UNITED STATES – USE OF ZEROING IN ANTI-DUMPING MEASURES INVOLVING PRODUCTS FROM KOREA
Document: Report of the Panel
Date: 18 January 2011
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

UNITED STATES – USE OF ZEROING IN ANTI-DUMPING
MEASURES INVOLVING PRODUCTS FROM KOREA

Report of the Panel

I. INTRODUCTION
1.1 On 24 November 2009, the Republic of Korea (" Korea") requested consultations pursuant to
Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), Article 4 of the
Understanding on Rules and Procedures Govern ing the Settlement of Disputes ("DSU") and
Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 ("Anti-Dumping Agreement"), concer ning the United States' alleged application of
the practice known as "zeroing" of negative dumping margins in calculating final margins of dumping
in its investigations of three products, namely st ainless steel plate in coils ("SSPC") from Korea;
stainless steel sheet and strip in coils ("SSSS") fro m Korea; and diamond sawblades and parts thereof
("diamond sawblades") from Korea. 1 Korea and the United States held consultations on
22 December 2009 and on 2 February 2010, but failed to resolve the dispute.
1.2 On 8 April 2010, Korea requested the establishm ent of a panel pursuant to Article XXIII of
the GATT 1994, Articles 4 and 6 of the DSU and Article 17.4 of the Anti-Dumping Agreement. 2 The
Dispute Settlement Body ("DSB") established a panel at its meeting on 18 May 2010.
1.3 The Panel's terms of reference are the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by Korea in document , the matter referred to the DSB by Korea in that
document, and to make such finding s as will assist the DSB in making the
recommendations or in giving the ruling provided for in those agreements."
1.4 On 8 July 2010, the parties agreed to the following composition of the Panel:
Chairman: Mr Alberto Juan Dumont

 Members: Ms Enie Neri de Ross
 Mr Ernesto Fernández Monge

1.5 China, the European Union, Japan, Mexico, Th ailand and Viet Nam reserved their rights to
participate in the panel proceedings as third parties.
1.6 The Panel met with the parties and third parti es on 5 October 2010. After consulting with the
parties, the Panel decided not to hold a second substantive meeting with the parties.
1.7 The Panel issued its interim report to the pa rties on 29 November 2010 and issued its final
report to the parties on 21 December 2010.
II. FACTUAL ASPECTS
2.1 At issue in this dispute is the alleged u se by the United States Department of Commerce
("USDOC") of the methodology commonly referred to as "zeroing" in the calculation of certain anti-
dumping margins in its investigations of th ree products from Korea, namely SSPC, SSSS and
diamond sawblades. The measures at issue, as iden tified by Korea, are the final determinations,
amended final determinations, anti-dumping duty orders and am ended anti-dumping duty orders
imposed by the United States in relation to imports of the three products.
3

1 WT/DS402/1.
2 WT/DS402/3.
3 WT/DS402/3 and Korea's first written submission, para. 3.

2.2 The United States published a notice of initiati on of an anti-dumping investigation of SSPC
from Korea on 27 April 1998. On 31 March 1999, the USDOC published the final determination of
dumping in this investigation. Following a fina l determination of injury by the United States
International Trade Commission, the United States issued an anti-dumping duty order on imports of
SSPC from Korea on 21 May 1999. 4 An amended final determination of dumping was published by
the USDOC on 28 August 2001, in order to im plement the recommendations of a WTO dispute
settlement panel on issues unrelated to th e alleged use of the zeroing methodology. 5 Further,
amended anti-dumping duty orders were published in 2003 in response to an appeal against the injury
determination of the United States International Trade Commission.6
2.3 Korea contends that the USDOC's use of the "zeroing" methodology affected the
determination of the margin of dumping for the responding company, Korean exporter Pohang Iron &
Steel Co., Ltd., and that this affected the determination of the "all others" rate.7
2.4 In relation to the second product, SSSS from Ko rea, the United States published a notice of
initiation of an anti-dumping investigation on 13 July 1998. The final determination was published on
8 June 1999. An anti-dumping duty order on imports of SSSS from Korea was issued on
27 July 1999, following a final determination of injury by the United States International Trade
Commission.8 An amended final dete rmination of dumping was published by the USDOC on
28 August 2001, in order to implement the reco mmendations of a WTO dispute settlement panel on
issues unrelated to the alleged use of the zeroing methodology.9
2.5 Korea contends that the USDOC applied its "zeroing" methodology in determining the margin
of dumping for the responding Korean exporter, Pohang Iron & Steel Co., Ltd., and that this affected
the determination of the "all others" rate.
10

4 Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils from
the Republic of Korea, 64 Fed. Reg. 15444, Exhibit Kor-1-A; and Antidumping Duty Orders; Certain Stainless
Steel Plate in Coils from Belgium, Canada, Italy, the Republic of Korea, South Africa and Taiwan , 64 Fed.
Reg. 27756, Exhibit Kor-1-B.
5 Notice of Amendment of Final Determinations of Sales at Less Than Fair Value: Stainless Steel Plate
in Coils From the Republic of Korea ; and Stainless Steel Sheet and Strip in Coils From the Republic of Korea ,
66 Fed. Reg. 45279, Exhibit Kor-1-C.
6 Notice of Amended Antidumping Duty Orders ; Certain Stainless Steel Plate in Coils From Belgium,
Canada, Italy, the Republic of Korea, South Africa, and Taiwan , 68 Fed. Reg. 11520, Exhibit Kor-1-D; Notice
of Amended Antidumping Duty Orders; Certain Stainless Steel Plate in Coils From Belgium, Canada, Italy, the
Republic of Korea, South Africa, and Taiwan , 68 Fed. Reg. 16117, Exhibit Kor-1-E; and Notice of Correction
to the Amended Antidumping Duty Orders; Certain Stainless Steel Plate in Coils From Belgium, Canada, Italy,
the Republic of Korea, South Africa, and Taiwan , 68 Fed. Reg. 20114, Exhibit Kor-1-F. See Korea's first
written submission, footnote 5.
7 Korea's first written submission, para. 8. Korea ex plains that in the case of the SSPC investigation,
the "all others" rate was equal to the rate established for Pohang Iron & Steel Co., Ltd. It was then assigned to
the Korean exporters that were not separately investigated.
8 Notice of Final Determination of Sales at Less Than Fair Value : Stainless Steel Sheet and Strip in
Coils From the Republic of Korea , 64 Fed. Reg. 30664, Exhibit Kor-2-A; and Notice of Antidumping Duty
Order; Stainless Steel Sheet and Strip in Coils From United Kingdom, Taiwan and South Korea , 64 Fed.
Reg. 40555, Exhibit Kor-2-B.
9 Notice of Amendment of Final Determinations of Sales at Less Than Fair Value: Stainless Steel Plate
in Coils From the Republic of Korea; and Stainless Steel Sheet and Strip in Coils From the Republic of Korea ,
66 Fed. Reg. 45279, Exhibit Kor-2-C.
10 Korea's first written submission, para. 11. Korea explains that in the SSSS investigation, the "all
others" rate was equal to the rate established for Pohang Iron & Steel Co., Ltd. Although there were two other
companies investigated, one was assigned a dumping margin based on adverse facts available and the other was
assigned a zero margin because it was found not to have made sales at less than fair value. The "all others" rate
was assigned to Korean exporters that were not separately investigated.

2.6 The United States published a notice of initia tion of an anti-dumping investigation of
diamond sawblades from Korea on 21 June 2005. The final determination by the USDOC was
published on 22 May 2006. An anti-dumping duty order on imports of diamond sawblades was issued
on 4 November 2009. Further, an amended final dete rmination correcting certain ministerial errors in
the dumping calculation was published by the USDOC on 24 March 2010.
11
2.7 Korea alleges that the USDOC applied its "zeroing" methodology in determining the dumping
margins for the three investigated Korean expor ters, namely Ehwa Diamond Industrial Co., Ltd.,
Hyosung Diamond Industrial Co. and Shinhan Diamond I ndustrial Co., Ltd., and that this affected the
determination of the "all others" rate.12
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. KOREA
3.1 Korea requests that the Panel find that the Un ited States acted inconsistently with the
requirements of the first sentence of Article 2.4.2 of the Anti-Dumping Agreement. Korea contends
that the United States applied the methodology known as "zeroing" in calculating margins of dumping
in three specific anti-dumping duty investigations in volving Korean products. Korea argues that the
zeroing methodology used by USDOC is virtually identical to the methodology that the Appellate
Body, in EC – Bed Linen and also in US – Softwood Lumber V , found to be inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement.
13 Consequently, Korea claims that the final
determinations, amended final determinations, anti-dumping dut y orders and amended anti-dumping
duty orders issued by the United States in the three investigations at issue are inconsistent with the
first sentence of Article 2.4.2 of the Anti-Dumping Agreement.14
B. THE UNITED STATES
3.2 The United States does not contest the accuracy of Korea's description of the zeroing
methodology as it relates to the investigations at i ssue in this dispute, nor does it contest that the
evidence relied upon by Korea to subs tantiate its factual claims was generated by the Department of
Commerce.15 The United States recognizes that in US – Softwood Lumber V the Appellate Body
found that the use of zeroing with respect to the average-to-average comparison methodology in
investigations was inconsistent with the first sente nce of Article 2.4.2 when it interpreted the terms
"margins of dumping" and "all comparable export transactions", as used in the first sentence of
Article 2.4.2, in an integrated manner. Finally, the United States acknowledges that this reasoning is
equally applicable to the margins at issue in this dispute.
16

11 Notice of Final Determination of Sales at Less Than Fair Value and Final Determination of Critical
Circumstances: Diamond Sawblades and Parts Thereof from the Republic of Korea , 71 Fed. Reg. 29310,
Exhibit Kor-3-B; Diamond Sawblades and Parts Thereof from the People’s Republic of China and the Republic
of Korea: Antidumping Duty Orders, 74 Fed. Reg. 57145, Exhibit Kor-3-D; and Amended Final Determination
of Sales at Less Than Fair Value: Diamond Sawb lades and Parts Thereof from the Republic of Korea , 75 Fed.
Reg. 14126, Exhibit Kor-3-E.
12 Korea's first written submission, para. 14. Korea explains that in relation to the Diamond Sawblades
investigation, the "all others" rate was calculated as the weighted average of the responding companies' dumping
margins. This was then assigned to the Korean exporters that were not separately investigated.
13 Korea's first written submission, para. 18.
14 Korea's first written submission, para. 2.
15 United States' first written submission, paras. 5 and 9.
16 United States' first written submission, para. 10.

IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties, as set out in thei r written submissions provided to the Panel, are
attached to this Report in Annexes A, C and E (See List of Annexes, at pages ii and iii of this Report).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The arguments of the third parties, as set out in their submissions provided to the Panel, are
attached to this Report in Annexes B and D (See List of Annexes, at pages ii and iii of this Report).
VI. INTERIM REVIEW
6.1 On 29 November 2010, the Panel issued its Interim Report to the parties. On
10 December 2010, both parties submitted written requests for review of precise aspects of the
Interim Report. Neither party submitted comment s on the other party's request for review or
requested that the Panel hold an interim review me eting. In accordance with Article 15.3 of the DSU,
this section of the Report discusses the arguments made by the parties at the interim review stage.
A. REQUEST FOR REVIEW SUBMITTED BY KOREA
6.2 Korea requests a number of minor drafting changes to paragraph 7.6 of the Interim Report, so
that the paragraph more accurately reflects its ar guments. The Panel has made the changes requested
by Korea.
6.3 Korea requests a number of changes to correct in accuracies in the Panel's citations to Korea's
exhibits. Korea also requests a ch ange to correct a typographical erro r in an Annex. The Panel has
made the changes requested by Korea.
B. REQUEST FOR REVIEW SUBMITTED BY THE UNITED STATES
6.4 The United States requests a drafting change to the final sentence of paragraph 7.2 of the
Interim Report in order to ensure that the sentence is not taken out of context and read as prejudging
the Panel's ruling. The Panel acknowledges that th e sentence could be viewed as prejudging its ruling
and has made the proposed change.
6.5 The United States requests a number of modificati ons to the Interim Report so that it more
accurately reflects its submissions. In particular, the United States requests an amendment to
footnote 52 and to the first sentence of paragraph 7.8, the final sentence of paragraph 7.16 and the
second sentence of paragraph 7.30. The Panel is satis fied that the changes requested to footnote 52
and paragraphs 7.16 and 7.30 are c onsistent with the United States' submissions and the Panel has
amended them. The United States requests that the Panel amend the first sentence of paragraph 7.8 as
follows: "the United States submits that prior pane l and Appellate Body reports are not binding on
panels or the Appellate Body in other disputes ". However, in its written and oral submissions, the
United States does not refer to whether Appellate Bo dy reports are binding on the Appellate Body in
other disputes. Therefore, the Pa nel has amended the first sentence of paragraph 7.8 to the extent it
remains consistent with the United States' submissions in this dispute.
6.6 In four paragraphs of the Interim Report in which the Panel refers variously to the
inconsistency of the "zeroing" methodology with Ar ticle 2.4.2 of the Anti-Dumping Agreement, the
United States requests that the Panel refer to the first sentence of Article 2.4.2, rather than
Article 2.4.2 in general. The Panel notes that the change suggested by the United States is consistent
with the arguments and the findings in this disput e. Therefore, the Panel has made the requested
modification.

6.7 The United States proposes a change to the thir d sentence of paragraph 7.30, which is a
sentence summarizing one of Korea's submissions. In particular, the United States objects to the
statement that "Members" expect panels to follow Appellate Body conclusions. The United States
argues that neither Korea's submission nor the underlying quote from US – Oil Country Tubular
Goods Sunset Reviews states who it is that expects panels to follow Appellate Body conclusions. The
Panel accepts that the third sentence of paragraph 7. 30 may slightly misrepresent Korea's submission
and therefore the Panel has amended it.
6.8 The United States requests a change to the sec ond sentence of paragraph 7.31 to reflect the
fact that Korea's submission does not focus on adopt ed Appellate Body reports as creating legitimate
expectations, to the exclusion of panel reports. The United States also notes that the Panel in this
dispute relies upon a number of panel reports to support its reasoning. Similarly, the United States
requests that the first sentence of paragraph 7.34 of the Interim Report be amended to reflect the fact
that the Panel has considered panel as well as A ppellate Body reports in reaching its findings. The
Panel has amended the second sentence of paragr aph 7.31 in the manner suggested by the
United States in recognition of the fact that both panel and Appellate Body reports may create
legitimate expectations among Members. The Panel has also modified paragraph 7.34.
6.9 The United States requests that the final senten ce of paragraph 7.34 be amended as follows:
"This is because the USDOC did not calculate the dumping margins on the basis of the "product as a
whole" and did not take into account all comparable export transactions when calculating the dumping
margins at issue". The United States argues that the phrase "product as a whole" is not found in the
text of the covered agreement, but was derived from the Appellate Body's integrated interpretation of
"margins of dumping" and "all comparable export transactions". Therefore, the phrase "product as a
whole" has the same textual basis as "all comparable export transactions" and is redundant. The Panel
has rephrased the sentence as requested by the United States so that it reflects the terminology used in
Article 2.4.2 of the Anti-Dumping Agreement.
6.10 Finally, the United States proposes a number of typographical changes and a change to the
manner in which three of Korea's exhibits are cited. The Panel has made the changes requested by the
United States.
VII. FINDINGS
A. ARGUMENTS OF THE PARTIES
1. Korea
7.1 Korea claims that the USDOC's final determin ations, amended final determinations, anti-
dumping duty orders and amende d anti-dumping duty orders relating to the three anti-dumping
investigations at issue are inconsistent with the United States' obligations under the first sentence of
Article 2.4.2 of the Anti-Dumping Agreement. Th is is due to the USDOC's use of the "zeroing"
methodology in the calculation of certain dumping margins in those investigations.17
7.2 Specifically, with respect to the SSPC and SSSS investigations, Korea argues that the
USDOC applied its zeroing methodology in calculating margins for Pohang Iron & Steel Co., Ltd.
With respect to the investigation of diamond sawbl ades, Korea contends that the USDOC used its
zeroing methodology in calculating margins for the three investigated Korean exporters, namely Ehwa
Diamond Industrial Co., Ltd. ("Ehwa"), Hyosung Diamond Industrial Co. ("Hyosung"), and Shinhan
Diamond Industrial Co., Ltd. ("Shinhan").
18 Korea does not claim that the "all others" rates are

17 Korea's first written submission, para. 2.
18 Korea's first written submission, paras. 8, 11 and 14.

inconsistent with Article 2.4.2 of the Anti-Dumpi ng Agreement. Rather, Korea's only claim in this
dispute is "that the methodology used by the USDOC in the three investigations was not consistent
with Article 2.4.2 of the Anti-Dumping Agreement". 19 Whether a correction of that methodology
would also require modification of the "all others" ra te is an issue to be addressed by the USDOC in
its implementation of any adverse ruling by the Panel.20
7.3 Korea argues that, in calculating the dumping margins for the relevant respondents, the
USDOC:
 (i) identified different "models" (i.e., typ es of products based on the most relevant
product characteristics);

(ii) calculated weighted average prices fo r sales in the United States and weighted
average normal values for sales in the comp arison market on a model-specific basis,
for the entire period of investigation;
(iii) compared the weighted average normal va lue of each model to the weighted average
United States price for that same model;
(iv) calculated the dumping margin for an exporter by summing up the amount of
dumping for each model and then dividing it by the aggregated United States price
for all models; and in doing so
(v) set to zero all negative margins on indi vidual models prior to summing the total
amount of dumping for all models.
7.4 Korea submits that by applying this methodology, the USDOC calculated margins of
dumping in amounts that exceeded the actual extent of dumping (if any) by the investigated
companies and, consequently, that the United Stat es collected anti-dumping duties in excess of those
that would have been due had the zeroing methodology not been applied.
21
7.5 Korea argues that the zeroing methodology used by the USDOC is virtually identical to the
methodology that the Appellate Body, in EC – Bed Linen and also in US – Softwood Lumber V, found
to be inconsistent with Article 2.4.2 of the Anti-Dumping Agreement. 22 In particular, Korea refers to
the Appellate Body's finding in US – Softwood Lumber V that "'margins of dumping' can be found
only for the product under investigation as a whol e". While investigating authorities may be
permitted to compare normal values and export prices fo r sub-groups of a product, the results of those
comparisons reflect only intermediate calculations in the context of establishing margins of dumping,
and "[i]t is only on the basis of aggregating all such intermediate values that an investigating authority
can establish margins of dumping for the product u nder investigation as a whole". Consequently,
Korea argues that investigating authorities are not permitted to disregard some of the intermediate
results of model-specific comparisons, or to treat some of those intermediate results as being greater
or less than they actually are, and that the prac tice of zeroing, as employed by the USDOC, does not
comport with this requirement.23

19 Korea's second written submission, para. 3.
20 Korea's second written submission, para. 3.
21 Korea's first written submission, paras. 4 and 17.
22 Korea's first written submission, para. 18.
23 Korea's first written submission, pa ras. 19-22. As well as referring to the Appellate Body's decision
in US – Softwood Lumber V , Korea also notes that the same (or a similar) result was reached by panels in US –
Shrimp (Ecuador) ; US – Shrimp (Thailand) ; and US – Anti-Dumping Measures on PET Bags , and by the
Appellate Body in US – Zeroing (EC); US – Stainless Steel (Mexico); and US – Zeroing (Japan).

7.6 Korea understands that while "there is a consis tent line of Appellate Body Reports" finding
that zeroing in the context of the weighted aver age-to-weighted average methodology in original
investigations is inconsistent with the first sente nce of Article 2.4.2 of the Anti-Dumping Agreement,
it is also clear that the Panel is not bound by the reasoning in prior Appellate Body and panel reports.
However, adopted reports create legitimate expectations among WTO Members, and "following the
Appellate Body's conclusions in earlier disputes is not only appropriate, but is what would be
expected from panels, especially where the issues are the same". 24 Korea argues that the apparent
disagreement between the United States and the Eu ropean Union regarding the extent to which
Appellate Body reports are binding on panels is not relevant to the present dispute. This is because, in
any event, the text, context, object and purpose of Article 2.4.2 confirm that the practice of zeroing, as
employed by the USDOC in the three investigations the subject of this dispute, is inconsistent with the
requirements of that provision.25
2. United States
7.7 The United States does not contest the accuracy of Korea's description of the zeroing
methodology as it relates to the investigations at issu e in this dispute. Further, the United States does
not contest that the documentation submitted by Kor ea, including the computer programmes used to
calculate the dumping margins, was generated by the USDOC during the conduct of the investigations
at issue. Finally, the United States recognizes that in US – Softwood Lumber V , the Appellate Body
found that the use of "zeroing" with respect to the average-to-average comparison methodology in
investigations was inconsistent with the first sen tence of Article 2.4.2, by interpreting the terms
"margins of dumping" and "all comparable export transactions" as used in the first sentence of
Article 2.4.2 in an integrated manner. The Unite d States acknowledges that this reasoning is equally
applicable to the margins at issue in this dispute.26
7.8 However, and to the extent Korea or the European Union suggest that the Panel should simply
base its findings upon a "consistent line of Appellate Body Reports", the United States submits that
prior panel and Appellate Body reports are not bindi ng on panels in other disputes. The rights and
obligations of Members flow from the text of the covered agreements. 27 Therefore, the Panel is not
bound to follow the reasoning of any prior report. 28 According to the United States, the Panel is
charged with making its own objective assessment of the matter before it, including an objective
assessment of the facts and the a pplicability of and conformity w ith the covered agreements as
required by Article 11 of the DSU.29
B. ARGUMENTS OF THE THIRD PARTIES
1. China
7.9 According to China, it is well-settled by the Appella te Body and by panels that the practice of
zeroing as employed by the USDOC is not consistent with the first sentence of Article 2.4.2 of the
Anti-Dumping Agreement. China requests that the United States provide a "package solution" to the

24 Korea's first written submission, para. 24 (citing Panel Report, US – Anti-Dumping Measures on PET
Bags, para. 7.24; Appellate Body Reports, Japan – Alcoholic Beverages II, page 13; US – Shrimp (Article 21.5
– Malaysia), paras. 108-109; US – Softwood Lumber V , paras. 109-112; and US – Anti-Dumping Measures on
25 Korea's oral statement at the substantive meeting of the Panel, paras. 15-17.
26 United States' first written submission, paras. 5 and 9-10 (citing Appellate Body Report, US –
Softwood Lumber V, paras. 62-117).
27 United States' first written submission, para. 11.
28 United States' first written submission, para. 11 (citing Appellate Body Report, US – Softwood
Lumber V, para. 111).
29 United States' first written submission, para. 11.

zeroing issue. In particular, China requests that the United States re-conduct all investigations in
which the zeroing methodology has been used.30
2. European Union
7.10 The European Union considers that there is no dispute between the parties and that under
these circumstances the report of the Panel could be limited to making a finding that the parties agree
that there is no dispute. Furthermore, noting that the United States acknowledges that its measures are
inconsistent with the Anti-Dumping Agreement, th e Panel could suggest that the United States bring
the measures at issue into conformity "immediately". The European Union considers that in order to
ensure a prompt settlement of the dispute, as well as to make "the procedures more efficient" in
accordance with Article 12.8 of the DSU, the Pane l could adapt its working procedures and stop its
proceedings upon receiving the views of the third parties.
31 Finally, the European Union addresses
the United States' position that the rights and obligations of WTO Members flow, not from panel or
Appellate Body reports, but from the text of the co vered agreements. The European Union relies on
the Appellate Body report in US – Stainless Steel (Mexico) to argue that panels should follow the
rulings of the Appellate Body where it has previously interpreted the same legal questions. Thus, the
European Union considers that to the extent the Panel wants to make an independent finding about the
interpretation of the relevant la w and its application to the facts of this case, it should follow
Appellate Body reports on the same legal issue and find that the USDOC's use of zeroing is
inconsistent with Article 2.4.2 of the Anti-Dumping Agreement.
32
3. Japan
7.11 Japan supports Korea's claim. It recognizes that the Appellate Body found in US – Softwood
Lumber V that the use of "zeroing" in the context of the weighted average-to-weighted average
methodology in original investigations is incons istent with Article 2.4.2 of the Anti-Dumping
Agreement. Furthermore, Japan recalls that in US – Shrimp (Ecuador) and US – Anti-Dumping
Measures on PET Bags , where the United States also acknowledged that the reasoning of the
Appellate Body in US – Softwood Lumber V was applicable to the disputes, the respective panels
concluded that the United States had acted inconsis tently with Article 2.4.2 of the Anti-Dumping
Agreement.33
C. ANALYSIS BY THE PANEL
7.12 Korea claims that the United States acted inconsis tently with Article 2.4.2, first sentence, of
the Anti-Dumping Agreement by using "zeroing" in calculating certain dumping margins in three
specific anti-dumping duty investigations involving Ko rean products. According to Korea, the final
determinations, amended final determinations, anti-dumping dut y orders and amended anti-dumping
duty orders at issue are inconsistent with Article 2.4.2. 34 The United States does not contest Korea's
claims. In particular, the United States does not contest the factual assertions made by Korea
regarding the United States' actions, nor the legal re levance of the Appellate Body reports cited by

30 China's oral statement at the substantive meeting of the Panel.
31 European Union's third party submission, paras. 2-5.
32 European Union's third party submission, paras. 6-9 (citing Appellate Body Report, US – Stainless
Steel (Mexico), paras. 157-162).
33 Japan's third party submission, paras. 2-4 (citing Appellate Body Report, US – Softwood Lumber V ,
paras. 62-117).
34 Korea's first written submission, para. 2. Korea confirms that its challenge relates only to the
application of the zeroing methodology in the anti-dumping investigations for the three products at issue, and
not to the calculation of margins of dumping in any administrative reviews (Korea's response to question 1,
para. 2).

Korea as applicable to those facts. 35 Further, while the United States argues that the Panel need not
follow past Appellate Body reports, it does not adva nce any legal arguments to contest the Appellate
Body's interpretation of Article 2.4.2 in those reports. 36 Consequently, the first step of our analysis is
to determine the role of the panel in circumstances where the claim is uncontested.
(a) The role of the Panel
7.13 Although the United States does not contest Kore a's claim, the United States submits that,
under Article 11 of the DSU, the Panel is required to make its own objective assessment of the matter
before it, including its own objective assessment of the facts, and the applicability of and conformity
with the relevant covered agreements. 37 In its third party submission, the European Union suggests
that the Panel could limit its finding to a conclu sion that the parties agree there is no dispute,
accompanied by a recommendation that the measures be brought into conformity.38
7.14 While the United States does not contest Korea's claim, in our view the parties do not "agree
that there is no dispute", as suggested by the Europ ean Union, nor have the parties characterized their
shared views as a "mutually agreed solution". Therefore, although when a mutually agreed solution is
reached, Article 12.7 of the DSU provides that a panel's report shall be "confined to a brief description
of the case and to reporting that a solution has been reached", in the Panel's view this does not apply
in the circumstances of this dispute.
7.15 Rather, Article 11 of the DSU, which govern s the "functions of panels", sets out our
responsibilities. In particular, Article 11 provides:
"The function of panels is to assist th e DSB in discharging its responsibilities under
this Understanding and the cove red agreements. Accordingly, a panel should make
an objective assessment of the matter before it, including an objective assessment of
the facts of the case and the applicability of and conformity with the relevant covered
agreements, and make such other findings as will assist the DSB in making the
recommendations or in giving the rulings pr ovided for in the covered agreements.
Panels should consult regularly with the parties to the dispute and give them adequate
opportunity to develop a mutually satisfactory solution."
39
7.16 Therefore, notwithstanding that the United States did not contest Korea's claims, we consider
that we are still required to reach our own conclu sion on the matter before us, in accordance with
Article 11 of the DSU. In particular, we are required to "make an objective assessment of the matter
before [us] including an objective assessment of the facts of the case and the applicability of and
conformity with the relevant covered agreements".
7.17 We note that the situation before us is ve ry similar to that before the panels in US – Shrimp
(Ecuador), US – Shrimp (Thailand) and US – Anti-Dumping Measures on PET Bags , in that the
complainant alleges inconsistency with Article 2. 4.2 of the Anti-Dumping Agreement due to the use
of zeroing in the application of the "weighted average-to-weighted average methodology" in
calculating margins of dumping in original investig ations and the respondent, the United States, does
not contest the claim. We agree with the approach adopted by those panels and are guided by it.

35 United States' first written submission, paras. 5, 9 and 10.
36 United States' first written submission, para. 11.
37 United States' first written submission, para. 11.
38 European Union's third party submission, para. 3.
39 Emphasis added. We note that Article 17.6 of the Anti-Dumping Agreement – setting forth the
special standard of review applicable to disputes under the Anti-Dumping Agreement – also applies to this
dispute. Given that the United States does not contest Korea's claims, it is not necessary for us give detailed
consideration to the application of this provision.

7.18 In particular, having determined the role of th e panel as part (a) of our analysis, to reach a
conclusion in this dispute we consider it necessar y to (b) determine the burden of proof to be
discharged by the complainant; (c) evaluate wh ether the complainant has established that the
United States used "zeroing" in the measures at is sue; (d) consider whether the complainant has
established that the "zeroing" methodology used by the United States is the same as the methodology
reviewed in a "consistent line of Appellate Body Reports", including US – Softwood Lumber V ; and
(e) find whether or not the complainant has established that the United States acted inconsistently with
Article 2.4.2 of the Anti-Dumping Agreement.
(b) Burden of Proof
7.19 We note that in US – Shrimp (Ecuador), the panel made the following findings regarding
burden of proof and that this reas oning was adopted by the panels in US – Shrimp (Thailand) and US
– Anti-Dumping Measures on PET Bags:
"Because of its singularity, this dispute raises in a particularly acute fashion the issue
of the burden of proof.
The burden of proof lies, in WTO dispute se ttlement proceedings, with the party that
asserts the affirmative of a particular claim or defence. Ecuador, as the complaining
party, must therefore make a prima facie case of violation of the relevant provisions
of the relevant WTO agreements. The burden would then shift to the responding party
(here the United States), to adduce evidence to rebut the presumption that Ecuador's
assertions are true. In this context, we recall that 'a prima facie case is one which, in
the absence of effective refutation by th e defending party, requires a panel, as a
matter of law, to rule in favour of the complaining party presenting the prima facie
case'.
In our view, the issue of the burden of proof is of particular importance in this case.
This is because Ecuador has made factual and legal claims before the Panel which the
United States does not contest. Yet, the fact that the United States does not contest
Ecuador's claims is not a sufficient basis fo r us to summarily conclude that Ecuador's
claims are well-founded. Rather, we can onl y rule in favour of Ecuador if we are
satisfied that Ecuador has made a prima facie case. We take note in this regard that
the Appellate Body has cautioned panels against ruling on a claim before the party
bearing the burden of proof has made a prima facie case. In EC – Hormones , the
Appellate Body ruled that the Panel erred in law when it absolv ed the complaining
parties from the necessity of establishing a prima facie case and shifted the burden of
proof to the responding party:
'In accordance with our ruling in United States – Shirts and Blouses ,
the Panel should have begun the analysis of each legal provision by
examining whether the United States and Canada had presented
evidence and legal arguments sufficient to demonstrate that the EC
measures were inconsistent with the obligations assumed by the
European Communities under each Article of the SPS Agreement
addressed by the Panel .... Only after such a prima facie
determination had been made by the Panel may the onus be shifted to
the European Communities to bring forward evidence and arguments
to disprove the complaining party's claim.'

More recently, in US – Gambling , the Appellate Body indicated that "[a] panel errs
when it rules on a claim for which the co mplaining party has failed to make a prima
facie case", and noted that:
'A prima facie case must be based on "evidence and legal argument"
put forward by the complaining party in relation to each of the
elements of the claim. A complaining party may not simply submit
evidence and expect the panel to divine from it a claim of WTO
inconsistency. Nor may a complaining party simply allege facts
without relating them to its legal arguments.
In the context of the sufficiency of panel requests under Article 6.2 of
the DSU, the Appellate Body has found that a panel request:
... must plainly connect the challenged measure(s) with the
provision(s) of the covered agre ements claimed to have been
infringed, so that the respondent party is aware of the basis
for the alleged nullification or impairment of the complaining
party's benefits.
Given that such a requirement applies to panel requests at the outset
of a panel proceeding, we are of the view that a prima facie case –
made in the course of submissions to the panel – demands no less of
the complaining party. The evidence and arguments underlying a
prima facie case, therefore, must be sufficient to identify the
challenged measure and its basic im port, identify the relevant WTO
provision and obligation contained therein, and explain the basis for
the claimed inconsistency of the measure with that provision.'
Thus, notwithstanding the fact that the United States is not seeking to refute
Ecuador's claims, we must satisfy ourselves that Ecuador has established a prima
facie case of violation, and notably that it has presented 'evidence and argument ...
sufficient to identify the challenged measure and its basic import, identify the relevant
WTO provision and obligation contained th erein, and explain the basis for the
claimed inconsistency of the measure with that provision'."
40 (footnotes omitted)
7.20 We agree with the reasoning of the panel in US – Shrimp (Ecuador) and adopt it as our own.
Consequently, although the United States does not refute any elements of Korea's claims, we must be
satisfied that Korea has established a prima facie case of violation of Article 2.4.2 of the Anti-
Dumping Agreement if we are to make the findings that Korea seeks.
(c) Has Korea established that the USDOC "zeroed" in the measures at issue?
7.21 In support of its assertion that the USDOC "zer oed" in relation to each of the measures at
issue, Korea provides copies of the computer pr ogrammes used by the USDOC for its amended final
determination in the SSPC investigation, the ame nded final determination in the SSSS investigation
and for the final and amended final determinations in the Diamond Sawblades investigation. 41

40 Panel Report, US – Shrimp (Ecuador), paras. 7.7-7.11. See also, Panel Reports, US – Shrimp
(Thailand), paras. 7.20-7.21 and US – Anti-Dumping Measures on PET Bags, paras. 7.6-7.7.
41 Model Match Programme , SSPC investigation, Exhibit Kor-1-G; Margin Calculation Programme ,
SSPC investigation, Exhibit Kor-1-H; Margin Calculation Programme Log , at lines 16083-16087, SSPC
investigation, Exhibit Kor-1-I; Model Match Programme , SSSS investigation, Exhibit Kor-2-D; Margin
Calculation Programme, SSSS investigation, Exhibit Kor-2-E; Margin Calculation Programme Log , at lines

Further, in relation to the latter investigati on, Korea submits the USDOC's Issues and Decision
Memorandum for the final determination. 42 Each of the computer programmes includes the line
"WHERE EMARGIN GT 0", indicating that the calculation of the total amount of dumping includes
only those sales where the dumping margin ("EMARGIN") is greater than zero ("GT 0"). Further, the
computer programmes provided for the Diamond Sawblades investigation include the line "IF
EMARGIN LE 0 THEN EMARGIN = 0", indicating that margins on models less than zero should be
set to zero. Finally the Issues and Decision Memorandum in relation to the Diamond Sawblades
investigation provides that "the Department will con tinue in this investigation to deny offsets to
dumping based on export transactions that exceed [normal value]".
43
7.22 On the basis of this evidence, and in the li ght of the fact that the United States does not
contest that the USDOC used the "zeroing" methodol ogy in the manner described by Korea, in the
Panel's view Korea has established that the USDOC "zeroed" in the measures at issue.
(d) Has Korea established that the methodology used by the USDOC is the same in all legally
relevant respects as the methodology reviewed by the Appellate Body in US – Softwood
Lumber V?
7.23 Korea contends that the "zeroing" methodology at issue in this dispute is "virtually identical"
to the methodology that was held to be incons istent with Article 2.4.2 of the Anti-Dumping
Agreement in US – Softwood Lumber V . It is necessary for us to consid er whether this is indeed the
case and if so, to consider the implications of the identity between the methodologies.
7.24 In US – Softwood Lumber V , Canada's challenge was limited to an "as applied" challenge to
the consistency of "zeroing" when used in cal culating 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-weigh ted average" methodology) in the context of an
original investigation under Article 2.4.2 of the Anti-Dumping Agreement.44
7.25 The Appellate Body in US – Softwood Lumber V , described "zeroing" as applied by the
USDOC in that investigation as follows:
"First, USDOC divided the product under i nvestigation (that is, softwood lumber
from Canada) into sub-groups of identical, or broadly similar, product types. Within
each sub-group, USDOC made certain adjust ments to ensure price comparability of
the transactions and, thereafter, calculate d a weighted average normal value and a
weighted average export price per unit of the product type. When the weighted

13847-13851, SSSS investigation, Exhibit Kor-2-F; Ehwa Margin Calculation Programme Log, at line 2611 et
seq., Exhibit Kor-3-G; Hyosung Margin Calculation Programme Log , at line 5119 et seq. , Exhibit Kor-3-I;
Shinhan Margin Calculation Programme Log, at line 2619 et seq., Exhibit Kor-3-K.
42 USDOC's unpublished Issues and Decision Memorandum for the Final Determination, Antidumping
Duty Investigation of Diamond Sawblades and Parts Thereof from the Republic of Korea , 15 May 2006,
Exhibit Kor-3-C.
43 USDOC's unpublished Issues and Decision Memorandum for the Final Determination, Antidumping
Duty Investigation of Diamond Sawblades and Parts Thereof from the Republic of Korea , 15 May 2006,
Exhibit Kor-3-C, p. 42. For completeness, we note that modification to the United States' methodology of
calculating the weighted average dumping margin in investigations using the average-to-average comparison
methodology, which took effect on 22 February 2007, did not affect the anti-dumping duty order or the amended
final determination in the Diamond Sawblades investigatio n. The modified methodology applies only to future
investigations and investigations pending before the US DOC as of 22 February 2007. In the case of the
Diamond Sawblades investigation, the final determinat ion was completed in 2006 and the amended final
determination, published on 24 March 2010, was limited to correcting ministerial errors (United States' response
44 Appellate Body Report, US – Softwood Lumber V, para. 63.

average normal value per unit exceeded the weighted average export price per unit for
a sub-group, the difference was regarded as the "dumping margin" for that
comparison. When the weighted average normal value per unit was equal to or less
than the weighted average export price per unit for a sub-group, USDOC took the
view that there was no "dumping margin" for that comparison. USDOC aggregated
the results of those sub-group comparisons in which the weighted average normal
value exceeded the weighted average export price – those where the USDOC
considered there was a "dumping margin" – after multiplying the difference per unit
by the volume of export transactions in that sub-group. The results for the sub-groups
in which the weighted average normal value was equal to or less than the weighted
average export price were treated as zero for purposes of this aggregation, because
there was, according to USDOC, no "dumping margin" for those sub-groups. Finally,
USDOC divided the result of this aggregati on by the value of all export transactions
of the product under investigation ( including the value of export transactions in the
sub-groups that were not included in the aggregation ). In this way, USDOC obtained
an "overall margin of dumping", for each exporter or producer, for the product under
investigation (that is, softwood lumber from Canada).
45

Thus, as we understand it, by zeroing, the i nvestigating authority treats as zero the
difference between the weighted average normal value and the weighted average
export price in the case of those sub-groups where the weighted average normal value
is less than the weighted average export pri ce. Zeroing occurs only at the stage of
aggregation of the results of the sub-groups in order to establish an overall margin of
dumping for the product under investigation as a whole."46
7.26 In Attachment 1 to its first written submission, Korea provides references to its exhibits to
demonstrate that for each investigation USDOC (i ) identified different "models" (i.e., types of
products based on the most relevant product characteristics) 47; (ii) calculated weighted average prices
for sales in the United States and weighted average normal values for sales in the comparison market
on a model-specific basis, for the entire period of investigation48; (iii) compared the weighted average

45 Appellate Body Report, US – Softwood Lumber V, para. 64 (emphasis original; footnote omitted).
46 Appellate Body Report, US – Softwood Lumber V, para. 65.
47 With respect to the SSPC and the SSSS investiga tions, Korea refers to the sections of the USDOC
computer programmes that indicate that "U.S: Models" and "Home Market Models" were identified ( Model
Match Programmes, SSPC and SSSS investigations, Exhibits Kor-1-G a nd Kor-2-D). In relation to all three
investigations, Korea also refers to the relevant final determination or preliminary determination, which state
that USDOC considered all products produced by the respondent(s), covered by the description in the Scope of
the Investigation section and sold in the home market during the period of investigation, to be foreign like
products for the purpose of determining appropriate prod uct comparisons to U.S. sale s. Where there were no
sales of identical merchandise in the home market to compare to United States sales, USDOC compared
United States sales to the next most similar foreign like product on the basis of a defined set of criteria (64 Fed.
Reg. 15444-15445, Exhibit Kor-1-A; 64 Fed. Reg. 30664, 30667, Exhibit Kor-2-A; and 70 Fed. Reg. 77135,
77139, Exhibit Kor-3-A).
48 Korea refers to the final or preliminary determ inations for each investig ation, which indicate in
varying terms that the United States calculated weighted av erage export prices or constructed export prices for
comparison to weighted average normal values (64 Fed. Reg. 15444-15445, Exhibit Kor-1-A; 64 Fed
Reg. 30664, 30667, Exhibit Kor-2-A; and 70 Fed. Reg. 77135, 77139, Exhibit Kor-3-A). Korea also provides
references to the relevant lines of the computer programmes (Exhibits Kor-1-G at Part 6; Kor-1-H at Part 1;
Kor-1-I at lines 15705-15711; Kor-2-D at Part 6; Kor-2-E at Part 2; Kor-2-F at lines 13467-13473; Kor-3-F at
Part 8, lines 2415-2421; Kor-3-G at Part 4-I, line 2387 et seq.; Kor-3-H at Part 8, lines 2362-2369; Kor-3-I at
Part 4-I, line 4895 et seq.; Kor-3-J at Part 8, lines 2443-2450; and Kor-3-K at Part 4-I, line 2395 et seq.).

normal value of each model to the weighted av erage United States price for that same model 49; (iv)
calculated the dumping margin for an exporter by summing up the amount of dumping for each model
and then dividing it by the aggregat ed United States price for all models
50; and in doing so (v) set to
zero all negative margins on individual models prior to summing the total amount of dumping for all
models.51
7.27 We have examined the preliminary determin ations, final determin ations, amended final
determinations, computer programmes and Issu es and Decision Memorandum cited by Korea in
Attachment 1 to its first written submission. 52 On the basis of this evid ence, we conclude that Korea
has made a prima facie case that the methodology used by the USDOC in calculating the margins of
dumping in the three anti-dumping investigations at issue, was the same in all legally relevant respects
as the methodology found by the Appellate Body in US – Softwood Lumber V to be inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement. This conclusion is supported by the fact that the
United States acknowledges that the reasoning used by the Appellate Body in US – Softwood
Lumber V is "equally applicable" to the margins at issue in this dispute.53
(e) Has Korea established that the methodology ap plied by the USDOC is inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement?
7.28 We turn now to the legal analysis of Korea' s claim, i.e., whether the zeroing methodology it
describes, as applied to the measures at issue, is inconsistent with Article 2.4.2 of the Anti-Dumping
Agreement. Article 2.4.2 provides:
"Article 2

Determination of Dumping

2.4.2 Subject to the provisions governing fair comparison in paragraph 4, the
existence of margins of dumping during the investigation phase shall normally be
established on the basis of a comparison of a weighted average normal value with a
weighted average of prices of all comparable export transactions or by a comparison

49 Korea cites either the final determination, amende d final determination or preliminary determination
for each investigation, whic h indicate in varying terms that weighted average expor t prices or constructed
export prices were compared to wei ghted average normal values in orde r to determine whether sales of the
product at issue from Korea to the United States were made at less than fair value (64 Fed. Reg.15444-15445,
Exhibit Kor-1-A; 66 Fed. Reg. 45279, 45283, Exhibit Kor-1-C; 64 Fed. Reg. 30664, 30667, Exhibit Kor-2-A;
66 Fed. Reg. 45279, 45283, Exhibit Kor-2-C; 70 Fed. Reg. 77135, 77139, Exhibit Kor-3-A). Further, Korea
provides references to the relevant lin es of the computer programmes (Exhib its Kor-1-H at Part 4; Kor-1-I at
line 16001; Kor-2-E at Part 6; Kor-2-F at line 13765; Kor-3-G at Part 5 line 2502 and Part 6 line 2567 et seq.;
Kor-3-I at Part 5, line 5010 et seq. and Part 6, line 5075 et seq.; Kor-3-K at Part 5, line 2510 et seq. and Part 6,
line 2575 et seq.).
50 Korea cites the lines from the relevant Margin Calculation Programmes and Margin Calculation
Programme Logs which provide "WTAVGPCT = (TOTPUDD/TOTVAL)*100" (where TOTPUDD refers to
total potential duties due, Korea's first written submission, fo otnote 8). See Exhibits Kor-1-H at Part 4, Kor-1-I
at line 16097, Kor-2-E at Part 6, Kor-2-F at line 13861, Kor-3-G at Part 8, line 2611 et seq., Kor-3-I at Part 8,
line 5119 et seq. and Kor-3-K at Part 8 line 2619 et seq.
51 See paras. 7.21-7.22 of this Report for a description of the evidence provided by Korea to
demonstrate that the USDOC set to zero all negative dumping margins on individual models.
52 Although some of the evidence relating to the Diamond Sawblades investigation pertains to the
USDOC's preliminary determination, the United States did not contest Korea's description of the zeroing
methodology as it relates to the investigations at issue in this dispute.
53 United States' first written submission, para. 10.

of normal value and export prices on a transaction-to-transaction basis. A normal
value established on a weighted average basis may be compared to prices of
individual export transactions if the author ities find a pattern of export prices which
differ significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weighted av erage-to-weighted average or transaction-to-
transaction comparison."
7.29 Korea relies upon the Appellate Body report in US – Softwood Lumber V to argue that the
United States acted inconsistently with the firs t sentence of Article 2.4.2 of the Anti-Dumping
Agreement. In particular, Korea relies on the Ap pellate Body's finding that, under the weighted
average-to-weighted average methodology provided for under the first sentence of Article 2.4.2,
"dumping ... margins must be, and can only be, established for the product under investigation as a
whole".
54 Therefore, model-specific results are only inte rmediate calculations and "[i]t is only on the
basis of aggregating all such intermediate values th at an investigating authority can establish margins
of dumping for the product under investigation as a whol e". A proper aggregation of the intermediate
results of model-specific comparisons must reflect the result of all such comparisons.55
7.30 In relation to the reliance by Kor ea on the Appellate Body's report in US – Softwood
Lumber V, both the United States and Korea agree that the Panel is not bound by the reasoning in
prior Appellate Body reports. However, the Un ited States recognizes that prior adopted panel and
Appellate Body reports may be taken into account by a panel. 56 According to Korea, adopted reports
create legitimate expectations among WTO Member s and that, where the issues are the same,
following Appellate Body conclusions is what would be expected from panels. 57 In contrast, in its
third party submission, the European Union argues th at the "Panel should follow the rulings of the
Appellate Body". The European Union supports this position by referring to Appellate Body
statements in US – Stainless Steel (Mexico), including that "absent cogent reasons, an adjudicatory
body will resolve the same legal question in the same way in a subsequent case".58
7.31 In our view, there is not a system of preceden t within the WTO dispute settlement system and
panels are not bound by Appellate Body reasoning. However, we agree wi th Korea that adopted
reports create legitimate e xpectations among WTO Members 59 and that "following the Appellate
Body's conclusions in earlier disputes is not only appropriate, but is what would be expected from
panels, especially where the issues are the same".60
7.32 In this light, we note that the panel in US – Shrimp (Ecuador) explained its understanding of
the Appellate Body's reasoning in US – Softwood Lumber V as follows:
"The Appellate Body began its analysis with the text of Article 2.4.2 and noted that
the question before it was the proper interpretation of the terms 'all comparable export
transactions' and 'margins of dumping' in Article 2.4.2. In examining the arguments of
the parties with respect to these phrases, the Appellate Body concluded that the
parties' disagreement centered on whether a Member could take into account 'all'

54 Korea's first written submission, para. 19 (quoting Appellate Body Report, US – Softwood Lumber V,
para. 96).
55 Korea's first written submission paras. 20-21 (quoting Appellate Body Report, US – Softwood
Lumber V, paras. 97-98).
56 United States' first written submission, para. 11.
57 Korea's first written submission, para. 24.
58 European Union's third party submission, paras. 6-9.
59 See Appellate Body Reports, Japan – Alcoholic Beverages II , p. 14; US – Shrimp (Article 21.5 –
Malaysia), paras. 108-109; and US – Softwood Lumber V, paras. 109-112.
60 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 188.

comparable export transactions only at the sub-group level, or whether such
transactions also had to be taken into account when the results of the sub-group
comparisons are aggregated. To examine th at issue, the Appellate Body noted the
definition of dumping in Article 2.1 of th e Anti-Dumping Agreement. The Appellate
Body found that 'it [was] clear from the texts of [Article VI:1 of the GATT 1994 and
Article 2.1 of the Anti-Dumping Agreement] that dumping is defined in relation to a
product as a whole as defined by the inves tigating authority'. The Appellate Body
further considered that the definition of 'd umping' contained in Article 2.1 applies to
the entire Agreement, including Article 2.4.2, and that '[d]umping', within the
meaning of the Anti-Dumping Agreement, can therefore be found to exist only for the
product under investigation as a whole, and cannot be found to exist only for a type,
model, or category of that product.' Next, the Appellate Body relied on its Report in
EC - Bed Linen , in which it stated that '[w]hatever the method used to calculate the
margins of dumping ... these margins must be, and can only be, established for the
product under investigation as a whole.' Thus, the Appellate Body noted that '[a]s
with dumping, 'margins of dumping' can be found only for the product under
investigation as a whole, and cannot be found to exist for a product type, model, or
category of that product.' The Appellate Body therefore rejected the United States'
arguments in that case that Article 2.4.2 does not apply to the aggregation of the
results of multiple comparisons at the sub- group level; for the Appellate Body, while
an investigating authority may undertake mu ltiple averaging to establish margins of
dumping for a product under investigation, the results of the multiple comparisons at
the sub-group levels are not margins of dum ping within the meaning of Article 2.4.2;
they merely reflect intermediate calculations made by an investigating authority in the
context of establishing margins of dumping fo r the product under investigation. It is
only on the basis of aggregating all such in termediate values that an investigating
authority can establish margins of dumping for the product under investigation as a
whole. On this basis, the Appellate Body held that zeroing, as applied by the USDOC
in US – Softwood Lumber V:
'mean[t], in effect , that at least in the case of some export
transactions, the export prices are treated as if they were less than
what they actually are. Zeroing, therefore, does not take into account
the entirety of the prices of some export transactions, namely, the
prices of export transactions in those sub-groups in which the
weighted average normal value is less than the weighted average
export price. Zeroing thus inflates the margin of dumping for the
product as a whole.'
The Appellate Body on this basis conclude d that the treatment of comparisons for
which the weighted average normal value is less than the weighted average export
price as 'non-dumped' comparisons was not in accordance with the requirements of
Article 2.4.2 of the Anti-Dumping Agreement. As a result, the Appellate Body
upheld the Panel's finding that the United States had acted inconsistently with
Article 2.4.2 of the Anti-Dumping Agreement in determining the existence of
margins of dumping on the basis of a methodology incorporating the practice of
zeroing."
61
7.33 We note that the Appellate Body's finding in US – Softwood Lumber V regarding "zeroing" in
the context of the weighted average-to-weighted av erage methodology in original investigations, is
consistent with its finding in EC – Bed Linen . In fact, panels consideri ng the issue have found that

61 Panel Report, US – Shrimp (Ecuador), paras. 7.38-7.39 (footnotes omitted).

"there is now a consistent line of Appellate Body Reports" holding that the use of "zeroing" as
described by Korea in this dispute is inconsis tent with the first sentence of Article 2.4.2. 62 Further,
three successive panels have reached the same conclusions as the Appellate Body on this issue.63
7.34 We have carefully considered the Appellate Body's reasoning in US – Softwood Lumber V
and taken into consideration pane l reports and the "consistent line of Appellate Body reports" finding
that zeroing in the context of the weighted aver age-to-weighted average methodology in original
investigations is inconsistent with Article 2.4.2, fi rst sentence. We recall our finding that the zeroing
methodology at issue in this dispute is identical to that at issue in US – Softwood Lumber V and that
the legal issues raised in Korea's cl aim are also identical in all mate rial respects to those addressed by
the Appellate Body in US – Softwood Lumber V . In the light of this, and the fact that the respondent
has failed to advance any legal ar guments to contradict the reasoning in the line of cases cited by
Korea, we are satisfied that Korea has established a prima facie case that the use of zeroing by the
USDOC in the calculation of the margins of dumping at issue is inconsistent with the United States'
obligations under the first sentence of Article 2.4.2 of the Anti-Dumping Agreement. This is because
the USDOC did not take into account all compar able export transactions when calculating the
dumping margins at issue.
7.35 Given our finding that Korea has made a prima facie case of violation in respect of the
measures at issue, and in the absence of arguments of the United States to the contrary, we conclude
that the United States has acted inconsistently with its obligations under the first sentence of
Article 2.4.2 of the Anti-Dumping Agreement by using the zeroing methodology in the manner
described above.
VIII. CONCLUSIONS AND RECOMMENDATION
8.1 In the light of the above findings, we conclude that the United States acted inconsistently with
the first sentence of Article 2.4.2 of the Anti-Dumping Agreement by using the zeroing methodology
in calculating certain margins of dumping in the three investigations involving Korean products.
Consequently, the final determina tions, amended final determinati ons, anti-dumping duty orders and
amended anti-dumping duty orders at issue are inconsistent with Article 2.4.2, first sentence.
8.2 Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment of benefits under that ag reement. Accordingly, we conclude that, to the
extent the United States has acted inconsistently w ith the provisions of the Anti-Dumping Agreement,
it has nullified or impaired benefits accruing to Korea under that Agreement. We therefore
recommend that the DSB request the United States to bring its measures into conformity with its
obligations under the Anti-Dumping Agreement.

Anti-Dumping Measures on PET Bags, para. 7.24.
63 See Panel Reports, US – Shrimp (Ecuador); US – Shrimp (Thailand); and US – Anti-Dumping
Measures on PET Bags.