WT/DS464/AB/R  
 
7 September 2016  
(16-4765) Page: 1/107 
  Original: English  
 
 UNITED  STATES  – ANTI -DUMPING AND COUNTERV AILING MEASURES ON L ARGE 
RESIDENTIAL WASHERS FROM KOREA  
AB-2016-2 
Report of the Appellate  Body 
 WT/DS464/AB/R  
 
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  Table of Contents  
 
1   INTRODUCTION  ................................ ................................ ................................ ........  12 
2   ARGUMENTS OF THE PAR TICIPANTS  ................................ ................................ .........  18 
3   ARGUMENTS OF THE THI RD PARTICIPANTS  ................................ ..............................  18 
4   ISSUES RAISED IN THIS  APPEAL  ................................ ................................ ..............  18 
5   ANALYSIS OF THE APPE LLATE  BODY  ................................ ................................ .........  20 
5.1   Claims under the Anti -Dumping Agreement and related c laims under the GATT  1994 .......... 20 
5.1.1    Background ................................ ................................ ................................ ............. 20 
5.1.1.1    The Nails  II methodology and the Washers anti-dumping investigation  ........................ 20 
5.1.1.2    The DPM and the first administrative review of the Washers anti-dumping order  ........... 22 
5.1.2    Article  2.4.2 of the Anti -Dumping Agreement  ................................ .............................. 23 
5.1.3    The relevant "pattern" for the purposes of the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement  ................................ ................................ .............................. 25 
5.1.4    Whether the Panel erred in finding that "the DPM is inconsistent 'as such' with the 
second sentence of Article  2.4.2 [of the Anti -Dumping Agreement] 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'"  ................................ ................................ ................................ .................... 30 
5.1.5    Whether the Panel erred in finding that the W -T comparison met hodology should 
only be applied to "pattern transactions"  ................................ ................................ ............... 31 
5.1.6    The extent to which price differences are to be assessed quantitatively, 
qualitatively, and in light of the "reasons" for t hese price differences  ................................ ........ 35 
5.1.7    Whether an explanation needs to be provided with respect to both the W -W and 
the T-T comparison methodologies  ................................ ................................ ....................... 40 
5.1.8    "Systemic disregarding" ................................ ................................ ............................ 43 
5.1.8.1    Whether the Panel erred in finding that Korea failed to establish that the 
United  States' use of "systemic disregarding" under t he DPM is inconsistent "as such" 
with the second sentence of Article  2.4.2 of the Anti -Dumping Agreement  ................................ 43 
5.1.8.2    Whether the Panel erred in finding that Korea failed to establish that the  
United  States' use of "systemic disregarding" under the DPM is inconsistent "as such" 
with Article  2.4 of the Anti -Dumping Agreement  ................................ ................................ ....55 
5.1.9    Zeroing under the W -T comparison methodology  ................................ ......................... 58 
5.1.9.1    Whether the Panel erred in finding that the United  States' use of zeroing when 
applying the W -T comparison methodology is inconsistent "as such" and "as applied" in 
the Washers  anti-dumping investigation with Article  2.4.2 of the Anti -Dumping 
Agreement  ................................ ................................ ................................ ........................ 58 
5.1.9.2    Whether the Panel erred in finding that the United  States' use of zeroing when 
applying the W -T comparison methodology is inconsistent "as such" and "as applied" in 
the Washers  anti-dumping investigation with Article  2.4 of the Anti -Dumping Agreement  ........... 65 
5.1.9.3    Whether the Panel erred in finding that the United  States' use of zeroing when 
applying the W -T comparison methodology in administrative review s is inconsistent 
"as such" with Article  9.3 of the Anti -Dumping Agreement and Article  VI:2 of the 
GATT  1994 ................................ ................................ ................................ ........................ 67 
5.1.10    Separate opinion of one Appellate  Body Membe r regarding zeroing under the 
W-T comparison methodology  ................................ ................................ ............................. 69 
5.2   Claims under the SCM  Agreement and related cl aims under the GATT  1994 ....................... 71 WT/DS464/AB/R  
 
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  5.2.1    Background ................................ ................................ ................................ ............. 71 
5.2.2    Whether the Panel erred in its interpretation and application of Artic le 2.2 of the 
SCM Agreement by upholding the USDOC's determination that the RSTA Article  26 tax 
credit programme was regionally specific  ................................ ................................ .............. 73 
5.2.2.1    Whether the term "certain enterprises" in Article  2.2 of the SCM Agreement is 
limited to entities with legal personality  ................................ ................................ ................ 74 
5.2.2.2    Whether the "designation" of a region for the purposes of Article  2.2 of the 
SCM Agreement must be a ffirmative and explicit, or may also be carried out by 
implication  ................................ ................................ ................................ ........................ 78 
5.2.2.3    Whether the concept of "geographical region" for the purposes of Article  2.2 of 
the SCM Agreement depends on the  territorial size of the area covered by a subsidy  .................. 79 
5.2.2.4    Conclusions  ................................ ................................ ................................ .......... 81 
5.2.3    Whether the Panel failed to conduct an ob jective assessment of the matter before 
it in articulating its findings on regional specificity  ................................ ................................ ..82 
5.2.4    Whether the Panel erred in its interpretation and application of Article  19.4 of the 
SCM Agreement and Article  VI:3 of the GATT  1994 by upholding the USDOC's 
determination that the tax credits received by Samsung under Articles  10(1)(3) and 26 of 
the RSTA were not tied to particular products  ................................ ................................ ........ 83 
5.2.4.1    The Panel's affirmation of the USDOC's test for ascertaining whether the RSTA 
Article  10(1)(3) and Article 26 tax credits were tied to particular products  ................................ 86 
5.2.4 .2   The Panel's affirmation of the USDOC's dismissal of certain evidence submitted 
by Samsung  ................................ ................................ ................................ ...................... 92 
5.2.4.3    Conclusions  ................................ ................................ ................................ .......... 95 
5.2.5    Whether the Panel erred in its interpretation and application of Article  19.4 of the 
SCM Agreement and Article  VI:3 of the GATT  1994 by upholding the USDOC's attribution 
of the tax credits received by Samsung under Article  10(1)(3) of the RSTA to Samsun g's 
domestic production only  ................................ ................................ ................................ ....95 
6   FINDINGS AND CONCLUS IONS  ................................ ................................ ................  101  
6.1   The relevant "pattern" for the purposes of the second sen tence of Article  2.4.2 of 
the Anti -Dumping Agreement  ................................ ................................ ............................  101 
6.2   The scope of application of the W -T comparison methodology in the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement  ................................ .....................  102 
6.3   Prices which differ "significantly" under the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement  ................................ ................................ ................................ .. 102 
6.4   The explanation to be provided under the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement  ................................ ................................ ................................ .. 103 
6.5   "Systemic disregarding"  ................................ ................................ ............................  103 
6.6   Zeroing under the W -T comparison methodology  ................................ ..........................  104 
6.7   Article  2.2 of the SCM  Agreement  ................................ ................................ ...............  105 
6.8   Article  19.4 of the SCM  Agreement and Article  VI:3 of the GATT  1994.............................  106 
6.9   Recommendation  ................................ ................................ ................................ ...... 106 
 
 WT/DS464/AB/R  
 
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ABBREVIATIONS USED I N THIS REPORT  
Abbreviation  Description  
AD anti-dumping  / anti-dumping duty  
Anti-Dumping A greement  Agreement on Implementation of Article  VI of the General  Agreement 
on Tariffs and Trade 1994  
BCI business confidential information  
BCI Procedures  Additional working procedures adopted by the Panel for t he protection 
of BCI, attached as Annex A -2 to the Panel Report  
CONNUM  control number  
CVD countervailing duty  
DPM Differential Pricing Methodology  that replaced the Nails II 
methodology  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Proce dures Governing the Settlement of 
Disputes  
GATT  1994 General  Agreement on Tariffs and Trade 1994  
GOK Government of Korea  
HRD human resources development  
IGE Informal Group of Experts  
joint request  Joint request of  the United  States  and Korea for additional procedures 
for the protection of BCI 
LGE LG Electronics, Inc.  
LRWs  large residential washers   
Nails II methodology  Methodology that was used by the USDOC  to determine whether to 
apply the W -T comparison methodology  
Panel  Panel in these proceedin gs 
Panel Report  Panel Report, United  States  – Anti-Dumping and Countervailing 
Measures on Large Residential Washers from Korea , WT/DS464/R , 
11 March 2016  
R&D research and development  
Refrigerators  
anti-dumping 
investigation  USDOC [A -580-865] Antidumpin g Duty Investigation of Bottom Mount 
Combination Refrigerator -Freezers from the Republic of Korea  
RSTA  Korea's Restriction of Special Taxation Act  
RSTA Article  10(1)(3) tax 
credit programme  The tax credit programme under Article  10(1)(3) of the RSTA enti tled 
"Tax Deduction for Research and Manpower Development " 
RSTA Article  26 tax credit 
programme  The tax credit programme under Article  26 of the RSTA entitled 
"Tax Deduction for Facilities Investment " 
RSTA Enforcement Decree  Presidential Decree No. 22037  enforcing the RSTA, issued on 
18 February  2010 
Samsung  Samsung Electronics Co., Ltd  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  WT/DS464/AB/R  
 
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  Abbreviation  Description  
SCM Committee  Committee on Subsidies and Countervailing Measures  
SEL Samsung Electronics Logitech  
Seoul overcrowding area  The "overcrowding control region" of the Seoul metropolitan area 
pursuant to Article  23 of the RSTA Enforcement Decree as defined in 
Article  9 and Table 1 of the Enforcement Decree of the 
Seoul  Metropolitan Area Readjustment Planning A ct 
SES Samsung Electronics Service  
SGEC  Samsung Gwangju Electronics Co., Ltd  
SMEs  small and medium enterprises  
T-T transaction -to-transaction  
USDOC  United  States  Department of Commerce  
Vienna Convention  Vienna Convention on the Law of T reaties, Done  at Vienna, 
23 May 1969, UN Treaty Series, Vol. 1155, p. 331  
Washers anti-dumping 
investigation  USDOC [A -580-868] Antidumping Duty Investigation of Large 
Residential Washers from the Republic of Korea  
Washers  countervailing 
duty investigation  USDOC [C -580-869] Countervailing Duty Investigation of Large 
Residential Washers from the Republic of Korea  
Working Procedures  Working Procedures for Appellate Review, WT/AB/WP/6 , 
16 August  2010 
W-T weighted average -to-transaction  
WTO World Trade Organization  
WTO Agreement  Marrakesh Agreement Establishing the World Trade Organization  
W-W weighted average -to-weighted average  
 
PANEL EXHIBITS CITED  IN THIS REPORT  
Exhibit 
No. Short title (if any)  Description  
KOR-1  USDOC [A –580–868] Notice of Final Determination o f Sales at Less Than 
Fair Value: Large Residential Wash ers From the Republic of Korea , 
United  States  Federal Register , Vol. 77, No. 247 (26  December 2012), 
pp. 75988 -75992  
KOR-2 Washers  final CVD 
determination  
 USDOC [C -580-869] Large Residential Washers From the Republic of 
Korea: Final Affirmative Countervailing Duty Determination, United  States  
Federal  Register , Vol. 77, No.  247 (26  December  2012), pp.  75975 -75978  
KOR-18 Washers  AD I&D 
memorandum  USDOC [A –580–868] Issues and Decision Memorandum for the  
Antidumping Duty Investigation of Large Residential Washers from the 
Republic of Korea (18 December 2012)  
KOR-21  Oxford  Dictionaries online, definition of "pattern"  
<http://www.oxforddictionaries.com/us/definition/american_  
english/pattern >, accessed 18 September  2014 
KOR-25  USDOC, Differential Pricing Analysis; Request for Comments, United  States  
Federal Register , Vol. 79, No. 90 (9  May 2014), pp.  26720 -26723  
KOR-32 Washers  preliminary 
AD determination  USDOC [A –580–868] Notice of Preliminary Determi nation of Sales at Less 
Than Fair Value and Postponement of Final Determinat ion: Large 
Residential Washers F rom the Republic of Korea, United  States  Federal 
Register , Vol. 77, No. 150 (3  August 2012), pp. 46391 -46401  WT/DS464/AB/R  
 
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  Exhibit 
No. Short title (if any)  Description  
KOR-33 Xanthan gum  
calculation 
memoran dum  USDOC [A -570-985] Memorandum regarding Less Than Fair Value 
Investigation of Xantha n Gum from the People's Republic of China: 
Post-Preliminary Analysis and Calculation Memorandum for Neimenggu 
Fufeng Biotechnologies Co., Ltd and Shandong Fufeng Fermen tation Co., 
Ltd (4  March 2013)  
KOR-36  Dictionnaires de français Larousse  online, definition of " configuration " 
<http://www.larousse.fr/dictionnaires/francais/configuration >, accessed 
18 September 2014  
KOR-37  Diccionario de la lengua española de Real Ac ademia Española  online, 
definition of " pauta " <http://lema.rae.es/drae/?val=pauta >, accessed 
18 September 2014  
KOR-41 
(BCI)  Washers  final AD 
calculation for 
Samsung 
memorandum  USDOC [A -580-868] Memorandum to File regarding Antidumping Duty 
Investigation o f Large Residential Washers from Korea – Samsung Final 
Determination Calculation Memorandum (18 December 2012) 
(contains  BCI) 
KOR-42 
(BCI)  Washers  final AD 
calculation for LGE 
memorandum  USDOC [A -580-868] Memorandum to File regarding Antidumping Duty 
Investigation of Large Residential Washers from Korea – Final 
Determination Margin Calculation for LG Electronics Inc. and LG Ele ctronics 
USA, Inc. (18  December  2012) (contains BCI)  
KOR-43  USDOC, Initiation of Antidumping and Countervailing Duty Administrat ive 
Reviews and Request for Revocation in Part, United  States  Federal 
Register , Vol. 79, No. 62 (1 April 2014), pp. 18262 -18276  
KOR-44 
(BCI)   USDOC [C -580-869] Remand Redetermination, Samsung Electronics Co., 
Ltd v. United  States , Final Results of Redeter mination Pursuant to Court 
Order, USCIT , Court No.  13-00099, Slip Op. 14 -39 (11 April 2014) 
(contains  BCI) 
KOR-45 Washers  preliminary 
AD calculation for LGE 
memorandum  USDOC [A -580-868] Memorandum to File regarding Antidumping Duty 
Investigation of Large Residential Washers (Washing Machines) from 
Korea – Preliminary Determination Margin Calculation for LG Electronics 
Inc. and LG Electronics USA, Inc. (27 July 2012)  
KOR-46 Washers  preliminary 
AD calculation for 
Samsung 
memorandum  USDOC [A -580-868] Memoran dum to File regarding Antidumping Duty 
Investigation of Large Residential Washers (Washing Machines) from 
Korea – Preliminary Determination Margin Calculation for Samsung 
Electronics Co., Ltd and Samsung Electronics America, Inc. (27 July 2012)  
KOR-72 
(BCI) Samsung Washers  
CVD questionnaire 
response  Response dated 9  April 2012 of Samsung Electronics Co., Ltd to the 
USDOC's questionnaire of 15 February 2012 in the Washers  CVD 
investigation [C -580-869] (excerpts) (contains  BCI) 
KOR-75 
(BCI)  GOK Washers  CVD 
questionnaire 
response  Response dated 9  April 2012 of the Government of Korea to the USDOC's 
questionnaire of 15 February 2012 in the Washers  CVD investigation 
[C-580-869] (excerpts) (contains  BCI) 
KOR-76  GOK Washers  CVD 
questionnaire 
response  Response  dated 9  April 2012 of the Government of Korea to the USDOC's 
questionnaire of 15 February 2012 in the Washers  CVD investigation 
[C-580-869] (including excerpts of Article  10 of the RSTA and Article  9 of 
the RSTA Enforcement Decree)  
KOR-77 Washers  final C VD I&D 
memorandum  USDOC [C -580-869] Issues and Decision Memorandum for the Final 
Determination in the Countervailing Duty Investigation of Large 
Residential Washers from the Republic of Korea (18  December 2012)  
KOR-78 
(BCI)  Washers  CVD GOK 
question naire 
verification 
memorandum  USDOC [C -580-869] Memorandum to File regarding Countervailing Duty 
Investigation of Large Residential Washers from the Republic of Korea – 
Verification of the Questionnaire Responses Submitted by the Government 
of the Republic of Kor ea (22 October 2012) (contains  BCI)  
KOR-79 
(BCI)  Washers CVD 
Samsung 
questio nnaire 
verification 
memorandum  USDOC [C -580-869] Memorandum to File regarding Countervailing Duty 
Investigation of Large Residential Washers from the Republic of Korea – 
Verifica tion of the Questionnaire Responses Submitted by Samsu ng 
Electronics Co., Ltd, Samsung Electronics [Logitech], and Samsung 
Electronics Service  (22 October 2012) (contains  BCI) WT/DS464/AB/R  
 
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  Exhibit 
No. Short title (if any)  Description  
KOR-81 GOK Washers  CVD 
questionnaire 
response  Response dated 9 April 2012 of th e Government of Korea to the USDOC's 
questionnaire of 15 February 2012 in the Washers  CVD investigation 
[C-580-869] (excerpts) (BCI -redacted version)  
KOR-82 
(BCI)  GOK Washers  CVD 
case brief  Case Brief of the Government of Korea, Large Residential Washers from 
the Republic of Korea  [C-580-869] (31 October 2012) (excerpt) 
(contains  BCI) 
KOR-85 Washers  preliminary 
CVD determination  
 USDOC [C -580-869] Large Residential Washers From the Republic of 
Korea: Preliminary Affirmative Countervailing Duty Determinati on and 
Alignment of Final Determination With Final Antidumping Determination, 
United  States  Federal  Register , Vol.  77, No.  108 (5 June 2012), 
pp. 33181 -33194  
KOR-90  Samsung Washers  
CVD case brief  Case Brief of Samsung Electronics Co., Ltd, Large Resident ial Washers 
from the Republic o f Korea [C -580-869] (2  November  2012) (excerpt)  
KOR-91 GOK Washers  CVD 
supplemental 
questionnaire 
response  Response of the Government of Korea to the USDOC's first supplemental 
questionnaire in the Washers  CVD investigation  [C-580-869] (containing 
exhibit  S-25, "Excerpts from Seoul Metropolitan Area Readjustment 
Planning Act (with its Enforcement Decree)" (Korean/English))  
KOR-96  USDOC [A -580-868] Large Residential Washers F rom the Republic of 
Korea: Preliminary Results of  the Antidumping Duty Administrative 
Review; 2012 -2014, United  States  Federal Register , Vol. 80, No. 45 
(9 March  2015),  pp. 12456 -12458  
USDOC [A -580-868] Memorandum regarding  Large Residential Washers 
from Korea : Decision Memorandum for the Preliminary Res ults of the 
Antidumping Duty Administrative Review; 2012 -2014 (3 March 2015)  
USDOC [A -580-868] Memorandum to File regarding  2012-2014 
Administrative Review of  Large Residential Washers from Korea – 
Preliminary Results Margin Calculation for LGE  (2 March 20 15) 
(BCI-redacted version ) 
KOR-98 
(BCI)  Refrigerators  AD I&D 
memorandum  
 
 
Refrigerators  AD 
Samsung cost 
verification 
memorandum  USDOC [ A-580-865] Issues and Decision Memorandum for the 
Antidumping Duty Investigation of Bottom Mount Refrigerator -Freezers 
from the Republic of Korea (16 March 2012) (excerpts)  
 
USDOC [A -580-865] Memorandum to File regarding Verification of the 
Cost Response of Samsung Electronics Co., Ltd and Samsung Gwangju 
Electronics Co., Ltd in the Antidumping Duty Investigation of Bottom 
Mount Combination Refrigerator -Freezers from the Republic of Korea 
(21 December 2011) (excerpts) (contains BCI annexes)  
KOR-99 
(BCI)  Washers  AD Samsung 
cost verification 
memorandum  USDOC [C -580-868] Memorandum to File regarding Verification of the 
Cost Re sponse of Samsung E lectronics Co.,  Ltd in the Less -Than-Fair-
Value Investigation of Large Residential Washers from the Republic of 
Korea (17  October  2012) (contains BCI)  
KOR-100 
(BCI)  Washers  preliminary 
AD calculation for LGE 
memorandum  USDOC [A -580-868] Memorandum to File regarding 2012 -2014 
Administrative Review of Large Residential Washers from Korea: 
Preliminary Results Margin Calculation for LGE (2 March 2015) 
(contains  BCI annexes)  
KOR-115 
(BCI)  Washers  CVD GOK 
questionnaire 
verification exhibit  10 Excerpts of exhibit 10 provided by Samsung to the USDOC in the Washers  
CVD GOK questionnaire verification (contains BCI)  
KOR-121 Washers  anti-dumping 
order  USDOC [A -201-842, A -580-868] Large Residential Washers From Mexico 
and the Republic of Korea: Anti dumping Duty Orders, United  States  
Federal Register , Vol. 78, No. 32 (15  February  2013), pp. 11148 -11150  
KOR-126 
(BCI)  Washers  CVD GOK 
questionnaire 
verification exhibit  12 Excerpts of exhibit 12 provided by Samsung to the USDOC in the Washers  
CVD GOK questionnaire verification (contains BCI)  WT/DS464/AB/R  
 
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  Exhibit 
No. Short title (if any)  Description  
KOR-141  USDOC [A -580-868] Large Residential Washers From the Republic of 
Korea: Final Results of the Antidumping Duty Administrative Review; 
2012–2014, United  States  Federal Register , Vol. 80, No.  179 
(16 September 2015), pp.  55595 -55596  
USDOC [A -580-868] Issues and Decision Memorandum for the Final 
Results of the Antidumping Duty Administrative Review of Large 
Residential Washers from the Republic of Korea (8  September  2015) 
USA-5  Oxford  English Dictionar y online , definition of "differ" 
<http://www.oed.com/view/Entry/52452?rskey=CRXlmt&result=2&print >, 
accessed 4 February 2014  
USA-7  Oxford  English Dictionar y online , definition of "significantly" 
<http://www.oed.com/view/Entry/179 570?redirectedFrom -
significantly&print >, accessed 4 February 2014  
USA-15  Negotiating Group on MTN Agreements and Arrangements, Amendments 
to the Anti -Dumping Code, Communication from the Delegation of 
Hong Kong, Addendum, GATT Document MTN.GNG/NG8/W/51/A dd.1, 
22 December 1989  
USA-16  Negotiating Group on MTN Agreements and Arrangements, Communication 
from Japan, GATT Document MTN.GNG/NG8/W/30 , 20 June 1988  
USA-17  Negotiating Group on MTN Agreements and Arrangements, Communication 
from Japan Concerning the Anti -Dumping Code, GATT Document 
MTN.GNG/NG8/W/81 , 9 July 1990  
USA-18  Negotiating Group on MTN Agreements and Arrangements, Meeting of 
16-18 October 1989, MTN.GNG/NG8/13  
USA-25 CVD preamble 
regulations  USDOC, Countervailing Duties: Final Rule, United States  Federal Register , 
Vol. 63, No. 227 (25  November 1998 ), pp. 65348 -65418  
USA-26 
(BCI)   USDOC [ C-580-869] Memorandum to File regarding Final Countervailing 
Duty Determination: Large Residential Washers from the Republic of Korea 
(18 December 2012) (contains BCI)  
USA-29 IGE Report  Report by the Informal Group of Experts to the Committee on Subsidies 
and Countervailing Measures, Note from the Informal Group of Experts 
(revision), G/SCM/W/415/Rev.2, 15 May 1998  
USA-31  The New Shorter Oxford English Dictionary on Historical Principles , 
4th edn, L. Brown (ed.) (Clarendon Press, 1993), Vol. 1, pp.  644-645 and 
1078-1079, and Vol. 2, pp.  2527-2528 
USA-48  The New Shorter Oxford English Dictionary on Historical Principles , 4th 
edn, L. Brown (ed.) (Clarend on Press, 1993), Vol. 1, p.  1614 
USA-100  Response dated 10 April 2012 of Samsung Electronics Co., Ltd to the 
USDOC's questionnaire of 15 February 2012 in the Washers  CVD 
investigat ion [C -580-869] (excerpts) (BCI -redacted version)  
CASES CITED IN THIS REPORT 
Short Title  Full Case Title and Citation  
Argentina – Footwear (EC)  Appellate  Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R , adopted 12 January 2000, DSR 2000:I, p. 515  
Canada – Aircraft  
 Appellate  Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft , WT/DS70/AB/R , adopted 20 August 1999, DSR  1999:III, p. 1377  
Canada – Dairy  Appellate  Body Report, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products , WT/DS1 03/AB/R , WT/DS113/AB/R , and 
Corr.1, adopted 27 October 1999, DSR 1999:V, p. 2057  WT/DS464/AB/R  
 
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  Short Title  Full Case Title and Citation  
Canada – Renewable Energy 
/ Canada – Feed-in Tariff 
Program  Appellate  Body Reports, Canada – Certain Measures Affecting the Renewable 
Energy Generation Sector / Canada – Measures Relating to the Feed -in Tariff 
Program , WT/DS412/AB/R  / WT/DS426/AB/R , adopted 24 May 2013, 
DSR 2013:I, p. 7  
China – Broiler Products  Panel  Report , China  Anti-Dumping and Countervailing Duty Measures on 
Broiler Products from the United  States , WT/DS427/R  and Add.1, adopted 
25 September 2013, DSR 2013:IV, p. 1041  
China – GOES  Appellate  Body Report, China – Countervailing and Anti -Dumping Duties on 
Grain Oriented Flat -Rolled Electrical Steel from the United  States , 
WT/DS414/AB/R , adopted 16 Novemb er 2012, DSR  2012:XII, p. 6251  
China – HP-SSST (Japan) / 
China – HP-SSST (EU )  Appellate  Body Reports, China – Measures Imposing Anti -Dumping Duties on 
High-Performance Stai nless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High -Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European  Union , 
WT/DS454/AB/R  and Add.1 / WT/DS460/AB/R  and Add.1, adopted 
28 October  2015 
China – Publications and 
Audiovisual Products  Appellate  Body Report, China – Measures Affecting Trading Rights and 
Distribution Services for Certain Publications and Audiovisual Entertainment 
Products , WT/DS363/AB/R , adopted 19 January 2010, DSR 2010:I, p. 3  
EC – Asbestos  Appellate  Body Report, European Communities – Measures A ffecting Asbestos 
and Asbestos -Containing Products , WT/DS135/AB/R , adopted 5 April 2001, 
DSR 2001:VII, p. 3243  
EC – Bed Linen  Appellate  Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India , WT/DS141/AB/R , adopted 
12 March 2001, DSR 2001:V, p.  2049 
EC – Salmon (Norway)  Panel  Report , European Communities – Anti-Dumping Measure on Farmed 
Salmon from Norway , WT/DS337/R , adopted 15  January  2008, and Corr.1, 
DSR 2008:I, p. 3  
EC – Selected Customs 
Matters  Appellate  Body Report, European Communities – Selected Customs Matters , 
WT/DS315/AB/R , adopted 11 December 2006, DSR 2006:IX, p. 3791  
EC and certain member 
States – Large Civil Aircraft  Appellate  Body Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p. 7  
EC and certain member 
States – Large Civil Aircraft  Panel  Report , European Communities and Certain Member States – Measures 
Affecting Trade in Large C ivil Aircraft , WT/DS316/R , adopted 1 June 2011, as 
modified by Appellate  Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685  
Japan – Alcoholic 
Beverages  II Appellate  Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R , 
WT/DS10/AB/R , WT/DS11/AB/R , adopted 1  November  1996, DSR 1996:I, 
p. 97 
Japan – DRAMS (Korea)  Panel  Report , Japan – Countervailing Duties on Dynamic Random Access 
Memories from Korea , WT/DS336/R , adopted 17 December 2007, as modified 
by Appellate  Body Report WT/DS336/AB/R, DSR  2007:V II, p. 2805  
Korea – Commercial Vessels  Panel  Report , Korea – Measures Affecting Trade in Commercial Vessels , 
WT/DS273/R , adopted 11 April 2005, DSR 2005:VII, p. 2749  
US – Anti-dumping and 
Countervailing Duties 
(China)  Appellate  Body Report, United  States – Definitive Anti -Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R , 
adopted 25 March 2011, DSR 2011:V, p. 2869  
US – Anti-Dumping and 
Countervailing Duties 
(China)  Panel  Report , United  States  – Definitive Anti -Dumping and  Countervailing 
Duties on Certain Products from China , WT/DS379/R , adopted 25  March  2011, 
as modified by Appellate  Body Report WT/DS379/AB/R, DSR 2011:VI, p. 3143  
US – Continued Zeroing  Appellate  Body Report, United  States  – Continued Existence and Appli cation of 
Zeroing Methodology , WT/DS350/AB/R , adopted 19  February 2009, 
DSR 2009:III, p. 1291  
US – Corrosion -Resistant 
Steel Sunset Review  Appellate  Body Report, United  States  – Sunset Review of Anti -Dumping Duties 
on Corrosion -Resistant Carbon Steel Fla t Products from Japan , 
WT/DS244/AB/R , adopted 9 January 2004, DSR 2004:I, p. 3  WT/DS464/AB/R  
 
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  Short Title  Full Case Title and Citation  
US – Cotton Yarn  Appellate  Body Report, United  States  – Transitional Safeguard Measure on 
Combed Cotton Yarn from Pakistan , WT/DS192/AB/R , adopted 
5 November  2001, DSR 2001:XII , p. 6027  
US – Countervailing Duty 
Investigation on DRAMS  Appellate  Body Report, United  States  – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20 July 2005, DSR  2005:XVI, p. 81 31 
US – Countervailing 
Measures on Certain EC 
Products  Appellate  Body Report, United  States  – Countervailing Measures Concerning 
Certain Products from the European Communities , WT/DS212/AB/R , adopted 
8 January 2003, DSR 2003:I, p. 5  
US – Gambling  Appel late Body Report, United  States  – Measures Affecting the Cross -Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R , adopted 
20 April 2005, DSR 200 5:XII, p. 5663 (and Corr.1, DSR  2006:XII, p. 5475)  
US – Lamb  Appellate  Body Report, United  States  – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R , WT/DS178/AB/R , adopted 16 May 2001, DSR 2001:IX, 
p. 4051 
US – Large Civil Aircraft 
(2nd complaint)  Appellate  Body Report, United  States  – Measures Affecting Trade in Large Civil 
Aircraft (Second Complaint) , WT/DS353/AB/R , adopted 23  March 2012, 
DSR 2012:I, p. 7  
US – Lead and Bismuth I  GATT Panel  Report, United  States – Imposition of Countervailing Duties on 
Certain Hot -Rolled Lead and Bismut h Carbon Steel Products Originating in 
France, Germany and the United Kingdom , SCM/185, 15  November  1994, 
unadopted  
US – Lead and Bismuth II  Appellate  Body Report, United  States  – Imposition of Countervailing Duties on 
Certain Hot -Rolled Lead and Bismuth  Carbon Steel Products Originating in the 
United Kingdom , WT/DS138/AB/R , adopted 7  June 2000, DSR 2000:V, p. 2595  
US – Lead and Bismuth II  Panel  Report , United  States  – Imposition of Countervailing Duties on Certain 
Hot-Rolled Lead and Bismuth Carbon Ste el Products Originating in the 
United  Kingdom , WT/DS138/R  and Corr.2, adopted 7 June 2000, upheld by 
Appellate  Body Report WT/DS138/AB/R, DSR  2000:VI, p. 2623  
US – Line Pipe  Appellate  Body Report, United  States  – Definitive Safeguard Measures on 
Imports of Circular Welded Carbon Quality Line Pipe from Korea , 
WT/DS202/AB/R , adopted 8 March 2002, DSR 2002:IV, p. 1403  
US – Offset Act 
(Byrd  Amendment)  Appellate  Body Report, United  States  – Continued Dumping and Subsidy Offset 
Act of 2000 , WT/DS217/AB/R , WT/DS234/AB/R , adopted 27 January 2003, 
DSR 2003:I, p. 375  
US – Softwood Lumber IV  Appellate  Body Report, United  States  – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R , adopted 17 February 2004, D SR 2004:II, p. 571  
US – Softwood Lumber V  Appellate  Body Report, United  States  – Final Dumping Determination on 
Softwood Lumber from Canada , WT/DS264/AB/R , adopted 31  August 2004, 
DSR 2004:V, p. 1875  
US – Softwood Lumber V 
(Article  21.5 – Canada)  Appell ate Body Report, United  States  – Final Dumping Determination on 
Softwood Lumber from Canada – Recourse to Article  21.5 of the DSU by 
Canada , WT/DS264/AB/RW , adopted 1 September 2006, DSR  2006:XII, 
p. 5087 
US – Softwood Lumber VI 
(Article  21.5 – Canada)  Appellate  Body Report, United  States  – Investigation of the International Trade 
Commission in Softwood Lumber from Canada – Recourse to Article  21.5 of the 
DSU by Canada , WT/DS277/AB/RW , adopted 9 May 2006, and Corr.1, 
DSR 2006:XI, p. 4865  
US – Stainless S teel 
(Mexico)  Appellate  Body Report, United  States  – Final Anti -Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R , adopted 20 May 2008, 
DSR 2008:II, p. 513  
US – Steel Safeguards  Appellate  Body Report, United  States  – Definitive Safeguard Me asures on 
Imports of Certain Steel Products , WT/DS248/AB/R , WT/DS249/AB/R , 
WT/DS251/AB/R , WT/DS252/AB/R , WT/DS253/AB/R , WT/DS254/AB/R , 
WT/DS258/AB/R , WT/DS259/AB/R , adopted 10 December 2003, 
DSR 2003:VII, p. 3117  WT/DS464/AB/R  
 
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  Short Title  Full Case Title and Citation  
US – Tyres (China)  Appellate  Body Report,  United  States  – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/AB/R , 
adopted  5 October 2011 , DSR 2011:IX, p. 4811  
US – Upland Cotton  Appellate  Body Report, United  States  – Subsidies on Upland Cotton , 
WT/DS267/AB/R , adopted 21 March 2005, DSR 2005:I, p. 3  
US – Upland Cotton  Panel  Report , United  States  – Subsidies on Upland Cotton , WT/DS267/R , Add.1 
to Add.3 and Corr.1, adopted 21 March 2005, as modified by Appellate  Body 
Report  WT/DS267/AB/R, DSR 2005: II, p. 299 
US – Wheat Gluten  Appellate  Body Report, United  States  – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R , 
adopted 19 January 2001, DSR 2001:II, p. 717  
US – Zeroing (EC)  Appellate  Body Report, United  States  – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R , adopted 
9 May 2006, and Corr.1, DSR 2006:II, p.  417 
US – Zeroing (Japan)  Appellate  Body Report, United  States  – Measures Relating to Zeroin g and 
Sunset Reviews , WT/DS322/AB/R , adopted 23 January 2007, DSR 2007:I, p. 3  WT/DS464/AB/R  
 
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  WORLD TRADE ORGANIZATION  
APPELLATE  BODY 
 
 
United  States  – Anti-Dumping and 
Countervailing M easures on Large 
Residential Washers from Korea  
 
United  States , Appellant/ Appellee  
Korea , Other Appellant /Appellee  
 
 
Brazil , Third Participant  
Canada , Third Participant  
China, Third Participant  
European  Union , Third Participant  
India, Third Participant  
Japan , Third Participant  
Norway, Third Participant  
Saudi Arabia, Third Participant  
Thailand, Third Participant  
Turkey, Third Participant  
Viet Nam, Third Participant  
 AB-2016-2 
 
Appellate  Body Division :  
 
Graham , Presiding Member  
Bhatia , Member  
Ramírez -Hernández , Member  
 
 
 
1  INTRODUCTION  
1.1.  The United  States  and Korea each  appeals certain issues  of law and legal interpretations 
developed in the Panel  Report , United  States  – Anti-Dumping and Countervailing Measures on 
Large Residential Washers from Korea1 (Panel  Report ). The Panel was established  on 
22 January  2014 to consider a complaint by Korea2 with respect to the consistency of the 
United  States ' measure s imposing definitive anti-dumping and countervailing duties on imports of 
large residential washers  (LRWs)  from Korea  with the Agreement on Implementation of Article  VI 
of the General  Agreemen t on Tariffs and Trade 1994 (Anti -Dumping  Agreement), the Agreement 
on Subsidies and Countervailing Measures ( SCM Agreement ), and the General  Agreement on 
Tariffs and Trade 1994 ( GATT  1994).  
1.2.  On 3 September 2014 , after consultation s with the parties, the P anel adopted  additional 
working procedures for the protection of business confidential information (BCI Procedures).3 
On 12 December 2014, the Panel rejected China's request for enhanced third party rights.4 
On 13 February 2015, the Panel also rejected the  European  Union 's request to amend certain 
aspects of its working procedures and found that there was no need to modify its BCI Procedures 
in light of the "reservations " raised by the European  Union .5  
1.3.  With regard to the United  States ' measures imposing de finitive anti -dumping duties on 
imports of LRWs  from Korea6, Korea challenged before the Panel  certain aspects of the 
methodologies used by the  United  States  Department of Commerce ( USDOC ) to determine 
whether to apply the weighted average -to-transaction ( W-T) comparison methodology . 
Specifically, Korea challeng ed: (i) the so-called "Nails II methodology "7 used in the anti-dumping 
                                                
1 WT/DS464/R , 11 March 2016.  
2 Request for the Establishment of a Panel by Korea of 5 December 2013, WT/DS464/4.  
3 Panel  Report, para.  1.10 and Annex A -2. 
4 China had indicated that it was a party to a parallel panel proceeding (WT/DS471) and accordingly 
requested enhanced third party rights . (Panel  Report, para s. 1.11-1.12)  
5 Panel  Report, para s. 1.13-1.14. 
6 The anti -dumping measures that the Panel refer red to are those cited in para graphs  2.4.a-2.4.e of the 
Panel  Report.  
7 The methodology that was used by the USDOC to determine whether to apply the W -T comparison 
methodology, introduced in the Polyethylene Retail Carrier Bags from Taiwan anti -dumping investigation in 
March 2010.  WT/DS464/AB/R  
 
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  investigation conducted by the USDOC concerning imports of LRWs from Korea8 (Washers 
anti-dumping investigation ); (ii) the so-called "Differential Pricing Methodology " that replaced the 
Nails II  methodology as of March 2013 (DPM) "as such"; (iii) the DPM "as applied" in the first 
administrative review of the anti-dumping order imposing anti-dumping duties  on LRWs from 
Korea issued by the USDOC on 15  February 20139 (Washers  anti-dumping order ); and (iv) the 
ongoing and future application of the DPM in connection with  the Washers anti-dumping 
investigation . Korea also challenged the USDOC's use of "zeroing " in the context of the W -T 
comparison methodology .10 Specifically, Korea challenged : (i) "as such" the  rule or norm pursuant 
to which the USDOC engages in zeroing; and (ii) zeroing "as applied" in the  Washers anti-dumping 
investigation.11 
1.4.  With regard to the United  States ' measures impo sing definitive countervailing duties  on 
imports of LRWs  from Korea in connection with the Washers  countervailing duty investigation12, 
Korea challenged under the SCM Agreement  the USDOC's determinations that two tax credit 
programmes13 were specific. Moreov er, Korea raised  claims under the SCM Agreement  and the 
GATT  1994 challenging the manner in which the USDOC calculated the ad valorem  subsidy rate for 
Samsung Electronics Co. , Ltd (Samsung )14 under those programmes.15 
1.5.  In the Panel  Report , circulated to Membe rs of the World Trade Organization (WTO) on 
11 March 2016 , the Panel found as follows concerning  the anti -dumping measures  at issue : 
a. with regard to the Washers anti-dumping investigation:  
i. the United  States  acted inconsistently with the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement  by applying the W -T comparison methodology to 
transactions other than those constituting the patterns of transactions that the 
USDOC had determined to exist16;  
ii. Korea failed to establish that the United  States  acted inconsistently with the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement  by determining the 
existence of a "pattern of export prices which differ significantly" among purchasers, 
regions or time periods on the basis of purely quantitative criteria, without any 
qualitative assessment of the reasons for the relevant price differences17;  
iii. the United  States  acted inconsistently with the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement by merely focusing on the difference between th e 
margin of dumping calculated using the weighted average -to-weighted average 
                                                
8 USDOC [A -580-868] A ntidumping Duty Investigation of Large Residential Washers from the Republic 
of Korea.  
9 USDOC [A -201-842, A -580-868] Large Residential Washers From Mexico and the Republic of Korea: 
Antidumping Duty Orders, United States Federal Register , Vol. 78, No. 3 2 (15 February 2013), 
pp. 11148 -11150  (Panel Exhibit KOR -121).  
10 Zeroing occurs in the context of establishing margins of dumping using the W -T comparison 
methodology when the USDOC sets at zero any negative comparison result when the results from multiple 
comparisons between the weighted average normal value and each of the individual export transactions are 
aggregated.  (Panel  Report, para. 7.172)  
11 Panel  Report, para.  2.2. 
12 USDOC [C -580-869] Countervailing Duty Investigation of Large Residential Washers fr om the 
Republic of Korea. The countervailing duties  that the Panel refer red to are those cited in paragraphs  2.4.f-2.4.i 
of the Panel  Report.  
13 The two tax credit programmes are established under Article  10(1)(3) of Korea's  Restriction of Special 
Taxation Act (RSTA), entitled "Tax Deduction for Research and Manpower Development " (RSTA Article  10(1)(3) 
tax credit programme), and under Article  26 of the RSTA, entitled "Tax Deduction for Facilities Investment " 
(RSTA Article  26 tax credit programme), respective ly. 
14 The amount of subsidy under the RSTA Article  10(1)(3) tax credit programme was conferred on 
Samsung and its three Korean subsidiaries, i.e. Samsung Gwangju Electronics Co., Ltd (SGEC), Samsung 
Electronics Service (SES) , and Samsung Electronics Logite ch (SEL) , whereas the amount of subsidy under the 
RSTA Article  26 tax credit programme was conferred on Samsung and its two Korean subsidiaries, SGEC and 
SEL. (USDOC [C -580-869] Memorandum to File regarding Final Countervailing Duty Determination: Large 
Residential Washers from the Republic of Korea (18 December 2012) (Panel Exhibit USA -26 (BCI)),  p. 5) 
15 Panel  Report, para.  2.3. 
16 Panel  Report, para.  8.1.a.i.  
17 Panel  Report, para.  8.1.a.ii.  WT/DS464/AB/R  
 
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  (W-W) comparison methodology and the margin of dumping calculated using the 
W-T comparison methodology , and by failing to consider whether the factual 
circumstances surrounding t he relevant price differences were suggestive of 
something other than "targeted dumping "18; and 
iv. Korea failed to establish that the United  States  acted inconsistently with the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement by failing to expla in why 
the relevant price differences could not be taken into account appropriately by the 
transaction -to-transaction ( T-T) comparison methodology19;  
b. with regard to the DPM:  
i. the DPM is inconsistent "as such" with the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement because it applies the W -T comparison methodology to 
"non-pattern transactions " when the aggregated value of sales to purchasers, 
regions, and time periods that pass the "Cohen's d test"20 account s for 66% or more 
of the value of to tal sales21; 
ii. Korea failed to establish that the DPM is inconsistent "as such" with the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement by determining the 
existence of "a pattern of export prices which differ significantly" among purchasers, 
regions or time periods on the basis of purely quantitative criteria, without any 
qualitative assessment of the reasons for the relevant price differences22;  
iii. the DPM is inconsistent "as such" with the second sentence of Article  2.4.2 of the 
Anti-Dumping Agr eement because , in applying the "meaningful difference test "23, the 
DPM focuses on the difference between the margin of dumping calculated using  the 
W-W comparison methodology and the margin of dumping calculated using the W -T 
comparison methodology or the "mixed " comparison methodology.24 The Panel also 
found that the DPM fails to provide for any consideration of whether the factual 
circumstances surrounding the relevant price differences are suggestive of something 
other than "targeted dumping "25; 
iv. Korea fail ed to establish that the DPM is inconsistent with the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement when, having concluded that the W -W 
comparison methodology cannot appropriately take into account the observed 
pattern of significantly dif ferent prices, it does not also consider whether the relevant 
price differences could be taken into account appropriately by the T -T comparison 
methodology26; 
v. the DPM is inconsistent "as such" with the second sentence of Article  2.4.2 of the 
Anti-Dumping Ag reement because, by aggregating random and unrelated price 
                                                
18 Panel  Report, para.  8.1.a.iii.  
19 Panel  Report, para.  8.1.a.iv.  
20 The Cohen's d test is used by the USDOC as part of the DPM to evaluate the extent of price 
differences. The Cohen's d test is described in greater detail in paragraph 5.9 of this Report.  
21 Panel  Report, para.  8.1.a.vi.  
22 Panel  Report, para.  8.1.a.v.  
23 Under the "meaningful difference test ", the USDOC examines whether the W -W comparison 
methodology can appropriately account for identified differences in prices. The meaningful difference test is 
described in greater detail  in paragraph  5.12 of this Report.  
24 As we explain below, where the value of the transactions that pass the Cohen's d test account s for 
more than 33% but less than 66% of the value of total sales, the USDOC combines the application of the W -T 
comparison methodology to certain transactions ( i.e. those transactions that pass the Cohen's d test) with the 
application of the W -W comparison methodology to other transactions ( i.e. those transactions that do not pass 
the Cohen's d test). This was referred to as the "mixed" comparison methodology by the Panel. Where the 
value of the transactions that pass the Cohen's  d test account s for 66% or more of the value of total sales, the 
USDOC applies the W -T comparison methodology to all sales.  
25 Panel  Report, para.  8.1.a.vii.  
26 Panel  Report, para.  8.1.a.v iii. WT/DS464/AB/R  
 
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  variations, the DPM does not properly establish "a pattern of export prices which 
differ significantly among different purchasers, regions or time periods"27; 
vi. Korea failed to establish that  the United States ' use of "systemic disregarding"28 
under the DPM is inconsistent "as such" with the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement29; and  
vii. Korea failed to establish that the United  States ' use of "systemic disregarding" under 
the DPM  is inconsistent "as such" with Article  2.4 of the Anti -Dumping Agreement30; 
and 
c. with regard to  zeroing : 
i. the United  States ' use of zeroing when applying the W -T comparison methodology is 
inconsistent "as such" with Article  2.4.2 of the Anti -Dumping Agreemen t31; 
ii. the United  States ' use of zeroing when applying the W -T comparison methodology is 
inconsistent "as such" with Article  2.4 of the Anti -Dumping Agreement32; 
iii. the USDOC acted inconsistently with Article  2.4.2 of the Anti -Dumping Agreement by 
using zeroing w hen applying the W -T comparison methodology in the Washers  
anti-dumping investigation33; 
iv. the USDOC acted inconsistently with Article  2.4 of the Anti -Dumping Agreement by 
using zeroing when applying the W -T comparison methodology in the Washers  
anti-dumping investigation34; and  
v. the United  States ' use of zeroing when applying the W -T 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  1994.35 
1.6.  In addition , the Panel  found as follows concerning  the countervailing duties  at issue : 
a. the USDOC's original and remand determinations that the "RSTA Article  10(1)(3) tax 
credit programme "36 is de facto  specific because Samsung received subsid ies under that 
programme in dispropor tionately large amounts are inconsistent with Article  2.1(c) of 
the SCM Agreement37;  
                                                
27 Panel  Report, para.  8.1.a.ix.  
28 As we explain below, "systemic disregarding" occurs when the W -T comparison methodology  applied 
to the transactions  that pass the Cohen's d test is combined with the W -W comparison methodology  applied to 
the transacti ons that do not  pass the Cohen's d test and , if the latter yields an overall negative comparison 
result, the same is disregarded or set to zero.  
29 Panel  Report, para.  8.1.a.x.  
30 Panel  Report, para.  8.1.a.xi.  
31 Panel  Report, para.  8.1.a.xii.  
32 Panel  Report , para.  8.1.a.xiii.  
33 Panel  Report, para.  8.1.a.xiv.  
34 Panel  Report, para.  8.1.a.xv.  
35 Panel  Report, para.  8.1.a.xvi. The Panel, however, declined to make any findings regarding Korea's 
allegations concerning the USDOC's use of average export prices rather  than actual export prices in calculating 
standard deviation and the USDOC's alleged "sufficiency test".  (Ibid., para. 8.2) Moreover, the Panel did not 
consider it necessary to address Korea's claims against zeroing under Articles 1 and 2.1 of the Anti -Dumping 
Agreement  and Article  VI:1 of the GATT  1994 in the Washers  anti-dumping investigation, in "subsequent 
connected stages" , and "as such". Nor did it consider it necessary to address Korea's claims against zeroing 
under Article  9.3 of the Anti -Dumping Ag reement and Article  VI:2 of the GATT  1994 in "subsequent connected 
stages" of the Washers  anti-dumping investigation.  The Panel also did not consider it necessary to address 
Korea's "as applied" and "ongoing conduct" claims concerning the DPM. ( Ibid., para . 8.3) 
36 See supra , fn 13.  
37 Panel  Report, para.  8.1.b.i.  WT/DS464/AB/R  
 
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  b. the USDOC acted inconsistently with Article  2.1(c) of the SCM  Agreement by failing to 
take account of the two mandatory factors referred to in the final sentence of that 
provision in its determination of de facto  specificity38;  
c. Korea failed to establish that the USDOC's determination of regional specificity in respect 
of the "RSTA Article  26 tax credit programme "39 is inconsistent with Article  2.2 of the 
SCM Agreement40;  
d. Korea failed to establish that the USDOC's failure to tie the subsidies claimed by  
Samsung under the RSTA Article  10(1)(3) and Article 26 tax credit programmes to 
Samsung's digital appliance products (including LRWs) is inconsistent with Article  19.4 of 
the SCM Agreement  and Article  VI:3 of the GATT  199441; and 
e. Korea failed to establish that the USDOC acted inconsistently with Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994 by limiting the denominator to the 
sales value of products produced by Samsung in Korea when allocating the benefit 
conferred to Samsung under the RSTA Article  10(1)(3) tax credit programme .42 
1.7.  In accordance  with Article  19.1 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes ( DSU), and having found that the United  States  had acted inconsistently 
with certain provisions of the Anti -Dumping Agreement, the SCM Agreement , and the GATT  1994, 
the Panel recommend ed that the United  States  bring its measures into conformity with its 
obligations under th ose Agreements.43 
1.8.  On 19 April 2016, the United  States  notified the D ispute Settlement Body (DSB) , pursuant to 
Article s 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the 
Panel  Report  and certain legal interpretations dev eloped by the Panel and filed a Notice of Appeal44 
and appellant's submission pursuant to Rule  20 and Rule 21, respecti vely, of the 
Working  Procedures for Appellate Review45 (Working Procedures). On 25 April 2016 , Korea  notified 
the DSB, pursuant to Article s 16.4 and 17 of the DSU, of its intention to appeal certain issues of 
law covered in the Panel  Report  and certain legal interpretations developed by the Panel and filed 
a Notice of Other Appeal46 and other appellant's submission pursuant to Rule 23 of the 
Working  Procedures . On 9 May 2016 , Korea and the United  States  each filed an 
appellee's  submission .47 On 9 May 2016, China filed a third participant's submission.48 
On 10 May 2016, Brazil, Canada, the European  Union , Japan, Norway , and Viet Nam  each filed a 
third participant's submission .49 On 17 June 2016 , India, Saudi Arabia, Thailand,  and Turkey  each 
notified its intention to appear at the oral hearing as a third participant .50  
1.9.  On 22  April 2016, the Appellate  Body Secretariat transmitted the Working Schedule  for 
Appeal drawn up by the Appellate Body Division  hearing this appeal , setting out the deadlines for 
filing written submissions.  
1.10.   On 5 April 2016, Korea and the United  States  had jointly addressed a letter to the Chair of 
the Appellate  Body, attaching a request that the Division that would eventually hear an appeal in 
this dispute adopt, pursuant to Rule 16(1) of the Working Procedures, additional procedures for 
the protection of BCI on the record of this dispute ( joint request ). Korea and the United  State s 
                                                
38 Panel  Report, para.  8.1.b.ii.  
39 See supra , fn 13.  
40 Panel  Report, para.  8.1.b.iii.  
41 Panel  Report, para.  8.1.b.iv.  
42 Panel  Report, para.  8.1.b.v.  
43 Panel  Report, para.  8.5. 
44 WT/DS464/7.  
45 WT/AB/W P/6, 16 August 2010.  
46 WT/DS464/8.  
47 Pursuant to Rules 22 and 23(4) of the Working Procedures.  
48 Pursuant to Rule 24(1) of the Working Procedures.  
49 Pursuant to Rule 24(1) of the Working Procedures.  
50 India, Saudi Arabia, Thailand,  and Turkey each submit ted its delegation list for the oral hearing to the 
Appellate  Body Secretariat and the participants and third participants in this dispute. For the purposes of this 
appeal, we have interpreted these actions as notifications expressing the intention of Indi a, Saudi Arabia, 
Thailand,  and Turkey to attend the oral hearing pursuant to Rule 24(4) of the Working Procedures.   WT/DS464/AB/R  
 
- 17 - 
 
  requested the Division  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 the joint request . They 
explained that BCI procedures in this appeal would serve "th e interest of fairness and orderly 
procedure in the conduct of an appeal", according to Rule 16(1) of the Working Procedures. 
On 8 April 2016, the European  Union addressed a letter to the Chair of the Appellate  Body 
commenting on the joint request . The Eur opean  Union expressed the view that BCI procedures at 
the appellate stage should not be based on the Panel's BCI procedures.  
1.11.   By letter dated 19 April 2016, the United  States  sought guidance from the Appellate  Body 
on how to proceed with filing its appella nt's submission, which was to be filed that day and 
contained information that was designated as BCI in the Panel proceedings. In a letter issued on 
the same day, the Chair of the Appellate  Body, on behalf of the Division hearing this appeal , 
informed the United States, Korea,  and the third parties  that, pendin g a final decision on the 
joint request , the Division had decided to provide provisional additional protection to information 
marked as BCI in the United  States ' appellant's submission and in an event ual other appellant's 
submission by Korea.51  
1.12.   On 21 April 2016, the Chair of the Appellate  Body addressed a letter on behalf of the 
Division hearing this appeal to the participants, asking them to substantiate further why certain 
information contained in th eir submissions and in the Panel record warranted special protection at 
the appellate stage beyond that already provided under the confidentiality standards set out in 
Articles  17.10 and 18.2 of the DSU, and the Rules of Conduct.52 Korea and the United  States 
responded to this request with separate communications on 26 April 2016. On the same date, the 
Division invited the third participants to provide further comments on the joint request and on 
Korea's and the United  States ' responses of 26 April 2016. On 27 April 2016, the European Union 
provided comments and , on 28 April 2016, China indicated that it had no objection to the 
requested additional protection of BCI.  
1.13.   On 9 May 2016, the Division hearing this appeal issued  a Procedural Ruling  on the 
protection of BCI on the record in this dispute , which is contained in Annex D of the Addendum to 
this Report, WT/DS464/AB/R/Add.1 . 
1.14.   By letter dated 19 May 2016 to the Chair of the Appellate  Body, Korea requested 
authorization,  pursuant to Rule 18(5) of the Working Pr ocedures, to correct certain clerical errors 
in its Notice of Other Appeal, other appellant's submission, and appellee's submission. In 
accordance with Rule 18(5), the Division, by letter dated 20 May 2016, provided the United  States , 
the third participant s, and third parties with an opportunity to comment in writing on the request 
by 23 May 2016. No objections to Korea's request were received  and, on 25 May 2016 , the 
Division authorized Korea to correct the clerical errors in its Notice of Other Appeal, ot her 
appellant's submission, and appellee's submission, as identified in its letter of 19 May 2016.  
1.15.   In a letter from the Appellate Body dated 15 June 2016, the United  States  and Korea were 
asked to keep their opening statements at the oral hearing to 30 minutes each and  the third 
participants to keep their opening statements to a maximum of five minutes ea ch. In a 
communication dated 16  June 2016, China requested the Division to allocate further five minutes 
for its opening statement. China also stated that  it looked forward to a full opportunity to engage 
on the relevant issues during the hearing, in light of its direct and immediate interest in the issues 
                                                
51 This provisional additional protection prescribed that : (i) no person may have access to BCI except a 
Member of the Appellate  Body or its Secretariat, an employee of a participant, third participant or third party, 
and an outside advisor for the purposes of this dispute to a participant, third participant or third party; (ii) 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; (iii) a participant, third participant or third party having access to BCI shall n ot disclose that 
information other than to those persons authorized to receive it pursuant to these provisional procedures; and 
(iv) each participant and third participant shall have responsibility in this regard for its employees , as well as 
any outside a dvisors used for the purposes of this dispute.  
52 The Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of 
Disputes, as adopted by the DSB on 3 December 1996 (WT/DSB/RC/1), are directly incorporated into the 
Working Pro cedures for Appellate Review (WT/AB/WP/6), as Annex II thereto. (See WT/DSB/RC/2, 
WT/AB/WP/W/2)  WT/DS464/AB/R  
 
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  raised in this appeal .53 By letter dated 17 June 2016, the Presiding Member explained that, in light 
of the many issues raised in this appeal and in order to be able to complete the hearing within a 
reasonable time -frame, the Division did not consider that it would be appropriate to extend the 
time allocated for opening statements.  
1.16.   On 17 June 2016, the Chai r of the Appellate  Body notified the Chair of the DSB that the 
Appellate  Body would not be able to circulate its Report in this appeal within the 60 -day period 
stipulated in Article  17.5 of the DSU, or within the 90 -day period pursuant to the same provisio n, 
and informed the Chair of the DSB that the circulation date of the Appellate  Body Report in this 
appeal w ould be communicated to the participants and third participants after the oral hearing.54 
The Chair of the Appellate  Body explained that this was due  to a number of factors, including the 
substantial workload of the Appellate  Body in 2016, scheduling difficulties arising from overlap in 
the composition of the Divisions hearing the different appeals, the number and complexity of the 
issues raised in thi s and concurrent appellate proceedings, together with the demands that these 
concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in 
the Appellate  Body Secretariat.  On 7 July 2016, the Chair of the Appellate  Body notified the Chair 
of the DSB that the Report in this appeal would be circulated to WTO Members no later than 
Wednesday, 7  September 2016.55  
1.17.   The oral hearing in this appeal was held on  20-21 June 2016 .56 The participants and  
six third participants (Brazil , Canada, China, Japan, Norway , and Viet Nam) made opening 
oral statements . The participants and third participants  responded to questions posed by the 
Appellate  Body Division hearing this  appeal.  
2  ARGUMENTS OF THE PAR TICIPANTS  
2.1.  The claims and arguments of the participants are reflected in the executive summaries of 
their written submissions provided to the Appellate  Body.57 The Notices of Appeal and 
Other  Appeal, and the executive summaries of the participants' claims and arguments, are 
contained in Annexes A and B of the Addendum to this Report, WT/DS464/AB/R/Add.1.  
3  ARGUMENTS OF THE THI RD PARTICIPANTS  
3.1.  The arguments  of the third participants  that filed a written submission  are reflected in the 
executive summaries of those  submissions provided to the Appellate  Body58 and are contained in 
Annex C of the Addendum to this Report, WT/DS464/AB/R/Add.1.  
4  ISSUES RAISED IN THI S APPEAL  
4.1.  With regard  to the anti -dumping measures , the following issues are raised in this appeal:  
a. whether the Panel erred in its interpretation an d application of the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement in relation to the Nails II methodology and 
the DPM. In particular:  
i. whether the Panel erred in its interpretation of the relevant "pattern" for the 
purposes of the second s entence of Article  2.4.2 in finding that "the relevant 'pattern' 
… comprises only low -priced export transactions to each particular 'target' (be that a 
                                                
53 China explained that  several issues of interpretation raised in this appeal are directly relevant to the 
parallel panel proceedings in the dispute  United Stat es – Certain Methodologies and their Application to 
Anti-Dumping Proceedings involving China  (DS471).  
54 WT/DS464/9.  
55 WT/DS464/10.  
56 On 25  April 2016, the United  States  had informed the Appellate  Body that it would have significant 
difficulty participatin g in an oral hearing scheduled during the week of 6 June 2016 or 4 July 2016, due to the 
unavailability of key members of the United  States ' delegation during those periods.  
57 Pursuant to the Appellate  Body's communication on "Executive Summaries of Writte n Submissions in 
Appellate Proceedings" and "Guidelines in Respect of Executive  Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11 March 2015).  
58 Pursuant to the Appellate  Body's communication on "Executive Summaries of Written Submis sions in 
Appellate Proceedings" and "Guidelines in Respect of Executive  Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11 March 2015).  WT/DS464/AB/R  
 
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  purchaser, or a region, or a time period), while other higher -priced export 
transactions to other purcha sers, regions, or time periods are 'non -pattern' 
transactions"59 (raised  by the United  States );  
ii. whether the Panel erred in finding that the 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 purchasers, regions or time periods " (raised  by the 
United  States );  
iii. whether the Panel erred in finding that the United  States  acted inconsistent ly with 
the second sentence of Article  2.4.2 because the USDOC applied the W -T comparison 
methodology to all export transactions, including transactions other than those 
constituting the patterns of transactions that it had determined to exist in the 
Washe rs anti-dumping investigation (raised by the United  States );  
iv. whether the Panel erred in finding that the DPM is inconsistent "as such" with the 
second sentence of Article  2.4.2 because it applies the W -T comparison methodology 
to "non -pattern transactions " when the aggregated value of sales to purchasers, 
regions, and time periods that pass the Cohen's d test account s for 66% or more of 
the value of total sales  (raised by the United  States ); 
v. whether the Panel erred in finding that Korea failed to establish  that the 
United  States  acted  inconsistently with the second sentence of Article  2.4.2 in the 
Washers anti-dumping investigation  because the USDOC determined the existence of 
"a pattern of export prices which differ significantly " based on purely quantitat ive 
criteria, without any qualitative assessment of the "reasons" for the relevant price 
differences ( raised  by Korea);   
vi. whether the Panel erred in finding that  Korea failed to establish that  the DPM is 
inconsistent "as such" with the second sentence of Article 2.4.2 because it 
determines the existence of "a pattern of export prices which differ significantly " 
based on purely quantitative criteria, without any qualitative assessment of the 
"reasons" for the relevant price differences ( raised  by Korea);  
vii. whether the Panel erred in finding that Korea failed to establish that the 
United  States  acted  inconsistently with the second sentence of Article  2.4.2 in the 
Washers anti-dumping investigation because the USDOC did not explain why the 
relevant price differen ces could not be taken into account appropriately by the T -T 
comparison methodology ( raised  by Korea); and  
viii. whether the Panel erred in finding that Korea failed to establish that the DPM is 
inconsistent with the second sentence of Article  2.4.2 because when, having 
concluded that the W -W comparison methodology cannot appropriately take into 
account the observed price differences, it does not also consider whether the 
relevant price differences could be taken into account appropriately by the T -T 
comparison methodology  (raised  by Korea) ; 
b. whether the Panel erred in finding that the use of "systemic disregarding" in the context 
of the DPM, whereby, when the W -T comparison methodology applied to "pattern 
transactions" is combined with the W -W compari son methodol ogy applied to 
"non-pattern transactions", an overall negative comparison result arising  from the 
application of the W -W comparison methodology is disregarded or set to zero , is not 
inconsistent "as such" with Article  2.4 and the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement ( raised  by Korea) ; and 
c. whether the Panel erred in its interpretation and application of Article s 2.4, 2.4.2, 
and 9.3 of the Anti -Dumping Agreement and Article  VI:2 of the GATT  1994 when it found 
that the use of zeroing when applying the W -T comparison methodology is inconsistent 
                                                
59 United  States ' appellant's submission, para.  34. WT/DS464/AB/R  
 
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  "as such" with these provisions and that the United  States  acted inconsistently with 
Article  2.4 and the second sentence of Article  2.4.2 by using zeroing when applying the 
W-T comparison methodo logy in the Washers  anti-dumping investigation ( raised  by the 
United  States ). 
4.2.  With regard to the countervailing duties , the following issues are raised in this appeal:  
a. whether the Panel erred in its interpretation and applic ation of Article  2.2 of the 
SCM Agreement  by upholding the USDOC's determination that the RSTA Article  26 tax 
credit programme was regionally specific (raised by Korea);  
b. whether the Panel failed to conduct an objective assessment of  the matter before it in 
articulating its findings on re gional specificity, thereby acting inconsistently with  its 
duties under Article  11 of the DSU  (raised by Korea) ; 
c. whether the Panel erred in its interpretation and application of Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994 by upholdi ng the USDOC's 
determination that the tax credits received by Samsung under Article s 10(1)(3) and 26 
of the RSTA were not tied to particular products  (raised by Korea) ; 
d. whether the Panel failed to conduct an objective assessment of  the matter before it in 
finding that tax credits bestowed under Article  10(1)(3) of the RSTA are not research 
and development ( R&D) subsidies,  thereby acting  inconsistently with  its duties under 
Article  11 of the DSU  (raised by Korea) ; and  
e. whether the Panel erred in its interpret ation and application of Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994 by upholding the USDOC's attribution 
of the tax credits received by Samsung under Article  10(1)(3) of the RSTA to the sales 
value of Samsung's products manufacture d in Korea only (raised by Korea) . 
5  ANALYSIS OF THE APPELLATE  BODY  
5.1.  We first address the claims raised on appeal under the Anti -Dumping Agreement and the 
related claims under the GATT  1994, before turning to the claims on appeal under the 
SCM Agreement  and the related claims under the GATT  1994.  
5.1  Claims under the Anti -Dumping Agreement and related claims under the GATT  1994  
5.1.1   Background  
5.1.1.1   The Nails  II methodology  and the Washers anti-dumping investigation  
5.2.  The Washers  anti-dumping investigation was initiated on 19  January 2012 and concerned 
LRWs produced by three Korean companies, including LG Electronics, Inc. (LG E) and Samsung.60 
During the investigation, the USDOC applied the Nails  II methodology to determine whether 
"targeted dumping" was occurring and whether t o use the W -T comparison methodology to 
determine dumping  margins for LG E and Samsung.  
5.3.  The Nails II methodology applied a two -stage test run on a model basis, with each model  
being assigned a control number (CONNUM).61 First, following an allegation of "ta rgeted  dumping" 
by a member of the domestic industry, the "standard deviation test" aimed to establish whether 
there were price differences by considering whether the weighted average price to one "targeted" 
group (i.e. customer, time period, or region)  in a particular CONNUM was below a benchmark price 
equal to one standard deviation belo w the weighted average mean price in that CONNUM. Second, 
                                                
60 USDOC [A –580–868] Notice of Preliminary Deter mination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Large Residential Washers From the Republic of Korea, United  States  
Federal Register , Vol. 77, No. 150 (3  August 2012) ( Washers  preliminary AD  determination) (Panel Exhibit 
KOR-32), p. 46391.  
61 Panel  Report, fn 54 to para. 7.10. See also USDOC [A –580–868] Issues and Decision Memorandum 
for the Antidumping Duty Investigation of Large Residential Washers from the Republic of Korea 
(18 December  2012) ( Washers  AD I&D memorandum) (Panel Exhibit KOR -18), pp. 19 -20. WT/DS464/AB/R  
 
- 21 - 
 
  the "gap test" aimed to establish whether the observed price differences were significant. Where 
the gap between the weighted average price of the sales to the "targeted" group and the next 
highest weighted average price of sales to a "non -targeted" group exceeded the  average gap 
among the weighted average prices between the "non -targeted" groups, those sales were 
considered to have passed the gap test.  
5.4.  If both tests were met62, the USDOC evaluated the differ ence between the weighted average 
dumping margin calculated using the W -W comparison methodology (without zeroing) and that 
calculated using the W -T comparison me thodology (with zeroing). The W -T comparison 
methodology was applied to all export sales where there was a meaningful difference between the 
two results.  
5.5.  During the Washers anti-dumping investigation, a domestic producer of LRWs had alleged 
that "targeted dumping" was occurring with respect to LRWs produced in, and exported from, 
Korea by LG E and Samsung.63 LGE and Samsung asserted that the alleged "targeted" sales 
corresponded to, inter alia , normal promotional practices.64 The USDOC, however, took the view 
that it was not required "to consider why [the price] differences exist".65 Applying the Nails II 
methodology, the USDOC found "a pattern of U.S. prices … that differs significantly among certain 
time periods, customers, and regions" for LG E as well as for Samsung.66 The identified "pattern" 
was "defined by all of the respondent's U.S. sales".67 Moreover, the USDOC explained that using 
the W -W comparison methodology "conceal [ed] differences" between the export prices and that 
there was a "meaningful difference " between the margin of dumping calculated using the W -W 
comparison methodology and the margin of dumping calculated using the W -T comparison 
methodology.68 Consequently, the USDOC applied the W -T comparison methodology with zeroing 
to all of LG E's and Sams ung's export transactions to establish margins of dumping for these two 
exporters .69  
5.6.  On 26  December 2012, the USDOC issued a Notice of Final Determination finding that LRWs 
were being sold or were likely to be sold in the United  States  at less than fair va lue.70 On this 
basis, and on the basis of the material injury determination of the United  States  Internation al 
Trade Commission , the USDOC issued , on 15  February 2013 , the Washers anti-dumping order.71 
                                                
62 The alleged "targeted" group was found to have passed the standard deviation test when more than 
33% of the sales to the "targeted" group passed this test.  Moreover, i f the sales passing the gap test 
accounted for more than 5% of the producer's sales by volume (for the basis being tested, i.e.  purchaser s, 
regions, or time periods), the USDOC considered the price differences to be significant.  
63 Washers  preliminary AD  determination (Panel Exhibit KOR -32), pp. 46391 and 46 394. 
64 Washers  AD I&D memorandum (Panel  Exhibit KOR -18), pp. 15 -18. 
65 Washers  AD I&D memorandum (Panel Exhibit KOR -18), p . 23. 
66 Washers  preliminary AD  determination (Panel Exhibit KOR -32), p. 46395.  
67 Washers  AD I&D memorandum (Panel Exhibit KOR -18), p.  34. 
68 Panel  Report, para. 7.54 ( quoting  Washers  preliminary AD  determination (Panel  Exhibit KOR -32), 
p. 46395 , and referring to  USDOC [A -580-868] Memorandum to File regarding Antidumping Duty Investigation 
of Large Residential Washers (Washing Machines) fro m Korea – Preliminary Determination Margin Calculation 
for LG Electronics Inc. and LG Electronics USA, Inc. (27 July 2012) ( Washers  preliminary AD calculation for LGE 
memorandum) (Panel Exhibit KOR -45), pp. 3 -4; and USDOC [A -580-868] Memorandum to File reg arding 
Antidumping Duty Investigation of Large Residential Washers (Washing Machines) from Korea – Preliminary 
Determination Margin Calculation for Samsung Electronics Co., Ltd and Samsung Electronics America, Inc. 
(27 July 2012) ( Washers  preliminary AD ca lculation for Samsung memorandum) (Panel Exhibit KOR -46), p. 3 ); 
and para. 7.56 (quoting  Washers  AD I&D memorandum (Panel Exhibit KOR -18), p.  20, and referring to  USDOC 
[A-580-868] Memorandum to File regarding Antidumping Duty Investigation of Large Reside ntial Washers 
(Washing Machines) from Korea – Samsung Final Determination Calculation Memorandum (18 December 2012) 
(Washers  final AD calculation for Samsung memorandum) (Panel Exhibit KOR -41 (BCI) ), p. 2; and USDOC 
[A-580-868] Memorandum to File regarding  Antidumping Duty Investigation of Large Residential Washers from 
Korea  – Final Determination Margin Calculation for LG Electronics Inc. and LG Electronics USA, Inc. 
(18 December 2012) ( Washers  final AD calculation for LGE memorandum) (Panel Exhibit KOR -42 (BCI)), p. 2).  
69 Panel  Report, para. 7.11 (referring to Washers  AD I&D memorandum (Panel Exhibit KOR -18), 
pp. 33-34); and para. 7.173 (referring to Korea's response to Panel question No. 1.2, para.  13). 
70 USDOC [A –580–868] Notice of Final Determination o f Sales at Less Than Fair Value : Large Residential 
Wash ers From the Republic of Korea,  United  States  Federal Register , Vol. 77, No. 247 (26  December  2012), 
pp. 75988 -75992 (Panel Exhibit KOR -1). 
71 Panel Exhibit KOR -121. WT/DS464/AB/R  
 
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  5.1.1.2   The DPM and the first administrative review of the Washe rs anti-dumping order  
5.7.  The USDOC initiated an administrative review of the Washers anti-dumping order on 
1 April 2014.72 In this administrative review, the USDOC applied the DPM, which replaced the 
Nails II methodology as of March 201373, to determine whether  to apply the W -T comparison 
methodology to establish  dumping margins for LG E.74  
5.8.  Unlike the Nails II methodology, where an allegation of "targeted dumping" from the 
domestic industry was required, the USDOC applies the DPM on its own motion.75 The DPM 
consists of three main components.76  
5.9.  First, the "Cohen's  d test" evaluates the extent of the difference between the mean price of a 
test group that comprises the sales to a particular purchaser, region, or time period and the mean 
price of a comparison group th at comprises all other sales of comparable merchandise.77 The 
Cohen's  d test is applied by the USDOC when the test and comparison groups each have at least 
two observations (i.e. two transactions) and when the sales quantity for the comparison group 
account s for at least 5% of the total sales quantity of the comp arable merchandise. The Cohen's  d 
coefficient is then calculated to evaluate the extent to which the net prices to a particular 
purchaser, region, or time period differ significantly from the net pri ces of all other sales of 
comparable merchandise. The extent of the difference is quantified by one of three fixed 
thresholds defined by the Cohen's  d test: small (0.2 ); medium (0.5 ); or large (0.8). The difference 
is consid ered significant if the Cohen's  d coefficient is equal to or exceeds the large threshold.  
5.10.   Unlike the Nails II methodology, the DPM is not concerned with prices that are "targeted" at 
a particular  customer, region, or time period. Rather , the focus is on any differences in prices, 
irrespe ctive of whether such prices are above  or below  the average and without the prior 
identification of a specific purchaser, region, or time period. The DPM thus analyses any given 
export transaction in three different ways (by purchaser, region, and time per iod) in order to 
identify six possible types of price variation, namely : (i) high er prices  to a particular purchaser ; 
(ii) lower prices to a particular purchaser ; (iii) higher prices in a particular region ; (iv) lower prices 
in a particular region ; (v) higher prices during a particular time period ; and (vi) lower prices during 
a particular time period.78 
5.11.   Second, the "ratio test" assesses the extent of the significant price differences for all s ales 
as measured by the Cohen's  d test. When the result of the ra tio test is above 66%, in the sense 
that the value of the transactions to purchasers, regions, and time periods that pass  the 
Cohen's  d test accounts for 66% or more of the value of the total sales, the application of the W -T 
comparison methodology (with z eroing) is being considered for all export transactions. When it is 
between 33% and 66%, a combined application of the W -T comparison methodology and the W -W 
comparison methodology is being considered (this is referred to as the "mixed" comparison 
methodol ogy by the Panel). When it is below 33%, the application of the W -T comparison 
methodology is not being considered.  
                                                
72 USDOC, Initiation of Antidumping a nd Countervailing Duty Administrative Reviews and Request for 
Revocation in Part, United  States  Federal Register , Vol. 79, No. 62 (1 April 2014) (Panel Exhibit KOR -43), 
pp. 18262 and  18264.  
73 Panel  Report, para. 7.89 (referring to USDOC [A -570-985] Memoran dum regarding Less Than Fair 
Value Investigation of Xantha n Gum from the People's Republic of China:  Post-Preliminary Analysis and 
Calculation Memorandum for Neimenggu Fufeng Biotechnologies Co., Ltd and Shandong Fufeng 
Fermentation  Co., Ltd (4 March 2013)  (Xanthan gum  calculation memorandum ) (Panel Exhibit KOR -33)). 
74 Unlike LG E, Samsung did not participate in this administrative review.  
75 Panel  Report, fn 268 to para. 7.138. See also USDOC, Differential Pricing Analysis; Request for 
Comments, United  States Federal Register , Vol. 79, No. 90 (9  May 2014) (Panel Exhibit KOR -25), p. 26722.  
76 Panel  Report, para. 7.107. These steps are described in detail at Panel  Report, para. 7.100 (quoting 
Xanthan gum  calculation memorandum  (Panel Exhibit KOR -33), pp.  3-5). 
77 Groups of purchasers are defined using reported customer code information. Regions are defined by 
reported destination codes (i.e. zip code s) and are grouped into regions based on standard definitions 
published by the United  States  Census Bureau, a sub -agency of the USDOC. Time periods are defined by 
quarter. Finally, comparable merchandise is defined using CONNUMs, as well as other characteristics of the 
sales, other than purchaser, region, and time period. (See Panel  Report, para. 7.100 (quoting Xantha n gum  
calculation memorandum  (Panel Exhibit KOR -33), pp. 3-5)) 
78 Panel  Report, para. 7.138.  WT/DS464/AB/R  
 
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  5.12.   Third, the "meaningful difference test" examines whether the use of the W -W comparison 
methodology can appropriately account for the differ ences found to exist  in the first two stages of 
the analysis. By applying this test, the USDOC compares the weighted average dumping margin 
obtained using the W -T comparison methodology with that resulting from the use of the W -W 
comparison methodology. If  there is a meaningful difference between the two results, this 
demonstrates that the W -W comparison methodology cannot account for the identified price 
differences. A difference is considered meaningful if there is a 25% relative change in the weighted 
average dumping margin  or if the weighted average dumping margin moves across the de minimis  
threshold. If the meaningful difference test is met and the result of the ratio test is above 66%, 
the W -T comparison methodology is applied to all export transactio ns. By contrast, if the 
meaningful difference test is met and the result of the ratio tes t is between 33% and 66%, the 
W-T comparison methodology is applied to those sales that pass the Cohen's  d test and the 
W-W comparison methodology is applied to the re maining sales.79  
5.13.   Applying the DPM in the first administrative review of the Washers anti-dumping order, the 
USDOC determined that 47.12% o f LGE's sales passed the Cohen's  d test.80 The result of the ratio 
test was thus between 33% and 66%. The USDOC further  determined that the meaningful 
difference test was met.81 Consequently, the USDOC applied the W -T comparison methodology 
(with zeroing) to thos e sales that passed the Cohen's  d test and the W -W comparison methodology 
(without zeroing) to the remaining sale s of LG E. When combining the overall comparison results of 
the W -T and the W -W comparison methodologies, the USDOC disregarded the overall negative 
comparison result arising from the W -W comparison methodology (this is referred to as "systemic 
disregarding "). The preliminary results of the first administrative review of the Washers 
anti-dumping order were presented on 9  March 2015 and the final results were published on 
8 September 2015.82  
5.1.2   Article  2.4.2 of the Anti -Dumping Agreement  
5.14.   Article  2.4.2 of the Ant i-Dumping Agreement reads :  
Subject to the provisions governing fair comparison in paragraph  4, the existence of 
margins of dumping during the investigation phase shall normally be established on 
the basis of a comparison of a weighted average normal value  with a weighted 
average of prices of all comparable export transactions or by a comparison of normal 
value and export prices on a transaction -to-transaction basis. A normal value 
established on a weighted average basis may be compared to prices of individ ual 
export transactions if the authorities find a pattern of export prices which differ 
significantly among different purchasers, regions or time periods, and if an 
explanation is provided as to why such differences cannot be taken into account 
appropriate ly by the use of a weighted average -to-weighted average or 
transaction -to-transaction comparison.  
5.15.   The first  sentence of Article  2.4.2 provides for two symmetrical comparison methodologies 
that "shall normally" be used by investigating authorities to establ ish "margins of dumping ": (i) the 
W-W comparison methodology, whereby dumping margins are established on the basi s of a 
comparison of a weighted average normal value with a weighted average of prices of all 
                                                
79 Where the result of the ratio test is below 33%, the USDOC does not apply the W -T comparison 
methodology.  
80 USDOC [A -580-868] Memorandum to File regarding 2012 -2014 Administrative Review of Large 
Residential Washers from Korea: Preliminary Results Margin Calculation for LGE (2 March 2015) (Washers  
preliminary AD calculation for LGE memorandum ) (Panel Exhibit KOR -100 (BCI)), p. 1 . 
81 Washers  preliminary AD calculatio n for LGE memorandum  (Panel Exhibit KOR -100 (BCI)), p. 2. 
82 Panel  Report, para. 7.170 (referring to USDOC [A -580-868] Large Residential Washers From the 
Republic of Korea: Preliminary Results of the Antidumping Duty Administrative Review; 2012 -2014, 
United  States Federal Register , Vol. 80, No. 45 (9 March 2015), pp. 12456 -12458  / USDOC [A -580-868] 
Memorandum regarding Large Residential Washers from Korea:  Decision Memorandum for the Preliminary 
Results of the Antidumping Duty Administrative Review; 2012 -2014 (3 March 2015) / USDOC [A -580-868] 
Memorandum to File regarding 2012 -2014 Administrative Review of Large Residential Washers from Korea – 
Preliminary Results Margin Calculation for LGE (2 March 2015) (BCI -redacted  version) (Panel Exhibit KOR -96); 
and USD OC [A -580-868] Issues and Decision Memorandum for the Final Results of the Antidumping Duty 
Administrative Review of Large Residential Washers from the Republic of Korea (8  September  2015) 
(Panel  Exhibit KOR -141)).  WT/DS464/AB/R  
 
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  comparable export transactions; and (ii) the T -T comparison methodology, whereby normal value 
and export prices are compared on a transaction -specific basis. As the Appellate  Body has 
explained , the W -W and T -T comparison methodologies "fulfil the same function" and there is no 
"hierarchy between the two ".83 Accordingly, the Appellate  Body found:  
An investigating authority may choose between the two depending on which is most 
suitable for the particular investigation. Given that the two methodologies are 
alternative means for establishing "margins of dump ing" and that there is no 
hierarchy between them, it would be illogical to interpret the transaction -to-
transaction comparison methodology in a manner that would lead to results that are 
systematically different from those obtained under the weighted avera ge-to-weighted  
average methodology.84  
5.16.   The second sentence of Article  2.4.2 provides for a comparison methodology that is 
asymmetrical: the W -T comparison methodology, whereby a weighted  average normal value is 
compared to prices of individual export transa ctions. This comparison methodology may be used if 
the following two conditions are met: first, "the authorities find a pattern of export prices which 
differ significantly among different purchasers, regions or time periods" ; and, second, "an 
explanation i s provided as to why such differences cannot be taken into account appropriately by 
the use of a weighted average -to-weighted average or transaction -to-transaction comparison."85  
5.17.   The second sentence of Article  2.4.2 allows investigating authorities to addr ess pricing 
behaviour that is focused on, or "targeted" to, purchasers, regions , or time periods by having 
recourse to the W -T comparison methodology. The function of the second sentence of Article  2.4.2 
is, therefore, to enable investigating authorities t o identify so -called "targeted dumping" and to 
address it appropriately.86 The Appellate  Body has stated that "[t]his provision allows Members, in 
structuring their anti-dumping investigations, to address three kinds of 'targeted' dumping, namely 
dumping th at is targeted to certain purchasers, targeted to certain regions, or targeted to certain 
time periods."87 The Appellate  Body has further suggested that the second sentence of 
Article  2.4.2 allows investigating authorities to "unmask targeted dumping".88 
5.18.   Whereas the first sentence of Article  2.4.2 provides that investigating authorities "shall 
normally" use the W -W or the T -T comparison methodology, the second sentence of Article  2.4.2 
stipulates that a weighted average normal value "may be compared" to price s of individual export 
transactions , provided the two above -mentioned conditions are met. In particular, the requirement 
in the second sentence of Article  2.4.2 that an explanation be provided contemplates that there 
may be circumstances in which an invest igating authority identifies a "pattern of export prices 
which differ significantly among different purchasers, regions or time periods" , but where "such 
differences" could be taken into account appropriately by the W -W or T -T comparison 
methodology.89 It follows that  the W -T comparison methodology is an "exception"  to the 
comparison methodologies in the first sentence that are normally to be used . In 
US ‒ Zeroing  (Japan) , the Appellate  Body stated that "[t]he asymmetrical methodology in the 
second sentence is clearly an exception to the comparison methodologies which normally are to be 
                                                
83 Appellate  Body Report, US – Softwood L umber V ( Article  21.5 – Canada) , para.  93. 
84 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para.  93. 
85 See also Appellate  Body Reports, US ‒ Softwood Lumber V ( Article  21.5 – Canada) , para.  86; and 
US ‒ Zeroing (Japan ), para.  131. The Panel referred to these two conditions as the "pattern clause" and the 
"explanation clause", respectively. Moreover, the Panel referred to the first part of th e second sentence of 
Article  2.4.2, which sets out that " [a] normal value established on a weighted average basis may be compared 
to prices of individual export transactions" as the "methodology clause". (Panel  Report, para. 7.9)  
86 The second sentence of Article 2.4.2 does not expressly refer to "targeted dumping". However, the 
notion of "targeted dumping" appears to be implied in the reference in the second sentence of Article  2.4.2 to 
"a pattern of export prices which differ significantly among different purchasers, regions or time periods".  
87 Appellate  Body Report, EC – Bed Linen , para.  62. 
88 Appellate  Body Reports, US – Zeroing (Japan) , para. 135; US – Stainless Steel (Mexico) , para.  127. 
In US – Stainless Steel (Mexico) , the Appellate  Body also stated t hat "[t]he second sentence of Article  2.4.2 
provides an asymmetrical comparison methodology to address a so -called pattern of 'targeted' dumping found 
among certain purchasers, in certain regions, or during certain time periods." ( Appellate  Body Report, 
US ‒ Stainless Steel (Mexico) , para.  122)  
89 Appellate  Body Report, US ‒ Zeroing  (Japan) , para.  131. The Appellate  Body explained that "[t]he 
second requirement … contemplates that there may be circumstances in which targeted dumping could be 
adequately addr essed through the normal symmetrical comparison methodologies." ( Ibid.) WT/DS464/AB/R  
 
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  used."90 In the same vein, in US – Softwood Lumber V ( Article  21.5 – Canada) , the Appellate  Body 
stated that the W -T comparison methodology "may be used only in exceptional cir cumstances" and 
that it is "an exception".91 
5.19.   We start our analysis with the United  States ' claim s that the Panel erred in its interpretation 
of the relevant "pattern" and in finding that the DPM does no t properly establish a "pattern" , 
before addressing the United States'  claims pertaining to the scope of application of the W -T 
comparison methodology. We then turn to Korea's claims concerning the identification of a pattern 
of prices which differ "significantly" and its claims regarding the explanation to be  provided under 
the second sentence of Article  2.4.2. Finally, we examine Korea's claims regarding the use of 
"systemic disregarding" in the context of the DPM and then the United  States ' claims regarding the 
use of zeroing in the application of the W -T comparison methodology.  
5.1.3   The relevant "pattern" for the purposes of the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement  
5.20.   The first condition set forth in the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement is that the investigati ng authority identify "a pattern of export prices which differ 
significantly among different purchasers, regions or time periods". The Panel's reasoning and 
conclusions regarding the relevant "pattern" are interspersed throughout  its Report. First, the 
Panel agreed with the parties that the term "pattern" refers to a "regular and intelligible form or 
sequence discernible in certain actions or situations" and that random price variation does not 
constitute a pattern.92 On this basis, the Panel found that , "[i]f particular prices are observed to 
differ in respect of a particular purchaser, region or time period, those prices may be treated as a 
regular and intelligible form or sequence relating to that purchaser, region or time period."93 The 
Panel further consi dered that the relevant "pattern" is composed of a subset of export transactions 
set aside for specific consideration in the second sentence of Article  2.4.2.94 The Panel clarified 
that, if particular prices are observed to differ by purchaser, region, or t ime period, those prices 
may be treated as a "pattern ". The Panel stated that , although those prices are identified by 
reference to other  prices pertaining to other purchasers, regions , or time periods, those other 
prices are not part of the relevant "patt ern".95 The Panel did not specify, however, whether the 
subset of export transactions set aside for specific consideration necessarily comprises export 
prices which  differ significantly because they are significantly lower  than other export prices or 
whethe r a pattern could comprise prices which  differ significantly because they are significantly 
higher  than other export prices.  
5.21.   Moreover, in the specific context of the DPM, which seeks to identify prices that differ 
significantly because they are high er or lower than other export prices, the Panel considered that 
"prices  that are too high  and prices  that are too low  do not belong to the same pattern ".96 In light 
                                                
90 Appellate  Body Report,  US – Zeroing (Japan) , para.  131. 
91 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , paras.  86 and  97, 
respectively . 
92 Panel  Report, para.  7.45 (referring to Korea's first written submission to the Panel, para s. 86 
and 132-133; Oxford  Dictionaries online, definition of "pattern"  
<http://www.oxforddictionaries.com/us/definition/american_english/pattern >, accessed 18 Sept ember  2014 
(Panel Exhi bit KOR -21); and United  States ' first written submission to the Panel, para s. 59 and 73 ). 
93 Panel Report, para. 7.46. The Panel explained that the price differences are "regular" and "intelligible" 
because they pertain only to that particular purchaser, re gion, or time period. The Panel further noted that a 
form or sequence of price differences may be intelligible if there is regularity to that form or sequence that may 
be detected in respect of a particular purchaser, region, or time period. ( Ibid., paras.  7.46-7.47) Elsewhere in 
its Report, the Panel also stated:  
[I]n the context of the second sentence, the relevant form or sequence is determined by reference to 
purchasers, regions or time periods. If particular prices are observed to differ by purchaser,  region or 
time period, those prices may be treated as a regular and intelligible form or sequence relating to that 
purchaser, region or time period. The price differences are "regular" and "intelligible" because they 
pertain only to a particular pu rchaser , region or time period.  
(Ibid., para. 7.28) Specifically, the Panel accepted Korea's argument that, to be "intelligible" , the price 
differences must have some relationship to one another. As the Panel observed , "[t]his relationship exists 
when the signifi cantly differing prices relate to the same purchaser, region or time period." ( Ibid., fn 79 to 
para. 7.28 (referring to Korea's first written submission to the Panel, para.  132))  
94 Panel  Report, para. 7.24. See also paras.  7.27-7.28. 
95 Panel  Report, para.  7.28. 
96 Panel  Report, para.  7.144.  WT/DS464/AB/R  
 
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  of the use of the words "or" and "among" in the phrase "among different purchasers, regions or 
time periods" in the second sentence of Article  2.4.2, the Panel also found that a pattern cannot be 
found to exist across  purchasers, regions, and time periods, "cumulatively ".97 The Panel considered 
that a pattern of prices which differ significantly among d ifferent purchasers must be found in "the 
price variation within a group of purchasers, as between one or more particular purchasers in 
relation to all other purchasers of the same group " (with the same being true for a pattern of 
prices which differ signi ficantly among different regions or time periods).98 
5.22.   On appeal, the United  States  claims that the Panel erred in its interpretation of the relevant 
"pattern" under the second sentence of Article  2.4.2 because it concluded that "the relevant 
'pattern' … comp rises only low -priced export transactions to each 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."99 In par ticular, the 
United  States  submits that a pattern includes both lower and higher export prices that "'differ 
significantly' from each other ".100 In the context of the DPM, the United  States  also argues that the 
focus does not need to be on export sales that are priced lower  than other export sales ; rather,  a 
pattern may also be identified by considering prices that are higher  than other export prices.101 At 
the oral hearing, the United  States  further clarified that identifying a pattern does not require an 
assessment of how export prices relate to normal value.102 Moreover, the United  States  submits 
that the relevant "pattern" is one that would transcend multiple purchasers, regions , or time 
periods.103 According to the United  States , the phrase " among different pur chasers, regions or 
time periods " in the second sentence of Article  2.4.2 is to be construed as allowing an investigating 
authority to find a pattern of export prices which differ significantly among different purchasers, 
different regions, or different ti me periods, or any combination of these categories.104  
5.23.   For its part, Korea argues that the pattern is the group of prices that stand out in some 
discernible way from the other prices , but does not exclude the possibility that a pattern could 
comprise export  prices that differ significantly because they are higher  than other export prices.105 
At the oral hearing, Korea also agreed with the United  States  that export prices are not 
benchmarked against normal value to identify a pattern in accordance with the seco nd sentence of 
Article  2.4.2.106 Regarding the issue of whether a pattern can transcend multiple purchasers, 
regions , or time periods,  Korea submits that the pattern focuses on purchasers, regions, and time 
periods, which Korea sees as three "fundamentally i ndependent and distinct" categories.107  
5.24.   Turning to our analysis, we observe that, according to the second sentence of Article  2.4.2, 
the investigating authority is required to "find a pattern of export prices which differ significantly 
among different purch asers, regions or time periods". Assuming the requisite explanation under 
the second sentence of Article  2.4.2 is provided by the investigating authority, the identification of 
the pattern is the trigger for the application of the W -T comparison methodolog y.  
                                                
97 Panel Report, para. 7.141. See also para. 7.142.  
98 Panel  Report, para.  7.142.  
99 United  States ' appellant's submission, para.  34. See also paras. 48 and  55. In particular, the 
United  States  argues that, by relying on the  object and purpose of the second sentence of Article  2.4.2, rather 
than the object and purpose of the Anti -Dumping Agreement as a whole, the Panel failed to apply properly the 
customary rules of interpretation of public international law to interpret the relevant "pattern" . (United  States ' 
appellant's submission, para.  54) We note that the Panel relied on the object and purpose of the second 
sentence of Article  2.4.2 in its analysis of the scope of application of the W -T comparison methodology and that 
the United  States  makes a similar argument when turning to this issue on appeal . (Panel Report, para. 7.26; 
United  States ' appellant's submission, para.  68) We thus address this argument below when we address the 
issue of the scope of application of the W -T comparison methodology.  
100 United  States ' appellant's submission, para.  53. (emphasis original) At the oral hearing, the 
United  States  clarified that the pattern is not always required to include all export transactions, but that it may.  
101 United  States ' appellant's submission, paras.  240-242. We recall that, unlike the Nails II 
methodology, the DPM seeks to identify lower and higher export prices compared to other prices.  
102 See also United  States ' appellant's submission, para. 241.  
103 United  States ' appell ant's submission, para.  52. 
104 United  States ' appellant's submission, para.  247. 
105 Korea's appellee's submission, paras. 119 -120. By contrast , Brazil and China submit that a pattern 
cannot be composed of high -priced sales. (Brazil's third participant's subm ission, para.  5; China's third 
participant's submission, para.  26) 
106 The European  Union and Brazil disagreed with this proposition at the oral hearing. In particular, the 
European  Union stated that the term "significantly" implies that the weighted average  of the prices found to 
differ is below normal value.  
107 Korea's appellee's submission, para.  125 et seq., spec. paras. 125, 128, and 134.  WT/DS464/AB/R  
 
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  5.25.   The word "pattern" is not explicitly defined in the text of the Anti -Dumping Agreement. We 
agree with the Panel that,  in the context of the second sentence of Article  2.4.2, a "pattern " can be 
defined as "[a] regular and intelligible form or sequence d iscernible in certain actions or 
situations".108 As the United  States  notes109, this definition of the word "pattern" is frequently used 
in conjunction with the word "of", such as is the case in the second sentence of Article  2.4.2 where 
the reference is to a "pattern of export prices".110 Moreover, this definition accords with the French 
and Spanish versions of the Anti -Dumping Agreement. The French version refers to the term 
"configuration ", which can be defined as a "[f]orme extérieure d'un ensemble; relief " (the exterior 
shape of a system; relief ); and the Spanish version  refers  to the term " pauta ", which can be 
defined as an "[ i]nstrumento o norma que sirve para gobernarse en la ejecución de algo " 
(an instrument or norm that serves to govern the execution of something).111 Understanding the 
word "pattern" as a regular and intelligible form means that there must be regularity to the 
sequence of "export prices which differ significantly" and this sequence must be capable of being 
understood.112 In particular, the wo rd "intelligible" excludes the possibility of a pattern merely 
reflecting random price variation, something that is not challenged on appeal.113  
5.26.   The relevant "pattern " in the second sentence of Article  2.4.2 is one of export prices which 
differ significantl y. The verb  "differ", which can be defined as "[t]o have contrary or diverse 
bearings, tendencies, or qualities; to be not the same; to be unlike, distinct, or various, in nature, 
form, or qualities, or in some specified respect"114, expresses a relative con cept. As such, prices 
that are found to differ necessarily differ from other prices. However, by its terms, the second 
sentence of Article  2.4.2 refers to a pattern of "prices which differ". This wording indicates that the 
focus in the pattern is on the pr ices that are found to differ, not on all prices. Therefore, whereas 
an investigating authority would analyse the prices of all export sales made by the relevant 
exporter  or producer  to identify a pattern115, the distinguishing factor that allows that author ity to 
discern which export prices form part of the pattern would be that the prices in the pattern differ 
significantly from the prices not in the pattern.  
5.27.   Our interpretation  accords with the ordinary meaning of the word "pattern" as used in the 
context of the second sentence of Article  2.4.2. As explained, the pattern is a regular and 
intelligible  form or sequence of "export prices which differ significantly", which means that there 
must be regularity to the sequence of prices and that this sequence must  be capable of being 
understood. We consider that a pattern that would comprise both the prices found to differ 
significantly from other prices and those other prices (namely, a pattern comprising all the 
transactions to all purchasers, in all regions, and  in all time periods) would effectively be 
composed of  prices that do not form a regular and intelligible sequence.  
5.28.   In addition , an interpretation of the term "pattern" as comprising only those prices which  
differ significantly from other prices gives mea ning and effect to the second sentence of 
                                                
108 Panel  Report, para.  7.45 (referring to Korea's first written submission to the Panel, para.  86; Oxford  
Dictionaries online, definition of "pattern"  <http://www.oxforddictionaries.com/us/definition/american_  
english/pattern >, accessed 18 Sept ember  2014 (Panel Exhibit KOR -21); and United  States ' first written 
submission to the Panel, para.  59). The participants agree with  this definition. (United  States ' appellant's 
submission, para. 38; Korea's a ppellee's submission, para. 108)  
109 United  States ' appellant's submission, para.  38. 
110 Emphasis added.  
111 Dictionnaires de français Larousse  online, definition of " configuration " 
<http://www.larousse.fr/dictionnaires/francais/configuration> , accessed 18 September 2014  (Panel Exhibit 
KOR-36); Diccionario de la lengua española de Real Academia Española  online, definition of " pauta " 
<http://lema.rae.es/drae/?val=pauta >, accessed 18  September 2014  (Panel Exhibit KOR -37), respectively . 
112 The definition of the word "intelligible " includes "[c]apable of being understood; comprehensible". 
(Oxford English Dictionary online, definition of "intelligible"  
<http://www.oed.com/view/Entry/97408?redirectedFrom=intelligible#eid >, accessed 18 July 2016 ) 
113 Panel  Report, para.  7.45 (referring to United  States ' first written submission to the Panel, para.  73; 
and Korea's first written submission to the Panel, paras. 132 -133).  
114 Oxford  English Dictionar y online , definition of "differ" 
<http://www.oed.com/view/Entry/52452?rskey=CRXlmt&result=2&print>, accessed 4 February 2014 (Panel 
Exhibit USA -5). 
115 We consider that the det ermination of dumping under any of the three comparison methodologies set 
out in Article  2.4.2 necessarily starts with an analysis based on the prices of all export sales made by the 
relevant exporter  or producer . In the context of identifying a pattern of  export prices among, for example, 
different purchasers, an investigating authority would examine the prices of export sales made to one or more 
purchasers as compared to the prices of export sales made to the other purchasers.  WT/DS464/AB/R  
 
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  Article  2.4.2, whose function is to allow investigating authorities to identify and address "targeted 
dumping". Indeed, by comprising only the transactions found to differ from other transactions, the 
pattern focus es on the "targeted" transactions. This is also consistent with the Appellate  Body's 
statements in US – Zeroing (Japan)  that "[t]he prices of transactions that fall within [the] pattern  
must be found to differ significantly from other export prices" and th at "[t]his universe of export 
transactions would necessarily be more limited than the universe of export transactions to which 
the symmetrical comparison methodologies in the first sentence of Article  2.4.2 would apply."116  
5.29.   We thus agree with the Panel that , under the second sentence of Article  2.4.2, " a sub -set of 
export transactions is set aside for specific consideration ."117 We further agree with the Panel that , 
once prices are identified as being different from other prices, "they constitute the relevant 
'pattern'" and that , "[a]lthough those prices are identified by reference to other prices pertaining 
to other purchasers, regions or time periods, those other prices are not part of the relevant 
'pattern' ."118 The text of the second sentence of Article  2.4.2 does not expressly specify whether 
the prices need to differ significantly because they are lower than other prices, or whether  they 
may differ because they are higher than other prices. Nor does the text of the second sentence of 
Article  2.4.2 specify wh ether those prices found to differ need to be below normal value. However, 
the Anti -Dumping Agreement as a whole is concerned with injurious "dumping "119, and 
Article  2.4.2 sets out the methodologies that investigating authorities may use to establish 
margin s of dumping. Article  VI:1 of the GATT  1994 and Article  2.1 of the Anti -Dumping Agreement 
refer to export prices that are lower  than normal value as "dumped " prices. Significantly, the 
function of the second sentence of Article  2.4.2 is to allow investigat ing authorities to identify and 
address "targeted dumping". Therefore, although we recognize that a pattern may be identified in 
a variety of factual circumstances, we consider that the relevant "pattern" for the purposes of the 
second sentence of Article  2.4.2 comprises prices that are significantly lower  than other export 
prices among different purchasers, regions or time periods. We fail to see how an investigating 
authority could identify an d address "targeted dumping " by considering significantly highe r export 
prices. If the prices found to differ significantly are higher than other export prices, the other 
(lower) export prices would not "mask" the (higher) dumped prices found to form the pattern.  
5.30.   Turning to the issue of whether a pattern can be found  to exist across purchasers, regions, 
or time periods, we recall that , pursuant to the second sentence of Article  2.4.2, a pattern involves 
export prices which differ significantly in relation to specified sub -groups, namely, "among 
different purchasers, r egions or time periods". As the Panel noted , these terms determine how the 
relevant "pattern" must be identified.120  
5.31.   Starting with the text of the second sentence of Article  2.4.2, we observe that , depending 
on the context in which it is used, the conjuncti on "or" can be exclusive or inclusive.121 We further 
observe that, as the Panel considered, the term "among" refers to something "in relation to the 
rest of the group [it belongs] to ".122 The use of this word in the second sentence of Article  2.4.2 
emphasizes membership of a group, and something belongs to a group when it shares certain 
common characteristics with the other members of that group or has some form of relationship 
with them. As such, the word "among" serves to specify the dimensions in relation to  which export 
prices which differ significantly may be discerned (i.e. purchasers, regions, or time periods). This 
understanding of the word "among" suggests that each category should be considered on its own, 
in the sense that a pattern of prices which di ffer significantly among different purchasers must be 
                                                
116 Appellate  Body Report, US – Zeroing (Japan) , para.  135. (emphasis original)  
117 Panel  Report, para. 7.24.  
118 Panel  Report, para. 7.28.  
119 See Appellate  Body Report, US – Continued Zeroing , para. 284.  
120 Panel  Report, para.  7.141.  
121 Appellate  Body Report, US – Line Pipe , para.  164. We note Korea's argument that the Anti -Dumping 
Agreement repeatedly uses the conjunction  "and" when it wishes to have multiple items being considered 
together . (Korea's appellee's sub mission, para.  130) However, we are not convinced that how the terms "and" 
and "or" are used elsewhere in the Anti -Dumping Agreement is relevant to the interpretation of the term "or" 
as used in the present context.  
122 Panel  Report, para.  7.142. (emphasis original) We note that the United  States  does not challenge 
this definition o f the term "among".  WT/DS464/AB/R  
 
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  found in the price variation within purchasers, as between one or more particular purchasers and 
the other purchasers (with the same applying to regions and time periods, respectively123).  
5.32.   Importantly, t he terms "or" and "among" in the second sentence of Article  2.4.2 draw 
meaning from the immediate context in which they appear. In particular, the need to identify a 
pattern provides contextual support for an interpretation of the terms "or" and "among" as  
requiring the investigating authority to consider each category (purchasers, regions, and 
time periods) on its own. As we have explained, the sequence of "export prices which differ 
significantly" must be both regular and intelligible . As such, a pattern cannot merely reflect 
random price variation. This means that an investigating authority is required to identify a regular 
series of price variation s relating to one or more particular purchasers, or one or more particular 
regions, or one or more particula r time periods to find a pattern. A  single  "pattern" comprising 
prices that are found to be significantly different from other prices across  different categories 
would effectively be composed of prices that do not form a regular and intelligible sequence.  
5.33.   Therefore, we consider that the words "or" and "among" as used in the phrase "among 
different purchasers, regions or time periods" cannot be interpreted to mean that the three 
categories can be considered cumulatively  to find one single pattern . This mean s that some 
transactions that differ among purchasers, taken together with some transactions that differ 
among regions, and some transactions that differ among time periods , cannot form a single 
pattern. Accordingly, "a pattern " has to be identified among different purchasers, or among 
different regions, or among different time periods, and cannot transcend these categories. In 
EC ‒ Bed Linen , the Appellate  Body also understood the three categories to work independently 
from one another. In that case, the Appellate  Body noted that there are "three kinds of 'targeted' 
dumping, namely dumping that is targeted to certain purchasers, targeted to certain regions, or 
targeted to certain time periods".124 As the Panel correctly observed, the Appellate  Body did not 
identify any other types of "targeted dumping".125  
5.34.   Finally, we note the United  States ' argument that the word "among" is used once in the 
second sentence of Article  2.4.2 and is not repeated before each category, which would suggest 
that those categories may be considered collectively in identifying a pattern. According to the 
United  States , for the Panel's reading of the word "among" to be correct, one would expect that 
word to appear before the mention of each category, i.e. " among  different purchases  [sic], among  
different regions or among  different time periods".126 We consider, however, that this repetition 
would have conveyed an identical meaning to that of the existing text. We thus agree with the 
Panel that , "[i]f particular prices are observed to differ in respect of a particular purchaser, region 
or time period, those prices may be treated as a regular and intelligible form or sequence relating 
to that purchaser, region or time period" and that "[t]he price differences are 'regular' and 
'intelligible' be cause they pertain only to that particular purchaser, region or time period."127 We 
further agree with the Panel that "a 'pattern' can only be found in prices that differ significantly 
either among purchasers, or among regions, or among time periods ."128  
5.35.   Consequently, in order to find a pattern, the export prices to one or more particular 
purchasers must differ significantly from the prices to the other purchasers, or the export prices in 
one or more particular regions must differ significantly from the prices  in the other regions, or the 
export prices during one or more particular time periods must differ significantly from the prices 
during the other time periods. Our interpretation does not exclude the possibility that the same 
exporter or producer could be practicing more than one of the  three types of "targeted dumping". 
We also do not exclude the possibility that a pattern of significantly differing prices to a certain 
                                                
123 A pattern of prices which differ significantly among different regions must be found in the price 
variation within regions, as between one or more particular regions and the other regions , and a pattern of 
prices which differ signific antly among different time periods must be found in the price variation within 
timeperiods, as between one or more particular time periods and the other time periods.  
124 Appellate  Body Report, EC – Bed Linen , para.  62. In US – Stainless Steel (Mexico) , the 
Appellate  Body stated that "[t]he second sentence of Article  2.4.2 provides an asymmetrical comparison 
methodology to address a so -called pattern of 'targeted' dumping found among certain purchasers, in certain 
regions, or during certain time periods" , thus also suggesting that these three categories work independently 
from one another. ( Appellate  Body Report, US – Stainless Steel (Mexico) , para.  122) 
125 Panel  Report, para.  7.141.  
126 United  States ' appellant's submission, para.  250. (emphasis original)  
127 Panel Report, para.  7.46. 
128 Panel  Report, para.  7.141.  (fn omitted)  WT/DS464/AB/R  
 
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  category may overlap with a pattern of significantly differing prices to another categor y. For 
instance, the same transactions could "target" certain purchasers in certain regions, in which case 
the investigating authority might find that a pattern of significantly differing prices among different 
purchasers and a pattern of significantly dif fering prices among different regions exist.  
5.36.   For the reasons set out above, we consider that a "pattern " for the purposes of the second 
sentence of Article  2.4.2 comprises all the export prices to one or more particular purchasers 
which  differ significant ly from the export prices to the other purchasers because they are 
significantly lower  than those other prices, or all the export prices in one or more particular 
regions which  differ significantly from the export prices in the other regions because they a re 
significantly lower  than those other prices, or all the export prices during one or more particular 
time periods which  differ significantly from the export prices during the other time periods because 
they are significantly lower  than those other prices . For the purposes of this Report , we refer to 
these transactions forming  the relevant "pattern" as "pattern transactions".  
5.37.   Consequently, we uphold  the Panel's conclusions regarding the relevant "pattern" set out in, 
inter alia , paragraphs 7.24, 7.27 -7.28, 7.45 -7.46, 7.141 -7.142, and 7.144 of its Report.  
5.1.4   Whether the Panel erred in finding that "the DPM is inconsistent 'as such ' with the 
second sentence  of Article  2.4.2 [of the Anti -Dumping Agreement] because, by 
aggregating random and unrelated price vari ations, it  does not properly  establish  'a 
pattern of export prices which differ significantly amon g different purchasers, regions or 
time periods '" 
5.38.   Having set out the interpretation of the relevant "pattern" for the purposes of the second 
sentence of Article 2.4.2 of the Anti -Dumping Agreement, we now turn to the claim raised by the 
United  States  that pertains to the identification of a pattern under the DPM. We recall that t he 
United  States  requests us to reverse the P anel's finding that the DPM "is  incons istent '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 peri ods'."129  
5.39.   As the Panel observed, the DPM examines any given export transaction in three different 
ways (by  purchaser, region, and time period) in order to identify six possible types of price 
variation that the USDO C considers to pass the Cohen's  d test: (i ) prices that are "too high " to a 
particular purchaser; (ii)  prices that are "too low " to a particular purchaser; (iii) prices that are 
"too high " in a particular region; (iv) prices that are "too low " in a particular region; (v)  prices that 
are "too high " during a particular time period; and (vi) prices that are "too low " during a particular 
time period.130 The Panel noted that the USDOC then aggregates the value of these six different 
types of price variation to determine whether a pattern exists. As we have set out above, the Panel 
found that a pattern can only be found in prices that differ significantly either among purchasers, 
or among regions, or among time periods – not across  these categories "cumulatively " – and that 
"prices that are too high and pri ces that are too low do not belong to the same pattern ".131 With 
these considerations in mind, t he Panel concluded that the DPM is inconsistent "as such" with the 
second sentence of Article  2.4.2 because it aggregates random and unrelated price variations an d 
thus does not properly establish "a pattern of export prices which differ significantly among 
purchasers, regions or time periods ".132 
5.40.   The United  States  acknowledges that the USDOC aggreg ates the results of the Cohen's  d 
test. The USDOC does so without double-counting those exp ort sales that pass the Cohen's  d test 
for more than one category .133 According to the United  States , however, there is no aggregation of 
random and unrelated price variations. Rat her, the results of the Cohen's  d test represent differe nt 
aspects of the exporter's overall pricing behaviour.134 The United  States  also argues that the DPM 
                                                
129 United  States ' appellant's submission, para.  219 (quoting Panel  Report, para.  7.147).  
130 Panel Report, para. 7.138.  
131 Panel  Report, para. 7.14 4. See also para. 7.141.  
132 Panel  Report, paras.  7.147 and 8.1.a.ix.  
133 United  States ' appellant's submission, para.  243. 
134 United  States ' appellant's submission, para.  245. WT/DS464/AB/R  
 
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  does, in fact , consider export prices relative to other prices in the same category (i.e. by 
purchasers, regions, or time periods).135  
5.41.   The fact that the DPM starts by considering export prices relative to other prices in the same 
category before aggrega ting the results of the Cohen's  d test is not dispositive of whether the DPM 
properly identifies a pattern for the purposes of the second sentence of Article  2.4.2. We have 
found above that a pattern can only be found in prices which  differ significantly  either among 
purchasers, or among regions, or among time periods, not across these categories. We have also 
found that the relevant "pattern" for the purposes of  the second sentence of Article  2.4.2 is 
comprise d of the export prices to one or more particular purchasers which  differ significantly from 
the prices to the other purchasers because they are lower  than those other prices (with the same 
applying to region s and time periods, respectively) .  
5.42.   It is undisputed  between the participants that the DPM aggregates prices found to differ 
among different purchasers, among different regions, and among different time periods for the 
purposes of identifying a single patt ern. As the Panel correctly considered, the DPM "effectively 
identifies  a 'pattern' of export prices across  different categories (purchasers, regions or time 
periods), rather than 'among' the constituents of each category".136 It is equally undisputed that 
the DPM aggregates prices that are higher  and lower than other export prices within  a given 
category. As we have just set out, finding a pattern across the three categories is inconsistent with  
the second sentence of Article  2.4.2. Moreover, a proper interp retation of the relevant "pattern" 
for the purposes of the second sentence of Article  2.4.2 means that it cannot be identified by 
considering prices that are higher than other prices.  
5.43.   Consequently , we uphold  the Panel's finding, in paragraph  8.1.a.ix of i ts Report137, that "the 
DPM is inconsistent 'as such ' with the second sentence  of Article  2.4.2 [of the Anti -Dumping 
Agreement] because, by aggregating random and unrelated price variations, it  does not properly  
establish  'a pattern of export prices which di ffer significantly amon g different purchasers, regions 
or time periods '".  
5.1.5   Whether the Panel erred in finding that the W -T comparison methodology should 
only be applied to "pattern transactions"  
5.44.   We turn now to consider the United  States ' appeal of the Pane l's findings regarding the 
scope of application of the W -T comparison methodology. The issue raised by the United  States  on 
appeal is whether the W -T comparison methodology can be applied to all transactions or whether it 
should only be applied to those tr ansactions that form the relevant "pattern". In the Washers  
anti-dumping investigation, only certain transactions passed the standard deviation and gap tests 
under the Nails II methodology. The USDOC nonetheless applied the W -T comparison methodology 
to all of Samsung's and LG E's export transactions.138 For its part, the DPM applies the W -T 
comparison methodology to all export transactions in certain situations, namely, when the value of 
the sales that pass the Cohen's  d test account s for 66% or more of the v alue of the total sales.139  
5.45.   The Panel found that the word "individual" in the phrase "individual export transactions" in 
the first part of the second sentence of Article  2.4.2 of the Anti -Dumping Agreement indicates that 
the W -T comparison will not involve all export transactions , but only certain transactions identified 
individually.140 The Panel further found that the only textual basis for individual identification of 
export transactions is that they form the pattern under the second sentence of Article  2.4.2. The 
Panel found support for its interpretation in the requirement that lies on investigating authorities 
to explain why "'such differences' cannot be taken into account appropriately by one of the 
symmetrical comparison methodologies."141 The Panel consi dered that such explanation refers 
back to the "pattern transactions" and does so precisely because only those "pattern transactions" 
should be subject to a W -T comparison. The Panel also relied on the exceptional nature of the W -T 
                                                
135 United  States ' appellant's submission, para.  249. 
136 Panel  Report, para. 7.143. (emphasis original)  
137 See also Panel Report, para.  7.147 .  
138 Panel  Report, para.  7.11 (referring to Washers  AD I&D memorandum (Panel Exhibit KOR -18), 
pp. 33-34). 
139 Panel  Report, para.  7.100 and fn 22 5 to para.  7.118. c. 
140 Panel  Report, para.  7.22. 
141 Panel  Report, para.  7.23. WT/DS464/AB/R  
 
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  comparison methodology, which suggests that "something different from the first sentence should 
be undertake n, i.e. assessment of only the pattern transactions  set aside for specific 
consideration."142 Finally, the Panel relied on the object and purpose of the second sentence of 
Article 2.4.2 to enable investigating authorities to "'unmask' so -called 'targeted dumping'"143, as 
well as on the Appellate  Body report in US – Zeroing (Japan) , where the Appellate  Body read 
"'individual export transactions' … as referring to the transactions  that fall withi n the relevant 
pricing pattern" .144  
5.46.   Accordingly, the Panel found that the W -T comparison methodology should only be applied 
to those transactions that constitute the "pattern of export prices which differ significantly among 
different purcha sers, regions or time periods".145 Consequently, the Panel found that the 
United  States  acted inconsistently with the second sentence of Article  2.4.2 in the Washers 
anti-dumping investigation because the USDOC applied the W -T comparison methodology to all 
export transactions, including transactions other than those constituting the patterns of 
transactions that the USDOC had determined to exist.146 The Panel also found that the DPM is 
inconsistent "as such" with this provision because it applies the W -T compar ison methodology to 
all export transactions, where the value of the sales that pass the Cohen's  d test account s for 66% 
or more of the value of the total sales.147  
5.47.   The United  States  claims that there is no textual and contextual support for the Panel's 
finding that the W -T comparison methodology should only be applied to the transactions 
constituting the pattern. In particular, the United  States  contends that the relevant definition of 
the word "individual" is "single; separate" and that this word merely sug gests that prices of single, 
separate export transactions may be compared to a normal value established on a weighted 
average basis, not that the scope of application of the W -T comparison methodology is limited to 
certain transactions.148 In this context, t he United  States  also takes issue with the fact that the 
Panel assumed that the application of the W -T comparison methodology is limited to "pattern 
transactions" because the second sentence of Article  2.4.2 provides no other basis for identifying 
"individ ual" export transactions.149 The United  States  further submits that the Panel misapplied 
Article  31 of the Vienna Convention on the Law of Treaties150 (Vienna Convention) by relying on 
the object and purpose of the second sentence of Article  2.4.2, rather than  that of the 
Anti-Dumping Agreement itself.151 Finally, the United  States  argues that the Panel's reliance on the 
Appellate  Body's statements in US – Zeroing (Japan) was "misplaced" and  that these statements 
do not support the Panel's interpretation.152 
5.48.   Korea submits that the United  States  reads the term "individual" more narrowly than the 
Appellate  Body did in US – Zeroing (Japan)153 and unduly focuses on specific words without 
considering the second sentence of Article  2.4.2 as a whole.154 In particular, Korea is  of the view 
that the textual reference to "such differences" in the context of the explanation to be provided 
under the second sentence suggests that this provision creates a group of sales that meet the 
conditions for the exception, and to which the W -T comparison methodology may be applied, and 
another group of sales that do not.155 Korea further argues that the United  States ' interpretation of 
the second sentence of Article  2.4.2 would lead to absurd results, in that an authority would be 
                                                
142 Panel  Report, para.  7.24. 
143 Panel Report, para.  7.26. 
144 Panel  Report, para.  7.25 (quoting Appellate  Body Report, US – Zeroing (Japan) , para.  135; and  
referring to Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada ), fn 166 to para.  99). 
145 Panel  Report, para.  7.29. 
146 Panel  Report, paras.  7.29 and 8.1.a.i.  
147 Panel  Report, paras.  7.119.c and 8.1.a.vi.  
148 United  States ' appellant's submission, paras. 59 -62, spec. para. 60 (quoting Oxford Dictionar ies 
online, definition of "individual"  
<http://www.oxforddictionaries.com/us/ definition/american_english/individual>).  
149 United  States ' appellant's submission, para.  64. 
150 Done at Vienna, 23 May 1969, UN Treaty Series, Vol. 1155, p. 331 . 
151 United  States ' appellant's submission, para.  68. 
152 United  States ' appellant's submission, pa ras. 69-76. 
153 Korea's appellee's submission, para.  148.  
154 Korea's ap pellee's submission, paras.  147 and 149. 
155 Korea's appellee's submission, paras.  146 and 150.  WT/DS464/AB/R  
 
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  allowed to apply  an exceptional comparison methodology to all export transactions once it has 
found a pattern to exist, irrespective of how few transactions constitute this pattern.156 
5.49.   Starting with our analysis of the text of the second sentence of Article  2.4.2, we recall  that, 
pursuant to this provision, " [a] normal value established on a weighted average basis may be 
compared to prices of individual export transactions" . By its express terms, the second sentence of 
Article  2.4.2 refers to a comparison to the prices of individual  export transactions. The word 
"individual" can be defined as "[e]xisting as a separate indivisible entity; numerically one; single, 
as distinct from others of the same kind; particular "157; or, as argued by the United States,  as 
"single; separate".158 This definition alone does not clarify whether the W -T comparison 
methodology can be applied to all transactions or whether it should only be applied to certain 
transactions, namely , the "pattern transactions". The term "individual export transactions" in  the 
second sentence of Article  2.4.2 draw s meaning from the immediate context in which it appear s.159  
5.50.   The second sentence of Article  2.4.2 requires, inter alia , that the investigating authority 
provide "an explanation … as to why such differences  cannot be  taken into account appropriately  
by the use of a weighted average -to-weighted average  or transaction -to-transaction  
comparison."160 The term "such differences" refer s back to the "export prices which differ 
significantly" and , therefore , form part of the pa ttern. As set out above, the requirement in the 
second sentence of Article  2.4.2 that an explanation be provided contemplates that there may be 
circumstances in which an investigating authority identifies a "pattern of export prices which differ 
significan tly among different purchasers, regions or time periods" but where "such differences" 
could be taken into account appropriately by the W -W or T -T comparison methodology.161 It 
follows that recourse to the W -T comparison methodology is permissible only to the  extent that it 
is necessary to remedy the inability of the normally applicable comparison methodologies to take 
into account appropriately the identified "pattern ". 
5.51.   Furthermore, the first  sentence of Article  2.4.2 provides for two comparison methodologies  
that "shall normally" be used by investigating authorities to establish margins of dumping. Under 
the first sentence of Article  2.4.2, the consideration is in respect of all export transactions. By 
contrast, the emphasis in the second sentence of Article  2.4.2 is on a "pattern". Both conditions in 
the second sentence of Article  2.4.2, namely, that a pattern of significant price differences be 
established and that an explanation be provided , pertain to "pattern transactions". Moreover, the 
W-T comparison me thodology is considered to be an exception to the symmetrical comparison 
methodologies in the first sentence. The structure of Article  2.4.2, which distinguishes the 
normally applicable methodologies from the exceptional W -T comparison methodology, thus se rves 
as further indication that the W -T comparison methodology should only be applied to those 
transactions justifying its use, namely, the "pattern transactions". We, therefore, agree with the 
Panel that "[t]he exceptional nature of this comparison method ology suggests that something 
                                                
156 Korea's appellee's submission, para.  153. 
157 Oxford English Dictionary online, definition of  "individual"  
<http://www.oed.com/view/Entry/94633?redirectedFrom=individual#eid >, accessed 18 July 2016.  
158 United  States ' appellant's submission, para.  60 (quoting  Oxford D ictionar ies online, definition of 
"individual" <http://www.oxforddictionaries.com/us/definition/american_english/individual>).  
159 The ordinary meaning of a treaty term is to be ascertained in its context and in  light of the object 
and purpose of the treaty . Moreover, the principles of treaty interpretation set out in the Vienna Convention 
are to be followed in a holistic fashion. (See Appellate  Body Reports, China – Publications and Audiovisual 
Products , para.  348; and US – Continued Zeroing , para.  268) In US – Offset Act (Byrd Amendment) , the 
Appellate  Body cautioned that "dictionaries are important guides to, not dispositive statements of, definitions of 
words appearing in agreements and legal documents." ( Appellate  Body Report, US – Offset Act (Byrd 
Amend ment) , para.  248) Along the same lines, in China – Publications and Audiovisual Products , the 
Appellate  Body held that dictionaries, however useful as a starting point, "are not necessarily capable of 
resolving complex questions of interpretation because t hey typically c atalogue all meanings of words."  
(Appellate  Body Report, China  ‒ Publications and Audiovisual Products , para.  348 (referring to Appellate  Body 
Reports, US – Gambling , para.  164; US – Softwood Lumber IV , para.  59; Canada – Aircraft , para.  153; and 
EC – Asbestos , para.  92)) 
160 Emphasis added.  
161 In US – Zeroing (Japan) , the Appellate  Body explained that "[t]he second requirement … 
contemplates that there may be circumstances in which targeted dumping could be adequately addressed 
through the norm al symmetrical comparison methodologies." ( Appellate  Body Report, US – Zeroing (Japan) , 
para. 131) WT/DS464/AB/R  
 
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  different from the first sentence should be undertaken, i.e. assessment of only the pattern 
transactions set aside for specific consideration."162  
5.52.   For the reasons set out above, we agree with the Panel that : (i) the use of the word 
"individual" in the second sentence of Article  2.4.2 indicates that the W -T comparison methodology 
does not involve all export transactions , but only certain export transactions identified individually ; 
and (ii)  the "individual export transactions " to which the W -T comparison methodology may be 
applied are those transactions falling within the relevant "pattern".163 Accordingly, we read the 
phrase "individual export transactions" as referring to the universe of export transactions that 
justify the use of  the W -T comparison methodology, namely, the "pattern transactions". Our 
interpretation gives meaning and effect to the second sentence of Article  2.4.2, whose function is 
to allow investigating authorities to identify and address "targeted dumping". It al so accords with 
the object and purpose of the Anti -Dumping Agreement. Although the Anti -Dumping Agreement 
does not contain a preamble expressly setting out its object and purpose, it is apparent from the 
text of this Agreement that it deals with injurious dumping by allowing Members to take 
anti-dumping measures to counteract injurious dumping and imposing disciplines on the use of 
such anti -dumping measures.164  
5.53.   Applying the W -T comparison methodology to "pattern transactions" only is also in line with 
the Appellate  Body's observations in US ‒ Zeroing (Japan) , where the Appellate  Body "[read] the 
phrase 'individual export transactions ' … as referring to the transactions that fall within the 
relevant pricing pattern ", and considered that "[t] his universe of export transactions would 
necessar ily be more limited than the universe of export transactions to which the symmetrical 
comparison methodologies in the first sentence of Article  2.4.2 would apply. "165 The 
Appellate  Body added that , "[i]n order to unmask targeted dumping, an investigating aut hority 
may limit the application of the W -T comparison methodology to the prices of export transactions 
falling within the relevant pattern. "166 
5.54.   We note that t he United  States  makes a number of arguments that take issue with the 
Panel's reliance , in paragrap hs 7.25 and 7.27 of its Report,  on the Appellate  Body's statements in 
US ‒ Zeroing (Japan) .167 First, the United  States  argues  that this case did not involve the 
application of the second sentence of Article  2.4.2. While this is correct, t he Appellate  Body was 
nonetheless  addressing legal issues raised on appeal, as the panel had drawn contextual support 
from the second sentence of Article  2.4.2 for its finding that zeroing is permitted under the T -T 
comparison methodology. Second, the United  States  asserts t hat the Appellate  Body merely 
suggested that an investigating authority may limit the application of the W -T comparison 
methodology. While the Appellate  Body's use of the word "may" could, if read in isolation, be 
perceived as being ambiguous, the remainin g parts of the  relevant  paragraph in its report make 
                                                
162 Panel  Report, para.  7.24.  
163 Panel Report, para. 7.22.  
164 In US – Continued Zeroing , the Appellate  Body stated that the Anti -Dumping Agreement "deals with 
'injurious dumping', and … counteract[ing] the material injury caused, or threatened to be caused, by 'dumped 
imports' to the domestic industry producing a 'like product'". ( Appellate  Body Report, US – Continued Zeroing , 
para. 284  (referring to Appellate B ody Report, US – Stainless Steel (Mexico) , para. 98) ) The United  States  
claims that, by relying on the "object and purpose" of the second sentence of Article  2.4.2, rather than that of 
the Anti -Dumping Agreement as a whole, the Panel failed to apply proper ly the customary rules of 
interpretation of public international law. ( United  States' appellant's submission, para.  68 (quoting Panel 
Report, para. 7.26) ) Pursuant to Article  31(1) of the Vienna Convention, "[a] treaty shall be interpreted in good 
faith in  accordance with the ordinary meaning to be given to the terms of the treaty in their context and in  the 
light of its object and purpose." Article  31(1) of the Vienna Convention thus refers to the object and purpose of 
the treaty as a whole, not of the par ticular provisions under interpretation. However, this does not exclude that 
individual provisions have a function, or a role to play in a treaty. As we have explained, the function of the 
second sentence of Article  2.4.2 accords with the  object and purpos e of the Anti -Dumping Agreement. 
Moreover, interpreting  the second sentence of Article  2.4.2 in  light of its function ensures that meaning and 
effect are given to that provision. The Panel correctly identified the rationale of the second sentence of 
Article 2.4.2. Therefore, we reject the United  States ' argument s pertaining to the Panel's reliance on the 
"object and purpose" of the second sentence of Article  2.4.2.  
165 Appellate  Body Report, US – Zeroing (Japan) , para.  135. In US – Softwood Lumber V ( Article  21.5 – 
Canada ), the Appellate  Body stated that "the universe of export transactions to which the weighted 
average -to-transaction  comparison methodology applies would be different from the universe of transactions 
examined under the weighted average -to-weighted average  methodology."  (Appellate  Body Report, 
US ‒ Softwood Lumber V ( Article  21.5 – Canada ), fn 166 to para.  99) 
166 Appellate  Body Report, US – Zeroing (Japan) , para.  135.  
167 United  States ' appellant's submission, paras.  69, 72, 85, and 179-181.  WT/DS464/AB/R  
 
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  clear that the Appellate  Body excluded the possibility that the W -T comparison methodology might 
apply to "non -pattern transactions".168 Finally, we disagree with the United  States  that the Panel's 
underst anding of the scope of application of the W -T comparison methodology was derived 
exclusively from  that Appellate  Body report . The Panel conducted its own analysis of the second 
sentence of Article  2.4.2, and relied on the Appellate  Body report in US – Zeroing (Japan) as 
"[f]urther support" for its interpretation.169  
5.55.   Based on the foregoing considerations, in particular in light of the function of the second 
sentence of Article  2.4.2 to allow investigating authorities to identify and address "targeted 
dumping" , we consider that the W -T comparison methodology should only be applied to those 
transactions that justify its use, namely, those transactions forming  the relevant "pattern".  
5.56.   We, therefore, uphold  the Panel's finding, in paragraph 7.29 of its  Report, tha t "the W -T 
comparison methodology should only be applied to transactions that constitute the ' pattern of 
export prices which differ significantly among different purchasers, regions or time periods '." We 
further uphold  the Panel's consequen tial findings : (i) in paragraph  8.1.a.i of its  Report170, that "the 
United  States  acted inconsistently with the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement , by applying the W -T comparison methodology to transactions other than those 
constituting the patte rns of transactions that the USDOC had determined to exist in the Washers  
anti-dumping investigation "; and (ii) in paragraph 8.1.a.vi of its Report171, that "the DPM is 
inconsistent 'as such ' with Article  2.4.2 of the Anti -Dumping Agreement, because it appli es the 
W-T comparison methodology to non -pattern transactions when the aggregated value of sales to 
purchasers, regions, and time periods that pass the Cohen's d test account [s] for 66% or more of 
the value of total sales ".  
5.1.6   The extent to which  price diffe rences are to be assessed quantitatively, 
qualitatively, and in light of the "reasons" for these price differences  
5.57.   Korea claims that the Panel erred in finding that a "pattern of export prices which differ 
significantly " can be established " solely based on  quantitative differences … regardless of the 
factual context of the prices and the differences".172 This claim on appeal raises the issue of 
whether a "pattern of export prices which differ significantly " can be established based on purely 
quantitative crit eria, without a qualitative assessment and without considering the "reasons" for 
the price differences.173  
5.58.   According to the Panel, the text of Article  2.4.2 of the Anti -Dumping Agreement contains no 
requirement to consider the "reasons" for the price differ ences in order to identify a pattern , and 
an examination of the relevant numerical price values suffices.174 The Panel further found that "an 
                                                
168 We recall that the Appellate  Body "[read] the phrase 'individual export transactions' … as referring to 
the transactions that fall withi n the relevant pricing pattern."  The Appellate  Body added that "[t]his universe of 
export transactions would necessarily  be more limited than the universe of export transactions to which the 
symmetrical comparison methodologies in the first sentence of Article  2.4.2 would apply ." (Appellate  Body 
Report, US – Zeroing (Japan) , para.  135 (emphasis added))  As the Panel observed, the term "necessarily" 
used by the Appellate  Body excludes the possibility that the W -T comparison methodology might in certain 
circumstances also apply to "non -pattern transactions". (Panel Report, para. 7.27)  
169 Panel  Report, paras.  7.22-7.25. The United  States  also stresses that the Appellate  Body misquoted 
the second sentence of Article  2.4.2 when stating that "[t]he emphasis in the second sentence of Article  2.4.2 
is on a 'pattern', namely a 'pattern of export prices which differs  [sic] significantly am ong different purchasers, 
regions or time periods[].'" ( United  States ' appellant's submission, para.  181 (quoting Appellate  Body Report, 
US – Zeroing (Japan) , para.  135) (emphasis added by the United  States )) The use of the word "differs" is a 
clerical err or that does not affect the reasoning of the Appellate  Body. This is apparent from the sentence that 
directly follows the misquotation, where the Appellate  Body explained that " [t]he prices of transactions that fall 
within [the] pattern  must be found to di ffer significantly from other export prices." (emphasis original) This is a 
clear indication that the Appellate  Body understood that the second sentence of Article  2.4.2 focuses on prices 
that differ, not a pattern that differs.  
170 See also Panel Report, pa ra. 7.29.  
171 See also Panel Report, para. 7.119.c .  
172 Korea's other appellant's submission, para.  154. 
173 We understand the Panel and the participants to use the term "reasons" for the price differences , as 
well as the phrase "why prices differ" , to refer t o the issue of whether the investigating authority should 
consider if the price differences are the result of normal price fluctuations or reflect "targeting" conduct to 
establish the existence of a pattern. We refer to this as the reasons for  or the cause  of the price differences.  
174 Panel  Report, para.  7.46. WT/DS464/AB/R  
 
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  authority might  properly find that certain prices differ 'significantly ' if those prices are notably 
greater  – in pu rely numerical terms – than other prices, irrespective of the reasons for those 
differences. "175 As the Panel noted, those "reasons" could, however, be relevant in the context of 
the explanation to be provided under the second sentence of Article  2.4.2.176 The Panel 
acknowledged that , in certain factual circumstances, the size or scale of a price difference may 
need to be assessed in light of the prevailing factual circumstances.177 For example, a relatively 
minor numerical difference between two large prices may  not be significant, whereas the same 
numerical difference between two much smaller prices may be significant. The Panel, however, 
found that this relates to how, not why, the relevant prices differ.178 Accordingly, the Panel 
rejected Korea's claim that the United  States  acted inconsistently with the second sentence of 
Article  2.4.2 in the Washers anti-dumping investigation because the USDOC determined 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.179 
The Panel also found that the DPM is not inconsistent "as such" with this provision because it 
determines the existence of a pattern of export prices which di ffer significantly on the basis of 
purely quantitative criteria, without any qualitative assessment of the "reasons" for the relevant 
price differences.180  
5.59.   Korea claims that the Panel mischaracterized  its claim as if it were solely that the authority 
must s tate the reasons why prices differ.181 Korea argues that, while it discussed the factual 
context of the Washers anti-dumping investigation in terms of the "reasons" why prices may be 
differing before the Panel, this was not its sole or even principal argumen t.182 Moreover,  Korea 
requests us to reverse the Panel's findings 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".183 Specifically, Korea argu es that the Panel erred in finding that the authority is not 
required to examine the "reasons" for the price differences to establish the existence of a 
pattern.184 Korea recalls that the term "significantly" entails both qualitative and quantitative 
aspects . Yet, while acknowledging this, in Korea's view, the Panel effectively held that the term 
"significantly" can be analysed in purely quantitative terms.185 According to Korea, qualitative 
considerations are relevant both as part of determining whether price differences are "significant" 
and form a "pattern" and as part of determining whether a W -W comparison can "take into 
account appropriately" the significant price differences.186 
                                                
175 Panel  Report, para.  7.48. 
176 Panel  Report, para.  7.48. With respect to this explanation, the Panel considered that , where price 
differences are caused by factors other than "targeted dumping ", these differences can "normally" be taken 
into account appropriately by one of the "normal" comparison methodologies. The Panel , therefore , considered 
that the authority must analyse the factual circumstances to consider whether something other than "targeted 
dumping " is responsible for the relevant price differences to satisfy the explanation requirement under the 
second sentence of Article  2.4.2. Consequently, the Panel found that the United  States  acted inconsistently 
with the second sentence of Article  2.4.2 in the Washers  anti-dumping investigation and that the DPM is 
inconsistent "as such" with the second sentence of Article  2.4.2. (Panel Report, paras. 7.72 -7.77, 7.119.b, 
8.1.a.iii, and 8.1.a.vii) Neither of these findings has been  appealed.  
177 Panel  Report , para.  7.49. 
178 The Panel found support for its approach in the panel  report in US – Upland Cotton , where the panel 
did not refer to the underlying "reasons" for the price suppression to establish whether the price suppression 
was significant within the me aning of Article  6.3(c) of the SCM Agreement . (Panel  Report, paras.  7.49-7.50 
(quoting Panel  Report, US – Upland Cotton , paras.  7.1328 -7.1330)) The Panel found further support for its 
approach in the Appellate  Body report in US – Large Civil Aircraft (2nd complaint) , where the Appellate  Body 
stated that the assessment of the significance of lost sales under Article  6.3(c) of the SCM Agreement  has both 
"quantitative and qualitative dimensions", without suggesting that the qualitative dimension extends to 
consideration of the "reasons" for those lost sales. (Panel  Report, para.  7.51 (quoting Appellate  Body Report, 
US – Large Civil Aircraft (2nd complaint) , para.  1272))  
179 Panel  Report, paras.  7.52 and 8.1.a.ii.  
180 Panel  Report, paras.  7.119.a and 8.1.a.v.  
181 Korea's other appellant's submission,  heading IV.B.  
182 Korea's other appellant's submission, para.  160 (quoting Panel  Report, para.  7.33, in turn referring 
to Korea's oral statement at the second Panel meeting, para.  26). 
183 Korea's Notice of Other Appeal, para . 6. 
184 Korea's other appellant's submission, para.  167. 
185 Korea's other appellant's submission, para.  175. 
186 Korea's other appellant's submission, para.  178. WT/DS464/AB/R  
 
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  5.60.   The United States,  in turn , is of the view that Korea attempts to expand its cl aims beyond 
what is set forth in its panel request.187 Moreover, while t he United  States  acknowledges that the 
term "significantly" has both quant itative and qualitative aspects188, according to the 
United  States , this does not mean  that the authority must exa mine the "reasons" for the price 
differences , and a pattern may be discerned through a simple examination of the relevant 
numerical price values.189 At the oral hearing , the United  States  clarified that , in its view,  there 
may be instances where a purely qua ntitative analysis suffices to find that price differences are 
significant.190  
5.61.   Addressing first  whether  the Panel mischaracterized  Korea's  claim, we note that  Korea's 
request for the establishment of a panel refers to "commercial reasons", "market explanati ons", 
and "economic or market factors" that the USDOC allegedly fails to consider.191 In our view, these 
references show that Korea claimed that qualitative aspects should be considered. Even if these 
references should be understood to go to the more narrow issue of why differences might exist 
between export prices, Korea's panel request is otherwise broadly dr afted. The "commercial 
reasons", "market explanations", and "economic or market factors" that the USDOC allegedly fails 
to consider appear to be mere e xamples of how, according to Korea, the USDOC fails to identify a 
pattern  in accordance  with the second se ntence of Article  2.4.2192, and as such are in the nature of 
arguments rather than claims.193 The Panel rejected Korea's claims that the USDOC acted 
incon sistently with the second sentence of Article  2.4.2 in the Washers anti-dumping  investigation 
and that  the DPM is inconsistent "as such" with this provision "by determining the existence of a 
'pattern of export prices which differ significantly' among purc hasers, regions or time periods 
on the basis of purely quantitative criteria , without any qualitative assessment of the reasons for 
the relevant price differences".194 We thus understand the Panel to have concluded that both the 
Nails II methodology and the DPM involve a purely quantitative analysis, which the Panel did not 
find to be inconsistent with the second sentence of Article  2.4.2. As such, the Panel sufficiently 
addressed Korea's claims and arguments, and not only whether the USDOC would have needed to 
consider the "reasons" for the price differences. Therefore, we disagree with Korea that the Panel 
mischaracterized its claim.  
5.62.    Turning to the issue of whether the Panel erred in finding that a pattern of export prices 
which differ significantly  can be established on the basis of purely quantitative criteria, without any 
qualitative assessment of the reasons for the relevant price differences , we recall that , pursuant to 
the second sentence of Article  2.4.2, the relevant "pattern" is one of export prices  which differ 
significantly . The term "differ" is thus qualified by the term "significantly".  As the Panel correctly 
recognized195, "significant" can be defined as "important, notable or consequential".196 We thus 
                                                
187 United  States ' appellee's submission, para.  125. We note that neither of the participants  has raised a 
claim or an argument under Article  6.2 of the DSU.  
188 United  States ' appellee's submission, para s. 129 and  131. 
189 United  States ' appellee's submission, paras.  129 and 134.  
190 See also United  States ' appellee's submission, para.  139. 
191 Request for the Establishment of a Panel by Korea of 5 December 2013, WT/DS464/4 , pp. 4 -5.  
192 We also observe that Korea's claims and arguments as set out in its first written submission to the 
Panel were not confined to whether the "reasons" for the price differences hav e a role to play in the 
identification of a pattern.  In its first written submission to the Panel, Korea claimed that the Nails II 
methodology that was applied in the Washers anti-dumping investigation and the DPM are inconsistent with the 
second sentence of Article  2.4.2 because "the USDOC applies fixed numerical criteria to determine whether 
there is a 'pattern of export prices which differ significantly' … and categorically rejects the relevance to its 
inquiry of the commercial context in which the alleg ed pattern of significant pricing differences arise. " (Korea's 
first written submission to the Panel, para.  349 (emphasis added))  
193 Article  6.2 of the DSU does not prohibit a party from including in its  panel  request  statements "that 
foreshadow its argumen ts in substantiating the claim" , and the presence of such argument s "should not be 
interpreted to narrow the scope of … the claims". ( Appellate  Body Report, EC ‒ Selected Customs Matters , 
para. 153) 
194 Panel  Report, para s. 7.52, 7.119.a , 8.1.a.ii, and 8.1.a .v. (emphasis added)  
195 Panel  Report, para.  7.48. WT/DS464/AB/R  
 
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  understand the word "significantly" to speak t o the extent of the price differences and to suggest 
something that is more than just a nominal or marginal difference in prices. Under the second 
sentence of Article  2.4.2, the something that must be important, notable, or consequential is the 
difference in export prices.  
5.63.   Furthermore, the term "significantly" has both quantitative and qualitative dimensions .197 
Accordingly, assessing the extent of the dif ferences in export prices to establish whether those 
export prices differ significantly  for the purposes of the second sentence of Article  2.4.2 entails 
both quantitative and qualitative dimensions . As part of the qualitative assessment,  circumstances 
pertaining to the nature of the product or the markets may be relevant for the assessment of 
whether differen ces are "significant"  in the circumstances of a particular case. The significance of 
differences may indeed be affected by objective market factors, such as the nature of the product 
under consideration, the industry at issue, the market structure, or the intensity of competition in 
the markets at issue, depending on the case at hand. Hence, what may be deemed "significant" 
price differences in one instance may fail to meet the same threshold when different variables are 
considered. For example, the Panel o bserved that , in a more price-competitive market, smaller 
differences may be significant.198 Unless the investigating authority considers such qualitative 
aspects, it will not know if and how these aspects are relevant to its assessment of whether prices 
differ significantly. Therefore, we disagree with the Panel to the extent it considered that an 
investigating authority may properly find that certain price s differ significantly within the meaning 
of the second sentence of Article  2.4.2 if they are notably g reater in purely numerical terms.199  
5.64.   Our understanding of the term  "significant" accords with previous Appellate  Body reports . 
For example,  in the context of Article  6.3(c) of the SCM Agreement200, in US – Large Civil Aircraft 
(2nd complaint) , the Appellate  Body found that "an assessment  of whether a lost sale is significant 
can have both quantitative and qualitative dimensions."201 Regarding the qualitative dimension, 
                                                                                                                                                  
196 See e.g. Appellate  Body Reports, US – Large Civil Aircraft (2nd complaint) , para.  1272 (quoting 
Appellate Body Report, US ‒ Upland  Cotton , para.  426, in turn referring to Panel  Report, US – Upland Cotton , 
para. 7.1326); US ‒ Tyres (China) , para.  176 (quoting Shorter Oxford English Dictionary , 5th edn, W.R. 
Trumble, A. Stevenson (eds.) (Oxford University Press, 2002), Vol. 2, p. 2835 ); and China – HP-SSST (Jap an) 
/ China  ‒ HP-SSST (EU) , para.  5.161  (quoting Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) 
(Oxford University Press, 2007), Vol. 2, p. 2833 ). See also Oxford  English Dictionar y online , definition of 
"significantly" <http://www.oed.com/view/E ntry/179570?redirectedFrom -significantly&pr int>, accessed 
4 February 2014 (Panel Exhibit USA -7), where the word "significantly" is defined  as, inter alia , "[i]n a 
significant manner; esp. so as to convey a particular meaning; expressively, meaningfully ." 
197 The Panel and the participants agree. (See  Panel Report, para. 7.51 ; Korea's other a ppellant's 
submission, para.  171; and United  States ' appellee's submission, para. 131 ) 
198 Panel  Report, para.  7.49.  
199 The Panel considered that "an authority might properly find that certain prices differ 'signific antly' if 
those prices are notably greater – in purely numerical terms – than other prices, irrespective of the reasons for 
those differences." (Panel  Report, para. 7.48) We note that , relying  on the Appellate  Body report in 
China  ‒ GOES , the Panel stated that "the Appellate  Body considered that an authority could determine the 
existence of 'significant price undercutting' simply by comparing two prices". ( Ibid., fn 105 to para.  7.48 
(referring to Appellate  Body Report, China  ‒ GOES , para.  241)) The Panel read a sentence in that 
Appellate  Body report, which makes a reference to Article  3.2 of the Anti -Dumping Agreement, out of context, 
especially as the meaning of the term "significant" was not at issue in that case. Moreover,  that report has to 
be read in light of the Appellate  Body's subsequent reports in China – HP-SSST (Japan) / China – HP-SSST 
(EU), in which, as set out in footnote 202 below, the Appellate  Body clarified  that the factual circumstances of 
each case will nece ssarily play a role in assessing "significance". ( Appellate  Body Reports, China – HP-SSST 
(EU) / China – HP-SSST (Japan) , para.  5.161)  
200 Article  6.3(c) of the SCM Agreement  provides that "[s]erious prejudic e in the sense of 
paragraph  (c) of Article  5 may a rise in any case where … the effect of the subsidy is a significant price 
undercutting  by the subsidized product as compared with the price of a like product of another Member in the 
same market or significant  price suppression, price depression or lost sa les in the same market ". (emphasis 
added)  
201 Appellate  Body Report, US – Large Civil Aircraft (2nd complaint) , para.  1272 (referring to 
Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  1218).  WT/DS464/AB/R  
 
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  the Appellate  Body referred to the "highly price -competitive" nature of the market.202 We also n ote 
that t he panel in US – Upland Cotton , in considering a case of significant price suppression  under 
the same provision , found that "it may be relevant to look at the de gree of the price 
suppression  … in the context of the prices that have been affected"  to assess whether the price 
suppression is significant.203 As the panel reasoned:  
The "significance" of any degree of price suppression may vary from case to case, 
depending upon the factual circumstances, and may not solely depend upon a given 
level of nu meric significance. Other considerations, including the nature of the "same 
market" and the product under consideration may also enter into such an assessment, 
as appropriate in a given case.204  
5.65.   The words "significantly" and "pattern" in the second sentence  of Article  2.4.2 , however,  do 
not imply an examination into the cause of (or reasons for) the differences in prices. The second 
sentence of Article  2.4.2 requires an investigating authority to find "a pattern of export prices 
which differ significantly am ong different purchasers, regions or time periods". The text does not 
impose an additional requirement to ascertain whether the significant differences found to exist 
are unconnected with "targeted dumping ". As the Panel correctly observed, in US – Large C ivil 
Aircraft ( 2nd complaint) , there was no suggestion by the Appellate  Body that the qualitative 
dimension of the significance of lost sales extends  to consideration of the cause of (or reasons for) 
those lost sales.205 Similarly, the Panel correctly observ ed that the US – Upland  Cotton panel did 
not refer to the underlying cause of (or reasons for)  price suppression as being relevant to the 
potential significance of the degree of price suppression.206 The text of the second sentence of 
Article  2.4.2 also does  not imply an examination of the motivation for , or intent behind , the 
differences in prices. We thus see merit in the United  States ' argument that, under the second 
sentence of Article  2.4.2, the investigating authority is charged with finding whether a p attern of 
export prices exists, not whether an exporter or producer has intentionally patterned its export 
prices to "target" and "mask" dumping.207  
5.66.   Based on the foregoing, we find that the requirement to identify prices which  differ 
significantly means tha t the investigating authority is required to assess quantitatively and 
qualitatively the price differences at issue. This assessment may require the investigating authority 
to consider certain objective market factors, such as  circumstances regarding the n ature of the 
product under consideration, the industry at issue, the market structure, or the intensity of 
competition in the markets at issue , depending on the case at hand . The investigating authority is, 
however, not required to consider the cause of (o r reasons for) the price differences. Therefore, 
we agree with the Panel that an investigating authority is not required to consider the cause of (or 
reasons for) the price differences to establish the existence of a pattern under the second sentence 
of Article 2.4.2  of the Anti -Dumping Agreement . However, we reverse  the Panel's finding in 
                                                
202 Appellate  Body Report, US – Large Civil Aircraft (2nd complaint) , para.  1272. See also Appellate  Body 
Report, EC and certain member States – Large Civil Aircraft , para.  1218; and Panel Report, 
Korea  ‒ Commercial Vessels , para. 7.571. In China – HP-SSST (Japan) / China – HP-SSST (EU) , the 
Appellate  Body was faced with interpreting Article  3.2 of the Anti -Dumping Agreement, which refers to 
"significant price undercutting". The Appellate  Body considered that "[w]hat amounts to significant  price 
undercutting … will … necessarily depend on t he circumstances of each case." The Appellate  Body further 
stated that "an investigating authority may, depending on the case, rely on all positive evidence relating to the 
nature of the product or product types at issue, how long the price undercutting ha s been taking place and to 
what extent, and, as appropriate, the relative market shares of the product types with respect to which the 
authority has made a finding of price undercutting." ( Appellate  Body Reports, China – HP-SSST (Japan) / 
China  ‒ HP-SSST ( EU), para. 5.161 (emphasis original))  
203 Panel  Report, US – Upland Cotton , para.  7.1328.  
204 Panel  Report, US – Upland Cotton , para.  7.1329. (fn omitted) The panel further stated:  
We cannot believe that what may be significant in a market for upland cotton w ould necessarily 
also be applicable or relevant to a market for a very different product. We consider that, for a 
basic and widely traded commodity, such as upland cotton, a relatively small decrease or 
suppression of prices could be significant because, f or example, profit margins may ordinarily be 
narrow, product homogeneity means that sales are price sensitive or because of the sheer size of 
the market in terms of the amount of revenue involved in large volumes traded on the markets 
experiencing the pric e suppression.  
(Ibid., para.  7.1330) On appeal  in that dispute , the Appellate  Body found "no difficulty with the Panel's 
approach". ( Appellate  Body Report, US ‒ Upland Cotton , para.  427) 
205 Panel  Report, para.  7.51. 
206 Panel  Report, para.  7.50. 
207 United  States ' appellee's submission, para.  149. WT/DS464/AB/R  
 
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  respect of the Washers anti-dumping investigation , in paragraph 8.1.a.ii of its  Report208, to the 
extent that the Panel found that "a pattern of export prices which differ significantly among 
purchasers, regions or time periods " can be established "on the basis of purely quantitative 
criteria". We also reverse  the Panel's finding in respect of the DPM , in paragraph 8.1.a.v of its 
Report209, to the extent that the Panel found t hat "a pattern of export prices which differ 
significantly among purchasers, regions or time periods " can be established "on the basis of purely 
quantitative criteria".  
5.1.7   Whether an explanation need s to be provided  with respect to  both the W -W and 
the T -T comparison methodologies  
5.67.   We turn now to consider Korea's claims regarding the second condition set forth in the 
second sentence of Article  2.4.2  of the Anti -Dumping Agreement, pursuant to which the 
investigating authority is to provide "an explanation … as to why such differences cannot be taken 
into account appropriately by the use of a weighted average -to-weighted average  or transaction -
to-transaction  comparison."  The issue raised by Korea on appeal is whether this provision requires 
that an explanation be  provided with respect to either the W -W or the T -T comparison 
methodology , or with respect to both of these two methodologies when the application of  the W -T 
comparison methodology  is considered  under the second sentence of Article  2.4.2. We recall that 
the USDOC's explanation in the Washers anti-dumping investigation focused on the W -W 
comparison methodology and did not make reference to the T -T comparison methodology.210 Nor 
does the DPM require the USDOC to provide an explanation with respect to the T -T comparison 
methodology.211  
5.68.   The Panel observed that, under the second sentence of Article  2.4.2, an explanation is 
required of why "a" W -W "or" T -T "comparison" cannot take into account appropriately the 
relevant price differences. The Panel considered that t he use of the indefinite article  "a", combined 
with the disjunctive "or" and the term "comparison" in the singular , suggests that the requisite 
explanation need only be provided in respect of one type of comparison (W -W or T -T), not both.212 
Furthermore, the  Panel relied on the Appellate  Body's finding in  US ‒ Softwood Lumber V 
(Article  21.5 – Canada) that "[a]n investigating authority may choose between the two 
[comparison methodologies in the first sentence of Article  2.4.2] depending on which is most 
suitable for the particular investigation."213 The Pane l considered that this choice under the first 
sentence of Article  2.4.2 would likely be made before  the application of the second sentence is 
considered. The Panel further considered that, if an authority were to opt for the W -W comparison 
methodology to a void an overly burdensome comparison process, it would seem anomalous for 
that authority to have to incur the burden of reverting to the T -T comparison methodology in the 
context of the second sentence of Article  2.4.2 before applying the W -T comparison me thodology. 
The Panel added that requiring an explanation with respect to both the W -W and the T -T 
comparison methodologies would undermine the investigating authority's "initial discretion" to 
choose between the W -W and T -T comparison methodologies.214  
5.69.   Accordingly, the Panel found that Korea failed to establish that the United  States  acted 
inconsistently with the second sentence of Article  2.4.2 in the Washers anti-dumping investigation 
because the USDOC failed to explain why the relevant price differences c ould not be taken into 
                                                
208 See also Panel Report, para. 7.52.  
209 See also Panel Report, para. 7.119.a .  
210 Panel  Report, para. 7.56. The explana tion provided by the USDOC was based on two factors: the 
W-W comparison methodology concealed the identified price differences ; and there was a meaningful 
difference between the margin of dumping calculated using the W -W comparison methodology and the marg in 
of dumping calculated using the W -T comparison methodology. (See Panel  Report, paras.  7.54-7.56 (referring 
to Washers  preliminary AD  determination (Panel Exhibit KOR -32), p. 46395; Washers  preliminary AD 
calculation for LGE memorandum (Panel Exhibit KOR -45), pp. 3 -4; Washers  preliminary AD calculation for 
Samsung memorandum (Panel  Exhibit KOR -46), p. 3; Washers  AD I&D memorandum (Panel Exhibit KOR -18), 
p. 20; Washers  final AD calculation for Samsung mem orandum (Panel Exhibit KOR -41 (BCI)), p. 2; and 
Wash ers final AD calculation for LGE memora ndum (Panel Exhibit KOR -42 (BCI)), p. 2) ) 
211 Panel  Report, fn 224 to para.  7.118.b. As explained above, under the DPM, the USDOC applies the 
meaningful difference test to identify whether the W -W comparison methodology  can take into account 
appropriately the observed price differences.  
212 Panel  Report, para.  7.79. 
213 Panel  Report, para.  7.80 (quoting Appellate  Body Report, US – Softwood Lumber V 
(Article  21.5 ‒ Canada) , para.  93). 
214 Panel  Report, para.  7.80.  WT/DS464/AB/R  
 
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  account appropriately by the T -T comparison methodology.215 The Panel also found that Korea 
failed to establish that the DPM is inconsistent with this provision because it does not consider 
whether the relevant price differences can be  taken into account appropriately by the T -T 
comparison methodology.216 
5.70.   Korea advances a series of arguments that take issue with these findings. Korea submits 
that the word "a" in the phrase "the use of a weighted average -to-weighted average  or 
transaction -to-transaction  comparison" in the second sentence of Article  2.4.2 reflect s the fact that 
the investigating authority will be using "a" single comparison methodology (rather than both at 
the same time ) and that the word "or" reflects this choice between th e W-W and T -T comparison 
methodologies.217 In addition, Korea disagrees with the Panel that providing an explanation with 
respect to both methodologies would be burdensome. According to Korea, given that the USDOC 
uses the T -T comparison methodology in "unus ual situations", it could easily explain why this 
methodology would not work in a particular situation.218 Korea adds that the Panel created an 
"artificial distinction that the author ity 'would likely' have chosen a  preferred method under the 
first sentence before turning  to the second sentence", whereas the authority may consider all 
three options at once.219  
5.71.   For its part, the United  States  is of the view that the Panel's interpretation follows a proper 
application of the customary rules of interpretation of public international law, is logical, and 
accords with prior Appellate  Body guidance concerning Article  2.4.2.220 In particular, the 
United  States  argues that if, as the Appellate  Body has found, an authority is free to choose 
between the W -W and T -T compari son methodologies in the first sentence of Article  2.4.2 and 
those methodologies yield systematically similar results, there would be no purpose in requiring 
that an explanation be provided with respect to both methodologies.221 Furthermore, according to 
the United  States , Article  2.4.2 describes a logical progression, in which the investigating authority 
first selects whether to use the W -W or T -T comparison methodology, and thereafter examines 
whether the W -T comparison methodology can be applied.222 Finally,  the United  States  submits 
that, under Korea's proposed interpretation, the investigating authority would effectively be 
required to explain its initial choice between the W -W and T -T comparison methodologies, 
something that is not required under the first  sentence of Article  2.4.2.223  
5.72.   We recall that the second sentence of Article  2.4.2 requires that "an explanation [be] 
provided as to why such differences cannot be taken into account appropriately by the use of a 
weighted average -to-weighted average  or transaction -to-transaction  comparison." Depending on 
the context in which it is used, the conjunction "or" can be exclusive or inclusive.224 We note the 
United  States ' argument that the first sentence of Article  2.4.2 provides an option between the 
W-W and T -T comparison methodologies using the conjunction "or" and that the word "or" thus 
has the same meaning in the context of the explanation to be provided under the second sentence 
of Article  2.4.2.225 However, t he mere fact that the conjunction "or" is used in th e first and second 
sentence s of Article  2.4.2 does not imply that it has the same meaning in both sentences.226 We 
also observe that , if the second sentence of Article  2.4.2 were to  include the conjunction "and" 
instead of the conjunction "or", this would su ggest that the authority is required to use the W -W 
and the T -T comparison methodologies in combination.227 Therefore, in the context of the second 
                                                
215 Panel  Report, paras.  7.81 and 8.1.a.iv.  
216 Panel  Report, paras.  7.119.b and 8.1.a.viii.  
217 Korea's other appellant's submission, para.  192. 
218 Korea's other app ellant's submission, para.  195. 
219 Korea's other appellant's submission, para.  198. (fn omitted)  
220 United  States' appellee's submission, paras.  167 and 170.  
221 United  States ' appellee's submission, paras.  171-172 (quoting Appellate  Body Report, US – Softwood 
Lumber V ( Article  21.5 – Canada) , para.  93). 
222 United  States ' appellee's submission, para.  178. 
223 United  States' appellee's submission, para.  181. 
224 Appellate  Body Report, US – Line Pipe , para.  164. 
225 United  States ' appellee's submission, para.  175. 
226 As the panel found in EC – Salmon (Norway) , because of the different functions of the word "or", "its 
meaning i n different provisions of the AD Agreement will very much depend upon the obligations at issue and 
the specific context in which it appears."  (Panel  Report, EC – Salmon (Norway) , para.  7.171 ) 
227 This is acknowledged by the United  States. According to the United States , replacing the conjunction 
"or" with the conjunction "and" would mean that the authority is required to use both the W -W and the T -T 
comparison methodologies "together in the same proceeding". ( United  States ' appellee's submission, 
para. 174) WT/DS464/AB/R  
 
- 42 - 
 
  sentence of Article  2.4.2, using the conjunction "and" instead of the conjunction "or" was not 
viable to indic ate that both methodologies should be addressed in the investigating authority's 
explanation.  
5.73.   Turning to the indefinite article  "a" and the singular form of the word "comparison" in this 
provision, we disagree with the Panel that these suggest  that an expl anation with regard to one of 
the two normally applicable methodologies comports with the second sentence of Article  2.4.2. We 
are particularly mindful of the fact that the equally authentic French version of the second 
sentence of Article  2.4.2 refers to "les méthodes de comparaison ", using a definite 
article  ("les") and "comparison methods " in the plural form.228  
5.74.   Furthermore, t he W-T comparison methodology in the second sentence of Article  2.4.2 is an 
exception to the comparison methodologies that are set out in the first sentence and are normally 
to be used.229 Interpreting the second sentence of Article  2.4.2 as requiring that an explanation be 
provided with respect to both the  W-W and the T -T comparison methodologies  gives a proper 
recognition to the text of that provision and to the distinction between the normally applicable 
methodologies in the first sentence of Article  2.4.2 and the exceptional W -T comparison 
methodology in the second sentence . If the W -T comparison methodology were to apply in an 
instance where  an explanation is provided with respect to  one of the two normally applicable  
comparison methodolog ies, but the other could appropriately take the relevant price differences 
into account, the W -T comparison methodology would no longer be used as an exception. Although 
the W -W and T -T comparison methodologies are likely to yield substantially equivalent results, the 
possibility that, in a particular case, they m ight yield different results and m ight impact differently 
the possible use of the W -T comparison methodology, should not be entirely excluded.  
5.75.   Finally , we disagree with the Panel's reasoning that the investigating authority's "initial 
discretion" between the W -W and T -T comparison methodologies under the first sentence of 
Article  2.4.2 would  be undermined by requiring that an explanation be provided with respect to 
both these methodologies. We recall that the W -W and the T -T comparison methodologies 
"fulfil the same function" and that there is no "hierarchy between the two".230 As such, an 
investigating authority may choose between these two methodologies "depending on which is most 
suitable for the particular investigation".231 However, we consider that the investigating authority's 
option between the W -W and T -T comparison methodologies under th e first sentence of 
Article  2.4.2 is unrelated to the question of whether these two methodologies are not appropriate 
to unmask "targeted dumping" such that the investigating authority contemplat es the application 
of the W -T comparison methodology. Requiri ng that an explanation be provided in respect of both 
the W -W and T -T comparison methodologies, when  the application of the  W-T comparison 
methodology  is considered under the second sentence of Article  2.4.2, does not mean that the 
investigating authority is deprived of its discretion should it decide to apply the first sentence of 
Article  2.4.2 instead of turning to the W -T comparison methodology in the second sentence.232  
5.76.   For these reasons, we consider that an investigating authority has to explain why  both the 
W-W and the T -T comparison  methodologies can not take into account appropriately the differences 
                                                
228 Article  33(1) of the Vienna Convention recognizes that treaties authenticated in several languages 
are equally authoritative in each of these languages , as is the case with the Anti -Dumping Agreement . 
Moreover, pursuant to Article  33(4) of the Vienna Conv ention, "when a comparison of the authentic texts 
discloses a difference of meaning …, the meaning which best reconciles the texts … shall be adopted." For the 
sake of completeness, the Spanish version of the second sentence of Article  2.4.2 refers  to "una comparación " 
in the singular, using the indefinite article  "una".  
229 Appellate  Body Report,  US – Zeroing (Japan) , para.  131. See also Appellate  Body Report, 
US ‒ Softwood Lumber V ( Article  21.5 – Canada) , paras.  86 and 97.  
230 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para.  93. 
231 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para.  93. 
232 The Panel also conside red that it would seem anomalous for the investigating authority to have to 
incur the burden of reverting to the T -T comparison methodology in the context of the second sentence of 
Article  2.4.2 before applying the W -T comparison methodology, if that autho rity opts for the W -W comparison 
methodology under the first sentence of Article  2.4.2. In  this context, the Panel noted that "[t] he choice 
between the two normal methodologies provided for in the first sentence would likely be made before  the 
application of the second sentence is considered ". (Panel  Report, para. 7.80  (emphasis original) ) However, we 
are not convinced that the burden that lies on investigating authorities and the sequence in which the various 
comparison methodologies are likely to be consi dered are relevant to the interpretation of the second sentence 
of Article  2.4.2 pursuant to the Vienna Convention . In addition , an investigating authority may consider the 
application of the three methodologies in no particular order or at the same time, rather than in sequence.  WT/DS464/AB/R  
 
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  in export prices that form the pattern. In circumstances where the W -W and T -T comparison 
methodologies would yield substantially  equivalent results and w here an explanation has been 
provided with respect to one of these two  methodolog ies, the explanation to be included with 
respect to  the other  may not need to be as elaborate .  
5.77.   Based on the foregoing, we reverse  the Panel's finding, in paragraph 8.1.a.iv o f 
its Report233, that "Korea failed to establish that the United  States  acted inconsistently with the 
second sentence of Article  2.4.2 [of the Anti -Dumping Agreement]  in the Washers  anti-dumping  
investigation  by failing to explain why the relevant price diff erences could not be taken into 
account appropriately by the T -T comparison methodology ". For the same reasons , we reverse  the 
Panel's finding, in paragraph  8.1.a.viii of its  Report234, that "Korea failed to establish that the DPM 
is inconsistent with the se cond sentence of Article  2.4.2 [of the Anti -Dumping Agreement] when, 
having concluded that the W -W comparison methodology cannot appropriately take into account 
the observed pattern of significantly different prices , it does not also consider whether the r elevant 
price differences could be taken into account appropriately by the T -T comparison methodology ".  
5.1.8   "Systemic disregarding"  
5.1.8.1   Whether the Panel erred in finding that Korea failed to establish that the 
United  States ' use of "systemic disregarding" under the DPM is inconsistent "as such" 
with the second sentence of Article  2.4.2 of the Anti -Dumping Agreement  
5.78.   We turn now to consider Korea's appeal of the Panel's findings under the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement in respect of "systemic disregarding". We begin by 
recalling that the USDOC applies a "mixed" comparison methodology as part of the DPM. In cases 
where the value of the transactions that pass the Cohen's d test is between 33% and 66% of the 
value of the total export tra nsactions, the W -T comparison methodology with zeroing is applied to 
these transactions. For the remaining transactions, i.e. the transactions that do not pass the 
Cohen's d test, the W -W comparison methodology is used.  
5.79.   In the first administrative review of the Washers  anti-dumping order, the USDOC applied 
this "mixed" comparison methodology with respect to LG E.235 For the transactions to which the 
W-W comparison methodology was applied, the USDOC took the sum total of the "evidence of 
dumping" (i.e. the pos itive comparison results) and "offset" this amount with export sales that 
were greater than normal value (i.e. the negative comparison results) up to the amount of the 
sum total of the "evidence of dumping". For the transactions to which the W -T comparison  
methodology was applied, the USDOC took the sum total of the "evidence of dumping" and made 
no "offsets" for export sales above normal value (i.e. the USDOC used zeroing).236 The USDOC 
then combined the sum total of the comparison results of the W -W and W -T comparison 
methodologies to determine the margin of dumping for the exporter (LG E) and the product under 
investigation  (LRWs)  "as a whole ". In aggregating the comparison results, the USDOC did not 
permit the overall negative comparison result arising from  the W -W comparison methodology to 
"offset" the "evidence of dumping" from the application of the W-T comparison methodology.237 As 
we have observed above, it is in this context that the issue of "systemic disregarding" arises under 
the DPM.  
5.80.   The Panel noted  that the W -T comparison methodology provided in the second sentence of 
Article  2.4.2 is an exceptional and alternative comparison methodology.238 The Panel considered 
                                                
233 See also Panel Report, para. 7.81.  
234 See also Panel Report, para. 7.119.b .  
235 USDOC [A -580-868] Large Residential Washers From the Republic of Korea: Preliminary Results of 
the Antidumping Duty Administrative Review; 2012 -2014, United  States Federal Register , Vol. 80, No. 45 
(9 March  2015), pp. 12456 -12458  / USDOC [A -580-868] Memorandum regarding Large Residential Washers 
from Korea:  Decision Memorandum for the Preliminary Results of the Antidumping Duty Administrative Review; 
2012-2014 (3 March 2015)  / USDOC [A -580-868] Memorandum to File regarding 2012 -2014 Administrative 
Review of Large Residential Washers from Korea – Preliminary Results Margin Calculation for LGE (2 March 
2015) ( BCI-redacted version ) (Panel Exhibit KOR -96); USDOC [A -580-868] Issues and Decision Memorandum 
for the Final Results of the Antidumping Duty Administrative Review of Large Residential Washers from the 
Republic of Korea (8  September  2015) (Panel Exhibit KOR -141).  
236 United  States ' appellee's submission, para. 58.  
237 United  States ' appellee's submission, para. 59.  
238 Panel Report, para. 7.155.  WT/DS464/AB/R  
 
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  that, when an investigating authority determines the margin of dumping for an individual e xporter 
or foreign producer under the second sentence of Article  2.4.2, the investigating authority is 
entitled to have particular regard and, therefore, limit its analysis to the pricing behaviour of that 
exporter or foreign producer in respect of the tra nsactions that form the "pattern ". Furthermore, 
the Panel noted that , irrespective of the methodology applied, Articles 2.1 and 6.10 of the 
Anti-Dumping Agreement require that margins of dumping be established for the product under 
investigation " as a whol e" for the individual exporter or foreign producer concerned. Thus, the 
Panel reasoned that, while the numerator may be established from the "evidence of dumping" in 
"pattern transactions", the denominator of the equation has to reflect the value of total exports of 
that individual exporter or foreign producer.239 
5.81.   The Panel further considered that , consistent with the focus of the second sentence of 
Article  2.4.2 being on the pricing behaviour in respect of "pattern transactions", one could take the 
view that  the combined application of the W -T and W -W (or T -T) comparison methodologies is not 
envisaged by that provision. However, since Korea had not raised a claim to that effect, the Panel 
did not see the need to rule on this matter.240  
5.82.   Recalling that the secon d sentence of Article  2.4.2 is designed to enable an investigating 
authority to focus on "pattern transactions" in order to "unmask targeted dumping", the Panel 
found that , where an investigating authority applies the W -T comparison methodology to "pattern  
transactions" and the W -W (or T -T) comparison methodology to "non -pattern transactions", the 
effect of this approach would be to "zoom in" on the "targeted dumping" identified in respect of 
"pattern transactions" , but subsequently to "zoom out" and "re -mask" the identified "targeted 
dumping", if the investigating authority had to take into account the result of the W -W (or T -T) 
comparison methodology applied to "non -pattern transactions" when making its overall 
determination of dumping.241 The Panel further found that such an approach would lead to 
"mathematical equivalence" ─ the same result that would arise from a straightforward application 
of the W -W comparison methodology to all transactions.242 "Systemic disregarding", according to 
the Panel, "enables an inv estigating authority to reveal any dumping in respect of pattern 
transactions that would otherwise be masked by the negative dumping in respect of non -pattern 
transactions" .243 
5.83.   The Panel rejected Korea's argument that the use of different weighted average no rmal 
values could avoid mathematical equivalence. The Panel found that Korea had not identified any 
textual basis in Article  2.4.2 for concluding that the "normal value established on a weighted 
average basis" referred to in the second sentence should diff er, within the same anti -dumping 
proceeding, from the "weighted average normal value" referred to in the first sentence.244 Neither 
was the Panel persuaded by Korea's argument that mathematical equivalence could be avoided if 
the investigating authority unde rtook a "granular analysis" of the transactions involved in the W -T 
comparison methodology and a detailed approach to price adjustments, i.e. by rethinking the 
adjustments that might be necessary to ensure price comparability.245 The Panel took the view 
that the second sentence does not envisage that any price adjustments be made in addition to 
those made pursuant to an investigating authority's general obligation to make a "fair comparison" 
under Article  2.4 of the Anti -Dumping Agreement. According to the Pa nel, "there is nothing in the 
                                                
239 Panel Report, para. 7.160.  
240 Panel Report, para. 7.161.  
241 Panel Report, para. 7.162.  
242 Panel Report, para. 7.164. However, the Panel clarified that it was specifical ly addressing the 
mathematical equivalence that would arise when the results of applying the W -W comparison methodology to 
all transactions are compared to a combined application of the W -T comparison methodology to "pattern 
transactions" and the W -W compa rison methodology to "non -pattern transactions". The Panel added that there 
would be no mathematical equivalence if the application of the W -T comparison methodology to "pattern 
transactions" were combined with the application of the T -T comparison methodo logy to "non -pattern 
transactions". ( Ibid., fn 303 to para. 7.164)  
243 Panel Report, para. 7.163.  
244 Panel Report, para. 7.165. However, the Panel, in clarifying that it was not "suggest[ing] that only a 
single weighted average normal value should be applied" , acknowledged that "model -specific weighted average 
normal values may be established, and that different weighted average normal values may be established for 
different periods within the period of investigation." ( Ibid., fn 306 to para. 7.165)  
245 Panel Re port, para. 7.166.  (fn omitted)  WT/DS464/AB/R  
 
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  text of the second sentence to suggest that an authority could or should make the type of 
adjustments proposed by Korea in order to allow the authority to unmask targeted dumping."246  
5.84.   In light of the above, the Panel rejected K orea's claim that the USDOC's use of "systemic 
disregarding" when combining the overall comparison results arising from the W -W and W -T 
comparison methodologies under the DPM is inconsistent "as such" with the second sentence of 
Article  2.4.2.247  
5.85.   On appeal,  Korea asserts that the Panel's approach essentially create s two margins of 
dumping, one for the subset to which the W -T comparison methodology is applied, and another for 
the subset using the W -W comparison methodology. Korea argues that , although the Pan el 
correctly found that zeroing could not apply to either of these two subsets, it allowed the 
"functional equivalent of zeroing" by combining the two subsets and by refusing to allow any 
"offsets" from the subset based on the normal comparison methodologi es when determining the 
overall dumping and margin of dumping.248 Korea argues that , apart from allowing an exception to 
the normal comparison methodologies, neither the second sentence of Article  2.4.2 nor the whole 
of Article  2.4.2 creates any exception to  the basic concepts of "dumping" and "margin of 
dumping".249 Further, Korea asserts that the Panel's reasoning has no basis in the text or context 
of Article  2.4.2250 and that "'[d]umping' only exists as a final conclusion based on all export 
transactions over all for the exporter and for the product as a whole."251  
5.86.   Moreover, Korea argues that , unlike what the Panel found, "[t]he purpose of the second 
sentence of Article  2.4.2 … is simply to allow the authority to undertake the more careful 
examination of individ ual export prices that the W -T comparison method[ology] makes 
possible."252 According to Korea, the purpose of the second sentence of Article  2.4.2 is not to 
"'unmask ' so-called 'targeted dumping '", but rather "to 'unmask ' individual export prices".253 Korea 
further states that the second sentence of Article  2.4.2 is not about end results , but rather about 
the comparison methodology necessary to ensure that individual export prices are more carefully 
examined by the investigating authority in specified circumst ances.254  
5.87.   For its part , the United  States  contends that , where an investigating authority applies the 
W-T comparison methodology to fewer than all export prices, the Anti -Dumping Agreement does 
not obligate the investigating authority to "offset" or "re -mask" the "evidence of dumping" that has 
been "unmasked" through the use of the W -T comparison.255 Therefore, the United  States  submits 
that Korea's argument in essence leads to an interpretation of the second sentence of Article  2.4.2 
as requiring the mandator y "re -masking" of below -normal value export sales, which is not 
supported by the text of the Anti -Dumping Agreement, and which would render the second 
sentence of Article  2.4.2 inutile .256 The United  States  contends that the Panel was right to interpret 
the second sentence 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.257  
5.88.   As regards the function of the second sentence of Article  2.4.2, the United  States  submits 
that Korea's position that the purpose of the second sentence is for the investigating authority to 
undertake a "more careful examination" means nothing if the provision requires "re -masking" of 
"targeted dumping".258 Moreover, the United  States  submits that , under Korea's approach , there 
would never be any reason for an investigating authority to resort to the alternative, W -T 
comparison methodology when the T -T comparison methodology already provides the 
investigating authority with the possibility of undertakin g a "granular examination of individual 
                                                
246 Panel Report, para. 7.166.  
247 Panel Report, paras. 7.167 and 8.1.a.x.  
248 Korea's other appellant's  submission, para. 57.  
249 Korea's other appellant's submission, para. 78.  
250 Korea's other appellant's submission, para. 54.  
251 Korea's other appellant's submission, para. 56.  
252 Korea's other appellant's submission, para. 118.  
253 Korea's other appellant's submission, para. 119.  
254 Korea's appellee's submission, para. 88.  
255 United  States ' appellee's submission, para. 64.  
256 United  State s' appellee's submission, para. 56.  
257 United  States ' appellee's submission, para. 71.  
258 United  States ' appellee's submission, para. 80.  WT/DS464/AB/R  
 
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  export prices".259 Thus, the United  States  submits that the only logical conclusion is that the 
second sentence of Article  2.4.2 is intended "to enable investigating authorities to 'unmask' 
so-called 'targeted dumping' ".260 
5.89.   For the purposes of our analysis and in order to address the discrete claims raised by Korea 
on appeal, we first recall below the relevant jurisprudence that dumping and margins of dumping 
are established for the product under investigation "as a whole " and for each exporter or foreign 
producer. Next, in light of this jurisprudence, we turn to consider the establishment of dumping 
and margins of dumping under the W -T comparison methodology set forth in the second sentence 
of Article  2.4.2  of the Anti -Dumping Agreement . 
5.1.8.1.1   Dumping and margins of dumping under the first sentence of Article  2.4.2 of 
the Anti -Dumping Agreement  
5.90.   The Appellate  Body has consistently held that the concepts of "dumping" and "margins of 
dumping" are the same throughout the Anti -Dumpin g Agreement. Recalling that Article  2.1 of the 
Anti-Dumping Agreement defines "dumping" "[f]or the purpose of this Agreement"261, the 
Appellate  Body found that the definitional content of "dumping" must be capable of application 
throughout the Anti -Dumping A greement in a coherent fashion.262 In US – Zeroing (Japan) , the 
Appellate  Body clarified that the terms "dumping"  and "dumped imports" have the same meaning 
in all provisions of the Anti -Dumping Agreement and for all types of anti -dumping proceedings, 
includ ing original investigations, new shipper reviews, and periodic reviews and  that, in each case, 
"they relate to a product  because it is the product that is introduced into the commerce of another 
country at less than its normal value in that country."263 The Appellate  Body further indicated that 
"[t]he definitions in Article  2.1 [of the Anti -Dumping Agreement] and Article  VI:1 [of the 
GATT  1994]  are no doubt central to the interpretation of other provisions of the Anti-Dumping 
Agreement , such as the obligation s relating to, inter alia , the calculation of margins of dumping, 
volume of dumped imports, and levy of anti -dumping duties to counteract injurious dumping".264 
5.91.   Moreover, the Appellate  Body has considered the Anti -Dumping Agreement to prescribe that 
"dumping  determinations be made in respect of each export er or foreign producer 
examined  … because dumping is the result of the pricing behaviour of individual exporters or 
foreign producers ."265 According to the Appellate  Body, in order to assess properly the prici ng 
behaviour of an individual exporter or foreign producer, and to determine whether the exporter or 
foreign producer is in fact dumping the product under investigation and, if so, by which margin, it 
is obviously necessary to take into account the prices of all the export transactions of that exporter 
or foreign producer.266 
5.92.   Article  2.4.2 of the Anti -Dumping Agreement explains how investigating authorities must 
proceed to ascertain margins of dumping. More particularly, Article  2.4.2 contains two sentences, 
which set out the methodologies that investigating authorities may use to establish margins of 
dumping.  
5.93.   The first sentence of Article  2.4.2 states that the existence of margins of dumping "shall 
normally be established on the basis of a comparison of a we ighted average normal value with a 
weighted average of prices of all comparable export transactions or by a comparison of normal 
value and export prices on a transaction -to-transaction basis." The Appellate  Body has considered 
that, in establishing dumping  and margins of dumping for each exporter or producer and for the 
                                                
259 United  States ' appellee's submission, para. 81  (quoting Korea's other appellant's submission, 
para. 197).  
260 United  States' appellee's submission, para. 82 (quoting Panel Report, para. 7.26).  
261 Article  2.1 of the Anti -Dumping Agreement provides:  
For the purpose of this Agreement, a product is to be considered as being dumped, i.e. 
introduced into the commerce of another c ountry at less than its normal value, if the export price 
of the product exported from one country to another is less than the comparable price, in the 
ordinary course of trade, for the like product when destined for consumption in the exporting 
country.  
262 Appellate  Body Report, US – Continued Zeroing , para. 280.  
263 Appellate  Body Report, US – Zeroing (Japan) , para. 109. (emphasis original)  
264 Appellate  Body Report, US – Zeroing (Japan) , para. 140. (fn omitted)  
265 Appellate  Body Report, US – Zeroing (Japan) , para. 111.  
266 Appellate  Body Report, US – Zeroing (Japan) , para. 111.  WT/DS464/AB/R  
 
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  product under investigation "as a whole" under the first sentence of Article  2.4.2, an investigating 
authority is under an obligation to take into account the entire "universe of export tran sactions", 
that is, all the export transactions of the "like" product by a given exporter or foreign producer.  
5.94.   In the context of the W -W comparison methodology, the Appellate  Body has found that 
there is nothing in Article  2.4.2 or in any other provision o f the Anti -Dumping Agreement that 
provides for the establishment of the existence of margins of dumping for types or models of the 
product under investigation , and all references to the establishment of the existence of margins of 
dumping are references to  the product under  investigation.267 In particular, the Appellate  Body has 
found that "[w]hatever the method used to calculate the margins of dumping , … these margins 
must be, and can only be, established for the product  under investigation as a whole."268  
5.95.   In establishing margins of dumping for the product under investigation under the W -W 
comparison methodology, the Appellate  Body has also recognized that, while the investigating 
authority may undertake multiple averaging or multiple comparisons at the sub -group level, it is 
"required to compare the weighted average normal value with the weighted average of prices of all 
comparable export transactions".269 Thus, it was in the context of "model zeroing" that the 
Appellate  Body in EC – Bed Linen  found that , "[b]y 'zeroing' the 'negative dumping margins', the 
European Communities … did not take fully into account the entirety of the prices of some  export 
transactions, namely, those export transactions involving models of cotton -type bed linen where 
'negative dumping  margins' were found."270 Accordingly, the Appellate  Body found that the 
existence of margins of dumping was not established on the basis of a comparison of the weighted 
average normal value with the weighted average of prices of all comparable export transa ctions.271 
The Appellate  Body has explained that , for the purposes of the W -W comparison methodology, 
"the word 'all' in 'all comparable export transactions' makes it clear that Members … 'may only 
compare those export transactions which are comparable, but [they]  must compare all such 
transactions'."272 
5.96.   Moreover, the Appellate  Body has emphasized that , although an investigating authority may 
undertake multiple averaging to establish margins of dumping for a product under investigation, 
"the results of the mult iple comparisons at the sub -group level are … not 'margins of dumping' 
within the meaning of Article  2.4.2 ."273 In the absence of a textual basis in Article  2.4.2 that would 
justify taking into account the results of only some multiple comparisons in the pro cess of 
calculating margins of dumping, while disregarding other results274, the Appellate  Body has stated 
that "it is only on the basis of aggregating all … 'intermediate values' that an investigating 
authority can establish margins of dumping for the produ ct under investigation as a whole ."275 
5.97.   In respect of the T -T comparison methodology, the Appellate  Body has not consider ed the 
absence of the phrase "all comparable export transactions" as suggesting that an investigating 
authority is free to disregard certa in export transactions from the applicable "universe of export 
transactions" in order to establish margins of dumping. According to the Appellate  Body, the 
phrase "all comparable export transactions" is not pertinent for this methodology because "under 
the T-T comparison methodology, all export transactions are taken into account on an individual 
basis and matched with the most appropriate transactions in the domestic market."276 The 
Appellate  Body has, thus, found that the text of Article  2.4.2 implie s that the calculation of 
margins of dumping using the T -T comparison methodology is a multi -step exercise , whereby  the 
results of transaction -specific comparisons are inputs that are aggregated in order to establish the 
margin of dumping for the product under in vestigation and for each exporter or foreign 
producer.277  
                                                
267 Appellate  Body Report, EC – Bed Linen , para. 53.  
268 Appellate  Body Report, EC – Bed Linen , para. 53. (emphasis original)  
269 Appellate  Body Report, EC – Bed Linen , para. 55. (emphasis origi nal) 
270 Appellate  Body Report, EC – Bed Linen , para. 55. (emphasis original)  
271 Appellate  Body Report, EC – Bed Linen , para. 55.  
272 Appellate  Body Report, US – Softwood Lumber V , para. 86. (emphasis original; fn omitted)  
273 Appellate  Body Report, US – Softwood  Lumber V , para. 97.  
274 Appellate  Body Report, US – Softwood Lumber V , para. 98.  
275 Appellate  Body Report, US – Softwood Lumber V , para. 97. (emphasis original)  
276 Appellate  Body Report, US – Zeroing (Japan) , para. 124.  
277 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 87.  WT/DS464/AB/R  
 
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  5.98.   In light of the above, an investigating authority is not allowed to disregard, in establishing 
dumping and margins of dumping under the W -W or T -T comparison methodology  provided in the 
first sentenc e of Article  2.4.2 of the Anti -Dumping Agreement , any transactions that make up the 
"universe of export transactions" to be examined thereunder, that is, all the export transactions of 
the "like" product by a given exporter or foreign producer.  
5.1.8.1.2   The W -T com parison methodology in the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement  
5.99.   We now turn to address how the W -T comparison methodology works under the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement. In so doing, we focus on the  "universe 
of export transactions" that needs to be compared with normal value in order to establish dumping 
and margins of dumping, also keeping in mind the function of this provision. We then consider 
whether the second sentence of Article  2.4.2 allows c ombining the W -T comparison methodology 
with one of the two symmetrical comparison methodologies provided in the first sentence. Finally, 
we address the participants' arguments in respect of "mathematical equivalence".  
5.100.   The second sentence of Article  2.4.2  of the Anti -Dumping Agreement provides:  
A normal value established on a weighted average basis may be compared to prices of 
individual export transactions if the authorities find a pattern of export prices which 
differ significantly among different purcha sers, regions or time periods, and if an 
explanation is provided as to why such differences cannot be taken into account 
appropriately by the use of a weighted average -to-weighted average or 
transaction -to-transaction comparison.  
5.101.   The comparison envisaged u nder the second sentence of Article  2.4.2 is, thus, an 
asymmetrical comparison between a normal value "established on a weighted average basis" and 
prices of "individual export transactions". We have concluded above278 that these "individual 
export transacti ons" refer to the "universe of export transactions" that justify the use of the W -T 
comparison methodology, namely, the "pattern transactions" . We have reached this conclusion 
based on the text of the second sentence of Article  2.4.2, read in light of its function of allowing an 
investigating authority to identify and address "targeted dumping", and in keeping with the overall 
structure of Article  2.4.2 of the Anti -Dumping Agreement .279 
5.1.8.1.2.1   Dumping and margins of dumping under the second sentence of Article  2.4.2  
of the Anti -Dumping Agreement  
5.102.   The Panel considered that , "at first glance, there appears to be some tension between  
(a) the Appellate  Body's understanding of the limited scope of application of the W -T comparison 
methodology and (b) its reference to the 'fundamental disciplines ' that 'dumping ' and 'margins of 
dumping ' pertain to an exporter or foreign producer, and to the product [under investigation ] (as a 
whole ), taking into account all export transactions of the exporter or foreign producer 
concerned. "280 In this regard, both the Panel281 and Korea282 referred  to the findings of the 
Appellate  Body in US – Zeroing (Japan) , where the Appellate  Body concluded:  
                                                
278 See para. 5.52 of this Report.  
279 Moreover, our conclusion also accords with the previous statements of the Appellate  Body that the 
W-T comparison methodology applies to a more limited "universe of export transa ctions" . In US – Softwood 
Lumber V ( Article  21.5 – Canada) , the Appellate  Body stated that "the universe of export transactions to which 
the weighted average -to-transaction  comparison methodology applies would be different from the universe of 
transactions  examined under the weighted average -to-weighted average  methodology".  (Appellate  Body 
Report, US – Softwood Lumber V ( Article  21.5 – Canada) , fn 166 to para. 99 ) The Appellate  Body has further 
explained that the universe of export transactions under the s econd sentence "would necessarily be more 
limited than the 'universe of export transactions ' to which the symmetrical comparison methodologies in the 
first sentence of Article  2.4.2 would apply" and that , "[i]n order to unmask targeted dumping, an investig ating 
authority may limit the application of the W -T comparison methodology to the prices of export transactions 
falling within the relevant pattern."  (Appellate  Body Report, US – Zeroing (Japan) , para. 135 ) These findings  
suggest that the domain of  the se cond sentence of Article  2.4.2 is this more limited "universe of export 
transactions" , i.e. the "pattern transactions" . 
280 Panel Report, para. 7.160.  (fn omitted)  
281 Panel Report, para. 7.158.  WT/DS464/AB/R  
 
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  Thus, it is evident from the design and architecture of the Anti-Dumping Agreement  
that: (a)  the concept s of "dumping" and "margins of dumping" pertain to a "product" 
and to an exporter or foreign producer; (b) "dumping" and "dumping margins" must 
be determined in respect of each known exporter or foreign producer examined; 
(c) anti-dumping duties can be lev ied only if dumped imports cause or threaten to 
cause material injury to the domestic industry p roducing like products; and 
(d) anti-dumping duties can be levied only in an amount not exceeding the margin of 
dumping established for each exporter or foreign  producer. These concepts are 
interlinked. They do not vary with the methodologies followed for a determination 
made under the various provisions of the Anti-Dumping Agreement .283 
5.103.   We observe that these statements in respect of the first sentence of Article  2.4.2, that 
dumping and margins of dumping have to be established for the product under investigation "as a 
whole" , should be read in the context of the Appellate  Body's finding  against "model zeroing". 
"Model zeroing" occurs in situations where the investi gating authority divides the product under 
investigation into product types or models for the purposes of calculating a weighted average 
normal value and a weighted average export price and sets to zero the negative comparison 
results arising in respect of  certain product types or models. In EC – Bed Linen , in addressing 
"model zeroing", the Appellate  Body stated that , "with respect to Article  2.4.2, the 
European  Communities had to establish 'the existence of margins of dumping' for the 
product  ‒ cotton -type bed linen – and not for the various types or models of that product " since , 
"[h]aving  defined the product  as it did, the European Communities was bound to treat that product  
consistently thereafter in accordance with that definition. "284 The Appellate  Body found that , "[b]y 
'zeroing' the 'negative dumping margins', the European Communities, therefore, did not take fully 
into account the entirety of the prices of some  export transactions, namely, those export 
transactions involving models of cotton -type bed linen where 'negative dumping margins' were 
found. "285 The Appellate  Body concluded that , in so doing , "the European Communities did not 
establish 'the existence of margins of dumping' for cotton -type bed linen on the basis of a 
comparison of the weighted av erage normal value with the weighted average of prices of all 
comparable export transactions – that is, for all transactions involving all models or types of the 
product under investigation ."286 
5.104.   The establishment of dumping and margins of dumping, for the pr oduct under 
investigation "as a whole" and by taking into account all export transactions of a given exporter or 
foreign producer, is to be carried out in respect of the applicable "universe of export transactions" 
for each of the comparison methodologies set forth in Article  2.4.2. It is in the context of 
establishing margins of dumping for the product under investigation "as a whole" under the 
normally applicable W -W and T -T comparison methodologies that the Appellate  Body has 
consistently found that , under the first sentence of Article  2.4.2, an investigating authority is 
under an obligation to consider the entire "universe of export transactions" for a given exporter or 
foreign producer. However, and as the Appellate  Body has previously stated, under the  W-T 
comparison methodology set forth in the second sentence of Article  2.4.2, the applicable "universe 
of export transactions" is more limited than those under the W -W and T -T comparison 
methodologies.287  
5.105.   Once the applicable "universe of export transaction s" has been determined under the 
second sentence of Article  2.4.2 for the purposes of the application of the W -T comparison 
methodology, dumping and margins of dumping pertaining to an exporter or foreign producer and 
to the product under investigation are  limited to this identified "universe of export transactions", 
i.e. the "pattern transactions".  
5.106.   In light of the above, not only is the application of the W -T comparison methodology 
limited to "pattern transactions", but also the second sentence of Article  2.4.2 provides for 
establishing margins of dumping on the basis of the limited "universe of export transactions" to 
                                                                                                                                                  
282 Korea's other appellant's submission, fn 14 to para. 64.  
283 Appellate Body Report, US – Zeroing (Japan) , para. 114. (fn omitted)  
284 Appellate  Body Report, EC – Bed Linen , para. 53. (emphasis original)  
285 Appellate  Body Report, EC – Bed Linen , para. 55. (emphasis original)  
286 Appellate  Body Report, EC – Bed Linen , para. 55 . (emphasis original)  
287 Appellate  Body Reports, US – Zeroing (Japan) , para. 135; US – Softwood Lumber V 
(Article  21.5 ‒ Canada ), fn 166 to para. 99.  WT/DS464/AB/R  
 
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  which the W -T comparison methodology applies  – i.e. the "pattern transactions".288 While the first 
sentence of Article  2.4.2 provides for symm etrical comparison methodologies that "shall normally" 
be used to establish the existence of margins of dumping by considering the universe of all export 
transactions, the second sentence  provides for an asymmetrical comparison methodology, which, 
as we ha ve explained above and as the Appellate  Body has stated , "is clearly an exception to the 
comparison methodologies which normally are to be used".289 
5.1.8.1.2.2   The function of the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement  
5.107.   The function of the second  sentence of Article  2.4.2 lends further support to a reading of 
this provision as providing for the establishment of margins of dumping on the basis of the limited 
"universe of export transactions" that form the pattern. We have considered above that the 
function of the second sentence of Article  2.4.2 is to allow an investigating authority to identify 
and address "targeted dumping". This is supported by the Appellate  Body's statement in EC – Bed 
Linen  that "[t]his provision allows Members, in structuring their anti -dumping investigations, to 
address three kinds of 'targeted' dumping, namely dumping that is targeted to certain purchasers, 
targeted to certain regions, or targeted to certain time periods."290  
5.108.   The second sentence of Article  2.4.2 does not expre ssly refer to "targeted dumping", but 
allows the use of the W -T comparison methodology "if the authorities find a pattern of export 
prices which differ significantly among different purchasers, regions or time periods". The notion of 
"targeted dumping" is implied in the reference in the second sentence of Article  2.4.2 to "a pattern 
of export prices which differ significantly among different purchasers, regions or time periods". 
Therefore, it is only certain export transactions, those that constitute the pa ttern by differing 
significantly from the remaining export transactions of an exporter or foreign producer , that are 
aimed at , or "targeted" to , a purchaser, region, or time period within the meaning of the second 
sentence of Article  2.4.2.  
5.109.   In keeping wit h its function of allowing an investigating authority to effectively address 
"targeted dumping", the second sentence of Article  2.4.2 permits an investigating authority to 
establish margins of dumping by means of the application of the W-T comparison metho dology 
exclusively to "pattern transactions". The second sentence of Article  2.4.2 says nothing about 
including transactions that are not part of the pattern in the comparison process that is required to 
establish margins of dumping. If an investigating au thority were required to conduct comparisons 
with export transactions outside of the pattern  – i.e. for "non -pattern transactions"  – by applying 
one of the two normally applicable comparison methodologies, and then aggregate the result of 
this comparison w ith the result of the W -T comparison methodology applied to "pattern 
transactions", the "targeted dumping" identified from the consideration of "pattern transactions" 
would be "re -masked" by the comparison results arising from "non -pattern transactions", i n 
situations where the latter produces an overall negative comparison result.  
5.110.   Korea disagrees that the function of the second sentence of Article  2.4.2 is to "unmask 
targeted dumping" and asserts  that its purpose "is simply to allow the authority to under take the 
more careful examination of individual export prices that the W -T comparison method[ology] 
makes possible" .291 We see no textual basis in the second sentence of Article  2.4.2 to conclude, as 
Korea asserts, that the function of the second sentence is  to allow an investigating authority to 
undertake a more careful and "granular" examination of individual export prices. In any event, we 
                                                
288 Under the W -T comparison methodology provided in the second sentence of Article  2.4.2, the margin 
of dumping, which is expressed as a percentage of the total value of export transactions of an exporter or 
foreign producer, would be established by considering "pattern transactions" , while excluding "non -pattern 
transactions" in the numerator of the equation . The denominator , however,  will reflect all export transactions 
of an exporter or foreign producer.  (See Panel Report, p ara. 7.160)  
289 Appellate  Body Report, US – Zeroing (Japan) , para. 131. In US – Softwood Lumber V ( Article  21.5 – 
Canada) , the Appellate  Body further explained that "[t]he second sentence of Article  2.4.2 sets out a third 
methodology ( weighted average -to-transaction ), which involves an asymmetrical comparison and may be used 
only in exceptional circumstances" , whereas  the first sentence of Article  2.4.2 "sets out two comparison 
methodologies ( weighted average -to-weighted average  and transaction -to-transaction ) involving symmetrical 
comparisons of normal value and export prices" . (Appellate  Body Report, US – Softwood Lumber V 
(Article  21.5 – Canada) , para. 86)  
290 Appellate  Body Report, EC – Bed Linen , para. 62.  
291 Korea's other appellant's submission, para. 118.  WT/DS464/AB/R  
 
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  do not see how Korea's proposed interpretation is different from what is already contemplated 
under the T -T comparison  methodology. In this respect, we are not convinced that , under Korea's 
approach , the W -T comparison methodology would fulfil a function that is not already fulfilled by 
the T-T comparison methodology.  
5.111.   Therefore, we do not think that the Panel erred in id entifying the function of the second 
sentence of Article  2.4.2 as addressing or "unmasking targeted dumping" and in considering that 
this function informs an interpretation of the second sentence of Article  2.4.2 as providing for the 
establishment of margi ns of dumping under the W -T comparison methodology by comparing 
normal value only with "pattern transactions" , while excluding from consideration "non -pattern 
transactions".292 Even if one were to accept Korea's proposed interpretation that the function of 
the second sentence is to allow an investigating authority to conduct a more careful or "granular" 
examination, we do not consider that such an interpretation would be  inconsistent with the reading 
of the second sentence of Article  2.4.2 as establishing mar gins of dumping based on "pattern 
transactions" only. Indeed, under the second sentence of Article  2.4.2  of the Anti -Dumping 
Agreement , an investigating authority will carefully consider all export transactions and separate 
those individual export transact ions that form the relevant "pattern" within the meaning of that 
provision from those that are not part of the identified "pattern". Margins of dumping are then 
established by comparing the weighted average normal value only with transactions that are 
included in the identified "pattern".  
5.1.8.1.2.3   The composition of numerator and denominator in establishing margins of 
dumping  
5.112.   Korea further contends that , in determining the margin of dumping, the numerator should 
comprise "the net amount of the comparisons of all ex port prices to normal value"293 and the 
denominator should comprise the "total sales by the exporter".294 According to Korea, "a proper 
'margin of dumping' consists of: ( i) a numerator that considers all export sales, without pretending 
that some of the export  sales were at lower prices (by denying offsets); and ( ii) a denominator 
that also consists of all export sales."295  
5.113.   For its part, the United  States  does not disagree with Korea that all of an exporter's export 
transactions should be "taken into account" in  the determination of dumping.296 The United  States  
adds that the USDOC's approach does, in fact, take account of all export transactions. However, 
the United  States  submits that Korea's approach means that the " evidence of 'targeted dumping' 
must, as a matt er of an obligation under the AD Agreement, be re -masked by aggregating all 
results for all transactions in the numerator of the calculation of the margin of dumping ."297 
5.114.   We have explained above that the second sentence of Article  2.4.2 permits the 
establish ment of the existence of margins of dumping for the product under investigation and for 
each exporter or foreign producer by applying the W -T comparison methodology to "pattern 
transactions" only. Thus, in calculating the margin of dumping as a percentage of the exports of a 
given exporter or foreign producer, the numerator comprises only "pattern transactions", while 
"non-pattern transactions" are excluded . The denominator, however, must reflect the universe of 
all export transactions of a given exporter o r foreign producer and comprises the value of all the 
sales of a given exporter or foreign producer of the "like" product.  
5.115.   We observe  that Article  6.10 of the Anti -Dumping Agreement states that " [t]he authorities 
shall, as a rule, determine an individual m argin of dumping for each known exporter or producer 
concerned of the product under investigation. " The margin of dumping determined under the 
second sentence of Article  2.4.2 in order to address "targeted dumping" is for each exporter  or 
producer , and not  just for the "targeted sales " by that exporter  or producer . On the one hand, the 
existence of a "pattern " within the meaning of the second sentence of Article  2.4.2, and thus 
"targeting" by exporters  or producers , justifies taking the dumping amount from the W -T 
                                                
292 Panel Report, para. 7.162.  
293 Korea's other appellant's submission, para. 109.  
294 Korea's other appellant's submission, para. 109.  
295 Korea's other appellant's submission, para. 114.  
296 United  States ' appellee's submission, para. 75 (quoting Korea's othe r appellant's submission, 
para. 98). 
297 United  States ' appellee's submission, para. 75.  WT/DS464/AB/R  
 
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  comparison that is applied to the "pattern transactions", while excluding from consideration 
"non-pattern transactions". On the other hand, this dumping amount that is based on the 
"targeted" sales must be divided by all the export sales of a given  exporter or pro ducer in order to 
determine the margin of dumping and the corresponding anti -dumping duty for that exporter  or 
producer . Therefore, the Panel did not err in finding that "while the net amount of dumping may 
be established from considering t he evidence of dumping in pattern transactions … the calculation 
of the margin as a percentage of the exports of that exporter or foreign producer must reflect the 
price of its total exports."298 
5.116.   Under the W -T comparison methodology provided in the second se ntence of Article  2.4.2, 
the margin of dumping, which is expressed as a percentage of the total value of export 
transactions of an exporter or foreign producer, would be established by considering "pattern 
transactions" , while excluding "non -pattern transa ctions" in the numerator of the equation. The 
denominator, however, will reflect all export transactions of an exporter or foreign producer. In so 
doing, while "targeted dumping" is identified and addressed by including in the numerator the 
"pattern transa ctions", the denominator, in reflecting the value of all export transactions of the 
"like" product by a given exporter or foreign producer, ensures that , for the universe of "pattern 
transactions" to which the W -T comparison methodology is applied, the mar gin of dumping is 
calculated for that exporter or foreign producer and for the product under investigation "as a 
whole".  This exercise is, therefore , consistent with the concepts  of "dumping" and "margins of 
dumping" as pertaining to an exporter or foreign  producer and to the product under investigation 
"as a whole" and with the function of the second sentence of Article 2.4.2 of the Anti -Dumping 
Agreement as identifying and addressing "targeted dumping".  
5.117.   We, therefore, conclude that , in calculating the mar gin of dumping as a percentage of the 
exports of a given exporter or foreign producer, the numerator comprises only the "pattern 
transactions", while excluding "non -pattern transactions". The denominator, however, is composed 
of all export transactions of a given exporter or foreign producer and comprises the value of all the 
sales of a given exporter or producer of the "like" product.  
5.1.8.1.2.4   Combining comparison methodologies  
5.118.   Korea contends that the Panel erred in permitting the USDOC to establish margins of 
dump ing under the DPM by disregarding an overall negative comparison result arising from the 
application of the W -W comparison methodology to "non -pattern transactions" when combining it 
with the overall comparison result of the W -T comparison methodology.299 We note that Korea's 
argument on "systemic disregarding" of "non -pattern transactions" is premised on the assumption 
that the second sentence of Article  2.4.2 of the Anti -Dumping Agreement  permits  the combining of 
comparison methodologies in establishing mar gins of dumping.  
5.119.   The Panel acknowledged that "[o]ne might take the view … that the combined application 
of the W -T and W -W (or T -T) comparison methodologies is not envisaged by that provision".300 
However, since Korea had not raised a claim to this effect, the Panel did not see the need to rule 
on that matter and proceeded with the assumption that a combined application of comparison 
methodologies was not excluded by the second sentence of Article  2.4.2.  
                                                
298 Panel Report, para. 7.160.  
299 See e.g. Korea's other appellant's submission, para. 72.  
300 Panel Report, para. 7.161. Moreover, the Panel noted that the issue of "systemic di sregarding " arises 
when considering how the results of the combined methodologies should be aggregated. The Panel further 
added:  
In cases where the non -pattern transactions are dumped, aggregating the result of the W -W 
comparison methodology (without zeroi ng) for non -pattern transactions with the result of the 
W-T comparison methodology (without zeroing) for pattern transactions would lead to the same 
margin of dumping as if the W -W methodology were applied (without zeroing) to all transactions. 
The potenti al for the margin of dumping to change only arises when the non -pattern transactions 
(assessed using the W -W methodology, without zeroing) are not dumped, and when that amount 
of negative dumping is "systematically disregarded" upon aggregation with the re sults of the W -T 
methodology. If "systemic disregarding" is applied, the results of combining the application of the 
W-T methodology to pattern transactions and the W -W methodology to non -pattern transactions 
would be equivalent to a simple application of the W -T methodology (without zeroing) to pattern 
transactions.  
(Ibid., fn 299 to para. 7.161)  WT/DS464/AB/R  
 
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  5.120.   We have found above that the second sentence of Article 2.4.2 , read in the context of the 
structure of Article  2.4.2 and consistently with its function of allowing an investigating authority to 
identify and address "targeted dumping", permits the establishment of margins of dumping by the 
application of the W-T comparison methodology to "pattern transactions" , while excluding from 
consideration "non -pattern transactions", when the conditions stated in that provision have been 
satisfied. Thus, having concluded that the applicable "universe of export transactio ns" for the 
purposes of establishing dumping and margins of dumping under the second sentence of 
Article  2.4.2 is limited to "pattern transactions", we do not consider that this provision allows the 
combining of comparison methodologies, that is, the combi ned application of the W -T comparison 
methodology applied to "pattern transactions" with either the W -W or the T -T comparison 
methodology applied to "non -pattern transactions".  
5.121.   Although the second sentence mentions the W -W and T -T comparison methodologies,  this 
reference appears in the context of the explanation requirement of why neither of these 
symmetrical comparison methodologies is capable of taking into account the "export prices which 
differ significantly". The second sentence does not provide for th e application of the W -W and T -T 
comparison methodologies anew. Instead, these two symmetrical comparison methodologies are 
referenced as they are provided for in, and subject to the requirements of, the first sentence of 
Article  2.4.2.  Consistent with the  jurisprudence of the Appellate  Body, we have explained above 
that, under the first sentence of Article  2.4.2, the W-W and T -T comparison methodologies apply 
to the universe of all export transactions , and not to "pattern" or "non -pattern" transactions wit hin 
the meaning of the second sentence. Thus, we do not see anything in the text of the second 
sentence , read in the context of the entire Article  2.4.2, that supports a reading of the W -W and 
T-T comparison methodologies as applying to a reduced "universe  of export transactions" (i.e. the 
"non-pattern transactions") pursuant to the reference to these two comparison methodologies in 
the second sentence of Article  2.4.2. The text of the second sentence, thus, does not provide for 
the application of either  of the two symmetrical comparison methodolog ies to "non -pattern 
transactions".  
5.122.   Moreover, conduct ing a separate comparison under one of the two symmetrical 
comparison methodologies for "non -pattern transactions" not only lacks support in the text of the 
second sentence of Article  2.4.2, but also undermines the function of the second sentence. In 
order to enable an investigating authority to identify and address "targeted dumping", the second 
sentence of Article  2.4.2 defines a more limited "universe of export  transactions", which , as we 
have considered above, coincides with the "pattern transactions" that are targeted to purchasers, 
regions, or time periods. It is on the basis of these "pattern transactions" that margins of dumping 
are then established under t he second sentence. To aggregate the results of a symmetrical 
comparison methodology applied to "non -pattern transactions" may either "mask" the "targeted 
dumping" (if the overall comparison result is negative) or increase the margin of dumping (if the 
overall comparison result is positive) in a manner that is not provided for in the second sentence 
of Article  2.4.2 and that would compromise its function of effectively addressing "targeted 
dumping".  
5.123.   The second sentence of Article  2.4.2 does not envisage "s ystemic disregarding" as 
described by the Panel.301 This provision does not provide for a mechanism whereby an 
investigating authority would conduct separate comparisons for "pattern transactions" under the 
W-T comparison methodology and for "non -pattern tra nsactions" under the W -W or T -T 
comparison methodology, and exclude from its consideration the result of the latter if it yields an 
overall negative comparison result , or aggregate it with the W -T comparison results for the 
"pattern transactions" if it yie lds an overall positive comparison result. This is further supported by 
our conclusion above that, if the conditions set forth in the second sentence of Article  2.4.2 are 
met, an investigating authority is allowed to establish margins of dumping by applyin g the W -T 
comparison methodology only to "pattern transactions", while excluding from consideration 
"non-pattern transactions".  
5.124.   Hence, we conclude that Article  2.4.2 does not permit the combining of comparison 
methodologies for the purposes of establishing  dumping and margins of dumping in accordance 
with the second sentence. Instead, the second sentence allows an investigating authority to 
establish the existence of margins of dumping by comparing a "normal value established on a 
weighted average basis" wi th "pattern transactions" only. We have explained above  that this is 
                                                
301 Panel Report, para. 7.161.  WT/DS464/AB/R  
 
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  consistent with the function of the second sentence of Article  2.4.2 and that , for the purposes of 
this provision, dumping and margins of dumping pertaining to an exporter or a foreign pr oducer, 
and to the product under investigation "as a whole" , refer to a more limited "universe of export 
transactions", that is, the "pattern transactions". In light of the above, we consider the question of 
whether the second sentence of Article  2.4.2 of the Anti -Dumping Agreement allows "systemic 
disregarding" as defined by the Panel as moot.  
5.1.8.1.2.5   Mathematical equivalence  
5.125.   In light of the above considerations, comparing normal value with "pattern transactions" 
only will not normally yield results that are mathe matically or substantially equivalent to the 
results obtained from the application of the W -W comparison methodology to all export 
transactions.302 Mathematical equivalence or substantial equivalence arises only if one were to 
take the view that the second s entence of Article  2.4.2 of the Anti -Dumping Agreement envisages 
the combining of comparison methodologies, thereby requiring an investigating authority to 
aggregate the results of the W -T comparison methodology applied to "pattern transactions" with 
the r esults of the W -W comparison methodology applied to "non -pattern transactions".303 In 
contrast, we have rejected an interpretation of the second sentence of Article  2.4.2 as permitting  
the combination of comparison methodologies.  
5.126.   Korea submits that the Pane l found mathematical equivalence despite the fact that the 
argument of mathematical equivalence has been considered and rejected by the Appellate  Body 
previously on numerous occasions when considering the second sentence of Article  2.4.2 as 
context for the  permissibility of zeroing under the first sentence.304 Korea further asserts that 
there is no necessary mathematical equivalence if the investigating authority changes its 
assumptions about normal value or makes adjustments for export prices for the subset of sales 
subjected to the W-T comparison methodology.305 
5.127.   The United  States  contends that, if zeroing is prohibited under the W -T comparison 
methodology, and if the result of the W -W comparison is allowed to "offset" the result of the W -T 
comparison, then the  overall result arising from this combination and that derived from the 
application of the W -W comparison methodology to all export prices will be mathematically 
                                                
302 The participants agreed at the oral hearing that , if the applicable "universe of export transactions" to 
which the W -T comparison m ethodology appl ies under the second sentence of Article  2.4.2 is limited to 
"pattern transactions" , whereas "non-pattern transactions" are not taken into account in establishing the 
margins of dumping, there will be no mathematical equivalence between the result so obtained and the result 
derived from the application of the W -W comparison methodology to all export transactions.  
303 In previous disputes, the Appellate  Body has found that " the 'mathematical equivalence' argument 
works only under a specific set of assumptions" (Appellate  Body Report, US – Stainless  Steel (Mexico) , 
para. 126) and it is based on certain assumptions that "may not hold good in all situations".  (Appellate  Body 
Report,  US – Zeroing (Japan) , para. 133 ) Moreover, the limited relevance of  the mathematical equivalence 
argument is reflected in Korea's acknowledgment that, even if an investigating authority were to change its 
assumption about the normal value under the W -T comparison methodology, the margins of dumping obtained 
from the combi ned application of the W -W comparison methodology to "non -pattern transactions" and the W-T 
comparison methodology to "pattern transactions" "may not be different in every case".  (Korea's other 
appellant's submission, para. 143 ) 
304 Korea's other appellant's  submission, para. 137 (referring to Appellate  Body Reports, US – Continued 
Zeroing , paras. 297 -298; US – Stainless Steel (Mexico), paras. 126 -127; US – Zeroing (Japan) , 
paras.  132-134; and US – Softwood Lumber V ( Article  21.5 – Canada) , paras. 97 -99). 
305 Korea's other appellant's submission, para. 143. See also Korea's appellee's submission, para. 77. 
Moreover, we recall that , in US – Stainless Steel (Mexico) , the Appellate  Body, in stating that the mathematical 
equivalence argument works only under a speci fic set of assumptions, took into consideration the possibility of 
determining different weighted average normal values for different time periods. In particular, the 
Appellate  Body stated : 
We note that the United  States  did not contest before the Panel Me xico's assertion that, if the 
determination of weighted average normal values was based on different time periods , dumping 
margin calculations under these two methodologies would yield different mathematical results.  
(Appellate  Body Report, US – Stainless Steel (Mexico) , para. 126. (emphasis original; fn omitted))  WT/DS464/AB/R  
 
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  equivalent306, which would render the second sentence of Article  2.4.2 inutile , contrary to the 
principle of effectiveness.307 
5.128.   The function of the second sentence of Article  2.4.2 should not be addressed by focusing 
on mathematical equivalence.308 As the Appellate  Body indicated in US – Softwood Lumber V 
(Article  21.5 – Canada) , that the comparison metho dologies in the first sentence of Article  2.4.2 
and the W -T comparison methodology will not normally produce equivalent results is a 
consequence of the fact that the third comparison methodology addresses "targeted dumping" by 
focusing on "pattern transact ions".309 Korea's argument that mathematical equivalence can be 
avoided by changing normal value or considering adjustments to export prices, thereby leading to 
different results in some cases, still does not explain how this exercise accords with the functi on of 
the second sentence of Article  2.4.2 of the Anti -Dumping Agreement of allowing an investigating 
authority to identify and address "targeted dumping". We fail to see how "different results" will in 
themselves address "targeted dumping", unless such re sults are calculated based on "pattern 
transactions".  
5.1.8.1.2.6    Conclusions  
5.129.   We have concluded above that the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement allows an investigating authority to establish margins of dumping by applying the W -T 
compari son methodology only to "pattern transactions" to the exclusion of "non -pattern 
transactions". We have also concluded that the second sentence of Article  2.4.2 does not permit 
the combining of comparison methodologies. Accordingly, we have found that this provision does 
not envisage "systemic disregarding", as described by the Panel. We do not consider that the 
second sentence of Article  2.4.2 envisages a mechanism whereby an investigating authority would 
conduct separate comparisons for "pattern transactio ns" under the W -T comparison methodology 
and for "non -pattern transactions" under the W -W or T -T comparison methodology, and exclude 
from its consideration  the result of the latter if it yields an overall negative comparison result or 
aggregate it with the  W-T comparison result for the "pattern transactions" if it yields an overall 
positive comparison result. Thus, in circumstances where the requirements of the second sentence 
of Article  2.4.2 have been fulfilled, an investigating authority is allowed to es tablish margins of 
dumping by comparing a weighted average normal value with export prices of "pattern 
transactions" and dividing the resulting amount by all the export sales of a given exporter or 
foreign producer.  
5.130.   In light of the above, we, therefore, moot the Panel's finding , in paragraph  8.1.a.x of its 
Report310, that "Korea failed to establish that the United  States ' use of 'systemic disregarding ' 
under the DPM is 'as such' inconsistent with the second sentence of Article  2.4.2 ". Instead, as 
explained ab ove, when the requirements of the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement  are fulfilled, an investigating authority may establish margins of 
dumping by comparing a weighted average normal value with export prices of "pattern 
transact ions", while excluding "non -pattern transactions" from the numerator , and dividing the 
resulting amount by all the export sales of a given exporter or foreign producer.  
5.1.8.2   Whether the Panel erred in finding that Korea failed to establish that the 
United  State s' use of "systemic disregarding" under the DPM is inconsistent "as such" 
with Article  2.4 of the Anti -Dumping Agreement  
5.131.   We turn now to consider Korea's appeal of the Panel's findings under Article  2.4 of the 
Anti-Dumping Agreement in respect of "systemic disregarding".  
                                                
306 United  States ' appellee's submission, para. 100 (referring to United  States ' appellant's submission, 
paras. 161 -164).  
307 United  States ' appellee's submission, para. 97  (referring to United  States ' appellant's submission, 
paras. 115 -167). 
308 We recall that the Appellate  Body has explained that "[o]ne part of a provision setting forth a 
methodology is not rendered inutile  simply because, in a specific set of circumstances, its application would 
produ ce results that are equivalent to those obtained from the application of a comparison methodology set out 
in another part of that provision."  (Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , 
para. 99 ) 
309 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , fn 166 to para. 99.  
310 See also Panel Report, para. 7.167.  WT/DS464/AB/R  
 
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  5.132.   The Panel recalled its findings  that Article  2.4.2 of the Anti -Dumping Agreement enables 
investigating authorities to establish the existence of margins of dumping by focusing on "pattern 
transactions" and that , if an investigating authority  choose s to combine the application of the W -W 
comparison methodology to "non -pattern transactions" with the application of the W -T comparison 
methodology to "pattern transactions", "systemic disregarding" enables it to avoid concealing any 
dumping identif ied in respect of "pattern transactions" with the negative dumping in respect of 
"non-pattern transactions". Accordingly, the Panel rejected Korea's argument that "'systemic 
disregarding ' is unfair and contrary to Article  2.4 because it inflates the margin  of dumping and 
ignores the negative amount of dumping in respect of non -pattern transactions".311 
5.133.   On appeal, Korea argues that the Panel's finding that there is nothing "unfair" about 
"systemic disregarding" and that, therefore, it is not inconsistent with Article  2.4, repeats the 
same legal errors that Korea has identified with regard to the Panel's interpretation of the second 
sentence of Article  2.4.2 that dumping can exist within a subset of the export sales.312 Korea, 
therefore, requests the reversal of t he Panel's findings under Article  2.4.313 In addition, Korea 
requests us to complete the legal analysis based on undisputed facts and on the Panel's findings in 
respect of the second sentence of Article  2.4.2, and to find that "systemic disregarding" is 
inconsistent with the "fair comparison" requirement in Article  2.4.314 Korea asserts that , for a 
measure to meet the "fair comparison" requirement in Article  2.4, it must be impartial, 
even-handed, and unbiased, something that "systemic disregarding" is not.315 
5.134.   The United  States  submits that the Panel was correct in finding that the USDOC's approach 
to the application of a "mixed" comparison methodology is not inconsistent "as such" with 
Article  2.4 and that Korea's arguments lack merit.316 The United  States  contends  that, since it is 
"fair" to take steps to "unmask targeted dumping" by faithfully applying a comparison 
methodology consistent with the second sentence of Article  2.4.2, when the conditions for its use 
are met, doing so is entirely consistent with the obl igation of an investigating authority under 
Article  2.4 to be impartial, even -handed, and unbiased.317 Thus, the United  States  submits that , 
since the Panel's findings need not be reversed, there is no need for us to complete the legal 
analysis.318  
5.135.   We begin b y recalling that the first sentence of Article  2.4 provides that "[a] fair 
comparison shall be made between the export price and the normal value ." We note that the 
introductory clause of Article  2.4.2 expressly makes this provision "[s]ubject to the provi sions 
governing fair comparison" in Article  2.4. In this regard, the Appellate  Body has explained that 
"Article  2.4 sets forth a general obligation to make a 'fair comparison' between export price and 
normal value", adding that "[t]his is a general obligat ion that ... informs all of Article  2, but 
applies, in particular, to Article  2.4.2 which is specifically made 'subject to the provisions 
governing fair comparison in [ Article  2.4]'."319 Therefore, the application of all three comparison 
methodologies (i.e. W-W, T-T, and W -T) set out in Article  2.4.2 is expressly made subject to the 
"fair comparison" requirement in Article  2.4. 
5.136.   In explaining the "fair comparison" requirement in Article  2.4, the Appellate  Body in 
US ‒ Softwood Lumber V ( Article  21.5 – Canada)  stated that "[t]he term 'fair' is generally 
understood to connote impartiality, even -handedness, or lack of bias."320 The Appellate  Body found 
in that dispute that "the use of zeroing under the transaction -to-transaction  comparison 
methodology is difficult t o reconcile with the notions of impartiality, even -handedness, and lack of 
bias reflected in the 'fair comparison' requirement in Article  2.4"321, since " the use of zeroing under 
the transaction -to-transaction  comparison methodology artificially inflates the  magnitude of 
                                                
311 Panel Report, para. 7.169.  
312 Korea's other appellant's submission, paras. 147 -148. 
313 Korea's other appellant's submission, para. 149.  
314 Korea's other appel lant's submission, para. 150.  
315 Korea's other appellant's submission, paras. 151 -152. 
316 United  States ' appellee's submission, para s. 106-107. 
317 United  States ' appellee's submission, para. 111.  
318 United  States ' appellee's submission, para. 109.  
319 Appellate  Body Report, EC – Bed Linen , para. 59.  
320 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 138. (fn omitted)  
321 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 138.  WT/DS464/AB/R  
 
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  dumping, resulting in higher margins of dumping and making a positive determination of dumping 
more likely."322 
5.137.   We have concluded above that the second sentence of Article  2.4.2 allows an investigating 
authority to establish dumping and margins  of dumping for an exporter or foreign producer and for 
the product under investigation "as a whole" by applying the W -T comparison methodology to 
"pattern transactions" only. We have also explained that , in doing so, while the denominator of the 
equation will comprise all export transactions of an exporter or foreign producer,  the numerator is 
composed of "pattern transactions" only, while excluding "non -pattern transactions". Moreover, we 
have concluded that the second sentence of Article  2.4.2 does not p ermit the combining of 
comparison methodologies.  
5.138.   The obligation to undertake a "fair comparison" between normal value and export price s 
arises in respect of the applicable "universe of export transactions" to which each of the three 
comparison methodologi es set out in Article  2.4.2 appl ies. The exceptional nature of the W -T 
comparison methodology, consistent with the function of the second sentence of Article  2.4.2 as 
allowing an investigating authority to identify and address "targeted dumping" by conside ring a 
"universe of export transactions … which … would be different from the universe of transactions 
examined"323 under the normally applicable comparison methodologies , also confirms that the "fair 
comparison" requirement in Article  2.4 applies only in re spect of "pattern transactions". 
Accordingly, we consider that Articles 2.4 and 2.4.2 not only inform each other, but must be read 
together harmoniously. The exclusion of "non -pattern transactions" from the establishment of 
dumping and margins of dumping u nder the second sentence of Article  2.4.2, thus, comports with 
the notions of impartiality, even -handedness, and lack of bias reflected in the "fair comparison" 
requirement in Article  2.4. Once an investigating authority has identified the "pattern transac tions" 
within the meaning of the second sentence of Article  2.4.2 for the purposes of the application of 
the W -T comparison methodology in order to address "targeted dumping" to the exclusion of 
"non-pattern transactions", the investigating authority can b e said to have adopted an approach 
that is impartial, even -handed, and unbiased. Such an approach neither distorts the prices of 
certain export transactions (i.e. the "non -pattern transactions"), nor inflate s the magnitude of 
dumping, as Korea asserts324, since there is nothing "to disregard", as the second sentence of 
Article  2.4.2 does not contemplate, in the first place, a comparison outside of the identified 
"pattern".  
5.139.   We recall that the Panel rejected Korea's argument that "systemic disregarding" under the 
DPM is "unfair and contrary to Article  2.4".325 Although the Panel considered that an investigating 
authority could establish the existence of margins of dumping by focusing on "pattern 
transactions" to the exclusion of "non -pattern transactions"326, the u nderlying assumption of the 
Panel was that the combined application of comparison methodologies is not excluded under the 
second sentence of Article  2.4.2.327 We have, however, explained above that , while we agree that 
the second sentence of Article 2.4.2 allows an investigating authority to establish margins of 
dumping based on a comparison between normal value and "pattern transactions" only, we do not 
consider that the second sentence allows for the combined application of the W -T comparison 
methodology to  "pattern transactions" and the W-W (or T -T) comparison methodology to 
"non-pattern transactions".  
5.140.   In light of these considerations, we conclude that the establishment of margins of dumping 
by comparing a weighted average normal value with export prices of  "pattern transactions" , while 
excluding "non -pattern transactions" from the numerator , and dividing the resulting amount by all 
the export sales of a given exporter or foreign producer , is consistent with the "fair comparison" 
requirement in Article  2.4. Having concluded that the second sentence of Article  2.4.2 does not 
permit an investigating authority to combine the W -T comparison methodology with the W -W or 
T-T comparison methodology and , thus, does not provide for "systemic disregarding" as described 
by the Panel, we moot the Panel's finding , in paragraph  8.1.a.xi  of its Report328, that "Korea failed 
                                                
322 Appellate  Body Report, US – Softwo od Lumber V ( Article  21.5 – Canada) , para. 142.  
323 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , fn 166 to para.  99. 
324 Korea's other appellant's submission, para. 152.  
325 Panel Report, para. 7.169.  
326 Panel Report, para. 7.169.  
327 Panel Report, para. 7.161.  
328 See also Panel Report, para. 7.169.  WT/DS464/AB/R  
 
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  to establish that the United  States ' use of 'systemic disregarding ' under the DPM is 'as such ' 
inconsistent with Article  2.4" of the Anti -Dumping Agreement.   
5.1.9   Zeroing under the W -T comparison methodology329 
5.1.9.1   Whether the Panel erred in finding that the United  States ' use of zeroing when 
applying the W -T comparison methodology is inconsistent "as such" and "as applied" in 
the Washers  anti-dumping investigation with  Article  2.4.2 of the Anti -Dumping 
Agreement  
5.141.   The Panel found that , since the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement puts particular emphasis on the exporter's pricing behaviour in respect of "pattern 
transactions", the entirety of t he evidence of dumping in respect of that pattern must be taken 
into account. According to the Panel, the focus of the W -T comparison methodology is on the 
prices of the "individual" export transactions within the pattern, which suggests that each "pattern  
transaction " should be considered in its own right and with equal weight, irrespective of whether 
the export price is above or below normal value. Thus, the Panel found that there is no basis in the 
text of the second sentence of Article  2.4.2 to conclude  that the export prices of certain individual 
transactions (e.g. those below normal value) should be accorded greater significance than the 
export prices of other individual export transactions (e.g. those above normal value). The Panel 
took the view that the phrase "individual export transactions" in the first part of the second 
sentence of Article 2.4.2 suggests that each and every "pattern transaction" should be fully taken 
into account in the assessment of the exporter's pricing behaviour in respect of that pattern.330 
The Panel also found that there is "no consideration of whether transactions within  the pattern are 
priced at significantly different levels relative to one another"331 and, thus, no basis to conclude 
that one (pattern) transaction priced sign ificantly lower than "non -pattern transactions" might 
mask evidence of dumping in respect of another (pattern) transaction priced significantly lower 
than "non -pattern transactions".332 
5.142.   Accordingly, the Panel concluded that the USDOC's use of zeroing when ap plying the W -T 
comparison methodology is inconsistent "as such" with the second sentence of Article  2.4.2.333 For 
the same reasons, the Panel concluded that the USDOC acted inconsistently with the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreemen t by using zeroing when applying the W -T 
comparison methodology in the Washers  anti-dumping investigation.334 
5.1.9.1.1   Zeroing under the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement  
5.143.   The United  States  claims that the Panel erred in finding that the u se of zeroing in 
connection with the application of the W -T comparison methodology is inconsistent with the 
second sentence of Article  2.4.2 of the Anti -Dumping Agreement, when the conditions for the use 
of the methodology have been fulfilled. According to  the United States, an examination of the text 
and context of Article  2.4.2 leads to the conclusion that zeroing is permissible, and indeed 
necessary, when applying the W -T comparison methodology, if that "exceptional" comparison 
methodology is to be given  any meaning.335 
5.144.   Korea responds that the United States'  argument do es not address the Appellate  Body's 
consistent logic that any finding of dumping must reflect all export transactions for each exporter 
and for the product  under investigation  "as a whole "336 and that denying "offsets" improperly 
                                                
329 One Member of the Division expressed a separate opinion on the issue of zeroing under the W -T 
comparison methodology. This separate opinion can be found in sub -section 5.1.10 of this Report.  
330 Panel Report, para. 7.190.  
331 Panel Report, para. 7.191. (emphasis original)  
332 Panel Report, para. 7.191.  
333 Panel Report, paras. 7.192 and 8.1.a.xii.  
334 Panel Report, para s. 7.192  and 8.1.a.xiv . 
335 United  States ' appellant's submission, para. 195.  
336 Korea's a ppellee's submission, para. 41 (referring to Appellate  Body Reports, US – Softwood 
Lumber  V, para. 99; US – Continued Zeroing , para. 283; US – Stainless Steel (Mexico) , paras. 89 -90; and 
US ‒ Zeroing (EC) , para. 128 ). WT/DS464/AB/R  
 
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  disregards the actual prices of some of the export transactions.337 Moreover, Korea contends that 
these principles apply consistently throughout the Anti -Dumping Agreement.338 According to 
Korea, there is nothing in the tex t or context of the second sentence of Article  2.4.2 that suggests 
that dumping or margin of dumping should have any different meaning for the second sentence of 
Article  2.4.2 than for the rest of the Anti -Dumping Agreement.339 
5.145.   We have recalled above the mai n Appellate  Body findings  regarding the use of zeroing 
under the W -W and T -T comparison methodologies provided in the first sentence of Article  2.4.2. 
In finding that zeroing is not permitted under either of the two symmetrical comparison 
methodologies set  forth in the first sentence, the Appellate  Body considered that the concepts of 
"dumping" and "margins of dumping" are the same throughout the Anti -Dumping Agreement and 
that margins of dumping are established for the product under investigation "as a who le", and for 
each exporter or foreign producer, by including in the comparison all the export transactions of the 
"like" product by that exporter or foreign producer.340 
5.146.   Thus, according to this jurisprudence, in establishing dumping and margins of dumping 
under the W -W and T -T comparison methodologies  provided in the first sentence of Article  2.4.2, 
an investigating authority needs to take into account all transactions that make up the applicable 
"universe of export transactions" to be examined thereunder.  
5.147.   We have also explained above that , under the second sentence of Article  2.4.2, dumping 
and margins of dumping pertain ing to all export transactions of an exporter or foreign producer 
and to the product under investigation "as a whole" are limited to the app licable "universe of 
export transactions" for that provision, namely, the more limited universe of "pattern 
transactions".341 Thus, dumping and margins of dumping under the W -T comparison methodology 
applied pursuant to the second sentence of Article  2.4.2 a re to be determined by conducting a 
comparison between normal value and "pattern transactions", without having to take into account 
"non-pattern transactions".342 
5.148.   We now turn to address the United  States ' claim on appeal that the Panel erred in finding 
that the use of zeroing in connection with the application of the W -T comparison methodology is 
inconsistent with the second sentence of Article  2.4.2. In doing so, the question that we need to 
address is whether , in the application of the W -T comparison method ology, an investigating 
authority is required to aggregate the results of all the transaction -specific comparisons that arise 
from the consideration of "pattern transactions" , or whether it can exclude those transactions 
within the pattern that yield negat ive intermediate comparison results, i.e. whether zeroing is 
permitted under the second sentence of Article  2.4.2.  
5.149.   We recall that the Appellate  Body has consistently held that the concepts of "dumping" and 
"margins of dumping" are the same throughout the A nti-Dumping Agreement. The Appellate  Body 
has considered that " Article  2.1 of the Anti-Dumping Agreement and Article  VI:1 of the GATT  1994 
are definitional provisions" that "set out a definition of 'dumping' for the purposes of the 
Anti-Dumping Agreement  and the GATT  1994".343 The Appellate  Body has also found that "the 
terms 'dumping' and 'margins of dumping' in Article  VI of the GATT  1994 and the Anti-Dumping 
Agreement apply to the product under investigation as a whole and do not apply to sub -group 
levels ."344  
                                                
337 Korea's appellee's submission, para. 41 (referring to Appellate  Body Reports,  US – Zeroing (Japan) , 
para. 146; and US – Softwood Lumber V  (Article  21.5 – Canada) , para. 139 ). 
338 Korea's appellee's submission, para. 41 (referri ng to Appellate  Body Reports, US – Stainless Steel 
(Mexico) , paras. 85 and  94; and US – Zeroing (Japan) , para. 109 ). 
339 Korea's appellee's submission, para. 42.  
340 See paras. 5.90 -5.98 of this Report.  
341 See paras. 5.105 -5.106 of this Report.  
342 Under the W -T comparison methodology provided in the second sentence of Article  2.4.2, the margin 
of dumping, which is expressed as a percentage of the total value of export transactions of an exporter or 
foreign producer, would be established by considering "pattern tr ansactions" , while excluding "non -pattern 
transactions" in the numerator of the equation . The denominator , however,  will reflect all the export 
transactions  of an exporter or foreign producer.  (See Panel Report, para. 7.160)  
343 Appellate  Body Report, US – Zeroing (Japan) , para. 140.  
344 Appellate  Body Report, US – Softwood Lumber V , para. 102.  WT/DS464/AB/R  
 
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  5.150.   In US – Zeroing (EC) , the Appellate  Body found that the use of zeroing by the USDOC 
under the W -T comparison methodology in administrative reviews was inconsistent with Article  9.3 
of the Anti -Dumping Agreement and Article  VI:2 of the GATT  1994.345 These  findings by the 
Appellate  Body do not, however, directly address the question of whether the second sentence of 
Article  2.4.2 permits the use of zeroing in the application of the W -T comparison methodology. 
Under the second sentence, the application of th e W-T comparison methodology serves to allow an 
investigating authority to identify and address "targeted dumping", which would otherwise be 
"masked" by the application of the two symmetrical comparison methodologies under the first 
sentence of Article  2.4.2. In contrast, in the administrative reviews at issue in US – Zeroing (EC) , 
the United  States  applied the W -T comparison methodology to assess the liability for anti -dumping 
duties on specific entries of the subject product for each individual importer – i.e. on the basis of 
the transactions of each individual importer from the exporter, for whom a margin of dumping 
under Article  2 already existed. Thus, the two provisions fulfil different functions under the 
Anti-Dumping Agreement.  
5.151.   In interpreting the se cond sentence of Article  2.4.2, we have come to the conclusion that 
the term "individual export transactions" refer s to the pattern of export prices identified by the 
investigating authority which differ significantly from other export prices. These export  prices differ 
significantly because they are significantly lower than other export prices. This conclusion is 
supported by the text and context of Article  2.4.2, taking into account the function of the second 
sentence of allowing an investigating authorit y to identify and address "targeted dumping".346 We 
find no such textual and contextual support to conclude that the term "individual export 
transactions" in the second sentence of Article  2.4.2 refers only to those transactions that form 
part of the identif ied "pattern" but are priced below normal value. Rather, we agree with the Panel 
that the term "individual" suggests that "each pattern transaction should be considered in its own 
right, and with equal weight, irrespective of whether the export price is ab ove or below normal 
value."347  
5.152.   Under the second sentence of Article  2.4.2, the relevant "pattern" is composed of a set of 
significantly lower prices to purchasers, regions, or time periods , and margins of dumping are 
established by conducting a comparison b etween normal value and those export transactions that 
are included in the pattern. The second sentence of Article  2.4.2 is "exceptional" because it allows 
investigating authorities to establish margins of dumping , while excluding from the dumping 
comparis on those transactions that do not form part of the pattern. This exception is spelled out in 
the text of the second sentence of Article  2.4.2 that uses the terms "individual export transactions" 
and "a pattern of export prices which differ significantly". We have concluded above that these 
terms refer to the same set of export prices. Moreover, the reference in the second sentence to 
the term "individual export transactions" is in the context of highlighting the asymmetrical nature 
of the W -T comparison met hodology, whereby a normal value established on a weighted average 
basis is compared to  prices of  individual export transactions as opposed to a comparison between 
normal value and export price on a W-W or T-T basis. Thus, we do not see any basis to read t he 
term "individual export transactions" as permitting the exclusion of those individual "pattern 
transactions " that are priced above normal value from the establishment of margins of dumping in 
the application of the asymmetrical W -T comparison methodolog y.  
5.153.   Zeroing within the pattern necessarily amounts to a definition of "pattern " that is limited to 
those export transactions to one or more particular purchasers, regions, or time  periods that are 
below normal value, as it is only those sales that would be  taken into account to establish margin s 
of dumping when using zeroing. However, as we have found above, the second sentence of 
Article  2.4.2 does not define the pattern in reference to normal value . Rather , the reference to 
purchasers, regions, or time pe riods indicates that , while export prices within a pattern must differ 
significantly from other export prices, the pattern is composed  of all the export prices to one or 
more particular purchasers, regions, or time periods , not just those that are below no rmal value. 
To allow zeroing within an identified "pattern" would disconnect the notion of pattern that is 
identified under the second sentence (as all export sales to one or more particular purchasers, 
regions, or time  periods) from the pattern to which t he W-T comparison methodology is applied for 
establishing margins of dumping in order to address "targeted dumping" (by considering only 
those sales to one or more purchasers, regions, or time  periods that are below normal value). 
                                                
345 Appellate  Body Report, US – Zeroing (EC) , para. 133.  
346 See paras. 5.29 and 5.52 of this Report.  
347 Panel Report, para. 7.190.  WT/DS464/AB/R  
 
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  However, the text of the second sentence of Article  2.4.2 does not support an interpretation 
according to which the pattern to which the W -T comparison methodology applies for establishing 
margins of dumping is different from the pattern that triggers the application of the second  
sentence and that reveals the existence of "targeted dumping".  
5.154.   We also recall that , in examining the permissibility of zeroing in the context of the T -T 
comparison methodology, the Appellate  Body stated in US – Softwood Lumber V 
(Article  21.5 ‒ Canada)  that "the reference to 'export prices' in the plural, without further 
qualification, suggests that all of the results of the transaction -specific comparisons should be 
included in the aggregation for purposes of calculating the margins of dumping."348 The 
Appellate Body, thus, concluded that "zeroing in the transaction -to-transaction methodology does 
not conform to the requirement of Article  2.4.2 in that it results in the real values of certain export 
transactions being altered or disregarded."349 While this finding concerned the permissibility of 
zeroing under the T -T comparison methodology, similar considerations apply to the reference to 
"prices of individual export transactions" in the plural in the second sentence of Article  2.4.2, 
which as noted above is no t qualified by any reference to normal value.  
5.155.   Turning to the function of the second sentence of Article  2.4.2, we observe that the second 
sentence provides for an exception to the normally applicable symmetrical comparison 
methodologies of the first senten ce in order to allow investigating authorities to identify and 
address "targeted dumping", whereby the "targeted dumping" coincides with the identified 
"pattern " of significantly different export prices. By conducting a comparison between normal value 
and all transaction s included in the identified "pattern", an investigating authority is able to 
address the "targeted dumping" that is identified and that corresponds to that particular "pattern ". 
Indeed, the second sentence of Article  2.4.2 allows an investi gating authority to identify and 
address "targeted dumping" that corresponds to a properly defined pattern, which includes sales 
that are both above and below normal value, and not to a pattern composed exclusively of sales 
that are below normal value. We are, therefore, of the view that there is nothing more that needs 
to be "unmasked" once the dumping comparison has been conducted between normal value and 
"pattern transactions" to the exclusion of "non -pattern transactions". In this respect, while zeroing  
within a pattern that includes sales above normal value increases the margin of dumping , it does 
not "unmask" the "targeted dumping" that corresponds to the properly identified "pattern " of 
significantly lower sales, whereby such pattern includes sales be low and above normal value.  
5.156.   The United  States ' argument that, if zeroing is not allowed, the second sentence of 
Article  2.4.2 "would no longer be 'exceptional' and would no longer provide a means to 'unmask 
targeted dumping'"350, does not take into account t hat under the W -T comparison methodology 
provided in the second sentence of Article  2.4.2 an investigating authority is allowed to establish 
margins of dumping by taking into account only "pattern transactions" to the exclusion of all other 
transactions th at fall outside of the pattern. The use of the W -T comparison methodology under 
the second sentence of Article  2.4.2 allows an investigating authority to "unmask" and address 
"targeted dumping" in keeping with its function and, accordingly, it does not dep rive the second 
sentence of its effet utile . The second sentence of Article  2.4.2 has meaning and effect because it 
allows for  the identification of the relevant "pattern" within the meaning of that provision and it 
allows an investigating authority to add ress "targeted dumping" by applying the W -T comparison 
methodology to the limited universe of "individual export transactions" that form the identified 
"pattern". As noted above, however, the "targeted dumping" to be "unmasked" corresponds to the 
properly identified "pattern", and not to a set of sales below normal value within that pattern for 
which there exists neither a textual nor a contextual basis in the second sentence. Therefore, 
when the W -T comparison methodology is applied to "pattern transaction s", zeroing  is neither  
necessary to "unmask targeted dumping", nor permitted under the second sentence of 
Article  2.4.2.  
5.157.   The United  States  recalls the Appellate  Body's observation in US – Softwood Lumber V 
(Article  21.5 – Canada) that "[i]t could be argue d … that the use of zeroing under the two 
comparison methodologies set out  in the first sentence of Article  2.4.2 would enable investigating 
authorities to capture pricing patterns constituting 'targeted dumping', thus rendering the third 
                                                
348 Appellate  Body Report, US – Softwood L umber V ( Article  21.5 – Canada) , para. 88. (fn omitted)  
349 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 88. 
350 United  States ' appellant's submission, para. 108 . WT/DS464/AB/R  
 
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  methodology inutile."351 According to the United  States , an implication of this observation by the 
Appellate  Body is that "it is possible  to use zeroing 'to capture pricing patterns constituting 
"targeted dumping "'."352 Moreover, the United  States  observes that "the Appellate  Body has 
never  found that it is permissible to use zeroing in connection with the alternative, 
average -to-transaction  comparison methodology set forth in the second sentence of Article  2.4.2, 
when the conditions for use of that methodology have been establ ished, just as it has never found 
that it is impermissible to do so, because it has never had occasion to examine that issue."353  
5.158.   We have found above that under the second sentence of Article  2.4.2 an investigating 
authority may focus exclusively on "patter n transactions" , while excluding from its consideration 
"non-pattern transactions". This enables an investigating authority to "capture pricing patterns 
constituting 'targeted dumping'"354 without any need to resort to the use of zeroing in the 
application o f the W -T comparison methodology.  
5.159.   We note that the application of the W -T comparison methodology provided for in the 
second sentence of Article  2.4.2 was not at issue before the Appellate  Body in US – Softwood 
Lumber V ( Article  21.5 – Canada) . In that dis pute, the Appellate  Body was addressing the second 
sentence of Article  2.4.2 in view of the Panel's contextual reliance on that provision. The 
Appellate  Body focused on the effet utile  of the second sentence of Article  2.4.2. The 
Appellate  Body considered that to use zeroing under the comparison methodologies provided in 
the first sentence to "unmask targeted dumping" would have deprived the second sentence, whose 
function is to address "targeted dumping", of its effet utile . The Appellate  Body, however, di d not 
pronounce on how "targeted dumping" should be addressed under the second sentence of 
Article  2.4.2. In particular, the Appellate  Body did not suggest that giving effect to the second 
sentence of Article  2.4.2 would require an investigating authority to establish margins of dumping 
by applying the W -T comparison methodology with zeroing to the applicable "universe of export 
transactions" , i.e. the "pattern transactions".  
5.160.   We have concluded above that , under the second sentence of Article  2.4.2, dumping and 
margins of dumping pertaining to all export transactions of an exporter or foreign producer and to 
the product under investigation are limited to "pattern transactions". The exceptional W -T 
comparison methodology in the second sentence of Article  2.4.2 requires a comparison between a 
weighted average normal value and the entire universe of export transactions that fall within the 
pattern as properly identified355 under that provision, irrespective of whether the export price of 
individual "pattern transac tions" is above or below normal value. While the results of the 
transaction -specific comparisons of weighted average normal value and each individual export 
price falling within the pattern will be intermediate results, the aggregation of all these results  is 
required and will determine dumping and margins of dumping for the product under investigation 
as it relates to the identified "pattern". Zeroing the negative intermediate comparison results 
within the pattern is neither necessary to address "targeted dumping", nor is it consistent with the 
establishment of dumping and margin s of dumping as pertaining to the "universe of export 
transactions" identified under the second sentence of Article  2.4.2.  
5.1.9.1.2   Mathematical equivalence  
5.161.   The United  States  further submit s that , assuming that under both the W -W and W -T 
comparison methodologies the calculation of the margins of dumping is based on the same normal 
value and export sales data, if zeroing is prohibited under both comparison methodologies , then 
the results of t he W -W comparison methodology and the W -T comparison methodology will be 
mathematically equivalent with respect to the total amount of all comparison results, the total 
amount of dumping, and the weighted average dumping margin for each exporter for the pr oduct 
under investigation.356 Korea,  for its part , contends that the United  States ' argument on 
mathematical equivalence starts with the false assumption that the method of determining normal 
                                                
351 United  States ' appellant's submission, para. 110 (quoting Appel late Body Report, US – Softwood 
Lumber V ( Article  21.5 – Canada) , para. 100).  
352 United  States ' appellant's submission, para. 110  (quoting Appellate Body Report, US – Softwood 
Lumber V (Article 21.5 – Canada) , para. 100) . (emphasis  original ; fn omitted ) 
353 United States ' appellant's submission, fn 139 to para. 110  (referring to Appellate  Body Report, 
US ‒ Stainless Steel (Mexico) , para. 127) . 
354 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 100.  
355 See paras. 5.29 and 5.36 of this  Report.  
356 United  States ' appellant's submission, para. 115.  WT/DS464/AB/R  
 
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  value must remain the same.357 According to Korea, the possibility o f changing the normal value or 
the adjustments to the export prices breaks mathematical equivalence.358 Korea asserts that 
"[a]ny equivalence reflects assumptions about how the authority is making the comparison."359  
5.162.   We note that the United  States ' argument o n mathematical equivalence is premised on its 
understanding of what constitutes the relevant "pattern" for the purposes of the second sentence 
of Article  2.4.2 of the Anti -Dumping Agreement . The United  States  submits that , "[o]n its face", 
the second sente nce of Article  2.4.2 "contemplates a pattern of export prices that would transcend 
multiple purchasers, regions, or time periods"360 and that "[s]uch a 'pattern' necessarily includes 
both lower and higher export prices that 'differ significantly' from each o ther."361  
5.163.   We have concluded above that the "pattern of export prices which differ significantly" 
within the meaning of the second sentence of Article  2.4.2 comprises only a subset of all the 
export transactions and that these significantly different export prices are significantly lower 
export prices, which would be used by an exporter  or producer  to "target" purchasers, regions , or 
time periods. In this respect, the W -W and W -T comparison methodologies are designed to 
operate based on different "universes o f export transactions": the first, based on all export 
transactions ; and the second, based on individual export transactions that form the relevant 
"pattern". Accordingly, the second sentence of Article  2.4.2 allows an investigating authority to 
establish margins of dumping by comparing "pattern transactions" with normal value, while 
excluding from its consideration "non -pattern transactions". Comparing normal value with "pattern 
transactions" only will not normally yield results that are mathematically or substantially 
equivalent to the results obtained from the application of the W -W comparison methodology to all 
export transactions.362  
5.164.   The United  States  further submits that the Panel's approach of applying the W -T 
comparison methodology to a subset of tran sactions without zeroing is in essence equivalent to 
the application of the W -W comparison methodology to the same subset of transactions without 
zeroing. According to the United  States , the Panel , in doing so , "effectively rewrote the second 
sentence of Article 2.4.2 , changing it from allowing the application of the average -to-transaction  
comparison methodology under certain circumstances to allowing the application of the 
average -to-average  comparison methodology to a subset of transactions  under certain 
circumstances. "363 Thus, the United  States  contends that the Panel "invented a new methodology" 
and "read the average -to-transaction  comparison methodology out of the second sentence of 
Article  2.4.2 of the AD Agreement altogether, contrary to the principle of effectiveness."364 
5.165.   The mere fact that the result of the application of the W -T comparison methodology to 
"pattern transactions" may be equivalent to the result of comparing the weighted average normal 
value with the weighted average export price of all "p attern transactions", is neither relevant 
under the second sentence that provides for the application of the W -T comparison methodology to 
"pattern transactions" only, nor does it read the W -T comparison methodology out of the second 
sentence of Article  2.4.2. As we have explained above, the function of the second sentence of 
Article  2.4.2 is to allow an investigating authority to address "targeted dumping" by identifying a 
                                                
357 Korea's appellee's submission, para. 73.  
358 Korea's appellee's submission, para. 74.  
359 Korea's appellee's submission, para. 77.  
360 United  States ' appellant's submission, para. 52.  
361 United  States ' appellant's submission, para. 53. ( emphasis  original)  
362 Our conclusion also accords with the Appellate  Body's statement in US – Softwood Lumber V 
(Article  21.5 – Canada)  that "the universe of export transactions to which the weighted average -to-transacti on 
comparison methodology applies would be different from the universe of transactions examined under the 
weighted average -to-weighted average  methodology" and in these circumstances  "the two methodologies 
would not yield equivalent results, except by coincidence ." (Appellate  Body Report, US – Softwood Lumber V 
(Article  21.5 – Canada) , fn 166 to para. 99) Moreover, and a s we have considered above with regard to 
Korea's appeal of the Panel's finding s on "systemic disregarding", the function of the second sen tence of 
Article  2.4.2 should not be addressed by focusing on mathematical equivalence.  We further recall the 
Appellate  Body's findings in previous disputes that the "'mathematical equivalence' argument works only under 
a specific set of assumptions" (Appe llate Body Report, US – Stainless  Steel (Mexico) , para. 126 ) and that "the 
mathematical equivalence argument is based on certain assumptions that may not hold good in all situations ." 
(Appellate  Body Report,  US ‒ Zeroing (Japan) , para. 133 ) 
363 United  States ' appellant's submission, para. 189.  (emphasis original)  
364 United  States ' appellant's submission, para. 189  (referring to Appellate  Body Report, 
Japan  ‒ Alcoholic Beverages II , p. 12, DSR 1996:1, p. 106) . WT/DS464/AB/R  
 
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  "pattern of export prices which differ significantly" and to which the W -T compariso n methodology 
is applied. Once the pattern of export prices within the meaning of the second sentence has been 
identified by the investigating authority, the fact that the application of the W -T comparison 
methodology to that pattern of export prices leads  to equivalent results as the application of the 
W-W comparison methodology to the same pattern, neither undermines the effet utile of the 
second sentence of Article  2.4.2 of the Anti -Dumping Agreement , nor does it lead to equivalent 
results between the ap plication of the symmetrical comparison methodologies normally used under 
the first sentence to the universe of all export transactions and the application of the W -T 
comparison methodology used under the second sentence of Article  2.4.2 to the limited uni verse 
of "pattern transactions".  
5.1.9.1.3   Negotiating history  
5.166.   The United  States  also argues that the negotiating history of the Anti -Dumping Agreement 
confirms that zeroing is permissible when applying the asymmetrical and exceptional W -T 
comparison methodology se t forth in the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement.365 The United  States  refers to four documents in support of its arguments and submits 
that certain proposals from GATT Contracting Parties seeking changes to the Tokyo Round 
Anti-Dumping Code addressed concerns about the use of an asymmetrical comparison 
methodology, in which negative dumping margins would be treated as zero instead of being added 
to the other transactions to "offset" the dumping margin.366 The United  States  consider s that such 
proposals reveal that those GATT Contracting Parties viewed asymmetry and zeroing as one and 
the same problem.  
5.167.   We have found above that under the second sentence of Article  2.4.2, an investigating 
authority can use the W -T comparison methodolog y to identify and address "targeted dumping" by 
establishing margins of dumping based on the pattern of export prices which differ significantly 
and which are "targeted" at purchasers, regions , or time periods. We have also concluded that this 
exercise wou ld allow an investigating authority not only to identify but also address "targeted 
dumping" without the need to have recourse to zeroing. We have , thus, reached the conclusion 
that zeroing under the W -T comparison methodology is not allowed based on the t ext and context 
of Article  2.4.2 read in light of the object and purpose of the Anti -Dumping Agreement. We, 
therefore, consider that it is not necessary to have recourse to the negotiating history of the 
Anti-Dumping Agreement in order to confirm the meani ng of the second sentence of Article  2.4.2.  
5.168.   Nonetheless, we address here the United  States ' arguments regarding the negotiating 
history of the Anti -Dumping Agreement. We observe, first, that the negotiating proposals referred 
to by the United  States  reflec t the positions of only some of the GATT Contracting Parties and not 
all.367 Second, the Appellate  Body has already considered some of the exhibited materials to 
conclude that these materials did not resolve the issue of whether the negotiators of the 
                                                
365 United States' appellant's submission, para. 197.  
366 United  States ' appellant's submission, paras. 200 -203 (referring to Negotiating Group on MTN 
Agreements and Arrangements, Amendments to the Anti -Dumping Code, Communication from the Delegation 
of Hong Kong, Addendum, GATT Document MTN.GNG/NG8/W/51/Add.1 , 22 December 1989  (Panel Exhibit 
USA-15), Negotiating Group on MTN Agreements and Arrangements, Communication from Japan, GATT 
Document MTN.GNG/NG8/W/30 , 20 June 1988  (Panel Exhibit USA-16); Negotiating Group on MTN Agreements 
and Arrangements, Communication from Japan Concerning the Anti -Dumping Code, GATT Document 
MTN.GNG/NG8/W/81 , 9 July 1990  (Panel Exhibit USA -17); and Negotiating Group on MTN Agreements and 
Arrangements, Meeting of 16 -18 October 1989, MTN. GNG/NG8/13  (Panel Exhibit USA -18)). 
367 In US – Softwood Lumber V ( Article  21.5 – Canada) , the Appellate  Body had similar considerations in 
mind. In considering that the historical materials referred to by the panel and the United  States  were of limited 
relevance, the Appellate  Body found:  
Finally, the negotiating proposals referred to by the United  States  are inconclusive and, in any 
event, reflected the positions of some, but not all, of the negotiating parties.  In sum, the 
historical materials do not provi de any additional guidance for the question whether zeroing 
under the transaction -to-transaction comparison methodology is consis tent with Article  2.4.2 of 
the Anti-Dumping Agreement . 
(Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 121 (fn omitted)) Moreover, 
we recall that , in US – Softwood Lumber V , the United  States  acknowledged that the "historical background" 
(consisting of prior GATT panel reports and certain proposals submitted by various delegations in the context of 
the negotiations on the Anti-Dumping Agreement ) it invoked as support for its position on asymmetry and 
zeroing did not constitute travaux préparatoires . (Appellate  Body Report, US ‒ Softwood Lumber V , fn 168 to 
para. 107)   WT/DS464/AB/R  
 
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  Anti-Dumping Agreement intended to prohibit zeroing.368 Finally, we observe that , even if these 
GATT Contracting Parties associated the asymmetrical comparison methodology with zeroing, this 
does not necessarily support a reading of the asymmetrical comparison met hodology in the finally 
agreed version of the second sentence of Article  2.4.2 as permitting zeroing. Zeroing may have 
been considered by some GATT Contracting Parties as a possible way to "unmask" and address 
"targeted dumping". We note, however, from a r eading of these documents that these 
GATT  Contracting Parties were opposed to both zeroing and the inclusion of an asymmetrical 
methodology (with zeroing) in the Anti -Dumping Agreement.  
5.169.   We, thus, consider that these documents do not support a reading of t he second sentence  
of Article  2.4.2  as permitting zeroing. On the one hand, they could be read , as the United  States  
suggests, as supporting the view that the asymmetrical comparison methodology was associated 
with zeroing. On the other hand, they also cou ld be read as explaining why the final version of the 
Anti-Dumping Agreement included the second sentence of Article  2.4.2 as a compromise provision 
addressing "targeted dumping" by means of an asymmetrical comparison methodology , but 
without zeroing.  
5.170.   While the text of the second sentence of Article  2.4.2 allows an investigating authority to 
focus on "pattern transactions" and exclude from its consideration "non -pattern transactions" in 
establishing dumping and margins of dumping under the W -T comparison me thodology, it does not 
allow an investigating authority to exclude certain transaction -specific comparison results within 
the pattern, when the export price is above normal value. As we have considered above, the 
second sentence of Article  2.4.2 allows an investigating authority to exclude from its consideration 
"non-pattern transactions" and to establish dumping and margins of dumping based exclusively on 
a comparison of a weighted average normal value with all the identified "pattern transactions", in 
order to identify and address "targeted dumping". In so doing, however, the second sentence of 
Article  2.4.2 does not allow an investigating authority to exclude from the applicable "universe of 
export transactions" individual transactions that form part of t he pattern, but that are priced above 
normal value.  
5.171.   In light of these considerations, we uphold  the Panel's findings, in paragraphs  8.1.a.xii 
and 8.1.a.xiv of its Report369, that "the United  States ' use of zeroing when applying the W -T 
comparison methodolog y is inconsistent 'as such ' with Article  2.4.2 of the Anti -Dumping 
Agreement"  and that "the U SDOC  acted inconsistently with Article 2.4.2 of the Anti -Dumping 
Agreement by using zeroing when applying the W -T comparison methodology in the Washers  
anti-dumpin g investigation ". 
5.1.9.2   Whether the Panel erred in finding that the United  States ' use of zeroing when 
applying the W -T comparison methodology is inconsistent "as such" and "as applied" in 
the Washers  anti-dumping investigation with Article  2.4 of the Anti -Dumpi ng Agreement  
5.172.   We turn now to consider the United  States ' appeal of the Panel's findings under Article  2.4 
of the Anti -Dumping Agreement in respect of zeroing.  
5.173.    The Panel recalled that the Appellate  Body had previously upheld claims under Article  2.4 
agains t the use of zeroing after finding that zeroing is inconsistent with the first sentence of 
Article  2.4.2  of the Anti -Dumping Agreement . In particular, the Panel cited the Appellate  Body's 
findings in US – Zeroing (Japan)  that, "[i]f anti -dumping duties are  assessed on the basis of a 
methodology involving comparisons between the export price and the normal value in a manner 
which results in anti -dumping duties being collected from importers in excess of the amount of the 
margin of dumping of the exporter or foreign producer, then this methodology cannot be viewed 
as involving a 'fair comparison' within the meaning of the first sentence of Article  2.4."370  
5.174.   The Panel considered that the use of zeroing in the context of the W -T comparison 
methodology would not le ad to a "fair comparison" since individual "pattern transactions " priced 
above normal value would not be properly taken into account when an investigating authority has 
particular regard to the exporter's pricing behaviour within that pattern. Thus, the Pa nel found that 
                                                
368 Appellate  Body Report, US – Stainless Steel (Mexico) , paras. 130 -131 (referring to Appellate  Body 
Report, US – Softwood Lumber V , para. 108). 
369 See also Panel Report, para. 7.192.  
370 Panel Report, para. 7.206 (q uoting Appellate  Body Report, US – Zeroing (Japan) , para. 168).  WT/DS464/AB/R  
 
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  the use of zeroing in the context of the W -T comparison methodology is inconsistent "as such" with 
Article  2.4 and , for the same reasons, the USDOC acted inconsistently with Article  2.4 by using 
zeroing in the Washers  anti-dumping investigat ion.371 
5.175.   Having found the use of zeroing to be inconsistent with both Article  2.4 and the 
second  sentence of Article  2.4.2, the Panel exercised judicial economy with regard to Korea's 
dependent claims under Articles 1 and 2.1 of the Anti -Dumping Agreement and  Article  VI:1 of the 
GATT  1994.372 
5.176.   On appeal, the United  States  asserts that the Panel's finding s of inconsistency regarding 
the use of zeroing in the application of the W -T comparison methodology under Article  2.4 rest on 
its earlier findings of inconsisten cy under the second sentence of Article  2.4.2.373 Thus, the 
United  States  submits that , since the Panel's findings under Article  2.4.2 "are erroneous and 
should be reversed, the Panel's findings under Article  2.4, which are based on those … flawed 
findings, likewise are erroneous and should be reversed ."374 Moreover, the United  States  submits 
that the second sentence of Article  2.4.2 provides means to "unmask targeted dumping" in 
exceptional situations and it is, thus, "fair" to take steps to "unmask targeted d umping" by 
faithfully applying the W -T comparison methodology, when the conditions for its use are met. 
According to the United  States , doing so is entirely consistent with the obligation that an 
investigating authority be impartial, even -handed, and unbia sed.375 
5.177.   In our analysis of Korea's appeal in respect of "systemic disregarding" under Article  2.4, 
we have noted that the introductory clause of Article  2.4.2 expressly makes this provision  
"[s]ubject to the provisions governing fair comparison" in Article  2.4. In that context, we have 
explained that , in respect of the second sentence of Article  2.4.2, the "fair comparison" 
requirement in Article  2.4 applies only in relation to "pattern transactions", which is also consistent 
with the function of the second s entence of Article  2.4.2 of allowing an investigating authority to 
identify and address "targeted dumping". We have considered that Articles 2.4 and 2.4.2 of the 
Anti-Dumping Agreement not only inform each other, but must be read together harmoniously. 
Accordingly, we have found that the exclusion of "non -pattern transactions" from the 
establishment of dumping and margins of dumping under the second sentence of Article  2.4.2 is 
consistent with the notions of impartiality, even -handedness, and lack of bias r eflected in the "fair 
comparison" requirement in Article  2.4.  
5.178.   Bearing in mind the above considerations, we now turn to analyse the consistency of 
zeroing in the application of the W -T comparison methodology with the "fair comparison" 
requirement in Article 2.4. We have concluded above that the second sentence of Article  2.4.2 
allows an investigating authority to establish dumping and margins of dumping by applying the 
W-T comparison methodology to "pattern transactions", while excluding from its considerat ion 
"non-pattern transactions". We have also concluded that , in doing so, an investigating authority is 
not allowed to use zeroing within the identified "pattern" and, accordingly, we have upheld the 
Panel's findings in this regard.  
5.179.   In EC – Bed Linen , the Appellate  Body explained that "a comparison … that does not take 
fully into account the prices of all comparable export transactions – such as the practice of 
'zeroing' … – is not a 'fair comparison' between export price and normal value, as required by 
Article 2.4 and by Article  2.4.2 ."376 Additionally, in US – Softwood Lumber V 
(Article  21.5 ‒ Canada) , the Appellate  Body considered that , since "the use of zeroing under the 
transaction -to-transaction  comparison methodology artificially inflates the magnitude of dumping", 
it "cannot be described as impartial, even -handed, or unbiased" and, accordingly, it does not 
"satisf[y] the 'fair comparison' requirement within the meaning of Article  2.4".377 
                                                
371 Panel Report, para s. 7.206 , 8.1.a.xiii, and 8.1.a.xv . 
372 Panel Report, para. 7.207. We note that Korea has not appealed this finding of the Panel.  
Accordingly, we are not called upon to rule on this matter.  
373 United  States ' appellant's submission, para. 210.  
374 United  States ' appellant's  submission, para. 211.  
375 United  States ' appellant's submission, para. 213.  
376 Appellate  Body Report, EC – Bed Linen , para. 55. ( emphasis  original ) 
377 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 142.  WT/DS464/AB/R  
 
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  5.180.   Setting to zero the intermediate negative comparison results has the effect of not only 
inflating the magnitude of dumping , thus  result ing in higher margins of dumping , but it also makes  
a positive determination of dumping more likely in circumstances where the export prices above 
normal value exceed those that are below normal value. Moreover, by setting to zero "individual 
export transactions" that y ield a negative comparison result, an investigating authority fails to 
compare all comparable export transactions that form the applicable "universe of export 
transactions" as required under the second sentence of Article  2.4.2, thus failing to make a "fai r 
comparison" within the meaning of Article  2.4.  
5.181.   We disagree with the United  States ' contention that, given that the function of the second 
sentence of Article  2.4.2 is to "unmask targeted dumping" and that zeroing is necessary in the 
application of the e xceptional W -T comparison methodology to give effect to the second sentence, 
such an approach is entirely consistent with the obligation that an investigating authority be 
impartial, even -handed, and unbiased. We have considered above that the effet utile  of the second 
sentence in addressing "targeted dumping" is fulfilled once an investigating authority has identified 
the relevant "pattern" within the meaning of the second sentence of Article  2.4.2 and has 
established dumping and margins of dumping by appl ying the W -T comparison methodology 
exclusively to "pattern transactions". In this respect, we have explained above that zeroing under 
the W -T comparison methodology is not required in order for the second sentence of Article  2.4.2 
to fulfil its function o f allowing an investigating authority to identify and address "targeted 
dumping".  
5.182.   In light of the above and given that we have upheld the Panel's finding s on zeroing under 
the second sentence of Article  2.4.2, we also uphold  the Panel's findings , in parag raphs  8.1.a.xiii 
and 8.1.a.xv of its Report378, that "the United  States ' use of zeroing when applying the W -T 
comparison methodology is inconsistent 'as such ' with Article  2.4 of the Anti -Dumping Agreement " 
and that "the USDOC acted inconsistently with Article 2.4 of the Anti -Dumping Agreement  by using 
zeroing when applying the W -T comparison methodology in the Washers  anti-dumping 
investigation" . 
5.1.9.3   Whether the Panel erred in finding that the United  States ' use of zeroing when 
applying the W -T comparison method ology in administrative reviews is inconsistent "as 
such" with Article  9.3 of the Anti -Dumping Agreement and Article  VI:2 of the GATT  1994  
5.183.   We turn now to consider the United  States ' appeal of the Panel's finding under Article  9.3 
of the Anti -Dumping Agreem ent and Article  VI:2 of the GATT  1994 in respect of zeroing in 
administrative reviews.  
5.184.   The Panel found that the use of zeroing by the USDOC when applying the W -T comparison 
methodology in administrative reviews is inconsistent "as such" with Article  9.3 o f the 
Anti-Dumping Agreement and Article  VI:2 of the GATT  1994.379 The Panel recalled  that the 
United  States ' defence was based exclusively on its argument that zeroing is not inconsistent with 
Article  2 of the Anti -Dumping Agreement , and stated that it had already rejected this argument in 
the context of its findings that the use of zeroing is inconsistent with Article 2.4 and the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement . Accordingly, the Panel considered that, 
since the use of zeroing in the context of the W -T comparison methodology would artificially inflate 
the margin of dumping, any duties collected would necessarily be excessive and thus inconsistent 
with Article  9.3 of the Anti -Dumping Agreement and Article  VI:2 of the GATT  1994.380 
5.185.   In US – Zeroing (EC) , the Appellate  Body considered the USDOC's practice of zeroing in 
the application of the W -T comparison methodology in administrative reviews. The Appellate  Body 
found that "the zeroing methodology, as applied by the USDOC in the admin istrative reviews  at 
issue [was] inconsistent with Article  9.3 of the Anti -Dumping Agreement  and Article  VI:2 of the 
GATT  1994"381 because the Appellate  Body considered that this methodology resulted in amounts 
of assessed anti -dumping duties that exceeded t he foreign exporters ' or producers ' margins of 
dumping with which the anti -dumping duties had to be compared under Article  9.3 of the 
                                                
378 See also Panel Report, para. 7.206.  
379 Panel Report, para s. 7.208  and 8.1.a.xvi . 
380 Panel Report, para. 7.208.  
381 Appellate  Body Report, US – Zeroing  (EC), para. 133.  WT/DS464/AB/R  
 
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  Anti-Dumping Agreement and Article  VI:2 of the GATT  1994.382 Moreover, in US – Stainless Steel 
(Mexico) , the Appellate  Body stated that , "under Article  VI:2 and Article  9.3, the margin of 
dumping established for an exporter in accordance with Article  2 operates as a ceiling  for the total 
amount of anti -dumping duties that can be levied on the entries of the subject merchandise from 
that exporter."383 
5.186.   On appeal, the United  States  submits that , like its findings under Article  2.4, the Panel's 
findings under Article  9.3 of the Anti -Dumping Agreement and Article  VI:2 of the GATT  1994 are 
based on the Panel's earlier flawed findings un der Article  2.4.2.384 The United  States  adds that a 
margin of dumping established by the use of the W -T comparison methodology when the 
conditions for its use have been fulfilled is a margin of dumping properly determined under 
Article  2 and , consequently, a ny anti -dumping duty levied pursuant to such a margin of dumping 
would not breach either Article  9.3 of the Anti -Dumping Agreement , or Article  VI:2 of the 
GATT  1994.385 Accordingly, the United  States  requests that the Panel's findings be reversed.386 
5.187.   We have c oncluded above that, while the second sentence of Article  2.4.2 allows an 
investigating authority to exclude from its consideration "non -pattern transactions" and to 
establish dumping and margins of dumping based exclusively on a comparison of a weighted 
average normal value with "pattern transactions", it does not allow an investigating authority to 
use zeroing when applying the W -T comparison methodology to "pattern transactions". We, 
therefore, also conclude that , in levying anti -dumping duties under Article 9.3 of the Anti -Dumping 
Agreement and Article  VI:2 of the GATT  1994, an investigating authority cannot exceed the margin 
of dumping that would be established under the second sentence of Article  2.4.2 without having 
recourse to zeroing.  
5.188.   Article  9.3 re fers to the "margin of dumping" as established under Article  2. This "margin 
of dumping" represents the ceiling for anti -dumping duties levied pursuant to Article  9.3 of the 
Anti-Dumping Agreement and Article  VI:2 of the GATT  1994. Accordingly, if margins of dumping 
are established inconsistently with Article  2.4.2 by using zeroing under the W -T comparison 
methodology, the corresponding anti -dumping duties that are levied will also be inconsistent with 
Article  9.3 of the Anti -Dumping Agreement and Article  VI:2 of the GATT  1994, as they will exceed 
the margin of dumping that should have been established under Article  2. We, therefore, agree 
with the Panel that, since the use of zeroing in the context of the W -T comparison methodology 
would artificially inflat e the margin of dumping, any duties collected would necessarily be 
excessive.387  
5.189.   We further note that , if zeroing is not permitted under  the W -T comparison methodology 
applied pursuant to the second sentence of Article  2.4.2 in original anti -dumping investi gations , it 
also cannot be permitted in respect of administrative reviews. In this respect, we recall that , in 
US – Stainless Steel (Mexico) , the Appellate  Body stated that it did not consider that there was "a 
textual or contextual basis in the GATT  1994 or the Anti-Dumping Agreement  for treating 
transactions that occur above normal value as 'dumped' for purposes of determining the existence 
and magnitude of dumping in the original investigation and as 'non -dumped' for purposes of 
assessing the final liabi lity for payment of anti -dumping duties in a periodic review."388 
5.190.   In light of the above, we uphold  the Panel's finding , in paragraph  8.1.a.xvi of its Report389, 
that "the United  States ' use of zeroing when applying the W -T comparison methodology in 
administrat ive reviews is inconsistent 'as such ' with Article  9.3 of the Anti -Dumping Agreement 
and Article  VI:2 of the GATT  1994". 
                                                
382 Appellate  Body Report, US – Zeroing (EC) , para. 133.  
383 Appellate  Body Report, US – Stainless  Steel (Mexico) , para. 102.  (emphasis original)  
384 United  States' appellant's submission, para. 216.  
385 United  States ' appellant's submission, para. 217.  
386 United  States ' appellant's  submission, para. 218. 
387 Panel Report, para. 7.208.  
388 Appellate  Body Report, US – Stainless  Steel (Mexico) , para. 10 7. 
389 See also Panel Report, para. 7.208.  WT/DS464/AB/R  
 
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  5.1.10   Separate opinion of one Appellate  Body  Member regarding zeroing  under the W -T 
comparison methodology  
5.191.   This dissent is limited to whether  zeroing is permitted for "pattern transactions". My 
agreement with the other sections of this Report is subject to my views as expressed in this 
separate opinion.  
5.192.   The second sentence of Article  2.4.2 of the Anti -Dumping Agreement says that "[a] normal 
value established on a weighted average basis may be compared to prices of  individual export 
transactions "390 if an investigating authority finds the requisite "pattern " and provides the requisite 
explanation. This text has no qualifier, and it does not specify  how the investigating authority is to 
do the comparison between a weighted average normal value and prices of individual export 
transactions.  
5.193.   The second sentence of Article  2.4.2 is an exception and has the function of "unmasking 
targeted dumping" and add ressing it. Since the text of the second sentence does not say how that 
is to be done, the question before the Appellate  Body in this appeal – the first to confront squarely 
the meaning of the second sentence – should be, what are the limits, if any, that the 
Anti-Dumping Agreement places on what an investigating authority may do to "unmask" and deal 
with "targeted dumping".  
5.194.   My distinguished colleagues of the majority have developed an interpretation that would 
allow investigating authorities to base W -T analyses solely on all "pattern transactions", but that 
would prohibit them from zeroing when doing so. In effect, investigating authorities may confine 
their examination to "pattern transactions", but , in doing so, they must combine the comparison 
results of all sales prices  within the "pattern" , that is, combine the comparison results of those 
prices above normal value with the comparison results of those below normal value  within the 
"pattern" . 
5.195.   The majority's interpretation would permit investigating auth orities to deal with "targeted 
dumping" only partially, and possibly ineffectively. Within the "pattern ", prices above normal value 
will cancel out – or "re -mask" – partly or completely, the "targeted dumping" that results from 
prices below normal value.  
5.196.   In my view, such an incomplete approach is not required by the text of the second 
sentence read in the context of the entire Article  2.4.2 and in light of the object and purpose of the 
Anti-Dumping Agreement, and it unduly restricts the regulatory leeway th at should be accorded to 
investigating authorities to deal with "targeted dumping". Accepting that , when applying the 
second sentence of Article  2.4.2, investigating authorities are to focus only on "pattern 
transactions", I  would permit investigating auth orities also to zero those "pattern transactions" 
that are priced above normal value, and to calculate dumping only on the basis of "pattern 
transactions" priced below normal value. Doing so would deal fully with "targeted dumping" by 
dividing the full amo unt of such dumping – instead of an amount diminished by non -dumped prices 
– by the full value of an exporter's sales.  
5.197.   Let us test this. Are the "in -pattern", below -normal -value sales "dumped", so that they can 
properly be identified as the relevant "targe ted dumping"? Article  2.1 of the Anti -Dumping 
Agreement defines "dumping" as occurring when a product is "introduced into the commerce of 
another country at less than its normal value, if the export price of the product exported from one 
country to another  is less than the comparable price, in the ordinary course of trade, for the like 
product when destined for consumption in the exporting country ." The second sentence of 
Article  2.4.2 says that "[a] normal value established on a weighted average basis may be 
compared to prices of individual export transactions  if the authorities find a pattern  …".391 That is, 
literally, what "in -pattern" zeroing, as I am proposing it, would do.  
5.198.   Does the proposal of allowing "in -pattern" zeroing under the second sentence of 
Article 2.4.2 accord with the context of Article  2.4.2 and the function of the second sentence? The 
majority has said that: (i) "the effet utile  of the second sentence in addressing 'targeted dumping' 
is fulfilled once an investigating authority has identif ied the relevant 'pattern' … and has 
                                                
390 Emphasis added.  
391 Emphasis added.  WT/DS464/AB/R  
 
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  established dumping and margins of dumping by applying the W -T comparison methodology 
exclusively to 'pattern transactions'"392; (ii) "[z]eroing the negative intermediate comparison 
results within the pattern is neither n ecessary to address 'targeted dumping', nor is it consistent 
with the establishment  of dumping and margin s of dumping as pertaining to the 'universe of 
export transactions' identified under the second sentence of Article  2.4.2"393; and (iii) the 
majority's i nterpretation  ─ but not the allowance of in -pattern zeroing  ─ is consistent with the "fair 
comparison" requirement in Article  2.4 of the Anti -Dumping Agreement.394 In my view, none of 
these statements is backed by convincing authority or is self -evident.  
5.199.   Does previous Appellate  Body jurisprudence prohibit "in-pattern " zeroing under the second 
sentence of Article  2.4.2? On the contrary, in  US – Softwood Lumber V ( Article  21.5 – Canada) , 
the Appellate  Body emphasized the exceptional nature of the W -T comparison methodology .395 In 
US – Zeroing (Japan), the Appellate  Body stated that "[t]he asymmetrical methodology in the 
second sentence is clearly an exception to the comparison methodologies which normally are to be 
used."396 Also in US – Softwood Lumber V ( Article  21.5 – Canada ), in finding  that a prohibition on 
the use of zeroing under the T -T comparison methodology would not render the second sentence 
of Article  2.4.2 meaningless, the Appellate  Body stated that , "on the contrary, … the use of zeroing 
under the two comparison m ethodologies set out in the first sentence of Article  2.4.2 would enable 
investigating authorities to capture pricing patterns constituting 'targeted dumping', thus rendering 
the third methodology inutile ."397 In the same case, the Appellate  Body, in discuss ing the 
interpretation of the T -T comparison methodology in the first sentence of Article  2.4.2, further 
stated that "the reference to 'export prices ' in the plural, without further qualification, suggests 
that all of the results of the transaction -specifi c comparisons should be included in the aggregation 
for purposes of calculating the margins of dumping."398 In my view, the fact that the second 
sentence, unlike the first sentence of Article  2.4.2, uses the phrase "prices of individual  export 
transactions"399 indicates that not all the transaction -specific comparisons arising from the export 
prices that form part of the "pattern " need to be aggregated in order to calculate dumping. In 
US ‒ Stainless Steel (Mexico) , the Appellate  Body emphasized that "[t]he Appellate  Body has so 
far not ruled on the question of whether or not zeroing is permissible under the comparison 
methodology in the second sentence of Article  2.4.2."400 The Appellate  Body made this statement 
after having recalled the US – Softwood Lumber V ( Article 21.5 – Canada)  jurisprudence about the 
exceptional nature of the second sentence, the application of the W -T comparison methodology to 
individual export transactions falling within the "pattern ", and the relationship between zeroing 
and the effet ut ile of the second sentence.  
5.200.   Regarding the text of the second sentence of Article  2.4.2 in other official languages, the 
French version reads:  
Une valeur normale établie sur la base d'une moyenne pondérée pourra être 
comparée aux prix de transactions à l'e xportation prises individuellement  si les 
autorités constatent que, d'après leur configuration, les prix à l'exportation diffèrent 
notablement entre différents acheteurs, régions ou périodes, et si une explication est 
donnée quant à la raison pour laquelle  il n'est pas possible de prendre dûment en 
compte de telles différences en utilisant les méthodes de comparaison moyenne 
pondérée à moyenne pondérée ou transaction par transaction.401  
5.201.   By referring to "[ les] prix de transactions à l'exportation prises indiv iduellement ", which 
translates literally in English as "the prices of export transactions taken individually", the French 
text of the second sentence of Article  2.4.2 puts emphasis on the select ion of individual 
transactions.  
                                                
392 See para. 5.18 1 of this  Report.  
393 See para. 5.160 of this Re port. 
394 See para. 5.18 0 of this Report.   
395 Appellate  Body Report, US – Softwood  Lumber V ( Article  21.5 – Canada) , para. 9 7. 
396 Appellate  Body Report, US – Zeroing (Japan) , para. 131.  
397 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada), para. 100.  
398 Appellate  Body Report, US – Softwood Lumber V ( Article  21.5 – Canada) , para. 88. (fn omitted; 
emphasis added)  
399 Emphasis added.  
400 Appellate  Body Report, US – Stainless Steel (Mexico) , para . 127. 
401 Emphasis added.  WT/DS464/AB/R  
 
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  5.202.   Thus, I believe that allowing an investigating authority to zero within the "pattern " under 
the second sentence of Article  2.4.2 not only is a permissible interpretation within the meaning of 
the second sentence of Article  17.6(ii) of the Anti -Dumping Agreement, but that it is a more 
defensible interpretation within the meaning of the fi rst sentence of that provision.  
5.203.   For these reasons, I disagree with the finding of the majority that zeroing within the 
"pattern " under the W -T comparison methodology of the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement is not permissible. Consequently, I also disagree with the finding s of the 
majority on zeroing under Article  2.4 of the Anti -Dumping Agreement and under Article  9.3 of the 
Anti-Dumping Agreement and Article  VI:2 of the GATT  1994. 
5.2  Claims under the SCM Agreement  and related claims under the GATT  1994  
5.2.1   Background  
5.204.   Korea raises a number of claims on appeal in respect of the USDOC's determinations in the 
Washers  countervailing duty  investigation concerning two tax credit programmes  adopted by the 
Korean government as part of the RSTA. Under both programmes, Korean companies can claim 
tax credits, i.e. reductions in the amount of corporate income tax otherwise owed, in their tax 
returns filed with the National Tax Service upon showin g that they have made certain eligible 
expenditures.402 
5.205.   The first programme, established under Article  10(1)(3) of the RSTA 
(RSTA  Article  10(1)(3) tax credit programme ), is entitled "Tax Deduction for Research and 
Manpower Development ".403 It forms part of a b roader tax credit regime, set forth in Article  10 of 
the RSTA, which aims to "facilitate Korean corporations' investment in their respective research 
and development activities, and thus to boost the general national economic activities in all 
sectors".404 Articles 10(1)(1) and  10(1)(2) of the RSTA provide tax credits equivalent to 20% of 
the yearly amount of R&D expenditures made by Korean companies in respect of  "new growth 
engine industries" and "core technology", respectively.405 Article  10(1)(3) provides t wo residual tax 
credit options available to Korean companies whose activities do not qualify under either 
Article  10(1)(1) or Article  10(1)(2). The first option is a tax credit equal to 40% (50% for small 
and medium enterprises (SMEs)) of the amount by whi ch a company's R&D and human resources 
development (HRD) expenditures during the tax year have exceeded the average of its R&D and 
HRD expenditures in the four previous years. The second option is a tax credit  of up to 6% 
(25%  for SMEs) of the total R&D an d HRD expenditures for the applicable taxable year.406 Access 
to tax credits under Article  10(1)(3) of the RSTA is automatic for any Korean company that 
satisfies the statutory requirements.407  
5.206.   The second programme, established under Article  26 of the RSTA ( RSTA Article  26 tax 
credit programme ), was entitled "Tax Deduction for Facilities Investment " and provided an 
economic incentive for "Korean companies to invest in a wide variety of business assets".408 It 
                                                
402 For tax purposes, a company with its head or main office in Korea is deemed to be a domestic 
company and is liable to  pay tax on its worldwide income. Otherwise, it is considered to be a foreign company, 
and its tax liability is limited to its Korea -sourced income. (See e.g. Response  dated 9  April 2012 of the 
Government of Korea to the USDOC's questionnaire of 15 February 2012 in the Washers  CVD investigation 
[C-580-869] (excerpts) (GOK Washers  CVD questionnaire response) (Pan el Exhibit KOR -75 (BCI ), at p. 4))  
403 See Korea's other appe llant's submission, para.  299. 
404 GOK Washers  CVD questionnaire response (Panel Exhibit KOR -75 (BCI) , at p. 37) . 
405 Korea's first written submission to the Panel, para.  245; Response dated 9  April 2012 of the 
Government of Korea to the USDOC's questionnaire of 15 February 2012 in the Washers  CVD investigation 
[C-580-869] (including excerpts of Article  10 of the RSTA and Article  9 of the RSTA Enforcement Decree)  
(GOK  Washers  CVD questionnaire response)  (Panel Exhibit KOR -76); GOK Washers  CVD questionnaire 
response (Panel Exhibit KOR -75 (BCI) , at pp. 11 and 25 -26). 
406 Korea's first written submission to the Panel, para.  245; Korea's other appellant's submission, 
para. 331; GOK Washers  CVD questionnaire response (Panel Exhibit KOR -75 (BCI) , at pp. 37 and 47) . These 
formulae are further detailed in Articles  9(3)-9(5) of the RSTA Enforcement Decree  in GOK Washers  CVD 
questionnaire response  (Panel Exhibit KOR -76). 
407 Korea's first written submission to the Panel, paras. 245 and 248; Korea's other appellant 
submission, para. 299; Panel Report, para.  7.211; GOK Washers  CVD questionnaire response (Panel Exhibit 
KOR-75 (BCI) , at pp. 41 -42). 
408 Korea's first written submission to the Panel, para.  252. (fn omitted) See also  Korea's other 
appellant's submission, para.  206. WT/DS464/AB/R  
 
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  lapsed on 31  December 2011.409 Under the version of the  programme in force for tax year 2010, 
any Korean company  could receive a corporate income tax credit  equal to 7% of the value of all 
qualifying business assets investments.410 However, pursuant to Article  23 of the RSTA 
Enforcement Decree411, investments made  in business assets located in the "overcrowding control 
region" of the Seoul Metropolitan Area (Seoul overcrowding area) would be excluded from 
eligibility for th is tax credit .412 As Korea observed, the policy rationale behind such exclusion was 
to "address  overcrowding and urban sprawl by discouraging investments in the Seoul 
overcrowding region"413 while, at the same time, allowing for "equal development throughout the 
country, except in the overcrowded areas".414 The Seoul overcrowding area accounts for rough ly 
2% of Korea's landmass and concentrates a significant portion of the country's population and 
economic activity.415 Its boundaries are defined in Article  9 and Table 1 of the Enforcement Decree 
of the Seoul Metropolitan Area Readjustment Planning Act .416 Access to tax credits under Article  26 
of the RSTA was automatic, as long as the applicant company satisfied the statutory 
requirements.417 
5.207.   Both tax credit programmes require applicant companies to indicate the amount of eligible 
expenditures for every tax yea r in their tax filings with the National Tax Service, which are 
submitted during the first quarter of the following year.418 Thus, the tax credits are granted after 
the underlying eligible expenditures have been made, in an amount determined by reference to 
the total of such expenditures.419 If a company is in a tax loss situation in a particular tax year, it 
may carry forward the applicable tax credits for the five following years.420 Similarly, if the 
corporate income tax , after all tax credits , is less than a specified minimum amount in a given 
year, then the company would have to pay that minimum tax amount, and the unapplied tax 
credits would be carried forward to the five following years.421 
                                                
409 GOK Washers  CVD questionnaire response (Panel Exhibit KOR -75 (BCI) , at pp. 73 -74); USDOC 
[C-580-869] Memorandum to File regarding Countervailing Duty Investigation of Large Residential Washers 
from the Republic of Korea – Verification of the Questionnaire Re sponses Submitted by the Government of the 
Republic of Korea (22 October 2012) (Washers  CVD GOK questionnaire verification memorandum ) (Panel 
Exhibit KOR -78 (BCI)), p. 7.  
410 Korea's first written submission to the Panel, para.  252; Korea's other appellant's  submission, 
para. 206; GOK Washers CVD questionnaire response (Panel Exhibit KOR -75 (BCI) , at pp. 66 -69). The specific 
types of business assets eligible for tax credits under  Article  26 of the RSTA were listed in Article  23 of the 
RSTA Enforcement Decree in Response dated 9 April 2012 of the Government of Korea to the USDOC's 
questionnaire of 15 February 2012 in the Washers  CVD investigation [C -580-869] (excerpts) (BCI -redacted 
version) (GOK Washers  CVD questionnaire response) (Panel Exhibit KOR -81). 
411 Presidential Decree No. 22037 enforcing the RSTA, issued on 18 February 2010.  
412 Korea's first written submission to the Panel, paras. 253 -254; Korea's other appellant's submission, 
para. 207; Article  26 of the RSTA and Article  23 of the RSTA Enforcement Decre e in GOK Washers  CVD 
questionnaire response (Panel Exhibit KOR -81). 
413 Korea's other appellant's submission, para. 288.  
414 Korea's first written submission to the Panel, para. 319. See also Korea's other appellant's 
submission, para. 277; and Panel Report, p ara. 7.273 . 
415 See e.g. Korea's first written submission to the Panel, para.  253; and Case Brief of the Government 
of Korea, Large Residential Washers from the Republic of Korea [C -580-869] (31 October 2012) (excerpt) 
(GOK Washers  CVD case brief ) (Panel Exh ibit KOR -82 (BCI), at pp. 6 -7). 
416 Korea's first written submission to the Panel, fn 223 to para.  253 and fn 316 to para.  320; Response 
of the Government of Korea to the USDOC's first supplemental questionnaire in the Washers  CVD investigation 
[C-580-869] ( containing exhibit  S-25, "Excerpts from Seoul Metropolitan Area Readjustment Planning Act (with 
its Enforcement Decree)" (Korean/English))  (GOK Washers  CVD supplemental questionnaire response ) (Panel 
Exhibit KOR -91); Washers  CVD GOK questionnaire verificat ion memorandum  (Panel Exhibit KOR -78 (BCI) , at 
p. 26); Article  26 of the RSTA and Article  23 of the RSTA Enforcement Decree in GOK Washers  CVD 
questionnaire response (Panel  Exhibit KOR -81). 
417 Korea's first written submission to the Panel, para.  335; GOK Washers  CVD questionnaire response 
(Panel Exhibit KOR -75 (BCI) , at pp. 71 -72). 
418 In their tax returns, applicant companies need not specify the products, if any, in respect of which 
the eligible R&D expenditures were made, or the facilities where such R&D ac tivities were carried out. (Panel 
Report, para.  7.303)  
419 Panel Report, para.  7.303.  
420 GOK Washers  CVD questionnaire response (Panel Exhibit KOR -75 (BCI) , at pp. 48 and 75) . 
421 Korea's first written submission to the Panel, para.  251; Response dated 9  April 2012 of Samsung 
Electronics Co., Ltd to the USDOC's questionnaire of 15 February 2012 in the Washers  CVD investigation 
[C-580-869] (excerpts) (Samsung Washers  CVD questionnaire response ) (Panel  Exhibit  KOR-72 (BCI) , at 
pp. 41 and 48) . WT/DS464/AB/R  
 
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  5.208.   In the Washers  countervailing duty  investigation, the USDOC determine d that the RSTA 
Article  10(1)(3) tax credit programme is de facto  specific because , during the period of 
investigation,  subsidies had been provided to Samsung under that programme in 
disproportionately large amounts.422 The USDOC also determined that the RST A Article  26 tax 
credit programme was regionally specific because it was limited to certain enterprises located in a 
designated geographical region.423 Based on these determinations of specificity, the USDOC 
imposed a countervailing duty  on LRWs from Korea. In calculating the ad valorem  subsidization 
rate for Samsung , the USDOC found that the tax credits bestowed on Samsung pursuant to 
Articles 10(1)(3) and 26 of the RSTA were not tied to any particular product s. It, therefore , 
allocated those subsidies acros s all products manufactured by Samsung in Korea during the period 
of investigation.424 The USDOC further rejected Samsung's argument that the denominator of 
Samsung's subsidization ratio should be adjusted to encompass Samsung's worldwide production, 
and dec ided instead to limit the denominator to the sales value of Samsung's production within 
Korea.425  
5.209.   The Panel found the USDOC's determinations that the RSTA Article  10(1)(3) tax credit 
programme is de facto  specific to be inconsistent with Article  2.1(c) of t he SCM Agreement426, and 
the United  States  has not challenged the Panel's finding on appeal.  
5.210.   Conversely, the Panel upheld the other determinations by the USDOC. In particular, the 
Panel concluded that: (i) the USDOC's determination that the RSTA Article 26 tax credit 
programme was regionally specific is not inconsistent with Article  2.2 of the SCM Agreement427; 
(ii) the USDOC's determination that the tax credits received by Samsung under Articles 10(1)(3) 
and 26 of the RSTA were not tied to particular products  is not inconsistent with Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994428; and (iii) the USDOC's attribution of the tax 
credits received by Samsung under Article  10(1)(3) of the RSTA to the sales value of Samsung's 
production in Korea is not inconsistent with Article  19.4 of the SCM Agreement  and Article  VI:3 of 
the GATT  1994.429 
5.211.   On appeal, Korea requests us to find that the Panel erred in upholding the above -
mentioned determinations by the USDOC. We , therefore , examine each of those dete rminations 
and the related claims in turn.  
5.2.2   Whether the Panel erred in its interpretation and application of Article  2.2 of the 
SCM Agreement  by upholding the USDOC's determination that the RSTA Article  26 tax 
credit programme was regionally specific  
5.212.   In its preliminary countervailing duty  determination, the USDOC observed that subsidies 
under the RSTA Article  26 tax credit programme were "limited by law to enterprises or industries 
                                                
422 Panel Report, para.  7.215; USDOC [C -580-869] Issues and Decision Memorandum for the Final 
Determination in the Countervailing Duty Investigation of Large Residential Washers From the Republic of 
Korea (18  December 2012)  (Washers  final CVD I&D memorandum ) (Panel Exhibit KOR -77), pp.  11-13 and 
31-37; USDOC [C -580-869] Large Residential Washers From the Republic of Korea: Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Determination With Final Antidumping 
Determination, United  States  Federal  Register, Vol. 77, No.  108 (5 June 2012)  (Washers  preliminary CVD 
determination ) (Panel Exhibit KOR -85), pp. 33187 -33188 . The USDOC's assessment was incorporated by 
reference in the Washers  final CVD determination. See  USDOC [C -580-869] Large Residential Washe rs From 
the Republic of Korea: Final Affirmative Countervailing Duty Determination, United  States  Federal  Register , 
Vol. 77, No.  247 (26  December 2012)  (Washers  final CVD determination) (Panel Exhibit KOR -2), p. 7597 6. 
See also USDOC [C -580-869] Remand Red etermination, Samsung Electronics Co., Lt d v. United  States , 
Final Results of Redetermination Pursuant to Court Order, USCIT , Court No.  13-00099, Slip  Op. 14-39 
(11 April 2014) (Panel Exhibit KOR -44 (BCI )), pp. 3 -18. 
423 Panel Report, para.  7.256; Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), 
pp. 14 and 46; Washers  preliminary CVD determination  (Panel Exhibit KOR -85), p. 33188; Washers  final CVD 
determination  (Panel Exhibit KOR -2), p. 7597 6. 
424 Panel Report, para.  7.301; Washers  final CVD I&D memora ndum  (Panel Exhibit KOR -77), pp.  41-42; 
Washers  preliminary CVD determination  (Panel Exhibit KOR -85), pp. 33187 -33188; Washers  final CVD 
determination  (Panel Exhibit KOR -2), p. 7597 6. 
425 Panel Report, para.  7.317; Washers  final CVD I&D memorandum  (Panel Exh ibit KOR -77), pp.  52-53. 
426 Panel Report, paras. 7.244, 7.250, 7.255, 8.1.b.i , and 8.1.b.ii . 
427 Panel Report, paras . 7.289 and 8.1.b.iii.  
428 Panel Report, paras. 7.307 and 8.1.b.iv.  
429 Panel Report, paras. 7.320 and 8.1.b.v.  WT/DS464/AB/R  
 
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  within a designated geographical region within the jurisdiction of the autho rity providing the 
subsidy", and , therefore , concluded that the programme in question was regionally specific.430 The 
USDOC reaffirmed its conclusion in its final countervailing duty  determination.431 Before the Panel, 
Korea claimed that, in reaching such conc lusions, the USDOC acted inconsistently with Article  2.2 
of the SCM Agreement . As mentioned above432, the Panel found that the USDOC's determination is 
not inconsistent with Article  2.2. Korea requests us to reverse the Panel's finding, complete the 
legal an alysis, and find that the USDOC's determination is inconsistent with the United  States ' 
obligations under Article  2.2.433 
5.213.   Article  2 of the SCM Agreement  sets forth the disciplines for determining whether a subsidy 
is specific, i.e. "limited inter alia  by rea son of the eligible recipients … or by reason of the 
geographical location of beneficiaries".434 Article  2.1 lays down the principles for determining the 
specificity of a subsidy to "certain enterprises" within the jurisdicti on of the granting authority.  
Article 2.2, in turn, is concerned with limitations on the geographical region(s) where the eligible 
enterprises are located.  
5.214.   The text of Article  2.2 reads:  
A subsidy which is limited to certain enterprises located within a designated 
geographical region wit hin the jurisdiction of the granting authority shall be specific. It 
is understood that the setting or change of generally applicable tax rates by all levels 
of government entitled to do so shall not be deemed to be a specific subsidy for the 
purposes of t his Agreement.  
5.215.   The Panel took the view, which the participants have not challenged on appeal, that the 
rationale of Article  2.2 is to cover subsidy programmes whereby "governments and public bodies 
encourage particular enterprises to direct their resources  to certain geographic regions, thereby 
interfering with the market's allocation of resources within the territory of [a] Member."435 For 
purposes of this Report, we use the shorthand phrase "regionally specific" to designate a subsidy 
that is specific pursu ant to Article  2.2. 
5.216.   Korea requests us to find that the Panel erred in its interpretation and application of 
Article  2.2 of the SCM Agreement . In particular , Korea's claims focus on certain terms contained in 
the first sentence of Article  2.2, namely: (i)  "certain enterprises "; (ii) "designated"; and 
(iii) "geographical region".436 Hence, in reviewing the Panel's findings in light of Korea's claims, we 
find it useful to structure our analysis along each of these terms.  
5.2.2.1   Whether the term "certain enterprises" in  Article  2.2 of the SCM Agreement is 
limited to entities with legal personality  
5.217.   Before the Panel, Korea argued that the term "certain enterprises" in Article  2.2 of the 
SCM Agreement designates companies or businesses with legal personality,  while it does  not cover 
a company's facilitie s that do not have legal personality. Under Korea's interpretation, the RSTA 
Article  26 tax credit programme would not be regionally specific because, being available to all 
companies incorporated anywhere in Korea, it did n ot impose any geographical limitations on the 
location of the subsidy recipients, but only on the location of the subsidized activities.437 The Panel 
rejected Korea's argument. It observed that nothing in the text of Article  2.2 justifies such a 
narrow readi ng of the term "enterprise", and  stated that an enterprise's "commercial activities " 
should rather be interpreted broadly.438 The Panel also noted that, as defined in the chapeau of 
                                                
430 Washers  preliminary CVD determina tion (Panel  Exhibit KOR -85), p. 33188.  
431 See Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 14;  and Washers  final CVD 
determination  (Panel Exhibit KOR -2), p. 75976.  
432 See para.  5.210  of this Report . 
433 Korea's other appellant's submission, para s. 294 -295. 
434 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  413. 
435 Panel Report, para. 7.273.  
436 Korea does not take issue with the Panel's interpretation and application of the phrase "within the 
jurisdiction of the gra nting authority" in Article 2.2. Both participants agree that the authority granting 
subsidies under Article 26 of the RSTA is the Government of Korea and that the scope of application of those 
subsidies is within the Government's jurisdiction.  
437 Panel Rep ort, para.  7.266.  
438 Panel Report, para.  7.267.  WT/DS464/AB/R  
 
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  Article  2.1 of the SCM Agreement , the term "certain enterprises" includes an "industry or group of  
enterprises or industries" , i.e. " entities [that] are not companies or businesses with legal 
personality ".439 Thus, the Panel held that an enterprise is located within a designated region if a 
constituent part of that enterprise, inclu ding a manufacturing facility belonging to that enterprise, 
is located in that region.440 Even assuming that Korea's reading of the term "enterprise" were 
correct, the Panel stated that a business or company may be located "in a variety of places", 
including  the sites of its head office, branches, manufacturing facilities, or other assets, and that a 
subsidy programme that limits the geographic location of any of these elements would be 
regionally specific.441  
5.218.   On appeal, Korea reiterates that regional specific ity has to be established based on the 
geographical location of the recipient of a subsidy.442 Such recipient must be a "natural or legal 
person"443 – i.e. an entity with legal personality.444 Conversely, an enterprise's facility does not 
qualify as a subsidy re cipient because it does not have legal personality.445 According to Korea, 
regional specificity cannot be deemed to exist "when a subsidy is merely contingent on 
considerations regarding the geographical location of any activity of any sort regarding the 
recipient", such as the location of its investments or facilities.446 In Korea's opinion, the Panel 
unduly conflated the concepts of "enterprise" and "commercial activities"447 and, therefore , 
provided an overly expansive interpretation of the scope of applicatio n of Article  2.2.448 Korea 
maintains that, under a correct interpretation, the Panel should have found that the RSTA 
Article  26 tax credit programme was not specific under Article  2.2, because it automatically 
bestowed subsidies on any enterprise, located an ywhere in the Korean territory, that made eligible 
investments outside the Seoul overcrowding area, thereby not imposing any limitations on the 
geographical location of the subsidy recipients.449 
5.219.   The United  States  disagrees with Korea that Article  2.2 applie s only to entities with legal 
personality.450 Rather, in the United  States ' view, the concept of "certain enterprises" covers a 
"wide variety of economic structures and activities".451 The United  States  notes that the term 
"enterprise" encompasses the notion o f "business", which in turn includes that of "commercial 
activity". Therefore, the United  States  argues, the Panel did not unduly conflate the concepts of 
"enterprise " and "commercial activity", but simply stressed the linkage between them.452 For the 
United  States , the location of an industry cannot be determined by the legal personality of 
individual producer s453 because legal personality "is a fiction , and may not imply a particular fixed 
location".454 Rather, an enterprise "takes up business", and is , therefo re, "situated" and 
"established", both at its headquarters and at the facilities in which it conducts manufacturing 
operations.455 According to the United  States , Korea's argument that only a natural legal person 
can receive a subsidy unduly borrows from the  notion of "benefit " under Article  1.1(b) of the 
SCM Agreement , which is "qualitatively different" from the notion of "limitations on access" to a 
subsidy under Article  2.2.456 The United  States  observes that Korea's interpretation would yield the 
absurd res ult that subsidy programmes that limit access to facilities in a designated region, but 
                                                
439 Panel Report, para.  7.268.  
440 Panel Report, para.  7.269.  
441 Panel Report, para.  7.270.  
442 Korea's other appellant's submission, para.  238. 
443 Korea's other appellant's submission, para.  236 (referring to Appella te Body Reports, US ‒ Lead and 
Bismuth II , para.  58; and Canada – Aircraft , para.  154); and para.  238. 
444 See e.g. Korea's other appellant's submission, para. 259 (referring to Appellate  Body Report, 
US ‒ Anti-Dumping and Countervailing Duties (China ), para.  373); and para. 262 (referring to Appellate  Body 
Report, US – Countervailing Measures on Certain EC Products , para.  110). 
445 Korea's other appellant's submission, paras. 238 and 263.  
446 Korea's other appellant's submission, para.  273. 
447 Korea's other appellant's submission , para.  253. 
448 Korea's other appellant's submission, para.  271. 
449 Korea's other appellant's submission, para.  240. 
450 United  States ' appellee's submission, para.  210. 
451 United  States ' appellee's submission, para.  219. (fn omitted)  
452 United  States ' appellee' s submission, paras. 214 -215. 
453 United  States ' appellee's submission, para.  222. 
454 United  States ' appellee's submission, para.  223. 
455 United  States ' appellee's submission, para.  228 (quoting the definition of the verb "locate" in 
Panel  Report, para.  7.270) . 
456 United  States ' appellee's submission, para.  236. WT/DS464/AB/R  
 
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  permit recipients to maintain their headquarters outside that region, would not be regionally 
specific.457 
5.220.   We note that t he term "certain enterprises" is a key component of the first sentence of 
Article  2.2. Indeed, a finding of regional specificity depends on whether a subsidy programme 
limits availability to "enterprises" that are located in a designated geographical region within the 
jurisdiction of the subsidizing Memb er. As observed by the Appellate  Body, the word "certain" is 
defined as "[k]nown and particularized but not explicitly identified: (with sing. noun) a particular, 
(with pl. noun) some particular, some definite".458 Thus, in order for a subsidy to be speci fic, the 
group of eligible enterprises must be something less than th e whole of the economy of a Member. 
The Appellate  Body, however, has cautioned that any determination of what constitutes "certain 
enterprises" can only be made "on a case -by-case basis".459 Further, t he term "certain enterprises" 
is expressly defined in the chapeau of Article  2.1 as "an enterprise or industry or group of 
enterprises or industries".460 As that provision stipulates, this definition applies throughout the 
whole SCM Agreement , inclu ding Article  2.2.461 In US ‒ Anti-Dumping and Countervailing Duties 
(China ), the Appellate  Body noted that t he word "enterprise" means "[a] business firm, a 
company "462, whereas the word "industry" signifies "[a] particular form or branch of productive 
labour; a trade, a manufactur e".463 Based on these definitions, the Appellate  Body considered that 
the term "certain enterprises" refers to some particular business firms or companies that are 
known and particularized, but need not be explicitly identified.464 In turn, we observe that the  term 
"business" encompasses "[t]rade and all activity relating to  it … ; commercial transactions, 
engagements, and undertakings regarded collectively".465 The term is "[u]sually taken to include 
[a company's] premises, staff, trade, profit, liabilities, etc ."466  
5.221.   Read together, these definitions do not indicate that the term "certain enterprises" is 
limited to entities with legal personality. To the contrary, they suggest a broader reading of such 
term. In particular, the text of Article  2.2 does not exclude t hat a sub -unit or a constituent part of 
a company – including, but not limited to, its branch offices or the facilities where it conducts 
manufacturing operations – may fall within the scope of the term "certain enterprises" despite not 
necessarily having distinct legal personality. In this respect, we find it significant that the definition 
of that term in the chapeau of Article  2.1 encompasses an "industry", a "group of enterprises" or a 
"group of industries". As the Panel correctly pointed out, an "indus try" or a "group of industries" 
are entities that, by their nature, may or may not have a distinct legal personality. Yet, they are 
included in the definition of "certain enterprises".467 Thus, we consider that the textual reference in 
the chapeau of Article  2.1 to such entities confirms that the notion of "certain enterprises" does 
not depend on the legal personality of the subsidy recipients.  
5.222.   This finding is further supported by the term "located" , which qualifies the term "certain 
enterprises"  and connects  it to the phrase "within a designated geographical region". A holistic 
reading of these terms sheds light on the core function of Article  2.2 – i.e. to address limitations 
                                                
457 United  States ' appellee's submission, para.  211. See also para.  237. 
458 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China ), para.  373 (quoting 
Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 375).  
459 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 373.  
(fn omitted)  
460 See para.  5.217  of this Report . 
461 Indeed, the chapeau of Article  2.1 "offe rs interpretative guidance" with regard to the scope and 
meaning of the rest of Article  2. (Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , 
para. 366) 
462 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 373 (quoting 
Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 841).  
463 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  373 (quoting 
Shorter Oxford English Dic tionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, 
p. 1371). The Appellate  Body also noted that the word "group" denotes "[a] number of … things regarded as 
forming a unity or whole on the grounds of some mutual or common relatio n or purpose, or classed together 
because of a degree of similarity". (Ibid.  (quoting Shorter Oxford English Dictionary , 6th edn, A. Stevenson 
(ed.) (Oxford University Press, 2007), Vol. 1, p.  1167))  
464 Appellate  Body Report, US – Anti-Dumping and Counterva iling Duties (China ), para.  373. 
465 Oxford English Dictionary  online, definition of "business"  
<http://www.oed.com/view/Entry/25229?redirectedFrom=business#eid> , accessed 5  July 2016.  
466 Oxford English Dictionary  online, definition of "business"  
<http://www. oed.com/view/Entry/25229?redirectedFrom=business#eid> , accessed 5  July 2016.  
467 Panel Report, paras. 7.268 -7.269.  WT/DS464/AB/R  
 
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  on access to a subsidy by virtue of the geographical  location  of the enterprises el igible for that 
subsidy. As the Panel observed, the verb "locate" signifies "tak[ing] up business in a place", 
"establish[ing] oneself … in a place", or "be[ing] situated".468 Under this definition, not every  
activity conducted by a company in a given place would suffice for that company to be "located" 
there.469 However, an enterprise may well "take up business" – and, therefore , be "situated" – in a 
certain region if it effectively establishes its commercial presence in that region, including by 
setting up a sub-unit such as a branch office or a facility for manufacturing operations.470 
Depending on the circumstances, a business or company may be commercially established in more 
than one location. Therefore, we agree with the Panel that an enterprise may be "loc ated" in a 
variety of places, including the site s of its head quarters , branch  offices , and manufacturing 
facilities . When a measure limits eligibility for a subsidy based on the geographical location of any 
of these sub -units or constituent parts of an ent erprise, as is the case for the RSTA  Article  26 tax 
credit programme, that measure will fall within the scope of Article  2.2.471  
5.223.   In support of its argument that the term "certain enterprises" is limited to entities with 
legal personality, Korea relies on th e Appellate  Body's statements that the recipient of the benefit 
must be a "natural or legal person"472 and that the focus of the analysis of whether a benefit exists 
"should be on 'legal ' or natural persons instead of on productive operations".473 We observe t hat 
those statements relate to Article  1.1(b) of the SCM Agreement , which addresses the notion of 
"benefit" as one of the elements necessary to establish the existence of a subsidy. The text of 
Articles 1 and 2 of the SCM Agreement  does not suggest  that th e identi fication of the recipient of a 
subsidy should prejudge the assessment of whether that subsidy is regionally specific. Indeed, a  
specificity analysis under Article  2 "presupposes  that the subsidy has already been found to 
exist".474 Thus, the notions of financial contribution, benefit, and specificity are distinct and 
independent concepts, which must be separately assessed in order to ascertain the applicability of 
the relevant disciplines of the SCM Agreement .475 An inquiry under Article  1.1(b) focuses,  in 
essence, on whether a financial contribution makes the recipient better off than it otherwise would 
have been on the marketplace.476 In this sense, stating that the recipient can be a "natural or legal 
person" recognizes that a subsidy may be conferred t o a wide variety of economic actors, including 
individuals, groups of persons, or companies. Conversely, the inquiry under Article  2 hinges on 
limitations on " eligibility  for a subsidy " in respect of certain recipients.477 Eligibility may be limited 
in "many  different ways"478, e.g. by virtue of the type of activities conducted by the recipients or 
the region where the recipients run those activities. Given these important differences between the 
analyses under Articles 1.1(b) and 2, we do not see that the Appellate Body's statements invoked 
by Korea are relevant to its argument that the term "certain enterprises" in Article  2.2 refers only 
to entities with legal personality.  
5.224.   Moreover, i f accepted, Korea's interpretation of the term "certain enterprises" would entail 
that a  regional specificity analysis should focus solely on the place (s) where the recipient 
companies are incorporated, without regard to the place(s) where those companies effectively 
establish their commercial presence  by, for instance, setting u p sub -units such as branch offices or 
manufacturing facilities. We agree with the United  States  that this interpretation could open the 
                                                
468 Panel Report, para.  7.270 (quoting The New Shorter Oxford English Dictionary on Historical 
Principles , 4th edn, L. Brown (ed.) (Clarendon Pre ss, 1993), Vol. 1, p.  1614 (Panel Exhibit USA -48)). 
469 Korea's other appellant's submission, para.  273. 
470 In making this finding, we are also informed by the broader context found in Article  XXVIII(d) of the 
General Agreement on Trade in Services , which def ines "commercial presence" as "any type of business or 
professional establishment" through: (i)  the "constitution, acquisition or maintenance of a juridical person"; or 
(ii) the "creation or maintenance of a branch or a representative office".  
471 Panel Repo rt, para.  7.270.  
472 Korea's other appellant's submission, para.  236 (referring to Appellate  Body Reports, US ‒ Lead and 
Bismuth II , para.  58; and Canada – Aircraft , para.  154).  
473 Korea's other appellant's submission, para.  262 (quoting Appellate  Body Report, US ‒ Countervailing 
Measures on Certain EC Products , para.  110 (emphasis omitted)).  
474 Appellate  Body Report, US – Large Civil Aircraft (2nd complaint) , para.  739. (emphasis added)  
475 Panel Report, Korea – Commercial Vessels , para.  7.411 . See also Appellate  Body Report, 
US ‒ Anti-Dumping and Countervailing Duties (China) , para.  413. 
476 See e.g. Appellate  Body Reports, Canada – Aircraft , para.  157; US – Lead and Bismuth II , para.  68; 
EC and certain member States – Large Civil Aircraft , paras. 705 -706; and Canada  ‒ Renewable Energy / 
Canada – Feed-in Tariff Program , para.  5.208.  
477 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  368. (emphasis 
original)  See also Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  943. 
478 Appellate  Body Report,  US – Anti-Dumping and Countervailing Duties (China) , para.  413. WT/DS464/AB/R  
 
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  door to circumvention of the disciplines of Article  2.2.479 For example, the recipient companies may 
be incorporated or he adquartered outside the relevant geographical region designated by a 
subsidy programme, but manufacture their entire  production within that region at facilities that do 
not enjoy distinct legal personality. Under Korea's interpretation, the subsidy program me in 
question would not be considered regionally specific, thereby escaping scrutiny under the 
SCM Agreement  and frustrat ing the function of Article  2.2. 
5.225.   In sum, we agree with the Panel that the term "certain enterprises" in Article  2.2 of the 
SCM Agreeme nt is not limited to entities with legal personality.480 Rather, an "enterprise " may be 
located in a certain region for purposes of Article  2.2 if it effectively establishes its commercial 
presence in that region , including by setting up a sub -unit, such as a branch office or 
manufacturing facility, which may or may not have distinct legal personality.481 
5.2.2.2   Whether the "designation" of a region for the purposes of Article  2.2 of the SCM 
Agreement must be affirmative and explicit , or may also be carried out by imp lication  
5.226.   Before the Panel, Korea contended that the RSTA Article  26 tax credit programme was not 
specific under Article  2.2 of the SCM Agreement  because it did not explicitly "designate" the 
geographical region for subsidization, but rather covered the en tire Korean territory except for the 
Seoul overcrowding area.482 The Panel observed that there is no requirement in Article  2.2 that the 
designation of the relevant region for subsidization be "explicit". Rather, as one of the definitions 
of the verb "design ate" is "indicate"483, the Panel took the view that the designation of a region for 
purposes of Article  2.2 "might  also be accomplished through less direct means that nevertheless 
make the region known".484 The Panel thus held that, by granting subsidies in co nnection with 
certain investments outside the Seoul overcrowding area, the RSTA Article  26 tax credit 
programme effectively designated the geographical region where the eligible investments were 
located.485 
5.227.   On appeal, Korea maintains that, by allowing for th e indirect designation of a geographical 
region, the Panel selectively relied on one of the possible definitions of the term "designate", and 
effectively replaced that term with the term "indicate".486 In Korea's view, the designation of a 
region must be "an  act of identification by the granting authority that is done affirmatively, not by 
implication or suggestion", lest the term "designate d" in Article  2.2 be rendered meaningless.487 
For Korea, the RSTA Article  26 tax credit programme could not be said to aff irmatively designate a 
geographical region, as it merely disqualified certain investments made in the Seoul overcrowding 
area from eligibility for subsidies that would otherwise be available.488 
5.228.   The United  States  agrees with the Panel that the meaning of the  verb "designate" 
encompasses definitions such as "indicate", which suggest s that the designation of a geographical 
region for purposes of Article  2.2 need not be affirmative or explicit, as long as the region in 
question is made known.489 According to the United States , it is irrelevant that the language of a 
subsidy programme designates a geographical region in terms of inclusion or exclusion, for the 
operational effect is the same.490 Similarly, the United  States  disagrees with Korea's 
characterization of th e RSTA Article  26 tax credit programme as "discouraging" investments in the 
Seoul overcrowding area, as opposed to "encouraging" investments in the rest of the Korea n 
territory. According to the United  States , framing the policy goal of the programme in ne gative 
                                                
479 United  States ' appellee's submission, para.  211. 
480 Panel Report, para. 7.267.  
481 Panel Report, paras. 7.269 -7.270.  
482 Panel Report, para. 7.276 . 
483 Panel Report, para.  7.280 (quoting United  States ' first written submission to the Panel, fn  502 to 
para. 407, in turn quoting The New Shorter Oxford English Dictionary on Historical Principles , 4th edn, 
L. Brown (ed.) (Clarendon Press, 1993), Vol. 1, p.  645 (Panel Exhibit USA -31, at p. 5) ). 
484 Panel Report, para.  7.280.  (fn omitted)  
485 Panel Report, para.  7.280 . 
486 Korea's other appellant's submission, para.  280. 
487 Korea's other appellant's submission, para.  215. (fn omitted)  
488 Korea's other appellant's submission, paras. 218 and 240 -241. 
489 United  States ' appellee's submission, paras. 24 6-248. 
490 United  States ' appellee's submission, para.  253. See also para.  264. WT/DS464/AB/R  
 
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  terms does not detract from the fact that the programme in question direct ed resources to 
particular geographical regions, thereby interfering with the market's allocation of resources.491 
5.229.   We note that , as the Panel observed,  the verb "designate" mean s "[p]oint out, indicate, 
specify … [c]all by name or distinctive term; name, identify, describe, characterize".492 As the 
Panel correctly stated , certain aspects of this definition – such as "specify" and "[c]all by name" – 
point to an act of explicit or af firmative identification, whereas other aspects – such as "indicate" 
and "describe" – suggest that identification may also be carried out through indirect means.493 
Thus, we agree with the Panel that the identification of a region for purposes of Article  2.2 may be 
explicit or implicit, provided that the relevant region is clearly discernible from the text, design, 
structure , and operation  of the subsidy measure at issue.  
5.230.   Korea posits that, if the drafters of Article  2.2 had not intended to require an affirma tive 
and explicit identification of the relevant region, they could have simply omitted the term 
"designated" from the text of the provision.494 Contrary to Korea's assertion, we do not believe 
that allowing for the implicit  identification of a region would deprive the  term "designated" of 
meaning . Rather, the inclusion of that term in the text of Article  2.2 serves to ensure that the 
relevant region is sufficiently demarcated and that its borders and territorial coverage are clear. 
We note that the Seoul ove rcrowding area is expressly delineated in Article  9 and Table 1 of the 
Enforcement Degree of the Seoul M etropolitan Area Readjustment Planning Act495, which 
specifically list the cities and municipalities constituting that area. Thus, we do not see any 
uncer tainty as to the boundaries of the area outside the scope of the RSTA Article  26 tax credit 
programme and, by exclusion, of the area that was indeed covered by the programme.  
5.231.   Similarly, w e do not find it relevant that the coverage of the RSTA Article  26 tax credit 
programme was couched in negative terms – i.e. it exclude d investments made in the Seoul 
overcrowding area from eligibility for subsidies otherwise available. As the United  States  points 
out496, the result would have been the same if the language o f the relevant regulation had 
affirmatively limited eligibility for that programme to investments made outside the Seoul 
overcrowding area. In both cases, the programme ha d the effect of discouraging certain 
investments in one portion of the Korean territo ry and, at the same time , encouraging those 
investments in another portion of the Korean territory.497 As observed above, limitations on access 
to a subsidy may be expressed in "many different ways".498 One way in which access to a subsidy 
may be limited on a geographical basis is by excluding portions of the territory of a Member's 
jurisdiction from that subsidy's scope of application. To draw the formalistic distinction proposed 
by Korea could enable Members to circumvent the disciplines of Article  2.2 by fra ming their 
regionally  focused subsidy schemes in negative or exclusionary terms.  
5.232.   Based on the foregoing, we agree with the Panel that, by identifying the relevant 
geographical region by exclusion or implication, the RSTA Article  26 tax credit programme 
effectively " designate d" that region for purposes of Article  2.2 of the SCM Agreement .499  
5.2.2.3   Whether the concept of "geographical region" for the purposes of Article  2.2 of 
the SCM Agreement depends on the territorial size of the area covered by a subsidy  
5.233.   During  the course of the Panel proceedings, Korea stressed that, since the Seoul 
overcrowding area accounts for only 2% of Korea's landmass, the RSTA Article  26 tax credit 
programme applied to virtually the entirety of the national territory.500 The Panel observed  that 
                                                
491 United  States ' appellee's submission, paras. 275 -280. 
492 Panel Report, para.  7.280 (quoting United  States ' first written submission to the Panel, fn  502 to 
para. 407, in turn quoting The New Shorter Oxfo rd English Dictionary on Historical Principles , 4th edn, 
L. Brown (ed.) (Clarendon Press, 1993), Vol. 1, p.  645 (Panel Exhibit USA -31, at p. 5)).  
493 Panel Report, para.  7.280.  
494 Korea's other appellant's submission, para.  280. 
495 GOK Washers  CVD supplemental  questionnaire response  (Panel Exhibit KOR -91). 
496 United  States ' appellee's submission, para.  253. 
497 Korea acknowledges that the RSTA Article  26 tax credit programme  aimed at correcting imbalances 
between the Seoul overcrowding area and the rest of the cou ntry. ( Korea's other appellant's submission, 
paras. 277 and 288) 
498 Appellate  Body Report,  US – Anti-Dumping and Countervailing Duties (China) , para.  413. 
499 Panel Report, para. 7.280.  
500 Panel Report, para.  7.282.  WT/DS464/AB/R  
 
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  Article  2.2 of the SCM Agreement refers simply to a "geographical region" without qualifying such 
concept in any way, and therefore held that " any geographical region – no matter how small or 
how large – would suffice to trigger the application of Article 2.2".501 
5.234.   On appeal, Korea reiterates that, since the Seoul overcrowding area accounts for only 2% 
of the national territory, the area covered by the RSTA Article  26 tax credit programme – i.e. the 
remainder of the country – was too large, too unbounded , and insufficiently demarcated or 
cohesive to be considered as a "designated geographical region".502 In Korea's opinion, " a subsidy 
that is available for investments made in 98% of the granting authority's jurisdiction is effectively 
as broadly available a s if it were available in 100% of the jurisdiction."503 In support of its 
argument that the RSTA Article  26 tax credit programme was broadly available , Korea stresses 
that the subsidy programme was based on neutral and objective eligibility criteria, consist ently 
with Article  2.1(b) of the SCM Agreement . In its view, this "lends further support" to the 
conclusion that the programme was non -specific pursuant to Article  2.2.504 For Korea, the RSTA 
Article  26 tax credit programme was an "efficient and effective po licy tool" to "address 
overcrowding and urban sprawl", and the Panel's interpretation of Article  2.2 would "improperly 
constrain" Members' ability to take corrective measures.505 
5.235.   The United  States  disagrees with Korea that the geographical area covered by th e RSTA 
Article  26 tax credit programme was too large and too diffuse to qualify as a "designated 
geographical region". The United  States  takes the view that "any identified tract of land within the 
jurisdiction of a granting authority" may qualify as a reg ion506, and notes that the boundaries of 
the area covered by Korea's subsidy scheme were not "diffuse", but were rather well defined under 
the RSTA Article  26 tax credit programme.507 Moreover, in the United  States ' opinion, the Seoul 
overcrowding area could n ot constitute a mere "exception" to an otherwise non -specific subsidy as 
the area in question encompasses a significant portion of the country's population and economic 
activity. For the United  States , by excluding that region from the coverage of the RSTA  Article  26 
tax credit programme, Korea limited access to its subsidy scheme "in a fundamental way".508 The 
United  States  also takes issue with Korea's contention that Members should be allowed to "curb 
urban sprawl" through zoning regulations.509 According to  the United  States , Members enjoy 
considerable leeway to adopt zoning laws and similar measures ; however, when they employ 
subsidies, they are subject to the disciplines of the SCM Agreement .510 
5.236.   Like the Panel, we observe that the term "geographical region" in the text of Article  2.2 is 
not qualified.511 We also note that the panel in US ‒ Anti-Dumping and Countervailing Duties 
(China) took the view that " any identified tract of land within the jurisdiction of a granting 
authority" may qualify as a "geographic region".512 We agree with the Panel that, given the 
absence of any textual qual ification to the term "geographical region", the territorial size of a 
region does not constitute a criterion relevant to the applicability of Article  2.2. This comports with 
the function of the provision at hand, which is to address subsidy schemes by whi ch Members 
direct resources to certain geographical regions within their jurisdictions, thereby interfering with 
the market's allocation of resources. Indeed, a subsidy programme that excludes from its coverage 
an area that, albeit territorially small, is nevertheless important from an economic standpoint, 
could in fact limit eligibility in a significant way. In this respect, we note the United  States ' 
argument that, although the Seoul overcrowding area only occupies 2% of Korea's landmass, such 
area accoun ts for a large proportion of the country's population and concentrates a substantial 
portion of its economy.513 As noted above, the boundaries of the area falling within the scope of 
                                                
501 Panel Report, para.  7.282. (emphasis origi nal; fn omitted ) 
502 Korea's other appellant's submission, paras. 214, 241 -243, and 284. 
503 Korea's other appellant's submission, para.  284. 
504 Korea's other appellant's submission, para.  246. 
505 Korea's other appellant's submission, para.  288. 
506 United  States ' appellee's submission, para.  256 (quoting Panel Report, para. 7.282, in turn quoting 
Panel Report, US ‒ Anti-Dumping and Countervailing Duties (China) , paras. 9.140 and 9.144).  
507 United  States ' appellee's submission, para.  263. 
508 United  States ' appellee's submission, para.  265. 
509 United  States ' appellee's submission, para.  288 ( referring to  Korea's firs t written submission to the 
Panel, paras. 317 -318 and 321).  
510 United  States ' appellee's submission, para. 293.  
511 Panel Report, para.  7.282.  
512 Panel Report, US – Anti-Dumping and Countervailing Duties (China) , para.  9.144.  (emphasis added)  
513 See United  States' appellee's submission, para.  265. See also European Union's third participant's 
submission, para.  130; and GOK Washers  CVD case brief  (Panel Exhibit KOR -82 (BCI), at pp. 6 -7). WT/DS464/AB/R  
 
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  the RSTA Article  26 tax credit programme were clearly delineated in the rel evant regulations. 
Thus, we see no reason why such "identified tract of land" would not qualify as a "designated 
geographical region".  
5.237.   In support of its argument that the RSTA Article  26 tax credit programme was broadly 
available and , therefore , not trade  distortive, Korea further stresses that the subsidy programme 
set out neutral and objective eligibility criteria, consistently with Article  2.1(b).514 Confronted with 
a similar argument, the Panel state d that nothing in the SCM Agreement  suggests that "a fi nding 
of specificity under Article  2.2 is somehow subject to further examination under Article  2.1(b)" .515 
Like the Panel, we observe that the text of these provisions does not suggest any hierarchy 
between them. Rather, Articles 2.1 and 2.2 set forth two di stinct and independent ways in which a 
subsidy may be specific. While the former provision addresses limitations "by reason of the eligible 
recipients", the latter focuses on limitations " by reason of the geographical location of 
beneficiaries".516 Therefore , the fact that a subsidy may set out neutral and objective eligibility 
criteria with respect to a given region does not, in and of itself, exclude the possibility that that 
subsidy is regionally specific.  
5.238.   Finally, we note Korea's argument that the Panel' s interpretation of the term "geographical 
region" would unduly constrain Members' ability to adopt measures that "pursue legitimate 
objectives and introduce minimal trade distortions".517 As an example in support of its argument, 
Korea posits that a subsidy  programme that excludes industrial investments in national parks from 
eligibility for subsidies otherwise available for like investments in the rest of a Member' s territory 
would be deemed regionally specific.518 We consider that Members are, in principle, free to 
preserve portions of their territories from industrial exploitation through measures other than 
subsidy programmes, such as zoning regul ations or prohibitions to build in certain areas. However, 
when Members choose to do so through the bestowal of subsidies, the disciplines of the 
SCM Agreement  apply. Pursuant to such disciplines, Members have the discretion to grant  
subsidies – other than those prohibited under Article  3 of the SCM Agreement  – that pursue 
legitimate policy goals , provided that, by doing so, they do not cause injury519 to other Members' 
domestic industries. If the bestowal of subsidies does, indeed, cause injury to the domestic 
industr ies of other Members , those subsidies may be subject to remedial action , such as the 
imposition of countervailing dutie s.  
5.239.   Based on the foregoing, we consider that the Panel was correct in finding  that the area 
covered by the RSTA Article  26 tax credit programme constitute d a "geographical region" within 
the meaning of Article  2.2 of the SCM Agreement .520 
5.2.2.4   Conclusions  
5.240.   In light of all the above, we agree with the Panel that: (i)  the term "certain enterprises" in 
Article  2.2 of the SCM Agreement is not limited to entities with legal personality, but also 
encompasses sub-units or constituent part s of a company  – including , but not limited to,  its 
branch offices and the facilities in which it conducts manufacturing operations  – that may or may 
not have distinct legal personality ; (ii) the "designation" of a region for purposes of Article  2.2 
need not be affirmative  or explicit, but may also be carried out by exclusion or implication, 
provided that the region in question is clearly discernible from the text, design, structure , and 
operation of the subsidy at issue; and (iii) the concept of "geographical region" in Article 2.2 does 
not depend on the territorial size of the area covered by a subsidy. The Panel correctly found that 
the RSTA Article  26 tax credit programme effectively designate d the region where the relevant 
eligible investments were to be made in order t o qualify for the subsidy at issue, thereby being 
"limited to certain enterprises located within a designated geographical region" within Korea's 
jurisdiction.  
                                                
514 Korea's other appellant's submission, para.  246. 
515 Panel Report, para.  7.261 (quoting Panel Report, EC and certain member  States – Large Civil 
Aircraft , para.  7.1233).  
516 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  413. 
517 Korea's other appellant's submission, para.  289. 
518 Korea's other appel lant's submission, para.  289. 
519 Footnote 45 to Article  15 of the SCM Agreement  defines "injury" as "material injury to a domestic 
industry, threat of material injury to a domestic industry or material retardation of the establishment of such 
an industry".  
520 Panel Report, paras. 7.282 -7.283.  WT/DS464/AB/R  
 
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  5.241.   We, therefore , uphold  the Panel 's finding, in paragraph 8.1 .b.iii of its  Report521, that 
"Korea f ailed to establish that the USDOC's determination of regional specificity in respect of the 
RSTA Article  26 tax scheme  is inconsistent with Article  2.2 of the SCM Agreement ". 
5.2.3   Whether the Panel failed to conduct an objective assessment of the matter before 
it in articulating its findings on regional specificity  
5.242.   Korea claims that, in articulating  its findings on  regional specificity, the Panel failed to 
conduct an objective assessment of the matter before it, thereby acting inconsistently with its 
duties unde r Article  11 of the DSU. In particular, Korea claims that the Panel did not adequately 
review the USDOC's determination of regional specificity .522 The United  States  responds that the 
Panel did evaluate the "key piece of evidence" on which the USDOC relied, namely , Article  23 of 
the RSTA Enforcement Decree.523 In any event, the United  States  argues  that Article  11 of the 
DSU did not require the Panel to cite explicitly the USDOC's determination in assessing Korea's 
claims.524 
5.243.   We note that the Panel's only descrip tion of the USDOC's determination is contained in 
paragraph 7.212 of its Report, where the Panel observed that, with respect of the RSTA Article  26 
tax credit programme, "[t]he USDOC found specificity under Article  2.2 of the SCM Agreement , on 
the basis … that the programme was limited to certain enterprises located within a designated 
geographical region."  
5.244.   However , the extent to which the Panel was required, in order to comply with its duties 
under Article  11 of the DSU, to examine the USDOC's determinati on depended on the nature and 
scope of the claims raised by Korea under Article  2.2. Those claims were not directed at the 
USDOC's handling of the evidence before it, nor did they require the Panel to delve deeply into the 
specifics of the USDOC's determin ation or the facts on the record of the investigation. Indeed, the 
text, design, structure, and operation of the RSTA Article  26 tax credit programme were not 
disputed. Rather, the thrust of Korea's argumentation touched , essentially,  on the interpretation  of 
Articles 2.1(b) and 2.2 of the SCM Agreement . In particular, Korea claimed that the USDOC erred  
by: (i) failing to take into account that the programme was non -specific pursuant to 
Article  2.1(b)525; (ii) improperly expanding the scope of Article  2.2 to cover not only "enterprises", 
but also investments in facilities526; (iii) finding the area covered by the programme to be a 
"designated geographical region" within the meaning of Article  2.2527; (iv)  holding that the 
programme was regionally specific although  the tax credits were available to all enterprises 
investing in the designated area528; and  (v) disregarding the fact that the programme was 
essentially a "zoning measure" aimed at relieving over -congestion in the Seoul overcrowding 
region.529  
5.245.   The Panel did a ddress all the interpretative arguments put forward by Korea. In particular, 
it analysed the relationship between Article 2.1(b) and Article 2.2530, the meaning of the term 
"certain enterprises" in Article  2.2531, the meaning of the term "designated geographic al region" in 
Article  2.2532, and the propriety of the "double -specificity" test proposed by Korea.533 At several 
                                                
521 See also Panel Report, para. 7.289.  
522 Korea's other appellant's submission, para.  229. Korea further states that the Panel "only provided 
disjointed, negative responses to Korea's allegations", thus failing to "develop  a positive, coherent 
interpretation of Article  2.2". (Ibid., para.  228) At the oral hearing, however, Korea clarified that it is not 
raising a claim under Article  11 of the DSU in respect of this aspect of the Panel's findings.  
523 United  States ' appellee's  submission, para.  303 (referring to Panel Report, para.  7.280).  
524 United  States ' appellee's submission, para.  304. 
525 Korea's first written submission to the Panel, paras. 322 -327. 
526 Korea's first written submission to the Panel, paras. 328 -330; second wri tten submission to the 
Panel, paras. 345 -359. 
527 Korea's first written submission to the Panel, paras. 335 -343; second written submission to the 
Panel, paras. 360 -366. 
528 Korea's first written submission to the Panel, paras. 331 -334. 
529 Korea's first written submission to the Panel, paras. 317 -321; second written submission to the 
Panel, paras. 367 -371. 
530 Panel Report, section 7.6.3.1.  
531 Panel Report, section 7.6.3.2.  
532 Panel Report, section 7.6.3.3.  
533 Panel Report, section 7.6.3.4.  WT/DS464/AB/R  
 
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  points in its reasoning, the Panel addressed Korea's policy arguments, and rejected  them based on 
the overall purpose of Article  2.2.534  
5.246.   Based on  the above, we consider that the Panel's omission to provide a comprehensive 
discussion of the USDOC's determination of regional specificity does not undermine the objectivity 
of the Panel's assessment of the matter before it  in light of the nature of Korea' s claims under 
Article  2.2 of the SCM Agreement . We, therefore , find that the Panel did not act inconsistently with 
its duties under Article  11 of the DSU in articulating its findings on regional specificity.   
5.2.4   Whether the Panel erred in its interpretation and application of Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994  by upholding the USDOC's 
determination that the tax credits received by Samsung under Articles  10(1)(3) and 26 
of the RSTA were not tied to particular products  
5.247.   We now tu rn to Korea's first claim under Article  19.4 of the SCM Agreement  and 
Article  VI:3 of the GATT  1994 with respect to the USDOC's calculation of the ad valorem  
subsidization rate for Samsung in the Washers  countervailing duty  investigation.   
5.248.   During  the tax year 2010, Samsung made certain expenditures that qualified for access to 
the RSTA Article  10(1)(3) and Article 26 tax credit programmes. It then calculated the tax credits 
that resulted from those expenditures and reported the aggregated resulting tax cred its in its 
annual tax return, which it filed with the National Tax Service  in March 2011.535 Samsung is 
internally organized into different business units, several of which made eligible expenditures 
during the relevant period. Its digital appliance business  unit produces the LRWs that were subject 
to the USDOC's Washers  anti-dumping and countervailing duty  investigations.  
5.249.   To recall536, in the Washers  countervailing duty  investigation, the USDOC determined that 
the RSTA Article  10(1)(3) and Article 26 tax cred it programmes are specific subsidies, and , 
therefore , imposed a countervailing duty  on LRWs from Korea. In calculating the ad valorem  
subsidization rate for Samsung, the USDOC was faced with the issue of whether the subsidies 
granted to the company were ti ed to the investigated products or, conversely, may be attributed 
also to non -investigated merchandise.537 Samsung argued that the majority of the tax credits it 
received under Articles  10(1)(3) and 26 of the RSTA related to expenditures that were attributab le 
to non -investigated products. Therefore, Samsung requested that the USDOC calculate the amount 
of the ad valorem  tax credit attributable to the investigated products by dividing the amount of tax 
credits earned by the digital appliance business unit by the sales value of the products 
manufactured by that unit.538 To this effect, Samsung submitted a document breaking down the 
eligible expenditures incurred by each of its business units during the relevant period, as well as 
the amount of tax credits generat ed by those expenditures.539 In support of that document, 
Samsung also submitted excerpts of its corporate books and records allegedly showing the 
individual eligible expenditures incurred by the digital appliance business unit and the resulting tax 
credit c alculations.540  
5.250.   The USDOC rejected Samsung's argument and found that the tax credits Samsung 
received under Articles  10(1)(3) and 26 of the RSTA were not tied to any particular product s. 
Therefore, the USDOC attributed the subsidies received by Samsung unde r those programmes 
across all products  – i.e. it divided the total amount of tax credits received by all of Samsung's 
                                                
534 Panel Report, paras. 7.27 3-7.274 and 7.281.  
535 Korea's other appellant's submission, para. 300. 
536 See para. 5.208 of this Report . 
537 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p p. 37-42. The USDOC's assessment 
was incorporated by reference in the Washers  final CVD dete rmination  (Panel Exhibit KOR -2), p. 75976.  
538 Korea's other appellant's submission, para. 307; Washers  final CVD I&D memorandum  (Panel Exhibit 
KOR-77), pp. 37 -39. 
539 Samsung Washers  CVD questionnaire response , exhibit 25  (Panel Exhibit KOR -72 (BCI) , at p. 51 ); 
Korea's other appellant's submission, paras.  303-304. 
540 Excerpts of exhibit 10 provided by Samsung to the USDOC in the Washers  CVD GOK questionnaire 
verification (Washers  CVD GOK questionnaire verification exhibit 10 ) (Panel Exhibit KOR -115 (BCI)); Excerpts 
of exhibit 12 provided by Samsung to the USDOC in the Washers  CVD GOK questionnaire verification (Washers  
CVD GOK questionnaire verification exhibit 12 ) (Panel Exhibit KOR -126 (BCI)). See also Korea's other 
appellant's submission, para. 305. WT/DS464/AB/R  
 
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  business units by the total value of all of Samsung's production in Korea during the period of 
investigation.541 
5.251.   The USDOC's conclusions wer e based on two main tenets. First, the USDOC stated that a 
determination of  whether a subsidy is tied to a specific product  focuses on "the purpose of the 
subsidy based on information available at the time of bestowal".542 Conversely, the USDOC will  not 
exam ine the subsequent "use or effect of subsidies"  – i.e. how benefits are used by companies .543 
According to the USDOC, a subsidy is tied to a product  "only when the intended use is known to 
the subsidy giver … and so acknowledged prior to or concurrent with t he bestowal of the 
subsidy ."544 Applying this test to the RSTA Article  10(1)(3) and Article 26 tax credit programmes, 
the USDOC found that the Government of Korea "had no way to know the intended use" of the 
subsidy at the time Samsung was authorized to clai m the tax credits  under those programmes ; 
nor could Samsung "acknowledge receipt of the subsidy prior to or concurrent with its 
bestowal".545  
5.252.   Second , the USDOC observed that the tax credits Samsung received under the RSTA 
Article  10(1)(3) and Article 26 tax  credit programmes  "reduce[d] Samsung's overall tax burden", 
and found no evidence in Samsung's tax return to the National Tax Service showing that those tax 
credits were being claimed in connection to any particular product.546 The USDOC also 
acknowledged t hat Samsung had submitted a document allegedly showing the amount of the 
eligible expenditures and the related tax credits pertaining to the digital appliance business unit. 
The USDOC, however, dismissed the relevance of that document on the ground that Sa msung's 
tax return did not evince that the tax credits provided under the RSTA were tied to any specific 
product or facility.547 Similarly, the USDOC did not find it necessary to "examine or discuss" the 
excerpts from Samsung's books and records548, because that documentation did not "form the 
basis for bestowal and [was] not included in the annual tax returns that the company file[d] with 
the Korean tax authority".549 
5.253.   Before the Panel, Korea claimed that the USDOC's calculation of Samsung's ad valorem  
subsidizat ion rate resulted in the imposition of a countervailing duty in excess of the amount of the 
subsidy found to exist, inconsistently with Article  19.4 of the SCM Agreement  and Article  VI:3 of 
the GATT  1994. According to Korea, the USDOC applied an inappropri ate standard by focusing on 
the intended use of a subsidy at the time of bestowal.550 Further, in Korea's view, the 
documentation submitted by Samsung to the USDOC would have allowed the investigating 
authority to identify readily the tax credits that Samsun g earned pursuant to Articles  10(1)(3) 
and 26 of the RSTA based on the eligible expenditures of its digital appliance business unit.551  
5.254.   Similar to the USDOC, the Panel articulated its reasoning along two main steps. First, the 
Panel took the view that, cont rary to Korea's assertion, the tax credits granted under 
Article  10(1)(3) of the RSTA "are not R&D subsidies".552 The Panel observed that those tax credits 
are provided after the underlying R&D activities have been undertaken, in an amount determined 
by refe rence to the total R&D activities. However, in the Panel's opinion, this does not mean that 
                                                
541 Panel R eport, para. 7.301; Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), pp.  41-42; 
Washers  final CVD determination  (Panel Exhibit KOR -2), p. 75976 . 
542 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 41 (referring to USDOC, 
Countervailing Du ties: Final Rule, United  States  Federal Register , Vol. 63, No. 227 (25  November 1998), 
pp. 65348 -65418 (CVD preamble regulations) (Panel Exhibit USA -25), p. 65403 ). 
543 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 41.  (fn omitted)  
544 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 41.  (fn omitted)  
545 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p p. 41-42. 
546 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 42.  
547 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 42.  
548 USDOC [ C-580-869] Memorandum to File regarding Countervailing Duty Investigation of Large 
Residential Washers from the Republic of Korea – Verification of the Questionnaire Responses Submitted by  
Samsung Electronics Co., Ltd, Samsung Electro nics [Logitech], and Samsung Electronics Service 
(22 October  2012) (Washers  CVD Samsung questionnaire verification memorandum ) (Panel Exhibit KOR -79 
(BCI)), p. 16.  
549 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 42.  
550 Korea's first written su bmission to the Panel, paras.  299-302; second written submission to the 
Panel, paras.  304-316. 
551 Korea's first written submission to the Panel, paras.  292-298; second written submission to the 
Panel, paras.  281-283. 
552 Panel Report, para. 7.303.  WT/DS464/AB/R  
 
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  the tax credits are tied to those R&D activities or to the products in respect of which those 
activities were undertaken. Indeed, according to the Panel, the subsid y conferred under 
Article  10(1)(3) of the RSTA consists of the "proceeds of the tax credit[s]", which are conceptually 
distinct from the underlying activities.553 The Panel stressed that Samsung is not required, 
pursuant to Article  10(1)(3) of the RSTA, to s pend the proceeds of the tax credits on the future 
production of digital appliance products. Rather, it may spend the proceeds of those tax credits on 
any product, or not spend them at all. For the Panel, Samsung's discretion regarding the use of 
the cash resulting from the tax credit "justifie s the USDOC's treatment of that subsidy as untied, 
and therefore the allocation of that subsidy across the sales value of all products".554 On this 
ground, the Panel rejected Korea's argument that the tax credits confer red under Article  10(1)(3) 
of the RSTA serve to spur retroactively the particular investments that result in those tax 
credits.555  
5.255.   Second , the Panel addressed Korea's argument that, during the course of the Washers  
countervailing duty  investigation, Samsung  had submitted documents singling out the tax credits 
that Samsung earned based on eligible expenditures of its digital appliance business unit. Since  
there was "no necessary correlation" between Samsung's R&D activities in respect of digital 
appliance pro ducts and the amount of tax credit cash used by Samsung for future manufacturing 
of such products, the Panel considered it "irrelevant " that Samsung might have been  able to 
identify the R&D expenditures made by each of its business units.556 Similarly, the Panel dismissed 
the relevance of the fact that the USDOC did verify the R&D costs specific to Samsung's digital 
appliance business unit in the Washers  anti-dumping investigation. In the Panel's opinion, even if 
the R&D costs relating to the production of LR Ws can be determined for the purpose of 
constructing a normal value  in an anti -dumping investigation , "this says nothing about the amount 
(if any) of the benefit conferred by the tax credit subsidies that is ultimately directed towards the 
future productio n of LRWs ."557 
5.256.   In the Panel's view, the above analysis applied mutatis mutandis  to the tax credits 
received by Samsung under Article  26 of the RSTA.558 Therefore, the Panel found that the USDOC's 
determination that the tax credits received by Samsung under Art icles 10(1)(3) and 26 of the 
RSTA were not tied to particular products is not inconsistent with Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994.559 
5.257.   On appeal, Korea requests us to find that the Panel erred in its interpretation and 
applic ation of Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994 by upholding 
the USDOC's determination that the tax credits received by Samsung under Articles  10(1)(3) and 
26 of the RSTA were not tied to particular products. In essence, Korea contends that the Panel's 
focus on the recipient's intended use of the proceeds of the tax credits prevented it from applying 
the correct tying test under Article  19.4 and Article  VI:3.560 Moreover, Korea maintains that the 
Panel erred by failing to examine the specific issue of whether Samsung had submitted positive 
evidence that allowed the USDOC to tie  the tax credit s that Samsung received on its development, 
production, and sale of digital appliance products to the R&D and other investment activities that  
generated those tax credits.561  
5.258.   Before assessing the merits of Korea's claim s, we recall the standard of review that applies 
to a panel assessing the WTO -consistency of a determination by a Member's investigating 
authority. In conducting such an assessment , a panel is not permitted to conduct a de novo  review 
of the facts of the case "or substitute its judgement for that of the … authorit [y]".562 Rather,  the 
panel must examine " whether, in the light of the evidence on the record, the conclusions reached 
                                                
553 Panel Rep ort, para. 7.304.  
554 Panel Report, para. 7.303.  
555 Panel Report, para. 7.304.  
556 Panel Report, para. 7.304.  
557 Panel Report, para. 7.305.  
558 Panel Report, para. 7.306.  
559 Panel Report, para. 7.307.  
560 Korea's other appellant's submission, paras.  38-40. 
561 Korea's other appellant's submission, para. 39. 
562 Appellate  Body Report, US – Steel Safeguards , para.  299 (referring to Appellate  Body Report, 
Argentina – Footwear (EC) , para.  121).  See also Appellate  Body Report, US – Anti-Dumping and Countervailing 
Duties (China ), para. 379. WT/DS464/AB/R  
 
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  by th e investigating authority are reasoned and adequate".563 What is "adequate" will inevitably 
depend on the facts and circumstances of  the case and the particular claims made , but some 
relevant " lines of inquiry " can be identified .564 First, a panel must ascerta in whether the 
investigating authority has "evaluated all of the relevant evidence in an objective and unbiased 
manner", including by "tak[ing] sufficient account of conflicting evidence and respond[ing] to 
competing plausible explanations of that evidence ".565 Second, the panel must "test[] the 
relationship between the evidence on which the authority relied in drawing specific inferences , and 
the coherence of its reasoning ".566 Finally, the adequacy of an investigating authority's 
explanations "is also a funct ion of the substantive  provisions of the specific covered agreements 
that are at issue in the dispute ".567  
5.259.   Based on  the above, the Panel was tasked with assessing whether the explanations 
provided in the USDOC's determination were "reasoned and adequate " in light of the evidence on 
the investigation record, so as to ascertain whether, by reaching such a determination, the USDOC 
acted consistently with Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994.568 
Our overview of the Panel's findings s hows that, indeed, the Panel considered that the USDOC's 
two-step reasoning constituted reasoned and adequate explanations. First, the Panel appears to 
have affirmed the test applied by the USDOC in the Washers  countervailing duty  investigation, 
whereby a subsidy is tied to a product only if the intended use of that subsidy is known to the 
granting authority and so acknowledged prior to or concurrent with its bestowal. Second, in light of 
that test, the Panel agreed with the USDOC's dismissal of the relevan ce of certain evidence 
submitted by Samsung, which purportedly showed the amount of eligible expenditures made by 
the digital appliance business unit, as well as the tax credits that those expenses generated under 
Articles  10(1)(3) and  26 of the RSTA.  
5.260.   Therefore, we find it useful to structure our assessment along the two analytical steps 
followed by both the USDOC and the Panel. First, we will examine whether the test applied by the 
USDOC and upheld by the Panel constitutes the appropriate standard to asce rtain whether the tax 
credits claimed by Samsung under Articles  10(1)(3) and 26 of the RSTA were tied to any particular 
products. Second, we will turn to the question of whether the Panel appropriately upheld the 
USDOC's dismissal of evidence that, alleged ly, would have enabled it to single out the tax credits 
generated by Samsung's digital appliance business unit.  
5.2.4.1   The Panel's affirmation of the USDOC's test for ascertaining whether the RSTA 
Article  10(1)(3) and Article 26 tax credits were tied to particul ar products  
5.261.   As noted above569, in the first portion of its determination, the USDOC set forth what it 
saw as the appropriate test to assess the existence of a product -specific tie with respect to the 
subsidies received by Samsung. The USDOC took the view tha t a subsidy is tied to a product  "only 
when the intended use is known to the subsidy giver " – in this case, the Government of Korea – 
and "so acknowledged prior to or concurrent with the bestowal of the subsidy".570 Applying this 
test to the RSTA Article  10(1)(3) and Article 26 tax credit programmes, the USDOC found that the 
Government of Korea "had no way to know the intended use" of the subsidy at the time Samsung 
was authorized to claim the tax credits  under those programmes, nor could Samsung 
"acknowledge  receipt of the subsidy prior to or concurrent with its bestowal".571  
5.262.   The Panel appears to have considered that, by applying such a test, the USDOC provided 
"reasoned and adequate " explanations for its determination.572 The thrust of the Panel's reasoning 
is that, although tax credits under Article  10(1)(3) of the RSTA are conferred in an amount 
                                                
563 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. 
564 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. 
565 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 97. See also 
Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 443. 
566 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  97. 
567 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  95 (referring to 
Appellate  Body Reports, US – Countervailing Duty Investigation on DRAMS , para. 184; US – Cotton Yarn , 
paras. 75 -78; and US – Lamb , para. 105 ). 
568 See Appellate  Body Report, US – Lamb , para. 105 . 
569 See paras.  5.251  and 5.254  of this Report . 
570 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 41.  (fn omitted)  
571 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p p. 41-42. 
572 See Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. WT/DS464/AB/R  
 
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  determined by reference to prior R&D expenditures, they cannot be said to be tied to those R&D 
expenditures or to the products in respect of which those expenditures w ere made. In particular, 
the Panel observed that, since the subsidy under Article  10(1)(3) of the RSTA "is only provided at 
the time that the tax credit is provided", that subsidy cannot retroactively "spur" any 
product -specific "investment that results in  the earning of the [tax] credit".573 Moreover,  according 
to the Panel,  Samsung's discretion to spend the proceeds of the tax credits on products other than 
those for which it received such tax credits – or on no products at all – "justifie s the USDOC's 
treatment of that subsidy as untied, and therefore the allocation of that subsidy across the sales 
value of all products".574  
5.263.   In Korea's view, by focusing on the recipient's intended use of the proceeds of a subsidy, 
the Panel articulated an erroneous standard,  as neither Article  19.4 of the SCM Agreement  nor 
Article  VI:3 of the GATT  1994 require s the "tracing back" of the proceeds of a tax credit to the 
eligible expenditures.575 Korea contends that , since money is fungible, the proceeds of every  
subsidy can be us ed in any way that the recipient sees fit, because it has the ability to use other 
funds to carry out the eligible activities.576 Korea stresses that  the Panel 's approach would create 
an irrebuttable presumption that a tax credit that is bestowed after the e ligible activity has 
occurred could never be tied to a particular product.577 Korea also asserts  that the Panel's 
reasoning runs counter to normal commercial behaviour , as any rational business entity  would 
necessarily take  into account the availability of t ax credits in deciding whether and to what extent 
to undertake qualifying expenditures.578 In this respect, Korea  posits that there is no practical 
difference between tying a tax credit and tying a grant  to a particular product: in both cases, the 
proceeds o f the subsidy are known  to be available for use to conduct the eligible activities.579 
Finally, for Korea, the Panel unduly disregarded the fact that, according to the USDOC's own 
regulations, the investigating authority may "attribute subsidies to particula r portions of a firm's 
activities" even if a recipient may use the proceeds of those subsidies as it sees fit.580 By doing so, 
Korea argues, the Panel impermissibly "substituted its own rationale as its legal basis for finding 
that tying had not been shown".581 
5.264.   The United  States , for its part, stresses that the circumstances relating to the "bestowal of 
the subsidy" are a "key consideration" in the context of a tying inquiry under Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994.582 In the United States ' view, the Panel 
appropriately found that the tax credits received under Article  10(1)(3) of the RSTA were not tied 
to Samsung's prior R&D expenditures583, for no subsidy had yet been "provided" or "bestowed"  
when such expenditures were made.584 The United  States  also disagrees with Korea that the RSTA 
Article  10(1)(3) tax credit programme operates to "spur" R&D investments in certain products.585 
For the United  States , the calculation of a subsidy ratio based on "speculation regarding whether 
the possibility of eventually receiving a subsidy had an effect ex ante " would be excessively 
onerous on investigating authorities and "fraught with uncertainty".586 Indeed, according to the 
United  States , the prospect of receiving a tax credit under Article  10(1)(3)  of the RSTA  may or 
may not affect a company's decision to make certain expenditures.587 Finally, the United  States  
contends that the Panel did not declare an all -purpose rule that  a subsidy "can never be 
tied … merely because the cash proceeds of the subsid y may be used in any way that the recipient 
sees fit ."588 Nor did the Panel base that statement on a "pure fungibility theory", for under such a 
                                                
573 Panel Report, para. 7.304.  (fn omitted)  
574 Panel Report, para. 7.303.  
575 Korea's other appellant's submission, para. 322. 
576 Korea's other appellant's submission, para. 322. 
577 Korea's other appellant's submission, paras.  318, 345, and 351 . 
578 Korea's other appell ant's submission, para. 334. 
579 Korea's other appellant's submission, para. 340. 
580 Korea's other appellant's submission, para. 325 (quoting CVD preamble regulations ( Panel Exhibit 
USA-25), p. 65403 ). 
581 Korea's other appellant's submission, para. 327. See al so para. 344. 
582 United  States ' appellee's submission, para. 322. 
583 United  States ' appellee's submission, para. 346. 
584 United  States ' appellee's submission, paras.  347-348. See also para. 370. 
585 United  States ' appellee's submission, para. 372. 
586 United  States' appellee's submission, para. 373. (emphasis original)  
587 United  States ' appellee's submission, paras.  373-374. 
588 United  States ' appellee's submission, para. 391 (quoting Korea's othe r appellant's submission, 
para. 321).  WT/DS464/AB/R  
 
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  theory a recipient's discretion to use a subsidy would make all subsidies untied.589 Rather, in the 
United  States ' view, the Panel grounded its conclusions on the "nature of the subsidies" at issue.590 
5.265.    We begin our assessment by examining the requirements of the provisions invoked by 
Korea, namely , Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994. Article 19.4 
and footnote 51 of the SCM Agreement  read:  
No countervailing duty shall be levied [*] on any imported product in excess of the 
amount of the subsidy found to exist, calculated in terms of subsidization per unit of 
the subsidized and exported produ ct. 
_______________________________________  
[*fn original]51 As used in this Agreement "levy" shall mean the definitive or final legal 
assessment or collection of a duty or tax.  
5.266.   Article  VI:3 of the GATT  1994 reads:  
No countervailing duty shall be levied on  any product of the territory of any Member 
imported into the territory of another Member in excess of an amount equal to the 
estimated bounty or subsidy determined to have been granted, directly or indirectly, 
on the manufacture, production or export of s uch product in the country of origin or 
exportation, including any special subsidy to the transportation of a particular product. 
The term "countervailing duty" shall be understood to mean a special duty levied for 
the purpose of offsetting any bounty or s ubsidy bestowed, directly, or indirectly, upon 
the manufacture, production or export of any merchandise.  
5.267.   Under both provisions, Members must not levy countervailing dutie s in an amount greater 
than the amount of the subsidy found to exist.591 Thus, in order to determine the proper amount of 
a countervailing duty , an investigating authority must first "ascertain the precise amount of [the] 
subsidy" to be offset.592 Article  19.4 further requires that the amount of the subsidy be calculated 
"in terms of subsidizat ion per unit of the subsidized and exported product". The term "per unit" 
indicates that an investigating authority is permitted to calculate the rate of subsidization "on an 
aggregate basis"593, i.e. by dividing the total amount of the subsidy by the total sales value of the 
product  to which the subsidy is attributable. The Appellate  Body, however, has cautioned that, in 
an aggregate investigation, the correct calculation of a countervailing duty  rate requires " matching  
the elements taken into account in the  numerator with the elements taken into account in the 
denominator".594 In turn, the product to which the subsidy is attributable for purposes of 
calculating per unit subsidization is defined in Article  VI:3 as the product for whose " manufacture, 
production or export " a subsidy has been "granted, directly or indirectly" in "the country of origin 
or exportation".  
5.268.   The per unit subsidization rate of the subsidized product constitutes the benchmark against 
which to establish the proper amount of the related countervailing duty . As the Appellate  Body has 
noted, the subsidies that justify the imposition of a countervailing duty  are those pertaining to "the 
imported products under  investigation ".595 Thus, Article  19.4 and Article  VI:3 establish the rule 
that investiga ting authorities must, in principle, ascertain as accurately as possible the amount of 
                                                
589 United  States ' appellee's submi ssion, paras.  386 and 393 . 
590 United  States ' appellee's submission, para. 391. 
591 Appellate  Body Report s, US – Anti-Dumping and Countervailing Duties (China) , para. 554; 
US ‒ Upland Cotton , para. 464. 
592 Appellate  Body Report, US – Countervailing Measures on Certain EC Products , para. 139. See also 
Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 601. 
593 Appellate  Body Report, US – Softwood Lum ber IV, para. 153. 
594 Appellate  Body Report, US – Softwood Lumber  IV, fn 196 to para. 164. (emphasis original) Thus, for 
instance, the panel in China – Broiler Products  faulted the Chinese investigating authority for failing to match 
the numerator and the d enominator. The authority had taken into account data pertaining to products falling 
outside the scope of the investigation in its allocation of the subsidy, but then divided this result by the sales 
volume of investigated products only. (See  Panel Report,  China – Broiler Products , paras.  7.255 -7.266 ) 
595 Appellate  Body Report, US – Countervailing Measures on Certain EC Products , para. 139. (emphasis 
added) See also Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 601; and 
Panel Report, US – Lead and Bismuth II , para. 6.57. WT/DS464/AB/R  
 
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  subsidization bestowed on the investigated products.596 It is only with respect to those product s 
that a countervailing duty  may be imposed, and only within the limits of the amount of 
subsidization that those product s received. This rule finds further support in Article  10 of the 
SCM Agreement , according to which "Members shall take all necessary steps to ensure  that the 
imposition of a countervailing duty" on any imported  product "is in accordance with the provisions 
of Article  VI of [the] GATT  1994 and the terms of [the  SCM]  Agreement". The wording of Article  10 
– and especially the phrase " take all necessary steps to ensure " – indicates that the obligation  to 
establish precisely the amount of subsidization requires a proactive attitude on the part of the 
investigating authority. Indeed, the Appellate  Body has held that authorities charged with 
conducting an investigation "must actively seek out pertinent information"597, and may not remain 
"passive in the face of possible shortcomings in the evidence submitted".598  
5.269.   Within these confines, the SCM Agreement  does not dictate any particular methodology for 
calculating subsidy ratios, and does not specify explicitly which elements  should be taken into 
account in the numerator and the denominator. Thus, an investigating authority has the discretion 
to choose the most appropriate methodology for carrying out its calculations, provided  that such 
methodology allows for a sufficiently p recise determination of the amount of subsidization 
bestowed on  the investigated products, as required under  Article  19.4 and Article  VI:3. In 
particular, no provision in the SCM Agreement  expressly sets forth a specific method for assessing 
whether a give n subsidy is, or is not, tied to a specific product.  
5.270.   The relevant definitions of the verb "tie" include: "join closely or firmly; to connect, attach, 
unite"599; "limit or restrict as to … conditions".600 Further, paragraph 3 of Annex IV to the 
SCM Agreement  – now lapsed601 – provided that , "[w]here the subsidy is tied to the production or 
sale of a given product", the value of the product shall be calculated as the total value of the 
recipient firm's sales of that product.602 In light of the above, we consider tha t a subsidy is "tied" 
to a particular product if the bestowal of that subsidy is connected to, or conditioned upon, the 
                                                
596 We note that, pursuant to Article  VI:3, a subsidy may be granted " indirectly " to the product under 
investigation. Based on this term, the Appellate  Body has held, for instance, that subsidies for the produ ction 
of inputs  used in manufacturing products subject to an investigation are not, in principle, excluded from the 
amount of subsidies that may be offset through the imposition of countervailing duties on the processed 
product , provided that the benefit f lowing from the input subsidy is passed through, at least in part, to the 
processed product. ( Appellate  Body Report, US – Softwood Lumber IV , paras.  140-143) 
597 Appellate  Body Report, US – Wheat Gluten , para. 53. See also Appellate  Body Reports, 
US ‒ Corrosion -Resistant Steel Sunset Review , para. 199; and US – Anti-Dumping and Countervailing Duties 
(China) , para. 344; and Panel Report, China – Broiler Products , para. 7.261.  
598 Appellate  Body Report, US – Wheat Gluten , para. 55. See also Panel Report,  China – Broiler 
Products , para. 7.261.  
599 Oxford English Dictionary online, definition of the verb "tie" 
<http://www.oed.com/view/Entry/201844#eid18396565> , accessed 22 May 2016.  
600 Appellate  Body Report, Canada – Aircraft , para. 171 (quoting The New Shorte r Oxford English 
Dictionary , (Clarendon Press, 1993), Vol. II, p. 3307; and referring to The Concise Oxford English Dictionary , 
(Clarendon Press, 1995), p. 1457).  
601 Annex IV sets forth disciplines for calculating the total ad valorem  subsidization pursuant  to 
Article  6.1(a) of the SCM Agreement . Article  31 of the SCM Agreement  provided that Article  6.1 would apply for 
a period of five years from the date of entry into force of the Marrakesh Agreement Establishing the World 
Trade Organization , after which th e Committee on Subsidies and Countervailing Measures (SCM Committee ) 
would determine whether to extend its application. The SCM Committee held a special meeting to this effect on 
20 December 1999. At that meeting, no consensus was reached to extend Article  6.1 either as drafted or in 
modified form. (See SCM Committee, Minutes of the Special Meeting held on 20 December 1999 , G/SCM/M/22. 
See also Panel Report, US ‒ Upland Cotton , para. 7.1187)  
602 That being said, Annex IV offers no other indications on the nat ure of the tie.  Indeed, the Informal 
Group of Experts (IGE), established by the SCM Committee to develop recommendations on how to calculate 
ad valorem  subsidization  under Annex IV to the SCM Agreement (Decision of the Committee, G/SCM/5, 
22 June 1995) , observed that paragraph 3 left open the question of "how closely related to a product a subsidy 
must be to be 'tied' to that product". ( Report by the Informal Group of Experts to the Committee on Subsidies 
and Countervailing Measures, Note from the Informal Group of Experts (revision), G/SCM/W/415/Rev.2, 
15 May 1998  (IGE Report) (Panel Exhibit USA -29), para. 62) The IGE further noted that R&D activities are 
future -oriented and, therefore, "it might be difficult to allocate the related subsidies to products no t yet in 
production". (Ibid., para. 118) However, the IGE also acknowledged that, in certain circumstances, it might be 
appropriate to tie R&D subsidies to a product. (Ibid., Recommendation 20.2).  WT/DS464/AB/R  
 
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  production or sale of the product concerned.603 An assessment of whether this connection or 
conditional relationship exists will inevitabl y depend on the specific circumstances of each case.604 
In conducting such an assessment, an investigating authority must examine the design, structure, 
and operation of the measure granting the subsidy at issue and take into account all the relevant 
facts s urrounding the granting of that subsidy. In certain cases,  an assessment of such factors 
may reveal that a subsidy is indeed connected to, or conditioned upon, the production or sale or a 
specific product. A  proper assessment of the existence of a product -specific tie is not necessarily 
based on whether the subsidy actually  results in increased production or sale  of the product in 
question, but rather on whether the subsidy operates in a manner that can be expected  to foster 
or incentivize the production or  sale of the product concerned.605  
5.271.   Applying these considerations to the Panel's review of the USDOC's determination, we note 
that the Panel briefly referred to certain features of Article  10(1)(3) of the RSTA. The Panel 
observed, for instance, that tax cred its under the RSTA Article 10(1)(3) tax credit programme "are 
provided after the underlying R&D activities have been undertaken, in an amount determined by 
reference to total R&D activities ."606 It also noted that Samsung's tax return "did not specify the 
merchandise for which [the tax credits were] to be provided" .607 However, despite those 
references, the Panel ultimately grounded its affirmation of the USDOC's test on the fact that, 
under Article  10(1)(3) of the RSTA, Samsung: ( i) was able to claim the tax c redits only after it had 
undertaken the eligible activities; and ( ii) was not required to spend the proceeds of those tax 
credits on the same type of activities as those that had given rise to eligibility for the subsidy. 
Based on this understanding, the P anel did not find it necessary to engage in any analysis of the 
RSTA Article  26 tax credit programme, for it considered that the same understanding applied 
"mutatis  mutandis " to that programme as well.608 In light of the above, we consider that the 
Panel's a nalysis falls short of a proper examination of the design, structure, and operation of the 
RSTA Article  10(1)(3) and Article 26 tax credit programmes, as well as all other relevant facts 
surrounding the bestowal of tax credits under those programmes. Inste ad of conducting such an 
examination, the Panel relied on a proposition that a subsidy cannot  be tied to a product if: ( i) the 
financial contribution is conferred on the recipient after the eligible activities have occurred; and 
(ii) the recipient is not r equired to spend the proceeds of the subsidy on the same type of activities 
that gave rise to eligibility. This closely mirrors the USDOC's finding that the Government of Korea 
                                                
603 This reading is informed by the broader context found in the Appellate  Body's jurisprudence 
concerning Article  3.1(a) of the SCM Agreement . Article  3.1(a) prohibits "subsidies contingent, in law or in fact  
… upon export performance". Footnote 4 to Article  3.1(a), in turn, specifies that a subsidy is de facto  
contingent on export performance when the granting of that subsidy, "without having been made legally 
contingent upon export performance, is in fact tied to actual or anticipated exportation or export earnings". 
(emphasis added) The Appellate  Body has noted t hat the term "tied to" in footnote 4 point s to "a relationship 
of conditionality or dependence". ( Appellate  Body Report, Canada – Aircraft , para. 171; see also 
Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para. 1037) In light  of this 
definition, the Appellate  Body has held, for instance, that a subsidy is "tied " to anticipated exportation within 
the meaning of footnote 4 "if it is geared to induce the promotion of future export performance by the 
recipient". ( Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para. 1056)  
604 Indeed, the Appellate  Body has emphasized the case -specific nature of similar inquiries in the 
context of other SCM provisions. For instance, it has held that ascertaining whether a s ubsidy is de facto  "tied" 
to anticipated exportation within the meaning of f ootnote  4 to Article  3.1(a) of the SCM  Agreement requires 
"an examination of the measure granting the subsidy and the facts surrounding the granting of the subsidy, 
including the d esign, structure, and modalities of operation of the measure".  (Appellate  Body Report, EC and 
certain member States – Large Civil Aircraft , para. 1056) 
605 In this respect, the IGE relied on the GATT panel report in US – Lead and Bismuth I  to recommend 
that a subsidy be deemed to be tied "if its intended use was known to the giver of the subsidy, and so 
acknowledged , prior to or concurrent with the subsidy's bestowal". (IGE Report ( Panel Exhibit USA -29), 
para. 63 and Recommendation 6.F.10) The IGE recognized,  however, that other possible approaches may be 
appropriate depending on the circumstances of a particular case . (Ibid., para. 63 and Recommendation 6.F.11) 
We note that the GATT panel report in US – Lead and Bismuth I was not adopted, and that the panel's  
articulation of the standard referred to by the IGE merely recited the United  States ' regulations and practice . 
(GATT Panel Report, US – Lead and Bismuth I  (unadopted) , fn 137 to para. 415) Moreover, the panel found 
that the fact that certain subsidies, i nitially bestowed on an industrial group as a whole, subsequently passed 
through to a specific business unit of that industrial group was, at the least, "relevant" to an assessment of 
whether those subsidies were tied to the products manufactured by that b usiness unit . (Ibid., para. 425) 
606 Panel Report, para. 7.303.  
607 Panel Report, para. 7.303  (referring to Washers  CVD questionnaire response, exhibits 24 and 22 
(Panel Exhibit KOR -72 (BCI), at pp. 45 and 38, respectively)).  
608 Panel Report, para. 7.306.  WT/DS464/AB/R  
 
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  "had no way to know the intended use at the time  [Samsung] was authorized to cl aim the tax 
credits".609 
5.272.   The fact that the recipient obtains the proceeds of a subsidy before, at the same time  as, 
or after conducting the eligible activities is not, in and of itself, dispositive of whether that subsidy 
is tied to a particular product. The  proceeds deriving from certain types of financial contribution, 
such as grants or loans, are usually paid before the recipient undertakes a certain activity. By 
contrast, the proceeds of other types of financial contribution, such as the cash that the rec ipient 
may keep in its accounts as a result of tax credits and other forms of revenue forgone , are 
normally obtained after the recipient has become entitled to receive them or has carried out the 
eligible activity. However, in both cases, the bestowal of a  subsidy may be connected to, or 
conditioned on, the production or sale of a particular product. Indeed, even when that subsidy 
operates in a manner whereby the recipient will obtain the proceeds after the eligible activity has 
occurred, the expectation  to obtain those proceeds may induce the recipient to engage in the 
production or sale of the product giving rise to eligibility.610 In this respect, the Appellate  Body has 
observed that the inclusion of "foregone or not collected" government revenue among the types of 
financial contribution  under Article  1.1(a)(1)  of the SCM Agreement  "recognizes that tax regimes 
may be used to achieve outcomes equivalent  to the  results that are achieved where a government 
provides a direct payment ".611 Excluding the existence of  a product -specific tie whenever the 
recipient obtains the proceeds of a subsidy after it has carried out the eligible activities could result 
in an unwarranted distinction between different types of financial contribution. Indeed, this would 
enable Member s to choose between different types of financial contribution with a view to creating 
or avoiding such a product -specific tie. In sum, we consider that a subsidy may be tied to the 
production or sale  of a given product even if the recipient obtains the pro ceeds of that subsidy 
after the eligible activity has taken place.612  
5.273.   For similar reasons, we find the Panel's affirmation of the USDOC's reliance on the 
recipient's "intended use" of the proceeds of a subsidy to be misplaced. The fact that a financial 
contribution, once collected by the recipient, may be spent on activities different from those for 
which it was bestowed is not, in and of itself, sufficient to exclude the existence of a 
product -specific tie. As Korea points out , money is fungible.613 Hence, un less a subsidy programme 
expressly determines the way in which the recipient has to spend the proceeds of the subsidy, the 
recipient will always  be free, in principle, to finance product -specific activities with resources other 
than those provided by the granting authority. Indeed , if the recipient's use of the proceeds of a 
subsidy for the same kind of activity that gave rise to eligibility were a condition for finding the 
existence of a product -specific tie , then hardly any subsidy would ever be considere d tied to a 
particular product, for the recipient would be able to escape such tie by spending the proceeds on 
different activities.614 Rather than focusing on the recipient's use of the proceeds of a subsidy, the 
appropriate inquiry into the existence of a product -specific tie requires a scrutiny of the design, 
structure, and operation of the subsidy at issue, aimed at ascertaining whether the bestowal of 
that subsidy is connected to, or conditioned on, the production or sale  of a specific product. Based 
on this assessment, a subsidy that does not restrict the recipient's use of the proceeds of the 
financial contribution may, nonetheless, be found to be tied to a particular product if it induces the 
recipient to engage in activities connected to that product.   
                                                
609 Washers final CVD I&D memorandum  (Panel Exhibit KOR -77), pp. 41 -42. 
610 In this sense, we are not persuaded by the United  States ' contention that, at the time the recipient 
conducts eligible activities with a view to obtaining a tax credit, no subsidy has yet b een "bestowed". 
(United  States ' appellee's submission, paras.  347-348. See also para. 370) Indeed, depending on the specifics 
of the measure at issue , it may be the case that the subsidy is "bestowed" at the time the recipient becomes 
entitled to, or condu cts the activity giving rise to eligibility for that subsidy . 
611 Appellate  Body Report, US – Large Civil Aircraft (2nd complaint) , para. 811. (emphasis added)  
612 This is further confirmed by paragraph 3 of Annex IV  to the SCM  Agreement , which provides that, if 
a subsidy is tied to a given product, the value of the product shall be calculated as the total value of the 
recipient firm's sales of that product "in the most recent 12 -month period, for which sales data is available, 
preceding the period in which the  subsidy is granted ". (emphasis added)  
613 Korea's other appellant's submission, paras.  322 and 342.  
614 We note, in this respect, that the panel in EC and certain member States – Large Civil Aircraft  found 
that certain subsidies were "tied to … anticipated e xportation"  within the meaning of footnote 4 to Article  3.1 of 
the SCM  Agreement regardless of – and without inquiring into – the activities for which the proceeds of those 
subsid ies were used.  (See Panel Report, EC and certain member States – Large Civil Aircraft , 
paras.  7.689 -7.690 ) WT/DS464/AB/R  
 
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  5.274.   In sum, b ased on the foregoing, the Panel applied a flawed test in reviewing the USDOC's 
determination and, in particular, in evaluating whether a portion of the tax credits that Samsung 
received under Articles  10(1)(3) and 26 of the RSTA was tied to the  products manufactured by its 
digital appliance business unit. Instead of reviewing the design, structure, and operation of the two 
tax credit programmes at issue, as well as other relevant facts surrounding the granting of those 
tax credits , the Panel und uly relied on the fact that the tax credits were conferred after Samsung 
conducted the eligible activities, and that Samsung was not required to spend the proceeds of 
those tax credits on the same type of activities. We understand that, by so doing, the Pa nel 
affirmed the standard applied by the USDOC in the Washers  countervailing duty  investigation, 
whereby a subsidy is tied to a specific product "only when the intended use  is known to the 
subsidy giver … and so acknowledged prior to or concurrent with the  bestowal of the subsidy".615 
Thus, we believe that the Panel erred in concluding that these explanations in the USDOC's 
determination concerning the calculation of the ad valorem  subsidization rate for Samsung were 
"reasoned and adequate " in light of the ev idence on the investigation record.616 
5.2.4.2   The Panel's affirmation of the USDOC's dismissal of certain evidence submitted 
by Samsung  
5.275.   In the latter portion of its determination, the USDOC stated that there was no evidence in 
Samsung's tax return to the National T ax Service showing that the tax credits it received under 
Articles  10(1)(3) and 26 of the RSTA were being claimed in connection with any particular 
products.617 The USDOC observed that Samsung had submitted a document allegedly showing the 
amount of the elig ible expenditures and the related tax credits pertaining to each of its business 
units, including the digital appliance business unit. However, the USDOC dismissed the relevance 
of that document on the ground that Samsung's tax return did not evince that t he tax credits 
provided under the RSTA were tied to any specific product or facility.618 Further, the USDOC noted 
that Samsung had submitted some excerpts from its books and records, which purportedly proved 
the accuracy of Samsung's unit -specific breakdown of eligible expenditures and the related tax 
credits.619 Nevertheless, the USDOC declined to "examine or discuss"620 those books and records 
because they did not "form the basis for bestowal and [were] not included in the annual tax 
returns that the company fi le[d] with the Korean tax authority".621 
5.276.   According to the Panel, since there was "no necessary correlation" between Samsung's 
R&D expenditures in digital appliance products and the amount of tax credit cash used by 
Samsung for future manufacturing of such pr oducts, it was " irrelevant " that Samsung might have 
been able to identify the R&D expenditures made by each of its business units.622 In other words, 
based on the test examined in section 5.2.3.1  above, the Panel affirmed the USDOC's view that 
the evidence s ubmitted by Samsung was not relevant to the calculation of the amount of tax 
credits that were tied to the products manufactured by Samsung's digital appliance business unit.  
5.277.   On appeal, Korea submits that the documents submitted by Samsung to the USDOC 
showed a tie between a portion of the tax credits received under Articles  10(1)(3) and 26 of the 
RSTA and the products manufactured by Samsung's digital appliance business unit.623 Indeed, 
according to Korea, those documents showed an exact correlation between the eligible 
expenditures made by the digital appliance business unit and the tax credits that accrued to 
Samsung pursuant to those expenditures, such that the USDOC's calculation would have been 
"easy to perform".624 Korea further highlights that, while the  relevant excerpts from Samsung's 
books and records needed not be filed with the Korean tax authorities together with Samsung's tax 
return for 2010, they were nonetheless available for inspection at all time s.625 For Korea, the 
USDOC's refusal to consider th e above -mentioned documents was inconsistent with the fact that, 
in determining normal value in the Washers  anti-dumping investigation, the USDOC did tie the 
                                                
615 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 41.  (fn omitted)  
616 See Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 93. 
617 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 42.  
618 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 42.  
619 Washers  CVD Samsung questionnaire verification memorandum  (Panel Exhibit KOR -79 (BCI)), p. 16.  
620 Washers  CVD Samsung questionnaire verification memorandum  (Panel Exhibit KOR -79 (BCI )), p. 16.  
621 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 42.  
622 Panel Report, para. 7.304.  
623 Korea's other appellant's submission, para. 319. 
624 Korea's other appellant's submission, para. 351. 
625 Korea's other appellant's submission, paras.  306 and 319.  WT/DS464/AB/R  
 
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  R&D expenditures of Samsung's d igital appliance business unit to the products manufactured by 
that unit.626  
5.278.   The United  States  contends that Articles  10(1)(3) and 26 of the RSTA set forth 
"undifferentiated, broadly applicable" tax credit programmes, which do not require recipients to 
specify the products in respect of which the eligible expenditures were  made in their tax returns.627 
For the United  States , the fact that Samsung was subject to "record -keeping requirements" under 
Korean law is not sufficient to establish a product -specific tie, because those requirements are "not 
a part of the RSTA legislatio n".628 Thus, the United  States  contends that the USDOC was not 
required to look at Samsung's documents referred to by Korea629 – documents that the Korean 
authorities themselves "never saw".630 In any event, according to the United  States , the features 
of Korea' s tax credit programmes do not establish an exact correlation between the amount of 
eligible expenditures made by each business unit and the amount of tax credits generated by 
those expenditures.631 The United  States  also considers it irrelevant that the USD OC reviewed 
certain R&D expenditures incurred by Samsung's digital appliance business unit in the Washers  
anti-dumping investigation.632 The United  States  agrees with the Panel that inquir ing in to certain 
costs "associated with" a product for purposes of con structing normal value is qualitatively 
different from assess ing whether and how a Member has bestowed a subsidy on that product.633 
Moreover, in the United  States ' view, considering documents pertaining to an anti -dumping 
investigation in a countervailing d uty investigation would have blurred the evidentiary barriers 
between the two records.634 
5.279.   We recall that, pursuant to Article  19.4 of the SCM Agreement  and Article  VI:3 of the 
GATT  1994, the USDOC was required to ascertain the "precise amount of [the] subsid y"635 
bestowed on the LRWs manufactured by Samsung. In conducting such an assessment, the USDOC 
had to take into account the design, structure, and operation of Korea's subsidy programmes, as 
well as any other relevant facts surrounding the granting of those  subsidies.636 Which facts were 
relevant for the purposes of the USDOC's calculation depended, necessarily, on the specific 
circumstances of the investigation. In reviewing the USDOC's calculation, the Panel was tasked 
with assessing whether, having "evaluat ed all of the relevant evidence"637, the USDOC had 
provided "reasoned and adequate"638 explanations for its determination.639  
                                                
626 Korea's other appellant's submission, paras.  310 and 319 (referring to USDOC [A -580-865] Issues 
and Decision Memorandum for the Antidumping Duty Investigation of Bottom Mount Refrigerator -Freezers from 
the Republic of Korea (16 March 2012) (e xcerpts) ( Refrigerators AD I&D memorandum) / USDOC [A -580-865] 
Memorandum to File regarding Verification of the Cost Response of Samsung Electronics Co., Ltd and Samsung 
Gwangju Electronics Co., Ltd in the Antidumping Duty Investigation of Bottom Mount Com bination Refrigerator -
Freezers from the Republic of Korea (21 December 2011) (excerpts) ( Refrigerators AD Samsung cost 
verification memorandum) ( Panel Exhibit KOR -98 (BCI) ); and U SDOC [ A-580-868] Memorandum to File 
regarding Verification of the Cost Respon se of Samsung Electronics Co.,  Ltd in the Less -Than-Fair-Value 
Investigation of Large Residential Washers from the Republic of Korea (17  October  2012) (Washers  AD 
Samsung cost verification memorandum ) (Panel Exhibit KOR-99 (BCI) )). 
627 United  States ' appelle e's submission, para. 350. See also paras.  308, 355, 365, 375, and 388.  
628 United  States ' appellee's submission, para. 354. 
629 United  States ' appellee's submission, paras.  357-358 (referring to  Korea's other appellant's 
submission, para. 304, in turn referri ng to Samsung Washers  CVD questionnaire response , exhibit 25  (Panel 
Exhibit KOR -72 (BCI),  at pp. 50 -51); and Korea's other appellant's submission, in turn referring to Washers  
CVD GOK questionnaire verification exhibit 10  (Panel Exhibit KOR -115 (BCI) ); and Washers  CVD GOK 
questionnaire verification exhibit 12  (Panel Exhibit KOR-126 (BCI) )). 
630 United  States ' appellee's submission, para. 359. (fn omitted)  
631 United  States ' appellee's submission, para. 353. For instance, the United  States  observes that , in its 
tax return for 2010 , Samsung carried forward credits that it had earned during the 2009 tax year (which, in 
turn, m ight have included deferrals from previous years), while deferring until the 2011 tax year a substantial 
amount of the credits that it earned  during the 2010 tax year. ( Ibid.) 
632 United  States ' appellee's submission, paras.  351-352 (referring to Panel Report, para. 7.304); 
para. 394 (referring to Panel Report, para. 7.305) ; and paras. 395 -409. 
633 United  States ' appellee's submission, para. 399. 
634 United  States ' appellee's submission, paras.  400-401 (referring to Panel Report, Japan – DRAMS 
(Korea) , para. 7.152).  
635 Appellate  Body Report, US – Countervailing Measures on Certain EC Products , para. 139. 
636 See para. 5.270 of this Report . 
637 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 97. 
638 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 93. 
639 See para. 5.258 of this Report . WT/DS464/AB/R  
 
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  5.280.   Applying this standard to the Panel's review of the USDOC's determination, we observe 
that the USDOC did examine certain relevant featu res of the RSTA Article  10(1)(3) and Article 26 
tax credit programmes. In particular, the USDOC noted that neither programme expressly 
conditions access to the tax credit on product -specific activities. Article  10(1)(3) of the RSTA 
conditions the bestowal of tax credits upon a showing that the applicant company has undertaken 
R&D and HRD expenditures during the course of the relevant tax year640, without specifying any 
product in connection to which those expenditures are to be made.  Likewise, Article  26 of t he 
RSTA bestowed tax credits on certain qualifying investments  made outside the Seoul overcrowding 
area, without linking those investments to any particular product s. Further, it is uncontested that, 
in order to claim tax credits under either programme, ap plicant companies only need to provide 
the Korean tax authorities with an aggregate calculation of the qualifying expenditures they have 
incurred, without being required to break down those expenses by product, production line, or 
facility.641 
5.281.   However, based  on those features of the tax credit programmes at issue, the USDOC 
appears to have disregarded other pieces of evidence on the investigation record submitted by 
Samsung, namely: (i) the one -page, unit -specific breakdown of eligible expenditures and relate d 
tax credits642; and (ii) the excerpts from Samsung's books and records purportedly proving the 
accuracy of that unit -specific breakdown.643 During the course of the investigation, Samsung 
emphasized that the documents in question were key to the USDOC's abil ity to tie a portion of the 
tax credits received under Articles  10(1)(3) and 26 of the RSTA to the products manufactured by 
the d igital appliance business unit (including LRWs).644 Hence , we are of the view that, in order to 
"evaluate[] all of the relevant e vidence in an objective and unbiased manner"645, the USDOC was  
required to examine the content of those documents, so as to weigh their probative value for its 
calculation of Samsung's ad valorem  subsidization rate. The fact that the evidence submitted by 
Samsung was created ad hoc  for the purposes of the Washers  countervailing duty  investigation, 
and was not expressly required under Articles  10(1)(3) and 26 of the RSTA does not suffice to 
relieve the USDOC of its duty to review it. Indeed, while that evidenc e did not form part of the 
design, structure, and operation of Korea's subsidy programmes, it could nonetheless constitute 
relevant evidence  surrounding the bestowal of those subsidies in light of the particular 
circumstances of the investigation.  
5.282.   We note  the United  States ' argument that, even assuming that the USDOC was required to 
take into account the documents submitted by Samsung, those documents would not have allowed 
a precise determination of the amount of subsidy attributable to the products manuf actured by the 
digital appliance business unit. Given the limits of our standard of review, we do not take a view as 
to whether, based on the documents in question, the USDOC should, in fact, have concluded  that a 
portion of the tax credits Samsung receive d under Articles  10(1)(3) and 26 of the RSTA was tied to 
the products manufactured by its digital appliance business unit. However, it was the USDOC's 
responsibility to review all the evidence available, as appropriate, with a view to ascertaining the 
amou nt of subsidies bestowed on the investigated products and to probe the existence of a 
product -specific tie.  
5.283.   In sum, by too readily dismissing the relevance of the documents submitted by Samsung, 
the USDOC failed to "evaluate[] all of the relevant evidence  in an objective and unbiased 
manner".646 Thus, by upholding the USDOC's finding that those documents were "irrelevant" to the 
calculation of Samsung's ad valorem  subsidization rate647, the Panel erroneously concluded that 
                                                
640 See Korea's first written submission to the Panel, para. 245; Kore a's other appellant's submission, 
para. 331; and GOK Washers  CVD questionnaire response  (Panel Exhibit KOR -75 (BCI) , at pp. 37 and 47) . 
These formulae are further detailed in Articles  9(3)-9(5) of the RSTA Enforcement Decree  in GOK Washers  CVD 
questionnair e response  (Panel Exhibit KOR -76). 
641 Korea's other appellant's submission, paras.  306 and 319; United  States ' appellee's submission, 
para. 355. 
642 Samsung Washers  CVD questionnaire response , exhibit 25  (Panel Exhibit KOR -72 (BCI) , at 
pp. 50-51). 
643 Washers  CVD GOK questionnaire verification exhibit 10  (Panel Exhibit KOR -115 (BCI)); Washers  CVD 
GOK questionnaire verification exhibit 12  (Panel Exhibit KOR -126 (BCI)).  
644 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), pp. 38 -39. 
645 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 97. 
646 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 97. 
647 Panel Report, para. 7.304.  WT/DS464/AB/R  
 
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  the explanations provided by the USDO C were "reasoned and adequate "648 in light of the evidence 
placed on the investigation record.  
5.2.4.3   Conclusions  
5.284.   In light of the above, we conclude that the Panel: (i) improperly endorsed a flawed test 
applied by the USDOC in the Washers  countervailing duty  investigation for ascertaining whether 
the tax credits bestowed under Articles  10(1)(3) and 26 of the RSTA were tied to particular 
products; and (ii)  improperly upheld the USDOC's dismissal of certain evidence submitted by 
Samsung that was potentially relevant to the assessment of whether a portion of the tax credits 
Samsung claimed under such provisions was tied to the products manufactured by its digital 
appliance business unit.  
5.285.   Therefore , we reverse  the Panel's finding , in paragraph 8.1.b.iv of its Report649, that "the 
USDOC's failure to tie the RSTA Article[s] 10(1)(3) and 26 tax credit subsidies to [d]igital 
[a]ppliance products is [not] inconsistent with Article  19.4 of the SCM Agreement  and Article  VI:3 
of the GATT  1994"; and find, instead, that the USDOC a cted inconsistently with the United  States ' 
obligations under Article 19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994 by 
applying a flawed test for ascertaining whether the tax credits bestowed under Articles  10(1)(3) 
and 26 of the RSTA were ti ed to particular products, and by dismiss ing certain evidence submitted 
by Samsung  that was potentially relevant to the assessment of whether a portion of the tax credits 
Samsung claimed under such provisions was tied to the products manufactured by its di gital 
appliance business unit.  
5.286.   Korea claims that, in articulating its analysis, the Panel also failed to comply with its duties 
under Article  11 of the DSU by stating that the tax credits available under the RSTA 
Article  10(1)(3) tax credit programme "are not R&D subsidies".650 Having reversed the Panel's 
finding under Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994, we do not find 
it necessary  to address Korea's claim under Article  11 of the DSU.   
5.2.5   Whether the Panel erred in its interpreta tion and application of Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994  by upholding the USDOC's attribution 
of the tax credits received by Samsung under Article  10(1)(3) of the RSTA to Samsung's 
domestic production only  
5.287.   We now turn to the second claim raised by Korea under Article  19.4 of the SCM Agreement  
and Article  VI:3 of the GATT  1994 with respect to the USDOC's calculation of the ad valorem  
subsid ization  rate for Samsung in the Washers  countervailing duty  investigation.  
5.288.   During th e course of the Washers  countervailing duty  investigation, the USDOC was 
confronted with the issue of whether it should attribute the tax credits that Samsung received 
under Article  10(1)(3)  of the RSTA to Samsung's products manufactured worldwide or only to 
those manufactured in the territory of Korea.651 Although Samsung produced digital appliance 
products (including LRWs) in Korea only, a number of Samsung's wholly  owned subsidiaries 
produced digital appliance products (including LRWs) in the jurisdictions  of other Members.652 
Thus, Samsung argued that the denominator of its per unit subsidization rate should encompass 
its worldwide production, including the production of its overseas subsidiaries. In support of this 
argument, Samsung highlighted that subsidi es such as R&D tax credits are, by nature, tied to an 
activity that benefits a company's domestic and overseas production alike.653 It also stressed that, 
                                                
648 See Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para. 93. 
649 See also Panel Report, para. 7.307.  
650 Korea's other appellant's submission, para. 331 (quoting Panel Report, para. 7.303).  
651 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 50.  
652 For instance, Samsung's Mexican affiliate, Samsung Electron ics Mexico S.A. de C.V., produced LRWs 
in Mexico. Samsung Electronics America, Inc. sold those LRWs in the United  States during the period of 
investigation. (See Response dated 10 April 2012 of Samsung Electronics Co., Ltd to the USDOC's 
questionnaire of 1 5 February 2012 in the Washers  CVD investigation [C -580-869] (excerpts) (BCI -redacted 
version)  (Panel Exhibit USA -100, at p. 3))  
653 Case Brief of Samsung Electronics Co., Ltd, Large Residential Washers from the Republic of Korea 
[C-580-869] (2 November 2012 ) (excerpt) (Samsung Washers  CVD case brief ) (Panel Exhibit KOR -90, at 
pp. 4-5); Korea's other appellant's submission, para.  357. WT/DS464/AB/R  
 
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  in the Washers  and Refrigerators  anti-dumping investigations654, the USDOC determined that 
Samsung's R&D activities in Korea benefitted all of its digital appliance subsidiaries.655 Finally, 
Samsung pointed to the royalties and sales commissions paid by Samsung's overseas subsidiaries 
in order to compensate their parent company for its R&D activities in Korea.656 
5.289.   The USDOC observed that its own regulations set forth "a very high threshold" to find that 
subsidies provided by a government can benefit the production of merchandise produced in 
another country.657 Indeed, according to those regulations, the USDOC applies  a "presumption that 
government subsidies benefit domestic production", and , therefore , normally attributes those 
subsidies solely to "products produced … within the country of the government that granted the 
subsidy".658 In order to rebut this presumption, the USDOC explained, the subsidizing government 
must have " 'explicitly stated that the subsidy was being provided for more than domestic 
production ' in the application and/or approval documents".659 Such documents "must show that, at 
the point of bestowal, o ne of the express purposes of the subsidy was to provide assistance to the 
firm's foreign subsidiaries ."660 Applying this presumption to the RSTA Article  10(1)(3) tax credit 
programme, the USDOC found that Samsung had not submitted any statements by the 
Government of Korea indicating that tax credits under that programme were meant to benefit 
production occurring outside of Korea. For instance, the USDOC observed  that there is no 
indication in the statutory provisions that a company could claim a tax credit o n R&D activities 
conducted outside of Korea, and the tax returns themselves do not evince t hat the design of the 
programme  includes the subsidization of foreign production.661 In light of the above, the USDOC 
decided not to extend the denominator of Samsung' s per unit subsidization rate to Samsung's 
oversea s production.662 
5.290.   Before the Panel, Korea claimed that the USDOC's decision resulted in the imposition of a 
countervailing duty  in excess of the amount of the subsidy found to exist in respect of Samsung's 
LRWs under investigation inconsistently with Article  19.4 of the SCM Agreement  and Article  VI:3 of 
the GATT  1994. In Korea's view, the denominator calculated by the USDOC did not match the 
numerator, which included the total amount of tax credits received by Samsung under 
Article  10(1)(3) of the RSTA.663 Korea submitted that , since the R&D tax credits claimed by 
Samsung benefi tted Samsung's worldwide production of digital appliances664, the denominator 
should have encompassed the total value of Samsung's sales of those products, regardless of 
where they were produced, manufactured, or sold.665 Moreover, according to Korea, the USDOC's 
presumption of attribution of a subsidy to domestic production only was impermissible.666 
5.291.   The Panel recalled that the subsidies Samsung received under Article  10(1)(3) of the RSTA 
are "the tax credits provided to Samsung in Korea", and that the "benefit" of those subsidies is the 
"tax credit cash".667 In turn, according to the Panel, this "benefit" is not "tied" to the underlying 
                                                
654 USDOC [A -580-865] Antidumping Duty Investigation of Bottom Mount Combination Refrigerator -
Freezers from the Republic of Kore a. 
655 See e.g. Samsung Washers  CVD case brie f (Panel Exhibit KOR -90, at pp. 4 -5); Korea's other 
appellant's submission, paras.  357-358 (referring to Refrigerators  AD I&D memorandum  and Refrigerators  AD 
Samsung cost verification memorandum  (Panel  Exhibit  KOR-98 (BCI) , at p. 8 and p. 12, respectively) ; and 
Washers AD Samsung cost verification memorandum  (Panel Exhibit KOR -99 (BCI)) , p. 42) . 
656 Samsung Washers  CVD case brief (Panel Exhibit KOR -90, at pp. 4 -5); Korea's other appellant's 
submission, para.  357. 
657 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52.  
658 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52 (referring to CVD preamble 
regulations (Panel Exhibit USA -25), p. 65403).  
659 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52 ( quoting  CVD preamble 
regulations (Panel Exhibit USA -25), p. 65403).  
660 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52  (quoting CVD preamble 
regulations (Panel Exhibit USA -25), p. 65404).  
661 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52.  
662 Panel Report, para.  7.317; Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), pp. 52 -53. 
The USDOC's decision was incorporated by reference in the Washers  final CVD determination  (Panel Exhibit 
KOR-2), p. 75976.  
663 Korea's fi rst written submission to the Panel, para.  307 (referring to Appellate  Body Report, 
US ‒ Softwood Lumber IV , fn 196 to para.  164).  
664 Korea's first written submission to the Panel, para.  308 ( referring to Samsung  Washers  CVD case 
brief (Panel Exhibit KOR -90, at pp. 4 -5)). See  also Korea's second written submission to the Panel, para.  323. 
665 Korea's first written submission to the Panel, para.  306. 
666 Korea's first written submission to the Panel, para s. 310-315. 
667 Panel Report, para.  7.318.  WT/DS464/AB/R  
 
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  R&D activit ies, since Samsung is free to spend the tax credit cash as it sees fit.668 Therefore, the 
Panel found that, even assuming that Samsung's R&D activities in Korea may have a "positive 
effect" on the overseas production of digital appliances by Samsung's subsid iaries, this does not 
mean that the tax credits conferred in connection with those activities have to be allocated across 
revenue from Samsung's overseas production. Indeed, in the Panel's opinion, such "positive effect" 
does not constitute a "benefit" wit hin the meaning of Article  1.1(b) of the SCM Agreement669, and 
there is no evidence that the benefit conferred by the tax credits claimed by Samsung "passed 
through" to Samsung's overseas production operations.670 The Panel further observed that the 
USDOC's pr esumption of attribution of subsidies to domestic production is rebuttable, in the sense 
that it allows respondents to show that a government expressly intends to subsidize overseas 
production. The Panel also noted that, while Samsung's subsidiaries may produce  digital appliance 
products overseas, the parent company – i.e. the recipient of the subsidy – produce s those 
products within Korea only . On these grounds, the Panel held that the USDOC was entitled to 
presume that the tax credit s Samsung received und er Article  10(1)(3) of the RSTA did not benefit 
Samsung's overseas production and that Samsung had not effectively rebutted that 
presumption.671 
5.292.   Korea requests us to find that the Panel erred in its interpretation and application of 
Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994 by upholding the USDOC's 
attribution of the tax credits received by Samsung under Article  10(1)(3) of the RSTA to 
Samsung's domestic production only. Korea maintains, first, that, by grounding its reasoning on 
Samsung's discretion as to the use of the tax credit cash, the Panel repeated the same error it had 
made with respect to the "tying issue".672 Second, Korea contends that the Panel improperly 
upheld the USDOC's presumption that "government subsidies benefit dom estic production" .673 For 
Korea, Samsung's arguments and evidence submitted during the course of the Washers  
countervailing duty  investigation effectively rebutted this presumption674 and required the USDOC 
to allocate the tax credits Samsung received under Article 10(1)(3) of the RSTA "to the products 
that Samsung produced worldwide" .675 Thus, Korea submits that, in calculating the ad valorem  
subsidization  rate for Samsung, the USDOC should have extended the denominator to the sales 
value of Samsung's worldwide production.676 
5.293.   According to the United  States , Korea's contention that subsidies may be attributed based 
on the indirect overseas effect of R&D activities has no grounding in the text of Article  19.4 and 
Article  VI:3.677 In the United  States ' view, those provi sions focus on domestic production678 
without addressing "possible overseas knock -on effects" of subsidies.679 In the United  States ' view, 
such cross-border effects "may not m aterialize for years (if ever)"680 and, therefore, tracing such 
effects would be excess ively onerous on investigating authorities.681 The United  States  also 
stresses that Article  10(1)(3) of the RSTA limits eligibility to Korean companies and to their R&D 
and HRD activities in Korea682 and maintains that the royalties paid by Samsung's overseas 
subsidiaries to their parent company in Korea testif y to the fact that the benefit received by 
Samsung did not automatically "pass through" to those subsidiaries.683 Finally, the United  States  
considers the USDOC's statement, in the Washers  and Refrigerators  anti-dumping investigations, 
                                                
668 Panel Report, para.  7.318.  
669 Panel Report, para.  7.318.  
670 Panel Report, para.  7.319.  
671 Panel Report,  para. 7.319.  
672 Korea's other appellant's submission, para.  360 (referring to  Panel Report, para.  7.318).  
673 Korea's other appellant's submission, para.  359 (quoting Washers  final CVD I&D memorandum  
(Panel Exhibit KOR -77), p. 52 ). See also para. 361.  
674 Korea's other appellant's submission, paras.  357-358 (referring to Refrigerators  AD I&D 
memorandum and Refrigerators AD Samsung cost verification memorandum (Panel Exhibit KOR -98 (BCI) , at 
p. 8 and p. 12, respectively) ; and Washers  AD Samsung  cost verification  memorandum  (Panel Exhibit KOR -99 
(BCI))) ; and  paras. 362-364 and  368. 
675 Korea's other appellant's submission, para.  356. 
676 Korea's other appellant's submission, para s. 357 and 372 . 
677 United  States ' appellee's submission, para.  416. 
678 United  States ' appell ee's submission, para.  418. 
679 United  States ' appellee's submission, para.  419. 
680 United  States ' appellee's submission, para.  430. 
681 United  States ' appellee's submission, para.  426. 
682 United  States ' appellee's submission, para.  431. 
683 United  States ' appelle e's submission, para.  430. WT/DS464/AB/R  
 
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  that Samsung's R&D activities in Korea benefitted all of its digital appliance subsidiaries to be 
irrelevant for determining the attribution of subsidies.684  
5.294.   We understand the Panel to have upheld the USDOC's analysis based on two core 
premises. First, since the "benefit" constituted by the proceeds of the tax credits under 
Article  10(1)(3) of the RSTA was bestowed on Samsung for its R&D and HRD activities in Korea, it 
was irrelevant, for purposes of attribution of the subsidy, that such activities could  have had a 
positive effect on the production of digital appliance products by Samsung's overseas subsidiaries. 
Second, the Panel considered that the USDOC was entitled to presume that those tax credits were 
being bestowed on Sams ung's domestic production only, as neither the text of Article  10(1)(3) of 
the RSTA nor any other application or approval document showed an intent by the Government of 
Korea to subsidize the production of Samsung's overseas  subsidiaries.  
5.295.   To recall, Article 19.4 of the SCM Agreement  requires an investigating authority to 
calculate the amount of subsidy bestowed on the products under investigation "in terms of 
subsidization per unit of the subsidized and exported product".685 In order to calculate per unit 
subsidization, an investigating authority may divide the total subsidy by the total sales value of all 
products to which the subsidy is attributable. In so doing, the authority must properly "match[] 
the elements taken into account in the numerator with the e lements taken into account in the 
denominator ".686 The SCM Agreement  does not expressly specify whether, in order to ensure this 
matching, the investigating authority should limit the denominator to the sales value of the 
recipient 's production  within the ju risdiction of the subsidizing Member or may also include in the 
denominator the sales value of the recipient 's production  in the jurisdictions of other Members.  
5.296.   As noted above687, Article  VI:3 of the GATT 1994 defines the "subsidized products" as the 
produc ts for whose "manufacture, production or export" a subsidy has been "granted, directly or 
indirectly" in "the country of origin or exportation". By expressly referring to "manufacture, 
production or export", Article  VI:3 contemplates that the bestowal of a  subsidy may be linked to a 
wide array of activities, spreading across the cycle of production and sale of the relevant products. 
In turn, Article  1 of the SCM Agreement  provides that  a subsidy is deemed to exist if there is a 
financial contribution by a g overnment or a public body within the territory of a Member that 
provides a "benefit" to the recipient.688 Finally, under Article  14 of the SCM Agreement , 
investigating authorities are required to calculate the amount of a subsidy in terms of "benefit to 
the recipient". Read together, these provisions indicate that "subsidized products" for purposes of 
calculating per unit subsidization are limited to those manufactured, produced , or exported by the 
recipient.  
5.297.   However, the above -mentioned provisions do not indicate that , for purposes of calculating 
per unit subsidization, the subsidized products should be limited to those produced by the recipient  
of a subsidy within the jurisdiction of the subsidizing Member. We do not see any express 
limitation to this effec t in the SCM Agreement . Thus, we consider that a subsidy may , indeed,  be 
bestowed on the recipient 's production  outside the jurisdiction of the subsidizing Member. For 
instance, if the recipient is a multinational corporation with facilities located in mul tiple countries, 
the subsidized products may, depending on the circumstances of the case, include that 
corporation 's production  in those multiple countries .  
5.298.   In calculating the amount of ad valorem  subsidization, an investigating authorit y has the 
task of identifying the specific products for whose "manufacture, production or export" a given 
subsidy has been "granted". This examination should be conducted on a case -by-case basis, based 
on the arguments and evidence submitted by interested parties and the sp ecific facts surrounding 
the bestowal of that subsidy. Those facts may include the text , design, structure, and operation of 
                                                
684 United  States ' appellee's submission, paras.  422-423 and 428.  
685 See para. 5.267 of this Report . 
686 Appellate  Body Report, US – Softwood Lumber IV , fn 196 to para.  164. (emphasis omitted)  
687 See para. 5.267 of this Report . 
688 See Appellate  Body Reports, Canada – Dairy , para.  87; and EC and certain member States – Large 
Civil Aircraft , para.  708. According to the Appellate  Body, the existence of a benefit is to be determined by 
reference to "whether the terms of the financial contrib ution are more favourable to what is available to the 
recipient on the market". ( Appellate  Body Report, EC and certain member States – Large Civil Aircraft , 
para. 974; see also e.g. Appellate  Body Reports, Canada – Aircraft , para.  157; US – Lead and Bismut h II, 
para. 68; US – Large Civil Aircraft (2nd complaint) , para.  690; and Canada – Renewable Energy / 
Canada  ‒ Feed-in Tariff Program , para.  5.208)  WT/DS464/AB/R  
 
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  the measure under which the subsidy is granted, as well as the structure and location of the 
recipient's production operations. In carrying out its assessment, the investigating authority should 
provid e the interested parties with a meaningful opportunity to submit evidence.689 Sometimes, an 
assessment of these factors may reveal that a subsidy is bestowed solely on the recipient 's 
production  within the jurisdiction of the granting authority. At other times, however, such an 
assessment may lead the authority to conclude that the subsidy at issue is bestowed also on the 
recipient 's production  in countries other than the subsidizing Member .  
5.299.   Applying these considerations to the Panel's review of the USDOC's determination, we 
believe that, in order to calculate appropriately the denominator of Samsung's per unit 
subsidization rate, the USDOC was tasked with identify ing the products in respec t of which the tax 
credits  Samsung received under Article  10(1)(3) of the RSTA were granted. In so doing, the 
USDOC was required to consider all the relevant facts surrounding the bestowal of those tax 
credits , including: (i) the text, design, structure, a nd operation of the RSTA Article  10(1)(3) tax 
credit programme; and (ii) the structure and location of Samsung's production operations. We 
recall690 that, i n reviewing the consistency of the USDOC's determination with Article  19.4 of the 
SCM Agreement  and Article VI:3 of the GATT  1994, the Panel had to assess whether , having 
"evaluated all of the relevant evidence in an objective and unbiased manner "691, the USDOC had 
provided "reasoned and adequate"  explanations.692  
5.300.   The Panel relied, first, on the fact that the  tax credits under Article10(1)(3) of the RSTA 
were provided to Samsung based on its Korea -based R&D activities and that any positive effect 
that such activities might have on Samsung's overseas production does not constitute a "benefit" 
under Article  1.1(b) of the SCM Agreement . The participants do not dispute that the "benefit" 
deriving from the bestowal of the subsidy under Article  10(1)(3) of the RSTA consists of the 
proceeds of the tax credits. Nor do they disagree that Samsung, a company established w ithin the 
jurisdiction of Korea, is the "recipient" of that benefit by virtue of its R&D activities in Korea. 
However, as we observed in section 5.2.1.1  above, the identification of the recipient of the benefit 
is part of the analysis as to whether a subsi dy exists pursuant to Article  1 of the SCM Agreement . 
This analysis is distinct from, and should not prejudge, the calculation of the amount of subsidy 
that has been bestowed upon the products produced by the recipient, so as to determine properly 
the amou nt of countervailing duty  to be imposed on such products in accordance with Article  19.4 
of the SCM Agreement  and Article  VI:3 of the GATT  1994. Thus, the fact that Samsung is the 
recipient of the "benefit" deriving from the bestowal of subsidies under Article 10(1)(3) of the 
RSTA does not, in and of itself, preclude a finding that those subsidies may be allocated to the 
production of Samsung's overseas subsidiaries. By overly focusing on the fact that Samsung was 
the beneficiary of the RSTA Article  10(1)(3 ) tax credits, the Panel appears to have conflated the 
concept of "recipient of the subsidy" under Article  1 of the SCM Agreement  with the concept of  
"subsidized product" for purpose s of calculating per unit subsidization under Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994.  
5.301.   Similarly , we do not find the Panel's affirmation of the USDOC's presumptive allocation of 
subsidies to Samsung's domestic production693 to be adequate in this case . As noted above, during 
the course of the Washers  countervailing duty  investigation, Samsung submitted arguments and 
evidence that, in its view, would have enabled the USDOC to allocate the tax credits  Samsung 
                                                
689 In this respect, we note that the GATT panel in US – Lead and Bismuth I  was confronted with a 
similar  issue to that arising in this dispute, i.e. whether the USDOC had erred in allocating subsidies provided 
to a respondent exclusively over its domestic production, rather than over its world -wide production. The panel 
noted, inter alia , that the USDOC did not a sk any questions to the respondents as to whether particular 
programmes were designed to benefit only domestic operations or both domestic and foreign operations of the 
companies in question . (GATT Panel Report, US – Lead and Bismuth I  (unadopted), para.  605) The panel , 
therefore , took the view that the parties to the investigation had not been afforded an adequate opportunity to 
provide factual information relevant to whether the subsidies actually benefitted foreign production . (Ibid., 
para. 606) 
690 See pa ra. 5.258 of this Report . 
691 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  97. 
692 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. 
693 Panel Report, para. 7.319. See also Washers  final CVD I&D me morandum  (Panel Exhibit KOR -77), 
p. 52. WT/DS464/AB/R  
 
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  received under Article  10(1)(3) of the RSTA across its worldwide production.694 Samsung's 
arguments  and evidence related to the specifics of the design, structure, and operation of the 
RSTA Article  10(1)(3) tax credit programme, as well as to the specific structure and location of 
Samsung's production operations . These submissions were, at least potenti ally, relevant evidence 
surrounding the bestowal of tax credits under Article  10(1)(3) of the RSTA. Thus, the USDOC was 
required to review those arguments and to evaluate that evidence in order to identify the 
"subsidized products" for purposes of calculat ing per unit subsidization.  
5.302.   Instead, in its determination, the USDOC relied mainly on a "presumption that government 
subsidies benefit domestic production".695 While that presumption could, in principle, be rebutted, 
the USDOC determined that the only way t o do so was for Samsung to show that the Government 
of Korea " 'explicitly stated that the subsidy was being provided for more than domestic production ' 
in the application and/or approval documents".696 The USDOC determined that Samsung had not 
made that show ing, as "there is no indication in the statutory provisions" or in "the tax returns 
themselves" that "a company could claim a tax credit on … a facility located outside of Korea ".697  
5.303.   The express ed intent of a subsidizing authority , as evinced by the face of  the measure 
granting the subsidy, cannot be the sole factor relevant to the allocati on of that subsidy to the 
products produced by the recipient in the context of calculating per unit subsidization. Although 
neither Article  10(1)(3) of the RSTA nor the re lated tax returns show the Government of Korea's 
express intent  to subsidize overseas production, this does not exhaust the scope of the relevant 
arguments and evidence submitted by the interested parties concerning the bestowal of the 
subsidy, which the U SDOC was required to examine. By focusing solely on the face of the statutory 
provisions and of the tax returns submitted by Samsung, the USDOC failed to "evaluat e[] all of the 
relevant evidence"698 and to provid e "reasoned and adequate" explanations  for its  
determination .699  
5.304.   Despite these deficiencies , the Panel upheld the USDOC's determination, thus condoning 
the USDOC's failure to assess meaningfully all the arguments and evidence submitted by 
interested parties and other relevant facts surrounding the best owal of tax credits on Samsung 
under Article  10(1)(3) of the RSTA. Thus, we consider that the Panel improperly concluded that, 
having evaluated all of the relevant evidence700, the USDOC had provided  "reasoned and 
adequate " explanations.701 
5.305.   In light of the abo ve, we conclude that the Panel: (i) erroneously conflated the concept of 
"recipient of the benefit" under Article  1.1(b) of the SCM Agreement  with the concept of 
"subsidized product" under Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994; 
and (ii)  improperly upheld the manner in which the USDOC presumptively attributed the tax 
credits  received by Samsung under Article  10(1)(3) of the RSTA to Samsung's domestic 
production, thereby condoning the USDOC not assessing all the arguments and evi dence 
submitted by interested parties and other relevant facts surrounding the bestowal of those tax 
credits .  
                                                
694 In particular, Samsung : (i) submitted that R&D tax credits, by their nature, benefit both a company's 
domestic and overseas production  (Samsung Washers  CVD case brief (Panel Exhibit KOR -90, at pp. 4 -5); 
Korea's oth er appellant's submission, para.  357); (ii) noted that, in the Washers  and Refrigerators  
anti-dumping investigations, the USDOC determined that Samsung's R&D activities in Korea benefitted all of its 
digital appliance subsidiaries  (Samsung Washers  CVD case  brief (Panel Exhibit KOR -90, at pp. 4 -5); Korea's 
other appellant's submission, paras.  357-358 (referring to Refrigerators  AD I&D memorandum  and 
Refrigerators  AD Samsung cost verification memorandum  (Panel Exhibit KOR -98 (BCI) , at p. 8 and p. 12, 
respecti vely); and  Washers AD Samsung cost verification memorandum  (Panel Exhibit KOR -99 (BCI)), p.  42)); 
and (iii) pointed to the royalties paid by Samsung's overseas subsidiaries in order to compensate their parent 
company for its R&D activities in Korea (Samsun g Washers  CVD case brief (Panel Exhibit KOR -90, at pp. 4 -5); 
and Korea's other appellant's submission, para.  357). 
695 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52.  (fn omitted)  
696 Washers  final CVD I&D memorandum (Panel Exhibit KOR -77), p. 52 (quoting CVD preamble 
regulations (Panel Exhibit USA -25), p. 65403).  
697 Washers  final CVD I&D memorandum  (Panel Exhibit KOR -77), p. 52.  
698 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  97. 
699 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. 
700 See Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  97. 
701 See Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. WT/DS464/AB/R  
 
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  5.306.   We, therefore , reverse  the Panel's finding, in paragraph 8.1 .b.v of its  Report702, that  "the 
USDOC [did not  act] inconsistently with  Article  19.4 o f the SCM Agreement  and Article  VI:3 of the 
GATT  1994 by limiting the denominator  to the sales value of products produced by Samsung in 
Korea when allocating the benefit conferred  by RSTA Article  10(1)(3) tax credit subsidies "; 
and find, instead, that the USDOC acted inconsistently with the United  States ' obligations under 
Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994 by not assess ing all the 
arguments and evidence submitted by interested parties and other relevant facts surrounding th e 
bestowal of the tax credits  received by Samsung under Article  10(1)(3) of the RSTA and thereby 
presumptively attribut ing those tax credits  to Samsung's domestic production . 
6  FINDINGS AND CONCLUS IONS  
6.1.  For the reasons  set out in this Report, the Appellate  Body makes the following findings and 
conclusions.703 
6.1  The relevant "pattern" for the purposes of the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement  
6.2.  We agree with the Panel that , under the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement , "a sub -set of export transactions is set aside for specific consideration ."704 We further 
agree with the Panel that , once prices are identified as being different from other prices, "they 
constitute the relevant 'pattern'" and that , "[a]lthough those  prices are identified by reference to 
other prices pertaining to other purchasers, regions or time periods, those other prices are not 
part of the relevant 'pattern' ."705 Although we recognize that a pattern may be identified in a 
variety of factual circums tances, we consider that the relevant "pattern" for the purposes of the 
second sentence of Article  2.4.2 comprises prices that are significantly lower  than other export 
prices among different purchasers, regions or time periods. Moreover, we consider that some 
transactions that differ among purchasers, taken together with some transactions that differ 
among regions, and some transactions that differ among time periods, cannot form a single 
pattern. Our  interpretation does not exclude the possibility that th e same exporter or producer 
could be practicing more than one of the  three types of "targeted dumping". We also do not 
exclude the possibility that a pattern of significantly differing prices to a certain category 
(purchasers, regions, or time periods) may overlap with a pattern of significantly differing prices to 
another category.   
6.3.  We thus consider that a "pattern " for the purposes of the second sentence of Article  2.4.2 
comprises all the export prices to one or more particular purchasers which  differ sig nificantly from 
the export prices to the other purchasers because they are significantly lower  than those other 
prices, or all the export prices in one or more particular regions which  differ significantly from the 
export prices in the other regions becaus e they are significantly lower  than those other prices, or 
all the export prices during one or more particular time periods which  differ significantly from the 
export prices during the other time periods because they are significantly lower  than those othe r 
prices.  
a. Consequently, we  uphold  the Panel's conclusions regarding the relevant "pattern" set out 
in, inter alia , paragraphs 7.24, 7.27 -7.28, 7.45 -7.46, 7.141 -7.142, and 7.144 of the 
Panel  Report.   
b. In addition, we uphold  the Panel's finding, in paragraph  8.1.a.ix of the Panel  Report706, 
that "the DPM is inconsistent 'as such ' with the second sentence  of Article  2.4.2 [of the 
Anti-Dumping Agreement] because, by aggregating random and unrelated price 
variations, it  does not properly  establish  'a pattern of ex port prices which differ 
significantly amon g different purchasers, regions or time periods '".  
                                                
702 See also Panel Report, para.  7.320. 
703 One Member of the Division expressed a separate opinion on the issue of zeroing under the W -T 
comparison methodology. This separate opinion can be found in sub -section 5.1.10 of this Report.  
704 Panel  Report, para. 7.24.  
705 Panel  Report, para. 7.28.   
706 See also Panel Report, para. 7.147 .  WT/DS464/AB/R  
 
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  6.2  The scope of application of the W -T comparison methodology in the second 
sentence of Article  2.4.2 of the Anti -Dumping Agreement  
6.4.  Based on the text of the second  sentence of Article  2.4.2 of the Anti -Dumping Agreement, 
which refers to "individual export transactions", read in context and in light of the function of the 
second sentence of Article  2.4.2 to allow investigating authorities to identify and address "tar geted 
dumping", we consider that the W -T comparison methodology should only be applied to those 
transactions that justify its use, namely, those transactions forming  the relevant "pattern".   
a. Therefore,  we uphold  the Panel's finding, in paragraph 7.29 of the Panel  Report, that 
"the W -T comparison methodology should only be applied to transactions that constitute 
the 'pattern of export prices which differ significantly among different purchasers, 
regions or time periods '."  
b. We further uphold  the Panel's conse quential finding, in paragraph 8.1.a.i of the 
Panel  Report707, that "the United  States  acted inconsistently with the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement , by applying the W -T comparison 
methodology to transactions other than those c onstituting the patterns of transactions 
that the USDOC had determined to exist in the Washers  anti-dumping investigation ".  
c. We also uphold  the Panel's consequential finding, in paragraph  8.1.a.vi of the Panel  
Report708, that "the DPM is inconsistent 'as suc h' with Article  2.4.2 of the Anti -Dumping 
Agreement, because it applies  the W -T comparison methodology to non -pattern 
transactions when the aggregated value of sales to purchasers, regions, and time 
periods that pass the Cohen's d test account [s] for 66% o r more of the value of total 
sales".  
6.3  Prices which differ "significantly" under the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement  
6.5.  We consider that the Panel did not mischaracterize Korea's claim. Moreover, assessing the 
extent of the dif ferences in export prices to establish whether those export prices differ 
significantly  for the purposes of the second sentence of Article  2.4.2 of the Anti -Dumping 
Agreement entails both quantitative and qualitative dimensions . As part of the qualitative 
assessment,  circumstances pertaining to the nature of the product or the markets may be relevant 
for the assessment of whether differences are "significant"  in the circumstances of a particular 
case. 
a. Therefore, w e find that the requirement to identify price s which  differ significantly means 
that the investigating authority is required to assess quantitatively and qualitatively the 
price differences at issue. This assessment  may require the investigating authority to 
consider certain objective market factors,  such as  circumstances regarding the nature of 
the product under consideration, the industry at issue, the market structure, or the 
intensity of competition in the markets at issue , depending on the case at hand . 
However, we agree with the Panel that an in vestigating authority is not required to 
consider the cause of (or reasons for) the price differences to establish the existence of a 
pattern under the second sentence of Article  2.4.2. 
b. We reverse  the Panel's finding in respect of the Washers anti-dumping investigation, in 
paragraph 8.1.a.ii of the Panel  Report709, to the extent that the Panel found that "a 
pattern of export prices which differ significantly among purchasers, regions or time 
periods " can be established "on the basis of purely quantitative cri teria".  
c. We also reverse  the Panel's finding in re spect of the DPM, in paragraph 8.1.a.v of the 
Panel  Report710, to the extent that the Panel found that "a pattern of export prices which 
differ significantly among purchasers, regions or time periods " can be established "on 
the basis of purely quantitative criteria".  
                                                
707 See also Panel Report, para. 7.29.  
708 See also Panel Report, para. 7.119.c .  
709 See also Panel Report, para. 7.52.  
710 See also Panel Report, para. 7.119.a .  WT/DS464/AB/R  
 
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  6.4  The explanation to be provided under the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement  
6.6.  We consider that an investigating authority has to explain why  both the W -W and the T -T 
comparison  methodologies can not take into account appropriately the differences in export prices 
that form the pattern. In circumstances where the W -W and T -T comparison methodologies would 
yield substantially  equivalent results and w here an explanation has b een provided with respect to 
one of these two  methodolog ies, the explanation to be included with respect to  the other  may not 
need to be as elaborate .  
a. Therefore , we reverse  the Panel's finding, in paragraph 8.1.a.iv of the Panel  Report711, 
that "Korea failed to establish that the United  States  acted inconsistently with the second 
sentence of Article  2.4.2 [of the Anti -Dumping Agreement] in the Washers  anti-dumping  
investigation  by failing to explain why the relevant price differences could not be taken 
into account appropriately by the T -T comparison methodology ."  
b. We also reverse  the Panel's finding, in paragraph  8.1.a.viii of the Panel  Report712, that 
"Korea failed to establish that the DPM is inconsistent with the second sentence of 
Article  2.4.2 [of the Ant i-Dumping Agreement] when, having concluded that the W -W 
comparison methodology cannot appropriately take into account the observed pattern of 
significantly different prices , it does not also consider whether the relevant price 
differences could be taken i nto account appropriately by the T -T comparison 
methodology ".  
6.5  "Systemic disregarding"  
6.7.  With respect to the Panel's finding under the second sentence of Article  2.4.2 of the 
Anti-Dumping Agreement, we consider that the second sentence of Article  2.4.2 allow s an 
investigating authority to establish margins of dumping by applying the W -T comparison 
methodology only to "pattern transactions" to the exclusion of "non -pattern transactions". We also 
consider  that the second sentence of Article  2.4.2 does not permi t the combining of comparison 
methodologies. Accordingly, we find that this provision does not envisage "systemic disregarding", 
as described by the Panel. The second sentence of Article  2.4.2 does not envisage a mechanism 
whereby an investigating authorit y would conduct separate comparisons for "pattern transactions" 
under the W -T comparison methodology and for "non -pattern transactions" under the W -W or T -T 
comparison methodology, and exclude from its consideration  the result of the latter if it yields an  
overall negative comparison result or aggregate it with the W -T comparison result for the "pattern 
transactions" if it yields an overall positive comparison result. Thus, in circumstances where the 
requirements of the second sentence of Article  2.4.2 have  been fulfilled, an investigating authority 
is allowed to establish margins of dumping by comparing a weighted average normal value with 
export prices of "pattern transactions" and dividing the resulting amount by all the export sales of 
a given exporter o r foreign producer.   
a. We, therefore , moot the Panel's finding , in paragraph 8.1.a.x of the Panel  Report713, that 
"Korea failed to establish that the United  States ' use of ' systemic disregarding ' under the 
DPM is 'as such' inconsistent with the second sentence  of Article  2.4.2 ". Instead, when 
the requirements of the second sentence of Article  2.4.2 of the Anti -Dumping Agreement 
are fulfilled, an investigating authority may establish margins of dumping by comparing 
a weighted average normal value with export pri ces of "pattern transactions" , while 
excluding "non -pattern transactions" from the numerator , and dividing the resulting 
amount by all the export sales of a given exporter or foreign producer.  
6.8.  With respect to the Panel's finding under Article  2.4 of the An ti-Dumping Agreement, we 
consider that Articles 2.4 and 2.4.2 not only inform each other, but must be read together 
harmoniously and that the exceptional nature of the W -T comparison methodology, consistent with 
the function of the second sentence of Article 2.4.2 as allowing an investigating authority to 
identify and address "targeted dumping" by considering "pattern transactions" confirms that the 
"fair comparison" requirement in Article  2.4 applies only in respect of "pattern transactions". 
                                                
711 See also Panel Report, para. 7.81.  
712 See also Panel Re port, para. 7.119.b .  
713 See also Panel Report, para.  7.167 .  WT/DS464/AB/R  
 
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  Accordingly, we conclude that the establishment of margins of dumping by comparing a weighted 
average normal value with export prices of "pattern transactions" , while excluding "non -pattern 
transactions" from the numerator , and dividing the resulting amount by all the export sales of a 
given exporter or foreign producer , is consistent with the "fair comparison" requirement in 
Article  2.4.  
a. Having concluded that the second sentence of Article  2.4.2 does not permit an 
investigating authority to combine the W -T comparison methodology with the W -W or 
T-T comparison methodology and , thus, does not provide for "systemic disregarding" as 
described by the Panel, we moot the Panel's finding , in paragraph  8.1.a.xi  of the 
Panel  Report714, that "Korea failed to establish that the United States ' use of 'systemic 
disregarding' under the DPM is 'as such'  inconsistent with Article  2.4" of the 
Anti-Dumping Agreement.  
6.6  Zeroing under the W -T comparison methodology715 
6.9.  With respect to the consistency of zeroing under the W -T comparison methodology  with the 
second sentence of Article  2.4.2 of the Anti -Dumping Agreement, we do not consider the Panel to 
have erred in its findings. The exceptional W -T comparison methodology in the second sentence of 
Article  2.4.2 requires a comparison between a weighte d average normal value and the entire 
universe of export transactions that fall within the pattern as properly identified under that 
provision, irrespective of whether the export price of individual "pattern transactions " is above or 
below normal value. Wh ile the results of the transaction -specific comparisons of weighted average 
normal value and each individual export price falling within the pattern will be intermediate results, 
the aggregation of all these results is required and will determine dumping a nd margins of 
dumping for the product under investigation as it relates to the identified "pattern". Zeroing the 
negative intermediate comparison results within the pattern is neither necessary to address 
"targeted dumping", nor is it consistent with the establishment of dumping and margin s of 
dumping as pertaining  to the "universe of export transactions" identified under the second 
sentence of Article  2.4.2.  While the text of the second sentence of Article  2.4.2 allows an 
investigating authority to focus o n "pattern transactions" and exclude from its consideration 
"non-pattern transactions" in establishing dumping and margins of dumping under the W -T 
comparison methodology, it does not allow an investigating authority to exclude certain 
transaction -specific  comparison results within the pattern, when the export price is above normal 
value.  
a. We, therefore , uphold  the Panel's findings , in paragraphs 8.1.a.xii  and 8.1.a.xiv of the 
Panel  Report716, that "the United  States ' use of zeroing when applying the W -T 
compa rison methodology is inconsistent 'as such ' with Article  2.4.2 of the Anti -Dumping 
Agreement"  and that "the U SDOC  acted inconsistently with Article  2.4.2 of the 
Anti-Dumping Agreement  by using zeroing when applying the W -T comparison 
methodology in the Washers anti-dumping investigation ". 
6.10.   With respect to the consistency of zeroing under the W -T comparison methodology applied 
pursuant to the second sentence of Article  2.4.2 with the "fair comparison" requirement in 
Article  2.4, we do not consider the Panel t o have erred in its findings. Setting to zero the 
intermediate negative comparison results has the effect of not only inflating the magnitude of 
dumping , thus result ing in higher margins of dumping , but it also makes  a positive determination 
of dumping mor e likely in circumstances where the export prices above normal value exceed those 
that are below normal value. Moreover, by setting to zero "individual export transactions" that 
yield a negative comparison result, an investigating authority fails to compar e all comparable 
export transactions that form the applicable "universe of export transactions" as required under 
the second sentence of Article  2.4.2 , thus fail ing to make  a "fair comparison" within the meaning 
of Article  2.4. 
a. Therefore,  having found that zeroing is not permitted under the W -T comparison 
methodology applied pursuant to the second sentence of Article  2.4.2 and having upheld 
the Panel's findings on zeroing under the second sentence of Article  2.4.2, we also  
                                                
714 See also Panel Report, para. 7.169 .  
715 For the separate opinion on this issue, see sub -section 5.1.10 of this Report . 
716 See also Panel Report, para. 7.192 .  WT/DS464/AB/R  
 
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  uphold  the Panel's findings , in paragraphs 8.1.a.xiii and 8.1.a.xv of the Panel Report717, 
that "the United  States ' use of zeroing when applying the W -T comparis on methodology 
is inconsistent ' as such ' with Article  2.4 of the Anti -Dumping Agreement " and that 
"the USDOC acted inconsistently w ith Article 2.4 of the Anti -Dumping Agreement  by 
using zeroing when applying the W -T comparison methodology  in the Washers  
anti-dumping investigation ". 
6.11.   With respect to the consistency of zeroing with Article  9.3 of the Anti -Dumping Agreement 
and Article  VI:2 of the GATT  1994 in the application of the W -T comparison methodology in 
administrative reviews, we do not consider the Panel to have erred in its finding. Article  9.3 refers 
to the "margin of dumping " as established under  Article  2. This "margin of dum ping" represents 
the ceiling for  anti-dumping duties levied pursuant to Article  9.3 of the Anti -Dumping Agreement 
and Article  VI:2 of the GATT  1994. Accordingly, if margins of dumping are established 
inconsistently with Article  2.4.2 by using zeroing under  the W -T comparison methodology, the 
corresponding anti-dumping dut ies that are levied will also be inconsistent with Article  9.3 of the 
Anti-Dumping Agreement and Article  VI:2 of the GATT  1994, as they will exceed the margin of 
dumping  that should have be en established under Article  2. Moreover, if zeroing is not permitted 
under  the W -T comparison methodology applied pursuant to the second sentence of Article  2.4.2 
in original anti -dumping investigations , it also cannot be permitted in respect of administr ative 
reviews.  
a. We, therefore , uphold  the Panel's finding , in paragraph 8.1.a.xvi of the Panel Report718, 
that "the United  States ' use of zeroing when applying the W -T 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". 
6.7  Article  2.2 of the SCM Agreement  
6.12.   With respect to the Panel's findings under Article  2.2 of the SCM Agreement , we agree with 
the Panel that: (i)  the term "certain enterprises" in Article  2.2 is not limited to entities with legal 
personality, but also encompasses sub-units or constituent part s of a company  – including , but not 
limited to,  its branch offices and the facilities in which it conducts manufacturing operations  – that 
may or may not have distinct legal personality ; (ii) the "designation" of a region for purposes of 
Article  2.2 need not be affirmative or explicit, but may also be carried out by exclusion or 
implication, provided that the region in question is clearly discernible from t he text, design, 
structure , and operation of the subsidy at issue; and (iii) the concept of "geographical region" in 
Article  2.2 does not depend on the territorial size of the area covered by a subsidy. The Panel 
correctly found that the RSTA Article  26 ta x credit programme effectively designate d the region 
where the relevant eligible investments were to be made in order to qualify for the subsidy at 
issue, thereby being "limited to certain enterprises located within a designated geographical 
region" within  Korea's jurisdiction.  
a. We, therefore , uphold  the Panel's finding, in paragraph 8.1.b.iii  of the Panel Report719, 
that " Korea failed to establish that the USDOC's determination  of regional specificity in 
respect of  the RSTA Article  26 tax credit scheme is inc onsistent with Article  2.2 of the 
SCM Agreement ". 
6.13.   With respect to the issue of whether , in its analysis of regional specificity, the Panel failed to 
comply with its obligations under Article  11 of the DSU, we consider that the claims that Korea 
raised befo re the Panel under Article  2.2 hinged, essentially, on the interpretation of certain terms 
contained in that provision, and that the Panel did address all of such interpretative claims.  
a. We, therefore , find that the Panel did not act inconsistently with its  duties under 
Article  11 of the DSU in articulating its findings on regional specificity.  
                                                
717 See also Panel Report, para. 7.206.  
718 See also Panel Report, para.  7.208.  
719 See also Panel Report, para. 7.289.  WT/DS464/AB/R  
 
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  6.8  Article  19.4 of the SCM Agreement  and Article  VI:3 of the GATT  1994  
6.14.   With respect to the Panel's affirmation of the USDOC's determination that the tax credits 
received  by Samsung under Articles  10(1)(3) and 26 of the RSTA were not tied to particular 
products, we consider that the Panel : (i) improperly endorsed a flawed tying test applied by the 
USDOC in the Washers  countervailing duty  investigation , whereby a subsidy is  tied to a specific 
product only when the intended use of the subsidy is known to the granting authority and so 
acknowledged prior to or concurrent with the bestowal of the subsidy;  and (ii)  improperly upheld 
the USDOC's dismissal of certain evidence submi tted by Samsung that was potentially relevant to 
the assessment of whether a portion of the tax credits Samsung claimed under such provisions  
was tied to the products manufactured by its digital appliance business unit.  
a. We, therefore , reverse  the Panel's f inding, in paragraph 8.1.b.iv  of the Panel  Report720, 
that "the USDOC's failure to tie the RSTA Article [s] 10(1)(3) and 26 tax credit subsidies 
to [d]igital [a]ppliance products is [not] inconsistent with Article  19.4 of the 
SCM Agreement  and Article  VI:3 of  the GATT  1994"; and  find, instead, that the USDOC 
acted inconsistently with the United  States ' obligations under Article 19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994 by: (i) applying a flawed tying test in 
the Washers  countervailing duty in vestigation, whereby a subsidy is tied to a specific 
product only when the intended use of the subsidy is known to the granting authority 
and so acknowledged prior to or concurrent w ith the bestowal of the subsidy ; and (ii) by 
dismissing certain evidence s ubmitted by Samsung  that was potentially relevant to the 
assessment of whether a portion of the tax credits Samsung claimed under 
Article  10(1)(3) and Article 26 of the RSTA  was tied to the products manufactured by its 
digital appliance business unit.  
6.15.   Having reversed the Panel's finding under Article  19.4 of the SCM Agreement  and 
Article  VI:3 of the GATT  1994, we do not find it necessary  to address Korea's claim  that the Panel 
also failed to comply with its duties under Article  11 of the DSU by stating , in paragraph 7.303 of 
the Panel Report,  that the tax credits available under the RSTA Article  10(1)(3) tax credit 
programme "are not R&D subsidies".  
6.16.   With respect to the Panel's affirmation of the USDOC's attribution of the tax credits received 
by Samsung unde r Article  10(1)(3) of the RSTA to Samsung's domestic production , we consider 
that the Panel: (i) erroneously conflated the concept of "recipient of the benefit" under 
Article  1.1(b) of the SCM Agreement  with the concept of "subsidized product" under Article 19.4 of 
the SCM Agreement  and Article  VI:3 of the GATT  1994; and (ii) improperly upheld the manner in 
which the USDOC presumptively attributed the tax credits received by Samsung under 
Article  10(1)(3) of the RSTA to Samsung's domestic production, thereb y condoning the USDOC not 
assessing all the arguments and evidence submitted by interested parties and other relevant facts 
surrounding the bestowal of those tax credits . 
a. We, therefore , reverse  the Panel's finding, in paragraph 8.1.b.v  of the Panel Report721, 
that "the USDOC [did not act] inconsistently with Article  19.4 of the SCM Agreement  and 
Article  VI:3 of the GATT  1994 by limiting the denominator to the sales value of products 
produced by Samsung in Korea when allocating the benefit conferred by RSTA 
Article 10(1)(3) tax credit subsidies"; and find, instead, that the USDOC acted 
inconsistently with the United  States ' obligations under Article  19.4 of the 
SCM Agreement  and Article  VI:3 of the GATT  1994 by not assess ing all the arguments 
and evidence submi tted by interested parties and other relevant facts surrounding the 
bestowal of the tax credits  received by Samsung under Article  10(1)(3) of the RSTA and 
thereby presumptively attribut ing those tax credits  to Samsung's domestic production . 
6.9  Recommendation  
6.17.   The Appellate  Body recommends  that the DSB request the United  States  to bring its 
measures, found in this Report, and in the Panel Report as modified by this Report, to be 
inconsistent with the Anti -Dumping Agreement, the SCM Agreement , and the GATT  1994, into 
conformity with its obligations under those Agreements.  
                                                
720 See also Panel Report, para. 7.307.  
721 See also Panel Report, para. 7.320.