KOREA – ANTI-DUMPING DUTIES ON PNEUMATIC VALVES FROM JAPAN NOTIFICATION OF AN APPEAL BY JAPAN UNDER 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
Document: Panel Report
Date: 31 May 2018
Document codes: WT/DS504/5
Complainant: Japan
Respondent: South Korea
Third parties: Brazil, China, Ecuador, EU, Norway, Singapore, Turkey, U.S., Vietnam
Dispute stage: Appellate Body
Agreements cited: Art. 3.1  Anti-dumpingArt. VI  GATT 1994Art. 3.2, 3.4, 3.5, 4.1, 6.5, 6.5.1, 6.9, 12.2, 12.2.2, 1  Anti-dumping

KOREA – ANTI-DUMPING DUTIES ON PNEUMATIC VALVES FROM JAPAN
NOTIFICATION OF AN APPEAL BY JAPAN UNDER 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
The following communication, dated 28 May 2018, from the delegation of Japan, is being circulated
to Members.

Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Proce dures Governing
the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review
("Working Procedures"), Japan hereby notifies the Dispute Settlement Body of its decision to
appeal certain issues of law covered in the Panel Rep ort in Korea – Anti-Dumping Duties on
Pneumatic Valves from Japan () ("Panel Report"), and certain legal interpretations
developed by the Panel in this dispute.

Pursuant to Rules 21(1) of the Working Procedures, Japan is simultaneously filing th is Notice of
Appeal and its Appellant Submission with the Appellate Body.

For the reasons to be elaborated in its submissions and oral statements to the Appellate Body,
Japan appeals the following errors in the issues of law in the Panel Report and legal interpretations
developed by the Panel, and requests the Appellate Body to reverse and modify the related
findings, conclusions and recommendations of the Panel, 1 and where indicated to complete the
analysis.

1. With respect to Japan's claim 2 that Korea defi ned the domestic industry producing the like
product contrary to the requirements of Articles 3.1 and 4.1 of the Agreement on Implementation
of Article VI of the General Agreement on Tariffs and Trade 1994 ("Anti -Dumping Agreement"),
Japan requests the Appellate Body:
a. to reverse the Panel's erroneous findings and conclusion that in applying Article 6.2 of
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel
Report, paras. 7.60 – 7.66, and it refused to address this claim, P anel Report,
para. 7.67;
b. then to conclude that Japan's claim is consistent with Article 6.2 of the DSU and that
Japan's claim is within the terms of reference of this dispute; and
c. then to complete the analysis, and find that the definition by the Korea Trade
Commission ("KTC") of the domestic industry as including only the two petitioning firms
among the nine domestic producers of like products did not properly represent the total
domestic production as a whole and then did not meet the "major proportion "
requirement as required by Articles 3.1 and 4.1 of the Anti-Dumping Agreement.

1 Pursuant to Rule 20(2)(d)(iii)of the Working Procedures, this Notice of Appeal includes an indicative
list of the paragraphs of the Panel Report containing the alleged errors, without prejudice to the ability of Japan
to refer to other paragraphs of the Panel Report in the context of its appeal.
2 Panel Request, page 2, para. 7.

2. With respect to Japan's claim 3 that Korea found a significant increase in the volume of
imports contrary to the requirements of Article 3.1 and the first sent ence of Article 3 .2 of the
Anti-Dumping Agreement, Japan requests the Appellate Body:
a. to reverse the Panel's erroneous findings and conc lusion that in applying Article 6.2 of
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel
Report, par as. 7.89 – 7.93, and it refused to address this claim, Panel Report,
para. 7.94;
b. then to conclude that Japan's Panel Request was consistent with Article 6.2 of the DSU
and that Japan's claim is within the terms of reference of this dispute;
c. then to complete the analysis, and find that Korea viol ated Articles 3.1 and the
first sentence of Article 3.2 of the Anti -Dumping Agreement, by improperly finding a
"significant increase" in subject imports considered in isolation, while: (i) disregarding
the lack of continuous increase of subject imports in either absolute or relative terms in
each year of the comparison period; (ii) improperly assuming a competitive relationship
between domestic products and subject imports without an object ive examination based
on positive evidence; and (iii) improperly finding displacement of domestic sales by
subject imports without examining whether the increased imports replaced domestic like
products through market competition; and
d. as part of completing the analysis, to rev erse the Panel's mistaken interpretation of how
to consider the volume of imports as set forth in its discussion of this issue in its
causation findings, including paras. 7.254-7.257.
3. With respect to Japan's claim 4 that Korea found the effects of imports o n domestic prices to
be significant contrary to the requirements of Article 3.1 and the second sentence of Article 3.2 of
the Anti-Dumping Agreement, Japan requests the Appellate Body:
a. to reverse the Panel's erroneous findings and conc lusion that in applyi ng Article 6.2 of
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel
Report, paras. 7.123 – 7.130, and it refused to address this claim, Panel Report,
para. 7.131;
b. then to conclude that Japan's Panel Request is consistent with Article 6.2 of the DSU and
that Japan's claim is within the terms of reference of this dispute; and
c. then to complete the analysis , and find that Korea violated Articles 3.1 and the second
sentence of Article 3.2 of the Anti -Dumping Agreement, by inc orrectly determining the
effect of imports on the domestic prices to be significant as required by the same
Articles, both as price depression and price suppression, while: (i) ignoring the facts of
consistent and significant overselling of subject imports ; (ii) disregarding the
dramatically diverging price trends; (iii) focusing on a single year of 2013, and ignoring
the absence of any evidence of price suppression in 2011 and 2012; and (iv) incorrectly
finding price comparability between subject imports a nd domestic like products without
demonstrating any competition between them.
4. With respect to Japan's claim 5 that Korea analyzed the impact of imports on the domestic
industry contrary to the requirements of A rticles 3.1 and 3.4 of the Anti -Dumping Agreeme nt,
Japan requests the Appellate Body:
a. to reverse the Panel's erroneous findings and conclusion that in applying Article 6.2 of
the DSU it found significant parts of this claim to be outside the Panel's terms of
reference, Panel Report, paras. 7.165 – 7.174, and it refused to address several
important aspects this claim, Panel Report, paras. 7.172, 7.175;

3 Panel Request, page 1, para. 1.
4 Panel Request, page 1, para. 2.
5 Panel Request, page 1, para. 3.

b. then to conclude that Japan's Panel Request is consistent with Article 6.2 of the DSU and
that Japan's claim is within the terms of reference of this dispute;
c. then to complete the analysis, and find that Korea violated Articles 3.1 and 3.4 of the
Anti-Dumping Agreement because the KTC's examination of the impact of the dumped
imports on the state of the domestic industry was inadequate in the following asp ects:
(i) failure to link its analysis of volume and price effects with the alleged consequent
impact from the dumped imports; (ii) failure to demonstrate any "explanatory force" of
the dumped imports on the state of the domestic industry; and (iii) failur e to properly
take into account positive trends; and
d. as part of completing the analysis, to reverse the Panel 's mistaken interpretations and
conclusions that the authority: (i) need not establish a logical link in its analysis of
impact, as set forth at paras. 7.328-7.330; (ii) need not address the explanatory force of
imports when analyzing the impact of imports, as set forth at para. 7.339; and (iii) could
dismiss with insufficient consideration positive trends during the period, as set forth at
paras. 7.342-7.346, in the Panel's discussion of these issues as part of its findings about
causation.
5. With respect to Japan's claim 6 that Korea analyzed the impact of imports on the domestic
industry contrary to the requirements of A rticles 3.1 and 3.4 of the Anti -Dumping Agreement,
Japan requests the Appellate Body:
a. to note the Panel correctly agreed to consider one asp ect of this claim regarding
two specific factors, Panel Report, para. 7.169 – 7.170, including the magnitude of the
margin of dumping, but to find the Panel erred as a matter of law by accepting as
sufficient the mention of the margin of dumping wit hout more, Panel Report,
paras. 7.189 - 7.191, and thus acted contrary to the requirements of Articles 3.1 and 3.4
of the Anti-Dumping Agreement; and
b. then to reverse the Panel's finding, Panel Report, paras. 7.187 – 7.192, that Japan has
not demonstrated that Korea did not assess the relevance of the magnitude of the
margin of dumping and the weight to be attributed to it in the injury analysis, and find
that Korea violated A rticles 3.1 and 3.4 of the Anti -Dumping Agreement by not properly
assessing the margin of dumping.
6. With respect to Japan's claim 7 that Korea found causation without a proper foundation of
intermediate findings regarding the volume, price effects, and impact of imports contrary to the
requirements of Articles 3.1 and 3.5 of the Anti-Dumping Agreement, Japan requests the Appellate
Body:
a. to note Panel correctly found what it called Japan's first causation claim to be within its
terms of reference, Panel Report, paras. 7.218 - 7.226; and
b. to, regarding the Panel 's following errors as a matter of law in several key respects
regarding this claim:
i. reverse the Panel 's error in misapplying the legal standard when assessing the
volume of subject impo rts, and improperly viewing its analysis for purpose of Article
3.5 as constrained by its narrow interpretation of the first sentence of Article 3.2,
Panel Report, paras. 7.254 – 7.258; and find that Korea's focus on the volume of
imports in 2013 in isolat ion from the broader period of investigation as context
fundamentally undermined its causation finding;
ii. reverse the Panel 's error in misapplying the legal standard when it considered its
findings about diverging price trends in isolation from its other fin dings about price
comparability and price ov erselling, Panel Report, paras. 7.278, 7.295 -7.296; and

6 Panel Request, page 1, para. 3.
7 Panel Request, page 2, para. 6.

find that Korea's assessment of the diverging prices and other evidence does not
support its finding of causation;
iii. reverse the Panel 's error in misapplying the legal standard when it considered the
KTC's allegations of "fierce competition" for a small fraction of the domestic like
product as a whole, and in isolation from the other evidence about alleged price
effects, Panel Report, para. 7.294; and find that Korea's assessment of the alleged
fierce competition does not support its finding of causation; and
iv. reverse the Panel 's error in misapplying the legal standard when it found that the
findings under Article 3.2 about volume and price effects are independent of the
findings under Article 3.4 about the impact of imports on the domestic industry,
Panel Report, paras. 7.329, 7.330, and 7.332; and find that Korea's consideration of
volume, price effects, and impact in isolation fundamentally undermined its causation
finding.
c. Japan also requests the Appellate Body to reverse the Panel's error by acting contrary to
the standard of review of Article 11 of the DSU when it considered Korea's arguments
but failed to consider Japan's rebuttal arguments to vari ous Korean assertions about the
reasonable sales price, Panel Report, para. 7.278.
7. With respect to Japan's claim 8 that Korea found causation without an objective examination
of the alleged causal relationship, and without objective examination of the lack of correlations
among various factors, contrary to the requirements of Articles 3.1 and 3.5 of the Anti -Dumping
Agreement, Japan requests the Appellate Body:
a. to note that the Panel correctly found what it called Japan's second causation claim to be
within its terms of reference, Panel Report, paras. 7.231 - 7.235; and
b. to find the Panel erred as a matter of law and to reverse the Panel's error of ignoring the
lack of correlation in the key volume, price, and profit trends that contradicted the
"causal relati onship" as required by Articles 3.1 and 3.5, Panel Report, paras. 7.353,
7.356, 7.360; and find that Korea erroneously ignored the lack of correlations that
fundamentally undermined any conclusion that an objective examination showed the
required "causal relationship".
8. With respect to Japan's claim 9 that Korea failed to inform the interested parties of the
essential facts contrary to the requirements of Article 6.9 of the Anti -Dumping Agreement, Japan
requests the Appellate Body:
a. to reverse the Panel's erro neous findings and conclusion that in applying Article 6.2 of
the DSU it found all of this claim to be outside the Panel's terms of reference, Panel
Report, paras. 7.515 – 7.516, and it refused to address this claim, Panel Report,
para. 7.517;
b. then to conclude that Japan's Panel Request is consistent with Article 6.2 of the DSU and
that Japan's claim is within the terms of reference of this dispute; and
c. then to complete the analysis, and find that Korea failed to inform the interested parties
of the fourte en essential facts relating to the volume of dumped imports, price effects,
the state of the domestic industry, and alleged causation factors before the issuance of
the Korea Trade Commission, Resolution of Final Determination on Dumping and Injury
to Dome stic Industry of Valves for Pneumat ic Transmissions from Japan (20 January
2015) Investigation No.: 23 -2013-5 ("KTC's Final Resolution") and the Office of Trade
Investigation, Final Investigation Report on Dumping and Injury to Domestic Industry of
Valves for Pneumatic Transmissions from Japan (20 Ja nuary 2015), Investigation
No. 23-2013-5 ("OTI Final Report"), as required by Article 6.9 of the Anti -Dumping
Agreement.

8 Panel Request, page 2, para. 4.
9 Panel Request, page 2, para. 10.

In sum, Japan considers that the Panel erred in law in its interpretation and application of
Article 6.2 of the DSU with regard to several claims, and improperly refused to address those
claims. The Panel also erred in law with its interpretations of Articl es 3.1, 3.2, 3.4, 3.5, 4.1,
and 6.9. Japan requests that the Appellate Body recommend tha t Korea bring its measures found
to be WTO -inconsistent into conformity with its obligations under the Anti -Dumping Agreement
and the GATT 1994. Japan also requests that, upon reversal of the Panel's erroneous findings and
conclusions identified above and after completing the analysis where indicated, the Appellate Body
help the parties resolve this dispute promptly by finding the Korean anti -dumping measures to be
contrary to the numerous specific obligations under the Anti -Dumping Agreement identified by
Japan in this appeal. Moreover, doing so will help clarify numerous important issues about the
obligations on national authorities under the Anti-Dumping Agreement.