WT/DS504/5  
 
31 May 2018  
(18-3285) Page: 1/5 
  Original: English  
 
KOREA – ANTI -DUMPING DUTIES ON PN EUMATIC VALVES FROM JAPAN  
NOTIFICATION OF AN A PPEAL BY JAPAN UNDER  ARTICLES 16.4 AND 17  OF THE UNDERSTANDING  
ON RULES AND PROCEDU RES GOVERNING THE SE TTLEMENT OF DISPUTES  (DSU),  
AND RULE 2 0 OF THE WORKING PROCE DURES FOR APPELLATE REVIEW  
The following communication, dated 28 May 2018, from the delegation of Japan, is  being circulated 
to Members.  
 
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Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Proce dures Governing 
the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review 
("Working Procedures"), Japan hereby notifies the Dispute Settlement Body of its decision to 
appeal certain issues of law covered in the Panel Rep ort in Korea – Anti-Dumping Duties on 
Pneumatic Valves from Japan (WT/DS504/R) ("Panel Report"), and certain legal interpretations 
developed by the Panel in this dispute.  
 
Pursuant to Rules 21(1) of the Working Procedures, Japan is simultaneously filing th is Notice of 
Appeal and its Appellant Submission with the Appellate Body.  
 
For the reasons to be elaborated in its submissions and oral statements to the Appellate Body, 
Japan appeals the following errors in the issues of law in the Panel Report and legal interpretations 
developed by the Panel, and requests the Appellate Body to reverse and modify the related 
findings, conclusions and recommendations of the Panel,1 and where indicated to complete the 
analysis.  
 
1. With respect to Japan's claim2 that Korea defi ned the domestic industry producing the like 
product contrary to the requirements of Articles 3.1 and 4.1 of the Agreement on Implementation 
of Article VI of the General Agreement on Tariffs and Trade 1994 ("Anti -Dumping Agreement"), 
Japan requests the App ellate Body:  
a. to reverse the Panel's erroneous findings and conclusion that in applying Article 6.2 of 
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel 
Report, paras. 7.60 – 7.66, and it refused to address this claim, P anel Report, 
para. 7.67;  
b. then to conclude that Japan's claim is consistent with Article 6.2 of the DSU and that  
Japan's claim is within the terms of reference of this dispute ; and 
c. then to complete the analysis, and find that the definition by the Korea Trade 
Commission ("KTC") of the domestic industry as including only the two petitioning firms 
among the nine domestic producers of like products did not properly represent the total 
domestic production as a whole and then did not meet the "major proportion " 
requirement as required by Articles 3.1 and 4.1 of the Anti -Dumping Agreement.  
                                           
1 Pursuant to Rule 20(2)(d)(iii)of the  Working Procedures, this Notice of Appeal includes an indicative 
list of the paragraphs of the Panel Report containing the alleged errors, without prejudice to the ability of Japan 
to refer to other paragraphs of the Panel Report in the context of its app eal. 
2 Panel Request, page 2, para. 7. WT/DS504/5  
 
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  2. With respect to Japan's claim3 that Korea found a significant increase in the volume of 
imports contrary to the requirements of Article 3.1 and the first sent ence of Article 3 .2 of the 
Anti-Dumping Agreement, Japan requests the Appellate Body:  
a. to reverse the Panel's erroneous findings and conc lusion that in applying Article  6.2 of 
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel 
Report, par as. 7.89 – 7.93, and it refused to address this claim, Panel Report, 
para. 7.94;  
b. then to conclude that Japan's Panel Request was consistent with Article  6.2 of the DSU 
and that  Japan's claim is within the terms of reference of this dispute ;  
c. then to complete the analysis, and find that Korea viol ated Articles 3.1 and the 
first sentence of Article 3.2 of the Anti -Dumping Agreement, by improperly finding a 
"significant increase" in subject imports considered in isolation, while: (i) disregarding 
the lac k of continuous increase of subject imports in either absolute or relative terms in 
each year of the comparison period; (ii) improperly assuming a competitive relationship 
between domestic products and subject imports without an object ive examination based  
on positive evidence; and (iii)  improperly finding displacement of domestic sales by 
subject imports without examining whether the increased imports replaced domestic like 
products through market competition; and  
d. as part of completing the analysis, to rev erse the Panel 's mistaken interpretation of how 
to consider the volume of imports as set forth in its discussion of this issue in its 
causation findings, including paras. 7.254 -7.257.  
3. With respect to Japan's claim4 that Korea found the effects of imports o n domestic prices to 
be significant contrary to the requirements of Article 3.1 and the second sentence of Article 3.2 of 
the Anti -Dumping Agreement,  Japan requests the Appellate Body:  
a. to reverse the Panel's erroneous findings and conc lusion that in applyi ng Article  6.2 of 
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel 
Report, paras. 7.123 – 7.130, and it refused to address this claim, Panel Report, 
para. 7.131;  
b. then to conclude that Japan's Panel Request is consisten t with Article 6.2 of the DSU  and 
that Japan's claim is within the terms of reference of this dispute; and  
c. then to complete the analysis , and find that Korea violated Articles 3.1 and the second 
sentence of Article 3.2 of the Anti -Dumping Agreement, by inc orrectly determining the 
effect of imports on the domestic prices to be significant as required by the same 
Articles, both as price depression and price suppression, while: (i) ignoring the facts of 
consistent and significant overselling of subject imports ; (ii) disregarding the 
dramatically diverging price trends; (iii) focusing on a single year of 2013, and ignoring 
the absence of any evidence of price suppression in 2011 and 2012; and (iv) incorrectly 
finding price comparability between subject imports a nd domestic like products without 
demonstrating any competition between them.  
4. With respect to Japan's claim5 that Korea analyzed the impact of imports on the domestic 
industry contrary to the requirements of A rticles 3.1 and 3.4 of the Anti -Dumping Agreeme nt, 
Japan requests the Appellate Body:  
a. to reverse the Panel's erroneous findings and conclusion that in applying Article 6.2 of 
the DSU it found significant parts of this claim to be outside the Panel's terms of 
reference, Panel Report, paras. 7.165 – 7.174, and it refused to address several 
important aspects this claim, Panel Report, paras. 7.172, 7.175;  
                                           
3 Panel Request, page 1, para. 1.  
4 Panel Request, page 1, para. 2.  
5 Panel Request, page 1, para. 3.  WT/DS504/5  
 
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  b. then to conclude that Japan's Panel Request is consistent with Article 6.2 of the DSU  and 
that Japan's claim is within the terms of reference of this disp ute;  
c. then to complete the analysis, and find that Korea violated Articles 3.1 and 3.4 of the 
Anti-Dumping Agreement because the KTC's examination of the impact of the dumped 
imports on the state of the domestic industry was inadequate in the following asp ects: 
(i) failure to link its analysis of volume and price effects with the alleged consequent 
impact from the dumped imports; (ii) failure to demonstrate any "explanatory force" of 
the dumped imports on the state of the domestic industry; and (iii) failur e to properly 
take into account positive trends; and  
d. as part of completing the analysis, to reverse the Panel 's mistaken interpretations and 
conclusions that the authority: (i) need not establish a logical link in its analysis of 
impact, as set forth at pa ras. 7.328 -7.330; (ii) need not address the explanatory force of 
imports when analyzing the impact of imports, as set forth at para. 7.339; and (iii) could 
dismiss with insufficient consideration positive trends during the period, as set forth at 
paras. 7. 342-7.346, in the Panel 's discussion of these issues as part of its findings about 
causation.  
5. With respect to Japan's claim6 that Korea analyzed the impact of imports on the domestic 
industry contrary to the requirements of A rticles 3.1 and 3.4 of the Anti -Dumping Agreement, 
Japan requests the Appellate Body:  
a. to note the Panel correctly agreed to consider one asp ect of this claim regarding 
two specific factors, Panel Report, para. 7.169 – 7.170, including the magnitude of the 
margin of dumping, but to find the Panel erred as a matter of law by accepting as 
sufficient the mention of the margin of dumping wit hout more, Panel Report, 
paras.  7.189 - 7.191, and thus acted contrary to the requirements of Articles 3.1 and 3.4 
of the Anti -Dumping Agreement; and  
b. then to reverse the Panel's finding, Panel Report, paras. 7.187 – 7.192, that Japan has 
not demonstrated that Korea did not assess the relevance of the magnitude of the 
margin of dumping and the weight to be attributed to it in the injury analysis, and find 
that Korea violated A rticles  3.1 and 3.4 of the Anti -Dumping Agreement by not properly 
assessing the margin of dumping.  
6. With respect to Japan's claim7 that Korea found causation without a proper foundation of 
intermediate findings regarding the volume, price  effects, and impact of imports contrary to the 
requirements of Articles 3.1 and 3.5 of the Anti -Dumping Agreement, Japan requests the Appellate 
Body:  
a. to note Panel correctly found what it called Japan's first causation claim to be within its 
terms of refe rence, Panel Report, paras. 7.218 - 7.226; and  
b. to, regarding the Panel 's following errors as a matter of law in several key respects 
regarding this claim:  
i. reverse the Panel 's error in misapplying the legal standard when assessing the 
volume of subject impo rts, and improperly viewing its analysis for purpose of Article 
3.5 as constrained by its narrow interpretation of the first sentence of Article 3.2, 
Panel Report, paras. 7.254 – 7.258; and find that Korea's focus on the volume of 
imports in 2013 in isolat ion from the broader period of investigation as context 
fundamentally undermined its causation finding;  
ii. reverse the Panel 's error in misapplying the legal standard when it considered its 
findings about diverging price trends in isolation from its other fin dings about price 
comparability and price ov erselling, Panel Report, paras.  7.278, 7.295 -7.296; and 
                                           
6 Panel Request, page 1, para. 3.  
7 Panel Request, page 2, para. 6.  WT/DS504/5  
 
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  find that Korea's assessment of the diverging prices and other evidence does not 
support its finding of causation;  
iii. reverse the Panel 's error in misapplying the legal standard when it considered the 
KTC's allegations of "fierce competition" for a small fraction of the domestic like 
product as a whole, and in isolation from the other evidence about alleged price 
effects, Panel Report, para. 7.294; and find that  Korea's assessment of the alleged 
fierce competition does not support its finding of causation; and  
iv. reverse the Panel 's error in misapplying the legal standard when it found that the 
findings under Article 3.2 about volume and price effects are independent of the 
findings under Article 3.4 about the impact of imports on the domestic industry, 
Panel Report, paras. 7.329, 7.330, and 7.332; and find that Korea's consideration of 
volume, price effects, and impact in isolation fundamentally undermined  its causation 
finding.  
c. Japan also requests the Appellate Body to reverse the Panel's error by acting contrary to 
the standard of review of Article 11 of the DSU when it considered Korea's arguments 
but failed to consider Japan's rebuttal arguments to vari ous Korean assertions about the 
reasonable sales price, Panel Report, para. 7.278.  
7. With respect to Japan's claim8 that Korea found causation without an objective examination 
of the alleged causal relationship, and without objective examination of the lack of correlations 
among various factors, contrary to the requirements of Articles 3.1 and 3.5 of the Anti -Dumping 
Agreement, Japan requests the Appellate Body:  
a. to note that the Panel correctly found what it called Japan's second causation claim to be 
within its terms of reference, Panel Report, paras.  7.231 - 7.235; and  
b. to find the Panel erred as a matter of law and to reverse the Panel's error of ignoring the 
lack of correlation in the key volume, price, and profit trends that contradicted the 
"causal relati onship" as required by Articles  3.1 and 3.5, Panel Report, paras. 7.353, 
7.356, 7.360; and find that Korea erroneously ignored the lack of correlations that 
fundamentally undermined any conclusion that an objective examination showed the 
required "causal r elationship".  
8. With respect to Japan's claim9 that Korea failed to inform the interested parties of the 
essential facts contrary to the requirements of Article 6.9 of the Anti -Dumping Agreement, Japan 
requests the Appellate Body:  
a. to reverse the Panel's erro neous findings and conclusion that in applying Article 6.2 of 
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel 
Report, paras. 7.515 – 7.516, and it refused to address this claim, Panel Report, 
para. 7.517;  
b. then to conc lude that Japan's Panel Request is consistent with Article 6.2 of the DSU  and 
that Japan's claim is within the terms of reference of this dispute; and  
c. then to complete the analysis, and find that Korea failed to inform the interested parties 
of the fourte en essential facts relating to the volume of dumped imports, price effects, 
the state of the domestic industry, and alleged causation factors before the issuance of 
the Korea Trade Commission, Resolution of Final Determination on Dumping and Injury 
to Dome stic Industry of Valves for Pneumat ic Transmissions from Japan (20  January 
2015) Investigation No.: 23 -2013-5 ("KTC's Final Resolution") and the Office of Trade 
Investigation, Final Investigation Report on Dumping and Injury to Domestic Industry of 
Valves for Pneumatic Transmissions from Japan (20 Ja nuary 2015), Investigation 
No. 23-2013-5 ("OTI Final Report"), as required by Article 6.9 of the Anti -Dumping 
Agreement.  
                                           
8 Panel Request, page 2, para. 4.  
9 Panel Request, page 2, para. 10. WT/DS504/5  
 
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  In sum, Japan considers that the Panel erred in law in its interpretation and application of 
Article 6.2 of the DSU with regard to several claims, and improperly refused to address those 
claims.  The Panel also erred in law with its interpretations of Articl es 3.1, 3.2, 3.4, 3.5, 4.1, 
and 6.9. Japan requests that the Appellate Body recommend tha t Korea bring its measures found 
to be WTO -inconsistent into conformity with its obligations under the Anti -Dumping Agreement 
and the GATT 1994.  Japan also requests that, upon reversal of the Panel's erroneous findings and 
conclusions identified above and after completing the analysis where indicated, the Appellate Body 
help the parties resolve this dispute promptly by finding the Korean anti -dumping measures to be 
contrary to the numerous specific obligations under the Anti -Dumping Agreement identified by 
Japan in this appeal.  Moreover, doing so will help clarify numerous important issues about the 
obligations on national authorities under the Anti -Dumping Agreement.  
 
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