC 
Korea as the two bases  of its finding on price effects.416 The KTC 's Final Resolution states, in 
relevant p art: 
The Commission finds that the dumped products suppressed price increases of the like 
product and caused decreases thereof, although the average sales price of the 
dumped products was higher than that of the like product.  
The average sales price of the  dumped products was higher due to their price 
differentiation in accordance with models, option details or customers, but it was 
found that the sales price of the dumped products was much lower than the average 
sales price in the case of certain products or customers for which the degree of 
competition with the domestic industry was fierce, which had the effect of suppressing 
increases in the price of the like product or causing decreases thereof . It was 
investigated that SMC Korea [[ ***]] strengthened mar keting activities of SMC Korea, 
which consistently expanded its sales organizations and used its dominant position to 
attract distribution agents or discourage defections of its distribution agents, and thus 
the domestic industry had to respond to such str engthened marketing activities of 
SMC Korea and become forced to decrease the sales price or refrain from increasing 
prices .417 
7.301.   In our view, whether the fact of consistent average price overselling demonstrates that the 
KTC's determination of causation was i nconsistent with Articles 3.1 and 3.5 cannot be separated 
from a consideration of whether the KTC 's overall analysis of price effects is reasonable, in light of 
the consistent average price overselling by the dumped imports . The question before us is 
there fore whether the KTC 's finding of a causal relationship based in part on price suppressi ng and 
                                                
414 Appellate Body Report, China – GOES , para. 138.  (emphasis original)  
415 Panel Report, China – Autos (US) , para. 7.272.  
416 For the purpose of price suppression, the KTC also calculated a "reasonable sales price ", which was 
higher than the average sales price per unit of the like product throughout the  POI. Moreover, the fact that 
prices did not increase during the POI , and even decreased in 2013, while costs increased and demand surged 
formed equally the basis f or KTC's consideration of significant  price suppression. (KTC's Final Resolution, 
(Exhibit KOR -1(b) (BCI)) , p. 19). 
417 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 19.  (emphasis added)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  depressing effects of dumped imports,  in light of consistent average price overselling  by dumped 
imports,  is one that could have been reached by a reasonable and  objective investigating authority  
on the basis of the evidence and arguments before the KTC . 
7.302.   Concerning the first basis of the KTC 's price depression and price suppression findings, we 
understand the KTC  to have considered that individual cases of dumped import resale prices for 
some models that were lower than average domestic prices and high -end domestic prices for 
corresponding models to certain customers418 (i.e. individual instances of " under selling"419) led to  
price suppression and depression of the domestic like product.  In particular , the KTC referred to 
the effects of individual instance s of what we refer to as "under selling" on "the price of the like 
product". This implies  that the KTC found the effects of these individual instances were on 
domestic like product prices as a whole, and not only on the prices of certain models of the 
domestic like product.  
7.303.   While i ndividual instances of "under selling" by dumped imports may indeed indicate price 
depressing or suppressing effects on the domestic like product prices as a whole, we question 
whether the KTC 's analysis is sufficiently robust to support its conclusions. In particular, it is not 
clear to us that  the KTC considered whether, and if so how, these individual instance s of 
"underselling"  with respect to certain models affected the prices of other models of the domestic 
like product, the extent of total domestic sales affected by such "under selling", or how these 
instances of " underselling " affected domestic like product  prices as a whole.420 Consideration of 
such questions would seem particularly warranted in the present case in light of  the consistent 
overall price overselling by the dumped imports and the fact that the average  prices of the models 
of dumped imports involved in these individual instances of "underselling" were still higher than 
the average prices of the corresponding domestic models.421 
7.304.   In its Final Report, the OTI listed " underselling " transactions for two models.422 The OTI 
stated that there were nine other models for which SMC Korea allegedly practised price 
discrimination .423 The OTI  did not state whether all of these nine models involved any 
"under selling" transactions.  Therefore the OTI in its Final Report referred to at most a total of 
11 models for which there were individual instances of "under selling" by dumped imports .424 
7.305.   In response to the Panel 's question, Korea  argues that these 11 models are only 
"examples" randomly selected during the verification  at SMC Korea.425 According to Korea , the OTI 
rando mly selected at least 13 models, all of which were found to involve price discrimination and 
"under selling".426 Along with its response to the Panel 's second set of question s, Korea  provided 
Exhibit KOR -57, a list of comparisons of the prices of all of the resale transactions of the Japanese 
respondent  SMC Korea  during 2013 with the average and high -end prices of the corresponding 
models of the domestic like product.  
                                                
418 The OTI's Final Report  indicates that the prices used for this  analys is are the resale prices of 
SMC Korea  to independent customer s. (OTI's Final Report , (Exhibit KOR -2(b) (BCI)),  pp. 100 -101). This is 
confirmed by Korea  in its response to Panel 's question No. 88(b), para . 19. See also Record Data on the 
Dumped Impor ts' Individual Resale Transaction , (Exhibit KOR -57 (BCI)) . 
419 We use the term "under selling" as shorthand  to indicate the situation in which prices of a model of 
dumped imports in certain transactions were lower than those of the corresponding domes tic like product . It is 
to be differentiated from the price undercutting which is one of the three price effects mentioned in the 
second  sentence of Arti cle 3.2 of the Anti -Dumping Agreement.  
420 Panels have considered that a finding of price depression in a situati on where dumped imports 
oversell the domestic like product requires an explanation of how the investigating authorities reached a 
conclusion of price depression in such a situation. (Panel Report s, China – Autos (US) , para. 7.272 ; China – 
Cellulose Pulp , para. 7.86 ). 
421 Japan 's second written submission, para. 79.  
422 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , pp. 100-101. 
423 OTI's Final Report , (Exhibit KOR -2(b) (BCI)) , p. 101 and fn 60. 
424 These models are: SY3140 -5LOZ, SY5220 -5LZ-01, SY7120 -5LZ-02, VF3130 -5DZ1 -02, 
VFN2120N -5DZ-02, VZ5120 -5LZ-01, VF5120 -2G1-03, VQD1151U -5M, VF1130 -5G1-01, VP342 -5DZ1 -02B, and 
SY114 -5LOZ.  
425 Korea 's response to Panel question No. 88 (c), para. 22.  We note that in its Final Report, the OTI 
used wording such as "[e]xamples of differences in unit price of the dumped products sold in 2013", "[o]ther 
cases of sales at lower prices for specific customers" , and "[a]nother example of the aggressive marketing of 
SMC Korea found by the on -site verification is VZ5120 -5LZ-01". These r eferences indicate to us that the listing 
of price undercutting of the two models in the Final Report was indeed by way of example.  
426 Korea 's response to Panel question No. 88 (c), para. 22.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.306.   Japan  argues tha t we should reject Exhibits KOR -57, 58 , and 60.427 Japan  argues that , as 
a matter of due process,  Korea should have submitted this evidence  at an earlier stage in the 
proceedings as a response to a specific question posed by the Panel .428 
7.307.   Paragraph 7 of the Pa nel's Working Procedures provides that:  
Each party shall submit all factual evidence to the Panel no later than during the first 
substantive meeting, except with respect to evidence necessary for purposes of 
rebuttal, answers to questions or comments on a nswers provided by the other party. 
Exceptions to this procedure shall be granted upon a showing of good cause. Where 
such exception has been granted, the Panel shall accord the other party a period of 
time for comment, as appropriate, on any new factual e vidence submitted after the 
first substantive meeting.  
7.308.   With respect to evidence necessary for purposes of rebuttal, answers to questions or 
comments on answers provided by the other party , paragraph 7 of the Panel 's Working Procedures 
allows for an except ion to the general rule that all factual evidence shall be submitted no later 
than during the first substantive meeting. Exhibits KOR -57, 58 , and 60 were submitted by Korea in 
response to questions  posed by the Panel . For this reason, we conclude  that Exhib its KOR -57, 58 , 
and 60 are properly  before us. Moreover, Japan had an opportunity to comment on these exhibits 
and, indeed, for this reason and at Japan 's request, the parties were given additional time  to 
comment on each other 's responses to the Panel 's questions. While we agree that it would have 
been preferable had these exhibits been submitted by Korea earlier when the Panel specifically 
asked for information of this nature  (but not as specifically as its later request)  after the first 
substantive meeting  of the Panel , we do not consider it inconsistent with due process to take these 
exhibits into consideration . 
7.309.   Having decided that it is properly before us, we turn to consider whether Exhibit KOR -57, 
in conjunction  with the OTI's Final Report and the KTC's Final Resolution, supports Korea 's 
contention that the KTC properly examined the extent to which the domestic like product prices 
were affected by individual instances of dumped imports ' underselling . 
7.310.   Korea  argues  that Exhibit KOR -57 shows  that the  KTC examined the extent to which the 
domestic like product was affected by individual instances of dumped import  "underselling" . Japan  
disagrees. According to Japan , "even if the OTI may have collected certain items of evidence about 
part of the market, t hat anecdotal evidence does not support the KTC findings unless the KTC 
actually discusses that evidence and the KTC actually draws a reasonable and objective link 
between that evidence and the domestic like product as a whole ".429 Exhibit KOR -57 is a list 
of 115,524 transactions similar to Table 1 above . It reports  the product code, series, date, 
quantity, value , and unit price of resale transactions of certain models of the dumped imports, and 
the average price and the high -end price  of corresponding models of the domestic like product. 
                                                
427 Japan 's comments on Korea' s response to Panel 's question No. 88,  paras. 18-22. By letter dated 
11 July 2017, Korea asked the Panel to reject Japan's request concerning exhibits 57, 58 , and 60. Korea 
argues that: (a) these exhibits are part of the underlying record of the investigation and there is no basis to 
doubt the ir genuine and contemporaneous nature; and (b) Korea did not submit these data before, because 
the Panel should not conduct a de novo  review of the underlying raw data but is limited to examining the 
findings of the investigating authorities that were base d on these data.  In the same letter, Korea also 
commented on the substance of Japan's comments concerning these exhibits, and indicated its availability to 
respond any further questions the Panel may have concerning these exhibits . By letter dated 12 July 2017, 
Japan asked the Panel to reject Korea's 11 July letter as an unsolicited submission. Japan added that, if the 
Panel were to consider Korea's 11 July letter, "the substance of the letter is immaterial, not supporting Korea's 
case in any respects".  We note that Korea' s 11 July letter was sent outside the deadline for the parties to 
comment on each other 's response to the Panel 's questions. Korea  has not requested any extension of the 
deadlines established by  the Panel in accordance  with its working  procedures. In light of the circumstances, we 
do not find it necessary to take into account Korea' s substantive arguments set out in its 11 July letter for the 
purpose s of the present proceedings.  
428 Japan 's comments on Korea' s response to Panel 's question  No. 88, para s. 18-22. The Panel 's 
question No. 29 to the parties reads:  
[P]lease indicate the percentage of sales affected by the alleged "strategic low pricing" and/or 
"aggressive marketing" of the Japanese respondents, referring to where in the record o f the 
investigation this information can be found? Did the KTC refer to this in its Final 
Determination/Resolution? Please indicate where in the relevant documents in the record.  
429 Japan' s comments on Korea' s response to Panel question No. 90, paras. 50 -52. WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  Where the transaction resale price of the dumped imports is lower than the average price or the 
high-end price  of the d omestic like product, a notation  of "undercutting" is recorded  for th e 
particular transaction. Exhibit KOR -57 does not contain any other narrative. Exhibit KOR -57 shows 
that the OTI compared  dumped import resale prices in a large number of transactions in 2013 with 
the average price and the high -end price  of the corresponding  models of the domestic like product. 
For some of these transactions, the OTI found that the transactional  resale price of the dumped 
imports was lower than  the average  price and/or the  high-end price  of the corresponding domestic 
like product model. Exhibit KOR -57 does not , however, show whether and if so how the OTI 
examined the extent to which domestic like product  prices were affected by the individual 
instances  of lower dumped impor t price s. We note that  this Exhibit  does not identify the 
corresponding models of the domestic like product whose prices are being "under sold", or the 
quantity or value of the sales of those models. Without such information, it is not clear to us how 
the investigating authority could  have assessed the extent to which domestic like product prices as 
a whole were  affected by the pricing of the dumped imports in the transactions concerned.  
7.311.   Korea  argues that the existence of "under selling" for all of the 13 randomly  selected 
models was sufficient to corroborate that Japanese respondents ' strategic low pricing and 
aggressive marketing was a persistent and prevalent practice that forced domestic prod ucers to 
react to the fierce competition from dumped imports by reducing prices of domestic like 
product .430 We cannot agree. The fact that all 13 selected models referred to in the OTI's Final 
Report show "under selling" in some  transactions may just reflect  the inherent weaknesses of a 
"transaction to average" comparison.431 In any series  of transaction prices, some  individual 
transaction prices will be lower than the average price , and others will be higher than the average 
price. The mere fact that there are  some instances of "under selling", even if there are many of 
them, does not necessar ily indicate  that the prices of the domestic like product is suppressed or 
depressed as a whole  as a result . An explanation and analysis of how and to what extent the 
prices of the domestic like product are affected is necessary .432  
7.312.   Korea  argues that the OTI conducted numerous simulations and analyses on the basis of 
the resale price data in Exhibit KOR -57 in order to consider the extent to which the domestic like 
product was affected by individual instances of dumped imports ' pricing.433 In Korea 's view, 
Exhibit  KOR-57 shows that:  
a. OTI found that SMC 's dumped products were frequently sold at prices much lower than 
its own average prices, across all 28 "series " of the dumped imports. That is, 
approximately [[ ***]]% of the representative models of dumped imports were sold at 
prices lower than the average resale price  of that model  in 2013. Approximately 
[[***]]% of th e representative models of dumped imports showed price variance of 
more than 100%. In many cases, the price variance of an identical product model 
ranged from [[ ***]]% to [[ ***]]%.434 
b. [[***]] units of corresponding representative models of the dumped imports  sold by 
[[***]] in 2013, account ing for [[ ***]]% of total sales of the corresponding 
representative models of the domestic like product ([[ ***]] units), were sold at prices 
lower than the average sales price of each corresponding representative model of the 
domestic like product. Further, KOR -57 shows that [[ ***]] units of the representative 
models of the dumped imports sold by [[ ***]] in 2013, equivalent to [[***]]% of total 
sales of the corresponding representative models of the domestic like products, were 
                                                
430 Korea 's response to Panel question No. 88 (c), para. 2 3. 
431 We have found,  above at para. 7.272 , that a compari son of individual transaction prices of certain 
models of  dumped imports o n different dates and in different quantities with the average prices of the 
corresponding domestic li ke product  model s, without any consideration of those differences, was not a 
sufficient basis to conclude that the dumped imports were sold at lower prices than comparable domestic  like 
products in the cases of certain customers and certain product models . 
432 We note that , "Article 3.2 does not ask the question of whether an investigating  authority can 
identify an isolated instance of the dumped imports being sold at lower prices than  the domestic like products ". 
(Appellate Body Report s, China – HP-SSST (Jap an) / China – HP-SSST  (EU), para . 5.159 ). While we are not 
considering a case involving significant price undercutting within the meaning of Articles 3.2, the Appellate 
Body's reasoning is in our view relevant in a situation where the investigating authority relied upon instances of 
underselling i n its price suppression and depression analyses.  
433 Korea 's response to Panel question No. 88 (c), para. 2 6. 
434 Korea 's response to Panel question No. 88 (c), para. 27.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  sold at prices lower than the high -end prices of the corresponding representative models 
of the domestic like product.435 
c. "Underselling" by representative models of the dumped imports (i.e. sales transactions 
at prices below the average price of the cor responding representative domestic model) 
took place in with respect to [[ ***]] out of [[ ***]] corresponding representative models 
of the domestic like product sold in 2013.436 
7.313.   We are not persuaded by Korea 's argument s. We have no doubt that the Korean 
Inves tigating Authorities had all the necessary data to conduct this examination , and indeed, may 
have done so .437 However, Exhibit KOR -57 does not, in itself , sufficiently  demonstrate  whether and 
how the OTI conducted the simulations and analyses, and reached th e relevant  conclusions as 
argued by Korea during the se proceedings. Neither the OTI's Final Report, nor the KTC's Final 
Determination indicated whether or in what way the Korean Investigating Authorities examined the 
extent to which the domestic like product was affected by individual instances  of "under selling" by 
dumped imports. Korea has not identified  any other document in the record showing that the OTI 
indeed conducted the analyses in question . 
7.314.   With regard to  "strengthened marketing activities", Korea refers to statements made 
before the OTI by users  of valves describ ing a number of instances in which  SMC Korea offered 
imported valves at lower prices than those of the Korean domestic producer TPC in o rder to win 
customers.438 Japan challenges the correctness and relevance of some of these exhibits.439 
7.315.   Although the KTC referred to the  "strengthened marketing activities" of SMC Korea, the 
evidence presented by Korea all relates to the ability of SMC Korea to  price discriminate, i.e. offer 
lower prices to certain customers to compete with Korean Producer TPC. Whe n a market player 
lowers  its price to certain customers that might  otherwise not purchase from it in order to attract 
them away from its competitor , that competitor may respond by lowering its own price in an 
attempt to retain those consumers. Such pricing behaviour may limit the ability of th e competitor 
to increase prices to other customers. For this reason, price discrimination by dumped imports 
suggests the existence of a degree of price competi tion between the dumped imports and the 
domestic like product  sufficient to support the view that the dumped imports affect the prices of 
the domestic like product . Particularly where such  price offers are made at generally the same 
time and in similar quantities  to the same customers, evidence substantiating their existence may 
be highly probative.  However, depending on the evidence and arguments in a particular 
investigation, an investigating authority might have to consider the extent of the domestic sales 
affected by price discrimination, and must in any event explain its conclusions.  
7.316.   We must decide whether the evidence of price discrimination/aggressive pricing behaviour 
in the record sufficiently suppor ts the KTC 's finding of price suppressing and price depressing 
effect s on domestic like product prices  as a whole . In the confidential version of its Final Report, 
the OTI stated:  
[[***]]440 
                                                
435 Korea 's response to Panel question No. 88 (c), para. 28.  
436 Korea 's response to Panel quest ion No. 88 (c), para. 29.  
437 Korea' s response to Panel question No. 88 (c), para s. 25-26; KTC's Resale Data Request , 
(Exhibit  KOR-56(b) (BCI)) . 
438 [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit  KOR-8(b) (BCI)) ; 
[[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt),  (Exhibit KOR -9(b) (BCI)) ; [[***]], 
[[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -10(b) (BCI)) ; [[***]], [[***]]'s 
Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -11(b) (BCI)) ; [[***]], [[***]]'s Price 
Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -12(b) (BCI)) ; [[***]], [[***]]'s Price Underselling 
and Undercutting  Case (Excerpt), (Exhibit KOR -13(b) (BCI)) ; [[***]], [[***]]'s Price Undersell ing and 
Undercutting  Case (Excerpt),  (Exhibit KOR -14(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  
Case (Excerpt), (Exhibit KOR -15(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case 
(Excerpt), (Exhibit  KOR-16(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), 
(Exhibit KOR -17(b)  (BCI));  and Additional Cases of [[ ***]]'s Price Underselling and Undercutting , 
(Exhibit  KOR-49(b) (BCI)) . 
439 Japan 's second written submission, para s. 89-90. 
440 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 58.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 91 - 
 
  [[***]] 
The OTI Report also indicates that : 
 
[[***]][.]441 
The OTI Final Report also states that:  
 
[[***442]] 
7.317.   Reference 8, which is a confidential section of the OTI's Final Report entitled "Cases of 
Price Depression Caused  by Aggressive Marketing of [[***]]", reports  only one example of 
aggressive marketing , which  took place in March 2013. This case study indicates that, in order to 
compete with TPC for a contract , [[***]] submitted a quote for [[ ***]] units of two models  of 
dumped valves at a price lower than TPC 's initial  quote  for domestic valves . In order to ke ep the 
contract , TPC offered a lower price quote . Eventually TPC got the sale . Over the course of the 
proceedings, Korea identified a total of [[***]] instances of aggressive competition .443 According 
to Korea , these [[***]] instances of aggressive  price competition  covered  customers444 that 
collectively purchased approximately [[ ***]]% of TPC 's (one of the two domestic producers in the 
domestic industry) domestic sales of the like product in 2013  and [[***]]% of the total sales of 
the domestic like p roduct in 2013 .445 
7.318.   While the [[***]] instances of aggressive price competition between two players in the 
market demonstrate the existence of a competitive relationship  between the dumped imports and 
the domestic  like product, their impact on prices for the domestic like product  as a whole has to be 
considered  in light of all the relevant facts. For instance, changes in market share for the domestic 
like product and the dumped imports, or changes in price levels may tend to corroborate the effect 
of dumped im ports on prices, or not. E xamples or isolated instances of such pricing behaviour will 
not, standing alone, suffice to  support a finding of price suppressi ng and depressi ng effects of 
dumped imports on domestic like product  prices  as a whole. It is clear that the confidential case 
study in Reference 8 is just one example  of a body of evidence in the record concerning price 
competition  between two players in the Korean market . However, we find nothing in the 
OTI's Final Report or the KTC's Final Resolution that indicates how much of the domestic like 
product was involved in these instances of aggressive price competition. Korea asserts they 
involved customers accounting for [[***]]% of the total sales of the domestic like product in 2013 . 
But this  does not address the relative volume of domestic like product sales that were actually 
                                                
441 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , fn 45. (emphasis  original)  
442 [[***]] 
443 Korea 's first written submission, para. 117 (referring to OTI 's Final Report, (Exhibit KOR -2(b) (BCI)) , 
pp. 57-59, 63-64, 99 -101, and 111; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), 
(Exhibit KOR -8(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt),  (Exhibit KOR -
9(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -10(b) (BCI)) ; 
[[***]], [[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -11(b) (BCI)); [[ ***]], 
[[***]]'s Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -12(b) (BCI)) ; [[***]], [[***]]'s 
Price Underselling and Undercutting  Case (Excerpt), (Exhibit KOR -13(b) (BCI)) ; [[***]], [[***]]'s Price 
Underselling and Undercutting  Case (Excerpt),  (Exhibit KOR -14(b) (BCI)) ; [[***]], [[***]]'s Price Underselling 
and Undercutting  Case (Excerpt), (Exhibit KOR -15(b) (BCI)) ; [[***]], [[***]]'s Price Underselling and 
Undercutting  Case (Excerpt), (Exhibit KOR -16(b(BCI))) ; and [[***]], [[***]]'s Price Underselling and 
Undercutting  Case (Excerpt), (Exhibit KOR -17(b)  (BCI))) ; second writt en submission, para . 51 (referring to 
Additional Cases of [[ ***]]'s Price Underselling and Undercutting , (Exhibit KOR -49(b) (BCI))) . 
444 We note that Korea  does not argue that the [[ ***]] instances of aggressive  marketing affected 
[[***]]% of the sales of domestic like product in 2013. Korea  argues instead that the customers  involved in 
these instances from 2010 to 2014 collectively purchased about 16% of the all of the sales of the domestic like 
product by volume. We note in particular that a significant  number of the [[ ***]] instances of aggressive  
marketing pertains to the year of 2012 . (Additional Cases of [[ ***]]'s Price Underselling and Undercutting , 
(Exhibit KOR -49(b) (BCI)) , sections  1, 2, 5, 6, 7, 8, 9, 16, 17, 18, 19, 20, 24, 25, 26, 32, 33, 34, 35, 38, and 
44). Some of these instances also pertain to the year of 2014 . (Ibid. sections 54 and 59 ). 
445 Korea' s second written submission, para . 51 and fns 59-60; response to Panel question No . 90, 
para. 40. According to Korea , some of these customer statements were verified by the OTI during its visit to  
several end -users and distribution agents for both SMC and TPC . (Korea' s second written submission, para . 52; 
see also OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , fns 42, 45 , and 59 , reference 8 ). WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 92 - 
 
  affected by this aggressive competition, which would give an indication as to the extent to which it 
may have affected domestic like product prices as a whole.446 
7.319.   Korea  also argues that  the [[***]] customer statements and the results of the 
comprehensive resale price analysis, " in combination ", are "sufficient to corroborate that Japanese 
respondents ' low pricing and aggressive marketing is a persistent and prevalent pract ice that took 
place across virtually all pneumatic valve transactions whenever  SMC Korea competed for the 
same customer with domestic producers ".447 We have concluded above that the KTC did not 
adequate ly explain its findings of price suppression and depression based on : (a) individual  
instances of " underselling "; and (b) the "strengthened marketing activities"  of [[***]], in light of 
consistent average price overselling by the dumped imports.  
7.320.   We turn now to Korea's argument that the customer statement s and the resale price 
analysis , in combination, explain the KTC's findings of price suppression and depression.  In our 
view, the customer statements, especially  those which demonstrate that TPC reduce d initial price 
offers in order to compete with SMC Korea for a particular customer, corroborate the individual 
cases of "underselling"  reported in Exhibit KOR -57. Together they confirm that there was 
competition between the dumped imports and the domestic like product in the Korea n market with 
regard to certa in models and for certain customers. However, these customer statements, even 
combined with the large number of price comparisons in Exhibit KOR -57, do not adequate ly 
expla in the KTC 's price suppression and depression findings, in light of the consistent average 
price overselling by the dumped imports.  As mentioned above, a  reasonable and objective 
investigating authority is expected to assess  how and to what extent  "underselling " in certain 
competitive sales affected the prices of the domestic like product  overall .  
7.321.   We recall that , even in the market sector where dumped imports "substantially"448 and 
"conspicuously "449 competed with the domestic like product, i.e. the representative models, the 
average prices of the representative models of dumped imports were significantly higher than the 
average prices of the representative models of domestic like product, as shown in the graph 
below.  Accordingly, we are not persuaded that the Korean Investigating  Authorities adequately 
explained how the customer statements a nd the resale price analysis, in combination, supported 
the KTC 's findings of price suppression and depression , in light of the consistent  average price 
overselling by the dumped imports .  
                                                
446 Korea also referred to Exhibits JPN -7, KOR -4, KOR -21, KOR -22, KOR -23, KOR -24, KOR -31, and 
KOR-32, as evidence that the KTC examined the extent to which the domestic like product were affected by the 
"strengthened marketing activities". (Korea 's response to Panel question No. 90, para s. 43-48). In our view, 
these documents, read together, are not su fficient to show that the KTC examined  the extent to which the 
domestic like product were affected by the "strengthened marketing activities". Exhibit JPN -7, which is the 
Investigation Application, contains only unsubstantiated allegations of "predatory du mping price" and price 
undercutting. (Investigation Application, (Exhibit JPN -7(b)), pp. 3 and 32 ). Exhibits KOR -4, KOR -21, KOR -22, 
KOR-23, and KOR-24 contain  only generali zed statements from a small number of selected customers  who 
testified that [[ ***]] offers or sells its products at prices similar to or even lower than domestic products.  
There appears to be certain level of overlap of these customers, e.g. [[***]] with those affected by the [[ ***]] 
instances of aggressive  marketing and those expressly m entioned in the Final Report.  KOR-31 and KOR -32 
contain allegations of two domestic producers, Yonwoo and Shin Yeong, that the Japanese respondent undercut 
their prices.  
447 Korea' s response to Panel question No. 88 (c), para. 33.  
448 Korea  argues that " the rep resentative models of [the dumped imports and the domestic like product ] 
are in more substantial  competition with each other ". (Korea' s first written submission, paras.  106-107; 
OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 15). 
449 Korea' s first written submission, para. 106.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  Figure 4: Comparison between  the average p rices of the dumped imports and the 
domestic like product on representative models basis  
 
Source: Record Data and Analysis on the Representative Model,  (Exhibit KOR -58 (BCI)).  
7.322.   For the reasons above, we find that the Korean Investigating Authorities failed  to 
adequate ly expla in their consideration of the price suppressing and depressing effects of dumped 
imports  in their determination  of causation,  in light of the undisputed fact that the prices of the 
dumped  imports were higher than those of the domestic l ike product  throughout the period of 
trend analysis  on the basis of both the average  price of the product as a whole and the average 
prices of representative models , and therefore acted inconsistently with Article s 3.1 and  3.5. 
7.8.4.2.2.5   Conclusion regarding price  
7.323.   For the reasons  stated above, we conclude that:  
a. the KTC acted inconsistently with Articles 3.1 and 3.5 of the Anti -Dumping Agreement by 
failing to ensure  price comparability in the comparison of individual transaction prices of 
certain models of dumped im ports with the average prices of corresponding models of 
the domestic like product;  
b. the different magnitude of price decreases from 2012 to 2013,  and the diverging price 
movements from 2011 to 2012, do not in themselves demonstrate that the KTC's 
determina tion of a causal relationship is inconsistent with Articles 3.1 and 3.5;  and 
c. the Korean Investigating Authorities acted inconsistently with Article s 3.1 and  3.5 by 
failing to adequately explain their consideration of the price suppressing and depressing 
effects of dumped imports in their determination of causation,  in light of the undisputed 
fact that the prices of the dumped  imports were higher than those of the domestic like 
product  throughout the period of trend analysis  in the comparison of both the a verage 
prices for the product as a whole , and the average prices of the representative models . 
7.8.4.2.3   Impact  
7.324.   Japan argues that  the following three considerations regarding the impact of dumped 
imports on the domestic industry  "disproved" the existence of a causal  relationship  between the 
dumped imports and the injury to the domestic industry : 
a. there is no  logical connection between the effects of dumped  imports and the condition 
of the domestic industry ;  
b. the KTC failed to examine  two specifically required factors ; and 
WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  c. the KTC ignored certain positive trends.450  
7.325.   We have rejected  Japan 's argument in support of its Article 3.4 claim that the KTC failed to 
examine two required economic  factors  in section 7.7.5.2 above . For the reasons set forth  in that 
section, we similarly reject Japan 's argument that the Korean Investigating Authorities acted 
inconsistently with Article  3.5 by failing to examine two specifical ly required factors.  
7.326.   We turn next to Japan's argument  that there is no logical connection between the effects 
of dumped  imports and the condition of the domestic industry . There are two aspects  to Japan 's 
argument : 
a. the KTC failed to link its volume and price effect s analyses with the alleged consequent 
impact of the dumped imports on the domestic industry ; and 
b. the KTC failed to demonstrate any "explanatory  force" of the dumped imports on the 
state of the domestic industry . 
7.8.4.2.3.1   Alleged f ailure to link the volume and price effects with the state of the 
domestic industry  
7.327.   Japan  relies in this context on its arguments  that the KTC failed to establish any "logical 
link" between its findings on the volume and price effects under Article 3.2 and i ts findings on the 
state of the domestic industry under Article  3.4, in particular  with respect  to its evaluation of sales, 
production volume , market share, factors affecting domestic prices, and profits.451 Japan also 
argues that in the absence of a proper consideration of the dumped imports ' price effects on the 
domestic like product as a whole, the impact examination  in the present case is necessarily  
inconsistent with Article  3.4.452  
7.328.   We start by recalling that Japan is here asserting an independent claim o f inconsistency of 
the KTC's determination of a causal relationship with Article 3.5. In that context, while Japan 
references its arguments in support of its claims under Article 3.4 (and Article 3.2), we are not 
called upon to make any findings under thos e articles . Rather, we must determine whether Japan 
has demonstrated that no reasonable and unbiased investigating authority could have made the 
determination of causation the KTC made in the absence of a "logical link" between its 
consideration of the vol ume and price effects of dumped imports and the impact of dumped 
imports on the domestic industry.  
7.329.   We recall that nothing in the Anti -Dumping Agreement prescribe s any particular 
methodology for examining the impact of the dumped imports on the domestic ind ustry in the 
context of a causation determination . Nor does anything in the text of Article 3.5 (or  of Articles 3.2 
and 3.4 ) require an investigating authority to establish a logical link between the consideration  of 
volume of the dumped imports and the effect of the dumped imports on the prices of the domestic 
like product under Article 3.2 and the examination  of the impact of the dumped imports on the 
state of the domestic industry under Article 3.4. The text of Article 3.5 does link the results of the 
inquiries under Articles  3.2 and 3.4 to the demonstration that there is a causal relationship 
between the dumped imports and the injury to the domestic industry .453 However, t he "logical 
progression  of inquiry "454 does not mean that the examination of impact under Article 3.4 must be 
linked to  the consideration under Article 3.2 .455 These  two separate  inquires can be undertaken 
independently of each other, and brought together in the ultimate determination under 
Article  3.5.456 
                                                
450 Japan 's first written submission, para . 195. 
451 Japan 's first written submission, paras. 149 -162. 
452 Japan 's second written submission, para. 128.  
453 Appellate Body Report, China – GOES , paras.  128 and 130 and fn 217.  
454 Appellate Body Report, China – GOES , para. 128. 
455 We note that Japan argues that the examination  of the impact under Article 3.4 must be a logical  
advancement from the outcome  of the analysis  of the price effects and volume of the dumped imports under 
Article 3.2. (Japan 's first written submission , para. 148 ). 
456 While there may be some overlap between  the consideration of the effect of the dumped imports  on 
domestic prices under the second sentence of Article 3.2 and the evaluation  of "factors affecting dom estic WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.330.   Accordingly, we see no basis for the view that in order to properly examine the impact of 
dumped imports on the domestic industry for purposes of Article 3.4, an investigating authority 
must link that examination with its consideration of the volume an d the price effects of the 
dumped imports.457 We reject as  a legal matter Japan 's position that it has demonstrated 
inconsistency with Article 3. 5 because : (a) the KTC failed to establish a logical link between  its 
evaluation of certain factors having a bear ing on the state of the domestic industry and its 
consideration of the volume of the dumped imports and the effect of the dumped imports on prices 
under Article  3.2; and (b) the examination of the impact of dumped imports on the domestic 
industry in the  present case is necessarily inconsistent with Article 3.4 as a consequence of the 
KTC's flawed price effects analysis.458 
7.331.   In addition to  its overall argument that the KTC failed to establish a logical link between its 
evaluation of factors having a bearing on the state of the domestic industry under Article 3.4  with 
the outcome of the Article 3.2 consideration, Japan makes the following specific arguments 
concerning five of those factors:  
a. concerning sales and production volume, the negative trend s in sales and production had 
nothing to do with declining volume of the dumped imports and were explainable by 
declining consumption ; 
b. concerning market share : 
i. the KTC considered domestic industry  market share without considering whether 
dumped imports  were actually s old after importation or "[w]ere in the inventory  of 
SMC Korea, the subsidiary of SMC "; 
ii. the KTC considered the decrease in domestic industry  market share in 2013 without 
reference to the context of its increase from 2010 to 2012;  
iii. the KTC did not address th e relevance of the domestic industry's export performance 
and the impact of third country imports;  and 
iv. the domestic  industry 's loss of market share was not caused by declining  sales 
volume, but by the fact that domestic sales did not increase as fast as th e dumped 
imports.  
c. concerning factors  affecting domestic prices, the KTC failed to consider the fact that 
dumped imports  significantly  oversold domestic  like products;  and 
d. concerning profits, the KTC ignored the fact that the operating loss of the domestic 
industry expanded in 2012 when the dumped imports  volume decreased  and prices 
increased.  
7.332.    We note that t hese arguments simply repeat Japan 's arguments made in support of its 
claims under  Article s 3.2 and 3.4. We recall that the  inquiries under Articles 3.2 and 3. 4 are not 
the issue before us with respect to Japan's independent claim under Article 3.5. In any event, 
those inquiries  "contribute [] to, rather than duplicate[]"459, the overall determination required 
under Article 3.5.  It is clear that  an investigating  authority is not required  to undertake  a 
fully-reasoned  causation and non -attribution analysis in the context of its examination of impact 
under Article 3.4.  
7.333.   In any event, in  the context of our considerat ion of whether these alleged flaws 
"independently" establish that the KTC's determination of causation is inconsistent with Article 3.5, 
                                                                                                                                                  
prices " under Article 3.4 , this does not mean that, as Japan seems to suggest, a flawed price effects analysis 
will necessarily  preclude a proper examination of the impact of the dumped imports on the domestic  industry 
under Article 3.4.  
457 Third-party Brazil support s this view. (Brazil 's third-party response to Panel question No . 2, p. 2). 
458 We recall that the claim before us is Japan's independent claim of violation of Article s 3.1 and 3.5, 
and we consider it unnecessary to make any findings with res pect to either Article 3.2 or Article 3.4 in this 
context.  
459 Appellate Body Report, China – GOES , para. 149.  (emphasis original)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  we have addressed this question with respect to certain of the alleged flaws above .460 We will 
address Japan 's argument s concerning profits below in considering Japan's second causation 
claim461, and Japan's arguments  concerning consumption, export performance below  in 
considering Japan's third causation claim.462 
7.334.   We now turn to Japan 's argument  that the KTC 's failure to consider whether dumped 
imports were actually sold after importation or "[w]ere in the inventory  of SMC Korea, the 
subsidiary of SMC " undermines its determination of causation . 
7.335.   Japan asserts that the KTC improperly included in its consideration of the volume of the 
dumped imports , dumped imports held in inventory , which necessarily affected the market share 
figures . According to Japan, dumped imports held in inventory should be excluded from the 
consideration of whether there has been a significant increase in dumped imports , because they do 
not compete with the domestic like product. Korea disagrees , arguing that  there is no provision in 
the A nti-Dumping  Agreement requiring that an investigating authority exclude from import volume 
dumped imports th at are held in inventory.463 
7.336.   The question under Article 3.5 is whether dumped imports are, through the effects of 
dumping, causing injury to a domestic industry. "Dumped imports" are those imports for which the 
investigating authority has made a proper deter mination of dumping. Article 2.1 of the 
Anti-Dumping Agreement provides that a product is to be considered as dumped , i.e. "introduced 
into the commerce of another country at less than its normal value , if the export price of the 
product exported from one country to another is less than" the normal value. Thus, the relevant 
imports for purposes of determining causation in this case are Japanese valves which were 
"introduced into the commerce" of Korea at prices below normal value. We recall that a 
determina tion of dumping is made with respect to the product as a whole.464 There is nothing in 
the definition of dumping, in the determination of dumping, or the concept of dumped imports, 
that would support Japan's notion that only dumped imports that have been sol d to independent 
customers in the market of the importing country are to be considered in determining the 
existence of a causal relationship  between dumped imports and injury .465 
7.337.   In our view, the introduction of a product "into the commerce of another countr y" at less 
than the normal value (i.e. dumping) occurs when the goods in question have cleared the 
importing country's customs  procedures . It is the introduction  of a product " into the commerce of 
another country " that is relevant, and not whether that pro duct is subsequently stored in inventory 
for later sale, or immediately sold to an independent buyer. We do not see any basis to introduce 
any other criterion for defining the term "dumped imports". Nor do we see any reason to interpret  
the term "dumped im ports" in the context of the determination of causation  differently than for 
other provisions of the A nti-Dumping  Agreement, and Japan has made no arguments that would 
suggest a contrary result.  Thus, we see no basis to conclude that there was any error in  the KTC's 
failure to exclude dumped imports held in inventory from consideration in its determination of 
causation.  
7.8.4.2.3.2   Alleged  failure to demonstrate any explanatory force of the dumped  imports 
on the state of the domestic industry  
7.338.   Japan argues  that the KTC failed to establish the explanatory force of the dumped imports 
on the  state of the domestic industry. Japan asserts that the following factors other than the 
dumped  imports have explanatory force for the state of the domestic industry:  
                                                
460 See sections 7.8.4.2.1  and 7.8.4.2.2 . 
461 See section 7.8.4.3.4 . 
462 See section 7.8.4.4 . 
463 In any event, Korea contends that there was no evidence before the KTC that imports were being 
held as part of an inventory build -up in line with a change of the safety -stock policy.  (Korea's first written 
submission, paras. 177 -181). [[***]]'s inventories are classified into safety, reserved and other inventories.  
The "safety -stock" is stock of products held for the purpose of securing sufficient quantity in advance for more 
active sales i n the future . (OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 108). 
464 Appellate Body Report , EC – Bed Linen , para. 53.  
465 Had the drafters of the A nti-Dumping  Agreement intended to limit the investigating authority 's 
consideration of the volume of the dumped imports to sales to independent customers, they would have used a 
different term, e.g. "the volume of the sales of the dumped imports in the importing country".  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  a. the de cline in consumption  in 2012 has more explanatory force for the decrease of 
domestic sales in 2012 than the dumped  imports , which also decreased in 2012;  
b. the domestic industry 's loss of market share in 2013 was caused by the sharp increase 
of consumption i n 2013, rather than by dumped  imports , which were a less important 
explanatory  factor;  
c. the fact that dumped  import prices were higher than  those of the  domestic like product  
undermines the explanatory force of those imports for the dec line in domestic like  
product  prices in 2013;  
d. competition between the two producers in the domestic industry  as a result of increase d 
capacity  has more explanatory force than the dumped  imports for the trends in domestic 
like product prices; and 
e. the explanatory force of the du mped  imports for declines in  the domestic like product  
prices is undermined by the fact that domestic  prices decreased by 3.6% in 2012 
whereas dumped  import prices increased by 7%, and domestic prices decreased by 
only 1.2% in 2013 when the dumped  import prices fell by 31.1%.466 
7.339.   Japan 's arguments (a) , (b), and (d) above allege that  factors other than the dumped 
imports explain the state of  the domestic industry  better, or with more force, than the impact of 
dumped imports . Thus, Japan  seems to be arguing  that the KTC's consideration of the impact of 
dumped imports in its determination of causal relationship is inconsistent with Article  3.5 because 
in making that determination, the KTC failed to take into account other factors causing injury to 
the domestic in dustry at the same time. However, while we do not preclude that an investigating 
authority might make a single unified determination of causation and non -attribution under 
Article  3.5, that is not required, and in any event is not what the KTC did in this case. We recall 
that Japan has made a separate claim concerning the KTC's non -attribution findings, which we 
address below. We see nothing in the text of Article 3.5 that would require an evaluation of the 
effects of other factors in the establishment of a  causal relationship between dumped imports and 
injury in the first instance.  
7.340.   We have addressed Japan 's argument s concern ing price overselling and parallel pricing in 
the context of the KTC 's determination of causation above467, and will not repeat that anal ysis 
here. 
7.8.4.2.3.3   Alleged  failure to properly tak e into account "positive trends " 
7.341.   Japan argues that the KTC failed to properly take into account  "positive trends " during the 
period of trend analysis with respect to sales and the ability to raise capital.  
7.342.   The ques tion before us is whether  the Korean Investigating Authorities' determination of 
causation reflects a proper consideration of these two factors . In addressing this question , we 
recall that our role is not to undertake  a de novo  review of the evidence that was before the 
Korean Investigating Authorities. N or may we simply defer to their conclusions. Rather, we must 
determine whether the Korean Investigating Authorities' conclusions were those of a reasonable 
and unbiased investigating authority , supported by  a reasoned and adequate explanation in the 
light of the arguments and evidence before them, and other plausible alternative explanations.468 
7.343.   We recall that in examining the impact of the dumped imports on the state of the domestic 
industry , the KTC evaluate d all of the factors listed in Article  3.4. The KTC found that information 
regarding two of those factors, sales and investment , and the ability to raise capital, showed 
increases during the period of trend analysis, i.e. the "positive trends" referred to in 
                                                
466 Japan 's first written submission, paras. 163 -172. 
467 See section 7.8.4.2.2  above . 
468 See, for example, Appellate Body Reports, US – Tyres (China) , para. 280 ; and US – Softwood 
Lumber  VI (Article 21.5 – Canada) , para. 93.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  Japan's  arguments.469 The KTC did not specifically discuss these increases in its overall 
determination of a causal relationship.  
7.344.   However, w ith respect  to sales, the KTC had elsewhere in its report observed : 
However, in 2013, when domestic consumption soa red by 52.8%, the market share of 
the like product decreased [[ ***]]%, while domestic sales thereof increased by  7.6%. 
This indicates that the like product was materially injured when its market share was 
lost significantly despite the slight increase in t he sales volume.470 
With respect to investment and ability to raise capital, the KTC had observed that: 
 
As discussed previously, the domestic industry expanded its investment in facility, in 
the expectation that economic recovery and the expansion of invest ment in 
automation would increase demand, but the domestic and international demand 
significantly decreased in 2012 due to the fiscal crises in Europe, etc. and the dumped 
products largely dominated the domestic market, resulting in the failure to increase  
output in accordance with the expansion of the production capacity.  
Accordingly, the domestic industry 's demand for investment in facility is expected to 
shrink significantly for the time being, and it appears that the dumped products are 
having potentially adverse impact on the domestic industry 's investment in facility.  
The domestic industry is making efforts for technological development, e.g., by 
spending more than KRW [[ ***]] per year since 2011 despite the operating losses, 
but the ratio of R&D spending to the sales amount increased only in 2011 and has 
since decreased continuously.  
Due to the continued operating loss, the domestic industry 's internal capability for 
investment is dwindling and the demand for investment in facility is shrinkin g as the 
capacity utilization of facilities and the market share decrease due to the rapid growth 
in the import of the dumped products. In sum, it appears that the overall growth of 
the domestic industry has been significantly undermined.   
… 
The continuing  operating loss of the domestic industry is weakening its internal capital 
raising capacity, and the increase in debt caused by such operating loss is weakening 
the external capital raising capacity as well.471 
7.345.   In light of these statements, which squarely ad dress the relevance of the "positive trends" 
to which Japan refers in the context of examining the impact of dumped imports on the domestic 
industry, w e cannot agree that the KTC disregarded or downplayed the m. The KTC noted and 
acknowledged the 14% increa se in sales from 2010 to 2013, and the 7.6% increase in sales 
from 2012 to 2013 , in the context of a 52.8% increase in consumption. In this context,  the KTC 
noted  that the domestic industry  lost 11.6 percentage points of market share , almost entirely to 
dumped imports, and observed that this loss indicated material injury. Thus, in our view, the KTC 
clearly explained the relevance of increase d sales to its overall determination of causation . 
Similarly,  the KTC specifically acknowledged the "sharp increase " in investment in 2011 and 2012 , 
and explained its understanding of the reasons for that increase, as well as its views regarding the 
                                                
469 According to  the Investigation Report [the OTI 's Final Report],  the domestic shipment of the 
like product indicated yearly fluctuations, increasing by 13.4% from [[ ***]] units in 2010 to 
[[***]] units in 2011, decreasing by 6.6% to [[ ***]] units in 2012, and increasing again by 
7.6% to [[ ***]] units in 2013. As such, the shipment in 2013 was [[ ***]]% higher than that of 
2010. 
(KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 20 (fn omitted) ) 
According to the Investigation Report [the OTI 's Final Report], t he investment in facility by the 
domestic industry was KRW [[ ***]] in 2010, KRW [[ ***]] in 2011, KRW  [[*** ]] in 2012 and 
KRW [[ ***]] in 2013, showi ng a sharp increase in 2011 and  2012.  
(KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 25 (fn omitted) ) 
470 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 20.  
471 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 25 -26. (fn omitted)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  potential  impact of likely declines in  domestic industry investment in the future , in light  of 
declining global demand due to the European fiscal crisis and the dominance of dumped imports in 
the Korean market.  Thus, it is clear that the KTC did discuss the increase in domestic industry 
capacity, and explained the relevance of that fact for its v iew that further investment might 
decline . 
7.346.   For the reasons set out above , we conclude that Japan has failed to demonstrate that the 
Korean Investigating Authorities acte d inconsistently with Article s 3.1 and  3.5 of the Anti -Dumping 
Agreement by failing to take into account positive trends in certain economic factors.  
7.8.4.2.3.4   Conclusion  regarding impact  
7.347.   For the reasons set out above, we conclude that Japan has failed to demonstrate that  the 
Korean Investigating Authorities acted inconsistently with Article s 3.1 and  3.5 of the Anti -Dumping 
Agreement : 
a. by failing  to examine two specifically required factors ; 
b. because : (i) the KTC failed to establish a logical link between  the evaluation of certain 
factors having a bearing on the state of the domestic industry and consideration of the 
volume of the dumped imports and the effect of the dumped imports on prices under 
Article  3.2; and (ii) the examination of the impact of dumped imports on the domestic 
industry in the  present case is necessarily inconsistent with Artic le 3.4 as a consequence 
of the flawed price effects analysis ; 
c. because they did not exclude dumped imports held in inventory from consideration in 
the determination of causation;  and 
d. by failing to take into account positive trends in certain economic factor s. 
7.8.4.2.4   Conclusion  regarding Japan's first claim  
7.348.   Accordingly, we conclude that Japan has failed to demonstrate that:  
a. the Korean Investigating Authorities' determination of causation is, with respect to the 
analysis of the volume  of dumped imports, and independe ntly of any inconsistencies with 
Article 3.2, inconsistent with Article s 3.1 and  3.5 of the Anti -Dumping Agreement;  
b. the Korean Investigating Authorities' determination of causation is, with respect to the 
analysis of the impact of dumped imports on the dom estic industry, and independently 
of any inconsistencies with Article 3.4, inconsistent with Article s 3.1 and  3.5; and 
c. the different magnitude of price decreases from 2012 to 2013,  and the diverging price 
movements from 2011 to 2012, in themselves, establi sh that the KTC's determination of 
a causal relationship is inconsistent with Articles 3.1 and 3.5.  
7.349.   We further conclude that the Korean Investigating Authorities acted inconsistently with 
Articles 3.1 and 3.5  of the Anti -Dumping Agreement , and independentl y of any inconsistencies 
with Article 3.2:  
a. by failing to ensure price comparability in the comparison of individual transaction prices 
of certain models of dumped imports with the average prices of corresponding models of 
the domestic like product;  and 
b. by failing to adequately explain their consideration of the price suppressing and 
depressing effects of dumped imports in their determination of causation,  in light of the 
undisputed fact that the prices of the dumped  imports were higher than those of the 
domestic like product  throughout the period of trend analysis  in the comparison of both 
the average prices for the product as a whole , and the average prices of the 
representative models . WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.8.4.3   Second claim: Alleged f ailure to properly demonstrate  a causal relationship  
7.8.4.3.1   The KTC 's findings on causation  
7.350.   The KTC found that significantly increased volumes of dumped imports at significantly 
decreasing prices in 2013 supressed and depressed  the prices of the domestic like product. As a 
result, the domestic industry  lost the market share it ha d gained up to 2012. In turn, this led to 
deterioration in the domestic industry 's profitability, delay in the recovery of capacity utilization, 
increase d inventory, decrease d wages, and deterioration in productivity and growth.  The KTC 
concluded that the deterioration of the state of the domestic industry was caused by the price 
effects  and the volume of the dumped imports, and by the strengthened marketing activities of the 
related importer of the exporting producers.  
7.351.   Japan  argues that the KTC failed to demonstrate that the dumped imports, through the 
effects of dumping, were causing injury to the domestic industry. Japan  argues that there was 
insufficient correlation between  the volume trends, price trends and profit trends and the state of 
the domestic industry to support the existence of a causal relationship between the dumped 
imports and the injury to the domestic industry.  
7.8.4.3.2   Volume correlation  
7.352.    Japan argues that there was "insufficient correlation in key volume trends" for th e KTC to 
demonstrate that the dumped imports were causing injury to the domestic industry. Japan 
contends that the existence of any causal relationship  between the dumped imports and the 
alleged injury was undermined by the following two facts:  
a. the volume  and the market share of the dumped  imports decreased from 2010 to 2012 
(i.e. during the first two years of the three -year period of trend analysis);  and 
b. the domestic  industry 's market share remained stable in 2013 as compared with 2010.  
7.353.   Japan 's arguments in support of  this aspect of its causation claim are identical to its 
volume -related arguments under its independent causation claim. We have found , at 
paragraph  7.258  above , that Japan failed to demonstrate that the Korean Investigating Authorities  
acted inconsistent ly with Article 3. 5 with respect to their consideration of the volume of dumped 
imports . On the basis of the same considerations as set out in section 7.8.4.2.1  above, we 
conclude that  Japan has failed to establish that insufficient cor relation in key volume trends 
suffices to demonstrate that a reasonable and unbiased investigating authority could not have 
properly found the required causal relationship  between the dumped imports and injury to the 
domestic industry  in light of the facts  and arguments that were before the KTC . 
7.354.   In addition, we note that the concept of an "insufficient correlation in key volume trends" 
is not very clearly explained in Japan's argument. It is not apparent from Japan's submission s 
what Japan considers key volume trends were insufficiently correlated with, nor what it considers 
would be a "sufficient correlation". In any event, we observe that even assuming that the volume 
of dumped imports declined while the condition of the domest ic industry worsened, a situation we 
believe would fall within Japan's notion of "insufficient correlation", this would not preclude a 
finding of injury caused by dumped imports, depending on the other facts considered and the 
explanations given by the inv estigating authority.   
7.8.4.3.3   Price correlation  
7.355.   Japan  argues that the lack of parallelism between dumped import  prices and domestic like 
product prices does not support the existence  of a causal relationship between the dumped 
imports and the injury allegedly suf fered by the domestic industry. Japan  notes, in particular , 
that: (a) dumped import prices increased from 2011 to 2012 while domestic like product prices 
decreased; and (b) dumped import prices fell sharply from 2012 to 2013 whereas domestic like 
product prices decreased  only slightly.  
7.356.   Japan 's arguments in support of this aspect of its causation claim are identical to its price 
effects -related arguments under its independent  causation claim. We have found, at WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  paragraph  7.296  above, that Japan failed to demonstrate that the Korean Investigating  Authorities  
acted inconsistently with Article 3.5 with respect to their consideration of the absence of parallel 
price trends . On the basis of the same considerations as set out in paragraphs 7.273  to 7.296  
above, we conclude that Japan has failed to establish that insufficient price correlation suffices to 
demonstrate that a reasonable and unbiased investigating authority could not have properly found 
the required causal relationship  between the dumped imports and injury to the domestic industry  
in light of the facts and arguments that were before the KTC . 
7.8.4.3.4   Profits correlation  
7.357.   Japan argues that there was insufficient correlation between  dumped imports and trends in 
domestic ind ustry profits to support the existence of a causal link. Japan contends that the 
domestic industry incurred losses from 2010 to 2012 , when dumped import  prices increased and 
their volumes decreased. According to Japan , when dumped import prices increased i n 2012, and 
their volumes and market share decreased, the domestic industry should have been in good 
health. Instead, the profit trends of the domestic industry in 2012 and 2013 show that the 
domestic industry was losing money regardless of the trends in the dumped  import volumes and 
prices.  
7.358.   With r espect to the profits of the domestic industry, the KTC observed:  
The operating profit from domestic sales by the domestic industry remained in deficit 
during the period of investigation, and the operating loss rate decreased from 
[[***]]% in deficit in 20 10 to [[ ***]]% in deficit in 2011 and the loss rate widened 
again to [[ ***]]% in deficit in 2012 and to [[ ***]]% in deficit in 2013.  … 
The deterioration of the operating profit in 2012, after improving in 2011, was a result 
of the price reduction of the li ke product and the increase in the operating cost in 
response to the competition with the dumped products.472 
The KTC acknowledged  that the domestic industry 's operating loss worsened  from 2011 to 2012 , 
that is, the operating loss ratio increased, at the sam e time as dumped import prices increased 
and their volume and market share declined. The KTC explained its view that th e increased 
operating loss ratio was a result not only of the decrease in domestic like product prices (which it 
elsewhere in its report attributed to the effect of dumped imports), but also of the increase of 
operating costs in response to competition with the dumped imports.  
 
7.359.   Responding  to arguments concerning other possible causes of the domestic industry 's 
operating loss, the KTC noted:  
The Respondents argued that the deterioration of the earnings of the domestic 
industry was  attributable to the excessive spending of SG&A expenses, but such 
expenses of the domestic industry  during the period of investigation showed a similar 
upward trend  with that of SMC Korea, which  means that the major reason for the 
increase in such expenses was the competition with the dumped  products, for which 
the marketing activities had been enhanced, e.g., through the expansion of sales  
organizations, etc. Consid ering that the operating profit decreased in 2013 despite the 
reduction in  SG&A expenses, such expenses cannot be deemed to be the cause of the 
worsening operating profit,  and the decrease in the price of the like product in 
response to the reduction of th at of the dumped  products appears to be the major 
cause.  
Meanwhile, the Respondents argued that the deterioration of the operating profit of 
the domestic  industry was attributable to the increase in the depreciation cost 
resulting from excessive expansion of facilities. However, despite the increase in the 
depreciation cost resulting from facility expansion,  the total manufacturing costs 
including the depreciation cost fell as much as [[ ***]]% from KRW  [[***]] per unit in 
2010 to KRW [[ ***]] per unit in 201 3, which means that the  cost reduction  through 
the facility expansion and investment in enhancement of productivity led to the 
                                                
472 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 23.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  decrease in  manufacturing costs. Therefore, the argument of the Respondents that 
the operating profit of the  domestic industry wo rsened due to the facility expansion is 
not reasonable.473 
7.360.   In our view, the KTC 's consideration of the relationship between the operating loss es of the 
domestic industry during the entire POI and the dumped imports is reasonable and grounded in 
the underlyin g facts.  Moreover, w e cannot agree with what appears to be the premise of Japan 's 
argument , that when dumped import prices increase and their volume decrease s, the profits of the 
domestic industry must necessarily improve  and there can be no injury caused by dumped 
imports . We therefore conclude that Japan has failed to establish that insufficient correlation 
between  dumped imports and trends in domestic industry profits suffices to demonstrate that a 
reasonable and unbiased investigating authority could no t have properly found the required causal 
relationship  between the dumped imports a nd injury to the domestic industry  in light of the facts 
and arguments that were before the KTC.  
7.8.4.3.5   Conclusion  regarding Japan's second claim  
7.361.   For the reasons above, we conclude  that Japan has failed to demonstrate that the Korean 
Investigating Authorities acted inconsistently with Articles 3.1 and 3.5 of the 
Anti-Dumping  Agreement  by failing to demonstrate  that the dumped imports, through the effects 
of dumping, were causing i njury to the domestic industry.  
7.8.4.4   Third claim: Alleged  failure to conduct a proper non -attribution analysis  
7.362.   Japan argues that t he KTC failed to conduct an objective analysis of certain known  factors 
other than the dumped  imports  allegedly causing  injury to the  domestic industry at the same time 
as dumped imports , and failed to examine at all some other known factors. As discussed at 
paragraph 7.243  above, our consideration of Japan's non -attribution claim is limited to its 
allegations regarding those factors that allegedly were inadequately considered by the KTC : 
(a) third country imports; ( b) trends in domestic consumption; and ( c) exports by the Korean 
industry.  
7.8.4.4.1   Third  countr y imports  
7.363.   In its Final Resolution , the KTC stated:  
According to the Investigation Report  [the OTI's Final Report] , the quantity of the 
product under investigation imported from countries other than Japan increased from 
[[***]] units in 2010 to [[ ***]] units in 2013, but the market share of such product 
in 2013 was only [[ ***]]% and its sales price was significantly higher than that of the 
like product or the dumped products. Accordingly, such product cannot be seen as 
being in competitio n with the like product. Therefore, products other than the dumped 
products have had almost no adverse impact on the domestic industry.474 
The OTI had examined trends in the volumes, market share and the prices of third country imports 
during the period of trend analysis , noting  that: 
 
The volume of imports from other countries is minimal in absolute terms although it 
increased [[ ***]]% from 2010 to 2013 per year on average.  
Imports from other countries increased from [[ ***]] units in 2010 to [[ ***]] units in 
2011, to [[ ***]] units in 2012, and to [[ ***]] units in 2013. Most of the products 
were imported from Germany and Hungary.   
… 
The sales price per unit of the products imported from other countries apart from the 
dumped products increased [[ ***]]% from 2 010 to 2013 per year on average.  
                                                
473 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 23.  
474 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 26.  (fn omitted)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  The market share of the products imported from other countries was merely between 
[[***]]% and [[ ***]]% during the period of investigation, and their sales prices were 
higher than those of the like products or the dumped pr oducts. Therefore, imports 
from other countries appear to have had only minimal impacts on the domestic 
industry.475 
Thus, referring to the findings in the OTI 's Final Report, the KTC concluded  that third country 
imports had almost no impact on the domestic industry because  their market share was only 
[[***]]% and  their prices were significantly higher than those of both the dumped imports and the 
domestic like product.  
 
7.364.   Japan takes  issues with several aspects of the KTC 's examination of and conclusions 
regar ding the effects of third country imports . 
7.365.   First, Japan  contends  that the KTC did not  refer to the small market share of the third 
country imports in its Final Resolution. We note in this regard that, i n its Final Resolution, the KTC 
referred to the key factual findings of the OTI. Although the KTC did not repeat the detailed data 
reported by the OTI in its Final Report, it clearly referred to the small market share of third 
country imports when it state d that their market share "was only [[ ***]]% in 2013 ", which we 
recall was when dumping was found. Japan's argument is inconsistent with the facts before us.476 
7.366.   Second, Japan  argues that the KTC failed to address the impact on domestic like product 
prices of the 62 .2% decrease in third country import prices from 2012 to 2013 . Japan 's allegation 
focuse s on the last year of the period examined , when third country import prices declined, but 
ignores the context of the low volume and market share of those imports  throughout the period, 
as well as the overall increase in third country import prices .477 In th is context  we are not 
persuaded that it was unreasonable  for the KTC to conclude that the overall impact of the 
third country imports on the domestic industry was minimal , despite th e significant decrease in 
third country import  prices during the last year of the period examined . 
7.367.   Third, Japan  argues that the KTC's assessment of the impact of the third country imports 
was not objective because the domestic industry  lost [[ ***]] percentage points  of market share to 
the third country imports.478 In our view, t he fact that third country import  market share increased 
by [[***]] percentage points from 2010 to 2013 does not necessarily mean that the third country 
imports ca ptured this market share from the domestic industry , or from the domestic industry  
only. Indeed, the data on market share indicate  that third country import market share gains were 
at the expense of dumped imports, and not the domestic industry, corroborat ing the KTC 's finding 
that third country imports had almost  no adverse impact on the state of the domestic industry.  
From 2010 to 2013, third country imports gained [[ ***]] percentage points  of market share, while 
dumped imports lost the same [[***]] percentage points of market share , and the market share of 
the domestic like product remained the same , as seen in  the table below:  
Table 2: Development in Market share 2010 -2013  
  2010  2011  2012  2013  Changes  
2010 -2013  
Dumped imports  [[***]]  [[***]]  [[***]]  [[***]]  [[***]]  
Domestic industry  [[***]]  [[***]]  [[***]]  [[***]]  [[***]]  
Third-country imports  [[***]]  [[***]]  [[***]]  [[***]]  [[***]]  
 Source: OTI 's Final Report, (Exhibit KOR -2(b) (BCI) ), p. 81. 
7.368.   Fourth, Japan  argues that the  KTC did not compare third country imports with the dumped 
imports in either absolute terms or by market share. According to Japan , such a comparison would 
have shown that the increase  in third country imports from 2010 to 2013 was 45% of the increase 
in dumped  imports in absolute terms.  The mere fact that Japan can posit a comparison that the 
                                                
475 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , pp. 81 -82. 
476 In any event, we are of the view  that an investigating authority need not recite in its determination 
all the evidence on which it relies in reaching its conclusions, so long as it adequately explains those 
conclusions and they are supported by the evidence that was before it. 
477 OTI's Final Report , (Exhibit KOR -2(b) (BCI)) , p. 81. 
478 Japan 's opening statement at the first meeting of the Panel, para. 75.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  KTC did not undertake , which might have supported  a different conclusion , provides no  basis for 
finding error in the KTC's approach and conclusions.  Japan would also have to demonstrate that no 
reasonable and unbiased  investigating authority could have failed to undertake the posited  
comparison in light  of the facts and arguments before the KTC in thi s case.  It has not done so.  
Moreover , while the KTC did not cite all the data that was before the Korean Investigating 
Authorities, it did specifically refer to the OTI 's Final Report  in this regard , including a table which 
showed the volume, market share , and price s of dumped imports, third country imports , and the 
domestic industry .479 In any event , we cannot agree with Japan  that the relative increase in third 
country imports from 2010 to 2013 undermine s the KTC 's finding , in the context of the low volume 
and high prices  of those imports . 
7.369.   Lastly, Japan  argues that the KTC could not have properly found that there was no 
competition between third country imports and the domestic like product , because it ha d found 
that the equally  higher priced dumped imports were in competition with the domestic like product. 
This argument is untenable. In contrast with its consideration of competition between the dumped 
imports and the domestic like product, the KTC 's conclusion  that there was no competition 
between third cou ntry imports and the domestic like product was based on the negligible volume s 
of third country imports and prices that were significantly  higher than those of both the domestic 
like product  and the dumped imports . 
7.370.   We therefore conclude that Japan has not demonstrated that the Korean Investigating 
Authorities ' conclusion regarding  the minimal impact of third country imports on the domestic 
industry is not one that a reasonable and unbiased  investigating authority could have reached in 
light of the evidence on the record and the arguments before the KTC . 
7.8.4.4.2   Domestic consumption  
7.371.   With respect  to domestic consumption, the KTC stated:  
As discussed previously, the domestic consumption increased by [[ ***]]% per year 
on average throughout the period of investigation; but the overall upward trend was 
due to the significant increase in 2013 as the figu re continuously decreased 
until 2012.  
Domestic consumption decreased by 25.4% between 2010 and 2012, and in 2012 in 
particular, it decreased by 22.9% compared to the previo us year, which may be 
interpreted to have had adverse impact on the domestic industry. However, during the 
same period, domestic sales of the domestic industry increased by [[ ***]]% and its 
market share increased by [[ ***]]%, which means that the negative impact of the 
decrease in the domestic consumption on the domestic industry is unclear.  
Meanwhile, domestic consumption increased by 52.8% in 2013, but the sales of the 
like product increased by only 7.6%, which means that the domestic industry saw 
almost no positive impact from the increase in domestic consumption, which, as 
confirmed above, was due to the sharp increase in the import of the dumped 
products.480 
7.372.   In considering the impact  of changes in consumption on the  state of the domestic industry , 
the KTC  looked at the period from 2010 to 2012, which showed a decrease in consumption 
of 25.4%, in contrast with an increase in domestic sales and market share of [[ ***]]% and 
[[***]]% respectively. The KTC looked separately at the period from 2012 to 2013 , when  
domestic consumption increased by 52.8%, and domestic sales also increased, but only by 
[[***]]%. The KTC found that the trends in domestic consumption did not correlate with the 
trends in domestic sales and domestic industry market share. The KTC conclud ed that the negative 
impact of the decrease in consumption in the earlier period was not clear.  
7.373.   Japan argues that, b y finding that it is uncertain whether the decrease in domestic 
consumption from 2010 to 2012 had a negative impact on the domestic  industry , the KTC failed to 
                                                
479 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 81.  
480 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 26.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  conduct a proper non -attribution analysis. Japan  takes issue with the following aspects of the 
KTC's examination of the impact o f changes in domestic consumption : 
a. The KTC "misleadingly cited" a 5.9% increase in domestic industry sales from 2010 to 
2012 when consumption declined during the same period.481 The KTC 's reliance on this 
increase  over the period 2010 to 2012, is contradicted by the fact that domestic industry 
sales decreased by 6.6% from 2011 to 2012.482 
b. The KTC "misleadingly cite d" an increase in the domestic industry 's market share in 
2012. The domestic industry 's market share increased because the volume of dumped  
imports decreased much more than the domestic industry 's sales. Therefore the increase 
in domestic industry market s hare does not support the KTC 's conclusion that the 
domestic industry was not adversely affected by the sharp decline in consumption.483 
7.374.   In essence, Japan  is merely suggesting  a different way of looking at the data. Japan 's 
arguments boil down to the followi ng: 
a. Looking at the period 2011 -2013, instead  of 2010 -2012, domestic sales moved in the 
same direction as consumption, showing that domestic sales were responsive to 
consumption changes.484  
b. The fact that the domestic industry 's market  share increased when consumption 
decreased from 2010 to 2012 does not necessarily indicate that the domestic industry 
was not negatively affected by the decline in consumption.485 
7.375.   We recall that m erely showing that a different way of looking at the data cou ld support a 
different conclusion is not enough to demonstrate error in an investigating 
authority 's determination , unless there is some reason to conclude that the proposed different 
approach was necessary, either as a matter of law, or because the eviden ce could not be 
objectively examined otherwise. Japan  has demonstrated neither. None of Japan  arguments 
contradicts or otherwise calls into question the reasonableness or objectivity of the finding of the 
KTC that changes in domestic consumption and the sales and market share of the domestic 
industry  were not correlated , and thus that any negative impact of declines in consumption from 
2010 to 2012 on the domestic industry, whose sales and market share increased during that 
period, were not clear . In our view, the graph below shows the lack of correlation . Accordingly the 
Korean Investigating Authorities ' conclusion in this regard is not unreasonable.  
                                                
481 Consumption declined b y 25.4% from 2010 to 2012. (KTC's Final Resolution , (Exhibit JPN -4(b)), 
p. 26). 
482 Japan 's first written submission, para. 216.  
483 Japan 's first written submission, para. 217.  
484 Japan 's second written submission, para s. 178-179. 
485 Japan 's first written submission, para. 217.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  Figure 5: Trends in consumption  and the domestic industry's sales and market share  
 
Source: OTI 's Final Report, (Exhibit KOR -2(b) (BCI) ), pp. 81-82. 
7.376.   Japan also argues that the KTC failed to examine the impact of the decrease in 
consumption on domestic prices in 2012 by looking at the trends in domestic sales by value.486 
According to Japa n, when measured by value, the trends in the domestic industry 's sales 
correlated to the changes in consumption .487 We recall  that Article 3.5 does not prescribe any 
particular methodology for a non -attribution analysis. Therefore there is no textual basis for 
Japan 's view that the Korean Investigating Authorities should have compare d trends in domestic 
consumption with trends in domestic sales by value. Once again, merely showing that a different 
way of looking at the data could support a different conclusion is not enough to demonstrate error 
in an investigating authority 's determination , unless there is some reason to conclude that the 
proposed different approach wa s necessary, either as a matter of law, or because the evidence 
could not be objectively examined otherwise.  We find that the Korean Investigating Authorities  did 
not act unreasonably by not comparing trends in consumption and domestic sales by value.  
7.377.   For the reasons above, we conclude that Japan  has failed to demonstrate  that the Korean 
Investigating Authorities' finding , in the context of its consideration of non -attribution of injury to 
other factors,  that it was uncertain whether the decrease in domesti c consumption from 2010 
to 2012 had a negative impact on the domestic industry , is one that a reasonable and unbiased  
investigating authority could not have reached in light of the evidence on the record and the 
arguments before it.  
7.8.4.4.3   The domestic industry 's export  performance  
7.378.   Japan argues that t he KTC failed to conduct a proper non -attribution  analysis concerning 
the impact of the domestic industry 's export performance. According to Japan , its weak export 
performance contributed  to the adverse condition of t he domestic industry  in 2012 and 2013.488 
7.379.   With respect to the domestic industry 's export performance,  the KTC stated:  
According to the Investigation Report [the OTI 's Final Report] , the export volume of 
the domestic industry showed severe annual fluctuations , with [[ ***]] units in 2010, 
                                                
486 Japan 's first written submission, para. 218.  
487 Japan 's first written submission, para. 220.  
488 Japan 's first written submission, para. 222.  
WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  [[***]] units in 2011, [[ ***]] units in 2012 and [[ ***]] units in 2013. Such 
fluctuations in export appear to have affected the gross sales and production of the 
like product. However, it cannot be concluded that the export ha d adverse impact on 
domestic sales of the like product because in 2011, when the export volume was the 
highest, the proportion of export to the overall sales was only [[ ***]]%489 and the 
capacity utilization of the domestic industry was low as well.490 
In its Final Report, the OTI stated:  
 
The export volume of the domestic industry considerably fluctuated year by year, from 
[[***]] units in 2010 to [[ ***]] units in 2011, to [[ ***]] units in 2012, to [[ ***]] 
units in 2013. The drastic changes in exports appear to have substantial effects on the 
total sales volume of the like products.   
… 
The ratio of exports to the total volume of shipment of the domestic industry 
increased from  10.7% in 2010 to 28.1% in 2011 and then decreased to 6.0% in 2012 
and then rose agai n to 12.9% in 2013.  
The ratio of exports to the total volume of shipment of the domestic industry has not 
changed much except in 2011. Although the ratio in 2013 is slightly higher than that 
of 2010, it is unreasonable to conclude that the export volume af fected domestic sales 
since the capacity utilization of the domestic industry was below [[ ***]]%. 
Therefore, the fact that domestic sales increased only by a narrow range despite the 
reduction in domestic sales in 2012 and the sharp increase in domestic de mand 
in 2013 should be viewed to have been caused not by exports but by other factors 
such as dumping, etc.491 
7.380.   Thus, th e KTC concluded that the export performance of the domestic industry did not 
adversely affect the state of the domestic industry because of  the relatively low level of exports 
compared to total sales  and low domestic industry capacity utilization. 
7.381.   Japan argues that the ratio between exports and total sales is irrelevant  to the question  of 
whether export performance affect ed the state of the domestic industry. According to Japan , the 
KTC should have examined the ratio between exports and domestic sales or profits.492 Japan 's 
argument is untenable . We recall that Article 3.5 gives no guidance as to how a non -attribution 
analysis  should be conducted, let alone how to examine whether the domestic industry's export 
performance is a cause  of injury to that industry. We see no reason to conclude, a priori , that  the 
ratio between exports and total sales may not be relevant in this rega rd. Indeed, it seems to us 
that this may be an important factor , as t he higher the ratio, the more impact export s would be 
expected to have on the overall performance of the domestic industry. If the ratio is low or 
negligible, this might suggest that regardless of any changes in export performance, there would 
be relatively little, if any, impact on the overall performance of the domestic industry . Similarly, in 
our view c apacity utilization may also be a relevant factor  in this context . If capaci ty utilization is 
high, the domestic industry may not be able to fulfill both export and domestic orders , and if it is 
export oriented, it may prioritize its export market , which may result in loss of domestic sales and 
market share. However, if the domest ic industry 's capacity utilization rate is low , the domestic 
industry could, if market conditions warranted, increase production to meet both domestic and 
export  demand.  
7.382.   Japan also argues that the export  performance  of the domestic industry wa s strongly 
correlated with the sales and profits of the domestic industry.493 In our view, while this is true, this 
correlation alone does not demonstrate  that export performance necessarily  had an impact on the 
                                                
489 This figure appears to be an error in  the Final Resolution , in both the original and Engli sh version s. 
The figure in the OTI Final Report appears to be the correct ratio.  
490 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 26 -27. 
491 OTI's Final Report, (Exhibit KOR -2(b) (BCI)) , p. 83.  (fn omitted)  
492 Japan 's second written submission, para. 184. 
493 Japan 's second written submission, para. 185.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  sales, profits , or overall performance of the domestic industry. In the present case, the KTC 
concluded that the export performance of the domestic industry had no adverse impact on the 
domestic industry because of the low ratio of export s to total sales and the industry 's low capacity 
utilization, which would have allowed for increased domestic sales if market conditions had 
warranted. Japan's arguments do not demonstrate that th is conclusion was not reasonable, in light 
of the facts and arguments o n the record.  
7.383.   For the reasons above, we conclude that Japan  has failed to demonstrate that the 
Korean  Investigating Authorities' finding that the export performance of the domestic industry had 
no adverse impact on the domestic industry is not one that a reasonable and unbiased  
investigating authority could have reached in light of the evidence on the record and the 
arguments before it.  
7.8.4.4.4   Cumulative  effects of the other "known" factors  
7.384.   Japan argues that t he KTC failed to consider the cumulative effect of all known factors  
other th an imports causing injury to the domestic industry . According to Japan , even if some of 
these factors in isolation do not break the causal link, several of these factors collectively  may 
have broken this link.494 Korea  has not responded to this argument in its submissions.  
7.385.   Article 3.5 of the Anti -Dumping Agreement provides that:  
The authorities shall also examine any known factors other than the dumped imports 
which at the same time are injuring the domestic industry, and the injuries caused by 
these other factors must not be attributed to the dumped imports. Factors which may 
be relevant in this respect include, inter alia , the volume and prices of imports not 
sold at dumping prices, contraction in demand or changes in the patterns of 
consumption, trade res trictive practices of and competition between the foreign and 
domestic producers, developments in technology and the export performance and 
productivity of the domestic industry.  
7.386.   As we have previously noted , Article 3.5 does not contain any guidance on how  an 
investigating authority should conduct its non -attribution analysis. We recall that the obligation to 
distinguish between the effects caused by dumped imports and the effects caused by other factors 
does not  necessarily imply that dumped imports on the ir own  must be capable of causing material 
injury.495 Therefore, it is clear to us that there is no requirement that an investigating authority  
consider the effects of other factors found to cause injury to the domestic industry on a collective 
or cumulative  basis in addition  to examining th eir individual effects. While there may be cases 
where, because of the specific factual circumstances, such an assessment may be  necessary for an 
investigating authority to ensure that injuries ascribed to dumped imports a re not caused by other 
factors496, Japan has failed to demonstrate , or even to argue, that this is such a case.  
7.387.   The KTC addressed each of the "other factors " raised by interested parties during the 
investigation  and concluded that they did not have adverse impact on the domestic industry. There 
is no suggestion  that the interested  parties argued that these factors should be considered on a 
cumulative basis. Japan  has not argued  before us that the circumstances of  the present case are 
such that no reasonable and unbiased  investigating authority could have reached the KTC's 
conclusion regarding non -attribution of injury to other factors without examin ing, on a cumulative 
basis, whether these factors taken together b roke the causal link  it had found between dumped 
imports and injury to the domestic industry . 
                                                
494 Japan 's first written submission, paras. 230 -231. 
495 Cf. Appellate Body Report, US – Wheat Gluten , para. 67. The Appellate Body was referring to the 
non-attribution language in the  Agreement on Safeguar ds, which ca n provide guidance in interpreting the 
non-attribution language in Article  3.5 of the  Anti-Dumping Agreement . (Appellate Body Report, US – 
Hot-Rolled  Steel, para. 230 ). 
496 Appellate Body Report, EC – Tube or Pipe Fittings , paras. 190 -192. The Appellate Body concluded: 
"We are therefore of the view that an investigating authority is not required to examine the collective impact of 
other causal factors, provided that, under the specific factual circumstances of the case, it fulfils its obligation  
not to attribute to dumped imports the injuries  caused by other causal factors".  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.388.   For th e reason s above , we conclude that Japan has failed to demonstrate that the Korean 
Investigating Authorities acted inconsistently  with Article s 3.1 and  3.5 b y failing to consider the 
cumulative effect of the other known factors  causing injury to the domestic industry at the same 
time as dumped imports . 
7.8.4.4.5   Conclusion  regarding Japan's third claim  
7.389.   For th e reason s above , we conclude that Japan has failed to demonstrate that the Korean 
Investigating Authorities acted inconsistently  with Article s 3.1 and  3.5 by failing to adequately 
examine  other known factors causing  injury to the domestic industry at the same time as dumped 
imports and the cumulative effect of such other known factors.  
7.9  Confidential  treatment of information  
7.9.1   Main arguments  of the parties  
7.9.1.1   Japan  
7.390.   In its panel request, Japan asserts that Korea's measures are inconsistent with Article  6.5 
of the Anti-Dumping  Agreement  "because Korea treated allegedly confidential information provided 
by the interested parties as confidential  without good cause  shown ". Japan also asserts that 
Korea's measures are inconsistent with Article  6.5.1 of the Anti-Dumping  Agreement  "because 
Korea: ( a) failed to require the applicants to furnish non -confidential summaries of their 
submissions, questionnaire responses, and amendments thereof; and ( b) where such summaries 
were provided, they were not in sufficient detail to permit a reaso nable understanding of the 
substance of the information submitted in confidence ".497 
7.391.   As articulated over the course of the proceedings , Japan  claims  that Korea acted 
inconsistently with Articles 6.5 and 6.5.1 of the Anti-Dumping  Agreement , with respect to the 
KTC's treatment of confidential information . More specifically, Japan argues that : 
a. the KTC granted confidential treatment to certain information provided by the applicants 
without requiring a showing of good cause and without conducting  an objective 
assessment to justify the confidential  treatment ; and 
b. with respect to certain documents, the KTC failed to require that submitting parties 
provide a non -confidential summary of information that was treated as confidential or to 
show why such a summary  could not be provided.498 
7.392.   Japan identifies the application for an anti -dumping  investigation filed on 
23 December  2013 as "the first and the most problematic example of the inappropriate 
confidential treatment of information submitted by the applicants".499 Japan asserts that a 
significant portion of the key information in that application was treated by the Korean 
Investigating Authorit ies as confidential without any explanation why it should be treated as such. 
Specifically, Japan refers to the following information: (a ) the share of total domestic production of 
the like product represented by the two  applicant companies; (b ) information on market shares; 
(c) capacity utilization rates; ( d) inventory ratios; ( e) operating income margin; ( f) information on 
prices of products from Japan and from other countries; and ( g) information about the domestic 
selling price or the appropriate selling price. According to Japan, the KTC simply assumed that 
good cause existed for granting confidential treatmen t and ignored the absence of any public 
summary.500 
7.393.   Japan argues that the KTC also failed to comply with the requirements of Articles 6.5 
and 6.5.1 with regard to subsequent submissions by Korean applicants. It identifies as an example 
the disclosed version of the applicants ' submission provided at the public hearing dated 
23 October  2014, from which the following information was deleted without any explanation an d 
                                                
497 Japan's panel request, p. 2.  
498 Japan 's first written submission, paras. 255 -256 and 265 -269; second written submission, 
paras.  207-235 and annex II . 
499 Japan 's first written  submission, para. 266 ; Investigation Application, (Exhibit JPN -7(b)). 
500 Japan 's first written submission, paras. 266 -267; Investigation Application, (Exhibit JPN -7(b)). WT/DS504/R  
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  without any public summary: (a ) price fluctuation index of the domestic like products throughou t 
the POI; (b) information regarding the applicants ' profitability situation;  (c) information regarding 
the sales and operating profits of two Korean producers (Yonwoo Pneumatic and Shin Yeong 
Mechatronics) ; and ( d) most of the information regarding the comparison between the actual 
selling price and the "reasonable " selling price of the applicants ' products.501 
7.394.   Finally, Japan identifies the last submission known to Japan, the applicants ' rebuttal 
opinion after the publi c hearing dated 13 November 2014, from which certain information and 
discussion (related to operating profits, facility investments, technology development, and 
manufacturing costs) was deleted and treated as confidential without any reason or 
non-confiden tial summaries.502 
7.395.   Japan provides a list, attached as annex III to Japan 's first written submission, which 
identifies 38 elements of information that were treated as confidential, for which the KTC allegedly 
failed to require and assess  whether there was good cause for confidentiality, and for which no or 
an insufficient non-confidential summary was provided.  Of these 38 elements of information , 24 
refer to information in the investigation application filed on 23 December 2013;  8 refer t o 
information in the summary of opinions filed by the applicants' attorneys dated 23 October 2014; 
and 6 refer to information in a rebuttal filed by the applicants' attorneys dated 
13 November  2014.503 
7.9.1.2   Korea  
7.396.   Korea has invited  the Panel to examine ex officio  whether Japan's claims under Articles 6.5 
and 6.5.1 of the Anti-Dumping Agreement ) are within the Panel's terms of reference.504 
7.397.   Korea also contends that Japan failed to make a prima facie  case of violation of Articles 6.5 
and 6.5.1  of the Anti-Dumping  Agreement .505 
7.398.   With respect to Japan's allegation concerning the alleged absence of "good cause" , Korea 
refers to Japan 's statement  that its claim concerns a "number of instances, including but not 
limited to the following examples  …" Korea argues that it is  not in a position to respond to an 
open-ended allegation concerning an unspecified "number of instances" of breach of Article 6.5. 
Korea also asserts that Japan 's allegations in this regard have not been substantiated in a 
meaningful manner. In its view, Japan has merely listed a number of items of information in the 
applicants ' submissions and simply asserted  that confidential  treatment  was granted to that 
information without good cause and non -confidential summaries were not provided.506 
7.399.   More specifically,  Korea also argues that, i n line with the general practice followed by 
interested parties in anti -dumping investigations in Korea, of which all parties were aware, the 
applicants provided non -confidential summaries of their submissions, from which they del eted the 
information they considered sh ould be accorded confidential treatment . By submitting these 
summaries, the applicants implicitly asserted that the deleted information fell within the categories 
of confidential information specifically set forth in the relevant legislation in Korea , or recognized 
as such in Korea 's practice .507 According to Korea, t he KTC objectively assessed  whether "good 
cause " was shown  by considering whether the deleted information fell within a category  of 
confidential information enumerated in the relevant Korean  legislation . The KTC also considered 
whether the information for which confidential treatment was requested was by nature 
                                                
501 Japan 's first written submission, para. 268 ; Public hearing, Summary of Opinion from  Attorneys 
(Disclosed) (23 October 2014)  (Summary of Opinion from Attorneys ), (Exhibit JPN -12(b)). 
502 Japan 's first written submission, para. 269 ; Rebuttal Opinion of Applicant Side, Document 
No. 90731 -201411 -1 (13 November 2014)  (Rebuttal Opinion of Applic ant Side ), (Exhibit JPN -18(b)). 
503 Japan 's first written submission, annex  III; Investigation Application, (Exhibit JPN -7(b)); Summary of 
Opinion from Attorneys , (Exhibit JPN -12(b)); and Rebuttal Opinion of Applicant Side , (Exhibit JPN -18(b)). See 
also firs t written submission, para. 266  and fn 300; and second written submission, annex II . 
504 Korea's response to Panel question No. 14. See also second written submission, annex, para . 3. 
505 Korea 's first written submission, para. 332.  
506 Korea 's first written submission, paras. 333 -334. 
507 Korea 's first written submission, para. 336. See also second written submission, para.  150. WT/DS504/R  
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  commercially -sensitive information that is typically not disclosed in t he normal course of business 
and which would likely be treated as confidential in anti -dumping investigations.508 
7.400.   Korea also asserts that the 38 elements of information identified by Japan correspond to 
information for which confidential treatment is warrant ed under Korean legislation (Article 15 of 
the Enforcement  Rule of the Customs Act ). Accordingly, there was "good cause " to treat this 
information as confidential.509 
7.401.   Specifically  with respect to the 24 pieces of information  in the original application which 
Japan identified , Korea states that the applicants submitted , on 16 April 2014 , an additional 
explanation for no t disclosing the information.510 Concerning the pieces  of information for which 
Japan allege s no or insufficient non -confidential summaries were provided , Korea  argues that the 
applicants submitted non -confidential summaries of the three documents identified by Japan 
containing the information . According to Korea, these non -confidential summaries were in 
sufficient detail to permit a reasonabl e understanding of the substance of the confidential 
information.511 
7.402.   Korea adds that Japan has failed to explain why the public versions submitted by the 
applicants were insufficient to permit a reasonable understanding of the confidential information. 
Accor ding to Korea, Japan has not met its burden to make a prima facie  case in this regard.512 
7.403.   Finally, Korea asserts that Article 6.5.1 of the Anti-Dumping  Agreement  does not require 
that a non -confidential summary must be provided for every piece of data included in a submission. 
In Korea 's view, investigating authorities have a reasonable degree of discretion in assessing the 
sufficiency of non -confidential summaries. Moreover, Japan is not claiming that the due process 
rights of interested parties were v iolated or that interested parties did not have a sufficient 
opportunity to defend their interests. According to Korea, t he KTC provided descriptive narratives 
with respect to all of the information that Japan  identified  in its communications subsequent to  the 
filing of the submissions, thereby ensuring a proper understanding of the substance of the 
confidential information. Korea argues  that Japan 's claim in this regard is , in any event,  a purely 
formalistic argument of harmless error.513 
7.9.2   Relevant facts 
7.404.   Article 64 of Korea's Enforcement Decree of the Customs Act is entitled "Request for 
Cooperation for the Information to the Interested Party". In relevant parts it provides that:  
(2) The Minister of Strategy and Finance or the Trade Commission shall not, witho ut 
an explicit consent of the provider, disclose such materials that, among the materials 
submitted pursuant to paragraph 1 of this Article or pur suant to paragraph 4 of 
Article  59 above, is by nature deemed confidential or is submitted by the applicant or  
interested party on confidential basis, showing good cause.  
(3) The Minister of Strategy and Finance or the Trade Commission may require a 
person, who provided the materials and requested such materials to be treated as 
confidential, to furnish non -confid ential summaries thereof. In such case, if such 
person is unable to furnish the summaries, such person shall submit a document 
stating the reasons why summarization is not possible.  
(4) Although the request for confidential treatment pursuant to the paragr aph 2 of this 
Article is deemed improper, if the person providing the materials refuses to disclose 
such materials without good cause or to submit a non -confidential summaries of such 
materials pursuant to paragraph 3 of this Article, the Minister of Strat egy and Finance 
                                                
508 Korea 's first written submission, paras. 337 -338. See also second written submission, para.  150. 
509 Korea 's first written submission,  para. 339 ; Article 15 of the Enforcement  Rule of the Customs Act , 
partially amended through the Ministry of Strategy and Finance Rule No. 588 (30 December 2016)  (Article 15 
of the Enforcement  Rule of the Customs Act ), (Exhibit KOR -34(b) ). 
510 Korea 's first written submission, para. 340.  
511 Korea 's first written submission, paras. 341 -342. 
512 Korea 's first written submission, paras. 343 -345. 
513 Korea 's first written submission, paras. 346-348. WT/DS504/R  
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  or the Trade Commission may disregard such information, unless the accuracy of the 
information is fully verified.  
(5) In deciding whether to investigate or impose the anti -dumping duties pursuant to 
Article 52 of the Act, the Minister of St rategy and Finance or the Trade Commission 
may, if any interested party fails to furnish the relevant materials, rejects, or 
obstructs an investigation conducted by the Trade Commission and it is impracticable 
to investigate or verify the materials because  of other reasons, decide whether to take 
measures to preclude the dumping on the basis of available information, etc.514 
7.405.   In turn, Article 15 of the Enforcement Rule of the Customs Act , entitled " Information 
Treated as Confidential in relation to Anti-Dumping Measure" , provides that:  
The materials subject to confidential treatment pursuant to paragraph 2, Article 6 2 
[sic] of the Enforcement Decree refers to the following materials the disclosure of 
which may infringe the interests of the provider o r the interested parties:  
1. Cost of production  
2. Accounting materials which have not been made public  
3. Name, address and trade volume of the trade partners  
4. Matters concerning the provider of confidential information; and  
5. Other materials adequatel y deemed as confidential .515 
7.406.   On 23 December 2013, TPC and KCC filed before the KTC an investigation application 
concerning imports of pneumatic valves  from Japan  in two versions, public and confidential .516 In 
the public version of the application certain sect ions were redacted by the applicants and specific 
information was replaced with the letter  "X". Specifically, this was the case for information 
regarding: (a ) the s hare of the subject  imports and the domestic product in the Korean market 
in 2010 and the first half of 2013; (b) the identification of specific producers of the subject imports 
and Korean affiliates; (c) the identification of specific models, for the purpose of comparing the 
physical characteristics of relevant products and the calculation of the normal value and the export 
price; (d) the percentage of domestic production represented by the applicants ; (e) costs of 
production of the products concerned; (f) domestic selling prices; (g) insurance expenses; 
(h) capacity utilization rates; (i) inventory ratios ; (j) equipment investment and research and 
development plans; (k)  employment by the domestic producer; (l) productivity of the domestic 
producer; (m) prices of raw materials; (n) the sale price of the subject imports in the Korean 
domestic mar ket and that of the domestic like product; (o) a re asonable selling price; and 
(p) revenues lost by the applicants.517 
7.407.   In the course of the investigation, the respondent Japanese company SMC complained  to 
the KTC that:  
[I]ts right to procedural justice has b een inf ringed upon, since the Applicant did not 
provide in its application any information on the increasing/decreasing rates regarding 
"whether prices of the products subject to investigat ion have been undercut compared 
to those of domestic products, whet her the products subject to inv estigation caused a 
decrease in the prices of the domestic products, whether the product subject to 
                                                
514 Article 64 of the Enforcement Decree of the Customs Act, partially amended through Presidential 
Decree No. 26,957 (5 February 2016)  (Article 64 of the Enforcement Decree of the Customs Act ), 
(Exhibit  KOR-33(b)). The paragraphs quoted were amended on 29  February  2008.  
515 Article 15 of the Enforcement  Rule of the Customs Act , (Exhibit KOR -34(b) ). The provision was 
amended on 1  October  2014.  
516 Investigation Application, (Exhibit JPN -7(b)). 
517 Investigation Application, (Exhibit JPN -7(b)), pp. 3, 17, 19, 21, 23 -27, 30, 33, 35, 37 -40, 42, 44, 46, 
48, and 50 -51. WT/DS504/R  
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  investigation suppressed the increase of prices of the domestic products, and whether  
imports of products subject to investig ation resulted in a decrease in the revenue. "518 
SMC also invoked Article 6.5 of the Anti-Dumping  Agreement  and requested the KTC that, if it was 
unable to provide summaries of the information, it provide reasons for not doing so.519 
 
7.408.   On 16 April 2014, the applicants sent a letter to the KTC in which they: (a) asserted that 
the applicants had not deliberately omitted information on increasing/decreasing rates for price 
undercutting, price depression, and price  suppression, when preparing the application, an d that 
the KTC's manual for preparing an application did not include a column for this information; 
(b) suggested that the responding party refer to the KTC's "report on whether to initiate the 
investigation on dumping of valves for pneumatic transmissions  from Japan and injuries thereof", 
which included increasing/decreasing rates for these indices; (c) argued that some of the 
information identified by the responding party is by nature confidential and, pursua nt to 
Article  6.5.1 of the Anti-Dumping  Agreeme nt should be treated as such by the authorities, while 
other information was included in the application and in the KTC's report; and (d) requested the 
KTC to grant confidential treatment to ten categories of information and provided reasons for each 
of the categories.520 
7.409.   On 23 October 2014, the attorneys for the applicants filed a summary of opinions.521 In the 
public version of this communication , certain sections were redacted and specific information was 
replaced with the letter  "X" or with asterisks "*". Specifically, this was the case for information 
regarding: (a) profit rates for the applicants in 2012, 2013 , and 2014; (b) information on sales 
and profits for two domestic producers, other than the applicants, who were supporting the 
investigation; (c) i ndex of the selling price of the domestic like product from 2010 to 2014; and 
(d) information comparing the prices of certain valve models for the applicant TPC and the 
responding company SMC .522 
7.410.   On 13 November 2014, the attorneys for the applicants filed a rebuttal opinion.523 In the 
public version of this rebuttal opinion , certain  sections were redacted and specific information was 
replaced with asterisks "*" or deleted. Specifically, this was the case for information 
regarding:  (a) correlation between selling prices for subject imports and the domestic like product; 
(b) comparison between imported products and domestic like products in a 2002 investigation in 
the United States; (c) operating profits; (d) facility investments; (e)  technological development; 
and (f) manufacturing costs  for the applicants .524 
7.9.3   Panel 's terms  of reference  
7.411.   In its request for a preliminary ruling, Korea did not assert that Japan 's claims under 
Articles  6.5 and 6.5.1 of the Anti-Dumping  Agreement  are outside  of the Panel 's terms of reference 
and that they should therefore be rejected by the Panel. However, i n response to a question from 
the Panel, Korea invited the Panel to examine  on its own whether Japan 's procedural claims , 
including its claims under Articles 6.5 and 6.5.1 , comply with the req uirements in Article 6.2 of 
the DSU.525 
7.412.   In its response , Korea referred to the following statement by the Appellate Body : 
[P]anels have to address and dispose of certain issues of a fundamental nature, even 
if the parties to the dispute remain silent on those issues. In this regard  … "[t]he 
vesting of jurisdiction in a panel  is a fundamental prerequisite for lawful panel 
proceedings." [*] For th is reason,  panels cannot simply ignore issues which go to the 
root of their jurisdiction – that is, to t heir authority to deal with and dispose of 
                                                
518 Communication dated 16 April 2014  from the applicants to the KTC, Response concerning the 
Applicant's Application for the Investigation on Valves for Pneumatic Transmission from Japan  (Response 
concerning the Application ), (Exhibit KOR -35(b)).  
519 Response concerning the Application , (Exhibit KOR -35(b)).  
520 Response concerning the Application , (Exhibit KOR -35(b)).  
521 Summary of Opinion from Attorneys , (Exhibit JPN -12(b)). 
522 Summary of Opinion from Attorneys , (Exhibit JPN -12(b)), pp. 12 -13 and 17.  
523 Rebuttal Opinion of Applic ant Side , (Exhibit JPN -18(b)). 
524 Rebuttal Opinion of Applicant Side , (Exhibit JPN -18(b)), pp. 13, 15, and 17 -20. 
525 Korea's response to Panel question No. 14.  WT/DS504/R  
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  matters. Rather, panels must deal with such issues – if necessary, on their own 
motion – in order to satisfy themselves  that they have authority to proceed.526 
[*fn original]34 Appellate Body Report, United States – 1916 Act , supra , footnote 32, para. 54.  
7.413.   We will therefore examine  the sufficiency of Japan 's panel request  with respect to Japan 's 
claims under Articles 6.5 and 6.5.1. We will consider in this regard whether, with respect to these 
claims  and in accordance with Article 6.2 of the DSU, Japan 's panel request  provides a brief 
summary of the legal basis of the complaint which is sufficient to present t he problem clearly.  We 
will keep in mind in this regard the double function of a panel request: ( a) to set the terms of 
reference for the Panel under Article  7.1 of the DSU  and define the scope of the dispute; and (b ) to 
serve the due process objective of notifying the respondent and other WTO Members of the nature 
of the complainant's case .527 If Japan 's panel request fails to explain succinctly how or why the 
measure s at issue are considered by Japan to be inconsistent with the WTO obligations in 
question, it does not satisfy the requirement of Article 6.2 of the DSU . In that case, we must 
conclude that Japan 's claims under Articles 6.5 and 6.5.1  with respect to the confidential 
treatment of information  are not within the sco pe of the Panel 's terms of reference.  
7.414.   In its panel request, Japan asserts that Korea's measures are inconsistent 
with: (a) Article  6.5 of the Anti-Dumping  Agreement  because Korea treated allegedly confidential 
information provided by the interested parties  as confidential  without good cause  shown ; and 
(b) Article  6.5.1 of the Anti-Dumping  Agreement  because Korea failed to require the applicants to 
furnish non -confidential summaries of their submissions  and, where such summaries were 
provided, they were not in sufficient detail to permit a reasonable understanding of the substance 
of the information submitted in confidence . 
7.415.   In our view, on its face the panel request provide s a brief but sufficient explanation as to 
how and why Japan considers the measure s at issue to be violating the specific WTO obligations in 
question , namely those  in Article s 6.5 and 6.5.1 of the Anti-Dumping  Agreement.  This language is 
precise enough to serve to both define the basis for the Panel 's terms of reference under 
Article  7.1 of the DSU, and inform other WTO Members, including the respondent , of the nature of 
the dispute.  
7.416.   The conclusion above is confirmed when we take into account the scope of the allegations 
concerning the alleged inconsistencies in the confidential treatm ent of information advanced in 
Japan 's submissions : (a) that the Korean Investigating Authorities granted confidential treatment 
to certain information provided by the applicants without requiring a showing of good cause and 
without conducting an objective  assessment to justify the confidentiality ; and (b) that, w ith 
respect to certain documents, the Korean Investigating Authorities failed to require that submitting 
parties provide a non -confidential summary of information that was treated as confidential o r to 
show why such a summary  could not be provided.  
7.417.   We note that in its first written submission Japan identified 38 specific elements of 
information that are the basis of its claims  under Article s 6.5 and 6.5.1 of the 
Anti-Dumping  Agreement . These specific elements may be seen as part of the arguments 
advanced by Japan in support of its claims. Indeed, a party alleging a breach of Article s 6.5 
and 6.5.1 must articulate its claim by identifying the information or category of information that 
was allegedly wrongly treated as confidential or for which no non -confidential summary was 
provided. Otherwise, the responding Member would not be in a position to respond to the 
complaint. Our analysis will be limited to the se specific elements identified b y Japan.  Because we 
consider the identification of these specific elements of information as arguments in support of 
Japan's claims, we do not consider that it was necessary to set them out in the panel request, nor 
has Korea argued otherwise.  
7.418.   Accordingly,  we conclude  that these claims , with respect to the confidential treatment of 
information under Articles 6.5 and 6.5.1 of the Anti-Dumping  Agreement , are within the 
Panel 's terms of reference.  
                                                
526 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 36. See also Korea's response 
to Panel question No. 14.  
527 Appellate Body Reports, EC – Bananas III , para. 142; US – Carbon Steel , para. 126.  WT/DS504/R  
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  7.9.4   Evaluation by the Panel  
7.9.4.1   Relevant provisions  
7.419.   Article  6.5 of the Anti-Dumping  Agreement  provides  that: 
Any information which is by nature confidential (for example, because its disclosure 
would be of significant competitive advantage to a competitor or because its 
disclosure would have a significantly adverse effect upo n a person supplying the 
information or upon a person from whom that person acquired the information), or 
which is provided on a confidential basis by parties to an investigation shall, upon 
good cause shown, be treated as such by the authorities. Such inf ormation shall not 
be disclosed without specific permission of the party submitting it.  
7.420.   Article  6.5.1 of the Anti-Dumping  Agreement  provides  that: 
The authorities shall require interested parties providing confidential information to 
furnish non-confidential summaries thereof. These summaries shall be in sufficient 
detail to permit a reasonable understanding of the substance of the information 
submitted in confidence. In exceptional circumstances, such parties may indicate that 
such informatio n is not susceptible of summary. In such exceptional circumstances, a 
statement of the reasons why summarization is not possible must be provided.  
7.421.   Articles  6.5 and 6.5.1 strike a balance between confidentiality and due process:  
[B]y protecting information where good cause has been shown for confidential 
treatment, while providing an alternative method for its communication so as to 
satisfy the right of other parties to the investigation to obtain a reasonable 
understanding of the substance of the confidenti al information.528 
7.422.   "Confidential information " is defined in Article  6.5 as information that is: (a) by nature 
confidential; or (b) provided on a confidential basis by parties to an investigation. In accordance 
with Article  6.5, "upon good cause shown" an inv estigating authority must:  (a) treat such 
information as confidential; and  (b) not disclose such information without the permission of the 
submitter.  
7.423.   Showing good cause is thus a "condition precedent for according confidential treatment to 
information subm itted to an authority".529 As used in Article  6.5, " good cause " means  a reason 
that is sufficient to justify withholding information  from both the public and the oth er parties to the 
investigation, and that a showing of "good cause " involves "a demonstration  of a risk of a potential 
consequence, the avoidance of which is important enough to warrant the non -disclosure of the 
information ".530 The requirement to show good cause applies to all information for which 
confidential treatment is sought , whether it is by  nature confidential or submitted on a confidential 
basis.531 
7.424.   There is no explicit requirement in Article  6.5 that a showing of good cause be made in 
respect of each individual  item of information. Accordingly , depending on the information and the 
documents in question, good cause may be shown in respect of general categories of information. 
At the same time, if an investigating authority treats as confidential information in respect of which 
no good cause has been shown, that investigating authority acts inc onsistently with its obligation 
under Article  6.5. 
                                                
528 Appellate Body Report,  EC – Fasteners (China) (Article 21.5 – China) , para. 5.36.  
529 Appellate Body Report,  EC – Fasteners (China) (Article 21.5 – China) , para. 5.38.  
530 Appellate Body Report , EC – Fasteners (China) (Article  21.5 – China) , para. 5.37 . See also 
Appellate  Body Report , EC – Fasteners (China) , para. 537 . 
531 "Article 6.5 applies  to both  information that is confidential by nature, and information that has been 
submitted to authorities on a confidential basis . … [T]he requirement to show 'good cause ' applies to both 
categories of information ". (Appellate Body Report , EC – Fasteners (China) (Article  21.5 – China) , para. 5.37 ). 
See also Appellate Body Report , EC – Fasteners (China) , para. 537 . WT/DS504/R  
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  7.425.   Under Article  6.5.1 an investigating authority must require an interested party submitting 
confidential information:  
a. to furnish a non -confidential summary of the information that is in sufficient detail to 
permit a reasonable  understanding of the substance of the information submitted in 
confidence; or 
b. in exceptional circumstances , where the submitter indicates that confide ntial information 
is not susceptible of summary , to provide a statement of the reasons why summarization 
is not possible.  
7.426.   Article  6.5.1 applies in respect of information properly treated as confidential under 
Article  6.5 (i.e. information with respect to w hich the requirements of Article  6.5 for confidential 
treatment  have been satisfied) . Moreover, w here non -confidential summaries are provided, they 
must be in "sufficient detail to permit a reasonable understanding of the substance of the 
information submi tted in confidence".  
7.9.4.2   Alleged  violations  of Articles 6.5 and 6.5.1  of the Anti -Dumping Agreement  
7.427.   Turning to the substance of Japan's claims under Articles 6.5 and 6.5.1 , we will consider 
whether Japan has made a prima facie  case with respect to the alleged violation s. Specifically, the 
relevant questions in this regard are : 
a. whether the KTC granted confidential treatment to certain information provided by the 
applicants without requiring a showing of good cause and without an objective 
assessment of that show ing to justify the confidential treatment, in a manner 
inconsistent with Article  6.5; and  
b. whether, w ith respect to certain information, the KTC failed to require that the 
submitting parties provide a non -confidential summary of information for which 
confid ential treatment was sought, or a showing of why such information was not 
susceptible of summary . 
7.428.   As indicated above, we will focus on the 38 elements of information that Japan has 
identified and alleged  were treated as confidential , without the KTC having  required and assessed  
whether there was good cause for such treatment.532 Accordingly, we need not address Korea 's 
argument that it is not in a position to respond to an open -ended allegation concerning an 
unspecified "number of instances" of breach of Arti cle 6.5 by the KTC.533 
7.429.   The following facts  are undisputed by the parties.  
7.430.   First, under the relevant Korean legislation ( Article 15 of the Enforcement Rule of the 
Customs Act ), the following information is entitled to confidential treatment  in anti -dumping 
investigations, because its disclosure may infringe the interests of the person supplying the 
information or another interested party: (a)  costs of production ; (b) a ccounting materials which 
have not been made public ; (c) n ame, address , and trade volume s of trade partners ; (d) m atters 
concerning the provider of confidential information; and  (e) other materials adequately deemed as 
confidential .534 The legislation also provides that information that is by nature deemed confidential 
or that is submitted by the interested party on a confidential basis, showing good cause , shall not 
be disclosed by the Korean Investigating A uthorities without an explicit consent of the provider . 
The Korean Investigating A uthorities may, however, require the person  who provided the materials 
to furnish non -confidential summaries thereof  or, alternatively, to submit a document stating the 
reasons why summarization is not possible . If the person providing the materials refuses to 
disclose such materials without good c ause or to sub mit a non -confidential summary , the Korean 
                                                
532 Japan 's first written submission, paras. 266 -269 and annex  III. 
533 Korea 's first written submission, para. 333.  
534 Article 15 of the Enforcement  Rule of  the Customs Act , (Exhibit KOR -34(b) ). WT/DS504/R  
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  Investigating A uthorities may disregard such information, unless the accuracy of the information is 
otherwise verified.535 
7.431.   Second, the applicants filed "Disclosed", or public, versions of at least thre e of their written 
submissions (the investigation application dated 23 December 2013 , the summary of opinion from 
attorneys dated 23 October 2014 , and the rebuttal opinion of applicants dated 13 November 2014) 
from which certain information was redacted ei ther by totally remo ving it or by replacing it 
with "X" or asterisks. With respect to these submissions,  in the course of the investigation, the 
responding companies had access only to these redacted versions.  
7.432.   Third, there is no explicit mention in any of these three written submissions to good cause 
that would justify confidential treatment of the redacted information. There is also nothing specific 
in any of these three written submissions linking the redacted information to any of the categories 
laid out  in Article 15 of the Enforcement Rule of the Customs Act .536 Likewise, there is no specific 
indication in the relevant documents on record of an assessment by either the KTC or the OTI as 
to whether good cause had been shown by the applicants to justify con fidential treatment of the 
redacted information.  
7.433.   Fourth, o n 16 April 2014, the applicants sent a communication to the KTC in which they: 
(a) asserted that some of the information included in the investigation application is by nature 
confidential and, purs uant to Article 6.5.1 of the Anti-Dumping  Agreement  should be treated as 
such by the authorities; and (b) requested the KTC to grant confidential treatment to ten 
categories of information and provided reasons for such treatment with respect to each of these 
categories.  
7.434.   Based on the facts described above, it is apparent that the Korean Investigating 
Authorities granted confidential treatment to certain information provided by the applicants , 
allowing responding companies access only to redacted version s of the submissions containing that 
information . This c onfidential treatment was granted by the Korean Investigating Authorities 
without any evidence that a showing of good cause  that would justify the confidential treatment  
had been required  from the applicants. Indeed, there is no evidence on record that the  applicants 
made any indication as to the existence of good cause for confidential treatment, nor is there any 
evidence that the Korean Investigating Authorities requested that such good cause be shown.  
7.435.   As there was no showing of good cause from the applic ants, there was nothing for the 
Korean Investigating Authorities to consider in gra nting confidential treatment  to the information 
in question.  We note in this regard Korea's  assertion that : 
[The] KTC objectively assessed whether there was "good cause " for the deleted 
information, i.e. whether the information was of the types for which Korean law s 
afford confidential protection. On the basis of such examination, KTC confirmed the 
"good cause " for any confidential treatment. In addition, KTC considered t hat the 
requested confidential information was by nature "commercially -sensitive information " 
… that is not typically disclosed in the normal course of business and which would 
likely be regularly treated as confidentia l in anti -dumping investigations.537 
7.436.   The Panel finds no evidence in the record to support this assertion. While such a procedure 
may be sufficient to satisfy the requirements of Article 6.5, in the absence of anything in the 
submissions themselves, or evidence otherwise on the record, linking t he information for which 
confidential treatment was granted to the categories of confidential information  identified in 
Korean law, we cannot conclude that the Korean Investigating Authorities actually engaged in the 
asserted procedure.  
7.437.   The communication d ated 16 April 2014, in which the applicants  provided reasons for 
requesting confidential treatment for certain information, was submitted after the OTI had granted 
                                                
535 Article 64 of the Enforcement Decree of the Customs Act , (Exhibit KOR -33(b)). 
536 Korea 's response to Panel question No. 113, para. 104.  
537 Korea 's response to Panel question No. 69.  WT/DS504/R  
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  confidential treatment.538 Moreover, there is no indication in the evidence presented to us to  
suggest that the Korean Investigating Authorities  took the reasons provided by the applicants into 
account, notwithstanding that confidential treatment, or even took note of the submission.539 
7.438.   We take note  of Korea 's argument that the 38 items of information identified by Japan fall 
into the list in Article 15 of the Enforcement Rule of the Customs Act describing types of 
information to be treated as confidential, and consequently there was good cause to treat this 
information as confidential.540 In our view, there is no reason a priori  why a Member 's legislation 
may not set out specific categories of information for which confidential treatment will normally be 
granted. In such a case, an investigating authority could,  at least in the first instance, rely on the 
identification of information as falling within one such category in granting confidential 
treatment.541 In the present case, however, there is no indication on the record that, in granting 
confidential treatment,  either the applicants specified, or the Korean Investigating Authorities took 
into account , whether the information in question fell into any of those categories . Moreover, some 
of the categories described in the legislation are so general (for example: a ccounting materials 
which have not been made public;  matters concerning the provider of confidential information; or 
other materials adequately deemed as confidential542) that the mere invocation of a specific 
category might in itself be insufficient to subs tantiate the alleged good cause for confidential 
treatment. Moreover, the existence in the legislation of defined categories of information that will 
normally be treated as confidential does not relieve the investigating authorities of their obligation 
to determine that good cause has been shown to justify the confidential treatment requested by 
the submitting party.  
7.439.   We note  in this regard Korea 's assertion that : 
[W]hen [the] KTC received information that was considered confidential by the 
interested parties , it objectively assessed whether there was indeed "good cause " by 
confirming whether the deleted information fell within a category of confidential 
information enumerated in the relevant Korean laws .543 
7.440.   As mentioned above, however, there is no  eviden ce on the record linking the information 
for which confidential treatment was granted to the categories of information warranting 
confidential treatment identified in Korean law . In this situation , we cannot conclude that the 
Korean Investigating Authoriti es actually engaged in a consideration of whether the submitters of 
the information had shown good cause for confidential treatment of the information in question. 
Nor has evidence been put before us to suggest that the Korean Investigating Authorities 
themselves undertook to link the information for which confidential treatment was sought to the 
categories defined in Korean legislation and thereby determine whether good cause for confidential 
treatment existed, assuming such a process would be consistent w ith the requirements of the 
Anti-Dumping Agreement, a question we need not and do not decide.  
7.441.   Accordingly, in respect of the 38 items of information  identified by Japan, we find that the 
submitters  did not show good cause for the confidential treatment of that information. On that 
basis, in respect of the information at issue, which was treated as confidential by the Korean 
Investigating Authorities,  we conclude that those authorities  did not act consistently with 
Article  6.5 of the Anti-Dumping  Agreement . 
                                                
538 Korea does not argue that this communication predates the KTC's assessment of good cause for the 
confidential treatment, although it argues that the communication contains additional reasons that would 
justify the confidential treatment. ( Korea 's response  to Panel question Nos. 65(e) and 117).  
539 For example, a chronology of the investigation contained in the OTI's Final Report does not even list 
the 16 April 2014 communication from the applicants. (OTI's Final Report, (Exhibit KOR -2(b) (BCI)), 
pp. 28-29). 
540 Korea 's first written submission, para s. 336 and 339; second written submission, para.  153. 
541 Of course, if challenged during the course of an investigation, such confidential treatment might need 
to be reconsidered by the investigating authority, and th e determination would remain subject to review 
in WTO dispute settlement.  
542 Korea argues that of the 38 items of information identified by Japan, all fall within the category of 
"accounting materials which have not been made public "; most, if not all are " adequately deemed as 
confidential "; and 30 are  "matters concerning the provider of confidential information ". (Korea 's response to 
Panel question No. 113, para. 104).  
543 Korea 's second written submission, para. 154. See also first written submission, para. 337. WT/DS504/R  
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  7.442.   With respect to non -confidential summaries, Korea argues that the version of the 
applicants' submissions from which confidential information was deleted constitutes the 
non-confidential summary required by Article  6.5.1.544 Korea argues that this was done "[ i]n 
accordance with the general practice followed by all interested parties in anti -dumping 
investigations in Korea".545 Because the applicants did not argue that the confidential information 
was not susceptible of summary, the question before us is only whe ther the KTC failed to require 
that the applicants provide a non -confidential summary of the information for which confidential 
treatment was sought , and not whether the KTC should have require d a showing of why such 
information was not susceptible of summ ary. 
7.443.   We note initially that the Article 6.5.1 obligation to summarize the substance of 
confidential information applies to all information properly designated as confidential.546 When 
information has been treated as confidential inconsistently with Article 6 .5, the issue of whether a 
proper non -confidential summary was provided becomes irrelevant.  
7.444.   In any event, we note the following. The obligation in Article 6.5.1 falls upon the 
investigating authorities: "[t]he authorities shall require interested parties p roviding confidential 
information to furnish non -confidential summaries  …". It is therefore incumbent on the 
investigating authorities to ensure that, when information is treated as confidential, a proper 
non-confidential summary is provided by the party s ubmitting the confidential information.547 
7.445.   In this respect, we note that the "Disclosed" versions of the three communications 
identified by Japan have entire sections from which information was removed. As noted above, in 
the course of the investigation, the  responding companies had access only to these "Disclosed" 
redacted versions. The information redacted from the submissions includes a significant amount of 
important data, such as: (a) volumes of domestic production of the like product, including 
percenta ges of the domestic production represented by the complainants; (b) volumes of domestic 
consumption; (c) market shares in the Korean domestic market; (d) import price of the product 
under investigation; (e) production capacity and utilization by the domest ic industry; (f)  domestic 
sales; (g) inventories volumes and ratio for the domestic industry; (h) profitability for the 
domestic industry; (i) production costs for the domestic industry; (j) investments in equipment 
and research and development by the dome stic industry; (k) employment and wages in the 
domestic industry; (l) productivity in the domestic industry; (m) cash flow for the domestic 
industry; (n) prices of raw materials; (o) quantity and value of imports of the product under 
investigation; and (p) production capacity and utilization by the Japanese industry. In some cases, 
although the actual data are deleted, changes expressed in percentages are included. There is no 
narrative in the "Disclosed " version to summarize the specific information del eted from the text.  
7.446.   Korea argues that Article 6.5.1 does not require that a non -confidential summary must be 
provided for every piece of data included in a submission. Korea also asserts that Japan is not 
claiming that the due process rights of interested parties were violated or that interested parties 
did not have a sufficient opportunity to defend their interests. According to Korea, t he KTC 
provided descriptive narratives with respect to al l of the information that Japan  identified  in its 
communications subsequent to the filing of the submissions, thereby ensuring a proper 
understanding of the substance of the information.548 
7.447.   We are unconvinced by these arguments. First, Article 6.5.1 requires  that interested 
parties provide a non -confidential summary of confidential information they submit. In principle, 
all confidential information must be summarized (or, in exceptional circumstances, an explanation 
must be provided of why a summary is not po ssible). While we agree that this does not mean that 
there must be a non -confidential summary of, for instance, each individual data point reported in a 
table or chart, a non -confidential summary of the information must nonetheless be provided . 
Second, if an investigating authority fails to ensure that a non -confidential summary is submitted, 
there is no requirement under Article 6.5.1 for a complainant before the WTO to demonstrate that 
the due process rights of interested parties were violated or that int erested parties did not have a 
sufficient opportunity to defend their interests , in order to establish a violation . Third, even 
                                                
544 Korea 's first written submission, paras. 341 -343; response to Panel question No. 65(a) . 
545 Korea 's first written submission, para. 336.  
546 Panel Report, China – X-Ray Equipment , para. 7.341.  
547 Panel Report, EC – Fasteners (China) , para. 7.515.  
548 Korea 's first written submission, paras. 346-348. WT/DS504/R  
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  assuming that the Korean Investigating Authorities subsequently provided descriptive narratives of 
the information treated as co nfidential, this would not resolve the issue of whether they required 
the submission of a non -confidential summary from the submitter of the information for which 
confidential treatment was sought. The subsequent provision of a non-confidential summary by the 
investigating authority does not absolve it of having failed to comply with Article 6.5.1 in the first 
instance.  
7.448.   We do not exclude a priori  that in some circumstances a redacted version of a document 
from which the submitting party has deleted certain information may in itself constitute the 
necessary non -confidential summary of information treated as confidential. Whether such a 
document satisfies the requirements in Article 6.5.1 , and specifically whether it is in sufficient 
detail to "permit a reason able understanding of the substance of the information submitted in 
confidence", is something that would have to be determined on a case -by-case basis.549 
7.449.   In the present case, the documents in question contain entire sections from which the data 
has been red acted. For example, in some cases tables are provided from which all data was 
deleted550; in other cases, percentage changes are shown in the tables, but the actual figures were 
deleted.551 There are also sections of text from which data was redacted.552 In none  of these cases 
does the document in question contain narrative that attempts to summarize the redacted 
information. In the complete absence of data, and with no narrative summary with respect to the 
deleted information, the "Disclosed" versions of the thr ee communications identified by Japan 
cannot be said to contain a summary in sufficient detail to "permit a reasonable understanding of 
the substance of the information submitted in confidence".  
7.450.   Accordingly, we find that the "Disclosed" versions of the thr ee submissions in question (the 
investigation application dated 23 December 2013 , the summary of opinion from attorneys dated 
23 October 2014 , and the rebuttal opinion of applicants dated 13 November 2014) do not 
constitute sufficient non-confidential summaries  of the information for which confidential treatment 
was sought  by the applicants. By failing to require that the submitting parties provide a sufficient 
non-confidential summary of the information  in question,  the Korean Investigating Authorities  
acted inconsistently  with Article  6.5.1 of the Anti-Dumping  Agreement . 
7.9.5   Conclusion  
7.451.   For the reasons explained  above , we conclude  that, with respect to the treatment of 
confidential information,  the Korean Investigating Authorities acted inconsistently  with Articles  6.5 
and 6.5.1 of the Anti-Dumping  Agreement . 
                                                
549 Korea's response to Panel question No. 68. Korea argues that there can "be situations when there is 
no meaningful way of summarizing confidential data and, thus, the only option is to redact such informa tion in 
full (e.g. by indicating 'XXX'). In such case, the narrative context or percentage trend in the document will be 
important to determine if the non -confidential document provides a reasonable understanding of the substance 
of the redacted information. That was the case in this investigation" . (Korea's second written submission, 
para. 155). See also Korea's response to Panel question No. 68. The Panel notes i n this respect th at 
Article  6.5.1 provides that when, in exceptional circumstances, information is not susceptible of summary, the 
interested part y must indicate such circumstance and provide a statement of the reasons why summarization is 
not possible. There is no evidence, nor has Korea argued, that such exceptional circumstances were i nvoked by 
the applicants.  
550 See, for example, the tables in Investigation Application, (Exhibit JPN -7(b)), pp. 12, 21, 48 -52; and 
Summary of Opinion from Attorneys , (Exhibit JPN -12(b)), pp. 1, 11, 13, and 17.  
551 See, for example, the tables in Investigation  Application, (Exhibit JPN -7(b)), pp. 13, 31 -45, and 47; 
Summary of Opinion from Attorneys , (Exhibit JPN -12(b)), pp. 11 and 18; and Rebuttal Opinion of Applicant 
Side, (Exhibit JPN -18(b)), pp. 18 -19. 
552 See, for example, Investigation Application, (Exhibit JPN-7(b)), pp. 30, 33, 35, 37, 46, and 51; 
Summary of Opinion from Attorneys , (Exhibit JPN -12(b)), pp. 12 and 17; and Rebuttal Opinion of Applicant 
Side, (Exhibit JPN -18(b)), pp. 13 and 15.  WT/DS504/R  
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  7.10  Disclosure  of essential facts  
7.10.1   Main arguments  of the parties  
7.10.1.1   Japan  
7.452.   In its panel request, Japan asserts that Korea's measures are inconsistent with Article 6.9  
of the Anti-Dumping  Agreement "because Korea  failed to inform the interested parties of the 
essential facts under consideration which formed the basis for the decision to impose definitive 
anti-dumping measures ".553 
7.453.   As articulated over the course of the proceedings, Japan claims that t he KTC failed to 
adequately disclose the "essential  facts" that formed the basis of its injury determination before 
making its final determination , in breach of Article 6.9 of the Anti-Dumping  Agreement . Disclosure 
of "essential facts " must be done in a co herent way "that permits an interested party to 
understand factual basis for each of the intermediate findings and conclusions reached by the 
authority, such that it is able properly to defend its interests "554. In particular, Japan argues 
that the KTC faile d to adequately disclose  essential facts in the OTI 's Preliminary Report  dated 
26 June 2014 , in the KTC 's Preliminary Resolution also dated 26  June 2014, and in the OTI's 
Interim Report dated 23 October 2014 concerning:  
a. price effects , specifically:  the alleged  "aggressive marketing ", the construction of  the 
"reasonable sales price ", "system sales "555, and the interchangeability of the dumped 
imports and the domestic industry 's like product;  
b. volume of dumped imports , specifically : the actual volumes and mar ket shares of the 
dumped imports , volume of the dumped imports relative to domestic production , and the 
end-point to end -point comparison of the volume of the dumped imports;  
c. state of the domestic industry , specifically : capacity utilization, market share , and the 
profitability of the domestic industry;  and 
d. causation , specifically : facts relating to any causal relationship and facts relating to other 
known factors having an impact on the  state of the domestic indus try such as 
third countries ' imports and th e export performance of the domestic industry.556 
7.454.   In response  to Korea's arguments , Japan argues that the KTC 's Final Resolution dated 
20 January 2015 constituted the "final determination " for purpose s of Article 6.9 because, in 
particular : (a) the text of A rticle 6.9 expressly distinguishes between "a final determination " and 
"the decision  whether to apply definitive measures"  as a matter of procedural sequence557; (b) the 
remainder of Article 6 supports this distinction between a "final determination " on various issues 
and the "decision " to impose duties558; (c) reference s to the phrase "final determination " in the 
broader context of the Anti -Dumping Agreement , in Article s 2, 3, 6.8 and 9.2 , also support the 
interpretation that "a final determination " under Article 6.9 occurs prior to the decision to impose 
duties559; (d) the purpose of Article 6.9 supports this distinction560; (e) th is distinction between  a 
"final determination " and the "decision  whether to apply definitive measures " is also reflected in 
Korean investigation documents561; (f) the KTC itself was aware that the disclosure of "essential 
facts" needed to be done prior to the KTC 's Final Resolution562; and (g)  in practice, the MOSF 
                                                
553 Japan's panel request, p. 2.  
554 Appellate Body Report s, China – HP-SSST (Japan) / China  – HP-SSST (EU) , para. 5.130; Japan' s first 
written submission, paras 273 -280.  
555 "System sales " is the prevailing  method  of selling valve s in the Korean market. It means sales to end 
customers of a package that includes three different components of a pneumatic system: pneumatic valves , 
cylinder s, and air unit s (filters, regulators, and lubricators) . (OTI's Final Report, (Exhibit KOR -2(b) (BCI)), 
pp. 13 and 16 -18; Korea 's first written submission, para. 43 ). 
556 Japan 's first written submission, paras. 281-297. 
557 Japan' s second written submission, para . 238. 
558 Japan' s second written submission, para . 239. 
559 Japan' s second written submission, para . 240. 
560 Japan' s second written submission, para . 241. 
561 Japan' s second written submission, para . 242. 
562 Japan' s second written submission, para . 243. WT/DS504/R  
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  almost never makes any substantive changes after the KTC has made its final determinations in 
anti-dumping investigations563. Accordingly, Japan contends that any  statements on the KTC Final 
Determination or the OTI Final Report do not cure Korea' s deficient disclosure that occurred before 
17 March 2015564. 
7.10.1.2   Korea  
7.455.   Korea has invited  the Panel to examine ex officio  whether Japan's claim  under Article 6.9 
of the Anti-Dumping Agreement  is within the Panel's terms of reference.565 
7.456.   Korea also contends that Japan failed to make a prima facie  case of violation of Article 6. 9 
of the Anti-Dumping  Agreement .566 Korea argues that Japan  seems to assume , incorrectly , that 
the "final determination " for purposes  of Article 6.9 (i.e. the decision whether to impose definitive 
anti-dumping measures) is the KTC 's Final Resolution. Korea asserts  that, under Korean law, in the 
Korean anti -dumping process , the final determination rests with the MOSF.  Korea argues that: 
(a) the MOSF has the power to conduct its own anti -dumping investigation pursuant to Article 64 
of the Enforcement Decree of the Custom s Act567; (b) even after the KTC's Final Resolution, 
interested parties to an anti -dumping investigation in Korea have statutory rights to submit their 
comments on the KTC's Final Resolution to the MOSF, and the MOSF has the statutory obligation 
to review and make findings on such comments pursuant to Articles 41 and 44 of the 
Administrative Procedures Act568; (c) the MOSF's investigations are substantive and not at all 
formalistic, as the MOSF frequently requests additional information from the KTC in order to satisf y 
itself regarding the conclusion of the investigation, and the MOSF has overruled or changed the 
KTC's Final Resolution569; (d) Articles 60 and 61 of the Enforcement Decree of the Customs Act, 
which codify Article 5.10 of the Anti -Dumping Agreement, conside r that the anti -dumping 
investigation in Korea is complete only when the MOSF concludes its investigation, not when the 
KTC issues its Final Resolution570; (e) the ordinary meaning of the word "final determination" as 
used in Article 6.9 of the Anti -Dumping Agreement refers to the ultimate final determination of an 
anti-dumping investigation that does not allow any further doubt or dispute regarding the 
existence of dumping, injury and causation, which can only be the MOSF's Final Decision571; and 
(f) given that Article 6.9 makes clear that the purpose of requiring the disclosure of essential facts 
is to put the parties in a position to adequately defend their interests before definitive 
anti-dumping measures are taken, a determination is not "final" as long as the parties can still 
defend their interests, as was the case for the Japanese respondents in the underlying 
investigation upon the issuance of the KTC's Final Resolution.572 Korea adds that the KTC's Final 
Resolution and the OTI's Final Report , both of whic h are dated 20 January 2015, disclosed all 
essential  facts that formed the basis f or the MOSF 's final decision  whether to apply definitive 
measures . Korea notes that Japan is not questioning the completeness of the disclosure of 
essential facts made throug h the KTC's Final Resolution and the OTI's Final Report .573 
7.457.   Korea also argues that, e ven assuming that the KTC's Final Resolution and  the OTI's Final 
Report constitute the "final determination " in terms of Article 6.9, the KTC 's pre -final 
determination disclosure ( through the OTI's Preliminary Report, the KTC's  Preliminary Resolution , 
                                                
563 From 1995 to 2016, there have been 86 anti -dumping cases in Korea, but there is only one example 
where MOSF changed the determination by the KTC (slightly modified the rate of ant -dumping duties). (Japan' s 
second written submission, para. 246 ; Korea' s response to Panel question No. 15 (g)). 
564 Japan' s second  written submission, para. 258.  
565 Korea's response to Panel questio n No. 14. See also second written submission, annex, para . 3. 
566 Korea 's first written submission, para. 400 . 
567 Korea's second written submission, para. 165.  
568 Korea's second written submission, para. 165. Note that footnote 231 of Korea's second written 
submission mistakenly states that the relevant statutory provisions are Articles 45 and 46 of the Administrative 
Procedures Act. However, these are simple clerical errors and the correct statutory provisions are Articles 41 
and 44 of the Administrative Proce dures Act, as can be confirmed by the relevant exhibits, i.e. Exhibit KOR -45 
and KOR -46. (See also Korea's comments on Japan's interim review request,  para. 86).  
569 Korea's second written submission, para. 166.  
570 Korea's second written submission, para. 167. 
571 Korea's second written submission, para. 168.  
572 Korea's second written submission, para. 169.  
573 Korea 's first written submission, paras. 362 -368; second written submission, paras . 162 and 
165-173; and response to Panel question No s. 74(a) and (b). WT/DS504/R  
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  and the OTI's Interim Report) properly informed the interested parties of all essential facts in 
sufficient time to allow the interested parties  to defend their interests.574 
7.458.   Korea adds that Japan failed to substantiate its allegations that : (a) the facts allegedly 
omitted from these documents were "essential "; and ( b) the disclosed information was not 
sufficient to allow the respondents an opportunity to defend their interest s. Korea argues that 
Japan focuses on relatively minor, intermediate findings and mistakenly suggests that in the 
context of its claim under Article  6.9, the raw data and evidence supporting each of the findings 
should have been disclosed to the respondent s.575 
7.459.   With respect to Japan 's specific  allegations concerning price effects, Korea  argues that:  
a. the term "aggressive  marketing " was explained in many parts of the investigative 
documents and reflected two facts: (i) dumped import prices were lowe r when in 
competition wi th the domestic like product; and (ii) [[***]] used its dominant position to 
attract distributors  or to discourage defection  of their distributors . Both facts were 
disclosed to the interested parties in documents prior to the KTC 's Final Resolution ; 
b. the KTC properly explained the role of the "reasonable sales price " on the basis of the 
dynamics between the reasonable sales price and the price of the domestic like product;  
and 
c. the issues regarding  "system sales " and "interchangeability " were not "essential facts " 
because they do not form the basis of the KTC 's decision to recommend the definitive 
measure s.576 
7.460.   With respect to Japan 's specific  allegations concerning  import  volume, Korea  argues that:  
a. the KTC disclosed the volume  of the dumped imports by providing non -confidential 
summar ies in the form of percentage changes. In addition, the respondents knew the 
actual volume s that they had reported;  
b. the KTC disclosed the trends in dumped import  market share by providing 
non-confidential summaries  in the form of percentage changes;  
c. the share of the dumped imports relative to domestic  production is not an essential fact 
because the KTC did not make any finding in this respect;  and 
d. the Japanese respondents could arrive at the end -point to end -point changes in the 
volume of the dumped imports by simply adding up the year -on-year changes  
disclosed .577 
7.461.   With respect to Japan' s specific allegations concerning the state of the domestic industry , 
Korea argues  that: 
a. the OTI 's Preliminary  Report provided information on the domestic industry 's capacity 
and production, which enabled interested parties to obtain capacity utilization by a 
simple calculation;  
b. the OTI 's Preliminary Report described that the market share of the domestic industry 
increased first and then decreased in 2013. Information on the changes in consumption 
and domestic sales provided a good basis for understanding the extent of the loss of 
market share in 2013 ; and  
c. the OTI's Interim Report contained information concerning t he development  of the 
profitability  of the domestic industry.578 
                                                
574 Korea 's first written submission, paras. 369 -376. 
575 Korea 's first written submission, para. 372 . 
576 Korea 's first written submission, paras. 377 -389. 
577 Korea 's first written submission, paras. 390 -394. WT/DS504/R  
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  7.462.   With respect  to Japan 's specific allegations concerning causation, Korea  argues that:  
a. Japan  failed to make a prima facie  case by simply alleging that no separate section 
dealing  with causation  was included in the  disclosure s prior to the KTC 's Final Resolution . 
The KTC dealt with injury and causation in an integrated manner;  
b. the OTI 's Preliminary Report and the OTI 's Interim Report contained information on the 
rate of increase  of third countr y imports, the fact that these imports were minimal in 
absolute terms, and the fact that the prices of third countr y imports were higher than  
the prices of  both the domestic like product and the dumped imports;  and 
c. both the OTI 's Preliminary Report and the OTI's Interim Report disclosed information on 
the percentage  point changes with respect to the domestic  industry 's export sales, and 
information concerning capacity and the possible effect of the domestic industry 's export 
performance on the state of the d omestic industry.579 
7.10.2   Relevant  facts  
7.10.2.1   Procedural aspects of the decision whether to apply definitive anti -dumping 
measures in Korea  
7.463.   Under Korean legislation , the decision whether to apply definitive anti -dumping measures 
rests with the MOSF.  Article 51 of the Customs Act provides:  
If foreign goods are imported at a price below the normal price prescribed by 
Presidential Decree ( "dumping ") and such foreign goods are found to fall under any of 
the following cases as a result of an investigation ( "material injury,  etc." for the 
purpose of this provision) and it is deemed necessary to protect the relevant domestic 
industry, upon a request from a person interested in the domestic industry and 
prescribed by Presidential Decree, or the relevant Minister, customs duties  
("anti-dumping duties "), not exceeding an amount equivalent to a difference between 
the normal price and the dumping price ( "dumping margin "), may be imposed on such 
foreign goods, supplier or exporting country thereof, in addition to customs duties, as 
prescribed by Ordinance of the Ministry of Strategy and Finance : 
1. Where domestic industry is materially injured or is threatened with 
material injury;  
2. Where the development of domestic industry is materially retarded.580 
7.464.   Article 61 of the Enforcement  Decree of the Customs Act581 defines the respective areas of 
competence of the MOSF and the KTC with respect to anti -dumping investigations and the 
imposition of anti -dumping duties as follows:  
a. The KTC: 
i. "[undertakes] investigation  of the fact of dumping, the f act of material injury, etc., 
as specified in Article 52 of the Act "; 
ii. "[conducts] a preliminary investigation into whether there is adequate evidence 
presuming the existence of the fact of dumping and the fact of material injury, etc. 
caused thereby "; 
iii. "[reports] the results thereof to the [MOSF] "; 
                                                                                                                                                  
578 Korea 's first written submission, paras. 395 -399. 
579 Korea 's first written submission, paras. 400-402. 
580 Article 51 of the Customs Act , (Exhibit KOR -39(b) ) (emphasis added). See also Korea 's response to 
Panel question No s. 15(a)  and (g). 
581 Article 61 of the Enforcement Decree of the Customs Act, (Exhibit KOR-40(b) ). See also Korea 's 
response to Panel question No. 15(a).  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  iv. "[terminates] the main investigation thereon " "where the dumping margin or the 
import quantity of dumping goods falls short of the standards prescribed by 
Ordinance of the [MOSF] or the material injury, etc. is deemed insignificant "; 
v. "[commences] a main investigation beginning from the day following the day on 
which the results of a preliminary investigation are reported  … unless special grounds 
prescribed by Ordinance of the [MOSF ] exist"; 
vi. "[reports] the results  of such main investigation … to the [MOSF] "; and 
vii. "may extend the investigation period by up to two months " "[w]here necessary to 
extend the investigation period in connection with the investigation … and any 
interested person requests the extension of the  investigation period presenting good 
cause ". 
b. The MOSF : 
i. "[determines] whether  to take measures prescribed in Article 53(1) of the Act and 
the substances thereof "582; 
ii. "[determines] whether to impose anti -dumping duties and substances thereof … and 
[takes] mea sures to impose anti -dumping duties in accordance with Article 51 of the 
Act"; and  
iii. "where [MOSF] determines that there are special circumstances, [takes] measures to 
impose anti -dumping duties within 18 months from the date on which the Official 
Gazette is  published ". 
7.465.   The competence of the MOSF to receive and review comments and other opinions on the 
KTC's Final Resolution is prescribed by the Enforcement Decree of Customs Act and the 
Administrative Procedures Act.  Article 64(1) of the Enforcement Decree of  the Customs Act 
stipulates that the MOSF may, whenever it deems necessary for the investigation under Article 52 
of the Act (i.e. anti -dumping investigation), "ask relevant administrative agencies, domestic 
producers, suppliers, importers and interested p arties to provide necessary cooperation, including 
submission of relevant information, etc."583 Article 44(1) of the Administrative Procedures Act 
provides that "[a]ny person may submit his/her opinions about a pre -notified draft legislation".  In 
addition, A rticle 44(3) of the Administrative Procedures Act requires that an administrative agency 
respect and address any such submitted opinion, whereas Article 44(4) requires that the 
administrative agency concerned notify the outcome of its review to the provide r of the opinion.584 
7.466.   As described above, on 20 January 2015 , based on the OTI's Final Report of the same 
date, the KTC issued its Final Resolution, in which it: (a) determined that the Korean domestic 
industry producing the like product was materially injure d by reason of the dumping of pneumatic 
valves from Japan; and (b) recommended to the MOSF  the imposition of anti -dumping duties on 
such imports for five years at the rates therein specified.585 The full non -confidential texts of 
OTI's Final Report and the KTC's Final Resolution were notified to domestic producers, importers, 
and consumers on 17 March 2015.586 
7.467.   On 12 June 2015, MOSF issued a Public Notice of Proposal Draft Rules on the Imposition of 
Anti-Dumping Duties on Valves for Pneumatic Transmissions Orig inating from Japan.587 Japanese 
                                                
582 Provisional measures.  See Korea's response to Panel question No.  15(a) and (g).  
583 Korea' s response to Panel question No. 15 g ; Article 64 of Enforcement Decree of the Customs Act, 
(Exhibit KOR -33(b)). 
584 Article 44 of the Administrative Procedures Act, (Exhibit KOR -45(b) ). See also Korea's response s to 
Panel question No. 16  b, and No. 87 (b), para. 12.  
585 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 1.  
586 Notification of final determination on dumping and injury to domestic industry of valves for 
pneumatic transmissions from Japan, (Exhibit JPN -29(b)).  
587 MOSF, Public Notice 2015 -105. See also KTC, Opinion after reviewing the Respondents ' Opinion on 
the Pub lic Notice on the Rule on Imposition of Anti -Dumping Duties on Pneumatic Valves from Japan  
(5 August  2015) ( KTC's Opinion on the Rule ), (Exhibit KOR -38(b)), p. 1.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  respondents subsequently filed an Opinion before MOSF on the Proposal. In their opinion, they 
requested MOSF not to impose anti -dumping duties. They advanced substantive objections to the 
KTC's findings, with respect to issues  such as: (a) the substitutability of the products at issue; 
(b) the scope of the domestic industry; (c) the consideration of the increase in dumped imports; 
(d) the effect of the dumped products on the price of the like product; (e) the consideration of 
other indicators pertaining to the domestic industry; and (f) the assessment of other factors 
affecting the domestic industry. Japanese respondents also raised objections to the procedure 
followed by the KTC and invited MOSF to consider the negative impact that anti -dumping duties 
would have on the competitiveness of Korean companies.588 On 5 August  2015, the KTC filed an 
opinion with MOSF addressing the arguments advanced by the Japanese respondents.589 Relying 
on the KTC's Final Resolution, on 19 August 2015 t he MOSF adopted Decree No. 498, entitled 
"Regulation Concerning the Imposition of Antidumping Dut y on Valves for Pneumatic 
Transmissions Originating from Japan ", which imposes anti -dumping duties for five years on the 
imports of pneumatic valves from Japan  at the rates recommended in the KTC's Final 
Resolution .590 
7.468.   With respect to the facts that have been identified by Japan in support of its claim as not 
disclosed as required by Article  6.9 of the Anti-Dumping Agreement , the documents mentioned 
above set fort h the information summarized below.  
7.10.2.2   Facts regarding price effects  
7.469.   The KTC's Final Resolution commented  on the aggressive marketing activities of one 
importing company in this way:  
The average sales price of the dumped products was higher due to their price  
differentiation in accordance with models, option details or customers, but it was 
found that the sales price of the dumped products was much lower than the average 
sales price in the case of certain products or customers for which the degree of 
competiti on with the domestic industry was fierce, which had the effect of suppressing 
increases in the price of the like product or causing decreases thereof. It was 
investigated that SMC Korea [[ ***]] strengthened marketing activities of SMC Korea, 
which consiste ntly expanded its sales organizations and used its dominant position to 
attract distribution agents or discourage defections of its distribution agents, and thus 
the domestic industry had to respond to such strengthened marketing activities of 
SMC Korea an d become forced to decrease the sales price or refrain from increasing 
prices.591 
7.470.   The KTC referred to the consideration of the marketing practices of the importer in its 
conclusions:  
[M]aterial injury to the domestic industry can be deemed to have been caused by the 
price effect of the dumped products … and the increase in the import thereof. It was 
investigated that in the  same process, the strengthened marketing activities of the 
importer, a subsidiary of the supplier of the dumped products, also had impact on the 
domestic industry .592 
7.471.   The OTI's Final Report, on which the KTC relied in its Final Resolution, states that "the 
import volume of the dumped products increased in 2013 as a result of the decline in sales prices 
of the dumped products and SMC  Korea's aggressive marketing when domestic demand was 
                                                
588 Respondents' Opinion on the Pre -Announcement of Legislation of the Rule (Draft) on Impositi on of 
Anti-Dumping Duties on Valves for Pneumatic Transmissions from Japan, (Exhibit KOR -37(b)).  
589 KTC's Opinion on the Rule , (Exhibit KOR -38(b)).  
590 MOSF's Decree No. 498, (Exhibit JPN -6(b)). See also MOSF's Public Announcement, 
(Exhibit  KOR-3(b) (BCI)).  
591 KTC's Final Resolution , (Exhibit KOR -1(b) (BCI)), p. 19 on "Review of Effect of the Dumped Products 
on the Price of the Like Product" . 
592 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 27 on " Overall Evaluation" . (emphasis added)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  rapidly increasing".593 In considering the effect of the dumped imports on the price of the like 
product, the OTI noted:  
It was found by the investigation that in case of the dumped products, even the sa me 
item was sold at various different prices depending on the competition status or 
customers, which directly affected sales prices of the like products.  
[[***[*]***]]594 
[[***]] 
7.472.   The OTI's Interim Report of 23 October 2014 also refers to the aggressive marke ting 
practices of importers. "Undercutting of domestic selling price of the dumped imports … and 
aggressive marketing of the importer of the dumped imports" are identified as factors that may 
have influenced the increase in imports in 2013.595 The Report als o states that "[t]he increase in 
the dumped import is likely to have been caused by the decline in the domestic sales price of the 
dumped imports … and the aggressive marketing of the importer of the dumped imports, etc. 
while the value of the Japanese yen  decreased  …".596 
7.473.   Although part of the information was treated as confidential and would not have appeared 
in the public version of the documents, we find as a matter of fact that the KTC's Final Resolution, 
the OTI's Final Report, and the OTI's Interim Repo rt all contain a discussion of the alleged 
aggressive marketing practices of the importing companies and the effect of those practices on the 
prices of the domestic like product in Korea.  
7.474.   With respect to the "reasonable sales price", the KTC's Final Resolution states:  
The sales price of the dumped products decreased significantly during the period of 
investigation, in 2013 in particular, while that of the like product fell only slightly. 
Apparently, this is because the domesti c industry could not reduce the sales price of 
the like product as much as the rate of price decrease of the dumped products, since 
the dumped product had been transacted at prices much lower than [their] reasonable 
sales price  throughout the period of inv estigation and the domestic industry had been 
suffering from the continued operating loss.  
The average sales price per unit of the like product required price increase because 
the price it was lower than the reasonable sales price by KRW [[ ***]] in 2010, b y 
KRW [[ ***]] in 2011, by KRW [[ ***]] in 2012 and by KRW [[ ***]] in 2013. However, 
the average sales price was not increased and on the contrary, it even decreased in 
2012 and 2013. Such suppression of the price increase as well as the decrease in the 
price appears to have been caused by the fierce competition with the dumped 
products that had strong dominance in the dom estic market. In particular, in  2013, 
the significant decrease in the price of the dumped products apparently depressed the 
price of the li ke product despite strong factors warranting an increase of sales price, 
such as the increase in the manufacturing cost of the like product. As such, the 
dumped products suppressed the increase in the price of the like product throughout 
the period of inve stigation, and caused the price decrease of the like product in 2013 
during which the prices of dumped imports drastically decreased.597 
In its conclusions on injury, the KTC's Final Resolution states:  
 
The Commission found that the import of the dumped prod ucts incr eased sharply 
in 2013 and their price also fell sharply in the same year, thereby suppressing 
                                                
593 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 47. (fn omitted)  
594 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 58.  
595 OTI's Interim Report, (Exhibit JPN -3(b)), p. 21 (fn omitted). See also ibid. p. 38.  
596 OTI's Interim Report, (Exhibit JPN -3(b)), p. 29; Korea 's first written submission, fn 459.  
597 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 18 -19. (emphasis added)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  increase of the price of the like product,  which had already been lower than the 
reasonable price , and even causing the price decrease thereof.598 
7.475.   The OTI' s Final Report, on which the KTC relied in its Final Resolution, also refers to the 
"reasonable sales price" in its consideration of the effect of the dumped imports on prices:  
During the period of investigation, the actual sales price of t he like products was lower 
than the reasonable sales price  by KRW [[ ***]] to KRW [ [***]] depending on the 
year. Therefore, there was a great need to increase sales prices. Nev ertheless, they 
could not raise sales price except in 2011 . 
… 
In particular, in 2 013, there was possibility that the sales price could be increased to a 
realistic level as domestic consumption grew significan tly. However, the import of the 
dumped products increased sharply, and their prices f ell drastically, which not only 
suppressed t he price rise of the like products but also caused a price fall the reof, and 
as a result, the gap between the reasonable sales prices  and the actual sales prices 
rather widened .599 
The OTI's Final Report explains how the "reasonable sales price" was estimate d: 
 
Reasonable sales price = (manufacturing cost per unit + SG&A expenses per unit) / 
(1 - reasonable operating profit ratio)  
… [[***]][.]600 
7.476.   The OTI's Preliminary Report of 26 June 2014 also refers to the reasonable sales price: 
"[the a] ctual selling price of like products has been sold in price that was lower than the 
reasonable selling price, XXX Won, XXX Won, and XXX Won, respectively, from 2010 to 2013 ".601 
The Report states that the "[c] hange of actual selling price of like products was small in spite o f 
fluctuation of the reasonable selling price of like product and of the selling piece of dumped 
imports in 2012 and 2013 ".602 
7.477.   The OTI's Preliminary Report includes a table comparing the actual selling price and the 
reasonable sales price of the like product  for the years 2010 through 2013, the price gap between 
the actual selling price and the reasonable selling price , and the yearly rates of increase or 
decrease rates for each. The table in the public version of the report shows only the yearly rates of 
increase or decrease, as the figures for the actual selling price and the reasonable selling price  
have been redacted as confidential.603 This Report also explains how the " reasonable sales price" 
was estimated:  
Reasonable selling price = (Unit cost of Manufact uring + Unit selling and 
administrative expenses) ÷ (1  - Reasonable operating profit rate)  
Reasonable operating profit rate is the operating profit of machines fo r general 
purpose (C291) in the country (Source: Notified by the Bank of Korea)  
- (2010) 6.63%  → (2011) 6.27% → (2012) 5.73% → (2013) not decided [.]604 
7.478.   With respect to "system sales", in addressing the question of like product, the KTC's Final 
Resolution notes that:  
                                                
598 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 27 on "Overall Evaluation ". (emphasis added)  
599 OTI's Final Report, (Exhibit KOR -2(b) (BCI )), pp. 56 -57. (emphasis added)  
600 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 57.  
601 OTI's Preliminary Report, (Exhibit JPN -2(b)), p. 75 on "Whether the Selling Price of Dumped Imports 
Prevented the Price Increase of Like Products" . 
602 OTI's Preliminary  Report, (Exhibit JPN -2(b)), p. 75.  
603 OTI's Preliminary Report, (Exhibit JPN -2(b)), p. 75.  
604 OTI's Preliminary Report, (Exhibit JPN -2(b)), p. 75.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  SMC argued that its products and domestic products are not in competition because  
its sales method is different from that of domestic producers. According to SMC , it 
sells its products through the so -called "system sales " together with other components 
of pneuma tic systems, such as cylinders, and provides a "total solution " that combines 
products and servic es, such as advance consulting, technical support recommending 
customized specifications for each customer and prompt after -sales services, etc., 
while domestic producers primarily sell valves individ ually (on a stand -alone basis). In 
response to this, the Applicants argued that the sales methods are not significantly 
different because domestic producers also conduct system sales and provide technical 
support and after -sales services to customers, similarly to SMC.  
In order  to verify the arguments of both parties, the [OTI] defined "system sales "[*] 
as package sales to end customers that include three of the key components of 
pneumatic systems, i.e.,  the pneumatic valve, air unit (filer, regulator and lubricator) 
and cylinde r, based on the opinions of  interested parties, and investigated sales 
methods of both parties. As a result, the [OTI] confirmed that as of 2013, in the case 
of the product under investigation, [[ ***]]% in  terms of quantity and [[ ***]]% in 
terms of amount,  was sold through system sales, and that in the  case of domestic 
products, [[ ***]]% in terms of quantity and [[ ***]]% in terms of amount, was sold  
through system sales. Therefore, it is concluded that the substitutability and 
competitive relationship  betwe en the products cannot be denied on the grounds of 
different sales methods since domestic  products are also sold by a sales method 
similar to that of the product under investigation despite  certain difference in degree.  
At the on -the-spot investigation of SMC Korea, the [OTI] confirmed that SMC 
performs accounting and sales management by unit of valves imported, rather than 
by unit of "system sales. " Therefore, individual valves imported are not converted to  
another product in the unit of system through "system sales ", but are merely sold 
with other components. It is reasonable to consider as a method of sales to enhance 
synergy effects among its  valves and other components by conducting package sales, 
and such sales method cannot be a basis to deem that the unit or degree of 
competition is different between the product under investigation and the like product.  
In addition, the advance consulting, technical support and after -sales ac tivities for 
customer argued by the Respondents should be deemed  as a part of proactive sales 
activiti es to attract new customers and expand sales rather than a unique sales 
method of the Respondents, a nd domestic producers were also found to provide 
similar technical support and after -sales services. Therefore, the su bstitutability and 
competitive relationship between the product under investigation and domesti c 
products cannot be denied based on such sales activities.605 
[*fn original]10 The "system sales " argued by SMC refer to package sales of the components 
composing  pneumatic systems, such as the pneumatic valve, cylinder and air unit, etc., and 
customers, including equipment companies, purchase such components and build pneumatic 
systems necessary for manufacturing equipment.  
7.479.   The OTI's Final Report, on which the KTC  relied in its Final Resolution, also refers to the 
respondents' argument about "system sales"  in discussing  the question of like product:  
Based on the opinions of interested parties, the [OTI] defined the "system sales " as 
package sales to end customers that include three of the major components of 
pneumatic systems,  i.e., (i) air units (filters, regulators, and lubricators), (ii) 
pneumatic valves and (iii) cylinders, and conducted an analysis accordingly.  
- The [OTI] confirmed that the Applicants, as well as the Respondents, sell their 
products by unit of pneumatic systems  and conduct "system sales " to various 
customers, including large companies such as [ [***]], [[***]], [[***]], and [[ ***]] 
- As of 2013, in case of t he product under investigation, [[ ***]]% in terms of quantity 
and [[ ***]]% in terms of amount, was sold through system sales, and in case of 
                                                
605 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 6 -7. WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 130 - 
 
  domestic products, [[ ***]]% in terms of quantity and [[ ***]]% in terms of amount, 
was sold through system sales .  
… 
At the public hearing, SMC argued that its price negotiation is carried out by system 
unit, which means that it is not in competition with the Applicants that conduct sales 
by valve unit in the domestic market. However, according to the accounting materia ls 
reviewed during the on -site verification, SMC Korea records sales in its accounting 
book by valve unit instead of system unit.  
- In other words, SMC Korea sells valves in packages of individual items that 
constitute pneumatic systems, rather than supply ing its products under the turn -key 
method by unit of pneumatic system.  
- As discussed above, domestic producers use the identical method of sales, 
conducting package sales of components that constitute pneumatic systems. 
Therefore, such method of sales ca nnot serve as a ground of the argument that the 
products of SMC are not in direct competition with the like products.  
Further, given that both the Applicants and the Respondents do not record the 
provision of services, including design consulting and after -sale support, as a separate 
account in their accounting books, but as part of the sales of their products, including 
cylinders and valves, the provision of such services should be deemed as a method of 
sales to promote the sales of their own products.  
Some customers are also found to purchase valves and cylinders, etc. separately from 
different producers, and then assemble them.  
Given the above mentioned circumstances, the substitutability and competition 
between the product under investigation and domesti c products cannot be denied on 
the ground of the difference in the method of sales ( "system sales ") as argued by the 
Respondents.  
Further, TPC among the Applicants used to import and sell products of SMC as 
SMC Korea (established in 1995) currently does, b efore parting from SMC and 
switching to self -production in 1997. Therefore, it is safe to conclude that the products 
produced by TPC and its method of sales have been similar to those of SMC from the 
beginning.606 
7.480.   The OTI's Final Report includes a table on s ystem sales of valves for pneumatic 
transmissions in 2013, comparing the quantity and amount of system sales and sales as individual 
products for the allegedly  dumped imports and the domestic product, and the respective shares of 
system sales vis-à-vis sales as individual products for each.607 All the figures in the table are 
bracketed as confidential.  "System sales" were not mentioned in the OTI's Preliminary Report, the 
KTC's Preliminary Resolution or the OTI 's Inter im Report . 
7.481.   With respect to "interchangeability", the KTC's Final Resolution notes the 
respondents'  argument that the product under investigation and the domestic product are not 
substitutable or in competition with each other because of factors such as their different qualities 
and the perception of customers. The Final Resolution notes in this regard that:  
[The OTI]  confirmed from d istributors and customers, etc. that the general quality of 
domestic products is similar to that of t he product under investigation, except some 
speciall y ordered products, etc., and that these products  have been used in 
substitution for each other.608 
                                                
606 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 17 -18. (fns omitted)  
607 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 17.  
608 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 4.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  7.482.   In response to a similar argument by one of the respondents, the KTC's Final Resolution 
adds:  
The [OTI] has confirmed that although it is true that the number  of items (models) is 
greatly different between the product under investigation and the li ke product, the 
number of items (models) of the product under investigation is large because of the 
addition of detailed options for various customers, and that the n umber of items 
(models) with  large sales volumes is limited compared to the total number of models. 
As a result of comparison of the rep resentative characteristics [*] of valves, most 
SMC's products have been confi rmed to be substitutable and in competition  with the 
Applicants'  products.  
Therefore, the product under investigation and domestic products are  deemed to be 
substitutable and in competition with each other since the characteristics and  
functions of the product under investigation are mostly identic al to those of domestic 
products alt hough the total number of items (models) is different between them .609 
[*fn original]8 Products with the same physical characteristics of the following 6 aspects are 
substitutable: (i) operating method (electrical, manual or air -operate) (ii) number of ports (3, 4, 
or 5 ports) , (iii) valve size , (iv) switching method (single, double, etc.) , (v) voltage , and (vi) 
wiring method (grommet, plug connector, etc.).  
7.483.   The OTI's Final Report, on which the KTC relied in its Final Resolution, refers to the 
respondents' argument that the product under investigation and the domestic product are not 
substit utable or in competition with each other in the following manner:  
The results of on -site verification of interested parties [*], including distributors and 
domestic customers, show that despite the partial differences in price between the 
product under inve stigation and domestic products, they are substitutable with each 
other in terms of performance, and are actually being used in substitution with each 
other .  
[*fn original ]21 [[***]], [[***]], [[***]], [[***]], [[***]], [[***]] 
… 
An additional analysis was conducted since SMC, whose products account for about 
[[***]]% of the product under investigation (as of 2013), denies substitutability and 
competition between the product under investigation and domestic products on the 
ground of the variety of its pr oducts and the difference in method of sales (system 
sales) .  
… 
It is true that the number of models of the product under investigation is significantly 
larger, given that the number of items (models) of the product under investigation 
imported to Korea be tween 2010 and 2013 was [[ ***]], compared to [[ ***]] of 
domestic products.  
- However, the reason of such larger number of models of the product under 
investigation is the addition of detailed options to basic models, while there are only 
limited number of models with large sales volumes compared to the total number of 
models.  
Comparison of the number of items as of 2013 based on the six representative 
physical characteristics* shows:  
- [[***]] of the models of the Applicants ([[ ***]]% of sales volume as of 2013) and 
[[***]] of the Respondents ' (SMC) ([[ ***]]% of imports as of 2013) are 
                                                
609 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 5 -6. (fn omitted)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  representative models of which the physical characteristics are identical with each 
other, and such models can be deemed to be substitutable and in competition with 
each other . 
* (6 physical characteristics) (i) method of operation (electrical, manual, air 
operated), (ii)  number of ports (3, 4, 5), (iii) size of valves, (iv) method of switchover 
(single, double, etc.), (v) voltage, (iv) method of wiring (grommets, plug connecto rs, 
etc.) and other characteristics   
… 
Based on the item groups (series) under which the representative models fall, [[ ***]] 
series in total are substitutable and in competition with each other, and this is 
equivalent to [[ ***]]% of sales volumes of the Ap plicants and [[ ***]]% of import 
volumes of the Respondents.  
- The remaining [[ ***]]% of the Respondents ' products other than the above 
mentioned [[ ***]] series are products of specific specifications produced to the 
requirements of specific customers. Some  of them are substitutable depending on the 
preference of the relevant customers and can be developed by domestic producers as 
well if domestic demand for them increases.610 
7.484.   The OTI's Interim Report, in discussing the issue of like product, notes the importe r's 
argument "that the Product under Investigation  … differed in the consumer evaluation in terms of 
physical characteristics and quality (life span of product, material characteristics, consumed 
electric power, etc.), and, hence, there was almost no chanc e of interchangeability." The OTI goes 
on to state that:  
According to the result of on -site verification of interested parties including domestic 
user, there were certain price differences between the Product under Investigation 
and the domestic product, b ut they are interchangeable in terms of physical 
characteristics and quantity.611 
7.485.   The issue of "interchangeability" is also discussed in the OTI's Interim Report with respect 
to the respondents' argument that certain products should be excluded from the prod uct under 
investigation as they could not be produced in Korea or were different from the domestic product 
"in terms of physical characteristics or usage, [and] therefore [they were not] interchangeable".612 
The OTI notes that to address this argument, it or ganized an expert advisory group that provided 
an opinion about the scope of the product under investigation. As a result, the OTI recommended 
that certain products and models be excluded from the scope of the product under investigation.613 
7.10.2.3   Facts regarding  volume  
7.486.   With respect  to the import volume of the dumped products, the KTC's Final Resolution 
states:  
According to the [OTI's] Investigation Report, [*] the import volume of the product 
under investigation ("dumped products") decreased from [[ ***]] units in 2 010, to 
[[***]] units in 2011, to [[ ***]] units in 2012, a decline of 9.8% and 32.0% year on 
year, and then increased to [[ ***]] units in 2013, an increase of 78.9% year on year. 
The import volume of 2013 represented an increase of [[ ***]]% from that of 20 10. 
The market share of the dumped products in the domestic market a lso decreased 
from [[ ***]]% in 2010 to [[ ***]]% in 2011, to [[ ***]]% in 2012 and then sharply 
                                                
610 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 13 -16. 
611 OTI's Interim Report, (Exhibit JPN -3(b)), p. 8.  
612 OTI's Interim Report, (Exhibit JPN -3(b)), p. 9.  
613 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 12 -13. In its Final Resolution, the KTC stated that the 
OTI's decision to exclude certain  products from the investigation, "which do not fall under the definition of the 
scope of investigation or have low substitutability with domestic products … is reasonable". ( KTC's Final 
Resolution, (Exhibit KOR -1(b) (BCI)) , p. 4).  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 133 - 
 
  increased to [[ ***]]% in 2013. The ratio of the import volume of the dumped 
products to the domestic production of the like prod uct also decreased from [[ ***]]% 
in 2010 to [[ ***]]% in 2011,  to [[***]]% in 2012 and then remarkably increased to 
[[***]]% in 2013.  
Hence, the import of the dumped products decreased both in absolut e and relative 
terms until 2012 and then sharply increased in 2013. Although the market share of 
the dumped products in 2013 did not reach that of 2010, it is clearly shown that the 
decreasing trend  until 2012 was reversed into a sharp increase of imports in 2013.  
On the contr ary, the domestic market share of the like product was on  continuous rise 
from [[ ***]]% in 2010 to [[ ***]]% in 2011, to [[ ***]]% in 2012 and then 
plummeted to [[ ***]]% in 2013, a similar level to 2010. The sudden decrease of the 
market sha re in 2013 appear s to have been affected by the dumped products given 
that the import volume  of the dumped products largely increased and their price 
greatly fell in the same year.614 
[*fn original]19 Investigation Report, pp. 46 -51[.] 
7.487.   Consideration of the volume of dumped i mports was subsequently referred to by the KTC 
in its conclusions:  
The Commission found that the import of the dumped products increased sharply in 
2013 and their  price also fell sharply in the same year, thereby suppressing increase 
of the price of the like product, which had already been lower than the reasonable 
price, and even causing the price decrease thereof .  
… 
Such material injury to the domestic industry can be deemed to have been caused by 
the price effect of the dumped products which was confi rmed by the final dumping 
margins at 11.66% - 31.61% and the increase in the import thereof .  
… 
Based on the comprehensive review of the import volume  and import price of the 
dumped products and their impact, and various business indicators of the domestic  
industry, the Commission determines that the domestic industry has suffered material 
injury due to the import of the dumped products.615 
7.488.   On whether there was an increase of the dumped imports in absolute terms, the OTI's 
Interim Report states:  
The volume of  dumped imports had increased by XXX% in annual average from 2010 
to 2013 [.] 
- The volume of dumped imports was xxx in 2011 and to xxx in 2012 that were 
decreased from xxx in 2010 by 9.1% and 32.5%, respe ctively. However, it was xxx 
in 2013 that was  increa sed by 75.9% compared to previous year.  
- The decrease of volume of dumped imports in the year of 2012 may have bee n 
influenced by the decrease of domestic quantity due to the global economic 
depression began at the end of year 2011 [.] 
… 
                                                
614 KTC's Final Resolution , (Exhibit KOR -1(b) (BCI)) , p. 14. See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)), pp. 46 -51. 
615 KTC's Final Resolution , (Exhibit KOR -1(b) (BCI)), p. 27 on "Overall Evaluation" . (emphasis added)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 134 - 
 
  - In 2013, the volume of dumped imports had increased 75.9% compared to the 
previous year, but 'SMC' mentioned that the inventory of SMC Korea had increased  
due to the cha nge in policy for safe level of inventory of SMC Korea, a subsidiary of 
SMC, However, it is difficult to explain only as the increase of inventory , 
- Undercutting of domestic selling price of the dumped imports (XXX%) and 
aggressive marketing  of the importer of the dumped imports may hav e influenced 
along with the drop of Yen value ( △20. 5%  to Won value in year 2013) in the 
situation of domestic market expan sion by the recovery of economy.616 
7.489.   On whether the volume of dumped imports was relatively increased, the OTI's Interim 
Report states:  
The market share of the dumped imports was decreased from XXX% in 2010 to XXX% 
in 2011 and XXX% in 2012, but increased XXX% as XXX% in 2013 compared to the 
previous year [.] 
The market share of the like product increased from XXX% in 2010 t o XXX% in 2011 
and XXX% in 2012 but became XXX% in 2013 that was decreased by XXX%  
compared to the previous year.617 
7.490.   The OTI's Interim Report contains tables that show: (a) annual figures for volume of 
imports of dumped products from 2010 to 2013; and (b) annual figures for imports of dumped 
products in quantity and amount from 2010 to 2013, including the share of those imports, of other 
imports, and of the domestic like product, relative to domestic consumption. The only figures 
available in the public version of the report are the annual rates of increase or decrease.618 
7.10.2.4   Facts  regarding the state of the domestic industry  
7.491.   With respect to production and capacity utilization, the KTC's Final Resolution states:  
The production capacity for the like product of the domestic i ndustry increased by 
44.5% from [[***]] units in 2010 to [[ ***]] units in 2013. It w as found that such 
increase was attributable to the active expansion of production facilities for the 
purpose  of responding to the expansion of investment in automation equipment by the 
domestic and international manufacturing sector and the growth of the machine 
industry, while strengthening productivity and reducing costs.  
The production of the domestic industry fluctuated during th e period of investigation, 
increasing by 28.5% from [[ ***]] units in 2010 to [[ ***]] units in 2 011, but 
decreasing by 24.7% to [[***]] units in 2012 and then increasing again by  19.3% to 
[[***]] units in 2013. Such severe fluctuations in the production by year are found to 
be the outcom e of the fluctuations in export volumes as well as the domestic sales.  
Capacity utilization of the domestic industry recorded [[***]]% in 2010, [[ ***]]% 
in 2011,  [[***]]% in 2012 and [[ ***]]% in 2013, increasing slightly in 2 011 and 
falling below [[ ***]]% after 2012. The decrease in the capacity utilization by 
[[***]]% between 2010 an d 2013 was due to the fact that the production grew only 
by [[***]]% while the production capacit y increased by [[ ***]]% during the same 
period.  
As production in 2011 increased by as much as 28.5% over the previ ous year thanks 
to the increase both in domestic sales and export, the domestic industry expanded 
production capacity, exp ecting that the demand would continue to grow, but the 
production de crease d by [[ ***]]% and the capacity utilization by [[ ***]]% in 2012 
                                                
616 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 20 -21 (fn omitted). See also OTI's Preliminary Report, 
(Exhibit JPN -2(b)), p. 52.  
617 OTI's Interim Report, (Exhibit JPN -3(b)), p. 21. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), p.  53. 
618 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 21 -22. See also OTI' s Preliminary Report, 
(Exhibit  JPN-2(b)), pp.  52-54. WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 135 - 
 
  since the domestic sales and exports  decreased significantly due to the global 
economic recession. In 2013, despite the rapid growth of domestic consumption, 
domestic sales of the like product were lower than expected due to the significant 
increase in imports of the dumped products and accordingly, the capacity utilization 
improved only slightly to [[ ***]]%.619 
7.492.   Capacity utilization  was subsequently referred to b y the KTC in its conclusions:  
Despite the sharp increase in the domestic consumption in 2013, the dom estic 
industry lost most of its market share it had gained up to 2012, due to the sharp 
growth in th e import of the dumped products and the sharp drop in t heir price. Also, 
the domestic industry suff ered material injury across the overall business indicators, 
including deterioration of profitability, delay in the recovery of capacity utilization , 
increase in inventory, decrease in wage and deterioration of p roductivity and growth, 
etc.620 
7.493.   The OTI's Interim Report refers to output and utilization of capacity in this way:  
Production capacity and output were increased by XXX% and XXX%, respectively, in 
annual average.  
- The increase of production capacity after 20 11 was the result of productio n facility 
expansion to improve productivity and to reduce cost. An increase of output in 2011 
and 2013 s eems to be mainly related to an increase of export.  
The utilization of capacity was low as XXX% in 2010, XXX% in 2011, XXX% in 2012, 
and XXX% in 2013. It looks that this is due to the competition with the dumped 
imports had lim ited the increase of production while the market size is not expanded 
than expected [.]621 
7.494.   The OTI's Interim Report contains a table that shows annual fi gures for: (a) production 
capacity; and (b) output of the domestic industry from 2010 to 2013, as well as utilization of 
capacity, which is defined as (b)/(a). The only figures available in the public version of the report 
are the annual rates of increase/decrease.622 
7.495.   With respect to the market share of the domestic industry, the KTC's Final Resolution 
states:  
The domestic market share of the like product increased from [[ ***]]% in 2010 to 
[[***]]% in 2011 and to [[ ***]]% in 2012 and then rapidly dec reased in 2013 to 
[[***]]%, a similar level with 2010.  
In 2011, when domestic consumption decreased by 3.3%, the like product expanded 
its market share by increasing domestic sales by 13.4%; in 2012, when domestic 
consumption decreased by as much as 22.9%,  the decrease in the domestic sales of 
the like product was  by only 6.6%, while its market share expanded by [[ ***]]%. 
Such expansion of the domest ic market share by the domestic industry appears to 
have been enabled by suppressing the increase of, or  decreasing, the sales price of 
the like product through cost reduction.  
However, in 2013, when domestic consumption soared by 52.8%, the m arket share of 
the like product decreased [[ ***]]%, while dome stic sales thereof increased by  7.6%. 
This indicates that th e like product was materially injured when its market share was 
lost significan tly despite the slight increase in the sales volume.  
                                                
619 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 21 -22. See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)), p. 64.  
620 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)), p. 27 on " Overall Evaluati on". (emphasis added)  
621 OTI's Interim Report, (Exhibit JPN -3(b)), p. 26. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), p.  57. 
622 OTI's Interim Report, (Exhibit JPN -3(b)), p. 27. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), p.  57. WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 136 - 
 
  It was found that the inventory of the like product at the end of the peri od recorded 
[[***]] units in 2010, [[ ***]] units i n 2011, [[ ***]] units in 2012 and [[ ***]] units in 
2013, falling in 2012 and increasing again in 2013.  
To sum up the overall situation during the period of investigation, un til 2012, the 
domestic industry expanded its domestic market share by slightly lowering the price 
or suppressing increases thereof in the context of shrinking domestic consumption, 
while in 2013,  even in the soaring domestic consumption, the domestic industry saw 
only slight increases in sales o f the like product, losing most of its market share which 
had been expanded until 2012 due to the sha rp decrease in the price of the dumped 
products and the sharp increase in their imports. The like pr oduct decreased the sales 
price in 2013 to compete with the dumped products, but the ability o f the l ike product 
to further decrease the sales price was limited by the deterioration in operating loss 
and theref ore, it lost a large portion of the market share.  
The sharp increase in the imports of the dumped products caused the d omestic 
companies to lose their market share which they had struggled to expand until 2012, 
and in terms  of the price, the price of the domestic like product was suppressed from 
increases, or was reduced,  in response to the decrease in the price of the dumped 
products. This cl early inflicted material injury to the domestic industry including the 
continued operating losses.  
The aggressive marketing activities of SMC Korea, together with t he price decrease of 
the dumped products, have also contributed to the decrease in the market share of 
the like product.623 
7.496.   The domestic  industry's market share was subsequently referred to by the KTC in its 
conclusions:  
Despite the sharp increase in the domestic consumption in 2013, the domestic 
industry lost most of its market share it had g ained up to 2012 , due to the sharp 
growth in th e import of the dumped products and the sharp drop in their price . …624 
7.497.   The OTI's Interim Report refers to the domestic industry's market share in this way:  
Market share of like product was increased from XXX% in 2010 to XXX% in 2011, and 
XXX% in 2012 by XXX % and XXX%, respectively, compared to the previous year. 
However, in 2013, it was XXX% that was decreased by XXX% compared to the 
previous year.  
- Market share of like product has been gradually increased. It  seemed that an 
increase of market share of like product was suppressed due to a rapid inc rease of 
dumped imports in 2013 .625 
7.498.   The OTI's Interim Report contains tables that show annual figures for market shares of 
dumped imports, other imports, and the domest ic like product from 2010 to 2013, as well as 
annual rates of increase or decrease. There are no figures available in the public version of the 
report.626 
7.499.   With respect to the situation of profits of the domestic industry, the KTC's Final Resolution 
states:  
The operating profit from domestic sales by the domestic industry remained in deficit 
during the period of investigation, and the operating loss rate decreased from 
                                                
623 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 20 -21. See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)), pp. 49, 62 -63, and 67.  
624 KTC's Final Resolution,  (Exhibit KOR -1(b) (BCI)), p. 27 on " Overall Evaluation ". (emphasis added)  
625 OTI's Interim Report, (Exhibit JPN -3(b)), p. 45. See also ibid. p. 21; and OTI's Preliminary Report, 
(Exhibit JPN -2(b)), pp.  53, 59, and 72.  
626 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 22, 29, 45, and 49. See also OTI's Preliminary Report, 
(Exhibit JPN -2(b)), pp.  59, 72, and 76.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 137 - 
 
  [[***]]% in deficit in 2010 to [[ ***]]% in deficit in 2011 and the loss rate widened 
again t o [[***]]% in deficit in 2012 and to [[ ***]]% in deficit in 2013. As the 
operating loss continued, the domestic industry 's return on investment as a 
percentage of the assets invested in the production of the like product recorded 
negative growth throughout  the entire period of investigation.  
The deterioration of the operating profit in 2012, after improving in 2011, was a result 
of the price reduction of the like product and the increase in the operating cost in 
response to the competition with the dumped p roducts.  
The Respondents argued that the deterioration of the earnings of the domestic 
industry was attributable to the excessive spending of SG&A expenses, but such 
expenses of the domestic industry during the period of investigation showed a similar 
upwa rd trend with that of SMC Korea, which means that the major reason for the 
increase in such expenses was the competition with the dumped products, for which 
the marketing activities had been enhanced, e.g., through the expansion of sales 
organizations, etc . Considering that the operating profit decreased in 2013 despite the 
reduction in SG&A expenses, such expenses cannot be deemed to be the cause of the 
worsening operating profit, and the decrease in the price of the like product in 
response to the reducti on of that of the dumped products appears to be the major 
cause.  
Meanwhile, the Respondents argued that the deterioration of the operating profit of 
the domestic industry was attributable to the increase in the depreciation cost 
resulting from excessive ex pansion of facilities. However, despite the increase in the 
depreciation cost resulting from facility expansion, the total manufacturing costs 
including the depreciation cost fell as much as [[ ***]]% from KRW [[ ***]] per unit in 
2010 to KRW [[ ***]] per uni t in 2013, which means that the cost reduction through 
the facility expansion and investment in enhancement of productivity led to the 
decrease in manufacturing costs. Therefore, the argument of the Respondents that 
the operating profit of the domestic ind ustry worsened due to the facility expansion is 
not reasonable.  
Further, the Respondents argued that the operating profit of domestic producers who 
did not participate in this investigation, such as [[ ***]] and [[ ***]], improved during 
the period of invest igation, and therefore, if such producers had been included, there 
would have been no injury to the operating profit of the domestic industry.  
The Office of Investigation conducted additional investigation into the business status 
of [[***]] and [[ ***]] with the cooperation of the two companies  and found that the 
sales volume and operating profit of both companies increased in 2011 but the trends 
similar to the business indicators of the Applicants occurred in 2012 and 2013, with 
their sales volume and sales amount decreasing and the operating profit worsening. 
Further, the operating profit of the two companies decreased as much as [[ ***]]% in 
2013 due to the adverse impact of the sharp increase in the import of the dumped 
products and the significant de crease in the sales price thereof. Accordingly, the 
inclusion of [[ ***]] and [[ ***]] would not significantly change the overall trends of 
the injury indicators of the domestic industry.627 
7.500.   Profitability was subsequently  referred to by the KTC in its conclusi ons: 
[T]he domestic industry suff ered material injury across the overall business indicators, 
including deterioration of profitability , delay in the recovery of capacity utilization, 
increase in inventory, decrease in wage and deterioration of productivity  and growth, 
etc.628 
7.501.   The OTI's Interim  Report refers to the situation of the domestic industry's profits in this 
way: 
                                                
627 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 23 -24 (fn omitted). See also OTI's Final Report, 
(Exhibit KOR -2(b) (BCI)), pp. 63 and 67 -71. 
628 KTC's Final Resolution,  (Exhibit KOR -1(b) (BCI)), p. 27 on " Overall Evaluation ". (emphasis added)  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 138 - 
 
  The operating profit rate had decreased from XXX% in 2010 to XXX% in 2011 
reducing deficit however, the deficit got bigger from XXX% in 2012  to XXX% in 2013 . 
- Due to the decrease of domestic selling price of dumped imports, decrea se of selling 
price of domestic industry was unavoidable, and it showed the consistent deteriorated 
status of domestic industr y causing increase of cost expenditure to promote 
competitiveness with the dumped imports .629 
7.502.   The OTI's Interim Report contains tables that show annual figures for operating profits 
from 2010 to 2013, as well as annual rates of increase or decrease. The tables also include figures 
on: (a) sales a mounts; (b) cost of goods sold; (c) profits from sales; and (d) selling and 
administrative expenses. There are no figures available in the public version of the report, except 
for the annual rates of increase or decrease column; in the case of operating pr ofits, this column 
contains only comments on whether there was an increase or a decrease in deficit in the 
respective year.630 
7.10.2.5   Facts regarding  causation  
7.503.   With respect to the situation of imports other than the ones under investigation, the 
KTC's  Final Resolution states  that: 
According to the [OTI's] Investigation Report,  the quantity of the produ ct under 
investigation imported from countries other than Japan increased from [[ ***]] units in 
2010 t o [[***]] units in 2013, but the market share of suc h product in 2013 was only 
[[***]]% and it s sales price was significantly higher than that of the like product or 
the dumped products. Acco rdingly, such product cannot be seen as being in 
competition with the like product. Therefore,  products other than th e dumped 
products have had almost no adverse impact on the domestic industry .631 
7.504.   The OTI's Final Report, on which the KTC relied in its Final Resolution, contains a table that 
shows annual figures for import volumes, market shares and sales prices, as well a s rates of 
change from 2010 to 2013 for: (a) other countries; (b) dumped products; and (c) like products. All 
figures in the table are bracketed as confidential, except for the rates of change for import 
volumes and sales prices.632 
7.505.   The OTI's Interim Report refers  to the situation of the volume and price of imports other 
than the dumped imports in this way:  
Quantity imported from other countries other than dumped imports h ad been 
increased by XXX% on an annual average from 2010 to 2013. However, imported 
quantity was small in absolute term.  
- Quantity imported from other countries was gradually increased from  XXX in 2010 
to XXX in 2011, XXX in 2012, and XXX in 2013, and a significant part of them was 
from German [sic] and Hungary . 
… 
Unit selling price of imports from other countries other than dumpe d imports had been 
increased by XXX% on an annual average from 2010 to 2013.  
Market share of imports from other countries during the Period of Inv estigation was 
only XXX ~ XXX%, and the selling price was higher than the price of like product and 
                                                
629 OTI's Interim Report, (Exhibit JPN -3(b)), p. 32. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), p.  61. 
630 OTI's Interim Report, (Exhibit JPN -3(b)), p. 32. See also ibid. p. 36; and OTI's Preliminary Report, 
(Exhibit JPN -2(b)), pp.  61 and 64 . 
631 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 26 (emphasis added; fn omitted). See also OTI's 
Final Report, (Exhibit KOR -2(b) (BCI)), pp. 62 and 81 -82. 
632 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), p. 81.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 139 - 
 
  the pric e of dumped imports. Therefore, it seemed that the effect of importation from 
other countries on domestic industry was negligible.633 
7.506.   The OTI's Interim Report contains a table that includes annual figures for the im ported 
quantities, market shares , and selling prices of imports other than the dumped imports from 2010 
to 2013, as well as annual rates of increase or decrease. There are no figures available in the 
public version of the report, except for the information  on the annual rates of increase or decrease 
column for imported quantities and selling prices.634 
7.507.   With respect to the situation of export sales by the Korean domestic industry, the KTC's 
Final Resolution states that:  
The production of the domestic industry fluctuated during the period of investigation, 
increasing by 28.5% from [[ ***]] units in 2010 to [[ ***]] units in 2011, but 
decreasing by 24.7% to [[ ***]] units in 20 12 and then increasing again by  19.3% to 
[[***]] units in 2013. Such severe fluctuations i n the production by year are found to 
be the outcome of the fluctuations in export volumes as well as the domestic sales . 
… 
As production in 2011 increased by as much as 28.5% over the previ ous year thanks 
to the increase both in domestic sales and export , the domestic industry expanded 
production capacity, expecting that the demand would continue to grow, but the 
production decrease d by [[ ***]]% and the capacity utilization by [[ ***]]% in 2012 
since the domestic sales and exports decreased significantly du e to the global 
economic recession . 
… 
According to the Investigation Report,  the export volume of the domestic industry 
showed severe annual fluctuations, with [[ ***]] unit s in 2010, [[ ***]] units in  2011, 
[[***]] units in 2012 and [[ ***]] units in 2013. S uch fluctuations in export appear to 
have affected the gross sales and production of the like product. However, it cannot 
be concluded that the export had adverse impact on domestic sales of the like product 
because in 2011, when the export volume was the highest, the proportion of export to 
the overall sales was only [[ ***]]% and the capacity utilization of the domestic 
industry was low as well .635 
7.508.   The OTI's Final Report, on which the KTC relied in its Final Resolution, contains tables that 
include annual figures for export volumes, domestic shipments and the ratio of export volumes to 
domestic shipments, as well as rates of change from 2010 to 2013. All figures in the table are 
bracketed as confidential, except for the rates of change for export volumes an d domestic 
shipments.636 
7.509.   The OTI's Interim Report refers to the situation of the export sales by the Korean domestic 
industry  in this way:  
The increase of production capacity after 2011 was the result of productio n facility 
expansion to improve productivity and to reduce cost. An increase of output in 2011 
and 2013 seems to be mainly related  to an increase of export . 
… 
Export had been increased by XXX% in annual average from 2010 to 2013 . 
                                                
633 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 48 -49. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), p.  76. 
634 OTI's Interim Report, (Exhibit JPN -3(b)), p. 49. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), p.  76. 
635 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 21 -22 and 26 -27 (emphasis added; 
fn omitted). See also OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 60 -61, 64, and 83.  
636 OTI's Final Report, (Exhibit KOR -2(b) (BCI)), pp. 61 and 83.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 140 - 
 
  - XXX in 2010 and XXX in 2011 that was increased by 197.9% compared to  the 
previous year. However, in 2012, it became XXX that were decreased by 77.1% 
compared to the previ ous year and became XXX in 2013 that was increased 
by 101.5% compared to the previous year.  
- It looks that the increase of export in year 2011 and 2013 is  the export inc rease to 
China, and the export decrease in 2012 seems to be caused by the global market 
depression due to the global economic depression   
… 
Export quantity*  of domestic industry was increased from XXX i n 2010 to XXX in 2011 
by 197.9% compare d to the previous year. However, in 2012, it was decreased as 
XXX by 77.1% compared to the previous year. In 2013, it was XXX that was increased 
by XXX % compared to the previous year.  
* Export quantity of XXX that TPC exports to China  
: ('10) XXXea → ('11) XXXea → ('12) XXXea → ('13) XXXea  
- Total export proportion of total sales in domestic industry was incr eased from XXX% 
in 2010 to XXX% in 2011 and was decreased to XXX% in 2012 and then increased to 
XXX% in 2013.  
Export proportion in the total sales  in domestic industry was around XXX%,  and 
utilization of capacity of domestic industry was significantly below than the reasonable 
utilization  of capacity. Therefore, it was difficult to regard that export influenced on 
the domestic sales of domestic indu stry.637 
7.510.   The OTI's Interim Report contains tables that show annual figures for exported quantities, 
total domestic sales , and the ratio of export volumes to total domestic sales from 2010 to 2013, as 
well as annual rates of increase or decrease. There are no  figures available in the public version of 
the report, except for the information on the annual rates of increase or decrease column for 
export volumes and domestic sales.638 
7.10.3   Panel 's terms of reference  
7.511.   In its request for a preliminary ruling, Korea did not assert that Japan's claim  under 
Article  6.9 of the Anti-Dumping  Agreement  are outside of the Panel 's terms of reference and that 
they should therefore be rejected by the Panel. However, i n response to a question from the Panel, 
Korea invited the Panel to examine  on its own whether Japan 's procedural claims , including its 
claim  under Article  6.9, comply with the requirements in Article 6.2 of the DSU.639 
7.512.   For the reasons set out in paragr aphs 7.411  to 7.413  above , we will examine the 
sufficiency of Japan's  panel request  with respect to Japan 's claim  under Article  6.9. We will 
consider in this regard whether,  with respect to this claim and in acc ordance with Article  6.2 of the 
DSU, Japan 's panel request  provides a brief summary of the legal basis of the complaint which is 
sufficient to present the problem clearly.  If Japan 's panel request fails to explain succinctly how or 
why the measure s at issue are considered by Japan to be inconsistent with the WTO obligations in 
question, it does not satisfy the requirement of Article 6.2 of the DSU . In that case, we must 
conclude that Japan's claim under Article  6.9 with respect to the investigating 
authorities'  obligation to inform interested parties of the essential facts under consideration is not 
within the scope of the Panel 's terms of reference.  
7.513.   In its panel request, Japan asserts that Korea's measures are inconsistent with Article  6.9 
of the Anti-Dumping  Agreement  "because Korea failed to inform the interested parties of the 
                                                
637 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 26 -27 and 50. See also OTI's Preliminary Report, 
(Exhibit JPN -2(b)), pp.  57-58 and 77 -78. 
638 OTI's Interim Report, (Exhibit JPN -3(b)), pp. 28 and 50. See also OTI's Preliminary Report, 
(Exhibit  JPN-2(b)), pp.  58 and 78.  
639 Korea's response to Panel question No. 14.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  essential facts under consideration which formed the basis for the decision to impose definitive 
anti-dumping measures ". 
7.514.   On its face , the panel request merely repeats the language of Article 6.9. It does not 
identify the essential facts allegedly not disclosed or set out any elements that would allow the 
respondent or other Members to have any understanding of the scope of the claim. A m ere 
paraphrase of the lan guage of Article 6.9 does not explain how or why Japan considers the 
measure s at issue to be inconsistent with the specific obligation  in this provision,  with respect to 
the alleged failure to disclose essential facts under consideration . More specifically, it does not 
explain how or why Japan considers that the Korean Investigating Authorit ies failed to inform 
interested parties of essential facts which formed the basis for the decision to impose definitive 
anti-dumping measures  in the inv estigation at issue . Japan's claim is essentially generic – nothing 
in the panel request links the claim to the particular circumstances of the investigation at issue.  
7.515.   Accordingly, we find that Japan 's panel request, with respect to the claim  under Article  6.9 
of the Anti -Dumping Agreement,  is not sufficient to present the problem clearly.  Such language is 
not precise enough to define the basis for the Panel 's terms of reference under Article  7.1 of the 
DSU, or to inform other WTO Members, including the respondent, of the nature of the dispute.  
7.516.   Our conclusion is confirmed when we take into account the broad and diverse scope of the 
allegations concerning the alleged failure by the KTC to disclose essential facts under consideration  
with respect to: (a) price effects , specifically:  the alleged practices of aggressive marketing , the 
construction of the "reasonable sales price" , the interchangeability of the dumped imports and the 
domestic industry 's like product , including with respect to the importance of "system sales"  in this 
regard; (b) the volume of dumped imports , specifically:  the actual volumes and market shares of 
the dumped imports , the volume of the dumped imports relative to domestic production , and the 
end-point to end -point comparison of the vol ume of the dumped imports ; (c) the condition of the 
domestic industry , specifically:  capacity utilization, market share , and the profitability of the 
domestic industry; and  (d) causation , specifically:  facts relating to any causal relationship and 
facts relating to other known factors having an impact on the state of the domestic industry such 
as third countries ' imports and the export performance of the domestic industry.  
7.10.4   Conclusion  
7.517.   For the reasons exp lained above, we conclude  that Japan 's claim  under Article  6.9 of the 
Anti-Dumping  Agreement,  concerning the alleged failure to inform interested parties of essential 
facts which formed the basis for the decision to impose definitive anti -dumping measures , is not 
properly within the Panel 's terms of reference, and we will neither consider it further nor resolve it. 
7.11  Public Notice  
7.11.1   Main arguments  of the parties  
7.11.1.1   Japan  
7.518.   In its panel request, Japan asserts that Korea's  measures are inconsistent with  Article 12.2 
of the A nti-Dumping  Agreement "because Korea failed to provide in sufficient detail the findings 
and conclusions reached on all issues of fact and law the investigating authorities considered 
material ". Japan also asserts that Korea's measures are inconsis tent with  Article 12.2.2 of the 
Anti-Dumping  Agreement "because Korea failed to make available all relevant information on the 
matters of fact and law and reasons which have led to the imposition of final measures ".640 
7.519.   As articulated over the course of the proceedings, Japan's  claims that Korea acted 
inconsistently with Articles 12.2 and 12.2.2 of the Anti-Dumping  Agreement are linked to its claims 
concerning  price effect s and non -attribution.641 Specifically, Japan  argues that the KTC acted 
inconsistently  with Articles 12.2 and 12.2.2 by failing to provide in its published report adequate 
explanation s for, or to address contrary evidence with respect to , the following findings:  
                                                
640 Japan's panel request, p. 2.  
641 Japan's second written submission, para. 278.  WT/DS504/R  
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  a. With respect  to price effect s: 
i. that t he subject imports and the domestic indust ry's like product were 
interchangeable;  and 
ii. that depression and suppression of the prices of  the like product of the domestic 
industry  occurred because of t he effect s of subject imports . 
b. With respect to non-attribution : 
i. that third countries imports did not  have any negative impact on the state of the 
domestic industry;  
ii. that decreasing consumption did not have any negative impact on the state of the 
domestic industry;  
iii. that its changing export performance did not have any negative impact on the state 
of the domestic industry;  
iv. that t he expanded capacity of the domestic industry and intensified domestic 
competition did not have any negative impact on the state of the domestic industry;  
and 
v. that t he cumulative effects of above -mentioned  factors do not break the causal 
link.642 
7.520.   In Japan's view, the public notice of the KTC's Final Resolution failed to provide sufficiently 
detailed explanations regarding factual and legal issues which led to the imposition of the 
measures.643 Japan  argues that the KTC should have, at a  minimum,  disclosed non -confidential 
summaries of the confidential information concerning the above -mentioned  explanations.644 
7.11.1.2   Korea  
7.521.   Korea has invited  the Panel to examine ex officio  whether Japan's claims under 
Articles  12.2 and 12.2.2 of the Anti-Dumping Agreement  are within the Panel's terms of 
reference.645 
7.522.   Korea argues that , with respect to the se claim s, Japan has simply repeat ed its arguments 
in support of  its Articles 3 and 6.9 claims and has failed to establish a prima facie  case of 
inconsistenc y with Articles 12.2 and 12.2.2.646 According to Korea,  the KTC's Final Resolution and 
the OTI's Final Report , which were annexed  to the published MOSF  Final Decision , set forth in 
sufficient detail the findings and conclusions reached on all issues of fact and law considered 
material by the Korean authorities . These documents also contain all relevant information on the 
matters of fact and law which led to the impositio n of the anti -dumping  measures.647 
7.523.   In Korea's  view, Japan 's Articles 12.2 and 12.2.2 claims in practice challenge the 
substance of several findings by the K orean authorities , rather than the sufficiency of the public 
notice with respect to the relevant infor mation or issues of facts and law considered material by 
the KTC  for those findings .648 
7.524.   In response  to Japan's specific  allegations, Korea  refers to its rebuttal of Japan 's 
substantive claims under Article  3.649 
                                                
642 Japan's first written submission, paras. 298 and 303 -315. 
643 Japan's first written submission, paras. 299 -302. 
644 Japan's first written submission, para s. 316-317. 
645 Korea's response to Panel question No. 14. See also second written submission, annex, para . 3. 
646 Korea's first written submission, para. 429.  
647 Korea's second written submission, para. 179.  
648 Korea's first written submission, paras. 418 and 427; second written sub mission, paras. 183 -184. 
649 Korea's first written submission, paras. 420-423. WT/DS504/R  
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  7.11.2   Relevant facts  
7.525.   The public announcement of MOSF Decree No. 498, that contains the Decision to Apply 
Anti-Dumping Duties  on the Pneumatic Transmission Valves from Japan, incorporates as annexes 
the KTC's Final Resolution and the OTI's Final Report.650 
7.526.   We have already describ ed in some detail the KTC's Final Resolution and the OTI's Final 
Report and the findings and conclusions reached by the Korean Investigating Authorities on the 
issues identified by Japan as set forth therein.  
7.527.   As described above651, with respect  to whether the subject imports and the domestic li ke 
product were interchangeable , both the KTC's Final Resolution and the OTI's Final Report, on which 
the KTC's Final Resolution is based, refer to the respondents' arguments that the product under 
investigation and the  domestic product are not substitutable or in competition with each other. 
Both documents conclude that the product under investigation and the domestic like product  are 
deemed to be substitutable and in competition with each other , and explain the reasons  for this 
conclusion.  
7.528.   With respect  to whether the effect of the dumped imports was to depress  and suppress  
domestic like product  prices in the Korean market, the KTC's Final Resolution notes the KTC's 
finding " that the dumped products suppressed price incr eases of the like product and caused 
decreases thereof " and explains the reasons for this finding.652 
7.529.   With respect  to the impact of third countr y imports on the state of the Korean domestic 
industry , the KTC's Final Resolution, after noting the figures for imports of the produ ct under 
investigation from countries other than Japan , as well as their sales price s and the market share of 
those imports in the Korean market,  concludes that  "products other than the dumped products 
have had almost no adverse impact on the domestic industry ".653 
7.530.   With respect  to the issue of the impact of changes in domestic consumption on the Korean 
domestic industry , the KTC's Final Resolution notes that domestic consumption decreased in 2011 
and 2012 and then increased in 2013. The Final Resolution also records the manner in which the 
market share of the domestic like product in the Korean market fluctuated over the same period. 
The KTC states that:  
[D]uring the period of investigation, until 2012, the domestic industry expanded its 
domestic market share by slightly lowering the price or suppressing increases thereof 
in the context of shrinking domestic consumption, while in 2013, even in the soaring 
domestic consumption, the domestic industry saw only slight increases in sales of the 
like product, losing most of its market share which had been expanded until 2012 due 
to the sharp decrease in the price of the dumped products and the sharp increase in 
their imports. The like product decreased the sales price in 2013 to compete with the 
dumped products, but the ability of the like product to further decrease the sales price 
was limited by the deterioration in operating loss and therefore, it lost a large portion 
of the market share.654 
7.531.   With respect  to the impact of changes in the export perfo rmance of domestic producers on 
the Korean domestic industry , the KTC's Final Resolution, after noting the volumes of production 
and exports of the domestic industry  from 2010 to 2013 , concludes that:  
[Although] severe fluctuations in the [annual domestic production are ] the outcome of 
the fluctuations in export volumes as well as the domestic sales .  
…  
                                                
650 MOSF's Public Announcement, (Exhibit KOR -3(b) (BCI)), p. 2. See also Korea's first written 
submission, para . 417. 
651 See paras. 7.481 -7.485  above . 
652 See paras. 7.262 -7.263  above.  
653 See paras. 7.503 -7.506  above.  
654 KTC's Fina l Resolution, (Exhibit KOR -1(b) (BCI)), p. 21. See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)), pp. 49, 62 -63, and 67; a nd paras. 7.495-7.498  above.  WT/DS504/R  
BCI deleted, as indicated [[***]]  
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  [I]t cannot be concluded that the export had adverse impact on domestic sales of the 
like product because in 2011, when the export volume was the highest, the proportion 
of export to the overall sales was [low] and the capacity utilization of the domestic 
industry was low as well .655 
7.532.   With respect  to the increase in domestic industry  capacity , the KTC's Final Resolution notes 
that: 
The production capacity for t he like product of the domestic i ndustry increased 
by 44.5% from [[***]] units in 2010 to [[ ***]] units in 2013. It w as found that such 
increase was attributable to the active expansion of production facilities for the 
purpose  of responding to the expansion of investment in automation equipment by the 
domestic and international manufacturing sector and the growth of the machine 
industry, while strengthening productivity and reducing costs.656 
7.533.   In considering  whether dumped imports caused injury, the KT C's Final Resolution adds, 
with respect  to the increase in domestic industry  capacity : 
As dis cussed previously, the domestic industry expanded its investment in facility, in 
the expectation  that economic recovery and the expansion of investment in 
automati on would increase demand, but  the domestic and international demand 
significantly decreased in 2012 due to the fiscal crises  in Europe, etc. and the dumped 
products largely dominated the domestic market, resulting in the failure to increa se 
output in accor dance with the expansion of the production capacity.657 
7.11.3   Panel 's terms  of reference  
7.534.   In its request for a preliminary  ruling, Korea did not assert that Japan's claims  under 
Articles  12.2 and 12.2.2 of the Anti-Dumping  Agreement  are outside of the Panel's terms of 
reference and that they should therefore be rejected by the Panel. However, i n response to a 
question from the Panel, Korea invited the Panel to examine  on its own whether Japan's procedural 
claims , including its claims under Articles 12.2 and 12.2.2 , comply w ith the requirements in 
Article  6.2 of the DSU.658 
7.535.   For the reasons set out in paragra phs 7.411  to 7.413  above , we will examine the 
sufficiency of Japan's panel re quest  with respect to Japan's claims under Articles 12.2 and 12.2.2 . 
We will consider in this regard whether,  with respect to these claims  and in accordance with 
Article  6.2 of the DSU, Japan's panel request  provides a brief summary of the legal basis of the 
complaint which is sufficient to present the problem clearly.  If Japan's panel request fails to 
explain su ccinctly how or why the measure at issue is considered by Japan to be inconsistent with 
the WTO obligations in question, it does not satisfy the requirement of Article 6.2 of the DSU . In 
that case, we must conclude that Japan's claims under Articles 12.2 and 12.2.2 with respect to the 
investigating authorities' obligations regarding public notice of their final determination are not 
within the scope of the Panel's terms of reference.  
7.536.   In its panel request, Japan asserts that Korea's measures a re inconsistent with 
Articles  12.2 and 12.2.2  of the Anti-Dumping  Agreement  because Korea: (a) "failed to provide in 
sufficient detail the findings and conclusions reached on all issues of fact and law the investigating 
authorities considered material by t he investigating authorities  [sic]"; and (b) "failed to make 
available all relevant information on the matters of fact and law and reasons which have led to the 
imposition of final measures ".659 
7.537.   On its face , the panel request merely repeats the language of Articles 12.2 and 12.2.2 . It 
does not identify which are the findings and conclusions that Korea failed to provide in sufficient 
                                                
655 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , pp. 21 and 27. See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)), pp. 60 -61, 64, and 83 ; and paras. 7.507  to 7.510  above . 
656 KTC's Final Resolution, (Exhib it KOR -1(b) (BCI)) , p. 21. See also OTI's Final Report, 
(Exhibit  KOR-2(b) (BCI)), p. 65 ; and paras. 7.491 -7.494  above.  
657 KTC's Final Resolution, (Exhibit KOR -1(b) (BCI)) , p. 25. 
658 Korea's response to Panel question No. 14.  
659 Japan's panel request, p. 2.  WT/DS504/R  
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  detail through the public notice of its final determination, in a manner that would allow the 
respondent or other Members to ha ve any understanding of the scope of the claims . Similarly, the 
panel request does not identify which are the matters of fact and law and the reasons which led to 
the imposition of final measures with respect to which Korea failed to make available all rel evant 
information reached on all issues of fact and law . A m ere paraphrase of the language of 
Articles  12.2 and 12.2.2  does not explain how or why Japan considers the measure at issue to be 
inconsistent with the specific obligations  in these provisions . More specifically, it does not explain 
how or why Japan considers that the Korean Investigating Authorities failed to give proper public 
notice of its final determination . Japan's claims are essentially generic – nothing in the panel 
request links the clai ms to the particular circumstances of the investigation at issue.  
7.538.   Accordingly, we find that Japan's panel request, with respect to the claim s under 
Articles  12.2 and 12.2.2  of the Anti -Dumping Agreement,  is not sufficient to present the problem 
clearly.  The language of the panel request is not precise enough to define the basis for the Panel's 
terms of reference under Article  7.1 of the DSU, or to inform other WTO Members, including the 
respondent, of the nature of the dispute.  
7.539.   Our conclusion is confirmed when we take into account the broad and diverse scope of the 
allegations concerning the alleged failure by the Korean Investigating Authorities to set forth or 
make available their findings and conclusions with respect to both: (a) price effects , specifica lly: 
that the subject imports and the domestic industry's like product were interchangeable;  and that 
price depression and price suppression occurred because of t he subject imports ; and 
(b) non-attribution, specifically:  that third countries imports did not have a  negative impact on the 
state of the domestic industry;  that decreasing co nsumption did not have a  negative impact on the 
state of the domestic industry;  that the changing export performance did not have a negative 
impact on the state of the dome stic industry;  that the expanded capacity of the domestic industry 
and intensified domestic competition did not have a negative impact on the state of the domestic 
industry;  and that the cumulative effects of the above -mentioned  factors d id not break the c ausal 
link. 
7.11.4   Conclusion  
7.540.   For the reasons explained above, we conclude  that Japan's claims  under Articles  12.2 
and 12.2.2  of the Anti -Dumping  Agreement,  concerning the alleged failure by the Korean 
Investigating Authorities to give proper  public notice of their final determination , are not properly 
within the Panel's terms of reference, and we will neither consider them further nor resolve them. 
7.12  Consequential  claims  
7.12.1   Main arguments of the parties  
7.12.1.1   Japan  
7.541.   Japan argues that, in light of the violations of Articles 3.1, 3.2, 3.4, 3.5, 4.1, 6.5, 6.5.1, 
6.9, 12.2, and 12.2.2 of the Anti-Dumping  Agreement , Korea's  anti-dumping measures on 
pneumatic  valves  from Japan  are also inconsistent with Article 1 of the Anti-Dumping  Agreement 
and with Article VI of the GATT 1994. In Japan's view, this is because Article 1 of the 
Anti-Dumping  Agreement provides that each of the provisions under the Anti-Dumping  Agreement 
"governs" the application of Article VI of the GATT 1 994.660 
7.12.1.2   Korea  
7.542.   Korea responds that, because all other claims advanced by Japan are to be rejected, these 
consequential claims cannot stand.661 Korea also asserts that a violation of Article 6.5, 6.5.1, 6.9, 
12.2, or 12.2.2 of the Anti-Dumping  Agreement would no t likely result in a violation of Article VI of 
the GATT 1994. In Korea's view, this is because Article 1 of the Anti-Dumping  Agreement 
differentiates between "the circumstances provided for in Article  VI of GATT  1994", which 
regulate s the application of a nti-dumping measures, and the initiation and conduct of 
                                                
660 Japan's first written submission, para. 319; response to Panel question No. 82, paras. 180 -181. 
661 Korea's first written submission, para. 431. WT/DS504/R  
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  investigations which must be "in accordance with the provisions of [ the Anti-Dumping  
Agreement ]". According to Korea, the procedural aspect s of anti -dumping investigations are not 
specified in Article  VI of GATT  1994, but are covered instead by the provisions of the Anti-Dumping  
Agreement . Those matters would "conceivably fall outside the scope of Article  VI of GATT  1994".662 
7.12.2   Panel 's terms of reference  
7.12.2.1   Evaluation  by the Panel  
7.543.   In its request for a preliminary ruling, Korea did not assert that Japan's consequential 
claims  with respect to Article 1 of the Anti-Dumping  Agreement and Article VI of the GATT 1994  
are outside of the Panel's terms of reference and that they should there fore be rejected by the 
Panel. We recall, however, that i n response to a question from the Panel, Korea invited the Panel 
to examine  on its own whether Japan's procedural claims  comply w ith the requirements in 
Article  6.2 of the DSU.663 This invitation by Ko rea did not specifically extend to Japan's 
consequential claims.  
7.544.   Given that we have examined the sufficiency of Japan's panel request  with respect to all 
the other claims raised by Japan, in order to properly establish our jurisdiction we consider it 
appropriate to do the same with respect to these consequential claims . 
7.545.   Accordingly , we will examine  the sufficiency of Japan's panel request  with respect to 
Japan's consequential claims . We will consider in this regard whether, with respect to these claims  
and in accordance with Article 6.2 of the DSU, Japan's panel request  provides a brief summary of 
the legal basis of the complaint which is sufficient to present the problem clearly.  If Japan's panel 
request fails to explain succinctly how or why the measure at issue is considered by Japan to be 
inconsistent with the WTO obligations in question, it does not satisfy the requirement of Article 6.2 
of the DSU . In that case, we must conclude that Japan's consequential claims are not within the 
scope of the Panel's terms of reference.  
7.546.   In its panel request, Japan asserts that Korea's measures are inconsistent with Article 1 of 
the Anti-Dumping  Agreement and with Article VI of the GATT 1994 , "[a] s a consequence of the 
apparent breaches of the [Anti-Dumping  Agreement ] described above ". On its face , the panel 
request merely asserts that the violation of other provisions listed in the panel request results in 
an automatic breach of  Article 1 of the Anti-Dumping  Agreement and Article VI of the GATT 1994 . 
7.547.   Article 1 of the  Anti-Dumping Agreement provides in relevant part that "[a]n 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 ".664 This provision establishes a single, distinct obligation, namely that anti -dumping 
measure s may only be applied : (a) under the circumstances provided for in Article  VI of 
GATT  1994; and (b) pursuant to investigation s initiated and conducted in accor dance with the 
provisions of the  Anti-Dumping Agreement . Accordingly, the imposition of anti-dumping measure s 
either in circumstances different from those provided for in Article  VI of GATT  1994 or pursuant to 
investigatio ns which have not been initiated or conducted in accor dance with the provisions of the  
Anti-Dumping Agreement  would result in a consequential violation of Article 1 of the  Anti-Dumping 
Agreement . As Japan has claimed that, in several aspects, the measures at issue were imposed by 
Korea pursuant to an investigation  that was not initiated or conducted in accor dance with specified 
provisions of the  Anti-Dumping Agreement , the language of Japan's panel request, although brief, 
is sufficient to connect the chall enged measure with the provision  at issue ( Article 1 of the  
Anti-Dumping Agreement ) so that the respondent party and other Members are  aware of the 
nature of the complaint.  
7.548.   In contrast, Article  VI of GATT  1994 does not contain one single, distinct obligation, but a 
number of obligations regarding the imposition of anti -dumping  and countervailing duties. As we 
have noted before, t o the extent that a provision contains multiple obligations, a panel request 
must specify which of them is being challenge d. As Japan's panel request  does not identify which 
of the obligations in Article  VI of GATT  1994 would be violated as a consequence of the alleged 
                                                
662 Korea's response to Panel qu estion No. 82.  
663 Korea's response to Panel question No. 14.  
664 Fn omitted.  WT/DS504/R  
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  violations of specified provisions of the  Anti-Dumping Agreement , the panel request is not in our 
view sufficient to present the problem clearly.  The language used is not precise enough to define 
the basis for the Panel's terms of reference under Article  7.1 of the DSU, or to inform other 
WTO Members, including the respondent, of the nature of the dispute.  
7.12.2.2   Concl usion  
7.549.   For the reasons explained above, we conclude  that Japan's consequential claim  under 
Article  1 of the Anti -Dumping  Agreement is within the Panel's terms of reference. In contrast, 
Japan's consequential claim  under  Article  VI of GATT  1994 is not properly within the Panel's terms 
of reference, and we will neither consider it further nor resolve it. 
7.12.3   Evaluation by the Panel  
7.550.   Article 1 of the  Anti-Dumping  Agreement provides that : 
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. The following provisions govern the 
application of Article  VI of GATT  1994 in so far as act ion is taken under anti -dumping 
legislation or regulations.  
[*fn original]1 The term "initiated" as used in this Agreement means the procedural action by 
which a Member formally commences an investigation as provided in Article  5. 
7.551.   We have already concluded  that, with respect to the measure at issue, the Korean 
Investigating Authorities  acted inconsistently with the following provisions of the 
Anti-Dumping  Agreem ent: (a) Articles  3.1 and 3.5, as a result of flaws in their consideration of the 
effect of the dumped imports on prices in the domestic market in determining causation; 
(b) Article  6.5, having treated information provided by the applicants as confidential without good 
cause shown  for such treatment ; and (c) Article  6.5.1 , with respect to the failure  to require that 
submitting parties provide a sufficient non -confidential summary of information for which 
confidential treatment was sought . 
7.552.   Accordingly , we conclude that, in respect of the inconsistencies described above, the 
measure at issue was imposed pursuant to an investigation  that was not conducted fully in 
accordance with the provisions of the A nti-Dumping  Agreement . As noted above, the imposition of 
anti-dumping measure s pursuant to investigations which have not been initiated and conducted in 
accor dance with the provisions of the  Anti-Dumping Agreement  necessarily results in a 
consequential violation of Article 1 of the  Anti-Dumping Agreement . 
7.12.4   Conclusion  
7.553.   For the reasons explained above , we conclude  that the Korean Investigating Authorities 
also acted inconsistently  with Article  1 of the Anti-Dumping  Agreement  as a consequence of and to 
the extent of the inconsistencies we have already found with respect to the 
Anti-Dumping  Agreement . 
8  CONCLUSIONS AND RECOMMENDATION  
8.1  Conclusions  
8.1.  Having considered Korea's request for a preliminary ruling and the responses thereto, as well 
as its invitation that the Panel consider ex officio  whether others of Japan's claims are properly 
within its terms of reference, we find that, with respect to the following, Japan's panel request fails 
to provide a brief summary of the legal basis of the complaint which is sufficient to present the 
problem  clearly . We therefore conclude that the following are not within the Panel's terms of 
reference  and we neither consider nor resolve them in this report:  
a. Japan's claim under Articles  3.1 and 4.1 of the Anti -Dumping  Agreement,  concerning the 
definition of the domestic industry ; WT/DS504/R  
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  b. Japan's claim under Articles  3.1 and 3.2 of the A nti-Dumping  Agreement,  concerning 
Korea's analysis of an increase in the volume of the dumped imports ; 
c. Japan's  claim under Articles  3.1 and 3.2 of the A nti-Dumping  Agreement,  concerning the 
consideration of the effect of the dumped imports on prices ; 
d. Japan's claim under Articles  3.1 and 3.4 of the A nti-Dumping  Agreement  concerning the 
impact of the dumped import on the state of the domestic industry , with the exception of 
the allegations that the Korean Investigating Authorities failed to evaluate two of the 
specific factors listed in Article  3.4 (the ability to raise capital or investments, and the 
magnitude of the margin of dumping ); 
e. Japan's claim under Articles 3.1 and 3.5 of the Anti -Dumping Agreement,  concerning the 
alleged failure by the Korean Investigating Authorities to consider adequately all known 
factors other than the dumped  imports that were injuring the domestic industry at the 
same tim e, with the exception of the allegations concerning whe ther the Korean 
Investigating Authorities considered certain known factors in isolation and dismissed 
them without an adequate exami nation;  
f. Japan's claim under Article  6.9 of the A nti-Dumping  Agreement , concerning the alleged 
failure by the Korean Investigating Authorities to inform interested parties of essential 
facts which formed the basis for the decision to impose definitive anti -dumping measures ; 
g. Japan's claims under Articles  12.2 and 12.2.2  of the Anti -Dumping  Agreement,  
concerning the alleged failure by the Korean Investigating Authorities to give proper 
public notice of their final determination ; and  
h. Japan's consequential claim under Article VI of the GATT 1994 . 
8.2.  We find that, with respect to t he following, Japan's panel request does provide a brief 
summary of the legal basis of the complaint which is sufficient to present the problem clearly . We 
therefore conclude that the following are properly within  the Panel's terms of reference : 
a. Japan's cl aim under Articles  3.1 and 3.4 of the A nti-Dumping  Agreement  concerning the 
alleged failure of the Korean Investigating Authorities to evaluate two of the specific 
factors listed in Article  3.4, i.e. the ability to raise capital or investments, and the 
magnitude of the margin of dumping ; 
b. Japan's claim under Articles 3.1 and 3.5 of the Anti -Dumping Agreement  that Korea's 
demonstration of causation lacks a foundation in its analyses of volume of dumped  
imports, e ffects of imports on prices, and the impact of those imports on the domestic 
industry, irrespectively and independently of whether Korea's analyses are found to be 
inconsistent with Articles 3.1, 3.2, and  3.4 of the A nti-Dumping  Agreement ; 
c. Japan's claim under Articles 3.1 and 3.5 of the Anti -Dumping  Agreement,  concerning the 
alleged failure by the Korean Investigating Authorities to demonstrate any causal 
relationship between the dumped imports and the injury  to the domestic industry ; 
d. Japan's claim  under Articles 3.1 and 3.5 of the A nti-Dumping  Agreement  concerning the 
alleged failure of the Korean Investigating Authorities to examine certain known factors 
adequately  and their examination of those factors in isolation;  
e. Japan's claims under Articles 6.5 and 6.5.1 of the A nti-Dumping  Agreement , concerning 
the treatment of confidential information and the provision of non-confidential 
summaries  of information for which confidential treatment was sought  by the applicants ; 
and 
f. Japan's consequential claim under Article 1 of the A nti-Dumping  Agreement . WT/DS504/R  
BCI deleted, as indicated [[***]]  
- 149 - 
 
  8.3.  With respect to those of Japan's claims that are within our terms of reference as set forth in 
paragraph 8.2 above, we conclude that Japan has not demonstrated that the Korean Investigating 
Authorities acted inconsistently with:  
a. Articles  3.1 and 3.4 of the  Anti-Dumping  Agreement  with respect to their evaluation of 
the investment and funding ability of the domestic industry and of the magnitude of the 
margin of dumping ; 
b. Articles 3.1 and 3.5 of the A nti-Dumping  Agreement  with respect to their conclusion that 
the dumped imports, through the effects of dumping, were causing injury to the 
domestic industry ; and  
c. Articles 3.1 and 3.5 of the A nti-Dumping  Agreement  with respect to their examination of 
known factors other than the dumped  imports that were injuring the domestic industry 
at the same time . 
8.4.  With respect to those of Japan's claims that are within our terms of reference as set forth in 
paragraph 8.2 above, we further conclude that Japan has demonstrated  that the K orean 
Investig ating Authorities  acted inconsistently with:  
a. Articles  3.1 and 3.5 of the A nti-Dumping  Agreement  in their causation analysis as a 
result of flaws in their analysis of the effect of the dumped imports on prices in the 
domestic market;  
b. Article  6.5 of the A nti-Dumping  Agreement  with respect to their treatment of information 
provided by the applicants as confidential without requiring that good cause be shown ; 
and 
c. Article  6.5.1 of the Anti-Dumping  Agreement  with respect to their failure to require that 
the su bmitting parties provide a sufficient non -confidential summary of the information 
for which confidential treatment was sought . 
d. As a consequence of and to the extent of the inconsistencies described above, Korea's 
anti-dumping measures on imports of pneumatic valves from Japan  are also inconsistent 
with Article  1 of the Anti -Dumping  Agreement.  
8.5.  Pursuant to Article 3.8 of the DSU, in cases where there is infringement of the obligations 
assumed under a covered agreement , the action is considered prima fa cie to constitute a case of 
nullification or impairment of benefits under that agreement. Accordingly, to the extent Korea has 
acted inconsistently with certain provisions of the Anti -Dumping  Agreement, we conclude that 
Korea has nullified or impaired bene fits accruing to Japan under that Agreement.  
8.2  Recommendation  
8.6.  Pursuant to Article 19.1 of the DSU, having found that Korea acted inconsistently with certain 
provisions of the Anti -Dumping  Agreement, we recommend that Korea bring its measures into 
conformity with its obligations under that Agreement.  
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