WT/DS464/R  
 
11 March 2016  
(16-1426)  Page: 1/124  
  Original: English  
 
  UNITED STATES – ANTI-DUMPING AND COUNTERVAILING MEASURES 
ON LARGE RESIDENTIAL WASHERS FROM KOREA 
REPORT OF THE PANEL 
 
 WT/DS464/R 
 
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  TABLE OF CONTENTS 
 
1 INTRODUC TION .......................................................................................................... 13  
1.1 Complaint by Ko rea .................................................................................................... 13 
1.2 Panel establishmen t and comp osition ............................................................................ 13 
1.3 Panel proceedings ...................................................................................................... 14 
1.3.1 Ge neral ................................................................................................................. . 14 
1.3.2 Working Proc edures on BCI ....................................................................................... 14 
1.3.3 China's request for enha nced third pa rty rights ............................................................ 14 
1.3.4 The European Union's request concerni ng the Panel's Working Procedures and the 
BCI Procedures ................................................................................................................ 16 
2 FACTUAL AS PECTS ...................................................................................................... 21  
2.1 The measures at issue ................................................................................................ 21 
3 PARTIES' REQUESTS FOR FIND INGS AND RECOMME NDATIONS .................................. 22  
4 ARGUMENTS OF THE PARTIES ..................................................................................... 25  
5 ARGUMENTS OF THE THIRD PART IES .......................................................................... 25  
6 INTERIM REVIEW ........................................................................................................ 25  
6.1 Anti-dumping claims ................................................................................................... 25 
6.1.1 Korea's requests for review of pr ecise aspects of th e Interim Report ............................... 25 
6.1.1.1 Paragraph 7.9 and Paragraph [7.188] (paragraphs 7.9 and 7.188 of the 
Final Re port) ................................................................................................................. .. 25 
6.1.1.2 Paragraph 7.11 (paragraph 7.11 of the Final Report) .................................................. 26 
6.1.1.3 Paragraph 7.12 (paragraph 7.12 of the Final Report) .................................................. 26 
6.1.1.4 Paragraph 7.33 (paragraph 7.33 of the Final Report) .................................................. 26 
6.1.1.5 Paragraph 7.71 (paragraph 7.71 of the Final Report) .................................................. 26 
6.1.1.6 Paragraph 7.76 and footnote 130 (paragraph 7.76 and footnote 134 of the 
Final Re port) ................................................................................................................. .. 27 
6.1.1.7 Paragraph 7.99 (paragraph 7.99 of the Final Report) .................................................. 27 
6.1.1.8 Paragraph 7.10 0 (paragraph 7.100 of the Final Report ) .............................................. 27 
6.1.1.9 Paragraph 7.10 2 (paragraph 7.102 of the Final Report ) .............................................. 27 
6.1.1.10 Paragraph 7.106 (paragra ph 7.106 of the Final Re port) ............................................ 27 
6.1.1.11 Paragraph 7.111 (paragra ph 7.111 of the Final Re port) ............................................ 28 
6.1.1.12 Paragraph 7.112 (paragra ph 7.112 of the Final Re port) ............................................ 28 
6.1.1.13 Paragraph 7.113 (paragra ph 7.113 of the Final Re port) ............................................ 28 
6.1.1.14 Paragraphs 7.118 and 7.119 (paragraphs 7.118 and 7.119 of the Final Report) ............ 28 
6.1.1.15 Paragraph 7.138 and footnotes 256 and 257 (paragraphs 7.138 and 
footnotes 268 and 269 of  the Final Report ) .......................................................................... 29 
6.1.1.16 Paragraph 7.149 (paragra ph 7.149 of the Final Re port) ............................................ 29 
6.1.1.17 Paragraphs 7.171, 7.193 and 7.209 (paragraphs 7.171, 7.193 and 7.209 of the 
Final Re port) ................................................................................................................. .. 29 
6.1.2 United States' requests for review of  precise aspects of the Interim Report ...................... 30 
6.1.2.1 Paragraphs 1.11 and 1.14 (paragraph s 1.11 and 1.14 of the Final Report) .................... 30 WT/DS464/R 
 
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  6.1.2.2 Paragraph 2.2 (paragraph  2.2 of the Final Report) ..................................................... 30 
6.1.2.3 Paragraph 2.4 (paragraph  2.4 of the Final Report) ..................................................... 30 
6.1.2.4 Paragraph 7.10, footnote 48 (paragraph  7.10, footnote 54 of  the Final Report) .............. 30 
6.1.2.5 Paragraph 7.14 (paragraph 7.14 of the Final Report) .................................................. 31 
6.1.2.6 Paragraph 7.28 (paragraph 7.28 of the Final Report) .................................................. 31 
6.1.2.7 Paragraph 7.32 (paragraph 7.32 of the Final Report) .................................................. 31 
6.1.2.8 Paragraph 7.70 (paragraph 7.70 of the Final Report) .................................................. 32 
6.1.2.9 Paragraph 7.76 (paragraph 7.76 of the Final Report) .................................................. 32 
6.1.2.10 Paragraph 7.100 and footnote 190 (paragraph 7.100, footnote 195 of the 
Final Re port) ................................................................................................................. .. 32 
6.1.2.11 Paragraph 7.101 (paragra ph 7.101 of the Final Re port) ............................................ 32 
6.1.2.12 Paragraph 7.130 (paragra ph 7.130 of the Final Re port) ............................................ 33 
6.1.2.13 Paragraph 7.148 et seq . (paragraph 7.148 et seq . of the Final Report) ........................ 33 
6.1.2.14 Paragraph 7.150 (paragra ph 7.150 of the Final Re port) ............................................ 33 
6.1.2.15 Paragraph 7.178 and footnote 311 (p aragraph 7.178 and footnote 319 of the 
Final Re port) ................................................................................................................. .. 33 
6.1.2.16 Paragraph 7.196 (paragra ph 7.196 of the Final Re port) ............................................ 34 
6.2 Subsidies claims ......................................................................................................... 34 
6.2.1 Korea's requests for review of pr ecise aspects of th e Interim Report ............................... 34 
6.2.1.1 Genera l comment ................................................................................................. 34 
6.2.1.2 Paragraph 7.21 3 (paragraph 7.213 of the Final Report ) .............................................. 34 
6.2.1.3 Paragraphs 7.217, 7.244 (footnote 401), and 7.249 (footnote 410) 
(paragraphs 7.217, 7.245 (footnote 415), 7.250 (footnote 424) of the Final Report) .................. 34 
6.2.1.4 Paragraph 7.[254], footnote 420 (p aragraph 7.255 of th e Final Re port) ........................ 35 
6.2.1.5 Paragraph 7.25 6 (paragraph 7.257 of the Final Report ) .............................................. 35 
6.2.1.6 Paragraph 7.26 0 (paragraph 7.261 of the Final Report ) .............................................. 35 
6.2.1.7 Paragraph 7.26 1 (paragraph 7.262 of the Final Report ) .............................................. 35 
6.2.1.8 Paragraph 7.26 2 (paragraph 7.263 of the Final Report ) .............................................. 36 
6.2.1.9 Paragraph 7.26 5 (paragraph 7.266 of the Final Report ) .............................................. 36 
6.2.1.10 Paragraph 7.269, footnote 435 (paragraph 7.270, footnote 453 of the 
Final Re port) ................................................................................................................. .. 37 
6.2.1.11 Paragraphs 7.274 and 7.283 (paragraphs 7.275 and 7.284 of the Final Report) ............ 37 
6.2.1.12 Paragraph 7.291 (paragra ph 7.292 of the Final Re port) ............................................ 37 
6.2.1.13 Paragraphs 7.301 and 7.302 (paragraphs 7.302 and 7.303 of the Final Report) ............ 38 
6.2.2 United States' requests for review of  precise aspects of the Interim Report ...................... 38 
6.2.2.1 Paragraphs 7.224, 7.277, 7.293, 7.296, 7.311, 7.312, and 7.313 
(paragraphs 7.224, 7.278 , 7.294, 7.297, 7.312, 7.313, and 7.314 of the Final Report) .............. 38 
6.2.2.2 Paragraph 7.26 9 (paragraph 7.270 of the Final Report ) .............................................. 38 
7 FINDIN GS ................................................................................................................... 38 
7.1 Introd uction ..............................................................................................................  38 
7.2 General principles regarding treaty interp retation, the standard of review, and burden 
of proof ...................................................................................................................... .... 39 WT/DS464/R 
 
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  7.2.1 Treaty in terpreta tion ................................................................................................ 39 
7.2.2 Standard of review................................................................................................... 39 
7.2.3 Burden of proof ....................................................................................................... 40 
7.3 Claims concerning the USDOC's applicat ion of the W-T comparison methodology in 
the Washers anti-dumping in vestigation .............................................................................. 40 
7.3.1 Introduction ............................................................................................................ 40 
7.3.2 Claim regarding th e methodolog y clause ..................................................................... 41 
7.3.2.1 Main argument s of the parties ................................................................................ 42 
7.3.2.2 Main argument s of third parties .............................................................................. 43 
7.3.2.3 Evaluation by the Panel .......................................................................................... 44 
7.3.3 Claim regarding the pattern clause ............................................................................. 46 
7.3.3.1 Main argument s of the parties ................................................................................ 46 
7.3.3.2 Main argument s of third parties .............................................................................. 48 
7.3.3.3 Evaluation by the Panel .......................................................................................... 48 
7.3.4 Claims regarding the explanation clause ...................................................................... 51 
7.3.4.1 Explanation provided by the USDOC in the Washers  anti-dumping investigation ............. 51 
7.3.4.2 Main argument s of the parties ................................................................................ 51 
7.3.4.3 Main argument s of third parties .............................................................................. 53 
7.3.4.4 Evaluation by the Panel .......................................................................................... 55 
7.3.4.4.1 The assessment of appropriateness ....................................................................... 56 
7.3.4.4.2 Whether it is necessary to address both the W-W and T-T comparison 
methodologies ................................................................................................................. 58 
7.3.5 Additional issues concerning the USDOC's application of the W-T comparison 
methodology in the Washers anti-dumping investigation ........................................................ 59 
7.4 Claims concer ning the DPM .......................................................................................... 60 
7.4.1 Whether the DPM is a measure th at may be challe nged "as such" ................................... 61 
7.4.1.1 Main argument s of the parties ................................................................................ 61 
7.4.1.1.1 Korea ...............................................................................................................  61 
7.4.1.1.2 United States ..................................................................................................... 62 
7.4.1.2 Main arguments of the thir d parties ......................................................................... 63 
7.4.1.3 Evaluation by the Panel .......................................................................................... 63 
7.4.1.3.1 Attribution of the DPM to the Unit ed States ............................................................ 64 
7.4.1.3.2 The precise content of the DPM ............................................................................ 64 
7.4.1.3.3 General and prospect ive application of the DPM ...................................................... 68 
7.4.1.3.4 Conclusion ........................................................................................................ 70 
7.4.2 Claims concerning the WTO-co nsistency of the DPM "as such" ........................................ 70 
7.4.2.1 The alleged inconsiste ncies concerni ng the DPM ........................................................ 70 
7.4.2.2 Whether the DPM aggregates random, unrelated price differences ................................ 71 
7.4.2.2.1 Main arguments of the parties .............................................................................. 71 
7.4.2.2.1. 1 Kore a ............................................................................................................ 71 
7.4.2.2.1.2 United States .................................................................................................. 72 WT/DS464/R 
 
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  7.4.2.2.2 Main arguments of the thir d parties ...................................................................... 73 
7.4.2.2.3 Evaluation by the Panel ....................................................................................... 74 
7.4.2.3 "Systemic disregarding" ......................................................................................... 77 
7.4.2.3.1 Claims against "systemic disregarding" under the second sentence of 
Article 2.4.2 ................................................................................................................. ... 77 
7.4.2.3.1.1 Main argume nts of the parties ........................................................................... 77 
7.4.2.3.1.2 Main argume nts of thir d parties ......................................................................... 78 
7.4.2.3.1.3 Evaluation by the Panel .................................................................................... 78 
7.4.2.3.2 Claims against "systemic disregarding" under Article 2.4 .......................................... 82 
7.4.3 Additional claims  concerning  the DPM ......................................................................... 83 
7.5 Zeroing in the context of th e W-T comparison  methodology .............................................. 83 
7.5.1 Introduction ............................................................................................................ 83 
7.5.2 Korea's claims against zeroing under the second sentence of Article 2.4.2 ........................ 84 
7.5.2.1 Main argument s of the parties ................................................................................ 84 
7.5.2.2 Main argument s of third parties .............................................................................. 85 
7.5.2.3 Evaluation by the Panel .......................................................................................... 86 
7.5.3 Korea's claims against ze roing under othe r provisions ................................................... 88 
7.5.3.1 Main arguments by the parties ................................................................................ 88 
7.5.3.2 Main argument s of third parties .............................................................................. 89 
7.5.3.3 Evaluation by the Panel .......................................................................................... 90 
7.6 Claims under the SCM Agreement ................................................................................. 91 
7.6.1 Introduction ............................................................................................................ 91 
7.6.2 Whether the USDOC properly found that RSTA Article 10(1)(3) tax credit subsidies 
are de facto  specific: disproportionately large amounts .......................................................... 92 
7.6.2.1 Intr oducti on ......................................................................................................... 92 
7.6.2.2 Main argument s of the parties ................................................................................ 92 
7.6.2.3 Main argument s of third parties .............................................................................. 95 
7.6.2.4 Evaluation by the Panel .......................................................................................... 96 
7.6.2.4.1 The USDOC's original determination ...................................................................... 96 
7.6.2.4.2 The USDOC's re mand determ ination ................................................................... 100  
7.6.2.4.3 Whether the USDOC took account of the two factors set forth in the final 
sentence of Arti cle 2.1(c) ................................................................................................ 102  
7.6.3 Whether the USDOC properly determined regional specificity in respect of RSTA 
Article 26 ...................................................................................................................... 103  
7.6.3.1 Relationship between Arti cle 2.1(b) and Article 2.2 .................................................. 104  
7.6.3.1.1 Main arguments of the parties ............................................................................ 104  
7.6.3.1.2 Evaluation by the Panel ..................................................................................... 104  
7.6.3.2 Whether RSTA Article 26 imposes any limitation on the geographical location of 
enterprises ...................................................................................................................  105 
7.6.3.2.1 Main arguments of the parties ............................................................................ 105  
7.6.3.2.2 Evaluation by the Panel ..................................................................................... 106  
7.6.3.3 Designated geographical region ............................................................................ 109  WT/DS464/R 
 
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  7.6.3.3.1 Main arguments of the parties ............................................................................ 109  
7.6.3.3.2 Evaluation by the Panel ..................................................................................... 110  
7.6.3.4 Certain enterprises .............................................................................................. 111  
7.6.3.4.1 Main arguments of the parties ............................................................................ 111  
7.6.3.4.2 Evaluation by the Panel ..................................................................................... 111  
7.6.3.5 Conc lusion ......................................................................................................... 11 3 
7.6.4 Whether the USDOC should have determined that RSTA Article 10(1)(3) and 
Article 26 tax credit subsidies were tied to Sa msung's production of digital appliances ............. 113  
7.6.4.1 Main argument s of the pa rties .............................................................................. 113  
7.6.4.1.1 Korea ............................................................................................................. 1 13 
7.6.4.1.2 United States ................................................................................................... 114  
7.6.4.2 Main arguments of third parties ............................................................................ 116  
7.6.4.3 Evaluation by the Panel ........................................................................................ 116  
7.6.5 Whether the Article 10(1)(3) subsidy amount should have been determined by 
reference to Samsung's worldwide sales ............................................................................ 118  
7.6.5.1 Main argument s of the pa rties .............................................................................. 118  
7.6.5.1.1 Korea ............................................................................................................. 1 18 
7.6.5.1.2 United States ................................................................................................... 119  
7.6.5.2 Main arguments of third parties ............................................................................ 120  
7.6.5.3 Evaluation by the Panel ........................................................................................ 120  
8 CONCLUSIONS AND RE COMMENDATION(S) .............................................................. 122  
 WT/DS464/R 
 
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  LIST OF ANNEXES 
ANNEX A 
WORKING PROCEDURES OF THE PANEL 
Contents Page 
Annex A-1 Working Procedures of the Panel (as amended) A-2 
Annex A-2 Additional Working Procedures on Business Confidential Information A-7 
ANNEX B 
ARGUMENTS OF KOREA 
Contents Page 
Annex B-1 Executive summary of the first written submission of Korea B-2  
Annex B-2 Executive summary of the second written submission of Korea B-11 
Annex B-3 Executive summary of the open ing oral statement of Korea at the 
First Substantive Meeting B-21 
Annex B-4 Executive summary of the closing oral statement of Korea at the 
First Substantive Meeting B-26 
Annex B-5 Executive summary of the open ing oral statement of Korea at the 
Second Substantive Meeting B-29 
Annex B-6 Closing oral statement of Korea at  the Second Substantive Meeting B-34 
ANNEX C 
ARGUMENTS OF THE UNITED STATES 
Contents Page 
Annex C-1 Executive summary of the first written submission of the United States C-2  
Annex C-2 Executive summary of the second written submission of the United States C-10 
Annex C-3 Executive summary of the opening oral statement of the United States at the 
First Substantive Meeting C-18 
Annex C-4 Closing oral statement of the United States at the First Substantive Meeting C-23 
Annex C-5 Executive summary of the opening oral statement of the United States at the 
Second Substantive Meeting C-25 
Annex C-6 Closing oral statement of the United States at the Second Substantive Meeting C-29 
ANNEX D 
ARGUMENTS OF THE THIRD PARTIES 
Contents Page 
Annex D-1 Executive summary of  the arguments of Brazil D-2 
Annex D-2 Executive summary of the arguments of Canada D-6 
Annex D-3 Executive summary of the arguments of China D-10  
Annex D-4 Executive summary of the arguments of the European Union D-14 
Annex D-5 Executive summary of the arguments of Japan D-19  
Annex D-6 Executive summary of the arguments of Norway D-23 
Annex D-7 Executive summary of the arguments of Thailand D-26  
Annex D-8 Executive summary of the arguments of Turkey D-27 
Annex D-9 Executive summary of the arguments of Viet Nam D-30  
 
 WT/DS464/R 
 
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  CASES CITED IN THIS REPORT 
Short Title Full Case Title and Citation 
Argentina – Import 
Measures  Appellate Body Reports, Argentina – Measures Affe cting the Importation of 
Goods , WT/DS438/AB/R / WT/DS444/AB/ R / WT/DS445/AB/R, adopted 
26 January 2015 
Argentina – Import 
Measures  Panel Reports, Argentina – Measures Affectin g the Importation of Goods , 
WT/DS438/R and Add.1 / WT/DS444/R and Add.1 / WT/DS445/R and Add.1, 
adopted 26 January 2015, as modified (WT/DS438/R) and upheld (WT/DS444/R / 
WT/DS445/R) by Appellate Body Repo rts WT/DS438/AB/R / WT/DS444/AB/R / 
WT/DS445/AB/R 
Argentina – Textiles and 
Apparel  Appellate Body Report, Argentina – Measures Affect ing Imports of Footwear, 
Textiles, Apparel and Other Items , WT/DS56/AB/R and Corr.1, adopted 
22 April 1998, DSR 1998:III, p. 1003 
Australia – Apples  Panel Report, Australia – Measures Affecting the Importation of Apples from 
New Zealand , WT/DS367/R, adopted 17 December 2010, as modified by 
Appellate Body Report WT/DS367/AB/R, DSR 2010:VI, p. 2371 
Canada – Continued 
Suspension  Panel Report, Canada – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS321/R and Add.1 to Add.7, adopted 14 November 
2008, as modified by Appellate Body Report WT/DS321/AB/R, DSR 2008:XV, 
p. 5757 
China – Autos (US)  Panel Report, China – Anti-Dumping and Countervailing Duties 
on Certain Automobiles from the United States , WT/DS440/R and Add.1, 
adopted 18 June 2014 
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 
China – GOES  Appellate Body Report, China – Countervailing and Anti-Dumping Duties on 
Grain Oriented Flat-Rolled Electrical Steel from the United States , 
WT/DS414/AB/R, adopted 16 November 2012, DSR 2012:XII, p. 6251 
China – Rare Earths  Panel Reports, China – Measures Related to the Exportation of Rare Earths, 
Tungsten, and Molybdenum , WT/DS431/R and Add.1 / WT/DS432/R and Add.1 / 
WT/DS433/R and Add.1, adopted 29 August 2014, upheld by Appellate Body 
Reports WT/DS431/AB/R / WT/D S432/AB/R / WT/DS433/AB/R 
Dominican Republic – 
Import and Sale of 
Cigarettes  Panel Report, Dominican Republic – Measures Affecting the Importation and 
Internal Sale of Cigarettes , WT/DS302/R, adopted 19 May 2005, as modified by 
Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p. 7425 
EC – Bananas III (Mexico)  Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas, Complaint by Mexico , WT/DS27/R/MEX, adopted 
25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, 
DSR 1997:II, p. 803 
EC – Bed Linen  Appellate Body Report, European Communities – An ti-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 – Export Subsidies on 
Sugar (Brazil)  Panel Report, European Communities – Export Subsidies on Sugar, Complaint 
by Brazil , WT/DS266/R, adopted 19 May 2005, as modified by Appellate Body 
Report WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, DSR 2005:XIV, 
p. 6793 
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, p. 135 
EC – Hormones (Canada)  Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), 
Complaint by Canada , WT/DS48/R/CAN, adopted 13 February 1998, as 
modified by Appellate Body Repo rt WT/DS26/AB/R , WT/DS48/AB/R, 
DSR 1998:II, p. 235 
EC – Hormones (US)  Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), 
Complaint by the United States , WT/DS26/R/USA, adopted 13 February 1998, 
as modified by Appellate Body Re port WT/DS26/AB/R, WT/DS48/AB/R, 
DSR 1998:III, p. 699 
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 WT/DS464/R 
 
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  Short Title Full Case Title and Citation 
EC – Seal Products  Panel Reports, European Communities – Measures  Prohibiting the Importation 
and Marketing of Seal Products , WT/DS400/R and Add.1 / WT/DS401/R and 
Add.1, adopted 18 June 2014, as modified by Appellate Body Reports 
WT/DS400/AB/R / WT/DS401/AB/R 
EC – Tariff Preferences  Panel Report, European Communities – Conditio ns for the Granting of Tariff 
Preferences to Developing Countries , WT/DS246/R, adopted 20 April 2004, as 
modified by Appellate Body Report  WT/DS246/AB/R, DS R 2004:III, p. 1009 
EC and certain member 
States – Large Civil Aircraft  Panel Report, European Communities and Certai n Member States – Measures 
Affecting Trade in Large Civil Aircraft , WT/DS316/R, adopted 1 June 2011, as 
modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685 
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 
European Communities – 
Selected Customs Matters  Panel Report, European Communities – Selected Customs Matters , 
WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body 
Report WT/DS315/AB/R, DSR 2006:IX, p. 3915 
Mexico – Olive Oil  Panel Report, Mexico – Definitive Countervailing Measures on Olive Oil from the 
European Communities , WT/DS341/R, adopted 21 October 2008, DSR 2008:IX, 
p. 3179 
Peru – Agricultural Products  Panel Report, Peru – Additional Duty on Im ports of Certain Agricultural 
Products , WT/DS457/R and Add.1, adopted 31 July 2015, as modified by 
Appellate Body Report WT/DS457/AB/R 
Philippines – Distilled Spirits  Panel Reports, Philippines – Taxes on Distilled Spirits , WT/DS396/R / 
WT/DS403/R, adopted 20 January 2012, as modified by Appellate Body Reports 
WT/DS396/AB/R / WT/DS403/AB/ R, DSR 2012:VIII, p. 4271 
Turkey – Rice  Panel Report, Turkey – Measures Affectin g the Importation of Rice , 
WT/DS334/R, adopted 22 October 2007, DSR 2007:VI, p. 2151 
US – 1916 Act (EC)  Appellate Body Report, United States – Anti-Dumping Act of 1916 , 
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, 
p. 4793 
US – Anti-dumping and 
Countervailing Duties 
(China)  Panel Report, United States – Definitive Anti-D umping 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 – 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 
Methodologies (China) United States — Certain Methodologies and their Application to Anti-Dumping 
Proceedings Involving China , WT/ DS471, panel composed on 28 August 2014 
US – Carbon Steel  Appellate Body Report, United States – Countervai ling Duties on Certain 
Corrosion-Resistant Carbon Stee l Flat Products from Germany , WT/DS213/AB/R 
and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779 
US – Carbon Steel (India) Panel Report, United States – Countervailing Measures on Certain Hot-Rolled 
Carbon Steel Flat Pr oducts from India , WT/DS436/R and Add.1, adopted 
19 December 2014, as modified by Appellate Body Report WT/DS436/AB/R 
US – Carbon Steel (India) Appellate Body Report, United States – Countervaili ng Measures on Certain Hot-
Rolled Carbon Steel Flat Products from India , WT/DS436/AB/R, adopted 19 
December 2014 
US – Continued Suspension  Panel Report, United States – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS320/R and Add.1 to Add.7, adopted 14 November 
2008, as modified by Appellate Body Report WT/DS320/AB/R, DSR 2008:XI, 
p. 3891 
US – Continued Zeroing  Appellate Body Report, United States – Continued Ex istence and Application of 
Zeroing Methodology , WT/DS350/AB/R, adopted 19 February 2009, 
DSR 2009:III, p. 1291 
US – COOL  Panel Reports, United States – Certain Country of Origin Labelling (COOL) 
Requirements , WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified 
by Appellate Body Reports WT/DS 384/AB/R / WT/DS386/AB/R, DSR 2012:VI, 
p. 2745 
US – Countervailing Duty 
Investigation on DRAMS  Appellate Body Report, United States – Countervaili ng Duty Investigation on 
Dynamic Random Access Memory Se miconductors (DRAMS) from Korea , 
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131 
US – Countervailing 
Measures (China) Panel Report, United States – Countervailing Duty Measures on Certain 
Products from China , WT/DS437/R and Add.1, adopted 16 January 2015, as 
modified by Appellate Body Report WT/DS437/AB/R WT/DS464/R 
 
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  Short Title Full Case Title and Citation 
US – Countervailing 
Measures on Certain EC 
Products Panel Report, United States – Countervailing Measures Concerning Certain 
Products from the European Communities , WT/DS212/R, adopted 8 January 
2003, as modified by Appellate Body Report WT/DS212/AB/R, DSR 2003:I, 
p. 73 
US – Countervailing 
Measures on Certain EC 
Products  Appellate Body Report, United States – Countervailing Measures Concerning 
Certain Products from th e European Communities , WT/DS212/AB/R, adopted 
8 January 2003, DSR 2003:I, p. 5 
US – Gambling  Panel Report, United States – Measures Affecting the Cross-Border Supply of 
Gambling and Betting Services , WT/DS285/R, adopted 20 April 2005, as 
modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797 
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Me at 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 II Appellate Body Report, United States – Imposition of  Countervailing Duties on 
Certain Hot-Rolled Lead and Bismuth Carb on Steel Products Originating in the 
United Kingdom , WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, p. 2595 
US – Shrimp (Viet Nam)  Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from 
Viet Nam , WT/DS404/R, adopted 2 September 2011, DSR 2011:X, p. 5301 
US – Shrimp and Sawblades  Panel Report, United States – Anti-Dumping Me asures on Certain Shrimp and 
Diamond Sawblades from China , WT/DS422/R and Add.1, adopted 23 July 
2012, DSR 2012:XIII, p. 7109 
US – Shrimp II  (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from 
Viet Nam , WT/DS429/R and Add.1, adopted 22 April 2015, upheld by Appellate 
Body Report WT/DS429/AB/R 
US – Shrimp II (Viet Nam)  Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from 
Viet Nam , WT/DS429/R and Add.1, adopted 22 April 2015, upheld by Appellate 
Body Report WT/DS429/AB/R 
US – Softwood Lumber IV  Panel Report, United States – Final Countervailing Duty Determination with 
Respect to Certain Softwood Lumber fro m Canada – Recourse by Canada to 
Article 21.5 [of the DSU] , WT/DS257/RW, adopted 20 December 2005, upheld 
by Appellate Body Report WT/DS257/AB/RW, DSR 2005:XXIII, p. 11401 
US – Softwood Lumber IV  Appellate Body Report, United States – Final Countervailing Duty Determination 
with Respect to Certain Soft wood Lumber from Canada  
– Recourse by Canada to Article 21.5 of the DSU , WT/DS257/AB/RW, adopted 
20 December 2005, DSR 2005:XXIII, p. 11357 
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) 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 VI 
(Article 21.5 – Canada) , Appellate Body Report, United States – Investigation of the International Trade 
Commission in Softwood Lumber from Cana da – 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 Steel 
(Mexico)  Panel Report, United States – Final Anti-Dumpi ng Measures on Stainless Steel 
from Mexico , WT/DS344/R, adopted 20 May 2008, as modified by Appellate 
Body Report WT/DS344/AB/R, DSR 2008:II, p. 599 
US – Stainless Steel 
(Mexico) Appellate Body Report, United States – Final Anti-Dumping Measures on 
Stainless Stee l from Mexico , WT/DS344/AB/R, adopted 20 May 2008, 
DSR 2008:II, p. 513 
US – Tyres (China) Appellate Body Report, United States – Measures A ffecting Imports of Certain 
Passenger Vehicle and Ligh t Truck Tyres from China , WT/DS399/AB/R, adopted 
5 October 2011, DSR 2011:IX, p. 4811 
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 – Wool Shirts and 
Blouses Appellate Body Report, United States – Measure A ffecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R, adopted 23 May 1997, and 
Corr.1, DSR 1997:I, p. 323 WT/DS464/R 
 
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  Short Title Full Case Title and Citation 
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 (EC) Panel Report, United States – Laws, Regu lations and Methodology for 
Calculating Dumping Margins ("Zeroing") , WT/DS294/R, adopted 9 May 2006, 
as modified by Appellate Body Report WT/DS294/AB/R, DSR 2006:II, p. 521  
US – Zeroing (Japan)  Appellate Body Report, United States – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p. 3 
US – Zeroing (Japan)  Panel Report, United States – Measures Relating to Zeroing and Sunset 
Reviews , WT/DS322/R, adopted 23 January 2007, as modified by Appellate 
Body Report WT/DS322/AB/R, DSR 2007:I, p. 97 
US – Zeroing (Japan) 
(Article 21.5 – Japan)  Appellate Body Report, United States – Measures Relating to Zeroing and 
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan , 
WT/DS322/AB/RW, adopted 31 Augu st 2009, DSR 2009:VIII, p. 3441 
 
 WT/DS464/R 
 
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  ABBREVIATIONS USED IN THIS REPORT 
Abbreviation Description 
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs 
and Trade 1994 
BCI Business Confiden tial Information 
BCI Procedures Additional working procedures of  the Panel concerning Business Confidential 
Information 
CONNUM Control number 
DPM Differential Pricing Methodology 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures  Governing the Settlement of Disputes 
ERDF European Regional Development Fund 
GATT 1994 General Agreement on Tariffs and Trade 1994 
LRWs/Washers Large Residential Washers 
Marrakesh Agreement Marrakesh  Agreement Establishing the World Trade Organization 
OECD Organization for Economic Cooperation and Development 
R&D Research and Development 
RSTA Restriction of Special Taxation Act 
SCM Agreement Agreement on Subsid ies and Countervailing Measures 
T-T Transaction-to-Transaction Comparison Methodology 
USDOC United States Department of Commerce 
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 
1155 UNTS 331; 8 International Legal Materials 679 
W-T Weighted Average-to-Transaction Comparison Methodology 
WTO World Trade Organization 
W-W Weighted Average-to-Weighted Average Methodology 
 WT/DS464/R 
 
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  1  INTRODUCTION 
1.1  Complaint by Korea 1.1.  On 29 August 2013, Korea requested consultations with the United States pursuant to 
Article 4 of the Understanding on Rules and Pr ocedures Governing the Settlement of Disputes 
(DSU), Article XXII of the General Agreement on Tariffs and Trade (GATT 1994), Article 17 of the 
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement), and Article 30 of th e Agreement on Subsidies and Countervailing 
Measures (SCM Agreement) with regard to the anti-dumping and countervailing measures applied 
by the United States on Large Residential Washers (LRWs) from the Republic of Korea.
1  
1.2.  Consultations were held on 3 October 2013, but failed to resolve the dispute. On 
5 December 2013, Korea requested the establishment of a panel.2  
1.2  Panel establishment and composition 
1.3.  At its meeting on 22 January 2014, the Di spute Settlement Body (DSB) established a panel 
pursuant to the request of Korea in document WT /DS464/4, in accordance with Article 6 of the 
DSU.3 
1.4.  The Panel's terms of reference are the following: 
To examine, in the light of the relevant pr ovisions of the covered agreements cited by 
the parties to the dispute, the matter re ferred to the DSB by Korea in document 
WT/DS464/4 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.
4 
1.5.  On 10 June 2014, Korea requested the Director-General to determine the composition of the 
Panel, pursuant to Article 8.7 of the DSU. This paragraph provides: 
If there is no agreement on the panelists  within 20 days after the date of the 
establishment of a panel, at the request of either party, the Director-General, in 
consultation with the Chairman of the DSB and the Chairman of the relevant Council 
or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with 
any relevant special or additional rules or procedures of the covered agreement or 
covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB sh all inform the Members of the composition 
of the panel thus formed no later than 10 days after the date the Chairman receives 
such a request.  
1.6.  On 20 June 2014, the Director-General accordingly composed the Panel as follows: 
Chairperson: Ms Claudia Orozco  
 
Members:  Mr Mazhar Bangash    Mr Hanspeter Tschaeni  
 
1.7.  Brazil, Canada, China, the European Union,  India, Japan, Norway, Saudi Arabia, Thailand, 
Turkey and Viet Nam reserved their rights to participate in the Panel proceedings as third parties. 
                                               
1 See WT/DS464/1. 
2 See WT/DS464/4. 
3 See WT/DSB/M/341. 
4 See WT/DS464/5. WT/DS464/R 
 
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  1.3  Panel proceedings 
1.3.1  General 1.8.  After consultations with the parties, the Panel adopted its Working Procedures
5 and timetable 
on 3 September 2014. The Panel revised its Work ing Procedures on 8 October 2014 and the 
timetable on 12 December 2014. 
1.9.  The Panel held a first substantive meet ing with the parties on 10 and 11 March 2015. A 
session with the third parties took place on 11 March 2015. The Panel held a second substantive 
meeting with the parties on 20 and 21 May 2015. On  3 July 2015, the Panel issued the descriptive 
part of its Report to the parties. The Panel issued its Interim Report to the parties on 14 October 2015. The Panel issued its Final Report to the parties on 13 November 2015. 
1.3.2  Working Procedures on BCI 
1.10.  After consultations with the parties, the Panel adopted, on 3 September 2014, additional 
procedures for the protection of Bu siness Confidential Information (BCI).
6 
1.3.3  China's request for enhanced third party rights  
1.11.  By letter dated 25 June 2014, China indicated that it is a party to a parallel panel 
proceeding7, and requested enhanced third party rights  to: (a) receive all submissions of the 
parties at the time they are submitted to the Panel; (b) have access to any other information 
submitted to the Panel; (c) be present during the entirety of all meetings of the parties; (d) ask 
questions of the parties at meetings; and (e) ma ke a short statement at all meetings of the 
parties. China repeated its request by letter dated 26 November 2014 to the Panel.  
1.12.  On 12 December 2014, the Panel rejected China's request for enhanced third party rights in 
the following terms: 
Article 10.2 of the DSU provides that Members may participate in panel proceedings 
as third parties if they have a "substantial" interest in the matter before the panel. It 
is well established that panels may grant a third party enhanced rights, provided that 
such third party's interest in the proceeding extends beyond the "substantial" interest referred to in Article 10.2 of the DSU. 
The Panel observes that previous panels have granted enhanced third party rights on 
the basis of, inter alia , the significant economic effect of the measures at issue on 
certain third parties
8, the importance of trade in the product at issue to certain 
third parties9, the significant trade policy impact that the outcome of the case could 
have on third parties maintaining measures similar to the measures at issue10, at least 
one of the parties agreeing that enhanced third party rights should be granted11, 
claims that the measures at issue derived from an international treaty to which certain 
third parties were parties12, third parties having previously been granted enhanced 
                                               
5 See the Panel's Working Procedures, Annex A-1. 
6 See Additional Working Procedures on BCI, Annex A-2. 
7 DS471  United States – Certain Anti-Dumping Methodologies (China). That panel was established on 
26 March 2014 and was composed on 28 August 2014. 
8 Panel Reports, EC – Bananas III , para. 7.8; and EC – Tariff Preferences , Annex A, para. 7. See, also, 
Panel Report, EC – Export Subsidies on Sugar , para. 2.5. (footnote original). "Footnote original" means 
footnotes to the quoted original text. However, to av oid any confusion, the sequential numbering of these 
"footnotes original" will follow the numerical order in this Report, rather than the original text. 
9 Panel Report, EC – Export Subsidies on Sugar , para. 2.5. (footnote original) 
10 Panel Report, EC – Tariff Preferences , Annex A, para. 7. (footnote original) 
11 Panel Report, EC – Bananas III , para. 7.8. (footnote original) 
12 Ibid. WT/DS464/R 
 
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  rights in related panel proceedings13, and certain practical considerations arising from 
a third party's involvement as a party in a parallel panel proceeding.14  
China asserts that its interest in DS464 extends beyond being merely "substantial" 
because the DS464 and 471 proceedings are "par allel", or "significantly overlapped".15 
China also asserts that it has an "especially significant interest" in the United States 
Department of Commerce's (USDOC) use of the methodology at issue in the DS464 proceeding. China contends that it will  be "disadvantaged", compared to the 
United States, in developing arguments in the DS471 proceeding if it cannot "properly 
appreciate the manner in which issues develop"
16 during the DS464 proceeding. 
In citing World Trade Organization (WTO) case law where enhanced third party rights 
have been granted in the context of parallel proceedings, China refers to the two EC – 
Hormones  cases.17 These two cases were separate proceedings brought by Canada 
and the United States against the same European measure. Both cases were factually intense, were heard by the same panelists, and involved the use of the same scientific 
experts. Enhanced third party rights were granted in these parallel proceedings for 
"practical" reasons
18, to avoid undue duplication. Similar practical considerations do 
not arise in the present case, particularly since the panelists in DS464 are different 
from the panelists in DS471. 
Regarding China's assertion that there is "sig nificant overlap" between the issues that 
are likely to arise in DS464 and 471, the Panel notes that similarity of the legal issues between cases has not been a criterion to grant enhanced third party rights to a 
third party in one case that is also the complainant in another case. Moreover, the 
Panel notes that China did not request, purs uant to Article 9.3 of the DSU, that the 
same panelists should serve on both the DS464 and DS471 cases.
19 This would have 
ensured a harmonized timetable between the cases.  
Regarding China's alleged "especially significant interest" in the USDOC's use of the 
methodology under review by the DS 464 Panel, China refers to the USDOC's use of 
this methodology in anti-dumping proceedings involving imports from China. China 
asserts that the USDOC's use of this methodology therefore has a "significant economic impact" on China. The Panel notes that the alleged economic impact of the USDOC's use of the relevant methodology against Chinese imports is what has caused 
China to bring its own proceeding against this methodology. China will have every 
right to pursue its own claims – and thereby protect its economic interest – in the DS471 proceeding. Since China is able to defend its interests by bringing its own case, 
there is no need for China to be granted enhanced third party rights to protect those 
interests in DS464.  
In referring to its "especially significant interest", China seeks to rely on the grant of 
enhanced third party rights in EC – Bananas III and EC – Tariff Preferences .
20 Those 
disputes involved situations in which third parties were the beneficiaries of the EC programs that were being challenged. The third parties in those cases therefore had highly significant economic interests in the panel proceedings that could not be 
addressed by them bringing separate cases. This is in marked contrast to the 
circumstances surrounding China's request, given China's ability to defend its own economic interests by bringing its own case against the United States.  
                                               
13 Panel Report, EC – Bananas III , para. 7.8. (footnote original) 
14 Panel Report, EC – Measures Concerning Meat and Meat Products (Hormones), Complaint by Canada 
("EC – Hormones (Canada) "), WT/DS48/R/CAN, adopted 13 February 1998, as modified by Appellate Body 
Report WT/DS26/AB/R, WT/DS48/AB/R, DSR 1998:II, 235, para. 8.17. (footnote original) 
15 China's 25 June 2014 request, paras. 3 and 4. (footnote original) 
16 Ibid. para. 10. (footnote original) 
17 Ibid. para. 2, footnote 4. (footnote original) 
18 Panel Report, EC – Hormones (US) , para. 8.15. (footnote original) 
19 China did not refer to Article 9.3 when requesting establishment of the DS471 panel. See 
WT/DSB/M/342 (pp. 23-24) and WT/DSB /M/343, p. 15). (footnote original) 
20 China's 25 June 2014 request, footnote 5. (footnote original) WT/DS464/R 
 
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  China further suggests that it will be "disad vantaged", compared to the United States, 
in developing arguments in the DS471 proceeding if it cannot "properly appreciate the manner in which issues develop"
21 during the DS464 proceeding. This argument is not 
persuasive, since China's claims in DS471 will be assessed on their merits by panelists 
who have not participated in the DS464 proceeding. Those panelists will determine for 
themselves (through questions, and their conduct of the hearings, for example) how 
the issues in DS471 should be developed. The manner in which issues develop in 
DS464 is therefore of little consequence.22 Furthermore, as a regular third party in 
DS464, China has already received the United States' first written submission in DS464, and therefore has an insight into the nature of the defence being raised by the 
United States. 
Finally, the Panel observes that both part ies have expressed their opposition to 
China's request for enhanced third party rights. The United States has expressed this opposition in two written communications. Korea expressed its opposition orally at the 
Panel's organizational meeting. China has not provided any reason for us to grant 
enhanced third party rights over the objections of both parties to the dispute. 
1.3.4  The European Union's request concerni ng the Panel's Working Procedures and the 
BCI Procedures 
1.13.  In its third party submission dated 8 De cember 2014, the European Union requested the 
Panel to amend certain aspects of its Working Procedures, and raised a number of reservations regarding the Additional working procedures of  the Panel concerning business confidential 
information (BCI Procedures).
23  
1.14.  By communication dated 13 February 2015, the Panel rejected the European Union's 
requests in the following terms: 
1.1 The European Union asks the Panel to amend its Working Procedures, in order 
to allow third parties to receive all communications submitted by the parties, be present throughout the hearings and respond to questions addressed to the parties or 
other third parties. The European Union also raises a number of reservations 
regarding the BCI Procedures adopted by the Panel.  
1 The Panel's Working Procedures 1.1 Introduction 
1.2  The European Union submits that the Working Procedures adopted by the Panel 
modify Appendix 3 of the DSU in a manner that risks to diminish the rights of 
third parties. The European Union requests modifications of the Working Procedures to 
preserve the rights of third parties as envisaged by the DSU.  
1.3 The European Union submits
24 that the Working Procedures set forth in 
Appendix 3 of the DSU contemplate two distinguishable stages in a panel proceeding. 
The European Union states that the first stage involves the parties setting out their 
case in chief, including a full presentation of claims, facts, evidence and appropriate argument. The second stage involves rebuttals, and the refinement of argument and questions for soliciting explanations. The European Union contends that paragraph 6 
of Appendix 3 grants third parties a right to  be fully implicated in the first stage and 
that DSU Articles 10.1 and 10.2 require that third parties have a full view of the cases presented by the parties before presenting  their written submissions and exercising 
                                               
21 China's 25 June 2014 request, para. 10. (footnote original) 
22 In its second request dated 26 November 2014, China refers to the possibility of the DS464 Panel 
Report being issued before the DS471 panel completes its work, and taken into accoun t by that panel. To the 
extent that this Panel's Report is issued before the DS471 panel completes its work, we agree that it may be taken into account by the DS471 panel. However, that panel would still be required by Article 11 of the DSU to 
make its own objective assessment of the matter before it. (footnote original) 
23 European Union's third party submission, paras. 13 and 14. 
24 Ibid. paras. 3-12. (footnote original) WT/DS464/R 
 
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  their right to be heard. The European Unio n asserts that paragraph 8 of the Panel's 
Working Procedures modifies the Append ix 3 Working Procedures "by admitting 
factual assertions and evidence (and associated argument) filed after the first hearing, notably in rebuttals or responses to questions".
25 According to the European Union, 
this modification "permits to some extent the shifting of fact, evidence and associated 
argument from the first stage to the second stage", thereby "diminish[ing]"26 the 
rights of third parties. 
1.4 The European Union requests three changes to the Panel's Working Procedures, 
s o  a s  t o  " f u l l y  p r e s e r v e "27 the rights of third parties. First, the European Union 
requests that third parties receive all submissions by the parties to the Panel, including first submissions, rebuttals, ruling requests and responses thereto, 
responses to questions and comments thereon and oral statements. Second, the 
European Union requests that third parties should be present during the entirety of the first and second substantive meetings. Third, the European Union requests that 
third parties have an opportunity to respond to questions from the Panel to the parties 
and other third parties. The European Union supports its requests by referring to prior 
WTO cases "in which appropriate steps"
28 have been taken in relation to third party 
rights. 
1.5 Consistent with Article 12.1 of the DSU, the Panel consulted with the parties 
regarding the European Union's request. The parties provided written comments regarding this matter on 30 January 2015. Both parties asked the Panel to reject the 
European Union's request. 
1.2 The nature of the European Union's request 1.6 We note that the European Union refers to WTO cases in which "appropriate 
steps" have been taken to protect third party rights. These are actually cases in which 
panels granted enhanced third party rights once satisfied that the interest of a third party extended beyond the "substantial " interest envisaged by Article 10.2 of the 
DSU. However, the European Union does not argue that its interest in the present 
proceeding extends beyond the "substantial" interest referred to in Article 10.2 of the DSU. Rather, the European Union argues th at paragraph 8 of the Working Procedures 
risks to diminish the rights of third parties, and justifies the rights requested as 
necessary to preserve the rights of third parties as envisioned by the DSU.  
1.3 The rights of third parties  1.7 Before addressing the argument by the European Union, we recall the rights of 
third parties established in the DSU and Appendix 3. Article 10 establishes a general 
obligation to fully take into account the interests of the parties to a dispute and those of other Members under a covered agreement. The specific rights of third parties are 
developed in paragraphs 2 and 3 of Article 10 and paragraph 6 of Appendix 3. 
Article 10.2 requires a panel to provide an opportunity for third parties to make submissions and present their views to the pa nel. In turn, the right to present views 
to the panel is developed in paragraph 6 of Appendix 3 which indicates that 
third parties shall be invited to a special session of the first substantive meeting of the 
panel with the parties. Article 10.3 of the DSU mandates that third parties receive the 
submissions of the parties to the first meeting of the panel.  
1.8 These rights are included and developed in paragraphs 15, 16, 17, 18, 20, 21 
and 25 (d) of the Panel's Working Procedures. In particular, parties are required to serve on all third parties their written submi ssions in advance of the first meeting with 
the Panel; third parties are invited to present written submissions prior to the 
first substantive meeting of the Panel; and third parties are invited to present their 
                                               
25 European Union's third party submis sion, para. 7. (footnote original) 
26 Ibid. para. 7. (footnote original) 
27 Ibid. para. 4. (footnote original) 
28 Ibid. para. 12. (footnote original) WT/DS464/R 
 
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  views orally to the panel during a session of  the first substantive meeting of the Panel 
with the parties.  
1.4 The Panel's Working Procedures reflect standard panel practice 
1.9 Before considering the European Union's arguments in detail, we note that there 
is nothing novel about the text of paragraph 8 of the Working Procedures. It is a 
standard provision of panels' Working Proc edures. All Working Procedures publicly 
available29 have an identical or virtually identical provision, except in one case.30 We 
note that in all these cases, the European Union was either a party or a third party in 
the dispute. We also note that there is no record in any of these panel Reports of any 
concern being expressed by the European  Union regarding the timeframe for the 
submission of factual evidence or the rights of third parties.  
1.10 The language of paragraph 8 is included in panel Working Procedures in order to 
regulate the submission of factual evidence. Such discipline is necessary because, as explained below, there is no deadline for th e submission of factual evidence provided 
for in the Working Procedures set forth in Appendix 3 of the DSU. 
1.5 Alleged diminishment of third party rights 
1.11 With regard to the European Union's assertion that paragraph 8 of the Panel's 
Working Procedures diminishes the rights of third parties, we recall that the first and 
second sentences of paragraph 8 provide: 
Each party shall submit all factual evidence to the Panel no later than 
during the first substantive meeting, except with respect to evidence 
necessary for purposes of rebuttal and answers to questions or comments 
on answers provided by the other party. Exceptions to this procedure shall be granted upon a showing of good cause. 
                                               
29 Panels have not always attached their Working Pr ocedures to their Reports.  Panels only recently 
began to do so systematically. Wo rking Procedures were attached in  Panel Report, United States – Measures 
Affecting the Cross-Border Supply of Gambling and Betting Services , WT/DS285/R, page A-2; Panel Report, 
Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes , WT/DS302/R, 
page B-2; Panel Report, European Communities – Selected Customs Matters , WT/DS315/R, page E-2; Panel 
Report, European Communities – Anti-Dumping Measure on Farmed Salmon from Norway , WT/DS337/R, 
page A-11; Panel Report, Turkey – Measures Affecting the Importation of Rice , WT/DS334/R, page H-2; 
Panel Report, United States – Continued Suspension of Obligations in the EC – Hormones Dispute , 
WT/DS320/R/Add.1, page A-4; Panel Report, Canada – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS321/R/Add.1, page A-4; Panel Report, Australia – Measures Affecting the 
Importation of Apples from New Zealand , WT/DS367/R, page A-10; Panel Reports, United States – Certain 
Country of Origin Labelling (COOL) Requirements , WT/DS384/R and WT/DS386/R, page E-3;  Panel Reports, 
Philippines – Taxes on Distilled Spirits, WT/DS396/R / WT/DS403/R, page G-8; Panel Reports, European 
Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/R /Add.1 and WT/DS401/R /Add.1, page A-2; Panel Report, China 
 Anti-Dumping and Countervailing Duty Measures on 
Broiler Products from the United St ates, WT/DS427/R/Add.1, page C-2;  Panel Report, United States – 
Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS429/R/Add.1, page A-3; Panel Reports, China – Measures Related to the Exportation of Rare  Earths, Tungsten, and Molybdenum, WT/DS431/R/Add.1, 
WT/DS432/R/Add.1 and WT/DS433/R/Add.1, page A-2; Panel Report, United States – Countervailing Measures 
on Certain Hot-Rolled Carbon Steel Flat Products fro m India, WT/DS436/R/Add.1, page A-2; Panel Report, 
United States – Countervailing Duty Measures on Certain Products from China, WT/DS437/R/Add.1, page H-2; Reports of the Panel, Argentina – Measures Affect ing the Importation of Goods, WT/DS438/R/Add.1, 
WT/DS444/R/Add.1 and WT/DS445/R/Add.1, page A-1; Panel Report, China – Anti-Dumping and Countervailing Duties on Certain Automobiles from the United States, WT/DS440/R/Add.1, page A-2; 
Panel Report, United States – Countervailing and Anti -Dumping Measures on Certain Products from China, 
WT/DS449/R/Add.1, page A-2; and Panel Report, Peru – Additional Duty on Imports of Certain Agricultural Products, WT/DS457/R/Add.1, page A-1. (footnote original) 
30 The Working Procedures in this case were based on an Agreement on Procedures between the parties 
(China and the United States). These Procedures did not include a provision gove rning the submission of 
factual evidence. See Panel Report, United States – Anti-Dumping Measur es on Certain Shrimp and Diamond 
Sawblades from China , WT/DS422/R/Add.1, p. D-3. (footnote original) WT/DS464/R 
 
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  1.12 The European Union's concern arises in respect of the limited exception 
provided for in paragraph 8 of the Panel's Working Procedures, because it "admit[s] factual assertions and evidence (and associated argument) filed after the first hearing". The European Union considers that all factual evidence and associated 
argument should be set out in the first stage of the panel process. The 
European Union considers that third parties are "fully implicated"
31 in this first stage. 
1.13 We note that the distinction between the first and second stages of the panel 
process was drawn by the Appellate Body in Argentina – Textiles . We consider it 
appropriate to be guided by the findings of the Appellate Body in that case. The 
Appellate Body was reviewing a decision by the panel to admit certain evidence 
presented by the United States, the complainant, after the deadline for rebuttal 
submissions. The panel had granted Arge ntina, the respondent, two weeks to 
comment on that evidence. The Appellate Bo dy upheld the panel's decision. In doing 
so, the Appellate Body observed that: 
Under the Working Procedures in Appendix 3, the complaining party 
should set out its case in chief, including a full presentation of the facts on the basis of submission of support ing evidence, during the first stage. 
The second stage is generally designed to permit "rebuttals" by each 
party of the arguments and evidence submitted by the other parties.
32 
1.14 With respect to the admissibility of factual evidence presented by the 
United States, the Appellate Body observed that "[t]he Working Procedures in 
Appendix 3 … do not establish precise deadlin es for the presentation of evidence by a 
party to the dispute."33 The Appellate Body emphasised  that the Working Procedures 
set forth in Appendix 3 "do not constrain panels with hard and fast rules on deadlines 
for submitting evidence."34 We agree. Since there are no rules in the Appendix 3 
Working Procedures governing the submission  of evidence, there is no basis for the 
European Union to suggest that the third party rights provided for in that Appendix 
are somehow tied to, or dependent on, any requirement that factual evidence should 
be provided by the parties in the first st age of the panel proceeding. Accordingly, 
there is no basis for the European Union to  allege that paragraph 8 of the Panel's 
Working Procedures somehow "diminishes" the rights of third parties provided for in 
Appendix 3 of the DSU by allowing – in exceptional circumstances only – the 
submission of factual evidence by the pa rties after the first substantive meeting. 
1.15 Furthermore, with respect to the European Union's concern that paragraph 8 of 
the Panel's Working Procedures allows "associated argument" to be submitted in the 
second stage of the Panel proceeding, we note that the Appellate Body in Argentina – 
Textiles  stated that the panel might have considered granting Argentina more than 
two weeks "to respond to the additional evidence"35 presented by the United States. 
Thus, the Appellate Body accepted that the United States could provide factual evidence after the first stage of the panel proceeding, and noted that Argentina should 
be afforded sufficient time to prepare comments and/or arguments in respect of that 
evidence. This due process requirement, which dictates that one party should always 
be entitled to adduce arguments in respect of factual evidence presented by the other 
party, no matter at what stage of the panel proceeding it is presented, is established 
in the last sentence of paragraph 8 of the Panel's Working Procedures. 
1.16 In addition, we are not persuaded by the European Union's argument that 
third parties have a right to be "fully implicated" in the first stage of the panel 
process. We agree with the Appellate Body's statement in Argentina – Textiles  that 
the first stage of the panel process includes  the panel's first substantive meeting with 
                                               
31 European Union's third party submis sion, para. 5. (footnote original) 
32 Appellate Body Report, Argentina – Textiles , para. 79. (footnote original) 
33 Ibid. para. 79. (footnote original) 
34 Ibid. para. 80. (footnote original) 
35 Ibid.  WT/DS464/R 
 
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  the parties.36 Paragraph 6 of Appendix 3 of the DSU establishes that third parties only 
attend a separate third party session of th e Panel's first meeting with the parties. 
Third parties are not present when the comp lainant presents its case to the Panel 
(pursuant to Paragraph 5 of the Appendix 3 Working Procedures). It is entirely 
possible that the parties may present new factual evidence to the Panel at this 
juncture. For example, the complainant may present new factual evidence to the Panel in response to an argument made in the respondent's first written submission. 
Contrary to the view expressed by the European Union, the Appendix 3 Working 
Procedures do not provide for third parties to be "fully implicated" in this exchange. 
1.6 Conclusion For the above reasons, we reject the European Union's allegation that the Panel's 
Working Procedures risk to "diminish" the rights of third parties. Accordingly, we 
reject the European Union's request to modi fy our Working Proced ures to provide for 
fuller third party participation in these panel proceedings. 
2 The Panel's BCI Procedures 
2.1 Introduction 2.1 The European Union expresses a number of "reservations"
37 regarding the BCI 
Procedures adopted by the Panel. First, the European Union considers that a Member's 
right to submit BCI to the Panel should no t be conditioned on the provision of an 
authorising letter from the entity that submitted that information to the investigating authority in the underlying investigation. Second, the European Union considers that a 
Member may not be required to follow the designation for confidential information 
used in the underlying investigation. Third, the European Union considers that the designation of information as BCI in panel proceedings is ultimately a matter for the 
Panel, and may not be absolutely delegated to the investigating authority or any 
interested party. Accordingly, the European Union considers that the BCI Procedures should contain a challenge clause by which the designation proposed by the party 
providing the relevant information may be challenged by the other party and 
third parties. 
2.2 Consistent with Article 12.1 of the DSU, the Panel consulted with the parties 
regarding the issues raised by the European Union. The parties provided written 
comments regarding this matter on 30 January 2015. Neither party shared the 
reservations expressed by the European Union. 
2.2 Absence of any third party inte rest, or support from the parties 
2.3 The European Union has not argued that the Panel's BCI Procedures have any 
specific implications for the rights and interests of third parties. Nor has the European Union identified any respect in which the Panel's BCI Procedures have 
impacted on its participation in the present proceeding. 
2.4 Furthermore, in accordance with Article 12.1 of the DSU, the Panel's BCI 
Procedures were adopted in consultation with the parties. Neither party expressed any concern with the proposed BCI Procedures during those consultations. In the absence 
                                               
36 Appellate Body Report, Argentina – Textiles , para. 79. There is uncertainty regarding the 
European Union's understanding of the scope of the first stage of panel proceed ings. In para. 5 of its 
third party submission, the European Union suggests that the first stage of the panel proceeding is limited to 
the parties' first written submissions: "In the first stage, parties are requir ed to set out their case in chief, 
including a full presentation of claims, facts, eviden ce and appropriate argument , in their first written 
submissions." At para. 7 of its written submission, though, the European Union suggests that the first stage extends to the Panel's first substantive meeting with the parties. Specifically, the European Union complains that the Panel's Working Procedures admit factual asse rtions, evidence and associated argument "after the 
first hearing", thereby "shifting … fact, evidence an d associated argument fro m the first stage to the 
second stage". (footnote original) 
37 European Union's third pa rty submission, paras. 13 and 14. (footnote original) WT/DS464/R 
 
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  of any support from the parties for the rese rvations expressed by the European Union, 
we see no basis on which we should amend the BCI Procedures at this juncture. 
2.3 Conclusion 2.5 For the above reasons, we do not consider that there is any need for us to 
modify our BCI Procedures in light of the "r eservations" raised by the European Union. 
2  FACTUAL ASPECTS 2.1.  This dispute concerns the definitive anti -dumping and countervailing duties applied by the 
United States as a result of anti-dumping and co untervailing duty investigations conducted by the 
USDOC concerning imports of LRWs from Korea.  
2.2.  Korea's claims under the Anti-Dumping Agreement concern certain aspects of the USDOC's 
approach to the comparison methodology provided for in the second sentence of Article 2.4.2 of 
the Anti-Dumping Agreement (weighted average to individual export transactions – W-T 
comparison methodology). Korea challenges cert ain aspects of the methodologies used by the 
USDOC to determine whether the conditions for the application of the W-T comparison 
methodology are met. Specifically, Korea challenges  (i) the methodology used to apply the second 
sentence of Article 2.4.2 in the Washers  anti-dumping investigation (the Nails II  methodology); 
(ii) the methodology that replaced the Nails II  methodology (the Differential Pricing Methodology 
or the DPM) "as such"; (iii) the DPM "as applied" in the first administrative review of the Washers  
anti-dumping order; and (iv) the ongoing and futu re application of the DPM in the context of the 
USDOC's Washers  anti-dumping proceeding. Korea also challenges the USDOC's use of zeroing in 
the context of the W-T comparison methodology. Specifically, Korea challenges (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. 
2.3.  Korea's claims under the SCM Agreement concern the USDOC's determinations that two tax 
credit subsidy programmes are specific. Korea also raises claims under the SCM Agreement and 
the GATT 1994 challenging the manner in which th e USDOC calculated the amount of subsidy 
conferred on Samsung under those programmes.  
2.1  The measures at issue 
2.4.  Korea has challenged the following alleged measures: 
 Anti-Dumping Measures 
a. Final Determination of Sales at Less Than Fair Value – Notice of Final Determination of 
Sales at Less Than Fair Value: Large Residential Washers From the Republic of Korea, 
United States Federal Register , Vol. 77 (26 December 2012), p. 75988. 
b. Issues and Decision Memorandum for the Antidumping Investigation of Large Residential 
Washers From the Republic of Korea (18 December 2012). 
c. Anti-Dumping Duty Order – Large Residential Washers From Mexico and the 
Republic of Korea: Antidumping Duty Orders, United States Federal Register , Vol. 78 
(15 February 2013), p. 11148. 
d. Any determination in the anti-dumping proceeding entitled Large Residential Washers 
from the Republic of Korea, including but not limited to the original investigation, preliminary and final determinations in administrative reviews, new shipper reviews, 
sunset reviews, changed circumstances review s, and other segments of that proceeding. 
e. The so-called "zeroing" methodology used in anti-dumping proceedings that use the 
weighted average-to-transaction methodology (W-T) to calculate margins of dumping, 
and the Nails II  methodology and DPM used to determine the applicability of Article 2.4.2 
of the Anti-Dumping Agreement, which are used pursuant to, inter alia , the following 
United States laws, regulations, administrative procedures and measures: WT/DS464/R 
 
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  i. The Tariff Act of 1930, as amended, including in particular, Sections 771(35)(A) and 
(B) (i.e. 19 U.S.C. Sections 1677(35)(A) and (B)), and 777A(c) and (d) (i.e. 19 U.S.C. Sections 1677f-1(c) and (d)). 
ii. The Statement of Administrative Action that accompanied the Uruguay Round 
Agreements Act, United States House of Representatives , Vol. I, No. 103-316. 
iii. The implementing regulations of the USDOC, United States Code of Federal 
Regulations , Vol. 19, Part 351, including in particular Sections 351.212 and 351.414. 
iv. The predecessor versions of these regulations, including the version found at 
United States Code of Federal Regulations , Vol. 19 (2008), Section 351.414, that the 
USDOC attempted to withdraw ( United States Federal Register , Vol. 73 
(10 December 2008), p. 74930), but that the U.S. courts have found to still be in 
effect in US Court of International Trade, Gold East Paper (Jiangsu) Co., Ltd. v. 
United States, (2013), 918 F. Supp. 2d 1317.  
v. The USDOC Import Administration Antidumping Manual, including any amended 
versions, and including the computer programme(s) to which it refers. 
vi. Any other closely connected, subsequent measures that enable or permit the use of 
zeroing, targeted dumping or differential pricing in anti-dumping investigations, 
administrative reviews and other segments of anti-dumping proceedings, including 
the collection of cash deposits and the assessment and liquidation of anti-dumping 
duties. 
 Countervailing Measures 
f. Final Countervailing Duty Determination – Large Residential Washers From the 
Republic of Korea: Final Affirmative Countervailing Duty Determination, United States 
Federal Register , Vol. 77 (26 December 2012), p. 75975.  
g. 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). 
h. Countervailing Duty Order – Large Residential Washers From the Republic of Korea: 
Countervailing Duty Order, United States Federal Register , Vol. 78 (15 February 2013), 
p. 11154.  
i. Any determination in the countervailing duty proceeding entitled Large Residential 
Washers from the Republic of Korea, including but not limited to other determinations 
issued in the initial investigation, preliminary and final determinations in administrative reviews, new shipper reviews, sunset revi ews, changed circumstances reviews, and 
other segments of that proceeding. 
3  PARTIES' REQUESTS FOR FI NDINGS AND RECOMMENDATIONS 
3.1.   With respect to the anti-dumping measures, Korea requests that the Panel finds that
38: 
a. The USDOC's use of "zeroing" under the W-T comparison methodology in anti-dumping 
investigations, administrative reviews and ot her segments of anti-dumping proceedings 
involving the second sentence of Article 2.4. 2 is inconsistent, "as such", with the Anti-
Dumping Agreement and the GATT 1994 in the following respects: 
i. The use of zeroing invariably results in the USDOC disregarding or artificially setting 
to zero the results of W-T comparisons when aggregating those results for the purposes of calculating the margin of dumping for the product as a whole and for 
each individual exporter or foreign producer. For this reason, it is "as such" 
                                               
38 See Korea's first written submission, paras. 346-354. WT/DS464/R 
 
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  inconsistent with the second sentence of Article 2.4.2 of the Anti-Dumping 
Agreement, and as a consequence, also "as such" inconsistent with Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT; 
ii. The use of the zeroing methodology invariably results in the results of intermediate 
W-T comparisons being disregarded or artificially set to zero, thus increasing the 
resulting margins of dumping and making an affirmative dumping determination more likely. For this reason, the use of zeroing is "as such" inconsistent with 
Article 2.4 of the Anti-Dumping Agreement; and  
iii. The USDOC systematically levies anti-dumpi ng duties in excess of the margin of 
dumping properly established under Articl e 2 of the Anti-Dumping Agreement. For 
this reason, the use of zeroing in administrative reviews is "as such" inconsistent 
with Article 9.3 of the Anti-Dumping Agr eement, and Article VI:2 of the GATT 1994.  
b. The USDOC's use of "zeroing" in the original Washers  determination and in subsequent 
connected stages of Washers  is inconsistent with the following provisions of the Anti-
Dumping Agreement and the GATT 1994: 
i. Article 2.4 and Article 2.4.2 of the Anti -Dumping Agreement, which require that 
investigating authorities fully take into account the results of intermediate W-T 
comparisons when calculating the margin of dumping for the product under 
consideration and for each investigated exporter or foreign producer;  
ii. Article 2.1 of the Anti-Dumping Agreement  and Article VI:1 of the GATT 1994, which 
require that investigating authorities determine the dumping margin for the product 
as a whole; and 
iii. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994, which 
require that investigating authorities levy anti-dumping duties not in excess of the 
margin of dumping properly establishe d under Article 2 of the Anti-Dumping 
Agreement. 
c. The USDOC's methodologies for invoking the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement are inconsistent with the obligations set forth in that provision 
"as applied" in the Washers anti-dumping  investigation, as ongoing conduct in 
subsequent connected stages of the Washers proceedings, and "as such" in respect of 
the DPM, in the following respects: 
i. Both under the methodology used in the Washers  anti-dumping investigation and the 
DPM that has replaced it, the USDOC applies fixed numerical criteria to determine whether there is a "pattern of export prices which differ significantly" among 
customers, regions or time periods, and categorically rejects the relevance to its 
inquiry of the commercial context in which the alleged pattern of significant pricing differences arise; 
ii. Both under the methodology used in the Washers  anti-dumping investigation and the 
DPM that has replaced it, the USDOC provides no explanation as to why the price differences it found cannot be taken into acco unt appropriately by resort to either the 
average-to-average or transaction-to-transaction methodology; and  
iii. Both under the methodology used in the Washers  anti-dumping investigation and the 
DPM that has replaced it, the USDOC applies the exception provided for in the second sentence of Article 2.4.2 to transactions that even the USDOC agrees do not 
meet its own criteria for determining "targeted dumping" or "differential pricing" 
rather than limiting the exception to those transactions that are found to be targeted or differentially priced. 
d. The USDOC's DPM is also inconsistent "as such" with the obligations in Article 2.4.2, 
because the USDOC does not effectively identify or analyse a "pattern" of prices charged by the exporter to any purchaser, or in any region or time period, as required by both WT/DS464/R 
 
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  the second sentence of Article 2.4.2 and the U.S. statute. Rather, the USDOC simply 
compares each individual price separately with the exporter's other U.S. prices.  
e. Furthermore, the USDOC's use of "systemic disregarding" in the calculation of the 
dumping margin in the DPM is inconsistent with the Anti-Dumping Agreement and the 
GATT 1994. 
f. The United States' measures discussed above are also inconsistent with Article 1 of the 
Anti-Dumping Agreement. 
3.2.  With respect to the countervailing measures, Korea requests that the Panel finds that the 
USDOC acted inconsistently with certain of the United States' obligations under the GATT 1994 and the SCM Agreement in the countervai ling duty proceeding entitled LRWs from the 
Republic of Korea , including: 
With Respect to RSTA Article 10(1)(3) 
 a. Article 1.2 and Article 2.1(c) of the SCM Agreement  because: 
i. the USDOC erred when it determined that the respondent Samsung received a 
de facto specific subsidy under Article 10(1)(3) of Korea's RSTA, which automatically 
provided tax credits to all Korean corporate taxpayers that made certain specified 
types of investments; 
ii. the USDOC incorrectly determined that Samsung received a disproportionately large 
amount of the tax credits available under Article 10(1)(3) of RSTA; and  
iii. the USDOC failed to take into account the extent of diversification of economic 
activities within Korea, as well as the length of time during which Article 10(1)(3) of 
RSTA had been in effect before determining that Samsung had received a disproportionately large amount of the tax credits provided under the Article. 
b. Article VI:3 of the GATT 1994 because the USDOC imposed countervailing duties on 
Samsung attributable to tax credits that it received for investments it made under Article 10(1)(3) of RSTA pertaining to prod ucts other than the products subject to 
investigation, i.e. products other than LRW.  
c. Article 1.1 and Article 14 of the SCM Agreement  because:  
i. the USDOC erroneously overstated the amount of the financial contribution that the 
Government of Korea provided and the resulting benefit that it conferred on 
Samsung when it failed to recognize that the tax credits provided under 
Article 10(1)(3) of RSTA benefitted products that Samsung manufactured in locations outside Korea; and 
ii. the USDOC did not provide a reasoned and ad equate explanation of why it failed to 
take into account in its benefit calculation the fact that the investments that generated the tax credits provided under Article 10(1)(3) of RSTA benefitted 
products that Samsung manufactured in locations outside Korea. 
d. Article 19.4 of the SCM Agreement  because the USDOC levied countervailing duties on 
imported products in excess of the amount of  the subsidy found to exist, calculated in 
terms of subsidization per unit of the subsidized and exported product. 
With Respect to RSTA Article 26 
 e. Article 1.2 and Article 2.2 of the SCM Agreement  because the USDOC erroneously found 
that Article 26 of RSTA provided a specific subsidy because it was limited to certain 
enterprises located within a designated geographical region notwithstanding that the tax credits under Article 26 were generally available throughout Korea. WT/DS464/R 
 
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  f. Article VI:3 of the GATT 1994 because the USDOC imposed countervailing duties on 
Samsung attributable to tax credits that it received for investments it made under Article 26 of RSTA pertaining to products other than the products subject to investigation, i.e. products other than LRW.  
g. Article 19.4 of the SCM Agreement  because, inter alia , the USDOC levied countervailing 
duties on imported product in excess of th e amount of the subsidy found to exist, 
calculated in terms of subsidization per unit of the subsidized and exported product. 
h. The United States' measures discussed above are also inconsistent with Article 10 and 
Article 32.1 of the SCM Agreement. 
3.3.  The United States requests that the Panel reject all of Korea's claims in this dispute in their 
entirety. 
4  ARGUMENTS OF THE PARTIES 
4.1.  The arguments of the parties are reflecte d in their executive summaries, provided to the 
Panel in accordance with paragraph 19 of th e Working Procedures adopted by the Panel 
(see Annexes B and C). 
5  ARGUMENTS OF THE THIRD PARTIES 5.1.  The arguments of Brazil, Canada, China, the European Union, Japan, Norway, Thailand, 
Turkey, and Viet Nam are reflected in their exec utive summaries, provided in accordance with 
paragraph 20 of the Working Procedures ad opted by the Panel (see Annex D). India and 
Saudi Arabia did not submit written or oral arguments to the Panel. 
6  INTERIM REVIEW 
6.1.  On 14 October 2015, the Panel submitted its Interim Report to the parties. On 
28 October 2015, Korea and the United States each submitted written requests for the review of precise aspects of the Interim Report. On 4 November 2015, both parties submitted comments on 
each other's requests for review. Neither party requested an interim review meeting. 
6.2.  In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the 
Panel's response to the parties' requests made at the interim review stage. The Panel modified 
aspects of its Report in the light of the parties'  comments where it considered it appropriate, as 
explained below. Due to changes as a result of our review, certain numbering of the paragraphs 
and footnotes in the Final Report has changed from  the Interim Report. The text below refers to 
the numbers in the Interim Report, with the numbers in the Final Report in parentheses for ease of 
reference. 
6.3.  In addition to the modifications specified below, the Panel also corrected a number of 
typographical and other non-substantive errors throughout the Report, including those identified 
by the parties. The Panel is grateful for the assistance of the parties in this regard. 
6.1  Anti-dumping claims  6.1.1  Korea's requests for review of precise aspects of the Interim Report 
6.1.1.1  Paragraph 7.9 and Paragraph [7.188]
39 (paragraphs 7.9 and 7.188 of the 
Final Report) 
6.4.  Korea requests the Panel to change the reference to "anti-dumping investigation" in these 
paragraphs to "anti-dumping proceeding", so as to avoid any confusion about the applicability of 
Article 2.4.2 to both original investigations and administrative reviews in this dispute. 
                                               
39 Korea's request for review of precise aspects of the Interim Re port of the Panel referred to 
paragraph 7.118, which we understand to  be a typo on the part of Korea. WT/DS464/R 
 
- 26 - 
 
  6.5.  The United States does not object to this request.  
6.6.  We have decided to make certain editorial changes to paragraphs 7.9 and 7.188 of the 
Interim Report to avoid possibly prejudging whethe r or not the second sentence of Article 2.4.2 
would apply to administrative reviews. 
6.1.1.2   Paragraph 7.11 (parag raph 7.11 of the Final Report) 
6.7.  Korea requests the Panel to add a footnote to identify the evidentiary basis for its factual 
statement that the USDOC applied the W-T comparison methodology to all export transactions. 
6.8.  The United States does not support this request. The United States argues that the proposed 
footnote does not contain any reference to the record evidence. Moreover, the United States 
disagrees with Korea that the United States "concedes" that the USDOC applied the W-T comparison methodology to all export transactions. 
6.9.  We consider it appropriate to include th e evidentiary basis for this factual statement. 
However, we agree with the United States that th e footnote proposed by Korea does not identify 
evidence to support the fact that the USDOC applied the W-T comparison methodology to all 
export transactions. Accordingly, we refer in a f ootnote to the Issues and Decision Memorandum in 
the Washers  anti-dumping investigation (Exhibit KOR-18, pp. 33-34.) instead. 
6.1.1.3  Paragraph 7.12 (paragra ph 7.12 of the Final Report) 
6.10.  Korea requests the Panel to supplement its summary of Korea's arguments on the term 
"such differences". 
6.11.  The United States does not support this re quest. The United States points out that Korea 
has not proposed a revision to the paragraph. Moreover, according to the United States, the 
argument Korea seeks to add is presented in Korea's second written submission and not one of 
Korea's main arguments. 
6.12.  We have decided to accommodate Korea's request, despite Korea's failure to propose 
specific text. Furthermore, we do not agree with the United States that arguments presented in 
the second written submission may not form part of a party's main arguments. 
6.1.1.4  Paragraph 7.33 (paragra ph 7.33 of the Final Report) 
6.13.  Korea requests the Panel to clarify in th is paragraph that Korea does not argue that an 
investigating authority must consider the inte nt of the exporter under the pattern clause. 
6.14.  The United States does not object to this request. However, to the extent that the Panel 
agrees to Korea's request, the United States requ ests the Panel to modify paragraph 7.37 to clarify 
that the United States' argument was not limited only to the intent of the exporter. According to 
the United States, it argued, more broadly, that an investigating authority need not consider the reasons  why export prices differ significantly among different purchasers, regions, or time periods. 
6.15.  We have decided to accommodate Korea's request. Concerning the counter-request of the 
United States to modify paragraph 7.37 of the Interim Report, we note that the current text is essentially a verbatim reproduction of the United States' argument to the Panel. Accordingly, there 
is no reason to make the modification proposed by the United States. 
6.1.1.5  Paragraph 7.71 (paragra ph 7.71 of the Final Report) 
6.16.  Korea requests the Panel to include discussi on of the context of the term "appropriately" 
under the explanation clause before turning to th e object and purpose of the second sentence of 
Article 2.4.2, in order to reinforce the Panel's interpretation of the explanation clause.  
6.17.  The United States does not support Korea's request. The United States notes first that 
Korea has failed to propose a revision. In addition, the United States does not agree that 
Korea's proposed addition of further contextu al discussion would enhance the clarity of the WT/DS464/R 
 
- 27 - 
 
  paragraph or the Panel's interpretation generally. The United States argues that 
paragraphs 140-148 of Korea's second writte n submission do not explain how the terms 
"explanation" and "cannot" could or should inform, as context, the interpretation of the term "appropriately". 
6.18.  We have decided not to accommodate Korea's request. In the absence of a proposed 
revision from Korea, it is not clear to us how Korea's proposed additional discussion of the context of the term "appropriately" would enhance the clarity of our interpretation of that term. 
6.1.1.6  Paragraph 7.76 and footnote 130 (paragraph 7.76 and footnote 134 of the 
Final Report) 
6.19.  Korea requests the Panel to modify a footnote to supplement the factual support for the fact 
that the USDOC did not consider the alternative explanations provided by the interested parties in 
the Washers  anti-dumping investigation. 
6.20.  The United States does not support Korea's request, because the proposed footnote, which 
relates to the USDOC's application of the pattern clause, is not relevant to the discussion of the 
explanation clause in this paragraph and footnote. 
6.21.  We have decided not to accommodate Korea's request. As the United States correctly 
observes, the specific passage from the Washers  I&D Memorandum which Korea refers to in its 
request concerns the USDOC's refusal to consider the reasons for the price differences in the 
context of its application of the pattern clause. It does not concern the USDOC's application of the explanation clause. 
6.1.1.7  Paragraph 7.99 (paragra ph 7.99 of the Final Report) 
6.22.  Korea requests the Panel to add a footnote  to identify the USDOC documents referred to by 
the Panel. 
6.23.  The United States does not object to this  request. However, the Un ited States notes that 
the parenthetical descriptions proposed by Korea do not appear to be neutral. 
6.24.  We have decided to accommodate Korea's re quest, taking into account the United States' 
concern over the neutrality of the description used. 
6.1.1.8  Paragraph 7.100 (paragra ph 7.100 of the Final Report) 
6.25.  Korea requests the Panel to correct a factual inaccuracy with regard to the Xanthan Gum  
document discussed in this paragraph and in footnote 190. 
6.26.  The United States makes a similar request. 
6.27.  We have corrected the inaccuracy identified by the parties. 
6.1.1.9  Paragraph 7.102 (paragra ph 7.102 of the Final Report) 
6.28.  Korea requests the Panel to insert a footno te to clarify the relationship between Exhibits 
KOR-33 and KOR-67. 
6.29.  The United States makes no comment on this request. 6.30.  We have inserted the footnote as requested by Korea. 
6.1.1.10  Paragraph 7.106 (paragra ph 7.106 of the Final Report) 
6.31.  Korea requests the Panel to address the di stinction between changes that can be made to 
the DPM in theory and changes that have been made in fact.  WT/DS464/R 
 
- 28 - 
 
  6.32.  The United States does not support Korea's request. The United States argues that the 
points raised by Korea have been addressed by the Panel at, inter alia , paragraphs 7.111-7.112 
and 7.115 of the Interim Report, and that it wo uld not improve the Report to repeat those 
discussions at this paragraph. 
6.33.  We have decided not to accommodate Korea's request. The points raised by Korea are 
already addressed by the Panel at,  inter alia , paragraphs 7.111-7.112 and 7.115 of the 
Interim Report. 
6.1.1.11  Paragraph 7.111 (paragra ph 7.111 of the Final Report) 
6.34.  Korea requests the Panel to expand the di scussion on the evidentiary issues concerning the 
DPM. 
6.35.  The United States does not support Korea's request, because Korea's proposed addition is 
already addressed in paragraphs 7.115 and 7.106 of the Interim Report. 
6.36.  We have decided not to accommodate this request. As Korea itself acknowledges in its 
request, the matter raised by Korea is already addressed by the Panel later on in paragraph 7.115 
of the Interim Report.  
6.1.1.12  Paragraph 7.112 (paragra ph 7.112 of the Final Report) 
6.37.  Korea suggests that the Panel appears to be addressing Exhibit USA-21 in this paragraph. 
On this basis, Korea requests the Panel to state clearly that the Panel's discussion in this 
paragraph relates to the points made by the United States in Exhibit USA-21. 
6.38.  The United States does not support Korea's request, because the United States submitted 
Exhibit USA-21 to support a different proposition from the Panel's discussion at this paragraph. 
6.39.  We have decided not to accommodate Korea's request. In paragraph 7.112 of the Interim 
Report, we addressed the issue of whether the DPM is of general and prospective application. On the contrary, Exhibit USA-21 relates to the United States' argument that the DPM cannot be found 
to be inconsistent with Article 2.4.2 "as such" because it does not result in the application of the 
W-T comparison methodology in all cases. We addr essed the latter argument of the United States 
at paragraphs 7.145 and 7.146 of the Interim Report.  
6.1.1.13  Paragraph 7.113 (paragra ph 7.113 of the Final Report) 
6.40.  Korea requests the Panel to add a cross-re ference to the point made at paragraph 7.105 of 
the Interim Report that the actual SAS code in fo ur proceedings over two years is identical. Korea 
argues that this fact also supports the gene ral and prospective application of the DPM. 
6.41.  The United States does not support Korea's request. The United States argues that adding 
the cross-reference would not improve the clarity given that the first sentence of paragraph 7.113 of the Interim Report already refers to the Naschak affidavit and describes Korea's reliance on it. 
6.42.  We have decided not to accommodate Korea's request, because the first sentence of 
paragraph 7.113 already refers to the conclusion  of the Naschak affidavit on the consistent 
application of the DPM as enshrined in the SAS code without any material changes.  
6.1.1.14  Paragraphs 7.118 and 7.119 (paragra phs 7.118 and 7.119 of the Final Report) 
6.43.  Korea requests the Panel to clarify the evidentiary basis for its factual statements about the 
DPM. 
6.44.  The United States does not support Korea's request, because paragraph 7.118 of the 
Interim Report does not appear to contain any factual statements or factual findings made by the 
Panel. WT/DS464/R 
 
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  6.45.  We do not consider it necessary to make the changes requested by Korea. As Korea itself 
recognises, the evidentiary basis of our factual statem ents is discussed in detail in Section 7.4.1 of 
the Interim Report where we addressed the issue of whether the DPM can be challenged "as such". 
6.1.1.15  Paragraph 7.138 and footno tes 256 and 257 (paragraph 7.138 and 
footnotes 268 and 269 of the Final Report) 
6.46.  Korea requests the Panel to include in these footnotes additional citations of various 
evidence supporting the factual statements of the Panel concerning the DPM. 
6.47.  The United States does not object to Korea's request. However, the United States notes that 
Korea's description of paragraphs 63-69 of the United States' second written submission is incorrect. 
6.48.  The evidentiary basis of our factual statements is already discussed in detail in Section 7.4.1 
of the Interim Report where we addressed the issue of whether the DPM can be challenged "as 
such". Nevertheless, in the absence of any oppositi on from the United States, we have decided to 
accommodate Korea's request, with the exception of the reference to paragraphs 63-69 of the 
United States' second written submission.  
6.1.1.16  Paragraph 7.149 (paragra ph 7.149 of the Final Report) 
6.49.  Korea requests the Panel to add a citation  for the factual statement that the DPM sets to 
zero any negative comparisons results from the W-W comparison. In addition, Korea requests the 
Panel to modify the fourth sentence of this paragraph to more accurately reflect Korea's arguments. 
6.50.  The United States does not support Korea's request, because this paragraph does not 
appear to set forth factual statements or  factual findings made by the Panel. 
6.51.  This paragraph concerns the summary of Korea's arguments on "systemic disregarding"
40. 
Although this paragraph does not set forth our factual finding, we have decided to accommodate 
Korea's request in order to complete the evidentiary record.  
6.1.1.17  Paragraphs 7.171, 7. 193 and 7.209 (paragraphs 7.171, 7.193 and 7.209 of the 
Final Report) 
6.52.  Concerning paragraph 7.171 of the Interim Report, Korea requests the Panel to make 
certain factual findings concerning the USDOC's appl ication of the second sentence of Article 2.4.2 
in the first administrative review of the Washers  anti-dumping order. In particular, Korea requests 
the Panel to confirm that the DPM as applied in the first administrative review of the Washers  
anti-dumping order is the same DPM with the same features as described by the Panel. 
6.53.  Concerning paragraphs 7.193 and 7.209 of the Interim Report, Korea requests the Panel to 
make certain factual findings to confirm that the USDOC's application of zeroing in the context of 
the W-T comparison methodology in the first administrative review of the Washers  anti-dumping 
order is the same as the Panel has found more generally. 
6.54.  The United States does not support Korea's requests. The United States argues that the 
Panel's decision not to review Korea's "as applied" claims concerning the first administrative review 
of the Washers  anti-dumping order is sound. Moreover, since the Panel has determined that it is 
not necessary for it to address the procedural issue whether the first administrative review of the Washers  anti-dumping order is within its term of re ference, the United States argues that the 
Panel should not make the factual findings concer ning claims or measures that have not been 
determined to be within its terms of referenc e. In addition, concerning Korea's proposed 
modification related to Exhibit KOR-141, the United States argues that since the Panel has 
determined it not necessary to make a ruling co ncerning the admissibility of Exhibit KOR-141, it 
would not be appropriate for the Panel to make factual findings on the basis of Exhibit KOR-141. 
                                               
40 We note that Korea originally used the phrase " systemic  disregarding", rather than " systematic  
disregarding", except in its response to  Panel question 4.19 vii, paragraph 132. WT/DS464/R 
 
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  6.55.  We have decided not to accommodate Korea' s requests. There is no basis for us to make 
factual findings in respect of claims for which we have exercised judicial economy.  
6.1.2  United States' requests for review of precise aspects of the Interim Report 
6.1.2.1  Paragraphs 1.11 and 1.14 (parag raphs 1.11 and 1.14 of the Final Report) 
6.56.  The United States requests the Panel to modify these paragraphs in order to place greater 
weight on (i) the importance of the views of the pa rties to the dispute; (ii) the greater obligations 
that would be imposed on the parties than those set out in the DSU; and (iii) derogation from 
certain rights of the parties under the DSU, when considering third parties' requests for additional 
procedural rights. The United States argues that the fact that both Korea and the United States agreed that additional third party rights should not be granted provides sufficient basis to decline 
the request.  
6.57.  Korea makes no comment on this request. 
6.58.  We have decided not to accommodate the United States' request. We do not agree with the 
United States that the parties' objections necessarily provide sufficient basis for the Panel to reject 
requests for additional third party rights. 
6.1.2.2  Paragraph 2.2 (paragra ph 2.2 of the Final Report) 
6.59.  The United States requests the Panel to sp ecify each proceeding by indicating its type, e.g. 
anti-dumping investigation or countervailing investigation. 
6.60.  Korea makes no comment on this request. 6.61.  We have decided to accommodate this request of the United States by making the 
necessary changes to this paragraph and paragraphs 7.29, 7.30, 7.44, 7.65, 7.70, 7.74 and 7.173 
of the Interim Report. 
6.1.2.3  Paragraph 2.4 (paragra ph 2.4 of the Final Report) 
6.62.  The United States requests the Panel to qualify the measures that Korea has challenged in 
this paragraph with the wording "alleged measures ", because the United States disputed that the 
DPM is a measure challengeable "as such". 
6.63.  Korea makes no comment on this request. 
6.64.  We have decided to accommodate the United States' request. 
6.1.2.4  Paragraph 7.10, footnote 48 (paragra ph 7.10, footnote 54 of the Final Report) 
6.65.  The United States requests the Panel to make certain changes to the Panel's description of 
the operation of the Nails II methodology in footnote 48 to ensure the accuracy of the Report. In 
particular, the United States requests the Panel to use the term "standard deviation test" instead 
of "pattern test" to describe the first step of the Nails II methodology. Moreover, the United States 
requests the Panel to also clarify that the Nails II methodology only looks at export sales for which 
there is an allegation of targeted dumping and that  the "gap test" only looks at export prices that 
pass the "standard deviation test". 
6.66.  Korea makes no comment on this request. 
6.67.  We note that in describing the first stage of the Nails II methodology, Korea has used the 
term "pattern test" in its written submissions.
41 On the contrary, the United States has referred 
the first stage of the Nails II methodology as the "standard deviation test" in its written 
submissions, its responses to the Panel's questions and the Washers  Final AD I&D Memo 
(Exhibit KOR-18). In the absence of any comments from Korea, we have decided to accommodate 
                                               
41 See, for example, Korea's first written submission, para. 149. WT/DS464/R 
 
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  the request of the United States in this respect. For the same reason, we have also changed the 
reference to "pattern test" under paragraph 7.18 of the Interim Report to "standard deviation 
test". We have also accommodated the United States' request to clarify other aspects of the description of the Nails II methodology. 
6.1.2.5  Paragraph 7.14 (paragra ph 7.14 of the Final Report) 
6.68.  The United States requests the Panel to modify the first sentence of this paragraph to 
accurately reflect the United States' arguments as set out in paragraphs 149 and 150 of its first 
written submission. The United States contends that it does not argue that the term "pattern of 
export prices" would necessarily include all export prices in all situations. The United States points out that in the context of the application of the Nails II methodology in the Washers  anti-dumping 
investigation, all of the export prices examined constituted the "pattern". In certain situations 
where the DPM is applied, the pattern identified by the USDOC did not include all export prices. 
6.69.  Korea makes no comment on this request. 6.70.  We have decided to partially accommodate the United States' request. As the heading of 
this section of the Interim Report indicates (i.e. "Claims concerning the USDOC's application of the 
W-T comparison methodology in the Washers  investigation"), the Panel's summary of the 
United States' arguments and its analysis in this paragraph are precisely made in the context of 
the USDOC's application of the Nails II methodology in the Washers  anti-dumping investigation, 
and do not concern the DPM. Therefore, it would be inaccurate to delete the reference to "all of the 
export prices examined" completely, as the United States requested. We have modified the first sentence of this paragraph in the following manner: 
The United States asserts that even if the W-T comparison methodology were only 
allowed to be applied to pattern transactions, the relevant "pattern of export prices" necessarily includes all export prices, including both lower and higher 
export prices that "differ significantly" from each other . The United States contends 
that an export price cannot "differ significantly" on its own. The United States asserts that because "difference" is a comparative or relative concept, for 
something to be different, it must differ from something else. The United States 
therefore contends that lower export prices, which likely do not differ significantly from one another, cannot form a "pattern of export prices which differ significantly" without reference within that pattern to the higher export prices from 
which they differ significantly. The United States argues that, in the Washers  anti-
dumping investigation, because the pattern identified by the USDOC comprised of 
all of the exporter's US sales, the USDOC's application of the W-T comparison 
methodology to all export sales is not at odds with the Appellate Body's statement 
in US – Zeroing (Japan)  that an investigating authority may limit the application of 
the W-T comparison methodology to the prices of export transactions falling within 
the relevant pattern. 
6.1.2.6  Paragraph 7.28 (paragra ph 7.28 of the Final Report) 
6.71.  For the same reasons given with respect to paragraph 7.14 above, the United States 
requests the Panel to modify its summary of the United States arguments in this paragraph.  
6.72.  Korea makes no comment on this request. 
6.73.  We have decided to accommodate this request of the United States.  6.1.2.7  Paragraph 7.32 (paragra ph 7.32 of the Final Report) 
6.74.  The United States requests the Panel to change the word "exception" to "exceptional 
comparison methodology" in this paragraph to enhance clarity. 
6.75.  Korea makes no comment on this request. 
6.76.  We have decided to accommodate this request of the United States. WT/DS464/R 
 
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  6.1.2.8  Paragraph 7.70 (paragra ph 7.70 of the Final Report) 
6.77.  The United States requests the Panel to add the word "meaningfully" before the word 
"lower" in its summary of the USDOC's application of the explanation clause in the Washers  
anti-dumping investigation. The United States argu es that the absence of the word "meaningfully" 
could be construed as suggesting that the USDOC was looking for any difference whereas the 
USDOC looked for a "meaningful" differe nce in the margins of dumping in the Washers  
anti-dumping investigation. 
6.78.  Korea disagrees with the request of the United States. Korea's first concern is that the 
USDOC used inconsistent terminology in the Washers  anti-dumping investigation: "material 
difference" in the preliminary determination and "meaningful difference" in the final determination. Korea's second concern is that the USDOC does not explain what "meaningful" difference means. 
For this reason, Korea considers it more appropriate not to add the word "meaningful". 
6.79.  We have decided to accommodate the request of the United States, by adding the wording 
"'materially' or 'meaningfully'" before the word "lower" in this paragraph. We have also addressed 
Korea's concerns above by adding a footnote to the effect that in its preliminary and final 
determinations of the Washers  anti-dumping investigation, the USDOC did not define or explain 
the meaning of the terms "material" or "meaningful". 
6.1.2.9  Paragraph 7.76 (paragra ph 7.76 of the Final Report) 
6.80.  The United States requests the Panel to in sert a footnote to indicate the quoted statement 
from the United States' response to the Panel's question. The United States also requests the 
Panel to modify the quoted statement and the third sentence of this paragraph to more accurately 
reflect its arguments. 
6.81.  Korea makes no comment on these requests. 6.82.  We have decided to accommodate the request of the United States concerning the quoted 
statement. Concerning the third sentence of this  paragraph, we have decided to accommodate the 
United States' request, albeit not in the exact manner as suggested by the United States.  
6.1.2.10  Paragraph 7.100 and footnote 1 90 (paragraph 7.100, footnote 195 of the 
Final Report) 
6.83.  Similar to Korea's request concerning this paragraph, the United States requests the Panel 
to make certain modification to enhance accuracy. 
6.84.  Korea makes no comment on this request. 
6.85.  We have decided to accommodate the United States' request. 
6.1.2.11  Paragraph 7.101 (paragra ph 7.101 of the Final Report) 
6.86.  The United States requests the Panel to modify this paragraph to accurately describe the 
DPM. 
6.87.  Korea makes no comment on this request. 6.88.  We have decided not to accommodate the United States' request. This paragraph accurately 
reflects the USDOC's description of the DPM in the Post-Preliminary Analysis Memorandum in 
Xanthan Gum . The elements which the United States requests to add to this paragraph are not 
present in the USDOC's description of the DPM in the text quoted in paragraph 7.100 of the Interim Report. WT/DS464/R 
 
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  6.1.2.12  Paragraph 7.130 (paragra ph 7.130 of the Final Report) 
6.89.  The United States requests the Panel to modify the last sentence of this paragraph to 
enhance clarity. 
6.90.  Korea makes no comment on this request. 
6.91.  We have decided to accommodate the United States' request. 
6.1.2.13  Paragraph 7.148 et seq . (paragraph 7.148 et seq . of the Final Report) 
6.92.  The United States notes that Korea used the term "systemic disregarding" rather than 
"systematic disregarding" in its submissions. Moreover, the United States requests the Panel to 
replace the term "systematic disregarding" used by the Panel in this paragraph and elsewhere in the Interim Report (except where reference is made to specific arguments made by Korea or third parties) with a more neutral term for describing the USDOC's approach of not providing any 
offsets when combining the results of mixed W-W and W-T comparison methodologies. The 
United States also disagrees that the USDOC's approach when combining the comparison results from mixed comparison methodologies can fairly be characterised as "disregarding".  
6.93.  Korea disagrees with the suggested change by the United States. Korea contends that the 
Panel has consistently referred to "systematic disregarding" with quotation marks to indicate that this term is a shorthand reference adopted by Kore a. Moreover, Korea argues that this phrase is 
not unbalanced. Rather, the phrase is descripti ve in that the negative results of certain 
comparisons are in fact being "disregarded" and replaced with something else. Korea further argues that the term "disregarding" and the phra se "systematically disregarding" have been used 
repeatedly by the Appellate Body in describing the USDOC refusal to consider negative comparison 
results in determining dumping margins.
42  
6.94.  We have decided not to accommodate the United States' request to replace "systemic 
disregarding" with a more neutral term. First, it would not be unbalanced for us to use this term. 
We note that in addition to referring to this term with quotation marks, we have also qualified the 
term with the wording "so-called" to indicate that this term is used only as a shorthand reference. Moreover, in the absence of a proposed more neutral term from the United States, it is not 
inappropriate for us to use the term "systemic disregarding" as a shorthand reference. However, 
we have decided to accommodate the United States request to use the term "systemic disregarding" rather than "systematic disregarding". 
6.1.2.14  Paragraph 7.150 (paragra ph 7.150 of the Final Report) 
6.95.  The United States requests the Panel to mo dify the wording of the first sentence of this 
paragraph to enhance clarity. 
6.96.  Korea makes no comment on this request. 
6.97.  We have decided to accommodate the United States' request. 
6.1.2.15  Paragraph 7.178 and footnote 311 (paragraph 7.178 and footnote 319 of the 
Final Report) 
6.98.  The United States requests the Panel to modify the second sentence of this paragraph to 
accurately reflect its argument, and to supplemen t the summary of the United States' arguments 
related to Korea's zeroing claims. 
6.99.  Korea makes no comment on these requests. 
6.100.  We have decided to accommodate the United States' requests. 
                                               
42 See, for example, Appellate Body's reports, US – Zeroing (Japan) , para. 125; US – Continued 
Zeroing , paras. 286, 314; US – Zeroing (EC) , paras. 127, 158. WT/DS464/R 
 
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  6.1.2.16  Paragraph 7.196 (paragra ph 7.196 of the Final Report) 
6.101.  The United States requests the Panel to modify the wording in the first sentence of this 
paragraph to enhance accuracy. According to the United States, the use of zeroing does not artificially reduce  intermediate W-T comparison results to zero, but in fact raises  or changes 
negative margins to zero. The United States therefore requests the Panel to replace the word 
"reduced" with "raised" or "changed". 
6.102.  Korea makes no comment on this request. 
6.103.  While this paragraph reflects accurately Korea's arguments regarding zeroing in the 
context of the W-T comparison methodology
43, the United States is correct to state that the use of 
zeroing does not reduce  to zero any negative results. We have therefore decided to accommodate 
the United States' request by replacing the phrase "reduced to zero" to "set to zero" in this 
paragraph and paragraph 3.1 of the Interim Report.  
6.2  Subsidies claims  6.2.1  Korea's requests for review of precise aspects of the Interim Report 
6.2.1.1  General comment 
6.104.  Korea asks the Panel to replace the phrase "disproportionate amounts" with the phrase 
"disproportionately large amounts", to accurately reflect the text of Article 2.1(c). 
6.105.  The United States does not object to Korea's request. 
6.106.  We have decided to accommodate the change requested by Korea. 6.2.1.2  Paragraph 7.213 (paragra ph 7.213 of the Final Report) 
6.107.  Korea asks the Panel to replace the phrase "without reference to" in the last sentence with 
the phrase "without including". 
6.108.  The United States does not object to Korea's request. 6.109.  We have decided to accommodate the change requested by Korea. 
6.2.1.3  Paragraphs 7.217, 7.244 (f ootnote 401), and 7.249 (footnote 410) 
(paragraphs 7.217, 7.245 (footnote 415), 7. 250 (footnote 424) of the Final Report) 
6.110.  Korea asks the Panel to amend, clarify or expand its description of Korea's arguments. 
6.111.  The United States does not object to Korea's request in respect of para. 7.217 of the 
interim Report. Regarding footnote 401, the United States asserts that the material referred to by Korea is irrelevant to the specific point made by the Panel in that footnote. The United States contends that if the Panel nonetheless wishes to include this material at the end of footnote 401, 
then the Panel should also include a summary of the U.S. position on the relevant issues. 
6.112.  Regarding footnote 410, the United States suggests that, if the Panel decides to include 
the material requested by Korea, the insertion should occur after the first sentence of this 
footnote, as a summary of Korea's position. The United States believes that placing this material 
after the final sentence, which contains the Panel's evaluation, could give rise to confusion. 
6.113.  We agree in principle to the changes requ ested by Korea. With respect to footnote 401, 
though, we have decided that the additional argu ments cited by Korea should be included at the 
end of paragraph 7.219 of the Interim Report, whic h describes Korea's main argument against the 
remand determination. As noted above, the addi tional arguments alluded to by Korea do not 
                                               
43 See Korea's first written subm ission, paras. 96, 97 and 347. WT/DS464/R 
 
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  pertain to the matter addressed in footnote 401. We have also decided to include the U.S. 
arguments concerning this matter, as requested by the United States. 
6.114.  Regarding footnote 410, we have decided to accommodate the United States' suggestion 
to include Korea's text after the first sentence of the footnote. 
6.2.1.4  Paragraph 7.[254], footnote 42044 (paragraph 7.255 of the Final Report) 
6.115.  Korea asks the Panel to clarify that the Un ited States merely alleged that the USDOC took 
the two mandatory factors into account. 
6.116.  The United States denies that the mandatory factors were only allegedly taken into 
account. The United States contends that it has identified language in the USDOC redetermination confirming that they were taken into account. 
6.117.  In order to avoid any confusion, we have decided to delete footnote 420 of the 
Interim Report. 
6.2.1.5  Paragraph 7.256 (paragra ph 7.257 of the Final Report) 
6.118.  Korea asks the Panel to include specific  arguments made by Korea in this paragraph. 
6.119.  The United States asserts that paragraph 7.256 does not purport to summarize in total  
Korea's arguments concerning the USDOC's regional specificity findings, but rather provides a road map to the Panel's subsequent analysis, with ea ch sentence ("first," "second", "third," and 
"fourth") relating to the corresponding section of analysis that follows. The United States asserts 
that the Panel already provides a summary of Korea's various arguments within each of the relevant sections. The United States also contends that Korea's request for the inclusion of two additional paragraphs immediately after paragraph 7.256 is similarly unwarranted. The 
United States suggests that the arguments iden tified by Korea are in any event sufficiently 
summarized and addressed at section 7.6.3.2 of the interim report. 
6.120.  Paragraph 7.256 of the Interim Report merely introduces the claims brought by Korea. It is 
not intended to describe arguments made by Korea in support of those claims. Korea's main 
arguments are described in subsequent paragraphs of the Report. For this reason, we have decided not to include any additional arguments in this paragraph. 
6.2.1.6  Paragraph 7.260 (paragra ph 7.261 of the Final Report) 
6.121.  Korea asks the Panel to delete the second sentence of paragraph 7.260, on the ground 
that it "may not take into account the full breadth of Korea's arguments regarding Article 2.1(b)". 
6.122.  The United States asserts that Korea has failed to provide a basis for deleting the second 
sentence of this paragraph. The United States contends that Korea fails to explain how the second 
sentence is inaccurate. According to the United States, Korea does not – and cannot – point to any submission in which it provides the discussion or  support that the Panel found to be lacking. 
6.123.  The second sentence of this paragraph stat es that "Korea does not discuss the relationship 
between Articles 2.1(b) and 2.2, [or] support its assertion with any analysis of the text of these 
provisions". At interim review, Korea has not identified any specific arguments pertaining to the 
relationship between Articles 2.1(b) and 2.2, no r identified any analysis of the text of those 
provisions. In these circumstances, we have decided not to delete the second sentence of this paragraph. 
6.2.1.7  Paragraph 7.261 (paragra ph 7.262 of the Final Report) 
6.124.  Korea suggests that the third sentence of this paragraph does not accurately reflect its 
arguments, and therefore requests the deletion thereof. 
                                               
44 Korea's request for review of precise aspects of the Interim Re port of the Panel referred to 
paragraph 7.253, footnote 420, which we understand to be a typo on the part of Korea. WT/DS464/R 
 
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  6.125.  The United States does not object to Korea's request. 
6.126.  Since the precise textual formulation of the third sentence does not feature in any of 
Korea's submissions to the Panel, we have decided to accommodate Korea's request. 
6.2.1.8  Paragraph 7.262 (paragra ph 7.263 of the Final Report) 
6.127.  Korea proposes a number of changes to the Panel's description of its arguments in 
paragraph 7.262. 
6.128.  The United States does not support Korea's request to delete and reformulate the third, 
fourth, and fifth sentences of this paragraph. The United States asserts that Korea fails to explain 
how these sentences are deficient. According to the United States, the sentences accurately reflect Korea's position at paragraphs 346-356 of its second written submission. The United States does not object to other changes proposed by Korea. 
6.129.  We have decided to accommodate the request by Korea. The amendments proposed by 
Korea all reflect arguments made in Korea's submissions to the Panel. Although the current summary of those arguments is not inaccurate, we see no reason not to use a formulation that 
more closely mirrors the actual arguments made by Korea in its submissions. 
6.2.1.9  Paragraph 7.265 (paragra ph 7.266 of the Final Report) 
6.130.   Korea proposes a number of changes to the manner in which the Panel presents Korea's 
claim in this paragraph. Korea proposes to amend the second sentence, and replace the 
penultimate and final sentences with a new sentence. Korea also proposes to change the text of footnote 431, by replacing the second sentence with a statement that the United States' interpretation of "enterprise" in this case is not consistent with its practice in free trade 
agreements. 
6.131.  The United States contends that Korea fails to explain why the second sentence of this 
paragraph – which Korea seeks to delete and replace – is inaccurate. In that sentence, the Panel 
observes that "Korea interprets 'enterprises' as companies or businesses having legal personality." 
According to the United States, this accurately reflects Korea's statement at paragraph 356 of its second written submission. The United States also opposes the replacement of the penultimate 
and final sentences of paragraph 7.265. According to the United States, these sentences 
accurately reflect statements in Korea's submissions. The United States also denies that Korea's requested change would provide a more comprehens ive summary of its arguments, as it seeks to 
replace two sentences with one.   
6.132.  The United States does not support Korea's request to delete and replace the second 
sentence of this footnote. According to the United States, the second sentence accurately reflects Korea's argument at paragraph 34 of its response to Panel question No. 5.10. The United States 
suggests that the language that Korea now seeks to introduce would obscure the meaning of the 
first sentence, as it would leave unexplained the alleged significance that Korea seeks to draw from definitions contained in U.S. free trade agreem ents (i.e., that they allegedly do not expressly 
refer to an entity's facilities).  
6.133.  We have decided not to make the change proposed by Korea in respect of the 
second sentence. This sentence reflects the ar guments made by Korea at paragraph 356 of its 
second written submission: "The term 'enterprises ' within the meaning of Article 2.2 should be 
interpreted to mean that the recipient of the su bsidy must be a company with legal personality." 
We have the same view in respect of the penulti mate sentence, which reflects an argument made 
by Korea at paragraph 329 of its first written subm ission: "RSTA Article 26 tax credits are limited, 
not to 'certain enterprises located within a design ated geographical region', but rather, are limited 
to certain uses – namely, to investments made outside the overcrowding control region of the Seoul Metropolitan Area." 
6.134.  Regarding the final sentence, the text simply reflects the Panel's understanding of Korea's 
position. RSTA Article 26 is entitled Tax Deduction for Facilities Investment. Since the heading of WT/DS464/R 
 
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  that provision refers to "Facilities", it is reasonable to understand Korea to argue that RSTA 
Article 26 concerns the location of facilities , rather than the location of enterprises. 
6.135.  Regarding footnote 431, we do not consider  it appropriate to include the qualification of 
the United States' argument proposed by Korea. Since we have decided not to evaluate Korea's 
claim by reference to the practice of the United  States in respect of its free trade agreements, 
there is no basis for us to state whether the interp retation proposed by the United States is or is 
not consistent with that practice. Nor is there any basis to delete the second sentence, which is 
based on Korea's assertion at paragraph 34 of its response to Panel question No. 5.10 that 
"interpreting the term 'enterprise' to refer to facilities is not even consistent with the consistent practice of the United States". 
6.2.1.10  Paragraph 7.269, footnote 435 (paragraph 7.270, footnote 453 of the 
Final Report) 
6.136.  Korea asks the Panel to amend its description of Korea's handling of a question from the 
Panel, by replacing the second sentence of f ootnote 435 with two additional sentences, and 
deleting the last sentence. 
6.137.  The United States contends that the seco nd sentence of footnote 435 accurately reflects 
the fact that Korea's responses did not address the temporal issue that the Panel raised in 
question No. 5.10 – i.e., whether the Article 2.2 specificity analysis hinges on whether an 
enterprise receives the subsidy before  or after acquiring new facilities. The United States asserts 
that likewise, in its comments on the U.S. response to Panel question 5.10, Korea reiterated its assertion that the term "enterprise" does not encompass "facilities," but failed to address the 
various arguments outlined by the United States with respect to this temporal issue. The 
United States proposes alternative text to be us ed in the event that the Panel chooses to amend 
footnote 435. 
6.138.  We consider that the second sentence of footnote 435 is an accurate reflection of Korea's 
reply to Panel question No. 5.10. In its reply, Korea did not address the temporal issue raised by the Panel. Korea instead repeated its view th at "facilities" should be distinguished from 
"enterprises". We have clarified the second sentence by replacing the word "matter" with the 
phrase "temporal issue". Regarding the last senten ce of footnote 435, we have decided to replace 
it with two sentences that more clearly explain Ko rea's reaction to Panel question No. 5.10, and its 
comments on the United States' reply to that question. 
6.2.1.11  Paragraphs 7.274 and 7.283 (paragra phs 7.275 and 7.284 of the Final Report) 
6.139.  Korea asks the Panel to include additional elements in its description of Korea's arguments. 6.140.  The United States does not object to Korea's request. 
6.141.  We have decided to accommodate Korea's request. 
6.2.1.12  Paragraph 7.291 (paragra ph 7.292 of the Final Report) 
6.142.  Korea asks the Panel to amend its description of Korea's arguments by deleting the first 
and third sentences. 
6.143.  The United States does not support Korea's request to delete the first and third sentences 
of this paragraph. The United States contends that, when read in context with the surrounding sentences in that paragraph, the first and third sentences accurately reflect Korea's arguments. 
Nonetheless, if the Panel wishes to amend this paragraph in response to Korea's request, the 
United States proposes alternative language. 
6.144.  We agree with Korea that the original formulation of this paragraph may risk 
misrepresenting Korea's arguments. Rather than dele ting entire sentences, though, we consider it 
more appropriate to amend the text in the manner proposed by the United States. This approach 
preserves the description of the main elements of Korea's position. WT/DS464/R 
 
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  6.2.1.13  Paragraphs 7.301 and 7.302 (paragra phs 7.302 and 7.303 of the Final Report) 
6.145.  Korea asks the Panel to amend its description of Korea's arguments, and include the 
argument that the R&D tax credits were enacted to provide an incentive to undertake R&D 
activities. 
6.146.  The United States does not support Korea's request to modify these paragraphs. As an 
initial matter, the United States contends that it is inadequate, in light of Article 15.2 of the DSU, 
for Korea to simply propose that the Panel make an unspecified "addition" to "reflect" Korea's 
arguments. The United States also disagrees that these paragraphs warrant revision. The United States observes that Korea does not dispute that the existing text is an accurate rendering 
of its position. Regarding the additional "inc entive" argument referred to by Korea, the 
United States contends that this argument appears to relate to an issue that is already addressed 
at paragraph 7.303 of the Interim Report.  
6.147.  Korea does not specify which additional "incentive" argument it would have the Panel 
include in these paragraphs. To the extent Korea is  referring to the argument made in its reply to 
Panel question No. 5.2, this argument is already reflected at paragraph 7.303 of the Interim 
Report. There is therefore no need to include that argument in paragraphs 7.301 and 7.302. If Korea is referring to some other argument, its failure to specify that argument precludes any 
meaningful intervention by the Panel at this stage.  
6.2.2  United States' requests for review of precise aspects of the Interim Report 
6.2.2.1  Paragraphs 7.224, 7.277, 7. 293, 7.296, 7.311, 7.312, and 7.313 
(paragraphs 7.224, 7.278, 7.294, 7.297, 7. 312, 7.313, and 7.314 of the Final Report) 
6.148.  The United States asks the Panel to supplement its description of the United States' 
arguments. 
6.149.  Korea does not object to the United States' request. 6.150.  We have decided to accommodate the United States' request. 6.2.2.2  Paragraph 7.269 (paragra ph 7.270 of the Final Report) 
6.151.  The United States asks the Panel to include a reference for the definitions of the verb 
"locate". 
6.152.  Korea does not object to the United States' request. 6.153.  We have decided to accommodate the United States' request. 7  FINDINGS 7.1  Introduction 
7.1.  Korea has advanced three sets of claims co ncerning the anti-dumping measures at issue in 
this case. First, Korea challenges the use of zeroing (i) when applying the W-T comparison 
methodology "as such", (ii) in the Washers  anti-dumping investigation, and (iii) in "subsequent 
connected stages" of the Washers  proceeding. Second, Korea challenges certain aspects of the 
methodology used by USDOC in the Washers  anti-dumping investigation (i.e. the Nails II 
methodology) to determine whether the W-T comp arison methodology under the second sentence 
of Article 2.4.2 should be applied. Third, Korea pursues claims concerning certain aspects of the 
Differential Pricing Methodology, which replaced Nails II  methodology as the USDOC's 
methodology for determining application of the W-T comparison methodology under the second 
sentence of Article 2.4.2. Some of the factual and legal arguments of the parties regarding these 
various claims are interlinked or overlapped. To en sure that all of Korea's claims are addressed in 
respect of the relevant measures, we proceed as follows. In Section 7.2, we review the general 
principles governing treaty interpretation, the st andard of review and the burden of proof. In 
Section 7.3, we address Korea's claims concerning the application of the W-T comparison methodology in the Washers  anti-dumping investigation, excluding Korea's claims regarding the 
use of zeroing. In Section 7.4, we turn to Korea' s claims concerning the DPM. In Section 7.5, we WT/DS464/R 
 
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  address Korea's "as such" and "as applied" claims concerning the use of zeroing in the context of 
the W-T comparison methodology. These claims ha ve been brought under a number of provisions 
of the Anti-Dumping Agreement and GATT 1994. Once we have resolved all issues concerning the relevant anti-dumping measures, we address Korea's claims concerning the countervailing measures in Section 7.6. 
7.2  General principles regarding treaty interpretation, the standard of review, and 
burden of proof 
7.2.1  Treaty interpretation 
7.2.  Article 3.2 of the DSU provides that the WT O dispute settlement system serves to clarify the 
existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly 
requires panels to interpret that Agreement's provisions in accordance with the customary rules of 
interpretation of public international law.
45 It is generally accepted that the principles codified in 
Articles 31 and 32 of the Vienna Convention on th e Law of Treaties are such customary rules.  
7.2.2  Standard of review 7.3.  Article 11 of the DSU provides, in relevant part, that:  
[a] panel should make an objective assessment of the matter before it, including an 
objective assessment of the facts of the case and the applicability of and conformity 
with the relevant covered agreements. 
7.4.  In addition, Article 17.6 of the Anti-Dumpi ng Agreement sets forth the special standard of 
review applicable to disputes under the Anti-Dumping Agreement: 
(i) in its assessment of the facts of the matter, the panel shall determine whether 
the authorities' establishment of the facts was proper and whether their evaluation of 
those facts was unbiased and objective. If the establishment of the facts was proper 
and the evaluation was unbiased and object ive, even though the panel might have 
reached a different conclusion, the evaluation shall not be overturned; 
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance 
with customary rules of interpretation of public international law. Where the panel 
finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with 
the Agreement if it rests upon one of those permissible interpretations.  
Thus, Article 11 of the DSU and Article 17.6 of th e Anti-Dumping Agreement together establish the 
standard of review we will apply with respect to both the factual and the legal aspects of the 
present dispute. 
7.5.  The Appellate Body has explained that where a panel is reviewing an investigating authority's 
determination, the "objective assessment" standard  in Article 11 of the DSU requires a panel to 
review whether the authorities have provided a reasoned and adequate explanation as to (i) how 
the evidence on the record supported its factual findings; and (ii) how those factual findings support the overall determination.
46 In the context of Article 17.6(i) of the Anti-Dumping 
Agreement, the Appellate Body has clarified that a panel should not conduct a de novo  review of 
the evidence, nor substitute its judgment for that of the investigating authority. A panel must limit its examination to the evidence th at was before the investigating authority during the course of 
the investigation and must take into account all such evidence submitted by the parties to the 
dispute.
47 At the same time, a panel must not simply defer to the conclusions of the investigating 
                                               
45 Article 17.6(ii) of the Anti-Dumping Agreement also provides that if a panel finds that a provision of 
the Anti-Dumping Agreement admits of more than one permissible interpretation, it shall uphold a measure 
that rests upon one of those interpretations. 
46 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS , para. 186; and US – 
Lamb , para. 103. 
47 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , paras. 187-188. WT/DS464/R 
 
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  authority; a panel's examination of those conclusions must be "in-depth" and "critical and 
searching".48 
7.6.  The Appellate Body has clarified a panel's st andard of review of the facts pursuant to the 
above provisions in the following terms: 
It is well established that a panel must neither conduct a de novo review nor simply 
defer to the conclusions of the national authority. A panel's examination of those conclusions must be critical and searching, and be based on the information contained 
in the record and the explanations given by the authority in its published report. A 
panel must examine whether, in the ligh t of the evidence on the record, the 
conclusions reached by the investigating au thority are reasoned and adequate. What 
is 'adequate' will inevitably depend on th e facts and circumstances of the case and the 
particular claims made, but several general lines of inquiry are likely to be relevant. 
The panel's scrutiny should test whether the reasoning of the authority is coherent and internally consistent. The panel must undertake an in-depth examination of 
whether the explanations given disclose how the investigating authority treated the 
facts and evidence in the record and whether there was positive evidence before it to 
support the inferences made and conclusion s reached by it. The panel must examine 
whether the explanations provided demonstr ate that the investigating authority took 
proper account of the complexities of the da ta before it, and that it explained why it 
rejected or discounted alternative explanations and interpretations of the record evidence. A panel must be open to the possi bility that the explanations given by the 
authority are not reasoned or adequate in the light of other plausible alternative 
explanations, and must take care not to assume itself the role of initial trier of facts, nor to be passive by 'simply accept[ing]  the conclusions of the competent 
authorities.'
49 (footnote omitted) 
7.2.3  Burden of proof 7.7.  The general principles applicable to the al location of the burden of proof in WTO dispute 
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert 
and prove its claim.
50 Therefore, as the complaining party in this proceeding, Korea bears the 
burden of demonstrating that certain aspects of the measures at issue are inconsistent with the Anti-Dumping Agreement, the SCM Agreement an d the GATT 1994. The Appellate Body has stated 
that a complaining party will satisfy its burden when it establishes a prima facie  case, namely a 
case which, in the absence of effective refutation  by the defending party, requires a panel, as a 
matter of law, to rule in favour of the complaining party.
51 Finally, it is generally for each party 
asserting a fact to provide proof thereof.52 
7.3  Claims concerning the USDOC's applicat ion of the W-T comparison methodology in 
the Washers anti-dumping investigation 
7.3.1  Introduction 
7.8.  Article 2.4.2 of the Anti-Dumping Agreement provides:  
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 individual 
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 
                                               
48 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93. 
49 Ibid. 
50 Appellate Body Report, US – Wool Shirts and Blouses , para. 337. 
51 Appellate Body Report, EC – Hormones , paras. 98 and 104. 
52 Appellate Body Report, US – Wool Shirts and Blouses , para. 337. WT/DS464/R 
 
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  appropriately by the use of a weight ed average-to-weighted average or 
transaction-to-transaction comparison.  
7.9.  Article 2.4.2 comprises the comparison methodologies applicable to establish margins of 
dumping in the investigation phase. The first sentence provides for two comparison methodologies 
that should "normally" be used to establish margins of dumping. The second sentence provides for 
a third comparison methodology for establishing the margins of dumping, to be used in exceptional cases only.
53 The second sentence of Article 2.4.2 is divided into three parts. The first part, which 
we refer to as the "methodology clause", explains that an investigating authority is allowed to use 
an asymmetrical comparison methodology involvin g the comparison of a weighted average normal 
value with "prices of individual export transact ions". The second and third parts provide that 
certain conditions must be met before such asymmetrical comparison may be undertaken. The 
second part, which we refer to as the "pattern cl ause", requires the existence of a "pattern of 
export prices which differ significantly among diff erent purchasers, regions or time periods". The 
third part, which we refer to as the "explanation clause", requires the investigating authority to 
explain why "such differences" cannot be taken into account appropriately by the use of a 
weighted average-to-weighted average (W-W) or transaction-to-transaction (T-T) comparison methodology.  
7.10.  Korea has advanced claims under each of the three parts of the second sentence concerning 
the USDOC's application of the Nails II methodology
54 in the Washers  anti-dumping investigation. 
We begin with Korea's claims concerning the me thodology clause. Thereafter, we address Korea's 
claims concerning the pattern and explanation clauses.  
7.3.2  Claim regarding the methodology clause 
7.11.  This claim concerns the scope of applicat ion of the W-T comparison methodology. In the 
Washers  anti-dumping investigation, the USDOC applied the W-T comparison methodology to all 
export transactions, including export transactions falling outside of the relevant patterns.55 Korea 
claims that the USDOC acted inconsistently with the second sentence of Article 2.4.2 because, 
according to Korea, the W-T comparison methodology may only be applied to transactions falling 
within the relevant patterns.  
                                               
53 See Appellate Body Reports, US – Softwood Lumber V (Article 21.5 – Canada) , paras. 86 and 97; and 
US – Zeroing (Japan) , para. 131. 
54 The Nails II  methodology is described by Korea at paras. 104-108 of its first written submission and 
by the United States at paras. 92-95 of  its first written submission and para s. 8-31 of its response to the Panel 
question No. 2.2. The Nails II  methodology applies a two-stage test for determining the existence of "targeted 
dumping". Following an allegation of "targeted dumping"  by a member of the domestic industry, the "standard 
deviation test" aims to find whether there are export pr ices that differ among differe nt purchasers, regions or 
time periods. The "gap test" aims to address the issue whether observed price differe nces are significant. Both 
tests are run on a CONNUM (i.e. model) basis. If a suffic ient volume of a respondent's export sales pass both 
stages of the Nails II  methodology, then the USDOC considers that there is a "pattern of  export prices which 
differ significantly" within the meaning of the second sentence of Article 2.4.2 of the Anti-Dumping Agreement. 
Under the "standard deviation test",  the USDOC determines whether the weighted average price to an 
alleged targeted group in a particul ar CONNUM is below a benchmark price that equals to one standard 
deviation below the weighted average mean price in that CONNUM. If the volume of sales below the benchmark price exceeds 33% of volume across all CONNU Ms (for the basis being tested, i.e. purchaser, 
regions or time periods), the USDOC moves on to the second stage of the Nails II  methodology.  
Under the "gap test", where the gap (or differenc e) between the weighted-average prices of the 
identified sales to the allegedly targeted group and the next highest weighted-average prices to a non-targeted 
group exceeded the average gap among the weighted-ave rage prices between the non-targeted groups, these 
identified sales are considered to have passed the "gap test". The "gap test" is only  performed for export sales 
that passed the "standard deviation test ". If the sales passing the "gap test " accounts for more than 5% of the 
exporting producer's total sales by volu me (for the basis being te sted, i.e. purchaser, re gions or time periods), 
the USDOC considers that the price differences "significant". 
If the "standard deviation test" and the "gap test" are both met, the USDOC evaluates the difference 
between the weighted-average dumping margin calculated with the W-W comparison methodology (without zeroing) and the weighted-average dumping margin ca lculated using the W-T comparison methodology (with 
zeroing) for purposes of the explanation clause of th e second sentence of Article 2.4.2. Where there was a 
meaningful difference between the results of the W-W and the W-T comparison methodologies, the W-T 
comparison methodology will be applied to all export sales. 
55 See Washers  Anti-Dumping I&D Memo, (Exhibit KOR-18), pp. 33-34. WT/DS464/R 
 
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  7.3.2.1  Main arguments of the parties 
7.12.  Korea submits56 that the structure and text of Article 2.4.2 confirm that the W-T comparison 
methodology may only be applied to those transactions determined to have met the criteria for invocation of that methodology ("pattern transactions"), and not to export transactions falling 
outside of the relevant pattern ("non-pattern transactions"). In terms of structure, Korea observes 
that the exceptional W-T comparison methodology "m ay" be used in certain limited circumstances, 
whereas a strong preference is expressed for the mandatory application of the W-W or T-T 
comparison methodologies outside of those circumstances. Korea concludes from this that the W-T 
comparison methodology should only be applied to those transactions that have justified its use. Regarding text, Korea observes that the Appellate Body in US – Zeroing (Japan) understood the 
phrase "individual export transactions" to refer to the transactions that "fall within the relevant 
pricing pattern". Korea notes that the Appellate Bo dy also stated that "this 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." 
Korea suggests that this interpretation is reinforc ed by the requirement in the second sentence of 
Article 2.4.2 to explain why the relevant price diffe rences, pertaining only to the narrower universe 
of targeted dumping transactions, cannot be taken into account appropriately by using either the 
W-W or T-T comparison methodology. Korea notes that in the Washers  anti-dumping investigation 
the USDOC indicated that the identified pattern "is defined by all of the respondent's U.S. sales". 
Korea understands the USDOC to suggest that the broad application of the W-T comparison 
methodology is predicated on its view that the te rm "pattern" refers to all export sales. Korea 
contends that this is not a plausible interpretation, since the relevant "pattern" refers only to those 
export transactions whose prices differ significan tly among different purchasers, regions or time 
periods. 
7.13.  The United States disagrees
57 with Korea's argument that it follows from the structure of the 
second sentence of Article 2.4.2 that the scope of application of the W-T comparison methodology 
should be limited to those transactions that have justified its use. The United States contends that, 
when the conditions for the use of the exceptional comparison methodology are met, nothing in 
the second sentence of Article 2.4.2 suggests th at the use of the alternative methodology is 
further constrained. The United States acknowledges that in US – Zeroing (Japan)  the Appellate 
Body read the phrase "individual export transactions" as referring to the transactions that fall 
within the relevant pricing pattern.58 The United States notes, though, that the Appellate Body 
went on to suggest that "in order to unmask targeted dumping, an investigating authority may 
limit the application of the [average-to-transaction] comparison methodology to the prices of 
export transactions falling within the relevant pattern."59 Noting the Appellate Body's use of the 
word "may", the United States asserts that the Appellate Body did not definitively declare in US – 
Zeroing (Japan)  that the W-T comparison methodology must only be applied to pattern 
transactions. 
7.14.  The United States asserts that even if the W-T comparison methodology were only allowed 
to be applied to pattern transactions, the relevant "pattern of export prices" necessarily includes both lower and higher export prices that "differ significantly" from each other . The United States 
contends that an export price cannot "differ significantly" on its own. The United States asserts 
that because "difference" is a comparative or rela tive concept, for something to be different, it 
must differ from something else. The United Stat es therefore contends that lower export prices, 
which likely do not differ significantly from one another, cannot form a "pattern of export prices 
which differ significantly" without reference within that pattern to the higher export prices from which they differ significantly. The United States argues that, in the Washers  anti-dumping 
investigation, because the pattern identified by the USDOC comprised of all of the exporter's US 
sales, the USDOC's application of the W-T comparison methodology to all export sales is not at odds with the Appellate Body's statement in US – Zeroing (Japan)  that an investigating authority 
may limit the application of the W-T comparison methodology to the prices of export transactions 
falling within the relevant pattern. 
                                               
56 Korea's main arguments are set forth at paras. 168-179 of its first written submission. 
57 The United States' main arguments are set forth at paras. 145-153 of its first written submission. 
58 See Appellate Body Report, US – Zeroing (Japan) , para. 135. 
59 Ibid. (emphasis added) WT/DS464/R 
 
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  7.15.  The United States submits that Korea's proposed interpretation of Article 2.4.2 is at odds 
with the Appellate Body's recognition that the alternative methodology provides Members a means 
to "unmask targeted dumping".60 The United States asserts that "targeted dumping" – which is 
evidenced by lower-priced sales that "differ significantly" from higher-priced sales – is "unmasked" 
by also applying the W-T comparison methodology to the higher-priced sales. 
7.3.2.2  Main arguments of third parties61 
7.16.  Brazil contends62 that there seems to be considerable uncertainties as to how the W-T 
comparison methodology should operate in practice . According to Brazil, an interpretation of the 
second sentence of Article 2.4.2 that would limit the application of the W-T comparison methodology to the transactions that fall within the pattern
63 raises several doubts relative to the 
practical operation of such understanding. 
7.17.  China contends64 that Article 2.4.2 of the Anti-Dumping Agreement is concerned with the 
establishment of margins of dumping, and that the provision is explicit in stating that such margins are "normally" to be determined on the basis of one or the two symmetrical comparison 
methodologies. China asserts that the permission to use the alternative W-T comparison 
methodology is exceptional
65, applying only where a relevant price pattern cannot be taken into 
account appropriately  through a symmetrical comparison methodology. According to China, this 
means that the allowance to use the W-T comparison methodology applies only on a limited basis: 
although an authority must consider the entire universe of sales in order to identify a relevant pricing pattern within that universe, the alternative methodology may be applied only to those sales that comprise the relevant pricing pattern. For export sales that are not part of the relevant 
pricing pattern, Article 2.4.2, second sentence, does  not permit departure from the rule, stated in 
the first sentence, that mandates use of  a symmetrical comparison methodology. 
7.18.  The European Union disagrees
66 with Korea's argument that the final sentence of 
Article 2.4.2 requires that the existence and am o u n t  o f  t a r g e t e d  d u m p i n g ,  i f  a n y ,  m u s t  b e  
calculated only on the basis of the export transactions falling within the pricing pattern. The European Union asserts that this would not comport with the basic objective of the targeted 
dumping provision, which is to permit an investigating authority to unmask targeted dumping by 
purchaser, region or time period that would ot herwise be concealed. It is not clear to the 
European Union how this can be achieved if the sole option open to an investigating authority would be to make a calculation only on the basis of the transactions that have passed the standard 
deviation and gap tests.  
7.19.  Japan contends
67 that the plain meaning of the second sentence of Article 2.4.2 suggests 
that the W-T comparison methodology is limited to the "pattern" of export prices which differ 
significantly among different purchasers, regions,  or time periods. According to Japan, the 
provision does not indicate that the W-T comparison methodology should extend to all sales 
transactions once a pattern is found. Japan also contends that the context of the sentence implies 
that "individual sales transactions" to be used for comparison are precisely those that fall into the 
"pattern" discerned by the authorities, and th e purpose of the provision to unmask targeted 
dumping similarly speaks for such understanding. Ja pan asserts that its interpretation finds strong 
support in the holding of the Appellate Body in US – Zeroing (Japan)  that the phrase "individual 
export transactions" in the second sentence refers to the transactions that fall "within the relevant 
pricing pattern", and that "an investigating authority may limit the application of the W-T comparison methodology to the prices of export transactions falling within the relevant pattern".
68 
Japan contends that its interpretation is also supported by the context of the first and second 
sentences of Article 2.4.2. Japan observes that the first sentence provides that the existence of margins of dumping shall "normally" be established through W-W or T-T comparisons. According to 
                                               
60 See Appellate Body Reports, US – Zeroing (Japan) , para. 135; and  EC – Bed Linen, para. 62. 
61 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
62 Brazil's third party submission, paras. 30-32. 
63 Ibid. para. 31 (citing Appellate Body Report, US – Zeroing (Japan) , para. 135). 
64 China's third party submission, para. 39. 
65 Ibid. (citing Appe llate Body Report, US – Zeroing (Japan) , para. 131). 
66 European Union's third pa rty submission, para. 47. 
67 Japan's third party submission, paras. 68-70. 
68 Ibid. para. 69 (citing Appellate Body Report, US – Zeroing (Japan) , para. 135). WT/DS464/R 
 
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  Japan, this makes the W-T comparison methodology an exception, which an investigating authority 
"may" use in its discretion if it finds a "pattern" and provides an explanation. Japan submits that it follows from the nature of the second sentence  of Article 2.4.2 as an exception that the 
W-T comparison methodology has to be applied in an appropriately limited manner – i.e. to an 
identified "pattern" – and not to all transactions, which would make the exception the rule as it 
would allow proceeding in the same manner as for W-W or T-T comparisons. 
7.20.  Viet Nam agrees
69 with Korea that, assuming the W-T comparison methodology can be 
used, it can only be applied to the transactions found to "differ significantly", that is, within the 
pattern. Viet Nam contends that the two "normal[]" methodologies should be applied to transactions outside the pattern. 
7.3.2.3  Evaluation by the Panel 
7.21.  Korea's scope claim raises the issue of whether the W-T comparison methodology may be 
applied to all export transactions, or only to transactions that constitute the relevant pattern (pattern transactions). Korea's claim requires us to determine whether the "prices of individual 
export transactions" used in the W-T comparison provided for in the first part of the second 
sentence are the same transactions as those comprising the "pattern of export prices which differ significantly among different purchasers, regions or time periods" referred to in the second part of 
that sentence. Our interpretive analysis suggests that they are. 
7.22.  We consider that the term "individual" in th e first part of the second sentence indicates that 
the W-T comparison will not involve all export transactions. Rather, the W-T comparison will only involve certain export transactions identified in dividually. The only textual basis for individual 
identification of export transactions to be used in  the W-T comparison is that they form the pattern 
referred to in the second part of the second sentence, i.e. those export transactions with prices that differ significantly (by purchaser, region or time period). The second sentence provides no 
other basis for identifying which "individual" export transactions should be included in the W-T 
comparison. 
7.23.   Application of the W-T comparison methodology to pattern transactions only is further 
supported by the third part of the second senten ce, which requires the investigating authority to 
explain why "such differences" cannot be taken into account appropriately by one of the symmetrical comparison methodologies. The ph rase "such differences" refers back to the 
significant price differences displayed by the pattern transactions referred to in the second part of 
the second sentence. This textual connection be tween the second and third parts of the second 
sentence suggests that the third part requires an  explanation why it would not be appropriate to 
apply the W-W or T-T comparison methodology to pattern  transactions. In our view, such 
explanation relates to pattern transactions precisely because only those pattern transactions 
should be subject to a W-T comparison. 
7.24.  Our reading of the text of the second sentence is further supported by contextual 
considerations. We observe that, according to the first sentence of Article 2.4.2, a margin of 
dumping should "normally" be established using either the W-W or T-T symmetrical comparison methodologies. In such "normal" cases, there is no determination that certain transactions form part of "a pattern of export prices which differ significantly among different purchasers, regions or 
time periods". All export transactions are effectively non-pattern transactions, and all such 
transactions are assessed using either the W-W or T-T comparison methodology. In exceptional cases where the W-T comparison methodology applie s, a sub-set of export transactions is set 
aside for specific consideration. The exceptional nature of this comparison methodology suggests 
that something different from the first sentence sh ould be undertaken, i.e. assessment of only the 
pattern transactions set aside for specific consideration.  
7.25.  Further support can be found in the statement of the Appellate Body in US – Zeroing 
(Japan)  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 significantly among different purchasers, 
                                               
69 Viet Nam's third party statement, para. 19. WT/DS464/R 
 
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  regions or time periods". The prices of transactions that fall within this pattern  must 
be found to differ significantl y from other export prices. We therefore read the phrase 
"individual export transactions" in that sentence as referring to the transactions that fall within the relevant pricing pattern. This 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.
70  
7.26.  Our reading of the text of the second sent ence of Article 2.4.2 is also supported by its 
object and purpose. There is broad agreement that  the object and purpose of the second sentence 
of Article 2.4.2 is to enable investigating authorities to "unmask" so-called "targeted dumping". This view has been expressed by the parties
71, all but one of the third parties72 and, as we explain 
below, the Appellate Body. This understanding of th e object and purpose of the second sentence is 
also confirmed73 by negotiating history, which shows that "the issue at stake [when negotiating 
the second sentence of Article 2.4.2] was masked, selective dumping".74 
7.27.  The Appellate Body stated in the abovementioned US – Zeroing (Japan)  case that the 
second sentence of Article 2.4.2 provides an as ymmetrical comparison methodology to address a 
"pattern of 'targeted' dumping".75 The Appellate Body then referred to the notion of "unmasking" 
such "targeted dumping". In particular, the Appellate Body stated that "[i]n order to unmask 
targeted dumping, an investigating authority may limit the application of the W-T comparison methodology to the prices of export transactions falling within the relevant pattern."
76 The last 
statement by the Appellate Body could be read in two ways.77 First – and this is the reading 
proposed by the United States – the Appellate Body could be stating that an authority is allowed to 
("may") limit the scope of application of the W-T comparison methodology to pattern transactions, but it is not required to do so (and may therefore apply the W-T comparison methodology to all 
export transactions). Second, the Appellate Body could be understood to suggest that, given that 
the object and purpose of the second sentence is  to unmask "targeted dumping", the authority is 
able to ("may") restrict the application of the W-T comparison methodology to pattern transactions 
only, since it is those pattern transactions that are indicative of targeted dumping. We favour the 
second reading, because the first reading would be at odds with the Appellate Body's statement in 
the preceding sentence  (set forth in the extract above) that the universe of transactions subject to 
the W-T comparison methodology would "necessarily" be more limited than the universe of 
transactions to which the symmetrical comparison methodologies in the first sentence of 
                                               
70 Appellate Body Report,  US – Zeroing (Japan) , para. 135. A similar statement was made by the 
Appellate Body in US – Softwood Lumber V (Article 21.5) , fn 166. 
71 Korea's first written submission, para. 153. Korea asserts that the "exception" in the second sentence 
of Article 2.4.2 "was created to address the situation wh ere an exporter's dumping is 'targeted' in the sense 
that the exporter makes dumped prices to a subset of the market, and 'masks' any du mping in that subset by 
selling at higher, non-dumped prices in its other U.S. sales". We agree with Korea' s understanding of the term 
"targeted dumping". The United States has not proposed any alternative understanding. See also United States' first writ ten submission, para. 45. 
72 See, for example, para. 20 of Brazil's third party submission, para. 19 of Canada's oral statement, 
para. 20 of China's third party submission, para. 38 of th e European Union's third pa rty submission, para. 6 of 
Japan's oral statement, para. 8 of No rway's oral statement, para. 4 of Th ailand's oral statement, para. 12 of 
Turkey's oral statement. Viet Nam's response to Panel question No. 1.1(i) indicates that Viet Nam does not associate the second sentence of Article 2.4.2 with "targeted dumping". 
73 Article 32 of the Vienna Convention allows recourse  to the preparatory work of the treaty in order 
inter alia  to confirm the meaning resulting from the application of Article 31. 
74 Negotiating Group on MTN Agreements and Arrangements, Meeting of 16-18 October 1989, 
MTN.GNG/NG8/13 (15 November 1989), (Exhibit USA-18), p. 11. 
75 Appellate Body Report, US – Zeroing (Japan) , para. 131. The Appellate Body also explained in EC – 
Bed Linen  that the second sentence of Article 2.4.2 "allo ws Members, in structuring their anti-dumping 
investigations, to address three kinds of 'targeted' du mping, namely dumping that is targeted to certain 
purchasers, targeted to certain regi ons, or targeted to certain time periods" (Appellate Body Report, EC – Bed 
Linen , para. 62). 
76 Appellate Body Report, US – Zeroing (Japan) , para. 135. 
77 Korea's second written submission, para. 178. Kore a suggests that the Appellate Body's use of the 
term "may" was not referring to the scope of application of the W-T comparison methodology at all, but was rather referring back to the phrase "may be compar ed" at the beginning of the second sentence. (Korea 
asserts that the scope of the W-T comparison methodol ogy was only addressed by the Appellate Body in the 
preceding sentences of its findings). This argument is not convincing since, immediately after using the word 
"may", the Appellate Body referred expl icitly to an authority "limit[ing] the application of the W-T comparison 
methodology to …". WT/DS464/R 
 
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  Article 2.4.2 would apply. The term "necessarily" excludes the possibility that the W-T comparison 
methodology might in certain circumstances also apply to non-pattern transactions. This reading is supported by the exceptional nature of the W-T comparison methodology. 
7.28.  We note the United States' argument that  a "pattern" necessarily includes lower export 
prices that differ from higher export prices, and th us all export transactions may be included in the 
relevant pattern. However, as we explain below
78, a "pattern" is "[a] regular and intelligible form 
or sequence discernible in certain actions or situat ions". We also explain that, in 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 purchaser, region or time period.
79 Once those prices are identified, 
they constitute the relevant "pattern". 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 "pattern" (just as a floral pattern on a garment is concerned with the flowers printed 
against a backdrop, rather than the backdrop itself).80 
7.29.  For the above reasons, we find that th e 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". In the Washers  anti-dumping investigation, the 
USDOC applied the W-T comparison methodology to all transactions, including transactions other than those constituting the patterns of transactio ns that the USDOC had determined to exist. In 
doing so, the USDOC acted inconsistently with the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement.  
7.3.3  Claim regarding the pattern clause  
7.30.  This claim concerns the USDOC's applicatio n of the pattern clause, i.e. the requirement to 
establish the existence of a "pattern of export prices which differ significantly among different 
purchasers, regions or time periods". Korea challenges the manner in which the USDOC 
determined the existence of a "pattern of ex port prices which differ significantly" among 
purchasers, regions or time periods in the Washers  anti-dumping investigation. Korea contends 
that the USDOC applied purely quantitative criter ia in determining the existence of "patterns of 
export prices which differ significantly", without any qualitative assessment of the reasons for the 
relevant price differences. Korea asserts that an investigating authority must qualitatively assess 
why prices differ, and whether such difference s reflect what can reasonably be inferred as 
targeting conduct. 
7.3.3.1  Main arguments of the parties 
7.31.  Korea submits
81 that the ordinary meaning of the terms "pattern" and "significantly" 
precludes resort to purely quantitative criteria  when determining whether there is a pattern of 
export prices that differ significantly. Korea asse rts that each of these terms carries qualitative 
connotations (that were ignored by the USDOC's purely quantitative tests), such that the second sentence requires an examination of "why", not just "how big".  
7.32.  Korea asserts that the word "pattern" means that there must be some intelligible and 
predictable repetition or form that can be discern ed, qualitatively, from the sample of prices at 
issue. Korea contends that the qualitative connotation of the word "pattern" does not allow for random variation, but rather requires a particular  design or purpose, namely targeting conduct. 
                                               
78 See para. 7.45.  below. 
79 We accept Korea's argument that, to be "int elligible" the price differences must have some 
relationship to one another (Korea's first written submission, para. 132). This relationship exists when the significantly differing prices relate to th e same purchaser, regi on or time period. 
80 This is consistent with the statement by the Appellate Body in US – Zeroing (Japan)  that the universe 
of transactions that fall within the relevant pricing pattern "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". 
81 Korea's main arguments are set forth at paras. 130-153 of its first written submission. WT/DS464/R 
 
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  Korea submits that, to be "intelligible" or to "serve to govern the execution of something"82, the 
pattern must be meaningful to the purpose of what is being undertaken – namely determining whether use of the exceptional comparison meth odology set forth in the second sentence of 
Article 2.4.2 is justified. 
7.33.  Korea contends that this understanding is re inforced by the requirement in Article 2.4.2 that 
the prices differ "significantly". According to Ko rea, this term conveys both quantitative and 
qualitative aspects. Korea contends that the qua litative meaning of "significant" means that the 
relevant price differences must have meaning or purpose, rather than reflecting random price 
variation or normal commercial factors. Korea contends that the price differences must be more than merely "large" in order to justify the application of the second sentence of Article 2.4.2. According to Korea, an authority cannot find di fferences to be "significant" based solely on 
quantitative criteria with no consideration at all of the qualitative factual context – the reasons 
why prices might be differing.
83 Korea asserts that a qualitative assessment of the relevant price 
differences is necessary in order to avoid find ing that price differences constitute targeted 
dumping, even though they are caused entire ly by exogenous factors or normal commercial 
conditions. 
7.34.  The United States disagrees84 with Korea's argument that the words "pattern" and 
"significantly" require an investigating authority to examine, qualitatively, the design, meaning, or 
purpose underlying the significant differences in ex port prices. The United States notes that the 
parties agree that a "pattern" is "[a] regular and intelligible form or sequence discernible in certain actions or situations". The United States agrees with Korea's contention that a "pattern" cannot 
simply be the result of random price variatio n. However, the United States rejects Korea's 
argument that there must be some predictable  repetition or form that can be discerned. The 
United States notes that an anti-dumping investigation is concerned exclusively with sales during 
the period of investigation, which necessarily is in the past. According to the United States, 
nothing in the "pattern clause" or anywhere else  in Article 2.4.2 of the Anti-Dumping Agreement 
relates to predicting future sales. 
7.35.  Regarding the term "significantly", the United  States agrees with Korea's contention that the 
Appellate Body has suggested that the term "significant" can have both quantitative and qualitative dimensions. The United States does not agree, though, that the price differences that trigger the application of the W-T comparison me thodology must be something other than merely 
"large" quantitative differences. The United States  suggests that Korea's understanding would read 
the quantitative dimension out of the term "significantly". The United States asserts that this would be inconsistent with the ordinary meaning of the term "significantly" in its context, and also 
with the Appellate Body's guidance in US – Large Civil Aircraft (2
nd Complaint) . 
7.36.  In the context of the requirement to iden tify "a pattern of export prices which differ 
significantly", the United States asserts that a qualitative analysis would be employed to assess 
how the export prices differ from each other, in the sense of whether that difference qualitatively 
is notable or important, and thus is "significant". The United States contends that under Korea's notion of a qualitative analysis, the investigating authority would rather ask why the export prices 
are different. The United States suggests that Korea's references to commercial reasons, market 
explanations, or other exogenous factors all go  to why differences may exist between export 
prices. The United States suggests that these issues would not provide information about how the export prices are different, and whether the observed differences are "significant". 
7.37.  The United States also contends that Korea's argument concerning the need to demonstrate 
that dumping is targeted confuses the "pattern of export prices which differ significantly", which is described in the text of the "pattern clause" in the second sentence of Article 2.4.2, with the 
intention of an exporter to "target" its dumpin g and "mask" that dumping. The United States 
asserts that the drafting of the "pattern clause" is passive and not active, such that the 
                                               
82 Korea's first written submission, para. 131(referring to the dictionary meaning of the Spanish term 
"pauta" as "[i]nstrumento o norma que sirve para gobernarse en la ejecució n de algo" (an instrument or norm 
that serves to govern the executio n of something) (Exhibit KOR-37). 
83 Korea's oral statement at the second meeting of the Panel, para. 26. However, Korea does not argue 
that an investigating authority must consider the inte nt of the exporter. See also Korea's second written 
submission, para. 89. 
84 The main arguments of the United States are set fo rth at paras. 55-99 of it s first written submission. WT/DS464/R 
 
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  investigating authority is charged with finding whether a pattern of export prices exists, not with 
finding that an exporter has intentionally patterned  its export prices to target and mask dumping. 
7.3.3.2  Main arguments of third parties85 
7.38.  Canada submits86 that the ordinary meaning of the word pattern implies a qualitative 
element. 
7.39.  China shares Korea's concern87 that the USDOC appears to have failed to consider relevant 
qualitative explanations for price variations. China asserts that the use of the W-T comparison 
methodology is conditioned on identification of a " pattern " of "prices which differ  significantly ". The 
mere existence of time-based, or similar, price variations cannot in itself be revealing of "significant" differences. For China, the fact that "significance" has meaning in both quantitative and qualitative terms is a strong indicator that an investigating authority must consider both such 
dimensions whenever it seeks to determine the existence of a "pattern of export prices which differ 
significantly". China disagrees with the United States  as they have asserted that it is sufficient to 
explore either dimension by showing either that price differences are "numerically large" or, 
alternatively, that even numerically small diff erences remain "important" in the context of a 
particular market. 
7.40.  The European Union argues
88 that the terms "pattern" and "significantly" can be understood 
quantitatively. The European Union agrees with the United States' understanding of the more 
limited sense in which that term might be under stood qualitatively. The European Union asserts 
that in a normal anti-dumping calculation, that does not involve any determination of targeted dumping, an investigating authority is not required to assess the reason for which dumping is 
occurring. Rather, the determination of the exis tence and amount of dumping is based on an 
objective assessment of the data. The European Union understands that the situation should be no different under the second sentence of Article 2.4.2 of the Anti-Dumping Agreement. 
7.41.  Japan argues
89 that the question of how significant a difference of export prices is, or in 
other words what the standard of being "large" is, cannot be answered unless one places relevant numerical variations in an appropriate context and assesses their meaning.  
7.42.  Turkey does not support the interpretation that a "pattern of significant difference" should 
be necessarily an outcome of a specific intent . Turkey does not agree that usual commercial 
practices are perfectly plausible if the differing ex port prices display a pattern in line with the 
expected results of these practices. Turkey argues  that neither the text of Article 2.4.2 nor WTO 
jurisprudence makes it possible to conclude that the "usual commercial" practices are defences to 
permit the act of targeted dumping.
90 
7.43.  Viet Nam agrees with Korea91 that the United States' methodology inappropriately creates 
the possibility that random, relatively minor and commercially entirely commonplace price 
fluctuations will be characterized as a "pattern" of prices that "differ significantly". Beyond all technicalities of the second sentence of Arti cle 2.4.2, it cannot be that the Anti-Dumping 
Agreement entitles WTO Members to burden export ers with higher anti-dumping duties simply 
because they follow standard business practices. 
7.3.3.3  Evaluation by the Panel 7.44.  Korea submits that in the Washers anti-dumping  investigation  the USDOC acted 
inconsistently with the pattern clause because it found a "pattern of export prices which differ 
significantly" among purchasers, regions or time pe riods based "solely on quantitative criteria with 
no consideration at all of the qualitative factual context – the reasons why prices might be 
                                               
85 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
86 Canada's third party submission, para. 22. 
87 China's third party submission, paras. 14-22. 
88 European Union's third pa rty submission, para. 40. 
89 Japan's third party submission, para. 31. 
90 Turkey's third party or al statement, para. 8. 
91 Viet Nam's third party stat ement, paras. 16 and 17. WT/DS464/R 
 
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  differing".92 According to Korea, the second sentence "r equires an examination of 'why', not just 
'how big'".93 
7.45.  Korea's claim is based on its interpretati on of the terms "pattern" and "significant". The 
parties agree that a "pattern" is "[a] regular and intelligible form or sequence discernible in certain 
actions or situations".94 We accept that this definition accords with the ordinary meaning of the 
term "pattern" as used in the second sentence of Article 2.4.2. The parties also agree that random price variation does not constitute a "pattern".
95 Again, we agree.  
7.46.  The parties disagree on whether a "pattern" of price differences may be discerned without 
exploring the reasons for those price differences. We note that the text of Article 2.4.2 contains no 
requirement to consider such reasons. Further, the fact that prices di ffer in a regular and 
intelligible form may be discerned through a simple examination of the relevant numerical price 
values. In the context of the second sentence, th e relevant form or sequence is determined by 
reference to purchasers, regions or time periods. If 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 th at purchaser, region or time period. The price 
differences are "regular" and "intelligible" because they pertain only to that particular purchaser, region or time period. This is consistent with Ko rea's argument that, in order to be "intelligible", 
the relevant price differences "must have some relationship to each other so that this form can be 
discerned".
96 The relationship results from the fact that the price differences pertain to a given 
purchaser, region or time period. 
7.47.  Korea argues that "to be 'intelligible' or to 'serve to govern the execution of something', the 
pattern must be meaningful to the purpose of what is being undertaken"97, i.e. "targeting 
conduct".98 We disagree. First, a form or sequence of price differences may be "intelligible" in the 
context of the second sentence if there is regularity  to that form or sequence that may be detected 
in respect of a particular purchaser, region or time period. Although the term "intelligible" excludes 
random price variation, it does not require consid eration of the purpose of the price variations. A 
regular series of price variation relating to a particular purchaser, region or time period may be 
detected on the basis of an objective assessmen t of the data, even if one does not know the 
reason for, or purpose behind, such variation. 
7.48.  Nor do we consider that an authority must assess the reasons for price differences in order 
to determine whether those price differences are "significant" within the meaning of the second 
sentence. In the context of the second sentence, we consider that the term "significant" should be 
understood to mean "important, notable; consequential".99 This was the definition applied by the 
Appellate Body in US – Tyres100 and US – Large Civil Aircraft (2nd Complaint)101, and by the panel 
in US – Upland Cotton .102 Korea distinguishes "significant" from  "large". Korea suggests that even 
a numerically "large" price difference will not be "significant" if the difference is "simply the natural and completely expected reactions to normal commercial considerations".
103 Korea contends that 
there is nothing "notable" about a price difference that results from normal commercial 
considerations, such as when prices are lowered during a well-known holiday season sale period.
104 We disagree. We consider that an authority might properly find that certain prices differ 
"significantly" if those prices are notably greater – in purely numerical terms – than other prices, 
irrespective of the reasons for those differences. The price difference is noteworthy because it 
                                               
92 Korea's oral statement at the seco nd meeting of the Panel, para. 26. 
93 Ibid. 
94 Korea refers at para. 86 of its first written submission to OxfordDictionaries.com , Oxford University 
Press, accessed 18 September 2014 <http://www.oxforddictionaries.com/us/definition/american_english/pattern> (Exhibit KOR-21). The United States refers to the same dictionary defi nition at para. 59 of its first written submission. 
95 United States' first written submission, para. 73; Korea's first written submission, paras. 132-133. 
96 Korea's first written submission, para. 132. 
97 Ibid. para. 132. 
98 Ibid. para. 133. 
99 The New Shorter Oxford English Dictionary , 4th edn, L. Brown (ed.) (Clarendon Press, 1993), Vol. 2, 
(Exhibit KOR-23), p. 2860. 
100 Appellate Body Report, US – Tyres , para. 176. 
101 Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , para. 1272. 
102 Panel Report, US – Upland Cotton , para. 7.1325. 
103 Korea's second written submission, para. 87. 
104 Korea's response to Panel question 2.1, para. 36. WT/DS464/R 
 
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  stands out, and it stands out because of its size, or scale, rather than the reasons behind it.105 
However, as discussed in section 7.3.4.4  belo w, the reasons behind the significant price 
differences may be relevant in the context of the explanation clause. 
7.49.  In certain factual circumstances, the size or scale of a price difference may need to be 
assessed in light of the prevailing factual circumstances. Thus, a relatively minor numerical 
difference between two large prices may not be "significant", whereas the same numerical difference between two much smaller prices may well  be "significant". In addition, a small price 
difference in a price-competitive market may be "significant". However, this aspect of significance 
pertains to how the relevant prices differ, not why they differ. We find support for this approach in 
the report of the panel in US – Upland Cotton , concerning the meaning of the phrase "significant 
price suppression" in Article 6.3(c) of th e SCM Agreement. That panel found that: 
[I]t is the degree of price suppression or de pression itself that must be "significant" 
(i.e. important, notable or consequential) under Article 6.3(c) of the SCM Agreement. In determining whether the price suppression is "significant", it may be relevant to 
look at the degree of the price suppression or  depression in the context of the prices 
that have been affected – that is, at th e degree of significance of suppression or 
depression.  
Such significance may be manifest in a number of ways. The "significance" of any 
degree of price suppression may vary from case to case, depending upon the factual circumstances, and may not solely depend up on a given level of numeric 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.  
We cannot believe that what may be significant in a market for upland cotton would 
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, for 
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 volume s traded on the markets experiencing the 
price suppression.
106 (emphasis added; footnotes omitted)  
7.50.  We agree with the US – Upland Cotton  panel that certain factual circumstances regarding 
the product and/or market may be relevant to the assessment of whether a difference is "significant". We also note that the US – Upland  Cotton panel did not refer to the underlying 
reasons for price suppression or depression as bein g relevant to the potential significance of the 
degree of price suppression or depression. 
7.51.  We also find support in the statement by the Appellate Body in US – Large Civil Aircraft 
(2
nd Complaint) that the assessment of the significance of lost sales has both "quantitative and 
qualitative dimensions".107 Regarding the qualitative dimension, the Appellate Body referred to the 
"highly price-competitive" nature of the market, an d the "strategic importance of securing a sale 
from a particular customer". However, there wa s no suggestion by the Appellate Body that the 
"qualitative dimension" of the significance of lost  sales extends to consideration of the reasons for 
those lost sales. 
                                               
105 We find support for this approach in China – GOES , where the Appellate Body stated that a 
determination of "significant price undercutting" requires a comparison between the price of subject imports and the price of like domestic products : "authorities must consider whether there has been a significant price 
undercutting by the dumped or subsidized imports as compared with the price of a like domestic product" 
(Appellate Body Report, China – GOES , para. 241). The Appellate Body was not specifically interpreting the 
term "significant" in this context. However, the fact that the Appellate Body considered that an authority could determine the existence of "significant price undercuttin g" simply by comparing tw o prices suggests that the 
concept of significance may properly be assessed on a purely numerical basis. Just as significant price 
undercutting may be established by comparing the numerica l values of domestic and import prices, significant 
price differences may be established in  the context of the second sentence by comparing the numerical prices 
to one purchaser, region or time peri od with the numerical prices to other purchasers, regions or time periods. 
106 The Appellate Body upheld the panel' s approach at para. 427 of its report. 
107 Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , para. 1272. WT/DS464/R 
 
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  7.52.  For the above reasons, we reject Korea's cl aim that the USDOC acted inconsistently with the 
second sentence of Article 2.4.2 in the Washers anti-dumping  investigation  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 differences. 
7.3.4  Claims regarding the explanation clause 7.53.  The third part of the second sentence of Article 2.4.2 requires an authority to provide an 
explanation "as to why [the pattern of significant price] differences cannot be taken into account 
appropriately by the use of a [W-W] or [T-T] comp arison". Korea claims that the USDOC failed to 
comply with this explanation clause in the Washers  anti-dumping investigation.  
7.3.4.1  Explanation provided by the USDOC in the Washers  anti-dumping investigation 
7.54.  The USDOC provided similar explanations pu rsuant to the explanation clause in both its 
preliminary and final determinations in the Washers  anti-dumping investigation. In its preliminary 
determination, the USDOC determined: 
For both LG and Samsung, we find that these [pricing] differences cannot be taken 
into account using the average-to-average methodology because the average-to-average methodology conceals differences in the patterns of prices between the 
targeted and non-targeted groups by averaging low-priced sales to the targeted group 
with high-priced sales to the non-targeted  group. Therefore, for the preliminary 
determination, we find that the standard average-to-average methodology does not take into account LG's and Samsung's price differences because the alternative 
average-to-transaction methodology yields a material difference in the margin. 
Accordingly, for this preliminary determination we applied the average-to-transaction methodology to all U.S. sales made by  LG and Samsung. In applying this 
methodology, consistent with our practice , we did not offset negative comparison 
results with positive comparison results.
108  
7.55.  In its final determination, the USDOC determined: 
In this investigation, we find for both LG and Samsung, based on the petitioner's 
targeted dumping allegations, that a pa ttern of EPs or CEPs for comparable 
merchandise that differs significantly am ong purchasers, regions or time periods 
exists. Further, our analysis shows that th e average-to-average method does not take 
into account such price differences because there is a meaningful difference in the 
weighted-average dumping margins when calculated using the average-to-average method and the average-to-transaction method for both respondents. We therefore 
have applied the average-to-transaction method for LG and Samsung in this final 
determination.
109  
7.56.  Thus, the USDOC's explanation is based on a combination of two factors. First, that the 
averaging used in the W-W comparison methodology "conceals differences" between the export 
prices. Second, that there is a "meaningful differ ence" between the margin of dumping calculated 
using the W-W comparison methodology and the margin of dumping calculated using the W-T comparison methodology. There is no referenc e to the T-T comparison methodology in the 
explanation provided by the USDOC. 
7.3.4.2  Main arguments of the parties 7.57.  Korea submits
110 that the term "appropriate(ly)" under the explanation clause requires a 
qualitative assessment of the objective circumstance s of a particular industry. Korea suggests that 
                                               
108 Washers  Anti-Dumping Preliminary Determination, (Exhibit KOR-32), p. 46395. See also LG AD 
Preliminary Calculation Memo, (Exhibit KOR-45), pp. 3 and 4; and Samsung AD Pre liminary Calculation Memo, 
(Exhibit KOR-46), p. 3. 
109 Washers  Anti-Dumping I&D Memo, (Exhibit KOR-18), p.  20. See also Samsung AD Final Calculation 
Memo, (Exhibit KOR-41) (BCI), p. 2; and LG AD Fina l Calculation Memo, (Exhibit KOR-42) (BCI), p. 2. 
110 Korea's main arguments are set forth at paras. 154-167 of its first written submission. WT/DS464/R 
 
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  the W-W or T-T comparison methodologies can appropriately take account of price differences in 
certain circumstances, particularly when those differences are commercially reasonable.111 Korea 
asserts that the authority must explain, with re ference to the existence of the pattern and the 
significance of the price differences within that pattern, why the W-W or T-T comparison 
methodologies cannot take appropriate account of th ose price differences. Korea contends that the 
explanation clause excludes the application of the W-T comparison methodology if there is any 
way in which the W-W or T-T comparison methodologies can produce a dumping margin 
calculation in which the pattern of significantly differing prices can be taken into account 
appropriately. 
7.58.   Korea submits that the USDOC failed to "make clear" and "give details" of the reason or 
purpose of the failure or impossibility to take into account appropriately the relevant pattern using 
either the W-W or T-T comparison methodology. Korea asserts that the USDOC merely observed 
that there was a "material difference" between th e margins of dumping calculated using the W-W 
comparison methodology without zeroing and W-T co mparison methodology with zeroing, and then 
concluded that the use of the W-W comparison methodology was not appropriate. Korea contends 
that the existence of a "material difference" merely relates to inherent aspects of the W-W comparison methodology that cannot provide the ex planation required by the second sentence of 
Article 2.4.2. Otherwise, according to Korea, the use of the W-T comparison methodology would 
have been automatically authorized as soon as a pattern of significantly different prices was found, without any obligation to explain. Korea further asserts that the USDOC's reasoning does not amount to the explanation required by Article 2. 4.2, but is rather a measure of the impact of 
zeroing on the calculation of dumping margins. Korea suggests that if the USDOC's approach 
would be accepted, it would render the explanation clause inutile , because the use of zeroing will 
virtually always produce higher margins. Korea also submits that there is no explanation by the 
USDOC as to why the T-T comparison methodology cannot take into account appropriately the 
pattern of significantly differing prices.  
7.59.  According to the United States
112, the "explanation clause" requires a reasoned and 
adequate statement by the investigating authority that makes clear or intelligible or gives details 
of the reason that it is not possible in the dumping calculation or computation to deal or reckon with export prices which differ significantly in a manner that is proper, fitting, or suitable using one of the normal comparison methodologies set fort h in the first sentence of Article 2.4.2. The 
United States suggests that a relatively brief and not particularly detailed explanation may suffice 
when, for example, it is readily apparent from a comparison of the results of the application of one of the normal comparison methodologies and the results of the application of the alternative 
comparison methodology that using one of the no rmal comparison methodologies would lead to 
the "masking" of dumping to a material or meanin gful degree. The United States asserts that the 
difference between applying the W-W and W-T comparison methodologies was meaningful in the 
Washers  anti-dumping investigation in the sense that it was relatively large and, in the case of 
Samsung, the difference resulted in a change from a determination of no dumping to an affirmative determination of dumping. 
7.60.  The United States disagrees with Korea' s argument that the explanation should include 
some qualitative assessment of the reasons for th e relevant price differences. The United States 
does not consider that the explanation need have any connection to the issues of "pattern" and "significance". The United States does not consider that the term "appropriately" introduces any 
such qualitative assessment into the pattern clause.
113 The United States also rejects Korea's 
argument that because it is in the very nature of the W-W comparison methodology that, through the use of averaging, it will "conceal" the differenc es between individual prices, it logically follows 
that this inherent aspect of the W-W comparison methodology itself cannot provide the required 
"explanation" as to why that methodology cannot take into account the pattern of lower priced sales found to exist. The United States recalls that the Appellate Body has stated that the second sentence of Article 2.4.2 allows the use of the W-T comparison methodology to "unmask targeted 
dumping".
114 The United States asserts that it is therefore logical for an investigating authority, in 
providing the requisite explanation, to examine th e extent to which dumping would be masked by 
                                               
111 Korea's response to Panel question No. 2.12, para. 99. 
112 The main arguments of the United States are set forth at paras. 100-144 of its first written 
submission. 
113 United States' second written submission, para. 75. 
114 Appellate Body Report, US – Zeroing (Japan) , para. 135. WT/DS464/R 
 
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  one of the normal comparison methodologies.115 The United States contends that while it is 
inherent in the W-W comparison methodology that differences between individual prices may be concealed, it will not necessarily always be the ca se that "targeted dumping" will be "masked" by 
this "very nature" of that comparison methodology such that the W-W comparison methodology 
cannot account for such differences appropriately. The United States suggests, for example, that 
differing export prices may all be above normal value, so that both the W-W and W-T comparison methodologies would lead to a finding of no dump ing. Alternatively, the United States suggests 
that it may be the case that all of the export prices are below normal value, and thus no "masking" 
of dumping is occurring, and the weighted aver age dumping margin calculated under both the 
W-W and W-T comparison methodologies would be the same. The United States suggests that, apart from these two cases, it may also be the case that the amount of "masking" or the amount 
of dumping found is relatively small. The United States contends that when there is a pattern of 
export prices that differ significantly, and the ex port prices that are lower are below normal value 
while the export prices that are higher are ab ove normal value, the "inherent aspect of the 
[average-to-average] comparison methodology itself" does indeed "provide the required 
'explanation' as to why that methodology cannot take into account the pattern of lower priced sales found to exist".
116 The United States submits that it is unclear what, other than this "inherent 
aspect" of the W-W comparison methodology,  would provide the requisite explanation. 
7.61.  The United States does not disagree with Korea's assertion that the comparison undertaken 
by the USDOC is a measure of the impact of zeroing on the calculation of the dumping margins under those two methodologies, when applied to al l of an exporter's sales, not merely to those 
found to constitute a pattern of significantly difference prices. The United States submits that this 
is an acknowledgement by Korea that the results of the comparisons would be mathematically equivalent without zeroing under the W-T comparison methodology. 
7.62.  The United States disagrees with Korea's argument that the USDOC should also have 
explained why the T-T comparison methodology could not "take into account appropriately the pattern of significantly different prices". The United  States refers to the Appellate Body's statement 
in US – Softwood Lumber V (Article 21.5 - Canada) that the W-W and T-T comparison 
methodologies "fulfil the same function", and are "equivalent in the sense that Article 2.4.2 does 
not establish a hierarchy between the two".
117 The United States also refers to the Appellate 
Body's statement in that case that it would be  illogical if these two comparison methodologies 
were to yield "results that are systematically different". The United States contends that, logically, 
if the W-W and T-T comparison methodologies yield systematically similar results, then there would be no purpose in requiring an investigatin g authority to explain why a pattern of export 
prices that differ significantly cannot be taken into account appropriately by the T-T comparison 
methodology, when the investigating authority already has explained why the pattern of export prices that differ significantly cannot be taken into account appropriately by the W-W comparison 
methodology. The United States also observes the Appellate Body's statement 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."
118 
The United States asserts that a T-T comparison methodology may be particularly unsuitable, and 
could be quite burdensome, when there are a large number of sales transactions in both the home 
market and the export market. The United States asserts that nothing in the first sentence of 
Article 2.4.2 requires an investigating authority to apply both comparison methodologies in the 
course of a single anti-dumping investigation. The United States contends that the initial choice 
between the W-W and T-T comparison methodologies is  reflected in the use of the word "or" in the 
explanation clause. 
7.3.4.3  Main arguments of third parties119 
7.63.  Brazil argues120 that if the investigating authority proceeds to use the W-T comparison 
methodology, there must be other reasons to ha ve recourse to this method beyond purely 
mathematical differences in the amount of dump ing, which are the consequence of the intrinsic 
                                               
115 United States' second written submission, para. 81. 
116 United States' first written submission, para. 133. 
117 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , para. 93. 
118 Ibid. 
119 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
120 Brazil's third party submission, paras. 25-27. WT/DS464/R 
 
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  characteristics and of the operation of each of th e methods. Brazil understands that investigating 
authorities have an obligation to give details on why the regular tools already afforded to them by 
the Anti-Dumping Agreement were not sufficient to enable the use of one of the symmetrical 
methods.  
7.64.  Canada asserts121 that the United States does not explain its recourse to the W-T 
comparison methodology. Canada contends that instead it compares the dumping margins that 
would be obtained by using the W-W comparison methodology to those that would be obtained by 
using the W-T comparison methodology. This "meaningful difference test" only demonstrates that 
using the two methodologies yields a different result, not that the difference in export prices cannot be taken into account by one of the symmetrical methodologies.  
7.65.  In China's view
122, the requirement of an explanation under Article 2.4.2 is a crucial 
discipline upon use of the exceptional W-T comp arison methodology. China submits that the 
explanation must have genuine explanatory value, making it clear "why" relevant "differences cannot be taken into account appropriately" using a symmetrical comparison methodology.
123 
China notes that the explanation provided by the USDOC in the Washers  anti-dumping 
investigation was incomplete: it centres on the idea that averaging somehow "conceals" targeted dumping, providing no analysis as to why the aver aging of prices has this effect. Rather, USDOC's 
reference to averaging resurrects the US assertio n – repeatedly rejected in WTO zeroing cases – 
that dumping may be understood as a transaction-specific  concept, meaning that average  values 
including all transactions are to be avoided in favour of "denying offsets"  (zeroing) where specific 
export transaction prices exceed normal value. China also believes that the USDOC has failed to 
address the T-T comparison methodology. China asse rts that under Article 2.4.2, an investigating 
authority must provide an explanation "as to why [the relevant] differences cannot be taken into account appropriately by use of a weighted average-to-weighted average or transaction-to-
transaction comparison". The use of the disjunctive "or" in this phrase signals that both 
methodologies must be considered and reject ed, because if one of these methodologies can "take 
into account appropriately" the relevant pricing pattern, then the conditions for use of the 
exceptional W-T comparison methodology are not met. This is confirmed by the fact that the 
symmetrical methodologies "shall normally" be used. In China's view, there are cases in which the T-T comparison methodology could appropriately ta ke into account a relevant pricing pattern. For 
instance, in a case involving allegations of significant differences in pricing among time periods , 
the T-T comparison methodology may appropriately take those differences into account because it 
is the methodology that gives most particular effect to the requirement under Article 2.4 that comparisons of export price and normal value are "made at as nearly as possible the same time". 
In this way, the T-T comparison methodology may have utility in dealing with seasonal price 
variations in a manner that ensures a "fair comparison".  
7.66.  The European Union refers
124 to the examples set by Korea to illustrate why the use of the 
W-T comparison methodology would be inappropriate to conclude that they do not explain nor 
demonstrate their argument. Insofar as Korea is arguing that the explanation must extend to the reasons it refers to in its submission, the European Union agrees with the United States that the Panel should reject that claim. Specifically, with respect to Korea's first example of seasonal prices, 
Korea does not explain or demonstrate that the patterns of export prices found to exist in the 
measure at issue are the result of seasonal pricing. Nor does Korea explain and demonstrate that they are the result of discounting during key holiday seasons (Korea's second example). With 
respect to Korea's third example (quantities), the European Union observes that this is one of the 
differences that Article 2.4 expressly requires must be given due allowance, and yet Korea does not appear to be developing any claim or argument with respect to that specific obligation. Finally, 
with respect to Korea's fourth example, the Euro pean Union notes that Korea does not explain or 
demonstrate that the patterns of export prices foun d to exist in the measure at issue are the result 
of changes in costs of production. However, the European Union agrees with Korea that the explanations in the measure at issue make no reference to the possible use of the T-T comparison 
methodology. The European Union submits that th e consistency of the measure at issue with the 
final sentence of Article 2.4.2 of the Anti-Dumping  Agreement should be assessed in that light.  
                                               
121 Canada's third party su bmission, paras. 28-30. 
122 China's third party submission, paras. 28-35. 
123 Ibid. para. 33 (citing Appellate Body Report, US – Zeroing (Japan) , para. 131). 
124 European Union's third part y submission, paras. 53-55. WT/DS464/R 
 
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  7.67.  Japan agrees with Korea125 that the meaning of "explanation" and "why" in the second 
sentence of Article 2.4.2 must be interpreted to mean that an investigating authority must provide 
clear and detailed reasons for or the purpose of the inability or impossibility to take into account appropriately a pattern of significantly differen t export prices by the use of a W-W or T-T 
comparison. Japan asserts that the United States' argument renders the "explanation" requirement 
of the second sentence of Article 2.4.2 practically ineffective as it is obvious that the calculation 
results of the W-T comparison methodology and of  the W-W comparison methodology will differ if 
one allows zeroing for the former and prohibits it for the latter. Japan considers that the 
"explanation" is also insufficient for the purposes  of the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement as it merely rests on a difference in dumping margins achieved by the W-W or W-T comparison methodologies, without making clear or giving details of the reasons or 
purposes of the inability or impossibility to take into account appropriately a pattern of significantly 
different export prices among the three types of category, i.e. purchasers, regions or time periods, by the use of the W-W comparison methodology. Japan considers that the USDOC's mechanical 
methodology for finding a "pattern" does not allow any assessment whether the export prices 
within the "pattern" deviate from the normal pricing behaviour. Japan sees no inherent "appropriate" reason to distinguish an exporter's pricing with respect to a certain limited universe 
of the market of the importing country that is a mere reaction to the market situation of the 
importing country from its pricing with respect to the rest of the same market, which is also a mere reaction to the market situation. In such a scenario, variations seen in export prices do not pertain to exporters' behaviour to mask dumping,  and therefore, Japan sees no reason why such 
price differences could not be taken into account appropriately by W-W or T-T comparisons.  
7.68.  Turkey understands
126 that the explanation of why normal methodologies cannot be used 
should be in such a context that it should not deprive the interested parties from using their right 
of presenting evidence they consider relevant in respect of the question. Thus, Turkey asserts that 
the base of the test controlling the adequacy of  the explanation should be Article 6.1 of the 
Anti-Dumping Agreement. 
7.69.  Viet Nam argues127 that the United States' practice reduces to an empty formality the 
requirement to provide an "explanation" as to why the two "normally" applicable methodologies cannot be used. Viet Nam supports its argument with three reasons: first, the United States fails to provide any explanation with respect to the T-T comparison methodology. Second, the 
explanation that the W-W comparison methodology "conceals" certain price differences is, as 
Korea argues, merely a description of what any averaging process entails by its very essence. Finally, saying that the W-T comparison methodology with zeroing yields a higher margin than the 
W-W comparison methodology without zeroing is not an explanation why price differences "cannot 
be taken into account appropriately" by the W-W comparison methodology. When zeroing is applied the margins of dumping will always be high er than if zeroing is not applied because of the 
absence of any offset for the margin by which export prices exceed normal value. Recourse to the 
third methodology cannot be driven, or justified, by the fact that the application of zeroing will always result in the highest possible dumping margin. Viet Nam concludes that nothing in Article 2.4.2 supports such an interpretation. 
7.3.4.4  Evaluation by the Panel 
7.70.  The explanation clause in the second sentence  of Article 2.4.2 requires an explanation as to 
why the significant price differences cannot be taken into account appropriately by the use of the 
W-W or T-T comparison methodologies. We must consider whether the USDOC complied with that 
requirement when it determined in the Washers anti-dumping investigation that the relevant 
export price differences could not be taken into  account "appropriately" by the W-W comparison 
methodology because (a) the averaging in that me thodology conceals price differences and (b) the 
margin of dumping calculated using that methodology was "'materially' or 'meaningfully'"
128 lower 
than the margin calculated using the W-T comparison methodology. We must also consider whether the USDOC was required to provide an ex planation in respect of both the W-W and the 
                                               
125 Japan's third party submission, paras. 57-64. 
126 Turkey's third party statement, para. 9. 
127 Viet Nam's third party statement, para. 18. 
128 We note that the USDOC used inconsistent terminology in the Washers  anti-dumping investigation: 
"material difference" in the preliminary determination and "meaningful difference" in the final determination. The USDOC did not define or explain the meaning of the terms "material" or "meaningful". WT/DS464/R 
 
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  T-T comparison methodologies, or whether it was sufficient to provide an explanation only in 
respect of the W-W comparison methodology.  
7.3.4.4.1  The assessment of appropriateness 7.71.  Although the second sentence of Article 2.4.2 provides that the W-T comparison 
methodology can only be applied when the authority explains that the W-W or T-T comparison 
methodologies cannot take "appropriate" account of the relevant price differences, the text of the second sentence does not provide any guidance for determining "appropriateness" in this context. 
In considering the ordinary meaning of the term  "appropriately", we observe that both parties
129 
rely on the statement by the Appellate Body in US – Anti-Dumping and Countervailing Duties 
(China) that: 
[R]elevant dictionary definitions of the term "appropriate" include "proper", "fitting" 
and "specially suitable ( for, to )". These definitions suggest that what is "appropriate" 
is not an autonomous or absolute standard, but rather something that must be assessed by reference or in relation to something else. They suggest some core norm 
— "proper", "fitting", "suitable" — and at the same time adaptation to particular 
circumstances.
130 (footnote omitted) 
We shall be guided by the Appellate Body's under standing of the ordinary meaning of the term 
"appropriate" in evaluating Korea's claim. We note in particular that the term "appropriately" 
should not be understood to suggest any autonomous or absolute standard, but rather suggests that the potential application of the W-W or T- T comparison methodology should be assessed by 
reference or in relation to something else, with proper consideration of attendant factual 
circumstances. 
7.72.  The second sentence of Article 2.4.2 does  not explicitly identify any reference point for 
assessing appropriateness. It is therefore reason able to refer to the object and purpose of the 
second sentence in this context. As explained elsewhere in this Report
131, the object and purpose 
of the second sentence concerns the unmasking of targeted dumping.132 We have also observed, 
with reference to the findings of the Appellate Body in US – Zeroing (Japan) , that the existence of 
a pattern of export prices which differ significan tly among different purchasers, regions or time 
periods is indicative of targeted dumping.133 Since the use of either the W-W or T-T comparison 
methodology may result in that targeted dumping being hidden134, it is appropriate for an 
authority to use the W-T comparison methodology in  order to avoid it being hidden. However, this 
does not mean that the W-T comparison methodology may be applied simply because of the 
existence of a pattern of export prices which differ significantly among different purchasers, 
regions or time periods. If this were the case , there would have been no need to include the 
explanation clause in the second sentence of Article 2.4.2. 
7.73.  In our view, the explanation clause is needed because there may be factors other than 
targeted dumping that may cause export prices to differ – even significantly – among different 
purchasers, regions or time periods.135 Price differences caused by factors other than targeted 
dumping may "normally" be taken into account appropriately by one of the "normal" comparison methodologies provided for in the first sentence of Article 2.4.2. Bearing in mind the object and 
                                               
129 United States' first written submission, para. 108; Korea's response to Panel question No. 2.14, 
para. 97. 
130 Appellate Body, US – Anti-Dumping and Countervailing Duties (China) , para. 552 (citing Shorter 
Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 106). 
131 See para. 7.26.  above. 
132 Appellate Body Report, EC – Bed Linen , para. 62. We recall that the Appellate Body explained in EC – 
Bed Linen  that the phrase "targeted dumpin g" refers to "dumping that is targeted to certain purchasers, 
targeted to certain regions, or targeted to certain time  periods". We agree that dumping must be "targeted" by 
the exporter in order to constitute "targeted dumping". 
133 See para. 7.27.  above. 
134 Korea's second written submission, para. 27. We no te that Korea acknowledges that "possible hidden 
dumping [may be] masked by the use of averages in the W-W comparisons". 
135 There is no disagreement between the parties on this issue. The United States asserts that "[t]here 
could be many reasons that would explain why export pr ices might differ among different purchasers, regions, 
or time periods" (United States' resp onse to Panel question No. 4.17, para . 57). Korea asserts that "[t]here are 
many reasons for price differences" (Korea's re sponse to Panel question No. 4.17, para. 83). WT/DS464/R 
 
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  purpose of the second sentence, the use of the W-T comparison methodology should be reserved 
for exceptional136cases where it is necessary to unmask a pattern of significant price differences 
that constitute targeted dumping. A pattern of  export prices which di ffer significantly among 
purchasers, regions or time periods is merely indicative of targeted dumping. It is not 
determinative of targeted dumping. Thus, even af ter establishing the existence of a pattern, an 
investigating authority must still analyse the prevailing factual circumstances in order to consider the possibility that something other than targeted  dumping is responsible for these relevant price 
differences. The authority's analysis of the prevailing factual circumstances must then be 
explained, before the authority is entitled to  depart from one of the normal comparison 
methodologies provided for in the first sentence of Article 2.4.2. 
7.74.  The USDOC referred to the averaging effect of the W-W comparison methodology as a 
reason why use of that methodology was not appropriate in the Washers  anti-dumping 
investigation. We disagree, for it is in the very nature of the W-W comparison methodology that, through the use of averaging, it will "conceal" the differences between individual export prices. 
Notwithstanding this inherent aspect of the W-W comparison methodology, and notwithstanding 
the prevalence of export price differentials, the first sentence provides that the W-W comparison 
methodology shall normally be used. Accordingly,  we do not consider that the masking effect 
inherent in the W-W comparison methodology itself provides an "explanation" as to why that 
methodology cannot take into account the relevant pattern of price differences.  
7.75.  The United States asserts that the USDOC pr operly took into account the particular factual 
circumstances of the Washers  anti-dumping investigation when it compared the margin of 
dumping calculated using the W-W comparison methodology with the margin of dumping 
calculated using the W-T comparison methodology. The United States asserts that this revealed the amount of dumping that would be masked by use of a normal comparison methodology, 
consistent with the object and purpose of the second sentence.
137 We disagree that an authority is 
entitled to only consider such difference in margin, since the use of the second sentence may result in a higher margin of dumping even in cases where the pattern of significantly differing 
export prices has nothing to do with targetin g conduct by the exporter. For example, take a 
hypothetical scenario in which both domestic an d export prices are $20 at the beginning of the 
period of investigation and fall to $10 during the last one of that period as a result of a decline in costs. Under the W-W comparison methodology, th e average price in both markets would be $15, 
and there would be no dumping. Under the second sentence, assuming the export transactions 
during the last month of the period of investigation were found to constitute "a pattern of export prices which differ significantly among different … time periods", the $10 export price at the end of 
the period of investigation would be compared with the $15 average domestic price over the entire 
period, thereby increasing the likelihood of a find ing of dumping. We do not consider that the use 
of the W-T comparison methodology would be appropriate in this hypothetical scenario, even 
though there will be an increase in the margin of dumping resulting from application of the W-T 
comparison methodology, since an objective assessment of the facts suggests that the drop in export price at the end of the period of investigat ion – which occurs at the same time as a similar 
drop in domestic price – is a reflection of the drop in costs, rather than targeted dumping. Bearing 
in mind the object and purpose of the second sent ence, there is no reason why one of the normal 
comparison methodologies could not take appropriate account of these price differences.  
7.76.  The appropriateness standard set forth in the explanation clause requires an authority to 
examine these factual circumstances, in order to  avoid the second sentence being applied in 
factual circumstances that have nothing to do with targeted dumping. The United States accepts that "if the evidence were to show that prices in  both the domestic market and the export market 
dropped at nearly the same time and in nearly the same amount, and there was a causal 
relationship connecting the price decline with the cost decline, that could lead an investigating authority to conclude that one of the 'normal' comparison methodologies could take into account the observed 'pattern' of export prices 'appropriately'".
138 This statement suggests that the 
United States acknowledges the need for an in vestigating authority to examine the attendant 
factual circumstances "presented by the interested parties"139 in order to avoid the second 
                                               
136 See Appellate Body Reports, US – Softwood Lumber V (Article 21.5 – Canada) , paras. 86 and 97; 
and US – Zeroing (Japan) , para. 131. 
137 United States' second written submission, para. 81. 
138 United States' response to Pa nel question No. 4.3, para. 22. 
139 Ibid. WT/DS464/R 
 
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  sentence being applied in factual circumstances that have nothing to do with targeted dumping. In 
the Washers anti-dumping  investigation , the USDOC failed to consider whether the factual 
circumstances surrounding the relevant price differences were suggestive of something other than targeted dumping. The USDOC instead focused on the difference between the margin of dumping 
calculated using the W-W comparison methodology and the margin calculated using the 
W-T comparison methodology.
140 
7.77.  For the above reasons, we find that the USDOC acted inconsistently with the explanation 
clause of the second sentence of Article 2.4.2 in the Washers  anti-dumping investigation. We 
emphasise that we are not finding that the factual circumstances of the Washers  anti-dumping 
investigation indicate that the relevant price differences were caused by something other than targeted dumping. We are simply finding that the USDOC's failure to consider this possibility is 
inconsistent with the requirements of the explanation clause. 
7.3.4.4.2  Whether it is necessary to address both the W-W and T-T comparison 
methodologies 
7.78.  Korea submits that the USDOC acted incons istently with the explanation clause 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. Korea observes that 
the USDOC only provided an explanation in respect of the W-W comparison methodology. 
7.79.  Beginning with the text of the explanation clause, we note that an explanation is required of 
why "a" W-W "or" T-T "comparison" cannot take into account appropriately the relevant price differences. The indefinite Article ("a") combined with the disjunctive ("or"), coupled with the use 
of the term "comparison" in the singular, together  suggest that the requisite explanation need only 
be provided in respect of one type of comparison, be it W-W "or" T-T. 
7.80.  Furthermore, considering the broader contex t of the explanation clause, we note that the 
Appellate Body has found 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."
141 The 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, in light of, for example,  the number of domestic and export transactions 
involved, differences between the domestic and ex port models, and other factors concerning the 
complexity of the comparison. If an authority we re to opt for the W-W comparison methodology to 
avoid an overly burdensome comparison process, but then ascertain the existence of significant 
price differences by purchaser, region or time period, it would seem anomalous for that authority to then have to incur the burden of reverting to  the T-T comparison methodology in the context of 
the explanation clause, before being able to apply the W-T comparison methodology. Korea 
contends that "[t]he authority has discretion to choose between them in the first instance, but then must again consider both comparison methods before turning to a W-T comparison as the 
exceptional method".
142 We disagree with the latter part of Korea's contention, since the initial 
discretion of an investigating authority to choose between the W-W and T-T comparison methodologies would be undermined by Korea's approach to the explanation clause.  
7.81.  Accordingly, we reject Korea's claim that the USDOC acted inconsistently with the 
explanation clause by failing to explain why the relevant price differences could not be taken into 
account appropriately by the T-T comparison methodology. 
                                               
140 See Letter from Warren Connelly to Ms Rebecca M. Blank regardin g Antidumping Duty Investigation 
on Large Residential Washers from the Republic of Kore a: Opposition of Samsung to Whirlpool's Targeted 
Dumping Allegation (July, 2012), (Exhibit KOR-68); and Un ited States Department of Commerce, Case Brief of 
LG Electronics, Inc. and LG Electronics USA, Inc,  Investigation No. A-580-868 (2012), (Exhibit KOR-83). The 
USDOC's application of the explanation clause was rest ricted to a statement that the averaging in that 
methodology conceals price differences, and a finding that the margin of dumping calculated using that 
methodology was lower than the margin calculated us ing the W-T comparison methodology. The USDOC failed 
to address in this context the respondents' denial s that they were engaged in targeted dumping. 
141 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , para. 93. 
142 Korea's response to Panel qu estion No. 2.16(i), para. 113. WT/DS464/R 
 
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  7.3.5  Additional issues concerning the USDOC's application of the W-T comparison 
methodology in the Washers anti-dumping investigation 
7.82.  At paragraph 102 of its second written submission, Korea asserts that the USDOC acted 
inconsistently with the second sentence of Article 2.4.2 in the Washers  anti-dumping investigation 
by "calculat[ing] standard deviations based on av erage export prices, not the actual 'export prices' 
themselves". At paragraph 103 of its second written submission, Korea alleges an inconsistency regarding the USDOC's use of allegedly biased standard deviations based on average, rather than 
actual, prices. At paragraphs 111 to 117 of its second written submission, Korea refers to an 
alleged inconsistency regarding the "sufficiency test" allegedly applied by USDOC in the Washers  
anti-dumping investigation. These alleged inconsistencies were not included in Korea's first written submission, even though paragraph 6 of the Pane l's Working Procedures provides that "[b]efore 
the first substantive meeting of the Panel with the parties, each party shall submit a written 
submission in which it presents the facts of the case and its arguments". As a result, we must consider the appropriateness of making findings in respect of these allegations. 
7.83.  Korea contends that the abovementioned allegations of inconsistency pertain to a claim 
articulated in its first written submission that "the USDOC improperly finds a 'pattern' based on unreasonable mechanical rules".
143 Korea refers in this regard to paragraphs 127 and 349 of its 
first written submission. We find no reference to any such claim in those parts of Korea's first 
written submission. Instead, both of those paragraphs refer in relevant part to a claim that "USDOC applies fixed numerical criteria" to determine whether there is a pattern, and "categorically rejects the relevance … of the commercial context". Korea's Request for 
Establishment of a panel identifies two separate claims that are relevant to the present discussion. 
First, Korea claims that "[t]he failure of the USDOC to consider legitimate commercial reasons and market explanations for any patterns of differing pric es is clearly inconsistent with the meanings of 
'pattern' and 'differ significantly'".
144 Second, Korea claims that "[t]he mechanical rules used by 
the USDOC to define 'patterns' of differing prices that 'differ significantly' are statistically unsound and produce economically irrational results".
145 We are in no doubt that the first claim is the one 
referenced in relevant part at paragraphs 127 and 349 of Korea's first written submission, 
concerning the relevance of the "commercial context". This is also the claim that we have addressed in section 7.3.3  above. There is no reference to the second claim (concerning "statistically unsound" and "unreasonable mechanical rules" that "produce economically irrational 
results") anywhere in Korea's first written submission, nor any indication of any arguments that 
might support such claim. Thus, although the second claim is covered by the Panel's terms of reference (as defined by Korea's Request for Establishment of a panel), Korea failed to pursue that 
claim in its first written submission.
146 
7.84.  Furthermore, even if the relevant allegations could somehow be treated as arguments 
pertaining to the claim that was pursued in Korea's first written submission (concerning the 
USDOC's failure to consider the "commercial context"), there is no doubt that such arguments 
were not included in Korea's first written submission, contrary to the requirement of paragraph 6 of the Panel's Working Procedures. Korea contends that the relevant allegations could not have been included in its first written submission be cause they rebut arguments made subsequently by 
the United States.
147 Concerning the allegations of WTO-inconsistency in respect of the USDOC's 
use of standard deviations and average export prices, Korea contends that these allegations 
respond to the United States' assertion that the USDOC had applied the Nails II methodology "as a 
rigorous and holistic analysis".148 Regarding the sufficiency test, Korea contends that the Panel 
should address this argument because the issue of the sufficiency test was raised by the 
                                               
143 Korea's response to Panel qu estion No. 4.21(i), para. 144. 
144 Document WT/DS464/4, Section III.3. 
145 Ibid. Section III.4. 
146 Korea's second written submission, para. 101. We  also observe that Korea introduced a number of 
"respects" in which the USDOC allegedly violated the pattern clause. The first two "respects" concern the standard deviation and use of average export price issues (see Korea's second written submission, paras. 102 and 103). The third "respect" refers to the USDOC's fa ilure to "consider the reas ons for price differences" 
(Korea's second written submission, para. 104). This th ird element concerns the first claim described above, 
regarding the relevance of the "comme rcial context". This structure of Korea's second written submission 
confirms our understanding that the relevant allegations of WTO-inconsistency do not pertain to the first claim 
outlined above. 
147 Korea's response to Panel question No. 4.21(ii), paras. 147 and 151. 
148 Ibid. para. 147 (referring to United States' first written submission, para. 96). WT/DS464/R 
 
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  United States as a rebuttal to Korea's argu ment about the USDOC's application of the Nails II  
methodology in the Washers anti-dumping investigation.149 Korea refers in this regard to the 
United States' response to Panel question No. 2.2, in which the United States asserted that "the USDOC considers, on a case by case basis, wh ether the volume of export sales which pass the 
Nails II methodology constitutes a sufficient volume of sales as compared to all sales made by the 
exporter during the period of investigation".
150 
7.85.  We accept that rebuttal arguments need not be included in a party's first written 
submission. In our view, though, the relevant allegations of WTO-inconsistency are more 
realistically treated as arguments in support of the second claim outlined above (concerning "statistically unsound" and "unreasonable mechanical rules" that "produce economically irrational results") than as arguments rebutting arguments made by the United States in defence of the 
first claim outlined above (concerning the re levance of the "commercial context"). The 
subject-matter of the relevant arguments relates far more closely to Korea's statistical claim than to Korea's "commercial context" claim. Furthermore, we would not normally expect rebuttal 
arguments to form the basis for specific allegations of WTO-inconsistency, as is the case with the 
allegations of WTO-inconsistency at issue.
151 
7.86.  In any event, it is well established that panels are not required to address all arguments 
made by the parties.152 We do not consider it necessary to address the United States' general 
assertion that the USDOC conducted a "rigorous and holistic analysis" in applying the Nails II 
methodology in resolving Korea's claim that the USDOC failed to consider the "commercial context" in establishing the existence of a pattern of transactions. The United States' assertion is 
very general and therefore not relevant to our evalua tion of Korea's claim. Accordingly, there is no 
need for us to address Korea's alleged rebutta l of the United States' general assertion. 
7.87.  The same is true for the sufficiency issue. The United States' assertion regarding the 
USDOC's application of a sufficiency test was part of the United States' response to a request by 
the Panel to explain how it had determined the existence of a pattern in the Washers  anti-dumping 
investigation. We do not consider it necessary to consider the United States' explanation regarding 
the USDOC's application of a sufficiency test in ev aluating Korea's claim that the USDOC failed to 
consider the "commercial context" in establishing the existence of a pattern of transactions.
153 For 
this reason, it is not necessary for us to address Korea's alleged rebuttal of this explanation. 
7.88.  For the above reasons, we decline to make any findings regarding the abovementioned 
allegations of WTO-inconsistency set forth in paragraphs 102, 103 and 111-117 of Korea's second 
written submission. 
7.4   Claims concerning the DPM 
7.89.  We now consider Korea's claims concerning the DPM, which has replaced the Nails II  
methodology since the Xanthan Gum  anti-dumping investigation in March 2013.154 Korea 
challenges the DPM both "as such", and "as applied" in the first administrative review of the 
Washers  anti-dumping order.155 To the extent that the same three alleged errors concerning the 
                                               
149 Korea's response to Panel question No. 4.21(ii), para. 146. 
150 United States' response to Pa nel question No. 2.2, para. 27. 
151 Korea's second written submission, introductory  statement, para. 101. Regarding the standard 
deviation and use of average export price issues, Korea id entified these as two specific inconsistencies with the 
"pattern" clause that the USDOC "acted inconsistently with the 'pattern' clause in the following specific respects". Regarding the sufficiency issu e, Korea asserted that "[a]n implicit finding of an unexplained test is 
not enough to satisfy the obligations of the second sentence of Article 2.4.2" (Korea's second written 
submission, para. 116). Furthermore, the relevant sub-sect ion of Korea's second written submission is entitled 
"Inconsistencies in the Washers  original investigation" (Korea's second written submission, Section III.A.5). 
152 See, for example, Appellate Body Report, US – Carbon Steel , para. 4.233. 
153 Korea's response to Panel question No. 4.21(ii), para. 146. Korea suggests that the issue of the 
USDOC's sufficiency test pertains to the "reasonable[ness]" of the Nails II methodology. However, there is no 
claim concerning the reasonableness of the Nails II methodology in these proceedings. 
154 Less Than Fair Value Investigation of Xanthan 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. (Mar ch 4, 2013) (Xanthan Gum I&D Memorandum), 
(Exhibit KOR-33). 
155 Korea's opening statement at the first meeting of  the Panel, para. 46; Korea's response to Panel 
question No. 1.3, para. 19; Korea's second written submission, para. 73. WT/DS464/R 
 
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  Nails II  methodology applied in the Washers anti-dumping investigation are repeated in the 
application of the DPM in subsequent connected reviews, Korea also challenges them as ongoing conduct.
156 Korea indicates that the key point of its multiple challenges is to establish the 
WTO-inconsistency of the DPM as the underlying measure.157 Korea indicates that its preference is 
for the Panel to address its claims concerning the DPM "as such".158 
7.90.  The United States disagrees that the DPM is a measure that may be challenged "as such".159 
The United States further argues that even if the DPM may be challenged "as such", it cannot be 
found to be inconsistent with Article 2.4.2 "as such" because it does not necessarily result in a 
breach of Article 2.4.2.160 The United States asserts that the DPM cannot be challenged "as 
applied" in the present case, because the first administrative review of the Washers  anti-dumping 
order has not yet been finalised, and it is not within the Panel's terms of reference.161 As regards 
Korea's ongoing conduct claim, the United Stat es argues that the purported ongoing conduct 
measure is not within the Panel's terms of reference, as it consists of an indeterminate number of future anti-dumping measures for which no final action had been taken at the time of Korea's 
panel request.
162 Moreover, the United States asserts that the facts in this dispute do not support 
the conclusion that the challenged practices "would likely continue to be applied in successive proceedings."
163  
7.91.  We will first address the issue whether the DP M may be challenged "as such". If we find that 
the DPM may be challenged "as such", we will then proceed to examine the substance of Korea's claims regarding that measure. After that, we will address Korea's "as applied" and "ongoing conduct" claims. 
7.4.1  Whether the DPM is a measure that may be challenged "as such" 
7.4.1.1  Main arguments of the parties 7.4.1.1.1  Korea 
7.92.  Korea submits that the DPM is a rule or norm of general and prospective application that 
may be challenged in WTO dispute settlement proceedings. Korea asserts that the USDOC has described the nature of the DPM in writing.
164 Referring to the jurisprudence of the Appellate Body 
in US – Zeroing (EC),  Korea contends that even if the DPM is not considered to be expressed in the 
form of a written document, it may be challenged as an unwritten rule or norm if the complaining Member demonstrates (i) that the alleged "rule or norm" is attributable to the responding Member; (ii) its precise content; and (iii) that it has general and prospective application.
165 Korea asserts 
that there can be no dispute that the DPM is attributable to the United States. Korea also asserts 
that the precise content of the DPM, as refl ected in its systematic application since the Xanthan 
Gum anti-dumping investigation, is invariable.166 Korea asserts that the DPM also constitutes a 
rule or norm of general and prospective application. Korea argues in this regard that, since the 
DPM was first applied in an original investigation on 4 March 2013, and in an administrative review on 22 March 2013, the USDOC now applies it in all newly initiated anti-dumping investigations and 
administrative reviews.
167 Korea provides the Panel with a summary of 138 determinations where 
                                               
156 Korea's first written submission, paras. 180-181. 
157 Korea's second written submission, paras. 200-206; Korea's response to Panel question No. 4.22, 
paras. 153 and 157. 
158 Korea's second written submission, para. 233. 
159 United States' first written submission, paras. 269-319. 
160 Ibid. paras. 282-290. 
161 United States' response to Pane l question 2.3, paras. 33, 35; United States' response to Panel 
question No. 2.8, para. 61; United States' response to Panel question No. 2.18, para. 84; United States' response to Panel question No. 2.21, para. 95; United States' Second written submission, para. 160. 
162 United States' first written submission, para. 323. 
163 Ibid. para. 324, referring to Appellate Body Report, US – Continued Zeroing , para. 191. 
164 Korea's first written submission, para. 184. 
165 Ibid. para. 185. 
166 Ibid. para. 186. 
167 Ibid. para. 187. WT/DS464/R 
 
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  the DPM is applied (Exhibit KOR-95)168, the Generic SAS Code which embodies the DPM 
(Exhibit KOR-24)169, and an "expert opinion" (Exhibit KOR-94) which describes the precise content 
and the general and prospective application of the DPM.170 Korea also asserts that the USDOC has 
made it clear that it will continue using the DPM going forward. According to Korea, the USDOC 
has stated that "[t]he Department is now using a 'differential pricing' analysis instead of the 
targeted dumping analysis"171, and that it has "switched to a differential pricing analysis for 
preliminary results issued after March 4 [of 2013]".172  
7.4.1.1.2  United States 
7.93.  The United States argues that Korea has failed to demonstrate that the DPM exists as a 
measure that may be challenged "as such".173 The United States asserts that the evidence 
adduced by Korea is little more than a "string of cases or repeated action".174 Such evidence 
contrasts sharply with the evidence put forward before the panel in US – Zeroing (EC),  and is 
insufficient to meet the "high threshold" as set out by the Appellate Body in that case .175 The 
United States points out that there exist instances wherein the USDOC has not applied the DPM. 
For example, in the Washers  anti-dumping investigation the Nails II  methodology was applied.176 
Furthermore, the United States argues that the USDOC's Request for Comments shows that the USDOC "is seeking comments to further develop and/ or refine its differential pricing analysis".
177 
The United States adds that the Generic SAS Code submitted by Korea does not support its 
argument that the DPM is a measure consisting of a rule or norm of general and prospective application, because that Code is not permanent or fixed, and may be changed depending on the 
particular situation in a given proceeding.
178 With regards to Korea's summary of the 
138 proceedings where the USDOC used the DPM in order to determine whether to use the 
W-T comparison methodology, the United States argues that the summary does not establish the content of the determinations or that the USDO C applied one and the same DPM in each of the 
138 determinations.
179 In the view of the United States, even if Korea were to provide the Panel 
with actual public documentation pertaining to  the 138 determinations, that would not suffice. 
What is needed is a "close examination of the records of the determinations".180 The United States 
further points out that several elements of Korea's summary are misleading. First, the figure of 
138 proceedings includes 32 preliminary determinat ions where the USDOC has not rendered final 
determinations.181 Second, there are a few cases where the USDOC did not apply the DPM because 
it applied adverse facts available to a respondent, or the USDOC lacked sufficient data to apply the 
DPM.182 The United States asserts that the USDOC is not applying the same DPM in case after 
case.183 Finally, the United States challenges the impart iality of Korea's "expert", on the basis that 
                                               
168 List of USDOC Proceedings Applying Differential Pricing Methodology, (Exhibit KOR-95), has been 
updated until 12 April 2015 by Updated List of USDOC Proceedings Applying Differential Pricing Methodology, (Exhibit KOR-123), which provides an updated list of USDOC determin ations applying the DPM through 
12 April 2015 (see Korea's second written submission, para. 216). 
169 Korea's first written submission, para. 187 (ref erring to Generic SAS Co de, (Exhibit KOR-24)). 
170 Korea's opening statement at the first meetin g of the Panel, para. 38; and second written 
submission, para. 215. 
171 Citric Acid and Certain Citrate Salts from Canada , Preliminary Results of Antidumping Duty 
Administrative Review; 2011-2012, 78 Fed. Reg. 34338 (USDOC June 7, 2013), I&D Memorandum (Citric Acid I&D Memorandum), (Exhibit KOR-52), p. 2. 
172 Fresh Garlic from the People's Republic of China , Final Results of Antidumping Duty Administrative 
Review; 2010-2011, 78 Fed. Reg. 36168 (USDOC June 17, 2013), I&D Memorandum, (Fresh Garlic I&D Memorandum), (Exhibit KOR-54), p. 10. 
173 United States' first written submission, para. 270. 
174 United States' second written submission, para. 150 (citing Appellate Body Report, US – Zeroing 
(EC), para. 204). 
175 United States' first written submission, paras. 270-273. 
176 Ibid. para. 274. 
177 Ibid. para. 278 (quoting from the Differential Pricing Analysis Request for Comments (Request for 
Comments), (Exhibit KOR-25)). 
178 Ibid. paras. 279-281. 
179 United States' response to Panel question No. 2.30, para. 123. 
180 Ibid. para. 123. 
181 Ibid. para. 124. 
182 Ibid. para. 125. 
183 Ibid. para. 123. WT/DS464/R 
 
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  she works for one of the law firms representing Korea in this dispute, and one of the respondents 
in the Washers  proceedings before the USDOC.184 
7.4.1.2  Main arguments of the third parties185 
7.94.  Brazil argues that the distinction be tween "as such" and "as applied" claims was a 
jurisprudential development to facilitate the understanding of the nature of a measure at issue. 
There is no limitation on the types of measures that may be challenged. According to Brazil, the 
criteria set out in US – Zeroing (EC)  must be assessed on a case-by-case basis, taking into 
consideration not only the characteristics and the nature of the measure that is being challenged 
but also the period of time that the measure has been in place.186 Furthermore, recognizing the 
value of "as such" claims in protecting the security and predictability to conduct future trade, Brazil considers it would be important and of systemic relevance to avoid reaching a situation similar to 
what WTO Members faced in the "zeroing " saga until very recently in the WTO.
187 
7.95.  China submits that care is necessary in approaching the novel issues raised by Korea's 
challenges to both the Nails II  methodology and the DPM. China argues that the Panel should be 
mindful not to go beyond the issues that are squarely before it, because elements of these 
methodologies not challenged in this case are, or may well be, the subject of distinct proceedings.
188 
7.96.  The European Union argues that  since the DPM was not applied in the Washers  
anti-dumping investigation, the Panel does not have before it the confidential documents (such as the Programme Log and Output for each exporter ) that would explain pr ecisely what was done. 
The European Union asserts that the Panel is ther efore unable to make findings about either the 
existence or precise content of the DPM.
189  
7.4.1.3  Evaluation by the Panel 7.97.  Korea first claims that the DPM is a rule or norm of general and prospective application, 
which is expressed in the form of a written document.
190 As discussed below, the DPM has been 
described by USDOC in a series of documents. However, Korea has not identified a single document which establishes, normatively, the cont ent of the DPM, that the DPM is the means for 
applying the second sentence of Article 2.4.2, or that the DPM must be applied in all anti-dumping 
proceedings. Accordingly, we do not consider that the DPM may be considered as a rule or norm expressed in the form of a written document. Korea asserts that, even if the DPM is considered not 
to be expressed in the form of a written document, it still can be challenged "as such". In US – 
Zeroing (EC) , the Appellate Body stated that rules or norms may be challenged "as such" even if 
they are not expressed in the form of a written instrument.
191 The Appellate Body cautioned that, 
when a challenge is brought against a rule or norm that is not expressed in the form of a written 
document, "the very existence of the challenged 'rule or norm' may be uncertain", and its 
existence shall not be lightly assumed.192 The Appellate Body articulated the following legal 
standard for assessing whether a complainant has proven the existence of an unwritten rule or 
norm of general and prospective application: 
In our view, when bringing a challenge against such a "rule or norm" that constitutes 
a measure of general and prospective application, a complaining party must clearly establish, through arguments and supporting evidence, at least that the alleged "rule 
or norm" is attributable to the responding Member; its precise content; and indeed, 
that it does have general and prospective application. It is only if the complaining party meets this high threshold, and puts fo rward sufficient evidence with respect to 
each of these elements, that a panel would be in a position to find that the "rule or 
                                               
184 See United States' second written submission, para. 147. 
185 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
186 Brazil's third party oral statement, para. 12. 
187 Ibid. para. 14. 
188 China's third party submission, para. 5. 
189 European Union's third pa rty submission, para. 60. 
190 Korea's first written submission, para. 184. 
191 Appellate Body Report, US – Zeroing (EC) , para. 193. 
192 Ibid. para. 196. WT/DS464/R 
 
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  norm" may be challenged, as such. This evid ence may include proof of the systematic 
application of the challenged "rule or norm". Particular rigour is required on the part of a panel to support a conclusion as to the existence of a "rule or norm" that is not 
expressed in the form of a written document. A panel must carefully examine the 
concrete instrumentalities that evidence th e existence of the purported "rule or norm" 
in order to conclude that such "rule or norm" can be challenged, as such.
193 
7.98.  This legal standard has been applied by panels considering "as such" challenges in US – 
Zeroing (Japan) , US – Stainless Steel (Mexico) , US – Shrimp (Viet Nam), US – Shrimp 
(Viet Nam II)194, and Argentina – Import Measures.195 This standard was confirmed by the 
Appellate Body in Argentina – Import Measures .196 Accordingly, in assessing whether the evidence 
presented by Korea is sufficient to prove the ex istence of the DPM as a measure that can be 
challenged "as such", we will be guided by the legal standard developed by the Appellate Body in 
US – Zeroing (EC) .197 We will consider, in particular, whether Korea has provided sufficient 
evidence to clearly establish (i) that the DPM is "attributable to" the United States, (ii) the precise 
content of the DPM, and (iii) that the DPM has gene ral and prospective application. We will address 
each of these elements in turn. 
7.4.1.3.1  Attribution of the DPM to the United States 
7.99.  Korea asserts that there can be no dispute that the DPM is attributable to the 
United States.198 The United States does not contest this. As will be explained below, the USDOC 
has adopted a deliberate policy of using the DPM to govern the application of the W-T comparison methodology since March 2013. Furthermore, the precise content of the DPM can be ascertained 
on the basis of USDOC documents.
199 Accordingly, we conclude that the DPM is attributable to the 
United States. 
7.4.1.3.2  The precise content of the DPM 
7.100.  Concerning the precise content of the DPM, Korea refers to a number of USDOC 
memoranda pertaining to particular anti-dumping proceedings.200 These memoranda contain 
statements confirming that the USDOC applied the DPM in those proceedings. They also contain a 
detailed description of the nature and conten t of the DPM applied by the USDOC in those 
proceedings. For example, the Post-Preliminary Analysis Memorandum in Xanthan Gum from the 
People's Republic of China describes the DPM in the following terms:  
The differential pricing analysis used in this post-preliminary analysis evaluates all 
purchasers, regions, and time periods to determine whether a pattern of significant 
price differences exists. The analysis incorporates default group definitions for purchasers, regions, time periods, and comparable merchandise. Purchasers are 
based on the customer codes reported by  Fufeng. Regions are defined using the 
reported destination code (i.e. zip code) and are grouped into regions based upon standard definitions published by the U.S. Census Bureau. Time periods are defined by 
the quarter within the period of investigation being examined based upon the reported 
date of sale. For purposes of analyzing sales transactions by customer, region and time period, comparable merchandise is considered using the product control number and any characteristics of the sales, other than purchaser, region and time period, 
that the Department uses in making comparisons between export price (or 
constructed export price) and normal value for the individual dumping margins. 
                                               
193 Appellate Body Report, US – Zeroing (EC) , para. 198. 
194 Panel Reports, US – Zeroing (Japan) , paras. 7.47-7.59; US – Stainless Steel (Mexico) , 
paras. 7.28-7.42 and 7.84-7.97; US – Shrimp (Viet Nam) , paras. 7.110-7.111; and US – Shrimp II  (Viet Nam), 
paras. 7.29-7.56. 
195 Panel Report, Argentina – Import Measures , paras. 6.319-6.342. 
196 Appellate Body Report, Argentina – Import Measures , para. 5.107. 
197 The parties agree that this is the appropriate le gal standard to be applied in the present case. 
198 Korea's first written submission, para. 186. 
199 See Exhibits KOR-24, KOR-25, KOR-33, KOR-67, KOR-52, and KOR-94. 
200 Korea's first written submission, para. 184. See also, Exhibits KOR-33, KOR-52, KOR-54 and 
KOR-67. WT/DS464/R 
 
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  In the first stage of the differential pricing analysis used here, the "Cohen's d test" is 
applied. The Cohen's d test is a generally recognized statistical measure of the extent 
of the difference between the mean of a test group and the mean of a comparison group. First, for comparable  merchandise, the Cohen's d test is applied when the test 
and comparison groups of data each have at least two observations, and when the 
sales quantity for the comparison group account for at least five percent of the total sales quantity of the comparable merchandise. Then, the Cohen's d coefficient is 
calculated to evaluate the extent to which the net prices to a particular purchaser, 
region or time period differ significantly from the net prices of all other sales of comparable merchandise. The extent of these differences can be quantified by one of three fixed thresholds defined by the Cohen's d test: small, medium or large. Of these 
thresholds, the large threshold provides the strongest indication that there is a 
significant difference between the means of the test and comparison groups, while the 
small threshold provides the weakest indication that such a difference exists. The 
difference was considered significant if the calculated Cohen's d coefficient is equal to 
or exceeds the large (i.e. 0.8) threshold.  
Next, a ratio test assesses the extent of the significant price differences for all sales as 
measured by the Cohen's d test. If the value of sales to purchasers, regions, and time 
periods that pass the Cohen's d test account for 66 percent or more of the value of 
total sales, then the identified pattern of ex port prices that differ significantly supports 
the consideration of the application of the average-to-transaction method to all sales 
as an alternative to the average-to-average method. If the value of sales to 
purchasers, regions, and time periods that pass the Cohen's d test accounts for more 
than 33 percent and less than 66 percent of th e value of total sales, then the results 
support consideration of the application of an average-to-transaction method to those 
sales identified as passing the Cohen's d test as an alternative to the average-to-
average method. If 33 percent or less of the value of total sales passes the Cohen's d 
test, then the results of the Cohen's d test do not support consideration of an 
alternative to the average-to-average method.  
If both tests in the first stage (i.e. the Cohen's d test and the ratio test) demonstrate 
the existence of a pattern of export prices  that differ significantly such that an 
alternative comparison method should be considered, then in the second stage of the 
differential pricing analysis, we examine whether using only the average-to-average method can appropriately account for such significant price differences. In considering 
this question, the Department tests whether using an alternative method, based on 
the results of the ratio test described abov e, yields a meaningful difference in the 
weighted-average dumping margin as compared to that resulting from the use of the 
average to- average method only. If the difference between the two calculations is 
meaningful, this demonstrates that the average-to-average method cannot account for price differences such as those observed  in this analysis, and, therefore, an 
alternative method would be appropriate. A difference in the weighted-average 
dumping margins is considered meaningful if 1) there is a 25 percent relative change 
in the weighted-average dumping margin between the average-to-average method and the alternative method, or 2) the resulting weighted-average dumping margin 
moves across the de minimis threshold.
201  
7.101.  The description above clearly identifies three main components of the DPM: (i) the Cohen's 
d test, (ii) the ratio test, and (iii) the "meaningful difference" test. The Cohen's d test considers 
whether price differences exhibited among different purchasers, regions, or time periods are 
significant. The ratio test assesses the extent of the significant price differences for all sales as measured by the Cohen's d test. Finally, the "meaningful difference" test examines whether using 
only the W-W comparison methodology can appropriately account for such significant price 
differences.  
7.102.  The Issues and Decision Memoranda in Citric Acid and Certain Citrate Salts from Canada  
(Exhibit KOR-52), Fresh Garlic from the People's Republic of China  (Exhibit KOR-54) and Xanthan 
                                               
201 Xanthan Gum  Post-Preliminary Analysis Memorandum, (Exhibit KOR-33), pp. 3-5. WT/DS464/R 
 
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  Gum from the People's Republic of China ( Exhibit  KOR-67)202 also describe the nature and content 
of the DPM applied by the USDOC in those proceedings in largely identical terms. The substantive content of the DPM in each of these Issues and Decision memoranda is identical: (i) the Cohen's 
d test, (ii) the ratio test, and (iii) the "meaning ful difference" test. These Issues and Decision 
Memoranda constitute evidence of the precise co ntent of the DPM as applied by the USDOC in 
general.  
7.103.  Korea also refers to the fact that the USDOC sought comments on the DPM in the form of a 
Request for Comments on the DPM (Exhibit KOR-25). Korea asserts that the USDOC's summary of 
the DPM in the Request for Comments establishes the precise content of the DPM as a measure. We agree, for the USDOC's Request for Comments on the DPM describes the application of the 
DPM in terms almost identical to those in the abovementioned Issues and Decision Memoranda, 
referring in particular to (i) the Cohen's d test, (ii) the ratio test, and (iii) the "meaningful 
difference" test.  
7.104.  In addition, Korea provides further details  of the precise content of the DPM through an 
opinion of a practitioner on the USDOC's Generic SAS Code.
203 Korea refers in this regard to an 
affidavit from Ms Anya Naschak204, an International Trade Analyst with the law firm representing 
Korea before this Panel, and formerly an analyst with the USDOC (Exhibit KOR-94).205 In her 
affidavit, Ms Naschak describes in detail how the Generic SAS Code implements the DPM.206 In 
particular, Ms Naschak identifies the following eight separate "steps" in the Generic SAS Code: 
Step 1: Calculate the average weighted mean price for a particular product model (i.e. 
CONNUM) in the tested group (i.e. customer, region or time) (for example, Model 8 
for the first quarter of the year (1Q). 
Step 2: Calculate the average weighted me an price for the remainder of the test 
group (not including those transactions being tested) (that is, for example, the 
average weighted mean price for Model 8 for all other quarters (2Q, 3Q and 4Q). 
Step 3: Calculate the standard deviation for all transactions for the particular model 
(e.g. Model 8) (including those being tested), and also calculate the Cohen's d test for 
all model (CONNUM)-basis (time, customer or region) pricing. 
Step 4: Insert the results of Step 1, Step 2 and Step 3 into Commerce's differential 
pricing test. 
Step 5: Determine all CONNUM-basis pricing that have a Cohen's d result more than 
the absolute value of 0.8 (in other words, mo re than +0.8 or less than -0.8), and then 
flag all individual sales transaction in those CONNUMs accordingly (e.g. "Pass" or "No Pass" based on the results). 
                                               
202 The USDOC announced the new policy in March 2013 in the in the Xanthan Gum  Post-Preliminary 
Analysis Memorandum (Exhibit KOR-33), and then finalized its application in the Xanthan Gum  case in 
June 2013 in the Issues and Decision Memorandum issued in conjunction with the final determination (Exhibit KOR-67). 
203 The Generic SAS Code is a standard computer code  that is used by the USDOC to calculate dumping 
margins in anti-dumping investigat ion and reviews. It is publicly available from the USDOC website (see 
Anti-Dumping Margin Calculation Pr ograms, Targeted Dumping Macros (Generic SAS Code), USDOC website 
accessed 18 September 2014 <http://enforcement.trade.gov/sas/programs/amcp.html> (Exhibit KOR-24); see Korea's response to Panel ques tion No. 1.3, paras. 29-30). 
204 Korea's response to Panel question No. 1.3, para. 31. 
205 The United States argues that Ms Naschak's affidavit cannot be viewed as "evidence" from an 
impartial or independent source, because Ms Naschak work s for one of the law firms representing Korea in this 
dispute and one of the respondents in the proceedings before the USDOC. In our view, the fact that Ms Naschak works for one of the law firms representing Ko rea in this dispute and one of the respondents in the 
proceedings before the USDOC is not in itself a reason for us to exclude her affidavit. This is particularly so in 
light of the fact that the United States has not co ntested the relevance and correctness of any substantive 
elements of Ms Naschak's affidavit, and the credentials of  Ms Naschak as an expert. Moreover, we note that in 
US – Shrimp II (Viet Nam) , the panel took into account, inter alia , an affidavit by Ms Naschak in relation to the 
USDOC's use of zeroing in three administrative reviews (see Panel Report, US – Shrimp II (Viet Nam) , 
para. 7.44). 
206 Affidavit of Ms Anya Naschak, (Exhibit KOR-94), paras. 17-26. WT/DS464/R 
 
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  Step 6: Determine percentage of the total U.S. sales transactions (by value) that 
meet Step 5. 
Step 7: Calculate overall AD margin three ways: (a) not applying [the W-T comparison 
methodology], (b) applying [the W-T compar ison methodology] to only those U.S. 
sales transactions included in Step 5 and (c) applying [the W-T comparison 
methodology] to all U.S. sales transactions (regardless of whether they are or are not included in Step 5). 
Step 8: Determine whether the results of Step 7 result in a "meaningful difference" in 
the margin, defined as either (a) crossing the de minimus  threshold; or (b) resulting 
in a 25% relative change in the margin between applying [the W-T comparison methodology] and not.
207 
7.105.  In her affidavit, Ms Naschak also explai ns that the DPM is enshrined in the Generic SAS 
Code's "Macros Program", which is not subject to changes by individual case analysts handling anti-dumping investigations and reviews. Based on her personal involvement and analysis of the 
Generic SAS Code as applied in four USDOC prelim inary and final determinations over a two-year 
time span from March 2013 to March 2015
208, Ms Naschak confirms that the SAS code used to 
apply the DPM in each of these cases was identical in all material respects. Her affidavit also 
directs our attention to certain actual SAS code la nguage that was utilized in the abovementioned 
proceedings. That code language was identical in each case, and identical to the Generic SAS 
Code. We observe that the relevant Generic SAS Code confirms the description of the DPM in the abovementioned Issues and Decisions Memoranda and the USDOC's Request for Comments. In 
particular, Steps 1-5 above correspond to the Cohen's d test; Steps 6 and 7 correspond to the 
ratio test; Step 8 corresponds to the "meaningful difference" test.  
7.106.  The United States argues that the Generic SAS Code does not support Korea's argument 
that the DPM is a measure consisting of a rule or norm of general and prospective application, 
because this Generic SAS Code is not permanent or fixed, and may be changed depending on the particular situation in a given proceeding. However, in response to our question regarding the type 
of changes to the DPM that can be made by go vernment officials handling an anti-dumping 
investigation or review, the United States referre d only to possible modifications concerning the 
default group definitions (i.e. how purchasers, regions and time periods are defined), where such changes can be or have been made.
209 The United States did not indicate that changes could have 
been made regarding the Cohen's d test, the ratio test, or the "meaningful difference" test. 
7.107.  Based on a careful review of the entirety  of the evidence above, we consider that the 
description of the DPM contained therein is precis e and complete. The evidence explains in detail 
the methods applied to determine the existence of  a "pattern of export prices which differs 
significantly among different purchasers, regions or time periods", and whether the identified pattern of significant price differences cannot be appropriately taken into account by the W-W or 
T-T comparison methodologies. The evidence also demonstrates that the DPM is applied in a 
consistent manner. The three main components of the DPM, namely (i) the Cohen's d test, (ii) the 
                                               
207 Affidavit of Ms Anya Naschak , (Exhibit KOR-94), para. 22. 
208 These are (1) Xanthan Gum from China  (final determination dated May 28, 2013); (2) Diffusion-
Annealed Nickel-Plated Steel from Japan  (final determination April 3, 2014); (3) Frozen Warmwater Shrimp 
from Vietnam  (final determination September 19, 2014); and (4) Washers from Korea  (preliminary results 
March 2, 2015). 
209 United States' response to Panel question No . 4.26, paras. 106 and 108. We observe that this 
feature of the DPM is not challenged by Korea. The Unit ed States refers to an administrative review of the 
anti-dumping duty order on seamless  refined copper pipe and tube from China, in which the USDOC changed 
the default definition of time period from quarterly to  monthly upon determining that a respondent's export 
pricing was tied to a publis hed monthly index for copper prices on the London Metals Exchange during a period 
of significant volatility  for copper prices. See  Seamless Refined Copper Pipe and Tube From the People's 
Republic of China: Final Results of Antidumping Duty Administrative Review; 2011-2012 , 79 Fed. Reg. 23,324 
(April 28, 2014), (Exhibit USA-96); and accompanying  Issues and Decision Memorandum, comment 6, 
(Exhibit USA-97), p. 13. In  an administrative review of the anti-dumping duty or der on pasta from Italy, the 
USDOC also changed its default setting for consolidated  customer code to individual customer code upon 
determining that a respondent maintained distinct price li sts and rebates for each sub- entity that was part of a 
larger consolidated company. See  Certain Pasta From Italy:  Final Results of Antidumping Duty Administrative 
Review; 2012-2013 , 80 Fed. Reg. 8,604 (February 18, 2015), (Exh ibit USA-98), and accompanying Issues and 
Decision Memorandum, comment 4, (Exhibit USA-99), p. 5. WT/DS464/R 
 
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  ratio test, and (iii) the "meaningful difference" te st, feature throughout the evidence supplied by 
Korea, and are described in virtually identical terms on each occasion. These main components 
were also included in the United States' own description of the DPM applied in the first administrative review of the Washers  anti-dumping duty order.
210 Furthermore, the 
United States has not contested any aspect of Kore a's description of the DPM as being imprecise or 
incorrect.  
7.108.  Accordingly, we conclude that Korea has established the precise content of the DPM. 
7.4.1.3.3  General and prospective application of the DPM 
7.109.  The abovementioned Issues and Decision Memoranda contain statements indicating that 
the USDOC has adopted a policy choice of applying  the DPM since 4 March 2013. For example, the 
USDOC stated shortly after that date that "[t]he Department is now using a 'differential pricing' 
analysis instead of the targeted dumping analysis"211, and that it has "switched to a differential 
pricing analysis for preliminary results issued after March 4".212 Furthermore, in its Request for 
Comments on the DPM, the USDOC states clearly that:  
[T]he Department is developing a new approach for determining whether application 
of such a comparison method is appropriate in a particular segment of a proceeding pursuant to 19 CFR 351.414(c)(1) and consistent with section 777A(d)(1)(B) of the 
Act. The new approach is referred to as the "differential pricing" analysis, as a more 
precise characterization of the purpose and application of section 777A(d)(1)(B) of the 
Act.
213 
7.110.  We take particular note of the USDOC's reference to the DPM as the "new approach" for 
determining whether to apply the W-T comparison methodology. This indicates that the USDOC 
has adopted a policy choice of applying the DP M, going beyond the simple repetition of the 
application of that methodology in isolated cases. As previous panels have done214, we consider 
such policy statements as evidence of the ge neral and prospective nature of the DPM.  
7.111.  Korea also relies on a summary of 138 instances in which the DPM has been applied in 
anti-dumping proceedings since 4 March 2013. The Un ited States argues that Korea must provide 
a "close examination of the records of the determinations"215 to discharge its burden of proof that 
one and the same DPM was applied in all of these ca ses. Although we agree with the United States 
that the burden of proving the general and prospe ctive application of the DPM rests on Korea, we 
find the United States' approach to be unduly restrictive and burdensome.216 We note that Korea 
offered, at the first meeting of the Panel, to provide all public documentation pertaining to the 
USDOC's application of the DPM in 138 anti-dumping proceedings.217 We do not consider that such 
an exercise is warranted or necessary in the pres ent dispute. We observe that the summary of the 
relevant proceedings provided by Korea contains most, if not all, pertinent information relevant to 
the issue before the Panel: whether the DPM was ap plied in the determinations, the results of the 
application of the Cohen's  d and the ratio tests, the outcome of the "meaningful difference" test, 
and the final comparison methodology applied by the USDOC in each of these determinations. The 
summary provided by Korea confirms that the DPM was applied in all of these determinations, 
                                               
210 United States' response to  Panel question No. 2.3, pa ras. 44-58. Referring to the Washers  
AD Administrative Review Preliminary Decision Memo and the Preliminary LG AD Review Calculation Memo, the United States described the way in which the USDOC used the Cohen's d test to consider whether price 
differences exhibited among di fferent purchasers, regions or time period s are significant, and the way in which 
the USDOC used the ratio test to determine whether the "pattern" clause of the second sentence of 
Article 2.4.2 was satisfied. The United States' description confirms the content of the DPM as described in the other evidence, and reflects the application of the DPM to a particular set of facts. 
211 Citric Acid I&D Memorandum, (Exhibit KOR-52). 
212 Fresh Garlic I&D Memorandum, (Exhibit KOR-54). 
213 Request for Comments, (Exhibit KOR-25), p. 26722. 
214 See Panel Reports, US – Zeroing (Japan) , para. 7.52; US – Stainless Steel (Mexico) , paras. 7.40 
and 7.95; and  US – Shrimp (Viet Nam) , para. 7.112. 
215 United States' response to Panel question No. 2.30, para. 123. 
216 The United States has not challenged any of these summaries. 
217 Korea's opening oral statement at the first meeting of the Panel, para. 41. WT/DS464/R 
 
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  except where its application was not necessary given that the USDOC applied adverse facts 
available or where there were insufficient comparable sales data.218  
7.112.  The United States also argues that ce rtain aspects of the summary of the proceedings 
provided by Korea are misleading. First, the United States refers to the fact that 32 out of the 138 
determinations are preliminary determinations for which the final determinations are not published 
yet. However, the preliminary nature of these de terminations does not change the fact that the 
DPM has been applied systematically in all proceedings initiated after 4 March 2013. Second, the 
fact that the DPM was not applied when the USDOC applied adverse facts available, or when there 
was not sufficient data to apply the DPM, should not be determinative. The United States does not contest that the USDOC applied the DPM in all cases where the potential application of the W-T comparison methodology could have been considered. Nor has the United States suggested that 
the USDOC would have used some methodology other than the DPM for applying the second 
sentence of Article 2.4.2, in cases where facts available were used, or where the relevant data was not available. 
7.113.  Korea also relies on the affidavit of Ms Naschak that the DPM is "a well-defined policy 
enshrined in the SAS Code that is being applied co nsistently and without any material change in 
every antidumping proceeding before the USDOC".
219 We recall that the United States argues that 
the Generic SAS Code submitted by Korea does not support the general and prospective 
application of the DPM because it may be changed depending on the particular situation in a given 
proceeding. However, while not identifying any materi al change to the DPM, the United States only 
emphasized in general terms the "continuing evol ution of the USDOC's approach to determining 
whether to apply the alternative, average-to-transaction comparison methodology" as evidenced 
by its request for comments and the possibility for interested parties to make comments on the DPM in the first administrative review of the Washers  anti-dumping duty order.
220 
7.114.  Finally, we note that the United States argues for an "appropriately broad view" of the 
evidence by taking into account all methodologies historically used to determine whether or not to resort to the W-T comparison methodology, including those that were applied before the DPM was 
introduced, such as the Nails II  methodology.
221 We are not persuaded by this broad view 
proposed by the United States. As mentioned above, the United States itself refers to the DPM as the "new approach" to determining whether the W-T comparison methodology should be applied. We have also found that the precise content of this "new approach" to applying the second 
sentence of Article 2.4.2 can be ascertained, as distinct from other methodologies previously used 
by the USDOC when applying the second sentence of Article 2.4.2. Therefore, our analysis shall 
focus on the DPM itself, as distinct from other methodologies previously applied by the USDOC for 
the application of the second sentence of Article 2.4.2.  
7.115.  We recall the Appellate Body's statement in US – Zeroing (EC)  that a panel should not 
lightly assume the existence of a rule or norm constituting a measure of general and prospective 
application, particularly where the rule or norm at issue is not expressed in written form. In our 
view, the entirety of the evidence discussed abov e meets the high threshold referred to by the 
Appellate Body. It clearly demonstrates that th e USDOC's application of the DPM represents a 
policy choice that extends well beyond the mere re petition of the methodology in certain specific 
cases. Furthermore, in its response to our ques tion, the United States could not identify any 
investigation or review initiated after 4 March 2013 where, in determining whether to apply the W-T comparison methodology, the USDOC app lied some methodology other than the DPM.
222 
7.116.  For the above reasons, we are satisfied that the DPM has general and prospective 
application. 
                                               
218 The Cohen's d test component of the DPM is applied when  the test and comparison groups of data 
each have at least two observations and when the sales quantity for the comparison group account for at least 
5% of the total sales quantity of the comparable merchandise. See para. 7.100.  above. 
219 Affidavit of Ms Anya Naschak, (Exhibit KOR-94) , para. 33. See also Korea's response to Panel 
question No. 1.3, para. 31. 
220 United States' response to Panel question No. 4.26, paras. 109 and 110. 
221 United States' response to Panel question No. 2.30, para. 122. 
222 United States' response to Panel question No. 4.27. The United Stat es refers to tw o instances where 
group definitions have been changed, and several instances where the Nails II  methodology has been used in 
administrative reviews initiated before , but completed after the final de terminations were published in Xanthan 
Gum on 4 June 2013. WT/DS464/R 
 
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  7.4.1.3.4  Conclusion 
7.117.  In light of the above, we conclude that the evidence advanced by Korea supports a finding 
that Korea has clearly established (i) that the DPM is attributable to the United States, (ii) the precise content of the DPM, and (iii) that th e DPM has general and prospective application. 
Accordingly, we conclude that the DPM is a measure that may be challenged "as such". 
7.4.2  Claims concerning the WTO-consistency of the DPM "as such" 7.4.2.1  The alleged inconsistencies concerning the DPM  
7.118.  Korea claims that the DPM is inconsistent with the second sentence of Article 2.4.2 in 
five aspects
223: 
a. the DPM applies fixed numerical criteria to  determine whether there is a "pattern", and 
categorically rejects the relevance to its inquiry of the commercial context in which the 
alleged "pattern" arises; 
b. the DPM fails to provide any adequate explanation as to why the significant price 
differences cannot be taken into account appropriately by using the W-W or T-T 
comparison methodology224; 
c. the DPM applies the exceptional comparison methodology to transactions that do not 
meet its own criteria for determining "differential pricing"225; 
d. the DPM does not identify a "pattern" of significant price differences among different 
purchasers, regions or time periods, but simply compares each individual transaction with the exporter's other export prices ; 
e. the DPM sets any negative W-W comparison result to zero when aggregating the 
two intermediate dumping calculations  when applying a mixed comparison 
methodology
226. 
7.119.  Regarding aspects a. to c. in the paragraph above, Korea essentially makes the same legal 
arguments that it makes with respect to the application of the Nails II  methodology in the Washers  
anti-dumping investigation.227 Equally, the United States responds in similar terms to its response 
to Korea's claims regarding the Washers  anti-dumping investigation.228 We refer to our findings in 
section 7.3  above, which apply mutatis mutandis  in the context of the DPM. For the same reasons, 
we find that: 
a. the DPM is not inconsistent "as such" with the second sentence of Article 2.4.2 by 
determining the existence of "a pattern of expo rt prices which differ significantly" among 
                                               
223 Korea's first written submission, para. 128; Korea's response to Panel question No. 4.22, 
paras. 154-156. 
224 As mentioned above at para. 7.100.  , the "meaningful difference" test is one of the three main 
components of the DPM. Under this test, the USDOC concludes that the W-W comparison methodology cannot appropriately take into account the observed pattern of  significantly different prices where the respondent's 
dumping margin using the W-W comparison methodology and the W-T comparison methodology yields a "meaningful difference". The USDOC defines "meaningful"  as a 25% relative change  in the weighted-average 
dumping margin between the W-W and W-T comparis on methodologies where both rates are above 
de minimis , or the resulting weighted-average dumping margin moves across the de minimis  threshold. The 
DPM does not address at all why the T-T comparison me thodology cannot take into account appropriately the 
pattern of significantly differing prices found to exist. See Korea's first written submission, para. 197. We recall that the United States does not contest any aspect of Korea's description of the DPM, including the "meaningful 
difference" test that is used to apply the explanation clause. 
225 As mentioned above at para. 7.100.  , the USDOC applies the W-T comparison methodology to all 
export transactions when the result  of the ratio test is above 66%. 
226 We recall that where the result of the ratio test  is between 33% and 66%, the DPM will lead to the 
application of a mixed comparison methodology. 
227 Korea's first written submission, paras. 190-200; Korea's response to Panel question No. 4.22, 
para. 155. 
228 United States' first written submission, paras. 293-311. WT/DS464/R 
 
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  purchasers, regions or time periods on the ba sis of purely quantitative criteria, without 
any qualitative assessment of the reasons for the relevant price differences; 
b. the DPM is inconsistent "as such" with the explanation clause of the second sentence of 
Article 2.4.2 because, in applying the "meaningful difference" test, the DPM focuses on 
the difference between the margin of dump ing calculated with the W-W comparison 
methodology and the margin calculated using the W-T comparison methodology or the mixed comparison methodology. The DPM fails to provide for any consideration of 
whether the factual circumstances surrounding the relevant price differences were 
suggestive of something other than targeted dumping. However, the DPM is not inconsistent with the explanation clause when, after the USDOC concludes that the W-W comparison methodology cannot appropriately take into account the observed 
pattern of significantly different prices, the DPM does not require the USDOC to also 
consider whether the relevant price differences could be taken into account appropriately by the T-T comparison methodology; 
c. the DPM is inconsistent with the second sentence of Article 2.4.2 because it applies the 
W-T comparison methodology to all transactions where the value of transactions to purchasers, regions, and time periods that pass the Cohen's d test account for 66% or 
more of the value of total sales, including transactions falling outside the "pattern[s] of 
export prices which differ significantly among different purchasers, regions or time periods". 
7.120.  Having considered Korea's claims under aspects a. to c. above, we move to address 
Korea's claims under aspects d. and e.  
7.4.2.2  Whether the DPM aggregates random, unrelated price differences 
7.4.2.2.1  Main arguments of the parties 
7.4.2.2.1.1  Korea 
7.121.  Korea claims that the DPM is inconsistent with the pattern clause, because the DPM 
aggregates random, unrelated price differences, with out properly identifying "a pattern of export 
prices which differ significantly among different purchasers, regions or time periods".
229 According 
to Korea, the pattern clause requires that a pa ttern be established among different purchasers, 
regions or time periods as distinct categories, in the sense that the pattern must be discernible: 
a. as between one purchaser and all other purchasers; or 
b. as between one region and all other regions; or 
c. as between one time period and all other time periods.230 
7.122.  Korea argues that the DPM does nothing mo re than measure the amount of price variation 
that can be found within an exporter's sales by aggregating random, unrelated price differences of 
every possible type and combination.231 By doing this, the DPM does not identify a meaningful 
pattern which can serve as the basis to apply the W-T comparison methodology.232 Korea identifies 
three distinct respects in which the DPM fails to identify "a pattern of export prices which differ 
significantly among different purchasers, regions or time periods".233 Korea refers to these as 
vertical variation234, horizontal variation235 and cross-category variation236, respectively. 
7.123.  Concerning the vertical variation aspect , Korea argues that the DPM does not analyse 
whether export prices differ at the level of partic ular purchasers, regions or time periods. Instead, 
                                               
229 Korea's first written submission, paras. 201-202. 
230 Ibid. para. 210. 
231 Ibid. paras. 202 and 213; second written submission, para. 121. 
232 Korea's first written submission, paras. 213 and 216. 
233 Ibid. para. 203. 
234 Ibid. paras. 217-221. 
235 Ibid. paras. 222-226. 
236 Ibid. paras. 227-233. WT/DS464/R 
 
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  the analysis of price variation takes place at the level of individual models (i.e. control number 
(CONNUM237)) without ever determining whether export prices differ among different purchasers, 
regions or time periods.238 Korea argues that the reference to "a pattern of export prices" in the 
second sentence of Article 2.4.2 should be understoo d to refer to a pattern of export prices for the 
product under investigation, not to a pattern that is discerned from the export prices for only 
certain models and sub-types of the product under investigation.239 
7.124.  In Korea's view, the USDOC is entitled to analyse price variation at the level of individual 
m o d e l s ,  a s  a n  i n t e r m e d i a t e  s t e p ,  t o  e n s u r e  t h a t  t h e  a n a l y s i s  i s  b a s e d  o n  e x p o r t  p r i c e s  f o r  
comparable transactions. However, the USDOC must take into account the price variation, or lack thereof, for all models in order to reach an ultimate determination whether there is a pattern. Otherwise the USDOC may incorrectly identify a "pattern" when in fact the export prices do not 
differ in any significant respect.
240 
7.125.  Concerning the horizontal variation aspe ct, Korea argues that the DPM aggregates price 
variation across all purchasers (or regions or time periods, as the case may be) to establish a 
"pattern", where no one of these purchasers (or re gions or time periods, as the case may be), on 
its own, has a sufficient amount of "passed" price variation to meet the 33% threshold that the USDOC uses to identify a "pattern".
241 Korea contends that this renders the DPM incapable of 
evaluating whether the export prices to a particul ar purchaser, region or time period must be 
distinct from the prices to all other purchasers, regions or time periods, respectively.242 Korea 
argues that this practice is incompatible with the meaning of "a pattern of prices which differ significantly among different purchasers, regions or time periods".  
7.126.  Furthermore, Korea argues that to exhibit a "pattern", the price differences must follow 
some sort of discernible sequence and may not reflect random or spurious price fluctuations.
243 
Using a hypothetical example of the DPM, Kore a contends that the aggregation of "passed" 
transactions which spread across different purchasers, and which can be either too high or too low, 
amounts to random or spurious price fluctuations lacking any meaningful pattern.244  
7.127.  Concerning the cross-category variation aspect, Korea asserts that by aggregating price 
variation among purchasers, regions and time periods, the DPM undertakes an "apples and 
oranges" analysis of unrelated price variation.245 Korea asserts that this is inconsistent with the 
ordinary meaning of the second sentence, which plainly contemplates that purchasers, regions and time periods are three distinct categories – not cate gories that can be added together to identify a 
"pattern".
246  
7.4.2.2.1.2  United States  7.128.  The United States argues that the USDOC's previous Nails II  methodology focused only on 
lower-priced export sales. However, Article 2.4.2 does not require the "targeted dumping" 
approach to the "pattern" analysis.
247 The United States contends that the DPM seeks to identify a 
"pattern", rather than a "target". The terms "tar geting" or "targeted dumping" are not present in 
Article 2.4.2, and are just one example of a "p attern", which is expressly provided for in 
Article 2.4.2.248 Therefore, the conceptual framework of the DPM, which looks for export prices 
                                               
237 The panel in US – Zeroing (EC)  described the USDOC's use of CONNUM as follows: 
The investigating authority, as we ll as determining the overall product scope of the proceeding (also 
referred to as subject product or subject merchandise), will, in applying the weighted average-to-weighted average comparison method, identify those sales of  sub-products in the United States considered 
"comparable", and will include such sales in an "averagi ng group". An averaging grou p consists of merchandise 
that is identical or virtually identical in all physical characteristics. Each category of sub-product within the subject merchandise is assigned a cont rol number, or CONNUM. (Panel Report, US – Zeroing (EC),  para. 2.3). 
238 Korea's first written submission, paras. 203 and 216. 
239 Ibid. para. 219. 
240 Ibid. para. 221. 
241 Ibid. paras. 222-223. 
242 Ibid. para. 224. 
243 Ibid. para. 224. 
244 Ibid. para. 226. 
245 Ibid. paras. 203 and 222-233. 
246 Ibid. para. 230. 
247 United States' second written submission, para. 166. 
248 Ibid. para. 165. WT/DS464/R 
 
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  which are either significantly higher or significantly lower, is consistent with the terms of the 
pattern clause of the second sentence of Article 2.4.2.249 According to the United States, the DPM 
reflects an approach that hews closely to the text of the second sentence of Article 2.4.2.250 The 
United States contends that normal values and dumping are not relevant to the question of the 
existence of a "pattern" of export prices which di ffer significantly because either lower-priced or 
higher priced export sales may be less than normal value, and either lower-priced or higher priced export sales may be more than normal value. A "pattern" of export prices which differ significantly 
does not provide evidence of dumping or the masking of dumping. Rather, it only establishes that 
conditions exist in the export market in which "masked dumping" could occur.
251  
7.129.  Concerning the vertical variation aspe ct, the United States maintains that Korea's 
arguments are based on a flawed legal premise. According to the United States, the second 
sentence of Article 2.4.2 requires the identification  of a "pattern" rather than a "target". Nothing in 
the "pattern clause" requires the investigating author ity to find that all of the export sales to one 
particular purchaser (or region or time period) as a whole  differ significantly from those to other 
purchasers (or regions or time periods).252 The United States agrees with Korea that the "pattern" 
shall be determined for the product under investigation as a whole and that the analysis of the price variation at the level of individual model is a necessary intermediate step. The United States 
points out that that is exactly why the USDOC has aggregated the results of the model-specific 
comparisons in the ratio test to ensure that the "pattern" identified is for the product under investigation as a whole, and is based on the exporter's overall pricing behaviour in the U.S. market.
253 
7.130.  Concerning the horizontal variation aspect, the United States denies that the USDOC 
improperly combines price variation across different purchasers (or regions or time periods). The United States argues that there is no textual su pport in Article 2.4.2 for Korea's contention that 
there must be a significant difference between the export prices to one purchaser and the export 
prices to all other purchasers. According to the United States, the use of the word "among" in the "pattern clause" under Article 2.4.2 contemplates a holistic analysis of the exporter's pricing 
behaviour for the product as a whole.
254 
7.131.  Concerning the cross-category variation aspect, the United States argues that nothing in 
the text of the "pattern clause" of the second sent ence of Article 2.4.2 suggests that the significant 
export price differences among purchasers (or regi ons or time periods) cannot be cumulated with 
the significant differences in export prices among other categories when assessing whether there 
exists "a pattern of export prices which differ significantly among purchasers, regions or time periods".
255 The United States contends that by aggregating the results across the 
three categories, the USDOC was not undertaking an  "apples and oranges" analysis of unrelated 
price variation, but considering the pricing behaviou r of the exporter in the Unites States market 
as a whole.256 The United States further asserts that Korea's approach that a "pattern" of 
significant price differences must be established for one purchaser against all other purchasers is 
inconsistent with the Appellate Body's guidance that a dumping margin must be exporter-specific 
and determined for the product as a whole.257 
7.4.2.2.2  Main arguments of the third parties258 
7.132.  Brazil argues that not all "pattern(s) of ex port prices that differ significantly" matter for the 
purpose of resorting to the W-T comparison method ology. Brazil contends that any decision about 
the existence of "a pattern of export prices wh ich differ significantly" for the purpose of the 
second sentence of Article 2.4.2 must be based on criteria of analysis coherent with the object and 
purpose of the Anti-Dumping Agreement.  
                                               
249 United States' second written submission, para. 167. 
250 Ibid. para. 170. 
251 Ibid. para. 168. 
252 Ibid. para. 179. 
253 Ibid. paras. 180-181. 
254 Ibid. paras. 184-185. 
255 Ibid. para. 186. 
256 Ibid. para. 187. 
257 Ibid. para. 188. 
258 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. WT/DS464/R 
 
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  7.133.  Canada argues that the use of the disjuncti ve "or" in the term "among purchasers, regions 
or time periods" means that the three categories are distinct.259 Canada contends that by 
aggregating the results of comparisons of export prices to purchasers, regions and time periods, 
the USDOC ignores the requirement that a pattern of significantly different export prices must be 
identified with respect to one of these categories.260  
7.134.  China argues that the question whether expo rt prices "differ significantly" in any of the 
three categories so as to form a relevant pric ing "pattern" must be answered by examining the 
differences severally within the categories of purchaser, region or time period and not by 
combining unrelated price differences across di fferent purchasers, regions or time periods.261  
7.135.  With respect to the alleged vertical variation problem, the European Union asserts that a 
targeted dumping determination must ultimately be made with respect to the product as a whole 
(in relation to a particular exporter). With respec t to the alleged horizontal variation problem, the 
European Union considers that adjacent regions, related purchasers and adjacent time periods may be considered as one and cumulated for the purpose of establishing a "pattern" of export 
prices which differ significantly. With respect to the alleged cross-category variation problem, the 
European Union finds it difficult to understand the justification for combining data that are not generated on the basis of equivalent parameters.
262 
7.136.  Japan disagrees with the United States' understanding that a pattern within the meaning of 
the second sentence of Article 2.4.2 includes both  lower and higher prices that differ significantly 
from each other.263 Japan notes that the Appellate Body has clarified that the role of the 
second sentence of Article 2.4.2 is to "enable in vestigating authorities to capture pricing patterns 
constituting 'targeted dumping'" and "unmask" such targeted dumping.264 Japan argues that the 
DPM cannot identify targeted dumping with "a diso rderly mixture of higher and lower prices across 
all purchasers, regions and time periods as well as across different models".265 Japan further 
argues that simply extracting and aggregating unr elated variation in export prices among various 
models across different purchasers, regions and time periods without contextualizing or interpreting such variation into a discernible form or sequence, is very different from identifying a 
pattern as defined in terms of different purchasers, regions or time periods.
266 
7.137.  Viet Nam shares the concerns expressed by  Korea over the vertical variation, horizontal 
variation and cross-category variation issues.267  
7.4.2.2.3  Evaluation by the Panel 
7.138.  The DPM analyses any given export transaction in three different ways (by purchaser, 
region and time period respectively) in order to identify six possible types of price variation that 
the USDOC considers to pass the Cohen's d test: 1) prices that are too high (i.e. where the 
Cohen's d coefficient is greater than 0.8) to a particular purchaser; 2) prices that are too low (i.e. 
where the Cohen's d coefficient is lower than -0.8) to a particular purchaser; 3) prices that are too 
high to a particular region; 4) prices that are too low to a particular region; 5) prices that are too 
high during a particular time period; and 6) pr ices that are too low during a particular time 
period.268 In assessing the extent of the significant price variation by using the ratio test, the 
USDOC aggregates the value of these six differen t types of price variation, and measures this 
aggregated value against the total value of export sales. If the aggregated value is more than 33% 
                                               
259 Canada's third party submission, para. 26. 
260 Canada's third party or al statement, para. 6. 
261 China's third party submission, para. 25. 
262 European Union's third part y submission, paras. 73-76. 
263 Japan's third party submission, para. 40. 
264 Ibid. (citing Appell ate Body Reports, US – Stainless Steel (Mexico) , para. 127; and US – Zeroing 
(Japan) , para. 133). 
265 Japan's third party submission, para. 39. 
266 Ibid. para. 26. 
267 Viet Nam's third party or al statement,  para. 15. 
268 Unlike the Nails II  methodology, the USDOC applies the DPM automatically, without the need for 
specific allegation from the domestic in dustry of targeted dumping to a partic ular purchaser, region or during a 
particular period of time.  WT/DS464/R 
 
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  of the total value of export sales, the USDOC considers a pattern to exist.269 Korea argues that the 
DPM merely measures the amount of the price variation, instead of identifying a "pattern".270 
Korea further identifies three respects in which the DPM fails to identify "a pattern of export prices 
which differ significantly among different purchasers, regions or time periods": 
a. By analysing price variation only at the level of individual models of the product 
concerned, the DPM does not analyse whether export prices differ significantly at the 
level of particular purchasers, regions or time periods (the so-called "vertical variation" 
issue); 
b. By aggregating price variation across all purchasers (or across regions or across time 
periods), the DPM does not analyse whethe r export prices differ among different 
purchasers, regions or time periods (the so-called "horizontal variation" issue); 
c. By aggregating price variation among the th ree different categories, the DPM undertakes 
an "apples and oranges" analysis of unrelated price variation (the so-called 
"cross-category variation" issue).271  
7.139.  The recurring theme of the alleged vertical , horizontal and cross-category variation issues 
identified by Korea is that the DPM does not identify a "pattern"  for a particular purchaser, region 
or time period.272  
7.140.  Korea argues that the pattern must be id entified among different purchasers, regions or 
time periods as distinct categories, in the sense that the "pattern" must be discernible from price 
differences as between one purchaser and all other purchasers, or as between one region and all 
other regions, or as between one time period and all other time periods. In contrast, the United States asserts that identifying a "pattern" for the exporter and product as a whole among different purchasers, regions and time periods re quires examining the exporter's export sales 
holistically and in the aggregate, across the ca tegories. Moreover, the parties disagree on whether 
a "pattern" consists of a subset of prices found to differ significantly among different purchasers, 
regions or time periods, or consists of all of the exporter's export sales. 
7.141.  According to the second sentence of Article 2.4.2, one of the conditions for applying the 
W-T comparison methodology is the identification  o f  " a  p a t t e r n  o f  e x p o r t  p r i c e s  w h i c h  d i f f e r  
significantly among different purchasers, regions or  time periods". In our view, the phrase "among 
different purchasers, regions or time periods" determines the question of how the relevant "pattern" must be identified. The use of the disjunctive "or" in this phrase is significant, as its 
ordinary meaning indicates that a "pattern" can only be found in prices that differ significantly 
either among purchasers, or among regions, or am ong time periods. This excludes the possibility 
of establishing a "pattern" across  the three categories cumulatively. We find support for this 
approach in the Appellate Body's previous clarif ication 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".
273 The Appellate Body did not identify any other types of 
"targeted" dumping. 
7.142.  We also emphasise the use of the word "a mong" in the second sentence of Article 2.4.2. 
According to its dictionary meaning, the word "among" is "used when you are mentioning a 
                                               
269 See para. 7.100.  above, which provides a descrip tion of the DPM; Exhibit KOR-25, where the USDOC 
summarizes the DPM similarly; and United States' response to Panel question 2.3, paras. 49-57, where the United States summarizes the DPM. 
270 Korea's first written submission, para. 202; second written submission, para. 121. 
271 Korea's first written submission, para. 203. 
272 We note that Korea itself also views the vertical, horizontal and cross-category variation problems as 
three distinct aspects of the overarchin g failure of the DPM to identify the necessary pattern for resorting to the 
W-T comparison methodology. Korea considers the vertic al, horizontal and cross-category variation problems 
as the "three respects in which the differential pricing methodology fails to identify a 'pattern'" (Korea's 
first written submission, para. 203). Korea also argues that  "[w]hat these three flaws reflect is the fact that no 
aspect of the differential pricing methodology seeks to  identify a pattern of export prices which differ 
significantly among different purchasers, regions or time periods, as the second sentence requires" (Korea's 
first written submission, para. 235). 
273 Appellate Body Report, EC – Bed Linen , para. 62. We are mindful of th e fact that the terms "target" 
or "targeted dumping" are not used in the second sentence of Article 2.4.2. However, it is a generally held view 
as confirmed by the Appellate Body that the second senten ce of Article 2.4.2 is intended to allow authorities to 
unmask targeted dumping. WT/DS464/R 
 
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  particular person or thing in relation to the rest of the group they belong to ".274 The use of the 
word "among" thus emphasises membership of a grou p, and the notion of belonging to that group. 
We are of the view that 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 a result, a "pattern" of significant price differe nces "among" different 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. The same is true for a "pattern" of significant 
price differences "among" different  regions or time periods.  
7.143.  With the above analysis in mind, we find the United States' approach of identifying one 
single pattern by aggregating six di fferent types of price variation to be inconsistent with the text 
of the second sentence of Article 2.4.2. This appr oach effectively identifies a "pattern" of export 
prices across  different categories (purchasers, regions or time periods), rather than "among" the 
constituents of each category, as we understand the second sentence of Article 2.4.2 to require.
275 
We are also not persuaded by the United  States' argument that identifying " a pattern" in the 
singular form requires examining the exporter's ex port sales holistically and in the aggregate. To 
the contrary, we consider that the use of the singular word " a pattern" is simply to indicate that 
the finding of a pattern within any of the three ca tegories could potentially be a sufficient basis for 
the application of the W-T comparison methodology.  
7.144.  Furthermore, it follows from the definiti on of "pattern" that price variation within a 
"pattern" must pertain to the same parameters. Otherwise, no "regular and intelligible form or sequence"
276 may be discerned from the group of price va riation. For this reason, prices that are 
too high and prices that are too low do not belong to the same pattern: high prices differ 
significantly from all other prices because they are higher than them; low prices differ significantly from all other prices because they are lower than them. The characteristic for establishing the 
degree of price variation is therefore not the same.  
7.145.  The United States argues that the DPM do es not necessarily result in a breach of the 
second sentence of Article 2.4.2 because the applic ation of the DPM only resulted in the application 
of the W-T comparison methodology "in approximately 20-30% of instances".
277 In response, 
Korea argues that it has shown that the DPM will necessarily result in breaches of Article 2.4.2 in certain circumstances. Korea asserts that the fact that, in some factual situations, the WTO-inconsistent features of the DPM may not be applied does not make them WTO-consistent, or 
save them from review of WTO consistency. Korea draws an analogy with the WTO case law 
concerning the United States' zeroing methodolog y. Korea argues that, under the United States' 
theory, the zeroing methodology could never have been found to be WTO-inconsistent "as such" 
because it did not result in zeroing in cases where there were no export producers' prices above 
the normal value.
278 
7.146.  We recall that the DPM is a methodology for determining whether the W-T comparison 
methodology should be applied in a particular situation. Where the conditions of the DPM are 
fulfilled, its application will necessarily result in the application of the W-T comparison methodology. On the other hand, where the cond itions of the DPM are not fulfilled, the W-T 
comparison methodology will not be applied. The fact that the application of the DPM only results 
in the application of the W-T comparison methodology in certain situations
279 does not prevent a 
finding that the DPM is inconsistent "as such". By its structure and design, the DPM will necessarily result in a breach of the second sentence of Ar ticle 2.4.2 in certain circumstances. We find the 
analogy that Korea draws with the treatment of the zeroing methodology by previous panels and 
                                               
274 McMillanDictionary.com, accessed on 23 September 2015 
<http://www.macmillandictionary.c om/dictionary/british/among> 
275 The United States itself uses the words "among" and "across" interchangeably. The United States 
argues that "[u]sing purchaser-specific weighted averages allows the investigating authority to disregard price variation within the sales to each purchaser and focus on meaningful price variation among (i.e. across) the purchasers" (United States' second written submission, para. 27). Use of the term "across" in this context is not an accurate reflection of the text of  the second sentence of Article 2.4.2. 
276 See para. 7.45.  above. 
277 United States' first written submission, paras. 287 and 289. 
278 Korea's second written submission, para. 220. 
279 We recall that where more than 33% of the transactions by value pass the Cohen's d test and where 
the meaningful difference test is satisfied, the DPM will lead to the application of the W-T comparison methodology (above 66%) or a mixed comparison methodology (33% to 66%). WT/DS464/R 
 
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  the Appellate Body to be highly relevant in this regard. Even though the application of the zeroing 
methodology will not have any impact where all export prices are less than normal value, the 
Appellate Body nevertheless found the zeroing methodology to be WTO-inconsistent "as such". This is because the zeroing methodology will result in WTO-inconsistent zeroing in cases where 
certain export prices are greater than normal value. For the same reason, we agree with Korea 
that the fact that the DPM will not result in the application of the W-T comparison methodology in some factual situations does not mean that it cannot be found to be WTO-inconsistent "as such". It 
suffices that there are certain factual situations in which the DPM will result in the application of 
the W-T comparison methodology, in breach of the second sentence of Article 2.4.2.
280 
7.147.  For the above reasons, we conclude 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 different 
purchasers, regions or time periods". 
7.4.2.3  "Systemic disregarding" 
7.148.  We now turn to Korea's "as such" claims against the USDOC's use of "systemic 
disregarding" in the context of the DPM, wher eby, when the W-T comparison methodology for 
pattern transactions is combined with the use of the W-W or T-T comparison methodology for 
non-pattern transactions, any negative amount of dumping resulting from the W-W or 
T-T comparison methodology is set to zero.281 Korea has brought these claims under the second 
sentence of Article 2.4.2, and Article 2.4. 
7.4.2.3.1  Claims against "systemic disr egarding" under the second sentence of 
Article 2.4.2 
7.4.2.3.1.1  Main arguments of the parties 7.149.  Korea observes that in certain situatio ns, the DPM provides for a combined methodology 
wherein the W-W comparison methodology is applied to non-pattern transactions, and the 
W-T comparison methodology to pattern transactions. Where a negative amount of dumping is determined for non-pattern transactions, the DPM sets such amount to zero, so that it does not 
                                               
280 We note that the United States asserts that the Panel should follow the analysis of the Appellate 
Body in US – Carbon Steel (India) in connection with India's "as such" claim, where the Appellate Body 
essentially applied the mandatory/discretionary distinction . In response to the Panel's written questions, the 
United States confirms that, in referring to the analysis of the Appellate Body in US – Carbon Steel (India),  it is 
suggesting that the Panel apply the mandatory/discretionary distinction that has been relied upon by the Appellate Body and panels previously  when addressing "as such" claims against alleged rules or norms of 
general and prospective application (See United States ' response to Panel questions Nos. 4.23 and 4.24, 
para. 100). The United States, however, has not made any submission on how this mandatory/discretionary 
distinction should be applied in th e present dispute. We recall that the Appellate Body has specifically 
confirmed that "as such" challenges can be brought against non-mandatory meas ures (See Appellate Body 
Report, Argentina – Import Measures , para. 5.106). Our finding above is therefore consistent with the 
Appellate Body's approach. 
281 We note that the United States as serts that Korea fails to present a prima facie  case of an "as such" 
inconsistency for the two additional aspects of the DPM (namely, (i) the DPM does not identify a pattern but merely aggregates random, unrelated price differences; ( ii) the "systemic disregardi ng" issue) by basing its 
arguments exclusively on hypothetical scenarios that are entirely the invention of Korea, without making reference to any actual evidence that  any of its concerns have actually manifested themselves in any actual 
application of the DPM. We note that United States does not dispute that Korea sufficiently identifies the DPM 
as the measure at issue and the basic import of the aspects being challenged. Nor does the United States dispute that Korea sufficiently identifies the second senten ce of Article 2.4.2 as the relevant provision, and the 
basis of the claimed inconsistency of the five aspects of the DPM with the second sentence of Article 2.4.2. Instead, the United States emphasized on the lack of sufficient evidence on the actual manifestation of the alleged inconsistencies in the actual application  of the DPM. We disagree with the United States. In our view, 
having established that the DPM is challengeable "as such", the Panel reviews the DPM independently from the application of the DPM in specific cases, just like a written rule or norm. As the Appellate Body confirmed, written rules or norms can be challenged as such "ind ependently of whether or ho w those rules or norms are 
applied in particular instance s" (see Appellate Body Report, US – 1916 Act (EC) , paras. 60-61). Therefore the 
United States' argument that Korea has not established a prima facie  case for the additional aspects of the 
DPM is without foundation. WT/DS464/R 
 
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  offset any amount of positive dumping established in respect of pattern transactions.282 Korea 
contends that such "systemic disregarding" is  "essentially a new form of zeroing" and is 
inconsistent with Articles 2.4 and 2.4.2 at the same time.283 More specifically, Korea argues that 
the systemic disregarding inflates the dumpin g margin, and is contrary to the concept of 
establishing a single margin of dumping per exporter for the "product as a whole".284 
7.150.  The United States argues that, because the use of zeroing in the context of the application 
of the W-T comparison methodology to all sales is permissible, there is no basis for finding that 
"systemic disregarding" is impermissible.285 The United States asserts that it is necessary to "zero" 
the negative W-W subset results for non-pattern transactions to ensure that the W-T subset results for pattern transactions are not masked or  offset by the W-W subset results. Otherwise, 
the purpose of the asymmetrical comparison methodology, which is to "unmask" dumping, would 
be thwarted.
286 
7.4.2.3.1.2  Main arguments of third parties287 
7.151.  Brazil submits that the practice of "syste mic disregarding" shares the same rationale as 
that of "zeroing" inasmuch as it zeros a negative result in the W-W comparison subset that could 
be used to offset the positive result found in  the W-T subset, and inflates the dumping margin.288 
Brazil argues that if the practice of "systemic disregarding" is found to be like "zeroing", it would 
also not be consistent with the fair comparison requirement of Article 2.4.289 
7.152.  China agrees with Korea290 that the "systemic disregarding" of intermediate results is not 
permissible. China contends that a manipulation of data in this way fails to have regard "to the results of all those comparisons"
291 and thereby fails to establish a margin of dumping for the 
product as a whole. 
7.153.  The European Union contends292 that the investigating authority must have the possibility 
of applying an appropriate methodology in order to address the targeted dumping, which can only 
mean that high priced export transactions would not be allowed to offset the dumping amount.  
7.4.2.3.1.3  Evaluation by the Panel 7.154.  The second sentence enables an investigating authority to apply the W-T comparison 
methodology in order to focus on the evidence of dumping in respect of pattern transactions, and 
to ensure that any evidence of dumping with regard to those transactions is not masked by non-dumping in respect of transactions falling outside of that pattern. The United States asserts that "systemic disregarding" is needed in order to prevent such masking. 
7.155.  In order to address the question before us, we will first review the intent of the comparison 
methodology established in the second sentence of Article 2.4.2. We note that the W-T comparison methodology is an exceptional and an alternative comparison methodology to the normally 
applicable methodologies provided in the first sentence of Article 2.4.2. As explained below, it 
appears that the second sentence of Article 2.4.2 re ad in light of Articles 2.1, 2.4 and 6.10 of the 
Anti-Dumping Agreement and the findings of the Appellate Body involves two exceptions to the 
normally applicable comparison methodologies: first, the scope of transactions to be taken into 
account to establish dumping and, second, the method of calculating the margin of dumping. 
                                               
282 See Korea's first written submission, para. 239; Exhibit KOR-24, pp. 70-71; Exhibit KOR-100, p. 93 
(p. 186 of pdf file) of the programming language titled  "The SAS System"; Exhibit KOR-100, p. 124 (p. 324 of 
the pdf file) of the "U.S. Sales Margin Program"; Exhibit KOR-141, pp. 28-29. The United States does not dispute this fact. See United States' second written submission, para. 198. 
283 Korea's second written submission, para. 198. 
284 Ibid. para. 195. 
285 United States' second written submission, para. 195. 
286 Ibid. para. 198. 
287 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
288 Brazil's third party oral statement, para. 16. 
289 Ibid. para. 18. 
290 China's third party submission, para. 81. 
291 Ibid. (citing Appe llate Body Report, US – Softwood Lumber V , para. 98 (original emphasis)). 
292 European Union's third pa rty submission, para. 47. WT/DS464/R 
 
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  7.156.  Concerning the scope, we recall our analysis in paragraphs 7.22.  to 7.27.  that the second 
sentence limits the application of the W-T comparison methodology to pattern transactions. As explained therein, the meaning of the text of the second sentence is confirmed by its context; in 
particular, being an exception it must refer to a subset of the universe of all transactions.
293 
Moreover, since the object and purpose of the ex ceptional comparison methodology is to address 
the situation of a pattern of significantly differing prices, this methodology requires that the amount of dumping be established from the transactions that form the pattern. Consequently, the 
text and structure of Article 2.4.2 envisage that, as a general rule, an investigating authority is 
required to take into account all export transactions and compare them to normal value and, as an exception, limit the comparison of normal value to pattern transactions.  
7.157.  With regards to the calc ulation of the margins of dumpin g, and given the relation of 
Article 2.4.2 with Articles 2.1, 2.4 and 6.10, it appears that the exceptional comparison 
methodology requires the investigating authority to (i) establish intermediary results on the basis of comparing the weighted average normal value to each of the individual transactions that form 
the pattern, (ii) aggregate the intermediary result s to determine the amount of dumping that may 
exist (without zeroing
294), and (iii) express the margin of du mping as a percentage of the export 
price for the exporter or foreign producer concerned. The latter requires the investigating authority 
to include the totality of the evidence of dumpin g from pattern transactions in the numerator and 
the totality of the exports of that exporter in the denominator of the equation. 
7.158.  The Appellate Body has found295 that the determination of a margin of dumping is subject 
to certain "fundamental disciplines" or "concepts" that apply in all anti-dumping proceedings. The 
Appellate Body has identified four such fundamen tal concepts: (a) the concepts 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 resp ect of each known exporter or foreign producer 
examined; (c) anti-dumping duties can be levied only if dumped imports cause or threaten to 
cause material injury to the domestic industry producing 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. The Appellate Body has also stated that: 
In order to assess properly the pricing behavi our 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.
296  
7.159.  In addition, the Appellate Body in US – Zeroing (Japan)  explained, specifically in respect of 
the second sentence of Article 2.4.2, that: 
The emphasis in the second sentence of Article 2.4.2 is on a "pattern", namely a 
"pattern of export prices which differs significantly among different purchasers, 
regions or time periods". The prices of transactions that fall within this pattern  must 
be found to differ significantl y from other export prices. We therefore read the phrase 
"individual export transactions" in that sentence as referring to the transactions that fall within the relevant pricing pattern. This 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.
297  
7.160.  We note 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 discipline" th at "dumping" and "margins of dumping" pertain 
                                               
293 We recall the statement of the Appellate Body in US – Zeroing (Japan)  that the universe of 
transactions that fall within the rele vant pricing pattern "would necessarily be more limited than the universe of 
export transactions to which the symm etrical comparison methodologies in the first sentence of Article 2.4.2 
would apply". See para. 7.25.  above. 
294 See our discussion in Section 7.5 below. 
295 Appellate Body Report, US – Zeroing (Japan) , paras. 108-114. 
296 Ibid. para. 111. 
297 Ibid. para. 135. We observe that a similar statement was made by the Appellate Body in 
footnote 166 of its report on US – Softwood Lumber V (Article 21.5) . WT/DS464/R 
 
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  to an exporter or foreign producer, and to the "product" (as a whole298), taking into account all 
export transactions of the exporter or foreign producer concerned. However, it seems to us that this tension is dissipated by two aspects of the text  and structure of Articles 2.1, 2.4.2 and 6.10 of 
the Anti-Dumping Agreement. First, in the context of the second sentence of Article 2.4.2, when 
an investigating authority determines the margin of dumping for an individual exporter or foreign 
producer, the investigating authority is entitled to have particular regard, and therefore limit its analysis to the pricing behaviour of the exporter or foreign producer in respect of the transactions 
that form "a pattern of export prices which diffe r significantly among different purchasers, regions 
or time periods". Second, regardless of the meth odology applied, Articles 2.1 and 6.10 of the 
Anti-Dumping Agreement require that the margin of dumping be established for the product as a 
whole for the individual exporter or foreign producer concerned. Consequently, while the net 
amount of dumping may be established from co nsidering the evidence of dumping in pattern 
transactions (in its entirety, as explained above), 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. It 
follows 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 the individual exporter or foreign producer concerned.  
7.161.  With this understanding of Article 2.4.2, we now turn to Korea's claim against the USDOC's 
use of "systemic disregarding". The so-called "systemic disregarding" arises in the specific situation where the DPM combines the results of  applying the W-T comparison methodology in 
respect of pattern transactions with the results of applying the W-W comparison methodology in 
respect of non-pattern transactions. One might take the view, consistent with the focus of the 
second sentence being on the pricing behaviour in respect of pattern transactions, 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 has not advanc ed any claim to this effect, there is no need 
for us to rule on this matter. For present purposes, therefore, we will assume that the combined application of methodologies is not excluded. If methodologies are combined, one must consider 
how the results of the combined methodologies should  be aggregated. It is in this context that the 
issue of "systemic disregarding" arises.
299 
7.162.  As noted previously, the second sentence of Article 2.4.2 is designed to enable an 
investigating authority to focus on pattern transactions to unmask targeted dumping that would 
otherwise be masked by an absence of dumping in respect of non-pattern transactions. Because it 
is an exceptional comparison methodology, the application of the W-T comparison methodology 
under the second sentence is subject to stringen t conditions. In a situation where an authority 
chooses to apply the W-T comparison methodology to pattern transactions and the W-W (or T-T) 
comparison methodology to non-pattern transactions, we see no utility in allowing an investigating authority to use the W-T comparison methodology to zoom in and have particular regard to the 
exporter's pricing behaviour in respect of pattern transactions, after ensuring compliance with the 
relevant conditions, if the authority is subsequently required to zoom out from that specific pricing behaviour and give full effect to the exporter's  pricing behaviour in respect of non-pattern 
transactions when making its overall determinatio n of dumping. After allowing an authority to 
unmask dumping in respect of pattern transactions, it makes no sense to require that authority to 
then re-mask  such dumping by providing offsets for ne gative dumping in respect of non-pattern 
transactions. Such offsets would be at odds with  the object and purpose of the second sentence. 
7.163.  Korea contends that the failure to provide offsets in respect of negative dumping for 
non-pattern transactions is "essentially a new form of zeroing".
300 Korea cautions that "the 
Appellate Body has made it clear that 'dumping' for the product as a whole must properly reflect 
                                               
298 Appellate Body Report, US – Zeroing (Japan) , para. 151. 
299 In cases where the non-pattern transactions are dumped, aggregating the result of the W-W 
comparison methodology (without zeroin g) 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 potential for the margin of dumping 
to change only arises when the non-pattern transa ctions (assessed using the W-W methodology, without 
zeroing) are not dumped, and when that amount of ne gative dumping is "systema tically disregarded" upon 
aggregation with the results 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. 
300 Korea's second written submission, para. 198. WT/DS464/R 
 
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  all positive and negative margins".301 We disagree that the Appellate Body's rulings against the 
practice of zeroing in the context of the first sentence of Article 2.4.2 mean that "systemic 
disregarding" should also be condemned if the W-W and W-T comparison methodologies are 
combined. The determination of dumping for the pr oduct as a whole in the context of the first 
sentence requires an authority to have regard to the exporter's pricing behaviour as a whole, in 
respect of all export transactions. In contrast, as  explained, the determination of dumping for the 
product as a whole in the context of the exceptiona l methodology is different, in the sense that the 
second sentence enables an authority to focus on, and have particular regard to, the exporter's 
pricing behaviour in respect of pattern transactions while taking into account the totality of its exports when calculating the margin as a percentage of exports.
302 If an authority chooses to 
apply different methodologies for pattern and non-pattern transactions respectively, "systemic 
disregarding" enables an investigating 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.  
7.164.  The exclusion of "systemic disregarding" wo uld also lead to mathematical equivalence with 
the results of a straightforward application of the W-W comparison methodology to all transactions.
303 Korea asserts that an authority could avoid mathematical equivalence by 
conducting a "granular analysis" of the domestic and export transactions involved in the W-T 
comparison. Thus, Korea observes that "whe n implementing the second sentence, the 
investigating authority has discretion to undertake a more detailed calculation of weighted-average prices for normal value and a more detailed approach to price adjustments".
304 
7.165.  Korea contends that the use of different  weighted average normal values, one for the 
application of the W-T comparison methodology to pattern transactions and a different one for the 
W-W comparison methodology for non-pattern transactions, would be allowed. Korea contends 
that "the normal value appropriate for one of the Article 2.4.2 methodologies may be different 
from the normal value appropriate for another Article 2.4.2 methodology".305 However, Korea has 
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 se cond sentence should differ, within the same 
anti-dumping proceeding, from the "weighted av erage normal value" referred to in the first 
sentence. Nor do we consider that any textual basis exists.306 Korea has rather argued that "the 
point of the second sentence is to consider the export transactions individually, so the authority 
can decide about the normal value to which each export transaction will be compared".307 This 
argument would seem to refer to the phrase "individual export transactions" in the second sentence. We have already explained that this phrase relates to identifying the (pattern) 
transactions to be compared to the weighted average normal value, consistent with the general 
emphasis placed by the second sentence on pattern transactions. This phrase says nothing about the weighted average normal value to which the ex port prices of those transactions should be 
compared. While the second sentence envisages that particular regard be had to a particular 
                                               
301 Korea's second written submission, para. 198. 
302 As explained below, zeroing is still prohibited in this context, since the investigating authority must 
have regard to the totality of the exporter's pricing behaviour within the pattern. 
303 We are specifically addressing the mathematical equivalence that would arise when the results of 
applying the W-W comparison methodology to all transact ions are compared to a combined application of the 
W-T comparison methodology to pattern transactions and the W-W comparison methodology to non-pattern transactions. There is no mathematical equivalence if the application of the W-T comparison methodology to 
pattern transactions is combined with the application of the T-T comparison methodology to non-pattern transactions (see Example 2 of Exhibit KOR-93, paras. 45-55; and United States' second written submission, para. 115). However, since an investigating authority has discretion to use either the W-W or T-T comparison 
methodology under the first sentence of Article 2.4.2, we do not consider that an authority choosing to apply a combination of methodologies should be required to apply the T-T methodology to non-pattern transactions 
simply in order to avoid mathematical equivalence. 
304 Korea's oral statement at the seco nd meeting of the Panel, para. 7. 
305 Korea's second written submission, para. 53. 
306 We do not mean to suggest that only a single weighted average normal value should be applied. We 
acknowledge that model-specific weighted average norm al values may be established, and that different 
weighted average normal values may be established for different periods within the period of investigation. 
307 Korea's response to Panel question No. 4.19(iv), pa ra. 118. Korea also refers to Article 2.1 of the 
Anti-Dumping Agreement, whereby dumping exists if the ex port price is less than a "comparable" home market 
price (Korea's response to Panel qu estion No. 4.10(ii), para. 40). Accord ing to Korea, the authority must 
therefore determine a normal value that is comparable to the specific individual export transaction at issue. We 
are not persuaded that a general provision regarding the de finition of dumping should result in a reading of the 
second sentence of Article 2.4.2 that is at o dds with the specific text of that provision. WT/DS464/R 
 
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  sub-category of export transactions, there is nothing to suggest that the second sentence also 
envisages the establishment of a separate weight ed average normal value with respect to some 
sub-category of domestic transactions. In other words, the exceptional nature of the W-T comparison methodology seems to reside in the "T", rather than the "W". If a proper 
application of the second sentence were to depend on it being "appropriate" to use a different 
weighted average normal value under the second sentence than under the first, as suggested by Korea, we would have expected this to have been  reflected in the text of the second sentence.
308  
7.166.  We take a similar view concerning Korea's argument that the second sentence also allows 
the authority to "rethink the adjustments that might be necessary to ensure price comparability".
309 Korea suggests that while an investigating authority might decide to use an 
overall average expense in making an adjustme nt under the W-W comparison methodology, it 
may make more sense for the authority to calculat e expenses on transaction-by-transaction basis 
if the comparison is made using the W-T comparison methodology.310 Korea explained during the 
second substantive meeting that such "granular analysis"311 of adjustments would be undertaken 
pursuant to an investigating authority's residual discretion under Article 2.4 of the Anti-Dumping 
Agreement312, rather than any specific authority governing the making of adjustments exclusively 
under the second sentence of Article 2.4.2.313 We observe that the second sentence does not 
envisage that any price adjustments be made in addition to those made pursuant to an authority's 
general obligation to make a "fair comparison" pursuant to Article 2.4. Thus, there is nothing in the text of the second sentence to suggest that an authority could or should make the type of adjustments proposed by Korea in order to a llow the authority to unmask targeted dumping. 
Rather, the adjustments referred to by Korea would be made pursuant to a provision that applies 
to all three comparison methodologies set forth in the first and second sentences of Article 2.4.2. If a proper application of the second sentence  w e r e  t o  d e p e n d  o n  t h e  t y p e  o f  a d j u s t m e n t s  
envisaged by Korea, we would have expected Arti cle 2.4.2, and particularly the second sentence 
thereof, to have said something about this issue. Furthermore, price adjustments will likely be made by the investigating authority before the app lication of the second sentence of Article 2.4.2 
is considered.
314 Moreover, adjustments are made prior to determining whether a pattern of 
significant price differences exists. This is reflecte d in the structure of Article 2.4, which addresses 
the need for adjustments for factors affecting price comparability in the chapeau of Article 2.4, before the discussion of comparison methodologies in Article 2.4.2. We see nothing to suggest that 
the authority should re-visit these adjustments in the event that the second sentence of 
Article 2.4.2 is ultimately applied. In other word s, there is nothing to suggest that adjustments 
that would be appropriate in the context of the first sentence comparison methodologies would 
cease to be appropriate in the context of the second sentence methodology.  
7.167.  In light of the above considerations, we reject Korea's claim that the USDOC's use of 
"systemic disregarding" when combining the W-W and W-T comparison methodologies in the 
context of the DPM is "as such" inconsistent with the second sentence of Article 2.4.2. 
7.4.2.3.2  Claims against "systemi c disregarding" under Article 2.4 
7.168.  Korea also brings an Article 2.4 "fair comparison" claim against the use of "systemic 
disregarding" under the DPM "as such". Korea contends that "systemic disregarding" is not fair 
                                               
308 At para. 138 of its second written submission, the United States has explained that comparing export 
prices in one month to the monthly weighted-average no rmal value for that same month will not necessarily 
take into account appropriately the price differences. The United States suggests that this is because the monthly comparisons still are aggregated  together to calculate the responde nt's overall margin of dumping for 
the product as a whole, and offsets for negative intermediate comparison  results allow higher-priced export 
sales made during distinct time periods to "mask" lower- priced export sales during ot her distinct ti me periods. 
We see merit in the United States' argument, an d note that Korea has not disagreed with it. 
309 Korea's response to Panel ques tion No. 4.19(iv), para. 118. 
310 Korea's response to Panel qu estion No. 4.10(i), para. 35. 
311 Korea's response to Panel question No. 4.19(iv), paras. 119-122. 
312 Article 2.4 of the Anti-Dumping Agreement provides in relevant part that "[d]ue allowance shall be 
made in each case, on its merits, for differences whic h affect price comparability, including differences in 
conditions and terms of sale, taxation, levels of trad e, quantities, phys ical characteristic s, and any other 
differences which are also  demonstrated to affect  price comparability". 
313 See also Korea's response to Panel question No. 4.10. 
314 This was the case in the Washers  anti-dumping investigation. Korea has not challenged this aspect of 
the investigation. Korea also acknowledges that investigating authorities have the discretion to proceed in this manner (see Korea's response to Panel question No. 4.19(iii), paras. 109 and 111). WT/DS464/R 
 
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  because, like zeroing, it unlawfully inflates the dumping margin and makes a positive 
determination more likely, by ignoring the negative dumping margins.315 The United States asks 
us to reject Korea's claim.316 
7.169.  As explained in detail above, we consider that Article 2.4.2 enables investigating 
authorities to establish the existence of a margin of dumping by focusing on pattern transactions. 
If such a situation arises and an authority chooses to combine the application of the W-W methodology to non-pattern transactions with the application of the W-T methodology to pattern 
transactions, systemic disregarding enables it to avoid concealing any dumping identified in 
respect of pattern transactions with the negative dumping in respect of non-pattern transactions. Accordingly, there is no basis for us to accept Korea's argument that "systemic disregarding" is unfair and contrary to Article 2.4 because it in flates the margin of dumping and ignores the 
negative amount of dumping in respect of non-pattern transactions. 
7.4.3  Additional claims concerning the DPM 7.170.  Korea also challenges the DPM as an ongoing conduct, and "as applied" in the first 
administrative review of the Washers  anti-dumping order, including the preliminary determination 
published on 9 March 2015
317 and the final determination published on 8 September 2015.318  
7.171.  We recall our findings above that the DP M is "as such" inconsistent with the second 
sentence of Article 2.4.2. We also note that Kore a's "as applied" claims relate to the same issues 
as its "as such" claim.319 We therefore do not consider it necessary for the resolution of the 
present dispute to also review Korea's ongoing conduct and "as applied" claims concerning the 
DPM.320  
7.5  Zeroing in the context of the W-T comparison methodology 
7.5.1  Introduction  7.172.  Zeroing in the context of establishing  margins of dumping using the W-T comparison 
methodology occurs when the USDOC disregards (i.e. treats as "zero") any negative dumping 
when the results from multiple comparisons betw een the weighted average normal value and each 
of the individual export transactions are aggregated. 
7.173.  Korea challenges the unwritten measure whereby the USDOC uses zeroing whenever the 
W-T comparison methodology is applied. We note that the United States does not disagree that 
this measure exists, or that it is of general and prospective application.
 321 Currently, the USDOC 
                                               
315 Korea's first written submission, para. 241. 
316 United States' second written submission, para. 199. 
317 Large Residential Washers from the Republic of Ko rea: Preliminary Results of the Antidumping Duty 
Administrative Review; 2012-2014, 80 Fed. Reg. 12,456 (March 9, 2015); Large Residential Washers from the Republic of Korea: Decision Memorandum for the Prelim inary Results of the Antidumping Duty Administrative 
Review; 2012-2014; Preliminary Results Margin Calculation for LGE, (Exhibit KOR-96). 
318 Issues and Decision Memorandum for the Final Results of the Antidu mping Administrative Review of 
Large Residential Washers from the Republic of Kore a (September 8, 2015), (Exhibit KOR-141). See also 
fn 306 below. 
319 Korea's "as applied" challenge of the DPM covers only 4 out of the 5 aspects of Korea's "as such" 
challenge because the improper scope of a pplication issue did no t arise in the first Washers  administrative 
review. See Korea's second written submission, fn 88; and response to Panel question No. 4.22, paras. 163 and 164. 
320 The USDOC published the preliminar y and final determinations of the first administrative review of 
the Washers  anti-dumping order during the course of the present proceedings (Exhibits KOR-96 and 141). 
Korea refers to these determinations in support of its "o ngoing conduct" and "as applied" claims concerning the 
DPM. Since we do not find it necessary to address thes e claims, it is not necessar y for us to consider the 
procedural issue whether these determinatio ns fall within our terms of reference. 
321 Korea has provided detailed evidence supporting its view that the USDOC's use of zeroing when 
applying the W-T comparison methodology is an unwritten measure that may be challenged "as such" (see Korea's response to Panel question No. 1.2). The Unit ed States has not contested the existence of this 
measure. In these circumstances, and bearing in mind that findings have been made in respect of the use of 
zeroing "as such" under the first se ntence of Article 2.4.2 in numerous previous dispute settlement 
proceedings, we find that the unwritten measure wh ereby the USDOC applies zeroing when applying the 
W-T comparison methodology may be challenged "as such". WT/DS464/R 
 
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  applies the W-T comparison methodology as part of the DPM and applies zeroing to the 
transactions to which it applies the W-T comparison methodology. 322 In cases where the value of 
pattern transactions is between 33% and 66% of the total export transactions, the W-T comparison methodology with zeroing is applied to pattern transactions. Alternatively, when 
pattern transactions represent more than 66% by value of total export transactions, the 
W-T comparison methodology with zeroing is applied to all export transactions. In the Washers  
anti-dumping investigation, the USDOC used zeroing when applying the W-T comparison 
methodology to all export transactions pursuant to the then applicable Nails II  methodology.
323  
7.174.  Korea claims that the measure whereby the USDOC applies zeroing in the context of the 
W-T comparisons in original investigations is inconsistent "as such" with the second sentence of Article 2.4.2, Articles 2.1 and 2.4 of the Anti -Dumping Agreement, and Article VI:1 of the 
GATT 1994. Korea also claims that the measure wh ereby the USDOC applies zeroing in the context 
of the W-T comparisons in administrative reviews is  inconsistent "as such" with Article 9.3 of the 
Anti-Dumping Agreement and Article VI:2 of the GATT 1994. Additionally, Korea claims that the 
USDOC's application of zeroing when aggregating the results of the W-T comparisons in the 
Washers  anti-dumping investigation and "subsequent connected stages", including administrative 
reviews, is inconsistent with the second sentence of Article 2.4.2, and with Articles 2.1, 2.4 
and 9.3 of the Anti-Dumping Agreement, and Articles VI:1 and VI:2 of the GATT 1994. 
7.175.  The United States asks us to reject these claims.  7.176.  We begin by addressing Korea's claims against zeroing under the second sentence of 
Article 2.4.2. 
7.5.2  Korea's claims against zeroing unde r the second sentence of Article 2.4.2 
7.5.2.1  Main arguments of the parties 7.177.  Korea's zeroing claims
324 are based primarily on findings made by the Appellate Body 
concerning the use of zeroing in the context of original investigations and reviews in which the 
W-W or T-T comparison methodologies were applie d. Korea contends that these Appellate Body 
findings are dispositive of the question of whether zeroing is permitted in the context of any 
anti-dumping proceeding, regardless of the comparison methodology used. This, according to 
Korea, is because the Appellate Body has conclusi vely interpreted the concept of "dumping", for 
the Anti-Dumping Agreement as a whole, as a product-wide and exporter-specific concept. Korea submits that the USDOC's use of zeroing in the W-T comparison methodology is based on a 
transaction-specific notion of dumping, allowing it to disregard (i.e. set at zero) non-dumped 
transactions when aggregating intermediate comparison results. Korea contends that the Appellate Body has on numerous occasions rejected the argument that the concepts of "dumping" and 
"margin of dumping" could possibly occur at the transaction-specific level. Korea submits that 
there is nothing in the second sentence of Ar ticle 2.4.2 to suggest that zeroing is somehow 
permissible in that context, while impermissi ble in the context of all other anti-dumping 
proceedings. Korea asserts that the application of zeroing in the context of the W-T comparison 
methodology in original investigations is indistinguishable from the application of zeroing in any other context. Korea submits that the second sent ence of Article 2.4.2 merely provides a limited 
exception to the application of the symmetrical methodologies provided for in the first sentence. 
Korea submits that the second sentence does no t, under any circumstance, provide an exception 
to the general rule that "dumping" and "margin of dumping" reflect product-wide and exporter-specific concepts throughout the Anti-Dumping Agreement.  
7.178.  The United States disagrees
325 with Korea's suggestion that prior Appellate Body reports 
are dispositive of the permissibility of zeroing in  the context of the W-T comparison methodology. 
The United States asserts that the Appellate Body has expressly stated that it has not ruled on the 
question of whether or not zeroing is permissible under the W-T comparison methodology when 
the requirements of the second sentence of Arti cle 2.4.2 are satisfied. The Appellate Body has 
merely addressed contextual arguments pertaini ng to that methodology when considering the 
                                               
322 Korea's first written submission, paras. 120-121. 
323 Korea's response to Panel question No. 1.2, para. 13. 
324 Korea's main arguments are set forth at pa ras. 54-70 of its first written submission. 
325 United States' main arguments are set forth at paras. 154-268 of its first written submission. WT/DS464/R 
 
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  WTO-consistency of zeroing when applying the normal comparison methodologies provided for in 
the first sentence of Article 2.4.2. The United States also denies that it treats the results of transaction-specific comparisons as "margins of dumping" when the W-T comparison methodology is applied. The United States submits that it is not asking the Panel to depart from the Appellate 
Body's finding that such transaction-specific comparisons are merely inputs that are to be 
aggregated in order to establish the margin of dumping of the product under investigation for each exporter or producer. The United States argues that  nothing in the text of the second sentence of 
Article 2.4.2 prohibits the use of zeroing and, contextually, since the second sentence is an 
exception to the first sentence of Article 2.4.2,  the W-T comparison methodology set forth in the 
second sentence should not yield results that ar e systematically similar to the results of the 
comparison methodologies set forth in the first sentence (W-W and T-T). The United States 
submits that, if the use of zeroing is prohibited in connection with the W-T comparison 
methodology, then the result of applying  the W-T comparison methodology would be 
mathematically equivalent to the result of applying the W-W comparison methodology, rendering 
the second sentence of Article 2.4.2 inutile . The United States contends that, while the Appellate 
Body has considered mathematical equivalence previously, nothing in prior Appellate Body findings forecloses the possibility that mathematical equivalence could support a finding that zeroing is 
permissible in connection with the use of the W-T comparison methodology. The United States also 
argues that negotiating history documents from the Uruguay Round confirm the interpretation proposed by the United States.  
7.5.2.2  Main arguments of third parties
326 
7.179.  Brazil notes327 that there are considerable uncertainties as to how the W-T comparison 
methodology should operate in targeted dumping situations and that no decision has yet been taken on whether "zeroing" is or is not permitted in  this context. Brazil argues that the Appellate 
Body has already held that there "is an inherent bias in a zeroing methodology"
328 and that as a 
"way of calculating" margins the zeroing methodology "cannot be described as impartial, even-handed, or unbiased"
329, because the comparison necessarily excludes any negative results. 
7.180.  Canada argues330 that the definition of dumping contained in Article 2.1 of the 
Anti-Dumping Agreement applies throughout the Ag reement. In Canada's opinion, when examining 
the use of zeroing under the T-T comparison methodology, the Appellate Body found that the concepts of "dumping" and "margins of dumping" can only be found to exist in relation to a 
product. Because the individual comparisons only yield intermediate results and not margins of 
dumping, margins of dumping cannot be found to exist under any methodology at the transaction level.
331 Canada argues that this means that even when an investigating authority is justified in 
using the exceptional W-T comparison methodology, the results of the individual comparisons 
must be aggregated to determine the margin of dumping in accordance with Article 2.4.2. 
7.181.  China agrees with Korea332 that the Appellate Body has settled that the term "dumping" 
used throughout the Anti-Dumping Agreement is a "product-related" concept333, and that the 
existence of "dumping" and "margins of dumping" are determined in relation to all export sales by an exporter or foreign producer of the relevant product. China stresses on the importance of the rejection of a transaction-specific understanding of dumping for the resolution of the zeroing issues 
in this dispute. China contends that if dumping is – in contrast to the apparent United States' 
position – understood to exist only in the aggregat e of an exporter's pricing of a product over time, 
and a "margin of dumping", by definition, is a margin for the product as a whole, then any 
calculation or aggregation of comparison results that fails to take account of all intermediate 
comparison results is simply not a margin of dumping consistent with the covered agreements. 
                                               
326 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
327 Brazil's third party oral statement, para. 17. 
328 Ibid., referring to Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135.  
329 Ibid., referring to Appellate Body Report, US – Zeroing (Japan) , para. 146, quoting Appellate Body 
Report, US – Softwood Lumber V (21.5) , para. 142. 
330 Canada's third party subm ission, paras. 8 and 9. 
331 Ibid. para. 8 (citing Appellate Body Reports US – Zeroing (Japan) , para. 115; US – Stainless Steel 
(Mexico) , paras. 104 and 105; and US – Continued Zeroing , para. 308). 
332 China's third party subm ission, paras. 65 and 66. 
333 Ibid. para. 65 (citing Appellate Body Report, US – Stainless Steel (Mexico) , para. 94). WT/DS464/R 
 
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  7.182.  The European Union disagrees with Korea's argument334 that a targeted dumping case has 
already been decided by the existing case law on zeroing. According to the European Union, panels and the Appellate Body have exercised judicial rest raint in this matter, addressing specific cases 
with specific types of comparison methodologies. As a targeted dumping case has not been 
addressed before, the European Union contends that it is not prejudged.  
7.183.  Japan agrees with Korea's understanding
335 that the Appellate Body jurisprudence covers 
the W-T comparison methodology under the second sentence of Article 2.4.2 of the Anti-Dumping 
Agreement. Japan contends that the Appellate Body has clarified that the determination of 
dumping is made in relation to "a product", so that the concepts of "dumping" and "margins of dumping" must be applied in a coherent and consistent manner to all provisions of the 
Anti-Dumping Agreement, and for all types of anti-dumping proceedings.
336  
7.184.  Norway agrees337 with Korea in that the Appellate Body has repeatedly found that 
"dumping" and "margins of dumping" must be established for the "product as a whole", as 
opposed to at the individual transaction level.338 Furthermore, Norway contends that the Appellate 
Body has underlined that the concepts of "d umping" and "margin of dumping" are exporter-
specific, and it has further clarified that these two terms must have "the same meaning in all provisions of the Agreement  and for all types off anti-dumping proceedings"
339. Norway agrees 
with Korea that the cohesive interpretation of these terms by the Appellate Body precludes an 
interpretation of "dumping" and "margins of dumpin g" to the effect that these may be considered 
on a transaction-specific basis, including und er the second sentence of Article 2.4.2. 
7.185.  Thailand contends340 that although the Appellate Body has not yet considered the use of 
zeroing in the W-T comparison methodology in cases of "targeted dumping" under the second 
sentence of Article 2.4.2, the Anti-Dumping Agreem ent does not permit the use of zeroing in such 
case.  
7.186.  Viet Nam agrees341 with Korea's reading of the second  sentence of Article 2.4.2 as not 
permitting recourse to the "zeroing" methodology. Viet Nam contends that the fact that it is an exception does not speak to the issue of zeroing, as it is exceptional because it is asymmetrical- 
that is, what is compared on one side of the comparison (a weighted average) is different from 
what is on the other side of the comparison (individual transactions).  
7.5.2.3  Evaluation by the Panel 7.187.  We recall the emphasis placed on patte rn transactions in the second sentence of 
Article 2.4.2.
342 As we shall explain, we consider that in light of the text of the second sentence of 
Article 2.4.2 and previous findings of the Appella te Body concerning zeroing when determining the 
margins of dumping, the second sentence of Article 2.4.2 allows an investigating authority to have 
particular regard to the pricing behaviour of an exporter in respect of those pattern transactions in 
determining the margin of dumping for that export er. However, such possibility requires that the 
entirety of the pricing behaviour within that pattern must be taken into account. We see no basis 
for ignoring, or zeroing, individual pattern transactions that may be priced above normal value. 
7.188.  We refer to our analysis in paragraphs 7.158.  to 7.160.  above concerning the 
four fundamental concepts identified by the Appellate Body343, which apply regardless of the 
comparison methodology used to establish margins of dumping. Our analysis therein explains our 
understanding of the possible tension that may be inferred from those principles and the 
                                               
334 European Union's third pa rty submission, para. 46. 
335 Japan's third party submission, para. 10. 
336 Ibid. (citing Appell ate Body Reports, US – Softwood Lumber V , paras. 92 and 93; US – Zeroing (EC) , 
para. 126; and US – Stainless Steel (Mexico) , para. 106). 
337 Norway's third party statement, para. 5. 
338 Ibid. (citing Appell ate Body Reports, US – Zeroing (EC) , para 126; and US – Softwood Lumber V , 
paras. 92 and 93). 
339 Ibid. (citing Appe llate Body Report, US – Zeroing (Japan),  para. 109). 
340 Thailand's third party statement, para. 6. 
341 Viet Nam's third party st atement, paras. 6 and 7. 
342 See para. 7.25.  above. 
343 See Appellate Body Report, US – Zeroing (Japan) , paras. 108-114. WT/DS464/R 
 
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  explanation by the Appellate Body344, that the phrase "individual export transactions" in the 
second sentence of Article 2.4.2 refers to the transactions that fall within the relevant pricing pattern, a more limited universe than the export transactions covered when applying the symmetrical comparison methodologies foreseen in the first sentence of Article 2.4.2. With this 
analysis in mind, we refer to the claim by Korea that zeroing in the context of the W-T comparison 
methodology is contrary to the second sentence of Article 2.4.2. 
7.189.  In the context of the second sentence of  Article 2.4.2, when an investigating authority 
determines the margin of dumping for an individual exporter or foreign producer, the investigating 
authority is entitled to have particular regard, and therefore limit its analysis to the pricing behaviour of the exporter or foreign producer in respect of the transactions that form "a pattern of export prices which differ significantly among diffe rent purchasers, regions or time periods". This 
explains the Appellate Body's reference to the "emp hasis" of the second sentence of Article 2.4.2 
being on pattern transactions. Consequently, and in  order to fulfil the object and purpose of the 
second sentence of Article 2.4.2, the W-T comparison methodology allows the investigating 
authority to zoom in on the evidence of dumpin g in respect of pattern transactions, and ensure 
that such evidence is fully reflected in the marg in of dumping, rather than being masked through 
the use of one of the symmetrical comparison methodologies provided for in the first sentence.
345  
7.190.  Since the second sentence involves particular emphasis on the exporter's pricing behaviour 
in respect of pattern transactions, the entirety  of the evidence of dumping in respect of that 
pattern must be taken into account. The focus of the W-T comparison methodology is on the prices of the "individual" export transactions within the pattern. The word "individual" suggests to us 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. There is no basis to conclude that the 
export prices in certain individual transactions (e.g. those below normal value) should be accorded 
greater significance than the export prices in othe r individual export transactions (e.g. those above 
normal value). There is certainly nothing in the text of the second sentence to suggest that the investigating authority is entitled to disregard evidence pertaining to pattern transactions where 
the export price is above normal value. On the contrary, the phrase "individual export 
transactions" in the first part of the second sentence suggests to us 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. 
7.191.  The United States asserts that zeroing is needed to ensure that pattern transactions whose 
export price is above normal value do not mask the evidence of dumping in respect of pattern 
transactions whose export price is below normal value.
346 We see no justification for this approach. 
As indicated above, the object and purpose of the second sentence indicates that non-pattern 
transactions should not mask the evidence of dumping in respect of pattern transactions. The possibility that non-pattern transactions might ma sk dumping in respect of pattern transactions 
arises because of the significant price differe nce between these transactions. There is no 
consideration of whether transactions within  the pattern are priced at significantly different levels 
relative to one another. There is therefore no basis to conclude that one (pattern) transaction priced significantly lower than non-pattern transactions might mask evidence of dumping in 
respect of another (pattern) transaction priced significantly lower than non-pattern transactions. 
7.192.  For the reasons set forth above, we find that the USDOC's use of zeroing when applying 
the W-T comparison methodology is "as such" inconsistent with the second sentence of 
Article 2.4.2. For the same reasons, we also find that the USDOC acted inconsistently with the 
second sentence of Article 2.4.2 by using zeroin g when applying the W-T comparison methodology 
in the Washers  anti-dumping investigation. 
7.193.  Concerning the claim by Korea of violation of Article 2.4.2 regarding the use of zeroing 
when applying the W-T methodology in "subsequent connected stages" of Washers , including any 
administrative reviews of the Washers  anti-dumping order, we note that the preliminary 
                                               
344 Appellate Body Report,  US – Zeroing (Japan) , para. 135. We observe that a similar statement was 
made by the Appellate Body in footnote 166 of its report on US – Softwood Lumber V (Article 21.5) . 
345 This is consistent with Korea's view that "[t]he sp ecific addition of the term 'pattern' in the text of 
the second sentence of Article 2.4.2 indicates a focus on  a subset of total export sales that constitute the 
'intelligible form' that the authority seeks to discer n" (see Korea's second written submission, para. 99). 
346 United States' first written submission, para. 151. WT/DS464/R 
 
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  determination of the first administrative review of the Washers anti-dumping  order was published 
on 9 March 2015 (Exhibit KOR-96). The final determination of that review was published on 16 September 2015 (Exhibit KOR-141). The United States asserts that these determinations fall outside our terms of reference. Korea asserts that they should be included within the Panel's terms 
of reference. The Panel has already found th e USDOC's use of zeroing when applying the 
W-T comparison methodology is "as such" inconsistent with the second sentence of Article 2.4.2. In light of that finding, it is not necessary for us to address Korea's claim regarding the USDOC's 
use of zeroing when applying the W-T methodology in "subsequent connected stages of Washers" , 
including any administrative reviews of the Washers  anti-dumping order. Nor, therefore, is it 
necessary for us to address the procedural issue of whether the preliminary and final 
determinations in the first administrative review of the Washers  anti-dumping order fall within our 
terms of reference. 
7.5.3  Korea's claims against zeroing under other provisions 7.194.  Korea has also raised claims regarding the United States' use of zeroing when applying the 
W-T comparison methodology under other provis ions of the Anti-Dumping Agreement. Korea 
claims that the USDOC's use of zeroing is inconsistent with the "fair comparison" requirement set forth in Article 2.4, and as a consequence also  Article 2.1 of the Anti-Dumping Agreement and 
Article VI:1 of the GATT 1994, both "as such" and as applied in the Washers  anti-dumping 
investigation and "subsequent connected stages". In addition, Korea claims that the use of zeroing in administrative reviews is inconsistent with Article 9.3 of the Anti-Dumping Agreement, and Article VI:2 of the GATT 1994, both "as such" and as applied in "subsequent connected stages".  
7.195.  The United States asks us to reject these claims. 
7.5.3.1  Main arguments by the parties 7.196.  Korea contends
347 that the use of zeroing invariably leads to the results of intermediate 
W-T comparisons being disregarded or artificially set to zero, thus increasing the resulting margins 
of dumping and making an affirmative dumping determination more likely. Korea asserts that the use of zeroing is therefore inconsistent with the "fair comparison" requirement set forth in the first 
sentence of Article 2.4.
348 According to Korea, the Appellate Body has found that the ordinary 
meaning of the term "fair" requires investigating authorities to be "impartial, even-handed, or unbiased" when comparing the export price and normal value, and this obligation applies with equal force to all three comparison methodologies provided in Article 2.4.2. Korea suggests that 
the Appellate Body has indicated that the use of zeroing cannot be considered impartial, 
even-handed or unbiased, because it distorts the prices of non-dumped export transactions, which 
are either not considered at their real value or artificially reduced.
349 
7.197.  Korea also claims that, as a result of zeroing in original investigations being inconsistent 
with the second sentence of Article 2.4.2 and the Ar ticle 2.4 fair comparison requirement, it is also 
inconsistent with the definition of "dumping" set forth in Article 2.1 of the Anti-Dumping 
Agreement and Article VI:1 of the GATT 1994, and with the general principle set forth in Article 1 
of the Anti-Dumping Agreement.350 
7.198.  Furthermore, Korea contends that the USDOC also systematically applies the zeroing 
methodology when calculating margins of dumping for the product and exporter in the context of 
administrative reviews, where those administrative  reviews entail the use of the W-T comparison 
methodology. Korea asserts that the USDOC therefore levies anti-dumping duties in excess of the margin of dumping properly established under Article 2 of the Anti-Dumping Agreement. Korea 
submits that the use of zeroing when applying the W-T comparison methodology in administrative 
                                               
347 The main arguments of Korea are set forth at  paras. 71-76 of its first written submission. 
348 The first sentence of Article 2.4 of the Anti-Dumping Agreement provides "[a] fair comparison shall 
be made between the export price and the normal value". 
349 Korea's first written submission, para. 75. 
350 Ibid. para. 352. By the terms of Korea's Request for Establishment of a Panel, Korea's Article 1 claim 
is limited to the USDOC's use of zeroing in the Washers  anti-dumping investigation (Document WT/DS464/4, 
Section I.5, p. 3). WT/DS464/R 
 
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  reviews is therefore "as such" inconsistent with Article 9.3 of the Anti-Dumping Agreement, and 
Article VI:2 of the GATT 1994.351 
7.199.  The United States asserts that Korea overstates the Appellate Body's findings in previous 
disputes related to zeroing and Article 2.4 of the Anti-Dumping Agreement. The United States 
suggests that the Appellate Body's findings that zeroing is inconsistent with Article 2.4 are closely 
related to, and perhaps even dependent on, earlier findings that zeroing is inconsistent with the first sentence of Article 2.4.2. According to the United States, the second sentence of Article 2.4.2 
of the Anti-Dumping Agreement provides Me mbers a means to "unmask targeted dumping"
352 in 
"exceptional"353 situations. The United States contends that  it is "fair" to take steps to "unmask 
targeted dumping" by faithfully applying the comparison methodology in the second sentence of Article 2.4.2, when the conditions for its use are met. The United States asserts that because 
zeroing is not inconsistent with Articles 2.4 or 2. 4.2 (second sentence), there is no basis to uphold 
Korea's dependent claims under Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994. 
7.200.  Regarding Korea's claim that the use of zeroing in administrative reviews is "as such" 
inconsistent with Article 9.3 of the Anti-Dumping Agreement, and Article VI:2 of the GATT 1994, the United States notes
354 that this claim is premised on Korea's argument that the USDOC 
"systematically levies anti-dumping duties in excess of the margin of dumping properly established 
under Article 2 of the Anti-Dumping Agreement."355 The United States recalls its earlier arguments 
that the USDOC's use of zeroing, or its approach to determining dumping under the average-to-transaction comparison methodology, is not inconsistent with Article 2 of the Anti-Dumping 
Agreement. The United States submits that there is therefore no basis for Korea's claims of 
inconsistency with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.  
7.5.3.2  Main arguments of third parties
356 
7.201.  Canada asserts357 that the practice of zeroing is inconsistent with the obligation to make a 
"fair comparison" contained in Article 2.4. The chapeau of Article 2.4 requires that "[a] fair comparison shall be made between the export price and the normal value". The introductory 
clause to Article 2.4.2 indicates that the dumping calculation methodologies set out therein are 
subject to the fair comparison obligation in Article 2.4.
358 Disregarding the results of certain 
intermediate comparisons is inconsistent with the obligation to make a "fair comparison" under Article 2.4. In this case, the USDOC practice of zeroing while employing th e average-to-transaction 
methodology distorts certain facts related to an investigation and contains an inherent bias. It 
therefore cannot be described as "fair" in acco rdance with Article 2.4 of the Anti-Dumping 
Agreement.  
7.202.  China considers
359 that zeroing involves disregarding the prices at which above-normal 
value export transactions occur, thereby preventing  these relatively high prices from offsetting  the 
relatively low prices of other individual export transactions, and therefore failing to generate a 
margin for the product as a whole. Instead, such a practice "artificially inflates" the level at which 
dumping is alleged to occur360, by basing the determination solely  on a subset of the universe of 
export transactions – specifically, low-priced transactions that generate positive intermediate 
                                               
351 Article 9.3 of the Anti-Dumping Agreement provides that "[t]he amount of the anti-dumping duty 
shall not exceed the margin of dumping as established under Article 2". Article VI:2 of the GATT 1994 provides 
that "[i]n order to offset or pr event dumping, a contracting party may levy on any dumped product an 
anti-dumping duty not greater in amount than the marg in of dumping in respect of such product. For the 
purposes of this Article, the margin  of dumping is the price difference determined in accordance with the 
provisions of paragraph 1". 
352 Appellate Body Reports,  US – Zeroing (Japan) , para. 135; and  EC – Bed Linen , para. 62. 
353 See Appellate Body Reports, US – Softwood Lumber V (Article 21.5 – Canada) , paras. 86 and 97; 
and US – Zeroing (Japan) , para. 131. 
354 United States' first written submission, para. 267. 
355 Korea's first written submission, para. 98. 
356 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
357 Canada's third party submission, para. 10. 
358 Ibid. (citing Appe llate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , para. 136). 
359 China's third party subm ission, paras. 95 and 96. 
360 Ibid. para. 95 (citing Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , 
para. 142, referring to the use of zeroing in the context of the T-T comparison methodology). WT/DS464/R 
 
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  comparison results. Because a margin determined through a methodology that involves zeroing of 
some intermediate comparison results is not a "margin of dumping" in the sense of the Anti-Dumping Agreement, an approach to the im position of anti-dumping duties that employs 
zeroing is inconsistent with Article 9.3, something confirmed by the Appellate Body.
361 
7.203.  Japan contends362 that zeroing under the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement violates the fair comparison obligation imposed on Members' authorities by Article 2.4. The Appellate Body found that zeroing in W-T comparisons in the context of periodic 
reviews and new shipper reviews is, as such, inconsistent with Article 2.4
363, clarifying that 
disregarding certain comparisons or transactions is unfair because it artificially increases the resulting margins of dumping and making an affirmative dumping determination more likely. Japan concludes that nothing in the Anti-Dumping Agreement suggests that this well-established general 
proposition under Article 2.4 would not apply to the second sentence of Article 2.4.2. 
7.204.  Norway considers
364 that as with the other two comparison methodologies, the use of 
zeroing while applying the W-T comparison methodology distorts certain facts related to the 
investigation and contains an inherent bias, making a positive determination of dumping more 
likely. According to Norway this is clearly in violation of the "fair comparison" obligation of Article 2.4 of the Anti-Dumping Agreement. 
7.205.  Thailand submits
365 that the Anti-Dumping Agreement do es not permit the use of zeroing 
in the W-T comparison methodology. The first sentence of Article 2.4 provides that "[a] fair comparison shall be made between the export pric e and the normal price", which, in Thailand's 
view, must apply to Article 2.4 as a whole, in cluding both the first and second sentences of 
Article 2.4.2. According to Thailand, allowing  the use of zeroing in the W-T comparison 
methodology under targeted dumping while prohibiting it in all other instances would render the previous interpretations of "fair comparison" with regard to zeroing meaningless.  
7.5.3.3  Evaluation by the Panel 
7.206.  Turning to Korea's Article 2.4 claim, we observe that the Appellate Body has in a number 
of cases upheld Article 2.4 claims against the use of zeroing after finding that zeroing is 
inconsistent with the first sentence of Article 2.4.2.
366 We note in particular the Appellate Body's 
finding 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 pr oducer, then this methodology cannot be viewed 
as involving a 'fair comparison' within the meaning of the first sentence of Article 2.4."
367 We 
consider that the use of zeroing in the context of the W-T comparison methodology would not lead 
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. We therefore find that the use of zeroing in the context of 
the W-T comparison methodology is "as such" inconsistent with Article 2.4. For the same reasons, 
we find that the USDOC acted inconsistently with Article 2.4 by using zeroing in the Washers  
anti-dumping investigation. 
7.207.  Having found that the use of zeroing is inconsistent with both Article 2.4 and the 
second sentence of Article 2.4.2, we do not consid er it necessary for the resolution of the present 
dispute to also review Korea's dependent claims under Articles 1 and 2.1 of the Anti-Dumping Agreement, and Article VI:1 of the GATT 1994. 
                                               
361 China's third party submission, para 96 (citing in  relation to zeroing in  reviews "as such", the 
Appellate Body Reports , US – Zeroing (Japan) , para. 166; US – Stainless Steel (Mexico) , para. 133; and US – 
Continued Zeroing , para. 199). 
362 Japan's third party submission, para. 17. 
363 Ibid. (citing Appe llate Body Report, US – Zeroing (Japan) , para. 169). 
364 Norway's third party statement, para. 10. 
365 Thailand's third party statement, para. 4. 
366 See, for example, Appellate Body Reports, US – Zeroing (Japan) , paras. 123-125; EC – Bed Linen , 
para. 55; and US – Softwood Lumber V (Article 21.5 – Canada) , paras. 138-143. 
367 Appellate Body Report, US – Zeroing (Japan) , para. 168. WT/DS464/R 
 
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  7.208.  In respect of Korea's "as such" claim under Article 9.3 of the Anti-Dumping Agreement and 
Article VI:2 of the GATT 1994, the United States' de fence is based exclusively on its argument that 
zeroing is not inconsistent with Article 2 of the Anti-Dumping Agreement. We have already rejected this argument in the context of our findings that the use of zeroing is inconsistent with 
Articles 2.4 and 2.4.2 (second sentence). Article 9.3 stipulates that "the amount of the 
anti-dumping duty shall not exceed the margin  of dumping as established under Article 2." 
Similarly, Article VI:2 of the GATT 1994 provides that "[i]n order to offset or prevent dumping, a 
Member may levy on any dumped product an anti-dumping duty not greater in amount than the 
margin of dumping in respect of such product." 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. Thus, bearing in mind our findings under Articles 2.4 and 2.4.2 
(second sentence), taking account of the findings of the Appellate Body against the use of zeroing 
in administrative reviews
368, and in the absence of any additional argumentation by the 
United States, we find 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 of the 
Anti-Dumping Agreement and Article VI:2 of the GATT 1994. 
7.209.  In light of this finding against the us e of zeroing by the USDOC when applying the 
W-T comparison methodology in administrative revi ews "as such", we do not consider it necessary 
to also address whether the use of zeroing by USDOC when applying the W-T comparison 
methodology in "subsequent connected stages" of the Washers  anti-dumping order, including 
administrative reviews, is inconsistent with Article 9.3 of the Anti-Dumping Agreement and 
Article VI:2 of the GATT 1994. Accordingly, it is not necessary for us to address the procedural 
issue of whether the preliminary and final determinations of the first administrative review of the Washers  anti-dumping order are within our terms of reference. 
7.6  Claims under the SCM Agreement 
7.6.1  Introduction 7.210.  Korea pursues a number of claims concerning the USDOC's determination that two tax 
credit subsidy programmes benefiting Samsung are specific. Korea also challenges the manner in 
which the USDOC calculated the amount of subsidy conferred on Samsung under those programmes. 
7.211.  The first programme, Article 10(1)(3) of the Restriction of Special Taxation Act (RSTA), 
provides tax credits pursuant to certain Research and Development (R&D) expenditures. The 
USDOC found de facto  specificity under Article 2.1(c) of the SCM Agreement, on the basis of its 
finding that Samsung received a disproportionately large amount of the total benefit under that 
programme. Korea challenges the USDOC's finding of de facto  specificity. 
7.212.  The second programme, Article 26 of the RSTA, provides tax credits pursuant to 
investment in certain business assets. The USDOC found specificity under Article 2.2 of the 
SCM Agreement, on the basis of its finding that the programme was limited to certain enterprises 
located within a designated geographical region. Korea challenges this determination of regional 
specificity. 
7.213.  The USDOC calculated Samsung's margin of subsidization for the relevant tax credits using 
an allocation method based on the sales value of all products produced by Samsung in Korea. 
Korea challenges the USDOC's decision not to calculate an amount of subsidy conferred on Samsung in respect of only the Digital Appliances business unit. Korea also challenges the 
USDOC's calculation of the amount of subsidization for RSTA Article 10(1)(3) tax credits without 
including the sales value of LRWs produced by Samsung outside of Korea. 
7.214.  The United States asks the Panel to reject Korea's claims. 
                                               
368 Appellate Body Reports, US – Continued Zeroing , paras. 314-316; US – Stainless Steel (Mexico) , 
paras. 133 and 134; US – Zeroing (Japan) , para. 166; and US – Zeroing (EC) , paras. 134 and 135. WT/DS464/R 
 
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  7.6.2  Whether the USDOC properly found that  RSTA Article 10(1)(3) tax credit subsidies 
are de facto  specific: disproportionately large amounts 
7.6.2.1  Introduction 7.215.  The USDOC found that the RSTA Article 10(1)(3) tax credit scheme was not de jure  
specific pursuant to Article 2.1(a) of the SCM Agreement, but that it was de facto  specific pursuant 
to Article 2.1(c). In particular, the USDOC dete rmined that subsidies had been provided to 
Samsung under that scheme in "disproportionat ely large amounts". The USDOC's determination 
was based on the facts that: (i) Samsung received a "very large" percentage of total subsidies 
disbursed under that scheme, and (ii) Samsung received many times more than the average 
recipient.
369 Following domestic judicial proceedings, this issue was subsequently remanded to the 
USDOC for review. In its remand determination,  the USDOC supplemented and reaffirmed its 
original finding of de facto  specificity. The USDOC found inter alia  that Samsung claimed more tax 
credits and saved more tax under the RSTA Arti cle 10(1)(3) scheme than 99 other companies in a 
similar "economic position", as measured by taxable income.370 
7.216.  Korea claims that both the USDOC's original determination and its remand determination 
are inconsistent with Article 2.1(c) of the SCM Agreement. The United States asks us to reject Korea's claims. 
7.6.2.2  Main arguments of the parties 
7.217.  Korea denies
371 that Samsung received subsidies in disproportionately large amounts 
under RSTA Article 10(1)(3). Korea contends that the USDOC's determination of de facto 
specificity is based solely on the fact that the tax credit claimed by Samsung on its 2011 tax return 
constituted a larger percentage of the total than the average tax credit claimed by each other 
Korean company. Korea asserts that the amount of subsidy received by Samsung was not disproportionately large because it was determined using one of the two formulas provided for in 
the programme, and therefore calculated according to  the conditions for eligibility for that subsidy. 
Korea further asserts that the USDOC was unable or unwilling to state what would have constituted a "proportionately" large amount of the Article 10(1)(3) tax credit that Samsung could 
have received without being subject to a finding of specificity. 
7.218.  Korea notes that the Appellate Body found in US – Large Civil Aircraft (2
nd complaint)  that 
a finding of de facto  specificity under Article 2.1(c) requires the investigating authority to establish 
that "a subsidy, although not apparently limited to certain enterprises from a review of the 
relevant legislation or express acts of a granting authority, is nevertheless allocated in a manner 
that belies the apparent neutrality of the measure".372 Korea refers in particular to the Appellate 
B o d y ' s  f i n d i n g  t h a t  a n  a s s e s s m e n t  m u s t  b e  m a d e  a s  t o  w h e t h e r  " t h e  a c t u a l  a l l o c a t i o n  o f  t h e  
'amounts of subsidy' to certain enterprises is too large relative to what the allocation would have 
been if the subsidy were administered in accordance with the conditions for eligibility for that subsidy as assessed under Article 2.1(a) and (b)".
373 Korea submits that the USDOC had no 
evidence of any difference between the tax year 2010 credit amount that Samsung calculated and 
the amount that "would be [calculated] if the subsidy were administered in accordance with the conditions for eligibility for that subsidy as assessed under Article 2.1(a) and (b)." Korea submits that the USDOC therefore had no basis to conclude that Samsung's RSTA Article 10(1)(3) tax 
credits were "disproportionate". 
7.219.  Korea notes that the USDOC confirmed its finding of disproportionality in a remand 
determination. Korea asserts that the USDOC again failed to examine whether the amounts of tax 
credits differed from the allocation that would be expected under the conditions for eligibility for 
that programme. Korea asserts that the USDOC' s focus in the remand determination on the 
99 largest Korean companies, measured by taxable income, is no different in principle from its 
original focus. Korea further asserts, inter alia , that the USDOC's reliance upon taxable income to 
assess the issue of disproportionality is inappropriate because taxable income has no relationship 
                                               
369 Washers  Final CVD I&D Memo, (Exhibit KOR-77), pp. 35-36. 
370 Washers  CVD Redetermination, (Exhibit KOR-44) (BCI), pp. 10-11. 
371 Korea's main arguments are set forth at paras. 265-276 of its first written submission. 
372 Appellate Body Report, US – Large Civil Aircraft (2nd complaint) , para. 877. 
373 Ibid. para. 879. WT/DS464/R 
 
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  to a company's size and because taxable income reflects innumerable business decisions on both 
the sales and expense sides. As such calculating ta x savings as a percentage of the amount of the 
tax owed is irrelevant.374 
7.220.  Korea also claims that the USDOC' s original and remand determinations on 
disproportionality are further inconsistent with Article 2.1(c) because they fail to address two 
mandatory factors set forth in that provision, namely the extent of economic diversification and the length of time during which th e programme has been in operation.
375 Korea observes that 
there is no explicit reference to these factors in the USDOC's determination, and contends that 
there is no authority in the SCM Agreement for these factors to be taken into account implicitly.376 
7.221.  The United States submits377 that the USDOC's determination of de facto  specificity is 
consistent with Article 2.1(c) of the SCM Agreem ent. The United States asserts that the USDOC's 
determination is amply supported by the facts. A ccording to the United States, despite the broad 
de jure  availability of the programme, a single  company, Samsung, received a very large 
proportion of all subsidies disbursed under the programme, which had nearly 
12,000 participants.378 The United States notes that Samsung received many times more subsidy 
than the average recipient.379 The United States also notes that the USDOC's remand 
determination showed that Samsung received a large proportion of all credits claimed by the 
100 largest companies participating in the prog ramme, and the bulk of the combined credits 
claimed by the other 99 largest recipients.380 The United States also asserts that the USDOC's 
redetermination showed that Samsung received a greater reduction in its tax liability to Korea than the average tax reduction received by the other 99 largest companies.
381 According to the 
United States, it is remarkable that Korea would criticize the USDOC for relying on taxable income 
as an indicator of company size, given that the GOK refused to provide data on company revenue or assets. The USDOC explained that its "initial attempt" to address the size argument "based 
upon the size of assets and amount of revenue was not possible," but that "[t]axable income is a 
suitable alternative" in part because the "benefit" of  a tax credit can be framed as a function of the 
amount by which taxes are reduced – i.e. the tax savings – and thus premised on taxable 
income.
382 In the view of the United States, the fact that a company's taxable income and tax 
savings may reflect tax planning strategies does not render this data irrelevant, particularly at the 
level of an aggregate comparison between Samsung and the other 99 companies. The United States argues that the USDOC used the best data available, which accounts for company 
size.
383 
7.222.  The United States further submits that, in  accordance with the findings of the Appellate 
Body in US – Large Civil Aircraft (2nd complaint) , the USDOC determined that there was a 
significant disparity between the expected di stribution of these subsidies based on the 
programme's eligibility criteria – which are open to any company investing in research or human resources development – and their actual distribution . The United States refers in this regard to 
the USDOC's determination that: 
It is a significant indicator of disproport ionate use that Samsung and LG together 
accounted for a very large percentage of al l tax credits provided under this program, 
when this program had more than 11,000 beneficiaries. Even though we would not 
expect each beneficiary to receive an equal percentage of the total benefits, in the 
case of Samsung and LG, the percentage of  total benefits received is significant.
384 
7.223.  The United States contends that this statement should be read in context with the 
USDOC's finding that RSTA Article 10(1)(3) is not de jure specific. The United States asserts that 
                                               
374 Korea’s second written submission, paras. 273-275. 
375 Korea's first written submission, paras. 272-274. 
376 Korea's second written submission, para. 270. 
377 The main arguments of the United States are set forth at paras. 339-382 of its first written 
submission. 
378 Final Samsung CVD Calculation Memo, Attachment 7, (Exhibit USA-26) (BCI). 
379 Ibid. 
380 Washers  CVD Redetermination, (Exhibit KOR-44) (BCI), pp. 10-11. 
381 Ibid. pp. 11-12 and 14. 
382 Ibid. p. 28. 
383 United States' second written submission, paras. 259-260. 
384 Washers  Final CVD I&D Memo, (Exhibit KOR-77), pp. 35-36. WT/DS464/R 
 
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  the USDOC found that the implementing statute for RSTA Article 10(1)(3) "do[es] not limit 
eligibility to a specific enterprise or industry or group thereof"385, and that the absence of any 
restrictions on eligibility means that benefits would have been expected to be distributed more evenly across the programme's 11,764 recipients. The United States submits that there was 
therefore a significant disparity between the expe cted distribution of subsidy based on those 
conditions of eligibility and the actual distribution in which two recipients received such a large percentage of credits and so much more than the average recipient. The United States adds that 
the text of Article 2.1(c) did not require the USDOC to frame its expectations in precise, 
quantitative terms. The United States also no tes that the Appellate Body did not express in 
quantitative terms the allocation of benefits it wo uld have expected given the eligibility criteria in 
US – Large Civil Aircraft (2
nd complaint) . The United States suggests that this is consistent with the 
panel's observation in US – Upland Cotton  that "specificity is a general concept, and the breadth or 
narrowness of specificity is not susceptible to rigid quantitative definition".386 
7.224.  In the view of the United States, the US DOC also considered at length the explanations 
provided by the parties for the distribution of  RSTA Article 10(1)(3) subsidies – including the 
"common formula" argument and "size defense" asserted by Samsung, and supported by Korea in this dispute. Regarding Korea's argument that Samsung's tax credits were proportionate because 
they were calculated using one of the formulas pr ovided for in the programme, the United States 
contends that the fact that common formulas are used to calculate subsidy amounts has no bearing on the disproportionality inquiry. The United States suggests that these formulas relate to different aspects of a specificity analysis under Article 2.1, namely consideration of potential 
non-specificity on the basis of the existence of "objective criteria or conditions", pursuant to 
Article 2.1(b). The United States notes in this regard that the Article 2.1(c) de facto  specificity 
analysis is made "notwithstanding any appearance of non-specificity resulting from the application 
of the principles laid down in subparagraphs (a) and (b)". 
7.225.  The United States also disputes Korea's argument that the distribution of benefits reflects 
the fact that Samsung is a large company, and that any tax credit reflects a large company's 
research and human resources development activities.
387 The United States observes that 
Samsung made this argument before the USDOC, but failed to offer any supporting evidence, either quantitative or qualitative.
388 According to the United States, this "size defense" was 
fundamentally at odds with the purpose of the disproportionality inquiry. Given the level of 
generality at which it was framed, this theory would render subsidies "proportionate" any time a 
"large" company received larger amounts of subs idy under a program. Regardless of the metric 
used as the basis for calculating subsidies (i nvestments, revenue, employment, etc.), large 
companies will often qualify for and receive more. But,  in the view of the United States, this fact is 
not sufficient to characterize any distribution that emerges as "proportionate."389 
7.226.  The United States submits that Korea has failed to make a prima facie  case of 
inconsistency regarding the USDOC's alleged failure to address two of the mandatory factors set 
forth in the third sentence of Article 2.1(c).390 The United States contends that an authority need 
only take account of these factors to the extent that they inform an authority's task of "determin[ing] whether a subsidy … is specific."
391 The United States asserts that where these 
factors are plainly irrelevant to that determination, an authority satisfies its obligation by 
determining that they are, in fact, irrelevant. The United States asserts that an authority need not conduct an empty analysis, merely to demonstrate compliance with a formalistic checklist. 
7.227.  The United States asserts that the USDOC properly found that neither of the two factors 
identified by Korea has any bearing on the USDOC's specificity inquiry. The United States argues that the USDOC expressly found, in respect to the "length of time during which the subsidy 
                                               
385 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p. 12. 
386 Panel Report, US – Upland Cotton , para. 7.1142; see also ibid. ("At some point that is not made 
precise in the text of the agreement, and which may modulate according to the particular circumstances of a given case, a subsidy would cease to be specific because it is sufficiently broadly available throughout an 
economy …"). 
387 United States' first written submission, paras. 380-382. 
388 United States' second written submission, paras. 235-237. 
389 Ibid. para. 239. 
390 United States' first written submission, paras. 383-394. 
391 SCM Agreement, Article 2.1 ( chapeau ). WT/DS464/R 
 
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  programme has been in operation", that the RSTA Article 10(1)(3) programme began in 1982.392 
The United States contends that the thirty-y ear duration of this subsidy programme was 
repeatedly noted in the record.393 
7.228.  The United States also suggests that the USDOC took Korea's economic diversification into 
account implicitly. The United States refers in this regard to the fact that, because Korea was 
unable to provide data setting out the distribution  of RSTA Article 10(1)(3) subsidies by industry 
and sector394, the USDOC found that "the information on the record is not sufficient to evaluate 
predominance or disproportionality on an industry basis".395 The United States also asserts that 
the USDOC was in any event aware of the publicly known fact that Korea is one of the wealthiest 
and most diversified economies in the world – a fact that Korea neither raised nor contested.396 
The United States observes in this regard that the record indicates that Korea is a member of both 
the Organization for Economic Cooperation and Development (OECD) and G20, and chaired a 
recent G20 summit397, and that the RSTA Article 10(1)(3) R&D tax credit programme had nearly 
12,000 participants398, reflecting Korea's status as an advanced, diversified economy. 
7.6.2.3  Main arguments of third parties399 
7.229.  China asserts400 that the Appellate Body has confirmed that the term "disproportionately 
large" is a relative term.401 According to China, its plain meaning denotes a comparative  exercise 
to determine whether the "amounts" of subsidy received are greater  than the amount that would 
have been received in proportion  to something else. China contends that, because the text of 
Article 2.1(c) is silent on the benchmark (i.e. the "something else") from which to measure whether the amounts received are "disproportionately large" or not, the issue on which the parties 
disagree is the following: Must the amounts received be disproportionate, solely in absolute terms, 
when compared both to the total amount available under the subsidy programme and to the amounts received by other recipients (which is the United States' position), or must the amounts 
received be disproportionate, in "relational" terms
402, to the amount that the recipient at issue 
could be expected to receive, given the precise terms of the eligibility criteria, the amount of 
benefitting activity, and other relevant factors (which is Korea's position)? In China's view, the 
question whether "disproportionately large amount s" of subsidy are received by a particular 
recipient cannot be based on a simple assessment of whether that recipient receives a major portion of the total amount available under th e subsidy programme and a greater amount, in 
absolute terms, than other recipients. China contends that the implication of such an approach 
would be that only subsidies received in equal amounts by all producers could be considered non-
specific. China asserts that such an approach would turn the concept of "disproportion" on its head: if small producers with little R&D expend iture each received the same amounts of R&D 
subsidy as a large producer with a massive R&D spend, the small producers are likely receiving a 
disproportionately large amount. Referring to the findings of the Appellate Body in US – Large Civil 
Aircraft (2
nd Complaint) , China contends that the question is whether USDOC's determination of 
"disproportionate amount" rested on something more than a simple finding that Samsung received 
a major portion of the total amount available under  the subsidy programme and a larger share, in 
absolute terms, of the subsidy than other reci pients. That alone would not be sufficient, as 
                                               
392 Washers  CVD Preliminary Determination, 77 Fed. Reg. at 33187, (Exhibit KOR-85). 
393 See, e.g. GOK April 9, 2012 Questionnaire Response (QR) at App. Vol. at II-75, 108 
(Exhibit KOR-75) (BCI). 
394 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p.  12. Korea was unable to provide this 
information, on the grounds that it did not compile da ta for RSTA Article 10(1)(3) along industry and sector 
lines (Ibid.). 
395 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p. 12. 
396 The United States refers, fo r example, to Panel Report, US – Softwood Lumber IV, para. 7.124 
(finding that the USDOC took into account the "publi cly known fact" that Canada is a highly diversified 
economy when the USDOC noted that the vast majority of  companies and industries in Canada do not receive 
benefits under the prog rammes in question). 
397 GOK April 9, 2012 QR at Ex. Gen02 (PR-56) at "Minister's Forward" (Exhibit USA-27). 
398 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p.  12; Final Samsung CVD Calculation Memo, 
Attachment 7, (Exhibit USA-26) (BCI). 
399 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
400 China's third party submission, paras. 102-106. 
401 China refers in this regard to Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , 
para. 879. 
402 Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , para. 879. WT/DS464/R 
 
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  explained by the Appellate Body, to reach a findin g that a recipient received disproportionately 
large amounts of subsidies in the sense of Articl e 2.1(c) of the SCM Agreement. China contends 
that, consistent with the guidance provided by the Appellate Body, an authority must carefully examine two factors: first, whether "the granting of the subsidy indicates a disparity between the 
expected distribution of that subsidy, as determined by the conditions of eligibility, and its actual 
distribution"; and, second, "the reasons for that disparity so as ultimately to determine whether there has been a granting of disproportionately la rge amounts of subsidy, in relational terms, to 
certain enterprises". 
7.230.  Referring to the findings of the Appellate Body in US – Large Civil Aircraft (2
nd Complaint) , 
the European Union403 considers that the Panel should identify the amounts of subsidy granted to 
Samsung pursuant to that provision since its entry into force. Then, the Panel should determine 
whether those amounts are "disproportionately large" relative to what the allocation would have 
been if the subsidy were administered in accordance with the conditions for eligibility for that subsidy as assessed under Article 2.1(a) and (b). If there is a disparity between the expected 
distribution of that subsidy, as determined by the conditions of eligibility, and its actual 
distribution, the Panel should also examine the reasons for that disparity so as ultimately to determine whether there has been a granting of disproportionately large amounts of subsidy to 
Samsung. If, ultimately, the reasons for Samsung obtaining more tax credits than other eligible 
Korean companies is determined by the conditions for eligibility (i.e. qualifying investments in R&D activities), this may indicate that Samsung did not receive disproportionally large amounts for the entire period. Since the amount of subsidisation was established by reference to a particular year 
(i.e. 2011), the Panel may also look into whet her Samsung received disproportionally large 
amounts of tax credits in that year as compared to other eligible Korean companies in the same period. 
7.6.2.4  Evaluation by the Panel 
7.6.2.4.1  The USDOC's original determination 7.231.  We begin by addressing Korea's claim concerning the finding of disproportionality in the 
USDOC's original determination. We then address the USDOC's redetermination of this issue. 
Thereafter, we address Korea's claim concerning the USDOC's alleged failure to address the two factors set forth in the final sentence of Article 2.1(c) of the SCM Agreement. 
7.232.  Article 2.1(c) of the SCM Agreement provides in relevant part: 
If, notwithstanding any appearance of non-specificity resulting from the application of 
the principles laid down in subparagraphs (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors 
are: use of a subsidy programme by a limited number of certain enterprises, 
predominant use by certain enterprises, th e granting of disproportionately large 
amounts of subsidy to certain enterprises, and the manner in which discretion has 
been exercised by the granting authority in the decision to grant a subsidy.
404 In 
applying this subparagraph, account shall be taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation. 
7.233.  Article 2.1(c) of the SCM Agreement therefor e allows investigating authorities to find that 
subsidies are de facto  specific when they result in the "granting of disproportionately large 
amounts of subsidy to certain enterprises". There is  no guidance in Article 2.1(c) as to how one 
might establish that the amount of subsidy provided is actually "disproportionately large". 
However, this issue was addressed by the Appellate Body in US – Large Civil Aircraft 
(2
nd Complaint)  in the following manner: 
The language of Article 2.1(c) indicates that the first task is to identify the "amounts 
of subsidy" granted. Second, an assessment must be made as to whether the amounts of subsidy are "disproportionately large". This term suggests that 
                                               
403 European Union's third party submission, paras. 101-103. 
404 In this regard, in particular, information on the frequency with which applications for a subsidy are 
refused or approved and the reasons fo r such decisions shall be considered. WT/DS464/R 
 
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  disproportionality is a relational concept that requires an assessment as to whether 
the amounts of subsidy are out of proportion, or relatively too large. When viewed against the analytical framework set out above regarding Article 2.1(c), this factor requires a panel to determine whether the actual allocation of the "amounts of 
subsidy" to certain enterprises is too large relative to what the allocation would have 
been if the subsidy were administered in accordance with the conditions for eligibility for that subsidy as assessed under Article 2.1(a) and (b). In our view, where the 
granting of the subsidy indicates a disparity between the expected distribution of that 
subsidy, as determined by the conditions of eligibility, and its actual distribution, a panel will be required to examine the reasons for that disparity so as ultimately to determine whether there has been a granting of disproportionately large amounts of 
subsidy to certain enterprises.
405 
7.234.  Referring to these findings, the Appellate Body further explained in US – Carbon Steel 
(India)  that it: 
[D]o[es] not see that an investigating authority or a panel could assess whether 
"amounts of subsidy" that were granted were "disproportionately large" without having some benchmark, perhaps informed by who was expected to receive that 
subsidy, against which to compare those granted amounts.
406 
7.235.  A similar approach had been adopted by the panel in EC and certain member States – 
Large Civil Aircraft : 
[A] subsidy granted to certain enterprises in an amount that represents 50% of the 
total amount of subsidies granted under a relevant subsidy programme says little, if 
anything, about whether that amount is "disproportionately large". As we have previously explained, assessing whether the amount of a subsidy is 
"disproportionately large" involves determining whether the relationship between the 
amount of the subsidy at issue and a relevant "baseline" demonstrates that the amount of subsidy is greater than the amount that it would need to be in order to be 
proportionate. Thus, determining whether a 50% share of the total amount of 
subsidies granted under a particular subsidy programme to certain enterprises is "disproportionately large" involves consider ing whether the 50% share is greater than 
what it would need to be in order to say that the certain enterprises received a 
proportionate amount of all subsidies granted under that same programme.
407 
(footnote omitted) 
7.236.  We agree with these findings, and attach particular importance to the fact that 
disproportionality is a "relational concept". We understand the relational nature of the analysis to 
mean that a finding of disproportionality must be  based on an assessment of how the amount of 
subsidy actually received relates to an objective benchmark indicative of the amount of subsidy 
that the recipient would have been expected to receive if the subsidy were distributed 
proportionately, in accordance with the conditions for eligibility.408 
7.237.  The United States agrees that disproportionality is a relational concept, but does not 
consider that the findings of the Appellate Body in US – Large Civil Aircraft (2nd Complaint)  mean 
that the USDOC was required to undertake the type of relational analysis described above. The 
United States disagrees that the USDOC was required to compare the amount of subsidy received by Samsung with the amount of subsidy that Sa msung should have received. The United States 
                                               
405 Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , para. 879. 
406 Appellate Body Report, US – Carbon Steel (India) , para. 4.389. 
407 Panel Report, EC and certain member States – Large Civil Aircraft , para. 7.972. This finding was not 
reviewed by the Appellate Body. 
408 Korea suggests that the amount of subsidy receiv ed by Samsung should have  been compared by the 
USDOC to a "second ratio" representing the amount of  subsidy that Samsung should have received. Korea 
suggests that the Appellate Body upheld the need for such a "second ratio" in US – Large Civil Aircraft 
(2nd Complaint) . The United States denies that the Appellate Body stated that any such "second ratio" was 
required. We shall refrain from using the term "second ratio", since the precise meaning of that term is 
unclear. It is neither a treaty term, not a term defined by the Appellate Body in US – Large Civil Aircraft 
(2nd Complaint) . We shall therefore complete our evaluation of Korea's claim without find ing whether or not the 
USDOC was required to have considered any such  "second ratio" in its relational analysis. WT/DS464/R 
 
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  contends that precise quantification of the amount that Samsung should have received was not 
required by the Appellate Body in US – Large Civil Aircraft (2nd Complaint). The United States 
asserts that the USDOC properly found that Samsun g received more than expected, relative to the 
amounts received by other recipients and bearing in mind the absence of any de jure  restrictions 
on eligibility. The United States asserts that the findings of the Appellate Body in US – Large Civil 
Aircraft (2nd Complaint ) support the determination made by the USDOC, because the Appellate 
Body found that it would have expected "a wider distribution of [subsidy] benefits", and this 
"provides a reason to believe that the IRB subsidies were granted in disproportionately large 
amounts to certain enterprises".409  
7.238.  We are not persuaded by the United States' argument. As indicated above, the standard 
set forth by the Appellate Body clearly calls for a relational analysis. While the Appellate Body 
accepted that the fact that recipients received 69% of total subsidies "provide[d] a reason to 
believe"410 that the relevant subsidies were granted in disproportionately large amounts, because 
normally a wider distribution would have b een expected, the Appellate Body nevertheless 
explained that it was necessary to examine possible reasons that explain the disparity between 
actual and expected distribution of a subsidy.411 The Appellate Body accepted the United States' 
argument that it would have made sense to examin e, in this latter context, whether the disparity 
could be explained by certain undefined "qualifying investments".412 Bearing in mind the Appellate 
Body's earlier reference to disproportionality being a relational concept, this reference to 
"qualifying investments" is, in our view, clearly intended to establish how the amount received relates to some objective benchmark, i.e. the amou nt of "qualifying investments" in that case.  
7.239.  The Appellate Body found that the United States had not placed any evidence on the panel 
record concerning the level of "qualifying inve stments". In the absence of "sufficient reasons 
supported by evidence to undermine the assessment"
413 that the granting of 69% of total 
subsidies represents an allocation at variance from the allocation that would have been expected, 
the Appellate Body upheld the panel's finding. Th is follows from the fact that the task of the 
Appellate Body in reviewing the findings of a panel is not to conduct its own examination of the 
facts de novo , but rather examine whether the findings of the panel are erroneous as a matter of 
law. In contrast, in a countervailing duty investigation, an investigating authority has the burden of investigating, and evaluating facts in light of the proper legal framework. The investigating authority is entitled to reach a preliminary determination of disproportionality based on an alleged 
disparity between the actual and expected distribu tion of a subsidy. However, that authority is 
then required to investigate the reasons for that disparity, by undertaking the requisite relational 
analysis using a relevant benchmark, before fi nding disproportionality on the basis of that 
disparity. The authority is not entitled to plac e the burden on the respondents to rebut that 
determination with evidence supporting a relational analysis that explains the disparity. The onus is on the investigating authority to investigate the facts concerning the issue of potential 
disproportionality for itself, and make a determination on the basis of the relational analysis set 
forth above.
414  
7.240.  We note the United States' assertion th at the USDOC was not required to express the 
expected distribution under RSTA Article 10(1)(3) in precise, quantitative terms.415 We do not 
disagree. Nor does Korea claim that this is what the USDOC should have done.416 However, a 
finding of disproportionality must be based on some form of relational analysis examining how the amount received relates to a benchmark – whether described in quantitative or qualitative terms – 
                                               
409 United States' first written submission, para. 370 (citing Appellate Body Report, US – Large Civil 
Aircraft (2nd Complaint ), para. 884). 
410 Appellate Body Report, US – Large Civil Aircraft  (2nd Complaint) , para. 884. 
411 Ibid. para. 886. 
412 Ibid. para. 887. 
413 Ibid. para. 888. 
414 We therefore reject the United States' argument that Korea and Samsung were  in the same position 
before the USDOC in the Washers  countervailing investigation that the United States was in before the panel 
and Appellate Body in US – Large Civil Aircraft (2nd Complaint) , in the sense that they were required to show 
why the large amount of subsidy rece ived by Samsung did not indicate th at the subsidies were granted in 
disproportionately large amounts (Unite d States' oral statement at the second meeting of the Panel, para. 52). 
The onus was rather on the USDOC to undertake the rela tional analysis necessary for a proper determination 
of disproportionality. 
415 United States' second written submission, para. 214. 
416 Korea's second written submission, para. 258. WT/DS464/R 
 
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  that is indicative of the amount that the recipient would have been expected to receive were the 
distribution proportionate. 
7.241.  The United States also objects to Korea's argument that the amounts received by Samsung 
were necessarily proportionate because they were consistent with the amounts that Samsung 
should have received, bearing in mind the application of the applicable formula to the amount of 
qualifying investments. The United States considers that the formula and conditions for eligibility of the RSTA Article 10(1)(3) scheme pertain exclusively to the issue of non-specificity under 
Article 2.1(b). The United States notes in this re gard that Article 2.1(c) begins with the phrase 
"[n]otwithstanding any appearance of non-specificity resulting from the principles laid down in" inter alia Article 2.1(b). Second, the United States asserts that while an entitlement to a tax credit 
under the RSTA Article 10(1)(3) tax credit scheme arises as a result of qualifying investments, 
those qualifying investments do not determine the amount of tax credit actually claimed.
417 The 
United States asserts that benefits under RSTA Article 10(1)(3) are calculated according to formulas that vary depending on company size, and recipients may elect not to take tax credits or 
defer them given Korea's Minimum Tax requirements . The United States submits that benefits do 
not simply reflect amounts invested, or any formula set forth in RSTA Article 10(1)(3).
418 
7.242.  We do not agree that the conditions for eligibility and other provisions governing the 
amount of subsidy to be provided are only relevant to the issue of non-specificity pursuant to 
Article 2.1(b) of the SCM Agreement. As explaine d above, the Appellate Body has stated clearly 
that the conditions for eligibility may play an important role in the relational analysis required for determining whether or not subsidy amounts are disproportionate in the sense of Article 2.1(c). 
We agree, since these conditions are generally relevant when identifying a benchmark that is 
indicative of what the expected amount of subsidy would have been. In these circumstances, reference is not made to conditions for eligibility in order to establish non-specificity under 
Article 2.1(b). A determination of non-specificity under Article 2.1(b) would not somehow trump a 
determination of de facto  specificity under Article 2.1(c). However, the fact that the conditions for 
eligibility are not relied on to establish non-specificity under Article 2.1(b) does not mean that 
those same conditions should not – to the extent relevant – inform the relational analysis required 
to demonstrate de facto  specificity on the basis of disproportionality. 
7.243.  Concerning the relevance of qualifying investments to determining the amount of subsidy, 
we do not disagree with the United States' assertion that "[t]he amount of tax credits received 
may reflect a range of factors – such as the size of the company (SME vs. non-SME), the extent to 
which expenses in the tax year compare to the annual average over preceding years, a company's tax loss, compliance with Minimum Tax requirements, and other tax planning considerations".
419 
There is no dispute between the parties regarding this matter. However, the fact that the amounts 
claimed do not relate directly to the amounts of qualifying investments does not mean that the USDOC was not required to undertake the relation al analysis explained above. It rather means 
that, in conducting such relational analysis, the USDOC was required to take account of the broad 
range of factors having a bearing on the amount that Samsung would have been expected to receive. Since Article 2.1(c) concerns a determination of de facto specificity, a determination under 
that provision must take proper account of all relevant facts. We recognize the complexity of the 
relational analysis required of the USDOC, give n the number of different factors having a bearing 
on the amount of subsidy that Samsung might be expected to claim and receive in a given year. 
However, the complexity of the task does not absolve the USDOC from its obligations under 
Article 2.1(c) of the SCM Agreement.
420 
7.244.  The USDOC's determination of disproportionality did not include the required relational 
analysis of the amount of subsidy received by Samsung. The USDOC's determination was based on 
                                               
417 See United States' response to Panel question No. 5.3, paras. 8-13. 
418 United States' first written submission, para. 379; and response to Panel question No. 5.3, 
paras. 8-13. 
419 United States response to Pane l question No. 3.1, para. 130. 
420 We disagree with Korea's argument that the USDOC should have assessed disproportionality on the 
basis of the tax credit earned , as opposed to the amount claimed (Korea's response to Pa nel question No. 5.3, 
para. 8). A tax credit constitutes a financial contribution within the meaning of Article 1.1(a)(1)(ii) of the SCM Agreement because it results in "government [tax] re venue that is otherwise due [being] foregone or not 
collected". The amount of benefit is the amount of tax revenue foregone or not coll ected, and therefore relates 
to the amount of tax credit actually claimed by the taxpayer. If no tax credits are claimed for a given period, no revenue is foregone or not collecte d – even if tax credits are actually earned  in that period. WT/DS464/R 
 
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  the facts that (i) Samsung received a certain percentage of all subsidies disbursed under that 
scheme, and (ii) Samsung received many times more than the average recipient. While the 
USDOC considered how the amount received by Samsung related to the amounts received by 
other recipients, the USDOC failed to consider how the amount of subsidy received by Samsung 
related to a benchmark that was indicative of the amount that Samsung would have been 
expected to receive, taking account of all factors having a bearing on that amount were the subsidy distributed proportionately. We theref ore find that the USDOC's determination of 
disproportionality is inconsistent with Article 2.1(c) of the SCM Agreement. 
7.6.2.4.2  The USDOC's remand determination 7.245.  In its remand determination, the USDOC affi rmed its original finding of disproportionality. 
The USDOC did so inter alia by comparing the amounts received by Samsung with the amounts 
received by the other 99 largest recipients. The USDOC also compared the amount of tax saved by 
Samsung with the amount of tax saved by 99 other companies in a similar "economic position", as measured by taxable income.
421 
7.246.  Before addressing the parties' substantive arguments regarding the USDOC's remand 
determination, we note the United States' argume nt that the USDOC's remand determination falls 
outside the Panel's terms of reference, and therefore cannot be found to be WTO-inconsistent. The 
United States asserts in this regard that the parties did not consult on the remand determination, 
and that the remand determination did not exist at the time that the Panel was established.422 
However, the United States accepts that the remand determination "is a relevant fact that the Panel may take into account".
423 
7.247.  We consider that the United States' argument that the parties did not consult on the 
remand determination is linked to its argument that the remand determination was not in existence at the time that the Panel was established. We note that, as such, the remand 
determination is not expressly covered by the text of Korea's Request for Consultations.
424 In this 
latter regard, we note that Korea's Request for Consultations, dated 3 September 2013, requested 
consultations on the following: 
Any determination in the proceeding entitled Large Residential Washers from Korea, 
including the investigation and all administrative reviews, new shipper reviews, changed circumstances reviews, sunset reviews and other segments of that proceeding.
425 
Korea also requested consultations on "any closely connected, subsequent measures that apply a 
measure or measures described in this request for consultations".426 In our view, this language is 
sufficiently broad to cover the remand determination. 
7.248.  The Appellate Body addressed the question of whether a measure not in existence at the 
time of establishment of a panel could be covered by a panel's terms of reference in US – Zeroing 
(Japan) (Article 21.5) . The Appellate Body stated: 
We recall that Article 6.2 of the DSU provides that the request for the establishment of 
a panel "shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly." Apart from the reference in the present tense to the fact 
that the complainant must identify the measures "at issue", Article 6.2 does not set 
                                               
421 Exhibit KOR-44 (BCI), p. 28. The United States asserts that the USDOC used taxable income to 
identify comparable companies because the Government  of Korea had failed to provide data on company 
revenue or assets (United States' second written submission, para. 259). We note that there was no finding by the USDOC that the Government of Ko rea had failed to cooperate with its investigation. Nor did the USDOC 
apply facts available in this context. 
422 United States' comments on Ko rea's response to Panel question  No. 5.7, para. 28; and second 
written submission, fn 348. 
423 United States' comments on Korea's respon se to Panel question No. 5.7, para. 29. 
424 The United States does not contend that the remand determination is not covered by Korea's 
Request for Establishment of a Panel. 
425 Document WT/DS464/1, Section V.4. 
426 Ibid. Section V. WT/DS464/R 
 
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  out an express temporal condition or limitation on the measures that can be identified 
in a panel request. Indeed, in US – Upland Cotton , where the issue was raised in the 
context of measures that had expired prio r to the panel proceedings, the Appellate 
Body explained that "nothing inherent in the term 'at issue' sheds light on whether 
measures at issue must be currently in force, or whether they may be measures 
whose legislative basis has expired". In EC – Chicken Cuts , the Appellate Body stated 
that "[t]he term 'specific measures at issue' in Article 6.2 suggests that, as a general 
rule, the measures included in a panel's terms of reference must be measures that are 
in existence at the time of the estab lishment of the panel." Nevertheless, the 
Appellate Body also stated in that case that "measures enacted subsequent to the establishment of the panel may, in certain limited circumstances, fall within a panel's 
terms of reference".
427 (footnotes omitted) 
As a further argument to support its view that Review 9 could not fall within the 
Panel's terms of reference, the United States relies on the Appellate Body's statement 
in EC – Chicken Cuts  that "[t]he term 'specific measures at issue' in Article 6.2 
suggests that, as a general rule, the measures  included in a panel's terms of reference 
must be measures that are in existence at the time of the establishment of the panel", 
and that only in "certain limited circumstances" will measures enacted subsequent to 
a panel's establishment fall within the Pane l's terms of reference. According to the 
United States, the circumstances of this case, including the fact that it is a compliance proceeding, do not justify the inclusion of Review 9 in the Panel's terms of reference. 
As the United States itself recognizes, however, in EC – Chicken Cuts , the Appellate 
Body did not rule that Article 6.2 categorically prohibits the inclusion, within a panel's terms of reference, of measures that come into existence or are completed after the 
panel is requested. Rather, the Appellate Body noted explicitly that, in certain 
circumstances, such measures could be included in a panel's terms of reference. Moreover, whereas the statement in EC – Chicken Cuts to which the United States 
refers was made in the context of original WTO proceedings, we are dealing here with 
Article 21.5 proceedings. As we explained ear lier, the requirements of Article 6.2 must 
be adapted to a panel request under Arti cle 21.5, and the scope and function of 
Article 21.5 proceedings necessarily inform the interpretation of the Article 6.2 
requirements in such proceedings. The proceedings before us present circumstances 
in which the inclusion of Review 9 was necessary for the Panel to assess whether compliance had been achieved, and thereby resolve the "disagreement as to the 
existence or consistency with a covered agreement of measures taken to comply with 
the recommendations and rulings".
428 (footnotes omitted) 
7.249.  We are guided by these findings, and agree that Article 6.2 of the DSU does not impose 
any express temporal condition or limitation on the measures that can be identified in a panel 
request. We also agree that measures enacted su bsequent to the establishment of the panel may, 
in certain circumstances, fall within a panel's terms of reference.429 Whereas the Appellate Body in 
US – Zeroing (Japan) (Article 21.5 – Japan)  attached importance to the fact that the proceedings 
in that case were brought under Article 21.5 of the DSU, nothing in the Appellate Body's Report 
suggests that a similar approach may not be adopted in other specific circumstances. Considering the circumstances of the present case, we observ e that there is a very close nexus between the 
remand determination and the measures expressly cited in the request for the establishment of 
the Panel. In particular, the remand determination supplements and reaffirms the USDOC's original determination of disproportionality, and is restricted to that issue. In these particular 
circumstances, we consider that the remand determination is covered by our terms of reference, 
despite the fact that it was not in existence at the time that this Panel was established. 
7.250.  Having found that the USDOC's remand determination is properly before us, we now 
examine Korea's claim that the redetermination suffers from the same analytical flaw as the 
                                               
427 Appellate Body Report, US – Zeroing (Japan) (Article 21.5 – Japan) , para. 121. 
428 Ibid. para. 125. 
429 Furthermore, it is not necessary to explicitly iden tify every challenged measure in the panel request, 
provided that a measure not explicitly mentioned has "a clear relationship to a measure that is specifically described [in the request], so that it can be said to be  'included' in the specified measure". Such a condition 
may be satisfied where, for example, the measure not explicitly referred to in the request amends a measure 
that is explicitly identified, without changing the essence of that original measure (Appellate Body Reports, Chile – Price Band System , paras. 126-144; EC – Chicken Cuts , paras. 156-159). WT/DS464/R 
 
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  original determination. We have already explained that, in order to properly find that Samsung 
was granted tax credits in disproportionately large amounts, the USDOC should have shown that Samsung received more tax credits than it would ha ve been expected to receive, taking account of 
all factors having a bearing on the amount of tax credit that Samsung was entitled to claim. Just 
as in the original determination, the USDOC failed to undertake this type of relational analysis in 
its remand determination.
430 The USDOC compared Samsung's situation to that of other 
companies, but failed to compare the amounts received by Samsung with any benchmark 
indicative of what Samsung would have been expe cted to receive, taking account of all factors 
having a bearing on that benchmark, were the subsidy distributed proportionately. For this reason, we find that the remand determination is inconsistent with Article 2.1(c) of the SCM Agreement. 
7.6.2.4.3  Whether the USDOC took account of the two factors set forth in the final 
sentence of Article 2.1(c) 
7.251.  We begin our analysis of Korea's claim by reviewing the following findings of the panel in 
US – Countervailing Measures (China) : 
A fourth aspect of China's claim under Article 2 of the SCM Agreement concerns the 
final sentence of Article 2.1(c). The question  before the Panel is whether the factors in 
the final sentence of Article 2.1(c), namely "the extent of diversification of economic 
activities within the jurisdiction of the granting authority" and "the length of time 
during which the subsidy programme has been in operation", must be taken into account by an investigating authority in every Article 2.1(c) analysis.  
With regard to the ordinary meaning of the final sentence of Article 2.1(c), we are of 
the view that the use of the term "shall" clearly connotes an obligation. Indeed, the 
term is defined as "has a duty to; more broa dly, is required to". The decision by the 
drafters of the SCM Agreement to use the term "shall" instead of terms such as 
"should" or "may" is significant.  
With regard to the context of Article 2.1(c) more broadly, as we have seen above, 
subparagraph (c) concedes a certain flexibility for investigating authorities to consider 
specificity in a number of factual scenarios that may arise. In this context, we 
consider the last sentence of Article 2.1(c) to function as a safeguard that keeps in check this flexibility. Indeed, where economic activities within the jurisdiction of the 
granting authority are less diversified, the use of a subsidy programme by a limited 
number of certain enterprises may nonetheless lead to a finding of non-specificity. Use 
by a limited number of certain enterprises may similarly lead to a finding of non-specificity where the subsidy programme has been in operation for a limited period of 
time only.  
In light of the above, the Panel agrees with the finding of the panel in US – Softwood 
Lumber IV  that taking into account the two factors in the final sentence of 
Article 2.1(c) need not be done explicitly.
 Similarly, the panel in  EC – Countervailing 
Measures on DRAM Chips  did not find it unreasonable for an investigating authority to 
not include an explicit  statement that these factors had been taken into account. In 
US – Softwood Lumber IV , however, the panel found that a certain statement of the 
investigating authority indicated that these factors had been taken into account 
implicitly.431 
7.252.  We agree with these findings. There is no doubt that the duration and economic 
diversification factors set forth in Article 2.1(c) of the SCM Agreement are mandatory, in the sense 
that an investigatory authority must ("shall") take account of them whenever a finding of de facto  
                                               
430 The United States suggests that the USDOC's an alysis was limited by Korea's failure to provide 
certain requested information (United States' first written submission, paras. 393 and 399). Korea asserts that Korea supplied all information that the Department requested that was re asonably available to it. (Korea’s 
second written submission, para. 278).We note that there was no finding by the USDOC that Korea failed to provide necessary information, in the sense of Article 12.7 of the SCM Agreement, nor any application of facts 
available under that provision. Accordingly, we do not consider that Korea's alleged failure to provide certain 
requested information is relevant to  our evaluation of Korea's claim. 
431 Panel Report, US – Countervailing Measures (China) , paras. 7.250-7.256. (footnotes omitted) WT/DS464/R 
 
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  specificity is made. Although it may be reasonable for an investigating authority to not include an 
explicit  statement that these factors had been taken into account in its determination, there must 
in any event be some means of determining from the determination that the authority did take them into account. The phrase "taking account of" was addressed by the Appellate Body in US – 
COOL (Article 21.5 – Canada and Mexico) . The Appellate Body found that this phrase calls for 
"active and meaningful consideration".
432 Although this finding was made in the context of 
Article 2.2 of the Agreement on Technical Barriers  to Trade, we see no reason why this  finding 
should not guide our interpretation of the (similar) phrase "account shall be taken" in the context 
of Article 2.1(c) of the SCM Agreement. We shall therefore consider whether the USDOC's 
determination indicates that the USDOC gave active and meaningful consideration to the two factors at issue.  
7.253.  Regarding the length of time during which the subsidy programme has been in operation, 
the United States asserts that the USDOC's record contains references to the fact that the RSTA Article 10(1)(3) program began in 1982. One such reference identified by the United States relates 
to the USDOC noting, in a brief description of the RSTA Article 10(1)(3) programme, that the 
Government of Korea had "reported" that the programme was first introduced in that year.
433 The 
other reference concerns the description of the programme provided by the Government of Korea 
in its Questionnaire Response.434 These references therefore pertain to statements made by the 
Government of Korea, and do not indicate that  the USDOC undertook any active and meaningful 
consideration of the duration of the programme in the context of its determination of de facto  
specificity. 
7.254.  Regarding the extent of economic diversification, the United States refers to the fact that, 
because Korea was unable to provide data setting out the distribution of RSTA Article 10(1)(3) subsidies by industry and sector
435, the USDOC found that "the information on the record is not 
sufficient to evaluate predominance or disproportionality on an industry basis".436 The 
United States also asserts that the USDOC was in any event aware of the publicly known fact that Korea is one of the wealthiest and most diversified economies in the world – a fact that Korea 
neither raised nor contested.
437 The United States observes in this regard that the record indicates 
that Korea is a member of both the Organization for Economic Cooperation and Development (OECD) and G20, and chaired a recent G20 summit
438, and that the RSTA Article 10(1)(3) R&D tax 
credit programme had nearly 12,000 participants.439 We do not doubt that such evidence may be 
of potential relevance to the extent of economic diversification within Korea. However, a series of 
isolated references to potentially relevant eviden ce again placed on the record by the Government 
of Korea does not indicate that the USDOC undertook active and meaningful consideration of this 
factor in the context of its determination of de facto  specificity. 
7.255.  For the above reasons, we find that the USDOC's determination of de facto  specificity 
failed to take account of the two mandatory factors referred to in the final sentence of 
Article 2.1(c) of the SCM Agreement. 
7.6.3  Whether the USDOC properly determined  regional specificity in respect of RSTA 
Article 26  
7.256.  This claim concerns Article 26 of the RSTA, which is entitled Tax Deduction for Facilities 
Investment. RSTA Article 26 provides tax credits for investments in a variety of business assets 
outside of the Seoul "overcrowding control region". Korea challenges the USDOC's determination 
                                               
432 Appellate Body Report, US – COOL (Article 21.5 – Canada and Mexico) , para. 5.218. 
433 Washers  CVD Preliminary Determination, 77 Fed. Reg. at 33187, (Exhibit KOR-85). 
434 See, e.g. GOK April 9, 2012 QR at App. Vol. at II-75, 108, (Exhibit KOR-75) (BCI). 
435 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p.  12. Korea was unable to provide this 
information, on the grounds that it did not compile da ta for RSTA Article 10(1)(3) along industry and sector 
lines (Ibid.). 
436 Ibid. 
437 The United States refers, fo r example, to Panel Report, US – Softwood Lumber IV, para. 7.124 
(finding that the USDOC took into account the "publi cly known fact" that Canada is a highly diversified 
economy when the USDOC noted that the vast majority of  companies and industries in Canada do not receive 
benefits under the prog rammes in question). 
438 GOK April 9, 2012 QR at Ex. Gen02 (PR-56) at "Minister's Forward", (Exhibit USA-27). 
439 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p.  12; Final Samsung CVD Calculation Memo, 
Attachment 7, (Exhibit USA-26) (BCI). WT/DS464/R 
 
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  that the RSTA Article 26 tax credit scheme is region ally specific pursuant to Article 2.2 of the SCM 
Agreement. Article 2.2 provides: 
A subsidy which is limited to certain enterprises located within a designated 
geographical region within 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 this Agreement.  
7.257.  Korea challenges various aspects of the USDOC's determination. First, Korea suggests that 
the RSTA Article 26 scheme is non-specific accord ing to Article 2.1(b), and therefore cannot be 
found to be specific under Article 2.2. Second, Korea contends that the subsidy recipients under the Article 26 scheme are not "enterprises" located within a designated geographical region. Third, 
Korea asserts that there is no "designated geographical region" for subsidization under the 
Article 26 scheme. Fourth, Korea submits that the USDOC in any event failed to establish that the tax credits were only available to "certain enterprises" within the alleged "designated geographical 
region". We address each of these claims below. 
7.6.3.1  Relationship between Article 2.1(b) and Article 2.2 
7.6.3.1.1  Main arguments of the parties 
7.258.  Korea suggests that the eligibility requirem ents for RSTA Article 26 are "objective criteria 
and conditions" within the meaning of Article 2.1(b), and thus non-specific by virtue of that provision.
440 We understand Korea to argue that a subs idy programme deemed non-specific under 
Article 2.1(b) cannot be deemed specific under Article 2.2. 
7.259.  The United States asserts that Korea's interpretation has no grounding in the text of 
Article 2, since Article 2.2 provides that subsidies limited to designated regions "shall be specific". The United States observes that the panel in EC and certain member States – Large Civil Aircraft  
stated: 
There is no indication in the text of the SCM Agreement that a finding of specificity 
under Article 2.2 is somehow subject to further examination under Article 2.1(b). 
There is thus no basis for the inferenc e of a hierarchy … and a reading of the 
provisions of Article 2 as potentially conflicting in this manner is to be avoided.
441  
7.260.  The United States also contends that Korea's interpretation would make Article 8.2(b) 
redundant. The United States observes that Article 8.2(b)(ii) provided that assistance to a 
disadvantaged region would be non-actionable if, among other things, the region is "considered as 
disadvantaged on the basis of neutral and objective criteria " (emphasis added). The United States 
recalls that the panel in EC and certain member States – Large Civil Aircraft , when dealing with a 
similar argument,  observed that such position "effectively would re-introduce the expired 
provisions of Article 8.2(b), making regional assistance subsidies non-actionable on the basis of being non-specific under Article 2.1(b), which is not a justifiable outcome".
442 
7.6.3.1.2  Evaluation by the Panel 
7.261.  Korea makes a simple assertion that because the eligibility requirements for RSTA 
Article 26 are "objective criteria and conditions" within the meaning of Article 2.1(b), and because 
RSTA Article 26 "fully meets the requirements of Ar ticle 2.1(b)", "the tax credits are not specific". 
Korea does not discuss the relationship between Arti cles 2.1(b) and 2.2, nor support its assertion 
with any analysis of the text of these provisions. We see no basis to conclude that a finding of non-specificity under Article 2.1(b) should trump, or exclude, a finding of regional specificity under 
Article 2.2. The text of these provisions does not suggest that there is any hierarchy between 
them. In addition, we note that the panel in EC and certain member States – Large Civil Aircraft  
found that "[t]here is no indication in the text of the SCM Agreement that a finding of specificity 
                                               
440 Korea's first written submission, paras. 322-327. 
441 Panel Report, EC and certain member States – Large Civil Aircraft , para. 7.1233. 
442 Ibid. para. 7.1234. WT/DS464/R 
 
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  under Article 2.2 is somehow subject to further examination under Article 2.1(b)".443 We agree 
with this finding, and similarly consider that Article 2.2 operates independently of Article 2.1(b). In these circumstances, we decline to find that  the RSTA Article 26 subsidies are necessarily 
non-specific because of the operation of Article 2. 1(b) of the SCM Agreement, irrespective of the 
application of Article 2.2. 
7.6.3.2  Whether RSTA Article 26 imposes any limitation on the geographical location of 
enterprises 
7.6.3.2.1  Main arguments of the parties 
7.262.  Korea denies that RTSA Article 26 imposes any limitation on the geographical location of 
certain "enterprises". Korea asserts that the only geographical limitation in RSTA Article 26 is the limitation on the investments that give rise to the tax credits. Korea asserts that an "enterprise" 
located anywhere in the territory of Korea is eligible to receive the Article 26 tax credits to the 
extent that it makes qualifying investments outside of the designated "overcrowding control 
region".  
7.263.  Korea asserts that although the Appellate Body has not provided a detailed interpretation 
of this provision, it has confirmed that Article 2.2 is focused on limitations as to the location of the 
enterprises  benefiting from the subsidy. Korea refers in  this regard to statements by the Appellate 
Body in US – Carbon Steel (India) .
444 Korea notes that the ordinary meaning of the term 
"enterprise" is "[a] business firm, a compan y", as has been confirmed by the Appellate 
Body.445 Korea asserts that, based on its ordinary meaning, the term "enterprise" refers to the 
overall business organization having legal personality and not to particular operations, facilities or investments of such enterprise.
446 Korea notes the United States' reliance on the compound term 
"certain enterprises" and the definition of this term  in the chapeau of Article 2.1 as extending to an 
industry or group of enterprises.447 Korea contends that the fact that the term may encompass 
more than one business firm or company does not mean that the term is also intended to cover 
just parts of those companies or firms, such as their facilities or investments. On the contrary, the 
fact that the drafters expressly referred to aggr egate forms of enterprises in the definition of 
"certain enterprises" but did not refer to sub-divisi ons of such enterprises, strongly suggests that 
they did not intend the term to be expansive in both directions.448 
7.264.  The United States refutes Korea's suggestion that the Article 26 programme addresses the 
"use" of a subsidy. The United States contends that Article 26 instead ties eligibility to the geographic location of the underlying facilities. Th e United States argues that the fact that the 
geographical restriction in RSTA Article 26 is addres sed to the location of the facilities, as opposed 
to the head office of the subsidy recipient, is of no moment, since Article 2.2 does not impose a 
"head office" test when establishing the location of the recipient enterprises. The United States contends that an enterprise or industry can be "located" in a variety of places – including where its 
investments and facilities are located. The United States notes that, in EC and certain member 
States – Large Civil Aircraft , Airbus received numerous subsidies in Spain that were found to be 
regionally specific, based on the location of Airbus-owned facilities in various designated regions – 
and not the location of its headquarters.
449 The United States suggests that if a "head office test" 
were accepted, Members could readily circumvent the SCM Agreement  by imposing geographic 
restrictions at the level of assets and investments, as opposed to the head office of recipients.450 
                                               
443 Panel Report, EC and certain member States – Large Civil Aircraft, para. 7.1233. 
444 Appellate Body Report, US – Carbon Steel (India) , footnote 1011 to para. 4.375. Korea also referred 
the Panel to Appell ate Body Report, U.S. – Anti-Dumping and Countervailing Duties (China) , para. 413. 
445 Appellate Body Report, US – Anti-Dumping and Coun tervailing Duties (China) , para. 373 (referring to 
Shorter Oxford English Dictionary, 6th ed., A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 841). 
446 Korea’s second written submission, paras. 354-355. 
447 U.S. response to Panel question 3.2, paras. 142-143. 
448 Korea’s second written submission, para. 350. 
449 Panel Report, EC and certain member States – Large Civil Aircraft , paras. 7.1207-7.1210, 
7.1235-7.1236, and 7.1243-7.1244; see also ibid., paras. 7.1206, 1235, 1243 (finding that subsidies are regionally specific based on location  of Airbus facility in Nordenham). 
450 See Panel Report, US – Anti-dumping and Countervailing Duties (China) , para. 9.143 (finding that if 
the narrow reading of "designated geog raphical region" were correct, "it would become a simple matter to 
circumvent the SCM Agreement by prov iding subsidies through industrial parks or similar geographical areas, 
without targeting particular ente rprises within those areas"). WT/DS464/R 
 
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  7.265.  The United States also submits that the term "enterprise" is broad enough to include a 
firm's facilities or investments. The United States observes that the term "enterprise" is part of the compound term "certain enterprises", which is defined in the chapeau of Article 2.1 as "an enterprise or industry or group of enterprises or industries". The United States asserts that this 
term therefore encompasses a wide variety of economic structures and activities. The 
United States suggests that a firm, industry or group thereof may be "located" in a variety of places, including the site of head office, branch, manufacturing facility, or other asset or 
investment. According to the United States, the fact that the term "certain enterprises" 
encompasses the term "industries" renders it particularly inappropriate to draw formalistic distinctions about location. 
7.6.3.2.2  Evaluation by the Panel 
7.266.  Korea notes that the text of Article 2.2 fo cuses on limitations concerning the geographical 
location of certain "enterprises". Korea interprets "enterprises" as companies or businesses having legal personality.
451 Korea contends that there are no limi tations on such enterprises under RSTA 
Article 26. Korea asserts that the RSTA Article 26 tax credits are available to any enterprise that 
meets the qualifications of that scheme, without regard to where the enterprise is located. Korea contends that an Article 26 recipient enterprise ca n be located anywhere within Korea, even within 
the Seoul "overcrowding control region". Korea asserts that Article 26 merely imposes a 
geographical limitation on the use of the subsidized activity, which is restricted to investments in facilities outside of the Seoul overcrowding region. In other words, Korea claims that the geographical restriction pertains to the location of the facilities  acquired in the context of the RSTA 
Article 26 scheme, rather than the enterprises  acquiring those facilities.
452 
7.267.  We are not persuaded that the application of Article 2.2 should hinge on the distinction 
drawn by Korea between an "enterprise" (as define d by Korea) and the "facilities" of such an 
enterprise. Read in isolation, the term "enterprise" means "a business or company".453 The term 
"business" includes the notion of "commercial activity".454 An enterprise's "commercial activities" 
may be broad in scope, ranging from research and design through to production, sales and 
servicing. There is no reason why the facilities in which an enterprise performs these "commercial 
activities" should not be treated as part of that enterprise's "business". Nor is there anything in the meaning of these terms to suggest that the relevant "commercial activities" should each have separate legal personalities. 
7.268.  Furthermore, even if the meaning of the term "enterprise" were limited to a business or 
company with legal personality, as suggested by Korea, Article 2.2 applies in respect of subsidies that are limited to "certain enterprises" within a designated geographical region. The chapeau of 
Article 2.1 provides that the phrase "certain enterprises" includes "an enterprise or industry or 
group of enterprises or industries". Viewed in this context, the term "enterprise" must be 
interpreted more broadly than suggested by Korea. This is because an "industry or group of 
enterprises or industries" would never meet the de finition of "enterprise" proposed by Korea, 
because such entities are not companies or businesses with legal personality. The fact that these entities are nevertheless explicitly deemed to consti tute "certain enterprises" by Article 2.1 of the 
SCM Agreement must mean that Korea's interpre tation of the term "enterprise" is overly 
restrictive. 
                                               
451 Korea's second written submission, para. 356. 
452 Korea asserts that the United Stat es has consistently defined, in its free trade agre ements, the term 
"enterprises" as an "entity constituted or organized under  applicable law …, including any corporation, trust, 
partnership, sole proprietorship, joint venture, association, or similar orga nization" (Korea's response to Panel 
question No. 5.10, para. 34). Korea observes  that there is no reference in this definition to an entity's facilities. 
As explained above in section 7.4.3, we are bound to evaluate Korea's claim on the basis of the ordinary 
meaning of the text of Articl e 2.2, read in light of its context and ob ject and purpose. We will therefore not 
evaluate Korea's claim on the basis of language that ma y be included by the United States in its free trade 
agreements. 
453 Oxford Dictionaries, last accessed on 02/10/2015 
<http://www.oxforddictionaries.com/definition/englis h/enterprise>. See also Appellate Body Report, US – 
Anti-Dumping and Countervailing Duties (China) , para. 373 (referring to Shorter Oxford English Dictionary , 
6th ed., A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 841). 
454 Oxford Dictionaries, last accessed on 02/10/2015 
<http://www.oxforddictionaries.com/definition/english/business>. WT/DS464/R 
 
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  7.269.  An industry is not a business or company with legal personality, and yet it can be a 
"certain enterprise" within the meaning of Article 2.2. In respect of an industry, therefore, the 
application of Article 2.2 cannot depend on the lo cation of the business or company having legal 
personality. The fact that Article 2.2 does not exclude that an industry (i.e. "certain enterprise" in 
the same area of manufacturing) may be "located within a designated geographical region" 
suggests that it is rather the location of the co nstituent parts of the industry that trigger the 
application of Article 2.2. The industry is therefore located within a designated region if a 
constituent part of that industry, including for ex ample a manufacturing facility belonging to that 
industry, is located in that region. In the cont ext of an industry, therefore, a "facility" would 
constitute the "certain enterprise" within the meanin g of Article 2.2. There is nothing in Article 2.2 
to suggest that a narrower approach should be adopted when the recipient is an individual 
enterprise.455  
7.270.  Furthermore, even if Korea were correct in  arguing that the term "enterprise" should be 
interpreted narrowly to mean a business or company with legal personality, we consider that a 
business or company may be "located" in a variety of places, including the site of its head office, 
branches, manufacturing facilities, or other assets or investments.456 The verb "locate" includes 
"tak[ing] up business in a place", "establish[ing] oneself … in a place", and "be[ing] situated".457 A 
company headquartered in London but with a manufacturing facility in Liverpool effectively has 
two locations: one in London, and one in Liverpool. It is established, or situated, in both cities. In our view, a subsidy programme that imposes limits in respect of the geographic location of any 
one of these would fall within the scope of Article 2.2. 
7.271.  We find support for rejecting Korea's narrower approach to the scope of Article 2.2 in the 
findings of the panel in EC and certain member States – Large Civil Aircraft . That panel found that 
certain Spanish subsidies for Airbus "facilit[ies]"
458 in designated parts of Spain were specific by 
virtue of Article 2.2. The panel found that these subsidies were specific under Article 2.2 because 
they were "provided to enterprises in designated geographical regions".459 We acknowledge that 
the panel in that case was not required to address the precise legal issue currently before us.460 
Nevertheless, we consider it relevant that the panel appears to have found specificity under 
Article 2.2 of the SCM Agreement on the basis of the recipients' physical presence in the 
designated regions. In doing so, the panel either  considered that the facilities, etc. in the 
designated regions of Spain could be treated as an  "enterprise" within the meaning of Article 2.2, 
or the panel considered that the Airbus enterprise  was located in those regions by virtue of that 
                                               
455 Korea suggests that the referenc e to "facilities" in (the now expired) Article 8.2(c) of the 
SCM Agreement means that the drafters intended to di stinguish "facilities" from "enterprise". We are not 
persuaded by this argument, since the very same provision also contains th e term "firms". The logic of Korea's 
argument would suggest that a "firm" should also not be  treated as an "enterprise", and yet Korea accepts that 
a "firm" falls within the definition of "enterpris e". See Korea's second written submission, para. 350. 
456 We note that the term "located " is expressed in the past tens e, possibly sugge sting that the 
enterprise must already be located in  the designated geographical region  at the time that the subsidy is 
provided in order for Article 2.2 to apply. Korea did not pursue this temporal issue wh en we raised it in Panel 
question No. 5.10. The United States asserted in its response to that question that the timing of when the enterprise received the subs idy has no bearing on whether the subsidy is regionally specific. The United States 
notes that the goal of the subsidy programme may be to stimulate companies to "locate" for the first time in that region. The United States also asserts that the timing question is in any event not presented in the facts of this case, since the qualifying investments had already been made by the time that the tax credits were claimed, i.e. by the time that the tax credit subsidies were granted. We consider that there is merit in these arguments by the United States. Although in its comments on the U.S. arguments Korea contested the United States' assertion that the location of an enterprise can include a site that is undetermined at the time the subsidy is granted and where facilities may be constructed in the future, Korea did not specifically address these arguments. Nor did Korea specifically address the temporal issue raised in the Panel's question. Korea's comments were primarily concerned with the issue of  whether or not "facilities" were equivalent to 
"enterprises". 
457 The verb "locate" is defined in re levant part as "[e]stab lish oneself or itself in a place; take up 
residence or business in a place . . . [f]ix or establish in a place . . . be situated." 1 New Shorter Oxford English 
Dictionary  1614 (1993) (Exhibit USA-48). 
458 Panel Report, EC and certain member States – Large Civil Aircraft , paras. 7.1207-7.1211. 
459 Ibid. para. 7.1235. 
460 This point is made by Korea at para. 38 of its comments on the United States' response to Panel 
question No. 5.11. Korea also suggests at para. 39 of those comments that the fa cts are different in the 
present case, because the RSTA Article 26 subsidies are br oadly available across 98% of the territory of Korea. 
We disagree that any difference in coverage should mean  that the essence of the legal approach to Article 2.2 
adopted by the panel in EC and certain member States – Large Civil Aircraft is not relevant in the present case. WT/DS464/R 
 
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  enterprise establishing itself in those regions through its facilities. Most importantly, the panel did 
not reject the application of Article 2.2 on the basis that the regional facilities were not businesses or companies having legal personality, as Korea's approach suggests it should have done. 
7.272.  Korea suggests that Article 2.2 was actual ly applied by the panel on the basis of the 
location of the recipient company , Airbus Spain, in a territory (Spain) within the jurisdiction of the 
granting authority (European Regional Development Fund (ERDF)).
461 Korea refers in this regard to 
the panel's statement that the relevant subsidies were co-financed by the ERDF, an institution with 
Europe-wide jurisdiction. Korea suggests that the ERDF's Europe-wide jurisdiction meant that the 
relevant geographically designated region was the whole of Europe, including Spain. Korea's position is not persuasive, though, because the subsidies were co-financed by the ERDF and the 
Spanish authorities. Given the co-financing, the panel addressed Article 2.2 regional specificity at 
two levels.
462 The panel only turned to regional specificity in respect of the ERDF's involvement 
after noting that the European Union did not challe nge the application of Article 2.2 in respect of 
the Spanish authorities' involvement in the subsidies. The panel specifically concluded that the 
subsidies provided by the Spanish authorities  were "provided to enterprises in designated 
geographical regions within the territory of the respective granting authorities".463 This finding, 
therefore, applies only to  the involvement of the Spanish  authorities in the subsidization of the 
Spanish  facilities. It has nothing to do with the location of the Airbus enterprise within the territory 
of the ERDF. In respect of ERDF's involvement, the panel appears464 to have accepted the 
United States' argument that subsidies under the ERDF, which is a regional  development fund, are 
necessarily limited to "certain enterprises located within a designated geographical region within 
the jurisdiction of the granting authority". 
7.273.  Furthermore, we note that the broader purp ose of the specificity provisions suggests that 
Article 2.2 should be interpreted to apply to any subsidy that is contingent on considerations 
regarding geographical location. Specificity is concerned with the potential for governments to 
distort trade through interference in the allocation of resources.465 Subsidies that are generally 
available are not specific because, being availa ble to all operators, they do not distort the 
allocation of resources among those operators. The purpose 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, ther eby interfering with the market's allocation of 
resources within the territory of the Member. The fact that Korea refers to RSTA Article 26 as 
alleviating "serious geographical imbalances"
466 and addressing "developmental concerns"467 
confirms that the underlying rationale of the scheme is to direct resources towards the development of particular geographical region s other than the Seoul overcrowding region. 
Accordingly, the fact that the Article 26 subsidy is  contingent on an enterprise becoming "located 
within" a designated geographical region provides sufficient geographic contingency to render that subsidy specific under Article 2.2 of the SCM Agreement. 
7.274.  Finally, we note Korea's argument that RSTA Article 26 "is essentially a zoning regulation, 
and any sensible reading of the SCM Agreement would not support a conclusion that turns a capital city zoning regulation into an illegal subsidy".
468 This argument is not persuasive. First, 
Article 2.2 is concerned with the specificity, rath er than the legality of subsidies. Thus, the fact 
that a subsidy is specific by virtue of Article 2.2 of the SCM Agreement does not mean that the 
subsidy is somehow "illegal", as suggested by Korea. Second, the WTO Agreement does not infringe on a Member's right to pursue any particular zoning policy. (Indeed, Korea might have 
chosen to address the abovementioned "serious  geographical imbalances" by prohibiting new 
                                               
461 Korea's second written submission, para. 357. 
462 Panel Report, EC and certain member States – Large Civil Aircraft , paras. 7.1235-7.1236. 
463 Ibid. para. 7.1235. 
464 Ibid. para. 7.1236. 
465 According to p. 198 of the WTO 1996 World Trade Report, "[t]he SCM text is predicated on the 
potential of specific subsidies to be trade distorting. Indeed, the more closely targeted a subsidy in terms of intended beneficiaries, the more concentrated will be its relative price effect. In many circumstances, this could 
be taken to imply a higher probability that the subsidy is distorting and less justifiable economically. A subsidy to a single industry, for example, ra ther than to many industries could impart a narrow advantage that does 
not reflect action in the face of a well defined market failure. The more broadly based subsidy recipients are 
defined, then, the more "spread out" and sh allower will be the likely subsidy impact." 
466 Korea's first written submission, para. 318. 
467 Ibid. para. 319. 
468 Korea's oral statement at the firs t meeting of the Panel, para. 90. WT/DS464/R 
 
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  facility investments in the Seoul overcrowding area.) However, when a Member chooses to pursue 
that policy through the bestowal of subsidies, th e disciplines of the SCM Agreement will apply if 
those subsidies are specific pursuant to Article 2 of the SCM Agreement. 
7.6.3.3  Designated geographical region 
7.6.3.3.1  Main arguments of the parties 
7.275.  Korea submits that the exclusion of a smal l area from the otherwise generally available tax 
credits provided under RSTA Article 26 does not establish regional specificity under Article 2.2 of 
the SCM Agreement. Korea contends that a subsidy that is available for 98% of the land mass of 
Korea is functionally equivalent to a subsidy that is available for 100% of the land mass. It subsequently explained that the point that Korea makes is that where, as in this case, there is no identifiable demarcation between the area in which a subsidy may be used and the broader 
jurisdiction of the granting authority, and the de gree of overlap between the two is almost total, 
there is no "designation" of a geographical region and there is effectively no limitation as to the 
geographical location of the enterprises.
469 
7.276.  Korea further contends that, under Article 2.1 of the SCM Agreement, the designation of a 
class of subsidy recipients must be "explicit". Korea notes that the Appellate Body has interpreted this to mean that the designation must be "expre ss, unambiguous, or clear from the context of the 
relevant instrument, and not merely 'implied' or 'suggested'".
470 Korea asserts that the only 
geographical area explicitly designated in RSTA Article 26, i.e. the Seoul "Overcrowding Control Region", is an area designated as an exception  to the general availability of the tax credit, rather 
than as an area designated for receipt of a subsidy. Korea contends that nowhere in RSTA 
Article 26 or in Article 23(1) of the Enforcem ent Decree of the RSTA is there any express, 
unambiguous, or clear designation of a geographical region that is eligible for these tax credits. At most, some remainder – the rest of the country ex cept for the overcrowding control region of the 
Seoul Metropolitan Area – might be said to be "implied" or "suggested" as a "region" eligible for 
subsidies. Korea also contends that the term "designate" means that the designation must be made affirmatively, rather than by implication or exception. 
7.277.  The United States disagrees with Korea's argument that because the RSTA Enforcement 
Decree speaks only of the region that is excluded  (i.e. the Seoul overcrowding area), there is no 
explicit designation of a geographical region. The United States asserts that Article 2.2 does not 
require that any geographic region be desi gnated "explicitly", as Korea suggests. The 
United States notes that Korea draws this allege d requirement from the text of Article 2.1(a), 
rather than Article 2.2. The United States obse rves that Article 2.2 does not contain the word 
"explicit". The United States asserts that if the dr afters of Article 2.2 had intended to impose such 
a requirement, they could have easily done so . The United States also suggests that Korea's 
argument would effectively limit Article 2.2 to situations of de jure  specificity. The United States 
asserts that the panel in US – Anti-dumping and Countervailing Duties (China)  rejected a similar 
argument – i.e. that Article 2.2 is limited to situations of de facto  specificity.
471 The United States 
notes that the panel observed that regional specificity is addressed in its own Article (Article 2.2), separate from the general provisions containing the definitions of de facto  and de jure  
specificity.
472  
7.278.  Furthermore, regarding the fact that the Article 26 programme covers 98% of the territory 
of Korea, the United States asserts that there is no basis for Korea's assertion that larger regions (which are subject to "exclusions" such as the Se oul overcrowding area) should be exempted from 
the disciplines of Article 2.2. The United States observes that the panel in US – Anti-dumping and 
Countervailing Duties (China) found that the term "designated geographical region" can 
encompass " any identified tract of land within the jurisd iction of a granting authority", and need 
not have a formal administrative or economic identity.
473 According to the United States, it would 
be particularly inappropriate to overlook the ge ographic limitation imposed here. The excluded 
                                               
469 Korea’s second written submission, para. 365. 
470 Appellate Body Report, US – Anti-Dumping and Coun tervailing Duties (China) , para. 372. 
471 Panel Report, US – Anti-dumping and Countervailing Duties (China) , para. 9.134. 
472 Ibid. para. 9.134. 
473 Panel Report, US – Anti-dumping and Countervailing Duties (China) , paras. 9.140-9.144. (emphasis 
added) WT/DS464/R 
 
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  area is the most densely populated area of Korea, and accounts for a substantial portion of Korea's 
economy.474 
7.6.3.3.2  Evaluation by the Panel 7.279.  We begin by addressing Korea's "exception" argument, which is based on Korea's assertion 
that the only area explicitly designated through a ffirmative identification in RSTA Article 26 is the 
area excluded from the subsidy scheme. We observe that there is no requirement in Article 2.2 that the designation of the relevant geographical area for subsidization should be "explicit". This 
requirement is only found in Article 2.1(a). As  noted above, a previous panel has found that 
Article 2.2 operates independently of Article 2.1. Th e inclusion of the word "explicitly" in the text of 
Article 2.1(a) therefore has no bearing on the interpretation of Article 2.2. 
7.280.  Korea asserts that the meaning of the term "designate" (in Article 2.2) requires an 
affirmative identification of the relevant geographical region, rather than identification through 
implication or suggestion. Korea refers in this regard to the definition of that term advanced by the United States
475, whereby "designate" means "[p]oint out, indicate, specify…[c]all by name or 
distinctive term; name, identify, describe, characterize". While certain aspects of the definition – 
"point out" and "specify" – perhaps suggest that th e designation of the region must be affirmative, 
the reference to "indicate" suggests that designation might also be accomplished through less 
direct means that nevertheless make the region known.476 Article 23 of the RSTA Enforcement 
Decree provides that the RSTA Article 26 scheme ap plies in respect of investments in "business 
assets out of overcrowding control region of the Seoul Metropolitan Area".477 Article 23 of the RSTA 
Enforcement Decree therefore makes it known that RSTA Article 26 tax credit subsidies are only 
available for investments outside of the Seoul Metr opolitan Area. In making this known, Article 23 
of the RSTA Enforcement Decree effectively desi gnates the geographical region in which the 
relevant investments will be eligible for subsidization. 
7.281.  In addition, we recall478 that the purpose of Article 2.2 is to cover subsidy programmes 
whereby governments and public bodies encourage pa rticular enterprises to direct their resources 
to certain geographic regions, thereby interfering with the market's allocation of resources within 
the territory of the Member. Article 23 of the RSTA Enforcement Decree makes it clear where 
enterprises should direct their resources in orde r to benefit from RSTA Article 26 tax credits. 
7.282.  Korea also argues that the excluded Seoul Metropolitan Area accounts for only 2% of 
Korea's land-mass, and that a subsidy available for 98% of the territory is "functionally equivalent" 
to a subsidy that is available for 100% of the territo ry. We note that Article 2.2 refers simply to a 
"geographical region" that has been designated. The phrase "geographical region" is not qualified in any way. This suggests that the designation of any geographical region – no matter how small 
or how large – would suffice to trigger the application of Article 2.2.
479 We find support for our 
approach in the findings of the panel in US – Anti-Dumping and Countervailing Duties (China) . 
That panel found that: 
[T]he text [of Article 2.2] on its own would appear to allow any identified tract of land 
within the jurisdiction of a granting author ity to be a "designated geographical region" 
in the sense of Article 2.2 of the SCM Agreement. 
                                               
474 United States' first written submission, para. 430; United States' second written submission, 
para. 297. 
475 United States' first written submission, fn 502 (referring to The New Shorter Oxford English 
Dictionary , (Exhibit USA-31), p. 645). 
476 The online Oxford dictionary defines "indicate" as  "point out, show" (Oxforddictionaries.com, Oxford 
University Press, accessed 24 September 2015 <http://www.oxforddictionaries.com/definition/english/indicate>). 
477 GOK questionnaire response, (Exhibit KOR-75), p. 142. 
478 See para. 7.273.  above. 
479 Korea asserts that such an approach would be "t oo extreme", and would mean that Article 2.2 covers 
subsidies provided to enterprises making investments anyw here in the United States, except within one of its 
national parks (Korea's second written submission, pa ras. 367 and 368). We shall focus on evaluating Korea's 
claim, in light of the applicable fact s, rather than dwell on policy considerations that may or may not arise in 
future cases. We also recall that Members enjoy broa d policy space under the WTO Agreement, and need not 
necessarily pursue policy objectives through subsidization. WT/DS464/R 
 
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  7.283.  Korea observes that the facts before the US – Anti-Dumping and Countervailing Duties 
(China) panel differed from those in the present case. Korea also observes that the issue in the 
present case was "substantially different" from the issue raised in these proceedings.480 We do not 
disagree. However, the panel provided a legal interpretation of the phrase "designated 
geographical region" that is not dependent on the facts of that case, or on the precise issue at 
hand. Since the panel's legal interpretation is based on a specific part of the text of Article 2.2, there is no reason why that interpretation shou ld not afford guidance whenever that text is 
considered in subsequent WTO dispute settlement proceedings.  
7.6.3.4  Certain enterprises 7.6.3.4.1  Main arguments of the parties 7.284.  Korea submits in the alternative that, even if the Article 26 programme did impose 
limitations on eligibility based on the enterprise's location in a designated geographical region, the 
USDOC failed to show that eligibility was limited to "certain enterprises" in that designated region. Korea notes that the chapeau of Article 2.1 defines the term "certain enterprises" as "an enterprise 
or industry or group of enterprises or industries."
481 As defined in Article 2.1, the term "certain 
enterprises" necessarily refers to a subset of enterprises. Therefore, according to Korea, a 
determination under Article 2.2 requires not only a finding that the subsidy is limited to a 
designated geographical region, but also that the subsidy is limited to "certain enterprises" within 
that geographical region. Korea contends that the Article 26 scheme is actually available to all 
enterprises within the relevant region, and therefore not limited to certain  enterprises only. Korea 
further notes that the United States' position is internally inconsistent. Korea explains that if the 
United States relies on the definition of "certain enterprises" in Article 2.1 to interpret Article 2.2, 
as it does in response to the Panel's questions, it  must accept the full implications that flow from 
the application of that definition.482 In particular, the United States must accept that transposing 
the definition of "certain enterprises" from Arti cle 2.1 to Article 2.2 necessarily means that only 
subsidies that are limited to a subset of enterp rises located within a designated geographical 
region are specific for purposes of Article 2.2. 
7.285.  The United States asserts that a similar argument was rejected by the panel in EC and 
certain member States – Large Civil Aircraft , on the basis that it would require specificity "on a 
double basis" within Article 2.2.483 The United States notes that the panel suggested that the 
approach proposed by Korea would render Article 2.2 redundant: "[i]f a national authority grants a 
subsidy to a subset of enterprises within its territo ry, whether that subset of enterprises is located 
in a designated region or not, such a subsidy would, by definition, already be specific under Article 2.1."
484 The United States also notes that the EC and certain member States – Large Civil 
Aircraft panel found that Korea's interpretation would make Article 8.2(b) redundant.485 The 
United States further observes that the panel in US – Anti-dumping and Countervailing Duties 
(China)  rejected the "double basis" interpretation of  Article 2.2, for essentially the same reasons 
as the panel in EC and certain member States – Large Civil Aircraft .486  
7.6.3.4.2  Evaluation by the Panel 7.286.  We do not accept Korea's argument that specificity must be established on a double basis, 
i.e. that the subsidy must be both (i) limited to a designated geographical region and (ii) limited to 
only a subset of enterprises within that region. Korea's double specificity argument would create 
redundancy with both Articles 2.1(a) and 8.2(b)  of the SCM Agreement. We are guided in this 
regard by the findings of the panel in EC and certain member States – Large Civil Aircraft , which 
addressed the issue thoroughly in the following terms: 
Article 2.2 is not particularly clearly drafted. It could be understood, based on the text 
alone, as establishing specificity on the basis of a geographical limitation on the 
                                               
480 Korea's second written submission, para. 365. 
481 Ibid. para. 372. 
482 Ibid. para. 373 (referring to U.S. response to Panel question 3.2, paras. 142-143). 
483 Panel Report, EC and certain member States – Large Civil Aircraft , para. 7.1223. 
484 Ibid. paras. 7.1224-7.1225. 
485 Ibid. para. 7.1226. 
486 Panel Report, US – Anti-dumping and Countervailing Duties (China) , paras. 9.127-9.139. WT/DS464/R 
 
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  recipients ("within a designated region"), wh ich is the United States' position. It could 
also be understood to establish specificity on the double basis posited by the European Communities – "certain", i.e. not all, enterprises, "within a designated region". While the text, standing alone, is not unambiguous in this respect, when the text is 
considered in its context and in light of its object and purpose, it is clear to us that 
Article 2.2 is properly understood to provid e that a subsidy available in a designated 
region within the territory of the granting authority is specific, even if it is available to 
all enterprises in that designated region.  
We recall that the European Communities argues that under Article 2.2 of the 
SCM Agreement, only a subsidy that is limited to certain enterprises within a 
designated geographical region within the ju risdiction of the granting authority shall 
be specific. The European Communities' proposed interpretation would entail that, in 
order to be specific, a subsidy granted by a regional authority must not only be limited 
to a designated region within the territory of the granting authority, but must in 
addition be limited to only a subset of enterprises within that region. However, if a 
national authority grants a subsidy to a subset of enterprises within its territory, whether that subset of enterprises is located in a designated region or not, such a 
subsidy would, by definition, already be specific under Article 2.1. 
… Thus, the European Communities' proposed reading of Article 2.2 merely replicates 
the standard set out in Article 2.1(a), and thereby makes Article 2.2 redundant. 
… 
The European Communities appears to recognize that its reading of Article 2.2 has the 
effect of making it redundant of Article 2.1(a), but dismisses this as a "structural 
overlap", which it describes as "not uncommon" in treaty-making. However, in our 
view, there is a perfectly reasonable reading of Article 2.2 which avoids this problem, and we consider it appropriate to eschew a reading of that provision which raises it. 
On this basis alone, we consider the European Communities' proposed interpretation 
of Article 2.2 to be unsatisfactory, as it fails to  give full effect to the text of Article 2 as 
a whole. 
In addition, as the United States points out, the European Communities' reading of 
Article 2.2 also creates a redundancy with Article 8.2(b). Although Article 8.2(b) has 
expired (pursuant to the provisions of Arti cle 31 of the SCM Agreement), it did form 
part of the original "traffic light" architecture of the SCM Agreement, and thus 
provides us with important context for understanding the intended scope of other 
provisions. Article 8.2(b) specifically rendered assistance to disadvantaged regions within the territory of a Member non-actionable, as long as that assistance met certain 
criteria. One of those criteria was that the assistance be "non-specific (within the 
meaning of Article 2) within eligible regions." Under the European Communities' reading of Article 2.2, a regional subsidy that is not "limited to certain enterprises" within the region is not specific. Thus, the European Communities' reading of 
Article 2.2 would have rendered Article 8.2(b) redundant and unnecessary from the 
outset. Moreover, Article 8.1(b) provided that  subsidies which were specific within the 
meaning of Article 2, but which met all the conditions of Article 8.2, would be 
non-actionable. Thus, Article 8.2(b) carved out as non-actionable regional 
development subsidies which, presumably, would otherwise have been actionable, in part because they were specific. Given that  the establishment of particular types of 
subsidies as non-actionable under Article 8, including assistance to disadvantaged 
regions, was a significant achievement of the Uruguay Round negotiations, an interpretation of Article 2.2 which would ha ve rendered one of the key provisions of 
Article 8 in this regard redundant and useless from the outset makes no sense to us, 
and we reject such an interpretation.
487 (footnotes omitted) 
                                               
487 Panel Report, EC and certain member States – Large Civil Aircraft , paras. 7.1223-7.1226. WT/DS464/R 
 
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  7.287.  The potential redundancy of Article 8.2( b) of the SCM Agreement was also explained by 
the panel in US – Anti-Dumping and Countervailing Duties (China) in the similar terms.488 
7.288.  We agree with the findings of the EC and certain member States – Large Civil Aircraft  and 
US – Anti-Dumping and Countervailing Duties (China) panels. The reference to "certain" 
enterprises, read in isolation, is not unambiguous. However, consideration of the text in its context 
and in light of its object and purpose, makes it clear that Article 2.2 provides that a subsidy available in a designated region within the territory of the granting authority is specific, even if it is 
available to all enterprises in that designated region. 
7.6.3.5  Conclusion 7.289.  For the above reasons, we reject Korea's claim that the USDOC's determination that the 
RSTA Article 26 tax credit scheme is regionally specific is inconsistent with Article 2.2 of the 
SCM Agreement. 
7.6.4  Whether the USDOC should have dete rmined that RSTA Article 10(1)(3) and 
Article 26 tax credit subsidies were tied to Samsung's production of  digital appliances 
7.6.4.1  Main arguments of the parties 
7.6.4.1.1  Korea 7.290.  Korea submits
489 that the USDOC's calculation of Samsung's subsidy margins for RSTA 
Article 10(1)(3) and Article 26 tax credits, on the basis of the total tax credits received for 
expenditures on all products divided by the total value of Samsung's sales of all products, was inconsistent with the United States' obligation under Article VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement not to impose a counterva iling duty in excess of the estimated subsidy 
determined to have been granted on the manufactu re, production or export of the investigated 
product. Korea submits that the USDOC improperly took account of tax credits that Samsung received on products outside of the Digital Appliances business unit (which was responsible 
inter alia  for the production of LRWs). Korea asserts that, because certain tax credits were tied to 
digital appliances
490, the proper calculation of Samsung's subsidy margins for both the 
Article 10(1)(3) and Article 26 programmes should have used those tax credits (i.e. those received 
on digital appliances) for the numerator, and Samsung 's sales of digital appliances, including LRW, 
as the denominator. 
7.291.  Korea submits that both Article 19.4 of  the SCM Agreement and Article VI:3 of the 
GATT 1994 draw a direct link between the subsidy that may be countervailed and the subsidization 
received by the exported product. According to Korea, therefore, countervailing action cannot be 
taken against a subsidy or bounty that has been conferred on some other product that is not subject to the investigation. Korea contends that the investigating authority's obligation to 
determine – based on an objective analysis and positive evidence – the amount of a 
countervailable subsidy that is attributable to the merchandise being investigated, and not to any "non-subject" merchandise, has been repeatedly affirmed by WTO panels and the Appellate Body. 
Korea refers in this regard to the findings of the panel in US – Lead and Bismuth II , and of the 
Appellate Body in US – Countervailing Measures on Certain EC Products . Korea also observes that 
the panel in China – Broiler Products  emphasized the proactive role that the investigating authority 
must take in "ascertain[ing] the precise amount of subsidy attributed to the imported products 
under investigation".  
7.292.  Korea submits that the USDOC acted inconsistently with Article VI:3 of the GATT 1994 and 
Article 19.4 of the SCM Agreement by determining that the subsidy amount would only be limited 
to tax credits for digital appliances if the relevant tax credits were "tied" to production and sales of 
those products through the granting authority's pr ior knowledge of "the intended use" of the tax 
                                               
488 Panel Report, US – Anti-dumping and Countervailing Duties (China) , paras. 9.130-9.133. 
489 Korea's main arguments are set forth at paras. 277-303 of its first written submission. 
490 See, for example, para. 281 of Korea's second written submission ("Since the DOC was able to tie 
the R&D expenses of the Digital Appliance Division to wa shers, then it necessarily (and logically) follows that 
the Article 10(1)(3) (and Article 26) tax credits generate d by those very same R&D ex penses can also be tied 
to the Digital Appliance Division"). WT/DS464/R 
 
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  credits. Korea submits that the USDOC's application of its "tying" requirement was impermissible 
because Samsung submitted data and documentation to demonstrate that the subsidy in fact benefited the production or sale of a particular product or category of products. Korea contends that the USDOC verified that R&D expenses incurred in the Digital Appliances business unit 
benefited all of the products within that division, including LRWs. Korea asserts that the USDOC's 
refusal to consider that information, and to use it to calculate the proper numerator and denominator in determining Samsung's subsidy margin, is inconsistent with Article VI:3 of the 
GATT 1994 and Article 19.4 of the SCM Agreement. 
7.6.4.1.2  United States 7.293.  The United States
491 submits that the USDOC appropriately found that these subsidies 
were bestowed on Samsung on an "untied" basis, and divided the total amount of benefit over the 
adjusted total sales of all products manufactured in Korea. The United States contends that RSTA 
Article 10(1)(3) is not an "R&D subsidy" to the exte nt that it does not require that the tax savings 
that a company receives be used for a particular activity, much less R&D activity.492 
7.294.  The United States notes that neither Article VI:3 of the GATT 1994 nor Article 19.4 of the 
SCM Agreement dictate precisely how the rate of subsidization is to be calculated. The United States asserts that because the GATT 1994 and the SCM Agreement do not give significant 
guidance on what methodologies should be employed for calculating subsidy rates, this is an issue 
that an administering authority will therefore n eed to examine and determine. The United States 
suggests that, in determining an appropriate approach, an investigating authority may nonetheless derive some guidance from certain provisions, su ch as Article VI:3 of the GATT 1994 and footnote 
36 of the SCM Agreement, which suggest that the facts relating to the granting authority's 
bestowal of the subsidy are a key consideration in determining the existence and amount of subsidization.
493 According to the United States, the reference in Article VI:3 of the GATT 1994 to 
a subsidy bestowed "indirectly" on the manufacture, production, or export of a product suggests 
that there are some subsidies that will potentiall y benefit more than one product or activity of a 
recipient. Thus, an investigating authority may find that subsidies are essentially "untied" when 
calculating the rate of subsidization, and divi de the benefit conferred by the subsidy by the 
company's combined sales of all products.494 The United States contends that, in other cases, an 
investigating authority may determine that it is appropriate to attribute a subsidy to a particular product. An authority may examine a subsidy and determine that there is a product-specific "tie," 
for example, where its nature and structure reveal  bestowal upon a particular product. Based on 
such a determination, the authority may allocate the subsidy entirely to that product and, in calculating the rate of subsidization, divide the benefit by only the sales of the product that it 
views as "tied" to that subsidy.
495 The United States notes that the use of both approaches is 
reflected in Annex IV of the SCM Agreement, wh ich informs a serious prejudice analysis under 
Article 6.1. Regarding the treatment of subsidie s as "tied", the United States notes that the 
Informal Group of Experts (IGE) established by the SCM Committee on Subsidies and 
Countervailing Measures496 developed recommendations to address when a subsidy is "tied" for 
purposes of Annex IV:3. The United States observ es that the IGE recommended the following test: 
To determine whether a subsidy is "tied" to a particular product in the sense of 
paragraph 3 of Annex IV, and hence whether the sales denominator should be the 
recipient's sales of that product alone, inst ead of its total sales, it is recommended 
that a subsidy be deemed to be tied to a product if its intended use is known to the 
                                               
491 The main arguments of the United States are set forth at paras. 433-484 of its first written 
submission. 
492 United States' response to Pa nel question No. 5.2, para. 6. 
493 United States' first written submission, paras. 445-446; United States' second written submission, 
paras. 301-302. 
494 United States' first written submission, para. 447. 
495 Ibid. para. 448. 
496 The Committee on Subsidies and Countervailing Me asures established the In formal Group of Experts 
with the following terms of reference: "To examine matters which are not specific in Annex IV to the [SCM] Agreement or which need further clarific ation for the purposes of paragraph 1( a) of Article 6, and to report to 
the Committee such recommendations as the Group considers could assist the Committee in the development 
of an understanding among Members, as necessary, rega rding such matters." (Decision of the WTO Committee 
on Subsidies and Countervailing Measures regarding In formal Group of Experts, G/SCM/5, June 22, 1995 
(Exhibit USA-30)). WT/DS464/R 
 
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  giver, and so acknowledged, prior to or concurrent with the subsidy's bestowal.497 
(emphasis added) 
7.295.  The United States further observes that, with respect to research and development 
subsidies, the IGE recommended that such subsidie s should be presumptively treated as "untied". 
The IGE explained that, "in view of the future orientation of research and development activities", 
it is recommend that "subsidies for these activities be presumptively allocated across the recipient firm's total sales, unless it is demonstrated that trea ting them as 'tied' to the product in question is 
appropriate".
498  
7.296.  The United States also observes that, in respect of Article 3.1(a) prohibited export 
subsidies, footnote 4 of the SCM Agreement refers to a subsidy being "in fact tied to" actual or anticipated export performance. The United States  asserts that the Appellate Body has confirmed 
that the existence of a "tie" to anticipated exportation is not based on the actual effects of that 
subsidy: 
In setting out this test, we do not suggest that the issue as to whether the granting of 
a subsidy is in fact tied to anticipated ex portation could be based on an assessment of 
the actual effects  of that subsidy. Rather, we emphasize that it must be assessed on 
the basis of information available to the granting authority at the time the subsidy is 
granted .499 (emphasis added)  
7.297.   The United States contends that the USDOC's approach is consistent with this contextual 
guidance afforded by the IGC and the Appellate Body. In particular, the USDOC found that "the 
GOK had no way to know the intended use at the time the company was authorized to claim the 
tax credits, nor can the recipient company acknowledge receipt of the subsidy prior to or 
concurrent with its bestowal".500 The United States observes that the RSTA legislation did not 
specify any product-specific tie, and eligibility criteria were not limited by product type. Moreover, 
the structure, architecture, and design of the RSTA subsidy programs did not reflect a product-
specific tie. Under the RSTA, Samsung submitted an aggregate  pool of expenses, and received an 
aggregate  pool of tax credits based on  formulas that related to aggregate  and average  expenses 
for the company's entire domestic operations – and not to particular products.501 Samsung's tax 
return did not indicate that any tax credits were tied to any particular merchandise or facilities.502 
Samsung admitted this in its questionnaire responses, stating that " the tax return did not specify 
the merchandise for which this reduction was to be provided ".503 The United States submits that 
the fact that Samsung purported to have certain underlying documentation showing expenditures 
in connection with particular products is of no moment, as "these documents do not form the basis for bestowal and are not included in the annual tax returns that the company files with the Korean 
tax authorities".
504 
7.298.  The United States asserts that Article 19. 4 of the SCM Agreement and Article VI:3 of the 
GATT 1994 do not require investigating authorities to treat subsidies as "tied" based on their 
alleged use and effects. The United States contends  that Korea's position would convert the inquiry 
into the amount of the subsidy benefitting the subsidized product into a speculative inquiry into "uses" and effects of a subsidy, rather than  the means by and terms on which the Member 
bestows the subsidy. 
                                               
497 IGE Report, Recommendation 6, (Exhibit USA-29), para. 10 
498 IGE Report, Recommendation 20, (Exhibit USA-29), para. 2. 
499 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 1049. 
500 Washers  Final CVD I&D Memo, (Exhibit KOR-77), pp. 41-42. 
501 United States' second written submission, paras. 303, 314-318; United States' first written 
submission, paras. 479-482. 
502 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p. 42. 
503 Samsung April 9, 2012 Questionnaire Reponse (QR) at Ex. 24, (Exhibit KOR-72), p. 2; see also ibid. 
at Ex. 22, p. 1. 
504 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p. 42. WT/DS464/R 
 
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  7.6.4.2  Main arguments of third parties505 
7.299.  China asserts that the relevant jurispru dence leaves no doubt as to the obligations 
imposed on an investigating authority under WTO law when it comes to determining, based on an objective analysis and positive evidence, the amount of a countervailable subsidy that is 
attributable to the merchandise being investigated. China is of the view that investigating 
authorities are indeed obliged, under Article VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement, to receive and carefully ex amine data and documentation submitted by 
interested parties in order to determine the precise amount of a given countervailable subsidy that 
is actually attributable to the merchandise being investigated. China contends that a careful examination of all relevant factors, including the data and documentation submitted by interested parties, is needed for an investigating authority to be able to determine the precise degree to 
which a given subsidy is a "genuine and substantial cause" of a particular market effect observed 
for the merchandise being investigated.
506 
7.300.  The European Union considers that Articles VI:3 of the GATT 1994 and 19.4 of the 
SCM Agreement require Members to accurately de termine the per unit subsidy amount found to 
exist with respect to the product under investigation and not impose countervailing duties exceeding that amount. That being said, the European Union further notes that, in practice, it may 
be very difficult to identify precisely the amount s that a company has received for the particular 
production or sale of the product concerned, especially when the company in question manufactures and sells a variety of products not covered by the investigation and which are made in the same production line. Likewise, when the su bsidy found to exist is not granted on a product 
basis, but rather on a company basis, it may also be difficult to identify what portions were used 
by the company for manufacturing the product concerned as opposed to other products. In this respect, if the subsidy is clearly tied in law or in fact to the production or sale of a particular 
product, this may allow the investigating authority to allocate the amounts received by the 
company to those specific products and, thus, calculate the specific subsidisation for the product concerned. However, if the subsidy is not tied to any particular product (such as e.g. a tax 
reduction in the income tax of a company in a gi ven year), it may be presumed that the company 
allocated this benefit across its entire production. The European Union does not take a position on whether the Article 10(1)(3) and Article 26 tax credits were only received by Samsung with respect to its digital appliances (and thus including LRW) or whether they were granted with the 
express purpose to benefit only domestic production and sales. A relevant question for the Panel to 
examine, however, appears to be whether RSTA Articles 10(1)(3) and 26 confer a subsidy with respect to a single or a variety of different products or whether they are granted on a company 
basis, provided that certain activities (such as investments on R&D or business assets) are 
conducted.
507 
7.6.4.3  Evaluation by the Panel 
7.301.  Korea's claim is based on Article 19.4 of the SCM Agreement and Article VI:3 of the 
GATT 1994, which provide that the amount of countervailing duty should not exceed the amount of per unit subsidization. In the Washers  countervailing investigation, the USDOC found that tax 
credit subsidies bestowed pursuant to RSTA Articl es 10(1)(3) and 26 are not tied to any particular 
product. The USDOC therefore allocated these subsidies across all products, by dividing the total 
amount of Samsung's tax credits by the value of sales by Samsung for all products. 
7.302.  Korea contends that the subsidies are R&D subsidies
508, and that the tax credits generated 
pursuant to R&D expenditures in the Digital Appliances business unit are tied to the production of 
Digital Appliances products, including LRWs. Korea contends that because the tax credits are provided as a result of R&D activities undertaken by Samsung, and because the tax credits would 
have the effect of retroactively reducing the cost of those R&D activities
509, Samsung could tie the 
tax credits to the underlying R&D activities, and the products in respect of which they were 
                                               
505 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
506 China's third party submission, paras. 108-109. 
507 European Union's third part y submission, paras. 84-86. 
508 Korea's response to Panel question No. 5.2, para. 2. 
509 Korea's response to Panel question No. 5.16, para. 37. WT/DS464/R 
 
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  undertaken.510 Korea submits that the USDOC should ther efore have calculated the amount of R&D 
undertaken by Samsung's Digital Appliances division, and allocated only the tax credits claimed in respect of that R&D to Digital Appliances (including LRWs). 
7.303.  Korea's claim is based on an erroneous characterisation of the nature of the subsidy at 
issue. Korea contends that RSTA Article 10(1)(3) provides for R&D subsidies, because the resultant 
tax credits retroactively reduce the cost of the R&D activities that gave rise to those tax credits.
511 
We disagree with Korea's characterisation. The relevant subsidies in the present case are the tax 
credits. These tax credit subsidies are not R&D subs idies. The fact that these tax credit subsidies 
were provided as a result of eligible R&D activity does not mean that those subsidies are tied to that R&D activity, or the products in respect of  which that R&D activity was undertaken. The tax 
credit subsidies are provided after the underlying R&D activities have been undertaken, in an 
amount determined by reference to total R&D activities. Tax credits constitute subsidies because 
government revenue is foregone or not collected. The benefit is the amount of revenue that is 
foregone or not collected. That revenue foregone or not collected is equivalent to cash that 
Samsung can keep in its account, rather than spending on its tax bill.
512 Korea's argument that the 
relevant tax credit subsidies are tied to Digital Appliance products (and therefore LRWs) overlooks 
the fact that the cash acquired by Samsung as a result of the tax credit subsidy may be spent by 
Samsung on any product. Samsung acknowledged this in its questionnaire responses, stating that 
"the tax return did not specify the merchandise for which this reduction was to be provided".513 
This is further confirmed by Korea's statement that "[t]he cash that is saved by paying less in taxes than otherwise would be the case can then be spent on any activities that the taxpaying 
company elects ".
514 Thus, Samsung was not required to spen d the proportion of benefit generated 
by Digital Appliance R&D expenditures on the futu re production of Digital Appliance products. It 
could have spent none of it on those products. Or it could have spent all of it on those products. It 
is Samsung's discretion regarding the use of the cash resulting from the tax credit subsidy that 
justifies the USDOC's treatment of that subsidy as untied, and therefore the allocation of that subsidy across the sales value of all products. 
7.304.  Korea argues that the "effect" of the tax cr edit is to spur the particular investment that 
results in the earning of the credit.
515 Korea also contends that the "effect" of the availability of the 
tax credit should be distinguished from a company's use of the "proceeds of the tax credit".516 We 
are not persuaded by Korea's arguments, since they continue to reflect an erroneous 
characterisation of the subsidy at issue. It is the "proceeds of the tax credit" – rather than the 
underlying R&D activity – that constitute the subsidy. That subsidy is only provided at the time that the tax credit is provided, i.e. at the time that revenue is foregone or not collected. Since the 
benefit of that subsidy may be used in any way that the recipient company sees fit, the USDOC 
was not required to find that the subsidy was tied to the products in respect of which the underlying R&D activities were undertaken. The fa ct that Samsung may be able to identify the 
R&D activities undertaken in respect of Digital Appliance products is irrelevant, since there is no 
necessary correlation between those R&D expenditures  and the amount of tax credit cash (if any) 
used by Samsung for the production of Digital Appliance products.
517 
7.305.  Korea's failure to properly characterize the subsidy at issue, and the benefit conferred 
thereby, also undermines its reliance on the fact that the USDOC verified R&D costs specific to 
Samsung's Digital Appliance business unit in the parallel anti-dumping investigation. In an anti-dumping investigation, an authority may need to construct a normal value on the basis of 
                                               
510 Korea's second written submission, paras. 288-297. 
511 Korea's response to Panel ques tion No. 5.2, paras. 3 and 4. 
512 Korea asserts at para. 3 of its re sponse to Panel question No. 5.2 that the tax credit "is effectively 
the same as giving cash to a company equal in amount to the tax credit amount". 
513 Samsung April 9, 2012 QR at Ex. 24, (Exhibit KOR-72), p. 2; see also ibid. at Ex. 22, p. 1. 
514 Korea's response to Panel question No. 5.2, para. 6. (emphasis added). 
515 Ibid. 
516 Ibid. 
517 Korea accuses the USDOC of applying an "irreb uttable presumption" (Korea's second written 
submission, para. 286). Korea asserts that Samsung should not be penalized "because the government of Korea chose not to require taxpayers to identify  in their tax returns the amount of any particular expenditure 
that pertained to any particular product ". This argument misses the point, since even if expenditures had been 
assigned to particular products in  the tax returns, this still leaves  open the question of whether the 
Government of Korea would have requir ed recipients to use the tax credits for the production of particular 
products. WT/DS464/R 
 
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  certain cost inputs. Certain costs that are incurred generally will need to be allocated to the 
product under investigation on a pro rata basis. Other costs, which are incurred specifically in 
respect of the product under investigation, are allo cated directly to that product. However, this 
costing exercise has nothing to do with the amount  – and destination – of benefit conferred by tax 
credit subsidies conferred after those costs have been incurred. Even if the R&D costs incurred in 
the production of LRWs may be determined precisely for the purpose of constructing a normal value, this says nothing about the amount (if an y) of the benefit conferred by the tax credit 
subsidies that is ultimately directed towards the future production of LRWs. We recall that 
Samsung was free to spend its tax credit cash as it saw fit, irrespective of the particular products for which the eligible R&D expenditures giving  rise to those tax credits were undertaken.
518 
7.306.  The above analysis applies mutatis mutandis  to Korea's claim regarding the USDOC's 
allocation of the RSTA Article 26 tax credit subsidies. Those subsidies were conferred at the time 
that the tax credits were claimed and granted, and Samsung was free to spend that tax credit cash as it saw fit. 
7.307.  For the above reasons, we reject Korea's claim that the USDOC's failure to tie the RSTA 
Article 10(1)(3) and 26 tax credit subsidies to Digital Appliance products is inconsistent with Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994. 
7.6.5  Whether the Article 10(1)(3) subsidy amount should have been determined by 
reference to Samsung's worldwide sales 
7.6.5.1  Main arguments of the parties 7.6.5.1.1  Korea 
7.308.  Korea claims
519 that in order to calculate the ad valorem  rate of subsidization for 
Samsung's receipt of tax credits under Article 10(1)(3), the USDOC acted inconsistently with Article VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement by utilizing a denominator 
that was inconsistent with the numerator. Korea complains that the USDOC limited the 
denominator to the sales value of products produced in Korea, whereas the numerator included all tax credits. Korea submits that because the R&D activities giving rise to the tax credits would have 
benefited Samsung's global production activities, the denominator should have included the sales 
value of all products that benefited from the tax credits. Korea contends that the USDOC's use of a denominator that did not include the value of all sales that benefited from the underlying R&D activities was to artificially inflate the ad valorem  rate of subsidization, contrary to the requirement 
of Article VI:3 of the GATT 1994, carried over in to Article 19.4 of the SCM Agreement, that "[n]o 
countervailing duty shall be levied [...] 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 such product in the country of origin or exportation." Korea submits that the Appellate 
Body stated in US – Softwood Lumber IV  that "the correct calculation of the countervailing duty 
rate would depend on matching the elements taken into account in the numerator with the 
elements taken into account in the denominator".
520 
7.309.  Korea asserts that, in its final determination in the Washers  countervailing investigation, 
the USDOC applied "a presumption that government subsidies benefit domestic production".521 The 
USDOC also found that Samsung had not rebutted that presumption, since it had not 
"demonstrated that the express purpose of these tax credits is to benefit not only domestic 
production, but also production that occurs outside of Korea".522 Korea submits that the USDOC's 
reliance on a presumption that the subsidies benefitted only Samsung's domestic production 
                                               
518 In its second written submission, Korea refers to  the USDOC verifying that R&D expenses incurred in 
the Digital Appliances division "benefited" all of the products within that division, including LRWs (Korea's second written submission, paras. 291 and 296). Korea subseq uently clarified, in its response to Panel question 
No. 5.15, para. 36, that this  reference to "benefit" was not intended to mean "benefit" within the meaning of 
Article 1.1(b) of the SCM Agreement. This clarification is  consistent with our own view that the allocation of 
R&D costs for the purpose of constructing normal value is not determinative of the treatment of the "benefit" 
(in the sense of Article 1.1(b) of the SCM Agreement) conferred by tax credit subsidies. 
519 Korea's main arguments are set forth at paras. 304-315 of its first written submission. 
520 Appellate Body Report, US – Softwood Lumber IV , para. 164, fn 196. 
521 Korea refers to Washers  CVD I&D Memorandum, p. 52 (K OR-77). (footnotes omitted) 
522 Ibid. WT/DS464/R 
 
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  violated its obligations under the SCM Agreement. Korea contends that there is no basis for any 
such presumption in the SCM Agreement. Korea submits that the question of which sales and 
production benefit from a particular subsidy is a question of fact, and the investigating authority is obliged to make its determination on the basis of an "in-depth examination" of "positive 
evidence".
523 Korea asserts that the USDOC failed to do this. Korea also contends that the 
presumption applied by the USDOC was fully re butted by Samsung, both by showing that the 
results of its R&D (which gave rise to the tax credit) in fact benefited its worldwide sales and 
production, and by showing that the USDOC had previously analysed this identical issue on 
two separate occasions and had determined on each occasion that the Article 10(1)(3) tax credits benefited Samsung's global production. 
7.6.5.1.2  United States 
7.310.  The United States submits
524 that there is no basis for Korea's assertion that the USDOC 
was required to include in the denominator th e sales value of products manufactured outside 
Korea. The United States asserts that Korea's argument that the underlying R&D activities affected 
manufacturing facilities operated by Samsung affiliates in other parts of the world is not grounded 
in the SCM Agreement or the GATT 1994. The United States asserts that the USDOC was not required to trace the possible indirect effects of subsidies overseas. 
7.311.  The United States submits that Article 19. 4 of the SCM Agreement and Article VI:3 of the 
GATT 1994 do not require Members to take into account the sales value of products manufactured outside the territory of the subsidizing Member when calculating subsidy rates. According to the United States, the language of these provisions suggests a focus on production activity occurring 
within the territory of the granting Member. The Un ited States asserts that these provisions do not 
address possible overseas knock-on effects from these subsidies.  
7.312.  The United States also contends that Members generally grant subsidies to generate 
economic benefits within their borders. The United  States suggests that for a subsidy provided by 
a Member to a recipient within its territory to be deemed to be attributable to production occurring elsewhere would require specific facts supporting such a unique conclusion. The United States 
asserts that, on the facts of this case, the USDOC explained that it was not appropriate to attribute 
subsidies to overseas production, since eligibility is restricted to Korean companies and nothing in the legislation or enforcement decree suggests an in tent to subsidize production outside Korea. As 
the USDOC stated, "there is no indication in the statutory provisions that a company could claim a 
tax credit on, for example, R&D conducted outside of Korea or a facility located outside of 
Korea".
525 The United States observes that Korea concedes that Samsung only claimed tax credits 
for R&D work conducted in Korea.526 The United States also points to statements made by the 
Government of Korea that RSTA Article 10(1)(3) "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".527 According to the United States, there was no 
evidence that the granting Member intended to subsidize overseas production, and no connection 
between the structure and operation of the subsidy programme and overseas production. 
7.313.  The United States asserts that Korea's argument that the USDOC failed to "match" the 
elements in the numerator and denominator rests on a flawed premise – namely, that the inquiry 
hinges on the possible indirect effects of subsidies overseas, rather than the structure and design 
of the subsidy programme itself. The United Stat es contends that Article VI:3 of the GATT 1994 
and Article 19.4 of the SCM Agreement do not re quire an effects-based tracing analysis. The 
United States asserts that the USDOC was not required to chase down the supposed overseas 
effects of R&D activities conducted in Korea, and in any event Korea has made no showing that these effects existed. According to the United States, Article VI:3 of the GATT 1994 and 
footnote 36 of the SCM Agreement confirm that the purpose of countervailing duties is to offset 
the bestowal of subsidies. Subsidies can only be best owed to the extent that they exist. Yet, in the 
                                               
523 Korea refers to Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93. 
524 The main arguments of the United States are set forth at paras. 485-501 of its first written 
submission. 
525 Washers  Final CVD I&D Memo, (Exhibit KOR-77), p. 52. 
526 Korea's first written submission, para. 313. 
527 GOK April 9, 2012 QR at App. Vol. 108 (emphasis supplied) (Exhibit KOR-75); Washers Final 
CVD I&D Memo at 52 (Exhibit KOR-77); United States' first written submission, para. 490; United States' second written submission, para. 349. WT/DS464/R 
 
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  view of the United States, Korea would premise the calculation of a subsidy rate on R&D activities 
that occur distinct from and prior to the existence or bestowal of a subsidy.528 Moreover, the 
United States contends that Korea fails to address the troubling implications of its effects-based approach. Investigating authorities would be required to conduct a jurisdiction-by-jurisdiction 
inquiry into how R&D activities affect production across the globe. The United States argues that 
tracing these effects is particularly challenging, given the differing legal, tax, and other regulations applicable to overseas operations; complexities in how companies structure their overseas and 
domestic operations; and the time lag between R&D activities and their effects.
529 
7.314.  The United States also submits that Kore a wrongly criticizes the USDOC for its alleged use 
of a presumption in favour of attributing subsidies to domestic production only. The United States asserts, as a threshold matter, that an investigating authority is not barred from employing 
methodologies that are not expressly addressed in the text of the WTO Agreement. The 
United States further observes that WTO panels and the Appellate Body have repeatedly endorsed the use of presumptions where they are reasonable and rebuttable.
530 The United States contends 
that, in any event, this presumption had no bear ing on the outcome, as the facts amply confirmed 
that the subsidy was not bestowed on overseas production.531 
7.6.5.2  Main arguments of third parties532 
7.315.  China recalls that the Appellate Body expressly recognized in US – Softwood Lumber IV  
that the elements taken into account in the numerator of a subsidy calculation must match those 
taken into account in the denominator. China is concerned that USDOC appears to have established a presumption  that government subsidies benefit only domestic production, which 
applies in the absence of positive evidence to the contrary. China considers it important not to 
discount the possibility that subsidies paid by a government may, under specific factual circumstances, benefit certain segments of a re cipient's worldwide production of a product and 
may not extend to other segments. However, wher e a subsidy benefits a product manufactured by 
a recipient, an investigating authority may not simply presume that the subsidy benefits only a specific segment of that production. Rather, the investigating authority may only determine that 
the benefits are limited in this manner if, and to the extent, there is positive evidence to support a 
finding that the benefit is, in fact , limited to a subset of the recipient's global production of the 
product. According to China, therefore, absent findings based on positive evidence, the total 
amount of the subsidy should be spread over the total volume of sales.
533 
7.316.  The European Union suggests that the Panel may find it relevant to examine whether the 
Article 10(1)(3) tax credits were in law or in fact limited to benefit production or sales carried out in Korea. Whilst it appears that the subsidy was granted with respect to R&D activities conducted 
in Korea, this does not necessarily mean that the subsidy benefitted only Samsung's domestic 
production, as the results of those activities could materialise in Samsung's total production (thus including exports).
534 
7.6.5.3  Evaluation by the Panel 
7.317.  Korea challenges the USDOC's decision to limit the denominator to the sales value of 
products produced by Samsung in Korea. Korea's claim is based on its assertion that, as a matter of fact, the R&D activities giving rise to the tax credits benefited Samsung's global production 
                                               
528 United States' second written submission, para. 348. 
529 Ibid. para. 354. 
530 The United States refers in this  regard to Appellate Body Report, US – Lead and Bismuth II , para. 62, 
and Panel Report, US – Countervailing Measures  on Certain EC Products , para. 7.75. The United States 
observes that, on appeal, the Appellate Body noted that  both parties concurred in the panel's finding with 
respect to the use of this pres umption, and observed that in US – Lead and Bismuth II  "we found this practice 
permissible under the SCM Agreement, so long as th e presumption was not irrebu ttable". (Appellate Body 
Report, US – Countervailing Measures on Certain EC Products , para. 84). 
531 United States' opening statement at the first substantive meeting, para. 66. 
532 If a third party is not included in this section, it  is because it did not make detailed arguments to the 
Panel regarding the issue at hand. 
533 China's third party submission, paras. 112-114. 
534 European Union's third pa rty submission, para. 86. WT/DS464/R 
 
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  activities.535 Korea contends536 that if certain revenue attributable to Samsung's R&D activities is 
to be excluded from the denominator because it  pertains to products produced by Samsung's 
subsidiaries outside of Korea, then the subsidy benefit attributable to those R&D activities should also be excluded from the amount of subsidy in the numerator.
537 Korea contends that the 
United States' arguments "fail[] to address the real issue, which is whether the R&D activities that 
Samsung conducted in Korea benefited the production of washers that Samsung produced in its overseas subsidiaries".
538 
7.318.  We disagree that the "real issue" concerning the USDOC's allocation of the benefit 
conferred by RSTA Article 10(1)(3) tax credit subsid ies hinges on the effects of the R&D activities 
that gave rise to those subsidies. As explained above, the subsidies at issue are the tax credits 
provided to Samsung in Korea.539 The benefit of that subsidy is the tax credit cash that Samsung 
(including its affiliate companies) does not have to spend on taxes. That benefit is not tied to the 
R&D activities that gave rise to the tax credits, since Samsung is free to dispose of the tax credit cash as it sees fit. The benefit conferred by the ta x credit subsidies does not, therefore, have to be 
allocated across revenue from Samsung's overseas production operations simply because such 
operations – to use Korea's terminology – "ben efited" from the underlying R&D activities. The 
positive effect of the underlying R&D alluded to by  Korea does not constitute "benefit" within the 
meaning of Article 1.1(b) of the SCM Agreement. 
7.319.  Korea also argues, in respect of the tax cr edit subsidies, that the USDOC was not entitled 
to rely on any presumption that those subsidies only benefit Samsung's domestic production operations. The United States contends that it is logical to presume (rebuttably) that a Member 
grants a subsidy to benefit domestic production.
540 WTO panels and the Appellate Body have 
already endorsed the use of presumptions wh ere they are reasonable and rebuttable. In US – Lead 
and Bismuth II , for example, the Appellate Body accept ed that investigating authorities are 
entitled to rebuttably presume, in administrative reviews, that a benefit continues to flow from an 
untied, non-recurring financial contribution.541 In US – Countervailing Measures on Certain EC 
Products , the panel found that "it is a normal and accepted practice … for the importing Member to 
presume that a non-recurring subsidy will provide a benefit over a period of time, which is 
normally presumed to be the average useful life of assets in the relevant industry".542 In the 
Washers countervailing investigation, the recipients of the tax credit subsidies (i.e. Samsung and 
its Korean affiliates) only produced in the territory of the subsidizing Member.543 The USDOC was 
therefore entitled to presume that the tax credit subsidies only benefited Samsung's domestic 
production operations. Furthermore, the presumption applied by the USDOC was rebuttable. The 
                                               
535 See, for example, Korea's first written submission , where Korea asserts that  "the R&D performed by 
the Digital Appliance business unit – for which Samsung received the RSTA 10(1)(3) tax credits on which the 
numerator was calculated – benefited Samsung's global pr oduction of digital appliances" (Korea's first written 
submission, para. 308). 
536 Korea's first written submission, paras. 304-309 (referring in turn to Samsung's arguments before 
the USDOC set forth in Exhibits KOR-77 and United Stat es Department of Commerce, Case brief of Samsung 
Electronics, Co. Ltd., investigation No. C-580-869 (2 November 2012), (Exhibit KOR-90)). 
537 Korea asserts that the USDOC included Samsung's revenue from sales of products produced outside 
of Korea in the denominator in an earlier proceeding (see, for example, Korea's second written submission, 
paras. 319-322). The United States contends that the USDOC had simply made a mistake based on erroneous reporting of data by Samsung (see, fo r example, United States' oral statement at the second meeting of the 
Panel, para. 71). Since this case is concerned with the USDOC's actions in the Washers  countervailing 
investigation, we shall confine our analysis to that case. 
538 Korea's comments on the United States' resp onse to Panel question No. 5.1, para. 3. 
539 See the United States' response to Panel question No. 5.1, and Korea's comments thereon, which 
make it clear that the tax credit subsidies were receiv ed by Samsung (including its Korean affiliates), which 
produces LRWs in Korea. There is no suggestion by Korea that the recipients of  the tax credit subsidies 
produced LRWs outside of Korea. In response to Panel questi on No. 5.1, which asked whether the entity that 
received subsidies "engages in production and/or sale s outside of Korea", Korea only references overseas 
production carried out by Samsung's overseas affiliates . In addition, Samsung repo rted in its questionnaire 
responses that it "performed all LRW production op erations at its Gwangju, Korea facility" (Samsung 
April 9, 2012 QR, at 3, Ex. 1, (Exhibit USA-100)). 
540 United States' first written submission, para. 498. 
541 Appellate Body Report, US – Lead and Bismuth II , para. 62. 
542 Panel Report, US – Countervailing Measures on Certain EC Products , para. 7.75. On appeal, the 
Appellate Body noted that both part ies concurred in the panel's finding with respect to the use of this 
presumption, and observed that in US – Lead and Bismuth II  "we found this practice  permissible under the 
SCM Agreement, so long as the presumption wa s not irrebuttable" (Appellate Body Report, US – Countervailing 
Measures on Certain EC Products, para. 84). 
543 See fn 505 above. WT/DS464/R 
 
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  USDOC's regulations provide in this regard: "If it is demonstrated that the subsidy was tied to 
more than domestic production, the [USDOC] will attribute the subsidy to multinational production".
544 In these circumstances, we consider that the rebuttable presumption applied by the 
USDOC is not inconsistent with Article 19.4 of the SCM Agreement or Article VI:3 of the 
GATT 1993.545 We also consider that the USDOC was entitled to conclude that neither Samsung 
nor Korea had rebutted that presumption. As disc ussed above, the fact that the underlying R&D 
activities may have been beneficial to the production operations of Samsung's overseas 
subsidiaries does not mean that the benefit conferred by the tax credit subsidies also passed 
through to those overseas operations. 
7.320.  For the above reasons, we reject Korea's claim 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 
by RSTA Article 10(1)(3) tax credit subsidies.  
8  CONCLUSIONS AND RECOMMENDATION(S) 
8.1.  For the reasons set forth in this Report, the Panel concludes as follows: 
a. With respect to the anti-dumping measures,  
i. the United States acted inconsistently with the second sentence of Article 2.4.2 of 
the Anti-Dumping Agreement, by applyi ng the W-T comparison methodology to 
transactions other than those constituting the patterns of transactions that the USDOC had determined to exist in the Washers  anti-dumping investigation; 
ii. 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 by determining 
the existence of a "pattern of export pr ices 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 differences; 
iii. the United States acted inconsistently with the second sentence of Article 2.4.2 in 
the Washers  anti-dumping investigation, by merely focusing on the difference 
between the margin of dumping calculated using the W-W comparison methodology 
and the margin calculated using the W-T comparison methodology and failing to consider whether the factual circumstances surrounding the relevant price differences were suggestive of some thing other than targeted dumping; 
iv. 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 by failing to 
explain why the relevant price differences could not be taken into account 
appropriately by the T-T comparison methodology; 
v. Korea failed to establish that the DPM is inconsistent "as such" with the second 
sentence of Article 2.4.2 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 qu alitative assessment of the reasons for the 
relevant price differences; 
vi. the DPM is inconsistent "as such" with Arti cle 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 pu rchasers, regions, and time periods that 
pass the Cohen's d test account for 66% or more of the value of total sales; 
                                               
544 19 CFR § 351.525(b)(7), (Exhibit USA-24). 
545 Korea also alleges that the USDOC's approach in  the Washers  countervailing investigation is 
inconsistent with its decision in the earlier Refrigerators  case to include the sales revenue from Samsung's 
global production operations in the denominator. The present claim concerns the USDOC's conduct in Washers . 
We therefore confine ourselves to what the USDOC did in the Washers countervailing  investigation. WT/DS464/R 
 
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  vii. the DPM is inconsistent "as such" with the second sentence of Article 2.4.2, because 
in applying the "meaningful difference" test, the DPM focuses on the difference 
between the margin of dumping calculated with the W-W comparison methodology and the margin calculated using the W-T comparison methodology or the mixed 
comparison methodology. The DPM fails to provide for any consideration of whether 
the factual circumstances surrounding the relevant price differences were suggestive of something other than targeted dumping; 
viii. Korea failed to establish that the DPM is inconsistent with the second sentence of 
Article 2.4.2 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 into 
account appropriately by the T-T comparison methodology; 
ix. the DPM is inconsistent "as such" with the second sentence of Article 2.4.2 because, 
by aggregating random and unrelated price va riations, it does not properly establish 
"a pattern of export prices which differ significantly among different purchasers, 
regions or time periods"; 
x. 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; 
xi. Korea failed to establish that the United States' use of "systemic disregarding" under 
the DPM is "as such" inconsistent with Article 2.4; 
xii. 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 Agreement; 
xiii. 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; 
xiv. the USDOC acted inconsistently with Articl e 2.4.2 of the Anti-Dumping Agreement by 
using zeroing when applying the W-T comparison methodology in the Washers  
anti-dumping investigation; 
xv. 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; 
xvi. 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; 
b. With respect to the countervailing measures,  
i. the USDOC's original and remand determinations of disproportionality are 
inconsistent with Article 2.1(c) of the SCM Agreement;  
ii. 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  specificity; 
iii. Korea failed to establish that the USDOC's determination of regional specificity in 
respect of the RSTA Article 26 tax credit scheme is inconsistent with Article 2.2 of the 
SCM Agreement; 
iv. Korea failed to establish that the USDOC's failure to tie the RSTA Article 10(1)(3) 
and 26 tax credit subsidies to Digital Appliance products is inconsistent with 
Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994; WT/DS464/R 
 
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  v. 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 by RSTA Article 10(1)(3) tax credit subsidies. 
8.2.  For the reasons also set forth in this Report, the Panel declines to make any findings 
regarding the allegations of WTO-inconsistency set forth in paragraphs 102, 103 and 111-117 of Korea's second written submission, concerning th e USDOC's use of average export prices rather 
than actual export prices in calculating standard deviation and the USDOC's alleged "sufficiency 
test", respectively. 
8.3.  We do 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 is it necessary to 
address Korea's claims against zeroing in "subsequent connected stages" of Washers  under 
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994. It is also not 
necessary for us to address Korea's "as applied" an d "ongoing conduct" claims concerning the DPM. 
8.4.  Under Article 3.8 of the DSU, in cases wh ere there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie  to constitute a case of 
nullification or impairment. We conclude that, to the extent that the measures at issue are 
inconsistent with certain provisions of the An ti-Dumping Agreement, th e SCM Agreement and the 
GATT 1994, they have nullified or impaired benefits accruing to Korea under those agreements. 
8.5.  Pursuant to Article 19.1 of the DSU, we recommend that the United States bring its measures 
into conformity with its obligations under those Agreements. 
 
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