JAPAN – COUNTERVAILING DUTIES ON DYNAMIC RANDOM ACCESS MEMORIES FROM KOREA
Document: Recourse by Korea to Article 21.5 of the DSU Request for the Establishment of a Panel
Date: 10 September 2008
Document codes: WT/DS336/19
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

Recourse by Korea to Article 21.5 of the DSU

Request for the Establishment of a Panel

 The following communication, dated 9 Septembe r 2008, from the delegation of Korea to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 21.5 of the DSU.

On 17 December 2007, the Dispute Settlement Body ("DSB") adopted its recommendations
and rulings in the dispute (WT/DS336). At the DSB meeting of 15 January 2008, Japan announced its intention to
comply with the recommendations and rulings of the DSB. Korea and Japan were not able to reach an
agreement on the reasonable period of time, and on 25 February 2008, Korea requested that the
reasonable period of time be determined through bind ing arbitration pursuant to Article 21.3(c) of the
Understanding on Rules and Procedures Go verning the Settlement of Dispute ("DSU"). The
arbitrator determined that the reasonable pe riod of time for Japan to comply with the
recommendations and rulings of the DSB in this di spute would be eight months and two weeks from
the date of the adoption of the Panel and Appellate Body reports, expiring on 1 September 2008. This
arbitration report was circulated to WTO members on 5 May 2008 ().

On 29 August 2008, Japan issued Cabinet Order No. 266 published in the Special Issue
No. 189 of the Official Gazette, modifying the c ountervailing duties imposed on DRAMs from Korea
in response to the recommendations and rulings of th e DSB. Japan also reported to the DSB on that
date that it had complied with the recommendations and rulings of the DSB in a manner consistent
with its WTO obligations.

Korea strongly disagrees. Korea considers th e determination by Japan, as modified on
29 August 2008, to be inconsistent with Japan's obligations under the relevant provisions of the
General Agreement on Tariffs and Trade 1994 ("GATT 1994") and the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement").

As a result of the disagreement between Korea and Japan as to the existence or consistency
with covered agreements of measures taken to co mply with the recommendations and rulings of the
DSB, and in accordance with paragraph 1 of the "Confirmed Procedures" agreement between Korea
and Japan of 9 September 2008 regarding this disp ute, Korea requests the establishment of a panel,
pursuant to Articles 6 and 21.5 of the DSU, Artic le XXIII of the GATT 1994, and Article 30 of the
SCM Agreement, regarding Japan's countervailing measures against DRAMS from Korea.

Korea respectfully requests that the panel:

1. find that the measures adopted by Japan on 29 August 2008 do not comply with the
recommendations and rulings of the DSB in this dispute, and
2. find that Japan has acted inconsistently with its obligations under Article 3.10 of the
DSU, as well as Articles 1.1, 14, 19 and 21 of the SCM Agreement. Specifically, Korea
makes claims under the following:
(a) Article 3.10 of the DSU, because Japan has failed to engage in the dispute-
settlement procedures mandated by the DSU in good faith in an effort to resolve
the dispute, and instead has made incorrect and misleading statements to the Panel,
the Appellate Body, and the Arbitrator appointed under Article 21.3(c) of the
DSU, and has also continued to impose countervailing duties on imports of
DRAMs exported by respondent Hynix Se miconductor Inc. ("Hynix") based on
arguments that have no logical basis and fail to comply with the recommendations
and rulings of the DSB in this dispute.
(b) Article 1.1 of the SCM Agreement because, inter alia, Japan failed to demonstrate
the existence of a financial contribution by the Government of Korea within the
meaning of Article 1 of the SCM Agre ement, when the alleged financial
contribution was undertaken pursuant to a financial analysis that, as Japan has
conceded, was "commercially reasonable."
(c) Articles 1.1 and 14 of the SCM Agreement because, inter alia, Japan (1) failed to
demonstrate that a benefit was confe rred on Hynix by the alleged subsidy
transactions (which, as noted above, were undertaken pursuant to a financial
analysis that, Japan has c onceded, was "commercially reasonable"); (2) failed to
identify the relevant market and market benchmark for purposes of determining
whether a benefit was conferred and measuring the amount of the benefit;
(3) assigned no value to the equity that the creditors received in the restructurings
for purposes of calculating the amount of the benefit; and (4) otherwise calculated
the amount of the alleged benefit in a manner inconsistent with the requirements of
Articles 1.1 and 14 of the SCM Agreement.
(d) Articles 19 and 21 of the SCM Agreement because, inter alia, Japan is improperly
levying a countervailing duty on imports wh en there is no longer a benefit from
the alleged past subsidies, and the dut y is not necessary to counteract alleged
subsidization.
 Korea continues to reserve its rights in resp ect of all other aspects of Japan's purported
compliance with its obligations in this case.

 Korea requests that the panel be established w ith the standard terms of reference set out in
Article 7 of the DSU.

 Korea further requests that the current request be placed on the agenda for the meeting of the
DSB on 23 September 2008.