WT/DS296/R 
 Page C-1 
 
 
 
 
ANNEX C 
 
 
REBUTTAL SUBMISSIONS OF PARTIES 
 
 
Contents Page 
Annex C-1 Executive Summary of Korea's Rebuttal Submission C-2 
Annex C-2 Executive Summary of the United States Rebuttal Submission  C-12 
 
 WT/DS296/R 
Page C-2  
 
ANNEX C-1 
  
EXECUTIVE SUMMARY OF THE 
SECOND WRITTEN SUBMISSION 
BY THE REPUBLIC OF KOREA 
 
19 July 2004 
  I. SUBSIDY ISSUES   A. The Scope Of “Entrusts Or Directs”    1. The meaning of “entrusts or directs” imposes legal limits 
 
1. The United States acknowledges but then ignores the legal limitations imposed by 
Article 1.1(a)(i)(iv). In particular, the United States  has ignored the core meaning of both of these key 
terms.   
   (a) Text 
 2. Both the word “entrusts” a nd the word “directs” convey the basic meaning of carrying out 
some specific action.  The United States claims th at guidance or suggestions alone would be sufficient 
to establish “entrusts or directs”.  Yet “directs” h as a much stronger meaning, and conveys the idea of 
ordering the private party to do something.  Also, in light of the French and Spanish texts, the most 
appropriate interpretation of the English word  “directs” must be the meaning of ordering
 a private 
body to take some action.   3. The term “entrusts” also conveys the idea of  the person who is entrusting already having 
something to be entrusted.  Thus the government must already have something that is going to be 
“entrusted” to the private body.  Accordingly, in the context of the Hynix restructuring, the only 
relevant term is the concept of “directs” since the restructuring was both privately organized and 
carried out.   
   (b) Context 
 
4. Both the words “entrusts” and “directs” are verbs, and Article 1.1(a)(1)(iv) has important 
textual guidance about the object of these two verbs, and what that object must be.  First , the 
entrustment or direction must apply to “a private body”.  Second , that private body must be entrusted 
or directed “to carry out” something. Since the private body is not being entrusted or directed to “carry out” some action, any discretion being left to the private body is thus fundamentally at odds 
with this notion of “carry out”.  Third , the action being entrusted or directed is not some generalized 
policy or wish, but rather one of the concrete  actions specified in Article 1.1(a)(1).   
 
   (c) Object and purpose 
 
5. Unlike the US assertion, Korea never argued that entrustment or directi on had to be expressed 
in writing.  By “explicit”, our argument means some concrete action directed to some specific person 
to do some specific action.  This narrow approach is quite proper in that the entire WTO framework 
regulates governmental action, not private action.    WT/DS296/R 
 Page C-3 
 
 
  2. US-Export Restraints   
 
6. The United States tries to downplay the relevance of US-Export Restraints , by arguing that 
panel decision considered a different factua l context. But this effort to distinguish Export Restraints 
fails on two levels.  First, the panel in that case was clearly offering its own reading of the specific 
text at issue here.  Second, that panel also wisely explained the problems with an overbroad reading of 
“entrusts or directs”.  In particular, the pa nel distinguished carefully between government 
interventions and actions that by their nature  rise to the level of “entrusts or directs”. 
 
  3. The US approach of considering general evidence is flawed 
 
7. The United States repeatedly invokes the argume nt that it was considering the evidence in its 
totality. Korea notes that this approach is deeply  flawed on a number of le vels.  Among others, under 
the US approach, an authority could countervail as  an impermissible subsidy a loan from a bank 
without a single shred of evidence about that particul ar bank or that particular loan.  Also, the US 
theory has no temporal limits.  
 
  4. The actions of private bodies 
 
8. The United States also mischaracterizes the Korean argument about private bodies.  Indeed, 
the actions of private parties are very much part of the evidence that must  be assessed to see whether 
the authorities have in fact me t the necessary legal standard. 
 
 B. The DOC “Evidence” With Respect To Specific Transactions  
 
  1. October 2001 Restructuring 
 9. The US evidence with regard to the Octobe r restructuring utterly fails for the following 
reasons.  First, the United States makes serious fact ual misstatements about the CRPA.  Moreover, the 
United States paints the CRPA as a trap with no escape, notwithstanding the numerous procedural safeguards built into the text of the law itself.  Finally, the United States makes broad allegations 
about FSS monitoring that lack relevance.  Moreover,  under the US theory of “entrusts or directs”, all 
the Korean banks were being told what to do.  Yet as well borne out by the October 2001 
restructuring, different banks made different c hoices based on their own commercial considerations.  
 
  2. May 2001 Restructuring & December 2000 Syndicated Loan 
 10. The US evidence with respect to the Ma y restructuring has the following flaws.  First , the 
United States repeats its flawed assertions a bout “blocking majority” and about alleged GOK 
influence over all of Hynix’s creditors th rough shareholding in certain of them. Second , the 
United States mischaracterizes the Prime Minister ’s Decree No. 408 while citing to the MOUs as 
somehow providing a mechanism of control.  Fourth , the mistaken press reports and the KorAm 
denials were provided to the DOC, but the United States continue to brush them aside.  Most 
egregious of all, the United States says not one word about the GDR equity offering that was the 
necessary precondition for the May 2001 restructuring.  With respect to the December 2000 syndicated 
loan, the United States stresses th e results of the Economic Ministers meetings, but draws conclusions 
far beyond what an objective authority would conclude based on these facts.  
 WT/DS296/R 
Page C-4  
 
 C. The DOC’s Other General “Evidence”  
   1. General problems with the US approach 
 
11. In general, the United States cites evidence rega rdless of the time period and regardless of the 
connection to the Hynix restructuring.  The United States also makes numerous factual misstatements.  
 12.  In addition, there are several problems w ith the evidence of an alleged policy to save 
Hynix.  The core US argument in this regard focuses on the Economic Ministers meetings in late 
2000.  But this discussion illustrates the shortcomings  in the US approach.  The United States also 
argues that Hynix was somehow exempt from its review of financially insolvent companies, citing a 
single newspaper article as evidence.  Yet the FSS/ FSC never exercised any pressure to exempt any 
companies from the list of companies to be liquidated.   
  2. Alleged control over creditors 
 
   (a) Signalling & Ownership  
 
13. The United States repeatedly invokes the idea of “signalling”.  The problem for the US theory 
is that such evidence is legally irrelevant to the i ssue of entrusts or directs.  The United States also 
invokes GOK ownership in the banks, but in so di ng, ignores the various procedural safeguards 
imposed by the GOK. 
 
   (b) Kookmin Prospectus 
 
14. The United States makes much of the Kookmin prospectus, but this approach to the Kookmin 
prospectus overlooks several important pieces of evidence.  Among others, the possibility of GOK 
influence is belied by the actual actions of Kookmin in the October restructuring. 
Prime Minister’s Decree & Public Funds Oversight Act/MOUs  
   (c) Prime Minister's Decree & Public Funds Oversight Act/MOUs 
 15. The United States mischaracterizes the Prime Mi nister’s Decree No. 408.  As Korea already 
explained, the United States completely ignores Artic le 1 of the Decree.  Instead the United States 
mischaracterizes other parts of the Decree.  The Un ited States ALSO cites to the MOUs as somehow 
providing a mechanism of control.  Unlike the US assertion, however, the purpose of the MOUs is to 
ensure that the bank can recover quickly follow ing its Normalization Plan so that the GOK can 
recover the public funds injected in to the bank as fast as possible.  
 
   (d) CRPA 
 
16. The United States describes the basic CRP A process, but then makes several serious 
mischaracterizations.  The United States argues th e Creditors Council gave only limited options, but 
this claim ignores the context of the restructuring.  The United States also erroneously argues that the 
CRPA does not provide any real choices.   
   (e) Role of FSS 
 17. One of the more disingenuous US arguments is  the effort to take normal bank regulation and 
turn it into another mechanism of control.  Un like the US claim, when a government regulatory 
agency decides whether to grant an exception to a regulatory limit, that government agency may 
consider a wider range of factors.  
  WT/DS296/R 
 Page C-5 
 
 
   (f) Alleged Coercion 
 
18. The United States cites numerous press articl es about alleged pressure on KFB.  But in the 
end, the actual behaviour of KFB is hardly cons istent with the US theory of coercion.  The 
United States goes on to raise two other irrelevant points that have nothing to do with Hynix.  
 
 D. The DOC’s Determination of “Benefit” 
 
  1. Requirements of Articles 1.1 and 14 
 19. With respect to the existence of a benefit, Article 14 applies very c oncrete terms focused on 
the “usual” or “prevailing” conduct in the market under investigation, or “comparable” conduct.  In 
US – Lumber , the Appellate Body found that the “the po ssibility under Article 14(d) for investigating 
authorities to consider a benchmark other than private prices in the country of provision is very 
limited ”.  The US claims that the Appellate Body’s holding in US – Lumber  must be restricted to 
Article 14(d) on that basis.  But such a readi ng completely ignores the clear preference found in 
Article 14 for primary benchmarks.    
   (a) Scope of Article 14(b) & (a) 
 
20. Under Article 14(b), comparable must first be defined by what a firm can “actually obtain on 
the market”.  In this case the market in question is fi rst and foremost Korea.  Thus, to the extent Hynix 
obtained loans in Korea from lenders the DOC di d not prove were “directed” by the GOK to extend 
credit to Hynix, those loans are “comparable”.  Un der Article 14(a), the issue turns on what is the 
“usual investment practice of private investors in the territory” of the member.  Even if the DOC can 
prove that some creditors were entrusted or direct ed by the government to purchase equity, it is not 
the basis to discard all investors as benchmarks.  
 
  2. DOC improperly rejected all Korean private banks 
 
21. The DOC’s benefit findings in this case are simply overbroad.  The syndicated loan is a 
perfect example.  With respect to Korean privat e banks, there is simply no evidence indicating that 
Shinhan, Hana, or KorAm bank we re entrusted or directed by the GOK.  These banks cannot be 
discarded as benchmarks simply because the DOC had suspicions or evidence concerning GOK entrustment or direction of other creditors.    
  3. DOC improperly rejected all equity benchmarks 
 
22. Under Article 14(a), the applicable standard is  whether the equity investment is  consistent 
with the “usual investment practice” in Korea.  Moreover, the text of Article 14(a) makes quite 
explicit that the benchmark standard for behavior is that of investors in Korea.  Given the liquidation 
value as estimated by Arthur Andersen, banks w ith large amounts of outstanding debt could quite 
reasonably decide to further invest in Hynix.   The United States tries to brush aside the 
Arthur Andersen determination of  liquidation value based on some dispute about the date of the 
report.  Yet this argument fails on several levels.  The United States also tries to brush aside “Prospect 
Theory”. This US argument is both sloppy a nd wrong because, among others, this is hardly a 
“marginal economic theory”.  WT/DS296/R 
Page C-6  
 
  4. DOC improperly rejected Citibank as a suitable benchmark 
 
   (a) Rejecting Citibank is inconsistent with Article 14(b) 
 
23. The DOC’s rationale for rejecting Citib ank as a suitable benchmark was based on a 
“circumspect finding” of “unusual aspects” in connection with Citibank’s loans to Hynix.  Yet in light 
of what the Appellate Body has found in US - Lumber, this rationale does not meet the standard set 
forth in Article 14(b).  
   (b) The DOC’s rationale for rejec ting Citibank is not supported by 
positive evidence 
 
24. The United States continues to insist on view ing Citibank’s loans in the context of  total 
financing.  Such approach, however, underscores the danger of allowing an investigating authority to 
utilize whatever methodology of its choice.  Also, wh en one considers Citibank’s participation in the 
transactions as they occurred, it is very much comparable to the commitments of other Hynix 
creditors in those transactions.    
  5. Korean default rates 
 
25. Even assuming DOC was somehow correct in its  approach to creditor benchmarks, there was 
no basis to ignore Korean default rates in calculating its  “uncreditworthy” interest  rate benchmark.  At 
the very least, the DOC was obliged to explain wh y the US data related or referred to prevailing 
market conditions in Korea.  Yet if failed to do so.  
 E. The DOC Determined “Specificity” Inconsistently with Article 2 
 26. The United States argues that specificity is th e “natural consequence of the nature of the 
subsidy at issue”.  Yet by failing to analyze the c onstituent elements of the Hynix restructuring, the 
United States failed to comply with the requirements of Article 2.   27. The United States also tries to ignore the “exte nt of diversification” requirement by arguing 
that Korea is not a small developing country.  But as the United States itself admits, this language 
“requires a consideration of the broader economic cont ext” within which the alleged subsidy operates.  
The Korean economy is well known for having a small number of large industry groups.  Thus in a 
Korean context, debt restructuring of a chaebol will automatically mean that a large value of debt will 
be involved.  Yet the United States has adopted an  approach whereby any time a Korean chaebol has 
to restructure, that restructuring is deemed specific.  
 
II. INJURY ISSUES 
 
 A. The Requirements Of Article 15.1 
 28. As pointed out in Korea’s First Submission, the standard of review in this case sharpens the 
meaning of the terms positive evidence and objectiv e examination found in Article 15.1.  The 
Appellate Body has clearly stated that Article 11 of the DSU does not allow for a rubber stamp of a 
competent authority’s determination, including its sel ection of facts and how it applies those facts in 
given case.  
 
29. Also, as Appellate Body in US – Lamb Meat  made clear, verifiable facts are not necessarily 
positive evidence of injury, and an examination of in complete or inadequate facts does not make an 
examination objective.    WT/DS296/R 
 Page C-7 
 
 
 B. US Interpretation of the Causation Standard 
 
30. The US reading of Article 15.5 of th e SCM Agreement would render the causation 
requirement of that provision largely meaningless.  In its First Submission, the United States resists what is now well-established principle that Artic le 15.5 requires authorities to disentangle causes, 
including subject imports, so as not to attribute in jury to subject imports caused by other factors. 
 
  1. Interpretation of “causal relationship” 
 
31. Article 15.5 requires a demonstration that th ere normally be a coincidence of, or correlation 
between, subject imports and declining domestic industry performance trends.  In its First 
Submission, Korea provided the Panel with just such  a temporal analysis.  The United States offered 
no comparable analysis, either within the ITC report or in its First Submission.   32. In its First Submission, the United States argues that the concepts of causation  are unique to 
the Agreement on Safeguards given the higher injury  standard contained in that Agreement.  The 
GOK disagrees.  First, concepts of causation and in jury comprise distinct legal elements under both 
agreements.  Also, although the terms “link” and “r elationship” appear different, in fact, a careful 
review of the plain meaning of both terms shows th at they are interchangeable.  Moreover, the French 
and Spanish texts confirm that the terms “relationshi p” and “link” have essentially the same meaning. 
 
  2. The non-attribution requirement in Article 15.5 
 
33. Unlike the US assertion, Korea never used the term “isolate” in the context of causation, and 
specifically with respect to non-attribution.  Rath er, Korea has argued that an authority must separate 
and distinguish the injury caused by subject imports, consistent with  the Appellate Body’s 
determination in US - Hot-Rolled Steel .  
 34. Under Article 15.5, as the Appellate Body in US - Lamb Meat  made perfectly clear, an 
authority cannot leave non-attribution to a simple re citation of other causal factors or some superficial 
discussion of the relative importance of different causes.   
35. Korea takes further exception to US claims that Korea advocates a “sole cause” standard.  
Korea makes no such argument. In fact, it appears th at the US favours what is in essence a “tangential 
cause” standard. Such a position cannot be supported by the Agreement text.  Indeed, the purpose of 
the non-attribution analysis required by Article 15. 5 is not merely to discern whether subsidized 
imports are a cause of injury in any form, but whether they are a cause of material injury. 
 
36. Also as the Appellate Body in US - Hot-Rolled Steel made clear, imports must be causing the 
injury  which justifies the imposition of duties.  If it is something less, duties are unwarranted. 
 
 C. The US Failure To Id entify Positive Evidence 
 
  1. The ITC Finding of Significant Volume  
 
   (a) Korean market share data 
 
37. The US criticisms of the market shar e data relied upon by Korea are both wrong and 
disingenuous.  The United States is wrong to allege  that Korea compared a quantity based market 
share figure for domestic shipments with a value-based  market share figure for Hynix.  Quite to the 
contrary, Korea notes that a quantity measure was used  to derive the market share figures provided in 
Figure 9 of Korea’s First Submission.   WT/DS296/R 
Page C-8  
 
38. The United States is disingenuous when it stat es that Korea’s estimate of non-Hynix subject 
imports is “troubling”.  Contrary to the US asserti on, the estimates that Korea provided were the best 
possible estimates given the constraints imposed by the United States.  39. Also, the ITC’s decision to make the en tire record confidential is not only not
 necessary to 
protect confidentiality but also is at tension with  the ITC’s own past practice (i.e. “three or more” 
rule).  The United States argues that under its “one company with 75 per cent or two companies with 90 per cent rule”, it could not provide this data publicly.  Yet nothing prevents the United States from providing this information to the Panel with a requ est for confidentiality.  Second, under the US rule 
itself, the Panel can have a high degree of conf idence that the portion omitted is not material.  
 
40. In sum, Korea vigorously disputes the ITC’s f actual conclusion that the data demonstrate that 
any increase in the volume of subsidized imports w as “significant”.  The only  way to resolve this 
critical issue is to examine the actual  quantity and value figures relied upon by the ITC in making its 
determination.   
 
   (b) Finding of “significant” increase 
 
41. Under Article 15.1, there must be positive evidence supporting the specific conclusion that 
the volume of subject imports can be deemed “significant”.  In this case, the volume of subject imports was not significant.  
 
42. First, this case did not involve a typical measure of units, such as tons of steel.  Having chosen a measure of volume of imports that by definition
 would show huge increases, the 
United States cannot now claim the SCM Agreement has been satisfied based  on such a measure of 
volume.  Also, the ITC never explained how  it took this unique factor into account. 
 
43. Second, the importance of substitutability mu st apply on a consistent basis throughout the 
period.  The focus here should be on what has changed  over time, not what has always been true about 
the DRAM market.  Third, the United States insists that the increase in market  share was significant. 
But once again the United States substitutes assertion for analysis.  Moreover, in light of the fact that 
the Hynix Oregon facility shut down during this pe riod, the significance is even smaller.   
 
   (c) Hynix’s US manufacturing facility 
 
44. The United States tries to justify ignoring the shutdown of the Oregon facility, but this effort 
fails.  Korea submits that Article 15.1 does not require the investigating authority to ignore context 
when assessing whether the volume of subject impo rts is significant.  Subject Hynix imports and 
DRAMs from Hynix’s Oregon facility were the same DRAM commodity product.    45. Given the complete substitutability between  Hynix Korea and Hynix Eugene DRAMs, the 
ITC should have treated subject Hynix imports as merely replacing production at Hynix’s Oregon facility.  Korea submits that the evidence establishe s that ALL of the increase in DRAMs imported in 
2001 and 2002 was to replace the Hynix-Oregon produced DRAMs. 
 
  2. The ITC Finding of Price Effects 
 
   (a) Failure to justify specific decisions with positive evidence 
 46. The United States argues that the ITC’s usual practice is not to disaggregate pricing by 
company, and that it would have been “arbitrary” to do so here.  But this statement ignores Hynix’s detailed arguments about the particular circumstances of this case , and the fact that the ITC Staff, in 
fact, did undertake the very analysis suggested by Hynix.  
  WT/DS296/R 
 Page C-9 
 
 
47 The ITC defence of its averaging methodology actually admits the defects in the rationale.  
Specifically, the United States noted  that transaction-specific data “would be more suitable”, 
admitting the reality that more detail is better than less detail in trying to unde rstand pricing dynamics.  
But because transaction specific data sometimes is oner ous to collect, the United States then swings to 
the opposite extreme, and largely ignores the disaggregated data that it actually did collect in this 
case.  
 
   (b) Price effects of subject imports 
 
48. The United States asserts that Hynix undersold more often than any other source, a conclusion 
that it reaches only by distorting the presentation.  It disaggregates the other suppliers into domestic 
and import sources, thus making them  appear smaller.  The United States also ignores the fact that 
during the investigation period, Hynix’s US ma nufacturing facility shut down.  Finally, the 
United States does not put the combin ed volume of the other suppliers into proper context.  Even if 
Hynix was sometimes the lowest price source, the effects  of that pricing must have been small 
because of the low and falling market share of Hynix DRAM shipments.  
 49. The US arguments about price depression are also without merit.  Most importantly, the United States points to no positive evidence supporting its conclusion to blame imports for the price 
decline.      (c) The pricing analysis compiled by the ITC  
50. Once again, Korea respectfully  requests that the Panel instruct the United States to provide 
the actual confidential “lowest pr ice” pricing data provided in Appendix E of the ITC Staff Report .  
We submit that such data is critically important for a proper analysis by the Panel of the claims being 
made in this dispute.   
 
 D. The Legal Requirement to Consider Other Factors  
   1. The importance of non-subject imports  
 51. There can be no dispute that non-subject im ports dwarfed Hynix subject imports.  In an 
attempt to obscure the importance and sheer magn itude of non-subject imports, the United States 
seeks to bolster the theory that competition be tween non-subject imports and domestic product was 
somehow attenuated because some non-subject impor ts consisted of RAMBUS and other specialty 
DRAM products.  
 
52. In its First Submission, the United Stat es notes that it “collected information on the 
percentage of imported products and US shipments” that were Rambus DRAM products and other 
“specialty” products. In fact, what th e ITC collected were value estimates
 of those companies’ share 
of 2002 shipments attributed to RAMBUS and other specialty DRAMs.  
53. The record ignored by the ITC and the United St ates shows that the most significant player in 
the “speciality” market was Samsung.  The record also s hows that Samsung’s Rambus DRAM 
production comprised only a small portion of its overall production.  
  2. The injurious effects of the unprecedented drop in the demand growth 
rate 
 
54. Notwithstanding the record evidence s howing that 2001 marked an unprecedented
 drop in 
demand in the two largest DRAM consuming sectors (PC and telecom), the United States would have this Panel believe that the information on the r ecord was completely speculative or represented a 
minor event.  Yet the ITC’s own data demonstrate that by the end of the investigation period the WT/DS296/R 
Page C-10  
 
demand growth rate had dropped by nearly two- thirds.  Also, Micron and Infineon explicitly 
acknowledged a direct correlation be tween the decline in the demand growth rate and harm to the 
domestic industry.    
  3. Increased capacity of other suppliers 
 55. What the evidence before the ITC demonstr ated was that DRAM manufacturers other than 
Hynix were dramatically increasing their capacity.  The ITC completely ignored this evidence.  To 
date, neither the ITC nor the United States have adequa tely explained, or really even considered, the 
role of capacity expansion by producers other than Hynix on the performance of the domestic 
industry.  Moreover, the data on relative capacity changes in this case strongly corroborated Hynix’s 
argument that other suppliers were offering the low est prices and had a much more substantial effect 
on price levels.   
  4. Injurious effects of Micron’s technological difficulties 
 
56. In its First Submission, Korea includes 16 paragraphs that provide evidence and argumentation concerning the significance of Mi cron’s admitted technological difficulties on its 
financial performance.  In response, th e ITC merely provides a single footnote
 of just three  sentences.  
As importantly, the US never recognizes that if Micron experiences difficulties, it has a substantial 
impact on the performance data for the industry as a whole.  
 
 E. The Condition of the Domestic Industry 
 
57. In its discussion of the condition of the US DR AM industry, the United States largely repeats 
the recitation of facts that appeared in the ITC dete rmination in the first instance.  The United States 
takes apparent pride in its “wealth of data”.  Bu t collecting data does not mean the data has been 
analyzed, or analyzed properly.  58. Yet with so much information about industr y performance over time, with so much testimony 
by industry executives about how well they were doing relative to the business cycle, it simply defies 
belief that the ITC would continue with its “business as usual” measure ment of trends in a vacuum.  
Such an approach is simply not an obj ective examination of positive evidence.  
 
III. OTHER ISSUES 
  A. The Secret Meetings Were Inconsistent with Article 12.6 
 
59. Contrary to the US argument, Korea was not objecting to the substance of the verification. 
Korea has a procedural objection that had no effect on the substance of what the DOC would do or would find out.  The Korean request in this situa tion was quite modest as  Korea requested only that 
counsel be allowed to observe the meetings.  Th e decision by the DOC to proceed anyway, over the 
objections of Korea, was inconsistent with Article 12.6. 
 
 B. The United States Has Levied Duties In consistently with Article 19.4 of the SCM 
Agreement and Article VI.3 of GATT 1994 
 
60. Under the US system, the final duty announced  in the countervailing duty order has important 
consequences.  First, this duty rate serves as the b asis for a cash deposit that importers must pay, with 
serious trade consequences.  Second, and more im portantly, this cash deposit becomes the final duty 
to be collected, if no party requests an administ rative review. Because of the pending court challenges 
under US law, the legal assessment may not yet be “final,” but is still “definitive”.   WT/DS296/R 
 Page C-11 
 
 
 C. The Countervailing Duty Orde r is Properly Before This Panel 
 
61. The United States argues that Korea did not provide any “indication” of the legal basis for its 
challenge to the countervailing duty order.  Yet the two consultation requests of the GOK provide a 
fairly detailed explanation of the legal defects w ith the DOC and ITC determinations.  Since the US 
countervailing duty order rests on the legal and factual foundations of these two agency findings, 
Korea was in fact providing a more than sufficient “indication” of the legal basis for its claim.   
 
 D. The Panel May Consider Any Evidence It Deems Appropriate 
 
62. At the first meeting with the Panel the Unite d States raised the argument that the Panel may 
only consider information submitted to the administer ing authorities.  Korea believes this argument is 
wrong as a matter of law.  The only relevant textua l obligation on panels under the SCM Agreement is 
found in Article 11 of the DSU.  Moreover, this  more flexible approach makes sense.  If the 
authorities have not asked the right questions, or did not clarify certain information, then those 
failures might well be part of the “objective assessment” that the panel must provide. WT/DS296/R 
Page C-12  
 
ANNEX C-2 
  
EXECUTIVE SUMMARY OF THE SECOND 
WRITTEN SUBMISSION OF THE UNITED STATES 
 
19 July 2004 
 
 
I.  DOC’S SUBSIDY DETERMINATION WAS CONSISTENT WITH US WTO 
OBLIGATIONS 
 
1.  This dispute is not about the validity of a particular "approach" or a specific restructuring 
"mechanism".1  Rather, this dispute is about the DOC’s determination that the GOK-directed bailout 
of Hynix gave rise to countervailable subsidies, and whether that determination was inconsistent with 
the terms of the SCM Agreement.   2.   Entrustment or Direction
:  Record evidence showed that  the GOK adopted an explicit 
policy to keep Hynix from failing, and that the G OK took affirmative actions to entrust and direct 
Hynix’s creditors to provide financ ial contributions to Hynix.  The GOK did so by exercising control 
over Hynix’s creditors in its multiple roles as lende r, owner, legislator and regulator, and, where 
necessary, using coercion.  3.  Early in the countervailing duty investigati on, both the GOK and Hynix conceded – in fact 
argued – that the various bailout phases were part of a single overall restructuring programme for 
Hynix.  The manner in which the various phases of the bailout programme overlapped and were 
interrelated is illustrated graphically in Figure US-3, entitled "The Constituent Parts of the Hynix 
Debt Restructuring".  
4.  The DOC gave a reasoned explanation of how the various aspects of the bailout were part of 
an overall programme.  They were all driven by  the same GOK policy to support Hynix; they 
occurred over a relatively short period of time; th ey were overlapping and interrelated; and the GOK’s 
role was evident at each stage.  Moreover, no Hynix creditors was allowed  to say "no" to 
participating in the GOK’s Hynix bailout programme. 
 
5.  Korea asserts that, legally, the government was precluded from intervening in the banking and 
financial sectors of Korea.  A plain reading of th e legal instruments cited by Korea belies Korea’ s 
assertion.  Regardless of the "primary purpose" of th e Decree No. 408, on its face, the Decree gave the 
GOK the legal authority to intervene in the lending decisions of a bank in the exercise of the GOK’s 
shareholder rights.  Similarly, with respect to the Public Fund Oversight Act, the law on its face 
provides for government intervention in the financia l sector.   For example, the Act required Korean 
private banks to sign contractual commitments with the GOK ("Memoranda of Understanding" or 
"MOUs") in exchange for the massive recapitalizat ions they received from the government.  These 
MOUs provided the GOK with a contractual right to intervene in the day-to -day business and credit 
decisions of Korean banks.  
 
6.  Bank-specific evidence also belies Kor ea’s assertions that the GOK was precluded from 
intervening in the banking and financial sectors of Korea.  Statements in Kookmin Bank’s June 2002 
prospectus were a clear and unequivocal acknowle dgment by a private bank that the GOK could and 
                                                     
 
1 Indeed, the fact that the International Monetary Fund (IMF) may have recommended changes to 
Korea’s corporate workout mechanisms, and that Korea adopted some  form of the "London Approach" to 
restructurings, is irrelevant.  WT/DS296/R 
 Page C-13 
 
 
did influence its lending decisions.  Moreover, Kookm in’s financial statements suggested that the 
statements in its prospectus related to Hynix.   Kookmin’s 2001 Annual Report listed Hynix as its 
single largest financially troubled borrower.  7.  With respect to the CRPA,  the GOK enacted the CRPA precisely at the time when Hynix and 
other Hyundai Group companies were on the brink of  bankruptcy and required significant financial 
assistance to avoid financial failure.  Citibank offici als characterized the CRPA as a way for the larger 
creditors to force their decisions on smaller creditor s.  Independent analysts, such as Standard and 
Poor’s, noted that the CRPA provided the GOK wi th "a powerful voice in lending decisions", and 
concluded that the GOK could utilize its powers to "force some financial institutions to make new 
loans against their will" and "strip[] the financia l services companies of their independence in lending 
decisions".  Thus, while the CRPA may have b een modelled in some respects on the so-called 
"London Approach", the GOK’s version was government -driven, with the GOK playing a direct role 
in working out debts with financial ins titutions owned and controlled by the GOK. 
 
8.  The structure of the CRPA enabled a handf ul of banks – the "Creditors’ Council" – to 
dominate the restructuring process, to establish the te rms and details of the agreement, and to dictate 
the results to every other creditor,  and this is what happened in the Hynix October restructuring.  
Citibank confirmed the effectiveness  of this voting structure, stating that "creditor banks holding 
75 per cent of Hynix’ debt can impose their decisi ons on everyone else ...  [and that, while] foreign 
creditors wanted more freedom to manoeuvre ... they  didn’t see that they had much choice ... ".  
Public entities, such as the KDB, and private entiti es owned and controlled by the GOK, were by far 
Hynix’s largest creditors.  Under the CRA/CRPA vo ting structure, even when these banks did not 
account for 75 per cent of the votes, they had sufficient voting power to block any actions that the minority creditors might propose.  The DOC found that in both the May and October restructurings, GOK-owned and controlled banks held a majority of the voting rights; i.e., a blocking majority. 
 
9.  It was impossible for any creditor to "walk away" from the Hynix bailout, and none did.  The investigation record established that Hynix cred itor banks did not have any choices beyond the three 
options offered under the proposed restructuring pl an developed by Hynix’s 18 largest creditors – 
which were public and private entities owned an d controlled by the GOK – and presented to all 
creditors for a vote on 31 October 2001.  There was no fourth option outside the plan approved by the 
Creditors’ Council.  
 10.  Option 3 is what Korea characterizes as "walking away" from Hynix and receiving "basically 
what they would have obtained in liquidation".  U nder the terms of Option 3, the banks were required 
to accept a five-year interest-free debenture from Hynix, thus condemning them to maintain a 
financial relationship with Hynix at least until 2006.   In addition, what the Option 3 banks "obtained" 
was not comparable to what they might have received in liquidation.   11.   In addition to taking actions that directly  evinced entrustment and direction, the GOK also 
took actions to ensure that Hynix’s creditors were  in a position to effectuate the GOK’s policy to 
rescue Hynix.  In a November 2000 meeting, the Economic Ministers concurred on a "resolution of 
special approval" by the FSC to increase certai n banks’ ceiling limits for single borrowers, as 
requested by the KEB on behalf of Hynix’s credito rs.  The FSC  approved three credit limit increases 
for Hynix’ creditors "in order to allow them to pa rticipate in the Hynix restructuring process".  Korea 
claims that the waivers were simply a "modest" st ep.  To the contrary, at the time of the DOC’s 
investigation, the FSC had approved only five cases since January 2000 where an applicant bank 
applied to exceed its credit ceiling, four of which related to Hynix and other Hyundai Group 
companies.  The record evidence showed that, far from applying "market principles", the FSC waived 
the credit ceiling for three of Hynix’s creditors par ticipating in the December 2000 syndicated loan for 
economic, social and political reasons.  The salient fact is that the GOK waiv ed the ceiling for every 
Hynix creditor that needed a waiver in order to participate in various restructuring events.   
 WT/DS296/R 
Page C-14  
 
12.  Another of the GOK’s actions aimed at effectua ting its policy to ensure the survival of Hynix 
was the GOK’s pressure on credit rating agencies.  Agencies cancelled plans to downgrade or were 
forced to upgrade credit ratings.  Lower credit ratings  would have made it more difficult for the GOK 
to continue its Hynix bailout programme, whic h was already the subject of intense criticism. 
  
13.  Governments may have political reasons fo r wanting to obscure their role in providing 
assistance to a particular company or industry.  Thus, cases involving indirect subsidies can present particular challenges for an investigating authority  attempting to gather facts and figure out what 
really happened.  If Article 1.1(a)(1)(iv) is to  have any meaning, it is essential to recognize the 
importance of examining, on a case-by-case basis, all of the evidence, including primary, secondary, 
and circumstantial evidence, surrounding possi ble government entrustment or direction. 
 14.  In the case of the Hynix bailout, the reas onableness of the DOC’s conclusion that the GOK 
entrusted or directed Hynix’s creditors is not even a close call.  The DOC considered a wide range of 
evidence.  With respect to secondary sources, pr ior panel reports provide support for the DOC’s 
reliance on secondary sources and the drawing of reas onable inferences based on the record evidence.  
In the DRAMs investigation at issue in this dis pute, the secondary sources in the record have been 
shown to be credible and are often corroborated by other reports or doc uments.  Moreover, the 
Appellate Body has recognized the permissibility of relying on reasona ble inferences.  Thus, it is not 
the type of evidence that matters.  Rather, the issue is whether the domestic authority examined all the 
pertinent facts and provided an adequate explanatio n as to how the facts support its determination.  
The DOC did so in the DRAMs investigation. 
 15.   Benefit
:  In determining the existence of a benef it, the issue is the position of the recipient 
"but for" or "absent" the government’s financial contribution.  Only by comparison to a market 
undistorted by the government’s financial contri bution is it possible to determine whether the 
recipient is better off than it otherwise would have been absent the financial contribution.  
 16.  Article 14 does not redefine the concept of benefit in Article 1.1(b).  Article 14 merely 
provides guidelines that must be followed in est ablishing "methods" for applying that concept to 
particular types of financial contributions.  Th erefore, each guideline in Article 14, including the 
guideline contained in Article 14(b), must be interp reted in a manner that is consistent with the 
meaning of the term "benefit" as used in  Article 1.1(b) of the SCM Agreement. 
 17.  With respect to Citibank, consistent w ith Article 14 of the SCM Agreement, the DOC 
examined the pertinent facts surrounding the lo ans and equity investments from Citibank and 
provided an explanation as to why they did not qua lify as appropriate benchmar ks.   The reasons why 
the DOC rejected Citibank as a suitable benchmark are discussed extensively in the paragraphs 
197-204 of the US first written submission.    18.  With respect to the DOC’s use of histori cal cumulative default rates published by Moody’s 
Investor Service to calculate the uncreditworthy benc hmark rate used to measure the benefit to Hynix, 
nothing in Article 14 of the SCM requires that th e DOC use Korean default rates to measure loans 
benefits.  In fact, the DOC examined but rejected th e Korean default rates provided by Hynix.  First, 
there was no information provided with the rates o ffered by Hynix that would have allowed the DOC 
to ascertain how they were calculated.  Second, th ere was nothing indicating that the historical rates 
were cumulative average rates, as required under th e DOC’s regulations.  Only cumulative rates 
provide the probability of default over the full term of  the loan, as opposed to a single year.  Third, the 
default information submitted by Hy nix was unreliable on its face, because the data suggested that the 
default rate for the lowest rated debt was lower than  the default rate for the highest rated debt.  This 
inverse relationship made no sense.  Accordingly, th e DOC reasonable declined to rely on the rates 
offered by Hynix, because they lacked sufficient information and appeared unreliable on their face. 
  WT/DS296/R 
 Page C-15 
 
 
19.  Specificity :  As detailed in the US first written submission, the DOC demonstrated, based on 
positive evidence, that the GOK-directed bailout was specific in fact to Hynix, and thus actionable 
under the SCM Agreement.  Although Korea disput es whether the bailout was government-directed, it 
has not disputed that Hynix was the beneficiary of  a planned financial restructuring programme.  The 
DOC also examined corporate usage of the CRA/CRPA to substantiate its spec ificity determination.  
The DOC found that, based on data provided by the GOK, the Hyundai Group companies received an 
extraordinarily large percentage of financial r estructuring and recapitalization aid and that Hynix 
alone received a very high percentage of such aid.  It  is axiomatic that an analysis of disproportionate 
use is comparative.  Korea has simply argued for use of a different comparative benchmark; argument should not be confused with WTO obligation.  
 
20.   Meetings with Experts
:  There is no requirement in Article 12.6 that investigating authorities 
must permit counsel for the government of the Member  in question to be present for its meetings with 
financial experts.  The Panel should reject Korea’s ne w version of the facts and its Article 12.6 claim.   
 II. THE ITC’S INJURY DETERMINATION WAS CONSISTENT WITH US WTO 
OBLIGATIONS 
 
21.  Volume Analysis
:  The ITC examined the volume of s ubsidized subject imports in three 
ways:  (1) in terms of billions of bits;  (2) as a ratio to domestic production;  and (3) as a share of 
apparent US consumption.  All th ree measurements increased over the period of investigation.  In 
light of the undisputed high degree of substitutab ility between subsidized subject imports and the 
domestic like product, the ITC found that the volume of  subject imports on an absolute basis, as well 
as the increase in the volume of subject imports both absolutely and relative to both production and 
consumption in the United States, was "significant".    
22.  The United States has previously explained why Korea’s brand-name argument has no legal 
basis under the SCM Agreement given the facts of th is investigation.  Korea has not rebutted this 
argument.  Nor has it shown that the ITC’s rejecti on of Hynix’s factual explanation for the increased 
volume of subsidized subject imports was unreasonable.  23.  Korea continues to place a great deal of  emphasis on relative market share increases.  
However, there is no legal support for Korea’s asser tion that increases in market share are the only 
indicia that matter for an affirma tive material injury analysis.   
 24.  Korea’s volume arguments continue to ignor e the importance of the conditions of competition 
in this industry to the ITC’s volume analysis.  As the ITC emphasized, its findings about the volume 
of subject imports were reinforced by the subs tantial degree of substitutability between subject 
imports and domestically-produced DRAM products.  The commodity-like nature of domestic and 
subject imported DRAM products magnified the ability  of a given volume of imports to impact the 
domestic market and industry.  25.  Korea disregards the fact that the degree of product fungibility, price sensitivity, and market 
differentiation can be relevant in assessing the significance of a given import volume or of a given 
increase of import volume absolutely or relative to  domestic production or consumption.  In an 
investigation involving a highly fungible product, a specific volume or a specific increase of import 
volume absolutely or relative to domestic productio n or consumption can be more harmful than a 
similar increase for a highly differentiated product, becau se it is more likely to have a direct impact on 
the market.  Given how quickly information is disseminated in the DRAMs industry, it is not 
surprising that purchasers were reluctant to commit large portions of their purchases to the financially 
troubled Hynix, although they were free to use Hynix’s low-priced offers to ratchet down prices from other potential suppliers.  WT/DS296/R 
Page C-16  
 
26.  Price Effects
: The ITC engaged in one of the most data-intensive, complex pricing analyses 
it has ever undertaken.  The pricing data the ITC collected were clearly representative, accounting, by 
value, for approximately 45.9 per cent of domestic  producers’ and 36.9 per cent of subject imports’ 
US shipments in 2002.  Based on a weighted-average  comparison of the price of domestic shipments 
with the weighted average price of subsidized subj ect imports for each month of that time period, the 
ITC found significant price undercutting by subsidized subject imports. 
 27.  The level of detail of pricing data obt ained by the ITC provided unassailably accurate 
head-to-head price comparisons.  The level of accu racy and objectivity of examination permitted by 
the monthly series of weighted-average price compar isons by product and by channel of distribution 
was remarkable.  These data permitted the ITC to de termine in those monthly periods for which price 
comparisons were available whether the subsidized  subject imports were underselling or overselling 
the domestic like product and by what margins.  Base d on this extensive data, the ITC ascertained that 
for the majority of possible comparisons, subsid ized subject imports undercut the domestic like 
product at high margins (often over 20 per cent) , and at increasing frequencies (from 51 per cent of 
possible comparisons in 2000 to 56 per cent in 2001 and 70 per cent in 2002).  The ITC identified 
significant price undercutting to each of the three main channels of distribution (PC OEMs ( i.e., 
original computer equipment manufacturers), othe r OEMs, and non-OEMs).  The ITC also found that 
undercutting was consistent and substa ntial for particular high-revenue pr oducts to particular channels 
of distribution at specific points during the period of investigation.  The ITC went well beyond the approach found to be WTO-consistent by the panel in EC – Tube .  
 
28.  The ITC also went well beyond the requirements of the SCM Agreement by collecting and evaluating pricing data on non-subj ect imports.  Korea’s argument in its opening statement that the 
ITC "ignored the prices of non-subject imports" in its pricing analysis is simply wrong.    
29.  The pricing data show that the underselling frequency by non-subject imports was lower than, 
and increased less than, the underselling frequency of  subsidized subject imports between 2000 and 
2002.  In particular, while subject  imports were increasing their underselling freque ncy between 2000 
and 2001 from 51 per cent of all observations to 56 per cent of all observations, the frequency of 
underselling by non-subject imports was fairly st eady at 46.6 per cent of instances in 2000, and 
47.7 per cent in 2001.  Underselling by subsidized subject imports increased to 69.8 per cent of all 
observations in 2002, or about 10 percentage poi nts higher than the percentage for non-subject 
imports in that year (60.7 per cent).  Consistent  with the data, the ITC concluded that for these 
"standard" pricing products, subsidi zed subject imports undersold non-s ubject imports in a majority of 
instances.  
30.  Equally without merit is Korea’s argument that the ITC should have examined the pricing 
data on a brand-name basis.  There is no requirement in the SCM Agreement to analyze price effects on a brand-name basis, nor does Korea identify one.  In the DRAMs investigation, use of the 
brand-name analysis urged by Hynix would not re flect the source country of the DRAM products and 
would be utterly inconsistent with the requireme nt under the SCM Agreement to examine the effect 
"of the subsidized imports" on the "like product," the product produced by the domestic industry.  On 
the other hand, by comparing the weighted-average  price of subsidized subject imports with the 
weighted-average price of domestic shipments fo r each time period, the ITC’s methodology in this 
investigation addressed the inquiry posed by Article 15.2 – the assessment of the price effects of the 
subsidized imports on the domestic industry.   
31.  In any event, the ITC also examined  the pricing data on a disaggregated basis (broken down 
both by brand name and by source).  Even a disaggr egated analysis showed that subsidized subject 
imports were the lowest-priced product " more often than DRAM products from any other source ". 
 32.  Contrary to Korea’s repeat ed arguments, the ITC did not "largely ignore" the "particular and 
unique competitive dynamics of the DRAM market".   The ITC identified several reasons why the  WT/DS296/R 
 Page C-17 
 
 
factual data on undercutting w as probative.  These included th e high degree of substitutability 
between subject imports and the domestic DRAM products, the overlapping customers and channels 
of distribution to which subject imports and the domestic DRAM products were sold, the inelasticity 
of demand, and the importance of price in this particular industry.  
33.  A finding of undercutting, let alone significan t undercutting, is not a prerequisite to an 
affirmative injury determination.  Article 15.2 of the SCM Agreement specifically provides that "[n]o 
one or several of these factors can necessarily give decisive guidance".  Nevertheless, it is clear that, 
under the analysis the ITC conducted in this investigation, there was significant  undercutting by 
subsidized subject imports. 
 
34.  The ITC also found that subsidized subject imports depressed prices to a significant degree.  Korea does not challenge the ITC’s finding that th ere was significant price depression by subsidized 
subject imports.  Instead, to the extent Korea mentio ns price depression at all, it is in connection with 
its argument that the ITC did not adequately consider  factors other than subsidized subject imports in 
its price effects analysis.  In its discussion of the ITC’s causation analysis, the United States has 
addressed and rebutted Korea’s argument.  35.  Impact of Subsidized Imports
 :  The ITC found that many indicators of domestic industry 
performance declined over the period of investig ation.  These included capacity, production, market 
share, employment, and hourly wages.  The domestic  industry’s operating performance also declined.  
The ITC also found that domestic producers reduced capital expenses during the period of 
investigation.  The ITC explicitly acknowledged that  for some of the impact factors, there were 
positive trends in the data at specific points during the pe riod of investigation.  But, it further analyzed 
the data and explained why, even for factors s howing increases, the value of such "improvements" 
was limited. 
 
36.  Korea does not contest the positive evidence supporting these findings.  Instead, Korea continued to reference snippets of  information that it believes woul d support a different conclusion 
than the ITC reached.  This appro ach ignores the fact that the ITC examined the domestic industry, as 
well as the evidentiary record, as a whole , as required by Article 15.4 and Article 16.1 of the SCM 
Agreement.  Other panels have recognized the importance of this language, including the panels in 
Mexico – HFCS and EC – Tube . 
 37.  Moreover, Korea’s arguments about indivi dual domestic producers are also flawed and/or 
based on a selective reading of the evidence.  The public statements that Korea continues to assert 
show that the US DRAM industry was doing well of ten pertain to the individual company’s global 
operations on all products, not just DRAMs.  Indeed, the two randomly selected quotations from 
Micron that Korea asserts show how the domestic  industry purportedly assessed its own condition 
reinforce rather than detract from the ITC’s imp act findings.  Neither statement establishes nor was 
intended to suggest that the identified factors show  that Micron or the domestic industry did not suffer 
injury.  Rather, they show that, because of good ma nagement practices, Micron expected to survive, 
despite the significant injury that it had suffered. 
 
38.   Article 15.5 Analysis
: The ITC’s analysis was also consistent with the requirements of 
Article 15.5 of the SCM Agreement.  The ITC found that the domestic industry producing DRAM 
products was materially injured by reason of the subsidized subject imports of DRAM products from 
Korea.  The ITC demonstrated a causal nexus between the subsidized subject imports of DRAM 
products from Korea and the material injury suffered by the domestic industry through its 
examination of the volume, price effects, and impact of the subsidized subject imports on the domestic industry.  No one or several of these factors was decisive.  Rather, the material injury determination – and, thus, the ITC’s causation anal ysis – was based on an analysis of these factors 
collectively.  Thus, in the DRAMs investigation,  the ITC integrated the causation discussion and its 
discussion of how it ensured that it did not attribute material injury from other factors to the subject WT/DS296/R 
Page C-18  
 
imports into its analysis of the volume, price effects and impact of subject imports.  While this approach is not required by the SCM Agreement, it is  certainly consistent with the Agreement.  Korea 
fails to show otherwise.  39.  Korea’s arguments reveal that it believes that  in investigations like the DRAMs investigation, 
where there are several factors that may be injuring the domestic industry, an investigating authority 
is precluded from making an affirmative material injury determination.  Korea’s argument has no basis in the provisions of the SCM Agreement.  Appellate Body reports also lend the argument no 
support.   
40.  The ITC also examined other known factors to  ensure that it did not attribute injury from 
those factors to the subsidized subject imports.  In so doing, the ITC properly separated and 
distinguished other known factors from the subsidized subject imports by providing a satisfactory explanation of the nature and extent of the in jurious effects of the other known factors, as 
distinguished from the injurious effects of the subsidi zed subject imports.  This is all that is required, 
even in the context of the Safeguards Agreement. 
 41.  For example, with respect to the business cy cle, the ITC found that because growth in demand 
for DRAM products has been continuous, but su pply increases are sporadic, supply and demand in 
this industry tend to be chronically out of equilib rium, giving the market its characteristic "boom" and 
"bust" business cycle.  The ITC also determined th at largely because of the perpetual improvements in 
production efficiencies experienced by this industry, prices are usually declining.  At the same time, 
the ITC determined that the business cycle (and other factors affecting prices) simply did not explain the unprecedented severity of the price declines th at occurred from 2000 to 2001 and that persisted 
through 2002.  Nor could it explain the increasing fr equency of underselling by subsidized subject 
imports during the period of investigation. 
 
42.  The ITC’s examination of other known factors is identical to the methodology upheld by the panels in EC – Tube and Egypt – Rebar .  The panel in Egypt – Rebar  did not require the 
"non-attribution" findings of the investigating aut hority to be based on an econometric model or some 
sophisticated quantification exercise.  All that the panel in Egypt – Rebar  required was that the 
"non-attribution" findings be based on a meani ngful explanation as to why the effects of the 
subsidized imports did not "overlap" with (that is , were notionally distinct from) those of another 
factor causing injury at the same time.  In th e DRAMs investigation, the ITC found that the subsidized 
imports had price effects that significan tly exceeded those of non-subject imports , and that other 
factors – such as the operation of the business cycl e (including by virtue of capacity/supply increases); 
slowing in the growth of demand; and the produc t life cycle – could not explain the unprecedented 
price declines experienced during the period of inves tigation.  Therefore, it is clear that subsidized 
imports had their own, inde pendent, injurious effects. 
 43.  As in EC – Tube , the ITC found that effects of one factor (capacity expansions) were 
subsumed within the effects of another factor (t he operation of the business cycle), and determined 
that the effects of the latter factor could not expl ain the totality of the injury observed (cumulative 
price declines that ranged as high as 90 per cent, well in excess of the "usual" ranges).  These findings 
supported the ITC’s conclusion about the causal nexus between the subs idized subject imports and the 
injury to the domestic industry.   WT/DS296/R 
 Page C-19 
 
 
 E. Korea does not Dispute the ITC's Treatm ent of Certain Data as Confidential 
and Offers no Basis for the Panel to Request Confidential Data 
 
44. Finally, in its opening statem ent and its oral responses to the Panel’s questions during the first 
Panel meeting, Korea requested that the Panel ask the United States to provide the entire confidential 
final determination of the ITC, as well as the entire c onfidential data tabulations that formed the ITC’s 
report in this investigation.  Kore a also suggested that if the ITC did not provide such information that 
the Panel look to Confidential US Figure 1 .  As we have previously explained, Korea has failed to 
demonstrate why any or all such confidential info rmation would be necessary or appropriate in this 
dispute. 
 
45. Reports reviewing other investigating aut horities’ antidumping determinations – such as 
Thailand –  H-Beams  – have recognized that it is objective for investigating authorities to base their 
determinations on the entire agency record (includi ng confidential data).  Thus, it was objective for 
the ITC to base its injury determination on a review of the entire record, and not just data that could 
be released in the public version of an opinion. 
 46.   With respect to Korea’s suggestion that the Panel look to Confidential US Figure 1 , for the 
reasons set forth in paragraph 300 of the US first subm ission, we continue to urge the Panel not to rely 
on the selective confidential information that Korea h as provided in this dispute.  Nevertheless, should 
the Panel be inclined to examine the data summarized in Confidential US Figure 1 , the United States 
makes the following observations based solely on a comparison of the limited confidential data before 
the Panel concerning Hynix Semiconductor Ameri ca’s imports and Hynix Semiconductor America’s 
US shipments of imported subsidized subject DRAM products with non-confidential information 
contained in the ITC’s final report.  
 * The ratio of subject imports to domes tic production increased enormously from 2000 
to 2002.  
  * Even based only on Hynix Semiconductor Am erica’s reported data, it is clear that 
subsidized subject imports gained ma rket share between 2000 and 2001 while 
domestic producers were losing market sh are.  Likewise, although both the domestic 
industry and subsidized subject imports lo st market share between 2001 and 2002, 
reliance solely on Hynix Semiconductor America’s reported data shows that 
subsidized subject imports maintained th eir market share better than the domestic 
industry between 2001 and 2002 at a time of slowing demand. 
 
 * Confidential Figure US-1 also reveals information about the magnitude of the 
absolute increases in subject import volume.