WT/DS402/R 
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ANNEX C 
  
ORAL STATEMENTS OF TH E PARTIES AT THE FIRST 
SUBSTANTIVE MEETING OF THE PANEL OR 
EXECUTIVE SUMMARIES THEREOF 
 
 
Contents Page 
Annex C-1 Opening Statement of Korea C-2 
Annex C-2 Opening Statement of the United States C-7 
Annex C-3 Closing Statement of Korea C-8 
 
 WT/DS402/R 
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ANNEX C-1 
  
OPENING STATEMENT OF KOREA 
  Mr. Chairman and Members of the Panel.    1. On behalf of the Republic of Korea, I would like to extend our thanks for your participation in 
this proceeding.  The dispute settlement system  established by the WTO Agreements only works 
through the willingness of panelists to devote thei r time and effort, as you have, to consider the 
arguments of the parties.  We very much appreci ate, therefore, the opportunity you have given us 
today to present Korea's views on the issues raised in this dispute.  
2. This dispute is, of course, one in a lo ng line brought to challenge the practice known as 
"zeroing" that has been used in anti-dumping i nvestigations by the United States.  Following a 
number of rulings by the Appellate Body holding that the practice of zeroing in anti-dumping investigations is not consistent with the provisions of Article 2.4.2 of the Anti-Dumping Agreement, 
the United States itself agreed several  years ago to cease using that practice.  However, the change in 
U.S. practice only affected investigations pendi ng on, or initiated afte r, 22 February 2007.
1  We have, 
therefore, commenced this dispute to correct the e ffects of using "zeroing" in three investigations 
involving Korean products that were completed be fore the change in U.S. practice took effect. 
 3. As described in our first submission, this  dispute challenges the use of zeroing by the 
United States Department of Commerce ("USDOC") in the following three cases: 
 
 (1) Stainless Steel Plate in Co ils from the Republic of Korea; 
  (2) Stainless Steel Sheet and Strip in Coils from the Republic of Korea;  and   (3) Diamond Sawblades and Parts Thereof from the Republic of Korea. 
 
4. We have already provided extensive document ation in our first submission to demonstrate 
that, in calculating the dumping margins for the res pondents in each of the investigations, the USDOC 
used the following five-step process:  
 (1) It identified different "models," i.e., types of products based on the most relevant 
product characteristics; 
  (2) It calculated weighted average prices for sales in the United States and weighted 
average normal values for sales in the comp arison market on a model-specific basis, 
for the entire period of investigation;  
 
 (3) It compared the weighted average nor mal value of each model to the weighted 
average United States price for that same model; 
 
                                                     
 
1 See Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an 
Antidumping Investiga tion; Final Modification, 71  Fed. Reg. 77722 (27 Decem ber 2006) (Exhibit KOR-4-A); 
Antidumping Proceedings: Calculation of the Wei ghted-Average Dumping Margins in Antidumping 
Investigations; Change in Effective Date of Final Modification, 72 Fed. Reg. 3783 (26 January 2007) (Exhibit 
KOR-4-B).  WT/DS402/R 
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 (4) It calculated the dumping margin for an exporter by summing up the amount of 
dumping for each model and then dividing it  by the aggregated United States price 
for all models;  and in doing so  
  (5) It effectively set to zero all negativ e margins on individual models prior to summing 
the total amount of dumping for all models.
2 
 And, as we noted in our first submission, this zeroing methodology is virtually identical to the methodology that was held to be inconsistent with  Article 2.4.2 of the Anti-Dumping Agreement in 
EC – Bed Linen , and also in US – Softwood Lumber from Canada .
3   
 
5. We have also explained in detail in our firs t submission how this met hodology is inconsistent 
with the requirements of Article 2.4.2 of the Anti-Dumping Agreement.4  In the interest of brevity, I 
will not repeat our entire argument, but w ill make only a few additional observations. 
 
6. First, it is clear that Korea has presented a prima facie  case that the measures adopted by the 
United States in the three investigations that are the subject of this dispute are not consistent with the 
obligations set forth in the relevant provision of  the Anti-Dumping Agreement.  Among other things, 
we have provided extensive documentation show ing that the USDOC did, in fact, employ a 
methodology involving the five steps I have descr ibed.  This documentation included not only the 
published determinations by the USDOC, but also th e actual computer instructions the USDOC used 
to set the dumping margins to zero when the export pr ice or constructed export price was greater than 
normal value.  We have cited the relevant language in Attachment 1 to our first submission.  An 
explanation of the manner in which that language  caused the USDOC to "zero" negative dumping 
margins is set forth in footnotes 8, 15 and 23 of our first submission.  And, significantly, the 
United States has confirmed that our interpreta tion of the relevant documentation is correct.5 
 
7. Furthermore, we have also provided an extens ive analysis of the relevant provisions of the 
Anti-Dumping Agreement.  As we have shown, it  is clear from Article 2.1 of the Anti-Dumping 
Agreement and Article VI of GATT 1994 that "dumping is defined in relation to a product as a whole 
as defined by the investigating authority."6  This means, to use the A ppellate Body's words, that 
"'[d]umping,' within the meaning of the Anti-Dumping Agreement , can therefore be found to exist 
only for the product under investigation as a whole,  and cannot be found to exist only for a type, 
model, or category of that product."7  It follows, then, that "[w]hate ver the method used to calculate 
the margins of dumping ... these margins must be, and can only be, established for the product  under 
investigation as a whole." 8  In sum, "[a]s with dumping, 'mar gins of dumping' can be found only for 
the product under investigation as a whole, and canno t be found to exist for a product type, model, or 
category of that product."9   
 8. As a result, while investigating authorities may be permitted to compare normal values and 
export prices for sub-groups, the results of those co mparisons do not constitute "margins of dumping" 
within the meaning of Article 2.4.2.  Instead, tho se model-specific results "reflect only intermediate 
calculations made by an investigating authority in  the context of establishing margins of dumping for 
                                                     
 
2 See Korea's First Written Submission, Attachment 1. 
3 See Korea's First Written Submission, para. 18. 
4 See Korea's First Written Submission, paras. 16 to 24. 
5 See U.S. First Written Submission, para. 9. 
6 See United States – Final Dumping Determination on Softwood Lumber from Canada , Appellate 
Body Report, WT/DS264/AB/R, 11 August 2004, paras. 92-93. 
7 Id., para. 93. 
8 Id., para. 96. 
9 Id. WT/DS402/R 
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the product under investigation."
10  In other words, "[i]t is only on the basis of aggregating all such 
intermediate values that an investigating author ity can establish margins of dumping for the product 
under investigation as a whole."11 
 9. In these circumstances, a proper aggregation of the intermediate results of model-specific 
comparisons must reflect the result of all such comparisons.
12  An investigating authority is not 
permitted to disregard some of the intermediate re sults of model-specific comparisons, or to treat 
some of those intermediate results as bei ng greater or less than they actually are. 
 10. The practice of zeroing, as employed by the USDOC in the cases subject to this dispute, does 
not comport with this requirement.  "Zeroing means, in effect , that at least in the case of some export 
transactions, the export prices are treated as if th ey were less than what they actually are."
13  As a 
result, "Zeroing … does not take into account the entirety of the prices of some export transactions, 
namely, the prices of export transactions in those sub-groups in which the weighted average normal 
value is less than the weighted average export price."14  And, consequently, "Zeroing thus inflates the 
margin of dumping for the product as a whole."15  In these circumstances, the USDOC's use of the 
zeroing methodology in investigations in the cases that are the subject of this dispute is not consistent with the requirements of Article 2. 4.2 of the Anti-Dumping Agreement. 
 11. Taken as a whole, therefore, it is clear that Korea has satisfied its burden of presenting a prima facie case.  Unless that case has been rebutted by th e United States, the Panel must find in 
favour of Korea's claims. 
 12. This leads me to my second point — which is that there does not appear to be any dispute 
between the Parties regarding the factual matters descri bed in our first submission.  Indeed, in its first 
submission, the United States has informed the Panel that it "does not contest the accuracy of Korea's 
description of the zeroing methodology set forth in  paragraphs 4 and 17 of Korea's First Written 
Submission, as it relates to the investig ations challenged in this dispute."
16 In addition, the 
United States has also informed  the Panel that it "has reviewed the factual evidence submitted by 
Korea and does not contest that the submitted docum entation, including the computer programs used 
to calculate the dumping margins, were generated by the Department of Commerce during its conduct 
of the three original investigations at issue."17  And, finally, the United States has not disputed Korea's 
claim that the zeroing methodology utilized in the th ree investigations that are the subject of the 
present case is virtually identical to the methodol ogy that was held to be inconsistent with 
Article 2.4.2 of the Anti-Dumping Agreement in Softwood Lumber .   
 13. The third point I would like to make is to emphasize that the argument outlined in our first 
submission, which I have summarized for you today,  is based on a careful reading of the relevant 
provisions of the Anti-Dumping Agreement.  It is obviously significant that the Appellate Body has 
adopted a similar analysis in its decisions.  But, it is even more significant that the reasoning set forth 
in our first submission, as well as the reasoning adopt ed by the Appellate Body, stands on its own as 
an appropriate interpretation of the relevant provisions.    
14. My fourth point is that the United States has not objected to the reasoning relied upon by 
Korea in this dispute.  Instead, the Un ited States has informed the Panel that it: 
                                                     
 
10 Id., para. 97. 
11 Id. 
12 Id., para. 98. 
13 Id., para. 101 (emphasis in original). 
14 Id. (emphasis in original). 
15 Id. 
16 See U.S. First Written Submission, para. 5. 
17 See U.S. First Written Submission, para. 9.  WT/DS402/R 
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recognizes that in US – Softwood Lumber Dumping , the Appellate Body found that 
the use of "zeroing" with respect to th e average-to-average comparison methodology 
in investigations was inconsistent with th e first sentence of Article 2.4.2 when it 
interpreted the terms "margins of dumping"  and "all comparable export transactions" 
as used in the first sentence of Article 2.4.2 in an integrated manner.  The 
United States acknowledges that this reasoning is equally applicable to the margins at 
issue in this dispute.18 
By the same token, the United States has not offered any arguments suggesting that the zeroing 
methodology utilized in the three investigations that ar e the subject of this dispute is consistent with 
the provisions of Article 2.4.2. 
 15. We understand that the United States has objected  to any suggestion that past decisions by the 
Appellate Body might be considered "binding" precedent.
19  For its part, the European Union appears 
to take issue with the U.S. position regardi ng the legal import of such past decisions.20  This apparent 
disagreement between the United States and the Euro pean Union certainly touches upon an interesting 
question of legal nuance that may be important in other disputes.  However, their disagreement would 
not appear to have any relevance to the present dispute.  16. As we noted in our first submission, it is well- settled that the Panel is not strictly bound by the 
reasoning in prior Appellate Body and panel reports .  Thus, we have not made the claim that the 
United States is objecting to.
21  Nevertheless, it is clear that adopted Reports create legitimate 
expectations among WTO Members22, and "following the Appellate Body's conclusions in earlier 
disputes is not only appropriate, but is what woul d be expected from panels, especially where the 
issues are the same."23   
 
17. Importantly, although the United States and the European Union may disagree about the 
philosophical issue of just how binding the non-binding past reports should be, there is no disagreement about the actual legal issue presented in this dispute.  As indicated in our first 
submission, and as I have described earlier, a review  of the text, context a nd object and purpose of 
Article 2.4.2 confirms that the practice of zeroing, as employed by the USDOC in the three investigations that are the subject of this dispute,  is not consistent with the requirements of that 
provision. 
 18. Consequently, the facts and the law relevant to the present dispute are clear.  The zeroing 
methodology that the United States used in the three i nvestigations that are the subject of this dispute 
is not permissible.  And, as a result, the Panel s hould issue a report finding that the measures at issue 
                                                     
 
18 See U.S. First Written Submission, para. 9. 
19 See U.S. First Written Submission, para. 11. 
20 See E.U. Third Party Submission, paras. 6 to 9. 
21 See Korea's First Written S ubmission, para. 24. 
22 See Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, 
Appellate Body Report, 4 October 1996, at 13; United States – Import Prohibition of Certain Shrimp and 
Shrimp Products  (Recourse to Article 21.5 of the DSU by Malaysia), WT/DS58/AB/RW, Appellate Body 
Report, 22 October 2001, paras. 108-109; United States – Final Dumping Determination on Softwood Lumber 
from Canada , Appellate Body Report, WT/DS264/AB/R, 11 August 2004, paras. 109-112.    
23 See United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from 
Argentina , WT/DS268/AB/R, Appellate Body Report,  29 November 2004, para. 188 ("The Panel had before it 
exactly the same instrument that had been examined by the Appellate Body in US – Corrosion-Resistant Steel 
Sunset Review ;  thus, it was appropriate for the Panel…to rely on the Appellate Body's conclusion in that case.  
Indeed, following the Appellate Body's conclusions in earlier disputes is not only appropriate, but is what would 
be expected from panels, especially  where the issues are the same."). WT/DS402/R 
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are not consistent with the requirements of Ar ticle 2.4.2 of the Anti-Dumping Agreement, and 
recommending that the United States bring those me asures into conformity with its obligations. 
 19. Thank you for your attention.  
  WT/DS402/R 
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  ANNEX C-2 
 
 
OPENING STATEMENT OF THE UNITED STATES  
 
 
 
 
Mr. Chairman, members of the Panel:  1. On behalf of the U.S. delegation, I would like to thank you for agreeing to serve on this Panel.  
We will not offer a lengthy statement, as our first written submission fully presents the U.S. views on 
the arguments raised by Korea.  We are hopeful that our statement today, like our first written 
submission, will help to narrow the issues presented to the Panel. 
 2. As stated in our written submission, the United States has fully reviewed  the factual evidence 
presented by Korea and does not contest that the documents submitted by Korea were generated by 
the Department of Commerce during its conduct of th e three original investigations at issue.  
 
3. Further, the United States recalls the Appellate Body's finding in US – Softwood Lumber V 
that the use of "zeroing" with respect to averag e-to-average comparisons in investigations was 
inconsistent with the first sentence of Article 2.4.2 of the Anti-dumping Agreement
1, when it 
interpreted the terms "margins of dumping" and "all comparable export transactions" in an integrated 
manner.2  The United States acknowledges this reasoning ap plies equally to the margins at issue in 
this dispute.  4. To be clear, as Korea and the United States agree, prior adopted panel and Appellate Body 
reports are not binding on panels considering other disputes.  Rath er, the rights and obligations of 
Members flow from the text of the covered agreements.
3  In that regard, we disagree strongly with the 
presentation by one third party relating to the status  of adopted Appellate Body reports under the DSU 
and their relation to the role of this Panel.  In addressing the issues presented in this dispute, what we 
have asked you to do, and are confident you will do,  is to fulfil your function under Article 11 of the 
DSU4, and make an objective assessment of the matter before you, including an objective assessment 
of the facts and the conformity of the challenged measures with th e relevant covered agreements. 
 
5. Mr. Chairman, members of the Panel, this concludes our opening statement.  We would be 
pleased to respond to any questions you may have.   
                                                     
 
1 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 . 
2 See US – Softwood Lumber V (AB) , paras. 62-117. 
3 U.S. First Written Submission, para. 11, n. 12; Korea's First Written Submission, para. 24. 
4 Understanding on Rules and Procedures Governing the Settlement of Disputes . WT/DS402/R 
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ANNEX C-3 
 
 
CLOSING STATEMENT OF KOREA  
 
 
 
Mr. Chairman and Members of the Panel, 
1. Our proceedings today have confirmed that th ere is no dispute between the parties regarding 
the facts and the law that apply to this case.   The zeroing methodology utilized by the U.S. 
Department of Commerce in the th ree investigations that are the subject of this dispute is not 
consistent with the requirements of Article 2.4.2 of  the Anti-Dumping Agreement.  The U.S. measures 
should, therefore, be brought into conformity w ith the obligations established by Article 2.4.2. 
 2. Article 3.3 of the DSU reminds us that "[t]he prompt  settlement of [disputes] … is essential  to 
the effective functioning of the WTO and the main tenance of a proper balance between the rights and 
obligations of Members."
1  In accordance with that objective, and in the absence of any disagreement 
between the parties with respect to the substantive issues in this dispute, Korea appreciates the Panel's 
willingness to consider whether a modification of its Working Procedures - to eliminate, for example, 
the requirement of a rebuttal submission and a second  substantive meeting between the Parties and the 
Panel - might be appropriate to allow a resolution to be achieved as promptly as possible.   
 
3. Thank you, again, for your attention.   
                                                     
 
1 (Emphasis added.)