Document: WT/DS402/R Page B-1 ANNEX B THIRD PARTIES' WRITTEN SUBMISSIONS OR EXECUTIVE SUMMARIES THEREOF Contents Page Annex B-1 Third Party Written Submi ssion of the European Union B-2
Document codes: WT/DS402/R
Complainant: South Korea
Respondent: U.S.
Third parties: China, EU, Japan, Mexico, Thailand, Vietnam
Dispute stage: Panel
Agreements cited: Art. 2.4.2  Anti-dumping

ANNEX B

THIRD PARTIES' WRITTEN SUBMISSIONS OR
EXECUTIVE SUMMARIES THEREOF

Contents Page
Annex B-1 Third Party Written Submi ssion of the European Union B-2
Annex B-2 Third Party Written Submission of Japan B-5

ANNEX B-1

THIRD PARTY WRITTEN SUBMISSION
OF THE EUROPEAN UNION

1. The European Union makes this third part y written submission because of its systemic
interest in the correct and consistent interpretation and application of the Agreement on
Implementation of Article VI of the Ge neral Agreement on Tariffs and Trade 1994 (the "Anti-
Dumping Agreement") and the Dispute Settlement Understanding ("DSU").

2. The European Union considers that there is no dispute before the parties as to the relevant
facts of the case, the interpretation of the relevant law and its application to the facts. Indeed, as
regards the facts of this case, according to the United States, "[it] does not contest the accuracy of
Korea's description of the zeroing methodology set fo rth in paragraphs 4 a nd 17 of Korea's First
Written Submission, as it relates to the inv estigations challenged in this dispute". 1 As regards the
evidence submitted by Korea to prove its case, the Un ited States notes that "[it] has reviewed the
factual evidence submitted by Korea and does not contest that the submitted documentation, including
the computer programs used to calculate the dumpi ng margins, were generate d by the Department of
Commerce during its conduct of the three original investigations at issue". 2 Finally, with respect to
the interpretation of the relevant provisions of the Anti-Dumping Agreement and its application to the
facts of this case , the United States confirms that "[it] acknowledges that [the reasoning of the
Appellate Body in US – Softwood Lumber Dumping , which found that the use of "zeroing" with
respect to the average-to-average comparison methodology in investigations was inconsistent with the
first sentence of Article 2.4.2] is equally applicable to the margins at issue in this dispute".3

3. Under these circumstances, once the Panel h as outlined the agreement of the parties on all
those issues (i.e., the facts, the interpretation of th e relevant law and the application of the law to the
facts), the report of the Panel could be limited to ma king the finding that the parties agree that there is
no dispute, and then recommend that the United Stat es bring the measures at issue into conformity
with its obligation under the covered agreements. In fact, in view of the circumstance s of this case,
where the United States has acknowledged that its measures are inconsistent with the Anti-Dumping
Agreement, the European Union considers that the Pane l could make use of the possibility of making
suggestions under Article 19.1 of the DSU, and suggest that the United States should bring the
measures at issue into conformity immediately.

4. This approach would be in accordance with Article 11 of the DSU. A panel has a basic
obligation under Article 11 of the DSU to make an objective assessment of the matter before it. Such
assessment should include the f acts, evidence and legal argument. Indeed, the Panel would
distinguish between a finding that the parties agree w ith respect to a particular fact, evidentiary matter
or legal issue; and the panel itself making such finding or recommendation.

5. To the extent that there is no dispute between the parties, the European Union recalls that the
prompt settlement of disputes is essential to the effective functioning of the WTO and the
maintenance of a proper balance between the rights a nd obligations of the Members; that all Members
have agreed to engage in DSU procedures in good faith in an effort to resolve disputes; and that all

Members undertake to accord sympathetic consid eration to representations made by any other
Member.4 In order to ensure a prompt settlement of the dispute, the European Union considers that the
Panel could adapt its working procedures in view of the agreement by the parties and stop its
proceedings once it has received the views of the thir d parties. In other words, the European Union
considers that, in view of the US acknowledgmen t of the correctness of the facts, evidence,
interpretation of the relevant law and its applicati on to the facts of this case, there is no need for a
hearing, questions from the Panel or subsequent subm issions from the parties. This would also be in
line with the requirement of making "the procedures more efficient" as contained in Article 12.8 of
the DSU.

6. Finally, the European Union wants to comment on the US position with respect to prior panel
and Appellate Body reports. The United States c onsiders that the rights and obligations of WTO
Members flow, not from panels or the Appellate Bo dy, but from the text of the covered agreements,
and requests that this Panel make an objective assessment of the matter before it.
5 The European
Union observes that panels and the Appellate Bo dy have found the use of zeroing in original
investigations to be inconsiste nt with Article 2.4.2 of the Anti-Dumping Agreement in many disputes
so far.6 The European Union notes that the Appellate Body Report in US-Stainless Steel (Mexico)
addresses in general terms the relevance of previous panel and Ap pellate Body reports.7 In particular,
the Appellate Body clarified the role of its previ ous reports and indicated how panels should act in
cases where the same legal issues arise:8

[T]he legal interpretation embodied in adopt ed panel and Appellate Body. Ensuring
"security and predictability" in the disput e settlement system, as contemplated in
Article 3.2 of the DSU, implies that, absent cogent reasons, an adjudicatory body
will resolve the same legal question in the same way in a subsequent case.
In the hierarchical structure contemplated in the DSU, panels and the Appellate Body
have distinct roles to play. In order to strengthen dispute settlement in the
multilateral trading system, the Uruguay R ound established the Appellate Body as a
standing body. Pursuant to Article 17.6 of the DSU, the Appellate Body is vested
with the authority to review "issues of law covered in the pa nel report and legal
interpretations developed by the panel". Accordingly, Article 17.13 provides that the
Appellate Body may "uphold, modify or re verse" the legal findings and conclusions
of panels. The creation of the Appellate Body by WTO Members to review legal
interpretations developed by panels shows that Members recognized the importance
of consistency and stability in the interpre tation of their rights and obligations under
the covered agreements. This is essential to promote "security and predictability" in
the dispute settlement system, and to ensure the "prompt settlement" of disputes. The
Panel's failure to follow previously adopted Appellate Body reports addressing the
same issues undermines the development of a coherent and predictable body of
jurisprudence clarifying Members' ri ghts and obligations under the covered
agreements as contemplated under the DSU . Clarification, as envisaged in

4 DSU, Article 3.3, 3.10 and 4.2.
6 See Appellate Body Report, EC – Bed Linen , para. 66; Appellate Body Report, US – Softwood
Lumber V, para. 117; Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , para. 124;
Appellate Body Report, US – Zeroing (Japan) , para. 138; and Appellate Body Report, US – Zeroing (EC) ,
para. 222. In addition, model zeroing in original investigations has been found to be inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement by all panels that have examin ed that practice, including the
panels in EC – Bed Linen , EC – Tube or Pipe Fittings , US – Softwood Lumber V , US – Zeroing (EC) , US –
Zeroing (Japan), and US – Shrimp (Ecuador), US – Shrimp (Thailand) and US – Continued Zeroing.
7 Appellate Body Report, US – Stainless Steel (Mexico), paras. 157 – 162.
8 Appellate Body Report, US - Stainless Steel from Mexico, paras. 160 – 162 (emphasis added).

Article 3.2 of the DSU, elucidates the scope and meaning of the provisions of the
covered agreements in accordance with cu stomary rules of interpretation of public
international law. While the application of a provision may be regarded as confined
to the context in which it takes place, the relevance of clarification contained in
adopted Appellate Body reports is not lim ited to the application of a particular
provision in a specific case.
We are deeply concerned about the Panel' s decision to depart from well-established
Appellate Body jurisprudence clarifying th e interpretation of the same legal issues.
The Panel's approach has serious implica tions for the proper functioning of the WTO
dispute settlement system, as explained above.
7. The European Union fully agrees with these stat ements without reservation. In this respect,
the final sentence of paragraph 160 refers to "an ad judicatory body" (in the singular), which seems to
indicate that the phrase refers to the situation in wh ich it is the same body in both the previous case
and the case to be decided. That is, it refers to the situation in which a panel might be called upon to
resolve the same legal issue that it has previously resolved; or the situation in which the Appellate
Body might be called upon to resolve the same legal issue that it has already resolved. We note that
the phrase refers to "cogent reasons" as the basis for a change in view. By contrast, the European
Union notes that paragraph 161 of the Appellate Body Report in US – Stainless Steel (Mexico)
addresses the hierarchical relationship between panels and the Appellate Body. It concludes that the
relevance of clarification provided by the Appella te Body on issues of legal interpretation is not
limited to the application of a particular provision in a specific case. There is no express reference to
"cogent reasons". Finally, in paragr aph 162 of the Appellate Body Report in US – Stainless Steel
(Mexico) the Appellate Body states that it was deeply concerned about the panel's decision to depart
from well-established Appellate Body jurisprudence cl arifying the interpretation of the same legal
issues.

8. In other words, WTO panels are obliged to co rrectly apply the law; in the context of this
dispute this also means that the Panel should follow the rulings of the Appellate Body where the
Appellate Body has previously interpreted the sa me legal questions. Otherwise, the security and
predictability enshrined in Article 3.2 of the DSU would be put in serious danger.

9. In sum, the European Union considers that, to the extent that the Panel wants to make an
independent finding about the interpretation of the re levant law and its application to the facts, the
Panel should follow previous Appellate Body's reports on the same legal issue, and consequently find
that the USDOC's use of zeroing in the original i nvestigations challenged by Korea is inconsistent
with Article 2.4.2 of the Anti-Dumping Agreement.

ANNEX B-2

THIRD PARTY WRITTEN SUBMISSION OF JAPAN

1. This dispute is one of the numerous di sputes brought to the WTO dispute settlement
procedure concerning "zeroing" used in the Unite d States' anti-dumping procedures. Japan, as shown
by its own recourse to the WTO dispute settlement procedure, has an interest in the issue of the WTO-
consistency and implementation by the United States regarding "zeroing".

2. The basis of claim by the Republic of Korea (" Korea") is that the United States Department of
Commerce's use of "zeroing" when calculating the dumping margins for certain investigated exporters
in the investigation of three products from Korea is inconsistent with the United States' obligations
under Article 2.4.2 of the Agreement of Implementation of Article VI of the GATT 1994 ( Anti-
Dumping Agreement).
1 Japan totally supports the Korea's claim. Japan shares the same recognition
with both parties that in US – Softwood Lumber Dumping the Appellate Body found that the use of
"zeroing" in calculating margins of dumping on the basis of a comparison of a weighted average
normal value with a weighted average of prices of all comparable export transactions (the "weighted-
average-to-weighted-average methodology") in investig ations was inconsistent with Article 2.4.2 of
the Anti-Dumping Agreement.2

3. Japan notes that the United States does not contest that the submitted documentation by
Korea, including the computer programs used to cal culate the dumping margins, was generated by the
United States Department of Commerce during its c onduct of the three original investigations at
issue.
3 In addition, it should be noted that the Un ited States also acknowledged that the reasoning
shown in US – Softwood Lumber Dumping was equally applicable to the Korea's claim in this case.4

4. In this regard, Japan recalls that the Unit ed States acknowledged that the reasoning shown in
US – Softwood Lumber Dumping was equally applicable to US – Shrimp (Ecuador) and US – AD
Measures on PET Bags. In these cases, the panels correctly concluded the measures of the use of
"zeroing" in calculating margins of dumping on the basis of the "weighted-average-to-weighted-
average methodology" were inconsistent with Article 2.4.2 of the Anti-Dumping Agreement.
5

5. In light of the foregoing, Japan agrees with the request of Korea that the Panel should find
that the United States acted inconsistently w ith the requirement of Article 2.4.2 of the Anti-Dumping
Agreement. Japan expects that the United States would take appropriate actions with respect to
measures at issue so that "promp t settlement of situations", as stated in Article 3.3 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes, will be achieved.

1 First Written Submission of Korea, para. 2.
2 Appellate Body Report, US – Softwood Lumber Dumping, paras. 62-117, First Written Submission of
Korea, para. 18.
3 First Written Submission of The United States, para. 9.
4 First Written Submission of The United States, para. 10.
5 Panel Report, US – Shrimp (Ecuador) , para.8.1, Panel Report, US – AD Measures on PET Bags ,
para. 8.1.