JAPAN – COUNTERVAILING DUTIES ON DYNAMIC RANDOM ACCESS MEMORIES FROM KOREA
Document: Notification of an Other Appeal by Korea under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 23(1) of the Working Procedures for Appellate Review
Date: 18 September 2007
Document codes: WT/DS336/9
Complainant: South Korea
Respondent: Japan
Third parties: China, EU, Taiwan, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. 1, 2, 14, 10, 15, 19, 21, 11, 12, 32.1, 15.5, 1.1, 19.1, 19.4  Subsidies and Countervailing Measures (SCM)Art. VI:3, X:3  GATT 1994

JAPAN – COUNTERVAILING DUTIES ON DYNAMIC
RANDOM ACCESS MEMORIES FROM KOREA

Notification of an Other Appeal by Korea

under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 23(1) of the Working Procedures for Appellate Review

 The following notification, dated 11 Septembe r 2007, from the Delegation of Korea, is being
circulated to Members.

 Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") and Rule 23 of the Working Procedures for Appellate Review, the
Republic of Korea ("Korea") hereby notifies its d ecision to appeal to the Appellate Body certain
issues of law and legal interpretations contained in the report of the panel Japan – Countervailing
Duties on Imports of Certain Dynamic R andom Access Memories (DRAMS) from Korea (WT/DS336)
(the "Panel Report"). Korea seeks review by th e Appellate Body of the following legal conclusions
and related findings and legal interpretations in the Report of the Panel:

(1) The Panel's finding that Japan acted consisten tly with its obligations under Articles 1.1(b)
and 14 of the Agreement on Subsidi es and Countervailing Measures (the "SCM
Agreement"), when the Japanese investigating authorities ("JIA") determined that Hynix
Semiconductor, Inc. ("Hynix") received a "benefit" from a transaction restructuring
Hynix's debts in October 2001.
1 The Panel incorrectly interpreted Articles 1.1(b) and 14
of the SCM Agreement to permit an investig ating authority to assume that a "benefit"
exists based solely on a finding that allegedly entrusted or directed private creditors failed
to undertake a satisfactory analysis of the transaction before approving it, in the absence
of evidence or a finding by the investigating authority that the alleged entrustment or
direction actually made the recipient "better o ff." The Panel's analysis is inconsistent
with the provisions of Article 1.1 of th e SCM Agreement, which requires a separate
analysis of (i) whether the government action constituted a "financial contribution" as a
result, inter alia , of government entrustment or direction of non-governmental entities;
and (ii) whether the government action has conferred a "benefit" on the recipient. In
addition, the Panel's analysis is inconsiste nt with the requirement of Articles 1.1(b)
and 14 of the SCM Agreement that a "benef it" exists when the recipient of the
government financial contribution has been ma de "better off", because the terms of the
transaction provided through the government financial contribution are more favourable
than the terms that would have been available in the absence of government action.

1 These findings include paragraphs 7.271 to 7.277, 7.280 to 7.281, and 7.316 to 7.317 of the Panel
Report.

(2) The Panel's finding that Japan acted consistently with its obligations under Articles 15.5
and 19.1 of the SCM Agreement, when the JIA made a determination of injury and
imposed countervailing duties, without making a reasonable determination that the
allegedly subsidized imports were causi ng injury to a competing domestic industry
through the effects of subsidies.
2 Article 15.5 requires a demonstration "that the
subsidized imports are, through the effects of subsidies, causing injury within the meaning
of this Agreement." 3 Article 19.1 permits the imposition of countervailing duties only if
"a Member makes a final determination ... that, through the effects of the subsidy , the
subsidized imports are causing injury ... ." 4 The Panel adopted an interpretation of these
provisions that rendered inutile the language of the provisions referring to "the effects of
the subsidy." As a result, the Panel incorrec tly allowed an affirma tive determination of
injury to be made, and countervailing duties to be imposed, when the evidence did not
support the conclusion that the volume or price of the imports, or the injury to the
domestic industry, would have been any different in the absence of subsidies.
(3) The Panel's finding that Japan acted consistently with its obligations under Articles 12.7
and 12.9 of the SCM Agreement, when the JIA designated as "interested parties" entities
that were not demonstrated to have any inter est in the proceeding, and then applied "facts
available" when some of those entities failed to provide information requested by the JIA
within the time limits established by the JI A. The Panel's interpretation of the term
"interested party" was not consistent with the ordinary meaning of that term or with the
context and purpose of the relevant provisions of the SCM Agreement. As a result, the
Panel approved a determination that was not consistent with the due process obligations
that the SCM Agreement imposes on investiga ting authorities, and authorized Japan to
subject an exporter to punitive duties based on the non-responsiveness of entities over
which the exporter had no influence or control.
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(4) The Panel's finding that Japan acted c onsistently with its obligations under
Article 1.1(a)(1) of the SCM Agreement, when (i) the JIA classified transactions that did
not involve a transfer of funds from the government (or government-entrusted or -directed
private entities) to Hynix as "direct transfers of funds" within the meaning of
sub-paragraph (i) of Article 1.1(a)(1); and (ii) the JIA failed to demonstrate that the
transactions met the requirements for clas sification as foregone revenue within the
meaning of sub-paragraph (ii) of Article 1.1(a )(1). The Panel's analysis is inconsistent
with the ordinary meaning of the relevant terms of the SCM Agreement and with the
context of the relevant provisions of the SCM Agreement. As a result, the Panel
disregarded the SCM Agreement's scheme for classifying financial contributions, and the
different analyses that investigating authorities are required to apply when making
findings under sub-paragraphs (i) and (ii) of Article 1.1(a)(1).
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