WT/DS464/AB/R/Add.1  
 
7 September  2016 
(16-4766) Page: 1/51 
    
 
  UNITED STATES – ANTIDUMPING AND COUNTERVAILING MEASURES  
ON LARGE RESIDENTIAL WASHERS FROM KOREA  
AB-2016-2 
Report of the Appellate Body  
Addendum  
This Addendum  contains Annexes A to D to the Report of the Appellate Body  circulated as  
document  WT/DS464/AB/R . 
 
The Notice s of Appeal and Other Appeal  and the executive summaries of written submissions 
contained in this Addendum are attached as they were received from the participants and third 
participants. The content has not been revised or edited by the Appella te Body, except that 
paragraph and footnote numbers that did not start at one in the original may have been 
re-numbered to do so, and the text may have been formatted in order to adhere to WTO style. The 
executive summaries do not serve as substitutes for the submissions of the participants and third 
participants in the Appellate Body's examination of the appeal.  
 
 
_______________  
 
 WT/DS464/AB/R/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
NOTICES OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 United States' Notice of Appeal  A-2 
Annex  A-2 Korea's Notice of Other Appeal  A-4 
ANNEX B  
ARGUMENTS OF THE PARTICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the United States' appellant's submission  B-2 
Annex  B-2 Executive summary of Korea's other appellant's submission  B-4 
Annex  B-3 Executive summary of the United States' appellee's submission  B-11 
Annex  B-4 Executive summary of Korea's appellee's submission  B-18 
ANNEX  C 
ARGUMENTS OF THE THI RD PA RTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Brazil's third participant's su bmission  C-2 
Annex  C-2 Executive summary of Canada's third participant's submission  C-3 
Annex  C-3 Executive summary of China's third participant's submission  C-4 
Annex  C-4 Executive summary of the European Union's third participant's submission  C-9 
Annex C-5 Executive summary of Japan's third participant's submission  C-12 
Annex  C-6 Executive summary of Norway's third participant's submission  C-14 
Annex  C-7 Executive summary of Viet Nam's third participant's submission  C-15 
ANNEX  D 
PROCEDURAL RULING  
Contents  Page  
Annex  D-1 Procedural ruling of 9 May 2016  regarding the protection of b usiness 
confidential information  D-2 
 
 
 WT/DS464/AB/R/Add.1  
 
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  ANNEX  A 
NOTICE S OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 United States ' Notice of Appeal  A-2 
Annex  A-2 Korea 's Notice  of Other Appeal  A-4 
 
 WT/DS464/AB/R/Add.1  
 
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  ANNEX  A-1 
UNITED STATES'  NOTICE OF APPEAL*  
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes  ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the United States 
files this notice of  appeal to the Appellate Body on certain issues of law covered in the Report of 
the Panel on United States – Anti-Dumping and Countervailing Measures on Large Residential 
Washers from Korea  (WT/DS464/R  & WT/DS464/R/Add.1 ) and certain  legal interpretations 
developed by the  Panel in this dispute.  
1. The United States seeks review by the Appellate Body of the Panel 's legal interpretation of 
the "pattern " for purposes of  the second sentence of Article 2.4.2 of the Agreement on 
Implementation  of Article VI of the General Agreement on Tariffs and Trade 1994  (the 
"AD Agreement ").1 The Panel found  that the relevant "pattern " for the purpose of the 
second  sentence of Article 2.4.2 comprise s only low-priced export transactions to a particular 
"target" (be that a purchaser, or a region, or a time period) while other export transactions to 
other purchasers, regions, or time periods are "non-pattern " transactions. This finding  is in error 
and is based on erroneous findings on issues of law and legal in terpretations .2 The United States 
respectfully requests that the Appellate Body reverse or modify the Panel's findings.  
2. The United States seeks review of the Panel 's findings relating to  the "scope of application "3 
of the alternative, average -to-transactio n comparison methodology. The Panel found that the 
alternative, average -to-transaction comparison methodology set forth in the second sentence of 
Article 2.4.2 of the AD Agreement "should only be applied to transactions that constitute the 
'pattern of expo rt prices which differ significantly among different purchasers, regions or time 
periods '."4 Consequently, t he Panel found that the U.S. Department of Commerce ( "USDOC ") acted 
inconsistently with the second sentence of Article 2.4.2 of the AD Agreement by applying the 
alternative, average -to-transaction comparison methodology to all export transactions in the 
washers anti-dumping  investigation.5 The Panel also found that the USDOC's differential pricing 
analysis  is inconsistent with the second sentence of A rticle 2.4.2 of the AD Agreement, "as such, " 
because it applies the alternative, average -to-transaction comparison methodology to all export 
transactions under  certain circumstances .6 These findings by the Panel  are in error and are based 
on erroneous find ings on issues of law and legal interpretations .7 The United States respectfully 
requests that the Appellate Body reverse the Panel's findings.  
3. The United States seeks review of the Panel 's findings relating to  the use of zeroing in 
connection with the app lication of the alternative, average -to-transaction comparison methodology 
set forth in the second sentence of Article 2.4.2 of the AD Agreement.8 The Panel found that "the 
USDOC 's use of zeroing when applying the [average -to-transaction]  comparison method ology is 
'as such ' inconsistent with the second sentence of Article  2.4.2," and that "the USDOC  acted 
inconsistently with the second sentence of Article  2.4.2 by using zeroing when applying the 
[average -to-transaction]  comparison methodology in the Washers  anti-dumping investigation ."9 
Consequently, the Panel also found that "the use of z eroing in the context of the 
[average -to-transaction]  comparison methodology is 'as such ' inconsistent with Article  2.4" of the 
                                                
* This Notice, dated 19 April 2016, was circulated to Members as document WT/DS464/7.  
 
1 See, e.g., Panel  Report, paras. 7.23 -24, 7.27 -29, 7.45 -46, 7.119.c, 7.141 -142, 7.144, 7.154 -157, 
7.160 -163, 7.187 -191, 8.1.a.i, 8.1.a.vi, 8.1.a.ix, and 8.1.a.xii -xvi. As with other findings reflected throughout 
the Panel Report, this list of the paragraphs in the Panel Re port reflecting this legal error is indicative.  
2 See, e.g., Panel Report, paras. 7.23 -24, 7.27 -29, 7.45 -46, 7.119.c, 7.141 -142, 7.144, 7.154 -157, 
7.160 -163, 7.187 -191. 
3 Panel Report, para. 7.11.  
4 See, e.g., Panel Report, para. 7.29.  
5 See, e.g., Panel R eport, paras. 7.29, 8.1.a.i.  
6 See, e.g., Panel Report, paras. 7.119, 8.1.a.vi.  
7 See, e.g., Panel Report, paras. 7.21 -7.29. 
8 See Panel Report, paras. 7.172 -7.209.  
9 See, e.g., Panel Report, paras. 7.192, 8.1.a.xii, 8.1.a.xiv.  WT/DS464/AB/R/Add.1  
 
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  AD Agreement,  "the USDOC acted inconsistentl y with Article  2.4 by using zeroing in the Washers  
anti-dumping investigation, "10 and "the use of zeroing by the USDOC when applying the 
[average -to-transaction]  comparison methodology in administrative reviews is inconsistent 'as 
such' with Article  9.3 of the Anti -Dumping Agreement and Article  VI:2 of the GATT 1994. "11 These 
findings by the Panel  are in error and are based on erroneous find ings on issues of law and 
legal interpretations , including an erroneous interpretation and application of the phrase 
"individual export transactions " in the second sentence of Article 2.4.2 of the AD Agreement.12 The 
United  States respectfully requests that the Appellate Body reverse the Panel's findings.  
4. The United States seeks review of the Panel 's finding that the USDOC 's differential pricing 
analysis "is inconsistent 'as such ' with the second sentence  of Article  2.4.2 because, by 
aggregating random and unrelated price variations, it  does not properly  establish  'a pattern of 
export prices which differ significantly among different purchasers, regions or time periods '."13 
These findings by the Panel  are in error and are based on erroneous findings on issues of law and 
legal interpretations , including an erroneous interpretation of the "pattern clause " of the 
second  sentence o f Article 2.4.2 of the AD Agreement.14 The United States respectfully requests 
that the Appellate Body reverse the Panel's findings.  
                                                
10 See, e.g., Panel Report, p aras. 7.206, 8.1.a.xiii, 8.1.a.xv.  
11 See, e.g., Panel Report, paras. 7.208, 8.1.a.xvi.  
12 See, e.g., Panel Report, paras. 7.187 -7.193, 7.206 -7.208.  
13 See, e.g., Panel Report, paras. 7.143, 7.147, 8.1.a.ix.  
14 See, e.g., Panel Report, paras. 7.138 -7.147.  WT/DS464/AB/R/Add.1  
 
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  ANNEX A -2 
KOREA'S  NOTICE OF OTHER APPEAL * 
1. Pursuant to Articles 16.4 and 17 of the Understanding on Rules and Procedures Gov erning 
the Settlement of Disputes ("DSU") and Rule 23 of the Working Procedures for Appellate Review 
(WT/AB/WP/6, 16 August 2010) ("Working Procedures"), Korea hereby notifies the Dispute 
Settlement Body ("DSB") of its decision to appeal certain issues of law and legal interpretations in 
the Panel Report in United States — Anti-Dumping and Countervailing Measures on Large 
Residential Washers from Korea (WT/DS464/R) ("Panel Report").  
2. Pursuant to Rules 23(1) and 23(3) of the Working Procedures, Korea files t his Notice of 
Appeal together with its Other Appellant Submission with the Appellate Body Secretariat.  
3. Pursuant to Rule 23(2)(c)(ii) of the Working Procedures, this Notice of Other Appeal includes 
an indicative list of the paragraphs of the Panel Report co ntaining the alleged errors, without 
prejudice to Korea 's ability to rely on other paragraphs of the Panel Report in its appeal.  
I REVIEW OF THE PANEL 'S FINDINGS UNDER THE  ANTI -DUMPING AGREEMENT AN D 
ARTICLE VI OF THE GA TT 1994.  
4. Korea seeks review by the Ap pellate Body of the Panel 's interpretation of Article 2.4.2 and 
Article 2.4 of the Anti -Dumping Agreement as they relate to the  proper way to combined the 
two subsets  of intermediate results created by the application of the exceptional W -T comparison 
method in the second sentence of Article 2.4.2.1 In particular, the Panel erred in finding that:  
 The intent of the second sentence of Article 2.4.2 somehow creates an exception to the 
fundamental principles governing the existence of "dumping" and a "margin of  dumping".2 
 Intermediate comparison results could somehow constitute "dumping" without  including the 
prices of all export transactions in the overall assessment.3 
 The authority can properly find a "margin of dumping" based on a numerator consisting only 
some export transactions from the subset using the W -T comparison method, as long as the 
denominator includes all export transactions.4  
 The need to "unmask" so -called "targeted dumping" somehow justifies departure from the 
fundamental principles governing t he existence of "dumping" and a "margin of dumping".5 
 Without these exceptions to the fundamental principles there would be mathematical 
equivalence in all cases, and that equivalence could not be eliminated by changing the 
assumptions behind the analysis being done.6 
 Such disregarding of offsets does not inflate the margin of dumping contrary to Article 2.4.7 
5. Accordingly, Korea requests that the Appellate Body reverse the Panel 's findings, in 
paragraphs 7.167, 7.169, 8.1(a)(x) and 8.1(a)(xi), that the auth ority may disregard offsets from 
the subset based on the normal comparison methods when combining those results with the 
subset based on the exceptional W -T comparison method.  As part of this review, Korea also 
requests the Appellate Body to review paragra phs 7.26, 7.27, 7.162, 7.166, and any other 
                                                
* This Notice, dated 25 April 2016, was circulated to Members as document WT/DS464/8.  
 
1 Panel Report, paras. 7.154 -7.167, 7.169.  
2 Panel Report, paras. 7.155, 7.156, 7.157, 7.160.  
3 Panel Report, paras. 7.154, 7.156, 7.157, 7.160.  
4 Panel Report, paras. 7.157 , 7.160.  
5 Panel Report, paras. 7.26, 7.27, 7.154, 7.162.  
6 Panel Report, paras. 7.164, 7.165, 7.166.  
7 Panel Report, para. 7.169.  WT/DS464/AB/R/Add.1  
 
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  discussions that suggest so -called "targeted dumping" can exist among the intermediate 
comparisons the authority may be conducting, before the authority has properly considered and 
taken into account all export t ransactions for the product as a whole. Korea further requests that 
the Appellate Body complete the analysis and find that (1) the fundamental principles for 
determining "dumping" and "margin of dumping" also apply to the second sentence of 
Article  2.4.2, and that authorities cannot deny offsets when combining the subsets of intermediate 
comparisons created by application of the second sentence of Article 2.4.2 of the 
Anti-Dumping  Agreement; and (2) denying such offsets inflates the "margin of dumping" and is 
thus contrary to the fair comparison requirement of Article 2.4 of the Anti -Dumping Agreement.  
6. Korea seeks review by the Appellate Body of the Panel 's interpretation of the pattern clause 
of the second sentence of Article 2.4.2 as not requiring the auth orities to consider qualitative 
factors when finding a "pattern" of export prices that "differ significantly.8 In particular, the Panel 
erred in finding that:  
 Korea had only challenged the failure to address the "reasons" for export price differences, 
and had not challenged more broadly the failure to address qualitative factors and the 
factual context more generally.9 
 The second sentence did not require the authorities to consider the reasons for export price 
differences as part of properly finding that a "pattern" actually existed,10 or that the 
differences could be considered "significant".11 
7. Accordingly, Korea requests that the Appellate Body reverse the Panel 's findings, in 
paragraphs 7.52, 7.119(a), 8.1(a)(ii) and 8.1(a)(v), that the authorities need not  consider 
qualitative factors as part of making a proper finding of export prices that "differ significantly" and 
constitute a "pattern". As part of this review, Korea also requests the Appellate Body to review 
paragraphs 7.72, 7.73, 7.76, and any other di scussions that suggest "targeted dumping" can exist 
among the intermediate comparisons the authority may be conducting, before the authority has 
properly considered and taken into account all export transactions for the product as a whole. 
Korea further re quests that the Appellate Body complete the analysis and find that the authorities 
must consider both quantitative and qualitative factors when finding a "pattern" of export prices 
that "differ significantly".  
8. Korea seeks review by the Appellate Body of th e Panel 's interpretation of the explanation 
clause of the second sentence of Article 2.4.2 as not requiring the authorities to explain why the 
normal T -T comparison method cannot take into account the pattern of export price differences.12 
In particular, th e Panel erred in finding that:  
 The second sentence of Article 2.4.2 does not require the authorities to consider both of the 
normal comparison methods – both the W -W comparison method and the T -T comparison 
method -- before turning to the exceptional W -T comparison method.13 
 Somehow the burden of considering the T -T comparison justifies ignoring the express 
requirement that the authority consider this option before turning to the exceptional W -T 
comparison method.14 
9. Accordingly, Korea requests that the Appell ate Body reverse the Panel 's findings, in 
paragraphs 7.81, 7.119(b), 8.1(a)(iv) and 8.1(a)(viii), that the authorities need not explain why 
the normal T -T comparison method cannot take into account export price differences. Korea 
further requests that the Appellate Body complete the analysis and find that the authorities must 
in every case consider both the normal comparison method – both W -W and T -T – before resorting 
to the exceptional W -T comparison method.  
                                                
8 Panel Report, paras. 7.44 - 7.52. 
9 Panel Report, paras. 7.33, 7.48, 7.49.  
10 Panel Report, paras. 7.46, 7.47.  
11 Panel Report , paras. 7.48, 7.49.  
12 Panel Report, paras. 7.78 -7.81. 
13 Panel Report, paras. 7.79, 7.80.  
14 Panel Report, para. 7.80.  WT/DS464/AB/R/Add.1  
 
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  II REVIEW OF THE PANEL 'S FINDINGS UNDER THE  SCM AGREEMENT AND ARTICL E VI:3 
OF THE GATT 1994  
10. Korea seeks review by the Appellate Body of the Panel 's findings under Article 2.2 of the 
SCM Agreement as they relate to the USDOC 's determination that RSTA Article 26 tax credits are 
regionally specific.15  
11. The Panel failed to make an objective assessment of the matter before it, including an 
objective assessment of the facts of the case, as required b y Article 11 of the DSU, because it 
failed to review the USDOC 's determination and to determine whether the USDO C's conclusion on 
regional specificity was reasoned and adequate and based on positive evidence.  
12. The Panel misinterpreted and misapplied Article 2.2 in finding that Korea failed to establish 
that the USDOC 's determination of regional specificity is incons istent with that provision. The Panel 
erred, inter alia , in finding that:  
 Article 2.2 of the SCM Agreement covers all measures that include "considerations regarding 
geographic location" or that "encourage particular enterprises to direct their resources t o 
certain geographic locations ".16 
 "the Article 26 subsidy is contingent on an enterprise becoming 'located within ' a designated 
geographical region" .17 
 "[w]e are not persuaded that the application of Article 2.2 should hinge on the distinction 
drawn by Kore a between an 'enterprise ' (as defined by Korea) and the 'facilities ' of such an 
enterprise" .18 
 "an 'industry or group of enterprises or industries ' would never meet the definition of 
'enterprise ' proposed by Korea, because such entities are not companies or  businesses with 
legal personality.  The fact that these entities are nevertheless explicitly deemed to 
constitute 'certain enterprises ' by Article 2.1 of the SCM Agreement must mean that Korea's 
interpretation of the term 'enterprise ' is overly restrictive ".19 
 "the designation of any geographical region – no matter how small or how large – would 
suffice to trigger the application of Article  2.2".20   
 The geographical region need not be affirmatively identified, but rather, "might also be 
accomplished through less direct means that nevertheless make the region known" .21  
 "Article 23 of the RSTA Enforcement Decree effectively designates the geographical region in 
which the relevant investments will be eligible for subsidization" .22  
 The USDOC 's determination that RSTA Article 26 tax credits are regionally specific is not 
inconsistent with Article 2.2 despite not being based on positive evidence or a reasoned and 
adequate explanation .23 
13. Accordingly, Korea requests that the Appellate Body reverse the Panel 's findings,  in 
paragraphs 7.289 and 8.1(b)(iii), that Korea failed to establish that the USDOC 's determination of 
regional specificity in respect of the RSTA Article 26 tax credit scheme is inconsistent with 
Article  2.2 of the SCM Agreement. Korea further requests th at the Appellate Body complete the 
analysis and find that the USDOC acted inconsistently with Article 2.2 of the SCM Agreement in 
finding that the RSTA Article 26 tax credit scheme is regionally specific.  
                                                
15 Panel Report, paras. 7.261, 7.266 -7.274, 7.279 -7.283, 7.286 -7.289.  
16 Panel Report, para. 7.273.  
17 Panel Report, para. 7.273.  
18 Panel Rep ort, para. 7.267.  
19 Panel Report, para. 7.268.  
20 Panel Report, para. 7.282.  (original emphasis)  
21 Panel Report, para. 7.280.  
22 Panel Report, para. 7.280.  
23 Panel Report, paras. 7.289 and 8.1(b)(iii).  WT/DS464/AB/R/Add.1  
 
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  14. Korea seeks review by the Appellate Body of the Pan el's findings under Article VI:3 of the 
GATT 1994 and Article 19.4 of the SCM Agreement as they relate to the USDOC 's determination 
that Samsung failed to meet its burden to provide evidence that "tied" the tax credits that it 
received under RSTA Article 1 0(1)(3) and RSTA Article 26 to its development, production, and sale 
of the large residential washers that were the subject of the USDOC 's investigation.24  
15. The Panel failed to make an objective assessment of the matter, including an objective 
assessment of  the facts of the case, as required by Article 11 of the DSU, in finding that the 
"tax credit subsidies are not R&D subsidies" .25  
16. The Panel erred in the interpretation and application of Article VI:3 of the GATT 1994 and 
Article 19.4 of the SCM Agreement i n finding, inter alia , that:  
 The tax credits that Korea bestowed under Article 10(1)(3) and Article 26 were not tied to 
any particular product .26 
 As a result, the USDOC was justified in allocating the tax credit subsidies across all products 
and not just to  digital appliances, including large residential washers .27  
 The relevant subsidies were not R&D subsidies because they were awarded after the 
underlying R&D activities had been undertaken .28 
 The benefits that Samsung received as tax credits constituted reve nue foregone or not 
collected, which is equivalent to cash that Samsung could keep in its accounts and/or spend 
on any product .29 
 Samsung 's discretion regarding the use of the cash resulting from the tax credit subsidies 
justified the USDOC 's treatment of t hose subsidies as "untied" .30 
 Since the benefits that arose from the tax credit subsidies could be used in any way, the 
USDOC was not required to find that those subsidies were tied to the production of the 
products for which the R&D activity was undertaken .31 
 The fact that Samsung could identify the precise R&D activities that benefited the production 
of the products produced in its Digital Appliance business unit was irrelevant to the issue of 
whether Samsung was able to tie its tax credits to those product s.32 
 The USDOC 's finding in the contemporaneous antidumping investigation of large residential 
washers that it could directly tie R&D activity performed by Samsung 's Digital Appliance 
business unit to the products produced by that unit was irrelevant.33 
17. Accordingly, Korea requests that the Appellate Body reverse the Panel 's findings, in 
paragraphs 7.306 and 8.1(b)(iv), that Korea failed to establish that the USDOC 's failure to tie the 
RSTA Article 10(1)(3) and RSTA Article 26 tax credit subsidies to Digital A ppliance products is 
inconsistent with Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994. Korea 
further requests that the Appellate Body complete the analysis and find that the USDOC acted 
inconsistently with Article 19.4 of the SCM Agree ment and Article VI:3 of the GATT 194 when it 
failed to find that Samsung submitted positive evidence that tied the tax credits attributable to 
Samsung 's Digital Appliance business unit to the products that were produced by that unit.  
                                                
24 Panel Report, paras. 7.300 -7.306.  
25 Panel Report, para . 7.302.  
26 Panel Report, para. 7.300.  
27 Panel Report, para.  7.302.  
28 Panel Report, para. 7.302.  
29 Panel Report, para. 7.302.  
30 Panel Report, para. 7.302.  
31 Panel Report, para. 7.303.  
32 Panel Report, para. 7.303.  
33 Panel Report, para. 7.304.  WT/DS464/AB/R/Add.1  
 
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  18. Korea seeks review by  the Appellate Body of the Panel 's interpretation and application of 
Article VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement as it relates to the USDOC 's 
determination that it should use the sales value of the products that Samsung produced and  sold 
in Korea, rather than the sales value of the products that Samsung produced and sold worldwide, 
as the denominator in the formula that the USDOC used to calculate the ad valorem subsidy 
margin for the tax credits that Samsung received under RSTA Arti cle 10(1)(3).34 The Panel erred, 
inter alia, in finding that:  
 The "real issue" was not the correctness of the USDOC 's allocation of the benefit conferred 
by the RSTA Article 10(1)(3) tax credit subsidies based on the effects of the R&D activities 
that gave rise to the tax credits .35 
 The benefit of the tax credit subsidy was the "tax credit cash" that Samsung received, and 
that benefit was not tied to the R&D activities that gave rise to the tax credits since 
Samsung was free to dispose of the cash as it saw f it.36 
 The positive effects of the R&D activities on Samsung 's overseas production activities do not 
constitute a "benefit" within the meaning of Article 1.1(b) of the SCM Agreement .37 
 The USDOC was entitled to rely on its presumption that Korea granted the A rticle 10(1)(3) 
tax credits to benefit only domestic production .38 
 The USDOC was entitled to conclude that neither Samsung nor Korea had rebutted that 
presumption.39 
19. Accordingly, Korea requests that the Appellate Body reverse the Panel 's findings, in 
paragra phs 7.319 and 8.1(b)(v), that Korea failed to establish that the denominator used to 
calculate the ad valorem  margin attributable to RSTA Article 10(1)(3) tax credits should consist 
solely of the sales value of products produced by Samsung in Korea. Korea further requests that 
the Appellate Body complete the analysis and find that the USDOC acted inconsistently with 
Article  VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement by failing to use as the 
denominator the value of Samsung 's worldwide produ ct sales, rather than its domestic sales.  
 
 
_______________  
 
 
 
 
                                                
34 Panel Report,  paras. 7.316 -7.319.  
35 Panel Report, para. 7.317.  
36 Panel Report, para. 7.317.  
37 Panel Report, para. 7.317.  
38 Panel Report, para. 7.318.  
39 Panel Report, para. 7.318.  WT/DS464/AB/R/Add.1  
 
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  ANNEX  B 
ARGUMENTS OF THE PAR TICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the United States' appellant's submission  B-2 
Annex  B-2 Executive summary of Korea's other appellant's su bmission  B-4 
Annex  B-3 Executive summary of the United States' appellee's submission  B-11 
Annex  B-4 Executive summary of Korea's appellee's submission  B-18 
 
 WT/DS464/AB/R/Add.1  
 
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  ANNEX  B-1 
EXECUTIVE SUMMARY OF THE UNITED STATES'  APPELLANT'S SUBMISSION  
INTRODUCTION AND EXE CUTIVE SUMMARY1 
1. The United States appeals certain of the Panel 's legal findings and conclusions related to the 
interpretation and application of the Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade 1994  ("AD Agreement ") and the General Agreement on Tariffs and 
Trade 1994  ("GATT 1994 "), and certain of the Panel 's findings that U.S. measures challenged by 
Korea in this dispute are inconsistent with various provisions of the AD Agreement and the 
GATT  1994. 
2. As demonstrated b elow, the Panel erred in its interpretation and application of the second 
sentence of Article 2.4.2 of the AD Agreement by failing to interpret that provision in accordance 
with the customary rules of interpretation of public international law, as required  by Articles 3.2 
and 11 of the Understanding on Rules and Procedures Governing the Settlement of Disputes  
("DSU").  
3. Specifically, section II.B demonstrates that the Panel erred in its interpretation of the 
relevant "pattern " in the second sentence of Articl e 2.4.2 of the AD Agreement. The Panel 
concluded that the relevant "pattern " for the purpose of the second sentence of Article 2.4.2 
comprises only low -priced export transactions to a particular "target " (be that a purchaser, or a 
region, or a time period) , while other higher -priced export transactions to other purchasers, 
regions, or time periods are "non-pattern " transactions. This conclusion does not follow from a 
proper application of the customary rules of interpretation of public in ternational law.  
4. Properly interpreted, the "pattern clause " of the second sent ence of Article 2.4.2 of the 
AD Agreement, which refers to "a pattern of export prices which differ significantly among different 
purchasers, regions or time periods, " requires an investigating aut hority to undertake a rigorous, 
holistic examination of the data in order to find a regular and intelligible form or sequence of 
export prices that are unlike in an important manner or to a significant extent as between different 
purchasers, regions, or ti me periods. Any such "pattern " necessarily would be a pattern of export 
prices that would transcend multiple purchasers, regions, or time periods, and necessarily would 
include both lower and higher export prices that "differ significantly " from each other . 
5. Section II.C demonstrates that the Panel 's findings regarding the scope of application of the 
alternative, average -to-transaction comparison methodology are erroneous. The Panel erred by 
failing to undertake a proper analysis pursuant to the customary ru les of interpretation, by 
engaging in circular logic, and by premising its findings on its own erroneous interpretation of the 
relevant "pattern " under the second sentence of Article 2.4.2 of the AD Agreement.  
6. Section II.D demonstrates that the Panel erred  in finding that the use of zeroing in 
connection with the application of the alternative, average -to-transaction comparison methodology 
is inconsistent with provisions of the AD Agreement and the GATT 1994. The Panel erred by failing 
to properly interpret  the second sentence of Article 2.4.2 of the AD Agreement in accordance with 
the customary rules of interpretatio n of public international law.  
7. The Panel engaged in virtually no analysis whatsoever of the text of what it called the 
"methodology clause " of the second sentence of Article 2.4.2 of the AD Agreement2. Instead, the 
                                                
1 Pursuant to the Guidelines in Respect of Executive Summaries of Written Submissions , WT/ AB/23 
(March 11, 2015), the United States indicates that this executive summary contains a total of 1,297 words 
(including footnotes), and this U.S. appellant submission (not including the text of the executive summary) 
contains 32,621 words (including foo tnotes).  
2 The "methodology clause" of the second sentence of Article 2.4.2 of the AD Agreement provides that: 
"A normal value established on a weighted average basis may be compared to prices of individual export 
transactions…." See United States – Anti-Dumping and Countervailing Measures on Large Residential Washers 
from Korea , Report of the Panel, WT/DS464/R (March 11, 2016) (" Panel  Report"), para. 7.9.  WT/DS464/AB/R/Add.1  
 
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  Panel based its findings concerning the operation of the alternative, average -to-transaction 
comparison methodology and zeroing on its flawed understanding of the relevant "pattern " and its 
own misreading of the Appellate Body 's previou s findings concerning zeroing.  
8. A proper examination of the text and context of Article 2.4.2 of the AD Agreement leads to 
the conclusion that zeroing is permissible – indeed, it is necessary – when applyi ng the alternative, 
average -to-transaction comparison methodology, if that "exceptional " comparison methodology is 
to be given any meaning. This conclusion follows from a proper application of the customary rules 
of interpretation of public international l aw. It also accords with and is the logical extension of the 
Appellate Body 's findings relating to zeroing in previous disputes, and it can be confirmed by 
recourse to the negotiating history of Article 2.4.2 of the AD Agreement.  
9. The Panel also erred in fi nding that the use of zeroing in connection with the application of 
the alternative, average -to-transaction comparison methodology is inconsistent with Articles 2.4 
and 9.3 of the AD Agreement, and Article VI:2 of the GATT 1994. These findings are dependen t on 
the Panel 's erroneous findings under Article 2.4.2 of the AD Agreement, and should be reversed for 
the same reasons.  
10. Section II.E demonstrates that the Panel erred in finding that a differential pricing analysis 
undertaken by the U.S. Department of Co mmerce ( "USDOC ") is inconsistent, "as such, " with the 
second sentence of Article 2.4.2 of the AD Agreement. The Panel 's finding was premised on its 
understanding of the relevant "pattern, " but the Panel 's understanding of the relevant "pattern " is 
erroneou s and not consistent with a proper interpretation of the second sentence of Article 2.4.2 of 
the AD Agreement.  
11. Additionally, the USDOC 's differential pricing analysis is not inconsistent with the "pattern 
clause " of the second sentence of Article 2.4.2, wh en that clause is properly interpreted in 
accordance with the customary rules of interpretation. The "pattern clause " of the second sentence 
of Article 2.4.2 of the AD Agreement requires an investigating authority to undertake a rigorous, 
holistic examinat ion of the data in order to find a regular and intelligible form or sequence of 
export prices that are unlike in an important manner or to a significant extent as between different 
purchasers, regions, or time periods. The USDOC has done this when it has a pplied a differential 
pricing analysis in antidumping proceedings.  
12. A differential pricing analysis seeks to identify a "pattern, " but does not require a specific 
"target. " A "target " analysis is just one kind of analysis an investigating authority might un dertake 
when searching for "a pattern of export prices which differ significantly among different 
purchasers, regions or time periods. " Investigating authorities might take other approaches to 
identify a "pattern " that also are consistent with the terms of  the "pattern clause. " 
13. In contrast to a "targeted dumping approach, " a differential pricing analysis looks for export 
prices to a purchaser, region, or time period which are either significantly higher or significantly 
lower than the export prices to other  purchasers, regions, or time periods. The conceptual 
framework of that analysis is consistent with the terms of the "pattern clause " of the second 
sentence of Article 2.4.2 of the AD Agreement, which calls upon the investigating authority to find 
"export prices which differ significantly, " but which does not require a focus either on lower -priced 
or higher -priced export sales.  
14. A differential pricing analysis does not aggregate random and unrelated price variations. 
A differential pricing analysis considers  the pricing behavior of the exporter in the United States 
market as a whole. Nothing in the text of the "pattern clause " of the second sentence of 
Article  2.4.2 of the AD Agreement suggests that the significant export price differences among 
purchasers, r egions, or time periods cannot be cumulated with the significant differences in export 
prices among other categories (i.e., purchasers, regions, or time periods) when assessing whether 
the exporter 's pricing behavior exhibits "a pattern of export prices wh ich differ significantly among 
different purchasers, regions or time periods. "  
 WT/DS464/AB/R/Add.1  
 
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  ANNEX B -2 
EXECUTIVE SUMMARY OF KOREA'S  OTHER APPELLANT'S SUBMISSION1 
A. The Panel Erred b y Allowing Authorities to Disregard Certain Results When 
Combining the Two Subsets Creat ed Pursuant to  the Second Sentence of Article  2.4.2  
1. The Appellate Body has provided repeated guidance for more than a decade about the 
meaning of "dumping " and "margin of dumping ". The final overall combination based on all export 
transactions must show a net result that meets the definition of "dumping " to establish a single 
"margin of dumping ". Individual low prices can never be "dumped " because the concept "dumping " 
simply does not exist at the level of individual export prices or even partial combinatio ns of those 
prices. Any calculations from some of the export prices, even if they lower, are just intermediate 
calculations. These principles do not depend on the comparison method being used.  
2. As its most fundamental error, the Panel started its interpreta tive analysis with "the intent of 
the comparison methodology established in the second sentence of Article 2.4.2 ". Although the 
"object and purpose " represents one element of a proper analysis, the Panel should have first fully 
considered the text and cont ext of that provision. The Panel did not do so, and therefore reached 
the wrong conclusions.  
3. By its express terms, the second sentence allows investigating authorities to use a particular 
type of comparison method. Specifically, when certain conditions hav e been met, the authorities 
may compare "a normal value established on a weighted -average basis" to "prices of individual 
export transactions" when establishing the existence of the "margin of dumping " for the 
investigated exporter for the product under co nsideration. Beyond allowing an exception to the 
normal comparison methods, however, neither the second sentence of Article 2.4.2 nor 
Article  2.4.2 more generally creates any exception to the basic concepts of "dumping " and "margin 
of dumping ". 
4. Yet notwith standing the narrow focus of the text itself, the Panel incorrectly found that the 
second sentence created a new "method of calculating the margin of dumping ". This purported 
"new" method to determine the "margin of dumping " has no textual or contextual ba sis. Textually, 
the second sentence in no way suggests a special understanding of these key concepts. The 
context provided by Article 2.4.2 overall confirms that the second sentence does not create any 
new understanding of "dumping ". These contextual argum ents have been reviewed exhaustively 
by the Appellate Body in numerous prior disputes, making the Panel's failure to discuss the text or 
context in any detail quite surprising. Finally, the object and purpose of the second sentence is to 
address situations  where certain purchasers, regions, or time periods are singled out for different 
(presumably lower) export prices. Such pricing strategies can only be identified and properly 
understood with reference to the overall pricing behaviour of the exporter, and cannot occur at the 
transaction -specific level or for any subset of exports.  
5. The Panel repeatedly confused the distinction between intermediate comparisons for some 
export prices and a final conclusion of "dumping " based on all export prices. This conceptu al error 
permeated the Panel's analysis, and it led the Panel repeatedly to consider something to be 
"dumping " or "evidence of dumping " when that intermediate stage in the analysis could not 
possibly yield a proper conclusion of "dumping ". 
6. Moreover, it is not enough to include all the export transactions in the denominator. There is 
no "net amount of dumping " within the subset using the W -T comparison method, because 
"dumping " cannot be found until all export transactions have been taken into account. 
Expor t prices within the subset using the W -T comparison method cannot be "dumping ". Thus, a 
numerator based only on the export transactions within the subset applying the W -T comparison 
method does not establish a proper amount of "dumping ". 
                                                
1 Pursuant to the Appellate Body guidelines for executive summaries, Korea confirms that this executiv e 
summary contains a total of 4,616 words (including footnotes) and that the overall other appellant submission 
(other than the executive summary) contains a total of 49,894 words (including footnotes).  WT/DS464/AB/R/Add.1  
 
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  7. The Panel also see ms to have believed that prohibiting zeroing within each of the 
two subsets meant that all comparisons would be considered equally. But prohibiting zeroing 
within each subset ensures only that the net amounts emerging from each subset reflect all of the 
transactions within each subset. Those amounts still have to be combined. By setting any negative 
amount from the subset using the normal comparison methods equal to zero (and denying any 
offsets for this negative amount), the Panel's approach improperly act s as if the export prices in 
that subset were lower than they really were. Each export price should be given the same full 
effect in either subset, regardless of the comparison method applied to that subset.  
8. The Panel also showed a fundamental misconceptio n about the relationship between any 
"dumping " and the associated "margin of dumping ". The numerator and denominator must refer to 
the same total universe of export sales. The Panel's approach ignores the interrelationship of the 
amount of "dumping " and th e "margin of dumping ". This connection is expressed most directly in 
Article VI:2 of the GATT and the Anti -Dumping Agreement, where the "amount " of the duty 
imposed to offset "dumping " is limited to no more than the "full margin of dumping " (Article 9.1) 
and "shall not exceed the margin of dumping " (Article 9.3). The same connection can also be seen 
in Article 7.2 regarding provisional measures. Article VI:1 of the GATT and Article 3 also require a 
connection between "dumping " or the "dumped imports " and th e material injury to the domestic 
industry. The Panel's approach also disregards prior Appellate Body decisions that require both the 
numerator and denominator to reflect all comparison results.  
9. A major part of the Panel's rationale was its belief that the  purpose of the second sentence 
was to allow authorities to "unmask " so-called "targeted dumping ". But the Panel misunderstood 
the purpose of the second sentence, and then used this misunderstanding to disregard the 
consistent Appellate Body jurisprudence about the concepts "dumping " and "margin of dumping ". 
10. One must look beyond short -hand phrases and look at the actual provision and its purpose 
more closely. The purpose that most closely links the text and context of the second sentence is 
simply to allow the authority to undertake the more careful examination of individual export prices 
that the W -T comparison method allows. The purpose to "unmask " individual export prices, 
however, is very different from the purpose to "unmask " so-called "targeted dumping ". The 
purpose to "unmask " certain export prices is fully consistent with the Appellate Body's 
jurisprudence on "dumping " and "margin of dumping ". Certain export prices are "unmasked " as an 
intermediate stage in the analysis. At this point, there is no con clusion about "dumping " nor can 
there be any such conclusion. A conclusion of "dumping " can never be reached based solely on a 
subset of prices. The purpose of the second sentence has been achieved once this more detailed 
examination has taken place at thi s intermediate stage.  
11. The Panel thought this purpose to "unmask targeted dumping " was consistent with the 
negotiating history. But the Panel's citation to a single document from the negotiating history that 
referenced possible "masking " of "selective dumpi ng", is a very limited piece of evidence. 
Moreover, the Appellate Body has already considered this legislative history, and still confirmed 
that there cannot be "selective dumping " based on a subset of export sales.  
12. Although the phrase "targeted dumping " has been used occasionally, the phrase "unmask 
targeted dumping " has appeared much less frequently. This phrase has appeared in only 
two Appellate Body decisions, and the context in which the Appellate Body used this phrase was to 
note the need to limit the  exceptional W -T comparison method to those transactions that met the 
conditions for the exception. The Appellate Body used this phrase to clarify the scope of the 
second  sentence, not to create a new concept of "dumping ". Moreover, the Appellate Body 
decisions on zeroing make quite clear that by "unmask " the Appellate Body certainly did not mean 
that zeroing (the denial of offsets) would be allowed to "unmask " some export transactions as 
having been "dumped " without considering all export transactions.  
13. The Panel mistakenly found "mathematic equivalence ". Korea notes that this argument of 
"mathematical equivalence " has been rejected by the Appellate Body four times, finding that even 
if "under certain circumstances " or "under a specific set of assumptions " the results are equivalent, 
such a situation does not render a provision inutile. In the face of the Appellate Body's repeated 
rejection of this argument, the Panel found mathematical equivalence anyway without any support 
for this conclusion. The Panel's b ald assertion of mathematical equivalence should be rejected for 
several reasons. First, the Panel illogically dismissed Korea's arguments that changing the basis of 
normal value or changing the method of adjustments would avoid mathematical equivalence. WT/DS464/AB/R/Add.1  
 
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  Second, the Panel dismissed Korea's arguments about the "assumptions " being made by the 
authority, including assumptions about normal value, even though they are essentially the same 
arguments that previously led the Appellate Body to reject mathematical eq uivalence in the past. 
Third, the Panel found mathematical equivalence even though Korea had submitted extensive 
evidence that the Panel did not discuss at all. Finally, there is nothing different about the situation 
of combining the results from two subse ts. The prior arguments before the Appellate Body also 
addressed combining two separate results, and rejected mathematical equivalence in that context.  
14. Beyond its findings under the second sentence of Article 2.4.2, the Panel also ruled against 
Korea's sep arate claim that systemic disregarding was inconsistent with Article 2.4 of the 
Anti-Dumping Agreement. The Panel's reasoning, however, simply repeats the legal errors 
identified above with regard to the Panel's interpretation of the second sentence of Art icle 2.4.2 
that "dumping " can exist within a subset of the export sales. Therefore for the reasons set forth in 
more detail above, we ask the Appellate Body also to reverse these Panel findings regarding 
Article  2.4. Broad findings under Article 2.4 – like those made in US – Zeroing (Japan) – confirm 
the fundamental principles that make any denial of offsets WTO inconsistent because doing so 
means finding "dumping " without considering all of the export transactions fairly and equally for 
the product as a wh ole. 
B. The Panel Erred by Finding that the Pattern Clause Did Not Require Authorities to 
Consider Qualitative Factors  
15. The Panel's did not interpret the terms "significantly " and "pattern " in the context of the 
Anti-Dumping Agreement as a whole. This error ha s two aspects. First, the Panel failed to consider 
these terms in the context of how these terms are used elsewhere. The Panel considered the 
ordinary meaning of these terms, but then never considered that the Anti -Dumping Agreement as 
a whole uses the ter m "significant " precisely when it wishes to convey a broader meaning than just 
"large". Whether the text of the second sentence of Article 2.4.2 uses the term "reasons " misses 
the point. Article 2.4.2 does not merely require that export prices differ; it r equires that they differ 
"significantly ". The Panel finding that the term "significantly " can be analyzed in purely 
quantitative terms directly contradicts the statement of the Appellate Body in US – Large Civil 
Aircraft (2nd complaint) that the significan ce of lost sales has both "quantitative and qualitative 
dimensions. " 
16. Second, the Panel also did not read these two terms in the context of the explanation 
clause. The Panel seemed to think that because it found a textual basis in the explanation clause 
to consider qualitative factors, it could reject any such textual basis in the pattern clause. But this 
approach reads these two parts of the second sentence in isolation, instead of reading them 
together as context for each other. Such qualitative considerat ions – such as falling costs – should 
be considered both as part of determining whether price differences are "significant " and as part of 
determining whether W -W comparisons can "take into account appropriately " any difference. The 
Panel's discussion of t he explanation clause seems to recognize this interrelationship, but confused 
the distinction between export prices differences that are "significant " as well as constituting a 
"pattern " and so -called "targeted dumping ". The Panel improperly grounded its r eading of the 
explanation clause in its flawed understanding of the object and purpose of "unmasking targeted 
dumping ". 
C. The Panel Erred by Finding that Authorities Need Not Address the T -T Comparison 
Method When Explaining the Need to Depart From the Norma l Comparison Methods  
17. The Panel ignored the express obligation to address both the normal comparison methods 
before turning to the exceptional comparison method. The absence of any explanation ever as to 
why the T -T comparison methodology cannot take into a ccount appropriately the pattern of 
significantly different prices is contrary to the requirement in the second sentence of Article 2.4.2 
that such an explanation be given.  
18. The Panel misinterpreted the terms "a" and "or" in the context of the second senten ce. The 
use of the term "a" reflects the fact that in the end the authority will be using "a" single 
comparison method. Similarly, the use of the term "or" reflects this choice between two alternative 
normal comparison methods. The use of the singular arti cle and disjunctive conjunction simply 
recognizes that there are two alternative normal comparison methods that must be considered. WT/DS464/AB/R/Add.1  
 
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  The text explicitly provides that if the authority seeks to depart from the use of one of those 
two normal methods, then the  authority must explain why it cannot use either of the normal 
methods.  
19. The Panel incorrectly seemed to think it would be burdensome and serve no purpose to 
require the authority to address the T -T comparison method if the authority had already selected 
the W-W comparison method. But the text does not specify the degree of explanation required or 
create any burden. Nor does this additional explanation fail to serve any purpose. W -W and 
T-T comparisons may be symmetrical, but they are not the same. Explainin g why one works does 
not automatically explain why the other will not work. The purpose of the second sentence is to 
allow a more detailed examination of individual export prices. This purpose relates directly to the 
choice among the different comparison m ethods. The more detailed examination ensure a more 
thorough consideration of the three possible comparisons methods under the second sentence, 
and thus helps ensure that the choice is in fact "appropriate ". 
D. The Panel Erred in Finding that RSTA Article 26 Subsidies are a  Regionally 
Specific  Subsidy  
20. RSTA Article 26 tax credits were available to all Korean corporations, wherever located that 
made investments anywhere outside the "overcrowding control region " of the Seoul Metropolitan 
Area, which comprised jus t 2% of Korea's land mass.  
21. First, the Panel erred because it never reviewed the USDOC's determination on regional 
specificity in order to apply its interpretation of Article 2.2, or determine whether the USDOC's 
conclusion was reasoned and adequate and bas ed on positive evidence. Thus, the Panel failed to 
comply with its duty, under Article 11 of the DSU, to make an objective assessment of the matter.  
22. Second, the Panel based its finding on an incorrect interpretation and application of 
Article  2.2. RSTA Art icle 26 subsidies do not encourage localization of the enterprises in a 
designated geographical region. Instead, they discourage enterprises from making investments in 
a small area that constitutes 2% of Korea's territory. Because the area in which investm ents are 
discouraged is so small, and the area in which investments may be made is so large (98% of the 
territorial jurisdiction of the granting authority) the subsidies cannot be said to be "limited " in any 
meaningful way.  
23. Even assuming that the stipulati on as to the investments made by recipient firms 
constituted a limitation on the location of the enterprises, the area in which investments must be 
made – 98% of Korea's land mass – does not constitute a "designated geographical region ". The 
area is too un bounded; it is neither sufficiently demarcated nor cohesive enough, and there is 
almost total overlap with the jurisdiction of the granting authority. In such circumstances, the area 
in which investments may be made is not "a designated geographical region " within the meaning 
of Article 2.2.  
24. Concluding that such subsidies are narrowly targeted, and therefore specific, is putting form 
over substance, and ignoring the intent of Article 2 as a whole. The reasons provided by the Panel 
to reject Korea's argument s are unpersuasive and did not provide a valid basis to dismiss 
Korea's  claim.  
25. Overcrowding and urban sprawl are not only a serious problem for Korea, they constitute 
serious challenges for many developed and developing countries. Subsidies provide an effi cient 
and effective policy tool to mitigate this problem, while introducing minimal trade distortions. 
Article 2.2 does not address the kind of subsidies provided under RSTA Article 26 and thus 
preserves Members' ability to use such subsidies to mitigate o vercrowding and urban sprawl. The 
Panel's overly expansive interpretation improperly constrains Members' ability to take corrective 
measures.  
26. Korea therefore requests that the Appellate Body reverse the Panel's finding. Korea 
additionally requests that the  Appellate Body complete the analysis and find that the USDOC's 
determination that RSTA Article 26 subsidies are specific is inconsistent with Article 2.2.  WT/DS464/AB/R/Add.1  
 
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  E. The Panel Erred in Finding that Samsung Failed to Tie the Subsidies that it 
Received Under RSTA Arti cle 10(1)(3) and RSTA Article 26 that Were Attributable to 
Investments Made by its Digital Appliance Business Unit to the Products Made by 
that Unit 
27. Samsung, a large and highly diversified Korean company, utilized two provisions of 
Korean  law that provided  tax credit subsidies for making specified investments in R&D activities 
and certain types of business assets. Samsung organized its corporate activities into business 
units. One such unit was the Digital Appliance business unit, which produced large resid ential 
washers, refrigerators, and other types of consumer products. This unit maintained detailed 
records of the investments that it made that qualified for the two tax credit programs.  
28. During the course of the USDOC's antidumping investigation of large r esidential washers, 
Samsung provided to the USDOC a listing of the eligible expenditures of its Digital Appliance 
business unit and the tax credits that the eligible expenditures had generated under RSTA 
Article  10(1)(3) and Article 26. Samsung contended t hat the ad valorem countervailing duty 
margin that the USDOC should calculate for each of the two tax credit subsidy provisions should 
equal the tax credits attributable to Digital Appliance business unit's eligible expenditures (i.e., the 
numerators) divi ded by the Digital Appliance business unit's sales value (i.e., the denominators).  
29. The USDOC rejected this calculation on the ground that Samsung had failed to "tie" the tax 
credits of the Digital Appliance business unit to that unit's sales. The purported  reason for this 
alleged failure was that the amounts of the two tax credit subsidies provided to the 
Digital  Appliance business unit were not known to the subsidy giver, i.e., to the Korean tax 
authorities, and so acknowledged either when the tax credits were conferred or before that time. 
The subsidies were conferred on the date that Samsung filed its tax return for fiscal year 2010, 
which was March 31, 2011. According to the USDOC, the tax return itself did not separately 
identify the tax credits that we re attributable to the eligible expenditures made by the 
Digital  Appliance business unit. Rather, Samsung reported a single lump sum for all of its business 
units for each of the two credits. However, the USDOC refused to consider evidence that Samsung 
presented in its questionnaire response and at the on -site verification of that response that 
contained the tying evidence.  
30. The Panel found that Samsung failed to make a sufficient showing that it could tie the 
two tax credit subsidies received by the Digital  Appliance business unit to expenditures made by 
that unit, but it relied upon a rationale that the USDOC itself did not rely upon. As a result of 
Samsung's alleged failure to make the required showing of tying, the Panel upheld the USDOC's 
calculation of the ad valorem subsidy margin attributable to Article 10(1)(3) by dividing the total 
eligible R&D expenses incurred by all of Samsung's business units by the total sales of those 
business units. The result was a dramatic inflation of the Article 10(1)(3) a d valorem subsidy 
margin from 0.22% to 0.72%. The USDOC similarly inflated the margin for Article 26 tax credits 
from 0.0046% to 1.05%.  
31. WTO jurisprudence is clear that the focus in every tying inquiry must be on whether the 
particular subsidy can be direct ly linked to particular product or product line. However, the Panel 
did not conduct this type of inquiry. Instead, it chose to rely entirely on the fact that the cash 
proceeds of the tax credits could be used in any manner that Samsung chose. However, the 
Panel's reliance had nothing to do with determining whether there was a direct link, i.e., a tying, 
between the subsidy at issue and particular products. The use of the proceeds of a subsidy is 
irrelevant to the tying inquiry, despite the Panel's contrary finding. Moreover, if the Panel's test is 
correct, then virtually every subsidy is countervailable regardless of whether it can be tied to a 
particular product or product category.  
32. The fatal flaw in the Panel's affirmance of the USDOC's ad valorem margin c alculations is 
that the Panel failed to examine the specific issue of whether Samsung had submitted positive 
evidence that allowed the USDOC to calculate, i.e., to tie, the tax credit benefit that Samsung 
received on its development, production, and sale o f the digital appliance products that it produced 
to the R&D and other investment activities that generated those tax credits. Instead, the Panel 
denied the tying claim based on its finding that the cash proceeds of the tax credits "may be spent 
by Samsung  on any product ". WT/DS464/AB/R/Add.1  
 
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  33. Since the Panel failed to apply the correct tying test, it thereby failed to apply either 
Article  VI:3 of the GATT 1994 or Article 19.4 of the SCM Agreement. Had the Panel applied the 
required tying analysis, it would have determined that  the Article 10(1)(3) and Article 26 tax 
credits that Samsung received on its development, production, and sale of large residential 
washers were at the de minimis level, i.e. they provided a total benefit of less than 1% 
ad valorem. Consequently, the USDO C would not have issued a countervailing duty order to 
Samsung based on undisputed record facts.  
34. The USDOC itself has stated that the manner in which the proceeds from any type of 
subsidy are spent is irrelevant to the issue of whether a subsidy can be tie d to a particular product 
or group of products. In the preamble to the final countervailing duty regulations that the USDOC 
published on November 25, 1998, the USDOC provided an extended discussion of the concept of 
tying, and it addressed various comments  that interested parties submitted on the subject of how 
and when tying to a particular product should be found. Some commenters "argued that because 
money is fungible, the Department should not allow subsidies to be tied to particular products or 
to parti cular export markets. " The USDOC rejected this argument. Therefore, the Panel erred in 
finding that the unrestricted use of proceeds from a subsidy program constituted the deciding 
factor in determining whether those proceeds could be tied to a particular product or product line.  
35. Equally important, the Panel was not free to reject the USDOC's finding that the use of 
proceeds from a subsidy was irrelevant to a tying analysis. By doing so, the Panel improperly 
substituted its own rationale as its legal basis for finding that tying had not been shown. The 
Appellate Body has stated that "panels should not substitute their own conclusions for those of the 
competent authorities. " Moreover, "the panel should seek to review the determination while giving 
due regard to the approach taken by the investigating authority, or it risks constructing a case 
different from the one put forward by that authority. " 
36. For these reasons, the Appellate Body should reverse the Panel's findings and instead find 
that Samsung made an ade quate showing of tying of tax credits earned by its Digital Appliance 
business unit to the eligible expenditures made by that unit.  
F. The Panel Erred in Finding that the Subsidies that Samsung Received Under RSTA 
Article  10(1)(3) Benefited Only Samsung's Dom estic Production and Not i ts Worldwide 
Production  
37. The USDOC collects countervailing duties by first calculating the ad valorem margin of 
subsidy provided by each of the programs that it determines to countervail, expressed as a 
percentage. The total ad val orem margin for all countervailable programs is then applied to the 
entered value of a particular importation to determine the amount of countervailing duties that are 
owed. If the entered value of a particular shipment of large residential washers is $100 ,000 and 
the applicable total ad valorem duty is 1.2%, then the importer must pay a countervailing duty of 
1.2% x $100,000, or $1,200, to the United States Treasury.  
38. The calculation of the ad valorem margin is a critical determinant of the amount of 
counte rvailing duties that an importer may owe. That margin consists of a numerator, which 
equals the total amount of the countervailed subsidies, and a denominator, which equals the total 
value of the sales that benefited from the countervailed subsidies. As a matter of simple 
mathematics, an increase in the denominator will reduce the ad valorem margin percentage, and a 
reduction in the denominator will increase that margin.  
39. The dispute between Korea and the United States focuses on the calculation of the 
denom inator that the USDOC used to calculate the ad valorem margin attributable to the tax credit 
benefits that Samsung received under RSTA Article 10(1)(3). Samsung contended that the eligible 
R&D investments that it undertook and, the tax credits that it obta ined from those investments 
benefited its worldwide production. However, the USDOC found that the tax credits benefited only 
Samsung's production in its home market of Korea. The ad valorem margin attributable to 
Article  10(1)(3) R&D tax credits that the U SDOC calculated using Samsung's home market sales 
value was 0.72%. Had the USDOC used Samsung's worldwide sales value, it would have calculated 
an ad valorem margin of only 0.49%.  WT/DS464/AB/R/Add.1  
 
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  40. The Panel rejected Korea's arguments on the same ground as it rejected the a rguments that 
Korea made concerning the tying issue. Specifically, the Panel found that the "tax credit cash " 
benefit that Samsung received as a result of the tax credit program was "not tied to the R&D 
activities that gave rise to the tax credits, since S amsung is free to dispose of the tax credit cash 
as it sees fit. " Moreover, even though Samsung's overseas subsidiaries may have benefited from 
the R&D activities that Samsung performed in Korea, the "positive effect " of those activities "does 
not constitu te 'benefit' within the meaning of Article 1.1(b) ". 
41. Here again, the Panel employed an erroneous analysis because it failed to determine the 
appropriate denominator that was to be linked with the numerator. By focusing on the use of the 
"tax credit cash ", the Panel ignored the underlying requirement that it determine which products 
Samsung had produced and sold that had benefited from the R&D activities that Samsung had 
performed, which resulted in the tax credits that were then provided.  
42. Samsung also provid ed substantial evidence to the USDOC, which the Panel ignored, that 
demonstrated unequivocally that the R&D activities that it performed benefited its worldwide 
production and that the USDOC had found to this effect. If the R&D activities benefited worldwi de 
production, then the tax credits attributable to those activities similarly benefited worldwide 
production. This evidence rebutted any presumption that the USDOC, or the Panel, might 
otherwise have been entitled to employ to the effect that subsidy prog rams benefit only production 
in the country where the benefits are provided.  
 
 WT/DS464/AB/R/Add.1  
 
- B-11 - 
 
  ANNEX B -3 
EXECUTIVE SUMMARY OF THE UNITED STATES'  APPELLEE'S SUBMISSION  
INTRODUCTION AND EXE CUTIVE SUMMARY1 
1. Korea appeals a number of Panel findings related to the U.S. anti -dumping and 
countervailing duty measures that Korea has challenged in this dispute. As demonstrated in this 
submission, the Panel did not err in its interpretation and application of the Agreement on 
Implementation of Article VI of the General Agreement on T ariffs and Trade 1994 
("AD Agreement"), the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), 
and the General Agreement on Tariffs and Trade 1994 ("GATT 1994"). Additionally, as shown 
below, Korea's various claims that the Panel acted i nconsistently with Article 11 of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") lack merit.  
2. The U.S. appellee submission is organized as follows, and includes detailed discussion of, 
inter alia , the following argumen ts. 
3. Section II.A  responds to Korea's appeal of the Panel's findings related to the approach of the 
U.S. Department of Commerce ("USDOC") to the application of a "mixed" comparison 
methodology. In Korea's view, the Panel should have found the USDOC's approa ch inconsistent 
with Articles 2.4.2 and 2.4 of the AD Agreement for the same reasons that it found zeroing 
inconsistent with those provisions of the AD Agreement. The Panel was correct to reject 
Korea's  claims. Indeed, if, as the Panel found, the alternati ve comparison methodology can only be 
applied to a subset of sales, then the Panel's finding with respect to a "mixed" comparison 
methodology is the only way  to interpret the second sentence of Article 2.4.2 so as to give 
meaning to this key provision of t he AD Agreement.  
4. Korea fails to offer any legal argument against the USDOC's approach that would accord 
with the customary rules of interpretation as to why mandatory re -masking is required under the 
second sentence of Article 2.4.2 of the AD Agreement. In stead, Korea argues that the USDOC's 
approach is the "functional equivalent of zeroing," and Korea asserts that previous Appellate Body 
findings are dispositive of its claims. Korea's arguments lack any merit.  
5. No prior WTO dispute has involved a Member's a pplication of the comparison methodology 
set forth in the second sentence of Article 2.4.2 of the AD Agreement. This dispute presents an 
issue of first impression for the Appellate Body.  
6. To the extent that the USDOC's approach to the application of a "mixe d" comparison 
methodology can be likened to zeroing, the U.S. appellant submission demonstrates that zeroing is 
permissible – indeed, it is necessary – when applying the alternative, average -to-transaction 
comparison methodology, if that "exceptional" comp arison methodology is to be given any 
meaning. Additionally, the U.S. appellant submission shows that the application of the alternative, 
average -to-transaction comparison methodology to all sales (with zeroing) is not inconsistent with 
Article 2.4.2 of th e AD Agreement.  
7. There is no legal basis for finding that the USDOC's approach to the application of a "mixed" 
comparison methodology is impermissible. Where an investigating authority applies the 
average -to-transaction comparison methodology to fewer than all export prices, the AD Agreement 
does not obligate the investigating authority to offset or re -mask the evidence of dumping that has 
been unmasked through the use of average -to-transaction comparisons. Korea's arguments in 
support of its position lack m erit. 
                                                
1 Pursuant to the Guidelines in Respect of Executive Summaries of Written Submissions , WT/AB/23 
(March 11, 2015), the United States indicates that this executive summary contains a total of 4,130  words 
(including footnotes), and this U.S. appellee submission (not including the text of the executive summary) 
contains 48,435 words (including footnotes).  WT/DS464/AB/R/Add.1  
 
- B-12 - 
 
  8. The Panel did not find that "individual low prices" can be "dumped" or that "dumping" can 
"exist at the level of individual export prices." The Panel found that the second sentence of 
Article  2.4.2 of the AD Agreement provides a means for investigati ng authorities "to ensure that 
any evidence of dumping  with regard to [pattern transactions] is not masked  by non -dumping in 
respect of transactions falling outside of the pattern." When the price of an export transaction is 
below normal value, that may, i ndeed, be "evidence of dumping." When the price of an export 
transaction is above normal value, that may be evidence suggesting that no dumping has 
occurred. However, such a price also could be masking evidence of dumping under certain 
circumstances, such as when the "stringent conditions" set forth in the second sentence of 
Article  2.4.2 of the AD Agreement have been established.  
9. Contrary to Korea's argument, the second sentence of Article 2.4.2 establishes "special 
rules." The Panel was right to interpret  the second sentence of Article 2.4.2 as being an exception 
to the first sentence of Article 2.4.2, and as setting forth a special methodology for establishing 
margins of dumping that may be used when certain conditions are met.  
10. The United States does not disagree that all of an exporter's export transactions must be 
"taken into account" in the determination of dumping. The USDOC's approach does, in fact, take 
account of all export transactions. What Korea really means, however, is that evidence of 
"targete d dumping" must be re -masked by aggregating all results for all transactions in the 
numerator of the calculation of the margin of dumping. Korea provides no legal or logical basis for 
this conclusion.  
11. Korea's arguments raise the question of what it means f or an export transaction to be 
"consider[ed]" or "taken into account." To the extent that certain export transactions may be 
masking "evidence of dumping," it is appropriate for those export transactions to be "taken into 
account" in a way that prevents su ch masking.  
12. The weakness of Korea's appeal is evidenced by Korea's astonishing attempt to contest the 
clear and obvious role of the second sentence of Article 2.4.2 within the context of the 
AD Agreement as a whole. Korea now argues that the "purpose" of t he second sentence "is simply 
to allow the authority to undertake the more careful examination of individual export prices that 
the [average -to-transaction] method makes possible." Korea's argument makes no sense. If Korea 
were correct, there would never b e any reason for an investigating authority to resort to the 
alternative, average -to-transaction comparison methodology described in the second sentence of 
Article 2.4.2. The transaction -to-transaction comparison methodology, set forth in the 
first sentenc e of Article 2.4.2, already provides an investigating authority with the possibility of 
undertaking such a "granular examination of individual export prices," and also individual normal 
value sales transactions.  
13. The only logical conclusion, as the Appellat e Body has itself observed, and as the Panel, both 
of the parties (at one time or another), and all but one of the third parties in this dispute agreed, 
is that the second sentence of Article 2.4.2 of the AD Agreement is intended "to enable 
investigating a uthorities to 'unmask' so -called 'targeted dumping'."  
14. Korea's arguments related to mathematical equivalence lack merit. The U.S. appellant 
submission discusses the Appellate Body reports in prior disputes to which Korea refers and 
demonstrates that the App ellate Body's previous consideration of mathematical equivalence 
neither supports rejection of the mathematical equivalence argument in this dispute, nor compels 
it. Korea also contends that the Panel "provided no support" for its mathematical equivalence 
finding. However, it is evident from the panel report that, after considering the positions of the 
parties, the Panel agreed with the United States and did not agree with Korea.  
15. The U.S. appellant submission conclusively demonstrates mathematical equivalen ce. It is 
evident from Korea's arguments regarding different weighted average normal values and different 
adjustments that breaking mathematical equivalence is Korea's goal. Korea is not seeking an 
interpretation that gives meaning to the second sentence o f Article 2.4.2 of the AD Agreement. On 
the contrary, Korea seeks to read the second sentence of Article 2.4.2 out of the AD Agreement 
entirely. Such an interpretation is inconsistent with the customary rules of interpretation of public 
international law, in particular the principle of effectiveness.  WT/DS464/AB/R/Add.1  
 
- B-13 - 
 
  16. Korea also argues that the Panel erred in finding that the USDOC's approach to the 
application of a "mixed" comparison methodology is not inconsistent, "as such," with Article 2.4 of 
the AD Agreement. Korea's a rguments concerning Article 2.4 are dependent on its arguments 
concerning Article 2.4.2, and lack merit for the same reasons. Additionally, Korea requests that the 
Appellate Body complete the legal analysis, but the reasons Korea gives for doing so are not  
availing, and the Appellate Body should reject Korea's request.  
17. Section II.B  responds to Korea's appeal of certain Panel findings related to the "pattern 
clause" of the second sentence of Article 2.4.2 of the AD Agreement. The "pattern clause" sets 
forth the first of the two conditions for using the alternative, average -to-transaction comparison 
methodology, and provides that an investigating authority may utilize the alternative comparison 
methodology "if the authorities find a pattern of export prices wh ich differ significantly among 
different purchasers, regions or time periods."  
18. Korea argues that the Panel mischaracterized its claim, as if Korea's claim were solely that 
an investigating authority must state the "reasons" why export prices differ. Korea alleges that the 
Panel "recast[] Korea's argument into something different from – and substantially narrower 
than – what Korea actually argued." Korea contends that, by recasting its claim too narrowly, the 
Panel failed to address the claim that Korea actu ally made, which, Korea asserts, related to the 
obligation to undertake a qualitative analysis when determining whether there exists a "pattern" of 
export prices which differ "significantly." The Panel did not mischaracterize Korea's claims.  
19. Korea appears to misunderstand the difference between claims and arguments. Consistent 
with the DSU and prior Appellate Body guidance, Korea's "claims" necessarily are those set forth in 
Korea's request for the establishment of a panel. The two relevant claims set forth  in Korea's panel 
request relate to the "reasons" or "explanations" for why export prices differ – or the factors to 
which the pattern of export prices is "attributable" – and the USDOC's decision not to consider the 
reasons why export prices differ as par t of its analysis. Neither claim refers more broadly to an 
obligation to examine so -called "qualitative aspects." The Panel examined Korea's panel request 
and correctly understood the nature and scope of Korea's claims. On appeal, Korea attempts to 
expand its claims beyond what is set forth in its panel request. That is not possible, and 
Korea's  attempt should be rejected.  
20. Korea also argues that the Panel incorrectly interpreted the "pattern clause" of the second 
sentence of Article 2.4.2 of the AD Agreemen t, and erroneously found that it does not require an 
investigating authority to examine the reasons why export prices differ. Korea's arguments lack 
merit.  
21. The Panel agreed that the term "significantly " has a qualitative dimension as well as a 
quantitative  dimension. However, the Panel did not agree with Korea that it follows from this that 
an investigating authority is obligated to assess the "reasons" why export prices differ when it is 
determining whether there exists a pattern of export prices which dif fer significantly.  
22. Korea is incorrect when it suggests that the Panel "dismissed" the US – Upland Cotton  
panel  report and the US – Large Civil Aircraft (Second Complaint)  Appellate Body report. On the 
contrary, the Panel appropriately relied on those repor ts as support for its own interpretative 
conclusions. The Panel correctly noted, however, that those reports do not support 
Korea's  argument that the underlying reasons are relevant to an examination of significance.  
23. Korea's understanding of the term "sign ificant" would read the quantitative dimension out of 
that term, necessitating an exclusive focus on Korea's understanding of the qualitative dimension. 
In Korea's view, any numerical difference in export prices can be explained away. 
Korea's  proposed inte rpretation is inconsistent with the ordinary meaning of the term 
"significantly" in its context, and also with the Appellate Body's guidance regarding the meaning of 
the term "significant."  
24. Section II.C  responds to Korea's appeal of certain Panel findings related to the "explanation 
clause" of the second sentence of Article 2.4.2 of the AD Agreement. The "explanation clause" sets 
forth the second of two conditions for using the alternative, average -to-transaction comparison 
methodology, and provides that an  investigating authority may utilize the alternative comparison 
methodology "if an explanation is provided as to why such differences cannot be taken into WT/DS464/AB/R/Add.1  
 
- B-14 - 
 
  account appropriately by the use of a weighted average -to-weighted average or 
transaction -to-transact ion comparison."  
25. Korea argues that the Panel incorrectly interpreted the "explanation clause" by finding that it 
does not require an investigating authority to provide an explanation regarding both the 
average -to-average comparison methodology and the tran saction -to-transaction comparison 
methodology. Korea's arguments lack merit. The Panel's interpretation follows from a proper 
analysis pursuant to the customary rules of interpretation of public international law. 
Korea's  proposed interpretation fails to r ead the terms of the "explanation clause" in their proper 
context, in particular in the context of the first sentence of Article 2.4.2, which affords an 
investigating authority discretion in selecting whether to use the average -to-average comparison 
method ology or the transaction -to-transaction comparison methodology.  
26. Korea's proposed interpretation also does not accord with prior Appellate Body guidance 
concerning the relationship of the average -to-average comparison methodology and the 
transaction -to-transaction comparison methodology. The Appellate Body has observed that the 
average -to-average and transaction -to-transaction comparison methodologies "fulfil the same 
function," and they are "equivalent in the sense that Article 2.4.2 does not establish a hi erarchy 
between the two."  
27. Korea's proposed interpretation also is not logical. Logically, if an investigating authority is 
free to choose between the average -to-average comparison methodology and the 
transaction -to-transaction comparison methodology, and t hose comparison methodologies yield 
systematically similar results, then there would be no purpose in requiring an investigating 
authority to explain why a pattern of export prices that differ significantly cannot be taken into 
account appropriately by the  transaction -to-transaction comparison methodology, when the 
investigating authority already has explained why the pattern of export prices that differ 
significantly cannot be taken into account appropriately by the average -to-average comparison 
methodolog y. 
28. Finally, Korea's concern about the purported "potential for serious abuse" lacks foundation, 
both in the evidentiary record before the Panel and in logic. Korea appears to suggest that an 
investigating authority might first opt to use the average -to-average comparison methodology, 
and then, when considering whether to use the alternative, average -to-transaction comparison 
methodology, explain only why the transaction -to-transaction comparison methodology could not 
take into account appropriately the patt ern of export prices which differ significantly. Of course, 
this is not what the USDOC did in the washers anti -dumping investigation, nor has Korea pointed 
to any evidence that its concern has ever manifested itself in any USDOC determination.  
29. Furthermore,  in light of previous Appellate Body guidance, an investigating authority is 
obligated to reach conclusions that are "reasoned and adequate," and the investigating authority's 
reasoning must be "coherent and internally consistent." The hypothetical scenari o Korea about 
which Korea speculates likely would not meet those requirements.  
30. In section III, we address Korea's appeal of certain Panel findings with respect to the 
USDOC's countervailing duty determination.  
31. Section III.A  addresses Korea's claim that the  Panel erred in rejecting its specificity claim 
with respect to RSTA Article 26. Contrary to Korea's assertions in this appeal, the Panel was faced 
with a straightforward application of Article 2.2 of the SCM Agreement. Article 2.2 provides, in 
relevant pa rt, that "[a] subsidy which is limited to certain enterprises located within a designated 
geographical region within the jurisdiction of the granting authority shall be specific."  
32. The RSTA Article 26 subsidy program is expressly limited to investments in n ewly-acquired 
facilities located in a designated geographic region – i.e., the territory of Korea that falls outside 
the "Seoul overcrowding area." The Panel appropriately found no error in the USDOC' s 
determination that this express limitation on access t o a designated region rendered the subsidies 
regionally specific.  
33. On appeal, Korea asserts a series of increasingly untenable legal and factual arguments.  WT/DS464/AB/R/Add.1  
 
- B-15 - 
 
  34. Korea adduces a narrow, results -oriented reading of Article 2.2 of the SCM Agreement. 
According to K orea, the phrase "certain enterprises" in Article 2.2 means that regional specificity 
exists only where access to a subsidy is limited to the "legal personality" of enterprises falling 
within the region. On this theory, an enterprise can only have a single  "location" – i.e., the "place" 
of its legal personality (despite the fact that an enterprise's legal personality is a fiction, and may 
not be affixed to a particular location).  
35. The Panel correctly rejected this interpretative legerdemain. As the Panel obs erved, this line 
of reasoning is inconsistent with the text, context, and rationale of Article 2.2. Article 2.2 applies 
to situations in which access to subsidies is limited to a designated geographical region. The term 
"certain enterprises," which appears  in Article 2.2, does not imply an additional 
requirement  - i.e., that subsidies also must be limited with respect to the "location" of an 
individual enterprise's legal personality. Such a reading would be inconsistent with the definition of 
"certain enter prises" found in the chapeau of Article 2.1(a) of the SCM Agreement, and the 
ordinary meaning of the terms within that definition. Nor is Article 2.2 restricted to the location in 
which an enterprise happens to receive the "benefit" of a subsidy (which may  or may not 
correspond to the location of that enterprise's "legal personality"). Korea's attempt to conflate 
concepts of "benefit" and specificity is improper.  
36. And Korea's approach would create gaping loopholes where the text does not provide for 
them. Ko rea draws a sharp distinction between an "enterprise" and its "facilities," asserting that 
the latter are somehow excluded from the former and irrelevant to Article 2.2. This interpretation 
would permit RSTA Article 26 subsidies – which are available with respect to "facilities" that are 
located in a designated region – to evade scrutiny under the SCM Agreement.  
37. In addition, Korea effectively re -asserts its argument that there is a "hierarchy" between 
Articles 2.1(b) and 2.2 of the SCM Agreement. The Panel correctly rejected this theory. There is no 
textual or logical basis for the assertion that a finding of regional specificity under Article 2.2 is 
subject to a finding under Article 2.1(b).  
38. Korea criticizes the Panel's interpretation and application of the  phrase "designated 
geographical region" in Article 2.2. Korea complains that the Panel should have adopted a series of 
results -oriented interpretations – for instance, finding in Article 2.2 an alleged requirement that a 
Member "affirmatively" designate a  geographical region for a subsidy to be regionally specific. But 
the Panel correctly reasoned that Korea's argument would mean that where a Member expressly 
identifies a region in which access to subsidies is excluded , there is no "affirmative" designatio n of 
a region, despite the fact that such a designation would also make clear which geographical region 
is included , and have the same effect. The Panel correctly found that Article 2.2 does not include 
the "affirmatively" identify requirement Korea seeks to read into the text, which would reduce the 
inquiry under Article 2.2 to a semantic game, inviting ready circumvention of subsidy disciplines.  
39. Korea then falls back on the "object and purpose" of Article 2.2, arguing that regional 
specificity is a "flexi ble" test, based on a sliding scale. But where the text of the measure limits 
access to a designated geographical region, no amount of "flexibility" makes it contrary to 
Article  2.2 to find that the subsidy is regionally specific. Among its many deficienci es, this 
argument would create a carve -out of certain regions from Article 2.2 that is nowhere found in the 
text, and fundamentally distort the nature of the inquiry under this provision.  
40. Korea deploys "policy" arguments to buttress its critique. Korea ass erts that subsidies are 
often a "first -best policy," and suggests that the Panel's interpretation would "improperly 
constrain" Member's ability to provide subsidies that address "overcrowding and urban sprawl." 
Korea goes so far as to impugn the Panel for having "impose[d] its own preferences on Members." 
The Panel did nothing of the sort, and this argument provides no basis to conclude that it is 
contrary to Article 2.2 to find a subsidy regionally specific where the text of the subsidy limits 
access to a designated geographical region.  
41. Finally, Korea asserts two claims under Article 11 of the DSU. Korea asserts that the 
Panel's  interpretation of Article 2.2 was insufficiently "positive" and "coherent," and makes the 
facially implausible claim that the Pane l "completely fail[ed] to review" the USDOC's determination. 
These arguments are unsupported, and have no basis in Article 11.  WT/DS464/AB/R/Add.1  
 
- B-16 - 
 
  42. In Section III.B , we address Korea's arguments with respect to the USDOC's calculation of 
the subsidy ratio for RSTA Articles 10( 1)(3) and 26. Korea impugns the USDOC's decision to 
calculate these ratios in an "untied" manner. According to Korea, the USDOC should have 
employed a novel variation of the "tied" approach to attribution. Under Korea's theory, the USDOC 
should have carved  up both the numerator and denominator of the subsidy ratio, based on a 
forensic accounting analysis of R&D and facilities expenses previously incurred.  
43. The Panel appropriately rejected Korea's novel theory. As the Panel found, Article 19.4 of 
the SCM Agre ement and Article VI:3 of the GATT 1994 do not require that approach. 
Korea's  theory is based on the alleged effect – which Korea misleadingly refers to as the 
"benefit"  – of expenses  that were incurred and associated activities  that were undertaken well 
before the subsidy was bestowed. The Panel observed that the concept of an "expense" or 
"activity" conferring a "benefit" is alien to the SCM Agreement.  
44. As the Panel's findings and record demonstrate, the R&D and facilities subsidies at issue 
lacked a "tie"  to particular products:  
 The RSTA legislation did not specify any product -specific tie, and eligibility criteria were 
not limited by product type. In particular, the legislation did not require that the 
recipient use subsidies in connection with a particul ar product.  
 The structure, architecture, and design of the RSTA subsidy programs did not reflect a 
product -specific tie. As the Panel found, the tax credits were conferred by reference to 
"total R&D activities. " Samsung submitted an aggregate  pool of expen ses, and received 
an aggregate  pool of tax credits based on formulas that related to aggregate  and 
average  expenses for the company 's entire domestic operations – and not to particular 
products.  
 Samsung 's tax return did not indicate any product -specific us e of RSTA subsidies, and 
the granting authority – the Government of Korea ( "GOK") – did not acknowledge any 
such product -specific use at the time of bestowal.  
45. Korea's  remaining assertions – including its reliance on cost accounting materials from 
separate anti-dumping proceedings – are equally deficient. As the Panel explained, there is no 
basis for importing cost accounting principles into this countervailing duty proceeding. Nor did the 
Panel fail to conduct an objective assessment under Article 11 of the  DSU, as Korea asserts.  
46. Section III.C  refutes Korea 's claim with respect to overseas manufacturing. Korea criticizes 
the Panel for upholding the USDOC 's decision not to include overseas sales in the denominator of 
the ratio for RSTA Article 10(1)(3) subsid ies. Korea portrays this as a failure to "match " the 
elements in the numerator and denominator.  
47. But like Korea 's "tying" theory, this claim has no grounding in the bestowal of subsidies. This 
theory would require the attribution of subsidies based on the indirect overseas effect of 
R&D activity . The Panel appropriately rejected this theory.  
48. Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994 do not require 
Members to take into account products manufactured outside the territory of the subsid izing 
Member when calculating subsidy rates. To the contrary, the language of these provisions 
suggests a focus on production activity occurring within the territory of the granting Member.  
49. Korea dismisses the Panel 's findings, on the grounds that the Pane l improperly substituted a 
different rationale from the USDOC 's. But it was entirely appropriate for the Panel to respond to 
Korea 's claim in these proceedings, and assess its consistency with the SCM Agreement.  
50. Korea relies heavily on cost verification do cuments from separate anti -dumping proceedings. 
Yet neither of these anti -dumping proceedings has any bearing on the subsidy attribution issue 
here. Even if R&D expenses or activities could be said to "benefit " or affect an overseas subsidiary 
for cost acc ounting purposes, this would not mean that subsidies should be attributed to overseas 
production.  WT/DS464/AB/R/Add.1  
 
- B-17 - 
 
  51. Moreover, Korea fails to address the troubling implications of its theory. Investigating 
authorities would be required to conduct a jurisdiction -by-jurisdicti on inquiry into how 
R&D activities affect production across the globe.  
52. The USDOC presumed (rebuttably) that a Member grants a subsidy to benefit domestic 
production. Korea challenges that Panel 's finding that the USDOC was entitled to conclude that this 
presumption was not rebutted on these facts. Here, again, Korea relies on separate anti -dumping 
proceedings, but they cannot rebut a presumption with respect to the attribution of the "benefit " of 
a subsidy to overseas manufacturing.  
53. Korea falls back on a se ries of factual arguments. Korea 's apparent request to have the 
Appellate Body render factual findings is improper. In any event, Korea 's factual assertions are 
inaccurate and misleading, and Korea neglects other facts which strong ly militate against its 
theory.  
 WT/DS464/AB/R/Add.1  
 
- B-18 - 
 
  ANNEX B -4 
EXECUTIVE SUMMARY OF  KOREA 'S APPELLEE'S SUBMISSIO N1 
A. The Panel Correctly Found That the Second Sentence of Article 2.4.2 Does Not 
Permit Zeroing  
1. The Appellate Body has repeated ly clarified that "dumping" only exists based on a full 
consid eration of all export transactions by each exporter, and only based on the product as a 
whole. Considering all export transactions is not "masking" anything, and is an indispensable part 
of a proper finding of "dumping".  
2. The U.S. arguments on why the secon d sentence of Article  2.4.2 allows zeroing share 
two overarching flaws. First, the United States tries to distinguish the second sentence from the 
first sentence based on a few words in isolation without takin g into account the 
Anti-Dumping  Agreement as a whole and the consistent use of the key language "dumping " and 
"margin of dumping". Second, the United States has not really found any new arguments, and 
thus faces the difficulty of finding an argument that does not dire ctly contradict prior 
Appellate  Body findings.  
3. Nothing in the text or context of Article 2.4.2 suggests that "dumping" or "margin of 
dumping" should have any different meaning than the rest of the Anti -Dumping Agreement. 
Indeed, this need for a consistent interpretation is why Article 2.4. 2 opens with the overarching 
phrase "the existence of margins of dumping" – which echoes the Article 2.1 phrase that a product 
"is considered as being dumped" – before turning to some specific rules about the use of different 
comparison methods under diffe rent circumstances.  
4. The U.S. textual arguments all fail. The Appellate Body has not grounded its zeroing 
decisions solely on narrow textual differences between the first and second sentences of 
Article  2.4.2. Rather, the Appellate Body has focused on the p roper understanding of the 
overarching concepts of "dumping" and "margin of dumping", allowing the Appellate Body to 
interpret consistently the obligations of the various provisions of the Anti -Dumping Agreement 
under whi ch zeroing has been challenged.  
5. The United States argues for "systematically different" results that will "unmask targeted 
dumping". Implicit in this U.S. argument is its belief that "dumping" somehow exists for a group of 
export transactions, which must be "unmasked" so as to find "dumping " to exist. This 
U.S. inference that "dumping" for a subset of export transactions needs to be "unmasked" has no 
basis in the text of Article 2.4.2 or Appellate Body jurisprudence.  
6. The U.S. argument for systematically different results so as to satisfy the  principle of 
effectiveness has several problems. First, this argument essentially would have the principle of 
"effectiveness" take precedence over all other principles of interpretation. Second, a  treaty text 
can have meaning even if the text results in t he same or similar margins of dumping in some 
cases; treaty text can have meaning as long as it sometimes has meaning in those other cases. 
Third, the U.S. argument depends entirely on a false assertion of mathematical equivalence.  
7. The U.S. argument about mathematical equivalence should be rejected for several reasons. 
First, the U.S. argument rests largely on the false assumption that the method of determining 
normal value must remain fixed. Changing normal value or changing export price adjustments 
makes perfect sense in the context of the inquiry posed by the second sentence of Article 2.4.2. 
Such changes would allow a more precise comparison, and thus allow a W -W or T -T comparison to 
"appropriately" take into account significant  price differences.  Although the United States develops 
many different hypothetical scenarios in an effort to show mathematical equivalence, these 
scenarios all depend critically on the assumption that normal value remains fixed.  
                                                
1 Pursuant to the Appellate Body guidelines for executive summaries, Korea confirms that this executive 
summary contains a total of 1 ,884 words (including footnotes) and that the overall other appellee submissio n 
(other than the executive summary) contains a total of 19,1 09 words (including footnotes).  WT/DS464/AB/R/Add.1  
 
- B-19 - 
 
  8. Second , as is true with its hypothetical examples, t he specific U.S. examples from Washers  
also depend on the same assumption that normal value does not change. Korea submitted specific 
evidence to the Panel demonstrating what would have happened in the Washers  original 
investigation if normal value had bee n changed from an annual average to monthly averages. The 
results showed materially different dumping margins for both Samsung and LG. The United States 
never disputed this evidence.  
9. Third, this argument of "mathematical equivalence" has been considered an d rejected by the 
Appellate Body four times. The Appellate Body has repeatedly found that even if "under certain 
circumstances" or "under a specific set of assumptions" the results from different comparison 
methods are equivalent, such a situation does not  render a provision inutile . The U.S. efforts to 
distinguish these repeated Appellate Body findings fail. The Appellate Body 's occasional use of the 
phrase "unmask targeted dumping" does not require any different conclusion.  
10. The Panel did not create a new approach that "effectively rewrote the second sentence". The 
Appellate Body has already provided repeated clarification of what "dumping" and "margin of 
dumping" mean for the Anti -Dumping Agreement. It is the United States – not the Panel – that 
now seeks to rewrite the text of Article 2.4.2 to create a different concept of "dumping" – one that 
finds "dumping" to exist in a subset of export transactions and ignores the remainder of the export 
transactions for an exporter.  
B. The Panel Correctly Interpreted the  "Pattern" Requirement  
11. The Panel correctly found that the "pattern" must consist of a set of export prices that 
actually demonstrate some discernible order, and cannot just be a collection of random export 
price differences. The current USDOC methodology t akes any situation of enough price differences 
beyond a certain threshold  and then labels those differences as a "pattern" even if they are 
actually  just random price differences.  
1.  High and Low Prices Are Not Part of the Same "Pattern"  
12. The fundamental flaw  in the U.S. argument is that it fails to properly read the ordinary 
meaning of "pattern" in the overall context of the second sentence. The United States simply 
strings together dictionary definitions, and misses the most important contextual point in the  
second sentence – that the terms "pattern" and "differ significantly" set forth distinct requirements 
that both must be met. It is not enough to have export prices that "differ significantly" within one 
of the three specially enumerated categories. This need to focus on specific categories  is precisely 
why the text does not just say the authorities must " find export prices which differ significantly". 
The text also requires finding a "pattern ". 
13. A "pattern" of lower prices makes sense because the lower pric es can constitute the 
"intelligible form" that can be discerned from the other prices. There might even be a "pattern" of 
higher prices – higher export prices that stand out from the other export prices in some discernible 
and intelligible way. Yet the Uni ted States ignores this aspect of the term "pattern" and allows a 
"pattern" to be any collection of differing prices – including both higher and lower prices at the 
same time . 
14. The United States also incorrectly believes that because the lower prices are be ing 
distinguished with reference to the higher prices, both the lower prices and the higher prices and 
all of the other prices are necessarily part of the "pattern". The Panel correctly dismissed this 
argument by noting the higher and lower prices could no t be part of the same "pattern".  The Panel 
noted that t he "characteristic for establishing the degree of price variation is therefore not the 
same", since being higher than other prices or being lower than other prices are distinct 
"patterns".  WT/DS464/AB/R/Add.1  
 
- B-20 - 
 
  15. Any need to "unmask" so -called "targeted dumping" does not change this interpretation. 
Korea has explained at some length in its Other Appellant Submission that the Panel misconceived 
the purpose of the second sentence, and that this language, "unmask  targeted dumping ", used by 
the Appellate Body in a single decision must be understood in context.  
2. Random Price Differences Cannot Be Aggregated to Find a "Pattern"  
16. The Panel correctly found two textual bases for its interpretation that distinct categories 
cannot be combin ed. First, the Panel reasonably interpreted the term "or". Since the categories of 
"purchasers, regions, or time periods" are inherently different, it was reasonable to interpret the 
use of "or" in this context as disjunctive. Moreover, within the text of the second sentence, the 
text uses the disjunctive "or" when discussing these three distinctive categories, but uses the 
conjunctive "and" to make clear that there must be both a "pattern" and an explanation.  
17. Second, the Panel also reasonably interpreted t he term "among", finding this term referred 
to something "in relation to the rest of the group they belong to". The issue is not whether the 
DPM initially tests each purchaser against other purchasers. Rather, the issue is whether 
differences for purchaser s can be combined with differences based on time, and with differences 
based on regions, so as to find a single "pattern".  
18. The United States also ignores other textual and contextual points. Under the 
U.S. interpretation of aggregating across different cat egories, any true "pattern" becomes 
obscured and becomes just random price variation. The authority can no longer distinguish 
whether export prices are actually differing among various purchasers, from whether different 
purchasers bought at different point s in time.  
C. The Panel Correctly Limited the Scope of the Exceptional Comparison Method  
19. The Appellate Body  has confirm ed that the exception should be applied only to those 
transactions that meet the conditions to invoke the exception – the export transaction s that fall 
within the "pattern". The Panel correctly noted that the text makes clear that the exceptional 
comparison method applies to the "prices of individual export transactions". The Panel also 
stressed the reference to "such differences" as confirmin g that the "individual export transactions" 
at issue were those that fell within the relevant pattern. The Panel also correctly noted the 
contextual point that the second sentence explicitly focused on a subset of export transactions that 
constitute a "pat tern," and by definition created another subset of export transactions that were 
not part of the "pattern".  
20. The United States tries to limit the Panel 's rationale to the single word, "individual", even 
though the Panel explicitly addressed other textual el ements of the second sentence and 
Article  2.4.2 more generally. This U.S. argument ignores the rest of the second sentence. 
The United States is also reading the term, "individual", narrower than the Appellate Body has 
read the term.  
21. The United States also  inappropriately dismisses the textual reference to "such differences". 
The existence of this particular phrase in the second sentence is telling. Instead of focusing on all 
price differences among all export transactions, the text instead focuses specific ally on "such 
differences" and requires the explanation to focus on "such differences." The text is thus explicitly 
creating a group of sales that meet the conditions for the exception and another group of sales 
that do not.  
22. It does not make interpretative  sense to make all of the export transactions part of the 
"pattern". Even if all export prices are used as a benchmark to determine the subset of prices that 
"differ significantly" from the benchmark, use of the benchmark export prices does not make them 
part of the "pattern".  
23. The U.S. interpretation also ignores the logical relationship between a basic rule and an 
exception. Under the U.S. interpretation, there would be no limit on the scope of the exception.  
_______________  
 WT/DS464/AB/R/Add.1  
 
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  ANNEX  C 
ARGUMENTS OF THE THI RD PARTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Brazil's third participant's submission  C-2 
Annex  C-2 Executive summary of Canada's third participant's submission  C-3 
Annex  C-3 Executive summary of China's third participant's submission  C-4 
Annex  C-4 Executive summary of the European Union's third participant's submission  C-9 
Annex  C-5 Executive summary of Japan's third participant's submission  C-12 
Annex  C-6 Executive summary of Norway's third participant's submission  C-14 
Annex  C-7 Executive summary of Viet Nam's third participant's submission  C-15 
 
 WT/DS464/AB/R/Add.1  
 
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  ANNEX  C-1 
EXECUTIVE SUMMARY OF BRAZIL'S  THIRD PARTICIPANT'S SUBMISSION  
1. Brazil  would like to comment in the present appeal proceedings three specific aspects of 
Panel's report: (i) the identification of the patterns for purchasers, regions or time periods and 
their aggregation; (ii)  the explanation requirement to depart from the normal comparison 
methods; and (iii) the practical application of the second sentence of Article 2.4.2.  
2. Brazil  understands that the patterns of price variations that matter for determining the 
margin of dumping in the situations of "targeted dumping" are only those that are significantly  
below  the price for the tested purchaser, region or time period. Brazil also agree s with the Panel 
when it states that a "pattern" of export prices cannot be found across the different categories 
covered by the second sentence of Article 2.4.2, but should rather be found than "among" the 
constituent elements  of each category.  
3. With regar d to the "explanation" required by Article 2.4.2, Brazil understands that a 
departure from the normal symmetrical methods demands an explanation as to why the price 
differences could not be unmasked by the application of both W -W or T -T methods.  
4. The applic ation of the W -T method also presents serious challenges, such as what should be 
done with the transactions outside the pattern. It is important to reach a clear distinction between 
"zeroing" and "systemic disregarding". The solution given by the Panel app ears to be in line with 
the objectives of the Anti -Dumping Agreement.  
 WT/DS464/AB/R/Add.1  
 
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  ANNEX C -2 
EXECUTIVE SUMMARY OF CANADA'S  THIRD PARTICIPANT'S SUBMISSION  
INTRODUCTION AND EXE CUTIVE SUMMARY1 
1. Canada  is participating in this appeal as it has a substantial systemic inter est in the 
interpretation of WTO anti -dumping rules.  
2. Canada's  written submission addresses three issues regarding the application of the 
exceptional weighted average -to-transaction (average -to-transaction) methodology referred to in 
the second sentence of Article 2.4.2 of the Agreement on Implementation of Article VI of the 
General Agreement on Tariffs and Trade 1994  (Anti-Dumping Agreement). In particular, Canada 
will focus on the need for an investigating authority to properly identify a pattern among exp ort 
prices, the impermissibility of zeroing in applying the average -to-transaction methodology, and the 
Panel's errors in al lowing "systemic disregarding".  
3. The text of the second sentence of Article 2.4.2 creates an exception to the two standard 
dumping  calculation methodologies and thus requires a rigorous application of the criteria 
contained therein. An investigating authority must examine whether a pattern consisting of a 
regular and intelligible series of export prices can be identified among purchaser s, regions, or time 
periods. The Panel correctly found that the United States Department of Commerce (USDOC) 
Differential Pricing Methodology (DPM) fails to meet this requirement when it aggregates 
transaction s from across all three groups.  
4. With respect to  zeroing, the correct application of the principles espoused in past decisions 
can only lead to the conclusion that zeroing is also impermissible under the average -to-transaction 
methodology. Furthermore, as zeroing distorts the magnitude of a dumping marg in, its use in 
applying the average -to-transaction methodology violates the fair compari son requirement in 
Article 2.4.  
5. Finally, the Panel erred in finding that the second sentence of Article 2.4.2 permits an 
investigating  authority to establish an "amount  of dumping" exclusively by reference to "pattern" 
transactions. The Panel further erred in finding that, when combining comparison results under the 
weighted average -to-weighted average (average -to-average) and average -to-transaction 
methodologies, the "s ystemic disregarding" of negative average -to-average comparison results is  
permissible.  
6. There are four fundamental problems associated with these findings. First, the Panel 
misapplied the well-established interpretation of "dumping" as an exporter - and pro duct-specific 
concept, and the "margin of dumping" as pertaining to all export sales of subject goods by an 
exporter. Second, the exception under the second sentence of Article 2.4.2 does not alter these 
principles by permitting an investigating authority to disregard certain transactions when 
calculating a margin of dumping for an exporter. Third, the Panel ignored the Appellate Body's 
repeated rejection of mathematical equivalence as a basis for justifying zeroing. Fourth, permitting 
the establishment of a "margin of dumping" based on a subset of "pattern" transactions would 
distort the margin of dumping in a manner as egregious as the application of zeroing under the 
average -to-average or transaction -to-transaction methodologies . 
                                                
1 Pursuant to the Appellate Body guidelines for executive summaries, Canada confirms that the 
executive summary contains a total of 478 words (including footnotes)  and that the overall third party 
submission (other than the executive summary) contains a total of 4823 words (including footnotes).  WT/DS464/AB/R/Add.1  
 
- C-4 - 
 
  ANNEX C -3 
EXECUTIVE SUMM ARY OF CHINA'S  THIRD PARTICIPANT'S SUBMISSION  
I. ISSUES COVERED BY CH INA'S THIRD PARTICIP ANT'S SUBMISSION  
1. China's  third participant's submission focuses primarily on issues of legal interpretation that 
are relevant for China's own complaint against certain US  measures in the parallel proceedings in 
United States – Certain Methodologies and their Application to Anti -Dumping Proceedings Involving 
China (DS471).  
II. APPEAL ISSUES RELATI NG TO USDOC 'S FAILURE TO COMPLY WITH THE 
CONDITIONS ON THE US E OF THE EXCEPTIONAL  W-T COMPARISON METHODO LOGY 
UNDER ARTICLE 2.4.2,  SECOND SENTENCE  
A. The Panel did not err in its interpretation of the scope of the relevant pricing 
pattern under Article 2.4.2, second sentence  
2. The Panel did not err when concluding that the "pattern" for purpo ses of Article  2.4.2, 
second sentence, comprises only a subset  of the examined export transactions. A consideration of 
the text, context and object and purpose of Article 2.4.2 reveals that the Panel committed no error 
in finding that a "pattern of export prices which differ significantly among different purchasers, 
regions or time periods" ("relevant pricing pattern") necessarily comprises a subset  of the entire 
universe of the export sales of a product as a whole by an exporter, and not as the United Stat es 
seems to contend, all export sales. Specifically, a relevant pricing pattern is a subset of low -priced 
sales to a particular customer or a particular region, or during a particular time period.  
3. Identifying a pattern of export prices characterized by high export prices would be 
inconsistent with the very concept of dumping that is at the centre of Article 2.4.2. Hence, the 
relevant pricing pattern referred to in Article 2.4.2, second sentence, must be one of low and not 
high export prices. The differences  between high prices and other prices are not a justification for 
resort to the exceptional methodology under the second sentence. Such differences are not 
significant  in the sense of Article 2.4.2.  
4. Accordingly, the Appellate Body should uphold the Panel's  finding that the "pattern" for 
purposes of Article  2.4.2, second sentence, necessarily comprises only a subset  of the examined 
export transactions. The Appellate Body should modify the Panel's findings to state clearly that a 
"pattern" under Article 2.4.2 , second sentence, may comprise only low-priced  sales.  
B. The Panel did not err in finding that USDOC's differential pricing methodology is 
"as such" inconsistent with Article 2.4.2, second sentence, because it 
aggregates random and unrelated price variations  and thereby does not allow 
proper establishment of a relevant pricing pattern  
5. The Panel did not err when finding that USDOC's so -called "differential pricing" methodology 
("DPM") is inconsistent "as such" with the second sentence  of Article  2.4.2 because,  by 
aggregating random and unrelated price variations, it  does not properly  establish  a pattern of 
export prices which differ significantly among different purchasers, regions or time periods . 
6. China agrees that the phrase "among different purchasers, regi ons or time periods" in 
Article  2.4.2, second sentence, determines the question of how the relevant pricing pattern must 
be identified. The Panel rightly attached significance to the use of the disjunctive "or" in this 
phrase, as its ordinary meaning indica tes that a "pattern" can only be found in prices that differ 
significantly either among purchasers, or among regions, or among time periods. This excludes the 
possibility of establishing a "pattern" across  the three categories cumulatively as USDOC appears  
to do with the DPM. The Panel was equally right to take the view that a "pattern" of significant 
price differences "among" different purchasers, regions or time periods must be found in the price 
variation within a group  of purchasers, regions, or time pe riods.  WT/DS464/AB/R/Add.1  
 
- C-5 - 
 
  7. The Appellate Body should, therefore, uphold the Panel's finding that USDOC's DPM is 
inconsistent "as such" with the second sentence  of Article  2.4.2.  
C. The Panel erred by finding that investigating authorities are not required, under 
Article 2.4.2, s econd sentence, to consider qualitative factors  
8. The Panel erred when it found that USDOC did not act inconsistently with Article 2.4.2, 
second sentence, of the Anti-Dumping Agreement  by determining the existence of "a pattern of 
export prices which differ significantly . . ." on the basis of purely quantitative  criteria, without any 
qualitative  assessment of the reasons for the relevant price differences.  
9. One qualitative  dimension that must be considered – especially where targeted dumping is 
alleged with r espect to a period of time – is seasonality . Another such qualitative dimension would 
be a secular decline  in costs of production  over the course of the relevant time period, which 
equally affects home market and export market prices for the product.  
10. The A ppellate Body should reverse the Panel's interpretation and find that investigating 
authorities must consider qualitative factors when examini ng, under Article 2.4.2, 
second  sentence, whether export prices "differ significantly" among purchasers, regions, or time 
periods. The Appellate Body should find that the qualitative factors to be considered are factors 
that are unrelated to any form of unfair pricing practice but that lead to regular or predicable 
variations in prices. The Appellate Body should find that an authority has an obligation to examine 
these qualitative factors on its own initiative, i.e., regardless whether verifiable evidence has been 
provided by interested parties.  
D. The Panel erred by finding that investigating authorities need not address  the 
T-T comparison methodology when explaining the need to depart from the 
symmetrical comparison methodologies  
11. The Panel erred when it rejected Korea's claim that USDOC ac ted inconsistently with 
Article  2.4.2, second sentence, by failing to explain why t he observed export price differences 
could not be taken into account appropriately by the use of the transaction -to-transaction ("T -T") 
comparison methodology. China agrees with Korea that the required "explanation" must include a 
discussion of both the we ighted average -to-weighted ave rage ("W -W") and 
transaction -to-transaction ("T -T") comparison methodologies.  
12. As a textual matter, this issue devolves upon the meaning of the word "or" in the 
explanation clause of the second sentence of Article 2.4.2. In ord er properly to interpret the use of 
the word "or" in that sentence, one must take into account th e context provided by the 
first sentence of Article 2.4.2, which contains the general rule that "normally" an authority is to 
use a symmetrical comparison meth odology. Hence, recourse to the exceptional W -T comparison 
methodology is allowed only if neither  of the symmetrical comparison methodologies can take the 
identified "pattern" into account appropriately.  
13. China agrees that Article 2.4.2 grants discretion to  investigating authorities when it comes 
to choosing between the two comparison methodologies that are normally  to be used. However, 
that initial discretion has been exhausted and thereby becomes irrelevant if the investigating 
authority wishes to have rec ourse to the exceptional W -T comparison methodology, inasmuch as 
that exceptional comparison methodology may be employed only if the specific conditions set forth 
by the second sentence of Article 2.4.2 are met.  
14. The Appellate Body should therefore reverse the appealed finding by the Panel, and confirm 
that, under Article 2.4.2, second sentence, investigating authorities must address the reason why 
the T -T comparison methodology, as well as the W -W comparison methodology, cannot be used 
before turning to the  exceptional W -T comparison methodology.  WT/DS464/AB/R/Add.1  
 
- C-6 - 
 
  III. APPEAL ISSUES RELATI NG TO THE DISCIPLINE S IMPOSED BY THE 
ANTI -DUMPING  AGREEMENT  AND THE GATT 1994  ON THE MANNER IN WHI CH THE 
W-T COMPARISON METHODOLO GY MAY BE APPLIED  
A. The Panel did not err in finding that the W -T comparison methodology under 
Article 2.4.2, second sentence, may only be applied to transactions that form 
part of the relevant pricing pattern  
15. The Panel's finding that, under Article 2.4.2, second sentence, the W -T comparison 
methodology may not be applied to all export sales but only to those forming part of the relevant 
pricing pattern is not in error. This view finds support in the text of the Anti-Dumping Agreement . 
16. First, the phrase "individual export transactions" in the text of th e second sentence of 
Article  2.4.2 refers to the specific transactions falling within the relevant pricing pattern. Having 
applied the W -T comparison methodology to the individual transactions that comprise the 
"pattern", the non -pattern transactions must be compared with n ormal value on the basis of 
one of the symmetrical comparison methodologies. The authority would then need to aggregate all 
intermediate comparison results (whether W -W, T-T or W -T) in order to determine a margin of 
dumping for the product as a whole.  
17. Second , it flows from the text of Article 2.4.2 that a relevant pricing pattern may only be 
taken into account "appropriately" and not in an unreasonable or disproportionate manner. The 
permission to use the W -T comparison methodology is not a blanket authorizati on to use that 
methodology for all sales. Rather, it grants limited authority to enable an authority to deal 
appropriately with a relevant pricing pattern that arises in respect of a subset of sales.  
18. Third, pursuant to an established canon of treaty interp retation, exceptions (such as that 
expressed in the second sentence of Article 2.4.2) apply only to the extent that they conflict with 
the general rule from which they derogate. It follows that the alternative methodology may be 
applied solely to sales for ming part of a relevant pricing pattern that cannot be taken into account 
by using a symmetrical comparison methodology.  
19. Accordingly, the Appellate Body should uphold the Panel's finding that the W -T comparison 
methodology may not be applied to all export sales. For sales that are not part of the relevant 
pricing pattern, Article 2.4.2, second sentence, does not provide any authorization to depart from 
the standard rule that mandates use of the symmetrical comparison methodologies.  
B. The Panel did not err in finding that USDOC's use of zeroing when applying the 
W-T comparison methodology in original investigations is inconsistent with 
Article 2.4.2, second sentence  
20. The Panel did not err when it found that the use of zeroing in connection with the application 
of the W -T comparison methodology under Article 2.4.2, second sentence, is inconsistent with the 
second sentence of Article  2.4.2 "as such", and "as applied" in the Washers  anti-dumping 
investigation . 
21. The use of zeroing when applying the W -T comparison meth odology under Article 2.4.2, 
second sentence, violates the fundamental product -wide and exporter specific nature of the 
concepts of "dumping" and "margins of dumping" Because a transaction -specific (or intermediate) 
comparison result is not itself "dumping ", the United States is mistaken that a transaction -specific 
comparison result can be evidence  of dumping in and of itself, without aggregating the individual 
transaction -specific comparison result together  with all other intermediate transaction -specific 
comparison results to see if there actually is "dumping".  
22. Although the Panel's ultimate finding as to the WTO -inconsistency of zeroing when 
aggregating transaction -specific comparison results arising in the context of the W -T comparison 
methodology is corr ect, its reasoning contains an important error regarding the nature of 
"dumping". The Panel reasoned that, in the context of the second sentence of Article 2.4.2, when 
an investigating authority determines the margin of dumping for an individual exporter o r foreign 
producer, the investigating authority is entitled to limit its analysis to the pricing behaviour of the 
exporter or foreign producer in respect of the transactions that form a "pattern". That approach WT/DS464/AB/R/Add.1  
 
- C-7 - 
 
  does not accord with the requirement to deter mine a margin of dumping for the product as a 
whole.  
23. The United States insists that the second sentence of Article 2.4.2 would be inutile unless 
zeroing is permitted. In the United States' view, in order to avoid inutility, it is essential that the 
results  of use of the W -T comparison methodology differ systematically from those that would 
arise under the W -W comparison methodology. Yet, to the extent that the investigating authority 
considers it necessary to ensure that the application of the W -T compariso n methodology leads to 
a different outcome than the application of the W -W comparison methodology, it may always have 
recourse to the existing WTO -consistent alternative techniques for calculating the weighted 
average normal value.  
24. Overall, although certai n elements of the Panel's reasoning  are problematic, the 
Appellate  Body should uphold the Panel's finding that USDOC's use o f zeroing when applying the 
W-T comparison methodology in original investigations is inconsistent with Article 2.4.2, 
second  sentenc e. 
C. The Panel erred by allowing investigating authorities to disregard certain 
results when combining the results of W -T comparisons with other comparisons 
obtained through using the W -W comparison methodology  
25. The Panel erred when it rejected Korea's claim that USDOC's practice of failing to give the 
full mathematical weight to the intermediate results of certain comparisons when aggregating 
those results with the intermediate results of other comparisons, amounts to a form of zeroing. 
Under the challenged p ractice, just as in other forms of zeroing, negative intermediate values are 
not permitted to offset positive intermediate values during the aggregation process.  
26. The Panel's reasoning suggests that export prices for sales outside  of the identified pattern 
may somehow be disregarded when establishing the numerator of the fraction used to calculate a 
margin of dumping. China considers that the Panel's asymmetrical treatment of the numerator and 
denominator is unsupported by the text of Article 2.4.2, and is c ontrary to the general principle 
that a margin of dumping must be calculated for the product as a whole. In order to satisfy that 
fundamental obligation, the numerator of the fraction must include all intermediate comparison 
results and the denominator mus t include the value of all sales on which those intermediate 
comparison results were calculated.  
27. The Appellate Body should reverse the Panel's decision to reject Korea's claim that 
USDOC' s use of what Korea calls "systemic disregarding" in the context of t he DPM is inconsistent 
"as such" with Article 2.4.2, and Article 2.4 of the Anti-Dumping Agreement . 
D. The Panel did not err in finding that the use of zeroing in connection with the 
W-T comparison methodology in administrative reviews is inconsistent with 
Article 9.3 of the Anti-Dumping Agreement  and with Article VI:2 of the 
GATT  1994  
28. The Panel did not err in finding that the use of zer oing in connection with the 
W-T comparison methodology in administrative reviews is inconsistent with Article 9.3 of the 
Anti-Dumping Agreement  and with Article VI:2 of the GATT 1994. The United States' appeal of this 
finding by the Panel is fully consequential to its appeal of the Panel's finding that USDOC's use of 
zeroing when applying the W -T comparison methodology in origin al investigations is inconsistent 
with Articles 2.4.2, second sentence, and Article 2.4.  
29. Even if the Appellate Body were to find that investigating authorities may apply zeroing 
procedures when using the W -T comparison methodology under  the second sentence  of 
Article  2.4.2, the United States' appeal remains devoid of merit. In essence, this is so because the 
use of zeroing in connection with the W -T comparison methodology in administrative reviews is 
inconsistent with Article 9.3 of the Anti-Dumping Agreeme nt and with Article VI:2 of the 
GATT  1994. The United States has not even attempted to demonst rate that Article 2.4.2, 
second  sentence applies to administrative reviews.  WT/DS464/AB/R/Add.1  
 
- C-8 - 
 
  30. The Appellate Body should uphold the Panel's finding and find that the Panel did not e rr in 
finding that the use of zeroing in connection with the W -T comparison methodology in 
administrative reviews is inconsistent with Article 9.3 of the Anti-Dumping Agreement  and with 
Article VI:2 of the GATT 1994.   
 WT/DS464/AB/R/Add.1  
 
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  ANNEX C -4 
EXECUTIVE SUMMARY OF THE E UROPEAN UNION'S  THIRD PARTICIPANT'S SUBMISSION  
A. Korea's claims under the Anti -Dumping Agreement  
1. The EU considers that the purpose of the final sentence of Article 2.4.2 of the ADA, as 
reflected in the preparatory work, is to strike a reasonable compromise b etween two different 
points of view. The first point of view is that whether or not dumping exists must be measured by 
taking into account the average pricing behaviour of an exporter, in both domestic and export 
markets, as well as average costs, irrespec tive, on the export side, of the purchaser, region or 
time period. Thus, for this purpose, the data universe includes all export transactions to all 
purchasers and regions and in all time periods of the investigation period, to the full value of all 
export  transactions, whether they are less or more than the normal value. This is so whether the 
comparison methodology is weighted average -to-weighted average or transaction -to-transaction. 
The second point of view is that whether or not dumping exists may be m easured by comparing 
each export transaction with a normal value, and, if the export price exceeds the normal value, by 
recording a finding of zero dumping, that is, by not allowing any off -set between positive and 
negative results. The compromise, as ensh rined in Article 2.4.2 of the ADA is that normally the 
first rule applies; but that exceptionally, if targeted dumping by purchaser, region or time period is 
demonstrated to exist, a normal value established on a weighted average basis may be compared 
to prices of individual export transactions.  
2. Thus, what the final sentence of Article 2.4.2 of the ADA does is to permit an investigating 
authority to unmask targeted dumping by purchaser, region or time that would otherwise be 
concealed. Thus, in the case of regional targeted dumping, a weighted average -to-weighted 
average comparison might lead to a determination of no dumping. However, a closer examination 
of one particular regional market within the importing Member might reveal that, in fact, the 
relatively  low priced and dumped transactions are pouring into that region and devastating the 
local industry, and this is being off -set by relatively high priced transactions to other regions. In 
such a case, what the final sentence of Article 2.4.2 of the ADA does  it to permit an investigating 
authority to respond to such a situation, by unmasking the targeted dumping. Instead of 
determining the existence and amount of dumping by reference to the entire territory of the 
importing Member, it is entitled instead to d etermine the existence of a pattern of export prices 
which differ significantly among different regions, and unmask the targeted dumping accordingly. 
The same observation applies, mutatis mutandis , with respect to targeted dumping by purchaser 
or time peri od. 
3. In a normal anti -dumping calculation, that is, one that does not involve any determination of 
targeted dumping, an investigating authority is not required to assess the reason for which 
dumping is occurring. Rather, the determination of the existence a nd amount of dumping is based 
on an objective assessment of the data. If the export price is less than the normal value, then 
dumping exists. The EU fails to see why the situation should b e any different under the 
final sentence of Article 2.4.2 of the ADA . In the case of regional targeted dumping, for example, 
the objective question is whether or not the product is being dumped into a particular region, 
based on an objective examination of the data. The reasons for which the dumping might be 
occurring, and  specifically the reasons for the existence of the pattern and the use of the weighted 
average -to-transaction methodology, might be relevant to the explanation to be provided pursuant 
to the final sentence of Article 2.4.2 of the ADA, but such reasons are not relevant to the question 
of whether or not a pattern of relatively low priced exports by purchaser, region or time period, 
has been demonstrated to exist. We think that the terms "pattern" and "significantly" can be 
understood quantitatively; and we ag ree with the US' that the term can also be understood 
qualitatively.  WT/DS464/AB/R/Add.1  
 
- C-10 - 
 
  4. The matter before the Appellate Body has not already been decided by the existing case law 
on zeroing. On the contrary, in our view, panels and the Appellate Body have exercised 
considera ble caution and judicial restraint in this matter, confining themselves to resolving the 
particular disputes that have come before them. Specific cases have addressed specific types of 
comparison methodologies in specific types of proceedings. However, a t argeted dumping case has 
not previously come before any panel, and panels and the Appellate Body have been careful not to 
prejudge the issues related to targeted dumping. Thus, at most, what Korea and the US appear to 
be arguing is that the basic underlyin g logic that has been used to resolve previous disputes 
should be carried forward, in a systematic and consistent manner, in order to resolve the present 
dispute, and in such a way that Article 2.4 and particularly Article 2.4.2 are interpreted and applied  
coherently.  
5. The EU disagrees that the final sentence of Article 2.4.2 requires that the existence and 
amount of targeted dumping, if any, must be calculated only on the basis of the export 
transactions passing the pattern and gap tests, as opposed to all transactions to or in the 
particular purchaser, region or time period. We fail to see how this would comport with the basic 
objective of the targeted dumping provision, which, as we have outlined above, is to permit an 
investigating authority to unmask tar geted dumping by purchaser, region or time that would 
otherwise be concealed. It is not clear to us how this can be achieved if the sole option open to an 
investigating authority would be to make a calculation only on the basis of the transactions that 
have passed the pattern and gap tests. The investigating authority must have the possibility of 
applying an appropriate methodology in order to address the targeted dumping, which can only 
mean that high priced export transactions to or in other purchasers, r egions or time periods would 
not be allowe d to offset the dumping amount.  
6. The EU agrees with Korea that the Appellate Body has already decided that mathematical 
equivalence does not determine the matter, and that the explanations in the measure at issue 
make no reference to the possible use of the transaction -to-transaction methodology. The EU 
submits that the consistency of the measure at issue with the final sentence of Article 2.4.2 of the 
ADA should be assessed in that light.  
7. With regard to Differential  Pricing Methodology and the first flaw, we share the view that a 
targeted dumping determination must ultimately be made with respect to the product as a whole 
(in relation to a particular exporter). With respect to the second flaw, we consider that, if th ere 
are, for example, 10 regions, and the relatively low priced transactions are distributed equally 
amongst them, there is no basis on which to find regional targeted dumping. However, if the 
relatively low priced transactions are in 2 adjacent regions, w e consider that the transactions to 
the 2 regions may be cumulated for the purposes of determining whether or not there is a pattern 
of export prices which differ significantly among different regions. In effect, the 2 regions are 
treated as one. We would make the same remark with respect to related purchasers or adjacent 
time periods. With respect to the third flaw, we consider that it is difficult to understand the 
justification for combining data that are not generated on the basis of equivalent paramete rs. 
B. Korea's claims under the SCM Agreement  
8. With respect to the issue of regional specificity, the European Union considers that 
Korea' s distinction between "enterprises" and "facilities" is artificial as facilities will normally form 
part of an enterprise.  Korea's argument that enterprises must have legal personality is not 
convincing because the term "certain enterprises" in Article 2.2 also covers industries which clearly 
do not have legal personality. Furthermore, there is no apparent reason why subsidie s should not 
be covered by Article 2.2 if they are granted to entities that may not necessarily have legal 
personality. A different interpretation could lead to the circumvention of Article 2.2.  
9. The European Union considers that specificity under Article 2 .2 is not called into question by 
the fact that the subsidy only excludes investments in 2% of Korea's land mass. The term 
"geographical region" in Article 2.2 is not qualified in any way and hence the designation of any 
geographical region – irrespective of its size – may trigger the application of Article 2.2. 
Korea' s interpretation would also risk leading to significant legal uncertainty as regards 
determining the relevant geographic size of an area. The European Union notes further that while 
the Seoul overcrowding control region may only account for 2% of Korea's land mass, the city of 
Seoul (excluding the metropolitan area) accounts for more than 20% of Korea's total population 
and in 2012 created 23% of Korea' s overall GDP.  WT/DS464/AB/R/Add.1  
 
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  10. The European Union agrees w ith the Appellate Body in US – Anti-Dumping and 
Countervailing Duties (China)  that the application of one of the sub -paragraphs of Article 2.1 is not 
in itself determinative as regards "specificity". The European Union therefore disagrees with 
Korea's argu ment that a finding of non -specificity under Article 2.1(b) should lead to a finding of 
non-specificity also under Article 2.2 . 
11. With respect to Article VI:3 of the GATT1994 and Article 19.4 of the SCM Agreement, the 
European Union recalls that both provisi ons require a direct link between the levy of countervailing 
duties with respect to the product under investigation and the determination that a subsidy is 
found with respect to "such" (i.e. the same) product. In light of these provisions and previous case  
law, Members must accurately determine the per unit subsidy amount with respect to the product 
in question and not exceed that amount. However, in practice it may be very difficult to establish if 
a subsidy is clearly "tied" in law or in fact to the produ ction or sale of a particular product. If the 
subsidy is not tied to any particular product, it may be presumed that the company allocated this 
benefi t across its entire production.  
12. Regarding the issue whether the tax credits in the case at hand were "tied " to 
Samsung' s digital appliances, the European Union considers that one relevant element to consider 
could be whether the eligibility criteria  for the subsidy are linked – i.e. tied - to the product in 
question. Other elements to consider could be whether  the use of the subsidy  is 
limited  - i.e. tied - to the product in question or whether Samsung in casu  did actually use the tax 
credits for its digital appliances.  
13. Regarding the issue whether the subsidy is to be allocated to Samsung's local or worldwide 
activities, the European Union considers that relevant elements to consider could be whether the 
subsidy was granted with respect to R&D activities conducted in Korea or with respect to 
R&D activities also outside Korea and whether Samsung used the tax cred its for its Korean or 
worldwide production.   WT/DS464/AB/R/Add.1  
 
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  ANNEX C -5 
EXECUTIVE SUMMARY OF JAPAN'S  THIRD PARTICIPANT'S SUBMISSION  
1. In this appellate proceeding, Japan will focus on the requirements of the second sentence of 
Article 2.4.2 of the Anti -Dumping Agreement and  the USDOC's methodologies concerning  the 
application of the said provision . In doing so, Japan would particularly like to address the systemic 
issues arising out of the USDOC's continued use of zeroing  when determining dumping and 
calculating margins of d umping by referring to the second sentence of Article 2.4.2 . 
2. To start with the overview of the relevant provisions of the Anti -Dumping Agreement and 
the understanding of dumping and margins of dumping  as a background, Article VI of the 
GATT  1994 and Articl e 2.1 of the Anti -Dumping Agreement recognise dumping  when "a product " is 
introduced into the commerce of an importing Member at less than its normal value. T hrough a 
number of prior WTO disputes, t he Appellate Body has established  that dumping and margins  of 
dumping within the meaning of Article VI of the GATT 1994 and the Anti -Dumping Agreement do 
not pertain to individual transactions or individual models/sub -types of a product, but to a product 
under investigation as a whole.  The Appellate Body also ruled that such interpretation must be 
applied in a coherent and consistent manner to all provisions of the Anti -Dumping Agreement, and 
for all types of anti -dumping proceedings. On this basis, the Appellate Body has consistently held 
zeroing to be inconsiste nt with the Anti -Dumping Agreement . 
3. Article 2.4.2 of the Anti -Dumping Agreement sets forth three comparison methodologies for 
establishing the existence of margins of dumping. While the W -W and T -T comparison 
methodologies under the first sentence "shall n ormally" be used, an investigating authority may 
use the exceptional W -T comparison methodology under t he second sentence  if the requirements 
of its pattern clause and explanation clause are met.  As clarified by the Appellate Body , the 
second  sentence is an instrument to "unmask" "targeted dumping ", i.e. dumping that is targeted 
to certain purchasers, targeted to certain regions, or targeted to certain time periods . 
4. Regarding the interpretation of the pattern clause, a "pattern"  must be of export prices tha t 
differ significantly "among different purchasers, regions or time periods". In other words, export 
prices for some  purchaser (or region or time period) must differ significantly from export prices for 
other  purchasers (or region or time period). Further,  the Appellate Body in US – Zeroing (Japan)  
explained that the export prices that fall within the relevant pricing pattern "must be found to 
differ significantly from other export prices ." 
5. In order to evaluate whether observed price differences are "signif icant[]", one needs to 
examine whether the observed price differences are "important, notable, consequential" in the 
context of the specific case at hand . Thus, as the Panel correctly found, the size or scale of a price 
difference may need to be assessed i n light of the prevailing factual circumstances, including the 
nature of the product and market in question.  In addition, since an exporter generally does not sell 
its product at a uniform price across different purchasers, regions and time periods, the te rm 
"significantly" implies that price differences must go beyond the kind of price variations that 
"normally" exist in the market . 
6. As to the explanation clause , given that it is perfectly normal to observe certain differences 
in export prices of a product in a given market, such variations are expected to be "taken into 
account appropriately" by the methodologies set forth in  the first sentence of Article 2.4.2 , which 
"shall normally" be used . Thus, an "explanation" has to be provided as to the fact that ob served 
variations in export prices are not a mere reflection of factors or pricing patterns that normally 
exist or otherwise the methodologies contemplated in the first sentence cannot be used to 
determine an appropriate margin of dumping.  Japan agrees wit h the Panel 's finding to that effect . 
7. On the other hand, Japan does not agree with the Panel's finding that the investigating 
authority need not provide an explanation as to why the T -T comparison methodology cannot take 
into account appropriately the pric e differences.  The combination of the negative form ("cannot") 
and the conjunction "or" in the second sentence clearly indicate that the investigating authority 
must address both the W -W and the T-T comparison methodology under the explanation clause.  WT/DS 464/AB/R/Add.1  
 
- C-13 - 
 
  8. The appropriate scope of the application of the W -T comparison methodology under the 
second sentence should be determined by considering not only the term "pattern" in isolation but 
also its context, including, inter alia , its explanation clause  as well as the  first sentence. Since  the 
W-W and T -T comparison methodologies under  the first sentence cover situations where  all export 
transactions are taken into account, it appears  natural to limit the application of the 
W-T comparison methodology under the second s entence in a manner necessary and appropriate  
to unmask  the "three kinds of" targeted dumping, i.e. dumping targeted purchaser s, region s or 
time period s. This reading is consistent with the use of the term "may" in the second sentence, as 
well as t he Appel late Body 's explanation  in US – Zeroing (Japan) . 
9. Regarding the permissibility of zeroing under the second sentence of Article 2.4.2 , neither  
that provision nor other provisions of the Anti -Dumping Agreement contain any language 
suggest ing that an investiga ting authority is allowed to depart from the consistent interpretation of 
the Appellate Body that dumping and margins of dumping are product -specific, and not 
transaction -specific , concepts . Zeroing is also at odds with, and goes far beyond, the role and 
function of  the second sentence of Article 2.4.2 to unmask the "three kinds of" targeted dumping.  
Furthermore, t he mathematical equivalence argument does not warrant an interpretation that 
zeroing is permitted . While t his argument rests on the assumption th at W-W and W -T comparison 
methodologies always or normally use the exact same set of pricing data (i.e. normal value(s) and 
export prices), such assumption finds no basis in the Anti -Dumping Agreement.  
10. Finally, with respect to the application of the second  sentence of Article 2.4.2 to the specific 
methodology adopted by the USDOC, the DPM relies solely on mechanical and inflexible criteria 
such as + 0.8 or –0.8, and 33%  in order to determine whether export prices "differ significantly" 
from one another. Thus , the DPM fails to consider  the prevailing factual circumstances on a 
case-by-case basis , which is inconsistent with the second sentence of Article 2.4.2 . In addition, t he 
DPM fails to identify a pattern of export prices which differ significantly "among different 
purchasers, regions or time periods" , because it aggregates unrelated price variations across  
different purchasers, regions and time periods, and because it takes into account price variations 
among different models  of a single product as constitu ting a "pattern" . 
 WT/DS464/AB/R/Add.1  
 
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  ANNEX C -6 
EXECUTIVE SUMMARY OF NORWAY'S  THIRD PARTICIPANT'S SUBMISSION  
THE USE OF ZEROING  
1. The Panel  found that the United States ' use of zeroing when applying the 
"weighted -average -to-transaction" methodology is both "as applied" and "a s such" inconsistent 
with the second sentence of Article 2.4.2 and Article 2.4 of the Anti-Dumping Agreement . 
The United States seeks review of these findings. Norway argues that the Panel 's findings on these 
issues should be upheld.  
2. In line with previous Appellate Body Reports, Norway holds that "dumping" and "margins of 
dumping" cannot occur at the level of individual transactions. The Appellate Body has emphasized 
that the concepts have the same meaning throughout the Anti-Dumping Agreement and for all 
types of proceedings. All intermediate comparison results must be aggregated in order to establish 
the margin of dumping for the product as a whole and for each individual exporter. The negotiation 
history referred to by the United States furthermore only s hows that some Members were 
concerned about the use of zeroing when applying the comparison methodology in question. 
A permission of applying zeroing when using said methodology cannot be deducted.  
3. Furthermore, the use of zeroing while applying the "weight ed-average -to-transaction" 
methodology distorts certain facts related to the investigation and contains an inherent bias, 
making a positive determination of dumping more likely. This is clearly in violation of the " fair 
comparison" obligation of Article 2. 4 of the Anti-Dumping Agreement .  
 WT/DS464/AB/R/Add.1  
 
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  ANNEX C -7 
EXECUTIVE SUMMARY OF VIET NAM'S  THIRD PARTICIPANT'S SUBMISSION  
1. The Panel  correctly applied the Appellate Body's numerous rulings that the terms "dumping" 
and "margin of dumping" are exporter -specific concepts t hat require that all sales from each 
exporter be included so that the determination of dumping can be made on the product as a 
whole. The practice of "zeroing", which disregards export transactions made at prices above 
normal value, is necessarily inconsis tent with the Appellate Body's repeated determinations 
concerning the meaning of the terms "dumping" and "margin of dumping".  
2. Viet Nam therefore disagrees with the United States ' claim that zeroing can be applied in 
some cases under the guise of the second  sentence of Ar ticle 2.4.2 of the 
Anti-dumping  Agreement. The United States ' claim is based on a strained and improper reading of 
isolated words within the second sentence of Article 2.4.2. Moreover, the United States ' peculiar 
justification because of a c oncept of "mathematical equivalence" is neither required by the 
Anti-dumping Agreement, nor correct as a matter of fact.  
3. Viet Nam agrees with Korea 's arguments that the Panel 's acceptance of "zeroing" , even 
when limited to the combination of sales in the W -W subgroup and those in the W -T subgroup, is 
inconsistent with the Anti -dumping Agreement. Viet Nam submits that the panel 's conclusion in 
this respect is fundamentally inconsistent with the terms "dumping" and "margin of dumping" as 
repeatedly enunciated  by the Appellate Body. Further, Viet Nam believes that there is nothing in 
either the language or the "object and purpose" of Article 2.4.2 that compels such an inconsistent 
result.  
 
 
_______________  
 
  
 WT/DS464/A B/R/Add.1  
 
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  ANNEX D  
PROCEDURAL RULING  
Contents  Page  
Annex  D-1 Procedural ruling of 9 May 2016  regarding the protection of b usiness 
confidential information  D-2 
 
 WT/DS464/AB/R/Add.1  
 
- D-2 - 
 
  ANNEX D -1 
PROCEDURAL RULING  OF 9 MAY 2016  
1. On 5 April 2016, the United States and Korea jointly addressed a letter ("joint request") to 
the Chairman of th e Appellate Body, requesting that the Division that would  hear the appeal in this 
dispute adopt, pursuant to Rule 16(1) of the Working Procedures, additional procedures for the 
protection of business confidential information (BCI) on the record of this dis pute.  
2. The United States and Korea requested the Appellate Body to adopt additional procedures 
for the protection of BCI on the basis of the BCI procedures adopted by the Panel and attached 
draft procedures to their joint request.  They explained that BCI p rocedures in this appeal would 
serve "the interest of fairness and orderly procedure in the conduct of an appeal", according to 
Rule 16(1) of the Working Procedures.   
3. The United States and Korea stated that the BCI procedures adopted by the Panel were 
necessary to enable the parties to submit to the Panel BCI that was previously treated as 
confidential  in the course of the anti -dumping and countervailing duty proceedings at issue in this 
dispute . They request ed additional protection of BCI allowing third pa rties and their government 
employees to have access to BCI and requir ing non-disclosure to officers or employees of 
enterprises engaged in the production, export or import of the products that were the subject of 
the investigations at issue. They request ed that BCI be identified in documents and that 
documents containing BCI be marked as such. They further request ed that parties making oral 
statements containing BCI be required to inform the Division, and that the Division ensure that 
only persons entitled to access BCI are in the room to hear the statement s. They propose d that no 
BCI be disclosed in the Appellate Body Report. They propose d that the Appellate Body provide the 
participants with a confidential version of the draft Appellate Body Report and giv e each of them 
the opportunity to review the Report prior to its circulation to verify and ensure that the 
Appellate  Body does not inadvertently disclose any information that contains BCI. Korea and the 
United States also propose d that these additional pro cedures contain further requirements: (i) to 
treat the information designated as BCI as confidential; (ii) not to disclose the information to 
non-authorized persons under the procedures; and (iii) to use the information only for the 
purposes of the dispute . 
4. On 8 April 2016, the European Union addressed a letter to the Chairman of the 
Appellate  Body commenting on the joint request.  The European Union expressed the view that BCI 
procedures at the appellate stage should not be based on the Panel's BCI procedur es, which it 
considered were, in certain respects, superseded by recent rulings by the Appellate Body. The 
European Union recalled recent Appellate Body decisions on the issues of BCI and argued that BCI 
procedures at the appellate stage should not define BCI by reference to the definition that was 
adopted by the Panel, which in turn referred to the definition adopted in the underlying municipal 
proceedings.  Moreover, the European Union argued that BCI procedures at the appellate stage 
should provide for th e possibility of review by the Appellate Body of the designation of information 
as BCI proposed by the participants, either at the request of any participants or third participants 
or on its own motion.  
5. On 19 April 2016, the United States filed its Notice of Appeal . In a letter communicated to 
the Appellate Body on the same day, the United States  sought guidance from the Appellate Body 
on how to proceed with filing its appellant's submission, which contained information that was 
designated as BCI in the pan el proceedings. In a letter issued on the same day, the Chair of the 
Appellate Body on behalf of the Division informed the United  States and the other participants 
that, pending a final decision on the joint request, the Division had decided to provide pro visional 
additional protection to information marked as BCI in the United States' appellant's submission 
and in an eventual other appellant's submission by Korea. On 19 April 2016, the United  States 
filed its appellant's submission. Korea filed a Notice of  Other Appeal and an other appellant's 
submission on 25 April 2016. Both submissions contain information marked as BCI.  
6. On 21 April 2016, the Chair of the Appellate Body addressed a letter on behalf of the 
Division hearing the appeal in this dispute to the  participants, asking them to further substantiate WT/DS464/A B/R/Add.1  
 
- D-3 - 
 
  why certain information contained in their submissions and in the Panel record warranted special 
protection at the appellate stage beyond that already provided under the confidentiality standards 
set out i n Articles 17.10 and 18.2 of the DSU, and the Rules of Conduct. Korea and the 
United  States responded to this request with separate communications on 26 April 2016.  
7. Korea noted that its other appellant's submission contained information regarding  one of t he 
Korean exporters' sales volumes and values, costs of production, including R&D expenditures, and 
other financial information, whose disclosure could cause this exporter to suffer competitive harm.  
Korea pointed out that this information  is not in the pu blic domain and was provided by the 
exporter under the expectation that it will be adequately protected. Korea further argued that the 
information for which Korea and the United States jointly request ed additional protection met  the 
criteria identified by the Appellate Body in its Procedural Ruling in EC and certain member States 
— Large Civil Aircraft  and that the additional protection requested by Korea and the United States 
would not impinge on the duties of the Appellate Body or on the rights of the thi rd participants.  
8. The United States n oted that t here was no disagreement between the parties concerning 
whether certain information constituted BCI , and that there was  no basis to doubt that the 
information was confidential as contemplated under  Article 6.5  of the A nti-Dumping  Agreement.  
The United States  further noted that the information related  to sensitive commercial data, such as 
sales and production data, tax information, and research and development expenses for the 
submitting companies , and that a ny disclosure of such data could reasonably be expected to have 
an adverse impact on the competitive interests of the companies submitting the information.  
9. The United States considered that the additional protection sought by the parties , although 
important , was minimal and  would not hinder the participation by third participants or the work of 
the Division in this appeal.  The United States recalled that, in essence, t his protection amount ed to 
a requirement to appropriately identify and mark submissions or s tatements containing BCI, 
including when BCI is submitted by a party or third party that did not originally provide the 
information to the Panel, and a restriction that would preclude access to BCI by individuals 
representing competitor companies in order to avoid harm to the originator of the information . 
10. On 26 April 2016, t he Division invite d the third participants to provide further comments on 
the joint request by Korea and the United States of 5 April 2016 and on their subsequent  
communications of 26 A pril 2016. The European Union recalled its communication of 8 April 2016 
and noted that Articles 17.10 and 18.2 of the DSU already imply the protection jointly requested 
by Korea and the United States. The European Union considered  what was requested by Ko rea and 
the United States less in the nature of "additional protection" and more in the nature of 
clarifications and elaborations of the protection already provided by the existing general rules. 
China did not provide substantive comments on the joint requ est and stated that it had no 
objection to the joint proposal of the parties for additional protection of BCI. 
11. We recall that in  EC and certain member States – Large Civil Aircraft , the Appellate Body 
considered that the DSU and the Rules of Conduct  alread y provide for confidentiality, and that any 
additional protection must be justified. The Appellate Body stated that, while " [p]articipants 
requesting particularized arrangements have the burden of justifying that such arrangements are 
necessary  in a given case adequately to protect certain information"1, it is the task of the WTO 
adjudicator and not of the parties to determine whether additional protection in the form of BCI 
procedures is called for. The Appellate Body considered in that dispute that the WT O adjudicator 
should decide whether and to what extent specific arrangements are necessary, while 
safeguarding the various rights and duties that are implicated in any decision to adopt additional 
protection.2 
12. The Appellate Body also stated in EC and certa in member States – Large Civil Aircraft  that 
"the determination of whether the particular information that was submitted deserved additional 
protection and the particular degree of such protection" should be based on objective criteria ,  
which "could inclu de, for example:  whether the information is proprietary; whether it is in the 
public domain or protected; whether it has a high commercial value for the originator of the 
                                                
1 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , Annex  III, Procedural 
Ruling of 10 August 20 10, para.  10. 
2 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , Annex  III, Procedural 
Ruling of 10 August 2010, para.  15. WT/DS464/AB/R/Add.1  
 
- D-4 - 
 
  information, its competitors, customers, or suppliers; the degree of potential harm i n the event of 
disclosure; the probability of such disclosure; the age of the information and the duration of the 
industry's business cycle; and the structure of the market".3 
13. In China – HP-SSST , the Appellate Body stated that "[i] n determining the scope a nd content 
of such procedures, the panel must consider the effect they may have on the exercise by the panel 
of its adjudicative duties under the DSU and other covered agreements, the parties' rights to due 
process, the rights of the third parties, and the  rights and systemic interests of other 
WTO Members. "4 The Appellate Body noted that any " additional procedures adopted by a panel to 
protect the confidentiality of sensitive business information should go no further than necessary to 
guard against a deter mined risk of harm (actual or potential) that could result from disclosure, and 
must be consistent with the relevant provisions of the DSU and other covered agreements 
(including the Anti -Dumping Agreement). "5 The Appellate Body stated that an obligation r ested  
upon the panel to adjudicate any disagreement or dispute that may arise under those procedures 
regarding the designation or the treatment of information as business confidential.6 We further 
note that the panel in China – HP-SSST  removed,  in a prelim inary ruling, from its initial procedures 
for the protection of BCI, the requirement that a party must provide prior written authorization 
from the entity that submitted the confidential information in the underlying anti -dumping 
proceedings when submittin g such information to the Panel .7 
14. In China – HP-SSST , the Appellate Body also considered that the treatment of information 
as confidential by an investigative authority in domestic proceedings should not be conflated with 
"the confidential treatment of inf ormation provided by a WTO Member to a panel or the 
Appellate  Body in the context of WTO dispute settlement proceedings "8, and that " whether 
information treated as confidential pursuant to Article  6.5 of the Anti -Dumping Agreement, and 
submitted by a party  to a WTO panel under the confidentiality requirements generally applicable in 
WTO dispute settlement, should receive additional confidential treatment as BCI is to be 
determined in each case by the WTO panel ".9 
15. Bearing  in mind the above -mentioned rulings by the Appellate Body on the issue of 
additional protection of BCI, we have decided to accord additional protection to the information, 
which has been designated as BCI in the submissions to the Appellate Body and in the panel 
record. As Korea and the Unit ed States have explained in their joint requests and substantiated 
further in their subsequent written clarifications, the information for which additional protection is 
sought relates  to sensitive commercial data  of the companies concerned in these procee dings. 
Korea noted, inter alia, that its other appellant's submission contained information marked as BCI 
regarding one of the exporters' sales volumes and values, costs of production, including R&D 
expenditures, and other financial information whose discl osure could cause this exporter to suffer 
competitive harm . The United  States in turn submitted that the information marked as BCI in its 
appellant's submission related  to sensitive commercial data, such as sales and production data, tax 
information, and r esearch and development expenses of the submitting companies  and that a ny 
disclosure of such data could reasonably be expected to have an adverse impact on the 
competitive interests of the companies submitting the information.  
16. The additional BCI protectio n is provided according to the following terms:  
17. No person may have access to information, which has been designated as BCI in the 
submissions to the Appellate Body and in the panel record,  except a member of the Appellate Body 
                                                
3 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , Annex  III, Procedural 
Ruling  of 10 August 2010, para.  15. 
4 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.311 (referring to 
Appellate  Body Report, EC and certain member States – Large Civil Aircraft , Annex  III, Procedural Rulin g of 
10 August 2010, pa ras. 8-9). 
5 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.311 (referring to 
Appellate  Body Report, EC and certain member States – Large Civil Aircraft , Ann ex III, Procedural Ruling of 
10 August 2010, para.  9). 
6 Appellate  Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.311.  
7 Panel Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para s. 7.26-7.29. See also 
Appellate  Body Reports , China  – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.305.  
8 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.313.  
(emphasis  original)  
9 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.316.  WT/DS464/A B/R/Add.1  
 
- D-5 - 
 
  or the staff of the Appellate  Body Secretariat, an employee of a participant or third participant, and 
an outside advisor for the purposes of this dispute to a participant or third participant. However, 
an outside 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 investigations at issue in this dispute.  
18. A participant or third participant having access to BCI shall treat it as confidential, and shall 
not disclose that information other than to those persons authorized to receive it pursuant to these 
procedures. Each participant or third participant shall have responsibility in this regard for its 
employees as well as any outside advisors employed for t he purposes of this dispute. BCI obtained 
under these procedures may be used only for the purpose of providing information and 
argumentation in this dispute and for no other purpose.  
19. A participant or third participant  that submits a document containing BCI  to the 
Appellate  Body, including in written submissions and oral statements, shall clearly identify such 
information in the document. The  participant or third participant 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: [[…]]. The first page or cover of the document shall state "Contains business confidential 
information  on pages XXX", and each page of the document shall contain the notice "Contains 
Business Confidential Information" at the top of the page. A party or third party that intends to 
make an oral statement containing BCI shall inform the Division in advance, s uch that the Division 
can ensure that only persons authorized to have access to BCI pursuant to these procedures are in 
the room to hear that statement.  
20. The Appellate Body will not disclose BCI, in its report or in any other way, to persons not 
authorized under these procedures to have access to BCl. The Appellate Body may, however, make 
statements of conclusion drawn from such information.   
 
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