WT/DS464/ARB/Add.1  
 
8 February  2019 
(19-0491) Page: 1/64 
  Original: English  
 
  
UNITED STATES – ANTI -DUMPING AND COUNTER VAILING MEASURES 
ON LARGE RESIDENTIAL  WASHERS FROM KOREA  
RECOURSE TO ARTICLE 22.6 OF THE DSU BY T HE UNITED STATES  
DECISION OF THE ARBI TRATOR  
Addendum  
 
This addendum  contains Annexes A to D to the Decision of the Arbitrator to be found in document 
WT/DS464/ARB.  
 
 
 
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  LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES O F THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Workin g Procedures of the Arbitrator C oncerning Business 
Confidential Information  9 
ANNEX  B 
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Integrated E xecutive summary of the arguments of the United States  12 
Annex  B-2 Integrated E xecutive summary of the arguments of Korea  23 
 
ANNEX  C 
CALCULATIONS OF THE ARBITRATOR  
Contents  Page  
Annex  C-1 Level o f Nullification or Impairment for  LRWs : Calculations  34 
Annex  C-2 Level of Nullification or Impairment for Non -LRWs: Derivation of Formula  46 
ANNEX  D 
DECISION OF THE ARBI TRATOR CONCERNING A PARTIALLY OPEN HEARI NG 
Contents  Page  
Annex  D-1 Decision of the Arbitrator on the United States' Request for an Open Hearing  60 
 
 
 
 
 
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  ANNEX  A 
WORKING PROCEDURES  OF THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures of the Arbitrator concerning Business 
Confidential Information  9 
 
 WT/DS464/ARB/Add.1  
 
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  ANNEX  A-1 
WORKING PROCEDURES O F THE ARBITRATOR  
Adopted on 21 February 2018  
 
General  
 
1. (1) In this proceeding, the Arbitrator shall follow the relevant provisions of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"). In 
addition, the following Working Procedures apply.  
 
(2) The Arbitrator reserves the right to modify these procedures as necessary, after 
consultation with the parties.  
 
Confidentiality  
2.  (1) The deliberations of the Arbitrator and the documents submitted to it shall be kept 
confidential. Members shall treat as confi dential information that is submitted to the 
Arbitrator by another Member which the submitting Member has designated as confidential.  
 
(2) Nothing in the DSU or in these Working Procedures shall preclude a party from 
disclosing statements of its own positions to the public.  
 
(3) If a party submits a confidential version of its written submissions to the Arbitrator, 
it shall also, upon request of a Member, provide a non -confidential summary of the  
information contained in its submissions that could be disclosed to t he public. Non - 
confidential summaries shall be submitted no later than ten days after the written 
submission in question is presented to the Arbitrator, unless a different deadline is 
established by the Arbitrator upon written request of a party showing g ood cause.  
 
(4) Upon request, the Arbitrator may adopt appropriate additional procedures for the 
treatment and handling of confidential information after consultation with the parties.  
 
Submissions  
 
3. (1) Before the substantive meeting of the Arbitrator with the  parties, Korea shall transmit  
to the Arbitrator and to the United States a communication explaining the basis for its 
request, including the methodology and data supporting it, in accordance with the timetable 
adopted by the Arbitrator.  
 
(2) Each party to the  dispute shall also transmit to the Arbitrator a written submission in 
which it presents the facts of the case and its arguments, in accordance with the timetable 
adopted by the Arbitrator.  
 
(3) The Arbitrator may invite the parties to make additional submissi ons in the course of 
the proceeding, including with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.  
 
Preliminary rulings  
 
4. (1) If the United States considers that the Arbitrator should make a ruling prior to the 
issuance of  the Decision that certain measures, claims or issues are not properly before the 
Arbitrator, the following procedure applies. Exceptions to this procedure shall be granted 
upon a showing of good cause.  
 
a. The United States shall submit any such request for a preliminary ruling at the earliest 
possible opportunity. Korea shall submit its response to the request at a time to be 
determined by the Arbitrator in light of the request.  
 
b. The Arbitrator may issue a preliminary ruling on the issues raised in such a preliminary WT/DS464/ARB/Add.1  
 
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  ruling request before, during or after the substantive meeting, or the Arbitrator may 
defer a ruling on the issues raised by a preliminary ruling until it issues its D ecision to  
the parties.  
 
c. In the event that the Arbitrator finds it appropriate to issue a preliminary ruling prior to 
the issuance of its Decision, the Arbitrator may provide reasons for the ruling at the 
time that the ruling is made or subsequently in its  Decision.  
 
(2) This procedure is without prejudice to the parties' right to request other types of 
preliminary or procedural rulings in the course of the proceeding, and to the procedures that 
the Arbitrator may follow with respect to such requests.  
 
Evidence  
 
5. (1) Each party shall submit all evidence to the Arbitrator no later than the substantive 
meeting, except evidence necessary for purposes of rebuttal, or evidence necessary for 
answers to questions or comments on answers provided by the other part y. Additional 
exceptions may be granted upon a showing of good cause.  
 
(2) If any new evidence has been admitted upon a showing of good cause, the Arbitrator 
shall accord the other party an appropriate period of time to comment on the new evidence 
submitte d. 
 
6. (1) Where the original language of an exhibit or a portion thereof is not in a WTO working 
language, the submitting party shall simultaneously submit a translation of the exhibit or 
relevant portion into the WTO working language of the submission. The Arbitrator may grant 
reasonable extensions of time for the translation of exhibits upon a showing of good cause.  
 
(2) Any objection as to the accuracy of a translation should be raised promptly in writing, 
preferably no later than the next filing or the me eting (whichever occurs earlier) following  
the submission which contains the translation in question. Any objection shall be 
accompanied by a detailed explanation of the grounds for the objection and an alternative 
translation.  
 
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party shall sequentially number its exhibits throughout the course of the 
dispute, indicating the submitting Member and the number of each exhibit on its cover page. 
For example, exhibits submitted by Korea should be numbered KOR -1, KOR -2, etc. If the  
last exhibit in connection with a submission was numbered KOR -5, the first exhibit in 
connection with the next submission thus would be numbered KOR -6. 
 
(2) Each party shall pro vide an updated list of exhibits (in Word or Excel format) together 
with each of its submissions, oral statements, and responses to questions.  
 
(3) If a party submits a document that has already been submitted as an exhibit by the 
other party, it should explai n why it is submitting that document again.  
 
(4) Insofar as a party considers that the Arbitrator should take into account a document 
already submitted as an exhibit in the prior panel proceedings, it should resubmit that 
document as an exhibit for the purpose  of this proceeding. In its list of exhibits, it should 
refer to the number of the original exhibit in the original panel proceeding (OP), if applicable 
(example: USA -1 (USA -21-OP). 
 
Editorial Guide  
 
8. In order to facilitate the work of the Arbitrator, each party is invited to make its submissions 
in accordance with the WTO Editorial Guide for Submissions (electronic copy provided).  
 
Questions  
 
9. The Arbitrator may pose questions to the parties at any time, including:  
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  a. Prior to the meeting, the Arbitrator may send written questions, or a list of topics it 
intends to pursue in questioning orally in the course of the meeting. The Arbitrator may ask 
different or additional questions at the meeting.  
 
b. The Arbitrator may put q uestions to the parties orally in the course of the meeting, 
and in writing following the meeting, as provided for in paragraph 16 below.  
 
Substantive meeting  
 
10. The arbitration hearing will be conducted in closed session, unless the Arbitrator decides 
other wise after consultations with the parties.  
 
11. The parties shall be present at the meetings only when invited by the Arbitrator to appear 
before it.  
 
12. (1) Each party has the right to determine the composition of its own delegation when 
meeting with the Arbitrator.  
 
(2) Each party shall have the responsibility for all members of its delegation and shall  ensure 
that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of  the proceeding and the 
submissions of the parties.  
 
13. Each party shall provide to the Arbitrator the list of members of its delegation no later  than 
5.00 p.m. (Geneva time) three working days preceding the first day of each meeting with the 
Arbitrator.  
 
14. A request for interpretation by any party should be made to the Arbitrator as early as 
possible, preferably at the organizational stage, to allow sufficient time to ensure availability of 
interpreters.  
 
15. There shall be one substantive meeting with the parties.  
 
16. The substantive meeting of the Arbitrator with the parties shall be conducted as follows:  
 
a. The Arbitrator shall invite the United States to make an opening statement to present 
its case first. Subsequently, the Arbitrator shall invite Korea to present its point of view. 
Before each party takes the floor, it shall provide the Arbitrator with a pr ovisional written 
version of its statement. In the event that interpretation is needed, each party shall provide 
additional copies for the interpreters.  
 
b. Each party should avoid lengthy repetition of the arguments in its submissions. Each 
party is invited to limit the length of its opening statement to 75 minutes. If either party 
considers that it requires more time for its opening statement, it should inform the  Arbitrator 
and the other party at least 10 days prior to the meeting, and it should also provid e, at the 
same time, an estimate of the length of its statement. The Arbitrator will accord equal time 
to both parties for their statements.  
 
c. After the conclusion of the opening statements, the Arbitrator shall give each party  
the opportunity to make comme nts or ask the other party questions.  
 
d. The Arbitrator may subsequently pose questions to the parties.  
 
e. Once the questioning has concluded, the Arbitrator shall afford each party an 
opportunity to present a brief closing statement, with Korea presenting its  statement first. 
Before each party takes the floor, it shall provide the Arbitrator and other participants at 
the meeting with a provisional written version of its closing statement, if available.  
 
f. Following the meeting:  
 
i. Each party shall submit a final w ritten version of its opening statement no later  than 
5.00 p.m. (Geneva time) on the first working day following the meeting. At the same WT/DS464/ARB/Add.1  
 
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  time, each party should also submit a final written version of any prepared closing 
statement that it delivered at the  meeting.  
 
ii. Each party shall send in writing, within the timeframe established by the Arbitrator 
prior to the end of the meeting, any questions to the other party to which it wishes  
to receive a response in writing.  
 
iii. The Arbitrator shall send in writing, within the timeframe established by the 
Arbitrator prior to the end of the meeting, any questions to the parties to which it 
wishes to receive a response in writing.  
 
iv. Each party shall respond in writing to the questions from the Arbitrator, and to any 
questions posed by the other party, within the time -frame established by the 
Arbitrator prior to the end of the meeting.  
 
Descriptive part and executive summaries  
 
17. The description of the arguments of the parties in the Decision of the Arbitrator shall consist 
of executive summaries provided by the parties, which shall be annexed as addenda to the 
Decision. These executive summaries shall not in any way serve as a substitute for the  
submissions of the parties in the Arbitrator's examination of the case.  
 
18. Each pa rty shall submit one integrated executive summary, which shall summarize the facts 
and arguments as presented to the Arbitrator in the party's submissions and statements, and 
where possible, its responses to questions and comments thereon following the sub stantive 
meeting.  
 
19. Each integrated executive summary shall be limited to 15 pages.  
 
20. The Arbitrator may request the parties to provide executive summaries of facts and 
arguments presented in any other submissions to the Arbitrator for which a deadline may not be 
specified in the timetable.  
 
Service of documents  
 
21. The following procedures regarding service of documents apply to all documents submitted 
by parties in the course of the proceeding:  
 
a. Each party sh all submit all documents to the  Arbitrator by submi tting them with the  DS 
Registry (office No. 2047).  
 
b. Each party shall submit 2 paper copies of its submissions and 2 paper copies of its 
Exhibits to the Arbitrator by 5.00 p.m. (Geneva time) on the due date esta blished by 
the Arbitrator.  The DS  Registrar  shall stamp the documents with the date  and time of  
submission. The paper version submitted to the DS Registry shall constitute the official 
version for the purposes of submission deadlines and the record of the dispute.  
 
c. Each party shall also send one e -mail to the DS Registry, at the same time that it 
submits the paper versions, attaching an electronic copy of all documents that it submits 
to the Arbitrator, preferably in Microsoft Word format. All such e -mails to the Arbitrator 
shall be addressed to DSRegistry@wto.org , and copied to the other WTO Secretariat 
staff whose e -mail addresses have been provided to the parties in the course of the 
proceeding. Where it is not possible to attach all the Exhibits to one e -mail, the 
submitting party shall provide the DS Registry with 4 copies of the Exhibits in CD -ROMs 
or DVDs.  
 
d. In addition, each party is invited to submit all documents through the Digital Dispute 
Settlement Registry (DDSR ) within 24 hours following the deadline for the submission 
of the paper versions. If the parties have any questions or technical difficulties relating 
to the DDSR, they are invited to consult the DDSR User Guide (electronic copy provided) 
or contact the D S Registry at DSRegistry@wto.org.  
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  e. Each party shall serve any document submitted to the Arbitrator directly on the other 
party. A party may submit its documents to another party in electronic format only, 
unless  the recipient party has previously requested a paper copy. Each party shall 
confirm, in writing, that copies have been served on the parties, as appropriate, at the 
time it provides each document to the Arbitrator.  
 
f. Each party shall submit its documents w ith the DS Registry and serve copies on the  
other party by 5.00 p.m. (Geneva time) on the due dates established by the Arbitrator.  
 
g. All communications from the Arbitrator to the parties will be via e -mail. 
 
Correction of clerical errors in submissions  
 
22.  The Arbitrator may grant leave to a party to correct clerical errors in any of its  submissions 
(including paragraph numbering and typographical mistakes). Any such  request should identify the 
nature of the errors to be corrected, and should be made promp tly following  the filing of the 
submission in question.  
 
 
 
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  ANNEX A -2 
ADDITIONAL WORKING P ROCEDURES OF THE ARBITRATOR  CONCERNING  
BUSINESS CONFIDENTIA L INFORMATION  
 
Adopted on 23  February  2018 
 
 
1. These procedures apply to any business confidential information (BCI) that a party wishes to 
submit to the Arbitrator, including BCI  that was previously treated by the U.S. Department of 
Commerce as confidential or proprietary information protected by Administrative Protective Order in 
the cour se of the anti -dumping and countervailing duty proceedings at issue in this dispute , entitled 
Large Residential Washers from the Republic of Korea (A -580-868 and C -580-869). However, these 
procedures do not apply to any information that is available in the  public domain. In addition, these 
procedures do not apply to any BCI if the entity which  provided the information in the course of the 
aforementioned proceedings  agrees in writing to make the information publicly available.  
2. If a party considers it necessa ry to submit to the Arbitrator  BCI as defined above from an entity 
that submitted that information in one or both of the proceedings  at issue, the party shall , at the 
earliest possible date, obtain  an authorizing letter from the entity  and provide such aut horizing letter 
to the Arbitrator, with a copy to the other party . The authorizing  letter from the entity shall authorize 
both Korea and the United States to submit in this arbitration , in accordance with these procedures, 
any confidential information subm itted by that entity in the course of those proceedings . 
3. No person may have access to BCI except a member of the Secretariat or the Arbitrator , an 
employee of a party, and an outside advisor for the purposes of this arbitration  to a party. However, 
an outs ide advisor is not permitted access to BCI if that advisor is an officer or employee of an 
enterprise engaged in the production, export, or import of the products that were the subject of the 
proceedings  at issue in this dispute.  
4. Each party shall, at the r equest of the other party, facilitate the communication to an entity in 
its territory of any request to provide an authorization letter referred to in paragraph 2. Each party 
shall encourage any entity in its territory that is requested to grant the author ization referred to in 
paragraph  2 to grant such authorization. If an entity refuses to grant the authorization referred to 
in paragraph 2, a party may bring the situation to the attention of the Arbitrator . 
 
5. A party having access to BCI shall treat it as confidential, i.e., shall not disclose that information 
other than to those persons authorized to receive it pursuant to these procedures. Each party shall 
have responsibility in this regard for its employees as well as any outside advisors used for the 
purposes of this arbitration . BCI obtained under these procedures may be used only for the purpose 
of providing information and argumentation in this arbitration  and for no other purpose.  
6. The party submitting BCI shall mark the cover and/or first page of the  document containing 
BCI, and each page of the document, to indicate the presence of such information. The specific 
information in question shall be placed between double brackets, as follows: [[xx,xxx.xx]]. The first 
page or cover of the document shall st ate "Contains business confidential information on pages 
xxxxxx ", and each page of the document shall contain the notice "Contains Business Confidential 
Information " at the top of the page.  
7. Where a party submits a document containing BCI to the Arbitrator , the other party referring 
to that BCI in its documents, including written submissions and oral statements, shall clearly identify 
all such information in those documents. All such documents shall be marked as described in 
paragraph 5. In the case of an or al statement containing BCI, the party making such a statement 
shall inform the Arbitrator  before making it that the statement will contain BCI, and the Arbitrator  
will ensure that only persons authorized to have access to BCI pursuant to these procedures are in 
the room to hear that statement.  
8. The Arbitrator  will not disclose BCI, in its decision  or in any other way, to persons not authorized 
under these procedures to have access to BCI. The Arbitrator  may, however, make statements of WT/DS464/ARB/Add.1  
 
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  conclusion drawn from such information. Before the Arbitrator  circulates its final decision  to the 
Members, the Arbitrator  will give each party an opportunity to review the decision  to ensure that it 
does not contain any information that the party has designated as BCI.  
 
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  ANNEX  B 
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Integrated E xecutive Summary of the A rguments of the United States  12 
Annex  B-2 Integrated Executive Summary of the A rguments of Korea  23 
 
 WT/DS464/ARB/Add.1  
 
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  ANNEX  B-1 
INTEGRATED EXECUTIVE SUMMARY OF  THE ARGUMENTS OF TH E UNITED STATES  
I. INTRODUCTION  
1. Contrary to the requirements of the Understanding on Rules and Procedures Governing the  
Settlement of Disputes  ("DSU"), the level of suspension of concessions that Korea has requested is 
not equivalent to the level of nullification or impairment.  
2. Ample evidence demonstrates that, if the WTO -inconsistent aspects of the U.S. antidumping 
and co untervailing duty measures on large residential washers ( "LRWs ") from Korea had been 
brought into compliance as of the expiration of the reasonable period of time ( "RPT"), there would 
be no increase in the value of U.S. imports of LRWs from Korea.  This is because Samsung and LG, 
the Korean producers of LRWs, lack both the interest and the capacity to resume production of LRWs 
in Korea for the U.S. market.  Instead, they will continue in the short run to supply LRWs from 
countries other than Korea while worki ng toward their goal of producing virtually all of the LRWs 
they sell in the U.S. market at new production facilities located in the United States.  Samsung and 
LG expect to be in a position to realize that goal by the end of this year.  Accordingly,  the level of 
nullification or impairment resulting from the maintenance of the WTO -inconsistent aspects of the 
U.S. antidumping and countervailing duty measures on LRWs from Korea after the expiration of the 
RPT is zero.   
3. Furthermore, Korea 's Methodology Paper contains errors sufficient by themselves to establish 
that the level of suspension of concessions Korea has requested far exceeds the level of nullification 
or impairment, contrary to the DSU.  For instance, Korea proposes an incorrect counterfactual,  uses 
an economic model that is wholly inappropriate in this situation, and makes numerous errors when 
compiling the data inputs it uses to estimate the level of nullification or impairment.  As a result, 
Korea overestimates the level of nullification or im pairment attributable to the U.S. measures about 
which the Dispute Settlement Body ( "DSB") adopted recommendations in this dispute.  
4. Korea argues that the level of nullification or impairment is $711 million per year as a result 
of the maintenance of the WT O-inconsistent aspects of the U.S. antidumping and countervailing duty 
measures on LRWs from Korea beyond the expiration of the RPT on December 26, 2017.  Korea 
further contends that the Arbitrator should determine that the level of suspension of concession s 
based on this already excessive level of nullification or impairment should be increased each year 
by 5.8 percent.   
5. Korea bases its request on the assertion that the counterfactual used must be the termination 
of the antidumping and countervailing duty m easures on LRWs from Korea following the expiration 
of the RPT.  In fact, the proper counterfactuals to be applied for the purpose of this proceeding are 
reduction – not elimination – of the antidumping duty rate , and, separately, reduction of the 
weighted -average countervailing duty rate from 0.58 percent to zero percent.  
6. Additionally, while in theory a partial equilibrium model can be employed to determine the 
level of nullification or impairment (although not in this proceeding, given that such a model as sumes 
that suppliers will increase their production and, as demonstrated by the evidence before the 
Arbitrator, this is an incorrect assumption here), Korea uses the wrong type of partial equilibrium 
model.  Korea 's economic model assumes that there are onl y two countries in the world, Korea and 
the United States, and further assumes that LRWs are perfectly substitutable.  Each of these 
assumptions is incorrect and contradicted by evidence, further demonstrating that Korea 's request 
is contrary to the DSU.   
7. In a situation where suppliers would increase their production, the appropriate partial 
equilibrium model would be one that correctly assumes that the products are imperfect substitutes, 
such as an Armington -based model, which also would take into account U .S. imports of LRWs from 
countries other than Korea and factor in the correct substitution elasticity for LRWs.  Using such a 
model, the estimated level of nullification or impairment resulting from the maintenance of the WTO -
inconsistent aspects of the U.S . antidumping duty measure on LRWs from Korea after the expiration 
of the RPT would be in the range of $18 million to $25 million per year, and the level of nullification 
or impairment resulting from the maintenance of the WTO -inconsistent aspects of the c ountervailing WT/DS464/ARB/Add.1  
 
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  duty measure on LRWs from Korea after the expiration of the RPT would be no more than $2.32 
million per year.  This once again demonstrates that Korea 's request of $711 million per year is far 
in excess of the equivalent level of nullification  or impairment, and thus contrary to the DSU.  
8. Korea does not propose a particular level of suspension of concessions  resulting from the 
application by the U.S. Department of Commerce ( "Commerce ") of a differential pricing methodology 
and the use of zeroing in antidumping proceedings involving products other than LRWs that are 
initiated after the expiration of the RPT.  Instead , Korea requests authorization to apply the same 
conceptually flawed eco nomic framework and derived formula that it proposes for LRWs, so that 
Korea can determine for itself the level of suspension related to products other than LRWs . Korea 's 
proposed level of suspension is contrary to the DSU.  The formula that Korea proposes is purely 
speculative and not based on sound economic analysis.  The selection of an appropriate economic 
model or formula is based on a number of critical factors, such as the appropriate estimation 
technique to apply (simulation or econometrics), substitu tability of products, and other variables 
that could affect demand and supply conditions.  Korea addresses none of these issues.  Furthermore, 
Korea 's formula suffers from conceptual flaws and data input problems that are just as problematic 
whether the form ula is applied to LRWs or products other than LRWs.  
II. APPROPRIATE DETERMINATION OF THE LEVEL OF NULLIFICATION OR IMPAIRMENT 
FOR THE ANTIDUMPING AND COUNTERVAILING DUTY MEASURES ON LARGE 
RESIDENTIAL WASHERS FROM KOREA   
A. Article 22 of the DSU Requires th at the Proposed Level of Suspension Be 
Equivalent to the Level of Nullification or Impairment  
9. Pursuant to Article 22.4 of the DSU, the DSB will not authorize the suspension of concessions 
and related obligations unless "the level " of suspension is "equivalent " to the level of nullification or 
impairment.  Article 22.7 of the DSU further provides that where a matter is referred to arbitration, 
the arbitrator "shall determine whether the level of . . . suspension is equivalent to the level of 
nullification or impairment. " The starting point in the analysis of a suspension request is to determine 
the extent to which any WTO -inconsistent measure maintained following  the expiration of the RPT 
nullifies or impairs benefit s accruing to the complaining party under the relevant covered 
agreement(s).  
10. Thus, an analysis of the level of nullification or impairment must focus on the "benefit " 
accruing to the complaining Member under a covered agreement that is allegedly nullified  or 
impaired as a result of the breach found by the DSB.  Arbitrators in past proceedings have uniformly 
based their determinations on hard evidence and have refused to "accept claims that are 'too 
remote ', 'too speculative ', or 'not meaningfully quantified. '" As the arbitrators in EC – Hormones 
(US) (Article 22.6 – EC) and EC – Hormones (Canada) (Article 22.6 – EC) found , "we need to guard 
against claims of lost opportunities where the causal link with the inconsistent [measure] is less than 
appar ent, i.e., where exports are allegedly foregone not because of the [inconsistent measure] but 
due to other circumstances. "  
11. Analysis using a counterfactual is appropriate to determine the level of nullification or 
impairment caused by the WTO -inconsistent U.S. measures.  That is, the appropriate analysis 
requires consistent consideration of the present trading relationship between Korea and the United 
States (as represented by the 2017 baseline), as well as what that relationship would be if the U.S. 
measure s had been brought into compliance with the DSB recommendations following the expiration 
of the RPT (the counterfactual).  The trade differential will be the level of nullification or impairment 
attributable to the U.S. measures.  WT/DS464/ARB/Add.1  
 
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  B. The Appropriate Counterf actual in this Proceeding Is Modification, Not 
Termination, of the WTO -Inconsistent U.S. Antidumping and Countervailing 
Duty Measures on LRWs from Korea  
12. At its most basic level, the determination of the trade effects of the disputed measures requires 
a comparison between the current value of LRWs exported from Korea to the United States and the 
value of exports from Korea that could be expected if the United States had complied wi th the DSB 's 
recommendations following the expiration of the RPT.  
13. Termination of the antidumping and countervailing duty measures on LRWs from Korea is not 
the only option available for compliance with the DSB 's recommendations, and a counterfactual that 
assumes termination of the measures is not plausible or reasonable.  The DSB did not recommend 
termination of the measures.  Importantly, Daewoo, a Korean producer of LRWs, was assigned a 
margin of dumping and a countervailing duty rate based on the applicati on of facts available in the 
original antidumping and countervailing duty investigations of LRWs from Korea.  The margin of 
dumping and countervailing duty rate assigned to Daewoo are not the subject of any DSB 
recommendations.  For that reason, the U.S. ant idumping and countervailing duty measures on LRWs 
from Korea would not, in any event, simply be terminated to bring them into compliance with the 
DSB's recommendations in this dispute.   
14. Additionally, evidence placed before the original Panel in this disput e demonstrates that the 
margin of dumping determined for LG in the original antidumping investigation would have been 
greater than de minimis , if it had been determined using the average -to-average comparison 
methodology (without zeroing).  That margin of dumping, if applied to LG following a redetermination 
of the results of the original investigation, would be in compliance with the DSB 's recommendations 
and U.S. WTO obligations.  Accordingly, rather than total elimination of the antidumping  duty 
determined for LG in the original investigation, a more appropriate counterfactual in this proceeding 
is reduction of that antidumping duty rate.   
15. It is appropriate in this proceeding to express separately the level of nullification or impairment 
resulting from the maintenance of the WTO -inconsistent aspects of the U.S. antidumping and 
countervailing duty measures on LRWs from Korea after the expiration of the RPT.  The antidumping 
measure and the countervailing duty measure, while challenged by Korea in the same dispute, are 
not related.  For the purposes of the analysis of a counterfactual in this submission, the United States 
uses a very conservative counterfactual wherein the weighted -average countervailing duty rate is 
reduced from 0.58 percent to z ero percent following the expiration of the RPT on December 26, 
2017.  This is consistent with the counterfactual approach described by Korea in relation to the WTO -
inconsistent aspects of the U.S. countervailing duty measure on LRWs from Korea.   
C. Modifyi ng or Terminating the WTO -Inconsistent U.S. Antidumping and 
Countervailing Duty Measures on LRWs from Korea following the Expiration of 
the RPT Would Not Result in any Increase in the Value of Exports of LRWs from 
Korea to the United States; The Level of N ullification or Impairment is Zero  
1. The DSU Permits the Arbitrator To Find that a Measure Causes No 
Nullification or Impairment  
16. Article 3.8 of the DSU plainly provides for the possibility that the Member concerned may 
rebut the presumption of the existen ce of nullification or impairment by putting forth evidence that 
a breach of WTO obligations does not have an adverse impact on the complaining Member.  
Additionally, nothing in Article 3.8 of the DSU, which is one of the "General Provisions " of the DSU, 
limits the opportunity of the Member concerned to make such a rebuttal only during the original 
panel phase of a dispute settlement proceeding.  The more logical time for a Member concerned to 
make such a rebuttal would be in the context of an arbitration und er Article 22.6 of the DSU, wherein 
the question of the level of nullification or impairment – and indeed, the question of the existence 
of any nullification or impairment at all following the expiration of the RPT – is placed squarely before 
the decision maker that is tasked by the DSU with evaluating that question and the question of the 
level of suspension – i.e., the DSU Article 22.6 arbitrator.  If no trade is foregone due to a WTO -
inconsistent measure 's continuing existence beyond the expiration of the  RPT, i.e., if the estimate 
of the trade foregone is zero, then the correct conclusion is that the level of nullification or 
impairment is zero.  WT/DS464/ARB/Add.1  
 
- 15 - 
 
  17. Furthermore, the factual circumstances related to a WTO -inconsistent measure 's impact on 
the complaining Member  might change over time, including after a panel report is circulated and 
before a suspension request is made under Article 22.2 of the DSU.  In an arbitration under Article 
22.6 of the DSU, it is incumbent upon the arbitrator to establish the level of null ification or 
impairment following the end of the RPT, so as to ensure that the level of suspension authorized by 
the DSB does not exceed the level of nullification or impairment.   
18. Accordingly, it is necessary for the Arbitrator to determine in this proceed ing the trade or 
economic effects on Korea of the maintenance of the WTO -inconsistent aspects of the U.S. 
antidumping and countervailing duty measures on LRWs from Korea after the expiration of the RPT 
on December 26, 2017.  As Korea suggests in its Methodo logy Paper, the relevant question in this 
proceeding is "what the value of Korea 's exports of LRWs to the United States would have been had 
the United States complied with all the DSB  recommendations and rulings at the end of the RPT, 
which was 26 December 2017 ."  
2. Ample Evidence Supports Finding that there Is No Nullification or 
Impairment in this Situation  
19. Ample evidence demonstrates that, if the WTO -inconsistent aspects of the U. S. antidumping 
and countervailing duty measures on LRWs  from Korea had been brought into compliance as of the 
expiration of the RPT, there would be no increase in the value of U.S. imports of LRWs from Korea.  
This is because Samsung and LG, the Korean prod ucers of LRWs, lack both the interest and the 
capacity to resume production of LRWs in Korea for the U.S. market.  Instead, they will continue in 
the short run to supply LRWs from countries other than Korea while working toward their goal of 
producing virtu ally all of the LRWs they sell in the U.S. market at new production facilities located 
in the United States.  Samsung and LG expect to be in a position to realize that goal by the end of 
this year.   
20. Extensive evidence, provided by Samsung and LG, establishe s definitively that the value of 
exports of LRWs from Korea to the United States would not increase by the amount of $711 million 
per year (and increasing at a rate of 5.8 percent per year), as Korea claims, if the WTO -inconsistent 
aspects of the U.S. anti dumping and countervailing duty measures were brought into compliance 
following the expiration of the RPT.  Rather, it is clear from this evidence that there would not be any 
increase at all in the level of exports of LRWs from Korea to the United States, b ecause Samsung 
and LG lack both the interest and the ability to resume production of LRWs in Korea for the U.S. 
market.   
21. Accordingly, the level of nullification or impairment resulting from the maintenance of the 
WTO-inconsistent aspects of the U.S. antidu mping and countervailing duty measures on LRWs from 
Korea beyond the expiration of the RPT is zero.  
D. The Errors in Korea's Economic Analysis Further Establish that the Level of 
Suspension Korea Requests Is Not Equivalent to the Level of Nullification or  
Impairment  
22. An examination of the economic model Korea proposes to use to determine the level of 
nullification or impairment provides further proof that Korea 's requested level of suspension is not 
equivalent to the level of nullification or impairment.   
23. To use a more appropriate economic model, one would need to take the imports of the relevant 
LRWs from Korea that are subject to the U.S. antidumping and countervailing duty measures for 
which the DSB has made recommendations, and compare those imports on a  prospective basis to 
the imports that would occur had the WTO -inconsistent aspects of those antidumping and 
countervailing duty measures been brought into compliance with U.S. WTO obligations following the 
expiration of the RPT.  To make that comparison, o ne would look at the actual value of imports of 
LRWs into the United States from Korea during the most recent period, full year 2017 (the actual 
situation), and then estimate the value of imports of LRWs that would exist during the same period 
if the WTO -inconsistent aspects of the U.S. antidumping and countervailing duty measures had been 
brought into conformity and all other factors were held constant (the counterfactual).  WT/DS464/ARB/Add.1  
 
- 16 - 
 
  24. Thus, in this proceeding, the correct "counterfactual " is the estimated value of relevant U.S. 
imports of LRWs from Korea that would exist if the antidumping and countervailing duty measures 
had been brought into compliance with U.S. WTO obligations, holding all other factors constant, and 
the "level of nulli fication or impairment " to Korea is the difference between the value of Korea 's 
exports to the United States as reflected in the trade data, and the estimated export value under 
the counterfactual scenario.  
25. Korea appears to agree with this approach general ly. Korea proposes to estimate the level of 
nullification or impairment using a "static partial equilibrium model. " However, Korea has used an 
inappropriate type of partial equilibrium model in its Methodology Paper.   
1. The Correct Partial Equilibrium Model for Determining the Level of 
Nullification or Impairment Would Be an Armington -Based Partial 
Equilibrium Model (an Imperfect Substitutes Model)  
26. The partial equilibrium model Korea uses is not appropriate in this situat ion. Indeed, Korea 's 
proposed calculation of the level of nullification or impairment cannot seriously be called a partial 
equilibrium model because it is not based on sound economic theory or analysis . First, Korea is using 
a hypothetical value for the 20 17 value of LRWs imports of Korea that is derived using Korea 's 2011 
import share, rather than truly modeling the effect of a tariff reduction on the actual 2017 value of 
LRWs imports from Korea.  Second, Korea uses as a "proxy " total import value instead of total 
consumption and total domestic production.  In doing so, Korea simply misapplies partial equilibrium 
analysis.  These flaws rest on top of Korea 's incorrect assumptions that the United States and Korea 
are the only two co untries that produce and sell LRWs in the U.S. market, and that there is perfect 
substitution between LRWs imported from Korea and U.S. LRWs and, implicitly, no substitution at 
all between imports from Korea and non -subject imports.  These assumptions are c ontrary to the 
evidence before the Arbitrator.  Korea 's proposed approach is flawed and has no foundation in 
economic theory or logic.  
27. Under correct economic theory, the effect of the reduction or removal of the WTO -inconsistent 
U.S. antidumping and counter vailing duties applied to LRWs from Korea depends on the 
substitutability between (1) the domestic like product (LRWs made in the United States), (2) subject 
imports (LRWs imported from Korea that are subject to the antidumping and countervailing duties), 
and (3) non -subject imports (LRWs imported from countries other than Korea).  To properly measure 
the effect of the reduction or removal of the antidumping and countervailing duties on LRWs from 
Korea, one would need to use an economic model that accounts f or the substitution effects on all 
three of these varieties of the product.   
28. Though Korea does not use such an economic model itself, Korea has placed before the 
Arbitrator an example of a partial equilibrium model that would be appropriate to use.  That ex ample 
can be found in the 2017 paper by Hallren and Riker, which Korea submitted as Exhibit KOR -15. The 
Hallren and Riker paper provides a convenient framework to undertake a partial equilibrium analysis 
of the trade effects of removing import tariffs wher e the imported and domestic goods are imperfect 
substitutes and where the tariff is applied to imports from one country but not applied to imports 
from other countries.  Indeed, the Hallren and Riker paper provides as an "illustrative application " an 
exampl e of modeling the effects of "a reduction in the import ad -valorem tariff applied to subject 
imports from 5 to 0 percent, " which corresponds to the reduction of duties for purposes of this 
discussion.  The partial equilibrium model in the Hallren and Riker paper is based on the Armington 
approach to trade, where products are differentiated by source countries and consumers view 
products from different countries as imperfect substitutes.  As explained in A Practical Guide to Trade 
Policy Analysis , also provided to the Arbitrator by Korea, "most simulation models use the 'Armington 
assumption ' whereby varieties of goods are differentiated by country of origin (Armington, 1969). "  
29. The model detailed in the Hallren and Riker paper permits the estimat ion of the "magnitudes 
of the changes in the prices of the three varieties of products, the industry 's overall price index, and 
the quantities of the products as a result of a reduction in the ad valorem tariff on subject imports…. " 
The goal of the analysi s is to quantify these changes given information on the duties and the initial 
values of trade and market shares in the LRWs industry.  WT/DS464/ARB/Add.1  
 
- 17 - 
 
  2. Correct Data Inputs that Would Be Used in Applying an Armington -Based 
Partial Equilibrium Model  
30. The United States pro vided to the Arbitrator correct data on the value of U.S. imports of LRWs 
from Korea for the period 2011 -2017.  Like Korea, the United States relies  on data queried using the 
USITC 's online trade statistics and tariff data program, DataWeb.  Korea, however, appears to have 
queried data using 6 -digit HTS subheadings.  That is an error.  In querying data using 6 -digit HTS 
subheadings, Korea has overstated the value of U.S. imports of LRWs by including products outside 
the scope of the U.S. antidumping and counter vailing duty measures on LRWs from Korea.  The 
United States has queried import data for LRWs using the appropriate 10 -digit HTS subheadings.   
31. Korea has used data for Korea 's share of U.S. imports  as a proxy for market share  data in its 
calculation of the level of nullification or impairment, and Korea also uses 2011 data for Korea 's 
import share (with no adjustment for other factors) rather than 2017 import share data.  These are 
serious errors that contribute to Korea grossl y overstating the level of nullification or impairment.  If 
Korea 's import share is included as part of the calculation of the level of nullification or impairment 
at all, then Korea 's 2017 import share should be used.  Using 2011 data would be inconsistent with 
the correct counterfactual approach on which the parties agree.   
32. In reality, Korea effectively more than double counts the level of nullification or impairment, 
because Korea starts with the share of imports of LRWs from Korea in 2011 multiplied by 20 17 total 
import value, i.e., an assumption of what the value would be unaffected  by the U.S. measures.  
Korea then applies its incorrect economic model to that figure to estimate how much that figure 
would increase if the U.S. measures were removed.  But aga in, the 2011 value of imports is already 
not affected by the U.S. measures . So, in effect, Korea is modeling a tariff reduction on an import 
value figure that is not subject to the tariffs.  
33. The correct data inputs to be used in the calculation of the level  of nullification or impairment 
would be the 2017 market shares of domestic producers, subject imports, and non -subject imports.  
It is possible to derive the necessary market share information using data that are publicly available.  
Specifically, one can u se data on U.S. imports of LRWs from Korea and from the rest of the world in 
combination with data on the total value of the U.S. washing machines market compiled by the 
Association of Home Appliance Manufacturers ( "AHAM "), appropriately adjusted to reflec t the value 
of the U.S. LRWs market.  
34. Following Korea 's approach concerning the source of elasticities to use in the economic model, 
the United States has used elasticities of supply  published by the USITC.  To be consistent with 
Korea 's representations about its intention to use "recent ", "confirmed " information, the elasticities 
of supply used should be 6.  
35. The United States also follows Korea 's approach to use the median of the range of U.S. demand 
elasticity reported by the USITC.  The USITC estimated the range to be -0.3 to -0.8. Accordingly, the 
-0.55 would be used for the price elasticity of total demand in the United States, which is the same 
value used by Korea.  
36. Still following Korea 's approach concerning the source of elasticitie s to use in the economic 
model, the United States has used the elasticity of substitution within the industry published by the 
USITC, again in the report issued at the conclusion of the 2017 global safeguard investigation of 
LRWs.  Using the median of this range, the substitution elasticity in a calculation using an Armington -
based partial equilibrium model would be 4.  
37. The elasticity of substitution that the United States proposes the Arbitrator use, like the 
elasticities of supply and demand that Korea prop oses be used, are estimates made by the USITC 
after analyzing responses from purchasers, producers, and importers to questionnaires concerning 
the LRWs market, as well as arguments made by interested parties.  These estimated elasticities 
were published ver y recently and they are for the specific product at issue, LRWs.  That makes them 
particularly well suited for use in a model to estimate the level of nullification or impairment in this 
dispute.  
38. The United States uses Korea 's calculation of the weighted -average antidumping and 
countervailing duty rates to be used to model the reduction of the antidumping duties and the WT/DS464/ARB/Add.1  
 
- 18 - 
 
  termination of the countervailing duties that are subject to DSB recommendations following the 
expiration of the RPT, i.e. 11.86 percent for  the antidumping duty rate and 0.58 percent for the 
countervailing duty rate.  The appropriate counterfactuals in this proceeding are reduction of the 
weighted -average antidumping duty rate from 11.86 percent to [[***]] and reduction of the 
weighted -average  countervailing duty rate from 0.58 percent to zero percent.  
39. Korea proposes that the level of nullification or impairment resulting from the maintenance of 
the WTO-inconsistent  aspects of the U.S. antidumping and countervailing duty measures on LRWs 
from K orea after the expiration of the RPT should be increased each year using a growth rate factor 
that assumes an annual rate of growth of the U.S. washing machines market of 5.8 percent.  Contrary 
to Korea 's argument, a proper determination of the level of nul lification or impairment resulting from 
the maintenance of WTO -inconsistent aspects of the U.S. antidumping and countervailing duty 
measures on LRWs from Korea after the expiration of the RPT should not include any growth rate 
factor at all.   
40. Ample evidenc e in the form of public statements made by Samsung and LG demonstrates that 
the Korean producers of LRWs lack both the interest and the ability to resume production of LRWs 
in Korea for the U.S. market.  Thus, if the U.S. measures on LRWs  were brought into compliance with 
U.S. WTO obligations, the value of U.S. imports of LRWs from Korea would not increase at all, and 
it certainly would not increase each year in parallel with the projected growth of the market for 
washing machines in the U nited States, as Korea proposes.  Given that, as of the end of 2018, "more 
than 95 percent of LG and Samsung LRWs will be supplied from the LG and Samsung U.S. LRW 
production factories, " it is expected that the value of U.S. imports of LRWs from Korea will decline, 
not grow.  
41. The numerous methodological and data problems with Korea 's estimation of the level of 
nullification or impairment discussed above confirm that the level of suspension requested by Korea 
is far in excess of the level of nullification or i mpairment.  In summary, if Korea 's economic model 
were applied at all, which it should not be, the following errors in Korea 's estimation of the level of 
nullification or impairment would need to be corrected:  
DO NOT USE  USE INSTEAD  
2011 data for Korea 's imports share: 42.9%  2017 data for Korea 's imports share: 15.5%  
Elasticity of Supply from January 2017: 7  Elasticity of Supply from December 2017: 6 
Projected 2017 Import Value Based on 6 -Digit 
HTS Subheading: $1,764,569,000  Actual 2017 Import Value Base d on 10 -Digit 
HTS Subheadings: $1,573 million  
Growth Rate Factor Based on Average Growth 
of the U.S. Washing Machines Market in Prior 
Years: 5.8%  No Growth Rate Factor  
 
42. When the above errors in Korea 's calculation are corrected, the annual level of nullification or 
impairment, using Korea 's methodologically flawed approach , declines from $711 million per year to 
$198.7 million per year.  That figure would be even lower if Korea 's approach were further c orrected 
to reflect that the WTO -inconsistent weighted -average antidumping duty rate should be reduced but 
not eliminated.   
3. The Level of Nullification or Impairment that Would Result from the 
Application of an Appropriate Armington -Based Partial Equilibrium Model  
43. Simultaneously solving the Armington system of equations using the given data inputs for 
each of the three estimates of the total value of the U.S. LRWs market, i.e., using 60 percent of the 
total market value reported by AHAM, using 70 p ercent of the total market value reported by AHAM, 
and using 80 percent of the total market value reported by AHAM, yields the following calculations 
of the level of nullification or impairment, but with respect to the antidumping measure and the 
counterva iling duty measure.   
44. The level of nullification or impairment resulting from the maintenance of the WTO-
inconsistent  aspects of the U.S. antidumping measure on LRWs from Korea after the expiration of WT/DS464/ARB/Add.1  
 
- 19 - 
 
  the RPT would range between $18 million and $25 million annually, depending on assumptions made 
about the size of the LRWs market.   
45. The level of nullification or impairment resulting from the maintenance of the WTO-
inconsistent  aspects of the U.S. countervailing duty measure on LRWs from Korea after the 
expirat ion of the RPT would be between $2.28 million and $2.39 million annually, depending on 
assumptions made about the size of the LRWs market.   
46. The United States considers that the most reasonable estimate of the size of the U.S. LRWs 
market, which would ensur e that the level of nullification is not overstated by the economic model, 
is 70 percent of the total value of the U.S. washing machines market as reported by AHAM.  
Accordingly, for purposes of this discussion, the level of nullification or impairment resu lting from 
the maintenance of the WTO-inconsistent  aspects of the U.S. antidumping duty measure on LRWs 
from Korea after the expiration of the RPT would be no more than $18 million to $25 million per 
year, and the level of nullification or impairment resul ting from the maintenance of the WTO -
inconsistent aspects of the countervailing duty measure on LRWs from Korea after the expiration of 
the RPT would be no more than $2.32 million per year.  
III. KOREA'S REQUEST TO SUSPEND CONCESSIONS FOR PRODUCTS OTHER THA N LRWS 
ON THE BASIS OF A FORMULA IS CONCEPTUALLY FLAWED AND CONTRARY TO THE 
DSU 
47. Korea also requests to suspend concessions with respect to products other than LRWs.  Rather 
than proposing a particular level of suspension, however, Korea requests authorizati on to apply a 
formula.  Korea explains that the same "formula used for calculating the level of nullification and 
impairment [for] LRW imports will also be used to estimate the level of nullification and impairment " 
resulting from Commerce 's application of a differential pricing methodology and its use of zeroing in 
antidumping proceedings involving Korean imports other than LRWs that are initiated after the 
expiration of the RPT.   
48. Korea 's proposed suspension is contrary to the DSU.  The formula that Korea proposes is purely 
speculative and not based on sound economic analysis.  The selection of an appropriate economic 
model or formula is based on a number of critical factors, such as the appropriate estimation 
technique to apply (simulation or econometrics),  substitutability of products, and other variables 
that could affect market demand and supply conditions.  The use of a single formula for a number of 
different products is not feasible without first examining the different industries that produce those 
products, and the different markets in which those products are traded, to determine whether it 
would be appropriate to use the same economic model or formula to analyze the different products.  
Korea has not even attempted to establish the basis for determini ng that the same formula – 
premised on the same economic assumptions, which are flawed in the case of LRWs – could be used 
to analyze all of the non -LRW products at issue in this dispute.  Furthermore, t he formula that Korea 
proposes to use suffers from the  same conceptual flaws and data input problems, whether it is 
applied to LRWs or imports other than LRWs.  
A. The Formula Korea Proposes To Use To Determine the Level of Nullification or 
Impairment for Products Other than LRWs Suffers from the Same Concept ual 
Flaws and Data Input Problems as the Formula Korea Proposes To Use for the 
Determination for LRWs  
49. The "static partial equilibrium model " that Korea proposes to use is inappropriate for use in 
determining the level of nullification or impairment result ing from the maintenance of U.S. 
antidumping and countervailing duty measures on LRWs from Korea after the expiration of the RPT.  
Korea 's economic model rests on a number of incorrect assumptions, which renders it also unsuitable 
for determining the level of nullification or impairment for Korean imports other than LRWs.  
50. First, the particular type of partial equilibrium model that Korea proposes to use "assume[s] 
that the world is composed of … two countries only " and that "export supply and import demand a re 
entirely determined by the domestic conditions in the respondent 's and the complainant 's markets. " 
That is an incorrect assumption to make for all the products identified in Appendix B of Korea 's 
Methodology Paper.  Korea and the United States are not th e only two countries that produce and WT/DS464/ARB/Add.1  
 
- 20 - 
 
  sell in the U.S. market the products other than LRWs that are identified in Appendix B of Korea 's 
Methodology Paper.   
51. Second, the economic model on which Korea 's formula is based assumes that there is perfect 
substitution between the Korean products and U.S. products and, implicitly, no substitution at all 
between imports from Korea and non -subject imports.  However, all of the USITC reports identified 
in Appendix B of Korea 's Methodology Paper recommend substit ution elasticities for each of the 
products examined.  Korea 's assumption of perfect substitution is incorrect.   
52. For these reasons, just as Korea 's static partial equilibrium model is inappropriate for use in 
determining the level of nullification or impairment with respect to LRWs, it is equally inappropriate 
for use in determining the level of nullification or impairment with respect to all the Ko rean imports 
other than LRWs that are identified in Appendix B of Korea 's Methodology Paper.  
53. Nor would it be appropriate to determine the level of nullification or impairment using the 
Armington -based partial equilibrium model that is described above.  The data input issues that the 
United States has discussed would be compounded in the application of such an economic model to 
so many different products.  For example, just as there has been difficulty identifying appropriate 
market share data for the specific  LRWs market at issue in this dispute (as opposed to the broader 
washing machines market), likely there would be similar challenges collecting up -to-date market 
share data specific to the precise products other than LRWs that are identified in Appendix B o f 
Korea 's Methodology Paper.  Nothing in Article 22 of the DSU would permit Korea to make 
determinations for itself about the proper market share data and other data inputs to be used.  
54. Similarly, when calculating the level of nullification or impairment wi th respect to LRWs, Korea 
erred in compiling U.S. import data by using incorrect HTS subheadings in its data query, which 
resulted in Korea misstating of the value of U.S. imports of LRWs.  Korea proposes to gather import 
data for products other than LRWs t he same way.  This suggests the strong likelihood that Korea 
would make the same errors with respect to those other products.  It would be contrary to the DSU 
for Korea to suspend concessions with respect to the United States on the basis of an inappropriate  
formula applied using erroneous data inputs that results in an overstatement of the level of 
nullification or impairment.  
55. Finally, the formula Korea has proposed includes a growth rate factor.  Korea, however, gives 
no evidence to support an assumption of growth, let alone any indication of how that growth rate 
factor would be applied to products other than LRWs or from where data would come to determine 
the growth rate factor.  This is another conceptual and data input failing of Korea 's proposed formula 
approach.  
56. Given these methodological and data problems, Korea 's request for authorization to suspend 
concessions by applying a formula to determine the level of nullification or impairment for products 
other than LRWs should be denied.  
B. Korea's Request for  Authorization to Suspend Concessions on the Basis of a 
Formula in this Dispute Is Contrary to the DSU  
57. Despite Korea 's assurance that data are "publicly available and can be readily employed by 
both Korea and the United States, " the issues discussed in the preceding section demonstrate that 
the formula approach Korea proposes is inappropriate, impractical, and would result in a level of 
suspension of concessions and related obligations that is not equivalent to the level of nulli fication 
or impairment.  That renders Korea 's request for suspension contrary to the DSU, and requires its 
rejection.  
58. As a general matter, neither the DSU nor subsequent arbitrator decisions preclude the 
possibility that the Arbitrator might base the level of suspension of concessions on a formula.  That 
being said, however, a Member 's right to request and be authorized to suspend obligations on the 
basis of a formula is not without any limitation.  The arbitrator in US – Offset Act (Brazil) (Article 
22.6 – US) reasoned that, as long as the approved level of suspension is equivalent to the level of 
nullification or impairment, there is no "reason why these levels may not be adjusted from time to 
time, provided such adjustments are justified and unpredictability  is not increased as a result ." Under 
Article 22.4 of the DSU, the level of suspension of concessions "is" to be equivalent to the level of WT/DS464/ARB/Add.1  
 
- 21 - 
 
  nullification or impairment.  The use of the present tense "is" indicates that the level of suspension 
of concessions  may need to be determined in a manner that allows it to continue to be equivalent 
to the level of nullification or impairment, but, at the same time, the level of suspension of 
concessions must never be permitted to exceed the level of nullification or im pairment.  
59. As explained above, the formula Korea proposes to apply grossly overstates the level of 
nullification or impairment resulting from the maintenance of the WTO-inconsistent aspects of the  
U.S. antidumping and countervailing duty measures on LRWs fr om Korea after the expiration of the 
RPT. The same would be true if that formula were applied for products other than LRWs.  Because 
they would greatly exceed the actual level of nullification or impairment, the adjustments to Korea 's 
level of suspension of  concessions that Korea proposes to make using its formula would not be 
"equivalent " and thus would not be "justified. " 
60. Additionally, given the data input problems discussed in the preceding section – including the 
difficulty of identifying correct market share information for the particular products subject to 
antidumping measures; the errors that Korea has already made querying U.S. import data; and the 
entirely unknowable volume and value of imports in future years – the adjustments to Korea 's level 
of suspension of concessions made using Korea 's proposed formula would increase "unpredictability " 
substantially.  Indeed, the level of suspension under Korea 's proposed approach simply could not be 
predicted at all.  
61. For these reasons, Korea 's request for autho rization to suspend concessions on the basis of a 
formula in this dispute is contrary to the DSU.  
IV. CONCLUSION  
62. For the reasons set forth in the U.S. written submission, oral statements during the 
substantive meeting of the Arbitrator with the parties, and the U.S. written responses to questions 
from the Arbitrator, the United States respectfully requests that the A rbitrator find that the level of 
suspension of concessions requested by Korea is in excess of the appropriate level of nullification or 
impairment, and further find that the level of nullification or impairment is zero. Furthermore, the 
United States respe ctfully requests that the Arbitrator distinguish in its decision the level of any 
nullification or impairment resulting from the maintenance of the WTO -inconsistent aspects of the 
U.S. antidumping duty measure on LRWs from Korea and the level of any nullif ication or impairment 
resulting from the maintenance of the WTO -inconsistent aspects of the U.S. countervailing duty 
measure on LRWs from Korea.  
 
 WT/DS464/ARB/Add.1  
 
- 23 - 
 
 ANNEX B -2 
INTEGRATED EXECUTIVE SUMMARY OF  THE ARGUMENTS OF KO REA 
I. INTRODUCTION  
1. Korea requested authorization to suspend concessions and other related obligations under the 
General Agreement on Tariffs and Trade 1994  ("GATT 1994 ") at the meeting of the Dispute 
Settlement Body ( "DSB") on 22 January 2018, pursuant to Article 22.2 of the Understanding on 
Rules and Procedures Governing the Settlement of Disputes  ("DSU").1 Korea 's request, in the 
amount of USD 711 million, was based on the United States ' failure to implement the DSB 's 
recommendations and rulings as contained in the Panel Report and the Appellate Body Report in the 
dispute  US – Washing Machines  (DS464).    
2. The United States was granted the longest reasonable period of time ( "RPT") to bring its 
measures into compliance contem plated under the DSU absent any particular circumstances.2 
However, the United States has not even started implementing the DSB 's recommendations and 
rulings with respect to the anti -dumping measures of the U.S. Department of Commerce ( "USDOC "), 
and only i nitiated implementation proceedings relating to the countervailing duty measures 
immediately before the expiration of the RPT.  Accordingly, as prescribed by Article 22 of the DSU, 
Korea is entitled to suspend certain concessions and related obligations at the level equivalent to 
the level of the nullification or impairment.   
II. PROCEDURAL BACKGROUND  
3. On 29 August 2013, Korea requested consultations with the United States concerning the 
USDOC 's anti -dumping and countervailing duty investigations on large res idential washers ( "LRWs ") 
from Korea, and the comparison methodologies used by the USDOC in its anti -dumping 
investigations and administrative reviews.3 In its reports, the Panel and the Appellate Body made 
several findings in favor of Korea.4 Pursuant to the DSB 's recommendations and rulings, adopted on 
26 September 2016, the U.S. measures that must be brought into conformity can generally be 
grouped as follows:  
a. The differential pricing methodology ( "DPM"), which was found to be "as such " incon sistent 
with the second sentence of Article 2.4.2 of the Anti -Dumping Agreement;  
b. The USDOC 's use of zeroing when applying the W -T comparison methodology, which was 
found to be "as such " inconsistent with Article 2.4.2 and Article 2.4 of the Anti -Dumping 
Agreement, and inconsistent "as such " with Article 9.3 of the Anti -Dumping Agreement and 
Article VI:2 of the GATT 1994 when used in administrative reviews;  
c. The USDOC 's dumping determination in the Washers  anti-dumping investigation, because 
the USDOC 's calcu lation of dumping margins was inconsistent with Articles 2.4.2 and 2.4 of 
the Anti -Dumping Agreement;  and 
d. The USDOC 's countervailing duty determination in the Washers  countervailing duty 
investigation and remand determination because the USDOC 's determinat ions were 
inconsistent with Articles 2.1(c) and 19.4 of the SCM Agreement and Article VI:3 of the GATT 
1994.   
4. After the parties to the dispute failed to agree on a period of time for the United States to 
implement the DSB 's recommendations and rulings, the Arbitrator determined the RPT to be 15 
months  pursuant to Article 21.3(c) of the DSU ,5 and accordingly,  the United States was required to 
                                                
1 WT/DS464/18.  
2 DSU, Article 21.3(c).  
3 WT/DS464/1.  
4 Panel Report, US – Washing Machines , para. 8.1.b.i and Appellate Body Report, US – Washing 
Machines , paras. 6.14 and 6.16.  
5 Decision of the Arbitrator, US – Washing Machines (Article 21.3(c)) , para. 4.1.  WT/DS464/ARB/Add.1  
 
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 bring its measures into compliance by  26 December 2017.  Despite having over a year to implement 
the DSB 's recommendations and rulings, the United States did not amend even a single measure.  
Instead, on 15 December 2017, just eleven days before the expiration of the RPT, the United States 
Trade Representative ( "USTR ") sent a letter to the U.S. Secretary of Com merce requesting that the 
USDOC issue a revised determination in light of the DSB 's recommendations and rulings.6 Notably, 
while the letter references the Panel and Appellate Body reports, it limits its instructions to the 
countervailing duty determination  only, and makes no mention of the Panel and Appellate Body 's 
recommendations on the anti -dumping investigation or "as such " findings.  In accordance with 
USTR 's instructions, the USDOC subsequently initiated proceedings under Section 129 of the 
Uruguay Rou nd Agreements Act ( "URAA ") only with respect to the countervailing duty proceedings.7 
As of the end of the RPT, the USDOC had done nothing more than issue questionnaires to Samsung 
and the Government of Korea.8 The United States has yet to take a single st ep to implement the 
DSB's recommendations with respect to its anti -dumping determination.   
5. In short, the United States has not modified or terminated the anti -dumping and countervailing 
duty orders that were improperly applied, and has made no modification s to the DPM method or W -
T price comparison method.  As such, the United States failed to comply with the recommendations 
and rulings of the DSB within the RPT.  After the failure to  reach an agreement on compensation, 
Korea had no choice but to request auth orization to suspend concessions and related obligations.9 
On 19 January 2018, pursuant to Article 22.6 of the DSU, the United States objected to the level of 
suspension of concessions and related obligations.10 
III. ARBITRATOR'S ROLE AND BURDEN OF PROOF  
6. An arbitrator 's mandate in Article 22.6 arbitration is to determine whether the level of suspension 
of concessions or other obligation sought by the complaining party is equivalent to the level of 
nullification or impairment.11 The arbitrator 's determination of the level of nullification or impairment 
should not use an approach that is too remote, too speculative, or not meaningfully qualified.12 In 
order for an arbitrator to find that the level of nullification or impairment at a certain point in time 
is "zero," the arbitrator should find that there is "no ‘credible, factual, or verifiable information ' 
available to quantify the level of nullification or impairment. "13 Thus, if there is credible, factual, or 
verifiable information that permits the arbitrator to q uantify a level of nullification and impairment, 
the arbitrator should not find that the level of nullification or impairment is zero.   
7. When counterfactual scenarios have been used to examine the level of suspension of concessions 
or other obligations, pas t arbitrators have determined whether the underlying counterfactual is 
"plausible " or "reasonable. "14 Arbitrators have recognized that it is not an arbitrator 's mandate to 
speculate on what "the most likely, " or the exact way, of implementing DSB ruling wou ld have been 
"as counterfactuals always involve an inherent degree of uncertainty because they represent a 
hypothetical scenario ."15 Past arbitrators have examined the calculation of the level of nullification 
or impairment on the basis of the "plausible " or "reasonable " counterfactual, depending on the 
circumstances of the case.16 If the counterfactual proposed by the requesting party is "plausible " or 
"reasonable, " the arbitrator is obliged to accept this counterfactual.17 Therefore, in determining the 
proper level of suspension of concessions in this case, the Arbitrator should analyze whether the 
                                                
6 Letter from USTR to USDOC (Exhibit KOR -01). 
7 Notice of Initiation (Exhibit KOR -02).  On 4 June 2018, the USDOC  issued its final determination in the 
Section 129 countervailing duty proceedings, which did not result in a change in the outcome of the USDOC 's 
original countervailing duty determination.  
8 Questionnaire to Samsung (Exhibit KOR -03); Questionnaire to GOK  (Exhibit KOR -04). 
9 WT/DS464/18.  
10 WT/DS464/19 . 
11 DSU Article 22.7.  
12 Decision of the Arbitra tor, US – 1916 Act (EC) (Article 22.6 – US), para. 5.57.  
13 Panel Report, EC – Bananas III (Article 21.5 – US), para. 5.250. (emphasis added)  
14 Decision s of the Ar bitrator, US – Gambling (Article 22.6 – US), paras.  3.26-3.27; EC – Bananas III 
(US) (Article 22.6 – EC), para. 7.7; US – Tuna II (Mexico) (Article 22.6 – US), para. 4.5; US – Section 110(5) 
Copyright Act (Article 25) , paras. 4.7 -4.14.   
15 Decision of the Arbitra tor, US – Gambling (Article 22.6 – US), paras.  3.26 and 3.37; see also Decision 
of the Arbitra tor, US – Tuna II (Mexico) (Article 22.6 – US), para. 4.5.  
16 Decision of the Arbitrator, US – Gambling (Article 22.6 – US), paras.  3.27 and 3.30-3.31. 
17 See Korea 's Responses to the Arbitrator 's Advance Questions, para. 10.  WT/DS464/ARB/Add.1  
 
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 counterfactual proposed by Korea is "plausible " or "reasonable, " in light of the circumstances of the 
dispute.  
8. In an arbitration  proceeding under Article 22.6, the burden of proof rests on the party challenging 
the proposed level of suspension of concessions.18 In this proceeding, the United States bears the 
burden of establishing a prima facie  case that Korea 's proposed level of su spension of concessions 
is not equivalent to the level of nullification or impairment caused by the United States ' WTO-
inconsistent measures.  Past arbitrators have confirmed that the objecting party must engage in the 
economic model proposed by the request ing party,19 and must also show that the counterfactual 
proposed by the requesting party does not reflect the level of nullification or impairment.20 Failure 
by the United States to make a prima facie  case would result in a decision in favor of Korea.  
9. Moreover, even if the United States meets its prima facie  obligation, it must then successfully 
rebut the arguments and evidence presented by Korea.  In the event there is equipoise in the 
arguments and evidence, the arbitrator must find against the party b earing the burden of proof – 
the United States.21 
IV. KOREA'S METHODOLOGY  
A. Termination of the WTO -inconsistent Measures is a Plausible and Reasonable 
Counterfactual Scenario under the Circumstances  
10. Article 22.4 of the DSU requires the level of suspension of concessions authorized by the DSB to 
be equivalent to the level of nullification or impairment.  To calculate this amount, arbitrators have 
relied on counterfactual scenarios.22 A counterfactual scenario is used to illustrate the level of exports 
that wou ld have been achieved had the responding party complied with the recommendations and 
rulings of the DSB at the end of the RPT.  Arbitrators have found that an appropriate counterfactual 
is one where the WTO -inconsistent measure is removed as of the expirati on date of the RPT.23  
11. In order to calculate the level of nullification and impairment caused by the United States ' failure 
to comply with the DSB 's recommendations and rulings by the end of the RPT, Korea applied a 
counterfactual scenario in which the WTO -inconsistent anti -dumping and countervailing duties are 
terminated as a result of the U.S. compliance with the recommendations and rulings of the DSB.  
Under this counterfactual scenario, Korea calculated the additional value of Korea 's exports of large 
residential washers ( "LRWs ") to the United States that could have been achieved had the United 
States terminated the anti -dumping and countervailing duty orders on LRWs by 26 December 2017.  
12. Not only is Korea 's counterfactual both plausible and reasonable, but it is also the only 
counterfactual before the Arbitrator that does not require the Arbitrator to make speculations beyond 
its mandate.  An appropriate counterfactual scenario is one in which the WTO -inconsistent measure 
has been brought fully into compl iance with the DSB 's recommendations and rulings.24 There is no 
doubt that termination of the anti -dumping and countervailing duty measures at issue would bring 
the WTO -inconsistent measure into compliance.  Moreover, Korea 's counterfactual scenario is 
consistent with Article 3.7 of the DSU, which states that the preferred outcome under the dispute 
settlement mechanism is to secure withdrawal of the WTO -inconsistent measure, as well as prior 
Article 22.6 proceedings, where arbitrators have found that an appro priate counterfactual is one 
                                                
18 See Decision of the Arbitrator, EC – Hormones (US) (Article 22.6 – EC), para. 9.  
19 Decision of the Arbitrator, US – COOL (Article 22.6 – US), para. 4.14.  
20 Decision of the Arbitrator, US – Gambling (Article 22.6 – US), para. 3.23.  
21 Decision of the Arbitrator, EC – Hormones (US) (Article 22.6 – EC), para. 9.  
22 See e.g., Decisions of the Arbitrator, EC – Bananas III (US) (Article 22.6 – EC), para. 7.1; EC – 
Hormones (Canada) (Article  22.6 – EC), para. 38;  Canada – Aircraft Credits and Guarantees (Article 22.6 – 
Canada) , para. 3.21; US – COOL (Article 22.6 – US), para. 6.32; US – Tuna II (Mexico) (Article 22.6 – US), 
para. 4.10.  
23 See e.g., Decisions of the Arbitrator,  EC – Hormones  (Canada) (Article 22.6 – EC), para. 37; EC – 
Hormones (US) (Article 22.6 – EC), para. 38; US – COOL (Article 22.6 – US), para. 6.32.  
24 U.S. Written Submission, paras. 24 -25. WT/DS464/ARB/Add.1  
 
- 26 - 
 
 where the WTO -inconsistent measure is removed as of the expiration date of the RPT.25 Accordingly, 
Korea 's counterfactual scenario is both plausible and reasonable.  
13. The United States has failed to demonstrate that Korea 's counte rfactual is implausible or 
unreasonable.  The United States relies on the fact that Daewoo 's anti -dumping and countervailing 
duty margins were not subject to the underlying Panel and Appellate Body proceedings to argue that 
Daewoo 's margin would have enable d the USDOC to maintain the anti -dumping and countervailing 
duty orders independent of Samsung and LG.26 However, as Daewoo was not subject to the Panel 
and Appellate Body proceedings, it cannot be a basis for determining the correct counterfactual to 
be us ed in this case.  
14. Moreover, the United States conflates "implementation " with the "counterfactual, " at most 
arguing that there could be other ways that the United States implements the DSB 's 
recommendations or rulings.  The counterfactual need not represent how a Member would have 
actually implemented its obligations, and need not even reflect the "most likely " scenario.27 As the 
United States has recognized in a prior case, even if there could be other options for implementing 
the DSB 's recommendations and ru lings, this does not mean that the withdrawal of the WTO -
inconsistent measure is not an appropriate counterfactual for the purposes of an Article 22.6 
arbitration.28 What other actions the United States could have taken to implement the DSB 's 
recommendations and rulings is simply irrelevant in the context of selecting a counterfactual for the 
purposes of calculating the level of nullification or impairment.   
15. In addition, the counterfactual proposed by the United States is not "plausible " or "reasonable. " 
First, the  United States is proposing a counterfactual that does not hypothesize full implementation 
of a recommendation to bring a measure into conformity with the covered agreements.29 As the 
United States concedes, its alternative counterfact ual only addresses the DSB 's "as applied " findings, 
and it does not take into account how the "as such " findings would impact the implementation of 
the "as applied " findings.30 However, according to the United States ' own statements in the 
proceedings under  Article 21.3(c), it would not be possible to implement the "as applied " findings 
without first implementing the "as such " findings, because the revised approaches and 
methodologies that will be developed in implementing the "as such " findings would potent ially be 
applied or adapted to the "as applied " implementation measure.31  
16. Even in addressing only the "as applied " findings, the United States explains that it would take 
the measures described in its counterfactual only after following the procedures it d escribed in the 
Article 21.3(c) proceedings, which include requesting comments from interested parties concerning 
the appropriate calculation methodology, which the USDOC would then take into account in re -
determining LG 's margin of dumping.32 Therefore, th e U.S. counterfactual, which applies a pre -
determined dumping margin for LG that was already on the record of the proceedings, cannot be 
plausible or reasonable as it ignores steps within the implementation process that could lead to a 
further revision of the dumping margin.  
17. Furthermore, the U.S. counterfactual would require the Arbitrator to examine the WTO -
consistency of the hypothetical measure, which falls outside of the scope of this arbitration.  The 
requirement for a counterfactual to be WTO-consistent does not mean that the United States enjoys 
a presumption of conformity in which its counterfactual will be interpreted in a manner that is 
deemed to be WTO -consistent.  This is particularly true given the speculative nature of the U.S. 
count erfactual, under which the USDOC "might " take certain steps and "might " reach a decision to 
use the W -W methodology instead of the WTO -inconsistent W -T methodology.33 That the USDOC 
"might " make these determinations can equally be understood to mean that the United States could 
also continue to apply the WTO -inconsistent measures if the USDOC does not change its original 
                                                
25 Korea 's Methodology Paper, para. 22; see also Decisions of the Arbitrator,  EC – Hormones (Canada) 
(Article 22.6 – EC), para. 37; EC – Hormones (US) (Article 22.6 – EC), para. 38; US – COOL (Article 22.6 – 
US), para. 6.32; US – Tuna II (Mexico) (Article 22.6 – US), paras. 4.4 and 4.9.  
26 U.S. Written Submission, para. 26; U.S. Opening S tatement, para. 22.  
27 Decision of the Arbitrator, US – Gambling (Article 22.6 – US), para. 3.26.  
28 Decision of the Arbitrator, US – COOL (Article 22.6 – US), para. 3.11.  
29 U.S. Replies to the Arbitrator 's Advance Questions, para. 12.  
30 U.S. Opening Stateme nt, para. 19.  
31 Korea 's Replies to the Arbitrator 's Post -Hearing Questions, paras. 6 -8. 
32 U.S. Replies to the Arbitrator 's Post -Hearing Questions, para. 24.  
33 U.S. Replies to the Arbitrator 's Post -Hearing Questions, para. 25.  WT/DS464/ARB/Add.1  
 
- 27 - 
 
 determinations.  In fact, even if the Arbitrator were to accept that the  USDOC would take these steps 
and use the W -W comparison method under the first sentence of Article 2.4.2 rather than the W -T 
comparison method under the second sentence, there is no way to ensure that the United States 
would apply the W -W methodology in a  manner that is WTO -consistent.  The Arbitrator cannot 
presume that the use of the W -W method would automatically result in WTO -consistent results.  
Thus, there is no way for the Arbitrator to ensure that the U.S. counterfactual is WTO -consistent.  
18. In short,  Korea 's counterfactual premised on the termination of import duties is plausible and 
reasonable, and in fact, the only indisputably WTO -consistent counterfactual scenario available for 
the Arbitrator 's consideration.  On the other hand, the U.S. counterfac tual is irreconcilable with the 
United States ' own description of its domestic procedures.  It is also speculative, requiring the 
Arbitrator to either presume WTO -consistency of the measure, which has no legal basis, or to 
examine the WTO -consistency of the  hypothetical measure, which falls outside of the scope of this 
arbitration.  Thus, Korea respectfully requests that the Arbitrator find that termination of the WTO -
inconsistent measures is the appropriate counterfactual scenario in this proceeding.  
B. Kore a's Economic Analysis Demonstrates that Korea's Proposed Level of 
Suspension is Equivalent to the Level of Nullification and Impairment  
1. The Bown & Ruta Partial Equilibrium Model is the Most Appropriate Model 
to Calculate the Level of Nullification and I mpairment  
19. Korea calculated the level of suspension of concessions or other obligations by using a partial 
equilibrium model based on research conducted by Chad Bown and Michele Ruta to estimate the 
trade effects of the United States ' failure to comply with  the DSB 's recommendations and rulings as 
of the expiration of the RPT ( "Bown & Ruta model "). The Bown & Ruta model is a widely recognized 
economic model that explains trade effects under simple yet effective economic frameworks.  Indeed, 
the United States itself proposed essentially the same methodology in its methodology paper in the 
Article 22.6 arbitration of India – Agricultural Products (Article 22.6 – India) .34 
20. The Bown & Ruta model directly calculates the total amount of the trade effect resulting from 
the WTO -inconsistent trade measure.  In other words, instead of calculating the level of imports that 
would have been achieved if the WTO -inconsistent measure had been withdrawn and subtracting 
the actual amount of imports at the  end of the RPT, Korea 's model achieves the same effect by 
directly calculating the amount of additional imports that would have been achieved if the WTO -
inconsistent measure was removed.  The reason that Korea used this method is because it directly 
calcul ates the impact of the trade measure in a manner that excludes external factors that can 
distort the impact of the WTO -inconsistent measure.  For example, exporters often take action to 
overcome unfair anti -dumping and countervailing duty measures at great cost, resulting in an 
increase in the actual import value that belies the trade impact of the WTO -inconsistent measure.  
The Bown & Ruta isolates the trade impact of the trade measure itself so that these external factors 
are not taken into consideration.   
21. The formula used by Korea to calculate the level of nullification or impairment for LRWs in the 
amount of USD 711 million is as follows:   
Trade loss due to the United States' measures: USD 711 million =  
(price drop of 11.86% by terminating the application of the second sentence of Article 2.4.2 
+ price drop of 0.58% by terminating the application of countervailing duties)  x 
(The share of imports from Korea of 42.9% as of 2011) x  
(Price elasticity of demand 0.55 + price elasticity of supply 7)  x 
(The entire U.S. import value of USD 1,764,569,000 projected as of 2017)   
                                                
34 India – Agricultural Product s, U.S. Methodology Paper , para. 6 (Exhibit KOR -29) ("Lost U.S. CLQ 
exports due to India 's import ban are calculated using a static partial equilibrium model, which is described in 
detail in sections IV through VI. This analytical  framework is grounded in academic literature and has been 
used to quantify the trade effects of similar measures. Past Article 22.6 arbitrators have also relied on a partial 
equilibrium model ."). WT/DS464/ARB/Add.1  
 
- 28 - 
 
 22. To calculate the level of nullification and impairment for LRWs for subsequent years, Korea 
applied a growth rate that is based on the projected average growth rate for the U.S. LRW market, 
under the reasonable assumption that Korea 's imports would increase proportionately with the 
growth of the U.S. LRW market.35  
23. In this formula, the change in price is calculated based on the price drop of washing machines 
from Korea induced by the removal of th e WTO -inconsistent measures.  As the measures at issue 
are the imposition of tariffs, the level of price drop resulting from the removal of such tariffs is 
equivalent to the level of tariffs imposed on LRWs from Korea.  This is represented by the weighted 
average anti -dumping duty rate of 11.86 percent, and the weighted average countervailing duty 
rate of 0.58 percent.  Korea further made adjustment to the price drop by multiplying the import 
share of washing machines from Korea, in order to correctly reflec t the real impact on the price of 
the entire U.S. market caused by the price drop of washing machines from Korea.  
24. Through the partial equilibrium model, Korea is able to show that imposition of the anti -dumping 
and countervailing duties resulted in artifi cially higher prices in the U.S. market, and accordingly, a 
decreased volume of exports of Korean LRWs in the United States.  Removing the WTO -inconsistent 
anti-dumping and countervailing duties lowers the price of washing machines in the U.S. market, 
which  increases the demand for Korean washing machines, causing a reduction in domestic supply.  
This change in the demand and supply in the U.S. market creates excess demand which, multiplied 
by prices in the U.S. market, is equivalent to the value of additiona l exports from Korea.  This value, 
calculated as USD 711 million at the expiry of the RPT, represents the trade loss caused by the 
United States ' non-compliance.   
25. The United States claims that the model is not appropriate because it assumes perfect 
substitu tability.36 However, perfect substitutability is not an absolute requirement for using the Bown 
& Ruta model, as demonstrated by the United States ' own proposal of essentially the same model 
to calculate the level of nullification or impairment in the India – Agricultural Products  case.37 In 
particular, Korea does not consider the substitutability of LRWs to be lower than the substitutability 
of the chicken products that were at issue in the India – Agricultural Products  case. The fierce price 
competition amo ng LRWs in the U.S. market approximates "perfect substitution, "38 while the level 
of substitutability between food products that are perceived to be contaminated, and those that are 
not, would likely be much lower than the level of substitutability between brands of washing 
machines.39  
26. In addition, the Bown & Ruta model does not assume that the existence of products only from 
two countries.  Rather, it isolates the trade effects to these two countries, making it unnecessary to 
separately take into account thi rd countries.   
27. Finally, the use of import share in Korea 's model as opposed to the total market share in the 
India – Agricultural Products  model is not a meaningful difference that renders the Bown & Ruta 
model inaccurate.  
28. Furthermore, the alternative eco nomic model based on Armington specifications proposed by 
the United States is not an appropriate model to calculate the level of nullification or impairment.  
The Armington model is designed specifically to understate trade effects of WTO -inconsistent 
meas ures, as it assumes that consumers are locked into one of three product varieties, which cannot 
be substituted with any other product variety.  Because of the presumed lack of substitutability 
among LRWs under the Armington model, the model is largely immun e to changes in import 
volumes, as these imported products cannot substitute domestic products or non -subject imports.40   
29. Moreover, the Armington model is highly sensitive to model parameters, and in particular, 
Armington elasticities.  In this case, a chan ge in just one digit of the elasticity results in double -digit 
                                                
35 Korea 's Methodology Paper, para. 46; see also Korea 's Written Submission, paras. 82 -83. 
36 U.S. Written Submission, para. 60.  
37 Korea 's Opening Statement, paras. 57 -62. 
38 Korea 's Replies to the Arbitrator 's Advance Questions, para. 82; Korea 's Opening Statement, 
para. 60. 
39 Korea 's Opening Statement, para. 61.  
40 Korea 's Opening Statement,  para. 66.  WT/DS464/ARB/Add.1  
 
- 29 - 
 
 increases in the level of nullification or impairment.41 Because of this sensitivity to elasticities, it is 
not possible to obtain an accurate calculation using the Armington  model based on the elasticity 
information on the record – the elasticity information provided in the U.S. International Trade 
Commission ( "USITC ") report.  In order to accurately calculate the level of nullification or impairment 
using the Armington model,  it would be necessary to collect elasticity information that aims to 
calculate trade volumes for a very narrowly defined product scope, such as LRWs.  To avoid 
distortions caused by the Armington model 's sensitivity to elasticities, the elasticity informat ion must 
be precisely calculated by accurately estimating the specific level of substitution among products 
from different origins, and based on market prices and quantity changes for a specific year.42  
30. Considering the various theoretical and practical lim itations of the Armington model, it is more 
appropriate to employ the Bown & Ruta model in this case, as it provides accurate results using 
reasonably available data.  
2. Korea 's Use of Data Inputs is Reasonable and Accurate  
31. Korea 's formula for calculating the level of nullification and impairment for LRW products is based 
on accurate and reasonably available data.  In particular, the use of 2011 import share data using 
the Bown & Ruta model is appropriate and necessary to obtain an accurate calculation of the level 
of nullification and impairment, based on what Korea 's import value would have been had the WTO -
inconsistent measure been removed at the end of the RPT.   
32. Korea 's approach is consistent with the arbitrator 's findings in EC – Hormones (US) (Article 22.6 
– EC). The arbitrator in that dispute considered the "pre-ban figures " to be a representative starting -
point for the calculations of total exports under the counterfactual, i.e., assuming the ban would 
have been lifted at the end of the RPT.43 Following this reasoning, Korea uses the 2011 import share 
data in order to calculate what the value of Korea 's imports would have been had the WTO -
inconsistent measure been brought into conformity at the end of the RPT, under the reasonab le 
assumption that Korea would regain the import share that it had prior to the imposition of the WTO -
inconsistent measures.  
33. The incorporation of 2011 import data does not mean that the level of nullification or impairment 
calculated using Korea 's formula  is punitive or seeks to reverse the trade effects of the WTO -
inconsistent measures.44 As an Article 22.6 arbitration is predicated on the responding party not 
having brought its measure into compliance by the end of the RPT, it is impossible to know what t he 
actual effect of removing those measures would be.  A reasonable consideration in estimating how 
the market would react if the measures were removed is the state of the market before the measures 
were imposed.  Examination of pre -measure data thus provide s a reasonable proxy of the market 
situation in the absence of the WTO -inconsistent measure.   
34. In fact, Korea applied the 2011 import share data to 2017 total import value data in order to 
estimate what the import value would have been for Korean LRW import s based on 2017 data.  The 
2011 import share was only incorporated to estimate the proportion of imports that would have been 
attributable to Korea without the WTO -inconsistent measure.   
35. In addition, the United States challenges the incorporation of a growt h rate in Korea 's formula 
for nullification and impairment in 2018 and beyond.45 It is reasonable to take into account the 
anticipated growth rate of the relevant industry when calculating the level of nullification and 
impairment.  Indeed, the growth rate f actor has been used in past 22.6 arbitrations.  The concept of 
nullification and impairment recognizes that benefits would otherwise continue to accrue absent a 
WTO-inconsistent measure.  If the benefits increase or decrease in the future, it is reasonable t hat 
the level of nullification and impairment would also change depending on the level of benefits that 
Korea would have otherwise accrued at that time.  Therefore, a level of suspension that incorporates 
market growth rate would be more accurate and equiva lent to the level of nullification and 
impairment.  It is reasonable to assume that imports of Korean washing machines will increase at 
least in proportion to the size of the market.  Furthermore, Korea 's projected growth rate is more 
                                                
41 Korea 's Opening Statement, para. 68.  
42 Korea 's Replies to the Arbitrator 's Post -Hearing Questions, para. 74.  
43 Decision of the Arbitrator, EC – Hormones (US) (Article 22.6 – EC), para. 67.  
44 U.S. Replies to the Arbitrator 's Post -Hearing Questions, para. 38.  
45 U.S. Written Submission, paras. 116 -121. WT/DS464/ARB/Add.1  
 
- 30 - 
 
 conservative than the a ctual expected growth rate for both the washing machines industry and for 
LG and Samsung products.   
36. The United States has pointed to no precedent or authority to support its claim that that growth 
rates should not be taken into account.  In fact, the United  States itself has incorporated the growth 
rate factor in its formula in a previous dispute.46 Rather, the only basis of the United States ' challenge 
to the incorporation of a growth rate is its argument that the business decision of exporters LG and 
Samsun g to move production facilities out of Korea means that imports from Korea would not 
increase in proportion to growth in the U.S. LRW market.  However, as discussed further below, the 
business decisions of individual companies are not relevant to determining the level of nullification 
and impairment suffered by Korea.  
C. The United States' Claim that Failure to Bring its Measure into Compliance 
Would Not Result in Any Nullification or Impairment is Baseless  
37. The United States ' argument that the appropriate level of nullification or impairment in this 
arbitration is zero, because LG and Samsung have no interest or ability to produce LRWs in Korea 
for the U.S. market, is groundless.47 The U.S. assertion has no basis in the WTO agreements or past 
arbitrations under Article 22.6 of the DSU.  It is undisputed that the United States violated its 
obligations under the Anti -Dumping Agreement, the SCM Agreemen t, and the GATT 1994, and that 
such violations "have nullified or impaired benefits accruing to Korea under those agreements. "48 
Where a Member 's measure has found to nullify and impair benefits accruing to another Member, 
"the level must be something great er than ‘zero, ' and it is a contradiction in terms to suggest 
otherwise. "49  
38. Furthermore, the premise that the United States ' failure to bring its measure into compliance 
would result in zero nullification and impairment is simply untrue.  Korean producers c ontinue to 
export LRWs from Korea into the United States, and the United States has not established that 
Korea 's export volumes would not recover with the removal of the WTO -inconsistent measures.  
Rather, the United States relies on statements made by Sams ung and LG officials in the context of 
a separate investigation conducted under separate domestic laws to argue that the companies do 
not intend to resume LRW production in Korea for the U.S. market, and that the business decision 
is not the result of the WTO-inconsistent anti -dumping and countervailing duty measures.50  
39. The United States ' claims are baseless for several reasons.  First, the DSU makes clear that it is 
the Member  that is subject to the nullification or impairment of benefits – not individual companies 
within the territory of the Member.51 Thus, the business decisions of individual companies ha ve no 
bearing on determining the level of nullification and impairment ca used to Korea.  In fact, as a 
practical matter, it would be impossible to estimate trade effects if the business considerations of 
individual companies had to be taken into account in calculating the level of nullification or 
impairment.  Trade actions will inevitably cause reactions in companies, and each company may take 
a different course of action that effect s their individual trade volumes in different ways.  This does 
not mean that these companies ' abilities or decisions should dictate the determination of the level 
of nullification or impairment.  Consideration of such factors would be speculative and unverifiable, 
and outside the mandate of the Article 22.6 arbitrator.   
40. Second, contrary to the United States ' claim that the exporters ' decision s to move pr oduction 
facilities out of Korea were unrelated to the WTO -inconsistent anti -dumping and countervailing duty 
measures, evidence on the record shows that the USITC itself recognized the temporal correlation 
between the imposition of anti -dumping and counter vailing duties and the movement of LG 's and 
Samsung 's production facilities.52 It is clear that the United States considered LG 's and Samsung 's 
decision to move production facilities out of Korea, and ultimately into the United States, a direct 
result of th e anti -dumping and countervailing duties imposed by the United States.  To the extent 
that there was a decline in Korean exports of LRWs into the United States, this decline is attributable 
                                                
46 India – Agricultural Products , U.S. Methodology Paper , para. 7 ( Exhibit KOR -29). 
47 U.S. Written Submission, paras. 19 and 51.  
48 Panel Report, US – Washing Machines , para. 8.4.  
49 Decision of the Arbitrator, US – 1916 Act (EC) (Article 22.6 – US), para. 5.50.  
50 U.S. Replies to the Arbitrator 's Advance Questions, para. 41.  
51 Korea 's Opening Statement, para. 41.  
52 USITC Pub. 4745, fn. 349 (Exhibit KOR -25). WT/DS464/ARB/Add.1  
 
- 31 - 
 
 to the United States ' imposition of anti -dumping and countervailing  duty orders, and it is reasonable 
to assume that this downward trend would reverse with the removal of the WTO -inconsistent 
measures.  
41. In addition, the United States fails to consider the business reality facing the Korean producers.  
The statements referre d to by the United States indicate that there were significant cost savings in 
moving production to the United States to serve the U.S. market.  Part of the efficiencies and cost 
savings is inevitably the avoidance of anti -dumping and countervailing duties.  In this respect, the 
need to move production operations into the United States is in itself a form of nullification and 
impairment of Korea 's benefits, as the U.S. measures unfairly altered the competitive relationship 
between Korean and U.S. domestic pro ducers.  
42. In sum, the United States provides no credible basis to argue that Korea 's level of nullification 
and impairment is zero, and its claim should be dismissed.  If the Arbitrator were to agree with the 
United States, such an outcome would not only be c ontrary to the fundamental purpose of the WTO 
dispute settlement system, but it would also set a dangerous precedent.  It would incentivize other 
WTO Members to impose prohibitively high anti -dumping and countervailing duties while prolonging 
the WTO dispute settlement process until foreign producers have no choice but to abandon 
production in their home countries, and move facilities to the imposing Member 's territories.53 
Therefore, Korea respectfully requests that the Arbitrator apply the level of nu llification and 
impairment proposed by Korea.  
D. Korea's Calculation of the Level of Nullification and Impairment for Non -LRW 
Products as a Result of the United States' "As Such" Violation Is Appropriate  
43. In the underlying proceedings, the Panel and Appella te Body ruled that both DPM and the use 
of zeroing under the W -T comparison methodology are "as such " inconsistent with the Anti -Dumping 
Agreement.54 These findings were not limited to LRWs but impact all other products against which 
the USDOC applies the W TO-inconsistent comparison methodologies.  
44. The United States ' failure to bring its measures into compliance affects not only Korean imports 
of LRWs, but all Korean imports that are subject to U.S. anti -dumping proceedings in which these 
comparison methods c ontinue to be used.  To take a conservative approach, Korea has not included 
the trade effects of the WTO -inconsistent measures on non -LRW imports as of the end of the RPT.  
In other words, i f the investigation or review was initiated prior to the RPT, Korea  will not  suspend 
concessions  based on the nullification and impairment to these imports even if the final 
determination  or result s is issued after the RPT.  However, Korea proposes to use the same formula 
used to calculate the level of nullification and im pairment to LRW imports as of the end of the RPT 
to imports of non -LRW products that are subject to new investigations or administrative reviews 
initiated after the end of the RPT, for which the WTO -inconsistent methods continue  to be used.  
45. In this respect , Korea will use individual data for each product at issue.55 These data will be 
derived from, but not limited to, the USITC data for the elasticities of demand and supply of the 
products at issue, import statistics of each HS code included in the scope of the proceeding, the 
change in price represented by the anti -dumping duty rate determined on the basis of the 
WTO-inconsistent DPM and the use of zeroing.56 Korea will also ensure that it includes in its 
calculation of the level of nullification and impairment margins that were calculated based on the 
WTO-inconsistent methodologies, and exclude margins and import data for exporters for whom the 
USDOC did not a pply DPM or zeroing when applying the W -T methodology (for example, margins 
calculated based on the application of total "adverse facts available "). In calculating the level of 
nullification and impairment, Korea is relying only on credible, verifiable inf ormation, and not on 
speculation.57 The "as such " formula would use the objective data that is used in the "as applied " 
formula for each individual product.   
46. Past arbitrators found that a formula is an appropriate method to quantify the level of suspension 
in such situation where the nullification or impairment has not been calculated yet at the expiration 
                                                
53 Korea 's Opening Statement,  para. 8.  
54 Appellate Body Report , US – Washing Machines , para. 6.3-6.11. 
55 See Korea 's Methodology Paper, para. 50.  
56 See Korea 's Methodology Paper, paras. 50 -51. 
57 Decision of the Arbitrator, US – 1916 Act (EC) (Article 22.6 – US), paras. 5.54, 5.63, and  7.7. WT/DS464/ARB/Add.1  
 
- 32 - 
 
 of the RPT, but the implementing Member would violate an "as such " decision in the future.  The 
reason of including an "as such " formula in Korea 's request  for suspension of concession follows the 
same logic of the arbitrator in US – 1916 Act  which considered that, in a case where it was found to 
be WTO -inconsistent "as such " and the responding party had not complied with the DSB 
recommendations and rulings,  the existence and maintenance of the WTO -inconsistent measure "as 
such" violates the rights of the complaining party, and each application of such measure increases 
the level of nullification or impairment sustained by the complaining party.58 The situatio n is also 
comparable to that in US – Offset Act (Byrd Amendment)  where the arbitrator found that there is 
no limitation in the DSU to the possibility of providing for a variable level of suspension as long as 
the level of suspension  is equivalent to the le vel of nullification or impairment , provided such 
adjustments are justified, and unpredictability is not increased as a result .59 
47. The United States recognizes that a formula can be used to calculate future level of nullification 
or impairment, but argues that the use of a formula is not appropriate in this case.  However, the 
United States has failed to establish a basis for its claims.  Korea has fully demonstrated that all 
aspects of its proposed formula are reasonable.  Korea has demonstrated that it is re asonable to 
assume that a dumping margin that has been calculated based on a WTO -inconsistent method would 
be withdrawn, resulting in a margin of zero.  In particular, Members are only permitted to maintain 
anti-dumping measures if these measures were impos ed in accordance with the Anti -Dumping 
Agreement.  As the Panel and Appellate Body have confirmed, use of the DPM and zeroing when 
applying the W -T method is inconsistent with the Anti -Dumping Agreement.  Therefore, the United 
States does not maintain the ri ght to impose a dumping margin that has been calculated in 
contravention to the Anti -Dumping agreement.  Korea has also demonstrated that the formula for 
non-LRW products, which is identical to the formula for LRW products, is reasonable and based on 
sound economic principles.  Korea has demonstrated through its explanations and through samples 
that it would be able to obtain the data necessary to conduct the calculations, mostly through public 
sources such as U.S. government agencies or trade associations, a nd if necessary, through private 
entities.60  
48. In sum, Korea 's proposed formula for calculating the level of nullification and impairment for 
non-LRW products is reasonable and relies on available data.  The United States has not established 
that applying the  non-LRW formula would result in suspension of concessions in excess of the level 
of nullification or impairment.  According ly, Korea respectfully requests that the Arbitrator authorize 
suspension of concessions for future nullification and impairment in th e amount to be calculated 
using the non -LRW formula proposed by Korea.   
V. CONCLUSION  
49. For these reasons, Korea respectfully requests that the Arbitrator determine that the level of 
suspension of concessions for LRWs from Korea is USD 711 million, to be adj usted each year 
consistent with the formula outlined in Korea's Methodology Paper, and that the level of suspension 
of concessions for non -LRW products from Korea is to be calculated based on the formula outlined 
in Korea's Methodology Paper.  
 
 
_______________  
 
 
 
 
                                                
58 Decision of the Arbitrator, US – 1916 Act (EC) (Article 22.6 – US), paras. 6.14 -6.15 and 7.8.  
59 Decision of the Arbitrator, US – Offset Act (Byrd Amendment) (Brazil) (Article 22.6 – US), para. 4.20. 
60 Korea 's Replies to the Arbitrator 's Advance Que stions, paras. 123 -125; Korea 's Replies to the 
Arbitrator 's Post -Hearing Questions, paras. 107 -114. WT/DS464/ARB/Add.1  
 
- 33 - 
 
 ANNEX  C 
CALCULATIONS OF THE ARBITRATOR  
Contents  Page  
Annex  C-1 Level o f Nullification or Impairment for  LRWs : Calculations  34 
Annex  C-2 Level o f Nullification or Impairment for  Non-LRWs : Derivation of Formula  46 
 
 
  WT/DS464/ARB/Add.1  
 
- 34 - 
 
  
ANNEX  C-1 
LEVEL O F NULLIFICATION OR I MPAIRMENT FOR  LRWS: CALCULATIONS  
 
Table 1: Anti -dumping duty  
 
ITEM  VALUES  
Initial anti -dumping duty on Korean LRWs in 2011  0.0%  
Anti-dumping duty on Korean LRWs in 2012  11.86%  
Projected United States imports of LRWs from Korea in 2012 after 
application of anti -dumping duty (millions)  USD [[***]] 
Projected Korean market share in United States after duty  [[***]] 
United States market for LRWs in 2017 (millions)   USD 3,718.4  
Projected United States LRW imports from Korea in 2017 (millions)  USD [[***]] 
Counterfactual anti -dumping duty  [[***]] 
Counterfactual United States LRW imports from Korea (millions)  USD [[***]] 
Nullification or impairment (millions)  USD 74.40 
 
Table 2: Countervailing duty  
 
ITEM  VALUES  
Initial countervailing duty on Korean LRWs in 2011  0.0%  
Countervailing duty on Korean LRWs in 2012  0.58%  
Projected United States imports of LRWs from Korea in 2012 after 
application of countervailing duty (millions)  USD [[***]]  
Projected Korean market share in United States after duty  [[***]]  
United States market for LRWs in 2017 (millions)  USD 3,718.4  
Projected United States LRW  imports from Korea in 2017 (millions)  USD [[***]]  
Counterfactual countervailing duty  0.0%  
Counterfactual United States LRW imports from Korea (millions)  USD [[***]]  
Nullification or impairment (millions)  USD 10.41 
 
  WT/DS464/ARB/Add.1  
 
- 35 - 
 
 Table  3: General CIF i mports value by HTS number  for Korea  
  
 
Source: USITC Dataweb.  
HTS 
Number Year Q1 Q2 Q3 Q4
8450110040 2010 455,900 1,005,798 233,194 321,100
8450110080 2010 2,411,181 3,127,637 2,352,108 856,464
8450200090 2010 142,437,357 200,352,678 191,620,967 122,882,409
8450902000 2010 3,165 7,254 12,407 6,403
8450906000 2010 17,221,417 18,859,599 10,099,736 10,200,203
8450110040 2011 5,297,409 2,658,820 508,274 3,645,284
8450110080 2011 2,742,125 3,474,175 3,178,022 4,316,686
8450200090 2011 152,543,185 130,775,593 100,973,206 164,089,821
8450902000 2011 11,483 0 5,835 9,161
8450906000 2011 15,176,653 10,232,980 6,657,471 13,044,517
8450110040 2012 944,025 1,842,228 1,223,156 769,642
8450110080 2012 4,477,326 4,579,619 3,278,981 1,338,362
8450200090 2012 83,202,038 191,090,515 143,698,714 107,883,370
8450902000 2012 134,718 47,418 37,410 7,772
8450906000 2012 6,931,041 13,772,378 15,866,941 11,968,395
8450110040 2013 0 0 0 0
8450110080 2013 2,160,471 2,756,001 3,538,996 3,899,584
8450200090 2013 80,714,166 93,928,512 49,391,822 68,432,414
8450902000 2013 130,369 231,103 110,762 207,085
8450906000 2013 12,843,113 2,474,776 1,564,143 2,580,268
8450110040 2014 0 267,412 55,634 0
8450110080 2014 3,285,580 3,058,525 4,964,255 4,181,821
8450200090 2014 54,756,381 51,941,406 26,031,374 14,575,763
8450902000 2014 288,991 185,152 284,129 103,190
8450906000 2014 2,172,278 1,922,635 1,740,304 1,719,880
8450110040 2015 33,210 0 632,369 3,999,882
8450110080 2015 4,250,557 4,828,466 3,059,896 4,159,627
8450200040 2015 2,381,816 5,470,562 3,364,544 4,305,302
8450200080 2015 13,154,573 15,357,655 10,717,448 19,848,967
8450902000 2015 260,828 322,957 235,073 407,602
8450906000 2015 2,125,548 2,380,446 2,314,134 2,261,598
8450110040 2016 8,295,821 5,943,180 1,975,084 6,665,517
8450110080 2016 5,510,528 3,565,435 3,162,474 3,966,431
8450200040 2016 6,859,967 2,417,464 7,766,322 16,438,224
8450200080 2016 19,848,219 15,905,949 19,066,124 33,735,203
8450902000 2016 172,603 307,169 81,878 240,018
8450906000 2016 1,713,055 1,271,572 1,237,362 2,118,122
8450110040 2017 5,787,934 7,518,135 4,444,110 23,594,408
8450110080 2017 3,544,395 4,924,709 4,573,523 3,803,447
8450200040 2017 24,158,923 28,883,403 19,928,506 68,482,685
8450200080 2017 16,047,488 31,419,135 22,651,803 46,452,573
8450902000 2017 140,111 275,920 192,018 449,749
8450906000 2017 665,364 878,310 848,603 1,394,077U.S. General Imports
Quarterly data for 2010-2017WT/DS464/ARB/Add.1  
 
- 36 - 
 
 Table 4: LRW share of CIF value of general imports  
[[ 
HTS Code  FY11  FY12  FY13  FY14  FY15  FY16  FY17  
*** *** *** *** *** *** *** *** 
*** *** *** *** *** *** *** *** 
*** *** *** *** *** *** *** *** 
*** *** *** *** *** *** *** *** 
*** *** *** *** *** *** *** *** 
*** *** *** *** *** *** *** *** 
*** *** *** *** *** *** *** *** 
Total  *** *** *** *** *** *** *** 
 
 
]] 
Note: The share for any fiscal year is computed as the value of LG and Samsung imports on which 
WTO-inconsistent duties were collected by United  States'  Authorities (information provided by the 
United States in Exhibit USA -21 (BCI) ) divided by the CIF value of imports extracted  from USITC 
Dataweb (see Table 3) for the four quarters c orresponding to the fiscal year.  
 
  WT/DS464/ARB/Add.1  
 
- 37 - 
 
 Table  5: Estimated LRW imports in 2011  
 
[[ 
 
HTS Subheading  Q1-Q3 of 2011  Q4 of 2011  Full year 2011  
*** *** *** *** 
*** *** *** *** 
*** *** *** *** 
*** *** *** *** 
*** *** *** *** 
*** *** *** *** 
*** *** *** *** 
Total  *** *** *** 
 
]] 
 
Notes:  
 
(1) For the first three quarters of 2011, the share corresponding to fiscal year 2011  in Table 4  is 
used.  For the fourth quarter of 2011, the share corresponding to fiscal year 2012 is used.  
 
(2) Shares exceeding 100% are capped at 100%.   WT/DS464/ARB/Add.1  
 
- 38 - 
 
  
TABLE 6: General Algebraic Modeling System  (GAMS ) code for calculatin g nullification or 
impairment from anti -dumping duty  
 
*==================================  
*Instructions  
*==================================  
 
*To run the code, press F9 or select "File/Run". This will calculate the level of  
*nullification or impairment in two steps. First, the counterfactual Korean import  
*share in 2012 is calculated. This share is combined with the market size in 2017 to  
*calcu late the initial value of imports in 2017. The level of nullification or impairment  
*is then calculated as the change in the value of imports (in world prices, net of duties) in 2017  
 
*This value can be written in the output file as NoI and is also written  to excel (NoI_AD.xls).  
 
*==================================  
*A. Set and parameter declaration  
*==================================  
 
SETS 
 
I countries /KOR,USA/  
 
PARAMETERS  
 
*1.Parameters  
sigma substitution elasticity  
epsilon demand elasticity  
eta supply el asticity  
 
*2. Market data  
demand2012   total demand 2012  
demand2017   total demand 2017  
demand   total demand  
supply(I) supply country  
kappa demand shifter I  
 
*3. Duty changes  
tarinitial(I) initial ad valorem tariff  
tarfinal(I) final ad valorem tariff  
 
*4. Calibration  
omega(I) import demand shifter  
lambda(I) supply shifter  
tar(I) ad valorem tariff  
 
*5. Outcome variables  
PE_PRE(I)  
VEXP_PRE(I)  
VEXP_POST(I)  
VEXP_CHANGE(I)  
ms_pre(I)  
ms_post(I)  
NoI; 
 
 
*==================================  
*B. Model parameters  
*==================================  
 
sigma=4;  WT/DS464/ARB/Add.1  
 
- 39 - 
 
 epsilon= -0.55;  
eta=6;  
 
 
*==================================  
*C. Variables and model  
*==================================  
 
VARIABLES  
 
OBJ   objective function  
 
POSITIVE VARIABLES  
 
EXP   domestic expenditures  
P    domestic price index  
PE(I)  export price  
M(I)   import demand  
X(I)   export supply;  
 
 
EQUATIONS  
 
OBJ_EQ   objective equation  
EXP_EQ   domestic expenditures equation  
P_EQ    domestic price index equation  
M_EQ(I)  import demand equation  
X_EQ(I)  export supply  equation  
EQ_EQ(I) equilibrium equation;  
 
OBJ_EQ..   OBJ-2=E=0;  
EXP_EQ..   EXP-kappa*(P**(1+epsilon))=E=0;  
P_EQ..    P**(1 -sigma) -SUM(I,(omega(I)**sigma)*((1+tar(I))*PE(I))**(1 -sigma))=E=0;  
M_EQ(I)..  M(I)-(omega(I)**(sigma))* ((1+tar(I))*PE(I))**( -sigma)*EXP*(P**(sigma -1))=E=0;  
X_EQ(I)..  X(I)-lambda(I)*(PE(I)**eta)=E=0;  
EQ_EQ(I).. X(I) -M(I)=E=0;  
 
 
MODEL Armington Armington model /all/;  
 
 
*==================================  
*D. Calculating 2012 market share  
*==================== ==============  
 
*1. Initial values  
*Base data  
demand2012=2653.6;  
supply("KOR ")=[[***]]; 
 
*Duty levels  
tarinitial("KOR")=0;  
tarinitial("USA")=0;  
tarfinal("KOR")=0.1186;  
tarfinal("USA")=0;  
 
*2. Calibration  
*Parameters and shifters  
tar(I)=tarinitial(I);  
demand=demand2012;  
supply("USA")=demand -supply("KOR")*(1+tar("KOR"));  
 WT/DS464/ARB/Add.1  
 
- 40 - 
 
 kappa=demand;  
omega(I)=(1+tar(I))*(supply(I)/demand)**(1/sigma);  
lambda(I)=supply(I);  
 
*Initial values  
EXP.L=demand;  
P.L=1;  
PE.L(I)=1;  
X.L(I)=supply(I);  
M.L(I)=X.L(I)*(1+tar(I));  
 
*3. S olve model  
 
*Solve baseline  
SOLVE Armington using NLP minimizing OBJ;  
PE_PRE(I)=PE.L(I);  
VEXP_PRE(I)=PE_PRE(I)*M.L(I);  
DISPLAY P.L,PE.L,M.L,X.L;  
*(Shows that initial prices are normalized at 1)  
 
*Solve 2012 counterfactual with anti -dumping duty  
tar(I)=tarf inal(I);  
SOLVE Armington using NLP minimizing OBJ;  
 
*4. Calculate counterfactual value of exports in 2012  
 
VEXP_POST(I)=PE.L(I)*M.L(I);  
VEXP_CHANGE(I)=VEXP_POST(I) -VEXP_PRE(I);  
ms_pre(I)=VEXP_PRE(I)/demand;  
ms_post(I)=VEXP_POST(I)/EXP.L;  
DISPLAY VEXP_ PRE,VEXP_POST,VEXP_CHANGE,demand,EXP.L,ms_pre,ms_post;  
 
*VEXP_POST gives the counterfactual value of trade in 2012 used to construct the  
*import share for 2017.  
*VEXP_CHANGE gives the change in the value of exports  
 
 
*==================================  
*E. Calculating 2017 NoI  
*==================================  
 
*The 2017 NoI is based on 2012 import shares and 2017 market size  
 
*1. Initial values  
 
* Base data  
demand2017=3718.4;  
supply("KOR")=(VEXP_POST("KOR")/EXP.L)*demand2017;  
 
* Duty levels  
tarinitial("K OR")=0.1186;  
tarfinal("KOR")= [[***]]; 
 
*2. Calibration  
 
* Parameters and shifters  
tar(I)=tarinitial(I);  
demand=demand2017;  
supply("USA")=demand -supply("KOR")*(1+tar("KOR"));  
kappa=demand;  
omega(I)=(1+tar(I))*(supply(I)/demand)**(1/sigma);  
lambda(I)=supply(I);  WT/DS464/ARB/Add.1  
 
- 41 - 
 
  
*Initial values  
EXP.L=demand;  
P.L=1;  
PE.L(I)=1;  
X.L(I)=supply(I);  
M.L(I)=X.L(I)*(1+tar(I));  
 
*3. Solve model  
 
*Solve baseline  
SOLVE Armington using NLP minimizing OBJ;  
PE_PRE(I)=PE.L(I);  
VEXP_PRE(I)=PE_PRE(I)*M.L(I);  
DISPLAY P.L,PE.L, M.L,X.L;  
*(Shows that initial prices are normalized at 1)  
 
*Solve 2017 counterfactual reducing the anti -dumping duty  
tar(I)=tarfinal(I);  
SOLVE Armington using NLP minimizing OBJ;  
 
*4. Calculate change value of exports  
 
VEXP_POST(I)=PE.L(I)*M.L(I);  
VEXP_CHANGE(I)=VEXP_POST(I) -VEXP_PRE(I);  
NoI=VEXP_CHANGE("KOR")  
DISPLAY VEXP_PRE,VEXP_POST,VEXP_CHANGE,NoI;  
 
*VEXP_CHANGE for Korea gives the change in the value of trade for Korea in 2017,  
*thus providing the NoI  
 
*Write to excel  
execute_unload 'NoI.gdx', NoI 
execute 'gdxxrw.exe NoI.gdx O=NoI_AD.xls par=NoI'    WT/DS464/ARB/Add.1  
 
- 42 - 
 
 TABLE 7: General Algebraic Modeling System  (GAMS ) code for calculatin g nullification or 
impairment from countervailing duty  
 
*==================================  
*Instructions  
*======================== ==========  
 
*To run the code, press F9 or select "File/Run". This will calculate the level of  
*nullification or impairment in two steps. First, the counterfactual Korean import  
*share in 2012 is calculated. This share is combined with the market size in 20 17 to 
*calculate the initial value of imports in 2017. The level of nullification or impairment  
*is then calculated as the change in the value of imports (in world prices, net of duties) in 2017  
 
*This value can be written in the output file as NoI and is also written to excel (NoI_CVD.xls).  
 
 
*==================================  
*A. Set and parameter declaration  
*==================================  
 
SETS 
 
I countries /KOR,USA/  
 
PARAMETERS  
 
*1.Parameters  
sigma substitution elasticity  
epsilon demand elasticity  
eta supply elasticity  
 
*2. Market data  
demand2012   total demand 2012  
demand2017   total demand 2017  
demand   total demand  
supply(I) supply country  
kappa demand shifter I  
 
*3. Duty changes  
tarinitial(I) initial ad valorem tariff  
tarfinal(I) final ad valorem tariff 
 
*4. Calibration  
omega(I) import demand shifter  
lambda(I) supply shifter  
tar(I) ad valorem tariff  
 
*5. Outcome variables  
PE_PRE(I)  
VEXP_PRE(I)  
VEXP_POST(I)  
VEXP_CHANGE(I)  
ms_pre(I)  
ms_post(I)  
NoI; 
 
 
*==================================  
*B. Model parameters  
*==================================  
 
sigma=4;  WT/DS464/ARB/Add.1  
 
- 43 - 
 
 epsilon= -0.55;  
eta=6;  
 
 
*==================================  
*C. Variables and model  
*==================================  
 
VARIABLES  
 
OBJ   objective function  
 
POSITIVE VARIABLES  
 
EXP   domestic expenditures  
P    domestic price index  
PE(I)  export price  
M(I)   import demand  
X(I)   export supply;  
 
 
EQUATIONS  
 
OBJ_EQ   objective equation  
EXP_EQ   domestic expenditures equation  
P_EQ    domestic price index equation  
M_EQ(I)  import demand equation  
X_EQ(I)  export supply equation  
EQ_EQ(I) equilibrium equation;  
 
OBJ_EQ..   OBJ-2=E=0;  
EXP_EQ..   EXP-kappa*(P**(1+epsilon))=E=0;  
P_EQ..    P**(1 -sigma) -SUM(I,(omega(I)**sigma)*((1+tar(I))*PE(I))**(1 -sigma))=E=0;  
M_EQ(I)..  M(I)-(omega(I)**(sigma))*((1+tar(I))*PE(I))** (-sigma)*EXP*(P**(sigma -1))=E=0;  
X_EQ(I)..  X(I)-lambda(I)*(PE(I)**eta)=E=0;  
EQ_EQ(I).. X(I) -M(I)=E=0;  
 
 
MODEL Armington Armington model /all/;  
 
 
*==================================  
*D. Calculating 2012 market share  
*==================================  
 
*1. Initial values  
*Base data  
demand2012=2653.6;  
supply(" KOR")= [[***]]; 
 
 
*Duty levels  
tarinitial("KOR")=0;  
tarinitial("USA")=0;  
tarfinal("KOR")=0.0058;  
tarfinal("USA")=0;  
 
*2. Calibration  
*Parameters and shifters  
tar(I)=tarinitial(I);  
demand=demand2012;  
suppl y("USA")=demand -supply("KOR")*(1+tar("KOR"));  WT/DS464/ARB/Add.1  
 
- 44 - 
 
  
kappa=demand;  
omega(I)=(1+tar(I))*(supply(I)/demand)**(1/sigma);  
lambda(I)=supply(I);  
 
*Initial values  
EXP.L=demand;  
P.L=1;  
PE.L(I)=1;  
X.L(I)=supply(I);  
M.L(I)=X.L(I)*(1+tar(I));  
 
*3. Solve model  
 
*Solve baseline  
SOLVE Armington using NLP minimizing OBJ;  
PE_PRE(I)=PE.L(I);  
VEXP_PRE(I)=PE_PRE(I)*M.L(I);  
DISPLAY P.L,PE.L,M.L,X.L;  
*(Shows that initial prices are normalized at 1)  
 
*Solve 2012 counterfactual with countervailing  duty 
tar(I)=tarfinal(I);  
SOLVE Ar mington using NLP minimizing OBJ;  
 
*4. Calculate counterfactual value of exports in 2012  
 
VEXP_POST(I)=PE.L(I)*M.L(I);  
VEXP_CHANGE(I)=VEXP_POST(I) -VEXP_PRE(I);  
ms_pre(I)=VEXP_PRE(I)/demand;  
ms_post(I)=VEXP_POST(I)/EXP.L;  
DISPLAY VEXP_PRE,VEXP_POST,VEXP_CHA NGE,demand,EXP.L,ms_pre,ms_post;  
 
*VEXP_POST gives the counterfactual value of trade in 2012 used to construct the  
*import share for 2017.  
*VEXP_CHANGE gives the change in the value of exports  
 
 
*==================================  
*E. Calculating 2017 NoI  
*==================================  
 
*The 2017 NoI is based on 2012 import shares and 2017 market size  
 
*1. Initial values  
 
* Base data  
demand2017=3718.4;  
supply("KOR")=(VEXP_POST("KOR")/EXP.L)*demand2017;  
 
* Duty levels  
tarinitial("KOR")=0.0058;  
tarfinal( "KOR")=0;  
 
*2. Calibration  
 
* Parameters and shifters  
tar(I)=tarinitial(I);  
demand=demand2017;  
supply("USA")=demand -supply("KOR")*(1+tar("KOR"));  
kappa=demand;  
omega(I)=(1+tar(I))*(supply(I)/demand)**(1/sigma);  WT/DS464/ARB/Add.1  
 
- 45 - 
 
 lambda(I)=supply(I);  
 
*Initial values  
EXP.L =demand;  
P.L=1;  
PE.L(I)=1;  
X.L(I)=supply(I);  
M.L(I)=X.L(I)*(1+tar(I));  
 
*3. Solve model  
 
*Solve baseline  
SOLVE Armington using NLP minimizing OBJ;  
PE_PRE(I)=PE.L(I);  
VEXP_PRE(I)=PE_PRE(I)*M.L(I);  
DISPLAY P.L,PE.L,M.L,X.L;  
*(Shows that initial prices are no rmalized at 1)  
 
*Solve 2017 counterfactual reducing the countervailing  duty 
tar(I)=tarfinal(I);  
SOLVE Armington using NLP minimizing OBJ;  
 
*4. Calculate change value of exports  
 
VEXP_POST(I)=PE.L(I)*M.L(I);  
VEXP_CHANGE(I)=VEXP_POST(I) -VEXP_PRE(I);  
NoI=VEXP _CHANGE("KOR")  
DISPLAY VEXP_PRE,VEXP_POST,VEXP_CHANGE,NoI;  
 
*VEXP_CHANGE for Korea gives the change in the value of trade for Korea in 2017,  
*thus providing the NoI  
 
*Write to excel  
execute_unload 'NoI.gdx',NoI  
execute 'gdxxrw.exe NoI.gdx O=NoI_CVD.xls par=NoI'  WT/DS464/ARB/Add.1  
 
- 46 - 
 
 ANNEX C -2 
LEVEL O F NULLIFICATION OR I MPAIRMENT FOR  NON-LRWS: DERIVATION OF FORMUL A 
 
1.1.  The following set of equilibrium equations defines the Armington model:  
 E =κP1+ε   (1) 
 P = 


 
i=1J
 ω−σ
i ( )pi ()1+t1−σ 1
1−σ
   (2) 
 mi =ω−σ
i ( )pi ()1+t−σ
Pσ−1E   (3) 
 xi =λipη
i   (4) 
 mi =xi   (5) 
1.2.  Equation ( 1) represents total demand in the importing country with E expenditures and P the 
price index. P is defined in equation ( 2) as a weighted sum over the prices from the different sources. 
Equation ( 3) is the import demand equation with mi the quantity imported, pi the export price and 
t the ad -valorem duty rate. Equation ( 4) is the export supply equation and equation ( 5) is market 
equilibrium with export supply equal to imp ort demand. ε is the demand elasticity in the domestic 
market, η is the export supply elasticity, and σ the substitution elasticity between goods from 
different sources.  
1.3.  The system of equations (1) -(5) can be combined and written in relative changes in ord er to 
obtain an expression for the change in the value of imports (exclusive of the duties paid) as a 
function of a change in the duty rate. Technically, this requires log differentiating the system of 
equations and combining and reorganizing the resulting  equations to solve for the change in the 
value of imports. Following this procedure, t he level of nullification or impairment for a non -LRW 
product i can be written as the product of a coefficient c (which depends on the elasticities and the 
market share of the product) , the value of imports, 
i vimp , the change in the dut y rate  and a scaling 
factor given by the reciprocal of one plus the duty rate: 
1.4.   
**1i
ivimpNI c tt        (6) 
1.5.  The coefficient c is a function of the import share sh and the different elasticities1: 
  
 11
i c sh         
         (7) 
 
                                                
1 Taking the limit of  σ going to infinity, gives the expression for the coefficient c in the perfect 
substitutes model. Separate derivation of the coefficie nt c starting from the partial equilibrium perfect 
substitutes  model would lead to the same result. As such the formula for the perfect substitutes model is a 
nested case of the more general formula for the Armington model.  WT/DS464/ARB/Add.1  
 
- 47 - 
 
 1.6.  The next paragraphs provide a det ailed derivation of equations (6) and (7 ). 
1.7.  Combining equations (1) -(5) leads to the following two equilibrium equations:  
 
 1i i ip t P p     
   (8) 
1
1 1
11J
ii
iP p t

   (9) 
1.8.  Hat (lo g) differentiating equations (8) -(9) gives:  
ˆ ˆˆ
1itp t Pt     
=𝜂𝑝̂𝑖   (10) 
1ˆ ˆˆ
1J
kk
ktP sh p tt 
    (11) 
1.9.  Rearranging equation ( 10) for countries whose duty rate t is not changing gives:  
ˆ ˆkpP

  (12) 
1.10.   Combining equations (1 1)-(12) then gives:  
ˆˆ ˆˆ
1ik
kitP p t sh Pt
    
  (13) 
1.11.   Rearranging equation (1 3) and using that 
1ki
kish sh
  leads to:  
 
ˆ ˆˆ
111i
i
ish tP p ttsh
  
  (14) 
  WT/DS464/ARB/Add.1  
 
- 48 - 
 
  
1.12.   Substituting equation (1 4) into equation ( 10) generates an expression for pi: 



11
ˆ ˆ
1
11i
i
i
i
ish
shtptsh t
sh



   
 (15) 
1.13.   To determine the change in the value of imports of the country whose du ty rate will change, 
equation ( 8) is hat differentiated:  
 ˆ ˆ ˆ ˆ ˆ 11i i idvimp tp m p t Pvimp t          
 (16) 
1.14.   Substituting equations (1 4)-(15) into equation (1 6) and rearranging gives (after a couple of 
steps of tedious but straightforward algebra) for the percentage change in the val ue of imports:  
 11
ˆ
1i
i
idvimp tsh tvimp t         
        
 (17) 
Equation (6) then follows from the definition of a variable with a hat, i.e. 𝑥̂=Δ𝑥
𝑥  WT/DS464/ARB/Add.1  
 
- 49 - 
 
 Table 1: Values of coefficients of formula, by harmonized system chapter2 
HS Line Coefficient   HS Line  Coefficient  
1 -1.348   50 -4.360  
2 -3.074   51 -5.216  
3 -3.282   52 -3.157  
4 -3.790   53 -2.202  
5 -1.783   54 -4.675  
6 -2.026   55 -2.665  
7 -3.777   56 -2.620  
8 -2.888   57 -2.757  
9 -2.401   58 -3.008  
10 -2.632   59 -2.338  
11 -4.341   60 -3.202  
12 -3.078   61 -3.761  
13 -1.626   62 -4.168  
14 -1.337   63 -3.342  
15 -2.362   64 -2.377  
16 -3.895   65 -1.881  
17 -1.790   66 -1.877  
18 -2.470   67 -1.969  
19 -3.630   68 -2.620  
20 -3.840   69 -3.424  
21 -2.394   70 -2.600  
22 -4.709   71 -2.378  
23 -5.666   72 -3.869  
24 -2.597   73 -2.336  
25 -1.987   74 -1.817  
26 -4.558   75 -1.832  
27 -4.994   76 -7.150  
28 -3.137   78 -5.300  
29 -2.091   79 -1.886  
30 -3.147   80 -2.967  
31 -3.124   81 -3.266  
32 -2.075   82 -1.606  
33 -3.928   83 -1.691  
34 -1.925   84 -3.568  
35 -1.965   85 -2.038  
36 -2.015   86 -1.672  
37 -2.037   87 -2.294  
38 -2.601   88 -4.265  
39 -3.034   89 -4.151  
40 -5.667   90 -3.147  
41 -2.011   91 -3.266  
42 -5.290   92 -1.737  
43 -3.435   93 -3.274  
44 -2.625   94 -1.638  
45 -2.916   95 -2.291  
46 -1.642   96 -3.187  
47 -2.711   97 -1.631  
48 -2.786   98 -3.526  
49 -2.041   99 -3.524  
 
 
 
                                                
2 As Chapter 77 is currently empty and reserved for possible future use in the Harmonized System, no 
coefficient can be calculated for that Chapter. See World Customs Organization, HS Nomenclature 2017 
edition, < http://www.wcoomd.org/en/topics/nomenclature/instrument -and-tools/hs -nomenclature -2017-
edition/hs -nomenclature -2017-edition.aspx >, accessed 17 October 2018.   WT/DS464/ARB/Add.1  
 
- 50 - 
 
 Table 2 : Summary statistics of the coefficients and the inputs to calculate the coefficients  
  
Mean  Standard 
deviation  Minimum  Maximum  
Elasticities      
Substitution elasticity  4.73 4.26 1.40 35.83  
Supply elasticity  7.70 0.00 7.70 7.70 
Demand elasticity  -0.80 0.19 -0.88 -0.00      
Market shares      
Share of Korean imports in total imports  2.45%  3.87%  0.00%  20.46%  
Share total imports in total demand  23.00%  15.39%  1.67%  74.98%  
Share Korean imports in total demand  0.51%  0.84%  0.00%  5.92%       
Coefficient  -2.96 1.12 -7.15 -1.34 
 
  WT/DS464/ARB/Add.1  
 
- 51 - 
 
 Table 3:  Read me file 
 
The following two steps should be taken to calculate the coefficients for the 98 HS -chapters, which 
serve as input into the for mula to calculate the level of nullification or impairment  for non -LRWs:  
 
1. Calculate the price elasticity of demand and the aggregate import share from the GTAP10 
database.  
 
Description: This program uses the GTAP10P2 database aggregated to 2 regions (USA a nd ROW) 
and calling the tab -file "GTAPv7_ep_imsh.tab ". This is the tab -file of the standard GTAP model 
version 7, supplemented with additional lines of code, calculating the share of imports in total sales 
and writing it together with the price elasticity to the summary file, "gtapsum_num.har". T he cmf 
calls GTAP data from version GTAP102, containing 2014 data on import shares. The own price 
elasticity of demand is calculated based on the constant difference elasticity (CDE) utility function 
calibrated to e stimated income and price elasticities for 10 more aggregated categories in Reimer 
and Hertel.  
 
a. Open "Wingem", a utility part of Gempack. In Wingem select "Simulation/Run TG 
program". This opens a new window.  
• Select for TG Executable "GTAPv7_ep_imsh.exe" , which is in the subfolder 
"code"  
• Select for Command file "calculate_ey_ep_impsh_2_57.cmf", which is in the 
subfolder "cmf".  
• Then choose "Run", which will run a numeraire shock and write the results to 
"gtapsum_num.har".  
 
b. Write the results to csv -files using the Command Prompt. To do this:  
• Double -click on the file "gtapsum_num.har"  
• The file opens in Viewhar  
• Click on the tab Programs and then on DOS Prompt, this opens the Command 
Prompt in the folder "Results"  
• Write  
har2csv gtapsum_num.har ep.csv ep  
and then  
har2csv gtapsum_num.har imsh.csv imsh  
in the command.  
 
c. Put the newly created files "ep.csv" and "imsh.csv" in the folder "raw_data".  
 
2. Calculate the coefficients for the 98 HS chapters.  
 
Description: This program (do -file) calls the data in folder "raw_data". Except for ep.csv and 
imsh.csv discussed in the previous step, this folder contains data collected directly from websites:  
a. "elast_LIMLhybrid_hs10.dta". The substitution elasticities calculated by Soderbery  
b. conc_hs_comb_gtap.csv. A concordance table from GTAP to hs6_combined, downloaded from 
wits.org  
c. imports_korea.xlsx and imports_world.xlsx containing value of imports in 2016 and 2017 at 
various hs -levels downloaded from US Census  
d. imports_hts2_dataweb.xlsx. Imports at hs2 leve l from usitc Dataweb for 2016 and 2017. Serve 
as comparison data  
The do -file aggregates the substitution elasticities to trade -weighted average elasticities; calculates 
aggregate import shares and demand elasticities based on the hs6 -GTAP concordance and h s6 to 
section concordance; calculates shares of Korean imports in total imports based on US Census data; 
sets the supply elasticity at -7.7; and finally calculates the 98 coefficients. The 98 coefficients are 
written to the excel file "coefficient_and_inpu ts.xls" in the folder "results."  
 
a. Open Stata. Select File/Change Working Directory. Select the folder "non_lrws".  
b. Open the do -file "calculate inputs for c_section_averages" located in the folder "code". 
Execute the do -file. 
c. The results are written into two  excel files, "coefficient_and_inputs.xls" and 
"summstats.csv", in the folder "results".   WT/DS464/ARB/Add.1  
 
- 52 - 
 
 Table 4:  Command file 
 
!===================================================================
============  
! CMF file for running the GTAPv7 model outside of RunGTAP  
!===================================================================
============  
 
auxiliary  files = ..\code\GTAPv7_ep_imsh ; 
Solution  file = ..\results\numeraire_shock  ; 
Method = Gragg; 
Steps = 2 4 6;  
subintervals  = 1; 
automatic  accuracy  = no; 
accuracy  figures = 5; 
accuracy  percent = 95; 
minimum subinterval  length = 1.0E-0006; 
minimum subinterval  fails = stop; 
accuracy  criterion  = Data; 
verbal description  = numeraire  shock to calculate  ey and ep; 
 
! -----------  
! Input files  
! -----------   
File GTAPSETS  = ..\data\sets.har ; ! constant input  
File GTAPDATA  = ..\data\basedata .har ; ! updated input  
File GTAPPARM  = ..\data\default.prm ; ! constant input  
 
! ------------  
! Output files  
! ------------   
File GTAPSUM = ..\results\gtapsum_num .har ; ! output  
File WELVIEW = ..\results\welview_num .har ; ! output  
File GTAPVOL = ..\results\gtapvol_num .har ; ! output  
updated file GTAPDATA  = ..\updated\updated_num .har; 
  
Exogenous  ! Standard GE closure: psave varies by region, pfactwld is 
numeraire  
  afall afcom afeall afecom afereg afesec  
  afreg afsec 
  aintall aintreg aintsec  
  ams  
  aoall aoreg aosec 
  atd atf atm ats  
  au 
  avareg avasec 
  cgdslack  
  dpgov dppriv dpsave 
  endwslack  incomeslack   WT/DS464/ARB/Add.1  
 
- 53 - 
 
   pfactwld   
  pop profitslack  psaveslack  
  qe qesf 
  tinc  
  tm tms to tp 
  tradslack  tx txs 
  ; 
 
Rest endogenous ; 
! End Common Closure file "BASE.CLS"  
  
 
shock pfactwld  = 1;   WT/DS464/ARB/Add.1  
 
- 54 - 
 
 Table 5: STATA d o file 
 
*==========================  
*Import trade data  
*==========================  
 
*Local path to be added  
*cd ""  
 
cd working  
 
set type double, permanently  
set more off  
 
import excel .. \raw_data \imports_korea.xlsx, clear firstrow case(lower)  
 
gen sp=strpos(commodity," ")  
gen hs=substr(commodity,1,sp -1) 
gen hsname=substr(commodity,sp+1,.)  
save imports_korea, replace  
 
use imports_k orea, clear  
keep if length(hs)==2  
rename hs hs2  
save imports_korea_hs2, replace  
 
use imports_korea, clear  
keep if length(hs)==10  
save imports_korea_hs10, replace  
 
gen hs2=substr(hs,1,2)  
collapse (sum) v2016 v2017, by(hs2)  
rename v2016 vv2016  
rename v2017 vv2017  
 
merge 1:1 hs2 using imports_korea_hs2, gen(check)  
gen cc1=vv2016 -v2016  
sort cc1  
gen cc2=vv2017 -v2017  
sort cc2  
 
 
import excel .. \raw_data \imports_world.xlsx, clear firstrow case(lower)  
 
gen sp=strpos(commodity," ")  
gen hs=substr(commodity,1,sp -1) 
gen hsname=substr(commodity,sp+1,.)  
save imports_world, replace  
 
use imports_world, clear  
keep if length(hs)==2  
rename hs hs2  
save imports_world_hs2, replace  
 
use imports_world, clear  
keep if length(hs)==10  
save imports_korea_hs10, replace  
 
gen hs2=substr (hs,1,2)  
collapse (sum) v2016 v2017, by(hs2)  
rename v2016 vv2016  
rename v2017 vv2017  WT/DS464/ARB/Add.1  
 
- 55 - 
 
  
merge 1:1 hs2 using imports_world_hs2, gen(check)  
gen cc1=vv2016 -v2016  
sort cc1  
gen cc2=vv2017 -v2017  
sort cc2  
 
*We checked here whether the Census data are consistent, i .e. that the HS2 reported  
*data are identical to the sum of the HS10 reported data. This is the case.  
 
*=================================  
*Import Census data  
*=================================  
 
*=================================  
*Calculate Korea's market share  
*=================================  
 
*Compare Census and USITC Dataweb data  
import excel using .. \raw_data \imports_hts2_dataweb.xlsx, clear firstrow  
tostring hts, replace  
replace hts="0"+hts if length(hts)==1  
rename hts hs2  
save hs2_dataweb, replace  
 
*Calculate import shares at the Chapter level  
use hs2_dataweb, clear  
merge 1:1 hs2 using imports_korea_hs2, nogen  
rename v2017 korea_census  
keep hs2 world Korea commodity korea_census  
merge 1:1 hs2 using imports_world_hs2, nogen  
rename v2017 world_census  
keep hs2 world Korea commodity korea_census world_census  
 
gen mskorea_census=korea_census/world_census  
gen mskorea_dataweb=Korea/world  
gen check=mskorea_census -mskorea_dataweb  
sort check  
*The difference between the census and usitc dataweb data is tiny, so we stick  
*to one consistent datasource, the census  
keep hs2 mskorea_census  
sort hs2  
save mskorea_census, replace  
 
 
 
*=========================================  
*Calculate trade -weighted average substitution elasticity  
*===================================== ====  
 
use .. \raw_data \elast_LIMLhybrid_hs10, clear  
keep good sigma  
rename good hs  
merge 1:1 hs using imports_korea_hs10, gen(check)  
save elast_liml_hs10, replace  
 
use elast_liml_hs10, clear  
gen hs2=substr(hs,1,2)  
*Somehow there are no trade data in hs2=46, so we take an unweighted average across  
*the estimates hs10 -substitution elasticities  
replace v2017=1 if hs2=="46"  
collapse sigma [iw=v2017], by(hs2)  WT/DS464/ARB/Add.1  
 
- 56 - 
 
 save sigma_2017, replace  
 
use elast_liml_hs10, clear  
gen hs2=substr(hs,1,2)  
replace v2016=1 if hs2 =="46"  
collapse sigma [iw=v2016], by(hs2)  
rename sigma sigma16  
merge 1:1 hs2 using sigma_2017, nogen  
*Difference base year is relatively small, so we take 2017, consistent with use of 2017 data  
*for other datasources in the case such as for LRWs for examp le 
 
*Check collapse  
use elast_liml_hs10, clear  
gen hs2=substr(hs,1,2)  
gen sigmah=sigma*v2017  
replace v2017=. if sigma==.  
collapse(sum) sigmah v2017, by(hs2)  
gen sigma2=sigmah/v2017  
merge 1:1 hs2 using sigma_2017, nogen  
*(Collapse statement with iw  was of course correct)  
 
 
*For two HSlines there are no substitution elasticity estimates, 98 and 99, so we  
*use the trade -weighted average across the other lines for this  
use elast_liml_hs10, clear  
gen hs2=substr(hs,1,2)  
collapse sigma [iw=v2016]  
gen hs2 ="98"  
save sigma_98, replace  
replace hs2="99"  
save sigma_99, replace  
 
use sigma_2017, clear  
drop if hs2=="98" | hs2=="99"  
append using sigma_98  
append using sigma_99  
save sigma_2017_final, replace  
 
 
*=========================================  
*Concordance H S2 to GTAP  
*=========================================  
 
use imports_korea, clear  
keep if length(hs)==6  
rename hs hs6  
save imports_korea_hs6, replace  
 
import delimited .. \raw_data \conc_hs_comb_gtap, clear  
tostring hscombinedproductcode, replace  
rename hscombinedproductcode hs6  
replace hs6="0"+hs6 if length(hs6)==5  
gen hs2=substr(hs6,1,2)  
joinby hs6 using imports_korea_hs6  
rename gtapproductdescription gtap  
gen comm=lower(substr(gtap,1,3))  
save conc_h, replace  
 
 
*=========================================  
*Calculate price elasticity of demand and Total import share  
*=========================================  WT/DS464/ARB/Add.1  
 
- 57 - 
 
  
import delimited .. \raw_data \ep, clear  
keep if comm==v2  
keep if reg=="usa"  
keep comm value  
rename value ep  
save ep_usa, replace  
 
import delimited .. \raw_data \imsh, clear  
keep if reg=="usa"  
keep comm value  
rename value imsh  
save imsh_usa, replace  
 
use conc_h, clear  
merge m:1 comm using ep_usa, gen(check)  
merge m:1 comm using imsh_usa, nogen  
sort check  
keep if check==3  
collapse ep imsh, by(hs2)  
rename ep ep_unw  
rename imsh imsh_unw  
save epimsh_unw, replace  
 
use conc_h, clear  
merge m:1 comm using ep_usa, gen(check)  
merge m:1 comm using imsh_usa, nogen  
sort check  
keep if check==3  
collapse ep imsh [iw=v2017], by(hs2)  
merge 1:1 hs2 using epimsh_unw, nogen  
*Weighted and unweighted average differ considerably sometimes. We choose to  
*work with the hs6 (Korea,US) trade value weighted average, as it is more exact  
keep hs2 ep imsh  
save epimsh_h, replace  
 
*Generate hs lines 98 and 99  
use conc_h, clear  
merge m:1 comm  using ep_usa, gen(check)  
merge m:1 comm using imsh_usa, nogen  
sort check  
keep if check==3  
collapse ep imsh [iw=v2017]  
gen hs2="98"  
save epimsh_98, replace  
replace hs2="99"  
save epimsh_99, replace  
 
use epimsh_h, clear  
append using epimsh_98  
append using epimsh_99  
save epimsh, replace  
 
 
*=========================================  
*Merge all results and calculate coefficient  
*=========================================  
 
use sigma_2017_final, clear  
merge 1:1 hs2 using mskorea_census, nogen  
merge 1:1 hs2 using e pimsh, nogen  
gen se=7.7  WT/DS464/ARB/Add.1  
 
- 58 - 
 
 gen kor_imsh=mskorea_census*imsh  
order hs2 sigma se ep mskorea_census imsh kor_imsh  
 
*Calculate coefficient  
gen coefficient  = ((se+1)*sigma*(se -ep)/(se+sigma))/(ep -se) ///  
     - kor_imsh*((sigma+ep)*se*(se+1)/(se+sigma))/(ep -se) 
save coefficient_and_inputs, replace  
export excel using .. \results \coefficient_and_inputs, firstrow(variable) replace  
 
 
*=========================================  
*Summary stats  
*=========================================  
 
use coefficient_and_inputs, clear  
estpost summ sigma se ep mskorea_census imsh kor_imsh coefficient  
esttab using .. \results \summstats.csv, replace cells("mean(fmt(3)) sd(fmt(3)) max(fmt(3)) 
min(fmt(3))")  
 
 
_______________  
 
 
 
 WT/DS464/ARB/Add.1  
 
- 59 - 
 
 ANNEX  D 
DECISION OF THE ARBI TRATOR CONCERNIN G A PARTIALLY OPEN H EARING  
Contents  Page  
Annex  D-1 Decision of the Arbitrator on the United States' Request for an Open Hearing  60 
 
 
 WT/DS464/ARB/Add.1  
 
- 60 - 
 
 ANNEX D -1 
DECISION OF THE ARBI TRATOR ON THE UNITED  STATES' REQUEST FOR  AN OPEN HEARING  
A. INTRODUCTION  
1.1.  As noted in section 2.2  ("Procedural Matters" ) of the Decision , the United States requested that 
the Arbitrator's meeting with the parties be opened to other Members and the public. On 5 April 
2018, the Arbitrator communicated its decision declining the Un ited States' request, confirming that 
the Arbitration hearing would be conducted in closed session. This section sets out the reasons 
underlying that decision.  
B. ANALYSIS  
1.2.  The United States initially requested that the Arbitrator's meeting with the parties be  open to 
observation by other WTO Members and the public "in whole, if Korea's agrees … , or in part, if Korea 
does not".1 In its written comments following the organizational meeting, the United States proposed 
a set of additional working procedures to co nduct an open meeting [hereinafter, "first set of working 
procedures"].2 Korea replied that it did not consent to public observation of the meeting3 and further 
indicated that, in its view, the first set of working procedures did not "protect Korea's right  to 
confidentiality as set out under Article 18.2 of the DSU."4 In the event, however, that the Arbitrator 
were to allow the United States to disclose its own statements at the hearing, Korea asked the 
Arbitrator to adopt delayed -viewing and redaction proc edures, modelled on those adopted by the 
arbitrator in US – Tuna II (Mexico) (Article 22.6 – US) [hereinafter, Tuna II ].5 Korea subsequently 
indicated that its "interests in ensuring protection of BCI and the United States' interests in opening 
the hearing  to the public can be met by holding a partially open hearing on a recorded or delayed 
basis."6 
1.3.  Reacting to Korea's statements, the United States requested that the Arbitrator "permit[] the 
United States to deliver its statements in a partially open hearin g", and indicated that the United 
States "did not object to recording the open portion of the hearing with a delayed viewing to allow 
for confirming that the recording does not contain business confidential information ('BCI')".7 The 
United States also app ended a second set of additional working procedures to conduct a partially 
open meeting [hereinafter, "second set of working procedures"].8  
1.4.  In light of the foregoing, we recognize that the United States has revised its initial request that 
the Arbitrator open the hearing either "in whole … or in part", to ask that the Arbitrator adopt 
procedures for a "partially open hearing". This directs us to focus our assessment on the United 
States' request for a partially open meeting and its second set of working pr ocedures.9 
1.5.  The United States' second set of working procedures only provides for the protection, and 
redaction, of BCI.10 To Korea, these working procedures "overlook[] important procedures that are 
                                                
1 See United States' comments on draft timetable and draft working procedures, p. 5.   
2 United States' "Additional Working Procedures for the Arbitrator: Open Meeting".  
3 Korea's comments on draft timetable and draft working procedures, para. 12.  
4 Korea's response to Arbitrator question No. 4 on open hearings, pp. 2 -3.  
5 Korea's comments on draft timetable and draft working procedures, para. 12 and fn 4. See also 
Korea's response to Arbitrator question No. 4 on open hearings, p. 3.  
6 Korea's response t o Arbitrator question No. 4 on open hearings, p. 3.  
7 United States' comments on Korea's response to Arbitrator question Nos. 3 and 5 on open hearings, 
paras. 3 -4. 
8 The United States attached "an example of working procedures for a partially open hearing,  based on 
those of the Arbitrator in US – Tuna II (Mexico) (Article 22.6 – US)". United States' comments on Korea's 
response to Arbitrator question Nos. 3 and 5 on open hearings, fn 4.  
9 Throughout this Decision, we indicate when we refer to a specific ope n hearing modality – partially or 
fully open – or to open hearings generally.  
10 See United States' "Additional Working Procedures of the Arbitrator on Partially Open Meetings", 
paras. 1.1, 3.3 -3.4, and 3.8 -3.10. WT/DS464/ARB/Add.1  
 
- 61 - 
 
 necessary for the protection of confidential information."11 Instead, Korea reiterated its request that 
the Arbitrator either adopt working procedures modelled on those in Tuna II  or devise a "simplified" 
redaction process.12  
1.6.  Thus, while we understand that the United States and Korea have agreed, in principle, that the 
meeting may be partially opened, the parties disagree on how to conduct such a meeting. More 
specifically, Korea and the United States differ on what may be disclosed, and, in particular, on 
whether the redaction "filter" should catch only BCI or should also catch "other confidential 
information".13 
1.7.   Therefore, we will evaluate the United States' request, along with its supporting reasoning, 
that the Arbitrator adopt the proposed second set of working procedures that limit the protection of 
confiden tial information to BCI, and Korea's proposals that extend such protection beyond BCI.  
1.8.  However, before turning to the parties' arguments on procedures to conduct a partially open 
meeting, we wish to address the United States' argument that "Korea's choice to maintain the 
confidentiality of its own statements would not be a basis to deny a U.S. request to the Arbitrator to 
lift the confidentiality of U.S. statements at the time they are made at the arbitration meeting" under 
Article 18.2 of the DSU, since "o ne party to this arbitration does not have a right to prevent the 
other party from delivering its statements in open hearing."14 
1.9.  As background, we recall that the DSU does not "expressly contemplate" open meetings.15 The 
working procedures contained in Appen dix 3 of the DSU, paragraph 2, provide that "panels shall 
meet in closed session."16 Article 12.1 of the DSU sets forth the possibility for a panel to depart from 
those working procedures, if the panel "consult[s] the parties to the dispute."17 Past WTO 
adjudicators – including arbitrators in Article 22.6 proceedings – have done so and opened meetings, 
either partially or in full, to public observation in limited circumstances. Where both parties have 
agreed to open meetings to public observation, panels and the Appellate Body have granted the 
request and adopted appropriate working procedures.18 Where parties have disagreed, WTO 
adjudicators have declined the request in all instances19, except one.20 This practice confirms that it 
is the WTO adjudicator that ultimately decides , in due consideration of the parties' positions and the 
circumstances of the proceeding, to either open a meeting (in full or in part) or to keep it closed.  
1.10.   The United States' argument mischaracterizes Article 18.2 of the DSU in relation to  the issues 
raised by a partially or fully open hearing. The second sentence of Article 18.2 of the DSU states 
that "[n]othing in [the DSU] shall preclude a party to a dispute from disclosing statements of its own 
positions to the public". We therefore agr ee with the United States and Korea that the second 
                                                
11 Korea's response to Arbitrator question on  United States' second set of working procedures, p. 1.  
12 Korea's response to Arbitrator question on United States' second set of working procedures, p. 3.  
13 See Korea's response to Arbitrator question No. 4 on open hearings, p. 3; Korea's response to 
Arbitrator question on United States' second set of working procedures, p. 1.  
14 United States' comments on draft timetable and draft working procedures, p. 6; and United States' 
response to Arbitrator question No. 1 on open hearings, para. 4 . See also United States' comments on Korea's 
comments on draft timetable and draft working procedures, p. 4.  
15 Panel Reports, US – Continued Suspension , para. 7.45; and Canada – Continued Suspension , 
para.7.43.  
16 As the panels in US/Canada – Continued Suspension  note, paragraph 2 of Appendix 3 of the DSU also 
provides: "The parties to the dispute, and interested parties, shall be present at the meeting only when invited 
by the panel to appear before it." There is no reference in that provision to the public or any ot her participant. 
Panel Reports, US – Continued Suspension , para. 7.45; and Canada – Continued Suspension , para.  7.43. 
17 Panel Reports, US – Continued Suspension , para. 7.46; and Canada – Continued Suspension , 
para. 7.44. Similarly, panels may neither resha pe substantive provisions of the DSU nor deviate from the 
working procedures in Appendix 3 in a way that would contravene an express prohibition in the DSU. Panel 
Reports, US – Continued Suspension , para. 7.45; and Canada – Continued Suspension , para. 7.43 .  
18 In 2005, the disputing parties requested, for the first time, opening the meetings with the parties to 
public observation in the US/Canada – Continued Suspension  panel proceedings. The panels accepted the 
request. See Panel Reports, US – Continued Sus pension , para. 4.2; and Canada – Continued Suspension , 
para. 4.2. To date, meetings have been opened in more than 30 disputes.  
19 See, e.g. Appellate Body Report, EU – Biodiesel (Argentina) , Add.1, Annex D -2, para. 6; and Panel 
Report, US – OCTG (Korea) , Add.1, Annex E -1, para. 3.4.  
20 The Tuna II parallel compliance panel proceedings and Article 22.6 arbitration are and remain the 
only examples in which an adjudicator granted one party's request for a "partially" open hearing – but over the 
objection of the  other party. See Decision by the Arbitrator, US – Tuna II (Mexico) (Article 22.6 – Mexico) , 
fn 31 and Add.1., Annex A -3. WT/DS464/ARB/Add.1  
 
- 62 - 
 
 sentence of this provision confers a right of disclosure to a party of statements of its own position; 
however, it does not follow from the mere existence of this right that an arbitrator must open a 
meeting, be it in full or in part, in order to provide a "vehicle" for a party to exercise its right of 
disclosure under Article 18.2. Article 18.2 does not address the question of whether hearings should 
be open or partially open. Further, there is nothing in  any other part of the DSU that indicates a 
party's right to disclose statements of its position under Article 18.2 must be exercised through 
holding a fully or partially open hearing. Accordingly, nothing in the DSU suggests that an arbitrator 
– or any ot her WTO adjudicator – is required either to facilitate a Member's exercise of its rights 
under Article 18.2 to disclose statements of its positions or to "automatically"21 grant the request to 
open a meeting.22 In summary, the text of Article 18.2 of the DSU  does not oblige the Arbitrator to 
accept a request to partially open a meeting.  
1.11.   We also disagree with the United States to the extent it suggests that as "the DSU makes no 
reference to the confidentiality of Article 22.6 arbitration proceedings … there is  even less basis to 
determine that one party to an Article 22.6 proceeding may prevent another party from delivering 
its statements in open hearing".23 First, we find this view inconsistent with the United States' overall 
argument that it has a right to for ego confidentiality of statements of its own position under 
Article  18.2, second sentence. Second, as noted above, past arbitrators have determined that the 
confidentiality rules of Article 18 of the DSU, which are expressly stated as being applicable to p anel 
and Appellate Body proceedings, also apply to Article  22.6 proceedings, whether or not textually 
indicated.24  
1.12.   Turning now to the parties' proposed procedures to implement a partially open meeting, we 
recall that the United States' second set of workin g procedures limit the scope of what may not be 
disclosed to BCI alone – and only BCI would be subject to review and redaction.25 Korea confirms 
that a narrow view of confidentiality limited to BCI is not satisfactory, given Korea's stated concerns 
on discl osure of its "other confidential information".26  
1.13.   We note, in this regard, that Korea proposed amendments to the United States' second set of 
working procedures, which we do not view as a separate request but as an attempt, by Korea, to 
find common ground b etween it and the United States.  Korea indicates that the United States' 
working procedures "overlook[] important procedures that are necessary for the protection of 
confidential information", namely those redaction procedures in Tuna II .27 Korea's amendments 
would re -introduce certain elements of the Tuna II  redaction procedure – elements that we note the 
United States set aside in its second set of working procedures – to permit redaction of its 
"arguments" and "positions".28 As Korea ackno wledges29, the United States does not agree to the 
Tuna II  working procedures, specifically the redaction process, which it criticized as "flawed"30. No 
matter how the Tuna II  redaction procedure could hypothetically be reformed, redaction beyond BCI 
is oppo sed by the United States.31 In other words, we find it impossible to reconcile a Tuna II 
approach to redact Korea's "other confidential information" with the United States' view of 
confidentiality as limited to BCI.  
1.14.   We further emphasize that, without the a greement of the parties on this fundamental issue – 
the scope of confidentiality for the purpose of conducting a partially open meeting in this proceeding 
– we cannot do as the parties wish, without, in practice, contravening the parties' respective views 
on disclosure and confidentiality.  
                                                
21 See Decision by the Arbitrator, US – Tuna II (Mexico) (Article 22.6 – Mexico ), para. 2.24 and fn 28.  
22 Decision by the Arbitrator, US – Tuna II (Mexico) (Article 22.6 – Mexico ), para. 2.24.  
23 United States' response to Arbitrator question No. 1 on open hearings, para. 6. In its response, the 
United States commented on the findings of the Appellate Body in US – Continued Suspension  on the scope of 
confidentiality in Article  17.10 of the DSU. See ibid. para. 5.  
24 See Decision by the Arbitrator, US – Upland Cotton (Article 22.6 – US I), para. 1.33.  
25 See United States' "Additional Working Procedures of the Arbitrator on Partially Open Me etings".  
26 Korea's response to Arbitrator question No. 4 on open hearings, p. 3; and Korea's response to 
Arbitrator question on United States' second set of working procedures, p. 1.  
27 Korea's response to Arbitrator question on United States' second set of  working procedures, pp. 2 -3. 
28 Korea's response to Arbitrator question on United States' second set of working procedures, pp. 2 -3. 
29 Korea's response to Arbitrator question on United States' second set of working procedures, p. 3.  
30 United States' commen ts on Korea's comments on draft timetable and draft working procedures, p. 4.  
31 United States' comments on Korea's response to Arbitrator question Nos. 3 and 5 on open hearings, 
para. 4.  WT/DS464/ARB/Add.1  
 
- 63 - 
 
 1.15.   In light of the foregoing, we decline to adopt the United States' second set of working 
procedures on a partially open hearing as well as Korea's proposed amendments thereto.  
1.16.   In the alternative, Korea asks the Arbitrator  to "provide the parties with a simplified redaction 
procedure … in which the parties may request redaction of statements that directly or indirectly 
disclose exhibits, arguments, and positions of the non -disclosing party."32 Korea offers no guidance 
or det ail on what may be "simplified".  
1.17.   In our view, Korea's suggestion that the Arbitrator devise and adopt a "simplified" redaction 
procedure would require the Arbitrator to determine what information is confidential and therefore 
susceptible to redaction. Notw ithstanding the Arbitrator's attempts – through questions – to arrive 
at a satisfactory procedural solution, the parties did not compromise their views on the scope of 
confidentiality and the attendant redaction procedures. "Simplified" working procedures would fail 
to bridge this gap as form cannot compensate for missing substantive agreement.  
1.18.   Furthermore, other considerations must be accounted for, in particular the prompt settlement 
of disputes.33 In this regard, fulfilling Korea's request would place a b urden on the Arbitrator, which 
goes directly against Korea's stated concern that "administrative burdens must be avoided in the 
interest of prompt settlement of a dispute".34 Relatedly, should we have devised a "simplified" 
redaction process, without furthe r direction from Korea, the proponent of the request, guaranteeing 
both parties' due process rights – through several rounds of questions and comments – would have 
affected the timetable.35  
1.19.   Accordingly, we abstain from proposing "simplified" procedures due  to these time constraints 
and the significant differences  between the parties' views regarding such procedures.  
1.20.   In ultimately denying the United States' request to partially open the meeting in this 
Arbitration, we are not prohibiting the United States f rom disclosing its statements of its own position 
and thereby depriving the United States of its right under Article 18.2 of the DSU. Members routinely 
publish submissions, methodology papers, responses to questions, oral statements, and other 
materials on  publicly accessible websites, regardless of whether the meetings were opened to the 
public.36 Hence, the United States can still exercise its right to disclose statements of its own 
positions by other means as it may determine under Article 18.2.  
1.21.   Finally, we are mindful of the issue of transparency in WTO proceedings, how it has figured 
in discussions among Members to improve and clarify the DSU, and its particular significance in the 
context of dispute settlement.37 To this point, we consider the conclusion  of the panels in US/Canada 
– Continued Suspension  to apply equally in this Arbitration:  
                                                
32 Korea's response to Arbitrator question on United States' second set of working procedures, p. 3.  
33 The arbitrator in Tuna II identified four factors that guide an evaluation of whether to grant a request 
to partially open a meeting: "(a) a non -disclosing party's right to confidentiality protection of statements of its 
own position, (b) due process, (c) the prompt settlement of disputes, or (d) the careful and efficient discharge, 
or the integrity, of the adjudicative function." Decision by the Arbitrator, US – Tuna II (US) (Article 22.6 – 
Mexico) , para. 2.31.  Both the U nited States and Korea consider these factors relevant to this proceeding. See 
United States' response to Arbitrator question No. 6 on open hearings, para. 14; and Korea's response to 
Arbitrator question No. 6 on open hearings, p. 4.  
34 Korea's response to Arbitrator question on United States' second set of working procedures , p. 3. The 
United States shares this concern, and it is one of the reasons the United States opposes the Tuna II  redaction 
process, one which, according to the United States, "adds sign ificantly to the burden on the Arbitrator and the 
Secretariat". United States' comments on Korea's response to Arbitrator question Nos. 3 and 5 on open 
hearings, para. 4.  
35 We are aware that this reason has weighed significantly in the decisions of panels and the Appellate 
Body in determining whether to partially open meetings and hearings. See, e.g., Appellate Body Report, EU – 
Biodiesel (Argentina) , Add.1, Annex D -2, para. 6; and Panel Report, US – OCTG (Korea) , Add.1, Annex E -1, 
para. 3.2.  
36 Panel Repor t, US – Upland Cotton (Article 21.5 – Brazil) , para. 8.20. See also Panel Report, US – 
OCTG (Korea) , Add.1, E -3, para. 3.4.  
37 See Panel Reports, US – Continued Suspension , para. 7.50; and Canada – Continued Suspension , 
para. 7.48.  WT/DS464/ARB/Add.1  
 
- 64 - 
 
 The Panel considers that its role is not to address transparency in general terms, but to 
determine whether the DSU as it currently stands permits that, under the circ umstances 
of this particular case, the Panel hearing be open to public observation.38 
1.22.   In light of  the parties' fundamental disagreement on how to conduct a partially open meeting, 
as well as other considerations in this Article 22.6 arbitration proceeding, we have decided, after 
consulting with the parties, to conduct the Arbitration hearing in closed  session.39 
 
 
__________  
 
 
                                                
38 See Panel Reports, US – Continued Suspension , para. 7.52; and Canada – Continued Suspension , 
para. 7.50.  
39 Paragraph 10 of the working procedures of the Arbitrator states: "The arbitration hearing will be 
conducted in closed session, unless the Arbitrator decides otherwise afte r consultations with the parties."