RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/213 
21 June 2006 
 (06-3000) 
Dispute Settlement Body 
30 May 2006  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 30 May 2006  
 
Chairman:  Mr.  Muhamad Noor Yacob (Malaysia) 
 
 Subjects discussed
: Page  
 
1. United States – Laws, regulations and methodology for calculating dumping 
margins ("Zeroing")............................................................................................................ .....1 
(a) Implementation of the recommendations of the DSB.................................................................1  
2. Japan – Countervailing duties on dynami c random access memories from Korea............4  
(a) Request for the establishment of a panel by  Korea ....................................................................4  
3. United States – Anti-dumping measures on oil country tubular goods (OCTG) 
from Mexico.................................................................................................................... ...........5  
(a) Statement by  Mexico ............................................................................................................ ......5  
 
 
1. United States – Laws, regulations and methodology for calculating dumping margins 
("Zeroing") 
(a) Implementation of the recommendations of the DSB 
1. The Chairman  recalled that in accordance with the DSU provisions, the DSB was required to 
keep under surveillance the implementation of reco mmendations and rulings of the DSB in order to 
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of 
the DSU provided that the Member concerned shall in form the DSB, within 30 days after the date of 
adoption of the panel or the Appella te Body reports, of its intentions in respect of implementation of 
the recommendations and rulings of the DSB.  He re called that at its meeting on 9 May 2006, the DSB 
had adopted the Appellate Body Report in the case:  "United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ('Zero ing')" and the Panel Report on the same matter, 
as modified by the Appellate Body Report.  He then invited the United States to inform the DSB of its 
intentions in respect of implementation of the recommendations. 
2. The representative of the United States  said that his delegation was able at the present 
meeting to inform Members that the United Stat es intended to implement the DSB's recommendations 
and rulings.  The United States would need a reasonable period of time in which to do so, and stood 
ready to discuss this matter with the EC, in accord ance with Article 21.3(b) of the DSU.  However, 
the United States remained of the view that the Ap pellate Body Report in this dispute was a deeply WT/DSB/M/213 
Page 2  
 
  flawed document.  The United States had considered the comments made by other Members at the 
9 May DSB meeting regarding the Appellate Body Re port, and had continued its own examination of 
the Report.  Unfortunately, the more the United Stat es examined the Report, the greater its concerns 
became.  To further assist Members in their revi ew of the Report, the United States had provided 
some responses to comments it had heard and had set  forth some additional concerns in a written 
document, which currently was being distributed in the meeting room, and which supplemented the 
document that the United States had submitted at the 9 May DSB meeting.  In that regard, the United States requested that this communication be circulated to all Members as a DS document.
1  
Rather than reading this document in its entirety, he wished to si mply summarize the areas of concern 
that the United States discussed at greater length in the written document.  
3. First, there was the fact that in certain key ar eas the Appellate Body had based its analysis not 
on the text of the Anti-Dumping Agreement, but rath er on its own prior reports , particularly its report 
in "US – Softwood Lumber V" (DS264).  As just on e example, the Appellate Body had relied heavily 
on its interpretation of the term "p roduct as a whole".  However, "pr oduct as a whole" was a term that 
was not found anywhere in the Anti-Dumping Agr eement nor in Article VI of the GATT 1994.  
Instead, it was a term that the Appellate Body had u sed specifically in the context of the first sentence 
of Article 2.4.2 of the Anti-Dumping Agreement a nd the average-to-average comparison method, the 
method that was at issue in the original Softwood Lumber V dispute.  Moreover, the Appellate Body 
had misinterpreted its prior reports, thereby arrivi ng at the erroneous conclusion that any kind of 
aggregated comparison required an offset, rega rdless of context.  The Appellate Body had 
compounded its error by finding that the margin of  dumping could not be calculated on a transaction-
specific basis.  The Appellate Body had relied on Article 6.10 of the Anti-Dumping Agreement to find 
that margins of dumping must invariably be estab lished on an exporter- or producer-specific basis, 
which it had assumed was inconsistent with calcula ting a margin of dumping on a transaction-specific 
basis.  
4. However, Article 6.10 simply provided that a Member must calculate a margin for each 
individual exporter or producer – as opposed to one  margin for all exporters or producers.  
Article 6.10 said nothing about whether the margin mu st be based on more than one transaction, and it 
did not prohibit the calculation of a margin of dum ping on a transaction-specific basis.  There was 
also the matter of the Appellate Body's relian ce on Article VI of the GATT 1994 and Article 2.1 of 
the Anti-Dumping Agreement.  As the United Stat es had previously explained, these provisions did 
not change as a result of the Uruguay Round ne gotiations.  The Appellate Body's conclusion 
essentially required one to believe that the Uruguay Round negotiators had dealt with "zeroing" by 
secretly agreeing to a new interpretation of the unchanged  text of Article VI and Article 2.1.  This was 
not plausible. 
5. Moreover, the logic of the Appellate Body's conclusion was that all of the Members that 
continued to use "zeroing" after the entry into force of the WTO – including at least the EC, the 
United States, and Canada – had done so in contradiction of this secr et agreement and so had acted in 
bad faith.  And whether one accepted the Appellate Bo dy's reading as permissible or not, the fact 
remained that other official, impartial experts reviewing these same provisions at the mandate of the DSB had concluded that there were other permissibl e interpretations of these same provisions.  Under 
the standard or review articulated in the Anti-Du mping Agreement, where a Member's measure rested 
on a permissible interpretation, the measure was required to be found in conformity with the 
Agreement. 
6. Finally, he said that he could go on, but he w ould not do this at the present meeting.  Instead, 
he wished to conclude by reiterating that the Un ited States considered the issues presented by the 
Appellate Body Report to be important, and we lcomed a discussion of them with Members. 
                                                     
 
1 Subsequently circulated in document WT/DS294/18.  WT/DSB/M/213 
 Page 3 
 
 
  7. The representative of the European Communities  said that the EC welcomed the statement by 
the United States that it intended to implement the DSB's recommendations and rulings.  The EC 
stood ready to discuss with the United States the appropriate period of time for implementation and hoped that prompt and full compliance would follow, both with regard to the required changes in US 
anti-dumping practice and the 31 anti-dumping measures identified in the EC panel request.  In that 
respect, the EC was aware that the United States still had to decide on the final liquidation of 
anti-dumping duties which were based on measures found to be WTO-incompatible. The EC would closely monitor these liquidation decisions.  The EC would also invite the United States again to refrain from taking a "minimalist"  approach to impl ementation in this dispute.  The DSB's ruling had 
inevitably wider implications that the United Stat es could not ignore.  In particular, it would be 
unacceptable if the United States contrived to increase dumping margins in the guise of 
implementation.  The definition of "margin of dumping" was applicable in duty assessment 
proceedings, in new-comer reviews and in changed circ umstances reviews.  It was also applicable in 
sunset reviews whenever a dumping margin was calc ulated or relied on.  It was equally applicable 
whether the comparison of export prices and nor mal values was made on a weighted-average-to-
weighted-average basis, or on a transaction-to-t ransaction basis.  Maintaining "zeroing" in duty 
assessment proceedings, in reviews, or when the comparison was conducted on a transaction-to-
transaction basis (a type of comparison which w as almost never appropriate) would only lead to a 
multiplication of disputes that the United States was bound to lose.   
8. As a general remark, the EC wished to recall that, at this stage, the Appellate Body Report 
had been adopted and must be unconditionally accepte d by the parties to the dispute, in accordance 
with Article 17.14 of the DSU.  The critical rema rks by the United States were all the more misplaced 
as they had been raised under a point on the agenda on its intentions in respect of implementation of 
the DSB's recommendations and rulings.  The United States was sending a mixed message that could only raise concerns as to how serious these intentions were. 
9. The EC noted that the United States seemed not to be satisfied with the outcome of the 
dispute, but this did not change the fact that a ll points of criticism raised by the United States had 
been subject to an extensive exchange of argum ents and discussion both before the Panel and the 
Appellate Body.  The EC would not re-enter into  that discussion and referred Members to the Panel 
and the Appellate Body Reports.  They would find, for each of the points raised by the United States, 
the EC arguments, which explained how the defi nition of "margin of dumping" as being for the 
product as a whole and for an exporter was perfec tly reconcilable with other provisions of the 
Anti-Dumping Agreement, such as the rules on ta rgeted dumping or the duty assessment on the basis 
of a prospective normal value.  The EC would only  comment on the point which related to the item on 
the agenda of the present meeting, namely, the alle ged difficulty of the United States to respond to the 
finding that it maintained a "zeroing" methodology WTO-incompatible per se  in original 
investigations.   
10. He noted that on 6 March 2006, the US Depart ment of Commerce had announced its intention 
to cease the practice of "zeroing" in weighted-avera ge-to-weighted-average comparisons in original 
investigations.  The EC could not judge at this st age if this was sufficient to fully implement the 
DSB's ruling on the "zeroing" methodology in original investigations.  But obviously, the logical outcome of this approach was that the United States should simply stop "zeroing" in all new investigations.  Any other approach was bound to result in a multiplication of disputes on the same 
issue, which could only have the same outcome, on ly with much greater expenditure of time and 
resources for all concerned. 
11. The representative of Japan
 said that his country was challenging the US "zeroing" 
methodology in its own separate dispute settlement  proceedings that were currently underway 
(DS322).  Japan had also actively participated in the proceedings in this case as a third party.  Japan, 
therefore, was very much interested in the impl ementation of the DSB's recommendations and rulings WT/DSB/M/213 
Page 4  
 
  by the United States.  Japan noted the fact that  the United States had informed the DSB of its 
intentions in respect of implementation of the DSB's recommendations and rulings and expected the 
United States to implement them promptly. 
12. The representative of the United States
 said that he wished to respond briefly to the EC's 
reference to Article 17.14 of the DSU, which stated  that adopted Appellate Body reports shall be 
unconditionally accepted by the parties to a dispute.  The United States noted that, from the inception 
of the WTO, Members had expressed their concerns with Appellate Body reports.  For example, he recalled that the EC's statements regarding the Bananas report (WT/DSB/M/37), the Mexico – Rice report (WT/DSB/M/202), as well as the Frozen Poultry report (WT/DSB/M/198).  In so doing, Members had taken seriously their responsibility to the WTO dispute settlement system and had 
attempted to ensure that it was serving its functi on well.  Expressing concerns with a report did not 
mean that a Member was "conditioning" its acceptance of the report.  So, for example, in this dispute, 
the United States had not set any "conditions" on its acceptance of the Report.  
13. The representative of Hong Kong, China
 said that her delegation wished to join other 
Members in urging the United States to implement the recommendations of the Appellate Body as 
adopted by the DSB and to bring its practices and m easures into conformity with its obligations under 
the WTO as soon as possible.  She noted that the ke y arguments set out in further communications of 
the United States had been put forward before the Appe llate Body for its consideration.  The Parties to 
the dispute, including third participants, had also presented their views and arguments.  The Appellate 
Body had then taken an informed and considered  decision on the matter, which was final.  Hong 
Kong, China understood that "zeroing" remained a sensitive matter to Members, but it was time to 
move forward in the interest of the multilateral tr ading system and its dispute settlement mechanism. 
14. The DSB took note  of the statements, and of the information provided by the United States 
regarding its intentions in respect of implementation of the DSB's recommendations. 
2. Japan – Countervailing duties on dyna mic random access me mories from Korea 
(a) Request for the establishment of a panel by Korea (WT/DS336/5) 
15. The Chairman  drew attention to the communication from Korea contained in document 
WT/DS336/5, and invited the representative of Korea  to speak. 
16. The representative of Korea  said that his country had serious concerns regarding the 
countervailing duties imposed by Japan on 27 January  2006 against dynamic random access memories 
("DRAMS") originating in Korea.  His country cons idered these measures by Japan to be inconsistent 
with Japan's obligations under the relevant provi sions of the GATT 1994 and the SCM Agreement.  
Korea, therefore, requested consultations on 14 March 2006 with Japan regarding these 
determinations,  pursuant to Article 4 of the DSU,  Article 30 of the SCM Agreement and Article XXII 
of the GATT 1994.  Consultations had been held with Japan on 25 April 2006.  These consultations, 
however, had failed to resolve the dispute between th e parties.  Korea believed that the panel would 
find that Japan had acted inconsistently with its ob ligations under Articles 1, 2, 10, 11, 12, 14, 15, 19, 
21, 22 and 32 of the SCM Agreement, as well as Articles VI:3 and X:3 of the GATT 1994.  
Accordingly, Korea requested the establishment of  a panel pursuant to Article 6 of the DSU, 
Article XXIII of the GATT 1994, and Article 30 of the SCM Agreement regarding the Japanese 
determinations and the resulting countervailing duties imposed on DRAMS from Korea, with  
standard terms of reference as provi ded for under Article 7 of the DSU. 
17. The representative of Japan  said that his country's imposition of countervailing duties on 
DRAMS produced by Hynix that Korea challenged had been imposed due to the fact that it had been 
found, based on ample evidence in an objective and im partial investigation, that the Government of  WT/DSB/M/213 
 Page 5 
 
 
  Korea granted subsidies to Hynix, which consequen tly caused injury to Japan's domestic industry.  
Japan was confident that this CVD measure was cons istent with the WTO Agreements in light of the 
evidence obtained in the investigation, as well as w ith WTO jurisprudence.  Japan had repeatedly 
explained to Korea in the investigation procedures, and in the consultation held pursuant to Article 4 
of the DSU, that the investigation and the resulti ng imposition of the CVD were consistent with the 
WTO Agreements.  Therefore, Japan was surprised a nd disappointed that Korea had chosen to request 
the establishment of a panel despite lacking foundation to support its claim.  Furthermore, turning to 
Korea's panel request, he said that Korea did not suffi ciently indicate the legal basis of its complaint.  
In view of the above, Japan did not agree to the establishment of a panel. 
18. The DSB took note  of the statements and agreed  to revert to this matter. 
3. United States – Anti-dumping measures on oil country tubular goods (OCTG) from 
Mexico  
(a)  Statement by Mexico 
19. The representative of Mexico , speaking under "Other Business", recalled that on 
28 November 2005, the DSB had adopted the A ppellate Body Report and the Panel Report, as 
modified by the Appellate Body Report, in the case on: "United States – Anti-Dumping Measures on 
Oil Country Tubular Goods (OCTG) from Mexico".2  On 17 February 2006 the United States and 
Mexico had mutually agreed that, pursuant to Arti cle 21.3(b) of the DSU, the reasonable period of 
time for the United States to implement the DSB's recommendations and ruling would be six months 
as of the date of the adoption of the Appellate Body  and the Panel Reports.  That period of time had 
expired on 28 May 2006 and, as of 29 May 2006, Me xico was unaware of the US compliance with the 
DSB's rulings and recommendations.  As it might be the case that the United Stated had not complied 
within the agreed period of time with the DSB' s rulings and recommendations, Mexico wished to 
reserve its rights under the DSU in this regard. 
20. The representative of the United States  said that his country thanked Mexico for its statement, 
which he would convey to capital. The United Stat es had been in close contact with Mexico during 
the reasonable period of time regarding the re-deter mination in this matter, and would continue to 
apprise Mexico with respect to this matter. 
21. The DSB took note  of the statements.  
__________ 
 
 
                                                      
2 WT/DS282.