WT/DS296/R
Page 109
Organization
WT/DS296/R
21 February 2005
(05-0600)
UNITED STATES – COUNTERVAILING DUTY INVESTIGATION ON DYNAMIC RANDOM ACCESS MEMORY SEMICONDUCTORS (DRAMS) FROM KOREA (DS 296)
Report of the Panel
WT/DS296/R
Page 109
TABLE OF CONTENTS
Page
I. introduction 1
A. complaint of korea 1
B. establishment and composition of the panel 1
C. panel proceedings 2
II. FACTUAL ASPECTS 2
III. parties' requests for findings and recommendations 3
A. Korea 3
B. United States 5
IV. ARGUMENTS OF THE PARTIES 5
V. ARGUMENTS OF THE THIRD PARTIES 5
VI. interim review 5
A. us comments 5
B. korean comments 6
VII. FINDINGS 7
A. standard of review 7
B. burden of proof 8
C. doc's subsidy determinations 8
1. Entrustment or Direction 9
(a) Is an investigating authority required to demonstrate an explicit and affirmative government action addressed to a particular entity, entrusting or directing a particular task or duty? 10
(i) Arguments of the parties 10
(ii) Evaluation by the Panel 13
(b) Did the DOC properly find that there was sufficient evidence to support a generalized finding of entrustment or direction with respect to private bodies spanning multiple creditors and multiple transactions over the period of investigation? 18
(i) Policy to Support Hynix and Prevent its Failure 19
(ii) GOK Control Over Hynix's Creditors 20
The GOK's role as lender/signalling 20
The GOK's role as owner 21
The GOK's role as legislator 23
The GOK's role as regulator 30
(iii) GOK Coercion 33
Threats against creditors 34
Disciplining credit rating agencies 39
Mandating attendance at creditor meetings 40
(iv) The DOC's single programme approach 42
(v) The Kookmin Prospectus 45
(vi) Expert Opinion 48
(vii) Conclusion 50
2. Benefit 51
(i) Arguments of the parties 51
(ii) Evaluation by the Panel 54
3. Specificity 54
(i) Arguments of the parties 55
(ii) Evaluation by the Panel 57
4. Conclusion 58
D. ITC injury investigation 59
1. Did the ITC properly assess the volume of subject imports? 61
(i) Arguments of the parties 61
(ii) Evaluation by the Panel 65
2. Did the ITC properly assess the price effects of subject imports? 69
(i) Arguments of the parties 69
(ii) Evaluation by the Panel 71
3. Did the ITC properly consider all factors relevant to the overall condition of the domestic industry? 74
(i) Arguments of the parties 74
(ii) Evaluation by the Panel 77
4. Did the ITC properly demonstrate the requisite causal link between subject imports and injury? 81
(i) Arguments of the parties 81
(ii) Evaluation by the Panel 84
5. Did the ITC properly comply with its obligation not to attribute to subject imports injury caused by other factors ? 85
(i) Arguments of the parties 85
(ii) Evaluation by the Panel 91
6. Did the ITC properly define domestic industry, subject imports and non-subject imports? 98
(i) Arguments of the parties 98
(ii) Evaluation by the Panel 99
7. Conclusion 101
E. Verification Meetings 101
(i) Arguments of the Parties 101
(ii) Evaluation by the Panel 103
F. burden of proof during the doc’s investigation 104
G. Article 4.4 of the DSU 105
H. the levy of countervailing duties – article 19.4 of the scm agreement and articlevi.3 of the gatt 1994 106
I. articles 10 and 32.1 of the scm agreement 106
J. Article 22.3 of the SCM Agreement 107
VIII. conclusions and recommendation 107
TABLE OF ANNEXES
ANNEX A
SUBMISSION OF PARTIES AND THIRD PARTIES FOR THE
FIRST SUBSTANTIVE MEETING
Contents / PageAnnex A-1 Executive Summary of the Submission of Korea / A-2
Annex A-2 Executive Summary of the Submission of the United States / A-11
Annex A-3 Executive Summary of the Third Party Submission of China / A-20
Annex A-4 Executive Summary of the Third Party Submission of the European Communities / A-25
Annex A-5 Executive Summary of the Third Party Submission of Japan / A-29
ANNEX B
ORAL STATEMENTS OF PARTIES AND THIRD PARTIES AT THE
FIRST SESSION OF THE FIRST SUBSTANTIVE MEETING
Contents / PageAnnex B-1 Executive Summary of the Opening Statement of Korea / B-2
Annex B-2 Closing Statement of Korea / B-5
Annex B-3 Executive Summary of the Opening Statement of the United States / B-7
Annex B-4 Closing Statement of the United States / B-12
Annex B-5 Third Party Oral Statement of China / B-14
Annex B-6 Third Party Oral Statement of the European Communities / B-17
Annex B-7 Third Party Oral Statement of Japan / B-20
Annex B-8 Third Party Oral Statement of Chinese Taipei / B-23
ANNEX C
REBUTTAL SUBMISSIONS OF PARTIES
Contents / PageAnnex C-1 Executive Summary of Korea's Rebuttal Submission / C-2
Annex C-2 Executive Summary of the United States Rebuttal Submission / C-12
ANNEX D
ORAL STATEMENTS OF PARTIES AT THE
SECOND SUBSTANTIVE MEETING
Contents / PageAnnex D-1 Executive Summary of the Opening Statement of Korea / D-2
Annex D-2 Closing Statement of Korea / D-4
Annex D-3 Comments of Korea on the US Opening Statement / D-8
Annex D-4 Executive Summary of the Opening Statement of the United States / D-10
Annex D-5 Executive Summary of the Closing Statement of the United States / D-14
ANNEX E
PANEL'S QUESTIONS, ANSWERS AND COMMENTS OF PARTIES
Contents / PageAnnex E-1 Questions to the Parties following the First Substantive Meeting / E-2
Annex E-2 Questions to the Parties following the Second Substantive Meeting / E-7
Annex E-3 Answers of Korea to Panel Questions, First Meeting / E-10
Annex E-4 Answers of the United States to Panel Questions, First Meeting / E-33
Annex E-5 Answers of Korea to Panel Questions, Second Meeting / E-64
Annex E-6 Answers of the United States to Panel Questions, Second Meeting / E-76
Annex E-7 Comments of Korea on Answers of the United States to Panel Questions, Second Meeting / E-115
Annex E-8 Comments of the United States on New Factual Information provided in Korea's answers to Panel Questions, Second Meeting / E-121
ANNEX F
LIST OF FIGURES AND EXHIBITS
Contents / PageAnnex F-1 List of Figures and Exhibits of Korea / F-2
Annex F-2 List of Figures and Exhibits of the United States / F-9
TABLE OF KEY ABBREVIATIONS USED IN THIS REPORT
AD Agreement / Agreement on Implementation of ArticleVI of the General Agreement on Tariffs and Trade 1994
ASP / Average Selling Price
BOK / Bank of Korea
CBO / Collateralized Bond Obligation
CHB / Choheung Bank
CLO / Collateralized Loan Obligation
CRA / Agreement of Financial Institutions for Promoting Corporate Restructuring (Corporate Restructuring Agreement)
CRPA / Corporate Restructuring Promotion Act
CVD / Countervailing Duties
D/A / Document against Acceptance
DDR / Double Data Rate
DOC / United States Department of Commerce
DRAM / Dynamic Random Access Memory Chips
DRAMS / Dynamic Random Access Memory Semiconductors
DSB / Dispute Settlement Body
DSU / Understanding on Rules and Procedures Governing the Settlement of Disputes
EC / European Communities
FAB / Fabrication Facilities or Plants
FSC / Financial Supervisory Commission
FSS / Financial Supervisory Service
GATT 1994 / General Agreement on Tariffs and Trade 1994
GDS / Global Depositary Shares
GOK / Government of Korea
H&CB / Korea Housing and Commercial Bank
HSMA / Hynix Semiconductor Manufacturing America
HYNIX / Hynix Semiconductor, Inc.
IAS / International Accounting Standards
IBK / Industrial Bank of Korea
IMF / International Monetary Fund
ITC / United States International Trade Commission
KCGF / Korea Credit Guarantee Fund
KDB / Korea Development Bank
KEB / Korea Exchange Bank
KEIC / Korea Export Insurance Corporation
KFB / Korea First Bank
KRW / Korea Won
MOU / Memorandum of Understanding
OEM / Original Equipment Manufacturer
Panel Request / Request for the Establishment of a Panel contained in document WT/DS296/2
ROA / Return on Assets
ROK / Republic of Korea
SEC / United States Securities and Exchange Commission
SCM Agreement / Agreement on Subsidies and Countervailing Measures
SSB / Salomon Smith Barney
Vienna Convention / Vienna Convention on the Law of Treaties
WTO / World Trade Organization
WTO Agreement / Marrakesh Agreement Establishing the World Trade Organization
TABLE OF CASES CITED IN THIS REPORT
Argentina - Footwear (EC) / Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12January2000, DSR2000:I,515
Panel Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/R, adopted 12January2000, as modified by the Appellate Body Report, WT/DS121/AB/R, DSR2000:II,575
Argentina – Poultry Anti-Dumping Duties / Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R, adopted 19May2003
Brazil – Aircraft
(Article 21.5 – CanadaII) / Panel Report, Brazil – Export Financing Programme for Aircraft – Second Recourse by Canada to Article21.5 of the DSU, WT/DS46/RW/2, adopted 23August2001, DSR 2001:X, 5481
Canada – Aircraft / Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20August1999, as upheld by the Appellate Body Report, WT/DS70/AB/R, DSR1999:IV,1443
EC–Bed Linen
(Article21.5 – India) / Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24April2003
EC - Tube or Pipe Fittings / Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18August 2003, as modified by the Appellate Body Report, WT/DS219/AB/R
Guatemala – CementII / Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted 17November2000, DSR2000:XI, 5295
Mexico - Corn Syrup / Panel Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States, WT/DS132/R and Corr.1, adopted 24February2000, DSR2000:III,1345
Thailand - H-Beams / Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5April2001, DSR 2001:VII, 2701
Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 5April2001, as modified by the Appellate Body Report, WT/DS122/AB/R, DSR 2001:VII, 2741
US – Countervailing Measures on Certain EC Products / Appellate Body Report, United States – Countervailing Measures Concerning Certain Products from the European Communities, WT/DS212/AB/R, adopted 8 January 2003
Panel Report, United States – Countervailing Measures Concerning Certain Products from the European Communities, WT/DS212/R, adopted 8 January 2003, as modified by the Appellate Body Report, WT/DS212/AB/R
US - Export Restraints / Panel Report, United States – Measures Treating Exports Restraints as Subsidies, WT/DS194/R and Corr.2, adopted 23August2001, DSR 2001:XI, 5767
US - Hot-Rolled Steel / Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, 4697
US – Lamb / Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16May2001, DSR 2001:IX, 4051
US - Line Pipe / Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R, adopted 8March2002
US - Steel Safeguards / Panel Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/R, WT/DS249/R, WT/DS251/R, WT/DS252/R, WT/DS253/R, WT/DS254/R, WT/DS258/R, WT/DS259/R, adopted 10 December 2003, as modified by the Appellate Body Report, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R
US- Softwood Lumber VI / Panel Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada ("US – Softwood LumberVI"), WT/DS277/R, adopted 26 April 2004.
US - Wheat Gluten / Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19January2001, DSR2001:II, 717
US- Wool Shirts and Blouses / Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India ("US – Wool Shirts and Blouses"), WT/DS33/AB/R and Corr.1, adopted 23May1997, DSR1997:I,323.
WT/DS296/R
Page 109
I. introduction
A. complaint of korea
1.1 On 30 June 2003, Korea requested consultations with the US pursuant to Article 4 of the DSU, Article 30 of the SCM Agreement, and Article XXII of the GATT 1994, with regard to the DOC Preliminary and Final subsidy determinations on Dynamic Random Access Memory Semiconductors from Korea, published in the Federal Register on 7 April 2003 and 23June 2003, respectively, the ITC Preliminary injury determination published in the Federal Register on 27 December 2003, and any subsequent determinations made during the ITC's injury investigation on DRAMS and DRAM Modules from Korea.[1]
1.2 On 18 August 2003, Korea requested further consultations with the US pursuant to the same provisions cited in its initial request, with regard to the ITC's Final determination of material injury, and the DOC's Final countervailing duty order, both published in the Federal Register on 11August2003. According to Korea, both of these actions relate to the same underlying measures at issue in Korea's initial request for consultations.[2]
1.3 Korea and the US held consultations on 20 August 2003 and 1 October 2003, but failed to reach a mutually satisfactory resolution of the matter. With respect to the ITC preliminary injury determination and the DOC countervailing duty order, the US maintained that Korea's consultation requests did not conform with Article 4.4 of the DSU because Korea did not identify any provisions with which the preliminary determination or order were inconsistent. The US asserted that, as a result, it did not agree to consult on either the preliminary determination or the order.[3]
1.4 On 19 November 2003, Korea requested the establishment of a Panel to examine the matter.[4]
B. establishment and composition of the panel
1.5 At its meeting on 23 January 2004, the DSB established a Panel in accordance with Article 6 of the DSU and pursuant to the request made by Korea in document WT/DS296/2.
1.6 At that meeting, the parties to the dispute also agreed that the Panel should have standard terms of reference. The terms of reference are, therefore, the following: