JAPAN – COUNTERVAILING DUTIES ON DYNAMIC RANDOM ACCESS MEMORIES FROM KOREA
Document: Notification of an Appeal by Japan under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 20(1) of the Working Procedures for Appellate Review
Date: 5 September 2007
Document codes: WT/DS336/8
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 Appeal by Japan

under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 20(1) of the Working Procedures for Appellate Review

 The following notification, dated 30 August 200 7, from the Delegation of Japan, is being
circulated to Members.

 Pursuant to Articles 16.4 and 17 of the Understanding on Rules and Procedures Governing
the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review ,
Japan hereby notifies its decision to appeal to the A ppellate Body certain issues of law covered in the
Panel Report on Japan – Countervailing Duties on Dynamic Ra ndom Access Memories from Korea
() ("Panel Report"), and certain legal in terpretations developed by the Panel in this
dispute. Japan seeks review by the Appellate Body of the Panel's conclusions and related findings and
legal interpretations that:
1. Japan improperly found government "entrustment or direction" of four of the private creditors
of Hynix Semiconductor, Inc. ("Hynix") to particip ate in the December 2002 Restructuring of Hynix,
contrary to Article 1.1(a)(1)(iv) of the Agreement on Subsidies and Countervailing Measures ("SCM
Agreement").
1 This conclusion was based on an erroneous interpretation and application of this
provision. In particular, the Panel erred in law by:
 (i) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU by limiting the scope of its analysis of the findings by the investigating authorities
of Japan (the "JIA") regarding the December 2002 Restructuring to only the Deutsche
Bank Report without any assessment of other evidence on the record and the JIA's
findings thereon, denying the "totality of ev idence approach" actually adopted by the JIA,
and conducting thereby a de novo review of the evidence, the JIA's findings and its
determination
2; and
 (ii) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU with respect to the intervention into th e preparation of the Deutsche Bank Report by
the Government of Korea, the lack of i ndependent third party characteristics of the
Deutsche Bank Report and the content of the Deutsche Bank Report, by making a de novo
review of the evidence, the JIA's findings and its determination, by making findings on
the characteristics of the Deutsche Bank Report which Korea neither presented the

1See Panel Report, paras. 7.245-47, 7.253-54 and 8.2 a.
2See, e.g., Panel Report, para. 7.157 in conjunction with paras. 7.155-56; para. 7.162 in
conjunction with paras. 7.158-60, 7.246-47, 7.253-54.

relevant evidence or arguments nor sought any findings by the Panel and failing to accord
the due process right of defence to Japan, and by improperly rejecting as ex post
rationalization arguments presented by Japan.
3
2. Japan improperly found that the December 2002 Restructuring conferred a benefit on Hynix,
contrary to Articles 1.1(b) and 14 of the SCM Agreement.4 This conclusion is in error because it was
not based on any analysis of these provisions and wa s wholly dependent on its conclusions relating to
"entrustment or direction" in the cont ext of the December 2002 Restructuring under
Article 1.1(a)(1)(iv) of the SCM Agreement.5 It is based solely on the Panel's erroneous conclusion,
described in paragraph 1 above, which was made inconsistently with Article 11 of the DSU.
3. Japan improperly calculated the amount of benefit conferred by the October 2001 and
December 2002 Restructurings of Hynix, contrary to Articles 1.1(b) and 14 of the SCM Agreement.6
This conclusion was based on an erroneous interp retation and application of these provisions. In
particular, the Panel erred in law by:
 (i) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU by finding that the JIA applied exclusively an outside investor benchmark giving
rise to an internal inconsistency in the JIA' s calculation of benefit, based on an inaccurate
understanding of the JIA's actual findings and a de novo review of the evidence, the JIA's
findings and its determination7;
 (ii) finding that the JIA failed to adopt an in sider investor benchmark, even though neither
Article 1.1(b) nor 14 of the SCM Agreement requires the application of a particular
methodology, and the benchmar k alleged by the Panel lacked necessary support in the
evidence on the record required under Article 12.2 of the SCM Agreement8;
 (iii) erroneously interpreting the provi sions of Articles 1.1(b) and 14 of the SCM Agreement
and failing to conduct the objective assessment of the matter required by Article 11 of the
DSU in finding that the JIA made its calcula tion of the benefit amount from the creditor's
perspective9;
 (iv) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU by reaching conclusions on the JIA's benefit calculation formulae, for which Korea
failed to establish a prima facie case of inconsistency with Articles 1.1(b) and 14 of the
SCM Agreement
10; and
 (v) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU without according the due process right of defence to Japan and erroneously
interpreting the requirements under Article 22.5 of the SCM Agreement as informed by
Articles 12.2 and 12.8 thereof and the meaning of facts available under Article 12.7
thereof in rejecting rebuttal arguments presented by Japan
11;

3See, e.g. , Panel Report, para. 7.168 in conjunction with paras. 7.163-67; para 7.188 in conjunction
and 7.244 in conjunction with paras. 7.191-243; and para. 7.245.
4See Panel Report, paras. 7.282 and 8.2 b.
5See Panel Report, para. 7.282.
6See, e.g., Panel Report, paras. 7.315, 7.316 and 8.2 c.
7See, e.g., Panel Report, para. 7.315 in conjunction with paras. 7.304-14.
8See, e.g., Panel Report, para. 7.315 in conjunction with paras. 7.304-14.
10See, e.g., Panel Report, para. 7.315 in conjunction with paras. 7.305-14.
11See, e.g., Panel Report, para. 7.315 in conjunction with paras. 7.304 and 7.314.

4. Japan improperly used methods to calculate th e amount of benefit to the recipient that were
not provided for in Japan's national legislation or implementing regulations, contrary to the chapeau
of Article 14 of the SCM Agreement.12 This conclusion was based on an erroneous interpretation and
application of this provision. In particular, the Panel erred in law by:
 (i) erroneously interpreting the requirement to provide for the methods in the national
legislation or implementing regulations to calculate the amount of benefit under the
chapeau of Article 14 of the SCM Agreement13; and
 (ii) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU in considering whether the methods provided for in Japan's implementing
regulations were used and actually applied in the investigation to calculate the benefit
amount.
14
5. Japan improperly levied countervailing duties in 2006 to offset some of the subsidies
provided by the October 2001 Restructuring, contrary to Article 19.4 of the SCM Agreement.15 This
conclusion was based on an erroneous interpretation and application of this provision as well as other
relevant provisions under the SCM Agreement. In particular, the Panel erred in law by:
 (i) erroneously interpreting the provisi ons of Articles 19.1 and 19.4 of the SCM Agreement16;
 (ii) failing to conduct the objective assessment of the matter required by Article 11 of the
DSU by finding that the JIA levied the counter vailing duty despite its determination that
the non-recurring subsidies in the October 2001 Restructuring would expire in 2005,
based on an inaccurate understanding of the actual determination by the JIA and a de
novo review of evidence on the record and findings and determination by the JIA.
17
 In sum, Japan considers that the Panel erred in law in the interpretation and application of
Articles 1.1(a)(1)(iv), 1.1(b), 12.2, 12.7, 12.8, 14, 19.1, 19.4 and 22.5 of the SCM Agreement and
failed to meet the requirements of Article 11 of th e DSU. Japan requests that the Appellate Body
reverse the Panel's erroneous findings and conclusions identified above.

12See Panel Report, paras. 7.334 and 8.2 d.
13See, e.g. , Panel Report, paras. 7.327, 7.330, 7.331, 7.333 and 7.334 in conjunction with
paras. 7.326-33.
14See, e.g., Panel Report, paras. 7.330, 7.331, 7.333 and 7.334 in conjunction with paras. 7.326-33.
15See Panel Report, paras. 7.361 and 8.2 e.
16See, e.g., Panel Report, para. 7.361 in conjunction with paras. 7.351-57.
17See, e.g., Panel Report, paras. 7.360 and 7.361 in conjunction with paras. 7.358-59.