RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/206 
4 April 2006 
 (06-1559) 
Dispute Settlement Body 
14 March 2006  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 14 March 2006  
 
Chairman:  Mr Muhamad Noor Yacob (Malaysia) 
 
 Subjects discussed
: Page  
 
1. United States – Tax treatment for "Foreign Sales Corporations":  Second 
recourse to Article 21.5 of the DS U by the European Communities ....................................1  
(a) Report of the Appellate Body and Report of the Panel...............................................................1  
2. United States – Measures affecting trade in large civil aircraft ...........................................4  
(a) Initiation of the procedures for developing information concerning serious prejudice 
under Annex V of the SCM Agreement and designation of the representative referred 
to in paragraph 4 of that Annex ................................................................................................ ..4 
3. United States – Countervailing duty in vestigation on dynamic random access 
memory semiconductors ( DRAMS) from Korea ...................................................................7  
(a) Statement by the United States ................................................................................................. ..7 
 
 
1. United States – Tax treatment for "Foreign  Sales Corporations":  Second recourse to 
Article 21.5 of the DSU by the European Communities 
(a) Report of the Appellate Body (WT/DS 108/AB/RW2) and Report of the Panel 
(WT/DS108/RW2) 
1. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS108/35 transmitting the Appellate Body  Report on:  "United States – Tax Treatment 
for 'Foreign Sales Corporations': Second Recourse to Article 21.5 of the DSU by the European Communities", which had been circulated on 13 February 2006 in documen t WT/DS108/AB/RW2, in 
accordance with Article 17.5 of the DSU.  He remi nded delegations that, the Appellate Body Report 
and the Panel Report pertaining to this case had been  circulated as unrestricted documents.  He noted 
that Article 17.14 of the DSU required that:  "An A ppellate Body report shall be adopted by the DSB 
and unconditionally accepted by the pa rties to the dispute unless the DS B decides by consensus not to 
adopt the Appellate Body report within 30 days follow ing its circulation to Members.  This adoption 
procedure is without prejudice to the right of Members to express their views on an Appellate Body 
report". WT/DSB/M/206 
Page 2  
 
2. The representative of the European Communities
 said that the repeal of the FSC/ETI 
legislation represented a welcome step towards solv ing this long-standing dispute.  Although it had 
taken more than four years to arrive at that result,  the EC remained appreciative of the efforts put into 
this by all relevant actors in the United States, notab ly the US Congress.  However, the repeal Act (i.e. 
the American Jobs Creation Act), included certain WTO-incompatible transitional and grandfathering 
provisions.  Their WTO-incompatibility had now been  confirmed by the Article 21.5 Panel and the 
Appellate Body in turn.  The EC thanked the Appe llate Body, once again, for having produced a clear 
and convincing Report on this dispute.   In particular, the repeal Act provided that FSC/ETI benefits 
remained available to US exporters up to the e nd of 2006 and, in some cases, for a potentially 
unlimited period thereafter.  Similar provisions had al ready been condemned in the past.  The Article 
21.5 Panel and the Appellate Body had clearly c onfirmed the WTO-incompatibility of the challenged 
US provisions.  Furthermore, they had made it abso lutely clear that the United States had yet to come 
into full compliance with earlier rulings and r ecommendations adopted by the DSB.  The EC 
requested that the DSB adopt the latest Appellate  Body Report on this matter and called upon the 
United States to ensure full comp liance with the applicable rulings  and recommendations.  He recalled 
that throughout this dispute, the EC had show n the utmost restraint in terms of applying 
countermeasures.  Hence, these had initially been in troduced at a level significantly lower than the 
amount allowed by the WTO arbitrator in 200 2, and had even been suspended pending the 
proceedings of the last Article 21.5 Panel and th e Appellate Body.  However, absent US compliance 
with its WTO obligations, mandatory EC legislatio n provided that the suspended sanctions would be 
reintroduced 60 days from the DSB's confirmation of  the WTO-incompatibility of certain aspects of 
the US legislation.  Finally, he stressed the EC 's continuing readiness to  explore with the United 
States ways and means to put an end to this long-sta nding dispute.  In that regard, the EC had noted 
with interest the "Trade Sanction Avoidance Act"  (HR 4909), a bill which had been introduced on 
8 March 2006 into the US Congress.  In tabling this bill, its sponsor noted the fact that the US tax breaks had been found WTO-incompatible on three o ccasions.  The bill called for the repeal of both 
the remaining transition period;  i.e. 2006, and the grandfathering of FSC/ETI as contained in the 
American Jobs Creation Act.  Finally, he said that the EC would appreciate if the United States could inform the DSB on the further steps and timing in the treatment of this legislative proposal and whether the US administration intended to support that bill. 
3. The representative of the United States
 said that his country would first like to thank the 
Panel, the Appellate Body and the Secretariat for th eir work on this dispute.  This was the second 
Article 21.5 proceeding brought by the EC.  The Un ited States was pleased that the Appellate Body 
had explicitly found that the US "measure taken to comply with the DSB recommendations from the 
original and first Article 21.5 proceedings – the Jobs  Act – has in large part withdrawn the prohibited 
subsidies."  At the same time, the United States noted  that other than confirming that the United States 
had largely withdrawn the subsidies at issue, the second proceeding had done little more than confirm 
the results of the first proceeding.  One might w onder why the EC had used the time and resources of 
the Panel, the Appellate Body, the Secretariat and Me mbers in that fashion, although the United States 
suspected most Members had seen reports as to the likely reason why. 
4. He said that the United States had not filed its appeal in order to obtain a reversal of the 
Panel's findings regarding the consis tency of the American Jobs Crea tion Act ("AJCA") with what he 
would call the "substantive" obligations of the SC M Agreement, the Agricu lture Agreement and the 
GATT 1994.  Instead, the United States had been troubl ed by some systemic issues raised by the 
Panel Report, in particular some language used by  the Panel in its findings, and believed that the 
Panel's misstatements needed to be corrected.  In th is regard, the United States agreed with the EC's 
statement to the Appellate Body in this dispute th at an appeal might sometimes be necessary "to avoid 
the creation of troublesome precedents." 
5. Therefore, while the United States was disappoint ed that the Appellate Body had not reversed 
the Panel in the issues on appeal, it was pleased that the Appellate Body had pr ovided clarification on 
the issues, recognizing for example that the Panel could have used "more precise" language in  WT/DSB/M/206 
 Page 3 
 
 
  describing the task of a panel under Article 21.5 of the DSU.  While the United States did not 
necessarily agree with every word u sed by the Appellate Body in its characterization of a panel's task, 
it was a marked improvement over that of the Panel. 
6. However, the United States remained troubled by  the approach used by the Appellate Body 
and the Panel in analyzing a panel's terms of re ference.  The United States had found particularly 
disturbing the Appellate Body's statement that "t he assessment of the panel request should not be 
confined to the content of its section 2 entitled 'The Subject of the Dispute'", particularly when it had 
been followed by the statement that "the Eur opean Communities' panel request does identify the 
continued operation of Section 5 of the ETI Act suffi ciently to put the United States on notice." It was 
hard to see how a Member could be on "notice" when  it was supposed to disregard the very section of 
a panel request that appeared specifically to constitu te that notice.  The Unite d States was also struck 
by the Appellate Body's statement that:  "When such a recommendation is adopted by the DSB, it 
must be, by virtue of Article 17.14 of the DS U, 'unconditionall y accepted by the parties to the 
dispute', and it thus becomes effective and binding on the parties."  The citation to Article 17.14 of the 
DSU appeared to be an error.  For example, th e Appellate Body's statement had not explained why 
Article 17.14 of the DSU would apply to panel recommendations, whether or not there were an 
appeal. 
7. The representative of Brazil  said that his country had participated as a third party in the 
proceedings related to the second recourse by the EC  to Article 21.5 of the DSU in this dispute.  
Brazil wished to join the previous speakers in  thanking the Appellate Body, the Panel and the 
Secretariat for their work in the case.  The systemic relevance of the Reports at issue was certainly 
way above the number of pages of the Reports.  Braz il was pleased to note that the findings of both 
the Panel and the Appellate Body ha d confirmed the central role of the principle of prompt and full 
compliance with the DSB's rulings and recommenda tions in the architecture of the WTO dispute 
settlement mechanism.  As Brazil had stated befo re the DSB many times, prompt and full compliance 
was the most faithful measure of the effectiveness of the system and, consequently, of its credibility. 
In that context, Brazil wished to draw Members' a ttention to the following statements contained in the 
Appellate Body Report:  "The obligation to comply with an Article 4.7 [of the Subsidies Agreement] 
recommendation remains in effect, even if several proceedings under Article 21.5 become necessary, 
until the prohibited subsidy is fully withdrawn." (par a. 84).  "The determination of whether 'measures 
taken to comply' challenged by the complaining pa rty implement fully, or only in part, the DSB 
recommendations and rulings and the entir e range of measures covered by them."  (para. 93).  "If this 
[the making of new Article 4.7 of the Subsidies Ag reement recommendation by an Article 21.5 panel] 
were to result in an extension of the time-peri od set for withdrawal of the subsidy found to be 
prohibited in the original proceedings, compliance proceedings could have the effect of extending  
implementation periods through new Article 4. 7 recommendations in successive Article 21.5 
proceedings.  This could lead to potentially 'neve r-ending cycle' of dispute settlement proceedings and 
inordinate delays in the implementation of reco mmendations and rulings of the DSB." (para. 86). 
8. Brazil also welcomed the Appellate Body's finding that "full withdrawal of a prohibited 
subsidy within the meaning of Article 4.7 of th e SCM Agreement cannot be achieved by a 'measure 
taken to comply' that replaces the original subsid y with yet another subsid y found to be prohibited." 
(para.83).  To put it another way, as Brazil had argued before the Panel and the Appellate Body, 
unless and until a WTO Member really and comple tely removed the WTO-inconsistency of its 
challenged measures, every compliance proceeding mu st conclude that the illegality found in the 
original proceeding remained, maybe "wearing differe nt clothes".  Brazil expected that the United 
States would now fully implement the DSB's recomme ndations in this case in the shortest period 
possible, as it was bound to. 
9. The representative of the European Communities  said that first, the EC did not believe that 
the continuing benefits were insignificant.  Althou gh the United States had refused to provide precise WT/DSB/M/206 
Page 4  
 
information, the EC believed the remaining benef it to be over US$750 million and this was, as all 
would agree, not insignificant.  Second, these benef its would last over a long period of time, distorting 
competition well into the future possibly until 2012 and even beyond. 
10. The DSB took note
 of the statements, and adopted  the Appellate Body Report contained in 
WT/DS108/AB/RW2 and the Panel Report contained in WT/DS108/RW2, as upheld by the Appellate 
Body Report. 
 
2. United States – Measures affecting trade in large civil aircraft 
(a) Initiation of the procedures for developing in formation concerning serious prejudice under 
Annex V of the SCM Agreement and designa tion of the representative referred to in 
paragraph 4 of that Annex (WT/DS317/5) 
11. The Chairman  said that the above-mentioned item was on the agenda of the present meeting 
at the request of the EC.  He then drew attention to the communication from the EC contained in document WT/DS317/5, and invited the representative of the EC to speak. 
12. The representative of the European Communities
 said that the item under consideration had 
been included on the agenda of the present meetin g due to the position of the United States at the 
previous DSB meeting.  He recalled that, at the pr evious DSB meeting, a panel to examine this case 
had automatically been established, but the United States had stated that it could not agree to the 
resumption of the Annex V process at that point.  He then stated it was worthw hile to recapitulate the 
milestones in this case.  At the time of the establis hment of the first panel on this matter, the United 
States had argued that 13 programmes were not pr operly before the panel since they were not 
explicitly listed in the original consultation request.  The EC had disagreed with this and had filed a 
preliminary ruling request aimed at obtaining clarity concerning the inclusion of these 
13 programmes.  The United States had not provid ed any information concerning these programmes 
in the Annex V process arguing that they had not been properly consulted on.  In an additional 
consultation request filed by the EC, followed by  an additional panel request, these 13 programmes 
were explicitly mentioned.  So despite disagreement regarding the justification for the US refusals to 
provide information, the EC had acted to remove th e procedural flaws perceived by the United States. 
13. In light of this, the continuing refusal by th e United States to provide this information was 
untenable.  The very purpose of the Annex V exerci se was to obtain relevant information concerning 
actionable subsidies.  And the Annex V process was not  a favour granted to the other party.  To obtain 
information under Annex V was a right – and the United States had simply been denying this right to 
the EC.  The reasons that delayed the start of th e Annex V procedure following the establishment of 
the original panel were no longer applicable.  A fac ilitator had already been designated by the DSB in 
this case and procedures had been agreed for the prot ection of confidential info rmation.  Also no party 
was requesting an extended time-table or any other sp ecial rules.  The EC remained open to explore 
with the United States a pragmatic approach to the conduct of the Annex V process, for example by 
limiting the information-gathering exercise to partic ular sets of questions.  This should decrease the 
administrative burden which was – as the EC knew from its own experience – considerable. 
14. The representative of the United States  said that it was surprising that the EC was seeking 
initiation of an Annex V process at this time.  As th e United States had pointed out in February 2006, 
the EC had, in the past, forcefu lly insisted that the Annex V process could not begin until the parties 
had mutually agreed on initiation and on modaliti es.  For example, at the 31 August 2005 DSB 
meeting, the EC had stated that "an Annex V pro cedure could not be initiated unilaterally by only one 
party to a dispute, but required a meeting of the minds;  an actual agreement between the parties."  
The EC had also stated that it "was of vital interest  to ensure that the content of any agreement on an 
Annex V procedure was carefully crafted so as to take  the particularities of the disputes properly into  WT/DSB/M/206 
 Page 5 
 
 
  account." (WT/DSB/M/196, para. 45).  The EC had made  similar statements at other DSB meetings.  
(WT/DSB/M/194, para. 52;  WT/DSB/M/195, para. 24). 
15. The United States had observed that the SCM Agreement and the DSU did not require a 
procedural agreement to commence Annex V proce dures for the first time.  However, the concern 
raised by the EC – that "an Annex V procedure" must "take the particularities of the dispute properly 
into account" – clearly did apply when the Annex V request covered measures that had already been 
subject to a completed Annex V process.  Yet the EC had to date made no concrete proposal to the 
United States or to the DSB about the relationshi p between the Annex V procedures that it sought to 
initiate now and the procedures that had already ended. 
16. Perhaps equally troubling was the EC's appa rent disregard for the carefully negotiated 
provisions of Annex V and the EC's apparent desire to re-write the provisions of Annex V to suit the 
EC's convenience.  The EC had ignored the fact  that Annex V provided a limited information-
gathering procedure, lasting 60 da ys without any provision for resumption or repetition.  For example, 
in its statement made at 17 February DSB meeti ng, the EC had claimed that "the DSB has already 
designated, pursuant to paragraph 4 of Annex V of the SCM Agreement, Mr . Mateo Diego-Fernández 
to serve as facilitator in the information-gatheri ng process."  However, that designation was for the 
Annex V process that had begun on 23 September 20 05, which had now concluded – the information 
gathering was over and the facilitato r had submitted his report.  If the EC sought to rely on this 
designation, then it was only demonstrating that it was seeking to resume the Annex V process that 
had ended. 
17. In fact, there had already been extensive pr ocedures under Annex V with regard to the EC 
allegations of subsidization of large civil aircraft .  The United States had already agreed to expand the 
period for information gathering by 50 per cent, fro m the 60 days provided under Annex V to 90 days.  
The United States had already submitted more than 40,00 0 pages of information, the majority of them 
pertaining to NASA and Defense Department program s.  The only rationale the EC had put forward 
for again seeking procedures under Annex V was its  assertion "that the US non-cooperation in the 
Annex V process deprives the EC of access to documents relevant to the dispute, in particular 
regarding NASA and Department of  Defense subsidies."  In fact, any non-cooperation was on the part 
of the EC, which had refused to fix obvious errors  in the panel request that had given rise to the 
original Annex V procedures, even though the Unite d States had pointed out those errors well in 
advance.  As a result, the EC had left the Pane l, the facilitator, and the United States facing a 
mismatch between the questions asked and the measures that were properly before the panel.  The fact 
that the EC had waited until after the end of the Annex V information-gathering process to attempt to 
fix errors in its panel request  did not entitle it to escape the express limitations in Annex V. 
18. Members should recognize that what the EC wa s really asserting was a unilateral right for a 
complaining party to re-open an Annex V process that had ended, simply by adding some new 
measures to a panel request.  On this view, a res ponding party could then be subject to an endless 
cycle of burdensome Annex V processes.  Annex V of the SCM Agreement did not provide for that 
right.  Therefore, there was no basis for the EC's re quest at the present meeting, and the United States 
was not in a position to consent to the initiation of Annex V procedures. 
19. The representative of th e European Communities  said that the EC regretted that the United 
States persisted in denying access to  information the EC was entitled to under WTO rules.  This was a 
serious matter which might have repercussions not only for this case, but for the operation of the 
provisions of Annex V in general.  The EC would continue to take actions in order to preserve its 
rights under the SCM Agreement.  According to the United States, agreement on the initiation and 
procedural rules by both parties was required before an Annex V process could be  initiated.  In this 
context, the United States had also referred to prev ious EC statements.  One thing had to be made 
crystal clear:  There was no positive consensus rule  to start an Annex V procedure and the EC had WT/DSB/M/206 
Page 6  
 
never taken such a position.  The Annex V procedur e was established automatically by the DSB upon 
request.  There needed to be an agreement on matt ers such as the name of the facilitator and how to 
address specific confidentiality problems.  Par ties were required to cooperate, as provided in 
paragraph 1 of Annex V.  The current situation w as not analogous to that prevailing in 2005 since 
now there was a facilitator as well as agreed confidentia lity rules.  There was no reason not to resume 
the Annex V procedure immediately.  The United St ates by continuing to block the proceedings was 
violating its basic duty to cooperate. 
20. As a final point, the EC wished to react to the US statement made at the previous DSB 
meeting that the EC had not satisfactorily coope rated in the Annex V process in the DS316 case by 
objecting to questions which were both covered by co nsultation and panel requests.  This was – so the 
United States had argued – due to "i nadequate Annex V rules".  It would not come as a surprise that 
the EC would disagree with the substance of that statement.  Unlike the United States, the EC had 
filed a preliminary ruling request concerning a numbe r of matters, which were also subject to the 
Annex V process.  By contrast, the US had chosen  to unilaterally withhold information, without 
reference to a future decision by the panel, citi ng numerous reasons, such as their export controls 
laws.  This being said, the EC was open to discu ss improvements to the existing Annex V modalities.  
However, since the United States was apparently not prepared to engage in such a discussion, the EC 
considered that the Annex V procedure was now initiated and reserved its right to request the 
facilitator to invite the United States to respond to questions. 
21. The representative of Brazil
 said that his country followed with great interest the 
developments of this dispute.  This interest was not  only due to the importance of trade in civil aircraft 
for the Brazilian economy, but also due to the system ic implications of the issues dealt with in the 
case under consideration.  At the present meeting, he  said that he would basically use the same words 
presented by Brazil to the DSB on 3 August 2005.  On that occasion, the United States had requested the initiation of the Annex V procedures in the c ontext of the dispute  "EC – Measures Affecting 
Trade in Large Civil Aircraft" (DS316), and the EC was then in the position of the United States at the 
present meeting. 
22. Once again, Brazil regretted the lack of system ic coherence concerning the positions of some 
Members on Annex V of the SCM Agreement.  He recalled that in 2003, Brazil had requested the 
DSB to initiate the procedures provided for in Anne x V of the SCM Agreement in the context of the 
dispute "United States – Subsidies on Upland Co tton".  At that time, Brazil had expressed its 
understanding, which remained unchanged, about the ma ndatory nature of that Annex.  Brazil noted 
with concern the inconsistency displayed by two of the main players in the dispute settlement 
mechanism.  This impaired the functioning and th e predictability of the system.  The provisos of 
Annex V were clear and unconditional.   Paragraphs 2 and 5 set out no additional requirement for the 
establishment of the fact-finding procedure, but the re quest itself and the "referral of the matter to the 
DSB under paragraph 4 of Article 7 of the SCM Agre ement".  With regard to the designation of the 
facilitator, paragraph 4 of that Annex was even mo re straightforward:  "The DSB shall designate a 
representative to serve the function of facilitating the information-gathering process." None of the 
paragraphs mentioned included any reference whatsoev er to a consensus rule.  There was no need for 
mutual agreement between the parties to a dispute as a pre-condition for establishing the fact-finding procedure.  There was no need for designating a fac ilitator for the information-gathering process.  The 
only requirements for the development of evidence under the mentioned procedures were the request 
for the initiation of the process and the referral of the matter to the DSB under paragraph 4 of 
Article 7 of the SCM Agreement. 
23. In Brazil's view, the information gathered pur suant to the Annex V procedures was a key 
element for the panel to make its judgment on the case.   As a third party to the dispute, Brazil wished 
to reserve its rights to participate in the Annex V procedure and to receive the information to be 
gathered by the representative that th e DSB would designate for that purpose.  WT/DSB/M/206 
 Page 7 
 
 
  24. The representative of Canada  said that his country noted the earlier statements made by the 
EC in respect of the lack of automaticity of Annex V process, and observed that the EC had expressly relied not only on practice but on "jurisprudence", wh ich it had nevertheless never identified.  The 
new position of the EC that Annex V process was "autom atic", that it was a "right" and that it did not 
"require positive consensus" risked, therefore, a measure of confusion among Members and at capital.  
Canada further observed that it woul d naturally be quite interested in the fluid movement of the EC 
position. 
25. The representative of the United States
 said that his delegation wished to reply briefly to 
several points made by the EC.  The US representative believed that he had just heard that the EC had 
claimed that it had a right to resumption of the Annex V process.  This issue had already been 
addressed by the United States in its statement and so  he would merely reitera te that Annex V did not 
provide a unilateral right for a complaining party to re-open an Annex V process that had ended.  
With respect to the statement made by the EC th at the rules of the completed Annex V process could 
apply to a new Annex V process, the EC had erred in assuming that the United States could agree to accept the same working procedures in  the future for an Annex V pro cess as had been used in the 
process recently concluded.  The US experience indi cated that the old rules were inadequate.  For 
example, the EC had ignored specific instructions  from the facilitator who was the DSB's designated 
representative in that process regarding the bracketi ng of business confidential information and highly 
sensitive business information.  The EC's actions under mined the integrity of th at Annex V process.  
Finally, with respect to the last point made by the EC in its second intervention, he wished to state that 
there was no basis in the DSU for one Member, the EC, to unilaterally determine that the DSB had 
taken a decision and again, the United States was not  in a position to consent to the initiation of 
Annex V procedures. 
26. The DSB took note
 of the statements.  
 
3. United States – Countervailing duty inv estigation on dynami c random access memory 
semiconductors (DRAMS) from Korea 
(a) Statement by the United States 
27. The representative of the United States , speaking under "Other Business", said that his 
country was pleased to report that it had implemen ted the recommendations and rulings of the DSB in 
the dispute:  "United States – Countervailing Duty Investigation on Dynamic Random Access 
Memory Semiconductors (DRAMS) from Korea" (DS296).  He recalled that the only WTO-
inconsistency found in this dispute involved Ar ticle 15.5 of the SCM Agreement.  The Panel had 
found that the US International Trade Commission ha d failed adequately to explain how it did not 
attribute to the subject imports any injury caused by changes in demand.  The United States had not 
appealed that finding, and the parties had agreed th at the reasonable period of time for implementation 
would conclude on 8 March 2006.  On 13 Fe bruary 2006, the Commission had issued a 
redetermination in which it had clarified and elabor ated upon the analysis set forth in its original 
determination regarding the effects of changes in  demand.  The redetermination had addressed the 
Panel's concern that the Commission not attribute to the subject imports any effects that might have 
been caused by the decline in the rate of growth in demand.  Th is clarification and elaboration had not 
required a modification of any of the Commission' s ultimate conclusions, but had rather provided 
additional support for those conclusions.  Therefore,  the Commission had continued to determine that, 
as of the time of the original determination,  the domestic industry producing DRAMS and DRAM 
modules was materially injured by reason of subsid ized imports from Korea.  On 8 March 2006, the 
US Department of Commerce had published a no tice in the Federal Register concerning the 
Commission redetermination.  As a result of these actions, the United States had complied with the recommendations and rulings of the DSB in the dispute DS296. WT/DSB/M/206 
Page 8  
 
28. The representative of Korea
 said that his country was concerned that the United States had 
made its announcement that it considered that it had complied with the DSB's ruling and recommendations in the "US – DRAMS" case (WT/DS296) under "Other Business" and in the context of a special DSB meeting.  Korea questi oned whether this was the proper time or place to 
have this discussion.  If the United States wished to make a statement that it was in compliance with 
its obligations, then it should have placed this issue as an item on the main DSB agenda, and not 
under "Other Business". 
29. With regard to the substance of implementa tion, he said that Korea believed that the 
United States had not faithfully implemented the Pa nel's decision.  The ITC had resorted to an 
exceptionally narrow approach to th e task assigned by the Panel, and had looked at the issue of 
changes in demand of like products in strict isolation.   A review of a distinct factor was not the same 
as an inquiry in strict isolation.  Furthermore, the ITC had misapprehended key market concepts, had 
ignored important evidence, and had thereby failed to fully appreciate the effects of a dramatic decline 
in demand on its domestic DRAM industry as distingu ished from the effects of subject imports from 
Korea.  One of the more troubling aspects of the ITC's determination was that it had rejected the 
Panel's findings that Korea had established an unr ebutted prima facie case that the ITC had not 
properly examined the required factor of changes in demand.  The ITC stated:  "In our view, the 
materials that Korea submi tted to the panel as 'prima facie' ev idence in support of the proposition that 
declines in the rate by which demand increased in 20 01 were responsible for price declines in the US 
market that year neither support that conclusion nor detract from the data in our record showing a lack 
of correlation between DRAM pricing and changes in the rate of growth of US consumption."
1  This 
was not appropriate.  It was simply not up to the ITC to reject the Panel's findings in this manner, but 
rather to accept and implement them.  Therefore, Korea did not consider that this was a full and 
proper implementation of the DSB's rulings and recommendations.  Korea was in the process of 
determining an appropriate course of action in response. 
30. The representative of the United States  said that, with respect to Korea's statement, his 
country was confident that the Commission's conclusions and the process that had led to those 
conclusions were fully consistent  with US WTO obligations.  Having said that, the United States did 
not believe that this was the forum in which to debate highly technical case specific issues regarding 
determinations made by the investigating authoriti es and trade remedy proceedings.  Of course, his 
delegation would communicate Korea's statement to the US authorities. 
31. The DSB took note  of the statements. 
 
__________ 
 
 
                                                      
1 USITC Investigation Number 701-TA-431 (Section 129 Consistency Determination), Pub. No. 3839, 
February 2006 at p. 13.